Tele2 reported net sales for the first quarter up 5 percent, also like-for-like, to SEK 6.22 billion, while EBITDA lifted 7 percent to SEK 1.63 billion, with results again getting a boost from operations in Kazakhstan and the Baltics, as well as from Croatia. The company said it will keep its quarterly dividend at SEK 4 per share but has announced a new shareholder remuneration and leverage policy as it looks forward to its merger with Com Hem.
The new policy means that post-merger, the company will be aiming for a net debt to EBITDA target range of 2.5-3.0 times. The ordinary dividend must be worth at least 80 percent of equity free cash flow. The target leverage will have to be maintained also with extraordinary dividends and share buybacks. Tele2 said the new policy will see it distribute over 100 percent of equity free cash flow to shareholders, through a combo of dividends and share buybacks. The merger is going to plan and should close in the second half.
Mobile end-user service revenues in the quarter went 3 percent higher to SEK 3.37 billion, with EBIT jumping 22 percent to SEK 952 million and the net profit rising 19 percent to SEK 590 million. Diluted earnings per share went up 9 percent to SEK 1.16.
Tele2 explained that B2B revenues started stabilising in Sweden following a turnaround last year, though headwinds continue with costs associated with for Roam Like at Home and other one-offs. In The Baltics, the company booked progress at both consumer and B2B while at Kazakhstan, the company reached its EBITDA margin ambition of 30 percent one-year earlier than expected. Croatia also improved, helped by product value for both mobile broadband (MBB) and smartphone customers. In the Netherlands, the company is preparing for its merger with T-Mobile Netherlands.
The 12-months operating cash flow leaped 26 percent to SEK 4.57 billion. Capex advanced to SEK 590million from 495 million the year before, with higher investments in Sweden and Other partly offset by lower investment levels in Kazakhstan. Net debt was stable at SEK 10.58 from 10.54 billion.
Tele2 ended the quarter with 15.319 million customers, up from the 14.969 million recorded year-on-year. In the quarter, the operator slowed total losses to 28,000 customers, from losses of 42,000 the year earlier. Losses at mobile ground to a half and reached 0 in the quarter. The fixed broadband customer base fell 6,000, the same as the year before, pulled down by declines in both Sweden and Germany. The number of fixed telephony customers was down by 22,000, a bit of an increase from the year earlier’s loss of 21,000.
The company reiterated its full year guidance for mobile end-user service revenue growth of mid-single digits, EBITDA of SEK 6.5-6.8 billion, and capex of SEK 2.1-2.4 billion.
