Tele2 said it completed its joint venture with Kazakhtelecom in the quarter and integration has started. Customer and revenue growth is improving, and profits should hopefully follow, thanks to synergies from the joint venture and the withdrawal of unprofitable price plans, the company said.
The group's EBITDA was also lower in Q1, down 14 percent at SEK 1.226 billion versus SEK 1.428 billion a year ago, and the margin fell to 19 percent from 22. Tele2 blamed the decline on costs associated with its commercial ramp-up in the Netherlands following the 4G network launch, Sweden mobile marketing investments and the continued decline in its fixed operations. The company noted that since the launch in the Netherlands, it now offers 4G across its footprint.
Net sales fell 1 percent to SEK 6.446 billion, hurt by the devaluation in Kazakhstan and decline in fixed operations. Tele2 said this was offset by organic mobile service revenue growth of 4 percent and strong equipment sales in the Netherlands, Croatia, Latvia and Lithuania. The operator lost 9,000 customers in the quarter, as a gain of 43,000 in mobile, mainly from the Netherlands and Kazakhstan, was offset by a loss of 6,000 in fixed broadband and 46,000 in fixed telephony. The total customer base amounted to 16.22 million at the end of March, up from 13.83 million a year earlier.
Tele2 reported negative free cash flow of SEK 154 million for the quarter. This was driven by an increase in capex to SEK 1.154 billion from SEK 938 million in the year-earlier period, due to the purchase of a spectrum licence in Lithuania.
The company maintained its guidance for the full year, forecasting flat net sales of SEK 26-27 billion and mid single-digit growth in mobile service revenue. EBITDA is estimated to fall to SEK 4.6-5.0 billion and capex will be at SEK 3.7-4.1 billion.
