Tele2 has upgraded its outlook for EBITDA growth this year after reporting a strong set of second-quarter results. The growth in Q2 was again led by its activities in the Baltics and Kazakhstan as well as a solid performance in its home market Sweden.
Tele2 reported revenues up 6 percent year-on-year to SEK 6.491 billion in Q2, with 5 percent growth on a like-for-like basis. Mobile service revenue rose 6 percent to SEK 3.580 billion and also increased 5 percent on an organic basis. Adjusted EBITDA jumped 13 percent to SEK 1.789 billion, and the margin lifted to 28 percent from 26 percent a year ago. The growth was due to higher mobile service revenue in the Baltics, Kazakhstan and Croatia as well as higher equipment sales in Sweden and the Baltics.
Tele2 CEO Allison Kirkby said this was the 12th consecutive quarter of exceeding expectations. The strong performance prompted the company to increase its adjusted EBITDA target for the year to SEK 6.8-7.1 billion from the earlier guidance of SEK 6.5-6.8 billion. The forecast for mobile end-user revenue growth was left unchanged at mid single-digits.
Both the merger with Com Hem in Sweden and the planned sale of Tele2 Netherlands are still expected to close in Q4.
Capex is still expected at SEK 2.1-2.4 billion over the full year, excluding spectrum fees. In the second quarter, Tele2 invested SEK 568 million, up slightly from SEK 513 million a year ago as investments were higher in all segments apart from Kazakhstan.
Free cash flow from operations fell to SEK 511 million from SEK 820 million, due mainly to the timing of working capital payments. Free cash flow from continuing operations amounted to SEK 674 million, down from SEK 972 million.
