Tele2 reported first-quarter sales up 9 percent from a year earlier to SEK 10.48 billion, while EBITDA rose a slower 1 percent to SEK 2.57 billion. The margin fell to 25 percent from 26 a year ago, hurt by increased marketing spend in the main markets Sweden and Russia to fight off increased competition. Tele2 said the quarter was "challenging as expected", as structural changes in the industry, such as the shift from voice to data, starting to have an impact. This was particularly evident at its Nordic operations, where price erosion and tough competition put pressure on results. The company's net profit was down 29 percent year-on-year to SEK 869 million, hurt by charges to write-off equipment ahead of network upgrades planned in the Baltic countries. Capex fell to SEK 1.04 billion from SEK 1.31 billion a year earlier, and cash flow dropped slightly to SEK 1.07 billion. The operator cuts its full-year capex budget to SEK 5.5 billion, from an earlier estimate of SEK 6.0 billion. Tele2 also lowered the EBITDA outlook for Sweden, Russia and Kakazhstan this year, while predicting stronger sales growth in these markets, suggesting it will continue spending on marketing to weather the increased competition. The company added a net 559,000 customers in the first three months of the year, mainly due to new mobile customers in Russia and Kazakshtan. Its total base numbered 34.76 million at the end of March, up from 31.24 million a year earlier.
