Tele2 has reported a 1 percent drop in first quarter end-user service revenue (EUSR) because of the pandemic, but a 6 percent rise in earnings before interest, taxes, depreciation and amortisation after leases (EBITDAaL). It attributed this to business transformation, operational discipline and a good performance in the Baltic region. The company said it is “not back to normal yet” but the future is more predictable, leading it to recommend an extraordinary dividend of SEK 3.00 for payment in July.
Revenue was unchanged year on year on an organic basis in Q1 at SEK 6.55 billion and EUSR fell 1 percent on an organic basis to SEK 4.73 billion as coronavirus had a negative effect.
In the Swedish Consumer operations, EUSR dropped by 2 percent to SEK 3.02 billion as growth in mobile post-paid and fixed broadband was offset by declines in digital TV and mobile prepaid revenue. In the Swedish Business segment, EUSR fell by 5 percent to SEK 946 million because of price pressure, a decline in legacy fixed services and loss of roaming revenue.
In the Baltic countries, EUSR increased by 8 percent organically to SEK 763 million despite Covid-19 restrictions, thanks to Average Spend Per User (ASPU) growth as Tele2 monetised growing data consumption and as customers migrated from pre-paid to post-paid subscriptions
Tele2 said mobile revenue in the first quarter was unchanged at SEK 1.41 billion but fixed revenue was 3 percent lower year on year at SEK 1.44 billion. Fixed broadband revenue climbed by 5 percent to SEK 678 million but digital TV revenue fell 8 percent to SEK 695 million. Fixed telephony and DSL revenue plummeted 27 percent to SEK 64 million. Landlord and Other revenue shrank 3 percent to SEK 170 million.
Underlying EBITDAaL reached SEK 2.31 billion, up 6 percent organically compared with Q1 2020 thanks to a “strong” performance in the Baltic countries, cost savings, temporarily low commercial spending, and bad debt provisions recognised in Q1 2020.
The profit after financial items (EBT) was SEK 1.07 billion, up from SEK 989 million in the first quarter of 2020. The net profit from total operations fell to SEK 865 million, amounting to SEK 1.25 per share after dilution, from SEK 1.18 billion in Q1 2020.
Equity free cash flow from continuing operations was SEK 820 million, down from SEK 1.28 billion a year earlier, chiefly because of a spectrum capex payment. Over the last twelve months, SEK 4.3 billion was generated, equivalent to roughly SEK 6.3 per share.
On 31 March, the Swedish Consumer segment had 2.93 billion mobile revenue generating units (RGUs), down by 25,000 from Q4. Fixed broadband RGUs rose 4,000 to 916,000 but digital TV RGUs fell 14,000 to 965,000. Total Swedish consumer RGUs fell by 47,000 from Q4 to 5.03 million at the end of the first quarter of 2021. The addressable fixed footprint in Sweden was down by 5,000 to 3.52 million.
Swedish consumer mobile ASPU in the first quarter was unchanged at SEK 160 per month with fixed broadband ASPU up 1 percent from Q4 at SEK 247.
In the Swedish Business segment, Tele2 had 964,000 mobile RGUs excluding IoT on 31 March, up by 18,000 in the quarter, but ASPU fell by 13 percent to SEK 135 monthly. Swedish Business mobile revenue dropped 7 percent to SEK 453 million year on year, fixed revenue was down 6 percent at SEK 234 million and Solutions revenue dipped 1 percent to SEK 259 million.
