Tele2 raises dividends, synergy targets after first quarter with Com Hem

News General Europe 13 FEB 2019
Tele2 raises dividends, synergy targets after first quarter with Com Hem

Tele2 has increased its dividend and said it expects further pay-outs this year to shareholders with the proceeds from selling its activities in the Netherlands and Kazakhstan. The company also increased its target for synergies from the merger with Com Hem in Sweden and set new mid-term targets, of low-single digit growth in end-user service revenue and mid-single digit growth in adjusted EBITDA.

Pro forma results for 2018, including Com Hem and excluding the activities to be divested, showed end-user service revenue was flat at SEK 21.4 billion, and Tele2 expects the same in 2019 as it rolls out "revenue growth enhancing" measures. Adjusted EBITDA met the target last year, up 5 percent to SEK 9.0 billion, and Tele2 forecast a similar performance this year. 

Improving revenue growth in the coming years is expected to come from cross- and up-selling at Com Hem, based around a 'more for more' strategy. Tele2 also improved its target for synergies from the merger closed in November 2018. It now targets a total of SEK 1.35 billion, up from the SEK 900 million first announced. The new target includes SEK 900 million in cost synergies to be achieved in three years, up from SEK 450 million in five years.

The revenue growth and cost savings are expected to help grow cash flow and as such shareholder returns. Tele2 already increased its annual dividend, to SEK 4.4 per share from SEK 4 last year, and said shareholders can expect a further pay-out once the sale of the Tele2 Kazakhstan stake closes. 

For the fourth quarter, Tele2 reported pro forma revenues from continuing operations up 3 percent to SEK 7.8 billion, as growth in the Baltics offset a small drop in Sweden. Mobile service revenue rose 3 percent to SEK 3.0 billion, while fixed revenues were down 2 percent to SEK 1.9 billion. Adjusted EBITDA improved 11 percent year-on-year to SEK 2.22 billion and was up 4 percent excluding one-time items. 

Tele2 increased pro forma capex to SEK 3.5 billion last year from SEK 2.4 billion in 2017. This is expected to drop back to SEK 2.9-3.2 billion this year and reach SEK 3.0-3.5 billion in the mid term, as it rolls out 5G and remote PHY. The outlook excludes spectrum payments. 

Categories:

General

Companies:

Tele2,  Com Hem,  Tele2 Kazakhstan

Regions:

Europe

Countries:

Sweden

Tags:

Voice services, Data services, Internet Access, Finance

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