Tele2 reported a drop in underlying revenue in the first quarter, hurt by weaker legacy fixed services and lower equipment revenue. Synergies from the merger with Com Hem helped grow profits, and the company maintained its outlook for full-year results.
Total revenue increased by 33 percent to SEK 7.217 billion thanks to the merger with Com Hem. Organic revenue fell 1 percent, as end-user service revenue was flat and equipment revenue declined, mainly in Sweden. Mobile end-user service revenue contributed positively with growth of 3 percent, while fixed end-user service revenue declined organically by 3 percent.
Underlying EBITDA grew 82 percent to SEK 2.659 billion, mainly as a result of the merger with Com Hem and the implementation of new accounting standards on leases. Excluding the accounting effect, underlying EBITDA rose 8 percent on an organic basis. Net profit rose to SEK 769 million from SEK 622 million a year earlier.
As forecast, capex rose to SEK 1.671 billion from SEK 840 million a year ago, due to the inclusion of Com Hem and payment for the 700 MHz licence in Sweden. The merger contributed to a jump in equity free cash flow, to SEK 437 million from SEK 68 million.
Tele2 maintained its outlook for flat full-year end-user service revenue, as growth enhancing initiatives are being rolled out and are estimated to have an impact only in the following years. Underlying EBITDA excluding the accounting effect is forecast up in mid-single digits, while capex excluding spectrum and leasing assets is estimated at SEK 2.9–3.2 billion. Tele2 said it will provide more details mid-year on the expected dividend, after completing the planned sale of its stake in Tele2 Kazakhstan.
