CEO Letter - Annual Report 2023

2023 marked Tele2’s 30th anniversary, and what better way to honor that legacy than by laying the groundwork for 30 more successful years?

For many people, the time around 30 is when big decisions are made that lay the foundation for the future. This is true also for Tele2. Throughout the anniversary year, we made substantial investments to pave the way for a successful future.

For example, the extensive IT modernisation that we have been conducting since 2021, was intensified in 2023 and will conclude in the first half of 2024. It has been a few years since the merger of the Tele2 and Com Hem brands, and the consolidation of our brand portfolio. But under the hood, we have had several different databases – Tele2, Com Hem, Boxer, Comviq – which have restricted our capacity to develop and personalise offerings tailored to individuals and households. Leaving those legacy limitations behind us and instead allocating resources to the development of services, products, and digital customer journeys will lead to radically better customer experiences, simplified onboarding, increased loyalty, and significant efficiencies for Tele2 going forward.

Improved customer experience goes hand-in-hand with efficiency

While we have been cleaning out legacy in the IT environment, we have also continued to build what will become Sweden’s best 5G network. We are building a real 5G network, meaning significantly higher speeds than 4G. Similar to the IT modernisation efforts, the enhanced customer experience is closely linked to a more efficient Tele2. Our 5G network is being built through our joint venture Net4Mobility, which means we share expansion costs, maintenance, and energy. As the 5G network is being rolled out across Sweden, we have begun the decommissioning of the old and outdated 2G/3G network, and by the time it is shut down in the end of 2025, Tele2 will have one top class network, both in terms of quality and efficiency.

A strategic shift with our customers in focus

The investments in internal and external infrastructure should be seen in the light of the strategic shift Tele2 is undergoing. We are transitioning from being a player that historically has been successful in customer acquisition but lacked the ability to build long-term relationships, to a player with strong brands that builds its business on customer satisfaction, quality, and loyalty, where customers see value in utilising the entire Tele2 product portfolio of mobile, broadband, and TV. Symbolic for this new direction, Comviq was awarded for having the industry’s best service, and Tele2 launched Sweden’s first real connection guarantee – a sign of our ability to innovate and the customer value of offering both fixed and mobile networks.

Commercial progress in times of change

Commercially, we also see positive results from the strategic shift. The Swedish consumer operations, which had seen a slight downturn for several years, returned to growth in end-user service revenue. One can compare the development to a large tanker slowly drifting in the wrong direction, that stopped drifting in 2022 and gained speed in the right direction in 2023.

Similarly, our Swedish Business operations has undergone a comparable transformation and has advanced even further. We have moved from being an interchangeable provider of hardware and connectivity to becoming a strategic partner that, with connectivity as a base, helps companies transform, digitalise, increase their security, and develop new business models. According to Swedish Quality Index (SKI), Tele2 has the most satisfied customers and the positive commercial development seen in 2022 accelerated in 2023.

The turbulent macro that characterised 2023 was particularly noticeable for our colleagues in the Baltics, who, in addition to the direct proximity to the war in Ukraine, also faced very high inflation rates. Despite the uncertainties, the Baltic operations consistently delivered outstanding results throughout 2023, which is truly impressive. An essential driver of our success has been high customer satisfaction levels, with lower churn and reduced price sensitivity as effects.

With an ambition to lead in sustainability

Even though Tele2 is in many ways a different company today than it was 30 years ago, the challenger spirit is deeply rooted in our culture and among our employees. In the 90s, the monopoly was challenged; today, we channel that challenger spirit into breaking limitations – both our customers’ and our own. Enabling a society of unlimited possibilities is the foundation of everything we do.

This includes enabling a sustainable society. It is fantastic to see how our products and services are increasingly becoming central when companies are transitioning to a more sustainable business.

We also see that our credibility as a partner in such a transition grows as our own sustainability efforts are recognised and rewarded for being at the forefront.

In 2023, Tele2 was named Europe’s climate leader by The Financial Times, we were recognised as Sweden’s most gender-equal company by Equileap, and we were awarded for having the most transparent sustainability reporting on the Swedish OMX. We aspire to lead in sustainability, and in 2023, we demonstrated significant progress. However, we are very much aware that we must accelerate further in the coming years, and we are determined to do so.

Finally, I would like to extend a big thank you to our customers for the trust you place in us, to all colleagues for all the hard work throughout the year, and to all shareholders for believing in Tele2 and the exciting journey ahead.

Kjell Johnsen
President and CEO