CEO Letter - Q2 2024
Strong second quarter for Tele2
As we are heading into the summer break, it feels good to summarise Tele2’s second quarter as one of good progress and solid financial performance. We deliver our 13th consecutive quarter of topline growth while progressing with the biggest technology transformation the Swedish telecom industry has ever seen.
Fully covered dividend as growth continues
We continue to see growth across operations resulting in an overall growth level of 4% in end-user service revenue. Through diligent cost optimisation, most of this growth translates into an underlying EBITDAaL growth of 3%. In terms of cash-flow, we have fully covered our dividend and leave Q2 with a leverage slightly below the target range, which testifies to a very strong balance sheet.
We see good momentum in Sweden Consumer based on price adjustments made earlier this year than previously. Hence, comparable performance in H2 will be tougher, but there is an overall good progress in the business.While we are gradually leaving the most challenging economic period for Swedish consumers behind us, it is still very much here and now for Swedish businesses. In that context, Sweden Business is doing well in a market influenced by record number of bankruptcies and a slowdown of the overall economy. We are positive that trends within B2B can improve further when the overall economy builds speed within a couple of quarters.
Lithuania continues to deliver well, and we see Latvia getting back to growth after being in between pricing cycles in the first half of the year. Estonia is in the middle of a turn-around and we expect improvements during the second half of the year.
A tech advantage that allows more Swedes to experience real 5G
Our 5G network continues to grow and cover more and more people in Sweden. We now have the best coverage of high frequency 5G – this is what we at Tele2 call real 5G, as the performance in more narrow spectrum bands with lower frequencies, will be more limited. We now cover close to 80% of the population with our 5G network, and the initial disadvantage we had by having to change every base station is now starting to become a technology advantage, as our network is completely renewed end-to-end. This is a key reason why capital expenditure will go down significantly when the main swap and roll-out phase ends at the end of 2025.
Reaching a major milestone in our strategy execution
During Q2, we brought together the IT platforms of Comviq and Tele2 into one. This represents a major milestone in our development, as building a nimbler framework is a key condition for long-term success and superior customer experience. All IT projects and consolidations do come with initial issues, and we had some as well, but we solve them as they come and focus on the next stage of customer interaction that this transformation enables.
Once again recognised for our commitment to lead in sustainability
We are very honored and happy to have been identified by Time Magazine as Sweden’s most sustainable company, alongside being named Sweden’s Climate Leader by the Financial Times. We are humble and aware that we have a lot of work to do in this important and fast evolving area if we are to remain one of the leaders, but we allow ourselves to enjoy this recognition that directly relates to one of the four proof-points of the strategy we presented at our Capital Markets Day in May 2021.
In summary, the first half of 2024 has Tele2 on a good course towards delivering on our financial targets for the year and renewing our technological capabilities.
I would like to take the opportunity to thank all great Tele2 colleagues for a job well done and wish for great summer holidays for all employees and readers of these lines!
Kjell Johnsen
President and Group CEO