CEO letter - Q3 2024

Tele2’s 14th consecutive quarter of growth

I am glad to report that we continue our growth in all business lines while being on track to finishing the 5G swap in Sweden. We see positive momentum and volume within Sweden Consumer and a good order intake for Sweden Business. Price adjustments in Latvia have played out well and the overall momentum in Lithuania and Latvia continues to impress. In numbers, this leads to a revenue growth of around 3% and an EBITDAaL growth of around 2% (3% excluding energy one-off in Sweden last year).

Leverage below target range, as the end of the 5G capex cycle is getting closer

Our balance sheet remains solid with a leverage ratio of 2.3x, which is somewhat below our target range. We are close to the bottom of our leverage range even if we add the second tranche of dividend in October, which rewarded shareholders with a further 3.45 SEK per share.

This speaks to the strong fundamentals of Tele2 as we are moving towards the final stretch of our 5G capex cycle, with the main roll-out being finished a little over a year from now. Short term trends have been impacted by the low-growth environment in Sweden and limitations in purchasing power, but the underlying growth pattern is an established secular trend.

Our customers enjoy a world class network

Due to the regulatory and security context, we started our 5G roll-out in Sweden with the highest frequencies. That also means we started with the highest download speeds, but it brought challenges as these frequencies have limited area coverage. As we have progressed, we now cover more than 80% of the Swedish population and our approach to the roll-out is materialising as a benefit. We recently received positive accolades from OpenSignal such as Global Winner in 5G Video Experience, Rising Star in 5G Availability and top-list entry for 5G Voice App Experience. This makes us very happy and shows that we have made strong progress and can deliver an excellent experience.

Households and businesses finally see the light in the tunnel

A lot has been said about the inflation and negative development of real disposable incomes in Sweden over the last quarters. I am proud that we have been able to deliver consistent growth throughout this challenging period.

As central banks now continue to reduce their signal rates and households consolidate their finances, most observers expect a significant pick-up in GDP growth in Sweden in 2025, which bodes well for all businesses. Despite a backdrop of bankruptcies and belt-tightening in both the public and private sectors, we expect positive growth momentum over the next quarters, also helped by the previously mentioned good order intake in Sweden Business. Within this momentum, we will absorb the migration of our Boxer customers from a highly energy consuming terrestrial network to more efficient broadband solutions in a one-off technology change and modernisation.