CEO letter - Q4 2024

At the moment we publish our full year 2024 report, I have served as CEO of Tele2 for 2.5 months and have been a member of the Board of Directors for an additional six months. During this period, I have familiarised myself with the specificities of the business and its people, engaged with customers, and deep dived into specific areas. It has been an intense period, and it has provided me with necessary insights and lots of energy that I carry into 2025.

Tele2 leaves behind a year marked by changes, challenges, and achievements. We reached two critical milestones. The first was the major migration from six down to two IT-stacks for our various brands. This will enhance the customer experience, help us better understand our customers’ needs and improve our ability to fulfil them.

The second milestone was the completion of our network upgrade, which now enables us to cover 90% of Sweden’s population with 5G. Our population coverage for 5G+, i.e. 5G with significantly higher speeds, now stands at an impressive 70%. By the end of 2025, we expect to cover more than 99% of Sweden’s population with what we anticipate being Sweden’s best 5G network.

Continued growth in 2024

Q4 2024 came with a mixed outcome for Tele2 in Sweden. The slowdown in top-line growth and flattish underlying EBITDAaL have been impacted by the necessary migration of our Boxer customers from the old DTT technology to a more flexible WiFi-based TV-solution with richer content. The negative short-term churn effect will be more than offset on the long-term by the gains in both customer experience and profitability.

Nevertheless, on Tele2 group level, the fourth quarter generated end-user service revenue growth of 2% and underlying EBITDAaL growth of 1%. For the full year, this led to end-user service revenue growth of 3%, underlying EBITDAaL growth of 2%, and capex to sales of 14%. All metrics are in line with the guidance we provided at the beginning of the year. Just as in many previous quarters, our Baltic operations deserve recognition, delivering another period of strong results.

Tele2 delivered Equity Free Cash Flow (EFCF) of SEK 4.4 billion in 2024, which represents a 7% decrease compared to 2023. Consistent with Tele2’s financial policy, the Board of Directors proposes to distribute 100% of this 2024 EFCF, corresponding to an ordinary dividend of SEK 6.35 per share.

Rejuvenating Tele2’s challenger culture

Our focus is now firmly on the future, particularly 2025. Tele2 is a company unique at its core and a global reference for challenger telcos. On top of that, there is an untapped potential in the company, and we are willing to unleash it.

To begin with, we will reduce complexity within the organisation, inherited from the successive integration of various companies within Tele2. We will select our initiatives and investments carefully to focus on those that make a real difference to our customers.

We have already introduced a significantly reinforced cost discipline. This is not new to Tele2 as cost consciousness has been a central part of the proud heritage we have carried since the company was founded. However, we are now doubling down on this, reintroducing cost consciousness as a core element of our culture.

Optimising the organisation

Our organisation will undergo significant changes during 2025. We will reduce our total workforce by around 15% across Tele2 Group within the coming 12 months, subject to union negotiations. This will be challenging times for all our employees, especially those directly affected by the reorganisation. Both I and all Tele2 leaders carry a great responsibility in the coming months to ensure that this process is as transparent, respectful and supportive as possible.

These changes are however necessary to make Tele2 a faster and more agile company, better equipped to swiftly capture market opportunities.

Accelerating underlying EBITDAaL growth in 2025

Our new operating model and simpler organisation will give us the resilience and flexibility we need to remain in control of our future. For 2025, we are guiding for a low single-digit end-user service revenue growth and an underlying EBITDAaL growth in the range of mid- to high single-digit. We expect capex to sales to be around 13% as we finalise the major 5G roll-out and the 2G/3G decommission in 2025.

I am very pleased to see the engagement and commitment from all our colleagues to create a new Tele2, built with our challenger heritage as the foundation. 2025 will be a year full of challenges, just how it is supposed to be when raising ambitions. And I am certain that our new Tele2 will be soon fit to deliver more value to our shareholders.