INTERIM REPORT JANUARY-SEPTEMBER 2006

In Q3 2006, Tele2's EBITDA was SEK 1.8 billion with mobile revenues up 32% to SEK 5.1 billion.

 

-  Operating revenue for the first nine months 2006 increased by 13% to MSEK 40,684 (36,003)

-  EBITDA in Q3 was MSEK 1,784* (1,873)

-  Excellent performance in Russian mobile: customer intake, revenues and EBITDA all growing strongly

-  Mobile revenues in Q3 increased by 32% to SEK 5.1 billion

-  Disposal of French fi xed and broadband business announced in October

- Net profit for the first nine months 2006 amounted to MSEK -3,180 (2,087), including a goodwill write down

and capital loss related to the SEC acquisition in 2000 (a total one time effect of SEK 4.3 billion), as previously

announced in early October

- Earnings per share, after dilution, for the first nine months 2006 amounted to SEK -6.92 (4.71)

 

*Including positive non-recurring items of MSEK 43 (see note 2).

The figures shown in parenthesis correspond to the comparable periods in 2005.

 

Lars-Johan Jarnheimer, President and CEO of Tele2 AB commented:

TELE2 has pursued a very successful expansion strategy aimed at building a large customer base across a significant number of markets in Europe. This expansion has been followed by a phase where Tele2 has reviewed its market position and decided where to invest further to establish a stronger network based position. This has been the rationale for further investments in mobile network operations in Sweden, Russia, Baltics and Croatia as well as broadband in selected markets. To ensure its resources are deployed in the most effi cient way it has also led to the winding down or disposal of the fi xed line businesses in Lithuania, Latvia, Estonia,Czech Republic, Finland, UK and most recently the sale of the fixed and broadband businesses in France.

 

This effort is now being intensified, which may result in a further concentration of our geographical scope in Continental Europe. While continuing to cross-sell a range of fixed and mobile services to leverage our customer base, our product focus will remain on mobile network operations and broadband in selected markets. Consistent with these objectives, new investments will be primarily focused on core geographical markets and services where Tele2 can achieve necessary scale to create long term successful businesses. Tele2 will continue to balance investments with profitability and stable cash returns to its shareholders.

 

OPERATIONALLY in Q3 2006 Tele2 produced an improved set of results. Revenue growth was strong, up 11% to SEK 13.7 billion and EBITDA, at SEK 1.8 billion, was up sharply on recent quarters. As promised, we increased our broadband intake and our mobile business had a tremendous quarter with revenues rising 32% year on year. There were also signs that fixed telephony resale churn may be starting to level off but it is difficult to interpret a trend from just one seasonally effected quarter. Nevertheless, what is impressive is the fixed telephony resale EBITDA margin which, at 14%, is the highest it has ever been.

Looking ahead to the remainder of the year, we will intensify our marketing efforts in the fourth quarter, primarily in mobile and broadband, as we seek to increase our broadband intake and continue the positive strides we have been making in our mobile businesses.

 

CONTACTS

Tele2 is Europe's leading alternative telecom operator. Our mission is to offer cheap and simple telecoms.

Tele2 always strives to offer the market's best prices. We have 31 million customers in 22 countries. Tele2 offers products and services in fi xed and mobile telephony, broadband and cable TV. Ever since Jan Stenbeck founded Tele2 in 1993, the company has been a tough challenger to the former government monopolies. Tele2 has been listed on the Stockholm Stock Exchange since 1996. In 2005, we reported operating revenue of SEK 50 billion and EBITDA of SEK 6.6 billion.