CEO Word, Q2 2014

This quarter’s results demonstrate that we are delivering on our growth strategy in all major regions with mobile end-user service revenue growth rising by 7 percent. Our investment in this growth is having the anticipated impact on our margins, as we are developing our mobile operations in the Netherlands, Kazakhstan, and other markets.

"Our Swedish operations continued to enjoy good end-user service revenue growth during the quarter. The demand for mobile data maintained its strong momentum as our customers’ usage of streaming services grew."

Our Swedish operations continued to enjoy good end-user service revenue growth during the quarter. The demand for mobile data maintained its strong momentum as our customers’
usage of streaming services grew.
However, the quarter was also characterized by tougher competition, in both the price and value segments. As a result, our marketing efforts increased in the quarter to ensure maintained price leadership for Comviq and value leadership for Tele2.

Our Dutch consumer fixed broadband operations started to turn the corner in the quarter showing positive customer intake in the consumer segment. This was accomplished through improved pricing of our broadband product in combination with better TV offerings. Going forward, we will maintain our effort to develop this area which will play a complementary role in the composition of our total product offering. The mobile business kept its pace through an innovative pricing and packaging strategy which increased market share. It is a very competitive environment; and, we will innovate to stay ahead of the game. As an example, new pricing models were introduced through SmartMix and Nonstop concepts, which draws from the positive experience we already have in the Swedish market. In the Netherlands, our network rollout accelerated in the quarter. Also, our technical organization continued to improve processes to further increase network roll-out speed.

On the 7th of July, we announced the sale of our Norwegian business. Since the creation of Tele2 Norway in 1995, we have built a successful mobile business of 1.2 million subscribers. We are proud of the strong brand name, effective organization, and talented employees. Subject to approval from the Norwegian competition authorities, the proposed sale is good for our customers, shareholders, and Tele2 as a whole.

Tele2 Kazakhstan saw further progress in customer intake, as the result of the remodeled commission structure. Our commercial offers were also better aligned to meet a strongly growing mobile data demand. Our improving position within 3G services reinforces this strong drive in mobile data. The network rollout maintained its momentum; and, our technical team closed the margin on our competitors’ capabilities.

Within one of our new growth areas, M2M/IoT (Internet of Things) won a major contract by providing connectivity across Europe to the Vattenfall group. Even though it is early days, we believe that our partnership program lays the foundation for further success in this field.

Our focus for 2014 is clear. The Netherlands and Kazakhstan are building a mobile business for the future, contributing strongly to the Group’s overall growth. Sweden stands as the standard when it comes to creating a profitable and data centric business model.



Mats Granryd
President and CEO