CEO Word, Q4 2014
2014 was a year where we delivered on our commitments, despite the uncertainty in Norway and the significant transition from fixed to mobile in the Netherlands. Q4 2014 was no exception and we produced our 14th consecutive quarter of mobile growth, with end-user service revenue growing 7 percent as a result of a continued ability to monetize our customers’ increasing need for mobile data. The catalyst has been LTE/4G services and a range of customer propositions that provide great value and a great experience.
In the quarter we shared our renewed strategy with our Board, our employees and our shareholders. We intend to remain focused on mobile, Europe/Eurasia and growing in both consumer and business segments. And our unique Way2Win will be via 4 key differentiators: Value Champion; Focused Technology Choices; Step changing our Productivity; and our Winning People & Culture. These differentiators are underpinning the success we saw in the quarter in each of our key markets.
Sweden maintained its status as the leader in mobile data for the Group. Mobile end-user service revenue increased by 5 percent as the usage of our mobile data service continued to expand. In the quarter we introduced a new commercial concept, based on the Value Champion strategy, which we refer to as Tele2.0. The concept includes changes such as no binding periods, a one-subscription solution, trial periods for both B2C and B2B customers, and removed expiry dates for all top-ups. The concept will improve customer satisfaction and restore trust for the industry, and through this strengthen the long-term positioning of Tele2 Sweden’s brands. The reaction from customers and media have so far been very positive, which encourages us that this is the right way forward.
In the Netherlands we are proving our Focused Technology Choices strategy as we are rolling out the world’s first nationwide LTE-Advanced/4G only network. In the quarter, yet another milestone was passed as we announced the launch of commercial LTE-Advanced/4G services as of January 2015. Meanwhile, the consumer mobile customer base continued to show solid growth and the business segment for Tele2 Netherlands saw important traction within the larger enterprise space. There is still a lot of work to be done before we are satisfied. During the quarter, our fixed broadband business executed well in a demanding market environment with positive customer intake.
Our Kazakh operation maintained its positive trajectory and delivered solid results in the quarter, despite increasing levels of competition. The continued work on our distribution channel strategy to further reduce churn rates in our customer base yielded positive results in the quarter. The demand for data services increased and we invested further in our 3G network to cater for our customers’ needs. Going forward, we will increase investments in Kazakhstan to further strengthen our position as the leading mobile data provider and close the coverage gap to our competitors. And I am certain that we will be successful with our Winning People & Culture.
Tele2’s operations in the Baltic region and in Croatia showed stable development in Q4 2014. The network upgrades to LTE/4G in Estonia, Latvia and Lithuania are progressing according to plan and will support our ambition to exploit the growing need for mobile data in the region. In Croatia, we secured additional frequencies in the 1,800 MHz band, making it possible for us to improve our mobile data proposition in the country.
As part of bringing the strategy alive, we also launched an initiative within Step Change our Productivity, dubbed the Challenger program. The program will focus on productivity increases by taking a holistic look at the organization. Productivity increases will be found by simplifying the way Tele2 interacts with customers and by consolidating and transforming the organization to work even smarter and better. The program will build over the next 3 years and reap full benefits of SEK 1 billion per annum starting in 2018. The investment required will be SEK 1 billion, phased over the next 3 years.
In the quarter, the negotiation process with the Norwegian competition authority on our sale of Tele2 Norway continued. Our view on closing the deal by Q1 2015 is unchanged. Looking forward, we remain confident in our strategy and our ability to monetize a great customer experience throughout our footprint. Sweden will maintain its leadership in 4G/LTE, and we will take our learnings from Sweden to the Baltics and of course the Netherlands, as we plan for and fully exploit LTE/4G across our footprint. 2015 will be another exiting year of investments in our future 'Rockets' of Kazakhstan and the Netherlands, supported by continued strength in Sweden and the Baltics.
President and CEO