CEO WORD, Q1 2015


"Our ability to monetize our customers’ increasing demand for mobile data has proven successful, resulting in 10 percent growth in mobile end user service revenue. LTE/4G services is the catalyst that enables a mobile lifestyle and we have served our customers with additional attractive offers and improved quality during the quarter, providing them with even greater value and experience than before."

The first quarter 2015 showed good progress towards our goals of sustainable, profitable growth via data monetization. Our ability to monetize our customers’ increasing demand for mobile data has proven successful, resulting in 10 percent growth in mobile end user service revenue. LTE/4G services is the catalyst that enables a mobile lifestyle and we have served our customers with additional attractive offers and improved quality during the quarter, providing them with even greater value and experience than before.

Sweden continued to spearhead the mobile data revolution and mobile end-user service revenue increased by 5 percent as the usage of our mobile data service continued to expand. In the quarter yet another step of our Value Champion strategy was introduced through “Big Buckets” and the initial results have been very encouraging. Our customers’ willingness to buy more data has been higher and their perception of the service offerings has been more positive than expected. This is definitely the right way forward.

In the Netherlands it is full speed ahead on the LTE/4G network rollout and we officially launched our first mobile service on our own network on January 1. Several hundred existing mobile customers were invited to test the network and share their experiences enabling us to learn and further improve the network performance ahead of full scale launch. The consumer mobile customer base continued to show solid growth and the demand for mobile data is surging. However, as we still have a large dependency on our MVNO relationship, the success of mobile data is temporarily increasing our operational expenditures, which is having a negative EBITDA impact. In the fixed broadband segment our operational performance was impacted by a larger dependency on off net products. Hence, we are exploring ways to offer our customers faster speed and improved services in the future.

Throughout Q1 2015, Tele2 Kazakhstan continued its focus on strengthening its market position and on increasing quality of the customer intake. This yielded solid results as we reached a record high total customer base and mobile end-user service revenue growth accelerated in the quarter. Tele2 successfully introduced new bucket priced offers to maintain its price leadership position as the competitive environment, with an increasing trend towards voice and data bundle offerings, remains tough. Going forward, we will continue our investments in Kazakhstan to further strengthen our position as the leading mobile data provider and close the coverage gap to our competitors.

Tele2’s operations in the Baltic region and in Croatia maintained a stable development in Q1 2015. 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 announced a network swap project, making it possible for us to improve our geographic coverage and mobile data proposition in the country. In Q1 2015, the sale of Tele2 Norway was completed after approval by regulatory authorities. The sale price amounted to SEK 4.5 billion leading to cash proceeds of SEK 4.9 billion and a capital gain of SEK 1.7 billion.

The Challenger program is ramping up fast and we have more than 20 initiatives which are all making good progress. The program will focus on productivity increases, reviewing and transforming our end to end processes and activities across the Group. 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 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 3 years.

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 continue to 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 exciting year of investments in our future ‘Rockets’ of Kazakhstan, Croatia and the Netherlands, supported by continued strength in Sweden and the Baltics.

 

Mats Granryd
President and CEO