CEO Word, Q3 2014

"We remain confident in our strategy and our ability to monetize a great customer experience throughout our footprint."

Q3 2014 was a high quality quarter with strong results across the board, resulting from our ability to monetize a great customer experience from our excellent mobile network. Our persistent focus on LTE/4G is now paying off, with strong top and bottom line progress in the quarter. This trend has been very clear in Sweden, and is now also apparent in other parts of our footprint. As a result, our mobile end-user service revenue grew by 8 percent in combination with strong operational performance.

LTE/4G is surely a game changer, even though we still are in the early stage of monetizing mobile data. Today, our major opportunity is to ensure that we keep delivering services that will enable and support our customers’ aspiration for a wireless lifestyle and foster further development of the current trend. Therefore we will relentlessly pursue our work to move the Tele2 brand from Discounter to Value Champion.

Sweden was the strongest performer in the quarter, leading the way for the rest of the Group. Mobile end-user service revenue increased by 6 percent as the usage of our mobile data service surged. I am particularly pleased with the revenue growth filtering through to better EBITDA contribution with a margin of 33 percent. Going forward we will maintain our investment efforts into what is already today the world’s best LTE/4G network, as we see a strong correlation between the growing demand of mobile data services and great mobile networks.

In the Netherlands our network roll-out gathered further momentum in the quarter, delivering improved population coverage through better processes and close relationships with our vendors. The mobile business kept its pace during the quarter. However, better distribution and our own mobile network are crucial to improving performance. 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. We continued to work on our distribution channel strategy, as further improvements are needed to reduce churn in our customer base. The demand for data services is growing fast. Our investments in the country will contribute to strengthening our position within 3G services and close the coverage gap between us and our competitors to better support our customers’ needs.

Tele2’s operations in the Baltic region and in Croatia showed very robust improvement in Q3 2014. It is always gratifying to see hard work paying off. Within this group of well performing companies, I once again need to highlight Croatia as a phenomenal comeback kid that has moved from a struggling business to become a real growth story.

To proactively drive the process to get clearance from the competition authorities on our sale of Tele2 Norway, we announced an agreement on frequency lease and sale of infrastructure to the third largest mobile operator in the country. As a result, our view on getting the deal done by Q1 2015, is unchanged.

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


Mats Granryd
President and CEO