2013 was a year of contrasts. The sale of our Russian operations was one highlight that proved to be a very good deal, satisfying all parties and generating great return on our invested capital in Russia. On the other hand, the outcome of the Norwegian spectrum auction was a great disappointment.
During the year, we saw the stabilisation of the market in Sweden as customers moved from a pay as you go to bucket price plans. Tele2 is leading this transition, not only towards new pricing plans but also to a more data centric future. Furthermore, Comviq launched the EU fixed price, challenging the frequently debated roaming tariffs. Operationally Tele2 Sweden is doing well, delivering an end-user service revenue growth of 3 percent.
In the Netherlands we have worked to maintain solid consumer fixed broadband operations, to keep growing market share within the business segment, and increase momentum within mobile operations. Our mobile network roll-out is proceeding according to plan with several hundred sites ready to start carrying 4G traffic.
Our Norwegian operations performed well during 2013 delivering on network roll-out and on-net traffic targets as well as customer experience. Despite a changed game plan, our commercial efforts remain intact, and we believe that the current set-up allows us to develop a profitable business.
Tele2 Kazakhstan has been concentrating on network roll-out and customer management. The network team rolled out almost 600 new sites last year. Soon we will have the same population coverage as our competitors. Concerning customer management, we changed commission structure in Q3 2013 to improve the quality of the customer base, which resulted in higher ARPU levels in the last quarter. Additionally, the business achieved an important milestone by breaking even on EBITDA in December.
The picture in our Baltic operations was mixed. Tele2 Estonia experienced a very tough year, affected by interconnect cuts and increased competition. On the other hand, our Latvian and Lithuanian operations kept up the pace despite maintained competition pressure. Lithuania continued to outperform the market and upheld its number one position.
A new strategy and leadership team contributed to a promising turn-around in Croatia with positive EBITDA and intake. Hopefully, this marks the beginning of a steady value-creation trend in the country.
Our German and Austrian operations have been performing according to our expectations in the fixed services. In 2013, Tele2 Germany also invested in mobile services. Tele2 Germany is now the lightest of MVNOs targeting a more mature segment with a predominant interest in voice services. If this proves successful, we may scale up our ambitions in other market areas.
Despite a more difficult operational environment, Tele2 demonstrated again in 2013 that it is one of the fastest growing operators in its industry.
Going into 2014, we will continue to challenge
In 2014, Tele2 will have a busy agenda, as we will carry out more investments in network roll-outs in several countries simultaneously, and further position ourselves as a leader within the field of mobile data.
We will see continued price competition and price innovation by our competitors in a bid to acquire share in an increasingly mature market. On the regulatory front, the digital single market will be debated and also result in more activity from all operators in Europe. More specifically, roaming, net neutrality and in-market consolidation are hot topics. In that respect, our stance is clear: we are seeking future regulation that enables a level playing field within the whole ICT sector. It should be stable (flip-flopping in the current EU roaming regulation creates uncertainty), and future proof (for instance, we cannot have a net neutrality regulation that prevents innovation in the ICT sector).
Driving results through operational excellence
In 2014, Tele2 will maintain its strategic direction with a stronger focus on mobile services complemented with fixed line services in key markets.
Understanding our customers and identifying their needs will remain key to “delivering value”. In 2013, our customer satisfaction results were very close to world-class. And yet, we want the customer experience to be further improved in all our touch points, honesty and transparency being our watchwords.
In that process, innovation will be of paramount importance. We invested in a new IT platform in 2013. Now that it has been delivered, it is time to capitalize on these tools. Brand tracking, data mining and analytics will help us to better read the market and understand customer trends. More accurate and better information about our customers’ expectations will in time lead us to offer more innovative pricing and packaging, more quickly than our competitors. We will also concentrate on doing the right things, meaning delivering services that give money in return.
Doing things the right way is equally important. The cost side of the equation underpins our capability to achieve scale and efficiency. We will pursue joint ventures, try to share as much cost as possible, and be smart in the way we run our operations. Scale and efficiency will enable us to sustain our profitability.
Lastly, we will grow from the core. We will seize the opportunities presented by in-market consolidation. A light version consists in sharing network as much as possible to reduce costs and remain competitive. In my view, it is really important to be big where we are. The convergence of certain fixed services with our mobile offering will also allow us to gain economies of scale in countries where we are present.
keeping up our challenger spirit
Sustainability and Corporate Responsibility mean two things for us. First, it means being the best telecom operator we could possibly be by providing our customers with attractive products and offerings that grant them access to society’s full range of services and the possibility of communication. Secondly, we will do good and do no harm, honouring transparency and fulfilling the company’s responsibility to protect human rights as defined by the United Nations in the best possible way. This is of utmost importance to maintain our customers’ trust and generate maximum shareholder value today, tomorrow and in the future. On this journey, we follow political and macroeconomic trends which could influence performance and delivery but we keep our line when it comes to risk appetite, culture, values and challenger spirit. We, and our owners, have tough expectations on ourselves for the next coming years but, as we see it, it is the highway or no way.
2014 will be a year when we remove uncertainty around Tele2. The Netherlands and Kazakhstan need to maintain their momentum within mobile. Tele2 Sweden will cement its position as the leader in mobile data services. The situation in Norway will be addressed in a way that maximizes value for shareholders. An overarching goal for all our operations, big or small, is to continue the hard work of striving to always be the trusted partner of consumers and businesses.
Our people make the difference
Tele2’s employees work harder to create value for our customers. They are able to deliver even when the boat is rocking. Our people think fast and move fast, at the pace of an industry whose customers’ demands change constantly. They challenge outdated mindsets and rewrite the rules. They take bold initiatives to get results. They want things to be great - because to Tele2, good enough isn’t good enough. Indeed, it is our people who make Tele2 so unique. They represent the strongest pillar of our company for our long-term success, and I want to thank them for yet another year of their unwavering dedication. Our people and culture can never be copied and that secures Tele2’s future of growth and innovation.
Read more in our Annual Report 2014
President and CEO