TELE2 AB ANNOUNCES STRONG GROUP CUSTOMER INTAKE, AND CONTINUED
SIGNIFICANT IMPROVEMENT IN EBITDA MARGINS
· 63% Annualized increase in Pro forma Operating Revenue
· 67% Annualized increase in Q2 Pro forma Operating Revenue
· Second successive EBITDA positive quarter since SEC
Acquisition, a MSEK 349 improvement Q2/Q1
· 66% Annualized increase in Q2 EBITDA for Tele2 Sweden
· Tele2's Mobile Operations in Sweden reported 53% EBITDA margins
and close to 2.3m Subscribers, an Annualized increase of 25%
· 41% Annualized increase in Pro forma Subscribers to 12.9
· Cash flows provided by operating activities improved from MSEK
-211 in the
first quarter to MSEK 385 in the second quarter
· Baltic and Eastern Europe increased Annualized EBITDA from MSEK
3 to MSEK 117
New York and Stockholm - August 6, 2001 - Tele2 AB (formerly NetCom AB,
"Tele2", "the Group") (Nasdaq Stock Market: TLTOA and TLTOB and
Stockhomsbörsen: TEL2 A and TEL2 B), the leading alternative pan-
European telecommunications company, today announced its consolidated
results for the first half of 2001.
Tele2 Financial Summary
SEK millions 2001 2001 2000 2000
Q2 Q1 Q4 Q2
Operating Revenue 6,220 5,619 4,949 3,716
Operating Profit (Loss)
before depreciation and 351 2 -356 80
after depreciation and -375 -707 -1,006 -520
* Pro forma before the merger of Tele2 and SEC
Lars-Johan Jarnheimer, President and CEO of Tele2 AB stated:
"Tele2 is the largest pan-European telecoms brand, with more than 12.9
million subscribers covering 21 countries. The strong first half of the
year reflects both the improving profitability and strong margins of our
mobile and fixed telephony operations in the Swedish market and in
particular the improving EBITDA profitability of our operations in
Central and Southern Europe, where our subscriber intake has been
strong, driving revenue growth and EBITDA losses have been substantially
reduced. Our focus continues to be on customer acquisition, churn
management and cost control and we believe that margin improvements will
continue to be made across the Group in 2001."
FINANCIAL AND OPERATING HIGHLIGHTS
(The figures shown in parenthesis correspond to the comparable periods
in 2000 and all negative amounts are distinguished with a minus sign).
· Tele2's operating revenues were MSEK 11,839 for the six months
ended June 30, 2001, an increase of 63% over the MSEK 7,247 reported
proforma in the same period last year. Non proforma operating revenues
increased by 143% over the same period
· The total number of subscribers for the Group at June 30, 2001
was 12.9 million, an increase of 41% proforma over
the same period of 2000.
· EBITDA at the Group level improved from MSEK 2 in the first
quarter of 2001 to MSEK 351 in the second quarter of 2001, a quarterly
improvement of MSEK 349
· Cash flows provided by operating activities improved to MSEK
385 in the second quarter of 2001 from MSEK -211 in the first quarter
· Nordic operating revenues increased by 20% to MSEK 5,951 and
EBITDA increased by 8% to MSEK 1,621
· Tele2 Sweden's operating revenues were MSEK 4,332 for the six
months ended June 30, 2001, an increase of 15% over the same period last
year. EBITDA increased by 36% to MSEK 1,691 over the same period, with
increased minutes of usage (MOU), up more than 15%
· Tele2 Sweden's mobile telephony business reported stable
monthly average revenue per subscriber (ARPU) of
SEK 204 compared with SEK 210 in the same period last year, inclusive of
postpaid and prepaid customers, the later represents 61% of total mobile
· Baltic and Eastern Europe operating revenues increased to MSEK
489 (76) and EBITDA increased to MSEK 117 (3)
· Central Europe increased operating revenues to MSEK 2,701
(+109%), Southern Europe MSEK 2,619 (+147%), Luxembourg MSEK 356 (+37%)
and Branded products and services MSEK 732 (+172%). EBITDA losses
contained and improvement in margins in Q2 increasing profitability per
subscriber. Strong Q2 ARPU's for Central Europe of SEK 170 (92) and for
Southern Europe of SEK 132 (101) on a monthly basis
· Tele2 has an unrivalled position in UMTS, with license awards
in Sweden, Finland, Norway and Liechtenstein.
· In July, Tele2 announced a financing initiative to raise E1.2
billion, 5 year, amortizing senior debt facility
· In May, Tele2 announced additional acquisition of OÜ Levicom
Broadband, a fixed telephony, internet and cable TV company in Estonia,
from 19.9% to 60% with effect from July 2001
From January 1, 2001, Tele2 has reported its results by six market areas
Proforma results for the three and six months ended June 30, 2001
Operating revenue increased by 63% to MSEK 11,839. There has been strong
revenue growth in mobile telephony and fixed telephony operations in
particular in the Baltics and Eastern Europe and Central and Southern
Europe. Operating revenue improved by 11% from MSEK 5,619 in the first
quarter of 2001 compared to MSEK 6,220 in the second quarter of 2001.
Operating revenue for Tele2 Sweden was MSEK 4,332, an annualized
increase of 15% with an encouraging 23% increase in mobile telephony in
Operating profit before depreciation and amortization (EBITDA) was MSEK
353 (326). EBITDA improved from MSEK 2 in the first quarter of 2001
compared to MSEK 351 in the second quarter of 2001. EBITDA margins
improved to 6% in the second quarter compared to 0% in the first quarter
EBITDA for Tele2 Sweden was MSEK 1,691 (1,247), an annualized increase
of 36% and an EBITDA margin of 39% (33%). EBITDA margins for Tele2
Sweden have shown consistent improvements on a quarterly basis for the
Operating profit (loss) after depreciation and amortization (EBIT) was
MSEK -1,082 (-894).
EBIT improved from MSEK -707 in the first quarter of 2001 compared to
MSEK -375 in the second quarter of 2001. EBIT for Tele2 Sweden was MSEK
1,310 (905), a 45% increase.
Profit (loss) after financial items was MSEK -1,368 (-995). Net interest
expense and other financial items totaled MSEK -236 (-90). The average
interest rate applied to debt outstanding was 5.6%.
Profit (loss) after tax was MSEK -1,728 (-1,284).
Earnings (loss) per share (diluted) was SEK -11.91 (-12.37), after
Tax for the period was MSEK -363 (-290) reflecting tax payable within
the Swedish operations. Deferred tax receivables are only recorded for
losses carried forward where it is anticipated these will be used in the
near future. A cautious valuation has been made for deferred taxes from
foreign operations, which for the six months ended June 30, 2001 were
recorded as zero.
Tele2's total assets at June 30, 2001 increased by 4% to MSEK 43,859
compared to MSEK 42,345 reported at December 31, 2000.
OPERATIONAL REVIEW BY MARKET AREA
Number of customers
2001 2000 %
By Market Area
Nordic 5,744,000 4,850,000 +18
Baltics and 481,000 63,000 +66
Eastern Europe 3
Central Europe 2,815,000 2,111,000 +33
Southern Europe 3,653,000 2,028,000 +80
Luxembourg 186,000 99,000 +88
TOTAL 12,879,000 9,151,000 +41
By Business Area
Fixed telephony 8,597,000 6,004,000 +43
Mobile telephony 3,025,000 1,998,000 +51
Whereof Prepaid 1,695,000 1,098,000 +54
Dial up Internet 1,257,000 1,149,000 +9
TOTAL 12,879,000 9,151,000 +41
* Pro forma before the merger of Tele2 and SEC
Operating revenue, MSEK 5,951 (4,967), +20%
EBITDA, MSEK 1,621 (1,506), +8%
The Nordic market encompasses operations in Sweden, Norway, Denmark and
The Nordic market reported revenue growth across all of its core market
Tele2 Sweden is the main component, representing operating revenues of
MSEK 4,332, an increase of 15% over the six months ended June 30, 2000.
The growth in the number of mobile prepaid and contract subscribers
accelerated during the second quarter due to Tele2's market position as
the price-leading operator. Tele2 Sweden reported 4.4 million
subscribers an annualized increase of 24%. Monthly average revenue per
subscriber (ARPU), inclusive of postpaid and prepaid customers, remained
stable at SEK 204 compared to SEK 210 in the same period last year and
SEK 201 in the first quarter of 2001, despite the higher customer intake
during the period. Minutes of usage (MOU) increased by 9% from 105 to
114 over the same period and by 16% from 98 in the first quarter 2001.
Prepaid mobile customers accounted for 61% of the total mobile
subscriber base and 88% of net new subscriber additions for Tele2 Sweden
in the period.
Fixed telephony customer intake in Sweden was very strong, increasing
33% on an annualized basis to 1.2 million and this was reflected in
increased sales and marketing spend which reduced margins.
In January, Tele2 announced a joint venture with Telia to share the cost
of developing a UMTS network in Sweden. In June, the court upheld the
Post and Telecommunications Authority (PTS) decision concerning the
initial allocation of UMTS licenses in Sweden following an appeal
process by Telia and Telenordia, both of whom have decided not to appeal
Denmark and Norway are predominantly fixed telephony operations and
reported a total of 1.4 million subscribers. There was growth in all
areas of the business in Denmark and Norway and particularly strong
growth in Internet subscribers.
Tele2 Denmark became the first mobile virtual network operator (MVNO),
allowing the company to offer competitively priced mobile telephony
services to its existing customer base. In association with Sonofon,
Tele2 will be able to offer prepaid and ultimately post paid contracts
without the need to invest in infrastructure. Tele2 will look to
replicate MVNO status in other countries of operations where
Tele2 in Norway has an agreement with Telenor to lease network capacity
enabling Tele2Mobil to offer an equal range of network coverage. Tele2
was the first service provider to offer pre-paid cards in Norway and
Tele2Mobil has been operational since the second quarter of 2000.
Tele2 offers pre-paid international telephony services in Finland and
has launched international, long distance and Internet services marketed
under the Tele2 brand.
Baltics and Eastern Europe
Operating revenue, MSEK 489 (76), +543%
EBITDA, MSEK 117 (3)
The Baltic and Eastern Europe market encompasses operations in the
Baltics, Poland and the Czech Republic.
At June 30, 2001, Tele2's operations reported 481,000 gross subscribers,
compared to 63,000 subscribers reported in the same period of 2000, 49%
of which were prepaid subscribers.
Operating revenue, MSEK 2,701 (1,291), +109%
EBITDA, MSEK -430 (-651)
The Central European market encompasses Tele2 operations in Germany, the
Netherlands, Switzerland, Austria and the United Kingdom and reported a
strong first half of EBITDA growth compared to the second half of 2000,
reflecting the maturity of certain of the operations and their progress
to EBITDA breakeven within the three years from operational launch.
Operating revenue, MSEK 2,619 (1,060), +147%
EBITDA, MSEK -707 (-486)
The Southern Europe market includes Tele2 operations in France, Italy
and Spain and a license in Portugal. This region had a strong first half
in terms of EBITDA margin growth reflecting the improving profitability
of Tele2's operations in France and their significant subscriber base.
Tele2 entered the French market in March 1999 and has grown to become
the largest private operator in the residential sector with a subscriber
base of approximately 2.3 million. Tele2's large customer base gives it
a strong foundation to negotiate with mobile network operators to secure
Tele2 is now one of Italy's second leading private fixed line operators.
In the second quarter, Tele2 launched fixed telephony services in Spain
and by June 30, 2001, reported more than 110,000 subscribers. Tele2 aims
to be the second leading alternative operator by the year-end. The
network in Spain is IP based using CISCO switches and the offer is
Operating revenue, MSEK 356 (259), +37%
EBITDA, MSEK 9 (-8)
The Luxembourg market includes Tele2 operations in Liechtenstein,
Luxembourg and Belgium and 3C companies in all countries of operation.
Tele2 offers mobile telephony services in Liechtenstein under the Tango
brand and launched fixed telephony services under the Tele2 brand in the
second half of 2000. In March, Tele2 was awarded a UMTS license in
In Luxembourg, Tango has a 42% market share. In March, Tango launched
GPRS in Luxembourg.
Branded Products and Services
Operating revenue, MSEK 732 (269), +172%
EBITDA, MSEK -257 (-38)
Branded Products and Services includes Optimal Telecom, C3, Everyday.com
and IntelliNet in all countries of operation. The main revenue generator
within this area is Optimal Telecom and C3.
At June 30, 2001, Tele2 recorded short-term liabilities of MSEK 3,350
related to the E1.2billion refinancing announced in July and hence it is
not foreseen that this sum will become payable. Tele2 has mandated ABN
Amro, CIBC World Markets plc, ING Bank, Nordea, The Royal Bank of
Scotland and West LB to arrange a E1.2 billion, 5 year, amortizing
senior debt facility. This will replace the two existing debt
facilities, which currently exist within Tele2 Sweden and the former
Investments and Divestments
In July, Tele2 increased its stake in OÜ Levicom Broadband, which
operates fixed telephony, Internet and Cable TV services in Estonia
under the Tele2 brand, from 19.9 percent to 60 percent. This will impact
the financial results for accounting periods commencing July 2001.
Following this increase in ownership, the operations and organizational
structures of Levicom Broadband will be merged with those of Tele2 Eesti
AS, which provides mobile telephony services in Estonia under the Q and
Tele2 Mobil brands and which is 94.8 percent owned by Tele2.
Tele2 is the largest shareholder in Suomen Kolmegee OY (3G), which has
been granted one of only four nationwide licenses for a third generation
mobile telephony network in Finland. The Everyday.com portal and free
Internet services have been launched in the capital, Helsinki and
expansion will follow throughout the country.
Transcom Worldwide SA
In January, Tele2 divested its 37.45% holding (acquired through the
merger with SEC) in the call center company Transcom Worldwide SA
(Transcom) to Industriförvaltnings AB Kinnevik (Kinnevik). At its AGM,
the Board of Kinnevik proposed a dividend of Transcom shares to its
shareholders and also a public listing of Transcom. The proceeds due to
Tele2 on the sale of its interest in Transcom will be determined by the
market price of Transcom's publicly listed equity 60 days after the
market quotation day. It is therefore anticipated that a capital gain on
disposal will be recorded in the income statement in the fourth quarter
At the Parent company level, Tele2 reported operating revenue of MSEK 7
(4) and EBITDA of MSEK -25 (210). Liquidity at June 30, 2001 and
December 31, 2000 was MSEK 7 and MSEK 7 respectively.
Third Quarter of 2001 Results
The proposed date for the release of Tele2's financial and operating
results for the period ended September 30, 2001 is October 24, 2001.
Stockholm, August 6, 2001
Board of Tele2 AB
The financial and operating results for the period ended June 30, 2001
have not been subject to specific review by the Company's auditor.
Tele2 AB, (formerly NetCom AB), formed in 1993, is the leading
alternative pan-European telecommunications company offering fixed and
mobile telephony, data network and Internet services under the brands
Tele2, Tango, Comviq and Q-GSM to more than 12.8 million people in 21
countries. Tele2 operates Datametrix, which specializes in systems
integration, 3C Communications, operating public pay telephones and
public Internet services; Transac, providing billing and transaction
processing service; C³, offering co-branded pre-paid calling cards and
IntelliNet and Optimal Telecom, the price-guaranteed residential router
device. The Group offers cable television services under the Kabelvision
brand name and together with MTG, owns the Internet portal Everyday.com.
The Company is listed on the Stockholmsbörsen, under TEL2A and TEL2B,
and on the Nasdaq Stock Market under TLTOA and TLTOB.
Lars-Johan Telephone: + 46 8 562 640 00
CEO, Tele2 AB
Hakan Zadler Telephone: + 46 8 562 640 00
CFO, Tele2 AB
Andrew Best Telephone: + 44 (0) 20 7321 5022
Bert Willborg Telephone: +46 707 27 7022
Visit us at our homepage: http://www.Tele2.com
CONFERENCE CALL DETAILS
A conference call to discuss the results will be held at 15.30 (Swedish
time) / 09.30 (New York time), on Monday, August 6, 2001. The dial in
number is: +44 (0) 20 8240 8241 and participants should quote, Tele2 AB.
A live audio stream of the conference call can also be accessed at
www.Tele2.com. Please dial in / log on 10 minutes prior to the start of
the conference call to allow time for registration. An instantaneous
recording of the conference call will be available for 48 hours after
the call on +44 (0) 20 8288 4459, access code 676372.
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Cashflow Statement
Consolidated Changes in Shareholders Equity
Market Areas split by Business Areas, Proforma
Market Areas split by Business Areas, non-Proforma
Notes to the Accounts
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