Tele2 AB announces strong group customer intake - Tele2

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Apr 25, 2001 8:07 AM CET

Tele2 AB announces strong group customer intake

TELE2 AB ANNOUNCES STRONG GROUP CUSTOMER INTAKE, AND SIGNIFICANT IMPROVEMENT IN EBITDA MARGINS IN ALL FIXED LINE OPERATIONS, MAKING THE GROUP EBITDA POSITIVE IN THE FIRST QUARTER OF 2001 * 59% Annualized increase in Proforma Operating Revenue * 140% Annualized increase in Group Operating Revenue * Group EBITDA Positive for first time since SEC Acquisition, a MSEK 358 improvement Q1/Q4 * Increasing profitability per subscriber across Continental Europe * 14% Annualized increase in EBITDA for Tele2 Sweden * Tele2's Mobile Operations in Sweden reported 2.2 million subscribers and 53% EBITDA margins * 53% Annualized increase in Proforma Subscribers to 12.4 million * Baltic and Eastern Europe increased EBITDA from MSEK -23 in Q4 to MSEK 59 in Q1 New York and Stockholm - April 25, 2001 - Tele2 AB (formerly NetCom AB, "Tele2", "the Group") (Nasdaq Stock Market: TLTO), the leading alternative pan-European telecommunications company, today announced its consolidated results for the first quarter 2001. Tele2 Financial Summary SEK millions First Fourth First Quarter Quarter Quarter 2001 2000 2000 Operating Revenue 5,619 4,949 2,346 Operating Profit (Loss) before depreciation and 2 -356 767 amortization (i) (i) EBITDA Lars-Johan Jarnheimer, President and CEO of Tele2 AB stated: "Tele2 is now the largest pan-European telecoms brand, with more than 12.4 million subscribers covering 21 countries. The strong start to the year reflects the improving profitability of our mobile and fixed telephony operations in the Swedish market and in particular our ability to manage sustained margins of over 50% in our mobile operations. In our operations in Central and Southern Europe, as well as Luxembourg, our subscriber intake has been strong, driving revenue growth, EBITDA losses have been reduced and margins improved. We remain focused on customer acquisition, churn management and cost control and believe that margin improvements will continue to be made across the Group in 2001." FINANCIAL AND OPERATING HIGHLIGHTS · · Tele2's operating revenues were MSEK 5,619 for the three months ended March 31, 2001, an increase of 59% over the MSEK 3,531 reported proforma in the same period last year and Group Operating revenues consolidated increased by 140% over the same period · The total number of subscribers for the Group at March 31, 2001 was 12.4 million, an increase of 53% proforma over the same period of 2000. Tele2 Sweden's mobile operations marketed under the brand name Comviq reported 2.2 million subscribers · Nordic operating revenues increased by 18% to MSEK 2,921 and EBITDA increased to MSEK 784 · Tele2 Sweden's operating revenues were MSEK 2,140 for the three months ended March 31, 2001, an increase of 16% over the same period last year. EBITDA increased by 14% to MSEK 835 over the same period, and increasing minutes of usage (MOU) up more than 7% · EBITDA at the Group level improved from MSEK -356 in the fourth quarter of 2000 to MSEK 2 in the first quarter of 2001, representing a quarterly improvement of MSEK 358 · Tele2 Sweden's mobile telephony business reported stable monthly average revenue per subscriber (ARPU) of SEK 201, inclusive of postpaid and prepaid customers, the later represents 60% of total mobile subscribers · Tele2's three operating market areas, Central Europe, Southern Europe and Luxembourg, reported the following: · Central Europe reported operating revenues of MSEK 1,230 (+84%), Southern Europe MSEK 1,204 (+137%) and Luxembourg MSEK 167 (+42%) · EBITDA losses contained and improvement in margins in Q1 increasing profitability per subscriber · Strong Q1 ARPU's for Central Europe of SEK 149 compared to SEK 121 for the same period of 2000 · Strong Q1 ARPU's for Southern Europe of SEK 126 compared to SEK 113 for the same period of 2000 · Tele2 France reported approximately 2.2 million customers and 50% market share of customers leaving France Telecom · Launched fixed telephony services in Spain · Tele2 has an unrivalled position in UMTS, with license awards in Sweden, Finland, Norway and most recently in Liechtenstein. The UMTS system in Sweden will be constructed in partnership with Telia. · Effective February 16, 2001, NetCom AB changed its name to Tele2 AB to reflect the pan European strength of its Tele2 brand. · FINANCIAL RESULTS (The figures shown in parenthesis correspond to the comparable periods in 2000 and all negative amounts are distinguished with a minus sign). As of January 1, 2001 and thereafter, Tele2 will report results by six market areas Proforma results for the three months ended March 31, 2001 Operating revenue proforma increased by 59% to MSEK 5,619 (3,531). Group operating revenue was MSEK 5,619 (2,346) an increase of 140%. There has been strong revenue growth in mobile telephony and fixed telephony operations in particular Tele2's operations in the Baltics and Eastern Europe and Central Europe. Operating revenue for Tele2 Sweden was MSEK 2,140, an increase of 16% with an encouraging 22% increase in mobile telephony in Tele2 Sweden. Operating profit before depreciation and amortization (EBITDA) was MSEK 2 (246). EBITDA at the Group level improved from MSEK -356 in the fourth quarter of 2000 compared to MSEK 2 in the first quarter of 2001, representing a quarterly improvement of MSEK 358. Group EBITDA margins improved from -7% in the fourth quarter to 0% in the first quarter of 2001. EBITDA for Tele2 Sweden was MSEK 835 (731), an annualized increase of 14% and an EBITDA margin of 39% (40%). EBITDA margins for Tele2 Sweden have shown consistent improvements on a quarterly basis during the previous three quarters. Operating profit (loss) after depreciation and amortization (EBIT) was MSEK -707 (-374). EBIT for Tele2 Sweden was MSEK 645 (562) an increase of 15%. Net interest expense and other financial items totaled MSEK -127 (-37). The average interest rate applied to debt outstanding was 6.2%. Profit (loss) after financial items was MSEK -867 (-412). Profit (loss) after tax was MSEK -1,036 (-554). Earnings (loss) per share was SEK -7.15 (-5.34), after dilution. Tax for the period was MSEK -171 (-143) 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 as of the three months ended March 31, 2001 were recorded as zero. Tele2's total assets at March 31, 2001 increased by 3% to MSEK 43,523 compared to MSEK 42,345 reported at December 31, 2000. OPERATIONAL REVIEW BY MARKET AREA Number of customers March 31, 2001 2000 % Proforma By Market Area Nordic 5,664,000 4,483,000 +26 Baltics and Eastern Europe 357,000 55,000 +549 Central Europe 2,811,000 1,837,000 +53 Southern Europe 3,419,000 1,646,000 +108 Luxembourg 173,000 105,000 +65 TOTAL 12,423,000 8,126,000 +53 By Business Area Fixed telephony 8,371,000 5,197,000 +61 Mobile telephony 2,773,000 1,839,000 +51 Whereof Prepaid 1,524,000 1,014,000 +50 Dial up Internet 1,279,000 1,090,000 +17 TOTAL 12,423,000 8,126,000 +53 All comparative numbers are proforma Nordic Operating revenue, MSEK 2,921 (2,465), +18% EBITDA, MSEK 784 (758), +3% The Nordic market encompasses operations in Sweden, Norway, Denmark and Finland. The Nordic market reported revenue growth across all of its core market areas. Tele2 Sweden is the main component, representing operating revenues of MSEK 2,140, an increase of 16% over the three months ended March 31, 2001. The growth in the number of mobile prepaid and contract subscribers accelerated during the quarter due to Tele2's market position as the price-leading operator. Tele2 Sweden reported 2.2 million subscribers an annualized increase of 28%. Monthly average revenue per subscriber (ARPU), inclusive of postpaid and prepaid customers, remained stable at SEK 201 compared to SEK 209 in the same period in 2000, despite the higher customer intake during the period. Minutes of usage (MOU) increased by 7.4% from 92 to 98 over the same period. Prepaid mobile customers accounted for 60% of the total mobile subscriber base and 41% of net new subscriber additions in the period. Fixed telephony customer intake in Sweden was very strong, increasing 32% 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. Denmark and Norway are predominantly fixed telephony operations, with a growing internet component and reported a total of 941,000 fixed subscribers an increase of 17% over the prior year. Tele2 Denmark recently 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 appropriate. 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 plans to launch international, long distance and Internet services to be marketed under the Tele2 brand. Baltics and Eastern Europe Operating revenue, MSEK 210 (36), +483% EBITDA, MSEK 59 (4) The Baltic and Eastern Europe market encompasses operations in the Baltics, Poland and the Czech Republic. The region reported a positive EBITDA in the first quarter of 2001 compared to an EBITDA loss of 23 in the fourth quarter of 2000. At March 31, 2001, Tele2's operations reported 357,000 gross cellular subscribers, compared to 55,000 subscribers reported in the same period of 2000, 44% of which were prepaid subscribers. SIA Tele2, is the second largest mobile telecommunications company in Latvia. Central Europe Operating revenue, MSEK 1,230 (668), +84% EBITDA, MSEK -293 (-245) The Central European market encompasses Tele2 operations in Germany, the Netherlands, Switzerland, Austria and the United Kingdom and reported a strong first quarter of EBITDA growth compared to the fourth quarter of 2000, reflecting the maturity of certain of the operations and their progress to EBITDA breakeven within the three years from operational launch. Southern Europe Operating revenue, MSEK 1,204 (507), +137% EBITDA, MSEK -397 (-254) The Southern Europe market includes Tele2 operations in France, Italy and Spain and a license in Portugal. This region had a strong first quarter 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 with a subscriber base of approximately 2.2 million. Tele2's large customer base gives it a strong foundation to negotiate with mobile network operators to secure MVNO status. Tele2 is now one of Italy's three leading private fixed line operators. In February, Tele2 launched fixed telephony services in Spain and the reaction from the market has been very good. 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 entirely pre-paid. Luxembourg Operating revenue, MSEK 167 (118), +42% EBITDA, MSEK 10 (1) 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 Liechtenstein. In Luxembourg, Tango has a 42% market share. In March, Tango launched GPRS in Luxembourg. Branded Products and Services Operating revenue, MSEK 361 (135), +167% EBITDA, MSEK -161 (-18) 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. GROUP REVIEW Tele2 Sweden At March 31, 2001, Tele2 Sweden recorded short term liabilities of MSEK 2,203, however, a refinancing is anticipated during the second quarter of 2001 and hence this sum will not become payable. Associated Companies Everyday.com Tele2 is the leading Internet service provider (ISP) in the Nordic region and Tele2's 1,279,000 Internet subscribers are being offered Everyday.com as their starting page in 11 countries. MTG publishes content on the WWW and has significant experience in the mass media, and marketing and advertising sales through TV channels, radio stations and newspapers. The Everyday.com content offering is growing continuously. The service was launched most recently in Denmark in June. Investments and Divestments Finland 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. In addition, Tele2 is offering an extremely competitive tariff structure through its pre-paid phone card offering for international and national calls. The cards are distributed through one of the major distribution chains in Finland. 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 forthcoming AGM, the Board of Kinnevik will propose 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 third quarter of 2001. Parent Company At the Parent company level, Tele2 reported operating revenue of MSEK 2 (2) and EBITDA of MSEK -12 (-16). Liquidity at March 31, 2001 and March 31, 2000 was MSEK 6 and MSEK 7 respectively. COMPANY DISCLOSURE Annual General Meeting (AGM) The AGM will be held at 1.30 pm local time on May 17, 2001 at Gamla Stans Bryggerier, Tullhus 2 in Skeppsbron, Stockholm. Second Quarter of 2001 Results The proposed date for the release of Tele2's financial and operating results for the period ended June 30, 2001 is August 6, 2001. Stockholm, April 25, 2001 President and CEO, Tele2 AB REPORT REVIEW The financial and operating results for the period ended March 31, 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 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 TLTO. CONTACTS Lars-Johan Jarnheimer Telephone: + 46 8 562 640 00 President and CEO, Tele2 AB Hakan Zadler Telephone: + 46 8 562 640 00 CFO, Tele2 AB Andrew Best Telephone: + 44 (0) 20 7321 5010 Investor enquiries Bert Willborg Telephone: +46 (0) 707 27 7022 Press enquiries Visit us at our homepage: http://www.Tele2.com CONFERENCE CALL DETAILS A conference call to discuss the results will be held at 14.00 (Swedish time) / 08.00 (New York time), on Wednesday, April 25, 2001. The dial in number is: +44 (0) 20 8240 8244 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 665 522. APPENDICES 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 Five Year Summary Notes to the Accounts ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/04/25/20010425BIT00020/bit0001.doc http://www.bit.se/bitonline/2001/04/25/20010425BIT00020/bit0002.pdf

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