CEO Word Annual Report 2019

2019 has been a transformative year as we finished the integration of Com Hem and set Tele2 up for its journey to become the smartest telco in the world. We completed the transactions in Kazakhstan and the Netherlands, changing the profile of the Tele2 Group to focus on our core Baltic Sea footprint where we have the scale and market position to drive sustainable growth. With a strong foundation in the Baltics, a clear focus on fixed‑ mobile‑convergence in Sweden and a new business transformation pro‑ gram we can now execute on our goal to return to growth.

In 2019 Tele2 underwent significant changes, laying the foundation for our new vision to turn Tele2 into the smartest telco in the world and deliver growth while operating a more lean and efficient organization. The merger with Com Hem allowed us to launch a completely new strategy in the Swedish consumer market as we added fixed services to our toolbox. We launched the fixed-mobile-convergence (FMC) more-for-more strategy and managed to get 219,000 customers on FMC-benefits by the end of the year, representing about three quarters of the overlapping customer base. We carried out a major rebranding campaign of the Tele2 brand, lifting it into a premium position in the market. Following this campaign, which was the most well received marketing campaign in Tele2’s history, we introduced new Tele2 family offers and implemented frontbook price adjustment on Tele2. We launched a new mobile brand, Com Hem Mobile, and we are happy with the progress so far. In fact, we saw great momentum across all our mobile brands, leading to the first full-year positive net intake of mobile subscribers in four years. While the Swedish B2B market remains challenging, we made efforts in 2019 to set us up for a future turnaround. We have separated the Large Enterprise and SME units for a more efficient and focused setup. As we see SME as an area where Tele2 is yet to reach its full potential, we put a lot of effort in developing our capabilities there. We end the year as a stronger challenger within SME as we have built up our sales capabilities, revamped the mobile portfolio and launched FMC offers. The Baltics continued its great performance and we finally saw a turnaround in Estonia with end-user service revenue growth for the full year. We also took a step to strengthen our network position by entering a network sharing agreement in Latvia and Lithuania, using the knowledge we have from many years of successful network sharing in Sweden.

Launching the next phase of business transformation


With a more focused geographical footprint and the Com Hem integration completed we can now run Tele2 in a more efficient way. We changed the organizational structure to better reflect the current asset portfolio and strategy, shrinking the group structure and setting Tele2 up as a flatter organization.
With all this progress we have completed phase one of the Tele2 transformation, turning Tele2 into an integrated operator. This enables us to begin the next phase which starts with our new vision to become the smartest telco in the world, creating a society of unlimited possibilities. For us this means radical simplification and customer focus. It means doing things simpler within a flat and fast organization, always with a focus on simplification and delivering value for our customers. Everyone should have a clear mandate and accountability, within a fact-based and performance-driven operation. This mindset allows us to quickly adapt to the world around us, and continously modernize our operations. It also means working with distinctly positioned leading brands, providing our customers with smart combined offerings for mobile connectivity, broadband, and next generation TV and play services, covering the entire household and being an outstanding partner to businesses and the public sector. We believe that this vision and the new governance model will drive positive change over the next few years as we launch a new business transformation program which is expected to reduce opex by at least SEK 1 billion over the next three years. While this transformation will result in a significant reduction of opex, that is not the goal in itself. We aim to operate smarter and reduce complexity which in the end means serving the customer in the best way possible while operating an efficient and fast organization.

Increasing focus on sustainability

This has been a year where we have seen a continued increase in the importance of sustainability for society as a whole. For us as a company we can clearly see how sustainability is ever higher on the agenda of our customers, investors and employees. This means that sustainability must be a foundation for our business. A focus for our efforts during the year has been to complete the integration of the sustainability efforts of Tele2 and Com Hem, following our merger. Our goal with this integration has been to take the best parts of both companies’ previous work, and leverage this to ensure the best possible impact. Our focus areas during the year have been: Environment, Ethics & Compliance, Privacy & Integrity, Child Protection and Diversity & Inclusion. These have remained the same as the previous year, as we still consider these to be the most material issues for us to work with. Among the activities that we have undertaken during the year, there are a few that we would like to highlight. As a part of our focus area Environment we have started reporting our carbon footprint to CDP, committed to setting science-based targets, taken the lead role in a new EU research project called AI4Green, and updated our environmental policy. In our focus area Ethics & Compliance we have produced an exit report from Kazakhstan, highlighting the transparency which has been a guiding principle during our presence in this market. We have also launched new anti-corruption and fair competition policies, as well as an updated version of our whistleblower policy. Improving our gender balance is a key activity for us as a company, emphasized by our focus area Diversity & Inclusion. During the year we have committed to becoming a gender balanced company by 2023 on three levels: executive management team, managers, and all employees. To further this commitment, we have introduced a principle in our Swedish organization we call 2+1, meaning that we should strive to recruit two women for each man we hire. 2019 has been a year where we have continued to receive recognition for the work that we do within sustainability. We have maintained our MSCI AAA-rating which puts us in the top 9 percent globally in the telecommunication services industry, and we have improved our RobecoSAM score. We were ranked as the 2nd best Swedish company and 35th in the world in Equileap’s global gender equality report. In the bi-annual “Walking the Talk” report by Misum at the Stockholm School of Economics we were given the highest “walk” score among all Swedish technology and telecommunications companies, praising our sustainability progress. I am proud of the progress that we have made in 2019, and pleased that we are recognized for the hard work that we do.

Looking forward


Thanks to the hard work and dedication of the Tele2 employees we have achieved a lot in just one year, completing phase one of Tele2’s transformation and turning the company into an integrated operator. With the groundwork done in 2019 we look forward to executing on the next phase of business transformation, turning Tele2 into the smartest telco in the world.

 

Anders Nilsson President and CEO