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Regulatory press release Tele2 Group Oct 20 2004, 6:00 AM CET


New York and Stockholm - Wednesday, October 20, 2004 - Tele2 AB ("Tele2", "the Group") (Nasdaq Stock Market: TLTOA and TLTOB and Stockholmsbörsen: TEL2A and TEL2B), the leading and profitable alternative pan-European telecom operator, today announced its consolidated results for the third quarter ended September 30, 2004.
  • Operating revenue for the first nine months increased by 17% to MSEK 31,803 (27,255)
  • Profit after tax for the first nine months increased by 28% to MSEK 1,093 (854)
  • Earnings per share after tax for the first nine months increased to SEK 7.39 (5.78)
  • Profit before tax in Q3 amounted to MSEK 764 (685), our best-ever
  • Strong improvement in profitability in Central Europe, with an EBITDA margin increasing to 9% (-12%)

    Lars-Johan Jarnheimer, President and CEO of Tele2 AB commented:

    "We delivered our highest-ever profit before taxes in the quarter. In the first nine months we achieved revenue growth of 17%, while increasing our profit after tax by 28% and producing a cash flow after CAPEX of SEK 3.6 billion. This is a strong financial performance.

    In Southern Europe and the Netherlands we saw an increase in churn during the quarter, a disappointment to us. In our other markets, our overall churn levels were stable, and Central Europe in particular was pleasing for us on the upside, in terms of both customer intake and earnings. The main factor in the increased churn in Southern Europe and the Netherlands has been the high level of marketing activity and aggressive win-back campaigns from the incumbents, which continued throughout the summer months. In these particular markets, we have already taken steps to counter this increased churn and the initial signs for the fourth quarter are encouraging. In the first two weeks of October we have already seen a net increase in Southern Europe, signifying that our efforts have the desired impact. In addition, the gradual introduction of wholesale line rental in Europe will have a positive impact on our churn levels.

    In the Nordic market area, during the third quarter, we have seen a stabilization in Swedish mobile margins, despite a continued competitive environment. We now have started marketing wholesale line rental in Sweden and our first customers will be transferred by the end of November, which based on our experiences in Denmark and Norway will significantly reduce churn.
    In the Baltic & Russia market area we achieved a strong customer intake, particularly in Russia. The Central Europe market area continued its positive progression with another large quarterly customer intake and with both revenues and EBITDA developing well.

    During the quarter we announced our intention to acquire Song Networks. This acquisition, as I said at the time, is entirely consistent with our strategy of firstly building a customer base and then, if it makes sense, we may integrate backwards to lower costs. The acquisition of UTA, announced last week, is again entirely aligned with this strategy.

    Our focus, which has proven to be highly successful, continues to be on low customer acquisition cost, churn management and operational cost control."

    Lars-Johan Jarnheimer, President and CEO, Tele2 AB
    Telephone: + 46 8 562 640 00

    Håkan Zadler, CFO, Tele2 AB
    Telephone: + 46 8 562 640 00

    Dwayne Taylor, Investor enquiries
    Telephone: + 44 20 7321 5038

    Lena Krauss, Investor enquiries
    Telephone: + 46 8 562 000 45

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    Tele2 is Europe's leading and profitable alternative telecom operator. Tele2 always strives to offer the market's best prices. With our unique values, we provide cheap and simple telecom for all Europeans every day. We have close to 26 million customers in 24 countries. We offer products and services in fixed and mobile telephony, Internet access, data networks, cable TV and content services. Our main competitors are the former government monopolies. Tele2 was founded in 1993 by Jan Stenbeck and has been listed on Stockholmsbörsen since 1996. The share has also been listed on Nasdaq since 1997. In 2003 we had operating revenue of SEK 36,911 million and reported a profit of SEK 5,710 million (EBITDA).