18-07-2025
Tele2 AB (TLTZF) Q2 2025 Earnings Call Highlights: Strong EBITDAaL Growth Amid Market Challenges
End User Service Revenue Growth: 2% in Q2, driven by strong growth in the Baltics and Sweden.
Underlying EBITDAaL Growth: 15% in Q2, attributed to workforce reductions and cost savings.
Equity Free Cash Flow: SEK 1.6 billion in Q2, following SEK 2 billion in Q1.
CapEx-to-Sales Ratio: Increased from 11.5% in Q1 to 12.4% in Q2.
Leverage: Remained unchanged at 2.2 times despite dividend payments.
Sweden Business Revenue Growth: 4% in Q2, with growth across all main product lines.
Baltics End User Service Revenue Growth: 7% in Q2, with a 20% growth in underlying EBITDAaL.
Mobile Postpaid Net Additions: 10,000 RGUs in Q2.
Fixed Broadband ASPU Growth: 2% due to price adjustments.
Total Revenue Growth: 1% organically in Q2.
Net Financial Items: Decreased year-on-year due to reduced interest rates.
Economic Net Debt: SEK 24.7 billion at the end of Q2, reduced by SEK 1.5 billion compared to end of 2024.
2025 Guidance Update: Raised underlying EBITDAaL growth to slightly above 10% organic growth.
Warning! GuruFocus has detected 4 Warning Signs with TGSGY.
Release Date: July 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Tele2 AB (TLTZF) achieved a 15% growth in underlying EBITDAaL in Q2 2025, driven by workforce reductions and cost savings.
The company reported a strong equity free cash flow of SEK1.6 billion in Q2, following SEK2 billion in Q1.
Tele2 AB (TLTZF) raised its full-year EBITDAaL guidance to slightly above 10% organic growth.
The company launched a new flexible TV and streaming portfolio in Sweden, which was well-received by customers.
Tele2 AB (TLTZF) was named Europe's climate leader by Financial Times and Sweden's most sustainable company for the second year in a row.
Negative Points
End-user service revenue in Sweden was flat in Q2, impacted by the decommissioning of Boxer TV.
The company anticipates Boxer revenue to be roughly SEK225 million below 2024, with a negative impact on EBITDAaL.
Fixed broadband in Sweden saw a decline of 1,000 RGUs in Q2 due to aggressive competition in open fiber networks.
The Swedish market faces macroeconomic headwinds and weak consumer confidence, which could impact future growth.
Tele2 AB (TLTZF) expects around SEK500 million in restructuring costs for 2025 related to ongoing transformation efforts.
Q & A Highlights
Q: Can you provide more color on the underlying Swedish service revenue growth, excluding the impacts of Boxer and IFRS adjustments? A: Jean-Marc Harion, CEO, explained that the underlying Swedish service revenue growth is around 2.5% to 3% when stripping out the Boxer and IFRS impacts. Peter Landgren, CFO, added that the Boxer impact is roughly 2 percentage points, and the IFRS impact will lessen later in the year.
Q: How much of the cost-cutting success is due to accelerating existing plans versus finding new efficiencies? A: Jean-Marc Harion, CEO, stated that the cost-cutting is primarily due to accelerating existing plans, particularly workforce reductions. They have reduced the workforce by 500 positions and are now focusing on specific areas for further efficiency improvements.
Q: Can you update us on the progress of renegotiating the 350 contracts and the potential impact on costs? A: Jean-Marc Harion, CEO, mentioned that they have reopened almost half of the largest 350 contracts, focusing on the lowest hanging fruits. The renegotiations will continue to have a positive impact on costs over the next 12 to 18 months.
Q: With strong EBITDAaL growth in H1, why is the full-year guidance only slightly above 10%? A: Peter Landgren, CFO, explained that while they are confident in the benefits from transformation activities, they remain cautious due to macroeconomic headwinds and potential reinvestments needed for growth, such as 5G rollout and marketing.
Q: What are the plans for rejuvenating the top line, especially in the Swedish Consumer business? A: Jean-Marc Harion, CEO, and Petras Masiulis, CEO of Baltics, highlighted initiatives like the relaunch of the Frank brand, new flexible TV and streaming portfolios, and investments in 5G. They aim to reduce dependency on third-party channels and enhance direct customer interactions.
Q: How is the B2B segment performing, and what drives its growth? A: Stefan Trampus, EVP of Tele2 B2B, noted that B2B has seen 16 consecutive quarters of growth, driven by mobile IoT, cloud PBX, and networking solutions. Growth is strong in the SME and public sectors, despite challenges in the micro segment due to economic conditions.
Q: Can you comment on the impact of Swedish broadband regulation on Tele2? A: Jean-Marc Harion, CEO, stated that while regulation is moving in the right direction, it is not fast enough. They advocate for open access to single dwelling units at fair wholesale prices and are concerned about increasing access fees by landlord associations.
Q: What is the outlook for IoT growth in the B2B segment? A: Stefan Trampus, EVP of Tele2 B2B, explained that IoT growth is expected to continue, supported by a strong market position and increasing connectivity. The growth rate may moderate as the base expands, but they remain optimistic about future prospects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
