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UPDATE 2-Tele2 Q1 profit above expectations, share price jumps
April 24, 2017 / 6:19 AM / 8 months ago

UPDATE 2-Tele2 Q1 profit above expectations, share price jumps

(Adds CEO, analyst comments, share price)

April 24 (Reuters) - Swedish telecom operator Tele2 on Monday reported clearly higher core profit than expected and said it had lower expansion costs in the Netherlands as customer intake was held back by price competition.

* Tele2 shares rise as much as 6.0 pct in early trade

* Q1 net sales of SEK 7,875 (6,446) million and EBITDA of SEK 1,723 (1,226) million

* Reuters poll: Q1 EBITDA seen at SEK 1,434 million, sales at 7,682 million

* “Our ambitions to the Netherlands remain,” CEO Allison Kirkby told Reuters

* Tele2 still aims for EBITDA break-even in 2017 in the Netherlands, Kirkby said, adding its Dutch mobile business will still be loss-making

* Co. sticks to its ambition of 20 percent mobile market share in the Netherlands vs currently around 6 percent, but says has no forecast for when it will be achieved

* “EBITDA was very strong in the first quarter, but as Tele2 keeps its full-year guidance, I think there will be limited upward adjustments of estimates (by analysts),” said Swedbank analyst Stefan Olsson

* Says the Dutch market was characterized by downward mobile price movements by its competitors and by ongoing changes in regulations impacting handset sales

* Says in terms of customer intake in the Netherlands, Tele2 had a transitional quarter resulting in lower expansion costs

* Says EBITDA in the Netherlands was positively affected by SEK 95 (73) million, including a revaluation of handset receivables which had a positive effect on net sales of SEK 53 million

* Says in the Netherlands it experienced lower customer intake as competitive pressure increased and new regulatory demands came in to play

* Says reported mobile net customer intake in the Netherlands of 16,000 included a one-time clean-out of 24,000 customers. In Q1 2016 mobile customer net intake amounted to 31,000

* Kirkby said its underlying Dutch customer net intake should be around 50,000 to 60,000 per quarter, vs about 40,000 in Q1

* EBITDA in the Netherlands was 151 million SEK vs a loss of 31 million SEK in Q1 2016

* Says 2017 financial guidance is unchanged

* Says much of growth initiatives and infrastructure investments for 2017 lie ahead of us, and revenues and costs will be negatively affected by the new roaming regulation in the second half of the year. Says 2017 full year guidance reflects these factors

* Says increase of Q1 EBITDA compared to last year is mainly related to the inclusion of TDC in Sweden as well as higher profitability levels in the Netherlands and Kazakhstan

* Says the main trends and pricing levels in the Swedish mobile market were stable from the previous quarter and competition among price-oriented brands remained intensive

* Says the integration of B2B-player TDC Sweden developed according to plan

* Says in Sweden, mobile end-user service revenue increased by 5 percent like-for-like driven by continued data growth, migration of customers to higher ASPU bundles, and a strengthening of our position in the enterprise segment Source text for Eikon: Further company coverage: (Reporting By Olof Swahnberg)

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