Tele2 sets merger performance targets
February 13, 2019
Tele2 has increased its dividend with the proceeds from selling activities in the Netherlands and Kazakhstan. The company also increased its target for synergies from the merger with Com Hem in Sweden and set new mid-term targets, of low-single digit growth in end-user service revenue and in adjusted EBITDA.
Pro forma results for 2018 showed end-user service revenue was flat at SEK 21.4 billion (€518m), and Tele2 expects the same in 2019 as it rolls out “revenue growth enhancing” measures. Adjusted EBITDA met the target last year, up 5 per cent to SEK 9 billion, and Tele2 forecast a similar performance this year.
Improving revenue growth in the coming years is expected to come from cross- and up-selling at Com Hem, based around a ‘more for more’ strategy. Tele2 also improved its target for synergies from the merger closed in November 2018. It now targets a total of SEK 1.35 billion, up from the SEK 900 million first announced. The new target includes SEK 900 million in cost synergies to be achieved in three years, up from SEK 450 million in five years.
For the fourth quarter, Tele2 reported pro forma revenues from continuing operations up 3 per cent to SEK 7.8 billion, as growth in the Baltics offset a small drop in Sweden. Mobile service revenue rose 3 per cent to SEK 3 billion, while fixed revenues were down 2 per cent to SEK 1.9 billion. Adjusted EBITDA improved 11 per cent year-on-year to SEK 2.22 billion and was up 4 per cent excluding one-time items.
CEO Anders Nilsson commented: “In Q4 the transformation of the Group which was initiated in the beginning of 2018 was concluded through the approval of the Dutch merger, conclusion of the merger with Com Hem and the exercise of the put option in Kazakhstan. All this paving the way for the next step in Tele2’s evolution and immediately following the merger with Com Hem we took the first step towards becoming an integrated operator through the launch of FMC offers in Sweden. The restructuring process has started with a 100 per cent upgrade to the cost reduction target, to be realised faster than originally expected. Both Tele2 and Com Hem delivered on full-year guidance and we now announce guidance for 2019 and the mid-term for the combined company.”