Get 40% Off
💰 Buffett reveals a $6.7B stake in Chubb. Copy the full portfolio for FREE with InvestingPro’s Stock Ideas toolCopy Portfolio

UPDATE 2-Sweden's Tele2 ups targets, mulls French unit future

Published 09/17/2009, 11:38 AM
Updated 09/17/2009, 11:42 AM
TTEF
-
TEL2b
-
TGT
-

* Sets mobile ops EBITDA margin target of at least 30 pct

* Aims for bigger share of Swedish postpaid market

* Russia to be more profitable

* Shares down 2.2 percent (Adds company comment, updates share price)

By Helena Soderpalm

STOCKHOLM, Sept 17 (Reuters) - Swedish telecom firm Tele2 set a new core profit target for its mobile operations on Thursday and lifted its sights for its Russian and Swedish units.

Tele2 said that its mobile operations on networks which it owns should have an EBITDA margin in the mid-30's percent or higher over the long term.

Its two biggest markets, Sweden and Russia, had EBITDA margins of 32 percent and 40 percent respectively in the second quarter.

In Sweden, however, Tele2 said its margin would fall next year as the company looks to increase market share among premium customers.

Tele2's operations in France, Norway and Holland are on shared networks.

Tele2 also said it was considering options for Tele2 France.

"Things aren't going to continue as they are today," Henrik Ringmar, head of Western European operations said, referring to the French unit.

Shares in Tele2 were down 2.2 percent at 95.90 crowns at 1431 GMT, underperforming the wider Stockholm market.

RUSSIA

Tele2 has sold off a number of assets in recent years, including operations in France, the Czech Republic and Switzerland, focusing much of its effort on Russia.

In Russia, Tele2 expects to grow its subscriber base to 18-19 million by year-end 2011, thanks to roll-outs in new regions. At the end of June it had 12.4 million users.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Russia accounted for about 26 percent of core profit in the second quarter.

Tele2 said the EBITDA margin for total Russian operations should grow from 25 percent to 30 percent between 2010 and 2011.

The EBITDA margin of regions where it already has operations should rise from 40 percent to 45 percent between 2010 and 2011, while the margin in new regions should reach break-even two years from commercial launch.

Between 2010 and 2011, accumulated capital expenditures for the total Russian operations will be in the range of 4.5 billion to 5 billion Swedish crowns ($658-$731 million).

In Sweden, Tele2 said it aimed to raise its market share among premium customers who receive monthly bills, rather than those who buy pre-paid cards.

It said this would lead to higher customer acquisition costs meaning that the EBITDA in Sweden would drop to around 30 percent in 2010.

"I strongly believe that the long-term benefits will significantly offset the short-term investments in a higher-value customer base," Chief Executive Harri Koponen said in a statement.

(Editing by Simon Jessop and Elaine Hardcastle)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.