Tuesday, April 16, 2013

Tele2 NL: preview to 13Q1 results (April 18)

Tele2's results are due April 18, before the markets open.

Looking back to the 12Q4 results:

  • Relatively strong in mobile, weak in fixed broadband.
  • Revenue still down, EBITDA weak as a result of losses in mobile.
  • Tele2 has now finally entered the NGA world of FTTH and LTE.

Guidance for the mobile activities in NL:

  • Revenue SEK 1,600-1,700m (EUR 185-200m) (2012: EUR 105m)
  • EBITDA negative SEK 50-75m (EUR 6-9m)
  • EBITDA break-even: 3 years after launches 4G-services
  • Capex: SEK 2,000-2,500m (EUR 230-290m), of which SEK 1,400m (EUR 161m) for 4G licenses.

Market consensus (roughly):

  • Revenue SEK 1,330m
  • EBITDA SEK 340m
  • Mobile subs 540k

Recent issues:

  • Tele2 Russia was sold and perhaps Tele2 Croatia is next. This is good news from a capex point of view as resources may be shifted to NL. It may also leave room for acquisitions.
  • Tele2 Business finally has a new director, Fedor Hoevenaars (formerly of BT and Verizon).
  • Group management was reshuffled. G√ľnther Vogelpoel (formerly Western-Europe) is now solely responsible for NL again.

Conclusion:

  • The main point is Tele2 NL's LTE strategy:
    • Timeline, pricing, targets, quad plays, fixed-line replacement services?
    • Will there be network sharing (with T-Mobile NL)? Recently, the group stated it expected to see 'co-build' in NL.
  • Is Tele2 NL essentially a mobile-only company, following the group's motto: "Tele2 - a European mobile operator - Mobile is our strategy".
  • What about WiFi? And distribution (Tele2 NL doesn't operate a retail store chain of its own)?

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