Release Date: October 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tele2 AB (TLTZF, Financial) reported a solid quarter with a 3% growth in end-user service revenue, marking the 14th consecutive quarter of growth.
- The company announced the first Disney+ bundle offering in Sweden, enhancing its entertainment offerings.
- Tele2 AB (TLTZF) was recognized as one of Sweden's most gender-equal companies, highlighting its commitment to diversity and inclusion.
- The Baltics region showed strong performance with a 7% growth in end-user service revenue, driven by pricing strategies.
- The company achieved SEK1.1 billion in equity free cash flow, maintaining a low financial leverage of 2.3 times, which is below the target range.
Negative Points
- The Swedish B2C segment faced challenges with only a 1% growth in end-user service revenue, impacted by legacy headwinds and tougher comparisons.
- There was a decline in digital TV end-user service revenue by 4%, driven by an increasing decline rate in the legacy DTV business.
- The cost savings program showed a slowdown in quarterly development, with only SEK25 million added to the annualized run rate.
- The company faced a SEK17 million headwind from energy costs, mainly due to the absence of electricity support received last year.
- Tele2 AB (TLTZF) anticipates potential churn impacts from the migration of Boxer TV customers to modern technology.
Q & A Highlights
Q: Can you explain the factors affecting B2C revenue growth and the cost savings program's progress?
A: B2C growth was impacted by early pricing adjustments and handset binding reintroduction. The cost savings program is progressing gradually, with SEK600 million targeted by 2026, and over a third expected by the end of 2024. (Kjell-Morten Johnsen, CEO)
Q: What is the outlook for working capital and B2C mobile growth?
A: We aim for neutral working capital by year-end. B2C mobile growth was affected by pricing cycles and handset binding, with normalization expected as we transition to annual pricing. (Charlotte Hansson, CFO; Hendrik de Groot, CCO)
Q: How is the FMC strategy progressing, and what are the challenges?
A: FMC penetration is growing, supported by IT readiness and cross-selling efforts. The market is still maturing, and we aim to enhance personalization and digital engagement. (Hendrik de Groot, CCO)
Q: What are the implications of the Boxer TV migration and the 5G rollout?
A: The Boxer migration is part of our legacy transition, with some churn expected. The 5G rollout is progressing well, with over 80% population coverage, enhancing both 5G and 4G experiences. (Kjell-Morten Johnsen, CEO; Hendrik de Groot, CCO)
Q: How does the annual pricing strategy align with inflation, and what are the cost savings expectations?
A: Annual pricing is aligned with inflation and innovation, aiming for broad customer coverage. Cost savings from the Boxer migration and sales channel optimization are expected to contribute significantly in the coming years. (Hendrik de Groot, CCO; Charlotte Hansson, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
