European Communications

Last update11:31:44 AM

Tele2 hits the right notes after decent 2011

Sweden-based operator Tele2 said its top priority was to offer customers less for more in 2012 as it announced revenue and profit increases for the previous quarter.

Sales between October and December 2011 rose eight percent year-on-year to €1.2 billion, while operating profit grew to €181 million.

The company also saw full-year revenues increase to €4.6 billion, up from €4.5 billion in 2010.

“Today’s results show the strength of Tele2 … we are still operating in a context of macroeconomic uncertainty,” commented president and CEO Mats Granryd (pictured).

The only blemish was a less that one percent fall in operating profit for 2011 to €790 million.

Mobile sales in Sweden and Russia were behind the company’s growth. Tele2 is growing rapidly in Russia and added more than two million customers in 2011 out of 2.8 million for the group as a whole.

“As the Russian market matures, we intend to shift our focus from volume to value,” commented Granryd.

It is also rolling out 4G in its homeland and “evaluating the potential” of a 4G network in the Netherlands where it has just shy of a million customers.

“The regulatory and market environments [in the Netherlands] seem favourable for a value driven telecom competitor,” added Granryd.

However, it is the company’s explicit focus on what it calls its “two unique assets” – the network and customer relations – that offers the most cause for optimism.

As European Communications is reporting in the upcoming Q1 issue, operators must afford customer service the same level of importance as the network – and it must come from the top.

It is therefore pleasing to read Granryd’s following comments: “In tomorrow’s connected world, seamless access at high speed will be essential: the successful operators will manage the shift from voice to data while offering world-class connectivity, a high-quality network, transparent and simple tariffs and flawless service with efficient communication.”

Nevertheless, challenges do remain. Fixed broadband and telephony registered falls both in numbers and revenues, for example.

The number of fixed broadband customers fell by 17,000 in Q4 and it remains to be seen whether the company really has the scale and desire to make a success in this highly competitive segment.

If capex trends are anything to go by, the company may have already decided. Mobile operations saw a 68 percent y-o-y capex rise in 2011, while fixed broadband registered a fall of 11 percent.

As Granryd also noted, end users are becoming ever more demanding: “The price awareness and value expectations of our customers are constantly increasing.”

If you are not fully committed to delivering a best-in-class service, you will be quickly found out.

Nevertheless, Tele2 is right to look ahead with a sense of anticipation and turning those figures into a full-year profit will be a key goal in the 12 months ahead.