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Tele2 sees TV base and revenues decline

Swedish service provider Tele2 saw its domestic TV revenues and subscriber base decline in the course of the first quarter despite progress in migrating customer to fixed-mobile convergence offerings.

Kjell Johnsen

Swedish digital TV end-user service revenue declined by 8%, which the company attributed to lower digital-terrestrial subs and lower revenue from premium sports packages.

The company ended the period with 965,000 digital TV subscribers, including 657,000 cable and fibre subs, down 5,000 over the quarter, and 308,000 DTT customers, down 9,000.

Average TV revenue per users declined by 4% year-on-year to SEK238, and overall revenue dropped by 8% to SEK695 million (€68.5 million).

Overall revenues were more or less flat year-on-year at SEK6.55 billion, with service revenue down 1% at SEK4.7 billion.

Underlying EBITDAaL was up 6% organically to SEK2.3 billion, driven by strong growth in the Baltic states and cost savings.

CEO Kjell Johnsen said that “our first quarter has been a story of disciplined focus and delivery in the face of pandemic headwinds”, highlighting the fixed-mobile convergence story.

However, he indicated that the company recognised a need to take its FMC play to the next level.

“So far, we have driven FMC mainly by connecting separate brands and offering benefits to improve loyalty in the existing customer base. However, for this to really move the needle and drive sustainable growth we need to look beyond the existing customer base and drive organic FMC sales by establishing a leading FMC premium brand that can cater to the whole household,” said Johnsen.

“In the near future we will take the next step in our brand optimization journey and consolidate our premium consumer brands in Sweden into one. Over time, this will help us scale the benefits we see in our current FMC customer base as we solidify our position in the premium end of the market with a clear focus on FMC. Furthermore, we see this as a step back from unnecessary brand proliferation in an already saturated Swedish market.”

Earlier this month, analysts at Jefferies issued a note comparing Tele2 unfavourably to rival Telia, pointing to the former’s recent “double volte-face on the go-to-market strategy” involving a move from limited interest in no-frills offerings to a focus on capturing a share of that market with a new brand and then a reversal on the basis that a no-frills strategy risked damaging the market.

Johnsen’s comments on reducing the number of brands and the recent focus on premium offerings and FMC would seem to indicate that the company is now more firmly focused on the premium end of the business.