Stockholm, Sweden — Tele2, the telecom company based in Sweden, has announced its intention to target approximately $57.4 million in cost savings, despite surpassing analysts’ expectations for their fourth-quarter earnings.
The company reported a net profit of 936 million Swedish kronor ($89.2 million), a decrease from SEK1.26 billion recorded in the previous year. However, this still exceeded the expected SEK865 million anticipated by analysts polled by FactSet.
Tele2’s preferred metric, underlying earnings before interest, taxes, depreciation, amortization, and the cost of leased assets (Ebitdaal), experienced a 5.7% increase to SEK2.62 billion. This growth was primarily driven by the rise in end-user service revenue, offsetting the impact of inflationary pressures.
Additionally, the company witnessed a 3.1% increase in revenue to SEK7.68 billion, surpassing the expected SEK7.61 billion.
Chief Executive Kjell Johnsen highlighted Tele2’s plan to allocate more resources to their go-to-market strategies while reducing investment in maintaining and replacing legacy systems. Johnsen stated, “We see potential for cost reduction related to customer acquisition and retention. This includes areas such as commissions in physical retail and customer interaction costs with our staff and support services.” Tele2 aims to save approximately SEK600 million within the period of 2024-2026.
Looking ahead, Tele2 has set ambitious goals for the coming years. They target 3%-4% organic end-user service revenue growth and 1%-3% organic underlying Ebitdaal growth by 2024. Additionally, they plan to allocate 13%-14% of capital expenditure to sales, excluding spectrum and leasing assets.
Furthermore, Tele2 has increased its ordinary dividend from SEK6.80 to SEK6.90.