Tele2 (TEL2) Q3 2024 earnings summary

Executive summary

• End-user service revenue grew 3% organically in Q3 2024, marking the 14th consecutive quarter of growth, with all business lines contributing and underlying EBITDAAL up 2% year-over-year.

• Equity free cash flow reached SEK 1.1 billion in Q3, with financial leverage at 2.3x, below the target range.

• The company launched the first Disney+ bundle in Sweden and continued to be recognized for gender equality.

• CEO transition announced: Kjell Johnsen stepping down, Jean Marc Harion appointed as new CEO effective November 10, 2024.

• Net profit from total operations was SEK 1.1 billion, with EPS of SEK 1.60, both slightly higher year-over-year.

Financial highlights

• Group revenue reached SEK 7,390 million, up 3% year-over-year; end-user service revenue at SEK 5,506 million (+3% organically YoY).

• Underlying EBITDAAL increased to SEK 2,818 million (+2% organically YoY), with margin stable at 38-43.3%.

• Net profit rose to SEK 1,108 million from SEK 1,063 million year-over-year; EPS at SEK 1.60.

• Equity free cash flow for Q3 was SEK 1,107 million; rolling 12 months at SEK 4.1 billion.

• Capex to sales ratio at 13.7% LTM; cash conversion at 58% in Sweden and 73% in the Baltics.

Outlook and guidance

• 2024 guidance reiterated: 3–4% organic growth in end-user service revenue, 1–3% organic growth in underlying EBITDAAL, and 13–14% capex to sales.

• Mid-term outlook: low to mid-single-digit organic growth in revenue and EBITDAAL, capex to sales to decrease to 10–12% post-5G rollout.

• Ordinary dividend of SEK 6.90 per share for 2024, paid in two tranches.

• Working capital targeted to remain neutral for 2024.

• Energy cost headwind for 2024 expected at SEK 40 million.