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October 20, 2010, 6:08 AM EDT
By Diana ben-Aaron
(Updates with share price in fifth paragraph.)
Oct. 20 (Bloomberg) -- Tele2 AB, Sweden?s second-largest telephone company, said third-quarter profit rose 43 percent, aided by expansion in Russia and increasing mobile data use.
Net income rose to 2.51 billion kronor ($370 million) from 1.75 million kronor a year earlier, the Stockholm-based company said in a statement. That beat the 1.31 billion kronor estimate, according to the average from 16 analysts compiled by Bloomberg. Sales gained 1.7 percent to 10 billion kronor, slightly below the average estimate of 10.08 billion kronor.
Tele2?s main business is prepaid mobile subscriptions sold through retail outlets such as gas stations and post offices. The company added 1.17 million customers in Russia, where it is the fourth-largest wireless operator, and revised commissions for resellers to reward continued customer usage. Mobile data usage in other markets continued to grow and the company aims to add data services for Russian customers in the future.
?Positive momentum in our business continues in all our markets,? Chief Executive Officer Mats Granryd said in the statement. ?We will defend the price position in each of our markets.?
Tele2 rose as much as 1.1 percent to 141.80 kronor in Stockholm and was up 1 percent at 141.60 as of 11:45 a.m.
Data Services
Swedish sales gained 10 percent as customers made more use of mobile data services. Eight out of 10 of the best selling phones in the company?s Swedish shops are smartphones, topped by Apple Inc.?s iPhone 4, Sony Ericsson Mobile Communications AB?s X10 Mini Pro, Apple?s iPhone 3GS, Samsung Electronics Co.?s Galaxy and HTC Corp.?s Desire, Granryd said in an interview.
The company said wants to acquire a mobile-data-network license in Russia and is open to ?complementary acquisitions which fit with its corporate culture? in the country. A data license would most likely be for faster fourth-generation systems such as the company is building with Telenor ASA in Sweden, rather than third-generation systems, Granryd said.
?4G has been talked about and we certainly would be interested in discussing that,? he said. ?3G is already deployed in Russia -- I think that race is more or less over.?
Baltic economies are stabilizing and the company is building 3G networks in those countries to capture data revenue, he added. The company aims to be a low-priced supplier in each of its markets and uses a talking black sheep named Frank as its advertising symbol.
Croatia Operations
Tele2?s Croatian operations posted positive earnings before interest, taxes, depreciation and amortization and expects positive cash flow within a year. The result was helped by summer visitors to the country, Granryd said.
The company reduced its full-year capital expenditure estimates by about 5 percent to 10 percent overall and about 20 percent in Russia. Granryd cited more efficient equipment, declining prices and supply problems at vendors as reasons for the revision.
Last year?s third-quarter results included a goodwill impairment loss of 526 million kronor on the sale of French operations.
--Editors: Robert Valpuesta, Simon Thiel.
To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net
To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net
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(Updates with share price in fifth paragraph.)
Oct. 20 (Bloomberg) -- Tele2 AB, Sweden?s second-largest telephone company, said third-quarter profit rose 43 percent, aided by expansion in Russia and increasing mobile data use.
Net income rose to 2.51 billion kronor ($370 million) from 1.75 million kronor a year earlier, the Stockholm-based company said in a statement. That beat the 1.31 billion kronor estimate, according to the average from 16 analysts compiled by Bloomberg. Sales gained 1.7 percent to 10 billion kronor, slightly below the average estimate of 10.08 billion kronor.
Tele2?s main business is prepaid mobile subscriptions sold through retail outlets such as gas stations and post offices. The company added 1.17 million customers in Russia, where it is the fourth-largest wireless operator, and revised commissions for resellers to reward continued customer usage. Mobile data usage in other markets continued to grow and the company aims to add data services for Russian customers in the future.
?Positive momentum in our business continues in all our markets,? Chief Executive Officer Mats Granryd said in the statement. ?We will defend the price position in each of our markets.?
Tele2 rose as much as 1.1 percent to 141.80 kronor in Stockholm and was up 1 percent at 141.60 as of 11:45 a.m.
Data Services
Swedish sales gained 10 percent as customers made more use of mobile data services. Eight out of 10 of the best selling phones in the company?s Swedish shops are smartphones, topped by Apple Inc.?s iPhone 4, Sony Ericsson Mobile Communications AB?s X10 Mini Pro, Apple?s iPhone 3GS, Samsung Electronics Co.?s Galaxy and HTC Corp.?s Desire, Granryd said in an interview.
The company said wants to acquire a mobile-data-network license in Russia and is open to ?complementary acquisitions which fit with its corporate culture? in the country. A data license would most likely be for faster fourth-generation systems such as the company is building with Telenor ASA in Sweden, rather than third-generation systems, Granryd said.
?4G has been talked about and we certainly would be interested in discussing that,? he said. ?3G is already deployed in Russia -- I think that race is more or less over.?
Baltic economies are stabilizing and the company is building 3G networks in those countries to capture data revenue, he added. The company aims to be a low-priced supplier in each of its markets and uses a talking black sheep named Frank as its advertising symbol.
Croatia Operations
Tele2?s Croatian operations posted positive earnings before interest, taxes, depreciation and amortization and expects positive cash flow within a year. The result was helped by summer visitors to the country, Granryd said.
The company reduced its full-year capital expenditure estimates by about 5 percent to 10 percent overall and about 20 percent in Russia. Granryd cited more efficient equipment, declining prices and supply problems at vendors as reasons for the revision.
Last year?s third-quarter results included a goodwill impairment loss of 526 million kronor on the sale of French operations.
--Editors: Robert Valpuesta, Simon Thiel.
To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net
To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net
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