Tele2 second-quarter boosted by mobile data use

STOCKHOLM Wed Jul 16, 2014 3:07am EDT

STOCKHOLM (Reuters) - Swedish telecom operator Tele2 said mobile data use boosted growth in the second quarter as it posted core earnings above forecasts on Wednesday but said full year revenues would be hit by a devaluation in Kazakhstan and lower handset sales.

Tele2 has for long been seen as a takeover target, with media reports earlier this year saying Hongkong's Hutchison had shown interest in its Swedish operations, and some analysts saw the sale of its Norwegian business this month as a step towards a break-up of the group.

Mobile end-user service revenue - excluding equipment sales - grew by 7 percent in the second quarter, compared to 3 percent in the first quarter.

"Our investment in this growth is having the anticipated impact on our margins, as we are developing our mobile operations in the Netherlands, Kazakhstan, and other markets," Tele2 Chief Executive Mats Granryd said in a statement.

Excluding its Norwegian business which it has agreed to sell to rival TeliaSonera, Tele2's earnings before interest, tax, depreciation and amortisation (EBITDA) were 1.47 billion crowns ($215 million), and were lifted by a one-off item in the Netherlands of 48 million.

That compared with a forecast of 1.42 billion in a Reuters poll of analysts and 1.47 billion a year ago.

Tele2 adjusted its forecasts for the year to reflect the sale of its Norwegian business and said it now expected revenue of between 24.8 and 25.2 billion crowns, EBITDA earnings of between 5.7 and 5.8 billion, and a capex level of between 3.5 and 3.8 billion.

It said a devaluation in Kazakhstan and generally lower handset sales had dented its revenue outlook for the year, but that those factors had a limited impact on EBITDA earnings.

Its previous forecast was for revenue of around 30 billion crowns in 2014, EBITDA earnings of around 6.0 billion, and a capex level of about 4.5 billion.

(Reporting by Sven Nordenstam; Editing by Alistair Scrutton)

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