RusTele.com

Tele2 Sets New Financial Targets, Focus On Margins

STOCKHOLM (Dow Jones)--Swedish telecom operator Tele2 AB Thursday set out new financial targets, with a strong focus on margins and financial discipline. 
"We need to continuously raise the bar for our company and set demanding targets that challenge our organization and keep us on our toes," said Chief Financial Officer Lars Nilsson, speaking at the company's capital markets day. 
Tele2 said it wants margins on earnings before interest, taxes, depreciation and amortization in its core business of 20% or more. 
The Stockholm-based company, which has around 25 million customers in markets including Sweden, Russia and the Baltic countries, had an Ebitda margin of 24% in the second quarter. Its Russian and Swedish mobile operations had Ebitda margins of 35% and 31%, respectively. 
Tele2's mobile operations based on its own infrastructure should target margins of mid-30% or higher over the long term, it said, and set a long-term target of 20% for return on capital employed, or ROCE, as it "wants to lay particular stress on cost control and optimal use of capital." 
In separate announcements Thursday, Tele2 also set new financial targets for its Russian and Swedish mobile operations. 
The company said it expects its customer base in Russia to reach 18 million-19 million by the end of 2011 as it enters new regions. 
The Ebitda margin for the its Russian operations as a whole should range between 25%-30% between 2010 and 2011, Tele2 said, adding that accumulated capital expenditure in the region in 2010-2011 will be around 4.5 billion-5 billion Swedish kronor ($655 million-728 million). 
"I am very happy with the way our Russian operations are currently developing," said Chief Executive Harri Koponen. "We are now aiming for the next level with the launch of our new regions, creating the foundations for prolonged growth in our Russian asset." 
In its Swedish mobile operations Tele2 aims for increased market share in the postpaid segment, the company said. It said this will lead to higher total acquisition costs in the short term, resulting in an Ebitda margin moving towards 30% in 2010. 
At 1230 GMT, shares in Tele2 were down 0.9% at SEK97.20, against a 0.7% rise in the wider market in Stockholm.