Tele2 lifts 2025 profit outlook after Q2 EBITDA beat, cost cuts pay off

Investing.com -- Tele2 (ST:TEL2b) on Thursday raised its full-year 2025 profit guidance after second-quarter earnings exceeded internal expectations, driven by cost reductions and strong performance in the Baltics. 

Underlying EBITDAaL rose 14.8% to SEK 2.93 billion, a 6% beat, while total revenue remained flat at SEK 7.26 billion, according to the company’s interim report for the April-June period.

End-user service revenue increased 1.9% to SEK 5.52 billion. In Sweden, revenue edged up 0.4% year-over-year, compared to a 0.2% decline in the first quarter. 

Growth in the business segment, up 3.8%, helped offset a 0.7% decline in the consumer segment. 

Mobile postpaid and fixed broadband each rose 3%, while digital TV fell 9%, impacted by the Boxer platform shutdown.

Sweden’s underlying EBITDAaL grew 13% to SEK 2.14 billion, supported by a reduced workforce and tighter cost control. 

Tele2 reported more than 500 job cuts by June as part of its previously announced target of reducing 600–700 full-time positions.

The company also began renegotiating major contracts and implemented new cost governance measures.

The Baltic region contributed significantly to earnings. Lithuania posted a 9% revenue increase, with EBITDAaL up 21%. 

Latvia recorded 4% revenue growth and 14% EBITDAaL growth. Estonia saw revenue rise 7%, with EBITDAaL up 33% due to pricing adjustments and continued efficiency measures.

Free cash flow strengthened to SEK 1.62 billion, up from SEK 1.17 billion a year earlier, aided by lower capital expenditure, improved working capital and reduced interest costs. 

Operating cash flow reached SEK 2.03 billion, compared to SEK 1.53 billion in the second quarter of 2024. Capex, excluding spectrum and leases, dropped 14% to SEK 899 million.

Tele2 revised its 2025 EBITDAaL forecast to slightly above 10% organic growth, up from a previous mid- to high single-digit range. 

The company maintained its guidance for low single-digit end-user service revenue growth and capex at around 13% of sales, excluding spectrum and leases. 

According to Morgan Stanley (NYSE:MS), the upgraded guidance could translate to a 3% increase in consensus EBITDA estimates for the year.

Economic net debt fell to SEK 24.7 billion from SEK 26.2 billion at the end of 2024. Leverage decreased to 2.2x EBITDAaL, below the target range of 2.5x to 3x.

The first tranche of Tele2’s SEK 6.35 per share ordinary dividend was paid in May, with the second tranche of SEK 3.15 scheduled for October.