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Investting.com -- Tele2 AB (ST:TEL2b) shares fell Tuesday after the company reported Swedish EBITDA for the third quarter slightly below analyst expectations, even as free cash flow exceeded forecasts and capital expenditure guidance was reduced.
End-user service revenue rose 2.4% overall in the quarter, with growth in Sweden accelerating to 1.2% from 0.4% in the second quarter.
Mobile revenue in Sweden increased 3.2%, while fixed services declined 2%, reflecting the closure of DTT services at the end of 2024. Revenue in the Baltics grew 6.6%, consistent with the last six quarters.
Underlying EBITDA after leases increased 11% year-on-year, below the Kepler Cheuvreux estimate of 14%.
Swedish EBITDA grew 8.5%, supported by workforce reductions, but slowed from 13% growth in Q2 due to higher marketing spending related to the reintroduction of the Frank marketing concept in June and increased access fees from open networks. Baltic EBITDA rose 20%, driven by workforce reductions and steady revenue growth.
Equity free cash flow was SEK1.8 billion, exceeding consensus by 19% or roughly SEK0.3 billion. The telecommunications company’s last twelve months eFCF totaled SEK6.2 billion, equivalent to approximately SEK9 per share, compared with the current dividend per share of SEK6.35.
Tele2 lowered its 2025 capital expenditure guidance to 12% of sales from 13%, while reaffirming other guidance.
End-user service revenue is expected to grow at low single digits, and underlying EBITDAaL is projected to rise slightly above 10%.
The company did not specify whether the capex reduction reflects a structural change or timing differences into 2026.
Tele2 shares were trading at SEK158.65, down from a 52-week high of SEK167.60 and above a low of SEK106.00, with an average daily volume of SEK560.1 million. Year-to-date, the stock has gained 45.2%.
Kepler Cheuvreux maintains a buy rating with a target price of SEK184, implying 16% upside from current levels.
End-user service revenue in the third quarter was driven by a 2.4% increase overall, with the mobile segment in Sweden performing better than fixed services, while EBITDA growth in Sweden slowed compared with the previous quarter due to marketing and access cost pressures. Baltic operations continued to show double-digit EBITDA growth.