Russia
The Russian operation is Tele2’s most important growth engine. The company has GSM licenses in 37 with approximately 61 million inhabitants.
Mobile
Tele2 Russia successfully executed on its strategy to have a balanced approach to rolling-out new regions while improving profitability in the more mature regions. The market’s response has been in line with or even better than expected compared to the business plan. The customer base of the new regions grew by 683,000 (84,000) customers.
Tele2 Russia reported an overall solid customer intake and added 949,000 (220,000) new users in the quarter. The total customer base amounted to 15,400,000 (10,642,000). The turnover of the total customer base improved both sequentially and annually, partly driven by the introduction of a new commission structure to the retail channels, improving the quality of the customer intake. During the quarter, Tele2 Russia broadened the cooperation with the Post of Russia to include several new cities.
Despite an impact from customer base growth in new regions with lower initial service usage, MoU for the total operations increased by 8 percent compared to Q1 2009, amounting to 220 (204). ARPU amounted to SEK 50 (48) or RUB 206 (195), despite a strong customer intake in new regions. The general pricing environment remained highly competitive throughout the Tele2 Russia footprint.
Supported by customer growth, Tele2 Russia carried on demonstrating good financial performance in the quarter. Revenue grew by 32 percent in Q1 2010 compared to the same period last year. The EBITDA margin development was robust, driven by strong operational performance in the more mature regions, as the company focused more on customer retention measures and stimulated usage rather than on market share growth. EBITDA in the mature regions amounted to SEK 886 (601) million, equivalent to a margin of 45 (36) percent. EBITDA in the new regions amounted to SEK -167 (-63) million.
Tele2 Russia will continue to look for possibilities to carefully expand its operations through new licenses as well as complementary acquisitions which fit with its corporate culture.