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UPDATE 2-Tele2 Q2 profit tops expectations, shares rise

Published 07/22/2009, 03:55 AM
Updated 07/22/2009, 04:08 AM
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* EBITDA 2.45 bln crowns, beats average forecast of 2.21 bln

* Sales rise 3 percent to 10.1 bln, undershoot forecast

* Shares rise 5.2 percent

(Adds analysts' comments, share price, more details)

By Helena Soderpalm and Veronica Ek

STOCKHOLM, July 22 (Reuters) - Swedish telecom operator Tele2 beat forecasts with a 17 percent rise in second-quarter core profit on Wednesday thanks to improved margins, pushing its shares more than 5 percent higher.

The company said it faced tough times in many of its markets, but cost-cutting measures had begun to have a positive effect on its operational performance, and it would continue efforts to bring costs down and maintain cash generation.

Shares in Tele2 were up 5.2 percent at 87.10 Swedish crowns at 0750 GMT, outperforming a 0.8 percent fall in the Stockholm bourse's blue-chip index.

"This is a good report. Sales are a bit weaker than expected, but EBITDA is strong, and that more than compensates for sales. Tele2 once again shows it is good at managing costs," said Anders Wiklund, an analyst at Evli Bank.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 2.45 billion crowns ($318.5 million) from 2.1 billion a year earlier and beat an average forecast of 2.21 billion in a Reuters poll of analysts.

"Margins are especially strong. What is most impressive is that mobile margins are better than expected," said an analyst who asked not to be named.

The EBITDA margin rose to 24 percent from 21 percent a year ago, beating the average forecast of 22 percent in the poll.

Revenues for Tele2, whose core markets include Sweden, Norway, Russia, Croatia and the Baltic states, rose by 3 percent to 10.1 billion crowns, a little below the average forecast of 10.3 billion.

The operator repeated its forecast for capital expenditure of 4.7-4.9 billion crowns this year.

With recession raging across the globe, the telecom sector has still fared relatively well. Swedish niche telecom operator Millicom on Tuesday also reported forecast-beating results.

The Nordic region's leading telecom operator Teliasonera is due to publish its second-quarter results on Friday. It is seen posting a 9 percent rise in EBITDA to 8.1 billion Swedish crowns from the previous year, according to the average forecast in a poll of 18 analysts. (Editing by Greg Mahlich/Will Waterman) ($1=7.692 Swedish Crown)

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