Tele2 Q3 core profit misses forecasts, cuts capex outlook on record cash flow

Tele2, a Swedish telecom operator, reported Q3 core earnings that fell short of analyst expectations on Tuesday. However, the company announced a reduction in its capital spending outlook and adjusted its full-year earnings growth guidance due to record cash flow. Underlying EBITDA, the key earnings metric, came in at kr3.15 billion, slightly below the kr3.19 billion consensus.

Growth remained flat at kr3.16 billion compared to the previous year, primarily due to the Baltic tower transaction. Organic growth remained steady at 3%, bolstered by increased revenue from end-user services and cost management. Revenue reached kr7.60 billion, matching the kr7.57 billion consensus, with a 2% organic growth attributed to end-user service revenue and operator revenue.

End-user service revenue stood at kr5.73 billion, 2% higher than expected and driven by growth in all operations. Operating profit was kr1.98 billion, slightly below the kr2.00 billion consensus. Equity free cash flow, a key indicator of available cash after investments and lease payments, amounted to kr2.30 billion, a record, up from kr1.78 billion a year prior.

For 2026, Tele2 now anticipates 4% to 5% organic EBITDA growth, down from its earlier projection of low to mid-single-digit growth, and plans to maintain capital expenditures below 10% of sales, excluding spectrum and leases, a decrease from 10% to 11%. The company maintained its forecast of low single-digit organic growth in end-user service revenue.

Net profit rose to kr1.41 billion, up from kr1.29 billion, and earnings per share increased to kr2.03 from kr1.86. In Sweden, end-user service revenue grew by 1%, with Business up 5% in mobile and solutions and Consumer remaining stable. Fixed broadband revenue in the Consumer segment declined by 3%, and the company lost 6,000 broadband subscriptions, citing competitive pricing and a shift towards mobile broadband.

End-user service revenue in the Baltics increased by 6% in local currency due to price adjustments and upselling. The company's economic net debt fell to kr17.51 billion from kr24.28 billion at the end of 2025, partly due to cash inflows from the Baltic tower deal.