2. Contents A key factor underlying
Tele2’s success is that
Significant events ........................................................................ 1
Jan Hugo Stenbeck ................................................................... 2 we communicate
Tele2 in brief ..................................................................................... 6 with our customers
President’s message ............................................................. 10
in a way that appeals
Market – continuing growth ......................................... 12
Business concept and business model ........... 14 to them.
Services and products ........................................................ 17
page 10
Nordic ................................................................................................... 20
Eastern Europe and Russia .......................................... 23
Central Europe ............................................................................ 26
Southern Europe ....................................................................... 28
Luxembourg .................................................................................... 30
Branded products & services ...................................... 31
Report of the Directors ...................................................... 32 A central market
Income statement ................................................................... 37
driving force is that
Balance sheet .............................................................................. 38
Cash-flow statement ............................................................. 40 customers are
Change in shareholders’ equity ................................ 41 increasingly seeking
Notes .................................................................................................... 42
Audit report .................................................................................... 84 total solutions.
Personnel and environment ......................................... 85 page 12
Board of Directors ................................................................... 86
Senior executives ..................................................................... 87
Tele2 share ...................................................................................... 88
Addresses .......................................................................................... 90
History ................................................................................................ 92
Definitions ....................................................................................... 93
Annual General Meeting Tele2´s business
The Annual General Meeting will be held at 1:30 pm
on Thursday, May 15, 2003, at Gamla Stans Bryggeri, concept is to offer
Tullhus 2 at Skeppsbron in Stockholm.
simple, customer-
Shareholders who wish to attend the Annual General
friendly services at
Meeting
must be entered in the register of shareholders the lowest price.
maintained by VPC AB (the Securities Register
page 14
Center) for the Annual General Meeting
(registration must be completed by Monday
May 5, 2003).
and notify the Company of their intention to attend
no later than 1:00 pm on Friday, May 9, 2003.
Notification can be made by phone to
+46 33 724 12 67, or in writing to:
Tele2 AB, Box 2094, SE-103 13 Stockholm, Sweden
label the envelope “Annual General Meeting” or by The rapid growth in
e-mailing to: bolagsstamma03@tele2.com
Southern Europe is
Financial information
Quarterly report, January–March April 23
driven by the intro-
Annual General Meeting May 15 duction of local pre-
Quarterly report, January–June August 5
Quarterly report, January–September October 21 selection.
page 28
3. Significant events in 2002
• Profit after financial items rose by SEK 2,740 million to SEK 796 million.
• Cash flow after investments increased by SEK 2,903 million to SEK 1,849 million.
• Operating revenue jumped 25%, by SEK 6,197 m to SEK 31,282 m.
• EBITDA advanced to SEK 5,127 m, compared with SEK 1,698 m in 2001. + 25%
• A positive EBITDA was reported for fixed telephony in Central and Southern Europe,
SEK 4 million compared with a loss of SEK 1,916 m in 2001.
• 16.8 million customers at year-end, an increase of 12%.
Significant events at the beginning of 2003
+ 12%
• Tele2 acquires the British company Alpha Telecom.
Financial summary
MSEK 2002 2001
Operating revenue 31,282 25,085
Operating profit/loss before depreciation, EBITDA 5,127 1,698
Operating profit/loss after depreciation, EBIT 1,530 –1,356
Operating profit/loss after financial items, EBT 796 –1,944
Profit for the year 223 392
Earnings per share, after dilution 1.51 2.70
Average number of employees 3,115 2,172
5. Tele2 AB
Dear Shareholder,
Jan Hugo Stenbeck was Chairman of the Board of Directors of Tele2 AB for nine years from
1993 to 2002. He was also Chairman of Industriförvaltnings AB Kinnevik, Invik & Co. AB,
Modern Times Group MTG AB, Millicom International Cellular S.A., Metro International S.A.
and Transcom WorldWide S.A.
Jan passed away on 19 August 2002. He possessed a seldom-rivaled energy, panache, ambi-
tion and sense of fun. His dynamism, curiosity and restlessness, combined with a charm,
determination and healthy fear, drove him to create one of Europe’s most innovative and
successful group of companies. He would not compromise on quality or efficiency and
never ceased to surprise by breaking with convention. His insight – the ability to grasp the
key elements of an issue and articulate his views clearly - was his greatest attribute. Loyalty
was the quality that he valued most in others.
Born in Stockholm in 1942, Jan graduated in Law from Uppsala University in 1968 and
with an MBA from Harvard Business School in 1970. He then joined US investment bank
Morgan Stanley and rose to become a Vice President in the Bank’s Corporate Finance depart-
ment. He became a member of the Board of Directors of Industriförvaltnings AB Kinnevik in
1971 and became Chairman in 1993, taking over at the helm of the Group that his father,
the prominent lawyer Hugo Stenbeck, and the Klingspor and von Horn families had built
into one of Sweden’s largest industrial investment companies. With uncanny foresight, Jan
built a multinational information empire from this industrial foundation and transformed
Kinnevik into a holding company for new telecommunications, media and service businesses
whose brands are now household names not just in his native Sweden but a large number of
markets around the world.
As one of the leading entrepreneurs and visionaries of his generation, he started hundreds of
companies in his lifetime.They ranged from a college sweatshirt business established in
1963 with 10,000 customers and less than US$1 million in annual sales to Europe’s leading
alternative telecommunications provider with over 16.8 million customers and US$3.7 bil-
lion in annual sales. All the businesses share several common features – they all break
monopolies in order to provide people with choice, grow sales aggressively, are highly com-
petitive businesses with low cost structures, and they all aspire to be “best in class”.
3
6. Jan Hugo Stenbeck
From Kinnevik’s roots in the traditional steel and forestry industries, Jan created a group of
companies that embraced new technologies and encouraged a competitive environment in
the Nordic region and then internationally. As a pioneer of mobile telephony in the early
1980s, Jan formed a joint venture with British defense company Racal to acquire the UK’s
second mobile phone license. Racal-Millicom evolved into the US$122 billion global
telecommunications giant,Vodafone. Jan also acquired one of the first mobile telephony
licenses in the United States and this model was repeated around the world. Millicom and
Tele2 today hold fixed line or mobile telephony licenses in 37 countries – from Estonia
to Sierra Leone, Bolivia to Russia, and Portugal to Laos – and have more than 20 million sub-
scribers around the world.
In similar fashion, Jan introduced the first commercial television channel,TV3, to Scandinavia
in 1987 by broadcasting commercial television into Scandinavia from London via the Astra
satellite in Luxembourg.The same approach enabled Sky Television to launch in the UK. TV3
is now the largest pan-Nordic television channel and the Viasat satellite TV platform broad-
casts 36 channels to nine countries, which are watched in 45 million homes.
The most recent project to achieve global scale and reflect the Group ambition is Metro
International, the free newspaper group. Again challenging local market monopolies and
established media in cities from Boston to Barcelona, Stockholm to Santiago, and Holland
to Hong Kong, Metro now reaches over 12 million readers and is the world’s largest news-
paper outside Japan.The company’s advertising revenues have grown at a compound annual
rate of 47% since the launch of the first edition in Stockholm in 1995.
All of these companies continue to shape and adapt successfully to new developments as third
generation mobile telephony and digital multi-channel television become realities, and as
exciting new markets in Eastern Europe and Asia offer significant new opportunities.
Kinnevik has generated a compound annual average rate of return since 1976 of 13%, with
the result that one dollar invested in Kinnevik in 1976 would be worth over US$25 today.
The Stenbeck Group of publicly listed companies had a combined market capitalization of
US$6 billion in February 2003 and employed more than 25,000 people in more than 50
countries around the world.
In typical style, the Stenbeck group of companies, combined established tradition with ground
breaking originality by welcoming in the new millennium with a spectacular fireworks and
multi-media display in Stockholm’s Old Town on New Year’s eve.The scale and complexity of
this event not only mesmerized the record breaking crowd of 700,000 people and won its
4 TELE2 ANNUAL REPORT 2002
7. Jan Hugo Stenbeck
place in the Guinness Book of World Records, but also offered a unique showcase for group
brands such as Comviq,TV3 and Metro.The event perfectly illustrated Jan’s unusual combin-
ation of creative flair and intricate planning.
On the day after he passed away and only a few months before his 60th birthday, one of Jan’s
greatest dreams was realized when the second Victory Challenge yacht was launched
in Auckland, New Zealand. From the time that he had acquired the former committee boat
of the New York Yacht Club, Jan had nurtured a dream to compete for one of the sporting
world’s oldest and most coveted trophies – The America’s Cup.The Victory Challenge syndi-
cate brought together leading match race sailors from the Nordic countries in the
first challenge by a Nordic crew for twelve years.
The challenge exemplified Jan’s approach, as he acquired one of the yachts used by Team
New Zealand to win the Cup in 2000, then recruited and motivated world class boat design-
ers, builders, and sailors, forged a team, and pushed each member to the limits of their
potential, whilst maintaining a strict control on cost.This was an environment in which he
thrived – high adrenaline competition, pitting the Nordic team against the world’s best.
Every detail counted as seconds decided between success and failure. Victory Challenge won
eleven races, including two victories over the New York Yacht Club, reaching the quarterfinals
of the Louis Vuitton Cup and becoming the most successful Nordic entry ever.The Challenge
generated unparalleled media airtime for its group sponsors, including live television cover-
age in Sweden, Norway, Denmark, Switzerland, France, Italy, the United Kingdom, the United
States and Canada.
Despite, and perhaps because, of all the achievements above, Jan remained a very private and
modest man. “Tell them that I am only a Basett hound breeder” he would reply to the end-
less requests for interviews. As Jan always said, “if you can’t choose, you shouldn’t com-
plain”. He led a unique life and is greatly missed. His legacy is an opportunity to build on
his success and your Board is firmly committed to fulfilling this responsibility. On behalf
of the shareholders, customers, employees and business partners, the Board of Directors
wishes to express its gratitude for the enormous contribution of Jan Hugo Stenbeck to the
development of Tele2 and the other companies, which he founded and in which he engaged.
Stockholm, 27th February 2003
Tele2 AB
The Board of Directors
5
8. Tele2 in brief
Mobile telephony Fixed telephony and Internet
Nordic: Sweden, Norway, Denmark. Nordic: Sweden, Norway, Denmark, Finland.
Geographic markets:
Eastern Europe Eastern Europe
and Russia: Estonia, Latvia, Lithuania, Russia. and Russia: Estonia, Poland, Czech Republic.
Central Europe: Switzerland, the Netherlands, Austria. Central Europe: Germany, the Netherlands, Switzerland,
Austria, UK.
Southern Europe: — Southern Europe: France, Italy, Spain, Portugal.
Luxembourg: Liechtenstein, Luxembourg. Luxembourg: Liechtenstein, Luxembourg, Belgium.
12 countries 19 countries
Percentage of net sales:
30 % 68%
Number of customers:
Nordic: 3 221 000 Nordic: 2 822 000
Eastern Europe and Russia: 1 366 000 Eastern Europe and Russia: 144 000
Central Europe: 271 000 Central Europe: 3 316 000
Southern Europe: — Southern Europe: 5 129 000
Luxembourg: 181 000 Luxembourg: 41 000
6 TELE2 ANNUAL REPORT 2002
5.0 11.4 million million
9. 16.8 million customers in 22 countries
Tele2 AB, formed in 1993, is the leading alter- and billing; C3, which is active
native pan-European telecommunications com- in prepaid calling cards for
pany offering fixed and mobile telephony, as well fixed telephony; and
as data network and Internet services, under the Optimal Telecom, which
brands Tele2, Tango and Comviq to more than offers households low price
16.8 million customers in 22 countries. Tele2 guarantees for telephony services. The Group
operates Datametrix, which specializes in sys- also offers cable-TV services and jointly owns the
tems integration; 3C Communications, which Internet portal Everyday.com with MTG. Tele2
operates Internet payments, credit card trans- AB’s share is listed on Stockholmsbörsen
actions and public pay telephones; Transac, which (Stockholm Exchange) under TEL2A and TEL2B
offers data processing of credit card transactions and on Nasdaq under TLTOA and TLTOB.
7
10. MVNO iHear
MVNO (Mobile Virtual Network Operator) is a concept iHear is a cordless digital
that makes it possible for Tele2 to offer its customers telephone equipped with
mobile telephony without needing to invest in its own a calling-router.
mobile network. Tele2 buys the right to handle incom-
ing and outgoing mobile traffic. As an MVNO, Tele2
has its own SIM cards, bills its customers directly and
develops its own services. As a result, customers gain
access to Tele2’s services and lower rates. MVNO
offers major growth potential for Tele2 in countries in
which it has a large customer base in fixed telephony,
but lacks its own infrastructure.
Transcom Flexible solutions
Transcom is a pan-European partner that handles Tele2’s corporate culture is marked by flexibility and
Tele2’s customer relations. Transcom serves as Tele2’s adaptability in reacting to changes in customer
customer service and handles all of Tele2’s ongoing requirements and other market conditions – while
customers matters. focusing constantly on customer demand for attrac-
tive services and the lowest price.
8 TELE2 ANNUAL REPORT 2002
11. Anders Igel , President of TeliaSonera Victory Challenge
“I think Tele2 is good at marketing, adopts a com- Tele2 sponsored Victory Challenge – the Swedish
mercial approach and has an ability to get things done. challenger for the America´s Cup in 2003. Victory
We’ve got a good deal to learn from them.” Challenge went all the way to the quarterfinals outside
Auckland in New Zealand. Tele2 is currently active in
Affärsvärlden, No. 3, 2003
22 countries and the exposure provided by the sailing
contests was a very effective way of strengthening the
brand among existing and new customers.
Network Management GSM licenses
in Russia
To provide 100% availability in the networks, they are
monitored 24 hours a day, 365 days a year. This Tele2 now has GSM licenses in all eleven of its oper-
ensures that our customers can communicate with as ations in Russia. Preparations for the GSM network
few interruptions as possible. build-out are well advanced and general agreements
for delivery of GSM infrastructure have been reached
with suppliers.
9
12. Tele2 is a unique company
Tele2 is the only telecom company that has more than SEK 2.3 billion. Another key Our fixed network companies are also
a pan-European market in fixed network benchmark of our solid financial base is becoming mobile companies in pace with
telephony. As the leading alternative tele- that net debt fell by SEK 1.6 billion dur- deregulation. We’re focusing on the MVNO
com company in Europe, we can state with ing the year and now amounts to SEK 7.7 concept, which means that we buy rights
satisfaction that our subsidiaries in country billion. to handle incoming and outgoing mobile
after country report positive operating profit This is a solid platform for continuing traffic from an established mobile opera-
before depreciation about three years after operations. tor. As an MVNO, we issue our own SIM
start-up. The question posed for most telecom cards, invoice customers directly and
The image of Tele2 as primarily a Swedish companies today is: “Are there sufficient develop proprietary services. For the cus-
or Nordic company is increasingly inaccur- funds?” The question I’m faced with is a tomer, the difference between a subscrip-
ate. Each of our subsidiaries in France, totally different one: “What will we do with tion with Tele2 as the MVNO or having a
Italy and the Netherlands have more fixed our funds?” The answer is easy to give: subscription with the operator who owns
network customers than Tele2 in Sweden. We will continue to be a growth compa- the infrastructure is merely Tele2’s lower
Tele2 is a unique telecom company ny and win market share in markets in rates and services. Being a Service Partner
since we are not burdened by major invest- which we are present. The exciting feature (SP) is less attractive for Tele2, since this
ments requiring write-offs. Tele2 reported is that we can personally set the pace with- does not permit the same type of customer
a positive bottom line in 2002 despite out viewing financial resources as a bottle- contact.
write-offs for our 3G venture in Norway. neck. Our efforts to develop fixed network cus-
Tele2’s profit before and after deprecia- Over a number of years I’ve stated that tomers and transform them into mobile
tion/amortization shows a much smaller we’ve got our fingers in the cookie jar. By customers is an expression of our cross-
difference than other telecom companies. that I mean we are as close as possible to selling strategy. Our large customer base is
Focusing on markets and customers our customers. We can see clearly how this being offered an increasing number of ser-
instead of on costly investments in tech- approach works in Estonia, Latvia and vices, which means lower costs for one
nology was the basic philosophy of Tele2’s Lithuania, countries in which we are high- “new” customer.
founder Jan Stenbeck from the very begin- ly successful. I’m convinced that these Through MVNO´s, Tele2 is now trans-
ning. Jan Stenbeck’s passing away in positive lessons can act as an excellent forming part of its large stock of fixed net-
August 2002 was of course a profound loss guide as we increase the pace in our work customers in country after country
for Tele2, but the founder’s basic ideas Russian operations. into Tele2 mobile customers. Mobile cus-
remain intact. Tele2 is now working active- Tele2 started its operations in Sweden. tomers accounted for the largest percent-
ly to develop these basic concepts through- Operations there are wide-ranging and age of the increase in customers in 2002.
out Europe. highly important. This applies not least to Tele2 returned its Norwegian UMTS
Tele2 now has a solid financial base. Comviq, which celebrated its tenth anni- license during the year, opting instead to
The fact that the company began to report versary in 2002, and reported 3 million sign an MVNO deal with Telenor.
a profit in 2002 is, of course, significant, mobile customers. Two million of these are European telecom deregulation is far
but perhaps what is even more impressive prepaid customers. Comviq’s mobile tele- from complete, but the EU and the various
is that cash flow during the year was boost- phony is based on our core values. Our aim national supervisory authorities are now
ed by almost SEK 3 billion after invest- is always to give customers minimum worried by the threat that has emerged in
ments. The company’s disposable liquid rates, while simultaneously developing a number of countries, namely, that mar-
funds, including unutilized overdraft facil- concepts and services. ket newcomers are disappearing so that
ities, amounted at year-end to slightly only the former monopolies remain. Since
“Tele2 is the world’s fourth fastest growing telecom/IT company…”
Business Week, June 19, 2002
10 T E L E 2 A N N U A L R E P O R T 2002
13. “Tele2 is the only
telecom company
with a pan-European
market in fixed
telephony.”
Tele2 is one of the few profitable European point remains the same as in the past. We Communication is fun, and fun shouldn’t
telecom operators, our operations attract gain a major advantage from expanding our cost too much.
substantial positive interest from the EU 3G network in Sweden in cooperation with By rolling out Tele2’s concept across
and national regulatory authorities. As the Telia. Our 3G operations will most likely be Europe and taking our experience with us
sole alternative pan-European telecom profitable earlier than in any other from previously deregulated markets, we
operator, we are currently one of the few European country. Our plan to commence are gaining a profitable customer base in
examples of the positive effects of dereg- commercial 3G operations at the end of country after country.
ulation for companies and consumers. 2003 remains in place. But for consumers, But there’s no shortage of challenges.
Competition must continue in order to voice communications, SMS and MMS will My colleagues and I continue to focus on
ensure consumer value. This means that remain the most important features. offering additional services to our enor-
the supervisory authorities have an interest Subsequently, long-term 3G factors will mous customer base. This is a guarantee
in maintaining competition. I definitely impact positively on earnings. But also in for continued growth and increased prof-
feel that this represents a significant guar- this case I believe that our close-to-the- itability in the sprit of a small company.
antee against national protection of the customer work approach will offer advan-
former monopolies regaining the upper tages. Our dialogue with customers is filled Stockholm, February 2003
hand. But there are definitely countries in with respect and interest in the customer’s
which one would wish for greater pressure requirements. Not least, we are following
for change. This applies primarily to with great interest the use of mobile tele-
Germany, but even in France this would be phony among young women, whom to date Lars-Johan Jarnheimer
very desirable. have been major trendsetters in this area.
UMTS (3G) continues to be a topical A key factor underlying Tele2’s success
subject. I never expected rapid 3G devel- is that we communicate with our cus-
opment and therefore my message on this tomers in a way that appeals to them.
11
14. Market – continuing growth
The European telecom market is charac- Continuing growth and market conditions permit. Tele2 has a
terized by stiff competition, acquisitions At the same time as competition is stiff- history of offering customers attractive
and mergers – but also by continuing ening, the telecom market continues to products at competitive prices.
growth in demand. expand. For example, the total market for
Following deregulation in the EU, fixed telephony, mobile telecom services Varying progress in deregulation
numerous new players established a pres- and Internet access in Sweden rose 7% EU telecom markets were deregulated to
ence in the market, at the same time as during the first six months of 2002, com- stimulate greater competition. The intro-
the former monopolies expanded into new pared with the same period a year earlier. duction of new legislation designed to lead
geographic markets. A central driving force in the market is to increased competition has, however,
Following a wave of investments in 3G that customers are increasingly seeking progressed differently in various countries.
licenses, data networks and other applica- total telecom solutions. Tele2 has access Germany, for example, has fallen behind
tions, many companies have abandoned to services and expertise in mobile teleph- other countries as regards local carrier pre-
the market, either as result of acquisition ony, fixed telephony, Internet, data net- selection. In those countries in which local
or bankruptcy. One feature of the com- works, cable-TV and broadband and is pre-selection is made available for players
panies that were pushed out is that they working continually to transfer know-how other than the former monopolies, such as
lacked financial strength and/or a feasible among the various areas and countries to France and Italy, Tele2 has gained consid-
business model. This trend has created strengthen its customer offering. Tele2 has erable successes.
opportunities for Tele2 to acquire cus- had major success in cross selling new Also, the EU Commission believes there
tomers from these companies. products to its existing customer base. is no effective competition in, for example,
In markets in which Tele2 is relatively broadband services via access networks,
recently established, the strategy is to add meaning copper wire that connects switch-
new services and products as deregulation es with end customers. The pricing applied
12
15. by the former monopolies discriminates leases an existing network and thus avoids with Telenor. Tele2 is already active as an
against newcomers. building a new mobile network. MVNO in Denmark and the Netherlands,
Also, interconnect traffic charges are an The difference between MVNO and SP and during 2002, an MVNO agreement
area in which improvements are required. is a fundamental one. In the latter case, was signed with Connect Austria in Austria,
The interconnect traffic charge is the fee the operator becomes a vendor of another where service was launched in February
paid by a telecom operator to enter the company’s telephony, since it only handles 2003.
access network. Interconnect traffic outgoing traffic. MVNO means simply that
charges are one of the largest expense a mobile operator purchases radio access UMTS – third generation mobile telephony
items for Tele2. Consequently, lower inter- from an existing mobile operator, but is Tele2 holds UMTS licenses for third gen-
connect traffic charges provide highly pos- otherwise completely independent and can eration telephony in Sweden, Finland
itive effects. develop services, payment forms and (through joint ownership of Suomen
The pricing originates from the former direct traffic accordingly as if it were a con- Kolmegee Oy), Liechtenstein, Luxembourg
monopoly’s attempts to retain control of ventional mobile operator. The only differ- and Latvia.
the access network. It is only when these ence between a conventional operator and In an effort to keep down costs of con-
– and thus subscriptions – are exposed to a real MVNO is that the MVNO has no con- struction and operation of the UMTS net-
competition that deregulation of the mar- trol of coverage build-out. For the cus- work in Sweden, Tele2 and Telia have
ket will have a full impact. tomer, there is no difference between hav- established a jointly owned company,
ing a subscription with a conventional Svenska UMTS-nät AB. Costs are curtailed
MVNO offers new growth opportunities operator or having one with an MVNO. through the use of both companies’ exist-
In cases in which deregulation is effective, The model opens major growth oppor- ing infrastructure, such as telecom masts.
new markets are opened up to new forms tunities for a company like Tele2, which Tele2 has a strong brand, large cus-
of service suppliers. Both Mobile Virtual has a large customer base in many coun- tomer base, service development close to
Network Operators (MVNO) and Service tries but which does not have its own infra- customers, an efficient organization and
Providers (SP) have emerged as new busi- structure. During the year, Tele2 returned comprehensive technical know-how – fac-
ness models that add to competition in the its UMTS license in Norway and instead tors that suggest success in the market for
mobile market. In both cases, the operator elected to conclude an MVNO agreement 3G-based services.
13
16. Business concept
Based on customers’ needs, Tele2 shall through
simple, customer-friendly sevices and the lowest
price have the most satisfied customers in the
market.
This is Tele2 Values
Tele2, formed in 1993, is the leading alternative Tele2’s corporate culture rests on three
pan-European telecommunications company and fundamental values:
is active in GSM, public telecommunications and
• flexibility
data networks, as well as Internet and cable-TV
• informality
services.
• cost-consciousness
Tele2’s organization
Tele2 AB
Lars-Johan Jarnheimer, CEO
Håkan Zadler, CFO
Nordic Eastern Europe Central Europe Southern Europe Luxembourg Branded products
and Russia Germany France & services
Sweden Luxembourg
Norway Estonia Netherlands Italy Liechtenstein C3
Denmark Latvia Switzerland Spain Belgium United Kingdom
Finland Lithuania Austria Portugal 3C Everyday
Optimal Telecom Poland Ireland Transac
Datametrix Czech Republic
Russia
X-source
14 T E L E 2 A N N U A L R E P O R T 2002
17. Strength factors: Strategies
• profitability The company’s strategy is reflected in:
• low rates • Being the price-leading operator in all markets
in which the Group is present.
• large customer base
• Price-leadership and the role of challenger to the
• industry-leading efficiency
former monopolies have been decisive factors in
• well-known brands
successfully securing new customers and thus
• flexibility Tele2’s growth.
• prompt adjustment to new customer • When expanding into new markets, the aim is
requirements and market conditions to rapidly build up a customer base that can
• committed and skilled employees subsequently be cross sold services in pace
with market maturity and deregulation to offer
more people the opportunity to communicate
less expensively through Tele2.
Business model
In existing markets in continental Europe, when it is not necessary. In countries in Baltic states are extremely important for
future growth is expected to derive largely which Tele2 owns infrastructure, it would expansion in Russia. Know-how and experi-
from the cross-selling of services and not have been possible to compete with the ence from the Baltic market can be used
products to the existing customer base. In former monopoly without access to propri- to gain efficient growth in Russia.
less mature markets, the penetration rate etary infrastructure.
remains relatively low, permitting rapid The objective in each country is to reach Rapid growth
growth when an increasing number of a positive operating income before depre- In 2002, Tele2 was the fastest growing
people demand attractive communications ciation/amortization within three years telecom operator in Europe, thereby con-
services. Tele2 is also monitoring countries from the start of operations. Tele2 has firming the functional nature of its busi-
bordering on current market areas. achieved this in all markets except ness model.
Tele2 consistently attempts to transfer Germany, where deregulation has lagged
know-how among its various product areas behind the rest of Europe. Quality
and countries. Customer offerings and suc- In Southern Europe, with France and Tele2 has a quality policy that serves as a
cessful concepts create synergies since Italy as the largest markets, Tele2 has guide for all operations in the Group. One
they can be more used effectively in sev- established itself as a strong brand and has of the most important means of attaining
eral markets, creating conditions for high- had great success in fixed telephony. the Group’s target is high quality in every-
er profitability through economies of scale Operations in the Baltic States have thing it does. Tele2’s commitments,
and better resource utilization. largely emulated Nordic activities with actions and products will be perceived as
Cost-consciousness also entails not great success – the area is one of the most an expression of quality. The foundation
contracting and owning infrastructure rapidly growing in mobile telephony. The comprises the Group’s values and accu-
15
18. Business model cont.
mulated expertise. Constant improvement The rapid addition of new customers in with an expected introduction in Germany
is the work motto. the Baltic States is driven by mobile tele- during 2003, revenues in Central Europe
The experience of a product or service phony and particularly the prepaid card. In will grow in 2003 without triggering any
must always meet the customer’s expect- Latvia, Tele2 acquired one of two UTMS rise in costs. As an MVNO, new possibili-
ations. The customer is the center of atten- licenses. In January 2003, the market ties for growth are created. Tele2 has an
tion and the key quality benchmark is cus- opened for fixed telephony and Tele2 MVNO agreement with Telenor in Norway,
tomer satisfaction. Customer surveys are expects to introduce services during the with launch planned for the first quarter of
conducted regularly in an effort to improve first half of the year. Tele2 launched fixed 2003. During 2002, Tele2 rolled out an
results consistently. Customers must telephony in Poland during the first quarter MVNO in the Netherlands and signed an
always feel confidence in Tele2 as a sup- of 2003 and plans to introduce local pre- MVNO agreement with Connect Austria in
plier. selection in the Czech Republic during the Austria.
year. In February 2003, Tele2 acquired Alpha
Opportunities in 2003 In Continental Europe, fixed telephony Telecom, the leading prepaid fixed tele-
During 2002, Tele2 grew faster than its operations continued to post strong growth phony operator in the UK for private indi-
competitors, generated the best cash flow in 2002 and at year-end had 8.5 million viduals and the market leader in prepaid
and improved earnings sharply. customers. Central Europe and Southern cards for fixed telephony. Alpha will ben-
Maintaining the balance between cus- Europe combined reached breakeven at efit from Tele2’s strong market position
tomer growth, profitability and cash flow the EBITDA level during the year. and will be able to expand to Tele2’s mar-
continues to be the priority in 2003. Introduction of local pre-selection in kets in Europe.
Tele2’s mobile operations are “Best in Southern Europe fueled Tele2’s very rapid
Class” with very favorable margins in development in the market area. Fixed
Sweden. Tele2 has more than 3 million telephony was launched in Portugal in
mobile customers in Sweden. Profitability 2003.
in the Swedish fixed telephony operations With local pre-selection available in the
continues to be good. Netherlands since August 1, 2002, and
Good positioning
Tele2 always aims to improve
16 T E L E 2 A N N U A L R E P O R T 2002
19. Products and services
Tele2 offers fixed telephony, mobile telephony, Internet services, and data network services,
cable-TV and content services in 22 countries in Europe.
Tele2’s product strategy is to have a joint product portfolio with fixed telephony as a base and
add dial-up Internet services, mobile telephony and broadband when the market in each country
is sufficiently mature. This strategy permits Tele2 to deliver and continually improve products that
satisfy customer demands for low-cost, high-quality communications services.
Fixed telephony Prepaid telephony
Prepaid fixed telephony means that the
customer pays his/her own “call account”
which they then use when calling via the
Carrier Pre-select fixed telecom network. For Tele2, the
Pre-selection means that customers can service means fewer unpaid receivables,
select to use Tele2’s lower prices for their lower customer churn and reduced invoicing
fixed telephony. They no longer need to dial costs, and at the same time, it is positive
a prefix. Local pre-selection means that for cash flow.
Tele2 also takes charge of local calls via Tele2 has had considerable success
pre-selection. with prepaid fixed telephony in France,
Following deregulation in France, Italy Italy, Spain and Finland.
and the Netherlands – Tele2 began to offer
iHear stores and news stands. C3 works closely
customers cheaper call rates using Tele2
iHear is a cordless telephone equipped with Tele2, which provides the network
via pre-selection. Tele2 continues to work
with a calling-router that always connects capacity.
with the authorities in countries in which
pre-selection and local pre-selection have the call via Tele2, and thus provides access
not yet been deregulated. to the company’s attractive rates. In recent Telephone booths, Internet
The access network, meaning the cop- years, Tele2 has used the iHear telephone terminals and WLAN Hot Spots
successfully to increase customer satis- Via 3C Communications, Tele2 operates
per wire connecting households with the
faction, customer loyalty and call volumes. credit card-based telephone kiosks and
telecom network, is still not open to com-
The telephone is particularly effective in Internet terminals in hotels, restaurants
petition but is instead handled almost ex-
countries where pre-selection is not avail- and other well-frequented locations
clusively by Europe’s former telecom mon-
able. Tele2 launched the latest Dect 3 throughout Europe. The kiosks and termin-
opolies. As a result, customers who have
model of iHear in 2002. als are an excellent base for adding WLAN
selected an alternative, must pay sub-
Hot Spots (Wireless LAN) which permit a
scription charges to the former monopoly.
Telephone cards link up with portable computers. Tele2
However, we have succeeded in offering
Since 1999, C – Calling Card Company –
3 operates via the operator organization
subscriptions to customers in Denmark
has sold calling cards for fixed telephony Pass-One for global roaming among vari-
and we are intensively pursuing this issue
in a number of markets in Europe. The call- ous Hot Spots.
in other countries. This gives our cus-
tomers one invoice and a better overview ing card is available in different denomi-
of their telephony costs, resulting in more nations for domestic and international VoIP
calls and features a code. The customer Voice over Internet Protocol – telephony via
satisfied customers and notably lower cus-
calls up the number indicated on the card the Internet.
tomer turnover.
and dials in his/her code – then it’s just a During 2002, Tele2 conducted a num-
matter of calling cheaper with Tele2. ber of successful tests using VoIP in broad-
The calling card is marketed under a band networks.
number of brands and is sold primarily in
17
20. Mobile telephony make calls outside Sweden using a pre-
paid card. This service has proved to be
very successful.
Tele2 offers mobile telephony via a number UMTS
of subscription forms and prepaid cards. UMTS technology increases capacity in
Regardless of whether the service targets mobile networks considerably compared infrastructure. Capacity is leased instead
consumers or the corporate market, it is with GSM. Tele2 believes firmly that third from a network owner. In countries in
positioned as price leader. generation mobile telephony, 3G, will which Tele2 does not have a mobile
Having a mobile telephone with a pre- involve a revolution for access to personal license, the MVNO concept permits Tele2
paid card is growing in popularity and has information and entertainment by con- to supply fixed telephony with a full range
contributed to Tele2’s rapid growth. It’s necting mobile customers with mobile of services in subscription and prepaid
easy to understand why many people opt broadband services such as e-mail, image calling cards for mobile telephony.
for prepaid calling cards. Customers can services, games and content portals. Tele2 expects MVNO´s to expand in the
start calling immediately, they have good Tele2 has UMTS licenses in Sweden, immediate future, since deregulation of
control of their telephone costs and can Finland (via the jointly owned Suomen the EU telecom market is gaining an
always check how much credit they have Kolmegee Oy), Luxembourg, Liechtenstein impact and the mobile market is maturing.
left. They also avoid bills and credit and Latvia. Tele2 operates as a MVNO in Denmark and
appraisals are unnecessary. the Netherlands. During 2002, a MVNO
A major innovation in Sweden during MVNO agreement was signed with Telenor in
2002 was the introduction of a service MVNO – Mobile Virtual Network Operator Norway and with Connect Austria in
allowing Tele2 customers to receive and – means that Tele2 can act as a complete Austria, where the service was subse-
mobile operator without owning its own quently launched in February 2003.
Internet services the conventional network are impossible
due to technical, legal or business reasons.
The success of wireless broadband also
indicates that the former monopolies have
Dial-up Internet an erroneous and ongoing monopolistic
Dial-up Internet means that customers are approach in the pricing of broadband ser-
not permanently connected but can use a vices.
modem when they wish to link up to the Tele2 offers wireless broadband via WLL
Internet. Dial-up Internet is available in in parts of Poland, Czech Republic,
subscription form and as a link-up without Finland, Norway, Sweden and Denmark.
a fixed charge, for which customers pay Metropolitan Area Networks
only for the time they are connected. The ADSL Tele2 offers broadband at 10 Mbit/s in a
primary growth in the area is represented ADSL – Asymmetric Digital Subscriber Line number of MANs (Metropolitan Area
by connections without a fixed charge. – is a technology that permits the use of Networks) in Sweden and Denmark.
Tele2 is the market leader in Scandi- broadband via conventional telephone In Sweden, the MAN is linked to Tele2’s
navia for dial-up Internet and has very suc- lines. This area offers major potential, wide-ranging trunk network, Swipnet,
cessfully launched Internet with subscrip- especially since customers find the product which was the first commercial IP network
tions as base in France and Italy in 2002. easy to use by customers, although pricing in Sweden. In Denmark, MAN is linked to
Dial-up Internet will be launched in more by the former monopolies presents a major the country’s largest trunk network.
countries during 2003. The Internet product obstacle to future growth. Tele2 is active-
is continually upgraded with new services. ly continuing its efforts to find solutions to Broadband via cable-TV
the monopoly problem. As early as 1998 in Sweden, Tele2 began
Wireless broadband Tele2 offers ADSL in Sweden, Norway, to offer broadband using cable-TV as the
Broadband is a method for transferring Denmark and Switzerland. Tele2’s ADSL carrier. During 2001 and 2002, a large
data in the form of text, images and voice services have made a definite impact in the portion of the network was upgraded to
at very high speeds. Wireless broadband Nordic market and the company has con- handle broadband. The offering is one of
via WLL (Wireless Local Loop, via radio net- solidated its position as the largest Internet the cheapest on the market.
works) is a way of circumventing the access supplier in Scandinavia. ADSL will be intro- Tele2 also offers broadband via cable-
network when broadband connections via duced in additional countries in 2003. TV network in Estonia and Lithuania.
18 T E L E 2 A N N U A L R E P O R T 2002
21. Cable-TV
Under the Kabelvision brand, Tele2 offers
one of the market’s best basic packages in
Sweden at an attractive price. Kabel-
vision’s basic package (Pluspaket) offers
access to 15 popular TV channels such as
MTV, Visasat Sport, Discovery, Eurosport
and E!. In addition, Kabelvision offers two
highly competitive expanded packages,
Silver and Gold, as well as premium
channels such as Canal+ and TV1000.
Available throughout Sweden, Kabelvision
has 310,000 household subscribers –
making it the country’s second largest
cable-TV operator. Tele2 also conducts
cable-TV operations in Estonia and
Lithuania.
Content services
Tele2’s strategy is to organize but not During the year, the Tele2 SelfNavigator
develop content services (e-mail, news, service was launched, permitting cus-
games, ringtones, image services) which tomers to review, add to or terminate cer-
makes things easier for our customers. The tain services on the Internet. It is also pos-
services are linked to the portal sible to view billing information and account
Tele2Internet that can be accessed irre- information.
spective of the form of communication. Tele2 also offers a large amount of SMS
Tele2 has a payment solution attached to and WAP-based services in various mar-
the platform for micro-payments to the kets. For example, Tele2 was one of the
companies supplying services, indepen- first companies in Estonia to offer payment
dens of access. The business model is of parking charges via mobile telephone.
based on distribution of revenue. Tele2 was also the first operator to give
customers in Luxembourg the potential to
send images using MMS.
19
22. Market position
among alternative
Service Launch operators
Sweden Mobile 1981 Market area
Fixed
Internet
Cable TV
1993
1991
1986
1 Nordic
Norway Mobile 2000
Fixed
Internet
1998
1997
1
Denmark Mobile 2000
Fixed
Internet
1996
1997
1
Finland Fixed 2000
Internet 2001
Sweden Comviq was the first operator in Sweden
Tele2 was established in Sweden and this to offer all prepaid card customers the
market accounts for the Group’s broadest opportunity to call and receive calls from
Market area’s share
of the Group’s
43% product portfolio. Sweden is also a key test
market for new services and their develop-
ment, which are subsequently implement-
abroad.
For corporate customers, Tele2 launched
mobile centrex, which offers the potential
net sales ed in other Tele2 countries. to use switch functions directly in the
During 2002, Tele2 Sweden sharpened mobile phone. Customers are seeking to
its focus on profitability and sales volumes. integrate solutions between fixed and
Efforts in this direction have highlighted mobile telephony and the launch of cen-
the primary products – mobile telephony, trex is a step in this direction.
2002 2001 Change fixed telephony, Internet, data network ser-
vices and cable-TV. Fixed telephony
Number of
In February Tele2’s fixed telephony cus-
customers, 000s 6,252* 6,274
Sharper customer focus tomers were also offered pre-selection for
Net sales, SEK M 13,566 11,898 +14% Two customer areas were created: Private local calls. This means that customers
Customers and Corporate Customers. The were also able to benefit from Tele2’s low
EBITDA, SEK M 4,814 3,768 +28%
customer areas are in charge of services prices for local calls. Tele2 is working
*including adjustment to the Group’s definition of active customer and packaging as well as for reaching their towards achieving a solution to offer fixed
preset profitability targets. The change has telephony susbcriptions, since this offers
Brands Tele2, Comviq, Kabelvision, Datametrix, led to a clear customer focus. The primary additional potential to reduce customer
Uni2, Optimal, Tango, Everyday, Get2Net results are more effective distribution as costs and enhance customer loyalty.
well as a distinct product offering. The
2002 Increased market shares
measures are a major factor underlying Launch of ADSL
Improved profitability
higher profitability and have been con- In the case of Internet customers, the
ducted in all product areas. focus has been on ADSL, which was
launched in June. Due to unreasonable
Higher market shares pricing from the network owner, Tele2 is
“We’re stronger Tele2 Sweden won market share in all unfortunately unable to offer a price that
is substantially below that of competitors.
than ever in the product areas. The most aggressive growth
However, it is gratifying to see that the dial-
was noted in Comviq prepaid, with the num-
Nordic region.” ber of customers exceeding two million dur- up Internet service, Free2Connect, has
ing autumn 2002. The total number of cus- shown stable growth.
Fredrik Berglund tomers exceeded three million at year-end. Tele2 also launched IP-VPN for the data
Market Area Director, Nordic network market. The launch marked a
Consolidated price position in mobile major sales success and it is planned to
Tele2 has consolidated its price position in enhance the product portfolio in data net-
the private and corporate markets. Private works during 2002.
customers are offered “Five ways of
calling more cheaply” and corporate cus- Stronger brands
tomers have two new subscriptions A logical development of the above is the
“Company” and “Company+”. At the close growing recognition of the Tele2 and
of the year, Comviq celebrated its 10th Comviq brands. Currently, 97% of
anniversary with a number of activities, Sweden’s population recognizes both
which included presenting existing and brands.
20 T E L E 2 A N N U A L R E P O R T 2002 new customers with lower calling prices.
23. A taste for action
Tele2 – in pole position
Norway In September Tele2 signed an MVNO In August, Tele2 launched its ADSL ser-
Despite a slower growth rate in the market agreement with Telenor. The agreement vice for households, which offers cus-
as a whole, Tele2 continued to expand and offers Tele2 the potential to transfer cus- tomers access to the market’s lowest rates.
win market share. Growth, combined with tomers currently covered by the present
cost control, resulted in record high prof- Service Provider agreement to the more Corporate market
itability for Tele2 Norway. competitive MVNO service. The agreement Tele2 has a complete range of services for
permits Tele2 to develop new, price-lead- companies, but focuses particularly on
Fixed telephony ing services for its customers in Norway. offering standardized package solutions to
Tele2 strengthened its customer offering In November, Tele2 returned its UMTS small and large companies. Standard-
and sales rose throughout the year, despite license to the Norwegian authorities. ization of the product portfolio is a suc-
aggressive marketing from old and new Consequently, Tele2 no longer has any cessful concept in reaching profitability in
competitors. commitments or expenses linked to the the corporate market.
expansion of the UMTS network in Norway.
Mobile telephony Denmark
Tele2 increased its market share and Internet The Danish telecom market is undergoing
strengthened its position in the mobile Although the market for dial-up Internet restructuring and consolidation. A number
market, with revenue showing a stable continued to weaken in 2002, Tele2 man- of players have withdrawn from the mar-
increase during 2002. aged to raise its market share. Marketing ket. Tele2 is continually seeking to max-
Tele2 successfully recruited mobile campaigns in January and December were imise the resulting emerging opportuni-
customers from Tele2’s existing customer successful in recruiting a substantial num- ties.
base in fixed telephony. Cross-selling ber of new customers. Cross-selling has Tele2 focused on controlling growth and
offers lower costs in attracting new cus- also proved to be highly successful, result- costs and is entering 2003 with good
tomers, moreover this type of customer ing in a larger number of more loyal cus- prospects in terms of growth and earnings.
calls more frequently and is more loyal tomers.
than other customer groups.
21
24. Mobile telephony Tele2 operates a Wireless Local Loop for Datametrix
2002 was a year of consolidation, restruc- broadband in Jyväskylä. The service was Datametrix is a strong system integrator in
turing and reassessment of the market for launched in spring 2002 and Tele2 is the Nordic market. The company is char-
Danish mobile operators. Prices in the pri- studying the possibility of expanding into acterized by good geographic coverage,
vate market have declined and competi- other cities with other network owners. flexibility and cost-consciousness.
tion continues to be tough. Tele2 conduct- The market is driven by the develop-
ed measures aimed at raising profitability Monopolistic market ment of conventional telephony with innova-
from mobile services, which led to a reduc- The monopolistic nature of the Finnish tive applications and the ever-growing
tion in costs for customer procurement and market means that Tele2 cannot yet offer demand for mobile solutions. IP telephony
an increase in call volume per customer. local calls. Nevertheless the number of has established itself as a competitive
During early 2002, Tele2 launched a customers and revenue rose during 2002. alternative for commercial applications.
subscription service, which reported rapid During the year, new agreements were
growth. signed covering international calls and other Sweden
services that reduce costs for Tele2. During The Swedish organization has been
Internet 2002, Tele2 moved from the development streamlined and is now focusing on IP
Tele2 ASDL was launched in August 2002. phase to greater customer focus and further telephony and system integration of tele-
The strategy is to attain balanced and cost developed its fixed telephony services, phony and data. Like Tele2, Datametrix is
effective growth. The launch of broadband which were launched in autumn 2001. a unique total solution supplier with a
has meant a reduction in dial-up traffic in strong product and service profile.
the overall market. But customer intake Optimal Telecom
continues nonetheless. Optimal Telecom is a Service Provider Norway
A review of the company and its inter- offering individuals fixed telephony and In November 2002, Datametrix in Norway
nal processes permitted the achievement Internet and the Tango prepaid calling card celebrated its 20th anniversary. The com-
of synergies between Tele2 and UNi2, the for mobile telephony. pany has developed into a prominent sys-
brand for corporate Internet. tems integrator in the Norwegian market.
Lowest-price guarantee It has become a market heavyweight
Fixed telephony Optimal Telecom’s lowest price guarantee through its consistent efforts in its three
During the year, Tele2 launched what automatically gives customers the lowest core areas: infrastructure, IP telephony
could be viewed as an alternative to fixed ordinary rate from Telia, Tele2, TeleNordia, and security.
price telephony, namely, the Weekend+ Rix Telecom, Utfors, Glocalnet and ACN. The
service, which offers 24-hour free tele- guarantee is the primary factor underlying Denmark
phony each Sunday. The service attracted Optimal Telecom’s high customer loyalty. In September, Datametrix in Denmark was
considerable attention and appeals to the Optimal Telecom also sells cordless ranked number 18 on the Børsen Gazelle
conservative, fixed telephony market. telephones and speaker telephones index of the fastest growing companies in
Two small operators with the corporate equipped with a calling-router, which Denmark, computed by the daily paper
sector as their niche were acquired during means calls are always handled by Optimal Børsens Gazelle index. The factor underly-
the year, which contributed to an increase Telecom. ing the success of Datametrix is its keen
in the customer base and revenue in the focus on products for the call-center mar-
corporate segment. Expansion in the private market ket.
At the end of the year, the Danish Optimal Telecom continued to report
authorities presented new regulations that robust growth in fixed and mobile teleph- Partners
entail a reduction in interconnect charges ony, while the company also raised prof- In May 2002, Datametrix was appointed
in certain areas during 2003. itability, despite stiff competition in the Norway Gold Partner to Cisco. This is con-
market. firmation of the company’s leading-edge
Finland During 2003, the focus is on generat- expertise and business skills. In Sweden,
Tele2 offers fixed telephony in Finland in ing continued growth and improved prof- the company is Gold Partner to Avaya and
the form of domestic calls, international itability in fixed and mobile telephony a certified Ericsson Service and Sales
calls and calling cards. In the Helsinki through increased cross-selling and build- Partner. During the year, Datametrix signed
area, dial-up Internet is also offered. The ing long-term customer relations. an OEM agreement with Intel, making it
launch of iHear telephones commenced in the sole vendor of Intel’s product line for
the summer of 2002. VPN in Sweden.
22 T E L E 2 A N N U A L R E P O R T 2002
25. Market position
among alternative
Licenses Launch* operators
Market area Estonia Mobile 1998
Fixed
Cable-TV
1998
1998 1
Eastern Europe Latvia Mobile 1999
1
and Russia Lithuania Mobile 2000
2
Czech
Republic
Fixed
Internet
2002
2000 1
Poland Fixed 2003
Internet 2000
Russia Estonia
Tele2 offers mobile telephony in eleven
regions in Russia. Most of the companies
Tele2 in Estonia offers a broad range of
telecom services: mobile telephony (sub-
Russia Mobile
7
operate under the FORA brand. In scription and prepaid calling cards), fixed *Year of launch by Tele2
November Tele2 sold its share of the telephony, Internet, content services and
Moscow-based NMT450 operator MCC.
Preparations for GSM
cable-TV.
2002 was one of the most successful
years in the history of the company. The
Market area’s share
of the Group’s
8%
During the year, Tele2 received GSM sharp growth from 2001 continued into net sales
licenses for Nishny Novgorod, Chelyabinsk 2002. Tele2 is the most rapidly growing
and the St Petersburg region. Thus, all mobile operator in Estonia and now has a
companies have licenses for GSM1800 tight grip on the second place in the mar-
and work is in progress to launch the first ket. Tele2 now commands one-third of the
regions during 2003. Estonian mobile market.
2002 2001 Change
Tele2 is also clearly the leading alter-
Calling Party Pays native operator in fixed telephony. Number of
customers, 000s 1,574 996 +58%
Tele2’s company in Omsk was the first
mobile operator to launch CPP (Calling Supplementary services launched Net sales, SEK M 2,320 1,148 +102%
Party Pays) services, which, as the name During 2002, several supplementary ser-
EBITDA, SEK M 541 272 +99%
implies, means that the calling person vices were launched that create added
pays the call. CPP is unusual in Russia, value for customers and which offer com-
where it is most common that the mobile petitive advantages for Tele2. Among other
Brands Tele2, Fora, C gates, Zeta Zivtina
telephone owner pays (MPP, Mobile Party points, Tele2 is the only mobile operator to
Pays), even when that person is called. date that offers pan-Baltic roaming for pre- 2002 Revenue doubled
CPP has proved to be an attractive and paid customers. Tele2 has also introduced Continuing profitability
effective means of competition in the a uniform invoice for customers who have
Russia market. Tele2 has also launched fixed as well as mobile telephony.
CPP in Chelyabinsk. During 2003, Tele2 “Tele2 is growing rapidly
will continue its efforts in negotiating Attractive services
in the Baltic States, with
agreements for CPP in other regions. Tele2 is very positive about prospects in
2003, not least because of a highly attract- more than one million
Outlook for 2003 ive product and service offering, although satisfied customers.”
Prospects for the Russian economy in competition in the Estonian market has
2003 are positive. The mobile telephone stiffened in recent times. Johnny Svedberg
Market Area Director, Eastern Europe and Russia
market expanded by 125% in 2002. Rapid
growth is expected to continue during the
current year. The customer segments now
seeking to acquire mobile telephones are
the middle class, middle management in
companies and small business owners,
which traditionally have been strong cus-
tomer groups for Tele2.
23
26. Tele2 fångar de stora fiskarna
Thrives on competition
Tele2 – more efficient than the old monopolies
Latvia vice means that both subscription and pre- Recognition of Tele2 is very high. 80%
Tele2 is the leading alternative mobile paid customers can call from anywhere in of Latvians recognize the brand, even
operator in Latvia. The company’s growth the Baltic States and still enjoy call rates though it was launched less than two years
is being driven particularly by the success as if they were at home in Latvia. ago. This level of recognition is reflected
in prepaid calling cards. Tele2 plans to Prepaid customers now get a bonus in growth: Tele2 is the most rapidly grow-
launch fixed telephony during 2003. when they are called, which contributes to ing telecom company in Latvia.
raising call volumes. They can also refill
Leader in the prepaid calling card market the prepaid card directly from their bank
Tele2 leads the market for prepaid calling account, all that is required is an SMS –
cards with Zelta Zivtina, “Gold Fish”. making it simple for customers and offer-
Subscription services are the leading alter- ing a cost saving for Tele2.
native to the former monopoly. A new ser-
24 T E L E 2 A N N U A L R E P O R T 2002
27. Increasingly comprehensive range Deregulation of fixed telephony In early 2002, Tele2 became the first
During 2002, Tele2 acquired one of two There are good prospects for the strong company to win a public license for fixed
UMTS licenses in Latvia. Tele2 also has growth in mobile telephony continuing. telephony. Negotiations for an intercon-
one of the two GSM licenses (900 and The market for fixed telephony was deregu- nect traffic agreement with the former
1800) for Internet services and a license lated in 2003 and Tele2 will maximise the monopoly were concluded in December
for broadband via radio networks. An opportunities for cross-selling as they and the launch of fixed telephony is
application for fixed telephony has been emerge. planned for the first quarter of 2003.
submitted, and Tele2 expects an allocation
during early 2003. Cable-TV and broadband Deregulation heralds new opportunities
During 2002, Tele2 achieved a dominant In November 2002, Tele2 signed a distri-
Exciting development position in cable-TV in all the company’s bution agreement for its prepaid calling
Both the customer base and revenue are areas in Vilnius. During the autumn the cards for fixed telephony with the Polish
expected to rise when Tele2 enters the cable-TV network was expanded to cover all Post Office, which sharply increased the
market for fixed telephony, at the same of Vilnius. number of sales outlets from 2,000 to
time as it continues to fuel growth in The number of broadband customers 10,000.
mobile telephony. doubled during the year. Tele2 offers cable- Since Poland has some of the highest
TV and broadband under the C gates brand. telephony rates in Europe, there are major
Lithuania opportunities awaiting Tele2 during the
Since its start-up in Lithuania in 2000, first quarter of 2003 with the finalization
Tele2 has established a strong position as Czech Republic of deregulation. This creates the potential
the leading operator among private cus- Tele2 has strengthened its position as one for Tele2 to market a more comprehensive
tomers. of the three largest suppliers of wireless service range in fixed telephony.
Mobile penetration rose sharply in 2002 broadband in the Czech Republic and has
and the customer base more than doubled. established a presence in the market for X-source
Tele2 is winning market share at the fixed telephony. X-source operates in IT outsourcing. The
expense of the two competitors; Bite and During 2002, Tele2 expanded wireless company was started by Tele2 in an effort
Omnitel. broadband to an additional two cities and to support IT operations in the group. The
the number of customers rose by 52%. head office is located in Stockholm.
Strong brand Depending on the business terms and con- During 2002, X-source expanded and
During the past year, strength and trust in ditions that can be achieved, Tele2 is like- opened offices in London, Luxembourg
the Tele2 brand have grown considerably, ly to offer ADSL during 2003. and Copenhagen. It also took over part of
with brand recognition rising to 71% dur- Transcom Sweden’s IT operations. As a
ing the fourth quarter of 2002. A contribu- Success in fixed telephony result, X-source is now established in six
tory factor is the fact that the GSM network In July, Tele2 became the first operator to locations in Sweden. The company plans
was expanded so that it now covers a little conclude an interconnect traffic agree- to established a presence in the Baltic
more than 90% of the population. ment with Cesky Telecom. The agreement States by spring 2003.
permits private customers to call more
Subscriptions launched cheaply with Tele2 by dialing a prefix. Competitive prices
During the first quarter of 2002, the Joker Tele2 is now a well-known brand in the X-source offers services in operations and
subscription service was launched, offer- Czech Republic and the largest alternative the development of PC workplaces, oper-
ing the market’s lowest monthly charge operator in the private market. During ations and maintenance of servers, data com-
and a price guarantee. During the third 2003 Tele2 plans to offer pre-selection munications and data security. X-source
quarter, a subscription was launched that and local calls. introduces a business approach to PC work-
is aimed at small and medium-sized com- places and assists client companies in
panies. Poland creating a secure and controlled IT infra-
Tele2 in Lithuania was also the first Tele2 Poland continued its rapid develop- structure, while simultaneously reducing IT
operator to launch pan-Baltic roaming for ment in IP telephony and wireless broad- costs.
prepaid customers. band access. The focus is on small and X-source’s services are also competitive
medium-sized companies. The number of for companies outside the Tele2 Group.
customers more than doubled during Customers include Datscha, Metro, MTG,
2002. Viasat, EIM. Iocore and Basset Support
Solutions.
25
