December 14, 2011 / 10:53 AM / 6 years ago

UPDATE 2-Tele2 sees slower growth in Russia

ВРЕМЯ ЧТЕНИЯ 3 МИНУТ

* Customer intake slowed in November after weak October

* Tele2 sees 20.6-20.7 mln Russian subscribers by year-end

* Shares down 4.1 percent (Adds analyst comment, share price reaction)

By Simon Johnson and Olof Swahnberg

STOCKHOLM, Dec 14 (Reuters) - Tele2 has trimmed its forecast for subscriber growth in Russia due to pressure from competitors, knocking the Swedish telecoms group's shares on fears its growth engine was slowing.

"We have chosen to focus on our activities on reducing the value of customer churn rather than on competing on net intake," chief executive Mats Granryd said on Wednesday.

Tele2's customer base has been expanding fast over the past few years as it rolled out networks across the vast country and took subscribers from existing operators.

But growth has slowed sharply since the summer. While larger rivals MTS and Vimpelcom are regaining traction in the Russian market, Tele2 has been focusing on profitability.

Carnegie analyst Lena Osterberg said Tele2 had reached a relatively high penetration level in its regional markets, making a slowdown in growth numbers not altogether surprising.

"This was a bad number and last month was no good either," she said. "I am not overly concerned yet. But if they were to continue at this pace next year, that would be really bad for the share (price)."

Swedbank analyst Sven Skold said while the numbers would not affect forecasts for 2011, "I am going to lower my forecasts for next year a bit".

Tele2, whose shares were down 4.1 percent at 126.10 crowns at 1035 GMT, had 20.5 million subscribers at end-November, up from 18.4 million at the end of last year. It said it expected its subscriber base to reach 20.6-20.7 million by the year-end, down from an earlier forecast for 21 million.

"We still believe that Russia is Tele2's most important growth market and the company will continue to have a balanced approach between customer intake and profitability," Granryd said. The company added 48,000 subscribers in November in its second-largest market after Sweden, down from 98,000 in October.

The cut in subscriber growth, however, won't affect Tele2's other targets for the country, a spokeswoman said.

Research group BMI said recently the Russian mobile market had entered a slower phase of growth, with average quarter-on-quarter subscriber growth slowing to 1.4 percent in the year to June from 1.8 percent in the previous year and 3.3 percent the year before that. (Editing by Jane Merriman and Dan Lalor)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below