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Contents

 1   Significant events

 2   President’s Message

 4   Tele2 at a glance

10   The Group

12   The Board of Dir...
Significant events

• Tele2’s pro forma net sales for full-year 2000                                                      ...
President’s Message

• Tele2 operates in 20 countries.
• Tele2 is now the largest pan-European
telecom brand.
• Tele2 had ...
President’s Message




   As an MVNO, Tele2 can operate as a full-fledged         Once mobile telephony has incorporated ...
Tele2 at a glance

   Tele2 (formerly NetCom), which was established in 1993, is the leading
   alternative pan-European t...
Tele2 at a glance




  Tele2 at the end of 2000                                      SEC joins Tele2
  At the end of the ...
Tele2 at a glance




         On August 30, 2000, Tele2 and Sonofon concluded             Continental Europe
      the wo...
Tele2 at a glance




                                                                         Challenges ahead
        Eu...
Tele2 at a glance




Personnel and the environment

Environmental policies                                               ...
Tele2 at a glance




   The various mobile technologies
   Universal Mobile Telecommunications Systems (UMTS),        Tra...
Marknadsområde Baltikum och Östeuropa

                The Group
                Rubrik




                              ...
The Group




        Since the merger of Tele2 and SEC, the                                                              ...
The Board of Directors




Standing: Stig Nordin, Håkan Ledin, Lars Wohlin, Vigo Carlund and Sven Hagströmer.
Sitting: Mar...
Senior Executives
         Lars-Johan Jarnheimer                        Håkan Zadler
                     Born 1960       ...
Financial Review

Results for full-year 2000                                  Net interest and other financial expenses to...
Financial Review



FIVE-YEAR OVERVIEW                            2000             1999               1998          1997  ...
The share

Number of shares                                                                                               ...
The share




      Share Price, Stockholm Stock Exchange

         Tele2         AFGX            Monthly trading volume, ...
The Nordic
     countries         The Nordic market area comprises Sweden, Norway, Denmark
                       and Finl...
Nordic countries




Sweden
With a complete offering in the areas                         Growth continues
of mobile telep...
Nordic countries




                                Tele2 Sverige AB markets its mobile services

                       ...
Nordic countries




High per capita use of mobile telephony
           Mobile telephony penetration in Sweden is         ...
Nordic countries




                           Growing competition has

                                meant that custom...
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Annual Report 2000

  1. 1. A n n u a l R e p o r t 2 0 0 0
  2. 2. Contents 1 Significant events 2 President’s Message 4 Tele2 at a glance 10 The Group 12 The Board of Directors 13 Senior Executives Tele2 AB (formerly NetCom AB), which 14 Financial Review was established in 1993, is the leading 16 The Share alternative pan-European telecom 18 The Nordic Countries operator. Tele2 offers fixed and mobile 32 The Baltic States telephony, as well as data communica- and Eastern Europe tions and Internet services, to 11.5 36 Central Europe million subscribers in 20 countries 39 Southern Europe under the Tele2, Tango, Comviq, and 42 Luxembourg Q-GSM brands. 45 Other brands 47 Report of Directors Annual General Meeting The Annual General Meeting will be held at 1:30 pm on 49 Income Statements Thursday, May 17, 2001, at Gamla Stans Bryggeri in Stockholm. 50 Balance Sheets Shareholders who wish to attend the Annual General Meeting 52 Cash Flow Statements must be entered in the share register maintained by the Securities Register Center (Värdepapperscentralen VPC) for 53 Notes the Annual General Meeting (registration must be completed by Monday May 7, 2001) and notify the Company of their 82 Audit Report intention to attend no later than 1:00 pm on Monday, May 14, 2001. 83 Addresses 85 Definitions Notification can be made by telephone, to +46 8 562 00060, or in writing, to Tele2 AB, Box 2094, SE-103 13 Stockholm, Sweden, or by e-mailing to bolagsstamma01@tele2.se Financial information First Quarter Results April 25 Annual General Meeting May 17 Second Quarter Results August 6 Third Quarter Results October 24
  3. 3. Significant events • Tele2’s pro forma net sales for full-year 2000 • During the fourth quarter, ARPU for fixed telephony in central were SEK 16,273 million, an increase of 53% Europe was an encouraging SEK 130, as opposed to SEK 109 for the entire year. from the previous year. • Southern Europe showed a similar trend, posting an ARPU of • Tele2 Sweden’s net sales for full-year 2000 SEK 113 in the fourth quarter and SEK 105 for all of 2000. totaled SEK 7,997 million, up 21% from the pre- • Tele2 had some 2 million French subscribers and was able to vious year. The operating profit before deprecia- recruit 50% of the subscribers who had left France Telecom. tion and amortization increased by 20% to SEK • Tele2 launched fixed telephony in Spain during February 2,749 million. 2001. • At December 31, 2000, the Group had 11.5 mil- • In October, Tele2 acquired SIA Tele2 (formerly lion subscribers, an increase of 59% from Baltkom GSM), the second largest mobile opera- December 31, 1999. tor in Latvia. • Tele2 Sweden’s mobile telephony business posted stable average monthly revenue per subscriber • In December, Tele2 was awarded a UMTS license (ARPU) of SEK 219 including prepaid card cus- in Sweden in addition to its previous licenses in tomers, who represented 59% of all customers. Finland and Norway. Tele2 signed an agreement in principle with Telia in January 2001 on a joint • An agreement with Sonofon in Denmark in UMTS network company. The collaboration will August made Tele2 the first mobile virtual net- considerably reduce costs for constructing and work operator (MVNO). The agreement enables operating a UMTS network in Sweden. Tele2 to offer mobile telephony services to exist- ing fixed telephony customers. The Group antici- • Tele2 divested its 37.45% stake in Transcom pates additional MVNO agreements. World Wide S.A. during January 2001. • Tele2 completed its acquisition of Société • On February 16, 2001, the shareholders voted Européenne de Communication S.A. (SEC) in to change the company’s name from NetCom October. AB to Tele2 AB to further strengthen the Tele2 • SEC’s net sales for the full-year 2000 were SEK 5,879 million, brand in Europe. an increase of 133%. • The operating loss before amortization and depreciation was reduced. Margins and profitability per subscriber improved in the fourth quarter. Financial ratios SEK million 2000 1999 Operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,470 8,175 Operating profit/loss before depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,841 2,062 Operating profit/loss after depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 1,154 Profit/loss after financial items* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 4,186 Profit/loss after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 381 3,769 Earnings per share after full conversion . . . . . . . . . . . . . . . . . . . . . . . . – 3.34 36.29 * The 1999 profit after financial items includes the divestment of an associated company for SEK 3,228 million. Tele2 Annual Report 2000 1
  4. 4. President’s Message • Tele2 operates in 20 countries. • Tele2 is now the largest pan-European telecom brand. • Tele2 had a customer base of over 11.5 million at year-end. The year 2000 was a turning point for Tele2. The acquisition of SEC transformed Tele2 from a Nordic company with businesses in Estonia, Lithuania and Poland to a genuine European operator. By obtaining 3G licenses in our domestic markets of Sweden, Finland and Norway, we have demonstrated that we are the most proficient and ambitious telecom operator in the Nordic region. Tele2 can look back on 2000 with pride. We posted: • pro forma net sales for the full year of over SEK 16 billion, • net sales in Sweden of SEK ‘‘ 8 billion, an increase of 21%, My first duty is to ensure that Tele2 is an efficient company. Such • an operating profit in Sweden …always seeking efficiency will benefit our customers before amortization and depre- new opportunities when it comes to price and quality, ciation that rose by 20% to SEK as well as look after the interests of 2.7 billion, for earnings and our shareholders. • an increase in net sales of 133% ” growth Tele2’s various brands – particu- to SEK 5.9 billion for SEC, larly Tele2, Tele2Mobil and Comviq which Tele2 acquired during the – have won respect for their ability year. to combine high quality with low For Tele2 to make the transition to a pan-European prices. Such recognition is the fruit of a corporate culture operator is a major challenge but this development repre- that has learned to manage its assets properly and to sents an enormous opportunity for the company. From invest in such a way that safeguards efficiency and quality the beginning, Tele2 has cultivated a corporate culture at very low costs. that encourages change and welcomes challenges. We are constantly crossing new boundaries. The “nomadic” A glance at the past aspect of our corporate culture constantly propels us The Comviq Kontant prepaid calling card has continued toward new opportunities for growth and earnings. to expand rapidly in the mobile telephony market, main- A cautious, short-term observer may regard such an taining its firm leadership in Sweden. approach as reckless. That was how we were frequently Comviq subscriptions (payment by invoice) and perceived before Tele2 was listed in 1996, and even after- Tele2Mobil for business customer numbers also increased wards, but such scepticism is rare these days. Tele2 has significantly in 2000. demonstrated its capacity to take on new challenges suc- Tele2 companies had 7,740,000 fixed telephony cus- cessfully and utilize fresh commercial opportunities to tomers, an increase of 72%, at year-end. Those customers forge profitable businesses. represent our foundation for expansion in the next few The key to success for a company that operates in years. Much of that expansion will come from opening Tele2’s sectors is to constantly reconsider what it is doing, virtual networks to mobile telephony and cross-selling a remain sensitive to the wishes and expectations of con- variety of our services. sumers, and avoid rigidity and bureaucracy. From the very beginning, Tele2’s business concept has MVNO – a strategic breakthrough been to reduce prices. That is still at the heart of the The biggest and most strategically important change for company’s mission. For a growing number of subscribers, our mobile telephony business in 2000 was our Danish we are the company that offers high-quality services in subsidiary’s agreement with Danish operator Sonofon. the markets where we operate but at lower prices than The agreement makes Tele2 A/S a mobile virtual net- the old monopolies (or even our infrastructure-oriented work operator (MVNO). competitors). 2 Tele2 Annual Report 2000
  5. 5. President’s Message As an MVNO, Tele2 can operate as a full-fledged Once mobile telephony has incorporated mobile GSM operator in Denmark with its own infrastructure Internet, demand will, in all probability, take a big leap for services. There is a fundamental difference between forward. There is understandable scepticism in that MVNO status and the service provider agreements that regard today – that which is totally unknown is always were previously so common in the industry. A service hard to imagine. Still, the question isn’t whether it will provider agreement turns a company into a distributor of happen, but when. another operator’s telephony with the ability to handle I can still remember all the pundits in 1995 who said outgoing traffic only. The MVNO agreement gives Tele2 that Comviq’s business concept of mobile telephony for its own exchanges and thus the capacity to handle the common man was totally out of the question. For incoming traffic as well. them, mobile telephony was destined permanently to Tele2 AS’s very large customer base (more than remain a tool of exclusive business customers. And for 800,000 at the time of the agreement) was the source of many European countries, they were right in the short its appeal for Sonofon. term. But Comviq got to work in Sweden. Today we can Early in the year, Tele2 Mobile in Switzerland con- boast of being Europe’s most profitable mobile operator cluded a service provider agreement with Swisscom, a business, including an operating margin before write-offs GSM operator. The Swiss subsidiary has already brought of more than 50% in the fourth quarter of 2000. 10% of its fixed-line customers over to mobile telephony UMTS will revolutionize the ability of mobile tele- as well. phony to provide personalized information and enter- Tele2’s broad customer base throughout Europe firmly tainment. When the services are appealing enough, they positions it for similar MVNO will automatically create a vigorous, agreements in one country after rapidly growing market. What another. Given that both parties in an MVNO agreement have something to gain from such col- laboration, I believe that Tele2 will substantially augment its sub- scriber base by this means over ‘‘ MVNO is one of the keys to the success of Tele2’s ambitious might seem like nothing more than a wild fantasy is likely to be com- monplace in a few years for those who are GSM users today. Deregulation is halfway there the next few years. expansion strategy The European telecom market is far ” MVNO status is one of the from fully deregulated. Tele2’s vari- keys to the success of Tele2’s ous subsidiaries report mixed results ambitious expansion strategy. in terms of how efficient that dereg- The prospect of being able to ulation has been. It is of the utmost grow without constructing too many of our own net- importance that both the European Commission and works is highly promising for our business, especially as national deregulation agencies (including the PTS, where Tele2 does have its own infrastructure – which will Swedish Competition Authority and Swedish Consumer include third-generation mobile telephony networks Agency) consistently pursue a proactive competition pol- (UMTS) in Sweden, Norway and Finland within a few icy. years – we will be a very attractive partner. The process won’t happen overnight. It will be many years before new companies are able to compete on equal UMTS terms with the old monopolies. Whether it’s the politi- The National Post and Telecom Agency (PTS) cians, deregulation bodies or antitrust authorities, the announced in December that it was awarding Tele2 establishment of each country tends to protect the old Sweden AB one of the four UMTS licenses in Sweden. monopolies to the bitter end. This puts us in the unique position of having obtained But the European telecom market is entering a whole licenses in the three major Nordic markets. new era. Each step in that direction means higher vol- Having a strong core business in the Nordic countries is umes and sales. Tele2 will make a major contribution in highly important for Tele2. We also have our own infra- revolutionizing the accessibility of personal information structure in those markets – although the actual owner- and entertainment – not to the exclusive few, but to the ship, construction and operation of the infrastructure is broad European masses. only peripheral to our business concept. The infrastruc- ture stems from the commercial realities of the Swedish That’s the way of tomorrow. telecom market at the time we launched our business. Our proposal to Telia that we construct a UMTS net- Lars-Johan Jarnheimer work together was a logical move. The competition between the two companies will remain as fierce as ever, but the collaboration will reduce construction costs and thus benefit our customers. Tele2 Annual Report 2000 3
  6. 6. Tele2 at a glance Tele2 (formerly NetCom), which was established in 1993, is the leading alternative pan-European telecom operator. The company offers GSM, pub- lic telecommunications and data communications, and Internet services. Tele2’s corporate culture rests on the fundamental principles of flexi- bility, non pretentiousness and cost awareness. Tele2’s business concept is to have the most loyal Tele2’s quality assurance policy is based on guidelines and satisfied customers in the market by cost- that apply to the entire Group. The policy is based on effectively selling and supplying voice, data and the belief that one of the keys to achieving the compa- image communications solutions while providing ny’s goals is to maintain high quality in everything that a high-quality service. it does. The Group’s fundamental principles and collec- Developments in 2000 are proof that Tele2 is attaining tive skills are the backbone of that effort. The watch- its objectives. As the annual accounts demonstrate, the word is constant improvement. company is experiencing rapid growth in both customer A customer’s experience of a product or service must recruitment and revenue per subscriber, even in mature meet his or her expectations. We always place the cus- markets like Sweden, Norway and Denmark. tomer at center stage, and our chief gauge of quality is his or her satisfaction. Twice a year we conduct cus- The Group’s strong suits are low rates, a large tomer surveys, the purpose of which is to ensure steady customer base, access to well known brands and improvement. According to the 2000 surveys, customers the ability to adapt rapidly to new customer believe that Tele2 is living up to to their expectations. requirements and market conditions. For instance, customer satisfaction with our Internet With its mobile telephony, fixed telephony, Internet, services was up 3 index points from the year before. data communications, and cable TV capabilities, Tele2 Tele2’s commitments, actions and products must be per- is able to provide the total solution that customers are ceived as quality-oriented. Our customers must always increasingly looking for. The Group is continually work- be able to trust Tele2 as a service provider. ing to spread know-how across product lines and coun- Det svenska teleundret (The Swedish Telecom tries in order to broaden its offering and thereby boost Miracle), released by Ekerlids Publishers in June 2000, is profitability. an excellent history of Tele2 and Comviq. The book chronicles events from the very beginnings in the late 19th century through the groundbreaking deregulation of the 1990s. Tele2 AB Lars Johan Jarnheimer, CEO Håkan Zadler, CFO The Nordic The Baltic Central Europe Southern Luxembourg Other Brands Luxemburg countries States and Germany Europe Luxembourg Optimal Telecom Eastern Europe Belgien Sweden Netherlands France Liechtenstein IntelliNet Liechtenstein Norway Estonia Switzerland Italy Belgium Denmark Latvia Spain C3 T2 Austria Tango Tango Finland Lithuania Ireland Portugal 3C 3C Datametrix Poland Transac Transac Czech Republic X-Source – Industriförvaltnings AB Kinnevik – Kinnevik gets ready to provide tradi- decides to enter the telecommunica- tional voice and data telecommunica- tions market. tions services. Late 1970s 1980s 4 Tele2 Annual Report 2000
  7. 7. Tele2 at a glance Tele2 at the end of 2000 SEC joins Tele2 At the end of the year, the new Tele2 business ran fixed The acquisition of Société Européenne de and mobile telephony operations under the Tele2, Communication S.A. was the biggest event of the year Tele2Mobil, Comviq, Tango, and Q-GSM brands. Tele2 for the Group. The merger turned Tele2 into a competi- provided telecom services to 11.5 million customers in tor against most of Europe’s old telephone monopolies. 20 countries. Tele2 is now the leading alternative pan-European tele- The Tele2 Group also includes a series of other com- com operator. As individual markets deregulate, Tele2 panies that provide telecom and data communications moves in and offers innovative, customized telephony services: services at the most advantageous prices. The growth • X-Source is an IT outsourcing business, strategy reflects the company’s conviction that it is easi- est and most economical to recruit customers at an early • Datametrix specializes in systems integration, stage of deregulation. SEC has made the recruitment of • Optimal Telecom offers the Optimal Selector, Internet fixed-line customers its first priority with the intention and Optimal Wireless, of subsequently offering mobile telephony and Internet • 3C Communications markets telephony and Internet services. At year-end 2000, Tele2/SEC had more than services for public telephones and terminals, 11.5 million customers. • Transac processes credit card transactions, invoices and the like, Tele2 scores hat trick in UMTS • C3 offers prepaid calling cards for fixed telephony, Testimony to Tele2’s proficiency and competitive strength is its unique position in the Nordic 3G market. • IntelliNet guarantees the lowest available rate to fixed- Tele2 is the only operator to have been awarded UMTS line customers. licenses in Finland, Norway and Sweden. As a result, The Group also offers cable TV services under the Tele2 faces major opportunities for synergies and Kabelvision, Tele2 and C-Gates brands, as well as broad- alliances, as demonstrated by its UMTS partnership band services. with Telia in Sweden (still semi-government-owned). The Everday.com Internet portal, which has expand- With its large customer base, technical know-how ed rapidly in Europe over the past two years, is a joint and three licenses, Tele2 is the most attractive prospec- venture between Tele2 and Modern Times Group tive partner for both service providers and other opera- (MTG). tors. Tele2 is quoted on the Attract 40 list of the Stockholm Stock Exchange under the TEL2A and Tele2 becomes the first MVNO in the world TEL2B ticker symbols and on Nasdaq under the Denmark permitted the Mobile Virtual Network TLTOA and TLTOB symbols. Operator (MVNO) option late in the spring of 2000. Tele2 was the first to take advantage of the opportunity. Advances in 2000 Like Service Providers (SP’s), MVNO’s are a means of Tele2 enjoyed an eventful and successful 2000. At the making the mobile telephony market more competitive. beginning of the year, Tele2 was a leading alternative In both cases, an operator rents capacity in an existing telecom operator in the Nordic market. By the end of network instead of having to construct its own radio the year, the acquisition of SEC had made Tele2 – with network. There is a fundamental distinction between businesses in 20 countries – the leading alternative pan- MVNO’s and SP’s. A Service Provider agreement turns a European telecom operator. company into a distributor of another operator’s tele- phony with the ability to handle outgoing traffic only. An MVNO agreement gives the company its own exchanges and thus the capacity to handle incoming traffic as well. An MVNO has its own SIM cards, can bill its subscribers directly, and is able to develop its own services – all of these aspects are obvious advantages in a highly competitive market. – Comvik AB launches its own NMT – A satellite link for data – Comviq obtains network. communications is estab- a GSM license. 1981 1986 lished. 1988 Tele2 Annual Report 2000 5
  8. 8. Tele2 at a glance On August 30, 2000, Tele2 and Sonofon concluded Continental Europe the world’s first MVNO agreement. A month later, the director of the Danish telecom authority made the first – an overview call over the new MVNO network. The company has established itself very quickly in the Tele2 will gradually offer mobile services based on the French market, is the largest alternative operator and is MVNO concepts that are permitted in each country. well positioned for negotiations on MVNO agreements. Subscribers will obtain the same level of service from an Tele2 is one of the three leading fixed telephony opera- MVNO as they do from a traditional operator. The tors in Italy and is beginning to move into the Spanish arrangement represents major growth potential for market in 2001. Tele2, which has a large customer base in a number of Tele2 is the fifth largest alternative fixed telephony countries but lacks a mobile telephony infrastructure. operator in Germany. The company is the largest alter- native fixed telephony operator in the Netherlands. The Tele2 breaks new ground in Poland Group plans to launch Tele2 as an MVNO operator in and the Czech Republic the Netherlands during 2001. Tele2 is the second largest Tele2 (SEC at the time) launched wireless broadband alternative fixed telephony operator in Switzerland. services (Wireless Local Loop – WLL) in the Czech Tele2 Mobile, which was successfully launched in May Republic under the Tele2 brand during 2000. The ser- 2000, offers Switzerland’s first prepaid calling card. Tele2 vice was initially offered in Prague and Brno, the coun- is the largest alternative fixed telephony operator in try’s two largest cities. Tele2 also began providing WLL Austria. in Warsaw. While awaiting the deregulation of the Tele2 has mobile operations in Luxembourg and Polish telecom market, Tele2 launched IP telephony for Liechtenstein under the Tango brand. both businesses and consumers in 2000. In both countries, Tele2 is focusing on carving out its share of the rapidly growing Internet market. Approximately 15% of both Poles and Czechs were mobile telephony customers in 2000, a figure that is likely to rise sharply in the next few years. Tele2 obtains GSM licenses in three Baltic countries In December, Tele2 received final approval for a GSM 900 license in Lithuania. That makes the company a GSM operator in all three Baltic states. Tele2 operates under the brands of Q GSM in Estonia, SIA Tele2 (for- merly Baltkom GSM) –acquired in October 2000 – in Latvia and Tele2 in Lithuania. In anticipation of the deregulation of the fixed telephony market on January 1, 2001, Tele2 launched an intensive marketing effort in Estonia during the autumn. – Agreement with the National –Tele2 AB is formed. – Comviq GSM starts its own Swedish Rail Administration on a GSM network. 1989 joint fiber optic network. 1990 1992 6 Tele2 Annual Report 2000
  9. 9. Tele2 at a glance Challenges ahead Europe continues to deregulate Lingering resistance by the old monopolies Deregulation of the European telecom market is far from The entrenched monopolies are slowing down the devel- uniform. The terms on which operators are allowed to opment of European telecom markets. There is still work compete with the old monopolies vary from country to to be done to create the proper conditions for genuine country. As a result, the European Commission spent competition, conditions that will in turn lead to more 2000 looking more closely at competitive conditions rapid rate cuts and the accelerated development of fixed among the EU’s various members. One of the key issues telephony services, ADSL and the like. Europe needs vig- that the Commission brought to light was the way in orous antitrust authorities that look out for the interests which the old monopolies limit access to the copper of telecom consumers. Deregulation is proceeding at very phone lines that link sub-exchanges to households. To different paces in the various EU countries. The coun- compete on equal terms, all operators must have the tries that have subjected their old monopolies to the same ability to offer local telephony and to utilize access most competition have been rewarded with the highest networks, such as ADSL for broadband. per capita use of mobile telephony, the Internet and In November 2000, the EU’s ministers of industry other telecom services. passed the Local Loop Unbundling ordinance, requiring owners of access networks to make their capacity avail- The potential of 3G able to other operators. This represents an important step As Tele2 sees it, there are a number of reasons to be opti- in the right direction. mistic about UMTS: Tele2 is well established in all of the major European • It will be a common standard throughout the western markets and is keeping a close eye on the commercial world and Japan. The fact that AT&T is moving opportunities that emerge as deregulation unfolds. toward GSM and UMTS suggests that a very broad- based standard is emerging. • Since one of the criteria during the contest for UMTS licenses in the Nordic markets was the ability to con- struct networks rapidly, these countries will have a head start in Europe. The experience garnered and the busi- ness concepts that have proved successful in Nordic telecom can be applied in new markets. • Data communications is marching steadily towards greater bandwidth and mobility. • Tele2 in Sweden will share its infrastructure with Telia, considerably lowering the cost for the construction of the UMTS network. – The fixed telephony market is deregulated. – NetCom Systems is formed to hold and develop the Kinnevik group’s telecommunications companies in the Nordic countries. – Kinnevik and Orkla set up NetCom ASA, Norway. – NetCom Systems launches the NetCom Systems owns 25% of the company. forerunner to Tele2 Norway. 1993 1993 Tele2 Annual Report 2000 7
  10. 10. Tele2 at a glance Personnel and the environment Environmental policies program, the various phases of which will extend over 18 Tele2's operations have only a limited impact on the months. Both line managers and specialists are partici- environment. Nevertheless, customers are increasingly pating. insistent that the Group produces evidence of practices All new employees complete a two-day basic course that are as environmentally friendly as possible. The that covers Tele2's operations, goals, principles, and qual- Group's guidelines specify that environmentally ity assurance objectives. approved products be used whenever possible. In addi- In addition, the Group pursues a wide-ranging skills tion, every effort should be made to treat waste materials development programme to ensure that Tele2 employees generated throughout the office network in an environ- possess the kind of know-how that will keep pace with mentally sound manner. Scrapped materials should be the evolution of the market and the needs of customers. handled in a similar way. Finally, purchasing decisions must take the environment into consideration. The Group is particularly attentive to environmental issues when it comes to mobile telephony. Tele2 closely follows the research in both Sweden and abroad, participating actively in the public discussion of health, environment and safety, and disseminating information about these matters on the Group’s web sites. Ongoing skills development To ensure a steady supply of new managers and special- ists, Tele2 has instituted a one-year trainee program, as well as a leadership project for current employees. A series of new graduates are chosen for the trainee pro- gram each year. For the most part, they undergo hands- on training in various parts of the organization, on a pan-European basis. Most managers in the Nordic orga- nization have started on a management development – NetCom Systems’ stock is spun off to Kinnevik shareholders. At the same time, these shares are listed on the Stockholm Stock Exchange’s O list. – Through its Tele2 A/S subsidiary, NetCom Systems becomes Tele Danmark's very first rival on the Danish telecom market, shattering a century-old monopoly. 1996 8 Tele2 Annual Report 2000
  11. 11. Tele2 at a glance The various mobile technologies Universal Mobile Telecommunications Systems (UMTS), Transitional technologies the technology for third-generation (3G) mobile telepho- During the transition from GSM to UMTS, several ny, will make it possible to do much more than simply technologies have emerged to augment the capacity of talk and send text messages. For instance, mobile phone GSM networks. The most well known technology is users will be able to surf the Internet, download images General Packet Radio Service (GPRS). Although Tele2 and watch video sequences. With a potential bandwidth offers GPRS, it is constrained by the number of compati- of up to 2 Mbit/s, UMTS has considerably higher capac- ble mobile phones in the market. ity than GSM. UMTS represents an attempt to create a GPRS permits much more rapid data transmission, global 3G standard. UMTS licenses were awarded in potentially 115 kbit/s, over GSM networks than earlier Finland during 1999 and in Sweden and Norway during technologies. Furthermore, a user can be continually 2000. In addition to its licenses in Sweden and Norway, connected to the GSM network even when not calling Tele2 has rights to a Finnish UMTS license through its from his or her mobile phone so minimizing switching partnership with Suomen Kolmegee Oy. The first times. Instead of paying for the time that he or she is UMTS systems are expected to be up and running in connected to the network, the user is charged according 2002. to the quantity of data sent. First generation – NMT Although the various types of telephone-based mobile communications date back to the 1930s, Nordic Mobile Telephone (NMT) is ordinarily regarded as the first gen- eration of mobile telephony. As the name implies, NMT is an analog technology developed in the Nordic countries. Comvik AB launched the first NMT network (in Sweden) in 1981. NMT was an attempt to create a system that would work both domestically and internationally. Telia operated its Swedish NMT network in two frequency bands: 450 Mhz and 900 Mhz. The com- pany discontinued its NMT 900 network as of December 31, 2000. Second generation – GSM The digital Global System for Mobile Communications (GSM) is the second generation of mobile telephony. GSM was introduced in 1991, the same year that the first GSM call was placed (from Finland). In 1992 the first portable digital mobile phones were produced and Comviq started its own GSM network. GSM, which can transmit data at Capacity 9.6 kbit/s, is now global standard. Maximum Initially GSM 9,6 kbit/s 9,6 kbit/s GPRS 115 kbit/s approx 50 kbit/s UMTS 2 Mbit/s 384 kbit/s – NetCom Systems is listed on – The Norwegian telecom market is Nasdaq. deregulated. 1997 Year-end 1997/1998 Tele2 Annual Report 2000 9
  12. 12. Marknadsområde Baltikum och Östeuropa The Group Rubrik The Nordic countries Total subscribers: 5,472,000 Central Europe Total subscribers: 2,702,000 The Baltic States and Eastern Europe Total subscribers: 278,000 Luxembourg Total subscribers: 160,000 Southern Europe Total subscribers: 2,942,000 – NetCom AB increases its Ritabell stake to 94.8%. – Equal access pre-selection reform in Denmark, Norway and Sweden. – Acquisition of a 48% stake in Ritabell (mobile telepho- – NetCom AB divests its NetCom ASA stake to Société Européenne de ny operator), the initial penetration of the Baltic market. Communication S.A. (SEC) in exchange for newly issued SEC stock. – NetCom Systems AB changes its name to NetCom AB. Following the deal, NetCom AB holds 17.8% of SEC's capital. 1998 1999 10 Tele2 Annual Report 2000
  13. 13. The Group Since the merger of Tele2 and SEC, the unusual for Tele2 to have as much or more of the market than all the other new operators put together. Group consists of six market areas: the Cross-selling – the marketing of additional products and Nordic region, the Baltic states and Eastern services to existing customers – is a key strategy, the Europe, Central Europe, Southern Europe, emphasis being on supplementing fixed with mobile tele- phony. Tele2 has come a long way in Sweden, Norway Luxembourg, and Other brands. and Denmark. There are also major opportunities in the rest of Europe for the cross-selling of new products and The Nordic operations comprises the largest market area services to the existing customer base. and have been up and running longest, with the Swedish Tele2 is continually working on spreading know-how operations being the oldest. Tele2 offers a broad range of across product lines and countries to broaden its offering products and services in Sweden, Norway and Denmark. and thereby boosting Group profitability. The company Tele2 has one or a variety of products and services in takes concepts that have proven successful and carries most of the other countries. The normal strategy has them over to other countries, frequently using the same been to launch fixed telephony and then to gradually employees. This approach maximizes economies of scale, incorporate new products and services. minimizes personnel requirements and ensures that mis- In most of Tele2’s markets, the company is by far the takes are not repeated. biggest challenger to the previous monopoly. It is not Total subscribers 12-31-2000 12-31-1999 % pro forma Per market area The Nordic countries............................................................................... 5,472,000 4,192,000 +31 The Baltic states and Eastern Europe.......................................... 278,000 56,000 +394 Central Europe ............................................................................................. 2,702,000 1,692,000 +60 Southern Europe ........................................................................................ 2,942,000 1,233,000 +139 Luxembourg .................................................................................................. 160,000 82,000 +95 11,554,000 7,255,000 +59 Per line of business Fixed telephony........................................................................................... 7,740,000 4,492,000 +72 Mobile telephony ...................................................................................... 2,559,000 1,775,000 +44 of which prepaid cards....................................................................... 1,396,000 959,000 +46 Dial-up Internet ........................................................................................... 1,255,000 988,000 +27 11,554,000 7,255,000 +59 Total subscribers per market area per segment 12,000 9,000 6,000 Luxembourg Southern Europe 3,000 Central Europe Dial-up Internet Baltics and Eastern Europe Mobile telephony 0 Nordic countries Fixed telephony 00 99 00 99 20 19 20 19 – NetCom is awarded UMTS – NetCom becomes the first mobile virtual licenses in Norway and network operator (MVNO) in Denmark. Sweden. – NetCom acquires Société Européenne de – NetCom acquires Baltkom Communication S.A. GSM, Latvia’s second largest – NetCom changes its name to 2000 2000 mobile operator. 2001 Tele2. Tele2 Annual Report 2000 11
  14. 14. The Board of Directors Standing: Stig Nordin, Håkan Ledin, Lars Wohlin, Vigo Carlund and Sven Hagströmer. Sitting: Marc J. A. Beuls, Jan Hugo Stenbeck and Lars-Johan Jarnheimer. Vigo Carlund Lars-Johan Håkan Ledin Sven Hagströmer (born 1946) has worked for Jarnheimer (born 1937) has an M.Eng. (born 1943) was chairman of Kinnevik companies since and M.B.A. He worked for the board of Hagströmer & President and CEO 1968, including as President LM Ericsson for many years Qviberg from its inception in (not a member of the Board). of Svenska Motor AB and before becoming President 1980 until 1995. He is chair- (born 1960) has an M.B.A. (now Vice President) of man of the boards of Korsnäs AB. In 1997, he He has been CEO and Millicom in 1987. Between Investment AB Öresund and became Vice President of Managing Director of Tele2 1995 and 1996, he was AB Custos and has been a Industriförvaltnings AB AB since March 1999. President of NetCom Systems. member of the Board of Tele2 Kinnevik (Kinnevik), and in Jarnheimer has held various He has been a member of the since 1997. Other board assign- May 1999 he took over as posts with IKEA, Hennes & Board of Tele2 since 1994. ments: Acando, Arkivator, President. He has been a Mauritz and SARA Hotels, Bokförlaget Atlantis, member of the Board of Tele2 Holding: 50,000 class B shares. and was President of ZTV for ProtectData, Quartz Pro and since 1995. a short time before coming to HQ.se. Holding: 379 class B shares. Comviq as Vice President. He Stig Nordin was President of Comviq in (born 1943) has an M.Eng. Lars Wohlin Marc J. A. Beuls 1993-97. Jarnheimer was part and worked for two decades in (born 1933) has a D.Econ. (born 1956) has a B.S. in of group management at Saab the forest products industry. and was head of the Swedish Economics. He has been Automobiles with responsibili- After joining Kinnevik in Industrial Institute for President of Millicom since ty for the Nordic countries, 1989, he built up TV3 in Economic and Social Research January 1998, and President Russia and the Baltic states, London. Nordin became Vice in 1973-76. He served as of Banque Invik in and was CEO of Saab Opel President of Kinnevik in 1991 Undersecretary of State in the Luxembourg since June 1997. Sverige AB in 1997-98. and served as President from non-Socialist Cabinet from Beuls previously held execu- Board assignments: MTG and May 1992 to May 1999. He 1976 to 1979 and as a tive positions at Generale Arvid Nordquist HAB. has been President of Invik & Governor of the Swedish cen- Bank in Belgium. He has been Co AB since 1999. Nordin tral bank from 1979 to 1982. Holding: 2,000 class B shares member of the Board of Tele2 was President of Korsnäs in From 1983 to 1996, he was and 48,000 options. since 1998. 1993–98. He has been a chairman of the board of the member of the Board of Tele2 Drott real estate company and Jan Hugo Stenbeck since 1993. Other Board President of the Urban Chairman of the Board assignments: Kinnevik, Mortgage Bank of Sweden. (born 1942) is also chairman of Millicom and MTG. He has been a member of the the boards of Kinnevik, Holding: 11 class B shares. Board of Tele2 since 1996. Millicom, Invik and MTG. He Through family or associates: Holding: 400 class B shares. has been a member of the 4,878 class B shares. Board of Tele2 since 1993. Holding: 892,832 class A shares. 12 Tele2 Annual Report 2000
  15. 15. Senior Executives Lars-Johan Jarnheimer Håkan Zadler Born 1960 Born 1960 President and CEO Chief Financial Officer Tele2 AB M.B.A. M.B.A. Employed since 2000 Employed since 1992 Holding: 30,000 options Holding: 2,000 class B shares 48,000 options Fredrik Berglund Johnny Svedberg Born 1961 Born 1962 Head of Nordic market area Head of Baltic states and President of Tele2 Sweden AB Eastern Europe market area Marketing economist Marketing economist Employed since 1995 Employed since 1990 Holding: 30,000 options Holding: 1 class A share, 240 class B shares and 8,000 options Roman Schwarz Jean-Louis Constanza Born 1947 Born 1961 Head of Central European Head of southern Europe market area market area President of Tele2 Germany President of Tele2 France and Switzerland M.B.A. M.B.A. Employed since 1998 Employed since 1998 Jean-Claude Bintz Magnus Mandersson Born 1956 Born 1959 Head of Luxembourg Head of business area, IntelliNet, market area Optimal Telecom, C3 and Router Employed since 1989 Distribution M.B.A. Employed since 1995 Björn Lundström Ib Andersen Born 1965 Born 1955 Head of Network Planning and Head of Network Operation Implementation Employed since 2000 M.Eng. Employed since 1991 Holding: 1,500 options Roger Mobrin Jeanette Almberg Born 1968 Born 1965 Head of Billing Operations and Head of Customer Service Coordination M.B.A. Technical college engineer Employed since 1995 Employed since 1995 Holding: 2,000 options Holding: 34 class B shares 1,500 options Per-Ivan Selinder Lars-Erik Svegander Born 1965 Born 1941 Head of Product Management Director of Human Resources Employed since 2000 Employed since 1991 Holding: 1,500 options Tele2 Annual Report 2000 13
  16. 16. Financial Review Results for full-year 2000 Net interest and other financial expenses totaled SEK –211 million (–241). The average interest on out- standing liabilities was unchanged at 4.8%. Tele2’s operating revenue was SEK 12,470 million (8,175), an increase of 53%. Pro forma net sales were The profit after financial items was SEK 186 million up by 53% to SEK 16,273 (10,640). Net sales increased (4,186). The previous year’s figure included the divest- substantially for both mobile telephony and fixed tele- ment of an associated company for SEK 3,228 million. phony, with SEC enjoying particularly robust growth. Tele2 Sweden’s net sales totaled SEK 7,997 million, an increase of 21%, including 24% growth for mobile The loss after tax was SEK –381 million (3,769). telephony. Earnings per share were SEK –3.34 (36.29) after full conversion. The operating profit before depreciation and amorti- zation was SEK 1,841 million (2,062). Tele2’s total assets rose by 194% from SEK 14,402 Tele2 Sweden posted an operating profit before million at December 31, 1999 to SEK 42,345 million depreciation and amortization of SEK 2,749 million at December 31, 2000 – an increase that reflected the (2,290), an increase of 20%, and a stable operating mar- acquisition of SEC. gin before depreciation and amortization of 34%. The operating profit was SEK 441 million (1,154). Tele2 Sweden’s operating profit was SEK 2,038 million (1,655), an increase of 23%. Operating profit before depreciation Operating revenues and amortization Operating profit Capital expenditure 14,000 SEK million 2,000 SEK million 1,000 SEK million 2,000 SEK million 12,000 1,500 750 1,500 10,000 8,000 1,000 500 1,000 6,000 4,000 500 500 250 2,000 0 0 0 0 96 97 98 99 00 96 97 98 99 00 96 97 98 99 00 96 97 98 99 00 14 Tele2 Annual Report 2000
  17. 17. Financial Review FIVE-YEAR OVERVIEW 2000 1999 1998 1997 1996 Income-statement and balance-sheet items (SEK million) Operating revenue 12,470 8,175 5,957 4,030 2,872 Operating profit/loss before depreciation and amortization 1,841 2,062 1,192 1,026 508 Operating profit/loss after depreciation and amortization 441 1,154 533 507 198 Profit/loss after financial items 186 4,186 246 78 – 26 Profit/loss for the year – 381 3,769 73 130 199 Shareholders’ equity 26,651 6,756 3,022 2,903 1,942 Shareholders’ equity after conversion 26,696 6,756 3,022 2,940 2,589 Total assets 42,345 14,401 9,958 8,435 7,194 Cash flow provided by operating activities 883 1,753 971 441 467 Liquidity 1,304 1,123 821 1,499 819 Net borrowing 7,095 4,605 4,600 3,579 3,894 Net borrowing after conversion 7,095 4,605 4,600 3,542 3,247 Investments, including financial leases* 774 1,475 1,941 1,147 873 Financial ratios Equity/assets ratio 63% 47% 30% 34% 27% Equity/assets ratio after conversion 63% 47% 30% 35% 36% Debt-equity ratio (multiple) 0.27 0.68 1.52 1.23 2.00 Operating margin before depreciation and amortization 14.8% 25.2% 20.0% 25.5% 17.7% Operating margin after depreciation and amortization 3.5% 14.1% 8.9% 12.6% 6.9% Return on shareholders’ equity – 2.3% 77.1% 2.5% 6.9% – 31.3% Return on shareholders’ equity after conversion – 2.3% 77.1% 2.5% 6.4% – 11.8% Return on capital employed 1.9% 44.8% 7.1% 6.8% 0.3% Average interest rate 4.8% 4.8% 6.6% 7.1% 8.9% Average interest rate after conversion 4.8% 4.8% 6.6% 7.1% 8.6% Value per share (SEK)** Profit/loss after tax – 3.34 36.29 0.71 1.32 2.25 Profit/loss after tax and conversion – 3.34 36.29 0.70 1.36 2.30 Shareholders’ equity 233.60 65.06 29.17 29.60 22.00 Shareholders’ equity after conversion 233.72 65.06 29.10 28.42 25.42 Cash flow 7.74 16.88 9.38 4.50 5.29 Cash flow after conversion 7.73 16.88 9.35 4.26 4.59 Dividends – – – – – Share price on closing date 392.00 598.00 330.00 170.50 110.50 P/E multiple – 117.33 16.48 467.07 128.82 49.04 P/E multiple after conversion – 117.47 16.48 468.21 125.61 48.10 Number of shares 144,798,726 103,850,246 103,850,246 103,094,691 88,294,691 Average number of shares 114,087,366 103,850,246 103,598,394 98,061,358 88,294,691 Number of shares after conversion 145,098,726 103,850,246 103,850,246 103,850,246 101,850,246 Average number of shares after conversion 114,224,866 103,850,246 103,850,246 103,433,579 101,850,246 * Financial leases are reported as of January 1, 1997. ** Outstanding option commitments at December 31, 2000 include 300,000 shares. Tele2 Annual Report 2000 15
  18. 18. The share Number of shares debentures with attached warrants for the subscription Tele2’s class A and class B shares were first quoted on the for a total of 300,000 new class B shares. A special meet- Stockholm Stock Exchange’s O list on May 14, 1996, ing of Tele2 AB’s stockholders’ on August 25, 2000 voted when the stock was distributed to shareholders in to issue a maximum of 40,901,585 class A and class B Industriförvaltnings AB Kinnevik. After the distribution, Tele2 shares to the shareholders and depository receipt Kinnevik held no shares in Tele2 but retained a convert- holders in Société Européenne de Communication S.A. ible debenture corresponding to 25,555,555 shares. In (SEC) in exchange for stock and depository receipts in 1996, Kinnevik sold shares obtained from converting part SEC. At the end of the issue period, a total of 40,748,480 of the loan to institutional investors and Invik & Co AB. shares had been issued. At December 31, 2000, there were a total of 144,798,726 shares in Tele2 AB, as well To attract interest in the United States for the company’s as three convertible debentures with attached warrants shares and to increase liquidity in trading outside of representing 300,000 class B shares. Sweden, Tele2’s shares were listed on the Nasdaq exchange One class A share entitles the holder to 10 votes, and as of January 22, 1997. Some months later, 2,000,000 one class B share entitles the holder to one vote. new class B shares were issued. Tele2 issued the shares with the aim of expanding its circle of international share- Shareholders holders and bolstering the trading of its shares on Nasdaq. At year-end 2000, Tele2 had some 68,000 shareholders, The SEK 220 million proceeds from the issue were util- as opposed to 54,000 at year-end 1999. Institutional ized chiefly for investment requirements, particularly the shareholders held approximately 85% (60) of the capital development of Tele2’s Danish and Norwegian operations. and 88% (74) of the votes at December 31, 2000. In conjunction with the issue, Industriförvaltnings AB Kinnevik sold the majority of its remaining convertible Analysts who cover Tele2 debenture loan in Tele2, converted into 6,000,000 class Below are some of the financial analysts who cover Tele2: B shares. Johan Broström, Hagströmer & Qviberg, ABG Securities, Henrick Vikstrom In mid-1997, Invik & Co AB converted its holding of Alfred Berg, Inge Heydorn convertible debentures in the company. The conversion, Aros Maizels, Mattias Gredmark which represented 6,700,000 class B shares, increased Carnegie, Frederik Danielsson Tele2’s shareholders’ equity by SEK 335 million. Danske Securities, Lars Horslund Deutsche Bank, Peter Kurt neilson During the second quarter of 1998, all outstanding Enskilda Securities, Rickard Rosenbacke convertible debentures were redeemed for 755,555 class Erik Penser, Daniel Nordstrom B shares. HSBC Securities, Viking Kjellstrom Hagstromer & Qviberg, Johan Brostom The May 2000 annual general meeting authorized the Handelsbanken IB, Peter Warleus board of directors to adjust the option commitment by Ohman fondkommission, Joachim Grebe means of an issue of new shares. In October 2000, Tele2 UBS Warburg, Niclas Isaksson issued 200,000 new class B shares and three convertible Shareholders, December 31, 2000 Current distribution Pctg. of Pctg. of Class A Class B Class A & B Number of votes capital votes Invik ..................................................................................................... 9,642,608 3,172,196 12,814,804 99,598,276 8.9 24.0 Kinnevik.......................................................................................... 6,498,880 16,125,426 22,624,306 81,114,226 15.6 19.6 Millicom Telecommunication S.A. .................... 5,384,316 9,331,334 14,715,650 63,174,494 10.2 15.2 Emesco ............................................................................................ 2,209,997 24,000 2,233,997 22,123,970 1.5 5.3 Confidentia Förvaltnings AB .................................. 898,076 — 898,076 8,980,760 0.6 2.2 Stenbeck, Jan Hugo ....................................................... 892,832 — 892,832 8,928,320 0.6 2.2 Nordbankens Allemandsfond Beta ................. 618,050 856,400 1,474,450 7,036,900 1.0 1.7 Brotherton Corporation N.V.............................. — 5,091,544 5,091,544 5,091,544 3.5 1.2 Euroclear Bank....................................................................... — 2,495,152 2,495,152 2,495,152 1.7 0.6 Livförsäkrings AB Skandia ....................................... 198,000 485,335 683,335 2,465,335 0.5 0.6 Total, ten largest shareholders............... 26,342,759 37,581,387 63,924,146 301,008,977 42.0 71.4 Other shareholders ......................................................... 3,664,188 77,210,392 80,874,580 113,852,272 58.0 28.6 Total.................................................................................................. 30,006,947 114,791,779 144,798,726 414,861,249 100.0 100.0 16 Tele2 Annual Report 2000
  19. 19. The share Share Price, Stockholm Stock Exchange Tele2 AFGX Monthly trading volume, ´000shares 840 720 600 480 360 30,000 240 25,000 20,000 15,000 120 10,000 5,000 60 96 97 98 99 00 01 Share Price, Nasdaq Stock Market Tele2 Nasdaq composite index Monthly trading volume, `000shares 100 90 80 70 60 50 40 900 800 30 700 600 500 20 400 300 200 100 10 97 98 99 00 01 Tele2 Annual Report 2000 17
  20. 20. The Nordic countries The Nordic market area comprises Sweden, Norway, Denmark and Finland, plus the Group company Datametrix. There were a total of 5,472,000 subscribers at the end of 2000. Market position NORDIC among alternative COUNTRIES Licenses Fixed Mobile Internet Launched operators Sweden X X X X 1981/1993* 1 Norway X X X X 1998 1 Denmark X X X X 1996 1 * Mobile telephony Finland X X 2000 New entrant was launched in 1981 and fixed telephony in 1993. 18 Tele2 Annual Report 2000
  21. 21. Nordic countries Sweden With a complete offering in the areas Growth continues of mobile telephony, fixed telephony, The number of mobile telephony subscribers, including prepaid calling card users, increased in 2000 by 27% to the Internet, data communications, cable 2,087,000 (1,641,000). At December 31, 2000, there TV and broadband alternative, Tele2 were 1,224,000 (909,000) active prepaid card customers, an increase of 35%. Sverige AB is Sweden’s leading provider of Including prepaid card customers, the average month- telecommunications services. ly call minutes per subscriber rose by 11% to 98 (88). The Average monthly Revenue Per User (ARPU) Among Tele2 Sweden’s strengths are attractive rates, a was unchanged at SEK 219. large customer base, its own infrastructure and access to well-known brands, as well as the ability to adapt quickly High brand recognition to new customer requirements and market conditions. 96% of the Swedish population knows of Tele2, whereas Tele2 offers a highly advanced range of services. With its 97% recognizes the Comviq brand. mobile telephony, fixed telephony, Internet, data com- munications, and cable TV capabilities, Tele2 is able to Tele2 is awarded a UMTS license provide the total solutions that customers are increasingly In December the Swedish National Post and Telecom looking for. Agency (PTS) awarded Tele2 one of the country’s four UMTS licenses to construct and operate third-generation Mobile telephony – the Comviq and mobile networks. In January 2001, Tele2 and Telia’s Tele2Mobil brands wholly-owned Telia Mobile AB subsidiary signed an Tele2 markets its mobile services under the Comviq and agreement in principle to form a joint (50/50) company Tele2Mobil brands. Comviq addresses the consumer to construct and operate the network. The collaboration market, while Tele2Mobil primarily serves the business will considerably reduce the costs for constructing the market. The services are positioned as price leaders. network. Tele2 and Modern Times Group (MTG) will work together to develop the service offering. Tele2 Annual Report 2000 19
  22. 22. Nordic countries Tele2 Sverige AB markets its mobile services under the Comviq and Tele2Mobil brands. Comviq addresses the consumer market, while Tele2Mobil primarily serves the business market. The services are positioned as price leader. Mobil telephony Comviq and Tele2Mobil 20 Tele2 Annual Report 2000
  23. 23. Nordic countries High per capita use of mobile telephony Mobile telephony penetration in Sweden is Tele2Mobil lowered both daytime and nighttime rates among the highest worldwide. Including pre- during the year. paid card customers, Comviq and Tele2Mobil had 34% of the Swedish mobile telephony market at the Agreement with Dial n’ Smile end of 2000. Telia Mobile (50% of the market) and Tele2 and telecom company Dial n’ Smile signed a service Europolitan (16%) are their two main rivals. Comviq has provider agreement in 2000 under which Dial n’ Smile a very strong position in the prepaid calling card sector, will purchase Tele2 network capacity for use in selling which is growing more rapidly than any other sector. mobile services to end customers under its own brand. New agreements in the business market Innovative new services by Comviq Tele2 continues to score triumphs in the business market. Comviq’s business concept is simple: to make mobile The company signed an agreement with SAAB in 2000 telephony available to as many people as possible at the involving the integration of fixed and mobile telephony. lowest possible rates. The Comviq brand encompasses The agreement runs through September 2002. The many different types of subscriptions that are suitable for Stockholm County Council (SLL) signed a new four-year particular calling patterns, not to mention prepaid calling mobile telephony agreement initially comprising 14,000 cards. The success of prepaid cards has contributed to subscriptions. Tele2 is the SLL’s only provider of mobile Tele2’s rapid growth. services. The City of Stockholm renewed its mobile tele- Comviq introduced a series of innovative new services phony agreement. Tele2 provides all of the city’s 18,000 in 2000, including bonuses for incoming calls and inter- mobile subscriptions. Tele2 signed a Nordic agreement est on prepaid card balances. New SMS services included with Forex (currency exchange) for Lan2Lan, fixed tele- sports results and quiz games. Rates were lowered for phony, a 2 Mbit/s Internet connection for the head office, both subscribers and prepaid card customers. and some 300 mobile subscriptions. The Salvation Army A number of notable marketing efforts were carried and the Salaried Employees’ Educational Association out during 2000, including an outdoor campaign in (TBV) also became Tele2 mobile subscribers in 2000. collaboration with the Swedish Society for the Protection of Children’s Rights in the Community (BRIS). Tele2 SMS usage accelerates and the celebrities who participated donated the proceeds SMS usage increased substantially during the year. In to BRIS. Comviq successfully recruited new subscribers addition to growing use among subscribers, new SMS- through marketing efforts during the European Football related services are constantly emerging. More and more Championships, the Olympics and the Christmas season. media outlets – including television channels, newspa- pers and radio stations – are fleshing out their offerings Tele2Mobil – now for consumers too with SMS services. For instance, Tele2 is working with During 2000, Tele2Mobil introduced several new ser- MTG on Baren (The Bar), a documentary soap opera. vices, including Flatrate, T2 Larm, Dataabonnemang The trend is expected to continue. and WAP. Flatrate allows a subscriber to call at the same rate 24 hours a day. T2 Larm provides alarm services WAP services through GPRS based on positioning technology. Dataabonnemang is for Tele2 will offer data and WAP services through GPRS subscribers who are primarily interested in sending and to all of its mobile telephony subscribers in 2001. The receiving data messages. range of services is continually expanding. For instance, In October, Tele2Mobil launched the Tele2 Senior game and surfing applications have multiplied. GPRS, subscription for the retired sector, a very large target with the ability it gives the user to remain online for 24 group. The introduction was accompanied by a market- hours a day, will spur the use of such services. ing campaign that engaged well known older actors and actresses. Tele2 Annual Report 2000 21
  24. 24. Nordic countries Growing competition has meant that customers can call more cheaply, regardless of the destination and time of day. Tele2 led the market in 2000 by cutting Fixed rates even further. telephony 22 Tele2 Annual Report 2000

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