A n n u a l   R e p o r t   2 0 0 1
Contents
  1    Significant events                                                 Tele2 AB, formed in 1993, is the
  2   ...
Significant events
• Tele2’s operating revenue for 2001 totaled SEK 25,085 million (2000: 12,440),
  an increase of 54% fr...
Tele2 operates in 21 countries.
• Tele2 is the only genuine pan-European tele-                  ments, which provide us wi...
President’s message



MVNO – a strategic breakthrough                                 the common man was totally out of t...
Tele2 in brief
     Tele2, which was established in 1993, is the leading alternative pan-European
     telecom operator. T...
Tele2 in brief



      Operations at year-end 2001                                       resulting in significant savings...
Tele2 in brief



             company in practice becomes a reseller of another com-         local calls as of January 1,...
Tele2 in brief



       Development of third-generation mobile telephony              purchasing decisions must take the ...
Tele2 in brief




       Development of mobile                                            1991 – the first GSM call
     ...
Tele2 in brief




       Continued investment in                                          In August 2001, Tele2 became th...
Nordic
                                                                     Total number of
                              ...
The Tele2 Group



       The Tele2 Group consists of six market areas:                                                   ...
The Board of Directors




Left to right: Lars-Johan Jarnheimer, Bruce Grant, Marc J. A. Beuls, Jan Hugo Stenbeck,
Lars Wo...
Senior Executives
           Lars-Johan Jarnheimer              Håkan Zadler
                      Born 1960              ...
The Tele2 share

Number of shares                                                                                         ...
The Tele2 share



      Share price trend on Stockholmsbörsen

         Tele2’s closing price each week     AFGX         ...
The Nordic market area

     includes Sweden, Norway,

     Denmark, Finland and

     Datametrix.

     The number of cus...
The Nordic market area




Sweden
With a complete offering in the areas of                      Growth continues
         ...
Marknadsområde Xxx




 Mobile
 telephonyTele2 Sverige AB
          markets its
          mobile services
          under ...
The Nordic market area



High mobile penetration and stiff competition                  Service Providers
Mobile telephon...
Fixed
telephony Due to stiffer
          competition,
          customers can
          now call more
          cheaply – ...
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Annual Report 2001

  1. 1. A n n u a l R e p o r t 2 0 0 1
  2. 2. Contents 1 Significant events Tele2 AB, formed in 1993, is the 2 President’s message leading alternative pan-European 4–9 Tele2 in brief telecommunications company offer- 4–5 Historical role ing fixed and mobile telephony, data 4–11 History network and Internet services under 8 Development of mobile communication 9 Continued investment in MVNO services the brands Tele2, Tango and Comviq 10 The Tele2 Group to 15 million people in 21 countries. 12 The Board of Directors Tele2 operates Datametrix, which 13 Senior Executives specializes in systems integration, 14 The Tele2 share 3C Communications, operating pub- 16 Nordic lic pay telephones and public 30 Eastern Europe and Russia Internet services; Transac, providing 35 Central Europe billing and transaction processing; 38 Southern Europe 41 Luxembourg C3, offering co-branded pre-paid call- 43 Branded products & services ing cards and IntelliNet and Optimal 46 Financial review Telecom, the price-guaranteed resi- 47 Report of the directors dental router device. The Group 51 Income statement offers cable-TV services under the 52 Balance sheet Kabelvision brand name and together 54 Cash flow statement with MTG, owns the Internet portal 55 Notes 89 Audit report Everyday.com. 90 Addresses 92 Definitions Annual General Meeting The Annual General Meeting will be held at 1:30 pm on Notification can be made by phone to +46 33 724 12 67, Thursday, May 16, 2002, at Gamla Stans Bryggeri in Stockholm. or in writing to: Shareholders who wish to attend the Annual General Meeting Tele2 AB, Box 2094, SE-103 13 Stockholm, Sweden must label the envelope “Annual General Meeting” or by emailing to : bolagsstamma02@tele2.se be entered in the share register maintained by the Securities Register Center (Värdepapperscentralen VPC) Financial information for the Annual General Meeting (registration must be Quarterly report, January–March April 24 completed by Monday May 6, 2002). Annual General Meeting May 16 and notify the Company of their intention to attend no later Quarterly report, January–June August 5 than 1:00 PM on Friday, May 10, 2002. Quarterly report, January–September October 23
  3. 3. Significant events • Tele2’s operating revenue for 2001 totaled SEK 25,085 million (2000: 12,440), an increase of 54% from the pro forma figure of SEK 16,243 million for 2001. • The total number of customers rose by 29% to 15 million on December 31, 2001, corresponding to a net intake of 3.4 million customers for the full year 2001. • The operating profit before depreciation and amortization (EBITDA) was SEK 1,698 million (2000: 1,820, pro forma 2000: –371), with an EBITDA margin of 7% (2000: 15%, pro forma 2000: –2%). • Tele2 Sweden’s operating revenue for full-year 2001 totaled SEK 9,060 million, up 14% from the previous year. The EBITDA increased by 38% to SEK 3,773 million (2000: 2,728). The EBITDA margin was 42%, as opposed to 34% in 2000. Mobile telephony’s operating revenue rose by 20% to SEK 5,720 million, while the EBITDA was up by 41% to SEK 3,111 million. As a result, mobile tele- phony’s EBITDA margin was 54%. • Operating revenue in Central Europe and Southern Europe amounted to SEK 5,364 million (2000 pro forma: 3,108) and SEK 5,591 million (2000 pro forma: 2,574), respectively, corresponding to increases of 73% and 117%. EBITDA were improved to SEK –606 million (pro forma 2000: –1,640) and SEK –1,331 million (2000 pro forma: –1,276). Financial summary 2001 2000 2000 SEK M pro forma* Operating revenue 25,085 16,243 12,440 Operating profit/loss before depreciation, EBITDA 1,698 –371 1,820 Operating profit/loss after depreciation, EBIT –1,356 –2,850 420 Operating profit/loss after financial items, EBT –1,944 –3,063 165 Profit/loss for the year 392 –3,618 –396 Profit/loss per share after dilution 2.70 –34.36 –3.47 * The pro forma accounts have not been subject to specific review by the Company’s auditors. Tele2 Annual Report 2001 1
  4. 4. Tele2 operates in 21 countries. • Tele2 is the only genuine pan-European tele- ments, which provide us with the opportunity to convert com operator and therefore the most widely some 10% of our fixed-line customers to mobile users recognized brand. within the first year alone. • The company had a customer base of 15 mil- Tele2 can look back on 2001 with pride. We posted: lion at year-end. • operating revenues for the full year of over SEK 25 billion, • With revenue growth of 56% and in increase • Group operating profit before amortization and in net profit before depreciation and amort- depreciation of SEK 1.7 billion, an increase of ization of SEK 2.1 billion during 2001, Tele2 is SEK 2.1 billion. the most rapidly growing operator in Europe. From the beginning, Tele2 has cultivated a corporate The authorities in Europe that establish the terms by culture that encourages change and welcomes challenges. which telecom companies operate are anxious to see We are always crossing new boundaries. The “nomadic” effective competition. As a result, they are assisting us in aspect of our corporate culture constantly propels us expanding our potential to operate profitably. As an excel- toward new opportunities for growth and earnings. lent illustration of that trend, a growing number of coun- A cautious, short-term observer may regard such an tries are allowing us to compete in the market for local approach as reckless. That was how we were frequently traffic. Without requiring any new marketing efforts, such perceived before Tele2 was listed in 1996, and even after- developments boost the demand to which we have access wards. But such skepticism is rare these days. Tele2 has by some 50%. demonstrated its capacity to successfully take on new chal- The acquisition of a major Russian mobile telephony lenges and utilize fresh commercial opportunities to forge business was our biggest new venture for the year. The profitable businesses. It normally takes two to three years market offers major potential. We have every reason to before Tele2’s expansion strategy receives the credit it believe that Russian operations will be just as successful as deserves. When we launched a broad-based effort to enter our Baltic businesses. The market area Eastern europe and the European fixed telephony market, there were observers Russia have now recruited over 1 million mobile customers. who labeled us as excessive risk-takers. Nowadays, the The task before us is to continue to make our fixed-line European fixed telephony business is a cornerstone of network even more profitable. Many of our competitors our operations. departed from that market in 2001. Their problem was The key to success for a company that operates in that they had not accorded top priority to building up Tele2’s sectors is to constantly reconsider what it is doing, a customer base. They had set their sights on infrastruc- remain sensitive to the wishes and expectations of con- ture investments instead. Tele2 was once criticized for sumers, and avoid rigidity and bureaucracy. choosing a customer-oriented strategy. Now we can see Tele2’s business concept has unwaveringly been to just how wise that decision was. reduce its rates. That is still at the heart of our mission. I have never been one to put my faith in grandiose For a growing number of customers, we are the company dreams about the immediate emergence of 3G. On the that offers high-quality services in the markets where we other hand, I am convinced that Tele2, just as when operate at lower rates than the old monopolies (or even Comviq launched GSM ten years ago, will become the our infrastructure-oriented competitors). price leader with solutions based on simplicity and cus- My first duty is to ensure that Tele2 is an efficient com- tomer preferences. pany. Such an approach will benefit our customers when Many telecom operators in Europe have a very high it comes to price and quality, as well as safeguarding the debt ratio. Keep in mind that Tele2’s has one of the lowest interests of our shareholders. debt ratios in relation to market market value in the Tele2’s various brands – particularly Tele2, Tele2Mobil, industry. Tango and Comviq – have garnered respect for their abil- Varying assessments of 3G should not obscure the fact ity to combine high quality with low rates. Such recogni- that Tele2 possesses other strengths that will evolve tion is the fruit of a corporate culture that has learned to dynamically and fortify the entire company. Once again, manage its assets properly and to invest in a way that I would like to underscore our hopes for MVNO arrange- guarantees efficiency and quality at very low costs. “ For a growing number of customers, we are the company that offers high-quality services in the markets where we operate at lower rates than the old monopolies 2 Tele2 Annual Report 2001
  5. 5. President’s message MVNO – a strategic breakthrough the common man was totally out of the question. For As an MVNO Mobile Virtual Network Operator), Tele2 them, mobile telephony was destined to remain a per- can be a full-fledged GSM operator without having its manent tool of exclusive business customers. And for own infrastructure. There is a fundamental difference many European countries, they were right in the short between MVNO status and the service provider agree- term. But Comviq got to work in Sweden. Today we can ments that were once so common in the industry. A ser- boast of Europe’s most profitable mobile operator busi- vice provider agreement turns a company into a distribu- ness, including an operating margin before write-offs of tor of another operator’s telephony with the ability to better than 50%. handle outgoing traffic only. An MVNO agreement gives 3G will revolutionize the availability of personalized Tele2 its own exchanges and thus the capacity to handle information and entertainment. When the services are incoming traffic as well. appealing enough, they will automatically create a vigor- The reason that GSM operators find an MVNO agree- ous, rapidly growing market. What might seem like noth- ment with a company like Tele2 so attractive is the large ing more than a wild fantasy is likely to be everyday fare number of customers to which it obtains access. in a few years for those who are GSM users today. We are Tele2’s broad customer base throughout Europe firmly currently working with GPRS technology, the stage pre- positions it for similar MVNO agreements in one country ceding 3G. That is the stepping-stone to the services of after another. Given that both parties have something to tomorrow. Our most inquisitive customers will have a lit- gain from such collaboration, I believe that Tele2 will sub- tle taste of that which lies before us. stantially augment its subscriber base by means of MVNO agreements over the next few years. Deregulation is halfway there We concluded MVNO agreements in Germany and the The European telecom market is far from fully deregu- Netherlands during 2001. MVNO is one of the keys to lated. Tele2’s various subsidiaries report mixed results in the success of Tele2’s aggressive expansion strategy. terms of how efficient that deregulation has been. It is of The prospect of being able to grow without constructing the utmost importance that both the European Commis- all too many of our own networks is highly appealing. sion and national deregulation agencies (including the But Tele2’s own infrastructure – which will include 3G PTS, Swedish Competition Authority and Swedish mobile telephony networks (UMTS) in Sweden, Norway Consumer Agency) consistently pursue a proactive com- and Finland within a few years – makes us a very attract- petition policy. A greater sense of urgency is needed. ive partner. The change will not take place overnight. It will be many years before new companies are able to compete on Our own infrastructure? equal terms with the old monopolies. Whether it is the Having a strong core business in the Nordic countries is politicians, deregulation bodies or antitrust authorities, the highly important for Tele2. We also have our own infra- establishment of each country tends to protect the old structure in those markets – although its actual ownership, monopolies to the bitter end. construction and operation are only peripheral to our But the European telecom market is entering a whole business concept. But the infrastructure stems from the new era. Each step in that direction means higher volumes commercial realities of the Swedish telecom market at the and sales. Tele2 is hard at work to ensure that it makes time we started our business. a major contribution to revolutionizing the availability of Once mobile telephony has incorporated mobile personalized information and entertainment – not to the Internet, demand will in all probability take a big leap for- exclusive few, but to the broad European masses. ward. There is understandable skepticism in that regard today – that which is totally unknown is always hard to That is the way of the future! imagine. Still, the question is not whether it will happen, but when. Lars-Johan Jarnheimer I can still remember all the pundits in 1995 who said that Comviq’s business concept of mobile telephony for “ ...Tele2’s debt is among the lowest of Euro- pean telecom companies... Tele2 Annual Report 2001 3
  6. 6. Tele2 in brief Tele2, which was established in 1993, is the leading alternative pan-European telecom operator. The company offers GSM, public telecommunications and data communications, and Internet services. Tele2’s corporate culture rests on the fundamental principles of flexibility, informality and cost-consciousness. Tele2’s business concept is to have the most loyal and satisfied customers in the market by cost- effectively selling and supplying voice, data and image communications solutions while providing high-quality service. The Group’s strong suits are low rates, a large customer base, industry-leading efficiency, access to well known brands and the ability to rapidly adapt to new customer requirements and market conditions. With its mobile telephony, fixed telephony, Internet, data A customer’s experience of a product or service must communications, cable-TV and broadband capabilities, meet his or her expectations. We always place the cus- Tele2 is able to provide the total solutions that customers tomer at center stage, and our chief gauge of quality is his are increasingly looking for. The Group is continually or her satisfaction. Twice a year we conduct customer sur- working to spread know-how among various countries veys, the purpose of which is to ensure steady improve- and product lines in order to broaden its offering and ment. Tele2’s commitments, actions and products must thereby boost profitability. be perceived as quality-oriented. Our customers must Tele2’s quality assurance policy is based on guidelines always be able to trust Tele2 as a service provider. that apply to the entire Group. The policy proceeds from For those who wish to read more about Tele2 and the insight that one of the keys to achieving the compa- Comviq’s history, the book “Det svenska teleundret”, ny’s goals is to maintain high quality in everything that it released by Ekerlids Publishers in June 2000, is an excel- does. The Group’s fundamental principles and collective lent history of Tele2 and Comviq. The book chronicles skills are the backbone of that effort. The watchword is events from the very beginnings in the late 19th century constant improvement. through the groundbreaking deregulation of the 1990s. Tele2 AB Lars Johan Jarnheimer, CEO Håkan Zadler, CFO Nordic Eastern Europe Central Europe Southern Luxembourg Luxemburg Branded products Sweden and Russia Germany Europe Luxembourg & Belgien services Norway Estonia Netherlands France Liechtenstein Liechtenstein Optimal Telecom Denmark Latvia Switzerland Italy Belgium T2 IntelliNet Finland Lithuania Austria Spain 3C C3 Tango Datametrix Poland Ireland Portugal Transac 3C Tele2 Czech Republic Transac United Kingdom Russia Everyday Historical role An Internet pioneer In 1986, Comvik Skyport AB put up a satellite link for transatlantic data communications. In 1989, Comvik signed agreements with the “Det svenska teleundret” (The Swedish Telecom Miracle), National Swedish Rail Administration on a joint fiber optic network. written by Anders Johnson and published by Ekerlids The company changed its name to Tele2 AB in 1990. Publishers in June 2000, illustrates the central role that According to Johnson, “That prepared the company for the Tele2 and the businesses that now comprise it have played deregulation of the telephony market in 1993 and allowed it to in making Sweden a global telecommunications leader. quickly become the second largest fixed-line operator. The infra- Although much of the book focuses on the collaboration structure that Comvik had built also played a key role in the between Ericsson and the National Swedish Telecom- advances of the Internet in Sweden. In 1991, Tele2 became the first munications Administration, that is not the end of the Swedish company to offer Internet access”. Sunet, the university data communications network, did not have story. Two parts of the book focus on the innovations that the wherewithal to arrange Internet access for all businesses and Tele2 has made. individuals outside the academic world. Snus (Swedish Network Users Society) filled that gap: 4 Tele2 Annual Report 2001
  7. 7. Tele2 in brief Operations at year-end 2001 resulting in significant savings for Tele2. Similarly, the At year-end Tele2’s operations consisted of fixed and need to erect new infrastructures will be reduced, since mobile telephony with the brands Tele2, Tele2Mobil, both parties’ existing infrastructure can be utilize to handle Comviq and Tango. Tele2 supplied services to some 15 traffic. million customers in 21 countries. Tele2 also has a UMTS license in Finland (through The Tele2 Group also includes a number of other its part ownership in Suomen Kolegee Oy), Norway and companies with data and telecom services: Lichtenstein, which creates significant opportunities for • X-Source, active in IT-outsourcing, coordination gains. With its large customer base, its • Datametrix, specialized in system integration, technical expertise and four licenses, Tele2 is the most attractive partner for both suppliers and other operators. • Optimal Telecom, with the products Linjeväljaren, Internet and Optimal wireless, Acquisition of FORA Telecom • 3C Communications, which sells telephony and An agreement was reached at the end of the year Internet services via pay phones and Internet terminals, through which Tele2 will acquire Millicom International • Transac, data processing of card transactions and Cellular’s Russian mobile telephone company FORA invoices, Telecom B.V. this is a logical development in light of the • C3 offers phone cards for fixed telephony, success that Tele2 has achieved in the Baltic countries, • IntelliNet, fixed telephony service with lowest-price particularly in the Estonia operations acquired from guarantee. Millicom in 1998. Russia is a growth market with sub- stantial potential, and with its eight GSM licenses, Tele2 The Group also offers cable-TV services under the has an excellent base for its operations. brands Kabelvision and Tele2, as well as broadband ser- vices. MVNO contracts in Germany and the Netherlands The Everyday.com Internet portal is a company that On August 30, 2000, Tele2 signed the world’s first is jointly owned by Tele2 and Modern Times Group MVNO (Mobile Virtual Network Operator) contract (MTG). with the mobile operator Sonofon in Denmark. During Tele2 is listed on exchanges in Sweden and the US. 2001, Tele2 signed two additional MVNO contracts. It is listed on Stockholmsbörsen’s Attract 40 list with In August, Tele2 announced that it had become the the symbols TEL2A and TEL2B and on Nasdaq as Netherland’s MVNO with the signing of a contract with TLTOA and TLTOB. Telfor, a GSM operator owned by British Telecom. In Germany, Tele2 signed a MVNO contract with Tele2 and Telia to build joint UMTS network VIAG Interkoms, which means that Tele2 can now also At the beginning of the year, Tele2 and Telia offer its customers mobile telephony. Tele2 is already announced that they had established the jointly owned one of Germany’s largest alternative telecom operators. company, Svenska UMTS-Nät AB, to build and oper- Both the MVNO and Service Provider (SP) roles ate a network for next-generation UMTS (Universal have arisen as a means of further opening the mobile Mobile Telecommunications System) mobile telephony. market to competition. In both cases, the operator leases This agreement means that Tele2 and Telia will have capacity in an existing network and thus does not have equal access to the license that Tele2 was awarded. It also to build its own radio network. The difference between means that the risks and costs will be shared equally, MVNO and SP is fundamental. In the first case, one “Their goal was to start up a commercial Internet access service. GSM pioneer When Snus approached the National Telecommunications According to Johnson, Comviq “was the most innovative operator Administration, it encountered total indifference. A group of when it came to marketing and distribution… Under the leadership English consultants engaged by the agency had determined that of CEO Lars-Johan Jarnheimer (currently CEO of Tele2), Comviq was the Internet was a fleeting technology without a future. The agency to turn GSM into a mass market”. suggested a mediocre service that it had developed on its own. “The Swedish GSM networks started up in the autumn of 1992 at Snus then turned to Comvik Skyport, which was more interested.” a time when the Swedish economic climate was beset by a highly That led Comviq to establish Swipnet, a special company to pro- unusual combination of sky-high interest rates and the collapse of vide Internet access. Despite internal resistance, the agency eventu- the krona. The economy was at a standstill and it was very difficult ally started its own IP network. to launch new products… To jump-start sales, Comviq introduced Nevertheless, Johnson writes that “as late as the autumn of new features that its competitors subsequently imitated.” 1995, the manager of Telia Infomedia Interactive (also responsible Tele2 breaks new ground – then and now. for the Internet) said that the Internet was merely a colorful garbage can.” Tele2 was in the vanguard of the Swedish Internet revolution. Tele2 Annual Report 2001 5
  8. 8. Tele2 in brief company in practice becomes a reseller of another com- local calls as of January 1, 2002. In Switzerland, as well pany’s telephony services, since only outgoing traffic is as in Italy, Tele2 is the second largest alternative oper- handled. The MVNO role includes owning telephone ator in fixed telephony, Tele2 is that largest alternative switches, which are thus able to handle incoming traffic. operator for fixed telephony in the Austrian market. An MVNO issues its own SIM cards, can invoice the During 2001, Tele2 began its offensive in the customer directly and develop its own services, which is Spanish market. In Luxembourg and Lichtenstein, a clear advantage in competitive markets. Tele2 is established as a mobile operator under the For the customer, there is no difference between hav- brand name Tango. ing a subscription with a conventional operator or an MVNO. This model opens significant growth opportu- Future opportunities nities for a company like Tele2, which has a large cus- An important trend during 2001 was that interconnect tomer base in many countries but lack infrastructure charges were lowered or are scheduled to be lowered in for mobile telephony. the near future in several of the markets in which Tele2 is active. Interconnect charges are the fees that a telecom Fixed telephony in UK operator pays in order to switch traffic to other net- Tele2 and the Royal Mail initiated a partnership during works, thus enabling calls between customers of various the year through which Tele2’s phone cards and fixed operators. Since Tele2 in other respects has low costs for telephony services are sold at all post offices in UK. infrastructure, reduction of interconnect charges will have a very positive impact. Advances in Eastern Europe Another positive trend during the past year was that The Tele2 brand was launched in Latvia and Estonia several countries introduced, or will introduce in the during 2001. Tele2 is now the largest alternative mobile near future, number portability, which means that a telephone operator in the Baltic region. Tele2 is also the customer is able to retain a mobile telephone number largest alternative operator for fixed telephony in Estonia. when changing operators. Pre-selection for local calls is also gaining ground. Continental Europe – an overview This means that profitable local calls are now also avail- In Germany, Tele2 is the third largest alternative operator able to Tele2, thus creating significant opportunities. in fixed telephony. In the Netherlands, Tele2 is the coun- Local pre-selection will be introduced in Sweden and try’s next largest alternative operator in fixed telephony France in the beginning of 2002. Toward the end of the and also established Tele2 as an MVNO during 2001. year, the Netherlands, Switzerland, Austria and Tele2 is also the largest alternative operator in France Germany will also introduce local pre-selection. and will probably be able to take additional market Tele2 has a well established presence in all major share, since France introduced number pre-selection for markets and is closely monitoring the business oppor- tunities being created as deregulation continues. – Industriförvaltnings AB Kinnevik – Kinnevik gets ready to provide decides to enter the telecommu- traditional voice and data – Comviq launches its own analog nications market. telecommunications services. network for mobile telephony. Late 1970s 1980s 1981 6 Tele2 Annual Report 2001
  9. 9. Tele2 in brief Development of third-generation mobile telephony purchasing decisions must take the environment into From Tele2’s perspective, there are many factors favor- consideration. Tele2 is particularly conscious of environ- ing UMTS: mental safety issues when it comes to mobile telephony. • It will be a common standard in the Western world It is of the utmost importance that we not only com- and Japan. That AT&T in the US is moving towards ply with prevailing environmental standards, but that GSM and UMTS means that the telecom world is we keep abreast of research both in Sweden and abroad. moving toward a standard with very broad support. The group is an active participant in public discussions about health, safety and the environment. • The Nordic region will have a head start in the European market, since the beauty contests held here Personnel and skills development for awarding licenses prescribe rapid deployment. Tele2 pursues an ongoing skills development effort to Experience and business concepts can be exploited in ensure that its employees possess the kind of know-how emerging markets. that will enable us to keep pace with the evolution of • All data traffic is moving towards higher bandwidth the market and the needs of customers. The group aver- and mobility. aged 2,172 employees in 2001, as opposed to 1,747 in • In Sweden Tele2 will share infrastructure with Telia, 2000. Tele2 does business in 21 European countries. which will significantly reduce costs for network Just over half of its employees are in the Nordic area. build-out. That is the region in which Tele2 originated and in which it still has the largest operations. Environment and personnel All new employees complete a basic course that covers Tele2’s operations, goals, principles, and quality assur- Strict environmental requirements ance objectives. A series of new graduates are chosen for Tele2’s operations have only a limited impact on the a trainee program each year. The program is primarily environment. The company has drawn up an environ- devoted to on-the-job training in various countries and mental policy for the entire group. The policy insists parts of the organization. that environmentally approved products be used. In We also have an 18-month, multi-phase leadership addition, waste materials generated throughout the project for the group’s managers. office network, as well as scrapped materials, should be treated in an environmentally sound manner. Finally, Tele2 is one of the primary sponsors of Victory Challenge, the Swedish syndicate that is an official challenger in Americas’ Cup, the world’s oldest and most prestigious sailing trophy. The challenger race, the Louis Vuitton Cup, begins on October 1. With Tele2’s logo- type on the spinnaker of one of the Americas’ Cup boats, the media impact in Tele2’s most important markets will be substantial. – Agreement with National – A satellite link for Swedish Rail Administra- data communications – Comviq obtains tion on a joint fiber optic – Tele2 AB is formed is established. a GSM license. network. (Currently Tele2 Sverige AB). 1986 1988 1989 1990 Tele2 Annual Report 2001 7
  10. 10. Tele2 in brief Development of mobile 1991 – the first GSM call GSM (Global System for Mobile communication) is the communication second generation of mobile telephony. This digital system was introduced in 1991, the year in which the world’s first Mobile telecommunication is continuously evolv- GSM call was placed in Finland. During 1992, the first ing. Today Tele2 is taking part in the build out portable digital mobile phones were launched, and in the of third-generation mobile telephony and the same year, Comviq started its own GSM network. UMTS (Universal Mobile Telecommunications From the start, the GSM system was able to transfer data System) in Sweden, Norway and Finland. at speed of 9.6 kbit/s. GSM is currently a global standard. With UMTS, higher bandwidth of up to 2 Mbit/s will allow 2001 – GPRS taken into operation more information to be transferred, compared with today’s GPRS (General Packet Radio Service) was implemented to GSM with 9.6 kbit/s. This will allow users to surf the increase data speeds in GSM networks. GPRS also facili- Internet, listen to music, play games and watch video clips. tates the transition from GSM to UMTS. Tele2 currently UMTS is an attempt to create a global standard for 3G. offers GPRS services in several application areas, thus Tele2 has access to UMTS licenses in Sweden, Norway enabling users to send email and surf the Internet, for and Finland (through its part ownership of Suomen example. Mobile phones are improving constantly and Kolmegee Oy), as well as in Lichtenstein. being used by more and more people. Tele2’s ambition is During 2001, Tele2 and the Swedish operator Telia to be the price leader and to be able to offer customers established a joint network company, Svenska UMTS-nät more value and greater enjoyment for their money. AB. Together, Tele2 and Telia will build and operate GPRS allows significantly faster data transmission a nationwide Swedish UMTS network. On January 1, speeds in GSM networks than previous technologies and 2002, Tele2 was able to present a functioning network is expected to support speeds up to 115 kbit/s in the with sufficient signal strength to fulfill its promise for the future. It will also be possible for mobile telephone users starting date for UMTS. By the end of 2003, the network to be constantly connected to the GSM network, even will cover 99.98% of the Swedish population. when they are not making calls. Instead of paying for con- nection time, users will pay for the amount of information 1981 – Comviq introduces analog mobile telephony that is sent. There have been different variants of mobile communica- tion by telephone starting as early as the 1930s. The first analog network was launched in Sweeden in 1981 by Comviq AB. But it is the NMT (Nordic Mobile Telephone) system that is commonly regarded as the first generation of mobile telephony. NMT is an analog technology that was developed in the Nordic countries. NMT was an attempt to create a system Transfer capacity that worked not just in a single country, but also between Maximum speed Initially countries. In Sweden, Telia operated NMT networks on GSM 9,6 kbit/s 9,6 kbit/s two frequency bands: 450 MHz and 900 MHz. Telia GPRS 115 kbit/s ca 50 kbit/s closed the NMT 900 network on December 31, 2000. UMTS 2 Mbit/s 384 kbit/s – The fixed telephony market is deregulated. – NetCom Systems is formed to hold and develop the Kinnevik Group’s telcommunication companies in the Nordic countries. – Comviq GSM starts its – Kinnevik and Orkla set up NetCom ASA, Norway. – NetCom Systems launched the own GSM network. NetCom Systems owns 25% of the company. forerunner to Tele2 Norway. 1992 1993 1993 8 Tele2 Annual Report 2001
  11. 11. Tele2 in brief Continued investment in In August 2001, Tele2 became the first MVNO in the Netherlands, when a contract was signed with Telfort, MVNO services a GSM operator owned by British Telecom. This means that customers can now be offered mobile services in During 2001, Tele2 entered MVNO contracts addition to the fixed telephony services already provided. with mobile operators in the Netherlands and Tele2 is constantly seeking opportunities to refine its Germany. These contract allow Tele2 to offer products. With the contract in the Netherlands, will fol- mobile services as a complement to the fixed low the launch of prepaid calling cards, subscriptions, telephony that the company already provides. and international roaming, meaning contracts with other operators that make it possible to use a mobile phone in This approach is cost-efficient and flexible, other countries. while offering customers more services at lower Tele2 is one of Germany’s largest alternative telecom cost. Tele2 was world’s first operator to offer operator, with more than one million private and busi- MVNO services through its contract with the ness customers in fixed telephony. With the MNVO Danish operator Sonofon in August 2000. Tele2 contract with VIAG Interkom signed in December 2001, is currently active as an MNVO is Denmark, the Tele2 can now offer mobile services to its German cus- Netherlands and Germany. tomers via VIAG Interkom’s network. Germany is Europe’s largest telecom market and thus an important A Mobile Virtual Network Operator (MVNO) is an market for Tele2. operator that offers mobile services but does not have its During 2001, the number of mobile phones exceeded own frequency licenses and only limited infrastructure. the number of fixed subscriptions in Sweden. Having a Instead, the MVNO leases capacity from a mobile tele- mobile phone has become just as self-evident as having a phone operator with an existing networks and uses its fixed phone. Seven of ten Swedes now have a mobile own switches to handle both incoming and outgoing phone. Sweden and the other Nordic countries have telephone traffic (unlike Service Providers, who only always been in the lead in the development of mobile handle the outgoing traffic). telephony, and it is therefore natural that Tele2 is taking An MVNO issues its own SIM cards, invoices cus- the lead in the growth of MVNO. tomers directly and can develop its own services, which Interest for MVNO is very great. Established operators provides clear advantages in competitive markets. For the are increasingly eager to load their existing networks with customer, there is no difference between having a sub- traffic. Although MVNO is primarily a European phe- scription with a conventional operator or an MVNO. nomenon, interest is spreading to the US and the rest of This model creates substantial growth opportunities for the world. MVNO is a clear example of how technology Tele2, which has a large customer base in many coun- can be adapted to create greater value for the end cus- tries, but lacks infrastructure for mobile telephony. tomer. New services are now being created in pace and in MVNO contracts provide more cost-efficient and flex- harmony with market development. Tele2 will continue ible access to mobile telephony services, while customers its investments to achieve MVNO status in the countries are offered less expensive access to these services. where this is possible. – NetCom Systems’ stock is spun off to Kinnevik shareholders. At the same time, these shares are listed on Stockholmsbörsen’s O list. – Through its Tele2 A/S subsidary, NetCom Systems becomes Tele2 Danmark’s very first rival on the Danish telecom market, shattering a century-old monopoly. – NetCom Systems is listed – The Norwegian telecom on Nasdaq. Year-end market is deregulated. 1996 1997 1997/1998 Tele2 Annual Report 2001 9
  12. 12. Nordic Total number of subscribers: . . .. 6,274,000 Central Europe . . . . . Total number of subscribers: 3,191,000 . . . .. Eastern Europe and Russia Total number of subscribers: . 996,000 Luxembourg Total number of subscribers: 211,000 . . Southern Europe Total number of subscribers: 4,286,000 The Tele2 Group – NetCom AB increases its Ritabell stake to 94.8%. – Equal access pre-selection reform in Denmark, Norway and – Acquisition of a 48% stake in Ritabell Sweden. (mobile telephony operator), the initial – NetCom AB divests its NetCom ASA stake to Société penetration of the Baltic market. Européenne de Communication S.A. (SEC) in exchange for – NetCom Systems AB changes its name to newly issued SEC stock. Following the deal, NetCom AB NetCom AB. holds 17.8% of SEC’s capital. 1998 1999 10 Tele2 Annual Report 2001
  13. 13. The Tele2 Group The Tele2 Group consists of six market areas: The market area Luxembourg includes Lichtenstein, Nordic, Eastern Europe and Russia, Central Luxembourg, 3C and Transac and a license for fixed Europe, Southern Europe, Luxembourg, telephony in Belgium. Tele2 is represented in most countries outside the and Branded products and services. Nordic region. Nordic is the largest market area and includes Tele2 In most of Tele2’s markets, the company is by far the operations in Sweden, Norway, Denmark, Finland and biggest challenger to the previous monopoly. Datametrix. Operations in Nordic differ from other Cross-selling – the marketing of additional products market areas in that they have been running longer, par- and services to existing customers – is a central strategy, ticularly in Sweden, and a broad portfolio of products is the emphasis being on supplementing fixed with mobile offered. telephony. There are major opportunities for the cross- The market area Eastern Europe and Russia consists selling of new products and services to the existing cus- of operations in the Baltic countries Estonia, Latvia and tomer base. Lithuania, as well as Poland, the Czech Republic, Russia Tele2 is continually working on spreading know-how and X-Source. among product lines and countries. Customer offerings The market area Central Europe includes Germany, and successful concepts create synergies, since they can the Netherlands, Switzerland, Austria and Ireland. also be copied in other markets. This increases prof- The market area Southern Europe includes operations itability by creating economies of scale, thus improving in France, Italy and Spain and a license in Portugal. resource utilization while facilitating market launches. Net Increase intake Number of customers, thousands 12-31-2001 12-31-2000 % 2001 By market area Nordic ...................................................................................................... 6,274 5,472 15 802 Eastern Europe and Russia ...................................................... 996 278 258 718 Central Europe ................................................................................... 3,191 2,702 18 489 Southern Europe .............................................................................. 4,286 2,942 46 1,344 Luxembourg ........................................................................................ 211 160 32 51 Total 14,958 11,554 29 3,404 By business area Mobile telephony ........................................................................... 3,710 2,559 45 1,151 of which prepaid ................................................................................ 2,179 1,396 56 783 Fixed telephony and Internet ................................................ 11,248 8,995 25 2,253 Total 14,958 11,554 29 3,404 Number of customers by market area Number of customers by business area 15,000 15,000 10,000 10,000 Luxemburg Southern Europe Central Europe 5,000 5,000 Mobile Eastern Europe telephony and Russia Fixed telephony Nordic and Internet 0 0 Q4/01 Q4/00 Q4/01 Q4/00 – NetCom is awarded – NetCom becomes the first mobile UMTS licenses in Norway virtual network operator (MVNO) in and Sweden. – Acquisition of FORA Telecom. Denmark. – Netcom acquires Baltikom – Joint UMTS company with Telia. – NetCom acquires Société Européenne GSM, Latvia’s second – NetCom changes its name de Communication S.A. largest mobile operator. to Tele2. 2000 2000 2001 Tele2 Annual Report 2001 11
  14. 14. The Board of Directors Left to right: Lars-Johan Jarnheimer, Bruce Grant, Marc J. A. Beuls, Jan Hugo Stenbeck, Lars Wohlin, Vigo Carlund, Sven Hagströmer, Pelle Törnberg, Håkan Ledin 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 CEO and Managing Director and an M.B.A. He worked for the board of Hagströmer & 1968, including as President (not a member of the Board). LM Ericsson for many years Qviberg from its inception in of Svenska Motor AB and before becoming President 1980 until 1995. He is chair- (Born 1960) has an M.B.A. Korsnäs AB. In 1997, he be- (now deputy chairman) of man of the boards of He has been CEO and came Vice President of Millicom in 1987. Between Investment AB Öresund, AB Managing Director of Tele2 Industriförvaltnings AB 1995 and 1996, he was Custos and also Acando since AB since March 1999. Kinnevik (Kinnevik), and in President of NetCom Systems. 2001. Other board assign- Jarnheimer has held various May 1999 he took over as He has been a member of the ments: ProtectData, Quartz posts with IKEA, Hennes & President. He has been a Board of Tele2 since 1994. Pro, LGP Telecom Holding Mauritz and SARA Hotels, member of the Board of Tele2 Holding: 30,000 class B shares. AB, Perbio Science AB and and was President of ZTV for since 1995. HQ Fonder. Member of the a short time before coming to Holding: 379 class B shares Board of Tele2 since 1997. Comviq as Vice President. He Pelle Törnberg was President of Comviq in Holding: 30,000 class B shares. Marc J. A. Beuls (born 1956), is president of 1993–97. Jarnheimer was part Metro International since (born 1956) has a B.S. in of group management at Saab 2000. In 1987, he started the Lars Wohlin Economics. He has been with Automobiles with responsibili- TV production company (born 1933) has a D.Econ. Millicom International ty for the Nordic countries, Strix. Since 1993, he has been and was head of the Swedish Celluular S.A. since 1992 and Russia and the Baltic states, responsible for all media com- Industrial Institute for has been President & CEO and was CEO of Saab Opel panies in MTG (formerly Economic and Social Research since January 1998. In 1997 Sverige AB in 1997–98. Since Kinnevik). Board assignments: in 1973–76. He served as he was appointed Managing year-end 1998, he has been MTG, Invik, SEC, Millicom Undersecretary of State in the Director of Banque Invik S.A. Vice President of and P4. Member of the Board non-Socialist Cabinet from in Luxembourg. Marc Beuls Industriförvaltnings AB of Tele2 since 2001. 1976 to 1979 and as a previously held executive posi- Kinnevik and President of Investment AB Kinnevik. Holding: 4,100 class B shares. Governor of the Swedish cen- tions at Generale Bank in Bel- Board assignments: MTG, tral bank from 1979 to 1982. gium. He has been member of Arvid Nordquist HAB, Jan Hugo Stenbeck From 1983 to 1996, he was the Board of Tele2 since 1998. Millicomn, Invik AB and chairman of the board of the Chairman of the Board Svenska UMTS-Nät AB. Drott real estate company and Bruce Grant Stenbeck (born 1942) is also President of the Urban (born 1959) is president of Holding: 2,000 class B shares chairman of the boards of Mortgage Bank of Sweden. XSource Corporation Inc. and 48,000 options. Kinnevik, Millicom, Invik and He has been a member of the Board assignments: Kinnevik, MTG. Member of the Board of Board of Tele2 since 1996. Korsnäs AB, Metro Inter- Tele2 since 1993. Holding: 900 class B shares. national S.A. and Transcom Holding: 811,332 class A WorldWide S.A. Member of shares. the Board in Tele2 since 2001. 12 Tele2 Annual Report 2001
  15. 15. Senior Executives Lars-Johan Jarnheimer Håkan Zadler Born 1960 Born 1960 President and CEO, CFO Tele2 AB M.B.A M.B.A. Employed since 2000 Employed since 1992 Holding: 3,000 class B shares Holding: 2,000 class B shares and 48,000 options Fredrik Berglund Johnny Svedberg Born 1961 Born 1962 Market area director, Market area director, Nordic Eastern Europe and Russia B.S. in market economics B.S. in market economics 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 Market area director, Market area director, Central Europe Southern Europe President, Tele2 Germany President, Tele2 France and Switzerland M.B.A M.B.A Employed since 1998 Employed since 1991 Jean-Claude Bintz Magnus Mandersson Born 1956 Born 1959 Market area director, Market area director, Luxembourg Branded products & services President of Tango M.B.A Employed since 1989 Employed since 1999 Björn Lundström Ib Andersen Born 1965 Born 1955 Director of network Director of network operations planning and M.B.A implementation M. Eng. Employed since 2000 Employed since 1991 Holding: 1,500 options Roger Mobrin Jeanette Almberg Born 1968 Born 1965 Director of billing operations and Director of customer service coordination M.B.A. Technical college engineer Employed since 1995 Employed since 1995 Holding: 1,500 options Holding: 50 class B shares and 1,500 options Karl-Johan Nybell Lars-Erik Svegander Born 1968 Born 1941 Director of product management Personnel director M.Eng. Employed since 1991 Employed since 1995 Holding: 1,500 options Holding: 1,000 options Tele2 Annual Report 2001 13
  16. 16. The Tele2 share Number of shares shares and depository receipts in SEC. By the end of the Tele2’s A and B series shares were listed on the O-List of issue period, a total of 40,784,480 shares had been issued. Stockholmsbörsen on May 14, 1996 in conjunction with At the end of 2001, all shares in FOR A Telecom B.V. the distribution of the Company to the shareholders of were acquired in exchange for 2,461,449 newly issued Tele2 Industriförvaltnings AB Kinnevik. Following the distribu- B shares. As of December 31, 2001, a convertible debenture tion, Kinnevik owned no shares in Tele2 but held a convert- corresponding to 100,000 B shares was converted to shares. ible debenture corresponding to 25,555,555 shares. During The new issue was submitted to PRV, the Swedish Patent 1996, Kinnevik sold portions of the debenture, after con- and Registration Office, for registration. version to shares, to institutions and Invik & Co. AB. As of December 31, 2001 there were a total of To promote interest in the Company’s share in the US 147,360,175 shares in Tele2 AB plus two convertible and to increase its liquidity, the Tele2 share was listed on the debentures with detachable options corresponding to Nasdaq exchange in the US on January 22, 1997. A few 200,000 B shares. months later, a new issue of two million B shares was imple- Series A shares carry 10 votes, while B shares carry one mented. With this issue, Tele2 sought to broaden the vote. Company’s international ownership interest and to support the Nasdaq listing. The proceeds for the share issue, which Ownership structure amounted to SEK 220 million, were primarily used for At year-end 2001, Tele2 had about 64,000 shareholders, ongoing investment requirements, in particular for the compared with about 68,000 one year previously. The pro- development of Tele2’s Danish and Norwegian operations. portion of institutional owners corresponded to about 88% In conjunction with the new issue, Industriförvaltnings (2000: 85%) of the share capital and about 81% (2000: AB Kinnevik sold the major portion of its remaining con- 88%) of the voting rights on December 31, 2001. vertible debenture in Tele2 after conversion to 6,000,000 B shares. Analysts who followed Tele2 during 2001 By the end of the first half of 1997, Invik & Co. AB had Michael Andersson Evli Securities converted its debenture, corresponding to 6,700,000 B Johan Broström Hagströmer & Qviberg shares, thus increasing Tele2’s shareholders’ equity by SEK Fredrik Danielsson Carnegie 335 M. Mattias Gredmark Aros Maizels During the second quarter of 1998, all outstanding Lena Hansson Julius Baer debentures were converted into 755,555 B shares. Viking Kjellström HSBC At the Annual General Meeting in May 2000, the Board Johan Klevby Alfred Berg of directors was authorized to settle an option commitments Peter Kurt Nielsen Deutsche Bank through a new share issue. In October 2000, 200,000 new Richard Rosenbacke Den Danske Bank B series shares were issued, as well as three convertible Henrik Sandell Swedbank debentures with detachable options with rights to new sub- Jeremy Taylor UBS Warburg scription of a total of 300,000 B shares. Tomas Tomasson Schroder Salomon Smith Barney At an Extraordinary General Meeting of Tele2 AB on Per Trygg Enskilda Securities August 25, 2000, a proposal was approved to issue at most Peter Warléus Handelsbanken 40,901,585 series A and series B shares in Tele2 to share- Henrik Wikström ABG Securities holders and holders of depository receipts in Société Stefan Wård CAI Cheuvreux Nordic Européenne de Communication S.A. (SEC) in exchange for Ownership structure, December 31, 2001 Current ownership structure Share of Share of A shares B shares A+B shares No. of votes capital, % votes, % Invik group ................................................................................ 9,724,108 3,090,696 12,814,804 100,331,776 8.7 24.0 Kinnevik group ...................................................................... 6,498,880 16,467,678 22,966,558 81,456,478 15.6 19.5 Millicom Telecommunications S.A. .................. 5,384,316 9,331,344 14,715,660 63,174,504 10.0 15.1 Emesco ............................................................................................ 2,209,997 48,400 2,258,397 22,148,370 1.5 5.3 Confidentia Forvaltnings AB .................................... 898,076 — 898,076 8,980,760 0.6 2.2 Stenbeck, Jan-Hugo ......................................................... 811,332 — 811,332 8,113,320 0.6 1.9 Nordea Allemansfond Beta ...................................... 619,850 1,046,500 1,666,350 7,245,000 1.1 1.7 Brotherton N.V. ..................................................................... — 4,039,993 4,039,993 4,039,993 2.7 1.0 AMF Pensionforsakring AB ....................................... — 3,982,000 3,982,000 3,982,000 2.7 1.0 Nordea Bank SA ................................................................... 245,750 189,666 435,416 2,647,166 0.3 0.6 Total, ten largest owners ..................................... 26,392,309 38,196,277 64,588,586 302,119,367 43.9 72.4 Other shareholders ............................................................ 3,614,638 78,559,616 82,671,589 115,203,331 56.1 27.6 Total .................................................................................................. 30,006,947 117,353,228 147,260,175 417,322,698 100.0 100.0 14 Tele2 Annual Report 2001
  17. 17. The Tele2 share Share price trend on Stockholmsbörsen Tele2’s closing price each week AFGX Number of shares traded (000s), including after-market trading 900 800 700 600 500 400 300 30,000 200 25,000 20,000 15,000 100 10,000 5,000 50 96 97 98 99 00 01 02 Share price trend on Nasdaq Tele2’s closing price each month Nasdaq composite index Number of shares traded (000s), including after-market 100 90 80 70 60 50 40 900 800 30 700 600 500 20 400 300 200 100 10 97 98 99 00 01 02 Tele2 Annual Report 2001 15
  18. 18. The Nordic market area includes Sweden, Norway, Denmark, Finland and Datametrix. The number of customers was 6,274,000 at year-end. Nordic Licenses Fixed Mobile Internet Launch Market position among alternative operators Sweden • • • • 1981/1993* 1 Norway • • • • 1998 1 Denmark • • • • 1996 1 Finland • • • • 2000 New player * Mobile telephony was launched in 1981 and fixed telephony in 1993. 16 Tele2 Annual Report 2001
  19. 19. The Nordic market area Sweden With a complete offering in the areas of Growth continues The number of mobile telephony customers, including mobile telephony, fixed telephony, prepaid customers, increased in 2001 by 21% to Internet, data communications, cable-TV 2,532,000 (2,087,000). Prepaid calling cards accounted and broadband, Tele2 Sverige AB is for 65% of all customers. Call minutes per month and user (MoU) rose in the Sweden’s leading alternative provider of fourth quarter of 2001 by 19% to 117, as opposed to 98 telecommunications services. in the fourth quarter of 2000. Despite an accelerated rate of new customers in the Among Tele2 Sweden’s strengths are attractive rates, a third and fourth quarters, average monthly revenue per large customer base, its own infrastructure and access to user (ARPU) including prepaid calling cards was SEK well-known brands, as well as the ability to quickly adapt 206 for all of 2001 and SEK 204 for the fourth quarter. to new customer requirements and market conditions. Tele2 offers a highly advanced range of services. With its High brand recognition mobile telephony, fixed telephony, Internet, data com- 96% of the Swedish population recognizes the Tele2 and munications, and cable-TV capabilities, Tele2 is able to Comviq brands. provide the total solutions that customers are increasingly looking for. Tele2 is awarded a UMTS license Tele2 is widely known for its flexibility, customer In December 2000, the Swedish National Post and focus and cost awareness and has shown impressive Telecom Agency (PTS) awarded Tele2 one of the coun- strength by not only protecting its customer base from try’s four UMTS licenses to construct and operate third competitors, but also by substantially increasing it. generation (3G) mobile networks. In March 2001, Tele2 and Telia and Telia Mobile AB subsidiary signed an Mobile telephony – the Comviq agreement to form a joint (50/50) company to build and and Tele2Mobil brands run the network. The collaboration will considerably Tele2 markets its mobile services under the Comviq and reduce the cost of construction. The joint venture was Tele2Mobil brands. Comviq addresses the consumer approved by the Swedish Competition Authority in market, while Tele2Mobil primarily courts the business March 2002. market. The services are positioned for price leadership. Comviq’s advertising spots generate consid- erable attention, particularly this one, which in a humoristic manner points out that Comviq’s customer receive a bonus when they receive calls. Tele2 Annual Report 2001 17
  20. 20. Marknadsområde Xxx Mobile telephonyTele2 Sverige AB markets its mobile services under the Comviq and Tele2Mobil brands. Comviq focuses on the consumer market, while Tele2Mobil primarily courts businesses. The services are positioned as the price leaders. 18 Tele2 Annual Report 2001
  21. 21. The Nordic market area High mobile penetration and stiff competition Service Providers Mobile telephony penetration in Sweden is near the top Tele2 has contracts with two service providers, Dial n’ worldwide. Including prepaid calling card customers, Smile and Optimal Telecom. Whereas Optimal Telecom Comviq and Tele2Mobil had 36% of the Swedish mobile offers mobile prepaid calling card services under the telephony market at the end of the fourth quarter in Tango trademark, Dial n’ Smile markets mobile subscrip- 2001. Their biggest competitors are Telia Mobile (48% tion services in both the private and business segments. of the market) and Europolitan (16%). Comviq has a very strong position in prepaid calling cards, which are SMS usage accelerates growing more rapidly than any other segment. Despite SMS usage continued to increase substantially during the the emergence of many new service providers, better year. Comviq launched a new SMS portal offering a wide than one out of every two first-time mobile telephony range of services. The new SMS Content product paved subscribers during the year were with Comviq or Tele2. the way for external content providers to sell directly to There are ten mobile telephony providers in Sweden. Tele2’s subscribers. Among the most popular offerings Tele2’s success reflects the strength of its brand and its are images, ring tones, stock prices and horoscopes. unique position among mobile telephony users. Number Community services and the ability to send SMS mes- portability, the ability to switch operator while keeping sages to live television shows also enjoy major potential. the same phone number, has spurred competition. That The company introduced its popular Comviq has accrued to Tele2’s advantage as well. Community SMS meeting place during the year. The new Tele2 directory service, with which employees can Comviq request an SMS message of any phone number at their Comviq’s business concept is simple: to make mobile place of business, is particular useful during non-office telephony available to as many people as possible at the hours. lowest possible rates. In addition to prepaid calling cards, Comviq offers a number of different subscription plans. Faster data transfer to mobile phones The success of prepaid calling cards has contributed to The GPRS service that Tele2 launched in 2001 allows its Tele2’s rapid growth. The company launched its extreme- customers to be connected 24 hours a day at greater ly popular Selfnavigator service during the year. bandwidths. Provided free of charge through May 31, Subscribers can go directly to the website to order sup- 2002, the service has been a media splash and served as plementary services, review their bills, get their account clear evidence that Tele2 is working hard to offer the balance, and track interest charges. Moreover, prepaid lowest rates. calling card customers can access WAP services. GPRS gives our customers faster connections not only Tele2 launched several widely acclaimed marketing to mobile Internet, but also to Tele2’s IQ Menu and T2 ventures, including a prizewinning television advertising Menu WAP portals. The portals include everything from campaign for Comviq Kontant prepaid calling cards. sports results and the latest news to games and entertain- Comviq’s new website included information on numer- ment. A popular entertainment service during the year ous SMS services. SMS and calling rates were lowered was Bridget Jones Diary. New functionality was intro- during the year for both peak and offpeak. duced on the portal during the year, including email ser- vices that provide users with access to their email from Tele2Mobil – new contracts their mobile phones in the same manner as from a PC. Tele2 continued to score triumphs in the business seg- ment, including a contract with the Region of Scania, UMTS and MMS during the year. In addition to renewing its mobile con- During 2002, even more acronyms will come into use. tract, IBM signed one for fixed telephony as well. The commercial launch of third-generation UMTS Furthermore, Tele2 concluded new mobile and fixed mobile telephony is approaching. The rate at which ser- telephony contracts with the Swedish municipalities of vices are introduced will be determined by customer Eskilstuna, Köping, Arboga, Kungsrör and Ekerö. The requirements and the availability of phones. In addition, company also entered into mobile and fixed telephony the launch of MMS (Multimedia Messaging Service) is contracts with NEA-gruppen and Scribona. SMS and approaching. MMS is an extension of the successful SMS calling rates were lowered during the year for both day- concept that will allow users to send not only text, but time and nighttime. images and sound to each other. During the year, Volvo, which has been a fixed tel- ephony, Internet and to a certain extent data network customer, decided to integrate mobile telephony from Tele2 into its operations, thus replacing portions of fixed telephony with mobile telephony. Tele2 Annual Report 2001 19
  22. 22. Fixed telephony Due to stiffer competition, customers can now call more cheaply – regard- less of the desti- nation or time of day. In a market where rates did not fall as sharply as during previous years, Tele2 Sweden retained its price leader- ship throughout 2001. 20 Tele2 Annual Report 2001

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