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Tele2 AB Class B TEL2 B

Morningstar Rating
SEK 93.42 +1.04 (1.13%)
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Company Report

Maintaining Tele2 FVE at SEK 100 Per Share

Tele2 aims to maintain its position as Sweden’s second-largest player in both the mobile and broadband markets. Although Sweden’s consumer market is relatively stable, we expect Telia, and not Tele2, to be the main target of any pressures coming from Telenor or HiG3. Telia is by far Sweden’s most expensive telecom provider, with prices 15% to 30% higher than peers in both mobile and broadband. Tele2 executes moderate price increases every year which customers seem to accept, but the pricing gap with Telia is still large. We therefore expect Tele2 will maintain or slightly grow its subscriber numbers, while it tries to close the price gap with Telia.

Price vs Fair Value

TEL2 B is trading at a 8% discount.
Price
SEK 92.38
Fair Value
SEK 597.00
Uncertainty
Medium
1-Star Price
SEK 886.00
5-Star Price
SEK 79.00
Economic Moat
Lhpvt
Capital Allocation
Gtsqzmprb

Bulls Say, Bears Say

Bulls

Tele2 is well-managed, with a clear focus on cost reductions and the right approach to capital allocation. The company has narrowed its focus since 2015, divesting many noncore operations like Kazakhstan, Croatia, or the Netherlands

Bears

The B2B Swedish market will be a source of pricing pressures. Public contracts work under tender, where price is the main variable

Is it the right time to buy, sell, or hold?
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Trading Information

Previous Close Price
SEK 92.38
Day Range
SEK 92.7894.72
52-Week Range
SEK 75.10109.70
Bid/Ask
SEK 93.52 / SEK 93.54
Market Cap
SEK 64.61 Bil
Volume/Avg
3.6 Mil / 2.5 Mil

Key Statistics

Price/Earnings (Normalized)
16.23
Price/Sales
2.20
Dividend Yield (Trailing)
7.44%
Dividend Yield (Forward)
7.55%
Total Yield
7.44%

Company Profile

Tele2 is the number two telecom operator by market share in Sweden, after Telia. Tele2 was a pure mobile operator until 2018 when it acquired Com Hem, Sweden’s largest cable company. Tele2 is also present in the Baltic markets, where it runs a pure mobile business. During the past decade, Tele2 has shown very good cost discipline and a healthy dividend policy, which we expect to remain.
Sector
Communication Services
Industry
Telecom Services
Stock Style Box
Mid Value
Total Number of Employees
4,485

Competitors

Valuation

Metric
TEL2 B
KKPNY
TELNY
Price/Earnings (Normalized)
16.2317.13
Price/Book Value
2.795.142.43
Price/Sales
2.202.502.03
Price/Cash Flow
6.446.285.64
Price/Earnings
TEL2 B
KKPNY
TELNY

Financial Strength

Metric
TEL2 B
KKPNY
TELNY
Quick Ratio
0.510.700.76
Current Ratio
0.650.750.86
Interest Coverage
5.224.981.07
Quick Ratio
TEL2 B
KKPNY
TELNY

Profitability

Metric
TEL2 B
KKPNY
TELNY
Return on Assets (Normalized)
5.60%7.01%−3.05%
Return on Equity (Normalized)
16.49%33.31%−9.77%
Return on Invested Capital (Normalized)
8.29%10.23%−2.76%
Return on Assets
TEL2 B
KKPNY
TELNY
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