Tele2 2024 Guidance Is Easily Within Reach; Maintaining SEK 100 Fair Value Estimate

Narrow-moat Tele2 delivered results in line with guidance during the second quarter, with 4% and 3% growth in service revenue and EBITDAaL, which came at SEK 5.5 billion and SEK 2.6 billion, respectively. The healthy performance is explained by Sweden, which saw service revenue growth of 4%. Mobile revenue is trending especially well, up 5% year over year due to higher average revenue per user, or ARPU. Despite raising its prices, Tele2 mobile plans remain cheaper than those of Telia, so Tele2 management has room to keep increasing prices at a moderate pace. Cost controls are also helping with EBITDAaL growth, with cost of goods sold declining by 2.5% while total revenue grew by 1.7% this quarter. We are maintaining our SEK 100 fair value estimate, with shares remaining fairly valued.