If you think telecom competition in Europe is dead, Lars-Johan Jarnheimer respectfully disagrees. After all, the company he runs, Stockholm-based Tele2, has grown in just over a decade into the Continent's largest independent operator of local, long-distance, and wireless services. As dozens of boom-era rivals collapsed into bankruptcy, Tele2 bucked the trend, piling on subscribers, revenues, and profits. "It's the only really pan-European alternative carrier out there," says telecom analyst Christian Kern of brokerage Schroder Salomon Smith Barney in London.
Just look at the numbers: Tele2 now serves more than 17.7 million fixed and mobile customers in 22 European countries, from Spain to southern Siberia. Annual revenues have soared more than fivefold, to $3.58 billion, since Jarnheimer became chief executive in 1998. Kern figures they'll climb 12% more this year. Tele2 also turned a profit in four of the last five years, including a net of $25.5 million in 2002.
The secret to Jarnheimer's success? The 43-year-old CEO sounds a familiar mantra: Focus on customers. But in this case, it's not just jargon. Jarnheimer got his start working for three of Sweden's most legendary consumer-products entrepreneurs, Ingvar Kamprad of furnishings giant Ikea International and Erling and Stefan Persson of sizzling clothing retailer Hennes & Mauritz. Jarnheimer was impressed that no matter how big their companies got, these leaders still stayed close to customers with techniques as simple as walking around stores every week. The lessons Jarnheimer learned about selling to the masses carried over to Tele2. Everything is kept as simple as possible, from pricing plans to Tele2's informative bills. And Jarnheimer stays in touch by personally answering customer letters and working the phones in Tele2's support center at least two days a year.
Jarnheimer also runs a super-tight ship. Tele2 owns little in the way of cables and wires. Instead, it has chased a rolling wave of deregulation around Europe, often being the first to take advantage of laws in newly opened telecom markets when incumbents are forced to lease space on their networks. That gives Tele2 first-mover advantage without big capital spending. "We're very opportunistic," Jarnheimer says. Tele2 also keeps expenses low and wrings out revenues per employee of more than $1.2 million per year -- as much as five times the level of established incumbents.
The approach is clicking today, but Tele2 had to win over a lot of doubters. In the 1990s, Jarnheimer says, bankers balked at investing in the company because it wasn't building its own network or pursuing business customers. Now, he says, "nobody doubts you can make money in residential service."
Jarnheimer's low-key pragmatism extends to his personal life. Married, with a son and a baby on the way, he's so busy that he only occasionally manages to slip away to his country home near Stockholm, where he enjoys boating and fishing. Europe's telecom giants no doubt wish he would spend more time snaring the local catch -- and less time reeling in their customers.