Tele2 Falls as Profit Forecast Trails Estimates on Dutch Rollout

  • Saw slower Dutch net gains than expected in the fourth quarter
  • Updated 2016 forecast is `weak,' Jefferies analysts say

Tele2 AB, the carrier controlled by Sweden’s Stenbeck family, fell the most in eight months after forecasting full-year earnings trailing analysts’ estimates as the company accelerates network and marketing investment in the Netherlands.

The shares dropped as much as 12 percent, the steepest intraday decline since May 20, and were trading 9.4 percent lower at 72.20 kronor as of 10:03 a.m. in Stockholm, valuing the company at 33 billion kronor ($3.9 billion).

Tele2 forecast 2016 earnings before interest, tax, depreciation and amortization of 4.6 billion kronor to 5 billion kronor, compared with the average estimate of 5.51 billion kronor, according to data compiled by Bloomberg. The company predicted sales of 26 billion kronor to 27 billion kronor, compared with the average estimate of 27 billion kronor.

The company’s updated outlook is “weak,” even after it in November projected lower full-year earnings due to investment in the Netherlands, Jefferies analysts including Ulrich Rathe said in a note to clients.

Over the past few years, Tele2 has exited businesses in Russia and Norway and partnered with a rival in Kazakhstan, focusing instead on its domestic operations and on rolling out fourth-generation mobile services in the Netherlands.

Increased competition in the Netherlands’ lower-priced SIM-only market, or customers just subscribing to wireless service rather than also purchasing handsets or other products and services, resulted in slower net gains than expected in the fourth quarter, Tele2 said in a statement. Dutch gross customer intake showed “positive progress,” the company said.

Chief Executive Officer Allison Kirkby on Thursday named Malin Holmberg head of the Dutch business, replacing Jeff Dodds.

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