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Tele2: The Nordic Challenger That Broke the Monopolies
Introduction: A Telecom Maverick's Legacy
In the winter of 1993, as Swedish consumers opened their phone bills from the state-owned Televerket monopoly, few imagined that within three years, an upstart would be offering international calls at half the price—or that this same challenger would one day become Sweden's second-largest telecommunications company. Yet that is precisely the trajectory of Tele2, a company born from the relentless ambition of one man who believed the Swedish telecom market was ripe for disruption.
Today, Tele2 operates in Sweden and the Baltic countries Estonia, Latvia, and Lithuania. As of May 2025, Tele2's trailing twelve-month revenue stands at $2.84 billion USD, with 2024 revenue of $2.79 billion, up from $2.76 billion in 2023. The company has carved out a formidable position as Sweden's second-largest player in both mobile and broadband markets, with a mobile broadband market share of 26.7 percent in Sweden and the second-largest fixed-line broadband market share following its merger with Com Hem.
But the real story isn't in today's market share figures. It's in the extraordinary journey from regulatory insurgent to regional powerhouse—and the strategic pivots that defined each chapter. This is a tale of monopoly-busting, aggressive international expansion, a painful Russian exit, transformative mergers, and now, under new French ownership, a return to challenger roots.
The core question this analysis seeks to answer: How did a Swedish upstart founded to challenge a century-old state telecom monopoly become a regional powerhouse, and what lessons does its journey of expansion and strategic retreat offer investors evaluating the company today?
The Stenbeck Empire: From Steel Mills to Spectrum
A Dynasty Transformed
The story of Tele2 cannot be told without understanding the man who created it. Jan Hugo Robert Arne Stenbeck (14 November 1942 – 19 August 2002) was a Swedish business leader, media pioneer, sailor and financier. He was head of Kinnevik Group from 1976 and founded among other things the companies Comviq, Invik & Co AB, Tele2, Banque Invik, Millicom, Modern Times Group and NetCom Systems.
Stenbeck's background was an unusual mix of old-money establishment and American entrepreneurial dynamism. Born on 14 November 1942 in Stockholm, the youngest son of business lawyer Hugo Stenbeck and his wife Märtha, he was brother of Hugo Jr, Elisabeth Silfverstolpe, and former Swedish Minister for Foreign Affairs Margaretha af Ugglas. He passed the studentexamen at Östra Real in Stockholm and received a Candidate of Law degree from Uppsala University and a Master of Business Administration degree from Harvard Business School in 1970.
The path to telecom empire began with family tragedy and corporate conflict. After his father Hugo Stenbeck died, Stenbeck returned to Sweden and gained control over Investment AB Kinnevik after a bitter feud with his sisters. He came to change the focus of the investment company away from traditional Swedish industries, such as pulp and paper industry and steel manufacturing towards media and telecommunication.
Kinnevik AB was founded in 1936 by the Stenbeck, Klingspor and von Horn families as a Swedish investment company. At the time Stenbeck took over, Kinnevik was a traditional Swedish industrial group focused on sectors such as forestry, mining, steel, and paper mills. Stenbeck's takeover involved a bitter family dispute with his sisters, who reportedly favored liquidating or divesting assets, while he sought to retain and revitalize the company.
The Challenger DNA
What made Stenbeck unique wasn't just his business acumen—it was his willingness to take on Sweden's entrenched establishment. In 1987 he started Sweden's first free, advertising-funded TV channel, TV3, then Comviq and Tele2, the free newspaper Metro, the magazine Z and the magazine Moderna Tider.
Stenbeck was a Swedish financier, media proprietor, and business disruptor who aggressively pursued diversification, founding entities such as Millicom for international telecom ventures and Banque Invik for financial services, while cultivating a reputation as an outsider challenging Sweden's entrenched state-dominated economy.
Stenbeck was one of Sweden's wealthiest people, worth some $800 million. But his impact transcended personal fortune. He systematically identified markets where government monopolies or cozy oligopolies extracted excessive rents from consumers—and attacked. Television. Newspapers. And most consequentially, telecommunications.
The political implications of his approach were profound. Stenbeck positioned himself as a liberator, breaking the stranglehold of what Swedes called "the People's Home"—the Social Democratic vision of state-managed services. This was not merely business strategy; it was ideological warfare waged through price competition and consumer choice.
Born into a powerful Swedish family, Jan Stenbeck took over after his father and brother's deaths. He challenged monopolies, launched TV channels and newspapers, becoming a visionary who changed Sweden, but at a high personal cost. A 2025 Swedish television series dramatizing his life captures this tension—the man who transformed Swedish media and telecoms while alienating family members and establishment figures alike.
Breaking the Telecom Monopoly: Comviq & Tele2 Founding (1981-1996)
The Mobile Revolution Begins
Before there was Tele2, there was Comvik—an audacious bet on a technology few believed would become mass-market. Comvik launched Sweden's second cellular telephone network on December 1, 1981, circumventing Televerket's fixed-line monopoly by leveraging radio-based mobile technology. The venture incurred substantial losses throughout the decade but was sustained by Stenbeck's family capital and strategic persistence.
Tele2 started in 1981 as a mobile phone provider called Comvik as an alternative mobile phone operator to the state-owned company Televerket (today known as Telia Company). Comvik later changed its name to become Comviq when the company got a GSM license in 1988 and started operating in 1992.
By employing political lobbying, media campaigns framing the effort as a "David versus Goliath" battle, and enlisting legal and technical experts, Stenbeck pressured policymakers, culminating in the 1993 deregulation of the telecom market, the privatization of Televerket into Telia, and the formal allowance of competition.
The Internet Pioneer: Swipnet
What many don't realize is that Tele2's roots extend to the very dawn of commercial internet in Sweden. 1991 is the historic year when Swipnet became Sweden's first commercial internet provider after the state-owned Televerket, now Telia, refused. Swipnet operated during this time as a subsidiary of Jan Stenbeck's Comvik Skyport, which later, in 1994, would become Tele2.
The state-owned phone company turned it down, preferring X.25 over the internet. Instead Jan Stenbeck's Comvik Skyport got the question, and Swipnet became Sweden's first commercial internet service provider.
The deal was signed on October 30, 1990 by Bo-Erik Sandholm, chairman of SNUS (Swedish Network Users' Society), and Per Troberg, CEO at Comvik Skyport. This was characteristic Stenbeck: when the state monopoly declined an opportunity, he seized it.
As Helena Lingham, one of the first Swipnet employees who still works at Tele2, recalls: "It was Tele2 that built the internet in Sweden. There is no question about it." Tele2's Internet package Connect2Internet was a pioneering offering, which in 1996 became the Christmas Gift of the Year in Sweden.
Tele2 Takes Shape
Ever since Jan Stenbeck founded the company in 1993, it has been a tough challenger to the former government monopolies and other established providers. In 1993 with telephone liberalization in Sweden, Tele2 started to offer international calls.
The initial proposition was brutally simple: Tele2 offered international phone services in Sweden at lower rates than Telia, the former state monopoly. In an era when international calls could cost several kronor per minute, Stenbeck promised to cut costs by 50% within three years. The challenger playbook was being written in real-time.
The three companies Comviq, Kabelvision, and Tele2 came together as the Tele2 brand on fixed-line services and Comviq on mobile services in Sweden in 1997. This consolidation created an integrated telecommunications challenger with multiple product lines—mobile, fixed-line, cable television, and internet—all positioned against the incumbent Telia.
The company went public on NASDAQ OMX Stockholm in 1996, providing capital for expansion just as European telecom markets were beginning to liberalize. The timing proved impeccable.
Building the European Challenger (1996-2005)
Going Public and Mobile
Tele2, founded in 1993, is headquartered in Stockholm and has been listed on the Nasdaq Stockholm since 1996. The public listing provided the war chest Stenbeck needed for continental conquest.
The late 1990s and early 2000s represented Tele2's most aggressive expansion phase. The company entered market after market across Europe, typically as the low-cost challenger attacking entrenched incumbents. International growth came in the form of acquisitions in Estonia, Lithuania, Latvia, Russia, and France.
The expansion strategy followed a recognizable pattern: enter markets during or shortly after liberalization, undercut incumbents on price, build brand awareness as the consumer-friendly alternative, and achieve profitability through operational efficiency rather than premium pricing.
The Consolidation in Sweden
When the Swedish Post and Telecom Authority awarded four licenses for the 3G UMTS mobile networks in December 2001, Tele2 was among the winners. Notably Telia, the former telephony incumbent in Sweden, did not receive a license and so an agreement was established to build a 3G network shared by Tele2 and Telia using Tele2's license. SUNAB builds, owns and operates that 3G network.
This was a remarkable outcome: the former monopolist forced to share network infrastructure with the challenger that had undermined its dominance. It demonstrated both the strength of Tele2's competitive position and the regulatory environment's transformation from protecting incumbents to promoting competition.
A similar company, Net4Mobility, was formed in 2009 between Tele2 and Telenor Sverige for the purpose of building a joint 4G LTE network. These network-sharing arrangements became central to Tele2's capital efficiency, allowing it to offer competitive services without bearing the full burden of infrastructure investment.
The Russian Gambit: Rise and Fall (2001-2013)
Building a Russian Empire
Tele2 operated in Russia from 2001 to 2013. Tele2 started the operations in the Russian Federation by acquiring 12 regional mobile operators from its sister company Millicom in 2001.
Russia represented the most ambitious bet of the Stenbeck era. The logic was compelling: a vast market, underpenetrated mobile telephony, and regulatory barriers that might deter less aggressive competitors. Before it was sold to VTB, it had been the only foreign company successfully operating on the Russian cellular market. Until 2013, Russia for Tele2 AB was the major market, which, as of 2010, provided more than a half of subscribers in total and 34.7% (the biggest percentage among all the countries) of EBITDA.
Through 10 years of operation in Russia, Tele2 became the fourth largest national operator there, with mobile subscriptions of 22.9 million by Q1 2013.
The Russian operation showcased Tele2's ability to execute in challenging environments. Building a mobile network across Russia's vast geography required operational excellence. The company achieved profitability and significant scale, seemingly validating the expansion thesis.
The Spectrum Wall
But Russia also revealed the limits of the challenger model in markets where regulatory capture trumps competitive merit. The 3G penetration and smartphone ownership was still lower, assuring the growth in data services which could cut into the revenue of voice services. However, Tele2 could only offer GSM services, far behind other national operators in Russia, because it failed to obtain 3G spectrum in April 2007 and 4G spectrum in July 2012 to boost its mobile data services. Tele2 had placed hope on the regulators allowing it to reform its existing spectrum for the higher speed network construction but, so far, no agreement has been reached.
This was the death knell. In a market transitioning from voice to data, spectrum allocation was existential. The three large Russian operators—MTS, Megafon, and VimpelCom—received 4G licenses. Tele2, the foreign upstart, did not. The decision appeared politically motivated, protecting domestic champions from international competition.
The Exit
With no path to 4G, the choice became binary: sell at a reasonable valuation or watch the asset deteriorate. Tele2 AB agreed to sell Tele2 Russia to VTB Group in a cash transaction comprising USD 2.4 billion (approximately SEK 15.6 billion) in equity value and USD 1.15 billion (approximately SEK 7.5 billion) in net debt, equivalent to an EBITDA multiple of 4.9 based on FY 2012 results.
Tele2 Russia had net sales in 2012 of SEK 12,984 million and an EBITDA result of SEK 4,744 million. The customer base amounted to 22.7 million at the end of 2012. The operations had approximately 3,500 employees.
The transaction was successfully completed on the 4 April, 2013.
From a shareholder perspective, the Russian investment generated exceptional returns despite the regulatory disappointment. The Board of Directors proposed an ordinary dividend of SEK 7.10 per share for 2012 and, following the completion of the sale of Tele2 Russia, to distribute SEK 12.5 billion, equivalent to SEK 28.00 per share, to shareholders through a mandatory redemption of shares.
The Russian exit crystallized a key lesson: regulatory risk in less transparent markets can overwhelm operational excellence. Tele2 built a successful business by every commercial metric—yet political decisions rendered the investment untenable. This experience would inform the company's subsequent strategic focus on core European markets with stable, predictable regulatory environments.
The Great Retreat: Portfolio Rationalization (2005-2018)
Exiting Non-Core Markets
Following founder Jan Stenbeck's death in 2002 and the Russian exit in 2013, Tele2 embarked on a sustained program of portfolio rationalization. Tele2 has terminated operations, activities, and holdings in the following countries: Austria, Belgium, Croatia, Denmark, Finland, France, Germany, Italy, Kazakhstan, Liechtenstein, Luxembourg, Netherlands, Norway, Portugal, Poland, Russia, Switzerland, and the United Kingdom.
In 2007 the company sold its holdings in Belgium to Dutch operator KPN, in France to SFR and activities in Spain and Italy to Vodafone Italy, in Portugal to Clix and in Switzerland to TDC Sunrise.
The strategic logic evolved from "attack every deregulating market" to "focus on markets where we can achieve sustainable competitive advantage." This meant concentrating resources on Sweden and the Baltic states, where Tele2 had established strong brand recognition, operational scale, and network infrastructure.
Norway Exit
Tele2 exited the Norwegian market in 2015. Tele2 Norway consisted of the brands Tele2, OneCall, MyCall and Network Norway. On 7 July 2014, it was announced that Tele2 would be acquired by Telia Company. On 5 February 2015, the deal was approved by Norwegian competition authorities.
The Norwegian exit illustrated how market structure can overwhelm challenger positioning. Despite years of investment, Tele2 remained a distant third player, struggling to achieve the scale economies necessary for sustained profitability. Selling to the incumbent Telia—the very company Tele2 had spent decades fighting in Sweden—represented a pragmatic acknowledgment that not every market could be won.
The Com Hem Merger: Becoming an Integrated Provider (2018)
Strategic Rationale
On January 9, 2018, the Board of Directors of Tele2 and the Board of Directors of Com Hem entered into a merger agreement and agreed on a joint merger plan, pursuant to which Tele2 and Com Hem agreed to combine their business operations through the Merger.
The merger will combine two highly cash generative businesses with clear synergies to create a leading integrated connectivity provider in the Baltic Sea region.
The strategic rationale was clear: telecommunications was evolving toward convergence, with customers increasingly preferring bundled mobile, broadband, and TV services from a single provider. The EC cleared the merger, concluding that 'the transaction would raise no competition concerns as the companies' activities and assets are largely complementary'. While Tele2 is mainly focused on the mobile market, Com Hem targets the fixed line and pay-TV sectors. The enlarged Tele2 will be in second place in Sweden's cellular, broadband and fixed telephony markets behind Telia.
Deal Structure
Each share in Com Hem was exchanged for 1.0374 new shares of class B in Tele2 and SEK 37.02 in cash. Com Hem's shareholders received approximately 26.9 percent economic ownership in Enlarged Tele2 and a total cash consideration of SEK 6.6 billion.
The merger between Tele2 and Com Hem was completed on 5 November 2018. Com Hem Holding was dissolved and all of its assets and liabilities were transferred to Tele2.
Anders Nilsson was appointed President and CEO of Tele2 effective as of November 5, 2018.
New Financial Framework
Based on this policy, Enlarged Tele2 is expected to distribute in excess of 100 percent of equity free cash flow to shareholders, through a combination of dividends and share repurchases. Tele2 and Com Hem believe that the prospects for cash returns to shareholders of the combined group, under this policy, are stronger than what could be expected for holders of Tele2 or Com Hem on a stand-alone basis.
Enlarged Tele2 will seek to operate within a net debt/EBITDA range of between 2.5-3.0x and maintain investment grade credit metrics.
The Com Hem merger transformed Tele2 from a mobile-centric operator into a full-service telecommunications provider capable of offering "quad-play" bundles (mobile, broadband, TV, and fixed telephony). This positioned the company to compete more effectively against Telia's integrated offerings while achieving cost synergies through shared infrastructure and customer service operations.
The Netherlands Exit & Network Sharing (2016-2019)
Netherlands Consolidation
Nordic cable and telecom operator Tele2 and Deutsche Telekom completed the merger of their Dutch operations. The combination of the pair's Dutch assets saw Tele2 Netherlands absorbed by T-Mobile. Following the completion of the merger, Tele2 owns 25% of the enlarged T-Mobile Netherlands and Deutsche Telekom owns 75%. Tele2 also receives a cash payment of €190 million, subject to standard closing adjustments.
The merger between Tele2 NL and T-Mobile NL was announced on December 15, 2017, and has since gone through a regulatory process including a Phase II investigation by the EC. Following constructive discussions between the two merging companies and the EC, the merger was approved with no requirement to offer remedies.
This represented a strategic pivot: rather than building standalone scale in the Netherlands, Tele2 opted for a minority stake in a combined challenger to market leaders KPN and VodafoneZiggo.
The Complete Dutch Exit
In September 2021, the parties agreed to an enterprise value of EUR 5.1 billion which implied an equity value of approximately EUR 860 million (approximately SEK 8.8 billion) for Tele2's 25 percent stake. Tele2 and Deutsche Telekom agreed to sell T-Mobile Netherlands to funds advised by Apax Partners and Warburg Pincus.
Deutsche Telekom AG and Tele2 AB closed the sale of T-Mobile Netherlands on March 31, 2022. A consortium of private equity funds advised by Apax Partners LLP and Warburg Pincus LLC acquired the company based on an agreed enterprise value of EUR 5.1 billion.
The transaction provided an opportunity for Tele2 to realize value from the successful development in T-Mobile Netherlands and to conclude Tele2's international consolidation. This successful sale concluded Tele2's international consolidation and allowed the company to focus on core operations in Sweden and the Baltics.
Swedish Network Partnerships
Tele2 and Telenor, through their joint venture Net4Mobility, now cover over 90% of Sweden's population with 5G. In 2020, Tele2 became the first operator in Sweden to launch 5G. Since then, Tele2 and Telenor, through Net4Mobility, have replaced all network equipment with the latest technology from Ericsson and Nokia.
Thanks to this partnership, the companies were the first in Sweden to provide a nationwide 4G network, which now covers 90% of Sweden's land area and over 99.9% of its population.
These network-sharing arrangements exemplify Tele2's capital-efficient approach to infrastructure investment—achieving competitive coverage without bearing the full cost burden of standalone deployment.
The Iliad Era: New Ownership (2024-Present)
End of the Kinnevik Era
Kinnevik, Tele2's largest owner for decades, sold its shareholding to Freya Investissement, which became the largest shareholder in April 2024.
Kinnevik sold its 19.8% stake in Swedish operator Tele2 to Xavier Niel's Iliad Group. The SEK 13 billion (€1.1 billion) transaction was made through Freya Investment, held jointly by Iliad and NJJ Holding.
The $1.26 billion deal saw Swedish investment giant Kinnevik sell its 20.7 million Class A shares at SEK 101 and 116.9 Class B shares at SEK 93. At an average price of SEK 94.2 per share, this represented a 13 percent premium on Tele2's Class B share price.
The transaction took place in three phases, with the final stage (completed in August 2024) leaving Iliad/NJJ with a 19.8% economic stake in Tele2 and a voting interest below 30%.
The New Reference Shareholder
Xavier Niel (born 25 August 1967) is a French billionaire businessman involved in the telecommunications and technology industry and is the founder and majority shareholder of the French Internet service provider and mobile operator Iliad trading under the Free brand (France's second-largest ISP, and third mobile operator).
As of July 2025, his net worth is estimated at US$13 billion. He is also co-owner of the newspaper Le Monde, co-owner of the rights of the song "My Way" and owner of Monaco Telecom, Salt Mobile and Eir. He is chairman and chief strategy officer for Iliad, and also a board member of KKR, Unibail-Rodamco-Westfield, and ByteDance.
Niel's background parallels Stenbeck's in significant ways: both built telecom empires by challenging incumbents with aggressive pricing. Xavier Niel began his career at age 16, when he dropped out of high school and created chat services for Minitel, a French precursor to the World Wide Web. At 19, he dropped out of school and founded his first company, a Minitel service provider that provided chat services, ultimately making him a millionaire at the age of 24.
"Freya will become the reference shareholder of Tele2 upon closing of the transaction. With its expertise and know-how in managing telecom assets, the acquisition of this strategic stake will offer the Iliad Group, through Freya, an opportunity to further Tele2's growth and to collaborate with Tele2's management team on innovation, convergence, and investments in next-generation networks."
New Leadership Team
Tele2's Board of Directors appointed Jean-Marc Harion as President and CEO, effective from November 10, 2024. Jean Marc Harion was the CEO of Polish telecom operator Play.
Jean Marc Harion is currently the CEO of Polish telecom operator Play and serves on Tele2's Board of Directors. With more than 25 years of experience from leading roles in telecom operators, Jean Marc Harion brings a wealth of industry expertise, and an impressive track record from markets of different maturity levels, in different types of corporate structures, incumbents as well as challengers. Most recently, he served as CEO at Play Poland, where he led efforts to grow Play from a challenger position to 15 million customers and the leadership position in mobile, and second in fixed communications.
The appointment signals Iliad's intent to bring its operational playbook to Sweden and the Baltics. Harion's experience transforming Play from challenger to market leader mirrors the trajectory Iliad hopes to replicate at Tele2.
Signalling the growing influence of shareholder Iliad Group, and following a shakeup of its management team in recent months, European operator Tele2 announced plans to reduce its total headcount by 15%, equivalent to between 600 and 700 full-time employees, as part of a "deep transformation to improve profitability in 2025". The operator has taken a number of major personnel decisions since Xavier Niel's Iliad Group acquired a near 20% stake in Tele2 in February 2024. In April, Iliad Group's CEO Thomas Reynaud was named as Tele2's chairman and was joined on the board by two other Iliad executives.
Current Operations & Financial Performance
2024-2025 Results
Tele2 delivered full year 2024 results in accordance with guidance: end-user service revenue growth of 3% organically, underlying EBITDAaL growth of 2% organically, and capex to sales of 14% (excluding spectrum and leases).
Tele2's consolidated results for full year and fourth quarter 2024 showed Equity Free Cash Flow (EFCF) reaching 4.4 billion SEK during the full year. Consistent with Tele2's financial policy, the Board of Directors proposes to distribute 100% of the EFCF, corresponding to an ordinary dividend of SEK 6.35 per share.
End-user service revenue of SEK 21,799 million increased by 3% compared to full year 2023 on an organic basis driven by growth across operations. Total revenue of SEK 29,583 million increased by 2% compared to 2023 on an organic basis. Underlying EBITDAaL of SEK 10,612 million increased by 2% organically compared to 2023 as end-user service revenue growth and cost savings from the Strategy Execution Program more than offset cost inflation.
Operating profit of SEK 5,817 million increased by 6% compared to 2023. Net profit from total operations of SEK 3,870 million (vs 3,735 million prior year) and earnings per share of SEK 5.59 (vs 5.40).
2025 Performance and Transformation
In Q3 2025, Tele2 reported total revenue of SEK 7.4 billion, up 1% organically compared to Q3 2024. Underlying EBITDAaL of SEK 3.1 billion was up 11% organically compared to Q3 2024, supported by improved cost base and solid top line growth.
Tele2 revised its 2025 EBITDAaL forecast to slightly above 10% organic growth, up from a previous mid- to high single-digit range. The company maintained its guidance for low single-digit end-user service revenue growth and capex at around 13% of sales, excluding spectrum and leases.
Sweden's underlying EBITDAaL grew 13% to SEK 2.14 billion in Q2 2025, supported by a reduced workforce and tighter cost control.
Economic net debt fell to SEK 24.7 billion from SEK 26.2 billion at the end of 2024. Leverage decreased to 2.2x EBITDAaL, below the target range of 2.5x to 3x.
The Transformation Plan
After delivering critical migrations in 2024, the company initiated a deep transformation to improve profitability in 2025, and to become a faster and more agile company. The transformation includes a downsizing of the workforce by around 15 percent within the coming 12 months, subject to union negotiations.
The company reached two critical milestones in 2024. The first was the major migration from six down to two IT-stacks for various brands. This will enhance the customer experience, help better understand customers' needs and improve ability to fulfil them. The second milestone was the completion of network upgrade, which now enables 5G coverage for 90% of Sweden's population.
In 2024, Tele2 completed a network upgrade that resulted in its 5G network covering 90% of Sweden's population: The telco also simplified its back-office technology platforms, migrating from six IT stacks to just two to support all of its brands.
Sustainability Leadership
Tele2 was ranked as the most sustainable company in Sweden by Time Magazine, and as the top Climate Leader 2024 in Sweden by the Financial Times.
Compared to 2019, Tele2's scope 1 and 2 emissions decreased by 96% in 2024, putting Tele2 ahead of its 2025 target of a 90% reduction. Tele2 continues efforts to reach 0 emissions in scope 1 and 2 by 2029, in line with science-based targets.
In 2022, Tele2 became the first company in the Nordics and Baltics to have a science-based Net Zero target approved by the Science Based Targets initiative.
Competitive Position & Market Dynamics
Swedish Market Structure
The four largest operators, Telia, Tele2, Telenor and Hi3G (Tre) had a combined market share of 96 percent in mobile subscriptions, which is the same as previous year.
Telia Company AB had the greatest revenue within the telecom companies in Sweden as of April 2024. As of April 2023, Telia Company AB reached a revenue of nearly 91 billion Swedish kronor, whereas Tele2 followed with roughly 28.1 billion Swedish kronor. Other leading telecommunication companies included Sinch and Telenor Sverige, both of which had revenues of more than eleven billion Swedish kronor.
Porter's Five Forces Analysis
Threat of New Entrants: LOW The Swedish telecom market presents formidable barriers to entry. Spectrum licenses are expensive and limited. Network buildout requires billions in capital expenditure. The four established operators have achieved coverage and service quality that would take years for a new entrant to replicate. Network-sharing agreements between existing players further cement their cost advantages.
Bargaining Power of Suppliers: MODERATE Tele2 relies on equipment vendors (primarily Ericsson and Nokia for network infrastructure) and content providers for its TV offerings. However, the presence of multiple equipment vendors creates competitive tension, and the company's scale provides negotiating leverage.
Bargaining Power of Buyers: HIGH Swedish consumers are sophisticated and price-sensitive, with low switching costs facilitated by number portability. The competitive intensity among four players means customers can easily shift to alternatives offering better value.
Threat of Substitutes: MODERATE-HIGH Over-the-top communication services (WhatsApp, Skype, FaceTime) have substantially substituted for traditional voice and SMS revenues. However, the underlying connectivity these services require keeps network operators essential. Fixed wireless access presents a growing substitute threat to traditional fixed broadband.
Competitive Rivalry: HIGH Four well-capitalized operators compete vigorously in a mature market with limited subscriber growth. The Com Hem merger and network-sharing agreements represent industry attempts to rationalize competition, but pricing pressure remains intense.
Hamilton Helmer's 7 Powers Framework
Scale Economies: Tele2's network-sharing partnerships with Telenor (Net4Mobility) provide scale benefits without full standalone investment. The Com Hem merger enhanced scale in fixed-line services.
Network Effects: Limited direct network effects, though bundled offerings create some switching cost inertia as customers consolidate services.
Counter-Positioning: Tele2's original positioning as low-cost challenger created counter-positioning against Telia, which couldn't match prices without cannibalizing premium revenues. However, this advantage has eroded as all operators compete on value.
Switching Costs: Bundled services (mobile + broadband + TV) create meaningful switching costs. The IT stack consolidation will enhance customer relationship management, potentially improving retention.
Branding: The Tele2 brand carries strong challenger connotations in Sweden. Comviq serves as a fighter brand for price-sensitive segments.
Cornered Resource: Network spectrum licenses represent cornered resources, though shared across the industry through various arrangements.
Process Power: The transformation underway aims to create process power through operational efficiency and simplified technology architecture.
Investment Considerations
Bull Case
New Ownership Energy: Iliad's track record of operational improvement at challenger telecoms—most notably at Play in Poland—provides a credible blueprint for margin enhancement at Tele2. The 15% workforce reduction and IT consolidation signal serious cost discipline.
Balance Sheet Strength: With economic net debt at SEK 24.7 billion and leverage at 2.2x EBITDAaL—below the 2.5-3.0x target range—Tele2 has financial flexibility for investment, acquisitions, or shareholder returns.
Network Leadership: 5G coverage reaching over 90% of Sweden's population with 70% having access to 5G+ offering speeds between 200 and 800 Mbit/s positions Tele2 competitively for data-intensive applications.
Cash Flow Commitment: The 100% EFCF distribution policy provides visibility on shareholder returns. The proposed ordinary dividend of SEK 6.35 per share maintains this commitment.
ESG Leadership: Recognition as Sweden's most sustainable company by Time Magazine and top Climate Leader by the Financial Times may increasingly attract ESG-mandated capital.
Bear Case
Mature Market Dynamics: The Swedish telecom market is fully penetrated with limited organic growth potential. Competition remains intense among four well-resourced operators.
Transformation Risk: The deep transformation plan involves significant execution risk. Workforce reductions can impair customer service; IT migrations can introduce operational disruptions.
Ownership Transition Uncertainty: While Iliad's involvement signals change, the ultimate strategic direction remains to be demonstrated. Historical Iliad acquisitions have involved more aggressive operational restructuring than may be culturally acceptable in Swedish context.
Fixed Broadband Challenges: Digital TV fell 9% in Q2 2025, impacted by the Boxer platform shutdown. The shift away from traditional TV bundling may pressure legacy revenue streams.
Regulatory Environment: While Swedish regulation has been stable, European-wide initiatives on data privacy, network neutrality, and digital markets regulation introduce ongoing compliance costs and constraints.
Key Performance Indicators to Monitor
For investors tracking Tele2's trajectory, three KPIs warrant particular attention:
1. End-User Service Revenue Growth This metric captures the underlying health of customer relationships, stripping out equipment sales and other volatile items. The 2025 guidance for low single-digit organic growth represents the baseline expectation. Acceleration would signal successful execution of the more-for-more commercial strategy; deceleration would raise questions about competitive position.
2. Underlying EBITDAaL Margin The transformation plan is fundamentally about margin improvement. The upgraded 2025 guidance to slightly above 10% organic EBITDAaL growth reflects early transformation benefits. Tracking this margin relative to revenue growth reveals whether cost discipline is translating to profitability.
3. Equity Free Cash Flow per Share Given the 100% distribution policy, EFCF per share directly determines shareholder returns. Equity free cash flow of SEK 1.6 billion in Q2 2025, with SEK 5.6 billion generated over the last twelve months—equivalent to SEK 8.02 per share—provides the benchmark for ongoing monitoring.
Myth vs. Reality
Myth: Tele2 is just a Swedish telecom operator. Reality: While now focused on Sweden and the Baltics, Tele2's history as a pan-European challenger shaped its operational DNA and demonstrates strategic adaptability.
Myth: The Iliad acquisition represents a hostile takeover. Reality: Kinnevik was a willing seller, and the transaction was structured as a share purchase at a 13% premium. Iliad is a reference shareholder, not a controlling owner, though its influence on board composition and management appointments is substantial.
Myth: Telecom is a declining industry. Reality: While legacy voice and SMS revenues have declined, data consumption continues growing. The challenge is monetizing data traffic at margins that offset legacy revenue erosion.
Material Risks & Regulatory Considerations
5G Spectrum Economics: Future spectrum auctions could require significant capital outlays. The mandatory swap of 5G equipment completed in 2024 demonstrates ongoing network investment requirements.
Network Sharing Agreements: Tele2's capital efficiency depends substantially on continued cooperation with Telenor through Net4Mobility. Any deterioration in this relationship could increase costs.
Swedish Labor Relations: The planned 15% workforce reduction requires union negotiations. Swedish labor law and norms may constrain the pace or scope of restructuring.
Competition Authority Oversight: Any future M&A activity would face rigorous competition review given the concentrated Swedish market structure.
Conclusion: A Challenger Reborn?
Tele2's journey from monopoly-buster to regional incumbent to Iliad-backed challenger-in-transformation encapsulates the evolution of European telecommunications over four decades. Founded by a maverick who believed Swedish consumers deserved better than state monopoly pricing, the company grew through aggressive expansion, learned painful lessons in Russia, and rationalized into a focused Nordic operator.
The Iliad era represents potentially the most significant strategic inflection since the Com Hem merger. Xavier Niel's playbook—operational efficiency, aggressive pricing, digital-first customer engagement—has proven effective in France, Italy, and Poland. Whether it translates to Sweden's more mature, more competitive market remains the central question.
For investors, Tele2 offers a rare combination: exposure to Europe's most advanced digital economy, a demonstrated commitment to shareholder returns, and a transformation story with experienced new ownership. The risks are real—mature market dynamics, execution uncertainty, and the inherent unpredictability of new strategic direction. But so is the potential: margin expansion, freed capital for returns, and the rekindling of challenger energy that defined Jan Stenbeck's original vision.
As Tele2 prepares to begin shutting down its 2G network on December 1, 2025—symbolically closing one technological chapter—the company opens another under new leadership. The question is whether this Nordic challenger can prove, once again, that in telecommunications, the establishment is never as invincible as it appears.
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