Tele2 Closes a Strong Quarter but Leaves Guidance Unchanged; Maintaining Fair Value Estimate

Narrow-moat Tele2 continued the positive trend in previous quarters with revenue growing 2% organically (1% last quarter) to SEK 6.63 billion thanks to a strong mobile segment in Sweden and good performance in the Baltics, which grew 12% year over year. Despite results having been good overall, shares are down more than 4% at the time of the writing and we believe this might come from management leaving its guidance unchanged despite the good results. Service revenue growth and EBITDA growth guidance seem easily achievable to us, especially considering management’s expectations of a strong fourth quarter. Service revenue and EBITDA for 2021 should be in the higher range of guidance (which is low-single-digit service revenue growth and mid-single-digit EBITDA growth). We maintain our fair value estimate.