Tele2 AB (publ) (TEL2-A.ST) fair value

ACCE thesis

Tele2 is a Swedish mobile and fixed-line operator whose core is its consumer and business mobile subscriptions, plus broadband and TV bundles sold under the Tele2 and Comviq brands across Sweden, the Baltics, and Croatia. Its edge is scale in a market where three or four networks compete, which lets it run an operating margin of 26.7% on 43.3% gross margin while growing revenue only 2.2%. The growth story is mostly margin and cash conversion rather than top-line acceleration, and the risk is that a slow-growing, capital-intensive business leaves little room for error if competition or price pressure picks up. At a trailing P/E of 10.9 and a 45.1% return on equity, the valuation looks undemanding for a company with this level of profitability, which makes it worth a closer look at whether the margins are durable and how much of the return on equity comes from leverage. The data here does not include a forward P/E, so the forward earnings path needs to be built from scratch before anyone draws conclusions about the multiple.