Tele2 Expands in Russia, Withdraws From Finland"

Tele2 has announced that it is withdrawing from the Finnish market, citing market conditions and the regulatory environment in Finland. In conjunction with this decision, the company has also decided to end the process regarding its 3G license in Finland. The administration of Tele2's existing Finnish customers will be transferred to Sweden.

Lars-Johan Jarnheimer, CEO of Tele2 said; "Given the current market environment, we see better opportunities elsewhere. It is of course unfortunate that we need to end our operations in Finland, which began in 2000. However, we still are not able, for example, to sell local calls there. Given this situation, we have decided to end any further marketing investments in Finland."

Ovum analysts commented that the Finnish market is saturated in terms of subscribers, an ever-growing number of low-cost, 'no frills' MVNOs are making life very difficult for all. Consolidation has already occurred in the market, with Elisa due to finalise the purchase of Saunalahti in the next couple of weeks. Even the market leader, TeliaSonera, is having massive difficulties in adapting to the intense price competition, and had a change of management this spring as a result. Players with lower scale, such as Tele2, are finding it even tougher. Ovum's recent research has shown that regulatory pressure on interconnect fees, together with increased price competition in the last 18 months, has led to substantial falls in the effective price per minute. Combined with low net-adds, this has led to minimal revenue growth for all players in the mobile market.

With healthy growth opportunities in Eastern Europe, Tele2 no longer wants to throw good money after bad. Ovum feels it's a good business decision in this case.

Tele2 also announced that, following the acquisition of Votec Mobile in December 2004, it has launched a GSM network in the Voronezh region, its twelfth in Russia under the Tele2 brand.

The population covered by the GSM license in Voronezh is 2.4 million and the region's mobile penetration is approximately 40%.

Lars-Johan Jarnheimer, CEO of Tele2 said; "The GSM launch in Voronezh in Southern Russia follows on from our 11 successful launches in 2003 and 2004. The Russian mobile market offers substantial growth potential for Tele2 and our previous launches in Russia show customers appreciate our service offerings."

Posted to the site on 22nd August 2005