Tele2 claims to cut consumer phone costs by 77pc


31 Aug 2004

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Swedish telco Tele2, which is launching in the Irish market tomorrow (Wednesday), revealed plans to roll-out carrier preselect (CPS) fixed call services that would guarantee Irish phone users savings of 77pc off the cost of calls on Eircom’s fixed line network. The company claims it will offer local calls for 1.1 cent per minute and 5 cent per minute to the UK and the US.

While Tele2 was reluctant to reveal its expenditure for introducing itself into the Irish market on the back of an existing Monaghan-based card services company [C3] that the company owns, it said that the initial cost of entry would be a seven-figure sum, with a large amount going into national advertising with newspapers, radio and television.

Siliconrepublic.com originally reported on Monday that the company was entering the Irish market with plans to have a disruptive effect on the existing fixed line business in Ireland. Tele2 has over 24 million customers in 24 countries and offers products and services in fixed and mobile telephony, internet access, data networks, cable TV and content services. The company describes its main competitors as: “the former government monopolies.”

Tele2 was founded in 1993 by Jan Stenbeck and has been listed on Stockholmsbörsen since 1996. The share has also been listed on Nasdaq since 1997. In 2003 the company had an operating revenue of SEK 36,911m (€4bn) and reported a profit of SEK 5,710m (€625m) EBITDA.

Tele2 Ireland’s managing director Mark O’Toole said that Tele2’s operations were characterised by low debt and slimlined operations. The company, he said, outsources wherever possible.

“Our focus is on developing a strong residential competitor to Eircom through our simple to install service. Users can keep their same number and phone and make their calls like normal. Customers who sign up for the service will be up and running within 14 days and they will still receive an Eircom line rental bill as well as a bill from Tele2. They are only charged on a per minute basis for the calls they make.

“We are targeting a mass market with cheap phone calls and high quality connections comparable to calls on Eircom’s network,” O’Toole said.

O’Toole added that the company, in keeping with its slimmed-down operational focus, will initially employ six people and will grow headcount as the business grows. “We estimate that we will break-even financially in the Irish market after three years in business.”

When asked if the company would be potentially offering data or mobile services as it does across Europe, O’Toole said that the company will only be focusing on voice services for its initial years in the Irish market. “We will focus on our voice product and take it from there. When the time is right we may look at other services but right now its not in our plans. Everything will depend on how we perform and the rate of average revenue per user that we achieve in the Irish market. However, we expect growth in the Irish market to be aggressive,” O’Toole said.

By John Kennedy