Tele2 (OM:TEL2 B) After Its Lithuania Spectrum Move And The Case For Value

Tele2 (OM:TEL2 B) stock is back in focus after the company committed €9.8 million to secure new 700 MHz and 1500 MHz spectrum in Lithuania and to extend its 2100 MHz license until 2042.

See our latest analysis for Tele2.

The spectrum decision comes as Tele2 trades at SEK171.05, with short term share price momentum softening, reflected in a 1 month share price return of down 8.5% and 3 month share price return of down 12.1%, even as longer term total shareholder returns of 30.4% over 1 year and 130.7% over 3 years point to a stock that has rewarded patient holders.

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Tele2’s Lithuania spectrum outlay lands just as the stock cools after a strong multi year run, raising a simple question for investors heading into the valuation work next: is this move about fading sentiment or business value.

Most Popular Narrative: 5.8% Undervalued

The most followed narrative on Tele2 points to a fair value of SEK181.54 per share, slightly above the latest close at SEK171.05, and frames the Lithuania spectrum move within a longer term cash flow story built on gradual revenue growth and margin compression.

The company's accelerated transformation program, which includes significant workforce reductions, systematic contract renegotiations, and a shift to digital-first/direct channels, is driving substantial, sustainable operating expense reductions. Positive momentum for net margin and EBITDAaL expansion has been observed and is expected to continue.

Read the complete narrative. Read the complete narrative.

Want to see what is sitting behind that margin story for Tele2? The fair value hinges on modest revenue expansion, thinner profitability and a richer future earnings multiple. Curious how those ingredients combine into SEK181.54.

Result: Fair Value of SEK181.54 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that 5.8% undervaluation narrative for Tele2 still runs into a couple of clear pressure points, from tough Swedish broadband competition to limits on further cost savings.

Find out about the key risks to this Tele2 narrative.

Next Steps

With Tele2 carrying both clear risks and appealing rewards, investors should not rely solely on headlines. Move quickly to review the full breakdown of 4 key rewards and 4 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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