Tele2 - AGM 11 September 2020
ECGS notes that as a result of the Covid-19 pandemic the EGM will be held as an electronic meeting only. Consequently, it will not be possible to attend the EGM in person.
In general, Tele2 is in compliance with the Swedish regulations relating to the organisation and procedures of the Extraordinary General Meeting.
Under ITEM 6 the board of directors proposes to distribute an extraordinary dividend of SEK 3.50 per share. ECGS notes that the aggregate dividend per share for the FY 2019 will amount to SEK 9.50 and consists of an ordinary dividend of SEK 6.00 (paid in May 2020) and a (proposed) extraordinary dividend of SEK 3.50.
As a matter of principle, ECGS believes that dividends should be covered by consolidated earnings (per share) and supported by a strong balance sheet in terms of solvency and leverage. In this respect, EGCS notes that the (aggregate) dividend is NOT covered by EPS and/or FCF for the sixth time over the past 7 years.
In addition, Tele 2 has a substantial amount of net debt of SEK 30.8 billion and corresponding high net debt to EBITDA (from continuing operations) ratio of 3.1x (as of financial year-end 2020). As such Tele 2 is NOT in line with ECGS' vision of a long-term responsible investor as set out in its ECGS partnership's 2020 commitment campaign on responsible distribution.
In view of the recent events relating to Covid-19, ECGS furthermore is in favour of postponing decisions on the dividend, reductions or suspensions that would allow companies to avoid liquidity risks or not generate risk for their survival.
As it sees no rationale for the (proposed) extraordinary dividend, ECGS recommends to vote OPPOSE.
Tele2 is engaged as a telecom operator. Co. provides mobile communication services, fixed broadband and telephony, data network services and content services. The mobile service comprises various types of subscriptions for residential and business customers as well as prepaid cards. Fixed broadband includes direct access, which is its own services based on access via copper cable and other forms of access, such as fibre networks, wireless broadband and metropolitan area networks. Fixed telephony includes resold products within fixed telephony. The product portfolio within resold fixed telephony consists of prefix telephony, pre-selection (dial the number without a prefix) and subscriptions.
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