Tele2's Satellite IoT Gambit: Strategic Positioning in the Next Frontier of Connectivity

The evolution of the Internet of Things (IoT) is entering a new phase, driven by the urgent need to bridge connectivity gaps in remote and underserved regions. At the forefront of this transformation is Tele2, the Swedish telecommunications giant, which has recently made a bold move into satellite-based IoT connectivity. By partnering with Skylo Technologies to launch the first commercial 3GPP-based direct-to-device satellite IoT solution in Sweden, Tele2 is not merely adapting to market trends-it is actively shaping them. This initiative, underpinned by a strategic alignment with global technological shifts, positions Tele2 to capitalize on a market poised for explosive growth.

A Strategic Leap into Satellite IoT

Tele2's satellite IoT offering leverages Skylo's Non-Terrestrial Network (NTN) technology, enabling seamless handover between terrestrial and satellite networks without requiring additional hardware, according to a Tele2 announcement. This innovation addresses a critical pain point for industries such as agriculture, logistics, energy, and maritime, where uninterrupted connectivity is essential for monitoring assets and optimizing operations in remote areas, Tele2 said. By integrating satellite connectivity into its existing terrestrial infrastructure, Tele2 is creating a hybrid model that enhances reliability and scalability-a crucial differentiator in a market where legacy providers and new entrants alike are vying for dominance.

The timing of Tele2's entry is particularly auspicious. The satellite IoT market is projected to expand from USD 2.5 billion in 2025 to USD 19.7 billion by 2035, growing at a compound annual rate of 23.1%, according to a Future Market Insights report. This growth is fueled by the deployment of low Earth orbit (LEO) satellite constellations, which offer lower latency and cost advantages over traditional geostationary satellites. Tele2's adoption of 3GPP-compliant NTN standards-a framework that harmonizes satellite and terrestrial networks-positions it to benefit from this technological shift while avoiding the high costs of proprietary systems, an IoT Analytics analysis notes.

Competitive Advantages and Market Positioning

Tele2's strategic advantages extend beyond technology. The company's recognition in the 2025 Gartner Magic Quadrant for Managed IoT Connectivity Services, where it ranks among the top 15 global providers and top 10 in Europe, underscores its maturity as a connectivity solutions provider. This credibility, combined with its established presence in the Nordic and Baltic markets, allows Tele2 to leverage existing customer relationships and infrastructure to accelerate adoption of its satellite IoT services.

Moreover, Tele2's geographic focus on Sweden, Latvia, and Lithuania-a strategy that emphasizes deep market penetration over broad geographic sprawl-enables efficient resource allocation and rapid scaling, according to a Canvas Business Model analysis. This approach contrasts with the capital-intensive strategies of some competitors, such as Inmarsat and Iridium, which rely on global satellite networks. Tele2's hybrid model, by contrast, offers a cost-effective alternative for industries that require intermittent satellite connectivity rather than full-time coverage.

The competitive landscape, however, is intensifying. Over 100 vendors now operate in the satellite IoT space, with new entrants like Amazon's Project Kuiper and SpaceX's Starlink challenging traditional players. Yet, Tele2's strength lies in its ability to act as a technology-agnostic integrator, offering solutions that combine terrestrial and satellite networks. This flexibility aligns with the industry's growing preference for "production-quality" IoT services that prioritize reliability over novelty, as highlighted by industry analysis.

Financial Resilience and Growth Potential

Tele2's financial health further bolsters its strategic position. In early 2025, the company reported a 3% increase in net sales to SEK 7.3 billion and a 2% rise in underlying EBITDAaL to SEK 2.8 billion, reflecting operational efficiency and cost discipline. These metrics are critical in a capital-intensive sector like satellite IoT, where upfront investments in infrastructure and partnerships are substantial. Tele2's ability to generate consistent cash flow provides the flexibility to reinvest in innovation while maintaining financial stability.

The broader market dynamics also favor Tele2's expansion. Governments and regulatory bodies are increasingly prioritizing satellite connectivity through policy incentives and funding programs. For instance, the European Union's push for digital sovereignty includes subsidies for satellite-based IoT solutions, a trend that could amplify Tele2's market reach in Europe. Additionally, the integration of satellite IoT with 5G networks-facilitated by 3GPP NTN standards-creates new revenue streams for providers like Tele2, which can offer seamless connectivity across multiple use cases.

Historically, instances where Tele2 has beaten earnings expectations-such as in October 2022 and July 2024-have shown mixed short-term performance. On average, the stock has experienced a 1.4% decline by day 7 post-announcement, underperforming the OMXS30 benchmark through day 9. However, by day 30, the stock typically recovers to breakeven, while the benchmark gains approximately 1.5%. This suggests that while there may be initial volatility, the long-term trajectory aligns with the company's growth fundamentals.

Risks and Challenges

Despite its strengths, Tele2 faces challenges. The satellite IoT market is highly competitive, with established players like Eutelsat OneWeb and emerging LEO constellations vying for market share. Moreover, the technology is still maturing, and customer adoption may lag expectations due to cost concerns or technical complexities. Tele2's success will depend on its ability to demonstrate clear value propositions, such as reduced downtime for logistics operators or enhanced asset tracking for energy companies.

Another risk lies in the regulatory environment. Spectrum allocation and data privacy laws vary across regions, complicating cross-border operations. Tele2's focus on the Nordic and Baltic markets mitigates some of these risks, but expansion into other regions will require navigating complex regulatory frameworks.

Conclusion: A Compelling Investment Case

Tele2's entry into satellite IoT represents a calculated bet on the future of connectivity. By combining cutting-edge technology with a pragmatic business model, the company is well-positioned to capture a significant share of a rapidly growing market. Its recognition by Gartner, financial resilience, and strategic alignment with industry trends-such as the shift to LEO constellations and hybrid networks-make it an attractive investment for those seeking exposure to the next phase of IoT expansion.

As the satellite IoT market matures, Tele2's ability to adapt and innovate will be critical. For now, the company's proactive approach and strong market positioning suggest that it is not merely a participant in this transformation but a potential leader.