Tele2 AB (publ)

Ladies and gentlemen, thank you for standing by and welcome to the Tele2 Q2 Entering Report 2021 conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. I must advise you that this conference is being recorded today and I would now like to hand the conference over to your speaker today, Sean Johnson. Please go ahead.

Thank you very much, operator. Good morning, everyone, and welcome to the second quarter report for Tele2. With me today, I have Mikael Larsen, our CFO, and Samuel Scott, our Chief Commercial Officer. Today, we'll walk you through the results for the quarter and we will run a Q&A session afterwards where we can address your questions. Since I became CEO of Tele2, I've talked about the challenges that we have faced and dealt with during an ongoing pandemic in order to reach our goals. With a post-pandemic society on the horizon, I can now safely say that we are overcoming those challenges and we are starting to see a turnaround in the financial results. At the Capital Markets Day in May, we presented our plans for our commercial business as well as the crucial IT and technology transformation that enables it all. I'm happy to see that the plans we have set are already starting to show positive signs, as I will briefly explain to you as we go through the figures of this quarter. So let's then turn over to the numbers. End-user service revenue returned to 2% growth for the group in the quarter as Baltics continued to grow really well and we saw Sweden stabilizing as we grew in Sweden B2C and we saw a trend in the number of business shifts in Sweden B2B compared to previous quarters. Strong performance in the Baltics, execution of the business transformation program and lower commercial spending in Sweden led to an underlying EBITDAO growth of 8%. We continue to invest in 5G in Sweden but we are not yet at our full year run rate, which you can see in our capex for the quarter. We expect to increase the speed in the second half and onwards as we ramp up the 5G rollout in Sweden and eventually start in the Baltics once we have acquired the spectrum. During the quarter we paid out three SEC to our shareholders, which was the first half of the ordinary dividend and in July we paid an extra ordinary dividend of three SEC. The remaining three SEC of the ordinary dividend is scheduled for October, meaning that we will have distributed nine SEC this year to shareholders. This is in line with our ambition of having a superior shareholder return. We successfully combined two of the most iconic consumer brands in Sweden into one strong premium brand, which concludes the first phase of our FFC journey. During this phase we have shown that we are willing to take responsibility in the market through our value-based strategy and we see that our more and more price adjustments are now improving the top line. With rolling revenues now roughly at the same level as last year and other areas that were particularly affected by the pandemic, such as TV and mobile prepaid stabilizing, we were able to grow the Sweden B2C business for the first time in a long while. In Sweden B2B we continue our multi-segment approach to take market share within SME, increase profitability in large private enterprise and defend our position within the large public enterprise segments. The initial results are promising and we see that the new mobile portfolio for small business launched in the first quarter is starting to bear fruit. While it will take some time to turn the B2B business back to growth, we start to see the end-user service revenue shift materializing and we are on track towards stabilization in 2022. We see the fantastic performance in the Baltics continue with strong end-user service revenue and underlying EBITDA growth. This is done through our -for-more strategy as we monetize the increased demand for data and leverage our different market positions in each market. But let's now move over to the Swedish consumer segment on slide four. The consumer market is in a similar state as the previous quarter with lower activity due to COVID-19 restrictions. Together with the price adjustments which always come with slightly elevated churn, this led to a negative net intake in mobile post-bates. In fixed broadband we really saw how resilient the business is as net intake remained relatively strong despite headwinds from the pandemic, pricing adjustments and the removal of one of the most well-known fixed broadband brands in the Swedish market. Price adjustments in post-bates and fixed broadband supported continued Aspyn growth in the quarter and cable and fiber TV Aspyn turn around as the revenue from premium sports is back. Total end-user service revenue increased 1% as growth in mobile post-bates, fixed broadband, and cable and fiber TV compensated for a continued decline in legacy services. And then let's move on to B2B on the next slide. Mobile net intake was positive with 10,000 revenue generating units in the quarter driven by improved net intake in a small segment and new contracts within the large segments. Mobile output continued to decline although at a lower rate as roaming headwind neutralized in the quarter. While we saw improvements within mobile and solutions, total end-user service revenue declined by 2%, mainly driven by continued decline in legacy fixed services. On the whole I would say the performance is in line with the trajectory we laid out at the capital markets day. We are seeing a trend shift which should continue throughout the year and then lead to stabilization in 2022. The price pressure of course persists since it is a tough market, however, after trends are already improving slightly compared to previous periods, even if you exclude roaming. While we have a journey ahead of us to get back to growth, I think it is a good sign that we can get volume growth while maintaining discipline on prices. So then let's turn to slide six for the whole of Sweden. End-user service revenue was flat in Sweden as growth in B2C compensated for decline in B2B. Underlying EBITDA increased by 7% through continued execution of the business transformation program, lower commercial spend and less headwinds related to the pandemic. We continue to see strong cash conversion of 65% despite increased capex related to the 5G rollout in Sweden and IT investments related to the business transformation program as we keep growing underlying EBITDA. And then let's turn to Baltics on slide eight. We saw strong net intake in the quarter for the Baltics driven by mobile force trade in Latvia and Lithuania. We continue to see strong ask to growth due to continued monetization of data driven by price adjustments through more and more campaigns and a slight recovery of roaming revenue in Latvia and Estonia. We continue to see fantastic financial results across the Baltic markets. End-user service revenue increased by 13% in the quarter with strong growth across all markets as COVID-19 headwinds started to abate and showed signs of slight recovery. Higher end-user service revenue led to an underlying EBITDA growth of 10% on an organic basis. Strong growth in underlying EBITDA together with low capital intensity as we are in between investment cycles ahead of the 5G launch and the spectrum acquisition overall led to an 83% cash conversion. With that I would like to hand over to Mikael to go through the financial overview.

Thank you Kjell and good morning everyone. Please turn to page 11 in the presentation. As in previous quarters we have taken this slide to illustrate each revenue line excluding roaming. Please keep in mind that the organic growth numbers on the slide are adjusted for F-exchanges. As we can see on this slide and as Kjell previously mentioned we now see some pandemic headwinds starting to abate in the quarter and in the comparable figures we have for the first time a full quarter of COVID-19 impact. As a result we see outbound roaming giving a slight tailwind of 18 million SECs for the group in the quarter but we are able to grow end-user service revenue even if we exclude this from the numbers. Mobile post-paid grew by 1% ex-roaming and fixed broadband increased by 5% driven primarily by price adjustments. We saw most of the effect of the price adjustments this quarter and we expect the full effect from Q3. As premium sports content now has returned we are able to grow our cable and fiber tv business with 3% compared to Q2 2020. However it did not fully compensate the continued decline in the legacy DTT business resulting in digital tv end-user service revenue declining by 2% in the quarter. Total end-user service revenue in Sweden B2C grew by .3% in the quarter excluding roaming as growth in mobile post-paid fixed broadband and cable and fiber tv was offset by decline in legacy services. In Sweden B2B slightly improved trends within mobile and solutions were not able to fully compensate for the continued decline in fixed legacy services and end-user service revenue declined by 2% excluding roaming. And in the Baltics we see continued strong performance resulting in 12% growth in end-user service revenue excluding roaming and this was driven by high asper growth on the back of price adjustments through our more for more strategy and also pre to post-paid migration. All of this resulted in the group growing end-user service revenue by .6% excluding roaming and .0% including roaming in the quarter. And this marks a turning point for our business from the negative growth numbers we have seen for the group over the last quarters. Let's move on and turn to slide 12 for a walk through of the group results. Continued strong development in the Baltics, execution of the business transformation program in Sweden and lower commercial spend drew an underlying EBITDA increase of 7% organically. Items effecting comparability was roughly at the same level as Q2 2020 and was mainly driven by restructuring costs related to the business transformation program in Sweden. Depreciation and amortization increased during the quarter as we now start to amortize the book value of the KOMHEM brand following the merger with the TELETU brand in the quarter. We also saw some impairments related to the IT transformation in the quarter. The release of a provision related to a tax dispute with the Swedish tax authorities resulted in a positive non-cash effect in the quarter of 21 million SEC on net interest and 350 million SEC on income tax. Let's continue by looking at cash flow on slide 13. Timing of customer equipment capex in Q2 last year led to a decrease of capex paid this quarter compared to Q2 2020. We saw a positive change to working capital in this quarter and that was primarily explained by external handset financing in the Baltics. Taxes paid were affected by timing of withholding tax on inter-company dividends from the Baltics. And finally, we continue to see strong cash flow generation with equity-free cash flow of roughly 1.3 billion SEC in the quarter and 4.7 billion SEC in the last 12 months. And that is equivalent to roughly 6.8 SEC per share. Please move on to slide 14 for an overview of the capital structure. Leverage was unchanged compared to last quarter as growth in underlying EBITDA was offset by the distribution of the first tranche of the ordinary dividend in April. We continue to be in the lower end of our target range of 2.5 to 3 times ahead of the extraordinary dividend which was paid out in the beginning of July. If we're just for this leverage would have been 2.7 end of June. So, so far this year we have distributed six SEC and in October we'll pay out 3 SEC per share as the second tranche of the ordinary dividend. And we can do this while maintaining our leverage comfortably within our target range. On top of the underlying cash generation of the business and re-levering effect of growing underlying EBITDA, we also have the opportunity to crystallize value for our shareholders through our stake in T-Mobile Netherlands. Since the Netherlands is not part of our group cash flow, a potential exit and distribution of the proceeds would not affect our ability to distribute cash to shareholders and maintain a very generous remuneration policy afterwards. Let's continue with slide 15 where we'll show an update of the business transformation program. We continue to execute on the program and we reach an annualized run rate of 350 million SEC at the end of Q2. This resulted in 80 million SEC in cost reductions from the business transformation program affecting the P&L during this quarter. The savings during the quarter comes from efficiency improvements within the technology, IT and commercial organizations as well as support functions. We remain committed to reach roughly half of the 1 billion SEC target by the end of this year and the rest by the end of 2022. And with that I will hand back to Jurschel to go through the updated guidance and our key priorities going forward.

Thank you very much, Michael. So then let's please turn to slide 16 to go through our updated financial guidance. As society gradually returns to normal, we see that the effects from the pandemic start to evade. As a result, we are more confident than we were in February when we gave the 2021 guidance. Hence we update our 2021 guidance for end-user service revenue from flat previously to flat to low single-digit growth and underlying line EBITDAO from 2 to 4 percent growth previously to -single-digit growth. The guidance for capex excluding spectrum and leases remains unchanged as we aim to ramp up the 5G rollout in the second half of the year. With a 7 percent growth in underlying EBITDAO in the first quarter, this full year guidance of course implies a slight slowdown in underlying EBITDAO growth in the second half of the year. The reason is that while the current market environment is good for our margin as it keeps commercial costs down, we want to make the necessary investment to achieve a sustainable balance between volume and price in order to grow end-user service revenue sustainably. So if -single-digit growth is 4 to 6 percent, you should not expect us to be in the upper part of that range since we want the flexibility to invest in growth in the second half so that we can hit the ground running in 2022. Please turn to slide 18 for our key priorities going forward. With the strategy and midterm ambitions set out at the capital market stay in May and with a post-pandemic society on the horizon, it is time to recalibrate our business towards a strong focus on growth. This includes investments that are essential for delivering a great service and customer experience while solidifying our premium position in the market by balancing volume and price through our -for-more strategy. In Sweden, we will continue to execute on our infrastructure investments both in the mobile and fixed networks with 5G and remote phy. We are on track with our plan to ramp up during the second half and aim for the higher end of our Capric guidance range during 2022 and 2023. The execution of the business transformation program is progressing well and we stay committed to deliver an annualized run rate of 500 million at the end of this year and at least 1 billion SEC at the end of 2022. In Sweden B2C, we will now enter phase two of our FMC journey with a new consolidated con-hemant of the two brands. While the first phase was all about building loyalty in the existing overlap among our fixed and mobile customers, the second phase will be focused on offering a truly convergent customer experience under one single brand by cross-selling to the 1.3 million non-FMC households within our fixed footprint that have only one of our services. The emphasis, however, will be on a valued FMC strategy to gradually increase penetration in our customer base. Sweden B2B is starting to become a good story. The B2B market has never been an easy market, but with a solid strategy in place, the internal parts are in place and we now need to shift from planning mode to execution mode to continue the trend shift in 2021 and move to stabilization in 2022. In the Baltics, we will build on the current momentum and execute our mobile-centric conversion strategy through more and more offers while preparing for a nationwide rollout of 5G once the spectrum of options are concluded. We will also further develop our FMC opportunities by looking at our own and third-party infrastructure capabilities. I'm also very happy that we were able to announce a strengthened group leadership team early this week, with Charlotte Hansson joining as a CFO and Henri de Chote as Chief Commercial Officer. Charlotte brings broad and valuable experiences from a number of industries, while Henrik is the commercial FMC expert that we need in order to achieve phase two of our FMC journey. I look forward to working with both of them. With yet another strong quarter behind us, I'm more confident now than ever that we will deliver on our midterm guidance and achieve our ambition to become the leading telco in the Nordic and Baltic regions. With that, I'll hand it over to the operators so we can move to Q&A.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Please just one question per analyst. As a reminder, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, please press star 1 if you wish to ask a question. The first question comes from the line of Andrew Lee from Goldman Sachs. Please go ahead.

Morning everyone. I had a question around the declining parts of your business and the improvements you've had within those in the second quarter, so specifically digital and TV and B2B. I guess the key investor question is how sustainable are those improvements and the direction of travel? On digital TV, you had been saying that you could stabilize digital TV trends in the second half of the year, I think. Obviously, you've inflected the growth in the second quarter. What's your outlook now for the rest of the year on TV and into 2022? And then on the B2B side, you reiterated a couple of minutes ago, Urshel, that we'd look to see stabilization in 2022, which is what you said, your capital markets day, but obviously a bigger improvement in B2B than people expected in the second quarter. So is there scope, do you think, to actually see stabilization sooner than 2022, for example, in the second half of the year? Comments to reassure on the sustainability of improvement would be really helpful. Thank you.

I'll start on B2B and in the summer we'll talk a little bit about TV afterwards. Yeah, we are very happy to see that the B2B has made significant improvement throughout the last couple of quarters. That's very, very helpful for our top line, for sure. Yes, it would be very nice to see the run rate stabilize at the end of this year. I have just emphasized that we are on track and we're getting there because it was a big concern for you guys, for me, and for everyone three quarters ago. And now we are quite confident that we are getting back to stabilization. We will work as hard as we can to bring that to run rate stabilization by the end of this year. That is, of course, an ambition that we would like to have. Maybe to the TV side?

Yes. So, hi Andrew and good morning everyone. So for TV, as you know, we have a strategy to continue to modernize our TV business and in that way stabilize it. Maybe not reaching growth sustainability, but at least stabilize it. And if we take out the kind of premium headwind that we see in Q2 we are definitely seeing an underlying improvement also without that premium part. So the trajectory is positive, also underlying for TV.

Thank you, that's helpful.

Thank you. Next question comes from the line of Maurice Patrick from Barclays. Please go ahead.

Good morning guys and thanks for hosting the call on the question today. Just one question really around your value versus volume. It seemed pretty clear over the last few quarters you wanted to pivot the company more towards value, maybe rather than just volume approach in the past. But in your statement today you seem to indicate a desire to increase the market activities to get a platform for growth in 2022. So maybe just a few thoughts around that value versus volume trade-off and how you're thinking about that. Thank you.

Yeah, just so there is no misunderstanding, I did not want us to shift towards becoming very volume focused. Again, that is not what I'm saying here. If you look at the market activity in the second half of last year, it was quite heavy activity going all the way from the iPhone launch via BlackWigs over towards Christmas and lasting into January this year. And now we have less activity from mid-January throughout the first half of the year. And I think it's only natural to expect that when we get back to the typical September, October activities at Christmas, there will probably be more activity than we've had in the first half of the year. And that is to some extent a volume game. But I just want to be very, very clear. We believe the long-term sustainable growth stems from a value focus, not from pushing volume. But it's important to relate to the fact that we are operating in a market. We are looking at what happens around us. We have taken a lot of responsibility by being very strategic. And it's our ambition to do so if the market permits.

That's great. Thank you.

Thank you. Next question comes from the line of Peter Nielsen from ABG. Please go ahead.

Thank you very much. Morning, gentlemen. A question on convergence, please. You seem very confident that you can drive convergence going forward and clearly to a higher degree than has been the case in the past. And you're also stressing that you're sort of adding some new competencies within FHC convergence. I understand that you have moved towards one single brand now. But what makes you so confident that you and what will make the big difference in your convergence efforts going forward? What is it that will be done differently? Can you enlighten us a bit on why this will suddenly, why we should see a step change in convergence and the contribution from that? That would be appreciated. Thank you. And if I can sneak in a technical question from Michael, Michael, for how long should we assume that the incremental amortization of the Comhim brand will continue, please? Thank you.

So let us be clear. Of course, there will always also in our customer base be people who want to have a clean mobile-only product or another straightforward relationship to us. And we will have to have a better convergence solution. We have unique assets. There are two players in this market. And that gives us the opportunity to have a bit of a uniqueness compared to other players in the market. We have talked about that multiple times. So it's about utilizing the assets we have, making sure that 1.3 million customer groups that we can address within our own base get the best possible offering. And that sets us a bit apart from, for example, Tre, who would naturally follow more of a mobile-only approach. And that's the right thing for them to do. That's a good thing for them to do. We have more agencies of our team. We can go for different segments that we are better suited for catering for. And yeah, Michael, I guess you will answer the other one. I can do it in the first question. Yes,

I can do it. It will be amortized over 10 years. So this is the new run rate level you will see going forward of amortization and depreciation.

That's great. Thank you, Michael. Thank you,

Ken. Thank you.

Thank you. Next question comes from the line of Nick Liel from Societe Generale. Please go ahead.

Yeah, morning, everybody. It was just a quick one on, maybe for Samuel, actually, on the Telia pricing, including content in the unlimited mobile package. Is that something that's an opportunity for you, do you think? I mean, it's quite a high price they're offering by adding content in. So is that an opportunity for you to undercut X content, or do you think that Swedish consumers are going to start to require more content in their top-end mobile packages? And that's something you have to work on, particularly with Champions League coming. Do you mind if I just get a clarification as well on the infrastructure comments you've made as well, Sheldon? There's nothing outside the Baltics in there. So should we conclude now that you're still doing the work, or have you finished the work on any of the Swedish infrastructure? Maybe it's just more organic stuff with Telenor, but nothing more than that. Thank you.

So if I start on the first question, Henrik, I mean, including content in top tiers, I don't think it's a must. So we don't have to do it, but you can do it. So let's see. But I think in general, we talk about the value-led strategy, and Telia talked about the value-led strategy, and this is a point of that driving the market in the right direction, then of course that's an opportunity for us. In general, I don't think we have to grab that opportunity by including content everywhere.

And on the infrastructure side, I think I would say that we're still working on that, and it has to do with, I'm sure you know very well, how the structure is on the 3G market in Sweden with us, and Telia, and of course, Tre and Telenor in the 3G. So we're untimely in these things, redistributing, setting up the net for mobility. So we're taking it one step at a time. I know it's very fashionable to move fast on these things, but with our balance sheets and our delivery now, we will make sure we do this in the right sequence, and that if we do something more around this, then it will be very well thought through. But we are super pragmatic about how we configure our value checks.

That's great. Thank you very much.

Thank you. Next question comes from the line of Stefan, Karfin, DNB Bank. Please go ahead.

Yes, hello. A CAPEX question. It's a lot of talk about 5G CAPEX, but you're also investing in Remote PHY. How much will you invest in this? And can you talk about what improvements in the cable network that we can expect from this in terms of improvement in speed and capacity? And is this investment in Remote PHY also supporting your 5G plans in any way? Thank you.

Yeah, there were several things there. First of all, I mean, the CAPEX is distributed on, of course, building the 5G. It's on Remote PHY. And then Sweden is a little bit unique in that it is also part of our CAPEX. So it's divided into different areas. The Remote PHY investment is clearly to support both our cable business with reliability and speed and for our broadband business. So it's basically, we used to say before, we talk about bringing Frankfurt to the customer in terms of you're building fiber closer and closer and closer to base stations. This is what we're doing, building the fiber closer and closer to the customer living in the building. So it does enhance the speeds. And Jorgers, if you remember, at our Capital Markets Day, started talking about the 10G. And so there's always another G. So on the Capital Markets Day, he presented this. That's also available on our website to go through more of a presentation, what is said there. I don't know, do you want to say something more about the CAPEX, Nico? Some of it on me.

I think we can, if you talk about the CAPEX levels, I think it's important to remember that this is an investment which will be ongoing for many years, five plus years. So if you spread it out over these years, the number per year is not that significant compared to the 5G rollout. And also bear in mind that this replace, we used to do node splitting in the past to cater for building capacity. And this is the new way of building capacity. So it replaces other CAPEX which we used to do before. So it's not just add-on. I think that's important to remember.

And maybe just from a customer perspective, this will generate market-leading symmetrical speeds for broadband. So that's of course important to underpin the journey we're doing on convergence and quality.

Okay, thank you. Thank you very much. Thank you.

Thank you. Next question comes from the line of Ulrich Rasse from Jeffreys. Please go ahead.

Yeah, thanks very much. You had a very strong Q1 result as well. And at the time you were sort of a bit cautious to redress into the full year. You talked about the commercial investments you want to make. Now the second quarter, again, you sort of haven't quite dipped into that commercial investment. I think that's part of the surprise versus market expectations. Could you sort of just get a bit more into, give a bit more color, what elements of the second quarter really gave you the confidence now to raise the full year guidance, whether it's the efficiency program, whether it's the market environment or whether it's the actual numbers that are coming out of the business? That would be helpful. Thank you.

Well, I think let me start by being maybe not 100% serious. It's easier to earn yourself into becoming a millionaire or billionaire than to save yourself. At some point, the focus needs to go back to getting a modest amount of growth. And I think that time already has come for us. We have started that shift. And to build long-term value, we need to have a focus on growth. We will continue to be an efficient operator. But if we focus only on savings, that's not going to build a really long, a good long-term story. I wouldn't say that there is one specific thing that causes us to adjust the guidance. I think it's several things coming together. I talked about B2B. B2B was a huge dragon in our performance. It is not a huge dragon in our performance anymore. We can still improve and we will improve. It's super important that the Sanger and team have brought us back to growth in B2C in Sweden. So we clearly see that this is sustainable and that is something we can build upon. And then of course we have exceptional growth in the Baltics. We think that will continue to grow, but that growth will of course come down at some point. We cannot have strong double-digit growth there forever. We all understand that. So it's a confidence that is building quarter by quarter. We see that we are more precise in our strategy that we have presented, our segmentation. We start seeing that the market responds to our strategic price hitting in the Swedish market and our ability to deliver our services is improving as we go through an improvement journey. So it's several factors that come together and make us feel more confident. Plus the fact that we are more confident that at least for Western Europe and from the OED, we probably will get out of this pandemic this year in a reasonable way, although the rest of the world still has a big problem.

Thank you very much. Thank you.

Thank you. Next question comes from the panel. Please go ahead.

Hi. Thank you for taking my question. I would like to ask about the new appointments that you've announced, in particular about the chief commercial appointment. It's quite a sensitive position for Atoll too currently. So first of all, can you confirm that there will be a roughly one month overlap as both CEOs kind of are together in Atoll too in August, which could improve somehow the succession process? And secondly, can you just give a bit of a background as to what led you to choose Henrik and what experience of this specifically makes him the right person for everything that Atoll is currently going through commercially? And then if I may just also sneak in a clarification please on the amortization of the Comhan brand as that or does that not carry a tax shield? Thank you.

Yeah, so it's very good news that Henrik comes along here already in August. That allows for an overlap. But in real life, that overlap has already started because Samuel asked Henrik to help him with challenging some of our strategy work. So the guys have actually had a dialogue around the B2C strategy for some time. And that is a huge strength for us so that when Henrik comes here, he can hit the ground running. And Samuel is an extremely loyal person so he will be helpful until the last day the way I know him. So this, you couldn't ask for a better transition than what we will see here. And the team have already been introduced to Henrik. His background, he has a lot of experience with FNC but he also knows the TV business, the cable TV business from his time at Zigo. And when you often find a typical technical CMO, which some of them are fantastic, or you find someone who's working cable TV and is doing a great job there. But someone who has that experience from both in the broad way, in a way like Samuel does here. Not that many out there. So I think we've made a very, very solid choice here that's going to be helpful for us. And then you ask something about again the amortization of Comhem. I think Mikael answered that it's going to be done over 10 years. Was that a question? No,

no. And I can clarify that there is no paid tax effect on this but of course there is a deferred tax booked on the amortization. Markus and Patrick can give you the details of this and the numbers. But no effect on paid tax.

Thank you very much.

Thank you. Next question comes from the line of Abhilash Mohapatra from Brimberg. Please go ahead.

Great. Thank you. Thanks for taking my question. I'll just ask a question around the, you know, some of the revenue improvement drivers in Q2 please. And just on TV where you mentioned that with sort of premium sports coming back, you've seen a return to stronger astral levels. My question just was if Q2 was sort of normalized run rate or should we expect more improvement as, you know, some of those elements return into the second half? And then just related to that on the solutions revenues, just wanted to check if there was some sort of a, you know, catch-up effect from free disc waters and or whether we should expect this to be the kind of run rate for solutions revenues going forward. Thank you.

So if I start with the TV question then, and as I said, we will have some headwind on comparisons for premium both in Q2 and Q3. And I think it's more or less evenly divided if you compare it to last year. But if you skip that, we also see an underlying improvement within both the former come-hem TV part and also some in Boxer. And that we expect to continue with the strategy we presented at the Q2 Market Play. And

you are addressing the solutions business. Yes, there is some effect on that. You're very well spotted. But it's not so big that that changes the overall picture. So I'm very happy with the way Stefan is stabilizing that business moving it back towards hopefully growth.

Got it. That's very helpful. Thank you.

Thank you. Next question comes from the line of C.G. Hei from CT. Please go ahead.

Hello. Thank you for taking my questions. And just the first question I want to ask about the price increase potential. And this quarter we're seeing that Telia announced one of the biggest fiber price increases over the past few years. Just wondering how do you think the potential price increase and ARPUL growth on fixed broadband going forward? I think broadband ARPUL growth is now 1% to 2%. Do you think there's potential to go back to the 3% to 4% as we saw in the past? And the second question, just a quick follow up. On your management team, would you mind to remind us how many key management seats that you still plan to fill? And should we expect a more stable top management structure going forward? Thank you very much.

So if I start with pricing, and then I want to come back to our strategy and the way we do pricing. I mean, we have a very clear, as you know, value led strategy. We have a clear process on how we work, where we do focus a lot on adding value, working with the front book in the second half of the year. And then in the first half of the year, we do the back book. And we're just now coming up of the back book exercise and now starting to look forward into kind of the next part of the cycle, the adding value and the front book. And when we do that, we look at two things, if you want to simplify it. One is, of course, what's happening in the market and what kind of potential does that bring? And the other thing we're looking at is our own ability to provide value to our customers. And with other players in the market working the same way and working with a value led approach, that of course, you know, plays into our decision material. So on the question, do we see continued pricing potential? The answer is definitely yes. But I'm not going to go into exactly the percentage points of that. But we do see potential and that is definitely part of the strategy going forward.

And your question and observation, of course, around the management team and the changes is, of course, absolutely spot on. I think we should take a little bit of a historic look at this. Teller 2 and Comhem came together and some people who were in this management team have been around for a long, long time. We're talking about, in Samuel's case, 14, 15 years. And we have had Yusuf Mikkan has been a CFO in different capacities now for a long, long time. So I think, to some extent, natural that when the first phase of this job is done, people who have spent a lot of time with a company and reached sort of the top level would like to try to do something else with their lives. I've been in exactly that situation myself. So I know exactly how that works. And now to your question, should we expect more stability? Yes, you should expect more stability within the top management team. We are moving ahead. Sharad joins us in January. We have the first September. So we have a team in place now that looks to the medium to longer term. And I think that we've been able to put together a strong team. And we can build on the strategy that has been developed, partly actually with one or two of the people coming in, helping us, but with this team. And I can tell you, when we have our management team meetings, we share a good laugh. There's a good tone. It's just at some point when you've been around for a long time, you want to move on and try something new.

That's very clear. Thank you very much.

Thank you. Next question comes from the line of Eugenie Coudina from Credit Suisse. Please go ahead. Hi,

thanks for taking my question. My first question is on operational side in mobile. So for the past three quarters, you've had B2C postpaid mobile negative growth in net ads. However, your competition has been growing quite well in the postpaid net ads. And I'm just wondering why is that trend and how are you seeing that going forward? And then my second question, sorry, maybe I've misheard your previous comments on infrastructure. Can you give an update on your towers in Sweden and potential monetization of those assets going forward? Thank you.

Yeah, I can start with the net ad question. So, I mean, if we look to this first half of the year, we know we had some challenges in the fourth quarter. We were very open about that and talked about it, which has improved. And then I think we have taken a very big strategic responsibility, being very clear on the value led strategy and also being a bit patient on that to make sure that, you know, we get that piece moving in the right way. We have had the pandemic impact, which of course has hampered volumes. And we've done a lot of pricing in the first half year. So I would say all of this has been by our decision and design. And now when we came out of the back book pricing we come out of the worst headwinds of the pandemic, we naturally see that there is a potential to improve also the volume side. So not a big worry on our part, rather, you know, decisions we have taken on how we want to structure this business going forward.

Yeah, I fully agree with what somebody is saying. I think it was important for us to show exactly how we operate and want to operate, how we want to set the tone in the market. But we are not going to sit and watch, of course, volumes going against us over time. But I think the learning we've had now is that it has been a worthwhile exercise that has given good results. And back to infrastructure again. Yeah, I think it's fair as you ask. And when I came in here, I started talking a bit early about infrastructure. So maybe, you know, I've created some expectations with you. The reality of it is we are untangling, like I said, the 3G networks, we are dividing the towers between ourselves, what we're going to bring from Sunab into the 5G network and network mobility. And then of course, we have a good relationship with our partner, Terenor, in network mobility. But we are taking ourselves, we are taking the time we need to do the proper analysis. So maybe I created expectations around timing at an early stage when I was here. That leads to you thinking that we should have announced something at this stage. I can only say that we are entirely pragmatic about how we structure our value chain, but it's too early for us to conclude and communicate.

Great, thank you. That's very helpful.

Thank you. Next question comes from the line of Adam Fox-Rumbly from HSBC. Please go ahead.

Thank you very much. I was wondering as we fully annualise the impact of the COVID-19 pandemic on the business this quarter, could we get your thoughts on the bad debt provision taking last year and how you're thinking about the outlook for your customer base as maybe some of the restrictions look to be lifted if that's your outlook? And then secondly, sorry to come back to this Comhen brand amortisation, but what's the reason for a 10-year lifetime when you're bringing two brands together? That seems like quite a long time to me, so I'd appreciate a little bit more detail there. Thank you.

I'll start and then hand over to Mikael, I think. Please remember that even though we've done this merger, the Comhen brand is still with us. It's in our logo still, partly, but of course you have to have been a Comhen customer for some time to see that. And secondly, we have Comhen Play Plus. So Comhen is still a part of Tele2 and this is the best way we have come up with together with the auditors for doing this. Before we didn't depreciate it at all, so it is a quite well analysed approach to it. I don't know, Mikael, if you want to add something to it?

No, I think you put it very well. It's still in the logo and you have certain attributes. It's still used in the Comhen Play service, TV service, for example, and so on. And that motivates tenure depreciation time. I can then add on the bad debt provisions to remind you all it was 35 million SEC, which we provided for in Q1 last year. And as we have said before, we have not seen any material bad debt coming up over the last quarters and I think situation is very stable overall. This provision will be released over time, but it's again 35 million in this group is not really material. So it will not be visible in the numbers. And it's part of the continuous reassessment we do of the bad debt provision every quarter in the country.

Got it. Thanks very much.

Thank you.

There are no more questions at this time. I hand the call back over to Shane Johnson. Please go continue.

Then I would like to thank you all for taking the time to join us today to listen to our quarter and our guidance and where we are today. I'm very happy that we could deliver a strong quarter, that we are able to lift our guidance a bit. And of course, that we also have been able to see quarter ended to pay out the extra ordinary dividend. So I think we're on track. But a couple like this, there will always be a lot of work to do. And we're continuing with our transformation program and we are continuing building the premium position for TELETWO. So we will have lots of interesting stuff to speak about for the next borders. But thank you for joining us today and have a very nice day.

That does conclude our conference for today. Thank you for participating. You may always connect.