Tele2 AB (publ)

Thank you very much, and good morning, everyone. Welcome to Tele2's presentation of the results for the third quarter of 2022. With me here in Kista today, I have Charlotte Hansen, our Group CFO, Henrik de Groot, our Chief Commercial Officer, and Stefan Trompuis, our Head of B2B. I'm going to ask you to turn to slide two for our quarterly highlights. So when looking into development during the third quarter, I'm very pleased to see that we're able to continue delivering profitable growth despite the challenging environment. The strategy we have implemented is proving very helpful in navigating this new landscape that provides challenges to both businesses and society at large. During the third quarter, end-user service revenues grew by 3.5% on an organic basis. And it's great to see that all countries are contributing to this growth. Although we have seen a significant increase in energy prices and inflation, we have been able to convert the strong end-user service revenue growth, coupled with the execution of the business transformation program, to an underlying EBITDA growth of 1.5% for the group. If we just adjust for the increase in energy costs, approximately 80 million higher in the quarter, The growth in underlying EBITDA would have been around 4.5% in the quarter. In Sweden B2C, I'm happy to see that mobile postpaid continues to show a strong net intake this quarter, and at the same time, we were able to maintain our mobile postpaid ASPU on a similar level as last year. In fixed broadband, we saw an increase in the quarter as the Viaplay deal started to come through, with all eligible customers now migrated to the new TV proposition. In Sweden B2B, the good momentum has continued during the third quarter. End-user service revenue increased 4%, driven by volume growth in mobile, a stabilized ASPU, and a slight tailwind from roaming, which is more than offsetting the decline in legacy business. Supply chain disturbances do, however, continue to impact our businesses during the quarter. In the Baltics, we experienced yet another quarter of good performance, both in terms of top-line and bottom-line growth. So far, we've been able to mitigate most of the sharp increase in electricity costs and inflation rates, and all three countries are showing good results. During the quarter, we have successfully acquired Spectrum in Estonia and are now focusing on rolling out 5G as fast as possible in all our markets. I should add we actually bought more spectrum in Latvia and Lithuania. We can clarify that more if you want afterwards. Turning please to slide four. Commercial activity in Sweden consumer was solid during the quarter, with our new speed-based 5G mobile portfolio being the major new offering in the market. End-user service revenue increased by 2%, driven by a strong net intake in mobile postbates, in line with our FMC bundling strategy. In fixed broadband, we see continued good volume growth, which contributed to higher revenues in the quarter. In the digital, TV, cable, and fiber business, we are seeing some positive impacts from the new entertainment packages that include Viaplay. At the end of September, all eligible customers have been migrated to the new proposition, which was one factor contributing to digital TV, fiber, and cable showing growth in the quarter. However, the overall customer base continues to decline, which reduces our end-user service revenue growth. And moving to slide five, mobile postpaid end-user service revenue grew by 2% in the quarter, driven by both prepaid and postpaid. We see continued end-user service revenue growth in fixed broadband of 1%, primarily driven by a larger customer base. Total end-user service revenue for digital TV declined by 1% in the quarter, primarily driven by continued decline in the legacy DTT TV terrestrial, due to a declining customer base, while digital TV cable and fiber grew 2%. So with that, let's move to Sweden B2B on the next slide. Mobile net intake continued to be strong in the quarter, driven by new contracts within both the SME and large segments, with 17,000 new mobile RGUs. The mobile ASPU in absolute numbers continues to be on similar levels as previous quarters, driven by the volume mix within SME and the profitability focus within large private and public. Continued mobile volume growth was able to fully offset the decline in the legacy fixed business, resulting in B2B growing end-user service revenue by 4% in the quarter. And then let's take an overview of Sweden on slide 7. The end-user service revenue increased 2% in Sweden, driven by a solid performance in both Sweden Consumer and Sweden B2B. International roaming had a positive effect of 24 million in Sweden in the quarter. Underlying EBITDA was on the same level as last year, as higher end-user service revenues and positive effects from the business transformation program were consumed primarily by higher costs for energy, external hazard financing, and content. We continue to see strong cash conversion of 67%. And then let's continue with the Baltics. We see similar trends to previous quarters in the Baltics. with strong volume and ASPU growth across all markets. Roaming continues to come back in a meaningful way, and we're also able to monetize data through our successful more-for-more strategy. This ASPU and volume growth led to an end-user service revenue growth for all markets, and we saw the Baltics grow by 13% in total. Despite the significant increase in energy costs and inflation this year, we have so far been able to mitigate the development by implementing price adjustments and executing the more-for-more strategy. In the third quarter, underlying EBITDA grew by 6%. We continue to see a high cash conversion for the Baltics due to the strong performance and relatively low CapEx levels so far in the early stage of the 5G rollout. And with that, I'd like to hand it over to Charlotte to take the financial overview.

Thank you, Kjell, and good morning, everyone. Please turn to page 12 in the presentation. During third quarter, we saw a 2% organic growth in underlying EBITDA. This was mainly driven by higher end-user service revenue in all countries and positive effects from our business transformation program in Sweden. At the same time, we have continued to see pressure on our margins due to a sharp increase in energy prices and rising inflation. Associated companies and JVs show a decrease compared to Q3 2021, as this no longer includes results from the divested T-Mobile Netherlands. Net interest and other financial items increased to 159 million SEK due to higher interest costs. Net profit discontinued operations decreased since last year included a settled dispute from previously divested operations. And let's continue with the cash flow on slide 13. CapEx paid was higher in Q3 2022 compared to last year, mainly due to timing in payments. Changes in working capital was negative in the quarter, driven by higher inventory levels. compared to previously lower levels, and an increase of network equipment related to the ongoing rollout of 5G. Taxes paid increased in Q3 2022 compared to last year, driven by improved operational performance. And we continue to see good equity-free cash flow generation of 1.3 billion SEC in the quarter, yielding an equity-free cash flow from continuing operation of 4.8 billion SEC in the last 12 months, corresponding to 690 SEC per share. Please move to slide 14 to go through the capital structure. At the end of the quarter, we saw economic net debt decrease to 23.7 billion SEC due to continued good cash generation in the quarter. Leverage was at 2.4 times at the end of September, which is just below our target range of 2.5 She's three times ahead of the second tranche of the ordinary dividend that was paid in October 14th. Should the dividend have been paid before closing of the third quarter, our leverage would have been at 2.6 times. Please turn to slide 15, where we will update you on the progress of business transformation programs. During the quarter, we continued to execute on the business transformation program and made improvements primarily within our combined IT and tech organization, both in terms of network optimization and savings in external spend. This led to an annual run-rise savings of 725 million SEC by the end of the quarter. The P&L effect of this was 170 million SEC in the quarter, with a net effect of 80 million SEC compared to Q3 2021. And with that, I hand over to Shell to go through our key priorities going forward.

Thank you very much, Charlotte. And let's then turn to slide 16 for a summary. So with two-thirds of the year concluded, I'm happy to see that we are on a steady course to deliver on our 2022 guidance. We are delivering well on our top-line growth in terms of the guidance, and we are also within the framework of the range that you would expect on EBITDA, although I should be very clear that we will be at the bottom end of the range that people would expect for mid-level, mid-single-digit growth, and we're somewhere in the mid to lower range on the CAPEX. So that's kind of the guidance situation. With the dividends for this year, we have been able to significantly remunerate our shareholders in 2002, in accordance with our mid-term ambition. On the back of this, we want to reiterate what we said in the Q2 report, that we are prudent in the way we look at our balance sheets, as we have done historically. This meant that even if we have room to re-lever our balance sheet, we want to be cautious and make sure that we keep our financial strength going forward while keeping our current leverage and dividend policy in the long term. In Sweden, we continue to roll out 5G with some bumps on the way, driven by supply chain challenges and semiconductor shortage. However, we are still committed to our goal of covering 90% of the population in Sweden by the end of 2023, and to have a capex range of 2.8 to 3.3 billion Swedish kronor during 2022 and the midterm. Similarly, on the fixed side, we continue to roll out remote PHY devices in order to gain the benefits from the investment as soon as possible. Both projects are key for us in order to increase customer satisfaction, which will support our more-for-more strategy for years to come. We will continue executing on the business transformation program to deliver a billion SEK of savings by end of Q2 2023. In Sweden Consumer, we will continue to balance volume and value in order to build sustainable growth while gearing up our capabilities to address the 1.3 million non-FMC households. We will also continue to build our premium brand in order to increase customer satisfaction that we can monetize through reduced churn or price adjustments on the back of product improvements. The improved entertainment offering that now includes Viaplay is a key part in this strategy, and we have now a more competitive offer out in the market. By the end of Q3, all eligible customers have been migrated to the new entertainment TV propositions. In Sweden business, we have seen an uplift in numbers since the new strategy was launched last year, which also continued in Q3. It all comes down to a focused work that aims to support our customers long term. Although fluctuations should always be expected, we are witnessing a very important and sustainable shift within B2B. In the Baltics, we experienced more pressure on the cost side than in Sweden due to exceptionally high electricity prices, as well as general inflation rates that are over 20% now. So far, we have been able to mitigate this from the incredible top-line growth, which filters down to underlying EBITDA. Going forward, we'll build on this momentum while we're conducting nationwide rollouts of 5G networks. With less than three months before we close this year, we look at the rest of the year and beyond. I have expressed many times before that Tele2 is a growth company at heart, And we continue to show this quarter after quarter as we execute on our strategy to reach our guidance for 2022 and in the mid-term. So with that, I would like to hand it over to Q&A, to the operator for Q&A.