Tele2 AB (publ)

Thank you very much and good morning everyone. Welcome to Teletoo's presentation of the results for the fourth quarter and the full year of 2022. So with me here in G-STAR today, I have Charlotte Hansen, our group CFO, Henrik De Groot, our Chief Commercial Officer, and Stefan Trampus, our head of B2B. So let's turn to slide two. So when summarizing 2022, there are some points I want to highlight. First, our strong performance during a year that turned out to be very challenging. Despite a lot of unexpected events, we have delivered on our 2022 guidance set out a year ago with a steady growth in revenues and results, excluding increased energy costs, underlying EBITDA grew by 4.9%. We have also made some important strategic achievements. The turnaround of B2B, which proves our ability to make necessary changes. We have taken important steps to strengthen our TV and B2C operation with a new entertainment offering. Our Baltic operations have shown a remarkable ability to adapt to new external conditions and continue to deliver strong and stable results. We have also secured important spectrum in the Baltics that will enable us to grow our business for many years to come. And at the same time, we have managed to continue our internal efficiency measures in line with the business transformation program and realize savings of over 800 million so far. We have also completed the sale of T-Mobile Netherlands and have made great progress within sustainability, among other things by having our science-based targets approved as the first company in Sweden. Our board of directors proposes an ordinary dividend of 6 kronor 80 euro per share, an increase from 6.75 last year to be paid in two tranches in May and October. And let's turn to page three, please. When looking at the development during the fourth quarter, I'm very pleased to see that we are able to continue delivering 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 fourth quarter, end-user server revenue grow by .2% on an organic basis. And it's great to see that we continue to make good progress in all our markets. Although we've seen a significant increase in energy prices and inflation during 2022, 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 EBITDAO growth of 3% for the group. And adjusted again for the increase in energy costs, approximately 35 million higher in the fourth quarter, the growth in underlying EBITDAO would have been around .3% in the quarter. Sweden B2C saw solid growth in net intake and end-user service revenues in core services, offsetting the decline in legacy services. ViyaPlay is now implemented for all eligible customers and is positively contributing to our digital TV business. In Sweden B2B, we saw continued commercial momentum with solid end-user service revenue growth and strong net intake of mobile postpaid across segments. In the Baltics, we experienced yet another quarter of good performance, both in terms of top line and bottom line growth. We have also focused on rolling out 5G services as quickly as possible across our Baltic markets. So let's then move to the Swedish consumer segment. Mobile postpaid saw continued strong net intake in the quarter driven by FMC bundling and Comvik, while Asprö declined slightly. However, the commercial growth and commercial activities in the market have been more competitive lately and showing signs of slowing customer demands. In fixed broadband, we see continued good growth driven by volume and a stable Asprö development. In the digital TV, cable and fiber business, we are seeing positive impacts from the migration of TV customers to the new entertainment packages that include ViyaPlay. Most important, the new package has been very well received among our customers and even contributed to an increased customer base during the quarter, breaking the downward trend from earlier quarters. We also see in the new TV proposition contributing to the overall performance, which shows a 5% increase in Asprö during the quarter. Mobile end user service revenue grew by 1% in the quarter, driven by the larger postpaid customer base. Also in fixed broadband, end user service revenues increased by 1% thanks to the growing customer base. Total end user service revenue for digital TV was flat in the quarter as the 3% growth in digital TV was offset by a decline in the legacy DTT TV service. And then let's move on to B2B. Commercial momentum continues to be strong in the quarter with both extended and new customer contracts, including the recently announced agreements with fuel company OcoQ8 and food retailer Asprö. Mobile net intake amounted to 26,000 RGU's, driven by improvements across segments and notably in the large segments. Mobile Asprö remained stable. End user service revenue increased by 6% in the quarter, including a positive one-off deal of 17 million related to solutions business. Adjusted for this, end user service revenue grew by 4%. And then looking at the combined Swedish operations, end user service revenue increased 1%, driven by a solid performance within B2B. International roaming had a positive -on-year effect of 16 million. Underlying EBITDA remain at 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 handset financing and contents. Cash conversion remained strong at 66% in the quarter. And then move to the Baltics. Across our Baltic markets, the number of mobile postpaid customers continued to increase, whereas the number of prepaid customers fell in line with a normal fourth quarter seasonality. We have continued to see organic Asprö growth across markets during the quarter. The focus has been on price adjustments combined with data monetizing through our more for more strategy. As for the financials, Asprö and volume growth in mobile postpaid led to organic end user service revenue growth across markets in the quarter, resulting in 11% growth for the Baltics as a whole. Despite soaring energy costs and inflation, we have so far managed to adapt to the new environment by adjusting prices and executing the more for more strategy. In the fourth quarter, underlying EBITDA grew by 16%. We continue to see a high cash conversion for the Baltics due to the strong performance and relatively low capex levels so far for the ongoing 5G rollouts. And with that, I would like to hand it over to Charlotte, who will go through the financial overview.

Thank you, Shell, and good morning, everyone. Please turn to page 13 in the presentation. During the fourth quarter, we saw a 3% organic growth in underlying EBITDA. This was mainly driven by high 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 the margins due to the sharp increase in energy prices and rising inflation. Associated companies and JVs show the decrease compared to Q4 2021, as this no longer includes results from the divested T-mobile Netherlands. Net interest and other financial items increased to minus 181 million due to higher interest costs. And net profit discontinued operations includes release of a tax claim of 363 million. In December, the administrative court of appeal ruled in favor of Teletub and accepted our claim for a deduction of exchange losses related to our former operations in Kazakhstan. So let's continue with the cash flow on slide 14. CapEx paid was higher in Q4 2022 compared to last year, mainly due to higher network investment. Changes in working capital was negative in the fourth quarter as well as for the full year. And to follow up on what Shell said earlier, I would say this is mainly explained by three items impacting the full year. Firstly, we temporarily suspended part of our external handset financing arrangement as we have renegotiated agreements with our third party providers. Secondly, we saw inventory increase related to network equipment, primarily linked to the 5G rollout. And lastly, we also saw our handset inventory rise from unusually low levels because of the supply chain challenges we were facing end of 2021. An improving working capital is one of our top priorities in 2023. However, this is not going to be a quick fix and we expect to take a couple of quarters to come back to more normalized levels. Taxes paid increased in Q4. This is mainly explained by large repayment of preliminary tax in Q4 2021. And equity-free cash flow from continuing operations amounted to 3.5 billion in 2021. Corresponding to 5 krona per share, which were lower than in the previous years. The main explanation for that is the negative development in working capital. However, this is, as I mentioned, something we expect to gradually improve during the coming quarters. So please move to slide 15, go through the capital structure. At the end of December 2022, economic net debt amounted to 25.6 billion. During fourth quarter, the second tranche of the ordinary dividend of 2.3 billion was paid. And in total, we have distributed some 13.6 billion in cash dividend to our shareholders during 2022. And leverage was at 2.5 times at the end of December, which is in the low end of our target range of 2.5 to 3 times. And in December, we issued a 1 billion-sec three-year bond. We also signed a 700 million euro sustainability link revolving credit facility with a tenor of five years. And those arrangements were signed as attractive conditions. And please turn to slide 16, where we'll update you on the progress of the business transformation program. 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 rate savings of 825 million by the end of 2022. The P&L effective was 195 million in the quarter, with a net effect of 80 million compared to Q4 2021. And with that, I hand over to Shell to go through our guidance and key priorities going forward.

Thank you, Charlotte. And then let's move to the page 17 for our guidance. So our guidance for 2023 is to continue to grow end user service revenue by a low single digit number alongside a similar growth rate for underlying EBITDA as inflation will weigh temporarily on results. Energy is part of inflation. And while it had a significant impact in 2022, the current benign price levels would show a more limited headwind in 2023. However, we all know that energy prices could change significantly. In 2023, CapEx is expected to remain in the upper end of our midterm target range of 2.8 to 3.3 billion. As the rollout of 5G is accelerating alongside the upgrade of the fixed network in Sweden with remote PHY. We also reiterate our midterm guidance with low single digit end user service revenue growth, mid single digit underlying EBITDA growth, and CapEx in the range of 2.8 to 3.3 billion. So please turn to page 18 for a summary. To summarize last year, I'm happy to conclude that we delivered on our 2022 guidance. With the dividends paid last year in total 13.6 billion SEC, we were able to significantly remunerate our shareholders in accordance with our financial policy. For 2023, our board proposes that another 4.7 billion shall be paid out to our shareholders. On the back of this, I want to reiterate what I said at the time for the Q3 report, that we are prudent in the way we look at our balance sheet, as we've done historically, 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 at a high pace and are committed to our goal of covering 90% of the population by the end of 2023. Also in the Baltic States, we are now rolling out 5G in all three countries after securing important spectrum last year. Similarly, on the fixed side, we continue to roll out remote fire devices in Sweden in order to gain the benefits from the investments as soon as possible. Both projects are key to us in order to increase customer satisfaction and being able to provide new services, which will support our -for-more for years to come. In 2023, we have an important spectrum auction coming up in Sweden. With regards to that, I want to highlight Teletoo's built-in network efficiency that will be further capitalized as Net for Mobility will become the only sharing vehicle in the market when a current 3G network is closed down. We will also continue executing on the Business Transformation Program to deliver 1 billion of savings by mid-2023. However, the ending of the program doesn't mean an ending of our cost focus. That for sure will continue. When we integrate the full Convic business to our new common IT platform by the end of 2023, we will have a simplified IT structure allowing us to devote more of our resources to giving our customers a digitalized service experience with even more focus on the market as we spend less time fixing legacy issues. In Sweden consumer, we will continue to balance value and volume 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, including ViyaPlay, is a key part of the strategy to regain our position in strengthening our customer offering. In Sweden business, we have seen an uplift in numbers since a new strategy was launched in 2021. The steady development during 2022 is encouraging and we see further potential to develop and grow our business. We have recently secured a number of new and renewed customer contracts, further meriting our strong offer in networks and security. It all comes down to a focused work that aims to support our customers long term. Although fluctuations should always be expected, we are now witnessing a very important and sustainable shift within B2B. In the Baltics, we experience more pressure on the cost side than in Sweden due to the exceptional high electricity prices as well as general inflation rates that have actually been well over 20 percent in recent months. So far we've 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 the 5G network. Our leading role in sustainability is something we can capitalize on as this is increasingly important to our customers. As such, we see potential to further develop circular economy solutions to meet customer demands. We are now looking at the year to come and beyond. I have expressed many times before that Teli2 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 2023 and in the midterm. So with that, let's move it over to a Q&A session and take some questions please.

Thank you. Dear participants, as a reminder to ask a question you will need slowly press star 1 and 1 on your telephone and wait for a name to be announced. To withdraw your question please press star 1 and 1 again. Please stand by while we compile the Q&A roll start. This will take a few moments. Now we're going to take our first question and the question comes to the line of Andrew Lee from Goldman Sachs. Your line is open. Please ask your question.

Good morning everyone. So I have two questions. One on the Swedish consumer outlook and then secondly on just to dig a bit more into your working capital outflow or working capital expectations for 2023. On Sweden, you mentioned Shell slow down in cost of demand and increase competitive intensity through the fourth quarter. That's the odds with tele-management commentary that suggests there hasn't been a major change. So I just wondered if you could give us a bit more color on your thoughts and what scope you see for higher price rises in 2023 than in 2022 to offset the inflation headwinds that you laid out. So that's on Swedish consumer and then secondly on the working capital outflows we saw in 2022 in the fourth quarter. Thanks for laying out the drivers of that. I just wanted to get a bit more color on what exactly should we be expecting in 2023 when you said you've recovered to normalized levels. Does that mean stable working capital for 2023 and no headwinds or a reversal of some of the effects and therefore some tailwinds? Just a bit more of an understanding about direction of travel for working capital would be great. Thank you.

Thank you Andrew. I'll kick off on the working capital and probably I will let Hendrik answer on consumer Sweden. So working capital is the result of very deliberate choices almost one year ago to make sure that we could roll out 5G, to make sure that Stefan would have enough routers and other equipment so that he could pursue the growth that he has been delivering in B2B and of course that we make sure we have handsets for our business. We came into 2020 with I wouldn't use the word completely empty shelves but we had the very low inventories and we needed to make sure with the supply chain disruptions that we actually could support our business and that has played out very well. We have had a good development on 5G rollout and we've been able to sustain strong deliveries in the B2B. So what can you expect going forward? Well as interest rates started going up we had to renegotiate our relationship with the factoring that we typically do of selling handsets so we took for a limited amount of time some of these handsets on our own balance sheets. We are balancing going forward and all the decisions were made actually back in November so how we're going to deal with this. We have a good relationship with our factoring partner so that's going to work well. So what you have seen in terms of handsets will then gradually be paid back as the customers pay back the financing over the next say two and a half years or so. So that's happening by itself and that's almost a third of the increase in working capital. Then when it comes to the build out of the 5G network as you know we have probably the most efficient network structure in Europe where we are building the network together with Telenor and those who have partners in 3G Telia with us and Tre with Telenor in the past will no longer have those benefits when 3G gets shut down. So the vehicle we have with network mobility is unique and a great thing to have and we need to accelerate the invoicing procedures through there but we have already come to a level of working capital that now with more predictability on supplies we can start optimizing working capital within that formability. We have big volume but now it's time for that optimizing and the third thing is that Stefan sitting next to me here he's going to be selling a lot of the goods that he took into storage last year with because of its good growth and gradually we will wind down some of what has come in in the bulk orders that we placed last year. Just as an information point some orders that were made in March we were even told in October in September-October that they wouldn't be delivered until 23 and then all of a sudden they start coming in October-November. So it is basically repercussions of a 2022 that was hard for everyone to predict but you shouldn't expect to see that we will unwind gradually the increase that we had in working capital through 2023 for an improved end of year showing. Thanks, that was

really helpful. Can I just follow up just before we move on to the 3G consumer? It sounds like an unwind so on a net basis we should expect a kind of positive working capital move in 2023.

That is clearly the ambition and the target that we set in front of ourselves and I can say to you, I said in an interview this morning, I would have done exactly the same thing again if I had the same choice knowing what I know today because it was really the right thing to do to secure that we can grow our business and build 5G and support Stefan's efforts to drive growth. I am actually quite happy with the decision but I understand that it is fair that we should defend it to you why does it play out like this for that specific year.

Yes, it makes sense, thank you.

Shall we move to

the 3G consumer? Andrew on your question, when we look at the market we of course look at a number of factors. We take into account the consumer sentiment from the external reporting which we have seen quite a slow down in the consumer confidence index. We look at market factors and of course we look at our customer touch points and the feedback we are getting in the sales channels but also through our customer operations and our interactions and any sort of customer service we are doing. I think if you take all that together we are seeing of course the inflationary pressures, energy prices and general inflationary pressures on consumer pricing is affecting the consumer sentiment. The way we are seeing it in our business is that marketably on device sales and headsets we have seen a more careful customer and also a slow down the fourth quarter. As you can see our numbers we were 6% lower on equipment revenues. That is of course also for us to say very strong quarter we had last year but we still see an overall slow down. What I would also want to mark there is that we are seeing basically also a more sensitive customer to promotions so customers are easier switching. I think there has been on a comparable basis a higher number of porting in the market and of course that also drives a little bit of pressure on AspWes as customers are of course hunting for deals. In our numbers we still feel and see that that mainly pertains to the mobile side. On the fixed side it has actually been quite stable both on broadband and TV both on sales and on churn so we have very low churn numbers but on the mobile side we have seen a bit more market movement. How does that relate to our overall outlook for going into 2023? We believe so far the market will still be very sensitive and the consumer to pricing. At the same time we will move to offset some of the cost increases we have been running into our business into the market and in Q4 and in 2022 full year you will recall that we have mainly focused our portfolio innovations on entertainment and that also came with quite a bit of price adjustment on the entertainment side but we have been lowered in doing price adjustments on the core connectivity side in mobile and broadband but we will of course take that into 2022, 2023 as we move forward now. Thanks

that was really helpful.

Thank you Andrew. Now we are going to take our next question. And the next question comes to the line of Maurice Patrick from Barclays. Your line is open please ask your question.

Thanks so much indeed for taking the question. Just from my side on the guidance you have guided of course you reiterated the midterm guidance of medium mid-single digit EBITDA growth particularly low. Could you just spell out what you are assuming in terms of energy hedging, energy pricing just so we can get a sense of the headwind that you are assuming for that. I am sure in your guidance you have assumed some sort of conservative element given what we saw in 2022 you sort of hinted as much. And then just on the spectrum side it is probably hard for you to comment too much ahead of the spectrum auction. We don't seem to be happy with your current spectrum portfolio. You don't have a burning need to acquire a lot more or get rid of a lot less. Any thoughts in terms of your high level thinking about spectrum given the net from mobility structure would be helpful. Thank you.

So on the guidance the way we have chosen to go about this is not to talk so much about energy numbers as such because quite frankly we don't have any better crystal bowl or understanding of energy prices than anyone else. We do have some element of hedging but I am very glad that we didn't do too much hedging in September, October last year to lock in the high prices that were then. So the way we see it now if trends continue like they have done in the beginning of the year in these very early days then we don't see energy as a massive impact on our business. Of course if we end back with the September, October prices again it will play out. And as you of course remember for 2022 it amounted to an extra bill of 1.5 percentage point at EBITDA level. So we have made sensitivity scenarios for modeling our business for the next year or two with energy and that is of course part of the prudent approach to dividends and other things. So what I can say to you is that we expect to deliver low single digit EBITDA growth irrespective of what happens to energy prices. Of course if they are benign like we see in January it will be a nicer low single digit number than the case would be if they are at September level where it would be a lower low single digit number. But it's not only about energy there are multiple other things that are coming into it. I made an interview this morning we talked about the wage discussions for this year where will they land and we see the equipment cost for example Stefan selling his routers to our customers because of the Swedish corona going down and general inflation. So these things have gone up and we are basically absorbing all of these including energy in 2023 but we are absorbing them to a level that doesn't take us quite to the mid single digit. Our ambition is to get back there again in a medium term and we're going to work very hard to make that happen. So I'm afraid during this year we have to live with that we are not able to say in more detail where we will end up because we don't know the energy component and it's been very very volatile. And on spectrum I think you're right it's not so easy for me to speak about the spectrum. I'm very happy that we bought good spectrum in the Baltics at what I would call low prices and that has secured our business for many years ahead. In Sweden we have a very good spectrum portfolio and we will just have to go into that auction with our partner with a view to secure the spectrum that we think is the right for developing our business forward. But I think whatever I say beyond that will probably not be smart to say.

That's very clear. Thank you, Kjell.

Thank you. Now we're going to take our next question. And the next question comes line of Andrej Kbasek from UBS. Your line is open please ask your question.

Hi, thanks for the presentation. I've got the follow-up instance of the B2C outlook in Sweden. So just in terms of the unlimited intake is it still the case that you're seeing more than 50% of growth out coming in on the you know 399 tariffs that you were highlighting last quarter? And then also in terms of price increases specifically have you seen in 2020 you didn't do anything on the fixed side because of the on the fixed broadband side to be specific because of the TV repricing so is this something that will be your focus perhaps in early 2023? And then a follow-up in terms of the or just a question rather in terms of free cash flow going into 2023. So capex I think you previously said would be somewhere around the midpoint of guidance perhaps even at the low end of the guidance. It's actually at the very high end for this year and in cash terms it's quite above the high end of the guidance. So it's one ring in terms of cash impact of capex and guidance in general for 2023 and 24 to expect some kind of easing relative to 2022 and then specifically also in terms of the factoring. I think the other two components that you mentioned around inventory those should be some almost mechanical unwind but in terms of the factoring can you just explain a bit better what you're doing there and the impact that you see specifically from this from this account and if it's free cash flow therefore you know benefits from both capex and working capital is it rational to to expect a an extraordinary dividend from time around maybe too cute. So thank you very much.

I think I'll start with the things around free cash flow and factoring and then Hendrik will take DTC. So capex 2022 we said throughout the year that we were kind of hoping to come in the upper end because we really want to build 5G and remote phy and I'm glad to see that we managed to keep up the pace towards the end so that we came somewhere between the mid and the higher end of the of the capex guidance that is actually a good thing so something that we are happy with and in 2023 we expect to be in the upper end of it because this is going to be the year that we're building 5G to all to most Swedish consumers and businesses so that's going to be a big push so it would be in the upper range and then without guiding on this I would say that in 24 at some point we will come to the point on the curve where the 5G momentum will gradually be taken down. I don't want to say at what point of time in 24 I think it's too early to say that but it will be in 24 and then how much remote phy we build is actually something we can to some throttle we are very happy that we've been able to triple the speed of it because now it works so much better than it did 18 months ago so now it's in our hands to choose the speed that we want to have so 23 we're going to continue building our business and then of course we start optimizing this and in terms of the free cash flow of course it's a component of multiple things first of all is the residual of revenues going through EBITDA to EBITDA minus capex for operating cash flow which is growing year over year also in 22 and that's the ambition to do going forward so the operating cash flow is growing that's what we're going to live from in the long term our working capital increased in 22 as you correctly pointed out that's going to be worked on in 23 gradually to take it down and that brings us to the factoring that you bring up we stopped doing factoring for a short period of time while we renegotiated took it on our balance clearly those customers let's say they bought a handset with a three-year financing from us in november last year then throughout 23 24 and some at some point in 25 they will have repaid that so it comes back naturally as they pay month over month back to us so this this all these decisions have been made it's just a matter of the time and the repayment for that money to come back and we're talking almost a third of the working capital increase relating to that specific component so that is of course going to be helpful i hope i answered all the parts of it you because you had many things in there if not let me know after henrik speaks on b2c

thanks sheldia andrew let me just address your question around the 5g portfolio in context of the the mobile performance that we're seeing in the fourth quarter so on revenues you see a growth of one percent and you've also noted in the commentary that we had a one of 10 million correction this is an underlying netting off of premium voice revenues that typically occur in december period that last year we only netted off in january so in that sense the the december 20 the december 21 of you for 21 numbers are 10 million higher than they normally should be and against that the mobile revenues grew by 1.7 percent versus one percent and if you translate that to aspo we've seen you know minus two percent in the presentation which you know if you go into the details the numbers is minus one and a half percent and if you take the off out of that then our aspo has declined by 0.7 percent or one and a half sec and if you then sort of go into that that is mainly due to you know movements on the variable side not on the core subscription side so there have been you know a better roaming a better add-on data but we've had to have also some offsets on variable revenues on voice and content some lower mbb and also allocations to our hardware bottom line that sort of bring in the net that minus 0.7 percent on the aspo and in that context you know if you look at the 5g portfolio that we've introduced in in august and as we said we've only introduced it to the market we have not done any back book pricing yet so the state of play at the moment is as i've been also speaking in earlier quarterly results calls is the portfolio is doing very well that we that i said that 50 plus of the intake is onto the higher end of the portfolio so into the unlimited part of the portfolio and that is still the case as we speak today throughout the fourth quarter what we are seeing of course at the same time is a little bit of an orientation also towards the lower prices and the limited tier so it is still 50 plus percent there is a couple of percentage points lower than for example it was in the third quarter our the new portfolio is now sub 20 percent of our total base so that's just for you also as an orientation as we move into 2023 and as part of our price adjustments we will of course start to look at the the back book pricing and moving customers onto fully onto the new 5g portfolio we are also looking at areas around our fixed broadband that we basically have been not pricing up that much in 2022 a part of that also is that we have seen a lot of the access in the Swedish market to work quite quite substantially so if nothing else we just need to onward price some of this into the market and then Shell was addressing the factoring side and as we move into 2023 we do we will also offset or at least ask customers to contribute to some of the financing costs so as we move into the next month we will introduce a handset financing charts charge on all of our device sales for both of our brands into the market

and I was alerted to the fact that I did sorry please go ahead no

sure when you put yeah exactly uh I guess follow up on on on the cash flow then we were essentially translating if it improves this year then potentially translating into an extra ordinary about something you're targeting

this

year and then maybe a full up in terms of the commercial commercial aspect just I think I guess that's many questions but the bottom line would be that do you expect consumer service revenues and mobile in Sweden to therefore kind of improve in terms of

well I would say of course we we are we we are looking at you know doing the necessary price adjustments into the market and introducing the handset the finance fee as I just said at the same time we have a very sensitive market we have still a you know a subdued consumer sentiment and we do hope and believe that also you know in terms of the um that competitively will get into a more benign to the promotional market again but yeah given given that context we do believe that we can of course put some of the growth back into the market on the mobile side

and to answer about the the potential for a one-off dividend I think there are a couple of ways to look at this if you take pure math and a spreadsheet and they communicate dividend policy and set a point in it clearly there is the capacity in the balance sheet to do an extraordinary dividend if that was the only determining factor what we have said consistently over the last quarter is that we want to be a little bit extra prudent going through this period of massive turmoil keeping our powder a little bit dry there is also a spectrum option coming up in Sweden that is going to cost some money so we would rather get a couple of things sorted out before we entertain that discussion but the balance sheet is quite strong as you can see from our leverage and we just are being a little bit cautious going through a period of historical turmoil in Europe thank you very much

thank you now we're going to take our next question and the next question is coming over from Stefan Goffin from DNB your line is open please ask a question

yes a couple of more follow-up questions so first of all despite cost savings Sweden delivers flat EBITDA growth and we're coming towards the end of the CX 1 billion cost saving program so can you talk a little bit on on how you're going to get Sweden back to EBITDA growth if it's more pricing and more cost savings etc and then just on on pricing Telia just announced back book price increases on both mobile and fixed broadband and now you talked about also doing back book price increases are that are those plans for already first half in order to get growth back up thank you

I will probably invite both Charlotte and Henrik here but but I think it's clear that the whole world around us now experiences price increases in some areas dramatic we're talking about what people pay for for well interest is a kind of a cost for their loans we are seeing pricing for food and these kinds of goods going up energy prices we've all seen so I think it's completely natural that there will be some price increases in this industry just like in the rest of society and you can expect that in in this business we will be making some price increases in a way that fits to the to the market realities but it shouldn't be a surprise to anyone it's completely natural at this stage that that will happen would you like to talk a little bit about Sweden maybe Charlotte on the EBITDA development

yes I can do that and like you mentioned we are still working on our one billion in savings and so we are still fully committed to that but then also as we mentioned here before that it doesn't mean that we're not going to look at cost going forward of course we'll always make sure that we have an efficiency in our business and also when we roll out these or come further in our digital transformation that will also give us a new possibilities without necessarily setting a cost cutting program but that is what we say here is that it's part of our DNA to actually be very cost aware and working on efficiencies all the time

so

I'm not going to really point out any things in particular but they are we see there are many possibilities of course making more things more digitalized as well

can add a little bit to it you saw you saw last two years ago we put together tele two and come home to one brand last year we put them together as one IT infrastructure this year tele two come home and convict will be one IT infrastructure we'll still keep the tele two brand we'll still keep the comic brand but they will all be on the same platform by the end of this year which simplifies our life makes it easier for us to work with the market and less with fixing the legacy that is very very important for us because the industry spends way much money on physical distribution on third-party retail and relatively non-targeted advertising so that's where the the buckets are for savings we can of course also work on our churn we still have a potential to improve there so when we are finished with the business transformation program we're not going to come with a program that is has a specific so and so many kroner target in it we're going to have a value creation program and then as a consequence of these improvements savings will come so we you will not hear me saying that x amount of people are going to leave tele two that is not what we're going to say we're going to say we're going to improve this and area we're going to go more digital and we're going to set kpis and targets for it and that's going to deliver the evitar going forward that's sustainable revenues over time

and then just on on pricing stefan the price adjustments for us are front loaded in the year and actually they're already in execution of course they don't go all in one but they will go as i said front loaded in that sense both for mobile and our fixed broadband and just remind you from the first of february so that's tomorrow we'll be introducing the the handset fee into the market as well

okay thank you very much

thank you now we're going to take our next question and the next question comes line of andreas yeltsin from bank bank your line is open please ask your question

yes hello everyone a question in line with many of the others on the the growth drivers for next year you talked about pricing and you talked about the sentiment in the market so just curious how you manage your customers so that to prevent them from as you stated orient themselves down to the lower end of the of the portfolio what tools do you have to make sure that they enter and stay also in in the mid to upper end of the of the portfolio and also if you can talk a little bit about what you see in of the market behavior as you said shell everyone is interested in increasing prices but is everyone walking the talk so to say thanks

yeah i think so many facets so that's i guess your question is a little bit tilted toward b2c and henry can of course answer that very very well but it's it's not only a b2c question there is also the b2b element and you can see that the the progress we do in b2b is based on close more intimacy to customers we understand customers more one of our key values is to be insight driven and that means taking our customers seriously listen to them and help them conducting their business in an efficient way and that actually means a lot because our business our delivery to our customers and b2b is usually a fraction of the cost components of their value chain but it's an area that is incredibly important for them to get right so when you come there with a solution rather than just trying to push a volume onto them that becomes a very strong relationship that you can build on and build more business sell more products that's super important in in that area i will speak a little bit to the baltics where we have a very strong mobile centric offering and where the the the business is thriving and we are able to execute on a regular basis on compensating for inflationary tendencies so hats off for a great performance there and of course in the swedish b2c which you are alluding to i will just briefly say that yeah we do see some of those things that you would expect to see in 2010 happening from time to time and that's the nature of a market with quite a lot of competition but we don't think it is the right solution to deliver a 5g product with the same kind of go to market as we did in the cf4g world we have gone to the market with a pricing structure that reflects the fact that 5g is a broadband product it's not the product that stems out of the voice world with a bundle it is something where you don't count the gigabytes you look at the speed and the quality of service and that's the way it should be and i think the market will gravitate towards that over time but by my taste there was a little bit too much optimistic behavior in the fourth quarter but okay i'm biased of course henrik would you like to add something

no the fourth quarter and in particular also this this year you know we've seen quite extensive promotional periods and i think that is part and parcel of of the fourth quarter in in the swedish in the swedish market for sure and you know we're all trying to offset things in the market and create value in the market at the same time of course there's the there's also this value and volume trade of constantly happening i do believe we all have a shared interest in the market to move into this year and and really drive the market and you know confidently up across in particular across our campaigns and promotionally the promotional side to your question andreas the you know for us the core of what we're doing in our portfolio is basically i would say is value loading value loading sits at the core of course as shale was saying you know our our new 5g mobile portfolio because to to provide the unlimited proposition right to an extent to to a wider to a wider part of the market as we've been doing and introducing them you know introducing the speed tearing i we still still very strongly believe that that is the way the market will go and i think i'm very happy to see that all of our competition has also moved in in that way although i think there's still a lot of you know potential for them to explore the speed tearing to its fullest extent and we see that the market wants to move there we've seen that our portfolio and the tier mix has substantially changed even though as i said just before there's there's of course a balancing for us as you know affordability at the same time happening but value loading is key and for us what's also you know key to retain customers is that all the work we've been doing on on the quality side and innovation side what i said you know what we've done on the entertainment side with via play on broadband with the quality programs we've been running we've been hitting all-time lows on churn both on both our fixed side of the portfolios and we are still working quite a bit but a little bit under the radar on all of the you know convergence and convergence to that's i think you know the landing spot for us ultimately that we can build value load in terms of a multi-play portfolio for consumers that they that they really want to you know hold on to and we've done a lot of the cross-selling introduction but as she was saying we still need to complete our it transformation to to really be introducing full multi-play as part of our proposition set later on this year into the market but that will sort of give us some good protection to go along with the price adjustments we're we're moving forward with

perfect thanks a lot

thank you now we're going to take our next question and the next question comes line of nick liel from your line is open please have your question

yeah morning everybody hope you're well um it was a couple please one on remote five first please show could you give us an update please on the um number of homes that you've upgraded on remote five so far and how many are to go and i think also you mentioned in your comments you were seeing increased access um charges so is it possible to give us an idea of the cost the incremental cost as you move from the hfc to the fiber um access network please and then the second one was on um was more sort of henrik's consumer stuff but it sounds like t is in the right mess in terms of its uefa coverage and just tv overall do you see any opportunities there i mean i think you said in the past you didn't really see much of an impact from tlia bringing in uefa coverage in the first place but is there anything there you think you can exploit or you're watching out for thank you very much

sorry that nick that last bit on tv i didn't fully understand that sorry can you just repeat that

no i was just really to say i think you'd said in the past henrik that you hadn't really benefited he hadn't really been impacted a great deal from tlia taking on the uefa rights in the first place so just to check that or if you'd seen it or any other opportunities really because it seemed like there's a little bit of flux in terms of what to do with our tv products

yeah okay shall i just start with that so on that last bit as as you said before that we have not seen a huge impact in terms of you know customer losses or whatever and i i do believe that you know with the rights coming up this year for you know it's to the market but let's see where let's see where they end up going ultimately what we see is that as part of the core portfolio customers are choosing you know a bouquet of of entertainment service that they really just want to you know want to keep hold holding on to and typically that's a combination of linear channels and streaming that's clearly you know at the core of of our proposition and of course there are is a big segment growing up that is only streaming oriented but i think for us still a big part of the market is what i call this hybrid segment where people do like linear they like their linear on any device in combination with streaming you know uh movies and series and live sports and that's of course one of the key reasons for us to to you know choose via play right because we have a very combination with live sports that is absolutely a customer attraction factor now and what do you then have you know champions league as a as an element of that i think we've that is you know not good enough to really draw the crowds at least not as we've seen it so far and i guess that will be somehow also tell you as our own experience i would i would guess um you also had some questions on remote fi right so we've been rolling out remote fi now to over 150 000 households so we still have we we still have a bit to go this is a clearly a part of a program that is is as shale said you know part of our core rollout and acceleration also for the for for this year and what it basically gives us as we've been saying it gives us a direct fiber connection you know to the basement of the house and ultimately you know it it helps us in cost savings right from you know the on the operational side is we don't have all the active equipment in the network that we typically have on the on the coax side a few were node splits and all this exactly and of course it allows us also to move to the you know the higher speeds on on the metrical level not not to forget and that's clearly also part of our more to more strategy as we move with our broadband portfolio from 100 megabits more to one gig and we've seen also this year already with the propositions we have in the market that the tier mix is shifting to the higher end of the speed range

and there was also a component of increased access charges which i have from the top of my head i think we'll have to take that back by ir so that we can after correctly yeah

that's great okay thanks very much guys

thank you now we're going to take our next question and the next question comes to line of peter nielsen from abg your line is open please after question

thanks very much and thank you for elaborating on the free cash flow and the working capital movements obviously for the reasons you've discussed the free cash flow falls way way short well short of covering the the ordinary dividend for 22 the outlook for 23 calif i understand you correctly whether you will cover the dividend by the foot from through the foot free cash flow will depend to a high degree on your success on the reverting the working capital trends and also where we come out on the on the spectrum is that correctly understood and then charlotte just a quick question i think you've previously discussed your interest rate sensitivity could you give us any indication charlotte on what we should assume for interest costs on a full year basis for for this year thank you very much

so we're basically expect to cover the dividend from our operating cash flow and then of course because you see our cash flow is increasing year over year as our eb star grows and we stay within the range and maybe potentially in the medium term can adjust the capital maybe downwards a bit which i'm not guiding at this stage but as our eb star growth our operating cash flow growth it covers our dividend and then of course we can optimize the working capital and then you correctly point out that how much the the spectrum will cost will of course impact the 2023 equity free cash flow number and that's something we'll know much later this year what that number will be

yes and then talking about the interest cost and i think we actually alluded to this before that one percent increase of the interest rates would be approximately 100 110 million or so and of course we don't know exactly what is going to be at the end of the year but we have the majority of our part is a fixed rate somewhere between six and 70 percent we have a fixed rate on that interest

so we should come out on a full year basis around where

we are now no i don't have that exact number for you okay

fully about this on

on the interest

okay okay

thank you

thank you now we're going to take our next question and the next question comes line of titus kran from bank of america your line is open please after question hi

uh good morning everyone and thanks a lot for taking my question i have just just one quick follow-up um on on the medium term outlook on cafec and i understand that beyond 2023 and potentially 24 as well with high high investments it's difficult to guide for you um but the question is mainly coming from from kelly last week for example giving a bit more follow-up on what to expect in the medium term after the high investments are over if there any way to to split up maybe five g capex or remote five capex from the current envelope for the next year just to give us a little bit of an impression of how much is spent on those um upgrades um compared to to the underlying run rates yeah

well yeah i don't think we want to detail it but what i can tell you since we all love to play around with single digit low mid high and all these things when they do guidance that the the remote phi is a is definitely a single digit percentage of our capex whereas the 5g is significantly higher so once we get beyond the peak and our 5g will start all other things being equal to be helpful towards having less pressure on capex remote phi is something that we as henrik correctly pointed out we do it both for the customer experience but also there are cost savings in in this so we get away from all of these nose bits and the active equipment there so there are two sides two positive sides to that point in a way so so we kind of like to to do that and then there are other capex components in here some of it is related to the work we do on fixing our legacy we already have started optimizing that a bit in terms of external consultants but for the two points that you brought up remote phi is a much smaller component than the 5g

okay thank you

thank you now we're going to take our last question and the last question comes to the line of louis lecaros from credit trees your line is open please ask your question

hi good morning and i have two questions please the first one is a follow-up on morris's question on the guidance can you please clarify what is the hedging you have as a percentage into 2023 and into 2024 as well please and can you let us know what is the assumption that you are building into the guidance for wage increases into 2023 and then specifically to swedish evda um you were mentioning that there was some content increases probably related to the viable idea can you let us know as a percentage of the evda what was the drag in q4 and what are your expectations into 2023 from from content drag thank you

so i don't think we should give you a number on the wage increase because that would be a little bit tricky since we are also going to have internal negotiations that would be but i think you can follow the discussion that happens in sweden there has been an offer from employers at two percent and there has been a demand request from employees for around 4.4 and they're going to meet somewhere there within those that framework for sure and i think they're out but it's going to take a bit of time in terms of hedging we are we have had quite a lot in estonia up until the end of first quarter this year we have limited hedging in the other countries in latvia we have a couple of hedges that we've done but they are for just a part of the energy cost in this in sweden we have had a policy of rolling hedges so quite a bit is under hedging now which are not exactly where we are now around

50% of the cost since we have been hedged

yeah and that's

on a on a rolling basis yeah

so we are exposed but i i think also there is a risk of trying to hedge everything especially on high prices so right now we're okay with not being fully going fully into the market last year for sure

okay thanks and may i follow up on the hedges the rolling basis policy is a three-year rolling is it a one-year rolling basis or is it more multi-year

it's a three-year rolling three-year rolling basis in sweden

and it's 50 percent for 2024 as well

no it gradually increases after you go along so then it's the majority in the first quarter and then gradually increases oh sorry

if

you

look at our profile now then then actually all other things equal based on where we are now we would have energy costs start coming down for sweden a bit in the second half of the year but you know lots of caveats i mean the world can change all things can change we've seen that in short time but where we are now given the combination of hedging and spots we will see that this starts easing off a bit in the second half so either way it doesn't have a dramatic impact on the business where we are from where we are now okay

and then thank you just briefly on your question about the content and the the content costs came in q3 last year so you can expect us to be on a on q3 q4 level also beginning of this year so it's going to be stabilizing on the level that we are in q4

yeah i guess we can say so that we we we have a little bit denied benign content position in the first and second quarter last year while we renegotiated with the bio play and that was added back in so we had a good faith negotiation going with them so exactly like shalop says what you saw in the third and fourth quarter will be more of the of the natural run rates yes because there's been fully implemented right into our

base so

good thank you

thank you there are no further questions i would now like to hand the conference over to our speaker shell yoncine for closing remarks

yes and i would like to thank you all for for spending this time with us today to go through where we are in our business i would summarize 22 saying that i'm very satisfied that we have been able to deliver on our guidance in a tough year that started in one way and ended in a completely different way for reasons that we all see with a war in the ukraine we are a stable country a company that is able to grow i think three percent growth is pretty good in the telecom industry we're growing consistently our ebit down and adjusted for energy we were at close to five percent and we will absorb the costs that are coming our way in 2023 not fully back to the mid single digit but our ambition is clearly to move back to that in the term so i think we are in a quite strong position 23 will take us through the last stage of the big it transformation we have visibility on the end dates and we're going to deliver on that so we can be even more focused on the -to-market in 24 and on our customer base so i think we're in a quite good spot 23 will probably throw curveballs just like 22 did but we are ready to take them on so i am ending 22 on a positive note and we're gonna keep on pushing in 23 and thank you for coming thank you for joining