Tele2 AB (publ)

thank you very much and good morning everyone welcome to tele2's presentation of the results for the fourth quarter and the full year of 22. so with me here in gsta today i have charlotte hansen our group cfo henry de groot our chief commercial officer and stefan trumpus 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 and strength 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 €6.80 per share, an increase from €6.75 last year, to be paid in two tranches in May and October. Let's turn to page 3, please. When looking at the development during the fourth quarter, I'm very pleased to see that we are able to continue delivering crock-forces of gold 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 grew by 3.2% 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 EBITDA 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 EBITDA would have been around 4.3% 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. Viaplay 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 Postmates saw continued strong net intake in the quarter, driven by FMC bundling and convict, while ASPU declined slightly. However, the 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 OSPU 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 Viaplay. 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 the new TV proposition contributing to the overall performance, which shows a 5% increase in ASTU during the quarter. Mobile end-user service revenue grew by 1% in the quarter, driven by the larger post-bid 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 continued to be strong in the quarter, with both extended and new customer contracts, including the recently announced agreements with fuel company Oko Q8 and food retailer Axfoods. Mobile net intake amounted to 26,000 RGUs, driven by improvements across segments and notably in the large segments. Mobile ASTO remained stable. End-user service revenue increased by 6% in a 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 solid performance within B2B. International roaming had a positive year-on-year effect of 16 million. Underlying EBITDA remained 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 content. 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 ASPU 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, ASPU 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, Kjell, and good morning, everyone. Please turn to page 13 in the presentation. During 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 a 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 Teletubbies 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 investments. Changes in working capital was negative in the fourth quarter as well as for the full year. And to follow up on what Kjell 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 arrangements 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. And 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 a large repayment of preliminary tax in Q4 2021. And equity-free cash flow from continuing operations amounted to 3.5 billion in 2022, corresponding to five kroner 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 to 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 SEK three-year bond. We also signed a 700 million euro sustainability-linked 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 effect of this 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 with 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 mid-term 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 mid-term 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 SEK, 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 PHY 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 more for more strategy for years to come. In 2023, we have an important Spectrum auction coming up in Sweden. With regards to that, I want to highlight Teletubbies' 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 the 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 CommVic 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 Viaplay, 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 the 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 within 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% 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 Teletoo 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.