Tele2 AB (publ)

Good morning, everyone. Welcome to Tele2's report call for the first quarter of 24. With me here in Kyrgyzstan today, I have Charlotte Hansen, our group CFO, Henrik Groth, our chief commercial officer, Stefan Trampus, our head of B2B, and we also have our CTO, Yogesh Malik here, who will soon present our exciting tech journey, which is why we have extended today's call with up to 20 minutes. So let's turn to page two for some of the highlights. We have a good start to the year, with 4% end-user service revenue growth in Q1 and 2% on underlying EBITDA as top-line growth outpaced cost inflation. We're also happy about our strong cash generation, which has pushed our financial leverage well below our target range, ahead of the first proposed dividend tranche in May. And that gives us flexibility going forward. In relation to Q4 results, we announced the launch of our new three-year strategy execution program, Through the program, we shift focus from fixing legacy IT towards our go-to-market efforts, developing outstanding digital tools and channels aimed at radically improving customer experience and value. It will also allow us to reduce run rate costs by 600 million. The program kicked off in Q1, and I will soon share some details on the development so far. In terms of sustainability, we are proud that our Climate A rating with CDP was reaffirmed. a level that less than 2% of more than 21,000 assessed companies globally receives. We're also number two in Sweden among the top 100 companies worldwide in Equilips gender equality ranking. Finally, the long-term ownership structure of Teletool looks set to be clarified, as Genevieve has agreed to sell its stake to Freya, jointly controlled by Iliad and NJJ. Subject to the completion of the transaction, Freya will be the new largest shareholder in Tele2. Let's move to page number three, please. End-user service revenue grew by 4% organically, with solid performance across operations, including continued growth acceleration in B2C. Organic underlying EBITDA grew by 2%, driven by end-user service revenue growth, partly offset by cost inflation. Q1 was yet another quarter with solid equity-free cash flow, and Charlotte will walk you through the details. In Sweden B2C, we saw end-user service revenue growth accelerating to 4%, by far the highest rate since the Comhem merger. Both fixed broadband and mobile postpaid grew strongly, supported by pricing. Sweden B2B continued to grow nicely, in line with previous levels. The mobile business posted 8% end-user service revenue growth supported by Aspoo and continued strong IoT growth. Baltics had yet another good quarter with a largely Aspoo-driven end-user service revenue growth that trickled down to underlying EBITDA growth. And then let's move to Swedish consumer, 5.5. Mobile Postpaid ASPR increased by 4% in Q1, driven by ongoing pricing and supported by churn in free mobile broadband, which largely also explains the RGU decline in this seasonally slope. In fixed broadband, ASPR grew by a strong 8%, mostly due to price adjustments. The number of RGUs declined by 6,000, excluding a cleanup of 11,000 non-active group agreement customers. Digital TV, cable, and fiber remained largely stable in terms of volume, excluding a cleanup of 16,000 non-active group agreement customers during Q1. Last but largely flat. Next slide. Mobile end-user service revenue grew by 5%, driven by continued acceleration in mobile post-paid, which delivered a strong end-user service revenue growth of 7%. Prepaid revenues continued to contract, albeit somewhat less than previous quarters, now that the registration requirement in February 23 has annualized. Fixed broadband delivered yet another quarter with impressive end-user service revenue growth, this time 9%. End-user service revenue for digital TV declined by 2%, driven by continued decline in the legacy DTT business. Now let's move to B2B, slide 7. The macro situation for Swedish companies has become increasingly challenging, as reflected in bankruptcy statistics, unemployment rates, and budget deficits in the public sector, among other things. However, Sweden B2B continued to grow end-user service revenue at a healthy underlying 4% in Q1. The main driver is the mobile business, which grew end-user service revenue by 8%, driven by ASPU and continued strong IoT growth. Net intake was negative with 10,000 RGUs, mainly due to a larger public customer that churned during the quarter. We're also happy to see 3% growth in our solutions area, supported by high level of activity for networking and unified communications among larger customers. Our copper decommissioning has now reached 95% completion and we begin to see signs of stabilization in our fixed business. And then let's move to the overview of Sweden. End-user service revenue growth for the total Swedish operations accelerated to 4%, driven by both B2C and B2B. Underlying EBITDA grew by 1% as the strong end-user service revenue growth exceeded cost inflation. The cash conversion of 59% is reflecting 14% capacity sales during the last 12 months. And then moving to slide 10. The number of Baltic mobile postpaid customers continued to increase in all markets during the quarter. Organic ASPU continued to grow at a healthy rate, driven by Lithuania, and our more-for-more strategy, price adjustment and prepaid to postpaid migration. Then moving to the financials. ASPU growth combined with some volume growth in mobile postpaid led to 7% organic end-user service revenue growth for the Baltics as a whole, largely driven by Lithuania. When it comes to Latvia, growth has slowed down after some exceptional years. and I'm optimistic about the prospects for regained growth going forward. Underlying EBITDA grew in line with end-user service revenue at a healthy 7%. Cash conversion remains very strong and reached 75% due to the roll-outs, reflecting 10% capital sales due to ongoing 5G roll-outs. With that, Charlotte, I hand it over to you for the financial overview.

Thank you, Kjell, and good morning, everyone. So we're on page 13. So first a few comments on the group P&L. In Q1, total revenue grew by 2% organically, whereas end-user service revenue grew by 4%. Underlying EBITDA grew by 3% in SEC terms and 2% organically, whereas underlying EBITDA grew by 2% organically, driven by solid end-user service revenue growth, exceeding significant cost inflation and continued margin pressure from product exchanges as legacy services continue to decline. In Q1, we had an 11 million headwind from energy year on year. As you can see on the slide, items affecting comparability increased by 120 million year on year, which were related to the strategy execution program. Then our net financial items increased by 40 million year on year, explained by higher financing costs for outstanding debt. By Q1, we had a debt mix of 67% fixed rates and 33% floating rates. That follows that for every one percentage point rate change in underlying market rates, our annualized financial expenses on loans with floating rates move by around 90 million. During 2024, we had some 2 billion SEP maturing, of which that majority is fixed and matures during Q2. So let's move to the cash flow on slide 14. CapEx remained high in Q1 due to continued intense investments and increased mainly due to timing of payments. Changes in working capital was positive in Q1, mainly impacted by a reduction in equipment receivables and increased provisions for restructuring costs. However, despite the positive development in Q1, our ambition to keep working capital cash flow neutral in 2024 remains unchanged. Taxes paid declined year on year due to a settlement of taxes paid of 93 million SEK related to previous years. And all in all, our equity-free cash flow for Q1 ended at 1.3 billion and above last year's level. And over the last 12 months, we have generated 4.9 billion of equity-free cash flow corresponding to 7.1 krona per share, and consequently slightly above our ordinary dividend level. So let's move to slide 15 for our capital structure. By Q1, economic net debt amounted to 20.4 billion, a decline by 1.2 billion compared to year-end due to the cash generated in the business. Our leverage ended at 2.3 times, which is well below our target range of 2.5 to 3 times. And with that, I hand over to Shell to comment on the strategy execution program.

Thank you very much, Charlotte. And then I'd like to take a little bit of a timeline perspective with you. And we talked a bit about this during the Q4 presentation. You will see this illustration of showing a timeline from 2020 to 2026, and I'm trying to put it into a context of the previous program and the current program. We have talked for many quarters about the importance of our IT migration. We talked about how important it is to move out of third-party retail. And of course, we are making ourselves prepared for this. And from 2020 up until where we are now, we have worked with consolidating our IT infrastructure going from having multiple stacks into having one so that we can work faster and more nimble and also have higher quality of execution. And I'm happy to say that basically as we speak now here in April, we are doing the final migrations so that we get this all into one B2C stack. And then of course the work continues with building the the digital interfaces, the channels, but it is a milestone for us. It's at a point where all the different assets, Teletubbies, Comham, Comvict, Boxer, these things are coming together and will make us more efficient going forward. And this is what we want to capitalize on with the strategy execution program in the sense that we're going to build an interaction with customers that is more digital, less cost in third-party retail, and obviously running this new stack is going to be in itself a more efficient way of running tele2 we will also create value from interactions with our customers in doing so by being much more precise in the way we approach them so i just wanted to show you this timeline and that the the idea is that by the end of 26 we would have completely revamped our go to market in intelli2 And if you speak to other operators and have an honest conversation with them about these things, which we can do, and I will not name names. I'm talking about companies outside of this market. Many telcos will have a timeline if they draw the same figure that we have here that will take them into 2030. That is for sure. So it is quite a big milestone for us. And we will return to this. And also Jogesh is with us today. to help us understand better what we are going to achieve. But let me then move to page number 17. So here's the first update on the progress of the strategy execution program, which aims to deliver radical improvements in customer experience and value and operational efficiency. On the B2C side, we are kicked off by strengthening focus and investment in own channels. And we have also carried out a major migration relating to customer service capabilities ahead of the final large B2C migration later this month. On the B2B side, we have established a program for digitalization and automation. Finally, our brand new 5G network is growing rapidly and is currently covering close to 70% of the population, despite us not using 5G in the low band. This is higher frequency coverage in new base stations. Then let's move to page 18 for the financials. As you know, as a consequence of the program, we are targeting 600 million SEK of run rate cost savings by the end of 26. By the end of Q1, which is the first quarter, we have executed organizational changes and network optimizations worth 80 million in run rate savings, of which 10 million contributed to our underlying EBITDA year over year. In Q1, we have also booked some 180 million of restructuring costs, mostly related to resource reductions. A good part of the restructuring cost has not yet contributed to the savings run rate, but we'll start doing so in Q2. But then let's go to the even more exciting stuff. Let's hand it over to Yogesh to take us through our tech journey. Thank you.