Tele2 AB (publ)

b2c.com for the fourth quarter and full year 2024. With me here in Chista today, I have Charlotte Hanson, our Group CFO, Henrik de Groot, our B2C Chief Commercial Officer, and Stefan Trampus, who heads our B2B business in Sweden. We have extended this call with up to 30 minutes, as this is my first results call with Teletubbies. and as we have some important development to share after the usual review of the quarterly and full year results. Please turn to slide two for some highlights. In a nutshell, our Q4 results, and that as expected, given suffer comes in Sweden consumer due to the phasing of pricing and the finalization for Voxel TV integration away from digital terrestrial technology, a slight growth improvement in Sweden business and continued solid growth performance from our Baltic operations. For the full year, we grew end-user service revenue by 3% and underlying EBITDA by 2%, whereas CapEx 2 sales ended just below 14%. Consequently, we delivered on all guidance parameters provided at the beginning of the year. On the other hand, We generated $4.4 billion of equity-free cash flow in 2024, which is 7% less than in 2023. Our guiding principle is that the ordinary dividend must be covered by the equity-free cash flow generation. As funding costs remain expensive, we must remain vigilant on the balance sheet. In line with Teletubbies' financial policy, the Board proposes to distribute 100% of the 2024 equity free cash flow through an ordinary dividend of 6.35 crowns per share to be paid in two tranches in May and in October. Looking forward, we see 2025 as a transition and a transformation year. We have engaged into a deep transformation to improve Teletubbies' profitability through stricter prioritization, reinforced cost discipline, in a simplified organization and operating model, which also enables a solid and ambitious 2025 guidance. Sadly, this transformation will also materialize in a reduction of around 15% of our total workforce, depending on unions' negotiations. We expect the acceleration of our underlying EBITDA growth will translate into a higher equity fricassure in 2025. We will talk more about this in a few minutes. In the meantime, please move to page three for a summary of our first quarter. In Q4, our end-user service revenue grew by 2% organically, driven by the Baltics and Sweden business, whereas organic and underlying EBITDA grew by 1%, largely driven by end-user service revenue in the Baltics. We generated 800 million of equity free cash flow in the quarter and 4.4 billion in 2024, leading to a 2.5% times leverage following the payout of the second dividend tranche in October. In Sweden consumer, end-user service revenue remained globally stable, as the decline in Boxer TV due to the migration was offset by solid growth in connectivity, with strong NetApps in mobile postpaid and continued strong ASPU growth in fixed broadband. In Sweden business, end-user service revenue grew by 3%, marking a slight improvement as compared to the previous two quarters, Mobile grew by 4%, and fixed continued to stabilize. The Baltics grew end-user service revenue by 7%, with growth in all markets. And Berline Big Dell grew almost as fast at 6%, and we are particularly proud of our Estonian team, which successfully accelerated top-line growth and turned into a BDA growth this quarter. Let's move to Swedish consumer on slide 5. Mobile end-user service revenue grew by 1%, driven by 2% in post-paid, partly offset by decline in prepaid. Fixed broadband grew end-user service revenue by 6%, due to a strong house pool. End-user service revenue for digital TV declined by 6%, driven by the final phase of the migration of box-show TV, away from legacy digital terrestrial TV. Meanwhile, our 32 DTV business remains largely stable. The upper part of the right-hand chart illustrates how we gradually have migrated BoxRTV DTV revenue from terrestrial to cable and IP-based. As DTV was shut down from 1st of January this year, there will be no terrestrial revenue anymore as from Q1 2025. For full year 2025, We anticipate box show revenue roughly 200 million below 2024, with neutral impact on EBDA. In the short term, the line of business would have become cash negative due to the continuous decline of the customer base. In the long run, immigration to more flexible and richer TV solutions will bring positive effects in both customer experience and profitability. Let's look at consumer KPIs on slide six. We had a strong 50,000 postpaid RGOs in the quarter, driven by both brands, including mobile broadband, which has benefited from the Boxer migration. ASPU declined by 1% year-on-year, driven by increasing IFRS 15 fair value adjustments due to the increase of the customer base with handset installment plans, excluding the fair value effect. Grew by 1%, impacted by RGU growth in family and mobile broadband, and less favorable comparison with Q4 2023. Fixed broadband added 4,000 RGUs in Q4, driven by both fixed mobile conversion and single-play. SPU grew by a strong 8%, mostly due to last-year price adjustments. Our 22 DTV cable and fiber business added 7,000 RGUs in the quarter, supported by the Disney Plus Lounge, and migration from Boxer. The lower chart shows the proportion of Boxer TV customers that have migrated away from terrestrial. By year end, only 7% of the migrated base had not activated their Wi-Fi-based TV hub yet. QM 2025 will be the first quarter without terrestrial distribution. Now that this business is gone, we intend to merge the reporting of our two business lines from Q1. Please move to slide 7 for Swedish business. While the Swedish business sector continues to be affected by economic headwinds, we remain optimistic about gradual improvement over the year. In Q4, Sweden's business reported 3% end-user service revenue growth, reflecting a slight improvement compared to the previous couple of quarters. Mobile grew by 4%, driven by our IoT business and by solid RGU growth, mainly in SMEs and public. Mobile ASPU was impacted by this year-on-year evolution in our customer mix. Our solutions business grew by 3%, whereas fixed continued to stabilize following the closure of the copper business in Q2. Please move to slide 8 for Sweden's financials. End-user service revenue grew by 1% in Q4, driven by business, whereas consumer remained flattish due to phasing of pricing and box remuneration effects. And underlying EBITDA remained stable, largely due to the slow end-user service revenue growth. The cash conversion of 58% is reflecting 15% capex to sale in Sweden, during the last 12 months. Let's move to the Baltic financials on slide 10. Total end-user service revenue continued to grow at a healthy 7% in Q4 in the Baltics, with solid performance across markets, and with Estonia accelerating following successful price adjustment during Q4. And the line EBITDA grew by 6%, driven by end-user service revenue growth, and with all markets around mid-single-digit growth rates. Following several quarters of EBITDA decline, Estonia finally returned to growth in Q4. Cash conversion remained strong at 73% during the last 12 months, reflecting 10% capex to sales due to ongoing 5G rollouts. Let's move to slide 11 for EBITDA. Baltic operations. The number of Baltic mobile post-paid customers continued to increase slightly, this time driven by positive net ads in Latvia. Lithuania was burdened by a cleanup of 16,000 post-paid ad use. Blended organic ASPU increased by 4%, with growth in all markets with Estonia at 9% and Latvia at 6%. This is due to price adjustment, the more formal strategy, and continued prepaid to postpone migration. With that, I hand over to Charlotte, who will go through the financial overview.

Thank you, Jean-Marc, and good morning, everyone. It's time to page 13. So first a few comments on the group P&L for the fourth quarter. Total revenue grew by 1% organically, whereas end-user service revenue grew by 2% organically, driven by the Bostex and Sweden business. Underlying EBITDA grew by 2%, both in SEC terms and organically, and underlying EBITDA grew by 1% organically, mainly driven by end-user service revenue growth. In Q4, we have a $6 million headwind from energy year-on-year, leading to a full-year headwind of $42 million, mainly explained by the $35 million of electricity support in 2023. Then a few comments regarding full-year P&L items this week. with significant changes, which are highlighted on this slide. Items affecting comparability increased by around 125 million year-on-year, and was mainly driven by restructuring costs related to the statutory execution program, and more specifically redundancy costs. DNA declined by around 205 million year-on-year, mainly because the surplus value of the TDC acquisition has been fully amortized since Q4 2023. Net financial items increased by $180 million year-on-year, partly due to higher financial costs for outstanding debt, and partly due to a $77 million other financial gain related to bond repurchase in Q2 2023. By Q4, we had a debt mix of 60% fixed rates and 40% floating rates. Then our income taxes increased by around $70 million year-on-year, partly due to a Pillar 2 top-up tax related to Lithuania. So let's move to the cash flow on slide 14. Let's focus on the highlighted full-year cash flow items. Motorization of lease liabilities increased by $190 million, mainly due to our network expansion, as well as a $90 million reclassification to working capital in Q4 2024. CapEx paid decreased by around 80 million due to a spectrum payment in Sweden of around 370 million in Q4 2023, partly offset by higher network investments. Net financial items paid increased by 205 million due to timing of coupon payments following previous bond refinancing and higher interest rates. Taxes paid increased by around 155 million, mainly due to timing of payments, with tax refunds of around 195 million in 2023, as compared to around 95 million in 2024. All in all, our equity-free cash flow for full-year 2024 ended at 4.4 billion, corresponding to 6.3 kroner per share and some 7% below the level in 2023. Let's move to slide 15 for our capital structure. By year-end, economic net debt amounted to $26.2 billion, some $0.6 billion above for year 2023, as the payout of the ordinary dividend exceeded the cash generated in the business. Our leverage ended at 2.5 times, which is in the lower end of our target range of 2.5 to 3 times. Let's move to slide 16. So we conclude 2024 by noting that we have delivered on all three guidance parameters we provided at the beginning of the year. In this context, we should also mention our Baltic colleagues, which once again have contributed substantially to our group performance. And with that, I hand over to Sean Mark for some comments about our operational milestones in 2024 and our plans ahead.

Thank you, Charlotte. Considering the decrease of 7% of equity-free cash flow in 2024, the mixed outcome of Q4 Swedish results and the transformation ahead, and in line with Teletubbies' financial policy, the Board proposes to distribute 100% of our 4.4 billion crowns equity-free cash flow to a more than rate dividend of 6.35 crowns per share. It is now time to look forward and say a few words about how we have started transforming Tele2 to make it a more agile and stronger company. Please turn to slide 70. Tele2 delivered an impressive migration roadmap in 2024, paving the way for a deeper transformation. We finalized the swap of our 5G network. On TV side, we completed the phase-out of our legacy Taivo platform, and the migration of BoxRTV customers. We accelerated the reduction of IT stacks and delivered several critical digital enablers. And in the meantime, we continued expanding our fixed broadband footprint. Please turn to slide 18. Despite strong competition in macroeconomic situation, we see a growth potential ahead across all segments supported by mobile energy growth in Sweden and in the Baltics in H2 2024. On Sweden consumer, the growth will continue being driven by the attractiveness of our offers. That will more than offset the box or top line impact. On Sweden business, the growth will be driven by IoT, SMEs, and AEs, despite the economic context. Already before the finalization of the 5G rollout, Tele2 has the best 5G availability in Sweden, according to OpenSignal, supporting customer experience and loyalty. And in the Baltics, the solid growth and excellent cash conversion will continue in 2025, driven by number one and number two positions in Lithuania and Latvia and the turnaround in Estonia. These perspectives give us confidence in our capacity to grow our top line, continuing on our current pricing policy. We therefore have no need, no intention to trigger a new price war in Sweden. Please turn to slide 19. Saying that, our main priority is about to improve the profitability of our business, which we believe could be higher. We see two areas of improvement. First, Teletubbies' legacy and the successive integration of Comhan, TDC, and other companies have created a lot of complexity in our organization. Second, some geographies, Estonia, for instance, and some of our Swedish business activities show a lower profitability than others. We have therefore introduced a radical transformation to improve our efficiency with two priorities in mind, simplify our operating model and our organization, and rejuvenate some parts of 32's smart change and cost-saving culture. Our deep transformation plan includes an extensive cost optimization already in motion with the systematic challenge of all our expenses and the renegotiation of all our contracts. It also includes, unfortunately, a reduction of around 15% of our total group workforce, corresponding to between 600 and 700 full-time equivalents, subject to union negotiation. Please turn to slide 20. Let me give you more color on our transformation plan. By the end of 2025, we will have simplified drastically our operating model in our organization, getting rid of the complexity inherited from legacy and integration. We will improve the profitability of all parts of our business, on Sweden B2C by focusing on customer loyalty and cross-selling, on Sweden B2B by assessing our services portfolio and automate our delivery, in the Baltics by making Tele2 Estonia cash-contributive and increasing centralization. Additionally, we will concentrate our investment on the building of our network, securing our 5G run-out, which waits for more than one-third of our total capex, preparing for 2G, 3G closure, and depriorizing all non-commissive capex. Please turn to slide 21 for our 2025 guidance. We are confident in the outcome of our transformation, which enables us to issue a solid 2025 guidance. In 2025, we will deliver a low single-digit organic growth on end-user services revenue, partly impacted by the 200 crowns boxer DTT impact on top line with no ABDA impact. When it comes to Swedish consumer pricing, we executed front book and back book adjustment in the beginning of January, in line with last year. And just like last year, the largest part of the pricing effect will be realized in March. In 2025, we will deliver mid-to-high single-digit organic growth and underlying EBITDA, thanks to the outcome of our deep transformation. When it comes to EBITDA, the workforce reduction will be executed over the coming 12 months, implying a back-end loaded growth profile for this year with no significant impact in Q1. In 2025, our capex-to-sales ratio will be in the range of 13%, as it will be as it will be the final year of intense network rollouts. In a mid-term perspective, we continue expecting our CapEx-to-Sell ratio to go under 12%. Our new operating model and simple organization will give us the resilience and flexibility we need to remain in control of our future, and I'm very pleased to see the engagement and commitment from all my colleagues to create a new Tele2 Simple and agile, built with our Challenger heritage as a foundation. 2025 will be a year full of challenges, but as well an ambitious one, and I'm certain that our new Tele2 will be soon fit enough to deliver more value to our shareholders. I hand back to Charlotte for some additional comments regarding 2025 before we open it for Q&A.