Tele2 AB (publ)

Good day and thank you for standing by. Welcome to the Tele2Q1 Interim Report 2025 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Jean-Marc Arien, President and Group CEO. Please go ahead.

Thank you and good morning and welcome to Teletous Report School for the first quarter of 2025. With me here in Chista today, I have Peter Landgren, our Group CFO and for Sweden, Peter Charmak, our chief B2C officer, and Stefan Trampus, our chief B2B officer. Please turn to slide two for a brief recap on our transformation plans and progress so far. 2025, as you know, is a transformation year for Tele2. Our objective is to build a faster, simpler, and more agile Tele2 by coming back to Tele2's original challenger culture. And I'm happy to present you today the progresses we have made over the first quarter of 2025 to simplify our organization, control our costs, and prioritize our investments. We have reduced our workforce by more than 450 positions at the group level by the 15th of April. We have reopened and renegotiated 20% of our largest contracts. We have implemented a new cost governance to scrutinize and challenge all our expenses. And we have now a new leadership team in place. And even more importantly, our cultural shift, especially our cost consciousness focus is strongly supported internally. And I want to take this opportunity to thank all Tele2 employees who actively contribute to get us back to the original Tele2. Please turn to slide three for some financial highlights. I'm happy to report that our Q1 equity cash flow has been improved already by the first steps of our ambitious transformation program with the additional support of some one-offs. And user service revenue grew by 1% in Q1, driven by the Baltics' excellent performance. We are facing some headwind on the top line in Sweden, where our revenue growth has been burdened mainly by the migration of Boxer off the terrestrial network with a higher revenue impact than expected. On the other hand, we have had a solid start to underlying EBITDA with a 6% growth in the quarter, largely due to the speed of our transformation. The first workforce reduction has been implemented earlier than expected. In the Baltics, most of the restructuring has been executed in January and February. In Sweden, we have registered some early workforce savings already in Q1 due to consultant and voluntary leads. Nevertheless, it's important to remember that the ongoing workforce reduction that will be executed during this year has only a limited impact in Q1. Equity free cash flow amounted to 2 billion Swedish crowns, supported by some temporary items that we will detail later. In a nutshell, so far so good, but we are only at the beginning of our journey. The largest part for transformation work is still ahead of us, and we keep focusing on operational optimization. Meanwhile, we reiterate all the components of our full year of guidance. And let me add two comments on the development of the company. During our transformation, we continue investing to improve our customers' experience. Our Netformability 5G network, whose rollout will be complete by year end, already offers the largest broadband reach in Sweden. The strengthening of our distribution channel plays a key role in our transformation, and we recently completed the revamping of Tele2.se, and we also opened four new stores in Sweden, including in Stockholm. In terms of sustainability, we are proud that our climate A rating with CDP was reaffirmed once again. We were also ranked number one in Sweden and among the top 40 companies worldwide in equity, gender, security ranking. Please move to page four for more details on our results. As I said, end-user service revenue grew by 1% organically in Q1, mostly driven by the Baltics, whereas organic underlying EBITDA grew by 6%, driven by sharp cost control across all operations and the top-line growth in the Baltics. Our strong equity cash flow included a few items subject to reversals, namely working capital and capex timing, in addition to a tax refund. Peter will walk you through the details in a moment. Our leverage stands at 2.2 times ahead of the proposed first dividend payment. In Sweden, consumer and user service revenue declined by 1% as our growth in core connectivity was upset by a significant decline in Boxer TV following the decommissioning of terrestrial distribution at the beginning of the year. In Sweden business, end-user service grew by 1% alongside with continued solid mobile RGU growth. Underlying EBITDA in Sweden grew by 3% thanks to ongoing cost optimization efforts. The Baltic grew end-user service revenue by 7% with strong growth in all markets. Underlying EBITDA grew by a massive 15%. The turnaround in Estonia continued to produce good results also in this quarter. Let's move to slide six for more details on Swedish consumers. Mobile end-user service grew by 1%, risen by 3% in post-paid, partly offset by continued decline in prepaid. Fixed broadband grew end-user service revenue by 5%, mainly due to solid ASPU growth. While Teletubbies TV remained largely stable, end-user service revenue for DTV declined by 10%. largely driven by Boxer TV migration. For full year 2025, we now anticipate Boxer revenue to be roughly 225 million below 24, with a slightly negative year-on-year impact on EBITDA. Looking forward to the rest of the year, we count on our recently launched TV Hub 2.0 service and the revision of our content portfolio to improve the profitability of our TV business. Let's look at the consumer KPIs on slide seven. Mobile postpaid RGU declined slightly in this seasonally low quarter, in which we also executed price adjustments, similar to Q4, as we declined by 1% year-on-year, driven by increasing IFRS 15 fair value adjustment due to family discount and an increase in the customer base with handset installment plans. Excluding the fair value effect, ASPU grew by 1%. For Q2-Q4, we expect the price increase is introduced in March to drive postpaid ASPU up again. Fixed Broadband added 1,000 RGUs in Q1, whereas ASPU grew by a solid 5% due to price adjustments. Our TV business lost 25,000 RGUs in the quarter, entirely related to Boxer in this first quarter, distribution. And during the last few weeks, we have negotiated some content contracts, including a new partnership regarding Global Streaming Service Max. And we launched a new flexible TV package offer with upgraded TV experience with TV Hub 2.0, making our entertainment proposition even more attractive for streamers and court cutters. Please move to slide eight for Sweden business. In Q1, Sweden business reported 1% end-user service growth. Growth across our IoT and large segments was partly offset by the micro-segment, which is particularly sensitive to economic conditions. Mobile grew by 1% driven by our IoT business and solid RGU growth in SME and public, however, partly offset by an IoT-related network outage. Mobile ISPU was mainly impacted by a change in consumer mix year on year. Solutions grew by 2%, whereas fixed declined by 3% as a result of the continued stabilization following the copper closure. Tele2 IoT was once again recognized in 2025, Gartner's magic quadrant for managed IoT connectivity service worldwide, ranking among the top 15 in the world and the top 10 in Europe. Please move to slide 9 for Sweden Financial. To summarize, our Swedish end-user service revenue was flat in Q1 as growth in business was upset by the slight decline in consumer. Underlying EBITDA grew by 3% thanks to sharp cost control and ongoing renegotiation of large contracts. The cash conversion has improved to 60% over the last 12 months. And let's move to Baltic financials on slide 11. I want to underline the excellent performance of our Baltic operations, which have delivered very strong top and bottom line growth in Q1. In the Baltics, total end-user service revenue continued to grow at a healthy 7% in Q1, with solid performance across markets, supported by previous and recent price adjustments. All markets grew underlying EBITDA by double digits in Q1, leading to 15% growth for the Baltics as a whole. In addition to top-line growth, strict cost control and workforce reduction have contributed to this excellent result. Cash conversion increased to a strong 76% during the last 12 months, affecting increasing EBITDA margin. Let's move to slide 12 for Baltic operating KPIs. All markets delivered positive postpaid net intakes in the quarter, with a special kudos for Tele2 Estonia turnaround. It is important to note that the prepaid base in Lithuania was impacted in Q1 by the introduction of prepaid SIM registration. As a result of this registration, the drop of 138,000 prepaid RGUs is due to churn of inactive users, prepaid to postpaid migration, and significantly lower gross intakes in the market. Blended organic ASPU increased by 7% with healthy growth rates in all markets, driven by more formal strategy, price adjustment, and continued prepaid to postpaid migration. With that, I hand over to Peter, who will go through the financial overview.

Thank you, Jean-Marc, and good morning, everyone. Please turn to page 14. First, a few comments on the group P&L for the quarter. Total revenue remained unchanged, while end-user service revenue grew by 1% organically, driven by the Baltics. Underlying EBITDA grew 7% and underlying EBITDA after lease grew by 6%, driven by the end-user service revenue growth in the Baltics and sharp cost control across the group. Items affecting comparability increased by 100 million year-on-year to 287 million SEC in Q1. largely related to redundancy costs connected to the workforce reductions concluded mid-April. Net financial items decreased somewhat year-on-year due to lower average interest rates on our outstanding debt, down from 3.2% in Q1 2024 to 2.9% this year. In Q1, we had a debt mix of 60% fixed rates and 40% floating rates. Let's move to the cash flow on slide 15. Amortization of lease liabilities decreased by around 50 million, mainly due to a 90 million reclass from working capital. Adjusted for that, our ongoing network expansion continued to increase amortization levels year on year. CapEx paid decreased by around 160 million due to lower investments. Changes in working capital were mainly impacted by elevated redundancy provisions related to the workforce reductions and a seasonal decrease in equipment receivables. Net financial items paid decreased slightly due to lower financing costs for our outstanding debt. Taxes paid and received decreased by around 200 million thanks to a tax refund of around 280 million this quarter. Last year included settlements of taxes paid of 93 million related to previous years. All in all, equity-free cash flow added up to 2 billion SEK in Q1, an improvement of 730 million year-on-year. It's certainly a very good start to the year. However, with support from the tax runoff, temporary tailwind from working capital, and somewhat low capex intensity. Equity-free cash flow per share over the last 12 months reached around 7.4 per share. Let's move to slide 16 for our capital structure. End of Q1, economic net debt amounted to 24 billion, some 2.2 billion below full year 2024, thanks to the cash generated in the business now in Q1. Our leverage ended at 2.2 times underlying EBITDA of the lease, which is below the lower end of our target range of 2.5 to 3.0, ahead of the proposed dividend payment a few weeks from now. Adjusted for that dividend, the formal average would have been 2.4. And with that, I hand over to Jean-Marc for some comments on our 2025 guidance. Thank you, Peter.