Telia Company AB (publ)

Good day and thank you for standing by. Welcome to the Q4 and year-end report January to December 2021 conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and one on your telephone. I must advise you that this conference is being recorded today on Friday, the 28th of January 2022. I'll now like to turn the conference over to your speaker today, Alison Kirkby, President and CEO of Talia. Please go ahead.

Thank you, Operator, and good morning, everyone. Thanks for joining us today. I'm here in Stockholm. with PC, Reiner, and Anders from IR, and Eric has dialed in from home, and you can probably get why he's dialed in from home. So we have a longer session today, longer than normal. We'll first focus on the Q4 results, and then we'll dive into an update on the progress we've made throughout 2021 on our strategy to reinvent a better telia, and that's why we've also got Reiner here today So let's get started. As you'll have seen this morning, we reported another quarter of improved revenue growth. Service revenue accelerated to 2.9% in the quarter and again in seven out of our eight units. But this quarter, the growth was driven a large part by mobile subscription revenues now growing 2.6%. We also delivered on our cost ambition with OPEX down 3.6%. driven by reduction in labour costs, IT costs and a pension refund, which together more than offset some inflationary pressure that we saw in the quarter. This resulted in a flat EBITDA, despite absorbing significantly higher content costs. Our capex, as expected, ramped up in the quarter as we are now really rolling out 5G and accelerating the modernisation of our 4G networks. But despite these heightened investments, operating free cash flow amounted to $10.4 billion as the working capital contribution was again strong. And as you'll have seen in our announcement late last night, we are making excellent progress on our agenda to crystallise the value of our infrastructure assets and work with strategic partners with a similar long-term view as ourselves to the inherent value in these assets. Brookfield and Alexa will ultimately help Telia retain and build its leadership position in the provision of digital infrastructure to the Nordic and Baltic region in the years to come. We closed our first tower transaction during the quarter for the towers in Finland and Norway, and last night we announced the second transaction through the extension of this partnership to Sweden, which we expect to close in the third quarter of this coming year. But even before that transaction closes, I'm super pleased that we've strengthened our balance sheet significantly during the past year and are now operating towards the lower end of our target leverage range. So let's get into the countries and let's start with Sweden. Last quarter, we returned Sweden to a tiny revenue growth and we said we intended to keep it in positive growth territory going forward. And as you can see here, the service revenue growth has continued to improve to 1.5% like for like. More importantly, looking at an underlying level where we adjust mainly for the copper legacy revenues, there was also an acceleration to 4.6% growth versus 3.5% last quarter. Growth was again broad-based with both consumer and enterprise and all the non-legacy product segments contributing. And the start performer this quarter was TD with 16% service revenue growth. growing both its service revenues and its EBITDA. The 6.5% EBITDA growth was boosted by a contribution from the pension fund, but even excluding that, our EBITDA was up 2%. And so we now have the same message for EBITDA as for revenue. We intend to keep our Swedish business unit in positive territory on both metrics going forward, albeit with some fluctuations in the odd individual quarter. Looking at the leading indicator KPIs, you're seeing here a healthy ARPU list uplift in all of the main product segments. Starting with mobile, we're proud that we've maintained our network leadership position, winning the Umlaut field test again this year and even increasing our margin relative to competitor networks. This network leadership position is a key enabler to the perceived premium service quality that customers are willing to pay for. And as a result, we saw post-paid R2 growth improving to 3% in the quarter, which is an acceleration from prior quarters. Looking at the subscriber base, the decline this quarter of some 40,000 post-paid customers is mainly explained by one public sector contract that we're migrating out and some mobile broadband connections. Fixed broadband also had a healthy R2 development and an even better growth in fiber customers at 11% year-over-year. compensating fully for the loss of copper broadband customers, of which there are now less than 200,000 remaining. And, as I mentioned, TV has a great quarter, with growth driven equally by ARPU and subscriber growth. Our ITTV business has performed well throughout the year and is now further boosted by our investments in Champions League and the still range of premium sports and a mix of streaming products that you can, on aggregate, access via Telia. And while it's early days, we can see that 70% of new video service customers subscribe to packages containing Champions League. So it is clear that this sport right is helping to drive the business and more importantly, drive improved consideration towards telio. Moving over to Finland, our service revenue declined by 2.5%. and was actually stable in the quarter. In consumer mobile, we're continuing with our value-focused turnaround strategy with more focus on 4G to 5G and Seymour upgrades than growth apps. The mobile handset R2 decline stopped and turned to positive toward the end of the quarter, helped by the 5G base more than tripling during the year and growing 24% in the quarter. Additionally, the number of tele-customers of Seymour has now more than doubled to well and lower churn as we move into 2022. In enterprise mobile, on the other hand, we are still migrating 4G customers in a large public sector contract that dilutes ARPU initially, but boosts the subscriber numbers. As we gradually migrate these customers into our base and then upwards towards 5G, ARPUs will improve over time. In our B2B ICT business, where we have a disproportionately large market share, Supply chain effects delayed deliveries, and this, on the back of a very strong end to last year, resulted in a high single-digit decline within fixed business solutions in the quarter. Clearly, supply chain effects will subside during the coming quarter, and so we expect this trend to reverse during 2022 and to help the trends in the year. EBITDA was affected by the revenue decline and an increase in energy costs, which unfortunately fully offset the transformation benefits that are now being realized in our Finnish market. In Norway, service revenues grew by 2.6%, supported both by the consumer and enterprise segments, which more than offset declines in mobile wholesale from the ICE contract. We continue to have really solid growth in enterprise, with both brands, Telia and Fenera, winning again, new significant customer contracts in the quarter, including Tieto Every and Norwegian, and reporting a double-digit growth in the private enterprise segment. Mobile ARPU received a boost, as you may remember, from insurance services starting last quarter, but even excluding insurance, ARPUs are growing. And clearly wholesale revenues from ICE comes with a higher margin than the lower margin value-added services, so EBITDA was somewhat impacted by this, as well as increased market activity relative to levels during the middle of the pandemic this time last year. Moving to our led markets, Lithuania contained its solid momentum on service revenue, which was rather broad-based, with growth in post-paid mobile, broadband, and TV, with a manageable drag from fixed to left-handed, and we are leaders in 5G. EBITDA was here impacted by energy inflation this quarter and did not have quite the same momentum as we did in the prior quarter, which, as you recall, was an exceptionally strong quarter. excellent momentum on both fixed and mobile and customer satisfaction as measured through NPS and is a great example of where we're proactively pursuing our premium network quality position and driving NPS and ARPU as a result, with post-paid consumer ARPU growing 6% mainly on the back of price adjustments. On the network side, we're the only operator providing 5G in the country, covering around a quarter of the population so far. And on fixed, we now have more fiber customers than DSL customers, and we're managing that migration positively. As you can see here, Estonia were able to translate a significant chunk of that service revenue into EBITDA, barring some pockets of low margin sales. Finally, Denmark delivered stable revenue and would have also been stable at EBITDA level if it wasn't for a rise in energy costs and a tough comp last year. It's nice to see mobile is growing 4% in the quarter. Moving to our TV and media unit, the strong revenue growth continued from previous quarters, with both ad and pay growing equally positively. Starting with advertising, our Swedish digital revenues grew more than 20% and are now a meaningful part of the business. This is mainly through the TV4 Play service, which we are delivering increasing amounts of addressable inventory to our advertisers and offering an increasingly trusted alternative to Google and Facebook to those advertisers. And as we'll talk about more in the strategy review coming up, this is now offsetting the decline in traditional TV viewing so that the overall TV reach is actually flattening out now despite the development of the traditional linear broadcasting viewing. That being said, our linear advertising also had a strong quarter, contributing to overall ad revenues going by 11%. As you know, Pay TV is ramping up its premium sports-related content, and we're now carrying the full impact of Champions League in the quarter, which results in, as we expected, lower EBITDA at this early stage of the ramp-up. Seymour did see a growing subscriber base in both Sweden and Finland in the quarter, mostly driven by sports. And Finland is successfully clearly trending up as the number of sports subscriptions increase. So now let's move over to the financials and to PV.

Thank you, Alison. Let me quickly take it to the Q4 and 21 financials. Starting with the surge revenue, as Alison has gone through, we have a solid revenue momentum across all segments. We tackle growth in the consumer segment of 1.7% and in the enterprise segment of 1.2%. on top of the mentioned growth on the TV and media unit of 11.3%. Full-year revenue growth, or 21, ended at 1.5%, well in line with our outlook for the year of flat-to-slice single-digit growth. Let's move to OPEX and EBITDA. Total OPEX reduced by 3.6% in Q4, or 244 million, driven by efficiencies in resource cost and IT, and a positive effect from pension refund of $200 million, offsetting higher energy costs of around $100 million due to the extreme energy prices in the quarter across our footprint. For the full year, total effect declined 1.2% or $0.3 billion, despite slightly higher pension costs and $200 million higher energy costs for the full year. More about this later in the presentation. On EBITDA, EBITDA was flat in the quarter at a 2.9% service revenue growth. Efficiencies and pension contribution was assessed by increased content cost of 0.5 billion and energy inflation of 0.1 billion. Total EBITDA growth for the year ended at 0.4%, well in line with our outlook of flat to slight growth. Moving to cash capex, As guided and expected, cash capex increased heavily in Q4 to $5.2 billion, driven by increased investments in mobile network modernization and 5G, combined with higher investments into product development and IT to support our ambitious transformation agenda. Total capex for a year ended at $14.4 billion or $14.7 billion if we adjust for the cloud accounting effect, within our guidance of $14.5 to $15.5 billion Moving to cash flow. Operational free cash flow ended at 1.4 billion in Q4, a 1.5 billion reduction compared to last year, mainly due to lower reported EBITDA from the carrier divestment and the mentioned decline in the TV and media unit. The higher cash flow, Cash flow was actually a bit stronger than expected due to somewhat higher contribution from working capital combined with a bit lower capex. Total cash flow for the year ended at 10.4 billion, well in line with our guidance that cash flow should cover our minimum dividend commitment. If we move on to net debt and leverage, total net debt reduced by 3.4 billion in the quarter, driven by good cash flow generation, and proceeds from the Finnish and Norwegian TAO transaction, partly offset by the planned and executed second tranche of dividend payments. Total net debt to EBITDA ended at 2.14 times, well within the targeted range of 2.0 to 2.5 times. Given the strong balance sheet and the strong outlook, the net proceeds of 5.5 billion from the Swedish TAO transaction are intended to be distributed be distributed to our shareholders after closing. And with that, I hand over to you, Alison, to start the strategy progress update.

Thanks, PC. So the three of us will now look at what we set out to achieve last year and at the progress that's been made towards creating a better telia in this first year of our multi-year journey. At this time last year, we launched our new purpose to reinvent better connected living in order that Telia would become consistently and sustainably better for all of our stakeholders, customers, employees, owners, and ultimately the societies of the Nordics and Baltics. To deliver on this ambition, we chose four areas where we would differentiate and win versus other operators. Those four strategic choices are here. They're about inspiring our customers beyond connectivity, connecting everyone in our region to the most trusted, reliable and modern vein networks. They're about transforming to digital, to be simpler, faster, more efficient and more data-driven, and by delivering sustainably through a more accountable and empowered organisation with a much stronger execution muscle. So how are we doing so far? I'll start off with inspiring our customers beyond connectivity. where this time last year we talked about need levers and how they would stimulate our growth strategy. First, it was about reinventing the customer experience, and clearly this is an objective in everything we do, from our networks to product to customer service. But in particular, we're aiming to drive it through being the orchestrator or aggregator of our customers' full digital experiences. And we measure it through improved customer satisfaction, and having won many awards, including SKI and EPSI this past year, we're clearly moving forward. Also, as we increasingly digitize the customer experience, we see NPS, churn, and cost benefits. For example, online self-care in Finland increased during the last year, while at the same time, the volume to our contact centers was reduced significantly. This is a massive opportunity for all our businesses in the years to come, and especially here in Sweden, where we have a much more ambitious agenda for 22 than we had last year. Secondly, we've seen further proof during the last year that customers having more services from us are clearly much more loyal. In Sweden, we're now verifying a churn reduction of one-third for mobile customers who have broadband and by two-thirds for those who take a full portfolio. In Finland, mobile with content is improving both loyalty and brand considerations. And this is helping us increase the customer lifetime value with over 50% compared to mobile customers without bundled content. And as you can see here in the graph, Norway has probably done the best job of all with its churn reduction, driven by family subscriptions and equipment bundles in connection with convergent offerings. Which is why we're very much aiming to grow the number of convergent households, which Across the footprint, we've grown the number of converged households to now over 800,000, with Telia Life in Sweden growing double digits. There is, however, much more to do here, and with an improved range of content and the improved technology platforms and data analytics that Rainer will talk about later, we'll be growing the number of converged customers and therefore customer lifetime value much further during 2022. Thirdly, we said that we would extend mobile leadership and monetize 5G, which we are doing by ensuring we are the leading 5G rollout. We are leading 5G rollout in almost all our markets and ensuring that as we migrate customers to this better quality service, we're also trading them up to higher tariffs and combining 5G with other services through the 4G to 5G migrations have held up, and they're even expanding a little bit to around 3.5 euros over the course of the year. And we've introduced a premium high-speed 5G for both consumers and businesses in Sweden as well. And clearly, as our coverage ramps up in 2022, we'll be able to migrate even more customers to that tariff. And then we're looking to accelerate broadband leadership, and we're approaching now 2 million fibre customers connected in our footprint with high single-digit growth rates, while also growing our IPTV base, especially in Sweden, where we have double-digit growth, as you've seen in our fourth quarter results, with Finland and Estonia not far behind. Brand consideration is increasing for the group as a whole, although there are differences between countries, and we'd like to make faster improvements there. Norway, with its brand consolidation behind it and relentless focus on loyalty and quality, has probably done the most improvement in 2021, And our OneCall brand in Norway was awarded the best consumer brand in the Etsy survey. Our Lithuanian business, which is now catching up with the leader, has also won awards for best customer care and service in shops, contributing positively to the high single-digit growth that we're consistently seeing in our Lithuanian mobile business. And finally, we're aiming to help our customers live a more sustainable life. One area we are proud of this past year is how we're offering phones with a reduced environmental footprint via the EcoRacing labelling scheme that we launched together with other major operators in Europe. And we're also making progress on the sale of pre-owned phones, another positive mitigation for the environment and supply constraints, with Norway increasing the share of pre-owned phones from 12% to 16% during the last year. Moving to B2B, For our enterprise customers, we're also aiming to reinvent and upgrade the customer experience, and we've seen excellent proof points during the year, as both our B2B brands in Norway took the top spots in the Etsy survey of customer satisfaction, and in Sweden, Telia continues to win the SKI quality survey for having most satisfied mobile business customers. We also committed to grow our connectivity business this year, and it's great to see that in the second half of the year, we took B2B revenue back to growth for the first time in many, many years, despite the delayed turnaround in Finland and despite the still muted levels of international business travel. This came with excellent new contracts as vital services in the societies we operate in, including both police and defence forces in Norway and Sweden choose Telia as their most trusted digital partner of choice. The biggest contract win of all this past year was with Region Skåne in Sweden. It's a very broad-based contract with multiple services, and we're truly humbled and proud to support the critical services in the country we operate in and view these contracts and relationships as a strategic differentiator that no other operator can match in our region. We also committed to create new revenue streams with horizontal and vertical solutions, and they started to emerge positively during the year. Specifically, I'm excited to see that we already have over 10 enterprise mobile networks in operation and three times as many signed, including a mining contract in Finland, which is already connected to our new 5G standalone network, taking connectivity and new industrial use cases to the next level. App-to-person messaging is continuing to grow and has been a very positive contributor in several markets, including Sweden, where we saw significant growth during the course of the year. There are also sustainability benefits with many of these solutions, not least within remote monitoring and reduced transportation and emissions. And it's therefore great to see that our end-to-end business continues to grow very positively as we added 1.2 million subscriptions in the year, a growth of more than 40%, driven to a large extent by the energy sector, another critical and growing sector that is choosing Telia as its digital partner. And Division X, Our division that captures all the more advanced IoT and data solutions grew 16% in 2021. Division X is becoming an increasingly material part of our business and another strategic differentiator for Telia relative to others. We're actually recognized as one of the top 10 IoT communication service providers in the world. And in a world of 5G, this is when IoT will really pick up. Moving to TV and media, we also committed to grow that business. And as you've seen throughout the year, we're clearly delivering on our promises. Starting with advertising, we're now back to pre-pandemic revenue levels as the demand and pricing has resounded. And not only have we extended our lead in linear with a commercial share of viewing growing to 54%, but due to our successful linear to digital transformation, we're achieving a trend shift in total reach. So that despite the disruption in the traditional TV markets, our overall reach is now flattening out because of growth in digital. This is driven by more and more people watching our digital channels through TV distributors, but mainly TV4Play as the biggest driver. Time spent on TV4Play increased by a third, keeping up well with last year's growth rate of 42%. As a result, we've been able to deliver more inventory to our advertisers, helping grow digital ad revenues by 20% during the year, and on track to deliver the two and a half times increase that we set out last year to achieve by 2025. So very much on track in that growing business for us. Moving to pay, we committed to grow Seymour, and we've delivered on that, not only with the 10% growth in direct Seymour OTT customers, but also with growth through DTV channels, so that the overall number of Seymour customers have grown by 14% this We will continue to drive growth in 2022 with a strong lineup of originals in Sweden and Finland, while at the same time strengthening the lineup with the best of British drama through the inclusion of Britbox. And clearly, we will have the full year of Champions League in 2022 as well. So how is this helping the rest of Telia to increase its customer lifestyle value? Well, we're seeing a majority of the growth in Telia's Sweden DTV is driven by premium sports. and that a majority of the new DTV customers are also buying Telia broadband. But it's still early days. In Finland, the Seymour HBOD service has become a popular add-on to our mobile service, helping differentiation, loyalty, and brand consideration. So, moving to the conclusions on this first strategic priority, you may remember that last year we summarized our revenue drivers by pointing to a reducing headwind from legacy, TV recovery, roaming recovery, rising mobile RQs, convergence reducing churns and new revenue streams. So let's see how we're delivering on our first year. Well, revenue did return to growth despite that the roaming recovery is delayed and that legacy headwinds continued. Of course, we still expect legacy headwinds to reduce going forward and roaming will definitely come back during this coming year and we already saw positive signs in December. TV recovered very well, as you just saw, and our crews grew in postpaid mobile across our footprint in the second half of the year at Bar Finland, but at least it's now stable. On chart, we've seen proof points of higher loyalty for converged households, but we've much more to do in terms of leveraging this across our full portfolio and footprint. And finally, our new revenue streams, including IoT and enterprise mobile networks, are growing at high speeds which will gradually become big enough to impact the overall growth rate. So that concludes our first strategic pillar. And I'm now going to pass over to Rainer, who will take you through our connect and transform pillars so that you can get an understanding of how we are improving our operations to enable an increased contribution to move to the bottom line from our accelerating revenue development as we move into 2022 and beyond.

Thank you, Alison. Thank you. In our second strategic pillar, connecting everyone, we have shared, if you recall, four value levers. First, the gigabit network build-out and modernization, then the softwareization of our networks throughout, then legacy retirement, and last but not least, the partnering to crystallize value from our digital infrastructure. Let me update you on all four value levers now. First, we are well on track with our gigabit network modernization. side, and this despite the continued global supply chain challenges that we've all been seeing. Now, our 5G networks cover 65% of Finns, more than 40% of Norwegians and Danes, 25% of Estonians, and more than 10% of Swedes, where we won the 5G spectrum just last year, if you recall. And most recently, we also launched 5G on commercial spectrum in Lithuania, so we are now live in all our markets. With our modernization, we have been able to further build out our network leadership and network position in all our markets. For example, yesterday, as I think Alison mentioned, reconfirmed by the Umlaut Award in Sweden, and we reached also number two network quality position in Finland, where we are even number one in 5G speed. All this is on the back of having secured the leading 5G spectrum position in our region, and with our modernization, we unlock five times more network capacity to our customers. As you also will recall, we employ a distinct and very efficient network modernization approach with a fully standardized set of site types, with dynamic spectrum sharing and single site visit for a combined 4G and 5G modernization. And on the underlying modernized 4G, we see up to 100% speed increase, And of course, on 5G, we see the amazing speeds, and we have had a speed record in Sweden of 2.2 gigabits per second last year. Turning on the fixed broadband, we continue our modernized and monetized approach. We successfully leverage the mobile infrastructure to grow our fixed wireless customer base, complementing our fixed broadband digital infrastructure, which we have only very selectively built out further. And beyond connectivity, we keep innovating with partners, especially on energy efficiency. We've launched pilots for energy storage in our network, and for example in Sweden with Polarium, where we're now demonstrating that we can do more than connectivity on this area. And also we have demonstrated last year as first in the world a distinct 5G function for power savings. Let's turn to network softwareization, which is well on track, and we see further improved performance and stability on this. We've already migrated 80% of our packet core workloads to virtualized cloud environments, and we will complete the full migration in the first half. On the transfer side, we are breaking the traffic-induced cost, where we progressively upgrade our high-scale architecture, separating the service nodes from the transfer pipes, and utilize the very modernity hardware. And we are a proud innovation leader in one of the world's most digitized regions. For example, we were first to launch the 5G standalone functionality here, which brings lower latency, network slicing capabilities, which are especially demanded by our enterprise customers. On the back of the modernization, and that's also what we showed last year, we are on track with the legacy takeout, which is super important to reduce complexity and to also improve the service quality. As you can see, we continue to retire our copper infrastructure as planned. Now, we are at 70% completion in Sweden, and we have even pre-poned the full closure of our copper network in Finland to 2024. We realize substantial benefits, for example, the reduction of the subcontractors due to the reduced number of copper faults that we see. On the 3G, we monitor the progress on the out here. And we have already completed the shutdown of our 3G network completely in Norway, as we communicated earlier. All our markets will be completed latest by 2023. And with the modernized network architecture in place, we are also able to drive out legacy network nodes. And we have completed more than half of our journey here, as you can see on the right-hand side. Turning to the next promise, we had delivered here on our promise on crystallizing value from our digital infrastructure through onboarding of strong and strategic partners. In June last year, to recall, we have completed the divestment of Telia Carrier to Polam for an enterprise value of 9.5 billion SEC. And on the tower side, executing our strategy, we have created a pan-nordic tower platform with our partners Brookfield and Electa, the total enterprise value of 2.6 billion euros. Initially, we had closed the sale of 49% of towers in Norway and Finland for 7.9 billion SEK, and as communicated last night and mentioned by Alison, we extended our partnership and also covered now Sweden with the sale of 49% of our towers there for a total of 5.5 billion SEK. Our tower platform now allows us to accelerate funding digital infrastructure investments and brings further scale and operation excellence, but at the same time retain control and ownership of this critical infrastructure. And going forward, we seek to add further assets both in the current three Nordic markets and also beyond. So now let's look at our third strategic pillar, transforming to digital. There we have embarked on arguably one of the industry's most ambitious digital transformations, and we can confidently say that he has laid a solid foundation to reinvent a better Telia. Our transformation spans all markets, all functions, is embedded in our operating and financial plans, and is borne by all our 20,000 people. We've decided on our digital target blueprints, starting with the customer experience principles and going all the way to a detailed IT architecture. We have enabled our organization to execute along what we call the Telia way of working, cross-functional and agile, fully transparent, and focused on tangible increments of customer experience and business value. We are now running a portfolio of several hundred concurrent transformation initiatives rolling up to a single transformation cockpit, which allows us to identify deviations and to intervene immediately whenever needed. We've delivered on a number of foundational digital building blocks, which generate immediate value, some of which I will highlight in the next few minutes. And all this supports tele-transformation to provide a digital native, omnichannel experience in each of our markets. Fully empowered local sales and service teams, which are digitally enabled by one common integrated delivery foundation, which provides the best product, processes, platforms, people, and partners at scale. So let's look at products and processes, the first two of our five P's. to begin with. We are on track to simplify and scale our products, from bespoke solutions to common platforms with high reusability across Telia. Last year, we had started with about 1,200 product installations across the group, and we had committed to retire 50%. To date, we have successfully retired the first 20% of our legacy portfolio, a crucial precondition to retire underlying platforms and to realize efficiencies. Our lean target portfolio consists of about only 100 products and is built to scale to maximize reuse efficiency and time to market. Today, we were able to increase the reuse factor of our product portfolio in the group to 46%. We have launched a group-wide operations excellence program for continuous improvement of our customer experience through systematic removal of the underlying root causes, and with this, We've been able to reduce the number of CVA incidents, which are most custom impacting, by 10%. And this is only the start. They're transforming our processes from complex and broken to simplified, digitized, and automated along customer and back office journeys. They've completed the first round of core process re-engineering, uplifting efficiency, quality, and throughput. For example, through this work, we expect to halve the lead to order time in Finland and the fiber order to activate time in Sweden in the B2B segments. And of course, this extends then also to the B2C. We have successfully deployed key IT enablers for process harmonization. For example, we scaled our common service catalog across markets with a 90% reuse of the solution, 45% cost reduction, and 30% faster time to market. So the scaling of our common products and platforms really works. With our center of excellence for robotic automation, we have achieved an increase of intelligent automation across Telia by 35%, realizing hundreds of thousands of working hours saved. Now let's turn to platforms, people, and partner. On the platform side, we simplify and reuse, transforming from a complex and quite complex legacy to a much more modular, scalable, and future-proof architecture. Starting again with the legacy, we have successfully retired 20% of all our legacy platforms, enabled by having standardized on a few target products, as mentioned before, and by successfully also migrating over to customers, delivering tangible cost savings already in 2021. As with our products, we are also scaling our target platforms group-wide for maximum reuse efficiency and time to market. In 2021, we have increased the share of common platforms to 15% also, We execute our fit-for-purpose cloud strategy with an on-premise and public cloud. So on the public cloud, we have increased the share of use to 50%. And we drive standardization of our IT, where we are working closely also with the TM Forum, and we have implemented the first 15% of the TM Forum's standard APIs, which make it much easier to connect also partner products. We've introduced digital native platforms to unlock business value, as mentioned by Alison before. And for example, our state-of-the-art AWS analytics stack allows us now to deploy intelligent customer value management to drive conversions and upselling. And this was outlined in our strategy pillar one by Alison earlier. Focusing on simplified product processes and platforms now allows us to focus our people on the key target domains, such as user experience, analytics, and cloud, and to transform to a cross-functional and digital-enabled workforce. We have scaled our execution excellence. Now 70% of our capacity is delivered through safe and agile methodology, supported by training, agile coaching, and state-of-the-art tools. This has tangibly and dramatically increased our delivery efficiency, We have reversed the brain drain to build critical competencies, and we realized efficiencies by a combined insourcing and nearshoring initiative, which is going to be continuing also going forward. We have scaled our nearshoring location in Vilnius by further 20%, and as the number one large employer of choice in Lithuania, we realized significant cost advantages to the group. We transformed to a digital native workforce, 75% of our product and technology talent now are active learners. 25% of all Telia employees actively use online dashboards for their daily work. And the usage of online real-time data analytics has increased by 30%. So we are clearly on a good way there as well. And finally, we have refocused on few but highly strategic partners with whom we share a common vision and success. We have already reduced the number of key system integrators from 28 to 11, and we are on track for the full cutover to our target four by the end of this year. And this will lead to a substantial 750 million set cross cost saving over the next five years, part of which is being reinvested into our transformation. Also, we have closed key partnerships for each of our core domains, which we had communicated separately earlier. And the most recent strategic partnership I'm very happy to announce today is with Celonis, the global leader in execution management and the creator of process mining. Together with Celonis, we'll deploy an X-ray through our processes to accelerate simplification, digitization, automation, and analytics augmentation. This effort will increase efficiency and deliver better experiences to our customers. So let me hand over to PC, who will update on Pillar 4, Delivering Sustainably.

Thank you, Rainer. Delivering Sustainably is all about creating value for all our stakeholders and create an execution muscle that allows us to deliver consistently and sustainably over time. This includes clarity on our purpose, strategy and transformation agenda, breaking this down into concrete operational plans with targets, KPIs, and initiatives, including our cost and investment agenda. Continuously strengthening our leadership and secure, motivated, and engaged employees. A comprehensive and integrated sustainability agenda. And finally, a solid and clear financial framework with clear ambitions, a strong balance sheet, and predictable and sustainable shareholder remunerations. Let me give you a quick update on how we are progressing on a few of these topics. Let me start with our efficiency and cost agenda. A year ago, we said that our total transformation of Telia, in addition to support our commercial agenda, would deliver a net cost reduction of $2 billion by 2023 and $4 billion by 2025. Through a comprehensive simplification and digitalization of our business, we would enable significant reduction in our resource costs, our sales and marketing costs, and other operating costs, including IT. So where are we today? Our OpEx reduction target of 2 billion by 23 and 4 billion by 25 remain. We realized 0.3 billion reduction in 21 despite significant headwinds. Through process improvement, process automation, legacy dismantling, product and system modernization, and digitalization of our customer interaction that Alison and Rainer have talked about, we have managed to reduce the number of resources by more than 1,000 in 2021. This, together with increased use of nearshoring, has offset annual salary inflation and reduced the total resource cost by $0.2 billion. IT cost has reduced almost $0.4 billion, driven by the system and vendor consolidation initiatives that Rainer has talked about. other costs having total reduced 0.2 billion from a broad set of initiatives. Total sales and marketing costs are quite stable in 2021, but key initiatives are being implemented in many markets to reduce dependency on expensive third-party channels, increase share of digital interactions, consolidate our media spend, move towards more targeted customer communication, and increase use of analytics to improve ROI on our marketing spend. Headwinds in 2021 that we didn't expect at this level a year ago are the mentioned increase in energy cost of 0.2 billion, increased cloud-related cost due to the accounting change, which is neutral on cash flow of 0.1 billion, and the temporary investment into Sweden customer care of 0.1 billion. The main driver of the energy cost increase end of 2021. Going forward, we assume that the energy prices will normalize somewhat. In addition, we are mitigating the pressure on energy costs by actively dismantling our copper-based legacy infrastructure, modernizing our mobile network with more energy-efficient software and hardware to take down energy consumption, and embarking on more advanced energy-saving solutions that Ryan had just talked about. And please note that part of the and co-location, where the cost is passed on to our customers and is neutral on EBITDA. Net cost reductions are expected to increase somewhat in 2022 and more in 2023, driven by slightly bigger impacts from our total transformation program, combined with less expected pressure from the mentioned headwinds. And we are continuously working to strengthen our transformation portfolio to offset these headwinds. All in all, we are on track towards a 2 billion OPEX reduction by 2023 and 4 billion by 2025. Over to CapEx. Last year, we announced a significant investment program to modernize our mobile networks, dismantle our legacy infrastructure, and to transform Telia to a much more digital company. In parallel, we launched a CapEx efficiency program to mitigate the pressure from the increased investments on our cash flow generation by reducing our investment of $1 billion per year by 2023. All in all, leading to a higher CapEx level in 2021 and 2022 before returning to 15% on net sales in 2023. As Rainer has taken us through, our investment agenda is very much on track. We ended, as we have seen, with a cash cashback in 21 at $14.4 billion, or 16.3% of net sales. This is slightly lower than the guidance, driven by the mentioned cloud accounting change, with an impact of $0.3 billion. CapEx is at the lower end of the outlook, driven by higher and earlier savings from our sourcing initiatives, the standardization and consolidation, and improved CapEx planning and prioritization. CapEx is expected to be on a similar level in 2022 before coming down to 15% of net sales in 2023. Moving to cash flow, last year we said that we would generate sufficient cash flow in 2021 to at least cover the $8.2 billion minimum dividend commitment. And from 2022 onwards, that the dividend commitment should be covered by the structural part of our cash flows. As you have seen, cash flow ended at $10.4 billion in 2021, well above the minimum dividend commitment of $8.2 billion. Contribution from working capital ended slightly higher than expected, driven by higher impact for our vendor financing program. The structure part of our cash flow came in as planned at $7.4 billion. From 2022 onwards, The structural cash flow is expected to increase to at least cover the minimum dividend commitment driven by the growth on EBITDA, and from 2023, also the reduced capex. Positive contributions are still expected from working capital going forward, but as earlier communicated, this is expected to gradually come down. And finally, a quick update on our integrated sustainability agenda. Sustainability is the core of what we do as we reinvent Better Connected Living. It's about creating and adding value to our customer and society as a whole, as well as protecting value and company assets. That's why we have integrated sustainability fully into our business strategy with content across our core strategic pillars. We have selected three impact areas that reflect our core business. Climate and circularity, digital inclusion, privacy and security. And these are the areas where we dedicate most of our attention and resources. In mid-March, when we publish our annual and sustainability report, you will receive a full update on the progress related to our sustainability goals. Here, I'd like to just highlight a few selected examples. On climate and circularity, we are making good progress towards our goals. We are today climate neutral within our own operations. Most CO2 emissions are generated in our supply chain. Hence, we are pushing our suppliers to adopt science-based targets, just like we have done, to secure that they have ambitious goals and action plans. And by the end of 2021, suppliers representing 27% of our supply chain emissions have set such goals. And our target for 2025 is to reach 72%. We are driving digital inclusion in our markets through significant investments in networks of the future, committed to improve access to high quality and reliable connectivity for all. It is equally important to secure that users, especially the vulnerable groups, are equipped with the right digital skills. And last year, Telia's digital skills initiative reached over 600,000 individuals, mostly seniors, children, and SMEs. And this makes us well on track to reach the 1 million individuals by 2025. Needless to say, privacy and security must be at the core of everything we do to constantly earn the trust from the customers that we serve. On privacy, we track our customers' views in this regard and aim for a top-tier position in all our markets. Last year, consumers in five out of six markets ranked us either one or two when we asked them via our regular consumer survey. On security, we see that B2B and public customers put increasing requirements on us, and rightly so, since security risks are increasing. As Alison has mentioned, last year we won several key contracts with elevated security requirements. We need to keep and develop this strong position by being proactive and responsive to existing and emerging trends. And with that, I'd like to hand back to you, Alison, to summarize and conclude this presentation.

Thanks, PC. So moving to our outlook, our ambitions for the 2021 to 2023 period are unchanged. For 2022, we're targeting low single-digit growth in service revenues as well as in EBITDA. And let me unpick that into the various components. Our core telco business is expected to grow, as we saw in the fourth quarter, EBITDA at low to mid-single digits. while our fast-growing TV and media business will continue to invest and absorb the full-year cost of Champions League in 2022 and have an extended set of high-quality drama options, which is why we expect that TV and media's EBITDA contribution will decline in the coming year, basically to fuel the digital transformation of that business to make it a more valuable business in the future with the right mix of cash generation and growth. CapEx, hopefully, to 15 billion, which is in line with last year, and as you can see, we've actually lowered the CapEx guidance range by half a billion. Next, on shareholder remuneration, I'm happy that we, on the back of a strong balance sheet, can propose a dividend growth of 2.5% in line with the ambition of our policy, which is one of the sector's most committed and shareholder-friendly. In addition, as per last night, we foresee that we'll continue to operate in the lower part of our debt target range, and our board therefore and it is the full net proceeds that we'll be distributing. So to summarise, the first year of our new strategy, we are delivering on our plan. We've returned to service revenue and EBITDA growth the first time since 2014. Mobile subscription service revenue growth is accelerating and really accelerated towards the end of the year. Our biggest market, Sweden, is now an inflection point, having returned to both revenue and EBITDA. build upon. TV and media also returned to growth, driven to an increasing extent by digital advertising and Seymour. We've secured our network leadership and are on track in the build-out of next-generation networks. We've laid the foundations for a sustainable digital transformation of the whole company. We're crystallising infrastructure value and in the midst of creating a pan-Nordic tower platform with an enterprise value of 2.6 billion euros. We've established an ambitious ESG agenda aligned with our strategy and are seeing strong progress. Our balance sheet is de-levered to the lower end of our target range through the carrier and tower transactions, and we're proposing the ordinary dividend to grow by 2.5% in line with our policy and planning for extraordinary shareholder remuneration after closing of the Swedish tower transaction. So with one year of our strategy under our belt, I remain absolutely confident in our ambitions and our plans to return Telia to consistent, sustainable growth that will ultimately benefit our customers, our employees, and most importantly, our owners and the societies we serve in the months and years to come. So after almost an hour, you deserve to ask a few questions. And so I'll hand back to the operator to start the Q&A session.

Thank you. As a reminder, if you want to ask a question, press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, to ask a question, please press star and one on your telephone keypad. Your first question comes from the line of Maurice Patrick. Please ask your question.

Yeah, morning, guys. And thanks for the session this morning and the opportunity to ask questions. If I could ask, I guess, being first, maybe just a boy who are on towers. So you've announced a second tower deal, this time Sweden Towers. I mean, you'd indicated, I think, at the previous quarter that that was a likely one. Can you just remind us of the extent of the infrastructure you have on towers? I think you talked about 21,000 towers and rooftops beforehand. I mean, is it still your ambition to monetize further towers and rooftops beforehand? Is there anything holding you back on rooftops? Do you have the MSAs in place to do that? Are you going to put them all inside tele-asset management? Just general thoughts around what's next in terms of that priority. Thank you.

Yes, clearly, thanks for the question, Maurice, and I hope you're well. Clearly, we're delighted at the tower platform that we are building up. And, you know, with an enterprise value of really 2.6 billion and working with partners such as Brookfield to bring unique operational and commercial experience, owning and operating one of the biggest footprints in the world of towers, we are clearly going to be looking at what else can we do. So I think what we said this morning is the Norway, Finland, Swedish towers amount to just over 8,000. It's predominantly just concrete and steel so far, with a few shelters in Sweden. What it doesn't include yet is similar types of assets in the Baltics or in Denmark, but clearly Denmark is part of a JVE. And then the rooftops, we've always said our rooftops were somewhere between two and three times the concrete and steel. And we will continue to look at what we can put into this great new platform. One of the reasons we chose Brookfield as a partner, not just for their valuation premium, but also because of their experience in markets such as Asia, where there's many, many rooftops, they can bring the experience of How do you transfer some of these non-concrete and steel assets into a tower platform? And certainly we'll be working with them on how best to do that. And you're right, it is more complex because you've got to you know, the towers, the rooftops sit on property that we don't own and therefore you have to look at the lease implications of some of those bits of equipment. But it's our intention to keep building this. And by keeping control, it also allows us to ensure that our operations, our, you know, retail operations, leadership position and take advantage of next generation technologies and developments that will happen in the coming years, whether it be 5G or 6G and beyond.

Great. Thank you for that.

And while the market values these towers so attractively, I think it's great news for our shareholders as well as for Telia's owners as we bring in these. You always said to me, Maurice, don't do a deal unless it's going to make it better for Telia as well. And I do believe Brookfield and the long-term view that Electa has makes it better for Telia in totality as well as the short-term crystallization of values.

Right, thank you. Your next question comes from the line of Stefan Goffen. Please ask your question.

Yes, hello. I could follow up on the previous question because you mentioned there are other infrastructure assets within these markets and also in the other markets. Are you basically talking about the rooftops or are you talking about other infrastructure assets like data centers, etc.? What other type of business are we talking about?

We've very much focused on towers so far, Stefan. Of course, we have other assets as well. But, you know, we are focusing on towers at the moment because that's where Brookfield brings particular benefits to us. And clearly, you know, we've got to get the Sweden transaction closed before we start going to the next ones as well. But, you know, we are always looking at how do we create the most value for our short shareholders out of our asset base. And I don't know whether you read in the reports, over the course of the last year, we've sold off non-core assets to the tune of half a billion kroner that weren't generating any EBITDA. So, of course, we will continue to really look at how we focus the portfolio on the assets that are core to Telia going forward. And if there continues to be assets that create value by bringing in some crystallized value by bringing in partners, we'll look at it. But Towers is our priority at the moment. Data centres will come later unless we see some specific opportunity at some point in time, Stefan.

Thank you.

Thank you. Next question comes from the line of Andrej Kabetsek. Please ask your question.

uh hi everyone uh thank you for the comprehensive presentation this morning uh i actually also have a follow-up if i may so when you started uh you know looking at looking at uh potential value crystallization you mentioned that powers uh internally were an overlooked asset uh and and so just to understand how much now that you're bringing in these strategic partners obviously you're selling kind of minority stakes it's kind of the best of both worlds because you're keeping control yet beeping um synergies and efficiencies that the strategic partners bring. So is there an internal idea in terms of how much of any kind of minority dividend leakage this efficiency from strategic partners is likely to kind of cover over time? And then second, Paul, if I may, in terms of you mentioned, you know, a pan-Nordic footprint that you have, and there's clearly you know one potential pan-nordic also partner that is also looking at crystallizing value so are there any ambitions to kind of form um given what's going elsewhere in the continent a a larger uh kind of platform with with uh a potential uh partner over the nordics and and are there any you know regulatory limitations for example that we should be aware of when thinking about this thank you

is only 200 to 300 million a year of these towers. So very, very low and very immaterial relative to the cash flow of our total business. In terms of the Pan Nordic footprint, we are today just focused on the partnerships that we've announced. Clearly as things develop and we see consolidation opportunities, got to consider the regulatory implications as well. So some markets will clearly be easier than others. But for now, we're very happy with the platform we're building with Brookfield and Letta.

Thank you very much.

And your next question comes from the line of Peter Kurt Nielsen. Please ask your question.

Thank you very much, Monika, and thank you for the strategy update, please, and well done. Alison, I'd like a question related to Sweden, please. Returning to Unicef Commons Sweden, returning to growth, which is, of course, positive and important in both mobile and in the fixed part of it. The positive trends in TV and broadband, you indicated that this is to a high degree driven by the inclusion of the premium sport content. There may, of course, be some one-time impact in the first quarter as you gain these rights, but has what you've seen to date strengthened your belief in management and the board that you will be able to monetize on these exclusive rights which you're investing in going forward and with a positive impact on your access business and the telco business as well? Any comments here would be appreciated. And if I may ask one follow-up, And so the key part of your strategy has been for the past year to invest for network leadership. This is obviously a multi-year project. When do you think, and we know it takes a bit of time for this to be reflected in the market, when do you think you'll start to see the initial benefits from these investments in terms of a more positive market perception of Talia's leadership in the market and actually monetizing on that? That would be appreciated. Thank you.

Thank you, Peter. And thanks for the question. It's good to talk about the business again and not just towers. So, yeah, it's delighted with the return to growth in Sweden. And I think, you know, it's not just driven by our investment in premium sports. You know, you look at the positive development we saw, you know, mobile ARCU's up 3%, you know, Fiverr up 8%, and clearly strong IPTV development. And that, yes, premium sports has an impact. But we've only had Champions League for three months, and it's the full range of content that we're able to offer on our platforms that is the driver of the strength in our IPTV business, which clearly Champions League attracts new people. and it's got good attachment rates to broadband within it, but it's not just that one right that's driving the strength of the business. It's multiple things, which includes the investment in our network. We are leading the others with the 5G development and the 4G modernization, and us sustaining that premium perception is absolutely critical to us continuing to sustain a premium perception versus others in the market. We have sustained and even grown a bit of our premium in the market, and we have absolutely every intention to do that this coming year as we continue to invest in our networks. So is it reflecting? I think it is. The fact that we have returned our enterprise business to growth, we are securing strategic contracts with key government agencies, key municipalities, key enterprise businesses beyond just connectivity, but into new use cases with 5G and IoT as well. I think that is all a reflection of how we are perceived and is allowing us to take the lead on pricing in mobile, in fixed, which we clearly will continue to do in 2022 to offset some of the pressure from inflation and really build that leadership position. In terms of is my belief in the investment in content strengthening further, it's still early days. I am happy with the edge that it is bringing to our converged position. But as I said, it's not just about Champions League. It's about the full range. And in a world where consumers are being and households are being bombarded by more and more streaming apps, our role is to be the best aggregator of all of the content you might want to choose from. And premium sports is one aspect, and it drives brand consideration and that perception of premium that helps us drive ARPU on the back of. But honestly, it's one of many aspects of our TV strategy and our connectivity and convergence strategy. And when Rhino's digital transformation really kicks in, it's about giving that platform that allows easy access to everything you want and a customer can then pick and choose going forward. Does that answer your question?

It does. Thank you very much for the call.

And as I said, it's all about driving customer lifetime value. And Champions League just brings something attractive to drive consideration of Serie A at this point in time.

Right, thank you.

Your next question comes from the line of Kevo Kiroia. Please ask your question.

Thank you for taking the question and for the update as well. Can you update us on the Finnish turnaround in a bit more detail and how much of the strategic repositioning has been done so far? And I guess I'm trying to really work out when we should think about the mobile service revenue and EBITDA return to growth in Finland. Thank you.

Yeah, so as we said, the turnaround would take into the second half of 2022 before you would see the real material impact. But what we are happy with so far is it is starting to deliver in line with our expectations. The The shift from third-party retail into our own channels is developing positively. We've seen quite a rapid shift into digital channels. It is starting to improve both our food development, convergence opportunity, but also it allows us a lower cost to serve as well. and what you're seeing with now an increasing base on 5G, we've started to halt the decline in ARPU, and actually in consumer ARPU, we started to see a positive development during the quarter. That value-focused turnaround does mean that we're stepping away from some low ARPU customers, so our subscriber base might be low for a bit, but definitely that migration from 4G to 5G, that removal of going after volume at any cost is showing positive development, as is the shift away from third-party retail into digital. In the enterprise space, we clearly had some headwinds in the fourth quarter from Q4 2020, when we had a very strong fixed service IT business line solutions quarter that, as I mentioned, was impacted by supply chain benefits at this time. That turns into a tailwind next year as well. We've also got roaming coming back. And our strategy is very much, you know, we should be able to grow in line with Alisa. And that is our plan. And you'll see the benefits in the second half of the year. In terms of the strategic repositioning of the brand, well, certainly 5G is helping. We've just won, our network scored very highly in a recent Tutela network survey of international 5G networks. And our network, the Finnish networks came out as one of the best in the world. And Telia was the best in Finland. So that helps change the brand perception. And we start to change the brand positioning in totality. I think actually as of today and in the last month, we actually purplified Seymour so that Seymour becomes a much stronger association with the Telia brand, which we're also seeing is helping change brand considerations and reduce churn and really starting to get a younger generation to start to be attracted to the telebrand again.

Okay, thank you.

And your next question comes from the line of Titus Bishop.

Good morning, everyone, and thank you very much for the presentation and for taking my question after two topics to touch on, if I may. The first one is on the energy cost impact. It seems like you split out a headwind of 200 seconds, a million seconds for the full year, so equivalent to about 1% of the data. Could you maybe provide some more color on the expected impact on 2022? And to what extent are you actually hedged, and to what extent were you hedged in 2021? And the second topic may be on the TV and media segment, just because you were very helpful in splitting out the e-data trends compared to the podcast with it. What would you expect at the top line for the segment, given that there's an increase in the subscriber base for 2022?

I'll take the first one, and then you can take the second one. So on the energy cost, we have a bit more than a billion a year in total energy costs. We have a hedging policy where we have a sort of a rolling hedge The first quarter is 70%, and then it gradually goes down. So as of today, we have hedged around an average 50% of the consumption in 2022, and then some in 2023 and some in 2024. So that is a hedging policy that we've had for some time. The increase that we see in 2021, and then in particular in the end of 2021, is mainly price-related. Because even if we're hedging 70%, there has been quite an extreme development on the spot prices in most of our markets during the Q4 in particular. So that is the main driver for the total increase in 2021. If we then take the view into next year, of course, we don't know, but we assume that the energy prices will normalize going forward. And if they do, there will be some flow over because we are now hedging on slightly higher levels into next year. We will of course also mitigate that, as I mentioned in the presentation, when it comes to consumption piece. I'm not going to repeat that, but we have a pretty solid set of initiatives that will mitigate some of the inflationary pressure by taking down consumption. So all in all, if we look at next year, our view at the moment is that we expect to see 100 to 200 million increase on top of the increase that we have seen this year, mainly driven then by the price effects that we've already seen.

And on TV media, yeah, we wanted to be much more explicit on the EBITDA and TV media because clearly That has been something that we've always been up against these last two years in getting consensus in the right place. Regarding revenue guidance, we weren't planning to give revenue guidance on the segment, but you should clearly expect it would be at least mid-single digits in the TV media segment.

Thank you very much.

And your next question comes from the line of Ulrich Ratte. Please ask your question.

Yeah, thank you very much. I wanted to return to the towers. Sorry about that. So the... Everybody loves towers as much as I do. Yes. First of all, there's a couple of sub-questions there. The first one is, Alison, I think in the at the very start of this project, you were slightly more hesitant to consider tower sales in those markets where TDA is a leading player. What changed your view? Is it the valuation simply too good to be true? Or is it that you are managing to structure these deals in ways that protect your interests better? Or what is it that really changed your view? Then the second question is, you talked about the dividend leakage. Can I first clarify the 200 to 300? Is that incremental from yesterday's deal or is that the total? And also, is there a difference between the free cash flow ownership of the partners and the divvy? Is it essentially 100% free cash flow payouts and that's a leakage or is that sort of a bigger value leakage? Because all these announcements focus very much on the proceeds and say very, very little about what you have handed over. And then the last sub-question here is how do you treat that dividend leakage in your free cash flow definitions operational and total free cash flow definitions and are you intending to change that and if I may just chuck in one other on the B2B revenue inflection I mean it's probably fair to assume there is a bit of a tailwind here from roaming recovery or at least roaming normalization in there so in other words is there a chance that the B2B revenue inflection which is really big news for Celia I think is really sustainable. You have commented on total service revenues that you expect sort of growth except for the odd quarter, but would you say the same thing about B2B? Thank you.

Okay, thank you, Ulrich. Lots of comprehensive questions there. So I'll get PC to handle the questions around towers and dividend leakage. But first of all, yeah, you're right. I was a bit more hesitant in the beginning on towers, but as we went through particularly the Norwegian-Finnish process, And I realized I could retain majority ownership. I could structure, first of all, get fantastic valuations, higher than we expected, and structure service agreements that are no worse than our retail operations had today in Telia, with it being an internal company. So we can protect our interests. we can keep control, and we can get operational and commercial benefits because it's not just a financial player that we're partnering with. It's actually a financial player combined with a Brookfield that really know how to run these businesses in a smart way. Then it was a win-win and actually much better than I was expecting. And that's why soon after striking the Norwegian-Finnish deal, we immediately went in to a discussion with Brookfield Electo in Sweden and delighted with the announcement that we made last night. Why don't I take B2B revenues and then I'll go to PC on all of your dividend questions. B2B revenue, listen, there is no international business travel recovery in our numbers. And so that trend shift is not from any shift in roaming. where we did see some pickup and roaming in the quarter was in the consumer business, but it was small. And if you look over the course of 2021, we actually, we had less roaming than we had in 2020. So any recovery in business travel is all upside to our existing trends. And so that, I view, is very positive. A lot of the big contracts that we have secured during the course of 2021 will start to kick in during 2022. They were in our numbers. And as I've announced, you know, a lot of those new deals, Region Skåne being one of them, takes us in to new services, some of them IOT related as they want to more and more use monitoring to be able to manage their asset base and where they're located at any point in time. So no, I don't see anything that says that the B2B revenue shift shouldn't continue into next year. And as I said, I don't know whether you picked up, if you just To rip out the TV media trends from the fourth quarter, we just need to achieve what we achieved in the fourth quarter in our core telco business and achieve our guidance for the whole year of 2022 in terms of top and bottom line development.

Yes, so on your more specific questions around dividend or cash flow leakage, First of all, we will continue to consolidate so there will be no changes in all the numbers that we then report and more from an operational point of view. So those will remain unchanged. Then, of course, there will be some leakage to the minority shareholders. And then if that is combined from the Swedish, Finnish and Norwegian tariffs total, we see a leakage of two to three hundred million. That will be under the line item financing activities and, of course, then a part of the free cash flow in totality. But it's quite insignificant in the big scheme of things, and it doesn't change any, let's say, framework or outlook in terms of dividend cover and the likes.

Did that answer your question, Louis?

That's very comprehensive. Thank you very much. Can I just clarify that? Is that dividend leakage, is that essentially the free cash flow or does Brookfields and Lecter retain sort of an accruing share value, if you will, or is that 200 to 300 essentially full payout of the free cash flow they actually own as owning 49%?

That would be payout. The 200 to 300 in absolute, yes.

Perfect. Thank you so much. Thank you.

And your next question comes from the line of Frances Cashield. Please ask your question.

Hello, and thank you for taking the question. So I've got one question on convergence, please. You highlight the fall in churn from convergence bundling and also from selling additional services. My question is, how much of that is real as opposed to self-selection of customers? Thank you.

That is real. You know, we are monitoring all of the time What is the churn of a single versus double versus triple play customer? And so the data points that we shared in our presentation have actually been monitored over time in our Swedish, our Finnish, and our Norwegian business. You broke up a bit, Francesca. I hope that answered your question. So it's not just selective customer groups. We're studying that the whole time.

Yeah, thank you. Yes, thank you.

Morning, everybody.

It was a couple, please, if that's okay. Just back to Peter's question, Alison, on your confidence on price rises in Sweden. Could you just tell us how the price rises have been received? Because the Sub numbers seem like a bit of a wobble. I mean, I know you've got a loss of a contract on the mobile side with about 20,000 subs, but still your subs are down underlying XM2M in postpaid, and the broadband subs seem pretty flat. So has that been well received, or is there a bit of an issue on churn there? And on the second one, just a really basic one, what are you thinking about, or what's the board taking into consideration when it compares a special divvy versus the buyback for the Brookfield proceeds, please? Thanks.

Okay. So the price rises have, you know, clearly we've taken, you know, quite aggressive pricing in some of our legacy revenues over the years, fixed telephony and DSL. And, you know, we're always balancing how much revenue uplift you get versus the churn you lose. But outside of those pricings, we've not, pricing moves, we've not seen really any impact on churn. The subs, we don't see it as a wobble. You know, there was two reasons for it. One is the loss of a large public sector customer that one of our peers, you know, offered crazy low prices for, so they're moving away. And then the other one was the mobile broadband, because what you're seeing in some of the more rural areas or second homes, people are either moving to fixed wireless access or they're moving to fibre alternatives. So nothing that makes us concerned. And in terms of our broadband customer base, DSL customers are reducing, but we're doing very well from a fibre point of view. And in fact, our total fixed broadband customer base grew in the quarter despite the DSL losses. So not worried about subscriber base at all. And then in terms of the board and how they're looking at special dividend versus buyback, very open-minded at the moment. We want to use the period between now and closing to consult to all of our shareholders and work out which one is the most attractive to the shareholder base that we have. So no opinion at this point in time.

And presumably they're thinking about divvy covered as well. I mean, that's got to be quite a big consideration given where you start off, hasn't it?

Absolutely. Our leverage is in, you know, our balance sheet is in a very strong position. And we have said that our ordinary dividend will be covered by structural cash flow in 2022. So we're in good shape.

That's great. Thanks very much.

Thanks. Another reminder to ask a question, please press star and 1 on your telephone keypad. Your next question comes from the line of Adam Fox-Rambley. Please ask your question.

Thank you very much for the presentations. I had a couple of very quick questions, I hope. Firstly, on the inflation, you make some comments in your prepared remarks, Alison, that I don't think that it's not going to fare any longer to not pass some of that inflation on, it sounded like. I was wondering if there's any opportunity in Sweden in particular to link inflation within customer contracts, as we've seen elsewhere. Secondly, on CapEx, it was quite a lot higher in Q4, as is typical. But I wondered whether or not that reflects the fact you kind of ramped up to a particular higher pace of that CapEx. And so actually we might see the inverse during the course of the year and it fades down to a lower level as we exit the year. And then finally, a quick question on your comment around customer value management. I think there was a sentence in the presentation where you're talking about it being deployed via AWS. I wasn't quite clear what was owned by Telia there. Is it Telia IP that is using the AWS platform or are you outsourcing part of that to a third party? Thank you very much.

Great, thanks for the questions, Adam, and that gives us the opportunity for all three of us to talk. So on the inflation question I'll take, then PC will take CapEx and Reiner will take Customer Value Management and AWS. We do have inflationary linked contracts in aspects of our B2B business in Norwex. And we are actually looking at whether we can extend that beyond Norway into Sweden and all of our markets at this point in time, actually. But normally our inflationary pricing comes through price adjustment, migrating customers up to new tariffs. But certainly in a world where inflation is, you know, 3% and above, for the foreseeable period, then we will clearly be doing everything we possibly can. And so it will be a mix of, you know, what we've done in Norway and getting that into contracts going forward. And then just, you know, the ongoing pushing customers up on the back of premium networks, premium service, and premium Converge services, and that's what you're seeing in Estonia. You know, we don't have any contracts that drive that ARPU development in Estonia, but they're doing a fantastic job there. But certainly we're now looking to learn from what we've done in Norway and take that further, and we would definitely be looking to do that in Sweden. On CAPEX, please.

Yeah, so the high CAPEX in Q4 was very much expected, and also what we've been guiding on earlier in the year that we expected this, and And there are two main drivers that hits us in the same quarter. One is we have an underlying high activity level in the quarter, higher than before, plus that we get some effects from earlier high activity levels. We have the random financing program that kind of delays some of this pain. And these are both hitting us in the fourth quarter. The 5 billion staying on a quarterly basis as our guidance is in the range of 14 to 15 billion for next year. So I don't know if that answers your questions on the CapEx.

So if I comment on the customer value management, great question and I touched upon it only very briefly when I was saying that we have actually reviewed the core competencies, the strategic CBM is clearly one of them. So rather than outsourcing, which of course some people might do, we do the opposite. We have built a team of analytics and CBM talent. We are now north of 300 people running the analytics and the CBM. And we've actually focused last year significantly turning a bit the focus from the acquisition to the in-base management and in-base monetization. with AWS extremely close. We are seeing what we call analytics foundation, which we have built and rolled out, which is a hybrid on-prem and public cloud setup, which secures that we can treat equally some of the very sensitive customers that Alison mentioned, as well as we can leverage for those data points where we can go to the public cloud, also the power of the cloud. All of this is managed by ourselves. But we are basically seeing a standardized setup, which we then can plug into those use cases. And the CVM for the in-base monetization for the term reduction is just, of course, one of the use cases, but we are focused on this specifically in 2021. So the answer is no outsourcing, rather the opposite, insourcing, building the competence analytics and driving it into a cross-channel, much more personal, you know, MarTech operation, if that helps.

Yeah, really interesting. Thank you, Wolf.

Your next question comes from the line of Stefan Groffen.

Yes, hello. I would like to follow up a little bit on the TV and media side. First of all, if you could repeat how much content cost was up year over year in Q4. And then I guess the Champions League rights especially will impact Q1 and Q2. So if you can give some information what we should think about content cost increase in these two quarters. Thank you.

Thank you, Stefan. So the content cost was up half a billion in Q4 versus Q4 2020. The majority of that was premium sports rights, i.e. Champions League, and clearly they were not in Q1 or Q2 last year.

Yes, but could you help us regarding the content costs for Q1 and Q2?

You're wanting us to guide at a very detailed level, but what I'm saying is the full quarterly costs increase in content was half a billion in Q4. And since that wasn't in Q1 and Q2 last year, you'll probably see similar levels in Q1 and Q2.

Okay, great. Thank you.

Obviously, we'll have some revenue development offsetting some of that as well, Stefan. But that is clearly... The phasing of Champions League and premium sports is what is driving the TV media negative EBITDA developments next year. But as I said, it's all about, you know, that was always planned for. And, you know, it is fueling the, you know, good development in Seymour and in our overall TV position in Sweden and Finland, which is then having benefits in convergence. benefits as well in those businesses as well. But once we're through the first half of next year, clearly that stops being a headwind.

Yes, very clear. Thank you.

Thank you. And your next question comes from the line of Ulrich Ratney. Please ask your question.

My goodness, you're getting second questions today.

Yeah, I was trying to be polite and didn't. If you let me on again, I have one bigger question and two clarifications. The first one is on consolidation. I think your colleagues to the West on their Q3 call were commenting on potential test cases brought if the ECJ decision appeal goes against the European Commission. What's your current discussion and view on potential Swedish consolidation and or rerun of the Danish one. My second and then the two clarifications is on working capital. Can you just outline why the sort of bump came in the fourth quarter? Was it an action you took like a factoring deal or was it simply the way the bills came in and they happened to come in the way that they did? And the last One is also clarification in the MSAs. You said you're very happy with the MSAs that you can get from Bookfields and Alexa. Is there an inflation link and can you disclose anything on the inflation link that you have in these MSAs? Thank you.

Okay, I'll take the consolidation question and pass over to PC for the others. So on consolidation issues, Yeah, let's see. I am a fundamental believer that absolutely there needs to be consolidation in Denmark. There's going to be a lot of moving parts in Denmark in the coming years. We sit on some great infrastructure, both in the TTN network, but also in a cyber footprint. And we've got a solid customer base. that's now starting to develop positively again. And we're very much streamlining that operation to be more digital and leaner. And so, you know, we will take advantage of any consolidation opportunities that come along in Denmark. Sweden, you know, I've always been a little bit more skeptical as to the possibility for consolidation in Sweden. because it's a very different market from a Denmark or a UK, because you don't have the MVNOs of any scale that you see in some of these other markets. But I would be positively supportive of any consolidation in Denmark.

And then on the working capital, I mean, first of all, there's no major changes or surprises in the fourth quarter. So what I said was that it was slightly better than what we anticipated. And as you know, the working capital can easily move around a couple of hundred millions both ways. There are no major deals. There are no major things. It's basically a combination of our effect on the total payment terms towards our entire cost base. and then some more effects on our vendor financing program. And there are no new agreements. It's just how much of our spend we actually then put on the existing contracts that we have with our vendors. And then I understood the final question was on the tower side, whether there was an inflation link in the MSA. And yes, there is. But MSA, you know, the starting point is very much the existing, you know, cost structure, cost level. And then there is this auto inflation link in the years to come.

Thank you.

I think one last question. And your final question comes from the line of Abhilash Mohapatra. Please ask your question.

Hi, Abhilash. Hi, good morning and thank you for taking the questions and the presentation. I just wanted to come back, please, Alison, to your comments on the sort of inflation question and the scope to do something on pricing. Just wanted to check, was that a reference to enterprise or do you see scope to maybe nudge up pricing in Swedish consumer mobile, for example? And then just to follow up on that, you've obviously struck a very positive tone on your top-line prospects in the Swedish business and how you've got premium versus your competitors. Just be interested to hear your thoughts on the competitive landscape in Swedish market. in the Swedish market more broadly as well? Please, thank you.

Yeah, clearly, we're seeing inflationary pressures, like every year at the moment. So it's not just enterprise that we'd be looking to take pricing in the next year. It will also be in our consumer business. And because of the investments that we're making into our network, making into our digital platforms, whether that be for the enterprise or consumer segment and investments into content and entertainment, we believe we've got good justification to be able to show our customers that we're giving them more value as we're driving pricing up. So yes, we will be aiming to nudge up mobile fixed in consumer and enterprise pricing next year across our footprint. some new prices for the Halobot brand here in Sweden, where you'll see there is good tactical nudging up of pricing going on on that brand. How is the competitive landscape? It's competitive, and I think we play in all of the segments, so we're able to keep the premium in Telia. and use either Halibop or Fellow to stop ourselves getting into any sort of competitive pressure at the low end of the market, which continues to be very competitive. But no worse than prior quarters. We didn't see anything change dramatically. Actually, there's been nothing really of any dramatic nature over the last few quarters. But that being said, we always have to be on our toes and we always have to be offering more to our customers and doing slightly better than our peers so that we can command and sustain the premiums that we have. And we want to command and sustain those premiums, but we also want to be getting some inflationary uplift on our pricing during the course of this year.

That's very clear. Thank you for the answer.

Thank you. So thank you all. I wish you and we wish you all a good rest of the Friday and looking forward to seeing some of you in person soon now that things are starting to open up. So have a great weekend, everyone, and thank you for listening and your questions.