Telia Company AB (publ)

Thank you for standing by and welcome to the interim report January to March 2022. At this time, all participants are in the 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 1 on your telephone keypad. And to withdraw your question, press the hash key. If you require technical support at any time, please press star 0. I would now like to hand the conference over to your first speaker today, Eric Strand in Perth, please go ahead.

Thank you. Good morning, everyone, and welcome to Telia's Q1 2022 call. I have with me here our president and CEO, Alison Kirkby, and our CFO, Patricia Merland, and my IR colleague, Anders Nilsson, who you all know. We will do a presentation followed by Q&A. We'll try to finish within the hour and I leave the word to you Alison.

Thanks Eric and good morning everyone and we are looking out to a sunny morning in Solna this morning. But first you know I think we should reflect on where we are after two years of COVID and you know back in January when we last spoke to you we we were all looking forward to our return to normal. The war in Ukraine has clearly quickly dampened any hope of a new, more positive normal. And like all of you, I'm deeply saddened by the human suffering in Ukraine and the worrying geopolitical situation we now have in Europe. But to be clear, Telia has no direct exposure to the conflict, but we are working in multiple ways to provide relief and support via both our products and services, as well as via the donations to various humanitarian relief efforts. Connecting refugee centers, offering employment to Ukrainian victims, and using our massive TV reach to host live fundraising events are just a few examples of what we are doing to play our part for Ukraine. And again, proving just how vital we are as a company and as an industry at keeping society connected, informed, and aware in the good times and the bad times. But now, let's move to the purpose of this morning's call, and I'm delighted that we've got the year off to such a strong start. Financial performance is strong, operational performance is strong, and our transformation programme is picking up in momentum. Service revenue growth for the group accelerated to 3.2%, and importantly, it's a broad-based growth with all markets and key segments contributing and Finland reaching stability. Growth is driven by both mobile, up 4.5%, fixed at 1.3%, and advertising up 9.7%. OPEX declined by 3% as a result of our transformation agenda and helped offset inflationary headwinds such as roughly 80 million kroner of higher energy costs in the quarter. If you look at EBITDA, core telco grew 4.6% as we were able to flow the strong service revenue momentum and the OPEX benefits down to the bottom line. However, for the full group, including our TV and media unit, EBITDA growth was, as expected, muted as we now carry the full cost of Champions League, for example. Cash flow of 2.2 billion kroner was lower than last year's Q1 when we had a very high contribution from working capital and our balance sheet remains very strong. I'm therefore very pleased that the Board has decided on a 5.4 billion kroner shared buyback programme transaction, which we now expect to close around the end of this quarter, so a quarter earlier than expected. Moving to strategy progress, our multi-year ambition to reinvent a better Telia is now in its second year and is progressing according to plan. And let me provide a few highlights from the quarter that capture some of the progress that we have made towards inspiring, connecting and transforming to ultimately deliver sustainability. our priority has always been to inspire our customers by pursuing a value-focused strategy. And in a heightened inflationary environment, as we now experience, this approach is of even more importance. Pricing moves, such as we've taken in Telia Sweden and in Halibop Sweden, are supported by improved network experiences and improved content experiences. And across the board, whether it be via improved bundled services, or improved more addressable reach in our media business, we are taking the necessary actions to deliver positive revenue and ARPU development, hence the good progress in the quarter. A great example of this is the best network combined with the best range of content, which has driven our Swedish TV customer base to over a million and the number of Swedish multiplayer customers to 900,000. Access to see more content is also helping drive higher value mobile customer growth in Finland and bundled Netflix in Norway and Denmark are contributing to the growth in those markets. Overall, we are very happy with how we're now building a stronger aggregator position across our footprint. On the enterprise side, our strong and trusted brand combined with a broad play of services resulted in continued good traction, especially in the public sector. In the quarter, we signed multi-year contracts with both the Norwegian Army and the Swedish Contingencies Agency, MSB. And with the current geopolitical situation, our role will only become more important going forward as societies invest in enhanced security of communication, and we are very well placed to take advantage of that. And we continue to sustain superior reach in our TV and media unit, and this reach is being further enhanced by our Avon platform and the addressable inventory that is enabling significant digital advertising growth. On connecting everyone, our network position was again confirmed by several external measurements in the quarter, including Umlaut in Sweden, Tutala in Finland, and our 5G network in Norway was recognized as the best 5G network for gaming. And in Finland, we deployed at the first operation in the world a 4G, 5G virtual private network based on network slicing and edge computing for customer use. RAN modernization is progressing well and we're continuing to successfully mitigate for a tighter supply chain situation. On 5G, we're progressing at pace with a population coverage of 36% for the group across the whole region, led by Finland at 70%, followed by Norway just above 50% and Denmark just below 50%. Also in Estonia, coverage is going fast and approaching 40%. In the quarter, we also launched 5G in Lithuania on commercial frequencies after three years of testing. On copper legacy retirement in Sweden, another 140 central offices were closed in the quarter. We've now closed 60% of our copper footprint and the shutdown of 3G by 2023 is progressing according to plan. On transforming to digital, our bold agenda to create the most purpose-driven digital telco in Europe is on track. We continue to digitalize with, at this time, a particular emphasis on improving customer experience and service. We're now seeing a sustained reduction in incoming calls from Swedish and Finnish consumers with improved satisfaction scores as we remove fault sources and pursue a channel shift towards digital. We're also continuing to remove legacy platforms and products having removed another 20 IT platforms in the quarter to over 100 being now retired, and over 25% of legacy products have now been removed. This helped drive an 18 million kronor structural saving in IT costs in the quarter. Rapid digital transformation is also happening within our leading advertising businesses in both Sweden and Finland. With our superior reach and improving addressability, Advertising is no longer just a linear product, which is why we recorded a 26% growth in digital ad revenue in the quarter. On delivering sustainability, our financial metrics are healthy, especially within our core telco and advertising businesses, and we remain on track to meet our 2 billion kroner OPEX savings target by the end of 2023. On sustainability, Telia in Sweden was recognised as Sweden's most sustainable telecoms brand for the 12th year in a row. And finally, we issued our second green bond in the quarter worth €500 million to finance energy-efficient networks and green digital solutions to help Telia and our customers with both our and their environmental ambitions. Moving to Sweden, Sweden had another solid quarter and managed, despite their continued legacy headwinds, to grow service revenues 1.8% and acceleration versus the level we saw in Q4 of 1.5. And the growth was broad-based. Mobile grew 3% supported by a solid ARPU development ended a 20-year period without growth for the B2B business. Excluding the impact from legacy and the recovery of rolling, underlying service revenue growth was even more impressive, coming in at just shy of 5% and also showing a slight sequential improvement. So, as you can imagine, I am genuinely happy with Sweden's performance, delivering on its commitment and ambition to remain in positive growth territory when it comes to service revenues, and also on EBITDA, which grew 4.4%, supported by the revenue growth, but in particular due to great work on driving improved productivity and structural transformation, predominantly related to resource reduction, where a decline of 7% versus last year was delivered. Moving on to the operational KPIs, in mobile you can see that our subscriber base is stable, while we're delivering healthy ARPU development in both consumer and enterprises. Our broadband subscriber base was also stable as growth in future-proof fibre and fixed wireless access products again offset the expected decline in XDSL subscriptions, which amounted to 20,000 subscriber decline in the quarter. Importantly, most of the growth was in SDUs this quarter, contributing to a mid-single-digit ARPU uplist and enabled by improved upselling and cross-selling. In TV, we continue to see great subscriber development, as I mentioned earlier. Swedish consumers are highly appreciating our award-winning IPTV service and the ability to aggregate all the content they want in one place. Turning now to Finland, I'm particularly happy to see that all the hard work by our Finnish team is starting to pay off and yield. mobile, despite interconnect headwinds, was offset by lower fixed revenues, predominantly driven by the loss of certain low margin business solutions and fixed broadband legacy revenues. Transformation of the cost base is also building momentum, enabling lower OPEX despite elevated energy prices and helping drive an EBITDA growth of almost 2% and the first quarter of growth since 2020, but probably the first structural growth of many quarters before that. progress of our peers in the market, it's clear that we still have work to do. Our subscriber base was down year on year due to the loss of a single enterprise contract lost last year, but which migrated only in this quarter. And ARPU also declined due to continued ARPU pressure in the enterprise segment and a regulated reduction in interconnects. Consumer mobile ARPU development was however positive and this alongside continued network modernisation and 5G progress combined with other turnaround initiatives, keep us on track for a second-half turnaround. Moving to Norway, with the wholesale revenue headwind experienced in 2021 now annualised, we are seeing really positive top-line momentum. Service revenues increased 6.6%, mainly driven by a 9% increase in mobile, roughly half of which relates to a change in VAS, Insurance Services Accounting, and so the underlying mobile growth is more like 4% year-on-year. Broadband continued to develop very strongly with growth of 8.2% both from new customers and higher ARCU driven by price increases both CPI linked collective agreements and price increases on individual agreements. EBITDA as you can see was slightly positive adjusting for one-off items both in this quarter and the corresponding quarter of last year, the underlying EBITDA actually grew faster than revenue at around 6%. Our mobile subscriber base continued its positive trajectory with a stable consumer base and growth in enterprise, where we grew our base in all sub-segments, SME, large and public. And our crew was again strong, but driven mainly by the VASA counting change, as well as from a partial recovery in rolling revenues. Moving to the lead markets now, and isn't this finally a beautiful page? Despite our incumbent status in Lithuania and Estonia, we're seeing almost challenger-like growth rates there, and it's great to see the turnaround that we're now experiencing in Denmark. In Lithuania, we continue to see mid-single-digit service revenue growth in mobile, in both mobile growing 8.7% and headwinds from higher energy costs. In Estonia, performance was again strong, with service revenues growing 8% and also broad-based. Mobile was up 6.1% and fixed was up 7.8%. We had an immaterial impact from the Ukraine conflict due to the closure of our Russian channels and our TV business, but overall in the Baltic, the impact from the conflict has so far been very limited. Of course, we continue to monitor the effects that the war might have and especially how the situation evolves for individual B2B customers. But for now, there is no indication that it will have a material impact on our 2022 outlook. Finally, in Denmark, we saw continued good progress driven by mobile, which grew 6.5%. Especially in consumer, we're seeing an increasing momentum due to the cleanup of historical discounts, and the introduction of bundling benefits and pricing moves. We're looking forward to more product launches to improve our market position and pricing power going forward. And for example, in enterprise, we've moved to CPI-linked contracts for new contracts. Combined with good momentum on transformation initiatives, Denmark delivered 5% EBITDA growth despite a material headwind from energy pricing. And finally, moving to our TV advertising, good development in sports and pay TV, and weaker development in the movie and series side of pay TV. Advertising in Sweden and Finland remains very strong, as I said, growing almost 10% year on year. As the market leaders, we offer superior reach and we are at the forefront of the industry's digitalization. Advertisers increasingly come to us for the unmatched combination of traditional and online viewing, and we're increasingly able to provide precise audience targeting and far better quality impressions than players like Google and Facebook. As a result, digital advertising had another strong quarter with 26% revenue growth. Pay TV had a more flattish quarter, although sports in Sweden had good growth despite the Olympics on rival channels, mainly due to Champions League. This was offset by declines in other sub-segments, including non-sports in Sweden, which was affected by the proliferation and being the unique partner to BritBox here in Sweden. EBITDA declined by €300 million year-over-year, as we expected, reflecting the cost of a full quarter of Champions League, for example, which is still in its first season. Looking forward, the second and third quarters are not full Champions League quarters, and hence we will see lower content costs and certainly a different year-on-year comparison in the second half. Looking at the trends of Seymour, we saw a slight decline in the overall base, driven mainly by the non-sports subscribers, but year-on-year growth in ARPU was driven by the increased share of sports subscriptions and price increases in Sweden. So with that, I hand over to PC for the financials.