Telia Company AB (publ)

Welcome everyone to Telia Company's Q4 2022 results presentation and strategy progress update. And with that, I will hand over to Telia Company's Head of Investor Relations, Eric Stranden-Pers. Please go ahead. The floor is yours.

Thank you, Sam. Welcome everyone to the Q4 call and the strategy progress update. We will start with Alison Kirkby, our President and CEO and Patricia Lörland, our CFO, taking us through the Q4 results. Thereafter, they will be joined by our COO, Rainer Deutschman, to take us through the annual strategy update. I expect this presentation to take about five minutes, and thereafter, we'll go to Q&A. So no time to waste. Please go ahead.

Good morning, everyone. So as you will have seen this morning, our full year financials show that we continue to make good progress on our plan to make Telia a better company for all its stakeholders. But at the same time, it's clear that it has been a challenging year with significant macro headwinds and a few disappointments. That means we did end the year with what I would say is a mixed set of results. Let's start with a run through of the quarter, which did contain some of those macro driven challenges that we saw last quarter as well. Service revenue growth continued, but at a slower rate of 0.7%. Most markets did continue to grow and we were positive in both the consumer and enterprise segments. Mobile was again strong with a 3.1% growth for the group and growth in all our markets for mobile. But of course, Sweden B2C and TD Media were soft. Transformation efficiencies continue to materialise and in the quarter, we managed to reduce OPEC's excluding energy just shy of 1%. EBITDA declined 2%, driven by higher energy costs and softer trends in the aforementioned TD Media and Swedish units. Operational free cash flows was weak, coming in at 400 million kroner, and materially below last year's level, explained mainly by a lower contribution from working capital, which PC will get back to. The structural part of cash flow was, however, rather unchanged versus last year, as EBITDA was flattish and we remained at peak levels of capex investment in quarter. With weaker cash generation, combined with the second tranche of the dividends and the end of the shared buyback programme, leverage increased to 2.35 times. The majority of the weaker cash generation in the quarter is, however, due to macro impacts that will subside or be mitigated over time. And in addition, we had some phasing of inventory and investment across the year. And so because of that, and because we still remain on track with our strategy, our financial framework for substantial value creation remains, even if it's a bit delayed. And the board therefore intends to propose a dividend of two crore per share in line with the floor of our dividend policy. But let's look at the markets now and start with Stephen. As you can see here, revenue remains sometimes slightly negative as growth in mobile, TV and broadband was not enough this quarter to offset the continued legacy fixed telephony pressure. And also there was a temporary weakening in business solutions in the enterprise space. TV and to some extent also broadband this quarter included a negative impact from the black screen situation with bioplay, a situation that was resolved during December. Despite legacy headwinds continued at an unchanged pace and the bioplay situation, we still saw underlying service revenue growth of around 1%. But EBITDA was down in the quarter, driven by the softer revenues, higher energy costs and a lower pension refund that we were expecting. These unfortunately offset another good quarter of cost transformation and OPEX reduction. Moving to the KPI proceedings, you see here a continued growth in mobile ARPU, supported by pricing initiatives, but there's less rolling and insurance upside this quarter and a slightly smaller subscriber base, mainly driven by the loss of some seasonal mobile broadband subscribers. The broadband subscriber base increased on the back of very strong growth in fibre, especially on our own networks. and more than compensated for the decline in DSL. And by the end of the quarter, we only had 100,000 subscribers left on this network, keeping us well on track for the shutdown by the end of 26. In TV, we continue to see a solid subscriber-based development, but the ARPU declined from the already mentioned black screen situation with BioPlay. With that dispute now behind us, we now have a broader set of content for our aggregator positions, And with the support from 150 crore price increase on our sports package introduced during this quarter, we should see an improved RQ development going forward. Moving to Finland, we had another quarter of improved service revenue development with mobile growing 3.8%. This marks the sixth consecutive quarter of improvement in our finished mobile business. In addition to this mobile development, we also had an improved situation on the fixed side in the quarter. EBITDA, however, continued to be negative, as higher energy resulted in a 90 million toner headwind in the quarter. Under live EBITDA growth, the low was slightly positive, which is an improvement compared to what we've seen for the past two quarters, and a good proof point that the turnaround in Finland is having an impact step by step. The mobile subscriber base declined slightly as we continued to focus less on the low end of the market, and ARPU continued to improve, supported by our chosen value-focused strategy. And finally, enterprise also improved for the fourth consecutive quarter and even turned to a slight growth. Moving to Norway, with another quarter, solid service revenue development increasing 3.2%, with mobile effects both growing at similar rates. And enterprise in another impressive quarter, growing by 7.4%. EBITDA increased, supported by the top-line momentum, which more than compensated for a higher cost level, all attributable to energy. So continued good, service revenue and financial momentum in Norway that will be further supported in 2023 from the recently announced transaction with Purecraft, under which their 143,000 mobile customers will move to our network during the second quarter. The lead market had another excellent quarter with top and bottom line growth across all three units. In Lithuania, mobile grew double digits and fixed grew almost 5%, and the flow through to EBITDA was excellent, growing more than 13%, despite continued headwinds from higher energy. In Estonia, performance was also strong, with service revenues growing 5%, and like in Lithuania, it was broad-based, with mobile growing almost 8% and fixed growing almost 4%. And as you can see, EBITDA growth, similar to Lithuania, exceeded the service revenue growth, despite inflation and energy cost headwinds. Ending with Denmark, you see here a flat service revenue development, but good mobile growth and significant cost takeout, resulting in an impressive EBITDA growth of 21% for the quarter. And we were particularly pleased with Umlaut, recognising Telia's mobile network as the best in Denmark's top four cities. Finally, for the TV and media unit, where service revenues decreased by 2.7%, advertising was slightly down, despite double-digit growth rates in digital advertising. but we do continue to have a challenging development in pay, declining almost 9% from a challenging competitive environment. EBITDA declined by £130 million, reflecting mainly the decline in revenues and, to some extent, a somewhat higher content cost level compared to the same quarter last year. But this was all in the pay segment, and in fact TV4 had its most profitable year ever in 2022. Our full focus for this business unit now going forward is to consolidate Seymour in TV4 in Sweden and MTV in Finland in the coming 12 to 18 months so that we, in the end, have fewer TV assets with a lower cost content rate that is focused on leveraging the growth potential in the digital ad space where we continue to grow at a double-digit rate. But now I will hand over to PC to take you through the quarter's financials.

Thank you, Alison. Let me quickly take you through the Q4 and then come back on the output later in the presentation. Starting with service revenue, as Alison has gone through, we have service revenue growth of 0.7% from all units except Sweden and TV media in this quarter. Health care service revenue growth is 1.2% driven by growth both in the consumer segment, but also in the enterprise segment. TV media has 2.7% from lower pay revenues, taking total growth down to the mentioned 0.7% for the quarter. Total surge revenue growth for 2022 ended at 2.1%, well in line with our outlook on low single-digit growth. Moving to OPEX, OPEX is reduced by 0.9%, as mentioned, or $58 million in the quarter. If we exclude the effect from pension refunds, OPEX decline is minus 2.5% for $155 million in the quarter. The reduction is driven by lower resource costs from 700 fewer resources since the fourth quarter last year. Despite inflationary pressure, we have two years into our transformation journey, reduced our net effect by 1.1 billion. Total EBITDA is negative, 2% in the quarter, driven by decline in Sweden, Finland, and TV media, partly a step for growth in Norway, Denmark, and the Baltics. Core telco EBITDA is minus 0.6%, but if we exclude the $280 million increased energy cost in a quarter, core telco growth is actually 3.1%. TV media EBITDA is negative $105 million in a quarter from service revenue pressure, dragging down total EBITDA for the group to minus 2.0%. Total EBITDA for 2022 and the flash versus last year in line with the outlook given in Q3. If we exclude the increased energy costs, EBITDA growth would have been close to 2.5% well in line with the low single-digit output. Total cash capex in Q4 is 5.3 billion in line with Q4 last year. Elevated capex in Q4 is due to spacing of around half a billion of investment from 23 into 22. This relates mainly to mobile network modernization and 5G rollout, transformation, and security investment. Despite a continued challenge in global supply chain situation, we have been able to stay on track and actually now slide ahead of our investment program to modernize our mobile network, dismantle our legacy infrastructure, and to transform Telia to a much more digital company. Cash CapEx on a rolling basis has increased slightly to $15.4 billion, or 16.9% on that scale. Cash CapEx excluding a $0.4 billion impact on FX ended at the high end of the range at $15.0 billion. Moving to cash flow. Operational free cash flow ended at $0.4 billion in Q4, down from $1.4 billion in Q4 last year. Reported EBITDA minus capex is flat versus last year. Tax is lower due to spacing, with interest costs being quite stable. Other in the graph is as expected, impacted by lower pension contributions versus the very high levels recorded in Q4 last year. Working capital was slightly positive in the quarter, but less than what we expected. This is mainly driven by two factors. Inventory levels are unfortunately still at elevated levels due to lower sales than expected, combined with some higher incoming inventory. The global supply chain situation has made inventory planning and steering much more challenging. The second factor is vendor financing. Our vendor financing balance ended slightly lower than expected due to longer time to onboard new suppliers. Both of these effects are facing between 2022 and 2023. Total cash flow for 2022 ended at 5.7 billion, with the structural part of cash flow at 6.5 billion. Total cash flow has been on a declining trend due to increased capex, elevated inventory levels, and lower contribution from lender financing. As guided in Q3, we were not able to generate total cash flow to cover the minimum dividend commitment of 7.9 billion. This is driven by macro implications, with the biggest item being the 0.8 billion increase in energy costs. This is combined with more than a billion of basing or investment of working capital, as mentioned, between 2022 and 2023. On leverage, total net debt increased 8.9 billion in the quarter. This is a result of a limited cash flow contribution in the quarter, combined that we completed the final part of the share buyback of 1.8 billion, We executed on the second tranche on the dividend payments of 4.2 billion. We have reduced our hybrid capacity, impacting net debt by 1.2 billion, in addition to leasing and FXFX on our debt. Due to these factors, net debt ratio has increased to 2.35 times, still within, well within the targeted range of 2.0 to 2.5 times. And with that, I hand back to Alison.

Thanks, PC. And let's now move directly into our annual strategy progress update as we now enter the third year of our Better Telia strategy. And Reiner will follow me and then PC, and I'll close out at the end. Just a reminder, two years ago, almost to the day, we launched our new purpose and strategy in order that Telia would become consistently and sustainably better for all our stakeholders, customers, employees, owners, and ultimately the societies of the Nordics and the Baltics. We believed then, and even more so now, that as the market leader in one of the world's most digitalized regions, the demand for safe, reliable, high-speed networks would remain high, and that going forward, Telia would play a fundamental role in the digitalization of society in a safe and secure way. Our strategy therefore set out to build a more agile and more resilient Telia that would reinforce our position as the most trusted and secure digital infrastructure and service provider in the region. Back then, we shared a set of growth levers and a resulting financial framework that would lead to substantial value creation. And coming from a situation with multi-year declining revenues in all our Nordic markets, we shared the levers that would return us to low single-digit revenue growth. We also shared how a bold digital transformation would simplify, digitalize and automate our operations and deliver 2 billion of OPEX production in the first phase. And how we were going to modernize our network and our technology platforms and combined with the other levers after a period of investment lead us to a growing EBITDA and later on a growing structural and operational cash flow. So how are we doing two years into the journey? Well, despite a multitude of headwinds that we could not have predicted at the time, and unfortunately hitting us in the peak investment year of 2022, we do believe that our strategy is delivering. I'll get back to the headwinds in a minute, but let's first look at what our strategy has delivered so far. The ambition of the inspiring our customer pillar of our strategy was about returning Telia to growth, and we have. We returned all our Nordic markets to growth after multi-year decline. Mobile growth has accelerated to 4%, with Finland contributing to that growth after years of decline. Our fibre revenue base, growing at a double-digit rate for annum, is now 25% higher than it was two years ago. And convergence is progressing, especially in our whole market, with triple play-up households up almost 20% in two years. And we are now the aggregator of choice to more than a million TV subscribers. And rare for an incumbent telco, enterprise is now growing across the globe, with Sweden Enterprise posting its first full year of revenue growth in two decades. Ryla will talk me through what we're doing within our infrastructure and our transformation under the Connect and Transform pillars, But I want to mention that we're ahead of our 5G rollout plan. Our fibre and coax homes past keep growing. The legacy network setting has accelerated. In enterprise mobile networks, one route to monetising 5G, we're now a clear market leader. And as you know, we've set up the leading Nordic Tower platform in partnership with Brookfield. On transformation, I'll let Ryan share the progress, but we remain on track towards our 2 billion OPEX takeout by 2023, with 1.1 billion already realised. And that's despite inflationary headwinds that we didn't predict at the time. And finally, we're delivering sustainably. We now have a group-wide approach to making pricing work in a higher inflation environment. We've reduced OPEX, not least by workforce reductions of around 2,000 or 10% of our workforce. And sustainability is fully integrated into our strategy and we've made substantial progress. For example, our CDP score at A- is up from D in 2018. 35% of our supply chain emissions are covered by science-based targets. We've exceeded our target for digital inclusion one year early and received an equal value as platinum medal. But more importantly, we are the leading digitalisation partner, the energy sector, the defence sector and the many civil contingency agencies, proving that Telia is increasingly the most trusted and secure digital infrastructure provider in the region in an era where sustainability, security and digitalisation are the key societal needs. However, while we're happy with that progress, we have, as you know, also faced some significant challenges, which I do want to touch on. The pay TV landscape has been very difficult, and we have also scored some own goals, sorry about the pun, by failing to fully monetize our rather expensive Champions League rights. We've been challenged by rising inflation across our costs and cap-out base, setting us back around a billion in energy costs alone. Supply chain disruptions have caused difficulties in planning, executing customer projects, investments, and on inventory. And rising interest rates means both higher financing costs and short-term fluctuations in our vendor financing programme, which has been a significant tailwind to cash flow in an earlier era at Telia. It's also been a barrier to completing some of the infrastructure deals we're working on, but I have no doubt those deals will come back on the table again. And let's just reflect, all of this hit in a period where we were at our peak investment of the modernisation and transformation of Australia. So we didn't have a lot of wriggle room. But looking forward, what are we doing to now mitigate the challenges? Well, in October, we announced that we're merging our loss-making streaming business, Seymour, into TV4, our ever-stronger market leader in Sweden, and into MTV in Finland. This will save significant content costs and restore profitability in TV and media, starting in 2024, and make it very clear that our core telco business is only an aggregator going forward. We are accelerating our pricing initiative and our transformation to offset inflation, both in our revenue base and in our cost base. And, you know, just so you know, on pricing, we've already announced increases across mobile, broadband and TV, both here in Sweden and Norway, which are kicking in already during the quarter. And to gain extra momentum, we've also this quarter initiated the next round of workforce reductions of 1,000 FTEs and FTCs. And for the full year, we're therefore targeting a total reduction of 1,500, which is a 50% increase on the last two years. On supply chain, small bottlenecks and lead times are still an issue. We are taking action and we expect to drive down the inventory that has built up. And on financing, we've already done all of our near-term refinancing needs and secured most of our vendor financing volume for next year. So all in all, despite that 2022 did not become the year we'd hoped for, our strategy remains. We're continuing to execute on our plan. And I know Ryla will now share, as we've done before, how we're progressing on the underlying operational KPIs and lead you through our progress that's transforming Telia towards a more lean and efficient digital telco.

Thank you, Alison. Let me lead you through the progress in our transformation. As in the past two updates, I've always shared with you transparently also the underlying drivers. You can see where we are heading and where we are. We are ahead in our network modernization. Recall, in late 2020, we had embarked on a major renovation concurrently modernizing our 4G network and deploying 5G coverage in a single site visit approach and with standard configurations across our footprint for best Carpex efficiency. We are proud that we have been able to safeguard the modernization, overcoming COVID and supply chain related challenges. In fact, we have front loaded our rollout and thus we have in 2022 crossed the peak rollout as you can see on the left-hand side of the chart. In the further years, it will reduce the intensity and focus on Sweden. We saw, as you know, a late 5G auction and hence a later start in the other. As a result, we are actually happy, very happy with our network quality, providing across the group 70% 5G coverage and even ahead of plan. In Sweden, we have crossed 50%. In Norway and Finland and Lithuania, we've even crossed the 80% population. We are the clear network leader in our region. We have number one positions in Sweden, Lithuania, Estonia, and further improving positions in our attacker market. In Norway, we are the clear 5G leader. And as Alice said earlier, in Denmark, we very recently gained network leadership in the most important four cities. So as you can see, we have built a strong network foundation to monetize based on our capacity, 7x. and the leading 5G position, spectrum position that we have gained in the region. Best networks are only as useful as they are used and monetized, and we actively drive key connectivity products, and we leverage our digital sales and service capabilities. As you can see on the left, we have increased the 5G devices on our network to now 30%, And with about 80% of all new devices being sold in our market being 5G, we see significant potential in the next year. Likewise, our strategy to complement our fixed broadband network with fixed wireless offerings pays off, demonstrated by a 59% increase of fixed wireless users to now almost 400K. And we build on our digital connectivity foundation. We have been, as Alison also mentioned, a pioneer since early days in enterprise mobile networks, combining high throughput, low latency, with utmost reliability and security. We have, to date, commercially contracted more than 65 sites, and we do serve critical customers with critical applications, such as in mining, public transportation, and so on. Likewise, we have also doubled our connected devices on IoT, We see steady growth in value-added IoT services, so beyond connectivity, and we continue to grow our leading position in smart public transport. Our transformation delivers steady improvements in our digital sales and service capabilities, as you can see on the right-hand side, essential to monetize our products at lower cost to serve. For example, Based on our Telluride customer value management platform that we have launched, we have tripled our targeted and automated campaigns, which is essential to stabilize and increase the ARPU with our products and services. Our program to reduce reasons to call and to improve agent efficiency, call center agent efficiency, they show material effects now. For example, in Sweden, which is obviously the most important, we see in the consumer segment a 20% reduced customer call volume. directly translating to cost savings. Now, reducing technical debt is a key driver for efficiency and quality, as you know. I've shown exactly the same chart over the past two years. And you can see we have made steady progress in all our key programs, which we have updated you consistently on. Koffa in Sweden is down to 1,500 central offices, and we keep driving out the long tail end through 2026. Likewise, we are now down to 5G, sorry, to 5% of 3G voice traffic share on the total voice. And we've already shut down our 3G networks in Norway and Lithuania, and all our 3G networks will be shut down by 2024, unlocking not only the cost efficiencies, but especially also enabling us to refarm the value of the 3G spectrum to 5G. And on the right side, you see that we have now retired about 70% of our legacy network system, and our program will complete by the end of 2024, resulting in a fully virtualized and future-proof network infrastructure. On the transformation itself, we have updated you last year, transformed along our five P's, products, processes, platforms, people, and partners. The direction is straightforward, simplify, automate, and scale. We consistently measure and report our progress through the KPIs, which drive efficiency and quality. We simplify and scale our products, legacy out, target in. To date, we have reduced the number of legacy products by 42%, and we are on the way towards our 100% reduction target. At the same time, we now already have more than 50% of our target products deployed on common platforms, This enables efficient reuse across the group. Note that already now more than two-thirds of our common products are being reused in more than one market. We improve and automate our processes to enable zero-touch journeys with better quality and efficiency. Through our group-wide operation excellence program, we systematically drive continuous improvement, which has now materially improved our incidence by 18%, so reduced incidence by 18%. At the same time, To our automation initiative, we have increased the number of hours saved through automation and bots by 65%, and this is only the start. Our platform, same as in product, we drive legacy out and target in. We have kept our pace in legacy drive out with 47% reduction now, while at the same time, we have increased the share of target platforms to 32%. The most evident successes in the launch of our transformed B2B operations in Sweden which enables us to reduce the order processing time from weeks to minutes. In 2023, we can now scale those products, processes, and platforms for full realization. The key to our transformation success are our people and partners. To upskill and empower our people, we invest into tools and training. And we give direct access to analytics for data-driven decisioning, covering At the same time, we increased our near-shore end workforce by 47%, and we took ownership of critical software skills which previously had been outlawed into our own workforce, especially on the near-shore location, which obviously much increases the efficiency. We've delivered on our plans to drastically reduce the number of different system integrators, now down 70%. Through the reduced fragmentation and increased scale, we have realized to date 200 million sec gross savings. And as we've updated earlier, we are ramping up to the area committed 750 million sec by 2025 cost savings in that area. At the same time, our strengths and strategic partnerships support our transformation and value realization, even in joint go-to-market activities. This is hard work. Two years in, I can definitely confirm our statement that we have embarked on one of the industry's most ambitious transformations here. Disorder Foundation, which will carry us forward to scale revenues and efficiencies sustainably. With this, I hand over to my dear colleague, PC, who will show us how our revenue and efficiency drivers support our financial plan.

Thank you, Rainer. Let me quickly take you through how all of this, what Alison and Rainer have talked about, come together from a financial perspective. Starting with our growth agenda and a quick update on the key growth levers that Alison touched on. COVID rebound on roaming and media that we talked about two years ago is mostly behind us now and less of a growth lever going forward. Legacy burden is still a drag, but it is expected to ease going forward, especially beyond 2023. Our core growth levers that we have talked about remain unchanged, including driving our growth by improving mobile experience and monetizing 5G, reducing churn and improve upsell from conversions, and gradually build more momentum for new revenue streams like IoT and EMF. In addition, we have, as we have discussed before, significantly stepped up and structured our approach to pricing in the new high inflationary environment. Our clear mission is to be able to assess inflationary pressure by pricing measures for all our units. This includes building in CPI linkages into our B2B contracts, combined with bigger and more frequent price increases for front and back books across our entire product portfolio. Service revenue growth has gradually improved and ended at 3.1% in 2022. Our outlook for 2023 is to grow further service revenues by low single digits, enable by maintaining and strengthening our current commercial momentum, gradually build more strength on pricing initiatives and get more impact on new revenue streams like IoT and EMF. Moving to the cost agenda. The key drivers, the ongoing digital transformation of our business is on track as we have mentioned. The key drivers transforming our cost base remain the same. Two years into our transformation journey, we have seen the biggest impact on the total cost from a selected driver. Let me mention a few. Reducing and digitalizing our customer interaction. Removing legacy and building common technology platforms. Moving to fewer strategic partners, as Reiner mentioned. Reduction in overhead costs, both on group level, but also in the business unit. If we look going forward, we expect continued impact from these drivers and gradually gain more impact from cleaning up our legacy product portfolio and consolidate into a few common products across all our markets, but also by gradually removing more manual work through simplifying, standardizing, and displacing our processes. These drivers have despite inflationary pressure enable a net output production by 1.1 billion Resource costs over the two years is now reduced by $0.7 billion, enabled by 2,000 pure resources. In addition, IT costs have been reduced following the initiatives that Rainer had talked about by $0.4 billion. Our vision remains to deliver 2 billion net OPEX production by the end of 2023, enabled by further reduction in number of resources by 1,500 in 2023, with 1,000 already being executed now during the first quarter, combined with further cost reduction in IT and also in marketing. On CapEx, the investment agenda that we presented two years ago are intact with some updated phasing, as we have discussed earlier today. Key components that Reiner has talked about has been to modernize our mobile networks and roll out 5G, negative reduction, and transform Jellier to a more digital company. CapEx in 2023 is expected to reduce to between 13 to 14 billion. This is enabled by reduced pace of network modernization after having achieved 70 to 80% population coverage on 5G in many of our key markets. Lower investment in product and IT following the high level that we booked in 2022. Our aim is though to be at the mid or the low end of this targeted range. On cash flow, structural cash flow is expected to grow from 6.5 billion in 2022 to between 7 to 9 billion in 2023. Our ambition is to generate low to mid single digits EBITDA growth on a yearly basis, But given the volatile and uncertain macroeconomic landscape, we choose to be a bit conservative and have 23 outlooks at flat to low single-digit growth. CapEx is expected to come down from the peak level in 2022. Interest costs are expected to end around one billion higher following the higher interest rates that we saw and expect for 2023. If we do remain on working capital, Our ambition and our aim is clearly to keep it stable for the year. Inventory is expected to come down significantly from the elevated levels in 2022. And on vendor financing, our ambition is to maintain the balance on level with 2022. We have already secured three quarters of this, with the remaining one quarter being work in progress and targeted to be secured in the coming months. Due to say things, we will see a quite negative impact on vendor financing in Q1 2023 before the mitigations start to take full effect. To summarize our outlook, service revenue to grow no single digits, EBITDA to be flat to grow no single digits, capex in the range of 13 to 14 billion, and the structural part of cash flow to be between 7 and 9 billion. On balance sheet and dividends, management and the board are fully committed to maintain a strong balance sheet and maintain the targeted leverage range and rating targets further the boards they committed to the dividend policy and proposed to the agm to distribute

our progress and way forward without repeating myself. Basically, we are a large, complex business in what has become a challenging market environment. We've known from the start that achieving our ambitious goals would demand grit, determination, focus, and perseverance. And today is a reminder of that. However, having returned to Telia to grow us, expanded our digital infrastructure and especially 5G faster than the others, passed our investment fees and built the foundations for improved operational momentum and cash conversion going forward. I remain absolutely confident that we're on the right track with the right plan to create substantial value for our owners in the coming years. So let's now move to questions.

Certainly. And at this time, if you would like to ask a question, please press star 1 on your touchtone phone. You may withdraw your question at any time by pressing star, the pound key. Once again, that's star 1. And we'll go to our first question from Andrew Lee with Goldman Sachs. Please go ahead.

Yeah, good morning, everyone. I had a couple of questions. One, just on Sweden and your outlook for that market, for yourselves in that market. And then, secondly, on the free cash flow drags below structural free cash flow. Just on Sweden, your service revenue growth, as you highlighted, was impacted by the Viaply outage in the fourth quarter. What's your outlook for growth in Sweden for your business in 2023, specifically taking into account competition? Do you still expect to be able to put through more meaningful price rises this year to offset cost inflation and drive growth? That's the Sweden question. And then on the free cash flow drags, centering around vendor financing and the hybrid capital refinancing. You went some way to doing this, PC, in the last couple of slides, but how can you all give us confidence that we don't see free cash flow drags from these in 2023? Thank you.

Thanks, Andrew. I'll take the Sweden question and leave the free cash flow question to dear PC. So the outlook for Sweden, yes, the Viaplay dispute did cause some disruption to our underlying momentum in the quarter. And some of that will still be an impact in Q1. But outside of Q1, we expect to get back to low single digit revenue development in Sweden again, like we've been saying. There is great continued underlying momentum in the broadband business, as you see. Another 50-tonne pricing increase going out now, which starts to benefit us during March and into April. The TV momentum, we've got more content now in our aggregator platform. We've taken 150-tonne pricing in the quarter, so that will benefit us coming out of this quarter as well. looking at the opportunity to better monetize mobile and we'll get some pricing moves going on in mobile as well. So I expect that Q1 will still be a bit soft, but we'll build momentum in Q2 onwards as all the pricing kicks in, as we start to really, you know, monetize 5G because we're well above 50% pop coverage now. And we can see the great momentum that we have in the enterprise business where we're selling in a broader range of digitalisation services, and I said particularly to support the energy and the defence sectors where we're seeing great demand. So, low single-digit development, but it will be from Q2 onwards.

Yes, and then I can take the working capital question. Just to be very clear, our ambition and our aim is to keep this flat in 2023, so it doesn't become a drag. But if you note on the slide, we say equal or potentially down. The reason for having that is we just want to be very open and transparent that we haven't fully secured everything at this point in time. That doesn't say that we are not working to close the remaining uncertainty and deliver working capital that doesn't become a drag on the total cash flow. And the fact for us to be able to be confident to say that is, number one, the inventory, I think we have quite good control. It just takes some time to get the effects out, and we'll be working with that systematically throughout the year. So that should be a positive development. There are no other elements of the working capital that we expect any big movements on. So we can then zoom into the vendor financing and development on that. As you know, when the interest rates peaked during 2022, it gave us a challenge that we suddenly saw a shortening of our payment terms. And we have been mitigating this with two things. One is, of course, to go back and renegotiate the discounts on existing suppliers. This is going quite well. We have progress on that. But it takes some time to get through all of those contracts. The second part is, of course, to onboard new suppliers to the program, and we also have new traction on that. So if you combine those two, we ended a balance of 11.4 billion in 2022, slightly higher than in 2021. And we actually expect now to maintain that balance, and we've already secured three quarters of that balance when we exit 2023. And now we have a sort of a clear portfolio initiative to close the remaining one quarter. If we do that, we don't expect any drag on working capital. And we can keep you updated during the year on this. But also, as I said, there will be a phasing in the year of 2023, but there will be a negative development in the first quarter and then gradually see the mitigation take full effect at the end of the year on the balance similar to this year.

Thanks, Peter. We are in much more control of this situation now, have much more visibility. We are ahead of where we were this time last year in securing the balance. And so our aim is for a neutral effect over the course of the year. That's our aim.

Thank you. That's much appreciated. Thank you. Can I just ask a quick follow-up? So, just one on the hybrid capital refinancing, how should we think about any kind of process of that in 2023? Because that was also a drag on net debt. And then, Peter, you mentioned that the vendor financing was being managed by a mixture of renegotiations and adding more more vendor financing, what's the kind of mix in terms of the support to the vendor financing balance? Is it more renegotiations and less additional vendor financing or the other way around? How can we think about that? Thanks.

The biggest portion on the vendor financing is the renegotiation of the existing vendors and contracts. And then we are able to secure some new vendors coming into the program. On the hybrid, you should not look at that in 23. So the leverage effect is already done. There's no further changes planned on our hybrid capacity. We just adjusted it down to make sure we get full credit from the rating agencies on our hybrid capacity after some of the structural changes that we have done in the past two years. So no changes going forward. Great.

Thanks.

We'll take our next question from Titus Grahn with Bank of America. Please go ahead. Your line is open.

Good morning, everyone, and thanks a lot for a detailed presentation and for taking my question. Just maybe following up very quickly on this operational free cash flow outlook, and I definitely understand that the current macro situation is quite challenging to really guide on some elements, but it still feels like the range is relatively wide. And maybe could you talk a bit on where you would expect the largest fluctuation between the different elements? And then maybe also on the EBITDA guidance for the next year. And again, it is quite, quite difficult to really assess all the impacts. Could you maybe give us an updated outlook of what energy impact you see in 2023? I don't think you can update that as part of the presentation. And on the wage side, how are negotiations going with the unions and what wage inflation is reasonable maybe to expect?

Okay, why don't I kick off and then once we get the most structural cash flow, I'm going to delegate that to PC. So, yes, we've given a wide range on structural cash flow guidance for the year. And that is very much driven by, you know, we are still in uncertain times. Our ambition is clear. Our ambition is to grow service revenue low single digit, EBITDA low single digit. We're coming off of peak investment levels. And that's why you get a range of seven to nine non-structural cash flows. Why are we being cautious? Well, if you look at EBITDA, our outlook is flat to low single digits because whilst we have an ambition to grow low single and very much low single in core telco we have to recognise that we're still in an environment where there could be a major recession we don't know yet and that could particularly impact our advertising business and that And if there is an impact on the consumer, we need to recognize that in our guidance and we need to plan for a scenario that the consumer environment might be tough. And so we need to plan for flat EBITDA, even although our ambition is clearly to grow it and our underlying plans are to clearly grow it. At the same time, now that we're off of our peak investment levels, we will now be steering down capex because we're ahead of plan in our 5G rollout and a number of the transformation initiatives are now kicking in. So the big benefit in our cash flow generation next year is really coming off all those peak levels of capex. From an energy point of view, the outlook is better than it was three months ago and we have assumed in our plans that it will be higher than this year over the course of the full year to the tune of 300 million. If you recall three months ago, it was 600 million. But it's still volatile. You know, we still don't know what the winter will look like. We still don't know what the war in Ukraine might do next. And again, that's all factored in to this full 7 to 9 billion range. And then on the wage side, what you're seeing in the Nordic markets is a much more reasonable set of expectations from the unions. You know, we are seeing in the range of 3 to 4.5% is the starting point for the negotiations. Baltic's clearly higher because they're living with higher inflationary rates, but no worse than last year, high single digits. Those negotiations kick in in the spring, and we are well covered for those ranges in our plan going forward. And PC, I don't know whether you want to pick up on other elements of operations retention.

No, I think you've covered it, and if you combine it with my answer to Andrew, I think we have covered it. I can just add on the salaries. We've been guiding earlier that we, in 2022, have around 400 million.

pressure on the salaries and we expect in 23 to have around 600 million and that is still like you kind of estimate of where we end up even if we don't have you know all the answers at this point in time okay very very clear thanks thanks a lot for that maybe very very brief follow-up just on the on the capex guidance um how should we think about cash capex whether it's reported one because i think now you guys on unreported one compared to to the cash and guided for in 2022?

Yes, so maybe I can take that. You're right, we are changing now the guidance, but we have also introduced an output statement on structural cash flow, which of course includes the cash capex components of it. So you think in a way, the cash capex is still a part of our outlook set as such. We have a few hundred million difference between the cash and book in 2022, and we don't expect any material difference for 2023. So we just want to align with the industry and make sure that we have a capex also which is in line with the activities in the year. And since we anyway captured the capex component in our structural cash, we felt it was more easier to do multiple capex going forward.

Great. Thanks so much.

We'll take our next question from Peter Nelson with ABG. Please go ahead.

Thank you very much. Alison, just a question. You're making some fairly strong comments on your failure to monetize the Champions League's rights in particular and wanted to focus on being a content aggregator going forward. Could you elaborate a bit on why do you think you have failed to monetize these rights? Is it simply not possible? Or is it an internal sort of failure by Italia? And what are the broader consequences of this? And your comment, Alison, sounds like you will not bid for the rights the next time they opt for renewal. But does this have any broader implications for your TV and content And then can I just, as a follow-up, as your question on the cash flow for next year to this year, the pension fund contribution, what should we expect going forward here? Thank you very much.

Thanks, Peter, and thanks for the question. Yeah, I've been, you know, since the very beginning, I was clear that I wanted to understand whether we could monetize the TV media asset and its investment in Champions League. And, you know, why have we failed to monetize Champions League? It was a very expensive right in the beginning. And, you know, I am not sure that Telia is best at monetizing content, if I'm really honest. Our TV media units is good at monetizing content, but monetizing content at an investment level that they can get a return on. And that's why we have made the decision to consolidate Seymour into the very sound and successful TV4 and MTV business going forward, to expand TV4 and MTV into offering HVOD, AVOD and SVOD services, but with the right content cost going forward so that we can return that business to the level of profitability it was throwing off before it got into some of these rights. And by making that strategy very clear, I can focus Telia on being a great aggregator What does it mean for what's the broader implications? I think it's no different from what you've seen in other markets. You see us focus more and more on building the right long-term partnerships with distributors and owners of content and making that content easily available on our platform. so that customers can pick and choose the content that they want to watch on whatever streaming service or whatever AVOD service or whatever linear service at any point that they want to. And that is our priority. And it's a trend that you've seen in other markets. That's what we will continue to do. And we'll focus TV4 and MTV on having the right content for their domestic champion, national champion status. And you'll have seen, sorry, just I want to add, you know, in the final agreement we made with Viaply, we're now offering some of our Champions League matches to Viaply. So we're starting to move away from that exclusivity that Telia tried to monetize uniquely. And that's also showing that we want to build a broader relationship and a better long-term relationship with these content owners. And PC on cash flows.

Yes. Hi, Peter. You should expect and we expect to have pension contributions of $900 million in line with what we saw in 2022. Super. Thank you very much both. Thank you.

We'll take our next question from... Stephen Goffin with DMV, please go ahead.

Yes, hello. I would like to stick with the TDM media business, which are reporting very weak numbers. I mean, this business had $1.5 billion in EBITDA before TLE acquired this business, and now It ends with an inevitable low of 300 million. And still the TV4 business is doing better than ever. So the problem is clearly on the pay-to-view side, which you also alluded to. So a little bit on, first of all, is it clear that owning the TV and media business is beneficial for the overall core TLA business? Secondly, what savings will you see from consolidating the pay-to-be business into the linear TV business? And then, can you also explain what you mean with just the content aggregation focus? Does that mean you will not really invest in owning content going forward. Thank you.

Good question. Thank you, Stefan, and good questions. Is it clear that Telia, it's beneficial for Telia to own the TV media unit? I think, first of all, we just need to get that business back. to the kind of EBITDA it was throwing off before it made an investment in very expensive content rights that it has not been able to monetize. And that is what is driving the big shift in the EBITDA development, because as you rightly said, TV4 is better than ever. And that's why our strategy now is to future-proof TV4 for the future by giving it the right level of content to put onto A-VOD, H-VOD, and S-VOD propositions so that it continues to capture some of that digital growth and get more recurring revenue from customers going forward. I think once we've done that consolidation and got the EBITDA and cash generation outlook improving again, then time will tell whether I can extract more value by owning the TV media business or retaining the TV media business. In terms of the savings, because the savings don't really come in until 2024, Stefan, I don't want to over-promise at this stage, but clearly we will... The end of the very extensive rights that we have ends in the spring of 24. And let's see how we evolve our content slate between now and then. But that will be the big benefit of the savings. alongside some OPEX developments that will come in the latter part of this year and going into next year. Because this year, it's a year of transition. We're investing in new tech platforms. We still have to see more brand support until it is fully merged into the TV4 and MTV business. So it's a 2024 benefit, not 2013. And what I mean by content aggregation, I said it's like what other markets have done and will be no different from other incumbent telcos that have the biggest reach and the biggest distribution and the best play for all of these streamers to actually be able to reach customers through.

Okay. Thank you. Thanks, Stefan.

And we'll take our next question from Louis LaCroix with Credit Suisse. Please go ahead.

Thank you for taking my questions. The first one is on Finland. I'm just trying to understand how market dynamics are evolving. We have seen an acceleration in service revenues, mainly driven by mobile and specifically by ARPU. I'm just trying to understand how you saw the quarter in terms of market dynamics and now that we are one month into into Q1 what you are seeing and your expectations into 2023. And the second one is just trying to understand your decision on cutting the dividend at all. I mean, cut is basically 2.5%, which is basically material. I'm just willing to understand what drove your decision on making the move. Thanks.

Okay, thanks. Let me take it. I think the market dynamics haven't really changed so much in the last quarter. I guess we've just had a particular softening in TV media, and I've mentioned the buy-off rate dispute in Sweden. I think as we look into next year, we will continue to take the action that we've been taking this year, to drive ARPU development across mobile, broadband, and TV. We'll continue to push convergence and growth of new services, particularly in the enterprise space with security and IoT. And so over the course of the year, we expect to see low single-digit, similar service revenue development to what we've seen this year. We do, however, expect it to improve during the course of the year because we've annualized some pricing. And as I said, the end of the year was a soft Sweden consumer that probably we won't start to see recovering until March onwards because of the pricing action that was taken. Just very quickly across our market, we have not yet seen any consumer impact from rising inflation. We monitor it very closely. Q4, there's always less roaming, so we didn't see the roaming uplift that we had in Q3. And we have clearly seen a little bit less VAD services like insurance coming through in the quarter. But our underlying strategy and considering no yet significant change in consumer spending power in markets says that we expect very similar market dynamics for this year. And then what you will see during the course of the year is obviously our inflation-linked contracts will start to benefit our enterprise segments, where we've already got those contracts rolled out on a material basis, and that's particularly in the Norway enterprise segment. In terms of the dividends, our policy is clear. It's a flow of two. and an aim to grow in line with underlying earnings development. Because our earnings did not grow and our cash flow clearly went down this year because of peak investments and some of the supply chain phasing that we mentioned earlier, the decision was taken that it was right to go with the floor of our dividends. rather than to show growth in the dividend. Because clearly, you know, we want to link the dividend to cash, underlying cash generation going forward.

We'll take our next question from Maurice Patrick .

Hi, Maurice.

about the capex outlook, maybe for the medium term. If I recall the time of the session that you gave... Can you hear me okay?

Yeah, Lawrence, could you start again? I think... Yeah, we can. If you could start the question again, we missed the beginning of it.

Yeah, no worries. It's a regular problem for me. So, if we think about capex into the medium term... not just 23. If I recall, you talked about 15% capex of sales once we were through the peak of the transformation investment. And now you're talking about 13 to 14 billion, maybe even the lower end of that. And it seems there's still some transformation efforts still going on. How should we think about the medium-term capex level? Is 13 to 14 the right number for the and services coming out a bit early for 6G and the replacement for fiber. So how do we think about CapEx over the next few years? It would be helpful. Thank you.

Hi, Maurice. I can answer that. I think you basically answered your question. I think, you know, the 13 to 14 is a good range to also have beyond 23, even if you don't have, you know, the same level of details for those years. And it's kind of been part of our plan already. We are now, because we spend a bit more than we thought we would be able to do in 22, we are able to take down 23 a bit more than what we have been guiding on before and actually then go below the kind of 15% sales that we have been guiding you towards. And then we expect to stay on that level also in 24 and beyond.

Great. Just a very quick go on for Rainer, if I may. You talk about a seven times capacity increase of 5G versus 4G. Is that a spatial efficiency or is that just total capacity?

Yeah, thanks for the question. Remember the... The network capacity increase is actually not only coming from the 5G, but also we have modernized the 4G into a much more state-of-the-art network. So it's a combination. But clearly, clearly, the spectrum efficiency is the key driver for the capacity increase. And we, I think, still have even more room because the spectrum acquisition that we have done, obviously, is even larger than what we have now with toys. So going forward, if we need more capacity, there is room to even further increase. But the 7X capacity increase is available. We see, to the point of fixed wireless, there's a bit of a link because the fixed wireless is growing actually fairly nicely with the updates also we have given in Norway, new propositions we launched as a self-install. So that capacity will be also required to complement Great.

Thank you very much, indeed.

Thanks, Lauren. We'll take the next question from Andre Kavetsky with UBS. Please go ahead.

Hi, and thanks for the presentation. I've got two clarifications and one question, please. In terms of the clarifications I want to ask in terms of the content renewal, so you mentioned that you will have more clarity on these in 2024. I was just wondering, because the UEFA content, the Champions League content, you acquired exactly three years ago for a free year. So I was wondering that the option must be very imminent. So if you could confirm that, please. And then what would the content when you open 2024 exactly be related to? The second clarification, just on CapEx, so you mentioned 13, 14 billion as roughly the outlook beyond 2023. I was just wondering if that is really the absolute number that you're targeting or if the implied kind of, say, 14% of sales is the level because you have a medium-term ambition of growing service revenues, so just the quality in terms of the absolute versus relative would be helpful. And then my question really on Sweden consuming. So you basically spoke about inflation not really yet having an impact as far as you can see on the consumer in Sweden. So just to understand the softness that you've seen in the fourth quarter, especially, I guess, in terms of mobile, really north of the competitive environment. I know Felix, for example, was talking about... you know, good traction with their unlimited care. So it is more of a competitive situation that you think you will be able to correct with 5G, you mentioned as being a big driver and price increases, or what exactly is the source of that toughness in Sweden in particular? Thank you.

Okay, thanks, Andre. I'll try to take those clarifications, questions, and if there's anything left on CapEx, I'll pass it back to PC. Content, the big one is Champions League in spring of 24 for us. I imagine the options for that next round of Champions League, I guess, will happen at some point during this year. But the timetable is varying by market, and I'm sure... they will want to pick a moment where they think they can extract the most value. So yes, it will be soon, but let's see how soon. The CAPEX, at this point in time, we're aiming for an absolute 13 to 14 billion range outside of, you know, we've made that clear for 23 and based on the output years, PC has already clarified that is a good level for us to assume looking forward at this point in time. And I'll let him finish off on CAPEX after I've answered your last question on Sweden B2C. Yes, You know, what really happened to us in the fourth quarter is, you know, there was a distortion in our underlying broadband and TV trends because of the Viaplay dispute. If you look at mobile, we didn't really see a lot of change in the quarter versus prior quarters. And, you know, not surprised that Teletubbies are seeing good traction on Unlimited. Unlimited is a popular car for us as well. But, you know, our focus continues to be much more a convergence focus. And, you know, the big opportunity for us is to continue to cross-sell mobile into our fixed base and continue to get more services by household and by individual. So yes, 5G unlimited plays a role in our mobile strategy as of pricing, but convergence plays a very important role because of the best network status we have on both mobile and on our fixed infrastructure, and also with having the broadest range of content aggregation. And yes, you know, no signing of, you know, living between Sweden and the UK gives me a very good insight into the consumer sentiment between the two countries. It's a very different environment here in Sweden. There's much less dialogue about consumer squeeze, recessionary pressure. It seems to be a population just gets on with it, which is very, very different from the UK population. But that being said, we're super sensitive to the macro environment around us, and that's why we're being quite cautious on our guidance for next year. And PC, do you want to follow up on the CapEx piece?

Maybe to give some flavor and connect it also to the question from Maurice, you know, why do we believe that 13 to 14 is a feasible range even beyond 23? You know, if you build on what Reiner has been talking about, by the end of 23, we have most of the network modernization on the mobile and the 5G rollout behind us. meaning that we have done a massive modernization and a front-loading of the mobile network investments in these three years that we have been talking about for a long time, and that we also added a lot of capacity in our network. That means that we can continue to reduce our investment into the mobile network until there at some point becomes a technology shift, but that's just further up. The second thing is, as Rainer also talked about, our progress of reducing the legacy and building common products and platforms will enable us to be more capex efficient going forward than what we have been in the past. But keep in mind, what we are doing now, we are actually also investing to remove that legacy and to build those common platforms. So that will help us over time. And then as before, you know, there are no big footprint expansions in our plans. If there is any opportunities, we will then pursue that together with partners or more kind of other structured vehicles and not do the full investments on our own. So a combination of those, we still think that that's a good run rate beyond 23.

That's very helpful. Thank you very much.

We'll take our next question from Steve Malcolm with Redburn. Please go ahead.

Yeah, good morning, and thanks for taking the questions. I think if I may, first up on interest cost, PC, I think you said that interest costs would be up a billion sec year on year in 2023. Can you just clarify that and also remind us what proportion of your debt is exposed to floating and kind of what the interest rate assumptions are behind that billion sec rise in 2023? Sure. And then a couple on working capital. First, I'm still a little bit unclear. Just looking at slide 32, some of the guidance is to be the same as 2022, which it looks like on slide 32. Well, I think what you said is that you expect it will be neutral or slightly down. Could you clarify that? And within working capital, I'm kind of curious on the vendor financing picture. Maybe you can help me a little bit here. If you keep vendor financing flat in 2023, given that your capex is coming down $2 billion, obviously means that you're going to be allocating more of your capex and your opex, which is going down towards vendor financing. So is that correct? And then interesting about the cost of vendor financing. I mean, historically, it's cost you nothing because suppliers have basically taken a very small haircut to be paid early. Is that still what you're seeing? Is it still costing you practically nothing? And are you relying on your suppliers to take bigger discounts in a rising interest rate environment to be paid early? Is that the future? Are you having to share some of the costs? That'd be super helpful. Thanks.

Yes, I'll take those, Alison. On the interest rates, yes, you are correct. The expectation is around a billion higher cost following the interest rates that we saw increasing in 2022 and the expectations that we have in the market in 2023 and beyond. I think we are in that outlook, reasonably conservative, so there could be upside if the interest rates start to come down, but it's way too early to speculate on that. The balance between fixed and closing is at the moment, and in line with our policy, to be 50-50, fixed and closing.

on total cash flow.

And the biggest component of that is to make sure that vendor financing doesn't become a drag. Because as you talk about, and I'm fully aware, with a higher interest, there is an exposure that we need to mitigate. And we are very well on track on that mitigation, as I talked about before. And if we're going to keep that balance, you're also right that if we are uh ramping down capex that we are now guiding on that means that we need to add some more let's say spend or vendors on our capex so that is a component of it but we don't you know it's not that massive there are some elements of it here and there And you're also right that we don't think we should and we don't think we need to pay for vendor financing. That's the kind of dialogue between the suppliers and the banks and the discount that they are willing to give to get the pay in seven days. So that is our response. And then there might be one odd case where there is a discussion on how to deal with it. In any case, we would definitely not have a downside that is higher than our alternative cost of borrowing. So that is the strong kind of guidelines that we are using.

Okay, so PC, just to be clear, you're assuming that your suppliers will, instead of taking maybe a 50 basis point or 100 basis point discount to be paid earlier, they're not going to take maybe a 3% discount given where rates have moved in the last 12 months?

Yeah, because, I mean, the discount was quite small, you know, when the interest rate was very low. When the interest rate is high now, it has a bigger value, and many of our suppliers are willing to give a bigger discount to get paid early. And we also, you know, in this uncertain environment, you know, money in the bank has a bigger value than it was.

Yeah, but I guess it's going to hit their margins a bit harder is the downside to that, right?

Yeah, but that's on their side, right? It depends on how they look at it. They're looking from a complete financial perspective. But we have, you know, we have some vendors that are really interested and actually looking for it, and we have some vendors that see the concerns that you have, that they don't want to hurt their margin. And in those cases, we go into dialogue and find a solution.

Okay, great. Thanks very much.

Okay, we'll take our next question from Kabel Kuro with Deutsche Bank. Please go ahead.

Thank you. Two questions, please. Firstly, I want to just go back on the dividend. You mentioned that naturally leveraging is a priority. But equally, the 22 BPS is still a full payout of free cash flow for 2023 at the midpoint. And we have the Swedish spectrum auction on top. So what will drive the leverage reduction in 2023? And did the board consider any merits of a lower dividend from which it would be needed to go from? And secondly, I think you suggested rising interest rates. have also been embarrassed concluding infodeals. But can you elaborate a bit more on this? We've still seen pretty healthy multiples for infodeals elsewhere in the sector over the past few months, but is there a bit more pressure on the multiple for your potential rooftop transaction? Thank you.

Thanks, Carol. I'll try and take those questions and then if there's anything outstanding I'll pass to PC. Deleveraging is a priority, absolutely. But, you know, we... decided with the board support that whilst we were still able to stay within the two to two and a half range, you know, with maybe the old quarter going out of that, we should stick with our current dividend policy because that supports the strategy. And we would not impact our dividend in this period when we have a plan to mitigate all of the structural macro headwinds that we saw during the last year, and they all hit us during peak investment period. So the plan is to deliver over time. You're right, the dividend might not be fully covered in 2023, but we believe we have the flexibility within our two to two and a half range to manage that. Albeit, you know, we might be at the higher end of that or slightly out of it in any one quarter. And, you know, but we have built in what the speed inspection option might be during the course of this year. So we've factored that in. So I wouldn't, you know, it's a priority for us to do ever. I think the reality in 2023 might be that, you know, we'll be in the upper end of the two to two and a half range rather than seeing any movement downwards. But clearly moving out of 23 and, you know, with a lower capex investment, with some of the macro headwinds subsiding, and as I mentioned earlier, you know, some of the pay TV pressure subsiding as well will be in good shape for in 2024 for us to start to see a delivering. And that's why the board did not want to impact the dividend. In terms of multiples, We've just seen them drift down a bit and we decided that we want to wait until they drift back up again for our rooftop transaction. That's not to say that we're not continuing dialogue, we will, but we're not going to do deals when we don't believe that it makes financial sense. It just came a little bit too marginal for us at that point in time, but I do expect that once there's more stability in the market, once we've gathered actually a little bit more information on the value of those rooftops, that it will be an asset that will be available to consolidate into our power platform at a future date. But we're not going to do deals if we don't believe it makes good economics.

That's cool. Thank you.

We'll go next to Nick Lyle with Sogden. Please go ahead.

Hello, guys. I hope you can hear me. It was a couple of questions, please, Alison. Firstly, one on Norway and on cable, please. Your subs look pretty solid, your broadband subs, but could you give us an update on how much of the network has been overbuilt by fibre providers in the Norwegian market? And from your comments on CapEx, it doesn't sound like you've got any plans to overlay with fibre, but could you correct me if that's wrong, if you're thinking about maybe doing something on the network technology here? And then second, just to come back to Kevil's point on the dividend in that last question, if you're out of that range, the 2 to 2.5 times range at the end of the year, is that sort of the, that's the sort of red light for the dividend, the sort of warning sign for the board, is it? Or would you be given sort of credit that change is becoming potentially in TV and media, as you say? But is that the sort of be all and end all? If you're out with the range at full year, that's the end of the dividend policy too. Thanks very much.

Thanks, Nick. On Norway, we have no intention to roll out fiber. I think there's enough fiber being rolled out. And our broadband business, from a cable point of view, holding up pretty well. And Reiner, you know, picked on the growth that we're seeing in fixed wireless access as well. So, you know, no intention to get into any fiber sort of investment in Norway. I'm happy with our fixed wireless access. is now complementing our cable business. And what we're doing a very good job is building the number of partners that we sell our full range of connectivity services into in Norway. In terms of the dividend, clearly I can't comment for what the board might want to consider this time next year, but we made the decision at the board meeting yesterday, looking at how our leverage will evolve over the course of the next year and into next year. with the range of sensitivities around that, and they got comfortable that 2-corona was still the right level, and that we would be moving into 24 in a stronger position from a test generation point of view.

Okay, thanks very much, Alison.

We'll take our next question from Adam Fox-Rumley with HSBC. Please go ahead.

Thank you very much. Hello, everyone. I do have quick questions on the Transmit, the modernisation programme, please. As was outlined, the narrative is very ambitious, remains so. I was wondering if you had any details on benchmarking versus competitors, where you are now and where you think you'll end up at the end of next year, I suppose, or this year, rather. And then your second question was on workforce engagement and whether or not you've had any recent surveys in terms of anything you can say about the moving route of the staff at the moment. Thanks.

So let me take the workforce engagement. I'll pass the first question to Raina. Workforce engagement, we have a highly engaged workforce. We score at the, you know, in the upper end of any of companies that we compete against. we were at an engagement level of 78% before we went into the transformation. We've gone down to 77%. So engagement remains really, really high. And we've actually, that's not to say that there's not impacts from, you know, the ongoing transformation and workforce production. And we monitor that very closely. But overall engagement is good. We're actually going through a big refresh of our values and our culture at the moment. We're doing it from the ground up. So we've got our organisation telling us how we can better bring our values and our culture to life. So overall, I'm super proud of how engaged and passionate our people are, despite the many headwinds. And, you know, it's our role to keep those high levels of engagement. And now I'm passing to PC on the first question.

Yeah, but maybe just start, you know, the dimension to your question. If you take it from a cost and efficiency perspective, we did a very comprehensive benchmark two years ago that we are, you know, set the scene and identify the areas that we really need to address with our transformation program. And this goes across the cost agenda, but also the investment agenda, where there was, you know, clearly inefficiencies in the group as a whole and a lot in Sweden and a lot in our kind of product tech area. And fast forward where we are now, we start to see that the efficiencies that we take out for the CapEx and OpEx is sort of closing in on those gaps. But both the good and the bad thing is that we still have a lot of more work to do, but I see that as more opportunities becoming even more efficient and reduce our costs and our investments going forward. But maybe, Rana, you can elaborate a little bit from your perspective.

That's a compliment. So the benchmarking is obviously the driver for looking at the right areas. If I look at the transformation from an approach and ambition perspective a bit more, comparing other telcos. From my own experience, as well as what we hear from some of our partners and peers, we are fairly, I would say, on the forefront of the ambition, especially also looking at the structural change we have made when we started to consolidate all the tech into a common team that gives us that leverage of creating through. So the common technology cost, for example, which represents a fair share of the total OPEX and CARTEX agenda, has delivered meaningful and net savings, both on OPEX and CARTEX. So typically, when we see that we take in either a platform, a product, or even a team into a common delivery, we realize between 10% and 20% savings on that particular area. And one of the examples that we have very vividly here in Intelli is that we have a common single operations team where we are operating all our networks, which already are harmonized on-run as well as down to the core network. And that has proven exactly that method that we have had separate teams before we are consolidating and we realize those 10 to 20% cravings. But as DC said, this is far from done. those elements and the foundation that we outlined earlier, yet to scale to full potential. That is exactly now what we are doing in 23, 4 and 5, which is our horizon of the transformation.

Thank you. So I think on that final comment from Rainer, we should probably end the call. And I just want to say, you know, clearly 2022 was not the year we expected. We did make good strategic progress, but we were thrown a few extra challenges along the way. We've taken steps to strengthen our strategy to mitigate those headwinds. And we're now stepping up the pace of our transformation agenda so that as we look forward, we get back to our original value creation plan. and get back to the top, bottom line, and cash flow growth that we always imagined and still believe in. So thank you all for your questions today. Look forward to seeing many of you in the coming days and weeks, and thank you.

Thank you. This does conclude today's program. Thank you for your participation. You may disconnect at any time.