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.