Telia Company AB (publ)

everyone to tell your company's q4 2023 results presentation and strategy progress and with that i will hand over to telling a company's head of investor relations eric strand and peers please go ahead the floor is yours

Thank you, Sophie, and welcome everyone to this call, which is about our fourth quarter and full year results, as well as our strategy update, which we've done every year in January since 2021. Our CEO, Alison Kirkby, is still with us here at Telia. You may have seen her commenting on the results in media this morning. But as you know, she's moving on to BT in just a few days. So she's trusted us to do this call without her. As from experience, we know some of your questions tend to be a bit forward-looking in nature. So therefore, Erik Hagerman, our chief financial officer, will present the quarter. Then Rainer Deutschman, our chief operating officer, will take us through that strategy update, after which he will hand back to Erik to comment on the financial outlook. And I expect this to take about half an hour, after which we look forward to your questions. So, Erik, the floor is yours.

Thank you, Erik. Good morning and welcome to our fourth quarter results and yearly strategy update presentation. I'm pleased to say that we continue to deliver. on our key focus for this year which is to maintain the profitable growth momentum in our telco operations and it's also pleasing to see that despite the weak advertising market in sweden we are starting to make some progress on our plan to return tv and media to profitability Looking at the telco operations, we delivered service revenue growth of 3.3%. Unlike previous quarters, growth is broad-based across all geographical markets, across both consumer and enterprise, as well as across both mobile and fixed. Telco EBITDA growth was plus 5.4%, supported by service revenue growth, a decline in OPEX, and a continued energy tailwind. For the full group, EBITDA growth reached 7.3%, as TV and media improved significantly versus last year, driven by the comprehensive cost restructuring, which more than offset the effects of a continued weak Swedish advertising market. The structural part of operational free cash flow improved as expected by 2.1 billion SEC in the fourth quarter, driven by higher EBITDA and lower cash capex. For the full year, structural operational free cash flow reached 7.3 billion. As expected, the working capital contribution was also strong in Q4 and had a positive 4.6 billion impact to operational free cash flow. Leverage came back into our preferred range again, decreasing to 2.32 times on the back of strong cash flow generation and increased EBITDA. Strategy execution also continued at pace, including 5G population coverage reaching 89% and Telia Sweden again awarded best network in Umlaut's yearly benchmark. On mobile MPS, we are seeing good progress too, with six consecutive quarters of improved score. And like I alluded to in the beginning, we see that all the efforts made to our media business now also is yielding results in the quarter. In the quarter, we made non-cash impairments of 4.1 billion SEC, referring mainly to goodwill in Finland and TV and media, as you've seen in the press release earlier this week. And finally, the Board of Directors proposed an unchanged dividend for 2023 of 2 kronor per share to the AGM in April. We remain thus committed to the financial framework and to return cash to shareholders in an ordinary fashion. Now let's go to the markets. And like the tradition goes, we start in Sweden. As you can see, we continued to gradually notch up on the 5G coverage and reached 82% in the quarter. As already mentioned, the network again came out as the best in Sweden after securing the top position in all three categories, voice, data and crowd. In fact, the score received was so high that it placed Sweden's mobile network amongst the top five best in the world. Sweden also continued to do well financially, with service revenue again improving sequentially, supported by strong development in both consumer and enterprise. And since the legacy headwind remained stable at around 140 million, also the underlying service revenue development improved sequentially, ending at a growth of plus 4.7%. EBITDA grew by 80 basis points and as usual it was driven positively by good service revenue momentum which is partly offset by the decline in high margin copper revenue. A handful of temporary items including energy savings, effects and bonus accruals largely offset each other this quarter and we believe that the modest positive EBITDA growth that you see here is fairly representative of the current underlying development in Sweden. Moving on on the next page to the operational KPIs for Sweden, we see that mobile SOPs declined 30,000 in the quarter, entirely driven by the enterprise segment and a loss of a few larger, low ARPU accounts in the public segment. APU itself increased almost 1% as the impact from price increases early in the year, compensated for continued mixed shift related to growth in family propositions and fellow. Finally, on mobile, Theria launched a new portfolio in the quarter, which contains more for more pricing in the lower end of the price range, and where we try to drive the use of family lines towards the more high-end subscriptions. On broadband, subscriber base was stable as growth in fiber and fixed wireless access compensated for the decline in copper broadband. The growth of fiber subscribers and pricing taken early this year resulted in another quarter of double-digit fiber service revenue growth. And finally, we turn to Telia Sweden's TV service, which again was recognized for having the most satisfied TV customers. And like so many quarters before, the subscriber base expanded, growing 17,000, supported by growth in both SDUs and MDUs. ARPU increased by 14%, partly due to the black screen situation with Viaplay last year, but mainly by the recent performed price increases. Now to Finland, where service revenue again grew around 2%, supported mainly by consumer mobile. And EBITDA grew at a double-digit rate, driven by the positive service revenue development, as well as OPEX reductions of 5.4%, when including the energy tailwind and lower marketing spend, as a result of continued channel optimization. The mobile post base declined by 24,000, predominantly driven by a continued focus on raising the ARPU levels in the consumer segment, which resulted in the consumer mobile ARPU increasing by 12%, while enterprise mobile ARPU in Finland was rather stable in this quarter. In Norway, our service revenue growth momentum continued, with all segments contributing to the growth rate of 4.2% for the quarter. EBITDA also continued to show a very healthy growth, ending at plus 8.9%, driven both by the aforementioned service revenue growth, but also OPEX that contracted by 10% due to lower costs for resources and energy, as well as a one-time item related to pension costs. Excluding the pension item, EBITDA growth in Norway was around 5%. The mobile subscriber base remained fairly flat also this quarter, and ARPU was up 3%, driven by the consumer segment that saw a 6% increase. In Lithuania, the service revenue growth pace softened in the quarter, ending at plus 4.3%. And the slower growth, coupled with higher resource costs related to year-end employee bonus provisions, was also the reason why EBITDA this quarter was a bit more muted than the one before. Estonia, however, continued to march on and delivered another solid set of results. with service revenue up 6.2%, of which mobile grew 4.8% and fixed grew 7.1%. And as a result, EBITDA growth continued at an impressive plus 11%. Finally, we come to TV and media that continue to be negatively impacted by the continued weak advertising market in Sweden, resulting in ad revenue decline of 14%, a tad better than the development we saw in Q3 when it declined 16%. Pay revenue, however, developed well and increased 6.5%, supported by both a growing subscriber base and higher ARPU. In fact, the pay TV growth rate was the best since the fourth quarter of 2021 when we were recovering from the pandemic. EBITDA and TV and media improved 132 million SEC compared to the same period last year and reached positive territory in the quarter, helped by a significant reduction in content expenses and sizable reductions in resource cost and marketing. Looking at the subscriber base, we saw another quarter of solid development, driven mainly by the recent launch TV Play Plus and Katsuma Age Vault services. Now let's move on to the group financials for Q4 2023. Like I've already mentioned, most telco operations maintained the positive trends from the third quarter. It was also a quarter where enterprise and consumer contributed equally well, as did mobile and fixed. All in all, this resulted in service revenue of 1.7% for continuing operations and 3.3% for telco. The telco EBITDA growth trend also persisted at plus 5.4%, albeit at a slightly more normal level. And for the first quarter and sub-time, also TV and media contributed to the overall growth of the group that ended at plus 7.3%. Continued energy tailwind contributed positively to this, while an increase in bonus accruals had a negative impact of approximately the same amount. On the next page, OPEX excluding energy remained more or less unchanged compared to the same period last year. This has increased resource costs driven by higher employee bonus levels in several markets, was compensated for by lower marketing spend, and the other smaller reductions for miscellaneous items such as bad debt and travel. CapEx declined, as expected, significantly in the quarter to 3.6 billion SEC due to lower investment levels in mainly Norway and CPS, primarily related to less investments in fixed infra, as well as product development and IT. We ended the year with a total CapEx of 13.6 billion, well below the 15.3 from the year before. Also cash flow improved as expected significantly in the quarter. Just as booked CAPEX declined, also cash CAPEX declined significantly versus last year and was together with the positive EBITDA development of half a billion SEC, the main drivers behind the improvement we saw in Q4. Restructuring costs increased by 400 million, impacted by a provision for VAT in Norway of also 400 million. The provision, however, didn't have a net impact to cash flow as there is an offsetting positive item within other items here. And finally, paid interest increased by 300 million on the back of increased interest rates on our outstanding debt. Together, these items had a positive impact to the structural part of operational free cash flow of 2.1 billion. And like I said at the beginning, working capital also had a material positive impact in the quarter and resulted in operational free cash flow increasing by 6.7 billion versus the same quarter last year. Let me end this financial section now with a brief look at our balance sheet. We saw net debt and leverage declined significantly in the quarter. Net debt decreased by 5.2 billion due to the strong cash flow generation in continuing operations. And leverage was reduced from 2.53 times to 2.32 times from a combination of both lower debt and higher EBITDA. So we are exiting the year, like expected, by being again within our target range of two to two and a half times net debt to EBITDA. And with that, I now hand over to Rainer, who will take you through how we're doing on strategy.