Telia Company AB (publ)

Thank you, Laura, and welcome everyone to the call.

We will do this in the usual manner, starting with a management presentation by our CEO, Patrick Hofbauer, and our CFO, Erik Hagerman. So I leave the floor to you, Patrick.

Thank you, Erik, and good morning and welcome, everyone. Let me start with a few overall reflections. The second quarter shows that we continue to trend well and in line with our expectations on service revenue and EBITDA, which is encouraging and shows that we have momentum to build from as we craft our value creation plan for 2025 to 2027. Like in previous quarters, we do better for consumer customers. We have strengthened our TV offerings with new content, including being the first among telecom operators with Amazon Prime. We have launched new mobile offerings in Norway and reduced customer service calls volumes in Sweden further. As a result, we see positive subscriber development, low mobile churn, increasing ARPU and higher empathy. And by the way, congratulations to Spain. And also saw strong development in digital revenue, which outpaced a continued drop in linear revenue. So all in all, we continue to perform well and much in line with our own plans. Looking at the financial highlights on the next page, momentum in our telecooperation remained with service revenue growing in line with last quarter at 2.6%, and again with growth in almost all markets, and growth in both mobile and fixed services. The quarter consumer was again the driving force with a 2.9% increase, but enterprise also grew 1.3%, an improvement from Q1 when it was neutral. Telco EBITDA grew 4.1%, driven both by higher service revenue and better cost development. TV and media continued to improve both on service revenue and EBITDA, resulting in a 2.5% increase of service revenue for the group and a 5.3% increase in EBITDA. Structural OFCF picked up materially and reached 1.7 billion on the back of profitable growth and 0.4 billion in tailwind from pension refund facing in Sweden, which you probably remember that we also called out after the first quarter. So in conclusion, we are on track on service revenue, EBITDA and Structural OFCF and also on CapEx. So we confirmed outlook for the full year across all metrics. Leverage was substantially reduced down to 2.21x from 2.43x at the start of the quarter due to EBITDA growth that proceeds from the Danish transaction and operational cash flow generation. Finally, as you know, we are planning to have a capital market update. The date will be September 26. I hope to see as many of you as possible here and tell you about the next chapter of Telia and our ambitions for 2025-2027. Let's now move into the markets, and like always, we start in Sweden. Overall, Telia Sweden continues to perform well with service revenue growth driven by consumer segment, and particularly by broadband and TV. They have together drawn uplift of about 200 million SEK. Enterprise, which had a strong year last year, was flat this quarter as growth in large customer projects did not fully compensate for the drop in fixed telephony. But we think that the underlying demand for connectivity, security, IoT and cloud services remains intact. Excluding the negative impact from legacy of 130 million, service revenue growth remained healthy at 4.3%. And as you will see on the next slide, the number of DSL customers is decreasing fast, resulting in a continued, gradually fading legacy pressure. EBITDA showed a material improvement in Q2, supported by service revenue growth and a positive 100 million impact from the refacing of the pension refund from Q1 to Q2, which again we told you about in the last quarter. Excluding this, EBITDA growth was at around 1%, in line with the underlying performance in recent quarters. Then moving on to the operational KPIs. Again, Sweden showed growth on mobile postpaid subs supported by consumer and predominantly by growth for Fellow, and with churn nearly at record low levels. RP continued to be flat, owing the mixed shift towards family SIMs and our Fellow brand, as well as lower sales of device insurances because of the continued drop in equipment sales. Broadband subscribers increased by 7,000 as growth in predominantly fiber but also fixed wireless access, more than compensated for the decline in copper. New fiber pricing last year continued to support ARPU, and in Q2 we did additional more-for-more pricing to support ARPU over the coming quarters. Finally, our TV business continued to outpace the competition with subscriber growth of 12,000 and ARP increase of 19%. To further add to the appeal of our TV service, we included, as mentioned, Amazon Prime to the distribution offering. Now, moving over to Finland. Finland has saw a neutral service revenue development this quarter as mobile growth of around 3%, offset by lower fixed revenues, driven by continued pressure on legacy revenue, regulatory changes and a ramp down of our non-profitable e-invoicing business. In the quarter, we also signed an agreement to sell our web hosting business, not a major transaction, but nevertheless important as we continue to simplify operations and focus on our core. Due to the softer service revenue development and only marginal tailwind from energy, EBITDA growth showed to just over 1%. The mobile subscriber base declined 16,000 following a continued focus on value and ARPU rather than volume, something that drove consumer ARPU up at 8%. A very strong level, albeit somewhat lower than the 12% we had in Q1. Our brand perception and customer satisfaction trends positively, and our churn is low, so we think Finland can do better, and to improve growth, we are selectively adding to our sales capabilities. This is starting to have some small positive effects already, but it will take some time to build up, so we expect the upcoming quarter also to be a bit softer like this one. Moving to Norway, where service revenue continued to grow, albeit at a slower rate, as continued good development in mobile was partly offset by a 3% reduction in fixed and the removal of paper invoicing and mobile bank ID fees. Wholesale growth remained strong, but we are starting to analyze the impact from the Fjordkraft contract, as you know. EBITDA increased by 3%, supported by the growth in service revenue and positive one-off items this quarter, leading mainly to an adjustment on the pension liability, totaling about SEC 50 million. A similar amount as to what we also had in positive one-off items in Q2 last year. On the KPIs, mobile ARPU remained flat as pricing effects were offset by somewhat higher share of large customers in the public segment with a lower ARPU. But our new mobile offering and summer campaigns have been well received, and it's encouraging to see that we have turned around the mobile subscriber trend, which has been negative for many quarters. We will continue to invest selectively in growth activities and we expect that Q3 EBITDA growth will temporarily dip into negative territory against a tough comp, but should pick up again in the coming quarters. We are also evaluating the needs to step up investments in the fixed network somewhat, now that the mobile network modernization has reached a population coverage of 95%. Moving over to Lithuania and Estonia. In both Lithuania and Estonia, we can see that service revenue growth picked up somewhat in the quarter. In Lithuania, that was driven by 10% growth for mobile, whereas in Estonia, growth was more driven by fixed services increasing by 2%. And for both countries, the slight sequential improvement to service revenue growth and cost discipline resulted in good operating leverage and EBITDA growth that outpaced the growth in service revenue. But like in the case for Norway, Lithuania also faces tougher comparison in Q3 due to strong energy tailwind and boost from the NATO summit in Q3 last year. Before I hand over to Erik, I'm happy to see that we continue the improvement in TV and media, where service revenue turned positive, supported by advertising revenue growth of 2%, and particularly good performance in digital advertising growing over 25%. Non-advertising grew 3% on the back of an expanding streaming subscriber base. It is very encouraging to see how well the transition to digital is going at the moment, with digital revenue streams in total more than compensating for the drop in traditional linear revenue. Despite an increased content cost level because of the Euros, EBITDA improved 90 million. This is driven by higher revenue in part, but mainly it's a result of good work on cost over the past year. As I'm sure you have noted, we have not renewed the UEFA Champions League and expect lower content cost from Q4 onwards, as the third quarter is also impacted by the cost for the Euros. Looking at the subscriber base, we saw an increase of 34,000 driven by non-sport packages and especially our HVOD service in Sweden. And seen over the last year, growth is even more impressive at more than 200,000. The increase of HVOD subscribers were also the reason why ARPA decreased year on year, but net impact from the subscriber base expansion is positive and a driver behind TV revenue growth in the quarter. And with that, I hand over to Eric that will take you through the Q2 financials.

Thank you, Patrick. Moving then to the next page on service revenue and EBITDA. Like you've already heard, we had broad-based profitable growth in our telco operations, with service revenue growth continuing at a steady pace, and this quarter also TV and media contributed positively to our EBITDA growth. EBITDA growth in telco nudged up sequentially to 4.1%, supported by all geographical markets, and was also helped by the pension refund in Sweden, which we told you about last quarter, as well as the start of the TSA with the new owner of Telia Denmark, both items impacting EBITDA by around 100 million SEK each. Following the operational improvements in TV and media, EBITDA growth for the group was 5.3% in Q2. Let's now have a look at the condensed P&L on the next page. Here we see that revenue increased by 1.5% as service revenue growth more than offset lower equipment sales. The driver behind the lower equipment sales was predominantly reduced sales of fixed equipment to enterprise customers in Sweden and Finland that together declined by around 350 million SEK. However, this was largely compensated for by the increased equipment sales in other operations following our TSA with Norelis, which we informed you about last quarter. The biggest contributor to EBITDA growth was Sweden, growing 130 million, of which 100 million was due to the expected re-phasing of pension refund and the service agreement in Denmark. Our EBITDA margin expanded by 130 basis points to 35.1%, supported by continued good cost management. Net income for the quarter increased by almost 4 billion, driven by a profitable growth and a 3.3 billion capital gain in discontinued operations from the divestment of Telia Denmark. OPEX and CAPEX on the next page. OPEX declined by 5% due to mainly resource cost, decreasing by around $260 million in the quarter. In addition, we also saw a reduction in property cost as well as marketing spend, together worth about $3.5 billion. Service revenue grew while OPEX declined, resulting in OPEX as a percentage of service revenue falling to 31.5% versus 33.9% in Q2 last year, a 240 million basis points improvement. On the right-hand side of this page, you can see that CapEx declined by 100 million year-on-year to 3.5 billion and is circa 500 million lower than last year in H1, primarily due to improved capital discipline. Like in Q1, the reduction also partly reflects the phasing of our full-year CAPEX plan. We expect the investment level to pick up a bit in H2. Consequently, our full-year CAPEX outlook remains unchanged at around 14 billion. Let's now look at our cash flow performance in the second quarter. Structural cash flow increased 1 billion to 1.7 billion, supported by a 500 million increase in EBITDA, as well as a 400 million positive impact from the pension refund. Restructuring items, cash capex and taxes all remained rather unchanged, whereas repayment of leasing liabilities and interest both moved by 200 million in the opposite direction compared to last year, so in effect cancelling each other out. Interest payments are seasonally highest in the first and third quarter, and we currently expect interest payments of around 1.2 billion in the third quarter, but we expect only half as much in Q4. For leasing, the increase was the result from contractual inflation and phasing, whereas the improvement in interest paid was largely due to phasing between Q2 and Q3. Working capital contributed 1.1 billion to the 2.8 billion operational free cash flow, predominantly related to relatively low content payments, lower inventory levels in Sweden, terminal financing in Norway, and some phasing of payables across the group. Some of these positive contributions are items that we brought forward originally planned for Q3, which leads me to the next slide. The next slide aims to give you more visibility on our EBITDA and cash flow quarterly phasing for the remainder of the year, as some of you have asked about this in recent months. As Patrick indicated in his comments, we expect temporarily slower EBITDA growth in some markets in the third quarter. And as you remember, we have a tough comparison following the 9.3% telco EBITDA growth in Q3 last year. So overall, we expect EBITDA growth in Q3 to be rather flat, but that growth will pick up again in Q4. So just to help you on the quarters, market expectations for EBITDA seem somewhat optimistic for Q3, to the tune of a couple of 100 million, but somewhat low for Q4 by approximately the same amount. We are overall not particularly concerned for the full-year market expectations, which appear to be reasonable. We expect structural operational free cash flow to continue to nudge up, but as some positive working capital items expected in Q3 were delivered already in Q2, so that we delivered more than 1 billion positive cash flow from working capital this quarter, the working capital contribution for Q3 is expected to be negative by approximately the same amount before contributing significantly again in Q4. So in totality, like mentioned on the 26th of January, and reiterated at our Q1 results, we see a meaningful positive contribution from working capital for the full year. Like usual, we end the financial section with our net debt and leverage at the end of the quarter. And as you can see, our net debt came down in Q2 as the cash flow generation from operations more than covered the quarterly dividend of 2 billion SEC. And the proceeds from Telia Denmark brought net debt further down to 68.4 billion. The reduction in net debt coupled with continued EBITDA growth reduced our leverage from 2.43 times in Q1 down to 2.21 times in Q2, and we are therefore now in the lower half of our target range of 2 to 2.5 times. And with that, I now hand over back to Patrick for a few words on our guidance and a brief summary of the quarter.

Thank you for that, Eric. And let's now summarize before we go into Q&A. For me, it is encouraging to see that telco growth momentum continued, that TV media continues to improve. Cash flow met our expectation and our full view is unchanged. Capital allocation will continue to be an important area for us, and I'm happy that we have now closed the transaction in Denmark that helped to reduce leverage, and we continue to simplify our business with exits from smaller non-core assets, as we have done now again in Finland. All in all, we are tracking according to our plan for the year, and as you see on the right, our full-year outlook is unchanged across all four metrics. Finally, I hope that after your summer breaks, we will see you at our capital markets update in September.

Thanks, Patrick and Erik. And operator, we are ready to go to Q&A. I will just say before that we are aware that there are some sound problems this morning and we are working to investigate what's that about. But please don't hesitate to ask us for clarifications if you miss anything. So please, then let's have your questions.

To join the queue to ask a question, please press star five on your telephone. Again, that's star five on your telephone to ask a question. Our first question is from Oskar Ronkvist at ABG. Your line is open. Please go ahead.

Thank you very much, and thanks for taking my questions. Good morning, all. So my first question would just be on the cash flow outlook. I think you got it before on a 1 billion interest payment growth year over year. I think now if we're looking for 1.2 billion in Q3 and then half of that in Q4, I think it's around 800 million, just if you could confirm that. Also, I think you said that the interest payments were supposed to be H1 tilted, so it seems like around 500 million increase now year over year, so just wanted to have some clarification on that. Then just... not sure if you want to guide on the sort of guidance but seven to eight billion in structural part of operational free cash flow pretty broad range now with two quarters left you retain your capex guidance and i think some other items should be pretty known at the moment so just wanted to get a sense of if you can get some more clarification on what should drive it to the lower or the higher part at the moment And also, my last question would be on the free cash flow facing. The structure part of free cash flow is usually very soft in Q4, yet you now guide for it to be the highest one in 2024. Obviously, 600 million lower interest payments around, but should be more than offset by lower EBITDA. Thank you.

Yeah, sure. Let's start with the interest payment. So early in the year, we guided for roughly a billion more than in 2023. And we still, with confirming the cash flow, we still that is the right number to expect for the year. 100 million more or less, but where we stand today, we feel comfortable with the billion additional. Slightly more H1 than H2 weighted, but again, from quarter to quarter might be a difference. We've highlighted this morning that we paid a part of the interest on the 1st of July because the traditional payment was at the end of June, but that fell on a weekend, which is why partly you see a shift from the interest payments from Q2 to Q3. Again, for the full year, that makes no difference. With regards to confirming the guidance of 7 to 8, I think it's fair to say that we see us more towards the lower end of that, I think, which is pretty much where market expectations are. And that is driven by the comments that we've made earlier today on both Norway and Finland. where we're a bit behind of what we originally expected for the year. We feel positive about what Q4 will look like for those markets compared to Q3. But clearly, yeah, we feel that being at the lower end of that range is the better place to be.

Okay. Thank you very much. That was all.

Our next question is from Andreas Jolson at Carnegie. Your line is open. Please go ahead.

Good morning, everyone. Two questions from my side. The first one is a bit broad, but if you could describe the overall pricing situation that you see now in the various markets and the various products. We come from a period with perhaps unusual high price activity in the industry. And how do you sort of grade your ability to continue to work on price and move up further? And secondly, Of course, a quite strong report, so sorry for focusing on something that maybe wasn't that strong, and that is Sweden mobile service revenue growth, which has been a bit lackluster for some time. So just curious what you can do to turn that trend around, and if you can take some learnings from the good performance in TV and move that to mobile. Thanks.

Yeah, so let me start to try to answer the first question. We see some softer development this year on the pricing side, but I think still we believe that there is an opportunity to still do pricing in all our markets for the coming years. But of course, it depends very much on the whole market, how it's developing. But I think there is an opportunity. We continue to invest. I mean, if we talk with big customers and ask them what they expect from us, it's actually better, robust services, more protected, of course. Security is an important part. And that also needs to be priced into the future as well. So we think that there is an opportunity, but we don't have the inflation that we can back it on as we had in the past. So that is number one.

On mobile, mobile Sweden. So overall, if you sort of dissect that market, so positive growth in B2C on the consumer side, B2B continues to lag a bit. and a very strong performance in the wholesale market. So overall, we're quite happy with the developments we see in mobile, and obviously not as strong as what we're seeing in the fixed side, where you have seen strong KPIs on TV, strong KPIs on broadband, as you saw in the analyst presentation, for an overall good performance for Sweden, both on service revenue and also on EBITDA. Erik, you want to give more specifics on what we've seen?

mobile across the brands yeah and i think that those are the main points i think the swedish team is doing a good job overall in driving growth in the in the whole market uh i think if you compare to other incumbents in their whole markets that were quite competitive uh but but it does come more than fixed line side partly because we have many converged customers we've chosen this uh strategy partly because the market is characterized by a High demand for low price concept, not only in telecoms, but also across other fast-moving consumer goods at the moment in many sectors. And we are operating the most premium brand proposition in the market. So we have to balance these things. And our low-end brand fellow is growing strongly as a result of this consumer pattern at the moment. But yeah, those are some flavors.

add on the TV service that we're offering at Atelia. We have a very strong product and a unique product in the market as well. That's the reason why we see this both on the subscriber growth and also on the ARPA growth. And it's very appreciated from our customers. So that is a unique position we have that we want to continue to develop. And it's good also for our broadband services.

Very helpful. Thank you, Patrick and Eric, times two.

Our next question is from Stefan Gauffman at D&B. Your line is open, please go ahead.

Yes, a couple of questions. First of all, on the TV side, if we assume an earlier cost of around £1 billion for Champions League, Could you give some sort of indication what will happen with this cost when BioPlay has taken over the asset in Sweden but you continue to own the asset in Finland? Will the TNF subscribers for the sports package still be able to view the Champions League? And what's the cost impact from Q4? And then just a clarification. Last quarter you mentioned SEK 300 million per year in service agreement from Lourdes. Looking at the reporting today, it seems like the contribution this quarter was bigger than this, with a year-over-year increase of 130 million. So just a clarification there.

Okay, thank you. I will take the first one and Eric, you will take the second question. So let's start with the first one on TV media. Yes, Champions League will disappear and we will see a significant lower content cost from Q4 and onwards. We have an agreement with Viaplay and we just expect that the content will be included in the sports packages as we have it today. So that is the agreement that we have and the expectations that we have as well. So we will just see a limited impact, I would guess, from Q3 onwards, because Champions League will start in September.

So I can confirm, Stefan, that for the full year we expect from the TSA roughly 300 million of service revenue and EBITDA because it's done with the assets that we already have in place. It's also true that in this quarter it was approximately 100 million. we still feel that 300 for a full year is the right number. In addition to the service that we provide, we also help them a bit on... and selling equipment. That's also roughly a billion in revenue for us, but it comes at a very low margin. So it has two components, the TSA. And again, this is something that we will have for two years, which potentially an option for a third year. So these are not, this 300 is not a one-off.

That's perfect. Thank you.

Our next question is from Andre Kabirsek at UBS. Your line is open. Please go ahead. Andre, your line is open. Please go ahead. We'll move on to our next question from Eric Lindholm at CEB. Your line is open. Please go ahead.

Yes, good morning everyone and thank you for taking my questions. So a couple from me. You mentioned digital advertising as a driver to the return to growth here in 3D media. Can you perhaps quantify how large part of this business is digital advertising and how much is this growing? And also if you could quantify the cost impact from the euros here in Q2 and perhaps in Q3 as well. And then also, you mentioned ramping up investments in Norway in the fixed network. Is it possible to quantify this, and is it also included in your CAPEX guidance here going forward? Thank you.

Yes, good morning. Let's start with the first one. Well, it's basically 80-20 split between the revenues if you look at the traditional linear TV from TV4 and the digital side that is growing. So that is the 20-80 of that one. Then when it comes to the next question, how much we pay for the euros, that is actually nothing that we disclose. So it will impact, of course, the COGS now in Q2 and Q3. But we're sorry we don't disclose the cost. It's according to our agreement that we have with UEFA.

And on Norway, what was the question, Norway? Okay.

The question was regarding our comments to make investments a little bit.

So obviously we're looking at what can we do on fiber to be competitive versus existing Coex product. Now that is something that we can do within the existing circa 14 billion envelope.

All right, perfect. And just your outlook for the coming years in terms of CapEx, is it still that CapEx will be sort of roughly stable at a percentage of sales in the coming years.

We will talk quite a lot more about capital, capital allocation, capital investments when it comes to our capital markets day on the 26th. So we will refrain from making comments on that today.

All right, perfect. I'll tune into that. Thank you.

Our next question is from Andrew Lee at Goldman Sachs. Your line is open. Please go ahead.

Good morning, everyone. I had a question on TV and media advertising and then also on corporate spending across the Nordics. On the advertising side, you've previously said that you'd look to offload TV and media and that advertising growth is a kind of prerequisite for that. Obviously, we've just had a quarter of it, so not necessarily expecting you to go and offload the business now. But how do you now think about a timeline for advertising Simplifying your business and stepping away from some of those businesses, given the infection to growth. And then the second question, just on corporate spend in the Nordics, we basically had slightly differing commentary from your peers on what's going on in corporate spend. A couple, including Teletoon, Elisa, have both said that there's been some macro pressure on corporate spend that's now abating and that they expect to see increased B2B spend into the second half of the year. Telener, on the other hand, basically highlighted stronger competition in the corporate space. I wonder if you could just talk about how you see the corporate kind of growth outlook from a macro stroke competition perspective, particularly in Sweden. But if you want to speak on the broader Nordics as well, that would be great. Thank you.

Okay, thanks, Andrew. Let's start with the second question, corporate spend. Yeah, we can see, we cannot go in and say that the macro is that impacting our B2B market. Yes, maybe in some smaller companies, we saw in the first quarter that we had some more Companies that went into struggle, but that was more on the small and medium size. If you look, what's impacting us more is actually the competition. We have seen a couple of public tenders in the public space that the price level have been extremely aggressive. And we just decided not to participate in those price tenders. aggressive price pressure. So actually, we made a cautious decision to step away, stay out of those. I think that is more impacting the development rather than the macro environment. That is at least our view of it. Then, if you look at the large accounts, we see that more and more of the big companies, of course, are asking for resilient and secure networks. This is important for them to run their own business. And we see a clear potential there going forward that this will be priced in as well for the large accounts. So that was the question on number two. When it comes to number one, then offloading TV media, our focus now is actually to turn the company and to get the right value on the asset. So we see we have a clear plan in place and we are happy to see that they are delivering and executing on the plan with lower cost. But we also see the transformation or the move the shift from linear tv dependency over to more digital revenues which is more future-proofed and we see that they're following the plan very nicely and that will continue throughout the year and also into next year so that's our focus at the moment thank you thank you very much that's great our next question is from nick lyle at bernstein your line is open please go ahead

Yeah, morning everybody. It was a couple, if I could please. Firstly, on the Swedish business, the service revenue growth is solid, but it doesn't seem to translate into EBITDA growth. Could you talk a bit about cost, please? It looks like cost pre-equipment are up around 3%. So are you struggling to save or are there certain things you had to invest in this quarter? Could you give us a bit of an update on that? And secondly, just back to, I think, Eric, you just mentioned the Norwegian upgrade being within the 14 billion capex envelope. Could you just tell us what sort of scope of upgrade you're thinking of? Because that sounds... pretty low if it's sort of 800,000 homes, 1,000 euros per home, let's say. What am I missing there? Is it spread over such a long period of time or have I just got the numbers wrong? Thanks very much.

Sure. Shall I start with the second one first? So if we are in conversations with the relevant households or the multi-dwelling units, sometimes they prefer fiber over coals, and that's what we want to be able to offer them so we can upgrade that. So that is not a demand of 800,000 homes in that market, hence it's limited and falls within demand. within the current framework. With regards to Sweden and Sweden performance, we're quite happy with that. I think the overall results aren't possible if you don't have good service revenue and EBITDA conversion of that in what is half of our market. So we're quite happy with that. Actually, if you think about the EBITDA conversion that we see, 5% for the group, part of that is not just driven by top line growth. It also is the good cost management that we've done. And in our whole market of Sweden, we've made really good progress there. So I don't know if there's anything specific around equipment, et cetera. But for sure, if I look at... the full year 2024 performance. And if I compare and contrast that with last year, you can clearly see in this market what I said on the group, an EBITDA margin improvement. So also in Sweden, they're having the right traction with cost containment, which again is mainly based on resources. It's partly procurement, but it's also on marketing spend. So now we're quite happy with how we're managing that market. And we think it's one of the reasons why we have such good EBITDA growth year-on-year.

That's great. Thanks, Eddie.

Our next question is from CEE at Citigroup. Your line is open. Please go ahead.

Hello. Hi. Good morning. Thank you for taking my questions. I think my question is really on the 3.5% OPEX reductions reported this quarter. I apologize that I missed some of your answers during the call. I was just wondering if you can just single out what's the key drivers and maybe you can point out in which regions that you see being the biggest contributor to the OPEX reductions this quarter. And I guess this question finally boils down to how should we think about the trend for the remaining of this year, especially that we're seeing that the trend has EBITDA growth come down in Norway, in Finland, and you suggested that it could also be quite limited for Q3. So when we think about Q4, you expect the EBITDA growth to pick up and what are the main drivers or do you expect those regions improve again, or you think that the majority of the drivers is coming from the content cost savings in the TV area? Thank you.

Well, why don't I start with the EBITDA trend? So tough comparison for Q3. So we're clearly guiding for that, for people to lower their consensus a bit, which was that phasing slide, slide 17, I think. It's in the analyst presentation. Why are we confident about Q4? One you've mentioned already, which is content cost, which is largely related to Champions League, of course. We all know that that was... Expensive. Second one is the sequential improvement of Norway. And we're clearly guiding for a negative EBITDA in Q3. And we think we could be better in Q4 than Q3 with all the actions that we're taking. Thirdly, it's the Baltics. So operations in Estonia and Lithuania where we see momentum already building now. And that mainly comes from two things. Pricing, which starts to come through, where we will read more of the benefits in Q4 than in Q3. And the other one is the projects that we're doing on B2B in both markets. Mainly, it's winning a couple of RFPs that are out there in that market that haven't come quite through in H1, and we expect that to happen by Q4. The last one is the reason why Q3 is tough to beat, because it's a hard comp versus last year. It's an easier comp than Q4. So those are the four main elements why we feel quite comfortable about Q4 EBITDA. And I guess what we've said in our voiceover is we expect it to be... What does above trend mean? I think you need to think something north of 5% because 5% is the trend that we have at the moment. To your first question, which is on OPEX. So indeed, if you adjust the 5% OPEX reduction for the pension refund, it's 3.5%. versus 1.5% down in Q1, it is mainly driven by resources. So having fewer people within our organization. And if you look at where that is happening, it is really proportionate across the group. So partly when we say all of the markets are contributing to profitable growth, if you look at who is contributing to OPEX reduction, it is really across the group. It's not just Sweden. It's not just the Baltics. All know in Finland everyone is pulling their weight and it's part of the concerted effort that we've been doing for the last couple of quarters.

Thank you, that's very clear.

Our next question is from Steve Malcolm at Redburn Atlantic. Your line is open, please go ahead.

Yeah, thanks very much. I just want to come back to interest costs, if I can, quite boringly. But, Eric, I heard your commentary earlier, but just to be clear, when I look at consents, I think it has 4.3 for the year. You're guiding to 1.8 in the second half. That's four. So that's a 300 million tailwind. You're kind of saying you expect free cash. There's still a few bottom ends of the range. So am I reading that right? And if that is the case, what are the kind of offsets against that improved interest outlook? And as you look into 25, you must have a pretty good idea where interest is going to land. I think there's kind of expectations of two or three more rate cuts in Sweden. So can you give us a sort of a range of, you know, of outcomes, you know, you know, within a couple of hundred million sec where you think interest costs will land next year? That'd be super helpful. And just a quick one on TV media. Can you, and I appreciate the comments on sort of not disclosing euro costs, but do we assume it was loss making in Q2? Maybe just a sort of sense of the underlying X euro growth rate any bit darker. It looked pretty good. I guess, is that above your expectations when you started, when you looked at this at the beginning of the year? That'd be great to know. Thanks a lot.

Want to do TV media first?

Yes, I can start with the TV media. So if you look at the turnaround in TV media, it was a good quarter now. And we expect the EBITDA to land around 200 million for the year. And we have said also that we should be reasonable to reach 600 next year in EBITDA. So these are the predictions that we have at the moment. then of course many things can happen, but this is the plan that we're working towards now internally to reach those targets. And again, we are at the moment following the plan very well, so I'm happy to see that.

Yeah, on interest cost, so what did we say at the beginning of the year? Roughly, we are paying $3 billion a year in interest, and we said we're going to do a billion more, so call that $4 billion. I think that's still quite comfortable with that expectation. Could that be $100 million, $200 million less? Possibly, and that's partly driven. It's less driven by if interest rates come down. It's more driven by the cash flow that my business is generating, and of course, at the proceeds from Denmark. So that might lead to, you know, it could be one, 200 million less. What could compensate for it, that then still brings it in line, because we have confirmed that seven to eight guidance, is possibly tax. We might pay a bit more tax because our profit before tax is just higher, driven by the strong EBITDA growth that we have seen. If you win maybe 100, 200 million of interest and that could happen by the full year, we might lose 100, 200 million on the tax line and they sort of cancel each other out. With regards to 2025, obviously we're not giving guidance for 2025, but what I can reiterate is what we said again at the beginning of the year, which is we do think that that interest rate of 4 billion payment is the peak for 2024 and it will be lower in 2025.

Okay, thanks a lot.

Our next question is from Kural Kiroya at Deutsche Bank. Your line is open. Please go ahead.

Thank you. I've got two questions, please. So firstly, historically, you had talked about scope for rooftop transactions. Do you think those transactions are more likely as rates hopefully go lower? And are you thinking about scope for info transactions anywhere else? And secondly, if we strip up your craft, am I right in thinking the Norwegian EBITDA growth is about 1% in Q2? And I just want to understand what you think is really key to getting Norway back to growth because it's already delivering a margin of 48%. So is there much you can do on the OPEC side or does it need to be more revenue driven? Thank you.

Shall I take the M&A? So we have continued to say that with regards to infrastructure, some is relevant, some is less relevant. Obviously, as part of, as you can imagine, our Capital Markets Day, we will give you an update on our views on the portfolio, etc. Yes, in sort of an interest rate environment might help. It might help return for who sits on the other side as a buyer. But regardless for it, that will be an attractive portfolio. But expect more on this on the capital markets day. Infrastructure in general, so over and beyond, rooftops. We obviously talked about the local exchanges. Again, we look forward to updating that and more details on the 26th of September. But that's a project that is progressing well for us. I think where historically we kind of thought, let's see what the real estate market looks like. And things look quite positive on that. With regards to Norway, maybe, Patrick, you can comment on service revenue. Let me comment on cost. We can do more as an organization. Part of the drive that you've seen is driven by cost discipline, and there is more that we can do also in that geographical market.

Yeah, so let's look into a bit of the revenue growth in Norway. I mean, we already commented on the enterprise sector that we had slight decrease to change the mix with a higher portion of public large customers where the price competition is higher and tougher. But what we are doing is that we have actually identified a set of initiatives within both consumer and I would say also enterprise, largely focused on improving sales and marketing, which we think with the limited investments in sales and marketing and OPEX as well as CapEx to connect new customers, we're resulting more effective in sales and marketing. improve our KPI trends. And we saw some encouraging early first signs of this improvement in Q2, if you remember that with the mobile subscriber trend turning positive again. But it will take some time before we really see the impact of this. So good trend at the moment. And let's hope now that all the initiative and hard work is actually turning this around and keep that, which would be very positive given what we're coming from.

Okay, thank you both.

Our next question is from Adam Fox-Rumley at HSBC. Your line is open. Please go ahead.

Thank you very much. My first question was on mobile consumer in Finland, please. I mean, Patrick, in your prepared comments, you talk about good ARPU, low churn, good customer satisfaction, but that you want to address the subs growth element with new sales capacity. I suppose what I'm wondering is whether that's designed to kind of turbocharge the growth in that market or whether, I suppose I'm thinking from a broader competition perspective, is there any risk that with those first three elements already being pretty good that you risk kind of heating up that market a little bit? And then secondly, I wondered if you could just give us a quick update on where you stand with your 5G network deployment across the big markets, just to get an idea of... of where you are and how much there is to go.

Thanks. So I can start with the second one when it comes to the 5G rollout. We are now population coverage of more than 90% now in our territory, so we have come fairly far now in our deployment of 5G. When it comes to Finland, well, it is not an easy answer on that one. As you can see from our figures, we have had a negative sub development for many quarters now. But the positive is that we are reducing the negative impact quarter by quarter last quarters. And we have managed to increase the ARPA, as you also can see in the report. So I think the trend is actually positive and we're adding more sales capabilities, which I think we need to invest a bit more in sales and marketing in Finland to take a fair share of the new sales, which we haven't done in the past, in the last quarters. So I think that will help us. And I don't think we will... make any big reactions in the market. We just need to take our fair share, basically, of the new sales. And then the churn levels have been very good and coming down to very competitive levels. Even though we saw a bit of a hiccup in the last quarter here now in Q2, we have some technical issues at the end so we could basically not save some of the customers that we normally do that will be normalized from Q3 Q4 onwards again so I think we are on a good trend even though negative but it will take some time but I think what we see so far in the consumer market in Finland is that the activities that we are now increasing is actually paying off so let's see how that will develop thank you

Our next question is from Fredrik Lihal at SHB. Your line is open. Please go ahead.

Hi, thank you for taking my questions as well. I just wanted to stay with Finland. I mean, it looks like it's a tough situation for you, and you're doing what you can. But looking at and listening to Telenor and also what Elisa is doing, it feels like you are a little bit behind them. So could you talk a little bit more about where you feed? in upside in terms of pricing if you are are a little bit lower on them and you can close that gap in order to to improve your trends a little bit more and also then you are doing you're talking about some portfolio rationalizations could be interesting to hear what that implies and also the web hosting how would that impact the numbers from q3 so a little bit more final would be interesting thank you

On the web hosting, so it's a relatively small business. Just from memory, it's roughly four, I think four, just over four million revenue or something like that, with a bit of margin attached to that. But it's not something which is core, which is, again, part of what we've been talking about for a couple of quarters already, is we want to focus on what our core telco corporations are. This clearly is not core of that business. So it's about four million of revenue in euros, by the way, so call it 40 million SEC. Yeah, tough situation for us, Patrick.

Yeah, I can move on into Finland and to give you some more color. I mean, if you look at the whole sector, a main issue now for a moment, I think, is on the B2B side when it comes to mobile, where we have decline in revenues as well. And what we are seeing here that we need to take a bigger share in the SME market. We are underrepresented in the SME side compared to our competitors. So we need to take our fair share there. And we also saw three things. So one is that strengthening our proportion of the share in the SME side. Number two is that we're also strengthening our offering with more security products. And then thirdly, we also now changed management in the B2B side in Finland. I think it's very important to get some new energy and new thinking into that organization. So these are three important activities that we have done in the short term.

Just a follow-up. Do you anticipate you will need to invest your way forward in terms of should we expect that it will be a pressure on EBTA from these activities that you feel are necessary in order to reignite your trends and your position.

Maybe I can comment on it. Like many of the other units in our portfolio, we're very happy with how the EBITDA margin has been trending. Also in Finland, we've seen that where they've gone across the 30% margin. We don't expect that to come at EBITDA margin dilution. So more sales or more marketing investments. There is always some, but we don't expect our EBITDA margin to be impacted by that. If anything, We're working very, very hard on continued cost discipline also in that geographical market to actually continue to improve our margins.

So just to add, I mean, among if you look at our markets, you know, the MPS, the customer satisfaction is really high now in Finland has improved quarter by quarter. And the churn is also fairly low. So I think that will also help us support to take more fair share of the new sales, basically. So all in all, I think I'm a bit optimistic. We will add some more sales and marketing, but we will not see an impact on EBITDA. That's our view on it. Thank you.

Okay, that's very clear. Thank you.

Thank you, Fredrik. Many good questions today. I think we have one more on the line, so let's take that, please.

Our final question is from Uzman Ghazi at Berenberg. Your line is open. Please go ahead.

Hello. Thank you for the opportunity. I've got two questions, please. One is a clarification. On the TV business, you're saying that, you know, 200 will be the dot this year, and 600 for 2025, if I read that, if I heard you correctly. I just wanted to inquire about the 600. I mean, because I guess this year, You know, you've had 200 million for the Euros. That is an additional cost that's kind of offsetting the benefit you get from the Champions League exit. But next year, you get the full run rate of a billion in cost benefits. So, you know, and the advertising market seems to be picking up. So the 200 just going to 600, I mean, I just wanted to ask what the driver there is. I mean, are you expecting a big kind of loss there in subscriptions because of the or any other . Then the second question was just on the capital intensity, and this is the clarification, You know, earlier, I think there's a question asked, are you happy with, you know, what you had said in the past in the CapEx representative revenue going forward? That's how you should be looking at this business. And that should be fairly stable. But then you said today that you don't want to comment on that further because you've got a capital market day coming up. You know, obviously, given the sensitivity around CapEx and amongst investors, I just wanted to give you a chance to clarify whether You know, I'm expecting some discontinuity here or, you know, previous messaging intact. Thank you.

Where is CapEx going is the question. We answered it before, but maybe you want to say it in your words.

No, but I can start with the TV media, you know, and you can take the CapEx later on. But when it comes to the TV media, you know, and the output for the ABT, I think the current expectations, as I said, you know, the 200 million this year and the 600 million for 2025 is all reasonable, you know. So I think let's make sure, first of all, that we deliver on those expectations before we start looking for higher numbers. We have never phased out such a large content right before as the Champions League and need to monitor the impact and effects of that one.

on capex um nothing more to add on what um has answered to the question before um we are today reiterating the circa 14 billion uh we're quite happy with uh sort of the first half performance where um we spent 500 million less compared to last year let's see what the second half bring but we talked about phasing in there so we expect that to pick up so we're quite happy to uh reiterate that guidance that we've been given and then when it comes to sort of 25 and beyond we will give you all the details on the 26th of september okay thank you so thanks everyone for this q a yeah thank you i just want to say thank you everyone for participating the call and we wish you a great summer break when it comes