Telia Company AB (publ)

Welcome, everyone, to Telia Company's Q3 2024 results presentation. And with that, I will now hand over to Telia Company's Head of Investor Relations, Erik Stranden Peers. Please go ahead. The floor is yours.

Thank you. Good morning, everyone, and thanks for joining our Q3 call. We will do, as usual, a presentation followed by a Q&A. We have Patrick Hofbauer, our President and CEO, and Erik Hagerman, our Chief Financial Officer, with us here today. Patrick, please go ahead.

Thank you Erik and good morning and welcome everyone. I would like to start with a few overall reflections before we move into the details of the quarter. We hosted our investor update one month ago here in Solna and I'm encouraged to see that we are making progress on several of the ambitions laid out on the day. The change program which we launched in September is fundamental for transforming Telia into a more customer focused, faster and more efficient operator We are on track with its implementation and expect to have the new organization in place on the 1st of December and start to generate the target efficiencies of at least 2.6 billion Swedish kronor. We continue to do better for our customer every day and consumer MPS scores for the group increased both quarter on quarter and year on year. In Q3, Tela Sweden also came out on top among main mobile brands in the SKI, the annual customer satisfaction survey. And Fello also came out even better, ending at second place among all Swedish mobile brands. Also, I'm glad to see that the hard work by TV and media to become more digital and reduce the cost base is paying off, resulting in a continued positive development for both service revenue and EBITDA. Finally, at our investor update in September, we launched new mid-term financial ambitions, including service revenue CAGR of 2%, EBITDA CAGR of 4%, book capex below 14 billion SEK, and an all-in free cash flow at least at SEK 10 billion by 2027. Turning then to the Q3 financial highlights, Service revenue continued to grow, supported both by Telco and TVN Media. The growth pace of 1.2% was a bit slower this quarter, as expected. We had elevated revenue in business solutions in Q3 last year from projects in Sweden and Lithuania, and this impacted the growth rate negatively by 50 basis points. Like last quarter, the consumer segment was the driver with a 2.6% increase, whereas enterprise declined 1.7%. Mobile continued to grow by 1.6%, supported by all markets. Fixed increased at 0.6% as continued strong TV momentum in Sweden, more than compensated for the pressure on fixed telephone and business solutions. We said last quarter that we expect EBITDA to be approximately unchanged this quarter and we ended up with an increase of 1.7%, mainly driven by Sweden, TV and media and partly also Finland. Structural OFCF declined from 3.7 billion to 3.1 billion as interest payments increased as expected 400 million due to facing and higher market interest rates. Leverage declined to 2.17x even though we are ramping down the vendor financing program. And finally, as you might have seen already this morning, we upgraded our EBIT outlook to mid single digit growth for the year and our capex outlook to be below 14 billion. Let's now move into the units. Overall, Telia Sweden's growth was driven by consumer also this quarter, which was up 3.9%, and especially by broadband and TV, which together drew uplift close to 200 million. Enterprise declined 3.9%, partly from a soft market, but mainly as Q3 last year contained some 60 million of low-margin license revenues. Looking at the growth excluding Cupper Legacy, growth was at 3.1%, despite that 60 million ITIM last year. EBITDA growth was driven by both service revenue growth and efficiencies, mainly related to consultants and personnel. We saw a continued decline in incoming customer service volumes, as we showed at the investor update, underpinned by improving customer experience and operational performance in customer operations. And we will continue to make improvements in the area which benefit both our customer and us. Moving on to Sweden's operational KPIs, where you can see that the mobile post-bred customer base remained flat, with a small gain consumer and a small loss in enterprise. ARPU increased by 1% with the flat ARPU in consumer, where Family Sims and our fellow brand continued to grow, and the enterprise ARPU growing at 2%. We launched a new mobile portfolio for small businesses, including enhanced security and more-for-more pricing. At the same time, in the public sector segment, there has been a handful of bare-bones mobile deals made at price levels we would not defend as a market leader, and we therefore expect to port out around 25,000 low ARPA subscribers in the fourth quarter. Our broadband subscriber base continued to grow this quarter by 6,000, and growth is predominantly fiber, but also fixed wireless access, more than compensated for the decline in copper. Fiber pricing performed last year as well as earlier this year continued to support ARPU with an increase of 3.3%. Finally, our TV business continues to outperform the market with its leading content offering, subscriber base growth of 14,000 and ARP increase of 16%. Moving to Finland. Finland saw a slightly negative service revenue development as mobile growth of 1.4% was offset by a 3.5% negative or decline for fixed revenues driven by continued pressure on legacy revenue. Regulatory changes and a ramp down of our non-profitable invoicing business. EBITDA growth, however, picked up somewhat to 2.1% due to cost efficiencies and lower energy costs. The mobile subscriber base declined by around 10,000 due to a continued focus on value and ARPU rather than volume. Something that moved ARPU up by 5% and the consumer ARPU up by a healthy 9%. We are taking further steps to simplify our business by divesting our web hosting business, a deal which closed this quarter and we continue as you know to ramp down e-invoicing. These pressures from regulation, legacy and rampdowns will increase a bit more the next quarter, but then we estimate that they will ease as we move into 2025. Moving into Norway. Mobile revenue continued to grow, supported by wholesale. At the same time, we had lower revenues from business solutions and paper invoicing fees following new regulation in the beginning of the year. You have probably noted that the move of the national roaming for ICE to Telenor's network in 2025, which likely means that our volumes for this contract will decline faster than we have planned for, but they were always expected to ramp down. The EBITDA development was in line with our expectation and we flagged it last quarter. We foresee that it will gradually pick up again as we move along. Given successful summer campaigns, a better subscriber development and the pricing plans we have for several products in the coming quarters. In consumer, mobile ARPU and the post-subscriber base both grew as our offerings are well received by the market, resulting in five consecutive months of subscriber growth, although this was masked by the exit of one enterprise contract in the quarter. Our enterprise offering continued to be popular still and Fonero won the EPSI Customer Satisfaction Survey for the third year in a row. Let's move into the Baltics. In Lithuania, growth slowed to around 3% on service revenue and 2% for EBITDA, mainly because Q3 last year contained about 3 million euro in one-off revenue related to the NATO summit. Mobile revenue growth was 7%, driven by an increased subscriber base, helped by our clearly leading network position. In Estonia, growth came down to just 1% due to some facing impact from a larger enterprise contract that was resigned earlier this year and challenged in court. This court case is now dismissed and we expect the contract to start to contribute again from Q4 and onwards. Finally, before I leave over to Erik, we have TV and media, which again had a strong quarter, both with regards to its digital transformation and its financial turnaround. Service revenue growth remained around 2%, supported by a strong development for digital advertising, underpinned increased digital viewing, and a larger base of streaming subscribers. Meanwhile, the linear advertising market in Sweden remains soft as linear viewing is trending down. Turning to EBITDA, we again had a good development with an increase of around 60 million due to service revenue growth and lower OPEX, despite somewhat increased content cost this quarter because of the Euros. Looking finally at the subscriber base, it's almost at 140,000 higher since one year ago. even with a decline in the quarter as we came out of the positive effect from the Euros this summer. Alper declined due to an increased share of H4 subscribers. And as you might have seen yesterday, we are happy that we have secured the rights for Swedish football, Allsvenskan and Superettan, for the period of 26 to 31. On terms that make financial sense for us, Allsvenskan is one of the most important sport rights in Sweden, and it's a great fit with our existing sports portfolio, which includes the Swedish Ice Hockey League. So now it's very clear where the consumers want to go if they want to see top Swedish sports. And with that, I hand over to Erik, and we'll take you through the Q3 financials.