Telia Company AB (publ)

Welcome everyone to Thulea Company's Q1 2025 results presentation. I'll now hand it over to Thulea Company's Head of Investor Relations, Erik Strandenberg. Please go ahead, the floor is yours.

Thank you and good morning and welcome everyone to our Q1 call. We have President and CEO Patrik Hofbauer and Group CFO Erik Hagerman here and they will take us through the quarter and then we'll go straight to Q&A. Patrik, please go ahead.

Thank you Erik and good morning everyone. I would like to start as usual with some overall reflections about the quarter. We have had the first full quarter with our new organization and I'm happy to see that we could follow our commercial plans despite all recent changes and with a financial outcome close to our own expectations. We have also completed a major milestone in our strategic plan as we found the right buyer for our TV and media business and agreed to sell it to Shipstead Media. This will enable an even greater focus on our core business going forward and it will make us a more predictable telecom group. There is also plenty to report about sustainability this quarter and I want to highlight especially our climate transition plan published in March which has out our climate roadmap describing how we can achieve net zero by 2040. Our full year outlook is unchanged since the financial results in the first quarter were largely as we expected and if you go to the next page I will comment on them in some more details. Service revenue growth in the Q1 was close to 2% in line with our full year outlook as well as our mid-term ambitions. It improved a little from last quarter helped by Sweden in particular which grew 2% but also by the Baltic markets. Fixed service again grew a little faster than mobile. EBITDA growth was close to 7% this quarter with strong contribution from Sweden, Finland and Lithuania. This is slightly ahead of our full year growth rate target even though TVN Media is not included anymore since it has been moved to discontinued operations. If TVN Media had been included, which it was when we originally set our target, EBITDA growth would have been 11%. Cost efficiencies derived from the change program was of course a big driver behind the higher EBITDA. CAPEX, if you look at it on a rolling 12 months basis, it is now well within our frame of less than 14 billion per year and will remain there for the rest of the year. We are also on track when it comes to the free cash flow, which was 1.7 billion in the quarter, and we still target around 7.5 billion for the full year. And with both EBITDA and cash flow going in the right direction, our leverage is declining and now stands at 2.18 times EBITDA, despite that we paid a 2 billion dividend every quarter. Let's now move into the countries and starting with our biggest and home market, Sweden. Sweden has followed its commercial plan in the quarter, focusing on deepening in customer relationships, both with households and enterprises, based on a premium infrastructure position. We are proud to have won a network award with Omlaut again, this time indicating that our network in Sweden is a top five network globally. In the consumer segment, we have a lot of pricing activity. We communicated backbook pricing to many mobile, broadband and TV customers in January, effective in March, so we expect full pricing effects in Q2. TV continues to do well and helped overall consumer revenue growth to almost 2%, despite the continued drag from legacy copper. This drug is reducing however and we have now passed the milestone of having less than 100 000 active copper pairs left in Sweden. In enterprise you may remember that we had negative growth last quarter much due to those project and license revenues that tend to be lumpy. We said that we expect better trends in Q1 and indeed we are clearly back to growth again with 3.5%. Again, this is partly explained by projects and licensing revenue and it will naturally continue to go up and down from one quarter to the next. We expect these revenues to be lower again in Q2, but customer activity is good and unless the macroeconomic situation deteriorates, we have a promising pipeline for the second half of the full year. EBITDA growth was the strongest for many years at over 8%, with a good effect from the efficiencies we created through the change program. So now let's move east to Finland. In Finland, we continue to drive simplification across the businesses. Meanwhile, the new management is reworking the overall strategy, especially when it comes to our enterprise operations. It is clear that we today are not able to fully leverage on our capabilities, product portfolio and network position in this segment. Looking at the quarter, we can see that mobile ARPA is holding up relatively well, supported by growth in consumer, but we are still in decline when it comes to our postpaid subscriber base. This is a key focus area for us to turn around and we are gradually improving. But with that said, it will most likely be another few quarters before we have come all the way to a neutral development. Service revenue growth was minus 2%, largely due to lower fixed enterprise revenues and the fact that Finland this quarter reached the peak impact from the re-invoicing ramp down. This had a negative impact of around 50 million, so excluding this headwind, revenue would have been stable. There is also a continued overall negative macro, which reduces the ICT spend amongst Finnish corporate customers. However, despite the negative service revenue development, EBITDA increased by 5.6% due to the change program that reduced the total OPEX by more than 5% despite an increase in IT cost. Moving now west to Norway, which is currently undergoing extensive changes across multiple management levels, including Mårten Karlsson Sörby joining as interim head of Norway until Björn-Ivan Mohen comes on board as the permanent head in January next year at the latest. The team under Mårten is working hard to improve our trends, especially on fixed revenue and we have launched new cost initiatives. In the quarter we see that service revenue growth remained somewhat negative as mobile growth of 1% was more than offset by a decline for fixed service revenue. Two services that have seen negative development for some time now and that we dedicate a lot of focus to stabilize. EBITDA growth was also negative as a result of the top line reduction. In the coming quarters of 2025, EBITDA decline will worsen before it gets better because of the migration of the ICE wholesale contract. Turning now to Lithuania, which continue to deliver a solid service revenue growth supported by mobile growth of 7%. And as can be seen on the right hand side, it is driven both by a steadily growing subscriber base and an expanding ARPU. This is very comforting and a sign that we are executing very well on our commercial agenda. Looking at the fixed services, broadband grew 5% and TV grew 4%. We had a successful launch of Netflix in the quarter, which helped drive TV revenues and shows again that our aggregator strategy is working also outside of Sweden. EBITDA growth accelerated further to 10%, driven by service revenue growth and efficiencies from the change program. Combined with a more efficient capex level, this translates into a record high EBITDA minus capex. Moving then on to Estonia, that like Lithuania, showed a strong financial performance in Q1, supported by the change program and a solid development for our core products, mobile, TV and broadband, as well as an acceleration of revenues from public sector ICT contracts. Despite all the changes we have done recently under the change program, Telia Estonia received awards for both the best employer in the IT and telco sector and for having a handful of the very best sales agents in the country. Finally, I want to say a few words on Telia Towers that previously has been part of operations in Sweden, Finland and Norway, but from this quarter is disclosed as a separate unit. Telia Towers has done well since it was created this Pan Nordic platform together with Brookfield and Alekta. It managed over 8,000 sites with approximately half of the revenues coming from external customers and half from internal customers. The tenancy ratio is well above 2x. which is good level. Together with our partners, we have created an efficient business and EBITDA has grown over 25% over the past three years to a level of almost 1.5 billion SEK. And with that, I hand over to Erik that will take you through the financials for the quarter.

Thank you, Patrik. Let me now take you through the financial development of Q1, starting as always with service revenue and EBITDA development. As you've heard this morning and you can see from the graph, service revenue continue to grow at an unchanged pace and in line with our full year ambition of around 2% growth. Key drivers this quarter were a solid development for our most important mark in Sweden and strong growth across our Baltic units. Also supporting growth in the quarter was a continued tailwind from the Norles TSA. An agreement that we will have for at least another year, but starting next quarter it won't contribute to the year-over-year growth anymore. From a product point of view, growth was also this quarter largely the result from strong mobile momentum in the Baltics and continued stellar growth for the Swedish TV business that grew 15%. Furthermore, Sweden also saw strong growth for business solutions, coming partly from an increased level of non-subscription based revenue. All in all, this more than enough compensated for a continued pressure on revenue from fixed telephony. As you might recall, we have for the last few quarters flagged for a somewhat slower service revenue growth in H1 compared to H2. This is mainly because of how our pricing cycle for the year is designed as well as the expected phasing of revenue from mission-critical services. This view on phasing remains unchanged and in Q2 we expect service revenue growth to be lower than in Q1 because we will lap the Norlis DSA growth benefit and we will have the full impact from the ICE contract migration. Our view on the full year remains unchanged and for around 2% like-for-like service revenue growth. Turning to EBITDA and we see that growth accelerate reaching almost 7% with key drivers being a profitable growth and the change program implemented from December 1st last year. I want to highlight also that when we guided at CMD for at least 5% EBITDA growth TVM Media was still in the perimeter of the group. If TV and media had still been included, rather than be treated as discontinued operations, we would have reported 11% like-for-like EBITDA growth in Q1. In the second and third quarter, we expect somewhat lower EBITDA growth, owing in part to the ICE contract migration in Norway, before accelerating again in Q4, as pricing actions and mission-critical contracts provide greater support. Lastly, the combination of profitable growth and efficiencies also resulted in the EBITDA margin for the Group expanding by 110 basis points, compared to the same period last year, reaching its highest level in modern times. More on efficiencies when we move to the next page. As you heard, the change program is now delivering and was the reason for operating expenses declining 3.2% in the quarter, more than offsetting an increased level of marketing spend to drive our commercial momentum. Other items remained neutral, as mainly higher IT costs were offset by a continued decline in energy cost and a lower level of bad debt following a relatively easy comparison. The combination of service revenue growth and lower absolute OPEX resulted in OPEX as a percentage of revenues declining by 160 basis points to 32%. As previously mentioned, we have an agenda to be more disciplined around our capital allocation. And as you can see from the graph in the middle of this slide, booked capex continue to trend downwards at just above 13 billion on a rolling 12-month basis. ROSI continues to improve as a direct consequence of that discipline, and EBITDA less CAPEX as a proxy for free cash flow generation also climbed higher in the quarter, which you can see on the right-hand side of the page. So overall, a good start to the year when it comes to our ambition to be more efficient with our capital expenditures, and we reiterate today that booked CAPEX for the year will be below 14 billion SEC. Let's now look at the free cash flow for the quarter. Here we can see that there is an improvement of 2 billion SEC compared to last year, with the first building block being our profitable growth, which fueled by the change program resulted in an EBITDA increase of 500 million SEC. Cash capex increased by half a billion versus the same quarter last year, to a large extent driven by us phasing out some capex payables from the vendor financing program. Whilst the overall vendor financing balance has remained stable versus Q4, we now have rebalanced the mix of a vendor financing portfolio towards OPEX and COX payables somewhat and away from CAPEX. This explains why cash CAPEX is higher than book CAPEX this quarter, while working capital is a greater benefit, also to the tune of around 600 million in Q1. Interest payments declined as expected due to our active portfolio management, resulting in lower gross debt level as well as from lower market interest rates. Other items increased by 300 million as a result of severance payment outflow linked to the change program. Again, very much in line with our expectations. Let's now briefly look at our net debt and leverage development. As you can see on the right hand side of this page, our net debt decreased by 1.4 billion in the quarter, mainly as a result of solid free cash flow generation and a positive FX impact on our issue debt, primarily driven by the recent SEC development. The reduction in net debt coupled with an increased EBITDA generation of 800 million on a rolling 12-month basis reduced leverage down to 2.18 times compared to 2.28 times at the end of 2024. Looking at the longer-term historical trend on the left-hand side of this page, we can see that leverage has gone down over the last years as we have grown EBITDA while using proceeds from divestments such as Telia Denmark to reduce our debt levels. The balance sheet will be further strengthened by the cash we will receive from both the TV media and the Marshall disposals. Before I hand back to Patrick, I would like to take the opportunity to briefly walk you through some of the financial milestones we have achieved in Q1 and how that resonates with our ambitions laid out at the investor update last year. As you may recall, we laid out a four-pronged agenda to drive value creation. And we continued in Q1 to make steady progress on all of them. Our EBITDA is gradually growing, supported by both profitable growth as well as efficiencies. In addition, we are also driving a disciplined and choiceful investment agenda, all of which are key building blocks for our ambition to grow free cash flow and dividend per share over time. With regards to our active portfolio management agenda, we have, as you already know, found a new home in Shipstead Media for our TV and media business. This will allow us to focus on our core business, which is to provide the best connectivity and adjacent services to the customers and societies of the Nordics and the Baltic region. We also continue to actively manage our balance sheet. And as you just heard, it was further strengthened in the quarter. And in the meantime, the vendor financing balance that was right-sized in the second half of last year remained unchanged at around 5.5 billion SEC. Finally, the AGM approved a dividend of 2 SEC per share earlier this month and given the solid start to the year, we remain as committed as before to deliver a free cash flow above 10 billion SEC by 2027. And with that, I hand over to Patrick for some closing remarks.

Thank you for that Eric and let me now quickly summarize before we go into Q&A. We started the year in line with our plans and I'm happy that the organization works well even when we've done many changes because of course we will continue to change going forward. I'm also happy that we found such a good buyer for TV and media business and looking forward to handing it over to Shipstead Media in this summer when the transaction closes, allowing us to focus even more on telco. Our shareholder meeting two weeks ago confirmed that our 2 kronor dividend level is intact and so is our outlook for 2025. And with that said, I will open up for questions. Thank you.

To join the queue to ask a question, please star five on your telephone. Again, that's star five on your telephone to ask a question. Our first question comes from Andrew Lee. Please go ahead. Your line is open.

Good morning, everyone. I just wanted to talk about your EBITDA growth outlook for the rest of the year. Obviously, a strong outlook. posting today at close to 7%. Eric, in your kind of talking points, you mentioned 2Q will be slower. So just a couple of questions around that and the outlook for the year. First of all, when you say slower, do you mean slower than the kind of near 7% in the first quarter or slower than the 5% guide? Then within your comments, you mentioned that price actions will help boost growth in the fourth quarter. Why did price actions not boost before then, given I think there's quite a lot of questions happening – price action is happening now from what we can understand. And then finally, is it possible for you guys to give us a sense of the size of the headwind from the ice wholesale contract loss for the group EBITDA growth for the second quarter and third quarter? Thank you.

I can start with the EBITDA growth. First of all, we say that it will be lower in Q2 and Q3, and we think it will be a bit lower than our guidance of 5% in the coming quarter. So, short term, we will, of course, lose the ICE revenue and the growth effect from the knowledge contract, which is a drag, of course, of around 2.5% on the EBITDA growth rate compared to Q1. In Q4, we expect contribution from, among other things, also from mission-critical services, which will support a growth rate towards the end of the year. And remember also, on your question, there is always quarterly volatility, but the year is progressing in line with our plan towards the level of the full-year outlook, so we feel still comfortable that we will deliver on the outlook for the year.

Shall I do the ICE headwind? So in 2024, the revenue we had was around 380 million. Migration has started in March this year. So the revenue impact will be limited in Q2 and then zero from Q3 onwards. It's about 100 million lower per quarter roughly versus the same quarter last year. I guess the country rate was part of our 25 to 27 plan, and obviously we're expected to see it decline. So again, 380 million in 2024, and then the revenue declined roughly about 100 million per quarter this year.

And then you had a second question. That's a really helpful thing. Did you have a second question as well, Andrew, on the pricing, wasn't it?

Yeah, exactly. It's pricing actions. I think we mentioned it's boosting in the fourth quarter. But from what we can see, there's been quite a lot of positive pricing action in the first quarter moving to the second quarter. So I guess it's their scope for that to help sooner than the fourth quarter.

Yeah, no. So we're happy. So if you look at Sweden, for example, people were informed in January. Impact will then be in people's bills in April. So that's going to help. But obviously you've also seen there is a bit of work to be done on Finland and Norway if you saw the service revenue development. So the plans are being made and that needs to be executed. And it's our expectation that the combination of price actions improving Finland and Norway plus mission critical across our footprint is then what's going to get that more than 2% service revenue growth in Q4 and hence in the second half of the year. Thank you.

Our next question comes from Oscar Runkvist. Your line is now open. Please go ahead.

Thank you. Good morning. And thanks for taking my questions. So the first one would just be on the CapEx. So you still guide for below 14 billion. I think ConsenSys is looking for 13.5 billion in 2025. And in the last 12 months, you have around 13.1 billion. So just wondered if you could give any color on the below 14 since you are closer to 13 at the moment, or should we expect that to come up a little bit closer to the 14 billion level? Thanks.

We don't guide so exactly on the CapEx. We have been clear that we will be below 14 billion and at the moment we are trending clearly below as you have seen now for the rolling 12. So it will be somewhere in between where we are now and then the 14 billion. There are a couple of customer cases that we are also expecting maybe to come in that we will use on CapEx for. So that is basically the guidance we can give at the moment.

Got it. Thank you. Then just a question on the TV growth in Sweden, which has accounted for a pretty large part of the total growth over the last couple of quarters. So we saw TV RPU slowing down a little bit in Q1, but subscription growth seems to be tracking at a quite good pace. So just wondered if you could give any color on the outlook. I mean, it's growing 15% year over year at the moment. And it's grown around 20% over the last year. So do you expect pricing to continue to support the Orpiu growth in this segment? And if you could give any color on the pace of the subscription growth trend at the moment.

Yes, thank you. I can start and I mean we have seen clearly growth as you said for TV product and we have the best TV product in the market and it's natural that it will come down a little bit with the high growth we have had historically. But we have a very good product, appreciated a lot by our customers and we think the current trends that we see now in Q1 will continue during this year when it comes to our TV product. And it's an important value proposition since we are in Sweden and consumers are looking at a household perspective and it's important for our two-play, three-play services. So I think it will continue in the same pace that we have seen now in the start of the year.

Perfect. Thank you. Just a final question on the free cash flow outlook in 2027. You still have the ambition of exceeding 10 billion. So after, I think you initially announced it, you lost the lease of contracts. I mean, you were expecting it to decline a little bit, but still a headwind, I suppose. And then you divested the TV and media segment, which should have been free cash flow, possibly, I suppose, in your 2027 outlook. And also I think that you have had some minor FX headwinds since then. So given the reiteration of the above $10 billion free cash flow in 2027, is there anything in particular that you want to highlight as positive things that have changed since you initially announced the guidance?

We are very comfortable with the solid start to the year. So having done a quarter and almost a month of the second quarter, we have good visibility on delivering the seven and a half and that ultimately is then a really good start to deliver at least 10 billion by 2027. There's always going to be some pluses and minuses. And you know I guess when we set out our store where we announced the TV immediate transaction to say the eight billion is now seven and a half for this year that seemed logical but also we iterating the at least 10 billion by 2027 I think demonstrates the confidence that we have on us delivering on the plan yeah so to be clear we are committed to deliver on the 10 billion

Yeah, perfect. Sorry, just a small clarification. You said the ICE loss in Q2 started ramping down in March, but it will have a limited impact on Q2. Just clarify that, please.

No, so revenue would be very limited in Q2, right, because of that, because, you know... It has been migrated to our competitor quite quickly. So it will be zero already in Q3, so it will be very limited revenue left in Q2 from that ICE contract. And if you think about it mathematically, right, 380 million last year goes down by 100 million in a quarter, right?

Yeah, no, perfect. I just interpreted that the impact would be limited in Q2, but that clarifies it. Perfect, thank you. Yeah.

Our next question comes from Andreas Johnson. Your line is now open. Please go ahead.

Thank you, and good morning, everyone. So cost seems to be well under control, to say the least. So looking at service revenue, it's the Baltic, and as we concluded in the last question session, TV in Sweden, that is driving the service revenue growth. So looking at the other products in Sweden and adding Finland and Norway, What can you do? You said you had plans to turn Norway around. Can you describe those plans a little bit more? You also said that you will take some additional cost measures in Norway. Can you sort of quantify that in some way? Just to understand the trends that we see and how we can turn those trends around.

Yes, good morning. I can start. First of all, it's not only the TV that is growing in Sweden. I mean, enterprise was growing more than 3% in this quarter, you know, so it's much broader than that. And it is super important that Sweden will continue to grow on service revenues, given it's a home market and it's almost 50% of our business, you know, so it's very, very important. And I'm happy to see that they are actually performing very well. Then when it comes to both Norway and Finland, I think we need to have some patience there, because we are now setting a whole new team in Norway, and then they are working with a short-term plan and a more mid-term plan as well to get that. But it takes some time before we turn this around, and I cannot give you exactly guidance on when it will turn, but they have at least full commitment to change the current trends that we see in the Norwegian market. But as you know, we are telco business, it takes some time to turn things around. And in Finland, we have also a new CEO coming in, who came in this quarter, Holger, and he's now working actively together with his team. But there are different starting points. They have not lost a wholesale contract like the ICE, for example, in Finland. So here we foresee a bit quicker maybe turnaround, but it will still have some patience, take some time. But we feel comfortable that we're now doing the right things, creating the right plans, creating good teams in place, that actually can deliver going forward on the turnaround of these assets on the tool market.

Maybe just to add one thing on service revenue. If you look at, I think it's note four on page 22 of today's report, gives you a bit more color on where the growth in Sweden is coming from. We specifically called out the 15% growth in TV. That's about just over 100 million compared to the same quarter last year. But also we grew in broadband and in business solutions as well. And those in combination were more than enough to offset the decline that we see in fixed telephony, which is the old legacy business, if you will. So it's not just TV, where we saw indeed good subscribers and output development. It is also a broadband business and also business solutions, which in essence is IT services that we offer. So it's much broader based than just TV.

Very clear. And the cost initiatives in Norway, what is that?

Yeah, so I think the best way to look at it is if you look at the report, Andreas, today, you can see across the board the strong impact that the change program had. So, for example, EBITDA margin in Sweden was up 230 basis point, and in Finland it was up 200 basis point. If you look at Norway, you don't quite see that. Actually, you see the opposite development there. That's not good enough. So to give you a sense of what we will do there, that might give you a bit of an indication.

So it's a broad perspective. We look through all the costs, basically, and turning all the stones in Norway. So it's not particularly one item. It's across the whole cost base.

Perfect. Thank you. Now I'll read note four.

Our next question comes from Fredrik.

Please go ahead. Thank you. Thank you for taking my question as well. I want to come back to the mobile side of things. And I looked in the numbers here and I can see that in Sweden it's the third quarter with the post-paid net ads losses and in finland you're up to seven quarters in norway it's two quarters in a row what is your plan with this are you are you comfortable with sort of tapping out a little bit on your subscriber base as long as your price hikes are biting on the remaining base or or is there another thinking here that you want to turn these things around and make net ads grow again Some discussion around that would be interesting to hear.

Thank you. I can start. And there are different views depending on the market. So let's start in Sweden first of all. We have been very clear in the enterprise space, so the B2B in Sweden, that we will not follow these aggressive prices we have seen in public tenders, especially on the municipalities. And we have actually stepped away from several of those cases. And we have been a bit more exposed to those in the past. But we have said that we will clearly not follow these aggressive prices. And so that is one of the reasons. It's a choice we made that we will step away and let our competitors take those at very low prices instead. Because we think we should actually charge more for the services that we provide to these customers. So that is a very important decision that we made internally. So that is basically for Sweden and the main reason. In Finland, we've seen some improvements in trends, but I agree with you. There's been too many quarters where we have given away basically our customer base and we will stop this. have launched several activities and it would take some time, but we are on the way to turn it around. But I think we need a couple of more quarters because it's not an easy change. But we are definitely not happy with the development.

Yeah, no, very good. I think there's different horses for courses here. So depending on where you are, I think maybe on the consumer side, In Sweden, it's very similar, where we continue to defend on the postpaid side quite strongly, where the price actions clearly have an impact to drive our performance there. I mean, we're only down 24 million SEK on a couple of billion of revenue on mobile in Sweden overall, so we're quite happy with that. And where the competition is, is mainly on the lower end of the market, where we have a good brand, where we can defend ourselves. As a premium offer, we try to stay out of that battle, if you will. Very different than the other markets where we are now more a challenger, where clearly there needs to be more of a line-in-the-sand strategy for us to win back a bit of market share. But it's always trying to find the right balance between... Where do you price to win back a bit of market share? And then how do you also make sure you get the right output development to drive service revenue growth? But, you know, we agree with your question. There's a bit of homework to be done there.

Just a quick follow-up on Finland. There have been some talks about a MVNO signed up in Finland. Is that something you can comment about, or have you seen, or have you evaluated?

Haven't seen anything. We have heard about it. It's nothing that we have evaluated. And we have not been in dialogue with any MBO contract in Finland. But I've heard rumors in the market about it. Okay, perfect.

Thanks. Our next question comes from Stefan Guffin. Please go ahead.

Yes, hello. A couple of big more detailed questions, one for Sweden, one for Finland. First, for Sweden, the fixed broadband subscriber intake looks a bit weaker than previous quarter, and that's despite that you're approaching the end of the XDSL subscriber base. Is this an effect of price increases or is it anything else like market competition or anything that we should be aware of? And then for Finland, Elisa was fairly positive on the mobile service revenue trends. And it seemed like they were positive on value-added services making an impact where they are including the mobile ID as part of the mobile bundle and will charge extra for that. Is this in your plans as well regarding mobile ID? I believe this was an industry-wide plan. the mobile ID is something that you also take part of. So is it a plan to charge for this and how much and when will we see the effect of that?

So, Erik, why don't you start with the Finland question?

I can take the last one. So we all in Finland and as well as in other places, we all have our unique selling points, right, for the product. And mobile ID is typically included free of charge for us specifically. I'm not aware of any plan and we typically wouldn't announce plans before they're made public anyways to change that at the moment. Overall, we have an overall pricing which are not far from the other players and not in fact far from the market leader, despite that we're the smallest player in the consumer space. So there also isn't a reason for us to do anything right now. But of course, we are a follower in the market, so we will follow the overall development and take our decisions from there.

Yeah, with regards to Sweden broadband, there are one or two, let's call them value for money players who are doing well in the Swedish market. Certainly also because we price at a premium, as you know, that's kind of the mix that you want to get or the balance that you want to get right between what is your pricing to drive your revenue. As I said already, in Q1, we see broadband service revenue growing, which is the right combination of increased pricing and you lose some subscribers to those competitors, which is fair to us. For us, ultimately it is about that combination of had the fixed mobile convergence. So it's not just about selling that one product, which is broadband. It's also then when you hold on to these customers, they are able to sell TV and other products to them, which is a big part of our strategy in Sweden and what differentiates ourselves from the competitors. So overall, we're quite happy with the performance of our broadband business.

And I think the reason why it was slightly negative was actually, and the reason why it was a bit negative, just to build on what Eric said, is regarding the price increases we also did, you know, in the market. So it's, but it's nothing unexpected and it's aligned with our own plans. So no surprises.

Okay, perfect. Thank you.

Our next question comes from Eric Lindham. Please go ahead.

Yeah, good morning, and thank you for taking my question. So your balance sheet is looking stronger and stronger here, and leverage will come down further, as you said, with the rest of the media and Marshall. If you think about your sort of capital allocation priorities here, is there any selective M&A that you would look to do, or is it more so increasing distributions to shareholders? I'll start there. Thank you.

Yeah, no, so we have a very clear framework, right, of where we want to be from a leverage perspective. So as a typical player in the industry, you feel comfortable between two to two and a half times when we start to get the money in from Marshall in Q2 and then a TV and media is expected in Q3, we start to get close to the lower end of that range. We also said today what we repeated at the investor update last year, which is we have a clear ambition to grow our free cash flow per share and our dividend per share. So when the time is right, when we start to get to that lower end of the range or below is when the moment when we need to a bit clearer about what we're going to do. But we're very happy with sort of our capital discipline. You see that with the rolling 12 month capex. You see ROSI going up. It's double what it was last year. So we're very happy with that. And we have a much healthier balance sheet that allows us. to continue to invest in the business. When it comes to M&A, we've always said that we would be looking to strengthen our position in specific markets and mainly in our home market for Sweden. But we also said that you should think of us more of a seller of assets rather than a buyer of assets if you think about how much do you spend versus how much do you receive in proceeds.

Perfect.

That's very clear. You mentioned being a seller of assets. I mean, is there any sort of further divestments or any non-core assets left that you would look to monetize here? You've done a lot of pruning in the portfolio already, but anything to highlight?

Yeah, we had a slide in September at the investor update that sort of set out some minority investments that we have. We talked about the turnaround plan for Finland, for example, where last year we were selling this e-voicing, invoicing business, which is about 10 million euro revenue a year with zero profit. Selling those is important to us. But that's more pruning rather than sizable things, if there are things more sizable. Obviously, we will update you when those become more prevalent.

Perfect. Just a final question from the... So, the change program is contributing nicely here in Q1. You have been progressing on your execution of it, but have you been able to sort of identify any new efficiencies or new cost savings as you've been doing this program? Thank you.

Yeah so the change program that we actually executed on December 1st was last year was more of a right sizing of the business and then now we are looking into of course to operational efficiency measures and opportunities and those will continue so we will of course do our best to take away the inflation that we see, you know, and then be more efficient. And we are constantly challenging all the costs that we will go through them during the springtime here again to see that we are right when it comes to our cost base. So we will continue, but we will not do another change program that we did last year because that was more of a right sizing. So now it's more business as usual to just work actively with the cost base.

Yeah, and as we said when we were on the roadshow after the full year results, maybe to add is it's not just about people, right? It's also about non-people related cost. I think what you should expect us to see when we are disciplined around CapEx, we're equally disciplined about cost. And it's trying to create a more cost-conscious culture. So there is quite a bit of room for improvement there as well. And the example of that, which we talked about in the Q&A earlier, is Norway, for example. But there are other markets where we feel more can be done.

Thank you.

Our next question comes from Ulrik Rath. Please go ahead.

Yeah, thanks very much. I wanted to dig into the comments in the report, in the CEO letter from the report, about the macro risks, given not being isolated, but obviously in a defensive industry, not directly impacted. But there are things you're saying, you're sort of looking at very carefully. What are the main levers? that you're currently touching to alleviate potential issues in the supply chain, the other risks that you highlighted there. Where do you actually have the freedom to adjust things? And related to that, sort of question 1A if you want, Tele2 actually commented, I think yesterday, on B2B pressure. They mentioned things like S&E bankruptcies going up in Sweden, also that the large enterprise customers are conducting their own cost-cutting exercises. Now, you are reporting, whereas with the strong Q1, talked already about them slowing down in Q2 a little bit because it's a lumpy business. But how do you look at the business overall against the backdrop of those micro-pressures and highlights in particular? by your vitamin competitor. I have a second question, but maybe this one first.

Yeah, I can start to give some comments on the macro. I mean, if you look at what's going on in the US at the moment, we don't see... It's too early to see any impact of the business. We haven't seen anything in Q1, just to be very clear. Our exposure also to the US and also Europe is limited. I mean, we are focusing on our territory, Nordic and the Baltics, and very limited impact as such. We are more looking into, of course, the impact of the general economic growth, you know, and see if that could actually impact our customers. So it's a more indirect view on it that we can see. For example, another one is that, OK, what is our exposure to the U.S.? Of course, we have some partners, U.S. companies that are partners. But it's a very limited part of our sourcing, our total sourcing that are directed to the US companies. We're talking about 1% maybe. And if you look at a bit broader and look at US companies also available here in Europe, it's around 5%, I would guess. So a very small part that is linked directly to this. So more on the indirect and dynamic impact we are following closely. We don't see those yet. You know, you always look outside and see what's going on or how will that impact us. Then when it comes to B2B, I would say last year, many companies hold back on investments and we have seen a better start of this year. That's the reason why we also see these other revenues, which we call a bit lumpy and a quarter to quarter coming up a little bit. We have actually seen a positive signs from large enterprise that they actually start to invest a bit more now in the business. And when it comes to their situation with headcount reduction, etc., you know, that is normal standard business for us. So we haven't seen any impact yet from the macro in the world that impacting our customers. But of course, we are in close dialogue with every customer to understand better their demands for going forward. But so far, very limited impact, I would say.

It's very helpful. Thank you. Sounds like. You're in a completely different boat there, still a coup. And the second question would be on towers. You're reporting this unit now separately, presumably to bring it a little bit more to the front of people's minds and to the direction and the sum of the parts and all these good things. So could you talk a little bit about what's in store there? What are the believers and plans you have for that? And I'm not talking about strategic plans. I'm talking about operational, how you see this business developing and what you can do to improve performance. Thank you.

Thank you for that question and for picking it up. It is indeed shining a light a little bit on a part of our business that previously was sort of hidden, if you will, within the various countries. And that's also the reason why the deal was done. No doubt at the time also doing a deal at a great multiple was beneficial, and it also gave cash, which allowed the company to deliver and do a share buyback program, etc. All of those good things. The main thing is that you then have people who have... laser focus on executing a commercial plan which is which was important and so in some of the KPIs that you see and that we called out also in the slide deck and not just in the report is that you have more tenants because people are so focused on this rather than you know when it's single tenants which is us which is why we also called out this growth in at that 50% of his external revenue, so not just from us. So this business has grown substantially, 25% additional EBITDA since the deal was done in 22, and the team continues to be ambitious on it. So on a regular basis, we will continue to update on this in the report and not necessarily in the analyst presentation because it is a commercial success on an asset that previously was I guess, undervalued or understood, not understood by the market, which is why we spend a bit more time on it. So we're very happy with that commercial development.

Fantastic. Thank you very much. We've brought answers.

Our next question comes from Victor Hogberg. Please go ahead.

Good morning. Free cash flow in Q1. Did it surprise you positively when you added it all up? You recreated the full-year guide, so it might be the case that some items are falling into some other quarters as well. Or instead, I'm thinking partly on the restructuring charges for H1. Yes, I'm thinking on the facing on free cash flow given the Q1 performance. And I have a second question after that.

Yeah, no, so we're happy with that 1.7 billion. Obviously, I had 2 billion more than last year, so that's always a good start rather than starting with the negative. It is very much in line with expectation because what were those levers? First one is strong EBITDA development, which is very good. Paying less interest because we actively manage down our gross debt. obviously also helped by slightly lower interest rates. So those are levers that you control. Then obviously there is a bit of a difference between cash and book capex that you've seen, but I think we've explained it in the presentation and also in the report. why that is the case, so good capital discipline, all of those together I think help. A bit less restructuring cost than we normally would have, obviously because we have just executed the change program, so that was quite a relatively known number, but for the full year there are always efficiencies. We talked about it in some of the answers we've given to the questions this morning, so we still expect roughly about a billion. for the full year. So marginally some difference in the different line items, but put together very much in line with our expectations. So if you think about feeling confident about seven and a half billion, it helps that you then have a good start out of the gate with 1.7.

And a semi-follow-up on that is 7.5, because just thinking about the spectrum capex, you don't guide specifically for that. You include the 650 million in average for these years. But you're comfortable with 7.5 billion, including that as well. We already know that the spectrum capex will be higher this year.

Well, we'll have to see, right? So that auction is at the end of the year. Let's see what that looks like, who participates and how the auction evolves, etc. For us, it was super important to guide for a cash flow that people can understand, put in their models. And hence, us saying historically that average is about 650 million. So no one needs to worry about what that outcome is. Let's see how that auction goes towards the end of the year and what the impact of that is.

We have the second part of the multiband auction payment, as you know, in Q4 as well, just to get the full picture.

Follow-up on the Towers question. I forget why you wanted to highlight it, but what can you do to drive profit growth going forward? You talked about commercial excellence and that you're very happy with the performance, but just could you help us with What are your drivers for increased EBITDA going forward? What to expect? What do you expect?

So one is rolling out more towers, increasing and being very disciplined around those, which ones can have multi-tenants, which can't. So you also take a few away, so you improve the efficiency of the infrastructure. making sure that the pricing agreements, the contracts that you have with us, but also with others, which is why the external revenue is so important. You don't want to have EBITDA growth just driven by us because that's left pocket, right pocket. We don't want that. So there's price escalators in those contracts, all of those things help. The next thing is they also become better over time because, you know, very seasoned professionals in running these in the most efficient way. And that's clearly what we see, right? To be able to get 25% increase in what in essence is two and a half years is, yeah, is a testament to the fact that these people know what they're doing and it's great to have them you know, as partners to run this.

Sorry, if I may, just a quick follow-up on that one. The 25% FTA growth, was that coming from a low base and now up to par with where it should be performing, or was it already in good shape and not performing, if you understand what I mean?

No, these were profitable businesses for us, right? So if you think historically, EBIT margins in places like Sweden were very good already, but there's always upside potential. And why? Because historically incumbents are not just us, but other players. That's why as telco operators, we divested them, is they were not understood as well and they were not commercially exploited to the best of their ability. So they were well run, but they're better run now, hence the uplift in Ibadan.

Okay, thank you very much. Thank you, Victor. Many great questions. I think we have about five more questions on the line and a couple of more minutes before the full hour, so we won't be able to take them all within the call. You're welcome to call us afterwards, but let's take two more questions quickly, please.

Okay, our next question comes from AJ, so you please go ahead.

Just a couple of quick ones. First of all, Sweden EBITDA is pretty strong in Q1. I'm just wondering how you expect this region's EBITDA growth to evolve over the year, because I think most of the headwinds you've mentioned were not specific to this region. So is Q1 quite representative of what you expect for the remainder of 2025? And then on free cash flow, just a couple of housekeeping ones. Other items you've previously said is underlying would be negative 500, 600 million. Thus, you have around about a billion cash out for the change programme. So the one and a half to 1.6 billion seem reasonable for this year, for this line. And then just double checking that you said that restructuring for this year will be one billion for the full year, despite only being 50 million in Q1. Thank you.

I can start with the first question. Yes, we expect Sweden to continue to perform during the year. We don't see any other signs that they will not. So that is the expectations we have in our own plans.

Yeah, I can confirm that one billion restructuring that I just said, despite the sort of, what is it, less than 60 million or so in Q1. And Erik, on other items?

Yeah, I think that's right, AJ. That's the right logic you're applying, so I think we can confirm that. But of course, it won't be exactly that, but roughly 600 million underlying plus roughly a billion of restructuring paid from last year's change program.

And you said expecting that restructuring to come out mainly in H1 of the change program?

That's right.

Correct.

Okay, great. Thank you very much.

Our next question comes from . Please go ahead.

Thanks for taking the questions, and I have two, please, both of which are in Norway. So, firstly, can you remind us what percentage of your broadband base is still on cable, and the degree to which your planned 1 billion sec of fiber investments will go towards covering these customers with fiber over the next two years? Secondly, going back to your comments on the need for additional OPEX cuts in Norway, how quickly do you think these additional measures will come through? Will they mitigate some of the ISO contract loss in Q2 and Q3, or should we think about that as a full drop-through? Thank you.

Yeah, it will take some time for those costs to come through, right? And also they come at a cost to some extent. So the full benefit you will see in 2026 rather than 2025, but some benefit already this year. Let us come back to that, I think at the half year on 18th of July to give you a better sense of dimension. once we have finalized the plans and executed those. The split of investment and fixed is indeed a billion over three years, we said at the Capital Markets Day, so that's roughly split equally over 25, 26 and 27, so let's call it 300 million. roughly per year. We have around 40-45% is still cable. So the inverse around 60% is already fiber. So a combination of fiber plus fixed wireless access. And we think that this investment is enough to be able to compensate for that. We're having very good traction actually. I mean it's hard to see that in the numbers but When we roll out fibre in SDUs and MDUs where there is that opportunity from either a commercial or a competitive perspective, we're very good at actually holding on to contracts or winning contracts when we roll that out. So we're quite happy with the money we've allocated and the way the country is using the capital that we made available for this to compete better versus the fibre offering of the competition.

great thank you thank you everybody for all the great questions we are very happy to continue to talk on the phone if you didn't have a chance to ask your questions but thank you for dialing and goodbye