Telia Company AB (publ)

Welcome everyone to Telia Company's Q4 four-year results presentation. And with that, I will now hand it over to Telia Company's Head of Investor Relations, Erik Stranden Pers. Please go ahead, the floor is yours.

Thank you and good morning everyone to our Q4 call. We will do the usual routine with the management presentation followed by Q&A. We have CEO Patrik Hofbauer and CFO Erik Hagerman in the room and we go straight ahead. Patrik, the floor is yours.

Thank you, Erik, and good morning to all of you. The last quarter of 2025 confirms that we are on track to reshape Tele into a much simpler, faster and more efficient company, in line with our value creation plan set out at the investor update back in September 2024. Before I go into the quarter, let me walk you through some key highlights for the full year of 2025. Looking at the financial performance we have for the first time in five years converted the dividend with a free cash flow without any vendor financing contribution. We delivered on our EBITDA and over delivered on our free cash flow ambition despite a challenging year for Norway and service revenue headwind in Finland and our balance sheet has strengthened. The good financial performances has also been noted by the market and resulted in a total shareholder return of 36% for 2025. We are also through the first year with our country-led operating model and the positive result when it comes to efficiency, speed and responsibility are clearly visible. The new model is also an enabler for further efficiencies and we announced a net reduction of 450 positions earlier this month. We have also come far in terms of improving our capex efficiency and reshaping our portfolio with the divestment of TVN Media and Bid for Brebant 2 and a process to exit Latvia. Throughout the year and across most markets, we have seen MPS improving, so the customer satisfaction, which confirms that we are doing the right things for our customers. In addition, our role in society is becoming increasingly important with increased demand for secure and mission critical communications. So a lot for the organization to be proud of and to build further on in the coming years. And with that said, let's now zoom in on Q4 highlights. We again won the best network in Sweden according to Umlaut's yearly survey, achieving both the highest overall score and a win in every category. But only having top-class network is not enough, and I'm happy to see that all the other efforts we do to drive customer experience is paying off, with MPS increasing across the footprint. We also continue to be very disciplined on cost in Q4, which resulted in an OPEX decline of by 4%. On portfolio management, we received the necessary regulatory approvals to go ahead with the bid for Breban 2 just before Christmas. And our process to exit Latvia is moving ahead. We also agreed to acquire a small fiber customer base in Finland. We saw Sweden deliver its best quarter in modern times with revenue growth reaching almost 5%, supported by business and mission critical services, but also strong growth in consumer and an improved trend on mobile. For 2026, we see continued good financial momentum and therefore guide for service revenue and EBITDA growth of around 2% and around 3%, respectively, and a stable CapEx level. Combined, these core building blocks are estimated to generate a free cash flow of around 9 billion, a good milestone towards delivering at least 10 billion in 2027. Now let's go to the financial highlights. Service revenue growth accelerated as expected, supported by strong growth in Sweden. EBITDA growth remained rather unchanged compared to the previous quarters, somewhat held back by a weak service revenue development in Finland and our decision to invest more in our core markets to capture growth. CapEx remained stable and ended a bit below our outlook of around 13 billion for the year. Free cash flow came out very strong, driven by better than expected Q4 working capital, which Erik will elaborate more on. This strong end to the year resulted in a full year free cash flow of SEK 9.6 billion based on normalized Spectrum CapEx, significantly above our outlook of around 8 billion. Finally, our balance sheet remained very healthy with leverage also this quarter at 1.93x and significantly down from a year ago. Moving now to Sweden, that again won the best network in Omla's survey, and that also secured further long-term access to 1800 MHz spectrum at attractive prices. In the quarter, we also completed the 5G rollout and the 3G sunset. Customer satisfaction improved both in B2C and B2B, and we continue our strategy to step-by-step move sales from external channels to internal channels. Financially, Sweden delivered impressive service revenue growth driven by both mobile and fixed. The consumer business had another good quarter with over 4% growth. Mission and business critical services were a strong growth contributor, but also other areas such as our IT business Telia Seigert. Growth was well balanced but driven 50-50 from pricing and volume. This shows that we can do both pricing and attract new customers, as you can see in the healthy KPI development on the right on the slide. With strong net intake for both broadband and TV and a growing mobile output driven by price changes earlier in the year. The slight decline in mobile customers was a result of a modest decline in the mobile broadband base. EBITDA growth remained strong despite including a lower year-over-year pension refund contribution as well as increased marketing spend. So all in all, Q4 was a strong delivery by the team in Sweden. Let's now move east to Finland, and let me start with the financials, where we had a weak quarter with service revenue down 3%, partly driven by continued weak enterprise market environment and a ramp down of non-core businesses, but mostly because of non-connectivity projects for enterprise customers, which are lumpy in nature. We had a high level of revenue from these projects in Q4 last year, and a relatively low level this year. The lowest service revenue was the main reason why EBITDA declined 6%, but also the higher marketing spend that we flagged already in Q3. So clearly a weak quarter and we are far from satisfied, but we also want some new enterprise customers and our focus remains on the strategic agenda we have communicated before. Strengthen profitability, simplify the business by divesting non-core assets and reducing organizational complexity and then turning around the SME segment and stabilizing the mobile market share. Underlying cost control remains tight and we expect service revenue and EBITDA to be more stable in the coming quarters. The mobile consumer market was very active this quarter with two new MVNOs and a record high number of customer changing operator. We continue to focus on network and customer service quality and avoided the lowest price points in the market, even if it resulted in a net loss of customers short term. In Broban, net ads declined by 6,000 in the quarter, but this was fully driven by a clean-up of inactive subscribers. Now moving west to Norway, where service revenue was close to flat despite lower mobile wholesale revenue mobile end-user and fixed revenue improved clearly. This was mainly driven by pricing and, as can be seen to the right, resulted in significant ARP growth across our core services. EBITDA remained in negative territory as we flagged last quarter due to decline in service revenue as well as higher cost level. Partly this was driven by phasing and partly because we have invested more into the market to capture future growth potential. We shifted the billing cycle for a large part of our customer base which helped working capital in the quarter and the churn effect was well in line with our own expectations. So now let's move to Lithuania, which launched 5G SA for its consumer customer and continue to deliver truly strong financial development with service revenue growth accelerating to 7%, supported again by both mobile and fixed. The acceleration together with another quarter of great work on generating efficiencies resulted in an EBITDA growth of 13% and an EBITDA minus capex that remained at record high level of 1.6 billion Swedish kronor on rolling 12 months basis. In addition to solid financial development, Lithuania continued expanding the mobile customer base and, as you can see, also grew ARPU across all products, predominantly on the back of pricing performed earlier this year. Moving on to Estonia that had an eventful quarter operationally receiving a recognition for best network by Rode and Schwarz, launching a new security service for its home broadband customers and new eSIM roaming service for customers trading, traveling outside of EU. Financially, the quarter was, however, a bit soft on service revenue, trended stable, and EBITDA growth slowed down due to an unusually low cost level in the corresponding quarter last year. But like for Lithuania, cash conversion remained close to a record level also in Q4. And with that, I hand over to Erik before I come back to summarize the full year and Q4. Thank you.