Telia Company AB (publ)

Welcome, everyone, to Telia Company's Q1 results presentation. And with that, I will now hand over to Telia Company's head in investor relations, Eric Strand and peers. Please go ahead. The floor is yours.

Thank you, and welcome, everyone, to the call this morning. We have in the room here President and CEO, Patrick Hofbauer, and the group CFO, Erik Hagerman. And I leave the word to you, Patrick. Please go ahead.

Thank you, Erik, and good morning to all of you. Our performance in 2025, including how we ended the year and started this year, confirms that we are on track to reshape TLE into a simpler, faster, and more efficient company, in line with our promises at the investor update back in September 2024. I'm glad to see that our mission to constantly improve and deliver on our promises is generating good results across many areas, including customer satisfaction, network stability, capital allocation, and operational excellence. This also becomes visible in our financials, with a whole market that continues to perform very well. And even though we have a lot of work still to be done in Finland and Norway, we see clear improvements on the back of the work performed to turn around those businesses. So we have made a lot of progress on reshaping Telia, but we are far from done. Therefore, we are working hard every day to make sure that we remain relevant to our customers and well positioned to deliver on our financial targets. Now moving to the highlights of the quarter. We have a good start to the year with improvements to our customer KPIs, most notably in Sweden, and growing share of converged customers and customer satisfaction increasing in most customer segments. This is driven both by improving customer service, where AI is becoming increasingly useful, and by great networks where we continue to stay in the lead as we launched 5G SA as the first operator in Norway and Estonia. Active portfolio management continues. We closed the Breban II acquisition, giving us a brand and a capability to compete in the value-for-money segment, and half a million customers based with limited overlap to the Telia brand. We also renewed our fiber partnership in Finland as we increased our stake in the number one Finnish fiber player, Valo Koitonen. But even more important was the run-sharing agreement with ICE in Norway, which will give us both a stronger network and better economics. We also remain focused on continuous simplification and cost discipline, even as our big change program is now behind us. And it is encouraging that we have reduced operational expenses by 2%, helped by 5% lower headcount versus Q1 last year. Finally, We made an update in March to our sustainability strategy, which now includes four new focus areas and related targets. And we were awarded most sustainable operator in Sweden for the 10th consecutive year by Sustainable Brand Index. Moving now to the financial highlights for Q1. Service revenue growth remained just above 2%, supported by consumer and high demand for business and mission critical services in Sweden. And Lithuania also continued to show solid performance. We also saw continued gradual improvement in Norway and better performance in Finland compared to Q4. EBITDA growth accelerated slightly, mainly driven by Finland and Norway, and with the mentioned cost reductions, the margin improved to 40% compared to 39% in Q1 last year. Continued investment discipline resulted in CapEx declining somewhat, ending at 12.6 billion on a rolling 12-month basis, comfortably below our full-year ambition of less than 13 billion. Free cash flow came out at 1.9 billion, which was stronger than we expected and predominantly due to better working capital contribution. And finally, our leverage remains low even after paying around 3 billion Swedish kronor for Breban II. Moving now to Sweden, that continued to perform well with growth of 4% in consumer, both as a result from pricing, including the first black book pricing increase ever in fellow, but also from growing customer base. And further support and growth was continued strong demand for business and mission-critical services. Our TV service continues to be the most appreciated. We signed two multi-year agreements with key content providers for product leadership also in the years to come. We also announced an agreement with Telia Seigert. Telia Seigert delivers sovereign AI services on top of the AI infrastructure that Brockfeld is planning to build in Sweden for approximately $10 billion. Customer satisfaction improved both in consumer and enterprise, and we continue our strategy to step-by-step move sales from external to internal channels. In the quarter, we opened three new stores, and we have more initiatives coming to further drive the shift to own channels, which we will be able to talk more about when we report our Q2 results in July. As you see to the right, Q1 was a strong quarter for our customer KPIs, and we continue to increase the share of converged customers, which is now at 59% compared to 57% one year ago. The 500,000 broadband and 30,000 mobile subscribers from Breban 2 add further economy of scale, and we continue on that topic on the next page. Which recaps the fact about this acquisition. After having had Breban 2 with us now for two months, we remain very positive about the potential for this highly complementary business and all targets are intact. The customer base have a very limited overlap and we are happy to see that we have already started to realize revenue synergies by selling additional Telia services to Breban 2 customers. Moving now to Finland, that's a more normal activity level in the consumer mobile market this quarter. We have led a gradual recovery of pricing underpinned by our leading customer satisfaction. The number of posted customers declined again, however, less so than in Q1 in the previous years. And we see improving dynamics in our customer base. We also increased our fiber JV ownership, and I will talk more on this on the next page. Financially, the performance Q1 was, as expected, much better compared to Q4, with B2B in particular performing better. We are, of course, not satisfied with being only marginally positive, so the strategic and commercial work to reposition and turn around the finished business is moving along at full speed. And we took further measures in the quarter to shrink the organization and make it simpler and more efficient. In Broban, net ads increased by 8,000 due to the acquisition of a similar number of customers from Global Connect. Now let me quickly go through the increased ownership in our Fiber JV. We are happy to have strengthened our participation in the growing fiber market, even as our previous partners have decided to exit. With a new partnership agreement with Brookfield, we have a partner we know well, and we have also stepped up slightly from 40% to 49% in the business. Valokutene was founded in 2020 as a joint venture between Telia and Capman. And it is the fiber to the home market leader with a reach of more than 400,000 homes through an open access model. The transaction reflects Telia's strategy to offer converged high-quality services to customers across Finland. And it's in line with Telia's partnership-based approach to long-term infrastructure investments. The deal is expected to be completed during Q2 with a price tag of around 30 million euros. Moving now to Norway, where we in early February announced RAN sharing agreement with ICE, a great project that I will say more about on the next page. Service revenue continued to trend in a positive direction and reached almost flat, despite the mobile wholesale revenue drag, which has now come to an end. The improvement was largely driven by pricing, which resulted in significant ARPA growth across our core services. However, we did lose 27,000 post-bred customers, mainly because we made both pricing and billing cycle changes in a short period of time. But we are now well behind these events and taking a broad range of measures to reduce churn going forward. EBITDA also improved but remained in negative territory, as we expected, impacted by high cost levels in marketing, M&A and energy. As said, we also launched a commercial 5G standalone across our network as the first operator in Norway. And we plan for an even better network ahead, which takes us to the next slide. We agreed in early February on an attractive RAN partnership with ICE, building Norway's most cost-efficient and future-proof mobile network. Network sharing is efficient, and this will create benefits for customers, the Norwegian society, and the network partners. Customers, even in the most remote areas, will have a choice between two nationwide networks, as we are building a network with quality and robustness on par with the incumbents. We will continue to operate independently with separate core networks, but we have a joint RAN infrastructure built on Telia's existing Ericsson network and will go live soon after the transaction is finalized. Over time, this will give us more competitive network position as well as significant cost and capex synergies. We aim to come back once the deal is finalized with further details on the financial impact. Moving on to Lithuania. Lithuania. where NPS continued to increase and Tele was awarded best customer service in a survey among Lithuanian consumer connectivity customers. We also took the first step in building a new data center near Vilnius in response to strong local demand. It is based on a hybrid model combining services from global cloud leaders with on-premise storage of strategically critical data. Service revenue growth accelerated slightly, supported by mobile and fixed, that both grew around 8%. EBITDA, however, normalized compared to a record-strong 2035 that was supported by the change program. In Q1, Lithuania also saw higher energy and marketing costs, as well as increased level of internal cost allocation for Lithuania and Estonia. Customer KPA trends remain intact with expanding mobile customer base and ARPA growth across all products on the back of pricing. Moving to Estonia, that by launching full 5G standalone further strengthened TLS position as the clear network and 5G leader. Our core connectivity business performed well with a growth of 4%. However, Overall service revenue growth slowed down because of lower ICT deliveries due to supply chain limitations. We expect we'll be less of a burden as we move across the rest of the year. EBITDA growth, however, remained positive despite somewhat higher energy costs. And with that, I hand over to Erik before I come back to summarize the quarter.

Thank you, Patrick. Let me now go through the financial development of the first quarter, starting as usual with service revenue and EBITDA. As you can see on the left-hand side, we started 2006 by again delivering service revenue growth of 2.1%. Like in the previous quarter, growth was supported by strong performance in business and mission critical revenue and our consumer business, which overall grew by more than 3% like-for-like, benefiting from strong development in predominantly fixed, led by TV in Sweden, and broadband growth across the footprint. Mobile service revenue remained in growth territory, despite a continued Norwegian wholesale drag, supported by growth in Sweden and the Baltics. From a country lens, Sweden and Lithuania had the strongest momentum, as you saw in Patrick's presentation, while Finland turned back to a slight positive growth. Norway also improved and only just remained short of the zero service revenue growth mark. All in all, a solid start to the year and we are on track to delivering on a guidance of around 2% service revenue growth for the full year. Moving to IBEDA that accelerated slightly to 4%, supported by service revenue growth and continuous operational improvements that further reduced the cost base. Growth predominantly came from Sweden and Lithuania, and also from efficiencies realized within central functions, which are part of other operations in our reporting. EBITDA margin was up again, in line with the September 2024 margin expansion promise. This quarter, margin expanded by 90 basis points and was close to 40%. Overall, a good start to the year, also in terms of profitability. supporting our around 3% EBITDA growth outlook for 2026. Moving now to OPEX and CAPEX. Starting on the left, you can see that we continue to deliver on our simplification and cost discipline agenda. The impact from the right-sizing change program is now mostly behind us, but we keep finding ways to simplify Telia and make the organization more efficient. This quarter, we saw lower costs related to resources driven by 5% lower headcount and reductions in costs for IT and bad debt, partly offset by somewhat higher marketing spend in mainly Finland and Norway. There were also increases in energy costs in Norway and the Baltics, but despite the turbulent energy markets, overall energy headwind for the group was kept at 20 million. Our hedging policy remains the same, with around 70% hedging over direct electricity exposure for the coming year. Overall, OPEX declined by 2.2% compared to the same quarter last year, which is great to see and a testament to our team's continued focus on this. OPEX has a percentage of service revenue continue to trend down further and decreased by 130 basis points to 30.2% in Q1. During the quarter, we've announced net reductions of around 500 positions across the group. Moving on to the middle graph, you can see that we also remain disciplined with CapEx that is now trending at $12.6 billion, well in line with the outlook for 2026 of less than $13 billion. Finally, to the right, EBITDA minus CapEx was again above $19 billion on a 12-month rolling basis. a 6% increase over the last year. We also continued to improve our cash conversion, now at 61%, up from 58% a year ago. Let's now look at the free cash flow for the quarter. Free cash flow for the first quarter came out at 1.9 billion, which was stronger than expected, mainly due to better working capital contribution in Sweden, driven by phasing and customers paying early. In addition, we also had a tax refund in Sweden, which came earlier than we originally expected. So we're off to a good start, a better start than we expected, and confirm today our around 9 billion SAC outlook for the full year. We continue to expect free cash flow generation not to be linear this year. The better-than-expected performance in Q1 is largely due to phasing, as just explained. Therefore, we continue to expect a free cash flow generation which will be H2 tilted with a 30-70% split between the first and the second half of the year due to working capital timing. So overall, a reasonable expectation of free cash flow for Q2 is approximately 1 billion SEC. Let's now briefly look at our net debt and leverage development. As you can see on the right-hand side, our net debt increased in the quarter by 4.6 billion, resulting in leverage increasing to 207 times, well within our desired 2 to 2.5 times range, and also well below the 2.18 times from the first quarter a year ago. The main reason for the increase, as Patrick mentioned, is the consideration of almost 3 billion for the purchase of Brebon II. We also reduced the mix of hybrid debt in our capital structure. Since hybrids are only accounted for 50% in our net debt, that technically increased our net debt by around $1.3 billion. However, this improves our capital structure, and we will pay less interest over time because of it. Finally, before I hand back over to Patrick, I would like to say a few words on some of the achievements this quarter and how that resonates with our value creation agenda laid out at the investor update back in September 24. Firstly, we continue to grow EBITDA on absolute terms, and we stay disciplined with our capital expenditures. This resulted in a free cash flow per share reaching 2.41 SEC on a rolling 12-month basis, comfortably exceeding our recently announced increased dividend of of 2.05 per share. Secondly, we continue to strengthen our asset portfolio. We closed the Bredbant 2 deal and we successfully transitioned our Finland Fibre JV into a new partnership, this time with Brookfield, in a transaction expected to close in Q2. We also continue to make progress on the transaction to exit Latvia, a deal we expect to close later this year. Thirdly, our balance sheet remains strong, even after paying for Brebon II and further optimizing the hybrid layer of our debt structure. We now have limited refinancing needs for the remainder of the year, which bodes very well for the interest expense line in our free cash flow statement. Finally, we paid another quarterly dividend of half a sec per share to our shareholders this quarter, and following the AGM approval earlier this month, We came through on our 2024 Capital Markets Day promise of growing our dividend per share. This is an important milestone on our journey so far. And with that, I hand back over to you, Patrik.

Thank you, Erik. Like I said in the beginning, the past year was a year of significant change and strategic progress for Telia, and I'm glad that we start in line with our plan also now in the first quarter. This confirms that we remain on track to build a simpler, faster, and more efficient Telia. Our customers continue to be increasingly more satisfied, and our services are more relevant than ever before in an increasingly uncertain world. And all of this puts us in a good position to deliver on our 2026 outlook and midterm ambition, including free cash flow of at least $10 billion in 2027. And with that, we will open up for 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 comes from Andrew Lee with Golden Black. Please unmute your line and ask your question.

Good morning, everyone. I had two questions on what would be the kind of standout positives from today's results, just Finland and your cost efficiency execution. On Finland, it's encouraging to hear talk of price rises through the quarter and consistent improvements. I wonder if you could just talk us or help us understand the phasing of the implications of those price rises in the first quarter. Should we expect to see a full boost from the first quarter price rises in the second quarter? And what do you think the growth can be if the market remains rational there? And then by growth, I mean service revenue growth. And then secondly, on cost efficiencies, I think you've taken out an incremental 5% of headcount there. following an incremental to the transformation program, is that the final picking of lower-hanging fruit, or is that a better guide on ongoing more sustainable efficiency opportunities going forward? Any help you can give us on that would be great. And is there anything in particular driving it? I think AI is more of a 2027 onwards potential compounder of efficiency opportunities, but any kind of particular cover would be helpful. Thanks.

Good morning, Andrew. It's Patrick here. Thank you for the questions. I will start to answer the question number two, and maybe Eric, you can take the question number one from Finland. But when it comes to cost efficiency, we clearly said when we did a big change program at the end of 2024 that that was the right sizing of the company. And then we were clear on the measures that we will continue to drive operational efficiencies out of the company in the coming years. So what we see here now is actually the continuous improvement in cost efficiency in the company. So it's not only organization. It's also on many other aspects. And this will continue going forward as well. It will not stop. So it's not a low-hanging fruit in that perspective. And we have some impact on AI in the cost-having programs already today. We see that, for example, in customer service. But this is only the start. We think and believe that we can do much more in 2027 and onwards that you alluded to. But we have already some impact in 2026.

Yeah, and on Finland, we're very happy with the improvements we've seen, certainly versus what we saw in Q4, which at the time we said in January was a very competitive market. It's the typical time of year. The MVNOs came in. And we are trying to defend our subscriber base. So if we look at it, we're very happy with that Q1 performance where, yes, we still lose some customers, but substantially less than what we have done historically. It's actually the best performance we had in the last six years. So that goes well on the customer development. The second one is what kind of ARPU are we seeing on win backs, on order intake, etc.? ? versus again where we were in December or in Q4, where we clearly are seeing that we're doing it at higher prices. Similar to what I guess our competition has been saying earlier this week. So if we put those two together, yeah, we're quietly confident about the direction of travel for Finland. Let's see what the second quarter and the third quarter shows us. But as Patrick said this morning to the team, We're very happy with the progress that Holger and team are making there, certainly when it comes to defending our place in the mobile market.

Thank you. Eric, just a very quick follow-up. Lisa talked about a lag between the price improvement and actually flowing through into revenue growth, and so it's more of a Q3 improver for their top one, they're saying. Do you have the same kind of lag? Obviously, it's quite different type of contracts. Do we need to wait for Q3 or do you think we'll see the benefits in Q2?

Hi, Andrew. It's Eric here at IR. There is a lag, obviously, always when you build up a subscriber base of different cohorts. Now, we've had subscribers coming in at lower RP levels during Q4, and that's going to be with us for the year. But it is gradually diminishing effect as we're now getting more at higher levels in January and then still a little bit higher in February and then further on in March and so on. So it's going to be a gradual recovery. I don't think we can give a better description on the coming quarters than that. Thank you.

Our next question comes from Frederick Little with SHB. Please unmute your line and ask a question.

Thank you. Good morning for taking my questions as well. Can I pick your brain a little bit on the Brookfield partnership you talked about? If you could elaborate a little bit more on what that is and mean for you. Is that any type of investments in coming years for you, or what will your role be there? So that's the first question, and then maybe if we could get a bit of an update on price changes in Lithuania and Estonia, if you have those, coming in positively impacting in Q2 or where we are on crisis in those two. Thank you.

Good morning. I think you, the question regarding Brookfield, I guess you mean the data center in Sweden, not the Valokuitonen deal in Finland. Is that correct?

Yes, thank you.

Yeah, so this is a partnership. We've been working with this for a while. So this is a partnership where Brookfield, they do the investments and we're providing connectivity to the data center, but also coming with a quite big customer base. So this is an important partnership because customers are demanding more and more, not only storage, this is more compute, which will be important in the space of AI. So that is actually our contribution to the partnership.

Yeah, Eric here again.

Go ahead. Does that mean that you see sort of incremental revenue streams from this when this is up and running? I understand it's not happening tomorrow, but how do you see that going forward?

Yeah, it is. Of course, this will be an important part of the agenda going forward, especially in our B2B side and especially in the side gate here in Sweden. So definitely we will see that. But it's too early to predict those at the moment, so we have to wait a little bit. But, I mean, all of us know the demand from AI-supported services and compute, you know, that's needed. and also local storage, so natural sovereignty. But to predict exactly the revenues and the growth coming forward, it's a bit difficult at the moment, but we'll come back when we know more about that.

Yeah, and on the second question, on the price changes, Fredrik, if you take them one by one, only 20 you've seen in the analyst presentation Patrick just showed the slide that the strong increases in APU on mobile, on broadband, and on TV, sort of mid-single-digit growth, and a subscriber base that continues to grow on the mobile side. That is a reflection of those price increases that we have done. You also saw this already in Q4 as well. The strong EBITDA growth that you see in this market, even after the increased head office allocation that we've done, growing at almost 10%, EBITDA, Q4 and Q1, is partly because of the cost takeout and that positions that you have seen. When it comes to Estonia, also there, a lasso on the mobile side, but certainly in broadband and TV, you can see that we've increased prices there. ARPU is up also by a single digit. But you've seen that the service revenue is a bit less than what we saw this period last year. So there is a bit of work to be done by the Estonian team to see where we can further increase pricing. And I think that's something that we expect more in the second half rather than in the first half. But put together, we're quite happy with the developments in the Baltic, certainly the way Lithuania is developing from a top-line growth and from a profitable growth perspective.

That's very clear. Thank you.

Our next question comes from Derek Lillebuth at ABG. Please unmute your line and ask a question.

Okay. Good morning, and thank you. I wanted to ask on the strong cash flow here and on the back of that, you still guide for the around $9 billion. For the full year, so just wondering what the key sensitivities are from here in relation to this guidance. And I think you mentioned if H1 is going to be 30% of the annual cash flow, and considering the $1 billion guide for Q2, that would apply cash flow well above your guidance, unless I'm missing something.

Yeah, so we're very happy with that start to the year on cash flow. As I said, it was better than expected and mainly driven by working capital phasing. There was also this sort of earlier payment that we received from tax. This was specifically in Sweden, which made it higher than what we expected when we were talking to you in the call in January. I think there is a little bit better also versus own expectations from less interest and tax, which helps a little bit as well. So it's not just purely working capital. The reality is, as we said, that we still firmly feel that it's one-third, two-thirds, if you think about H1, H2. Given that we roughly have done $2 billion, that would mean, as I said in the analyst presentation, We expect roughly a billion. And why then a billion only for Q2 is because that strong working capital inflow that we saw in Q4 and partly in Q1 at some stage has to reverse, and that's what we will see in the second quarter. With regards to then how we compare and contrast that to the guidance that we've given, it's still relatively early in the year. We're happy that we have a solid start. also in terms of cash flow, there is also quite a turbulent market out there that impacts interest rate, effects, energy costs, et cetera. And let's see how that plays out in the remainder of the year. Thirdly, there is a handful of transactions that we're working on. We talked about Bribon 2 today where we give an update. There was also the network run sharing that we're doing in Norway. All of that will also have an impact. And we will come back to that when we close those deals. Latvia is the other one. So good start of the year in terms of free cash flow. A bit early in the year to be talking about upgrades versus the guidance we've given.

Our next question comes from Andreas Jolson with BNB. Please unmute your line and ask your question.

Yes, good morning. It's Andreas. A follow-up to Andrew's question on costs. You've obviously done a lot of changes over the last two years since you came into the company, and not at least on efficiency, and you said that you will continue to do that. But I'm just curious how you make sure that this momentum can be kept up and maintained. about how to avoid the organization falling back to old habits. And maybe as an addition to this, when you look at benchmarking towards quite close competitors, what do you see that you can do even more on efficiency? Thanks.

Thanks, Andreas, and good morning. I can start. Patrick and Eric, please fill in if you feel I missed out something. cost efficiency is an important for us competitive tool, basically, to make sure that we stay competitive. And we have been working quite hard to do the changes in the company, and now we have implemented an operating model where we continuously work with taking out cost. And it's not only in the countries, it's also In the head office and common functions, you know, so this will be built in the plans for the coming years. And of course, we will not give up and fall back to old habits, as you call them. So I think we can just continue to prove quarter by quarter that we are reliable and that we continue to take out the OPEX, to reduce the OPEX. And we have some support from technology, but still we have a lot more to do in the company. We are not where we want to be yet. So we have still a way to go to be this simpler, faster, and more efficient company. So there is plenty more to do on the agenda.

Yeah, maybe just to add.

And then regarding versus competitors, well, I think it's good that we have competitors. That creates a discipline for us as well, and we see that there is more potential to do. So I think we get a lot of energy when we see others coming out with more efficiency programs, et cetera, and improved margins, and that gives us a lot of energy to seek new opportunities to be even more efficient. Eric, sorry.

Good. Very good. Thank you.

Our next question comes from Abhilash Mahaptra from BMP Paribas. Please unmute your line and ask a question.

Hi. Good morning, and thanks for taking my questions. I've got two, please. Firstly, just on the EBITDA guidance, we've obviously had a strong start to the 4% EBITDA growth, and I think you can look at the quarters last year. Q1 last year was the strongest quarter for EBITDA growth. Given the performance on this sort of tough form, can you just walk us through, you know, your expectations for the rest of the year, given you've left the guide unchanged at sort of 3% despite the strong start? And then the second thing, just on shareholder distributions, you sort of referred to in your opening remarks how pre-cash for the share is running sort of 15%, 20% above last year's dividends. Can you just sort of share some thoughts around shareholder distribution expectations for this year, given you'll also presumably have some proceeds coming in from the Norwood and sharing deal, and as you said, leverage is not that high, so any further there would also be helpful. Thank you.

Yeah, maybe on the second question first, I think as a team we are super happy that sort of two, two and a half years in, we got the company to a position last year where we're covering the dividends for the first time, that sort of mythical $8 billion that we pay every year. And the second one was the milestone that I referred to just now, which is that the AGM has approved that increase in the dividend per share. For us, that's a really good start. And I think It's a massive tick in the box, as you would say, Patrick, with what we promised when we did the Capital Markets Day in September 2024. However, we clearly said we have a stated ambition to grow the dividend and Axis Cash will get to shareholders. You've seen the balance sheet as well today, which is slightly up versus the 1.93 times that we had at the end of last year. which is partly the acquisition and the way we've restructured hybrids as part of our debt portfolio. So there isn't that much of a push, I would say, there, but we continue to work in that direction. I'm very happy with sort of what we achieved on that part of the value creation, and let's see what comes next. With regards to EBITDA, that's the same answer I just gave. It's still early in the year. We're very happy with that 4% as a start. We've guided for 3% for 26% and 4% for the medium term. So, you know, let's get through a couple of quarters. And we just need to make sure we continue to deliver on that cost agenda. That worked really well in Q1. Let's see how the rest of the year develops.

Okay. Thank you very much.

Our next question comes from AJ Phoney with JP Morgan. Please unmute your line and ask your question.

Hi guys, thanks for taking the question. I've got two. The first is around the BreadBan2 customer base. So what you see as the biggest cross-selling opportunities and could you size your service to be at full run rate? And then just related to that, what was the EBITDA contribution from BreadBan2 in Q1? And then my second question is around the Norway joint operations. Do you have any regulatory concerns with this? Thank you.

I can start with the first question regarding Rebant 2. I mean, the whole point with doing this acquisition was to strengthen our position in a more value-based part of Sweden. We have a low overlap. When we look into the broadband to customer base, we have quite low overlap between our customer bases. So our big opportunity here is to sell mobile on these customers and our TV products. We have just started, so it's too early to give some more flavor around it. But the start, I can tell you, is in line with the business case that we acquired the company for. But, again, we have only had this asset now for two months, you know, so it's a bit early to look forward looking. But the logic is sell more to these customers mobile services and TV services.

Yeah, very good. With regards to the EBITDA contribution, was that a do-you-want contribution? Is that the question, Eric?

I think so, yeah.

Okay. Yeah, so EBITDA contribution. Yeah, it was 45 million SEC EBITDA contribution from BB2. That's only the February and March impact that we have because we closed the deal then. So like for like, obviously, it includes the whole month, as you can imagine. But, yeah, those two months were 45 million SEC. Okay.

I can give a short and please fill in.

I mean, there is no news. I mean, we have a good dialogue with the competition authorities in Norway. They're looking into the case. We expect to get green light on it, but I think it will take some time more before we got that message from the competition authorities, basically. We don't have any more information at the moment.

Okay, thank you.

Thank you.

Our next question comes from Nick Lyle with . Please unmute your line and ask your question.

Yeah, morning, guys. I hope you can hear me. It was a quick one back on the savings, please. In Sweden, you mentioned the 500 staff. Is it all in Sweden, in terms of the sort in terms of the mechanics there. And you've also got some of these coming through from broadband too. So are you quite happy in the Swedish business that's more than enough to offset inflation and energy costs this year? And then secondly, on Finland, you talked about efficiency starting, but what can you expect in terms of savings while you're trying to sort of rejuvenate the business? What's realistic for us to expect this year and next year? Thanks.

Shall I start with the Sweden question? And just to be clear, Nick, and you are, it's hard to hear you on your connection. It's slightly better than in January. So on Sweden, no, so the net positions of 500 is for the whole group. And maybe in general, that was the point I was going to make earlier on those cost savings, is we see it both in the units or within the countries. at least Lithuania did quite a bit at the end of last year and a bit here in the early of the year, but also at the head office. We have this group technology business which has almost 2,000 people in it and then the head office itself, which are all the support functions, legal, finance, HR, et cetera, which is also roughly 800 people. We continue to find efficiencies there. And why is that? As the theme says, and it's not just, you know, just words on a piece of paper, we are continuing to try to make this a simpler and faster and more efficient organization. I think the other part what drives this is when it wasn't just 3,000 people out, if you recall the change program, also 2,000 people went from central functions within those, to those countries. When they have been absorbed the year later, you can see, you know, where can we still make further improvements. And that's what we continue to see. And then I think the third question was around what do you see then in Finland. It's pretty clear when we set out our store in September 24 that margin expansion was very important to us, which is why each quarter we come back to the increase that we're seeing. As Patrick said, first time 40% for the whole group. Finland is the big opportunity there, and I think during the year you will see that coming through, because Holger and team clearly saw opportunities also for this business to become simpler, faster, and more efficient. So again, overall put together, off to a good start, and yeah, whether all in all that compensates for energy and some other headwinds, we have a very clear ambition to grow our EBITDA this year by 3%. And part of that is service revenue growth. Part of that is continuous cost operational improvements. That's great.

Thanks, Eddie.

Cheers.

Thanks.

Our next question comes from Oba Agbula with UBS. Please unmute your line and ask your question.

Hey, thanks for the presentation. Two questions for me. The first on Finland. I know you cited improvements versus Q4, but one of your competitors suggested that pricing is actually – or pricing for new customers is at lower levels. So I just wanted to check whether you agree with that. Has pricing actually returned to the levels we saw at the start of last year? And then second question on Norway. You mentioned you're still waiting to hear back from the regulators. Is the expectation that operations will start in Q2 with, you know, coverage or most of the coverage being done by the end of 2023? Is that still the expectation? And then just secondly on that, could you just remind us of what you think you can do in terms of pricing and improving your market position in Norway after, you know, the RAN show is up and running? Thank you.

So I can start with the first question on Finland, and please fill in, Erik, if you have something out here now. But in Finland, we see, as I said, you know, clearly stabilization in Q1. We don't see that the price levels on the new customer positions are at the same level as in Q1 last year yet, but we see that they are moving clearly in the right directions.

So there's a small gap still, but it's closing fast. So it's a positive development month by month for sure.

And we see it also now. So it continues to improve every month now. So it's a much better stable situation overall in the market.

And on Norway, the round sharing, we gave a bit more color today in the analyst, in the presentation just now. The regulators here have asked the competition authorities to ask questions, as they should. They're doing independently their job, so we're working our way through that. I think you need to bear with us for a bit what then the implications are, when does rollout start, et cetera, or joined rollout start, and what that then ultimately will do for us over and above the words that were on the page today. So if you think about there are some costs that first come to be able to create one network, to set up an organization, et cetera, that needs to be run at arm's length. But clearly it's beneficial for us if you think about the medium term because it will lead to cost efficiencies. But the way we will approach the market, what it means for our positioning, et cetera, and what we can do on pricing, which was your specific question, it's a bit early days for that. So bear with us, but we will come back to that very clearly later this year.

Okay. So just to follow up, when the deal actually closes, you'll give us more information on synergies, pricing, et cetera?

Absolutely. That's the plan. Absolutely. Okay.

Great. Thank you very much.

Our next question comes from Ulrich Rafe with Berenberg. Please unmute your line and ask a question.

Yeah. Thank you very much. I have two questions. One is on Swedish fiber. A competitor commented yesterday that, you know, much of the MDU fiber infrastructure is aging, supports limited speeds, 100 to 300 megapixels per second was sort of mentioned, and that customers are therefore incentivized to simply find the lowest price because there's limited service differentiation. I think these comments were mainly on MDU fiber. First of all, would you agree with that sort of assessment? It's obviously coming from someone who's running an HFC network, so there is an ulterior motive here to comment like this, but I'd just like to hear your views on this in particular, how you see the situation with regards to the quality of fiber in the SDU segment. That would be my first question. The second one is any news on the SDU fiber regulation in Sweden? that you can share at this point, and on the impact on Telia, the likely impact on Telia. Thank you.

Thank you, Ulrich. This is Eric here at IR. I'll take the first one. So we've heard this comment being made before about the aging fiber infrastructure. This isn't anything we've ever felt that's been a limiting factor for our business, so we don't quite recognize it. One possibility is that it refers to actually in-building wiring, which may be in some buildings of an older standard, but even that should be a factor which should be reducing of importance over time. So this is not a limitation factor for us at all, in fact.

Yeah, and I agree. We don't hear that from the market, so we are a bit surprised of that question. I must say that. But then the second question regarding the Swedish fiber regulation. So no news, basically, but if you look at our position here, we are today the only operator that are regulated on dark fiber access for the MDU market, SDU, and also for B2B customers. And if you look at the coming regulation, we expect this to come in 2027, and I think it will apply only to fiber access for SDUs. and only for network operators designed as having significant market power, so SMPs. And that is one of, I mean, we are one of 60 operators that are classified as SMPs. So for us, this will be neutral to a more positive view on the total. But we don't expect it to have a big impact, fairly limited impact on us. Eric, do you want to add something?

No, I think that's... Thank you very much. Still waiting for it.

Yeah. Great. Thank you very much.

Our next question comes from Victor Hogberg with Danks Bank. Please unmute your line and ask a question.

Good morning. So this is a question on capital distribution. with a payout ratio below 100% of our free cash flow. Could you just help us shed some light on how the board reasons regarding distribution in the light of the stronger balance sheet and the payout ratio? Any help there would be helpful. Thank you.

I think we have discussed this almost on every quarter presentation, and we're also discussing this as a board. The board is positive to increase the dividend to our shareholders. That's by nature. We have had a policy that said that we should increase on an annual basis the dividend, but the problem was that we were not able to do it. Now we did it for the first time in five years. And I think we will have a bit of a careful and cautious approach as well to make sure that we deliver on the set, for example, key promises. And then when we see that we have more cash and we are delivering on our plans, then of course we'll have an openly good discussion with the board on increasing the dividend going forward.

Yeah, and I think there's one leg missing, which is what often this question refers to, right? There isn't a payout policy that we have set over and beyond what a dividend policy is. And we know that the homework that we have to do, I think in some conversations we've said, we'll come back to that when we set out sort of the next three-year plan. So we're not quite there yet. And, you know, we just started the year. I think what we ultimately want to achieve is pretty, pretty clear and I think we've been quite open about that pretty much since day one, which is why covering the dividend and then increasing the dividend are such important first milestones on that.

Operator?

Our next question comes from Derek with ABG. Please unmute your line and ask a question.

Thank you, sir, for coming back. I was cut off. I just wanted to ask about the sustainability and the performance in Sweden, obviously delivering a strong EBITDA growth again here with the notable contribution from PIX and TUV. How sustainable would you say this mix-driven strength is, and how should we think about mobile momentum going from here?

Yeah.

One more question, I think.

Yeah, sure. No, we're very encouraged by what we have seen. And again, sorry to go harking back to 24, a bit philosophical at the moment. But I guess it is coming from a business that was X growth and then to go to a business two and a half, three years later where we are growing even ahead of what we do as a group and the strong increase that we see in profitability and is a fantastic achievement by Team Sweden. And if you think about their relative size, that's more than half of our business. For us to go out there and have a medium-term guidance of 2 and 4% or a 26 guidance of 2 and 3% service revenue with Agro and to have then that Swedish unit do 3% top line and more than 6% EBITDA is obviously really great to see. I think the other one that we feel happy with is how we start to see that continuous operational improvement in cost, which bodes well if we think about sort of the remaining quarters of the year. But obviously, we're not going to specifically guide on every unit. But yeah, if you think about what is driving that growth, which is our growth in broadband, our strong growth in TV, which continues to be more than 100 million plus every quarter, and then the same on the mobile side. It's obviously very encouraging for us to see. I think ultimately that's why we decided to call it the good start to the year, because this foundational unit is doing even more than what we do as a group.

Okay, cool. And on mission critical, did that perform well above your expectations here in Q1? And how should we think about that going forward? Because I believe you flagged it will be quite lumpy and maybe a setback in Q1, if I remember correctly. Yeah.

Yeah, so I can comment on that one. You know, we are not that specific when it comes to mission critical in that perspective, but we had a good quarter. It's in line with our expectations, but it is lumpy, you know, so it's a bit difficult to predict. But for the full year, it will be in line with our expectation and in line also with the guidance that we have been given. So it's a bit lumpy again on the quarter, which we have said before, but no surprises, and it will be in line with including in our guidance in our outlook for the year.

Okay, great. Thank you.

Thank you.

Our last question comes from . Please unmute your line and ask your question. Hello.

Thank you for taking the questions. The first one is on your Swedish fiber. It seems that the regulator are looking into the Chinese vendors. And one of the competitors comments that in the fixed network there was still some of the Huawei equipment. I'm just wondering if you can share with us your exposure to that. any particular cost or timeline that you have in mind if you need to sort them out. Your fixed network will be helpful. And the second question is really a clarification for Patrick's comments in the press release. I think you mentioned in the press release saying that the industry has never been so competitive. And considering that you are actually growing top line in all the markets on the line basis, just wondering what are the reasons for being cautious in your comments? Thank you.

Yeah, I think you refer to the B2B market if I guess right now. I would imagine that. I would imagine that, you know. So we see quite... strong competition in the B2B market. And, I mean, given the macro and also your political situation, I think that many companies and big organizations are holding back on investments and also cost-focused. And that is hitting our B2B business. On the B2C side, we feel quite unchanged, basically, on the demand. So we feel quite... an okay market situation on the consumer side, but it's related to the B2B where we see some headwinds when it comes to competition, but basically the companies are holding back on investments, and then the competition, of course, will increase immediately.

And then, C, on your question about Chinese equipment, so we've done the replacement of all the equipment we need to replace, and the I think we haven't had an update on this for a while, so I'd have to check, but to the extent there is anything left, we're following a plan to replace what we need, so it's not really a topic.

Thank you.

Okay. Thank you. I think that was the last question. Thanks, everyone, for all the good questions, and we look forward to speaking with you again in the coming days and weeks. Thank you, and goodbye.