Telia Company AB (publ)

Thank you and good morning everyone. Welcome to the call. We have as usual CEO Patrick Hofbauer and CFO Erik Hagerman here and I hand the word over to you Patrick.

Thank you, Erik, and good morning, everyone. We continue to see good commercial momentum in the business with strong performance in our core operations. I will take you through the key areas. Starting with customer satisfaction is improving and our net promoter score continues to increase. This helps to drive growth in the customer base, and we had positive mobile net ads across our three biggest markets this quarter. We delivered high-quality experience to fans during the FIFA World Cup, and our network supported record data traffic and streaming volumes. Protecting our customers is equally important, and we blocked tens of millions of scam calls in the quarter. Our management of asset portfolio remains very active and we are driving targeting consolidation in our markets. After closing the Breban 2 deal last quarter, we have agreed to two smaller Bolton acquisitions in Sweden, adding a city network and a niche B2B MVNO. Work on the mobile run-sharing agreement with ICE in Norway is progressing well, although taking slightly longer than initially estimated. In July, we also completed the stake increase and new partnership in our Finnish fiber JV, Valo Koitonen. Simplification is fundamental to our strategy. We recently closed a hillbop mobile brand in Sweden, and we have agreed to transfer part of our ICT business in Finland to our partner, including around 250 employees. This will help us to focus even more on our core business. We are using AI and other technologies to improve customer journeys, which saves time both for us and our customers. Turning to innovation, we have agreed to form a partnership with KTH Royal Institute of Technology and Brookfield, where we will work together to develop sovereign AI capabilities. We launched a service called Telia Critical IoT Connectivity, which is the first commercial available service in Sweden to use 5G standalone. M-Industries demonstrated a modular solution that enables mobile coverage in emergency situations. Let's now look at the financial highlights for the quarter. Service revenue growth accelerated to 2.8%, the highest in four years, supported by continued strength in Sweden consumer and high demand for business and mission-critical services. Lithuania was again strong and Norway's growth accelerated to 4.1% as the wholesale headwind faded in the quarter and is now behind us. EBITDA grew by 3.4% with solid contributions from Sweden and the Baltics, while Norway was slightly negative due to a tough cost comparison on the TV content side. CAPEX remained disciplined at around 12.5 billion SEK on a rolling 12 months basis remaining below our full outlook for less than 13 billion. Free cash flow once again stronger than we expected driven mostly by phasing and came in at 2.2 billion for the quarter and 4.1 billion year to date. And leverage ended at 206x, more or less unchanged from the last quarter. Let's now move into Sweden, where we had solid customer trends supported by convergence. This is a clear strength for us since we have more than 1 million converged households. Customers buying multiple service improve both loyalty and economics, which can be seen in our financial performance. Double-digit TV growth is the most obvious example. Growth IN CONSUMER CONTINUED TO BE STRONG AND DEMAND FOR MISSION AND BUSINESS CRITICAL SERVICES REMAINED SOLID. AS I MENTIONED, THE HALE MOBILE BRAND WAS DISCONTINUED IN THE QUARTER. THIS IS PART OF OUR SIMPLIFICATION AGENDA AND CAN IMPROVE BOTH CHANNEL MIX AND OPERATIONAL EFFICIENCY OVER TIME. THE INTEGRATION AND SYNERGIES FROM BREBANTU ARE DEVELOPING ACCORDING TO PLAN. The broadband ARPU decline of 9% is to around half driven by the addition of Breban II customers which had a lower ARPUs and partly because we are in a phase with more volume growth. having grown the base for four consecutive quarters, but less pricing. The balance between volume and pricing will shift from time to time, and there is working is going on to strengthen the ARPU. And as you know, we have a full household approach currently doing more pricing on TV. Financially, Sweden continue to deliver healthy results with service revenue growth remaining strong at 2.6% and EBITDA growth of above 5%, supported by lower OPEX. EBITDA less capex continue to improve and is now on comfortable levels of 10 billion. In Finland, we saw an increase in mobile customer base driven by growth in enterprise and stable development in consumer. The consumer mobile segment remains challenging, but intake output is slowly moving in the right direction and we continue to focus on retention and loyalty. The share of our consumer mobile customers in binding contracts has steadily increased from very low numbers two years ago and now represent a majority. As I mentioned, we signed an agreement to transfer part of our ICT business to our partner. This is part of our strategy to sharpen focus on our core business. For the same reason, we left the e-invoicing, web hosting and alarm business in recent years, because it makes Telia Finland less complex and more agile. Around 250 people will be part of this transfer, which will result in approximately 40 million euro lower revenue for us per year, but hardly no change to EBITDA. We also finalized our new partnership and increased our ownership in Valo Koitonen, the FiberJV infra joint venture, from 40 to 49%. Service revenue growth was slightly positive overall. The revenue mix this quarter included some low margin components, but this was offset by strong effects from cost savings, especially on resource cost, so that EBITDA growth overall was flat. Norway delivered a visible improvement in revenue growth supported by pricing, improving customer trends and to some extent an easy comp on TV since we had higher discounts last year during the black screen situation with TV2. Arpus increased across all products and the mobile subscriber development improved, with the quarter ending strongly. EBITDA Grow was, however, held back by a tough year-on-year cost comparison on content cost, which resulted in a decline of 2%. We had a strong roadmap to strengthen our infrastructure. The amount of fiber upgrades that what we have sold to MDU and SDU customers follow our plan. And next thing is to get the run sharing with ICE started. Since this will create both better network for our customers and stronger economics. We did not quite get it up on running in Q2 as originally planned, but we are making good progress on this complex transaction and are working towards finalizing it soon. Lithuania again delivered a strong quarter. Service revenue growth remained solid across both mobile and fixed, and EBITDA growth accelerated to almost 9%, due to good top-line momentum and cost control. The new data center announced last quarter is progressing well, and we secured important spectrum at an attractive price in a multiband auction, adding as much as 40 MHz in the 1500 MHz band, This was an important auction and it will help us to retain our 5G leadership. We also renewed our spectrum in the 2100 MHz band. In summary, we continue to deliver a great financial performance while strengthening our network position and expanding our capabilities in secure and robust infrastructure services. In Estonia, growth also accelerated, driven mainly by mobile ARPUs, which had helped by reduced discount levels overall. Enterprise ICT deliveries also returned to grow, as some of the supply chain constraints that we saw last quarter have been easing. Our fiber build-out continues, and we are reducing legacy infrastructure at the same time and are well in line with our plan. Overall, Estonia continues to show solid execution and healthy development in the core business. And with that, I hand over to Erik, who will go through the financial development in more detail.

Thank you, Patrik. Let me now take you through the financial development in the quarter, starting as usual with service revenue and EBITDA. Service revenue growth accelerated in Q2 to 2.8%, which is comfortably above our full-year ambition of around 2%. Across the group, consumer revenue had the fastest growth, and as you just saw, the country units with the strongest momentum were Sweden and Lithuania, with also a clear improvement in Norway. Finland managed to stay flat in terms of service revenue growth despite pressure on mobile, helped in part by relatively low margin project and licensing revenue in the quarter. From a product perspective, growth was driven by strong TV performance in Sweden and Norway, good mobile growth in the Baltics and continued demand for business and mission critical services in Sweden. Overall, this more than compensated for continued pressure on legacy revenue in Sweden and the mobile development in Finland. Turning to EBITDA, growth came in at 3.4%, which is broadly in line with our ambition for the full year of around 3%. The main drivers were again Sweden and the Baltics. Finland also contributed through strong cost control in the quarter, while EBITDA in Norway was held back by a tough year on content cost comparison. So overall, we had a quarter where profitable growth and cost discipline resulted in earnings growth and margin expansion, with EBITDA margin expanding to 40.5%. Looking forward to the second half of the year in terms of EBITDA growth, you can see on the far right of this page that we currently expect EBITDA growth in Q3 to be below 2%, driven mainly by limited growth in Sweden due to phasing and the margin profile of some customer projects. In Q4, we then expect a re-acceleration again in Sweden and also in Finland, which has a relatively easy Q4 EBITDA comparison. Overall, we expect our EBITDA growth for the second half to be in line with consensus and to deliver on a full-year guidance of around 3%. Looking at operating expenses, we continued to maintain good cost control in the quarter. Resource costs were again down, largely driven by Finland, and we also saw a reduction in IT costs and bad debt for the group, which more than compensated for increased marketing spend, mainly in Norway, to drive mobile growth. Together, this resulted in OPEX declining by around 1%. OPEX, as a percentage of service revenue, continued to trend down, ending at 29.1% compared to 30.2% in the same quarter last year. Moving on to the middle graph, you can see from the green-bluish line that we also remain disciplined with our capital expenditures. On a rolling 12-month basis, CapEx was stable at 12.5 billion SEC, comfortably below a full-year outlook of less than 13 billion. This reflects our continued capital allocation discipline and supports our ambition to improve cash flow generation over time. As a result, EBITDA less CAPEX continued to expand this quarter, reaching 20 billion SEC, a healthy 5% increase over last year. On the right-hand side of this page, you can see that ROSI has been steadily trending upwards, ending the quarter at 10.6%, up from 9.3% a year ago, a direct consequence from both increased profitability and improved capital allocation. Let's now have a look at our free cash flow statement. Free cash flow in the second quarter was 2.2 billion SEC and year to date we are just above 4 billion. This is ahead of our early expectations that about one third of the full year free cash flow was to be generated in H1. In addition to better than expected profitability and lower interest paid, we also saw some phasing of cash capex and working capital. As you can see from the table, cash capex is significantly lower than last year and lower than our budget for the year, driven by some re-phasing into the second half. As for working capital, we did expect a reversal this quarter, following the strong positive contribution in previous quarters, but the reversal was smaller than anticipated as we benefited from mission-critical payments. In the second half of this year, we also expect to make a circa 400 million SEK tax payment in Norway, following a recent court verdict in the long running case regarding historical VAT rates on new services, which impacts everyone in the industry. In summary, Q2 free cash flow was above plan, mainly because of phasing, and hence we keep the full year ambition of around 9 billion SEK. This implies a stronger second half, but is now less back-end loaded than previously expected. Our 9 billion SEK ambition for the full year now also includes the 400 million Norwegian tax payment I just mentioned. Let's now have a brief look at how leverage has developed on the next page. As you can see on the right hand side, leverage decreased marginally compared to the first quarter to just over two times, driven by expanding EBITDA that more than compensated for the net debt increase of around 700 million. The main reason for the net debt increase this quarter is the negative impact we had from FX movements, mainly NOC versus SEC, which impacted both debt and derivatives values. Overall, we can say in the first half that despite paying for the BB2 acquisition and reducing the level of hybrids, we are comfortably in the lower end of the leverage target range. Looking back at the value creation agenda we laid out at the investor update, we continue to make good progress. We are delivering profitable growth and margin expansion, and we are staying disciplined on CAPEX. The first half of 2026 has been particularly active on the M&A front, where we have signed several MOUs and also closed some deals that simplify the business, strengthen our infrastructure portfolio, and drive in-market consolidation through smaller bolt-on acquisitions, particularly in Sweden. As said, our balance sheet is healthy with limited refinancing needs in the year. And in April, we paid the first tranche of our now increased dividend per share. And with that, I hand back to Patrick for our closing remarks.