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.

Thank you, Erik. To summarize, Q2 showed continued solid momentum with good service revenue and EBITDA growth with disciplined capital allocation. Sweden and Lithuania remained strong, Norway and Estonia improved, and Finland showed stabilization supported by solid cost control. We remain focused on customer satisfaction, profitable growth and becoming even simpler, faster and more efficient. This all supports our outlook for the full year as well as our mid-term ambitions.

Thank you. Yes and with that I think we're ready to take questions.

To be in the queue and 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 Angie Lee with Goldman Sachs. Your line is now open. Please go ahead and ask your question.

Hi, good morning, everyone. You actually have Sofia from the team. Two quick questions from us. The first one, there have been weaker results across the Nordics this quarter with operators citing competition. as one of the reasons, which has made investors question structural growth outlook of all Nordic markets. Do you think that outlook has deteriorated in any of the markets, or do you see any changes when it comes to structural growth? That's the first question. And the second one is, you had slightly weaker mobile and burden trends in Sweden this quarter. Can you just go a little bit more into detail as to what is driving that? Thank you.

So, thank you, Sofia. I can start. It's Patrick here. Let's look at the competitive situation. We don't feel a change in the competitive landscape in the Nordics. We see a slight stabilization in Finland, which we have had quite a tough situation now the last two, three quarters. But we see more stabilization there, and we hope that that will continue, of course, going forward, that the market is a bit more rational. In Sweden we see a similar situation we've seen before. Consumer is for us strong. It's a good market for consumer. We see B2B still some but no change from previous quarters. Some competition in large and public accounts but no change. Mission critical is strong for us. And if nor we see actually an improvement, but if you look at the market situation I don't see a big different shift, you know compared to the previous quarters So we foresee it will be continued rational and stable throughout the rest of the year

Mobile Sweden? That's the first question.

Yes, so in Mobile Sweden, what's the first question?

Yeah, mobile service revenue growth.

Yeah, mobile service revenue growth. So if you look at the mobile service revenue growth in Sweden, this is a similar trend that we have seen in the last quarter. So nothing has changed from our side. We have a household focus. So if you look at consumer mobile in Sweden, we have much more focus on the household. And we see that we have now more than one million converged households that have at least two services from us. And this is an important play for us and it has been there for the last years. And we see clearly benefits with that. We see lower churn and we see higher financial performance. If you look at the revenue per household, that's actually increasing. So we don't see a major trend shift from our perspective in that one.

I like your question. Our next question comes from Derek with ABG Thunder Courier. Please unmute your line and answer the question.

Yes, good morning and thank you. So I have two questions. You highlighted first the lower EBITDA growth in Q3 coming up and then a stronger growth in Q4 due to project phasing. I was wondering if you could elaborate a bit on what's driving that phasing and how much confidence you have in the pretty significant Q4 acceleration, and I was wondering if you could update us on the Hale-Pop migration here, whether you've seen any increase in insurance or competitive activity following this closure, and is the simplification delivering the commercial benefits you expected so far? Thank you.

Should I start with the second one? Good morning, by the way, regarding Hale-Bopp. Well, this migration has been planned for almost a year or a bit more than a year. So it's the right decision to simplify the portfolio, as I said, you know, in Sweden and make it much clearer also on the customer proposition in the market. The Hale-Bopp migration went very well according to plan, no surprises, no increased churn and we migrated these customers over to the Telia brand and it was very successfully done, so well executed by the Swedish team.

Yeah, and on the first question with regards to the profile in the second half of this year. So we currently expect EBITDA growth in Q3 to be below 2% and then above our sort of trend rate in Q4 to accelerate. And it's driven by the expected limited growth in Sweden. We mentioned two things in the analyst presentation. One is the phasing and the other one is the margin profile. of what we're selling. So what is the phasing? So we had higher mission-critical Q3 last year than we expect this year in the same quarter, but then we expect that to accelerate again in Q4, so more mission-critical in Q4 than the same period last year. Then with regards to the margin profile, because that obviously is what impacts is that we're doing proportionally more ICT in that third quarter and less mission critical, which has a higher margin. With regards to the confidence of that, we have full confidence in it, and I think it's also important that we have a slightly different profile for EBITDA than for service revenue, because basically we don't see that impact on service revenue And because the compensation of the less mission critical is there by more ICT revenues in the quarter in Sweden.

Very good. Thank you.

Our next question comes from the line of Andreas Jolson with DMV Carnegie. The line is open. Please go ahead.

Good morning everyone. One question from my side but it's a bit long. I know it's difficult to compare products and talk about households but it would still be interesting to hear your thoughts on the Swedish ARPA development on TV and the corresponding service revenue growth that you see in TV versus the lack of ARPA growth in mobile and corresponding lack of mobile service revenue growth and yes I know I'm living in an Excel world and you live in the real world and there are differences but can you take some learnings from what you have done on the pricing on TV into mobile in order to accelerate mobile services as well.

Thanks. Good morning Andreas. I can try to start what's going on on the market now, just joking. But I will try to explain our situation, you know. So we have a very strong TV product, the best, absolutely best in the market and this has been the situation for a number of quarters and we continue to have good development there. Look, our play in Sweden is, I tried to say before as well, we are trying to focus on a household perspective. So getting more broadband customers was strategically important for us. That's the reason why we acquired the 500,000 broadband, broadband 2 customers as well. Because that gives us a good base to sell more services on top, so like mobile and TV. So the reason why TV, the pricing power has been so good in TV is because we have the absolutely best product. No one can compare our product with anyone else in the market. That is the reason. And then we look in, when we look in our KPIs, we look into, okay, how is the revenue per household developing? And that is important for us because A, we have a significantly lower churn of those customers, and we want to sell more to existing customers and building that base. And that we have done successfully. We have now more than one million households that are converged that have at least two services for us. That is 20% roughly from the Swedish households. So that's the total households in Sweden. So that's building a solid position for us. Then, of course, looking forward, we're looking to always, you know, how we can continue to grow ARP in mobile both postpaid and on broadband. We think that there is still opportunity to increase prices going forward, but let's see whether the timing is right.

Thank you very much.

Our next question comes from the line of Andrzej Sibajak with UBS. Your line is open. Please go ahead.

Hi, Yves. Good morning, everyone. Thanks for the presentation.

I have two questions, maybe more follow-ups. On the Hollywood migration or the impact, rather, of the discontinuation of the brand, we've heard from one of your competitors, that this has created a lot of, I guess, attempts at, you know, stealing, I guess, market share during this migration period. But at the same time, you guys also had a very good result in terms of net ads. So if you could please comment on, you know, those two or those three pieces of information, how they square up from your perspective. And then a second comment, I guess, I would appreciate if you could give us on the comments from, again, your biggest competitor in Norway, where the situation was painted as basically much more competition in the higher-end unlimited segment, and specifically from MVNOs. But again, you don't seem to be too concerned, so if you could please comment on that from your perspective, thank you.

Yes, thank you. Let's start with the first question, Hale-Bopp. Well, as I said previously on the previous questions, the Hale-Bopp migration went according to our plan, or actually a bit better than planned, with extremely low churn. So remember, again, we took all these customers and moved them into the Telia brand, and that worked very well. If you look at the market, yes, we have seen more activities on the value-based segments, the no-frills brand. And that is, I would say, pretty natural. It's not like we have seen historically aggressiveness. We would not subscribe to that one. But we have, of course, seen more activities. Of course, our competitors are trying to steal customers from us, but we have not seen that in our base. People stayed with us, they are happy with the services that we are delivering to them, and the migration for Helbop was extremely successful, so I'm super, super happy to see that. Then, when it comes to the Norwegian case, well, I would say the market has been somewhat tougher in Q2, but we remember we performed well in this market and there were some positive also developments in June. We see ATL prices, for example, that we have observed in the market, you know, that several brands have increased the prices. And we are acting rational in the market. We haven't seen an increase so much intense competition in Norwegian market. It's fairly similar compared to previous quarters. So we are not recognizing that comment on your question. We see the market a bit different. So fairly healthy market competition is there. It will continue, of course, but it's not unusual compared to previous quarters.

I appreciate that. Thank you.

Thank you.

Our next question comes from Frederick Little with FHB. Your line is now open. Please ask your question.

Thank you. Thank you for taking my questions as well.

Just a follow-up on the but if you could describe a little bit if you have some cost benefits now when you close down platforms or FTs or something and if that was part of Q2 already if that is the case. Secondly, if we could get a little bit more details on how to view network and capital changes in the coming quarters, how we should sort of train that in our models. Thank you.

I can answer the first question. We don't see a big impact in the numbers. This is a part of our simplification work that is ongoing to support the outlook and the target up until 2027 that we have already communicated. So there is nothing on top. This has been planned for more than a year. and very sensitive and very successfully executed, I would say. But it will, of course, be beneficial for us because it will be easier for the customer to understand the difference between the telebrand and the fellow brand. Now, Helbop was a bit stuck in the middle. That now we take away. And we continue to build a premium position with the Telia brand and the customers are obviously very happy with that situation and we are growing in the Telia brand which is very positive for us. So I think we are in a good commercial momentum there and that will continue. And that is again supported by the convergence. That is a very attractive play and it's very appreciated by the customers as well.

With regards to your second question on capital, Frederik, we highlighted today the rolling 12th month, which is at around 12.5 billion, coming from 16 or so billion two years ago. That trend continues. So today we reiterate the guidance that we are going to be below that 13 billion for 2026. We don't see any reason why that would change. So if you think about it as a percentage of sales with the strong performance and top line that you've seen this quarter, we'll see that continuing to run down. So relatively flat in absolute terms, trending down as a percentage.

All right, perfect. Thank you.

Our next question comes from Max Finde with Roth Child & Co. The line is now open. Please ask your question.

Good morning, Patrick and Eric. You mentioned that the majority of finished customers are now on fixed-term contracts. A couple of questions on this. Was there a sudden ramp-up during the second half of last year, and if so, how significant was this? And should we expect the trend to fixed contracts to continue, or should this temper from here? Then, secondly, both your competitors have explained how they expect pricing over time to recover in the Finnish market. But it seems to me there's a risk to pricing. A lot of these fixed contracts will come to an end during Q4, and operators will be wanting to defend their volumes, which you mentioned remains your focus in Finland. Given these subs will no doubt have liked their cheaper tariffs, MD&Os are launching new tariffs. and there's been commentary on softer consumer sentiment. It appears the backdrop for significant pricing improvement in Q4 is tough. So it'd be really useful to get your view on how you see the pricing environment developing in Finland. Thank you.

Thank you, Max. This is Erik, the other Erik at IR here. I will take the question on fixed-term contracts. So we've actually had over quite a long time, a couple of years, a gradual build-up of the share of fixed-term contracts in the base from levels, very, very low levels of low single digits almost to a majority now. So that's one of the things we do to build engagement and loyalty in the base. There isn't a big bump in terms in that curve in Q4 of the year. So it's been a longer-term effort. And yes, there's a lot of turnover in Q4 seasonally. And is there an opportunity to raise prices when those contracts expire in Q4 this year? It probably is, but let's see. And we can't really forecast what the other players and the MBOs will do, I think. Anything to add, Patrick or Egge?

No, and I think, I mean, the build-up of fixed-term contracts is also good for the market, and it stabilizes the market, and we had just an imbalance in our base more than two years ago, you know, where we have everything without outside contracts, you know, so this is the right play for telecom operators to run, so, yeah.

Thank you. Thank you.

Our next question comes from Nick Lyle with Barandag. Your line is not able to speak. Go ahead.

Yeah, morning, guys. I hope you can hear me this time. It was a quick question on cost fees on the Finnish market and the Norwegian market. I think Patrick In your presentation, you mentioned that cost control in Finland was solid, and it looks as if OPEX is about flat. But is that where you want to be? I mean, how quickly could you ramp up savings that you talked about and raise margins in the Finnish market via savings? Is that more of a revenue effect if prices start to rise again, or are there more savings you can take out and when? And in the Norwegian market, Yeah, as always, Nick, it wasn't always. We caught about 75% of that, but we won't make that comment again. But I think we got the gist. So it's on margin expansion in those markets. So

No, actually, in Finland, OPEX is down quite a lot from memory. It's about 90 million, but Erika Anders can confirm that outside the call. And it is because of what we flagged earlier. It was a business which had less than 30% EBITDA margin, and it should get to, you know, let's call it 40% or so, as we said in many interactions with you guys and investors. And we are all on that path. And part of that is taking out the cost You saw the FTE reductions that we've done. The second one is by divesting non-core businesses is also helping with that. Hence, the acquisition or the sale to CGI that we highlighted in the report is super important in that context. Good progress made, quite a bit yet to go in that market. And to your second question, obviously improved pricing will help with that. We already see a better market in Q2 than in Q1, and Q1 was a lot better than Q4. So I think we're going in the right direction there in terms of Finland. In terms of Norway, what we've done there... is that increased commercial momentum that we called out in the presentation today is partly driven by the increased focus on mobile. For the first time, you see us actually winning customers there again. In combination with very strong output increases following the price adjustments that we have, you see that mobile momentum growing. And that's partly also because we invested in sales and marketing. So is there more opportunity for cost there? Absolutely. Not just in Norway and Finland, but across the board for the organization. But we're very happy with what we've seen in the OPEX development. 1% down. compared to last year, and as a percentage of revenue, our ROPEX continues to go down. It is a fundamental part of our profitable growth story, is margin expansion, and we see that coming through certainly also in Finland now.

That's great. Thanks, Eric.

Our next question comes from Felix Henriksen with Nordia. Your line is now open. Please go ahead.

Hi, guys. Thanks for taking my question. I have a couple left. Just looking for status updates on a couple of the strategic projects that you have ongoing, first in the network JV in Norway. What exactly is dragging on the process there? And then the of Latvia, where are we at the moment, and what is the expected timeline for that in regards to the second half of the year? Thanks.

Yes, hello. Regarding JV Norway, well, we have actually started to build a company, you know, to do these kind of activities. We are still, it's a quite complex agreement, and we are in the stage to finalize that agreement, so I hope we will... finalize this just after summer. So that is the ambition and it continues. It's a bit late, but I think we were a bit over optimistic in the start as well to fix this, but no other concerns or anything about this JV. Then Latvia, well there is a more trick question actually going there next week to meet the Prime Minister to discuss this because we have an agreement that we should finalize this to sign an SBA by the end of July and we have a meeting next week so I will come back when I know more but still the strategic direction is no change, we still are in a plan to exit. But there has been some political changes, as you probably know, in the country, where there is a new prime minister and there is an election coming up in 3rd of October. So let's see where we will end this. But no change in direction is just maybe a timing question. And we don't know yet. We will go there next week. So let's see.

Thank you.

Our next question comes from Kevil Correa with Deutsche Bank. Your line is now open. Please go ahead.

Thank you. I've got a question on Norway, please. So can you remind us of how much of your cable network has now been upgraded to fiber? And it looks like the Norwegian boot CapEx was down 20% in the first half despite this upgrade accelerating. So can you also talk a little bit about the underlying movements in the Norwegian CapEx as well? Thank you.

Yeah, so thanks Kevin. It's Eric here. I are Eric again and it's it's roughly 60% of the subscriber base on broadband is on fiber and FWA so about 40% on on HFC connections. So that, I think, is the short answer. And there is a gradual, you know, project. First you set up the plan, then you sell in the upgrade to the customer, the MDU or SDU, and then you plan the build-out and so on. So it ramps up quarter by quarter according to plan, but it takes a little bit of time to get the speed up, I would say, as expected. Was there a second question?

Yeah, CapEx in Norway.

Yeah, CapEx is always... Since it's taken a bit of time, it doesn't consume so much CapEx yet, this build-out. And, you know, we have built out 5G and done a lot of CapEx in Norway, so CapEx on a quarterly basis is always shifting a bit. I don't think we have much to add there.

But no surprises. Everything is actually according to plan and including in the guidance for the year. So no surprises. That is at least nothing that we have on the top of our heads at the moment. So, yeah.

Okay, thank you.

Thank you.

Our next question comes from Abhilash Manipatra with BNP. Your line is now open. Please go ahead.

Thank you for taking my question. Just clarification, I wanted to come back to the Swedish mobile service revenue trends. You mentioned obviously you're quite pleased with the underlying commercial development and how you're sort of doing with the households. Just in terms of the sort of financial trends this year, this quarter, obviously MSR was sort of down year on year. Could you just maybe give us a bit of color whether There were some tough comes this quarter, and then how those might evolve to the rest of this year. And then just related to that, could you maybe just sort of remind us of any back book pricing impacts, the timing of those within your Swedish business, and how that might impact service revenue evolution? Thank you.

Yes, I can start. It's Patrick here. Good morning. I will start with the first question regarding the mobile service revenue development that you are asking for. So if you look at the consumer side, it was growing 2%, you know, around 40 million, partly due to subscriber base expansion versus last year and slightly higher RP as well. On the enterprise side, we had a decline of almost 8% or 86 million. This was driven by an ARPA decline, and this was partly due to an organic decline, but also, I don't know if you remember, but they had a 50 million, I would say, unusual high project-based revenue in Q2 last year, so comparables are a bit tough. And that was related to IoT, to a smart public transportation deal that we did. So it's a one-time deal that we had in Q2 last year, which is impacting also the year-to-year comparisons. So that's the... But otherwise, we don't see any big trend shifts in the market versus previous quarters.

No, maybe just to briefly add, maybe you want to say something on pricing then, Erik? I think there is a bifurcation between strong consumer mobile and softer B2B mobile. I think that is something that we've seen for many quarters, so there's no real change. And on pricing, Erik, anything?

Yeah on pricing we have basically we have a two year cadence as we've said before in each brand and we continue with that in the overall picture. We did do pricing on Hale but before we merged the customers into the Telia brand to align the brands a bit so that's done. We've done something on Family Sims this year but it goes along the long term plan I would say on pricing. No particular change there. I think if you add back the IoT dealer Patrick mentioned, you will see that the trend hasn't really shifted much.

Great. Thank you so much.

Our next question comes from AJ Sunny with JP Morgan. Your line is now open. Please go ahead.

Hi, guys. Two quick questions. First on Finland, your net ads were positive this quarter for the first time in quite a while. So is there anything you've done here? I know you've been heavily focused on not losing share here, but anything you've done commercially to move this trend positively? And then the second one was around the Norway JV. You're expecting to close, you said, end of summer. So how quickly will it take for the OPEX and CAPEX benefits from this JV to feed into your numbers? Will it be fully run right into Q4, or will it take much longer? Thank you.

Yes, good morning. I can start with the first question, and Erik, you can take the second one. Finland, on the mobile side, well, we've been focusing quite a long time to turn the trends around, and gradually we have also increased, as we talked about previously, earlier this call, the fixed-term contracts, and also we have reduced the churn. So what we see here is now a bit better, more stable development. And we have also one deal in the B2B that is supporting the growth as well of the 10,000 subs in the quarter on the mobile side. So overall, I would say we are seeing a more stable situation. The customer's experience has been high. You know, MPS is high in the market, so customers are fairly happy with the services, but it's just been too much pressure between the MNOs. and we have seen a more stable situation that is benefiting us as well in combination with more fixed-term contracts, less churn, so we don't need to hunt so many new customers to stabilize the base. I think that is the reason. So it's... execution, good, better execution in the Finnish market overall, and a more stable situation if you look at the broad picture on the market in Finland, more stabilized this quarter compared to previous quarters. But better, better, I would say, during this year. And we see, as I said, you know, we see, if you look at the new sales RP, we are not where we were a year ago, but we are on a good way to reach the numbers, you know, where we were a year ago. So overall looks more stable now in Finland. Let's hope that this will continue.

Yeah, on Norway, the network, Jyvi, I think the question, your question was, I think we're making good progress, sort of nothing to announce now, but, you know, underneath the surface, peddling incredibly hard, as Patrick said, setting up the company, getting people recruited to run that, offices, all the, you know, infrastructure, et cetera, that you, hardware and software that you need to do this. So a lot of progress, sort of, and behind the scenes that that is happening with regards to the impact that we've been very clear since day one that this if you think about the medium term obviously is very beneficial from us a financial attractor from a from a capex and an opex perspective in year one of course you also will have cost once we start to operate in this in this joint operation because there's dismantling cost as well. So sort of neutral at first and in the medium term, obviously, it's very accretive. But once we have finally signed the agreement, we will then give you those financial details. But just to be very clear, we will not do these type of corporations if they weren't financially attractive because they clearly are. But it takes a bit of time to finalize it, as Patrick just commented.

Thank you.

Our next question comes from with Bernstein. Your line is now open. Please go ahead.

Thanks very much. I have two questions for you. The first one is on this full household strategy in Sweden. If I go on your commercial retail website, it's interesting, right, that the bundling discounts come at the very bottom end of the page. It's, you know, compared to sort of other conversions plays in Europe that put this front and center of the retail website, it seems that you're actually playing this down the way you're sort of presenting it to the customers. I'm just wondering, when you say it is front and center of your strategy, what are you doing there? Is this sort of below the line discounting? Is it sort of the way you market it? Is it the way you approach the customer? What exactly is the manifestation of the strategy? And in this context, could you please clarify, when you give this larger than 1 million household number there, is this simply, you know, the addresses of people matching with two or more contracts, or are these actually people who are getting the bundling discounts? Thank you.

Thanks, Ulrich. This is Erik here at IR again. Yeah, it's a fair comment, good observation. We have never at Telia wanted to drive a convergence by discounting heavily on one of the services. It's more like providing value add to customers that have more than one service, and I think it comes through more clearly when you speak to customer service and when we reach out to our customers and ask them if they don't want to upgrade their packages or add on another service. So it is working. Broadband and TV has got an excellent attachment rate in particular, but also it works reasonably well with mobile. But fair enough, it may not be as visible on the website as it is when you speak directly to us.

But just to add, so how you do this operationally is of course that we are contacting the customers, selling them more services, you know, and building on the broadband base as a start. And this play works very well. And then if it's not visible, I must say that I need to go in to check the website again. to see, but there is no doubt that this has been an important play for us, and we have repeatedly given that message for the last at least four or five quarters, especially to build the number of households, because that is important for us to be, of course, an important partner for the content providers, that we have a significant number of households, which we have today. It makes us also in a much better position when we discuss content deals with the content providers, so this has been a very strategic... rational in driving this for us. And it's very beneficial.

Maybe just to add to that, it's a slightly different angle. It's more on the M&A side, where it also manifests itself. As part of the Bribon 2 acquisition that we've done, where we acquired roughly half a million additional broadband customers, One of the business cases around us is the synergies that you obviously have. The basic one, obviously, is cost, et cetera, because you can trade it in your company. But the really attractive one is the revenue synergies, because if we look at the type of customer that this has brought to us, they're very underrepresented in terms of being a mobile customer or even a TV customer. And so the cross-sell opportunities are absolutely massive and that is ultimately the thinking that you bring to this company So it's a company that you buy that is focused on selling one product And we want to sell multiple products to them and with a very strong TV offering that you have and you've seen the growth and TV Sweden this this quarter more than 200 million second one quarter and It is a very easy sell to these new type of customers. So even in the acquisition cases of in-market consolidation, there is a strong synergy case where the thinking or the philosophy behind it is convergence. Thank you very much.

Thank you.

Our next question comes from Victor Hogberg with Dansk Bank. Your line is now open. Please go ahead.

Good morning. Just on broadband market and the potential for you and also for the market potential and just your thoughts on it. In Sweden, given the upcoming regulation, access to single-family homes, what are your thoughts on output development for you in that context, given that the regulator is aiming for lower end prices for customers? I would assume. So that's the first question, please.

So if you look at the regulation, we don't know exactly how that will play out yet, you know, but we think it's neutral, basically neutral for us. And it actually levels the playing field in the market as well because we are partly regulated, as you know, today. So this we don't see. We see a continuous potential to improve. If you look at the whole product area, we believe that there is a bigger potential to improve the Orpus in mobile and TV in short term. We think also in Brabant, but maybe more on the collective agreements and also on the open networks that we can maybe improve a little bit more on pricing going forward. But let's see. We cannot disclose any plans of course what we are doing. But we still see that there is a pricing power in the market.

Yeah, and maybe to that, sorry to mention M&A again, but again, we obviously have bought Bribon 2, so in-market consolidation, which will bring benefits. I talked about synergies, but obviously there is pricing elements as well. And then obviously we've all taken note of one of the other competitors taking out the other sort of independent broadband player in the market. Could that help us as an industry to drive better pricing? Let's see. Certainly, it's not going to hurt us, one would say.

Okay, perfect. Thank you. Last question. Just to pick your brain on our current topic, I'd ask you, one of your competitors did yesterday, just satellites. What are your thoughts on satellite providers within the context of the competitive landscape in the future? Not today, but a couple of years ahead, both for Telia and for the Nordic landscape in general. Do you see any shifts in... in the competitive landscape and the productive in some sense.

Yeah, so let's start with satellites first of all. I've actually been running or responsible for satellites for five, six years when I was on another company in the Nordics. But very positive satellites, I must say that, and we are of course open-minded to look into this. This could actually improve in the more mid-long-term perspective the customer experience. So for example, if we could combine mobile fixed and satellite to the customer, so they make sure that they always have good connectivity. Then, let's remember, in the Nordics, we have built out 5G to the full extent. We are on the way now to finalize the build-out of fiber as well. It's already fiberized in Sweden. It's part left to do in Finland. But otherwise, people have really good connectivity, and price levels in the Nordics are also attractive from a customer perspective. If you compare it to the U.S., I mean, the price in Europe of half of what the price is in the U.S. So I think we have already good infrastructure connectivity in place up here. And we see satellites now as a very good complement. And we also see the low orbit satellites also as a good complement to our business. We don't see its substitution in the business today, but we really are curious to look into if we could improve the customer experiences, depending if it's a B2B or a B2C customer, with combining technologies, but there is a lot to be done with spectrum and technology to fix that. But in the long term, it's really interesting to see how we can combine the technologies for the customers.

Thank you. Just a final question, if that's okay. Yes, the housekeeping one. The 400 million Norwegian tax that is now included in your 9 billion free cash flow gap, was that also included previously? So that you're previously in for higher cash flow or just the mechanics of the payments and The guidance, please.

Good question, Victor, and thank you for that. No, it was not included when we set out our guidance at the start of the year. The reason why it wasn't concluded, this is an old court case that dates back to the GATT acquisition, so before 2020. So no, there was no way and we expected that maybe a conclusion next year. So no, it was not included in the guidance. And as I said, we're absorbing that this year. Similar to what we did last year, if you recall, when we sold TV and media, where we lost, what was it, six, seven hundred million of free cash flow. And also we didn't change our guidance at the time. So no, it wasn't included.

Our last question comes from Pavan Diswani with Citi. Your line is now open. Please go ahead.

Good morning. Thanks for taking my question. Just a quick one on free cash flow, where performance in the first half was very strong. I know you talked about some phasing impact in the prepared remarks. Could you expand a bit on that, and what really surprised you positively in the quarter, and how we should think about these moving parts for H2?

Yeah, sure. We sort of guided for, if you think about guiding for nine, sort of felt like three in the beginning and six in the second half. And now we already have done four. So I, in the analyst presentation, I said earlier this morning that it's now less back and loaded. Then on top of that, we absorbed this 400 million. The positive surprise was working capital. If you recall last year, we had very strong working capital inflow, mainly in the fourth quarter, and at some stage that will reverse. I think in line with consensus, we expected around a billion reversal this quarter, and we had 600 million, as you have seen in the numbers. And as I said in the presentation, a big part of that is driven by and mission critical payments. And we've talked about this before in the context of how it's driving our Sweden top line growth, how it's driving margin as well in that market because it's very profitable business for it. And on top of that, they pay early as well. That's exactly what we have seen. Of course, it also helps in that first half to get to 4 billion plus because we have strong EBITDA performance that you have seen. We pay less interest because we've managed that. We have less gross debt and we have actively made sure we pay less average interest because we've taken out some expensive bonds in the first two years. that we took over. And all of that then adds up to a better free cash flow. But it's partly phasing on cash capex as well. But we saw that last year as well. So, yeah, overall positive for us to see that, you know, in essence, we did almost a billion more than we expected at the start of the year.

Thank you.

Thank you so much everyone for all the good questions and that concludes the call. We wish you a very good summer and looking forward to speak to you again in three months time if not before. Thank you and goodbye.