Marianne Moe - Head of IR Jorgen Rostrup - Group CFO Sigve Brekke - Group CEO

Havard Nilsson - Carnegie Victor Hoglund - SEB Roman Arbuzov - JP Morgan Maurice Patrick - Barclays Peter Nielsen - ABG Terence Tsui - Morgan Stanley Andrew Lee - Goldman Sachs Sunil Patel - Bank of America Jakob Bluestone - Credit Suisse Irina Idrissova - RBC Capital Markets Thomas Heath - Danske Bank

Good morning and welcome to the presentation of Telenor Group’s Results for the Fourth Quarter. My name is Marianne Moe, I’m Head of Investor Relations and I have the pleasure of guiding you through the session here today.

I hope you all have the presentation material available. Today, we will start with the Group CFO, Jorgen Rostrup, taking us through the financial results followed by Group CEO, Sigve Brekke presenting, giving us update on the strategic priorities and our progress on digital transformation.

There will, as usual, be a Q&A session after the presentations. Since the presentation deck is slightly longer than usual, I think the whole session will take approximately 1 hour and 15, 20 minutes.

After that, there will as usual also be a separate media session for media present here today. So without much further ado, I leave the room to Jorgen Rostrup to take you through the financials.

Thank you, Marianne. Welcome everybody.

It’s good to be here. Performance in fourth quarter marked a solid end to what we regard in Telenor as a strong year.

We continue to grow our core revenues and customer based. Actually, we grew by 8 million new customers in 2017 that is a 5% increase in our customer base, 2 million additional customers in fourth quarter.

We also see positive effect from our efficiency program, simplification agenda. We see this contributing to solid growth in EBITDA as well as in cash flow both in Q4 and for the full year.

And good development on our efficiencies initiatives and our transformation program in ’17 also secures momentum into ’18, which is of course our complete focus right now. I’m please to see that we close 2017 by delivering on all guiding parameters.

As indicated in the Q3 presentation, we ended up in the high end of the EBITDA margin range, actually also partly supported by relatively low handset sales in Q4 and then you see the implication of that on, ending in the lower part of the revenue guidance, but still within all three parameters for ’17. Some words about the operational performance in the quarter.

Scandinavia, we are in a competitive environment stable, but competitive environment. We see still healthy ARPU growth both within fixed and within mobile.

Mobile increased by 2%, fixed internet by 5% and also TV increased by 9% in the quarter. The number of fiber connections increased in Norway by 12,000 and in Sweden by 10,000 subscribers in the quarter.

Fixed internet and TV revenues therefore increased by 7% in Norway and 5% in Sweden. In Denmark, we have seen a temporary cost increase in the quarter.

This has been planned for, it's related to some transformational tasks and business development. We expect to be back on track in our cost of program for next quarter.

Broadcast also part of the larger Scandinavia setup, good performance, revenues increasing 1% and stable EBITDA. We see a continue loss in DTH subscription in broadcast, but fortunately for us we keep it in the family more than half of this loss is churn to Telenor Norway's fiber offering.

Central Eastern Europe, Hungary continues to revenue and momentum that we saw in Q3, actually delivering a solid 5% organic growth in subscription and traffic revenues in the quarter. And then across the board in Central Eastern Europe, we see a clear results from reduction in cost, strong cost management, and we see a decrease in Hungary in a quarter of 6%.

We see 7% in Serbia and Montenegro, and we also see 7% in Bulgaria. Emerging Asia, we added a 2.7 million subscribers this quarter that is 1.4 million in Bangladesh and 0.9 million in Pakistan and 0.4 million in Myanmar.

This is taking total customer base in that area to 126 million customers. 12% subscription and traffic growth in Bangladesh combined with relentless focus on the cost is yielding result across the Emerging Asia.

In Myanmar, we see increase price pressure. We believe it is due to that existing operators now are positioning themselves ahead of the launch of the new entrant with which we believe will happen during the first half of 2018.

Then on emerging, on the developed Asia, we see in the quarter, Thailand moving back to growth again with 1% growth and the decline in Malaysia is significantly lower this quarter than what we have seen the previous few quarters. We also see that we are able to move more of our revenues stream from voice and SMS and into Internet data usage.

And as you see on the slide, the average data users, usage in developed Asia is high 7.6 gigabyte only Sweden is higher in our portfolio with 9 gigabyte. Subscription and traffic revenues for mobile, fix and TV service are we believe our core revenues.

This is the foundation for profitability and value creation in Telenor, it's also reflect how we follow our performance in our group. As you know, we are earlier focus on mobile subscription and traffic revenues and then we see that fix revenues and TV services also saw an important integrated part of our core base in particular that revenue coming from Scandinavia.

So, therefore from now when we talk about subs and traffic revenues, we will include also these revenues into the definition. Going forward, this will also be our revenue guidance, I will get back to that but this number we will put more emphasis on for the reason I mentioned.

On this chart, you can see the development of subscription and traffic revenues. It constitutes approximately 75% of total revenues for the Company but more than 95% on gross profits.

So it's by far the important part of our revenues. We had a growth in this of 2.5% in fourth quarter and 2% for the year.

While subscription and traffic revenues that we just talked about increased 2.5%. The revenues on total were flat in fourth quarter.

This is due to less revenues from low margin handset sales and also decrease in prices and low margins on our global wholesale activity. This has very little impact on our value creation further down on the profit and loss.

Gross increased sale by 2%, so this again underlines the importance for us to maintain a healthy development in subscription and traffic revenues. Gross margin was up -- was 73% in Q4, which is up 1 percentage points from Q4, 2016.

Cost efficiency has been high on the agenda in 2017. Sigve will refer to it later for '18.

It will remain high on the agenda. We started the year with an ambition to have a flat development to break the increasing trend of increasing or the trend of increasing OpEx year-on-year that we have seen for the last few years for the group, increasing by 3% every year.

Halfway into 2017 supported by good traction on the cost program, we introduced and 1 billion cost production target. We were not too good at estimating that because we've reached that already in Q3.

This, what you can see here is that we have also achieved significant cost reduction in Q4 by 0.6 billion for the fourth quarter, so in total on an operational basis, taking out NOK600 million approximately in currency effects. We are at NOK1.6 billion in lower OpEx for the year which is 3%.

If you look at, looking at OpEx reduction per business unit in 2017. It's good for us to see that we have achieved that in almost all of our markets.

This was one of the ambitions we had, everybody to participate and to build up a collective large effort in this area. Telenor Norway continues its constructing efforts at deliver at 3% OpEx reductions at initiatives has been implemented both in the fixed part of Telenor Norway's business as well in the mobile.

And we see several positive effects also from moving to digital channels for sales and for customer care. Going forward we will do more within the technology area in Norway.

In Emerging Asia, OpEx increased in both Bangladesh and Myanmar, mainly due to network expansion and other growth related costs. But also here, this has been partly compensated by cost efficiency.

Telenor Pakistan which delivered 8% substance traffic revenues in 2017 is perhaps best-in-class in this say this year. So they delivered this growth which is substantial at the same time they take up OpEx by 7%.

There are always a lot of technical elements in those numbers, but the main issue is that they have really scrutinized all elements it's a tremendous collective effort, and it yields strong and rewarding results. So, I have been through operating profit -- gross profit, OpEx development just briefly mentioned EBITDA then, it increased by 11% in the quarter, 9% if you adjust for the VAT charges that we took in 2016 in Sweden in the case that we are not agreeing with the development on.

For the full year, organic revenue increased by 9%. Again we take it as a very good and encouraging thing all that if you look at the grass the reason for this growth is 50-50 revenue increased and cost efficiencies.

So we have so far been able to avoid too heavy foot on one of the elements, it is in our view a balanced development that we see in our effort. The EBITDA ended for 2017 at 49 billion which is all time high EBITDA for the Telenor group.

As the EBITDA margin improved by three percentage points both for the quarter and the year in full, taking the full year EBITDA margin to 39%. Again the profitability or the EBITDA performance if you like is followed across the group, improving for nine out of 11 markets, again important for us and very encouraging.

Looking at this per market, we see that we delivered as I said 9 out of 11, and we see Norway continued strong effort on performance partly from cost production, partly also from maintaining those important market positions and our ability to compensate fixed legacy revenues which are declining with growth in fiber and mobile up selling. We call it the revenue renewal and that is part of our focus on growth, it is to increase that top line but is obviously also to replace the revenue streams that are declining for natural resource.

Thailand EBITDA margin improved by 5 percentage points and we also see significant margin expansion, both in Bangladesh and Pakistan. Then looking at the graph, you can see that Denmark stands out with relatively low EBITDA margin that is according to the market conditions that we had talked about earlier.

However it is encouraging for us to see improvements been made in Denmark in 2017. We have delivered and stabilized the business support system.

We have in general significant cost savings and we also have significant simplifications in the way we do things in our product portfolio et cetera. And all this has as a consequence that we have reversed a previous impairment made in 2015 by 1.2 billion in this quarter.

Capital intensity declined both in fourth quarter 2016 and for the year, the key reasons for this where the high network expansions done in 2016 and particular in Bangladesh and in Myanmar. We spend around 18 billion in CapEx in 2017 implying a CapEx to sales ratio of 15% right on our guidance for the year.

We believe that this CapEx level give ample room also for investments both in maintain market positions and to stimulate growth. If you look at the pie chart, 2017 we prioritize CapEx towards continued network effort rollout in emerging Asia that is a little bit more than 20% of the CapEx similar size went into network densification in Thailand.

Then, we have significant fiber rollout in Norway and Sweden and our continuous work on 4G coverage in Norway creating one of the best networks we have in the road. This is both -- important both to capture growth and to maintain important market positions.

All-in-all, this accounted for 60% of our CapEx, if we don’t in addition management what we spend on IS/IT then we have a picture IS/ IT is also important for our transformation going forward. Net income statement we have address revenues we have talked about EBITDA, we have charge of $400 million in the quarter predominantly related to workforce reductions.

We also have negative effect from impairments on Tapad, we have right down and impairment of $1.7 billion in the quarter as a result of further weakening of Tapad U.S. media advertising segment and lower than expected growth in the data segment.

This is a large degree offset by the reversal of 1.2 billion of the impairment we made for the Danish Telco operation. Apart from this, a clean set of results in this quarter for the full year we reported a strong net income of $12 billion which equals to earnings per share of 8.11.

Adjusted for FX related to the India exit and the VM disposals net income increased by 4.7 billion compared to 2016 and the improvement primarily relates to improve operating result EBITDA. Free cash flow is important for us 2017 was a strong year in that respect with free cash flow of 25 billion.

Of this 25 billion, 9 billion comes from proceeds from disposal. More important for us, more encouraging is that you don’t go excluding these disposals, we more than double cash flow compared to 2016 from 7.7 billion to 16.2 billion in 2017.

Some of this obviously due to the timing of spectrum, it is due to the high investment level in 2016, but it is also due to more efficient capital deployment and improved operational efficiency. Before we go into debt and dividend proposal for '17 quickly recap our priorities on the capital allocation.

We aim to maintain a strong balance sheet, we define that keeping net debt to EBITDA below two times, that's a ceiling, it's not a target, and we see no reason to change this. We also are very focused on delivering attractive shareholder remuneration.

We're committed to deliver -- we're very committed to deliver year-on-year growth in ordinary dividend and this remains firm. In addition we've said and we still say we will apply buybacks and/or special dividends to be considered in special cases.

Then, we need to make sure that we allocate sufficient funds to maintain and expand our networks -- that is at the core of our investment program as well as ensuring that we've efficient -- strong, but efficient spectrum portfolio. This is again important to support profitable growth and maintain key market positions.

And then we are also open to looking to inorganic opportunities within core business within core geographical area, if and when that makes sense, but right now we don't spend most of our time on that. Balance sheet continues to be strong as you see on the slide, net debt of around one time EBITDA, which has been the case for a while, this is the level we're comfortable with.

Net debt in the quarter increased by 6 billion, this is primarily explained by two elements, one the payout of around 5 billion, the second tranche of the dividend, to the shareholders in the quarter and then a continued buyback program, cashing out approximately a 1 billion in the quarter. Quickly then on our debt maturity profile, you will see we have a couple of maturities into '18, we've an upcoming $500 million in May.

We also had a €500 million that matured now in January, that one we repaid in full with excess liquidity. And then the cash position is still comfortable, and to what extent we are then refining -- refinancing the upcoming maturity in May remains to be seen, we're reviewing it as we speak.

Solid performance, solid cash flow generation, strong balance sheet, we're pleased to then deliver a continued growth in dividend in line with our stated policy. 2017, the Board proposed a dividend of NOK8.10 per share which represents a 4% growth compared to 2016 and a total payout of 12 billion in '18.

The dividend will as usual be paid in two tranches in May and in November. We also plan to ask AGM in May for a new buyback mandate to secure that we have flexibility for potential addition of shareholder remuneration in 2018.

The buyback program of up to 2% of shares announced last July is running and we've brought back approximately 11 million shares or 80% of the next target that we are going to buy in the market. The market part of the buyback program, we expect to run at least until end of February.

Following then the AGM in May, the proportionate amount of shares will then be bought from Norwegian state and all repurchased shares will be cancelled mid-2018. It’s destiny of the CFO to look back and the privilege of CEO to look forward.

So, Sigve will take you through ’18.

Yes. Good morning to everyone and thank you Jorgen for both strong numbers and the solid shareholder return.

As Jorgen said, I will talk about the strategy, the strategic initiatives, and also do a deep dive in what we do on our digital transformation. This is something we have promised you to comeback with and now is time to go a little bit deeper on that.

In fast moving changing industry landscape, we have big three key beliefs that is guiding our strategy. The first one is that internet access is our foundation as voice has been our foundation in the last several decades.

And it’s going to be even more important going forward to connect people to interment and the data of the growth. And that’s why, we are continuing to be very focused on building strong mobile networks and in the scanning area, also fixed networks.

Now, the other one is to take the data we get the knowledge, we get from our customers and personalized offers, that’s where you see a value can be created and that’s why, we also then across the group, and I will come back to that, our building now advanced analytical tools and as you call it distribution and a digital data platform. And the third one is that only the most interest operators will survive in the dynamic future.

So we are going to continue to make ourselves more and more efficient and continues efficiency program. But efficiency for us, which also comeback to, it’s not all about cost, it’s also to create a flexibility, which sure you are competitive in the market and with that also capture growth opportunities.

Let me add our Capital Markets Day last year in February. We show this just picture that the key focus areas where to continue to capture growth in the market that we operate, it was efficiency and it was just simplify both the portfolio and also existing models.

In addition to that focus on the 20,000 passionate team members we have and make sure that we do the business right way. The same focus areas as we start in 2017, we will continue with in ’18.

Let me start with the revenue part of that or the growth part of that. We continue as Jorgen also said to see in our core revenues and we closed 2017 with a 2% increase in sub and traffic revenues.

Emerging Asia has a very strong growth profile and we expect that to continue. That is coming from an Emerging Asia, Pakistan, Bangladesh and Myanmar, that’s coming from still millions of customers not even being connected to data services.

We estimate that in these three markets, the re-penetration is just for the multiple number of simcards is around 55%. So, there is still a lot of people all in the village, all in the rural areas that we were to connect.

The growth is also coming from relatively low data usage. We estimate that around 45% of our customers in this three markets are using data.

And also that the medium of data usage is only 30 to 40 megabyte, so there is a long way to go to get to the level we see in Europe. And that again is very much a of course by a low market penetration.

In this market the voice is a little bit different than in Pakistan and in Bangladesh, smartphone penetration is around 30%. And when a feature phone customer gets the smartphone, we see that the data usage increases.

In a be more mature part of the develop – part of our old markets the growth is to compensate for what we call legacy revenues that being voice or SMS type of revenues in Thailand and Malaysia and it’s been a copper based fix services in Norway. So, let’s look at that and in Norway we see that we are now with the high speed internet more than compensated for the decline is fix telephony and AG business.

In addition to that, we see healthy growth on the mobile side coming from good up-selling introduction of new services and not lease the position – the strong position have on the B2B segment where which we also now use as a platform to move into IoT type of services. In Thailand which is other example of graph.

We see that this market is now starting more and more like what that type of market contract we see in Europe and the people that moving from prepaid very price aggressive into post-paid bundles and from voice to data. In Thailand now we are continuing and focusing on our company for that and we have now around 50% of our revenues on post-paid and other one on prepaid.

And when the customer look comes from prepaid to post-paid, we see a higher ARPU, we see a lower churn and we see a dramatic uptake of data even more sold than you see in Europe. Then on the efficiency side, as Jorgen also said, historically, we have had an increased OpEx based year-over-year.

It has increased around 2% to 3%. When 2017 started, we said that we need to set the stop to that increase and the plan when the year started was to level out the OpEx spending and then start the production from 2018 and onwards.

Fortunately, we were able to do better in that, the reason for that I will say is that we started the year with aligning the troops so to speak, aligning organization around the efficiency agenda. Getting the mindsets right, getting the commitment align the KPIs and the targets, such as we as a group could do something with this together.

And I’m then quite satisfied that we delivered much better than the flat OpEx development in the year and it’s basically coming from three main areas, one is the limit, the low hanging fruits and we have taken out lot of cost which we really don’t think that hamper our operations. It’s coming from our digitalization agenda and from their transformative activities which I will come back to.

And then seeing that we’re closing the year with OpEx reduction of NOK1.6 billion, it makes me very satisfied and 3% reduction in OpEx. And even better 60% of that as we estimated almost 60% is structural reductions, which we then can carry with us also into 2018 and in the years to come.

Even though, we are ahead of the plan, we’ve got a good start, we are going to continue with the OpEx focus and we are going to remain. The guiding we had that in the year, this year and 2019 and 2020, we plan to further reduce OpEx with 1% to 3%.

Then on the simplification agenda, and the reason why we took that as a key strategic initiative a year ago was that we want a leaner and more agile Telenor. And we want to make sure that both the money is being spent when it can get the best return but also that the management attention is where the growth can be captured.

So, what we’ve done as you know we decided to exit India that goes on plan. So during the first quarter this year, we hope that it will be finally out of India.

We've exited VEON. We reorganized our online classified ad portfolio selling out of South America, Latin America and then focusing on Asia.

But the simplification agenda is more than that. It’s also to simplify the way we work.

That’s why we implemented a cluster organization, taking our 12 business unit into four, very similar markets or clusters. That’s why we also have been working on right-sizing to make our organization more efficient.

That’s also why we’re constantly looking for reducing complexity and bureaucracy, so there's a lot of things going out in the organization and in the core business as well. And the third example here is from Sweden.

Sweden was the first market out where we systematically looked at how can we simplify our business model? And going through all the different offers that they had and one example as illustrated here is that we took down the number of price plans in the Swedish operation from 335 down to 55 and with that getting rid of a lot of IT legacy.

Now we do the same in Thailand and the plan is then to roll that out business unit for business unit. The strategic priorities we have then going into 2018 is to continue the focus we started 2017 with.

So, all the business that we have communicated they will stay. We will continue to digitalize our core business, continue to look at the entire customer journey and digitalize that and IT and networks.

We’ve also -- as Jorgen mentioned, let’s see how can we be smarter in our CapEx deployment and also in the way we look at monetizing the spectrum investments. We will continue to make sure, we are monetizing the data investments we do in Asia and we will have special attention to two very important market for us.

One is Norway to make sure we keep the market position and the profitability in the Norwegian market and that we are coming through the regulatory situation in Thailand in a way where we are creating value. Then I am going to take you through some of the main digital initiatives that we've in our transformation program.

Starting with the transformation program as such, we started last year with putting up a transformation program headed by a transformation executive which is a part of my executive management team, that program is done basically in six different areas, it's about digital sales and marketing, digital care, digital products, business model simplification which I already mentioned, core IT platforms and scalable networks. This program is then put into project -- a project which then are monitored on a frequent basis, it's the group executive management that is the steering committee for those six programs, making sure that they are creating the value out of it that we expect.

This will also then be mirrored into the way the transformation setup is in the business units, so it's organized through functional project teams, and then having clear targets, when it comes to timelines, value creation and also the project -- the way we want to get these to be efficient. We've in addition to that trained over 180 top leaders, through an agile way of working to a more sprint type older projects to also trying to learn faster and implement that learning quicker, and the performance reviews are closely then monitored by Jorgen, the CFO, and by myself with not only the transformation programs but also each and one of the business units to make sure that they are on task to deliver on these programs.

The first part of that program was digital customer engagement, and I want to show you some examples on how we do that in practice. The first example is from Norway, family bonus, in I think it was October, November where we launched a family bonus program which is basically that if you have more than three relationship to Telenor in the family or group of friends it can be fixed line or fiber, it can be a mobile or it can be a handsets program, then you get the bonus and then you can then allocate that bonus between the family members.

After just some -- very few months the latest number I have is 170,000 families -- 170,000 families took up this offer, and 70% of them did it digitally, we've never seen this high all popular customer offer before and never seen so many of our customers taking that up digitally, and then you can tie down to the 70,000 families with two or three people in per family. And this is just to show how we are then using the Telenor, My Telenor at, to drive then introduction of new programs that also then to drive up sell and management of the data.

The other example up to the right is WowBox in Emerging Asia. Started in Bangladesh then we rolled it all to Pakistan then into Myanmar.

It basically app platform internet platform which have good great local content that being music that being used or that being other type of or it have local content. And this is the entry that many of our new data customers are having into internet.

In addition to that, you can also top up your account in this platform. 50 million users active users so far and this is growing very fast, some other example on how we can display and engage with our customers.

And the third one it's Thailand. Line Mobile, in both Thailand with Line Mobile and in Sweden with Vimla we have introduced two digital only operators.

To get back in on our all network and in a ray being this chapter to the main operation we have. We do that to test out a digital omni concept and we do that also to see can we offer better business services to the digital natives.

The last example, down to the right it's from our broadcast addition. We've launched today a new products together we do the android, we call it one place.

And this is a product where we are bundling multi-order to do on DTH and Line than the linear TV with a Google or an Android experience. And for now this is the first we are in the first in the world to do that also bundling DTH content and an Android streaming solution.

Then to the sales part the digital sales part. And important part of sales and clear, an important part of what we do is then to digitalize the customer journey.

Historically our competitive focus has been to build wide distributions channels and it is to have good customer care. But all that has been based on physical handling.

Physical answering of phones or the physical distribution. Now we are trying to take that into a digital world.

And with the digitalization you can both use the costs, but you can also engage with the customer display and get more data, which is again can use into personalized offers. At the same time, as you can improve the customer experience.

So some examples of that, starting to the left from Malaysia DiGi. We see that in one year, after we launched the MyTelenor app in DiGi and we have ad 63% uptick on active customers using it.

At the same time you see that in the same year or the same period the number of calls to the call center in Malaysia has reduced 26%. So here we see an example on how customers are changing the way that interact with us on the care side.

On the group level the number of calls call reductions in the care centers is around 20%, including in Norway. We also see around 20% reduction in overall calls going to the Norwegian call center.

The examples in Norway have rolled out, by the way, the MyTelenor app in all the markets and we see very similar developments. The example, say, in the mid here and middle here it's from Bangladesh and this is example on how we are using the advanced analytics and trying to personalize to offers.

We started to test this all in Thailand a year ago and this as competences our platforms we are getting from Tapad, our U.S. company.

And with that platform we get better knowledge about our all the customers data but we also get third-party data to enrich that offer and that knowledge even better. And this then rolling now all in six markets already and then into the rest of the turnover business unit, so this example from Bangladesh is an example of how we are using that data to reengage silent customers.

And in this market where you have a competition such that people are using several operator SIM cards it's very important for us to rather waiting for a churn reenergize that customer and this is an offer which is an example of that. The third example to the right, it's how we also know a digitalizing the sales part of the customer journey.

To Scandinavia first, 35% of all the sale being acquisitions or being data up sell is now happening digitally. And I think in Norway, this number is even higher 40% and from one year we increased in Norway, the Norwegian operation, we increased the digital sale from 17% to 40%.

And then we see if we do the same in the other markets and there is a big potential in our three other clusters also to move them physical sale into using digital channels. Then, what are we doing on our infrastructure side, the network and IT.

And I will claim that here we are really at forefront of what we see other operators are doing. Our business model in the past has been based on the very decentralized models, and very few platforms have been taken out across.

So every company have had their own IT system and their own network basically. And we see that that has created a lot of legacy and I used example from Sweden, the number of price plans just keep on expanding and then with that more and more IT infrastructure complexity.

And the key focus in our operation is both to digitalize this to standardize it and also to see if we can share some of these resources with competitors. In the left here, it's showing one example of that on how to develop a common delivery center, and that is basically to drive standardization and consolidation and create scale in the markets that we operate.

And we used them all optimization we will also then increase the customers experience. The base here for, the base we can attack here is around 2.6 billion.

And we estimate that around 30% of that can be saved while we do this in all our markets. To the rights it's showing the IT part of it.

And what we tried to do in IT as to go from hardware into virtualization into cloud. And the reason why we're not able to go directly to cloud is that some of these services is not ready for being cloud based.

So what we've done so far is to utilize around 65% of our IT infrastructure and our own 2% to 5% of the core network functions. This year, they don’t take that total 275% and on the IT and also to also 50% on the core network functions.

And then the next step in 2020 is to take it from virtualization into cloud based, which gives an additional savings and also additional efficiency and experience for the customers. So again the base line here is around NOK4.2 million and what we estimate is that around 40% of that can be saved through that virtualization and digitization journey.

This digitalization also effects, have an effect on our workforce. This is due to atomization, but also as example I had with when few people are calling, there are a need for fewer agents at the call center.

And off course it's unfortunate that so many of our employees are being affected by that. In 2017, we had a reduction of 2,600 employees around 8% of our force and as we see now the digitization effects going forward, we estimate that would be around 2000 FTE's that unfortunately, we will leave us in 2018 and but also in '19 and '20.

At the same time we lead more competences and new competences, so we have introduced a program pointing two four areas where we see that we need to up skill and skill our workforce to. It applied analytics, it's the sign, product assign if digital channels and its products development.

And we have made variable course, internet courses or online course in these areas. We have also in end of last year, challenged all our employees to use at least 40 hours during '18 as to upscale themselves and not only through that as challenge our employees but that will also implement it that now in our employee dialogs.

So it's a possibility even for the leaders to make sure that employees will have 40 hours time to go through this and prepare themselves for future. Then on the OpEx reduction, as I said we got a much better start in '17 when we talked and that we're going to uphold the ambition that we also talked about a year ago on 1% to 3% '18, '19 and '20.

So, the total OpEx space we have is around NOK45 billion, we estimate that around 50% of that 45 billion can be addressed through digitization and it is in areas as you see our sales customer management, marketing, IT and support. In order to that talk about what we do on digital sale, I talked about digital care, I talked about how we can use at both analytics to improve markets and market efficiency, but also how we can use can use digitalization to automate and make processes more efficient.

So this is the areas where we are going to attack. In addition to that, there are also some other structure initiatives we do, which is not directly related to digitalization partner.

One is to make sure that we are getting benefits out of the reduced regulatory costs in Thailand when the concession ends in September 2018. The one is, what I was mentioned to reduce in network costs, we try to build scale through our common delivery center and they have started with that in Asia.

The third one is to continue the fixed value chain transformation in Norway. And the fourth one is just to set cost mindset across the group always asking, can be done cheaper and smarter.

We will, almost 60% structural OpEx reductions we had in ’17, we will of course with us into ’18. So the part of the ’18 plan, it’s on the structural part, also the rollover from ’17 as you can see on the right hand side.

Then we have several new structural initiatives in the pipeline. Some of them we have to invest before we can harvest.

And some other harvest we will get in ’18 based on the investment in ’17. And then we will also continue to focus on non-structural costs.

However, it’s also in our business portfolio such that some of the cost increases. So we have inflation, we have network expenses especially in our Emerging Asian markets, and we do not want to jeopardize the growth alternatives, also the growth opportunities.

So we stay very close to the market to make sure that we are keeping our market shares and that we are competitive out there in reducing sales and marketing, yes, tools and money. So the balance of this is that some of it goes down and some of this go up.

But overall, we see that ’18, we should be able to deliver on our ambitious of 1% to 2%. Again, I want to close, we just bring us back to the main focus areas.

And all-in-all, I think we now have a good building block and a good strategy moving forward. We’ve got a good movement out of 2017 and they are happy of course that you’re able then to honor that promise we had with paying back for the shareholders, but we also have a good momentum in the organization.

But ’18 is going to be high and of course to more and more you dig into more structural initiatives, the harder it gets. But having said that, I think we have a good united management team both on the group level, but also in the business units that are ready to execute.

And with that, I hand over to Jorgen again that will give us some guidance.

Yes, we're just wrapping up with one more slide on this. First of all, I think Sigve confirmed that our mid-term ambitions they remain, low-single-digit revenue growth or revenue growth low-single-digit, net OpEx production of 1% to 3% through the period, CapEx in sales ratio of around 15% that remains.

If we then look into 2018, we will do the same as we’ve done for previous years where we guide on revenue, we will guide on EBITDA and we will guide on the CapEx. But then we have adjusted the parameters slightly, if you keep the analyst wake and sharp that was one reason, the other reason is and that it is more aligned with our performance management and our focus on cash flow generation.

So, as already indicated, we will now give revenue guidance on organic growth in subs and traffic revenues which then includes subs and traffic revenues for mobile as well as for fixed operations. Covering as I said 75% of the revenue base, but more importantly almost all across profit contribution.

We expect these revenues to grow 1% to 2% in 2018, we have done taking do considerations to in particular two elements several elements, the two elements I want to mentioned, it is the new entrance in Myanmar. But also the positive stabilization of development is in Malaysia.

When it then comes to EBITDA growth, keep in mind that we have then a few elements things that are happening into 2018. We have lots of high margin mobile wholesale revenues in Norway and we have talked about that before predominantly the Phonero contract.

And we also expect payments related to ToT agreement in Thailand as soon as we get it signed, so these amounts to three percentage points or whatever negative in the sales from EBITDA growth. At the same time, we will continue to reduce cost as I described along with our midterm ambition.

All-in-all, this leads to an outlook of 1% to 3% organic growth in EBITDA in 2018. And also just for those two elements that I mentioned, these implies that underlying to mid single-digit growth is what we see in EBITDA for next year.

CapEx is expected to be around 18 billion to 19 billion in 2018 relatively stable from this year, and we the same priorities as we have went through. Then, I think Marianne we are ready for Q&A session.

Absolutely, Jorgen. Thank you, Sigve and Jorgen.

We are now ready to take questions. And as usual, we’ll start taking questions from the audience present here at Fornebu before we open up for the participants on the phone.

Any questions, I can see at least one hand in the air.

Hi. Thank you.

Havard for Carnegie. You pretty almost addressed all of my questions so far, but I was wondering if you perhaps could give us some pointers on pros and cons of keeping or divesting the Central European assets?

And also indication of timeline on the IT cost savings in Asia as well as you had on the Slide 30 I think it was?

Yes, when it comes to the CEO, asset -- the CE assets, I don’t think I want to say more than what we issued in the release on last week. We’ve got an inbound offer.

We are assessing that offer now and that would probably take us a couple of months. When that is done, we will then announce what we are going to do with that offer, but more than that I don’t want to comment.

On the other question on the IT, I think these numbers that I showed you is in the 2020 picture also the reduction on the baselines. But I don’t want to -- I am not able to break that down on a yearly basis.

Next question please. Okay, if there are no more questions from the participants here at Fornebu, we will now open up for questions from the conference call participants, please.

Yes, thanks and just as pervious speaker said that, most of the questions have been taken already. But I was wondering you’re highlighting price per megabyte ambition for parts of the group.

Can you comment on how that can be applied across the group?

You just said price per megabyte?

Yes, you've showed in the cloud slides where you explained, your view on the future on, how you can drive down costs and the efficient improvement in Asia.

Yes.

How that can -- I was wondering if we can -- if you can do something similar in other parts.

Yes, we are starting with this in Asia as I explained, but we’re also going to roll that out to Europe. We have picked the partner in Asia to help us with this.

We are moving fast on both the virtualization and the cloud base and now we are looking for a similar concept, such similar approach in Europe. So in the 2020 picture, you should include Europe as well and that’s why I've talked about 30% and 40% savings on the base.

I cannot break it down further on that.

My question is around the management’s incentive program and this question should be viewed in the light of your very strong performance on OpEx in 2017 and you said you felt that, you were somewhat surprise by the strong delivery. So in terms of the management’s incentive program, I was wondering if you could give us some color in which way the OpEx metrics enter the executive management KPIs?

And in particular, I was wondering how big is OpEx within the overall program sort of how dominant is that? And also whether it's potentially sort of front loaded in terms of target or is it backend loaded, sort of you have to deliver consistently in terms of performance or is it judged on a year-by-year basis?

Yes, I can answer the first part and then Jorgen can take the second part. On the management targets, OpEx is definitely one of the targets, its revenues, its actual OpEx reduction and its EBITDA growth.

But I don’t want to tell you exactly how these three elements are weighted, but that we had in 2017 and that we also have us as the group executive management going into '18.

If I understand the second question correct, there is no bonus for neither front-loading nor back-loading this program, it's yearly agreements and understandings with -- between management and the Board of Directors, and it's a balance scorecard as Sigve is referring to. And as an extra comment to that, obviously time matters.

So we do, in all aspects of what we're doing, we do what we can. But we're not front-loading or back-loading, we're just working continuously through the agenda that we have, take it when it's appropriate.

So, the performance is evaluated on a year-by-year basis, right. There's no sort of multiyear targets where you've reach and sort of the final valuation coming 2020, so it's basically down a year-by-year.

Is that right?

Yes, it's year-by-year, of course the strategic plan and the financial plan, it's longer than the year but the actual target is based on the yearly basis.

So, just quick sort of thinking on Thailand spectrum, and in your CapEx slide, you indicated 20% CapEx is coming in densification. You talked about your group being well placed for 2.1 gigahertz, 2.3 gigahertz, you bought the ToT spectrum coming through.

Perhaps talk a bit about your need for spectrum in the upcoming auction? Do you think scope for the reserve price falling?

And perhaps I mean you've flagged the higher NOK1 billion of spectrum payments in 2018, but I think that was a moving parts on in terms of lower USO fee and expiry concession this year?

Yes, I can comment on the spectrum situation in Thailand. We did 2.3 of let's one step back, we have not got the approval from the regulator in Thailand and we're just waiting for the final approval from the Attorney General.

So I hope that is not many days or weeks, away from actually getting that spectrum and starting to roll off. And of course with that one, in addition to the 2.1, we have in Thailand.

We will have a very good 4G network in the urban areas and also out in most of the rural centers. And then, when the spectrum comes on the 1,800, we will of course look at the conditions and then make our decisions then.

But -- so I don't want to comment on that other than saying that with the 2.3, we will be in a much better place.

And you're of course right, Maurice that, the concession related costs will come -- continue to come down in 2018. DTAC was, in its Q4 presentation, they showed that regulatory course is now around 11% of sales, that's off to concession expiry, it should be 5% to 6%.

A question on Norway, please. As the positive response you've received on the family bonus scheme has that given you more appetite for pushing conversions in Norway please?

And if I may a quick question on Sweden, you had a very good fiber quarter in Sweden despite the sort of stagnating market at the moment. Could you comment a bit on how you have achieved this please?

Yes, on Norway first. Of course, we want to see how we can utilize the different offers that we have in the market and family bonus is a good example of that where you're combining all the relationship you have with Telenor.

And you may see that the Norwegian team is going to launch similar offers. However, we're not going to lead any aggressive bundling when we think about that in a discounting type of pictures, we have seen some other European countries.

We don’t see a lead product and we have done rather focusing on how to make this good offer for the customers, how to reduce the churn, how to do up sell or beta, and how to just make it coming. The second question was on Sweden and the fiber rollout, was it?

Yes.

Yes, we have the last couple of years rollout fiber in Sweden and we continue to do that. The Swedish market as you know is a little bit different from the Norwegian.

There is a longer lead time, but we see that we are very well placed. We'd also fixed position in Sweden and we continue to then capture the opportunities that we see there.

I don't want to go any numbers or anything like that.

Has it mainly been achieved through own rollout in Sweden.

No, it's the combination from both with the only rollouts and also participating in the open networks.

I just had a broad question about how you balance the need for OpEx reductions versus top line growth. Obviously, the cost reduction program has been going very well.

I'm just wondering whether you've seen a need to reinvest some of the savings into improving the revenue momentum in some of your markets and that's loaded then in Q4 like Myanmar and Thailand, so just some thoughts on cost reduction versus top line?

As I try to illustrate in the presentation and discussion we had at least for 2017, we are very pleased with the numbers coming out showing a good balance. And this is for '17 confirming what we have thought and also communicated the whole way.

We still believe we will continue to do that, we believe are add for rooms and it's very of course very important for us to do at good balance in revenue, revenue renewal and cost and efficiency implications. But if you look to Myanmar, you will see that they have had not insignificant cost increase for '17.

We are obviously catering for this kind of development in those areas that are necessary. And Myanmar was one the other was Bangladesh with the significant growth we have there it is quite natural to fuel hat.

At the same time we see Bangladesh has been through a tremendous growth over many years. It's quite clear that there are also significant cost efficiency opportunities in structural business portfolio.

So I think we have managed it good so far. We will do the same.

We have a lot of attention to this and we are confident we will keep that balance.

Yes just want to that Jorgen and also myself. We are sitting very close on development in the different markets, trying to understand market dynamics and making sure that we are not losing out of growth opportunities.

And it would have been impossible to have the double-digit growth to have in Bangladesh and also close to double digit in Pakistan if we hadn’t made sure that we also are aggressive in the market place.

Your presentation on digitalization was really clear. It was just great to delve into the headcount reduction a bit if that’s the case.

You are guiding to 6,000 cuts over the next three years. Can you give us any stats like you did for Bangladesh in the presentation that give us confidence the customer perception in the Nordics is improving with this.

What's been your MPS improvement or churn reduction or reductions in calls in the call center that gives you the added confidence that this cost cutting is sustainable? And I'm wondering if you could touch on, what are the costs associated with the 6,000 headcount reduction?

And then just lastly on Norwegian competition, could you just give us an update on the competitive intensity in the market? Obviously, you have been successful with family plans.

But could you comment on any further aggression from istep.net following its capital raise? And what you are seeing in terms of ARPU uplift from fiber up selling?

Wow, that was a new presentation, but let me try to make it short. The Norwegian market remains competitive.

I don’t see any change. We see Telenor being there, we see ICE being there and the recent movements in the price sensitive segment.

But I think we are very happy with the position we have on the value segment of the postpaid consumers and we are seeing we are not losing any market share there. And then we also see that there is service they have because the service have in Norway is also on the postpaid front.

So, I'd say no change in the competitive landscape in Norway. Then to the question you had on customer, how happy the customers are, when they are being digitalized?

Generally, we see that customer feedback goes up when they have a digital journey rather than the physical. So that's why we are putting so much effort on making that Telenor, MyTelenor app, the personality and the user friendliness on par with the very best services that is out there.

So, we don’t see that digitalization and with that cost reduction, it's hampering the customers' affection at all, it's actually all the way around. And that’s why I used customer experience as a word both when I talk about the care part of it, the sales part of it, but even the IT and the network digitalization, it is to make a better customer experience.

And I think that’s what you asked about.

I think also when you look at the reduction in incoming calls to customer service that also reflects that the customers have reasons to calling. The networks are more stable.

The product offering are more intuitive.

Yes, that’s a very good point.

What is that number in Norway?

Pardon.

What is the reduction in calls in for call center you see in Norway?

Close to 20% year-over-year.

Over the last year?

Yes.

And in Asia, we are around 30% to 40% reduction in a year.

And then just cost of the headcount reductions? Sorry for the multiple questions.

The cost is obviously, it's hard to do an average number here because we have 11 to 12 business units in very different geographies. So, we're taking that on a running basis and I think we can apply some of the numbers that we have guided on and shown disclosed into 2017 as an indication of how that also going forward.

Just two small questions, if that’s okay. One on Myanmar, you've seen price pressure into the quarter ahead of the new entrant launch, but can you may be just share some local insights on when you expect a new launch to occur?

Any sort of insights into their strategy? I mean I record Telenor in Myanmar segment particularly strong in the data portion the market.

Is there a barrier to entry your position that protected by the investments you made in network? Or do you -- should we expect I think price pressure to continue through 2018 and onwards?

And my second question is just on the balance sheet for Jorgen. I mean you talked about two times being a ceiling no target, but is there a flow when you just look at the efficiency to drive down your WAG in the historic sort of low cost of debt?

Does it not make sense to may rebalance more towards debt financing rather than equity?

You take the balance sheet and I deal with Myanmar.

Yes. Well, we are not -- it's not in our current thinking right now to kind of reengineer the balance sheet.

It is strong today, it is significant below the defiance ceiling the max we've had. But the max is not the target, it's been quite stable around 1, 1.2 for long time and kind of restructuring our balance sheet by paying off excess dividend in the short run is not according to our thinking right now.

On Myanmar, we expect to the fourth entrant to launch in the end of this quarter, at least that is what I will say or in Q2, and we have been preparing ourselves very well for that. We have 40% market share in Myanmar now.

We have 8,000 sites out there covering 90% of the population and we have close to 100,000 point of sales. So, we will have I would say that we are about to be number one in this market with and the way you measure it.

And off course, that is going to be our leverage where new entrant comes in. We don’t know what they will do.

Most likely, they're going to focus on data, but relatively I think we're well positioned to defend our position. Then, you also asked about the price levels, yes, here is rough competition on voice data, it's a little bit better and specially on net tariffs.

And that’s why, why you have seen that the revenue growth has been slowly down a bit.

I will keep it to one question on Denmark please. Just on the revaluation that you've done looking at Note 4 in the report, you've talked about assumption for 3% compound annual growth in ’18 and ’19, 3%.

So, can you maybe just talk us through, how do you get to that assumption for Denmark growing future into the next few years? What's determined by fixed mobile pricing subs?

And what's the rationale behind it? And then if you can maybe also just give us, what is actually the value of your Danish business on the balance sheet after this maybe through valuation after size?

It’s 1.2 on top of the value, total value.

I think we’ll have to get back to that.

We’ll check it out. We have disclosed that as we are supposed to do the functions behind that.

We have obviously run several scenarios. We have looking to the costs side, the business development side.

Our portfolio is developing. And all-in-all that brings together these values and we haven’t accounting duty in a way to reverse an impairment like this when we see that valuation is substantially higher than what was assumed in 2015.

Things have changed about on the internal side. We also see the market leveling out a little bit, which is good.

It is still not as profitable as it should be in order to fuel for future investments the way we see. But it is better than assume in 2015 hence the reversal.

When it comes to the full value, I have to get back to that. I don’t have that number or the full valuation on the balance sheet.

First of all on Norway FX has been a year since the unbundling of TV and broadband rules came into effect. Can you just talk about the impact to you’re seeing on the behavior of your subscriber based specifically as a result of this changes?

And how does return in back for example compared with the original expectations, any further impact into 2018? And second question, I understand you can’t comment on the CE or you see again effort specifically.

But can you just talk about your thinking around the portfolio as a whole? How do you think about which assets are core versus non-core?

And if beyond generally of course creating shareholder value, can you give us some color on the key decision criteria, when you think about whether to sell or keep the geography?

The first one, I didn’t really get. Was it to the unbundling of fixed and TV, was that the question?

Yes. Correct.

Yes, then you’re thinking about unbundling than of fixed and our access in TV in the Norwegian market. Is that your question?

Is that we haven’t really seen and a bigger picture of that? We haven’t seen any neither big churn nor a big uptake of new customers.

So I think it’s, yes, so far it has to be an effect and I think the customers are very satisfied with our TV solution and even more so now after we launched also our android component to it. So, we stay on very competitive in digital.

We have a very good growth in the TV business.

Yes and then to our portfolio, what is core and what is not core and so on and so forth? We have said the whole time that our telco business is the core activity of Telenor.

And Telco is that the business unit and businesses that are very closely related to the Telco System. Then we have started on the portfolio simplification process as Sigve described in his presentation, we know Russian urgency but we have done it when we have thought we have good opportunities to do what was strategically and financially sound decisions.

And beyond he mentioned, he also discussed India, we have all recently believe that that was a bad decision to describe to exit India. We high graded the values and on classified in Latin America that was a cash valuation decision.

And then we got an inbound that is important for us, we got an inbound interest on CEE. And then it is our duty to reflect on that, some reflections are quick, some reflections we spend more time on.

This is more that we spend a little bit more time. We are eager to grow and develop Telenor that’s the whole purpose.

And that is what we’re working on, and at the same time make sure we are taking sound value creating decisions on behalf of the shareholders. It is cash implications, it is valuation multiples, it is strategic evaluations of how markets are developing et cetera, et cetera.

Going forward, we have said that down the road we might look at new opportunities in geographically closeness to where we are and in pure businesses in telco business.

Well said.

Do you agree?

Yes.

So we agree on that.

Thomas Heath with Danske Bank. Just one question, if I may.

You highlighted the analytics and promotional activities in Thailand based on Tapad infrastructure. Yet to say another quite large write-down on Tapad that a business now was just 400 million that you acquired for 3 billion a very long ago.

What the sort of learning from an M&A point of view? How do you avoid making this type of costly mistake in the future?

And what didn’t play out as planned?

Yes, we of course we are not satisfied with the development of the Tapad business and especially not on the media side. The development of online marketing in the U.S.

market became much tougher than what we expected. Basically the Googles and the Facebooks are taking more and more share of that.

So, we’re not happy with that and we have also a little bit less growth on the data side of the Tapad business, that's what we expected. But having said that, I must say that the benefits we not see from using their platforms, using their voice graph system, but also using that for the third-party data starting to yield from results, we see that in Thailand.

And as I said, we're rolling this out now in five new markets and then in the rest of the Telenor Group. And what it enabled us to do is to organize our own data, is to get richer data from our old customers from the third party, but it also to get access to competitors, customers.

So, it helps us then to do a much more efficient distance sale and up sale, but also more personalized offers.

Is it fair to say to that, all the digits journey we need confidence and knowledge?

Yes.

And then we shouldn’t pay more than necessary for it, but we need that.

So should we think of this more as an internal tech unit within Telenor in years ahead rather than a standalone business?

We will come back to that. Right now, it is a standalone business.

It has external business, which is valuable for it and it has also good online businesses, rational businesses with Telenor and we’ll get back to it.

Okay. And that was the final caller today and this ends the session here today.

So for those of you not getting through with your questions or having follow-up questions, please contact the IR team. And as I said at the beginning of the session, there will also be now a separate media session for media present here at Fornebu.

Severin and Meera will take you to that session. So, thank you all for attending the session here today.

Thank you.