Good morning, and welcome to the Presentation of Telenor Group's Results for the Fourth Quarter 2018. My name is Marianne Moe.

I'm heading the Investor Relations team, and I have the pleasure of guiding you through the session here today. The results today will be presented by Group CEO, Sigve Brekke; and Group CFO, Jørgen Rostrup as usual.

And I hope you all have the result, the material available. And after the presentation here today, which will take approximately an hour including Q&A, there will be a separate media session with here at Fornebu with the Group CEO and the acting Head of Telenor Norway.

Without much further ado, I leave the floor to Sigve Brekke for the highlights of the quarter. Please, Sigve.

Thank you, Marianne, and good morning to all of you present here and also those of you that are following us on the video streaming. Let me start with taking a look back on 2018.

It was a year with significant achievements. It was a year where we did solid progress with our modernization of Telenor.

It was also a year which we delivered on the strategy laid out in the Capital Markets Day in 2017. And then starting 2019, as a leaner and more focused Telenor.

Let me take some examples. It was a year where we had the record rollout of our network.

We rolled out 18,000 new 4G sites. We have never done a number like that.

And we also did a record rollout of fiber in Norway. It was a year where we continued to simplify our portfolio and our corporate structure.

We concluded transitional from concession to license in Thailand and we are finally now ready to start growing again. It was a year where we delivered on our financial ambitions, stable revenues, NOK 1.2 billion cost reductions, 3% EBITDA growth, and underlying 5% EBITDA growth and the free cash flow of NOK 2 billion.

And we ended the year in the fourth quarter with a robust performance in Scandinavia, a good growth in Pakistan and Bangladesh. However, we have growth challenges and they remains in Thailand and Myanmar.

Let me take one step back to what we said in the Capital Markets Day in the beginning of 2017. To reflect a bit on what I said and what we have done.

On the growth side, we said that we are going to deliver a single digit growth in 2018, 2019 and 2020. In 2017, we grew around 2%.

In 2008, the growth has been softer. The first half of the year, we had a slow growth in Pakistan, due to tax headwind.

We had a relatively slow growth also in Bangladesh, due to bad weather. Those two markets are now coming back stronger.

And in the second half of the year, we have been hit by aggressive competition in Myanmar and also the concession to license transition in Thailand. On the OpEx side, the target was to stabilize OpEx in 2017 before we start to take it down.

The ambition was to reduce OpEx in the range of 1% to 3% year-over-year. Looking back, it's encouraging to see that we have over achieved the target and we have actually delivered more than 3% OpEx reduction in 2017 and in 2018.

On CapEx, we have delivered on what we communicated. In total, I'm pleased to see that we actually have done what we said to do.

However, the program we started in 2017, it's - we're just halfway and there is more to be done. Then into the business.

Let me continue with - let me just start with the Scandinavia and take an overview of Scandinavia first. I will say that we have a robust performance in all of the three Scandinavian assets.

Sold underlying EBITDA growth in all the three markets. And these are coming from the effects we know are seeing for our digitalization and transformation program.

In Norway, the revenues are being masked by loss of wholesale revenues and special numbers. And with these two effects, amounts to around NOK 600 million and those will not be visible anymore in 2019.

The underlying revenue growth in Norway in 2018 was 3%. I will say that that is very strong.

In addition, we have 600 million to 700 million drag on EBITDA from loss of fixed legacy revenues. Sweden, strong underlying EBITDA growth of 6% and we also have a good subscriber intake in both the B2B segment and also in consumer.

And Denmark, the turnaround continuous resulting in a 10% reduction in OpEx and an impressive 27% growth in EBITDA. And I actually want to take the opportunity to send a message to our Danish team.

This is very impressive, so please continue what you have started. Some more details on Norway.

As I said, we had a strong fourth quarter on fiber rollout in Norway. As you remember, we had a slow start in the first half of the year, but we are nowhere we want to be.

15,000 new fiber connections added in the quarter, highest ever. We see a continuous growth in post-paid in the quarter, 2,000 new prospect customers.

And if we are just for the reduction in the standalone data cards which fewer and fewer people are using, there was an increase of the post-paid base of 6,000. This comes from a continuous strong sale on the Flexi product and we now have more than 10% of our subscriber base on the high value Flexi product.

Robust ARPU, 1% increase in the quarter. And if we exclude for the special numbers and also changing from handset subsidy into the smart model, the underlying ARPU growth is actually 3%.

And this is due to continue success on the upsell model. As I said, we are modernizing Telenor.

And one of the key modernization initiatives to coming years will be to replace the copper network with high speed future proof solutions. Access to Internet and digital services it becoming a must with Norwegian customers.

And we therefore need to modernize a 100 years copper network. And we have to do that and the aim now is to do that faster than previously planned.

The ambition is to finish that replacement in the coming four years. I'm excited about this, because this is important to be a part of digitalizing Norway.

And thumbs-up to the Norwegian team that has taken the challenge to speed up this process. Our plan is to replace the copper network with fiber and high speed wireless solutions.

And to do that we need to step up even further the fiber rollout ambition. Norway has already been scored now for having the world fastest mobile network.

And we want to take that position and start introducing also fixed wireless solutions as a replacement to the fixed copper network. They are already testing that out both on 4G and also pilot on 5G.

The roadmap on how we're going to do that will be detailed later in the coming months and we will come back to you before the summer. Moving to emerging Asia; Pakistan, Bangladesh and Myanmar.

Starting with Bangladesh, strong performance both in the third quarter and that's going also into the fourth quarter. The whole second half is now back to the growth that we expect in the market like Bangladesh.

11% growth in subs and traffic revenues, driven by both voice and data. We added 1.3 million new subscribers in the quarter and we know have more than 72 million subscribers in Grameenphone.

We also see that we are able to continue to drive data usage with our customers. 51% of our customers are now using data.

However, most of them on a very low volume, so still a long way to go here. An impressive cost control.

And despite their 11% growth, we are also able to reduce our OpEx, resulting in a 62% EBITDA margin. And this is really driven by cost innovation.

Pakistan also continued a strong growth we saw in the third quarter. 12% subs and traffic growth.

After these two countries are now, or these two business units are now competing 11% or 12% growth, 15% EBITDA growth. We have also taken learnings from the benchmarking we do in emerging Asia to see on how can we focus on customers reviving rates in a market which is very gross driven, acquisition game is important for us to make sure we are bringing in quality customers and with that reducing churn.

Myanmar, we still unfortunately see effects of the aggressive pricing from the fourth operator that came in mid-year. However, we see some positive indication now that the customer loss is flattening out and this we see a stabilization in December also going into January.

ARPU is stable in Q4 and the 11% reduction in subs and traffic revenues is explained by 12% reduction in mobile subscribers year-on year. Going forward, we are continuing to focus on the strength we have in our network, the strength we have in our distribution and the brand.

And as in Pakistan, we also hear focus now more on quality of the new subscribers and with that reducing the churn. Then to Thailand.

The third quarter in Thailand was a very special quarter for us. This was a quarter where we - which market end of more than 20 years concession regime and also a quarter which was the end of lot of uncertainties.

We are now rolling up our sleeves and starting to focus on growth again in the Thai market. We are focused on a massive network rollout, utilizing the new spectrum that we acquired last year.

On the 2.3 frequency, we have now added 6,800 sites in the fourth quarter, and in the year, we have added 12,700 sites. For those of you that are in the technology field, you will understand how big of a scale that is in a very short period of time.

In addition to that, on the 2.1 frequency network, we continue to densify the network and added 7,900 base stations. It's a massive effort over a short period of time.

And when you do that it has affected the customer's experience. But we now see that the experience, the network experience is improving day by day.

The 4G speed we now see on the 2.3 frequency is significantly better than before. And finally, we started to fully compete with other operators.

On the revenues, we see now that subscriber loss that we have seen is flattening out. Actually it's the lowest now in the last three years.

We see a stable ARPU and lots of prepaid customers are not being compensated with growth in post-paid. The subs and traffic revenues decreased 5% in the quarter and it's explained by 6% lower sub base compared with last year.

On costs, both cost and OpEx. We increased year-on-year with 1.7 billion, but that explained by the fee where that we paid to TOT on leasing the 2,300 megahertz frequency is explained by increased network cost with that massive rollout that I explained.

And in the quarter, we also had a cost related to transition from concession into license. And those cost you will not see in the coming quarters.

Moving to Malaysia, we started a repositioning of our company in Malaysia in 2017. Repositioning it from being a prepaid company into now focus more on post-paid customers and on prepaid Internet to get away from their prepaid legacy businesses, voice and SMS.

The effects of this information is now step by step coming through. The growth in Internet revenues, prepaid internet revenues in Q4 was 14%.

The subs and traffic revenues decreased by 2% as loss in the prepaid legacy as SMS and voice declined somewhat more than the post-paid growth. EBITDA however increased by 2% in the quarter, as a high proportion of the post-paid in the base is improving over gross profit.

In addition, this is also a company which continued to focus on efficiency and OpEx was decreasing 1% from those improvements. Digi, it's one of our most forward leaning companies when it comes to digital transformation.

To give you a couple of examples, on their customer journeys, the growth in my MyDigi users increased 20% year-on-year and we have now more than 3 million of our customers using that appreciation frequently. On digitalizing the distribution, on your Android phone now in Malaysia, you can do data management and top up.

This is the first operator that Google launched that service with. And we see a big attraction on this service.

Modernization, I think I have been using that word now several times already. And this word actually covers more or less everything we do in Telenor these days.

With our infrastructure, we face out all technologies, we ultimate, we vitalize, we digitalize and we partner up with vendors to create scale and efficiency. We are also considering strategic options on what to do over our toes.

We are testing out fixed wireless access solutions and we are getting ready for 5G. We're simplifying our corporate structure, including reducing the legal structures, we create a more efficient headquarter and also a better balance between what we do on the Group level and what we do on the business unit levels.

We digitalize our distribution and customer journeys, which enable us not only to be more efficient, but also to use customer data to personalize services and products. And with this, we also simplify our price plans on our products to take away customers pay point.

We are building new competencies for the future. For instance, within AI and robotics and security.

And this will require hiring new competencies, but first of all, it will also require a systematic up skilling of our current employees. Let me close off with the main priorities we have going into 2019.

Our transformation and modernization strategy that we laid out two years ago has three main components, is growth, is efficiency and the simplification. And this is what we have been focusing on and also what we are going to focus on in 2019 and 2020.

When it comes to the growth and the revenue renewals, we continue to see potentials in our markets. We are still adding new customers in Bangladesh, in Pakistan and we see an increasing data usage with these customers.

We believe that we can increase ARPU from existing customers, driven by strong network positions, up selling and use analytics to personal offers. In Norway, we have a very strong B2B position and we also see attractions on the IOT.

We want to take the experience we have from Norway and roll it into other Telenor markets. And it's a key priority for us to return to growth in Myanmar and in Thailand.

We have just started the modernization of Telenor and this is going to continue. We're going to continue to modernize the infrastructure, including copper replacements and 5G readiness.

We're going to accelerate and Jørgen is going to talk more about that, our structural efficiencies and continue the digitalization of the core business. And with that I welcome Jørgen on the stage.

Thank you, Sigve. Good morning, everybody.

As Sigve said, 2018 for us marks another solid year for Telenor and we believe it is due to consistent strategy, a strategy that we set out two years ago, so we are halfway into that program, which we embarked on. And then having said it upfront, in a large group like Telenor, there will from time to time be issues in some of our markets and right now we are facing difficulties and challenges in Thailand and Myanmar.

As the same time, I'm very pleased to see how we deliver according to our plans in the Group in total also in the fourth quarter. Total revenue decreased NOK 0.5 billion in the quarter compared to last year, simply due to unfavorable currency movements.

If we see subscription and traffic revenues, it turned negative in the quarter to minus 0.7%. For the full year, it's marginally positive at 0.2%.

During the quarter, we have seen the continued strong subscription and traffic revenue development and momentum in Bangladesh and Pakistan as Sigve alluding to. However, the Group growth rate has been in the pressure from Thailand and Myanmar.

On top of a 6% year-on-year reduction in customer base in Thailand, we have also had the 2,300 rollout and the transition from concession to license regime. We see a somewhat weaker network perception during the quarter with our customers, but we also see as Sigve was saying better quality, improving speed in our network and we think we will come through this during 2019 first half.

The negative development in Myanmar after the fourth operate entered, continue to drag our revenues. It's primarily due to our lower customer base of 12% as ARPU remains fairly stable.

And then we see in December signs of lower customer losses and we see that also continuing into January. Maybe I should also comment on fixed legacy.

It continues to be in line with previous trends, pulling down the Group's growth with almost 1 percentage points. Okay, we can go to next.

Efficiency in improvements continues to be a top priority and we managed to reduce our cost base with 1.2 billion or 3% in 2018. This quarter, we see OpEx remaining stable, despite having temporarily increased costs related to transition from concession to license.

If you are isolating the OpEx increase in Thailand, we see an OpEx reduction in the quarter of 1.5%. Looking at the full year's reduction, we see a balance set of numbers across all categories, reflecting again our efforts to work both on simplification and also targeting the more structural OpEx reductions.

We communicated February '17, that we expected OpEx reduction in the range of 1% to 3% from 2018 onwards. In both 2017 and 2018, we have been successful in executing on the program, we still believe there is significant potential left.

In the first two years of our efficiency program, we have managed to reduce OpEx with some 2.6 billion or more than 3% per year. I believe we can say we are ahead of our plan.

Nevertheless, we maintain our ambition, it remains firm, we aim to continue to deliver 1% to 3% OpEx reduction per year also for 2019 and for 2020. And we have also started to plan for efficiency improvement also beyond 2020.

We believe there is a potential for continuous improvements as we have done it through remove inefficiencies and through simplification and by their prioritization. This goes for simplifying products, simplifying systems, our own processes and smaller adjustments in the organization.

We also think we can modernize and progress our modernization journeyed the way Sigve alluded to. Addressing structural improvements will become increasingly important for us in Telenor and this is where we see the larger effects coming forward.

Let me take you through a couple of examples. To firm up the structural modernization towards 2023, we have during the fall, established strategic cost program.

In each business unit, local management has identified their respective key initiatives. In total for the Group, we have some 40 multi-year initiatives owned by local business units, addressing very specific underlying structural challenges to realize cost opportunities and also modernize systems, customer facing processes and even larger organizations.

These 40 initiative and compulsory round 50% of the Group's OpEx space. So it's concerning activities which is adding up in total to 50% of our cost base i.e.

20 billion out of the 38 billion to 39 billion cost base. We have strengthened how we work with the strategic initiatives.

We will put in place dedicated to resources reporting directly to CEOs in these units, the main priority now is to systematically follow up in a strong performance management, should I say regime. Attracting activities, milestones, KPIs regularly where also Sigve and I will be spending some of our time going forward.

In addition to these structural modernization initiatives, we also in a process of reviewing our tower infrastructure assets. This is a project we started mid-2018.

We are in an exploratory phase and we will give you an update as we go. We have around 50,000 own towers in the Group which off two thirds are situated in Asia.

If we take a quick look at the EBITDA development, we have only a slight underlying growth this quarter. There are some significant items negatively impacting EBITDA.

We had payment to TOT in Thailand for lease of spectrum. We should regard this as a CapEx substitute.

It will be annualized by April 2019. Then we have the temporary cost in Thailand in Q4 related to the transition.

And then we have a full narrow and special number regulation in Norway which will be analyzed as of now, so beginning 2019, it is annualized. Adjusted for these item, we have a slight growth despite the negative topline impact in general from Thailand and Myanmar.

Looking at the full year of 2018, we have a 5% underlying growth in EBITDA. The underline EBITDA improvements is to a large extent due to their cost improvements of 1.2 billion and also improved gross profit from handset sales interconnect and that slight growth in subs and traffic revenues that we talked about.

CapEx excluding spectrum analysis was 6.1 billion in Q4, around 22% of sales. So as we said in third quarter, it would be a high intensity in the CapEx program in the quarter.

The rollout speed we were talking about was lifting the CapEx in developed Asia, in Scandinavia it is predominantly a solid fiber rollout that is adding up the investment numbers. During the quarter, we have also acquired 900 megahertz and 1,800 megahertz spectrum in Thailand, 700 megahertz spectrum in Sweden and 900 megahertz spectrum in Myanmar.

So all this is amounting to NOK 12.6 billion on the spectrum side. Let's touch on the P&L.

Net income to equity holders of Telenor ended at NOK 1.2 billion this quarter, equivalent to NOK 0.81 per share. There is a decrease of NOK 1 billion from last year.

Other items this quarter was negative 2.4 billion primarily related to the settlement that we informed the market about with CAT in Thailand of total NOK 2.5 billion. We made a provisional point NOK 0.4 billion on this, so the net charge in the fourth quarter was NOK 2.1 billion.

Then we had net financials of NOK 3.1 billion, an increase of NOK 1.8 billion. This was a result of unfavorable currency movements.

We are hedging net present values not the equity in our subsidiaries. Hedge accounting is limited to the equity value and the book value is usually lower than our net present value for these business units.

Hence, the remaining currency effect must be taken over the P&L. And that will give flux directions in situations with significant currency movements as we have seen in the fourth quarter.

These effects were partly offset by lower depreciation as we have talked about for Thailand related to the end of concession and also higher profit from discontinued operations, as a result of a gain from the partial disposal of Telenor, Microfinance Bank in Pakistan to ANT Financials. For the full-year, net income was NOK 14.6 billion or close to NOK 10 per share.

And as you can see from the right hand side of the slide, the effects of the net the accounting, new accounting stand IFRS 15 had marginal P&L impact for Telenor. Free cash flow for the fourth quarter negative NOK 0.1 billion, a decrease of NOK 3.5 billion from same quarter last year, due to high, very high should I say investment level and also the spectrum payments for the quarter.

For the year, free cash flow amounted to NOK 32 billion, an increase of NOK 7.1 billion to last year positively impacted by the proceeds from the sale of assets in Central and Eastern Europe. Free cash flow before these proceeds and other M&A activities amounts to NOK 11.7 billion, more or less the same level as the ordinary dividend proposal of NOK 12.2 billion.

When it comes to outlook for 2019, we continue to focus on the same parameters as in previous years. Then as dtac has communicated, they will give an updated outlook on revenues and EBITDA in second quarter.

Hence we have as of now decided to provide Group outlook excluding Thailand when it comes to revenue and EBITDA. For subs and traffic revenues, excluding Thailand then we expect to deliver an organic growth in the range of 0% to 2%.

The drivers here should be looked at continued growth in Bangladesh and Pakistan somewhat easier comps in Norway as the impact of special number regulation are now annualized. However, keep in mind that we have high positive one-offs of NOK 700 million in Pakistan in global wholesale in 2018.

When it comes to EBITDA, we expect 1% to 3% organic growth for the year, reflecting that we anticipate positive contribution from both revenue growth and further continued cost reductions. CapEx for the year, this including Thailand is expected to be in the range of NOK 16 billion to NOK 17 billion i.e.

at the same level as this last year and also in the range of approximately 15% to the revenue. The outlook reflects we feel that we continue to execute on the combined strategy and financial ambition that was set at Capital Markets Day in 2017.

During the last couple of years, we have demonstrated solid progress on the cost efficiency, on the CapEx efficiency, we have also de-risked to the Group portfolio through the exit of India, through the - yet to be a completed exit of VM and also through the transition from concession to license in Thailand. We now find the time right to revise our capital structure and balance sheet efficiency.

The Group has a ceiling historically been set at two times net to EBITDA - to net debt to EBITDA, the actual leverage has however been around onetime. We believe that the target - leverage target closer to the existing ceiling of two times would improve capital structure and strike a fair balance between return on equity, cost of capital, access to funding and financial flexibility.

We have therefore decided to introduce a leverage target of 1.5 to two time net debt to EBITDA. As a first step to move towards these targets, we are planning for a 3% share buyback program in 2019.

And then if deemed appropriate in order to reach the targeted level, a special distribution to shareholders will also be considered in the coming years. And then as you know, IFRS 16 will be implemented in 2019 and will impact how we account for financial leases.

And we expect this will lead to our somewhat higher target range on our side, however we still feel that our uncertainty how IFRS 16 will impact the sector. This is something we will have to get back to during 2019 or 2020 when we get more experience and when the sector get more experience with it.

For 2018, the board proposed a dividend of NOK 8.40, which represent 4% growth and a yield of 5% and which is consistent with the year-on-year growth in recent years. The dividend will be paid as usual in two tranches, one in May and one in October.

It constitutes a payout of NOK 12 billion and implies that we payout 100% of underlying free cash flow for the year. Further, in order as I said to support the path towards the new leverage target, we also plan to ask the Annual Meeting in May for a buyback mandate of around 3% of shares equal to distribution of around NOK 7 billion and similar tools than could be used also for coming years in order to support the same ambition.

All-in-all, a proposed dividend, the planned share buyback program in the magnitude of NOK 19 billion which is comparable to an 8% yield. I think this is the presentation on our side.

We are continuing along the path that we have set out for two years. Maybe we should see if there is a Q&A.

Thank you, Jørgen. And Sigve, please join us on stage.

As usual, we will start with questions from the audience present here at Fornebu before we open up for the conference call participants. Any questions here?

I think we have one up there.

Thank you. Henriette Trondsen, Arctic.

It's positive that you decided to increase your leverage with leverage target today. Can you give some more thoughts and then time horizon for reaching this target and maybe distribute between how we will use this dividends, special contributions or M&A going forward?

Yeah, first of all, I think the slide pointed to an indicative timeframe, so it won't happen all in one go. In 2019 that would be a typical Telenor.

At the same time, there is no reason to expect that we should do this over a very lengthy period. So we have indicated I guess two, three years or whatever and that is probably what you should see, maybe it was four years, I don't remember on the slide.

And we haven't changed our M&A thinking. If we are going to do M&A that will have to be accretive, it will have to be within the core of our business, it will have to be in regions where we are et cetera, et cetera.

And it is still not the top priority for Telenor. But we - as we have said before, we pay attention to what's going on around us.

So this is more we have started now on the target which we aim to get within. One year, we can be above, and one year, we can be below, but we should be within a range and it shouldn't take us too long time to get there.

And thank you. And any thoughts on Thailand going forward, as the perception of the dtac brand has actually become weaker during this quarter and now so suppose that your EBITDA growth guidance for 2019 without been dragged down if you had included Thailand in your guidance today.

So any thought on Thailand going forward?

Yeah, the thoughts are that we are well positioned now to get back to growth. And we are true the most hectic roll-out period as I talked about in my intro, I think we also are now seeing flattening out of the customer loss and the stabilization of the ARPU.

So we expect a return to growth in Thailand. However, I also admit that the network roll-out and also that all day the changes in frequencies, we have taken a hit with the customers.

And one thing is the fact and the fact shows us that we are now actually coming back to a network quality which is comparable but is also a perception we need to deal with. And that's why we need some more months to be more precise on how we are going the full-year.

But going into this year, it's with a growth mindset and that's what we are discussing and following up with the management as well.

Thank you. And one more question if I may.

On the reviewing of your tower infrastructure, will this like could be in Norway, Bangladesh and Thailand or as see you have JVs and infrastructure agreements in one of your markets. Any thoughts around this?

Exactly. So we are working with in total almost 90,000 towers, 50,000 of those we own ourselves, and I said, two thirds in Asia.

This is work we started in third quarter and we are reviewing the total days and it is not - it is not only a structural review, it's a complete review, how do we operate it today, can we learn more from each other, are there different ways we should do it in order to operate it more efficiently. As you know, tower sharing is again number one in how we run the towers, if not to sell them.

Day one it is to share them and to build capacity on one tower. And as we are alluding to, we are quite advanced there in some markets, we are less advance in some other markets.

So this is a full walk through and hopefully during maybe the first half of this year, we can come back and talk a little bit more about our thoughts on it.

Thank you.

Next question, please. Yes, please.

I'm Hans Rettedal, Carnegie. Just two questions.

The first one is, are you worried about your strong sort of subscriber growth in Norway is going to lead to increased competition here and more aggressive sort of offers and prices from your competitors? And the second one is, is regarding just IFRS 16 and you say it's going to increase the target range, do you mean it's going to increase your net debt to EBITDA or is it going to increase your 1.5 to 2 times range?

Yeah, I can start with Norway. The Norwegian market is competitive, has been, is, and will be.

And that's why it's so important for us to build out the network and actually have a very, very solid platform for customer experience. And I am very, very pleased now with the status of our 4G network, and that's also why we are piloting as the first in the Nordics a 5G, actually two pilots of 5G.

And then what we also see from the Norwegian customers is that it's more than price, is now also that they want to have additional services. So for example, what we do on their family offers where we include family bonuses, what we do on this program, where you can go in for an installment with the customers, what we do on the insurance, ID, insurance, a lot of this top up services are not included in the packages.

And that's where we see that we are able to be very competitive with a high end market. However, in the lower end market, the more price sensitive market, we are also losing some of the prepaid customers, but we have chosen then just to focus on the most value creative customers.

So I think we are - we have demonstrated that we're able to compete in this tough market. And I think that's also where we are going forward also focusing much more on innovation of the new services and not only the price part of it.

And IFRS 16?

Yeah, I need some water, you can take that.

Okay. So I believe and I will look for among some people in the audience now, but I believe in last annual report said that we will increase that in the range of NOK 20 billion to NOK 25 billion by this transfer to IFRS 16, and then we will increase EBITDA with some NOK 4 billion or NOK 5 billion, and then we will have an opposite effect because we will increase the depreciation to NOK 3 billion and financial costs with NOK 1 billion to NOK 2 billion.

So the net result will be almost zero, is that now I got a note, very good. So then we also said I believe that it will have an impact of 0.6 on the ratio.

My intention with my comment was twofold. First of all, I did not say that we are growing to not move the target from 1.5 to 2 away from there, so we are not going to use that 0.6 to get through their target range.

On the other hand, I didn't either say that we will add that 0.6 on top of the 1.5 and start by 2.1 et cetera. I said that the situation I would prefer to have a look and understand more of the responses of the discussion in the market et cetera have the discussions with the banks, with the rating firms and everything.

You might say that the rating companies have in many ways they include this in their thinking but we don't fully know, have they included everything, what is Telenor's data compared to the general sector, what is a perspective on the debt ratio in the sector, when you get to focus on the lease, the impact of the lease arrangements in the sector. So it is to create some leeway and some flexibility to give you guys a direction which we are embarking on and we will come back and have that discussion with you when we are ready.

And in the meantime, we will work towards that range. Was that okay?

Perfect, thank you.

Next question, please.

Frank Maaø from DNB Markets. Thanks for the good answers on the previous questions and most of my questions have been answered and also congrats for the new debt and leverage target for the Group.

Congrats. Sounds so good.

Well done. So my question is more related to Scandinavia and the vendor situation given all the political and security focus around your vendors, some of your vendors in Scandinavia.

And how does the potential issues around that and the potential need for perhaps swap parts of that network in Scandinavia factoring to your CapEx guidance. Would it make sense now to perhaps put a little bit of break on all the 5G preparations with your current vendors and so on?

How does that factoring? That's my last question, thank you.

Yeah, as you know, we have had and will have a multivendor strategy in our networks. That has been very important for us to be balanced, to always keep some competition and also be well prepared for uncertainties.

Then of course, we are following the situation with the Chinese vendors very closely. At the same time, we are also in dialogue with the security authorities in Norway and in other Scandinavian countries.

And where we are right now, it's to test out, it's due to test out different technologies. We are testing with our way at 5G, we announced yesterday that we are also now testing with Ericsson, a pilot here.

We are also cooperating with Nokia in the European project. So it's too early to say which vendor strategy we are going to choose for 5G.

It's too early to say what complication that will, also consequence that we have for 4G. And its first after we have done the tests and after we have seen the picture being somewhat clearer that we will choose a strategy and make some decisions on this.

May I just add that, when it comes to the CapEx level for the period, which we have given some kind of indication off, which is the next couple of years, we don't see this changing anything. First of all, 5G will happen step-by-step, it will not happen in all our markets at same time et cetera, et cetera.

And we feel we have that flexibility and catered for that within our total numbers. And then we will have to talk later about what is happening after 2020 not saying that that will be changed but we just, we will have to come back.

And maybe just to add, we are using about NOK 4.5 billion in CapEx in Norway. That was more or less that number in 2017 and it's also in 2018.

And that has mostly so far gone to rolling over the 4G network with the fantastic position we have on 4G. It also gone to them scaling up the fiber network.

And now when 4G is not finished but it's kind of flattening a little bit out, we will increase the fiber step up as a price as a part of replacing the copper. And I think in that we have room to the necessary investments going forward.

Are there any more questions from the audience present here at Fornebu? I believe there is one over there.

Hi. Henriette Trondsen, Arctic.

In Norway, fixed revenue was quite soft this quarter as well, can you give any more color on this, if you expect any improvements going forward in this segment in Norway?

Yeah, I think the fixed revenues, we see continues decline of course in the copper subscriptions. We see continuous increase in the fiber.

The ARPU in fiber I think is quite flat, but we have some extraordinary revenues on this in the fourth quarter last year. On the comparable, it's making the fees revenues looking weak in the fourth quarter.

And going forward, we see continues uptick in fiber. And when we are then increasing the fiber even more, we hope that we will be able to compensate for further replacement on copper.

Thank you.

I can also add that we had - on the fixed Internet revenues in Norway, we had a tough comparable this quarter because we had 7% growth in Q4, 2017. We also see that our broadband ARPU is downfall in NOK this quarter driven by lower hardware revenues.

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

Good morning, guys. This is Maurice here from Barclays.

A couple of quick questions for me. On Myanmar, you've made the hint around improving customer losses in December and January.

Perhaps explain a little bit more around why it's improving in December, January, is it less competitive activity, is it more promotional activity from yourselves, so walk us through that please? And the second question really on Sweden.

There is many comments around conversions coming to Sweden with the merger of Com Hem, then talk about that with the synergy there? And also in terms of how convergence is going in Sweden and how much you think that will happen in 2019, please?

Yes, on Myanmar, I think I said two things, one was that the subscriber losses flattering out and other I think I said was the ARPU, it's also more stable. And I think the reason for that it's the most aggressive offers that we saw the forth entrant came with when he launched in June, it's now alter the market.

They were allowed to price themselves significantly below the price floor for 90 days. Those 90 days expired in September, October, so they also now need to comply with the price regulations.

So that's one explanation. The other explanation is that our machinery starts to work.

The machinery that we have built in distribution since we launched, the brand we have, the competitive offers that we have. We are not going to fuel this market with the sales and marketing or commission costs that are not yielding any revenues.

So we're going to stay on quality customers, going to - to go for that, so I will rate customers that I talked about trying to avoid outdating customers that are churning after some few months. So these are the top of activities.

However, it's too early to say how the competition is going to react, but some early positive signs that some of the things that we have put in place is starting to work. When it comes to Sweden, yes, there are some bundle offers and we then do that as well.

And I think the way that happens in Sweden, it's good for consumers. But we had not seen any discounting offers.

And it doesn't seem that the other operators in Sweden are starting that game. And I think we are very well positioned because we also have the fixed position that we have and the strong mobile position.

So we have also done some of the customer bundling going forward. And I think that's hopefully what the industry is going to focus on.

And that happens in Norway by the way also. We are giving our customers extra bonus if they have, if it for three subscriptions with Telenor, that could be more subscription, that could be a handset device subscription, and it could be fixed subscription then we bundle and give some extra bonus.

Again not discounting offers but trying to take advantage of the positions that we have.

Thank you.

Next caller, please. May we have the next caller please?

Thank you very much for taking my questions. The first one is for Jørgen.

So I just wanted to dive deeper into the balance sheet debate. And Jørgen, you mention that, it's not really Telenor Norway to suddenly hand over lots of cash all over sudden to shareholders.

So I was just wondering how would you behave in a hypothetical scenario a couple of years from now, if you do find yourself in a situation where you're still some way below target leverage, which I think is quite realistic right given the run rate of your free cash flow generation as you've presented on your slides, which has also been hampered by the way by you can say somewhat higher spectrum expenditure in 2018. So if you do have this level of free cash flow generation, I mean you continue to reward shareholders with NOK 19 billion a year for buybacks.

And for dividends, the deleveraging trajectory is not quite aggressive enough. So I was just wondering how will you solve this conundrum of not having lots of cash and at once which is not the Telenor Norway and actually hitting your leverage targets.

And specifically within that question, you have sort of hinted that M&A is not really, there isn't anything concrete on the agenda near term, but I was just wondering if you're baking in anything for that target within that target for kind of a hypothetical M&A and also maybe FX if even that is an issue at all? Thank you very much.

Well, maybe it will be the next Telenor Norway, if you're right in your in your estimate. But I think we shared 23 billion or we distribute the NOK 23 billion last year.

If we get it through 2020 or 2019 this year and then let's see what's happened the next two years. So I think it is at least the Telenor Norway to first give good shareholder remuneration.

And it's also the Telenor Norway to be predictable, say what we plan to do and do what we have said we wanted to do, that also goes in this area. So my point was just that the idea for us was to get there gradually and we didn't have a tight fairly tight timeframe and not do it in a surprising move overnight.

The plan is to distribute good shareholder return for the next few years. The plan is also as I said to keep financial flexibility and it encompass all the elements you talked about.

We have reduced the Group's risk we believe by the measures we've talked about, but there is still significant risk in the Group, there is a large and currency volatile portfolio in Asia et cetera, et cetera. We want to have a muscle to do a good value creative M&A transaction if that occurs.

At the same time, we do not want to have an inefficient balance sheets. And since we have been fortunate enough to be ahead of our program both in the restructuring of our business and also in the reduction of our portfolio and the sales, remember all these has happened in two years' time.

So we are a little bit ahead of the program. We are not surprised that we end up in a situation where we are going to increase our distribution.

And want tickles a little bit by surprise in over the summer was that we were somewhat faster than we anticipated in the original plans.

Thank you very much. Can I ask just one more in the guidance please?

Specifically on the cost side, you're still targeting the 1% to 3% OpEx reduction for 2019. And yet in your presentation you have mentioned some of the one-off factors that were boosting at 2018 performance like Pakistan in the whole and global wholesaler, those will be reversing.

You also have this year cost in Thailand annualizing and perhaps your other units will not be as beneficial to your OpEx reduction in 2019 as it was in 2018. So if you add it all up, the 1% to 3% feels a little bit ambitious.

So I was just wondering if you can comment on whether the 1% to 3% is so to speak kind just an automatic target that is the result of your full year plan of the 1% to 3% reductions or do you think it's actually quite a realistic bottom up target based on your 2019 projections or this just kind of a top down target in line with the overall ambitions please? Thank you.

Thanks for that. I assume you did not talk about the OpEx indication that we have given and not the EBITDA guidance.

So that's correct?

That's right, yeah.

Very good. So, no, there is there is not much automation behind this.

At the same time - so we have a calculation which is telling us how we are going to achieve this. At the same time, there is a range here and we have been as I said from two different angles over delivering the first two years, one was that the first year should be a flat year, but we took out 3.5% and the second year, we are all the way up to the top part of the range.

So maybe we will be a little bit lower than the top part of the range in 2019, but we have ambitious plans, we are continuing with the work. So there is no schematic way we are presenting this.

Maybe just add that Jørgen had a slide on, we are knowing do much more structural cost efficiencies than we were in first two years and you're going to use some examples on that. And I will say that the investments we have done in some of these structural initiatives in 2017 and 2018 is now starting to come true.

And maybe also from the management point of view, we have now been able to get an alignment with our business leaders, ultimate business units that we want to be, we want to modernize Telenor, we want to be a more lean Telenor and with that also comes a continuous efficiency. And in a way, it has helped us that we have all received our target the first two years because it does gives us little confidence that we're able to do this difficult stuff.

Thank you so much.

Next question, please.

Yeah, thanks so much. My question is on Thailand.

Obviously, part of at least part of the problem there seems to be sort of an adverse area regulatory behavior in recent times. I'm talking about this concession, extension issue, the remedy issue and also the sort of the very expensive license options and everything surrounding this.

So my question is with regard to your plan to turn around Thailand and back into growth, what further significant points of dependency off the regulator do you have or is it now a situation where you would say you know this is the bit that we actually need from the regulator there all in place and really it's now and asked to turn this around obviously depending on industry behavior but it's most of our - in the industry issues on the regulatory behavior, are there any particular things you still need from the regulator or that you see it coming on the horizon where you have a sort of similar risk could arise again in Thailand? Thank you.

No, I think you almost concluded yourself. I think we are through the difficulties and there dependency we had on both the regulator and the [Technical Difficulty], solid the license on 1,800, solid lease agreement with TOT on 2.1.

So the license and the spectrum situation it's now in our control. So Norway is very much up to us to make sure that we're able to return to growth.

Of course, we are also dependent on the competitive situation. But at least that is what we think we can best and what we will utilize our experience on.

And that's the reason why I will say that the base is now kind of set and base for and returning to growth. However, we don't know how long time it will take because we still are the midst of that network has not even with the regulatory, but has to do with in terms also the transitional on building the 2.3, identifying the network on 2.1 and living with lesser spectrum on 1,800 and duration of the time.

So that's why we want to keep dtac out of the guiding. But I am positive that we will be able to return to growth during the year.

And this is what even me and Jørgen are spending a lot of time on both Thailand and Myanmar to try to help us best as we can.

I see we have still three callers waiting, I think we have time for them all especially if you limit yourself to one question and one quick follow-up. May we have the next caller please?

Thank you very much. A question of the outlook for this year, please.

Particularly on the return to revenue growth, I think you partly alluded to it some of the factors have held you back this year, which will disappear automatically. Considering the headwinds in Thailand and Malaysia, I appreciate Thailand is outside of your guidance, but still would you say it's fair to say that the growth profile for this year, so for revenues and probably also just some of EBITDA would be skewed to what's the second half of the year, would you concur with that?

And just a quick follow-up on the covered decommissioning in Norway which obviously significant [indiscernible] because you told us you will come back with more info, but with certain undertaking specifically the covered decommissioning in Norway, which alluded to would take around four years, would that come with associated significantly additional OpEx in Norway just as an indication? Thank you.

I understand where you are coming from. I don't think we should start guiding you within a guidance, it becomes a little bit complex.

You could of course do the thinking that you are doing based on Thailand and Myanmar alone and say that they are struggling still in the fourth quarter and hence they would spend times speeding up. On the other hand, remember that we had fairly we have better comparable or easier comparable on Pakistan and Bangladesh in first half.

So it becomes a little bit you know skewed and I starting on guiding that Marianne will be giving hard time for afterwards, I shouldn't do that.

And that goes with Norway as well in the copper replacement. We will come back with more details on this before the summer.

Okay, thank you.

Next question please.

Thanks. Good morning, everyone.

I just had another follow-up question around the shareholder remuneration. I am just wondering why are you reluctant to, so you can move to new leverage target even from Scandinavian peers have done return to shareholders very quickly, so you wouldn't necessarily be the fast?

And then related to that, what was the ordinary dividends because you are buying shares, the ordinary dividend is increasing only single digit but due to ordinary dividend paid has been broadly stable for the last four year, what - does it seem to correspond with the increased visibility have around business? Thank you.

Yeah, I don't think we have much more comments on this now. We started 2017 committing to increasing year-on-year dividend.

At that point in time, the question was more would we be able to maintain the level that we had at that time and we are persistently done that. And we have done three times or this will be the third time we are buying back shares in this period over three years and it will be - and we have had one extraordinary dividend on top of that.

So that's where we are now. We hope is appreciated.

We have given some directions on the balance sheet which is, so those cater for an even transparency on the somewhat medium term perspectives on the extra parts. And then we will get back to this at next milestone, but this is where we are now.

Okay.

Hello, good morning. Thanks for the questions.

And I have two please. And the first one is you mentioned about the 2.5 billion to 3.5 billion OpEx savings, would you mind just clarify whether that is part of your 2019 to 2020 costs OpEx savings or I should expect it to be on top of the what is already been guided?

And also on your comments on modernization of Telenor and how should I think this would impact the CapEx envelope. And the second question is on your EBITDA assumptions, 1% to 3%, would you mind to just to let us know what are the key drivers that you have built into this expectation, for example, do you expect the potential range deduction of the telecom industry in Pakistan?

Thank you very much.

Okay, we might have to repeat part of the question, but the first one was - what was the first one?

Is what you talked about on the cost?

On the cost the NOK 2.5 billion to NOK 3.5 billion. Well you cannot just add it on top of anything else we have said about cost program.

On the other hand, you should also expect that this is continuing past 2020 and that a major part of this will come in the latter half of the time period, because it is of deep structural nature and the copper is obviously one example of that. So therefore, there will be a mix and the indication is that we are continuing with our modernization program and that we are strengthening - based on learning experience, we are strengthening the way we do it and giving it even more formal and rigid setup.

And then Marianne?

So, could you please repeat your second question?

Yes. Just wondering what are the key driver that you backed in to your 1% to 3% EBITDA assumptions, especially in Pakistan?

Well, again we are coming down from a higher EBITDA growth in 2018, but we are basing it on the same two elements as we have always done and that is of course how much can we assume from the cost program and what can we believe from the top line revenue. Remember also that in 2018, we had a significant effect from other units.

The consequence of both restructuring other units, group functions, global services and global expert environments plus what we have talked about before the fact that we are charging out more of the Group costs than before because we have a well-documented story on the services and the value for the business units. All that gave the result that other units has been one of the high performers in 2018 in the cost program.

That will not continue to the same level. We have come down significantly in cost in Group functions, we have - we are charging out a lot.

So that is perhaps the biggest changer on the EBITDA level.

Final question of the day, please.

Thanks very much. I am not sure you might push this question out later in the year, but a quick one on the Norwegian copper network.

And whether or not there were any regulatory applications or challenges that you need to consider and you might be able to share with us? Thank you.

Yeah, we'll come back to the details on that. There is already regulations on the fiber access in Norway, healthy access.

So - and of course we will not speculate in further regulations. But this is just based on the need we see now of modernizing our network.

It's an old copper network and we see that it's time for us to be a little more ambitious on how fast to replace that with other topper products.

Okay. Thank you.

Okay. And that was the final caller, the final question here today.

If there are any follow-up questions, Investor Relations is happy to take your questions later on. And now, for those of you media present here at Fornebu, there will be a separate session with Group CEO, Sigve Brekke and acting Head of the Telenor Norway in the - is it upstairs in the cafe area?

Yeah, [indiscernible] will take you there. For those attending the presentation on the conference call here today, thank you so much for attending and see you next quarter.