Telia Company AB (publ)

Jesper Wilgodt - IR Johan Dennelind - CEO Christian Luiga - CFO

Erik Pers - Danske Bank Thomas Heath - Handelsbanken Peter Nielsen - Kepler Cheuvreux Jakob Bluestone - Credit Suisse Roman Arbuzov - UBS Stefan Gauffin - Nordea Nick Lyall - SocGen Ulrich Rathe - Jefferies Terence Tsui - Morgan Stanley Allan Nichols - Morningstar Maurice Patrick - Barclays Georgios Ierodiaconou - Citi San Dhillon - RBC Capital Markets

All right, Good morning, everyone, and welcome to TeliaSonera's Q2 Report Presentation. I'm Jesper Wilgodt, Head of Investor Relations.

We have a little bit of a new set up today, we are presently in the lobby of TeliaSonera headquarters, but hopefully everything will work fine. And, not to make you too confused, we have the same line-up as usual.

I will -- we'll start to present Johan Dennelind, our CEO, and after that Christian Luiga, our CFO will come in. So please, Johan.

Thank you, Jesper. I am told to not to be too far away from the mic work fine here, excellent.

Welcome summer time and for those of you online there is also ice-cream here in the lobby I can see, so we will take you through quarterly report number two; the highlights for the quarter clearly is Norway where we are progressing much better than we thought on the integration of the Tele2 acquisition. We’re also pleased with the Swedish consumer and our investment programs upgrading Internet experience across our markets.

I’m also positive that we’re taking steps on our innovation agenda. So those are my highlights for the quarter which we will cover over the next couple of minutes.

We go to the numbers where clearly if you look at the reported side of life it looks pretty positive. Remember in that we’re helped here by ForEx in Eurasia mainly but also through the M&A activities in Norway; removing that we are slightly down on organic service revenue and also on EBITDA.

Cash flow for the quarter unusually high of course because of the SEK4.7 billion dividend that has arrived safely into the bank account of TeliaSonera. Looking at Norway then since it is the highlight of the quarter, starting with the operational side of life.

The market share now is around 40%. We have significantly upgraded our 4G network over the last nine months.

Remember that we started already back in the fall committing to broader network on 4G where we in June reached above 90% -- covering 90% of the Norwegian customers ahead of some of the bigger players in Norway I am glad to say and this is really the first time we feel that we have fantastic opportunity also on quality and coverage versus our main competitors, so that’s great news. We also have an organic service revenue growth in Norway of around 3% driven by consumer and we are committed to the 98% 4G coverage over the next 18-24 months or so.

So, on the operational side of life in Norway very good and it gets even better when you look into how we’re progressing with the acquisition and integration of the Tele2 business to create a leading challenger in the Norwegian markets. If we add the effects of M&A, you can see the service revenue reaching almost up to 2 billion for the quarter and EBITDA 7.30 and what is really pleasing is that the synergy takeout and the effects of the M&A activity is ahead of plan, so strong integration activities from the team, realizing synergy ahead of plan, raising our estimates for this year from around 300 that we talked about last quarter to about 700 already this year.

And then of course it impacts also the synergies that we talked about full run rate that we have previously around 800 with full effect in ’16, is now up to SEK1 billion full year ’16 and that is obviously very-very pleasing and we are glad to follow this progress further. So that’s Norway as a highlight.

Looking at the Swedish side and there are mix pictures and you know this, this is nothing different from before. We have a consumer market that is doing fairly well actually TV, broadband and mobile are all growing in service revenue organically, but we have a pressure on fixed telephony obviously not just consumer but also on the enterprise side.

And moving to enterprise side, we have a general pressure still and these are the same courses as we have talked about many times here in this setting before and we don’t see that easing over the next quarters. We are in a transformation phase bringing our corporate from old to new to future proof solutions and it takes time.

There are some light in the tunnel in the SoHo/SME segments where we see stabilizing trends, where we also have some exciting new launches that we had in Q2 IPB, IP based cloud services for SME and SoHo is taking off well and also some innovation initiatives that we hoped to take off well where we actually have a music also for companies being any interesting proposition launched in the quarter. So Sweden I should also say, sorry I’ll stay one more minute on Sweden, remember we had a big discussion in Q1 on the earnings, the impacts of our investments in the marketing activities and the mix of the acquisition cost on subsidies and commissions.

We are working with that to optimize it we’re not fully there yet but we have an improving trend on the way we’re investing into the market and the hardware business obviously is very important part to get right because it has a margin dilutive impact but we are working our way to improvements on the investment side in Sweden so better than last quarter. Then we have -- we move to Eurasia and it’s a different type of picture, we have some really good news but we also have some not so good news and that has been the case in the region over the last quarters.

Remember that we have a very challenging macro environment in Eurasia impacted from energy prices and FX and the high uncertainty and it is trickling down into the consumer behavior and consumer spending, both on consumer enterprise. Then we have the very rough competitive situation I’ll come back to one market specifically in the next slide which is Kazakhstan.

But apart from that, it is an okay stabilization and we are adjusting with the cost to try to maintain the EBITDA level for the year. We are however for the year seeing an increased risk and increased uncertainty in the Eurasian setting.

But I’ll come back to that during the outlook discussion with Christian. Just a few words first on Nepal, you know we had a devastating earthquake in the quarter and we had a lot of efforts going on from here but mainly in Nepal where we had heroic efforts from our local team and also from our partners to stabilize the situation, to get all the people safe, to get the network up and running to support the rescue operations and then also to make sure that the business in itself wasn’t badly impacted.

And I am glad to say that we have managed on all those accounts and also seen that the numbers are holding up in Nepal and we have taken some non-recurring costs in the quarter as well which Christian will take you through later on. Then let me move to Kazakhstan which is clearly sticking out or standing out in the quarter as a negative if you look at it face value and it is.

You can’t ignore the results which is not very pleasing to say the least but you have to look further to what’s actually happening in Kazakhstan beyond the macro aspects we have a price war situation and that has been going on for the last two-three quarters but it intensified in the second quarter and we could no longer just be cautiously working our way back in the market we have to launch some aggressive offers ourselves. This is just to give you an example what you face in Kazakhstan you get a lot of -- actually more data, you get free calls, free SMSs already in Kazakhstan and this is still not the most aggressive pack because we are market leader over 50% market share, over 50% margins, but we need to meet the competition with offers and this is the prepaid brand in the market which is call Activ.

We’re seeing some good pick up on this Hello Kazakhstan proposition and this is one of the things that has to work to get Kazakhstan back to growth eventually. But remember we’re still in double-digit negative territory for the quarter and that’s while maintaining an EBITDA margin of about 50%.

So under the circumstances the team is doing fairly well and we have high hopes now that the new team in place will pick up from here. A couple of words on our strategic agenda, you’ve seen this it was launched in the Capital Markets Day as almost a year ago and we’re continuing to deliver on this.

We have a couple of proof points in the quarter. Obviously, pleasing to see that the acquisition in Norway is helping us to strengthen our core in the Nordic Baltics, working a lot on the converged propositions tested already in Finland interesting things going on there.

And also on the competitive operations we are clearly investing our way into a better future here with which I’ll come back to as well. And then we are exploring opportunities close to the core and we told you this before and we are working on various partnerships across these various areas.

And in the quarter it was quite heavy on that side when we had some music initiatives that is portrayed here today and also displayed on this slide and before I talk a little bit about the initiatives that we have this is an area where our customers love music, be it consumer or enterprises because enterprises are made up by consumers. And we had a situation where 4G is leading the way Internet traffic is booming 4G penetration is growing rapidly and that is opening up the completely different behavior among our customers.

And we need to stay relevant in this field and we’re doing a lot on our own but we’re also now venturing into partnerships where we find it interesting. Soundtrack Your Brand is something we do with the SMEs, Spotify is a partnership that we’ve taken to the next level from the thin commercial partnership to more strategic deeper partnership where we also invested to show our commitment and believe also in our business model.

And then lastly sound industries we announced I think it was like nine months ago and at the time we didn’t know of course all about what’s going to come, but yesterday there was a very interesting launch where you have this new music smartphone launched in London and we have exclusivity on this one in our markets and you can try out with Peter over there later. It is one attempt to see if we can stay innovative and relative to their customer base supporting and working with partners.

Then to some of the heavy lifting that is going on into our core markets, Sweden and Finland. The transformation agenda is prerequisite for making Telia Sweden, Telia Finland into more profitable operations going forward based on much better customer experience.

And these are some of the message that we have put out to reduce complexity, improve customer experience and then eventually also improve our cost base. So this is a program that is investing 2 billion over two years to save 2 billion on OpEx going full speed into 18 and we are broadly speaking on track.

We have invested about 300 million in the first half and this will be gradually stepped up to realize the cost savings as we have lined it up in the Capital Market Day. So I would summarize this quarter with fairly stable executing on our strategic priorities and have a lot more to do in order to make our operations competitive across the board.

So Christian with that I would leave it you to take us to the numbers and I will be back for Q&A.

Thank you very much. Hello everyone welcome and welcome on the phone and welcome here in Stockholm.

And I will take you through the financial part and a little bit more of the presentation. So we have a quite solid quarter I think and it is stable in the base with bill revenue in the Nordics very stable and I will come back to that.

Revenue growth is up 8% and the profit is up 4% [ph] very much depending on the Forex exchange of course and cash flow is very much linked to the dividend we get from Turkcell our associated company. If we start to look at the revenue growth and the currency impact we see that the revenue is up 1.5% including our acquisition in Norway.

The acquisition itself impact by 2.8 percentage points. The currency impact is significant and it's from a weakening Swedish krona therefore you can see a lot of currency like the Nepalese rupee and Kazakh tenge very strong on this picture.

But also we have to remember the biggest base is in euro and euro is up 2.8% towards Swedish krona and has a good impact also on the base. If we then go to the different elements of the revenue, billed revenue is down slightly in the quarter.

This is related to Eurasia and primarily Kazakhstan. Both Sweden and Europe is up in the quarter and if we look at the different parts of that in the bill revenue and you can see that Finland is for example up 1.7% that is in a quite stable customer base but with some uplift from price increases.

That will continue into the next quarter, we have brought some price increases in Finland into the equation. But the uplift and upgrade of the impact will coming quarter three.

The interconnect is flat but we have two strong growth companies in Uzbekistan and Nepal and there interconnect is going up by volume. In Kazakhstan, Finland, Norway and Denmark we have regulatory impact that is negative on the contrary.

Together it's at flattish position and on fixed it continues to be a decline primarily Sweden and Finland and these are the main reason also why we are having some struggle with the profitability in these two entities. Equipment sales continues to grow it's on the lower growth rate in Sweden in the quarter and that is from the improved optimization of our way working with the cost related to this.

We are not there yet as Johan have said but we have taken a good step and in Europe it has increased, one reason for the increase in Europe is Spain. Last year we have a quite weak quarter and I will come back to that shortly.

The EBITDA is up 4% in reported and this is of course an effect of the currencies. The acquisition in Norway compensates for the negative growth in local organic.

So on net it's flattish position. The different parts here I like to go into the organic is firstly Kazakhstan primarily driven by the lower service revenue.

But also little bit higher cost on that service revenue relationship wise and that’s on the off net minutes that we have added in our packages like our competitors have done as well. If we then look at Spain we have a higher cost for taking customer in Spain in this quarter compare to last year, I’ll come back to that in a second and then we have a decline in fixed in Sweden and in Finland we also have a decline in fixed but also an increased ambition in customer operation and that we talked about already last quarter.

A short recap then on Spain, last year quarter one we had a dramatic loss huge intake of customers high cost per customer. We pulled the breaks March-April and we then bounced back quite heavily both on very low cost for marketing and subs and then a high profitability.

This year we have a much more stable and even subscription intake but also profitability in Spain and that’s the reason why the comparisons become a little bit odd here. If we look at Sweden in quarter one, we talked about three elements that impacted the profitability; one was a small part which was stores; the other one was the go to market cost; and the third one was the fixed.

In this quarter we remained with the fixed and on top of that we have a small impact from pension cost that we have a onetime reversal in 2014 from recalculating our big pension fund base that we had, so it was small comparison difference but it’s important also to understand that when you look at it going forward. Finland we talked about and then there we have a heavier investment this year and the most important part of the Finnish game will be to see that we can handle the market and continue to grow our revenue base.

CapEx we have continued to invest according to our strategy, our strategy is to work with connectivity -- the best connectivity, superior connectivity and convergence this means that we will invest over these two years more than we normally do, we have said we will invest to transform and we will invest to grow. The transformation is small part of this Johan talked about 300 million over these two quarters.

On quarter by quarter we have still increased with 1 billion all three regions are behind this increase. If I start with Sweden it’s network related and fiber related 60% is 4G and the fiber in this quarter and all of the increase comes from those two elements as well.

In Europe, Finland and Norway stands for the biggest increase. In Finland we have an ambition this year to populate 2,000 of our sites with 4G and we have 93% coverage already in Finland.

In Norway we have built out 10 sites per day new sites in our ambition to be a real threat in the market to our competitors and be very strong player in Norway. I would claim we have the best 4G network in Norway today.

If we look at Nordic and Baltics together, we have over 90% coverage today in all countries except for Latvia. The Eurasian impact comes from Uzbekistan, Nepal and Azerbaijan.

And you may wonder why is not Kazakhstan part of that increase. We did quite high uplift in Kazakhstan in quarter four on CapEx and that is something we bring into this year.

The other difference in Eurasia is that we decided this year to be quite heavy in the beginning of the year and still remain with some option to be cautious during the rest of the year if we need to for example for macro reasons. On the fiber in Sweden if we just take that for a second before we leave, we have an ambition that we have increased during the year.

So now we have an ambition of 55,000 SDUs during the year. We have sold all of them already so now it’s just to deliver before the end of the year.

And the impact on revenue will be higher in the second half compared to the first half. Free cash flow looking at the picture you will see one significant item and which is the cash flow coming from the dividend in Turkcell, it comes back at the same 4.7 billion and that is coming through net of taxes paid already.

We should remember also that we have a 2 billion coming pretty much from Russia soon on our late payment of the shares we sold in MegaFon. And then cash CapEx we just talked about has increased and naturally it will also come through the cash flow.

The net debt is flat compared to last year around 68 billion, 1.91 net debt to EBITDA. The impact here as well is that we see an M&A activity in the last 12 months, is the Norwegian acquisition, its Spotify and then we have some smaller acquisitions coming through.

And that will be balanced down in this picture with the Turkcell dividend and gives us an otherwise quite recognized picture. We paid out SEK3 in quarter two per share which evens out at SEK13 billion.

Just then stopping at our full year forecast and outlook, we remain with the same outlook as last quarter. The uncertainty in Eurasia has increased.

The biggest impact on EBITDA will come from Sweden in the change between the first-half year and the second-half year and there I remind you, it will be price increases, it is cost procurement we have work with and it is also the fiber uplift. We have a target of at least SEK3 for next year as well and we do that with also keeping a solid of balance sheet as today we have no changes in our rating which is Standard & Poor’s A minus stable outlook.

That’s all.

Now I think it's time to open up for some questions here.

Firstly, I think you did surprise a lot of observers this quarter by investing in Spotify. Are you willing to tell us how much you're prepared to set aside for such an investment to grow -- to spur innovation, so to speak?

Secondly, in Kazakhstan what do you think is required to break the vicious circle you have now there with the price war in the market? And then, thirdly, just on a number, how many fiber instalments were invoiced in Q2 in Sweden, please?

So let me take on two and we take number three, on the investments and partnerships, we’re not predicting any more of that type in the near-term. But we also don’t earmark any specific funds for investments at this point of time.

As you know this is the core part of our strategy and taking steps into adjacencies which we believe will benefit our core and this is what is happening out in the world today and we need to open to what’s happening with our consumer behavior across and we do think that we believe are value creative for TeliaSonera going forward. So we’ll speak about the ones that we will do, but not the ones that we plan to do.

On the Kazakhstan side, I think it is -- a lot of things that have to -- we need to move through some more turbulence, I think, because there is a price war going on and in the price war the market leader with superior margins will suffer more than the challengers, and that we’ve seen. Now we’re in the market with a proposition that is aggressive, but not the most aggressive and this is a trick to balance, and not try to fuel more into the price war.

This proposition that I showed you is about SEK70 and for all that free calls, free SMS and a lot of data, more data than you get in many other markets in a country where you don’t have the same customer experience. So this is a tricky balance to get right, we shouldn’t expect the short-term turnaround in that.

Christian?

Yes on connections on the fiber side we had roughly 20,000 on the SDU side and around 15,000 on the MDU together with our communications operator.

Just wanted to confirm your guidance for the full year, you're down 4% now but you still think you’ll be flat and you exclude the synergies from Norway. I just wanted to confirm that, or Norway somehow included in the full year guidance?

Confirmed.

Okay, it’s a big pick up?

Yes.

Could you just say maybe a little bit how you said the three different things that Sweden will be the main driver for the turnaround, could you just say roughly how much should we expect from each?

No, I can’t go into that. But I can give you some examples of cost activities that we do.

We do both on resource cost, but also done a lot of procurement activities in the beginning of this year that will start to actually have an impact. For example, we did a repurchase of all of our field maintenance, we haven’t done a big thing of it, but we did that in quarter -- end of last year in quarter one and that will have an impact itself by 80 million on Sweden alone between the first and second half.

So these kind of activities we have done and we haven’t talked so much about them.

Thomas Heath with Handelsbanken. Follow-up first on guidance on Sweden there, you show some charts with B2C and B2B it looks like the comparables are getting tougher if anything particularly on the business-to-business side.

So whilst you're making this picked up it’s sort of the hardest time perhaps, so should we understand this to be mainly on the cost side or is it consumers that going to do all the work or if not has something materially changed in the B2B segment?

I think you should not expect a turnaround in B2B as I said, you should see some uplift in consumer and then the cost side that Christian talked about, are the three pieces to watch.

And consumers both price and offering work that we have done on the mobile side for those on the fiber side.

That’s helpful. Thank you.

Whilst I’ve got the mic I’ll throw in a few more. On Norway, can you say anything about the market development this quarter?

We saw ICE.net launch -- or soft launch, perhaps. Have you seen any sort of impact from them yet and do you expect any sort of changes in the next part of the year.

And then thirdly on Finland your peer allies are reported pretty strong numbers in Finland yesterday and there is quite a difference meanwhile we’re seeing a quite a fast 4G pick-up and 4G prices are at the premium. So what’s happening here?

Why isn't TeliaSonera benefiting to the same level? Thank you.

Thanks. Norway first, market dynamics, I think where three payer markets on the network side and M&L side and that we’ll continue to heat up, I think you will see in some of it already.

Actually if you look through Q1, Q2 we have lost a bit of customers in Q1, picked it up back in Q2 and being quite active in the market which is seen in the EBITDA organic drop in Q2. But that is to get back to winning on all the brands which are now positive, all brands are positive subscriber intake in Q2 that was not the case Q1.

So if there was something as an effect of all the acquisition maybe we would have gone a little bit of the market in Q4-Q1, we’re back in the market in Q2. It hasn’t changed the dynamics drastically but we expect it to increase, but we’re ready for that competition now that’s the big difference from before.

In the Finish side, market share wise on subscribers I think we’re holding fairly well on both B2C, B2B. Clearly we’re not monetizing as well as one of our competitor is doing and that’s a problem and that we need to fix.

We have the situation in Finland where we have tried to move the market to more -- better monetizing models for data, but that is not working. So we just need to get in the market down on the same terms and get back to winning also monetizing and that’s the focus of the team.

Remembering also that we have a big transformation ongoing where customer experience is improving as we move forward and also do watch the converged propositions that are launched in Finland, which, I think will also be good opportunity.

Thank you.

Right. Maybe we should move on to the conference call.

Operator could you please open the line.

Firstly, if I may just return to the outlook, just more specifically on Sweden. Christian's comments here about the bulk coming from recovering Sweden in the second half.

Does this mean that we should anticipate at least a flat EBITDA in Sweden for this year versus last year? If you would comment a bit, that would be much appreciated.

And secondly, may I just ask? The increased synergies you found in Norway, where have they come from?

I would assume it would be internal cost synergies, given that you should know the synergies from the traffic from Tele2. But if you could elaborate a bit, that would also be useful.

And thirdly, can I just ask Johan, you told us for some time that regarding Spain Yoigo you were waiting for the Orange/Jazztel remedies, as obviously that might have an impact on your August position. To the best of my knowledge, you haven't commented on this yet.

Could you give us any comments on how you felt about the remedies? And has that supported Yoigo, or neutral, or anything here would be appreciated.

Thank you.

Peter, thank you. I’ll work by way from the bottom to the top where Christian will take the first one.

Yoigo as you’ve seen in the quarter we continue to win against the big three, market share-wise. We have a model that works now very good data proposition but we haven’t solved our long-term strategic problem where we had and we’ve talked about it, where we had our eyes on the remedy discussion going on where we were not very excited about what was offered from Jazztel and Orange and we were very clear on that, that was not something that we believe would be value creative in short mid-term for Yoigo and that’s why we’re not part of that for the moment.

On the Norway side synergies yes, they’re realizing faster across the board so I don’t want to pick out any specific one that is going better than the others. We are faster on the integration, network, cost take out, but also on the brand considerations and upgrading the customer experience.

So it’s across the board you have synergies but if I should summarize it one way, it’s faster execution than expected.

Okay. On Sweden, Peter the comps will be positive in second half for Sweden compared to negative in the first half but I will not go into giving you guidance if it will be flat year-on-year.

Okay. Thank you very much.

I've got one question just to follow on, on the guidance issue. Christian, you mentioned that there are three components to the better second-half margin in Sweden; price hikes, cost procurement and fiber uplift.

Just on the fiber uplift, by that, do you mean more ARPU coming from more people taking fiber? Or do you mean more installation fees from one-time connections?

And then, maybe related to that. Can you maybe just remind us what some of those price hikes are, if any of them have been announced?

Thank you.

It's a good point that was actually seeing to buy when I talk before and it's both of course. So we have a bigger installed base that will have then higher ARPU in the second half and then on top of that we have a €2,000 onetime charge and that we also will have an impact of in the second half.

Are there any other price moves you can share with us?

We can say like this in quarter two we have increased pricing on TV. And first off which is on related to the triple play of course with fiber.

Also in MDU side we have done some price increases in the quarter and then [Audio gap] other than that we have done on mobile side first of July for example we have increase the price in our lowest 0.5 gigabytes offering to with from 199 to 249. So we have price increases a little bit all over the board and they will have an impact of course in the second half.

My questions relates to Sweden mobile and particularly the consumer market. So I understand that your growth has slowed down somewhat from plus 6% to plus 4.25%.

So I just wanted to hear your thoughts in terms of do you think this is a market as a whole has slowed down somewhat? Or do you think you perhaps may have lost some share in the quarter in the consumer market?

Also, regarding the promotions and the double data environment, you were obviously very keen to get out of this double data promotion mode, this hasn't proven to be possible. So given this, how would you characterize your overall competitive environment in Sweden mobile currently, and where do you think we're going to go in terms of the rest of 2015?

Also finally, related to mobile if I may, just in terms of the additional go-to-market cost that you were talking about for Q1, which was SEK180 million, were there any costs of this nature this quarter? And then do you expect any in terms of 3Q or have you stopped spending aggressively on the various promotions that you were doing up until the end of May as I understand?

I think I lost all of your question, was a bit weak on the line there. But Sweden mobile yes we have done split to consumer in enterprise where consumer is still north of 4% growth which is good, not great and there are probably going to be numbers high than that from our competitors we have seen one.

So in that sense we shouldn’t be happy. But remembering that we are trying to take step-by-step approach here to monetize -- to optimize the monetizing not the too eager to jump into flat rates where it looks like people are moving or operates are moving.

We're still creating some resistance to that as we monetize moderately I would call it at this point of time. So I think that answered actually both your first and your second point.

The third one I didn’t fully understand but I think it's about the SAC in Sweden and I'm not going to go to do details of exactly how much we are trimming on what line, I can just say that we have strong focus on our SAC engine and both on retention engine we're optimizing those investments across the board. But remembering also that the comparables are slightly better this quarter than Q1, equipment sales and absolute terms are about the same level.

So this is more about trimming it even more going into second half so you will see more of that.

Okay. Can I just follow up with a very quick question to Christian please?

In terms of working capital, how much was Kazakhstan handsets please?

Sorry could you repeat please.

In terms of the [Audio Gap] working capital outflow this quarter, how much was Kazakhstan handsets?

Kazakhstan handsets weren't that big actually in this quarter because Kazakhstan is about 300 million. But in total we did actually most of that purchase in quarter one.

And so but it has an impact. But I think you need to look also a little bit on the cash flow over two quarter or even sometimes more because we have a big shift in payment terms depending on the year.

If it comes on the first day of the month or if it comes on the last day of the month. And we have a huge customer base the pay all in once, so the first half year is very similar to last first half year and it's quite flattish.

It's a little less than I want it to be but it is still in line where we usually end up.

Let’s move on could you please limit your questions to maximum two questions. Maybe we should move over here to the floor, we have one question here.

Stefan Gauffin, Nordea. One of the larger deviations this quarter was seen in Nepal on EBITDA and here you write in the report that you benefited from internationals both voice and data traffic.

Can you quantify the impact from higher international traffic this quarter and has this continued into Q3 or has this stabilized to more normal level?

So Nepal, it’s a mixed emotions quarter as I said in my presentation but if you take the pure financial view on it, there has been a lot of traffic obviously in Nepal both incoming, but also domestic. But the majority part of the increase is coming from the international incoming.

But we’re seeing a strong uplift also on domestic traffic as a result of lot of the communication needs and therefore you shouldn’t expect the same amount going forward.

I’d just add that, I think one of the benefits we had is, that we had a team that was extremely great in making sure the network worked and that gave us possibility to support and even though we actually gave away some free minutes and data we have this uplift.

Should we now go back to the conference call again operator?

It’s Nick from SocGen, could I ask two please? Just firstly you've not mentioned anything about quad play so far and you were talking a little bit more about the possibility of it in the second half.

Firstly, can you just confirm that you're still on track that you think for a second half quad play launch, are all the IT systems ready, et cetera? And also does that have any bearing in terms of marketing and some of the rebound that you're talking about in Sweden, just in terms of general cost?

Is that included in guidance, or will that have to be something separate? And then secondly on Eurasian assets, you've talked a lot about the uncertainty.

Could you just mention, would it be the right time to think about selling some of the Eurasian assets, for example, to Turkcell via Fintur, to sell on that asset, or is it the wrong time given weakness in 4X or others? Could you just tell us how you're thinking about Eurasia please?

Thank you.

The quad play question I think I haven’t given you any timeline for any launch, I said that we’re working hard on understanding how we could get value -- more value out of combining products across our markets where we have the capabilities. And as I said, we are starting the most -- the furthest we have on those plans is in Finland.

In Sweden we’re taking step-by-step and getting our act together internally first and the system wise as you pointed out. And very-very particular about not discounting too early on any of the product mixes.

So we’ll get back to it as we move along. On the Eurasian side, clearly, so we’ve been talking about its macro situation that is difficult, but that happens in many places so you just need to adjust, and get your act together and then we have a high competitive pressure which we’re working to mitigate and that’s our focus right now to take Eurasia to the next level.

We have thought highlighted that some of the markets are very difficult specifically Uzbekistan where we have not just normal issues but extraordinary issues with repatriation and ongoing investigations. So, we’re not taking it further than that at the moment.

Two questions. The first one is, maybe to Christian, about the additional element of the guidance.

You say you're reiterating guidance, but you're also making this comment in conjunction with the guidance about increased risk in Eurasia. So I'm just wondering whether, when you think back to the time when you initially issued the full year guidance, whether it's a question here of some bits of the Group maybe doing worse or having higher risk to the downside while others actually do better and therefore overall you feel fairly confident with the guidance as you did when you issued it?

Or, whether there's a scenario here where you increasingly see the guidance as a stretched goal and you're highlighting this to the market with this comment about Eurasia risk? That would be my first question, please.

The second on is on Swedish margin. Now you've given some indications here, how it is going to progress.

But I'm wondering whether in the big picture you do have ambitions or you see the possibility of actually returning to prior margin levels in Sweden? Or whether what is happening and has been happening there, ultimately, resets the attainable margin?

So in other words, I'm trying to get through what is transitory here and what is more structure. Whether you have any color on that?

Thank you very much.

Thank you, Ulrich let me start from the end and talk about little bit Sweden. I think we are investing heavily and we’re going through the transformation in Sweden, and we have clearly said that not only for the group but also the Sweden that investment and that transformation should lead to higher EBITDA.

We are more focused on growing the EBITDA and that therefore also what is going to help us on the cash flow overtime and there is a two-year period where we will work hard on this transformation items and that will impact the speed of how we recover, but will also be a critical factor in recovering. On the guidance and Eurasia, we have an increased uncertainty.

I think it's easy to see how hard it is to predict in the last two quarters with the changes in Kazakhstan and Nepal and other countries and there is as you say clearly both upsides and downsides in the forecast that could come in. And therefore it's not a time to change a guidance, but it is time to clearly state that this uncertainties is to keep track off.

We see better a Nepal than we probably all expected, we have tough times in Kazakhstan, very unclear how the competitive market will develop. In Uzbekistan we have four players and they haven’t really made a move, but they can do it quite quickly and we have not the least, a macro environment which we don’t know the effects of yet.

So I think all those things together is making it difficult.

But the question really was at the Group level. I understand the situation in Eurasia.

I'm really asking you what the level of confidence on the Group level, whether ultimately there are bits and pieces moving in the Group elsewhere that make you quite comfortable or the same degree of confidence that you had at the beginning of the year? Or whether really there is an incremental pressure because of Eurasia, as you're highlighting here?

Look we’re flagging high risk and higher uncertainty, but we’re sticking to the guidance. Then implicitly what you're lining out is that we need to compensate for that somewhere else which we believe we can do and that’s what it is with 15 direct markets and that you operate in, some will go better, some will go worst and we are making judgment on a Group level that we did earlier this year and we’re still sticking to that.

I had a question on Uzbekistan. You mentioned in the press release the fourth entrance, I just wondered if you can share with us whether you have seen any impacts from them on your customer base and whether you've had to respond in any way.

And then secondly, just on Denmark. I'm just interested on your latest thoughts around the regulatory process.

Do you remain optimistic that the transaction still gets approved? Thank you.

Last one is yes, we’re working with constructive dialogue with Telenor and the EU commission and commissioner and we’re progressing pretty much according to expectations. This is the deal that it will be on the scrutiny, we expected that and we still sticking to second half as the prediction.

On Uzbekistan, Christian mentioned that there was now four players and then the question is how much impact have they actually had and you’ll probably say very low so far. But of course we’ll make their way into the market over the next quarters, but fourth one is really just presently and part of the capital where the MTS is broader already.

But I wouldn't label Uzbekistan as a market where we see price for as this point. However you have seen the growth come down, but that’s more on the natural progression of the very high comparables.

I was just wondering on -- you received the dividend from Turkcell. Is that a sign of more cooperation amongst the various owners or are there still issues with, ultimately, control over Turkcell?

Thank you.

No, that’s absolutely an evidence of clear cooperation where we work together to achieve the dividend. What happened in late Q1 and then we moved all the uncertainty in Q2 with actually cash being paid.

However I like to emphasize the fact that the major problems are still unsolved, we’re not on the board with 38% shareholding, we’re not on the board, we’re not happy about that, we’re monitoring this from all angles that we can and not being on the board where you present in Turkey, where you engage with the company as a large investor, but we want to get on the board. And then that requires solution on the top level where there is still a lot of disputes ongoing.

But I think as I have said previously on these discussions that we have much better climate when we discuss these issues.

It's Maurice from Barclays. A quick one on Swedish markets, on B2B side.

You did say you saw some stabilizing in the SoHo/SME trends due to IP -- i-based cloud, enterprise clearly tougher. Is that more around just the timing of which enterprise customers react to your larger customers or just much lower in terms of their upgrade cycles or is it more structural?

Just as a quick follow-up on the Swedish side. You talked about price increases, do you think there's scope for bigger price increases in the future, given the clear utility you have from fiber and fixed line and video, more pricing power in the marketplace?

Thank you.

Hi, Maurice. Thanks.

Last one I think that’s what we will test segment-by-segment, quarter-by-quarter. We believe so, I believe so that we should be able to price up on the service where there are huge demand, you should be able to price up, but that’s the commercial excellence that we need we’re working hard on that.

On the B2B side you’re right, this is cyclical. This goes in contracts two, three, four or five year contract even getting shorter and being renegotiated more often and that’s where we take the opportunity to take to step with the customers into the future which requires a different pricing model normally especially for the customers coming from old technology, fixed PSTN technologies, going into IP-based solutions and services that’s the nature of the Swedish market and there is a bit of lag among the larger corporate.

The good news is though we’re keeping market share in terms of subscribers and the lines as such but we re-pricing in aspects.

I was wondering if we could go back to the guidance. I know earlier you were asked about Sweden and whether it could grow in the second half of the year.

In Europe, which is a bit more predictable than Eurasia, could you perhaps give us a similar indication, whether you think EBITDA growth is possible in the second half? And if you could comment perhaps on some of the smaller markets.

I know you commented on Finland and Norway, but perhaps on Denmark and Spain which tend to be really volatile because of the lower margins that they deliver, whether you would see drivers of better or worse profitability in the second half? Thank you.

I’ll make it, I will not be fully compliant with your question here, but I’ll try to guide you little bit, but if we start to Spain then in the south as I said we have much more even and stable profitability we’re working this year and that will continue and I’d say we feel quite comfortable how to switch on and off the acquisition cost and work with profit in that market keeping our 7% market share. Also we have a small uplift which is possibly we haven’t talked about in both Lithuania and Latvia.

Its small countries, but it is actually helping and they also have a positive trend after many, many years of negative growth and cost cutting. And Finland we talked about positive build revenues suffering from fixed.

Tough journey in transformation and then ambition in service operation or customer operation, but I like to guide you a little bit on looking at the comps instead asking me about the second half profitability for these entities.

A couple of questions, just firstly on Sweden. Obviously, Tele2 doubled its data bundles a few months ago.

Everyone was concerned -- all competitors were concerned that they’re basically front-loading the growth opportunity in Swedish mobile. Tele2 started talking about a more difficult upselling situation in Sweden at the moment, but you're expecting an uplift in B2C mobile.

Can you help us understand a little better just what's going on here? How do you see the growth and upselling outlook in Swedish mobile trending, and perhaps more on a two to three-year view as well in light of that?

Then second question was on fiber rollouts. We've heard from other companies about them using other -- or new technologies to reduce the cost of ultrafast broadband.

KPN, for example, has found it has multiple copper lines into each house and can actually use super vectoring to deliver 300 megabytes per second plus. Do you have any opportunities here or are your working on anything here to reduce the cost or increase the returns of your ultrafast broadband rollout?

Thank you.

Thanks. The consumer mobile again then and I think you are very spot on your question and I answered part of it already that we’re working on the step wise approach to try to monetize, trying to stay away from going all out in the almost flat rates that are out there from some operators and once you’ve gone flat rate, yes there is now way back and once you take a step wise approach you can still then gradually monetize and that has been our strategy and is our strategy and if we change that we will talk about it.

So therefore when we say we see upsize, we see upsize and on the fiber side.

On the fiber side, it’s a good question. We do also experiment on different kind of production methods and we need to balance it long-term -- to be very long term we don’t want to rebuild this after three-four years.

In same time there is areas where it’s too expensive actually to go in with fiber right now and there we do experiments with other kind of mix between traditional copper and fiber and such as also KPN is doing. I know their way of doing it as well.

But then also even more important actually in the typical base fiber build out we’re doing there we really are also experimenting getting that cost down with certain machines and certain ways of working and making sure we build the right way from the beginning and not have to come back.

I think we have time for one final question here. So please operator.

A lot of the questions have been answered already, I guess. Could you comment on the new Turkcell CEO?

He's changing strategy at the company very publicly, telling investors that he wants to leverage up Turkcell to the best part of 4 times and internationally expand. As a very large shareholder, as you mentioned, what do you think of that as a strategy?

Cheers.

We are very clear to Turkcell the way we can be without being on the board. We express our views in investor relations settings to the management of Turkcell and to the Chairman of Turkcell.

Then we meet of course regularly in various forms CEO to CEO. So we will have to monitor and see what they do and when they do things that we don’t like we'll speak about it from our large shareholder point of view.

With that I think we conclude.

Thank you all, to the once in the rooms there is also Helene here, new Swedish CEO and Erik Hallberg, I think you saw around corners somewhere there head in the regions. So please feel free to ask more questions throughout.

Thank you.