Telia Company AB (publ)

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

Andreas Joelsson - DNB Stefan Gauffin - Nordea Lena Österberg - Carnegie Stefan Wård - Swedbank Johanna Ahlqvist - SEB Equity Terence Tsui - Morgan Stanley Georgios Ierodiaconou - Citi Ulrich Rathe - Jefferies Peter Nielsen - Kepler Cheuvreux Roman Arbuzov - UBS Henrik Herbst - Credit Suisse Nick Lyall - SocGen San Dhillon - RBC Capital Markets Sunil Patel - Merrill Lynch Allan Nichols - Morningstar

All right, Good morning, everyone, and welcome to TeliaSonera's Q3 Presentation. I'm Jesper Wilgodt, Head of Investor Relations.

With me today to present I have our CEO, Johan Dennelind, and our CFO Christian Luigawill, and after that there will be some time for questions. We intend to close this session within one hour.

So by that, I would like to hand over to Johan, please.

Thank you, Jesper and good morning everyone here and online. Let me see which camera, I'm in, that one, excellent.

And I'll take you through the Q3 results today. But before I start, let me make a couple of comments on the recent developments and recent noise that we've had regarding our accounting standards.

We have issued a separate statement today, clarifying some of those allegations that we would have some misstatements in our accounts. We do not.

We have today gone through in more detail than on Thursday. How we follow the IFRS and how we follow the Swedish accounting standards.

So there are no misstatements and that's signed off by our auditor Deloitte. I'd also like to point out that there are no at this point in time claims or indications of claims as is stated or the amounts from the American authorities or any other authorities relating to the investigations ongoing.

And therefore, you cannot and we cannot under IFRS note that in our books. So those statements are made today as a separate press release, so please have a look there.

And of course, anyone is free to have a view on the valuation of TeliaSonera, but when you go through the accounting principles and standards then we have to make the facts correct, and that we have done today. Now I hope we can speak about Q3, and I will take you through some highlights.

First of all, on the reported side, we have an organic still negative [0.5%] compared to last quarter, if you to remember, it was about 1.3% negative. Of course, the reported numbers were stronger.

Thanks to both our M&A activities mainly in Norway, but also to some extent supported by currency tailwind. Same on EBITDA side, just reminding you, last quarter was minus 4% organic, and we're getting close to the zero mark on EBITDA.

We have an issue in Kazakhstan, which I'll get back to, which of course, weighs quite heavily on the group numbers at this time. EPS supported by the associates, so a pretty strong EPS reported number for the quarter.

Let me move then into some snapshots on the region. And for those of you following us closely, we've talked about improving trends in Europe and in Sweden, and we are showing that in Q3.

Sweden up 3.2% from minus 5% last quarter and minus 10% in quarter one. Europe also coming from minus 7.5% in Q2 and now up to 1.2% growth on EBITDA.

So that is according to our expectation and which we have been talking about here previously in the year. What is not according to our expectations is the drop in Eurasia, and this is mainly driven by Kazakhstan, and I will speak about Kazakhstan separately.

But all in all core operations delivering in accordance with our expectations or slightly better. So let's have a look at Sweden, which shows strength.

And it doesn't just show strength in one segment or one product area, it shows strength pretty much across the board. So let me speak about business to consumer.

Our consumer side is strong, showing almost 5% growth. It is driven by TV, it is drive by mobile, and it's driven by broadband.

Of course, we have an all-time high on our fiber deployments. We're passing 50,000 households in Q3 alone with about 60% up Kcell or connected rate on those passed homes, which is also a very strong number.

And it shows the data demand that we have out there, and we are delivering as much as we possibly can. We're also showing strength in the Mobile segment on the consumer side, where we see the uptake on our bundles.

We have priced up some of our packages from SEK 199 to SEK 229, and we've also seen a migration upwards on some of the mid-buckets, which is very encouraging as we try to monetize our data. On the B2B side, I should caution that we don't see a trend shift, but we see improved comparables Q-on-Q, so it's a slight easing pressure.

It doesn't mean, we have to come out of the issues that we have talked about on B2B in Sweden over the last year or so, but it's at least a breather for the quarter and helps the overall numbers as such. So another point on Sweden just, which you've also seen in the EBITDA effect, is that, we have optimized our SAC further and that has been a topic in the forums throughout the year that we're trying to optimize the way we invest in our channels and in our subsidies, and that is now more balanced than previously.

So let me then move to Norway, which is another strong point in our report, not just M&A to Tele2 integration, but also organically. We are showing strength in our deployment of the network.

4G now I think around 94%, 95% coverage, starting to build the brands of a strong second alternative or the alternative to Telenor, and gaining traction also on the customer side now, which is encouraging, but then when add of course to Tele2 acquisition, it looks really strong, and we have already during the year upped our synergy estimate for the year, and we stand by that SEK 700 million improvement synergy for the year, and leading into next year about SEK 1 billion run rate on the effects of Tele2, so that is very encouraging, a strong team in place. Let me move then to Finland and Denmark briefly.

Finland, I have to remind you, we are in a middle of transformation in Finland. It is too early to expect strong numbers out of Finland, even if we of course trying to do everything we can, but it's somewhat muted quarter.

We still have the interconnect effects in Finland, which we're working hard to mitigate. We know, we haven't lived up to our ambition of gaining market share.

We have lost out at least one on the mobile side in the quarter we think, but we're fighting hard to regain with a recent launch of a full house or converged offer in the market in Finland. On Denmark, yes, we are back to square one you can say, where we're not proceeding with the planned joint venture with Telenor, which we pulled back here in the quarter, not been able to please the commission with enough remedies, which made sense for us and for Telenor.

In the meantime, the Danish team has done well. Pressure is still on top line, compensating with strong focus on costs, and encouraging now in at least hopeful that we can see some uplift going into Q4 with recent price stabilization or also price increases that we launched late last week on some key mobile buckets.

So hopefully we can see some improvement in Denmark going forward. Let's have a look at Baltics.

We don't about Baltics in this forum very much, but when all three countries come out with positive trends, they make a difference, and that's also encouraging if we talk about Nordic Baltics in our core that we have markets that are improving both from a growth perspective and from a profitability perspective, so that's encouraging. And we recently also announced a business combination in Lithuania where we will be able to do even more in the converged space going forward.

Then let me turn to Eurasia. We have a mixed bag as we normally do.

Over the last quarters, some really good numbers, strong numbers. Starting with Nepal, there we have stood strong throughout the tough period after the earthquake.

We've done tremendous work in stabilizing networks working through with partners and customers, keeping networks, but also growing the networks into rural areas, and seeing a lot of traffic and customer increase per se. So that's encouraging with the growth we're getting out of Nepal.

Let me move to the not so rosy picture in Kazakhstan. We have been speaking about the challenges in Kazakhstan here over the last year or so, where we have been losing market share quarter-by-quarter.

Kcell during the summer launched a new proposition called Hello Kazakhstan, with a clear ambition to stop the bleeding on the customer side. They have done so, as you see, but it has come at a too high price, not too high cost, which then impacts the numbers quite significantly.

This, I would say, was underestimated in some parts of the dynamics, how much off net traffic did come with this new launch, and how many customers actually migrated to lower buckets. That is being corrected towards the end of Q3, but it will carry on throughout Q4, not as bad as in Q3, but still worse than we wanted to be.

So Kcell is about now re-battling also the profitability not just the customers to look good into 2016. And it is due to Kazakhstan that we see the numbers weighing down quite heavily on the group as well.

I think the number is -- Christian will get into this, but I think it's about SEK 300 million or so in Swedish krona effect on the group. So let me also take a few words on what was announced 17th of September with our ambition to reduce precedence in Eurasia over time.

We're doing so for a couple of reasons. Of course, we have issues and challenges that we've been working with over the last two years to resolve.

We have resolved a lot of things operationally, stronger governance, stronger compliance, but there are few things that we haven't been able to solve, which are still outstanding, both partner relationships and repatriation of cash are prominent challenges, but we also have a focused ambition in the Nordic Baltics, where we want to refocus and a build a new generation Telco in the Nordic Baltics and that requires a lot of investments and resources and focus, and that also unreasonably are going to reduce our precedence in the region over time. That process has started recently as you know, and I have no real updates on the progress.

I will keep all of you posted as we proceed with this very delicate process. It's going to take some time.

And during this time, we will be very responsible. We've established a responsible exit program with an upgraded governance and upgraded focus to make sure that we do responsible business during the exit, and we continue to invest and develop these markets as long as we are there.

That's part of our obligation and responsibility, and that's something we're now upgrading to make sure, we do this proper. I am also like to highlight that MegaFon and Turkcell are not part of the scope to reduce precedence over time.

They are part of a separate scope and we speak about those two companies separately. As we've seen from this quarter, they helped on the EPS side, they helped improve the numbers.

Turkcell had a fairly strong Q2, which is delayed numbers into our quarterly three numbers of course. And MegaFon is fighting well in a rough Russian economy.

On the MegaFon side, we have very good relationships with the company, with management and our partners, which is very important in this financial holding as we have labeled it. On the Turkcell side, it's a bit more complicated as you know.

We have been speaking openly about our progress in Turkcell. We made a big step forward during the year with the dividend in the AGM in March.

There are still very difficult discussions to resolve outstanding issues, which is mainly on the legal side and mainly historical or all historical. I think we should set our eye on the next AGM which is in March 16, let's see if we can build momentum again to resolving some of our issues.

On the legal side, there of course going to be -- there are some milestones coming up with the damage towards [Cukurova] and we'll be following that and update if there are any material information. So let me, before I get to closing, also mark at a bit our sustainability update that we're also launching today.

It is a first interim report that we are taking to the markets because the interest in the way we deal with our sustainability matters across the board are of high importance and of high interest, so this is a way of encouraging further dialogue on these matters, and these are for the first time also signed off by Deloitte to make sure that we are reporting on our KPIs and following up the commitments we are undertaking. Some snapshots from the report, if you haven't read it already, we talk about our improved risk control, we talk about our responsible procurement, which started from a very low level, I have to admit, with the help of EcoVadis and due diligence, procurement and vendor due diligences we're doing that throughout our footprints starting with high risk suppliers throughout Eurasian footprints.

We are also reporting for the first time -- with also audited by Deloitte our Law Enforcement Disclosure Report, where we now have nine countries, part of this disclosure. Of course, we also speak about the [STGs], where we are activating them through our [indiscernible] platform, so that's a good read, and I encourage you to do have a look at that and revert with your feedback.

So to finish off my part, before I let Christian speak, it's very good to see that we have our core operations leading the way with Sweden and Norway, the outstanding markets this quarter together with Baltics. It is Eurasia who is weighing down especially Kazakhstan.

We have a plan to recover, but it's going to take some time there. And then we'll keep you updated on our ambition to reduce precedence, but nothing new for the moment.

So with that I will leave it to Christian to take you through a bit more detailed on the numbers. Thank you.

Thank you, Johan. Good morning everyone and welcome to the financial part of this presentation today.

And my highlights will be around the revenue growth that we have, and that I'll also talk about the improved EBITDA trend we have, and this is very encouraging, of course. And then the cash flow, which is always important, we have a cash flow that is impacted both by the dividend from associates and CapEx, and I will spend a little bit around CapEx in this presentation for that reason.

But let's start with the revenue side. We have a growth in the quarter.

It's primarily a flattish service revenue trend that we see. The service revenue is organically down 0.5%, but if you look at Sweden and Europe together, based on that we know that Eurasia is down.

Sweden and Europe together is at 2% on service revenue. On top of that we have a very positive impact from the acquisition that we are very proud of in Norway of 2.9%, and then FX 1% going up.

Not that much on FX, and it may surprise some people to see. For example Kazakhstan on this picture with a devaluation on the 20th August still only being minus 2.6%, but then we in this room need to remember that Swedish krona hasn't been that strong over the last 12 months either.

On the net sales growth, the impacts from different parts, the build revenues is flattish, here as well, we can see growth in most markets in Nordics and in Sweden and Kazakhstan is the main negative impact on this number. Interconnect impacted primarily by Nordics, Finland, and Norway and Denmark, all having quite dramatic negative impact from Interconnect in this quarter.

Finland should slowdown in the next quarter. Equipment sales is growing.

The equipment sales is primarily coming from Europe this quarter. Spain is a big contributor.

We have sort of a break on equipment last year, so it's not that dramatic as it looks like. This is not coming with negative margin, the European equipment sales [either], so the shift between Europe and Sweden is actually on a positive note in that sense.

If we look at the earning strength, as Johan said, Kazakhstan is the prime negative factor in this quarter, SEK 330 million almost in negative EBITDA quarter-on-quarter. This will continue in the quarter four, but on a lower level, but that has a big impact on the organic trend.

Europe and Sweden are growing. Sweden with 3.2%, and this is positive, on top of that we have the M&A of 2.9%, and FX is only 1% in this quarter.

This kind of strength something we have talked about and it's very encouraging of course and will continue. Transformation, we have started a journey.

This is a journey, we have to remember. It will take several years.

At this moment the cost for driving the transformation is outweighed by the savings, so we have savings coming through, but they are more balancing off right now, and the savings will start to materialize in a later stage, and that we have talked about before as well. Around SEK 1.5 billion CapEx so far into this program.

Online, IT, and some of the fixed parts are part of this transformation CapEx right now. The part we can't see on this page, we Sweden and Finland here, but we also have two programs on group level, and we have talked about them before.

One is something we call [Daisy], which is the server and the datacenter consolidation we do in Nordics. We are taking down all this datacenters to just a few and we are consolidating.

So if you go in and order a server today, you can't buy one single, so you just by a space internally, so this is the transformation we do, and then we can work together in a more efficient way and get the cost down. The other program is within the surveillance and operations side of the networks, where we continue to build a scale business from one place.

EPS is improved by 16%, and that is coming from associates a lot. We have associates in Turkey, as Johan said, that is improving quarter two over quarter two.

It's not a surprise. We've seen the numbers.

They have quite impact in 2014 from [105 times] from the international business, which is less now, and on top of that, they are doing quite well in the Turkish market, both on the revenue side and the EBITDA side. We can also see that financials and taxes are netting off, both are moving in this picture.

The net financial is a proof of that we have money in dollars in Eurasian countries. So when the currency moves and we have US dollar in Kazakhstan and we have devaluation, we get a positive impact on the net financials.

So that is just a proof of how we have handled that cash position. On tax side, the tax has increased because the earnings have increased.

So net income before taxes are higher and therefore taxes are higher. So a little bit about CapEx, we have a SEK 12 billion year-to-date group CapEx split as we can see in this picture, so we see Sweden, Europe and Eurasia, but we also have in other part, other part, AFT group functions that we work with, as I talked about, we have a group technology that both work with some common products like TV platforms, but also the network side and the surveillance and operational side.

And then Sweden of this is SEK 4 billion, and it will be around SEK 6 billion at year-end. The majority is 50% in fiber, and part of that fiber is also to support the backhaul of 4G and then we have 4G.

The most interesting part of this picture, I think, is the fiber that is a large part and it's making us grow in Sweden, both on MDUs and SDUs, I don't think there is any other company that is building out, in the size we are doing it, 50,000 homes passed and 30,000 homes connected on SDUs side so far this year, and we're doing that at a very good return on investment. We continue to roll out quite well now in quarter four, and we have over 100,000 untouched homes passed that we have already built out to, that we can come back to in later years.

This picture will continue. We have said that we will invest SEK 6 billion to SEK 7 billion more over two years time in '15 and '16, and SEK 2 billion in [fund] transformation, and SEK 4 billion to SEK 5 billion is on invest to grow initiatives primarily in Sweden and in Europe, and we are just half the way here.

This impacts, of course, also cash flow. So during this period, we will have an impact on cash flow and the SEK 2 billion we see here is cash CapEx from our higher investment, and the other part of the cash flow that is notable is the dividends received so far this year.

We had SEK 4.7 billion in the dividend from Turkcell, and then we had a dividend from MegaFon in quarter three, which was just one part of their dividend, they have an intention to also have a dividend in quarter four, and this is something we support shareholders as well. Net debt is on the same level last year [1.70], it's down from quarter two, which is always a little bit high due to the dividend we pay out.

The cash CapEx [indiscernible] is also a little bit impacting in the quarter. And then the AF Telecom payment, it's the second last payment, we got the payment now in quarter three of SEK 2.7 billion, there one more payment to get next year in the same period in August.

This is a picture of the cash flow, divided on Eurasian, and the associates dividend, and the core, the rest of the company, and the grey part is the Eurasian cash flow, and the green part is the dividends from associates, and the orange part is the rest of TeliaSonera. It's about SEK 5 billion so far this year on the rest of the TeliaSonera, and that is impacted by CapEx and will also continue to grow into next quarter, and SEK 3.3 billion on Eurasian, one-third of that stems from Kazakhstan, which is the biggest driver still.

It's still a huge entity with a quite high profitability driving the cash flow in Eurasia. If we look at net debt, we have SEK 60 billion plus on net on the group side and SEK 9.4 billion net cash is located in Eurasia.

All that SEK 9.4 billion, we have talked about the trapped cash as we call it in Uzbekistan and in Nepal, and that is around SEK 6 billion in total of the SEK 9.4 billion. This gives you a picture of how our cash flow and our debt situation looks with and without Eurasia.

I want to reinforce our priority on having a solid investment grade A minus and BBB plus. The current rating is, A minus with Standard & Poor's, and I just want to make sure, it's clear that this is our ambition.

Finally, on the outlook, we have clearly said throughout this year that the biggest impact, positive impact on our profitability will come from Sweden in amounts and that the biggest risk remains in Eurasia. Unfortunately this quarter, that was also a fact with Kazakhstan coming through in a worst way than we have expected, so we have to then re-guide.

I want to say that, Sweden and Europe will continue the positive earnings trend into quarter four, and it will improve, and we will still have issues around Eurasia. And therefore our new guidance is instead of saying that we're going to be around last year is going to be slightly below last year on EBITDA level.

On CapEx and dividend it's unchanged, so we remain with a target of SEK 3 dividend for this year. That is all.

Thank you.

Good. Thanks a lot, Christian.

And I think it's time to open up for some questions, and I think we start here in the room with Andreas Joelsson.

Good morning. Andreas Joelsson from DNB.

My question on the disposal of the Eurasian assets, should you succeed in that? Do you see that you can remain with the stake you're having in Turkcell, and fully disposed the Eurasian assets?

So let's take one step at a time. We are going to now moving to this face of reducing our precedence in the southern markets, which are in scope.

The Turkcell situation more complicated and not fully in our control as you know, and when we are at a point where we do have options in Turkcell, we will speak about our options and what we want to do, so those are two separate things for the moment.

Next question.

Yeah, this is Stefan Gauffin from Nordea. A couple questions, first relating to Kazakhstan, if you can give some more flavor on the impact on the margins, what kind of impacted the interconnect that you're paying more interconnect cost, how much did that impact, and what kind of measures for you take into improve margin?

Secondly, relating to the Danish market, there has been some price initiatives, just if you can give some more comments on how you see that development developing and what kind of measures you are taking? And then thirdly, Norway, there was a really solid ARPU development on the mobile side this quarter, just wondering what's driving that performance?

Thanks Stefan. And let me take the two last one and then Christian you can comment on the numbers there.

On Norway, yes, it's been a solid development. We have organic growth as well as the M&A effects on Tele2.

We're seeing some price stabilization from some of the players which we are part of on our main brands, but I have to say also that on the fighting brands as we call, I mean it's very fierce price competition, where also the new entrance, the new entrants are very active, so I think it's a bit of a split market, where we'd see some math easing pressure -- actually uplift in the higher segments, premium segments, but pressure still on the lower segments. In Denmark, we'll see what this means, we have you know that TDC announced price changes.

We announced later also price changes on some parts of the mobile portfolio. We had SEK 10 Danish kroner increase on some of the buckets.

We hope and think that will be accepted by our customers. It is showing the first signs, and then we will see how we can take it further.

You know our view on the Danish market is a very negative, [indiscernible] for that reason, but it's a price war that's been going on for very long, and I think we need to test segment by segment where we can stabilize an increased returns step by step, but otherwise we have further problems in Denmark. On Kazakhstan question?

Yeah, on Kazakhstan, you are correct that the interconnect cost has a big impact on the profitability, and there were two factors then, and mainly two factors, it's the interconnect cost and the lower ARPU that has been driving the lower profitability because in the quarter as you've seen the customer base was starting to pick up again, so that is the biggest impact. So on year-over-year also, the customer base has somewhat an impact, but much less.

The interconnect is then -- related to that we first of all we increased the buckets quite dramatically, and secondly there was also quite a high abuse, so what we have done is first of all to go in and actually correct all the abusers which you can do you have to just do a lot of work around that, and secondly of course we have to change the offering somewhat and we have done that in the end of the quarter, starting on the 8 October, I think the new offerings coming in with a little bit lower buckets, therefore limiting both average and the maximum off net minutes for our customers which is still not lowered than our competitors, but we have much higher buckets than our competitors.

Alright. We have on the line Lena.

Hey, good morning. Lena Österberg from Carnegie.

First of all, on the disposal again for Eurasia, would it be enough for you if you were selling to say Turkcell or MegaFon, is that enough distance from you from [SRA] compliance point of view? Second, in Denmark, you [proved a way] before you had a decision from the EU authorities, if there is a different ruling, say in Italy or the UK, if they are taking more positive stands in those markets, would you reconsider you [merger plans] in Denmark?

And finally as well as if you can maybe say something about the fiber, how much you have sold into next year and what could we expect in terms of rollout speed for next year?

Thanks Lena. So on the disposals, I don't want to jump ahead I want to take step by step and talk about the things we actually will do, when we are there, and then what the consequences are with a potential acquirers or buyers, so we'll leave that.

And as I said, right now in Turkcell, we don't have the options that we would like to have, so that's a separate process where we're trying to provide and create options that we can decide upon which is not the case today as we have a direct stake in Turkcell and we have an indirect stake in Turkcell. The direct of course, we control more, the indirect stake, we don't control in the same way.

On Denmark, one thing that was very clear in our dialogues with or debates I should call it to be mild with the commission is that, every market is different and that's something also that comes back clearly from them. This is not a precedent, first of all because we pulled back, it's not a precedence for other markets.

And the fact that also each market is different or different combination proposal, each market dynamics are different, so I think country by country we'll be assessed. If Italy or UK is positive, it doesn't really change the view on the Danish market per se, that's the view from the commission and that's how we also view our case.

And for our case -- in our case the case was not strong enough with the remedies that were demanded or looked for. Therefore we had to pullback.

And fiber question?

Fiber, yeah, I don't have the number on how much we sold into next year, but let me put it this way, we have an ambition to continue to grow and we have grown quite a lot this year compared to last. The limitation is not same at this point, the limitation is to keep a lot of vendors, quality vendors of delivering fiber in the same time keeping a good customer experience because every day you take on the new vendor to help us today again and to go today to the house and we need to educate and make sure we get the customer [experience] and that's the limitation and that's the battle we are having everyday to be able to pick up even more next year.

Okay. Next question.

Can I ask you to limit your questions to one or two, there are a lot of people on the line.

This is Stefan Wård with Swedbank. How committed are you really to the financial targets and the [rating].

What I mean is, I heard what you said, but it can -- targets can change and I mean you could argue that [countries] can tell us, when it goes down or when you [lead Eurasia] and that you could carry higher leverage, that's the question. Thank you.

If the [countries] goes down or we can carry higher leverage then maybe I can keep A minus with higher leverage and then I will have a higher leverage, that will be my answer. Any follow-up or?

The ratings [indiscernible] and that's just EBITDA.

No it's the rating. We have said that before, we want to have a solid rating that insurers ask that we can borrow long-term with high flexibility, and during this investment phase when we are increasing our investments after SEK 6 billion to SEK 7 billion extra, and quite uncertain financial markets, we want to keep flexibility and possibility to borrow in the same length that we are actually investing in our CapEx and that has been sort of the strategy around it.

So if we can go up to SEK 2.4 billion in keeping A minus after Eurasia sold and that's positive.

Johanna?

Yes, Johanna Ahlqvist from SEB. It was actually connected to the previous question on the leverage post Eurasia.

So my question is really, would you consider the proceeds you might get for Eurasia and do you believe there is a possibility to pay the multi-shareholders or do you believe you need to sort of hold, I mean, the company to sort of have some safeguard against potential penalty so what have you and also the net debt to EBITDA discussion we just had?

I think we've been having a statement, before I would like to reiterate and that's, let's wait and see until we are there and then we'll have that discussion.

If you could take one final question here from Nordea in the front and then we move to conference call.

I have a question connected to the news about sponsorship to surety in Uzbekistan. How could be sure of the status of the some children sport development as a real charity fund and that it is not just another way for the [repressive regime to Gail]?

Thanks for bringing that up, since it's a topic in some part of the media today and we have since the last two years worked very hard to improve our controls and governance around sponsorships and donation, and in this specific case it has followed the new procedures i.e. we know where the money is going, we know what the money is for, and we are following up that the money is used for the sake it is supposed to be used for.

We also have our Compliance Officer Michaela Ahlberg, with whom you can speak to afterwards as well, who will guide you through that. And let me also say that, 17 September, we announced we are reducing our precedence in Eurasia, but as long as we are in Eurasia, we are in Eurasia, and we are part of society, and we are often the big and large companies in these markets, but we have to participate, but when we participate in various activities we want to make sure it is conducted in a right, in a proper way.

And in this case the documentation is there and the purpose is apparently and supposedly correct.

Okay, so we take one follow-up here.

Yeah, on the same theme, and I just wonder when was the last time as you as a company hired relative to dictator to do your business?

I don't understand the question, so maybe you can post that afterwards.

No, I could rephrase it. When was the last time that you know that you hired a relative to dictate -- to help you out with business in Eurasia?

So we are doing our controls from our partners as we move along and I'm not aware of any new ones that are as [trainees], we do our controls on peps as they are called and if they are red flags we go through the red flags, and if we don't like, we don't do it, if they clear our red flag process we do it. So that's the answer.

I think we move onto the conference call. Could we have some questions from the conference call, please?

Good morning everyone. Just one question, I had a question around the fiber rollout plan.

You said that, you have connected almost 30,000 new households during the quarter, but then you also said you have connected 16,000 [single new] homes during the quarter. I was expecting perhaps some more of a focus towards [multi-dwelling] units.

Is there any particular notice about change of strategy there or is it still in the end result here, you had spent more single dwelling units connected?

Yeah, so the first answer is that, we had a bit slow start on Q3 on single dwelling units, but the ambition is clear as you say, that's why we have most of the virgin territory and new homes to be passed and connected and that's where the focus is. We cored up towards the end of the quarter and we'll see how we'll do in Q4.

I mean, we do have both MDU and SDU rollout, and we just mentioned the SDU numbers here.

Okay. Thank you.

Alright. Next question, please.

I will limit mine to one question also. I just wanted a follow-up on your answer earlier on Denmark.

You said, every case is different, is it the market is different or do you think the specific tie-up was different, so do you think there still possibilities in Denmark it's just not with Telenor? Thank you.

As I told you, of course, there is also the proposed merger combination and the dynamics between the players and what position that would create, but it was very clear to us that we could not do this without establishing fourth new network operator and the remedies to do that were severe and therefore the case didn't work. If the combination would have be purposed differently, maybe we would have been looked up on differently as well from the commission.

So again, back to square one, we are there, we are fighting to provide better solutions for the customers, now we'd see if we can do something on the price, but we have to continue to invest and it's hard for me to see today how we will get the decent return on capital level, therefore we have to look at further options going forward.

Thank you.

Alright. Next question, please.

Hey thanks so much, also one question from me. You are saying that the audits have looked at the books of '14 and also the reports of '15 and nothing should have been done differently, but some of the suggestions, and these allegations were also relating to those, I've heard in the conference, just wanted to see whether they have actually looked at the '13 accounts or whether for lack of time they didn't have a chance to do so, what the reason is, why you didn't mention '13 accounts here?

The other question I have is, you mentioned when you commented on this that, there were no material misstatements, have you found any misstatements as part of these reviews and what are the sort of [notes] of immaterial ones? Thank you.

Okay. Christian here.

Let me start with the expression material misstatements. I think I can go into any company, in any place of the world and I'll find one small misstatement and this is the language you use when you actually referred to any statements.

Even in Germany or in England or in US or in Sweden, so that's no difference. The books for 2014 also have comprising numbers of 2013.

The opening balance of 2014 needs to be correct to make sure you actually do an unqualified, unmodified statement of the 2014 numbers. So therefore, you need to know what's going in there is the right thing.

Secondly, the auditors when they do their analysis then and review of the quarter results, they go through all material matters that could have an impact for the shareholders. They are the shareholders' auditors, not the company's, and they review that and they see that one IFRS is still valid and we are following IFRS correctly, secondly that everything that is material has been included in the numbers we report.

That's the simple answer.

That's very clear. Thank you very much.

Okay. I think we move on.

Thank you. You have shown how that -- if we gain very good momentum in the Swedish business particularly on the fiber side and obviously if we look at the numbers, you are close to breakeven on fixed line service revenues.

Do you see any reason why your fixed line revenues should not turn positive going forward? And if I can just add, how fine to the future do you think we need to look before we can expect the stabilization in the B2B market on mobile?

Thank you.

Hey Peter. We're still in a steep decline on the traditional old picks.

In some quarters we weigh it up with a new broadband and fiber, heavily supported now by one-time charges, so a lot of CapEx in fiber creates a lot of one-time charges on the installation, but underlying we have to remember that we are still in a decline in the [PS10] with about 200 quarters or so, Christian?

Like 1,000 customers a day.

1,000 customers a day, so don't forget that when you look at the trends, but it's encouraging to see that we, in some quarters, are able to mitigate or also in this quarter improve the trends, so that's on the fixed side, Peter. Did you have anything else?

How far do you see we need to look into the future for stabilization on the B2B market in Swedish mobile?

Yeah, that's a recurring topic, and you keep reminding us and we don't speak about trends shift in this quarter either, as I said, there are some really positive signs in the [FME] side, where we have launched [Touchpoint] still picking up momentum. Those are the type of things we need to get into the market, and we'll start talking about when we see positive trends in the larger segments.

You still have heavy pressure, a lot of re-pricing, a lot of competition, but the good thing and I keep reminding you that we're keeping our share of the large incorporates and public, and they are with us and into the future.

Okay, very good. Thank you.

Okay, next question please.

Thank you for taking the question. Firstly, I wanted to ask on the dividend.

Given your ambition to exit Eurasia longer-term, I was just wondering what impact would that have on your dividend and how generally should we think about TeliaSonera's dividend go forward? What I'm asking is just perhaps some of the key drivers and a framework for thinking about it, and you showed in your slide today Eurasia clearly account for a significant part of your free cash flow?

And then secondly, I just wanted to ask on Sweden mobile, if we look at the postpaid as those were negative this quarter and also churn has picked up, so could you please comment on the latest competitive dynamics in Swedish mobile and whether you are happy with your current positioning?

On the dividend we'll be very short, I mean, we'll come back to that when we report our Q4 as we normally do, and also when it comes to reducing the precedence in Eurasia, we've said it will take time, it's complicated, so once we get there we will definitely start talking about the impact on the future dividend etcetera. On the Swedish mobile side, I think the prepaid segments in Sweden are still under pressure and that's where you have the heavy churn.

On the postpaid side, it's stable, and as we've shown it's picking up on the usage and we have migration [upwards] on our data buckets, which is very positive, so I think now it's more on keeping the momentum and finding new ways of offering value added services around the buckets that we have been talking about in the past or so. In terms of share on the Swedish market and the dynamics, nothing major new in the quarter, in terms of changing those dynamics that we have.

We have optimized our SAC and investments as you saw on the profitability side which has been part of our plan and we do that without impact right now on the markets intake, so fairly good situation there right now.

Thank you very much.

I think we move on to the next question please.

Yeah, thanks very much. I had two questions.

Firstly on the Swedish OpEx trends, quite impressive trends year-over-year, you have talked about optimization SAC and investment. Maybe you can cap it what that actually means and also if there is anything else going on driving the improvement in year-over-year SAC or OpEx in Q3?

And then also on the mobile side, it seemed to have had quite contraction with your new bigger data bundles. I was just wondering if you can give any details on how many of your customers are still on the entry level type bundles in Sweden.

Thanks very much.

Christian, here, I'll start with the OpEx trend, thank you for commenting on that. We have worked on SAC.

We started to talk about that already during the spring where we were not so satisfied with our work on both giveaways and the way we used the SAC compared to our competitors. We have worked quite extensively over the summer and engineering days, and both on the giveaway products.

They are much less today, and also on the SAC optimization program that we have internally, which is a big impact actually on this quarter compared to last year and also compared to previous quarters. The other part we're working on in the cost side is improving and making us self leaner and we have a total reduction enforce this quarter of 400 people almost in the group, about 160 of those comes from the Swedish or group organization, and this is something I've said before, we will continue to try to fine-tune from consultants on IT costs and on other costs outside of transformation program, and we will have a similar kind of report coming back in quarter four with other things that we have done improve OpEx everyday as we go further.

When it comes to the mobile entry package there, we can say that -- when you look at new [phase] in retention once go into their entry packs as more or less half from 20%, 25% down to 10% to 15% over the past year.

Okay, but can you say anything about how much of the base is still on the lower end?

Can we have a look into that and come back to you.

Okay, thank you.

Yeah, good morning. It's Nick from SocGen.

Can I ask maybe one Denmark, please? On the trends in Denmark, it looks as if the top line is still weak in the [indiscernible], but it's more of a -- more driven by savings in terms like good margin for this quarter.

So could you comment on whether that's just a reduction maybe in costs as you were going to the merger process or is it something a bit more sustainable? And then secondly on -- you keep on mentioning options on Denmark, what are the options in Denmark, please, because it looks as if it's difficult to exit as we know because of the merger process [collapsing] and maybe just from one buyer.

So what do you have to think of, do you have to think acquisitions in fixed or maybe wholesale and cable, could you talk us through what other options might be, please? Thank you.

Thanks Nick. On the trends -- on the operational side, yes, it's still pressure on top line.

We're trying to do something about that now as I talked about our price increases on some other segments, and some other buckets, otherwise, it's cost trimming and cost efficiency and I think the Danish operation is very lean. We also have the effects from the joint network coming through to some extent also leading into next year, but there are no -- as you mentioned costs for the merger process, those are not in the results, those are non-recurring and outside the EBITDA line.

And when it comes it the options in Denmark, when I referred to options, we need now to see what options we have to improve our return on equity or return on capital in Denmark. We are struggling to get to these levels as you know.

We're back to the drawing board on that, where one part is clearly the operational improvements that we'll have to do, and then we'll see if there are things we can do on our own and with someone else as well, but that's not in priority right now which also to stabilize and grow the operations as they stand.

Okay, fine. Just a check you had on employment was it because of the merger process, was there any reduction in marketing spend in the quarter because of that or is this, I'd would say, a sustainable saving because of the new network -- because of the network JV rather?

We have not held back on the Danish operations during this process and that has been, I think, now a blessing that we have a team. I mean you see, oh, by the way, up and running with high pace and speed and haven't lost momentum and haven't saved their through the year leading to potential merger.

So there has been very much business as usual for the team in Denmark.

Great, thank you.

Next question, please.

Hey, it's San Dhillon, actually. Two very quick questions from me, just on your TV price increases in August, I believe in Sweden.

I know it's early days but what's the customer reaction then it hasn't been good enough to embolden you to continued price increases through TV and broadband going forward? And on your goal of becoming convergent in your core Nordic markets post the Eurasian, so I guess in Norway and Denmark, you essentially have either no or very limited fixed line precedence, I mean what's your path to convergence activities in those markets?

Thanks.

The TV increases also came with an upgrade in the offering, now the Swedish customers, TV customers also have the Telia Play which is the [LTT] product part of the offering, but so far positive, we'll see, we'll continue to monitor. And path to convergence is something we will do where and when required.

In Norway, I think, right now is very separated, we'll see what we need to do to bring something together. We'll provide you those updates as sooner than long, but nothing as of to-date report.

We've been very focused on the integration of Tele2. We've said that, we want to get that housing order first and then we'll have a look at other options.

In Denmark, as I said, there are also a very converge market and that's [indiscernible], if you don't have it you'll lose out, so it's very mobile focused -- fixed TV incumbent that we fight up on separately, our small fixed base in Denmark as well, but we look for options to spring some convergence across our footprints in the core Nordic Baltic.

Great and thank you very much, guys.

Okay, I think, we had time for a couple more questions too. Operator?

Good morning. So I just have two questions.

On Finland, I'm still a little bit lost about why your underperformance is going to steep versus market leader [leases]. It feels very special in the mobile side, the opportunity of growing your customer [indiscernible] it's not being monetized by yourself and I'm lost why that's happening and why you think pushing bundles is the answer rather than improving sort of single play offering?

And the other question I had is on Denmark again. I mean your price high is very much mirror that of [TDCs] at the low end by SEK 10.

Were you known tempted to be more bold and increase prices more at the mid and high end also in [tandem], so why is it you only did, what the competitor also did as well nothing more?

Yeah, thanks, then without going into all the thinking and tactics around pricing that is a very, of course, competitive advantage. I think, we're testing the orders and see the reactions in segment by segment and I will see if we can take it further.

We'll revert as and when we do that. In Finland, I agree with you that this is a bit frustrating to not have the formula working in gaining share and taking part of the data revenue growth in the most mature date market in the world, highest usage per customer with all you can eat plants, and you said that, why not focus on the single play, we do.

We are focusing on improving our single mobile proposition only which is strong and it's gaining somewhat momentum and tractions, but not to the level where we wanted to be, but at the same time, we're also looking at the advantage we have of having a full house as we call it in Finland offering all services to the customers that want it. We are confident that this is the way to go, but we need to find better pace leading into next year in Finland, and that I agree.

Thank you.

Okay. I think we have time for one more question.

One more question and then we have to conclude.

Thanks for taking my question. I was wondering, how much of your struggles in Kazakhstan and Georgia.

Do the increase competition like you've seen in Kazakhstan and how much of it is from spillover effects from Russia? Thank you.

I can take Kazakhstan, it's probably the most competitive market out there with four players and four strong players, hit not just by macro, but also by some cost Christian can explain. And Georgia, I think it's just a normal market dynamics and one quarter you win and one quarter you lose, and it's bit unpredictable there.

Alright, thank you.

Good. I think that concludes the session.

Thank you.