Telia Company AB (publ)

Jesper Wilgodt - Head of Investor Relations Johan Dennelind - Chief Executive Officer Christian Luiga - Chief Financial Officer

Stefan Gauffin - Nordea Lena Österberg - Carnegie Andreas Joelsson - DNB James Britton - Nomura Peter Nielsen - Kepler Cheuvreux Roman Arbuzov - UBS Terence Tsui - Morgan Stanley Nick Lyall - Société Générale Ulrich Rathe - Jefferies San Dhillon - RBC Henrik Herbst - Credit Suisse Maurice Patrick - Barclays Sunil Patel - Merrill Lynch

Okay. Welcome, all, and good morning.

And the presentation today of TeliaSonera's Q4 Results. I'm Jesper Wilgodt, Head of Investor Relations.

And with me today to present, as usual, I have our CEO, Johan Dennelind; and CFO, Christian Luiga. And after that, we will have some time for Q&A.

We intend to close this session within one hour. And by that, I hand over to Johan please.

Excellent. Thank you, Jesper, and good morning, all here and also online.

I'll take you through our quarterly results or full-year results of this, and then Christian will go into some more details. But first of all, let me just look back quickly on 2015 which has been a hectic year indeed but also we believe a quite successful year laying the foundation for the new TeliaSonera.

As you know, we have announced the start of our leaving the region Eurasia, which we also have started to execute on. We are in the middle of a business transformation in some core markets and operations which is still ongoing.

It will be so for another year or so. And then gladly, our core operations is performing or are performing pretty much across the board, which I'll come back to in much more detail.

So, we believe we're sticking to the plan that we had at CMD in September, 16 months ago, with the exception then of us leaving Eurasia, which was not part of the CMD message. Let's look at Q4 and full year.

We are pleased to deliver a Q4 above expectations to some extent, both on the reported and organic. We are 4% up on the reported service growth and EBITDA 11% for the quarter.

And remember, these are the continued or continuing operations. Christian will go deeper into the full picture and close the year with our guidance towards 2015.

Also, the cash flow for Q4, SEK 1.8 billion, somewhat burdened by negative working capital and very high CapEx, which Christian will also go into more detail. Full year then, also a slight positive EBITDA organic growth and also a flattish service revenue for the continuing operations.

So, the message here is really solid over year and very strong Q4 in the continuing operations. And please note that the cash flow for the continuing operations is close to the SEK 13 billion we're also proposing for dividend later.

Looking into the trends on revenue and EBITDA in our core operations, very pleased to see Sweden on 2.5% service revenue growth, a strong team in place now delivering on a very ambitious agenda for 2016 as well. Europe, still in negative service revenue territory burdened a little by Estonia, Norway and Denmark, but otherwise fairly positive trends in core operations there as well.

EBITDA side, 10% year-on-year for the quarter in Sweden, the highest number we have seen in a long time, driven a lot by fiber, TV and mobile, which we'll dig deep into soon. Europe into positive territory on EBITDA growth as well.

And then the total continuing operations on 9%, which then you think how can that be because the average of Sweden and Europe is now 9%. But in the other operations, you have both the new Global Services & Operations, which include and are benefiting from some cost savings and transformation effect but also the TSIC carrier and [indiscernible] are improving year-on-year.

So that leaves us in a good position heading into 2016. Let's look at Sweden.

We have totaled out during the year about our converged propositions that we have but haven't really launched. But they're comprised of course of TV, fiber, mobile and all of them are improving ARPUs year-on-year.

Mobile 2.2%, broadband 5.2% excluding OTC for fiber and TV is up almost 10%. And that's on the back of successful launches also in Sweden where we have our IPTV Play+ offer.

We have our fiber propositions which is also a key driver with 185,000 fiber homes passed during the year. It's a record number.

We'll come back to that. And also our new mobile proposition in the Baltics are gaining traction, especially in postpaid for the higher ARPI costumers.

So I think with the recent launches like free roaming for our Swedish customers in the Nordic-Baltics, we're making progress on our commercial agenda, and I'm positive on the team going forward. Fiber.

It's a big thing in Q4 both on revenue and EBITDA and here you can see it that 7.2% service revenue growth in consumer with the OTC, one-time charges for fiber excluding it's slightly lower than 2 but still positive which is important. And on the absolute numbers, we're up now to almost 1.3 million homes passed, increase of 185,000 approximately for the year and connecting 150,000 households over the year which is someone told me 17 per hour, 24/7, 365.

B2B has been a problem, you know that, all through the last two years and still is to some extent. If you look at the gross numbers, it's still negative service revenue growth.

But a positive sign is that in SME and SoHo where we have launched a couple of new things during the second half, partly the IP-PBX, [indiscernible] or Touchpoint, we call it. And our individual service concept to small enterprises has been successful.

And we are actually in the growth territory for SME and SoHo, but still dragged down by the large corporate and public where it's very, very competitive but where we're also keeping our share. So, we're defending our share of customers and giving more to our corporates, which is laying that foundation for the next years to come.

And another positive news if we look east into Finland, where we are now for the first time, we look to the right, mobile service revenue are in positive territory. And that's coming both in B2C and B2B.

And that's the first time both B2C and B2B mobile is growing in Finland. Of course, we have fixed which is weighing heavily.

I think it's around 7%, 8% negative for the quarter, but all in all, then a positive development for mobile. Total service revenue, clearly, still down but improving EBITDA in spite of the pressure on revenues mainly thanks to good cost control, lower resource costs in Finland, and lower marketing spend.

So, pleased with Finland in the way we finished off the year. Before we leave Finland, I'd also like to say we know a lot of our customers have had a difficult time the last couple of months and we have been out in Finland apologizing.

We're also doing that here. It's about to be fixed.

We had some network problems there recently. Then our process to leave now.

I left Norway behind, now let's go back, because Norway is too important to miss. We have had a great year in Norway with regards to integrating Tele2.

Remember what we started out with SEK 700 million synergies for the year and maybe up to - higher into next year. During the year we reguided the synergies to be at least SEK 1 billion heading into 2016, and that's where we still are.

If we look to the right here, we see the actual effects coming through from the integration, around SEK 750 million as an effect of the Tele2 acquisition. And if you look to the left, you see the organic performance in Q4 has been somewhat soft, some due to lower - worse comparables, but also due to some slowdown in roaming revenues.

But all in all, a fantastic integration, have investment heavily in 4G network and now it covers 98% of Norway, very much on par with incumbent on competing not just in consumer but also in the enterprise space where we are looking to make more impact in 2016. So, closing Norway on high note as well.

Then, on our forces leading Eurasia, we announced 17th of September that we are, over time, reducing our presence. And just before Christmas, we announced the divestment of Nepal to Axiata, which is under progress.

And the remaining six countries, of course, that are also under process to be evaluated and divested and progressing according to plan. And as you know, we now report on discontinued operations which means that we anticipate that we will be able to divest these operations over the next 12 months or so.

And since we don't report individual countries now in the press release and the Q4 report, let me give you a quick snapshot of three markets in the region where - starting with Kazakhstan. We have had a terrible year, you know that, partly driven by really the macros, devaluations in currency, but also from our operations where we have not been able to adjust our propositions in a smooth way to meet the competition, but had a big impact in Q3 which we're now regaining momentum from.

But still in, of course, in very negative territory which is, by the way, the main reason we have not met the original guidance for the full year for the full group which Christian will elaborate further on. And Nepal has continued to deliver good numbers in spite of a rough year with earthquake and power outages and turmoil.

Nepal is strong both on service revenue and EBITDA. Azerbaijan is surprisingly positive, I would say, given the circumstances that we also see in Azerbaijan with another devaluation, about 50%, currency restrictions, bad macros and consumer sentiment.

So, a 5% year-on-year drop in EBITDA is not too bad, I have to say. Then we keep coming back to a quick update on our transformation which I've said we're in the middle of that.

We're still sticking to our CMD ambition of reducing our cost base heading into 2018 with SEK 2 billion and approximately investing SEK 2 billion to reach that. Year-to-date, approximately SEK 700 invested and some savings coming through already net SEK 200 million coming in to 2016.

I'm not going to spend more time on that. More importantly, I know the focus have been on our dividend policy, our updated dividend policy, to reflect the new company.

So, we see this now without Eurasia and are ready to distribute at least 80% of the free cash flow from the continuing operations including associates. That's the change to dividend policy where we say at least 80%.

And for 2016, we say at least SEK 2 to give some predictability there since we're a year in the change. We're also splitting up the payments into two tranches, Q2 and Q4, for smoother cash flow for the group.

And our leverage target is, to some extent, unchanged because we're still aiming for A minus, BBB plus as the rating but a bit more precise on the leverage target, which we haven't had, as you know. Now, we want to be 2.

That's what we're aiming, and then we can accept the deviation plus/minus 0.5%. But if we deviate, we want to go back towards 2, and that's the leverage we're aiming for.

For the 2015 dividend, we are proposing down to the AGM SEK 3 per share dividend, SEK 13 billion, which is also what we said last year, so we're sticking to that. I'm happy to deliver that also into tranches for the year.

That brings us to our outlook for 2016. Reminding you that we're still in a transforming year, still in heavy investments, and still with some legacy to deal with in revenue mix and margin mix, notably in Sweden and Finland.

If you add the starting point in Sweden and Finland, we're somewhere north of a SEK 1 billion negative already when we start the year on EBITDA due to fixed migration on PSTN and the negative trends we still have in B2B in the large corporate. So, have to regain a SEK 1 billion before we're even flat.

That's why we say was aiming to maintain the SEK 15 billion level of EBITDA. And the CapEx is going to be the peak year of our CapEx between SEK 14 billion and SEK 15 billion depending on the pace of roll out in Sweden fiber, where we hope to beat 15 in rollout, and Hélèn is looking at me and smiling and she's on top of that, which will again then be able to deliver at least 80% of our free cash flowing continuing operations and at least SEK 2 per share.

That is the new TeliaSonera. And we're heading into the future with confidence based on a great Q4.

You have seen the numbers here, but if I could reflect the ambition and the motivation amongst staff, I think it will be even brighter. But we're very geared up to take TeliaSonera into the next phase where Nordic-Baltics are core where we see great opportunities to invest and create value in both - in all our markets actually in both fixed and mobile and the converge propositions both for B2C and B2B.

So, I'm looking forward to 2016. And with that, Christian, I'd like to invite you up and go through the details a bit more on the numbers which are somewhat complicated this quarter with continuing and discontinuing operations.

As always or no. I'll go with the traditional of the pointer.

I'm still too conservative for all this technology. Good morning, everyone.

Happy to see you, here, today. We have a lot to talk about.

Good progress in the core business. We have a solid cash flow, that brings us to a solid net debt position.

And we have new guidance both from the dividend and on the outlook for next year. So, I'll try to pass through those items today with you.

And starting with last year actually so - and the full picture. We started this year as a company including Eurasia in our numbers, and we end the year having it as discontinued.

And I'm trying to take us back and go through how it looks if we would have had Eurasia in the number still at year-end. We said in the beginning of the year that we would be on EBITDA level around 2014.

We also is very clear and we said it many times that the highest risk in our plan is in Eurasia. And unfortunately, that risk - those risks in Eurasia to sensibly actually materialize over the year.

So, instead of being around flat, we ended up 1.5 minus on the total business including Eurasia. And as you remember, in the fall, we re-guided also from flat to the slightly below.

So, we came in on that promise. The good thing is that in the continuing operation, we can see that we ended up 0.1% on EBITDA.

So, we could keep that part of our promise, and we have delivered according to what we expected. On the service revenue growth, we can also see that it's a similar path, and even though in the Nordic and the Baltics.

We have some countries that are still in negative territory on service revenue. In Europe, we have countries like Finland and Estonia and Denmark that is still struggling a little bit on negative service revenue.

Some of them are coping better with it on the EBITDA, and some left, like Denmark. In Sweden, it's very flat, slightly positive.

And the discontinued operations are negative also on service revenue. And on the discontinued operations on Eurasia, we know that Kazakhstan is a big part of that negative development.

In local organic terms, and you have seen maybe the report this morning, but in our local organic terms, it's over SEK 800 million in this year, dropped from last year. And we were a little bit surprised by the competitors and of consumers in Kazakhstan's behavior.

And we didn't act fast enough in Kcell, so - and that is something we have talked about also in the previous quarters. So, that is the full year picture.

And let me take you then to the quarter improvement. As have said, we said that the highest risk would be in Eurasia.

But if we looked then on the continued operation, what we also talked about is - and we got the question many times, if you're at negative territory in the beginning of the year, how are you going to succeed? And we said that we have certain things that we're working on that will help us in the second half.

And that we will have a step change when it comes to primarily Sweden. The biggest change will be, in absolute numbers, in Sweden.

That's what we talked about, and that is what happened. And that stems from certain things like fiber, but also from the cost side.

We talked in the spring about our SAC engine and SAC that was not satisfactory from our side, giveaways and cost for equipment, and not only in Sweden but from primarily in Sweden, we have an improvement of the equipment margin. We also can see that in countries like Spain and in Finland, and in those countries, it's very much related to unbundling of equipment in something we call consumer financing models.

But the consumer unbundle it, and they decide themselves how fast they want to pay for it, 36 months or 6 months, and therefore it also helps us to give the right price on the equipment to the consumer. So, we ended up well.

And on the cost side, it's not only OpEx, as I said. It's also COGS.

But we have done things on the COGS as we talked also about our field maintenance in Sweden and other OpEx activities. I like to say also for the record that we have quite good comparisons in Finland as well this quarter.

If we look at the CapEx side. Let me start with that we have said in the Capital Markets Day quite a long time ago now - reminds me that we should probably have one new soon - that we will increase our investments in 2015 and 2016.

We intend to increase it with SEK 5 billion to SEK 6 billion, Invest-to-Grow and Invest-to-Save, mainly mobile capacity and coverage in 4G, fiber and also the transformation in the Invest-to-Save package, and Johan mentioned SEK 700 million already this year. CapEx is SEK 2 billion more this year on continued operations compared to last year, and it stems from any of these things that we talked about.

In Norway and in Finland, we have increased CapEx, in Finland with 40%, in Norway with 75%, and it is mobile coverage and capacity mainly and 4G. We have guided next year to increase, maybe further from 14.2 this year to between 14 and 15.

And that, as Johan said, we'll be very much dependent on our fiber rollout. We have very good momentum right now and we will try to deliver as much as we can within our required business case and delivery capacity, because we have still a very strong demand.

So this is a little bit on the CapEx side. And we will continue for another year with a high CapEx level, and that would be a peak year.

Free cash flow, SEK 16.6 billion, divided into certain buckets. We have Eurasia, SEK 4 billion.

And the remaining the remaining SEK 12.6 billion belongs to the continuing operation, whereby SEK 4.7 billion comes from a very good development of how to release the dividend from Turkcell. We handled that negotiation in a good way and we continue to have the same ambitions going forward.

Otherwise, we can see on the total free cash flow, this thing we talked about on the previous page that cash CapEx, the CapEx apart of the cash flow has increased and therefore is taking down cash flow both in this year and next year. I like to also point out which is not so visible on this page is that we had a tax refund in Sweden this year and therefore we like to guide you on the tax for next year.

And we see on the continued operations around 19% in tax rate and 80% payout of that in paid tax. The net debt is still counted in relation to the operation towards the EBITDA or the full operation.

Net debt is of course something that will change when we divest the operations, but we can't talk about how much right now. We will see when we have sold the operations.

The only thing we know right now is that we have an estimate of SEK 7.5 billion for the sales of Nepal and cash effect. The SEK 55.7 billion is affected by cash CapEx as you see.

But also AF Telecom, we had a loan to AF Telecom that resides from back in when we sold our shares in MegaFon to AF Telecom. And that loan was supposed to be paid in August next year.

But we talk to them and negotiated, so we got them paid now already this year. So, that is SEK 2.3 billion and about SEK 0.4 billion in interest.

In total SEK 2.7 billion that came in before year-end. That was supposed to be paid next year in quarter three.

Net debt to EBITDA, 1.53 including Eurasia EBITDA as I said, and it's a low level. But we have SEK 14 billion that we are supposed to distribute, which is our proposal to the AGM this year.

And we have - we are remaining on our previous guidance on A minus to BBB plus. It's very important for us to have that guidance and we are today within A minus range, and we tried to stay there as long as we can until we need to step outside that for any bigger events that could come, and we have a strategy to deliver on.

It's good to have a solid credit rating within the A minus to BBB plus. Meanwhile, we deliver on a high CapEx level.

Take us through that period, and also delivering on our strategy. We have then added something to the guidance on leverage to make sure it's better understood.

And then we believe that this A- or BBB+ rating is within the net debt to EBITDA of 2x plus/minus 0.5x. And so just give that guidance and it also helps us together with you to have a discussion on what our aim is.

The proposal for dividends next year as I said is SEK 13 billion and due to the reason of our cash flow to align that dividend more to our cash flow and also then take down the risk exposure on the liquidity and take down the liquidity per se, which we have quite high. We have now them propose to pay that SEK 3 per share out into two tranches next year.

One in April and one in October. This year, sorry, I'm still in the closing mode.

And that is very important as you can understand. We're paying out pretty much 100% of our cash flow, and if that's going to come in one payment, it puts a burden on how to finance and the risk of liquidity and how you need to manage that.

So, it's good for the company, and therefore, it's good for the shareholders. Earnings per share is dramatically down this quarter, and it stems from two things that we reported two weeks ago.

One is a write-down in continued operation of SEK 1.9 billion in Denmark. That is a result of our failure to complete a merger with Telenor and we have to reassess our business cases and business plans.

And that had a result in the write-down. secondly we had a write-down of the value in Uzbekistan, and that is part of the change into discontinued operation, and that was SEK 5.3 billion.

In total, SEK 1.67 are on the EPS. In summary, we had a solid performance in core operations.

we have a good momentum. We have good momentum in mobile service revenue, both in Sweden and in Finland.

In Norway, more flattish. In Denmark.

it is tough but we are not worse than the competitors. Higher free cash flow and reduced net debt.

Good solid balance sheet going into the peak year of CapEx, feels very comfortable. We have an ambition to maintain the 2015 EBITDA level into 2016.

And that leads me into the out of 2016. And as Johan said, we're starting with a negative round billion on the fixed voice, and also the B2B challenges we have.

So, even with a good sentiment we have now in Sweden, we have taken that back finally on the SoHo and SME. The large and public segment is still a tough market.

CapEx, SEK 14 billion to SEK 15 billion, depending on the fiber. And dividend, 80% of free cash flow in continued operation, at least SEK 2 in 2016.

Thank you.

Good. Thank you, Christian.

I think it's time for some questions.

Okay. We can start with Stefan Gauffin in the front, if you have a microphone.

We have a microphone?

Yes. Hello.

Stefan Gauffin, Nordea. Three questions.

First of all, a little bit of reasoning behind the new dividend policy and especially the floor on SEK 2, is that in order to reflect uncertainty around dividend payment from Turkcell and MegaFon? Secondly, you guide for similar EBITDA level as in 2015 despite fairly easy comps in first half - despite the easy comps in first half of 2016, reasonings behind that?

And then thirdly, there's huge demand for fiber, and you also plan to increase the rollout of fiber in 2016. Could you say anything about how you look upon fiber rollout beyond 2016?

Thank you.

Thank you, Stefan. Let's start with the dividend then.

As you know, the free cash flow from continued operations do include the associates' dividend from MegaFon and Turkcell as well as on the cash flow from continued operations, Nordic, Baltics. We believe in this, at least 80% free cash flow.

But during 2016, there is a transition here with a lot of movements in the portfolio. So, we will now give comfort that also, to your point on dividend from the associates come and go and they're not very certain.

We want to give that floor of SEK 2 to investors. Also then stretching into 2017 where we're comfortable that our increased cash flow, free cash flow from continued operations will cover the levels that we're setting for 2016.

And maybe just to reiterate, Christian, that this is not a cut of dividend. This is a new dividend policy to reflect the new company and the cash generation that we see are setting now a floor to take it from here.

On the EBITDA guidance, I do agree with you that the comparables may look easier in Q1, Q2 but tougher in Q3, Q4. So, that if you look at our organic EBITDA for the year, it is flat in continued operations.

So, even if Q4 looks strong, year-on-year it's flat. And then with the remarks I made on starting the year with about SEK 1 billion negative EBITDA that we know more or less going to come through, working our back to that SEK 1 billion to get to flat is the first step and that's our ambition.

But we are comfortable with our guidance on maintaining EBITDA. And on fiber, Christian, beyond 2016, we say this is the peak year for CapEx.

Doesn't mean necessarily it's a peak year for fiber, but it means it's the peak year CapEx for the group. Depends on how we face the fiber towards the end of the year and that is everything from weather and wind and the capacity.

And we have a clear target then and where we said that's SEK 15 billion next year. If we succeed with that, it will definitely go down on a higher scale.

The year after, we have 260,000 homes passed right now that we haven't connected and we will start then successively also over time to implement these, and that will take down CapEx. We'll just continue to drive the connected homes.

But we have a strong momentum right now, as I said before, and we want to keep that as long as we can do that within our business case and deliver capacity.

Lena Österberg from Carnegie. Two questions.

First of all, on CapEx. Once you passed this peak, what do you see as a sustainable level going forward?

And also maybe on frequencies over the next two years, how much do you think you need to spend and set aside for that notion licenses coming up? And then also I'm a little bit curious on this IT transformation and what is it that you actually do.

What are you swapping, what is the next generation TeliaSonera is going to look like? Because you talked about you will become the next-generation Telco, so what are you doing internally to become that new Telco?

Johan?

Yeah. I'll just start.

We have already in the Capital Markets Day said that the year before, i.e., 2014, was a good starting point for thinking where we should go back to. So, we are increasing the SEK 5.6 billion over these two years to go back to more that kind of level afterwards.

Yes. And then, if you remember, the SEK 5.6 billion was primarily Sweden and Europe, but there was also an element of that into Eurasia, and that was not the majority part of the money.

The frequencies, you're correct, it's very hard to predict. But there is plans, both in Sweden, I think in Spain, Lithuania and maybe Norway as well.

But this is very unpredictable. It could come this year or next year, and we will have to wait and see.

But we have noted in the presentation that we shouldn't forget about that this can come and we should be prepared for those. And we will then, at those times, evaluate if we want to participate or not.

And it may be so.

But that's not in the SEK 14 billion to SEK 15 billion?

No, that's not in the SEK 14 billion to SEK 15 billion.

And on transformation, we go back to our ambition that we set in CMD with our cleaning up if you want, the old system and legacy. We're setting the right platforms in place to be able to adapt to the new customer behaviors that we see in our markets, which is much more living the digital life and online than ever before, and we don't have those systems from the past.

They were not set up to deal with today's consumer behaviors, both B2C and B2D. And that requires investments in the factory to remove and reset.

That's a high-level description of what we're doing. A detailed description is much more complicated and we can certainly speak about that more, but I think I'll stop there.

It is really investing out of legacy into future-proof platform in Finland, Sweden and on Group level which supports the countries.

Will you be done in one year?

We're close - we're in the middle of it. And I don't think we can be down period everything in one year from now.

But the main part of the transformation, the main investments will be done in a year or so. But it will probably be tail-end of further cleanups.

And remember, as long as we have the PSTN and the copper network out there, we'll still in a legacy factory. And that will be maintained for some longer time than 2017, and will probably remain for a few more years.

But that's also what I talked about in the transformational effect, that we are disconnecting a lot of peers down with EBITDA effect of SEK 800 million EBITDA of copper, PSTN and closed down, volunteer and non-volunteer. People disconnecting and we're also disconnecting people to get them into future-proof technology.

And that takes time, but roughly from now we should be through the main part of those CMD discussions with some tail end for the copper closedown.

We have a big investment here in 2016, but we have said that the effects will come during 2017. It gives us some room, but it also puts a limit to it.

So, I think that's a good way of looking at it.

Andreas?

Good morning. Andreas Joelsson from DNB.

Two questions. First, you mentioned the macro environment in Eurasia and you could argue that the timing for disposals is not perfect.

Is that something that you consider? And secondly, on mobile you lost subscribers in, I think, all countries but two, partly deliberately but can you say something about what you see and if that is a concern?

Thanks, Andreas. Yes, macro is, to put it mildly, troublesome in many of our markets.

And from that perspective, you could argue that the timing is wrong. But I also believe that the timing for us to focus our efforts in investments and management attention into the Nordic-Baltics is more important.

We have a responsibility to make sure that we have it exit responsibly both in terms of value, risk and timing. So we're evaluating that in this process which is underway, and we're not running away leaving the keys on the table.

On the customer side, we're focusing on value a lot to make sure that we get the value customers. We're not forgetting that, of course, subscribers are important, but we're not going after subscriber market share in all markets.

It's about revenue market share where we have some positive trends in some markets. I think we're holding up fairly well in our core segments, but clearly not fully competitive yet.

And that's also back to the transformation that we're doing. Some of that will have to come when we are through transformation because we know that we will be better to meet a lot more customers' expectations into 2017 and 2018.

[indiscernible] by a couple of markets that we clean out inactive subscribers in both Norway and Spain for example.

Yeah. Thank you.

That's true.

Yeah.

I think we should open for the conference call, Jesper, for any questions.

Well, thanks very much. Good morning.

The first question is around, I guess, around the CapEx outlook beyond 2016. How can you be so confident that you're not going to see a case for really interesting CapEx projects in 2017 and 2018 with great returns on investment, and then obviously that has an impact on free cash flow potentially the dividend capacity?

And then secondly, perhaps I can just ask for an update on the Fintur situation. I mean, we know that some made an offer.

Can we conclude that you've actually declined this offer? I mean, can you give us any update at all on the level of interest in your Eurasian assets?

Thank you.

Thanks, James. On the CapEx, we say it's a peak year CapEx, SEK 14 billion to SEK 15 billion.

The range is very much related to the fiber rollout which is dependent on timing and weather as I've said. And we believe that this - when you look at the CapEx profiles for our countries right now, it is a lot coming together in one year; 4G expansions, capacity expansions, fiber rollout and upgrade of a lot of our legacy systems.

So, we're comfortable to say this is the peak year. And of course, it doesn't mean we can reshuffle CapEx going forward between countries depending on what you mentioned opportunities coming up.

But this is where we see the need assistance now 2014 to 2015 and being the peak. Fintur is part of what I mentioned, the divestment process which is ongoing, progressing according to expectations and we have noted the interest of course from Turkcell which they made official.

There were also other interested parties in that discussions. And we will have to come back when we have more to say.

So, a short but - short answer.

Can I just ask - just to clarify, you said that you should expect to finalize the divestment process in the next 12 months. Does that also include Uzbekistan?

So, we have made the assessment and judgment that we can do a divestment during the year to come. And that's why we have made them into discontinued operations.

And that assessment we have to do every quarter basically now and see how we're progressing. But the call we made for the full year 2015 and ending end of December is that we can manage that within the next 12 months.

Clearly, a challenge. Clearly, is something we have to reevaluate if need be.

But that's the call we have now.

Great. Thanks.

All right. [indiscernible] could you take the next question.

Please limit the questions to one or two, so we have many on the line.

Thank you. Two questions please.

Firstly, if I can just return to Swedish fiber rollout. You obviously given us some quite positive comments on the outlook for this year and Christian mentioned the number of households passed but not connected, et cetera.

You gave us, in the beginning of this year, a target for fiber SDU connections to be reach in 2015 and you full met that number. Are we to take it that the cases you've given us is that you will at least make - meet that number for 2016 of 55,000, and are you potentially willing to give us a new target for households that are connected for this year?

And can I just follow up on your guide to the previous question you had, please? If you indeed meet your target or ambition of having the disposal process completed within this year, i.e., the next four months, do you think that by the end of this year as well, you will be in a position to give us your thoughts on what you intend with the disposals, i.e., what I mean is do you think you will have full knowledge by that of one proceeds, but on the other hand, cite also any potential outflow in terms of penalties by the end of this year?

Thank you very much.

Thanks, Peter. Two short answers.

Yes and yes. If you want me to elaborate a bit, we intend to overseas on last year's fiber rollout, and that's what you see in the upped CapEx guidance.

And yes, we do expect to close our issues in Eurasia, and we'll then be able to talk about the future in how we allocate capital going forward in the investment in the Nordic core on how we deal with the balance sheet.

Thank you.

All right. Next question, please?

Thank you very much for taking my question. So firstly on Sweden mobile, you've mentioned that the SME seems to be doing relatively well in mobile.

If we look at the overall performance, there seems to be a bit of a slowdown. So, can you just please talk about what's going on there in the overall competitive intensity in the market.

And also secondly, perhaps, on the dividend, you've given the floor of SEK 2 for this year. You talked about the dividend being covered, and that is a comfort to investors of course.

But then thinking about to 2017 without sort of being too precise on it, you're talking about CapEx coming down and your starting point was a cover dividend in 2016. So therefore, is it reasonable to assume that, in your base case, you're thinking about growing your dividends or should we be more focused on flattish in terms of expectations?

Thank you. Mobile Sweden, our enterprise in Sweden is still extremely competitive.

And if we start from the top again, large corporate on the tremendous pressure both from competitors; not just Telco competitors, but ICT system integrators. Also, heavy price pressures we've talked about due to the old going into new services, not buying products or one-offs, but into services in the cloud, et cetera.

And we're part of that and we'll take our customers into the future, but we'll also take a hit on the revenue while renegotiating. And that's still very much under way in the large corporate, and that's why it's so positive to see that what we have done in SME and SoHo during the year or two really big launches in H2 has paid off or starting to pay off.

And we're hopeful that, that can also spread into the larger segments. And roughly, I mean, SME and SoHo is actually slightly bigger than the large corporate in terms of revenue, so that's a little hint.

On the dividend side, well, we won't go further than saying at least 80% and at least SEK 2 for 2016. But we also say that we see improved cash flow in 2017 and onwards, thanks to business improving, lower CapEx through transformation.

And that then will hopefully give us some flexibility going forward. But we won't go further than that for now.

All right. Next one, please.

Yes. Thank you.

Good morning. Just two quick ones.

Firstly, on Finland, obviously Q4 saw the margins improved quite nicely on a year-on-year basis as the cost transformation continues into 2016. How high do you think EBITDA margins in Finland could eventually reach?

And the second, on Sweden. Quick clarification on the fiber households passed in Q4.

Just wondered if you can split out how many were SDU? How many were CTS?

How many were MDUs? And how many were homes passed but not yet connected?

Thank you.

I'll leave it to my good friends here, next [indiscernible].

Good. I will start with Finland and as I've said it's not the biggest part but we had good comps also between the quarters, quarter 4 this year and last year.

We reported that we had high cost in customer operations and we have to do some dramatic cost uplift there last year. but we have improved.

We have improved over the year and we're working on cost service revenue and mobile and consumer has improved. But meanwhile, the Enterprise segment in Finland is very tough and there it's tough in all parts of the segments.

And that is something we will carry into next year as well. So, quarter 4 was a little bit better than you should expect because of these reasons and as we have been pointed out by one of our other analyst here today, the comps will be better in the beginning in the year than in the end of the year.

Good. And on the fiber side, on the SDU side related to the campaigns that we had on there, we added 23,000 in this quarter versus 16,000 in Q3 and that was 12,000 last year, and then we have [indiscernible] 14,000, MDUs then - yeah, some other being the reminder [indiscernible] basically.

Thank you.

Next question, please.

Good morning. It's Nick, Soc Gén.

Just a couple of questions, please, as well. Could you remind us how quickly you expect the cost savings to come through in 2016, please, and whether that's going to be quite a big acceleration this year?

I think you mentioned a SEK 200 million run rate, didn't you, by the end of 2015. And then secondly, what's the better equipment margin contribution been this year?

Is that something that would accelerate? Could you give us maybe a few bits of detail around the contribution to EBITDA, but maybe number of subs that have taken it and whether it would speed up into next year as well?

Thank you.

Okay. On the cost savings, just to clarify that again, the discussion we've had, the transformation is a little bit like a catch-up effect in a sense, so we're working very hard over two years with big investments, big changes, and it will be slower improvements coming through.

And also, there will be cost for driving this and limitations driving this. And that's why one of the reasons we have said a long time, doing this large transformation in this group will have limitations in all the things we want to do.

And therefore, we don't run, for example, large cost programs on top of this. We do fine-tuning, we take down resource costs where we can, and we negotiate our contracts where we can, but we're not going to be able to do any large other cost savings meanwhile we do this transformation.

And that will be more of a catch-up type effect in that sense. And then secondly, on the better equipment margin, I think there's different elements of this.

In Sweden, we're very clear in quarter one that we were not satisfied with the way we were handling that. And we have then changed that into second half.

That means that if we continue on this level now where we have found good way of handling that, we will have good comps in the first half and we would be more on par in the second. On top of that, we are driving other activities on equipment sales like we do in Finland where we try to unbundle.

And when we unbundle, we actually find that we have a better opportunity to get paid for what it cost just to buy an equipment for us. And that will continue.

We're looking into Denmark and other markets now to take that journey as well.

And if we come back on acquisition, is it quite a large effect in terms of EBITDA for the second half of 2015 in total? I mean, is it material when you add together Sweden and Finland or is it a reasonably small benefit?

I think I have started to learn you, guys, now. So, both for you and for me, everything that is small is material, I found.

So, all the small dots we have on our numbers, you're very curious to understand what's happening and that is for us as well. So, everything is important, and this is an important element of driving the right cost structure and also the right model going forward.

So, in absolute numbers, it's not the big tickets like we say when we have the negative push, but it's one of those items that helps us to compensate and close the gap.

Okay. Thank you.

All right. Should we take the next one, please?

Yes. Thanks very much.

On Norway, could you sort of outline how you see the current market structure? Is there a strategic need for Telia in Norway to gain more market share or is what you have now a good basis to work from?

Second question is maybe a bit sort of left field, but still there's obviously much talk about industry consolidation also from a cross-border perspective in European telecoms. Are there any interesting opportunities for you out there, or would you simply say we locked down the portfolio, obviously, we have this Eurasia thing going on, and unless there's an amazing deal coming across our desks, we wouldn't even sort of think about things like that at this point.

And then maybe one last question really quick on Eurasia sales process, can you - I'm not sure you can, but can you confirm that you are actually talking to several potential buyers for each of the major operation, or is that in contrast to just talking to one? Thank you.

Thank you, Ulrich. Norway, first.

The market structure is, as you know, set through the last year with two large ones and then several smaller ones now. And I don't think we're - our prime target is not to gain sub-share.

Our prime target is to get rev stabilized share and then also work on the EBITDA share in the market. But we are happy with the year of integration where we're also doing the integration invested heavily as you have seen from the numbers into a 4G network, which is now on par and capable to take on more competition in other segments than consumers.

So, if there's something we're aiming a little bit more for is the enterprise side. And consumer, I think, we're probably in the right level of market structure, but we'll see.

We also expect some more competition actually in Norway during next year from the smaller players. So, that market will probably go through a bit of competitive test as well.

On the consolidation, right now, we're focused on divesting. We're focusing on investing and making sure that we create the right platform in our Nordic-Baltics.

And we have a lot of opportunities to deal with here. So, that's where we focus.

And on the Eurasia, as I said, it's a process where we're progressing according to plan and there are several parties in discussions across the board, that's all I can say.

That's great. Thank you very much.

Good. Should we move on to the next one, please?

Hi, guys. One quick question on Eurasia, would you please?

If you were to sell any of the Fintur assets to someone other than Turkcell, could you confirm that, that party would have to also offer to acquire Turkcell's stake and sell assets at the same price, please?

We're taking this step by step. First of all, we're divesting to seven countries and let's deal with that first, and then we'll see where we are once we have divested there and then we will deal with the Turkcell issue which is a separate one for now.

Where we have, as you know, we'll talk about our progress there and where we have a constructive dialogues across the board, both in Turkey and with our partners and are aiming to achieve things also for 2016 like we achieved in 2015. I think that's an important message that we're working hard on that.

And the AGM for Turkcell is always a key event that we should expect in the first quarter.

No. Sorry, I think you misunderstood my - including myself.

What I was asking is if you sold the Fintur assets to someone other than Turkcell, would that party have to buy out Turkcell's stake and those Fintur assets as well as a tag along?

The answer is no, because we decoupled these two issues. As I said, we deal with the seven markets separately from Turkcell.

Okay. Fine.

Thank you.

Yeah. Thanks very much.

I had two questions on Swedish fixed, just given the demand you seem to be seeing on fiber and that pricing in general seems to be up a little bit on fixed line in Sweden, you put through some TV price increases in 2015. I didn't see you put through any price increases on broadband.

Do you think, maybe just your view on pricing turn on fixed line in general and maybe on fiber, your fiber pricing doesn't seem too aggressive. If you can kind of put that up a little bit maybe.

And then on the fixed line telephony side, how many of your PSCM lines are telephone only and basically how many houses take just telephony and non-broadband or anything like that? Do you think you can put a pricing I guess online or [indiscernible] didn't do that in 2015?

Thanks so much.

Henrik, Jesper is looking up the numbers for PSCM. Pricing fixed, broadband, and fiber to go down the fiber.

A very interesting question. I think we are on a mission to optimize our pricing across segments, across product and I'm sure we can find the areas where we are not optimally priced.

We have tried that in 2015, not on a large scale. We continue to try to see if we hit some sweet spot on pricing where we can leverage further.

I think we should begin [indiscernible] come back on that very specific question. So let us come back to that afterwards.

Okay.

Thank you very much.

Hi, guys. It's Maurice from Barclays.

I just have a quick question on the space of competitive intensity in the Swedish markets. It feels as though perhaps the competitive pressure has eased a bit in the second half?

Are you seeing - it looks like lower churn, lower subsidies, lower margins for everyone, is that what we are seeing? Of course, earlier in the year, we were all concerned about these super-large buckets that's damaging the future of data monetizations.

Any thoughts on that would be greatly appreciated. Thank you.

Maurice, thank you. I think it's fair to say that the year has been characterized by competition within our respective bases.

We have repriced our base, we have upgraded our base, we have secured our base, except maybe for one player in the market, which is taking share. So, I think we have a lot of that competitive dynamics within our own bases.

And I think and I hope we stay rational into next year with focus on value, focus on getting the right propositions into the right customer and the right segments in Sweden, and that has paid off during the year. We have a strong growth on consumer mobile postpaid, for instance.

I think it's 5% in the quarter, so 5% postpaid service revenue growth, and it comes a lot from our existing base. So, we're not in need of gross add taking share in order to drive revenue, and that has been the focus, and we'll see what the focus will be going forward.

Thank you.

All right. Next question.

Good morning. So, just one question from myself.

On Denmark, now there's disappointing revenue performance in the quarter, how do you think about your options for that market? And is this something that you're committed to in terms of staying in middle class, or do you think you could look to exit that over the course of this year?

Thank you. It's very competitive indeed, and also, as you say, disappointing trends.

We had repriced in Denmark. Most players have repriced during Q4 with some of their lower buckets, 10%, SEK 10 or et cetera.

That has not kicked through as you see from most of competitors reporting. And it takes time to reprice the base, so we haven't seen that effect yet.

Even with that effect, I say that we don't think we will get to great returns on our Danish situation. And that's why I still say that Denmark is important for us, it's important for our customers to be in Denmark, but we have to make money in Denmark.

And those two parameters we need to fix together, and that's where we stand right now in our view on the market.

Good. Thank you.

I think we have one final question.

Thank you. Just coming back to Eurasia.

I just want to clarify in the balance sheet and net assets of Eurasia is SEK 24 billion. Is that your best assessment of the market value on those countries for 100% of those businesses including the minorities?

The short answer is that the SEK 24 billion that is on page 23 I think in the quarter four is the book value of 100% as we consolidate the 100% of the Eurasian entities. We need to also book the assets and liabilities to 100%.

So that's the 100% of our book value not our assessment of what we think we will get for those assets, for our shares.

Okay. Thank you.

Okay. Thank you.

I think we'll conclude there.

Thank you very much.