Telia Company AB (publ)

Thank you, and good morning, and welcome, everyone, to our Q1 call. We have President and CEO, Patrik Hofbauer; and Group CFO, Eric Hageman here.

And they will take us through the quarter, and then we'll go straight to Q&A. Patrik, please go ahead.

Thank you, Erik, and good morning, everyone. I would like to start, as usual, with some overall reflections about the quarter.

We have had the first full quarter with our new organization, and I'm happy to see that we could follow our commercial plans despite all recent changes and with a financial outcome close to our own expectations. We have also completed a major milestone in our strategic plan as we found the right buyer for our TV and Media business and agreed to sell it to Schibsted Media.

This will enable an even greater focus on our core business going forward, and it will make us a more predictable telecom group. There is also plenty to report about sustainability this quarter.

And I want to highlight especially our Climate Transition Plan published in March, which sets out our climate road map describing how we can achieve net zero by 2040. Our full year outlook is unchanged since the financial results in the first quarter were largely as we expected.

And if we go to the next page, I will comment on them in some more details. Service revenue growth in Q1 was close to 2%, in line with our full year outlook as well as our midterm ambitions.

It improved a little from last quarter, helped by Sweden, in particular, which grew 2%, but also by the Baltic markets. Fixed service again grew a little faster than mobile.

EBITDA growth was close to 7% this quarter with strong contribution from Sweden, Finland and Lithuania. This is slightly ahead of our full year growth rate target even though TV and Media is not included anymore since it has been moved to discontinued operations.

If TV and Media had been included, which it was when we originally set our targets, EBITDA growth would have been 11%. Cost efficiencies derived from the change program was, of course, a big driver behind the EBITDA -- the higher EBITDA.

CapEx, if you look at it on a rolling 12-months basis, it is now well within our frame of less than SEK 14 billion per year and will remain there for the rest of the year. We are also on track when it comes to the free cash flow, which was SEK 1.7 billion in the quarter, and we still target around SEK 7.5 billion for the full year.

And with both EBITDA and cash flow going in the right direction, our leverage is declining and now stands at 2.18x EBITDA despite that we paid SEK 2 billion dividend every quarter. Let's now move into the countries and starting with our biggest and home market, Sweden.

Sweden has followed its commercial plan in the quarter, focusing on deepening customer relationships both with households and enterprises based on a premium infrastructure position. We are proud to have won a network award with umlaut again, this time indicating that our network in Sweden is a top 5 network globally.

In the Consumer segment, we have a lot of pricing activity. We communicated back book pricing to many mobile, broadband and TV customers in January, effective in March.

So we expect full pricing effects in Q2. TV continues to do well and helped overall Consumer revenue growth to almost 2% despite the continued drag from legacy copper.

This drag is reducing, however, and we have now passed the milestone of having less than 100,000 active copper pairs left in Sweden. In Enterprise, you may remember that we had negative growth last quarter, much due to those project and license revenues that tend to be lumpy.

We said that we expect better trends in Q1. And indeed, we are clearly back to growth again with 3.5%.

Again, this is partly explained by projects and licensing revenue, and it will naturally continue to go up and down from one quarter to the next. We expect these revenues to be lower again in Q2, but customer activity is good.

And unless the macroeconomic situation deteriorates, we have a promising pipeline for the second half of the full year. EBITDA growth was the strongest for many years at over 8% with a good effect from the efficiencies we've created through the change program.

So now let's move east to Finland. In Finland, we continue to drive simplification across the businesses.

Meanwhile, the new management is reworking the overall strategy, especially when it comes to our enterprise operations. It is clear that we today are not able to fully leverage on our capabilities, product portfolio and network position in this segment.

Looking at the quarter, we can see that mobile ARPU is holding up relatively well, supported by growth in Consumer, but we are still in decline when it comes to our postpaid subscriber base. This is a key focus area for us to turn around, and we are gradually improving.

But with that said, it will most likely be another few quarters before we have come all the way to a neutral development. Service revenue growth was minus 2%, largely due to lower fixed Enterprise revenues and the fact that Finland this quarter reached the peak impact from the e-invoicing ramp-down.

This had a negative impact of around SEK 50 million. So excluding this headwind, revenue would have been stable.

There is also a continued overall negative macro, which reduces the ICT spend amongst Finnish corporate customers. However, despite the negative service revenue development, EBITDA increased by 5.6% due to the change program that reduced the total OpEx by more than 5% despite an increase in IT costs.

Moving now west to Norway, which is currently undergoing extensive changes across multiple management levels, including Morten Karlsen Sørby joining as Interim Head of Norway until Bjørn Ivar Moen comes on board as the permanent head in January next year at the latest. The team under Morten is working hard to improve our trends, especially on fixed revenue, and we have launched new cost initiatives.

In the quarter, we see that service revenue growth remained somewhat negative as mobile growth of 1% was more than offset by a decline for fixed service revenue, 2 services that have seen negative development for some time now and that we dedicate a lot of focus to stabilize. EBITDA growth was also negative as a result of the top line reduction.

In the coming quarters of 2025, EBITDA decline will worsen before it gets better because of the migration of the ICE wholesale contract. Turning now to Lithuania, which continued to deliver solid service revenue growth, supported by mobile growth of 7%.

And as can be seen on the right-hand side, it is driven both by a steadily growing subscriber base and an expanding ARPU. This is very comforting and a sign that we are executing very well on our commercial agenda.

Looking at the fixed services, broadband grew 5% and TV grew 4%. We had a successful launch of Netflix in the quarter, which helped drive TV revenues and shows again that our aggregator strategy is working also outside of Sweden.

EBITDA growth accelerated further to 10%, driven by service revenue growth and efficiencies from the change program. Combined with a more efficient CapEx level, this translates into a record high EBITDA minus CapEx.

Moving then on to Estonia that like Lithuania showed a strong financial performance in Q1, supported by the change program and a solid development for our core products, mobile, TV and broadband, as well as an acceleration of revenues from public sector ICT contracts. Despite all the changes we have done recently under the change program, Telia Estonia received awards for both the best employer in the IT and telco sector and for having a handful of the very best sales agents in the country.

Finally, I want to say a few words on Telia Towers that previously has been part of operations in Sweden, Finland and Norway. But from this quarter, it's disclosed as a separate unit.

Telia Towers has done well since it was created, this pan-Nordic platform together with Brookfield and Alecta. It managed over 8,000 sites with approximately half of the revenues coming from external customers and half from internal customers.

The tenancy ratio is well above 2x, which is good level. Together with our partners, we have created an efficient business, and EBITDA has grown over 25% over the past 3 years to a level of almost SEK 1.5 billion.

And with that, I hand over to Eric, who will take you through the financials for the quarter.

Thank you, Patrik. Let me now take you through the financial development of Q1, starting as always with service revenue and EBITDA development.

As you've heard this morning, and you can see from the graph, service revenue continued to grow at an unchanged pace and in line with our full year ambition of around 2% growth. Key drivers this quarter were a solid development for our most important market, Sweden, and strong growth across our Baltic units.

Also supporting growth in the quarter was a continued tailwind on from the Norlys TSA, an agreement that we will have for at least another year. But starting next quarter, it won't contribute to the year-over-year growth anymore.

From a product point of view, growth was also this quarter largely the result from strong mobile momentum in the Baltics and continued stellar growth for the Swedish TV business that grew 15%. Furthermore, Sweden also saw strong growth from business solutions coming partly from an increased level of non-subscription-based revenue.

All in all, this more than enough compensated for a continued pressure on revenue from fixed telephony. As you might recall, we have, for the last few quarters, flagged for a somewhat slower service revenue growth in H1 compared to H2.

This is mainly because of how our pricing cycle for the year is designed as well as the expected phasing of revenue from mission-critical services. This view on phasing remains unchanged.

And in Q2, we expect service revenue growth to be lower than in Q1 because we will lap the Norlys TSA growth benefit, and we will have the full impact from the ICE contract migration. Our view on the full year remains unchanged and for around 2% like-for-like service revenue growth.

Turning to EBITDA, and we see that growth accelerate, reaching almost 7%, with key drivers being our profitable growth and the change program implemented from December 1 last year. I want to highlight also that when we guided at CMD for at least 5% EBITDA growth, TV and Media was still in the perimeter of the group.

If TV and Media had still been included rather than be treated as discontinued operations, we would have reported 11% like-for-like EBITDA growth in Q1. In the second and third quarter, we expect somewhat lower EBITDA growth, owing in part to the ICE contract migration in Norway, before accelerating again in Q4 as pricing actions and mission-critical contracts provide greater support.

Lastly, the combination of profitable growth and efficiencies also resulted in the EBITDA margin for the group expanding by 110 basis points compared to the same period last year, reaching its highest level in modern times. More on efficiencies when we move to the next page.

As you heard, the change program is now delivering and was the reason for our operating expenses declining 3.2% in the quarter, more than offsetting an increased level of marketing spend to drive our commercial momentum. Other items remained neutral as mainly higher IT costs were offset by a continued decline in energy cost and a lower level of bad debt following a relatively easy comparison.

The combination of service revenue growth and lower absolute OpEx resulted in OpEx as a percentage of revenues declining by 160 basis points to 32%. As previously mentioned, we have an agenda to be more disciplined around our capital allocation.

And as you can see from the graph in the middle of this slide, booked CapEx continued to trend downwards at just above SEK 13 billion on a rolling 12-month basis. ROCE continues to improve as a direct consequence of that discipline.

And EBITDA less CapEx as a proxy for free cash flow generation also climbed higher in the quarter, which you can see on the right-hand side of the page. So overall, a good start to the year when it comes to our ambition to be more efficient with the capital expenditures, and we reiterate today that booked CapEx for the year will be below SEK 14 billion.

Let's now look at free cash flow for the quarter. Here, we can see that there is an improvement of SEK 2 billion compared to last year, with the first building block being our profitable growth, which fueled by the change program resulted in an EBITDA increase of SEK 500 million.

Cash CapEx increased by SEK 0.5 billion versus the same quarter last year, to a large extent driven by us phasing out some CapEx payables from the vendor financing program. Whilst the overall vendor financing balance has remained stable versus Q4, we now have rebalanced the mix of a vendor financing portfolio towards OpEx and COGS payables somewhat and away from CapEx.

This explains why cash CapEx is higher than booked CapEx this quarter, while working capital is a greater benefit also to the tune of around SEK 600 million in Q1. Interest payments declined, as expected, due to our active portfolio management, resulting in lower gross debt level as well as from lower market interest rates.

Other items increased by SEK 300 million as a result of severance payment outflow linked to the change program, again, very much in line with our expectations. Let's now briefly look at our net debt and leverage development.

As you can see on the right-hand side of this page, our net debt decreased by SEK 1.4 billion in the quarter, mainly as a result of solid free cash flow generation and a positive FX impact on our issued debt, primarily driven by the recent SEK development. The reduction in net debt, coupled with an increased EBITDA generation of SEK 800 million on a rolling 12-month basis, reduced leverage down to 2.18x compared to 2.28x at the end of 2024.

Looking at the historical and the longer-term historical trend on the left-hand side of this page, we can see that leverage has gone down over the last years as we have grown EBITDA while using proceeds from divestments such as Telia Denmark to reduce our debt levels. The balance sheet will be further strengthened by the cash we will receive from both the TV and Media and the Marshall disposals.

Before I hand back to Patrik, I would like to take the opportunity to briefly walk you through, through some of the financial milestones we have achieved in Q1 and how that resonates with our ambitions laid out at the investor update last year. As you may recall, we laid out a 4-pronged agenda to drive value creation, and we continued in Q1 to make steady progress on all of them.

Our EBITDA is gradually growing, supported by both profitable growth as well as efficiencies. In addition, we are also driving a disciplined and choiceful investment agenda, all of which are key building blocks for our ambition to grow free cash flow and dividend per share over time.

With regards to our active portfolio management agenda, we have, as you already know, found a new home in Schibsted Media for our TV and Media business. This will allow us to focus on our core business, which is to provide the best connectivity and adjacent services to the customers and societies of the Nordics and the Baltic region.

We also continue to actively manage our balance sheet. And as you just heard, it was further strengthened in the quarter.

And in the meantime, the vendor financing balance that was rightsized in the second half of last year remained unchanged at around SEK 5.5 billion. Finally, the AGM approved a dividend of SEK 2 per share earlier this month.

And given the solid start to the year, we remain as committed as before to deliver a free cash flow above SEK 10 billion by 2027. And with that, I hand over to Patrik for some closing remarks.

Thank you for that, Eric. And let now quickly summarize before we go into Q&A.

We started the year in line with our plans, and I'm happy that the organization works well even when we've done many changes because, of course, we will continue to change going forward. I'm also happy that we found such a good buyer for TV and Media business, and looking forward to handing it over to Schibsted Media in this summer when the transaction closes, allowing us to focus even more on telco.

Our shareholder meeting 2 weeks ago confirmed that our SEK 2 dividend level is intact and so is our outlook for 2025. And with that said, I will open up for questions.

Thank you.

I just wanted to talk about your EBITDA growth outlook for the rest of the year. Obviously, a strong posting today at close to 7%.

Eric, in your kind of talking points, you mentioned 2Q will be slower. So just a couple of questions around that and the outlook for the year.

First of all, when you say slower, do you mean slower than the kind of near 7% in the first quarter or slower than the 5% guide? Then within your comments, you mentioned that price actions will help boost growth in the fourth quarter.

Why did price actions not boost before then, given I think there's quite a lot of questions happening -- sorry, quite a lot of price actions happening now from what we can understand? And then finally, is it possible for you guys to give us a sense of the size of the headwind from the ICE wholesale contract loss for the group EBITDA growth for the second quarter and the third quarter?

I can start with the EBITDA growth, first of all, that we say that it will be lower in Q2 and Q3, and we think it will be a bit lower our guidance -- than our guidance of 5% in the coming quarters. So short term, we will, of course, lose the ICE revenue and the growth effect from the Norlys contract, which is a drag, of course, of around 2.5% on the EBITDA growth rate compared to Q1.

In Q4, we expect contribution from, among other things, also from mission-critical services that will support our growth rate in -- towards the end of the year. And remember also on your question, there's always quarterly volatility, but the year is progressing in line with our plan towards the level of the full year outlook.

So we feel still comfortable that we will deliver on the outlook for the year.

Yes. Shall I to the ICE headwind?

So in 2024, the revenue we had was around SEK 380 million. Migration has started in March this year.

So the revenue impact will be limited in Q2 and then 0 from Q3 onwards. It's about SEK 100 million lower per quarter roughly versus the same quarter last year.

I guess the cut rate was part of our '25 to '27 plan. And obviously, we're expected to see it decline.

So again, SEK 380 million in 2024 and then the revenue to decline roughly about SEK 100 million per quarter this year.

And then you had a second question...

That's really helpful.

Did you have a second question as well, Andrew, on the pricing, wasn't it?

Yes, exactly. It's pricing actions, I think, were mentioned as boosting in the fourth quarter.

But from what we can see, there's been quite a lot of positive pricing action in the first quarter moving into the second quarter. So I guess, is there scope for that to be of help sooner than the fourth quarter?

Yes, no, so we're happy -- so if you look at Sweden, for example, people were informed in January, impact will then be in people's bills in April. So that's going to help.

But obviously, you've also seen there is a bit of work to be done on Finland and Norway if you saw the service revenue development. So the plans are being made, and that needs to be executed.

And it's our expectation that the combination of price actions improving Finland and Norway, plus mission-critical across our footprint, is then what's going to get that more than 2% service revenue growth in Q4 and, hence, in the second half of the year.

So the first one would just be on the CapEx. So you still guide for below SEK 14 billion.

I think consensus is looking for around SEK 13.5 billion in 2025. And the last 12 months, you have around SEK 13.1 billion.

So just wondered if you could give any color on the below SEK 14 billion since you are closer to SEK 13 billion at the moment. Or should we expect that to come up a little bit closer to the SEK 14 billion level?

We don't guide so exactly on the CapEx. We have been clear that we will be below SEK 14 billion.

And at the moment, we are trending clearly below, as you have seen now for the rolling 12. So it will be somewhere in between where we are now and then the SEK 14 billion.

There are a couple of customer cases that we are also expecting maybe to come in that we will use some CapEx for. So that is basically the guidance we can give at the moment.

Got it. Then just a question on the TV growth in Sweden, which has accounted for a pretty large part of the total growth over the last couple of quarters.

So we saw TV ARPU slowing down a little bit in Q1, but subscription growth seems to be tracking at a quite good pace. So just wondered if you could give any color on the outlook.

I mean it's growing 15% year-over-year at the moment, and it's grown around 20% over the last year. So do you expect pricing to continue to support the ARPU growth in this segment?

And if you could give any color on the sort of pace of the subscription growth trend at the moment.

Yes, thank you. I can start.

And I mean we have seen clearly growth, as you said, for TV product, and we have the best TV product in the market. And it's natural that will come down a little bit with the high growth we have had historically.

But we have a very good product, appreciated a lot by our customers. And we think the current trends that we see now in Q1 will continue during this year when it comes to our TV product.

And it's an important value proposition since we are in Sweden on the consumer side, looking at a household perspective, and it's an important for our 2-play, 3-play services. So I think it will continue in the same pace that we have seen now in the start of the year.

Perfect. Then just a final question on the free cash flow outlook in 2027.

You still have the ambition of exceeding SEK 10 billion. So after, I think, you initially announced it, you lost the lease contract.

I mean you were expecting it to decline a little bit, but still a headwind, I suppose. And then you divested the TV and Media segment, which should have been free cash flow positive, I suppose, in your 2027 outlook.

And also, I think that you have had some minor FX headwinds since then. So given the reiteration of the above SEK 10 billion free cash flow in 2027, is there anything in particular that you want to highlight as positive things that have changed since you initially announced the guidance?

We are very comfortable with the solid start to the year. So having done a quarter and almost a month of the second quarter, we have good visibility on delivering the SEK 7.5 billion.

And that ultimately is then a really good start to deliver at least SEK 10 billion by 2027. There's always going to be some pluses and minuses.

And I guess when we set out our store when we announced the TV and Media transaction to say the SEK 8 billion is now SEK 7.5 billion for this year, that seemed logical. But also reiterating at least SEK 10 billion by 2027, I think, demonstrates the confidence that we have on us delivering on the plan.

Yes.

So to be very clear, we are committed to deliver on the SEK 10 billion.

Yes. Perfect.

Just -- sorry, just a small clarification. You said the ICE loss in Q2 will -- or started ramping down in March, but it will have a limited impact on Q2.

Can you just clarify that, please?

No. So revenue would be very limited in Q2, right, because of that because it has been migrated to our competitor quite quickly.

So it will be 0 already in Q3, so will be very limited revenue left in Q2 from that ICE contract. And if you think about it mathematically, right, SEK 380 million last year goes down by SEK 100 million in the quarter, right?

Yes. No, perfect.

I just interpreted that the impact would be limited in Q2, but that clarifies it. Perfect.

So cost seems to be well under control to say the least. So looking at service revenue, it's the Baltic and as we concluded in the last question session, TV in Sweden that is driving the service revenue growth.

So looking at the other products in Sweden and adding Finland and Norway, what can you do? You said you had plans to turn Norway around.

Can you describe those plans a little bit more? You also said that you will take some additional cost measures in Norway.

Can you sort of quantify that in some way? Just to understand the trends that we see and how we can turn those trends around.

Yes. I can start.

First of all, it's not only the TV that is growing in Sweden. I mean Enterprise was growing more than 3% in this quarter.

So it's much broader than that. And it is super important that Sweden will continue to grow on service revenues, given it's our home market and it's almost 50% of our business.

So it's very, very important. And I'm happy to see that they are actually performing very well.

Then when it comes to both Norway and Finland, I think we need to have some patience there because we are now setting a whole new team in Norway, and then they are working with a short-term plan and a more midterm plan as well to get that. But it will take some time before we turn this around.

And I cannot give you exactly guidance on when it will turn, but they have at least full commitment to change the current trends that we see in the Norwegian market. But as you know, we are a telco business, it takes some time to turn things around.

And in Finland, we have also a new CEO coming in -- who came in this quarter, Holger, and he's now working actively together with his team, but there are different starting points. They have not lost a wholesale contract like the ICE, for example, in Finland.

So here, we foresee a bit quicker maybe turnaround, but it will still have some patience, take some time. But we feel comfortable that we're now doing the right things, creating the right plans, creating good teams in place that actually can deliver going forward on the turnaround on these assets -- on the 2 markets, sorry.

Yes. Maybe just to add one thing on service revenue.

If you look at I think it's Note 4 on Page 22 of today's report, gives you a bit more color on where the growth in Sweden is coming from. We specifically called out the 15% growth in TV.

That's about just over SEK 100 million compared to the same quarter last year, but also we grew in broadband and in business solutions as well, right? And those in combination were more than enough to offset the decline that we see in fixed telephony, which is the old legacy business, if you will.

So it's not just TV where we saw indeed good subscribers and ARPU development. It is also our broadband business and also business solutions which is, in essence, is IT services that we offer.

So it's much broader based than just TV.

Very clear. And the cost initiatives in Norway, what is that?

Yes. So I think the best way to look at it is if you look at the report, Andreas, today, you can see across the board the strong impact that the change program had.

So for example, EBITDA margin in Sweden was up 230 basis points. And in Finland, it was up 200 basis points.

If you then look at Norway, you don't quite see that. Actually, you see the opposite development there.

That's not good enough. So to give you a sense of what we will do there, that might give you a bit of an indication.

So it's a broad perspective. We look through all the costs basically and turning all the stones in Norway.

So it's not particularly one item. It's across the whole cost base.

Perfect. Now I'll read Note 4.

I want to come back to the mobile side of things. And I looked at the numbers here and I can see that in Sweden, it's the third quarter with postpaid net adds losses.

And in Finland, you're up to 7 quarters; in Norway, it's 2 quarters in a row. What is your plan with this?

Are you comfortable with sort of tapping out a little bit on your subscriber base as long as your price hikes are biting on the remaining base? Or is there another thinking here that you want to turn these things around and make net adds grow again?

Some discussion around that would be interesting to hear.

Thank you. I can start.

And there are different views depending on the market. So let's start in Sweden, first of all.

We have been very clear in the enterprise space or the B2B in Sweden, we will not follow these aggressive prices we have seen in public tenders, especially on the municipalities, and we have actually stepped away from several of those cases. And we have been a bit more exposed to those in the past, but we have said that we will clearly not follow these aggressive prices.

And so that is one of the reasons. It's a choice we made that we will step away and let then our competitors take those at very low prices instead because we think it's not -- we should actually charge more for the services that we provide to these customers.

So that is a very important decision that we made internally. So that is basically for Sweden and the main reason.

In Finland, we've seen some improvements in trends. But I agree with you, there's been too many quarters where we have given away basically our customer base, and we will stop this.

And we have launched several activities, and it will take some time, but we are on the way to turn it around. But I think we need a couple of more quarters because it's not an easy change, but we are definitely not happy with the development.

Yes. No, very good.

I think there's different horses for courses here, so depending on where you are. I think maybe on the consumer side, in Sweden, it's very similar where we continue to defend on the postpaid side quite strongly, where the price actions clearly have an impact to drive our performance there.

I mean we're only down SEK 24 million on a couple of billion of revenue on mobile in Sweden overall. So we're quite happy with that.

And where the competition is, it's mainly on the lower end of the market where we have a good brand where we can defend ourselves. But as a premium offer, we try to stay out of that battle, if you will.

Very different than the other markets where we are now more a challenger, where clearly there needs to be a line -- more of a line in the sand strategy for us to win back a bit of market share. But it's always trying to find the right balance between where do you price to win back a bit of market share and then how do you also make sure you get the right ARPU development to drive service revenue growth.

But we agree with your question, there's a bit of homework to be done there.

Just a quick follow-up then on Finland. There have been some talks about an MVNO signed up in Finland.

Is that something you can comment about? Or have you seen or have you evaluated?

I haven't seen anything. We have heard about it.

It's nothing that we have evaluated. So -- and we have not been in dialogue with any MVNO contract in Finland.

But I've heard rumors in the market about it.

A couple of a bit more detailed questions, one for Sweden and one for Finland. First, for Sweden, the fixed broadband subscriber intake looks a bit weaker than previous quarter, and that's despite that you're approaching the end of the xDSL subscriber base.

Is this an effect of price increases? Or is it anything else like market competition or anything that we should be aware of?

And then for Finland, Elisa was fairly positive on the mobile service revenue trends, and it seemed like they were positive on value-added services making an impact where they are including the mobile ID as part of the mobile bundle and will charge extra for that. Is this in your plans as well regarding mobile ID?

I believe this was an industry-wide -- the mobile ID is something that you also take part of. So is it a plan to charge for this?

And how much? And when will we see the effect of that?

Yes. So Erik, why don't you start with the Finland question?

Yes, I can take the last one. So we all -- in Finland and as well as in other places, we all have our unique selling points, right, for the product.

And mobile ID is typically included free of charge for us specifically. I am not aware of any plan, and we typically wouldn't announce plans before they made public anyways to change that at the moment.

Overall, we have an overall pricing, which are not far from the other players and not, in fact, far from the market leader despite that we're the smallest player in the consumer space. So there also isn't a reason for us to do anything right now.

But of course, we are a follower in the market. So we will follow the overall development and take our decisions from there.

Yes. With regards to Sweden broadband, there are 1 or 2, let's call them, value-for-money players who are doing well in the Swedish market.

Certainly also because we price at a premium, as you know, that's kind of the mix that you want to get or the balance that you want to get right between what is your pricing to drive your revenue. As I said already, in Q1, we see our broadband service revenue growing, which is the right combination of increased pricing and you lose some subscribers to those competitors, which is fair to us.

For us, ultimately, it is about that combination of the fixed mobile convergence. So it's not just about selling that one product, which is broadband.

It's also then when you hold on to these customers, they're able to sell TV and other products to them, which is, yes, a big part of our strategy in Sweden and what differentiates ourselves from the competitors. So overall, we're quite happy with the performance of our broadband business.

And I think the reason why it was a slightly negative was -- and Stefan, the reason why it was a bit negative, just to build on what Eric said, is regarding the price increases we also did in the market. So it's -- but it's nothing unexpected and it's aligned with our own plan, so no surprises.

So your balance sheet is looking stronger and stronger here. And leverage will come down further, as you said, with the divestment of TV and Media and Marshall.

If we think about your sort of capital allocation priorities here, is there any selective M&A that you would look to do? Or is it more so increasing distributions to shareholders?

I'll start there.

Yes, no, so we have a very clear framework, right, of where we want to be from a leverage perspective. So as a typical player in the industry, you feel comfortable between 2 to 2.5x.

When we start to get the money in from Marshall in Q2 and then TV and Media is expected in Q3, we start to get close to the lower end of that range. We also said today what we repeated at the investor update last year, which is we have a clear ambition to grow our free cash flow per share and our dividend per share.

So when the time is right, when we start to get to that lower end of the range or below is when the moment when we need to a bit clearer about what we're going to do. But -- and we're very happy with sort of our capital discipline.

You see that with the rolling 12-month CapEx. You see ROCE going up, it's double what it was last year.

So we're very happy with that. And we have a much healthier balance sheet that allows us to continue to invest in the business.

When it comes to M&A, we've always said that we would be looking to strengthen our position in specific markets and mainly in our home market for Sweden. But we also said that you should think of us more of a seller of assets rather than a buyer of assets if you think about how much do you spend versus how much do you receive in proceeds.

Perfect. That's very clear.

You mentioned being a seller of assets. I mean, is there any sort of further divestments that -- or any noncore assets left that you would look to monetize here?

You have done a lot of pruning in the portfolio already, but anything to highlight?

Yes. We had a slide in September at the investor update that sort of set out some minority investments that we have.

We talked about the turnaround plan for Finland, for example, where last year, we were selling this e-invoicing business, which is about EUR 10 million revenue a year with 0 profit. Selling those is important to us.

But that's more pruning rather than sizable things. If there are things more sizable, obviously, we will update you when those become more prevalent.

Perfect. And just a final question for me.

So the change program is contributing nicely here in Q1. You have been progressing on your execution of this.

But have you been able to sort of identify any new efficiencies or new cost savings as you've been doing this program?

Yes. So I mean the change program that we actually executed on December 1 last year was more of a rightsizing of the business.

And then now we are looking into, of course, to operational efficiency measures and opportunities, and those will continue. So we will, of course, do our best to take away the inflation that we see and then be more efficient.

And we are constantly challenging all the costs, and we'll go through them during the springtime here again to see that we are right when it comes to our cost base. So we will continue, but we'll not do another change program that we did last year because that was more of a rightsizing.

So now it's more business as usual to just work actively with the cost base.

Yes. And as we said when we were on the road show after the full year results, maybe to add, is it's not just about people, right?

It's also about non-people-related cost. I think what you should expect us to see when we are disciplined around CapEx, we're equally disciplined about cost.

And it's trying to create a more cost-conscious culture. So there is, yes, quite a bit of room for improvement there as well.

And the example of that we just talked about in the QA earlier is Norway, for example, but there are other markets where we feel more can be done.

I wanted to dig into the comments in the report, in the CEO letter in the report about the macro risks, Telia not being isolated, but obviously in a defensive industry, not directly impacted, but there are things you're saying you're sort of looking at very carefully. So what are the main levers that you're currently touching to alleviate potential issues in the supply chain, the other risks that you highlighted there?

What are you -- where do you actually have the freedom to address things? And related to that, sort of question 1a, if you want, Tele2 actually commented, I think, yesterday on B2B pressure.

They mentioned things like SME bankruptcies going up in Sweden, also that the large enterprise customers are conducting their own cost-cutting exercises. Now you are reporting a relatively strong Q1, talked already about slowing down in Q2 a little bit because it's a lumpy business.

But how do you look at the business overall against the backdrop of those macro pressures and highlighted, in particular, by your main competitor? I have a second question, but maybe this one first.

Yes. I can start to give some comments on the macro.

I mean, if you look at what's going on in the U.S. at the moment, we don't see -- we don't -- it's too early to see any impact of the business.

We haven't seen anything in Q1, just to be very clear. Our exposure also to the U.S.

and also Europe is limited. I mean we are focusing on our territory, Nordic and the Baltics, and very limited impact as such.

We are more looking into, of course, the impact of the general economic growth and see if that could actually impact our customers. So it's more indirect view on it that we can see.

For example, and another one is that, okay, what is our exposure to the U.S.? Of course, we have some partners, U.S.

companies that are partners, but it's a very limited part of our sourcing, total sourcing that are directly to the U.S. companies.

We're talking about 1% maybe. And if you look at a bit broader and look at U.S.

companies also available here in Europe, it's around 5%, I would guess. So a very small part that is linked directly to this.

So more on the indirect and dynamic impact we can -- we are following closely. We don't see those yet, but you always look outside and see what's going on or how will that impact us.

Then when it comes to B2B, I would say last year, many companies hold back on investments, and we have seen a better start of this year. That's the reason why we also see these other revenues, which we call a bit lumpy on a quarter-to-quarter, coming up a little bit.

And we have actually seen positive signs from large enterprise that they actually start to invest a bit more now in the business. And when it comes to their situation with headcount reduction, et cetera, that is normal standard business for us.

So we haven't seen any impact yet from the macro in the world that's impacting our customers. But of course, we are in close dialogue with every customer to understand better their demands for going forward.

But so far, very limited impact, I would say.

That's very helpful. It sounds like you're in a completely different boat there as Tele2.

And the second question would be on Towers. So you're reporting this unit now separately, presumably to bring it a little bit more to the front of people's minds into the valuation and the sum of the parts and all these good things.

So could you talk a little bit about what's in store there? What are the levers and plans you have for that?

And I'm not talking about strategic plans, I'm talking about operationally what -- how you see this business developing and what you can do to improve performance?

Thank you for that question and for picking it up. It is indeed shining a light a little bit on a part of our business that previously was sort of hidden, if you will, within the various countries.

So -- and that's also the reason why the deal was done. No doubt at the time, also doing a deal at a great multiple was beneficial and it also gave cash, which allowed the company to delever and do a share buyback program, et cetera, all of those good things.

The main thing is that you then have people who have laser focus on executing a commercial plan, which is -- which was important. And so in some of the KPIs that you see and that we called out also in the slide deck and not just in the report is that you have more tenants because people are so focused on this rather than when it's single tenants, which is us, which is why we also called out this growth in that 50% of is external revenue, so not just from us.

So this business has grown substantially 25% additional EBITDA since the deal was done in '22, and the team continues to be ambitious on it. So on a regular basis, we will continue to update on this in the report and not necessarily in the analyst presentation because it is a commercial success on an asset that previously was, I guess, undervalued or understood -- not understood by the market, which is why we spend a bit more time on it.

So we're very happy with that commercial development.

On free cash flow in Q1, did it surprise you positively when you added it all up? You reiterate the full year guidance, so it might be the case of some items falling into some other quarters as well.

Or instead, I'm thinking partly on the restructuring charges for H1. Just some thinking on the phasing on free cash flow given the Q1 performance.

And I have a second question after that.

Yes, no, so we're happy with that SEK 1.7 billion, obviously, the SEK 2 billion more than last year. So that's always a good start rather than starting with a negative.

It is very much in line with expectation. Because what were those levers?

First one is strong EBITDA development, which is very good, paying less interest because we actively manage down our gross debt, obviously also helped by slightly lower interest rates. So those are levers that you control.

Then obviously, there is a bit of a difference between cash and booked CapEx that you've seen. But I think we've explained it in the presentation and also in the report why that is the case.

So good capital discipline. All of those together, I think, help.

A bit less restructuring cost than we normally would have, obviously, because we have just executed the change program. So that was quite a relatively low number.

But for the full year, there are always efficiencies. We talked about it in some of the answers we've given to the questions this morning.

So we still expect roughly about SEK 1 billion for the year -- for the full year. So marginally some difference in the different line items, but put together, very much in line with our expectations, right?

So if you think about feeling confident about SEK 7.5 billion, it helps that you then have a good start out of the gate with SEK 1.7 billion.

And a semi follow-up on that, the SEK 7.5 billion because just thinking about the spectrum CapEx, you don't guide specifically for that. You include the SEK 650 million in average for these years.

But you're comfortable with the SEK 7.5 billion, including that as well. But we already know that the spectrum CapEx will be higher this year.

Well, we'll have to see, right? So the auction is at the end of the year.

Let's see what that looks like, who participates and how the auction evolves, et cetera. For us, it was super important to guide for a cash flow that people can understand, put in their models, hence, us saying, historically, that average is about SEK 650 million.

So no one needs to worry about what that outcome is. Let's see what -- how that auction goes towards the end of the year and what the impact of that is.

We have the second part of the multi-brand auction payment, as you know, at the -- in Q4 as well, just so you get the full picture. Yes.

A follow-up on the Towers question. I forget why you wanted to highlight it, but what can you do to drive profit growth going forward?

You talked about the commercial excellence and that you're very happy with the performance. But just could you help us with what are the drivers for increased EBITDA going forward?

What to expect? What do you expect?

Yes. So one is rolling out more towers, increasing and being very disciplined around those, which ones can have multi-tenants, which can't.

So you also take a few away, so you improve the efficiency of the infrastructure, making sure that the pricing agreements, the contracts that you have with us, but also with others, which is why the external revenue is so important, right? You don't want to have EBITDA growth just driven by us because that's left pocket, right pocket.

We don't want that. So there's price escalators in those contracts.

All of those things help. The next thing is they also become better over time because very seasoned professionals in running these, yes, in the most efficient way.

And that's clearly what we see, right? To be able to get 25% increase in what in essence is 2.5 years is, yes, is a testament to the fact that these people know what they're doing, and it's great to have them as partners to run this.

Sorry, if I may, just a quick follow-up on that one, the 25% EBITDA growth. Was that coming from a low base or now up to par with where it should be performing?

Or was it already in good shape and outperforming...

No, these were profitable businesses for us, right? So if you think historically, EBIT margins in places like Sweden were very good already, but there's always upside potential.

And why? Because historically, incumbents, not just us, but other players, that's why as telco operators, we divested them, is they were not understood as well, and they were not commercially exploited to the best of their ability.

So they were well run, but they're better run now, hence, the uplift in EBITDA.

Thank you, Viktor. Many great questions.

I think we have about 5 more questions on the line and a couple of more minutes before the full hour. So we won't be able to take them all within the call.

You're welcome to call us afterwards. But let's take 2 more questions quickly, please.

I have just a couple of quick ones. Firstly, on Sweden EBITDA, so it's pretty strong in Q1.

I'm just wondering how you expect this region's EBITDA growth to evolve over the year because I think most of the headwinds you've mentioned were not specific to this region. So is Q1 quite representative of what you expect for the remainder of '25?

And then on free cash flow, just a couple of housekeeping ones. Other items you've previously said is underlying would be negative SEK 500 million, SEK 600 million, plus you have around about SEK 1 billion cash out for the change program.

So the SEK 1.5 billion to SEK 1.6 billion seem reasonable for this year for this line? And then just double checking that you said that restructuring for this year will be SEK 1 billion for the full year despite only being SEK 50 million in Q1.

I can start with the first question. Yes, we expect Sweden to continue to perform during the year.

We don't see any other signs that they will not. So that is the expectations we have in our own plans.

Yes, I can confirm that SEK 1 billion restructuring that I just said despite the sort of, what is it, less than SEK 60 million or so in Q1. And Erik, on other items?

Yes, I think that's right, Ajay. That's the right logic you're applying.

So I think we can confirm that. But of course, it's not an -- it won't be exactly that, but roughly SEK 600 million underlying plus roughly SEK 1 billion of restructuring paid from last year's change program.

And you're still expecting that restructuring to come out mainly in H1, the change program?

Yes, that’s right.

Correct.

I have 2, please, both of which are Norway. So firstly, can you remind us what percentage of your broadband base is still on cable and the degree to which your planned SEK 1 billion of fiber investments will go towards covering these customers with fiber over the next 2 years?

And then just secondly, going back to your comments on the need for additional OpEx cuts in Norway, how quickly do you think these additional measures will come through? Will they mitigate some of the ICE contract loss in Q2 and Q3?

Or should we think about that as a full drop-through?

Yes. It will take some time for those costs to come through, right?

So -- and also they come at a cost to some extent. So the full benefit you will see in 2026 rather than 2025, but some benefit already this year.

Let us come back to that, I think, at the half year on 18th of July to give you a better sense of dimension once we have finalized the plans and executed those. The split of investment in fixed is indeed SEK 1 billion over 3 years.

We said that at the Capital Markets Day. So that's roughly split equally over '25, '26 and '27, so let's call it SEK 300 million roughly per year.

We have around 40%, 45% is still cable. So the inverse around 60% is already fiber, so a combination of fiber plus fixed wireless access.

And we think that this investment is enough to be able to compensate for that. We're having very good traction, actually.

I mean it's hard to see that in the numbers, but the -- when we roll out fiber in SDUs and MDUs where there is that opportunity from either a commercial or a competitive perspective, we're very good at actually holding on to contracts or winning contracts when we roll that out. So we're quite happy with the money we've allocated and the way the country is using the capital that we made available for this to compete better versus the fiber offering of the competition.

Thank you, everybody, for all the great questions. We are very happy to continue to talk on the phone if you didn't have a chance to ask your questions.

But thank you for dialing, and goodbye.