Telia Company AB (publ)

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

Andreas Joelsson – Enskilda Lena Österberg – Carnegie Eric Pers – Danske Bank Peter Nielsen – Kepler Cheuvreux Barry Zeitoune – Berenberg Andrew Lee – Morgan Stanley Georgios Ierodiaconou – Citi Dominik Klarmann – HSBC Keval Khiroya – Deutsche Bank Allan Nichols – Morningstar Thomas Heath – Handelsbanken Jacques de Greling – Natixis Securities Ulrich Rathe – Jefferies Maurice Patrick – Barclays

All right. Welcome all to the presentation of TeliaSonera’s Second Quarter Results.

I’m Jesper Wilgodt, Head of Investor Relations. And we meet to present today, I have our CEO, Johan Dennelind; and our CFO, Christian Luiga.

And we take some questions after that. And we intend to close this event within an hour.

So, by that, Please go ahead, Johan.

Thank you, Jesper, and good morning all. Not a full house here in Stockholm.

I’ll take it we’re in the middle of a hectic reporting season rather than the middle of the holiday seasons. I’ll take you briefly through the highlights of our second quarter, where I’m pleased but not fully happy.

It has few components we would like to explain but overall, a pretty okay quarter. Our group service revenues are flat but net sales is negatively impacted by Spain and we will go through that in more detail.

Underlying EBITDA is stable in local currency and margins are similar to last year which is positive in spite of the revenue pressure. We have continued growth in the Nordic Mobile space which is positive news backed on the internet demand that we are seeing across our footprint with our new bucket pricing on data having a good effect.

However, the enterprise segments remain challenging both in Finland and Sweden but we’re defending share and that’s the good news. Our Eurasian operation is showing strength both sequentially and year-on-year.

We have almost 7% growth in organic terms. And the margin is on strengthening to very high levels.

We continue to focus on our corporate governance and upgrade our respective frameworks in all of our markets and we’ll cover that in a bit more detail later on. As you know, we all planned our strategy in Q2, which we also showed a proof point on during quarter two or after quarter two actually when we announced the acquisition of Tele2 in Norway.

So, let’s have a look at some of the numbers. Our local organic is minus 1.2 mainly related to Spain and equipment which we’ll also cover in a bit more detail.

Our EBITDA margins are set or flat 35.3 in the quarter. CapEx to sales, slightly higher than previous quarter last year and mainly back on good progress on our fiber and 4G investments across our footprints actually.

Moving to some of the key highlights on the service revenue which is a core parameter for us from the KPI, we’re moving slightly away from the net sales and equipment and focusing more on the service revenue. So it’s positive to see that the trend in service revenue as you can see on the left side is positive.

We have that from all our regions our new regions in the new operating model are showing an improved trend on service revenue. And we’ll also cover that in a bit more detail, so that’s a positive side on the service revenue.

Moving to Sweden, new CEO in Sweden, Malin Frenning in our team first quarter as a combined entity strong focus on one customer, one brand. I’m very happy to see that the customers are also showing positive response to this with the highest NPS, Net Promoter Score ever in the Swedish space so that’s positive news and a good start for the Swedish team.

They’re also delivering a very solid set of numbers in the second quarter with flat year-on-year growth organic, slightly up on the reported. And that’s thanks to the acquisition of the (inaudible) service included in the later part of the quarter.

EBITDA margin strengthened somewhat, good cost control, good focus on the efficiencies. And as I said, a good start for the Swedish team.

CapEx to sales, we’ll get back into some of the more CapEx details. We’re on track on our 4G investments covering 99% of the population by the end of this year and 4G network is really superb, great feedback from the customers, great speeds and the good propositions out there.

So, good tick for Sweden for I would say. Looking at the somewhat breakdown on the Swedish side, it is mainly B2C that is helping Sweden, if you remove someone off, look at underlying growing for consumer in Sweden it’s 2% over fixed and mobile.

And that’s the first time the fixed is also helping the numbers on the consumer side stabilizing the negative trend. On B2B however, we are under pressure.

It’s a decrease of 4.5% to 5% in the quarter. And it’s the heavy price pressure that we see on the larger corporate where we are defending share.

It’s also very fierce competition in the SME segments where we are shaping up our propositions. As you can see on the bottom chart, the trend on the fixed side in Sweden is improving.

The fiber business is supporting this, good roll-out of fiber and also stabilizing trend on the old fixed PS10 and DSL product. Moving to region Europe then, we see a stable margin where net sales, is as I mentioned impacted by Spain both on equipment and build.

But it’s supported, actually Spain decreased on net sales, it’s helping the margin stabilization in the region ironically. And good traction also on the investments in the European space on 4G roll-out, both in Norway, Finland and Denmark.

So, let’s have a look at Spain then, current topic, it is a very challenging market in Spain as you know, we have talked about this many times. Is marketing any easier in Spain?

The big threes are, two of them are getting converged, i.e. they have fixed and mobile and pushing those propositions out in the market.

And we have the competition coming from below from the MDNOs adding to the very, very competitive landscape where we see in Spain. And we are mobile only.

We’re around 7% market share. And we’re struggling to see and find a path to sustainable profitable levels.

And I think the picture is pretty clear. We have stabilized the profitability on EBITDA, as we said we would in Q1.

We said, we would be back on in positive territory and we are. We are slightly lower than on the – this market share gain.

Even if we are gaining against the big ones, the net porting, we’re losing a bit of the share to the MDNOs. But Spain is difficult, and we’re also now having looked at this for a few months and struggling to see that we can on our own get to a sustainable profitable situation in Spain.

So, now we are exploring the alternatives for Spain over the coming months. Quick look at Finland and Denmark, in the European region, we have local organic and negative trend that is somewhat stabilizing.

Finland is good in the consumer space. The Tele Finland brand is very strong, Sonera is stabilizing I would say.

And also trying out the new price models in Finland, not an easy market to come in with new pricing model, where speed is still the dominant factor for the propositions. We’re trying to bring quota and volume into the market, some traction on that, even if the main propositions are still on speed from the competitors.

In Denmark, positive things are that we’re gaining customers. We’ve improved the customer base over the last six months with 5%.

However, there is a price pressure it’s very fierce competition in Denmark. But we have a strong proposition and our 4G network is seen as the best in the country.

And I’m very glad to see that that is paying off. We are small in Denmark, we have not reached our scale in Denmark.

We are hoping to see some of that coming out of the network joint venture with Telenor, but the question is, whether it’s sustainable long-term and that we’re also exploring. And moving to Eurasia briefly.

As I mentioned, strong growth in Eurasian regions, 6.7% to 7%, strengthened margin, they look a little bit higher than they should. And then Christian will explain why, but 54.5% EBITDA margin is superb.

We see a strong support from this from several markets, stabilizing negative trends in Azerbaijan and Georgia and positive growth still high double-digit for Nepal and Uzbekistan. Kazakhstan contributing our net sales with the launch of the iPhone which is taking off in a nice way.

Slightly behind on our plans for CapEx but expecting to pick-up to normalized level during the rest of the year. Quick look then at Kazakhstan, where we have 3.5% approximately organic growth.

Obviously that disappears somewhat in the FX conversion to reported. And the margins are strengthened in the case of business.

Nepal, we’re reaching 12 million customers in Nepal as we speak. And the EBITDA margins are now close to 60%, which is and I remind you an unusual situation with two-player market where we expect competition to increase over the coming quarters.

Couple of words also on our corporate governance upgrade and our sustainability. We have a new management in Eurasia on many levels.

We’re also new people in many of our companies. We have a new focus and it’s leading to an improved control and strengthening of our governance framework.

It is also resulting in some of the one-off and the write-downs that we are doing in Q2 and Christian will cover them in more detail. Our anti-corruption and risk assessment is completed in the region Eurasia and it’s now starting in Europe and international carrier space.

And the risk assessment just to remind you is where we go through the countries, the operational risks, the company risks to make sure that we know in all aspects what the risks are. Then, we continue to roll-out our code, our conduct, which is well above 90% participation in all our markets.

In Azerbaijan, it’s 99%. We also conducted more than 5,000 face-to-face trainings on the anti-corruption policy.

So, we’re getting to a point now where we at least, people know what we expect and how we should operate in our respective markets. We’re also implementing our freedom of expression policy in our respective markets.

And I take the opportunity when I meet with the Presidents and Prime Ministers and Ministers across the footprint to express our view on this important dilemma. On I’m happy with the progress there.

But also reminding us and you that we have a long way to go. Closing off, I’d like to tie back to the acquisition that we’ve announced last week, our Tele2 in Norway.

We have now started the discussions with the local authorities, competition authorities in how this deal from our point of view makes sense and why we think it should be approved. And we expect that process as we mentioned to carry on for few months and mostly likely getting the decision in towards the end of the year or early next year.

I’m not going to recap all the details of the deal. We are very happy that we were able to reach an agreement.

Now we’re very focused on getting the process and the approval and also preparing for a new stock in Norway with two great companies coming together. So that’s our focus.

And before Christian takes over, let’s just look briefly at the outlook, which we said in Q1 that we had so high risk for the equipment sales. We still believe at the time that we would be able to keep that on the same level as last year.

We see now, mainly related to Spain but that would not be the case, so we are revising our outlook on net sales, mainly related or principally related to the equipment sales. And therefore we would be slightly below last year.

Our EBITDA margin should remain the same as last year and CapEx to sales we don’t change as well. So, as I said, a pretty okay quarter with some unusual items that Christian will take you through right now.

Here you go.

Thank you. Good morning everyone.

I’d like to first just to make a little bit advertising for our new quarter report. We got some message back this morning from some of you, positive feedback and whatever feedback it is, we like it.

And we like it of course that you think that the new report looks good. I thought I will start off little bit with the first half year.

And the first half year is very similar to the quarter. It’s a drop in net sales primarily Spain and equipment sales in Spain.

We have a stable EBITDA growing slightly and there is decrease in cash flow and EPS which I will come back more in detail. Otherwise I’m quite happy about to say both first half year and it would give us courage that we have a good balance sheet and a strong position going forward.

The net sales change is minus 1.2% in the quarter and as Johan said, it’s mainly Spain. And the equipment sales included that it’s the driver, 2.1 percentage points comes from Spain.

If we deduct that and also if we deduct a positive change from the equipment sales in Nordics, there we can see it primarily in Sweden, Norway and Denmark. We have a still net positive effect on the core business.

And this is something we like and continue to drive hard to reach every quarter. And it’s important to be able to grow EBITDA over time.

The EBITDA margin is stable despite quite heavy FX effects in Eurasia. As you know, Eurasia is a high margin contributor and it’s growing this quarter and if the FX effects are high, it will also impact the margin.

We do have a stabilized situation around the 35% margin. And if we look at the right hand side of this picture, we can see that the FX effects in Kazakhstan primarily we had an evaluation in quarter one, it’s quite severe on the margin.

So in local currency, the margin would have increased even a little bit. Otherwise the main factors that have an impact on the EBITDA margin is our cost work.

It’s the equipment sales of course and also the strong development in Eurasia. We have margin improvements in all regions.

However, they are little bit different. First of all, I would like to point out Sweden, very strong.

You will find some personnel, non-recurring as well in our income statement and it’s related to some cost reductions in quarter two in Sweden and Finland. And we have a strong focus on both bringing up the sales and we have a 2% underlying B2C consumer sales in Sweden, in the same time we are reducing cost.

And that brings EBITDA change in actual absolute terms, which is positive. Secondly, if we look at Europe, it’s a little bit mix.

Spain is dragging down the sales of course, all for the cost. But excluding Spain, OpEx is also going down in Europe which is important.

The main contributors otherwise from an EBITDA point of view in local currency in Europe is Finland excluding the non-recurring Spain and Latvia. And Latvia we have found a positive trend finally and it’s the first country that makes little bit of breakthrough in Baltic’s for us, which is encouraging.

Eurasia, very strong positive growth, even if you would look at the EBITDA in local, and reported currency, the growth in EBITDA would be positive. And then, and the cost is increasing slightly above what we may be expected but most of it is from Kazakhstan, where we have a devaluation that pushed OpEx increases and price increases, in the same time we have not been able to increase the price to our customers to revenue side.

EPS is impacted by the associated companies. Its currency effects in both Megafon and in Turkcell, and they are partly related to the environment we have with the sanctions etcetera that has put high pressure.

It’s both FX effects in within the income statements of these two companies but it’s also when consolidating these two companies into our books, we have a lower profitability and it’s quite high between the quarters over the year. Otherwise, also we have a negative slight effect on FX even though the Euro and the Danish Krona is stronger, Norwegian Krona is weaker, but in Eurasia, we have a fall both in Uzbekistan, Nepal and in Kazakhstan on the currency.

CapEx and CapEx to sales, we have a strong focus on expanding our 4G coverage and the fiber network. The picture lies a little bit and I just want to tell you that that we have now a group technology, a central unit which is not part of this picture.

And in the transition of moving projects between the different entities, it maybe that it will be on some part to present a little bit changes going forward. We have now our common platforms, we try to drive a shared common investment platform for TV and other parts of the organization.

And that makes it a little bit complicated in the beginning how to sort that out. But overall, it gives a fair picture and that we have a weaker position in Eurasia.

It’s Nepal, Kazakhstan and that is the biggest changes over year-on-year, and also a little bit in Uzbekistan. We think that it will normalize over the second half year and for that half year.

And the main focus will be to be able to coverage in these countries. In Sweden, it is a very high demand on fiber right now.

Fiber is much more expensive than the 4G. And I think as I said last quarter that 40% of the CapEx was Fiber.

And now it’s over 50% of our CapEx in Sweden that goes to Fiber. And on that topic, I wanted to give little bit deep dive into Fiber.

This is fiber, the fiber in Sweden. And we can see that we are increasing and having a quite good growth every quarter, which is very positive.

It is not only a positive growth in fiber as total it’s also a growth in our connected services to these fibers. And we have around one third of the market and there is still a little penetration to work with out there.

The broadband services, we have on 52% on the fiber households. And the pace is increasing and that’s the most important thing.

The broadband is the most important one as well because that’s where we have the highest margin. If you look at where Telia as a service, we have it on 67% on the households.

The other thing is that this is divided by multi-dwelling units, apartment buildings and villas or single households. And in the single households there is around 2 million in Sweden and around 25% of them have fiber today.

And of them we have 115,000 and it’s growing. Of those 115,000 90% have a Telia service, and you know this is open fiber, which is very positive.

The final comment I want to make about this is that we have said that we have to build more and more, it will also have an impact on the revenue. And in this quarter had a year-on-year impact of SEK 90 million.

And this is when we start to develop and dig more and connect more households, it will have an impact as long as we see a potential growth, it will be positive. Free cash flow is more negative, its negative compared to last year, just two elements, cash CapEx.

And as you may know, cash CapEx is just a result when you pay your CapEx so it will shift over time. And over time it should be even with our reported CapEx.

So, it’s a time in question. On the working capital, we have two or three main elements, this quarter.

One is actually rated to interconnect payments in time of interconnect payments in Eurasia. The other one is actually Kazakhstan where we’re building up an inventory and a distribution now of the iPhone and started to sell handsets in Kazakhstan.

And now in the first step, when we build that inventory, we have one-time impact. I believe we have the level of inventory right now that is sufficient for the second half year.

In Spain also, we have an opposite effect. In Spain we’ve had a distribution setup where we have a positive cash flow from increasing equipment sales, the opposite what you would think about.

We had paid our vendors much lower than we have got paid from our customers or from the distributors. And now, when the equipment sales is going down, it has a quite negative impact on the cash flow, so that’s also something that now comes here and stops as long as the equipment sales doesn’t drop even further from this level we have today.

In the same time, we also have paid some vendors of a little bit faster than maybe usually in Spain. The next page, dividend payment, explains net of increase, quite simple picture.

We have increased on net debt with SEK 14 billion, we have paid out SEK 13 billion to our shareholders. And SEK 2 billion is FX effects on our debt portfolio.

So, and that comes from the Euro increase. Johan, you want to summarize or should I summarize.

Well, please summarize.

Well, then, I will summarize. I think it is an okay quarter.

We have a very positive result with stable margin. And it’s very easy to understand the revenue change.

And we have a B2C growing and we have customer growth in several markets in the Nordic especially both Sweden and Denmark and Norway is growing very nicely on the customer side. Eurasia has very high performance and we look forward for seeing you in the quarter.

Well, actually not in the quarter actually we look forward to see actually at the Capital Markets Day which is in September 30. Actually we look forward to see you.

Excellent. Then I think we’re as usual we open up for questions.

And Jesper will facilitate.

Yes, so maybe we start here in the audience. And do we have some microphones to, yeah, Andreas perhaps.

Good morning, Andreas Joelsson, Enskilda. Surprise, surprise, question on Spain.

What has changed in Spain since two years ago and it was quite apparent that it was for sale. How come you try this once again, what has changed and why do you think you can be more successful this time?

I think a couple of things are changing in Spain one is the competition dynamics where convergence has really emptied the stage in Spain. I think you cannot survive long-term on a profitable level without having an offering in the space which is converge one way or another.

We would try that with a reseller agreement which is not really working out for us. And we are still hovering around the 7% market share.

And last quarter, reminding you that I said we’re looking at Spain from either we’d really need to get to point where we see we can get above 10% or just sustainable levels of profitability or we need to find solutions for Spain, because right now we don’t have the return on capital that we need to have in Spain. And we don’t see that based on our analysis and strategic review right now that there are good viable options to get to sustainable levels on our own.

Therefore we need to take the consequence of that or look at options. Well, what has changed, well, the convergence is changed.

And I think you also have different climate in Europe now in terms of consolidation opportunities I would say.

All right.

Lena Österberg, Carnegie. To continue on the strategic reviews.

You also mentioned Denmark, that you think that you’re too small. So I’m wondering, is it presence in Denmark key for you consider buying rather than exiting the market.

And then also you mentioned that you need further cost optimization, you needed a leaner organization. Where do you see opportunities for more efficiency measures going forward?

In Denmark or general?

In general.

In general. So, Denmark first, and I mean, yes, this is a small business but it’s doing well under the circumstances.

And we expect to see further improvements with this network partnership with Telenor which is already paying off by the way in the 4G space where we have the best network perception and gaining shares. So I mean, operationally we’re doing well in that market even if we need to improve further.

The question we have on that market is whether we can get to sustainable levels, our profitability also in Denmark on our own. And it remains a question mark, it remains to be seen.

And Denmark is in the middle of our core Nordic Baltic strategy, where we want to be strong, where we want to be sustainable profitability wise over time. So, we’re keen to look at options in Denmark.

On the cost side, generally speaking, I think we can improve our efficiencies across the board. We showed last year that we are able to take out costs and maintain focus.

We have to do that in all corners of the shop. We don’t have growth, and then we need to be more efficient to produce EPS growth obviously.

And that’s the focus now. And I think we’re going through each of these components.

The one important aspect of that will be the transformation where we are prepared to invest to save. And that is in areas where we need to be more agile, we need to reduce complexity.

And that’s a program that we are working on and we’ll talk more about in the CMD in September.

Eric?

Eric Pers, Danske Bank. The question regarding Swedish mobile market.

You changed your bucket sizes, your prices recently. Can you speak in a bit of detail about what effects that have had on your business?

And also you reported I think end-user service revenues about flat for this quarter. Your main competitor Tele2 had a bit of growth, what do you read into that?

And also, if – could you split that number that flat number into consumer and business, can you see the developments in each?

Absolutely. On the bucket pricing, still early days.

I want to wait a bit before I draw any conclusions. Financially I can tell you that the reception from our customers is very positive.

We just need to translate that into positive for us as well. It’s – as I said, early days.

But I think we need to experiment a bit around data pricing which is now the driver for our future growth and we need to get it right. So we’ll get back on the details of the actual effects in Q3.

On the consumer side in Sweden, first of all, the service revenue flatness as we said is across the group. And in Sweden, we’re in the consumer space we’re actually on a 2% growth, if you normalize it across fixed and mobile.

And then I can tell you that the mobile is growing faster than the fixed. So there you get probably into same territories of some of our competitors that have reported on the consumer side in Sweden.

Thanks.

One question, on the back.

Hi, (inaudible) from The Wall Street Journal. I was just coming back to Spain a bit.

I mean, given that Spain is now a drag on the overall topline here. I was wondering whether, I mean, you’re less price sensitive in terms of selling the unit to someone, I mean, that was one of the hurdles two years ago when you tried to set it last?

Well, I don’t know the exact hurdle, the last time we tried, there were many reasons for that not just price, there were those regulatory aspects in the game. As I said, I think there are less hurdles today in making a consolidation in Europe generally given that some of the deals that we have been waiting for has just gone through.

However with some remedies, but they are through. And it’s an acceptance in general terms for consolidation Euro from 4 to 3 at least.

And the price, I’m not going to comment on any of those things at this moment. What we had said that we’re at this point now need to get some alternatives on the table, when it comes to Spain as a whole.

I mean, we have looked at it from investment going up in Spain, now when you kind of think, if there are viable options in leaving Spain or not.

Okay. Should we open up for some questions from the conference call?

Operator? Please.

Thank you. Yes, just to turn into Christian’s very interesting comments and your presentation on Swedish fiber.

I mean, obviously the improvement in service revenue trends in the consumer side is quite remarkable on the fixed side. Are you hopeful now that with the demand you’re seeing, the optic, the roll-out that you’re seeing, that you can envision the defects business which ran into sort of flat stable revenues in Sweden on the back of this?

And secondly, can I ask you Johan, I know you’re not directly involved in the current proceedings between Turkcell and Altimo of course. But in your sort of introductory meetings and dealings with Turkcell people, are you hopeful of establishing sort of fruitful relationship with them once the ownership situation in Turkcell becomes audit?

And thirdly, if I can just return to the SEK 2 billion cost reduction program last year and this, are we to take that this is almost completed now and the targets have been reached in terms of the cost savings? Thank you.

Thanks Peter. On the fixed side, there is still a higher demand than we can supply and that’s a good thing.

So, we need to make sure that we address all the people that need and want our internet services on fiber. Whether that will return into flat sustainable situation or fixed that remains to be seen.

But we’re very glad to see this quarter holding up I would call it rather than growing on the fixed side. But it’s positive.

On the Turkcell situation, well, we’re obviously very close to the situation, we have good dialogue with the partners. And we’re keen to see the outcome of the ongoing process which should be – which should be very close to at least knowing what happens end of July.

And then we’ll talk about what that means for us going forward. But everyday we’re getting closer.

On the cost program, I just like to say that last year in the beginning of and actually end of 2013, we – no ‘12 actually, we initiated the cost program. And it’s been running and we are on track but we have a new organization, new set.

We foresee that we need to do continuous cost measures all the time. And we are actually working on new programs, local programs.

And as you can see, we entered into new operating model 1 April and we still have a change in this quarter and we would continue to do that. So, we’re on track but it’s not sort of we’re going to end this internally.

We’re just going to continue to work with programs, local programs all the time. So, it’s a little bit maybe blurry answer but the real answer is we’re on track but we’re not stopping, we’re continuing.

Okay, very good. Thank you.

All right, next question please.

Hi, good morning. It’s Barry Zeitoune from Berenberg.

I’ve got a few questions. The first is, more of a general one and I was just hoping to get your general view rather than thinking about it in terms of your specific participation.

But your general view on consolidation in Denmark and Sweden, after the German and Irish remedies? And whether you think those remedies would be a threat to the potential of consolidation in the Sandy market or whether indeed it opens more consolidation potential?

My second question is on fiber, Com Hem in their marketing were highlighting that they have a speed advantage versus fiber over most of their footprint. Do you think cable speed advantage versus fiber over most of the cable footprint is sustainable?

Or do you think you can catch them up or you can overtake them? And then, my final question is on Norway.

You’ve mentioned that you started discussions with the competition authorities. I was just wondering whether you started any discussions with Ice on the potential sale of Tele2’s network or any other spectrum assets as well.

Thank you.

Thanks Barry. Consolidation generally, I mean, you get 100 answers if you ask 100 people.

So, most of them, I will add much to your full picture there. Let’s focus on our concrete example of Norway.

We think we have good reasons and good arguments for this consolidation in Norway and there will still be three networks, there will still be plenty of brands, there will be good competition. And that’s our argumentation that we’re now are using.

And I think on a general terms, it’s good to get clarity what the attempts have been in Europe, that had the attempts that are out there and now clarity on what remedies would be. And then you have to make up your mind whether you think that’s good for the merging entities and the remaining entities.

And I think that’s the big debate now in Europe whether there are acceptable to the remaining entities rather than just the merging entities. So, that’s a good, I think it’s a good step that we know what is expected from the authorities when you go for consolidation.

So in that sense, one less hurdle. And I commented on Norway, I’m not going to comment anything else and we’ll be focusing on getting this deal through.

And then we’ll see what that means for the rest of the market and the rest of the players. On the fiber brand Com Hem I’m not going to really comment on their claims, I can just say that our proposition, our product, our fiber roll-out, its excellent speed, excellent quality, once you get it.

But again, it’s a high supply, high demand and we’re struggling to supply through the value chain and that we’re working on.

But there was one on Ice that you didn’t comment, so we’re finished.

We didn’t comment on that.

Yes, so our next question please. No further questions.

Thank you. Good morning, everyone.

Just a few more – couple more questions on M&A. And you stated that you think they can proactive role country consolidation particularly in the Nordics.

But now it’s done, do you actually other chances presenting themselves in the next 12 months and just so you feel you have the financial and managerial capacity to do this in the near term? And then secondly, on Denmark, even when you’re exploring options here.

Do you feel you could fulfill your Nordic strategy overall by having just a wholesaler range just in Denmark or do you need to own assets there? Thank you.

Thanks Andrew. I think on the first question on the deal, and the execution capabilities I think that is not the main problem, the execution capabilities.

I think we still have a strong balance sheet to be part of the consolidation in different ways in our Nordic Baltic markets but also in the Eurasian space, that’s also part of our core home markets. There are core markets are they.

So, we’ll see what availability there is and the viability of those opportunities, we’ll speak about when we have them at the table. And on Denmark, I think that’s obviously an option that you’re mentioning that we can do wholesale proposition based on wholesale, and we’re looking at that we have fixed components already today in Denmark that we’re using actually growing.

But to take it to the full potential next level, we’re looking at various options.

All right, next question please.

Hello, it’s Georgios Ierodiaconou from Citi. I have a couple of questions from my side.

The first one, a follow-up on your answers around Spain. I think all the debate is around mobile consolidation but that is perhaps less up to you.

I was wondering whether if there is a convergent option for you to merge per house with at least that broadband provider and have a stake there, whether that would be an acceptable solution or whether an exit from Spain is primarily the objective here? And secondly, around the fixed performance in Sweden, you mentioned the interest charges on the access fee in particular during the start of the year.

It’s quite encouraging but I’m quite surprised by the fact that we have seen line losses increase on the telephonic side. So I was wondering if you could give us an idea as to why that is happening and whether that means, you could push more price increases in the future?

Thank you.

Thank you. On Spain, I don’t have much more to say than I said, and let me repeat that.

We are looking at our various options in Spain, we have looked at ways to get up in Spain and both organically and non-organically. We don’t see that as a very viable option at the moment.

We’re focusing on delivering on our current business, team is doing really well in the very difficult markets. But now we also need to look at the other options for Spain, which will include a range of alternatives that we have to assess.

And that’s why I say, that is now the main focus to assess what options actually we have. And then we’ll have to make up our minds then what is best for our shareholders.

And the second one, you want to take that Christian?

The fixed line, well, as you say, we have positive increases in the pricing. And still there is not higher rate of clauses in the fixed lines.

We are positively surprised a little bit as well. And I think that shows that the behavior is more important than the pricing in this area.

So, the shift from traditional to new, that kind of behavior change is a bigger driver than the pricing maybe. But it’s too early to say.

And let’s wait and see and as long as it works this way, it’s good for us.

Thank you.

Hi, thank you. I’ll state here another consolidation question.

And ask you about the regulatory reform package, I’m just wondering if you are supporting the connected content and package at this stage or do you rather still see too many negatives in there? And connected to then going forward, what’s your expectation from Jean-Claude Juncker, are there any further reform issues you would want to see picked up by the new commission.

And then, maybe on Sweden and you’re increasing the data allowances, I’m just wondering if it’s not a very dangerous thing in terms of educating customers that more service costs, more when you now raise your data allowances again, and what’s the rationale behind that? And then, maybe you can update us on the competitive situation in Uzbekistan, yes, that’s all?

Thank you.

Let me go from the bottom to the top. Uzbekistan no news really but more speculations about the timing of the new entrant.

We were still saying that it will happen. But now we probably can safely say that the full impact of the third entrant will not come this year, it will come into next year.

And on data pricing, in Sweden, if you look at Sweden versus the other Nordic countries, we have the lowest data per user and that’s one of the reasons we’re also trying to give more to our Swedish customers. And that’s been very positively received as I said.

Obviously we need to find a way of monetizing this over time, we need to experiment, we need to also to add to the simple pricing of just data, we need to add things to that, which will do as we go along. But it’s a very important area, high focus and we expect this to be an important growth driver obviously going forward.

And the last one on EU, well, let’s see, we have from the new commission. There is a handover agenda from nearly cruise into someone.

And we’re monitoring this closely, we’re working as an industry, the Seals and the large Telco’s in Europe are talking and together with GSMA together with regulators to see what we can do to drive the investment climate in Europe to the next level. And we’re keen to get clarity on number of topics, including spectrum, including net neutrality and also roaming.

So, we are driving this very hard. We’re taking steps already leading the way.

And I think there has never been as good dialog as it is right now.

Great, thank you.

Good morning, everyone. I’ve got three questions if I may.

First, on Nepal. Can you comment what’s the state of the progress for the reliance of the new entrants and when do you expect them to have a more meaningful impacts on the markets?

And then second, in Norway, if I look at the Dell service revenues and go down 5% in the quarter, and then current down 1% in the prior quarter. So, can you just comment a little bit more about what explains that trend as well?

Please. Thank you.

So, Christian will cover the Norway. Let me talk about Nepal.

We have said earlier in these calls that we expect a new entrant to come in this year. I think also in Nepal now, we need to say that it probably won’t have a big impact this year.

We’re probably moving into next year when the third entrant will have the full impact. Having said that, I think I’d like to take the opportunity to say that the competitor in Nepal has become very, very much more aggressive on the competing with our N sale.

And that is good, we’re getting good competition there now. And we’re doing well, rolling out the network even broader and deeper in Nepal.

And we’re seeing the effect now we’re almost up to 12 million customers in Nepal.

On Norway, we have both the B2B and B2C has been tough for us in this quarter. And it looks good on the surface when you look at the number of customers in Norway, and it is positive in the end.

But we started actually the quarter in April and May with a decrease in number of subscribers. So it only in June we went above the previous quarter.

So, therefore the average for the quarter is actually we could say, a fewer customers. Then we have successfully with both price and packaging moved a little bit positive than in June.

It is still been tough from our competitors and we continue to try to do the best there. And in the B2B it’s been similar.

That’s great. And just a follow-up, when you mentioned your subscriber may have been weaker.

And do you think you’re losing Telenor or Tele2 in Norway, in those two months?

Probably we have seen, the most aggressive office in the market has been from the alternative player in the quarter if you put it that way.

Sure, okay. Thank you.

Hi, I’m Allan Nichols from Morningstar. I was wondering if you could give us an update on international data roaming and how your decision to cut rates in 2012 is affecting usage and revenues.

Thank you.

Do you want to take the data roaming. I don’t know.

We need to come back on that. I mean, we know that we have had a positive impact on usage the first year and into this year we’re continuing to work with the roaming agreements externally with all the countries as well, primarily where we have high usage from our countries.

But I’m not sure.

Go into specific details on the data side, maybe we can take that afterwards.

Yes, yes.

Okay.

Thank you. Two questions if I may.

Firstly, back to corporate cuttings, you put quite a lot of non-recurring items in EBITDA this quarter. Is part of this to the reorganization into country, shop sure or is it part to the old traditional connection?

Basically should we assume that there is a sequential drop in cost in the operations where we’re seeing the long recurring charges? My second question on bucket plans and fee down there if you could say, roughly how much of your subscriber base is on bucket plans now?

Thank you.

Yes, we have – if we take the Nordic picture on the data pricing, it’s varying from 5% to 85% of the customer base being into the new buckets. And I would say Sweden is somewhere in the middle there.

And 5% being Finland and 85% being Norway. On the cost recurring costs, non-recurring costs rather, we have this quarter couple of items there.

Some are related to the new operating model and related to Sweden. Some are more related to the new focus and governance and control that we have in Eurasia.

I don’t know if you want to add anything Christian to that?

I can just say around SEK 300 million this year is around the re-organization cost that we will continue also the try to find future measures on. As long as we do that we will have cost on non-recurring personnel introductions.

And the rest comes from Eurasia and non-cash items. And last year it was actually, primarily 100% on personnel related.

Thank you, that’s very clear. A quick follow-up if I may.

As the change of head-office saw material impact? Thank you.

What change in head-office cost?

No, no, I was just thinking the big ramp that you’ll be having from both longer term projects about losing sites?

Yes, when we move in, in a couple of years we will decrease costs on the group from this.

Okay, thank you.

Hi, I have three questions. The first one, could you comment why the dividend orders has negative EBITDA this quarter.

Second question regarding consolidation, what is the book value of your Spanish subsidiary in your books? And third question, could you give us a flavor of what could be the impact in terms of EBITDA of having normal roaming in Europe in 2015?

Thank you.

I might just take the first question, then on the other operations where we have (inaudible) also head-office in functions. We have quite a large cost on the re-organization both consulting and communication etcetera that we have taken in this quarter.

And that is the major impact you should not expect to have the same pace going forward. The other question was?

It was difficult to pick up your other question, could you please repeat?

Sorry, the second question relates to the book value of Spanish subsidiary and third question relates to the impact of the EU roaming regulation on a full year basis? Thank you.

On the e-regulation I’m making reference to the expected connect regulation.

We don’t comment on the book value of Spain. But the last question was around the…

The roaming EU regulation. Which we’ll come back to, which is the similar question before on the roaming impact, we will cover that later.

Yes, but we’ll get back to you.

Thank you.

Thanks very much. I have maybe three questions.

The first one is, you talked about investing to save and you would tell us more at the Capital Markets Day and sort of we’re looking forward to that. But I was wondering whether there is an element also maybe of an incremental need for commercial investments in some of your assets.

If you look at your asset portfolio, do you feel there are assets where you really have in the past maybe under-invested on commercial investments and do you feel that you would benefit in a return accretive way from really ramping up investments in a material way? That would be my first question.

Second question is more clarification. You talked about some distortions in the divisional versus sort of central allocation of CapEx I believe it was.

I was wondering whether there is anything similar going on with regards to EBITDA in the quarter, i.e. whether there are sort of costs in the overhead in this allocation set that maybe worth usually more logic will belong into the countries or vice versa?

And my last question was with regards to the margin guidance. I mean, you essentially cut the revenue guidance and give a reason that it’s lower handset sales, it’s obviously very low margin.

But you’re maintaining EBITDA margin guidance. I’m just wondering implicitly you’re sort of cutting the margin expectations with this right, and I was just wondering what would drive incremental margin pressure in the year that has caused this implicit cuts?

Thank you.

Can I talk to two questions Johan.

Yes.

Let me just answer the EBITDA question and head-office and allocations. We have allocated a group technology and group commercial units in the right way so that will have not have a change over time.

And the guidance questions, I just give a flavor that in the first half year we have as we said, an EBITDA margin that increased in local currency but we have currency impact on that. And therefore we have a stable margin for the first half year.

Ulrich, I’m getting back to your first question on this investment topic. There are a couple of things we’re doing.

We’re investing and I spoke about investors save, both short term obviously but more importantly to transform some of our operations into a more agile, lean operations we need to take a longer term view. And that’s the invest-to-save and we’ll give more detail on that.

But we’re also investing obviously to grow. And in some of the markets, you’re right, there have been some under investments and we’re making that right.

We’re upgrading a lot of our 4G and fiber investments across the footprint where we have it. But we’re also more, clear on our prioritization of growth which comes under umbrella back to winning in some of our key markets.

So you will see both and we will explain more in detail in the CMD.

Great. That’s very clear.

Thank you.

Right. Any further question?

Hi there, I have a question on basically if you can give a breakup for explicit breakup between B2B and B2C revenue just on the mobile side in Sweden and Finland? And can you comment I mean, the B2B decline is more kind of a structural decline rather than just a cyclical one?

And any update if you’re seeing any competition going up due to Altel launch in Kazakhstan?

Sorry, what was the last one, competition in?

Yes, competition in Kazakhstan because of Altel launch of commercial services there?

Right. So, Kazakhstan, we have, it’s normal competition I would say.

What you would have also from the fourth player there, with 4G license is that they’re going little bit more nationwide ambition. So we’ll see if they get any traction.

We’re working hard with the stakeholders in Kazakhstan to make sure we get 4G into all of the players actually I don’t think it would be good for not just our customers but also for Kazakhstan as a whole. On the structural question on B2B, Christian, you can cover the details on the split.

The structural reasons, we have talked about and let me remind you, there is a couple of things going on. First, you have a macro aspect in some of these markets where we have our enterprise, very exposed to the economic environment.

Secondly, you have a transition from old technologies into newer IP based technologies, where we are taking our customers into the future platforms. And that comes with a one-off downgrade in revenue so to say.

And then, you also have fierce competition in some of our core segments where we’re choosing to defend share in the larger corporates. But also that comes normally with a quite heavy price pressure.

And then we’re a bit under pressure on the SME segments where we’re strengthening our propositions in Sweden and Finland mainly.

And I can take the question on the B2B, B2C. On the total service revenues, it’s rather 50-50 split between B2B and B2C.

And within mobile it’s a little bit a weight on the B2C side, in both countries.

And can you just give the split of revenue growth this quarter just on the mobile side in Sweden and Finland, between B2B and B2C?

On the mobile side. Yes, mainly in Sweden, on the mobile side we’re so 3.5% approximately on the B2C side and minus 4% approximately on the B2B side.

Thank you.

Yes, hi, it’s Maurice from Barclays. I know you would talk more about the investment plan at the capital market space.

But I remember some comments from the previous management teams talking about some of the simplicity projects that are taking place over due to places like TeleSonera, specifically around the Swedish market for the IT and billings systems. So, perhaps some sort of comments in terms of if you do see this is very much a Nordic plan in terms of spending to save or if it’s wider TeleSonera, gives you an opportunity?

Thank you.

Hi Maurice, yes. It’s a wider issue than just Sweden.

Actually we have legacy and complexity that we want to get rid of in many of our markets. And we need a bit of patience to get the full effect of that.

So, we’ll break that down for you many more details as I said in the CMD.

Is it multi – second thought, get a bit further, is it a multi-year investment if I’m just sort of sure short do you think?

Yes, there are no easy quick wins when you’re transforming legacy operations. We need a bit of patience to get the full effects.

But we have urgency of getting them started. But we’ll break it down for you Maurice when I see you in September.

Great. Thank you so much indeed.

All right. I think we have time for one final question.

Okay. Any questions on the floor?

The one over here, in the front.

Yes, maybe, I have some questions about Eurasia. The write-downs there are SEK 412 million in the quarter.

Do you see any more write-downs going forward as an effect of your valuation of assets there? And also, can you give us some more details about the write-downs related to the fiber agreement in Uzbekistan?

Do you want to take that Christian?

Yes, I would. We have a focus on operational assets as we work both for better control and we also work with our new strategy.

We have then a SEK 400 million write-down in this quarter. I think there is a risk that we will see more, absolutely.

And that’s what we’re also saying in our report. And it’s not going to be any cash items but just going to be historical investments that need to be reviewed.

Just to give you also a perspective, we have this generally in this industry when you have infrastructure. So typically you would find it in the infrastructural broadband in Sweden etcetera corporate networks taken down that maybe not always have been written down to the full extent.

But now we have a bigger and higher focus on Eurasia and therefore it will be bigger impact in the short-term.

Did that give you an answer? Okay.

Thank you very much. And I’ll hope to see you in September.

Have a good summer. Thank you.