Telia Company AB (publ)

Thank you, operator. And good morning, everyone.

Thanks for joining us today. I'm here in Stockholm with PC, Rainer and Anders from IR.

And Eric is dialed in from home and you can probably guess why he's dialed in from home. So, we have a longer session today, longer than normal, where we'll first focus on the Q4 results and then we'll dive into an update on the progress we've made throughout 2021 on our strategy to reinvent a better Telia.

And that's why we've also got Rainer here today to particularly take you through some of the transformative elements of our strategy. So, let's get started.

As we're seeing this morning, we reported another quarter of improved revenue growth. Service revenue accelerated to 2.9% in the quarter and a gain in seven out of our eight units.

But this quarter, the growth was driven in large part by mobile subscription revenues now growing 2.6%. We also delivered on our cost ambition with OpEx down 3.6%, driven by reduction in labor costs, IT costs and a pension refund, which together more than offset some inflationary pressure that we saw in the quarter.

This resulted in a flat EBITDA despite absorbing significantly higher content cost. Our CapEx, as expected, ramped up in the quarter as we are now really rolling out 5G and accelerating the modernization of our 4G networks.

But despite the pace of investments, operating free cash flow amounted to SEK 10.4 billion as the working capital contribution was again strong. And as you'll have seen at our announcement late last night, we are making excellent progress on our agenda to crystallize the value of our infrastructure assets and work with strategic partners with a similar long-term view of ourselves to the inherent value in these assets.

Brookfield and Alecta will ultimately help Telia retain and build its leadership position in the provision of digital infrastructure to the Nordic and Baltic region in the years to come. We closed our first tower transaction during the quarter for the towers in Finland and Norway.

And last night, we announced the second transaction through the expansion of its partnership to Sweden, which we expect to close in the third quarter of this coming year. But even before that transaction closes, I'm super pleased that we've strengthened on our balance sheet significantly during the past year, and are now operating towards the lower end of our target leverage range.

But let's get into the countries and let's start with Sweden. Last quarter, we returned Sweden to a tiny revenue growth.

And we said we intend to keep it in positive growth territory going forward. And as you can see here, the service revenue growth has continued to improve to 1.5% like-for-like.

More importantly, looking at an underlying level where we adjust mainly for the copper legacy revenues, there was also an acceleration to 4.6% growth versus 3.5% last quarter. Growth was again broad based, with both consumer and enterprise and all the non-legacy product segments contributing.

And the star performer this quarter was TV with 16% service revenue growth. This quarter is the first quarter for six years in which Sweden is growing both its service revenues and its EBITDA.

The 6.5% EBITDA growth was boosted by a contribution from the pension funds. But even excluding that, our EBITDA was up 2%.

And so, we know have the same message for EBITDA as for revenue. We intend to keep our Swedish business unit in positive territory on both metrics going forward, albeit with some fluctuations in the odd individual quarter.

Looking at the leading indicator KPIs, you're seeing here a healthy ARPU uplift in all of the main product segments. Starting with mobile, we're proud that we've maintained our network leadership position, winning the [indiscernible] field test again this year and even increasing our margin relative to competitor networks.

This network leadership position is a key enabler to the perceived premium service quality that customers are willing to pay for. And as a result, we saw postpaid ARPU growth improving to 3% in the quarter, which is an acceleration from prior quarters.

Looking at the subscriber base, the decline this quarter of some 40,000 postpaid customers is mainly explained by one public sector contract that we're migrating out and some mobile broadband connections. Fixed broadband also had a healthy ARPU development and an even better growth in fiber customers of 11% year over year, compensating fully for the loss of copper broadband customers, of which there are no less than 200,000 remaining.

And as I mentioned, TV had a great quarter, with growth driven equally by ARPU and subscriber growth. Our IPTV business has performed well throughout the year and is now further boosted by our investments in Champions League and the full range of premium sports and mix of streaming products that you can on aggregate access via Telia.

And while it's early days, we can see that 70% of new video service customers subscribe to packages containing Champions League. So, it is clear that this sport right is helping to drive the business and, more importantly, drive improved consideration towards Telia.

Moving over to Finland. Our service revenue declined by 2.8% year-on-year, mainly due to decline in fixed services, which includes a chunk of legacy, while mobile is seeing early signs of improvement and was actually stable in the quarter.

In consumer mobile, we're continuing with our value-focused turnaround strategy with more focus on 4G to 5G and C More upgrade than gross adds. The mobile handset ARPU decline I stopped and turned to positive towards the end of the quarter, helped by the 5G base more than tripling during the year and growing 24% in the quarter.

Additionally, the number of Telia customers with C More has now more than doubled to well over 200,000,. contributing to better brand consideration and lower churn as we move into 2022.

In enterprise mobile, on the other hand, we are still migrating 4G customers in a large public sector contract. This dilutes ARPU initially, but boosts the subscriber numbers.

As we gradually migrate these customers into our base and then upwards towards 5G, ARPUs will improve over time. In our B2B ICT business where we have a disproportionately large market share, supply chain effects delayed deliveries, and this on the back of a very strong end to last year, resulted in a high single digit decline within fixed business solutions in the quarter.

Clearly, supply chain effects will subside during the coming quarter, and so we expect this trend to reverse during 2022 and to help the trends in the year. EBITDA was affected by the revenue decline and an increase in energy costs, which unfortunately fully offset the transformation benefits that are now being realized in our Finnish market.

In Norway, service revenue grew by 2.6%, supported both by the consumer and enterprise segments, which more than offset declines in mobile wholesale from the ICE contract. We continue to have really solid growth in enterprise, with both brands, Telia and Sonera, winning again new significant customer contracts in the quarter, including [indiscernible] reporting a double-digit growth in the private enterprise segments.

Mobile ARPU received a boost, as you may remember,. from insurance services starting last quarter, but even excluding insurance, ARPUs are growing.

And clearly, wholesale revenues from ICE comes with a higher margin than the lower margin value-added services. So, EBITDA was somewhat impacted by this as well as increased market activity relative to levels during the middle of the pandemic this time last year.

Moving to our LED markets, Lithuania contained its solid momentum on service revenue, which was rather broad based with growth in postpaid mobile, broadband, and TV with a manageable drag from fixed telephony. And we are leaders in 5G.

EBITDA was here impacted by energy inflation this quarter and did not have quite the same momentum as we did in the prior quarter, which, as you recall, was an exceptionally strong quarter. Estonia had excellent momentum on both fixed and mobile and customer satisfaction as measured through NPS.

And it's a great example of where we're proactively pursuing our premium network quality position and driving NPS and ARPU as a result, with postpaid consumer ARPU going to 6%, mainly on the back of price adjustments. On the network side, we're the only operator providing 5G in the country, covering around a quarter of the population so far.

And on fixed, we now have more fiber customers than DSL customers and we're managing that migration positively. As you can see here, Estonia were able to translate a significant chunk of that service revenue into EBITDA apart from some pockets of low margin sales.

Finally, Denmark delivered stable revenue, and would have also been stable at the EBITDA level if it wasn't for a rise in energy costs and a tough comp last year. So, it's nice to see mobile is growing 4% in the quarter.

Moving to our TV and media units, the strong revenue growth continued from previous quarters before ad and pay growing equally positively. Starting with advertising, our Swedish digital revenues grew more than 20% and are now a meaningful part of the business.

This is mainly through the TV four play service, which we are delivering increasing amounts of addressable inventory to our advertisers and offering an increasingly trusted alternative to Google and Facebook to those advertisers. And as we'll talk about more in the strategy review coming up, this is now offsetting the decline in traditional TV viewing, so that the overall TV reach is actually flattening out now, despite the development of the traditional linear broadcast and viewing.

That being said, our linear advertising also had a strong quarter contributing to overall ad revenues growing by 11%. As you know, pay TV is ramping up its premium sports player content, and we're now carrying the full impact of Champions League in the quarter, which results in, as we expected, lower EBITDA at this early stage of the ramp up.

C More did see a growing subscriber base in both Sweden and Finland in the quarter, mostly driven by sports. And Finland is successfully offering a C More HVOD product to its mobile customers, which is having a dilutive effect on the ARPU, but you can see the effect of premium sports on the ARPU in Sweden, which is clearly trending up with the number of sports subscriptions increase.

So, now let's move on to the financials and to PC.

Thank you, Allison. Let me quickly take you through the Q4 and 2021 financials.

Starting with the service revenue. As Allison has gone through, we have a solid revenue momentum across all segments, with telco growth in the consumer segments of 1.7% and in the enterprise segment of 1.2%, on top of the mentioned growth on the TV and media unit of 11.3%.

Full-year revenue growth for 2021 ended at 1.5%, well in line with our outlook for the year of flat to slight single digit growth. Let's move to OpEx and EBITDA.

Total OpEx reduced by 3.6% in Q4 or SEK 244 million, driven by efficiencies in resource cost and IT and a positive effect from pension refund of SEK 200 million, offsetting higher energy costs of around SEK 100 million due to the extreme energy prices in the quarter across our footprint. For the full year, total OpEx declined 1.2% or SEK 0.3 billion, despite slightly higher pension costs and SEK 200 million higher energy costs for the full year.

More about this later in the presentation. On EBITDA.

EBITDA was flat in the quarter as the 2.9% service revenue growth, efficiencies and pension contribution was offset by increased content cost of SEK 0.5 million and energy inflation of SEK 0.1 billion. Total EBITDA growth for the year ended up 0.4%, well in line with our outlook of flat to slight growth.

Moving to cash CapEx. As guided and expected, cash CapEx increased heavily in Q4 to SEK 5.2 billion, driven by increased investments in mobile network modernization and 5G, combined with higher investments into product development and IT to support our ambitious transformation agenda.

Total CapEx for the year ended at SEK 14.4 billion or SEK 14.7 billion if we adjust for the cloud accounting effect, within our guidance of SEK 14.5 billion to SEK 15.5 billion. Moving to cash flow.

Operational free capital ended at SEK 1.4 billion in Q4, a SEK 1.5 billion reduction compared to last year, mainly due to lower reported EBITDA from the Carrier divestment and the mentioned decline in the TV and media units. The higher CapEx had a very tough comparison on working capital versus last year.

Cash flow was actually a bit stronger than expected due to somewhat higher contribution from working capital combined with a bit lower CapEx. Total cash flow for the year ended at SEK 10.4 billion, well in line with our guidance that cash flow should cover our minimum dividend commitments.

If we move on to net debt and leverage. Total net debt reduced by SEK 3.4 billion in the quarter, driven by good cash flow generation and proceeds from the Finnish and Norwegian tower transaction, partly offset by the planned and executed second tranche of dividend payments.

Total net debt to EBITDA ended at 2.14 times, well within the targeted range of 2.0 to 2.5 times. Given the strong balance sheet and a strong outlook, the net proceeds of SEK 5.5 billion from the Swedish tower transaction are intended to be distributed to our shareholders after closing.

And with that, I hand over to you, Allison, to start the strategy progress update.

Thanks, PC. So, the three of us will now look at what we set out to achieve last year and the progress that's been made towards creating a better carrier in this first year of our multi-year journey.

At this time, last year, we launched our new purpose to reinvent better connected living in order that Telia would become consistently and sustainably better are all of our stakeholders – customers, employees, owners, and ultimately, the societies of the Nordics and Baltics. To deliver on this ambition, we chose four areas where we would differentiate and win versus other operators.

Those four strategic choices are here. They're about inspiring our customers beyond connectivity, connecting everyone in our region to the most trusted, reliable and modern day network.

They're about transforming to digital to be simpler, faster, more efficient and more data driven. And by delivering sustainably through a more accountable and empowered organization, with a much stronger execution muscle.

So, how are we doing so far? I'll start off with inspiring our customer beyond connectivity where, this time last year, we talked about these levers and how they would stimulate our growth strategy.

First, it was about reinventing the customer experience. And clearly, this is an objective in everything we do, from our networks to product to customer service, but in particular, we're aiming to drive it through being the orchestrator or aggregator of our customers' full digital experiences.

And we measure it through improved customer satisfaction. And having won many awards, including SKI and EPSI this past year, we're clearly moving forward.

Also, as we increasingly digitize the customer experience, we see NPS, churn and cost benefits. For example, online self-care in Finland increased during the last year, while at the same time the volume to our contact centers was reduced significantly.

This is a massive opportunity for all our businesses in the years to come, and especially here in Sweden where we have a much more ambitious agenda for 2022 than we had last year. Secondly, we've seen further proof during the last year that customers having more services from us are clearly much more loyal.

In Sweden, we're now verifying a churn reduction of one-third for mobile customers who have broadband and by two-thirds for those who take a full portfolio. In Finland, mobile with content is improving both loyalty and brand consideration.

And this is helping us increase the customer lifetime value with over 50% compared to mobile customers without bundled content. And as you can see here in the graph, Norway has probably done the best job of all with its churn reduction, driven by family subscriptions and equipment bundles in connection with convergent offerings, which is why we're very much aiming to grow the number of conversion households, which was our second cost lever that we spoke about last year.

Across the footprint, we've grown the number of converged households to now over 800,000 with Telia Life in Sweden growing double digits. There is, however, much more to do here.

And with an improved range of content and the improved technology platforms and data analytics that Rainer will talk about later will be growing the number of converged customers and, therefore, customer lifetime value much further during 2022. Thirdly, we said that we would expand mobile leadership and monetize 5G, which we are doing by ensuring we are leading 5G rollout in almost all our markets and ensuring that, as we migrate customers to this better quality service, we're also trading them up to higher tariffs and combining 5G with other services to ensure these customers drive up CLV for Telia.

In Finland, we can see that the early price premium extracted through the 4G to 5G migrations have held up and they're even expanding a little bit to around €3.5 over the course of the year, and we've introduced a premium high speed 5G for both consumers and businesses in Sweden as well. And clearly, as our coverage ramps up in 2022, we'll be able to migrate even more customers to that tariff.

And then, we're looking to accelerate broadband leadership. And we're approaching now 2 million fiber customers connected in our footprint, with high-single digit growth rates, while also growing our IPTV base, especially in Sweden where we have double-digit growth as you've seen in our fourth quarter results, with Finland and Estonia not far behind.

Brand consideration is increasing for the group as a whole, although there are differences between countries and we'd like to make faster improvements there. Norway with its brand consolidation behind it and relentless focus on loyalty and quality has probably done the most improvement in 2021.

And our One Call brand in Norway was awarded the best consumer brands in the EPSI survey. Our Lithuanian business, which is now catching up with the leader, has also won awards for best customer care and service in shops contributing positively to the high-single digit growth that we're consistently seeing in our Lithuanian mobile business.

And finally, we're aiming to help our customers live a more sustainable life. One area we are proud of this past year is how we're offering phones with a reduced environmental footprint by the Eco Rating labeling scheme that we launched together with other major operators in Europe.

And we're also making progress on the sale of pre-owned phones and other positive mitigation for the environment and supply constraints, with Norway increasing the share of pre-owned phones from 12% to 16% during the last year. Moving to B2B.

But our enterprise customers were also aiming to reinvent and upgrade the customer experience and we've seen excellent proof points during the year, as both our B2B brands in Norway took the top spots in the EPSI survey of customer satisfaction, and in Sweden, Telia continues to win the SKI quality survey for having most satisfied mobile business customers. We also committed to grow our connectivity business this year, and it's great to see that, in the second half of the year, we took B2B revenue back to growth for the first time in many, many years despite the delayed turnaround in Finland and despite the still muted levels of international business travel.

This came with excellent new contracts as vital services and the societies we operate in, including both police and defense forces in Norway and Sweden, chose Telia as their most trusted digital partner of choice. The biggest contract win of all this past year was with region Skanör in Sweden.

It's a very broad-based contract with multiple services. And we're truly humbled and proud to support the critical services in the countries we operate in and view these contracts and relationships as a strategic differentiator that no other operator can match in our region.

We also committed to create new revenue streams with horizontal and vertical solutions, and they started to emerge positively during the year. Specifically, I'm excited to see that we already have over 10 enterprise mobile networks in operation and three times as many signings, including a mining contract in Finland which is already connected to our new 5G standalone network, taking connectivity and new industrial use cases to the next level.

App to person messaging is continuing to grow and has been a very positive contributor in several markets, including Sweden where we saw significant growth during the course of the year. There are also sustainability benefits with many of these solutions, not least within remote monitoring and reduced transportation and emissions.

And it's therefore great to see that our end-to-end business continues to grow very positively as we added 1.2 million subscriptions in the year, a growth of more than 40%, driven to a large extent by the energy sector, another critical and growing sector that is choosing Telia as its digital partner. And Division X, our division that captures all the more advanced IoT and data solutions, grew 16% in 2021.

Division X is becoming an increasingly material part of our business and another strategic differentiator for Telia relative to others. We're actually recognized as one of the top 10 IoT communication service providers in the world.

And in a world of 5G, this is when IoT will really pick up. Moving to TV and media, we also committed to grow that business.

And as you've seen throughout the year, we're clearly delivering on our promises. Starting with advertising, we're now back to pre-pandemic revenue levels as the demand and pricing has rebounded.

And not only have we extended our lead in linear with a commercial share of viewing growing to 54%, but due to our successful linear to digital transformation, we're achieving a trend shift in total reach, so that despite the disruption in the traditional TV market, our overall reach is now flattening out because of growth in digital. This is driven by more and more people watching our digital channels through TV distributors, but mainly TV4 Play as the biggest driver.

Time spent on TV4 Play increased by a third, keeping up well with last year's growth rate of 42%. As a result, we've been able to deliver more inventory to our advertisers, helping grow digital ad revenues by 20% during the year and on track to deliver the 2.5 times increase that we set out last year to achieve by 2025.

So, very much on track in that growing business for us. Moving to paid, we committed to grow C More and we delivered on that not only with the 10% growth in direct C More OTT customers, but also with growth through DTV channels, so that the overall number of C More customers have grown by 14% this year.

We will continue to drive growth in 2022 with a strong lineup of originals in Sweden and Finland, while at the same time strengthening the lineup with the best of British drama through the inclusion of BritBox and, clearly, we will have the full year of Champions League in 2022 as well. [indiscernible] the rest of Telia to increase its customer lifetime value.

Well, we're seeing a majority of the growth in Telia Sweden's DTV is driven by premium sports, and that a majority of the new DTV customers are also buying Telia broadband, but it's still early days. In Finland, the C More HVOD service has become a popular add-on to our mobile service, helping differentiation, loyalty and brand consideration.

So moving to the conclusions on this first strategic priority, you may remember that, last year, we summarized our revenue drivers by pointing to a reducing headwind from legacy, TV recovery, roaming recovery, rising mobile ARPU, convergence reducing churn, and new revenue streams. So, let's see how we're delivering on our first year.

Well, revenue did return to growth despite that the roaming recovery is delayed and the legacy headwinds continued. Of course, we still expect legacy headwinds to reduce going forward, and roaming will definitely come back during this coming year and we already saw positive signs in December.

TV recovered very well, as you just saw, and ARPUs grew in postpaid mobile across our footprint in the second half of the year for Finland, but at least it's now stable. On churn, we've seen proof points of higher loyalty for converged households, but we have much more to do in terms of leveraging this across our full portfolio and footprint.

And finally, our new revenue streams, including IoT and enterprise mobile networks, are growing at high speeds, which will gradually become big enough to impact the overall group growth rates. So, that concludes our first strategic pillar.

And I'm now going to pass on to Rainer who will take you through our connect and transform pillars, so that you can get an understanding of how we are improving our operations to enable an increased contribution to move to the bottom line from an accelerating revenue development as we move into 2022 and beyond.

Thank you, Allison. Thank you.

In our second strategic pillar, connecting everyone, we have said, if you recall, four value levers. First, the gigabit network build out and modernization.

Then the softwarization of our networks throughout. And legacy retirement.

And last, but not least, the partnering to crystallize value from our digital infrastructure. Let me update you on our four value levers now.

First, we are well on track with our gigabit network modernization towards our target 2023, as you can see on the left side, and this despite the continued global supply chain challenges that we've all been seeing. Now, our 5G networks cover 65% of Finns, more than 40% of Norwegians and Danes, 25% of Estonians and more than 10% of Swedes where we won the 5G spectrum just last year, if you recall.

And most recently, we also launched 5G on commercial spectrum in Lithuania. So, we are now live in all our markets.

With our modernization, we have been able to further build our network leadership and network position in all our markets. For example, yesterday, as I think Allison mentioned, reconfirmed by the [indiscernible] award in Sweden, and we reached also number two network quality position in Finland where we are even number one in 5G speed.

All this is on the back of having secured the leading 5G spectrum position in our region and, with our modernization, we unlock five times more network capacity to our customers. As you also will recall, we employ a distinct and very efficient network modernization approach, with a fully standardized set of site types, with dynamic spectrum sharing and single site visit for our combined 4G and 5G modernization.

And on the underlying modernized 4G, we see up to 100% speed increase. And, of course, on 5G, we see amazing speeds and we have had a speed record in Sweden of 2.2 gigabits per second last year.

Turning now to fixed broadband. We continue our modernized and monetized approach.

We successfully leveraged the mobile infrastructure to grow our fixed wireless customer base, complementing our fixed broadband digital infrastructure which we have only very selectively built out further. And beyond connectivity, we keep innovating with partners, especially on energy efficiency.

We have launched pilot for energy storage in our network. And for example, in Sweden, with Polarium where we are now demonstrating that we certainly can do more to connectivity on this area.

And also, we have demonstrated last year, a first in the world, a distinct 5G function for policy. Let's turn to networks authorization which is well on track and we see further improved performance and stability on this.

We've already migrated 80% of our packet core workloads to virtualized cloud environments and we will complete the full migration in the first half. On the transport side, we are breaking the traffic induced cost where we progressively upgrade or hyperscale architecture separating the service nodes from the transport pipes and utilized a very cost efficient commodity hardware.

And we are proud innovation leader in one of the world's most digitized regions. For example, we were first to launch the 5G standalone functionality here, which brings lower latency, network slicing capabilities, which are especially demanded by our enterprise customers.

On the back of the modernization, and that's also what we showed last year, we are on track with the legacy take-outs, which is super important to reduce complexity and cost and to also improve the service quality. As you can see, we continue to retire our copper infrastructure as planned.

Now, we are at 70% completion in Sweden. And we have even preponed the full closure of our copper network in Finland to 2024.

We realized substantial benefits. For example, the reduction of the subcontractors due to the reduced number of copper faults that we see.

On the 3G, we monitor the progress on the 3G voice traffic in Sweden, for example, as called out here. And we have already completed the shutdown of our 3G network completely in Norway as we communicated earlier.

All our markets will be completed latest by 2023. And with the modernized network architecture in place, we are also able to drive out legacy network nodes.

And we have completed more than half of our journey here, as you can see on the right-hand side. Turning to the next promise.

We had delivered here on our promise on crystallizing value from our digital infrastructure through onboarding of strong and strategic partners. In June last year, to recall, we have completed the divestment of Telia Carrier to Polhem for an enterprise value of SEK 9.5 billion.

And on the tower side, executing our strategy, we have created a pan-Nordic tower platform with our partners Brookfield and Alecta for total enterprise value of SEK 2.6 billion. Initially, we had closed the sale of 49% of towers in Norway and Finland for SEK 7.9 billion.

And as communicated last night and mentioned by Allison, we extended our partnership and also covered our Sweden with the sale of 49% of our towers there for a total of SEK 5.5 billion. Our tower platform now allows us to accelerate funding digital infrastructure investments and bring further scale and operational excellence, but at the same time, retain control and ownership of this critical infrastructure.

And going forward, we seek to add further assets both in the current three Nordic markets and beyond. So, now let's look at our third strategic pillar, transforming to digital.

There we have embarked on arguably one of the industry's most ambitious digital transformations and we can confidently say that we have laid a solid foundation to reinvent the Telia. Our transformation spans all market, all functions, is embedded in our operating and financial plans, and is borne by all our 20,000 people.

We have decided on our digital target blueprint starting with the customer experience principles and going all the way to a detailed IT architecture. This enables our organization to execute along what we call the Telia way of working, cross functional and agile, fully transparent, and focused on tangible increments of customer experience and business value.

We are now running a portfolio of several hundred concurrent transformation initiatives rolling up to a single transformation cockpit, which allows us to identify deviations and to intervene immediately whenever needed. We've delivered on a number of foundational digital building blocks, which generate immediate value, some of which I will highlight in the next few minutes.

And all this supports Telia transformation to provide a digital-native omnichannel experience in each of our markets. Fully empowered local sales and service teams, which are digitally enabled by one common integrated delivery foundation which provides the best product, processes, platforms, people and partners at scale.

So, let's look at products and processes, the first two of our 5Ps, to begin with. We are on track to simplify and scale our products, from bespoke solutions to common platforms with high reusability across Telia.

Last year, we had started with about 1,200 product installations across the group and we had committed to retire 50%. To date, we have successfully retired the first 20% of our legacy portfolio, a crucial precondition to retire underlying platforms and to realize efficiencies.

Our lean target portfolio consists of about only 100 products and it's built to scale to maximize reuse, efficiency and time to market. Today, we were able to increase the reuse factor of our product portfolio in the group to 46%.

We have launched a groupwide operational excellence program for continuous improvement of our customer experience to systematic removal of the underlying root causes. And with this, we have been able to reduce the number of severe incidents, which are most customer impacting by 10%, and this is only the start.

We are transforming our processes from complex and broken to simplified, digitized and automated along customer and back office journeys. We have completed the first round of core process reengineering, uplifting efficiency, quality, and throughput.

For example, through this work, we expect to have the lead to order time in Finland and the cyber order to activate in Sweden in the B2B segments, and, of course, this extends then also to the B2C. We have successfully deployed key IT enablers for process harmonization.

For example, we've scaled our common service catalog across markets, with a 90% reuse of the solution and 45% cost reduction and 30% faster time to market. So, the scaling of our common products and platforms really works.

With our center of excellence for robotic automation, we have achieved an increase of intelligent automation across Telia by 35%, realizing hundreds of thousands of working hours saved. Now, let's turn to platforms, people and partner.

On the platform side, we simplify and reuse, transforming from a quite complex legacy to a much more modular, scalable and future proof architecture. Starting again with the legacy, we have successfully retired 20% of all our legacy platforms, enabled by having standardized on a few type of products, as mentioned before, and by successfully also migrating over the customers, delivering intangible cost savings already in 2021.

As with our products, we are also scaling our target platforms groupwide for a maximum reuse efficiency and time to market. In 2021, we have increased the share of common platforms to 15%.

Also, we execute our fit for purpose cloud strategy with an on-premise and public cloud. So for the public cloud, we have increased the share of reuse to 50%.

And it drives standardization of our IT where we are working closely also with the TM Forum and we have implemented the first 15% of the TM Forum standard APIs, which make it much easier to connect also partner products. We have introduced digital native platforms to unlock business value, as mentioned by Allison before.

And for example, our state-of-the-art AWS analytics stack allows us now to deploy intelligent customer value management to drive conversions and upselling, and this is outlined in our strategy pillar 1 by Allison earlier. Focusing on simplified product, processes and platforms now allows us to focus our people on the key target domains such as user experience, analytics and cloud and to transform to a cross functional and digital-enabled workforce.

We've scaled our execution excellence. Now, 70% of our capacity is delivered through safe and agile methodology, supported by training, agile coaching and state-of-the-art tools.

This has tangibly and dramatically increased our delivery efficiency, the customer quality of what we deliver and also the time to market. We have reversed the brain drain to build critical competencies and we realized efficiencies by a combined in-sourcing and nearshoring initiatives, which is going to be continuing also going forward.

We have scaled our nearshoring location and venues by further 20%. And as the number one largest employer of choice in Lithuania, we've realized significant cost advantages to the group.

We transformed to a digital native workforce. 75% of our product and technology talent now are active learners.

25% of all Telia employees actively use online dashboards for their daily work. And the usage of online real time data analytics has increased by 30%.

So, we are clearly on a good way there as well. And finally, we have refocused on few, but highly strategic partners with whom we share a common vision and success.

We have already reduced the number of key system integrators from 28 to 11. And we are on track for the full cutover to our target 4 by the end of this year.

And this will lead to a substantial SEK 750 million cost saving over the next five years, part of which is being reinvested into our transformation. Also, we have closed key partnerships for each of our core domains, which we have communicated separately earlier.

And the most recent strategic partnership I'm very happy to announce today is with Celonis, the global leader in execution management and the creator of process mining. Together with Celonis, we'll deploy an x-ray through our processes to accelerate simplification, digitization, automation, and analytics augmentation.

This effort will increase efficiency and deliver better experiences to our customers. So, let me hand over to PC who will update on pillar 4, delivering sustainably.

Thank you, Rainer. Delivering sustainably is all about creating value for all our stakeholders and create an execution muscle that allows us to deliver consistently and sustainably over time.

These include clarity on our purpose; strategy and transformation agenda, breaking this down into concrete operational plans with target KPIs and initiatives, including our cost and investment agenda; continuously strengthening our leadership and secure motivated and engaged employees; a comprehensive and integrated sustainability agenda; and finally, a solid and clear financial framework, with clear ambitions and strong balance sheet and predictable and sustainable shareholder renumeration. Let me give you a quick update on how we're progressing on a few of these topics.

Let me start with our efficiency and cost agenda. A year ago, we said that our total transformation of Telia, in addition to support our commercial agenda, will deliver a net cost reduction of SEK 2 billion by 2023 and SEK 4 billion by 2025.

Through a comprehensive simplification and digitalization of our business, we would enable significant reduction in resource cost, our sales and marketing costs and other operating costs, including IT. So, where are we today?

Our OpEx reduction target of SEK 2 billion by 2023 and SEK 4 billion by 2025 remains. We have realized SEK 0.3 billion reduction in 2021 despite significant headwinds.

Through process improvement, process automation, legacy dismantling, product and system modernization and digitalization of our customer interactions that Allison and Rainer have talked about, we have managed to reduce the number of resources by more than 1,000 in 2021. This, together with increased use of nearshoring, has offset annual salary inflation and reduced the total resource cost by SEK 0.2 billion.

IT cost has reduced almost SEK 0.4 billion, driven by the system and vendor consolidation initiatives that Rainer has talked about. Other costs have in total reduced SEK 0.2 billion from a broad set of initiatives.

Total sales and marketing costs are quite stable in 2021, but key initiatives are being implemented in many markets to reduce dependency on expensive third-party channels, increased share of digital interaction, consolidate our media spend, move towards more targeted customer communication and increased use of analytics to improve ROI on our marketing spend. Headwinds in 2021 that we didn't expect at this level a year ago are the mentioned increase in energy costs of SEK 0.2 billion.

Increased cloud-related costs due to the accounting change, which is neutral on cash flow, of SEK 0.1 billion and the temporary investments into Sweden customer care of SEK 0.1 billion. The main driver of the energy cost increase was the higher energy prices at the very end of 2021.

Going forward, we assume that the energy prices will normalize somewhat. In addition, we are mitigating the pressure on energy costs by actively dismantling our copper-based legacy infrastructure, modernizing our mobile network with more energy efficient software and hardware to take down energy consumption, and embarking on more advanced energy saving solutions that Rainer just talked about.

And please note that part of the energy cost increase is related to customer-specific services, like data center and colocation where the cost is passed on to our customers and neutral on EBITDA. Net cost reductions are expected to increase somewhat in 2022 and more in 2023, driven by slightly bigger impact from our total transformation program, combined with less expected pressure from the mentioned headwinds.

And we are continuously working to strengthen our transformation portfolio to offset these headwinds. All in all, we are on track towards the SEK 2 billion OpEx reduction by 2023 and SEK 4 billion by 2025.

Over to CapEx. Last year, we announced a significant investment program to modernize our mobile networks, dismantle our legacy infrastructure, and to transform Telia to a much more digital company.

In parallel, we'll launch a CapEx efficiency program to mitigate the pressure from the increased investments on our cash flow generation by reducing our investment of SEK 1 billion per year by 2023. All in all, leading to a higher CapEx in 2021 and 2022 before returning to 15% of net debt in 2023.

As Rainer has taken us through our investment, again, that is very much on track. We ended, as we've seen, with a cash CapEx in 2021 at SEK 40.4 billion or 16.3% of net sales.

This is slightly lower than the guidance, driven by the mentioned cloud accounting change with an impact of SEK 0.3 billion. CapEx is at the lower end of the outlook, driven by higher and earlier savings from our sourcing initiatives, the standardization and consolidation, and improved CapEx planning and prioritization.

CapEx is expected to be on a similar level in 2022 before coming down to 15% of net sales in 2023. Moving to cash flow.

Last year, we said that we will generate sufficient cash flow in 2021 to at least cover the SEK 8.2 billion minimum dividend commitments, and from 2022 onwards that the dividends commitment should be covered by the structural part of our cash flow. As you have seen, cash flow ended at SEK 10.4 billion in 2021, well above the minimum dividend commitments of SEK 8.2 billion.

Contribution from working capital ended slightly higher than expected, driven by higher impact from our vendor financing program. The structural part of our cash flow came in as planned at SEK 7.4 billion.

From 2022 onwards, the structural cash flow is expected to increase to at least cover the minimum dividend commitments, driven by the growth on EBITDA and, from 2023, also the reduced CapEx. Positive contributions are still expected from working capital going forward, but as earlier communicated, we can expect it to gradually come down.

And finally, a quick update on our integrated sustainability agenda. Sustainability is the core of what we do as we reinvent better connected living.

It's about creating and adding value to our customer and society as a whole, as well as protecting value in company assets. That's why we have integrated sustainability fully into our business strategy, with content across our four strategic pillars.

We have selected three impact areas that reflect our core business – climate and circularity, digital inclusion, privacy and security. And these are the areas where we dedicate most of our attention and resources.

In mid-March, when we published our annual and sustainability report, you will receive a full update on the progress related to our sustainability goals. Here I'd like to just highlight a few selected examples.

On climate and circularity, we are making good progress towards our goals. We are to date climate neutral within our own operations.

Most CO2 emissions are generated in our supply chain. Hence, we are pushing our suppliers to adopt science-based targets, just like we have done, to secure that they have ambitious goals and action plans.

And by the end of 2021, suppliers representing 27% of our supply chain emission have set us goals. And our target for 2025 is to reach 72%.

We are driving digital inclusion in our market through significant investment in networks of the future, committed to improve access to high quality and reliable connectivity for all. It is equally important to secure end users, especially the vulnerable groups are equipped with the right digital skills.

And last year, Telia's Digital Skills Initiatives reached over 600,000 individuals, mostly seniors, children and SMEs. And this makes us well on track to reach the 1 million individuals by 2025.

Needless to say, privacy and security must be at the core of everything we do to constantly earn the trust from the customers that we serve. On privacy, we track our customers views in this regard and aim for a top tier position in all our markets.

Last year, consumers in five out of six markets ranked us either one or two when we asked them via our regular consumer survey. On security, we see that B2B and public customers put increasing requirements on us, and righty so since security and risks are increasing.

As Allison has mentioned, last year, we won several key contracts with elevated security requirements. We aim to keep and develop this strong position, by being proactive and responsive to existing and emerging trends.

And with that, I'd like to hand back to you, Allison, to summarize and conclude this presentation.

Thanks, PC. So, moving to our outlook.

Our ambitions for the 2021 to 2023 period are unchanged. For 2022, we're targeting low-single digit growth in service revenues as well as in EBITDA, and let me unpick that into the various components.

Our core telco business is expected to grow as we saw in the fourth quarter EBITDA of low to mid-single digits, while our fast growing TV and media business will continue to invest and absorb the full year cost of Champions League in 2022 and have an extended set of high quality drama options, which is why we expect that TV and media EBITDA contribution will decline in the coming year, basically to fuel the digital transformation of our business to make a more valuable business' future with the right mix of cash generation and growth. CapEx, excluding licenses and spectrum, is expected to be between SEK 14 billion to SEK 15 billion, which is in line with last year.

And as you can see, we've actually lowered the CapEx guidance range by SEK 0.5 billion Next to shareholder remuneration. I'm happy that we, on the back of a strong balance sheet, can propose a dividend growth of 2.5%, in line with the ambition of our policy, which is one of the sector's most committed and shareholder friendly.

In addition, as per last night, we foresee that we'll continue to operate in the lower part of our debt target range and our board, therefore, intends to report a distribution of the proceeds from the Swedish tower transaction after closing to either extraordinary dividends or share buybacks. And it is the full net proceeds that we will be distributing.

So to summarize the first year of our new strategy, we are delivering on our plan. We've returned to service revenue and EBITDA growth for the first time since 2014.

Mobile subscription service revenue growth is accelerating and really accelerated towards the end of the year. Our biggest market, Sweden, is now at an inflection point, having returned to both revenue and EBITDA growth, of which we aim to continue to build upon.

TV and media also returned to growth, driven to an increasing extent by digital advertising and C More. We've secured our network leadership and are on track in the buildout of next generation networks.

We've laid the foundations for sustainable digital transformation of the full company. We're crystallizing infrastructure value and in the midst of creating a pan-Nordic tower platform with an enterprise value of €2.6 billion.

We've established an ambitious ESG agenda, aligned with our strategy, and are seeing strong progress. Our balance sheet is delevered to the lower end of our target range through the Carrier and tower transactions, and we're proposing the ordinary dividend to grow by 2.5% percent, in line with our policy and planning for extraordinary shareholder remuneration after closing of the Swedish tower transaction.

So with one year of our strategy under our belt, I remain absolutely confident in our ambitions and our plans to return to Telia to our consistent, sustainable growth that will ultimately benefit our customers, our employees, and most importantly, our owners and the societies we serve in the months and years to come. So, after almost an hour, you deserve to ask a few questions.

And so, I'll hand back to the operator to start the Q&A session.

If I could ask, I guess, a thing first or maybe just a boring one on towers. You've announced a second tower deal this time.

Sweden towers, you had indicated I think at the previous quarter that that was the likely one. Can you just remind us that the infrastructure you have on towers, I think you've talked about 21,000 towers and rooftops beforehand.

Is this still your ambition to monetize further towers and rooftops? Is there anything holding you back on rooftops?

Do you have the MSAs in place to do that? Are you going to put them all inside Telia asset management?

Just sort of general thoughts around what's next in terms of that priority?

Clearly, we are delighted at the tower platform that we are building up. And with an enterprise value already of SEK 2.6 billion and working with partners such as Brookfield who bring unique operational international experience owning and operating one of the biggest footprints in the world of towers, we are clearly going to be looking at what else can we do.

But I think what we said this morning is that Norway, Finland, Swedish towers amount to just over 8,000. It's predominantly just concrete and steel so far, with a few shelters in Sweden.

What it doesn't include yet is similar types of assets in the Baltics, or in Denmark, but clearly Denmark is part of a JV. And then, the rooftops – I have always said our rooftops were somewhere between 2 and 3 times the concrete and steel.

And we will continue to look at what we can put into this great new platform. One of the reasons we chose Brookfield as a partner not just for their valuation premium, but also because of their experience in markets, such as Asia, where there's many, many rooftops, they can bring the experience of how do you transfer some of these non-concrete and steel assets into a tower platform.

And certainly, we'll be working with them on how best to do that. And you're right, it is more complex because you've got to – the tower – the rooftops are set on property that we don't own and, therefore, you have to look at the lease implications of some of that, those bits of equipment, but it's our intention to keep building this.

And by keeping control, it also allows us to ensure that our operations, our retail businesses are still able to secure their leadership position and take advantage of next generation technologies and developments that will happen in the coming years, whether it be 5G or 6G and beyond. And whilst the market values these towers so attractively, I think it's great news for our shareholders as well as for Telia's owners as we bring in these – you always said to me, Maurice, don't do a deal unless it's going to make it better for Telia as well.

And I do believe Brookfield and the long-term view that Alecta has makes it better for Telia in totality as well as a short-term crystallization of value.

I could follow-up on the previous question because you mentioned there are other infrastructure assets within these markets and also in the other market. Are you basically talking about the rooftops or are you talking about other infrastructure assets like data centers, et cetera?

What other type of business are we talking about?

We're very much focused on towers so far, Stefan. Of course, we have other assets as well.

But we are focusing on towers at the moment because that's where Brookfield brings particular benefits to us. And clearly, we've got to get the Sweden transaction closed before we start going to the next ones as well.

But we are always looking at how do we create the most value for our shareholders out of our asset base. And I don't know whether you read in the report, over the course of the last year, we've sold off non-core assets to the tune of SEK 0.5 billion that we're generating any EBITDA.

So, of course, we will continue to really look at how we focus the portfolio on the assets that are core to Telia going forward. And if there continues to be assets that create value by bringing in some crystallized value, by bringing in partners, we'll look at it.

But towers is our priority at the moment, data centers will come later, unless we see some specific opportunity at some point in time, Stefan.

I actually have a follow-up, if I may so. When we started looking at potential value consolidation, you mentioned that towers internally were an overlooked asset.

And so, just to understand how much, now that you're bringing in the strategic partner, and so, obviously, you're selling kind of minority stakes, it's kind of the best of both worlds because you're keeping control, yet we're paying synergies and efficiencies that the strategic partners bring. So, is there an internal idea in terms of how much of any kind of minority dividend leakage this efficiency from strategic partners is likely to kind of cover over time?

And then second follow up, if I may, in terms of – you mentioned a pan-Nordic footprint that you have and there's clearly one potential pan-Nordic also partner that is also looking at crystallizing value. So, are there any ambitions to kind of form, given what's going elsewhere in the continent, a larger kind of platform with a potential partner over the Nordics?

And are there any regulatory limitations, for example, that we should be aware of when thinking about this?

The dividend leakage – because I think it's the first question – is only SEK 200 million to SEK 300 million a year of these towers. So, very low and very immaterial relative to the cash flow of our total business.

In terms of pan-Nordic footprint, we are today just focused on the partnerships that we've announced. Clearly, as things develop and we see consolidation opportunities with others, we would consider those, but we've always got to consider the regulatory implications as well.

So, some markets will clearly be easier than others. But for now, we're very happy with the platform we're building with Brookfield and Alecta.

Allison, a question related to Sweden, please. Returning to your initial comments, Sweden returning to growth, this is, of course, positive and important, both mobile and in the fixed part of it.

The positive trends in TV and broadband, you indicated that this is, to a high degree, driven by the inclusion of the premium sport content. That may, of course, be some one-time impact in the first quarter as you gain these rights, but has what you've seen to date strengthened your belief in management and the board that you will be able to monetize on these exclusive rights, which you're investing in going forward and with the positive impact on your access business and the telco business as well?

Any comments there would be appreciated. And if I may ask one follow-up.

Allison, a key part of your strategy has been for the past year to invest for network leadership. This is, obviously, a multi-year project.

When do you think and will we know – it takes a bit of time for this to be reflected in the market. When do you think you'll start to see the initial benefits from these investments in terms of a more positive market perception of Telia's leadership in the market and actually monetizing on that?

That will be appreciated.

It's good to talk about the business again, not just towers. So, yes, delighted with the return to growth in Sweden.

And I think it's not just driven by our investment in premium sports. You look at the positive development, we saw mobile ARPUs up 3%, fiber up 8%, and clearly strong IPTV development.

Yes, premium sports have an impact, but we've only had Champions League for three months and it's the full range of content that we're able to offer on our platform that is the driver of the strength in our IPTV business, which clearly Champions League attracts new people and it's got good attachment rates to broadband within it, but it's not just that one right that's driving the strength of the business. It's multiple things, which includes the investment in our network.

We are leading the others with the 5G development and the 4G modernization. And us sustaining that premium perception is absolutely critical to us continuing to sustain a premium versus others in the market.

We have sustained and even grown a bit of our premium in the market. And we have absolutely every intention to do that this coming year as we continue to invest in our networks.

So, is it reflecting? I think it is.

The fact that we have returned our enterprise business to growth, we are securing strategic contracts with key government agencies, key municipalities, key enterprise businesses beyond just connectivity, but into new use cases with 5G and IoT as well. I think that is all a reflection of how we are perceived and is allowing us to take the lead on pricing in mobile, in fact, which we clearly will continue to do in 2022 to offset some of the pressure from inflation and really build that leadership position.

In terms of, is my belief in the investment in content strengthening further, it's still early days. I am happy with the edge that it is bringing to our converged position.

But as I said, it's not just about Champions League. It's about the full range of entertainment services you can have.

And in a world where consumers are being and high schools are being bombarded by more and more streaming apps, our role is to be the best aggregator of all of the content you might want to choose from. And premium sports is one aspect and it drives brand consideration and that perception of premium that helps us drive ARPU on the back of and loyalty of the most premium customers on the back of.

But, honestly, it's one of many aspects of our TV strategy and our connectivity and conversion strategy. And when Rainer's digital transformation really kicks in, it's about getting that platform that allows easy access to everything you want and a customer can then pick and choose going forward.

And as I said, it's all about driving customer lifetime value. And Champions League just brings something attractive to drive consideration of Telia at this point in time.

Can you update us on the Finnish turnaround in a bit more detail and how much of the strategic repositioning has been done so far? And I guess I'm trying to really work out when we should think about the mobile service revenue and EBITDA return to growth in Finland?

As we said, the turnaround would take into the second half of 2022 before you would see the real material impacts, but what we are happy with so far is it has started to deliver in line with our expectations. This shift from third-party retail into our own channels is developing positively.

We've seen quite a rapid shift into digital channels that is starting to improve both ARPU development, convergence opportunity, but also allows us a lower cost to serve as well. And what you're seeing with now an increasing base on 5G, we've started to halt the decline in ARPU and actually, in consumer ARPU, we've started to see a positive development during the quarter.

That value focus turnaround does mean that we are stepping away from some low ARPU customers. So, the subscriber base might be low for a bit, but definitely that migration from 4G to 5G, that removal of going after volume at any cost is showing positive developments, as is the shift away from third-party retail into digital.

In the enterprise space, we clearly had some headwinds in the fourth quarter from Q4 2020 when we had a very strong fixed service IT business line solutions quarter that I then mentioned was impacted by supply chain benefits this time. That turns into a tailwind next year as well.

We've also got roaming coming back. And our strategy is very much we should be able to grow in line with [indiscernible].

And that is our plan. And you'll see the benefits in the second half of the year.

In terms of the strategic repositioning of the brand, well, certainly, 5G is helping. We've just won – our network scored very highly in a recent Tutela Network survey of international 5G networks.

And our network at – the Finnish networks came out as one of the best in the world and Telia's was the best in Finland. So, that helps change the brand perception and we start to change the brand positioning in totality.

I think, actually, as of today, and in the last month, we actually [indiscernible] C More, so that C More becomes a much stronger association with the Telia brand, which we're also seeing is helping change brand consideration and reduce churn and really starting to get a younger generation to start to be attracted to the Telia brand again.

I have to two topics to touch on, if I may. The first one is on the energy cost impact.

Seems like you spit out a headwind of SEK 200 million for the full year, so equivalent to about 1% of EBITDA. Could you maybe provide some more color on the expected impact on 2022, until when and to what extent are you actually hedged and to what extent were you hedged in 2021?

And the second topic may be on the TV and media segment just because you're very helpful in splitting out the EBITDA trends compared to enterprise business. What would you expect at the top line of the segment, given that there's an increase in subscriber base, and for 2022?

I'll take the first one and then you can take the second one. So, on the energy costs, we have a bit more than SEK 1 billion a year in total energy costs.

We have a hedging policy, where we have a sort of a rolling hedge, with the first quarter is 70% and then they gradually go down. So, as of today, we are hedged around, in average, 50% of the consumption in 2022 and then some in 2023 and some in 2024.

So, that is a hedging policy that we've had for some time. The increase that we see in 2021 and in particular in the end of 2021 is mainly price related because, even if we're hedging 70%, there has been quite an extreme development on the spot prices in most of our markets during the Q4, in particular.

So, that is the main driver for the total increase in 2021. If we then take the view into next year, of course, we don't know, but we assume that the energy prices normalize going forward.

And if they do, there will be some floor because we're now hedging on slightly higher levels into next year. We will also mitigate that, as I mentioned in the presentation, when it comes to consumption piece.

I'm not going to repeat that, though we had a pretty solid set of initiatives that will mitigate some of the inflationary pressure by taking down consumption. So, all in all, if we look at next year, our view at the moment is that we expect to see SEK 100 million to SEK 200 million increase on top of the increase that we have seen this year, mainly driven then by the price effects that we already seen.

And on TV and media, yeah, we wanted to be much more explicit on the EBITDA on TV and media because, clearly, that has been something that we've always been up against these last two years and getting consensus in the right place. Regarding revenue guidance, we weren't planning to give revenue guidance on the segment, but you should clearly expect it would be at least mid-single digits in the TV media segment.

I wanted to return to the towers. Sorry about that.

There's a couple of sub questions there. The first one is, Allison, at the very start of this project, you were slightly more hesitant to consider tower sales in those markets where Telia is a leading player.

What changed your view? Is it the valuations are simply too good to be true?

Or is it that you were managing to structure these deals in ways that protect your interests better? Or what is it that really changed your view?

Then the second question is, you talked about the dividend leakage? Can I first clarify the SEK 200 million to SEK 300 million?

Is that incremental from yesterday's deal? Or is that the total?

And also, is there a difference between the free cash flow ownership of the of the partners and the divi? Is it essentially 100% free cash flow payout and then that's a?

Or is that sort of a bigger value leakage? Because all these announcements focus very much on the proceeds and say very, very little about what you have handed over.

And then, the last sub question here is, how do you treat that dividend leakage in your free cash flow definitions, operational and total free cash flow definitions? And are you intending to change that?

And If I may just chuck in one other. On the B2B revenue inflection, it's probably fair to assume there is a bit of a tailwind here from roaming recovery, or at least roaming normalization in there.

So in other words, is there a chance that the B2B revenue inflection, which is really big news for Telia, I think, is really sustainable? You've commented on total service revenues, but you expect sort of growth except for the odd quarter, but would you say the same thing about B2B?

I'll get PC to handle the questions around towers and dividend leakage. First of all, you're right, I was a bit more hesitant in the beginning of towers, but as we went through, particularly the Norwegian/Finnish process, and I realized I could retain majority ownership, I could structure – first of all, get fantastic valuations, higher than we expected, and structure service agreements that are no worse than our retail operations had today in Telia with it being an internal company.

So we can protect our interests, we can keep control, and we can get operational and commercial benefits because it's not just a financial player that we're partnering with. It's actually a financial player combined with a Brookfield that really know how to run these businesses in a smart way.

Then, it was a win-win and actually much better than I was expecting. And that's why soon after striking the Norwegian/Finnish deal, we immediately went in to a discussion with Brookfield/Alecta on Sweden and delighted with the announcement that we made last night.

Why don't I take B2B revenues and then I'll go to PC on all of your dividend questions? B2B revenue, listen, there is no international business travel recovery in our numbers.

And so, that trend shift is not from any shift in roaming. Where we did see some pickup in roaming in the quarter was in the consumer business, but it was small.

And if you look over the course of 2021, we had less roaming than we had in 2020. So, any recovery in business travel is all upside to our existing trends.

And so, that, I view, as very positive. A lot of the big contracts that we have secured, during the course of 2021, will start to kick in during 2022.

They were in our numbers. And as I've announced, a lot of those new deals, region Skanör being one of them, takes us in to new services, some of them IoT related as they want to more and more use monitoring to be able to manage their asset base than we have allocated at any point in time.

So, no, I don't see anything that says that the B2B revenue shift shouldn't continue into next year. And as I said, I don't know whether you picked up, if you just strip out the TV media trends from the fourth quarter, we just need to achieve what we achieved in the fourth quarter in our core telco business and achieve our guidance for the whole year 2022 in terms of top and bottom line development.

On your more specific questions around dividend or cash flow leakage, first of all, we will continue to consolidate. So, there will be no changes in all the numbers that we then report more from an operational point of view.

So, those will remain unchanged. Then, of course, there will be some leakage to minority shareholders.

And then, if that is combined from the Swedish, Finnish and Norwegian towers in total, we see a leakage of SEK 200 million to SEK 300 million. That will be under the line item financing activities and, of course, then a part of the free cash flow in totality.

But it's quite insignificant in the big scheme of things and it doesn't change any, let's say, framework or outlook in terms of dividend cover and the likes.

Can I just clarify? Is that dividend leakage, is that essentially the free cash flow or does Brookfield and Alecta retain sort of an accruing share value, if you will?

Or is that SEK 200 million to SEK 300 million essentially full payout of the free cash they actually own as owning 49%?

It will be payout.

The SEK 200 million to SEK 300 million in absolute. Yes.

I've got one question on convergence, please? You highlight the performance in churn [indiscernible] bundling and also from selling additional services?

My question is, how much of that is real as opposed to self-selection of customers [indiscernible]?

That is real. We are monitoring all of the time, what is the churn of a single versus double versus triple play customer.

And so, the data points that we shared on our presentation has actually been monitored over time in our Swedish, our Finnish and our Norwegian business. You broke up a bit, Francesca.

I hope that answered your question. But it's not just selective customer groups.

We're studying that the whole time.

There was a couple, please, if that's okay. Just back to Peter's, Allison, on your confidence on price rises in Sweden, Could you just tell us how the price rises have been received?

Because the sub numbers seems like a bit of a wobble. I know you've got loss of a contract on the mobile side with about 20,000 subs, but still your subs are down underlying ex-M2M in postpaid and the broadband sub seem pretty flat.

So, has that been well received? Or is there a bit of an issue on churn there?

On the second one, just a really basic one. What's the board taking into consideration when it compares a special divi versus the buyback for the Brookfield proceeds, please?

The price rises, clearly, we've taken quite aggressive pricing in some of our legacy revenues over the year, fixed telephony and DSL, and we're always balancing how much revenue uplift you get versus the churn you lose. But outside of those pricing moves, we're not seeing really any impact on churn.

The subs, we don't see it as a wobble. There was two reasons for it.

One is the loss of a large public sector customer that one of our peers offered crazy low prices for. So, they are moving away.

And then, the other one was some mobile broadband because what you're seeing in some of the more rural areas or second homes, people are either moving to fixed wireless access or they're moving to fiber alternatives. So, nothing that makes us concerned.

And in terms of our broadband customer base, DSL customers are reducing, but we're doing very well from a fiber point of view. And in fact, our total fixed broadband customer base grew in the quarter despite the DSL losses.

So, not worried about the subscriber base at all. And then, in terms of the board and how they're looking at special dividend versus buybacks, very open minded at the moment.

We want to use the period between now and closing to consult to all of our shareholders and work out which one is the most attractive to the shareholder base that we have. So, no opinion at this point in time.

Presumably, that's thinking about divi covered as well. That's got to be quite a big consideration given where you start off on.

Absolutely. Look, our leverage is in – our balance sheet is in a very strong position.

And we have said that our ordinary dividend will be covered by structural cash flow in 2022. So, we're in good shape.

So, I had a couple of very quick questions, I hope. Firstly, on the inflation.

You make some comments in your prepared remarks, Allison, that you don't think that it's not kind of fair any longer to not pass some of that inflation on, it sounded like. I was wondering if there's any opportunity in Sweden, in particular, to link inflation within customer contracts as we've seen elsewhere.

Secondly, on CapEx, it's quite a lot higher in Q4, as is typical, but I wondered whether or not that reflects the fact you kind of ramped up to a particular higher pace of that CapEx. And so, actually, we might see the inverse during the course of the year and it fades down to a lower level as we exit the year.

And then, finally, a quick question on your comments around customer value management. I think there was a sentence in the presentation where you're talking about it being deployed via AWS.

I wasn't quite clear what was owned by Telia there. Is it Telia IP that is using the AWS platform?

Or are you outsourcing part of that to a third party?

That gives us the opportunity for all three of us to talk. So, on the inflation question, I'll take, then PC will take CapEx and Rainer will take customer value management and AWS.

We do have inflationary-linked contracts in aspects of our B2B business in Norway. And we are actually looking at whether we can extend that beyond Norway, into Sweden and all of our markets at this point in time actually.

But normally, our inflationary pricing comes through price adjustments, migrating customers out to new tariffs, but certainly in a world where inflation is 3% and above for the foreseeable period, then we will clearly be doing everything we possibly can. And so, it will be a mix of what we have done in Norway and getting that into contracts going forward and then just the ongoing pushing customers up on the back of premium networks, premium service, and premium converged services.

And that's what you're seeing in Estonia. We don't have any contracts that drive our ARPU development in Estonia, but they're doing a fantastic job there.

But certainly, we're now looking to learn from what we've done in Norway and take that further. And we would definitely be looking to do that in Sweden.

On CapEx, PC?

So, the high CapEx in Q4 was very much expected and also what we've been guiding on earlier in the year that we expected this. And there are two main drivers that hits us in the same quarter.

One is we have underlying high activity level in the quarter, a higher number four, plus that we get some effects from earlier high activity levels. So, we have the vendor financing program that kind of delayed some of these payments.

And these are both hitting us in the fourth quarter. The SEK 5 billion, we should put that in the context that the guidance next year is high, right?

So, it's not the level that we will sustain on a quarterly basis, as our guidance is in the range of SEK 14 billion to SEK 15 billion for next year. So, I don't know if that answers your questions on the CapEx.

So if I comment on the customer value management, great question. And I touched upon it only very briefly when I was saying that we have actually reviewed the core competences, the strategic areas that we need to build in-house and analytics, and CVM is clearly one of them.

So, rather than outsourcing, which, of course, some people might do, we do the opposite. We have built a team of analytics and CVM talents.

We are now north of 300 people running the analytics and the CVM. And we've actually focused last year significantly turning a bit the focus from the acquisition to the in-base management and in-base monetization driving off into convergence.

And with respect to the AWS, we have a very strategic partnership with AWS, extremely close. We are seeing a, what we call, analytics foundation, which we have built and rolled out, which is a hybrid on-prem and public cloud setup, which secures that we can treat equally some of the very sensitive customers that Allison mentioned, as well as we can leverage for those data points where we can go to the public cloud also the power of the of the cloud.

All of this is managed by ourselves. But we are basically seeing a standardized setup, which we then can plug into those use cases like the CVM, for the in-base monetization, for the churn reduction.

This is, of course, one of the use cases, but we are focused on this specifically in 2021. So the answer is no outsourcing, rather the opposite.

In-sourcing, building the competence in analytics and driving it into a cross channel and much more personal [indiscernible] operation, if that helps.

I would like to follow-up a little bit on the TV and media side. First of all, if you could repeat how much content cost was up year-over-year in Q4.

And then, I guess, the Champions League rights especially will impact Q1 and Q2. So, if you can give some information, what we should think about content cost increase in these two quarters.

So, the content cost was up SEK 0.5 billion in Q4 versus Q4 2020. The majority of that was premium sports rights, i.e.

Champions League, and clearly they were not in Q1 or Q2 last year.

Yes. But could you help us regarding the content cost for Q1 and Q2?

You're wanting us to guide at a very detailed level. But what I'm saying is the full quarterly cost upgrade, increase in content was SEK 0.5 billion in Q4.

And since that wasn't in Q1 and Q2 last year, you'll probably see similar levels in Q1 and Q2.

Obviously, we will have some revenue development offsetting some of that as well, Stefan, but that is clearly – the phasing of Champions League and premium sports is what is driving the TV media negative EBITDA developments next year. But as I said, that was always planned for and it is fueling the good development in C More and in our overall TV position in Sweden and Finland, which is then having benefits in convergence benefits as well in those businesses as well.

But once we're through the first half of next year, clearly, that stops being a headwind.

I have one bigger question and two clarifications. The first one is on consolidation.

I think your colleagues to the west on their Q3 call were commenting on potential test cases brought if the ECJ decision appeal goes against the European Commission. What's your current discussion and view on potential Swedish consolidation and/or rerun of the Danish one?

And then the two clarifications is on working capital. Can you just outline why the sort of bump came in the fourth quarter?

Was it an action you took like a factoring deal? Or was it simply the sort of the way the bills came in and they happen to come in the way that they did?

And the last one is also clarification. In the MSAs, you sort of said you're very happy with the MSAs that you can get from Brookfield and Alecta?

Is there an inflation link? And can you disclose anything on the inflation link that you have in these MSAs?

I'll take the consolidation question and pass over to PC for the others. So, on consolidation, yeah, let's see, I'm a fundamental believer that, absolutely, there needs to be consolidation in Denmark.

There's going to be a lot of moving parts in Denmark in the coming years. We sit on some great infrastructure, both in the TTN network, but also in a fiber footprint, and we've got a solid customer base that's now starting to develop positively again, and we're very much streamlining that operation to be more digital and leaner.

And so, we will take advantage of any consolidation opportunities that come along in Denmark. Sweden, I've always been a little bit more skeptical as to the possibility for consolidation in Sweden because it's a very different market from a Denmark or a UK because you don't have the MVNOs of any scale that you see in some of these other markets.

But I would be positively supportive of any consolidation in Denmark.

And then, on the working capital, first of all, there's no major changes or surprises in the fourth quarter. So, what I said was that it was slightly better than what we anticipated.

And as you know, the working capital can easily move around a couple of hundred millions, both ways. There are no major deals, there are no major thing.

It's basically a combination of our effect of the total payment terms towards our entire cost base, and then some more effects on our vendor financing program. And there are no new agreement.

It's just how much of our spend we actually then put on the existing contracts that we have with our vendors. And then I understood the final question was on the tower side, whether there was inflation linked in the MSA.

And, yes, there is. But MSA, the starting point is very much the existing cost structure cost level and then there is a sort of inflation link in the years to come.

I just wanted to come back, please, Allison, to your comments on the sort of inflation question and the scope to do something on pricing. Just wanted to check, was that a reference to enterprise or do you see scope to maybe nudge up pricing in Swedish consumer mobile, for example?

And then, just a follow up on that. You've obviously struck a very positive tone on your top line prospects in the Swedish business and how you got premium versus your competitors.

I'd just be interested to sort of hear your thoughts on the competitive landscape in the Swedish market more broadly as well, please.

Clearly, on inflation, we were seeing inflationary pressures, like everybody else at the moment. So, it's not just enterprise that will be looking to take pricing in the next year.

It will also be in our consumer business. And because of the investments that we're making into our networks, making into our digital platform, whether that be for the enterprise or consumer segment and investments into content and entertainment, we believe we've got good justification to be able to show our customer that we're giving them more value, as we're driving pricing up.

So, yes, we will be aiming to nudge up mobile, fixed in consumer and enterprise pricing next year across our footprint. And in fact, just this week, we announced some new prices for the Halebop brand here in Sweden where you'll see various good tactical nudging up of pricing going on on that brand.

How is the competitive landscape? It's competitive.

And I think we have we play in all of the segments. So, we're able to keep the premium in Telia and use either Halebop or Fello to stop ourselves getting into any sort of competitive pressure at the low end of the market, which continues to be very competitive, but no worse than prior quarters.

We didn't see anything change dramatically. Actually, there's been nothing really of any dramatic nature over the last few quarters.

But that being said, we always have to be on our toes and we always have to be offering more to our customers and doing slightly better than our peers, so that we can command and sustain the premiums that we have. And we want to command and sustain those premiums, but we also want to be getting some inflationary uplift on our pricing during the course of this year.

So thank you all. I wish you and we wish you all a good rest of the Friday.

And looking forward to seeing some of you in person soon, now that things are starting to open up. So, have a great weekend everyone and thank you for listening and your questions.