Tele2 AB (publ)

Erik Pers - Head of Investor Relations Allison Kirkby - President and Group Chief Executive Officer Lars Nordmark - Executive Vice President, Group Chief Financial Officer Samuel Skott - Executive Vice President, CEO Tele2 Sweden

Lena Osterberg - Carnegie Stefan Gauffin - DNB Peter Neilson - ABG Maurice Patrick - Barclays Capital Securities Ltd. Terrence Tsui - Morgan Stanley Ulrich Rathe - Jefferies Nick Lyall - Societe Generale Usman Ghazi - Berenberg

Good morning and welcome to our third quarter results. Here with me today as usual we have Erik Pers from IR, we have Lars Nordmark, our CFO and we also have Samuel Skott, our CEO for Tele2 Sweden joining us this morning.

So as you have seen this marks the final quarter before the closing of the merger with Com Hem in a year of major transformation for the whole Tele2 group. As you've seen this morning we continue to deliver results ahead of our own expectations, in fact, it's our thirteenth consecutive quarter.

This over delivery is providing us with the confidence to upgrade our full year EBITDA guidance again for Tele2 on a standalone basis and Lars will explain that in a bit more detail towards the end of our presentation. Liberating a more connected life continues to be our ultimate priority and we saw another quarter of solid growth.

Revenue amounts SEK6.5 billion, up by 4% on a like-for-like basis, driven by both strong base of monetization especially in our international markets and from higher equipment sales in Sweden and the Baltics. We also saw solid mobile end-user service revenue growth of 5% with excellent momentum in the Baltics, Croatia and Kazakhstan.

On the same basis EBITDA was up by 9%, mainly driven by the top line growth which flows through the strong 14% increase in rolling 12 months operating cash flow excluding the Netherlands and 19% if you include Netherlands, which as you all is classified as discontinued due to the impending transaction with T-Mobile. Before getting into the details I'd like to highlight some of the key successes in the quarter.

Starting with our Baltic Sea Challenger markets our Swedish business returned to growth with positive trends in both mobile end user service revenue and adjusted EBITDA, all this despite being a highly competitive market proving both our agility and resilience in both our consumer and B2B businesses. As I stated earlier we're joined here today by Samuel, CEO of Tele2 Sweden and he will take you through the Swedish result in a bit more detail and also be available for Q&A afterwards.

Moving to the Baltic, we continue to deliver solid revenue and EBITDA growth up by 3% and 9% respectively in local currency. As a result, our Baltic Sea Challenger businesses collectively achieved a 3% increase in operating cash flow on a rolling 12-months basis amounting to SEK4.5 billion.

In our investment markets, we continue to have excellent momentum, thanks to 4G rollout, fearless commercial offerings, improved brand perfections and of course our customers' insatiable thirst for data. Kazakhstan delivered another outstanding quarter with mobile end-user service revenue up 20% in local currency on the back of higher ASPU and a continuing growing customer base.

As a consequence, further repayments of the shareholder loan were received during the quarter, and total repayments now amount to SEK750 million. Croatia also delivered an excellent mobile end-user service revenue growth of 12%, which in combination with lower spectrum cost underlying EBITDA growth of 20% if you exclude the reversal of prior period provisions.

A core pillar of our strategy is to have the most engaging, fun and positively fearless brand that our customers love. Though testaments to our dedication ambition was Comviq second consecutive win in the Evimetrix Swedish Brand Award, which named Conviq The Strongest Telecom Brand in Sweden based on an expensive consumer survey.

Also the Swedish quality index SQI study published just this week writes Tele2 as the main consumer brand with a highest customer satisfaction levels. Alongside Tele2 business making the largest improvement in customer satisfaction in the B2B segment.

In the Baltic, our Lithuanian business which is the most fearless and the most customer centric recorded an all-time low churn of mid-single-digit in the postpaid consumer segment and something for the whole of the Tele2 footprint coming from. With respect to our upcoming matter, a new number of key milestones were achieved during the quarter.

Starting here in Sweden and the merger of Com Hem, the transaction has now be approved by both sets of shareholders and the European Commission and the transaction will officially close on November 5th. After our Dutch merger, we continue to have a constructive dialog with the European Commission during the phase 2 regulatory process.

The commission has set the date for a final decision on November 30th, however they do have the right to extend this timetable as they feel it necessary. So let's move into the markets in more detail, and we'll start with our Baltic Sea Challenger businesses and taking them in order of size, I'll first hand over to Samuel, he will present the results for Sweden.

Thank you, Allison, and good morning, everyone. In Sweden, following an eventful first half of the year, with new price plans launched in the price fighter segment and increased competitor activity.

The third quarter was still vibrant with a lot of campaigns but no major movements in pricing. Our business remains resilient with mobile end-user service revenue returning to growth with the B2B segment and consumer prospect driving the results.

EBITDA was up by a healthy 6%, with disciplined cost control, lower marketing spend and strong network cost efficiency compensating for a continued decline in our legacy fixed businesses. Our rolling 12-month cash conversion continues to be on high levels at 79%, with an operating cash flow for the same period of roughly SEK 3.4 billion.

Looking closer at our consumer business, we continue to leverage our strong dual brand position and customer value proposition to successfully navigate the competitive environment. Mobile end-user service remained resilient flat in the quarter despite sustained strong competition in the price fighter segment.

This result is driven by solid growth in consumer postpaid, which is up 6% year-on-year but offset by declines in prepaid and mobile broadband. Postpaid ASPU was up 1% in the quarter, mainly driven by Tele2 while Comviq postpaid ASPU remains stable.

As Comviq has gone from strength to strength, it makes up an increase in quarter, while our consumer business naturally having an effect on the ASPU mix. As for Tele2 we see a continued demand for unlimited as customers continue to embrace the benefits of the connected life and in the process consume more and more data, volumes per postpaid subscription increasing by 30% over the past 12 months.

Successful retention activities kept and it's stable in the quarter, despite the effects from the marketing movements in Q1 and Q2. Sweden's ambition, our ambition is to achieve the strongest growth through the most satisfied customer and therefore I'm very pleased to see that Comviq for the second year in a row won the title of the strongest brand in the market in heavy metrics and your ranking, which is based on a combination of customer satisfaction and brand recognition, of course.

Moving into B2B, as we saw in previous quarters, the B2B market continued to be price competitive as payers continue to challenge the incumbents' premium pricing position. Revenue growth was up 1% of high equipment sales and good turn to growth for mobile more than compensates the continued price competition.

Service revenue was down 3% with headwinds from price erosion of legacy fixed business been partly offset by growth in mobile end-user service revenue at 3%, as we now start to reap the benefits of the consistent customer wins over the past year. Our B2B sales organization is becoming more effective and confidence as each month passes.

We again had very successful quarter when it comes to winning new and retaining existing customers. A few new names in our customer portfolio includes the municipalities of Kavlinge, Alvesta, Markaryd and Almhult as well as Goteborg Energi and Axfood.

In our thoughts and with the customer and we are very proud to see that our experts to be the most customer-centric B2B operator are paying off. As the Swedish Quality Index show that Tele2 made the w and just improved them in the B2B market, while we are now a strong challenger to the incumbent and closing in on the number one spot.

This, all of this with customer satisfaction and continued growth and wins of new customers is giving us the confidence that we are on the right track to growth. As we see now the first evidence of this in the quarter, the growth in our customer base should enable the continued recovery of revenue trends going forward for B2B.

And with that I would like to hand back to Allison, who will provide you with the results from the other markets.

Thank you, Samuel. Moving east to the Baltics, it was another solid quarter for data monetization despite for year-on-year call and the impact from customer compensation following a significant ruling outage in early August.

This outage seek 2 percentage points also the reported mobile end user service revenue growth of the quarter, so underlying we remain at our mid-single-digit ambition of 5% growth. This underlying growth was driven by continued solid momentum in both Lithuania and Lativa.

And as expected, it was partly offset by declines in Estonia where we are still suffering from aggressive price competition in prior quarter and the loss of a mobile broadband MVNO arrangement with Starman. For the region as a whole, EBITDA increased by 9%, driven by the topline growth and continued extra cost control, filtering through to our strong increase in cash flow with rolling 12 months operating cash flow up 12% and an excellent cash conversion similar to our Swedish business of almost 80%.

In the quarter, we saw ASPU growth of 1% and obviously higher than that in Lithuania and Latvian and the transition from prepaid to postpaid subscriptions continue and customers traded up to larger data buckets. As in previous quarters, smartphone and mobile broadband penetration continued to increase, which supports the uptake of the larger data bundle.

Our Lithuanian business continues to be a shining life for the mobile industry with a record low churn rate of mid-single-digit in consumer postpaid, great testament to the Lithuanian team's obsession to grow customer loyalty and customer life time value. Our Latvian network also received positive recognition in the quarter, as it was named by the regulator as offering the highest mobile internet speeds in the country than even faster than prior quarter which peaks about 40 megabits per second.

On a next positive note, Estonia has the [indiscernible] turnarounds. However, our new CEO has a solid plan underway and he is continuing to be adjust the commercial model towards a higher quality proposition.

In the quarter, we saw a positive progress on both NPS and margin development giving us confidence that we will see the revenue and EBITDA trends improve during 2019. Now moving even further into our investment market and Kazakhstan, we have despite continued competitive pressure mobile end-user service revenue was up 22% in local currency, driven by very strong monetization of increasingly larger data buckets as well as continued growth of the customer base.

EBITDA was up by more than 60% in local currency, and we continue to sustain an excellent margin of 34%, thanks to the benefit of higher ASPU, increased scale and cost discipline. As a result of this excellent momentum, Tele2 Kazakhstan's ability to generate cash continues to improve, now, it's 68% cash conversion on a rolling 12-month basis.

Further repayments against the shareholder loan of KZT6 billion, approximately SEK160 million were made during the quarter. And as I said earlier, accumulated repayments now amounts to approximately SEK750 million, with an outstanding balance as of the end of September at SEK3.3 billion.

Looking at the Kazakh results in a bit more detail, our customer base grew by 4% year-on-year, and ASPU was up by 17% year-on-year, driven by our 4G advantage, our improved network quality perfection and our geo-brand strategy with new tariffs launched on both brands during the quarter. Despite a tougher competition, our focus on improving customer satisfaction continues to drive positive net intake for both brands.

And as you can see, net promoter scores are improving also for both brands paving the way for further growth. The scale of results coming out of our Kazakh team reflects the hard work and efforts of that local team, so much so that our JV integration project have laid the foundation for the current momentum and have been shortlisted at the capacity global carrier awards for the best Asian projects in recent years.

And with that, I'd like to hand over to Lars who will go through the financials.

Thank you, Allison. I will start by making a few comments on the P&L this quarter.

We saw a strong revenue growth of 7%, which was mainly driven by the continued mobile end-user service momentum in the Baltics in our investment markets as well as continued strong equipment sales. At the EBITDA level, we had great contributions from across our footprints driven primarily by revenue growth that also support by excellent cost discipline as mentioned by both Allison and Samuel.

Looking at reported revenue and EBITDA, both were helped in the quarter by an FX tailwind of approximately 3%, which is explained by the weak FX compared to the Euro, Croatian kuna and Kazakhstan tenge. Moving further down the P&L we have some items affecting comparability below EBITDA, which relates to acquisition cost to Com Hem as well as an integration cost of Com Hem and TDC.

On the line other financial items, we report the changes to the valuation of the earn-out obligation for Kazakhstan every quarter. This quarter the value increased again to just north SEK700 million on the back of continued splendid performance by Kazakh business.

In the quarter we recognized SEK165 million non-cash cost in our P&L, as the value of our liability increased. As per P&L taxes which were actually bit lower in Q3 2017 as we recognize, we just add tax in Germany of SEK26 million, which is up in a positive impact of the tax in the quarter.

In addition, we now have the tax cost in Kazakhstan. If we then move on to the next slide, you can see changes in the cash flow as compared to the same quarter last year.

Keep in mind that the cash flow statement is on a total operations basis and therefore includes discontinued operations. Here I will make a few short comments.

Adjusted EBITDA for discontinued operation is higher than Q3 last year reflecting mainly the results from the Dutch business. Lower tax payments this quarter mostly related to the timing of Tele2 Sweden.

At the CapEx line, the main difference was at the balance sheet CapEx is, of course, that the cash flow statement is on a total operation basis, whereas Dutch CapEx is incurred here. At the bottom of the table, we split the free cash flow in continued operations and discontinued operations.

As for the cash flow from discontinued operation year-on-year difference is main derivative to working capital movements in the Netherland. Moving on to the next slide, this is a similar picture by now, it shows the operating cash flow is the final EBITDA in the CapEx on a rolling 12 months basis.

Our Baltic Sea Challenger businesses and our smaller business units continued its trend by producing a solid cash flow of well over SEK4 billion. The remaining aftermarkets, CapEx in Croatia together generated over SEK700 million of positive operating cash flow over the past 12 months.

This is a significant turnaround from having produced a similar size operating cash flow loss than three years ago. So, together we are now at an operating cash flow contribution from continuing operations of SEK4.9 billion, while the Netherlands has been consuming cash.

Moving on to the balance sheet on the next slide. Our economic net debt went up temporarily due to as it paid off the dividend of SEK2 billion.

During the third quarter, we are taking down our debt from 11.4 billion to 10.2 billion to approximate cash flow generation needing that we close the quarter with the healthy leverage of 1.5. Looking back 12 months, we have generated free cash flow of SEK2 billion, we see the cash contribution from the sale of Tele2 Austria and against this we paid a dividend of SEK2 billion.

Both together this still results to the stronger balance sheet than a year ago. Let's touch my final slide, which covers the financial guidance.

First of all, I want to make it clear that the financial guidance provided on this slide is for Tele2 on a standalone basis. This means that no contribution from Com Hem included, as we want to be consistent with guidance provided earlier this year.

As per the guidance we are on the back of the continued strong delivery in our markets up trading our adjusted EBITDA guidance for the full year to between SEK7.0 billion to SEK7.2 billion. At the same time, we are taking down the full year guidance for CapEx to between SEK1.9 billion to SEK2.2 billion to reflect the investment rate being to date.

Guidance from mobile end-user service revenue remains unchanged, as mid-single growth. And with that, I'd like to hand back to Allison for some concluding remarks.

Thank you, Lars. So, let me end with our priorities as we hand over to the next Tele2 leadership team.

First, with the closing of the merger with Com Hem only a few weeks away and the regulatory process in Netherland is moving forward, our focus is now preparing for day one of our transformation metrics. Both transactions were related to take its customer focused strategy to an even higher at scale levels.

However, whilst integration ramps up, we cannot and will not take our eye of the ball on the basics and we will ensure that the great progress we'd made financially and operationally over the last three years will be sustained. Lastly, we'll continue to surprise you all through the monetization of data across our footprint, which will enable us to continue our industry leading momentum in the Baltics, Croatia and Kazakhstan and further the maintain in Sweden know that we are back to close again.

All of this in term in the transit of our to fearlessly liberate people to make a more connected life. And so this will be my last quarterly report as CEO of Tele2, I'm extremely proud to hand over our business with a well-defined roadmap to create a leading connectivity provider around the Baltic Sea with the optionality in our investment market.

Throughout my tenure, we have driven returns to a disciplined capital allocation and focused our efforts on the market where we can win our never losing focus on our customers. I would therefore like to express my huge thanks to the whole Tele2 team who have been part of my Tele2 journey over the past four plus years.

They are vibrant, challenger-oriented expert with the energy that drive Tele2 forward to ever stronger achievements. Some people saying telcos are boring.

Well, let me tell you Tele2 and the Tele2 team are never boring. And I wish all of them to remain not boring, but wish them every success as their mission continues to liberate people to live a more connected life.

And with that, Lars, Samuel and I would like to take your questions.

Operator, we are now ready for taking questions.

Good morning. Yes, thank you, Allison.

Sad to see you go. And questions now, I think on B2B Sweden.

Samuel, I was wondering, are you sort of indicating that what to see year-over-year growth as of the fourth quarter? And then a question also on the Dutch mobile operations which you now have that breakeven in the quarter.

Should we expect the mobile OpEx base to stay around this level, I think you've EUR400 million now? Or is it something like will drive it higher going forward into next year?

And then also on merger with Com Hem, just trying to understand the PPA in the merger document, I was wondering if you could give some kind of indication precise of the intangible amortization and the tangible depreciation going forward post the merger? Thank you.

Okay. Thank you, Lena.

I'm sorry to be moving on as well, but I'm sure we will keep in touch. And so why don't I take Netherlands and then I hand over to Lars on the Com Hem PPA and then Samuel can finish with B2B Sweden.

Next you'll have seen Netherlands mobile be more positive in the quarter. As you know, we have an improved NRA agreement with Dutch Telecom that kicked in during the quarter.

We also see some seasonality in Q3, but beyond that we prefer not to really comment on the Dutch business at this time. The dialogue with the EU continues to be very constructive and we remain on track with process that we expected.

Phase 2 - the phase 2 comes to an end on November 30. The commission, however, can extend that further into December, but as I said, a good constructive dialogue, and that's what I'd like to say on Netherlands.

And Lars -

On the PPA for Com Hem, as you know, Lena, this is the preliminary one that we have done and if you look at the total consideration about the 27.5 billion, we got about 15.7 billion allocated to other intangibles. Out of which approximately 12.8 billion is to customer relations and then the remaining 2.3 billion is to brand.

Now, they will be depreciated over anywhere between 5 and 15 years. So the additional account of depreciation amortization that you could see is around 770 million per year.

Okay. And moving on B2B question, I mean, what we see is continued recovery on the back of great wins with a lot of customers in the recent years, we've built the momentum within our customer and sales organization and we're continuing to see that momentum.

I'm not going to guide on this specific quarter, but we are confident that we would see that recovery going forward.

Okay. Thank you.

Yes, Lars, Stefan, here. So, first of all, we have to like to wish Allison and also Lars later on good luck in the future careers.

And then I have a couple of questions just to clarify. So very strong performance on Sweden EBITDA.

Can you give some more details here? First of all relating to marketing spend how much that was down year-over-year especially on the mobile operators?

And secondly on other operations, in Q2, you reported an EBITDA of 28 million, this quarter 100 million and looking at 12 month rolling, it's around 70 million per quarter, is this a normal seasonality effect or how should we think about that? Thank you.

Sam, you can.

Okay. So I mean if we go into marketing spend, yes it was lower in the third quarter, not going into details exactly how much but it was lower in the quarter.

I think on other operations, Stefan, there is couple of things going on there. One is the equipment, now basically the contribution margin up I guess on equipment sales that was up both versus last quarter also the quarter last year.

And then it's also some seasonality on the cost side. So if you look at the year-to-date we're pretty much about the same level as we were last year.

So that's probably some underlying because performance gives you a better indication eliminating some of the seasonality impacts.

Okay, thank you.

Thank you very much and good morning both of you. Congrats Allison on your new challenge in Denmark and good luck to that.

Thank you, Peter.

A couple of questions please. Firstly, if I can just return to Swedish consumable, a growth looks a bit weak in this quarter considering we're not out of the room like at home impact, could you perhaps Samuel, talk a bit about what impact you've seen from these pricing moves in Sweden in the first half of the year, do you explain and whether you feel that perhaps some of the increase data, you talked about has limited the near term upside potential to revenue and will continue to do so in the future.

Any color you can give here would be appreciated? Thank you.

And if I can just ask on B2B, since the acquisition of TDC, Swedish business, you seem to have improved your market position considerably in B2B, can you talk a bit about what has been the driving factor, is it ICT solutions, what is the driving effect behind this improve competitiveness piece? And thirdly, if I can just ask last, what is the main drive of the lower CapEx guidance for the full year please?

Thank you very much.

Okay. So well I'll start.

If we go to kind of the consumer mobile piece, I mean we see, continue to see a really good growth in the consumer postpaid segment in this quarter offset by declines in prepaid and the mobile broadband. Of course what happened in the first and the second quarters affected us a bit.

But I think the main thing here is that we can remain a very stable business and we definite we'll see opportunities for growing going forward. In terms of data, we don't see any kind of signs that increasing data have any effect on our ability to grow.

As with campaigns having, giving chance to try more data, we see they use more data. So there is plenty of room to grow in the consumer usage of data.

Going over to B2B, I mean you're absolutely right. We did TDC acquisition, we have turned that into much stronger combined market position.

And I think it is just the combination that makes us so strong. It's the Tele2 fantastic mobile network and some of the cloud and child PBX or is combined with TDC's huge knowledge and large enterprise segment in the integration services that makes up successful.

And we are seeing that on the back of the combined customer relationship, we're able to grow those relationships with new products and new services. I think that's the underlying thing driving our momentum.

And then on the CapEx guidance, I think that the two factors is one and overall the spend level across the board and any CapEx on if you look at of level compared to last year, they are down significantly. I think we've reached more benefits that we initially thought from the combination of the network that we did last year and then team has also done some really good work on the transmission which have saved us some of the CapEx.

That CapEx will probably have an uptick in Q4 but still lower guidance for the full year.

Right, thank you. And again thanks a lot for your help and good luck to you both.

Thank you, Peter.

Thank you.

Yeah, hi. I am Maurice from Barclays.

Again from my side congratulations and good luck to both of you. Couple questions please.

I know you don't want to comment on the magnitude of lower second marketing, but within volume led or was it sort of unit cost led you know is it, you be more efficient you know how you allocate marketing spend or just you just spend less? And then the second question relates to CapEx that was we haven't really spoken too much about today.

I've always been amazed by how low the capital intensity is at Tele2, I know the JV return obviously helps, I believe you booked the CapEx proportionally, but you know given so strong growth in data, how are you able to keep that CapEx level just so low in Sweden? Thanks.

So on marketing spend, I mean I would say it's a bit of both, we can see that we have been and that was actually part of the challenger program if you remember that to work even more efficiently and data driven with marketing spend. So we are becoming more efficient in the way we work with marketing.

But it's also a fact that the third quarter was a bit lower in terms of just spend as we made the decision not to go forward in the third quarter on some of the campaigns or rather focusing on the most efficient ones. But it's always seasonality in marketing and as you know some quarters are lower and some quarters are higher.

So I think that's the basic explanation. I think on the CapEx level in Sweden as we have said lot of times is that it has been under as an unusually lower level and we would expect it to pick up somewhat.

I think the investment that we have made in our 4G network have been extremely efficient, we have a very good cooperation with Telenor on that side where we kind of drive rolled out and capacity expansions is done in a very efficient way. Eventually we will have to do some to that now for that, but you know for now, I mean we're seeing levels that have been very low and it's not that we're holding back on investments not at all, we're obviously monitoring the base station from thresholds and we are upgrading them when we see them which are important.

Okay, thank you guys.

Yes, thank you. I've got a couple of questions please.

Firstly on Sweden just following on from the discussion around B2B, I just wondered if you could give us a bit more color around the pricing dynamics in B2B because all that fall to lots of they use large enterprises, would that be very price sensitive, but you are seeing now that they are valuing much more the conversion that you can give them now that you merged with TDC in Sweden? And that secondly, I just had a couple of financial clarifications please.

So just on Kazakhstan, you mentioned the value of the put option, is that including or excluding the accumulated repayment so for of 750 million and do you have a latest value on the equity value as well, please? And sorry just lastly on the Com Hem merger.

Do you have any more updates on the different accounting policies between the two companies and how this could potentially impact EBITDA and cash flow from bringing the two businesses together? Thank you.

Okay. So I'll start on the B2B side I think.

Yes, there is - it's a very competitive landscape. We see that also in terms of pricing.

And if you compare I mean prices on a standalone same cargo connection is going down over time. But what we are seeing is as alluded to I mean convert services and the ability to be a full service supplier is extremely important I mean almost in all segments of the B2B business.

And what we are able to do, in a lot of our businesses to expand the relationship with the existing customer base. So even if prices on the standalone service might be going down, we're able to offer more services now that in a lot of relationships actually more than compensates for the price erosion.

So price erosion on standalone services is there, it's very competitive but our kind of solution put up if you will is to grow our relationships with customers and take a larger part of their total spend in terms of communication and integration services.

And moving on to Kazakhstan, so that we have a remaining outstanding balance of SEK2.3 billion and that is accruing an interest rate of high single digits because it pick interest. So we received 750 already and 2.3 billion to go.

And turn back, it's just pure to the shareholder loan and doesn't take kind of any equity value that we believe is there in the business and as we continue to accrue against in our books. So you would have seen because of the continued momentum in the quarter in business, we have taken up the value of that to be it again and that's equivalent to an aging profound equity stake and that's currently fitting at SEK713 million.

So if you think our diluted ownership of that business is 31%, so the equity value is almost double that based on how we are valuing the business at this point in time. And the final question was on the Com Hem merger?

So on the Com Hem merger, I think the bigger one is probably the activation of sales commission, which we are taking in the P&L and they have activated, so that will move into the P&L going forward, so reduce the CapEx. That's the biggest one I would comment.

I think in general terms IFRS 16 is still work in progress on our side, so once we have more details on the implications and that we will let you know.

That's great, thank you.

Yeah, thanks very much. I was interested to discuss the cost question in Sweden a bit more.

Maybe from a different angle, when you raise the guidance in Q2 presumably had a budget in mind for the second half of now by raising it, it seems mainly on cost of the element, not so much on revenue as I understand it. Could you sort of describe what part of the cost across the group rate you have moved quite so much compared to the plants just three months ago?

Thank you very much.

I think you are right on the kind of top line. I mean the Q2 for the Swedish business, the top line development is broad in line.

I think on the cost side, like Samuel said I mean we are a bit lower on the expansion cost and marketing but it's all been through, the store footprint and subsidies and commissions and so forth. I think the network cost we have talked a lot about.

We see further efficiencies coming through. We also see some benefit in customer service.

I think if you look at the bigger kind of cost buckets in this business, expansion cost, network cost, G&A including customer service that has been a positive pretty much any in all aspects of that. So not seeing one think of life and they kind of drive it but Q3 was lower and if you look at 2017, Q3 was also lower.

We have an uptick in Q4 last year, you should expect an uptick in expansion cost in Q4 but we don't guide exactly on how much that will be.

The underlying cost efficiency has continued and that is benefiting also our Swedish projections and our international projections going forward and that makes one of the key drivers that taking guidance which is the continued strength in our international footprint. And that's very much revenue driven.

Thank you. If I just may follow-up, my particular angle here is what changed over the last three months and I understand the drivers to some extent and thank you for adding some color to that, but it's a relatively short period of time over the summer where sort of the guidance comes up quite a bit, I'm just wondering where that very significant delta compared to three months ago sort of comes from?

Thank you.

We didn't have turned around slightly faster than we expected certainly from an EBITDA development as you know the cost interventions as Samuel and the team started to put into place earlier in the year when the market got tougher, started to come soon. And you know we have continued to perform better versus a competitive situation in Kazakhstan than we would expecting as well.

So that's probably the two drivers.

Brilliant. Thank you very much and good luck for the future.

Thank you.

Thank you, Ulrich.

Yeah, good morning. It's Nick from So-Gen.

Allison thanks again for the help. A couple from me if that's okay.

And on the Swedish first, it doesn't look like you are struggling in terms of churn prove at all or in terms of marketing. So is there any increase do you think generally from Swedish consumers in convergence at the moment obviously for the other operators not for yourself, but any reductions of the churn because of that?

And on B2B side, do your comments suggested like-for-like B2B pricing is getting more difficult and obviously you are making gains via the TDC acquisition. But is basic market pricing for like-for-like product suffering?

Thanks.

Okay. So starting at B2C and if kind of convergence effecting the churn pool was talking about the kind of the mobile churn pool where we are in currently we don't see any effect on that.

I mean we're seeing as it's starting to happen but it's starting from extremely low levels, so that will take time. So in the mobile churn pool, we are seeing very, very limited effects of that.

In terms of B2B pricing, not - I wouldn't say it's getting more difficult. It's part of the B2B business and especially in the early segment it has always been there and I think it will continue to be there and the way for us to mitigate that, is of course to win more customers as we see that, but also expend our relationship with the customers with that.

Thank you.

Good morning and thanks for taking my questions and again good luck to both of you. Two questions if I may.

First, going back to CapEx, do you see any ramp up for 5G in 2019 or maybe in Sweden into capacity or Kazakhstan, where you have now had a good benefit for a while and maybe that reversing 2019 or anything you can comment on CapEx trends into 2019 would be very helpful? And then on mobile service revenue growth in general here.

First on Sweden, can you broadly indicate or just provide some colors possible on how mobile B2C service revenue growth would have been in Q3 or year-to-date excluding negative impact from prepaid and mobile broadband? And then if you can just talk a bit about where you see demand drivers for mobile service revenue growth in 2019 that would be super?

Thank you.

Well, if we though by CapEx levels and the needful of going forward, I think coming back to what Lars said, I mean we're running a very efficient network here currently and very good cooperation with Telenor. And of course, our ambition on target is to keep on running a very efficient network.

However as well as Lars said, eventually we will move into modernization of that network and 5G network as well. So that will mean an uptick, but I think, I mean you can be sure about efficiency will be the name of the game for us going forward as well and doing it as an evolution rather revolution.

If we go into service revenue for Sweden, I think I mean the key thing which is disclosed already that in consumer postpaid, we grew 6%, so I think that gives some kind of good pointer for you. And in terms of forward-looking statement, we are not giving guidance of that level at this point, yeah.

I think on the CapEx level as I said before, it's been unusually lower we would say, it's lower than expected. We would expect an uptick in 2019, I mean the business is firing in all and growing tremendously, what that particular another would be that's for Allison, you got to come back on when they communicate the 2019 guidance with the Q4 figures.

Okay, great. And just one question on the consumer postpaid mobile service growth that you speak about 6% here.

How is that, is the main contributor has the larger bundles or is it up trending on lower bundles or mix of everything, just some logics on dynamics there would be super helpful? Thank you.

I mean it's the same underlines that we've seen within our dual brand strategy which is the growth of Comviq and customer base and the successful data monetization with unlimited within the Tele2 base.

Okay, thank you very much and again good luck.

Thank you.

Hello, thank you for taking my question and my well-wishers to both Allison and Lars as well. I've got three questions please.

Firstly, I was wondering on the consumer mobile revenue again in Sweden, I mean you know if I look at it excluding the Roam Like at Home impact, we've gone from plus 3% growth in Q1 and Q2, to flat now in Q3. I mean I am not asking for you know the specific direction going forward, but I mean is there risk that consumer mobile revenues going to a bit of a decline here or do you expect them just stay flat to up over the next few quarters?

The second question was just on you know whether you could comment on how big the legacy revenue exposure is in the B2B business? And my final question was just on the equity value that's implied by earn out calculation for Kazakhstan.

You know when it comes to potential exit, is there room for negotiation on that equity value or is what you're providing in the accounts basically what's in it be kind of mechanism to calculate the value? Thank you.

So I mean if we start with consumer piece, what we're seeing is we are billeted to be stable in the vibrate market, we're confident that it won't get worse and we're definitely seeing opportunity to grow going forward. We're now seeing decline in the prepared and mobile broadband business as well, which is a natural moment in the market.

So it's not only about what happened in the first half of the year. But we are stable in the vibrant market than we see opportunity to grow going forward.

In terms of the division of revenues in the B2B area that's not something that we disclose.

And as on deeper, so we got 730 million on 18%, so that's total equity value for that business above 4 billion. As far as the room to negotiate, there is clean count way forward in the shareholders' agreement on the valuation mechanism and that will be followed.

One important elements in all that we are valuing at in our books according to DCS in the valuation and methodology and the approach we will have with the other part, there are more elements to the valuation then just the DCS, that's also comparable, so multiples and so forth of other transaction. So that's important to remember.

Thank you.

Yes, operator, I think we actually need to finish up the call very soon, we got Com Hem call coming up in a few minutes. So I would like to thank you every one who has been listening in and we look forward to speak to again in February when we released our fourth quarter results.

Thank you and good bye.