Tele2 AB (publ)

Thank you very much Nicole, and good morning, everyone, and welcome to the Q1 Report Call for Tele2. With me here on this end is Mike Larsson, our CFO; and Samuel Skott, EVP for Sweden Consumer.

Today we will walk you through the results for the quarter and the outlook, then briefly talk about the accounting changes related to IFRS 16and then move on to Q&A, so we can address the topics you are most interested in. Please turn to slide two for a brief summary of the Q1 results.

The Tele2 Group revenue declined by 1% on an organic basis, including Com Hem in the comparable period. End-user service revenue was flat, as mobile services increased by 3%, while fixed declined by 3% due to decline in legacy services.

Underlying EBITDA excluding effects of IFRS 16 increased by 8% to SEK 2.3 billion, driven by cost reduction as we have started to execute on the synergies. CapEx excluding spectrum and leases amounted to SEK 0.6 billion in the quarter.

As you can see, we are reporting EBITDA differently than in previous quarters. This is partially due to the new IFRS 16 accounting standard and Mikael will walk you through the details later in this presentation.

Now, let's look at the strategic initiatives on slide three. On this slide, you can see the main strategic pillars that will help us become a true integrated challenger over time.

Let's start with the most important segment, Sweden consumer, where we added a new growth driver this quarter by launching Com Hem mobile. While it's too early to have a noticeable impact, initial traction looks promising and we believe this could create meaningful growth in the future.

We also continued to make progress on FMC penetration in our customer base with 45,000 customers now on FMC benefits. We already see that the FMC customers have higher NPS and lower churn, which reaffirms our view that FMC penetration is a key driver for growth going forward.

While it's still early days, progress so far reassures us that as we can reach our revenue synergies, which we expect to add an annual run rate of SEK 450 million in underlying EBITDA over five years. In Sweden B2B as you know our goal is to turn around the negative revenue trend and improve profitability.

In the quarter, we started laying the foundation for future growth in this segment by setting up the management team with key new hires, tasked to refocus the organization on profitable growth. We have begun restructuring the SME sales organization to focus on execution and reducing lead times which is key to winning and keeping contracts.

We have changed the large enterprise sales incentive program and already see improved sales pipeline with less low margin and more core network based customers coming in, while withdrawing from loss making bids. We see continued positive momentum in volumes, while the price pressure remains.

Key here is to reduce churn, which will make us less dependent on chasing price and reduce commercial cost. In other words, we see a clear path to growth and we are adjusting the business to get there.

In the Baltics, we see continued great momentum with 7% growth in mobile end-user service revenue and 16% in underlying EBITDA, excluding IFRS 16. While we are working on initiatives to set this company up for long term growth, we are already executing on cost reductions.

In Q1, we realized SEK 50 million of cost synergies and we have already reached an annual run rate of SEK 300 million at the end of the quarter, making progress towards the SEK 450 million run rate that we expect by the end of this year and the SEK 900 million after three years. As you can see, we have started to execute on plans, which will help us reach our financial guidance which you will find on slide four.

We are reiterating our guidance for 2019 and the mid-term. Since we expect revenue benefits from the commercial strategy to gradually ramp up, we expect end-user service revenue to be roughly flat in 2019 and thereafter grow by low single digits.

We aim for mid-single digit underlying EBITDA growth, excluding IFRS 16 in 2019 and over the midterm, mainly driven by front-loaded cost synergies in 2019 and the combination of revenue growth and cost reduction in the coming years. For CapEx we guide to SEK 2.9 billion to SEK 3.2 billion in 2019 and SEK 3 billion to SEK 3.5 billion per year in the midterm, excluding spectrum and leases.

Through revenue growth, OpEx reduction and low capital intensity, we will continuously increase our cash flow that we intend to return to shareholders. The Board has proposed to increase the ordinary dividend by 10% and pay out SEK 4.4 per share this year corresponding to SEK 3 billion in total.

We also intend to distribute proceeds from the sale of the Netherlands and Kazakhstan once the Kazakhstan sale is final sometime mid-year. In addition, as we grow EBITDA, we will use our balance sheet to lever up within our target range of 2.5 to 3 and distribute more cash to our shareholders.

Now, let's take a look and a closer look at the segments starting with Sweden consumer on slide six. We had positive net adds in all core services, driven mainly by Comviq mobile postpaid and fixed broadband on both Com Hem and Boxer brands.

Total mobile ASPU grew by 2.5% due to pre to postpaid migration and postpaid ASPU growth of 1.3% driven by upsell to larger data buckets and unlimited. Fixed broadband ASPU grew by 1.8%, driven by upsell and higher speeds.

We had an inflow of Group agreements this quarter with some negative effect on digital TV, cable and fiber ASPU, but positive effect on churn. Volume growth in our core services, along with higher ASPU in mobile and fixed broadband led to growth in end user service revenue for our core services, which you can see on slide seven.

End-user service revenue for our core services grew by 3%. This was offset by continued decline in the legacy services of 11%, which led to total decline of 1% in the end-user service revenue in the segment.

However, while we wait for revenue growth to materialize, we execute on cost reduction, which resulted in a 6% growth in underlying EBITDA in the quarter. Now, let's move to Sweden B2B slide eight.

We continue to make progress on volumes with a 5% increase in mobile RGUs, while ASPU continued to decline by 6% due to price pressure in the market. On slide nine, you can see that while we are working our way back towards revenue growth, we already see positive momentum in EBITDA growth.

We expect cost reduction and focus on high margin revenue to result in EBITDA growth already this year, while revenue growth will come later. \ Please go to slide 10 for an overview of Sweden as a whole.

Underlying EBITDA excluding IFRS 16 grew by 5%, mainly driven by cost synergies within the consumer segment. This led to stable cash generation with a 12 month rolling cash conversion of 73% excluding spectrum.

On slide 12, you can see that we have continued great momentum in the Baltics with a 6% growth in ASPU, with ASPU growth in all three markets led by Lithuania. Mobile RGUs continued to grow up 1% despite challenges in Estonia.

On slide 13, we see the effects on mobile and service revenue, which rose 7%, while underlying EBITDA excluding IFRS 16 grew by 16% organically. Lithuania continues to be the best performer, growing mobile end-user service revenue by 11% and underlying EBITDA excluding IFRS 16 by 25%.

This resulted in continued strong cash generation, as you can see in the chart on the right. Kazakhstan on slide 14 continues to grow very nicely, driven mainly by pricing and cost efficiency.

We received another SEK 134 million of cash from repayment of the shareholder loan in the quarter and expect further repayment of the remaining SEK 2 billion until we close the sale of the assets. The sale is on track to close by mid-year.

With that, I hand over to Mikael.

Thank you, Anders. Please go to slide 16, which includes a summary of the accounting changes we have made from 1st of January following introduction on the new accounting standard for leases IFRS 16.

First of all, we have from this quarter for transparency introduced reported EBITDA as a metric. This is in line with our industry peers.

In addition to this we have placed a metric that offset [ph] EBITDA with underlying EBITDA with the difference being that the scope of items affecting comparability excluded from underlying EBITDA has been somewhat expanded in order to have this metric fully explaining operational development in the business between the counting periods, without disturbance of items affecting comparability not associated to current trading. With this change, we may focus more on explaining the underlying business performance to you, while all one-off items excluded from our underlying EBITDA are disclosed in our financial reports and may be found on page 22 in the report for this quarter.

With the introduction of IFRS 16, lease costs are now excluded from EBITDA, while we in line with some other European peers have introduced a new key metric, underlying EBITDA of the leases. As illustrated on page 16, this new metric includes depreciation of right-of-use assets, as well as lease interest and this will be used for cash flow metrics such as cash flow - operating cash flow and leverage.

For comparability towards previous years, we will in this year and throughout 2019 continue to report underlying EBITDA excluding IFRS 16. Going forward, our financial guidance will be based on underlying EBITDA off their leases.

After these remarks about accounting changes, let us now move on to the reported finances for Q1, starting with the Group profit and loss on slide 17. Please note that Com Hem is included in numbers for this year, but not in last year's numbers, while revenue and operating performance on this slide can't be compared between the periods.

In the quarter we recorded costs related to the integration with Com Hem of SEK 155 million, which are included in items affecting comparability. The major step up in depreciation and amortization is explained by both additional amortization of surplus value from acquisitions of SEK 299 million, as well as depreciation or right-of-use assets under IFRS 16 of SEK 303 million.

For net profit, with a major uplift in Q1 this year versus last year, up from SEK 343 million to close to SEK 1 billion, explained by the major restructuring to Group has undergone over the past 12 months, with the Netherlands operations being merged with T-Mobile and the acquisition of Com Hem. Let us look at the cash flow for the quarter.

On slide 18, where we see a major uplift in EBITDA from continue operations of approximately SEK 600 million, net amortization of least liabilities. The increase is explained by the inclusion of Com Hem in the 2019 numbers, as well as strong performance in discontinued operations, Kazakhstan in this quarter and Netherlands and Kazakhstan in Q1 2018.

CapEx paid increased, driven by the inclusion of Com Hem and also by spectrum payments of SEK 799 million in the quarter, including SEK 721 million for the 700 megahertz license in Sweden. Change in working capital improved to a positive SEK 116 million, as a negative performance in previous quarters was partially reversed, as we have been able to expand our handset financing solution in Sweden.

Finance license increased due to lease interest costs of SEK 47 million included in 2019 numbers. Tax payments were also higher with Com Hem included in this year and also explained by higher profits reported in our non-Swedish operations.

In addition to equity free cash flow of SEK 477 million generated by the Group in Q1, we also received the preliminary proceeds from the sale of Netherlands of €190 million, pre closing adjustments. Please go to slide 19, synergy update.

In the quarter we had SEK 50 million of cost savings included in the profits with an annualized run rate of SEK 300 million of synergies realized at the end of the quarter of which a vast majority came from FTE reductions, both consultants, as well as old employees. This means we are well on track to deliver on the SEK 450 million run rate goal for the end of this year, as well as the SEK 900 million in total annual cost synergies to be realized until end of 2021.

Let's move to slide 20, with a summary of our financial guidance, which is unchanged since previous quarter. Our financial performance in Q1 reflects the full year guidance for 2019 with end-user service revenue for the Group being flat in the quarter, underlying EBITDA excluding IFRS 16 growing by 8% and CapEx excluding spectrum and leased assets of SEK 643 million.

CapEx is expected to be somewhat skewed towards the second half of this year, as we start with the roll out of 5G and Remote-PHY more intensely - intensively. Please go to slide 21.

At the end of March we reported leverage of 2.6 times measured at economic net debt to underlying EBITDA of the leases, down from 2.8 times at the end of 2018. And this is the leverage ratio we will use going forward, with lease depreciation and lease interest costs deducted from the EBITDA metric and excluding the lease liabilities from net debt.

As we chose on the alternative approach, as shown in the middle column on slide 21, excluding lease and interest payments from the EBITDA metric and including lease liability, net debt to underlying EBITDA would have been at 2.8 end of March. But as you may see on the right of this slide, the entire increase of 0.2 is explained by non-committed future lease liabilities of SEK 2.6 recorded in the balance sheet under IFRS 16.

Excluding these non-contractual liabilities, net debt to underlying EBITDA would also have been at 2.6. This means that our leverage target will remain unchanged after introducing IFRS 16 at 2.5 to 3 time's economic net debt to underlying EBITDA of the leases.

The strong cash generation in the business in combination with the cash proceeds from the sale of Netherlands led to leverage reducing [ph] to the lower end of our target range end of March. This is the half of payment of the first portion of this year's ordinary dividend of SEK 4.4 per share beginning on May.

As earlier stated, we'll help to inform you regarding additional shareholder remuneration around min-2019 when the sale of Kazakhstan is expected to be completed. And with that, I would like to hand back to you Anders?

Thank you very much Mikael. And please turn to slide 23 for our key priorities going forward, which actually remains the same as last earnings call.

One of our top priorities is to reignite growth in Sweden. We will do this by ramping up sales of Com Hem mobile and drive FMC in the customer base, in the consumer segment.

We expect these initiatives to ramp-up to a run rate of SEK 450 million per year in adjusted EBITDA in five years' time. We also aim to turn the Swedish B2B business into growth by taking market share and improve profitability by focusing on high-margin on-net growth.

On the cost side, we will continue executing on the restructuring process to reach the SEK 900 million of cost synergies within three years, with roughly half already by the end of this year. In addition, we will investigate the potential for more structural change over time to turn Tele2 into a true integrated challenger.

Outside of Sweden, we will build on the momentum we have in the Baltics, and we will look forward to closing the sale in Kazakhstan, marking a major step towards optimizing our footprint to focus on the Baltic Sea region. With that, I'd like to hand over to the Nicole for Q&A.

Thank you very much. Anders, if I read your comments correctly in this morning's report, you seem to be suggesting that by focusing on a fully integrated sort of market approach, fixed and mobile, FMC approach, the market can return to growth in a better way than sort of combing the two fixed and mobile segments the way it is today, is that correctly understood you believe that this can spur growth in the overall market?

And my second question just relates to the Com Hem mobile offering, I appreciate it's very early days. But could you give us any indications on this one, where the Com Hem mobile customers are coming from if at all possible?

Thank you very much.

Thank you very much, Peter. So I mean, we believe that by going into - focusing on FMC, which were not the only operator doing, as you know our major competitors are doing the same thing and by doing it, using them more for more strategy, which seems to be the case both for us and for our competitors, that will introduce a new growth lever in the markets which has not been prescient [ph] so far, at least not in the mobile markets and that is price.

So we believe that that will help the whole markets actually to perform better over time. And there are actually two things happening with FMC buy - and we can see that already now from the 45,000 FMC customers we have - we have on the - in our books by the end of Q1 and we see a significantly higher Net Promoter Score and we see a very, very significantly lower churn rate on these customers, even though it's early days.

And that indicates to me that we have produced pricing power, which we didn't have before and we will have customers staying on for a longer time. Both these things are obviously key to driving revenue.

So yes, I believe that an FMC market on a more - for more strategy, which the Swedish market seems to be will have better growth profile than end markets without these kind of initiatives. Then when it comes to Com Hem mobile, we - and I guess the question is do we cannibalize ourselves to a very high degree, Peter, that's how I read the question anyhow.

And the answer is no, actually we have a lower cannibalization than our markets share would suggest. So we're happy from that perspective as well.

Very good. Thank you.

Thank you.

Good morning. Thank you very much for taking my questions.

I also had three and all of them relate to synergies and your guidance for EBITDA and for costs. So the first one is, you strongly out of the blocks in terms of your delivery for Q1 and then it's very impressive.

I was just wondering if you can perhaps elaborate on whether you were just delivering faster on what you have initially planned or are you perhaps - have you discovered additional areas that you could be working on in terms of the synergies. Secondly, given the strong Q1 performance, do you think this is - this may allow you late in the year to upgrade your synergy targets and I'm talking about the synergy targets for this year, as well as the medium term?

And also one may observe now that your EBITDA guidance for the year also looks somewhat conservative. Would you agree with that?

And then finally, on one of the slides you also mentioned investigating additional initiatives related to the synergies. Could you please just talk about those and maybe your broader high level thinking on what those may be and obviously if you already have some sort of a magnitude in mind that would also be extremely helpful?

Thank you so much.

Thank you, Roman for these questions I'll try to address them one by one. So the first one was the synergies, are the synergies - the 450 million run rate coming faster or have we found additional areas, actually increasing the magnitude and that was the first kind of question.

And what we're doing right now is that we're executing on the 450 run rate and we have been able to do that faster than anticipated. You start to bear in mind that this is not a linear process.

We will - you will not see the same kind of pace in every quarter, even though we're trying to do things as early as possible. And I would say that in this quarter we - it has been faster than what we anticipated.

So we have seen more synergies coming through in Q1 than we originally anticipated. What will that then mean for synergies for the full year and for the longer term?

I think it's too early to go into that debate. I would like to see how things move on in Q2 before coming back and addressing this question.

So right now I think we're going to stick with the 450 number for the full year and then we'll come back and see if we need to address that or update that on the back of what's happening during Q2 or not. So let let's keep that for the time being, but there may be possibilities on the upside, maybe, but don't bank on it, that that might take at least.

And then the third question was, are there additional initiatives which we can investigate? And the answer is yes, yes there are.

So what we have found is that the synergy is basically the SEK 900 million, that's basically synergies for merging, integrating Com Hem into the Tele2 Group and for taking - taking down some group functions or the group functions in Tele2 as we now service less and less countries. So that's 1 900 million number.

Then we have another ambition and that is to become an integrated operator and that that means that we should in the future not work in silos, as we are doing today and the company is basically in Sweden, there are three silos. It's the Com Hem silo, it's the Tele2 mobile silo and it's the Tele2 B2B silo.

And the idea [ph] then being to integrate all of these into one basic operation, one company performing the services for all the type of customer groups, as far as possible and that will then give us opportunity to both become more efficient, i.e., equal synergies. But I think equally important and maybe even more important that will make us more agile and make us able to service our customers in a much better way going forward.

These initiatives we have not basically put a number on and we have not put the time line on yet, because we have been busy in executing the synergies, but we will for sure come back to that over time, Roman.

Thank you very much. That's very helpful.

Okay, great.

Yeah. Morning, everybody.

Just a couple of questions please Anders if I could. First one would be on ARPU in the consumer and business - businesses, as you talked I think in the answer to Peter's question about some pricing power, but it seems as if consumer postpaid ARPU growth is a little slower this quarter and business ARPU seems quite a bit weaker as well.

So could you just mention is on the consumer side is a little bit of dilution or maybe more discounting from operators, could you maybe just update us on that? And on business, it felt from the commentary as if things were getting a bit tougher.

Is that the right way to - right term to infer from your comments or is it maybe the effect of certain contracts? Could you help me out?

Then the second question was Telia's [ph] price rises are very large, if you see many benefits from any churn coming from Telia in the last couple of months as well? Thank you.

Okay. Thank you very much, Nick.

I'll hand over the first question on the consumer ARPU to…

Yeah. So, hi, Nick.

Samuel, here. So on the postpaid - postpaid ARPU, yes a bit slower in Q1, but no major items, yes there are some kind of incoming [indiscernible] lowers, thanks to group agreements.

But no major items as such. I think one should also remember that we took a deliberate decision to put through less pricing this year that those will have some effect in Q1, even though the big effect of that would be made here in Q2.

Exactly. And then for B2B, I mean, as you - as we have explained, we are trying to refocus the business on selling more network based services, including obviously mobile and we're also addressing the segments where we want to have more emphasis on SME going forward.

Right now we see a lot of the action happening in large enterprise and that is where we have the biggest price pressure. So - and that is what you see in the absolute number basically.

So that's an effect of price pressure in the large enterprise segment, whereas we intend to increase our efforts also in the SME market, which is much more resilient and the price pressure is not as big going forward. So I think over time you will see a different kind of story here.

But I do expect price pressure going forward on the prices in B2B, which is I think common face, when you have a market, where you have a market leader and you have challengers like ourselves and others coming in taking market share from the market leader, which is a part of the game here going forward.

So I should conclude then on the Telia price right. I mean, it took effect on 1st of April, sort of a bit too early to tell.

We continue to deliver solid net adds in the broadband space, but too early to tell the impact of the Telia price rise.

That's great. Thank you.

Thank you.

Good morning. I have two questions.

First of all, could you say something maybe on the synergy target just explaining the 450. Is that what you expect in annualized or realized synergies for this year?

The second question is on the 45,000 fixed mobile convergence customers that you got in the quarter. Given that you say you had so far - and you know, it was a relatively late launch on the Com Hem mobile brand and not so many customers in all that, so I assume the majority of those customers came in from the Tele2 brand taking broadband and TV subscriptions, is that correct?

Thanks. Thank you, Lena.

It's Michael here. I will try to answer on the first one.

The target we mentioned the SEK 450 million of synergies for this year, that is the annual run rate at the end of the year, which means that you will not see that number in the P&L for this year. It's that the run rate at the end of the year annualized.

That to be compared with a 300 you had already in this quarter?

Yes, exactly. That is it, not the 50 million we realized in P&L in this quarter.

For the quarter 5G [ph], I hand over to Samuel.

Hi, Lena. Its Samuel, here.

I mean, yes, you're correct. Since the launch of Com Hem mobile was news of the quarter.

The majority of these customers are Tele2 customers. So there are three ways mainly you can become an FMC customers, as we count them, there is cross-selling, fixed to mobile, mobile by fix, or it's the existing overlap where the customers choose to sign up for the - for the benefit schemes.

So the majority of these customers to date is the existing overlap signing up for the benefits scheme is becoming as we see as the full FMC customer.

Okay. Thank you very much.

Good morning, guys. Its Maurice here.

So on the consumer side and the impact from Com Hem mobile. Thanks for clarifying the 45,000 been mostly internal so far.

You said in the past that you won't use price as a tool to take market share. I just wondered if you'd seen any change in capacity moves that might change that view?

You do talk about ramping up activities on conversions, which I guess get linked to that, you cited the lower churn as well. I mean, do you see a lower churn pool because of FMC efforts generally.

So I guess a two part question really. Are you going to change pricing and are you seeing a lower churn pull in the market because of the wider activities taking place?

Okay. Hi, Maurice.

Its Samuel here. So on the Com Hem mobile, I mean, there are so many things we can do operationally still to improve attractiveness and the attraction within our own customer base.

So we don't see any kind of need for any price changes in the short term and that's - as Anders said in the beginning here, we see a stable market currently and we expect it to continue to be that way. On the churn point, we have started to see in the broadband space already lost here, some diminishing of the churn pool, thanks to FMC.

And that's a trend that we continue to see even if it's - if it's a small number so to say, we are starting to see the impact and of course, we are part of driving that and happily so.

Thank you.

Thank you, Maurice.

Yes. Good morning, everyone.

I had a couple questions just on Swedish trends. Just firstly, I wonder if you could give us your take on the current competitive dynamics in Sweden, both consumer and B2B.

And does it look better than you had expected when you set your revenue growth outlook? Obviously you've touched upon - is too early to tell the impact of Telia price rises, but just how do you see the market dynamics more broadly?

And then the second question, just on the legacy headwinds. So the legacy trends have gone down with modestly with the rest of your trends in Sweden.

Do you think legacy headwinds have got worse or are we just seeing the tougher comp effect of the year without price rises more broadly in the Swedish market? Thank you.

Okay, Andrew. So good morning, Samuel, here.

I'll start with the competitive dynamics for B2C and then legacy [indiscernible] for B2B. So, I think it's - it is what we expected coming into this year.

It's very competitive, but stable. If we compare it to the situation we had last year.

On the margin we see some changes in campaigns. But overall I would say it is as expected.

And when it comes to the legacy headwinds, we don't see any change in the dynamics or in the market. It's rather our own decisions around pricing that affect this.

Yes. And when it comes to the B2B market, I think it's pretty much as expected, maybe a little bit tougher on the large enterprise side, but that should not really be a material effect to us, given that we have - I mean, the whole case hinges on us performing differently and setting up our operation and working in different way.

That's what's going to turn this business into growth. So I don't see anything stopping us from doing that.

I hope that answers the questions Andrew?

Okay.

Thank you.

Thank you. Hi.

I have two questions if I may. First of all back to Sweden again, and the price increases.

I'm just wondering you mentioned previously that you see scope for a slightly lower price increase as the last year. And I'm just wondering your strategy here because obviously price is an important component for driving growth in the Swedish market going forward.

And your strategy here is it more to sort of look upon what Telia and Telenor is doing and the react to them or will you even be a price leader or how do you see upon that strategy? And the second question relates to Kazakhstan, and how is that process as of now, I know you mentioned that you see a closure in the mid of this year.

And are you having sort of one price suggestion and the counterpart one and then you're trying to sort of meet in the middle. I'm just wondering if you could give any indication of if you expect it to end up as you sort of - the number you have in your - in your book?.

Thank you.

So thank you very much, Johanna. So on pricing I'll give you the kind of broad overlook of how we're looking at that.

Pricing is a part of our strategy going forward. We're on the move [ph] for more strategy and we intend to build customer satisfaction throughout the year, which were then going to translate the part of into higher prices.

We do that normally once a year. In the case of Com Hem it's conducted in Q1, so you have seen pricing this year happening, which will then come through in Q2.

The price increases this year were - are much smaller basically a third of last year. So you're going to see a smaller impact in Q2 than you saw last year, which is going to have an impact on our growth rates then, yes, since you're aware of that.

Then we will come back and do pricing every year and we will try to do it for the mobile side as well. We know that once the customer is on an FMC bundle, we produce significant amounts of MPS which we can translate into price.

So that's why it's so important to go on FMC as for as many customers as possible on FMC as fast as possible. And so that's basically the broad strategy.

When it comes to pricing versus our competitors, it's quite clear that the - the market leader in this market have to have the highest prices, highest r headline prices. We do not have the brand strengths to go beyond the prices of the market leader yet, at least.

But we are working on strengthening our brands, so we can become as close as possible to the market leader and that will over time hopefully be reflected in our headline prices to consumers. So that was the first part on pricing.

Then that we moved to Kazakhstan, Mikael?

Yes. And as you know, Johanna, there is a step process for this valuation and how to fix the price for the asset and we are in the middle of this process, so well - in the quarter prepared for the valuations to be made.

We're in the process of getting the valuations, then we will see if we meet on the price or we go for a third evaluator. And since we are in the middle of this process right now, I cannot comment on any details exactly where we are.

The - yes, that we are - we are as expected in the process. It's going as planned and we expect to communicate the outcome around mid-2019.

And when it comes to value, you can - if you follow the details of the report, you can see that we have more or less the same value for the earn-out liability in this quarter as we had in last quarter, and it has been valued on a consistent basis.

Thank you.

Thank you.

Thank you.

Hi, morning everyone. I just wondered if you could say a few words around Boxer.

I was just wondering about how much of that legacy decline impulse is not being offset by an increase [ph] in broadband and whether we're any closer to a revenue stabilization of Boxer? And just related to that, I remember in the past you talked about EBITDA about that being around SEK 300 million.

Obviously, the cost cutting at the Swedish group level is going very, very well. It is also a key component of that as well?

And then the second question is more like a medium-term question around shareholder remuneration, in particular the balance around dividends versus share buybacks. I remember Com Hem investor feedback was important in your decision when you decided to raise the dividend by 50% at one stage.

Just hoping that you can share with us some of us the feedback that you received and maybe which way you are leaning towards when it comes to special returns in the future? Thank you.

Hi, Terence. Its Samuel, here.

I can start. So if we look to Boxer, I mean, the development more or less looks assets.

We have an intake on broadband and we have a decline in TV that continues. And the main priority for us right now is to go and forward include Boxer in the FMC strategy during the course of this year, integrate Boxer into the Com Hem brand, so we're able to offer the full product suite and all the benefits of becoming an FMC customer.

So that's the strategy going forward for Boxer.

And when it comes to Boxer EBITDA profitability, I would say that the EBITDA is stable and that counts from the vast majority of the costs are variable with revenue and they are reduced. On top of that, we also see fixed cost reductions with that part of the synergies.

So overall stable EBITDA.

And when it comes to dividends versus buybacks, so - and the feedback from some investor so far is that the majority are in the camp of dividends. So we have some who like buybacks, so that that's the feedback we've got.

When it comes to the Board and their view, they have not made up their mind exactly on how to treat this going forward. But one indication may be that in the AGM which we will hold in the beginning of May, we ask for a mandate to be able to do buybacks.

So at least we will have that opportunity, if we would like to do it. And then the Board will come back with a proposal on what to do with the proceeds from the Netherlands and Kazakhstan and how to distribute them in due course.

That's what I can give you right now, Terence.

All right. Thanks very much, Anders.

Thank you.

Hi. I think I have two questions please.

The first one is on the - on the solutions line in your fixed business, the growth in - the revenue growth and solution step down from 4% I think in the fourth quarter to 1%. I think you're not counting this as legacy revenues.

I was just wondering what drives this slowdown in solutions whether it's just quarterly variability or anything sort of more underlying? The second question is on one-off, as you mentioned that you have sort of re-designed the definition of one-offs, that would leave market expectations more formed before you - before that is cantered around, so maybe just for the first quarter would you be able to sort of give us some indication how EBITDA would have looked under the old definition for one-offs that will be helpful?

Thank you.

Thank you very much, Ulrich. So I'll take the first part and then I'll hand over to Mikael for the second one.

So on solutions in B2B, well, I mean this is - this is part of the strategy. So solutions have a significant lower profit margin then the network-based services and one of the things we're doing here when we are reigniting growth in B2B is that we will focus less on solutions and more on network-based services.

So very deliberately we do not sell as much solutions and focus less on that, which is what you see in the numbers. And that will in the short term not help growth in solutions obviously, but it will for sure help profitability, because it's - some of the products are even loss-making and those we should absolutely not sell obviously.

So that's what I can give you on B2B. And then for one-offs Mikael?

For one-offs, I mean, for comparability with loss shares you have - you have all items openly disclosed in the report. For Q1 this year, if we had applied adjusted EBITDA in this quarter, I would say that the net effect of this change is that it's negative SEK 6 million, that is disclosed on page 22 in the report in footnote three.

So it's only SEK 6 million minor difference in this quarter.

It's helpful. Thank you very much.

Thank you.

Hello. Hi.

Good morning. Thank you for taking my questions.

I have two please. And first one, is it more about a clarification.

I mean, in Q1 you delivered a flat organic service revenue growth, but the comps are getting harder in Sweden because you have a lower price increases and also harder comps in Baltics as well. And my question is if I think about for full year 2019, do you think there could be a chance we're really looking at a modest end-user service revenue decline and for the full year?

And my second question is on Sweden fixed. I wonder if you can give us some indication of fix churn development this year, of course, your price increases and to whether you're thinking on potential magnitude of the price increases could potentially catch giving the churn development and a tedious price increase?

Thank you very much.

Thank you very much. So I'll start with the first one.

We - I mean, our estimate is the same, we believe in the flat end-user service revenue for the full year of 2019 and nothing that we have seen in Q1 changed with that assumption. So that's where we're at.

Markets may change going forward, which will have a positive and negative impact, but not nothing we see right now will change our mind, as of now. Then we'll go to the fixed churn.

Yes. So if we look on customer churn on both Com Hem and Boxer, it's actually slightly better than compared to Q1, Q1 last year.

And in terms of pricing of course, pricing is an integral part of all the strategy going forward, but the exact sizing and when and how that is something we will have to come back. So right now the focus is to build customer satisfaction and loyalty through defensive scheme and that's the priority for this year.

Thank you very much.

Thank you.

Yeah, thanks. Thanks very much.

I just want to follow up on the ASPU trends in Sweden, yet in particular the fixed broadband ASPU trend is quite - quite a big slowdown. I was wondering if fixed broadband ASPU was also impacted by this group contract or if that's mainly a result of the smaller price increase in 2019?

And also if you could repeat, I didn't really get your explanation why postpaid - consumer postpaid ASPU slow - growth slowed in Sweden as well? And then when we think about sort of a re-acceleration in service revenue growth in Sweden from 2020, should we think about that as being mainly volume or ASPU driven basically?

Thanks very much.

Yeah. Hi, Henrik.

Samuel, here. So if we start with the ASPU trends on fixed broadband.

The vast majority of that difference is pricing. So yes, of course, there is an influx of group agreements, but on a steady slow growing pace, with no major impact, it's about pricing.

On mobile postpaid, I mean, we had a big change in the competitive landscape during Q1, Q2 last year and of course that is still affecting us some. So I would say that is the main - the main driver for that.

And then maybe Anders, you can take the last one.

Yeah, exactly. So the mix - I had to think about the mix in 2020 and forward.

I mean, if you look at the initiatives we think will make a big impact, starting with the consumer. I mean, Com Hem mobile that will drive both volume and obviously ASPU on a consumer level.

If you think about the FMC benefits that will reduce churn. So everything else equal and that will drive volumes.

And then obviously we will have price as another tool depending on how much customer satisfaction we are able to build during the year, which will drive ASPU obviously. So it will be a combination and I can't tell you exactly how much will in one camp and how much it will be in another camp.

That will pretty much be decided on how these growth drivers turn out to work in the real life. Then when it comes to B2B that will be a volume game, that will not be an ASPU game.

I think we will see pressure on us moving B2B going forward since it's a - we are a challenger taking market share from the incumbent and that ultimately is done with price to some extent this season. I hope that answers your questions Henrik?

Thank you very much.

Thank you.

Okay. Anybody else want to have a question, I think this is your last chance.

That doesn't seem to be the case operator. So I think I'll - we'll end there.

So thank you very much Nicole. And thank you everybody who has been on the call.

This then concludes this earnings call and I wish you all a very good day. Thank you very much.