Tele2 AB (publ)

Thank you very much, Rose, and good morning everyone, and welcome to the Q4 and full-year 2019 report call for Tele2. With me here in Stockholm I have Mikael Larsson, our CFO; and Samuel Skott, Chief Commercial Office for Tele2.

Today we will walk you through the results for the quarter, our progress this year and the outlook for 2020 and beyond and then we're going to do Q&A, so we can address the questions you are most interested in discussing. Now, please turn to slide two for a brief summary of the results for the quarter and the full year.

We achieved our financial guidance for the year. TheTele2 group and end-user service revenue was flat in the quarter and the full year in line with our full year guidance of flat growth.

Underlying EBITDA, excluding effects of IFRS 16 increased by 10% in the quarter and 6% for the full year driven by cost reduction as we concluded the Com Hem integration. This is also in line with our full year guidance of mid to single digits growth.

CapEx excluding spectrum and leases amounted to SEK 0.7 billion in the quarter and SEK 2.4 billion for the full year which is in line with our guidance range of SEK 2.3 billion to SEK 2.6 billion for 2019. Now let's look at the summary of our strategic achievements during the year on Slide 3.

Tele2 underwent a significant change as we carried out the integration with Com Hem. While this has affected the entire group, in many ways it has had the biggest impact on the Consumer business in Sweden.

The merger with Com Hem allowed us to launch a completely new strategy as we added broadband and TV to our toolbox. We launched the FMC more-for-more strategy and managed to get 219,000 customers on FMC benefits by the end of the year which actually represents about three quarters of the overlapping customer base.

We carried out a major rebranding campaign of the Tele2 brand listing it into a premium position in the markets and it was the most well received marketing campaign in the history of Tele2. Following this, we introduced new Tele2 family offers to establish Tele2 as a household brand and did the first ever frontbook price adjustments on Tele2.

We also launched a new mobile brand, Com Hem mobile and we are happy with the progress of this brand so far, and in fact we saw great momentum across all our mobile brands leading to the first full year positive net intake of mobile subscribers since four years. While Sweden B2B remains challenging, we made efforts in the year to set us up for future turnaround.

We have separated the large enterprise and SME units for more efficient and focused set up. We end the year as a stronger challenger within SME as we have built up our sales capabilities.

We have revamped the mobile portfolio and launched FMC offers and we grew our mobile customer base with a net intake of 30,000 RGUs during the year. The Baltics continued its great performance and we finally saw a turnaround in Estonia with end-user service revenue growth for the full-year.

We also took a step to strengthen our network position by creating a network JV in Latvia and Lithuania. And we made some significant structural changes to the group during the year.

We completed the transaction in Kazakhstan and the Netherlands, changing the profile of the Tele2 group as we now operate in our core Baltic Sea footprint. We completed the Com Hem integration two years ahead of plan and reached a synergy run rate of SEK 800 million.

In December we changed the organizational structure to better reflect the current asset portfolio and strategy removing the group structure and setting Tele2 up as a flatter organization. We paid out SEK 7.2 billion in dividends to our shareholders while reducing the leverage from 2.8 to 2.5 times.

With all these changes, we have completed phase 1 of the Tele2 transformation, turning Tele2 into an integrated operator. This enabled us to start the next phase which starts with a new vision for Tele2.

Please turn to Slide 4. Our new vision is to become the smartest telco in the world, creating a society of unlimited possibilities.

This vision may sound rather ambitious and it definitely is. It will take a lot of work, but in the end it will come with a large payoff as we create a lean, agile operation that can better serve our customers while reducing OpEx by at least SEK 1 billion over the next three years.

While this transformation will result in a significant reduction in OpEx, that is not the goal in itself. We aim to operate smarter and reduce complexity which in the end means serving the customer in the best way possible while operating an efficient and fast organization.

So what do we mean by smart? Well, for us it means radical simplification and customer focus.

It means doing things simpler within a flat and fast organization, always with a focus on simplification and delivering value for our customers. Everyone should have a clear mandate and accountability within a fact-based and disciplined operation.

This mindset allows us to quickly adapt to the world around us and never cease to modernize our operations. It also means working with distinctly positioned leading brands providing our customers with smart combined offerings for mobile connectivity, broadband and next generation TV and play services covering the entire household and being an outstanding partner to businesses and the public sector.

Let's move to Slide 5 for some for some concrete examples of strategic focus areas for 2020 and beyond. Within Sweden consumer we will continue to drive the FMC strategy to reduce churn and build pricing power.

We are launching two completely new growth drivers' a standalone OTT service and a new digital FMC brand. Samuel will give you more details on how these will help us drive growth and take Tele2 into the future of telecommunications.

The main driver of growth this year will be backbook price adjustments which we will begin executing this quarter and gradually see the effects of throughout the rest of the year. Over the longer term, we also need to optimize our brand portfolio, so we can focus our energy where it matters while covering all relevant segments of the market.

Within B2B, we are aiming for a turnaround. It will not happen in the near-term, but we're in for a gradual improvement as we use our new capabilities to take share in the SME market and focus on the private sector within large enterprise, where we can take higher margin contracts and improve profitability.

In the Baltics we will work to continue the good momentum that we have while strengthening our mobile-centric-convergence through the launch of TV offers. Over the long term, we will consider the need to add fixed services as these markets go FMC as well.

Underpinning all of this is our new vision and the business transformation program. We expect to reduce OpEx by at least SEK 1 billion over the next three years.

Mikael will give you more detail on this program in a few minutes. Another major project over the next few years will be to upgrade both our mobile and fixed networks as we roll out 5G and upgrade our coax network to Remote PHY.

Now let's look at our Q4 performance in more detail on Slide 7. But before we dig into the details, I want to make you aware of some changes to our reporting structure.

Following the changes of the structural Tele2 with international consultation and merger with Com Hem, we have adjusted the group governance model. To reflect the new organizational setup, we have adjusted the reporting structure by combining the Sweden consumer, the Sweden business, and the IoT segments into one segment.

As you will see in this presentation, we are keeping all detailed disclosure in terms of KPIs and revenue while reporting a combined EBITDA and CapEx for the new Sweden segment. Now let's look at the performance of the Sweden consumer business.

In Sweden consumer, we saw continued momentum in mobile postpaid volume with a sixth consecutive quarter of positive net intake. As expected, postpaid ASPU was flat as backbook price adjustments will not have an effect until Q2 2020.

Similarly, within fixed broadband and digital TV, cable and fiber, we see continued volume growth while ASPU trends are not expected to turn around until we see the effects of this year's backbook price adjustments. Total end-user service revenue growth was roughly flat as growth in mobile postpaid and fixed broadband was offset by declines in digital TV and fixed telephony and DSL.

We aim to accelerate growth in Sweden consumer. In 2020 this will mainly be driven by price adjustments, but over time we expect our two new growth drivers to support sustainable growth.

And I will now hand over to Samuel to walk you through these in more detail. Samuel?

Thank you, Anders and good morning everyone. We are very excited to announce the launch of two new services in the Swedish Consumer market this month.

Please turn to Slide 8 for an overview of the completely new brand called Penny. We are taking the first step into the future of telecommunications with the launch of our own completely digital brand.

Penny is unlike any other brand in the Swedish market. As the first FMC brand in the digital no-frills segment, it caters to a customer group that nobody properly serves today.

Penny is a purely digital service with mobile broadband and TV in one single app aimed at the modern Swede who embraces all things digital. Price in the higher end of the no-frills segment, we aim to track status seekers as well as price hunters.

We're doing a first soft launch now in February offering mobile and broadband following an app with a full blown launch in Q2, where we will market Penny as a full-service brand including video streaming. Penny will have a sim only postpaid mobile offer and we'll start a broadband offering in Com Hem's high-speed coax network and then expand into open networks, covering millions of Swedish households.

With this brand, Tele2 is finally present in all segments of the Swedish consumer market with Tele2 and Com Hem in the premium segment, Comviq in the mid tier, and Penny in the digital no-frills segment. As a full-service integrated operator, we can now take our fair share in all segments of the market.

Let's turn to Slide 9 for our second major service launch this month. We have taken an important step to solidify our leadership in the TV market with the launch of our own standalone OTT service, ComhemPlay+.

By becoming an OTT provider, we enter a rapidly growing market where we're currently not present. As the largest TV provider in the country, this is the natural next step for us as we can leverage our ability to bundle the best content, use our existing ComhemPlay platform and our large customer base and sales channels to get traction.

ComhemPlay+ is a powerful new tool in the FMC more-for- more strategy helping us to enhance the experience for our assisting customers with new content and attract new customers as a natural complement to mobile or broadband subscription. We will start by giving this service to all our existing customers across all brands to gain scale and build customer satisfaction.

For non-Tele2 customers we will have an attractive offer to purchase ComhemPlay+ standalone or as a natural combination with one of our other services. Over time we expect our two new growth drivers ComhemPlay+ and Penny to contribute to sustainable growth as we enter two growing segments of the market where we have not been present before.

And perhaps more importantly, the lean and purely digital nature of these services will help Tele2 transform into the next generation telco and remain relevant to the modern consumer. Now, I'll hand back to you Anders.

Thank you.

Thank you, Samuel. And please move to Slide 10 to look at Sweden B2B.

Within B2B we see similar developments as in previous quarters. We continue to add mobile subscribers, both driven by new sales and reduction in churn.

However, the price pressure in the market continues and as a result mobile end-user service revenue growth remains negative. Combined with the decline in legacy fixed services, total end-user service revenue declines continue in line with previous quarter.

And keep in mind that IoT is now included in the chart to the right, but excluding IoT the growth would have been minus 4% which is the same as in the previous quarter. Please turn to Slide 11 for an overview of Sweden as a whole.

Even with a 1% decline in end-user service revenue, underlying EBITDA excluding IFRS16 grew by 11% in the quarter, entirely driven by cost reduction. Excluding profit from the sale of bad debt in the quarter, underlying EBITDA excluding IFRS 16 grew by 9%.

We continue to see strong cash conversion of 73% as CapEx spend is relatively low now in between investment cycles. And now, let's have a look at the Baltics which you'll find on Slide 13.

Net intake was negative in the quarter in all the three countries due to seasonal churn in mobile prepaid. However, continued growth in ASPU led to growth in end-user service revenue which you can see on Slide 14.

End-user service revenue increased by 8% which is over 9% growth in underlying EBITDA excluding IFRS16 and we are happy to see the turnaround in Estonia continue and we actually saw Estonia growth end-user service revenue for the full-year. Continued EBITDA growth and low capital intensity led to strong cash flow generation as you can see in the chart to the right.

And with that, I'll hand over to Mikael.

Thank you, Anders and good morning everyone. Please turn to Slide 16.

Revenue for the group amounted to SEK 7.3 billion for the quarter with underlying EBITDA of SEK 2.7 billion. Operating profit as well as net profit increased significantly compared to previous year explained by Com Hem being included in the full quarter 2019 and by the transaction in the Netherlands which ended the negative impact our previous Dutch operation had on profits as well as one off impairment of deferred tax assets in previous year's numbers.

This all leg to a net profit of SEK 943 million in this quarter compared to negative SEK 349 million in 2018. Let's have a look at the cash flow statement on Slide 17.

Equity free cash flow increased from SEK 86 million to almost SEK 1.5 billion in Q4 2019 driven by higher EBITDA contribution, lower CapEx as we have divested the Netherlands and Kazakhstan, improved change in working capital, as well as improved financial net and taxes paid. This led to equity free cash flow for the full year of SEK 4.8 billion of which SEK 4.3 billion relates to continuing operations or approximately SEK 6 per share.

Please turn to Slide 18. Leverage measured at economic net debt to underlying EBITDA of the leases decreased from 2.8 to 2.5 times during 2019, equivalent to decrease of SEK 3.1 billion in net debt as SEK 7.2 billion of dividends paid to shareholders was covered by cash flow generated in the business proceeds from divestments and repayment of the shareholder loan in Kazakhstan.

This means that we ended the year at the lower end of our target leverage range and this is ahead of distributing profits to shareholders. The Board is proposing through the AGM to increase the ordinary dividend by 25% to SEK 5.50 per share to be paid in two equal tranches in May and October.

In addition, the Board proposes an extraordinary dividend of SEK 3.5 per share partly covered by the proceeds from the sale of Croatia and this is also to be paid in May. Please turn to Slide 19.

As Anders announced, we now closed the Com Hem integration program after having realized run rate of SEK 800 million in cost synergies since the merger in November 2018. In the fourth quarter we had a positive impact or approximately SEK 200 million of OpEx savings in the accounts leading to a total impact on profits of SEK 500 million for the full year 2019.

The remaining SEK 100 million of cost savings from the integration are now rolled into the new program we announced today. Progress is also being made for the revenue synergies with two-thirds of the overlapping customer base now on FMC benefit packages.

In addition, we today announce our no-frills FMC brand and OTT service presented by Samuel, which we will roll out to our entire customer base during 2020. This means we are on track to deliver the SEK 450 million contribution from revenue synergies over five years.

With the Com Hem integration completed, we can now begin the next phase of transformation. Please move to Slide 20 for more details on our new business transformation program to fulfill our mission to become the smartest telco in the world.

This new program which has the aim to reduce cost by at least another SEK 1 billion over the coming three years comes on top of the SEK 800 million order the realized mergers introduced with Com Hem. Realization of cost savings in the new program will be backend loaded as they to a large extent relate to removal of legacy IT systems where we first need to invest into the target platforms before decommissioning the old legacy IT systems.

And important part of the new program will be to further simplify our organizational structure and operating model to be fast and flat and to automate processes and become more agile in our way of working. In addition to save costs, this will allow us to serve our customers in an even better way than today through product simplification and consolidation of brands.

Please turn to Slide 21, financial guidance. We reiterate our guidance of low single-digit growth of end-user service revenue and mid-single-digit growth of underlying EBITDA of the lease for 2020 as well as for the midterm.

As we started this year with flat growth of end-user service revenue, we foresee a gradual ramp-up of end-user service revenue growth through FMC cross-sell in Sweden B2C and modernization of – monetization of customer satisfaction in addition to new growth drivers being launched. For underlying EBITDA of the lease, this means that growth in coming quarters will continue to come from cost savings realized in 2019 with full effect in the accounts in 2020 and to a minor extent from the new business transformation program.

As we expect end user service revenue to start growing, the mix between cost savings and revenue growth will become more balanced over time. For CapEx, we reiterate our midterm guidance of yearly CapEx excluding spectrum band leases to be in the range of SEK 2.8 billion to SEK 3.3 billion during the rollout phase of 5G and Remote PHY.

However, as the high frequency auction in Sweden has been postponed, we will start the more CapEx intensive rollout of 5G later than earlier planned leading to a lower CapEx guidance of SEK 2.5 billion to SEK 3 billion for 2020. And with that, I would like to hand back to Anders for conclusion.

Thank you, very much, Mikael. Now please turn to Slide 23 for our key priorities going forward.

The key to achieve sustainable growth for Tele2 is to reignite growth in Sweden. The main driver of this will be Sweden Consumer, where we are now adding two new growth drivers; ComhemPlay+ and Penny.

We are launching these two services now in February and expect them to start contributing to sustainable growth in the coming years. In addition, we will continue addressing the remaining mobile and fixed overlap with FMC offers and carry out price adjustments to support growth near term.

In B2B we are aiming for gradual improvement as we leverage our new capabilities within SME to take market share and turn focus within large enterprise to the private sector where we see better profitability. In 2020 we will start turning our new vision to become the smartest telco in the world into reality.

We will begin our business transformation program, simplifying the organization, removing silos and legacy IT systems to support growth and reduce OpEx by at least SEK 1 billion over three years. We aim to continue the good momentum in the Baltics and close the sale of Croatia once we receive the official regulatory approval.

Last, but not least, we will prepare our networks for the future as we begin the rollout of 5G and Remote PHY. And with that, I hand over to the operator, Rose for Q&A.

Good morning, guys, Maurice here. So a quick question just on the latest on the Bonnier dispute, maybe for the benefit of us in London not in Stockholm, but just where are we in terms of the dispute and the impact on the financials?

If I'm not wrong, you had a period in Q4 without the broadcast rights, you resolved those issues, I think now you are broadcasting fewer rights than you ever had and just help us walk us through some of the financial impact would be super helpful I guess, the benefit in Q4 to not having all the rights and then Q1 and beyond I believe you are paying less than you were in the full end? And I guess just related to that on the online, I mean streaming rights, when we should get an update on that?

Thank you.

Hi Maurice, good morning, and thank you for your question. And I think this question may come for times today, so then let's elaborate a bit now and then we hopefully can leave that behind us.

Because in the scheme of things it affects a smaller part of our business and does not have that great of an impact on our business going forward. But you are absolutely right Maurice, we unfortunately ended in this situation where we could not agree on a new contract with Bonnier Broadcasting actually before in November and after that contract expired, Telia become the owner of this asset of TV4 and we could not agree with Telia either which ended up by us having to go dark with these channels and that lasted for 12 days running up until the 22nd of December when we signed an agreement and the channels were back on air.

And at the core of the conflict is what kind of relationship we should have going forward and you should bear in mind that the TV4 had a relationship with Com Hem during the 27 years it has existed and has been one of the channel houses which we have supported throughout the years and distributed all their channels. And now it turns out that going forward they are not interested in having this kind of relationship when it comes to streaming rights and that was at the core of this conflict.

And we tried to find a way to negotiate streaming rights and I think out of the 12 days we spent 10 days doing this and we at that point in time realized together with TV4 that it is not going to work and we will have to have a different relationship going forward. And thereafter we tried to find the relationship which we both felt we need to have going forward and that is a much smaller relationship, that entails the main TV4 channel, it entails the premium offering from C More and some other smaller channels.

And that we agree, that relationship we will have and there we have an agreement done which we are distributing these channels, but for the rest we – rest of the channels we do not and I am not sure we're ever going to get that agreement either on these channels. So we have concluded that the relationship we have with TV4 and Telia is not going to be the same that we have had historically and the savings we got which were really big and we are now spending elsewhere with the content suppliers who actually want to collaborate with us going forward and see a future together with us.

And that's the direction we want to go in. So, we gained clarity.

We lost a good partner, but we gained clarity and we're now finding other partners we can team up with in order to build our business going forward. And it's with them we are investing now when we go into launching ComhemPlay+ for instance.

As for financial impact, in Q4 you -- I mean, there was no financial impact. There was no impact on customers either.

You will see an impact in Q1. It's not material.

It will be there, it will be visible, but it is not material. It won't impact our performance for this year at all.

So there Maurice I think you have it in a nutshell.

Very clear, thank you so much.

Thank you.

Good morning, and thank you for taking the question. My questions are related to the launch of Penny, the new brand.

So, first of all, can you just talk us through please, the reaction that you expect to come from competitors? And what gives you the confidence that there won't be any irrational reaction that would decrease the overall value of the pie?

And then just secondly, in terms of the cash flow per customer, I know it's early days, but perhaps you have some, some thinking and forecast on that front. I mean, do you expect the cash flow per customer from these digital brands to be roughly similar to your mainstream customers today?

And related to that, you know, do you therefore expect any cannibalization please? Thank you very much.

Hi, Roman, Samuel here. So, on Penny, I mean, what we're seeing happening in the market are a couple of very clear things.

One is FMC that is happening and it's happening across the entire market. The other thing we're seeing is, that we see is three really clear segments.

We have a premium segment, we have a mid-tier segment, and we have a digital, no-frills segment. And we haven't been active in the digital no-frills segment before.

So, it's -- I would say it's a natural evolvement for us as the main operator in Sweden to take part of all segments. I wouldn't, I mean, no one should see it as a surprise.

And I think as we've been quite transparent about, we see this as a customer experience and digital customer experience revolution and that's the way we're going to work. So, it's FMC in a new way.

It's a very digital customer experience and of course, it's going to be attractively priced, but that's not the key point. So, I do not expect an irrational behavior because it's really a rational behavior on our part.

In terms of cash flow, we see it neutral. Yes, the prices might be lower, but the operating costs are also much lower, both in terms of sales service, but also since there are no hardware included in any of these offers.

And in terms of cannibalization, of course, when you operate in a multi-brand world, there is cannibalization, but we expect it to be low. And this is not a situation that is new to us.

We've been operating in a multi-brand environment for many years and successfully managed that. And I'm sure we will be able to do it with Penny as well.

Just one thing further. I mean, we are going into new segments where we have not been present before, but we are not disrupting that segment and I think that's very important to say.

We are going in there with prices which are in line and to some extent you could argue higher, at the high end in that segment. So, I think this is also very, very important to note.

Thank you very much. And in terms of the take up, could you share some thoughts on the expected take-up?

I think that is way too early. We're launching the service today.

It's a soft launch and it will be a gradual ramp up as we learn and tweak. So that is something we will need to get back to later.

Thank you very much.

Good morning, everybody. Just a quick one on the phase two of the savings, please, Anders.

You talked a lot about brands and IT, but you haven't mentioned much about other things like headcount, for example, or product cuts. Could you just give us a bit more detail on how you break down the SEK 1 billion of savings, please, and where might be those upside or the risks?

Thanks.

So, thank you very much for that question. I'll hand over to Mikael.

He's the manager here.

Okay. I'll talk to him and then you can fill in.

So, I mean, I will say that on the of these savings that is the IT transformation. And that -- I mean, we have a very solid plan after being worked on this for one and a half year now, we have a solid plan for how to do IT migration, which will entail that we reduce the number of IT systems by half over the coming year with 2018 as a starting point.

This is, I would say, the plan is solid. Then with IT systems there is always risk for delay when you do the migration.

I think we have a solid plan and the risk is more about the timing than actually being able to execute on this. This will lead to a significant saving in operating costs for IT.

CapEx reduction might come on top, but that is more in terms of CapEx avoidance going forward, and this is further into the future. Now, in the coming years, we will continue to invest as we have guided.

Then we have number of savings associated to the IT migration and that is within customer service and the rest of the organization in terms of expected lower call ratios from customers, more of happy and satisfied customers with improved IT system infrastructure. On top of this there are savings to be had in the networks, network organization, and also brand consolidation, which we have been clear about since the merger that over time we'll reduce the number of brands within the consumer business in Sweden.

I will say that these are the main points.

And so, in your previous comparisons that you've made to us about Telenor Sweden and its size and things like that, have you found they're not quite as valid as you've gone through the process or is that still something that you're working on?

So, I mean, you should see this as a starting point. This is what we have been able to do up until today and the plan we have.

And as we go along and execute, if we find more opportunities, we're going to go for them, but this is where we start.

That's great. Thank you.

Thank you very much, Nick.

Thank you, good morning everyone. I just had a question around the financial guidance for the medium term.

You've always spoken about having an ambition for mid-single digit EBITDA growth. But now we've got the new announcement today of the extra SEK1 billion in net OpEx savings.

I'm just wondering that if everything goes well regards to streamlining the IT systems and also consolidating some of the consumer brands, whether there's potential for faster revenue growth than the mid-single digit that you're guiding for today? Thank you.

So, thank you very much, Terrence. I think Mikael and myself are going to try to answer this one together, because I get where you're coming from and so what we have done now is that we have identified SEK1 billion more in cost savings after the coming three years.

It's going to be backend loaded as we discussed. We first have to invest into the IP stack, but before we can see the synergies coming through or the savings coming through.

At the same time, we are pushing for growth, as you know. And if you look at our guidance, it is a band, if you will, around I mean low-single digits in terms of revenue growth is a band around certain percentages and the same goes for EBITDA.

And dependent how successful we are with growth, we could end up in the lower or higher part of that band. And it could also be so that if we execute on our revenue growth in a good way, and we execute on our new savings in a good way, we could end up higher than the current guidance.

But that is too early to say at this point in time. So, we are a bit prudent.

We're not issuing new guidance, but we are sticking with the one we have until we see what kind of traction we'll get in the market. Anything to add, Mikael?

Yes. I can comment on the 2020.

I mean, as Anders said, the new program is backend loaded. You will not see much impact on profits for 2020.

You will have a flow through from the old integration program into 2020. The remaining -- the difference between the run rate and what the impact we're having on the accounts in 2019, that is SEK 300 million that will flow through in 2020.

And then on top of that we started this year with no growth of end-user service revenue. So, that's the starting point for this year and that's why we are we -- that leads up to the guidance for this year.

And then as Anders said, in the coming years it will be very much dependent on the trajectory of end-user service revenue growth.

Okay, that's clear. Thanks, Anders, thanks Mikael.

Thank you, Terrance.

Thank you. If I may just stick to the comments just made on the new SEK 1 billion program, as you're saying you have to invest some of the savings this year and then the impact will be backend loaded.

Could you elaborate a bit on what investments are these you have to make this year and why you are so confident that they will disappear post to this year? Obviously, you know, this sector has a history of delays with these IT transformation programs as Mikael alluded to.

So, I'm just interested in why you automatically assume that the reinvestments will disappear post this year? Thank you very much.

Hi, Peter. And that's a very good question.

So, the investments we are pointing to or not in the IT systems stuff, that's not where we're using the savings. It's in ComhemPlay+, our OTT service we launched and in Penny.

So, those -- those are the ones we invest in right now and I hope that answers your question.

Yes. Well, yes and no, because it actually enforces -- I mean, why would you assume that those investments would have to -- would disappear next year and onwards?

Because we are launching ComhemPlay+ free to all our customers this year, 12 months free and then we're going to start charging for it the following year.

Okay, understood. Thank you.

Good morning. Yes, my question is on the price increases you planned for Q1.

Could you maybe comment a little bit on, if all products will come from simultaneously or if you come start with maybe the mobile which has not been impacted by the contract negotiations with Telia and then go over to TV and broadband into Q2, or should everything come out towards the end of Q1?

Hi, Lena, Samuel here. So, on pricing, this will be gradually rolled out during this quarter and the next, and we expect to start seeing impact from it on the next quarter.

Mobile and broadband is the significant part of this pricing exercise. TV is less than a fourth.

But you're right, TV will come a bit later. But besides from that no kind of changes to the plan.

So, we start now and going from Q1 to Q2, start seeing the impact in Q2.

So, you -- just to confirm, you already have mobile and broadband already in Q1?

We will start executing according to plan and roll it out across both products in Q1 and Q2, more details than that is not something that I would like to give.

And size wise, it's roughly what you indicated before in terms of size?

There's no changes to the plans we have had. The only slight change is that we've pushed TV amount to ahead, but otherwise there are no changes.

And as I said, TV is the small part of this exercise.

Okay, thank you.

Yes, a couple of questions if I may. Firstly, I'll just follow up on Lena.

I think you mentioned in an interview that price increases will be in line with inflation. And I believe that's fairly low price increase compared to expectations.

And I wonder if that's impacted by the TV4 conflict. Secondly, the ComhemPlay is only TV series and movies so far and no TV channels.

Will this be the case also for Penny and how do you -- is it a plan to come with TV channels over time?

Hi, Stefan. So, we have made no changes to our plan when it comes to magnitude or pricing since we spoke to you last time.

As Samuel said before, the only change we have done is that we have pushed the timing of TV pricing a bit into the future. When it comes to ComhemPlay, you should bear in mind that we already have a product which is called ComhemPlay which is basically the TV Everywhere Solution if you buy a box space Com Hem service, TV service.

ComhemPlay+, which we are launching now is a standalone OTT service which consists of movies and series basically. And if you are a Com Hem subscriber, you will also get live TV in there.

That's how it's divided. Hope that answers your question Stepfan.

I just wonder about the Penny which you haven't yet launched the TV streaming service, will that be similar?

That would be a version of ComhemPlay+.

Okay. Thank you.

Thank you.

Yes. Good morning and thanks for taking my question.

Maybe just one on [indiscernible], and so Telia has obviously launched this new broadband product on the open LAN networks. So, it'd be interesting to just get your thoughts, any thoughts on that, please?

Thanks.

So, I think this is where the market is heading as we discussed before. I mean, Telia, Telenor and ourselves, we are moving FMC.

We started with the main brands, and they're all FMC now. And now we're moving into the mid-tier.

So you see, Telia's mid-tier brand going FMC. You see us launching Penny today, which is also going to be FMC.

So, I think it's quite clear that this is where the market is heading. And we think that's really good development and something we embrace and it's good for the consumer and for the stability in the marketplace over time.

That's great. Thanks.

Thanks. Good morning, everyone.

I had a question on Swedish top line. It's obviously impressive and pretty clear cost cutting guidance.

Now means the greater uncertainty reversal in Tele2 is the top line in Sweden. We didn't see improvements in trends this quarter, but you've clearly guided on the upcoming back about repricing.

So, the question was around, you've historically grown Swedish revenues above 1% in the combined Com Hem and Tele2. So, what are the major risks to achieving that 1% plus service revenue growth again?

And is there anything else you can say as a follow up question, or part B, is there anything you can say to allay the investor fears that your Penny product will undermine and disrupt that rational Swedish market? If you did see irrationality on the back of it, could you adjust pricing?

Thank you.

Thank you very much Andrew for those questions. So, I mean growth in Sweden consists of a couple of things.

It consists of volume, volume intake and last year we had good volume intake, really good volume intake. We expect to have good volume intake this year as well.

But what was lacking last year was the pricing component and that we are now putting in place, as Samuel explained. We're doing back with group pricing on all our products, both mobile, fixed and TV.

And those two in combination should lead to end-user service revenue growth when they transpire. On top of that we have B2B where we do think we are in a better position today than let's say a year ago, and that should over time also help the growth trajectory.

I'm not saying that B2B is going into positive growth anytime soon, but saying that we should over time expect B2B to perform better year-over-year. So, I think we have a good opportunity here to go into growth once these things happen, and they're going to happen this year, so that's when it comes to growth in Sweden.

You should also bear in mind that in the Baltics, which is, I think 20% of our business, we have great traction and performing well and we expect that to continue this year and beyond. And when it comes to Penny, I mean, we are actually the last one into the no-frills segment.

Telenor and Telia and 3 has been there for quite some time. Telia was the last one in before us and so now we are entering.

So, we are the last one into this segment. And we are not -- we don't do that with ambitions to disrupt the no-frill segments.

We do that to -- by playing the game with the rules that already apply. But we do it in perhaps a little bit more modern way.

That's our angle. So, if we were to disrupt too much, we can always use price, as you alluded to.

The ambition is not to go in there and take an unfair share of market share. We're looking for a fair share of market share and that's what we're going to go for.

So, I don't really see the risk that you alluded to Andrew.

Thank you.

Hi, thank you for taking the question. A couple of quick questions, please.

Just to follow-up on Andrew, like in terms of the timing of Swedish mobile -- sorry, Swedish service revenue growth, I mean, is it something we should see more sort of backend weighted towards 2020 or you're not sort of thinking that Sweden can even grow in 2020? And then really just wanted to clarify on earlier question regarding Bonnier, on the one hand, you're saying you made big savings and obviously there was a number of days in which you were dark.

So, you were not paying them for that period. So, I'm trying to understand how there wasn't a financial impact, because on the one hand you made big savings, on the other hand you're saying there's no financial impact.

So, if you could just help us understand if there was any help to Q4 EBITDA from that? Thank you.

Thank you very much. So, when it comes to end-user service revenue growth, I mean, what needs to happen in order for this to be the case in Sweden is that we need to see pricing coming through and we need to keep the volumes coming in as we have seen historically.

And we are doing pricing in Q1 and Q2 and then you will see the effect of that coming in Q2 and Q3. So, that gives you some sense on timing when it comes to growth.

When it comes to the financial impact on Bonnier, I'll hand over to Mikael.

So, and this goes back to the impact in Q4. And as Anders said, this is not significant for the group results and you can't see it even in the Swedish P&L from the outside.

Of course, there are minor savings from ComhemPlay to TV4 for these days when we were dark. But that is, I mean, it's part of one month in one quarter.

And on the other hand, we also compensated customers with other content during these days to mitigate the negative impact on the conflict. And on top of that, we also added temporary personnel in the customer service organization.

All in all, the net impact of this is very insignificant, or it's not visible for you from the outside.

Thank you.

Thank you. You mentioned during your prepared remarks that you are considering the possibility of adding fixed propositions in the Baltics.

I understand the stellar review. I think this is the way it sounded.

But could you outline how you would do that? And is there a possibility that you would acquire fixed assets over this exclusively on wholesale deals if it were to happen?

Thank you.

So, I mean, thank you for the question. So, we are -- I mean, I think the Baltic markets will go, FMC will be converted over time and we are already in that game.

We do something called mobile-centric-conversion, which we have copied from Play in Poland who have done this quite successfully over a number of years. The issue being that when you become really successful, it's probably not possible to do -- only use the mobile networks due to capacity constraints even with 5G.

So, then you have to go into the ground and then you look at each local market and see what opportunities you have. So, we could then, we could go wholesale, the wholesale route, where that is possible and we could then also go and acquire local fixed operators where that would be a possibility.

So, we will be open to all ideas and whatever makes most economical sense.

Thank you.

Thank you.

Yes, one topic we haven't touched upon, what's going on in the Netherlands? You still have your 25% of the joint venture and I'm just wondering sort of how that operation is developing and how you -- and when do you see a potential exit from that fully?

Thank you.

Hi, it's Mikael here. I can start and then Anders can fill in.

So, I mean, this is of course sensitive. We can't say anything about Q4 performance in the Netherlands since they have not disclosed the results and it has not been disclosed by Deutsche Telecom, the majority owner.

Until Q3, the company has performed very well. They are executing all the integration programs similar to the one we go through here in Sweden with the cost takeout and you will also see that they are growing top line, in particular growing mobile end-user service revenue.

So, very good operational performance there I would say. In terms of timing for potential exit, I mean, we can't really comment on it.

As you might recall, when we announced the merger some years ago, then we have certain exit provisions in our agreement, but that is after a couple of years. And any events before that, we can't really potentially events before that we can't comment on.

And there are still years left on the - until we have these separations in the agreement.

Just to follow up on that, I guess you previously stated that it would be too early to expect the joint venture to pay out dividends for 2020. So, I guess you forecast like 2021, then you probably should see dividends from the joint venture, is that a fair assumption?

That's a fair assumption, but also being dependent on the upcoming spectrum auction in the Netherlands, which will happen later this year.

Yes, absolutely. Thank you.

Thank you.

Yes, thanks so much. I had two quick ones.

Firstly, on in terms of convergence, I think you launched core Play benefits on Comviq [ph] just before Christmas. I don't know if it's too early and maybe if you can say anything about the take-up here and what the interest has been and if you actually flagged it, or tick-tick [ph] customers?

And then on your ComhemPlay+, I'm just wondering how important the negotiations with Telia on over the copyrights for broadcasting is, and if you don't get access to the over the top content on your terms, does that change your view on whether you need to own content or not? Thanks so much.

So, on convergence, well, what we've done for Comviq is based on the learnings we have with Tele2 on Com Hem brand that have some positive results on churn. We have extended it to both Boxer and Comviq.

We've done it to all the customers that are in an overlap between Com Hem and Boxer or Comviq. So, everyone has gotten these benefits, but it's still too early to say anything about it.

But, of course, we expect the same positive results as we have seen on the overlap between Tele2 and Com Hem. On the ComhemPlay+ product, since it's a video-on-demand streaming product, it's very much independent from our negotiations with Telia and there are plenty of studios and partners out there are willing to work with us and we see that as a very, very positive.

We're not in the game of doing our own content, and we don't see the need to be in that game either going forward, even with this change of strategy from Telia and TV4 perspective, we see plenty of positive partnerships out there that's leverageable.

I mean, to be honest, there is only one partner who doesn't want to team up with us for the future.

Thanks very much.

Hello, good morning. I just had a quick question on CapEx, please.

I noticed that you haven't changed your mid-term ambitions of SEK 2.8 billion to SEK 3.3 billion CapEx despite there has been almost two years delay on your CapEx budgets. So, I just wanted to clarify whether there is just a timing issue or you see some potential savings from some of your CapEx projects?

And if I can just follow-up on 5G, I just wonder if you can give us some updates on your negotiation of choosing the 5G vendors and how do you see 5G capacity develop? Thank you.

Hi, it's Mikael here. I will try to answer and Anders can fill in.

For the CapEx guidance, there is no change in amount over time. It is felt that the 5G investment will be made later.

So, it has been pushed - the whole project is pushed into the future by a couple of months or quarters. That is the only change.

In terms of selection of vendor, we are still in -- we have still not selected vendor, or we are in the process to do that together with Telenor in a joint venture here in Sweden. I hope that answers your question.

Okay, so then that concludes this presentation and the Q&A session, and I would like to thank you very much for joining this call and for your interest in Tele2 and wish you all a great day. Bye-bye.