Operator: Welcome, everyone, to the Telia Company's Q4 Full Year 2024 Results Presentation. And with that, I will now hand over to Telia Company's Head of Investor Relations, Erik Strandin Pers. Please go ahead. The floor is yours. Erik

Strandin Pers: Hi, everyone.

Welcome to our Q4 call. We will do the usual exercise with the management presentation followed by a Q&A session, and we have our President and CEO, Patrik Hofbauer; and our CFO, Eric Hageman, with us here today. I leave the word to Patrik. Please go ahead.

Patrik Hofbauer: Thank you, Erik, and hello and good morning, everyone.

Before we go into the details of the quarter, I would like to start as usual with a few overall reflections. In September, we held an investor update where we laid out the direction for the next three years and described our change program, which is making Telia more customer focused, faster and more efficient operator, taking then also decisions closer to our customers. I'm glad that we managed to get the new operating model in place as planned December 1 and starting to realize the financial benefits of at least SEK2.6 billion. I believe we did this without losing focus on our customers and our business and the results for the quarter were close to our expectations and in line with what we have described in connection with the Q2 and Q3 results. I will talk more about them in the following pages.

Finally, I'm also glad to see that we delivered on all 2024 outlook metrics. Our services revenue, we guided for low single-digit growth and ended at 1.8% plus. For EBITDA growth, we upgraded the last quarter to mid-single digit, and we did plus 4.3%. Booked CapEx ended at SEK13.5 billion, comfortably below the Q3 upgrade of below SEK14 billion. And finally, our structural cash flow ended in the middle of the SEK7 billion to SEK8 billion range.

So all in all, good results. But like in sports, your performance is only as good as your last game. So now our focus is to delivering on the 2025 outlook, including the free cash flow of around SEK8 billion. Moving now into the Q4 highlights. As we said in Q3, service revenue growth in Q4 was expected to be somewhat below our midterm ambitions of around 2%, and we came in at 1.5% plus.

As a reminder, one of the reasons for this is the timing of price changes in the Nordic markets, while growth in Lithuania and Latvia accelerated. Consumer remained solid with a growth of 1.9% and the Enterprise segment also grew slightly helped by contribution from the Norlys TSA and a good performance in the Baltics. Mobile revenues continue to grow, although less than in Q3. This mainly is due to Sweden being negative this quarter, which I will elaborate more on later. Fixed growth accelerated sequentially to plus 1.8% from continued strong TV momentum in Sweden and since a negative growth trend for Business Solutions last quarter turned positive.

We said last quarter that we expected EBITDA growth to pick up Q4, which it did, ending at plus 5.8%, and supported by all telco units except for Norway that had a tough cost comparison. TV and Media increased by around SEK220 million due to mainly lower content cost. Our structural OFCF was at SEK2.3 billion, and for the full year, we ended at SEK7.5 billion, right in the middle of our SEK7 billion to SEK8 billion guidance range. And finally, the Board proposed for 2024 an unchanged dividend of SEK2 per share to the upcoming AGM in April. Let's now move into the units, starting with Sweden.

As can be seen to the left, service revenue growth slowed to 0.5% as growth in consumer broadband and TV was partly offset by a 5% decline in Enterprise Mobile. Lower revenue in Enterprise Mobile came to a large extent from a technology shift in a couple of large IoT and A2P messaging customers, but we expect to be back to flat or even growth already in Q1 in that segment on the back of a few deals won recently. Looking at Consumer Mobile, we have announced new pricing, which will also have a positive impact from Q1. The decline in legacy copper revenue remained around SEK130 million. And excluding this, growth was at 2.3%, a slight slowdown from the reasons I just mentioned.

EBITDA growth ended somewhat below 2%, supported by the service revenue growth and cost reductions mainly related to resources. So now let's move into the operational KPIs of Sweden. On mobile, we said last quarter that we would put out 30,000 low-ARPU mobile-only enterprise customers, which we decided not to defend at unhealthy price levels. And we came in at minus 27,000 in total. ARPU declined SEK2 or less than 1% versus Q4 last year.

But as I said, pricing has been announced, and we expect to see an improvement going forward. We stay focused on providing our customers with world-class digital infrastructure, and this was confirmed again by umlaut's yearly network test where Telia really came out as the winner and also as a top 5G net in the world. Our broadband subscriber base continue to show steady growth this quarter by 4,000 as growth in fiber more than compensated for the continued decline in copper subscribers. TV continued to outperform with a record net intake of 38,000 subscribers and an ARPU increase of 12%. We saw strong demand both for basic TV packages and for the streaming services, and we added Disney+ to the platform this quarter.

Potentially, we got some tailwind from a competitor closing its legacy IT -- TV services. Our TV service is an important way to deepen relationship with the Swedish households customers, and we spoke about that on the Investor Day. It has been growing and gaining shares for several years, and I'd like to take a few moments to explain why. So the simple explanation is that Swedes really like our product. It has come out on top of the SKI customer satisfaction survey in nine of the 10 last years.

We distribute by far, the broadest content based on a unique lineup of strategic content partnerships with all leading streaming providers, as you can see here, including a great relationship with Netflix. We are a one-stop shop aggregator where customers buy these services directly from us, combined with linear TV channels. These are unique deals that appeal to a wide audience and offer great value for money. And for content partners, we offer access to a large amount of customers. As a result, the subscriber base is up 40% in five years, and we have grown ARPU from SEK180 to SEK245.

This has resulted in SEK1 billion growth in TV revenues over these years. But more importantly, the TV service is a key component of our converged household strategy. Customers who have TV in addition to connectivity are more satisfied and have significantly lower churn than those who don't. And the attachment rates between the two services is high and growing. Now moving into Finland, on to Finland.

Well, actually, I would like to start saying welcome to our new Head of Finland, Holger, who has done a great job in leading Telia Estonia and now will take Telia Finland through to the next level. Looking at Q4, Finland was rather neutral on service revenue with mobile growth of 1.2%, was offset by fixed revenue decline of minus 2.3%. Fixed revenue declined due to continued pressure on legacy revenue, regulatory changes and the ramp down of our noncore e-invoicing business. Together, these items had a negative impact of around SEK100 million, but from Q1, we expect the impact to be much less as mainly the headwind from regulation will be gone. Despite the flat service revenue development, EBITDA growth accelerated to 7.4% from the change program and lower bonus levels versus last year and also lower energy costs.

The mobile subscriber base declined by almost 20,000 driven mainly by the loss of 14,000 mobile broadband subscriptions in the consumer segment. Looking instead at the mobile handset segment, the long-running subscriber loss that we have been seeing in Finland continued to diminish. In addition, we continue to focus on value and ARPU rather than volume, an ARPU increase of 4%, supported mainly by consumer, but this quarter also enterprise ARPU was somewhat positive. Moving west to Norway, where service revenues were somewhat negative as mobile growth of 1.3% was offset by lower fixed revenues. Some of our trends in Norway are unsatisfactory, and we have a set of initiatives to improve in the course of the year.

In mobile, the trend is stable, but we have announced several price changes, which will take effect in Q1. Within fixed, we are offering more fiber upgrades to MDUs. And as we discussed at the Investor Day, a new service portfolio and CPAs are in the pipeline. We're also doing several changes in sales channels, both in field sales and support systems. Our partner business develops well, and we signed two new small fixed partners in the quarter, albeit small, and amended on the partnership with Chilimobil, which already was operating on our award-winning mobile network.

EBITDA declined 3.6%, partly due to lower service revenue, but mainly driven by the SEK70 million positive impact to OpEx last year from the one-off settlement of a pension scheme. Excluding this, EBITDA would have been slightly positive. And if we look at the KPI trends in Norway, so there are no big shifts, so I'll continue to the Baltics. Lithuania saw service revenue growth accelerated to 6.6% from a continued solid development for mobile and a significant improvement in fixed where B2B in particular, scored several new customer wins. The solid service revenue development was the main reason for EBITDA growth being close to double digit.

In Estonia, growth remained just above 1%. A large public sector contract was re-signed earlier this year and started to contribute again at the end of the quarter with full run rate again from Q1. Cost control has been strong, and despite limited service revenue growth, EBITDA grew 7%. Moving then from telco over to our media. TV and Media that was neutral on service revenues as a continued strong development for streaming, supported by an expanding subscriber base.

The effects of the customer base of the exit from Champions League were actually milder than we expected. Streaming revenue growth was offset by pressure on advertising revenues with linear viewing in Sweden continued to trend down. However, this is mostly compensated by digital advertising, which grew 15% in Sweden. EBITDA increased by around SEK200 million due to lower content-related costs, of which the key driver, of course, was the UCL cost. Finally, we gained 45,000 new customers in the quarter and 85,000 compared to a year ago.

ARPU remained almost flat compared to last year, which is a good achievement considering the increased share of HVOD subscribers in the base. And with that, I hand over to Eric who will take you through the Q4 financials.

Eric Hageman: Thank you, Patrik. Let me now take you through the financial development of Q4 and the full year, starting as usual with service revenue and EBITDA. Like you already heard from Patrik, service revenue growth increased sequentially to 1.5%, up from 1.2% in Q3.

Unpacking that fourth quarter a bit, the units driving this growth were predominantly Sweden, Lithuania and Other operations. Other was up mainly due to Latvia and a continued uplift from the Norlys TSA. From a product lens, growth was the result from continued strong momentum in mobile, broadband and TV, which more than compensated for the continued pressure of fixed telephony. For the full year, we delivered service revenue growth just shy of 2% for the group and exactly 2% for our telco business. As you might recall, we flagged last quarter that mainly because of how our pricing cycle is planned for the year, we estimated that service revenue growth in 2025 would be somewhat tilted towards the second half.

We maintain this view, although the difference between the outlook for the first and the second half is not very big. Moving to EBITDA. We can see that growth, as expected, accelerated compared to the Q3 level and ended at 5.8% for the quarter. This growth was generated fairly equally between TV and Media and our telco operations, where all markets grew except for Norway that had a relatively tough quarterly year-on-year comparison. For the full year, our EBITDA margin improved by 100 basis points, mainly due to the combination of growing service revenue, lower content cost in TV and Media as well as lower OpEx for the group overall.

More on this on the next page. Here, we can see that OpEx for the full year was down 1.6% or circa SEK400 million. Resource costs were down some 3% year-on-year, and we also had lower energy cost. This cost improvement was partly offset by higher costs for IT and some bad debt in the year. Overall, OpEx as a percentage of service revenue declined by 110 basis points in 2024 compared to the previous year.

For Q4, the OpEx development was rather flat as the resource cost reduction of 2% and tailwind from lower energy cost was largely offset by increased IT and marketing spend. The impact from the change program amounted to a couple of hundreds of millions in SEK in Q4, and we expect this to pick up in Q1 when we start to see the full run rate of the program. Booked CapEx in the fourth quarter was SEK4 billion, an increase we expected and which resulted in full year CapEx of SEK13.5 billion, comfortably below the SEK14 billion which we guided for in September -- in October last year. Let's now have a look at our cash flow. Looking at the full year cash flow, we can see that the uplift compared to last year is driven by the growth of our EBITDA.

EBITDA increased in the year by SEK1.1 billion, and then stable currency growth was even a bit stronger at SEK1.3 billion. Taxes increased somewhat and interest paid increased by SEK700 million, which was somewhat below our initial estimated year-on-year increase of up to SEK1 billion. This is mainly because of the positive impact from the euro and sterling bond buyback we did as well as reallocating liquidity for improved yield. Working capital had a negative contribution to cash flow of SEK3.1 billion as a direct result from our decision to downsize our vendor financing program by SEK6 billion in 2024, partly offset by the positive impact from predominantly accounts payable. A multiyear effort to improve working capital through a range of actions, such as optimization of billing cycles and inventories, also contributed to this.

And underlying, we had a cash inflow of around SEK2 billion in 2024, as flagged at the start of the year. License CapEx was low for 2024 compared to 2023 when we made the first SEK800 million payment for the Swedish multiband auction. The second payment is due in the fourth quarter of this year. The line item PPE divested had a SEK200 million contribution to free cash flow in 2024 relating to the divestment of the first batch of legacy technical real estate in Sweden in the fourth quarter. So overall, despite the increase in paid interest and tax and the rightsizing of a vendor financing program, we still managed to generate SEK4 billion of all-in free cash flow for the year, significantly ahead of consensus expectations.

Free cash flow per share was just over SEK1 for 2024, but would have covered our SEK2 per share dividend excluding the vendor financing ramp down. Before I summarize our 2024 financial milestones, let's briefly have a look at our net debt and leverage. As you can see on this page, our net debt increased by around SEK4 billion in the fourth quarter and leverage increased to 2.28 times, up from 2.17 times in Q3. This was mainly driven by free cash flow being impacted by the vendor financing downsizing and our quarterly SEK2 billion dividend payment to shareholders. We also had a SEK900 million FX effect on our debt, mainly euro and NOK versus the Swedish krona and SEK2.2 billion from other items split between increased leasing liabilities and the impact from the settlement of buying back a relatively expensive sterling bond.

For the full year, however, leverage is down from 2.32 times to 2.28 times despite the downsizing of vendor financing this year. Looking at the impact from the agreement to sell our stake in Marshall announced last week, this would, on a pro forma basis, have lowered our leverage to about 2.25 as of December 2024. Before I hand over back to Patrik, I would like to walk you through some of the financial milestones we achieved in 2024 and how that resonates with our ambitions laid out at the investor update back in September last year. At the CMD, we laid out our four-pronged agenda to drive value creation. Let me recap them for you.

Our first objective is to substantially improve free cash flow, driven mainly by consistent EBITDA growth, combined with CapEx discipline and strict capital allocation priorities. Our second objective is to be more choiceful in the assets we own and what we invest in. Our third objective is to actively manage our balance sheet so as to operate from a position of strength. And finally, we are targeting to grow our dividend per share and over time, also return excess cash to our owners. Looking then at what we achieved in 2024, I would like to call out the absolute growth in EBITDA as well as our improved EBITDA margin.

We've been more disciplined in CapEx, resulting in spend ending comfortably below outlook. We've also made progress in actively managing our portfolio of assets. In 2024, we successfully closed the sale of Telia Denmark. We also said we would develop our noncore assets to create shareholder value and sell them if we find a better owner at the right price. The sale of our stake in Marshall exemplifies this commitment.

In addition to M&A, we've actively managed our balance sheet. We rightsized our vendor financing program and improved our underlying working capital position. To lower our interest bill, we have significantly reduced our overall gross debt with both bond buybacks and optimizing our liquidity position. Finally, as you already heard today, the Board of Directors proposes a SEK2 dividend for 2024. But as you know, we have the ambition to grow DPS over time and to return excess cash to shareholders.

We firmly believe that we are taking the right actions that step by step will lead us to a free cash flow generation above SEK10 billion by 2027. And with that, I hand over to you, Patrik, for our closing remarks.

Patrik Hofbauer: Thank you for that, Eric. And let me now quickly summarize before we go into Q&A. We ended the year in line with our plans, and I'm happy that we managed to do that while executing on our change program.

The quarter ended stronger than it started, which give us an encouraging momentum as we enter into 2025. With a new operating model in place, and with now 2024 now behind us, we are fully focused on delivering on our 2025 value creation plan including an EBITDA growth of at least 5% and the free cash flow that covers our dividend floor at SEK2. And with that said, we will open up for questions. Thank you.

Operator: [Operator Instructions] Our first question come from the line of Andrew Lee from Goldman Sachs.

Your line is now open. Please go ahead.

Andrew Lee: Good morning, everyone. I think following obviously your CMD in September and the fact that your cost cutting will start to impact in Q1, today, it was all about looking at your underlying service revenue growth for the Nordic telcos. And I guess what we saw is it was pretty muted as anticipated.

So the question is on the reacceleration there. It's three questions, but kind of all very interrelated. One, should we expect an acceleration in your service revenue growth in the first quarter of 2025 for Sweden, Norway and Finland? Two, what is driving that service revenue growth reacceleration? And then three, when do you think your Nordic telcos will start delivering to their structural service revenue growth potential of 2% plus? Thank you.

Patrik Hofbauer: Yes. Thank you and good morning, Andrew.

I can start. So we expect -- as we said, I mean, the service revenues will be around 2%. That is actually the outlook we have been given for 2025. And we believe that it will be a bit below in the first half and a bit then above in the second half, but not that big swings as we had before. So I think there are a couple of things we will want to mention for the coming year then.

So in 2025, we will not have these regulatory headwinds in Norway and Finland, which we have now in 2024. The legacy pressure will also decrease from 2025 and onwards. Pricing is to perform and has to perform now started in this Q1 and a recurring basis across all markets and products. If we look at the Q4, the price momentum was quite modest and is expected to pick up now in the coming quarters. We also see a potential in revenue from mission-critical, which we also talked about on our investor update in September in Sweden here that will gradually increase now from 2025 to 2027.

And if you look at Q4 also, Estonia was hampered by the government IT contract that is now resolved, and we saw a better end to the quarter for Estonia, which will give some positive momentum into the Q1. And also, we have some e-invoicing business in Finland that will be gone. So that's also a headwind that will be released now in the start of the year. So I think that was the first order questions.

Andrew Lee: I think that's pretty much all of it.

That was really helpful. And so it sounds like less of a swing maybe than we expected between 1H and 2H and the reacceleration starting in Q1.

Patrik Hofbauer: And I think, Andrew, overall, we feel very comfortable at the moment to deliver on what we said now the outlook for 2025, so including service revenues and also the EBITDA and cash flow. So it feels that we have some tailwind now towards the end of the quarter, which we will take with us in Q1 and again in 2025.

Andrew Lee: Thank you very much.

Patrik Hofbauer: Thank you.

Operator: Our next question comes from the line of Ondrej Cabejsek from UBS. Your line is now unmuted. Please go ahead.

Ondrej Cabejsek: Yes.

Hi, everyone. Good morning and thank you for the presentation. I've got two questions, please. One is just on your changes to management in Finland and Norway. So if you could talk us a bit through what kind of was -- or is rather going to change in these units, what's supposed to improve, specifically, what are you kind of targeting? I guess it's a reacceleration of growth primarily, but kind of what's -- true meaning, what's supposed to change? And when are we going to see these changes in the numbers, please? That's one question.

And then the second question, Patrik, you still mentioned optionality around kind of the portfolio review. So I guess this pertains primarily to TV. I guess if you can confirm that or kind of expand on what else? And then on TV specifically, I guess you're kind of reaching the SEK1 billion EBITDA levels in the coming year, which is probably a time when the restructuring is done and you're potentially looking at some options with that unit. So what are the options? And how are you thinking about the timing around the potential split or divestment or whatever it may be in those units? Thank you.

Patrik Hofbauer: Yes.

Thank you and good morning. Let me start with the management changes in Norway. I'm super happy that we managed to sign Bjørn Ivar. Bjørn Ivar has an extensive telco experience and he's worked in Norway for many years and he's been responsible for the whole Norwegian business for Telenor at that time, but also in the broadcast side, so he can broadband TV and mobile. So a broad experience in telco.

And he has been now working for a challenger position for Telenor in Sweden now for the last four years and done a tremendous good job there. So we think that will be really, really good for us. Then of course, he will start at the latest January 1 next year. So there will be a time here before he will enter. But I'm super happy with that management shift that we are doing now in Norway.

That will be -- and we're very happy for that one. So -- and I think the effect of that one we will have to wait until Bjørn Ivar will start. So -- but we have a lot of -- of course, activities going on in Norway already now to improve the performance, but they are not linked to Bjørn Ivar. And then second on TV. Well, on TV and Media, they are performing very well.

We -- our focus now is actually to continue to turn the company around. They are delivering on the plan that we have. And rightly, as you say, we are targeting an EBITDA of below SEK1 billion in 2025. And also, as you can see from the figures on the EBITDA development now in Q4, they're trending in the right direction to reach that, and that's very positive. And also very positive with TV and Media is they are managing to compensate traditionally, historically, linear advertising money or revenues with streaming revenues, both with a very strong customer development subscriptions -- subscribers, sorry, and also on the advertising side on the streaming side.

So very good managed and very disciplined on the cost side. So then regarding structural discussions on TV and Media, we don't give -- I mean, the same question we get every quarter. We have -- our strategic view is that we don't need to own TV and Media asset, but we -- our focus now is actually short term, it's actually to deliver on the change program that they are doing and doing very well. And then TV content is important for us because looking into Telia Sweden and there how we outperformed the market and with the distribution agreement. So TV will always be important because it's important value proposition to the consumer and the households in Sweden and obviously very appreciated.

So TV will still be an important part for us. And we will continue to focus on getting the right distribution agreements in place, which we have at the moment, and we have good partnerships and creating value to our partners there.

Eric Hageman: Yes. Maybe to add to the second part of your last question as in what other assets, may be helpful to remind you that since 2020, the company has divested SEK37 billion of value of assets, including Telia Denmark last year. And then if you would go to Page 48 of the investor update presentation from last year, we set out assets that we fully own.

For example, we're executing the legacy real estate out of the copper exchanges. We also have historically talked about rooftops. And then there's assets that we partially own. One of those was our stake in Marshall that we announced last week, the sale of it. And there's a handful of other assets mentioned there.

So yes, you should assume that we continue to be very disciplined around when we get to sell things, what we do with those proceeds, but we've been very pretty clear at the CMD, what the intention is of what we do with that, which first and foremost is delever and then afterwards, the ambition to return excess cash to shareholders.

Ondrej Cabejsek: Thank you both.

Operator: Our next question comes from the line of Maurice Patrick from Barclays. Your line is now open. Please go ahead.

Maurice Patrick: Good morning, guys. Thanks for taking the questions. Just from my side, if you could add some more commentary on the impact of the change program on your overall business? I mean you've indicated in the prepared remarks that you completed that on plan at the beginning of December, and you're seeing those cost benefits coming through. I'm just curious to understand the impact, if any, on the operating performance over the time, clearly, a period of large change for you with 15% of employees leaving the business. Investors do ask about the net and gross impact of that SEK2.6 billion cost reduction.

Your updated thoughts on that would be very helpful. And just a sort of a small second question. I noticed the SEK0.2 billion, I think it is, of copper-related real estate sales, which I suspect is less about the copper itself, maybe the local exchanges. Just thoughts in terms of what we could expect from copper-related estate inflows in the next couple of years would be very helpful. Thank you.

Patrik Hofbauer: Yes. Thank you. Let me start with the operational impact of the change program. Of course, as we -- when we call out the program, this is a significant change to Telia. It's not only taking out 3,000 headcounts, another 2,000 are actually changed positions in the company.

And remember, what we try to achieve here is actually to get a simpler, faster and more efficient Telia where we take the decisions closer to the market. So we're putting more power to the market. So on the positive side then, we have managed to do it on time, December 1, and we have so far very limited impact on operation, and that's very good. So I'm very optimistic. And I think the change program so far has gone better than we expected.

And what I mean with that is actually you never know what could happen when you do this big change -- big transformation of a company. But so far, I must say that people internally understand what we have done and why we did it, and a lot of credit to that. So good communication and understanding. And so far, very limited impact. And -- but again, a big respect for these changes, we are only two months into the new organization, and it will take some time to get everything to work perfectly.

But so far, I would say a very limited impact on our operation and no impact on customer facing because we actually strengthened the customer-facing part of our organization because we have -- we want to have the decisions much closer to the customer. So the market has much more power, but they're also very clear now on the responsibility side. Eric, do you want to fill in something?

Eric Hageman: Yes. Maybe just on the gross-net, it's the question we also got at the time when we announced this in September and even when we confirmed that we had finished it in December, and we said at the time, we won't go into gross versus net for us as in giving an isolated net. We clearly said it's SEK2.6 billion lower cost, of which is SEK2.3 billion is OpEx.

So will straight go into EBITDA and SEK300 million of that is CapEx. We expect this year to pick up the full run rate for that. And of course, we will continue to have further cost reductions as you would expect a company of our size in the industry to continue to do. So also this year, we will see restructuring costs. But very happy with the impact that we saw on the first -- in the fourth quarter with a couple of hundred million positive impact there, but the full impact in 2025.

Maybe with regards to your real estate question. So yes, our first deal is announced, expecting the cash of a couple of hundred million to come in this year. We announced at the start of the program that we expect to get around SEK1 billion in cash from this in the coming couple of years. Those were your questions, I think, Maurice.

Patrik Hofbauer: And Eric, to just like to add to that is that we had an illustration in the Investor Day slide package, and I think that's still relevant.

So you can take a look at that to understand...

Eric Hageman: How the phasing of the...

Maurice Patrick: Thank you.

Operator: Our next question comes from the line of Stefan Gauffin from DNB. Your line is now open.

Please go ahead.

Stefan Gauffin: Yes, a couple of questions, please. So first on Sweden mobile, where end-user service revenue was declining despite what I think is an okay market environment? I know you gave some comments on business mobile, are seeing some improvement there. But are you happy with your strategy in Sweden? And do you see that your pricing initiatives will support a return to healthy growth for the mobile business? Secondly, on TV and Media, your -- the TV revenues exceeded my forecast, compensating for weaker-than-expected advertising revenues. So how do you see the advertising revenues playing out in 2025? Do you still see structural headwind for the linear TV resulting in declining advertising revenues despite improving macro? What's included in your forecast? Thank you.

Patrik Hofbauer: Yes. Good morning, Stefan, Patrik here. Let's start with TV and Media first, with your second question. So we have also seen bigger headwind on the linear TV ad than we expected and anticipated in the beginning. And we see that, that will continue.

The negative development will continue. But remember one thing, the total ad market is actually up. So this is like a structural shift in the market. And what's really good with TV and Media is that they are actually working and mitigating this structural change. So we actually move money from traditional linear TV over to streaming, both when it comes to ad spending streaming -- or ad revenues streaming, sorry, and when it comes to number of subscribers, which we saw was a great development now in Q4, and it continues also into Q1.

So we think it will be -- it will still be tough, a negative on linear TV also in 2025, but we will compensate for that with streaming and customer-driven revenues in TV and Media. So that's our first comment. Then when it comes to pricing. Well, if you look at the Q4 now, so the consumer was rather flat. So the drop, as you also mentioned, was driven mainly by enterprise, which declined 5% to SEK58 million.

And that was basically due to a loss of 25,000 subs year-on-year and somewhat lower core ARPU in enterprise, that SEK21 million around. And we had a drop in A2P revenue, the bulk SMSs and to mainly parcel delivery clients using their own app now these days. We have also some lower IoT revenues from a large automotive company partner. We also see that we are now doing pricing. So we will have support for pricing now moving into 2025, which will be an important component of driving revenue growth.

And we have seen also our competitors are doing price increases in the Swedish market, which is good because it is a rational market. But remember, now in Q4, we didn't see so many effects, of course, of pricing, but we will see now in 2025 since we have just sent out price increases. Thank you.

Stefan Gauffin: Okay. Thank you.

Operator: Our next question comes from Siyi He from Citi. Your line is now open. Please go ahead.

Siyi He: Hello. Good morning, thank you for taking my questions.

I have two, please. The first question is really on your guidance on the EBITDA growth for 2025. I think at your Capital Markets Day, I mean, the same question was asked why are you targeting just above 5% and not a bolder guidance. I think the answer given then was that you are still going to implement the changing program? And now we have successfully completed that. And just a question is why you still maintain the initial EBITDA guidance as given in Capital Markets Day? And the second question is really also about the guidance is on free cash flow.

Looking at the cash outflow in Q4, it seems that you have paid some of the restructuring costs in Q4. I'm just wondering will this give some headrooms for your free cash flow for next year? And maybe some comments on how should we think about net working capital going forward? Thank you.

Patrik Hofbauer: Yes, let's start maybe with working capital. So we talked about it at the beginning of last year and also at the investor update, how we have gone from cash outflow to cash inflow. We saw that in last year, about SEK2 billion, a bit more than I think we originally had expected partly related to the vendor financing ramp down that we have done basically increases a little bit your accounts payable because previously, you would put it in the vendor financing.

So that was a positive, a positive surprise, partly why we ended up at SEK7.5 billion or the higher end of cash flow, if you will. We expect similar working capital inflow for 2025, not at the same level, but definitely an inflow. So I guess, somewhere around SEK1 billion or so seems a reasonable assumption for 2025 based on the things that we continue to do on billing cycles and all the inventory management that we continue to do, et cetera. So quite happy with that. We feel comfortable with the around SEK8 billion, and it is driven obviously by EBITDA, which was your first question.

So as a group, the way we ended the year in Q4 or even December and the momentum that Patrik talked about, that we carry into Q1, we feel comfortable with delivering that medium-term ambition of 2% top line growth. With on top of that, the impact that we have from the change program, we should be able to do at least 5% EBITDA. And that then ultimately given the various free cash flow items that we have, we should be able to get to around SEK8 billion of free cash flow for 2025.

Siyi He: Thank you very much.

Operator: Our next question comes from the line of Andreas Joelsson from Carnegie.

Your line is now open. Please go ahead.

Andreas Joelsson: Good morning, everyone. A question for Patrik and a little bit sort of overall question, but you've been in the company for a year now, and you have done a lot of action on costs. You have done some management changes.

And I guess you also have had plenty of dialogue with customers. And given that, what do you see that customers say that they would like you to do that you're not doing in order to give you more trust with their business? Sort of have they given you new ideas how to be able to grow this business for beyond 2025 and so on? A difficult question, but it would be great to hear your thoughts on this.

Patrik Hofbauer: Yes, and thanks for the question. Let's start with a bit sum out and a broader question. I've been an exec at the company now for a year or actually February 1, it's a year, so very close to.

And I must say that I visit all the countries a couple of times to better understand -- to deepen -- to get more deep understanding of the business, the products and services that we are delivering to the customers, and of course, obviously, I've met a lot of customers. I must say it, number one, I'm very happy to see the positions that we have in all our markets. We are either number 1 and number 2. So we have a strong position. So that's a good starting point.

We have also good engagement among the employees. Despite that we did this big change program, still the energy and the mindset is good in the company. So that's a really positive start. The feedback from the customer is also very good because we are more and more relevant in the discussions that we have. Because if we look what's in the head of the business leaders today, well, first of all, it's cybersecurity, how do I make sure that I secure my company, so we make sure that we have our services up.

And there, we are very relevant as Telia. At the same time, of course, they are pushing us and saying that we should be on the right price levels. That's natural. But given the complexity that we deliver, so I'm very optimistic and see how the business leaders are having cybersecurity on top of their heads and how important we are on the deliveries to them. There are not so many new ideas.

They mostly request is actually about security. How do we make sure that we deliver robust and good connectivity to them so they can actually use the data for their own operation, not only that their customers should have access to the services? So that is very important. And very -- one very good feedback I give all of them is to look into the people. It's not -- we have been investing in processes and technology for many, many years when it comes to security. But the biggest risk is among the employees.

And that is a typical discussion I have now. How do you make sure that you have the right culture for cybersecurity in the company? So that's a typical question I have. And I will say that's maybe the most relevant comment I also get back then again on the cybersecurity, how do we make sure that I have my operations up if something hits me. So that is maybe, but there is other -- not so many other new ideas. Then of course, we are running a lot of tests.

We have IoT. We are helping large accounts, lot of customers like Vattenfall, Ellevio with smart grids on the electricity distribution. And that is typically a way that we can support and help them in complex environment that maybe we are the only one that actually can help them with that solution. So that is also a typical other use case that I'm included -- involved in the discussion. I hope that gives you some views on the discussions I have with other business leaders.

Andreas Joelsson : Absolutely. Thank you.

Operator: Our next caller is Fredrik Lithell from Handelsbanken. Your line is unmuted. Please go ahead.

Fredrik Lithell: Thank you very much for that. I had a follow-up question maybe to Eric on the free cash flow guidance, around SEK8 billion for the year and a guidance you provided on the Capital Markets Day, you have now or in the process of selling Marshall will contribute SEK1 billion or so. Is that -- did you sort of know about that? Or did you have a hunch about that, so you have already added that into the free cash flow guidance? Or should we think about that you will sort of change the guidance when that is settled? That's really my question. Thank you.

Eric Hageman: Thank you for the question.

Good morning. Now categorically it's not part of our free cash flow definition. So the only thing from a divestment perspective that is part of it is literally what we put in the -- on that page, which is the copper and the sale of the local exchange, what we call PPE divested. So no, that is not part of this.

Fredrik Lithell: Okay.

Thank you.

Operator: Our next caller is Viktor Högberg from Danske Bank. Your line is unmuted. Please go ahead.

Viktor Högberg: Two questions from me.

On the cost program, it's kind of interesting to see that Tele2 yesterday also announced a similar cut 15% FTEs. Might be unfair, of course, to call it comparable, but mindful of what you've done, but I would imagine that Tele2 would have a bit leaner organization to begin with. Just thinking, does this imply that when it comes back to the EBITDA growth guidance, maybe you have more efficiencies to draw out the Telia organization this year and next year. Is that something that we can infer from what Tele2 is doing? Of course, not fully comparable. But just thinking if you are a bit conservative on the 5% -- at least 5% EBITDA growth.

That's the first question. I have another one after that.

Patrik Hofbauer: I can start with give you some views of the cost program and Eric, maybe you could then delve into the EBITDA. But first of all, when we did the program in Q4, announced in September, this was to rightsize the company. We have never said that we will continue to drive OE agendas in the company, that will continue.

But this was more of a rightsizing, getting it right, getting the decisions out to the market and reduce the head office functions as a simplified overall explanation. So we will, of course, continue to run efficiency programs, but exactly how those will be, we don't have everything in place yet, of course. But still, we will be running OE agendas going forward, which we have done historically as well. This was more of a rightsizing. And then I cannot give comment on Tele2 because I don't have any insight on their business.

Eric Hageman: Yes. Maybe just to add to that point, we typically have somewhere between SEK500 million to SEK1 billion in restructuring costs every year. And you should assume that we have that. So regardless of what we're doing on the change program, yes, you could expect us to continue to improve the operational efficiency of this organization as everyone does in this industry. Erik

Pers Berglund: Very good questions, guys.

We have seven questions left, I think, on the line. So let's try to speed up as much as we can and see if we can finish this within sort of the next 10 minutes or so, so we can stay to roughly an hour.

Viktor Högberg: Could I ask another question or should I go back in line?
Erik

Pers Berglund: Yes. Go ahead, Viktor.

Viktor Högberg: Okay.

Thank you. You paid up more in dividends than the cash flow has allowed to reiterate the guide for SEK8 billion this year. Finally, covers the SEK2 dividend. Given the balance sheet is in decent shape, the divestments you're doing, of course, this is a Board question, but just is it too early to talk about a possible dividend hike already for the year of 2025, announced in one year, would follow the logic over the past years? Or do you just want to get to this level, confirm SEK2 for 2025? And then in 2026, the dividend growth? Just some thoughts around that would be good.

Patrik Hofbauer: Yes.

Thank you. And I can -- this question was also discussed during the investor update. The Board has been very clear. Number one, we want to see -- before we discuss any changes of the dividend, we want to see the company to cover the dividend with the cash flow, and that is our short-term focus now. Then it's up to the Board and take a decision when we have managed to get there to the SEK8 billion in all-in free cash flow, then there will be a new discussion.

And they have been super clear at the Board, and we are just following that, of course, as the management as well.

Eric Hageman: Yes. And maybe just to add, and again, reiterating what we said in September last year, we have a stated dividend policy. And the dividend policy says there is a floor of SEK2 and then to grow that from there on. And so that remains the ambition.

But it starts with delivering on that promise and that promise [Technical Difficulty]

Operator: Our next question comes from the line of Keval Khiroya from Deutsche Bank. Your line is now open. Please go ahead.

Keval Khiroya: Thank you. Two questions, please.

So firstly, going back to Swedish mobile, I appreciate the Q4 issues. But even when we look historically, there's limited evidence of service revenue growth over the past two years. So to what degree do you think the price rises have been sticking so far? And how much do you think this has been going away in spin down to the low end of family plans? And secondly, underlying EBITDA in Norway was slightly positive, excluding the comp issue that 2025 will obviously see the loss of the ICE revenues. So to what degree do you think you can compensate for the ICE loss? And how should -- how are you thinking about Norwegian EBITDA growth in 2025? Thank you.

Patrik Hofbauer: Shall I start with the ICE contract.

First of all, let's start with that one. I mean, revenues so far for the ICE contract, I don't know if you have been followed up, but has been around the SEK300 million per year. So we don't really understand other communicated figures from our competitors. And especially also remember then the contract will be gradually migrated over to them. This contract was actually a part of our plan for 2025, 2026, but the amount we expected to decline over the period.

So we think in our plans, we had already from the beginning, a rather decline on the revenues going forward. And we think that we are able to mitigate that in the plans that we have now for Norway going forward. So far, I must say that we have seen very little movements and migration from this contract from us over to Telenor. So let's see how that will play out. Erik

Pers Berglund: Sweden mobile? Eric, why don't you go?

Eric Hageman: Yes.

I think Sweden mobile, I think you're right that we have -- we're growing a bit slower on the mobile side then the fixed side. Just a reminder, we are sort of executing a full household approach. We're growing better in fixed for a number of quarters. Patrik spoke about the TV product, which is an important component of that. So -- and I think we're taking a lot of market responsibility as a market leader in Sweden, making sure that the marketing environment and pricing environment is relatively stable from our end.

So that's sort of the overall reminder from my side. Erik

Strandin Pers: Can we have the next question please. Thank you.

Operator: Our next question comes from Joshua Mills from Exane BNP Paribas. Your line is now unmuted.

Please go ahead.

Joshua Mills: Thanks, guys. A couple of short ones for me. You've talked a lot about your own pricing initiatives. And the commentary from Tele2 management, yes, that was also quite supportive.

So my question firstly would be, are you seeing any change in price activity, price increases from your competitors in the market? And that would be the first one. And then secondly, on B2B, obviously, a headwind this quarter, and you're talking about the improvement expected in Q1 and later in 2025. My question is, would this improvement coming through has just to do with phasing or has there been any change in the competitive environment, which makes you more confident in the B2B outlook this year? Thanks.

Patrik Hofbauer: Thank you. Let's start with the first one.

It's always difficult to see what the competitors are doing. But so far, we have seen very rational behavior in all our markets. And I see that there has been a demand for everyone to basically raise the prices. So, so far, I think there is no changes in the dynamic of the market in 2025 versus 2024 or the other years. So we expect it to be basically similar from our competitive landscape.

So that was the first one. The other one on the B2B, we see that we had some wins in customers. So that's the reason why we dare to say that we will be improved in the first quarter, flattish or maybe a small growth. But also, we have to remind us of our position, especially for B2B in Sweden. We are mission-critical in many aspects.

We can deliver to the large accounts, the defense, et cetera. And we see here now that these contracts will come in during the year, which will help the business to develop in a positive direction for B2B. So this is an important part. And in that case, we are basically the only one that can deliver those services for the mission-critical part. And yes, so that will help us in the growth.

And then also, we see some upside in the SME side where we have been a bit softer, and I think we can be more forward-leaning in that segment and take better shares there, and that is really both for Sweden and for Finland. So that is how we see -- view the market. And I think also the overall market expect the investments from the larger accounts will also start to improve in 2025 versus 2024.

Joshua Mills: Great. Thanks very much.

Operator: Our next question comes from Ajay Soni from JPMorgan. Your line is now open. Please go ahead.

Ajay Soni: Thanks for taking my questions. Two from me, please.

You highlighted in the presentation that your Finland EBITDA benefited from the change program. You didn't highlight this within other markets. So is there something specific within Finland, which means you saw the benefit in Q4? And my second question is just around pricing that you highlighted within Sweden and Norway. Can you give details on what pricing adjustments you've made and any subsequent impact on your subscriber base? Thank you.

Patrik Hofbauer: Let me start with the pricing, first of all.

And we have done price increases in the majority of our markets. And we have seen a bit more limited impact than we expected. So -- or milder, I would say, milder impact than we expected from the price increases. But we are early out. So let's see, and we have planned or have already done price increases in every market.

So no one is -- so this will continue. We just recently did in Sweden. We have just recently done it in Norway and also in Estonia, and it will follow also in the other countries. So that is how we do pricing.

Eric Hageman: Yes.

And in Finland, it was important to -- there was nothing specific because all markets and units benefit from the change program for that one month of December. But it was important to call it out in Finland for two reasons. One is because historically, you guys have seen that EBITDA has benefited from lower energy cost, and the improvement in EBITDA wasn't just because of lower energy costs. So it was important to call it out. And the other one is, historically, people have commented on a relatively low margin compared to some of the other units in our group.

So it was important to demonstrate that we have taken clear actions there in reducing the number of employees that you can see and where you don't see that translated is that, that EBITDA uplift of more than 7%. That's why we call it out specifically.

Ajay Soni: Okay. Thank you very much. Erik

Pers Berglund: Yes, thank you.

Operator, we're running a few minutes over. I suggest we take the one last question here on the call. And for those of you who have not had a chance to ask a question, please give us a call afterwards.

Operator: Our final question comes from Steve Malcolm from Redburn Atlantic. Your line is now open.

Please go ahead.

Stephen Malcolm: Yes. Thanks, everyone. I'm very honored to get the last question. Just a couple on service revenues and maybe one very quick one on interest as well.

Just sort of coming back to the questions that you've been asked on service revenue, just wanted to understand, it seems like your view of the SKU between 1H and 2H has softened a bit since the CMD in Q3. Is that right? In terms of the uplift required in Q2? And if so, could you sort of just lay out the reasons why you don't think the SKU is going to be quite as stark? And then secondly, just on service revenues, the comments you've made on kind of your mission-critical revenues in Sweden. Is it a reasonable assumption that given the kind of changing geopolitics, you've seen a lot of cable cutting in the Baltics, clearly, we've had Trump in the States and [indiscernible] that you're seeing greater urgency from the Swedish authority in terms of defense spending. Is that something that you think is going to come through a bit quicker than previously? And then finally, Eric, just on interest, a lot of moving parts this year with a bond refi, we had a rate cut yesterday in Sweden. Can you just give us an idea of the sort of step that interest costs we should expect for 2025? That would be very helpful.

Thank you.

Patrik Hofbauer: Yes. Let me start maybe with the service revenue and I think the slightly softened our commenting on the split between H1 and H2, it has all to do with the momentum that we ended the year with that Patrik talked about. So if you carried that momentum into New Year because nothing specifically changes from the 31st of December to the 1st of January. If you carry that with you, that obviously helps, similar to the growth that you saw going in Q3 from 1% service revenue to 1.2% to 1.5%.

So that's the momentum that we talked about. That's the reason why we're suffering. On interest, so last year, we guided for going from SEK3 billion to roughly SEK4 billion because we said it's going to be SEK1 billion more. We've spent a bit less than that, and that has all to do with us being very focused on lowering our gross debt and making better use of the cash that we have on our balance sheet, but also the proceeds that we got, including from Telia Denmark. And that will continue.

So Marshall adds SEK1 billion to the kitty at some stage this year and then a bit of proceeds from the copper exchanges as well. All of that helps to lower our gross debt, which means that we end up spending less on interest. So more than the SEK3 billion, I would say that we had in 2022 -- 2023, sorry, and then less than the SEK4 billion that we had this year roughly is where we think we will be for this year.

Eric Hageman: Yes. And I can give you some comments...

Stephen Malcolm: [Technical Difficulty] reasonable.

Patrik Hofbauer: That sounds reasonable. Yes, that sounds reasonable to me, Steve.

Eric Hageman: Steve, to give you some comment on the question regarding mission-critical. Well, I don't think there are activities connected to the sea cables, but of course, the geopolitical situation, as you know, have increased interest from every government on the defense.

And for us, this is important and -- but the difficulty is that we believe that there will be an increase on demand from us for our business in 2025. But it's a bit difficult to say exactly the timing of it. But it will definitely be an increased spend for us in 2025 revenues. But it's -- again...

Stephen Malcolm: So you haven't seen any sort of -- no particular evidence of greater urgency in the last few months, just joined the dots, I guess, on the geopolitics.

Eric Hageman: No, no, no, it's the same. I think it has not increased. It's still much higher than in the past. So -- but still I don't see any extra activities now related to this rather than on a general geopolitical situation. But for us, it's important, and we are, of course -- we foresee that we will get some increased revenues in 2025, but the timing is still, again, just to repeat myself, but it's -- timing is a bit difficult when it will happen, but it will happen during 2025.

Stephen Malcolm: Okay. Thanks a lot.

Eric Hageman: Thank you. Erik

Pers Berglund: Thank you, Steve, and thanks, everyone, for dialing in today. Sorry, we couldn't do all the questions.

But again, we're happy to continue afterwards. Just please give us a call. Thank you, and goodbye.