Earnings Call: Q3 2021

Oct 19, 2021

Good day and thank you for standing by. Welcome to the Tele2 Q3 Interim Report 2021 Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. I must advise you that this conference is being recorded today on Tuesday, 19th October 2021. I would now like to hand the conference over to Your speaker today, Kjell Jonsson. Please go ahead. Thank you very much, and good morning, everyone. Welcome to the Q3 Report call for Tele2. With me in the room here today, I have our Interim CFO, Peter Langren our Chief Commercial Officer, Henrik de Groot And our Head of B2B, Stefan Trampus. I'm glad to present to you today the 2nd consecutive quarter of growth with good results across All segments. Sweden B2B in particular turned to growth for the first time in several years, while we saw commercial momentum picking up in Sweden B2C. During the quarter, we also finalized the consolidation of our international footprint through the divestment of T Mobile Netherlands. While I am impressed by the development and efforts of the management and employees in the Netherlands, we clearly stated during the Capital Markets Day That our midterm strategic ambition is to be the leading operator in the Nordics and the Baltics. Thus, our focus will be on this specific region. As we will now go through this quarter's numbers, I'm even more confident about reaching the ambitions that we set out earlier this year. The group end user service revenue showed a growth of 2% in the quarter on the back of strong performance in the Baltics, Growth in both Sweden B2C and B2B and a slight tailwind from roaming. Underlying EBITDAO Grew by 5% for the group in the quarter, driven by end user service revenue growth and continued execution of the business transformation program in Sweden. As I mentioned earlier, we closed the T Mobile Netherlands sale in the quarter, marking an important milestone for the company. The Board intends to propose an extraordinary dividend of at least SEK0.11 per share pending receivable of cash proceeds. This gives further proof of our midterm ambition of having the best industry shareholder return. During the quarter, we paid out an extraordinary dividend of SEK 3 per share to our shareholders. Together with the second tranche of the ordinary dividend This is yet another proof of our midterm ambition. In Sweden B2C, we see that our value led strategy Through price adjustments on the back of product improvements are continuing to bear fruit, while net intake in mobile postpaid turned positive. After a successful 5 gs launch last year on the premium Tele2 brand, we now launched 5 gs on Comvik to further assert our strong position in the mid tier segment. This gives us an enhanced product offering Prior to a quarter with seasonally higher activity for handsets. I'm very proud to say that Sweden B2B saw growth in the quarter. We're in the middle of a major turnaround within B2B, and Stefan and his team is doing an amazing job to fulfill the ambitions that we presented to you on a Capital Markets Day. Our more granular approach with clearly defined segments a developed understanding of how to balance value and volume has led to a major improvement in performance. Our operations in the Baltics Are clearly performing very well, both in terms of end user service revenue and underlying EBITDA growth. We see that our more for more strategy It's very much working as we monetize the increased demand for data by our customers. But let's move over to the Swedish Consumer segment on Slide 4. With previous modest market activity, commercial activity started to pick up in the quarter, and we saw positive net intake from mobile With price adjustments made previously during the year having full effect in the quarter and a slight tailwind from roaming, We were able to grow mobile postpaid ASPU by 3%. As a result, we saw mobile postpaid end user service revenue of 2%. So growth in that of 2%. Fixed broadband continues to show steady growth, both in terms of volume and ASPU, Leading to a solid end user service revenue growth in the quarter of 4%. In the Cable and Fiber segment within digital TV, We see continued strong ASPU development on the back of pandemic unwind as we now had a full quarter of premium sports. Combined with a growing contribution from Com Hem Play Plus, this fully offset the slight decline of RGUs, And we were able to grow end user service revenue by 1%. With a strong ASP development in our core services and pandemic recovery, We were able to grow total end user service revenues in Sweden B2C by 1%. Let's continue with Sweden B2B on the next slide. Mobile net intake was positive with 17,000 revenue generating units in the quarter, driven by positive net intake in all three segments. Mobile ASPU declined by 4%. While still declining, this is a clear improvement in the trend as we see SME intake Contributing to a better mix and focus on profitability in large public and private starting to have an effect. We also see a slight tailwind from roaming in the quarter. With increasing mobile volumes, continued growth within IoT and solution sales, we were able to And now let's move to an overview of Sweden on Slide 6. End user service revenue grew by 1% As both B2C and B2B segments saw growth, underlying EBITDA increased by 4% through end user service revenue, Wholesale revenue growth and structural cost savings related to the Business Transformation Program. Cash conversion continues to be high in the quarter at 65%, as we keep growing underlying EBITDA and the full run rate of 5 gs rollout has not yet been reached. Then let's look at the Baltics on Slide 8. Our operations in the Baltics are performing well both in terms of absolute numbers and in relation to our competitors. Net intake was strong in the quarter for the Baltics, Driven by mobile postpaid growth in Lithuania and Latvia. We saw ASPU growth on similar levels as in Q2 as we continue to monetize increased data consumption through our More for More strategy and are helped by a slight tailwind from roaming. Let's move to the next slide. We see continued strong end user service revenue of 12% in the quarter with growth across all markets driven by ASPU and volume growth. Higher end user service revenue led to an underlying EBITDA growth of 6% on an organic basis. Cash conversion saw a slight decline compared to previous quarters as continued underlying EBITDA growth was offset by slightly higher CapEx as we now have started to modernize our core networks to prepare for 5 gs. So after this little overview, I'd like to hand over to Peter to go through the financial overview. Thank you, Kjell, and good morning, everyone. Please turn to Page 11 in the presentation. As in previous quarters, we have included this slide to illustrate the top line development with the roaming impact on a separate line. Please keep in mind that the organic growth rates on this slide are adjusted for currency movements. With the restrictions now starting to ease up, We now see a gradual roaming recovery. And as a result, outbound roaming provided tailwind of SEK 29,000,000 in the quarter. However, even if we strip out the roaming effect, we see the underlying business improving and we were able to grow end user service revenue by 1.9% ex roaming. In Sweden, BDC mobile postpaid grew by 1% ex roaming and fixed broadband by 4%, driven by price adjustments and also volume growth in fixed broadband. Within TV, We are helped by somewhat easier comps as sports broadcasts were shut down part of Q3 last year. And now we also see Com Hemplay Plus starting to contribute to the top line. But this didn't fully compensate the continued decline in the legacy DTT This resulting in TV end user service revenue declined by 2%. And to summarize, Sweden BTSE end user service revenue was Quite flat excluding roaming as growth in the core services was offset by the legacy decline. And as Kjell mentioned, we now see Sweden B2B growing for the first time in several years as the business shows good progress. Growth in mobile and solutions was fully compensating the decline in legacy fixed services. Our Baltic trends continue to deliver fantastic growth. End user service revenue was up by 11% excluding roaming, with new customers added, price adjustments and upselling, all enabled by our More for More strategy. So to conclude, this marked the 2nd consecutive quarter of end user service revenue for So please turn to Slide 12 for the group results. The end user service revenue growth along with the continued execution on the business transformation program were the main factors behind the mid Single digit growth in underlying EBITDA. Items affecting comparability of SEK 75,000,000 Were mainly related to restructuring costs attached to the Business Transformation Program. And please note that last year's Figure included a positive one off of around SEK 110,000,000. D and A increased compared to last year as we continue to amortize the book value of the Conhem brand following the merger with the Tele2 brand in the Q2. And finally, results from associated companies And the JV has improved largely related to our 25% stake in T Mobile Netherlands. So let's have a look at the cash flow on Slide 13. We continue to see strong cash generation with equity free cash flow of SEK1.9 billion in the quarter. Compared to last year, it improved by some SEK 200,000,000 with underlying EBITDA growth as the key driver. We also had a positive change to working capital where External handset financing in the Board picks contributed. Net financial items paid also improved as we benefit from lower interest rates compared to last year. And finally, looking at the last 12 months, equity free cash flow of SEK 4,900,000,000 has been generated, which is equivalent to SEK 7 per share. So please move to Slide 14 for an overview of the Capital structure. In the Q3, the extraordinary dividend of SEK 3 per share was paid. Leverage or economic net debt to underlying EBITDA still stayed in the lower end of our 2.5 to 3 target range as a result of the strong cash generation and the underlying EBITDA growth in the quarter. In October, the 2nd tranche of the ordinary dividend was also paid. And if we adjust for this leverage, would have been at around SEK 2.7 billion at The end of Q3. And worth repeating, we have now paid SEK 9 per share in total dividends to our shareholders In 2021, and as already communicated, the Board intends to propose another extraordinary dividend of at least SEK 11 So let's continue with Slide 15 and the progress on the business transformation program. So we continue to execute on the program and we reached annualized run rate savings of SEK425 1,000,000 at the end of Q3, and this resulted in SEK90 1,000,000 of cost reductions affecting the P and L in the quarter. And the efficiency improvements adding during this quarter came from the technology, IT and commercial organizations. And we remain committed to the saving targets of at least to SEK 1,000,000,000. And with that, I'd like to hand back to Sjem to cover our key priorities going forward. Thank you very much, Peter. So I'll ask you all please to turn to Slide 17 for our key priorities going forward. I'd like to say that I'm very proud of the team's efforts when I see the results that we are able to present to you today and we show that we can grow both on the top and bottom line. As we gradually move to a post pandemic society, we will continue to make the investments necessary to assert our premium position in the market. On the fixed side, this means improving our fixed footprint by building fiber closer to property through Remote PHY, which is already showing promising signs from our pilot areas. In the mobile infrastructure, we are now finishing the final test for our 5 gs network in Sweden, And we aim to ramp up the rollout in order to achieve nationwide coverage. The execution of the Business Transformation Program is In Sweden B2C, we gear up our capabilities to address the 1,300,000 non FMC households, While continuing to build a premium brand, we're increasing customers' satisfaction that we can monetize through reduced churn or price adjustments on the back of product improvements. In the mid tier market, we will continue the success story that is complete. An introduction of 5 gs is a major step in this as we enter a quarter with seasonally higher activity. In Sweden B2B, we will continue the turnaround that we have started with a new granular approach with clearly defined segments and a developed understanding of how to balance volume and value. This includes improved volumes in the SME segment, while focusing on profitability in Public and Large Cellular segments. In the Baltics, we'll continue to build on the momentum and execute Our mobile centric convergence strategy through more for more offers, while ensuring that the growth we have seen will be sustainable. We have taken a major step in preparation of 5 gs by modernizing our core network and launched a fiber pilot project in Lithuania to trial A CapEx light approach in order to provide fixed services to our customers. With yet another strong quarter behind us And restrictions starting to ease up, we can see that our hard work is starting to yield results. I'm excited to continue this journey together with my colleagues at the office, And I'm confident that we can and will achieve the ambitions that we have communicated and reach sustainable long term growth. So with that, operator, I hand it over to you for Q and A. Thank you. And we ask we would like to ask the analysts to limit themselves to one question. Your first question comes from the line of Andrew Lee from Goldman Sachs. Yes, good morning, everyone. So for one question, I was just going to focus Swedish consumer, you had flat service revenue growth in Swedish consumer ex roaming. And your Swedish customer intake turned positive in the quarter postpaid net has turned positive as well, but Nowhere near where you were a year ago. So the question is just what does the run rate look like as you exited Q3? And so how much of an acceleration should we anticipate? How much is Sweden consumer running on all cylinders? And how much is In terms of acceleration to come? Thank you. Well, let me start and probably Henrik will fill in a bit. First of all, I think you see that throughout the year, we have done a good value versus volume mix With the moves we did with Comvik in the earlier part of the year, which was kind of unprecedented to the market. And now you see that we're also looking into the volume side where we see positive volumes coming in. So I think we're kind of finding a good balance on that. It seems like We can keep two thoughts in our mind at the same time. Henrik, do you want to add some? Sure. Thanks, Sheldon. Hi, Andrew. I think if you look at the trending, you do see that we're Stabilizing and sort of moving back to positive terrain on the consumer side. I think for the Q4, typically this is Quite an active quarter in the business. And we do believe that we can work on that basis and A little bit further investment, right, into the quarter as we see also post pandemic recovery. I do want to point out that we're not fully out of the woods, let's say, and that we're still on the recovery path. So I think you would need to take that into a balance. But I do believe we can continue and strengthen our play on the consumer side. Thank you. Can I just Check? I understood what you're saying. So when you say kind of not fully afterwards on recovery path and when you say, Fraser, continue the trending, What exactly do you mean? Is that did you see accelerating run rate through the quarter and into Q4? Or Is the Q3 overall that you posted today an indication of the run rate that you are delivering at the end of as you exited Q3? I think we have an underlying run rate that we're establishing throughout the Q3. The Q4 typically It's quite a busy season that we do believe we can pick up on. And I think that's How you would need to look at it? Yes. And I would like to say, since I have the benefit of being here last year also, before Henrik came, that We have a much stronger go to market proposition in the Q4 of this year than we had last year. And Clearly, we can see in Q3 that, that played out quite well compared to where we were last year. Yes. At the same time, Andrew, it's safe to just final comment. What I mean with the post Pandemic is that we do see that traffic to, for example, retail and stores, that's not At the level yet of pre pandemic, okay. So that's the sort of balance I'm just putting on the table. Thank you. That's very helpful. And your next question comes from the line of Andre Karpeljzeck from UBS. Please ask your question. Hello. Thank you for the presentation. I had a question in terms of commercial costs. If I'm not mistaken, if I'm looking at the numbers Correctly then. Just looking quarter by quarter this year, it seems to me that about 75% of the cost that you kind of didn't The sites utilizing the first half came back in the Q3. But as we know, there were still a lot of restrictions in Sweden until the end of September. So Could you maybe explain how you've been doing things differently in terms of interacting with your growth as you mentioned, stores that are a bit emptier, at the You've got fewer stores than you had pre pandemic. So just develop a bit on that. And then any outlook in terms of direction of the commercial costs relative to 4Q as we head into that busy period that you just mentioned would be helpful. Thank you. Well, I think you will recall, we talked about this a bit in July also how the first and second quarters saw A relatively calm market and that we expected fully that the 3rd and the 4th would be much more active, which It's a normal seasonality, of course, around the iPhone launch of Black Week and leading up to Christmas. So clearly, We are and we said we would. We are investing a bit into that market activity, and that is reflected In the commercial costs? Yes, I can just add if you look at it and Between the year on year, we see quite flat development between last year and this year. And as Kjell says, we Expect it will be intensified next quarter. Yes, sorry, the quarter that is in Q4. And in terms of year over year dynamics, should we expect 4Q year over year to be more intense than last year because you mentioned 1st half, we did save some money in this regard. So would you be reinvesting that or would you expect more of a kind of flattish year over year situation in the second half, the second Q4, of course. We will have more activity definitely in the Q4 than you saw in the 1st 2 quarters. So And my message is that the offerings out there now are very competitive. So we're getting a return from investing that money. Janrick? Maurice, well, maybe to add to what was already said. So yes, it will be a more busy quarter. Your question, of course, is what is it from a year on year point of view. I do believe we are in a different situation than we were last year also on the pandemic. That said, On the marketing side, we've also been able of course to be to generate some efficiencies through the business transformation and the rebrand. So I think whilst we're investing more in the marketing side, on the one hand, we also have some efficiencies coming in. And I would say The sales cost will be slightly up also versus Q4. But how that in total will look like, I think we're sort of pretty on a balanced play, given of course some of the marketing efficiencies I've been pointing out. We're happy about this. It gives us momentum into next year. Yes. Thank you. Your next question comes from the line of Maurice Patrick from Barclays. Yes, morning guys. Thanks for taking the question. If I could ask a slightly bigger picture question around CapEx. You indicated This quarter you spent you were focusing a lot on higher 5 gs spend and you seem to indicate much of that was around the core network. I was just curious to understand a bit around how far you are in the process of rolling out the 5 gs network, numbers of new sites that you're rolling out, Whether it's mainly upgrading existing kits and just where you think we'll be in the next by the end of next year in terms of Sweden coverage. And just linked to it, you talked about Remote PHY investments. Should we understand that's more likely a 20 'twenty two, 'twenty three activity rather than this year? Thank you. Okay. So the Position of 5 gs depends a bit on whether we're talking Baltics or Sweden. In the Baltics, we clearly are still doing the prep work With the core, since we're still going to do the spectrum auctions, but we are quite far down the line of clarifying The round picture for the Baltics. In Sweden, the testing and all this stuff is done. Orders have been placed And rollout plans are put together. So you will see a lot of rollouts going on over the next 2 years. We're going to cover The majority or most of the population of Sweden at the end of 2023. And of course, there could be some Disruptions, you heard Beria talking about it today. But by and large, the momentum is there. So we're going to do that. Remote PHY is, of course, in order of magnitude much, much smaller in terms of CapEx. So yes, we're going to continue doing that in 2022 and 2023, we have done quite a few installations this year as well. We Would think that we could potentially double the volume in 2022. Even though the final we haven't Finally concluded the exact numbers of that order of magnitude, that's quite possible. But again, from a CapEx point of view, That is not moving the needle in any major way. Great. Thank you very much. Your next question comes from the line of Stefan Gauffin from TNB. Yes. Hello. I have a question on the wholesale revenue in Sweet, because that was the main deviation compared to my numbers. What is driving a 17% increase Year over year in this in the wholesale revenue line. I mean, the business seems Fairly lumpy. Why is that the case? Well, clearly, our part of the Still in the ATP businesses here in Sweden, that's one major element. And of course, we see some of these growing effects. But please, Peter? Yes, I can comment. As Michel says, it's SAP applications person and roaming is recovering. People are coming to Sweden and that helps us in that field. Okay. Thank you. And your next question comes from the line of Kevin Tsui from Morgan Stanley. Yes, thank you. Good morning, everyone. So just picking up on the theme again of investments and CapEx. I just wondered if you can just say a few words around Supply chain, obviously, you've got the big rollout of 5 gs. What's Telu 2's access to things like labor, equipment and chips? And then the second part of this is just maybe you can elaborate a bit more on your plans for Remote PHY. Why have you chosen to go down Remote PHY? Why not full fiber, which is what several cable companies are doing. Maybe just give us an indication of some of the build out costs for remote fire would be great, please. Thank you. So the 5 gs rollout and the component part is, of course, maybe related to DRAM at this stage because we've done so much of the preparations in our core networks. So like we all know There are some small warning signs, but we have placed orders. We are going into production mode. So at this point, it doesn't look like it's going to be a big deal for us. There can, of course, be some impact. We are to some extent hedged because in Sweden we are getting deliveries to from both Ericsson and Nokia and the way, of course, such contracts are structured, that gives us the opportunity, if need be, to adjust volumes. I don't think it will come to that, but it is an opportunity that we have out there. And when you come to this discussion about remote fiber versus Fiber, I think to some extent you're getting a little bit into the religion here. So Several cable operators, of course, go with Remote PHY, which gives plenty of speed and reliability For all the all foreseeable future, you've probably listened in on our Capital Markets Day when Jorgos took you through its 10 gs thinking. There is it's a natural upgrade path for us to clean up the node splits and to get a simple infrastructure that is cheaper to operate And have even higher reliability. And at the end of the day, if you use fiber, you still have to buy quite expensive equipment to give higher speeds to the end users. So it is a matter of pros and cons, But in almost any case that we operate, the service delivery and the speeds that we can offer Will be more than the market and then with any realism we'll need. Great. Thanks very much, Kjell. Your next question comes from the line of Ulrich Ratty from Jefferies. Yes, thanks very much. I was wondering about The revenue growth inflection in B2B, you're highlighting this very prominently as sort of a Clear sign of your turnaround effort. I'm wondering how sustainable sort of this inflection is. Is this Sort of lumpy item and you would say, look, there could be some quarters ahead where it turns negative again depending how things unfold. And what are the uncertainties? What are the major sort of uncertainties with regards to the continuity of the revenue growth outlook in B2B? Thank you. I will soon hand over to Stefan on that to the man himself. Clearly, B2B markets are and also in Sweden are very competitive. So the big change that has happened here is, of course, the level of accuracy has improved tremendously over the last 9 months. So much more data driven, much more clearly segmented and more disciplined. But please, Stefan? Yes. Hello, Alrik. First of all, I mean, our long term financial objective for To be, which we presented at the Capital Markets Day, was or is to return to growth and improve profitability. And I'm confident that the strategy and the focus areas that we put in place supports This in the correct way. Then if we look at the Q3 results, I mean, Q3 2022 2020 was somewhat an easier comparison quarter for the fixed revenues. Looking forward to Q4, We had some one off effects in Q4 last year on the mobile side. But with that said, I mean, we can conclude that Q3 was really, really strong. We will achieve the trend shift that we were talking about in the Capital Markets Day to achieve a Less revenue decline in 2021, and our ambition is to stabilize the revenues in 2022. So we're sticking with the revenue ambitions and the financial objectives both for 2021, 2022 and long term. Thank you very much. And then you said some was a question about uncertainties as well. I mean, I would say that, that would be market moves by our competitors. We haven't seen any of those. It is quite a stable market in terms of B2B. One factor that It's a question mark that you're all aware of and that's visible for us as well is the semiconductor shortage and that can Affect us on the solution business going forward in Q4, but this is not affecting our Competitiveness, we won't lose any market share. If it comes to that, then it's Just delays in deliveries basically, and mainly that affects the equipment revenues. Thanks again. Thank you. Your next question comes from the line of Roman Arbuzov Can I just ask A small clarification on the T Mobile Netherlands proceeds? The over 11 corona Distribution that you're targeting, do you intend to distribute 100% of the proceeds? Or would you need to hold some back? And also perhaps you could discuss some of the related costs, anything to do with taxes or any other costs to Close the transaction. And can I also just ask on the Baltics fiber, the Lithuania pilot, The timing of it, why did you suddenly decide to do it now? It seems like something that you Certainly, could have done a while back, and the topic has been on your mind for some time. So why now, please? Thank you. I'll start with the second one because it's very easy. That's because Pietras, who runs Baltics, asked me for permission to run the pilots, and I said yes. So, when it comes to the first one, we sent a very clear signal when we Announced Netherlands that the money is going to be distributed to shareholders. And that's the message that we are basically giving. So we want to just make sure that Tele2 is In the same situation, after selling Netherlands as we were before. We don't want to hold back anything. So we want to make sure from a ratings and from a future dividend perspective, we have the same situation. And given that Selling Netherlands means that in the future, there will be absolutely no dividend, of course, coming from Netherlands when it has been sold. That has A certain impact on our ratings and capital position. So we just want to make sure that we have that picture crystal clear before we set the final dividend, which will be at least SEK 11. If we were to go all the way and take the nominal amount, krona for krona, then All other things equal, we would have basically paid an extraordinary dividend. You see what I mean? So let's take that when we get the money on the account. We will talk to the Board. The Board will make a recommendation. And is there any cost just related to that, any explicit cost that you're expecting during closing? Peter here, just to comment on that one on the cost of no specific taxes or such things. Obviously, there are Slight transaction costs in it, but that's reflected by us already. So that's a minor. All right. Thank you very much. Your next question comes from the line of Kiefer Kiroy are from Deutsche Bank. Thank you. You talked about supply chains, but there's also been increased discussion around inflationary impacts Across sectors, you have seen accelerating inflation in Sweden. Can you talk about how you think about the impacts to your As you see it today from energy or any other areas as well? Thank you. Yes. We At this point, we don't see anything that has a major impact on how we run our day to day business. Peter, maybe there are some things that I have I can I mean, my view I mean, I shared your view? I mean, obviously, energy prices are increasing. That has an impact. And of course, All else equal negative for us, but in the scheme of things, it's not the major cost items for us. Okay. Thank you. Your next question comes from the line of Adam Foxramly from HSBC. Thank you very much. I had a question on the sales cycle in B2B, please. What proportion of the customer base has had to consider new tariffs All products in business, I guess it's probably different by business segment, but it'd be interesting to know how far through that kind of process you are. Thank you. Well, if you look at the development that we have, I mean, there's lots of different products. So it could be a really, really complex answer to your questions, Adam. But if we look at the development of what we're doing in the market for the different segments, I mean, we're taking in Good intake in the SME segment and the small segment on the back of the new portfolio that we launched This year, I think we're taking a conscious and responsible Approach to the price in the market, we are well above of some of our competitors On the pricing there, so it's actually developing a little bit better than expected in that segment. On the larger segments, so the public and the key private segments, I mean, these The contracts that we take in the pricing are individual contracts And the focus in these segments is really to drive profitability, Making sure that we stick with the pricing guidelines and improve margin, totally according to the ambition that we set out For the different segments going forward, and we can see that this is yielding result. You can see that on the mobile ASPU, for instance. But also when we look at the solutions revenues that we are getting. So hopefully, that answers your questions, Adam. Yes. Thanks very much. Your next question comes from the line of Nick Laiho from Societe Generale. Good morning, everybody. Just a quick one maybe to Hendrik. Just on The commercial strategy, given you started just recently, Henry, what is there anything that you're planning on changing, particularly on the FMC strategy? And then secondly, it's very, very early days, but have you seen any change in customer behavior after the Telia fiber price rises or the start of the UEFA service. Thank you. Yes, Nick, thanks for the questions. And yes, Pleased to be here, I could tell you. And it's a great time to join Tele2 in the combination of strength of Company in the market and of course where we are on the hopefully the end of the pandemic. I think the commercial strategy was clearly laid out. I hope you joined at the Capital Markets Day. That was before my time, but I think there's a clear direction we want to go in with the consumer business. FMC is a key part of that. Certainly, now all the assets have come together. I think as it was laid out before, what I see at the moment is not a question of change of direction. It's Question of making sure that we execute on the next phase. And as you may have noted before that The first phase was very much as a result of the merger, making sure that we retain those valuable customers. You can see a little bit But that that we're sort of at the end of that, we're sort of tailing off in terms of adding customers who are around 310 ks and that's sort of Stabilizing a little bit at the same time, we will and we are in process of ramping up our next phase. For that, we need to bring a number of capabilities in place that are different from What we had at our disposal in the first phase, which is basically to address that 1,300,000 households. It was also pointed out at the Capital Markets Day that are, I would say Tele2 customers, but they're mainly single play. And therefore, we need to have a sort of a cross selling approach. For that, a number of things need to be well in place in terms of being able to Approach these customers in a data driven way to make sure that also on the IT side, we they're sitting on the right systems. As you probably know, we're still moving through some IT transformation that we need to have fully in place as an enabler. And There's a couple of other things that we are considering to follow through on. So A bit of a long answer, but we're clearly moving in that direction. You'll see us picking up as we move into 2022 on that Phase 2. I would say at the moment it is putting the right enablers in place and actually honestly also focusing on the Q4 As we've pointed out before, which is a very strong season and that's sort of where we are on FMC. In terms of customer Behavior around Telia and what you sort of pointed out with probably more on the entertainment side. I think what we're seeing there is that the market in general is moving and entertainment is moving behind the paywall. That is a trend that has been going on for a bit of a longer time. Obviously, with the asphalt players coming to market, it is now Picking up speed sort of across the whole market, that sports are moving behind the paywall, basically From old premium now on an asphalt basis by the paywall, I think is also a normal trend. We're also working on our entertainment strategy as we've laid out on the Capital Markets Day. It's a couple of things that we have in the works that will see daylight as we enter the New Year. For now, what we're seeing on Telia and for example, Champions League behind the paywall, there will be customers and also Tele2 customers You know, who sort of are very big fans of Champions League and you know have made a mark. Have we seen customers depart us? Yes, we have seen some. Is it material? No, it is not. And that's how we're trending. So yes, entertainment is changing. We have also very clearly laid out a strategy around entertainment. And on the short term, is it significant for us In respect to the Champions League move, no, it is not. That's great. Thank you. Thanks. Your next question comes from the line of Siyi He from Citi. Thank you very much. It's actually a follow-up on the question I think in your presentation, you talked about you see some positive contributions from Come and Play. And it will be interesting to hear you say what you see and the willingness of paying that particular project product. And maybe just to back on your comments of your work doing on the entertainment side. And I wonder if there is an addition to stabilize your TV base. Because I understand that you're targeting to stabilize the cable TV revenue, assuming that stable Customer base would be a cornerstone for that. But now with Telia potentially taking some customers away on the premium spot, and what Are you planning to offset the decline? Thank you. Sure. And thanks for the questions. I would say what we're seeing on overall, if you look at our entertainment business, We do see that and as you've I think Peter you also talked to that right in terms of the financials. We have the DTT business that is sort of A declining business and that is just, I would say, a legacy that will carry on. So that will put some pressure On the Total Entertainment business line as such, if you look a bit sort of closer into, let's say, the cable And pay TV part, that's where we've seen of course in this quarter a little bit of a, as a jump back From Lowe's from last year that sort of helped us in a bit of a cleanup also on the RGUs. But in addition, we have seen indeed Com and Play Plus sort of first starting to chip in where we've had a 12 month Premium, let's say, and now these customers are rolling off and we see Likely a willingness to pay a little bit above our expectations. So I think that is good. It's still very early days. So we need to see What the stickiness of that will look like going forward, but early signals are good. And in general, we do believe this will help us to stabilize at least the historic trend, Which was declining both on Boxer and on the cable TV base to stabilize certainly that latter bit. And then with the developments we have planned and I don't want to take any sort of forward looking specific Comments here at this stage, but I think we're quite confident with some of the developments we're at the moment, executing on that We can look at I at least look confidently at as we move into 'twenty two on our entertainment business and ability Stabilize that side of the business. That's very clear. Thank you. Your next Question comes from the line of Jacob Bluestone from Credit Suisse. Hi. My question has actually been asked. Thank you. Our next question and it's from Abhilash Mohapatra from Berenberg. Hi, good morning and thanks for taking my question. I've got a question around the B2B mobile app Excuse me, and the chart that you show in the presentation. I was just wondering, excluding roaming and IoT, Is it fair to think that B2B mobile ASPs can sort of stabilize going forward? Or Should we continue to see a sort of year on year declining trend sort of more in line with what we've seen historically? Thanks. Yes. Hello, Abhilesh, and thank you for your question. Of course, I mean, we've seen the mobile app developing better than previously. And this is Basically, due to a couple of things. First of all, the things that I was talking about, the pricing Guidelines and bidding line guidelines and the focus on profitability in the large and public. Secondly, we have a good Momentum in the small segment, yielding good net intake And decreasing churn as well as part of the new portfolio. And also the Move on on that segment, of course, is higher, which improves totally then with this development. I wouldn't like to guide anything on specific KPIs going forward, but we think the strategy that we put in place Will support us going forward also in the mobile revenue that we have and the mobile line that we have. That's great. Thank you. And our final question comes from the line of Ethan Nielsen from ABG. Please ask your question. Yes. Thank you. Yes, I just want to follow-up on the one question earlier Convergence. Just so I understand your comments correctly, what you are saying is we should not anticipate a major push From TILI-two until sometime perhaps well into next year on the converging side. Did I understand that correctly? Thank you. Ethan, thanks for that question. Our view on convergence is that we will we are carrying on with the initiative and the focus and And it's key priority as we speak today. So it's not like we've parked everything and we will sort of switch on the engine again Somewhere in somewhere next year. So if that's been your sort of perception, then that's not the case. I think what we're saying is that There are a number of ways we can enter and continue on FMC. And the way we want to do it is in line with our overall commercial Strategy which is to look for a balanced play of value and volume. So you will not see us press the button On a hard aggressive type price play on FMC, that is not the way we want to do it. And We definitely will sort of continue this and move this forward in a balanced fashion, But not somewhere starting it up in the second half next year, for example. So we're working it. We're working it through Also early into the next year and you will see us taking sort of balanced steps, okay? So it's more like Continuum and building up momentum type trajectory that we're looking for where we can balance Value and volume in the market and bring these customers to us For a sustainable journey with us instead of for a quick buck or a quick deal. Okay. Thank you for that. Sure. We now have a couple of more questions. So our next The question comes from the line of Christopher Kalsgaard from Handelsbanken. Please ask your question. Good morning, guys. So we have seen if we look at the Swedish mobile market, we have seen Hatch bring in a lot of subscribers over the past year. So I would I was a bit interested to understand how big of a threat you believe this is to your business? Or do you actually believe it's good that they are able to bring in customers with current price plans and thereby minimizing the risk We talked about the strategic picture here before Where I've said that there are 2 players that have all the assets that are needed to build the FMC story that Henrik was talking about. And of course, in order the transformation that we are going through now is about taking us to a level where we simplify and we can do this in a much more nimble way than traditional Fortelcos. So in that perspective, the 2 of us Have that opportunity. The 3rd player has some of those elements, but has struggled quite a lot with making that work. And then you have Trier that is a pure play mobile growing their customer base. And I think when you go Into the numbers, you will see it's their 2nd brand that has grown the most. So the first brand is shows limited growth. There is also an element of cannibalization. I think their approach is quite rational. I think it's quite natural that they will have a feed from people who want to be Mobile only. And if they execute well on that, they can have an okay position for that. So the position that we are taking is to develop Tele2 as the converged brand and of course continue the success of Comvick where we have assets that definitely Tele2 Does not have. So I should we should give credit to these guys for executing on a relatively clear strategy. We Are getting traction on our converged story. And as we get out of the transformation program, we'll be in a great spot. Thank you. And your next question comes from the line of Pontus Bart Meister from SEB. Hi, guys. Quick question on the working capital. It was a Slightly larger release in Houston in Q3, but also year to date, it's a better kind of 3 9 months period than the previous years. Would you say this is pure efficiencies and just a better execution? Or is it that we are seeing kind of inventories drawing down Because of bottlenecks, you're basically selling everything you've got and it's hard to replenish supplies for hardware. Can we see a version of this is my big point in the future? Thanks for the question. Peter here. I would say that We have a strong working capital in the quarter and year to date. And the first piece is, of course, that we get the help from external handset financing in the Baltics, Lithuania from last year and last year this year. So that's positive. Then I think if you compare To last year, I think you should recall that in Q3 last year, we had a little bit of swings with a one off effect in working capital negatively SEK100 1,000,000 roughly. So that And heavy Christmas and Black Friday period where we'll sell phones, which will bring it down a bit. So that's how I would look at working capital. Thank you. We have no further questions. I would now like to hand the call back to Joao Jonsson for some final remarks. Thank you very much, and thank you to all of you for your questions. I'm going back to My original statements here, I think we were happy to see that we are delivering a strong quarter. And we see that it's not One area alone that drives it, it is across the board an improved performance. Very happy to see our growth in the Baltics. But of course, in the long run, the mothership is Sweden. So now we're getting back to growth overall in Sweden, which I think is a milestone. We see B2B that used to be a problem 12 months ago, a big problem, is now back in a Stable situation and that gives us quite good hopes for going forward. I also see that the on the CapEx side, we are definitely within our guidance. And for this year, we probably will be Somewhere between the top and the medium range of our CapEx. So we could come in a bit up under the top. So cash flow generation is very, very strong at Tell you, too. So the 3rd quarter is something that's a step on the way. But if you see Quarter by quarter, there is continuous improvement, and I'm very happy to see that. And I think we're going to land this year in a Quite decent way. I'm quite comfortable and confident about that. But again, thank you for joining us today, And I look forward to speaking to you guys later. That does conclude our conference for today. Thank you for participating. You may all disconnect.