Good morning everyone, welcome to Telia Company's Q2 2020 results presentation. With me in the room, I have our President and CEO, Allison Kirkby, and our CFO, Douglas Lubbe. Allison will start to give her reflections on the quarter. Douglas will continue with a more deep dive of the numbers. Allison will come back with a few final remarks before we go into Q&A. Before we start, as usual, some rules. You know the drill. Stick to one question each. Be disciplined, please. Also you can find the slides on teliacompany.com. Please download them and it will be easier to follow the presentation. By that, Allison, welcome.
Good morning, everyone. If we move to slide two to start off. It clearly has taken some time, but it feels very good to have finally arrived at Telia and to engage with all of you again. With this being my first quarter and me still within my first 100 days, I thought I'd like to start out by talking a little bit about my first impressions of the company so far. Already when I was appointed back in October, and prior to that, I knew the strengths and the untapped potential of Telia, and these to date have all been confirmed. We are the leading operator in the Nordic Baltic region, one of the most digitalized regions in the world that I do believe will come out of the COVID-19 pandemic stronger. Our history, heritage, and role in society is unique.
We have highly motivated employees with top quartile engagement and pride in the company. Despite the fact I've had to get to know them virtually since arriving in early May, I can confirm that they are very motivated. We have excellent mobile networks that are now starting their upgrade to 5G. We're seeing increased penetration of fiber and gigabit speed fixed networks, where we are well-placed in almost all of our markets. We have a unique set of locally relevant and highly engaging TV and media assets. We're seeing increased demand for a more digitalized society, which clearly accelerated during the current pandemic. Our customer base, whether it be an individual, a household, or an enterprise, is demanding a broader and richer range of services from us.
Whether that be cloud-based services, remote mining, mobile-operated underground services, crowd insights are just to name a few. They are clearly much richer and much broader than pure connectivity. All of this tells me that never before have our customers and society been in more need of Telia to enable a more informed and a more connected digital life. Our purpose, therefore, of bringing the world closer could not be more relevant, and our values of dare, care, and simplify, if we really fully leverage them, should be a real differentiator for us. That being said, as I compare Telia to our peers, we clearly have gaps to close, and we have opportunities to materialize to consistently create the value for our customers and also for our shareholders.
These opportunities are in the areas of customer experience, in our speed to market, in how we leverage our network strengths, in how we accelerate convergence, in how we radically simplify by accelerating digitalization, in how we forensically challenge our cost base, and of course, in how we rigorously monitor and improve capital allocation. These are all opportunities that I foresee that will create an even stronger Telia. A stronger Telia that enables our customers and our societies to thrive in a digital world, and a Telia that consistently pays attractive returns to its shareholders. Changes in these areas are clearly necessary, I'm also aware that changes like these will not happen overnight. You should expect us to be already taking measures to realize the change that is required.
To help me realize them, you will have seen that I have seen the need to complement myself and the Telia team by bringing in new capabilities and new talent into the Group Executive Management. Some are internal talent and some are external. They bring a wide range of sector experience from large-scale incumbents to some of the most agile, digitalized challengers in the world. They, like myself and the rest of the Telia team, are super excited and committed to the journey ahead. I very much look forward to introduce you to all of them, when we are allowed to, but definitely when we share our strategy update, which will be before our final report for the year. Now, let us move into our focus for today and our recent quarter results that we posted this morning, moving to slide three.
As I said in the report, our second quarter was better than we expected and has proven our resilience as we proactively address the cost base to offset the service revenue impact from the COVID-19 pandemic. Service revenues did take a hit from lower roaming revenues, lower sports-related pay TV revenues, and lower advertising, amounting to roughly SEK 1 billion in the quarter. All in all, like-for-like revenues were down 5.6%. If you exclude our newly acquired TV and Media unit, our traditional service revenues were down by 2.3%, and if you then exclude the COVID-19 impact on that business, our underlying service revenues were down 0.6%. All of our business units stepped up to the challenge of first supporting our communities, and secondly, successfully mitigating the full revenue impact on the bottom line in the quarter.
As a result, despite around a half a billion in impact, adjusted EBITDA was flat versus the same quarter last year. If you exclude TV and Media, our traditional businesses actually grew by 1.8%, despite the hits from roaming and sports-related TV impacts in our IPTV businesses. Encouragingly, despite a lower contribution from working capital, as well as the first payment for the UEFA Champions League rights that we acquired during the quarter, the operational free cash flow was solid at SEK 2.2 billion. Year to date, we've now generated SEK 5.5 billion in operating free cash flow. As you also know, during the quarter, we signed an agreement to divest our full stake in Turkcell Holding, which upon closing, will improve liquidity by $530 million. Including those proceeds in our quarter-end leverage would take us at June 30th already to a leverage of just around the 2.5 times.
Moving to slide four, as I said, including all the COVID impacts, EBITDA was flat in the quarter on a like-for-like basis. However, just to help you understand the strength and resilience of our telco business, I want to show you a bit more of a breakdown to get to real underlying trends ex-COVID. Here you can see that on an underlying basis, our traditional telco business, excluding the impacts I mentioned earlier, increased by 5%. The main drivers for this growth are an underlying mobile service revenue growth in Sweden and the Baltics, solid performance in broadband, but the main contributor behind this is cost reduction.
The cost reductions in the quarter, Douglas will go back to later, on a very high level, they're driven by lower resource costs, both from acquisition synergies, as well as the synergies and savings we set out to achieve from the new operating model. We have also had lower marketing activities in the quarter, and we're seeing other benefits, including lower travel-related benefits as a result of COVID. If we would include the impact from roaming and pay TV, EBITDA is up by 1.8% as we showed in the earlier slide. Although TV Media is clearly reporting a better Q2 than Q1, EBITDA is still reduced versus Q2 last year. Moving to slide five, clearly COVID had a negative impact across our markets, especially in TV Media, with only Lithuania, Estonia, and Telia Carrier showing positive year-on-year development.
Sweden was basically stable versus last year, despite increased legacy pressure and now the COVID impacts. An OpEx reduction of 2.6% and prior year price increases helped Sweden offset their headwinds. Finland and Norway had strong bottom line development in the quarter as a result of excellent cost management, with a growth of 4% in Finland and an excellent 8% growth in Norway. Clearly, we have work to do in those markets to return service revenue to growth. Lithuania continued its strong performance with positive mobile market share, while Denmark and Estonia were basically stable. Naturally, given the tough situation for TV and Media, EBITDA dropped by 30% in the quarter, less so than in the first quarter, as around 150 million SEK of costs related to sports events that were then phased and postponed into Q3 will move into the second half of the year.
Moving to slide six, I thought from now I would just show you some of the fundamentals underlying the business. If we look at mobile across the group, you're seeing that subscriber revenues were reduced in the quarter, burdened by lower roaming fees. If we adjust for these roaming revenues, underlying mobile revenues were actually up slightly, but just around 0.2%. The sequential decline in growth is mainly related to Norway, where, as you know, we've been losing subscribers in the B2C segment, especially in the Telia brand, while at the same time we continue to perform well on the B2B or Phonero side. Denmark also shows a slightly weaker trend in the quarter versus the first quarter as we continue to simplify our product portfolio in that market.
Our ARPU levels were clearly affected by lower roaming revenues. Encouragingly, our ARPU levels continue to grow if we exclude those roaming effects. The Baltics are continuously performing well, while Denmark is the only exception with a negative development, partly mix related. Sweden is supported by the new mobile portfolio in the consumer segment, more than offsetting a slight reduction in the enterprise segment. Finland continues its long trend of growing ARPU. Clearly, in order to get back to sustainable growth in our mobile businesses, we need to do a better job at some of the areas I highlighted earlier. Whether that be customer experience, commercial execution, and marketing that better explains the quality of our networks and the value of our converged offers are opportunities almost everywhere. The main events in mobile in the quarter were the launches of our 5G networks in both Norway and Sweden.
In Sweden, our network already covers most of Stockholm, with a plan to extend it to 12 cities in the autumn, including Gothenburg and Malmö. We've also launched a 5G network in Oslo, and as you know, we have also 5G services up and running in Finland. 5G will play a key role in our ability to further monetize and digitalize society, we intend to be the most innovative, the most trusted, and the most sustainable in our approach. We already have extensive knowledge of 5G technology, as we've been working with many partners and customers in several pilot projects since June 2018. We look forward to accelerating these pilots into real live commercial opportunities, predominantly initially within the enterprise segment. Worth noting is also that our 5G network will be powered to 100% renewable energy in line with our day-end goals.
Even while we're waiting for 5G, and let's remember, the average person doesn't know what 5G is yet. I'd like to recognize that today we do have the best networks in our key markets. In Sweden, Telia's network was recently voted the best by the public, and in Lithuania, the communications authority recently confirmed that Telia has the fastest network speeds. In addition to our strength of speed and strength of networks in mobile, on the fixed side, we just recently launched Norway's fastest broadband product, delivering 1.25 gigabits per second. This takes me to slide seven and our broadband revenues. Clearly, mobile is more impacted by roaming, but if you look at our fixed broadband business, it's showing a stronger growth, mainly driven by Sweden, thanks to the price adjustments taken in April last year.
The growth is slightly lower than in previous quarters, as there are some lapsing price effects, especially from fiber in Sweden. However, we are seeing good growth in Norway, driven by further customer intake behind the gradual rollout of our higher speed product. This is a great opportunity for us to start to step change our customer experience and step change the quality perception of our broadband network in Norway. ARPU development is somewhat mixed through the footprint but is mainly a consequence of customer mix changes. In Norway, we have been successful in gaining new partners and MDUs where ARPU levels are generally lower, but customers are generally stickier. The same is related to Finland, where MDUs have increased their share of the mix.
In Sweden, it's pleasing to see that 75% of our broadband customers are now on a fiber network, which has helped mitigate the natural declines we're seeing from our legacy copper network. This increased penetration of fiber is a combination of increased penetration in our own footprint, but also an increased market share in open city networks. The important thing to note here is that having an increasing share of customers on a future-proof technology leads to increased loyalty, lower churn, and also creates a stronger foundation for more converged offerings, especially in the open city network, where we perhaps had no prior customer relationships. Looking forward, we've announced further price increases on our Swedish fiber services in the autumn.
Remember, Sweden fiber is just shy of 40% of the total broadband revenues for the group, so it should have a positive impact, although admittedly, the price increase is slightly less than the increase we took last year. Moving to slide eight. I've spoken about the strength of our core networks, I just want to talk about our converged customer base. In the countries where we've established converged offerings, we are seeing good progress. We took another leap forward in Sweden during the quarter with a move towards almost 300,000 customers on our Telia Life product, which is positive news for our customer lifetime value, as the churn of a Telia Life customer is up to two-thirds lower compared to a single product user.
The Baltics have been ahead of Sweden with convergence, but even so, Estonia continues to grow their Telia One customer base, growing 8% in the quarter, and Lithuania also grew its converged share of customers in the quarter. For the other countries, we have yet to properly establish and market true converged offerings. There is only upside here, especially in Norway, now that we have the proper tools through our 5G and our upgraded Get infrastructure, and in Finland through the recently established JV with CapMan, the upgrade to 5G, and content collaboration with the TV and media unit. Let's not forget, convergence is not only growing within the B2C segment. It's equally important in the enterprise segment where we have real strength.
During the quarter, we secured several sizable deals in both Sweden and Finland that include IoT, collaboration and IT services, in addition to our core connectivity services. During and post-COVID-19, we're seeing particular interest from our public service customers to extend their relationship with us and become a full-scale enabler of digitalization for them and be their communication and collaboration partner of choice. Moving to slide nine, this being my first quarter as the CEO of Telia, I thought it might be worthwhile talking a little bit more about how I view the TV and Media unit. Clearly, it was a tough quarter for TV and Media. Let me help you understand how I look at the three different elements of the business that we have and the fundamentals that drive them.
First, we have a predominantly advertising-funded, free-to-air broadcast business in both Sweden and Finland that generates roughly 5% of our group revenue. This business attracts uniquely high reach, particularly in Sweden, and has some of the best local talent in content creation and storytelling that our Swedish and Finnish viewers love. This business was solid pre-COVID. In the quarter, our reach and viewership shares were stable despite our content being no longer available on a large distributor's packages and the fact that in Finland we compare to a period where we broadcast the highly popular world championships in ice hockey. We were also stable. Indeed, viewing of TV4 News, it did become the most popular news channel during the COVID crisis. It spiked by 30% and 200% on digital platforms during Q2 this year compared to Q2 last year.
Outside of this, our digital market shares are outpacing competition and growing dramatically, especially with the younger generation, and are up 12 points from this time last year. Proof that our viewers are increasingly able to access our content whenever and wherever they want it and is touching all aspects and demographics and age groups of the Swedish population. Admittedly, while the ad market is still tough, we are, however, seeing early signs of recovery in Sweden. While we maintain such great reach on both our linear and digital platforms, we are confident that these revenues will return over time.
Secondly, combined with our free-to-air broadcast business, we have an SVOD business in the form of C More, which is fueled with content and talent from the talent and distributors we build relationships with in our free-to-air business, and should become a property that we are able to better bundle with our products and services going forward to drive engagement, loyalty, and added value in our traditional Telia business. This business is more reliant on tent poles in sport and domestic scripted drama. Clearly, the postponed or canceled sports events or filming of drama series took their toll in the quarter. We also saw higher churn from customers that we attracted on a promotional or defensive basis during the conflict with Com Hem in December last year. All in all, it was a tough quarter, and subscribers reduced by 5%.
Going forward, it's important that we get back to subscriber growth and make better use of our Telia sales channel to reach more customers with our great entertainment. Our TV business that is reported outside the TV and Media unit, well, it was showing stable underlying development, but was clearly hit by the impact from COVID in the quarter. As prices are now going back to normal, we should not see that much of a COVID impact for the following quarters, unless there is a second wave and further postponed sports events as a consequence. Similar to the SVOD business, the role of this segment is to drive penetration, loyalty, and customer lifetime value of our access business.
We will ruthlessly monitor the contribution margin of this business going forward relative to the additional revenues being generated in our access business to ensure that combined, we are delivering solid returns on the content investments that we make. With respect to this business, we are actually now seeing some good progress in the premium sports product that we launched in Sweden at the end of May, a campaign that has gained good traction and performing better than we expected as viewers get delighted to get access to live sports again. This should start to contribute, albeit from a low level, to service revenues in the third quarter. Also, I'm pleased to say that we've won some new distribution deals in Norway, which we know will improve the subscriber trend in the coming quarters there.
While our total TV business has been massively hit since the start of the year, if we can sustain reach and viewership on our free-to-air channels, both linear and digital, when advertising revenues return, we will be in good shape. Provided the role of our SVOD and IPTV businesses are primarily to drive access, convergence, and new opportunities for customer engagement, and we are disciplined in the assets we invest in, these businesses should generate a good return on capital going forward. On that note, I'm going to hand over to Douglas.
Thank you, Allison. Good morning, everyone. It's once again my pleasure to present these Q2 results on behalf of Telia Company and the great people that have made them possible. Allison has already given you an overall shape of the group numbers that we have reported and are repeated on slide 11, which we're talking to now. I will take you through some specific insights in respect of some of our key markets. Before I get there, I think very clear in what you've heard from Allison is that COVID-19 has impacted our traditional markets, both in respect of roaming and in respect of TV revenues. Clearly, our TV Media segment has suffered from advertising and subscription revenue decline as a consequence of the pandemic.
As a group, we are naturally pleased about the fact that we've been able to mitigate some of these impacts through strong cost control. A third of which comes from resource costs, a third from marketing as we've decided how to use our marketing more efficiently, and a third that comes from indirect benefits, as an example, lower travel as a consequence of the pandemic. We have, however, also benefited from phasing of content cost, which I will get to later in the presentation. If I now turn your attention to slide 12, where in Sweden, I'd first of all like to remind you that last quarter, we had a strong quarter for the Swedish business in terms of service revenues. This quarter, we have shown a decline of 1.9%.
If one were to exclude the legacy decline and the COVID-19 impact, we would still see a good underlying development. However, that is aided by a one-off that I will get to shortly. Mobile service revenues report a decline of 1.8%, which is, of course, impacted by lower roaming revenues. If we were to exclude the lower roaming revenues, we would reflect growth in this segment. It does include an impact of 80 million SEK, which is a release of deferred revenues during the quarter.
A further item to note is that we do have pressure in terms of mobile service revenue related to regulated termination rates, where we see a decline of around SEK 20 million during the quarter, but these revenues had minimal impact on our EBITDA.During the last four quarters, we've been able to ease the pressure that we see from falling fixed telephony revenues as a consequence of the price increase that we implemented. These increases have, however, lapsed during this quarter, and we therefore expect to see the rate of decline increase in the forthcoming quarters at a rate similar to what we saw pre the price increases. Also, as per previous quarters, we have seen lower fiber installation revenues, with a decline of around SEK 40 million in the quarter versus the prior year.
This is mainly due to the fact that we see less fiber rollout in the SDU segment. Finally, on service revenues, the B2C segment does show a decline of around 0.4%, which is, of course, as a consequence of the roaming and TV revenues. In B2B, we report a decline of around 4%, also impacted by roaming. I'd like to remind you that in Q2 last year, we did have significant IoT revenues, which make the comps tougher during this quarter. Focusing in on EBITDA a little, we did show a decline of 0.9%, and this is despite the negative impacts of COVID, where we have, as mentioned, been able to mitigate it through cost efficiencies. These are both underlying cost efficiencies as well as incremental activities that we put in place due to COVID, and then the indirect savings like travel, as I mentioned before.
EBITDA is also, of course, naturally impacted by the one-off that I mentioned earlier, which flows through fully to the EBITDA margin. We also saw growth in the subscriber base after two successive quarters of decline. The subscriber growth is, however, attributed into machine subscriptions, whilst the postpaid base was stable, and we mainly lost 21,000 prepaid customers. If you look at TV, you do see a big increase in the subscriber base. Around 40,000 of this is due to us being able to refine the way that we measure our MDU customers, and we have now reported these incremental customers. This is not an underlying increase. It is just a correction. ARPU is down by 11%. 1% of this is impacted by these incremental customers, and the remainder is impacted due to the sports.
On the broadband side, as Allison mentioned, we see good momentum in the segment, and we show strong growth in both the subscriber base as well as in the ARPU development off the back of some of our price increases. If I turn to slide 13 and address Finland, we did close the quarter with a 4.1% decline in service revenues. TV revenues were specifically impacted due to the fact that the ice hockey league, Liiga, was canceled, and this would have been the playoff season, which is naturally when we see much more interest in the league with an increased viewership, and unfortunately, this did not happen. I remind you that we did take the impairment for that cost in Q1, and that was to the tune of SEK 40 million.
We still see a decline in the fixed telephony revenues, which we have seen since Q2 last year. This is as a consequence of the dismantling of the fixed telephony network. This will continue to cause a drag, the impact is diminishing as we go on. You will see that the EBITDA trend has improved. As mentioned, Q1 was negatively impacted by the impairment for Liiga. If it were not for that, the trend would have been more positive. In this quarter, we report a 4.3% growth on the back of cost efficiencies, which compensated for the revenue declines. If we turn to the right-hand side, despite the pressure on roaming, mobile ARPUs were flat and the subscriber base grew by about 2,000 customers, mainly due to M2M customers.
Excluding M2M, our mobile subscriber was broadly flat, just with a shift between prepaid and postpaid segments. In respect of TV, I've already mentioned the impact of Liiga that it had. Norway, slide 14. We continue to see revenue decline, this quarter is further burdened by the impacts from COVID. Mobile subscription revenues ended down by 4.4% versus the prior year, is of course pressured by roaming. You will also note that in the B2B segment, we did add 40,000 customers, which is great, as we've signed significant large core contracts over the period. EBITDA, as mentioned, increases by 8.4% off the back of synergy realization and cost mitigations. Remember that Q1 was negative because of a tougher comparable versus the prior year where we sold impaired receivables to the tune of around SEK 100 million.
Mobile subscriber base fell by 8,000, and this is clearly the area that we need to address going forward. We turn to Lithuania. I will be brief on these markets. Lithuania shows really good momentum with a 7.2% service revenue growth, both from fixed and mobile, especially in the TV segment and the fixed, where we're seeing healthy development in those metrics. If we go to slide 16, Estonia impacted by COVID, where we see roaming has been impacted quite severely, and that has brought the rate of service revenue development down from the previous 5%-6% that we've seen historically to 2.1%. Unfortunately, they have not been able to mitigate those impacts and show a 1.3% decline in EBITDA. If we go to slide 17, Denmark continues to be challenged, and we see a service revenue decline of 7.4%.
Management has yet again done a great job in mitigating those impacts through strong cost control. If we go to slide 18 and focus on TV Media, we have mentioned the impacts that we see clearly a drag on the advertising revenues, but also on the subscription revenues when it comes to premium sports. Fortunately, those prices are back to normal in Q3 as the sports leagues have come back online, which all sports fans are really thankful for. EBITDA in this quarter did reduce, but it is also of importance to note that we record our revenues and our costs as and when we incur them. With no premium sports or sports seasons being shown during Q2, we also haven't reflected the costs associated to the revenues that we've not had.
We now know that we will defer costs for leagues that have resumed, that were not canceled into the second half of the year. This will be around SEK 150 million in the second half, of which the majority will come in Q3, leading us to believe that Q3 will be a negative quarter from an EBITDA perspective for the TV Media unit. We also now have a much clearer view than what we did in Q1 in respect of canceled events. We now know that we have around SEK 200 million of costs that will not be incurred during this year because those events have been canceled. This mainly relates to ice hockey rights. Therefore, we expect the full year EBITDA to land within a range of SEK 300 million-SEK 500 million, which is a slight update from what we reported previously.
If I go to slide 19, stable cash flow development, slightly lower than the last year. I think the most important thing to highlight here is that we do see a drag in the contribution from working capital, where last year we were able to sell some receivables that contributed quite significantly in the second quarter. For the rest, that is pretty stable. Obviously, we see the incremental EBITDA generation from the TV Media unit that was not part of the group last year. If I turn to net debt and leverage, quite stable quarter-over-quarter, despite the fact that we have paid the dividend and we have also made the final payments in terms of the Bonnier Broadcasting acquisition.
We do reiterate that our target is to be investment grade when it comes to leverage, and therefore our Turkcell proceeds are earmarked to lead us to this path, and that will mean that we hold firm on the A- to BBB+ rating. With that, I'll hand back to Allison for her to make her summary.
Thank you, Douglas. First, the outlook for the rest of the year. Our operational free cash flow is reiterated, and as we've both confirmed, we're already now at SEK 5.5 billion year to date. We've also reinstalled an adjusted EBITDA outlook and expect the second half of the year to generate a similar amount to what we have reported in the first half. This is based on unchanged currency levels and also provided that we don't see a second wave of COVID-19 that implies we go back to lockdowns that we saw earlier in the year. At this time, the board of directors have also concluded that it's too early to decide on a potential additional dividend during the autumn, and we, therefore, maintain the previously communicated dividend of SEK 1.80 per share.
We maintain committed to our investment-grade credit rating and are pleased that including the Turkish proceeds, our leverage is already close to two and a half times. When it comes to the COVID impact for the remainder of the year, we expect a similar impact from roaming as we saw in the second quarter, as we do not expect travel to increase from the second quarter level. On pay TV related to resumed sport, while we do see some improvement in service revenues, the phasing of content costs that Douglas mentioned implies that our content costs will be higher in the second half versus the first half. Of course, there remains uncertainty in advertising due to the economic impacts. All in all, we assume a COVID-19 impact on EBITDA in the second half of around SEK 1 billion at this time.
Moving to slide 23, just to summarize, it's really great to have finally arrived here. I'm pleased that after a tough start to the year, the Telia team have delivered better than we expected to in the second quarter. I'm particularly pleased with the resilience of our telco businesses and how the whole team in telco and TV Media have stepped up to mitigate the impacts from COVID with strong cost control. While mitigating the impacts on our business, I'm also hugely proud of how we have supported our societies throughout the pandemic, keeping them connected, informed, educated, and of course, entertained. As a result, I do believe the pandemic will be a catalyst for further digitalization, and we're well equipped to take advantage of the new opportunities that will arise.
That being said, I'm acutely aware that we need to close the gaps we have relative to customer expectations and our peers when it comes to shareholder returns. Our short-term priorities are to enhance and improve our performance with respect to customer experience, with respect to connectivity and how we leverage 5G and gigabit speed broadband strengths, with respect to convergence, both with our media assets in consumer and ICT and security assets in enterprise. With respect to our cost base, we are now ruthlessly scrutinizing what we do and how we operate to identify how to close the gaps versus best-in-class peers. Capital allocation, as I said, we will establish a more rigorous approach to capital allocation going forward.
Once the new team are in place, as I said, I look forward to introducing them to all of you as we share a comprehensive view of our strategy and plans for the coming years before our final new report. I hope you get the sense that my aim is to restore Telia to a thought leader that outperforms the industry by delivering superior customer experiences, superior business results, and superior shareholder returns. On that note, I would like to end the call. Sorry, not end the call. Open for questions.
Yes. I think.
I apologize as we've been talking for a bit too long this morning.
Thank you both. Operator, can we start the Q&A session, please?
Thank you. All participants, if you would like to ask a question, please press star and one on your telephone keypad. If you would like to cancel it, you can press the hash key. That's star and one. Your first question comes from Paul Sidney from Credit Suisse. Please go ahead.
Hi. Thank you very much, and good morning, everyone. My question was on cost-cutting. I know you've talked a bit about it, cost-cutting has clearly been a theme of the results we've seen so far this week for the Nordic telcos. You've executed extremely well in Q2 in mitigating the COVID effects. My question is, just how much of this is just lower costs, just driven by lower commercial activity that would have happened anyway? How much is actually driven by your proactive actions? Just interested in the level and nature of the proactive measures you've taken, because obviously that could have some pretty interesting implications for yourselves and the sector.
Thanks, Paul. As we said, we reduced OpEx by around 4% in the quarter. About a third of that is structural, through both synergies from the integrations of the Get acquisition and the structural interventions that we aim to achieve as a result of the new operating model that we launched early last year. The next third is marketing, where some of that will be phasing or some of that will be lost. The final third is a mix of things, some of it indirectly related to COVID in that we've got less travel going on. I'd say, a third definitely structural. Some of those other elements, whilst there is no travel, will continue. For the rest, we will invest behind marketing where we see we can get good traction to our propositions when we market.
That's very helpful. Thank you.
Thank you, Paul. May we have the next question?
This question comes from Ulrich Rathe from Jefferies. Please go ahead.
Thanks very much. The TV and Media business, you acquired it. It's not your setup, right? It's an acquired setup. Based on what you've seen now, how sensitive this business is to macro shocks, admittedly now a very hard one, but still, it is a fairly exposed business model. Would you draw already further conclusions on how this business model needs to change within Telia Company compared to how it is operating at the moment? Thank you.
Well, clearly, all of these TV Media assets need to evolve and not be as sensitive to shocks going forward. That was the ambition of the Bonnier team and clearly ambition of the Telia team that acquired it. This business going forward is an enabler for us to improve the experience, the engagement, and drive the access side of our business. Increasingly, this business will move digitally. We have great reach with our free-to-air business today to build direct relationships with customers, and those relationships can only help us build a stronger, more loyal, and more entertained consumer base going forward. We're also seeing opportunities with 5G and new technologies that will allow us to give our customers unique experiences that perhaps others can't.
It's there to serve a purpose to sell more access products and to make our customers more loyal to us so that we can drive customer lifetime value. Clearly, it's in a tough situation at the moment, but we still aim for the same ambitions that we always had on it earlier.
Thank you.
Thank you, Ulrich. May we have the next question, please?
This question comes from Nick Lyall from Societe Generale. Please go ahead.
Yeah. Morning, everybody. It was a quick question, Allison, on Norway, please, if that's okay. The cost cuts seem very big for the quarter. I know obviously you've got synergies coming through, you've got COVID cuts and other items. Could you just help us on what makes up that big cut in underlying costs? If it's lumpy or if you expect more synergies to be coming through in the year or just a bit on timing, please, because it was a heck of a move in the numbers. Thank you.
Yeah, it was a great quarter in Norway, from a cost point of view, but there's still bit some work to do on the top line, Nick. About two-thirds of the uptick was synergies coming through. Douglas can confirm when we start to annualize them. A third were other elements, like just smart cutting of costs during the quarter, whether that be a bit of marketing or a bit of less travel. There is also quite a change in mix going on in that business at the moment as well. Douglas, you want to comment on what it might look like in the out quarter?
We still expect to realize some synergy benefits. What we've reported to you previously is that we have strong momentum, and we expect to fulfill the synergies that we announced when we announced the deal. Where we have struggled is on the revenue synergies, and those are clearly now much more in focus. You've heard from Allison about how we want to drive the convergence agenda and how we want to drive the broadband speeds, and those are being worked on. Cost is on track to hit what we targeted when we announced the deal.
Clearly, our new Group CFO needs to deliver on them going forward as well.
That's great. Thank you.
Thank you, Nick. Next question, please.
Your next question comes from Lena Rastberg, from Carnegie. Please go ahead.
Yes. Hello. I was going to ask you a little bit on Sweden. Your cost control was very strong, as you pointed out in Finland and Norway. What's going on in Sweden? I know you have this new CRM system, the Telia Mass Market, being implemented. Could you maybe say something about how many customers have migrated, how you're tracking on that? As I understood it, you expected quite big savings from that coming online. Thank you.
Thanks, Lena. Well, OpEx was down 2.6% in Sweden in the quarter. You’re right, this Mass Market transition is still going on. We’ve now migrated around 80% of our customers, and the additional 20% will come in the coming quarters, which does give us further opportunity to have a single view of those customers and get them onto the new pricing propositions as well. The savings are not coming through there yet, Lena. The program has taken way longer than was expected. We’re still settling down the new system, which means we’re carrying some extra consultants at this point in time. Some of the services are not yet at the speed we would like them to be either. Still in transition. It gives us a platform for opportunity going forward.
Certainly Anders and the team have quite an ambitious cost program going forward. 2.6% was good for Sweden in the quarter, but they need to keep delivering levels like that.
Thank you.
Thank you, Lena. May we have the next question, please?
This question comes from Roman Arbuzov from J.P. Morgan.
Thank you very much for taking the question. Hi, Allison. My question relates to the EBITDA outlook for the full year. The question is, can you please provide your thoughts on whether you think it may be conservative given that some of the cost cutting is clearly highlighted, some of these are structural in nature? You also sounded relatively positive on the TV outlook potentially improving in the second half of the year. Also the COVID-19 impact arguably could be somewhat lesser in the second half of the year as travel improves. What do you think about that? Also within that answer, if you could please comment on your previous TV EBITDA guidance of SEK 250 million-SEK 500 million. Do you think it's still an appropriate number, between SEK 0-SEK 500 million?
Do you think that's still an appropriate range for the TV business? Thank you.
Hi, Roman. Why on earth would I say my guidance was conservative when I've just announced it? Listen, we are still in the midst of the COVID impact. We don't yet know how economies are going to bounce back and how quickly. As we also mentioned, we've got a phasing of content costs, around SEK 150 million moves into the second half. It's highly likely that the TV Media unit will be in negative territory in the third quarter. Whilst advertising is starting to return, it's July, and it's not a great time to be able to say the rest of the year is secure. Certainly we need another quarter under our belt. It's right for us to maintain this guidance at this point in time whilst we see how the world develops.
In terms of the TV Media unit guidance, you might have missed what Douglas said on the call there. We're now saying that the range for the year is narrowed to SEK 300-SEK 500. We delivered SEK 300 in the quarter, but recognizing that content phasing going into the second half, then that's why we're talking about SEK 300-SEK 500 for the full year. If you think about it, Roman.
Yes.
We've only had roaming impacts since March. We've now got a full six months of roaming to consider. Certainly everyone's staying at home this summer. Roaming will likely be the same as we saw in the second quarter for the rest of the year. I've explained the content piece as well.
Very good.
Thank you very much, Allison.
Thank you, Roman.
Thanks a lot, Roman. We noticed that you sneaked in two questions, but I guess they were related, so you get away with it. Next question, please.
This question comes from Andrew Lee from Goldman Sachs.
Yeah. Good morning, Allison. I had a question on your view on the structural growth outlook of the Swedish market more broadly, and specifically on Swedish pricing inflation. I know that you've announced a price rise in Swedish fiber in October and also your emphasis today on quality superiority. Should we expect the inflationary trends in Swedish prices to be continued, either by yourselves or more broadly across the market? Just any kind of views or color you can give on what you see as the outlook for the market would be great.
Yeah.
Thank you.
Well, clearly, I've been away from Sweden for a bit, and despite having some of the best networks in the world, I've been disappointed at what's happened to Swedish pricing while I've been away. I think as we upgrade to 5G, as we roll out more fiber, upgrade our DOCSIS 3.1 networks, I'd love to see us to be able to monetize all our great networks to our customers, that our customers are increasingly reliant on. Rest assured, I will be aiming to drive the more for more strategy that already existed here, to really be trying to encourage more convergence and more value-added services. We have products in the full range of the tiers. We go from Fello to Halebop to Telia, so we can capture all aspects of the market with the brands that we have.
I fundamentally believe with the great networks we have and the great services we have, I'd love to see us being able to monetize the investments that went behind them.
Thank you.
Thank you, Andrew. We have a couple of more questions in the queue. Let's take them one by one. Next, please, operator.
This is from Maurice Patrick from Barclays. Please go ahead.
Yeah, morning, guys. Morning, Allison.
Morning.
Yeah, I'm tempted to ask about quarterly phasing of guidance, but I'll go for a big picture question instead. You talked in your opening comments about efficiency and cost opportunities, which I'm sure you'll have had a chance to look at in your first 100 days you referenced. I'm just curious as to where you see the biggest opportunities. I'm sure you won't tell us today how big they are. You referenced this idea of a strategy update before the final year report. Should the expectation be that you're talking a lot more detail about the quantum of these cost savings at that point?
Well, thanks for not asking the quarterly phasing question, first of all, Maurice. We have a view on where the opportunities are versus our peers. Clearly it requires quite some structural changes to really release them. That's why I'm bringing in someone like Rainer Deutschmann who has been heavily involved in some of the most agile digitalized challenges in the world to really help us look at how do we once and for all really transform how we do things, and how we serve our customers in the most digitalized way. I would hope to come with some more color on what we're planning to do, certainly by the end of the year.
Yeah. Thank you. Just as a quick follow-up, sorry. Just related to that, you talked about growing free cash flow, which I guess is related to that. Should we see the nine and a half to 10 and a half as a floor for cash flow, given your comments around growing it?
I'm still within my first 100 days, Maurice. I'm still digesting what the plans look like for next year, no comment on future years or future guidance beyond what we've given today. Thanks for trying.
I had to try.
Of course.
Absolutely, Maurice. Thanks for trying. Try again next time. Next question, please.
This question comes from Keval Khiroya from Deutsche Bank. Please go ahead.
Thank you. Just got a question on Sweden. Obviously, in Denmark, you've seen the presence of a market which historically had been affected by the low-end brands. Just going back to the Swedish competitive environment, do you see any risks of what seems to be more of these low-end brands having crept up, at least in terms of noise in the market? How do you successfully segment them in the future? Thank you.
Yeah. As I mentioned there, Keval, I'm disappointed at how the market has actually changed while I've been away. I think the role of us with the more premium brands in the market who are investing heavily behind 5G now and new services is to try and ensure that we can monetize the extra benefits that will come from those services over time. I am very aware that there are some low-end brands. We have one ourselves now with Fello. At the end of the day, that's where I see that we need to put much more effort on customer experience.
That's where I believe we have an opportunity to do a really better job of not disappointing our customers on the core experience that they have with us, whether that be quality of network or ability to access our call centers or ability to offer flexible services for their families and give them the value-added services they need. We need to step up the mark on all of our brands and use the investments in 5G to monetize them for the sake of our shareholders as well.
That's clear. Thank you.
Thank you, Keval. Next question, please.
This question comes from Stefan Gauffin from DNB. Please go ahead.
Yes, hello. Just to help us understand a little based on the COVID-19 impact, can you help us splitting up the impacts from this on both sales and EBITDA, in terms of roaming, sports, advertising, and other? I guess roaming is around SEK 300 million on sales and I guess around SEK 200 million on EBITDA. Would be very helpful to get impact from sports and advertising.
Basically, in the half a billion EBITDA impact in the quarter, half of that was roaming and the rest was the TV sports and advertising impact. It's our preference not to break out advertising in particular because that's commercially sensitive, Stefan.
Yeah.
If you assume about SEK 250 was roaming in the quarter.
Also remember the content phasing. If we hadn't have phased the content until the second half, that would have looked significantly worse during this quarter. That is something that you should bear in mind as well.
Yes. Okay. Thank you.
Whilst we might see improving premium sports TV revenues in the second half, we get that hit from the SEK 150 million content that goes into the second half.
Yes. The sports are now up and running. I guess unless we get a second wave, that revenue will come back. I just think it is a bit too conservative to say that you should have a similar impact coming quarters, especially from the revenue side.
Yeah. Remember, advertising revenues only really started to hit us in mid-March. You've got a full six months of advertising. While we're hoping it will recover, we're not expecting it will fully recover in the year. We've got the phasing of the content costs. The third quarter is always the biggest roaming quarter as well.
You sometimes get quite a bit of Far East roaming in the fourth quarter that at this point in time, we're not predicting.
Perfect. If I can add to that, remember that we've now got the last legacy price increases in Sweden that we will now see the decline similar to what we had pre the price increases. Secondly, with the premium sports, you're right. It does come back in the third quarter, but it's not an instantaneous comeback because we have different billing cycles. OTT services, it's when the customer has a credit card charge, and that means that it will gradually come back during the third quarter.
Okay. Thank you. That was helpful.
Thank you, Stefan. We still have a couple of more questions, so we will go on for a few more minutes. Operator, please, next question.
This question comes from Fredrik Lithell from Danske Bank. Please go ahead.
Thank you very much. Hello, everybody. Hope you're all right in this pandemic situation. I thought I'd bake three questions into one in order not to aggravate Andreas too much. Maybe Allison, if you could elaborate a little bit more on business-to-business market. Some of your competitors have talked about the tough environment in Sweden specifically, but maybe if you could elaborate on Finland, Sweden, and Norway, how the business-to-business situation is for you. Thank you.
Thank you, Fredrik. Yes, we are all well. Thank you for asking. B2B, what we're seeing is clearly a more value-focused SME segment. We are seeing a slightly stronger public sector, but a more cautious key account business. That's what we are seeing. I think I mentioned in my script, we're particularly seeing real interest for a broader set of services from the public sector going forward. We should be cautious on our B2B segment. That's one of the reasons for the guidance that we've given for the second half of the year.
Okay. Thank you.
Thank you, Fredrik. Next question, please.
This question comes from Jörgen Wetterberg from Nordea. Please go ahead.
Yes. Hi, guys. A question for you, Allison. When it comes to your 5G investments in Sweden, Norway, and Finland, how are you thinking about the longer-term business case here, how it splits up between the different use cases, enhanced mobile broadband, fixed wireless access, and the enterprise opportunity here?
Well, it very much varies by market. First and foremost, we need 5G for more capacity. Our networks are increasingly under more and more demand as everybody increasingly works digitally. First and foremost, it's a capacity investment, and it's much more efficient than 4G. Secondly, it definitely is an opportunity for us to offer higher speeds via fixed wireless in areas where it does not make economic sense to upgrade from copper to fiber. Certainly, we have been working for a number of years now on pilots that give us an edge on some of the industrial use cases of 5G, whether that be remote mining, autonomous vehicles. I'm very excited about the deal we just struck with the Oslo Metro to operate their underground services. Even though that's on 4G, it will be even better operated in 5G.
The way I look at 5G, it's not an option not to invest in it because we need it to upgrade our 4G networks. As it becomes more mass market and we have more devices in the consumer segment, I would expect there'll be some good opportunity for us to monetize unique, engaging experiences that we can particularly offer with perhaps content and gaming. That's further away.
Okay, maybe just a quick follow-up. Is there any reason why you haven't adopted speed-based pricing ahead of the 5G launches in Norway or Sweden, or would you reevaluate that?
We have followed the market leader in Norway. Sweden, we haven't got the full spectrum to properly launch 5G yet, and the handsets are not fully available. I think, we need to wait until we have the full spectrum in Sweden and the full range of handsets before you see proper 5G pricing propositions in the market.
Good. Thank you.
Thank you, Jörgen. We have to cut you there. A few more questions, perhaps.
Your next question comes in.
Two more questions, operator.
Okay. Your next question comes from Johanna Ahlqvist from SEB. Please go ahead.
Yes, thank you very much. Yes, one question related to the fact that you now sort of enter the sports content space, acquiring the Champions League rights. I'm just wondering how you look upon the business case here. I know that the rights are expensive. We don't know the exact pricing, but how you expect to monetize on this and get this investment back. How much is basically gaining C More subscribers, and how much is sort of a bundling effect from perhaps gaining more broadband subscribers? That is the first question, and I have a follow-up on that because I think you have some experience from the British market where you're in the board of British Telecom.
Obviously, British Telecom tried entering the sports content, they sort of later changed their view, and I think they're now teaming up with Sky on the matter, if I'm not misunderstanding it. I'm just wondering, do you see any specifics in Sweden that makes this business case stronger for Telia than, for instance, for BT in U.K.? Any elaboration on that business case would be fantastic.
Wow, that was a long question, Johanna. Very nice to be back. Let me try and answer it quickly. Listen, the Champions League is the world's best football tournament, as we believe in convergence. We come from behind in terms of the content aspect of convergence. We're the challenger there. We see having the right local scripted drama and sport as being key assets to drive an improved experience and new engagement opportunities that allow us to be bundled with our access business to drive our access business on the back of it. It's 2021 before we are able to exploit those rights, so I'm not going to get into how we're going to bundle them and how much will be C More or IPTV. Watch this space for the future.
I wouldn't underestimate how content can be combined with 5G in the future for us to create unique experiences for our audiences and actually try to monetize aspects of 5G going forward as well. In terms of my experience with British Telecom, I think what BT Sport did for BT was it actually transformed the image of BT and helped to get customers to start to think that BT was no longer this dusty incumbent. It really has changed the perception of the brand. What they've cleverly done now is they've found ways of partnering with others. They are very disciplined in how much money they're prepared to put into sport, but it's clearly there to drive the BT Halo product and to drive convergence, NPS, customer loyalty of the BT brand.
I think they have learned along the way how to make it an attractive asset to drive the overall BT business, but by minimizing the bottom-line impact. I'm very excited about some of the stuff that they are planning with both some of their handset manufacturers and propositions in the coming months.
Thank you. Sorry for the long questions.
That's okay.
Let's see if you can.
Nice to hear from you again, Joanna.
You too.
A final question, please. A final question, operator, please.
The final question comes from Abhilash Mahtra from Berenberg. Please go ahead.
Yes, good morning, and thanks for taking the question. I've just got one on Finland and Norway, please, where in your remarks you talk about sort of setting up Telia as a credible alternative to the market leader. I'm just wondering how we should interpret those comments. Should we think of Telia as maybe getting a bit more aggressive in these markets and pushing the subscriber growth? Is it a question of maybe focusing on revenue trends? I know you've talked about being the national market leader in Sweden as you try and monetize your investments in 5G and fiber. Would you have a similar approach in Finland maybe as well, and Norway? Thanks.
Yeah, we've not properly exploited convergence in those markets yet. We've only recently upgraded to 5G in both but not fully exploited it. We've only recently upgraded the broadband network. A credible alternative to the market leader means that we need to learn to move faster, be more creative, and offer value-for-money propositions, but that still give us a good return on investment. Both countries have to do a lot more work on their cost structure as well so that we can be the value-for-money alternative to the incumbent. I would see a lot more work on simplification and digitalization of the customer experience in those markets as well.
Great. Thank you.
Thank you, Abhilash. Unfortunately, that has to conclude our conference call for today. We will take note of the ones that are still on the queue and reach out to you. By that, we wish you all a very nice summer, and let's talk again during the autumn. Thanks a lot. Thank you.
Thank you.
Thank you. That does conclude our call. Thank you all for joining. You may now disconnect.