Welcome to Telia Company's Q2 2024 results presentation. With that, I will now hand over to Telia Company's Head of Investor Relations, Erik Strandin Pers. Please go ahead. The floor is yours.
Thank you, Laura, and welcome everyone to the call. We will do this in the usual manner, starting with a management presentation by our CEO, Patrik Hofbauer, and our CFO, Eric Hageman. I leave the floor to you, Patrik.
Thank you, Erik, and good morning, and welcome everyone. Let me start with a few overall reflections. The Q2 shows that we continue to trend well and in line with our expectations on service revenue and EBITDA, which is encouraging and shows that we have momentum to build from as we craft our value creation plan for 2025 to 2027. Like in previous quarters, we do better for consumer customers. We have strengthened our TV offerings with new content, including being the first among telecom operators with Amazon Prime. We have launched new mobile offerings in Norway and reduced customer service calls, volumes in Sweden further. As a result, we see positive subscriber development, low mobile churn, increasing ARPU, and higher MP- post from the Euro 2024 tournament, and by the way, congratulations to Spain.
And also saw a strong development in digital revenue, which outpaced a continued drop in linear revenue. So all in all, we continue to perform well and much in line with our own plans. Looking at the financial highlights on the next page, momentum in our telco operation remained, with service revenue growing in line with last quarter at 2.6%, and again, with growth in almost all markets, and growth in both mobile and fixed services. The quarter consumer was again the driving force, with a 2.9% increase, but enterprise also grew 1.3%, an improvement from Q1 when it was neutral. Telco EBITDA grew 4.1%, driven both by higher service revenue and better cost development.
TV and media continued to improve, both on service revenue and EBITDA, resulting in a 2.5% increase of service revenue for the group and a 5.3% increase in EBITDA. Structural OFCF picked up materially and reached SEK 1.7 billion on the back of profitable growth and a 0.4 billion in tailwind from pension refund facing in Sweden. We should probably remember that we also called out after the Q1. So in conclusion, we are on track on service revenue, EBITDA, and structural OFCF, and also on CapEx. So we confirmed the outlook for the full year across all metrics. Leverage was substantially reduced, down to 2.21x from 2.43x at the start of the quarter, due to EBITDA growth, the proceeds from the Danish transaction and operational cash flow generation.
Finally, as you know, we are planning to have a capital market update, the date will be September 26th. I hope to see as many of you as possible here and tell you about the next chapter of Telia and our ambitions for 2025 to 2027. Let's now move into the markets, and like always, we start in Sweden. Overall, Telia Sweden continued to perform well with service revenue growth driven by consumer segment, and particularly by broadband and TV, that together drove an uplift of about SEK 200 million. Enterprise, which had a strong year last year, was flat this quarter, as growth in large customer projects did not fully compensate for the drop in fixed telephony. But we think that the underlying demand for connectivity, security, IoT, and cloud services remains intact.
Excluding the negative impact from legacy of SEK 130 million, service revenue growth remained healthy at 4.3%. As you will see on the next slide, the number of DSL customers is decreasing fast, resulting in a continued gradually fading legacy pressure. EBITDA showed a material improvement in Q2, supported by service revenue growth and a positive SEK 100 million impact from the rephasing of the pension reform from Q1 to Q2, which again, we told you about in the last quarter. Excluding this, EBITDA growth was around 1%, in line with the underlying performance in recent quarters. Moving on to the operational KPIs. Again, Sweden showed growth on mobile postpaid subs, supported by consumer and predominantly by growth for Fellow, and with churn nearly at record low levels.
ARPU continued to be flat, owing to the mix shift towards family SIMs and our Fellow brand, as well as lower sales of device insurances because of the continued drop in equipment sales. Broadband subscriber increased by 7,000, as growth in predominantly fiber, but also fixed wireless access, more than compensated for the decline in copper. New fiber pricing last year continued to support ARPU, and in Q2, we did additional more for more pricing to support ARPU over the coming quarters. Finally, our TV business continued to outpace the competition with subscriber growth of 12,000 and ARPU increase of 19%. To further add to the appeal of our TV service, we included, as mentioned, Amazon Prime to the distribution offering. Now, moving over to Finland.
Finland has saw a neutral service revenue development this quarter as mobile growth of around 3% was offset by lower fixed revenues, driven by continued pressure on legacy revenue, regulatory changes, and a ramp down of our non-profitable e-onboard invoicing business. In the quarter, we also signed an agreement to sell our web hosting business, not a major transaction, but nevertheless important as we continue to simplify operations and focus on our core. Due to the softer service revenue development and only marginal tailwind from energy, EBITDA growth showed to just over 1%. The mobile subscriber base declined 16,000, following a continued focus on value and ARPU rather than volume, something that drove consumer ARPU up at 8%. A very strong level, albeit somewhat lower than the 12% we had in Q1.
Our brand perception and customer satisfaction trends positively, and our churn is low, so we think Finland can do better, and to improve growth, we are selectively adding to our sales capabilities. This is starting to have some small positive effects already, but it will take some time to build up, so we expect the upcoming quarter also to be a bit softer like this one. Moving to Norway, where we service revenue continued to grow, albeit a slower rate, as continued good development in mobile was partly offset by a 3% reduction in fixed and the removal of paper invoicing and mobile bank ID fees. Wholesale growth remains strong, but we are starting to analyze the impact from the Fjordkraft contract, as you know.
EBITDA increased by 3%, supported by the growth in service revenue and positive one-off items this quarter, relating mainly to an adjustment on the pension liability, totaling about SEK 50 million. A similar amount as to what we also had in positive one-off items in Q2 last year. On the KPIs, mobile ARPU remained flat, as pricing effects were offset by somewhat higher share of large customers in the public segment with a lower ARPU. But our new mobile offering and summer campaigns have been well received, and it's encouraging to see that we have turned around the mobile subscriber trend, which has been negative for many quarters. We will continue to invest selectively in growth activities, and we expect that Q3, EBITDA growth will temporarily dip into negative territory against a tough comp, but should pick up again in the coming quarters.
We are also evaluating the needs to step up investments in the fixed network somewhat now that the mobile network modernization has reached a population coverage of 95%. Moving over to Lithuania and Estonia. In both Lithuania and Estonia, we can see that service revenue growth picked up somewhat in the quarter. In Lithuania, that was driven by a 10% growth from mobile, whereas in Estonia, growth was more driven by fixed services, increasing by 2%. And for both countries, the slight sequential improvement to service revenue growth and cost discipline resulted in good operating leverage and EBITDA growth that outpaced the growth in service revenue. But like in the case for Norway, Lithuania also faces tougher comparison in Q3 due to strong energy tailwind and boost from the NATO summit in Q3 last year.
Before I hand over to Eric, I'm happy to see that we continue the improvement in TV and media, where service revenue turned positive, supported by advertising revenue growth of 2% and particularly good performance in digital advertising, growing over 25%. Non-advertising grew 3% on the back of an expanding streaming subscriber base. It is very encouraging to see how well the transition to digital is going at the moment, with digital revenue streams in total more than compensating for the drop in traditional linear revenue. Despite an increased content cost level because of the Euros, EBITDA improved SEK 90 million. This is driven by higher revenue in part, but mainly it's a result of good work on cost over the past year.
As I'm sure you have noted, we have not, not renewed the UEFA Champions League and expect lower content cost from Q4 onwards, as the Q3 is also impacted by the cost for the Euros. Looking at the subscriber base, we an increase of 34,000, driven by non-sport packages and especially our Hboard service in Sweden. And seen over the last year, growth is even more impressive at more than 200,000. The increase of Hboard subscriber were also the reason why ARPU decreased year-over-year, but net impact from the subscriber base expansion is positive and a driver behind TV revenue growth in the quarter. And with that, I hand over to Eric, that will take you through, the Q2 financials.
Thank you, Patrik. Moving then to the next page on service revenue and EBITDA. Like you've already heard, we had broad-based, profitable growth in our telco operations, with service revenue growth continuing at a steady pace, and this quarter, also TV and media contributed positively to our EBITDA growth. EBITDA growth in telco nudged up sequentially to 4.1%, supported by all geographical markets, and was also helped by the pension refund in Sweden, which we told you about last quarter, as well as the start of the TSA with the new owner of Telia Denmark, both items impacting EBITDA by around SEK 100 million each. Following the operational improvements in TV and media, EBITDA growth for the group was 5.3% in Q2. Let's now have a look at the condensed P&L on the next page.
Here, we see that revenue increased by 1.5% as service revenue growth more than offset lower equipment sales. The driver behind the lower equipment sales was predominantly reduced sales of fixed equipment to enterprise customers in Sweden and Finland, that together declined by around SEK 350 million. However, this was largely compensated for by the increased equipment sales in other operations, following our TSA with Noralis, which we informed you about last quarter. The biggest contributor to EBITDA growth was Sweden, growing SEK 130 million, of which SEK 100 million was due to the expected rephasing of pension refund and the service agreement in Denmark. Our EBITDA margin expanded by 130 basis points to 35.1%, supported by continued good cost management.
Net income for the quarter increased by almost SEK 4 billion, driven by a profitable growth and a SEK 3.3 billion capital gain in discontinued operations from the divestment of Telia Denmark. OpEx and CapEx on the next page. OpEx declined by 5% due to mainly resource cost, decreasing by around SEK 260 million in the quarter. In addition, we also saw a reduction in property cost as well as marketing spend, together worth about, we think. Like in the Q1 of the year, service revenue grew while OpEx declined, resulting in OpEx as a percentage of service revenue falling to 31.5% versus 33.9% in Q2 last year, a 240 basis points improvement.
On the right-hand side of this page, you can see that CapEx declined by SEK 100 million year-over-year to SEK 3.5 billion, and is circa SEK 500 million lower than last year in H1, primarily due to improved capital discipline. Like in Q1, the reduction also partly reflects the phasing of our full-year CapEx plan. We expect the investment level to pick up a bit in H2. Consequently, our full-year CapEx outlook remains unchanged at around SEK 14 billion. Let's now look at our cash flow performance in the Q2. Structural cash flow increased SEK 1 billion to SEK 1.7 billion, supported by a SEK 500 million increase in EBITDA, as well as a SEK 400 million positive impact from the pension refund.
Restructuring items, cash CapEx, and taxes all remained rather unchanged, whereas repayment of leasing liabilities and interest both moved by 200 million in the opposite direction compared to last year, so in effect, canceling each other out. Interest payments are seasonally highest in the first and Q3, and we currently expect interest payments of around SEK 1.2 billion in the Q3, but we expect only half as much in Q4. For leasing, the increase was the result from contractual inflation and phasing, whereas the improvement in interest paid was largely due to phasing between Q2 and Q3. Working capital contributed SEK 1.1 billion to the SEK 2.8 billion operational free cash flow, predominantly related to relatively low content payments, lower inventory levels in Sweden, terminal financing in Norway, and some phasing of payables across the group.
Some of these positive contributions are items that we brought forward, originally planned for Q3, which leads me to the next slide. The next slide aims to give you more visibility on our EBITDA and cash flow quarterly phasing for the remainder of the year, as some of you have asked about this in recent months. As Patrick indicated in his comments, we expect temporarily slower EBITDA growth in some markets in the Q3. And as you remember, we have a tough comparison following the 9.3% telco EBITDA growth in Q3 last year. So overall, we expect EBITDA growth in Q3 to be rather flat, but that growth will pick up again in Q4.
So just to help you on the quarters, market expectations for EBITDA seem somewhat optimistic for Q3 to the tune of SEK 200 million, but somewhat low for Q4 by approximately the same amount. We are overall not particularly concerned for the full-year market expectations, which appear to be reasonable. Looking then at the graph, that we expect structural operational free cash flow to continue to nudge up. But as some positive working capital items expected in Q3 were delivered already in Q2, so that we delivered more than SEK 1 billion positive cash flow from working capital this quarter, the working capital contribution for Q3 is expected to be negative by approximately the same amount before contributing significantly again in Q4.
So in totality, like mentioned on the 26th of January, and reiterated at our Q1 results, we see a meaningful positive contribution from working capital for the full year. Like usual, we end the financial section with our net debt and leverage at the end of the quarter. As you can see, our net debt came down in Q2, as the cash flow generation from operations more than covered the quarterly dividend of SEK 2 billion, and the proceeds from Telia Denmark brought net debt further down to SEK 68.4 billion. The reduction in net debt, coupled with continued EBITDA growth, reduced our leverage from 2.43 times in Q1, down to 2.21 times in Q2, and we are therefore now in the lower half of our target range of 2 to 2.5 times.
With that, I'll now hand over back to Patrik for a few words on our guidance and a brief summary of the quarter.
Thank you for that, Eric, and let's now summarize before we go into Q&A. For me, it is encouraging to see that telco growth momentum continued, that TV and media continues to improve. Cash flow met our expectation, and our full year view is unchanged. Capital allocation will continue to be an important area for us, and I'm happy that we have now closed the transaction in Denmark that helped to reduce leverage, and we continue to simplify our business with exits from smaller, non-core assets, as we have done now again in Finland. All in all, we are tracking according to our plan for the year, and as you see on the right, our full year outlook is unchanged across all four metrics. Finally, I hope that after your summer breaks, we will see you at our capital markets the update in September.
Thanks, Patrik and Eric. And operator, we are ready to go to Q&A. I will just say before that, we are aware that there are some sound problems this morning, and we are working to investigate what's that about. But please, don't hesitate to ask us for clarifications if you miss anything. So please then, let's have your questions.
To join the queue to ask a question, please press star five on your telephone. Again, that's star five on your telephone to ask a question. Our first question is from Oscar Rönnkvist at ABG. Your line is open. Please go ahead.
Thank you very much, and thanks for taking my questions. Good morning, all. So, my first question would just be on the cash flow outlook. I think you guided before on a SEK 1 billion interest payment growth year-over-year. I think now if we're looking for SEK 1.2 billion in Q3 and then half of that in Q4, I think it's around SEK 800 million. Just if you could confirm that. Also, I think you said that the interest payments were supposed to be H1 tilted, so it seems like around SEK 500 million increase now year-over-year. So just wanted to have some clarification on that. Then just not sure if you want to guide on this sort of guidance, but SEK 7 billion to SEK 8 billion in structural part of operational free cash flow.
Pretty broad range now with the two quarters left. You retain your CapEx guidance, and I think some other items should be pretty known at the moment. So just wanted to get a sense of if you can get some more clarification on what should drive it to the lower or the higher part at the moment? And also my last question would be on the free cash flow facing. The structure part of free cash flow is usually very soft in Q4, yet you now guide for it to be the highest one in 2024. Obviously, SEK 600 million lower interest payments around, but should be more than offset by lower EBITDA. Thank you.
Yeah, sure. Let's start with the interest payment. So early in the year, we guided for roughly SEK 1 billion more than in 2023, and we still, with confirming the cash flow, we still that is the right number to expect for the year. Could be SEK 100 million, more or less, but where we stand today, we feel comfortable with the billion, SEK 1 billion additional. Slightly more H1 than H2 weighted, but again, from quarter to quarter might be a difference.
We've highlighted this morning that we paid a part of the interest on the first of July, because the additional,the traditional payment was at the end of June, but that fell on a weekend, which is why partly you see a shift from the interest payments from Q2 to Q3. Again, for the full year, that makes no difference. With regards to confirming the guidance of 7 to 8, I think it's fair to say that we see us more towards the lower end of that, I think, which is pretty much where market expectations are. And that is driven by the comments that we've made earlier today on both Norway and Finland, where we're a bit behind of what we originally expected for the year.
We feel positive about what Q4 will look like for those markets compared to Q3. But clearly, we feel that being at the lower end of that range is the better place to be.
Okay. Thank you very much. That was all.
Our next question is from Andreas Joelsson at Carnegie. Your line is open. Please go ahead.
Good morning, everyone. Two questions from my side. The first one is a bit broad, but if you could describe the overall pricing situation that you see now in the various markets and the various products. We come from a period with perhaps unusual high price activity in the industry, and how do you sort of grade your ability to continue to work on price and move ARPU up further? And secondly, of course, a quite strong report, so sorry for focusing on something that maybe wasn't that strong, and that is Sweden mobile service revenue growth, which has been a bit lackluster for some time. So just curious what you can do to turn that trend around, and if you can take some learnings from the good performance in TV and move that to mobile. Thanks.
Yeah, so, let me start to try to answer the first question. We see some softer development this year on the pricing side, but, I think still we believe that there is a opportunity to still do pricing in all our markets, for the coming, years. But of course, it's depends very much on, on, on the whole market, how it's developing. But I think there is an opportunity, and we continue to invest. I mean, if we talk with the big customers, you know, and ask them what, what they expect from us, it's actually better, robust services, more protected, of course. Security is an important part, and that is also needs to be priced for, into the future as well.
We think that there is some opportunity, but we don't have the inflation that we can back it on as we had in the past. So that is number one.
On mobile, mobile Sweden, so overall, if you sort of dissect that market, so positive growth in our B2C on the consumer side. A B2B continues to lag a bit, and a very strong performance in the wholesale market. So all, we're quite happy with the developments we see in mobile, and obviously not as strong as what we're seeing in the fixed side, where you have seen strong KPIs on TV, strong KPIs on broadband, as you saw on the analyst presentation. For an overall good performance for Sweden, both on service revenue and also on EBITDA. Eric, you want to give some more specifics on what we've seen in the mobile across the brands?
Yeah, and I think those are the main points. I think the Swedish team is doing a good job overall in driving growth in the whole market. I think if you compare to other incumbents in their home markets, that we're quite competitive. But it does come more on the fixed line side, partly because we have many converged customers. We've chosen this strategy, partly because the market is characterized by a high demand for low price concept, not only in telecoms, but also across other fast-moving consumer goods at the moment, in many sectors. And we are operating the most premium brand proposition in the market.
So we have to balance these things, and our low-end brand fellow is growing strongly as a result of this consumer pattern at the moment. But yeah, those are some flavors.
And I can just add on the TV service that we're offering at Telia. We have a very strong product, a unique product in the market as well. That's the reason why we see this, both on the subscriber growth and also on the ARPU growth. So, And it's very appreciated from our customers, so that is a unique position we have that we want to continue to develop. So, and it's good also for our broadband services.
Very helpful. Thank you, Patrik and Eric, times two.
Our next question is from Stefan Gustafson at DNB. Your line is open. Please go ahead.
Yes, a couple of questions. First of all, on the TV side, so, if we assume an earlier cost of around SEK 1 billion for Champions League, could you give some sort of indication what will happen with this cost? Well, Viaplay has taken over the asset in Sweden, but you continue to own the asset in Finland. Will the TV subscribers for the sports package still be able to view the Champions League? And, yeah, what's the cost impact from Q4? And then just a clarification. Last quarter, you mentioned SEK 300 million per year in service agreement from Nordics. Looking at the reporting today, it seems like the contribution this quarter was bigger than this, with a year-over-year increase of SEK 130 million.
Just a clarification there.
Okay, thank you. I will take the first one, and Eric, you will take the second question. So let's start with the first one on TV media. Yes, the Champions League will disappear, and we will see a significant lower content cost in from Q4 and onwards. We have an agreement with Viaplay, Viaplay, and we just expect that the content will be included in the sports packages as we have it today. So, that is, that is the agreement that we have and the expectations that we have as well. So, yeah. So we will just see a limited impact, I would guess, from Q3 onwards, because the Champions League will start in September, so yeah.
On Nordics, so we have. So I can confirm, Stefan, that for the full year, we expect from the TSA, roughly SEK 300 million of service revenue and EBITDA, because it's done with the assets that we already have in place. It's also true that in this quarter, it was approximately SEK 100 million. We still feel that SEK 300 million for a full year is the right number. In addition to that, that's the service that we provide, we also help them a bit on-selling equipment. That's also roughly SEK 1 billion in revenue for us, but it comes at a very low margin. So it has two components, the TSA.
Again, this is something that we will have for two years, which potentially an option for a third year. So these are not, and this 300 is not a one-off.
That's perfect. Thank you.
Our next question is from Ondrej Cabejšek at UBS. Your line is open. Please go ahead. Andre, your line is open. Please go ahead. We'll move on to our next question from Erik Lindholm at SEB. Your line is open. Please go ahead.
Yes, good morning, everyone, and thank you for taking my questions. So a couple from me. You mentioned digital advertising as a driver to the return to growth here in, into the media. Can you perhaps quantify how large part of this business is digital advertising, and how much is this growing? And also, if you could quantify the cost impact from the euros here in Q2 and perhaps in Q3 as well. And then also, you mentioned ramping up investments in Norway in the fixed network. I mean, is this... Is it possible to quantify this, and is it also included in your CapEx guidance here, going forward? Thank you. I'll stop there.
Yes, good morning. Let's start with the first one. Well, it's basically an 80/20 split between the revenues. If you look at the traditional linear TV from TV4 and the digital side that is growing. So that is the 20/80 of that one. Then when it comes to your next question, how much we pay for the euros, that is actually nothing that we disclose. So it will impact, of course, the COGS on now in Q3 and Q4, sorry, Q2, Q3, but we, Sorry, we don't disclose the cost. It's according to our agreement that we have with the UEFA.
Yeah, and on Norway, what was the question on Norway?
So, the question was, regarding our comments to make-
Ah, yes.
investments a little bit.
Yeah, no. So, so obviously we're looking at what can we do on fiber to be competitive versus existing coax product. Now, that is something that we can do within the existing circa SEK 14 billion envelope.
All right. Perfect. And just your outlook for the coming years in terms of CapEx. Is it still that CapEx will be sort of roughly stable as a percentage of sales in the coming years?
We, we will talk quite a lot more about capital, capital allocation, capital investments when it comes to, our capital markets day on the twenty-sixth. So we will refrain from making comments on that today.
All right. Perfect. I'll tune into that. Thank you.
In Finland, and you suggested that it could also be quite limited for Q3. So when we think about Q4, you expect the EBITDA growth to pick up, and what are the main drivers? Or do you expect those, those regions to improve again, or you think that the majority of the, the drivers is coming from the content cost savings in the TV area? Thank you.
Sure. Why don't I start with the EBITDA trend? So tough comparison for Q3. So we're clearly guiding for that, for people to to lower their consensus a bit, which was that phasing slide, slide 17, I think it's in the analyst presentation. Why are we confident about Q4? One you've mentioned already, which is content cost, which is largely related to Champions League, of course, right? We all know that that was expensive. Second one is the sequential improvement of Norway, and we're clearly guiding for a negative EBITDA in Q3, and we think we could be better in Q4 than Q3 with all the actions that we're that we're taking.
Thirdly, it's the Baltics, so operations in Estonia and Lithuania, where we see momentum already building now, and that mainly comes from two things: pricing, which starts to come through, where we will realize more of the benefits in Q4 than in Q3, and the other one is the projects that we're doing on B2B in both markets. Mainly it's winning a couple of RFPs that are out there in that market that haven't quite come through in H1, and we expect that to happen by Q4. The last one is the reason why Q3 is tough to beat, because it's a hard comp versus last year. It's an easier comp in Q4. So, those are the four main elements why we feel quite comfortable about Q4 EBITDA.
I guess what we've said in our voice over is, we expect it to be above trend. You know, what does above trend mean? I think you need to think something north of 5, 5%, because 5% is the trend that we have at the moment. To your first question, which is on OpEx. So indeed, if you adjust the 5% OpEx reduction for the pension refund, it's 3.5%, versus 1.5% down in Q1. It is mainly driven by resources, so having fewer people within our organization. And if you look at where that is happening, it is really proportionate across the group.
So partly when we say all of the markets are contributing to profitable growth, if you look at who is contributing to OpEx reduction, it is really across the group. It's not just Sweden, it's not just the Baltics or Norway, Finland. Everyone is pulling their weight, and it's part of the concerted effort that we've been doing for the last couple of, couple of quarters.
Thank you. That's very clear.
Our next question is from Steve Malcolm at Redburn Atlantic. Your line is open. Please go ahead.
Yeah, yeah, thanks very much. I just want to come back to interest costs, if I can, quite boringly. But, Eric, I heard your commentary earlier, but just to be clear, when I look at consensus, I think it has SEK 4.3 for the year. You're guiding to SEK 1.8 in the second half. That's 4, so that's a SEK 300 million tailwind. You're kind of saying you expect free cash flow still to be bottom end of the range. So am I reading that right? And if that is the case, what are the kind of offsets against that improved interest outlook? And as you look into 2025, you must have a pretty good idea where interest is going to land. I think there's kind of expectations of 2 or 3 more rate cuts in Sweden.
Can you give us a sort of a range of, you know, of outcomes, you know, you know, within SEK 200 million, where you think interest costs will land next year? That'd be super helpful. Just a quick one on TV Media. Can you, and I appreciate the comments on sort of not disclosing euro cost, but do we assume it was loss-making in Q2? Maybe just to sort of sense of the underlying ex-euro growth rate any bit darker. It looked pretty good. I guess is that above your expectations when you started, you know, when you looked at this at the beginning of the year? That'd be great to know. Thanks a lot.
You want to do TV Media first?
Yes, I can start with the TV Media. So, if you look at the turnaround in TV Media, it was a good quarter now, and we expect the EBITDA to land around SEK 200 million for the year. And we have said also that we should be reasonable to reach SEK 600 million next year in EBITDA. So these are the predictions that we have at the moment. Then, of course, many things can happen, but this is the plan that we're working towards now internally to reach those targets. And again, we are now at the moment following the plan very well, so I'm happy to see that.
Yeah, then on interest cost, so what did we say at the beginning of the year? Roughly, we are paying SEK 3 billion a year in interest, and we said we're gonna do SEK 1 billion more, so call that SEK 4 billion. I think that's still quite comfortable with that expectation. Could that be, you know, SEK 100 million to 200 million less? Possibly, and that's partly driven. It's less driven by if interest rates come down. It's more driven by the cash flow that my business is generating and, of course, the proceeds from Denmark. So that might lead to, you know, you could be SEK 100 million to 200 million less. What could compensate for it, that it then still brings it in line, because we have confirmed that 7 to 8 guidance, is possibly tax.
We might pay a bit more tax because our profit before tax is just higher, driven by the strong EBITDA growth that we have seen. So if you win maybe SEK 100 million to 200 million of interest, and that could happen by the full year, we might lose SEK 100 million to 200 million on the tax line, and they sort of cancel each other out. With regards to 2025, obviously, we're not giving guidance for 2025, but what I can reiterate is what we said again at the beginning of the year, which is we do think that that interest rate of SEK 4 billion payment is the peak for 2024, and it will be lower in 2025.
Okay. Thanks a lot.
Our next question is from Keval Khiroya at Deutsche Bank. Your line is open. Please go ahead.
Thank you. I've got two questions, please. So firstly, historically, you had talked about scope for rooftop transactions. Do you think those transactions are more likely as rates hopefully go lower? And are you thinking about scope for infra transactions anywhere else? And secondly, if we strip up Fjordcraft, am I right in thinking the Norwegian EBITDA growth is about 1% in Q2? And I just want to understand what you think is really key to getting Norway back to growth, because it's already delivering a margin of 48%. So is there much you can do on the OpEx side, or does it need to be more revenue driven? Thank you.
Shall I take the? So the M&A, so, we have continued to say that with regards to infrastructure, some is relevant, some is less relevant. Obviously, as part of, as you can imagine, our Capital Markets Day, we will give you an update on our views on the portfolio, et cetera. Yes, in sort of an interest rate environment might help. It might help return for who sits on the other side as a buyer. But regardless for it, it's that will be an attractive portfolio. So but expect more on this on the Capital Markets Day. Infrastructure in general, so over and beyond rooftops, we obviously talked about the local exchanges. Again, we look forward to update you that in more details on the 26th of September.
But that's a project that is progressing, progressing well for us. I think we historically, we kind of thought, let's see what the real estate market looks like, and things look quite positive, on that. With regards to Norway, maybe, Patrick, you can comment on service revenue. Let me comment on cost. We can do more as an organization, right? Part of the EBITDA drive that you've seen is driven by cost discipline, and there is more that we can do also in that geographical market.
Yeah, so let's look into a bit of the revenue growth in Norway. I mean, we already comment, you know, on the enterprise sector, that we had slight decrease to change in mix, you know, with a higher portion of public large customers, where the price competition is higher and tougher. But what we are doing is that we have actually identified a set of initiatives within both consumer and I would say also enterprise, largely focused on improving sales and marketing, which we think with the limited investments in sales and marketing and OpEx as well as CapEx, to connect new customers will result in more effective in sales and improve our KPI trends.
We saw some encouraging early first signs of this improvement in Q2, if you remember that with the mobile subscriber trend turning positive again. But it will take some time before we really see the impact of this. So, good trend at the moment, and let's hope now that all the initiative and hard work is actually turning this around and keep that, in which we would be very positive, given what we are coming from. Okay, thank you both.
Our next question is from Adam Fox-Rumley at HSBC. Your line is open. Please go ahead.
Thank you very much. I had my first question on mobile consumer in Finland, please. I mean, Patrik, in your prepared comments, you talk about good ARPU, low churn, good customer satisfaction, but that you want to address the subs growth element with new sales capacity. I suppose what I'm wondering is whether that's designed to kind of turbocharge the growth in that market, or whether I suppose I'm thinking from a broader competition perspective, is there any risk that with those first three elements already being pretty good, that you, that you do you risk kind of heating up that market a little bit?
And then secondly, just on, I wondered if you could just give us a quick update on where you stand with your 5G network deployment across the big markets, just to get an idea of where you are and how much there is to go. Thanks.
Yeah. So I can start with the second one when it comes to the 5G rollout. We are now population coverage of more than 90%, now in our territory, we have come fairly far in our deployment of 5G. When it comes to Finland, well, it is not an easy answer on that one. As you can see from our figures, we have had a negative subs development for many quarters now. But the positive is that we are reducing the negative impact quarter by quarter, last quarters, and we have managed to increase the ARPU, as you also can see in the report.
So I think the trend is actually positive, and we're adding more sales capabilities, which I think we need to invest a bit more in the sales and marketing in Finland to take our fair share of the new sales, which we haven't done in the past, in the last quarters. So I think that will help us, and I don't think we will make any big reactions in the market. We just need to take our fair share, basically, of the new sales. And then the churn levels have been very good, and coming down to very competitive levels.
Even though we saw a bit of a hiccup in the last quarter, and now in Q2, we have some technical issues at the end, so we could basically not save some of the customers that we normally do. That will be normalized from Q3, Q4 onwards again. So I think we are on a good trend, even though negative, but it will take some time. But I think what we see so far in the consumer market in Finland is that the activities that we're now increasing is actually paying off. So let's see how that will develops. Thank you.
Thanks.
Our next question is from Fredrik Lithell at SHB. Your line is open. Please go ahead.
Hi, thank you for taking my questions as well. I just wanted to stay with Finland. I mean, it looks like it's a tough situation for you, and you're doing what you can. But looking at and listening to Telenor and also what Elisa is doing, it feels like you are a little bit behind them. So could you talk a little bit more about where you feel you have an upside in terms of pricing, if you are a little bit lower on them, and you can close that gap in order to improve your trends a little bit more? And also, you're talking about some portfolio rationalizations. Could be interesting to hear what that implies, and also the web hosting, how will that impact the numbers from Q3?
A little bit more on Finland would be interesting. Thank you.
On the web hosting, so it's a relatively small business. Just from memory, it's roughly 4, I think 4, just over 4 million revenue or something like that, with a bit of margin attached to that. But that's not something which is core, which is again part of what we've been talking about for a couple of quarters already, is we want to focus on what our core telco corporations are. This clearly is not core of that business, so it's about 4 million of revenue in Euros, by the way, so call it SEK 40 million. Yeah, tough situation for us, Patrick.
Yeah, I can move on into Finland and to give you some more color. I mean, we've if you look at the whole sector, a main issue now for a moment, I think is on the B2B side, when it comes to mobile, where we have decline in revenues as well. And what we are seeing here, that we need to take a bigger share in the SME market. We are underrepresented in the SME side compared to our competitors, so we need to take our fair share there. And we also. So there are three things. So one is that strengthen our proportion of the share in the SME side. Number two is that we're also strengthening our offering with more security products.
And then thirdly, we also now changed management in the B2B side in Finland, where I think it's very important to get some new energy and new thinking into, to that organization. So these are three important, I would say, activities that we have done in the short term.
But just a follow-up: do you, do you anticipate you will need to sort of invest your way forward in terms of should we expect that, that it will be a pressure on EBITDA from these activities that you feel are necessary in order to reignite sort of your trends and your position?
No, maybe I can comment on it. Like many of the other units in our portfolio, we're very happy with how the EBITDA margin has been trending. Also in Finland, we've seen that where they've gone across the 30% margin. We don't expect that to come at EBITDA margin dilution, so more sales or more marketing investments. There is always some, but we don't expect our EBITDA margin to be impacted by that. If anything, we're working very, very hard on continued cost discipline, also in that geographical market, to actually continue to improve our margin.
So, just to add, I mean, among,
Okay.
Among, if you look at our markets, you know, the MPS, the customer satisfaction is really high now in Finland, has improved quarter by quarter, and the churn is also fairly low, you know? So I think that will also help us to support this, to take more fair share of the new sales, basically. So all in all, I think I'm a bit optimistic. We will add some more sales and marketing, but we will not see an impact on the EBITDA. That's our view on it. Thank you.
Okay. That's very clear. Thank you.
Thank you, Fredrik. Many good questions today. I think we have one more on the line, so let's take that, please.
Our final question is from Usman Gazi at Berenberg. Your line is open. Please go ahead.
Hello. Thank you for the opportunity. So I've got two questions, please. One's a clarification. So, on the TV business, you're saying that, you know, SEK 200 will be the bill this year, and, you know, SEK 600 for 2025, if I read that, if I heard you correctly. I just wanted to inquire about the SEK 600. I mean, because I guess this year, you know, you've had the SEK 400 million for the loans, that is an additional cost that's kind of offsetting the benefit you get from the Champions League exit. But next year you get the full SEK 100 billion in cost benefits. So, you know, and the advertising market seems to be picking up.
So the 200 just going to 600, I mean, I just wanted to ask what the driver there is. Am I, are you expecting a big kind of loss there in subscriptions because of the exit from Champions League, or, or any, any color there would be helpful. Then, the second question was, just on the capital intensity, and this is the clarification bit. So, you know, earlier you, you, I think there was a question asked that are you, are you happy with, with, you know, what you had said in the past, and the revenue, the CapEx represented the revenue going forward, that's how you should be looking at this business, and, and that should be fairly stable.
But then you said today that you don't wanna comment on that further because you've got a capital markets day coming up. You know, obviously, given sensitivity around CapEx and most investors, I just wanted to give you a chance to clarify whether, you know, are you expecting some discontinuity here or, you know, is the previous messaging intact? Thank you.
Where is CapEx going, is the question. We answered it before, but,
Yeah.
Maybe you want to say it in your words.
No, but I can start with the TV media-
Yeah.
You know, and you can take the CapEx later on. But when it comes to the TV media, you know, and the outlook for the EBITDA, I think the current expectations are set, you know, SEK 200 million this year and SEK 600 million for 2025 is all reasonable, you know? So I think let's make sure, first of all, that we deliver on those expectations before start looking for higher numbers. We haves I mean, we have never phased out such a large content right before as the Champions League and need to monitor the impact and effects of that one.
Yeah, and on CapEx, nothing more to add on what I answered to the question before. We are today reiterating the circa SEK 14 billion. We're quite happy with sort of the first half performance where we spent SEK 500 million less compared to last year. Let's see what the second half bring, but we talked about phasing in there, so we expect that to pick up. So we're quite happy to reiterate that guidance that we've been given. And then when it comes to sort of 25 and beyond, we will give you all the details on the 26th of September.
Okay. Thank you.
Thanks, everyone, for this,
This concludes the Q&A, and
Yeah. Thank you. I just wanna say thank you, everyone, for participating in the call, and we wish you a great summer break when it comes.
This concludes today's call. Thank you for your participation. You may now disconnect.