Good day everyone, and welcome to today's Telia Company's Q2 results call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one keys on your touch-tone phone. Please note that I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Mr. Erik Strandin Pers. Sir, please begin.
Thank you. Hello, and welcome everyone to the call. We will do a presentation followed by the Q&A as usual. We have with us our President and CEO, Allison Kirkby, our CFO, Per Christian Mørland, and my IR colleague, Anders Nilsson. Allison, please go ahead.
Good morning, everyone, and welcome to our Q2 report live from sunny Solna this morning. Much more pleasant place to be than London yesterday. I do feel for all of you. I hope it's a bit fresher in London today. Anyway, back to our quarter. I'm happy to say that the trends we started the year with have continued into Q2, with strong financial performance underpinned by strong operational and transformation progress. Growth momentum continued, with service revenues growing a solid 2.4%, supported by all units, and Finland again relatively stable. Like last quarter, the growth was broad-based, with mobile growing in all markets, and we also had growth in fixed services in all markets except for Finland. Efficiencies are continuing to come through as we transform Telia, and in the quarter, we managed to reduce OpEx by 1.6%.
Excluding a SEK 100 million hit from higher energy costs, OpEx was down 3.2%. Core Telco was again strong, with 2.4% service revenue growth flowing through to 4.3% EBITDA growth, pretty much in line with what we saw in Q1. This growth, as expected, was more than offset the cost of content investments in TV & Media, with group EBITDA growing 0.8% this quarter. Operational free cash flow at SEK 1.1 billion is lower than in the same period last year, driven almost all by working capital phasing. However, the structural part of our cash flow is fairly unchanged compared to last year, Q2 at SEK 1.5 billion. Our balance sheet has also strengthened further.
Now it's a leverage of 2.01x, and this is a material reduction compared to Q2 last year as a result of our strategy to crystallize infrastructure asset value. As you know, we closed the Swedish tower transaction this quarter, the net proceeds of which more than offset this year's first dividend tranche of SEK 4.1 billion, which we made in April. In June, we started our buyback program, buying back shares for around SEK 400 million in the month. In total, we'll be buying back shares worth SEK 5.4 billion between June and February next year at the latest. Moving to strategy progress in the quarter. As mentioned, all our markets are delivering growth in mobile, largely driven by ARPU growth from a customer value enhancing focus, higher pricing, and roaming.
I'm particularly proud of the progress we're making in the enterprise segment, thanks to the unique breadth of connectivity and digital services that in some cases only Telia can provide, and the increasing demand for them from our customers. Growth is increasingly driven by our corporate customers needing to digitalize their operations by moving to cloud, deploying digital networking and IoT solutions, and enhancing the security of their communication infrastructure. Our unparalleled digital infrastructure with the highest levels of independence and redundancy, combined with our digital services or ICT businesses, especially in Sweden, Finland, and the Baltics, make us their partner of choice. In our broadcast TV advertising-funded businesses in Sweden and Finland, we've now fully recovered from the pandemic as revenue in TV4 was the highest ever for a Q2 , including digital revenue growing again by more than 20%.
Network modernization remains on track with 5G coverage ramping up a lot this quarter. We now reached just shy of 50% of the population across our footprint, with the widest coverage in Norway and Finland at around 70%. Sweden, as you know, started from behind due to the late frequency auctions, but they doubled their coverage in the quarter, and we now reach 1/3 of the Swedish population. At this time, we reckon we are clearly ahead of all our competition on 5G rollout here in Sweden. This means that we're able and are taking a leading role in private networks or enterprise mobile networks. We have a double-digit number of running EMN customers and 5+ new contracts signed during the last quarter with a steady line of customer dialogue.
We have EMN services available in Sweden, Finland, and Norway, and we see that corporates are now starting to demand private 5G networks for critical operations. During the quarter, we won an agreement with Posiva, which is building the first of its kind final disposal facility for nuclear waste in Finland and with forestry company SCA for a dedicated network at their Munksund site in Sweden. Two great examples of how Telia is enabling the digitalization of and the green transition of our region. As we ramp up in 5G, we're also ramping up legacy shutdown and have now dismantled almost 40% of the Swedish 3G network and 70% of the fixed copper network.
Interconnected with network modernization is our digital transformation, and we've now closed more than a third of both our legacy products and legacy IT systems and increasingly launched new products on the new common technology platform. We're also improving processes and achieving both structural cost savings and a smoother experience for our customers with the need for manual interactions reducing, in some cases, significantly. Incoming contacts for our B2C contact center declined across all our markets, with volumes in Sweden down almost 30% year-on-year. In addition, we're transforming our channel mix with Finland, for example, now seeing 80% of all incoming contacts going through our own digital channels. These efforts contribute to our lower OpEx and keep us on track towards our SEK 2 billion of net reductions by 2023.
Although now as forward-looking rates are no longer indicating a reversal of energy prices, we're building a stronger energy headwind into our forward-looking assumptions. We now expect to reach at least SEK 2 billion of reductions in OpEx, excluding energy, and mitigate the energy headwind through a combination of both cost and pricing initiatives to meet our short and midterm EBITDA targets, which are unchanged. PC. will touch on this a bit more, later. Finally, seeing great progress in our sustainability agenda. We made two significant long-term agreements to purchase wind and solar power in Denmark and Estonia, which will cover most of the energy needs there. Positive news both for the advancement of green energy in society and for the longer-term resilience of our cost base. In another important sustainability, we're stepping up our efforts to protect our customers online.
A great example of which is the new security service for Swedish households. Moving then to the markets. As you can see here, Sweden again delivered a very solid quarter. Service revenues increased 1.2% despite legacy headwinds. Like last quarter, the growth was broad-based, with mobile growing 2.7% from a continued positive ARPU development. Broadband growing 4.1% from pricing initiatives. Again, a stellar performance in the TV business, displaying a 16% growth. Sequentially, the service revenue growth was slightly lower, driven mainly by lower fiber installation fees and lower copper wholesale revenues. Our enterprise business continued to show a solid development and grew 1.1%, confirming the trend shift initiated one year ago.
We saw solid momentum in all enterprise segments, with even growth in the SME segment for the first time in many, many years. We have a healthy pipeline of customer deals, including this quarter, the win of an agreement to continue to deliver network services to the Swedish Public Employment Service, including new advanced security solutions. The combination of our security credentials combined with our breadth of digital services is proving to be a real sweet spot for us, particularly in the public entity segment. Excluding the impact from legacy and the recovery of roaming revenue, underlying service revenue growth was again strong, coming in at 3.3%, with the headwind from copper being stable at SEK 170 million.
The pivot to growth continues in Sweden and also on EBITDA, which grew 2.8%, benefiting from revenue growth and from unlocking productivity gains from transformation. Specifically this quarter, we saw OpEx decline 7% versus last year. Moving on to the operational KPIs. We see a continued growth in mobile ARPU, supported by pricing initiatives and the return of roaming, and also a growing subscriber base equally in consumer and enterprise. Our broadband subscriber base was fairly stable as growth in fiber and fixed wireless access are more or less offsetting the organic decline in XDSL subscriptions. Like previous quarters, the ARPU continued to grow nicely, supported by pricing. In TV, we again saw a strong subscriber base development driven by growth in both SDUs and MDUs.
Importantly, we saw another strong ARPU development supported by pricing and a higher share of premium sports packages in the base. Turning to Finland. We had another relatively stable quarter of service revenue development and improved growth momentum for mobile, despite interconnect headwinds, was offset by lower fixed revenues, predominantly driven by the acceleration and the loss of legacy copper revenues. We are continuing to see positive results in brand, value, and network perception among our customers, and the turnaround is materializing step by step. The transformation of Finland continues at pace, albeit with some temporary cost tailwinds, as Q2 last year carried extra costs for software licenses and this quarter being positively impacted by industrial action. However, OpEx was reduced by 6%, and this is despite a SEK 35 million energy headwind.
In summary, a stable service revenue development, mobile growth of 3% excluding interconnect and a substantially reduced cost base, albeit not all structural, drove an EBITDA improvement of 5.3% in the quarter. The subscriber base was stable, and a slight loss in consumer was compensated by a gain in enterprise, and the ARPU stabilized after several quarters of negative development despite the aforementioned interconnect reductions. Consumer mobile ARPU development improved to 3% versus the 1% we saw last quarter. In enterprise, we're starting to see the pressure on ARPU easing. Given these positive trends, continued network modernization, 5G migrations, and turnaround initiatives, we remain on track for a more structural turnaround in the second half of the year. Moving on to Norway. We saw another quarter of really great top-line momentum.
Service revenue increased 6.8%, mainly driven by an 8%, 8.9% increase in mobile, driven by a growing subscriber base and core ARPU expansion in both the consumer and enterprise segments, combined with higher wholesale revenue. Enterprise grew by an impressive 11% in the quarter, continuing a long trend of excellent performance. As you might have already seen, the Norwegian regulator recently confirmed in its annual market report that Telia grew more in the Norwegian enterprise market than all the other players combined last year. As we continue to win new customers on quality and service credentials, we expect this trend to continue. Broadband also continued to develop very positively at 8.1%, driven by both customer and ARPU growth.
The ARPU growth is very much driven by price increases through our CPI-linked selective agreements as well as on individual agreements. EBITDA grew 2% as higher service revenue was partly offset by higher content and marketing costs, as well as from a lower equipment margin in the quarter. The mobile subbase continued on its positive trajectory with a stable consumer development and growth in enterprise, where we grew our base in all sub-segments, SME, large and public, as well for both brands, Telia and Phonero. ARPU was again strong, driven partly by core ARPU, but to a large extent also by the VAS accounting change as well as roaming recovery. Moving to the lead markets, it's the second consecutive quarter of a beautiful pace for these markets.
In Lithuania, we continue to see broad-based service revenue growth, with mobile growing double digits and fixed by 5.1%. The flow through to EBITDA from higher service revenues was, as you can see, excellent this quarter, despite significant headwinds from higher energy costs. In Estonia, performance was again strong, with service revenues growing 4.7%. Like in Lithuania, it was broad-based, with mobile growing 5.9% and fixed growing 4.3%, supported by all services except for clear fixed telephony. As you can see, EBITDA grew in line with service revenues despite the inflationary headwinds. Finally, in Denmark, we saw continued good progress driven by mobile growth of 3%, which more than compensated for a slight softness on the fixed side.
This, combined with continued good momentum on the cost transformation, resulted in Denmark delivering an excellent 9.5% EBITDA growth for the quarter. Finally, moving to TV and media, we can see that service revenues increased by 2% from a strong performance in advertising growth, 4.2%, partly offset by weaker performance in the pay business. Ad revenues in Sweden and Finland remained strong despite a tough comparison with the Euros last year, and digitalization of advertising is continuing at speed. Far, we are not seeing any signs of deteriorating demand from advertisers due to the macro situation. Pay TV had a softer quarter as growth in Sweden was offset mainly by lost Formula One rights in Finland and an expiring DTT agreement in Denmark.
As expected, our EBITDA declined by SEK 231 million year-over-year, reflecting the higher content costs, mainly from Champions League, as well as higher OpEx relating predominantly to the return of live events, higher resources as a result of that, and marketing spend. Looking at the Pay TV customer base, we saw a decline of 41,000 in the quarter, driven mainly by normal sports seasonality as predominantly Champions League and the Swedish hockey season ended towards the end of the quarter. We did see a slight growth in ARPU year-over-year, driven by an increased share of sports subscriptions and price increases in Sweden. Looking ahead, we have now annualized the Champions League investment and will no longer carry that as a headwind on a year-on-year comparison from next quarter onwards.
However, clearly the TV market is going through a period of significant change and now, especially in the SVOD market, it's very competitive, as you all know. With this backdrop, and as you would expect, we are now looking at how best to position Telia's assets in the future, leveraging our strengths in aggregation in our core telco-based business and a phenomenal reach in our broadcast TV business. With that, I'll hand you over to PC for a run-through of the financials.
Thanks, Allison. Let me quickly take you through the Q2 financials. As Allison has gone through, we have a solid growth at 2.4%, with Finland stabilized and all other units with good growth momentum, partly on the back of a continued roaming rebound. The service revenue growth is broad-based, like in Q1, with telco growth both in the consumer segment of 2.7% and in the enterprise segment of 2.1%, on top of the mentioned TV & Media growth of 2.0%. We have a good momentum with several quarters of low single-digit growth and are well on track to deliver on the outlook for 2022 and 2023. Let's move to OpEx. Total OpEx is reduced by 1.6% or SEK 104 million in the quarter.
The reduction is driven by lower resource costs of SEK 173 million from more than 1,200 reduction in FTEs since Q2 last year. Marketing spend is reduced by SEK 15 million in the quarter, where underlying growth in spend and activities was offset by efficiencies from media spend consolidation, more targeted communication, and a more cost-efficient channel mix. Other OpEx increased SEK 84 million, where continued IT cost reduction from IT simplification, consolidation, and modernization are offset by SEK 101 million increase in energy costs from increased energy prices. Despite inflationary pressure, we have, 6 quarters into our transformation journey, reduced our OpEx by SEK 0.6 billion or SEK 0.9 billion if we exclude energy costs.
The ongoing digital transformation of our business is fully on track and has enabled a significant reduction in number of resources, marketing efficiencies, and lower IT costs. During the last few quarters, the energy prices in our footprint have soared, and during the last quarter also the market outlook for energy prices the coming years has increased significantly. Despite hedging so far this year, the energy cost has increased SEK 184 million. If we use the updated market outlook for energy prices, the total energy cost for 2022 is expected to increase by around SEK 300 million versus last year, and with a similar increase again in 2023. As stated, our transformation agenda is moving forward and we are on track to deliver at least SEK 2 billion net OpEx reduction by 2023, excluding the energy cost.
The energy cost increase will be fully mitigated by a combination of additional cost and pricing initiatives to reflect the higher cost base and be fully offset on EBITDA level. Let's move to EBITDA. Total EBITDA grew 0.8% in the quarter. We grew in all units except TV & Media that as expected is impacted by the higher content costs related to Champions League. Total EBITDA is only slightly growing. We have gained a significant growth momentum across all our units in the telco business, with EBITDA growth at a solid 4.3% similar to Q1. The strong growth momentum on the telco side, combined with easier year-over-year comparison on the TV & Media business in the second half of 2022 onwards makes us well on track towards the outlook for 2022 and 2023. Moving to cash CapEx.
Total cash CapEx in Q2 is SEK 3.7 billion, slightly higher than Q2 last year. Mobile and fixed network investments are similar to last year, but we see some high investments related to product development and IT to support our ongoing transformation. This is expected to come down again to the same level going forward. Despite the challenging global supply chain situation, we are able to stay on track with our investment program to modernize our mobile network, dismantle our legacy infrastructure, and to transform Telia to a much more digital company. Cash CapEx on a rolling twelve months basis has increased to SEK 15.0 billion or 16.9% of net sales.
Cash CapEx is expected to reduce on a rolling twelve months basis in the second half, bringing cash CapEx well within the 2022 guidance of SEK 14 billion-SEK 15 billion and further down in 2023 to be in line with the outlook of 15% of net sales. On cash flow, operational free cash flow ended at SEK 1.1 billion in Q1, down from SEK 2.1 billion in Q2. EBITDA on a reported basis are slightly positive, where negative effects from the carrier divestment last year is offset by underlying growth and positive FX effects. The decline versus last year is mostly driven by in-year phasing of working capital in addition to the slightly higher CapEx in the quarter.
Total cash flow on a rolling twelve months basis is as expected on a somewhat declining trend due to increased investment and lower contribution from working capital. The structural part of cash flow are expected to improve going forward, mainly driven by the EBITDA growth in the second half of 2022, following the continued growth momentum on telco side and easier comps on the TV & Media business. This combines with a somewhat lower cash CapEx on the twelve month rolling basis in the second half. Working capital is expected to be positive for the year, but less positive than the SEK 3 billion positive that we carried last year. This will secure cash generation both including and excluding working capital to at least cover the minimum dividend commitment of SEK 7.9 billion post our share buyback. Moving to net debt and leverage.
Our total net debt reduced by SEK 2.0 billion in the quarter, driven by good cash flow generation and the SEK 5.4 billion proceeds from the Swedish Tower transaction. This is partly offset by the distribution of the first installment of dividend of SEK 4.1 billion and the first batch of share buybacks of SEK 0.4 billion in the quarter. Total net debt to EBITDA ended at 2.01 times, down from 2.09 times last quarter, and are now at the very end, low end of the targeted range of 2.0-2.5 times. Finally, on the outlook. With a strong first half behind us in line with our own expectations, combined with a solid plan and execution momentum, we are well on track to deliver on our outlook both for 2022 and the period 2021-2023. With that, I'll hand back to Allison to summarize presentation before going into Q&A.
Quick summary. It's been a strong first half, and we're continuing to deliver on our plan despite the macro environment we now find ourselves in using both pricing and cost initiatives. Core Telco is solid and growing with broad-based momentum. Finland is on track for a second-half turnaround. TV & Media continues to have a particularly solid advertising business, and we're well positioned to take advantage of the changes afoot in the industry. Modernization and transformation are on track for a sustainably better, more digital Telia, and our balance sheet is strong and very much supporting the share buyback that is underway.
Finally, as I touched on earlier when talking about our enterprise business, we have never been more important to society, and we are uniquely placed with the leadership position and breadth of services we have. Even with the inflationary headwinds, I remain confident in our outlook, our ambitions, and our plans for this year and beyond to ultimately return Telia to consistent, sustainable growth that will benefit all of our stakeholders in the months and years to come. With that, it's time for your questions.
Thank you. At this time, if you would like to ask a question, please press the star and one key on your touch tone phone. You may remove yourself from the questioning queue at any time by pressing the pound key. Once again, that is star one to ask a question. Our first question comes from Andrew Lee with Goldman Sachs. Your line is now open.
Yeah, good morning, Allison and PC. Just had one question on your commentary around price mitigation for energy cost inflation in 2023. Clearly, that's the crunch time for a lot of telcos when energy cost hedging runs out. Just on your confidence to achieve that, particularly from the perspective of affordability and spin down risk. How do you get confidence from that perspective? Clearly, competitive environment is fairly rational at the moment, but from a customer affordability perspective, love to hear your comments around why you're so confident. Thank you.
Yeah. The mitigation is a combination of both cost initiatives and pricing initiatives. It's not all pricing. you know, clearly, we always had a pipeline of cost initiatives that were more than SEK 2 billion anyway, Andrew. On pricing mitigation, you know, we have already this year taken 5% on Telia Mobile, 10% on Halebop. We're taking a number of pricing on our fixed services again on fiber this year. Our services are relatively good value for money, and we've got that wide range. You know, we've got low end if our customers want to trade down, but there is no indication yet in any of our markets that there's any sort of consumer squeeze. you know, maybe it's the media doesn't make a bigger deal of it in this market than it does in the UK.
Certainly we have seen no impact to date. The more we invest in our services, upgrade networks, it's allowing customers to work more from home. That saves them money. We are sensitive to it, but to date, we haven't seen any impact from a consumer tightening. We need to watch our SVOD market, clearly. On our core business, if anything, we're seeing our enterprise customers investing more into new advanced security and digital services. You know, we've got a history of running with smart pricing in an inflationary environment in our Baltic markets. We have a mechanism that we know how to ensure we're striking the right balance of recovery, of mitigating the cost pressure and passing that through to our customers in a way that it doesn't, you know, go in the wrong direction and trade customers down. You know, relative to many other services, we're still great value for money.
Thank you. That's very helpful.
Thank you. Our next question will come from Peter Nielsen with ABG. Your line is open.
Thank you very much. Morning, guys. Allison Kirkby, you may have just partly answered my question, but you have, in Sweden, you have marketed your premium networks, premium content, your new streaming services for more content, et cetera. My question was, do you feel that you are able to monetize this? Are you happy with the way you're monetizing these premium services and the investments you've made? And do you think there's scope for an increase in service revenue growth in Sweden in the coming quarters? If I may squeeze in a follow-up. Your comments on the demand for private industrial 5G networks, I think appears to be some of the more positive for many of the telcos. Do you think you will be able to to monetize this demand, Allison Kirkby, and make this into a sort of a material revenue stream for you going forward within the addition to the enterprise market? Thank you.
Thank you, Peter, for the questions. First of all, on Sweden and monetization of premium sports. Well, clearly, you know, we are seeing the benefits of the investment that we've put into converged services in general in our Swedish business, and that is helping us hold up our Telia Mobile and our Telia Fixed businesses. You know, we're offsetting all of the accelerating copper decline at the moment in our broadband business with 4% growth in the quarter. That despite the fact, you know, we had SEK 170 million revenue decline from legacy in the quarter.
I'd say where we're seeing the monetization is in our ability to still grow our broadband business and transition it to fiber, allowing us to take us into MDUs where we previously did not have business, and overall, you know, help drive content with access with content in general. I think that's where you're really monetizing it. Our growth in TV, our aggregator business in Sweden, you know, growing 16%, we're clearly monetizing that revenue development. As I look forward, you know, our pivot to growth continues in Sweden. Roaming is recovering. Migration to 5G hasn't really started yet in Sweden because we only doubled the pop coverage in the quarter. We're now at 30%.
We are fueling the Swedish business with the investments in our network, the investment in our security credentials and digital services, and the investment in premium sports and the aggregated experience so that we can help sustain and justify, you know, 5% on Telia Mobile pricing, a loan, already this quarter and more fiber pricing happening. Talking of private networks, you know, what became obvious to us, I don't know if you're aware of Almedalen Week, which was just a couple of weeks ago here in Sweden, where it's the gathering of, you know, key public sector officials, the key ministries, and all of the biggest Swedish customers. The interest in 5G private networks and how private networks can help them either in their pivot to sustainable digitalization or just on their straight digitalization agenda was very, very obvious.
While they are small project-related revenue streams today, the more we get ahead of competition and, you know, we've now got double-digit live private networks across our footprint. We signed up, you know, the Finnish new nuclear facility in the quarter. We're working with the forestry sector. We're working with the mining sector. Really interesting now doing a 5G private network for the Norwegian Armed Forces. We are uniquely placed in those areas because of our 5G credentials, but particularly with our security credentials, Peter. I think that will definitely be. We're monetizing now through project revenues, but they will become recurring revenues over time. It's just giving us a really different dialogue with our customers because they come to us for the overall, "How can you help us on our digitalization?" It rises as above the scrappy, you know, cost of a mobile SIM for my employees. I think that's super important for us, and it's a real differentiator for us, Peter.
That's great. Thanks a lot for that, Alison. Thank you.
Thank you.
Thank you. Our next question will come from Ondrej Cabejšek with UBS. Your line is now open.
Hi, everyone. Good morning, and thank you for the presentation. I wanted to follow up again on the energy cost communication and the targets that you are emphasizing or reiterating really. I just wanted to understand why even mention these headwinds in the first place when you are confident that these can be offset and therefore you're not, you know, changing the medium-term guidance. Is this a way to basically emphasize how much upside there is to the externally communicated targets that you have up to SEK 2 billion and SEK 4 billion respectively in terms of cost cutting? Or is this more of a way to convey that there is some tail risk to these targets?
Thanks for the question, Ondrej. Why even mention? Because we believe in transparency. We have, you know, previously said that we would be able to mitigate totally within SEK 2 billion. But when we look at the forward-looking rates, it would be unrealistic for us to say we can continue to compensate. I think it's just total transparency, but we're absolutely confident in our outlook. And PC , do you want to build on that at all?
No, I think that's the key message. I think what, compared to what we talked about in the past quarters, is that the forward-looking rates now in our region has moved, right? We can no longer kind of assume that the energy price rate will normalize in 2022 and 2023. That means that, you know, since we're also hedging, our energy costs will continue to go up in line with what I guided on in my presentation. And y ou have, you know, a solid set of mitigations on the cost side, but there is a risk that the net effect on the OpEx line alone will not be exactly SEK 2 billion, including energy, but we will be able to offset it on an EBITDA level when we also include some effects from pricing.
Thank you. Just to double confirm, that the SEK 4 billion target is intact as well, not just the SEK 2 billion, but the SEK 4 billion as well.
The same applies for SEK 4 billion. We should also look at excluding energy. Of course, you know, 2025 is just a long way ahead, so we don't know how the energy prices will develop towards 2025.
And Ondrej , if you look at, you know, what you're seeing so far in our, you know, our trends, we're doing a little bit better in our revenue development versus our guidance, and we're continuing to deliver on our EBITDA development despite the energy inflation. Basically, we're just aligning that SEK 2 billion and SEK 4 billion with what we're actually executing on today.
We carried SEK 100 million increase in Q2, and we carried, you know, SEK 80 million increase in Q1, and we are still in line with our EBITDA.
That's much clearer now. Thank you very much.
Thank you.
Thank you Ondrej .
Our next question will come from Ulrich Rathe from Jefferies. Your line is open.
Thank you. Two, maybe if I can. The first one is on the free cash flow outlook this year. I realize you're not guiding. With the sort of versus consensus sort of shortfall of almost 50% this quarter, there might be room to clarify market expectations a little bit. I think market consensus for SEK 9 billion. Would you feel comfortable with that, or not? The second question I had is on the strategic agenda. Allison, I think you're quoted here in various media outlets about talking earlier today about Denmark consolidation opportunity. You didn't mention that on this call. Could you sort of just frame that a little bit for us? Also, is it fair to say that your comment about a very competitive SVOD market and that you're now looking how to best position Telia's assets for the future in a context that this is a bit of a nudge that there might be some considerations in this area as well. Thank you.
Hi Ulrich, I can start on the cash flow outlook. As you know, we don't give specific sort of guidance or outlook on cash flow. But what we are very clear on is that we are guiding on that we at least will deliver SEK 7.9 billion that is necessary to cover our minimum dividend commitment. I think we don't know kind of all the details around the kind of consensus, but I think SEK 9 billion is not sort of an unreasonable number to assume for 2022.
On the strategic agenda, yes, they asked me the specific question on Bloomberg this morning on where do you see consolidation opportunities. I said it would only be in Denmark in our footprint that I see consolidation opportunities, and that's nothing new. I've said that for a while. Is there anything on the radar? No, there isn't, Ulrik, but I still believe Denmark will need to consolidate over time. There's just too many players for that market. You know, we are focused on turning around our business there. We've done a good job of that, as you can see this quarter. You know, we're putting ourselves in a strong position for any consolidation that might happen in the years to come. In terms of the SVOD market, yes, you know, I do believe there are now probably too many subscriptions out there, and there will have to be consolidation.
We are increasingly clear that what we wanna be the best at content aggregation in our telco business, and we wanna continue to digitalize our phenomenal reach that we have in our broadcast business. I think you will see certainly a change to how we will view our SVOD business over time as a result of that. Is there any immediate consolidation opportunity? I don't believe so. By focusing on aggregation in telco and digitalizing our reach in advertising, that's where we will put most of our emphasis in the future.
Very helpful. Thank you very much.
Thank you.
Thank you. Our next question will come from Nick Lyall with Soc Gen. Your line is now open.
Morning, everybody. Allison, just a quick one on the on roaming. Could you tell us how much roaming contributed to the Q2 , please? If you're thinking it could be quite a decent summer in terms of return on roaming for mobile average, could you give us a little bit of a sense of scale on that? Just to come back to PC's comments as well about the cash flow. You mentioned I think working capital to be positive for the year, PC is that still including some vendor financing benefits in there or is that expanding on what you mentioned? Thanks very much.
Yeah, I can take a go at both of your questions. On the roaming, I mean, in Q1, I think we said that we saw kind of a 60% rebound from the pre-pandemic. Now in Q2, we see that has increased to 70% on the revenue and on the EBITDA. So on the revenue line is a little bit more than SEK 140 million in Q2 versus last year. On the cash flow and the working capital, yes, the guidance on working capital being positive for the year includes effects from the vendor financing solution.
Okay. That's great. Thank you.
Thank you. Our next question will come from Keval Khiroya with Deutsche Bank. Your line is open.
Thank you very much. We've two questions, please. Firstly, Allison, you mentioned you've not seen any ad spend impact so far, but can you share how you think about how these revenues will develop going forward potentially with the weakened macro backdrop? Any help on sensitivity here would be appreciated. Secondly, last quarter you said the rooftop sites weren't quite ready, but they do remain a priority for a potential deal. Does that still remain the case? Thank you.
Yeah. Thanks for the questions, Keval. Yeah. We're not, you know, seeing any ad spend impact. You know, I think having spent 25 years in consumer goods, consumer goods companies, and actually retailers to some extent actually love inflationary periods because it gives them an opportunity to raise pricing, and they've not had the opportunity to do that for many years. What you're seeing is when they do that, they have to invest back a bit, and they're definitely investing in advertising at the moment. We are seeing no impact on our ad spend.
Now of course, we need to prepare for any potential downside, even though there's no indications yet, and that's why we're digitizing. We're digitizing rapidly so that increasingly we can shift some of the spend that's going into Google, YouTube, Facebook, and others onto our platforms that are, you know, safer from a brand reputation point of view. Building on our unique reach gives our advertisers even more premium targeted addressable inventory. We see the shift to digital and being able to take market share from the big guys as being a way for us to compensate for any downside and weaker macro backdrops that might happen. Clearly we're not seeing that yet, and you know, very strong demand, particularly from retailers and consumer goods companies. In terms of rooftop, yes, it continues to remain a priority. You know, our priority is to crystallize value of our infrastructure, and most other tower companies have rooftops within them, and it's our intention to put rooftops into our TowerCo, as and when we are ready and, you know, we can then start dialoguing with interested parties of which we have.
Perfect. Thanks, Allison.
Thanks, Keval.
Thank you. Our next question will come from Stefan Gauffin with DNB. Your line is open.
Yes. Actually, most of my questions have been answered. Perhaps going back to working capital and just look at why we saw so much tied up in working capital this quarter seems to be a buildup of inventory and also higher accounts receivable. Can you two talk about the inventory yesterday and that it was a deliberate choice to mitigate the impact from supply chain issues? Can you just talk about these issues and what to expect for the coming quarters?
Yeah. I'll address that question. Thank you. I think on the outlook, I think I've covered it, but I can put some more perspective on the quarterly working capital development. In comparing to Q2 last year, there's a SEK 800 million negative year-over-year change effect. That is coming from SEK 400 million positive effect last year on the back of a positive, you know, accounts payable effect in 2021. You have a negative effect this year, which is a combination of, as you say, increased inventory. This is actually a deliberate choice that we have made to mitigate some of the pressure that we see from the global supply chain situation. We have stacked up on critical, you know, elements that we, y ou know, to secure our transformation agenda and also to secure customer delivery. This should be seen as somewhat a sort of temporary effect. On top of that, there are some phasing on the accounts receivable and a slightly lower accounts payable. You know, keep in mind there's nothing sticking out of the ordinary. You know, these are kind of normal variations between the quarters that you should expect.
Yes. Perfect. Thank you.
All right. Thanks.
Thank you. Our next question will come from Francesca Castelli with BNP Paribas. Your line is open.
Morning. Thanks very much for taking the question. Also most of mine have also been answered. If I could just ask on enterprise. The Core Telco enterprise grew 2.1% this quarter. You also talk about strong interest in 5G private networks as another vector for growth. You've consistently outperformed your peers in B2B in recent years, especially in Sweden. Are there any structural factors in Sweden that are behind this? Thank you.
Francesca, I missed the final part of that question. Could you just you know, I heard you were, you know, you were saying we're outperforming our peers. Is there anything structural? Was that the question going on in-
Yeah.
Core Telco and with enterprise? Okay. Yeah, I you know, as I said, you know, earlier, and I think, you know, we have the broadest range of both connectivity, communication services, ICT services, IoT services, and security services in the market by far. That is really helping us drive our enterprise segment. It's helping us you know, secure Region Skåne, the biggest region in Sweden. It's helping us do new advanced security solutions for the Employment Agency. At the same time, as we're migrating to 5G, as we are you know, upgrading and pricing our services appropriately, yeah, I think we're in a very strong position there. You know, nobody can really serve the public sector and larger enterprises with the range of services that we have at Telia and the credibility we have, particularly in the security and network areas. Did that answer your question? It was quite difficult to hear you.
Yeah, sorry . Thank you. Yeah, that's it.
Thank you.
Once again, that is star one to ask a question. Our next question will come from Adam Fox-Rumley with HSBC. Your line is open.
Thank you very much. Actually, it was a build directly on that last one, which was just to ask how much of the kind of unique capability that you have do you think has been developed internally as their IP versus something that others in time would be able to catch up with you on. There are obviously other Pan-Nordic operators. As a kind of related question, how many of your customers are actually buying services across borders? I don't really need to ask for a specific number, but to what proportion is that an important part of the like the proposition on your side? Thank you.
Okay. Let me try and answer that. PC might have answered the last question. Because we invested in Cygate 15 years ago, and because we have, you know, been supporting some of the most important government agencies with security services for many, many years, it's not easy for others to catch up at the more advanced end of private network ICT services and security services without having to partner with others. I reckon we've got more intellectual property through the combination of our connectivity, ICT, and security services than anybody else does across the footprint. Now, yes, we've got other Pan-Nordic players, but nobody has been the incumbent and in as many markets as we have. Nobody has invested in the ICT segment as much as we have.
You know, we're number one in ICT and security services in Finland and the Baltics. Yes, maybe Norway, one of our peers, has the breadth, but they don't have the breadth outside of that market because they tend to have come from a more challenger mobile-only route, which is where we have not. That's what gives me the confidence that we've got it. Competition will pressurize us to keep doing better, and that's why, you know, we aim to be the digital partner of choice to the enterprise segment, and we're investing to retain that. It's so far working for us. You know, with double-digit private networks already being operated by us, and you know, almost three times that in the pipeline, I think we're well ahead of our Pan-Nordic peers. In terms of services across borders, I'll pass that to PC.
Yeah. I don't think we give an exact number, but we have a few hundred of, you know, really critical multinational customers, you know, in our markets and equipment.
That is a segment that's been growing in the quarter as well. It's growing for us.
Great. Really interesting. Thank you.
Thanks, Adam.
All right. There are no further questions in the queue. I'd like to turn it back to the speakers for any closing remarks.
Okay. Thank you very much for joining the call, and thank you for your questions. We are online. If there are any further questions, just give us a call.
Thank you.
Have a great summer, everyone.
Have a great summer. Thank you, everyone.
Bye-bye.
Bye.