Welcome, everyone, to Telia Company's Q4 full-year results presentation. With that, I will now hand it over to Telia Company's Head of Investor Relations, Erik Strandin Pers. Please go ahead, the floor is yours.
Thank you, and good morning, everyone, to our Q4 call. We will do the usual routine with a management presentation followed by Q&A. We have CEO Patrik Hofbauer and CFO Eric Hageman in the room, and we go straight ahead. Patrik, the floor is yours.
Thank you, Erik, and good morning to all of you. The last quarter of 2025 confirms that we are on track to reshape Telia into a much simpler, faster, and more efficient company in line with our value creation plan set out at the investor update back in September 2024. Before I go into the quarter, let me walk you through some key highlights for the full year of 2025. Looking at the financial performance, we have, for the first time in five years, covered the dividend with our free cash flow without any vendor financing contribution. We delivered on our EBITDA and over-delivered on our free cash flow ambition despite a challenging year for Norway and service revenue headwind in Finland, and our balance sheet has strengthened. The good financial performance has also been noted by the market and resulted in a total shareholder return of 36% for 2025.
We are now also through the first year with our country-led operating model, and the positive result when it comes to efficiency, speed, and responsibility are clearly visible. The new model is also an enabler for further efficiencies, and we announced a net reduction of 450 positions earlier this month. We have also come far in terms of improving our CapEx efficiency and reshaping our portfolio with the divestment of TV and Media and bid for Bredband2 and our process to exit Latvia. Throughout the year and across most markets, we have seen NPS improving, so the customer satisfaction, which confirms that we are doing the right things for our customers. In addition, our role in society is becoming increasingly important with increased demand for secure and mission-critical communications. So a lot for the organization to be proud of and to build further on in the coming years.
With that said, let's now zoom in on Q4 highlights. We again won the best network in Sweden according to Umlaut's yearly survey, achieving both the highest overall score and a win in every category. But only having top-class network is not enough, and I'm happy to see that all the other efforts we do to drive customer experience are paying off with NPS increasing across the footprint. We also continue to be very disciplined on cost in Q4, which resulted in an OPEX decline by 4%. On portfolio management, we received the necessary regulatory approvals to go ahead with the bid for Bredband2 just before Christmas, and our process to exit Latvia is moving ahead. We also agreed to acquire a small fiber customer base in Finland.
We saw Sweden deliver its best quarter in modern times, with revenue growth reaching almost 5%, supported by business and mission-critical services, but also strong growth in consumer and an improved trend on mobile. For 2026, we see continued good financial momentum and therefore guide for service revenue and EBITDA growth of around 2% and around 3%, respectively, and a stable CapEx level. Combined, these core building blocks are estimated to generate a free cash flow of around SEK 9 billion, a good milestone towards delivering at least SEK 10 billion in 2027. Now let's go to the financial highlights. Service revenue growth accelerated as expected, supported by strong growth in Sweden. EBITDA growth remained rather unchanged compared to the previous quarters, somewhat held back by a weak service revenue development in Finland and our decision to invest more in our core markets to capture growth.
CapEx remained stable and ended a bit below our outlook of around SEK 13 billion for the year. Free cash flow came out very strong, driven by better than expected Q4 working capital, which Eric will elaborate more on. This strong end to the year resulted in a full-year free cash flow of SEK 9.6 billion based on normalized spectrum CapEx, significantly above our outlook of around SEK 8 billion. Finally, our balance sheet remained very healthy with leverage also this quarter at 1.93x and significantly down from a year ago. Moving now to Sweden, that again won the best network in the Umlaut survey and that also secured further long-term access to 1800 megahertz spectrum at attractive prices. In the quarter, we also completed a 5G rollout and a 3G sunset.
Customer satisfaction improved both in B2C and B2B, and we continue our strategy to step by step move sales from external channels to internal channels. Financially, Sweden delivered impressive service revenue growth driven by both mobile and fixed. The consumer business had another good quarter with over 4% growth. Mission and business-critical services were a strong growth contributor, but also other areas such as our IT business, Telia Cygate. Growth was well balanced, driven 50/50 from pricing and volume. This shows that we can do both pricing and attract new customers, as you can see in the healthy KPI development on the right on the slide. With strong net intake for both broadband and TV and a growing mobile ARPU driven by price changes earlier in the year. The slight decline in mobile customers was a result of a modest decline in the mobile broadband base.
EBITDA growth remained strong despite including a lower year-over-year pension refund contribution as well as increased marketing spend. So all in all, Q4 was strong delivered by the team in Sweden. Let's now move east to Finland, and let me start with the financials, where we had a weak quarter with service revenue down 3%, partly driven by a continued weak enterprise market environment and a ramp-down of non-core businesses, but mostly because of non-connectivity projects for enterprise customers, which are lumpy in nature. We had a high level of revenue from these projects in Q4 last year and a relatively low level this year. The lower service revenue was the main reason why EBITDA declined 6%, but also the higher marketing spend that we flagged already in Q3.
Clearly a weak quarter, and we are far from satisfied, but we also won some new enterprise customers, and our focus remains on the strategic agenda we have communicated before: strengthen profitability, simplify the business by divesting non-core assets and reducing organizational complexity, and then turning around this segment and stabilizing the mobile market share. Underlying cost control remains tight, and we expect service revenue and EBITDA to be more stable in the coming quarters. The mobile consumer market was very active this quarter with two new MVNOs and a record high number of customers changing operators. We continue to focus on network and customer service quality and avoided the lowest price points in the market, even if it resulted in a net loss of customers short-term. In broadband, net adds declined by 6,000 in the quarter, but this was fully driven by a cleanup of inactive subscribers.
Now moving west to Norway, where service revenue was close to flat despite lower mobile wholesale revenue since mobile end user and fixed revenue improved clearly. This was mainly driven by pricing and, as can be seen to the right, resulted in significant ARPU growth across our core services. EBITDA remained in negative territory as we flagged last quarter due to the decline in service revenue as well as higher cost level. Partly this was driven by phasing and partly because we have invested more into the market to capture future growth potential. We shifted the billing cycle for a large part of our customer base, which helped working capital in the quarter, and the churn effect was well in line with our own expectations.
So now let's move to Lithuania, which launched 5G SA for its consumer customer and continued to deliver truly strong financial development, with service revenue growth accelerating to 7%, supported again by both mobile and fixed. The acceleration, together with another quarter of great work on generating efficiencies, resulted in an EBITDA growth of 13% and an EBITDA minus CapEx that remained at a record high level of SEK 1.6 billion on a rolling 12-month basis. In addition to solid financial development, Lithuania continued expanding the mobile customer base and, as you can see, also grew ARPU across all products, predominantly on the back of pricing performed earlier this year.
Moving on to Estonia, that had an eventful quarter operationally, receiving a recognition for best network by Rohde & Schwarz, launching a new security service for its home broadband customers and new eSIM roaming service for customers traveling outside of the EU. Financially, the quarter was, however, a bit soft on service revenue, trended stable, and EBITDA growth slowed down due to an unusually low cost level in the corresponding quarter last year. But like for Lithuania, cash conversion remained close to a record level also in Q4. And with that, I hand over to Eric before I come back to summarize the full year and Q4. Thank you.
Thank you, Patrik. Let me now go through the financial development of the quarter and full year, starting as usual with service revenue and EBITDA. In the last quarter of 2025, service revenue growth improved to 2.1%, driven by the strong performance of our consumer segment, which benefited from a particularly strong development in fixed, led by TV in Sweden, and broadband, which grew nicely across all our markets. Mobile service revenue returned to growth despite the continued drag from wholesale in Norway. From a country perspective, Sweden's top line accelerated as expected, and growth in the Baltics remained solid at around 5%. Combined, Sweden and Baltics service revenue growth more than compensated for a somewhat negative Norway and a weak development in Finland, the latter feeling the impact of increased competition, some year-on-year phasing, and the previously flagged closure of the non-core e-invoicing business.
But as Patrik said, we expect the service revenue trend to improve in the coming quarters, even though the overall turnaround in Finland and Norway will take time, as previously explained. As a group, we ended full year 2025 with 1.5% service revenue growth, a tad shy of our around 2% outlook. Excluding the wholesale revenue loss in Norway, we would have been at a 2% top line growth for the full year, which is what we guided for for 2026. Sweden is expected to enjoy continued good growth, albeit at a lower rate than seen in Q4, and we expect Norway and Finland to gradually improve. Moving to EBITDA at 3.7%, growth in the quarter remained solid, yet somewhat below the Q3 level because of the increased marketing spend in Finland and Norway.
EBITDA margin was up again, firmly aligned with our September 2024 Capital Markets Day margin expansion promise. For the full year, the improvement was 120 basis points and is the result of profitable growth supported by the positive impact of the change program. Looking into 2026, we guide for around 3% EBITDA growth supported by service revenue growth and continued work on generating efficiencies. Moving now to OPEX and CapEx. Starting on the left, also in Q3, we kept a high level of cost discipline as the change program continued to drive down resource cost. As a result, OPEX declined by 4.1% compared to the same period last year. We also saw lower cost for energy and bad debt in Q4, which largely compensated for slightly higher IT cost and increased spending on sales and marketing to capture identified growth opportunities in our three main markets.
OPEX as a percentage of service revenue continued to trend down and decreased by 200 basis points to 31.9% in 2025. While it's, of course, encouraging to see that we managed to do more with less, we see many more opportunities. We will not sit idle, and we will continue to make Telia simpler, faster, and more efficient. Consequently, we announced early this month that we are targeting a net reduction of at least another 450 positions across the group this year. Moving on to the graph in the middle, you can see that we also remained disciplined with our capital expenditures, ending the year with SEK 12.8 billion for the full year, ahead of the improved guidance of around SEK 13 billion that we gave you at Q3, and significantly better than the initial guidance of less than SEK 14 billion that we had at the start of the year.
For 2026, we expect CapEx to be below SEK 13 billion, in line with how we currently are trending and well below the SEK 14 billion of our initial and medium-term guidance. Finally, as you see on the right-hand side, EBITDA minus CapEx as a proxy for free cash flow was SEK 19 billion on a 12-month basis, a step up of SEK 1.5 billion or 9% versus last year. We also improved our cash conversion to 60% on a 12-month rolling basis, up from 57% a year ago. Let's now have a look at our free cash flow. Free cash flow for the fourth quarter came out stronger than expected, mainly due to working capital. This was driven partly by our own initiatives, including earlier billing and better inventory management, and partly by external factors such as early payments by enterprise customers.
For 2025, we delivered SEK 9.6 billion free cash flow on a normalized spectrum CapEx basis, significantly ahead of our initial free cash flow of around SEK 7.5 billion that we had upgraded to around SEK 8 billion at the Q3 results. On a reported basis, free cash flow was SEK 9.3 billion after paying SEK 800 million in a final installment for the Swedish 2023 multi-band auction and with forex headwind of more than SEK 300 million as the Swedish krona strengthened versus the euro. This year-on-year cash flow growth was structurally driven by a SEK 1 billion increase in EBITDA due to profitable growth and cost savings, and circa SEK 600 million in reduced interest payments as a result of lower gross debt, lower average interest paid, and strong working capital inflow.
Looking ahead, we currently don't expect to have any significant net contribution from working capital in 2026, and we also don't expect paid CapEx to exceed booked CapEx like it did in 2025. Together, these two items contributed around SEK 1.5 billion to our cash flow last year. This is not expected to be repeated this year. That sets our free cash flow starting point back to around SEK 8 billion as we head into 2026. From there, we expect to grow our free cash flow to around SEK 9 billion, as you have seen us guide for this morning. This growth will be mainly driven by increased EBITDA, which we have guided for to grow by around 3%, which is circa SEK 1 billion in absolute terms. Overall, we currently expect free cash flow to be quite back-end loaded in 2026, even more so than it was last year.
We expect relatively low cash flow in Q1, as some reversal of working capital should be penciled in, considering the strong inflow we had in Q4. Interest payments are also seasonally high in the first quarter, just as a reminder. We expect cash flow generation to then strengthen quarter by quarter as profitable growth accelerates, with the impact of continuous cost improvements taking hold. You know we are very focused on improving Telia's free cash flow generation capability. We made good progress in 2025, but we aim to make more progress in 2026. Our target remains to exceed SEK 10 billion in free cash flow by 2027. Let's now briefly look at our net debt and leverage development.
As you can see on the right-hand side, in Q4, our net debt increased slightly by SEK 400 million, but with EBITDA growing in equal measure, leverage was 1.93x the same as in the third quarter. Perhaps more importantly, looking at the bottom left bar chart, we can clearly see that leverage has come down materially over the last 2 years as we have expanded EBITDA and used the cash proceeds from selling non-core assets to actively manage and strengthen our balance sheet. The benefits of this much healthier balance sheet are threefold. 1, we pay significantly less interest as debt has come down materially.
2, it enables us to actively think about increasing returns to shareholders, as evidenced by a proposal to the AGM to increase the dividend per share, and we can strengthen our core business via accretive acquisitions such as Bredband2 in Sweden and fiber investments in Norway and Finland. Finally, before I hand back to Patrik, I would, as usual, like to say a few words on some of the achievements we've done in the quarter and how that resonates with our value creation agenda laid out at the investor update in September 2024. Firstly, free cash flow more than covered our dividends paid in 2025 and exceeds the dividend being proposed by the board for the fiscal year 2025. Furthermore, we delivered on our commitments for 2025 in terms of EBITDA, CapEx, and free cash flow. Secondly, we continue to work diligently on our active portfolio management agenda.
We received the regulatory approvals related to the Bredband2 deal, and significant effort was also spent on a transaction to divest Latvia, where work continues with our counterpart to ensure that we reach an agreement this year. Thirdly, and as just mentioned, our balance sheet improved again this year, ending the year at 1.93 times, just below our target range of 2- 2.5 times net debt to EBITDA. Finally, we paid another quarterly dividend of SEK 0.5 per share to our shareholders, and as you have seen today, the board of directors proposes a dividend increase of 2.5% to the upcoming AGM. This would mean that for the first time in a long time, we will deliver on our commitment to a progressively growing dividend. And with that, I hand back over to you, Patrik.
Thank you, Erik. The past year was a year of significant progress for Telia as a company. Our customers are becoming more satisfied, and our services are more relevant. It was also a year in which we delivered on our EBITDA and cash flow promises and made progress in both CapEx efficiency and portfolio management. We have taken several steps to create a simpler, faster, and more efficient Telia. Also, the strong end to 2025 confirms that although there are challenges still to overcome, we have a solid foundation in place that will enable us to deliver on our 2026 plans and our midterm plan targets for 2027. This comfort is also shared by the board of directors, who will propose to the AGM in April a dividend raise from SEK 2.00 to SEK 2.05 per share. With that, I will open up for 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 comes from Andrew Lee with Goldman Sachs. Your line is open. Please go ahead.
Hi, good morning, everyone. Here is actually Sofia from Goldman. Today we have two questions. The first one is on Finland. What is your timeline to reach stability on EBITDA there? And the second one is on cost cutting. So you guided to just 3% EBITDA growth off 2% service revenue growth for 2026, and you've already announced 450 headcount reduction this year. So is the EBITDA growth guide conservative, or are there headwinds such as lost high margin revenues greater than expected, or is cost efficiency opportunity just not as high as you'd hoped initially? Thank you.
Good morning. I can take the first question. It's Patrik here regarding Finland. I mean, if we start with Finland on a broad perspective, first of all, we are not, of course, satisfied with the performance in this quarter, but we continue to focus on, first of all, we continue to focus on our customer experience and the satisfaction. And I mean, we have also been credited for the best network and also the best customer experience, highest NPS in Finland, which we are, of course, proud of. Then, just to remind you what we're working on, I mean, we have three main activities in Finland. First of all, is to stabilize the customer base that we're working on. The second one is to improve the profitability, which clearly you can see in the financials for 2025, where we improved the EBITDA by 4.4%.
And then we want to increase the share for our SME customers. And on top, of course, we continue to simplify the business and clean up the portfolio and also in the organization. So then, how does it look going forward? Well, we expect some improvements already now in Q1 and also towards the rest of the year. So we will expect improvements both when it comes to service revenues and EBITDA. And if you look at the takeout that we just also mentioned, which is the second question, and Eric will take that one, the major part is actually coming also from Finland. Our big part is coming from Finland. So we are doing activities. We have a plan in place, and I think we will see improvements in this year now in 2026. Thank you, Eric.
Yeah, with regards to the guidance of 3% EBITDA growth for 2026, well, first and foremost, it's very much in line with our mid-term ambitions. If you recall, that's a 4% CAGR over that period 2025 to 2027. And as a reminder, we did 5.2% in 2025. The other thing to remember is 2025 obviously enjoyed the great benefit of the change program, taking out 3,000 net positions. And of course, we will continue to find out our cost savings, but the impact in 2026 from headcount, lower headcount will be less because, as we just said at that announcement, there's a net positions of 450.
Okay, thank you.
Our next question comes from Owen McGivern with Bank of America. Your line is open. Please go ahead.
Hi, good morning. It's McGivern at Bank of America. Thank you for taking my questions. First one also on Finland. Just maybe a bit more color on the weaker enterprise deal flow that you've seen in B2B. Would you say this is a continuation of kind of a tough market backdrop that we've seen across the year, or are there idiosyncratic factors here for Telia? And then the second one, Norway growth remains challenged. Now with the new CEO in situ, how should we think about the phasing of the recovery over full year 2026, noting that the comp is probably quite tough in Q1? Thank you.
Yeah, shall I start with Norway maybe first? So we still have one quarter of Ice impact in Norway, which, as we said at the time, was around SEK 400 million for that full contract, both revenue and EBITDA. So there's about SEK 100 million left impact in the first quarter. And then, as we've said, with the investments we've done in sales and marketing and in general how that market is developing and the impact that we will have, we feel quite confident that that business will improve through the year. With regards to Finland and the weak enterprise, it actually was a very strong, exceptionally strong Q4 in 2025. These enterprise sales are always very lumpy, so we had quite a few in Q4 last year and a few less this year. I don't think there's anything structural on it.
The macroeconomy that we see in Finland is in our portfolio one of the weakest, but it's not particularly weaker now than it was last year or the year before. If anything, Patrik pointed out to what we are focusing on, which is making sure we stem the decline in mobile market share, but also capturing that opportunity in SME, small, medium-sized enterprise market is super important for us, and there we had very, very good traction. The last point on Finland is EBITDA margin. So EBITDA went up, margin went up 120 basis points, if I'm not wrong, this year, up from below 30% to above 31%, and there is more to be done there. This historically has been a business that was less efficient, and it's one of those things that we called out in the September 2024 Capital Markets Day.
Margin expansion is important for all our countries. Apart from Norway, because of the Ice contract, all countries have improved their margin. There is particularly more upside in Finland to go in 2026.
Perfect. Thank you.
Our next question comes from Erik Lindholm with SEB. Your line is open. Please go ahead.
Thank you. Good morning. So two questions, if I may. I just wanted to start on Sweden, mission and business critical revenues, really strong, as you said. How are you thinking about the opportunity to drive continued growth here in 2026? And is this something we should sort of expect to see driving growth for several quarters in a row? And then secondly, on Norway, you mentioned quite clear improvements in terms of ARPU in this quarter. What are you seeing in the market, and in both fixed and mobile, that is allowing you to push through these quite large price increases? Thank you.
Good morning, Eric. I can start with the first question regarding Sweden. We have good momentum in Sweden, as you saw also in Q3, which is very positive. It's obviously the biggest market for us and the most important one. When it comes to mission critical, we continue to see the demand. They will not change compared to this year, but you cannot say it will continue in the same pace every quarter. It goes a bit up and down depending on the demand and also of timing questions, but we expect to see a similar demand in that segment also in 2026, as we saw in 2025. This is one of the growth drivers that we have here in Sweden, but a very solid performance, and I would expect this will continue into the next year as well.
Yeah, then on Norway with regards to ARPU, absolutely it was important for us to make sure that you have the right combination of volume and pricing. So quite a lot of price increase, both fixed and mobile, towards the end of the year. Why is it possible, was your question? Because it's a very healthy market, as many of you write. It is one of the best markets in Europe. And I would say, if you look at our Sweden performance, maybe challenged by, started to get challenged by Sweden. The other thing is we continue to invest there. So if you look at that three-player market by continued investment in fixed, whether that is fiber, but also on network coverage on 5G, where we have a leading network that allows you actually to price that with customers.
I think thirdly, what defines that healthy market is good macro, clearly good macro economy. And on top of that, it's very, very rational, yeah, acting by the incumbent as opposed to Finland, which really, really helps this market.
All right, excellent. Thanks.
Our next question comes from Andreas Joelsson with Carnegie. Your line is open. Please go ahead.
Good morning, everyone. Two questions from me as well. You have touched upon it a little bit, but on the growth guidance, could you state the three most important factors that you expect drive that growth to 2%? You have had some headwinds in 2025 that will fade, but other than that, what are the key critical factors for the 2%? Secondly, on the balance sheet, you will now pay for Bredband2 soon, but I guess Bredband2 will generate positive cash flow, which is not included in the guidance. Then hopefully you will divest Latvia. In the event that you would return to below 2x leverage after you paid for the acquisition, what is the main priority for that sort of excess cash, if you could call it like that, being below the leverage target? Thanks.
Yes, good morning. I can start with the growth coming forward. I mean, the elements of what is important to you, the question you asked. I mean, of course, it's important for us that Sweden continues to perform, especially we have the mission critical. We know that that will continue. The demand will be there also for 2026. But then we have also pricing, which we have done. We are doing some pricing now in, we have done recently in Norway, etc. So we are doing that all the time. So I think those in combination will then help us to reach the around 2%, which we are guiding on the outlook for 2026. And then, of course, we expect also some improvements in Finland and then Baltics continue to drive. So I think that is overall, I feel quite comfortable on that outlook for 2026.
Yeah, then with regards to the balance sheet, so when we do Bredband2, just to remind you, it's about SEK 3 billion, right? So that adds, what is it, 0.1x to what we have, which brings us then slightly above the 2x. Then let's see when Latvia materializes. So we will be close to the bottom of that range. And we feel quite comfortable with that. The second part of that question is related to what do we do when there's excess cash? Maybe it's best to explain it as follows. We take, as we said at the investor update, capital allocation very seriously. And in that vein, you've seen us reduce OPEX, you've seen us reduce CapEx, and we will continue to do that going forward. Then we invest in growth, like for example, mission critical, right?
Sweden's strong performance is partly because of mission critical accelerated. That requires investments, both people and also CapEx. And then we have a balance sheet, a balance sheet that allows us to do, as I just said in the analyst presentation, accretive bolt-ons, which is great. And as cash flow continues to grow, then we can start to think about what are we going to do with regards to shareholder remuneration. Well, today, as you've heard, we announced to increase the dividend. And then let's start to get through 2026 when we start to deliver on the guidance of SEK 9 billion on a path to SEK 10 billion by 2027. And I think sequentially we then can think about with a healthy balance sheet what we can do in terms of shareholder returns.
Thanks a lot.
The next question comes from Fredrik Lithell with SHB. Your line is open. Please go ahead.
Thank you very much. Good morning to you all. I have two questions. The first one is really if you could elaborate a little bit on the net working capital in Q4. You have spelled out phasing of billing and customer payments, but if you could sort of put some type of numbers on it, it would help a little bit. Second question is on the upcoming regulation in Sweden on B2C fixed fiber SDU. When that comes into effect, I mean, that's a stronghold for you, that market. How will you go about to defend your position there when it's going to be open for more competition? It would be interesting to hear. Thank you.
Competition? Do you want to do?
Yeah. Hi, Fredrik. On B2C fiber SDU, I think that regulation has been in the. It's been worked on for several years. It's still not in place, and once it gets in place, it will take time to implement it. Some of the proposals that have come along have been a bit more positive and some a bit less positive from our point of view. So I think we need to sort of see where it lands before we can say exactly. But in general, we are regulated today, and we see that hopefully the regulation will create a more level playing field going forward. There might be some drawbacks for us, but there might also be opportunities for us to invest into networks where we're not present today.
Sorry for a vague answer, but the regulation isn't really in place fully yet, so I don't think we can say more than that at this point.
I can just add, I mean, it's a bit difficult, as Eric is saying, to judge where we will end, but clearly we have pushed for a more level playing field in the market, given that we are regulated. So I think that is an opportunity for us, but we have to wait and see where the outcome will be because it has changed during the years a bit back and forth. So let's see where we will end. I'm not even sure that there will be a regulation this year, given that we have thought this for many years now. So let's see. But I think for us, it's actually more an opportunity than a risk. That is our internal judgment so far.
Perfect. Thank you.
Yeah, then with regards to working capital, you're going to get an equally vague answer, I'm afraid. So as I said in my voiceover during the analyst presentation, it's partly planned. So the work that we do, which is what? Making sure that you issue invoices early and that you do good management of your inventory, etc. All of those have benefited, but there also were external factors, as we said, which is people literally paying us that typically wouldn't pay us, as we've seen in the last couple of years. Read into that what it is. Part of those planned initiatives, for example, is the way we're billing people in Norway, which had roughly a SEK 400 million impact. So it's part of the work that we did, and it also allowed us, obviously, during the year to do the free cash flow upgrades.
But it was certainly more than what we had planned. I think maybe equally important is to talk about what it means for this year. And again, just to repeat that, what I said in the analyst presentation is we expect it to be neutral for 2026. Partly that is the reversal, some reversal of the high inflow that we had in Q4. And on the other hand, the work that we continue to do to improve working capital. So where in the last two years we were guiding for inflow for 2026, we're guiding for neutral working capital.
Okay. And in that neutral working capital, will you still have sort of pensions coming your way in that equation?
Pension?
Pension, look, we pay pension to the people that worked here in the past, and then we get a refund from the pension foundation, as you know. So that's normally a sort of a wash, more or less. And that shouldn't really affect working capital. So that's not really a part of that. But I think we expect this, as a starting point, we expect the normal sort of SEK 900 per year refund that we usually get for 2026 as well.
Yeah, if you think about the growth from where we guided for SEK 8 billion last year and we're guiding for SEK 9 billion now, that increase, it's not driven by pension. As I said, because working capital is neutral, it is also not driven by that. It is driven by our EBITDA growth.
Yeah, perfect. Thank you, Claire.
Next question comes from Nick Lyall with Berenberg. Your line is open. Please go ahead.
Morning, guys. Hope you can hear me. It's a quick question about Swedish service revenue growth, please, and the improvement there. About half of it seems to have come from other. So could you maybe just tell us what the other bump-up is? And then in mobile as well, the R2 has improved quite strongly this quarter. So could you tell us, is this a timing of price rises? I was surprised a little bit about your comment that you thought that growth would keep on coming, but at a lower rate. So could you just explain also why that lower rate for 2026? Is that just a function of other not being repeated, or is there something that's going to be lower in maybe mobile or fixed as well? Thank you.
I didn't hear all the questions, but I will try to take the first one because that one I could follow, but help Mel and colleagues here in the room here. So when it comes to other revenues, that is partly the mission critical that is included in that one. So if we start there first. And then the next question was, Eric?
I understood mobile R2, but.
Yeah, Nick, go ahead.
Yeah, sorry, guys. My headphones got fixed. Yeah, the mobile ARPU was quite strong in the quarter, so it improved quite sharply. So is that the timing of price rises, or is there something a bit more fundamental there? And the final question was just about, I think you mentioned about maybe slower growth continuing.
Oh, we lost you, Nick. We heard the beginning of the question. Is mobile ARPU up because of pricing or something more fundamental, I think, was the question now?
Yeah, very much. I'm chiming in. Yeah.
Was the mobile ARPU question about Norway?
Or Sweden, I think.
Or Sweden.
Sweden. Sorry, Nick.
Sweden, please.
Yeah, I think it is a smaller increase, and it is because of the ongoing amendments of the portfolio and price changes we are doing. So nothing really big there, I would say, on the pricing. So it's just the ongoing strategy.
Okay. I think you can hear me at all still, guys.
Yeah, we hear you barely.
Yeah, I'm sorry, Nick. So I'll try once more, and if it doesn't work, just cut me off. But you mentioned as well about the growth coming through, but at a lower rate in Q4, Eric. So is that mobile and fixed at a slightly lower rate, or is that just a function of that other revenue growth falling away? Why at a slower growth rate than Q4 for 2026, please?
In Norway or which country?
Which country, Nick? Sorry.
Still Sweden.
Oh, still Sweden.
Still Sweden.
The other is really strong. So I'm not sure what we're looking at. And partly it is the bad connection, I think. But mission critical is really driving other in Sweden. It sits in different buckets, but to be clear, that is if you think about the strong growth in 2025, but certainly also in Q4 for Sweden, which is driven partly by fixed, which is TV and broadband. But then on top of that, you have the strong growth in mission critical. Thinking about it in a slightly different way, very strong performance in consumer up 4%, slightly less good in B2B because we've seen that takes a while, right?
We haven't really guided per quarter. So if that was a misunderstanding, sorry about that, but we haven't really got into that. As Eric says, consumer is strong over 4% growth, and the mission critical is strong. It's also the main growth drivers in Sweden at the moment.
Okay. Thanks very much. Sorry about the headset.
Yeah, no worries.
Next question comes from Abhilash Mohapatra with BNP Paribas. Your line is open. Please go ahead.
Yeah, good morning, everyone, and thanks for taking my question. It was just around your sort of free cash flow and FX, actually. So you mentioned in Q4 how there was a sort of FX headwind of SEK 300 million, which you managed to offset. Obviously, the Swedish krona has strengthened quite a lot over the last two or three months since your Q3 results. But you've still reiterated your 2027 free cash flow guide for sort of greater than SEK 10 billion. And today, obviously, you've sort of guided in line with consensus for 2026 on free cash flow. Just wondering what steps are you sort of taking to offset what looks like a pretty material FX headwind? And also just related to that, if you didn't have that headwind, all else equal, would your free cash flow guidance be higher? Thank you.
So first foremost, the SEK 300 million wasn't a Q4 effect. It's a full year, 2025 effect. Because if not, then we would be talking north of SEK 1 billion. Of course, you have to take that into account when you are guiding. At some stage, you need to fix it, and let's see how SEK trades versus the euro. So for us, delivering that 9.3 or the 9.6, depending if you look at report on a normalized, is obviously very good to see that in the context of all the headwinds that we saw. If you think about the Norway wholesale contract, if you think about Finland in Q4, and if you think about FX not being our friend. So from our side, guiding for around SEK 9 billion for this year is something that we feel very comfortable with, that we as a team feel that we can deliver.
Let's see how the year evolves.
Thank you.
Our next question comes from Akhil Dattani with JP Morgan. Your line is open. Please go ahead.
Hi guys. I've got two questions. The first is Finland. You mentioned there's much more upside on your EBITDA margin there. So you've obviously mentioned the FTE reduction mainly coming from Finland. What are your other key priorities in this region to step up that margin? And my second one was just around your midterm CapEx ambitions. I see they're still below SEK 14 billion. Obviously, you've guided to below SEK 13 billion for this year. So is there anything you expect to change into 2027 where you expect CapEx to step up? Because obviously, the trend is being broadly on the way down. Thank you.
Hi, good morning. I can take the question number 2 regarding CapEx, starting with that first of all. No, we have a guided outlook for 2026 at around SEK 13 billion. And we don't see, I mean, the targets for 2027, we set back in September 2024. So they still remain in order. And the most important part there is actually for us to deliver above the SEK 10 billion in Free Cash Flow for that one. Then we change the guidance for the CapEx in 2025 to SEK 13 billion, and we stick with that for 2026. We don't see that we will increase that in 2027 either. So this is just what we are just guiding at the moment for 2026 for the outlook, not for 2027 at the moment.
Yeah, and on Finland margin, in essence, it's a handful of things. First and foremost, we are a people-intensive industry. So making sure you have the right number of resources there is what is driving that. You already saw that this year in the EBITDA margin increase in Finland. And more of that will come because, as we said, a disproportionate amount of those net reductions, gross 600, net 450, because we're also growing in other parts of the organization, will take place in Finland. So that naturally will help. It's also the market where we have the lowest salary inflation. So that helps us a little bit. And there are further initiatives that we are taking to make sure, yeah, we are disciplined when it comes to cost. I think the other one is what type of products are you selling?
We've been very clear about last year selling this non-core e-invoicing business, which was about EUR 12 million of revenue. Let's call it SEK 150 million, with pretty much no margin on it. We own more of those businesses. So rationalizing this portfolio in Finland, focusing on core, focusing on more profitable products, will also help us to increase both gross profit margin, but also EBITDA margin. Those are the initiatives that we're taking.
Great. Thank you.
Next question comes from Terence Tsui with Morgan Stanley. Your line is open. Please go ahead.
Good morning. Thank you very much for taking my question. Just back to Finland again, I'm sorry, but focusing a bit more on consumer mobile. But we're seeing some structural changes in the market in your view now. Is it being a bit tougher to do more 5G upselling and the consumer being a bit more price sensitive? I'm just looking at your mobile CAN number, and Q4 is always seasonally high, but this year it's much higher than what it was last year and the prior year. And then secondly, on free cash flow, can you just repeat the comments again? Why you expect free cash flow generation to be a bit more back-end loaded this year? I've noticed in previous years it's been a little bit back-end loaded, but not significantly. So just wondering why this year may be particularly different. Thank you.
Yeah, good morning. I can take the first one regarding Finland. Yes, we see some more intense competition in Q4 this year compared to previous years. We see also more customers changing operator in this quarter. This is driven also by entry of two new MVNOs coming into the market that will obviously want to take their share of the market. And also we, of course, because we want to try to defend our market share. But we have seen some more activity also on the lowest price levels, but we didn't compete. We didn't actually go into that war. So we stepped out a little bit on the lowest price levels. But clearly, we have seen an increased intensity in the market now in Q4, definitely. But let's see how that will develop now in Q1.
Yeah, with regards to free cash flow, yeah, absolutely. It's more back-end loaded than last year. Just to give you a sense, last year it was roughly around the numbers, 40%, 60%, H1 versus H2. We're looking at around 30%-70% for this year. So a bit more skewed towards the second end. Why is that? And also in the comments, we said soft start to the year with regards to free cash flow, partly it's the working capital reversal, right? The big inflow reverses mainly in Q1. So that is a lower starting point. And also the interest payments, they tend to be more H1 weighted. They're even a bit more this year. Why is that? It is because if you look at the big decrease in gross debt that we have had as a company, we still have the same number of hybrids.
The payments for those are more skewed towards Q1. Yeah, the last point I would make is we had a really good Q4 performance in Sweden. We're saying that will be a bit softer in Q1. The reason for that is the lumpier nature that we have of part of our enterprise business, including our very successful mission critical and business critical business. The combination of those three makes it a slightly slow start to the year, which would be preferred to tell you now rather than have any surprises when we report in April.
Thank you, Eric. Thank you, Patrik.
Thank you.
Our next question comes from Ulrich Rathe with Bernstein. Your line is open. Please go ahead.
Yeah, two questions from me, please. Thank you. The first one is you explained the EBITDA trends in the fourth quarter in Finland and Sweden, in particular with reference to marketing, higher marketing, marketing phasing. The KPIs aren't obviously strong in mobile. I think excluding M2M, you're still losing customers after pretty encouraging results, certainly in Sweden in the second and third quarter. So my question is, how do you actually measure the success of marketing if it's not the KPIs? Is it KPIs a quarter out then because it's a delayed effect? Or I think you referenced NPS earlier without actually giving numbers. Or what else do we sort of look at when we want to see how effective your investments in marketing really are, especially when you ramp it up in a given quarter?
My second question is, on the dividend, you highlighted the growth, but it was below market expectations. I think that was pretty clear. So while the free cash flow was above market expectations, I'm just wondering what thinking was behind setting the dividend at this particular level, appreciating its growth, but obviously slightly below what we all expected. Thank you.
Yeah, now we see different consensus numbers because it's very much in line with what the expectations is. It's also we're not there to beat the analyst expectations. We have a stated dividend policy, and that stated dividend policy says that we will grow the dividend by low- to mid-single-digit. And then the other point is, I'm very happy that finally we are in a place after a couple of years of keeping it flat that we're able to fulfill that based on the strong performance in 2025. I think the next one is we want to have a sustainable dividend growing because that's what ultimately is attractive for capital markets. So that's why we came up with this choice of increasing it by 5%.
When it comes to marketing, there are different ways here. What we have invested is more in marketing. This is not a short-term impact. It will give impact for a longer run regarding this. If you pay more commissions, you get an immediate impact. But if you do marketing, that will take some time before it comes to be visible in the market. We are measuring the KPIs that everyone else is measuring when it comes to performance marketing, etc. There's nothing unique for us. But I think we will not see an immediate impact on that one. We'll see a bit longer impact on increasing marketing spend. This is actually for preparing us for 2026.
Yeah, if I can build a little bit on it, it was Finland and Norway that we flagged for increased marketing this quarter. Finland is an unusual quarter in terms of the market situation. Norway is a bit of an unusual quarter when it comes to our actions because sales were actually very good. But we did a couple of things. We did increase prices quite a bit, which you can see in the ARPUs. And we did also do a billing shift where a lot of customers were asked to pay two bills in a month, basically, because we started to bill in advance, which many operators knew. But we introduced that in Norway this quarter. So those things always have a predictable churn effect, and they did. And that was fine. That was in line with expectations.
But considering that, I think we were quite happy with the sales in Norway.
Thank you very much.
Our next question comes from Oba Agboola with UBS. Your line is open. Please go ahead.
Hi, thanks for the presentation, everyone. Just to ask about Finland again. So there was a comment in the presentation or press release that said the financial impact of increased competition is limited. So I just wanted to understand, given the uptick in competition, how were you able to limit the impact on service revenues? And then also just a bit of color on potential phasing. Do you see Q4 as kind of a peak in mobile competition? And how should we think about competitive developments in Q1 and beyond? Thank you.
I think I can answer the first one because it was probably in the email we sent out with the report. We just wanted to be factual about the financial impact. Of course, there is financial impact from the market situation. Just in the short term, it is a bit limited. The major part was how the timing of B2B deals come in. So it was just to clarify that. And so let's see over time how that financially impacted. It depends how the market situation develops, which is your second question. And it's not really, of course, in our hands. There are two new players in the market. We'll see how those act. But we focus, as Patrik says, on the customer experience and our basic strategic goals. And also we think it will be a bit, I mean, we think we will have an improvement in the first quarter.
I think also the market will calm down a little bit. Q4 is always extremely intense when it comes to competition. This year, extra intense in Finland because of the launch of the new two MNOs coming into the market. I think that is also pushing the market in Q4. We think and believe it will be calmed down a little bit now in the beginning of the year.
Okay, thank you very much. Just a quick follow-up. Have the two new MVNOs been particularly aggressive? Are there any differences in the behaviors between the two, just initially, from what you guys have seen?
So competition varies from week to week. There's been, as has been already discussed, a very, very intensive quarter. The number of people changing operators has been the highest for many, many years. But it is also the usually high campaign season. So we just have to monitor the situation and focus on our own customer base, basically.
Yes.
Okay, thank you.
Thank you. Our final question comes from Siyi He with Citi. Your line is open. Please go ahead.
Hello, hi, good morning. Thank you for taking my questions. I have two, please. The first one, you just really follow up on your dividend policy, which you're guiding for low- to mid-single-digit growth. But if we look at your free cash flow profile, I think underlying is growing more than 10% every year over the next two years. Just for one, if you can help us to understand how to bridge the current dividend policy, what is your free cash flow ambition, and whether you think there could be a scope to update on that policy? And the second question is a clarification, really. I think, Eric, you mentioned that you see Sweden as a market is challenging Norway as one of the best markets in Europe.
I'm wondering if you can talk about where you see the dynamic changes and whether that gives you more confidence on the growth profile in Sweden. Thank you.
Yeah, Sweden has had an amazing 2025. If we look at the consumer growth, how B2B is holding its own, what is a more competitive market, I think it's a really massive result. And I think it's that, again, go back to the investor update in September 2024. We had this thing that we call the smiley face, which is including legacy, of course. You have service revenue declining for year after year, that kind of bottom out in 2024. And since then, we have this growth, right? So pictorially, it looks like a smiley face. Yeah, that has been a massive success. And if you then look at what the competition is doing, if you look at their results, where they also have profitable growth, yeah, that bodes well for that market.
At times, we have said the only part where that is not the case is sort of the no-frills mobile segment because there's so many brands there. But it's such a small part of our business that it doesn't really affect us, as you have seen in the Q4 results. So the other one, I think, at the growth and mission critical, we said it's going to double. We have done more than that, and that continues to accelerate, which again bodes well for our path to SEK 10 billion. I think the last point that I would make is the price increases that we have seen, right? What typifies a rational market is where people are not lowering prices, but actually increasing prices. And what we have seen of our competitors, yeah, even this year, they have started with increasing prices across the board, both fixed and mobile.
For us as a market leader, that obviously is good because that allows us to continue to have that price differential given that we are the premium brand. So put all of those together, even though we are a four-player market, as we sometimes say, yeah, it's a very, very healthy market. So very happy with that. With regards to the dividend policy, yeah, I think on several occasions we have said, I think it was even at your conference, that at some stage we need to come out with sort of that final leg of a clear policy that says basically it could say something like, what is your payout ratio? How much of your free cash flow are you paying out? For us, we are on this value creation part of going from what was less than SEK 5 billion to SEK 10 billion by 2027.
During this period, I think we will decide what that ultimately looks like for the years beyond that. It's a bit early days. For now, we're very happy with the fact that we covered the dividend with our Free Cash Flow and that we were able to go back to what our current stated policy is, which is this growing dividend per share. We're very happy with that after two years of running the business.
Can I just add something also on Sweden, also on the consumer side? I mean, we have a well-functioned machinery there when it comes to convergence as well. So we have called that out in previous quarters as well, where we sell both broadband TV and mobile. And especially we've been focused on TV. And you see that we continue to grow in that kind of services. And it's a really appreciated service for our customers. So the converged play that they have both broadband TV and mobile on top. So we're very happy with the machinery we have in Sweden and the consumer side that actually takes that position. And we have a quite unique position there in the Swedish market. So that's very valuable for us.
That's very clear. Thank you.
Operator, are there any more questions on the line?
That was our last question. Thank you very much.
Thank you. Thanks, everyone. Many good questions today. We look forward to seeing you face to face in the next few days and weeks. Thank you and goodbye.
Thanks so much.