Telia Company AB (publ) (STO:TELIA)

CMD 2014

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Sep 30, 2014

With that said, it is time to kick off. And I am delighted to hand over to our CEO, Johan Dennerlin, for a strategy update. Please, Johan. Good morning, good morning and warmly welcome to the Capital Markets Day twenty fourteen. I have been looking forward to this a long, long time, but it is only now when the complete new management team is in place that I wanted to have this. So I'm delighted to have my full management team here today, not everybody on stage, but all here present for you to meet and mingle with. Delighted to see you also on the webcast. I don't know how many you are yet, but we will follow and make sure that we know how big of an interest it is outside this room. And in this room, we have a variety of people as you may already know, but it's interesting to see who attends these meetings. Everything from the expected group, our beer investors and analysts, our beer media, our supplier and partners, our employees. And also I noticed some executive search companies are here. So we have to perform all the way here. Again, very warm welcome. I have picked up a few expectations from you out during the coffee round and made a few changes last minute changes to make sure we cover all of your expectations. But if we don't, then you will have the opportunity to ask me and my team in the breaks or in the breakout sessions later on. So let me kick off with some words on Telia Sonra. I've been here a little bit more than a year. And what a year it has been. It's been a wonderful year and it's been a very, very tough year as you know. And I describe my journey so far when people ask how was it? Was this as expected? And I say, well the average is what I expected, but the extremes are much more. It's much more fun and it's much tougher. So one year down the road, I'm very glad that we're here, because the first year 2013 was a lot about changes, big changes. I doubt that many companies have gone through that many changes in such short period of time with everything as you know from Board to management to structure organization strategy, which we will talk about today. So we are now at a pace a place where we want to stabilize and shape and I will give you comfort on that today. But we're also in a situation where we need during the next two years to transform this company, core operations and also other operations in order to create and shape the new generation telco, the new telsonere if you wish leading up to 2017, 2018 when we strongly believe we will have a company that is operating as full potential. So during the period of change, you have followed us more or less in detail and you know we have had fairly steady performance. And that's an important signal that in times of big change, we have maintained focus on our customers, on our employees, delivering on our expectations more or less, which is a strong message. And as you see, there are some improving service revenue trends even if we are still in negative territory. You've also been rewarded last year with SEK 3 per share approximately 6% at the time. And we have a fairly good track record of returning a competitive amount to shareholders. So our journey has started and this is a simplified view of our industry that we operate in. And you know this well and it is a simplification I have to stress, but it is a changing landscape where we are meeting new competition not just fierce competition from traditional players, but also new competition from what is often referred to as over the top players. And we simply have to accept this new landscape. We cannot try to maintain in the old space defending the path with an old mindset. We need to step up and lead the way into the future. And we are targeting to move from an area where we have been very good in network, but also a bit stuck there only network and a little bit more into an area where we deepened the relationship with our customers both B2C and B2B and provide a fuller set of services in order to also protect the core revenues. It's very important to be further present in the customer interface and that they are becoming increasingly demanding on what we deliver to them both B2C and B2B which you will see throughout today. And the orange balls you will also see more of later on today. Some of them are referred to as adjacencies where we are making interesting bets in possible future revenue streams to be noticeable on group level. As I said, an industry in big change driven by the customer demand, driven by the customer's changing behavior where quality and capacity is taken for granted. Look at yourself how annoyed you are when you don't have full coverage and good speed on the network. That's a prerequisite today. And to be honest, our industry generally, we have not kept up with that demand. So you see our peers here and there upgrading now networks and upping their investments to cope with the demand today. We are also upping our investments as you will see to cope with the future, because it's an all Internet era we are in. We just have to accept it. Today, customers are also demanding anywhere everywhere. There's nothing new, but it is increasing by the day the expectations on availability, connectivity, comfort and security. And then something we have ignored as an industry for too long, the simplicity. Bringing simple services to our customers may seem like a thing that everybody should be able to do, but some of us including some of our operations have been stuck a bit in the old legacy and context having difficulties stepping up being simple and fast. Interestingly, fact points also supporting the change in demand that we see is the increasing streamed media in our networks. Over half of our network in Sweden this is has is now going stream media and it's increasing believe us. And we monitor it. We see it every day. We have the privilege of having the full value chain not just the end access last mile on mobile and fixed not just a good backbone international, but we have Telesomera international carrier that can also monitor this on a global basis, where we're one of the leading IP backbones in the world. So we see every day, every second how the explosion is happening. And we are present in many of the most modern and advanced markets where Internet is driving the societies. And also explosion of data over 80% CAGR the last few years, which is impressive and scary. Add to this fact that we have had and you have heard me talk about this before, during a period of time we have not lived up to our potential in core markets. Both in B2C and B2B, we have lost out market share for different reasons. And you can argue what reasons here and there. But as a general approach, we don't like to lose market share and we have done that. And we have now analyzed what it comes from and why this is and we have now decided to reverse the trends and that you will see in our presentations going forward. All of this I've just said has led us up to the new strategy framework where we are recommitting to our core by saying that we're going to enhance the core and I'll go into the details on this, but also explore the opportunities that are close to the core. So if I take the Enhance the Core just briefly, it's about to develop our core businesses in the Nordic Baltics and to take Eurasia to the next level. It's by providing superior connectivity to our customers in our markets. Internet, when you're on Telia Sonra various networks and brands, you should simply have the best Internet experience. And we believe in convergence. You will hear us speak about convergence today, not just in B2C, which is often in focus, but also in B2B, which is increasingly important where the customers are even more demanding. And then a big theme for today, we need to have our future proof operations, competitive operations we call it, which means we have to transform some of our core operations by investing to get out on the other side with a more agile and fast setup to serve the customer needs. On the Explore opportunities, we have already a presence today in some of these, which we'll hear more about both in my presentation and also Helium Barnekov further on. So let me quickly take you through each of these pillars and then we will go on to some more numbers. We showed this slide a few years ago actually that the future model is a model where we need to step up towards the customers with not just data volumes or speeds in some markets, but also with extra services, extra quality, extra comfort. And we're about to do that in many of our markets. But there is also an opportunity to provide services to our partners, our OTTs or suppliers in various aspects. And we have already developed some services there. Some are becoming noticeable. And that's a great encouragement, because we know how important it is for our partners to provide a good quality of service all the way through the networks. This is not uncontroversial as you probably know. This is what is often referred to as a net neutrality debate. What is Internet about in the future? And we can certainly talk about that in some of the discussions later on. Then we say convergence. And for us convergence are is a couple of things. Yes, it is services that are simpler, easier to deal with us as a provider by one stop shopping, a broader set of services, not just consumers, but as I said also to enterprise customers. This is very important to find new revenue streams, to create more loyalty, to create the brand experience that we believe we can offer in our markets by not discounting. That's our point of departure. This is not coming in as a discounting game and Marlin will for instance go deeper into this in Sweden. But convergence is also about the delivery capacity and capabilities that we have in the network. The further out you can take fixed, the better customer experience you could provide as the Internet explosion is happening. And that is where mobile has a limitation in some markets at a certain point in time and that's where we will endeavor to have fixed as far as possible, because it gives simply a better customer experience. As you know, five of our seven markets in the Nordic Baltics, we have fixed the mobile and we will make sure we leverage that to its full potential. Then Eurasia. There are great potentials in Eurasia and there are great challenges in Eurasia. I don't have to say that many times. Let's talk about opportunities first. There's a market where the old model is still growing I. E. SMS, voice and to some extent data is starting to pick up, but it's still in an old pricing model in all of our markets. And we are in a migration now where also data will boom where we need to invest to cater for this pent up demand that is mainly held up by handsets and the prices of handsets. And Erik will further down the road here explain the situation for instance in Kazakhstan. So we believe that the Internet opportunity in Eurasia is fantastic, but we have to invest to serve that opportunity. B2B is also an area where it's apparent that we have opportunities and upsides. How big? Hard to say, but it will as these societies develop become increasingly important with solid B2B services also here. And here we have now a focused strategy that Erik Halberg will speak about later on. But then again Eurasia is a tough market. It's a tough region and we are constantly reminded even today or yesterday about the news that is always coming out or is coming out of these markets. And you know we have said it and we continue to say this that we will in our new focus on governance and control search here and everywhere for things to improve. And when we see things that needs to improve, we will address them. And this means that we are also, as I say in my last bullet here, we continue to evaluate the risk reward in these markets. You cannot ignore the difficulties, but you cannot not ignore the opportunities either. We're trying to balance this going forward. Then the numbers. We are investing 2,000,000,000 over the next two years to transform the company. Without these investments, we will not be able to save more on the bigger scale savings because the easy savings, if forgive me for the expressions, is conducted more or less. We can do some more here and there. But the big structural savings, we can only attack and address by investing. And therefore, we're committing ourselves to a SEK2 billion savings kicking in 2017 full potential 2018 full year effect 2018 of SEK2 billion per year. It's a great business case invest to get to every year. It's about executing this and committing to this. And this is what we're doing here today. The other thing we're saying is SEK 4,000,000,000 to 5,000,000,000 of new growth initiatives that we want to invest in. And this you will hear through the presentations today, fiber in Sweden, Internet push in Eurasia, B2B uplift in pretty much all markets. And this requires us to add CapEx to get these growth initiatives going. It's a big commitment as well. And as you see, we don't put a number on what that upside is. Hopefully, this will get us back in our ambition to get top line growth for this group. We know that the initiatives that we have identified will provide growth itself, but will it be enough to produce profitable growth for the group? That's the big question and that we will not go into more detail than saying it will reverse market trends. It will support our growth in our ambition to get back to profitable growth. Then our adjacencies or our areas that complement and strengthen the core. We you may think these are all new things, but we're actually well established in some of these areas. And Helen will go into these, so I won't spend much time other than mentioning that some of these are well established like TV, music, M2M, but the others are more emerging where we are evaluating how to get these initiatives going in the right markets. But this is very exciting and it provides opportunities to hit those spots, revenue spots and growth spots that we as an industry have opportunities, thanks to our heritage, thanks to our presence in the markets and for instance, thanks to our presence in the living rooms by having 1,500,000 TV customers. So here is a great opportunity that we will continue to explore. We're putting it higher on the agenda for you and also starting to more to report on it and talk about it more and more. On the responsible business, there will be a special breakout this afternoon where you have the opportunity to meet with Mikaela, our Chief Compliance Officer and Peter Borisos, Head of Group Communications, where we are showing what we're doing. It's not just words, it's action. And before we start talking about social investments, environment, which is important for us, which we're doing. But before we start talking about the brand building stuff, we need to regain trust. So all our focus, the first year has been on regaining trust by establishing a strong compliance program in some core critical areas. And a year ago, I showed you a slide in a special update to the investor community focusing on responsibility, responsible business, which all of you should do by the way, but that was a special focus. And this was the picture. This was the assessment at the time on our focus areas where we were. And our focus areas identified as anti corruption, freedom of expression, occupational health and safety and customer privacy. Then we have established, I would say, close to best in class best practice compliance program, where we've upgraded from no people to a lot of people, where we have upgraded from having no view on how to run control and risk in these areas to having a very structured approach on the eight step model, which some of you are very familiar with to the point where we're now in twenty fourteen October have moved according to our plan where a lot of things are progressing to according to our plan. I want to stress that the green bubbles here are doesn't mean that we have risk done all home free let's go. It means that we are progressing according to our plan in mitigating the overall risk, which are still critical and high in many of our markets in these chosen areas. So even if we're progressing to plan, we still have a lot of work to do and a lot of risk to deal with. But it gives me great comfort for instance, if you take one of these areas that the anti corruption program rolled out in all our markets in Eurasia near 100% have both completed it online and had face to face trainings. That's where it starts. To start pushing our new values, our new views and our new governance and leadership takes time, but we have come a long way and it gives me comfort that we are preparing for the future. Let me say a few words also on the M and A and our footprint situation. We get this question quite a lot. We are in strong positions in most of our markets, number one or two in all about two, which is Spain and Denmark. We are seeking opportunities, in market opportunities be part of the consolidation where we are. We have showed it already on a smaller scale in both Finland and Denmark and Sweden. We have done bolt on acquisitions. We've done a medium sized acquisition or are about to complete hopefully a medium sized acquisition in Norway, which you will hear from Robert later on from Europe how that is progressing. But we are confident that this will go through. And we're working hard with the regulator the competition authorities and the stakeholders to make sure that we can complete this transaction and we're still of that view. And we have a strong balance sheet that we can use in times of opportunities and that you know. I think the big question mark and I already picked up some of that this morning, what are going to do in Spain? And Spain is let me go back one or two steps. Spain, Joigo started a few years ago and has done an amazing job. The team there, 100 people have operated in a tough market already then, got to 7% market share, excellent operational efficiency and execution, shaken up the market, attacked the big ones and made progress. Market is changing. Convergence has really kicked in. Spanish economy hasn't been the best even if it's recovering now. Has put and also MVNOs coming in from underneath squeezing Joergo to a difficult position in the middle. And that forced us to put Joergo under a strategic review. How do we take Joergo from here? And as you have followed the news, we don't have a solution. We haven't commented on any solution there yet. And we don't have the solution for you here today. So I hope I'll take some of those questions out of the way right away. But Spain is default where we are and we have to execute on our priorities, which we're doing well, still taking market share. But we are very focused on looking at what options we have at hand to make it a sustainable case where we come to profitable levels that we can accept or find solution that reduces the exposure. And we don't have that solution for the moment. That was M and A. A couple of words on our associates, our important associates. As you know, this is roughly 60%, 62 depending on the price per day value if you take the market cap and our share. So very, very important associates. Let me start with Megaphone, a company that we are closely working with through the Board presence that we have. Very happy with the management, building a strong megaphone in Russia, where I think they're doing as well as they can in an increasingly difficult and unpredictable Russia. And I don't think we have to speak much about the difficulties that we see in that sense. It's just to note that it's somewhat unpredictable and very difficult. But we like Megafont as a company. So it is a 25.2% holding. Yes, it is a financial holding, but it is a company that we like. However, is different. Turkcell is a situation where we're quite frustrated. As you know, it's been a long ongoing dispute and between various parties where we need to get to a conclusion. We always say very soon. And it is still we want to get conclusion very soon, but are still realistic that this is complicated and it will take time. There are a couple of things happening for you following the news that the situation changed somewhat or clarified somewhat I should say during the summer where the redemption of the shares between Shukurova and Altimo was sorted out and it was Shukurova who managed to redeem. And I said that was one important point to clarify who is our key speaking partner in these discussions. And it's still the fact that all three main shareholders including the Turkish government will have to in the end come to some sort of an agreement how to solve this. And the date we have nailed down in the calendar is a very, very important milestone is next year in March, I believe it is now, where the Capital Markets Board get increased rights to do decision make decisions in the AGM, because we haven't solved our issues. So I think that has put pressure on all parties to start talking more actively and proactively. And believe me, it is happening. And that's pretty much how much I'm going to be able to say on Turkcell throughout today. Then during the next two years, we are committing to some upped or increased investments up to NOK6 billion to NOK7 billion during the two years. It is weighing on the cash flow, but we are confident that we can do this without compromising on the shareholder returns. And therefore, we're saying at least NOK 3 per share for NOK 14 and NOK 15 paid out in 2015 and 2016, obviously subject to final approval by the AGM. But that's the target we have put for ourselves at least NOK 3 to give you comfort that during this investment phase and transformation phase, we are also focusing on shareholder returns. So let me round off and summarize, which we will have an opportunity to do later on as well. The company the new company is taking shape. I have a new management team that is fully committed to delivering on this ambition. We have a well defined strategy, which is ambitious and in many aspects leading where we are doubling down on our core, enhancing the core. We're exploring opportunities close to the core. We need to transform the company. It's not a volunteer thing. We need to transform the company into something that becomes more cost efficient, more agile a couple of years down the road. And we're going to do it with an embedded view on sustainability and responsible business, whilst being part of the consolidation, being active in consolidation in our markets and regions, while you will have comfort on at least NOK 3 per share during the next two years. That is the short of the story. And the rest of the day, the rest of the presentations now will give you further comfort that we are executing in this direction when we go through Sweden, Europe, Eurasia and group commercial leading up to Christian who will present the numbers and then we will sum up. So I think I'm going to stop there Jesper, but I'm sure we are able to take a few questions, not too many, but a few questions at least. Yes. Thank you, Johan. I think we should take a couple of questions. Johan will be back as I said in the afternoon with another Q and A session. So we will just take a couple of questions just to move on in the schedule. We can take Sven in the corner, Lven. Hello. Yes. Good morning. Sven Schaal from Swedbank. First about convergence. Just talk warmly about convergence in the Nordic markets. But in Norway, you lack the fixed line side of the business, only the mobile side. First of all, you interested in buying Jet? And now when Jet is sold, how will you look at that in the Norwegian market? And the second question, if I may. Mean, many of us have seen the news the last few days that media companies are not allowed to own more than 20% of sorry foreign owners are not allowed to own more than 20% of Russian assets. And some think that will also come to the telecom business. What is your take on that? Have you heard anything? Have you seen anything? Thanks. Thanks, Ben. Last question first. Russia, we're monitoring closely with good advisers and presence. Obviously picking up that news, which in our discussions wasn't very predictable how that came about. And as I said, it's an unpredictable market. We see no signs at this point in time that it would be similar for our industry. And we will just continue to monitor and be present. That's all I really can say on the megaphone side. Norwegian side, we are as you know progressing with an acquisition on Tele2. Hopefully, we'll complete that in the next quarter or so. Robert will update you more on the details of the deal as such. But it's a very positive step in this market, which is importantly to your question on convergence not yet converged. It is very separated in essence in the value propositions in the market. And August is also present in one of the breakouts this afternoon, the CEO of Norway, who can explain a bit more on the actual propositions how he's meeting competition. But at this point in time, we don't see that the convergence is a threat from a customer point of view. When it comes to my other point of convergence taking fixed as far as possible, we are well advanced in having fiberized base station and taking fiber as far as possible to cater for the data need. And with regards to GET, I'm not commenting on specific acquisition. You can just note that it was a pricey one. Right. We have one in the back Andrew. Stefan Heine here. Andrew, please can you hear me? Yes. Yes. Good morning. It's Andrew from Goldman Sachs. Just a question on convergence and you're highlighting it as a positive opportunity to increase loyalty. But there are a number of players that are highlighting the threat of convergence. And I wonder if you could talk about the threat from fixed players launching to mobile. Is there any reason why we shouldn't see Com Hem as big as a threat? Is it a fixed plan moving to mobile as other cable assets are across Europe? And maybe you could talk about how the JV structure maybe makes that less of a threat? And then just secondly on strategic reviews. I think you had mentioned that Denmark was under strategic review and I don't think you highlighted it on your M and A slide earlier. I wonder if you could talk about how you're thinking about your Danish asset at the moment. Thanks, Andrew. Again, last question first. I didn't say we were doing a strategic review in Denmark. I just simply said that Spain and Denmark were the two markets where we were not number one or two. But Denmark is a difficult market. It's probably one of the most difficult or worst market in a sense from a pricing point of view and where the profit pools are very skewed to one player. And Robert will talk more about this in his section. When it comes to convergence, first of all, our convergence and the way we will offer convergence, we're very comfortable that we can provide better value to our customers, which creates at least better loyalty, maybe even an opportunity to find new revenue streams. However, we see the threat, but we have also strong governance on how to price in this space. That's one of the areas also we're working closely with the group commercial, which Helene represents. But then again, we have to react to the market and see what's happening. If Com Hem should as you point to or other cable player fixed player comes out with a converged offer on discounting, we will have to see what that means for that specific market. But it's not something we're seeing right now. Okay. I think we just need to take one final question because we have to move on down. Stefan? Yes. Hello. Stefan Goffeijn, Nordea. I have a question regarding your press release regarding the CapEx spending over the coming years. You state that you will have continuous CapEx in Telesorna's core operations, which is expected to be around 15%. And I guess this is around the level that we have seen over the last couple of years, which has incorporated quite large fiber rollouts in Sweden. And now you're talking about additional CapEx of SEK 4,000,000,000 to SEK 5,000,000,000, which should be to roll out more fiber to go from 1,100,000 households to 1,900,000 in 2018. How should we view this? Does the continuous CapEx include fiber rollout? This 5,000,000,000 doesn't come take you very far in terms of rolling out to SDU market? Are you also targeting MDU markets? Or is it primarily SDU markets? Can you please help me understand this CapEx sentence? Thank you, Stefan. I will give you a general answer and then we will leave some of the break the news for Marlin and Christian will go through even more detail. But generally, firstly clarification, approximately 15% CapEx the next two years is our base CapEx. And then we're adding during the next two years, we're adding four to five for growth initiatives and two for saving initiatives. The four to five, yes, a large portion of that is going to be fiber. But already in the base CapEx, we have fiber as you point out. But we see now an opportunity to accelerate fiber rollout to meet the pent up demand, because today we can't deliver to all of some of you here that wants it to your house or to your apartment. And we feel it's not just an opportunity. In our leading position, it becomes it feels wrong not to deliver on that. And that's Marni will show you that it also makes sense from a financial point of view. So that's the upgrade of the CapEx we're talking about if you want to know specifically around CapEx. And then please I will refer to Christian and Malin. And if you still want clarifications, we'll take it in the last Q and A. Thank you. Will now warmly hand over to Jesper maybe and then Mal. Thank you. Mal. Thank you. Mal. Hi. Sweden has for many years been the leading telecom country in the world ranked as number one. We are pioneers here in Sweden, we all. And we should maybe start to remind ourselves that we invented NMT from the beginning. Some say that we also invented mobile telephony. Five years ago, we were also the first one out in the world to launch four gs. So we have a strong pioneer position. Today, unfortunately, Sweden as a country has dropped down to become number three in the telecom sector according to World Telecommunication Forum. My ambition is not only to take TLA in Sweden to become number one or the next generation telco. It's also to take Sweden to get back to top position, because what we are doing in Thiela is that we are building the connected Sweden. We are building the future digital arena here in Sweden. I have three key priorities, but I have one key assumptions behind these three key priorities. And that is and maybe that's the most important to remember to bring the customer experience on the customer terms, on your terms if you are a Telia customer. Because the first key priority is to ensure that you as a customer always can choose where you want to be connected. You should always be sure when you are using Telia that you have the highest connection ever. Because the second key priority for Sweden is to secure that we have a multi axis that works. And a multi axis for me is that we are using all the different technologies that we have. We have built up a fantastic network that we have as a base, together with the four gs, three gs and also now a strong fiber network together with the Wi Fi that we normally don't talk about. So that is a multi access to ensure that the customer always gets the connection from the highest one. And the third key priority is also coming from a customer point of view that is the transformation. The transformation is a prerequisite for getting the number one position in Sweden, because we have not only from a customer experience perspective need to develop, but we also have to ensure that we reach a sustainable reduction of the cost base. So I have three key priorities. Let me start with the strong market position that we have and maybe it's familiar for you as well. We are number one in the Swedish market in many areas, in the fixed telephony mobile telephony, fixed broadband and also mobile broadband and number three in TV. And our position in those areas are of course challenged. You saw on Johan's slide that we have lost market share in the mobile side and we are getting a turnaround of that with this plan. And we have also been providing stable financials over the years, which we are also proud of. But now we are also ensuring that we are investing to grow, investing to transform, which is important. Let me start with what we will do then. I think the mobile business is turning data centric. It's maybe not that something that is a surprise for you, because we see a big trend shift all over the country and also, I would say, all over the world. But we are also part of an industrial challenge, I would say. And the industrial challenge is mainly in the B2B, because in the B2B sector we see huge price erosion. And also that we have and are in the middle of a big product portfolio shift. And that means that our mobile service revenue growth has been under pressure for some time, not in B2C. Yes, it's under pressure for sure, but not as much as it has been in the B2B area. But I want to point out that this is a challenge that we share with our competitors as well. When we look at the development of the ARPU, we have been working with that and we have more than 40% of the consumer subscription base now on a data centric plan. And that is a fundament for the future in Sweden. If you get back to the first quarter in twenty thirteen, we introduced Della. We followed it up with Complet as you probably have followed. And we are now also during this year changed the bucket sizes. And this is also a journey we are on. We have to learn. We have to do this together with our customers. And the good news is that the data consumption is increasing. I think there are no doubt about that. And the data volumes has increased threefold over the two past years. And also the smartphone penetration is increasing steadily. And in Sweden, it's now over 70%. And that is creating a fundament that we need for further growth, because the more smartphone, the more customers are using their buckets and that is something that we are following and seeing. The new bucket size is, I would say, a good step forward because our customers are consuming more, topping up more when they reach the limit. And that is exactly what we were expecting. So again, there is a growing demand for high speed fixed broadband services as well, not only mobile, because our customers they are using the services outside their home and inside their home. And inside their home, I can see since we have both households with fiber, but also with copper that the fiber household is consuming more. And maybe that's not a surprise either because with fiber you can have more TVs, you can have more screens. I have in my household 15 screens that my teenager boys are using all the times. So again, this is something that will continue. And this is also a reason why the ARPU has been increasing. The more you use, the more we are also improving that. But it's also that we have been working heavily with price increases, because I think that in a way you can say the broadband has been a little bit too cheap. But I think onwards, we will see a lot of upgrades also in this part. So coming back to the demand then for higher speeds, yes, that will continue to increase. And on the left side, it's a little bit of a techy fixture. I just wanted to show you that, because it's the network in and out from Sweden. That shows how much we are surfing in and out from the Swedish network. And why I want to show this is that it's only consumer driven because it's us surfing in and out and that is also increasing heavily. I know Cisco is talking about 50% increase, but we see a bigger growth. On the right side, you see also the demand for higher speed. And between 12% to 15%, the demand for FTTx has gone from 4% to 39%. And I have done my calculation how that will look like in 2018. And I think the portion of the orange will be even bigger. To support this growth of data, we have decided to continue to build our network with different technologies. And what I said initially is that we think this will be a mix, mix of different technologies. By the end of this year, we have built out the four gs network in Sweden with 99% population coverage. By the end of next year, we will have 90% area coverage. And if we combine that with the fiber build out, that is of course a big and good fundament for a customer experience that at least our customers wants to share. But it's not only about four gs, three gs and fiber. It's also to combine that with other assets that we have. We have Wi Fi. We have the copper network and we can provide a full experience with a mix of infrastructure. And that is key for us onwards. And you can also see the number of fiber connected households that has been increasing steadily over the years. I will go into more specifically around fiber, even though I'm saying that it's connected every part. And we will continue with the four gs build out. We are also continuing the investment in three gs. Many customers are still there and will be there for a couple of years ahead. Johan asked me to show this picture because maybe the fiber layers or fiber business model isn't that easy. We have a three layer model. The base layer is the infrastructure part where we are working under the brand Scanova and also Sanska Statsnet that we acquired a couple of years ago. On this layer, we have more than 180 competitors, all the city networks. And this is a passive infra layer with no active equipment at all. And in this layer, we have 33% market share. The top layer is the service provider and maybe the layer that we normally talk about, the end customer services in the B2B and the B2C. And in that part in the consumer, we have 26% market share. And then the middle layer, I think this is quite specific for the Swedish market and also the reason why we need to lightening up all the passive infrastructure. So in the Swedish market, we have a communication operator layer, where we have three big players with approximately one third each. But we have also many smaller communication operators that are operating this passive infrastructure. And why I'm showing this is that each one of these different layers is a separate business in my operations. And during last year, we acquired Citrus as you probably know. And today, we are the market leader also in the communication operator field. And just to explain that, we are doing that totally open. So we invite all the service providers that wants to offer their services on our communication operator, which means that I will have a higher penetration, because the only thing that counts in fiber, that's one thing and that is penetration. Good news for Sweden then is that 2,000,000 households still lack fiber. In the MDU part to the left, you see that 5,000,000 households are still lacking fiber. And that means that we have still room and also continuing our investment in this area. But the biggest opportunity is still in the Villa area or the SDU, the single dwelling unit, where 1.5 or 1.55 to be exact households are still without fiber. It's not in the main cities, it's not in the super rural areas. It's in the medium sized cities and also in the suburbs of the big cities. And we have decided to move forward and also continue to invest in this part. But before I go into that, I will show you what I showed 2011 on the Capital Market Day, because at that time our investment and the plan for fiber was totally new. The gray staples show what we thought would be the business case for a three year period. So at that time, I remember I said the ARPU will be $550,000,000 Now we have improved the ARPU for these customers to 600 We also said that we will be able to take a onetime fee per Villa customer of around 15,016 thousand. And today we know that it's on average 19.9, so it has also improved. The third area is the penetration rate and probably the key area as I just said. In the business case from the beginning, we said we calculated with 30%. Today, we know we have an average of 43% in our areas. And I can also assure you that this is improving all the time, because now our customers understand what to use the fiber for. We said we had no fiber fever from the beginning. Today, is a fiber fever in Sweden. And that means also on the business case that we showed 11, we have then a better payback time over the years. So the improvement of the business case also supports the next step in this area. And we have decided now to take the next step in the fiber investment part. And we target the reach, and reach is important to understand what it is, 1,900,000 households in fiber. In the fiber area, you know that reach could be also the passive fiber households, which you can see, but it's also a big step forward with the connected households. And again, this gives a good sort of ground also for improving the growth onwards. So the base investment that we have had, we are now stepping up one level more because we think that this is also a window of opportunity for one to three years in Sweden to do these investments now. And then Sweden will be sort of fibrized. And then we will have good ground to stand on further on. So we aim to invest in total for fiber of around $9,000,000 between 2015 to 2018 and that is a step up compared with today. Convergence is also a very important part of this, because in Sweden again, we have all the assets. We have fixed, we have mobile. We will be able to support the customer to use the services wherever they are. And I know that when you are thinking about convergence, you think discounts and rebates. And now we will go into a trap into this. But we have asked the customers how they want to have this. And the answer is not discounts. The answer is ensure us that you will be able to combine the services, so we don't need to think about how we are using them. So I don't think the answer is in the discount part. The answer is in the customer experience, because then the customers are also willing to pay. And the customers want complete solutions. Just go to yourself. How do you want to live? And again, we are well positioned also with all necessary pieces in place. And then we believe that simplicity and also the services itself will lead them to loyalty and premium, because that is what our customers are telling us. When we look at our customer base, which you can see also on the slide, we see that there is a from now until lunch, we will give you updates on our European operations, our Eurasian operations and also on the commercial side. And by that, it is my pleasure to hand over to our Head of European Operations, Robert Andersson. A very good morning to all of you here in the audience as well as to the people on the webcast. It's my pleasure to be here and talk about Region Europe this morning. Within the Region Europe, we have we cover seven markets and some 20,000,000 subscriber customers. The markets are quite diverse and frankly so are the customers as well. But they have one thing in common. They all increasingly use data, mobile data, fixed data. We want to help our customers to enjoy an online lifestyle, consuming social media, value added services, video, TV, whatever you have it, regardless of time and place. This trend is very much driven by the business to consumer, consumers' online lifestyle, but we also see an increasing trend in B2B. Functional activities, processes are going online as well, and there's an opportunity for us to support our customers in this activity. When we succeed in this, it will enable us to monetize data across our footprint. We are a well established player in most of our markets. This brings certain benefits. We are well known. Our brand is trusted, But it also brings a certain number of downsides and challenges. And I would say one of the biggest challenge we've had we have in front of us in countries like Finland is a transformation. We have done a lot in terms of using the sort of so called cheese slicer, looking at efficiencies, improving processes, cutting down on fat, etcetera. But in order to get to the next level of agility, competitiveness and cost efficiency, we have to not just sort of polish the hood, but go deep into the engine room. The European market is a very vibrant one at the moment. If I'm talking to Andreas Rejkstrom, our Head of M and A, he says there's never been so much activity ongoing as there is at the moment. These activities in terms of business development, M and A, partnering, etcetera, these activities are, to a large extent, driven by revenue and cost pressures by the trend of convergence as well as by, to some extent at least, by emerging European regulation. We will constantly be looking ways at to secure the right footprint, the right scale, the right technology or relevant technologies and efficient operations across the region. These are my three points going forward. Now on the bottom of the page, you see the in the graphs, the share of the regions share of the overall group net sales. We have 40% of the total group, but only 27% of EBITDA. And this goes back to what you answered about. We have some of the most the toughest markets in Europe, including Denmark, Lithuania. But to present the markets a little bit more in detail. We are the mobile market leader or runner-up in five of the seven markets. In The Baltics, we are very strong. We are strong both in mobile and fixed. In Finland, we are number two both in mobile, but also a strong number two in fixed. And in Denmark, as already mentioned, we have a it's a challenging market where we are a number three player and a rather small player in fixed. Norway, number two and Spain, as mentioned already earlier, a rather distant number four, which is a challenging position to be. If we're looking at the overall market, I would say, I hope maybe this is wishful thinking, but I hope we've seen the worst. The last couple of years have been quite tough. And if you're looking at the trend lines, somebody said this is a trend business and if the trend is going in direction, just keep doing what you're doing and get better at what you're doing. It's encouraging for me to see that the trend line is changing. And this is prior really to implementing the strategy, prior to fully implementing the benefits of a customer centric, business segment centric, market centric organization and doing and executing on the strategy. So I'm hopeful that we are on a better path. Now if I then group the countries, the operations into segment them on the basis of fixed and mobile. So we have integrated operators in Finland, Estonia and Denmark. And for these countries, it's the strategy going forward is really very much about further strengthening our position across fixed and mobile and focus on convergence. Malin spoke about convergence earlier. What we are doing is pretty much the same as she described. Then for the mobile centric operators, Norway and Spain, focus is very much really on growth driven by data growth and on structural opportunities. And I will talk some more about Norway in a few minutes. Minutes. Then last but not least, we have our not fully consolidated operations in Latvia and Lithuania. Here, obviously, the setup is slightly different as we do not have 100% control of some of the assets. Ability to move is slightly limited. But what we're doing here, the ambition here is to go for integration, go for convergence opportunities. What we can do in these markets without having full ownership is working together in the business to business interfaces in account management, joint forces in retail, etcetera. And these are things we are already doing and looking forward to doing more of in the future. Finland and Norway are quite dominating in European portfolio. As you can see, out of the EBITDA split, Finland and Norway stand for over 60%. So I think it's relevant to dig a little bit deeper into what we're doing specifically in these two markets. And we have some a couple of good cases here. In Finland, it's about transformation and improving efficiency. And in Norway, it is about driving mobile data and monetized mobile data. I'll start with Finland. So I joined Telia Sonora Group and Sonora's CEO in quarter two of twenty twelve, two point five years ago. And we then had a long history of losing market share. And not really, I think, that had impacted the fighting spirit and the general sort of drive in the company. We managed to, together with the team there, change the attitude, the mindset. And I think the transformation in that sense in Finland started already two years, two point five years ago. We launched a new offering in August called Sopiva, which was well received in the market, and that fueled a lot of other activities and increased confidence in the team. You can see now in the graphs there, we've grown systematically in subscriptions. We're going from a very negative external service revenue situation to a rather encouraging one. You have to remember also that what this blue line there is influenced by Interconnect, which is sort of by default a negative one. We worked on churn. And as a consequence, we see a positive trend in EBITDA. Now under the leadership of Wouter, Finland will go take the next step with the transformation. And what is the transformation in Finland? This picture that you can see there on the left hand side is the real, it's the map, the IT infrastructure architecture map in Sonara in Finland. And everything is bolted to everything. There is not sort of proper layering. It is a very complex structure to navigate. And as a consequence, we have large costs, large efforts supporting, maintaining the systems and platforms. We are slow to market. We're using extensively external consultants who are coding for us. And we are not good at multichannel, particularly not good at online. In this situation and this environment, it's very challenging to deliver a premium and consistent customer experience. Now what are we doing then? This is a busy slide, but I'll try to describe what it means. So what's really been the situation now is that we've been sort of taken hostage by our processes and systems in the middle there. The system architecture has not enabled us to do a lot of things and do them in the way we would like to fast. Now what we're doing changing here now and what the transformation really means is that we are starting from radically simplifying our offering, going from tens of thousands of products to very significantly fewer numbers of products, building these products and also the channel offering in such a way that they are online compatible, I. E. Future proof. And very importantly, taking a customer a product view rather than a systems and IT view and then adjusting systems and IT processes as well as the network to support this approach. By this, we're going from complex to simple and modular, from offline to online, from complex manual processes to first time right automated processes, etcetera. The benefits Marlin showed a similar picture. The benefits are a payback in two years. And just to be clear, this payback means cash flow payback. We're investing X, and we're getting X back by 2019. We are also working on other initiatives, including procurement. We're working on network savings. Some of you may have noticed that we announced in August, we announced a network sharing agreement with DNA in Finland. And we have set ourselves tough targets in terms of procurement savings in certain categories. For the transformation, we will be monitoring progress with key KPIs: 80% fewer IT systems, half of the transactions in online this is going from somewhere around 20% today And the use of the take up of our simplified offering, we believe the simplified offering, the online presence will automatically more or less provide for a much higher Net Promoter Score. And altogether, in 2017, the result, the effect of these changes or this transformation will be around SEK 400,000,000.0 on our EBITDA. But moving over to Norway. Norway probably has done a world record or at least European record in terms of migrating customer from voice centric to data centric subscriptions. We started the journey in AprilMay last year twenty thirteen. Now fifteen months later, we have over 80% of our consumer customers on data centric models. And so in a way, to some extent, this has been a there's been both a stick and a carrot here. And what's good to see is that we haven't lost customers. We have been able to develop service revenue in a positive direction, and we have maintained or slightly increased our EBITDA margin. Data volumes are growing, doubling in a year. We are able to monetize both on speed and volume, and we're seeing an increasing trend of pop ups. And as a consequence of increased data, four gs usage surpassed three gs usage in Norway in our network in September. So a lot of positive things happening. And probably the most exciting thing for us now going forward is the Tele2 acquisition in Norway. All of a sudden, we're going from a number two with 23 or so to a clear number two, a very clear number two with 40% adding 1,100,000 subscriptions, getting achieving synergies of in excess of SEK 800,000,000. And the scale and the sort of the larger customer base gives us a lot of confidence. We have committed to the market that we will roll out four gs 98% population two years earlier than the license would require us to do. Now this deal, as you know, is subject to regulatory approval. We are in a good dialogue with the regulator and important the stakeholders in the Norwegian society, and we have a strong confidence level that this deal will be executed, which again puts us in a very strong position in Norway. So to summarize, we see great opportunities. We believe the worst is behind us. Data is growing. We can capture value from data. We have proven it in certain markets. We can learn from our strengths in certain markets, copy, paste and improve to other markets. We are strong in value added services in Denmark. We are strong in accessories in Norway. We can cross fertilize. We are pretty good in data analytics in Finland, etcetera. But we have to transform. It's been said earlier today. This is not an option. It is something we very strongly believe we have to do in order to be future proof, to have future proof our operations. We are starting in Europe, in Finland, and then we'll sort of monitor that progress first and see how we do and whether we need to do it in other markets as well. And we will be actively monitoring development in the marketplace in terms of business development, M and A and partnering to make sure that we have the best possible portfolio of businesses. Thank you. Thanks a lot Robert. And it's time to open up for some questions here. We can start in the front. Thanks very much. It's Nick Lyall from SocGen. Can I ask a couple of questions please? On Norway, do you think I mean could you just update us on regulation and how you're doing with the regulatory talks? But do you think you're going to have to offer very aggressive MVNO deals to either get or access firstly? And secondly, what's your thoughts on Danish pricing as well? Do you see any stabilization there? And would you be prepared to follow TDC's move next year and raise prices? So if we start with Norway, we are in a good dialogue. We have met several times with the regulator on various levels. The process we are in Phase two of the approval process. And we haven't yet gotten to a point where we are talking about very concrete remedies. But that it's a positive. It's a good dialogue, and I'd rather not speculate on what those remedies might be without sort of having any more facts on this. So I think you'll have to wait another couple of months for more detail on that. Then pricing in Denmark. Yes, the Danish market the pricing in Denmark is extremely challenging. Everybody is hurting. What we've seen is I think we're probably on sort of our ARPU is among the higher ones. And what we've managed to do is to we see that there's much less price sensitivity around value added services. So people are happy to pay, what is it, SEK 129 for Spotify on a monthly basis, whereas they are they think SEK 99 for unlimited data on a monthly basis is sort of expensive. So I think what I mentioned that Denmark is a market where we see we've done quite well with value added services and bundling sort of the basic stuff, voice messaging, data and additional services can sort of help counter a very tough focus on the core pricing of the core elements. We have one open to go. You. Peter Koten Nielsen again. If I can stay with Denmark, I'd like to express what is your strategy for Denmark? And I'm not talking consolidation. Telia as is today, you seem to reposition the company over the last couple of years sort of moving away from the corporate market. It seems to focus on the U segment in the mobile business. And then again lately, you've made a couple of minor acquisitions, which seems to focus on the B2B market again. So where and how is it you want to position Telia in Denmark? And I'm talking Telia as is today. Thank you. Yes. So I mean, if you look at the short term, if you recap the short term, what we've done during this year and really since we established this new organization and way of working and sort of the foundation for the new strategy, We have put together, first of all, Mobility and Fixed and Broadband in Denmark, merged the organization. We have started working on, as a consequence of a one organization, which is much easier to do, look at the potential of convergence, cross selling, up selling, bundling products. We have made a small acquisition. We acquired a company, a small ICT company called Cimin in April, I think it was, or May. And I would say we have an ambition to do we're thinking more of string of pearls kind of approach with expanding into B2B. We are a small player in fixed. And if you want to be strong in B2B, you basically would have to be a much stronger player in fixed than we are currently. So this is the thinking forward. We believe we have to strengthen our position. That is pretty obvious, and we can do it through expansion into B2B. And as I said, the market is very vibrant at the moment. Everybody is talking to everybody, and we are involved in those talks. Liana? Liana Stebow from Carnegie. Yes. I was going to ask you, previously you've talked a long time about reducing complexity of your products and your IT infrastructure. I think Anders Eagler raised the topic the first time. So it's taken quite a long time. So I was wondering what makes you confident that you can do it now in two years' time? And can you say a little bit about how you're going to do it? Is it complete swaps of the old systems? Or how is it going to work in practice? I would say that probably this if I would suggest that we take that question in the breakout session into more detail because it's more of a dialogue rather than a sort of black and white answer. But I would say, from what I've seen, we have tried to I think, for instance, in Finland, we have tried to change our mobile billing system seven times and sort of basically not had the guts to do it. Now I mean, this is we are communicating to all of you, 200 people in the audience that now we are doing it. There is no option out anymore. We are fully in. And I think that's what it really takes now to execute. We can't sort of come back a year ago and say, no, we were just joking. We're not going to do any transformation. We are on a transformation route here. We have one over there. Thomas? Thank you. Thomas Heath with Handelsbanken. Two questions, if I may. Firstly, on the Baltic countries. Can you update us a little bit on ownership there? And if you see any potentials to continue and strengthen your control of the various assets there? And then secondly, on Finland, we've seen quite a lot of development in the TV market in Finland not least from DNA entering various spaces and Ellis as well. So perhaps a few words on Sonra's position in TV in Finland. Thank you. So ownership in the Baltics. If we start with Lithuania, we own 100% of Omnitel. We own 88.15% of TEO, the fixed line operator. These two companies are already working rather and TEO is a stock market is actually the biggest listed company in Lithuania, my memory serves me well. We are collaborating in the marketplace, but I would say it's pretty obvious that we can do more. And my ambition is to find a way to ensure a better converged offer in the Lithuanian market within a year or so. Now if we move to Latvia. Latvia is more challenging. We own is it 66%, 67% of LMT, the mobile operator. We own 49% of Lat Telecom. Our partner in these are the various agencies of the Latvian government. Obviously, a more challenging situation, and we have an election now in October in Latvia. Obviously, whatever we do, if we find a way in order to find a way to somehow consolidate these operations and be able to offer a better converged proposition, then that would have to get support from the new government. And at the moment, I don't want to speculate in their interest in doing this. In the past, it hasn't been an easy or obvious case. And there was a question on the TV market in Finland. And then TV market in Finland. What should I say about TV market in Finland? Good news. Sonera brought out their TV everywhere offering, I. E, a mobile fixed TV offering a month ago. We feel that we are well positioned in the TV market. We are committed to TV. We see that TV is driving broadband uptake. We see that TV is driving higher ARPU in fixed services. So we stay committed. Maybe we can do a little bit more in the breakout. We have Walder Leid, who is running Finland present as well, and he can dig a little bit deeper. All right. I think it's time to move on. So thanks a lot, Robert. Thank you. Thank you. Time to look east. And our next speaker is Erik Halberg, Head of the Eurasian Operations, a true Telia Sonera veteran. So please welcome up on stage. Good morning. Good morning to all of you here around 200 people, but also good morning to all of you there. Just now five ten minutes ago it was four seventy streams going on the same time as we're sitting here. So it's more than double up monitoring following us just now. It seems that U. S. Has waken up or maybe we are more and more interesting. I've been around in this position for nine months. Our CEO Johan addressed that we're going to talk about Eurasia to the next level. For me, starting this journey, I've been addressing three areas for me to have in good shape to take it to the next level. Number one, financial stable platform number two, governance and number three, the growth story, the potential in the market. Let me address the financial stable area first. For me, when we're looking into grow it to the next level, it will be important to be sure that we have a platform which is stable, stable from all aspects. And I guess you have seen the releases in December from the Q4 in January, Q2 and Q3 where we have made adjustments. Adjustments for example for impairment of licenses in Kazakhstan where we bought WiMAX license with the purpose to convert to LTE has not happened yet. Then we made an adjustment. We hope we can convert it to LTE and then it has a much larger value for the future again. But it is what it is at this moment. Number two, we have been through different topics in the balance sheet like the warehouse where we have to go look into what goods going in and out to the field maintenance. And when we see that there is something we need to review, we do it. You may say is that a problem? Yes, it's a problem because part of the control system has not been as good as we have wanted it. And therefore, we admit that and tell it to you. These things will hopefully not continue like this all the time, but we need to come through. We need to come through and set a dot and then go to the next step. And we do that at the same time as we look into the governance. Governance is crucial. In all these companies, in these countries, we have minority shareholders. Minority shareholders that is one way or another represented in the Board. One way or another needs to be imported or feel important in this process and we need to bring them on board, not only to bring them on board as shareholder because they also bring a lot of knowledge about the market where we act. To do this, we need to be present. We need to be present in all these markets. And I can assure you, I probably have been visiting these countries and these markets more times than my predecessors than during the whole time they were in the company. Tomorrow morning, I'm landing I think my thirty fifth time in the country this year. And this is ongoing all the time, because governance is not a PowerPoint, because that's a power without point. It's not Excel. It's not mail. It's presence. You come. You follow-up. You talk. You meet people. You're going back and you follow-up again. And it's not only me doing it. I have a good group of colleagues in the management team of the group as well in my region management team for Eurasia. So we are many of us addressing the same thing the whole time. Governance is also important because we want to follow-up our policies, policies which is not just paper dragons is important because it's flesh and blood that represent it. That's the reason why we need to be present out there talking about it, preaching about it, following it up not only internally, but also externally. It's a challenge, yes, but that's the way it is. With that, I'd like to go over to give you a flavor of the opportunities we have. The opportunities in this market, which is big, but challenging with all respect. 43,000,000 subscriber in this market wants us to continue delivering good networks, good services to take them to the next level. And we see in this region that we have an untapped potential in the consumer market. We have a potential in the B2B enterprise market. And to really come through with both securing the stable platform and the governance, we need to secure that we have the right leadership that is fostering this culture. We have done a lot of changes. And when soon needed for reaching our targets, we will continue add in the right profile to secure that we can drive this business with the right governance. We're starting with a quite good position. We have good revenue and good EBITDA. We are number one or number two in all these markets. And some of you may say, well, how can you say that is good? Because in some cases, are incumbent and in some cases, are a challenger, right? But that's not a big difference for us because we always independent which role we have in a market when it comes to market share wants to offer the customer the best choice. A customer centric driven organization has to adjust to different market conditions, different environment things, but always having mind up here to have the best choice for the customer. We have seen that the revenue is growing around 6% for the last two quarters. Meanwhile, EBITDA is catching up a little bit. And you may ask where is that coming from? It's not coming from big cut costs. It's coming from efficiency activities to be more cost efficient when it comes to our operational cost. And that's good news because that gives us some space, some room to increase our market activities for the future. Because even in this market, we have lost market shares when it comes to number of subscribers and also revenue And that's something we need to stop. Our ambition is to keep market share and in some places even grow them again. And it's coming from story, a development curve where you can see the number of subscription has grown since 2008 quite rapidly to around 43,000,000 today. All countries has been growing, especially Nepal and Uzbekistan has grown dramatically. But at this moment in time when we are standing here, we see growth in all countries on a monthly base in number of subscribers. That's good news. It means that the focus to keep market share is coming through in all units. Data traffic is growing rapidly. CAGR has been up 127% from a low starting point and I will come back to that. We see the B2B share with a lot of potential, south of 6% in revenue share. And in the more developed market like Nordics, it's around 45%. Well, it's not going to happen next quarter, I can assure you, but there is a big potential, a big potential for us to address because this enterprise customer in this market wants to be competitive for the future. And we need to be there when this is happening. In all these markets, we have a quite high voice penetration and SIM card penetration. At this time in time, five out of seven markets is above 100% when it comes to SIM penetration. But SIM penetration in this market is not equal to subscriber penetration, because in most of this market, people have at least double SIM cards. That means that there is potential for us to take more subscribers, but also potential to keep more of the traffic from each subscriber for the future. That's a potential that is just there within the 43,000,000 subscriber we already have. Data is growing. It's growing fast. Around 13%, 14% of our revenue is coming out from data today. That's equal to around SEK 2,500,000,000.0 on a yearly base. That's good, but it's only in the beginning of the beginning. You can see that growth is growing rapidly in all countries. And let me share with you a few examples how and where this growth is coming from. When I'm out traveling in these territories in these countries, I not only look into the nice management presentation, I meet with a normal customer, the real people on the street, try to find out what is a driver for them in countries where the GDP per capita is south of $1,000 per year in average. It means that the median sometimes is just around $405,100 dollars $30.40 dollars a month. What is driving for them? What is important for them? I met around 20 year old man in Kathmandu a few months ago And I asked him, how important is Internet for you? And he said, it's one of the most important thing for us. And I said, okay. How often do you connect? He said, I'm connecting almost every day. I said, how can you do that? You only have Internet penetration in this country, which is around 20%. He said, that's not a problem. I can use my last dime and go to an Internet coffee shop and buy the connectivity for a few minutes. Or I can go to a friend that could afford to have a smartphone and he rents it out to me for a few minutes. But for me to be connected every day is crucial. Then I ask the next question, which I raised to my teenager as well at home, what do you do when you are connected on Internet? And he said the most important thing for us is to get knowledge, to learn more, to be more competitive for the future. Quite interesting story in a country where the GDP per capita is maybe $30 $40 $1.02 dollars per day. In Tajikistan where we just a few months ago with the same GDP per capita launched four gs LTE network, we today see that we have around 6,000 subscribers. Around 2,000 of them is not only using a device because they could afford a few of them to buy, but they're using it as a router. They connect it into their homes or their small offices and they use it instead of a fiber connection. And the data traffic is growing rapidly. And they use it because the infrastructure in some of this country where we don't have neither copper or fiber today, this is going to be the alternative. So we see that this is happening. It's happening now and it's happening with high speed. We see that the data growth is just around and is a big potential for us. But if you have a GDP per capita, which is low, you need to make it affordable. You need to make it possible to take it from the initial level to the mass market level. And that means that we need to have affordable Internet. And affordable Internet is not only price per meg or something. It's also to make the devices affordable. Therefore, we started beginning of the year together with our commercial units to look into how we can reduce price for smartphones. Beginning of this year, the low price smartphone in our countries was around $130 to $150 each. And we found out that we were able to buy and put in market smartphones with Android, not the most luxury one, but well working for around $60 today. We believe it will be south of $50 within a few months together with our efforts with our commercial unit. That's important. It makes it possible for more people to get a smartphone to grow their behavior and get connected to information, which will drive possibility for freedom of expression and find information that is important for their future. And it's also important for us, because we have already recognized in some countries like these two countries that the ARPU is going up with more than around 20% when you get the smartphone in your hand. It's also important to recognize that the ARPU is a little bit different compared if you have a voice customer or if you have a blended customer with both voice and data. It's more data, less voice, but the ARPU is going up. People want to be connected. They are willing to pay for it. But to make this happen and make it affordable, we need to come out with new offers, new offers that we heard from Sweden as well from Norway where we do bundles, put things together where voice and data is working together. Just now three out of seven countries has bundle offers in the market and we will have all of them having bundled offers in the market beginning of next year. We also need to have low entry point pricing. What do I mean with that? Well, it's a little bit like if you are thirsty and you want to buy a bottle of water or a coke, you buy it. If you are thirsty a few hours later, you buy a new bottle of water or a new coke, if you can afford it. In one of our countries, we launched this May June. And today, we are selling 20,000 bottle of waters per day. That's equal to 600,000 bottle of waters per month and it's growing every day. We're going to do similar things in market by market and push it because make it possible for more people to see that it's affordable to get connected. The thing that all of this customer is asking for in the end is the same that you have heard earlier today is quality, quality, quality is coming back. Therefore, I'd like to share with you one success story in among our countries, in this case, Nepal. And in the breakout session later, you will also be able to meet with the CEO from Nepal that is here together with me, where we during the last years has grown from 2,008 to 2,008, 1.7 to around 12,000,000 subscriber, sevenfolded the customer base, at the same time growing our market share from 41% to 56%. And within the region, this country has grown from 7% of our EBITDA to 18% today. It's a good story. It shows that it's happening. What is driving this? Well, it's coming from for sure that the penetration which is today, the SIM penetration of 70% is going to continue we think going up to 90% the next coming years, but also supported by the data that you can see coming in and adding in value into this blended ARPU. But in a market like Nepal where you have quite low income per capita, we need to do more than just pushing these affordable devices and affordable price plan. We put in one more part of it. We put in an advet funded data pack where people that cannot pay can also start looking into an advertising and thereby get some time without paying. This one will go live in testings and test marketing beginning of the year. And I can assure you most of the countries in the region is just looking at it and say if it works and we will do some trial and we will do some errors, we will go and do it in country by country over time. The potential in B2B as we have said is big, but it's also good that we have our units within the Nordic and in Europe, because we have within commercial a big potential to use platform that we already have to come out faster, not only faster, but also more cost efficient and thereby become more competitive immediately. And that's what we're doing yes now. We put an organization in place working with commercial from our regional office to secure that we faster can bring out new services that the B2B customer wants. It's not the most sophisticated solution. It could be very simple thing like cloud services for web hosting services, for a VPN services or for something like Office three sixty five. It's basic ICT services that we want to be there with it when the market starts changing and it's changing and start moving quite fast from day to day. All of these things leads to that we need to continue to invest in our infrastructure in our factory. The investment we have made in these countries mainly has been for two gs and now we upgraded to three gs, four gs. That's obvious. And that means that we need to invest to support this data explosion. We need to support it not only with more coverage and capacity, but also with more core network, more signaling, with more BSS back office systems to meet this demand from the customer. We need to also invest more together with our other units like TeliaSonera international carrier to get international connectivity, because when this customer wants to be connected, they want to be connected not only to local content, but also to international content like Marlin showed earlier. But it's not only to do this capacity and coverage and functionality, it is investment to secure that we over time will have the right gross margin in our operation. That's crucial. So therefore, we need to upgrade and invest to go from the two d investment to the next investment level to meet the customers' demand, but also for us to meet our future gross margin and thereby cost level. All this is about figures and business. That business without human beings is not really going to be any business. Therefore, we work very hard with creating a sustainable business. We know the challenge. We are humble about it, but we are absolutely convinced that we can take it to the next level and become a very sustainable business. Therefore, have strengthened the governance. We are strengthening the operating process. And you have seen some of the results of it. But it's also that we strengthening management, adding in new resources to take us to the next level, but not only to take us to the next level financially, but also to build in the culture, the values which is critical for us. I'm therefore very proud to say that we together with our ethics and compliance team has been able to train almost 100% of all our people in anti corruption both in web training, but also face to face training. A very important step something that people talk about are and is very encouraged about and very positive about. We now also start doing it in more areas like third vendor management, procurement and we will continue. And I guess you will hear more when you talk with Mikaela Albury later today about that in the breakout session. We're also establishing procurement things. We are establishing it in all the countries reporting to the CEOs. And in all countries, we have been able to recruit procurement managers coming from abroad, coming in with senior experience to secure that we have a good governance and sustainable procurement operation in each country for the future. Last but not least, discussion with governments about our policies. That's something that we do all the time. We're talking about that. We're talking with them about it. And we do it because we think this is part of our culture. It's part of our values. It's part of our policies and it's part of us. It's coming from the inside. I talk to Prime Ministers, to Minister of Communication, Minister of Finance, regulatory bodies every time I'm out. Last week, I had the opportunity to be in Moldavia and met with the Prime Minister and we talked about the new legislation that is under the way in the local parliament where they want to have a new way of interception for extreme terrorism. And we talked about it from the freedom of expression point of view. And the Prime Minister said, you're right, we have to think about that. But we bring it up. Another example where freedom of expression has been on the at the table just a week ago was in Nepal, where we give the customer was free access to Twitter. And the regulatory body said, you are not allowed to continue with that. And the reaction from the market from the customer was, wow, this is not acceptable. How can the regulatory body stop a vendor to say no to that? And media will start writing this is a breach and intervention in our freedom of expression as citizen in this country. We are standing up for something that is important. And we will continue doing that in every possible opportunity we have when we are in these markets. That's important. And this is coming from us as human being, from me together with Johan and our team, with my team. In every opportunity we have, we will address this as one of the most crucial thing for the future. To summarize Eurasia and take Eurasia to the next level, we have a strong market position and we have shown operational performance and we had good operational performance. We are committed and I am committed to take Eurasia to the next level, utilizing the potential in the consumer market, utilizing the potential in the enterprise market, but also to secure for the right leadership that we stand up for a sustainable business with the right value and the right culture. Thank you so much. Thanks a lot, Erik. Think we should open up for a couple of questions here as well. Have one hand, Thank you. Thomas Hiegel, Handelsbanken again. Wondered if you could say a few words about some of the new competitors you're facing like Alte in Kazakhstan, MTS maybe in Uzbekistan and a little bit what's happening in Nepal and what you can do to sort of preemptively prepare yourself? Thank you. All right. I think good question. We see that in Kazakhstan Altel, which is owned by Kazakh Telecom is today in the market with four gs offers. They have said that they're going to complement it with three gs. I had the opportunity last week or two weeks ago to meet the Chairman of Board of Kazakh Telecom that said that we need to do more, but we need to find funding for doing it. In reality, means that they are building out a lot of things and they now need to secure that they can do it. We have high respect for them and we always have high respect for our competitors. And the only way where we can really mitigate that risk that could be if someone becomes stronger is to be the customer's best choice and continue investing to have the best network for Internet experience where we are And that's what we do in Kazakhstan. And that's what we're also doing in Uzbekistan where MTS is planning to come into the market and reopen again end of the year. At this time in time, they have said end of the year, we really don't know. But we are preparing for it. We are thinking that in markets where you have around 60% penetration on SIM card level, there is still good potential for us to be and we need to carve out our niche, our offers and our focus to go for the future in that market. Competition we are used to. I'm used to live with that in Sweden and in other markets. And we have to accept that we have competitors coming in and we just need to secure that we are better, better from the customers' point of view. When it comes to Nepal, there has been speculation for a long time about new entrants or new players in the market. The biggest thing we have seen so far the last one year and this year is that NTC, the Nepalese telecom player has been accelerating their investments and they are doing it quite dramatically. But we are meeting it and we are growing in the region and we're taking it step by step to new levels. And I think this is the way we have to continue. There is a few smaller players in Nepal. All of them is today talking about that they're looking for finding funding to grow. But at the same time that they're talking about finding funding, we are doing things in the market and we take the next step, the next step and this is the way we have to continue. Thank you. Next one is Erik. Thank you. It's Erik Persch, Danske Bank. It seems to me that as many markets that are going from the maturing two gs business into three gs and four and growing on data and that are entering a period of much tougher competition as many networks want these new smartphone subscribers on board and lower margins because of smartphone costs largely and higher CapEx as well because of network investments and spectrum. So and it seems to me that maybe Telesana Eurasia is on its way into this next phase. Do you share this sort of view of this challenge? And if you do, how can you tackle that? Well, number one, in the Eurasian countries at this time in time, we don't have a heritage of the European model where you have quite high subsidizes for phones. That's one of the reasons why I talk about affordable devices because we don't subsidize them. We they have to buy it. We have cooperation in some countries with financial institutes like your own bank, but not in this market, but where they do the funding or the financing of the devices. One of the reasons is that there is no fixed address to people. It's very difficult sometimes to find out who is living where and where should I send an invoice and how do you pay for it. So therefore the business logic is different. And when we look at the blend of different kind of traffic pattern, you go in from traditional voice and SMS with interconnect cost that is related when you go back and forth between operator and you go to more plain data tariffs and data utilization, you have another margin situation where you have less of interconnect in the local market. And thereby we have a sincere belief that we could maintain a reasonable good EBITDA margin over time even if the landscape has become more competitive and different in a service package. Okay. Just a follow-up. Do you think you can avoid the subsidies in the midterm in Eurasia? The answer upon that is that we will avoid it as long as we can. And I think that's a lesson learned from other industries and other markets from other markets that if we can avoid this and get it in a better shape in this market is very important. But I cannot say it's going to be one or zero, but this is how it is at this time in time, okay? I think we have time for one final question with Andreas. Andreas Ursson, FTB. Can you give us an update on the options or opportunities to take money out of countries like Uzbekistan and Nepal? When it comes to Uzbekistan, it's a challenge and there's nothing we have hide about that. We have invested which is official around $1,000,000,000 from us into the network. We have around $200,000,000 in cash deposit. The good news just now is that we have been able with our vendors our major vendors for core network elements to be able to pay in local currency. In reality, it means that we can start to invest with the money we have in the country and thereby start using it and get a better return of the money than having them in the bank account when you have an inflation around you. We have also met with the ministers in the foreign investment ministry in the country and we have addressed this question. They have pointed at this certain direction to get money out. We will push that and we will continue to push it and we will continue to push it. And I guess for the country's own sake, it's going to be a debate about open up for the future. It's not easy. It's a challenge and we will address it. When it comes to Nepal, I think we have another story, another development curve. And I think we have some good signs that we hope that we will come through to see that happening in the future. All right. Thanks a lot, Erik. Thank you. You. You. So he will tell us a little bit more about how we drive one common commercial agenda across the group and also how we capture the opportunities in areas that are close to our core. So our next speaker is Helene Barnikov, Head of Group Commercial. Thank you, Jesper for that introduction and good morning to you. Still good morning to you in the room and good morning to you on the webcast. I'm extremely pleased to see so many of you here, because I'm extremely pleased to get to share at least the highlights of the commercial agenda for the new Telia Sonra. And that obviously has just one starting point, which is in the strategy. And you saw this slide at the beginning of Joel's presentation. So basically, I'm going to share with you what we're doing from a commercial perspective to enhance the core and then to explore opportunities close to the core. And everything is connected to that. So if we start with enhance the core and you will have heard many of these points made by my colleagues, which is the whole idea that we have one commercial agenda and my job is to help Marlin, Eric and Robert to make that happen in the market. And if we start from the left, data monetization you must have heard it so many times and it probably looks like an obsession. Well, it is an obsession because this is so important for us to get right. And it ranges from how do we create those values that both Marlin and Robert talked about in the mature markets, what are the pricing models that make sense and how are we extremely disciplined around that to how do we actually become that Internet leader in Eurasia with affordable smartphones and price tags that match that. So this is a big area for us, key focus. Enterprise business, you've heard that again across the markets. And we're setting this up from a global perspective as well. I was actually just and appointed ahead on our global B2B business. So it's kind of happening real time. But it's both about what type of services do we take there where and what new services can we do. There's also an element here of our multinational company business where we see a potential. And all of this is actually underpinned by Telia Sonera International Carrier, which I'm sure you've all heard about where we have both voice and IP broadband and that's a really important part of our strategy and how we reach out to our markets. Commercial innovation, very important for us and maybe the first time you see this so high up on the agenda from us. And that's about finding new business models in our core revenue streams. This is really critical to us. And the reason it's on the agenda is also because we obviously have some people in group functions that will make sure that we actually work to this. But the other point is innovation is not happening in one place. It's not a title that you put on somebody's cards and then you're done. It happens in every single market we're in. And our job is also to make sure we leverage that and that's one of the values of being in so many markets. I see innovation from all markets every single day. So very key point. And of course customer excellence. You've heard all the way from Johan to now everybody speaks about the customer here. And that's a very key point. And this is about the whole customer journey. How do we address the customer all across the journey in the way that pleases the customer, not necessarily pleases us? And we will work with this in every single market. We'll have programs. We'll track this in a consistent way through our NPS scores. So this will become another really key point that we can come back to. Now what we haven't talked so much about today is how we explore opportunities close to the course and we also call that adjacencies. So I'll spend a little bit of time on this and this also has strategic rationale. It's not anything that ends up being adjacencies. It's either focusing on creating customer value and loyalty in our core business. And we have done a number of things here and I think you actually can see some in the breakout sessions, where we also have data points what happens to the loyalty, to the conversion rates, to the churn when we do this well. So very important. And the other one is to develop new profit pools, which is a very focused investment approach we will take. And I'm going to take you through a couple of examples, not the only ones and for sure not the only ones to come, but two good examples of what we have today. And there have been some questions on TV, so let me start there. First of all, it goes back to where Johan actually I think talked this morning about convergence, one stop shop, treating our customers with a unified customer experience. And we already are a very active TV player on the marketplace. And we are a big household brand, which is an important asset to have in all these markets. And you see the ratings here. We have about 1,500,000 subscribers on our network, not counting Latvia because it's not consolidated in our numbers and a SEK2 billion revenue stream coming from this. We can see of course the value of this from a churn perspective with the fiber strategy that you've heard talked about before. Now TV is one of those red hot areas. So what got you there is not going to take you to the next step. And we're very clear about that. So there's a lot of work going on in the TV strategy. And we'd love to come back and speak to you about this more in detail. But to give you some few highlights of this, the cornerstones of that, first of all, is the customer, because the customer behavior is changing so much. How do you consume TV? What do you consume? Anything from multi screens to the kind of content you actually consume. So it means that one of our areas in the investments and I think one of our assets is actually in analytics, because we know what they're consuming and how they're consuming and how they're changing their pattern. So really key point. Another very key point is our user interface, which is a core part of our strategy because that's how they reach everything and that's how they can enjoy it. Thirdly, of course, is the technology investing in existing platforms and new platforms. We have TV everywhere in several markets. We have full OTT in several of our markets really, really critical for us. Partnerships, very open for and discussing and evaluating partnerships. And of course, the content is part of that because the content is also changing really, really quickly. So this is a core area and core part of our strategy and we're very excited about it. The second thing I wanted to share with you and now it gets really to that infinite possibility, which is the Internet of Things. I think it's still topping the Gartner hype cycle because it is huge. And I'm sure you cannot open your blogs or your TVs or your Tweets one single day without seeing new numbers on Internet of Things because it's massive. Now there are a couple of interesting points here. It's growing at least 15% per year the latest estimates on a global basis. The Nordic markets they grow double that pace. And that's good for us because we are in the home markets over this is growing even faster on a fast growing market. And talk about being pioneering that Marlene started off her conversation about. It's really critical to us. If we take it closer to our core and our home, it's about the M2M business. So this is about connecting things on our network, are not phones and iPads etcetera. And the estimate is that this will go from 0.9 units to 2.6 units per person by 2017. So here we're having a massive opportunity and we can really leverage our investments. So that's the first good news. The second good news is that Telia Sonora is already a good strong player here and we were a first mover. Eric who is a veteran in Telia Sonora and I am not just reminded me that first time they talked about this on the stage was 2009 actually. So we have a good background. How many noticed the Tesla outside when you came? A few of you noticed it. So it's not for test drives, but you can have a look at the user interface because Tesla is one of our customers and partners in M2M. And it's a very, very interesting one because it's more than just seeing a big screen with your map and your Internet radio because Tesla is treating their cars as smartphones. So if you own a Tesla, you get out in the morning, you'll get a question, we have a latest software for you, do you want to fix, do you want an additional service and it goes over our networks into the Tesla cars. So it's a really good customers are really of course important when you drive innovation like that. And we have several good customer examples up here. So our winning a successful approach has been that we have had managed to work with very, very strong customers and partners. We have a dedicated M2M team that have a full setup with products, sales and marketing. We have a 20 fourseven customer service, which I think is a really critical point. And we've been very highly rated by the analysts, which is also a critical point because we have confidence in this. And we were the founders of the global M2M Association together with Orange Deutcher Telecom, Telecom Italia, which is important for competence, innovation and for footprint. So we are very excited about taking this forward. Today, this is about a SEK300 million business for us and we're targeting a quadrupling of this by 2018 to a SEK1 billion plus business. And what how are we going to do that? First of all, focusing on continue focusing on a horizontal approach, but of course also very important to go deeper in selected verticals. Automotive would be a natural one of those, but there will be others and we'll come back and speak more about the exact strategies for that and you'll see announcements, but this is a very key point. And then our geographical footprint. To expand on our geographical footprint, today we are Nordics and Baltics. We have a wider footprint with our own networks and with our partners actually. And connected to this is also a new partner ecosystem, which is a very, very critical part. If you think about verticals, you can also imagine how many different possibilities there are to build new ecosystems. So that's another key part of our strategy. And this is a very focused, I would say, initiatives in terms of safeguarding profitability while we invest to generate new revenue streams. So with that, I would really just like to leave you with two thoughts. We have one commercial agenda between us that really will help us drive new customer revenues on the investments we've already made as well as set us up to generate brand new revenue streams. And that's the exciting part with this strategy And we are all fully committed behind it. So everybody who's been up here speaking today, this is our commercial agenda. And with that, I would like to say thank you. Thanks a lot, Helen. Let's see if we have any questions here on this subject. We have one in the back from Andrew. Hi, thanks. We're just looking you're just highlighting your machine to machine growth opportunity, which we know is typically incredibly low margin. So I wonder if you could talk about how you actually monetize the profitability of that excuse me revenue stream? Yes. So some of them are low margin and some of them are much, much better margin actually. So it's also which revenue streams I mean which applications you're going into and I think quite honestly how much innovation you are driving with your partners. So one of the examples up here actually, which is Postnord, we're driving we're doing a pilot with them, which involves innovation with another innovation company, which is very groundbreaking and something that is then very much value add and something we can also bring forward into others. So these are not necessarily going for the low margin business, I would say. Do you have any numbers around that the kind of the margins of the business today and the margins of the business by 2018? We haven't actually we haven't even reported on it and this is the first time we even report revenue numbers or even targets on M2M. So we're not speaking about exact margins. And I'll be happy to ask our CFO to see later on if he wants to comment on it, but I'm not able to give those exact details right here. All right. I think that concludes the session. So will give us a deep dive into the financials. And therefore, I would like to welcome our CFO, Christian Ujiga on stage. Thank you very much. It's great to get an applause when you step up. You don't ever get that every morning in your life, especially when you're the CFO. Happy to see you here today. I'm happy to see so many faces, many that I recognize. I will probably see a lot of you again just in a couple of weeks. We're not here to talk about quarter three. We're here to talk about our future, more long term future. And I will try to summarize my colleagues' description of how we're going to take this journey in our financial ambitions. And it will be a summary because most of what I will talk about, my colleagues have talked about, but I, as I said, will summarize it in the financial numbers. I will follow agenda looking like this, speak a little bit about our balance sheet and leverage. I will then deep into cost for a minute or two and then to CapEx. And I heard we had some questions on CapEx earlier, and I'll try to sort that out for you. Then I will talk about cash flow. And finally, one of the big news for today that we have told you that we are leaving our old policy of 50% of net income in dividend policy and now said that we're going to pay out at least NOK three for the next two years. Before I step into those subject, though, I want to just give a recap on where we are today, a little bit about our historical trends and both on the revenue, EBITDA and cash flow side. The trend on revenue is declining over the recent years. This is local organic revenue trend. The main reason for this, I think you saw on Erik's picture earlier, Eurasian level was 10% a couple of years ago. Now it's 5%, 6% in revenue growth. He has a good plan of how to reverse that trend. This year, particular, the minus 1.5% comes from the Spanish situation where equipment sales and interconnect has hit us quite hard. It's over two percentage points on total group level just from Spain. More importantly, and you will hear that more and more, we talk about service revenue. Service revenue, the definition for that is total net sales, the one part on the left, less equipment sales. Equipment sales has no margin. It doesn't drive any CapEx. Therefore, it's not so interesting to compare and have as a relative measure. Service revenue is a positive picture. We see an ease in the decrease over the years. That ease comes from B2C trend in Nordics, and we think that's positive. Marlin and also Robert talked about that, both on the fixed side, particularly in Sweden, but also on the mobile consumer side. EBITDA is important. I'm not talking here about EBITDA margin. Margin is, of course, important in a growth industry, but we are quite flattish right now. Our focus is to bring better cash flow for our shareholders and ourselves, and therefore, the EBITDA in absolute terms are very important. We have had a very stable local organic growth over the recent years, and this has been very important for us. Cash flow. Cash flow has been increasing the last year. 2013 was a very good year. Two years ago, we decided to focus more on cash flow in Telesynera. I know for a fact, being at Telesynera for a couple of years now, that cash flow is not something you talk about in this industry. I came from normal industrial area, but also from other companies where cash flow was more important than it's been in the operator business. But it's becoming a reality, and I can see both from our colleagues in the market, the peers and our own company that this is becoming a very strong focus, which is natural and important. So we started to work with this two years ago. Last year was the first time we had an incentive to our managers where they had part of their bonus based on cash flow generation. And this is partly the result we see last year. But it's also partly why we have a quite somewhat weak first half year this year because the pressure on cash CapEx and working capital were very heavy at the end of the year. But this is how you start a journey, focusing on working capital and cash flow in a company like ours. CapEx to service revenue. I talked about that service revenue is more important. Here, it's important to remember that in our guidance still, we have CapEx to net sales, which is saying 15%, around 15% on the full year. Here we can see that the trend has been around 16% average over the last years, very stable. And this is to compare then with 15%. We just keep that in our head. I know I make it a little bit confusing for you, but I think it's time to start to focus on the right type of measurement and dialogue here, and that's why we do the change here. It's very important for us to keep a balance between the shareholders' and the creditors' requirements and demands on us. And therefore, of the fundamentals in our financial policy is our investment rating. I think I need to say that very clear because that is one of the pillars, and it's very important to understand that. So we have today a target to be have a solid investment grade at A minus to BBB plus Today, we have an A minus. And today, that implies being below two point zero. This picture is lying a little bit because it shows us the leverage at year end 2011, 2012 and 2013. And by half year, we have just paid out our dividend and therefore it goes up. And last year, it also went up, but it's not really shown here. So we were at 1,850,000,000.00 last year, at some we're now at €1,900,000,000 We got €4,000,000,000 from megaphone repayment of loan and also from dividend. That puts 100,000,000.0 on increased leverage just from that pro form a. So just to have that in our heads that the up in the half year is not a trend. The solid balance sheet and the solid investment grade is important for us during this journey for several reasons. One is that we want to fund ourselves long term. And to do that, you need to have a good rating. Secondly, we want to have a fast execution on our M and A opportunities. And that's also then important to be able to fund fast. Of course, in addition, it gives us a lower cost of funding, which is also good. And just to stop a little bit on the long term funding. Our funding strategy is important here as well. We have long term funding, but we also try to have a smooth pattern of the redemption of our debt portfolio. Here you can see on the picture that no year we have a repayment of debt of more than €1,000,000,000 We also tried to diversify our portfolio and find other ways to work with it. This spring, we actually found also a possibility to get a credit facility on top of our EMTM program of SEK 1,000,000,000 as an M and A facility. It's connected to the EMTM program we have, but it's in addition. That helps us also to execute in the M and A arena fast. We also try to seek and find new ways of funding ourselves, both when it comes to currencies, diversification in terms. And maybe some of you saw that yesterday was an article in the newspaper. I think we're one of the few in the world that can do it today, but we actually funded ourselves on a fifty year bond, fifty year bond at 3%. And I think that's extraordinary. It makes me, of course, very proud and happy for our treasury department doing such a good job in finding new ways of funding ourselves. It's a seek and test, see where we can fund ourselves and we will continue to do that over time. And for this reason, to have this good platform, a good rating is important. And it's important to keep that balance between the creditors and the shareholders. That said, it doesn't mean that we're not going to do any M and As, because M and As will bring value creation to the group and it could put us in a different grading for a period. We have some very good examples over the last two years, both in the B2B and the B2C arena, both in market consolidation and adding to our current portfolio, and we will continue to pursue that as much as we can. On top of that, Kalyan talked about core outside the core adjacencies, and I think that's also going to be part of the portfolio going forward. And we will use our strong balance sheet to participate in the consolidation and in this transition of M and A, and we will still commit to our rating. So from the balance sheet, a little bit to the cost. Some of you maybe remember that exactly two years ago, today pretty much, we decided to go for a cost program of NOK 2,000,000,000 in Telesenera. We've been running that, as Robert and Marlin said, pushing out efficiency, working with processes and delivered on these savings net savings in the group. At half year, we were at SEK 1,400,000,000.0. We have decided not to meet that fully. We will be a little bit away from that target at year end. And the reason is that in the original plan, it was that we will go even harder on marketing, even harder on customer related parts of the business. And in this now new journey we are taking, we don't see that as a good way forward. We don't want to compromise on the sales and marketing in the next wave with our new strategy. Then to one of today's favorite subjects for me and hopefully for you, and I heard a lot of good questions before, and I'll try to clear them out. Let me start with 2011 to 2014. 16% we have service revenue, CapEx to service revenue. We have used this CapEx that someone said is quite good number. It's not sort of trying to be a little bit cheap on the CapEx. We have done a good rollout here. We're number one in four gs in the Baltics, Denmark, Sweden. We're on our way catching up on our competitors in Finland and Norway. So it's not that we're not doing anything. Somebody also mentioned that fiber is actually already a big part of this CapEx. On top of that, in Eurasia, we have fixed a lot of the coverage that we need. We haven't fixed the future data, but we have fixed the coverage, a lot of two gs coverage. So it's not that we haven't done anything with this CapEx. We tend to forget and try to add on top of it. So that base CapEx for the next two years, we estimate should be around 15%, slightly going down because we have had quite a high pressure on both fiber and four gs in the recent years. On top of that, we have decided to invest SEK6 billion to SEK7 billion, up to SEK 6 to 7,000,000,000, SEK 2,000,000,000 because we must, we must fix our legacy, up to SEK 4,000,000,000 to 5,000,000,000 because we have a great opportunity to take fiber a little bit further. We have a great opportunity to take data in Eurasia a little bit further, and we have something we need to fix in B2B. And you have heard us talk about that the last three quarters quite a lot. And that's why we have an additional CapEx. Starting with the invest to save part. 2,000,000,000 investment. And I think some of you saw Robert's picture of the network in Finland. It's pretty much the same in Sweden in some areas. Sweden is much bigger and have different elements, but we have this legacy we need to take care of. We must do it. It's been now waiting so long before we get to do it, so it's a must. We are committed to do it. We have a plan to do it. And we are extremely committed to deliver SEK 2,000,000,000 in saving run rate 2017. We will, as part of this, also take our procurement to the next level. Our procurement is not up to average in this group, And we have a lot of procurement, as you know. We're a big buyer and a big company. And it comes back to system and processes. If you don't have good system and processes, your employees will not have a chance but not either do the procurement in the way you want to do it. Finally, just to make sure we are in agreement with that also, it doesn't mean we will stop doing normal efficiency programs and take out the synergies that are obvious in our new operating model. InvestoGrow aims to reverse our market share trend. It will bring fiber to a next level. Marlin talked about 1,900,000,000 households in 2018. This increase the increase in fiber investment will bring more than I don't know exactly how much, but I know it's going to be more than SEK 500,000,000 in revenue in 2017 in Sweden. But it's too early to say how much. So it will help us in the revenue journey, but it doesn't mean that I can tell you how much revenue we will have in Sweden in total. The B2B focused very much on the SOHO and SME solutions, and that's an area where we want to regain a good market position. And Erik talked about the Eurasia data networks. I will not take too much time on that. Working capital. Here, you also see the effect of the new incentive programs and the work we're doing. We actually started to develop our sort of initiatives and work last year, but we haven't fully implemented them. We have three areas that we see more potential than others. One is in the DPO side, the payment terms to our vendors. We have just signed this year an agreement with one bank where we can pay or get paid on the terms we want, meanwhile the vendor can pay the bank on the terms they want. So if we want to get paid or pay our vendors in sixty days, we make sure we pay the bank and they pay then the vendor in ten days or whatever. And that's an agreement with you. So we have a solution like that, that we, of course, push on our vendors today as we update our contracts. That's one part. The other one is amendment of customer price plans and payments. If we go to more fixed price plans and then also prepayments, it can help us in our working capital. Finally, we have SEK6 billion in our balance sheet that we lend today to our customers in handsets. So if you go in and buy a handset today, you actually get it from us. It's on our balance sheet that you paid over twenty four months. We implemented a solution for that in Spain, which I've talked to you many of you already during the spring. It has given us SEK 300,000,000 relief for these six months. We are now starting to implement that in Finland in the end of this year. And during next year, we'll take it to Sweden. And Sweden is, of course, as usual, the biggest part of this SEK 6,000,000,000. This is an important statement today. As you know, we have said that our old policy, 50% of net income contributable to the shareholders, We take that away. It doesn't have so much relevance right now. We are going into a period of investments. Meanwhile, we want to make sure that it's clear that we will pay at least what we paid last year in dividend over the next two years of investments. So the 2014 and 2015 dividend, which is paid out in 2015 and 2016, we have then made this target of at least NOK 3. And before I summarize finally, I just want to take us through this picture that Johan also showed. We are transforming over two years. During these two years, we will invest to save. We also will look at the opportunity to invest to grow. That means we will have an impact on the cash flow from this. We are committed to deliver on this and we will use, of course, our balance sheet if needed for timing differences during these years to reach this. However, just talking before about leverage, there's quite a big part of our leverage unutilized still within our credit rating. So 1,000,000,000 or 2,000,000,000 doesn't sort of rock the boat from that point of view, but it's going to be extremely important in making this company much stronger. And that's our commitment and that's our goal, to create a new Telescenura that is stronger. And we believe very much in this journey. Finalizing, summarizing today's ambitions that we will tell you and we tell you today. We have a strong commitment to our rating, to investment grade, investment grade of A minus to BBB plus We have a strong balance sheet still, will be used to pursue business development going forward. CapEx, 15%, somewhat lower than today, is our base CapEx for the next two years. In addition to that, we are willing to invest up to SEK 6,000,000,000 to 7,000,000,000 in save and grow initiatives. Cost, we will deliver SEK 2,000,000,000 run rate savings in 2017. Doesn't mean we will not work with other measurements as well. Cash flow will be temporarily impacted by this CapEx, but we strongly believe this will make this company stronger and both from a business point of view, but also from a cash flow point of view in the midterm. And finally, once again, the dividend target for the next two years is at least NOK 3, And I think that's it. Thanks a lot, Christian. I think then we should open up for some questions. Before I take a can I ask myself a question? Maybe. Yes. You can I like that? So if I ask myself so I will actually repeat one of the questions from earlier about Uzbekistan and cash repatriation because I think that is a tricky and important question. We have difficulties as you understand and it's not obvious how to solve repatriation in Uzbekistan. As Erik says, we are doing everything we can and we need to do everything we can. I just want to make it clear that long term, if we don't find a sustainable solution, it will be difficult to stay. And I think it would be strange for me to not say that. So I just want to make that clear. All right. We can start with a question now Nick. Thank you. It's Nick Lyall from SocGen. Could I ask a couple please? I don't quite understand why you can't give a few more targets on what the 4,000,000,000 to £5,000,000,000 CapEx is set to generate in terms of growth. How would you reassure us that's not just part of normalized CapEx now and that genuinely is a growth driver? And then secondly Christian if I can ask as well You're revising you're still doing the review on Spain. What sort of targets never mind the outcome, but what targets does that review have to live up to? What sort of targets are you aiming for in Spain in terms of returns or something else that you're setting as the target for discussions? Okay. I'll do like my boss. I'll start with the last question. So in Spain without going into too much details, we have a market share of 7% there. And like in many of our other countries, we talk about making sure we don't lose market share in that market. And that's the prime target to start with. Exactly how that will come out in our income statement and cash flow, I won't tell you today. When it comes to the CapEx on Invest to Grow, I admit it could be a little bit fluffy and difficult. On the Investors' Save, it's easy and that's why also very clear on the commitment on the invest to grow, I say, up to SEK 4,000,000,000 to 5,000,000,000, because it is a little bit look and feel over time. There's one part, which Marlin talked about, which is approximately onethree, which is very clear. And therefore, I also mentioned the revenue number there. It's very clear. It's very obvious if we have those kind of 40% penetration, etcetera, to calculate and see what it means. But when it comes to the pace, Erik will keep in Eurasia on the data growth, it depends. So if he feels that Kazakhstan and Azerbaijan is easy to early drive fast and we actually wait somewhere else, well that will have one impact. And if it goes through all countries, it will have another. But what we say is up to this amount, we are prepared to invest to actually take that opportunity and make something about it. So that's why I won't tell you today, but we will come back on those things absolutely and tell both how much we invest of this and what it gives. We have one question on there. It's George Rosario Gono from Citi. I was just wondering in the cost saving plan that you have, what is expected out of a migration to an all IP network, which a number of your peers have been discussing for the next couple of years Deutsche Telekom in particular and of switching over from copper to cable, so retiring the copper network since you are a bit more advanced than the average? And maybe linked to that, is there anything that's stopping you launching a cloud TV service linked basically to questions earlier about the TV market in Sweden? I think I defer the TV market. Or are talking about cost? I didn't really understand you Lars. On the cost savings, €2,000,000,000 that you've mentioned, do you factor in savings from an all IP migration or from switching off the core But on the last thing on the TV market And on the revenue side for the TV market, whether there is anything that is stopping you from having a cloud TV service available Okay. In your That question I'll defer to later on to my colleagues. But on the initiatives, there is a number of initiatives behind this SEK 2,000,000,000. And as I said, we have a plan, we have a view. In that, one of the initiatives is actually a part that takes down copper network in Sweden. So that is included partly in this transformation. The other part is not as clear included at this point. All right. One question from Andreas. Andreas Woolson, SEB. I have a question on the leverage side. What if Mr. Ekstrom comes into your office and say that I have this great acquisition I want to make. It brings the leverage up to clearly above two. The analysts will go nuts, but we must do it. What do you say? Why would they go nuts, I would say. So that was my first question. And secondly, I will say, let's look at it. So it's not excluded that you cannot go clearly above two No. Let's look at it. Doesn't I mean we need to have a balanced approach still between our creditors and our shareholders, but also we want to participate in the M and A agenda. So let's look at it. Think according to the agenda, we should also have Johan up on stage. I think I will bring him up and then we can continue to shoot questions here. You. There seems to be great interest in the CFO questions. Keep asking. Maybe I can just pick up on the last question actually because we're not locking ourselves to 1.5 to two. We're locking ourselves to the rating per se, which means then we can stretch the actual leverage from time to time. Then the TV question, I would love actually Helene to answer the TV question. As you said, we are very well present in the TV and in the living room and in the brand. And you elaborated a bit on that on the cloud TV, which I understand as OTT TV. Is that correct? Cloud TV equal to OTT TV. Actually, was more data center based TV proposition. Okay. But in my I'm not entirely sure what you mean because an OTT service today like a Netflix of course is a data centric based TV solution. But also our existing IPTV products are somewhere in the value chain data centric. So we have today a very strong presence in the TV, 1,800,000 customers. We're looking at how to extend that strength and differentiation into the future and including OTT services as well partnerships as Helian referred to shallow or deeper partnerships. All right. A lot of hands. We have you can take do you have a mic there Sven? Yes. Hello. Sven Scholl from Swedbank here again. Just wondering have we seen the last cost cutting program in Thales Onra now the last big one? I mean they have historically been quite successful I must say. No is the answer. We will continue to make this company more efficient all the time. But we have come to a point where the quick wins and the cost savings you take out without investing is has become very much more difficult. That's why we need to take the investments in addressing the structural costs. But as Christian pointed out, we will continue to do the efficiencies all along, but don't expect those to be big until we're through the big transformation. Okay. We can take it, Yena. Helena Astorbeik, Energi. I was going to ask a little bit about the cost savings program. You say you have a full run rate in 2017. Will we see any savings in 2016 as well and roughly how much? And then also you asked if you could come back to the payback time question that was raised early on fiber. So maybe if you could say how you calculate that I think we all want to know. So just on the cost saving, the programs are quite big and going into a step change. That means that will be some impact in 2016 coming, but the full run rate will not come into place until during 2017. So there will be a gradual one, but it will come slower in 2016, just to give you some kind of picture. And then on the return on investment, on all kind of investments like the fiber, we do an NPV calculation and then we do a return on investment calculation and look at so what's the time when we get to do a zero return on this and what's the time when we actually get to our NPV that we talked about over time. So it's nothing strange. It's not any magic with that. Normal return on investment calculation. I don't really understand if you're after exactly what VAC we are using or how we calculate. But it's of course both income statement and cost of capital impact into our calculations when we do this. And that's different in different countries. So if you ask me for the VAC we're using in I think we have them in our annual report as well from last year, the VAC in Kazakhstan is much higher than the one we use for fiber in Sweden. All right. We have one question here in the front. Thank you. Tom Bennett from RBS. A question regarding your dividend policy. Is this a temporary move going from a payout ratio to SEK3 per share? Because it seems indicate that you're to go down in terms of net income in next couple of years and therefore breach your typical policy which is 50% payout. And or is this just a permanent change in terms of how you're going to pay shareholders going forward? Is that clear? So it's a change for now and we're going to at least NOK three for next two years. And then we'll have to review it after two years and see what it means for the next phase. And the reason for the change? And what is that? The reason for the change, we're much clearer. At least NOK three is clearer than at least 50% of EPS. Okay. We have paid up much more than 50% of the EPS as you know. So it hasn't been really clear. Okay. We have one in the back. Hello. James Britton from Nomura. The European Commissioners has talked about wanting to create bigger telecom companies to compete, guess, across the world stage. Is there a future for incumbent combinations in Europe in your view? So it's not the most used argument I hear speaking to the parliament and commissions in Europe to create larger bigger European telcos. We're driving an agenda today together as an industry for clarity on a certain number of issues spectrum harmonization, net neutrality, but also consolidation. But I wouldn't say it's a clear statement as such. Will it happen or not? I think there are certainly opportunities for consolidation in many markets, whether it's going to be the big incumbents or the number two or three players that remains to be seen market by market. Okay. I have one here in the front. Thank you. Aurora Samersvonten from GES. This is a question directed to the CEO, but also Eurasia. In many of the countries where you are in Eurasia, there is this system called SOARM where that means that the government can access the information, the data and so without your control. And I'm thinking about the policy that you launched in December, the freedom of expression policy. In these countries, you can't guarantee your clients freedom of expression because the government can access the data and you are not in control here. So I wonder how can Telia and Sonae ensure that their clients in this market are informed that this cannot be delivered? Thank you for the question and thanks for making the clarification there what it means. And it's important to understand that it is a requirement normally a law which enables the real time surveillance in some of our markets. And we are very unhappy And we are now with our new policies speaking openly about us not being happy about that to the point where we actually encourage our industry colleagues to take a point of challenge when we feel that we are breaching the customer privacy and the freedom of expression. And that we're doing country by country. And I've been in a couple of meetings with Erik meeting ministers in our markets talking about this. And some things are happening. The dialogue is increasing, but it will not change short term. So we will remain in situations where we have dilemmas where we operate in breach with our own policies. At least we push fully for clarity and take the point of challenge. That's what we can do now. Long term hopefully our voice together with other voices in these countries will make a difference. How do you inform your clients in these countries about this? We post we have an ambition to be doing the transparency reporting, which we have started to do recently for Sweden, Finland. We will increase the number of countries as we go along. Hopefully and our ambition is to report on all breaches according to our policy in all our markets, But we have a long way to go in order to do that. Okay. Next question Stefan Nguyen. Yes. Hello. Stefan Gosfang, Nordea. A couple of questions. First of all, you mentioned that the cost saving program the former cost saving program of delivering SEK 2,000,000,000 in cost savings by year end will not be met. Where are we likely ending? And how does that affect the cost of the program? Secondly, going back to Liana's question regarding the fiber rollout. You mentioned how the former rollout has performed in terms of payback time customer payments around 20,000 per customer and 40% penetration. What are the calculated metrics for this rollout? Do you expect similar payback time customer payments etcetera? Or how do you think about those measures? So I'll continue with the last question first, while Christian think about the first one. You'll hear more about the fiber case in the Sweden breakout session. But generally speaking, you've mentioned the data points which we have in our case. And I think there is room for improvement on each and every one of those criteria including the installation fees, penetration rates, but also addressing the cost for rollout in our various geographies. So I think there are room for improvements on the or upside for the business case having a quicker payback on investments that frankly speaking have a very long payback according to our own measures. They are beyond our normal return on capital requirements. But since they produce such an upside in the long run, we're making these investments for upgrading the total capabilities. And the second one? And the cost savings program. I'm not going to give an exact number. I know you want that, but it's going to be a little bit less and it's related to the areas. And I think that's the most important part of the discussion. It depends on the Christmas campaigns and how much we invest. All right. May have Peter Koot here in the floor? Thank you. One for each of you please. Firstly on the dividend, Christian. What level of confidence do you have and can you give us and investors in the dividend? Are you in any way dependent on any dividends from associated companies you may or may not receive in the future? And is the dividend guidance you've given, is that immune to any M and A plans you may have sort of at the moment? And secondly for Johan please. On the international carrier business, I know it's been part of your strategic review Johan. You haven't talked much about it today except I believe Helene alluded to the fact that you are having some benefits indirectly from having the carrier business. Are we to understand that the international carrier business is part of your strategy? It's here to stay. And when we look at the returns from that business, we should not just look isolatedly at the earnings from the carrier, but also include some indirect benefits? Thank you. Yes. You summarized it well on the international carrier side. We're still in a quite big transition also there from voice to data, where we're very strongly positioned in the data space where the margins are much greater than on the voice side. So managing that transition is important to get out with a better financial story on the international carrier as well. Having said that, there is strategic components supporting all our operations delivering a better customer experience through the network by having it in controlling the key part of the value chain. But we will and going into the next year, we'll be clear on the financial of the carrier as well. And on the dividend side, first of all, we are not immune to what the AGM says. So in the end, we need to go to an AGM and get approval by the shareholders, but we all know that. So but we wouldn't go out for this target if it wasn't a quite clear commitment from our side. We have a strong balance sheet that gives us the possibility to give this kind of target. And on the associate side, we are not dependent on a change in that to take this target to you today. Right. Think that's There about it for will be more opportunities in the breakout sessions to ask questions to these guys. So that's it. And by that, I would like to hand over to Johan for his concluding remarks. Thank you, Jesper. Let me start by saying thank you for being so attentive and very active on the questions. And it's not only you here, it's also people online and on Twitter. And I picked up a few comments from some of you in here and outside, but I'd just like to clarify a few things because some have not been mentioned all that much. Adjacencies, how do you view adjacencies? Is this just a fashion thing? Or do you actually believe in this creating revenues? And yes, we do. But we also think it's very important for us to invest in these adjacencies because it gives a further better protection for the core. Improving and increasing our relevance to the consumers, we can also defend our core. One tweet came out saying, look at the map of Eurasia and how can we steer Eurasia from here? And I think it's a very good point because it's far away. And it is about physical presence. It is about having a governance model and a management model that works. And you heard Erik earlier today talk about his frequent flying and he's more out there than up here. But he's not alone. I mean, we have a group we have now group functions set up to support the region heads driving the P and L and driving the excellence in the units. So he's traveling often with colleagues to offload him in the Eurasian assets. And we are very clear on decision making and the new delegation of authorities, boring things maybe, but very, very important things to give comfort that we can steer. We strongly believe we can steer Eurasia from here. So that was a tweet that I picked up on. There are also tweets about my beard. And there is a Swedish saying that I should which means stop mumbling and speak up. And I'm thinking what could that be? So I'm trying to clarify if there are any more points you want to know from us. So please let me know if I should be clearer on any points. Then I before I go into some closing remarks, you will be invited to mingle with some drinks. Is it downstairs or here? Outside. Outside, yes. So don't run away if you don't have to catch a flight. Stay with us for drinks and catch up and questions. We continue to be available for comments. My closing remarks are fairly simple. I'm not going to spend time on this one, except to say, I hope you now understand what this means. What the orange bubbles mean, transformation is not just words here. There are programs behind our activities to transform Telia Sonra's core operations into a new generation telco, future proof and ready for the all data era to be much closer to the customers. We have outlined our strategy and our strategic priorities. You've heard them from each and every one on stage relating to our core strategy and our priorities. And I think when we now come out also presenting to you how we're doing, we will always relate it to our strategy in an integrated way where also for instance sustainability is embedded. The summary the concrete summary, of course, is the enhancement of our core, recommitting to making sure that our network can be differentiated because it can still be, but we need to invest. We need to address the opportunities in convergence and also the threat with convergence. And we need to transform our operations to become more competitive. And we're putting numbers on this. We're putting numbers on the growth initiatives. We're putting money numbers on the saving initiatives. I think Christian said it was a bit vague on the growth initiatives, but actually they're very well crafted initiatives with concrete action plans on each and every one. What he refers to is hopefully we can execute all of this, because these are executing on the opportunities that we see in our search for growth, which is so rare in our industry. So it's a bold bet where we step up our investments in times of uncertainty, but we also do that with a commitment that we both will participate in consolidation strengthening our core operations, exploring opportunities as well as committing to the at least NOK 3 per share during these two years. So very, very briefly that's the equity story of Telia Sonera over the next few years leading up to 2018 where we should hopefully earlier have reached a much better or much higher potential than we see today in our respective markets. I think it's been a fantastic day so far. I appreciate your time. I know you've traveled far and spent a full day with us. It's a privilege to have you here. And I know we'll see you a lot out there now in the next quarters where we have to come back to this and not mumble, but speak up and be very clear on how we're doing and how we're delivering. So thank you very much for your time and I'll see you out there mingling in the lounge. Thank you very much.

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