Welcome everyone to Telia Company's Q1 results presentation. With that, I will now hand over to Telia Company's Head of Investor Relations, Erik Strandin Pers. Please go ahead. The floor is yours.
Thank you, and welcome everyone to the call this morning. We have in the room here, President and CEO, Patrik Hofbauer, and the Group CFO, Eric Hageman, and I leave the word to you, Patrik. Please go ahead.
Thank you, Erik, and good morning to all of you. Our performance in 2025, including how we ended the year and started this year, confirms that we are on track to reshape Telia into a simpler, faster, and more efficient company, in line with our promises at the investor update back in September 2024.
I'm glad to see that our mission to constantly improve and deliver on our promises is generating good results across many areas, including customer satisfaction, network stability, capital allocation, and operational excellence. This also becomes visible in our financials with a home market that continues to perform very well. Even though we have a lot of work still to be done in Finland and Norway, we see clear improvements on the back of the work performed to turn around those businesses.
We have made a lot of progress on reshaping Telia, but we are far from done. Therefore, we are working hard every day to make sure that we remain relevant to our customers and well-positioned to deliver on our financial targets. Now, moving to the highlights of the quarter.
We have a good start to the year, with improvements to our customer KPIs, most notably in Sweden, and growing share of converged customers and customer satisfaction increasing in most customer segments. This is driven both by improving customer service, where AI is becoming increasingly useful, and by great networks, where we continue to stay in the lead as we launched 5G SA as the first operator in Norway and Estonia. Active portfolio management continues.
We clos ed the Bredband2 acquisition, giving us a brand and a capability to compete in the value for money segment, and half a million customer base with limited overlap to the Telia brand. We also renewed our fiber partnership in Finland as we increased our stake in the number one Finnish fiber player, Valokuitunen.
Even more important was the RAN sharing agreement with ice in Norway, which will give us both a stronger network and better economics. We also remain focused on continuous simplification and cost discipline, even as our big change program is now behind us, and it is encouraging that we have reduced operational expenses by 2%, helped by 5% lower head count versus Q1 last year.
Finally, we made an update in March to our sustainability strategy, which now includes four new focus areas and related targets, and we were awarded Most Sustainable Operator in Sweden for the 10th consecutive year by Sustainable Brand Index. Moving now to the financial highlights for Q1. Service revenue growth remained just above 2%, supported by consumer and high demand for business and mission-critical services in Sweden.
Lithuania also continued to show solid performance. We also saw continued gradual improvement in Norway and better performance in Finland compared to Q4. EBITDA growth accelerated slightly, mainly driven by Finland and Norway, and with the mentioned cost reductions, the margin improved to 40% compared to 39% in Q1 last year. Continued investment discipline resulted in CapEx declining somewhat, ending at SEK 12.6 billion on a rolling 12 months basis, comfortably below our full year ambition of less than SEK 13 billion.
Free cash flow came out at SEK 1.9 billion, which was stronger than we expected, and predominantly due to better working capital contribution. Finally, our leverage remains low even after paying around SEK 3 billion for Bredband2. Moving now to Sweden, that continued to perform well with growth of 4% in consumer, both as a result from pricing, including the first back-book pricing price increase ever in Fello, but also from growing customer base.
Further support and growth was from continued strong demand for business and mission-critical services. Our TV service continued to be the most appreciated. We signed two multi-year agreements with key content providers to ensure product leadership also in the years to come. We also announced an agreement for Telia Cygate to deliver sovereign AI services on top of the AI infrastructure that Brookfield is planning to build in Sweden for approximately $10 billion.
Customer satisfaction improved both in consumer and enterprise, and we continue our strategy to step by step move sales from external to internal channels. In the quarter, we opened three new stores, and we have more initiatives coming to further drive the shift to own channels, which we will be able to talk more about when we report our Q2 results in July.
As you see to the right, Q1 was a strong quarter for our customer KPIs, and we continue to increase the share of converged customers, which is now at 59% compared to 57% one year ago. The 500,000 broadband and 30,000 mobile subscribers from Bredband2 adds further economy of scale, and we continue on that topic on the next page, which recaps the facts about this acquisition.
After having had Bredband2 with us now for two months, we remain very positive about the potential for this highly complementary business, and all targets are intact. The customer base have a very limited overlap, and we are happy to see that we have already started to realize revenue synergies by selling additional Telia services to Bredband2 customers.
Moving now to Finland that saw a more normal activity level in the consumer mobile market this quarter. We have led a gradual recovery of pricing, underpinned by our leading customer satisfaction. The number of postpaid customers declined again. However, less so than in Q1 in the previous years. We see improving dynamics in our customer base. We also increased our fiber JV ownership, and I will talk more on this on the next page.
Financially, the performance Q1 was as expected, much better compared to Q4, with B2B in particular performing better. We are of course not satisfied with being only marginally positive, so the strategic and commercial work to reposition and turn around the Finnish business is moving along at full speed. We took further measures in the quarter to shrink the organization and make it simpler and more efficient.
In broadband, net adds increased by 8,000 due to the acquisition of a similar number of customers from GlobalConnect. Now let me quickly go through the increased ownership in our fiber JV. We are happy to have strengthened our participation in the growing fiber market, even as our previous partners has decided to exit.
With a new partnership agreement with Brookfield, we have a partner we know well, and we have also stepped up slightly from 40% to 49% in the business. Valokuitunen was founded in 2020 as a joint venture between Telia and CapMan, and it is the fiber-to-the-home market leader with a reach of more than 400,000 homes through an open access model.
The transaction reflects Telia's strategy to offer converged high-quality services to customers across Finland and is in line with Telia's partnership-based approach to long-term infrastructure investments. The deal is expected to be completed during Q2 with a price tag of around EUR 30 million. Moving now to Norway, where we in early February announced a RAN sharing agreement with Ice. A great project that I will say more about on the next page.
Service revenue continued to trend in a positive direction and reached almost flat despite the mobile wholesale revenue drag, which has now come to an end. The improvement was largely driven by pricing, which resulted in significant ARPU growth across our core services. However, we did lose 27,000 postpaid customers, mainly because we made both pricing and billing cycle changes in a short period of time.
We are now well behind these events and taking a broad range of measures to reduce churn going forward. EBITA also improved, but remained in negative territory as we expected, impacted by higher cost levels in marketing, M&A, and energy. As said, we also launched a commercial 5G standalone across our network as the first operator in Norway, and we plan for an even better network ahead, which take us to the next slide.
We agreed in early February on an attractive RAN partnership with Ice, building Norway's most cost-efficient and future-proof mobile network. Network sharing is efficient, and this will create benefits for customers, the Norwegian society, and the network partners. Customers, even in the most remote areas, will have a choice between two nationwide networks as we are building a network with quality and robustness on par with the incumbent.
We will continue to operate independently with separate core networks, but we'll have a joint RAN infrastructure built on Telia's existing Ericsson network, and will go live soon after the transaction is finalized. Over time, this will give us more competitive network position as well as significant cost and CapEx synergies. We aim to come back once the deal is finalized with further details on the financial impact.
Moving on to Lithuania, where NPS continued to increase, and Telia was awarded best customer service in a survey among Lithuanian consumer connectivity customers. We also took the first step in building a new data center near Vilnius in response to strong local demand. It is based on a hybrid model combining services from global cloud leaders with on-premise storage of strategically critical data.
Service revenue growth accelerated slightly, supported by mobile and fixed that both grew around 8%. EBITA, however, normalized compared to a record strong 2025 that was supported by the change program. In Q1, Lithuania also saw higher energy and marketing cost, as well as increased level of internal cost allocation for Lithuania and Estonia.
Customer KPI trends remained intact with expanding mobile customer base and ARPU growth across all products on the back of pricing. Moving to Estonia, that, by launching full 5G standalone, further strengthened Telia's position as the clear network and 5G leader. Our core connectivity business performed well with a growth of 4%.
However, overall service revenue growth slowed down because of lower ICT deliveries due to supply chain limitations. We expect it will be less of a burden as we move across the rest of the year. EBITDA growth, however, remained positive despite somewhat higher energy cost. With that, I hand over to Eric before I come back to summarize the quarter.
Thank you, Patrik. Let me now go through the financial development of the first quarter, starting as usual with service revenue and EBITDA. As you can see on the left-hand side, we started 2026 by again delivering service revenue growth of 2.1%. Like in the previous quarter, growth was supported by strong performance in business and mission-critical revenue, and our consumer business, which overall grew by more than 3% like-for-like, benefiting from strong development in predominantly fixed, led by TV in Sweden, and broadband growth across the footprint.
Mobile service revenue remained in growth territory despite a continued Norwegian wholesale drag, supported by growth in Sweden and the Baltics. From a country lens, Sweden and Lithuania had the strongest momentum, as you saw in Patrik's presentation, while Finland turned back to a slight positive growth. Norway also improved and only just remained short of the zero service revenue growth mark.
All in all, a solid start to the year, and we are on track to delivering on our guidance of around 2% service revenue growth for the full year. Moving to EBITDA, that accelerated slightly to 4%, supported by service revenue growth and continuous operational improvements that further reduced the cost base. Growth predominantly came from Sweden and Lithuania and also from efficiencies realized within central functions, which are part of other operations in our reporting.
EBITDA margin was up again, in line with our September 2024 margin expansion promise. This quarter, margin expanded by 90 basis points and was close to 40%. Overall, a good start to the year also in terms of profitability, supporting our around 3% EBITDA growth outlook for 2026. Moving now to OpEx and CapEx. Starting on the left, you can see that we continue to deliver on our simplification and cost discipline agenda.
The impact from the right sizing change program is now mostly behind us, but we keep finding ways to simplify Telia and make the organization more efficient. This quarter, we saw lower cost related to resources, driven by 5% lower headcount, and reductions in cost for IT and bad debt, partly offset by somewhat higher marketing spend in mainly Finland and Norway.
There were also increases in energy cost in Norway and the Baltics. Despite the turbulent energy markets, overall energy headwind for the group was kept at SEK 20 million. Our hedging policy remains the same, with around 70% hedging of a direct electricity exposure for the coming year. Overall, OpEx declined by 2.2% compared to the same quarter last year, which is great to see and a testament to our team's continued focus on this.
OpEx as a percentage of service revenue continued to trend down further and decreased by 130 basis points to 30.2% in Q1. During the quarter, we've announced net reductions of around 500 positions across the group. Moving on to the middle graph, you can see that we also remain disciplined with CapEx that is now trending at SEK 12.6 billion, well in line with the outlook for 2026 of less than SEK 13 billion.
Finally, to the right, EBITDA minus CapEx was again above SEK 19 billion on a 12-month rolling basis, a 6% increase over the last year. We also continued to improve our cash conversion, now at 61%, up from 58% a year ago. Let's now look at the free cash flow for the quarter.
Free cash flow for the first quarter came out at SEK 1.9 billion, which was stronger than expected, mainly due to better working capital contribution in Sweden, driven by phasing and customers paying early. In addition, we also had a tax refund in Sweden, which came earlier than we originally expected.
We're off to a good start, a better start than we expected and confirm today our around SEK 9 billion outlook for the full year. We continue to expect free cash flow generation not to be linear this year. The better-than-expected performance in Q1 is largely due to phasing, as just explained. Therefore, we continue to expect that free cash flow generation, which will be H2 tilted with a 30%/70% split between the first and the second half of the year due to working capital timing.
Overall, a reasonable expectation of free cash flow for Q2 is approximately SEK 1 billion. Let's now briefly look at our net debt and leverage development. As you can see on the right-hand side, our net debt increased in the quarter by SEK 4.6 billion, resulting in leverage increasing to 2.07 x. Well within our desired 2x-2.5 x range, and also well below the 2.18 x from the first quarter a year ago.
The main reason for the increase, as Patrik mentioned, is the consideration of almost SEK 3 billion for the purchase of Bredband2. We also reduced the mix of hybrid debt in our capital structure. Since hybrids are only accounted for 50% in net debt, that technically increased net debt by around SEK 1.3 billion. However, this improves our capital structure, and we will pay less interest over time because of it.
Finally, before I hand back over to Patrik, I would like to say a few words on some of the achievements this quarter and how that resonates with our value creation agenda laid out at the investor update back in September 2024. Firstly, we continue to grow EBITDA in absolute terms, and we stay disciplined with our capital expenditures.
This resulted in a free cash flow per share reaching 2.41 SEK on a rolling 12-month basis, comfortably exceeding our recently announced increased dividend of 2.05 SEK per share. Secondly, we continue to strengthen our asset portfolio. We closed the Bredband2 deal, and we successfully transitioned our Finland Fiber JV into a new partnership, this time with Brookfield, in a transaction expected to close in Q2. We also continue to make progress on the transaction to exit Latvia, a deal we expect to close later this year.
Thirdly, our balance sheet remains strong even after paying for Bredband2 and further optimizing the hybrid layer of our debt structure. We now have limited refinancing needs for the remainder of the year, which bodes very well for the interest expense line in our free cash flow statement.
Finally, we paid another quarterly dividend of SEK 0.5 per share to our shareholders this quarter, and following the AGM approval earlier this month, we came through on our 2024 Capital Markets Day promise of growing our dividend per share. This is an important milestone on our journey so far. With that, I hand back over to you, Patrik.
Thank you, Eric. Like I said in the beginning, the past year was a year of significant change and strategic progress for Telia, and I'm glad that we start in line with our plan also now in the first quarter. This confirms that we remain on track to build a simpler, faster, and more efficient Telia.
Our customers continue to be increasingly more satisfied, and our services are more relevant than ever before in an increasingly uncertain world. All of this puts us in a good position to deliver on our 2026 outlook and midterm ambition, including free cash flow of at least SEK 10 billion in 2027. With that, we will open up for questions.
Our first question comes from Andrew Lee with Goldman Sachs. Please unmute your line and ask your question.
Good morning, everyone. I have two questions on what would be the kind of standout positives from today's results with Finland and your cost efficiency execution. On Finland, it's encouraging to hear talk of price rises through the quarter and consistent improvements. I wonder if you could just talk us or help us understand the phasing of the implications of those price rises in the first quarter.
Should we expect to see a full boost from the first quarter price rises in the second quarter? What do you think the growth can be if the market remains rational there? By growth, I mean service revenue growth. Secondly, on cost efficiencies, I think you said that you've taken out an incremental 5% of headcount following an incremental to the transformation program.
Is that the final picking of lower-hanging fruit, or is that a better guide on ongoing, more sustainable efficiency opportunities going forward? Any help you can give us on that will be great. Is there anything particular driving it? I think AI is more of a 2027 onwards potential compounder of efficiency opportunities, but any kind of particular color would be helpful. Thanks.
Good morning, Andrew. It's Patrik here. Thank you for the questions. I will start to answer the question number two, and maybe, Eric, you can take the question number one on Finland. When it comes to cost efficiency, we clearly said when we did a big change program at the end of 2024, that was a right-sizing of the company.
Then we were clear on the measures that we will continue to drive operational efficiencies out of the company in the coming years. What we see here now is actually the continuous improvement in cost efficiency in the company. It's not only organization, it's also on many other aspects. This will continue going forward as well. It will not stop. It's not a low-hanging fruit in that perspective. We have some impact on AI in the cost-saving programs already today.
We see that, for example, in customer service, but this is only the start. We think and believe that we can do much more in 2027 and onwards that you alluded to. We have already some impact in 2026.
Yeah, on Finland, we're very happy with the improvements we've seen, certainly versus what we saw in Q4, which at the time we said in January was a very competitive market. It's the typical time of the year, the MVNOs came in, and we are trying to defend our subscriber base. If we look at it, we're very happy with that Q1 performance where, yes, we still lose some customers, but substantially less than what we have done historically.
It's actually the best performance we had in the last six years. That bodes well on the customer development. The second one is what kind of ARPU are we seeing on win backs, on order intake, et cetera, et cetera, versus again, where we were in December or in Q4, where we clearly are seeing that we're doing it at higher prices.
Similar to what I guess our competition has been saying earlier this week. If we put those two together, yeah, we're quietly confident about direction of travel for Finland. Let's see what the second quarter and the third quarter shows us. As Patrik said this morning to the team, we're very happy with the progress that Holger and team are making there, certainly when it comes to defending our place in the mobile market.
Thank you both. That's really clear. Erik, can I just a very quick follow-up. Eric has talked about a lag between the price improvement and that actually flowing through into revenue growth, and so it's more of a Q3 improver for their top line they're saying. Do you have the same kind of lag? Obviously, slightly different type of contracts. Do we need to wait for Q3 or do you think you'll see the benefit, we'll see the benefits in Q2?
Hi, Andrew. It's Erik here at IR. No, there is a lag, obviously, always when you build up a subscriber base of different cohorts. Now we've had subscribers coming in at lower ARPU levels during Q4, and that's gonna be with us for the year. It's a gradually diminishing effect as we're now getting subscribers in at higher levels in January, and then still a little bit higher in February, and then further on in March and so on. It's gonna be a gradual recovery. I don't think we can give a better description on the coming quarters than that.
Thank you.
Our next question comes from Fredrik Lithell with SHB. Please unmute your line and ask a question.
Thank you. Good morning, thank you for taking my questions as well. Can I pick your brain a little bit on the Brookfield partnership you talk about? If you could elaborate a little bit more on what that is and mean for you. Is that any type of CapEx investments in coming years for you or what will your role be there? That's the first question. Then maybe if we could get a bit of an update on price changes in Lithuania and Estonia, if you have those coming in positively impacting in Q2 or where you are on prices in those two. Thank you.
Good morning. I think the question regarding Brookfield, I guess you mean the data center in Sweden, not the Valokuitunen deal in Finland. Is that correct?
Yeah. Correct.
Yes. Okay. Thank you.
Thank you.
Yeah. This is a partnership. We've been working with this for a while. This is a partnership where Brookfield, they do the investments and we providing connectivity to the data center, but also coming with a quite big customer base. This is an important partnership because customers are demanding more and more, not only storage, this is more compute, which will be important in the space of AI. That is actually our contribution to the partnership.
Yeah. Eric here.
Okay. That's good. Yeah.
Go ahead.
Does that mean that you see incremental revenue streams from this when this is up and running? I understand it's not happening tomorrow, but how do you see that going forward?
Yeah. Of course, this will be an important part of the agenda going forward, especially in our B2B side and especially in the Cygate here in Sweden. Definitely we will see that, but it's too early to predict those at the moment, so we have to wait a little bit. All of us know the demand from AI-supported services and compute, that's needed. Also local storage, so natural sovereignty. To predict exactly the revenues and the growth going forward, it's a bit difficult at the moment, but we will come back when we know more about that.
Yeah, on the second question, the price changes, Fredrik, if you take them one by one. On Lithuania, you've seen, in the analyst presentation, Patrik just showed the slide that the strong increases in ARPU on mobile, on broadband, and on TV, sort of mid-single digit growth, and a subscriber base that continues to grow on the mobile side.
That is a reflection of those price increases that we have done. You also saw this already in Q4 as well. The strong EBITDA growth that you see in this market, even after the increased head office allocation that we've done, growing at almost 10% EBITDA in Q4 and Q1, is partly because of the cost takeout and that positions that you have seen.
When it comes to Estonia, also there are less on the mobile side, but certainly in broadband and TV, you can see that we've increased prices there. ARPU is up also by mid-single digit. You've seen that the service revenue is a bit less than what we saw this period last year. There is a bit of work to be done by the Estonian team to see where we can further increase pricing. I think that's something that we expect more in the second half rather than in the first half. Put together, we're quite happy with the developments in the Baltics, certainly the way Lithuania is developing from a top-line growth and from a profitable growth perspective.
That's very clear. Thank you.
Yeah.
Our next question comes from Derek Laliberté at ABG. Please unmute your line and ask your question.
Okay, good morning, and thank you. I wanted to ask on the strong cash flow here, and on the back of that, you still guide for SEK 9 billion for the full year. Just wondering what the key sensitivities are from here in relation to this guidance. I think you mentioned if H1 is going to be 30% of the annual cash flow and considering the SEK 1 billion guide for Q2, that would imply cash flow well above your guidance, unless I'm missing something.
Yeah, no. We're very happy with that start to the year on cash flow. As I said, it was better than expected and mainly driven by working capital phasing. There was also this sort of earlier payment that we received from tax. This was specifically in Sweden, which made it higher than what we expected when we were talking to you on the call in January.
I think there is a little bit better also versus our own expectations from less interest and tax, which helps a little bit as well. It's not just purely working capital. The reality is, as we said, that we still firmly feel that it's one third, two thirds, if you think about H1, H2. Given that we roughly have done SEK 2 billion, that would mean, as I said in the analyst presentation, we expect roughly SEK 1 billion.
Why then SEK 1 billion only for Q2? It's because that strong working capital inflow that we saw in Q4 and partly in Q1 at some stage has to reverse, and that's what we will see in the second quarter. With regards to then how we compare and contrast that to the guidance that we've given, it's still relatively early in the year.
We're happy that we have a solid start also in terms of cash flow. There is also quite a turbulent market out there that impacts interest rate, FX, energy cost, et cetera. Let's see how that plays out in the remainder of the year. Thirdly, there is a handful of transactions that we're working on. Now, we talked about Bredband2 today, where we give an update, the results of the RAN sharing that we're doing in Norway.
All of that will also have an impact. We will come back to that when we close those deals. Latvia is the other one. Good start to the year in terms of free cash flow. A bit early in the year to be talking about upgrades versus the guidance we've given.
Andreas Joelsson with DNB.
Go ahead, operator.
Our next question comes from Andreas Joelsson with DNB. Please unmute your line and ask your question.
Yes, good morning. It's Andreas. Follow-up to Andrew's question on costs. You have obviously done a lot of changes over the last two years since you came into the company, and not least on efficiency, and you said that you will continue to do that. Just curious how you make sure that this momentum can be kept up and sort of how to avoid the organization falling back to old habits. Maybe as addition to this, when you look at benchmarking towards quite close competitors, what do you see that you can do even more on efficiency? Thanks.
Thanks, Andreas, and good morning. I can start, Patrik, and Eric, please fill in if you feel I missed out something. First of all, cost efficiency is an important, for us, competitive tool, basically, to make sure that we stay competitive. We have been working quite hard to do the changes in the company.
Now we have implemented an operating model where we continuously work with taking out cost. It's not only in the countries, it's also in the head office and common functions. This will be built in in the plans for the coming years. Of course, we will not give up, and fall back to old habits, as you call them. I think we can just continue to prove quarter by quarter that we are reliable and that we continue to take out the OpEx, to reduce the OpEx.
We have some support from technology, but still, we have a lot more to do in the company. We are not where we want to be yet, so we have still a way to go to be this simpler, faster, and more efficient company. There's plenty more to do on the agenda.
Yeah, maybe just to add. Go ahead.
No, and then regarding your question, sorry, on versus competitors. Well, I think it's good that we have competitors. That creates a discipline for us as well, and we see that there is more potential to do. I think we get a lot of energy when we see others coming out with more efficiency programs, et cetera, and improved margins, and that gives us a lot of energy to seek new opportunities to be even more efficient. Eric, sorry.
Good.
Very good. Thank you.
Our next question comes from Abhilash Mohapatra from BNP Paribas. Please unmute your line and ask your question.
Hi, good morning, and thanks for taking my questions. I've got two, please. First, just on the EBITDA guidance, you've obviously had a strong start to the year, 4% EBITDA growth, and I think if you look at the quarters last year, Q1 last year was the strongest quarter for EBITDA growth. Given the performance on this sort of tough comp, can you just walk us through your expectations for the rest of the year, given you've left the EBITDA guidance unchanged at sort of 3% d espite the strong start.
The second thing, just on shareholder distributions, you referred to in your opening remarks how free cash flow per share is running 15%-20% above last year's dividend. Can you just share some thoughts around shareholder distribution expectations for this year, given you'll also presumably have some proceeds coming in from the Norway RAN sharing deal, and as you said, leverage is not that high, so any color there would also be helpful. Thank you.
Yeah. Maybe on the second question first. I think as a team, we are super happy that two and a half years in, we got the company to a position last year where we're covering the dividend for the first time, that mythical SEK 8 billion that we pay every year. The second one was the milestone that I referred to just now, which is that the AGM has approved that increase in the dividend per share. For us, that's a really good start, and I think it's a massive tick in the box, as you would say, Patrik, with what we promised when we did a Capital Markets Day in September 2024, where we clearly said we have a stated ambition to grow the dividend and excess cash will get to shareholders.
You've seen the balance sheet as well today, which is slightly up versus the 1.93x that we had at the end of last year, which is partly the acquisition and the way we've restructured hybrids as part of our debt portfolio. There isn't that much of a push, I would say, yet there, but we continue to work in that direction. Very happy with what we achieved on that part of the value creation, and let's see what comes next.
With regards to EBITDA, yeah, it's the same answer I just gave. It's still early in the year. We're very happy with that 4% as a start. We've guided for 3% for 2026 and 4% for the medium term. Let's get through a couple of quarters. We just need to make sure we continue to deliver on that cost agenda that worked really well in Q1. Let's see how the rest of the year develops.
Lovely. Thank you very much.
Our next question comes from Ajay Soni with JP Morgan. Please unmute your line and ask your question.
Hi, guys. Thanks for taking the question. I've got two. The first is around the Bredband2 customer base. What do you see as the biggest cross-selling opportunities, and could you size if they were to be at full run rate? Just related to that, what was the EBITDA contribution from Bredband2 in Q1? My second question is around the Norway joint operations. Do you have any regulatory concerns with the setup for this? Thank you.
I can start with the first question regarding Bredband2. The whole point with doing this acquisition was to strengthen our position in a more value-based part of Sweden. We have a low overlap. When we look into the Bredband2 customer bases, we have quite low overlap between our customer base.
Our big opportunity here is to sell mobile to these customers and our TV product. We have just started, so it's too early to give some more flavor around it, but the start, I can tell you, is in line with the business case that we acquired the company for. We have only had these assets now for two months, so it's a bit early to look forward-looking. The logic is sell more to these customers mobile services and TV services.
Yeah, very good. With regards to the EBITDA contribution, was that Q1 contribution? Is that the question, Erik?
Yes, I think so, yeah.
Okay. Yeah. EBITDA contribution. Y eah, it was SEK 45 million EBITDA contribution from BB2. That's only the February and March impact that we have because we closed the deal then. Like for like, obviously it includes the whole month, as you can imagine. Yeah, those two months were SEK 45 million.
Then can you just give me an update on any regulatory concerns with the Norway joint operations as well?
I can give a short and please fill in. There is no news. We have a good dialogue with the competition authorities in Norway. They're looking into the case. We expect to get green light on it. I think it will take some time more before we get that message from the competition authorities, basically. We don't have any more information at the moment.
Okay. Thank you.
Thank you.
Our next question comes from Nick Lyall with Berenberg. Please unmute your line and ask your question.
Yeah, morning, guys. I hope you can hear me. It was a quick one back on the savings, please. In Sweden, you mentioned the 500 staff. Is that all in Sweden, Eric, in terms of the mechanics there? You've also got some of these coming through from Bredband2. Are you quite happy in the Swedish business that's more than enough to offset inflation and energy costs this year? Secondly, on Finland, you talked about efficiency starting, but what can you expect in terms of savings while you're trying to rejuvenate the business? What's realistic for us to expect this year and next, please?
Shall I start with the Sweden question? Just to be clear, Nick, and you are, it's hard to hear you on your connection. It's slightly better than January. On Sweden, no. The net positions of 500 is for the whole group. Maybe in general. That was the point I was going to make earlier on those cost savings is we see it both in the units or within the countries.
Lithuania did quite a bit at the end of last year and a bit here in the early of the year. But also at the head office. We have this group technology business, which has almost 2,000 people in it. Then the head office itself, which are all the support functions, legal, finance, HR, et cetera, which is also roughly 800 people. We continue to find efficiencies there. Why is that?
Because as the theme says, and it's not just words on a piece of paper, we are continuing to try to make this a simpler and faster and more efficient organization. I think the other part, what drives this is when it wasn't just 3,000 people out, if you recall the change program, also 2,000 people went from central functions within to those countries.
When they have been absorbed a year later, you can see, where can we still make further improvements? That's what we continue to see. I think the third question was around, what do you see then in Finland? It's pretty clear when we set out our stall in September 2024, that margin expansion was very important to us. Which is why each quarter we come back to the increase that we're seeing. Patrik said first time 40% for the whole group.
Finland is the big opportunity there. I think during the year you will see that coming through because Holger and team clearly saw opportunities also for this business to become simpler, faster, and more efficient. Again, overall put together off to a good start. Yeah, whether all in all that compensates for energy, and some other headwinds. We have a very clear ambition to grow our EBITDA this year by 3%, and part of that is service revenue growth, part of that is continuous cost operational improvements.
That's great. Thanks, Eric. Cheers.
Thanks.
Our next question comes from Oba Agboola with UBS . Please unmute your line and ask your question.
Hey, thanks for the presentation. Two questions from me. The first on Finland. I know you cited improvements versus Q4, but one of your competitors suggested that pricing for new customers is at levels similar to what was seen in Q1 2025. I just wanted to check whether you agree with that. Has pricing actually returned to the levels we saw at the start of last year? Second question on Norway.
You mentioned you're still waiting to hear back from the regulators. Is the expectation that operations will start in Q2, with coverage or most of the coverage being done by the end of 2027, is that still the expectation? Just secondly on that, could you just remind us of what you think you can do in terms of pricing and improving your market position in Norway after the RAN co is up and running? Thank you.
I can start with the first question on Finland, and please fill in Eric if I miss something out here now in Finland, we see, as said, clearly stabilization in Q1. We don't see that the price levels on the new customer acquisitions are at the same level as in Q1 last year yet, but we see that they are moving clearly in the right direction. Eric?
There's a small gap still, but it's closing fast. It's a positive development month by month for sure.
Yeah. We see it also now. It continues to improve every month now. It's much better stable situation overall in the market.
Yeah. On Norway, the network, the RAN sharing, we gave a bit more color today in the analyst presentation just now. The regulators here, the competition authorities, ask questions as they should. They're doing their job independently. We're working our way through that. I think you need to bear with us for a bit on what then the implications are when those rollouts start, et cetera, or joint rollouts start.
What that then ultimately will do for us over and above the words that were on the page today. If you think about, there are some costs that first come to be able to create one network to set up an organization, et cetera, that needs to be run at arm's length. Clearly it's beneficial for us if you think about the medium term, because it will lead to cost efficiencies.
The way we will approach the market, what it means for our positioning, et cetera, and what we can do on pricing, which was your specific question. It's a bit early days for that. Bear with us, but we will come back to that very clearly later this year.
Okay. Just to follow up, when the deal actually closes, you'll give us more information on synergies, pricing, et cetera?
Absolutely. That's the plan. Absolutely.
Okay. Great. Thank you very much.
Our next question comes from Ulrich Rathe with Berenberg. Please unmute your line and ask your question.
Yeah, thank you very much. I have two questions. One is on Swedish fiber. A competitor commented yesterday that much of the MDU fiber infrastructure is aging, supports limited speeds, 100 Mbps-300 Mbps was sort of mentioned. That customers are therefore incentivized to simply find the lowest price because there's limited service differentiation.
I think these comments were mainly on MDU fiber. First of all, would you agree with that sort of assessment? It's obviously coming from someone who's running an HFC network, so there is an ulterior motive here to comment like this. But I'd just like to hear your views on this, in particular, how you see the situation with regards to the quality of fiber in the SDU segment. That would be my first question. The second one is, any news on the SDU fiber regulation in Sweden that you can share at this point, and on the impact on Telia, the likely impact on Telia? Thank you.
Thank you, Ulrich. This is Erik here at IR. I'll take the first one. We've heard this comment being made before about the aging fiber infrastructure. This isn't anything we've ever felt that's been a limiting factor for our business, so we don't quite recognize it. One possibility is that it refers to actually in-building wiring, which may be in some buildings of an older standard. Even that should be a factor which should be reducing of importance over time. This is not a limitation factor for us at all, in fact.
Yeah, I agree. We don't hear that from the market, so we are a bit surprised of that question, I must say that. The second question regarding the Swedish fiber regulation. No news, basically, no. If you look at our position here, we are today the only operator that are regulated on dark fiber access for the MDU market, SDU and also for B2B customers.
If you look at the coming regulation, we expect this, I think it'll come in 2027, and I think it will apply only to fiber access for SDUs and only for network operators designed as having significant market power, so SMPs. We are one of 60 operators that are classified as SMPs. For us, this will be neutral to a more positive view on the total. We don't expect it to have a big impact. Fairly limited impact on us. Eric, you want to add something?
No, I think that's.
Thanks very much.
Yeah. Still waiting for it.
Yeah.
Great. Thank you very much.
Our next question comes from Viktor Högberg with Danske Bank. Please unmute your line and ask your question.
Good morning. This is a question on capital distribution. Telia is the only Nordic telco with a payout ratio below 100% of our free cash flow. Could you just help us shed some light on how the board reasons regarding capital distribution in the light of the stronger balance sheet and the payout ratio? Any help there would be helpful. Thank you.
I think we have discussed this almost on every quarter presentation. We're also discussing this as a board. The board is positive to increase the dividend to our shareholders. That's by nature. We have had a policy that said that we should increase on an annual basis the dividend, but the problem was that we were not able to do it.
Now we did it for the first time in five years, and I think we will have a bit of a careful and cautious approach as well to make sure that we deliver on what we said, for example, keep promises. Then when we see that we have more cash and we are delivering on our plans, then of course, we will have an openly good discussion with the board on increasing the dividend going forward.
Yeah. I think there's one leg missing, which is what often this question refers to, right? There isn't a payout policy that we have set over and beyond what our dividend policy is. We know that's the homework that we have to do. I think in some conversations we've said we'll come back to that when we set out the next three-year plan. We're not quite there yet. We just started the year. I think what we ultimately want to achieve is pretty clear, and I think we've been quite open about that pretty much since day one, which is why covering the dividend and then increasing the dividend are such important first milestones on that.
Our next question comes from Derek Laliberté with ABG. Please unmute your line and ask your question.
Yeah, thank you, sir, for coming back. I was cut off. Just wanted to ask about the sustainability and the performance in Sweden, obviously delivering a strong EBITDA growth again here with the notable contribution from fixed and TV. How sustainable would you say this mix-driven strength is, and then how should we think about mobile momentum going from here?
Yeah. No, we-
I have one more question after that.
Yeah, sure. No, we're very encouraged by what we have seen. Again, sorry to go harking back to 2024. A bit philosophical at the moment, but I guess it is coming from a business that was X growth, and then to go to a business two and a half, three years later, where we are growing even ahead of what we do as a group.
The strong increase that we see in profitability is a fantastic achievement by Team Sweden. If you think about their relative size, that's more than half of our business. For us to go out there and have a medium-term guidance of 2% and 4%. Over 2026 guidance of 2% and 3% service revenue EBITDA growth. To have then that Swedish unit do 3% top line and more than 6% EBITDA is obviously really great to see. I think the other one that we feel happy with is how we start to see that continuous operational improvements in cost, which bodes well if we think about the remaining quarters of the year.
Obviously, we're not going to specifically guide for every unit. Yeah, if you think about what is driving that growth, which is our growth in broadband, our strong growth in TV, which continues to be more than SEK 100+ million every quarter, and then the same on the mobile side, yeah, it's obviously very encouraging for us to see. I think ultimately that's why we decided to call it a good start to the year because this foundational unit is doing even more than what we do as a group.
Okay, cool. On Mission Critical there, did that perform well above your expectations here in Q1? How should we think about that going forward? Because I believe you flagged it will be quite lumpy and maybe a setback in Q1, if I remember correctly.
Yeah. I can comment on that one. We are not that specific when it comes to Mission Critical in that perspective, but we had a good quarter. It's in line with our expectations, but it is lumpy, so it's a bit difficult to predict. For the full year, it will be in line with our expectation and in line also with the guidance that we have been given. It's a bit lumpy again on a quarter, which we have said before, but no surprises, and it will be in line with including in our guidance, in our outlook for the year.
Okay, great. Thank you.
Thank you.
Our last question comes from Siyi He with Citi. Please unmute your line and ask your question.
Hello. Hi, good morning. Thank you for taking my questions. I have two please. The first one is on your Swedish fiber. It seems that the regulator are looking into the Chinese vendors, and one of the competitors comments that in the fixed network, there was still some of the Huawei equipment. I just wondering if you can share with us your exposure to that and any potential cost or timeline that you have in mind if you need to sort them out in your fixed network will be helpful.
The second question is really a clarification for Patrik's comments in the press release. I think you mentioned in the press release saying that the industry has never been so competitive. Considering that you are actually growing top line in all the markets underlying basis, just wondering what are the reasons for being cautious in your comments? Thank you.
Yeah. I think you refer to the B2B market, if I guess right now.
I would imagine, yeah.
I would i magine that. We see quite a strong competition in the B2B market. Given the macro and also the geopolitical situation, I think that many companies and bigger organizations are holding back on investments and also cost focused, and that is hitting our B2B business. On the B2C side, we feel quite unchanged, basically, on the demands.
We feel quite an okay market situation on the consumer side. It's related to the B2B where we see some headwinds when it come both to competitions, but basically the companies are holding back on investments, and then the competition, of course, will increase immediately.
Siyi He, on your question about Chinese equipment. We've done the replacement of all the equipment we need to replace. I think we haven't had an update on this for a while, so I'd have to check. To the extent there is anything left, we are following a plan to replace what we need. It's not really a topic.
Thank you.
Okay. Thank you. I think that was the last question. Thanks everyone for all the good questions, and we look forward to speaking with you again in the coming days and weeks. Thank you and goodbye.