Earnings Call: Q3 2021

Oct 21, 2021

Good day and thank you for standing by. Welcome to the Interim Report January to September 2021 Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. I must advise you that this conference is being recorded today on Thursday 21st over 2021. I would now like to hand the conference over to your speaker today Andreas Joseph. Please go ahead. Good morning, everyone, and welcome to a very bright and sunny autumn day in Stockholm. With me in the room, as usual, I have our President and CEO, Alison Kirkby our CFO, Christian Merlin. We have Eric Pasch, our new member of the IR team that will take over once I leave next week. You have Anders Nielsen and myself. So IRs outnumber management. What could go wrong? We used the same drill as usual. So I hand over to Alison immediately to go through the Q3 Hi. Good morning, everyone. And yes, it's not just the Board room that's full of people today. Glad to say that We're reporting from a Stockholm office where people are finally returning to the office after a long stretch of working from home. Moving to the quarter, we are reporting good progress on our journey to reinvent Aventa Telia with an expanded next generation network, improved commercial Momentum and Accelerated Structural Cost Takeout. Service revenues, as you've seen this morning, grew 2.3%, which is much more broad based than last quarter with growth in 7 out of 8 units and across most of our important product segments with both subscriber growth as well as ARPU growth in most segments. EBITDA, now carrying the expected higher content costs as well as an impact from pension phasing, declined 1.9%. Cash CapEx grew by 5% as we continue to modernize our 4 gs network, while also rolling out 5 gs. Cash flow remains strong, generating DKK9 1,000,000,000 of operational free cash flow year to date, of which $2,900,000,000 was generated in the 3rd quarter. We're now clearly above the $8,200,000,000 level needed for the minimum dividend. And looking at the structural part of OFCF, we've generated already SEK 7,000,000,000 year to date. With our Norwegian Finnish Tower transaction expected to close before year end, we have a pro form a leverage at the very low end of our targeted range. And even including the 2nd tranche of the 20 dividend due to be paid out in November, we expect to end the year at a slightly higher level of the 1.99 times here, but still comfortably at the very low end of the 2% to 2.5% range. Our multiyear ambition to reinvent Avicatalia is progressing to plan. Here we picked out a few highlights from the quarter. We've just this past week won several customer satisfaction awards. In Sweden, FTI awarded Telia the best operator in the enterprise segment for the 18th year in a row with an increased distance versus all our competitors. And Hayloudd was awarded the Best in the Consumer segment for the 12 out of 14 years. In Norway, Etsy awarded OneCall the Best consumer brand and within the enterprise segment, we not only won 1st place with Fanero, but also 2nd place with Telia. Both these surveys are a good recognition for our renewed efforts to improve customer experience and are evidence of the quality position we have set for ourselves across ANSI In the Consumer segment, we're seeing solid momentum in our convergence strategy. Sweden added 8,000 converged households in the quarter, Norway 6,000 and Finland 15,000 and sales are ahead of expectations on the high value Swedish 5 gs plus mobile bundle, including Netflix and C More. Also in Sweden Consumer, the launch of Champions League and the associated campaign starting in LATAM has generated good engagement so far with overall brand situation increasing and especially for our TV offering. On C More, we've seen a 38% newscore subscription increase versus last year and we've seen a 30% growth of store subscriptions within our Telia Sweden IPTV customer base. We've also seen that viewing among our sports subscribers have been high for the rounds that have been placed so far. And I hope you all stayed up to see Man United win and Ronaldo I get that goal in the 81 minute last night. Moving to Finland, where we're further ahead in Content with access strategy, we've seen a 170% year on year growth in joint Telia and C More customers, now over 210,000, providing us with a much better consideration to Ork Telia up 19 points and a lower churn of 7 points and improved value for money perception. In the Enterprise segment, we're reporting service revenue growth for the 2nd consecutive quarter for the whole for Telia Group with revenue growth in each of the enterprise segments in 5 of our 7 markets. Our enterprise strategy aims to reverse the declines of the past few years through combining connectivity alongside ICT solutions and security solutions, We call it the Smart Orchestrator. In the quarter, our growth funnel was enhanced by deals that amplify our enterprise convergence and innovation strength. Specifically, we saw deals that combine data analytics, private networks and IoT solutions. And specifically, we signed our largest crowd analytics deal to date, where we'll provide the Finnish road authority with insights on traffic flows over its entire road network. On private networks, we signed the largest private 5 gs enterprise mobile network to date in our region with the mining company Agnico Eagle. And we've signed the deal to roll out our dedicated mobile network services for our major industrial project in Sweden. On IoT Solutions, we've extended the deal we have in utilities with Stockholm Exergi. And in real estate, we signed an 8 year contract with Akademiskerhus, one of Sweden's largest real estate companies. We're really building vertical strength in the real estate and the transportation areas. In the TV Media segment, we continue to experience high commercial share of viewing levels in both Sweden and Finland. Early in the quarter, admittedly in the quiet period for advertisers, we were somewhat hampered by the Summer Olympics being broadcast by a competitor, but in September, we recovered to previous high levels. Moving to our connecting everyone strategy pillar, 5 gs rollout continues in line with plan and we retain our leadership in Sweden, Norway, Estonia and Lithuania. We continue to expand POP coverage now at 54% in Finland, 31% in Norway and we've launched real 5 gs services to 25 Swedish cities so far. We remain the sole 5 gs supplier in Estonia covering 17% of population across 15 cities and Oslo was measured as the fastest 5 gs capital in the world by Speed Intelligence during July, which we believe is due to the 5 gs leadership we took in Oslo early on. Also in Norway, the 5 gs spectrum concluded successfully. We increased our holdings in the 2.6 gigahertz band to 2.30 megahertz and maintained our holding of 100 megahertz in the 3.6 for 6 gigahertz brands. We also obtained our desired position in the spectrum band, further cementing our position as the only credible challenger in the Norwegian market. Turning to fiber, we've now surpassed the 1,000,000 connected customer mark in Sweden, taking our full fiber subscriber base to above 1,800,000 across our footprint and an 8% growth. Worth noting is that we now only have roughly 200,000 ex DSL customers remaining in Sweden, which supports our view that the drag from declining legacy revenues will become less and less ahead. As we now modernize 4 gs and roll out 5 gs, we're accelerating the shutdown of legacy. Structural cost reduction related to these migrations amounted to DKK120 1,000,000 year to date, which is helping offset cost increases related to, for instance, and increased share of customers in Open City Networks. In addition, we're utilizing 3 gs to a lesser extent having reduced traffic further in the quarter, Now having only 25 percent of total voice traffic left in the network and only 3% of data traffic. Finally, we're on track closed the announced tower transaction in Q4, which is only pending final local in one market relative to approval. We've already received clearance from the EU and as we've stated before, the experience from this transaction has left us with an appetite to do more elsewhere in our footprint and we're actively preparing the next chance for a transaction in early 2022. Moving to digital transformation, we're also on track. Our IT transformation is about optimizing the IT platform for you and optimizing the strategic partners we select. This quarter, we selected VMware as our strategic partner within cloud solutions aiming to scale the native cloud infrastructure further, thereby gaining efficiencies. We've also selected Pluralsight as our strategic partner to support our technology skill transformation. This quarter, we reduced IT costs by DKK 68,000,000, largely driven by the decommissioning of IT platforms, further utilization of near shoring and our ongoing selection of strategic partners, which results in vendor consolidation. So far this year, we've reduced IT costs by SEK 173,000,000. From a KPI perspective, we continue to see positive momentum in our digital transformation of products and processes. And year to date, we shut down more than 100 legacy systems and 50 product lines, leaving us well on track to remove up to 80% of our existing products by 2025. Amongst our people and our workforce planning, we're on track to deliver the 1,000 FT feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet Feet Feet Feet Feet Feet reduction commitment And 550 FT feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet Es have already exited the company so far this year, and we've reduced the number of consultants by around 200, despite increasing consultants for a short term basis in our Swedish market. And in our free to air channels, we are transitioning towards offering our a higher value more addressable set of customer targets via our digital platform and building our inventory and ad tech platform accordingly. In the quarter, we saw an all time high digital consumption, which led to digital ad revenue growing 24%. On delivering sustainably, the transformation of Telia towards consistent and sustainable growth is progressing as planned. We are on track to deliver on the financial ambitions we've set out both for this year as well as for the mid term and long term, and we're building the foundation that will enable that. This is despite some headwinds that we faced this year such as clearly the development in Finland. Cash generation to enable attractive shareholder remuneration remains strong and our balance sheet is very strong looking at the end of the year and into 2022. As you know, we now sustainability is thoroughly integrated into our business strategy to both inform and strengthen execution. And looking at the progress we made in the quarter, I'd like to highlight a few things. First, we've been awarded the gold level recognition, top 5% of 75,000 companies globally for our sustainability achievements by EcoVadis, the world's largest provider of business sustainability ratings. And that's for our combined work across environment, labor rights, ethics and sustainable procurement. Secondly, having already hit 0 carbon in our own footprint, we're making good progress on emission tracking of our total supply chain. Looking at the total emission levels in our entire value chain, the supply chain represents 85%. And as such, we're very happy to see that our efforts to make our suppliers set science based targets has yielded results as 7 out of our 10 of our largest CO2 emitters have either set or committed to set such targets. Thirdly, our monitoring suggests that consumers rank as number 1 or number 2 in all our markets when asked about Telia's association with strong privacy measures. And finally, I'd also like to refer back to the data insights and IoT deals I talked about earlier. These are perfect of how we can innovate around our core, keep creating products that are good for our customers and good for society. On the back of crowd insights, which clearly was a big enabler to governments during the pandemic. We've just launched Travel Emission Insights, where we enable municipalities to instantly get a view over the emissions generated from travel within a certain geographic area and will in time provide solutions on how to reduce emissions and the tracking of them. Our strength in IoT will clearly benefit us as 5 gs industrial use cases develop, providing us with further opportunity to monetize our 5 gs investments smarter than anyone else can in the region. Now to the markets and starting with Sweden, where it's great to see a return to growth. Despite the continued legacy headwinds, you can see here service revenue actually reversed to growth for the first time in almost for 6 years. Yes, the increase is small, but it's broad based and it's driven by both mobile and fixed and by both consumer and enterprise. All sub segments grew this quarter, except Interconnect and Pure Legacy segments. More importantly, you can see our underlying service revenue, Building legacy enrollment grew by 3.5%, the strongest rate since we started to calculate this underlying revenue in this way. The Enterprise segment grew by 1% with positive growth in mobile and all but one customer segment grew mid single digits with only SME declining low single digits, but relatively stable to prior quarters despite us continuing to carry a premium because of our quality position versus competition. In consumer, TV revenues grew at a healthy 10%, helped by strong sports content, fiber grew 12% and mobile grew around 1%. Our cost base increased slightly as it was impacted by €60,000,000 of pension savings, mostly non cash. So underlying EBITDA delivered a small growth in the quarter if you also exclude last year's one offs. Moving to KPIs, the performance is solid with increases in mobile, broadband and TV customer basis as well as in ARPU. In mobile, we have positive net adds in both Consumer and Business with a slightly improved ARPU versus last year, mainly as a consequence of increased value added service usage similar to the Q2. We did see a slight increase in churn within the consumer segment due to the price increases taken on share plan, but this was compensated by lower B2B churn returning to the lower levels after the loss of a large public contract, which had a negative churn impact in Q1 and Q2. Broadband net adds returned to growth this quarter as the growth in fiber more than offset the copper decline even after adjusting for a small one time adjustment to the base. And the fiber growth we've generated both within our own network as well as within Open City Networks. Likewise, the TV customer base continues grew by 6% year on year and ARPU for both broadband and TV grew as well by 3% 4%, respectively. Encouragingly, these strong trends are supported by attractive sports content as we increasingly become the aggregator and home of entertainment with a wide range of entertainment both from Seymour, from Via Play and now as of September, having Champions League. Moving to Finland, it continues to be a tough market for us, but the revenue did improve sequentially and it's nearing stability around the DKK3 billion level per quarter. Both the consumer and business segments were largely stable on revenues on a like for like basis, supported by 5 gs and the start of this 4th season on TV. TV revenue grew by a healthy 6.5% and mobile revenue was stable and our B2B datacom business turned to growth for the first time in over 2 years. We did however see declines in our legacy fixed broadband and Telephony Products. In an overall tough environment, though there are some bright spots, we're seeing TV growing positively as is access to content products. 5 gs continues to come with an uplift and ARPU of more than €3,000 in consumer and the premium is even larger for enterprise. And with the 5 gs customer base just shy of 150,000 subs by the end of the quarter, we're continuing to roll out and upgrade to 5 gs at pace. Beyond the revenue channel news, we did have some increased pension costs impacting EBITDA, resulting in a 4.5% decline. My KPI perspective, the mobile subscriber base is growing, but it is driven by enterprise where we add customers in the public sector, Although a lower ARPU which dilutes the overall ARPU, positively churn has continued to reduce and it is looking like 5 gs could help us sustain This caused a trend on churn. Now just to give you an update on our turnaround efforts, they're very much focused on a value versus volume strategy alongside structural cost takeout. Specifically, we are restoring our brand and network perception to improve value for money perception and the early signs are positive. Secondly, we're expanding 5 gs PoP coverage, increasing our potential to migrate more customers to 5 gs. And when we combine 5 gs with content from C More, we see much improved consideration and reduced churn. 3rd, we're shifting to our own channel by exiting expensive third party channels that encourage churn and 4, for shifting sales incentives to a value versus volume focused incentive scheme and have stopped our historical practice of subs and calls. And finally, we are in a process to restructure our workforce to be finalized during quarter 4. In summary, we now have a plan and we're executing on it. Yes, it will take a few more quarters, but we're very confident that the turnaround will come and it will have a material impact going forward. Moving to Norway, service revenues are reversing to the positive territory again, despite the spill of burden by the ICE National Roaming Agreement, although as you can see, it's sequentially lower this quarter at 55,000,000 Underlying momentum has continued to improve with the Enterprise segment growing at a very healthy 3.4% pace, driven by mobile and the consumer segment now growing 2.3% driven by both mobile and broadband. With stability in our consumer customer base, we're aiming for this growth to continue as we have now implemented speed based pricing in our premium unlimited offerings of Cortellia X. And at the same time continue to see great strength in the enterprise segment both through Fanero and Telia. New customers such as the Norwegian Postal Service will start to migrate over to us during the next few quarters. Churn in both segments have been broadly stable in the quarter and ARPU is growing due to value added services, more specifically insurance, FAS represented just over half of the year on year ARPU development that you're seeing here. And OpEx declined by 3.6%, which helped that could not fully mitigate the lower revenue from the wholesale contract leading to a small EBITDA decline. Moving to what we call our lead market, the trends remain very strong in our Baltic operations. In Lithuania, service revenue growth accelerated to 8.1% with EBITDA following and growing 9.3%. This quarter our mobile trends particularly stand out growing above 10%. But fixed is also stronger than in prior quarters, growing just shy of 7%. The consumer segment remains the main revenue driver, but we're also seeing the enterprise segment growing too. In Estonia, both service revenue and EBITDA grew by 6%. And just as in Lithuania, the consumer segment was the main driver, but the enterprise segment is not far behind and both segments showing growth in both mobile and fixed services. As we said in Q2, the Danish service revenue is stabilizing and even turn to a growth of 2.2% in the quarter. However, this was driven by interconnect enrollment, which came with limited or no gross margin. To drive further improvement in sustainable Danish revenue and EBITDA growth, we have changed management during the quarter with Petr Cermak, a telco inspector who has been advising us on our strategy since the turn of the year and someone I have known for many years is stepping in as acting CEO until we have a permanent solution in place. The costs are impacted by a non cash balance sheet clean out and slower pace than previous quarter, but the recovery did already start in Q3 last year at 12%, but driven in no small part by a 20 4% increase in digital ad revenue. Pay grew by over 20% helped by stronger sports content and looking back over 20 for months revenue in TV and Media is almost tied to pre pandemic levels. As you know, unexpected content costs are increasing with both the Euros and Champions League affecting the quarter, which clearly affect our EBITDA. And content costs will ramp up further in the Q4 as we take a full quarter of Champions and incur the usual Q4 fiscal jump screen content. Our C More subscriber base grew 20% in both Sweden and Finland and In addition, we have a transfer of 60,000 customers from Finland to the TV and media units so that we ended at 5,600,275,000 customers respectively. I'm sure you're all curious about Champions Lease. It's early days, but we have indeed, besides the already mentioned Positive impact on Swedish TV subscribers, a positive subscriber uptake on the back of it, recovering the outflow of sports subscribers after the euros, which ended at the beginning of the quarter. All in all, sports related subscriptions have increased by 40% year on year. These movements are, however, masked by the fluctuations of the lower ARPU non sports subscriber base. But despite this, revenue is growing positively. We have now embarked into a multiyear period of a stronger content offering and we'll be monitoring the different aspects in which Champions League impacts our business, both on IPTV, on streaming, but more importantly, on the attachment to our access and product that ultimately drives convergence and customer lifetime value. So now, P. C, I'm going to hand over to you in the financials. Thank you, Alison. Let me quickly summarize the financials, starting with service revenue. At your right, we The growth of 2.3%, broken down by unit and market. And as mentioned, we have growth in all the markets of Finland, driven by growth in all key product categories. On the left hand side, you see the same growth split by segment. And as you can see, it's also covered by Amazon. We have a solid growth momentum both in our consumer segment and also in our enterprise segment in the Q3. Year to date, after 9 months behind us, we have recorded a sales revenue growth of 1.0% and are well on track to deliver our outlook for the year of flat to slight growth. If we move to OpEx, starting from the land. Versus last year, total OpEx increased by 1.1 percent or €61,000,000 In Q3 this year, we have more than €200,000,000 of structural cost efficiencies, mainly driven by the 750 fewer resources combined with significant IT related savings. However, in the quarter, this is more than offset by pension phasing effects combined with inflationary pressure mainly from salary inflation. Moving to the right and take a look at the cost development by category, resource costs increased by 134,000,000 versus last year. The reduction of 750 resources has gained more than €100,000,000 of savings in the quarter with resource reductions more or less in all units and functions. This is, however, this quarter offset by 3 main factors. First, the mentioned effect from pension phasing impacted the quarter more than €100,000,000 with a significant part of this being the effect relating to last year. 2nd, salary inflation effect of around €100,000,000 slightly higher than the regular quarterly average. And thirdly, also from the temporary investments we have done in Sweden customer service to protect and develop our customer experience. Marketing costs are flat in the quarter, where some increased activity level is offset by marketing efficiencies in many of our markets. Going forward, we expect to see more efficiencies from our transformation program on marketing costs, but of course, the reported costs will vary depending on the quarterly activity level. Within other OpEx, we have solid reduction driven by the Ed mentioned $68,000,000 lower IT from the transformation initiatives related to debtoring, better consolidation, system decommissioning and increased use of common products and platform. Year to date, we are down 0.7% of €135,000,000 in line with our plan. With a reduction of 750 resources out in 9 months, we are well on track to reduce total resources by 1,000 during this year. This will both secure a good result for this year, but more importantly, secure a strong run rate going into 2022. And to summarize, we are well on track versus our plan and have good visibility how to reduce OpEx of €2,000,000,000 by €23,000,000,000 and €4,000,000,000 by 2025. If we move to EBITDA, at the right hand side, you can see the total EBITDA decline of 1.9% broken down by market and unit. But the main reason for the decline is, as mentioned, Sweden impacted by engine phasing Finland hurt by lower revenues and pensions and TV Media impacted by increased content costs offsetting the service revenue growth. After 9 months behind us, we have recorded an EBITDA growth of 0.8%. If we look at the full year, we expect to end 2021 at the lower end of the flattish drybulk outlook range. The main reasons for this are mainly due to the lower than expected performance in Finland, combined with effect from a slower rebound of the non EU roaming. As Alex mentioned, we see positive signs in Finland already and the global roaming is hopefully starting to return a bit during first half of next year. On CapEx, starting from the right, as expected, we see an Increase in mobile network activities related to the ongoing mobile network modernization and 5 gs rollout in all our markets. Fixed investments are a bit down due to less fiber related investments in Sweden, but we see a slight increase in the quarter within product development and IT due to some key transformation related investments in Q3. As we can see on the left side, total cash CapEx on a rolling 12 month basis has increased to $13,600,000,000 or 15.4 percent on NASDAQ. Cash CapEx will increase further in Q4, both from higher planned activity levels, but also from the delayed effect of completed activities due to our long payment terms. It's worth to note that the ongoing global supply chain situation is starting to impact our business and therefore could have some delay effects on the CapEx levels going forward. However, so far, we have been able to mitigate this relatively well. All in all, we are on track with our investment agenda and given the expected increase in cash CapEx in Q4, we expect to land around $15,000,000,000 in cash CapEx in the middle of the targeted range. Moving to cash flow, starting from the right, we have reported a total cash flow of $2,900,000,000 in the quarter, down from last year. This is a combined effect of lower EBITDA, slightly higher CapEx and a slight negative contribution of working capital in the quarter. On a rolling 12 month basis, we see solid cash flow at SEK11,900,000,000 somewhat reduced from last quarter. And excluding contribution of working capital, we are on a rolling 12 month basis at SEK 7,500,000,000 in line with our expectations. After 9 months, we now have generated a solid €9,000,000,000 of cash flow, well above the needed €8,200,000,000 to cover the minimum dividend commitment. And we are on track from 2022 onwards to cover the minimum dividend commitment with cash flow excluding working capital contribution. On net debt leverage, as mentioned, we have reduced our leverage by almost SEK3 1,000,000,000 during the operation. If we take the Q3 results and add the expected proceeds from the tower transaction, pro form a leverage is at SEK1.99, But keep in mind that we have $4,100,000,000 to be paid out in dividend during Q4. We expect By end of 2021, that this will put us at the lower end of the targeted range. Our outlook for 2021 After 9 months of the year behind us and with our financials well within the targeted range, we reiterate the outlook for the year. As mentioned, we expect EBITDA for the year to be at the lower end of the outlook range with cash CapEx expected to be in the middle of the range around SEK 15,000,000,000. On the midterm ambition, given the solid top line momentum we see, the ramp up of the structural cost agenda and a clear plan on how to turn around our low performing units, we are well on track on our mid term ambition. And with that, I hand back to you, Allison, to summarize the presentation before we go into Q and A. Thanks, P. C. So to basically summarize We are delivering on our plan. We're proud that our commercial position took a step forward in the quarter with the expanded Next generation networks, both 5 gs and new enhanced content and digital service has been added. The momentum in almost all markets and all key product segments are strong, including in our largest market Sweden, where as I said, we've seen service revenue acceleration for several quarters now and getting closer to that sustainable and consistent EBITDA growth too. Our transformation is building the foundations for sustained structural customer experience and cost advantage, which is helping to mitigate some, but not all of the recent headwinds. Furthermore, our ambitions to crystallize value from our assets are on track with the Tower transaction expected to close next quarter as previously communicated and more will follow. But the Tower transaction already announced is putting us already at the lower end of the leverage range as we move into next year. Our outlook for flexible single digit growth in both revenue and EBITDA remains. And as Preeti just said, we'll be at the lower end of that range on EBITDA this year and CapEx will be in the mid part of that range. So we're finally on our way out of the pandemic and moving forward with even more confidence on our transformation journey to reinvent AveXothelia. We do believe that the pandemic has strengthened our role in society and cemented the need for ubiquitous connectivity seamlessly combined with the best digital services provided by the most trusted provider. And as a result, we're really looking forward to playing an ever more important role in our customers' lives in the post pandemic world and for our improved market and structural position to generate consistently attractive shareholder returns for our owners. Operator, could we have the first question, please? Certainly. Your first Question comes from the line of Maurice Patrick from Barclays. Yes, hi guys. Thanks for taking the questions. Maybe a question on TV Media and some of the puts and takes for 2022. I believe, Alison, you said, I think it was at the 2Q, you're happy with consensus around SEK900 1,000,000 for EBITDA for 2021. I mean that would imply Sort of quite low for the Q4. I guess that's your point around the Champions League. Has TV and Media got back to its old run rate yet? What are the puts and takes in terms of costs and revenues for next year? Can EBITDA grow in that division? I linked to that is, will the full benefit from the Champions League be seen mostly in TV media? Or should we see some come through the OpCos like in Sweden as well? Thank you. Thank you, Morris. So yes, we've been saying I think we've definitely said last quarter, EBITDA shouldn't be much More than €900,000,000 for the year. And that's basically what we've been guiding to this year this morning. The different puts and takes are clearly we are very happy with the return of the ad business And we are actually all, as I said there, all went back to 2019 levels when you look at Q3. So the return of the ad piece, Very positive. And even more positive with a bigger mix moving into digital ad revenues now, where you get more of a premium And clearly that's the future. So good progress there. In terms of EBITDA development, so we'll have to next year consumed the full year of Champions League, which we've not had this year. So that will clearly have an impact on TV Media EBITDA next year. But where do we expect benefits to accrue? We expect benefits to continue to accrue on Seymour. We expect benefits to continue to accrue on the Telia IPTV, which we're actually really delighted at how that's developing at the moment. And what we will also continue to expect to accrue is improved convergence and reduced churn as we see attachment to our access product. And that comes over time because some of the subscribers that want to come to us to Get Telia are today locked into contracts with other providers that will diminish over time as well. So I'd expect next year because we'll be consuming a whole year of the cost of Champions League that you won't see much EBITDA development in the TV media sector, that you will start to see it coming through in our core Swedish and Finnish telco businesses. Very clear. Thank you, Allison. Yes. Thank you, Maurice. And I think, Maurice, if you see in Sweden in the quarter, 12% fiber development, Mobile still growing 1%, TV up 10%. There's clearly an impact there of everything we're doing, not just Champions League. And I'm really hoping for more of that next year, particularly with reducing legacy headwinds. Great. Thank you. Almost got 2 answers there, Maurice, on one question. That's a new one. Next question, please. Your next question comes from the line of Andrei Tobiaszuk from UBS. Hi, good morning and thank you for the presentation. I guess Finland, it's a bit of a topic. So if I can handle a couple of questions there, please. So first of all, you're now saying that Your targets in the turnaround in 2022. Is there any kind of more specific timing with respect to that? 2nd, if you could remind us of some of the progress made and what's left to do from your point of view before the business starts to perform as you wish or at least in line with the market? And then finally And I guess most importantly, regardless of your specific issues in Finland, is there some kind of It's rather, can you kind of rule out any kind of pricing disruption of pushing 5 gs and consumer that would be a kind of peg to turn this business around? And specifically, I'm asking because some of your peers are kind of pointing to Telia specifically in the enterprise segment being a bit more aggressive. So is this something that you can rule out in the consumer segment? Thank you. Hi, Andre. Were you focused on Finland there or overall? It was Finland. Sorry, I missed that. Yes. I missed specific, yes. All 3 of them, yes. Thank you. Yes, yes. Very clearly, yes, we have a multi pronged turnaround in Finland plan. And just to be clear, we don't need to take market share in Finland to turn around this business. We just need to grow at the same rate as the market leader, monetize 5 gs at the same rate as them And that alongside the structural interventions that we're making on our cost base, on our channels and on our go to market will enable us to grow at the same rate as Alisa. So it's not it's a value versus volume focused strategy. What we've discovered as we've peeled the onion in Finland is both by dependency on third party channels that encourage churn at our own sales incentive model that was just pursuing subs at any cost, we were being irrational in the consumer segment. We are stopping that as of now. So that we are seeing good traction as we're starting to shift the perception of the brand on the back of 5 gs rollout. We're seeing good traction to 5 gs and the churn of 5 gs is lower. So it's very much a value versus volume focused strategy in the consumer segment. In the enterprise segment, we've seen a return to growth in our core Datacom business. And just as we're seeing in Sweden, our breadth of services beyond connectivity are really becoming attractive to the large public and key account sector. We've signed as I said, we've signed the biggest Mobile network deal in the region in Finland during the last quarter, really attaching IoT services. And those kind of services help us minimize the ARPU dilution that can happen when you have irrational players in the market and help us to hold market share. We think we're holding market share in the price segment. And clearly, that's our intention going forward as well. Does that answer your question on Finland? Yes. Thank you. And maybe just if you could be a bit more specific in terms of when exactly in 2022 you would expect the turnaround to occur? I think it's more likely the second half than the first half, Andre, to be honest. We need a few more quarters because as we pull out a third party External retail and move to value versus volume, that obviously has an impact. And as I said, we are actively talking to the unions regarding changes in restructuring in the workforce that will happen starting Q4. Thank you. Thank you, Andre. Just as a reminder, please limit yourself to one question Otherwise, we won't be able to capture you all. Next question, please. Your next question comes from the line of Terence Tsui from Morgan Stanley? Thanks, Andreas. Good morning, everyone. I'll just stick to the one question regarding the comments that you made earlier around towers and fiber. Just specifically interested on your thoughts on the assets in Sweden. You obviously got quite a high price for the setup towers in Norway and Finland. So the market It's clearly quite hot, but maybe you can just talk about some of the potential disadvantages you could see from any deal Or doing anything in Sweden as well, please? Thank you. Clearly, don't see any disadvantage in doing tariff deals at Call when we keep majority control and working with a partner such as Brookfield and Alexa, Alexa that are very long term in nature And Brookfield brings real confidence being the biggest owner and operator of towers in the world. So As we said at our Capital Markets Day, we have just over 9,000 concrete and steel towers. We have 3 times that if you include All of the sites, Norway and Finland accounted for just around half of our tower footprint, and We didn't make up a chunk of the balance of that, not all of it, but a chunk of it. And we as I said, we are proactively preparing the next tranche for a similar transaction and we'd love to get similar multiples and we hope to be able to do something in early 2022 turns. In terms of fiber, we have a great footprint of fiber already, but clearly we have some white spaces And we have some opportunities, particularly where you see like the Swedish government are really keen to co invest in rural fiber. So we will clearly be looking at where we can partner with others to fill out our white space of fiber footprint in the coming Quarters and years as well. And the fact there's so much interest in that area, we don't need to do it all ourselves now If we can find great partners with a very long term view and we'll be good partners for us in our fiber strategy. So yes, Lots more to do in the infrastructure area and excited about the potential there. All right. Thanks, Anderson. Thanks a lot. Terence, may we have the next question? Your next question comes from the line of Stefan Groffen from DNB Bank. Yes, hello. I have a question regarding the B2B market in Sweden. Teva 2 alluded to that there has been some stabilization in the pricing of on the corporate side in Sweden. And I just wonder if you agree to this picture so that the B2B market could see a good recovery going forward? Thank you. Yes, I would agree to that position. We saw a relatively stable quarter. And As I said, we actually saw lowtomidsingledigit growth in all segments apart from SME. The SME segment still remains very competitive and a key competitor is being quite aggressive at times. There's always one that's more aggressive in 1 quarter, But I'd say in totality it's pretty stable and even in the SME segment, where we carry a real premium on ARPU, We are seeing stability with low single digit declines, which has been very consistent in the last couple of quarters. So yes, I'd say it was a fairly Stable quarter from a competitive point of view in the enterprise segment. Okay. Thank you. Very good, Stefan. Thanks a lot. Next question, please. Our next question comes from the line of Peter Nielsen from ABG. Thank you very much. Good morning, everyone. I had two questions, but I'm not as strict in these options. I'll stick to the second one. Listen, obviously, OpEx reductions is an important part of your 3 to 5 year plan going forward. We seem to be entering an environment with an accelerating and increasing inflation. Could you talk a bit about how and where You see that impacting Telia? And how you see your opportunities for mitigating that, including Passing on some of those costs to your customers. Any color here would be appreciated on your sort of medium term view. Thank you. Yes. So clearly, we have built in salary inflation into our plan. So that was always built in over the 3 5 year period and that €2,000,000,000 is a net ambition. We are seeing a bit of inflationary pressure Energy, we don't we hedge the majority, but clearly with spot pricing going up, we're seeing a little bit of an impact there. But we tried to pass that on as much as possible. For example, our data centers, we passed on any inflationary pressure there. And clearly, we see continued inflation and where we see inflation pressure on devices and equipment, we've had that on. And we will be monitoring the situation over the coming months as we create our plans for '22 onwards. We're looking at if there is going to be inflation pressure, what more can we do from a pricing point of view. But at this point, all manageable. And based on our strategy to consolidate the number of products, platforms and partners that we have, we will use that strategy to leverage scale and mitigate some of the headwinds as well. And that's something we can do because of the scale of the business we have throughout the region and because we started with a very fragmented set of partners as well. And That's not just helping us from a cost mitigation point of view. It's also helping us from a supply point of view at the moment. And I'm Very happy that our network providers are giving us all the support we need so that we can keep our 5 gs rollout on track despite Clearly, the supply chain pressures, which at the moment, we just need to give much more forward looking forecast to our suppliers. Thank you, P. J. Thanks, P. J. I know your first question was why we only highlighted Man United. So congrats on the Chelsea win. I've done well. Yes, but it's been mild more aggressive. Yes, I know. 1st place tonight, by the way. Next question. Next question, operator. Your next question comes from the line of Roman Mike Rudolph from JPMorgan. Hi, guys. Thank you for the opportunity. I wanted to go back to the question of Finland turnaround. So I appreciate it's work in progress and to require A few more quarters and thank you for your earlier comments, Alatin, on what needs to be done. Do you think it has all come down to mostly distribution and the go to market strategy. And when I look at your results, It looks like you are building up your 5 gs base. So there's clearly some upselling going on. You're not really losing market share. Your postpaid Customer base has been growing for a number of quarters. So the ARPU is not really firing up. And can that be down to maybe back end systems and how you manage your existing customer base and things like Data analytics, smart targeting, something along those lines? Or do you think it's more of a distribution of lending question? Just additional color there, that would be helpful. Thank you very much. Well, it's market position, it's network position, Brand position on the back of that and then distribution go to market and much more modern day tools to drive the business. So it's kind of all of that. But you're right. If Elisa can get €1 uplift from 5 gs. There is no reason that we can't do that considering the market position we have as well. If we are changing the perception of the network, which we are, we have proof points. If we're changing the perception of the brand, Still to do work on the brand, but our CMO who started out fixing Denmark is from Sweden, he's now off to Finland now. That is work in progress. But all of the what we are doing to build a data analytics capability for the group is being prioritized for Finland at the moment. And so the more we move into our own channels, the more we'll be able to use The customer we're calling it a customer value management boost. We're really pushing ahead in Finland first for the whole group to see how that can really improve cross sell, upsell and convergence in general. So it is a distribution and go to market, also a focus. We are and that's more we're getting rid of some distractions around the edges that have been built up, whether it be Esports or gaming in the consumer segment or in the enterprise segment, we're getting out of alarm businesses and other smaller periphery businesses that were built up over the years. So focus, distribution, go to market, analytics and then really going after the workforce and the cost structure. Got it. Thank you very much. By the way, Yves explained that it's as much as €3,000,000 All 4 5 gs outlets. So plenty of places there. And that's what we're getting. We're getting 3 in the consumer And more than 3 in enterprise. But if you look at Alisa's ARPU over the last year, it has gone up by 1. So that's what I'm referring They've probably got at least double the 5 gs customers that we have and they've already got an extra €1 on their ARPU. But clearly, there's much more to go after. But even €1, a year from now makes a big difference. And if we're going after structural cost interventions as well. Thank you very much. Thank you. Thank you, Rene. Thanks a lot, Roman. Next question, please. Next Question comes from the line of Ulrich Rathej from Jefferies. Yes, thanks very much. I have slightly more technical on the pension area of pension. It has been a source of volatility for the quarters, now in 3 quarters in the 3rd quarter again. So 3 sub questions here in particular, maybe to address. The first one is what is the nature of this, what you call, phasing? It sounds to me that this is actually more like one offs, but could you explain what you mean here by phasing? Could you talk about pension reimbursement To be expected in the Q4, as in the prior 2 years in Q4, whether that's coming again in terms of what amount, whether it's possible to comment on that. And then In the IR email this morning, there's sort of a comment that you are aiming to improve the accounting. Could you just comment on what would improve and how it might improve? Thank you. Yes. I'll try to address those questions. So just to remind, last year, we reported an OpEx reduction of SEK 180,000,000 where twothree of that was nonstructural and pacing. So a big part of what we are reporting this year is relating to last year. And last year, there was some different kind of technical effects hitting in a positive way in the Q3. On top of that, we also have some, As we have mentioned some phasing effects from this year. And what is coming from is there are some, let's say, one time effects, which is hitting this quarter. That's kind of belongs to other quarters this year and last year. And on the improvement, I mean, what we are doing now, we have The way we accrue for pension to avoid having this noise on the numbers and the result of that is we're kind of getting a double cost because we are carrying The one time charge in addition that we're not doing a more proper accrual on the pension costs and more specifically is related to Salary inflation and also on bonuses, so that's very technical part. So overall, these Cyber effects mostly belong to Q3, where a big part of it is Q3 last year and there are some effects for Q3 this year. On your second question around reimbursement, we are looking into what room we have for pension And reimbursement, I'm not going to guide anything more on that at this point. And then I think I covered the third question in my first answer. So yes, you could say it's a one off because it was a big negative last year and a big positive this year. Moving forward, we're trying to kind of smooth this out And there's no bad news in there. Got it. Thank you very much. Thank you, Ulrich. I think we have Four questions left. So let's speed up and see if we can fit all in. Next question, please. Next question comes from the line of Steve Malcolm from Redburn. Good morning, folks. I hope you can hear me okay. Thanks for taking the question. Just a question on balance sheet and return on capital. Obviously, the balance sheet looks Balance sheet looks in very good shape. You've got the dividend clearly coming out in Q4. We understand that, but still be in good shape. The tariff deal is closed. Can just update us on your thinking on returning sort of excess capital through buybacks to shareholders and maybe the timing and the sort of the puts and takes on that and why you wouldn't return Debt Capital, I guess, would it if you weren't to do that with full year results, would that be because you see opportunities elsewhere to reinvest Because maybe some concerns about the outlook. How should we read any decisions not to return excess capital? Thanks a lot. Well, I think our capital allocation policy is very clear for the year. It's a minimum of DKK 2 per share dividend, and we want that to grow in line with our EBITDA going forward. You're right. We're right at the low end of the 2 to 2.5 range. We're still in the 2 to 2.5 range. So whilst we're in that, I wouldn't expect the Board to change anything. But clearly, if we were to do any more, For example, tower transactions that would obviously have to trigger the Board to look at an excess capital return. And I'm sure they would lay out the pros and cons Buybacks versus extraordinary dividend at that time, but that's not really a dialogue for today. But we do have a very shareholder friendly Chairman. And there is no incentive for us to go below the 2% to 2.5% range. So and In terms of we've laid out our CapEx investment for the coming years. We don't see any immediate major acquisition needs. So I think if anything, if we were to have cash that took us below the 2, that would clearly our Board would Consider a return to shareholders. I'm still very open minded whether that's through buybacks or special dividends at this stage. Yes, I think that's something for the Board to really discuss alongside our midterm outlook when we get together in January. Okay, great. Thank you. Thanks for its shareholders as well, clearly. Thanks a lot, Steve. Next question, please. Your next question comes from the line of Seeyi from Citigroup. Hello. Thank you very much for your questions. Just I have a question on the how we think about your midterm EBITDA trajectory. I think today's guidance change suggests that there will be We have about 7%, 8% EBITDA growth that are required over the next 2 years. And during the call, you made a comment about higher content costs And also Finland might not return to growth until the second half of twenty twenty two. So I was wondering, should we think about the delivery of your 3 year EBITDA growth target to be more for back end loaded? Is that the right way to think about it? Thank you. No. We are very comfortable with our low to mid single digit outlook that we gave for the period. And some of the we're starting the Finland turnaround. That will start to benefit us next year. Roaming will start to return and we'll start to get more and more benefit from the transformation program. So very much on Track and we fixed our guidance and are confident in that. Okay. That's very clear. Thank you. Thank you, Seey. And may we have the next question, please? Your next question comes from the line of Avila Sohrabhatra from Berenberg. Yes, good morning and Thanks for taking the question. Sorry to come back to Finland again. I think it's fair to say that past management teams have also talked about Going ahead with the value versus volume approach in Finland. I guess my question is what is different this time? Is it just that under new management you'll be more sort of discipline in your approach in Finland? Or is it simply that with the 5 gs sort of opportunity, you see a chance to Essentially, grow service revenues by being sort of more rational on competition. Thanks. Yes. I think the past management Seems that they've been there long enough to actually just deliver any discipline or focus. So what's different this time, yes, we've got the opportunity of 5 gs And we've got the opportunity of content. And I really do believe we've got a management team that's really Getting to the root of the problem in Finland and starting to turn that around and we'll certainly be able to leverage The group transformation towards common products, platforms, processes and partners. And that's what gives me the confidence. P. C. Has been around a little bit longer than me. Do you want to comment P. C? No, it also goes in the focus of execution, right. So build the capabilities and ensure we actually execute. The strategy in itself is not rocket science, but it's actually making sure that we deliver on it. And we have a much more robust integrated strategy Planning process now that cascades all the way down to country and functional plan, something that didn't exist until the year before. Thank you very much. Thank you. Thank you, Aviles. We have one more question in line. So I think we take that and then we end. And this and by the way, this is the last Question for Andreas as the Head of IR of Telia on his 20th set of results. So make it a special question. Your question comes from the line of Agam Bockwani from HSBC. Wow, no pressure. There's actually a bit of a follow-up to that last one, I'm afraid. But I wanted to ask a little bit about the balance between group level policies and how those feed down into the countries. So one thing specifically like pricing and the balance of gross adds and churn, how much of that is really coming from the center and implemented locally? What is locally focused and is then monitored from the center because a lot of the conversations I think we're having around Finland and in particular over the last few quarters Seemed to suggest that maybe oversight wasn't quite where it could have been. And I'd just really like to hear how that's changed basically. Yes. So, great question. We it is the local markets own their go to market strategy, which includes pricing, gross adds, go to market, everything, but they are overseen by group. And what We set the targets and the ambitions. Rynor equips the countries with the product platforms and partners they need to take to market. And then we were and then by getting the transparency on the plans from the countries at a group level, we're able to scrutinize, Challenge support and get a much better understanding of the feasibility of the plan relative to the targets that we're setting. So it's a real mix of top down and bottom up and a collective ownership for the plan in the end between group and local markets. Thank you, Alison. Good luck, Andreas. Thank you. And on that note, I would like to end the call today by saying Thank you, Andreas, for 20 fantastic quarters. I know that's not always been good. You didn't yet turn around Finland, But we wish you all the best in your future career. You're going back to the dark side, but I know you'll put a buy on it as soon as you can. And I look forward to watch Finland turnaround from the dark side. Thanks a lot everyone. That concludes the call for the Q3 report. Have a very nice day and reach out if there is anything you would ask more. Eric is dying to take calls. And as you have a nice day. Take care.