Earnings Call: Q2 2021

Jul 21, 2021

Good morning, everyone, and welcome to this quarterly presentation of TLA Companies Q2 results for 2021. We will do this exactly as we used to do. We will start with our CEO and President, Alison Kirkby, which will then hand over to our CFO, Christian Marland, And then we open up for Q and A. And as usual, please stick to one question each. Please be disciplined as we are with CapEx. And by that, Alison, over to you. Good morning, everybody. Great to have Andreas on top form this morning. I'm also happy to be reporting another quarter of progress towards reinventing a better Telia on this sunny Stockholm morning. As you have seen this morning, as societies have opened up during the second quarter, we've also seen an improvement in our performance with growth in both service revenues at 3.2% up and EBITDA at 1.9% up, both on a like for like basis. Nice to see as this is the Q1 since Q4 2015 that would deliver growth on both top and bottom line metrics. On service revenues, we saw growth return to our mobile subscription service revenues with 6 of our 7 markets now showing growth And as a group, we're showing mobile growth in both the consumer and the enterprise segments. Service revenues also benefited from a strong recovery in our TV and media unit where advertisers have returned with strong demand and we are seeing strong demand for our pay TV services. EBITDA growth was mainly supported by the Recovery in TV and Media and further strong progress in the Baltics, but it was also a really solid quarter for Sweden with great underlying momentum. All types remained flat during the quarter. Importantly, we see progress in structural cost reduction both within resource costs and IT in total amounting to roughly DKK 150,000,000 this quarter. Compared to Q2 last year, there are however offsets from some temporary investments to Customer experience, that's in Sweden and COVID related impacts that reduced our cost base this time last year. So basically COVID mitigants that were taken this time last year. Cash CapEx is in line with the levels that we saw last year despite continued network modernization and 5 gs rollout And operational free cash flow reached DKK 2,100,000,000 which is only slightly below the level seen last year. Year to date, we've now generated SEK6.1 billion and most importantly, we're well on track to more than cover our minimum dividend commitment for the year. Following this set of results, the completed sale of Telia Carrier and the announced agreement to divest a minority stake in our Norwegian and Finnish towers, we have an even stronger balance sheet with a pro form a leverage just shy of 2.1 times. It's now almost 6 months since we embarked on our multiyear and bold ambition to reinvent Abeyta Telia. Here is a quick snapshot of some of the progress made in the quarter. Revenue development and NPS is how we assess Progress when it comes to inspiring our customers. And I'll get back to the revenue development in the country section. But in the NPS, we are seeing a positive development in Estonia, signs of Improvement of stability in Norway, Lithuania and even Denmark remain positive. And so it's only Sweden that continues its negative trend, especially in broadband. This is not surprising. And as we expected, as we have communicated a number of price increases during the quarter. Despite this, we see that customer satisfaction levels are stable relative to Q1 and in all countries except 1, we have an underlying churn reduction versus the corresponding period last year. Convergence, as you know, is our chosen route to improve customer experience, increase loyalty and stayed a premium versus the market in both the consumer and enterprise segments. In the quarter, we made good progress on convergence. Sweden's converged customer base is growing 25,000 and on top of that, we've seen a strong intake of C More customers throughout the euros leading to an even greater convergence potential ahead. Norway is also growing 7,000 with good progress on the expansion of our partner network. And Finland is worth 32,000 including good progress on content of access where we are seeing roughly 2 thirds of all 5 gs subscribers adding a C More subscription to their mobile subscription. At a group level, the churn on our FMC customer base is being monitored and they remain roughly 5 points lower than for a single product customer, even for those customers buying a content with access product. In Sweden, we are one of only 5 operators globally to bundle Netflix seamlessly with an access product and certainly the first in Sweden. From launching on the 1st June, we're off to a good start with the first drop of our consumer aggregator product with multi order e commerce and seamless bundling connectivity device and value added services. So far, 75% of customers are choosing the highest value tier that's unlimited 5 gs plus which includes Netflix and C More. We're also seeing increased appetite for upgrades from existing lower data, lower ARPU tier customers as more than 40% of sales of the new 5 gs bundles are coming from existing customers trading up. At the same time, we're now monetizing 5 gs by making the 5 gs plus feature available to all subscriptions for a higher ARPU worth SEK 29. We're also continuing to strengthen our business with Swedish landlords. On top of the deals we signed in the Q1, we continue to sign more during the Q2. So far this year, we've secured more than 130,000 households, which close to 30% are totally new to Telia. Unique to all these landlord arrangements is the combination of next generation digital services, including access, Wi Fi, Smart Home, IoT and data and analytics that provide greater insights to the landlord about the utilization and efficiency of their building services. We believe that Telia has a true competitive edge in this area, hence the progress that we are making. This competitive edge and strength beyond connectivity is also evident in enterprise. On one day in June, we struck the biggest enterprise deals ever in both Sweden and Norway. In Sweden, we're honored to have our contract renewed with Regent Skane for another 6 plus 6 years, where we will be their turnkey supplier in its digitalization journey. On the same day, we signed an 8 year contract with the Norwegian Postal Service, which is a pan Nordic contract where we will leverage our strong Nordic footprint as well as our market leading digital services including our market leading IoT portfolio. And TV and media continues to rebound with commercial share of viewing on the rise in both Sweden and Finland and Seymour gaining customers and posting revenue growth of 75% in the quarter, mainly related to a great slate of sports content and admittedly relative to a period last year where a lot of sports were canceled. As we pursue an ambition to connect everyone, 5 gs rollout continued at pace. Across our whole footprint, we increased population coverage by more than a third. Population coverage is now at 47% in Finland. We're in 65 cities, 25% in Norway, 34 cities, but 95% coverage in the 2 key cities, 13% in Estonia, we're in 6 cities and we're the sole provider of 5 gs in Estonia. We're now at 12% in Denmark in 4 cities and we've expanded our 5 gs service in Sweden, now offering it in 22 Swedish cities. Encouragingly, we have received several independent confirmations of both our 4 gs and 5 gs network leadership in Sweden during the quarter of which Bumlaud, formerly P3, is 1. In Finland, we achieved a performance milestone with an all with world record speed of 4 gigabits per second. And in Sweden, we just beat the Swedish 5 gs speed record. Alongside 4 gs modernization 5 gs rollout are continuing to step by step close down legacy networks across our footprint with further good progress in Sweden in the quarter leading to structural cost reductions within both COGS and OpEx worth around DKK 80,000,000. We're also increasingly migrating traffic from 3 gs, our traffic has come down by almost 50%, putting us well on track to completely close down 3 gs throughout our footprint by the end of 2023. And finally, as you know, I've been quite vocal about our infrastructure ambitions. And so late in the quarter, We announced that we'll divest the minority share of our towers in Finland and Norway to Brookfield and Elekta. Brookfield, as you know, owns and operates the largest tower footprint in the world and is Clearly an excellent long term partner to help us operate and commercialize these towers better than if we were doing it ourselves. We're aiming to close the transaction in the Q4 and based on the multiple, the MSA and the quality of the partner, we have an appetite to do more now elsewhere in our footprint. Moving to transformation, which is continuing at pace and we made good progress in the quarter. Workforce reductions are progressing to plan with the 4 50 colleagues exited year to date And we'll continue to expand and utilize our near shoring operation, which now includes around 1,000 FT feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet Es after adding another 100 in the second quarter. This initiative will strengthen critical digital competencies at a lower cost going forward. On IT transformation, we have started to deliver on a plan to drastically consolidate our supplier portfolio. We have closed agreements with 4 suppliers as strategic partners and we'll consolidate the first 29 suppliers into those 4, which include Accenture, Capgemini, TCS and TL Delivery. We're already benefiting from the improved commercial terms and new ways of working as of the month of June. Over the next 5 years, this project will reduce OpEx and CapEx combined by around SEK 750,000,000. Additionally to this, we closed a further 75 legacy IT systems in the quarter contributing to IT cost savings of around 45,000,000 On simplification, we reached a strategic innovation partnership with software provider ServiceNow, which will fuel simplification and automation of key parts of our operations and a key enabler for our orchestrator value proposition to B2B customers. Implementation activities have now commenced across all markets. In addition, we've removed over 20 products and simplification plans are now in place in all markets to in some cases, particularly in Finland, remove up to 80% of our existing products through 2025. We're also seeing a growing adoption of common products now at 12% across the group, which is critical to support the removal of legacy products and leverage scale benefits going forward. Finally, from a transformative digital perspective, TV Media is clearly a standout in the quarter with digital ad revenue is growing by 177%, giving us confidence that TV4 has the ingredients to be one of Europe's most profitable broadcasters even as viewers and advertising shifts from linear to digital platforms. Finally, on delivering sustainably, we're on track with All of the financial ambitions we set out to achieve this year so far and are particularly pleased with the stability and free cash flow and the strength of our balance sheet, we are in good shape as we move into the second half of the year. In the markets where we're the market leader, we are responsibly taking action to restore market growth on the back of the Growth on the back of the significant investments we've made into our networks. 5 gs monetization is one of those actions that we've recently taken in Sweden alongside the multiple price increases that we've taken in Sweden recently as well. At the same time, our purpose ensures we also take responsibility for societal progress. And in the quarter, we made good progress and proud to receive some high quality recognition. For example, we were highlighted by the Financial Times as a times as a European climate leader due to our emission reduction and the fact that we set bold science based climate targets. Together with a few of the largest European operators, we launched a new secular initiative, the eco rating of mobile phones to encourage customers to easily select phones with strong environmental credentials. And we've launched a mobile driving license for Swedish children to provide safe and secure start to Digital Life. And finally, we received a gold level award, the highest level possible in the Estonian Responsible Business Index Award. So that's the strategic progress, but now to the markets and let's start with Sweden. Despite the legacy DRIVE and good cost takeout. Underlying, we're seeing solid momentum, most notably in B2B within the large segment and site based both showing growth on a year on year basis. Sweden B2B actually grew their mobile revenues by 2.5% in the quarter, which is the first time in a long time. In B2C, we're seeing strong growth in fiber, up 11%, TV, IPTV, excluding Seymour, up 17% and also in mobile, as I said, up 2.1% you exclude last year's one off. In totality, service revenues excluding legacy and the one offs grew by a healthy 2%. OpEx was down 4% and cost was stable as savings from copper dismantling and subcontracted fieldwork offset increased content and Open City network access costs. Looking ahead, we have in the quarter implemented several price increases on legacy copper products including PSTN and XDSL. And we're seeing early indications of less legacy burden Having implemented these prices, which combined with additional price adjustments already announced for the autumn, we're expecting to see improved trends in the second half of the year. These announced price increases include fiber broadband to be implemented in September and selected mobile services such as the family share funds we're adding extra SIM cards to the base subscription for a small fee. In terms of leading indicator KPI development. I think this is where Sweden is showing, so really good signs. In mobile, we're increasing our postpaid subscriber base with all brands either stable or growing the base. In enterprise, we are still impacted by the loss of a low ARPU public sector customer, but stable excluding that loss. ARPU levels are moving up driven by enterprise, partly explained by the loss of that customer, but also by increased usage and value added services. Overall, pricing levels remain competitive, but no worse than we've seen before and our broad range of services and tools are proven to be supportive to customer retention and ARPU development for Telia. Churn is also healthy with reducing churn in consumer and stable in enterprise if you exclude the aforementioned customer. Within broadband, we're continuing to grow within high speed tiers and especially within the Open network universe. This quarter, we saw a higher churn within our ex ESL customer base, which is as expected given the price increases. ARPU is up on a year on year basis and flat sequentially and overall trends are in line with what we've seen in prior quarters. The success we've had within MDUs is also visible in TV subscriber growth and we also grew in SDUs in the quarter. This is now the 5th consecutive quarter with net additions. TV ARPU showed a dramatic growth year on year as last year was impacted by the pandemic. So sequentially, we are flattish as increased uptake of high ARPU sports packages is mitigated by the dilutive effect of our MDU growth that is implied underneath. All in all, Sweden was a strong quarter with a growing customer base, growing ARPUs and reduced Sure. But as you saw in our report this morning, Finland had another challenging quarter even if the revenue trend did get sequentially better. We declined in both service revenues, down 1.6% and EBITDA down 9%, driven by the Enterprise segment, but especially the IT business lines were lower by 7% than a year ago. The Consumer segment was actually flat as the decline in mobile offset by growth in TV, but there were some signs that make us hopeful for the future. We saw positive momentum in the mobile customer mix, a record 5 gs migration at an average €3 higher ARPU. We're closing the gap to Alisa in terms of population coverage. We have lower churn in our access with content bundles and we're seeing continued growth of Seymour, which is now the number 2 OTT player after Netflix in the Finnish market. However, that didn't help EBITDA materially. EBITDA was particularly weak due to certain pandemic cost reductions or mitigation that were taken last year and they've now returned and that includes a pension holiday and marketing. But also from a nonrecurring software license cost that we took this quarter and increased energy costs. From a KPI perspective, the global subscriber base is growing driven by enterprise where we add customers from a large public customer and ARPU is slightly down year on year due to the segment mix shifts. Churn remains at lower levels than the pre pandemic levels. Several transformation initiatives are now underway and headcount has already been reduced by 3% since the beginning of the year. In addition, our Head of Strategy and Commercial, Marcus Metherar, will on top of his group role become the Finland Chief Commercial Officer to help the Finnish team fix commercial basics and enable a value accretive commercial turnaround, while Heli focuses on the overall transformation agenda. Moving to Norway. Service revenues declined as expected, but highly related to lower revenues from our national roaming contract with ICE, which impacted us negatively by around DKK 67,000,000. Wholesale revenues aside, underlying momentum is actually quite solid with positive momentum in the Enterprise segment, up 3.4% and especially in SME where we had our highest subscriber growth ever. We're also seeing positive growth in the consumer segment with strong growth in broadband, up 3.8%. Churn remains relatively low in both segments and ARPU development is positive across the board with continued strong traction to our premium tier mobile subscription, that's Telia X, which now represents 17% of our total postpaid base. And this is clearly supported by rapid 5 gs rollout now at 25% coverage and ahead of the main competitor. Similar to Sweden, we are growing our customer base, we are growing ARPUs and we are seeing churn decline in. The highlight of the quarter was what we touched upon earlier, the deal signed with the Norwegian Postal Service, the largest deal ever signed in Norway. This as well as the earlier contract signed with the Norwegian Police and the renewal of the contract with NRK, the Norwegian public service broadcaster, we have clearly proven that we are reliable and trusted supplier of communication services to the entire Norwegian public sector. OpEx increased by 4.4%, but mainly related to lower costs taken last year to mitigate pandemic impact. Underlying, however, we are making good progress on transformation and structural cost takeout such as proceeding with the outsourcing of our field services during the quarter. Moving to our lead market and just as in the previous quarters, the trend remains very strong in our Baltic operations. Lithuanian service revenues grew 5.5 percent and EBITDA grew 3.7%. We saw more than 5% growth in both mobile and fixed services with the consumer segment being the main driver, 11% growth, particularly from growth in mobile. Estonian service revenues grew 6.1% and EBITDA growth was excellent at 12%. There is progress on both mobile and fixed segments with mobile turning to growth and fixed accelerating its pace from previous quarters. In Denmark, our service revenues declined, but albeit at a lower rate than recent quarters, but EBITDA declined quite significantly due to lower equipment margins relative to last year. We also had lower costs in Denmark last year taken to mitigate the early COVID impacts. Importantly though, Danish mobile service revenues are now stabilizing And in fact, flattish for the quarter with a particularly strong end to the quarter during the month of June as Denmark truly reopened. And then finally, TV and Media had another strong quarter as it rebound from the COVID lows and it even accelerated during the quarter. EBITDA increased almost 85%, driven by service revenue growth of 45% with both ads up 43%, equally in linear and digital and pay up 58%. Businesses are improving significantly post the pandemic with increased share of viewing in both Sweden and Finland and premium price levels restored in pay. We continue to take market shares in linear TV, driven by a combination of well established formats, new successful formats like the season finale of MASS Singer had an astonishing 76 percent share of viewing as well as popular sports events such as the World Championships in Ice Hockey, Go Finland And the euros mark my work, the Tartan Army and Scotland will be back again. More seriously, as demand from advertisers We could leverage on our strength and market position offering more inventory and being disciplined on pricing. Additionally, we see Strong growth in digital with viewing time on TV for Play growing 25% more than any other domestic broadcaster, including the public service broadcaster. As a consequence, our EBITDA grew significantly, though not to the same extent as revenues due to as expected higher content costs from the returning sports events. As a reminder, there will be an increase in content costs in the second half as we have some significant and exciting sports rights content in the coming quarters such as the Champions League. But putting that aside, this quarter is another proof point that we're on our way to the store and reach Our original ambitions from media ownership, driving convergence, increasing loyalty and becoming the aggregator of digital experiences for the whole, regardless of its media, connectivity or smartphone services. But now, I'll hand over to P. Z. Thank you, Alison. So let me quickly summarize the financials. 1st, service revenue. At the right On the slide, you can see the plus 3.2% growth broken down by the market and the unit. Sweden, as mentioned, is impacted by a legacy decline that is affecting the underlying growth. Freedom experienced Pressure both on mobile and fixed revenues. Norway have underlying growth, but it impacted, as Alison said, by the wholesale agreement with ICE. Our Baltic markets continued a strong growth momentum and lastly then the solid strong recovery of our TV Media business. If we move to the left side, the key driver of the 3.2% growth This has mentioned the recovery in the TV media unit, but we also see good development in our telco business. Total Telco Consumer segment see a growth of 0.5%. This is driven by growth in mobile revenues in all markets except Finland and TV revenue growth across our footprint. And this is more than offsetting the roughly CHF 200,000,000 legacy pressure we have in the quarter, mainly coming from Sweden. We're also happy to see that total Telco Enterprise revenues are flat versus last year with great trend improvement in Sweden, a good growth momentum Norway on the back of the Panera and the CTC acquisition and continued strong performance in our Baltic markets. So year to date, after 6 months of the year behind us, we have recorded a slight service revenue growth of 0.4% and are well on track to deliver on our outlook for the year of flat to single digit growth. On operational expenses, total OpEx was as mentioned stable in the quarter. And on the right, we can see the breakdown into the 3 main cost categories. On resource costs, in the quarter, we had CHF 100,000,000 structural cost savings from 450 colleagues that had left us during this year. This is, however, more than offset by 3 key elements. 1 is, as usual, salary inflation. The second is, as Alison alluded to, return of certain cost items related to the pandemic. Examples include, but are not limited to, temporary layoffs from closed shops last year, temporary lower use of consultants, lower social security charges and also lower pension costs in some of our markets. And the 3rd component is specifically temporary investments we have done to strengthen customer support and customer experience in Sweden and also some specific growth related investments into our B2B operation. The more that we execute on our transformation journey, the more we will get efficiencies and net cost safeguard also in these areas. The increase in resource cost is offset by efficiencies and reduction in other costs from CHF 50,000,000 lower IT costs related to the vendor and system consolidation that we are pursuing and lower provisions for bad debt in the quarter. This is partly offset by somewhat higher energy costs in some of our markets. Year to date, we are down 1.6 percent in line with our plan. We are on track to reduce total resources by 1,000 during this year. This will both secure good results for 2021, but more importantly secure a strong run rate into 2022 and the years to come. Going forward, you should expect to see more impact from the transformation program and we are well on track to our plan to reduce OpEx by SEK 2,000,000,000 by 2023 and SEK 4,000,000,000 by 2025. On EBITDA, at the right hand side, you see total EBITDA growth of 1.9%, broken down by market and unit. Sweden is stable despite pressure from legacy that is offset by cost reduction. Finland is down 9.1 percent impacted by both service revenue decline and higher costs. Nova is down 2.9%, but has underlying EBITDA growth if we exclude for the wholesale agreement. We continue to see good growth momentum in the Baltic market and then the strong recovery in our TV Media unit has also generated a strong EBITDA growth in the quarter. With EBITDA growth year to date of 2% growth, and we are well on track to deliver on the outlook for the year of flat to low single digit growth. In the second half, TV Media will contribute less on EBITDA than in the first half due to tougher comparables and also the mentioned increase in content costs. This is somewhat offset by expected improvement in the Telco business, both on the revenue side, but also effects from the cost initiatives. On CapEx, Starting from the right, where we see total CapEx being stable versus last year. As expected, we see an increase in mobile network investments related to the ongoing 5 gs rollout and mobile network modernization currently ongoing in all our markets. This is offset by slightly lower investments in fiber in Sweden as planned. Investments into product development and IT is only slightly up versus last year, where CapEx efficiencies, but also top prioritization is to a large degree offsetting the increased activity levels to transform our products and IT platforms. As we can see on the left side, total cash CapEx on a rolling 12 month basis is stable on SEK 13,400,000,000 or around 15% to net sales. As mentioned before, cash CapEx will gradually increase in the second half, both from higher planned activity level, but also from the delayed effect of completed activities due to our loan payment terms. It's worth noting that the ongoing global supply chain situation can potentially impact our business and delayed some of the CapEx spend. But so far, we've 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 the second half, we are well on track to deliver cash CapEx in the range of SEK 14,500,000,000 to SEK 15,500,000 for the year. On cash flow, starting from the right, Total cash flow in the quarter was solid at SEK 2,100,000,000 slightly lower than last year. EBITDA less CapEx is stable in this quarter, but is expected to be impacted in the second half by the higher cash CapEx levels. Tax and interest payments is a drag this quarter, but this is entirely due to phasing between the quarters versus last year. Net other payment is negative versus last year due to higher costs related to the mentioned M and A transaction and also the ongoing business transformation program. Lastly, also this quarter, we had a positive impact on working capital, driven by the positive contribution from our vendor financing initiative. Moving to the left, year to date, we have now generated a solid cash flow of SEK 6,100,000,000 or 75 percent of the minimum dividend commitment of SEK 8,200,000,000. On a rolling 12 month basis, we see a total cash flow at a solid CHF 12,700,000,000 continues to be supported by working capital contributions. On a rolling 12 month basis, Excluding working capital, we are still in line with the minimum commitment of SEK 8,200,000,000. So to summarize, we are well on track to generate more than enough cash flow to cover our dividend commitments for this year. And we are well on track from 2022 onwards to cover the dividend commitment with cash flow excluding contribution from working capital. On the tower transaction, there's not so much more to comment at this point. I'd like to say that we are very happy to both the valuation of 27 times, but also our strong and solid partners in Brookfield and Alecta. And I really look forward to the journey that we have ahead of us. On net debt and leverage, as expected, our total net debt is reduced in the quarter to around SEK 17,000,000,000 with net debt to EBITDA ratio reduced to 2.32 times. This improvement is driven by the received proceeds from the Telia Carrier transaction. Excluding the proceeds from the transaction, net debt is fairly stable, excluding payments of the 1st tranche of the dividend that was paid in the Q2. If we add the proceeds that we expect from the cloud transactions, we would see a further reduction on net debt to EBITDA down to 2.07 times. And this will put us in the lower end of our target range of 2.0x to 2.5x. So to summarize, after a solid first half with year to date results, well in line with outlook given the facility for the remaining 6 months, we are confident to reiterate our outlook for 2021 with service revenue and EBITDA flat to low single digit growth and cash CapEx around CHF 14,500,000 to CHF 15,500,000. With that, Plus the ramp up of our transformation agenda, we are also well on track towards our mid term ambition. And with that, I hand over to you, Allison, to summarize the presentation before we go into Q and A. Yes. Frank, it's P. C. So just in summary, we're clearly pleased to Back to growth on both top and bottom line and importantly delivering in line with the outlook that we set out for this year. Our core business is improving driven by mobile where we're seeing growth in 6 out of 7 markets. TV and media recovery is real and we're closing in on We will potential imagine when Bonnier was acquired an exciting bottom ahead of us. We're progressing well with our strategic priorities that includes the transformation program. We received the proceeds from the sale of Telia Carrier and announced our first tower deal. Cash generation remains very healthy and our balance sheet is strong. So our full focus is now on creating a better Telia by delivering on the road map that we set out in January, a road map that aim to reinvent a better Telia and for our customers, our employees and our shareholders, while contributing our part to enabling the development and digitalization of the societies of the Nordics and the Baltics. So I think it's time for Q and A now. We'll be talking about it. It's not too long. Thank you both. And operator, please let's open up for Q and A. Thank you. We will now begin the question and answer session. Your first question comes from the line of Peter Nielsen from ABG. Your line is now open. Thank you very much. Good morning, Allison and Peer Christian. Allison, I'd like to take a step back from the Q2 results, please. If we go 6 months back to the strategy update we had at the time, some of your new management team had barely said it in. I think some hadn't even arrived yet. Then you outlined sort of the Transformation process as well as your plans for a strategy for regaining commercial momentum. Now it's been 2 quarters. How would you evaluate the progress and the size of the challenge the way management views it today? You're saying that the IT or sorry, the transformation process It's going as planned, which is positive. It sounds a bit like the challenge in Finland perhaps is a bit Greater than originally thought. How would you say about Sweden? Is your view on Sweden, what is required, the size of the challenge to turn Sweden around? Jose, is that unchanged, Alison? Thank you. Thanks for the question, Peter, and thanks for rising above the Q2. Yes, you're absolutely right. In January, a number of the team were new. And I think reflecting back, I'd say we're actually Slightly ahead of plan on commercial momentum if you exclude Finland and Denmark. I'm actually really quite happy how momentum is building commercially. And the transformation program, our leader to lead that came in, in the summer of last year. And that is very much ramping up in line with expectations. But and where I think we're slightly ahead of plan It's probably TV Media. TV Media has rebounded faster and they are transitioning to digital faster than we expected as well. And clearly, our TD position across the footprint, not just in the Bonnier asset is really strong. So that's where we're probably a little bit ahead of plan, Peter. But you're right, it's similar that we're behind plan. And I think it's I think what we've realized is there are more there's more work to be done on the commercial agenda there. The transformation and cost structure takeout is clear and we're moving forward with that. But it's more the commercial agenda and machinery that is weaker than we expected. And that's why I'm sending in Marcus to help because he brings great experience from Austria, from Switzerland, from e commerce. And we do need to radically digitalize And change our channel focus in settlements. So and then moving to Sweden. I think I'm actually really happy with the underlying momentum in Sweden, if you look at everybody has reported now. And if you put aside Hutch, we are We're ahead in consumer mobile, we're ahead on enterprise mobile, but we're doing that in a value accretive way. We're sustaining, if not growing, 2. We're reducing churn and we are proving that when you sell in a broader range of services, particularly in the enterprise Or to landlords and even to the consumer now with great content, we're starting to be able to sustain That premium ARPU position that we have. And we've now, in the matter of the last quarter, taken a number of pricing moves And to restore market growth. And excluding churn effects, they could be worth up to $350,000,000 on an annualized basis going forward. Now some of them are on legacy products. So I think €200,000,000 to €300,000,000 on an annualized basis from that pricing. So Overall, good about Sweden. But this is a major transformation, Peter. This will we said at the time, it will take time. And but we're happy with the progress today, and the team remains super excited about the potential. And when we find such Basics missing in our commercial operations in Finland. We know that actually just fixing the basics will create a lot of value too. That's great. Thank you for that, Alain. Thanks, Peter. Thanks, BK. Can we have the next question, please? Thank you. And your next question comes The line of Andrew Lee from Goldman Sachs. Your line is now open. Yes, morning everyone. Thanks for the presentation. Just to add a couple of questions on Sweden. Firstly, just on the Swedish consumer service revenue trends. I know you had kind of relatively easy TV comps in the second quarter. But should we expect mobile and broadband trends to kick on and accelerate into the second half given the price rises you announced in Q2? And how should we view the scale and breadth of those price rises? And then the second question was just on B2B, which is always hard from an outside perspective To get a true understanding of, but I know you lost a public sector contract. But do you think that the pricing pressure has abated somewhat in large Corporate, is this a trend? And how are you holding up in SME given Tele2's tariff changes? Kind of any help on What's going on an underlying basis in B2B would be great. Thank you. Yes, absolutely. Thanks, Andrew. So on B2C, yes, as a result of The pricing moves we've taken, the stability and actually underlying growth in our customer base and the Base and the churn reduction and with Champions League coming uniquely to Telia Play And outlook at Seymour, the outlook is actually really quite good for our consumer business. And as I just said to Peter there, In totality, the pricing has worked up to €350,000,000 on an annualized basis. But if you assume there's some churn there, we can look €200,000,000 to €300,000,000 upside. And so good outlook on B2C. On B2B, Really strong. We grew in the large segments, as I said, almost mid single digits. Cygates is growing, And they are with all of the demand for digitalization support in our customers, I think that growth will continue. We are seeing stability of ARPUs in public and key and seeing stability in SME as well. So You know both of them had similar trends to Q1 and that's in the low single digit decline range. So not seeing any negative impacts and actually holding up really well. And as I said, We are sustaining an R2 premium because of the range and quality of services that we're able to take to the market. Thank you. So it sounds like B2B is improved versus a pretty tough mid-twenty 19, 2020 and that's Yes, absolutely. As I said, we grew robot and enterprise 2.5% in the quarter. It's been a long time. And your positive and large SME is low single digit Decline and there's no roaming in there now. So really, really, really solid Swedish quarter actually In terms of underlying base, ARPU, churn reductions, initiatives ahead, no, very good. Thank you. Thanks, Andrew. Next question, please. Thank you. And your next question comes from the line of Maurice Patrick from Barclays, please ask your question. Yes, good morning guys and thanks for taking the question. If I could move the conversation onto the towers. You've been pretty clear in the presentation, Alison, it's more than just getting a high multiple for it. Picking up on your comment around Brookfield about helping you do it better than doing it yourselves, what is it specific you think Brookfield can bring To help you run that top portfolio better than maybe if you're doing it just on your own. And you also said, I noticed in the presentation, that this is our 1st tower deal. So I guess the obvious question is what's the next one or what can we expect? And do you still take the view that Sweden is sacrosanct? Or Yes. Are you going to wait and see how the Brookfield deal lands before you start taking more strategic moves? Kind of where are we in that perspective? Thank you. Thanks for the question, Morris. So yes, I've been very clear that we see the industrial logic In our digital infrastructure, we went into the 1st tower transaction with an ambition to sell a minority stake, But to bring in a partner that will help Telia be better. So not just crystallizing value, but giving us A competitive MSA agreement allowing us to control our MSA agreement. And in terms of Brookfield, they're just They run, well, a footprint of 185,000 towers today. We treat our towers as something on the side. We've not been running them efficiently. We don't proactively go out to find new tenants. And a world of Massive microcell deployment, which will happen with 5 gs and 6 gs, with the likes of Brookfield operating in India, Where all of those towers, where they get many, many towers and pushing more and more kit onto those towers, we are going to learn So much. And we saw that in the partner presentation. We really focus as a management team on What did the partners bring in Brookfield really stood out for us and they're in it for the long run. So really, really delighted And their ambition and actually all the other parties that we met, ambition was for us to build out a Nordic Baltic Tower portfolio. So Norway, Finland, concrete and steel is first. We're still with the rooftops to go after. And considering the quality of the partner and that partnership between Brookfield and Elekta, we might be more willing to proceed on a faster basis in Sweden as well. That's very helpful. Thank you. Thanks, Maurice. Next question, please. Thank you. And your next question comes from the line of Nick Lau from Societe Generale. Your line is now open. Good morning, everybody. It was just a quick one, Allison, please, on Finland, if you could talk about what costs have risen, if that's okay. I know it sounds like early days As your team go into look at the costs, but how long do you think, if at all, it's going to take you to get the costs down? And is the SEK 2,000,000,000 Target for full cost is dependent on getting these finished costs down or would this be additional on top? How does that play along with The big group targets, please. Thanks. Yes. So thanks for the question. So clearly, Short term, there was a bit of a bump up in costs, some one off license costs, some increase in energy costs. And we were coming off of a period last year where there were some short term interventions like no pensions and no marketing. But our Cost agenda that we will that we're planning on is a part of that $2,000,000,000 It's not going to add to the $2,000,000,000 it's included. We're just a bit slower to get our share of that and it's phasing a little bit later than we were expecting. Where does the cost come from? Well, it comes we have over the years really proliferated All of the B2B products and services through acquisitions. We've already in the quarter sold 2 small businesses, a lifetime alarm business and a remote monitoring business. So a lot of the cost benefit comes from radical portfolio I think our group ambition is to reduce product by about 50%. In Finland, we're going to go much harder And we will go faster, particularly in the B2B area. And then it's about automation, driving productivity and efficiency, Having a smarter channel, go to market channel strategy, we're very reliant on 3rd party retail that's very costly. We aim to go much more digital and really by building the network perception, the brand perception And bringing in some of the digital capabilities from elsewhere in the footprint and what Marcus brings from his e commerce experience, We hope to go harder and faster there. And then really driving convergence to reduce churn. And we've got a big churn machine In Finland, unfortunately, that drives a lot of subscriber acquisition costs that clearly is part of the transformation agenda as well. So A lot to do. It's all part of the $2,000,000,000 It's just coming a little bit slower than we expected. But Now we will go harder and faster in cash up as soon as we can. And is it fair to say because of that? So I get the point about the €2,000,000,000 But is it fair to say there might be a few more rocky Quarters in Finland on the way. I mean, it doesn't sound like a straightforward exercise, this. I think even the previous management and the one before that struggled with the Finnish cost base. So it something you sort of you've got to beat a few things up before they come right? Yes. Well, this management is going to fix it once and for all. And yes, it's going to take a few Certainly. It's already resolved overnight, but I'd hope to be on a better run rate by Q1 next year. That's great. Thanks, Alison. Thanks, Nick. Thank you, Nick. Next question, please. Thank you. And your next question comes from the line Soren Sui from Morgan Stanley. Your line is now open. Thank you. Good morning, everyone. I had a question around the TV and Media unit, please. Basically, it's just great news that you've got the Champions League rights from next season after such an exciting summer for England and some of the Nordic countries as well. You mentioned that the costs should increase in the second half of twenty twenty one. But I'm just thinking about So whether you can steer us a bit more around the evolution of revenues and cash flow as well. Like how do you expect So eventually you'll be paying off the increased content costs. So how should we think about the evolution of revenues over time? Thank you. Yes. We've not really disclosed that because a lot of the revenue will actually flow through in our Swedish business unit. It wouldn't necessarily all flow through In the TV Media Unit, because we've now announced that packages will be split between Seymour, offered to all and some unique experiences on Telia Play. So they both contribute to our overall outlook for the year of flat to low single digit growth and clearly trying to maintain That was seen in Q2. In terms of, again, the cost impact, as you know, these contracts don't allow us to Disclose the absolute cost impact, but the rumors in the media is a good estimate of what it will cost over the 3 year period. And clearly, you should be planning on that cost hitting us 2 quarters of that cost or half a year of that cost In the second half. I don't think I can really say any more than that, although both The revenue development will be positive for TV Media and Sweden in the coming quarters. And the cost will be booked as the games are broadcasted. So it will be fairly even along the period. And then on cash, Part of it has already been paid. So then there will be other installments in certain quarters, but we'll let's get back to you on that. But if you look at consensus for the TV media unit at the moment for the year, I wouldn't take that up any further as a result of The Q2 results. That is a good estimate. Don't go further, is my guidance to you. Great. Thanks for the clarifications. Thanks, Terence. And also good to see that Denmark actually was in the euro, which I missed last time. So apparently, they were. Next question, please. And your next question comes from the line of Ulrik Ratlach from Jefferies. I wanted to Get to the back to the Swedish price increases. I think the way you've positioned it, right, is that you're sort of Putting the price umbrella over the market as the market leader. And Tele2 Communicate in a similar way that they're taking responsibility. Question is, if you look at the prices Price levels that you will be at in the second half after the price increases you've now announced and Tele2 being where they are. Are you essentially exposed to the price levels of the rest of the market and You're watching what they're going to do. And if they don't move, then you have to rethink it? Or do you feel you're in an entirely comfortable position with the situation that you will be in, in the second half also given where Tele2 will be at that point. I'm just trying to figure out what the pull forward and then sort of the ratchet situation is and then how you look at that commercially? Thank you. Yes. I think clearly, we're always cautious when we take pricing and that's why I said you've got to think about Reducing the absolute amount by a bit of churn before you assume you can get the full value. But if you look at the pricing we're taking, we're not doing anything dramatic Way ahead of inflation. Where we can, we are implementing them alongside Some value added services. So if you look at how we're nudging up price, we're pushing a 5 gs plus premium. And that's an extra service for our customers. We're adding an extra SIM for the family. That's an extra service for our customers. And in the fiber area, we're pushing higher speeds all of the time as well. So none of them are particularly dramatically going to move us away from the market. There are multiple levers of Small pricing that overall is worth a lot that I don't believe will make us disadvantage from a competitive point of view. That's very helpful. Thank you. Thank you, Rich. Next question, please. Thank you. And your next question comes from the line of Keval Khiroya from Deutsche Bank. Your line is now open. Thanks very much. I've just got a question on Finland. You helped elaborate of the issues related to OpEx. But just when we think about the service revenue performance, can you talk a bit more about just what you think is going wrong? You did mention I think distribution, but just an understanding exactly why you think the brand is really underperforming versus G and A and Elyse will be helpful. And also as you try to fix the service revenues, is there a risk that actually you need to spend more OpEx Just to also get the revenues in the right way. Thank you. Thank you. Well, we've been we're still living from a Periods where network perception was a problem for Telia and our sales team were trying to They were too focused on going after growth ads at discount rather than retaining the current customer and working with that customer through added value services. So We're going to shift more to a customer value management approach, really upselling 5 gs now, now that we've got to 47% population coverage. We're seeing an acceleration of 5 gs take up. We're now over 100,000 subs. So that will help as well. And we're going to do a lot more work on churn prevention, which was not the case during the last 6 months in the way that we'd expect. And we've also got some pricing moves to take advantage of, particularly in the all pay area and some of the lower value tiers as well coming. So I don't expect to see a dramatic impact in OpEx to drive this. In fact, as we move away from 3rd party channels And we've gone to digital, that should actually reduce our OpEx over time. That's very clear. Thank you. Thank you, Keval. We have a couple of questions left, so let's try to move quickly. Next question, please. Thank you. And your next question comes from the line of Steve Malcolm from Redburn. Your line is now open. Yes, good morning guys. Thanks for taking the question. Can I just come back to Ulrich's question on pricing? Maybe I've got it wrong, but I thought your fiber prices were going up double digits in the second half Without any noticeable increase in speeds. Can you just clarify that if that is the case and if it is, Is it plausible to get NPS up against those sorts of price rises? And what would be success in terms of the movement of churn in net adds against those sorts Price price, broadband subs are already declining. Do you expect that to continue? So just an understanding of the overall movement on price for broadband and the subject of subscriber Evolution would be great. Thanks. Okay. Yes, the pricing, it's we're going from €439,000,000 to €479,000,000 on the Megabits. We're going from 5.9 to 5.29 on the 2.50 megabits. So I don't really see those as being particularly aggressive. And then we're always trying to treat Clearly aggressive and then we're always trying to treat customers up to higher speeds as well. The bigger, more ahead of inflationary pricing is on ex DSL and PSTN, which we've got a history Of driving those price increases ahead of inflation and yes, accelerates a bit of churn, but it still contributes to the bottom line positively. Did I ask that question fully answer that question fully, Steve? Well, I guess it's usually seeing sort of more for more. We're seeing the same for more, which is more for more has got a checkered history, more the same for more, there's not much history at all. It's kind of an odd move in this particular time, I guess, in the market. No, we're also selling in great TV packages as well. We've got the best TV packages in the market at really great value for money. So That is where we're driving real more for more benefit to our customers as well as nudging up the pricing of fiber, which is Fundamental to the sustainability of the value of fixed connectivity in Sweden going forward because fiber It's cheaper than some copper products. So offering More for More on the TV and driving up fiber pricing, I actually think that is a good strategy. And we've got because of the bundling we have, not just of our own content, but also with ViaPlay And with C plus we've got all of the stores that anybody could want at a very good price. And now with Netflix Ingested as well, we're in a strong position. So maybe you can give us an idea when you expect NPS scores to improve. Obviously, there's going to be a bit of a lag with the price rises coming through. Well, I think it will be tough this year With all the pricing we're taking. But maybe they'll be delighted by Champions League and that might nudge us up. So will the 100 meg customers get Champions League in that Price rise or do they pay extra for that? No, they pay extra for that. That's pure fiber. Yes. So pure fiber and they still get 100 meg for the same price Sorry, for the extra price. Yes. We're just paying for the TV packages at the moment, but clearly, yes. Okay. Okay. Thanks. Thanks, Steve. Thanks, Steve. We have time for one more question, the final one. Maybe something for Bibi. Thank you very much. And your next question comes from the line of Stefan Gauffelin from JNB Bank. Your line is now open. Good morning. Well, most of my questions are answered, but perhaps could dig in a little bit deeper on the cost increase in Finland. You reported very solid postpaid subscriber intake in Finland, But I think you mentioned at the call that it was a large B2B contract behind that number. Can you clarify that or if you also had good solid subscriber intake on your 5 gs plans. And the reason why I'm asking is, I wonder if higher subscriber acquisition cost Explain part of the cost increase this quarter. You go ahead and talk about the cost increase, Yes. So we don't see that we it was more related to the, let's say, the artificial low marketing costs that we had last year. That is part of explaining the cost increase that we have reported this year. But the cost increase in Finland is not just driven by marketing is also other cost items that affect the comparability versus last year. And all the post and all the subscriber base increase was in the B2B segments driven by that new public customer. Yes. Yes. Okay. That's very clear. Thank you. But good progress on 5 gs, that's one of the many things that make me hopeful for the future, Seth. Thank you. Okay. Thank you. Thanks, Stefan, for letting P. C. In as well. Very good. By that, We conclude the Q2 and wish you all a great summer and let's get back in touch when we are all back from vacation. Take care.