Tele2 (ST:TEL2b) (TEL2), a leading telecommunications provider, has maintained its growth trajectory in the third quarter of 2024, marking its 14th consecutive quarter of growth with a 3% increase in end-user service revenue.
President and Group CEO Kjell Johnsen, who announced his departure after four years at the helm, reported a 2% increase in underlying EBITDaL and a solid SEK1.1 billion in equity free cash flow.
The company's financial leverage remained below the target range at 2.3 times. Notably, Tele2 launched Sweden's first Disney Plus bundle, enhancing its digital TV offerings. Jean Marc Harion is set to replace Johnsen as CEO.
Key Takeaways
- Tele2's end-user service revenue grew by 3%, with B2C and B2B sectors in Sweden seeing a 1% and 2% increase, respectively.
- The Baltics experienced a 7% revenue growth across all markets.
- Tele2 is on track to achieve SEK600 million in cost savings by the end of 2026, with SEK225 million already realized.
- The company's economic net debt decreased to SEK24.6 billion.
- A focus on improving customer experience and efficiency, including a unified IT platform and digital channels, is a priority.
- Tele2's consumer business strategy includes growing mobile and fixed services integration, achieving a 26% penetration of FMC (NYSE:FMC) customers.
Company Outlook
- Tele2 plans to prioritize customer experience and sustainability initiatives.
- The company expects an energy cost headwind of SEK40 million in 2024.
- CapEx to sales ratio is projected at 13%-14% in 2025 due to the final phase of 5G expansion in Sweden, with a return to historical levels of 10%-12% from 2026.
Bearish Highlights
- The company noted a historic high in bankruptcies and the impact of rising interest rates on consumer purchasing power in Sweden.
- B2C mobile performance growth rates have declined due to changes in pricing strategies and the reintroduction of handsets.
- Content costs, particularly for sports, have increased.
Bullish Highlights
- Tele2 is optimistic for a gradual economic improvement in 2025.
- The company's 5G services are receiving strong customer responses, covering over 80% of the population.
- Tele2's FMC strategy and handset binding in retail have led to customer acquisition improvements and churn reduction.
Misses
- No significant increase in run-rate savings is expected in Q4, though minor additions are anticipated.
- The company's EBITDA guidance remains unchanged for the full year due to uncertainty in volumes and trends.
Q&A Highlights
- Tele2 anticipates normalization in growth as pricing stabilizes throughout the year.
- The company is transitioning customers from DTT to OTT services by the end of 2023.
- Questions were addressed regarding the Comviq brand's pricing strategy and the more-for-more approach implemented.
Tele2's third quarter of 2024 has been marked by solid performance and strategic initiatives aimed at sustaining growth and improving customer experience. With the company's leadership transitioning and the continued rollout of 5G technology, Tele2 is positioning itself to adapt to the evolving telecommunications landscape while maintaining financial stability and operational efficiency.
Full transcript - None (TLTZF) Q3 2024:
Operator: Good day and thank you for standing by. Welcome to the Tele2 Q3 Interim Report 2024 Webcast and Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Kjell Johnsen, President and Group CEO. Please go ahead.
Kjell Johnsen: Thank you very much, operator, and good morning, everyone. Thank you for taking the time to joining us. And welcome to this report call for the third quarter of ‘24. With me here in Kista today, I have Charlotte Hansson, our Group CFO; Stefan Trampus our Head of B2B and Hendrik de Groot, our Chief Commercial Officer. And they will soon present an update on the Swedish Consumer business and B2B, which is why we have extended today’s call up to 20 minutes. Let’s move to Page 2. I'm glad to report another solid quarter with good end-user service revenue growth of 3%, marking the 14th consecutive quarter of growth and with all lines growing whereas underlying EBITDaL grew by 2%. We continue to generate solid cash flow leading to a financial leverage of 2.3 times, which is below our target range. In September, Tele2 announced the first Disney Plus bundle offering in Sweden. New DTV customers will have this Award-Winning entertainment included from day one, whereas it will be made available to existing customers overtime. Once again, we were ranked as 1 of 3 most gender-equal companies by Allbright. And earlier this year, we were ranked as Sweden’s second most gender-equal company by Equileap. And as you all know, I will be leaving the company after having had the privilege of leading Tele2 for the past four years. Together, we have achieved a great deal over this year. We have returned to growth in all major areas. We have delivered strong cash flow and we have taken our sustainability performance to new highs. And of course, all based on the Tele2 Challenger culture. Last week, our Board appointed Jean Marc Harion, as Tele2’s new CEO. Jean Marc is currently the CEO of Polish telecom operator Play, and he also serves on Tele2’s part. So let's move to Page 3 and look at the quarter. End-user service revenue grew by 3% organically, supported by growth across operations. Organic Underlying EBITDaL grew by 2%, mainly driven by end-user service revenue growth. Excluding the energy support in Sweden last year, growth would have been 3% and in line with the end-user service revenue growth. We generated SEK1.1 billion equity free cash flow reporting leading to a low 2.3 times leverage ahead of the dividend distribution level approach. In Sweden, B2C end-user service revenue grew by 1%, led by fixed broadband and mobile postpaids, partly offset by elevated legacy headwinds. In addition, we have previously flagged for tougher comps in the second half as we executed prior to adjustments earlier this year than the previous year. Sweden B2B grew end-user service revenue by 2%, hence the strong achievement given the prevailing macro headwinds out there. We continue to look forward to improving performance within a few quarters. The Baltics grew end-user service revenue by 7%, with growth in all markets. Underlying EBITDaL grew almost a [Indiscernible] at 6%. And in Q3 we saw sequential revenue growth acceleration in Latvia and Estonia. And then let's move to Swedish B2C. We added 20,000 postpaid RGUs to the quarter with positive numbers from both Tele2 and Comviq. ASPU grew by 1% year-over-year, which obviously lower than the previous couple of quarters, the main difference is tougher comparables due to early pricing this year, whereas it was later last year. Fixed Broadband returned to positive net intake with 4,000 RGUs in the third quarter, driven by both single-play and SMC. ASPU grew by a strong 8%, mostly due to price adjustments. Digital TV, cable, and fiber added 4,000 RGUs in the quarter, partly supported by the Disney Plus launch towards the end of the quarter. The ASPU growth came from a combination of pricing and the cleanup of RGUs in Q1. Moving on to Slide 6. Mobile end-user service revenue grew by 2%, driven by 3% in postpaid, partly offset by continued decline in prepaid. Fixed broadband grew end-user service revenue by 7% due to the strong ASPU. End-user service revenue for DTV declined by 4%, driven by an increasing decline rate in our legacy DTT business due to the ongoing migration, while Cable and Fiber remains largely stable. And then, let's move to B2B in Slide 7. While Swedish companies have continued to be affected by economic headwinds, we look forward to gradual improvements over the next year. Given the circumstances, we continue to perform well, but a 2% end-user service revenue growth in the quarter. Mobile grew by 4%, driven by our IoT business RGU base and ASPU. Our Solutions business grew by 2%, whereas fixed continue to stabilize following the closure of the copper business in the second quarter. And then, we will move to Slide 8 for a view of Sweden now. End-user service revenue growth for the total. Swedish operations ended at 2%. Underlying, EBITDaL growth was 1%, driven by the end-user service revenue growth, partly offset by the energy headwind from the SEK25 million support we received last year. Adjusted for that EBITDaL – EBITDaL growth would have been 2%. The cash conversion of 58% is reflecting 15% CapEx to sales in Sweden during the last 12 months. And then, let's move to the Baltics. The number of Baltic mobile postpaid customers continued to increase driven by Lithuania and Latvia. Blended organic ASPU increased by 3% with growth in all markets. This is due to the more-for-more strategy continued prepaid to postpaid migrations and monthly price adjustments, which have supported sequential ASPU upticks in Latvia and Estonia in this quarter. And then looking at Baltics financials, Side, 11, The ASPU growth combined with volume growth in all markets led to 7% organic end-user service revenue growth for the Baltics as a whole as a sequential improvement in Latvia and Estonia. Underlying EBITDaL grew by 6%, driven by 7% in both Latvia and Lithuania. Cash conversion remains strong at 73% during the last 12 months, reflecting 10% CapEx to sales due to ongoing 5G rollouts. And that, with that trend, I hand it over to Charlotte who will take us through the financial overview.
Charlotte Hansson: Thank you, Kjell, and good morning, everyone. So now we are on the Page 13. First, a few comments on the Group P&L. In Q3, both total revenue and end-user service revenue grew by 3% organically, supported by growth across operations. Underlying EBITDA grew by 2% both in sectors and organically and underlying EBITDaL grew by 2% organically, driven by end-user service revenue growth and savings from the strategic execution program, partly offset by energy headwinds. In Q3, we had a SEK17 million headwind from energy, mainly explained by the SEK25 million of electricity support we received last year, As you can see on the slide, D&A declined by around SEK80 million year-on-year, which is due to reduced regular depreciation and because the surplus value of the TDC acquisition has been fully amortized. Then our income taxes increased by around SEK50 million year-on-year, mainly due to a Pillar Two top-up tax relating to Lithuania. For those who are not familiar with Pillar Two, this top-up ensures that we fulfill our obligation to have an effective tax rate of at least 15% in every country. By Q3, we had a debt mix of 59% fixed rate grade and 41% floating rate. With that follows that for every one percentage point rate change in underlying market rates, our annualized financial expenses on loans with floating rates move by around SEK110 million. So let’s move to the cash flow on Slide 14. CapEx remained high also in Q3, due to continue intense network investments and cash CapEx increased due to timing of payments. Changes in working capital were negative in Q3, mainly impacted by a decrease in liabilities, following a temporary increase in the previous quarter. Our ambition to keep working capital cash flow neutral in 2024 remains unchanged. Taxes, paid increased mainly as this quarter included approximately SEK130 million or withholding tax payments, while the corresponding payment last year was made in the second quarter. All in all, our equity free cash flow for Q3 ended at SEK1.1 billion; hence around SEK800 million lower than last year's level, largely due to the aforementioned reasons. Over the last 12 months, we have generated SEK4.1 billion of equity free cash flow, corresponding to 5.9 kroner per share. So let's move to Slide 15 for our capital structure. By Q3, economic net debt amounted to SEK24.6 billion from SEK1.1 billion below the level of year end as the cash generation exceeded the first charge of the dividends. Our leverage ended at 2.3 times, which is below our target range of 2.5 to 3 times, ahead of the second dividend tranche, which was paid last week. Adjusted for that, pro forma a leverage would have been 2.55 times. And with that, I hand over to Kjell for an update on our strategy execution.
Kjell Johnsen: Thank you very much Charlotte. And this is already our third update on the progress of the Strategy Execution Program, which aims to deliver direct improvements in customer experience. In Q3, our online channel delivered improved customer experience on iPhone Launch Day, following a redesign of key aspects of our IT front-end. We have also accelerated the pace of upgrading Boxer TV customers through modern technology ahead of closing down the Legacy DTT service by year end. On the TV side, we have enhanced our ability to deliver exceptional entertainment to our customers. Thanks to the launch of the first Disney Plus bundle in Sweden. And finally, our brand new 5G network continues to grow rapidly and is currently covering more than 80% of the Swedish population despite low ban spectrum in use. And then we can go to the financials. As you know, we're targeting SEK600 million of runrate cost savings by the end of ’26. By Q3, we had executed on organizational changes and network optimizations worth SEK225 million in annual runrate savings, of which SEK55 million contributed to our underlying EBITDaL in Q3 year-over-year. So we won't see any major increase in the runrate in Q4, but we hope to add a couple of tens of millions. And then, we'll move to Slide 18 for a reminder about our digitalization and customer value journey before I let Hendrik in for an update on the Swedish consumer business, So, we've shown this graph before about our strategy execution. And I think it’s important to remind ourselves of what we're doing here. Now we've done a lot of the back-end migration. Now that we have one IT stack for the mass markets. And like everyone else, we integrate big complex IT systems who had some issues, but we have also overcome them. We have fixed them. So we are now on one platform not three or four as we used to be. This means that gradually we get better speeds, quality, and of course in this day and age where we hear about cyber-attacks every day and we also become stronger. We are more resilient against attacks and also less reliant on external providers. Going forward, it'll be very important that we develop our front-end and our digital channels. So we can improve our efficiency. And this frees up resources for a more dynamic strategy and of course, we want to improve the customer experience. We know that a customer that addresses us in a digital way. And can find their own solutions typically is more happy than a customer that has to go indirectly to us. We also will do a complete revamp of Tele2’s go to market strategy and who could better speak about that is Hendrik. We will get back to that. And of course, we have talked a lot about the need to reduce third-party retail costs. So it’s a cost issue, but it's also a relationship issue towards our customers. In contrast to Comviq, Tele2 was without halted binding for many years, that was finally fixed in Q3 of last year. And then, since then, and for strategic reasons, we are building an increasing base of customers in binding, alongside efforts to rebalance the channel mix from third-party retail to home stores. We do that because it makes sense long term, might be higher customer lifetime value through increased loyalty, reduced churn and lower expansion costs. And let there be an intro and let me hand it over to Hendrik to talk more.
Hendrik De Groot: Right. We can move to the next slide. Thank you, Kjell, and good morning. On 2021 Capital Markets Day, we share a strategy to build a sustainable revenue growth for the Sweden Consumer business. This was anchored on three core value drivers. The first one, capitalizing on our FMC potential from combining Tele2’s mobile and Comhem’s fixed assets in customers base. The second, driving a balanced approach in the market between value and volume growth. And third, stabilizing our TV business by modernizing our TV portfolio and to do this based on our leading consumer brands, Tele2 and Comviq. Today, I'm pleased to provide an update on our progress and how we intend to take the consumer business forward, we can go to the next slide please. Let me start with a summary view of our key achievements and milestone so far. From an initial wider all products, all brands retention approach, we have focused our FMC approach on the combination of mobile, and fixed connectivity for Tele2, now reaching 26% penetration of FMC customers in our mobile and fixed customer base. At the same time, we have reduced call volume to our callcenters by 80%, driven by FMC customer base growth and related improvement measures. Across our portfolios, we have driven a responsible market posture balancing both value and volume growth in the markets. Our mobile postpaid RGUs grew over the period by plus 9% to 2.1 million RGUs, loss of broadband ASPU grew by plus 11% to SEK277. Together with stabilizing our TV business, we have seen our overall consumer revenue return to growth and picking up a pace of plus 3.1% year-to-date 2024. In returning the consumer business to growth, we've been navigating a number of significant changes and related headwinds in our legacy business. This was prepaid registration in 2023 and is the transition of Boxer TV out of DTT to OTT this year. We can move to the next slide please. As Yogesh mentioned in his Q1 technology update, we have now transitioned to one IT stack for all consumer services. This stack enables significant portfolio simplification at 360 customer view in our touch points, unified channel engagement, and digital customer journeys, and personalization. This makes Tele2 well-positioned to capitalize on our FMC potential in a still immature Swedish FMC market. Our focus has shifted from cross all brand's retention to Tele2 main brand cross-selling of mobile and fixed connectivity. The foundation of our FMC approach is the combination of connectivity services for households. And so far, we are making good progress and can double click on core FMC value drivers. We see significant churn reduction of around 30%. The product hold is growing and now stands at 3 plus driven by multiple mobile RGUs. Our approach is connectivity led and Tele2 main brand focus. Our share of sales now stands at 30% across our channels, whereby we see the direct customer contact channels, achieve higher results. And our online channel will be ready in 2025 unlocking further growth potential in cross deep and prospect selling of FMC as we move to full multiplay inclusion. We can move to the next slide please. Tele2 holds a longstanding reputation as customer value champion, challenger and innovator. We are supporting our customers’ demanding digital lives with innovations and increased connectivity, which allows us to drive balanced value and volume growth in the markets. In 2022, Tele2 was first to introduce a new Mobile 5G unlimited speed based portfolio making unlimited subscriptions available to substantially larger part of the market. In 2022, Tele2 was also first to introduce bundled linear and video on the demand TV packages to the Swedish markets. In 2023 Tele2 introduced seamless broadband switchover to the mobile network-as-a-service, which still today is unique in the Swedish market. In 2023, we also as Kjell mentioned corrected, Tele2’s mobile portfolio reintroducing handsets and enabling this in our own channel. And this year, Tele2 moved to annual pricing along for a more comprehensive and transparent pricing approach executed early in the year, whereby we annually adjust our prices for all eligible customers, based on general price level developments and innovations. And finally, as already mentioned last month, we announced the launch of the first Disney Plus TV bundle in the Swedish markets. In general, these innovations support, both ASPU and RGU developments. For Tele2 mobile, the development of our handset bound base means that the in the initial two year build up period, from end of ‘23 to end of ‘25 mobile ASPU will be affected by IFRS 15 fair value treatment. Revenue will not be affected as this is balanced out by lower churn and profitability is improved from lower acquisition cost in our own channels as commissions - versus commissions in retail. We can move to the next slide please. Our TV portfolio has seen the most profound transformation in order to capture the support of customers’ changing viewing habits across different age groups. The modernization of our TV portfolio is anchored on three pillars. First, enabling relevant entertainment content by combining linear TV channels and video on-demand streaming service into a superior viewing experience. From this, we have for example, seen a significant increase in video on-demand viewing for all the customer age groups. Second, upgrading customers to modern set-top boxes that enable the modern viewing experience. This has included so far upgrading over 100,000 customers from their old TiVo (NASDAQ:TIVO_old) set-top box to our modern TV hub over the last year, and includes the migration of our Boxer TV customers from DTT to a modern TV hub. Today 52% of our customers are using a modern TV hub. The pace of adoption is accelerating with the Boxer TV migration as you can see on the graph. The set-top box modernization allows us to achieve simplification and lower cost to serve. A third pillar is our TV tech modernization program, through which we enable an advanced aggregation platform and user experience. As a longstanding TV operator, Tele2 is uniquely positioned here with a deep TV tech competence at our disposal to work with our partner ecosystem to deliver and the pace of innovation of our TV portfolio will continue. So then, how do we intend to take the Consumer business forward? And looking the next slide, next and final slide. With the pace of transformation and innovation set, a lot of progress made, modern 5G and gigabit broadband networks and the unified IT stack at our disposal, our focus going forward will be on customer experience first. And how will we achieve this? The key to unlock customer experience advancement for us lies in becoming personally relevant. And since our customers like we all do use digital means to interact, our focus will be on enabling our customer journeys to start digitally first. With full 360 customer recognition, seamless across any of our touchpoints and with personally relevant interactions, which we believe will be increasingly AI supported and generated. We believe that consumers are increasingly climate aware and we see it as our mission to contribute by bringing sustainability to our customers through responsible utilization of recycled materials, and allowing our customers to contribute themselves by offering better circularity for devices to trade in refurb and returns. We will continue to build growth momentum based on our leading brands, the benefits of convergence, high-speed connectivity, modern entertainment and handset portfolios and its continued innovation. And finally, we aim to further reduce cost of acquisition, cost to serve from a more efficient go to market. Based on online and own channels first, active handset engagement, and renewal in our channels and increased FMC share to result in a more loyal customer base. These efficiencies are captured in our SEP program. This then concludes my consumer update. Thank you for listening. I'm now returning the call back to Kjell
Kjell Johnsen: Thank you, very much Hendrik. Very interesting to sit and listen, and, and reflect on the journey we've been on in terms of technology, of course, many changes, but also the approach to the culture and the position level where we are focusing for much more on value. It's been it's quite an interesting journey. So, thank you very much for taking us through it. And then, we will turn to Slide 25 for our guidance again. So let me make it short. We reiterate both our 2024 guidance and the midterm outlook. For this year, we now expect an energy cost headwind of around SEK40 million or broadly in flat excluding last year’s energy support. And as a reminder of our CapEx profile, in 2025, we expect 13% to 14% CapEx to sales driven by the final stage of the major 5G expansion in Sweden. And that means that we are replacing the 3G network by the end of 2025, From 2026, CapEx to sales is expected to come down to historic levels at 10% to 12%, as our network expansion will return to being demand-driven. And with that, I will hand it over to the operator for Q&A.
Operator: Thank you. [Operator Instructions] We will now go to the first question. One moment please. And your first question comes from the line of Andrew Lee from Goldman Sachs. Please go ahead.
Andrew Lee: Good morning, everyone. And thanks. Just had a couple of questions around the - your confidence level in getting to that kind of mid-term EBITDA growth guidance that’s been rather late and a few questions as we go around the two areas of the business where business development was quite strong this quarter than in previous quarters. Just wanted to start out on consumer and thanks very much for your presentations, very helpful in terms of bottom up and analysis and you’ve been improving upon. But could you just help us just understand or how we should think about how that translates into overall growth, obviously B2C growth shrank to 1.4% this quarter have been arguably kind of or potentially inflated by easy comps. So given all the development improvements you are making should we expect a gradual improvement in B2C and revenue growth from here as it can happen in B2B and then if not, why not? And then, just second question on the cost savings program, the annualized runrate only rose SEK25 million I think in the quarter and that is versus Q2. So bit of a slowdown in the quarterly development of that for those savings. Obviously, this is a bit lumpy because you just give us a bit of an understanding about, I think you mentioned that 4Q when develop that cost saving much more either. So when should we see the kind of the less meaningful pick up in annualized runrates on the SEP? Thank you.
Kjell Johnsen: Thank you, Andrew. Let's try to address this things step-by-step here. And so, we have – I’ve talked in my CEO letter and also in interviews about the expectations for a gradually improving economy and particularly in Sweden. And we have seen a historic high level of bankruptcies over the last year. And, of course, Swedish consumers, as you know very well are very much impacted with higher interest rates because of a high proportion of variable-rate loans. Now we’ve already seen a couple of rounds of interest rates reductions and we - when we listen to the chief economists of different banks in Sweden, we hear a much more upbeat tone tonality for 2025. Now, what it is, we will grow 2% or 2.7%? I don't know at the end of the day. But people are giving these kinds of numbers. And of course, that will that will help any business, especially ours, which is a consumer business with more than a B2B. But in B2B, we expect, of course, businesses to improve their outlook for next year. I think that's an important component that when the tide comes in, it lifts all the boats, and it should also help us. And I would go through a couple of specific things. You talked about the SEP. And the previous program we had where we saved a billion was very back-end loaded. We did a lot towards the end. This one we said we are going to save SEK600 million and by the end of this year, we are closer to SEK250 million, and SEK230 million to SEK250 million here. So we do it much more in a much more gradual way. And we get quite a lot of it out this year. And Hendrik talked about the importance of changes in our go to market. That is a carrying component on it that we're going to move more and we talked about in Telecom’s reports towards internal sales and digital sales and it's going to happen gradually as we have now consolidated our systems. And one thing that I'd like to mention that also Hendrik mentioned which is quite important here is to find fair value treatment in IFRS. Because clearly we were at Tele2, for historical reasons, without a handset binding proposition and I think it was absolutely right and necessary to get that in place. And while we are building that space, the fair value year-over-year comparison as Hendrik also said in ‘23 and throughout ‘25 for the period when we're building the two year retention base will of course impact the year-over-year comparison. Then it will more level out. This is the absolutely right thing to do regardless how it plays out in our books, and it's going to be an important part of our success formula going forward with lower churn, and higher customer lifetime value. So, to summarize it, the SEP delivers actually more than a third of its weight of the program in 2024, and the next steps are detailed out. The fair value plays into it when you look at our ASPUs and of course, we expect the improving economy to help us. And I have talked in interviews about the order book of B2B that has also improved. We have won some good contracts not basically on the price, we are winning on quality, and a good sustainability reference. So there are a few things that speak to an improvement into next year. Was that okay, Andrew?
Andrew Lee: Yeah, that's really helpful, Kjell. Thank you. Just one, I think you were saying that consumer is more sensitive to their macro backdrop the B2B and so as you get the improvements in macro, you should see improvement in consumer – or move out from consumer in B2B. Is that right?
Kjell Johnsen: Yeah, that was saved by this Swedish employees have had a negative disposable income, real disposable income development for a bit of time. And when you face that situation and you have higher interest rates, it means, of course that the purchasing power is going down. There is no way to avoid that. It speaks to the resilience of this company and this industry that we are still growing in that environment. And I think because very many people in Sweden have variable rates all bound for three months and these kind of things when the interest rates go down people will feel it relatively soon and most people will have started to feel that by the end of this year or early next year. And of course, if consumers can spend a bit more, it's helpful to businesses and we should be out of the woods I hope on the record number of bankruptcies that will live through. And again, also to our B2B team to deliver growth throughout this period of time is really, really strong. I think that's actually something to look out.
Andrew Lee: Thank you.
Operator: Thank you. We will now take the next question. And your question comes from the line of Ondrej Cabejsek from UBS. Please go ahead.
Ondrej Cabejsek: Hi. Good morning. Thank you for taking my questions and for the update. And I had [Inaudible].
Kjell Johnsen: Ondrej, we don't hear you, unfortunately.
Ondrej Cabejsek: Hello, can you hear me now?
Kjell Johnsen: Yeah, now we hear you.
Ondrej Cabejsek: Apology for that. I have one gamut question or simple question one more of a higher level question please. So the first question will be just on working capital also you had a SEK400 million posted than went into use, talk about a neutral bounce for the year. We saw a bit of an unwind – a big unwind that’s [Indiscernible] point I just want to confirm that for the full year and neutral net working capital number is still the target. And then, a second question, just on specifically B2C mobiles, so we had, I guess, an unexpectedly high growth rate in 1Q and 2Q and now the drop in the growth rate I think is maybe also quite larger more than people expected. So can we just maybe dig into the drivers of that? I am aware that we are overlapping price increases that you explained well in the slides. But was there anything more than that, specifically maybe some pressure more resuming from any of your competitors, maybe some shift, if you can maybe talk about the shift or for the mix in the Comviq register, so that would be helpful that something we haven’t had an update on quite some time? So basically just to explain what is causing now the sharp kind of drop in the mobile B2C runrate and speed as specifically please. Thank you.
Charlotte Hansson: All right. So if I start with regarding the working capital and I think that's what you're saying is correct with. We had the negative impact this quarter, but we also had a very positive impact in last quarter in Q2. So what we are aiming at is that still to have a neutral working capital by the end of this year. Yeah, go ahead.
Kjell Johnsen: Yeah. So should I take it on the - Ondrej, just to add some more color on the B2C mobile. I think it's good - just to remind the cycle we're in, right? There's two big changes that sort of in a year to year-on-year comparison are happening that are both affecting how you look at the numbers. As we've been pointing out, the first one is that we have basically put Pillar Two Mobile on a very much, so stronger footing, and by reintroducing handsets. And so this is a first big measure. The second big measures is that we completely changed the way we do pricing. And if you don't sort of compare these in the year-to-year, then of course it's important to understand that some of that underlying detail. And the result of the pricing has been that, for one has been the first two quarters of this year has been sort of exceedingly strong because of course, we are basically changing back-loaded cycle to a front-loaded cycle. So that's the first big, big part of it. Year-to-date, it was 3 plus 1% growth in the quarter at 1 plus, 1 plus 4%. The second element is that we – as we have moved Tele2 Mobile into handsets we have done this in two steps. I think we've said in the past that our IT development wasn't ready until September last year to move basically into our own handsets and our own channels. But in Q4 ‘22, we already introduced handset binding in retail. And so the effect in ‘23 has been that we had immediate I guess current benefits coming in as we of course, reintroduced that in in retail. But we could only then add our own channels from September last year. The effect - it is clear that acquisition in our own channels is a way more profitable way of doing things than in retail. So we had the benefits of churn reduction, but from September last ‘23, and moving it increasingly to our own channels, we, of course also got the fair value treatment to start growing. And if you add those two together, then the sort of explains a little bit the cycle, and the dishes needs to normalize out. So pricing will be normalizing out throughout this year because we are now in an annual pricing cycle. And as we've said and also Charlotte reiterated the value, the fair value treatment will be a build up over the next two year period. And you could say we're now halfway. So hopefully it gives you a little bit more color.
Ondrej Cabejsek: That's great. Thank you. And if I may just one follow-up in terms of working capital outlook in 2025 and just I think previously there was a comment that working capital should also be, neutral in 2025 and then only reversing with some positive impacts as the 5G rollout kind of ends in 2026. Is that's kind of the expectation?
Charlotte Hansson: Yes, we said that much about ‘25 already. I think we need to come back to the ‘25 when we give the guidance.
Ondrej Cabejsek: All right. Thank you.
Operator: Thank you. We will now go to the next question. And your next question comes from the line of Andreas Joelsson from Carnegie. Please. Go ahead.
Andreas Joelsson: Good morning, everyone. And maybe a question for Hendrik on the FMC. You mentioned that the penetration is quite low, the market is immature. Can you say something about what is holding back that penetration and the maturity? And also how you can and will change that? You mentioned, for instance increased degree of personal offerings or personalization of the solutions. Can you describe that a little bit more? And the second question is also maybe on the offers you have and I understand that some of the content that maybe should have been included from one of your content providers isn't included and therefore I guess you will have discussions with them without going into details how important is sport content for you, for instance? And your sport content cost increased quite a lot in, I think. 2022, 2023. What is the risk that we see in other step-up in in content costs going forward? Thanks.
Kjell Johnsen: Sure, Andreas, happy to um, give you some color on FMC. It's part of our core strategy as I have been sort of talking you through. So there is a couple of steps. First of all, I think if you look at Sweden versus some other European markets, I think that's the context in which I said it is pretty immature. There are, of course, other markets out in Europe where you see typically that the penetration of FMC on the base is substantially higher as see with an average I think see here in Sweden. For us in particular, as we've been talking through to really do FMC well, you need to be able to see the customer fully and that means you need to be able to have your supporting IT working for you. And of course, that has been part of our transformation. And that brings us into a situation that we're pretty ready now. Although, as I pointed out, the - for example our online channel still needs to be further readiness, so that we can also completely use that channel for FMC and drive our FMC into our customer base. With the penetration we have today, we're quite happy. And we're also quite happy that we started with what I feel is the true foundation of fixed mobile convergence. And that is basically combining connectivity. And with the IT readiness we have now we will be introducing full multi-play into our FMC approach and that these are very important drivers for us to further accelerate. We have done and we're doing a lot of work and also, with regards to cross-selling and also there the share of sales at the moment stands at 30%. You can see in my slides, I gave it a light green tick. There's still an awful lot more potential that we need to unlock, not only in online, but also in our customer operations, for example. And these are all type of programs that are sort of rolling out now. But they're all based on the fact that, now through the one IT stack, we have the full customer 360 at our disposal. And then when I talk about, making it more personal now that we have the customer 360, we need to hook up of course, all our data analytics, all our, supporting systems. So that we have relevant personnel seeing this 360 the customers, one that being very relevant to understanding their needs, understanding for example the number of calls they have been making, their behavior enables us to be way more onto the customer themselves. And then, last comment to make, when we talk about content it’s very important, you’ve seen that content costs have been very quite flat over the last period. And we are driving content for families and households. Sports is important, but it's not - it is not the most important thing I search. It is about a relevant entertainment experience and we were quite happy actually to have Disney Plus with us. Operator?
Operator: Thank you. We will now go to the next question. And your next question comes from the line of Stefan Gauffin from DNB. Please go ahead.
Stefan Gauffin: Yes, hello. I have three questions, please. First on the order intakes. You mentioned that you have seen that you won some good contracts. Can you first just explain when these will be visible both in terms of volumes on the P&L effect that, some more color on these? Secondly, you mentioned that you've seen that you think that you have a low FMC penetration. And on your comment, it sounded that that could – that had more to do with your readiness on the IT side. Or do you see other explanations to why we see a low FMC penetration in Sweden? And then just thirdly, you are migrating your terrestrial B2B business. And you've already mentioned that a large share of the old DTV customers are already migrated, but can you give some more details as to what the risks are related to DTV revenues? Thank you.
Kjell Johnsen: Quickly on take B2B and then I'll go.
Stefan Trampus: Sure. Hello Stefan here. Thanks for the B2B question. I think, Kjell was alluding to the performance that we had over this recession period. And I think all developments that we see in all the segments and the product line should be seen in that slide. But looking at the developments lately, which Kjell was alluding to all the order intake, we have seen signals that is positive and pointing in the right direction. And, when returning from the summer vacation, they have seen good activity level basically in all our segments with we just ended up in a good trajectory for us. But you should also see it in a perspective of the mobile RGU growth. In Q2, we reported good growth on the mobile RGUs. Now we have the second quarter with a good mobile RGU growth summing up to 32,000 RGU growth for these two quarters. If you compare that with the period of Q1 last year, ‘23 to Q1 this year, we only have 13,000 RGU growth, which points to the direction that we are seeing a positive signals. Thirdly, we had really good equipment revenues in Q3. It's actually, year-on-year the best figure since Q2 last year. And that is materialized basically already in the quarter. And so, and also we have a fourth thing being the Solutions business where we have a good growth in Q3 versus Q3 last year. So some of this order intake, we are already seeing in the numbers. But of course, we're not still as Kjell said out of the woods. These are signals together with the macro - that we're picking with us. And that is pointing and then giving signals that we will see better trajectory during next year. And I would say, in the next year and I don't want to give you a certain quarter we will see a better development.
Kjell Johnsen: Okay, and then this is the time. I'll go quickly on the other one. The lower FMC presentation I think is partly a market maturity issue and I think that's going to be developing throughout the whole of the 20s. Basically, we're going to see that increasing. And to some extent, the readiness issue. But we have taken big steps on the preparedness. So, that is a part of the ’25, ’26 program to really fix our preparedness for FMC step-by-step. And if the terrestrial TV that we are shutting down, clearly it's a system that is very energy consuming. It has had had its useful life, so to speak. And we are moving those customers over to other ways of receiving broadband signals, broadband entertainment and and TV. And that is a very good thing. Obviously many of those who use them have been in more rural areas and are of a higher age group. So, it's an extra effort to transition them over to new technology, but we are making a big effort to help them with that. So I hope that answers the B2B terrestrial and we can then maybe move?
Stefan Gauffin: Thank you.
Operator: Thank you. Your next question comes from the line of Erik Lindholm-Rojestal from SEB. Please go ahead.
Erik Lindholm-Rojestal: Yes, good morning and thank you for taking my questions here. So to start with question on the EBITDA guidance, your last guidance unchanged here for the full year heading into Q4, quite a broad range field on here today. I mean, what are sort of the main puts and takes here into Q4 that is, would you say creating this uncertainty? And I mean, what could put you towards the higher or the lower end of this range? And then, just a second question, and just talk about your move to annual pricing with greater transparency and more sort of ties to general inflation. And if you think about this for next year, what sort of price increases do you think is likely for Sweden mobile businesses? And thank you.
Kjell Johnsen: Yeah, but on the guidance, I think it's hard for us to put in directional decimals here. But we are doing some more around the transformation plans. And of course, the volumes in those important weeks towards the end of the year will have some level of impact. We're seeing the trends from Latvia coming through, that is also net, net positive. But I think we're a little bit reluctant to guide you on decimal points on EBITDA. We're feeling a quite okay momentum. We feel that we're able to add profitability on top of the price increases from last year, so that's good. But I feel a little bit awkward going too granular into so to speak. And on annual pricing, Hendrik. I guess you will not want to be keep it in percentages.
Hendrik De Groot: I’ll keep it short. And your pricing for us is a method to first of all, to capture transparency, all eligible customers. So many more customers than we typically would have done with more-for-more and then your pricing isn't orientation led to price developments, but also driven by innovations. So we do believe also going forward it will be a very good way to capture the value we want.
Operator: Thank you.
Erik Lindholm-Rojestal: All right, thank you.
Operator: Thank you. Your next question comes from the line of Titus Krahn from Bank of America. Please go ahead.
Titus Krahn: Good morning, everyone. And thanks so much for taking my questions. But just a quick one follow-up maybe I have missed this before. But could you talk about how many Boxer customers – of [Indiscernible]. So would you just give any numbers for that? And maybe then staying on this topic, can you talk a bit about kind of how the frequencies are kind of going to be used in the future? Would that be kind of an upside for the telecom sector maybe? And also on the cost side, to what extent do you see kind of your cost savings on the energy side offsetting any potential revenue losses? Thank you so much.
Kjell Johnsen: On – Titus, I'll just start and then, sort of maybe hand over to, on savings to Charlotte. But basically our intention is to move out of DTT holistically. So that means, by the end of - by the end of this year, all of our customers will be moved out of the DTT network. We are moving those customers as I said to OTT to Over-the-Top to our TV Mini Hub and this is a program that is in full swing at the moment given the 31st of December, close of the end of the year. And that’s a program we are running, will we be able to move all of our customers over? Well, some of them are in a bit more remote rural areas where connectivity maybe an issue. So that's what we're - that's what we're at the moment managing. So that will be a level of customers that will not move over. But I think we are seeing at the moment good traction on customers moving to OTT and actually we're getting us response with the customers once gone over see the benefits of sitting on modern TV technology. With regards to cost savings, Charlotte, now where you want to talk on that?
Charlotte Hansson: Yeah. So, when it comes to the energy, of course that we are doing some things that will lower the costs. When it comes to energy because as we're having more efficient, we 3G network for example, which is quite costly. But at the same time, as we are reducing the consumption there, we also see a higher data usage from our customers and that then implies that there will be more consumption or high consumption. So it's I can't say, exactly what the outcome of this will be, but I would say that more in the line of easing it themselves out on those two specific items. That’s what we are seeing right now anyway.
Titus Krahn: Okay. Thank you.
Charlotte Hansson: It is driving of course, higher consumption on data.
Operator: Thank you. We will now take the next question. And your next question comes from the line of Felix Henriksson from Nordea. Please go ahead.
Felix Henriksson: Thanks for taking my question. I'd like to follow up on fixed mobile conversions... Could you please elaborate on the CapEx needs that you see to drive up the FMC penetration in your customer base. And also comment on what drove potential Fiber M&A placing your desires to increase your FMC ambitions in Sweden? Thank you.
Kjell Johnsen: I don't see as a massive driver of CapEx. I mean, the main CapEx is being used for building the 5G network. And of course, some upgrades with remote sites. And, but these are not when we're finished with the main 5G rollouts your remote five CapEx is relatively limited. So, FMC is in my view, more of a front-end development and a crystallization exercise than a massive CapEx exercise.
Hendrik De Groot: Yeah, no, absolutely, Kjell. So it’s 5G that’s basically the network we are rolling out, it’s remote – as Charlotte was saying and we do hope that as we go into next year, we see – as moving on regulation and as we use. And however, that means that the current fiber operators will need to open up at a wholesale level. And that also is not a huge CapEx driver. It does mean of course that we need to interconnect. But that’s I would say it’s minor CapEx. However, it opens up a big opportunity. I'm sorry. Felix, the second question was…
Kjell Johnsen: Fiber M&A.
Hendrik De Groot: Fiber M&A. Okay, well, you have heard said it before, we haven't done anything. We haven't done any M&A. We have said that it’s an option, if there is something that we think has the right price, we can do a lot of FMC without doing any M&A? If we do M&A it’s icing of the cake.
Operator: Thank you. We will not take the next question. And the question comes from the line of Keval Khiroya from Deutsche Bank. Please go ahead.
Keval Khiroya: Thank you. Well, two questions please. So firstly, your quite to see on the potential macro improvements helping B2B. Can you say a little bit more about the competitive environment and also the scope for price increases as well? And secondly just following on from the previous question, you’ve also highlighted the Baltics as an area where you could consider M&A with respect to convergence assets. And is this idea still supported by the Board and how do we think about the likelihood and timing of any potential deals in the Baltics? Thank you.
Kjell Johnsen: Well, the competitive environment is largely unchanged. We do have a rotational segment that lives its own life. And I can't really see that that it’s producing massive value creations in terms of what goes on with and how long ended on and these kinds of things. So we’d also see a relatively okay, disciplines among that the players that focus on postpaid and FMC and going in that direction. So I think there is a relatively okay pricing discipline in the markets. And my personal prediction is that, these rotational markets have found more or less its shape. I don't think there is going to be very much more volume coming in there. So, there should be scope for a relatively healthy pricing environment for the premium brands that's catering to families and businesses. When it comes to M&A in the Baltics, I think that goes with the comment that we made before here. If the right opportunity is there then, yeah, that we would look at it. We haven't seen things that we have felt we wanted to go for. And we still have a lot of legs. We're building a great 5G network now at maximum speed in the Baltics, We have a lot of capacity to use for a mobile-centric convergence gain. So we have plenty of time to develop based on the assets that we have.
Keval Khiroya: That’s clear. Thank you.
Operator: Thank you. Your next question comes from the line of Ajay Soni from JPMorgan. Please go ahead. Hello, Ajay, you are very quiet. We cannot hear you.
Ajay Soni: Hi there. Any better?
Kjell Johnsen: Yes.
Ajay Soni: That’s great. When you posted ARPU and all just being playing a bit, I just want to understand a bit further headwind just in Q4 and more specifically on the Comviq brand, what the 2023 price increases were and are these going to done in 2024? And then on your leverage, even after the dividend, it's still towards the lower end. So could you target a lower range? Or do you see the balance sheet headroom for higher shareholder returns potentially M&A, as well?
Kjell Johnsen: Well, I think uh I can take the third one and then Hendrik takes one or two maybe with Charlotte. So on the leverage, yes you're right we're at the lower end and we're almost at the lower end even after paying the dividends. So, I choose to see that as a positive thing. I think my successor and Board will have significant freedom of action whatever they choose to do on that. So I think that's a good starting point for the next stage. Hendrik?
Hendrik De Groot: Hi, Ajay. On Comviq, Comviq as of ‘25 will be fully in the annual pricing cycle. That’s what I can say on this. And it wasn't included this year fully in, given that in. 20 - September ‘23 we already did a more-for-more pricing on Comviq.
Kjell Johnsen: And was that the question, was that related to fair value or what did I talked on Ajay?
Ajay Soni: No, no. So I just want to get the mobile pricing. And then just on Comviq itself. Did you do any price increases in 2024?
Kjell Johnsen: We did a second branch of more-for-more in early ’24, yes. But we did the majority of it in September ‘23, which was still a more-for-more pricing cycle and it will now move into full annualized pricing as you go forward.
Ajay Soni: Okay. That’s very clear. Thank you very much.
Kjell Johnsen: Sure.
Operator: Thank you. Your next question comes from the line of Fredrik Lithell from Handelsbanken. Please go ahead.
Fredrik Lithell: Thank you very much. I would like to start with saying, Kjell I've been a pleasure to get to know you and I wish you all the luck going forward. Hope we meet again. With that, a lot of questions have been asked, maybe one that I would like to have a more color on is, the ongoing rollout of 5G and you have come far away, but can you sort of give us some more incremental sort of experiences from that work? Or if you are on par or above or in ahead of competition on several of your sites or something like that. Some more color on your 5G Network, how it stands to competition right now would be interesting. Thank you.
Kjell Johnsen: Yeah, that's a very, very good question. I am glad as you asked it because when I'm talking a bit about it in my CEO letter, when we started the process of 5G, we had to start with a high-end spectrum at 3.5, which gives us fantastic speeds but bad coverage. So you have to build very many base stations to get the same coverage as you do with the low end spectrum. And one of our main competitors could start it in a little bit different way and it's not because they did something wrong or right with it wrong or right. It's just related to the regulatory approach that we have to take given that we have to take Huawei from our networks. And I'm very happy to see that in open signal, which is completely independent, it’s not bought by an operator to, and in a way tailor made for testing out a network for some operators. This is open signal and they gave us a very good feedback now on the network. Best video experience and they also put us on the list of the companies that have the best acceleration of coverage. And also for those who are interested, very good feedback on gaming experience. And the reason why we get this fantastic video experience is that we have had the force to build out the high frequency spectrum first. So when we don't get the coverage, you get a false 5G experience, that you physically cannot get with a 700 or a 900 network. It's a good thing to have. It’s great and we're going to do it ourselves also. But we really got positive feedback on that. So, we are now coming to the point where we cover more than 80% of the population and during 2023, sorry, 2025, when we replaced sooner, the 3G network, we will do the area coverage for 5G. So I think we've come to a turning point where it's becoming visible that we have for certain high quality standard needs, the best network available in the Swedish markets.
Fredrik Lithell: Sounds great. And just a follow up on that. And when you do the uh, implementation of the maybe low bands in ’25, do you that in any specific order in order to capture the best sort of low-hanging fruits from that in the start or how do you go by them?
Kjell Johnsen: It's such a big project that we have to do it sort of like a machine rollout. It's very hard to cherry pick when you have a such an enormous transaction volume, but this is the biggest volume upgrade rollout that has happened in the history of telecoms in Sweden. And of course, we want to make sure that that’s deliveries. What I would like to highlight is that we still are slightly below 50% handset - 5G handset penetration. So, another effect of these upgrades that we do is that, those who have a 4G headset, also get an improved experience, which is almost even more important in the Baltics, but also important in Sweden. So it's not only for 5G, but we get a better 4G experience also. That’s important. Going from a 3G network to a revamped 4G, plus 5G network, it's kind of a sea change.
Fredrik Lithell: Yes. Good.
Operator: Thank you. We will now take the next question and the question comes from the line of Usman Ghazi from Berenberg. Please go ahead.
Usman Ghazi: Hello gentlemen. Thank you for the opportunity. I've got two questions please. The first one was just going back to the annual price increase strategy in Sweden. Is it fair to say at this point I mean, CP inflation is a fair parameter for what a fair annual pricing strategy looks like? Or do you consider that we should be thinking about inflation type of stuff? So that was the first question. The second question was just going to the cost savings program that you have SEK600 million. And I just wanted to understand that as you look out for 2025 and 2026, is it fair to say that the bulk of the savings for ‘25 is related to the Boxer migrations, which as you've said are progressing well, which is, and then in ‘26, that's when the savings from the move to your own channels as opposed to third-party channels more savings and kick in off to your space built up on the asset binding contracts. Thank you.
Kjell Johnsen: I can take the first one, Usman, on annual pricing. The way to think about it is that, inflation orientation is maybe a baseline. But we will every year, look at how we want to move and innovate our portfolios and the combination of those two. One mix makes gives us, as wide as possible, a customer base that we can, transparently touch, but also that we can innovate on. And the old more-for-more pricing goes way more cohort driven and with smaller subset of customers that you would move. So, we're now combining and then, a baseline and innovations to sort of drive the type of values that we that we think we can and that we can capture in the market.
Hendrik De Groot: And I guess, on the cost savings, clearly Boxer will lead to some cost savings. It would also lead to some churn and we are writing about absorbing that effect, but it is an element of it. And I would like to highlight maybe Charlotte will say some more. But I would like to say that the Boxer migration we do now is a lot big customer movement that we're doing at Tele2. We are now almost out completely of DSL businesses, legacy business like that. We have been through a prepaid addition that has been a day job and of course, we did the migrations. Now when we move customers to one consumer IT platform and now we do Boxer. And then, it will be easier to keep the focus on the business and not have these disturbances from migrations. But clearly there is a cost saving element from shutting down a legacy high energy consuming terrestrial network.
Charlotte Hansson: And just slightly commenting, as well. So what the savings that we've seen this year has been largely when it comes to the reorganizations that we made and also a lot the network optimizations. And some of these will also have an impact on four that to a pretty much lower extent. So we've also talked about as part of the set programs. The execution program it’s also B2B transformation, digital transformation. So that's one part that really that we're looking forward to in the coming years. And of course, the sales channels optimization that you were also mentioning but that’s actually more towards the end of the program. So that's flattened I would say.
Usman Ghazi: Got it. Can I perhaps just follow up on the Boxer migration will the churn impact coming from because I guess if you've got customers had the back end are being have already understand and moved. Or at least they had the opportunity or – let me rephrase that. So, I understand that they have access to the platform already right? So is it that come the end of the year the most of these customers might realize that they're paying for something that they don't want and therefore or that they weren't consuming and therefore shut down the service or something, or I mean, just trying to understand why you would be expecting churn but?
Hendrik De Groot: Sure. So, first of all, it is as Kjell mentioned, the Boxer - based in the boxer network is the - I think the last big legacy move that we're doing. And this part of the customer - this part of the business has been declining year-after-year. So this is not, so there's inherent decline in this business to start with. We're now moving them to OTT which we can see and you see in that our Cable and Fiber business has - we have been able to stabilize that with the modernizations we did on the portfolio. So we do believe once customers move over to OTT and a new viewing experience, it inherently is better for retention. And that is actually what's happening. This has been happening throughout the years. So first of all, the Boxer base is declining throughout the year like it has done any year. But now is the migration we've been moving customers over to OTT. And underlying we already see once they're on OTT, the retention rate is anyway much better. And also the NPS we're getting is way better. Towards the end of the cycle now, there may be some customers right, that either choose to move, either choose to for example, only move to the free to air parts of the terrestrial distribution that still will be ongoing, because ours is a Pay TV part. But that will of course very severely limit the number of channels they have to one or two public channels. There may be a cohort of customers making that choice. And that's where we are. So, it is a declining base. It’s managing the legacy. It's driving of course the cost efficiencies for us into our SEP program and it's basically moving to our modern platform by which we have an inherently better viewing experience and also retention rates.
Kjell Johnsen: And I think we can say that many - some of these customers are also relatively elderly people who may not have the better coverage that where they live. So that is an element that plays into it and we can cover that maybe with mobile as we build out. So there are - we have to help the people in their transitions so to speak.
Usman Ghazi: Thank you.
Operator: Thank you. We will now take the next question and the question comes from the line of Adam Fox-Rumley from HSBC. Please go ahead.
Adam Fox-Rumley: Thanks very much. The first one operational on consumer and I guess your aspirations to be digital first down the line. I was wondering to what extent there is a customer education element here. And to the extent there is what’s necessary to help them can drive more of that business digitally. You didn’t mention any kind of – pricing on that. There is not some engagement by that process something on your agenda. And then the second question was on AI in telecoms and your customer insights, which I think you mentioned in the presentation. I guess I’d love to hear you talk about the balance between partnership and in-house development there. I was wondering if Tele2 needed to work more closely say with one of the larger telecoms groups to get more access to the relevant datacenters or whether or not you can do that in in-house. Thank you.
Hendrik De Groot: Yeah, Adam. Good questions. The - so on digital first, we can see that when we offer the right digital channels to our customers, that customers do very much use that. So it's not a question of overcoming that much. It's more a question of us being able to sort of present the right digital touchpoints to them. You can see the - for example, if you look at Comviq versus Tele2 in channel mix, we have a very much highly driven digital channel mix for Comviq and we still have a lot of opportunity for Tele2 to get there. But given that we've not been able to present the right digital interface. We of course see that there's still an opportunity that we need to cater for. And that of course also includes the right platform, which given that we're increasingly and predominantly mobile has to be appeased. And that is all part of the next steps we're taking now that we're on one full IT stack and that we can move forward into really moving the investments into the customer-facing parts. And then on AI, definitely of course it's a buzzword anyway but it's also something that is absolutely that we're working on. It will take a number of steps. It starts with having our data, our customer data at our fingertips fully and our data analytics there. And, we have of course, moved quite a bit already in NBA and NBO. And these sort of platforms. But to make them fully AI-driven is the next step and for us, just to give you a little bit of color, the first step we're doing now is basically on the customer support interface. So, our chat bots that we have been sort of working on and that are now fully in production for Tele2 also, they are in a first step now becoming first of all hooked up to all our back-end so that they can be personalized. But they are also starting to get elements of AI into them. So and that's a whole roadmap that we need to unveil and build. But that was also what Kjell mentioned before that now we can really move the whole sort of approach and investment cycle into the front-end into that customer interface, and making that more relevant, more digital, and more personalized.
Kjell Johnsen: And of course, now when we are seeing the end of the main 5G rollout, we will do the earlier phase of AI that is not so fancy as a generative AI or general AI. But we will do much more automation of how we're running our networks. That is clearly in our plans and we are comparing those with other Telcos to see where we can learn and where are good. So we have interactions, of course, also with the Iliad and Play, but with others. So we are actively collaborating with others to speed up.
Adam Fox-Rumley: Thanks very much.
Operator: Thank you. We will now take the next question. And the question comes from Viktor Högberg from Danske Bank. Please go ahead.
Viktor Högberg: Yeah. Hi. So, Kjell, now when you're passing the torch reflect on the years now as CEO of Tele2, anything you would have done differently? If so what and why? And, also just what you think have been the most important parts during your time as CEO? And then, I have a follow-up on that.
Kjell Johnsen: Okay. Well, my mother thinks I'm a patient person, she's wrong. But, so when I look back, I'm always looking at what we have done faster, because your speed is important, but accuracy is also important. And that's why we have worked a lot with first the strategy and the values and then to build the culture. Because if we had gone, - as we have gone at full speeds, just after formulating the strategy, the organization wouldn't have been able to keep up with that. So we would have to take it in steps. And I I'm very pleased to see that the value-driven culture that we are developing here, which is more about position, and it's more about value, a bit less about volume. It’s paying off. That is the only key reasons why we've had growth for many quarters in B2B and also Hendrik and his team has turned B2C back to consistent growth. It is a question of accuracy and having a clarity of mind. So I'd say, almost in any company to work on the culture is super important and be clear about where you're headed. But I will probably never be satisfied with myself about, would it be passing us. And then your follow-up.
Viktor Högberg: Okay. Thank you. And a bit more digital short term. Free cash flow, we are thinking interest paid, given the amount paid now year-to-date and the changes to your full year expectations, given the rate moves we've seen. Just short-term comments about your four businesses?
Kjell Johnsen: You mean, whether the interest rate moves will impact our free cash flow in the fourth quarter?
Viktor Högberg: Yeah. Given the - I was positively surprised think because that as well by the low amount in Q3 and just what to think about the Q4 number, the full year number basically?
Charlotte Hansson: Yeah. So, I can take that and it’s more timing. So we have a seasonality when it comes to the interest payments in the year. So it's expected from our point of view, Q3 is usually always lower than other quarters. At least in Q4
Operator: Thank you. We will now take our final question for today. And your final question comes from the line of Siyi He from Citi. Please go ahead. Hello Siyi, is your line muted. Hello Siyi. Due to no response, I will hand the call back to Kjell for closing remarks.
Kjell Johnsen: Yes. Okay. Thank you very much for joining us today to go through the developments of Tele2 in the third quarter. I think we're showing again that we are able to grow in a challenging environment. And I'm hopeful that as we progress with interest rate reductions and a better GDP growth environments, maybe we can see even better performance over time although it’s going to happen gradually. And of course, I would like to thank you who have been on this call. For me this is my 17th quarterly call for your questions and your support and sometimes tough questions which is fair. That’s what you are doing. I will see you some of you today and also tomorrow on the road show. To those that I don't see, once again thank you very much for following us and I'm sure that you will have interesting discussions with the team also going forward. Thank you.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
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