Welcome everyone to Telia Company Q3 2022 Results Presentation. With that, I will hand over to Telia Company's Head of Investor Relations, Erik Strandin Pers. Please go ahead. The floor is yours. Thank you, and good morning, everyone, and welcome to our Q3 call. On the call today, we have Allison Kirkby, our President and CEO, and Christian Mørland, our CFO, and myself, and Anders Tillander from Investor Relations. Allison, please go ahead. Good morning, everyone. As you've seen in our report this morning, macro challenges increased significantly during the quarter. Those of you that have followed us lately know that we've expected to be able to largely mitigate these macro effects. As we progressed through the quarter and now summarizing both the quarter and the outlook, we do see larger macro effects than previously and have decided to be more cautious as we look forward. We understand this is painful in the short term for everyone, but it's the right thing to do because we're very much focused on building the long-term value creation of this company. On that note, it's encouraging to see the continued commercial and operational momentum that we saw in the first half of this year continue. Proof that we are showing resilience in a difficult environment and proof that our plan to create a better Telia is on track. Service revenue growth, digital transformation momentum, OpEx reduction, and underlying EBITDA are all developing in line with our midterm ambitions, which are low single-digit revenue development and mid-single digit EBITDA development. On service revenues, growth continues at a pace similar to last quarter at 2.3%, supported by all our units for the first time since Telia moved to a country-based organizational structure some 10 years ago. Excluding the hit from higher energy costs, which almost tripled in the quarter, efficiencies are continuing to come through as we transform Telia, and in the quarter, we managed to reduce underlying OpEx by just over 2%. EBITDA increased by 1% as service revenue growth and efficiencies are compensating for higher energy costs. Excluding the impact from energy, we had a strong underlying growth of 4.9%. Our underlying performance is sustained. Operational free cash flow came in at SEK 2.1 billion, which is SEK 0.9 billion reduction versus the same period last year, driven mainly by a different timing of content payments and slightly higher CapEx, but both in line with our plan. If you look at the structural part of our cash flow, i.e. cash flow excluding changes in working capital, it was fairly unchanged year-on-year at SEK 2.7 billion compared to SEK 3 billion last year. Our balance sheet remains healthy, with a slight increase in leverage driven mainly by our share buyback program. We've so far bought back approximately 100 million shares by the end of the quarter, and as of earlier this week, we're now 76% through the buyback program. Finally, considering the macro headwinds around us, we're rightly being more cautious as we look forward. We have reflected the known energy and interest rate headwinds and some additional caution into our forward-looking statements. While the macro environment poses some short-term challenges, our strategy is still intact, and we will continue to execute on it at speed. Moving to our strategy, as I said, all countries had positive service revenue growth, and it was broad-based with mobile growth 4.1%, fixed services growing in all markets except for Finland, and with another strong quarter for advertising. Our total enterprise segment was again strong and positive, growing 1.5%. Our pricing momentum is building with much more potential as we look systematically in all parts of our service portfolio and in all markets, and this will clearly give us more top-line benefits next year and the following year. Network modernization is on track, with 5G coverage increasing fast and now reaching 63% of the Nordic and Baltic population, up from 49% last quarter. Norway, Finland, and Denmark are now all above 70% coverage, and Lithuania is already at 80%. Digital transformation is also progressing, with product and platform portfolio simplification on track. Another 10 IT systems were decommissioned in the quarter, and IT costs continue to decline despite underlying wage inflation. All of these efforts are designed to create long-term benefits and sustainable economics. Although in the short term, we cannot compensate, of course, for the dramatic increases in energy prices we've seen. After the end of the quarter, we also announced our intent to consolidate all our linear and streaming content under the TV4 and MTV brands in Sweden and Finland, respectively. Which means they will each span linear, AVOD, HVOD, and SVOD, strengthening their national champion status via one platform. Fundamental for them to take further advantage of changing viewer habits toward on-demand digital platforms and enabling us to offer richer targeted inventory to our advertisers. Finally, on sustainability, I'm super proud that Telia was awarded the Platinum Medal by EcoVadis, putting us in the top 1% of 75,000 companies assessed worldwide for strong sustainability management, fully integrated into our policies, our actions, and our results. Moving to Sweden, we again had a solid quarter with service revenue growing 1.2%, mobile growing 2.3% from a continued positive ARPU development, broadband growing 4.1% from pricing initiatives, and again, a strong development in Telia TV services growing 15%. Our enterprise business continues to show a solid development, even though the slight decline this quarter due to some elevated levels of IoT revenues this quarter last year. Underlying, we're still seeing a stable to growing development and so far no signs of decline in spend among our enterprise customers as they continue to digitalize to meet the opportunities of tomorrow. A great example of which is Ellevio in making their energy grid smarter and a great proof point of how we can support our enterprise customers on their digitalization journeys at the same time as we contribute to a more sustainable society. Excluding the impact from legacy and the recovery of roaming revenues, underlying service revenue growth was again very healthy at 3.4%. EBITDA grew 1.2%, somewhat lower than Q2, but fully explained by a one-off write-down of Fello. Again, a solid operational performance by our Swedish team, especially if looking at underlying revenue and EBITDA development. Moving on to the operational KPIs. We're seeing a stable mobile customer base and a continued growth in ARPU, supported by an improving NPS, and that's despite pricing initiatives on both the Telia and Halebop brands that we took earlier in the year and which have not yet fully flowed through. This meeting is being recorded. On broadband subscribers, we're not able to fully compensate for the loss of XDSL customers this quarter. As you can see, ARPU accelerated on the back of price increases on both copper and fiber. In TV, we again saw a strong subscriber base, and importantly, we saw another strong ARPU quarter, supported by both pricing and a higher share of premium sports packages in the base. During the quarter, we entered into our partnership with Discovery on the streaming rights for the Swedish football league Allsvenskan to build on our aggregator position. However, as you know, right at the end of the quarter, we were not able to agree with Viaplay on a new agreement that makes financial sense for us or for our customers. Moving now to Finland, we saw a slight pickup for service revenues, very much driven by mobile, which, despite interconnect, increased by 3.5% and made a good start to the sports season on TV. That being said, the progress on mobile was largely offset by continued pressure on fixed revenues that relate mainly to legacy datacom services. The turnaround of mobile is on track, and so is our cost transformation, especially in digitalization and in the move to online, with an underlying 2% reduction this quarter. Admittedly, it is, however, difficult to see the cost transformation this quarter as Finland is particularly hard hit by energy cost increases, which were SEK 80 million higher. Subscriber base grew slightly in the quarter, driven to some extent by consumer, but mainly by the enterprise segment, and you're seeing ARPU increase by 2%, helped by continued migration to 5G. With these trends, continued network modernization, pop coverage is now at 75% and a range of cost initiatives, we remain committed to improve Finland in a structural way, but we do recognize that we've got a bit more to do considering the magnitude of the current headwinds. Norway had another quarter of very strong momentum. Service revenue increased just shy of 6%, driven by an almost 6.5% increase in mobile on the back of a growing subscriber base, core ARPU expansion, higher wholesale revenues, and a strong recovery in roaming. Enterprise grew by an impressive 8%. This strong service revenue development was also confirmed by the regulator, which confirmed that Telia was the fastest-growing mobile operator in both B2C and B2B segments in the first half of this year from a value point of view. We also had a strong development on fixed services with excellent broadband development growing 4.3% and TV growing 5.7% on the back of pricing. You might have seen we announced some new additional broadband pricing in Norway this morning. EBITDA grew 4.5% as higher service revenues more than offset a SEK 50 million negative impact from increased energy costs. The mobile subscriber base continued its positive trajectory in both our brands, but mainly in Fello this quarter. ARPU was again strong with a 2.6% increase helped partly by roaming recovery. Moving to the lead markets. In Lithuania, we grew mobile 10.8%, which was in line with Q2, and we've taken a clear lead in 5G with an excellent commercial launch and see strong initial demand. The development for fixed service was a bit softer year on year, resulting in total service revenue growth at 5%. The flow through to EBITDA this quarter from the higher service revenues was weak as a result of energy headwind worth SEK 40 million. Hedging in the Baltics is less straightforward than in the Nordics, but we are taking other mitigating actions in this inflationary environment, including a number of significant price increases which are taking place now. In Estonia, performance was again strong, with service revenues growing 5%. As you can see, EBITDA growth in line with service revenues despite the energy headwinds, which has been helped by historical PPAs that we have in that market. This is another strong achievement for Estonia, alongside excellent NPS development too. Finally, in Denmark, we have service revenue growth driven by mobile growing at 2.8%. Energy headwinds were especially strong in the quarter. Our shared network does not hedge, but revenue growth and easy comps on the cost side and generally excellent turnaround momentum resulted in just over 8% EBITDA growth. Finally, moving to TV and media, we had a record high third quarter in MAT advertising, despite that we had the Euros last year, and this compensated for a challenging development in pay. The shift to digital continues, and with that we saw a 20% growth in Swedish digital ad revenue. Pay had a soft quarter, driven mainly by the loss of Formula One in Finland and continued headwinds from a wholesale agreement in Denmark that expired in the fourth quarter last year. EBITDA increased by 24%, driven by mainly lower sports as last year contained both football Euros and World Cup qualifiers. If you look at the pay TV customer base, we saw an increase of 28,000 in the quarter, driven mainly by strong high-tier sports growth in Sweden, driven by the Swedish Hockey League, UCL, and other sports bundling. Looking ahead, we're now starting the work I mentioned in the strategy highlights to simplify our TV and media setup. We see more premium content to be transferred into the TV4 and MTV streaming services and offering a more focused slate of premium Nordic content, including both AVOD, HVOD, and SVOD services. These changes will be implemented during the course of next year and will build on the strengths of the TV4 and MTV brands. Regarding the outlook for advertising revenues in these tough macro times, we continue to see strong demand from advertisers. Clearly, after 4 quarters of advertising revenue growth ranging from 4%-11%, we cannot expect as high growth rates going forward at this time. That's enough for me, and I'll now hand over to PC. Thank you, Allison. Let me quickly take you through the Q3 financials and the updated outlook. Starting with service revenue. As Allison has gone through, we have a solid growth at 2.3%. We grew in all units, partly on the back of a continued roaming rebound. The service revenue growth of 2.3% is driven by telco growth, both in the consumer segment of 2.6% and also in the enterprise segment with 1.5%. TV and media is quite stable year-over-year, with growth in advertising offsetting lower pay revenue. We have a good momentum with several quarters of low single-digit growth and are well on track to deliver on the outlook both for 2022 and for 2023. Let's move to OpEx. OpEx, excluding energy, is reduced by 2.1% or SEK 111 million in the quarter. The reduction is driven by lower resource costs of SEK 152 million from the more than 700 FTE reduction since Q3 last year. Despite inflationary pressure, we have 7 quarters into our transformation journey, reduced our OpEx, excluding energy, with SEK 1.0 billion. The ongoing digital transformation of our business is on track and has enabled a significant reduction in number of resources, marketing efficiencies, and lower IT costs. Looking into 2023, we plan to step the cost agenda and especially the pace of FTE reduction even further. As stated, our transformation agenda is moving forward, and we are on track to deliver at least SEK 2 billion net reduction in OpEx, excluding energy, by 2023. Next, an update on energy cost development. Our general hedging policy is to hedge 70% of own consumption short term with gradual reduction following quarters. This equals to around 60% hedge levels for the next twelve months. Total effective hedging is around 50%, as part of our consumption is currently unhedged, and this includes consumption for landlords in all our markets, our joint network with Telenor in Denmark, Lithuania, Latvia, but also the data center in Finland. Energy prices during Q3 were on average 3 times higher than last year. This is close to Q2, both the actual prices and the market expectation for the coming quarters has increased significantly. Our hedges and PPAs for Q4 of this year, 2023 and 2024 are all in the range of 400-500 MWh. Significantly below the current and expected levels. Now currently, we are placing most of our hedges for 2024 and 2025 at quite reasonable prices, at least compared to current levels. Despite the significant hedge levels, the very high prices in Q3 has led to a SEK 300 million increase in energy costs year over year. Using the current market expectation and our current hedges, the outlook is that the energy cost for 2022 is going to end SEK 900 million higher than last year with another SEK 600 million increase in 2023. We recently signed a PPA at very attractive terms in Estonia, starting Q1 next year and in Denmark starting Q1 2024. We are also working on further potential PPAs in the future. In addition, we are working across our footprint on initiatives to reduce energy consumption, including legacy shutdown, network modernization, and also implementing more advanced software features. Let's move to EBITDA. Total EBITDA grew 1.0% in the quarter, driven by growth in Sweden, Norway, and TV and media. Finland is negative, heavily impacted by the mentioned increased energy costs. EBITDA excluding energy costs increase grew 4.9% in Q3 from higher service revenue and lower costs. EBITDA outlook for 2022 is updated to end around flat versus last year due to the SEK 900 million higher energy costs, mainly from the second half of this year. If we exclude the increase in energy costs, EBITDA is still expected to grow low single digits%. Our midterm EBITDA ambition for 2021 to 2023 has also been updated to reflect the significantly higher energy cost levels expected both in 2022 and 2023. Excluding the energy cost increase, EBITDA is still expected to grow low to mid single digits%. Moving to cash CapEx. Total cash CapEx in Q3 is SEK 3.4 billion, slightly higher than Q3 last year. CapEx on a quarterly basis tends to stay around SEK 3-4 billion, with Q4 last year being an outlier with more than SEK 5.2 billion in cash CapEx. Despite the continued challenge, global supply chain situation, we are able to stay on track with our investment program to modernize our mobile network, including 5G rollout, dismantle our legacy infrastructure, and transform Telia to a much more digital company. Cash CapEx on a rolling twelve-month basis had increased slightly to SEK 15.3 billion or 7.0% on net sales. Cash CapEx is expected to reduce on a rolling twelve-month basis in Q4 due to annualizing the outlying Q4 last year, bringing cash CapEx within the 2022 guidance of SEK 14-15 billion. Further down in 2023 to be in line with the mid-term outlook of 15% on net sales. On cash flow, operational free cash flow ended at SEK 2.1 billion in Q3, down from SEK 2.9 billion in Q3 last year. EBITDA growth are offset by somewhat higher cash CapEx and negative working capital. Negative change in working capital is mainly driven by spending on content payments related to Champions League. Our Champions League cost is paid in two equal installments in Q1 and Q3, hence with no payments in Q2 and also not any payment in Q4 this year. If you compare it to last year, please note that in 2021 we did not have any payments on Champions League as this was already prepaid in 2020. Vendor financing is slightly positive in Q3 and also year to date. Total cash flow on a rolling twelve-month basis is on a somewhat declining trend due to increased cash CapEx and lower contribution from vendor finance. Despite solid momentum in our underlying business, due to the macroeconomic environment we are in 2022, not likely to meet our ambition of covering the minimum dividend commitment of SEK 7.9 billion. This is a combination of the recent increases in energy and interest costs, combined with a more prudent approach regarding pension contribution and a decision not to force a reduction in inventory levels to support our business beyond 2022. We are, however, building up a strong portfolio of pricing initiatives across all our business units. We are stepping up and moving parts of our cost agenda forward. We are working on several energy consumption reduction initiatives, and we are also taking a full review of our CapEx spend. It takes some time before these mitigation initiatives gain full momentum, and short term, we are not able to mitigate the full impact in a sustainable way. We will come back in January with more guidance regarding 2023 once we have closed the year and with a full set of financial outlook backed by completed and approved financial plan. Moving to net debt and leverage. Total net debt increased as expected by SEK 2.5 billion due to the share buyback of SEK 3.3 billion in the quarter. Balance sheet remains healthy with leverage at 2.07 times at the lower end of the targeted range of 2.0-2.5 times. During the quarter, we are very happy to have signed a new sustainability-linked EUR 1.2 billion revolving credit facilities, replacing the current facility of EUR 1.5 billion euro. Despite a very challenging market, we have now completed most of our refinancing needs both for 2022 and 2023, with two benchmark hybrid bonds performed in Q1 and also now in Q3. As mentioned, we have updated our outlook, EBITDA outlook for 2022 to be around flat, but excluding energy increase, still low single digits. With a similar update to a midterm 2021 to 2023 ambition on EBITDA. With that, I hand over to you, Allison, to summarize before we go into Q&A. Thanks, PC. To summarize the quarter, commercial momentum continued, helped by an improving customer experience and broad-based pricing initiatives enabling solid momentum in both core telco and advertising businesses. Network modernization, digital transformation, and structural cost reduction all continues in line with our plan. We're now simplifying and refocusing our TV and media assets, preparing it for the next phase of digitalization and richer, broader inventory for advertisers. Our balance sheet remains healthy and well within the 2-2.5 range. Hence, our dividend policy remains unchanged as the business is showing its resilience with no sign of customers pulling back on spending at this time. However, as we've said, the macro challenges were dramatic this quarter, and that has put pressure on our EBITDA and our capital outlook for this year and next. We are taking action, and we will take more if needed. These actions that we take are structural and sustainable in nature and cannot offset such an extreme move on energy in any one quarter. As you would expect with such volatility, therefore, we've decided to hold off until January to provide an outlook for next year. Stepping back, thanks to the choices we've made these past two years on capital allocation, on a more focused Nordic-Baltic portfolio, in the strengthening of our balance sheet, and in building the foundation for a return to sustainable growth, I'm absolutely confident that if we remain focused on the execution of our strategy, but now at a more accelerated pace via the additional measures we're taking, we will be an even better Telia when the macroeconomic headwinds subside. With that, we are now ready to take your questions. Thank you. Ladies and gentlemen joining today over the phones, if you would like to ask a question at this time, please press star and one on your telephone keypad. If you would like to remove yourself from the queue, simply press the pound key. Once again, ladies and gentlemen, that is star and one, if you would like to ask a question today. We'll hear first from the line of Andrew Lee with Goldman Sachs. Yeah. Good morning, everyone. I had two questions. First was just on vendor financing and other incremental free cash flow drags or potential curveballs versus going forward versus the incremental drags you've laid out today. Obviously today you laid out many more headwinds from macro than maybe we might have expected, like lost pension contributions, obviously interest costs might have been expected too. But what about vendor financing, which is obviously a key investor concern? How confident are you that this is gonna stay flat next year, and therefore not be a drag on working capital? And what exactly are you doing to mitigate the headwinds to vendor financing on working capital from rising interest rates? Kind of part B to that question would be, are there any other kind of incremental macro sensitivities that you haven't laid out today that you're keeping an eye on? Then second is a big picture question. Really related to price rises to pass through cost pressures. You had previously highlighted confidence that price rises can mitigate cost headwinds. Headwinds have gone up, and totally understand that it's too late for price rises to mitigate those headwinds for 2022. But has your confidence essentially reduced on your ability to pass through higher costs to customers as we look into 2023, either mitigation of higher costs with the price rises you're doing now? Thank you. Why don't I take the second question first, Andrew, and then I'll pass over to PC on the vendor financing. Our confidence has not changed at all about our ability to pass on the pricing. What happened during the course of the quarter, Andrew, and you know, I was with you during the quarter, is the energy prices got increasingly higher. As we saw that coming through, we had to reflect on what does this mean for the balance of this year and into next. When you see a doubling of price or cost in one quarter and see that go through into Q4 as well, no sustainable pricing could have offset that in the quarter or in Q4 either. The price rises are continuing. You will have seen we took NOK 40-NOK 50 in Norway broadband this morning. We took action in Finland just yesterday following the market lead in the consumer segment yesterday. All of our pricing initiatives are going to plan, and we're continuing to plan to look at taking even more if the inflationary environment continues. No change in our confidence. The only issue is that pricing takes time, and you can't compensate for the short-term energy volatility that we had this quarter and will be next quarter as well. Absolutely confidence still. There's no sign of consumers pulling back. As you've seen, we had another very strong advertising revenue quarter as well. We see this as short-term pain but for long-term gain in terms of the pricing moves we're making. You know, we have now CPI linked contracts in all countries in any new enterprise contract being struck now, and they're already in existence in Norway for a number of years. On the vendor financing, Per Christian Mørland. Yes. Hello, Andrew. Let me give you a bit of extensive response because I know you're very much on top of it, but just make sure everybody are fully up to date. Vendor financing has been very positive, you know, over the last couple of years, contributed significantly on the cash flow and on the working capital. We were quite clear that going forward we will see a more kind of neutral situation. That's actually also what we see now within Q3 and year to date. You know, it's slightly positive, but not at the levels that we have seen before. Also for 2022, we expect you know, vendor financing to be slightly positive. That's the kind of financial guidance as it stands now. Sort of take a step back. What it is, right, is that, you know, we go into a dialogue with our suppliers and the bank and where the suppliers are able to get their, you know, payment, in 7 days versus our standard 90 days. The discount that the suppliers give, gives us an extension on the payment term. How this affects both now and going forward depends on three things. First, how many suppliers and how much spend do we have in the program? Second, how big discounts are the suppliers willing to give, you know, to get paid in 7 versus 90 days? Third, you know, what are the terms the banks are willing to give us? Of course, this is depending on the general interest rate. It's important to understand that the program can be beneficial to both in a low interest environment where it's easy to get very long extension on the payment terms, but also in a high interest environment where you can, you know, the higher interest actually increase the value of getting paid in 7 versus 90 days. Also, you know, getting paid early can be useful for some of our suppliers in the challenging times that we're in. We always say everything else is equal. Higher interest rates reduces the payment terms and become a negative drag on working capital. One way we mitigate this is either by, you know, expanding the program with new vendors or new, additional spend, or which is actually more importantly, to go back to our current suppliers and to just, you know, negotiate better discounts because the interest rates now have moved. That is what we're doing, and that's also why we are quite stable even if the interest has moved, we are quite stable this year and also for the remaining part of the year. What happens going forward, you know, depends on how we, you know, decide together with our suppliers, you know, to do this. I think what's important to do that we will only use it if it makes financial sense for us. You know, we are, you know, prudent, and we want to make sure that whatever we do generates financial value. I think that's some perspective on the program and where we stand. Of course, when we come back in January, we'll give you a more kind of complete update on the cash flow and the working capital outlook. Once we have completed this year, we have a full financial outlook based on a financial plan, and also we have some more visibility on the macro situation. Thank you very much, both of you. Our next question will come from Maurice Patrick at Barclays. Yeah, good morning, guys, and thanks for taking the question today. Just one for me onto the balance sheet positioning, cash flow dividend, sort of related items. Clearly you've reduced the cash flow guidance due to having a G&A EBITDA, and indicated the dividend won't be covered by structural cash flow. You said you'll come back next year. I'm sure you don't really want to get into a debate about what's the right cash flow number to plug into the model for next year. The dividend is a big question for investors, given it's not covered this year now. You talked about it being covered structurally going forwards. Maybe just if you can sort of articulate some levers and how you think about, you know, is 2-2.5 times leverage sort of the right leverage ratio? Would you be happy having another year of uncovered dividend if energy prices remain where they are? You know, you obviously have some initiatives around reducing the share count via buybacks or the towers you've done already, and there's particularly rooftops that can reduce that share count but help with overall dividend coverage. Sort of what bigger picture thoughts in terms of the balance sheet positioning and dividends cash would be very helpful given where we are at the moment. Thank you. Thanks, Maurice. There's a lot of questions in there. Let me try and start kind of high level, and then I'll pass over to PC for detail. You know, the way we look at it is our underlying plan and strategy is delivering in line with what we expected. We are just seeing at this point in time some heightened macroeconomic pressure that is making us be a little bit more cautious on pension elements, on supply chain elements, and clearly, we have a short-term impact from energy costs that we cannot offset in a structural, sustainable way with pricing and costs at any point in time. Our underlying plan is intact and therefore, and our balance sheet is very helpful. We've got lots of headroom in that balance sheet to cope with this short-term macro pressure. That's why the board are very committed to the dividend policy that we set out on, and willing, you know, to take a little bit of increased leverage in the short term because they and we believe in the underlying plan and the underlying health of the business. Hopefully that gives the context. PC, is there anything else that you want to give Maurice, as he tries to work out his model? Yeah. No, I think you addressed most of it, but just sort of to summarize, right? We are now in the second half of this year really hit by these factors that Allison went through, and they are to a large extent unmitigated. Working now systematically on pricing, on cost and energy consumption reduction and on CapEx, we will gradually be able to offset more of this pressure, even if, you know, it's not going to reverse, you know, dramatically. As we have guided you on, we are now steering down CapEx in line with our plan towards 15% of sales. All of these should sort of give you at least a positive outlook on how our structural part of our cash flow and our business is delivering in the right direction. Great. Can I just double check something you said earlier? Did you say you were striking hedges at 400-500 for 2023 and lower beyond that? Is that what you said earlier in the call today? Yeah. Our average hedging is at SEK 400-SEK 500 krona per megawatt hour for- Yeah, exactly. That'll be quite stable, both looking at the fourth quarter and also looking at, you know, the quarterly hedges we have for next year and 2024. You know, it's a little bit different by quarter and by market, but all tend to be within that SEK 400-500/MWh, which is significantly lower than the, you know, the several thousand that we've been experiencing in Q3. You know, you have seen pricing come down in the last couple of weeks, but you know, I think we need to get through the winter months to get confident that they're going to go sustainably down. What's important, Maurice, is that we are not placing hedges now on very high levels, right? The hedges we are putting now in 2024 and 2025, you know, they are more expensive than they were before, but they are kind of SEK 1,000-1,500 level. Keeping it in a good mixed cost level. If you see that chart we showed earlier, you know, we were seeing spot rates at 10 times the 400-500 at certain points in the quarter, and that's what caused the extreme volatility. Perfect. Thank you. Thanks, Maurice. Our next question today comes from Ondrej Cabejšek with UBS. I hope I said your name correctly. Your line is open, sir. Good morning. Thank you. Thanks for the presentation. I have a follow-up on working capital. If you could maybe talk a bit about inventories as well, because they've been a drag about SEK 600 million this year, and we've seen from your peers as well, you know, the build up of inventory because of supply chain issues, CapEx expectations, et cetera. If you could talk about whether that is a plateau or whether we can expect, maybe, you know, that winding down or maybe an even incremental drag going into the fourth quarter, that would be helpful. A bigger picture question on just various parts of the P&L going into next year, please. I think you've laid out very well, you know, what the energy impacts are by quarter end next year. Then can you talk a bit about because I think there's been some confusion around the conference communication from December around personnel and interest. If you could just give us color on the moving parts on those two specific items that obviously also impact the free cash flow expectation for next year, that would be helpful. Thank you very much. Okay, Ondrej. I will use quite a bad line, but I'll try and pick up on your second question on the outlook for next year, and then I'll pass over to PC on your inventory question and working capital question. We'll be very clear that our outlook is still intact for this year and next year if you exclude the energy impact. That's been reinforced by the underlying development that we've seen in the business so far this year. This quarter, you know, low single digits on the top line, 2.3% this quarter, and mid-single digits on the bottom line at 4.9%. That was absolutely our ambition going into next year. That still stands, but we're adjusting it down for what we're seeing at the moment, an additional SEK 600 million in energy year-over-year as we look at it. That's the only adjustment that we're making to our EBITDA outlook at this point in time. Just to build on the sort of second question. On interest, I think there was a question there. We start to see some you know, increased cost on interest already in Q3, and this will continue to build into Q4. For the year of 2022, we're looking at around SEK 300 million higher interest costs than what we expected. Then there is a delayed effect, right? That will continue into next year. You know, there's another few hundred million increase in interest rates if the sort of market is correct at the moment. As a rule of thumb, you can think that 1 percentage point increase in the interest gives us around SEK 400 million higher interest costs for a year, you know, because we have a big part of our leverage portfolio is locked in and not really impacted by the short-term volatility. We of course also have a substantial floating. If I heard correctly, there was also a mention of pension. Last year we had SEK 1.3 billion of positive contribution from pension. We have been hoping to sustain that level this year. That is quite high level, also if you look historically. That was also what we expected when we talked to you in Q2. We have taken a relook, and year to date, the pension fund has, you know, lost 8%-8.5% of the value. Luckily, also the liability of the pension has gone actually down even more than that, but we have taken a quite prudent approach. It's well covered, but we want to wait it out a little bit and see how the market develops. What we are now, you know, in the outlook planning to do, it's still not formally decided, is to do SEK 900 million this year. We have already taken SEK 400 million in Q1, and then do another SEK 500 million in Q4. You should not expect that to, you know, continue being a big issue going forward. I think we should have that kind of SEK 900 million level as a sort of a baseline, looking ahead. Specifically on working capital. Year-to-date in Q3, we are minus SEK 700 million. That is almost entirely driven in the quarter by the pacing of content payments that I took you through in my presentation. If you look year-to-date, that's also, you know, I think a little bit shy of a billion negative, SEK 900 million. That's also, you know, basically the pacing of content payments. Because if we move into Q4, we're not gonna have any payments to Champions League. That will normalize quite a bit. Inventory levels are at a quite high level already in Q3. We hope to be able to sort of reduce that, but we expect now that that will actually continue and actually also slightly increase a little bit going into Q4, but not dramatically so. You talked about this a minute ago that we expect to be, you know, relatively neutral also going forward. In totality, working capital is not expected to change dramatically. We were hoping earlier to have lower inventory levels and also have somewhat more positive contribution from the vendor financing program that we don't see at the moment. Just to summarize, Ondrej, you know, the pension and the inventory decisions that we've taken, they were active choices that we made when we were considering the macro environment. You know, we could have pushed more pricing into this year, and we could have run down our inventory. Running down our inventory when the global supply chain situation is still a problem would not have been good for the continued rollout of our network. That's, you know, wrong decision if you're planning for the long term. The pension decision is absolute choice that we've made because we don't think it's the right time to be taking money out of the pension fund. They were proactive decisions and back up the point of we've taken a cautious approach to our outlook considering the macro environment. That's very comprehensive. Thank you very much. If I may, one very quick follow-up on the pension. You said SEK 900 million going forward. Is that a annual kind of, or is that a flat number therefore going forward, or is that a repeated 900 every year? No, of course, the decision is taking on an annual basis, right? So that you should set a sort of recurring annual effect. Okay. Thank you so much. Luis Sanchez-Lecaroz with Credit Suisse, your line is open. Hi. Thank you for taking my questions. I have two, please. The first one is on Sweden, on mobile service revenue specifically. I have seen that your customer net adds excluding machine-to-machine slowed down in the quarter. When I look at your postpaid ARPU, it slowed down as well despite the back-book price increases you pursued on the Halebop brand, which I think they came in in August or mid-August. I am interested in getting your thoughts on how you have seen competitive dynamics evolving in Q3. Specifically, if you are seeing any impact from the new Tele2's unlimited speed tier tariffs. Any color you could give on Q4, that would be helpful. The second one on Finland. I have seen that you have posted a good recovery in terms of MSR. Now you are announcing that you are following another competitor with price increases. One of your competitors was mentioning yesterday that up to Q4 they were not seeing a value approach by peers in the market. Is this announcement signaling that you are expecting a more rational environment going forward? Finally, if I may squeeze a follow-up on your comments on price increases. You mentioned price increases in Norway and in terms of broadband now following in Finland. Telenor announced they will be pursuing price increases on mobile and that will kick in in Q4. What are your thoughts there? Are you going to follow? Thank you. Well, that was a long question, Luis, but I will try and answer as quickly as possible. On Sweden, we are very happy with our how we're holding up in a competitive environment in Sweden. You know, we look at postpaid net as pretty much neutral, postpaid ARPU developing more positively than competition than they posted yesterday. I would say we are sustaining our market leadership position. We are being very rational. We took a number of pricing moves pre-summer. We are waiting to see competition follow. No, the new Tele2 unlimited tariff is not having an impact on us at the moment. I think it's a bigger threat to them actually in terms of a downgrade point of view than it is to us. On Finland, yeah, happy with the recovery we're seeing in mobile service revenue. Happy to see that there has been market movements and pricing and clearly not being the market leader in Finland, we will be happy to follow them, which we did yesterday. Yes, we are also hoping that the Finnish market is now going to be more rational. But there is still some of these vouchers around in the market that the key competition sends out on a regular basis. Certainly all the movements are very positive at the moment. As I've said, we aim to grow in line with the market in Finland, and that's what we will do. Norway, yes, some new pricing this morning on broadband. We are clearly looking at our mobile tariffs as well and looking at what happens in the market dynamics. We have got a very comprehensive, systematic approach to pricing going on in all segments, in all markets, and that will continue to benefit us in the following quarters and years ahead. Maybe you started your question a little bit around the mobile service revenue and ARPU. It's a more technical question you can follow up with IR. Because in general, what we see is a solid, you know, ARPU development basically across our footprint on the back of a growing rebound, but also on the back of the pricing moves that we already have done. That's helpful. Thank you. Our next question comes from Titus Krahn at Bank of America. Yes. Good morning, everyone. Thanks a lot for taking my questions. I have just two more strategic ones, but rather topical ones, I think. If I may, first one on consolidation. I'm sure you saw yesterday's EU court statement on the O2 Hutchison deal in the UK. Just maybe could you give some thoughts on how you view the statement? To what extent do you believe this is actually relevant for the markets you're in, for example, in Denmark? And would you say this remains a market-by-market decision? And maybe are you following the current attempts in other markets such as Spain, actually more closely than this EU court decision? The second question on the infrastructure ownership, I mean, you already showed with the Tower deal that you're quite open to share ownership of some of the infrastructure and with potentially more to come. I just wondered now on those fixed infra assets that you have in the Nordic market, would that be on the table for you as well, looking at Telenor, which achieved quite a high valuation last month or so? I assume that's not a top priority at the moment, but would you be generally open to similar deal? Thanks, Titus. Consolidation views, I think yesterday's announcement doesn't change my opinion that these decisions are very much clearly taken on a market-by-market situation. I don't think that decision would have any impact on our markets. Clearly, we are following what will happen in Spain and what will happen in the U.K. with the Hutchison Vodafone decision as well. You know, Denmark is its own market. Clearly in these times where we have more financial pressures, we will, you know, take advantage of consolidation as and when it comes along for Telia. I don't think yesterday's decision changes that. In terms of infra initiatives, yes, we're very happy with the deals we've struck. We're continuing to look at our rooftops. We've been quite open in that. In terms of fixed assets, you know, we don't need to sell our assets for leverage reasons. We've done it because of the valuation differences, but we've maintained control so that we can work with partners that bring commercial and operational value add beyond just the check they are writing to get a minority stake. In terms of our fixed assets, we see them as strategic. I've been quite open in the past that I don't need to sell a minority stake for any financial balance sheet reasons. I would be willing to look at creating vehicles that allow me to consolidate further the Swedish market. For example, you know, create a venture in partnership with somebody else to consolidate city network. I've been quite open about that in the past. It's not a priority at the moment. If some assets become available that allow us to build our fixed infrastructure further, I'd be very welcome to do that in partnership with other players. Thank you very much. Thank you, Titus. Next question. Our next question today will come from Nick Lyall at Berenberg. Hi, everybody. Hi, Allison. Hi, PC. There's a couple of questions, if I could, Allison. Hi, Nick. No, just to tie down. Just on the unlimited pricing first, in Sweden, I'm surprised you're so relaxed about it from Tele2. Just given, you know, SEK 399 for unlimited is about the price of your 15 gig package. So why wouldn't that limit upside to pricing for consumers? Can you tell me sort of what I'm missing there and why you'd be more relaxed about it? Then secondly, just to come back to Maurice's point on the divvy, how long do you think you've got with an uncovered divvy before you have to question, either from the board or from yourselves before you have to question that, the floor, the 2 SEK floor, please? Thank you. We've been living with a significant difference to Tele2's pricing for quite some time. You know, as we continue to build out 5G well ahead of competition, sustain our best network, best coverage, highest speeds, positions, we are as yet not seeing it having an impact on our business. Clearly it's something we're looking at, but to date, we haven't seen any impact on our business. In fact, those that are willing to pay a significant amount of outlay for a tariff tend to want to be more with the market leader in our market anyway. It's actually the low-tier brands with the lower tariffs that are, you know, something we monitor more in this time when customers are more likely to go to no frill options. In terms of the dividend policy, certainly, you know, we have a clear mid long-term plan that our board remains very committed to. We believe the dividend policy is aligned with that plan. There is absolutely no dialogue about reconsidering that dividend policy at this time. Okay. Thanks very much. Cheerio. Okay. We'll hear next from Peter Nielsen with ABG. Thank you very much. Hello, everyone. Allison, I have a question related to comments made earlier by both Per Christian and yourself on looking to review your CapEx spend for next year in relation to the sort of the cash flow questions earlier. Now, you told us several times today that you're seeing no impact or changes to consumer spending. You're following the long-term strategy, and you just stressed the importance of having premium network. My question is, why would you consider reviewing your CapEx plans? And if so, which areas of the CapEx would you be looking to potentially reduce? Thank you. Per Christian Mørland in a minute, but just to be clear, you know, we always planned to come off of peak spending this year, and so we revert to 15% of service revenue as our metric for CapEx next year, and that has always been the plan and still is the plan. As you know, our network rollout is, you know, we're now above 70% in a number of our markets and 80% in Lithuania and Sweden is, you know, 40% done. Per Christian Mørland, it was you that said that earlier. Yeah. Maybe I can give some little flavor on what I meant is that our general agenda remains, and we are not planning to do any sort of dramatic changes on that. You know, we need to complete our network modernization. We need to transform Telia as a company and then, you know, that those will continue. But of course, a changing kind of business and macro environment, we should sort of take a re-look into our investment agenda and see what are the investments that we actually need to protect, you know, maybe even more, and make sure we get the value out of that. What are the investments that we actually need to look at whether we should, you know, pace slightly differently or actually also cut out. That's what I meant the reviewing. You shouldn't expect that. Actually one of the things we haven't talked so much about it, we are not actively cutting down significant CapEx now to protect cash flow this year. Because we mean that the investment that we are doing is very important element of building, you know, a sustainable Telia going forward. What we will be doing, we will take a full review of what we are doing, and we are currently doing that as part of our financial planning for next year. The ambition is to have an overall CapEx plan, you know, that is in line with 15% of net sales. Okay, good. Thank you. Thank you. Next, we'll hear from the line of Keval Khiroya at Deutsche Bank. Thank you for two questions, please. Firstly, you've talked about potential consolidation opportunities in TV in the past. What are your latest thoughts on the opportunities and what exposure you would ideally like to have to TV and media in the future? Secondly, a question, how we think about core telco enterprise trends for 2023. It sounds like you haven't seen much change in customer behavior, but we have seen a slowdown in enterprise service revenue growth over the last three quarters. Do you expect further slowdown into next year, or do you expect trends to be similar to the 1.5% growth we saw most recently? Thank you. Thanks, Keval Khiroya. Yeah, you know, consolidate the TV and media. You know, yes, I still believe it will happen at one point. Our focus at the moment is simplifying what we have, consolidating around the TV4 and MTV brands that are very strong national champions. Making them stronger for changing viewer habits and increased demand for targeted inventory from advertisers to make that business a better business so that it either throws off more cash to Telia or creates value creation if the right opportunity comes along. First and foremost, it's making the business stronger as it stands today. Core telco trends, you know, enterprise was a bit softer this quarter, but as I said, some of that was kind of, you know, one-off IoT revenues in Sweden last year and a little bit of acceleration of Datacom legacy decline in Finland this year. We're very happy with how our enterprise business is performing. We're seeing increasing both demand from the public sector and the private sector for us to help them with their digitalization journeys. As I, you know, as I said, I think to one of the media earlier this morning, as enterprises look for more efficiencies and are under more pressure from a sustainability point of view, we are the perfect partner to be with them. No concern, but clearly, you know, monitoring the economic environment, but no indications that we would slip next year. Thanks so much. Maybe we'll get time for one final question. Yeah? We've got three. Okay. Well, let's see how we get on then. Next, we'll hear from Stefan Gauffin at DNB. Yes. Hello. Just a couple of follow-ups on earlier questions. First of all, you stated that inventory level would remain at this level for now, but you're almost SEK 1 billion higher on inventory in Q3 2022 versus Q3 2021. What is a fair level once supply chain issues are removed? Are we coming back to the situation one year ago? Secondly, just a clarification on your assumptions on energy cost for next year. Have you assumed that the Q3 spot prices remain throughout 2023 in these assumptions? Thank you. I guess those are for me, Allison. Go ahead, energy expert. Yeah. I'll start on the energy cost. No, absolutely not. You know, so whenever we give an outlook, it is based on two things. It is based on the market forward rate, you know, and that's what we showed in the graph. So that's what the outlook is that is based on. Then, of course, we combine that with whatever hedges we have placed. As you saw also our, you know, hedge levels for 2023 and also then the average hedge prices that we have in the range of SEK 400-500 per megawatt hour. That's an important policy that we have followed throughout this year, and we will continue to do going forward. On inventory, yeah, you are right that it has increased quite dramatically, you know, and this is, you know, mostly linked to conscious choices, right? Because of the situation we are in, we need to place orders, you know, often more than a year on certain critical components, both to where we resell and, you know, to our B2B customers, but also for our own commercial business and also our own kind of transformation and network rollout. We have chosen, you know, to protect the business and allow this inventory build-up. We have been maybe, you know, a bit ambitious to, you know, how fast can we scale it down. I think you should, you know, I'm not gonna give you an exact number what it's gonna be, but it's SEK several hundred million lower than what you have today. That is, will be at more normal level, even if there will be, you know, kind of a safety supply chain situation probably in the years to come. Thanks, Stefan Gauffin. I think there'll be time for one last question. Our final question will come from the line of Adam Fox-Rumley at HSBC. Thank you very much. I wonder if you could talk a bit about how you're planning to set your budgets next year, given the inflationary and energy backdrops we've discussed today. I mean, is this a time for zero-based budgeting? Are you tasking local management to find an X% reduction on their X energy costs? Just be interested to hear about the process and whether it's changing in light of the current circumstances. Thanks. I'll start, and then I'll pass over to PC. Well, clearly, because of the underlying inflationary pressure, we're expecting them all to take more pricing than they planned. We're starting to get good visibility on wage negotiations. That gives us a good understanding of what that impact might be next year and how that compares to the underlying cost agenda. We're still pushing our organization to offset as much as they possibly can through additional pricing. We are now front-loading next year's planned headcount reductions. As you know, our plan was to reduce headcount by 1,000 a year. We will upgrade that, and it will probably be more like 1,500 next year is the headcount reduction. That's all we work through at this time. PC, anything you want to add? Yeah. No, no. The fact that our underlying business is progressing very well, and we want to continue with our transformation agenda. We don't want to take a sort of full retake and throw everything up in the air. That will continue. Of course, in certain areas like, you know, support functions and so on, we take a more deeper look at, you know, what is the cost structure, what can we live without, how can we really challenge that. It comes back to the main changes is related to pushing pricing, as Allison said. You know, both in terms of passing on to our customers, you know, making sure that we use CPI linkages wherever we can, transfer prices, back-book price migration, and also improve on channel execution, reduce the below the line pricing and sort of aggressive discounting. You mentioned the cost agenda that we are now moving forward, and we will do more in the first half of next year to get full effect of that. We talked about the CapEx, where we're spending more time now reviewing our, you know, current plans to see should we adjust it or should we change anything. Of course, more work going into it, but the base plan and the base process is pretty much the same. Thank you. With those comments, that rounds off the Q3 call. Thank you everyone for listening, and you're very welcome to contact us if you have further questions, and we look forward to speak again in January. Thank you and goodbye.