The Telia Company's Q1 2023 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, Sam. Hi, everyone. Welcome to our Q1 call. As usual, we do a presentation followed by Q&A. On the call today we have Allison Kirkby, our President and CEO, and our CFO, Per Christian Mørland. Allison, please go ahead. Good morning, everyone, and warm welcome. Our year has started with a full focus on building profitable growth momentum in our telco businesses and taking decisive action on capital allocation to improve both cash conversion and via value creation over the medium term. I'm happy to say that this focus is already evident in our results and in our actions this quarter. Our telco business units have de-delivered a solid set of financial and operational results with service revenue growth improving to 2.4%. Both mobile and fixed grew at similar rates, and all markets contributed positively, except for Denmark, which was relatively flattish. We also saw growth in both consumer and enterprise segments, where the latter accelerated to a strong 3.4% growth as we see excellent demand for connectivity services bundled with security, cloud, and our award-winning IoT services. EBITDA momentum for the telco operations also improved sequentially, growing to 1.6% year-on-year. We did, however, experience a tougher time in our TV and media business with a softer advertising market, adding to the challenges of monetizing some of our pay TV content. This was expected, and it did result in a weak EBITDA and contributed to a relatively flat year-on-year EBITDA development for the group. Also in the quarter, the structural part of our cash flow decreased to around SEK 700 million from year-on-year CapEx phasing. Total operational free cash flow was negative, as we expected and communicated earlier, due to a temporarily lower vendor financing balance. We now expect this to be fully recovered over the remainder of the year, as P.C. will explain later. On strategy execution beyond the financials, it's been a quarter of meaningful progress on customer satisfaction, on network modernization, and on our sustainability ambitions. Specifically, we continue to be the undisputed 5G leader in the region, reaching a population coverage of 77% by the end of the quarter, and with Opensignal awarding Telia Finland for having the best quality network in the world. We made significant progress in this year's Sustainable Brand Index, proof that our customers are viewing our ESG efforts positively, and we were super proud to be awarded the top spot in this year's ranking of Europe's Climate Leaders by the Financial Times, a globally recognized assessment of climate commitments and real performance where we came out beating many global powerhouses and all of our telco peers. Having started the year with solid financial, operational, and strategic progress and with more visibility on both CapEx and working capital elements, our outlook for the full year is unchanged. As you saw last night, we continue to actively manage our portfolio to improve capital allocation and our balance sheet. Before we move ahead and talk about the quarter, let me just touch on the Danish announcement. As you've seen, we've successfully agreed a deal to sell our Danish business to Norlys, the leading provider of energy and fiber infrastructure in the country, subject to relevant and customary approvals. This has been a long time in the planning and is a great outcome for everyone, us, Norlys, and the customers and businesses who rely on the services we provide. With such a committed long-term owner, it's great for Telia's Danish team too, who in just over a year have done an outstanding job at turning around the business and upgrading the mobile network, both of which have been recognized in the valuation struck with Norlys. The valuation of DKK 6.25 billion or almost SEK 10 billion corresponds to around nine times the 2022 Telia Denmark EBITDA, and clearly a much bigger multiple of cash generation. We now enter a period of confirmatory due diligence, followed by a final share purchase agreement that we expect to sign during the summer. We'll move into a regulatory approval process that is likely to conclude it around the turn of the year, so closing should occur within the next 12 months. At closing, we intend to use the proceeds for deleveraging purposes. Let's move back to results and how our four-pronged approach to building a better Telia is progressing. Everything we do to create a better Telia is guided by our belief that we will play an increasingly vital role in enabling the digitalization and technological development of our highly innovative region. By inspiring customers, connecting everyone, transforming to digital, and delivering sustainably, we are continuing the hard work of returning the company to sustained profitable growth, maintaining our technology and sector leadership, driving modernization of our operations to make Telia a better company for all its stakeholders today, tomorrow, and into the future. Let's now look at the progress in each of the units, and we'll start with Sweden. In Sweden, we saw customer satisfaction improve. We were the sector leader in the Sustainable Brand Index for the 13th consecutive year, and Telia's 5G is now available to almost two-thirds of the Swedish population. Service revenue turned positive again with broad-based growth in all our service lines if you exclude legacy copper services. Consumer improved and returned to growth in March as effects from the Q4 black screen situation gradually subsided. Enterprise growth continued to be very strong, growing 2.3% with Telia and Telia Cygate leveraging their unique market position, combining connectivity services with IT, cloud, and security services. Telia Cygate actually won preferred partnerships with several key global security solution providers in the quarter, contributing to double-digit growth in our, what I call beyond connectivity enterprise services. Excluding copper revenues and roaming, you can see the real underlying revenue growth rate improving in the quarter to 2.8%. With pricing initiatives taken in March impacting around one million subscriptions, we saw the growth rate improve further as we progressed through the quarter. EBITDA growth improved sequentially, although still showing a minor decline due to inflation, mainly energy, which was a SEK 40 million headwind in the quarter. Moving on to the operational KPIs. In mobile, we had positive postpaid net adds for our brand portfolio as a whole, including for Fello, our most affordable brand, which won mobile operator of the year in the quarter based on NPS. This recognition also helps in pricing of course, which we announced on Fello just last week. Talking about pricing, mobile ARPU continues to grow slightly supported by pricing initiatives and to a lesser extent this quarter, the roaming rebound. The broadband subscriber base increased as growth in fiber and FWA more than offset the decline in the remaining DSL base, which has halved in the last year with only 65,000 customers remaining. ARPU was, as you can see, flat as pricing late in the quarter was offset by DSL decline and some discounting linked to the black screen situation that I mentioned earlier. In TV, we again saw a strong subscriber-based development with 22,000 new customers despite price increases with more than 2/3 of this growth in the high-value SDU segment. Clearly, ARPUs are expected to improve going forward from the pricing taken in March, the gradual removal of the Q4 discounts, and now the Fello pricing just announced last week. Moving to Finland. Network modernization, 5G rollout, global recognition for our network quality, improving brand consideration, and cost transformation were all evident in the quarter. Financially, we had our third consecutive quarter of service revenue growth, and despite continued heightened energy costs, we saw EBITDA growth. The Finnish team continued to successfully drive down their cost base through digital transformation, channel shifts, and general productivity measures. Mobile growth was slightly slower as we had a strong A2P quarter this time last year, helped by elevated public sector messaging during COVID. Looking at consumer, mobile ARPU grew 6% as a result of 5G migrations and pricing. However, our postpaid subscriber base declined somewhat due to a slightly shrinking market and our value-focused strategy, especially when it comes to which offers we make and which channels we use. Specifically, we've taken many pricing initiatives, and we're selling less in third-party channels. While we have a reduced customer base, this strategy is benefiting not just ARPU and SAC, but also churn, where we've seen a meaningful reduction in the quarter. In enterprise, mobile was impacted by the lower A2P revenues that I mentioned, but we saw an excellent 8% growth in fixed services driven by business solutions. Like we have in Sweden, we have a real competitive edge when we go to market combined with Telia Cygate services. Turning to Norway, and we saw another quarter of solid momentum, both on network rollout, where we remain the 5G front runners with 89% of Norwegians now having access to our network. Onboarding of our new wholesale customers from Fjordkraft started in late March in line with plan. Service revenues increased 3.8%, with a 5% increase in mobile driven by both consumer and enterprise. In fixed, both TV and broadband also grew in the 4%-5% range on the back of pricing, which together more than offset declines in fixed telephony, where we decommissioned an end-of-life service. EBITDA again grew around the 3% mark, that's despite a tough comp from a positive one-off item worth SEK 40 million this time last year. Looking at our customer base, we saw a slight decline as we expected following our recent price increases, ARPU increased 1% as a solid increase in consumer was partly offset by the mix effect coming from our fast-growing enterprise unit and specifically from growing business in the public sector. Moving to the lead markets, again, an excellent development for both Lithuania and Estonia, where we sustained brand leadership and built further our 5G network leadership positions to 95% pop coverage in Lithuania, where I will start. Lithuania, Telia was named the most sustainable operator in the country after rising seven points compared to last year. You know, we're almost at 100% pop coverage on 5G. Financially, we continue to see excellent and broad-based service revenue growth, with mobile growing 11.5% and fixed 8.5%. The flow-through to EBITDA was again excellent and resulted in 13% growth. Estonia was ranked as number one in telcos and number two overall in a customer service quality survey of large corporates. Financial performance was likewise excellent, with service revenue growth of 5.8%, again broad-based, with mobile growing double digits and fixed growing 4% and translating into a highly positive 10% EBITDA growth. Finally, in Denmark, 5G pop coverage increased to 85%, and it was also confirmed that Excuse me. Telia retained its number one NPS position among the main brands. In terms of revenue, we saw a more muted development, partly driven by regulated reductions in interconnect, but it was another strong quarter on the cost transformation side, resulting in EBITDA growing 15%. Finally, let's move to TV and media, and starting with advertising, where we believe we're performing relatively well, but it is a softening market. Advertising revenues declined -5.4%, driven by linear in Sweden, and only partly offset by continued healthy growth in digital. In Finland, the development was more positive due to the recent general election. On pay, revenue development turned slightly positive after several quarters of decline, supported by good OTT subscriber base development and price increases. However, EBITDA losses increased, reflecting the lower service revenue, unsatisfactory monetization of some premium sports rights, an expanded slate of international entertainment, combined with some inflationary and currency impacts affecting content costs. While Q1 was a low point, and it is always a loss-making quarter from a cyclical point of view, there are unfortunately a few quick fixes, and so we will continue to carry high content costs for a number of quarters going forward. Our full focus is therefore now on the restructuring of the business. The consolidation of our brands is progressing well, and we've just announced that the new TV4 Play service, which will combine content currently offered under the C More brand, will be launched after the summer, allowing the gradual discontinuation of C More in the following months. Moving to the financials, I'll pass over to PC to take you through them. Thank you, Allison. Let me quickly summarize the Q1 financials. As Allison has gone through, we have service revenue growth at +1.9% with telco growth of 2.4% in the quarter. All telco units are growing nicely, except Denmark that is flattish in the quarter. Telco service revenue growth is driven by growth both in consumer segment of 0.9% and a solid enterprise segment growth of +3.4%. Total EBITDA is negative in the quarter at -0.8% with telco growth at +1.6%. All telco units report solid EBITDA growth, with Sweden being flattish versus the quarter last year. Energy prices in Q1 has been significantly lower than feared only a few months ago. Energy cost in Q1 is still SEK 130 million higher than what we recorded in Q1 last year. Sequential improvement versus the last couple of quarters is driven by the improved telco growth and less negative impact from dimension energy cost. Let's move to OpEx. OpEx increased 1.3% in the quarter with slightly lower resource and marketing cost offset by tough comp on other cost items like IT expenses and travel cost. During the quarter, we have, as planned, executed on a headcount reduction process, resulting in a total reduction of 900 resources, where of 500 of our own employees. This has limited impact in the quarter, but would help our cost development in the coming quarters ahead. Despite significant headwinds, we have two years into our transformation journey, reduced our net OpEx by SEK 1.0 billion, driven by significant net reductions in our resource and IT cost. The higher and extended inflationary pressure makes it more difficult to realize the full potential of SEK 2.0 billion net cost reduction by end of 2023. On CapEx, total CapEx in Q1 is SEK 3.7 billion, significantly lower than the SEK 5.0 billion recorded in Q4 last year. CapEx is SEK 0.4 billion higher than Q1 last year, driven by higher investments related to the ongoing mobile network modernization and higher fiber-related investment in Sweden. CapEx is to be gradually reduced the coming quarters with the biggest year-on-year impact to be seen in the second half. We are well on track towards a full year outlook of SEK 13 billion-SEK 14 billion. Our aim remains to be at the mid or low end of this targeted range. Let's move to cash flow. The structure part of operating free cash flow ended at SEK 0.7 billion in Q1, down SEK 1.3 billion versus Q1 last year, mainly due to two factors. First, cash CapEx was SEK 1.1 billion higher than last year from SEK 0.4 billion higher book CapEx and a vendor financing effect of SEK 0.8 billion versus last year. Secondly, restructuring cost increased by SEK 0.3 billion due to the mentioned redundancy process in the quarter. Total operating free cash flow was, as expected, negatively impacted by change in working capital. This is mainly driven by negative vendor financing impact of SEK 3.1 billion in addition to phasing of accounts payables. On the next slide, I'd like to comment on the cash flow evolution during the year. The low cash flow generation Q1 was as we expected, and we are well on track to deliver on our cash flow outlook for the year. The structural part of cash flow is expected to improve significantly in the second half, mainly from lower CapEx levels and higher EBITDA. Total operational free cash flow will in addition be supported by the positive working capital development, mainly from phasing of vendor financing impact. Our vendor financing balance is expected at the end of the year to be on a similar level as the end of last year. The negative impact we see in Q1 is expected to be fully reversed over the coming quarters. Our net debt increased as expected by SEK 4.3 billion in the quarter, and leverage ratio are now at the high end of our targeted range of 2.49 times. This is mainly driven by the mentioned negative cash flow generation in the quarter. As mentioned, proceeds from the sale of Denmark is expected to be used for deleveraging and reduce leverage by around 0.2 times. Improved cash generation ahead, combined with proceeds from M&A transactions are expected to secure leverage well within the targeted range of 2.0-2.5 times. With that, I hand back to you, Allison, to summarize the presentation. Thanks, PC. Let's start with our full year outlook. It's unchanged. We expect to grow both our service revenue and EBITDA this year, but more so in telco than in TV and media. That's what we always expected when we set out on the year. On cash flow, as PC has described, we are well on track and increasingly confident now also with strong visibility on the vendor financing trajectory during the remaining course of the year. We therefore expect all key financial metrics to grow year-on-year, service revenue, EBITDA, structural cash flow, and operational free cash flow. Summarizing the quarter and the outlook. Growth momentum continues, especially in enterprise, with price increases to contribute going forward. Network modernization and 5G rollout is delivering to plan, strengthening our leadership position and underpinning our premium market positions. The current inflation environment, as you expect, is challenging our cost agenda, but we have executed on close to 1,000 resource reductions at the end of the quarter, which will support our cost trajectory ahead. TV and media, yes, it's experiencing headwinds. However, brand consolidation of C More into TV4 and the subsequent restructuring is well underway. We're making excellent progress on our sustainability agenda, where we are the clear leader in our sector in Europe and our region. Investment levels have peaked, vendor financing balance is secure, and so we're on track on our financial growth ambitions for the year. We've struck a highly accretive deal in Denmark that once approved, will allow us to focus even further on markets where we can win with improved potential for capital allocation and value creation. I guess you're all now ready for questions. At this time, if you would like to ask a question, please press star one on your touchtone phone. You may withdraw your question at any time by pressing the pound key. Once again, that is star and one. We will take our first question from Ondrej Cabejšek with UBS. Please go ahead. Everyone, good morning and thank you for the presentation. I have two questions, please. One is just a question on free cash flow. You were still saying that, you know, expect the full balance for the year to be roughly neutral in terms of vendor financing. Can you just give us an update? And it's following on from the full year results where you said you had about 70% of the contracts secure on the way to make that balance, you know, neutral year-over-year. Where are you today? And is there any color in terms of the phasing as we go through the year, talk about sector? That would be helpful color. The second question, just on the spectrum that you flagged should be, essentially a material cost in the second half of the year. I'm just wondering if historically spectrum in Sweden has been, relatively cheap compared to the market. What makes you think that this time around it's going to be a material outlay? Are there any kind of strategic, thoughts behind that as well? Thank you very much. PC, take the first question, and then I got a bit distracted by the flashing screen there. You'll need to ask me the second question. You take the vendor financing question. Yeah, with Swedish spectrum. Swedish spectrum, yeah. On, on the vendor financing, yeah. As we have talked about over the last few quarters, right, the sudden increase in interest rates gave us a challenge that we had to mitigate. We have progressed very well. As you said, you know, in Q1, in January, or in January, we updated you that we have secured, you know, three-quarters of the balance for the year. Given our, you know, update now, we can confirm that we have secured the 100% of that. What we have been done, just to give some color on that, is that we have renegotiated with some of our key contracts. You know, around 10 of our key contracts has been renegotiated to secure the vendor financing balance. We have, you know, entered into a couple of new arrangements. All in all, that secures the vendor financing balance on level with 2022. The Swedish spectrum auction, We’ve gone through the consultation phase. We’ve all given back our feedback. We should be hearing from the regulator PTS in the coming days or weeks. We’re still expecting the auction to proceed as planned in September. Thank you. The, the question was more like why would you expect this particular auction to be a material, you know, cash outlay? I guess historically, spectrum in Sweden wasn't, you know, very expensive relatively. It may not be material to be dependent upon. This, this is a 25-year auction for 900 megahertz, 2,100 megahertz and 2,600. It's one of the most important auctions and the last big auction outstanding for us as a group. A very important one for all operators in the market. All right. Thank you very much. We will take our next question from Peter Nielsen with ABG. Please go ahead. Hi, Peter. Thank you very much. Thank you. Hi there. Hi, Allison. Hi, PC. Thanks for the presentation. A question related to the TV and media business, Allison, please. You said that trends are more or less as anticipated, but it does appear, at least from the outside, Allison, that the losses in the TV and media business exceed even your own expectations basically each quarter, and that the content costs keep surprising negatively. Why is that? Why do you not have better visibility on the content side? I appreciate that there's weaker service revenue impact, but it does appear that the costs are higher. What is driving this and your seemingly limited visibility. If I can just ask a follow-up, Allison. The exit from Denmark, do you see any way road back into the Danish business or is this sort of a final goodbye to the Danish market for Telia? Thank you. Okay. This is the final goodbye for Telia in the Danish market as at this time. You know, we have tried for many years to build a position from a mobile-only player. We've done a fab job in the last 18 months to turn it around. Unless the market was to change dramatically and there was a great deal to be done, I think you can assume that it is a fond farewell, but we're passing over the business to a great new owner, and we'll create a new national challenger in the market. Super proud of the deal that was struck, and happy to pass it over to Niels and the Norlys crew once we've had all the approvals. On TV Media, when I said it was in line with expectations, we had built into our guidance for the year that TV Media would be challenged by a softening ad market this year. That's exactly what we've seen. Less so in Finland so far, but more so in Sweden. In our overall market guidance, it's in line with expectations, but it is a little bit softer than we wanted to start the year with. In terms of the visibility on content costs, one of the big changes this quarter is you are seeing currency impacts on some of those contracts starting to flow through as well. You know, there were some new contracts struck later in the year in defense in case the Viaplay dispute was extended for a further period. We went into Allsvenskan, and that was absolutely right for our total business. We expanded some of our international entertainment with BritBox just to strengthen the entertainment slate in C More. We had very clear visibility on that content cost. Maybe we just didn't manage to guide that to the market. You know, what we're really focused now on is the restructuring. Q1 is always a loss-making quarter for TV Media. I think it will be a soft year for TV Media considering the broader economic environment. We're creating a business, a better business for the future, and we never expected TV Media to contribute positively this year anyway. We are looking more or less at a loss for this year? Sorry, could you repeat that, Peter? I couldn't really hear you. Yeah. Thank you for the call, Allison. Oh, thank you, Peter. I think you said we are heading for a loss indeed. Well, we made a profit last year. What I'm saying is we won't have any growth this year. It will be a back-weighted, positive EBITDA, which it always is in TV Media. Yeah. Thank you, Allison. Thank you. Much appreciated. We'll take our next question from Maurice Patrick with Barclays. Please go ahead. Good morning, guys. Morning. Yeah, yeah. A question on Denmark sale, please. In fact, I have a couple of related questions. First one, in Denmark is you talked about it being a long time coming, but I guess why sell the asset now? Why the timing now? Why had it taken a long time to come, given what you said that? Related to that, you said you're gonna delever with proceeds. I think with some of the tower sales, you did a share buyback. Why the decision process for deleveraging over the share buyback this time around? I guess, what other potential disposals could be there to surprise the market? I mean, you've talked in the past about rooftops in other markets. Wondering if that's gonna make the agenda. Thank you. Okay. Thanks, Maurice. When I say it's been a long time coming, I think it's been quite public that we have looked a number of options for our Danish business over many, many years. That's what I mean it's been a long time coming. In terms of the timing now, when I, you know, when I came in to Telia and when I appointed Petter as the new CEO there, his whole focus was on turning around the business to make it a better business for Telia, but a better business when the right consolidation opportunities came along. Are you typing away on your keyboard, Maurice? I'm always typing. All right. Okay. Why is it the right time now? We have turned around that business. But the Danish market continues to be a tough market, and we're number four. Norlys came with a good offer for the business. nine times EBITDA for a business that has struggled to generate cash, is a good option for us, and certainly better than staying the number four player forever, in a very competitive market. And, you know, it only happened in the last weeks, couple of months, because they've only recently received the proceeds from their fiber transaction. So that's why it's. They've got the cash. It was a good offer. We have never planned to stay in a market over the long term as the number 4 mobile-only player. Why delever and not share buyback? I think the world has changed since we did the share buyback a year ago. And certainly, you know, we want to be in the 2 to 2.5 range in terms of leverage. And at this time, we're at the top end of that. It's absolutely the right and prudent thing to do to use it as a deleveraging opportunity whilst interest rates remain at heightened levels. That's why. What about other potential disposals? Rooftops we still intend to do when the price is right and we're fully ready. We are always looking at our portfolio, to see if there's other opportunities to crystallize value, and allow better app capital allocation and more focus on the core connectivity business. Okay. That's very clear. Thank you. Thank you, Maurice. We'll take our next question from Andreas Joelsson with Danske Bank. Please go ahead. Good morning, everyone. I have two questions, one for Allison and one for PC. If we start with PC, if we take a more longer-term look at the vendor financing program, is this sort of the seasonality that we should expect, that you have a softer start of the year and then a build-up for the rest? For Allison, on Finland, you have been looking at Finland now for a while and try to turn it around, and we see that ARPU levels are quite flattish. Given that you have a very broad 5G offering and also the best quality network in the world, when do you see that ARPU levels on a reported basis are coming up? I understand that there are B2B dilutive, but, when do you see that quality also moving into the ARPU level? Thanks. Yeah. Maybe I can start, Andreas. No, absolutely not. This seasonality that we see now, it's entirely linked back to the, you know, sudden increases we saw in interest rates, during the course of last year, which is in a historic perspective almost unheard of. As long as, you know, the interest rates stay, quite stable, we won't see any significant seasonality related to vendor financing. Thanks for the question on Finland, Andreas, and great to have you asking a question and not being sitting around the board table with us here. You're absolutely right, the ARPUs are flattish. Although consumer mobile ARPU is actually up 6%. It's particularly diluted this quarter because of the some of the A2P revenues that were flowing through in the B2B ARPUs last year, and we've got that mix impact. There's also an interconnect impact as well that the guys can explain to you when you meet them later. You know, when will they start to improve? What we've seen in the consumer market is, you know, everybody wants to build great networks and everybody wants to price appropriately for those services. You've therefore seen that ARPUs are growing on the back of 5G and all of us wanting to create, you know, value for our shareholders as well as value for our customers. Yet to see that fully in the B2B market. There is still quite competitive pressure, particularly from the challenger in that market. We've got, as you know, a very heavily weighted, you know, what? 55%-60% of our Finnish business is B2B. What we need to do a better job of now is monetizing 5G and monetizing some of the other services around 5G to stop the deflationary pressure that's been in the B2B market, but has seems to have been removed from the B2C market. That's what the team are working on. Having the best network and having the strength of position we have in security services, and we do have the most trusted, most secure network, particularly it's in the choice of vendor that we have. I do believe that it will build over time, Andreas. Perfect. Thank you. Thank you. We'll take our next question from Stefan Gauffin with DNB. Please go ahead. Yes. Hello. I have a couple of questions around the cash flow. Repayment of lease liabilities took a step up of SEK 200 million quarter-on-quarter. Is this the level to be seen going forward or was this exceptional for Q1? I know this Q1 last year was also high. Secondly, also on cash flow. Restructuring charges was high, which should have been expected, given that you said in Q4 that 1,000 employees would be laid off in Q1. If you look at number of employees, not much has happened quarter-on-quarter, but I understand there is a time lag. When will this be visible in employee numbers? Should we return to, sort of more normal restructuring charges over the coming quarters? I'll answer the employee numbers question and then pass to PC on the lease liabilities and the restructuring charges, Stefan. Yeah, you're absolutely right. Those employees that exited us were still employees on the 31st of March. Most of them exited on the 31st of March, and some exit actually during the month of April. In the end, we're seeing about 900 resources exit during kind of the four-six weeks following the end of the quarter. Half of those are employees, which the restructuring charges are linked to, and the other half are, you know, consultants that are either working in IT or in our call centers. It's just a timing and a lag effect. PC maybe you can answer the more financial questions there. Yeah. Just to connect them to the restructuring charges, right? We took out. The 1,000 resources is 500 of that. We ended up at 900 in the quarter, 500 our own employees, which is correlating to the restructuring charges, as you said. You know, as part of our transformation, we will continue to, you know, reduce our number of resources and they, you know, they can come restructuring charges also going forward, but not at the level that we saw in Q1. That is very much, you know, at scale is an issue for Q1. As we said, going back more than two years, we are looking at a total restructuring charge and, you know, adjustment item around SEK 1 billion per year, and that we also expect for this year. On the lease payments, you, as you rightfully say, Q1 is a bit higher from a, you know, seasonality point of view, that will continue. In terms of the year-on-year increase, we see some increases linked to the indexation linkages that we have in many of our contracts. We expect the total lease payments for the year to increase SEK a few hundred million, linked to the higher inflationary levels. Okay. Very clear. Thank you. We will take our next question from Nick Lyall with Société Générale. Please go ahead. Hello, guys. Morning. It was a couple of questions for you. Hi, Allison. Couple of questions please, Allison. One on the TV media. Just back to the question on the numbers themselves. Obviously a weak Q1, as you say. Why wouldn't it struggle to meet zero this year in terms of the EBITDA? If you look at the quarter last year, it would have roughly flat. For the next three quarters, you're looking at around zero for the EBITDA number. Is there something coming on in terms of the benefits maybe from the C More merger that's gonna help just push it up above zero for the second half, for example? Could you please help us on how that's maybe broken down for the full year on the EBITDA number? Second, on the just the clarification on the turnaround in working cap. I think you said you see the SEK 3 billion vendor turns around the full year to get to zero. Is that the same as well for the working cap negative for the first quarter? Does that get back to zero for the full year on your expectations? Thank you. Okay. Thanks for the question, Nick. On, some of it is content phasing. Like, you know, we're going all in on Love Island and a couple of big new content pieces this quarter. The second half is always when this business generates more, and some of it is our expectation of some positive revenue development on the back of the restructuring of the business in. That will be very much Q4 related as well. We expect things to improve during the course of the year. On the second question, PC? On working capital, you know, so the rebound, you know, we called in on working capital minus SEK 4.3 billion in the quarter. Over SEK 3 billion of that is related to vendor financing. The vendor financing will, you know, rebound as we have talked about earlier. In addition, we also expect inventory to gradually go down throughout the year, and also some positive effects from accounts payable phasing. As we see it now, of course, there's a bit of, you know, always a bit fluctuation on working capital, but we expect that most of this SEK 4.3 billion will- Hi, team. This is Sam. We've lost audio. Hello? Can you hear us? Can you hear us, Sam? Hello? Are we back? If anyone can hear us. We are back. Yes, we can hear you. We can't hear anyone else. Sorry. Can you, are we back again, Sam? Operator? Yes, ma'am. We are back. You're connected. Okay. Nick, did PC answer that question or do you- Allison, you're still on. We're back on. I think It's a really strange one. I don't know if you can hear me, but I think you cut out in the words Love Island, would you believe, Allison? I think that was about as far as we got. Oh. Oh, right. Okay. Maybe it was me mentioning Love Island on a call. Okay. Unless I'm the only one. Apologies, but that's. All right. That's what happened. All right. Sorry. Okay. Nick, what I was saying is there is some content phasing. There is some big entertainment hits this quarter that weren't in the same quarter last year. There's also some content phasing later in the year as well. Yes, we are expecting some revenue momentum to come as we start to sell the new TV4 Play product in the second half of the year as well. That's why. You know, if the market remains soft, there's absolutely, you know, risk on that TV media total unit, and that's why we came into the year not expecting it to grow, and we're monitoring the situation very closely. On PC Just quickly on the working capital. We recorded SEK 4.3 billion negative in Q1. We expect the SEK 3.1 billion part of that to revert back from vendor financing. In addition, we expect inventory gradually to come down throughout the year, in addition, some positive effects on accounts payable phasing. We expect as we see it now, so the entire working capital will be quite neutral on the year. That's great. Thank you. We'll take our next question from Steve Malcolm with Redburn. Please go ahead. Yeah. Morning. It's Steve Malcolm with Redburn. Hi, Steve. Hi there. Couple of questions, please. Just coming back to the vendor financing point that PC raised, not PK. You said you've renegotiated some of the contracts. I mean, what are we reading into that? Are you now prepared to share some of the costs? 'Cause previously this has effectively been pre-financing for you with low interest rates. It seems a bit counterintuitive that, you know, your supplier, sorry, will wear a much bigger discount to be paid early. Maybe just sort of give us an insight into what that means renegotiation. I'd also like to know, you know, what sort of suppliers are still happy to use vendor financing in this higher interest rate environment, because again it seems a little bit sort of counterintuitive to me. Just coming back to Denmark, Allison, I think you said it was accretive, the deal. On my math, it's sort of pre-tax or neutral and EPS accretive. Maybe just help us understand the overall sort of accretion impact of that deal on the pre-cash and earnings basis. I know it's early days, but that'd be very helpful. Thanks a lot. Okay. I'll pass to vendor financing PC. When I say accretive, I was really meaning we're getting almost SEK 10 billion for an asset that doesn't flip through off any free cash flow. We haven't done the numbers, or I don't have them in front of me on all the EPS and more technical elements, Steve. It doesn't generate cash flow, is it? Yeah. It pretty much doesn't. It doesn't generate cash flow. It's pretty much not generated any cash for us for years, and certainly in the last six years. Yeah, would one expect to generate cash this year based on either the CapEx improvements you made or. Not a lot. So It would be marginal because we're- Okay still investing in the 5G network this year, Steve. We should just assume that the code sheets get you to pay loans out and save you interest costs, essentially. Correct the free cash flow. Yeah. You know, example had to be bigger. Yeah. Okay. Correct. Thanks. PC on the vendor financing. Thank you. On the question relating to, you know, our partner suppliers on this, no one has indicated or has left the vendor financing program so far. We have good dialogues with all the partners that we have on the program as of now. As I said, also we have onboarded a couple of new ones. When you talk about renegotiation, it's basically in a higher inflationary environment, you know, the suppliers are willing to give a higher discount to get paid in seven days versus the original 60 to 90 days. That is the biggest effect. You're not actually paying any money on that still? It's still a free source of financing for you, essentially. We don't pay directly for it, no. Okay. I mean, just to follow up on that, I mean, in this higher interest rate environment, you know, you're still gonna have SEK 11.4 billion outstanding vendor financing in the year. Is that the right number? I mean, five years ago, that was nothing when rates were very, very low. Is that the right number to think about on a long-term basis, do you think? I think it's a good number for now. I think if interest rates, you know, start to come down, we have the opportunity to, you know, scale it down a little bit, over the next, you know, few years. As of now, we will keep it on that level. Our ambition is not to expand it further. We don't see it as a driver for cash flow. We try to, you know, mitigate it doesn't become an issue on our cash flow generation. We've got a broad range of vendors making use of it, that, you know, are relevant in all elements of our supply chain. Okay. Is it still the case that sort of a lot, over 50% on the OpEx side? I think you said that previously. Is that still the case? No, it's a good mix of COGS, CapEx. It's actually ...equipment on the total balance, around 25%, goes within sort of the investment bucket and the rest goes as part of the EBITDA side. Working capital. Okay. Super. Super. Okay. Thanks a lot. Thanks, Steve. Thanks very much. Thank you. We will take our next question from Andrew Lee with Goldman Sachs. Please go ahead. Good morning, everyone. I had two questions, one on price rises and then secondly on CapEx. On the price rises side of things, a push back that some investors make is that even though we see headline price rises in Sweden, those don't filter down into ARPU because of customer spin down and also promotional activity. I wonder if you could just talk about your confidence that the bigger price rises you're putting through this year, do you impact your ARPU and service revenue growth in Sweden? Maybe there's a change in mechanics. I note that Telenor raised its fiber brand pricing, but if you could talk about the drop through from the price efforts you're making and your competitors are making to ARPU, that'd be really helpful. Just second question, just coming back to CapEx. You mentioned that CapEx is phasing downwards through the year. Nonetheless, obviously CapEx was higher this quarter than it was expected, and we also saw your competitor Tele2 deliver CapEx at higher-than-expected levels and also potentially talk about risk to the upside on that, on its CapEx for the full year. I just wondered if there's any sort of inflationary pressure or other factors that might drive higher CapEx than might have been expected in Sweden at the start of the year. Thank you. Thanks, Andrew. On price rises, yeah, absolutely. It's the same in every market. You know, the headline price rises, at a gross level don't end up the same at a net level because of competitive pressure, spend down, and discounting. We don't plan for 100% of those headline prices to come through. What we see more positively now in Sweden, that has become more positive in the last six-eight weeks, is that the market leader at the low end of the market has taken their first price increase ever of SEK 10. You know, we have a brand also in that segment called Fello, and we have also just announced pricing last week in the SEK 10-SEK 30 range. As a result of that movement, we are expecting a little bit less spend down going forward. Clearly we will have less discounting that we carried forward from Q4, from the Viaplay dispute into the quarter as well. That will dissipate over time as well. We're expecting a little bit better net impact in the months to come than perhaps we saw towards the end of last year. You know, there's been a lot of various pricing moves in the market in Sweden the last couple of quarters. In terms of CapEx, I'll pass to PC. For context, you know, we are now at basically 90% 5G coverage in all our markets except Sweden now, and Sweden we're at 63%. We have still got slightly heightened mobile network investment in this quarter, as we had in Q4, but that is going to reduce now because once you're above 90%, there's not a lot more to roll out. We have good visibility as to how that CapEx will phase. PC, if you wanna build on that. On the, on the CapEx phasing, right? If, we expect it to come slightly down from the levels that we saw in Q1 over the next few quarters. Remember Q3 always is a low CapEx quarter because of the vacation season. The reduction is mainly, you know, related to Allison talked about on the mobile network investments that we gradually increased during last year, peaked in Q4, and now gradually coming down towards the end of this year. Related to your questions on inflationary pressure or, you know, other things that can come as a surprise, I think we have built a very solid investment plan now. We have built in most of the inflationary pressure into that plan. Also as we said before, most of the the higher part of the spend is locked into existing contracts, and it's not immediately, you know, exposed to the inflation that we're seeing. I think it's worth mentioning that we see a continued heightened inflationary pressure and it drags out a little bit, so over time that will put some pressure also on our investment levels. We're talking, you know, SEK 200 million on a, you know, SEK 13 billion-SEK 14 billion investment program. I don't see any major risk for that in a 2023 perspective. Yeah. No risk to the 13-14 range, Andrew. Not at all. Great. Thanks very much. Okay. We'll try and squeeze in two more questions, although we're getting to the end of time. Another question. Yes. certainly. We'll go to Fredrik Lithell with Handelsbanken. Please go ahead. Thank you. Thank you for squeezing me in as well then. I'm gonna be very quick here. If maybe, PC, if you could summarize up what you see in front of you in terms of cost reduction program, if you see pockets of new savings to be made going forward, if you take more of a one, two years time span on that subject. Secondly, labor costs. We in Sweden have central negotiations just finalized with a 4% hike on salaries. How much of your workforce will be sort of influenced by this? Is this a Q2 thing to think about in calculations? Thank you. Thanks for the questions. I'll start on the labor cost. As we've talked about before, in a normal kind of environment, inflation environment, we've had around SEK 400 million of salary inflation on a yearly basis. When we saw inflation starting to rise last year, we increased that to SEK 600 million. Actually that has been a good estimate until recently. Over the last few weeks, we have, you know, landed agreements in our main markets, Sweden, Finland and Norway. As you said, you know, they have ended slightly higher than what we expected. Actually there's a yearly impact in 2023 of around SEK 100 million on our salary cost. That will start to kick in then from Q2 onwards. The good thing is that they also in Finland and Sweden have landed on the salary inflation for 2024, which is on a very, I would say, reasonable level given where we are, you know, slightly above 3% and below 3% in Finland. On the cost reductions, you know, the reduction we have done now during Q1, which is not really visible in the numbers, that will give us a tailwind of around SEK 200 million per quarter over the coming quarters. That is good. Of course that we don't stop there. We continue to implement new cost reduction and efficiency measures both this year and also, you know, going forward. I think there's this... We have done quite okay to reduce our cost base so far, but we still have a lot of complexity, a lot of manual work, a lot of, you know, incoming calls to our customer service. The journey continues, but you not expect any kind of significant changes. We will just continue working on a broad set of initiatives for the coming years as well. Okay. That's very clear. Thank you. We'll go next to Siyi He with Citi. Please go ahead. Thank you very much for taking my questions. I just have two follow-up, please. The first question is on the price increases. I think, the post Q1 call, some of your peers is talking about potential to implement the price indexation also into the B2C market. Just wondering, based on your experience of price increase this year, do you see this, the Swedish and Finnish market, the customers would have appetite to accept, indexation into the contract? Second question is on the cost. I mean, your press release, you sound a bit cautious about the inflation, inflationary pressure and impact your 2 billion cost-saving targets, which you have reiterated at the Q4 conference call. I just wondering, what do you see over the last three months that the inflation could potentially impact your targets? Thank you. Thanks, Siyi. Very quick price increases. As you know, we've put price indexation into pretty much all new enterprise contracts across our footprint, and we started doing that during the course of last year, and it was already in existence in our Norwegian enterprise business. The tricky bit of putting price indexation into contracts in Sweden and Finland is that it, you know, it gives the customer the right to break from a binding contract. That is. You know, if we're able to get away from that, of course, we will consider it. At the moment, I think we are finding just a very rigorous, regular approach to price increases is probably the way we're gonna continue in the consumer market until unless we can change legally some of the terms of the binding contracts. Then on costs, what has changed in the last three months is these recent wage negotiations that PC just touched on. You know, Sweden ended up above 4% this year. Norway could be close to 5%. It's not even, you know, finalized. Finland was also close to 4%. That is putting SEK 100 million. And, you know, we think how that might trickle through into other things, that could be a SEK 150 million headwind that we only realized in the last three weeks. That's why we're being a bit more cautious on the SEK 2 billion. We're still putting through all the initiatives, we're still aiming for it, but with those heightened levels, we now need to find new initiatives to offset that new SEK 150 million. That's why we're being a bit cautious on the SEK 2 billion, but our cost agenda still remains. What PC also said, though, is unlike other European markets, in Sweden and Finland, we struck two-year deals with the unions, and so it. You know, in Sweden, it will reduce to 3.3% next year, and in Finland it will be below 3%. That gives us much more visibility for next year. It really is a 2023 issue that, you know, we'll take away, and we'll look at what we can do to offset. Thank you for the questions. Thanks, Allison. I think that will have to be the last question of the call. Thanks, everyone, for many good questions. Please don't hesitate to reach out if you got more questions that we didn't have time for. Goodbye, everyone.