Tele2 Aktie

Good day, and thank you for standing by. Welcome to the Tele2 Q1 Interim Report 2026 Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jean-Marc Harion, President and Group CEO. Please go ahead.

Thank you, and good morning, and welcome to Tele2's report call for the first quarter of 2026. With me here in Stockholm, I have Peter Landgren, our Group CFO; Nicholas Hogberg, our Chief B2C Officer and Deputy CEO; and Stefan Trampus, our Chief B2B. Please turn to Slide 2 for some highlights from the first quarter.

In Q1, group end-user service revenue grew by 3%, whereas underlying EBITDA grew by 11%, marking the fourth consecutive quarter of double-digit growth. We also continue to generate strong equity free cash flow with SEK 2.2 billion in Q1, plus 7% versus last year. Our Baltic Tower transaction was completed by the end of February, generating cash proceeds of SEK 4.7 billion to Tele2. And we also opened 5 new stores in Sweden in Q1 and upgraded our fixed network to 2.5 gigabit per second, a record internet speed, which are already available across many of the largest cities, including in Stockholm. With our 5G already recognized as the fastest in Sweden, we now operate the fastest networks in the country. Please move to Page 3 for more details on our results.

Our 3% growth in end-user service revenue was driven across all our operations and core services. Our 11% growth in underlying EBITDAaL was driven by both transformation and revenue growth. Our strong equity cash flow or free cash flow, which grew by 7% year-on-year was largely driven by the increase in our operating cash flow. Peter will go through the details.

CapEx to sales declined seasonally, partly due to lower 5G rollout speed in Q1. Leverage fell to 1.5x due to the Baltic Tower transaction and organic cash generation. In Sweden Consumer, end-user service revenue grew by 1% with contribution from all main services. In Sweden Business, end-user service revenue grew by 5%, driven by mobile and IoT. Our Baltic operations grew end-user service revenue by 7% and underlying EBITDAaL by 15%. Let's move to Slide 5 for more details on Swedish Consumer.

As commented in the CEO letter this quarter, we combined store expansion with rapid progress in AI and automation, improving customer experience, operational efficiency and our ability to anticipate customer needs. Mobile postpaid end-user service revenue grew by 3%. Total mobile revenue grew by 2%, partly offset by continued decline in prepaid and some temporary issues due to the move to our new logistics platform. Fixed broadband grew end-user service revenue by 1% due to ASPU growth. Digital TV once again improved sequentially, driven by healthy high single-digit growth in Tele2 TV end-user service revenue, more than offsetting the latest impact of Boxer TV switch off. Let's look at consumer KPI on Slide 6.

Mobile postpaid RGUs remained unchanged in Q1 despite temporary negative impact related to 2G, 3G shutdowns. Mobile ASPU increased by 1% year-on-year, driven by price adjustments, while still negatively impacted by IFRS 15 fair value adjustments, which will gradually abate during the year. Fixed broadband RGU declined slightly in Q1, while ASPU grew by 1% due to price adjustments. As in previous quarter, we have remained selective in parts of the market due to continued aggressive competition, which hampered volume growth. TV RGUs increased by 4,000 in Q1 as the good growth momentum in Tele2 TV has continued. ASPU grew by 5% year-on-year, driven by pricing and cross-selling of sports content improving the success of our flexible offer. Please move to Slide 7 for Sweden business.

Sweden business continued to deliver strong end-user service revenue growth, reaching 5% in Q1 despite strong competition. Mobile grew by 8%, largely driven by our IoT business, which is expanding in new industries such as the automotive sector and geographies, for example, in Latin America. Mobile RGUs increased by 3,000 in Q1, ASPU continued to be impacted by change in customer mix. B2B solutions grew by 3% in Q1, reflecting our decision to focus on a more targeted portfolio of services. Please move to Slide 8 for Sweden financials.

In total, Sweden end-user service revenue grew by 2% in Q1, driven by both business and consumer. Underlying EBITDA grew by a solid 9%, driven by the end-user service revenue, workforce reduction, stricter prioritization and cost control. The cash conversion has improved to 73% over the last 12 months. Let's move to the Baltics financials on Slide 10.

Baltics once again maintained strong top and bottom line growth in Q1. Total end-user service revenue grew by 7%, partly supported by previous price adjustments. Q1 was the fifth consecutive quarter in which all Baltic markets delivered double-digit organic growth in underlying EBITDAaL, delivering a total growth of 15% pro forma the Baltic Tower transaction. It is worth commenting that our Baltic operations started accounting the cost of Baltic Tower company in March 2026. Cash conversion based on the last 12 months stands at 80% despite the impact of the Tower transaction. As you know, a spectrum auction has already been announced and will take place in Lithuania in 2026. Let's move to Slide 11 for Baltic's operating KPIs.

The total postpaid base in the Baltics increased by 17,000 RGUs in Q1, driven by all markets. Prepaid decline was due to regulation and migration to postpaid. Blended organic ASPU grew by a strong 10%, driven by price adjustments and continued prepaid to postpaid migration.

With that, I hand over to Peter, who will go through the financial overview.

Thank you, Jean-Marc, and good morning, everyone. Please turn to Page 13 and the group income statement for the quarter. Total revenue grew, thanks to organic service revenue growth of 3% with contribution from all operations. Underlying EBITDA grew by 10% organically or 11% after lease, thanks to the sharp cost control across the group and the contribution from service revenue. Items affecting comparability were mainly impacted by redundancy costs related to workforce reductions.

Last year, the corresponding redundancy provisions were more significant as you might recall. The gain from sale of operations of SEK 5.1 billion refers to the capital gain from the Baltic Tower transaction completed at the end of February. Net financial items decreased year-on-year, mainly thanks to higher interest income and positive currency effects. In Q1, our average interest rate was 2.7% with a debt mix of 73% fixed rates and 27% floating rates. Income tax increased year-on-year due to higher taxable profits. Let's move to the cash flow on Slide 14.

CapEx paid, excluding spectrum decreased compared to last year, mainly due to lower intensity in the Swedish 5G rollout and reduced workforce. The decline was also impacted by delayed hardware supply with an expected catch-up later in the year. Spectrum CapEx paid increased due to the first out of 2 payments for the Swedish spectrum secured in 2025. Changes in working capital contributed to the cash flow with around SEK 450 million, largely driven by seasonal decrease in equipment receivables. Taxes paid increased since last year included a tax refund of around SEK 280 million, while the corresponding tax refund this year was around SEK 50 million. In summary, Q1 equity free cash flow reached SEK 2.2 billion, which implies a 7% growth compared to last year, and this translates to around SEK 9 per share over the last 12 months. Please turn to Slide 15 for our capital structure.

End of Q1, economic net debt was SEK 17.4 billion, a reduction of SEK 6.9 billion compared to end of 2025. This was driven by 2 things: the cash proceeds of SEK 4.7 billion from the Baltic Tower transaction as well as the SEK 2.2 billion generated in the business. And this brings down leverage to 1.5x underlying EBITDA after lease ahead of the proposed dividend distribution.

And with that, I hand over to Jean-Marc for some comments on our 2026 guidance.

Thank you, Peter. Please turn to Slide 16 for 2026 guidance. As highlighted last quarter, we concluded 2025 by setting a high standard and establishing a new reference point for Tele2 profitability. Building on that momentum, we remain focused on consolidating the company's transformation further strengthening profitability and safeguarding revenue growth in the face of continued geopolitical uncertainty. We, therefore, maintain our full year guidance for 2026 with low single-digit organic growth of end-user service revenue, low to mid-single-digit organic growth of underlying EBITDAaL, CapEx to sales in the range of 10% to 11%. Note that the organic growth rates include the impact of the Baltic Tower transaction on a pro forma basis.

And I hand back to Peter for some additional comments regarding 2026 before we open up for Q&A.

Thank you. First, a reminder about the Baltic Tower transaction. As previously stated, the transaction is expected to have a negative impact on underlying EBITDAaL of around EUR 35 million on a 12-month basis. And in Q1, this only impacted March, while we'll see the full impact onwards. And then a few reminders on the cash flow for the full year 2026.

On spectrum, we noticed that an auction has been announced in Lithuania expected to take place during 2026. On financial items, excluding leasing, we still estimate full year net payments of around SEK 650 million with a similar quarterly phasing to last year. And finally, on taxes, we still estimate full year payments of around SEK 1.4 billion.

And with that, I hand over to the operator for Q&A.

[Operator Instructions] And our first question comes from the line of Ondrej Cabejsek from UBS.

I had a few questions on Sweden and specifically mobile, I guess, please. So I am looking at the mobile trends specifically in postpaid. And if you could please talk about -- I guess, you mentioned previously that you put through price rises this year about a month earlier than last year that the market has been kind of improving. So I think we would have maybe expected a bit more of an acceleration. You mentioned also that there has been some kind of legacy negative impacts on mobile. So if you can talk about the growth rates for postpaid Sweden specifically and how you see those throughout 2026.

And second question, if I may, also related to this, but maybe from a different angle. You've obviously put with the new portfolio on mobile, you seem to have a very stable base in the quarter on postpaid against some price rises specifically on like family plans, which I think are very important. So how is the reception then and again, tied to how we should think about the service revenue kind of profile for the rest of the year?

Slight technical issue, but we continue the Q&A session. Just to answer your first question first, and then I will hand over to Nicholas to develop on the portfolio and the new pricing. But of course, the price adjustment that we implemented a little bit earlier this year, of course, has a progressive impact, and it's as always, mitigated by the BTL discount, the different segment that -- where these price adjustments are adjusted for. I believe that the second question is more relevant to be answered by Nicholas about the postpaid portfolio now and the positioning and how we see the competition, not only, I would say, with the other operators, but with the sales distributors as well.

So thank you, Jean-Marc. This is Nicholas. Yes, the new portfolio has been very well received. We have simplified the portfolio radically, which is good, and we have also continued to build Frank. And of course, as you know, we have started somewhat a repositioning of Comviq with Jattebra, very good, and it's actually working very good so far. So what we can see is that it's still a fierce competition and a challenging market. We have been restricted to engage in the price war, especially when it comes to the no-frills brands. They are pushing the market really hard. But we see that our new portfolio is working well and that we -- our position in the market becomes clearer and clearer.

Then when it comes to our distribution, we have launched 5 new stores during the quarter, and they are working very well, and we think that, that's the way forward for us. And we also see that we are less dependent on third-party distribution.

If I may maybe follow up on the last point. So is it a case of maybe you are -- as you kind of reposition the distribution channels, is it a case of maybe there will be slightly weaker volumes this year, but profitability will benefit as a result?

Yes. Let me -- Jean-Marc here again. To complete what Nicholas was commenting, of course, we are operating in a very competitive environment in Sweden on the consumer market. We like this kind of competition. We have 2 strong brands to compete with the others. One of the specifics, and this is a comment that I already made several times, one of the specifics of the Swedish market is that the competition is distorted by the behaviors of some sales channels, which are too important, overwhelming on the volumes, for instance, telemarketing. So that's probably what you were referring to.

We made a very clear statement last week supporting stricter rules for telemarketing operators. But we believe that this stricter rules should apply as well to other channels, third-party retailers where we have as well received a lot of complaints from our customers. So this, in my view, is one of the focus -- one of the priorities for the industry in Sweden and, of course, for Tele2 in the coming few months.

Our next question for today comes from the line of Fredrik Lithell from Handelsbanken.

I would like to come back to your cost profile and the good cost control you are driving the company with. A little bit more on the sort of the software stacks. You alluded to that in the report that you're working your way through with automating the software stacks and all that stuff. How much of that upgrade, modernizing, automating your software environment will sort of trickle through in improved cost profile over time as well? Or is this that sort of you get into a modern state with your software and the cost will be pretty much the same to drive it. It would be interesting to hear a little bit more color on that.

Okay. Thank you for your question. It's a very complicated exercise to answer your question in a few minutes in this Q&A session because, of course, now, for one simple reason because it's an ongoing transformation process. We have a huge potential ahead. And I believe that Tele2 is leading the pack in the AI and automation initiatives. We received recently an international award for the automation of our processes.

We have built -- in parallel, we were optimizing the organization in the company. We have created a dedicated data and AI team. Of course, one of the purpose is to help us better understand the customer behavior, anticipate their issues and make the support to these customers smoother and more faster and more transparent. But we have engaged into a huge transformation of all our processes. So we have a series of initiatives, internal initiatives that empower the managers and the employees to automate their own processes.

So we have created a kind of library of tools and small internal academy to support automation and AI initiatives. And furthermore, and I believe that, that is more relevant with the content of your question. We started applying agentic coding in our development. And this, of course, is a huge opportunity because it accelerates the delivery and lower the cost of the development. We haven't seen all the potential of this initiative yet, but I'm personally very impressed by the first results that we are delivering. So far, we don't have any number to share with you. We are just trying to unleash the potential of agentic coding internally to accelerate our transformation.

Very clear. Can I have a follow-up on that, Jean-Marc? Do you expect that you will see the biggest effect or maybe the earliest effects within your production. Or will you see it within your support systems or support functions, I should say. Where do you see the early signs?

No, we -- I believe that we already see it in the customer interaction because that's where, of course, we put our priorities. We want to improve our knowledge in order to better understand the needs and the issues faced by every single customer segment. But the automation and the development is evolving fast as well, including in the support of our B2B customers. And that's because, of course, I should have mentioned that the automation of our processes started in the B2B area last year when we started trying to automate the processes that we have in place in order to support our large accounts. And this is from there that we have developed this automation academy and so on.

Our next question comes from the line of Andreas Joelsson from DNB Carnegie.

Two questions from my side. First of all, Jean-Marc, your comment about the macro situation currently, how does that impact your growth plans and growth ambitions for the year. Has there been any changes to that given what you see around you? And does it also make you more eager to look further to the cost side and CapEx side?

And secondly, just curious, given a quite strong start to the year with 11% EBITDA growth, how did you reason when you decided to keep the EBITDA outlook unchanged?

Okay. Thank you, Andreas. I believe that the 2 questions are linked. First, so far, the telecom industry has not been the one most impacted by the international situation. So that's good news. But in the meantime, we see a sharp increase in the price of the component of IT equipment. So this may impact our cost, CapEx and OpEx in the coming months. But so far, we can deal with the situation, but this price increase in the component is a concern for our industry, not only for the telecom industry.

But of course, the major focus we have is about the consumer behavior. So far, the Swedish economy was recovering, but still lagging behind in terms of consumer consumption. The international situation will probably create some tension as well in the customer behavior and appetite to spend. We will see. We are just careful. And so far, so good. But if the situation lasts, then we will need to adjust. And this is why we are very happy to have transformed the company last year so that we are agile and reactive again. So we can react very fast. We have a much leaner cost structure that help us adjust if necessary. And that explains as well why for the time being, we are careful with our guidance.

Our next question moment comes from the line of Derek Laliberte from ABG Sundal Collier.

Just a follow-up there on the guidance and given the strong Q1, what would you say needs to happen or not happen for you to reach the upper end of this EBITDAaL guidance or even beat it?

Just -- okay, Peter?

Derek, thanks for the question. I think it will be a little bit of a repetition of what Jean-Marc is saying because I think we have elaborated on it. We have the geopolitical uncertainty, which is both on the component side, but also on things like energy costs and FX and things like that, but most of all, the customer sentiment. And to add to the customer sentiment, it's also about the competitive situation, which is, of course, we know where we stand now in April, but it's a long year and it's early days and how that evolves is, of course, critical for our top line evolvement. So that's something to add and that can bring things to upper or lower end, I would say. So that's what I would add.

Okay. Got it. And on competition there, has anything changed in terms of the Swedish competitive intensity in the consumer segment?

Nicholas?

Yes. We can see that it's a bit of an increased competition, and it has to do with all the product segments. So we can see it both on Voice, but also on broadband and entertainment TV. So we see that there is clearly higher competition in the market during Q1.

Got it. And finally, on TV in Sweden, how do you see the growth prospects from here on?

We have a positive view on the growth prospects for TV, and we feel that we have a strong offer, and we see a continuous growth in TV.

And the Swedish football team is qualified for the World Cup. So that's good for the business.

Our next question for today comes from the line of Felix Henriksson from Nordea.

I have 2, both relating to capital allocation. Just want to hear your thoughts about why not distribute some proceeds from the Baltic Tower transaction given that your balance sheet is in an extremely healthy state at the moment? And secondly, in the report, you mentioned this proposal to regulate the Villafiber market by PTS. So I just wanted to pick your brain if that has changed your mind in either way about making M&A in fiber assets in the future in Sweden.

Peter will answer the first question. I will try to answer the second.

On the capital allocation then, I would put it this way that there was a proposal then from the Board, as you know, along with the Q4 release of a quite appealing shareholder return of SEK 10.5 per share, which we assume will be approved by the AGM now in May. So it's sizable and it fits well into our updated financial policy stating that we want to secure appealing shareholder return while retaining our flexibility.

On the Baltic Tower transaction, That's, of course, a sizable cash proceed we received now, SEK 4.7 billion. But as we have said before, that's not really turning the needle in terms of dividend capacity because it also affects which leverage we can allow based on our rating. But we, of course, fully agree. We have a strong balance sheet. We see that as something very positive and something that enables appealing shareholder return also in the future. And on top of that financial flexibility and, of course, good interest rates. So we see that we are in a quite good spot. And then, of course, it's up to the Board to conclude how to pay it going forward.

And as a reminder, the proposal from the Board to the general assembly consists in distributing 118% of 2025 equity free cash flow, which is partly an answer to your question.

And regarding the -- your question about M&A and fiber infrastructure. I would say the comment we make is about the -- we made -- is about the progresses made by PTS, the Swedish regulator in the regulation of the SDUs. So this is, of course, a good news for the Swedish consumers. Let's remember that in Sweden, 1 out of 2 households is a villa, meaning that 1 of 2 villa owner today doesn't have access to competitive offer for the fixed Internet. So this will be a big opening and a big opportunity. And of course, we expect to play a key role in the opening of the market. We are waiting for the regulation to materialize, but at least the first publication by the PTS are a good sign, and we expect the regulation to materialize in the coming few months. Of course, the sooner the better.

Regarding the M&A, we will see. I already commented that we don't exclude anything. But of course, the assets have to be available at a reasonable price. So far, we haven't any opportunity on the table. We are looking -- we are observing and scrutinizing the market, but nothing tangible, nothing concrete at this stage. Maybe it's interesting to comment that to remind ourselves that the Swedish market is very fragmented at this stage. Maybe some consolidation will happen in the coming few years. It's not the time yet. So let's wait and see.

Our next question for today comes from the line of Keval Khiroya from Deutsche Bank.

I've got 2 questions, please. So last year, you made strong progress on renegotiated supply contracts and on the workforce reduction savings. Can you elaborate a bit more on how you think about the source and scope of additional OpEx cuts in 2026? I appreciate you did speak a bit about automation.

And then secondly, in B2B, you've again shown strong revenue growth. Last year, you also talked about wanting to focus a bit more on profitability of some B2B contracts or segments. Are you now happy with the B2B profitability? And how do we think about the B2B revenue to EBITDA growth translation?

Peter will answer on the contract side.

Yes. Thanks for the question, Keval. On the workforce and also the contracts, starting with the workforce, we had this big transformation last year, as you obviously recall with a reduction of 650 positions or 15% across the group. And that was completed, as you know, in last year. This year, we're moving rather from this transformation phase to more of an optimization where we will continue to stay disciplined in the workforce number and, of course, use the opportunities created by automation and AI, but it's a different phase than last year.

And on the supplier contracts, the work continues. Of course, we had a strong start last year when a lot of contracts were reopened with a lot of potential. There is still a lot of potential, but it's not as obvious as last year. But the ambition is the same, the intensity in the supplier renegotiation is the same, and we reap benefit from it. But at the same time, we should, of course, also remind the inflationary pressure that we see in some pockets, especially around hardware, which Jean-Marc has called out. So we keep on working on this just like before, the discipline continues.

And maybe a short comment about the constant optimization of the organization. So once again, it's a never-ending exercise if we want to keep the company at the best of its efficiency. So we are moving pieces of the organization, [ permanent ] -- because of the -- we are close from the end of the rollout in Sweden. We reshuffled some team in the network organization. In the meantime, we are reinforcing our skills and capacities in AI and data analytics, but it's an investment in order to create more synergies, thanks to the automation. So that's why it's a permanent exercise. To answer your question about B2B, I will hand over to Stefan. But in a nutshell, yes, no, we are happy with the profitability of our B2B activities, Stefan?

Thank you, Keval, for the question and also Jean-Marc. Well, the efforts that we've taken in the B2B during last year, but also coming into this year is really broad-based in order to create a better profitability, which trickles down to bottom line, but we're not revealing in the numbers, but we see a significant improvement during last year, but also in this quarter.

We have addressed vendor partner negotiations. We addressed organization where we changed the structure. We have done rightsizing of the organization, and it also continued into Q1. We've done some near-shoring of some resources as well during this quarter. We have outsourced some of our production of some of our platforms. We are working on IT modernization, automation, which Jean-Marc was alluding to earlier, which we kick started early last year. We're creating a center of excellence. And we are, as you know, working on the channel optimization in order to drive versus our internal challenge with one of the highlights during the autumn where we closed 60% of our external resellers. So it's really a broad-based approach on improving efficiency.

Of course, one part of this is also addressing individual customers and customer profitability. That is something that we're scrutinizing and have a program in place to drive, and it has also yielded results. So hope that gives you some color, Keval, to what we're doing and it's paying off.

[Operator Instructions] Our next question comes from the line of Andrew Lee from Goldman Sachs.

I had just a couple of questions around some temporary drags on your customer numbers at the moment in Sweden. Just if you could give us a better sense of scale of those drags and what your service revenue growth might be anticipated to be excluding those.

So first off, in Swedish mobile, I think you had a drag on postpaid customer numbers from the 2G, 3G switch off this quarter. What scale of drag is that? When should we anticipate that drag disappearing or dissipating? And where do you think your service revenue growth could be without that? And then similarly, you've talked a lot on the fixed broadband side about the drag from not competing in open networks areas at the moment. Your broadband net add number is negative at the moment.

If you were competing in the open networks area with a viable wholesale price as you should achieve or at least hope to achieve post regulation, where would you expect your broadband net add number to be? Should it be still negative? Or would it be flat? And what kind of drag do you think that's placing on your Swedish service revenue growth? Those are the 2 questions, I mean, overarching is if you didn't have those temporary drags, where do you think your Swedish service revenue growth would be this quarter as an insight for how we should think about things going forward given that even with those drags, your Swedish service revenue growth was 2.4%.

Thank you, Andrew. I will try to answer the question together with Nicholas. But to make it clear, the 2G, 3G switch-off took place in December. It impacted some prepaid and low ASPU customers in January. So it was a temporary hiccup. We came with a number of solutions and proposals to support the customers who have the -- who were using noncompatible phone for VoLTE, 4G and so on. Unfortunately, we couldn't reach all the customers for obvious reasons, but it was a temporary hiccup. So it's behind us now.

Maybe Nicholas want to complete and elaborate on FBB and competition in the open networks.

Yes, absolutely. Thank you, Jean-Marc. So what we see is that some of our competitors is actually quite aggressive now in the broadband space and in the open networks. We even see competitors are selling right now at below cost, which we are not participating in. So when the regulations come in place, we, of course, see an opportunity to expand more and hopefully take market shares. But we are waiting for the regulations to come in place, and then we can get back more on that matter.

Okay. Can you give us a sense of how many customers you ended up losing from that 2G, 3G switch off? And I get your point on broadband that there's also intensified competition in the space that's also dragging on customers. But is there any sense of giving us -- is there any scope for you to give us a sense of the scale of drag from not being able to compete in the -- or not being able to compete in the open networks there at the moment?

No. But allow us not to answer the first question about the 2G, 3G drag because, of course, it's an information that we keep for ourselves. But once again, it's a temporary hiccup. It's behind us now. And regarding the FBB, we don't have any I would say, forecast or estimation to share either.

Our next question comes from the line of Nick Lyall from Berenberg.

Just coming back to the cost question, please, for 2026. I mean you mentioned about staff costs and procurement, I think in Keval's question there. But could you give us an idea of the scale of savings available to you? You've got roughly 3/4 of your staff savings done before the end of the first half in 2025. So it feels like the pull-through effect for 2026 is going to be minor. But also how far are you through the procurement process itself. Could you help us on that, please? Because some of the comments about inflation from maybe the geopolitical effects and others suggest there's not a lot to go. So could you help us with the absolute amount of savings you might see in '26 versus '25, please, so we can start to sort out the forecast.

Peter, can you take this one?

Yes. Nick, we are not calling out specific numbers, but the flavor around 2025 and '26, of course, as we have said and the main impact or a larger impact was seen in 2025 when we kickstarted this exercise and had some quick wins as well. So we had sizable savings last year. We will see benefits from it this year as well. So it is a contributor, of course, partly flow-through effects, some of it from last year and additional efforts that are doing this year. But the magnitude is lower simply because it's getting tougher and tougher and because we have some cost avoidance to take care of as well. But we're not calling out specific numbers, but it's a high priority also in 2026.

That's great. And the timing of any AI contributions. It sounds like maybe it's a benefit possibly to service revenue, predictability of consumers and things like that. There's nothing we need to think about sort of the AI contribution immediately is there?

I think it's -- we have benefits from this in different places, obviously, on how we meet our customers and how we approach them. On the cost side, we have, of course, efficiencies to reap the benefits from on how we're working, and we will get savings from that. But it's gradual. We have seen some of it, and we keep working on extracting more savings there.

Our next question comes from the line of Ajay Soni from JPMorgan.

I've got 2. The first is around business growth, which was very strong, and you mentioned IoT. So I was just wondering, can this growth continue around this mid-single-digit level because obviously, B2B revenues can be somewhat lumpy. And if it is going to continue at that level, what is driving that growth?

And then my second question is just back to the costs. So you still had pretty sizable redundancy costs in Q1. So could you tell us what your FTE reductions were in Q1? And I can understand maybe you don't want to give a number, but do you have a target for your FTE reductions for 2026?

Okay. So let's start with IoT. Stefan, do you want to answer it?

Yes. Ajay, thank you for the question. I think I'm going to answer it in a general perspective. And I mean, you're correct, and we talked about it before. We time to time have quarters with some swings due to larger wins, customer wins or larger rollout projects. So that can happen. Overall, I'm really happy that we have a well-diversified portfolio and that over time takes turns in driving the growth.

We have a focused portfolio with some decisions that we did last year, but it's still a well-diversified portfolio, which gives us this ability to have growth from different sources. And this quarter, we basically have growth on all product lines and then the stabilization of the fixed part and the fixed connectivity that we saw some quarters ago has continued, driven by deals that we're doing in that domain. And also that we see that there's a need of modernization of networks, indoor networks, et cetera, for the customers. There's modernization in regards to cloud, more capacity that customer needs to bring to their businesses. So this is driving continuous, I would say, need of modernization for our customers, and that helps our growth overall.

This quarter, IoT stands out. It's the highest growth driver, which we're happy to see. And it's driven by increased usage, which is a very positive sign. So not directly RGU. We have good RGU development as we've had before, but very much the usage part, which is good to see. And as I communicated before, I think we expect IoT to continue to grow on the basis of more deployments of IoT-enabled devices throughout the world.

So that's overall what we see at the moment. Looking forward, I think I commented the profile for the year. I wouldn't say that you should take into account Q4 or Q1 as the level of growth for B2B. You should rather look at the full profile for 2024 when you look at the profile for the full year. You know that we had a really good ending of last year. It's going to be hard and the comps in end of this year will be high. So it's going to be hard to see the same growth rate that we've seen in the last couple of quarters. So look at it from a full perspective of 2025, I would say, going forward for this year. I hope that gives you some color, Ajay.

And maybe I should -- Peter, I can continue with the second question around redundancies. Yes, you have probably noticed it in our notes that we have redundancy costs of around SEK 40 million in Q1. It corresponds -- to answer your question, that corresponds to roughly 45 people. We don't have any specific targets on downsizing this year. As we have said, last year, we had a big transformation with the 650 people reduction. This year, it's more about optimization. So it will be more of a gradual optimization never ending that will continue. And that's how you should probably look at the workforce side.

Our next question comes from the line of Viktor Hogberg from Danske Bank.

Just a continuation on the Tower commitments and the rating agencies. Could you say anything if you got something new on the kind of leverage cap you're looking at following the Tower deal? Is it still 2.6, 2.7? And then another question on the cash flow. Just working capital, do you expect it to be neutral this year. And the CapEx, how much was the delayed hardware CapEx now in Q1 that is going to be caught up during the rest of the year?

Okay. Peter?

Thanks for the questions. My favorite questions. Let's start with the leverage or the rating view on this. As you point out or as we've said before, we believe that the cap for our BBB rating is, as you said, around 2.6, 2.7, something like that based on the present context. On working capital, it's clear that this -- we have a clear seasonal effect. We have seen it before.

We are, of course, in the holiday season in Q4 with Black Friday and Christmas, we -- and also sometimes also on Apple launch, we're selling a lot of equipment and then it's a bit of time lag before we can get it financed by our financing partner. And that's a very big piece of the working capital upside we see in Q1 and that one, all else equal, will, of course, normalize or bounce back for the remainder of the year. And yes, we see some delays on the CapEx side. I can debate exactly which number, let's call it around SEK 50 million that delay, but it's, of course, a matter of definition.

Our next question comes from the line of Siyi He from Citi.

I have 2 questions relating to your fixed business. The first question is really a follow-up on your answers to Andrew's question earlier that you mentioned the pricing competition is particularly intense in the SDU market. Could you just let us have a visibility who are the operators that you see being aggressive on pricing? Are they MNOs or they are more like the ISPs?

And the second question is that I wonder if you can tell us if you have seen any changes on the cable trends after you have done the speed upgrades. I saw that landlord revenue are still declining by 4%. Just wondering why you are still seeing all these kind of rental revenues from MTU landlords are still coming down?

Okay. Thank you for the question. Nicholas is going to answer those. I'm not sure that we want to share information about competition, but Nicholas?

No, exactly. No. But we can see an overall competition in the market from all the players. So I won't comment that more. When it comes to our upgrade of the network, we see very positive reaction from our customers. And we see also that we have a strong offer in the market with the highest speed in Sweden in our network and with a very good footprint. So we, of course, are very optimistic about that going forward. So that's about it that I can comment right now.

We will now take our final question. And this question comes from the line of Abhilash Mohapatra from BNP Paribas.

Maybe just one on the Baltics. We've seen you continue to deliver very strong organic end-user service revenue growth in these markets. I think there was a perception that maybe the sort of price increases led revenue growth might slow in the future. So maybe just -- it would be helpful to hear your latest thoughts on the potential to use -- continue using pricing as a source for growth in these markets?

And then secondly, just any color there on your sort of thoughts heading into the spectrum auction that you mentioned in Lithuania. Just any thoughts around the potential size or any context that you can give us there would be very helpful.

Okay. Thank you for your question. I would say that the way price adjustments are applied in each Baltic country takes, of course, into account the positioning of Tele2 in this country, meaning that we are not doing anything crazy. We are just adjusting when we see an opportunity. We remain very well positioning in terms of price points. And of course, in these markets, the largest part of the sales are done in our own stores. So based on conversation and in discussion with the customers. So I would say it's a kind of very smooth and more and more sophisticated price adjustment that we apply in the Baltic countries. So no risk that Tele2 loses clear position as the best value for money in these countries.

Regarding the auction, the spectrum auction in Lithuania, I believe that the message that we wanted to convey here is that please don't forget about this auction in your computations. But so far, we don't have any indication of the price, and we cannot, of course, comment on the details of the auction.

That was our final question for today. This concludes today's conference call. Thank you for participating. You may now disconnect. Have a great day.

Good day, and thank you for standing by. Welcome to the Tele2 Q4 and Full Year Report 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jean-Marc Harion, President and Group CEO. Please go ahead.

Thank you, Sandra, and good morning to all, and welcome to Tele2's report call for the fourth quarter and full year 2025. With me, I have Peter Landgren, our Group CFO; Nicholas Hogberg, our new Chief B2C Officer and Deputy CEO; and Stefan Trampus, our Chief B2B Officer.

Please turn to Slide 2 for some operational highlights from the fourth quarter. We had quite an intense last quarter of the year. We successfully secured and expanded our 1,800 megahertz spectrum position during the Swedish spectrum auction in November. In early December, we shut down both our 2G and 3G networks in Sweden, marking a milestone in our company history. Combined, these achievements will support our efforts to further improve our 5G network which already covers 99% of the population and was recently recognized by OpenSignal as the fastest 5G network in Sweden.

We have delivered on our ambitious transformation and cost reduction targets, including for the reduction of our workforce. At the end of the year, we had canceled around 650 position at group level. We have so far as well addressed and renegotiated close to 350 supplier contracts, and this will continue during 2026. Moreover our tireless work on sustainability continues. And during the quarter, we were ranked #1 in Europe and second globally by Global Child Forum for our work on integrating child rights into the business. We were also recognized by CDP with an A score for climate change efforts for the fourth consecutive year.

Please move to Page 3 for financial highlights. Our deep transformation executed in record time has borne fruit and translated into not only a spectacular improvement of Tele2 profitability, but also into an accelerated growth of our top line. Our end-user service revenue growth has progressively improved throughout the year to reach a good 4% in Q4. Once again, underlying EBITDAaL grew strongly with 13% in Q4, marking the third consecutive quarter of double-digit growth.

On a full year basis, we exceeded most of our 2025 guidance KPIs. Tele2 full year equity free cash flow grew by a massive 42%, leaving our balance sheet very healthy. This was mainly driven by our operating cash flow plus working capital, which we have improved by 1/3 compared to 2024. Consequently, our Board of Directors proposes a dividend of SEK 10.50 per share, an increase of 65% from last year and to be paid in 2 tranches in May and October. We have also updated our financial policy and set guidance for 2026, which will soon be discussed.

Please move to Page 4 for more details on our results. Our 4% end user service revenue growth in Q4 has been driven across all our operations and core services. In addition to continued strong performance by Sweden business and the Baltics, especially positive this time is the return to growth in Sweden Consumer. The 13% growth in underlying EBITDAaL was driven by both transformation and revenue growth. Our Q4 equity free cash flow was impacted by a spectrum payment, which offset higher underlying EBITDAaL. Full year, Tele2 delivered SEK 6.2 billion equity free cash flow.

CapEx to sales picked up seasonally in Q4, but remained at low levels, around 11%, both in Q4 and for the full year. In Sweden Consumer, end user service revenue grew by 2% as growth in core services exceeded declines in Boxer TV and legacy services. In Sweden business, end user service revenue growth accelerated further to 7%, thanks to good growth in mobile, including IoT and solutions. The Baltic grew end-user service revenue by 6% and underlying EBITDAaL by 16%.

But let's move to Slide 6 for more details on Swedish Consumer. As mentioned in my CEO later, we have successfully leveraged our strengthened brand and new offers to drive significant traffic to our own channel, which now contribute to 2/3 of our sales. Our continued investment in stores and online capability have started paying off, and we are confident in the efficiency of our commercial model. Mobile postpaid end-user service revenue grew by 5%, up from 4% in Q3. Total mobile revenue grew by 4%, partly offset by continued decline in prepaid.

Fixed broadband grew end-user service revenue by 2%, mainly due to ASPU growth. Digital TV showed strong sequential improvement driven by healthy mid-single-digit growth in Tele2 TV, end-user service revenue growth, which now offset the continued, albeit smaller drag from Boxer TV. Following up on Boxer TV, the full year ended very close to our communicated estimate of around SEK 225 million revenue decline compared to 2024. Total consumer end-user service revenue grew by 3% in the quarter, excluding the Boxer impact.

Let's look at consumer KPIs on Slide 7. Mobile postpaid added a solid 16,000 RGUs in Q4, net of 14,000 one-off contribution relating to recognition of previously uncounted low ASPU RGUs. Mobile ASPU growth improved to 3% year-on-year, which is -- while it was still negatively impacted by IFRS 15 fair value adjustment in Tele2 customer base, Q4 also included a positive one-off. Adjusted for both underlying ASPU growth was still 3%.

Fixed broadband RGUs remained unchanged in Q4, whereas ASPU grew by 1%. Just like in previous quarter, we observed aggressive competition and escalating wholesale access fees, which hampered volume growth. TV returned to positive net intake with 3,000 RGUs added in Q4 as growth in Tele2 exceeded continued decline in Boxer. ASPU grew by 4% year-on-year, supported by more sports revenue.

Please move to Slide 8 for Sweden business. Sweden business continued to deliver strong end-user service revenue growth, this time reaching 7% driven by growth across operations. Mobile grew by 7%, driven by our IoT business, including some temporary project revenue of around SEK 15 million in the quarter. Mobile RGUs remained stable in Q4, while up by a solid 4% year-on-year, ASPU continued to be impacted by change in customer mix. Solutions grew by a strong 10%, driven by finalization of larger network and cloud modernization projects.

Please move to Slide 9 for Sweden financials. In total, Sweden end-user service revenue accelerated to 3% growth in Q4, driven by both business and consumer. Underlying EBITDAaL grew by 12%, driven by the end-user service revenue, workforce reduction, stricter prioritization and cost control. The cash conversion has improved to 69% over the last 12 months.

Let's move to Baltic financials on Slide 11. Baltics have maintained operational momentum with continued strong top and bottom line growth in Q4. Total end-user service revenue grew at 6%, supported by price adjustment during first half year. Q4 was the fourth consecutive quarter in which all markets delivered double-digit growth in underlying EBITDAaL, delivering a total growth of 16%, led by Estonia at 41%. Cash conversion increased to a strong 81% during the last 12 months, reflecting increasing EBITDAaL margin.

Let's move to Slide 12 for Baltic operating KPIs. The total postpaid base in the Baltics increased by 23,000 RGUs in Q4, driven by Latvia and Lithuania. Prepaid declined by 68,000 RGUs, largely due to regulation and migration to postpaid. Blended organic ASPU grew by a strong 11%, driven by price adjustment and continued prepaid to postpaid migration.

With that, I hand over to Peter, who will go through the financial overview.

Thank you, Jean-Marc, and good morning, everyone. Please turn to Page 14. First, a couple of comments on the group P&L for the quarter. Total revenue grew by 4% organically, driven by service revenue growth of 4% with contribution from all operations and equipment revenue growth of 7%. Both underlying EBITDA and underlying EBITDA after lease grew by 13% organically, thanks to sharp cost control across the group, and the service revenue contribution.

Then over to the full year P&L. Both underlying EBITDA and underlying EBITDA after lease grew by 11% organically. The group reached a full year underlying EBITDAaL margin above 39%, which implies an increase of 3.4 percentage points compared to 2024. Items affecting comparability ended at SEK 600 million, of which SEK 500 million were restructuring costs related to the transformation, fully in line with our expectations.

Net financial items decreased year-on-year, thanks to both lower interest rates and reduced debt levels. By the year-end, our average interest rate was 2.8%, with a debt mix of 68% fixed rates and 32% floating rates.

And income tax finally, sorry, increased year-on-year due to higher taxable profits. And let's move to the cash flow on Slide 15. In Q4, equity free cash flow of SEK 777 million was generated, broadly in line with last year. The final payment of the Swedish spectrum secured in 2023 was absorbed by strong growth in underlying EBITDAaL and lower CapEx. But let's focus a bit more on the strong full year cash flow. CapEx paid, excluding spectrum, decreased by around SEK 630 million. This was mainly thanks to successful prioritization and partly due to some investments being postponed to 2026.

Changes in working capital contributed almost SEK 300 million to the cash flow, supported by optimized inventory levels, but also increased redundancy provisions. Taxes paid decreased by around SEK 155 million, thanks to a tax refund earlier in the year. Net-net, full year equity free cash flow reached SEK 6.2 billion, which means a 42% growth compared to last year. This translates to almost SEK 9 per share.

Please turn to Slide 16 and our capital structure. By year-end, economic net debt amounted to SEK 24.3 billion, a reduction of SEK 1.9 billion compared to 2024. This was enabled by the cash generated in the business, exceeding the dividend distribution. Today, we also announced that the Board has updated the financial policy. With this policy, the aim is to provide attractive shareholder remuneration, while preserving a strong balance sheet and financial flexibility. The proposed dividend demonstrates a sizable distribution, while our leverage of 2.1x underlying EBITDAaL after lease will comfortably stay within the desired investment-grade range.

And with that, I hand over to Jean-Marc for a follow-up on our 2025 guidance and then some comments on our 2026 guidance.

Thank you, Peter. Please turn to Slide 17 for some comments regarding our performance relative to our 2025 guidance. Overall, we delivered clearly ahead of our initial full year 2025 guidance. While end-user service revenue growth was in line with guidance, as you probably remember, in Q2, we raised guidance on underlying EBITDAaL from initially mid- to high single-digit growth to slightly above 10%. We can now conclude that we even exceeded that target by the massive full year growth of 11.4%. In Q3, we also reduced our CapEx guidance from around 13% to around 12%. We ended the year at 10.8% due to the successful prioritization and the deferral of some planned investment to 2026.

Please turn to Slide 18 for our 2026 guidance. As we leave 2025 behind and look ahead, our strong performance during last year has obviously raised the bar and established a new reference point for Tele2 profitability. Our ambition for 2026 is to consolidate the transformation of the company, continue improving our profitability and secure our revenue growth despite the uncertainties of the geopolitical landscape. We have, therefore, decided on the following full year guidance for 2026, low single-digit organic growth of end-user service revenue, low to mid-single-digit organic growth of underlying EBITDAaL, CapEx to sales in the range of 10% to 11%. It is important to note that the organic growth rate for underlying EBITDAaL excludes the impact of the Baltic Tower transaction that we expect to close in Q1.

I hand back to Peter for some additional comments regarding 2026 before we open up for Q&A.

Thanks. I would like to start with then a reminder about the Baltic Tower transaction, which is still expected to be finalized in Q1. Upon closing, we expect cash proceeds of around EUR 430 million after transaction costs. And as previously stated, the transaction is expected to have a negative impact on underlying EBITDAaL of around EUR 35 million on a full year basis.

Finally, the CapEx avoidance is limited to passive equipment, and that's already reflected in our 10% to 11% CapEx to sales guidance for the group.

And then a few additional comments on the cash flow for the full year 2026. In Q1, we'll pay SEK 117 million for the Swedish 1,800 megahertz spectrum secured in November 2025. The other half will be paid later in 2028. Also worth mentioning that there might be spectrum auctions in the Baltics during 2026. On financial items, excluding leasing, we estimate full year net payments of around SEK 650 million. Finally, on taxes, we estimate full year payments of around SEK 1.4 billion.

With that, I hand over to the operator for Q&A.

[Operator Instructions] We will now take the first question coming from the line of Andrew Lee from Goldman Sachs.

I had 2 questions, both -- or one around the growth guidance or one around capital allocation. So just on the growth guidance, could you just talk through the scenarios you see that would support a low single-digit EBITDA growth guide for 2026. Obviously, Q1 has pretty easy comps. And that means that your low single-digit growth guidance would imply basically no EBITDA growth, I think, for the remainder of the year. Are you missing something in terms of what's happening in the cost base? Or something else that didn't really transpire in 4Q? Any help there would be really useful.

And then secondly, just on the capital allocation. The SEK 10.5 dividend is obviously a meaningful increase. You haven't split it by extraordinary and ordinary dividends. Should we see that SEK 10.5 DPS as a floor now for shareholder returns going forward, given I think that leaves you below or notably below 2x net debt to EBITDA by the end of the year?

Yes, Peter will take the 2 questions. Yes.

Okay. If we start with the second question around the floor, it's correct that the dividend, there is no distinguished between ordinary or extraordinary dividend. That's a conscious decision. And I think we're pleased that we are able to distribute such a sizable dividend, thanks both to the strong cash generation in 2025 and also the strong balance sheet that we have.

Looking forward, we're not communicating in the sense of that this is the floor. We have 2 things that enables dividends going forward, and that's obviously the continuation of cash generation. And secondly, we still have a very healthy balance sheet to enable us to have attractive shareholder remuneration also going forward. But I wouldn't see this as a floor. That's not what we're communicating today. We're communicating a sizable dividend of 118% of equity free cash flow, and we communicate a policy, which enables both a solid rating and good distributions going forward, but not more than that.

Regarding the growth guidance, I would say that when you look around, it's -- of course, it's important to remain cautious about the commitment we take to our investors. That's -- as a reminder, and we insisted on that point, we have raised the bar for profitability. So the starting point is much higher this time. So we continue -- we will continue improving the EBITDAaL and the EBITDAaL margin over the time, thanks to the continuation of the cost discipline and the strict prioritization that we have implemented in 2025. This will not change. But in the meantime, we are observing how the market will evolve and the possible impact on the customer behaviors.

So we have made the company today much leaner and much more agile than it was 1 year ago. So the adaptation, the capacity of Tele2 to adapt to any circumstances to deliver anyhow or targets for margin and cash will not be impacted by or cannot be impacted by the evolution of the landscape. So that's why we remain a little bit careful when looking forward in 2026, and we will see how the situation develops.

Just a quick follow-up. Just -- so am I to interpret Jean-Marc, your comments as in you've built in kind of uncertainty around the kind of the macro environment to that EBITDA growth guide rather than implicitly reflecting an increase in costs, marketing costs, which went up at 1 point during 2025 or some incremental costs around stepping away from third-party retailers or something that...

No, no. If this was the reason for you to ask the question, no, it's not the case. So we remain quite scarce in terms of all kind of expenses, including marketing expenses. We, of course, keep our ambition and confirm our ambition to develop our own channels and reduce progressively the dependency on the third-party channels because of the behaviors and the quality of the sales that we generate through these third-party channels. But definitely, the reason for us to come with this guidance is, of course, the observation of the context.

We will secure the cost base of Tele2 as a continuation of the discipline that we have implemented in '25. Of course, we see the top line continue growing, but depending on the evolution of the context, we may need to adapt. That's the only rationale. But definitely, no increase, no major change in the cost base if this was your question.

We will now take the next question from the line of Ondrej Cabejšek from UBS.

I've got 2 questions as well. One is on CapEx. So Peter, you said that some CapEx is spilling over into 2026 from 2025, but the 2026 CapEx guidance is already, I would think, a positive surprise. So my question would be, does that signal to us that Tele2 can be quite firmly at around 10% CapEx to sales from 2027 onwards? That's the first question.

And then the second question would be maybe asking a different way about the dividend. So in terms of the leverage policy that is now just to remain investment grade. So I was thinking, first of all, is there a soft steady-state target around, say, 2x that you wish to be on? And then implicitly also, what is the -- or in addition, what is the limit under the new definition of remaining investment grade, taking into consideration the impact from the Tower deal? Like what is the headroom basically for you to remain investment grade? What is the maximum ratio is the question?

Okay. Ondrej, thanks for the questions. If we're starting with the CapEx guidance, good that you're positively surprised. That's always nice. 10% to 11% is what we call out now. We know that we have things moving in different directions in one way we -- one movement is, of course, that the rollout in Net4Mobility is slowing down, which is helping our CapEx ratio. On the other hand, we have other investments that we need to take care of, for instance, making sure that we have the rollout complete in the Baltics, and we landed on the 10% to 11% is a reasonable range from that perspective.

What that means for 2027 is nothing we announced today, but we think that this level, which we talk about now is quite representative to where Tele2 stands today. When it comes to the dividend or the financial policy and the range, it's true that, as you call out, that the Tower transaction will have implications on how we look at leverage going forward in 2 ways. One is the obvious one that the leverages will else equal decline by the Tower transaction. So we'll see lower leverage once that's concluded.

On the other hand, as you point out, the acceptance from the rating firms will also be reduced due to commitments we have in the new tower arrangement. And I would say right now, I think that the route for leverage after the Tower transaction will probably be somewhere between 2.6 and 2.7. That might evolve over time, but to give some kind of engagement right now, how we look at the limit for where we can be in the new environment. Hopefully, that's covering your question.

It does. If I may, one quick follow-up. Regardless of what the dividend will be next time around, if it's SEK 10.5 or there's a bit of a reset. Is there an ambition that you can kind of share -- and I know this is the Board, et cetera, but is there an ambition to have maybe like a mid-single-digit growth in the dividend, just like many of your peers do as an example?

No, the ambition is to have attractive shareholder remuneration and stick to this policy. In the end, as you point out, it's ultimately the Board that decides what is the right level every year. I think our focus here is to generate as much cash as possible because that's fundamentally what enables dividend going forward, but nothing more than that for now.

We will now take the next question from the line of Owen McGiveron from Bank of America.

It's Owen McGiveron at Bank of America here. So mentions of releveraging and distributing and share buybacks have been emitted from the new financial policy. My question is if these remain in your toolkit? Or should we now expect capital return announcements to be a once-a-year kind of event at full year?

Thanks for the question. I think for now, the route is, as you also see from the announcement today, is dividends, and that's what you can expect for now going forward. We're not ruling out share buybacks at some point. But right now, that's not what we see coming.

And on the announcement, I think we -- of course, you can expect dividend announcements along with the Q4 report every year going forward as well. If there will be something in between at some point, it's a bit speculative and might happen, but nothing will -- we'll not rule it out, but we don't have a firm decision on when to announce dividends. For now, this is a dividend we call out now in Q4 to be fair.

We will now take the next question from the line of Andreas Joelsson from DNB Carnegie.

I had a question on the KPIs actually. Looking at Sweden and your growth initiatives that you have for 2026, we can see that mobile ARPU is trending quite positively, while ARPU within broadband is at a somewhat slower pace. So it would be interesting to hear your plans to continue growing ARPU in both areas in Sweden going forward?

Nicholas is going to answer your question.

Thank you for your question, Andreas. Well, so I think we are ready to capture both long-term and short-term growth. And especially during 2026, we will unleash the potential on our existing customer base and increase the value of the base through cross-sell and upsell, which will be prioritized. And we will do that through many initiatives, working with customer intelligence as the main driver, and we will make sure that we maximize our customer interactions and sales through own channels as said before. And we now have our own -- sales through our own channels is now representing approximately 2/3 of the total sales, which is important going forward to establish a strong relationship with our customers.

So we will optimize that through sophisticated data analysis and AI tools, and that's an ongoing work to be able to maximize cross-sell and upsell. So also with that said and what Jean-Marc said earlier, we are now increasing our physical footprint and opening up new stores, also in areas where we have historically been underrepresented. So this will help us. We now have the fastest 5G network covering 99% of the population. So given that, that gives an excellent customer experience, it allows us to break new ground and develop our market share in areas where we historically haven't had a very strong market share.

So I think we see a potential of growing during 2026 in our customer base. When it comes to broadband, we have our network, and we're focusing on delivering excellent mobile broadband to our customers, but also we're happy to having our own network, broadband network, and we are now strengthening our coax network, and we are going to launch 2,500 megabit per second service to our customers to increase our strength in that area.

Perfect. And just one follow-up on the dividend. Would you be happy to continue to pay out more than 100% of equity free cash flow for the dividend if needed, so to say?

Yes. I think there's nothing in the policy that stops us from doing that. And as you can see as a demonstration on that today, the proposal is 118% of equity free cash flow. So that might -- it's a bit speculative, but that might, of course, happen depending on the context and the financial outlook and our abilities. The limit is -- what's committed is at least 80% of equity free cash flow as ordinary dividend. That's what we keep stating.

We will now take the next question from the line of Fredrik Lithell from Handelsbanken.

I'm going to stay with one question. And maybe Stefan, if you could put some color on how you see the business-to-business market developing? What you see in front of you? And if you can sort of split that up in discussions around sort of the large enterprises, the public sectors and the small company segments and how they develop would be interesting.

Thank you, Fredrik. Well, if we start with the different segments then on the micro SME segment, I mean 2025 was a challenging year in terms of bankruptcies. It's the highest level in many, many years. At the end of the year, we saw a slowdown of the bankruptcies, which, of course, also is seen in our customer base. So it has been stabilizing in the smaller segments.

I think the demand is still there from SMEs. And if you look at on a year-on-year growth. I mean, we had good growth and demand in SMEs and the public sector. If we talk about the larger segments, I would say that the public sector must have been a little bit squeezed from a budget perspective coming into the end of the year, it has been visible in some of our product lines.

And in the larger segment, I would say that the larger customers have been a bit cautious. I mean, of course, it's not the same thing for all customers, but I would say that we have seen some cautiousness in investments from larger segments. So that is how we see the development of the different segments. And of course, going into 2026, we hope for a better macro, better demand in general. I mean, we've been hoping that the macro will turn for many times now. But let's see how it develops. Of course, it will help us.

From a competitive situation, I would say that we've seen high competition aggressiveness in the micro and SME segments, especially from Telia and Telenor, where they have, I think been very high on commissions to external partners and also on below-the-line pricing. So that's what we've seen. But on the larger segments, we've also seen that both Telenor and Telia have been keen on keeping their customers and finding new ones looking at how they have acted on different deals. So that's a little bit color on both the competitive side and the segment side. I hope that gives some color, Fredrik, to the situation.

Let me add one comment on what Stefan commented. It's important to remind us that in 2025, we've been through a very deep transformation of our B2B business because the observation we made at beginning of last year was that not all the segments for B2B were, I would say, delivering the same profitability. So thanks to the transformation driven by Stefan, the prioritization of our portfolio, the focus on future-proof technology, a lot of automation in the process.

We are now comfortable to grow all the segments, of course, with the preference for the core business but not only the solutions as well. And that gives us the flexibility to push some segments depending on the evolution of the market. So this is super important. We now have, I would say, a fully profitable activity on the B2B side, and we can accelerate the revenue when we see the opportunity in every segment.

We will now take the next question from the line of Erik Lindholm-Rojestal from SEB.

Two questions from me, if I may. So I just wanted to follow up on the Baltic Tower Co transaction. You've spoken about this already, but sort of when you are seeing the completion of this and given what you said about leverage, could this be a trigger for announcing further dividends?

And then the second question, just on Sweden B2B. I mean, IoT was really strong. Anything to call out there in terms of the drivers to this strength? And also solutions looked really solid, and you said there were completion of some projects. But do you see this strength continuing ahead?

Peter, on the Tower Co.

Thanks for the questions, Erik. I don't think you should expect more dividends just because of the closure of this transaction. What we announced today is what we announced today, and let's see what will be concluded by the Board going forward, but not -- no explicit expectations just because of that. It's -- as we have discussed, we will see a sizable decline in our leverage by the transaction. But at the same time, the commitment in the Tower agreement in the 20 years agreement will lead to that the acceptance for high leverage is declining, is also going down accordingly. So that's what I would say at this point.

And we expect to close the transaction in Q1. On the B2B, IoT?

Yes. Thanks, Erik, for the question on both the IoT and the solutions part. Jean-Marc was alluding to it a little bit in his speech in the beginning that we have a healthy growth mix from all parts, I would say, of the business. It's driven both by mobile, cloud PBX, networking solutions. In the networking solutions area, the growth is coming from managed services and service agreements, both from new and existing customers.

And then we also have the IoT part. And the solutions business is very much driven by customers needing to do network and cloud modernization. And I think that will continue. At what pace? I mean, it differs a little bit about how our customers can make investments in different areas. But for sure, it will continue. It can go up and down between quarters, and we talked about that before that we can have large rollouts for some quarters and then we have a buildup of revenues, et cetera. So that can differ over quarters.

On the IoT side, we have a bit of an elevated increase this quarter, as Jean-Marc was alluding to, with SEK 15 million due to some larger projects. Let's see how the customer demand is there for specific projects. So that's something we are continuously in discussions with our customers. But in general, the IoT growth, we expect that to continue. The underlying growth in that business is really good. And let's not forget that, I mean, excluding this SEK 15 million, I mean, we are on a high level, actually picking up a little bit from Q3 to 5.4% growth, excluding this, what we would call project rollouts then or one-off revenues.

So overall, a solid quarter in regards to the growth and looking forward to 2026. But I wouldn't say that you should take Q4 as the base for the growth going forward. As I said, it's a bit -- it can swing between quarters. I think the profile that we had looking forward, more looking like 2025 in full year, so to say, that's what we look at.

We will now take the next question from the line of Nick Lyall from Berenberg.

Can I just come back to the growth point, please, on service revenues in particular. I mean you've just done 3.7% in Q4 for the group or 2.6% in Sweden...

Nick, can you speak louder because we are struggling a little bit to hear you.

Sorry, can you hear me better now?

Yes, a little bit better.

A bit better. You've just done low single digit -- so you said low single-digit revenue guidance or service revenue guidance for '26, but you've done 3.7% in Q4 and especially with the Boxer effect and the accounting effects falling away, why not more aggressive into 2026, please? And I do realize you've talked a little bit about conservatism and macro. But could you give us more guidance why particularly after the comments you've just made on consumer where you've talked about boosting the value of the subs base. Why is that not coming through more aggressively in 2026, please?

Peter?

Yes. Thanks for the question, Nick. I would say first on maybe building on what Stefan said about Q4 and full year. We are, of course, very happy with the sequential improvement in Q4, but I think we should be -- avoid to be too carried away of taking that as a single data point for looking at the full year 2026. We had some -- we benefited from some tailwind from one-offs in both B2B and B2C.

Going forward then, as Stefan said, we're positive about the B2B development, albeit not at the level as in Q4. On the B2C side, you're perfectly right that we don't have the Boxer headwind. Boxer will obviously continue to be presumably a decline, but not at the elevated levels as we saw in 2025. And we're positive to our core services, but still coming back to what we said in the beginning, a bit humble around the development around us and how things will progress going forward.

And then I think we should also keep in mind that we have support from a fantastic growth in the Baltics. We, of course, expect Baltics to continue to grow, but you might not be able to expect such a growth the Baltics going forward. So we expect support from all 3 business lines, but altogether, we find this a good guidance for now.

Yes. I believe that a general note about our 2026 guidance is, as we stated in -- earlier in the presentation is that we are not starting from the same starting point. So we have raised the bar, and we will continue, of course, developing, but from a higher starting point.

We will now take the next question from the line of Felix Henriksson from Nordea.

I wanted to revisit your thoughts regarding M&A in light of your new updated financial policy. Do you see sort of any opportunities for M&A, for example, in the fixed business in Sweden or somewhere else? Or should we sort of conclude that the use for excess cash will be basically to distribute that back to the shareholders?

I will take this one. Of course, we are scanning the market, and we'll continue doing so. It's part of our role and part of the mission that the Board of Directors is asking us to do. For the time being, there is no deal on the table, and I believe that one of the reason for that, especially considering what the sector that you are referring to, the fixed business is that we are waiting for the regulation of the single dwelling units, which should materialize this year before observing the consequences on the new landscape. But on a general note, we continue scanning for the opportunities. But so far, we don't have any project on the table.

We will now take the next question from the line of Ulrich Rathe from Bernstein.

I have 2 questions, please. The first one is on working capital. That was a major contributor in 2005 to -- 2025 to free cash flow. So I was wondering how much further you can drive that? Working capital is at some point, structurally listed in terms of what it can provide, but we're not quite sure from the outside how much further you can drive your optimization efforts.

Second question is on the terms of the Tower Co. I mean so far, we know cash impact on you, the general structure of the deal with Manulife and then also the EBITDA impact, but we don't know much about what the structure of the underlying agreements are. Now you're highlighting here that the agencies are taking a view. Presumably, they know a little bit more about it, but their focus is on creditor protection, which is not necessarily aligned with what equity investors are considering when they look at such deals and what they do to the value creation. So I was just wondering what further color you can provide on what this Tower Co will do to the Tele2 case? In particular, 2 aspects here would be the EBITDA impact in further outer years. The second one is how we are supposed to value your 50% stake in this Tower Co, if we don't really know what you've agreed there in terms of terms?

Peter, you can...

Yes, I can start with the working capital...

Yes. And continue with Baltic Tower Co.

Yes. On working capital, first of all, of course, we're very pleased with the contribution of close to SEK 300 million in 2025 based on a continuous work and persistency on optimizing the asset side and the main driver is then optimized inventories. That can obviously not -- as you point out, not continue forever. It will continue to be top of our agenda to make sure it's as optimized as possible in 2026. But we also know that, for instance, we have some severance provisions that we need to settle, and we're also dependent a bit on the commercial activities and what will happen around both Hans funding and other things around the business. So exactly where it will land going forward is unclear, but I don't think you should expect it to be repeated again as this swings back and forth. We continue to work on it, but 2025 was an extraordinary good year.

So that's on that. On the Tower Co, the information we provide right now is the things we have called out, the annual EBITDAaL impact of negative EUR 35 million and that's what you should expect in the near term. Then of course, we -- it will evolve, and we will learn more, but that's what you should expect for now and also the upfront cash proceeds and the size in terms of number of towers and rooftops has been called out. And also there is a 20 years agreement around those towers. That's what we call out now. Obviously, in the financial reports going forward, we will own 50% of this company and the contribution from that will, of course, be, to some extent, disclosed in our numbers because it's part of our consolidation in the end, even though not consolidated in our EBITDA numbers, but as a separate line, so you will get visibility there.

Otherwise, more strategically, we're doing -- as a reminder, we do this to be the first pan-Baltic Tower company and build a strong company there. And of course, we have, as shareholders, expectations of creating a successful business there as well. But at this point, this is what we call out, and it will, of course, evolve during 2026.

We will now take the next question from the line Siyi He from Citi.

I just have a follow-up question on the broadband -- consumer broadband trend. It seems that the broadband has stable for this year. I'm just wondering what are the reasons behind the flattish broadband trends, whether you see some pressure in your cable base, or you have chosen not to expanding into the fiber areas because of the pending change of regulations.

And if I can also follow up on the change of regulations, just get your view on what could be the potential changes? And maybe your view on how to benefit from the improvement in regulations, either you think it's fine to benefit through organic growth? Or you think the buying infrastructure assets could be a better option?

Okay. Well, I will take this one first, and Nicholas will complete, if necessary. But basically, on the broadband, we already commented on that in previous exercises. We see -- we have, of course, to deal with the complexity of the market for the fiber part. So the open fiber networks in Sweden are owned by a variety of different owner and operators, a lot of them being local ones. And what we see is that not only there is an intense competition on these networks, but sometimes, the retail prices are capped by the landlord for instance, and there is a permanent increase of the wholesale prices that squeezes the operator. So this situation is probably not sustainable on the long run.

And of course, for the time being, it's a situation that we see in the buildings, mostly because we are waiting for the regulation that will give us access to the single dwelling units, the villas that represents half of the households in habitation in Sweden.

Saying that in the waiting for the -- for this regulation, as Nicholas has commented, we are emphasizing the benefits of our DOCSIS infrastructure that we have partly upgraded to Remote PHY in the areas where we were suffering from congestion. And now we are reshuffling the spectrum, and we have started offering up to 2.5 gigabit per second Internet, which is a performance, of course, that is very rarely matched by fiber in Sweden, and we see that as a competitive advantage. So we are capitalizing on our footprint. And of course, we will wait for the new regulation to materialize before taking new positions on the fiber. But for the time being, the situation of the fiber in Sweden is not optimal. Nicholas, do you want -- no?

No, no further questions or comments.

We will now take the last question from the line of Abhilash Mohapatra from BNP Paribas.

I've got 2, please, mostly clarifications. Firstly, on the dividend. You mentioned that the SEK 10.50 is not a flow, but at the same time, the policy does not stop you from paying more than 100% of the equity free cash flow. My question is, what exactly will determine where you end up on the payout on a year-to-year basis? How do you think about it given your strong cost cutting will probably keep growing free cash flow? So how do you decide on the dividend payout on an annual basis?

And just related to that, is there a sort of numeric leverage range, which is linked to your investment-grade target? Is there a number that we can think about? And sorry, just one other clarification. Earlier in the prepared remarks, did you mention a cash tax number for 2026 of SEK 1.4 billion? Sorry, if I misheard but just if you could clarify.

Okay. On the dividend, first of all, just stating the obvious that it's, of course, in the end up to the Board, what they will propose and ultimately, the AGM. What sets the limits for next -- for the future? First of all, this financial policy gives a framework where to land. And that's the framework we need to live with and play based on that or will do so.

The fundamental thing for future dividend is the cash generation again. But then exactly how a large portion of the cash generation that will be distributed. That's nothing that we can comment on now, obviously, but we commit in the policies is that it's at least 80% of the equity free cash flow generated that will be distributed. That's the floor we talk about.

When it comes to the -- if I understand your leverage question, and then I'm repeating that answer and hopefully it covers your question is that based on the context right now, that might, of course, evolve. But as we see right now, after the Tower transaction, we believe that with the ceiling for BBB is around 2.6 or 2.7 in terms of leverage. But again, it's based on the context and there are also other metrics, but that's what we expect. And yes, on tax payments for 2026, we, at this stage, early in the year, expect SEK 1.4 billion of payments.

Thank you. There are no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.

Thank you for standing by. My name is Van and I will be your conference operator today. At this time, I would like to welcome everyone to the Tele2 Q3 Interim Report 2025. [Operator Instructions]

I would now like to turn the call over to Jean-Marc Harion, President and Group CEO. Please go ahead.

Thank you, and good morning. Welcome to Tele2's report call for the third quarter of 2025. With me, I have Peter Landgren, our Group CFO; and some members of our group leadership team.

Please turn to Slide 2 for some financial highlights. End-user service revenue grew by 2% in Q3 despite the continued impact of the discontinuation of Boxer TV terrestrial distribution in Sweden at the beginning of the year. Underlying EBITDAaL continued to increase rapidly growing to -- growing by 11% during the quarter, mostly thanks to excellent transformation efforts. Once again, our equity free cash flow was very strong, totaling SEK 1.8 billion in the quarter, which is 60% more than last year.

At the end of September, we had reduced our workforce by slightly more than 600 positions, thereby already reaching the lower end of our targeted range of 600 to 700 by January 2026. September marked a major milestone as we completed the 5G upgrade across our entire Swedish network. Coverage jumped from 25% to 90% of the territory, now reaching virtually 100% of the Swedish population. And just recently, OpenSignal named Tele2, the global leader in 5G video experience.

We are also stepping up our long-term network ambition in the Baltics. The creation of the first pan-Baltic TowerCo is a key enabler supporting our future expansion while unlocking value from our infrastructure there. The transaction is expected to close in Q1 2026. Finally, we are proud to have been recognized by Time Magazine as one of the World's Best Companies, a ranking based on employee satisfaction, growth and transparency in sustainability.

Please move to Page 3 for more details on our results. As said, end-user service revenue grew by 2% organically in Q3, driven by continued strong growth in the Baltics and accelerating growth in Sweden. Excluding the Boxer impact, group end-user service revenue grew by 3%. The 11% growth in underlying EBITDAaL was driven by the transformation, improved profitability in Sweden business and the Baltic revenue growth. Our strong equity free cash flow benefited from lower paid CapEx and better working capital year-on-year, which Peter will soon discuss in more detail.

After reaching 12% in the first half year, our CapEx to sales ratio fell to 11% for the first 9 months due to additional reprioritization and replanning. As a result, we have decided to lower our full year guidance, which I will return to shortly. Our leverage fell to 2.0x ahead of the final dividend tranche, which was paid last week.

In Sweden Consumer end-user service revenue was unchanged as growth is in core connectivity offset the decline in Boxer TV following the decommissioning of terrestrial distribution at the beginning of the year. In Sweden Business, end-user service revenue growth accelerated to 5%, thanks to good growth in mobile and solutions. The Baltic grew end-user service revenue by 7% and underlying EBITDAaL by a massive 20%, matching Q2 performance.

Let's move to Slide 5 for more details on Swedish Consumer. Mobile postpaid end-user service revenue grew by 4%, up from 3% in Q2. Total mobile revenue grew by 3%, partly offset by continued decline in prepaid. Fixed broadband grew end-user service revenue by 3%, mainly due to ASPU growth, while Tele2 TV grew by a low single digit, end-user service revenue for DTV declined by 8% due to the Boxer migration. For full year 2025, we continue to anticipate Boxer revenue to be roughly SEK 225 million below 2024 with minor year-on-year impact on EBITDAaL. Total Consumer end-user service revenue remained unchanged in the quarter. Excluding the Boxer impact, consumer grew by 2%.

Let's look at consumer KPIs on Slide 6. Mobile postpaid added a solid 8,000 RGUs during Q3. Mobile ASPU growth improved to 1% year-on-year, but was still negatively impacted by IFRS 15 fair value adjustment in Tele2 customer base, which did not have handset binding until almost 2 years ago. Excluding this adjustment, ASPU grew by 2%. As mentioned in my CEO letter, successful rebranding of our main brand and strong demand for iPhone 17 led to our best iPhone launch in years, reinforcing the shift towards own channel sales.

Fixed broadband grew by 1,000 RGUs in Q3, whereas ASPU grew by 2% due to price adjustments. Similar to Q2, we observed aggressive competition in open networks, along with escalating wholesale access fee, which hampered volume growth. Our TV business further stabilized as the customer base approaches a neutral development Tele2 TV RGUs grew driven by our recently launched flex TV offer, whereas Boxer TV RGUs declined.

Please move to Slide 7 for Sweden Business. In Q3, Sweden business once again delivered a strong end-user service revenue growth, reaching 5% with all main product lines growing, while the Micro segment remained stable, we saw continued growth in IoT and our larger segments, reflecting the evolution of mobile ASPU year-on-year. Mobile grew by 5%, driven by our IoT business and continued solid RGU growth among larger customers. Solutions grew by a strong 8%, driven by Network Solutions and Cloud PBX, whereas fixed remained stable. A new partner program was launched in Q3 to enhance quality and customer satisfaction. As a result, around 60% of the specialized reseller partners for SMEs were phased out.

Please move to Slide 8 for Sweden financials. All in all, our Swedish end-user service revenue improved to 1% growth in Q3, driven by business, 2% without Boxer impact. Underlying EBITDAaL grew by 8%, driven by workforce reductions, stricter prioritization and cost control from a quarter-on-quarter perspective, growth was partly offset by substantial sequential increase in marketing expenses. As you probably noticed, we invited Frank back. Network operating costs increased due to the expansion of our mobile network and notable cost inflation in access fees from open networks. The cash conversion has improved to 66% over the last 12 months.

Now let's move to Baltic financials on Slide 10. Our Baltic operations have maintained operational momentum with sustained strong top and bottom line growth in Q3. Total end-user service revenue continued to grow at 7%, supported by price adjustment during the first half year. Q3 was the third consecutive quarter in which all markets delivered double-digit growth in underlying EBITDAaL, driving a total growth of 20%, same as Q2 and with Estonia posting a massive 53%.

Cash conversion increased to a strong 78% during the last 12 months, reflecting increasing EBITDAaL margin. As part of ongoing efficiency efforts, we have now initiated project to centralize support and IT across our Baltic countries to reduce operating costs and shorten development time lines in the coming years.

Let's move to Slide 11 for Baltic operating KPIs. The total postpaid base increased by 21,000 RGUs in Q3, driven by Lithuania and Latvia. Prepaid increased by 8,000 RGUs. Blended organic ASPU grew by a strong 12%, driven by price adjustment and continued prepaid to postpaid migration.

And with that, I hand over to Peter, who will go through the financial overview.

Thank you, Jean-Marc, and good morning, everyone. Please turn to Page 13.

First, a few comments on the group P&L for the quarter. Total revenue grew by 1% with end-user service revenue up by 2%, driven by the Baltics and Sweden B2B. Our equipment revenue declined in a continued slow handset market, but a successful launch of the new iPhones supported equipment revenue growth in Sweden B2C. Both Underlying EBITDAaL and underlying EBITDA after lease grew by 11% organically, thanks to the sharp cost control across the group and the end-user service revenue growth. Worth noting is that the group now has reached an underlying EBITDAaL margin of 40% year-to-date.

Items affecting comparability were at SEK 130 million in the quarter, impacted by redundancy costs related to workforce reductions. Net financial items decreased year-on-year, thanks to both lower interest rates and reduced debt. In Q3, our average interest rate was at 2.8% with a debt mix of 66% fixed rates and 34% floating rates. Income tax increased largely due to higher profits.

Let's turn to Slide 14 and our group cash flow. CapEx paid decreased by around SEK 175 million. This was partly due to successful prioritization and partly due to the deferral of planned investment to 2026. Changes in working capital remained quite neutral in the quarter, slightly impacted by reduced liabilities.

Net financial items paid, excluding leasing decreased year-on-year, thanks to the reduction of interest costs along with payment timing. Net-net, equity free cash flow added up to a strong SEK 1.8 billion in Q3, an improvement of SEK 670 million compared to last year. And over the last 12 months, equity free cash flow has reached SEK 9 per share.

So let's move to Slide 15 and our capital structure. End of Q3, economic net debt amounted to SEK 22.9 billion, reduced by SEK 3.3 billion compared to the end of 2024. This was enabled by the cash generated in the business exceeding the payout of the first dividend tranche in May. Our leverage of 2.0x underlying EBITDAaL remains below our target range, thanks to the strong profitability and cash generation. Adjusted for the payout of the final tranche of the ordinary dividend last week, pro forma leverage would have been at 2.2.

And with that, I hand over to Jean-Marc for some comments on our 2025 guidance.

Thank you, Peter. Please turn to Slide 16 for our upgraded 2025 guidance. Following the first 9 months of the year, we remain confident in our ability to deliver on our growth guidance, namely low single-digit organic growth of end-user service revenue, including around 1 percentage point drag from Boxer, slightly above 10% growth in underlying EBITDAaL that we committed on in July. In addition, we are slightly reducing our 2025 guidance on CapEx to sales from around 13% to around 12%. This is driven by successful prioritization efforts as well as the deferral of some costs to 2026. That said, we reiterate our expectation of a midterm range between 10% and 12% from 2026 onwards.

I hand back to Peter for some additional comments regarding 2025 before we open up for Q&A.

Thank you, Jean-Marc. A few additional comments first on the P&L. We continue to anticipate around SEK 500 million in restructuring costs this year related to the ongoing transformation. On savings from workforce reductions, please remember that roughly 80% of our workforce costs impact OpEx, while the remaining share impact CapEx.

Also, I repeat what has been said about the Boxer effect. For the full year 2025, we continue to expect Boxer revenue roughly SEK 225 million below 2024 and with a somewhat negative year-on-year impact on underlying EBITDA after lease. And then a few comments on the cash flow. In Q4, we will pay the final roughly SEK 370 million for the Swedish spectrum licenses that we secured in 2023. Also now in Q4, an 1,800 megahertz spectrum auction will be held in Sweden. The payment terms in that auction is 50% in Q1 2026 and 50% in Q1 2028 as informed by the regulator.

On changes in working capital, we're satisfied with the performance in the first 9 months of the year, while recognizing that Q4 is seasonally weak. We hence now estimate the full year outcome in the range of 0 to plus SEK 200 million for the full year. On net financial items, excluding leasing, we continue to expect full year payments of around SEK 750 million. And finally, regarding taxes, we still expect around SEK 1.0 billion of net payments in 2025, including the SEK 280 million refund we received in Q1.

And with that, I hand over to the operator for Q&A.

[Operator Instructions] Our first question comes from the line of Andrew Lee from Goldman Sachs.

I had -- my first question was on -- well, both questions are on costs. My first question was on EBITDA costs and specifically the open network access fee inflation. I think that, that impact is around SEK 30 million, but I'm not 100% sure. I wondered if you can give us any clarity on the scale of the impact from that.

And then just on that point, you have historically or recently said that you feel that price rises can be put through over and above cost inflation. Do you feel like you can pass that increase in cost on to the customer over the next 12 months?

And then the second question is just on CapEx. You highlighted that you're reiterating the 10% to 12% CapEx to sales guide for next year. Obviously, there's an element of deferral of CapEx from 2025 into 2026 that's lowered your guidance for this year. Does that deferral mean you're likely to end up towards the ceiling of the 10% to 12% CapEx to sales guide for next year?

Okay. Well, I will take the first question on access fee. Of course, this is nothing new here. We have observed a regular increase of the access fee. And in the meantime, due to the competition on retail prices, we observe a growing pressure on the profitability of the open access. Of course, the consequence for the operators and especially for Tele2 will be in the future to focus more on other channels -- other networks, sorry, rather than open fiber. But I believe that we face here a critical issue for the market and for the Swedish customer. It's as well related to the delay in the SDU regulation.

So that means that open fiber today is a technology that we need to address specifically as a complement for other solutions for the customer. And on top of that, of course, at a certain point, we may be obliged as well to reflect part of this access fee increase in the retail price. So that's one of the, I would say, battles that we are fighting and we will continue fighting in the coming months.

Regarding the CapEx, I will hand over to Peter. Just a comment. I would say the decision to lower the CapEx guidance was the consequence of the prioritization of our investment in general and especially in the mobile network. And I want to say 2 things. First, it doesn't impact the quality of the network. You probably noticed that -- and I stated that in my presentation that we have rolled out 5G on the entire Swedish network that we operate, and we now reach 99% of the population -- 99.9% of the population with an excellent quality of service, and our ambition is still to build the best 5G network in Sweden. And some -- and the second point is that it doesn't change our midterm guidance, but Peter, feel free to elaborate on that.

Andrew, I think you covered it quite well, but just to add a little bit on the -- as Jean-Marc said, it's the stricter prioritization that is helping us to being able to reduce our CapEx guidance for 2025, including then also impact on CapEx from workforce reductions, which is helping there. And then, of course, we always try to invest as late as possible, meaning that some pieces are deferred to 2026, but it doesn't change our ambition of being behind 10% to 12% going forward. And to specifically answer your question on what it means for 2026, where we will be in that range is too early to respond on now. We'll come back to our CapEx guidance for 2026 when we release our Q4 numbers in January.

It's really helpful from both. Do you have any sense of the scale of the headwind that you got from the open network fee increase and the competition that stopped you from kind of fighting back on that? Any sense of the scale that would be helpful. And I guess, Peter, on your answer on the CapEx to sales, you're not saying that you'll definitely be towards the upper end of that 10% to 12% because of this deferral. It's as you say, too early to say. Is that the right understanding of your comments there?

No, it's too early to comment on that. I believe that we observe a distortion of the market. Definitely compared to what's happening in other European countries, the market evolution, the broadband market evolution in Sweden is not in favor of the customer interest. We should see an improvement of the competitive situation and what we observe is the opposite. It's due to the dominant position of some local players. It's not new. We are flagging that. And in the meantime, of course, we are taking actions in order to offset this impact and find alternative solution to serve our customers. We'll come back to that in more details when we will comment on our full year results.

And on the access fee too, we're not providing a specific number on that impact, but it's, of course, something that is important to us in terms of costs.

Our next question comes from the line of Andreas Joelsson from DNB Carnegie.

Just a follow-up basically on the open network side. You cannot control regulation, obviously, but -- and you say that you will look at alternatives. But what kind of alternatives do you have that you can sort of -- because leaving the open fiber network would leave -- would mean that you would leave quite a big market size. And just curious about the alternatives that you see should this -- there be further delays to this regulation, for instance?

Yes. Okay. Let's be specific and give you an element of answer. But for obvious reasons, I don't want to elaborate further. Of course, it's all -- everything is a question of geography. But first, Tele2 operates on HFC cable infrastructure with DOCSIS, excellent Internet speed and customer experience. In some areas, a much better Internet quality than with fiber because some part of the fiber in Sweden is quite old. So this is definitely one part of the answer.

The other one is, of course, related to the recent expansion of our 5G footprint. We now provide 5G connectivity to the entire Swedish population with here again, an excellent quality of service as recognized by Open Signal. And this quality will even improve in the future. So that's the answer. So of course, there are some areas where we will be -- we'll have no access to the customers outside of the open fiber infrastructure, but there are many areas where we have multiple solutions. And so far, we were a little bit agnostic in the technology, but we cannot let the situation with open fiber degrade without responding.

Our next question comes from the line of Erik Lindholm-Rojestal from SEB.

So Jean-Marc, you mentioned exiting a major third-party retailer here in Sweden during the quarter and also making some changes on the B2B side with partners. And I understand the long-term positives from this, but would you expect sort of any short-term headwind to growth from this?

We will -- of course, we will prepare. We will not go unprepared to this big shift. But we have been preparing for a while. We are opening regularly new stores, own stores. For instance, next week, we will open 2 new stores in Sweden in G vle and Borl nge and then we will continue with others. So we are progressively increasing the number of stores. Once again, we are not going to go crazy with the stores, but there were gaps in our footprint that we want to fill. It's important that we have stores in all the major areas where we see a commercial traffic that we can take advantage of. In the meantime, we are improving the performance of our websites, investing in the future of the websites. We are as well doing a lot of changes and improvement in our customer operations. And we are determined to -- I have to say, to eradicate the questionable sales practice that we observe in the market.

The Swedish Consumer Agency flagged some practice observed in the telemarketing area during the summer. It's not the only area where we observed this kind of practice. So this practice results into an artificial churn, which penalized the operators. That's why we believe that we need to take control of our relation with the customers. We have stepped down from one of the retailers, a minor one that I don't want to disclose the name, already this year. And we are preparing to take more control on our distribution.

Today, we are very happy to see that the contribution of our own channels is increasing in our commercial activity, and we want to continue pushing that, not only in B2C, but in B2B as well. That's why we took the decision to, I would say, reform, transform our sales partners for SMEs. And here, we reduced the number of our sales partner by around 60% in order to focus on high-quality partner that we can trust to deal with our customers.

So for us, it's definitely a long-term investment. And of course, we don't want to make an hasty decision. We are in permanent discussion with all the partners, but we know where we want to go. And of course, there will be -- there may be from time to time, commercial hiccups, but we are absolutely certain that this is the strategy to follow and to deliver for the long-term value creation in the market.

All right. So -- but do you expect any meaningful impact to sort of gross adds in the short term or maybe for next year?

That's why we are taking the time. We are just showing the path, but we are moving step by step. We don't expect to make any crazy move. We just want to consolidate, strengthen our own channels progressively and make case-by-case decisions.

Our next question comes from the line of Maurice Patrick from Barclays.

If I could ask a follow-up question on CapEx, please. I appreciate you've indicated the 10% to 12% midterm range for next year and you don't want to narrow that. But just to understand a bit around the key projects that remain pending. If I'm not wrong, you've signaled today you pretty much finished the mobile 5G upgrade and swap outs. You've signaled earlier in the prepared remarks, I think, a need to or desire to increase the investments in the Baltics post the TowerCo sale. I think in previous calls, you had suggested Remote PHY as in the cable upgrade was more on hold as such. So could you help us understand sort of what additional projects beyond just maintenance you have in mind for '26? Is it just the Baltics? Or is there anything else we should be thinking about?

No, no, I believe that there is no hidden agenda or hidden project that we have kept in our wallet out of the sight of the investors. I believe that the revision of our CapEx guidance is just the consequence of some replanning that we had to do and that we were able to do considering, I would say, the evolution of our rollout. So this is a very ambitious rollout that we are in. Of course, our goal is to complete the largest part of this rollout by the end of the year. But in the meantime, as you can easily understand, the more we move forward, the more difficulties we collect in the building of the sites because they are remote. Sometimes we have issues to connect the energy to the sites, some permit delay and so on.

So the decision to revise our CapEx and sales guidance is just the result of pragmatic replanning of the rollout with, I would say, some sites that will not be built at the end of this year, but completed and switch off -- switch on, sorry, at the beginning of next year. So the impact of delay is minimal, but still impactful considering the size of the investment that we are making this year on the Swedish mobile network.

And of course, one of the reason for this delay is called Swedish winter because in December, January, it's a little bit difficult to dig into the Swedish ground for obvious reasons. So not a big deal. Next year, we'll have some, I would say, some additional sites to complete but with a minor impact on the CapEx for 2026. The main part of our investment next year will remain the modernization of some part of our Baltic operations with, of course, the impact of our TowerCo company as well.

And for the rest, I confirm that we will stick with our new strategy for the modernization of our cable network. Also, of course, we believe that in the current context of the fixed broadband market, there is a competitive advantage for us to push our mobile -- sorry, our cable HFC network. We don't see the point to systematically modernize the network. So we stick with our reactive modernization strategy that we have decided at the beginning of this year. So that we don't foresee any acceleration of the Remote PHY investment.

For the rest, of course, we are progressing on the modernization of our IT, centralizing as much as we can the platforms across all our product lines in Sweden, and we have as well some project to centralize some platforms between Baltics and Sweden. But I would say all this has been already anticipated. And compared to the network investment, it's a relatively minor part of our investment policy. So that's why we are quite confident that the replanning of our CapEx in this end of year will have -- will not change our midterm guidance, which is to keep the CapEx and sales ratio between 10% and 12% over the next few years.

Our next question comes from the line of Owen McGiveron from Bank of America.

McGiveron from Bank of America here. Question on costs. So on headcount, you said over 600 by the end of September versus the over 500 by the end of June. Could you give us a sense on the phasing of this reduction and when the incremental cuts will feed through into your numbers. And then a quick 1 on marketing spend. Just thinking about the weighting of Q3 versus Q4, trying to weigh the initial cost of the launch where you said that there was a substantial increase in marketing spend in Q3 versus Q2 versus a more competitive Q4 where you'll do more advertising.

Yes. Maybe I will ask Peter to complete. But keep in mind that compared to H1, we have -- 3 areas where we had foreseen, I would say, slightly higher spending in H2. The first 1 is definitely marketing areas where we have reintroduced Frank with a, I would say, an obvious result and the traffic in our stores on our website. But I would say, a recognition of the Tele2 brand, which has improved I'm referring here to the ID center KPI to improve significantly compared to H1 with a tripling of the recognition by the customers.

So that, of course, has some impact on our cost, but it was foreseen because we had kept the -- we have planned the rebranding at the very end of June 2026. We have the access fee impact which, of course, is a variable cost and something that we -- you probably understand is that, of course, we are impacted by access fees in proportion of the acquisition of customers we make in this area. And something that you cannot -- we cannot forget either is the increase of our network OpEx, which is proportional to the rollout of the network. So the more sites we build and we are on a good path to complete the rollout of our 5G network, but the more maintenance OpEx, we need to support. Peter?

Yes. Thanks, Jean-Marc. I can add maybe a little bit on the -- you asked specifically about the timing in the workforce reductions. And I think it's 2 aspects of this. One is that we, of course, try to optimize gradually and find improvements every day, but there was a bit of a larger portion in towards the end of the quarter, end of September, where a bit larger piece of the reduction came through, which means that -- and when it comes to the cost for that, you can see in our restructuring costs, a bit of elevated costs in Q3. And so that's all reflected in the Q3 numbers, the severance payments for those reductions.

And on marketing, I think it's quite well covered, but maybe call out as well that the big impact then from the sequential EBITDAaL trends is that we were very, very low in Q2. So in Q2, we had a large tailwind in our EBITDAaL year-on-year from low marketing. We saved our money for the rest of the year with the rebranding and also a little bit of a more intense sales season. I hope that answers.

Our next question comes from the line of Fredrik Lithell from Handelsbanken.

I thought maybe we could have -- if Stefan would like to talk a little bit about the trends in business-to-business. You have really good growth there. If you could sort of dig into the details a little bit more what's really going on in the business-to-business marketplace would be interesting to hear. And then secondly, Jean-Marc, if I could ask you, it seems like EQT is putting GlobalConnect up for sale. We don't know. It's news comments at this point. But if that would be, would you see that you have some pockets where you sort of could fill up your assets on long-haul fiber or anything? It would be interesting to hear your elaboration on that, if possible.

All right. Thank you, Fredrik, for your question. Always a pleasure to talk about B2B. And as we've seen, it was a good quarter. I think the profile of the revenue development in Q3 is very similar to Q2. It's a broad-based improvement year-on-year for the quarter in all of the -- basically all product lines. We see the stabilization on the fixed part, driven by broadband and data net services and the deals that we've done in that domain.

On the mobile side, we continue with good growth, both on the larger segments, SME and the larger segments on RGU development. We had a growth of 10,000 RGUs and also the previous quarters, of course, are helping us in the quarter-on-quarter growth of the mobile RGUs. IoT is a little bit better than in Q2, actually on quarter-on-quarter growth, a couple of millions better.

So overall -- and then we have the solutions area where we have continued good pace on the network security part, but also on Cloud PBX, which is more of a modern solution. So it's very similar to Q2 actually, a little bit better, I would say, everywhere.

Then on the Micro, we see a stabilization. It's something that we have seen with the recession that is impacting the growth. So we're still looking for the smaller segments or the smaller customers returning to better growth overall in the Swedish economy. So hopefully, we'll see that. I hope for that last year, but we didn't see it this year. But hopefully, that's something that we will see next year. I hope that gives you some color on the B2B and where the growth is coming from.

Yes. And maybe to complete what Stefan was commenting, the reason -- one of the reasons why we can accelerate in B2B is because, thanks to the transformation of this activity that Stefan has delivered in H1, we have no profitable growth. We can now secure a profitable growth in all the segments, including the solutions. So that's, of course, a key lever for us for the acceleration of the revenue. And I will not comment on GlobalConnect.

As commented by Peter, yes, we have, I would say, an excellent balance sheet so far, but we have stated at the beginning of the year, and I will stick with this statement that the decisions about the use of the cash flow will be taken after the full delivery of our transformation this year. So we still have a quarter to go. And therefore, I will not preempt any discussion that will be at the Board level that will take place at the Board level in January.

Our next question comes from the line of Nick Lyall from Berenberg.

Can I just ask 2, please. Firstly, on the contracts with suppliers. Could you remind us how far you are through your negotiations with your suppliers so far? And could you help us by giving us some sort of target to quantify the savings you might make from that over time, please?

And then secondly, on the access cost point, trying to avoid access costs or alternatives to access costs, how does that fit with the idea that you're going to be just reactive on Remote PHY and the coax network and also sort of tailing off spending on 5G as well. Those 2 don't seem to tally. So could you tell me what I'm missing there, please?

Peter will answer on the contract and the savings.

Yes. Nick, yes, on the number of contracts, we have now renegotiated around 225 contracts and keep working on them in full pace, of course, also going forward. We are not providing any specific financial targets on this exercise. It's, of course, an important component in our EBITDAaL improvement, but we stick to what we aim for on our EBITDAaL and CapEx guidance. So that's what I would say on the contract negotiations. And then Jean-Marc, I don't know if you want to comment again on the access cost in Remote PHY maybe.

No, I was consulting with Petr Cermak. I don't believe that there is more to say about the access fee. We are observing, I would say, a negative evolution of the market in terms of profitability. This evolution goes in the opposite direction compared to all the other operating countries. We observed that PTS has been blocked in the SDU regulation. So there is a problem with the market structure. Of course, we will fight in order to get better market condition for the customers.

In the meantime, I would say, we have other cards to play. And I believe that the consequence of this increase in the access fee, which is not motivated by any reason, but the -- I would say, the collection of an additional fee by the intermediary operators, the local intermediary operators is to motivate the operators to use other networks.

And once again, we have more than 1 million households served by our excellent DOCSIS network, providing 1 gigabit per second Internet to MDUs across all the country. And in the meantime, now we have our 5G technology that we can use in order to serve families and homes with 5G connectivity and no need to elaborate too much on that, but we observed that mobile broadband is becoming more and more popular amongst our customers, especially the new generation as the main access to Internet. So that's it.

So meaning that we observed this increase in access fees, and we are taking the consequence. And fortunately, we have other cards to play, and that's it. We are just commenting on access fees because it was obviously one of the, I would say, the components that may have been underestimated from external observers on the Swedish market, but we are not the only one impacted by that.

Our next question comes from the line of Ajay Soni from JPMorgan.

My one just goes back to the marketing costs. Obviously, you've called them out stepping up a little bit in Q3. Are you expecting this to continue into Q4 and then 2026? And is this driven by a more competitive environment? I understand some of the pricing, especially within the second brand has become more competitive. So maybe a comment on the pricing environment would be helpful as well.

I believe that Peter commented already that the seasonality dictates that we spend more in marketing in the second half of the year than in the first half. But do you want to elaborate on that, Peter?

No, I can just repeat that one. So it's not that we're -- just to be clear, it's not that we are intensifying our marketing spend. It's more that we reduced our marketing spend in the first half of the year and especially in Q2. So it's not an escalation in any sense. It's more that we had a very large tailwind from that in Q2, and now we don't have that tailwind. So we will keep discipline in how much marketing we spend. That's what I would say there.

Our next question comes from the line of Felix Henriksson from Nordea.

I think beyond the FTE reductions and the vendor contract renegotiations, you've highlighted that the decommissioning of some unprofitable B2B services and sort of automating the service delivery is sort of one of the key drivers for profitability transformation. So could you just please provide a bit of an update on that work stream? That would be very helpful.

All right. Thanks for the question and Stefan here to respond on the automation and IT transformation. As we've been alluding to before, I mean, we are doubling down on IT transformation for B2B this year, and it will go on into next year. We're actually in the middle of the work -- of the scope work of that. So we're doing the requirement design, all of that, but we haven't come into production yet. The first phases of production will come next year. We won't give you a specific quarter, but we will see specific product segments being handled by the new end-to-end IT ecosystem, which will really, really, really will be something different, much, much more efficient than the ways we are working on today. So really looking forward to those launches which start next year.

Our next question comes from the line of Max Findlay from Redburn, Atlantic.

This is Max Findlay from Rothschild & Co Redburn. Firstly, going back to the FTE question, just checking where in-quarter reductions were removed, I assume Sweden. And any clearer ideas where you might land in your 600 to 700 FTE reduction range would be very helpful. I appreciate you've already been asked questions on contracts already, but the last couple of quarters, you've provided a percentage of large contracts renegotiated, but I could not find that this quarter. So any color on that would be very helpful. And then finally, just checking that there were no one-off cost savings in Q2 that dropped out in Q3, maybe as costs were deferred during contract renegotiations.

Okay. I will let Peter answer the last 2 questions on the FTEs. As we commented, we have reached the lower end of the target already. We believe that we will land -- we'll finish the year, I would say, very close from the full year target that we gave ourselves, which was between 600 and 700. We are now in an execution phase for the long tail in some specific reorg. And we're on a good path. Now we have completed the discussion with the union and so on to deliver all these workforce reduction, including in the Baltics, where we still have some minor workforce reduction ongoing. But we will be -- we will deliver workforce reduction in line with our target.

Yes. And on the workforce reduction, most of it then maybe a repetition, but was towards the end of the quarter, in end of September, and it's majority in Sweden then the workforce reductions in Q3. On the contracts, it was -- altogether, we have renegotiated 225 contracts now year-to-date. And that's a decent portion of our large contracts, but we're not done yet. So we continue working on that. And when it comes to one-offs, no specific one-offs in Q2 that was pushed in any way towards -- over to Q3. Last year in Q2, we had a one-off related to bad debt, which helped our -- or made our comps a bit easier in Q2 this year, which we have called out earlier, but no major one-offs in Q2 and Q3 this year.

Our next question comes from the line of Abhilash Mohapatra from BNP Paribas.

Sorry to come back on the open network access fee question, but just trying to understand, has the impact been sort of greater than you had anticipated earlier in the year when you're sort of setting out the guidance? And so therefore, should we see this as you've been able to keep your guidance despite sort of greater-than-expected impact from this cost headwind? And how do you sort of see the time line of this evolving in the coming months? You mentioned sort of talking to the regulators. How do you see this sort of evolving?

And then the second question was just around shareholder returns. You flagged that leverage is now down to sort of 2.2x, and you mentioned you'll be sort of examining this over the coming quarter. But as we think about your leverage target range, 2.5 to 3x, what are the sort of puts and takes of where you would want to end up compared to that sort of target leverage range, low end versus high end? What are the factors there? And does this development would be sort of open network access fees change that thinking at all?

Okay. So there's a lot of questions about access fees. We don't want to emphasize too much this topic. But okay, to answer your question, what can we add on top of what we have already commented. We observed that the situation is becoming a little bit critical. But once again, it's not -- it's the result as well of the fragmentation of the fixed broadband infrastructure market in Sweden. So the reaction of the different landlord association, for instance, are not the same depending on the network swap that we are considering. And we see that, for instance, some landlord association are reviewing the condition -- the terms and conditions of their agreement. They -- some of them realize that there is a limit to the current model.

And of course, that translates in some decrease in the broadband penetration in their networks. And of course, this is not what they want, and this is not what we want to see. So I don't want to elaborate too much, but it's a very fragmented situation on the broadband market. We see the result with some, I would say, greed from some landlord association that has some consequence for all the operators. We have to deal with that. That's our job. So Peter, can you comment on the 2 other questions?

Yes. On the shareholder return and the leverage targets, of course, we recognize that we noticed that we are below our target range of 2.5 to 3. As Jean-Marc also mentioned previously in the call, we will not preempt the discussions around where we're moving. We will have the discussion with our Board ahead of the Q4 release to see how we should proceed in terms of shareholder remuneration and how to deal with our strong balance sheet. It's a pleasant problem. We're happy with the strong profitability and cash generation leading to a very strong balance sheet position at present. And we'll come back in Q1 -- sorry, when we release Q4.

Our next question comes from the line of Ondrej Cabej ek from UBS.

Two questions from me, please. One is on just refocusing a bit on the top line in Sweden, where almost across the segments, you saw an acceleration of trends. I was wondering, from your perspective, because you are the first to report, how much of this improvement are you attributing to your own commercial initiatives, which you say obviously stepped up into the second half? And how much of this is some kind of market repair, which I believe we have seen since the summer. So that's one question.

And then the second question on contracts, please. So as you say, I think you mentioned the number 225 contracts have been kind of renegotiated. I was just wondering in terms of the actual impact when we're starting to see this, is it all -- or rather, can we assume that all 225 of these have already started to have some impact on the financials? Or is there a part of these which have been renegotiated, but for example, only have an impact starting 2026 or later?

Okay. I will let Peter to answer on the consumer revenue. But definitely, we see the impact of Frank being back, the iPhone launch, the own channels, Petr?

Yes. No. So we see an improvement in the connectivity quarter-on-quarter, both through both for the offers we have, but also through the focus on the own channels. So we are focusing our own stores, customer operations online. That's our main focus, and we are trying to tone down the rest of the external distribution. We see good traction of our TV offers that we launched in April. So the flex model is something the customer wants. We see good traction on it, and it partly compensates our decline in TV. This is entirely driven by Boxer. So Frank has -- the relaunch of Frank has helped to improve our commercial momentum since summer. And it continues and we will continue what we are doing right now. It's a mix of pricing, some acquisitions and the focus on own channels.

And Peter, do you want to take the other one again?

Yes, I can take that again, but maybe in a slightly new angle to the question. Again, 225 contracts has been renegotiated. When it comes to timing of this, it is a mix. In some cases, we were able to reap the benefits directly. We saw quite much of that in the first half of the year. But of course, depending on the nature of the contract and what we're negotiating, something is coming later. So some pieces will also come from 2026. So it's a gradual effect of what we're doing that you should expect.

Our final question comes from the line of Siyi He from Citi.

I just have a question on the cost side. I think Jean-Marc, in your CEO letter, you talked about that Tele2 are ready to gradually increase the efforts to optimize your teams and optimize your process. Just wondering if you can comment on maybe the kind of savings that it could have and when it could -- when should we expect it to hit the financials? And I also believe that you decided to take away the midterm targets at the beginning of this year. Just wondering after you complete the staff reduction should we expect the reintroduction of the midterm guidance at the full year result?

Sorry, I didn't understand the last.

The second one, if we have a midterm financial guidance.

We don't. We -- apart from the -- for the CapEx, we don't have a midterm guidance. On the CapEx, we already mentioned that our ambition, and we say this ambition turns into more and more kind of commitment, but we will be between 10% and 12% of the sales. But to come back to your initial question, I would say that the cost optimization or the transformation in general translate into 3 major benefits for the company.

The first one, of course, is overall cost reduction. We see the impact today in our cost structure of the payroll OpEx improvement as well the renegotiation of some contracts. But it's as well the benefit of, I would say, making the company more agile. And this agility comes with profitability. We gave the example of B2B. We had some issues with the profitability of some line of business. So we have transformed the process. We have reviewed the portfolio.

Now we can accelerate the growth in B2B. And in other areas as well, I give B2B just as an example, because we have secured the profitability and we have simplified the process. And I would say that this simplification is as well something that we benefit from globally in order to respond to the market. That's why, of course, when we observe that some part of -- some segment of the market are not evolving in the right direction, we are now able to react much more promptly that is, of course, what is happening today in the fixed broadband.

And I would say the third benefit of this transformation is that thanks to the strengthening of our -- and the simplification of our processes, we are able to take a stricter control on our distribution channels and prioritize our CapEx much more. So that translates into the reinforcement, the strengthening of our own channels, the detriment of the third-party ones that will translate in the future into better value for Tele2 because we will increase the stickiness of the customers. We will increase the ASPU, and we will decrease the acquisition cost. And this is only possible because we have made the company agile and adaptive again. So that's my summary. Do you want to add something?

Yes, maybe add one thing on the question on the guidance. As Jean-Marc pointed out, of course, right now, this is where we stand because we don't have a midterm guidance. I think also the question were about if we will have it going forward, and that's too early to say. We'll talk to the Board ahead of the Q4 release and take it from there. Right now, we're here and now and focus on the guidance we have submitted for this year.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Tele2 Second Quarter Interim Report 2025 Conference Call. [Operator Instructions]

Please be advised that today's conference is being recorded.

And now I'd like to hand the conference over to Jean-Marc Harion, President and Group Chief Executive Officer. Please go ahead, sir.

Thank you, and good morning, and welcome to Tele2's report call for the second quarter of 2025.

With me today, I have Peter Landgren, our Group CFO; for Sweden, Petr Cermak, our Chief B2C Officer; and Stefan Trampus, our Chief B2B Officer; and for the Baltics, Petras Masiulis, our CEO of Baltics.

Please turn to Slide 2 for a brief recap of our transformation plans and progress so far. 2025 is a transformation year for Tele2. Our objective is to build a faster, simpler and more agile company by coming back to Tele2's original challenger culture. I'm happy to present the progress we have made over the first half year of 2025 to simplify our organization, control our costs and prioritize our investment.

We have reduced our workforce by more than 500 positions by the end of June. We have implemented a new cost governance to scrutinize and challenge all our expenses. We have reopened and renegotiated half of our 350 largest contracts. We are investing in the development of our own channels and the reinforcement of our data analytics and AI expertise to depend less on third-party channels for the growth of top line in Sweden.

We have now a new leadership team in place, and even more importantly, our cultural shift, especially our cost consciousness focus, is strongly supported internally.

I'm taking this opportunity to thank all Tele2 employees who actively contribute to getting us back to the original Tele2.

Please turn to Slide 3 for some financial and commercial highlights. End-user service revenue grew by 2% in Q2, consistent with our guidance targets despite the impact of the discontinuation of Boxer terrestrial TV in Sweden at the beginning of the year.

On the other hand, we have delivered an outstanding 15% growth of underlying EBITDAaL in the quarter, thanks to the fast execution of our transformation program with significant contribution from workforce reductions and other cost savings across operations.

Equity free cash flow amounted to SEK 1.6 billion. Hence, another strong quarter following the SEK 2 billion generated in Q1.

Based on the strong performance, we raised our full year EBITDAaL guidance to which I will come back at the end of our presentation.

For Sweden, key events during the second quarter include the launch of our new flexible TV and streaming portfolio, the opening of new stores and the revamp of tele2.se and the relaunch of Tele2 brand, where Tele2's most popular coworker ever, the sheep, Frank, returned after a few years of retirement. All these initiatives had been very well received by our customers.

In terms of sustainability, we are very proud of once again being named Europe's Climate Leader by Financial Times and Sweden's most sustainable company for the second year in a row and 23rd worldwide by TIME Magazine.

Please move to Page 4 for more details on our results. As I said, end-user service revenue grew by 2% organically in Q2, driven by continued strong growth in the Baltics and accelerating growth in Sweden Business. Excluding Boxer's impact, group end-user service revenue grew by 3%.

The 15% growth in underlying EBITDAaL was driven by the transformation in the Baltics revenue growth.

Our strong equity free cash flow benefited from lower paid CapEx year-on-year, of which Peter will soon walk you through the details.

When it comes to booked CapEx or CapEx-to-sales increased from even 11.5% in Q1 to 12.4% in Q2, leading to 12% for the first half year.

Our leverage remained unchanged at 2.2x despite the dividend payment in May.

In Sweden Consumer, as already commented, connectivity growth continued to be offset by the decommissioning of terrestrial Boxer TV at the beginning of the year. In Sweden Business, end-user service revenue growth accelerated to 4% alongside continued solid mobile RGU growth.

Baltics grew end-user service revenue by 7%. Underlying EBITDAaL grew by a massive 20% in the Baltics with double-digit growth across markets.

Let's move to Slide 6 for more details on Swedish customer -- Swedish Consumer. Mobile end-user service revenue grew by 2%, driven by 3% in Prepaid (sic) [ Postpaid ], partly offset by continued decline in Prepaid. Fixed broadband grew end-user service revenue by 3%, mainly due to ASPU growth. While Tele2 TV remained stable, end-user service revenue for DTV declined by 9%, entirely driven by Boxer TV migration.

For full year 2025, we continue to anticipate Boxer revenue to be roughly SEK 225 million below 2024 with minor year-on-year impact on EBITDAaL as our Boxer business would have become loss-making in 2025.

Total Consumer end-user service revenue declined by 1% in the quarter. Excluding Boxer impact, Consumer end-user service grew by 1%.

Let's look at Consumer KPI on Slide 7. Mobile Postpaid added 10,000 RGUs during Q2, following a seasonally slow Q1 in which we also executed price adjustments. Mobile ASPU declined by 1% year-on-year, again impacted by increasing IFRS 15 fair value adjustment in Tele2 customer base, which did not have a handset binding until 18 months ago. Excluding this adjustment, ASPU grew by 1%.

Fixed broadband declined by 1,000 RGUs in Q2, mostly in open fiber networks areas where we have observed quite aggressive competition during the quarter. On the other hand, ASPU grew by 2% due to price adjustments.

Our TV business stabilized its customer base as the RGU loss in Q2 was only 1/3 of the decline seen in the last couple of quarters. As in previous quarters, the entire RGU decline was due to Boxer. And I'm happy to see that our flexible TV and streaming portfolio has generated good customer intake offsetting Boxer customers loss. 60% of our non-group agreement customers are now on flex offers.

Please move to Slide 8 for our Sweden Business. In Q2, Sweden Business accelerated end-user service revenue rose to a strong 4% with all main product lines growing. Growth across our IoT and Large segments partly offset by the Micro segment, which is still struggling due to continued economic conditions. This change in segment mix is reflected in the Mobile ASPU year-on-year evolution.

Mobile grew by 4%, driven by our IoT business and continued solid RGU growth amongst large customers.

Solutions grew by a strong 5%, while Fixed turned into slight growth for the first time in years.

Please move to Slide 9 for Sweden financials. To summarize, our Swedish end-user service revenue was flat in Q2 as growth in Business was offset by the Boxer decommissioning on Consumer side.

Underlying EBITDAaL grew by a massive 13%, thanks to workforce reduction, sharp cost control and ongoing renegotiations of large contracts. The cash conversion has improved to 63% over the last 12 months.

And now let's move to Baltics financials on Slide 11. Once again, our Baltic operations have performed excellently with continued strong top and bottom line growth in Q2. Total end-user service revenue continued to grow at 7% supported by previous and recent price adjustments. All markets continued to grow underlying EBITDAaL by double digits in Q2, leading to a 20% growth for the Baltics as a whole.

In addition to top line increase, the drivers of this outstanding performance are, like in Sweden, strict cost discipline and workforce reductions and improving the equipment margins. I'm particularly happy to see the turnaround in Estonia materialized so quickly.

Cash conversion increased to a strong 77% during the last 12 months, reflecting increasing EBITDAaL margin. It is important to add that we are strengthening the everyday collaboration between Baltics and Swedish organizations to ensure we are efficiently sharing operational best practice.

Let's move to Slide 12 for Baltics operational KPIs. All markets delivered positive Postpaid net intake in the quarter, leading to a total increase of 19,000 RGUs. Prepaid declined by 21,000 RGUs, mainly impacted by the implementation in Q1 of prepaid registration in Lithuania.

A look at our total Baltics Mobile business shows that 78% are Postpaid customers accounting for 88% of Mobile end-user service revenue, in turn implying a Postpaid ASPU roughly twice the level of Prepaid.

Blending organic ASPU increased by a strong 12% driven by price adjustment and continued prepaid to postpaid migration.

And with that, I hand over to Peter who will go through the financial overview. Hello?

So hi. Now I think the sound is in the right place. Good morning, everyone, and thanks, Jean-Marc, for the handover.

So please turn to Page 14. A few comments first on the group P&L for the quarter. Total revenue grew by 1% organically with end-user service revenue up by 2%, driven by the Baltics and Sweden B2B. Equipment revenue was down in a slow handset market.

Underlying EBITDA grew by 14% organically and underlying EBITDAaL by 15%, driven by sharp cost control across the group and the end-user service revenue growth.

Items affecting comparability of SEK 83 million were related to restructuring costs as well as pension and inventory adjustments.

Net financial items decreased year-on-year, mainly thanks to reduced interest rates. In Q2, our average interest rate was 2.9% with a debt mix of 66% fixed rates and 34% floating rates.

And income tax increased year-on-year, largely related to the higher taxable profits.

So let's move to the cash flow on Slide 15. CapEx paid decreased by around SEK 190 million due to reduced investments from high levels in Q2 last year.

Changes in working capital were quite neutral in the quarter. Redundancy provisions related to the workforce reduction have been partly consumed, as expected, balanced by decreased inventory levels.

Net financial items, excluding leasing decreased year-on-year due to the reduced interest rates along with some payment timing.

So net-net, equity free cash flow added up to SEK 1.6 billion in the quarter, an improvement of SEK 450 million year-on-year.

And over the last 12 months, equity free cash flow has reached SEK 8 per share.

So let's move to Slide 16 for our capital structure. End of Q2, economic net debt amounted to SEK 24.7 billion, reduced by some SEK 1.5 billion compared to end of 2024. This has been enabled by the cash generated in the business exceeding the payout of the first dividend tranche in May.

Our leverage of 2.2x underlying EBITDA after lease remains below our target range, thanks to the strong EBITDAaL and cash generation.

And with that, I hand over to Jean-Marc for some comments on our 2025 guidance.

Thank you, Peter. Following workforce reduction in the Baltics and in Sweden, we have reduced more than 500 positions out of the 600 to 700 full-time equivalent that we have planned for the year.

Following the strong first half year, we feel confident enough to raise our 2025 guidance on underlying EBITDAaL from mid- to high single-digit organic growth to slightly above 10% organic growth.

We remain confident in our ability to deliver on the other guidance parameters, namely, low single-digit organic growth on end-user service revenue, including around 1 percentage point drag from Boxer, and CapEx-to-sales to be in the range of 13% during this final year of intense 5G network rollout. We continue to expect a mid-range midterm range of 10%, 12% from 2026 onwards.

Now I hand back to Peter for some additional comments regarding 2025 before we open up for Q&A.

Thank you, Jean-Marc. A few additional comments first on the P&L. We continue to anticipate around SEK 500 million in restructuring costs this year related to the ongoing transformation. And just repeating again that on savings from workforce reductions, please be aware that roughly 80% of our workforce costs impact OpEx while the remaining share impact CapEx.

Also, I repeat what Jean-Marc said about the Boxer effect for the full year 2025. We continue to anticipate Boxer revenue roughly SEK 225 million below 2024, and with it, somewhat negative year-on-year impact on underlying EBITDAaL.

Finally, I have understood that we often get questions about our amortization of surplus values from acquisitions. The current annual run rate of SEK 1.4 billion to SEK 1.5 billion a year is expected to continue until 2027. After that, it will gradually decline and these expenses are not tax deductible.

And then a few comments on the cash flow for 2025. In Q4, we'll pay the final roughly SEK 370 million for the Swedish spectrum licenses that were secured back in 2023.

On change in working capital, we're, of course, pleased with the performance in the first half of the year, but continue to assume a quite neutral impact on a full year basis.

On net financial items, excluding leasing, we expect full year payments of around SEK 750 million.

And finally, regarding taxes, we still expect around SEK 1 billion of net payments in 2025, including the SEK 280 million refund we received in Q1.

And with that, I hand over to the operator for Q&A.

[Operator Instructions] We will now take our first question from the line of Andrew Lee from Goldman Sachs.

I had a couple of questions, one on the Swedish service revenue growth and then, I guess, unsurprisingly on the cost-cutting side of things.

On the Swedish service revenue growth, obviously, people's understanding of what's going on beneath the bonnet is not helped by the Boxer temporary headwinds, which we know reduce into the second half and also by this fair value approach, the IFRS approach.

So can I just check with you, if we strip those impacts out, is your underlying Swedish service revenue growth about 2.5% to 3% in 2Q, and therefore, as the effects of Boxer reduces and the fair value approach kind of -- doesn't unwind but doesn't have any incremental impact in the second half, should we see -- should we be expecting to see close to that 2.5% to 3% underlying Swedish service revenue growth delivered in -- sorry, if I set off an alarm.

Just basically, if you could give us a bit more color on what the underlying Swedish service revenue growth is? And any commentary on the market environment to support that would be helpful.

And then just on the cost cutting, a much more straightforward question. Obviously, really impressive delivery so far. Could you just help us understand how much of that is simply a pull-forward of the plans you gave us 6 months ago? And then how much of this is just you're finding more scope for efficiencies? So reassure us that this isn't just a pull-forward on the cost savings would be helpful.

Thank you for your question. I just need to ask, we are -- due to the season, we are in different locations so I don't understand where the fire alarm takes place. Is it in Kista or is it somewhere else? It looks like...

We have a fire alarm in Kista.

Okay. Okay. So I was just going to ask Peter to help me answering the first question you raised just in order to be precise because we already partly answered this question in our presentation, trying to state what the growth of our end-user revenue in Sweden for Consumer business was without the fair value restatement and -- without the Boxer impact, but I prefer Peter to come and say a precise answer on that because you were expecting to -- you are trying to understand what would be the impact in H2.

So let's wait for Peter to be able to take the call probably from outside. And I will start with the second part of the questions about the transformation pace.

Can you just rephrase because we were partly distracted by this fire alarm -- yes.

Yes. I was just asking, obviously, I'm just trying to -- any help you could give us on how much of the cost cutting that your -- that boosted your guidance for this year and it's obviously delivered a big beat in Q2. How much of that is just a pull-forward of your explicit head count reduction plan? And how much of it is you just finding more and more areas for efficiencies.

No, I believe what we have done is just to accelerate the plan. So we don't come with, I would say, with a new ambition. We just -- regarding at least the workforce reduction, we gave ourselves an objective, which was to reduce the workforce before the end of 2025 by around 15%. Depending on the positions impacted, this would have -- this would translate into a reduction of the workforce between 600 and 700 people -- positions, both full-time employees and full-time consultants.

We have been able to reduce workforce by 500 people already at the end of June and now we are digging into the more detailed part of the organization. We have seen it is for efficiency improvement. But we don't expect this second wave to be, I would say, as big and as impacting as the first one. It's more about specific improvement in some specific areas.

And in the meantime, what we have done is to become -- to make ourselves in control of -- to take the control of our costs much faster than expected. And this is clearly thanks to the involvement of the team.

Yes, it was part of the DNA of the company to be cost conscious and we just rejuvenated this spirit. We've been able, for instance, to reopen a lot of contracts and this will have an impact as well on H2 because some of these contracts, of course, were renegotiated in Q1, but a lot of them as well in Q2 with a progressive impact over the next 12 or 18 months.

So we are just stating here that we are sooner than expected in the transformation period and that translates in this good performance for Q2 EBITDAaL.

I don't know where Peter is...

Yes. Sorry, do you hear me now?

Yes, yes. Loud and clear.

Yes. So sorry, everyone, I'm at the parking lot in Kista and I haven't really followed what happened until now. So maybe if there was a question in the beginning from Andrew or that should be repeated?

That was it. It's just the Swedish service revenue growth, what the underlying is when you strip out the Boxer in the fair value approach. And therefore, what we should be thinking about for the second half given the Boxer headwinds reduce and the fair value, I think, impact should drop out at some point?

Yes. Thanks for the question. If I start with Boxer on the Swedish Consumer end-user service revenue, Boxer has an impact of roughly 2 percentage points. And that's, of course, an impact that will -- I mean, we will have the impact also in Q3 and to some extent Q4 because the main impact was on the decommissioning of the terrestrial network in the new year, yes. So that's on that on fair value.

I mean, we will always have IFRS 15 and fair value implications, that's here to stay. But the additional impact then from the Tele2 customer base, as you say, will dilute and so it will be somewhat less of an impact then from later in the year. But I don't think we should call out specific growth implication on that one.

Okay. And if we strip them out for this quarter, what's the underlying Swedish service revenue growth? Is it right that it's about 2.5% to 3%?

Yes. For the total group, it's around 3% then instead of...

Our next question comes from the line of Ondrej Cabejšek from UBS.

Congratulations on these exceptional results. I've got 2 questions around the cost base, of course, as just the main topic.

So I guess the first one is you mentioned after 1Q that kind of the next phase of the cost-cutting would be a breakaway from the third-party channels. It's kind of a 2026 project kind of saving money on distribution. But already in this presentation, you're saying that you're moving to kind of more in-house channels. Is that something that you've again accelerated? Is this something that's already impacting the numbers thus far?

And then -- and if you could maybe give us an indication of the potential there for the cost savings, regardless of whether that started or not?

And then also second question, please. You mentioned in 1Q that you already did something like 20% of the 350 contracts that you're trying to renegotiate or open 20% of them. If you can update us on kind of where you are on that. And again, any indication of how big of an impact these 350 contracts or the ones that have at least thus far been then renegotiated can have on the cost base.

Okay. So I will take the 2 questions because I don't know where they are -- is the fire alarm...

I'm still here, at least I think the rest is unfortunately not there yet, but might be.

Okay. So regarding the distribution, it's an important point that you raised. And I confirm what I already stated in our previous results presentation, it's critical for us to become less dependent on third-party channels, but not only for cost reason. It's because as well a lot of churn in the Swedish market is generated by this third-party channel, which artificially moves the customers from one operator to another one.

So this is something that, in our view, is not beneficial for the customers because they are driven from one operator to another one just for the benefit of these third-party distributors. And we want to limit our dependency to these distributors. So that's why we are reinforcing our interactions with the customers. That's why we are opening new shops, that's why we are revamping our website and we are taking a number of initiatives.

I don't know if we will leave one specific channel at a certain point in time, but that's for sure that the contribution of these third-party channels we want to be reduced in 1 year from now. And we are working on it.

And once again, and I will not give you any numbers related to that, it's not about to reduce the annual cost of acquisition of new customers. It's about increasing the investment in the customer acquisition meaning that we want to acquire the customer in a transparent way in direct relation with the clarity on what they are buying and what we provide them for the price they pay. And of course, improve the lifetime and value and so on. So it's not only a question of cost. It's a question of revenue and loyalty.

Regarding the other topics related to the contracts, we are in a kind of systematic approach. So it's a kind of day-to-day exercise. The good thing is that now we have turned it into a collective exercise across the company. It was not -- I would say, not very difficult for the Tele2 employees to get back to these roots, which used to be one of the original values of Tele2 and is now, again, one of our values because we have changed our values and cost consciousness, one of the new values that we have reimplemented in the company.

And we have reopened, I would say, almost half of the biggest 350 contracts meaning that, to be honest, I believe that, unfortunately, we have picked the lowest hanging fruits. There are still contracts that we will reopen because they have a [ renegotiation ] date, we couldn't reopen it before the termination. But over time, of course, we will have to climb higher in the tree to pick the fruits.

But we will see in the meantime the benefits -- the continuing benefits of the renegotiation of the contract in the coming quarters. So that's my answers to your 2 questions.

We will now take our next question from the line of Erik Lindholm-Rojestal from SEB.

Congratulations on strong results here. A couple of questions from me, if I may. So very strong delivery on EBITDAaL growth in Q2 over 3. But you have guided for slightly above 10% with the EBITDAaL growth for the year. You have already delivered almost 11% for H1 with a higher pace in Q2. Is there any reason for you expecting a lower pace in H2? Any growth investments coming in or something else you are seeing? I will pause there and come back with a follow-up.

I will take advantage of Peter returning back in his room after the fire alarm to transfer the question to him.

Yes. Thanks, Jean-Marc. Thanks, Erik, for the question. So what we say on our EBITDAaL guidance, I would say that it in this way that so far, of course, we are satisfied with development in the first half of the year in 10.6% organic growth, which has been enabled by our transformation activities and also the Baltics top line growth.

And those benefits are something that they are here to stay. So we're confident that we'll have benefits from them also in the second half of the year. And that's why we're confident to today raise our guidance.

Then I think we still should keep in mind that we experienced a macro headwind and a weak consumer confidence that we need to be aware of in the remainder of the year. And we have had a great discipline on the cost side so far and some of that might need to be reinvested to secure the growth going forward as well.

To give you some flavor and 2 examples, we have an ongoing 5G rollout, which is great for our quality, but brings not only CapEx but some extra OpEx as well along the way. And we have been very disciplined for good reasons with our commercial investments like marketing in the first half of the year. And now the more intense season is starting and we might need to reinvest a bit there, as you know. So that's how we look at the guidance.

Yes. Just to elaborate on that, what we see in the market are, of course, that the consumers are, not surprisingly, a little bit cautious about their spending due to the economic environment. Two proofs of that, we see that there is a drop in handset sales compared to last year, not in Tele2, specifically, but on all the markets, all the channels. We see as well the level of bankruptcies, the SME bankruptcies, remaining relatively high. So that makes us a little bit careful.

But this is the reason why we decided to transform urgently Tele2 because we want to be able to react. We are the value-for-money reference in this market. So we need to help customers in this period of time. But that explains as well that we remain careful for the second half of the year.

All right. And then, I mean, just coming back on that then, I mean, is it fair to say then that Q2 is maybe the peak of EBITDAaL growth for the year and you see a slightly lower pace for H2? Or is that the right way to characterize it?

Peter?

Yes. I don't think we should elaborate too far on exactly how each quarter will develop. But we're absolutely satisfied with the development in Q2 with very strong performance, both in Sweden with 13% and extraordinary growth of 20% in the Baltics. But otherwise, I would refer back to the comments from me and Jean-Marc on how we think the full year will land.

Perfect. And just a final question. So leverage down to 2.2x. Will come down, I guess, clearly, with the [ all the growth ] you're seeing in H2. This gives, of course, a lot of room for different capital allocation options. But is there any pocket that you will look at doing M&A in? Or is returning capital to shareholders top of the priority list there with this balance sheet?

So if I start again on the leverage side, as you see, we have a very strong balance sheet and I think that's something that is very, very positive to start with. And as you know, we start with we have the second tranche of the ordinary dividends that will be paid out in October, it's SEK 2.2 billion.

Besides that, I think we repeat what we have already said that the focus right now is on execution this year, on the transformation. And after that, let's see what the Board might suggest in relation to capital structure and M&A. I think, it's a little bit speculative on -- if anything would happen there.

We will now take our next question from the line of Andreas Joelsson from DNB Carnegie.

It's Andreas here. I hope everyone is okay after the fire alarm. I have a question on the top line going forward. Clearly, you have rejuvenated Tele2 on the cost side. But can you give some more flavor on what you do and prepare for rejuvenating the top line as well? I guess, you are collecting and analyzing a lot of data as you have done in other countries where you have operated before.

So can you explain a little bit what you do with all this data and how you plan to sort of structure in general terms the offerings when we leave 2025?

Yes. I assume that your question is more about the Consumer business in Sweden. We are growing nicely in B2B in Sweden and the growth is spectacular in the Baltics. So of course, we can comment on that, but I assume that your question is more focused on the Consumer -- the Swedish Consumer business.

So Petr, do you want to comment on that?

Yes. I can comment. Thank you. Can you hear me, by the way?

Yes.

Yes, brilliant. So thank you for the question. We are -- in Q2, we have seen more intense competition on the offers, both on the ATL and BTL and in [ extra in retail ]. What we are -- we have relaunched Frank, the new brand, which will give us a boost into brand recognition and so on.

Yes, we are preparing series of your new portfolios and new products on both mobile and broadband. We have launched TV, which is now a future-proof flex model, which we believe in. So we are preparing the rest of the revenue growth post this quarter, yes.

Yes. The new flex model is now used by 60% already for non-group customers, meaning customers we interact directly with. We have very good feedback from that. And of course, we're investing -- we continue investing massively on 5G because we believe that there are a lot of untapped potential for 5G in Sweden.

So that's it. We are using this data in order to maximize the impact of the service we launch and as well to improve the quality of the direct interaction with the customers.

Just a follow-up on that. I guess you have renegotiated some content-related contracts, and I guess, it's too early to see the impact of that. But do you see that costs will be reduced in absolute terms from those renegotiations?

No, the renegotiation of some of our content contracts, the ones that we could renegotiate, were triggered first by this new flex offer that we introduced. And we introduced this flex offer because we see that this is now a prerequisite from the new generation of TV watchers and viewers. People want to be in control of what they watch and they want to pay for what they use and watch and not for bundle. At least this is how the new generation of viewers behave. And that's why our flex offer has been received in a very positive way by the customers.

That, of course, was the opportunity for us as well to renegotiate a number of contracts using the competition between all the platforms and the content players. And yes, this has impacted positively our cost base as well.

But I would say it has a double benefit for us, meaning that in terms of revenue, usage, customer and in terms of cost savings where we pay more and more for the content actually used by our customers. And that's one of the areas -- one of the many areas of improvement of our P&L structure.

We will now take our next question from the line of Fredrik Lithell from Handelsbanken.

I have maybe 2 questions. B2B have seen an improved trend, RGU is up. And even though ASPU is down, you have a good progress in growth despite the fact that we see sluggish developments on the corporate side.

Could you sort of maybe pick that apart a little bit in what is it that drives the B2B for you? Is it public or the private sector? Or is it large or small enterprises? So that's the first question there.

The second one I have is right-of-use assets has been on a much higher level the last 3 quarters now compared to historical levels. So could you explain what that sort of -- what that means? Is that taking CapEx down? Is it helping your cost transformation by taking into the balance sheet or what? Would be interesting to hear.

Okay. So I will ask Stefan to answer your first question about B2B, and Peter will take over about the balance sheet.

Thanks, Jean-Marc, and thank you, Fredrik, for the question. And in regards to the B2B development, I mean, you're quite right about the sluggish development we went through into recession in 2023 in the autumn. And that has, of course, have affected us, and we've seen that in -- during the past couple of quarters last year.

But I'm really happy that despite this, I think it's very -- I think it's important to note that this is the 16th quarter of consecutive growth that we have for B2B despite this development.

And looking at the last quarter, I think it's a healthy mix from a product perspective. We see growth on both Mobile, IoT revenues, Cloud PBX, networking solutions, where it comes from managed services and service agreements. So it's quite broad.

If we look at from a segment perspective, I would single out SME and the public sector on the Mobile side. The Micro segment that Jean-Marc was alluding to has had difficulties more so than other companies or larger companies. So that is something that is still a concern of us. We've seen bankruptcies being high also going into this year. So I would say we're not out of the woods yet. And of course, going forward, it will be important for us to see that the macro returns.

But I would say that the results that we see is on the back that we are supporting our customers with their needs, and it's paying off in terms of both the customer base and revenues. So I'm really happy about how all my teams are performing in regards to both the ongoing transformation, but also handling and focusing on supporting our customers, and that is really paying off. Thank you. Hope that gives you color.

Yes, absolutely. Just a follow-up on that. I mean, we see that the ASPU is down and has the sort of -- it has continued to decline at a bit bigger clip. Is that an effect of the mix that you point out? Public sector, for example, do you have sort of other price parameters that is influencing your ASPU in a negative way because public sector is driving on faster. Is that fair?

Well, we talked about it the last -- during the last quarterly call and I think the explanation that I have then is the same for this quarter.

And you're correct in regards to segment mix, there is a change in the segment mix. The smallest Micro segment comes with a higher ASPU. And of course, where we have a higher increase of our RGUs in the public segment as we've had, that affects the ASPU.

But it's not only the sort of the segment mix. We also see that during this recession that both SME and Large segments, they have done adjustments on the engagement that we have and they have reduced number of employees. They have cleaned out the subscriptions. They have been downgrading to cheaper subscriptions, et cetera.

So of course, it's a mix, I would say, both by segment mix and a product change thing. But one thing, I think, is important to highlight here is that now looking at the quarter-on-quarter development, meaning Q2 versus Q1, we see a stabilization on the ASPU. But year-on-year, we have a clear decline.

Okay. And on the balance sheet question on the right-of-use assets, I think I can answer in 2 ways on that one. The growth we have seen last year is primarily due to a growing network, and with that, more leases and also some other contracts. That's one way to look at it.

I think the other thing is that these assets and the related liabilities are quite sensitive to contract assessment and also the length of those contracts. And that's why when we look at our numbers and since IFRS 16 is a quite sensitive topic, we have chosen to look at our financials in a way excluding IFRS 16 in a sense that we're looking at underlying EBITDA after lease and also our cash flow after the amortization there, making those judgments a little bit less sensitive and looking more on the true developments no matter how we charge IFRS 16. So that's what I would say there.

Our next question comes from the line of Ulrich Rathe from Bernstein.

A lot of my questions have been answered in the meantime. But one is there was a debate a little bit earlier into the quarter whether this period of renegotiations of your supplier contracts also involves you cutting back on purchasing simply from a tactical point of view because, obviously, it strengthens your negotiation position if you sort of show that you have flexibility to reduce volumes.

So in as much as there is a debate here about what happens in the second half and that 2Q could be peak growth, could you comment on this effect, whether there are elements here in the second quarter of one-off-ish cost benefits simply from the renegotiation?

And my second question is with regards to the revenue outlook, Jean-Marc, in particular, based on your current assessment, would you be willing to give some sort of trend growth or growth potential outlook for longer-term growth potential in the Swedish Business from an end-user service revenue point of view, obviously.

Okay. Thank you for your question. I'm not sure that I understood clearly the first one about the contract renegotiation and the one-off. Peter, can you help me on that?

Yes, so I can answer, if you like. So I think -- I understand the question. I think the short answer is that there is no material such impact. The benefits that we have from contract negotiations are more sustainable than that and no massive one-off effects from those discussions that will bounce back in a way. That's what we see.

Yes. So that was -- that's the reason why I was not understanding clearly the question. There is no one-off impact.

Regarding the revenue outlook, it's quite difficult to give you -- to share our forecast on our revenue development for the next quarters. I believe that the reason for that is, of course, related to the uncertainties of the environment that we commented already that we see materializing in what we commented on the Micro segment on B2B in Sweden with a lot of a lot of bankruptcies, at least the number of bankruptcies remaining high in this segment. The drop in handset sales in the market in general. We see a lot of uncertainties as well in a certain remit on -- in the Baltics due to the political -- the geopolitical environment.

What we have done in order to, I would say, prevent us from these uncertainties is to make the company more agile. Basically, when you are not certain about the environment, you need to make sure that you can react fast and make a quick decision and adapt to the customers' constraints and behavior. We have a kind of commitment to the customer. We are the value-for-money brand, meaning that we are there to stand with the customers if they face some issues to get access to their services.

Saying that, we are taking a number of actions in order to accelerate our growth on the B2B side. That's something that was underlying Stefan's comment in his answer before. We are reprioritizing our portfolio, revising our portfolio of services in order to make sure that we will be able to grow in all the segments and sometimes offset the slowdown of -- in one segment with additional growth in another one with, I would say, equivalent or comparable profitability level. That is an exercise that was part of the transformation that we completed this year already, meaning the reprioritization and the revisiting of the services of B2B -- the portfolio of B2B services.

On the Consumer side, I believe that Petr partly commented on what we are doing in order to connect more directly with the customers. But as well to adapt to some specific situation, I commented briefly that we see some competition on the open fiber areas. I wouldn't say that the regulatory situation in this area is satisfactory, but we need to cope with that.

And then of course, we don't want to trigger another price war. But in the meantime, when we see the need to respond, now we are in a position to respond. And that's one of the reason why we want to keep our margin of maneuver in H2 to reinvest in the market in order to fight back or to respond. But in some very specific areas, once again, we don't believe that anybody in the market wants to trigger a new price war.

And if I have to share with you a long-term outlook, I believe that our objective is to continue growing at the pace we are growing today our revenue over the next few years with a special focus on the Consumer market segment in Sweden. And of course, to sustain the growth that we see in the Baltics as well because usually we have Petras with us today in this call. We don't comment a lot on the Baltics performance, but they are doing a great job. And of course, they are an inspiration for us in terms of revenue growth.

Our next question goes to Viktor Högberg from Danske Bank.

Yes. You touched upon it briefly, yes, the Swedish broadband regulation. Just your take on the latest analysis from PTS thinking about access cost, do you think it's moving in the right direction? Just want to pick your brain on that topic a bit more and specifically for Tele2, that is.

Yes. I would say my answer will be very short and straightforward. The regulation is evolving in the right direction, but not fast enough. There is half of the Swedish households, which are single dwelling units, villas, homes -- houses, we need to have an open access to these households at a fair wholesale price. And of course, the access has to be negotiated together with the wholesale price. This will happen. The regulator is working on it, but we need it faster.

And then there is another problem that, I would say, transforms in the kind of ticking bomb in the market, which is the increase of the access fee by the landlord association. This is something that we have stated already clearly in the previous quarterly presentation. We stand on the side of our customers because, of course, we need to make sure that in this very critical value chain for getting access to homes. Nobody is taking a kind of an undue fee from the hand of the customers.

These are the 2 battles that we are ready to fight in order to make sure that everybody gets access to Internet -- broadband Internet at a share price in...

Our conference call and webcast will be extended due to the fire alarm disruption.

We will now take our next question from the line of Felix Henriksson from Nordea.

It's in 2 parts. First is regarding the personnel reductions. Can you comment on the timing of your incremental head count reductions for the second half of the year, whether that's more tilted towards Q3 or Q4?

And secondly, I think you've previously hinted that you will especially revisit your financial targets and capital allocation policy once the transformation process has been -- is further ahead. So should we expect you to provide some more information on this matter already in the second half of 2025 or rather after the fiscal year?

Okay. I will take the first question and I will let Peter answer the second one.

Regarding the reduction, the first part of the workforce reduction was, I would say, the consequence of the overall simplification of our organization, the reduction of layers, concentration of management role, prioritization, revision of a number of processes and so on.

The next time -- and that was, of course, organized across the company and across the group both in Sweden and in the Baltics. And of course, this was executed at the end of H1 to the extent of more than 500 positions canceled in the organization.

The next step will translate more over time because it's about the progressive improvement of some specific areas of the organization when we see that we have opportunities to improve the efficiency and the profitability. And we will communicate on that in due time because we are in the process of investigating the topics specifically with the employees, with the management, with the unions and so on.

So it will be over time. It will be -- it will not be the kind of big move that we made in H1.

Okay. If I can continue on the second question from Felix. And the policy we have is still valid and unchanged. But as discussed, what we focus on right now is the transformation during this year. So even -- it's up to the Board to judge when or if that should be revisited, but I don't think you should expect that to happen in the near term or during this transformation year.

We will now take the next question from the line of Ajay Soni from JPMorgan.

Just got couple. First is on the customer reaction to your price rises in March, April. Obviously, your Q2 net adds were broadly solid, maybe ASPU is slightly softer on the fixed side. So was there much in retention offers here to hold on to your customers with these price rises?

And the second one is just around the interest payments. You mentioned Q2 timing was -- there was a timing benefit for your interest costs. So are Q3 and Q4 more similar? Or is Q4 still expected to be seasonally higher?

Okay. Once again, I will take the first one, maybe with the help of Petr if he has something to add. And Peter will answer the second one.

So the point is that the Swedish market has now entered the phase where annual price increases have been accepted by the customer. It's not surprising when you live in Sweden because this price is, of course, material but not really significant in terms of budget. At the end of the day, we are discussing about an essential service whose cost is still equivalent to a few cappuccinos per month.

And in the meantime, in an economy where all the prices are increasing due to inflation and a number of reasons, it has been accepted and it's something very important for the market. It has been accepted by the consumer that the price would increase. Of course, there are always some segment of deal seekers who are ultra-price sensitive. But for the largest part of the customers, they have accepted these price increases.

So we have seen some moves, but not significant moves in terms of churn and so on and we see a continuous accept-ation of this move.

Do you want to add something, Petr or...

Yes. I think, it was exactly as you say. On top, we have seen in quarter 2 higher promo activity on the market. So competitors launching promos to acquire customers. We have done the same. We will not allow customer loss. That said, we are not losing the customers.

But in quarter 2, the market has been more -- tougher. There has been more activity and that is also a little bit the result in some of the ASPUs that we see from the acquired customers.

Yes, that's important to mention because from our side, the price increases are, of course, mixed with some promos and that's the usual way to deal with the price perception in the market.

Peter, do you want to take the question about debt?

Absolutely. On the interest payments, our payments are quite volatile between the quarters since we're funded by, quite to a large extent, through bonds. And just like last year, it will be -- the majority will be paid in Q4. And as I said previously, on a full year basis, our present expectations are at SEK 750 million of interest payments, excluding leasing.

Our next question comes from the line of Joshua Mills from BNP Paribas Exane.

I actually wanted to ask about the CapEx numbers. So your CapEx sales today or first half of the year is running about 12%, that's down maybe 20% in absolute terms versus 2024. So how much of that is due to phasing? Or are you actually delivering on some of the underlying efficiencies in this area as well? And if so, is it possible that we could end 2025 within the 10% to 12% CapEx-to-sales range you've targeted in the medium term a bit earlier than expected? It would be great to know if there's any specific phasing effects or investments you expect to make in the second half to get us back towards that 13%.

And then maybe just one quick follow-up on the cost side. I know you've talked about it a lot during the call. But if we were to use the SEK 650 million head count target as a proxy for cost savings, i.e., another SEK 150 million versus the SEK 500 million you've done year-to-date, should we expect the cost reduction on head count to come down again in Q3 and Q4 relative to Q2? Or is there a mismatch between when the employees leave the business and then when you account for it in your OpEx and EBITDA.

Okay. I will take the 2 questions and let Peter complete on them, if he has something to add. On the CapEx side, in a nutshell, we already commented in Q1 that we have made a number of prioritization decisions in order to focus our CapEx where we had to really invest.

So we made a number of decisions, for instance, on Remote PHY upgrade for our HFC network because we had engaged into a kind of systematic upgrade of the fixed network of Tele2. We realized that it was only impactful for the customers in areas where we had a capacity issue. So we made the logical decision to move from a kind of proactive upgrade to a reactive upgrade. And we focused these upgrades only in areas where we need to improve the capacity.

We have as well seen the impact of -- we have stopped a number of projects that we were not considering as top priorities. And we see as well on the CapEx side the impact of the renegotiation of the contracts with a number of vendors.

Saying that, when we look forward, we have a major source for investment in '25, which is the rollout of our 5G network within Net4Mobility. And as you can observe, we have been increasing the CapEx-to-sales ratio from 11.5% in Q1 to 12.4% in Q2, and we will continue. We have kind of hard deadline at the end of the year to complete this 5G network, and that's why we believe that we will deliver the CapEx guidance.

Regarding the head count impact, this is as well something that we already commented or at least we anticipated in Q1. We started implementing -- executing on the workforce reduction at the beginning of the year with, of course, an impact that was faster in the Baltics. In Sweden, we had to wait for the conclusion of the negotiation with the unions. But they've been -- the workforce reduction has been implemented in the kind of long tail in June. So we will see something like 7 to 8 months' impact in 2025.

For the other workforce reduction, as I commented, they will be delivered over time. And some of them will not materialize in '25 -- we'll have no significant impact on the 2025 P&L because some of them will happen probably at the very end of the year.

Peter, do you have anything to...

I think you covered it right well. So just to -- on the people cost side, to conclude, the absolute majority of the impact is there already in the Q2 numbers. But obviously, not all of it, but most of it.

And on the CapEx side, I think you covered it.

Our next question comes from the line of Nick Lyall from Berenberg.

Just a couple of questions, please. Firstly, on the Swedish Consumer business, you've done a rebrand this quarter and brought back Frank and things like this. Have you looked to talk about -- is this just about price rises each year? Or are you actually looking in this latest review at the scope to change package structures? Are you happy with the price positioning of the brand? So just be interested in what you've sort of concluded there.

And then secondly, back to SME in Business. Is it possible for you to quantify the SME revenue, please, and give us a couple of trends over the last few quarters? Just be interested to see if that revenue has started to slip because of insolvencies or not and what you're actually soaking up.

Okay. On the B2C side, I believe that, no, it's not only about the price increases. We are introducing a number of new tariff plans. We are, I would say, adjusting our portfolio of services segment by segment in order to respond to the customer needs.

Price increases are not special to Tele2. It's a market trend now. We are following the trend. But in the meantime, we are very eager to remain the value-for-money reference in the market, which we are. We are not, I would say, the cheapest brand, but we provide as well excellent offers for handsets and other services and good quality of network.

So we believe that the value-for-money positioning of Tele2 remains valid, but needs to be reinvented in a different way depending on the segments that we consider.

On the B2B SME side, Peter, I'm not sure that we communicated about the...

No, we're not too explicit on that one. I mean, in terms of size, our Large business is larger than our Micro business. That's a fact, but we're not too explicit on exactly the numbers here.

But I'm afraid that we need to leave you in the -- we need to trust us in the -- when we refer to the evolution of the mix and how we balance it. What I believe is the most important output of this transformation that we have -- this first wave of transformation that we have completed is what I was commenting earlier is that we used to have some profitability issues in some [ non-company ] segment. And so it was difficult to compensate what we -- some slowdown in the Micro segment by increase in higher segment.

Now, it's much more -- it makes much more sense to do that for us because of the revisiting of our portfolio and the increase of profitability on the higher segment, not only because of the prioritization of the portfolio, but as well because of some of efficiency and automation that was implemented by Stefan in his organization. We are now in the process of the accelerated implementation of a number of tools in order to automate the delivery and the support of our services, which improve the profitability.

And what we can add is, I mean, as we have also stated, the growth that we see in Q2 is thanks to the development within the Large segment and IoT. That's...

Just to clarify there, I think -- when we talk about the Large segment, that is a combination of the SMEs, public and the private customers. And the Micro segment is employees. Roughly, I would say between 0 and 10 employees. And that's where we have difficulties, as Jean-Marc was alluding to.

And it has been visible in our numbers. Let's keep it at that comment, yes.

Our next question comes from Steve Malcolm from Redburn Atlantic.

Yes. And I don't normally say this, congratulations. I can't remember seeing a European telco grew EBITDA 13% in the sort of northern market for long term. So well done on that.

Just a couple of questions, one on B2B -- coming back to B2B on revenues and another on costs. It looks -- when I look at B2B Mobile, that the swing factor is and you do called out is IoT, which grew, I think, 11% in Q2, but only 3% in Q1. Can you sort of give us just a bit of a flavor of what you think the sort of mid- to long-term growth rate for the IoT business is and why it sort of stepped down in Q1 and why it recovered in Q2, that would be great.

And then just coming back to costs, it's a remarkable performance. And I think you've sort of been asked, I did drop off the call briefly. But when I analyze it, it looks like your OpEx fell by about 2% or 3% in Q1 in Sweden. It fell by about 8% to 9% in Q2. I mean, that is a huge step up. Can you just confirm that there was no sort of major renegotiations that landed handed in Q2. There wasn't sort of a huge pullback in marketing spend. There was nothing in terms of deferral because we were kind of getting the message that there was some cost deferral in Q1, it might drop into Q2. That clearly hasn't happened.

And can you sustain that sort of high single-digit percentage decrease in OpEx for the second half of the year, which if you can, it obviously suggests that the guidance you've given is a bit conservative. So just sort of dig into that sort of massive step-up in cost reductions in Q1 and Q2 would be really helpful.

Okay. Thank you for the questions. Stefan, can you answer the question about IoT. Peter and myself will take the second one.

Yes, sure. And just to clarify, on the Mobile connectivity, it's evenly divided between -- the growth on the Mobile side, it's evenly divided between regular Mobile growth and IoT. So it's not just driven by IoT. It's 50-50 basically, more or less, split.

No, I can see that. But if I look at Q1, I think your Mobile growth rate was 1%. In Q2, it was 4%. And the difference appears to be, because IoT was quite -- not weak, but it only grew 3% in Q1. It grew double digits in Q2. So clearly both are growing, but that was a swing factor, right?

Yes. No, no, no. That is correct. From the IoT perspective, we had a little bit lower base development at the beginning of the year. So that is one explanation. Another explanation is that we have an FX effect because a lot of the IoT revenues are billed in euros. And thirdly, we have this network outage that hit our revenue in Q1. So those are the 3 main reasons and that we saw coming back then in Q2.

Going forward, I mean, we have a really good position on IoT. We believe that we will be able to continue to grow, not maybe on the same percentage-wise because we're growing the base all the time. So growing the percentage on the same base it will be harder. But we see ourselves well positioned.

Some of you maybe noticed that we were given recognition by Gartner in the Magic Quadrant for connectivity in their latest report on IoT connectivity, which states and proves that we are in a good position in the market to continue to grow. And the whole IoT market is growing due to more things getting connected all the time. So we have good hopes for growth on IoT going forward as well.

And if I start with the second question and please chip in, Jean-Marc. First, on specific one-offs. We called out last year that we had an impact from bad debt of some SEK 15 million, SEK 20 million or something. That's, of course, slightly helping the year-on-year development this year, even though not massively.

Then I would split into 2 pieces. We have some structural savings. We have done the workforce reductions that we have talked about with the most impactful effect from mid-April, but also some phasing as we have talked about and also the undergoing renegotiation of contracts, which is helping, and in general, the cost discipline. So that is sustainable and will continue going forward as well.

Then on top of that, as I mentioned earlier, there is some timing in certain costs and marketing is one such example where we have kept it disciplined in the first half of the year and we'll save the spending for the more intense sales season in the fall and also some development of our growing network, adding network OpEx as well.

So it's mixed in that sense, but no big one-offs in the results.

Okay. So if we look at the sort of minus 2% or 3% in Q1 and the sort of minus 7% or 8% in Q2, is it fair to say that some of the minus 8% comes back in the second half because you're rephasing the marketing, I guess, around the relaunch of Frank and things like that and some of the network OpEx you're thinking about.

Yes. That's some of it and then I'll not call out a specific number there. But the cost savings are real, but also, of course, some timing and sequencing in when costs are arriving, yes.

Right. I'm showing no further questions. We thank you all very much for your questions. And with that, we conclude today's program. Thank you for your participation. You may now disconnect your lines.