Telia Stock

Welcome to Telia Company Q3 2026 Report Presentation. I will now hand over to Head of Investor Relations, Erik Strandin Pers. Please go ahead.

Thank you, and welcome, everyone, to the call. We have, as usual, CEO, Patrik Hofbauer; and CFO, Eric Hageman here, and we will do the presentation and then Q&A. We'll try to finish this call in 50 minutes today, 50 minutes. So let's try to be extra fast and efficient today. So think about an efficient question for the Q&A when we come to that. Patrik, please go ahead.

Thank you, Erik, and good morning, everyone. I'm glad to see that we have maintained good momentum in the third quarter, both operationally and financially. We are growing our core business. Customer trends remain healthy, and we continue to simplify Telia and move responsibility closer to our customers. So let me start with the progress we made during the quarter.

First, regarding our customers. Customer satisfaction developed positively, and we continue to see net growth in our customer bases. In Sweden, we have been selected as the main supplier for the Swedish emergency communication network, which further demonstrates Telia's relevance in secure and mission-critical connectivity.

Second, regarding simplification and strategic development, we are on a journey to move towards a more localized company with greater accountability and decision-making closer to our customers. And in Q3, we have taken another step in that direction, which I will come back to later in the presentation. We were also very proud to be the first telco ever to reach the best score 10 out of 10 in the Global Child Forum benchmark as protection of children in our digital environment is a key focus area for us.

Third, regarding portfolio management, we continue to sharpen the asset portfolio to drive growth in our core business. We make small bolt-on acquisitions like the 6,000 fiber households that we agreed to acquire in Norway this quarter and by making selected divestments in simplified business to simplify the business. In the quarter, we announced the divestment in our Communication as a Service platform ACE to a specialist partner who is better equipped to develop the platform going forward.

Then fourth, regarding technology, which is an important for secure and resilient services. During the quarter, we launched an enhanced Caller ID service in Finland and a Mobile DNS Firewall service in several countries. We are also expanding commercial 5G stand-alone capabilities across our footprint for safer and more reliable connectivity, better protection against digital threats and as a platform for new services that can take advantages of the full potential of 5G.

We continue to simplify our technology environment by modernizing and closing legacy systems, implementing new consolidated ways of working with partners and vendors and improving delivery accuracy for new functions and features for customers.

Turning to the financial highlights. Service revenue growth accelerated to 3.3%, supported by strength in TV, mission-critical and non-connectivity project revenue. Sweden and Lithuania both remained solid. EBITDA increased by 2.9%. This was somewhat stronger than we have anticipated, mainly due to lower cost. As flagged in connection to Q2, Sweden slowed temporarily in the quarter, and we expect growth there to reaccelerate again in Q4.

CapEx remains well controlled at SEK 12.6 billion on a rolling 12-month basis, below our full year outlook of less than SEK 13 billion. Free cash flow was at SEK 3.7 billion in the quarter, taking us to SEK 7.8 billion year-to-date. The leverage was at 2x at the very bottom end of our targeted range. Based on the performance in the first 9 months, we can now upgrade our full year outlook for adjusted EBITDA and free cash flow.

Moving to Sweden, where commercial performance remained healthy. We continue to grow our consumer business, having added more than 100,000 mobile customers and more than 150,000 TV customers since the start of last year. Consumer ARPUs are also growing in both mobile and TV. Broadband ARPU remains lower than last year. But as you saw in the numbers this morning, it has started to tick up again in absolute terms.

This month, we are proud that Telia Enterprise and Fello were named by SKI, Swedish Quality Index, as the mobile operators with the highest customer satisfaction in Sweden and to have been selected as the main supplier for the Swedish emergency communication networks, as I mentioned. Service revenue growth accelerated to 4.7%, supported by elevated project and non-connectivity revenue. But even adjusting for this and for copper legacy revenue, the business is growing by a healthy 4%. EBITDA grew 2.1% as expected. This was a temporary slowdown compared with recent quarters, and we expect growth to reaccelerate in Q4. Cash generation is strong with EBITDA less CapEx continued to move higher on a rolling 12 months basis.

Let me spend a moment on convergence because it remains central to our consumer strategy in Sweden. As you can see, the convergence ratio is on a consistent upward trajectory, and we now have about 1.2 million converged consumer -- customers, equal to around 55% of the base. This provides a lot of stickiness and every additional services added reduces churn by about 50%. At the same time, average revenue per household continues to increase by around 3%. The underlying economics remain compelling. Household churn falls materially as customers add more Telia services. We continue to see convergence as an important way to deepen the customer relationship, improve loyalty and create additional value from the households over time.

Moving to Finland, where the competitive environment in mobile remains challenging, and our focus continued to be on customer retention, loyalty and profitability rather than chasing volume. Service revenue was flat as lower mobile revenue was compensated for by growth in fixed, where both the consumer and the business segments contributed to the increase, the latter largely due to non-connectivity revenue. At the same time, EBITDA remained in growth territory, supported by good cost control. This shows that the work to simplify the business and improve its cost structure continues to have an effect even in a difficult revenue environment.

We have also completed the non-core ICT divestment, further sharpening Finland's focus. There is more work that needs to be done to improve the top line, particularly in mobile, but we continue to take the right structural actions.

Moving west to Norway, where the mobile customer momentum improved further. ARPU growth remained solid, supported by pricing and fixed revenue continued to perform strongly. We expect trends to continue in the right direction, helped by our new product portfolio just announced. Furthermore, we have continued to improve our NPS and our mobile brand OneCall was ranked #1 by EPSI in terms of consumer mobile customer satisfaction.

Service revenue remained in a positive territory at 1.8%, while EBITDA returned to a slight growth. This marks the first EBITDA growth in 9 quarters following the negative impact from the lost wholesale contract. Importantly, the operational cash flow trend also improved. While there is much more to do, the business has made meaningful progress compared with where we were a year ago.

In Norway, we're also building a stronger mobile networks, which I will touch on briefly on the next page. The rationale for this remains compelling. We are creating an efficient and future-proof mobile network. Coverage will improve in rural areas and urban areas alike, along roads and railways and where the cabins are located. Network capacity will increase. It will increase competition and consumer choice and make Norway's digital infrastructure even more resilient.

As you remember, Telia and Ice will continue to operate our independent core networks and compete in the market. But the radio network will be run by a joint operation with its own organization, which will create substantial cost and CapEx synergies. Regulatory discussions are still ongoing, so we can't give you an exact time line, but operations are planned to start at the beginning of 2027 with traffic migration expected to be completed before the end of that year. The network build-out will continue through 2030.

We will consolidate 50% of the joint operations P&L, cash flow and balance sheet in our accounts. The near-term service revenue and EBITDA impact is expected to be limited, while over time, we expect significant cost and CapEx synergies. The current estimate is for annual benefits to Telia of around NOK 300 million to NOK 400 million from 2029 onwards.

Now moving on to Lithuania, which continues to deliver consistent results, including positive ARPU development across the main products. Mobile customer growth remained healthy and service revenue grew 6.4% with good development across both mobile and fixed. The broadband customer base saw a slight decline, but we expect new fiber regulation, which we believe can help creating better momentum in 2027.

Telia Lithuania has furthermore been selected to provide critical communications, connectivity and cybersecurity infrastructure for Lithuania's presidency of the Council of the European Union. EBITDA grew 7.9%, showing continued healthy conversions to top line growth into earnings.

Finally, Estonia, where financial trends remain stable with service revenue growth of 2.8% and EBITDA increase of 4.3%. ARPU development remained positive across mobile, broadband and TV and the mobile postpaid base increased during the quarter. We have launched new security packages on for both mobile and home services this year and see strong demand.

This quarter, we also launched a new AI assistant in our customer service, and it has successfully reduced responding times and received positive customer feedback. Our fiber rollout program continued with contributed to a 1,000 growth to our fiber subscriber base, partly offsetting of the decline in copper connections. With that, I hand over to Eric, who will take you through the financial development in more detail.

Thank you, Patrik. Let me take you through the financial development in the quarter, starting as usual with service revenue and EBITDA. Starting with service revenue on the left, growth accelerated further to 3.3% in Q3 compared to 2.8% in the second quarter. The strongest contribution came again from Sweden that continued to see a solid consumer segment development and a somewhat elevated level of nonconnectivity-based revenues. This was also the case for Finland this quarter.

This type of revenue is quite lumpy by nature, and some of the deliveries we made this quarter were originally expected to be delivered in Q4, but came a bit earlier than anticipated. As a result, we expect lower service revenue growth in Q4 compared to our year-to-date growth of 2.8%. As such, we keep our full year guidance unchanged at around 2%.

Turning now to EBITDA, which grew 2.9% in the third quarter. This was, as we flagged 3 months ago, a slight slowdown from the level of growth we saw in the previous quarters. Having noted that, we actually did came out somewhat stronger compared to what we originally expected, mainly driven by lower costs. Year-to-date, EBITDA growth is 3.5%. As previously communicated, we expect this to reaccelerate in Q4. Therefore, we are today upgrading our full year EBITDA growth guidance from around 3% to between 3% and 4%.

Moving now to OpEx and CapEx. Starting on the left, OpEx declined 2.6% on the back of relatively stable resource cost, lower cost for marketing and less spend on other, which includes, for example, better-than-expected levels of bad debt across the group. OpEx as a percentage of service revenue continued to decline, coming down to 26.6% compared to 28.2% in the corresponding quarter last year.

Moving to the middle graph, you can see that CapEx in absolute terms was pretty much flat at SEK 12.6 billion on a rolling 12-month basis, comfortably below our full year outlook of less than SEK 13 billion. EBITDA less CapEx as a simple proxy for cash flow generation was up again, now at SEK 20.3 billion. Rolling 12-month cash conversion was up 20 basis points to around 62%. Finally, on the far right, our return on capital employed reached 10.3%, up 100 basis points compared to 9.3% a year ago, supported by our profitable growth and continued discipline on our capital allocation.

Turning to free cash flow. Free cash flow in the third quarter amounted to SEK 3.7 billion compared to SEK 2.9 billion in the same quarter last year, taking free cash flow to SEK 7.8 billion for the first 9 months of the year. The first major contribution to this circa SEK 900 million year-on-year increase comes from profitable growth with EBITDA up SEK 400 million. CapEx had an equally positive impact of circa SEK 400 million as last year, we saw some higher cash CapEx. Working capital also made a minor positive contribution in Q3 compared to last year.

Finally, we also saw a timing effect between quarters regarding dividends related to our telco ownership in Latvia, which helped a little bit this quarter. Overall, free cash flow again developed very well in Q3. In combination with a strong start to the year, we have nudged our free cash flow outlook for the year slightly up to at least SEK 9 billion.

Moving now to the balance sheet. With net debt down SEK 1.4 billion and a rolling 12-month EBITDA up SEK 500 million in the quarter versus Q2 of this year, leverage decreased from 2.06x at the end of Q2 to 2x at the end of Q3, putting up as -- us at the very bottom end of our targeted range of 2 to 2.5x. Our free cash flow of SEK 3.7 billion more than covered the dividend of SEK 2 billion we paid this quarter. Overall, our balance sheet remains strong and provides us with good financial flexibility.

Finally, let me put the quarter into context of our value creation agenda. First, rolling 12-month free cash flow per share has reached SEK 2.61, more than covering our current yearly dividend of SEK 2.05 per share. Second, we remain active in the market as we continue to see opportunities to further optimize our portfolio. In this quarter, through transactions in Sweden and Finland, where we have divested part of our operations to become more efficient and Norway, where we signed an agreement to acquire 6,000 fiber customers from Global Connect.

Third, leverage is at the lower end of our target range, as I just explained. Finally, we paid another quarterly dividend of just over SEK 0.50 per share. Overall, we continue to make good progress across all our pillars of our value creation agenda in terms of cash generation, portfolio management, balance sheet strength and shareholder returns. With that, I hand back to Patrik.

Thank you, Eric. Let me now turn to an important next step in our simplification journey, which we announced on October 12. Over the last couple of years, we have progressively moved Telia towards a customer-focused operating model. We now intend to take that model further. The principle is simple, put more responsibility and resources closer to our customers, reduce unnecessary coordination and make it easier to take decision quickly. Subject to union negotiations, we, therefore, intend to shift further resources from group to our countries and simplify the group structure.

At the same time, we intend to reduce approximately 900 positions across Telia. The target is approximately SEK 1 billion of annual gross savings with actions expected to have a positive impact on free cash flow in 2027 and reach the full run rate benefit from 2028. This is not a simplification for its own sake. It's about creating a company with clearer accountability, fewer interfaces and greater speed of execution.

Let me now finish by summarizing the quarter. Overall, we continue to make good progress. Customer trends remain healthy. Service revenue growth was strong, and we continue to execute on our simplification and portfolio management. Financially, we are tracking well against our plan. After 9 months, both service revenue and EBITDA growth are ahead of the respectively full year outlook levels, while capital discipline and free cash flow generation remains strong.

Given this, we are comfortable in upgrading our full year outlooks for EBITDA and free cash flow. At the same time, we remain focused on the longer term. The actions we are taking will support sustainable growth in revenue and cash flow while enabling us to continue creating value for our customers and meeting their evolving needs. We are well on track on our midterm ambitions, including free cash flow of more than SEK 10 billion in 2027. With that, we will open up for questions. Thank you.

[Operator Instructions] And the first question comes from Ondrej Cabejsek at UBS.

I wanted to focus on the RAN sharing slide that you have, please. So thank you for providing more clarity. I guess one straightforward question is that given that there is a regulatory discussion ongoing, does this mean that you as probably the new largest network in Norway, expect to be somehow regulated with some kind of wholesale obligations the same way that, I guess, Telenor is today? That's question number one.

And then question number two, on the free cash flow effect, are we correct to assume that there are some equalization payments from the smaller partner in '27, '28, which looks pretty material. So the whole thing is free cash flow accretive from '27 already despite some of these kind of, I guess, integration or CapEx going into this initially? And then what do you mean by short-term impact on service revenue and EBITDA, if you could please clarify?

It's Patrick. I can take the first question. We are now in dialogue with the regulatory environment in Norway. We cannot specifically say what it is. It's too early, but we are in good dialogue, and we still think that this -- it will be possible for us and Ice to move on with this one because, again, we are building a stronger network in Norway, which improved the digital environment overall and the infrastructure in Norway. So -- but it's a bit too early to say what it will be about.

On the impact or the financial impact, if you will, we -- as you can see on the slide, we're not going into details of exactly what those blue arrows are, greenish blue arrows are because that's part of a nonpublic business agreement that we have. But I think the orange ones are clearly indicating what it will do for us in the short- and medium-term. In essence, negative in '27 and to a small extent in '28 because you have implementation costs and then starting to reap the benefits from '29 onwards to the tune of, at the moment, we've said circa NOK 300 million to NOK 400 million.

And can you please explain the impact on service revenues and EBITDA? What is happening there?

Yes, we will come back to that at a later stage. As Patrick just said, let's make sure we get through the conversations with the competition authority, which we hope to bring to a good conclusion. Then after that, we are able to tell you a little bit more where we have landed. But we felt that something that we announced last year was important to give a bit more detail that we have that we've agreed also with our partner. We thought it was important to give you a bit of clarity also because we're starting to get closer to '27. As you can see on this page, this has an impact on that '27 free cash flow number.

The next question comes from Derek Laliberte at ABG Sundal Collier.

So first question on -- I have 2 questions. First, on Sweden. Service revenue growth accelerated to 4.7%. Here, you mentioned it was helped by Business Solutions and other services. So just wondering how much of that strength was sort of simply Q4 revenue being pulled into Q3 and what the underlying growth would have looked like excluding that timing effect?

Yes, I can start first. It's Patrick here. As we said, we were a bit surprised the Q3 was a bit better than expected. One of the reasons is that we got some orders in -- or businesses in mainly non-connectivity related. If we exclude those non-connectivity related, we would be at around 4% in the quarter. So that is basically it.

Perfect. That's very clear. And then on the free cash flow here, obviously, very strong at SEK 3.7 billion. You mentioned it was supported by working capital and lower cash CapEx. How much of that would you say is expected to reverse in Q4? And what should we assume for sort of year-end working capital here?

Yes. We're obviously not guiding on a quarter-by-quarter basis, but I think you should see in a positive light that we've notched up that free cash flow outlook to at least or above SEK 9 billion. We -- there is a bit of phasing. There always is. But if you look at the rolling 12 months in terms of CapEx, we feel very confident where this is heading. I think that gave us also the confidence to upgrade to free cash flow today.

I think if you look at versus last year or the expectations we have for the year, there's various elements that contributed, paying less tax, paying less interest, a bit better working capital inflow, but it starts with a much stronger EBITDA that we've seen and our expectations for Q4. Yes, I think we feel comfortable with this upgrade that we've done today on the back of a strong start to the year at 7.8%.

The next question comes from Maurice Patrick at Barclays.

Just one question really, Eric, on the balance sheet and shareholder returns, if I may. I ask it because you mentioned it twice on the call actually that you're at the very low end of your target leverage range. You also highlighted free cash flow more than the dividend. I think you mentioned that twice as well. It's interesting talking to Tele2 yesterday, they sort of asked about special dividends and shareholder returns, and they talked about wanting to maintain a cautious balance sheet given the financing environment.

But you're clearly at a point where you're below your mid-term guidance range on leverage. You'll have a CMD, I think, next year to talk about the outlook to 2030. It's probably premature to talk about your total shareholder return strategy for the next 3 years, but very curious to hear your thoughts in terms of longer-term balance sheet positioning, use of cash flow and how you think about that for the years ahead?

Yes, very good question. I'm sure in the coming days when we're on the road, we will get it quite regularly. I think it's part of the hard work that we've put in, right? It's the consequence of the strong results. I think working backwards, you're absolutely right. There is a CMD that we're planning to have in H1 next year. I think this is when we will set out our store on all these elements because that's also what we did in September '24. We feel that we are getting in a good position, both from a balance sheet perspective.

Of course, our colleagues here in Sweden are right, given the current macro climate, increasing interest rates being at the lower end has advantages because one will pay more interest, right? Being at the lower end is a good thing. Give us some time to come back to that. No doubt, in the beginning of next year, we will talk about the dividend because that's when you prepare your documentation for the AGM and then followed by the CMD, where you should expect us to talk about capital allocation in general and shareholder remuneration specifically.

The next question comes from Andrew Lee at Goldman Sachs.

I had 2 questions. One on cost cutting and the announcement you made a couple of weeks ago. Then second on the top line. Just on the cost cutting, I guess your share price response on the day of that announcement was muted because people were trying to gauge how much of that is incremental. Could you talk about how much of that increment -- of that cost-cutting program you've just announced is incremental versus what you expected to deliver when you set your 2027 guidance?

And any color on where it's coming from would be helpful given that if we look at the 2027 outlook now, you've got almost SEK 1 billion of extra costs that you're taking on SEK 600 million of restructuring and NOK 300 million to NOK 400 million of RAN sharing costs. It looks like with an unchanged free cash flow guide, you've essentially raised your underlying free cash flow guidance by SEK 1 billion in 2027. Just a bit more color around kind of what's going on incrementally would be helpful there.

Then just secondly, just more simply on the top line, you've kept your top line guidance of around 2% for the full year this year. I think that implies basically flat to declining top line in the fourth quarter. Could you just explain why that is? What's getting materially worse given I'm guessing, if Finland should be getting better in the fourth quarter?

Thank you, Andrew. I can start with the top line. No, we don't expect a negative development. So -- and we normally not guide, as you know, by quarter. But we see that some business that came in a bit earlier than expected came in Q3 instead of Q4, and then we also have tough comps in Q4 as well. That's the reason why we maintain basically the outline -- outlook -- sorry, the outlook for the 2026 full year outlook. A bit softer expected, but not any dramatic.

Then on the cost cutting that we -- remember now, this is a continuation of what we have started before, building a simpler, faster, more efficient Telia. We see of course, the big impact will come in '28. We will have some impact in '27, but the majority of the impact is in '28 and onwards. That's the reason why we're doing this change. We want just to be sharper and simpler in the way we operate. Then maybe, Eric, you can say something about the impact for 2027, specifically given your question, Andrew.

Yes, we obviously had a discussion on, but we set out a clear story of our free cash flow development in September '24, and you kind of don't want to change that. Obviously, for '26, it's slightly different because there are some puts and takes. We see the negative impact of RAN sharing. There is restructuring costs for the project that we announced on the 12th of October for which, as Patrik said, we will get the full benefit next year. We had a conversation as in, is this the moment to do it or not, and we felt not yet. But I think your conclusion is right. Does it underlying mean that it's a free cash flow upgrade? And I guess, in essence, it is.

The next question comes from Andreas Joelsson at DNB Carnegie.

Just a follow-up on the top line and perhaps more specifically mobile in the Nordics. You have some growth in the Swedish market, but you're still in decline in Finland and Norway. So just interested to hear your thoughts on how to turn that trend. And maybe in connection to that, also the convergence that you mentioned in Sweden, does that mean that you are more looking at the total service revenue package, so to say, rather than looking at trends for various sub products in your various markets?

Andreas, I can start to answer. So first of all, yes, on your last comment or question that we see it from a household perspective much more. The reason is very simple. Around 50% of the Swedish household has at least one service from us. Adding more service to existing customers is the most important play for us in the consumer market. So correct. We see that the household ARPU is growing by around 3%. It's very, very healthy numbers. Then, of course, we also look into the different products and see how we can move them because they are, of course, included in the packages.

Let me say like that, we see some improvements in Sweden, but also in Norway, we see growth in the customer base, which is the best for many years now in the mobile, especially in the consumer side. So we see some good movements overall trends there. Where we don't see the same good trends is in Finland, obviously, where we still have a lot to do and quite tough situation, especially on the consumer side. So there, we haven't seen the turnaround yet, even though we saw some softer activities in the market in September, but let's see now into Q4. But I think still, we think we have a way to go there in Finland to turn the needle there, turn it around.

The next question comes from Fredrik Lithell at Handelsbanken.

Could we stay with Finland a little bit? And if you could talk a little bit more about the market picture and how the competitive pressure is developing through Q3? And also then if you could add into that on the corporate side, what you see there?

Yes. If you look at Finland overall, I mean, it's a quite tough GDP development overall in Finland. Then you look into the different areas. In consumer side, I mean, I think you all know what happened last year in Q4 with the intense competition. It's eased up a little bit, but some MNOs are still quite aggressive in the market with the gift vouchers, et cetera. We have seen some -- a bit maybe softness of that one towards the end of the quarter in Q3, and let's see how the market will react.

For us, it's very important. We focus on our customer base and to make sure that we get more value out of the base and continue to improve the customer experience. That is our short-term focus in Finland. But of course, we are demanded, of course, and we need to rely that the market is improving and repairing itself going forward from where we are coming from. But so far, we haven't seen any big trend shifts apart from a bit softer towards the end of Q3. Let's hope and see that the market is improving.

In the B2B side, I think it's fairly unchanged. It's quite tough. We have some good wins there, but overall, it's quite tough market situation. But that is the same for all markets. I think all the public tenders, they tend to be quite aggressive overall. Yes, so that is the overall picture for the market. Where we see some good development is in the SME side, which we have been very clear on for many years that we want to grow our share in the SME side. That growth we see is coming in. That's very good for us. That is valid both for Finland and for Sweden. I hope I answered your questions, Andreas (sic) [ Fredrik ].

Yes, absolutely. Can I just follow up there on the B2B in Finland? Do you participate sort of on the data center side that is developing there and also on the mission-critical type of services? Could you just put a word on that?

Yes. Yes, we are. Yes for both. We're, of course, looking into all opportunities. There are many now potential data centers builds in Finland. Of course, we are looking into that, and we are participating in those. Then on the mission-critical side, it's given for us to be there also in Finland as we are in Sweden. But we haven't seen the big growth coming in from mission-critical yet in Finland as we have seen in Sweden. But we are, of course, well positioned to deliver to all the mission-critical society parts in Finland.

The next question comes from Ajay Soni at JPMorgan.

I hope you can hear me. The first question I've got is on Sweden and the no-frills segment, which has been called out as being a bit aggressive. You see that mobile ARPU for yourselves are minus 1% this quarter, pretty similar to Q2. So are you seeing a drag on mobile ARPUs from the no-frills segment? And how are you positioning yourself here?

And the second one was just a clarification on the cost cutting for 2027. I get the gross annual saving of around SEK 1 billion. Do you think these mostly fall within your 2027 EBITDA numbers? And if so, would you expect an acceleration in 2027 EBITDA versus 2026?

Yes, I can answer the first question on ARPU. When it comes to ARPU in Sweden, we actually -- in the consumer side, we are actually performing quite well. It's majority driven are B2B, where we have these big tenders from enterprises and also governmental bodies that do public tenders and then the price tend to go very aggressive. We have decided not to participate in those aggressive tenders. We have stepped out from many of the potential business because we just think the prices are just too low so that we don't -- and that is, of course, impacting the ARPU also reflecting in the ARPU for that side.

In B2C, actually, we are increasing slightly. So that's positive. Then also on the SME side, also in the SME side, I mentioned SME in the previous question, but also on the SME, we see an increase, but where we can compensate also by volume, taking shares that is positive.

On the cost cutting, it's quite simple. For a while, we guided for a CAGR of 4% EBITDA. For this year specifically, we're now saying between 3% and 4%. If you would multiply that by our SEK 30 billion plus of EBITDA in an annual year, there's about SEK 1 billion of EBITDA growth, give or take, in a year. I think that's also what we expect for next year.

The best way to think about the program that we announced on the 12th October is securing the uplift of that in our EBITDA growth for next year, which obviously then also helps our free cash flow uplift. Hence, the answer to the previous question, was that we did an upgrade, but it secures the development for our profitable growth for '27, '28 and beyond.

The next question comes from Ulrich Rathe at Bernstein. [Operator Instructions] The next question comes from Viktor Hogberg at Danske Bank.

On the Swedish broadband, could you just elaborate on your thoughts on the current market now ahead of the upcoming regulation and your plans that you can disclose, how to mitigate when others might get access to your home, so to say, sometime next year?

Yes. Thank you, Viktor. So we are -- as a reminder, we are already regulators. We're already providing access to others who sell on our infrastructure. Once the regulation eventually sets in, we expect it to level the playing field so we can get more access to other local networks. But it remains to be seen what effects that will have. So we think that point will have a relatively neutral impact to us, but let's see. It might be an opportunity.

The next question comes from Ulrich Rathe at Bernstein. The next question comes from Nick Lyall at Berenberg.

Maybe just a quick one. On the broadband numbers, please, the ARPU dilution is obviously quite big from the Bredband2 acquisition. But could you maybe tell us what the underlying numbers look like because we're hearing a lot about very fierce competition in open networks. Could you give us a bit of an update on what ARPUs are doing sort of on an underlying basis for broadband plays in Sweden?

And then just second, just on a couple of numbers. Is it possible to give us the contribution of Bredband2 on revenue and EBITDA? And also, I think, Patrik, you gave us just now the contribution of the extra revenue in Sweden as well of about 0.7%, but any costs associated with that you could give us as well, so we can get back to some underlying numbers.

I can start with the first question you had regarding the broadband ARPU. It's rightly, as you said, roughly half of it is dilution of the Bredband2 customers coming in. Then the rest is driven by a combination of -- we have a higher share of customers in binding, i.e., we can minimize, of course, the price adjustments on those customers. We see also growth in more collective agreements, which is normally lower in the ARPU.

The third one is that also that you said, the market is more competitive now, especially in the open network side, as you say. Again, we are also in a phase where we do less pricing on broadband on average. We are more focused on the TV side at the moment. So those are the main reasons. But it's not a single one like competition. It's a combination of several. And the next one was?

Yes, Bredband2, just those numbers for you, Nick. But just to be clear, right, the growth figures are like-for-like, right? So it has no impact there, but the absolute numbers are as follows. SEK 466 million gross service revenue, SEK 381 million net because the delta being our wholesale revenues that we had. So you eliminate those. And EBITDA contribution in Q3 from BB2 was SEK 71 million.

The next question comes from Abhilash Mohapatra at BNP Paribas.

A couple of things, please. Firstly, just coming back to the success of no-frills band. I mean you've called out the recognition for OneCall in Norway and obviously, Fello is also sort of doing quite well in Sweden. Just going forward, how do you sort of think about the balance between addressing that segment and pursuing customer growth versus the sort of risks of down-spinning on overall consumer ARPUs?

And then secondly, just following up on Bredband2. Could you maybe just give us a quick update on how you see the synergy benefits of that coming through? Obviously, it's been about a year since that deal was closed. So how do you -- how should we think about that going into 2027?

I can take the first question. As you remember, we dismantled or stopped working with the brand, Halebop during the summer, which we migrated very successfully over to the Telia brand. Now we have a much more clearer market positions between the brands. One is the Fello in the value-based -- more value-based segment, competing mainly with brands like Vimla and Hallon. Then, of course, we have the Telia brand. This is our premium brand. We see a clear now market definition between those 2, and we are growing actually in both bases, which is very positive for us.

Overall, we are very happy with the situation at the moment. We don't feel that the competition has -- is more intense now in Sweden than it has been. It's basically the same level as it always has been. If we should say something about competition, what we feel in the market, it's much more intense in the B2B side, especially on the large accounts, the public tenders. There is much more aggressive and price -- sorry, intense competition than maybe in the consumer side. Overall, the consumer market in Sweden works very well. Then the next question was?

Yes, that is on Bredband2, what the contribution is and how things are progressing on the synergy side. So revenue synergies are developing well. We are cross-selling TV to this customer base and also mobile services. I would say, pretty much in line with our plan or the business case, if you will. Cost synergies are also developing in line with plan, maybe slightly better even. But just to remind you of what we said at the time of the acquisition, it's neutral to our free cash flow in '26 because, yes, you have benefits, but you also have integration costs. So no impact in '26. Then we said it has a contribution of roughly SEK 200 million positive next year.

And maybe just to follow up on the no-frills one. Any commentary on the Norwegian market where sort of OneCall, as you called out, has been a very successful brand?

No, I think it's also -- it's very similar. I mean we feel the Norwegian market quite stable. It's very driven by campaigns, so no news. We have clear market positions for the brands that we have and OneCall works very well in the value segment, and we have then the Telia again on the premium side. I think we have a model that works and suits us very well at the moment. Yes, no change in that behavior.

The final question comes from Keval Khiroya at Deutsche Bank.

I've just got 2 questions, please. So firstly, Norway, you've highlighted a decent improvement in KPIs. Can you elaborate a little bit more on what's driving that? And ultimately, are you being a little bit more promotional than before? And secondly, just on AI agents, how do you think about the revenue risk to your business or not? And can you give us a sense of front book versus back book pricing for your 3 main Nordic markets?

Yes. The first one, I can take Keval. So Norway KPIs, yes, we're seeing an improvement on the mobile side. That's -- we're happy with that. It's the best for quite some time. We haven't really been that much more promotional or not more promotional at all, we think, versus last year. I think we've received the questions a few times, I think, in response to one of our competitors talking about it, but we don't quite recognize that picture. We are spending on similar levels as we did before.

And then when it comes to AI agents, I'm not sure what your question is, if it's about the news from [ news ] that came from the U.S. or...

Yes. That's correct.

Okay. But we have already been operating in a world where AI is a part of the customer interface for some time now. I think we have been focused on making our services easier and now discovered by AI tools. This is changing from SEO optimization basically to AI optimization instead. This is an environment to win new businesses. This is already active. We don't have a big gap between front book and back book pricing. So -- and still, it's quite complicated to do a follow-up buy because we need to identify the person, the individual that is buying with bank ID or other solutions. We are not that concerned.

We see it more as a move in customer behavior, what kind of tools you use instead of Google it, you use AI assistance instead to find it. We are working actively with this one already today to make sure that information is correct. Then, of course, it's beneficial for us, and this will continue. So we are not that concerned regarding that -- the new method instead of Googling, you use the AI tools instead.

All right. Thank you, everybody. Very good questions. We have to end the call now, but looking forward to speak more to you in the coming days and weeks. Thank you, and goodbye.

Welcome, everyone, to Telia Company's Q2 results presentation. And with that, I will now hand over to Telia Company Head of Investor Relations, Erik Strandin Pers. Please go ahead, the floor is yours.

Thank you, and good morning, everyone. Welcome to the call. We have, as usual, CEO, Patrik Hofbauer; and CFO, Eric Hageman here, and I hand the word over to you, Patrik.

Thank you, Erik, and good morning, everyone. We continue to see a good commercial momentum in the business with a strong performance in our core operations. I will take you through the key areas. Starting with the customer. So the customer satisfaction is improving and our Net Promoter Score continues to increase. This helps to drive growth in the customer base, and we had positive mobile net adds across our 3 biggest markets this quarter. We delivered a high-quality experience to fans during the FIFA World Cup, and our network supported record data traffic and streaming volumes. Protecting our customers is equally important, and we blocked tens of millions of scam calls in the quarter.

Our management of asset portfolio remains very active, and we are driving targeting consolidation in our markets. After closing the Bredband2 deal last quarter, we have agreed to 2 smaller bolt-on acquisitions in Sweden, adding a city network and a niche B2B MVNO. Work on the mobile RAN sharing agreement with ice in Norway is progressing well, although taking slightly longer than initially estimated. In July, we also completed the stake increase, a new partnership in our Finnish fiber JV, Valokuitunen.

Simplification is fundamental to our strategy. We recently closed the Halebop mobile brand in Sweden, and we have agreed to transfer part of our ICT business in Finland to a partner, including around 250 employees. This will help us to focus even more on our core business. We are using AI and other technologies to improve customer journeys, which saves time both for us and our customers.

Turning to innovation. We have agreed to form a partnership with KTH Royal Institute of Technology and Brookfield, where we will work together to develop sovereign AI capabilities. We launched a service called Telia Critical IoT Connectivity, which is the first commercially available service in Sweden to use 5G stand-alone. MNS has demonstrated a modular solution that enables mobile coverage in emergency situations.

Let's now look at the financial highlights for the quarter. Service revenue growth accelerated to 2.8%, the highest in 4 years, supported by continued strength in Sweden consumer and high demand for business and mission-critical services. Lithuania was again strong and Norway's growth accelerated to 4.1% as the wholesale headwind faded in the quarter and is now behind us. EBITDA grew by 3.4% with solid contributions from Sweden and the Baltics, while Norway was slightly negative due to a tough cost comparison on the TV content side.

CapEx remained disciplined at around SEK 12.5 billion on a rolling 12-month basis, remaining below our outlook for less than SEK 13 billion. Free cash flow once again stronger than we expected, driven mostly by phasing and came in at SEK 2.2 billion for the quarter and SEK 4.1 billion year-to-date. And leverage ended at 2.06x, more or less unchanged from the last quarter.

Let's now move into Sweden, where we had solid customer trends supported by convergence. This is a clear strength for us since we have more than 1 million converged households. Customers buying multiple service improve both loyalty and economics, which can be seen in our financial performance. Double-digit TV growth is the most obvious example. Growth in consumer continued to be strong and demand for mission and business-critical services remained solid. As I mentioned, the Halebop mobile brand was discontinued in the quarter. This is part of our simplification agenda and can improve both channel mix and operational efficiency over time. The integration and synergies from Bredband2 are developing according to plan.

The broadband ARPU decline of 9% is to around half driven by the addition of Bredband2 customers, which had lower ARPUs, and partly because we are in a phase with more volume growth, having grown the base for 4 consecutive quarters, but less pricing. The balance between volume and pricing will shift from time to time, and there work is going on to strengthen the ARPU. And as you know, we have a full household approach currently doing more pricing on TV. Financially, Sweden continued to deliver healthy results with service revenue growth remaining strong at 2.6% and EBITDA growth of above 5%, supported by lower OpEx. EBITDA less CapEx continued to improve and is now on comfortable levels of SEK 10 billion.

In Finland, we saw an increase in mobile customer base, driven by growth in enterprise and stable development in consumer. The consumer mobile segment remains challenging, but intake ARPU is slowly moving in the right direction, and we continue to focus on retention and loyalty. The share of our consumer mobile customers in binding contracts has steadily increased from very low numbers 2 years ago and now represent a majority.

As I mentioned, we signed an agreement to transfer part of our ICT business to our partner. This is part of our strategy to sharpen focus on our core business. For the same reason, we left the e-invoicing, web hosting, and alarm business in recent years, because it makes Telia Finland less complex and more agile. Around 250 people will be part of this transfer, which will result in approximately EUR 40 million lower revenue for us per year, but hardly no (sic) [ any ] change to EBITDA.

We also finalized our new partnership and increased our ownership in Valokuitunen, the fiber joint venture, from 40% to 49%. Service revenue growth was slightly positive overall. The revenue mix this quarter included some low-margin components, but this was offset by strong effects from cost savings, especially on resource cost, so that EBITDA growth overall was flat. Norway delivered a visible improvement in revenue growth, supported by pricing, improving customer trends and, to some extent, an easy comp on TV since we had higher discounts last year during the black screen situation with TV2. ARPUs increased across all products and the mobile subscriber development improved with the quarter ending strongly. EBITDA growth was, however, held back by a tough year-on-year cost comparison on content cost, which resulted in a decline of 2%.

We had a strong road map to strengthen our infrastructure. The amount of fiber upgrades that we have sold to MDU and SDU customers follow our plan. And next thing is to get the RAN sharing with ice started since this will create both better network for our customers and stronger economics. We did not quite get it up and running in Q2 as originally planned, but we are making good progress on this complex transaction and are working towards finalizing it soon.

Lithuania again delivered a strong quarter. Service revenue growth remained solid across both mobile and fixed and EBITDA growth accelerated to almost 9% due to good top line momentum and cost control. The new data center announced last quarter is progressing well, and we secured important spectrum at an attractive price in a multi-band auction, adding as much as 40 megahertz in the 1,500 megahertz band. This was important auction, and it will help us to retain our 5G leadership. We also renewed our spectrum in the 2,100 megahertz band. In summary, we continue to deliver a great financial performance while strengthening our network position and expanding our capabilities in secure and robust infrastructure services.

In Estonia, growth also accelerated, driven mainly by mobile ARPUs, which had helped by reduced discount levels overall. Enterprise ICT deliveries also returned to grow as some of the supply chain constraints that we saw last quarter have been easing. Our fiber build-out continues, and we are reducing legacy infrastructure at the same time and are well in line with our plan. Overall, Estonia continues to show solid execution and healthy development in the core business.

And with that, I hand over to Eric, who will go through the financial development in more detail.

Thank you, Patrik. Let me now take you through the financial development in the quarter, starting as usual with service revenue and EBITDA. Service revenue growth accelerated in Q2 to 2.8%, which is comfortably above our full year ambition of around 2%. Across the group, consumer revenue had the fastest growth. And as you just saw, the country units with the strongest momentum were Sweden and Lithuania, with also a clear improvement in Norway. Finland managed to stay flat in terms of service revenue growth despite pressure on mobile, helped in part by relatively low-margin project and licensing revenue in the quarter. From a product perspective, growth was driven by strong TV performance in Sweden and Norway, good mobile growth in the Baltics, and continued demand for business and mission-critical services in Sweden. Overall, this more than compensated for continued pressure on legacy revenue in Sweden and the mobile development in Finland.

Turning to EBITDA. Growth came in at 3.4%, which is broadly in line with our ambition for the full year of around 3%. The main drivers were again Sweden and the Baltics. Finland also contributed through strong cost control in the quarter, while EBITDA in Norway was held back by a tough year on content cost comparison. So overall, we had a quarter where profitable growth and cost discipline resulted in earnings growth and margin expansion with EBITDA margin expanding to 40.5%.

Looking forward to the second half of the year in terms of EBITDA growth, you can see on the far right of this page that we currently expect EBITDA growth in Q3 to be below 2%, driven mainly by limited growth in Sweden due to phasing and the margin profile of some customer projects. In Q4, we then expect a reacceleration again in Sweden and also in Finland, which has a relatively easy Q4 EBITDA comparison. Overall, we expect our EBITDA growth for the second half to be in line with consensus and to deliver on our full year guidance of around 3%.

Looking at operating expenses, we continue to maintain good cost control in the quarter. Resource costs were again down, largely driven by Finland, and we also saw a reduction in IT costs and bad debt for the group, which more than compensated for increased marketing spend, mainly in Norway, to drive mobile growth. Together, this resulted in OpEx declining by around 1%. OpEx as a percentage of service revenue continued to trend down, ending at 29.1% compared to 30.2% in the same quarter last year.

Moving on to the middle graph, you can see from the green bluish line that we also remain disciplined with our capital expenditures. On a rolling 12-month basis, CapEx was stable at SEK 12.5 billion, comfortably below our full year outlook of less than SEK 13 billion. This reflects our continued capital allocation discipline and supports our ambition to improve cash flow generation over time. As a result, EBITDA less CapEx continued to expand this quarter, reaching SEK 20 billion, a healthy 5% increase over last year. On the right-hand side of this page, you can see that ROCE has been steadily trending upwards, ending the quarter at 10.6%, up from 9.3% a year ago, a direct consequence from both increased profitability and improved capital allocation.

Let's now have a look at our free cash flow statement. Free cash flow in the second quarter was SEK 2.2 billion. And year-to-date, we are just above SEK 4 billion. This is ahead of our early expectations that about 1/3 of the full year free cash flow was to be generated in H1. In addition to better-than-expected profitability and lower interest paid, we also saw some phasing of cash CapEx and working capital. As you can see from the table, cash CapEx is significantly lower than last year and lower than our budget for the year, driven by some rephasing into the second half. As for working capital, we did expect a reversal this quarter following the strong positive contribution in previous quarters, but the reversal was smaller than anticipated as we benefited from mission-critical payments. In the second half of this year, we also expect to make a circa SEK 400 million tax payment in Norway, following a recent court verdict in the long-running case regarding historical VAT rates on news services, which impacts everyone in the industry.

In summary, Q2 free cash flow was above plan, mainly because of phasing, and hence, we keep the full year ambition of around SEK 9 billion. This implies a stronger second half, but is now less back-end loaded than previously expected. Our SEK 9 billion ambition for the full year now also includes the SEK 400 million Norwegian tax payment I just mentioned.

Let's now have a brief look at how leverage has developed on the next page. As you can see on the right-hand side, leverage decreased marginally compared to the first quarter to just over 2x, driven by expanding EBITDA that more than compensated for the net debt increase of around SEK 700 million. The main reason for the net debt increase this quarter is the negative impact we had from FX movements, mainly NOK versus SEK, which impacted both debt and derivatives values. Overall, we can say in the first half that despite paying for the BB2 acquisition and reducing the level of hybrids, we are comfortably in the lower end of the leverage target range.

Looking back at the value creation agenda we laid out at the investor update, we continue to make good progress. We are delivering profitable growth and margin expansion, and we are staying disciplined on CapEx. The first half of 2026 has been particularly active on the M&A front, where we have signed several MOUs and also closed some deals that simplify the business, strengthen our infrastructure portfolio, and drive in-market consolidation through smaller bolt-on acquisitions, particularly in Sweden. As said, our balance sheet is healthy with limited refinancing needs in the year. And in April, we paid the first tranche of a now increased dividend per share.

And with that, I hand back to Patrik for our closing remarks.

Thank you, Eric. To summarize, Q2 showed continued solid momentum with good service revenue and EBITDA growth with disciplined capital allocation. Sweden and Lithuania remained strong, Norway and Estonia improved, and Finland showed stabilization supported by a solid cost control. We remain focused on customer satisfaction, profitable growth and becoming even simpler, faster and more efficient. This all supports our outlook for the full year as well as our midterm ambitions. Thank you.

Yes. And with that, I think we're ready to take questions.

[Operator Instructions] Our first question comes from Andrew Lee with Goldman Sachs.

You actually have [ Sofia ] from the team. Two quick questions from us. The first one, there have been weaker results across the Nordics this quarter with operators fighting competition as one of the reasons, which has made investors question structural growth outlook of all Nordic markets. Do you think that outlook has deteriorated in any of the markets? Or do you see any changes when it comes to structural growth? That's the first question. And the second one is, you had slightly weaker mobile and broadband trends in Sweden this quarter. Can you just go a little bit more into detail as to what is driving that?

So thank you, [ Sofia ]. I can start. It's Patrik here. Let's look at the competitive situation. We don't feel a change in the competitive landscape in the Nordics. We see a slight stabilization in Finland, which we have had quite a tough situation now in the last 2, 3 quarters. But we see a more stabilization there, and we hope that, that will continue, of course, going forward, that the market is a bit more rational.

In Sweden, we see a similar situation we've seen before. Consumer is, for us, strong. It's a good market for consumer. We see B2B still some -- but no change from previous quarters, some competition in large and public accounts, but no change. Mission-critical is strong for us. And in Norway, we see actually an improvement. But if you look at the market situation, I don't see a big different shift compared to the previous quarters. So we foresee it will be continued rational and stable throughout the rest of the year.

Mobile Sweden? The first question.

Yes. So in mobile Sweden -- what's the first question?

Yes, mobile service revenue growth.

Yes, mobile service revenue growth. So if you look at the mobile service revenue growth in Sweden, we have been now -- this is a similar trend that we have seen in the last quarters. Nothing has changed from our side. We have a household focus. So if you look at consumer mobile in Sweden, we have much more focus on the household. And we see that we have now more than 1 million converged households that have at least 2 services from us. And this is an important play for us, and it has been that for the last years. And we see clearly benefit with that. We see lower churn and we see higher financial performance. If you look at the revenue per household, that's actually increasing. So we don't see a major trend shift from our perspective in that one.

Our next question comes from Derek Laliberte with ABG Sundal Collier.

So I have 2 questions. You highlighted, first, the lower EBITDA growth in Q3 coming up, and then a stronger growth in Q4 due to project phasing. I was wondering if you could elaborate a bit on what's driving that phasing and how much confidence you have in the pretty significant Q4 acceleration? And then I was wondering if you could update us on the Halebop migration here, whether you've seen any increase in churn or competitive activity following this closure? And is the simplification delivering the commercial benefits you expected so far?

Should I start with the second one -- Good morning, by the way, regarding Halebop? Well, this migration has been planned for almost a year or a bit more than a year. So it's the right decision to simplify the portfolio, as I said, in Sweden and make it much clearer also on the customer proposition in the market. The Halebop migration went very well according to plan, no surprises, no increased churn, and we migrated these customers over to the Telia brand, and it was very successfully done. So well executed by the Swedish team.

Yes. And on the first question with regards to the profile in the second half of this year. So we currently expect EBITDA growth in Q3 to be below 2% and then above our sort of trend rate in Q4 to accelerate. And it's driven by the expected limited growth in Sweden. We mentioned 2 things in the analyst presentation. One is the phasing and the other one is the margin profile of what we're selling. So what is the phasing? So we had higher mission-critical Q3 last year than we expect this year in the same quarter. But then we expect that to accelerate again in Q4. So more mission-critical in Q4 than the same period last year.

Then with regards to the margin profile, because that obviously is what impacts EBITDA, is that we're doing proportionally more ICT in that third quarter and less mission-critical, which has a higher margin. With regards to the confidence of that, we have full confidence in it. And I think it's also important that we have a slightly different profile for EBITDA than for service revenue, because basically, we don't see that impact on service revenue, and because the compensation of the less mission-critical is there by more ICT revenues in the quarter in Sweden.

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

One question from my side, but it's a bit long. I know it's difficult to compare products and talk about households, but it would still be interesting to hear your thoughts on the Swedish ARPU development on TV and the corresponding service revenue growth that you see in TV versus the lack of ARPU growth in mobile and corresponding lack of mobile service revenue growth. And yes, I know I'm living in an Excel world and you live in the real world, and there are differences, but can you take some learnings from what you have done on the pricing on TV into mobile in order to accelerate mobile services as well?

Andreas, I can try to start what's going on, on the market, now just joking, but I will try to explain our situation. So we have a very strong TV product, absolutely the best in the market. And this has been a situation for a number of quarters. And we continue to have good development there. Look, our play in Sweden, as I tried to say before as well, we are trying to focus on a household perspective. So getting more broadband customers was strategically important for us. That's the reason why we acquired the 500,000 broadband Bredband2 customers as well, because that gives us a good base to sell more services on top, so like mobile and TV.

So the reason why TV -- the pricing power has been so good in TV is because we have the absolutely best product. No one can compare our product with anyone else in the market. That is the reason. And then when we look in our KPIs, we look into, okay, how is the revenue per household developing. And that is important for us because, a, we have a significantly lower churn of those customers, and we want to sell more to existing customers and building that base. And that we have done successfully, and we have now more than 1 million households that are converged, that have at least 2 services from us. That is 20% roughly from the Swedish households.

So that's the total households in Sweden. So that's building a solid position for us. Then, of course, looking forward, we look into always how we can continue to grow ARPU in mobile, both postpaid and on broadband. We think that there is still opportunity to increase prices going forward, but let's see when the timing is right.

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

I have 2 questions, maybe more a follow-up. On the Halebop migration or the impact rather of the discontinuation of the brand, we've heard from one of your competitors that this has created a lot of, I guess, attempts at stealing, I guess, market share during this migration period. But at the same time, you guys also had very good results in terms of net adds. So if you could please comment on those 2 -- or those 3 pieces of information, how they square up from your perspective?

And then a second comment, I guess, I would appreciate if you could give us on the comments from, again, your biggest competitor in Norway, where the situation was painted as basically much more competition in the higher-end unlimited segment and specifically from MVNOs. But again, you don't seem to be too concerned. So if you could please comment on that from your perspective.

Yes. Thank you. Let's start with the first question, Halebop. Well, as I said on the previous questions, the Halebop migration went according to our plan or actually a bit better than planned with extremely low churn. So remember, again, we took all these customers and moved them into the Telia brand, and that worked very well. If you look at the market, yes, we have seen more activities on the value-based segment, i.e., the no-frills brand. And that is, I would say, pretty natural. It's not like we have seen historically aggressiveness. We would not subscribe to that one. But we have, of course, seen more activities. Of course, our competitors are trying to steal customers from us, but we have not seen that in our base. People stayed with us. They are happy with the services that we are delivering to them, and the migration for Halebop was extremely successful. So I'm super, super happy to see that.

Then when it comes to the Norwegian case, well, I would say the market has been somewhat tougher in Q2, but remember, we performed well in this market. And there were some positive also developments in June. We see ATL prices, for example, that we have observed in the market that several brands have increased the prices. And we are acting rationally in the market. We haven't seen an increase or much intense competition in Norwegian market. It's fairly similar compared to previous quarters. So we are not recognizing that comment on your question. We see the market a bit different. So a fairly healthy market. Competition is there. It will continue, of course, but it's not unusual compared to previous quarters.

Our next question comes from Fredrik Lithell with SHB (sic) [ SHAB ].

Just a follow-up on Halebop, if you could describe a little bit if you have some cost benefits now when you close down platforms or FTEs or something, and if that was part of Q2 already, if that is the case? And secondly, if we could get a little bit more details on how to view net working capital changes in the coming quarters, how we should sort of trim that in our models?

Yes. I can answer the first question on Halebop. Well, we don't see a big impact in the numbers. This is a part of our simplification work that is ongoing to support the outlook and the target up until 2027 that we have already communicated. So there is nothing on top. This has been planned for more than a year and very sensitive and very successfully executed, I would say. But it will, of course, be beneficial for us, because it will be easier for the customer to understand the difference between the Telia brand and the Fello brand.

Now Halebop was a bit stuck in the middle. That now we take away. And we continue to build our premium position with the Telia brand. And the customers are obviously very happy with that situation, and we are growing in the Telia brand, which is very positive for us. So I think we are in a good commercial momentum there, and that will continue. And that is, again, supported by the convergence that is a very attractive play and it's very appreciated by the customers as well.

Yes. With regards to your second question on capital, Fredrik, yes, we highlighted today the rolling 12 months, which is at around SEK 12.5 billion coming from SEK 16 billion or so 2 years ago. That trend continues. So today, we reiterate the guidance that we are going to be below that SEK 13 billion for 2026. We don't see any reason why that would change. So if you think about it as a percentage of sales with the strong performance in top line that you've seen this quarter, we'll see that continuing to trend down. So relatively flat in absolute terms, trending down as a percentage.

Our next question comes from Max Findlay with Rothschild & Co.

You mentioned that the majority of Finnish customers are now on fixed-term contracts. A couple of questions on this. Was there a sudden ramp-up during the second half of last year? And if so, how significant was this? And should we expect the trend to fixed contracts to continue? Or should this temper from here?

Then secondly, both your competitors have explained how they expect pricing over time to recover in the Finnish market. But it seems to me there's a risk to pricing as a lot of these fixed contracts will come to an end during Q4 and operators will be wanting to defend their volumes, which you mentioned remains your focus in Finland. Given these subs will no doubt have liked the cheaper tariffs, MVNOs are launching new tariffs, and there's been commentary on softer consumer sentiment. It appears the backdrop for significant pricing improvement in Q4 is tough. So it'd be really useful to get your view on how you see the pricing environment developing in Finland.

Thank you, Max. This is Erik, the other Erik at IR here. I will take the question on fixed-term contracts. So we've actually had over quite a long time, a couple of years, a gradual buildup of the share of fixed-term contracts in the base from very, very low levels of low single digits almost to a majority now. So that's one of the things we do to build engagement and loyalty in the base. There isn't a big bump in that curve in Q4 of the year. So it's been a longer-term effort. And yes, there's a lot of turnover in Q4 seasonally. And is there an opportunity to raise prices when those contracts expire in Q4 this year? It probably is, but let's see. And we can't really forecast what the other players and the MVNOs will do, I think. Anything to add, Patrik or Eric?

No. And I think, I mean, the buildup of fixed-term contracts is also good for the market and it stabilizes the market. And we had just an imbalance in our base more than 2 years ago, where we have everything with outside contracts. So this is the right play for telecom operators to run. So yes.

Our next question comes from Nick Lyall, Berenberg.

Yes. I hope you can hear me this time. Just a quick question on cost, please, on the Finnish market and the Norwegian market. I think, Patrik, in your presentation, you mentioned that cost control in Finland was solid. And it looks as if OpEx is about flat. But is that where you want to be? I mean, how quickly could you ramp up savings that you talked about and raise margins in the Finnish market via savings? Is that more of a revenue effect if prices start to rise again? Or are there more savings you can take out and when? And in the Norwegian market, maybe cost is around 3% underlying in terms of growth, and you mentioned some marketing spend in the quarter. Is there a big initiative you can start or that depends on the brand share? And when do you expect the savings in both markets to kick in, if possible?

Yes. As always, Nick, it wasn't always. We caught about 75% of that, but we won't make that comment again. But I think we got the gist. So it's on margin expansion in those markets. So no, actually, in Finland, OpEx is down quite a lot from memory, it's about SEK 90 million, but Erik or Anders can confirm that outside the call. And it is because of what we flagged earlier. It was a business which had less than 30% EBITDA margin, and it should get to, let's call it, 40% or so, as we said in many interactions with you guys and investors.

And we are all on that path. And part of that is taking out the cost. You saw the FTE reductions that we've done. The second one is by divesting noncore businesses. It is also helping with that. Hence, the acquisition or the sale to CGI that we highlighted in the report is super important in that context. Good progress made, quite a bit yet to go in that market. And to sort of your second question is, obviously, improved pricing will help with that. We already see a better market in Q2 than in Q1, and Q1 was a lot better than Q4. So I think we're going in the right direction there in terms of Finland.

In terms of Norway, what we've done there is that, that increased commercial momentum that we called out in the presentation today is partly driven by the increased focus on mobile. And for the first time, you see us actually winning customers there again. In combination with very strong ARPU increases following the price adjustments that we have, you see that mobile momentum growing. And that's partly also because we invested in sales and marketing. So is there more opportunity for cost there? Absolutely, not just in Norway and Finland, but across the board for the organization. But we're very happy with what we've seen in the OpEx development, 1% down compared to last year. And as a percentage of revenue, our OpEx continues to go down. It is a fundamental part of our profitable growth story is margin expansion, and we see that coming through certainly also in Finland now.

Our next question comes from Felix Henriksson with Nordea.

I have a couple left. Just looking for status updates on a couple of the strategic projects that you have ongoing. First, the network JV in Norway, what exactly is dragging on the process there? And then the divestment of Latvia, where are we at the moment? And what is the expected time line for that in regards to the second half of the year?

Yes. Regarding JV Norway, well, we have actually started to build the company to do these kind of activities. We are still -- it's a quite complex agreement, and we are in the stage to finalize that agreement. So I hope we will finalize this just after summer. So that is the ambition and it continues. It's a bit late, but I think we were a bit overoptimistic in the start as well to fix this. But no other concerns or anything about this JV.

Then Latvia, well, that is a more tricky question. We're actually going there next week to meet the Prime Minister to discuss this, because we have an agreement that we should finalize this to sign an SPA by the end of July, and we have a meeting next week. So I will come back when I know more. But still, the strategic direction is no change. We still are in a plan to exit, but there has been some political changes, as you probably know, in the country, where there is a new Prime Minister and there is an election coming up on October 3. So let's see where we will end this. But no change in direction. It's just maybe a timing question. And we don't know yet. We will go there next week. So let's see.

Our next question comes from Keval Khiroya with Deutsche Bank.

I've got a question on Norway, please. So can you remind us of how much of your cable network has now been upgraded to fiber? And it looks like the Norwegian booked CapEx was down 20% in the first half despite this upgrade accelerating. So can you also talk a little bit about the underlying movements in the Norwegian CapEx as well?

Yes. So thanks, Keval. It's Erik here. IR Erik again. And roughly 60% of the subscriber base on broadband is on fiber and FWA, so about 40% on HFC connections. So that I think is the short answer. And there is a gradual project. First you set up the plan, then you sell in the upgrade to the customer, the MDU or SDU, and then you plan the build-out and so on. So it ramps out quarter-by-quarter according to plan, but it takes a little bit of time to get the speed up, I would say, as expected. Was there a second question?

CapEx in Norway.

Yes, CapEx is always -- since it's taking a bit of time, it doesn't consume so much CapEx yet to this build-out. And we have built out 5G and done a lot of CapEx in Norway. So CapEx on a quarterly basis is always shifting a bit. So I don't think we have much to add there.

But no surprises. Everything is actually according to plan and including in the guidance for the year. So no surprises. There is at least nothing that we have on the top of our heads at the moment. So yes.

Our next question comes from Abhilash Mohapatra with BNP.

Just a clarification here, I wanted to come back to the Swedish mobile service revenue trends. You mentioned, obviously, you're quite pleased with the underlying commercial development and then how you're sort of doing with the households. Just in terms of the sort of financial trends this year -- this quarter, obviously, MSR was sort of down year-on-year. Can you just maybe give us a bit of color whether there were sort of some tough comps this quarter and then how those might evolve through the rest of this year? And then just related to that, could you maybe just sort of remind us of any back book pricing impacts, the timing of those within your Swedish business, and how that might impact service revenue evolution?

Yes. I can start. It's Patrik here. I will start with the first question regarding the mobile service revenue development that you are asking for. So if you look at the consumer side, it was growing 2%, around SEK 40 million, partly due to subscriber base expansion versus last year and slightly higher ARPU as well. On the enterprise side, we had a decline of almost 8% or SEK 86 million. This was driven by an ARPU decline, and this was partly due to an organic decline, but also, I don't know if you remember, but we had a SEK 50 million, I would say, unusually high project-based revenue in Q2 last year, so the comparables are a bit tough. And that was related to IoT, to a smart public transportation deal that we did. So it's a onetime deal that we had in Q2 last year, which is impacting also the year-over-year comparisons. So that's the -- but otherwise, we don't see any big trend shifts in the market versus previous quarters.

Maybe just to briefly add, maybe you want to say something on pricing then, Erik. I think there is a bifurcation between strong consumer mobile and softer B2B mobile. I think that is something that we've seen for many quarters. So there's no real change. And on pricing, Erik, anything?

Yes. On pricing, basically, we have a 2-year cadence, as we've said before, in each brand, and we continue with that in the overall picture. We did do pricing on Halebop before we merged the customers into the Telia brand to align the brands a bit. So that's done. We've done something on Family SIMs this year, but it goes along the long-term plan, I would say, on pricing. No particular change there. I think if you add back the IoT deal that Patrik mentioned, you will see that the trend hasn't really shifted much.

Our next question comes from Ajay Soni with JPMorgan.

Two quick questions. First on Finland, your net adds were positive this quarter for the first time in quite a while. So is there anything you've done here? I know you've been heavily focused on not losing share here, but anything you've done commercially to move this trend positively? And then the second one was around the Norway JV you're expected to close, I think you said end of summer. So how quickly will it take for the OpEx and CapEx benefits from this JV to feed into your numbers? Will it be fully run rate in Q4? Or will it take much longer?

Yes. I can start with the first question, and Erik, you can take the second one. Finland on the mobile side, well, we have been focusing quite a long time to turn the trends around. And gradually, we have also increased, as we talked about previous earlier this call, the fixed-term contracts. So we have reduced the churn. So what we see here is now a bit better, more stable development. And we have also one deal in the B2B that is supporting the growth as well of the 10,000 subs in the quarter on the mobile side. So overall, I would say we are seeing a more stable situation.

The customer experience has been high. NPS is high in the market. So customers are fairly happy with the services, but it's just by being too much pressure between the MNOs. And we have seen a more stable situation that is benefiting us as well in combination with more fixed-term contracts, less churn so we don't need to hunt so many new customers to stabilize the base. So I think that is the reason. So it's better execution in the Finnish market overall and a more stable situation, if you look at the broader picture on the market in Finland, more stabilized this quarter compared to previous quarters. But better, I would say, during this year.

And we see -- as I said, if you look at the new sales ARPU, we are not where we were a year ago, but we are on a good way to reach the numbers where we were a year ago. So overall, it looks more stable now in Finland. Let's hope that this will continue.

Yes. And on Norway, the network JV, I think your question was. I think we're making good progress, sort of nothing to announce now. But underneath the surface, peddling incredibly hard, as Patrik said, setting up the company, getting people recruited to run that offices, all the infrastructure, et cetera, hardware and software that you need to do this. So a lot of progress sort of behind the scenes that is happening.

With regards to the impact, I think we've been very clear since day 1 that this, if you think about the medium term, obviously, is very beneficial from us, financially attractive from a CapEx and an OpEx perspective. In year 1, of course, you also will have cost once we start to operate in this joint operation, because there's dismantling cost as well. So sort of neutral at first. And in the medium term, obviously, it's very accretive. But once we have finally signed the agreement, we will then give you those financial details. But just to be very clear, we will not do these type of corporations if they weren't financially attractive, because they clearly are. But it takes a bit of time to finalize it, as Patrik just commented.

Our next question comes from Ulrich Rathe with Bernstein.

I have 2 questions, please. The first one is on this full household strategy in Sweden. If I go on your commercial retail website, it's interesting, right, that the bundling discounts come at the very bottom end of the page. So compared to sort of other convergence players in Europe that put this front and center of the retail website, it seems that you're actually playing this down the way you're sort of presenting it to the customer. So I'm just wondering, when you say it is front and center of your strategy, what are you doing there? Is this sort of below-the-line discounting? Is it sort of the way you market it? Is it the way you approach the customer? Or what exactly is the manifestation of the strategy?

And in this context, could you please clarify when you give this larger than 1 million household number there, is this simply the addresses of people matching with 2 or more contracts? Or are these actually people who are getting the bundling discounts?

Thanks, Ulrich. This is Erik here at IR again. Yes, it's a fair comment, good observation. We have never at Telia wanted to drive convergence by discounting heavily on one of the services. It's more like providing value add to customers that have more than one service. And I think it comes through more clearly when you speak to customer service and when they reach out -- we reach out to our customers and ask them if they don't want to upgrade their packages or add on another service. And it is working. Broadband and TV has got an excellent attachment rate in particular, but also it works reasonably well with mobile. But fair enough, it may not be as visible on the website as it is when you speak directly to us.

But just to add, so how you do this operationally is, of course, that we are contacting the customers and selling them more services and building on the broadband base as a start. And this play works very well. And then if it's not visible, I must say that I need to go and check the website again to see. But there is no doubt that this has been an important play for us, and we have repeatedly given that message for the last at least 4, 5 quarters, especially to build the number of households, because that is important for us to be, of course, important, and important partner for the content providers that we have a significant number of households, which we have today, and makes us also in a much better position where we discuss content deals with the content providers. So this has been a very strategic rationale in driving this for us. And it's very beneficial.

Yes. Maybe just to add to that, it's a slightly different angle. It's more on the M&A side where it also manifests itself as part of the Bredband2 acquisition that we've done, where we acquired roughly 500,000 additional broadband customers. One of the business cases around this is the synergies that you obviously have. And the basic one, obviously, is cost, et cetera, because you can trade in your company. But a really attractive one is the revenue synergies, because if we look at the type of customer that this has brought to us is, they're very underrepresented in terms of being a mobile customer or even a TV customer. And so the cross-sell opportunities are absolutely massive.

And that is ultimately the thinking that you bring to this company. So it's a company that you buy that is focused on selling one product, and we want to sell multiple products to them. And with a very strong TV offering that you have, and you've seen the growth in TV Sweden this quarter, more than SEK 200 million in 1 quarter, it is a very easy sell to these new type of customers. So even in the acquisition cases of in-market consolidation, there is a strong synergy case where the thinking or the philosophy behind it is convergence.

Our next question comes from Viktor Högberg with Danske Bank.

Just on broadband market and the potential for you, and also for the market potential and just your thoughts on it. In Sweden, given the upcoming regulation, access to single-family homes, what are your thoughts on ARPU development for you in that context given that the regulator is aiming for lower end prices for customers, I would assume. So that's the first question, please.

So if you look at the regulation, we don't know exactly how that will play out yet, but we think it's basically neutral for us. And it actually levels the playing field in the market as well because we are partly regulated, as you know, today. So this, we don't see. We see a continuous potential to improve. If you look at the whole product area, we believe that there is a bigger potential to improve the ARPUs in mobile and TV in short term. We think also in broadband, but maybe more on the collective agreements and also on the open networks that we can maybe improve a little bit more on pricing going forward. But let's see. We cannot disclose any plans, of course, what we are doing. But we still see that there is a pricing power. in the market.

Yes. And maybe to that, sorry to mention M&A again. But again, we obviously have bought Bredband2, so in-market consolidation, which will bring benefits. I talked about synergies, but obviously, there is pricing elements as well. And then obviously, we've all taken note of one of the other competitors taking out the other sort of independent broadband player in the market. Could that help us as an industry to drive better pricing? Let's see. Certainly, it's not going to hurt us, one would say.

Okay. Perfect. And last question, just to pick your brain on a current topic I asked one of your competitors yesterday, just satellites. What are your thoughts on satellite providers within the context of the competitive landscape in the future, not today, but a couple of years ahead, both for Telia and for the Nordic landscape in general. Do you see any shifts in the competitive landscape? And could that affect you in some sense?

Yes. So let's start with satellites, first of all. I had been actually running or responsible for satellites for 5, 6 years when I was on another company in the Nordics. But very positive satellites. I must say that, and we are, of course, open-minded to look into this. This could actually improve in the more mid- to long-term perspective, the customer experience. So for example, if we could combine mobile, fixed and satellite to the customers, so they make sure that they always have good connectivity.

Then, let's remember, in the Nordics, we have built out 5G to the full extent. We are on our way now to finalize the build-out of fiber as well. It's already fiberized in Sweden. It's part left to do in Finland. But otherwise, people have really good connectivity, and price levels in the Nordics are also attractive from a customer perspective. If you compare it to the U.S., I mean, the price in Europe are half of the prices in the U.S.

So I think we have already good infrastructure connectivity in place up here. And we see satellites now as a very good complement. And we also see the low orbit satellites also as a good complement to our business. We don't see a substitution in the business today, but we're really curious to look into if we could improve the customer experiences, depending if it's a B2B or a B2C customer, with combining technologies. But there is a lot to be done with spectrum and technology to fix that. But in the long term, it's really interesting to see how we can combine the good technologies for the customers.

Just a final question, if that's okay. Just a housekeeping one. The SEK 400 million tax that is now included in your SEK 9 billion free cash flow, was that also included previously so that you previously aim for higher cash flow, or just the mechanics of the payments and the guidance, please?

No, good question, Viktor. Thank you for that. No, it was not included when we set out our guidance at the start of the year. The reason why it wasn't concluded, this is an old court case that dates back to the GET acquisition, so before 2020. So no, there was no way, and we expected that maybe conclusion next year. So no, it was not included in the guidance. And as I said, we're absorbing that this year. Similar to what we did last year, if you recall, when we sold TV and Media, where we lost, what was it, SEK 600 million, SEK 700 million of free cash flow, and also we didn't change our guidance at the time. So no, it wasn't included.

Our last question comes from Pavan Daswani with Citi.

Just a quick one on free cash flow, where performance in the first half was very strong. I know you talked about some phasing impact in the prepared remarks. Could you expand a bit on that? And what really surprised you positively in the quarter? And how we should think about these moving parts for H2?

Yes, sure. We sort of guided for -- if you think about guiding for SEK 9 billion, it sort of felt like SEK 3 billion in the beginning and SEK 6 billion in the second half, and now we already have done SEK 4 billion. So in the analyst presentation, I said earlier this morning that it's now less back-end loaded. Then on top of that, we absorbed this SEK 400 million. The positive surprise was working capital. If you recall last year, we had very strong working capital inflow, mainly in the fourth quarter. And at some stage, that will reverse. I think in line with consensus, we expected around SEK 1 billion reversal this quarter, and we had SEK 600 million, as you have seen in the numbers.

And as I said in the presentation, a big part of that is driven by mission-critical payments. And we've talked about this before in the context of how it's driving our Sweden top line growth, how it's driving margin as well in that market, because it's very profitable business for us. And on top of that, they pay early as well. That's exactly what we have seen.

Of course, it also helps in that first half to get to SEK 4 billion plus, because we have strong EBITDA performance that you have seen. We pay less interest because we've managed that. We have less gross debt, and we have actively made sure we pay less average interest, because we've taken out some expensive bonds in the first 2 years that we took over. And all of that then adds up to a better free cash flow. But it's partly phasing on cash CapEx as well, but we saw that last year as well. So yes, overall, positive for us to see that. In essence, we did almost SEK 1 billion more than we expected at the start of the year.

There are no further questions. I will now hand back to management for closing remarks.

Thank you so much, everyone, for all the good questions. And that concludes the call. We wish you a very good summer and looking forward to speak to you again in 3 months' time, if not before. Thank you, and goodbye.

Welcome, everyone, to Telia Company's Q1 results presentation.

And with that, I will now hand over to Telia Company's Head of Investor Relations, Erik Strandin Pers. Please go ahead. The floor is yours.

Thank you, and welcome, everyone, to the call this morning. We have in the room here, President and CEO, Patrik Hofbauer; and the Group CFO, Eric Hageman, and I leave the word to you, Patrik. Please go ahead.

Thank you, Erik, and good morning to all of you. Our performance in 2025, including how we ended the year and started this year, confirms that we are on track to reshape Telia into a simpler, faster and more efficient company, in line with our promises at the investor update back in September 2024.

I'm glad to see that our mission to constantly improve and deliver on our promises is generating good results across many areas, including customer satisfaction, network stability, capital allocation and operational excellence. This also becomes visible in our financials with a home market that continues to perform very well. And even though we have a lot of work still to be done in Finland and Norway, we see clear improvements on the back of the work performed to turn around those businesses. So we have made a lot of progress on reshaping Telia, but we are far from done. Therefore, we are working hard every day to make sure that we remain relevant to our customers and well positioned to deliver on our financial targets.

Now moving to the highlights of the quarter. We have a good start to the year, with improvements to our customer KPIs, most notably in Sweden, and growing share of converged customers and customer satisfaction increasing in most customer segments. This is driven both by improving customer service, where AI is becoming increasingly useful, and by great networks where we continue to stay in the lead as we launched 5G SA as the first operator in Norway and Estonia.

Active portfolio management continues. We closed the Bredband2 acquisition, giving us a brand and a capability to compete in the value for money segment, and 0.5 million customers based with limited overlap to the Telia brand. We also renewed our fiber partnership in Finland as we increased our stake in the #1 Finnish fiber player, Valokuitunen. But even more important was the run sharing agreement with Lyse in Norway, which will give us both a stronger network and better economics.

We also remain focused on continuous simplification and cost discipline even as our big change program is now behind us. And it is encouraging that we have reduced operational expenses by 2%, helped by 5% lower head count versus Q1 last year. Finally, we made an update in March to our sustainability strategy, which now includes 4 new focus areas and related targets. And we were awarded most sustainable operator in Sweden for the tenth consecutive year by Sustainable Brand Index.

Moving now to the financial highlights for Q1. Service revenue growth remained just above 2%, supported by consumer and high demand for business and mission-critical services in Sweden. And Lithuania also continued to show solid performance. We also saw continued gradual improvement in Norway and better performance in Finland compared to Q4. EBITDA growth accelerated slightly, mainly driven by Finland and Norway. And with the mentioned cost reductions, the margin improved to 40% compared to 39% in Q1 last year.

Continued investment discipline resulted in CapEx declining somewhat, ending at SEK 12.6 billion on a rolling 12-month basis, comfortably below our full year ambition of less than SEK 13 billion. Free cash flow came out at SEK 1.9 billion, which was stronger than we expected, and predominantly due to better working capital contribution. And finally, our leverage remains low, even after paying around SEK 3 billion for Bredband2.

Moving now to Sweden that continued to perform well, with growth of 4% in consumer, both as a result from pricing, including the first backward pricing book price increase ever in [ fellow ], but also from growing customer base, and further supporting growth was continued strong demand for business and mission-critical services.

Our TV service continued to be the most appreciated. We signed 2 multiyear agreements with key content providers to product leadership also in the years to come. We also announced an agreement with Telia Cygate -- for Telia Cygate delivers sovereign AI services on top of the AI infrastructure that Brookfield is planning to build in Sweden for approximately $10 billion.

Customer satisfaction improved, both in consumer and enterprise, and we continue our strategy to step by step move sales from external to internal channels. In the quarter, we opened 3 new stores, and we have more initiatives coming to further drive the shift to own channels, which we will be able to talk more about when we report our Q2 results in July.

As you see to the right, Q1 was a strong quarter for our customer KPIs, and we continue to increase the share of converged customers, which is now at 59% compared to 57% 1 year ago. The 500,000 broadband and 30,000 mobile subscribers from Bredband2 adds further economy of scale, and we continue on that topic on the next page, which recaps the fact about this acquisition. After having had Bredband2 with us now for 2 months, we remain very positive about the potential for this highly complementary business, and all targets are intact. The customer base have a very limited overlap, and we are happy to see that we have already started to realize revenue synergies by selling additional Telia services to Bredband2 customers.

Moving now to Finland. That's a more normal activity level in the consumer mobile market this quarter. We have led a gradual recovery of pricing, underpinned by our leading customer satisfaction. The number of postpaid customers declined again, however, less so than in Q1 in the previous years, and we see improving dynamics in our customer base. We also increased our fiber JV ownership, and I will talk more on this on the next page.

Financially, the performance Q1 was, as expected, much better compared to Q4, with B2B, in particular, performing better. We are, of course, not satisfied with being only marginally positive. So the strategic and commercial work to reposition and turn around the Finnish business is moving along at full speed. And we took further measures in the quarter to shrink the organization and make it simpler and more efficient. In broadband, net adds increased by 8,000 due to the acquisition of a similar number of customers from Global Connect.

Now let me quickly go through the increased ownership in our fiber JV. We are happy to have strengthened our participation in the growing fiber market, even as our previous partners has decided to exit. With a new partnership agreement with Brookfield, we have a partner we know well, and we have also stepped up slightly from 40% to 49% in the business.

Valokuitunen was founded in 2020 as a joint venture between Telia and CapMan. And it is the fiber-to-the-home market leader, with a reach of more than 400,000 homes through an open access model. The transaction reflects Telia's strategy to offer converged high-quality services to customers across Finland, and is in line with Telia's partnership-based approach to long-term infrastructure investments. The deal is expected to be completed during Q2, with a price tag of around EUR 30 million.

Moving now to Norway, where we, in early February, announced RAN sharing agreement with Lyse, a great project that I will say more about on the next page. Service revenue continued to trend in a positive direction and reached almost flat despite the mobile wholesale revenue drag, which has now come to an end. The improvement was largely driven by pricing, which resulted in significant ARPU growth across our core services. However, we did lose 27,000 postpaid customers, mainly because we made both pricing and billing cycle changes in a short period of time. But we are now well behind these events and taking a broad range of measures to reduce churn going forward.

EBITDA also improved but remained in negative territory as we expected, impacted by higher cost levels in marketing, M&A and energy. As said, we also launched a commercial 5G stand-alone across our network as the first operator in Norway, and we plan for an even better network ahead, which takes us to the next slide.

We agreed in early February on an attractive RAN partnership with Lyse, building Norway's most cost-efficient and future-proof mobile network. Network sharing is efficient, and this will create benefits for customers, the Norwegian society and the network partners. Customers, even in the most remote areas, we'll have a choice between 2 nationwide networks as we are building a network with quality and robustness on par with the incumbent.

We will continue to operate independently with separate core networks, but we have a joint RAN infrastructure built on Telia's existing Ericsson network, and will go live soon after a transaction is finalized. Over time, this will give us more competitive network position as well as significant cost and CapEx synergies. We aim to come back once the deal is finalized, with further details on the financial impact.

Moving on to Lithuania, where NPS continued to increase and Telia was awarded best customer service in a survey among Lithuanian consumer connectivity customers. We also took the first step in building a new data center near Vilnius in response to strong local demand. It is based on a hybrid model, combining services from global cloud leaders, with on-premise storage of strategically critical data.

Service revenue growth accelerated slightly, supported by mobile and fixed that grew both grew around 8%. EBITDA, however, normalized compared to a record strong 2025 that was supported by the change program. In Q1, Lithuania also saw higher energy and marketing costs as well as increased level of internal cost allocation for Lithuania and Estonia. Customer KPI trends remained intact, with expanding mobile customer base and ARPU growth across all products on the back of pricing.

Moving to Estonia, that by launching full 5G stand-alone further strengthened Telia's position as the clear network and 5G leader. Our core connectivity business performed well with a growth of 4%. However, overall service revenue growth slowed down because of lower ICT deliveries due to supply chain limitations. We expect we'll be less of a burden as we move across the rest of the year. EBITDA growth, however, remained positive despite somewhat higher energy costs.

And with that, I hand over to Eric before I come back to summarize the quarter.

Thank you, Patrik. Let me now go through the financial development of the first quarter, starting as usual with service revenue and EBITDA. As you can see on the left-hand side, we started [ 2006 ] by again delivering service revenue growth of 2.1%. Like in the previous quarter, growth was supported by strong performance in business and mission-critical revenue and our consumer business, which overall grew by more than 3% like-for-like, benefiting from strong development and predominantly fixed, led by TV in Sweden, and broadband growth across the footprint. Mobile service revenue remained in growth territory despite a continued Norwegian wholesale drag, supported by growth in Sweden and the Baltics.

From a country lens, Sweden and Lithuania had the strongest momentum, as you saw in Patrik's presentation, while Finland turn back to a slight positive growth. Norway also improved and only just remained short of the 0 service revenue growth mark. All in all, a solid start to the year, and we are on track to delivering on our guidance of around 2% service revenue growth for the full year.

Moving to EBITDA that accelerated slightly to 4%, supported by service revenue growth and continuous operational improvements that further reduce the cost base. Growth predominantly came from Sweden and Lithuania and also from efficiencies realized within central functions, which are part of other operations in our reporting. EBITDA margin was up again, in line with our September 2024 margin expansion promise. This quarter, margin expanded by 90 basis points and was close to 40%. Overall, a good start to the year also in terms of profitability, supporting our around 3% EBITDA growth outlook for 2026.

Moving now to OpEx and CapEx. Starting on the left, you can see that we continue to deliver on our simplification and cost disciplined agenda. The impact from the rightsizing change program is now mostly behind us, but we keep finding ways to simplify Telia and make the organization more efficient. This quarter, we saw lower cost related to resources driven by 5% lower head count, and reductions in costs for IT and bad debt, partly offset by somewhat higher marketing spend in mainly Finland and Norway.

There were also increases in energy costs in Norway and the Baltics. But despite the turbulent energy markets, overall energy headwind for the group was kept at 20 million. Our hedging policy remains the same, with around 70% hedging of a direct electricity exposure for the coming year. Overall, OpEx declined by 2.2% compared to the same quarter last year, which is great to see and a testament to our team's continued focus on this. OpEx as a percentage of service revenue continued to trend down further and decreased by 130 basis points to 30.2% in Q1. During the quarter, we've announced net reductions of around 500 positions across the group.

Moving on to the middle graph, you can see that we also remain disciplined with CapEx, that is now trending at SEK 12.6 billion, well in line with the outlook for 2026 of less than SEK 13 billion. Finally, to the right, EBITDA minus CapEx was again above SEK 19 billion on a 12-month rolling basis, a 6% increase over the last year. We also continued to improve our cash conversion, now at 61%, up from 58% a year ago.

Let's now look at the free cash flow for the quarter. Free cash flow for the first quarter came out at SEK 1.9 billion, which was stronger than expected, mainly due to better working capital contribution in Sweden, driven by phasing and customers paying early. In addition, we also had a tax refund in Sweden, which came earlier than we originally expected. So we're off to a good start, a better start than we expected, and confirm today our around SEK 9 billion outlook for the full year.

We continue to expect free cash flow generation not to be linear this year. The better-than-expected performance in Q1 is largely due to phasing, as just explained. Therefore, we continue to expect that free cash flow generation, which will be H2 tilted, with a 30%-70% split between the first and the second half of the year due to working capital timing. So overall, a reasonable expectation of free cash flow for Q2 is approximately SEK 1 billion.

Let's now briefly look at our net debt and leverage development. As you can see on the right-hand side, our net debt increased in the quarter by SEK 4.6 billion, resulting in leverage increasing to 2.07x, well within our desired 2 to 2.5x range and also well below the 2.18x from the first quarter a year ago. The main reason for the increase, as Patrik mentioned, is the consideration of almost SEK 3 billion for the purchase of Bredband2. We also reduced the mix of hybrid debt in our capital structure. Since hybrids are only accounted for 50% in our net debt, that technically increased our net debt by around SEK 1.3 billion. However, this improves our capital structure and we will pay less interest over time because of it.

Finally, before I hand back over to Patrik, I would like to say a few words on some of the achievements this quarter and how that resonates with our value creation agenda laid out at the investor update back in September '24.

Firstly, we continue to grow EBITDA in absolute terms, and we stay disciplined with our capital expenditures. This resulted in a free cash flow per share reaching SEK 2.41 on a rolling 12-month basis, comfortably exceeding our recently announced increased dividend of SEK 2.05 per share.

Secondly, we continue to strengthen our asset portfolio. We closed the Bredband2 deal, and we successfully transitioned our Finland fiber JV into a new partnership, this time with Brookfield, in a transaction expected to close in Q2. We also continue to make progress on the transaction to exit Latvia, a deal we expect to close later this year.

Thirdly, our balance sheet remains strong, even after paying for Bredband2, and further optimizing the hybrid layer of our debt structure. We now have limited refinancing needs for the remainder of the year, which bodes very well for the interest expense line in our free cash flow statement.

Finally, we paid another quarterly dividend of SEK 0.5 per share to our shareholders this quarter, and following the AGM approval earlier this month, we came through on our 2024 Capital Markets Day promise of growing our dividend per share. This is an important milestone on our journey so far.

And with that, I hand back over to you, Patrik.

Thank you, Eric. Like I said in the beginning, the past year was a year of significant change and strategic progress for Telia, and I'm glad that we start in line with our plan also now in the first quarter. This confirms that we remain on track to build a simpler, faster and more efficient Telia.

Our customers continue to be increasingly more satisfied and our services are more relevant than ever before in an increasingly uncertain world. And all of this puts us in a good position to deliver on our 2026 outlook and midterm ambition, including free cash flow of at least SEK 10 billion in 2027.

And with that, we will open up for questions.

[Operator Instructions] Our first question comes from Andrew Lee with Goldman Sachs.

I had 2 questions on -- would be the kind of standout positives from today's results, just Finland and your cost efficiency execution. On Finland, it's encouraging to hear you talk of price rises through the quarter and consistent improvements. I wonder if you could just talk or help us understand the phasing of the implications of those price rises in the first quarter? Should we expect to see a full boost from the first quarter price rises in the second quarter? And what do you think the growth can be if the market remains rational there? And then -- by growth in service revenue growth.

And then secondly, on cost efficiencies. I think you said that you've taken out an incremental 5% of head count following an incremental to the transformation program. Is that the final picking of lower-hanging fruit? Or is that a better guide on ongoing more sustainable efficiency opportunities going forward? Any help you can give us on that would be great. And is there anything particular driving it? I think AI is more of a 2027 onwards potential compound driven efficiency opportunities, but any kind of particular color would be helpful.

Andrew, it's Patrik here. Thank you for the questions. I will start to answer the question number two, and maybe Eric, you can take the question number 1 on Finland.

But when it comes to cost efficiency, we clearly said when we did a big change program at the end of 2024, that was a rightsizing of the company. And then we were clear on the measures that we will continue to drive operational efficiencies out of the company in the coming years. So what we see here now is actually the continuous improvement in cost efficiency in the company. So it's not only organization, it's also many other aspects. And this will continue going forward as well. It will not stop. So it's not low-hanging fruit in that perspective.

And we have some impact on AI in the cost-saving programs already today. We see that, for example, in customer service, but this is only the start. We think and believe that we can do much more in '27 and onwards, that you alluded to, but we have already some impact in 2026.

Yes. And on Finland, we're very happy with and the improvements we've seen, certainly versus what we saw in Q4, which at the time we said in January, was a very competitive market. It's the typical time of the year, the MVNOs came in, and we are trying to defend our subscriber base. So if we look at it, we're very happy with that Q1 performance where, yes, we still lose some customers, but substantially less than what we have done historically. It's actually the best performance we had in the last 6 years. So that bodes well on the customer development.

The second one is what kind of ARPU are we seeing on win backs, on order intake, et cetera, versus again where we were in December or in Q4, where we clearly are seeing that we're doing it at higher prices, similar to what, I guess, our competition has been saying earlier this week. So if we put those 2 together, yes, we're quietly confident about the direction of travel for Finland. Let's see what the second quarter and the third quarter shows us. But as Patrik said this morning to the team, we're very happy with the progress that [ Holger ] and team are making there, certainly when it comes to defending our place in the mobile market.

That's really clear, Eric, just a very quick follow-up. [indiscernible] talked about lag between the price improvement and the actual flowing through into revenue growth, and so it's more of a Q3 improve for their top line they're saying. Do you have this the same kind of lag -- obviously slightly different type of contracts. Do we need to wait for Q3? Or do you think you'll see the benefit -- we'll see the benefits in Q2?

Andrew, it's Erik here at IR. There is a lag, obviously, always when you build up the subscriber base of different cohorts. Now we've had subscribers coming in at lower ARPU levels during Q4, and that's going to be with us for the year. But it's a gradually diminishing effect as we're now getting subscribers in -- at higher levels in January and then still a little bit higher in February and then further on in March and so on. So it's going to be a gradual recovery. I don't think we can give a better description on the coming quarters on that.

Our next question comes from Fredrik Lithell with SHB.

Can I pick your brain a little bit on the Brookfield partnership you talked about? If you could elaborate a little bit more on what that is a meaningful you? Is that any type of CapEx investments in coming years for you? Or what will your role be there? So that's the first question.

And then maybe if we could get a bit of an update on price changes in Lithuania and Estonia, if you have those coming in positively impacting Q2? Or where you are on prices in those 2?

I think you -- the question regarding Brookfield, I guess you mean the data center in Sweden, not the Valokuitunen deal in Finland. Is that correct?

Yes, correct, yes.

So this is a partnership. We've been working with this for a while. So this is a partnership where Brookfield, they do the investments, and we're providing connectivity to the data center, but also coming with a quite big customer base. So this is an important partnership because customers are demanding more and more, not only storage, this is more compute, which will be important in the space of AI. So that is actually our contribution to the partnership.

And does that mean that you see sort of incremental revenue streams from this when this is up and running? I understand it's not happening tomorrow, but how do you see that conclude?

Yes, it is -- of course, this will be an important part of the agenda going forward, especially in our B2B side and especially in Cygate there in Sweden. So definitely, we will see that, but it's too early to predict those at the moment. So we have to wait a little bit. But I mean, all of us know the demand from AS supported services and compute that's needed, and also local storage, so natural solvency. So -- but to predict exactly the revenues and the growth going forward is a bit difficult moment, but we will come back when we know more about that.

Yes. And on the second question, the price -- on the second question on the price changes, Fredrik, if you take them one by one. On Lithuania, you've seen in the analyst presentation, Patrik just showed the slide that the strong increases in ARPU on mobile, on broadband and on TV, sort of mid-single-digit growth and a subscriber base that continues to grow on the mobile side. That is a reflection of those price increases that we have done. You also saw this already in Q4 as well. The strong EBITDA growth that you see in this market even after the increased head office allocation that we've done, growing at almost 10% EBITDA in Q4 and Q1 is partly because of the cost takeout and the positions that you have seen.

When it comes to Estonia, also there, less on the mobile side, but certainly in broadband and TV, you can see that we've increased prices there. ARPU is up also by mid-single digit. But you've seen that the service revenue is a bit less than what we saw this period last year. There is a bit of work to be done by the Estonian team to see where we can further increase pricing. And I think that's something that we expect more in the second half rather than in the first half. But put together, we're quite happy with the developments in the Baltics, certainly the way Lithuania is developing from a top line growth and from a profitable growth perspective.

Our next question comes from [ Derek Lilibert ] at ABG.

I wanted to ask on the strong cash flow here. On the back of that, you still guide for the around SEK 9 billion for the full year. So just wondering what the key sensitivities are from here in relation to this guidance? And I think you mentioned if H1 is going to be 30% of the annual cash flow and considering the SEK 1 billion guide for Q2, that would imply cash flow well above your guidance, unless I'm missing something.

Yes. No. So we're very happy with that start to the year on cash flow. As I said, it was better than expected and mainly driven by working capital phasing. There was also this sort of earlier payment that we received from tax. This was specifically in Sweden, which made it higher than what we expected when we were talking to you in the call in January. I think there is a little bit better also versus own expectations from less interest and tax, which helps a little bit as well. So it's not just purely working capital.

The reality is, as we said, that we still firmly feel that it's 1/3, 2/3, if you think about H1, H2, given that we roughly have done SEK 2 billion, that would mean, as I said in the analyst presentation, we expect roughly SEK 1 billion. And why then SEK 1 billion only for Q2? Is because that strong working capital inflow that we saw in Q4 and partly in Q1 at some stage has to reverse, and that's what we will see in the second quarter.

With regards to then how we compare and contrast that to the guidance that we've given, it's still relatively early in the year. We're happy that we have a solid start. Also in terms of cash flow, there is also quite a turbulent market out there. That impacts interest rate, FX, energy cost, et cetera. And let's see how that plays out in the remainder of the year.

Thirdly, there is a handful of transactions that we're working on. Now we talked about Bredband2 today, where we give an update to the results of the network around sharing that we're doing in Norway. All of that will also have an impact. And we will come back to them when we close those deals. Latvia is the other one. So a good start to the year in terms of free cash flow, a bit early in the year to be talking about upgrades versus the guidance we've given.

Our next question comes from Andreas Joelsson with DNB.

Yes. It's Andreas. A follow-up to Andrew's question on costs. You've obviously done a lot of changes over the last 2 years since you came into the company and not at least on efficiency, and you said that you will continue to do that. But just curious how you make sure that this momentum can be kept up and how to avoid the organization falling back to old habits? And maybe as an addition to this, when you look at benchmarking towards quite close competitors, what do you see that you can do even more on efficiency?

Thanks, Andreas, and good morning. I can start, Patrik, and Eric, please fill in if you feel I miss out something.

First of all, cost efficiency is an important for us -- competitive tool basically to make sure that we stay competitive. And we have been working quite hard to do the changes in the company. And now we have implemented an operating model where we continuously work with taking out cost. And it's not only in the countries. It's also in the head office and common functions. So this will be built in, in the plans for the coming years. And of course, we will not give up and fall back to old habits, as you call them.

So I think we can just continue to prove quarter-by-quarter that we are reliable and that we continue to take out the OpEx -- to reduce the OpEx. And we have some support from technology, but still, we have a lot more to do in the company. We are not where we want to be yet. So we have still a way to go to be this simply a faster and more efficient company. So there's plenty more to do on the agenda.

Yes. Maybe just to add...

And then regarding your question, sorry, on -- versus competitors. Well, I think it's good that we have competitors. That creates a discipline for us as well, and we see that there is more potential to do. So I think we get a lot of energy when we see others coming out with more efficiency programs, et cetera, and improved margins, and that gives us a lot of energy to seek new opportunities to be even more efficient.

Eric, sorry?

No. Good.

Our next question comes from Abhilash Mohapatra from BNP Paribas.

I've got 2, please. Firstly, just on the EBITDA guidance. You've obviously had a strong start to the year for -- and EBITDA growth. And I think if you look at the quarters last year, Q1 last year was the strongest quarter for EBITDA growth. So given the performance on this sort of tough comp, can you just walk us through your expectations for the rest of the year given you've left the EBITDA guide unchanged, that's sort of 3% despite the strong start.

And then the second thing, just on shareholder distributions, you sort of referred to in your opening remarks how free cash flow per share is running sort of 15%, 20% above last year's dividend. Can you just sort of share some thoughts around shareholder distribution expectations for this year given we'll also presumably have some proceeds coming in from the Norway RAN sharing deal. And as you said, leverage is not that high. So any color there would also be helpful.

Yes. Maybe on the second question first. I think as a team, we are super happy that sort of 2, 2.5 years in, we got the company to position last year where we're covering the dividend for the first time. That sort of mythical 8 billion that we pay every year. And the second one was the milestone that I referred to just now, which is that the AGM has approved that increase in the dividend per share. For us, that's a really good start. And I think -- it's a massive tick in the box, as you would say, Patrik, with what we promised when we did the Capital Markets Day in September 2024, where we clearly said we have a stated ambition to grow the dividend and access cash will get to shareholders.

You've seen the balance sheet as well today, which is slightly up versus the 1.93x that we had at the end of last year, which is partly the acquisition and the way we've restructured hybrids as part of our debt portfolio. So there isn't that much of a push, I would say there. But we continue to work in that direction. I'm very happy with sort of what we achieved, all that part of the value creation, and let's see what comes next.

With regards to EBITDA, yes, it's the same answer I just gave. It's still early in the year. We're very happy with that 4% as a start. We've guided for 3% for '26 and 4% for the medium term. So let's get through a couple of quarters. And we just need to make sure we continue to deliver on that cost agenda, that worked really well in Q1. Let's see how the rest of the year develops.

Our next question comes from Ajay Soni with JPMorgan.

I've got 2. The first is around Bredband2 customer base. So what do you see as the biggest cross-selling opportunities? And could you size if there to be at full run rate? And then just related to that, what was the EBITDA contribution from Bredband2 in Q1?

And then my second question is around the Norway joint operations. Are you -- do you have any regulatory concerns with the [indiscernible]?

I can start with the first question regarding Bredband2. I mean the whole point we're doing this acquisition was to strengthen our position in a more value-based part of Sweden. We have a low overlap. When we look into the Bredband2 customer bases, we have quite low overlap between our customer bases. So our big opportunity here is to sell mobile on these customers and our TV product.

We have just started. So it's too early to give some more flavor around it. But the start, I can tell you, is in line with the business case that we acquired a company for. But again, we have only had these assets now for 2 months. So it's a bit early to look forward looking, but the logic is sell more to these customers, mobile services and TV services.

Yes, very good. With regards to the EBITDA contribution, was that Q1 contribution? Is that the question, Erik?

Yes. I think so, yes.

Okay. Yes. So EBITDA contribution -- yes, it was SEK 45 million EBITDA contribution from BB2. That's only the February and March impact that we have because -- and we closed the deal then. So like-for-like, obviously, it includes the whole month, as you can imagine. But yes, it's -- those 2 months were SEK 45 million.

Okay. And can you just give me an update on the -- any regulatory concerns with the Norway joint operation as well?

I can give a short term, please fill in. I mean there is no news. I mean, we have a good dialogue with the competition authorities in Norway. They are looking into the case. We expect to get green light on it, but I think it will take some time more before we got that message from the competition authorities basically. We don't have any more information at the moment.

Our next question comes from Nick Lyall with Berenberg.

I hope you can hear me. There was a quick one back on the savings, please. In Sweden, you mentioned the 500 staffing. Is that all in Sweden in terms of the sort of -- in terms of the mechanics there? And you've also got some of these coming through from Bredband2. So as you're quite happy in the Swedish business has more than enough to offset inflation and energy costs this year.

And then secondly, on Finland, you talked about efficiency starting, but what can you expect in terms of savings while you're trying to sort of rejuvenate the business? What's realistic for you to expect over the end of this year and next, please?

Shall I start with the Sweden question. And just to be clear, Nick, and you are -- it's hard to hear you on your connection. It's slightly better than in January.

So on Sweden, no, so the net position of 500 is for the whole group. And maybe in general, -- that was the point I was going to make earlier on those cost savings. As we see it both in the units or within the countries. And Lithuania did quite a bit in -- at the end of last year and a bit here in the early of the year. But also by the head office. We have this group technology business, which has almost 2,000 people in it and then the head office itself, which are all the support functions, legal, finance, HR, et cetera, which is also roughly 800 people.

We continue to find efficiencies there. And why is that? Because as the team says, and it's not just words on a piece of paper, we are continuing to try to make this a simpler and faster and more efficient organization. I think the other part, what drives this is when -- it wasn't just 3,000 people out, if you recall the change program. Also 2,000 people went from central functions within those -- to those countries. When they have been absorbed a year later, you can see where can we still make further improvements. And that's what we continue to see.

Then I think the third question was around what do you see then in Finland? It's pretty clear when we set out our store in September '24, that margin expansion was very important to us, which is why each to [indiscernible], we come back to the increase that we are seeing. Patrik said first time, 40% for the whole group. Finland was the big -- is the big opportunity there. And I think during the year, you will see that coming through because [ Holger ] and team clearly saw opportunities also for this business to become simpler, faster and more efficient.

So again, overall, put together off to a good start. And yes, whether all in all, that compensates for energy and some other headwinds, we have a very clear ambition to grow our EBITDA this year by 3%. And part of that is service revenue growth. Part of that is continuous cost operational improvements.

Our next question comes from Oba Agboola with UBS.

Two questions from me. The first on Finland. I know you cited improvement versus Q4, but one of your competitors suggested that pricing is actually old pricing for new customers, is that level similar to what we've seen in Q1 2025? So I just wanted to check whether you agree with that? Has pricing actually returned from the levels we saw at the start of last year?

And then second question on Norway. You mentioned you're still waiting to hear back from the regulators. Is the expectation that operations will start in Q2 with coverage or most of the coverage being done by the end of 2027. Is that still the expectation? And then just secondly on that, could you just remind us of what you think you can do in terms of pricing and improving your market position in Norway after the [ RAN co ] is up and running?

So I can start with the first question on Finland. And please fill in, Eric, if I miss something out here now. But in Finland, we see, as I said, clearly a stabilization in Q1. We don't see that the price levels on the new customer acquisitions are the same levels in Q1 last year yet, but we see that they are moving clearly in the right direction.

So Eric...

So there is a small gap still, but it's closing fast. So it's a positive development month by month for share.

And we see it also now. So it continues to improve every month now. So it's a much better stable situation overall in the market.

Yes. And on Norway, the network -- the RAN sharing, we gave a bit more color today in the analyst in the presentation just now. The regulators here -- the competition authorities that ask questions, as they should, they're doing independently their jobs. So we're working our way through that. I think you need to bear with us for a bit what then the implications are, when does rollout start, et cetera, or [ drone ] rollout start? And what that then ultimately will do for us over and above the words that were on the page today.

By the time we -- so if you think about -- there are some costs that first come to be able to create one network to set up an organization, et cetera, that needs to be run at arm's length. But clearly, it's beneficial for us if you think about the medium term because it will lead to cost efficiencies. But the way we will approach the market, what it means for our positioning, et cetera, and what we can do on pricing, which was your specific question, it's a bit early days for that. So bear with us, but we will come back to that very clearly later this year.

Okay. So just to follow up, when the deal actually closes, you'll give us more information on synergies, pricing, et cetera?

Absolutely. That's the plan. Absolutely.

Our next question comes from [ Alrik Rafe ] with Berenberg.

I have 2 questions. One is on Swedish fiber. A competitor commented yesterday that much of the MDU fiber infrastructure is aging, support limited speeds, 100 to 300 megabits per second was sort of mentioned, and that customers are therefore incentivized to simply find the lowest price because there's limited service differentiation. I think these comments were mainly on MDU Fiber. First of all, would you agree with that sort of assessment? It's obviously coming from someone who was running an HFC network. So there is a -- there's ulterior motive here to comment like this, but I'd just like to hear your views on this in particular, how you see the situation with regards to the quality of fiber in the SDU segment. That would be my first question.

The second one is any news on the SDU fiber regulation in Sweden that you can share at this point and on the impact on Telia, that likely impact on Telia.

Thank you, [ Alrik ]. This is Erik here at IR. I'll take the first one. So we've heard this comment being made before about the aging fiber infrastructure. This is -- isn't anything we've ever felt that's been a limiting factor for our business. So we don't quite recognize it. One possibility is that it refers to actually in-building wiring, which may be in some buildings of an older standard, but even that should be a factor which should be reducing of importance over time. So this is not the limitation factor for us at all, in fact.

Yes. And I agree. We don't hear that from the market. So we are a bit surprised of that question, I must say that.

But then the second question regarding the Swedish fiber regulation. So no news, basically, no. But if you look at our position here, we are today the only operator that are regulated on dark fiber access for the MDU market, SDU and also for B2B customers.

And if you look at the coming regulation, we expect this 20 -- I think will come in 2027. And I think it will apply only to fiber access for SDUs and only for network operators designed as having a significant market power, so SMPs. And that is -- Telia is one -- I mean, we are 1 of 60 operators that are classified as SMPs. So for us, this is -- will be negatively to -- sorry, neutral to a more positive view on the total. So but we don't expect it to be -- to have a big impact, fairly limited impact on us.

Erik, do you want to add something?

No, I think that's...

Still waiting for it.

Yes.

Our next question comes from Viktor Högberg with Danske Bank.

So this is a question on capital distribution. Telia's is the only telco with a payout ratio below -- lower 100% of free cash flow. Could you just help us shed some light on how the Board reasons regarding capital distribution in the light of the stronger balance sheet and the payout ratio? Any help there would be helpful.

I think we have discussed this almost on every quarter presentation. And I think -- and we're also discussing this in Board. The Board is positive to -- I mean increase the dividend to our shareholders. That's by nature. We have had a policy that said that we should increase on an annual basis, the dividend, but the problem was that we were not able to do it. Now we did it for the first time in 5 years. And I think we will have a bit of a careful and cautious approach as well to make sure that we deliver and we set, for example, keep promises. And then when we see that we have more cash, and we are delivering on our plans, then of course, we will have an openly good discussion with the Board on increasing the dividend going forward.

Yes. And I think there's one leg missing, which is what often this question refers to, right? There isn't a payout policy that we have set over me on what our dividend policy is. And we know that's the homework that we have to do. I think in some conversations, we've said we'll come back to that when we set out sort of the next 3-year plan. So we're not quite there yet. And we just started the year. But I think what we ultimately want to achieve is pretty, pretty clear, and I think we've been quite open about that pretty much since day 1, which is why covering the dividend and then increasing the dividend are such important first milestones on that.

Operator?

Our next question comes from [ Derek Lilibert ] with ABG.

Sorry for coming back. I was cut off. I just wanted to ask about the sustainability and the performance in Sweden, obviously, delivering a strong EBITDA growth again here with a notable contribution from fixed and TV. How sustainable would you say this mix-driven strength is? And then how should we think about mobile momentum going from here? I have one more question after that.

Yes, sure. No, we're very encouraged by -- about what we have seen. And again, sorry to go harking back to '24, a bit philosophical at the moment. But I guess it is coming from a business that was ex growth and then to go to a business 2.5, 3 years later where we are growing even ahead of what we do as a group and the strong increase that we see in profitability is a fantastic achievement by Team Sweden. And if you think about their relative size, that's more than half of our business for us to go out there and have a medium-term guidance of 2% and 4% over '26 guidance of 2% and 3% service revenue EBITDA growth, and to have then that Swedish unit do 3% top line and more than 6% EBITDA is obviously really great to see.

I think the other one that we feel happy with is how we start to see that continuous operational improvements and cost, which bodes well if we think about sort of the remaining quarters of the year. But obviously, we're not going to specifically guide on of every unit. But yes, if you think about what is driving that growth, which is our growth in broadband, our strong growth in TV, which continues to be more than 100 million plus every quarter and then the same on the mobile side is -- it's obviously very encouraging for us to see. I think ultimately, that's why we decided to call it a good start to the year because this foundational unit is doing even more than what we do as a group.

Okay. Cool. And on mission critical, did that performed well above your expectations here in Q1? And how should we think about that going forward? Because I believe you flagged it, it will be quite lumpy and maybe a setback in Q1, if I remember correctly.

Yes. So I could comment on that one. We are not that specific when it comes to mission critical in that perspective, but we had a good quarter. It's in line with our expectations, but it is lumpy. So it's a bit difficult to predict. But for the full year, it will be in line with our expectation and in line also with the guidance that we have been given. So it's a bit lumpy again on a quarter, which we have said before, but no surprises, and it will be in line with -- including in our guidance -- in our outlook for the year.

Our last question comes from Siyi He with Citi.

I have 2, please. And the first one is on the -- on your Swedish fiber. It seems that the regulator are looking into the Chinese vendors. And one of your competitors commented that in the fixed network, still some of the Huawei equipment. I'm just wondering if you can share with us your exposure to that? And any potential cost or time line that you have in mind if you need to sort them out, your fixed network, will be helpful.

And the second question is really a clarification for Patrik's comments in the press release. I think you mentioned in the press release saying that the industry has never been so competitive considering that you are actually growing top line in all the markets on the line basis. Just wondering, what are the reasons for being cautious in your comments?

Yes. I think you referred to the B2B market, if I guess right now, I would imagine that. So we see quite strong competition in the B2B market. And I mean, given the macro and also the geopolitical situation, I think that many companies and bigger organizations are holding back on investments and also cost focused, and that is hitting our B2B business.

On the B2C side, we feel quite unchanged basically on the demand. We feel quite an okay market situation on the consumer side, but it's related to the B2B where we see some headwind when it comes both to competitions, but basically, the companies are holding back on investments. And then the competition, of course, will increase immediately.

And then see, on your question about Chinese equipment. So we've done the replacement of all the equipment we need to replace. And I think we haven't had an update on this for a while, so I have to check. But to the extent there is anything left that we are following a plan to replace what we need. So it's not really a topic.

Okay. Thank you. I think that was the last question. Thanks, everyone, for all the good questions, and we look forward to speaking with you again in the coming days and weeks. Thank you, and goodbye.

Welcome, everyone, to Telia Company's Q4 Full Year Results Presentation. And with that, I will now hand over to Telia Company's Head of Investor Relations, Erik Strandin Pers. Please go ahead. The floor is yours.

Thank you, and good morning, everyone, to our Q4 call. We will do the usual routine with the management presentation followed by a Q&A. We have CEO, Patrik Hofbauer; and CFO, Eric Hageman, in the room, and we go straight ahead. Patrik, the floor is yours.

Thank you, Erik, and good morning to all of you. The last quarter of 2025 confirms that we are on track to reshape Telia into a much simpler, faster and more efficient company, in line with our value creation plan set out at the investor update back in September 2024.

Before I go into the quarter, let me walk you through some key highlights for the full year of 2025. Looking at the financial performance, we have, for the first time in 5 years, converted the dividend with our free cash flow without any vendor financing contribution. We delivered on our EBITDA and overdelivered on our free cash flow ambition despite a challenging year for Norway and service revenue headwind in Finland and our balance sheet has strengthened. The good financial performance has also been noted by the market and resulted in a total shareholder return of 36% for 2025. We are also through the first year with our country-led operating model and the positive result when it comes to efficiency, speed and responsibility are clearly visible. The new model is also an enabler for further efficiencies and we announced a net reduction of 450 positions earlier this month. We have also come far in terms of improving our CapEx efficiency and reshaping our portfolio with the divestment of TV and Media and bid for Bredband2 and our process to exit Latvia.

Throughout the year and across most markets, we have seen NPS improving, so the customer satisfaction, which confirms that we are doing the right things for our customers. In addition, our role in society is becoming increasingly important with increased demand for secure and mission-critical communications. So a lot for the organization to be proud of and to build further on in the coming years.

And with that said, let's now zoom in on Q4 highlights. We again won the best network in Sweden according to umlaut's yearly survey, achieving both the highest overall score and a win in every category. But only having top-class network is not enough. And I'm happy to see that all the other efforts we do to drive customer experience is paying off with NPS increasing across the footprint. We also continue to be very disciplined on cost in Q4, which resulted in an OpEx decline by 4%. On portfolio management, we received the necessary regulatory approvals to go ahead with the bid for Bredband2 just before Christmas. And our process to exit Latvia is moving ahead. We also agreed to acquire a small fiber customer base in Finland.

We saw Sweden deliver its best quarter in modern times with revenue growth reaching almost 5%, supported by business and mission-critical services, but also strong growth in consumer and an improved trend on mobile. For 2026, we see continued good financial momentum and therefore, guide for service revenue and EBITDA growth of around 2% and around 3%, respectively, and a stable CapEx level. Combined, these core building blocks are estimated to generate a free cash flow of around SEK 9 billion, a good milestone towards delivering at least SEK 10 billion in 2027.

Now let's go to the financial highlights. Service revenue growth accelerated as expected, supported by strong growth in Sweden. EBITDA growth remained rather unchanged compared to the previous quarters, somewhat held back by a weak service revenue development in Finland and our decision to invest more in our core markets to capture growth. CapEx remained stable and ended a bit below our outlook of around SEK 13 billion for the year. Free cash flow came out very strong, driven by better-than-expected Q4 working capital, which Eric will elaborate more on. This strong end to the year resulted in a full year free cash flow of SEK 9.6 billion based on normalized spectrum CapEx, significantly above our outlook of around SEK 8 billion. Finally, our balance sheet remained very healthy with leverage also this quarter at 1.93x and significantly down from a year ago.

Moving now to Sweden that again won the best network in umlaut survey and that also secured further long-term access to 1,800 megahertz spectrum at attractive prices. In the quarter, we also completed the 5G rollout and the 3G sunset. Customer satisfaction improved both in B2C and B2B, and we continue our strategy to step-by-step move sales from external channels to internal channels. Financially, Sweden delivered impressive service revenue growth, driven by both mobile and fixed. The consumer business had another good quarter with over 4% growth. Mission and business-critical services were a strong growth contributor, but also other areas such as our IT business, Telia [indiscernible].

Growth was well balanced, driven 50-50 from pricing and volume. This shows that we can do both pricing and attract new customers, as you can see in the healthy KPI development on the right on the slide, with strong net intake for both broadband and TV and a growing mobile ARPU driven by price changes earlier in the year. The slight decline in mobile customers was a result of a modest decline in the mobile broadband base. EBITDA growth remained strong despite including a lower year-over-year pension refund contribution as well as increased marketing spend. So all in all, Q4 was strong delivered by the team in Sweden.

Let's now move east to Finland. And let me start with the financials where we had a weak quarter with service revenue down 3%, partly driven by continued weak enterprise market environment and a ramp down of noncore businesses but mostly because of non-connectivity projects for enterprise customers, which are lumpy in nature. We had a high level of revenue from these projects in Q4 last year and a relatively low level this year. The lower service revenue was the main reason why EBITDA declined 6%, but also the higher marketing spend that we flagged already in Q3. So clearly, a weak quarter, and we are far from satisfied, but we also won some new enterprise customers and our focus remains on the strategic agenda we have communicated before, strengthen profitability, simplify the business by divesting noncore assets and reducing organizational complexity and then turning around the SME segment and stabilizing the mobile market share.

Underlying cost control remains tight, and we expect service revenue and EBITDA to be more stable in the coming quarters. The mobile consumer market was very active this quarter with 2 new MVNOs and a record high number of customer changing operator. We continue to focus on network and customer service quality and avoided the lowest price points in the market, even if it resulted in a net loss of customers short term. In broadband, net adds declined by 6,000 in the quarter, but this was fully driven by a cleanup of inactive subscribers.

Now moving west to Norway, where service revenue was close to flat despite lower mobile wholesale revenue since mobile end user and fixed revenue improved clearly. This was mainly driven by pricing and as can be seen to the right, resulted in significant ARPU growth across our core services. EBITDA remained in negative territory as we flagged last quarter due to the decline in service revenue as well as higher cost level. Partly this was driven by phasing and partly because we have invested more into the market to capture future growth potential. We shifted the billing cycle for a large part of our customer base, which helped working capital in the quarter, and the churn effect was well in line with our own expectations.

So now let's move to Lithuania, which launched 5G SA for its consumer customer and continue to deliver truly strong financial development with service revenue growth accelerating to 7%, supported again by both mobile and fixed. The acceleration, together with another quarter of great work on generating efficiencies resulted in an EBITDA growth of 13% and an EBITDA minus CapEx that remained at a record high level of SEK 1.6 billion on a rolling 12 months basis. In addition to solid financial development, Lithuania continued expanding the mobile customer base, and as you can see, also grew ARPU across all products, predominantly on the back of pricing performed earlier this year.

Moving on to Estonia that had an eventful quarter operationally, receiving a recognition for best network by Rohde & Schwarz, launching a new security service for its home broadband customers and new eSIM roaming service for customers trading -- traveling outside of EU. Financially, the quarter was, however, a bit soft on service revenue, trended stable and EBITDA growth slowed down due to an unusually low cost level in the corresponding quarter last year. But like for Lithuania, cash conversion remained close to a record level also in Q4.

And with that, I hand over to Eric before I come back to summarize the full year and Q4. Thank you.

Thank you, Patrik. Let me now go through the financial development of the quarter and full year, starting as usual with service revenue and EBITDA. In the last quarter of 2025, service revenue growth improved to 2.1%, driven by the strong performance of our Consumer segment, which benefited from a particularly strong development in fixed, led by TV in Sweden and broadband, which grew nicely across all our markets. Mobile service revenue returned to growth despite the continued drag from wholesale in Norway. From a country perspective, Sweden's top line accelerated as expected and growth in the Baltics remained solid at around 5%. Combined, Sweden and Baltic service revenue growth more than compensated for a somewhat negative Norway and a weak development in Finland, the latter feeling the impact of increased competition, some year-on-year phasing and the previously flagged closure of the noncore e-invoicing business.

But as Patrik said, we expect the service revenue trend to improve in the coming quarters, even though the overall turnaround in Finland and Norway will take time as previously explained. As a group, we ended full year '25 with 1.5% service revenue growth, a tad shy of our around 2% outlook. Excluding the wholesale revenue loss in Norway, we would have been at a 2% top line growth for the full year, which is what we guided for 2026. Sweden is expected to enjoy continued good growth, albeit at a lower rate than seen in Q4, and we expect Norway and Finland to gradually improve.

Moving to EBITDA at 3.7% growth in the quarter remained solid, yet somewhat below the Q3 level because of the increased marketing spend in Finland and Norway. EBITDA margin was up again, firmly aligned with our September 2024 Capital Markets Day margin expansion promise. For the full year, the improvement was 120 basis points and is the result of profitable growth supported by the positive impact of the Change Program. Looking into 2026, we guide for around 3% EBITDA growth, supported by service revenue growth and continued work on generating efficiencies.

Moving now to OpEx and CapEx. Starting on the left, also in Q3, we kept a high level of cost discipline as the Change Program continued to drive down resource cost. As a result, OpEx declined by 4.1% compared to the same period last year. We also saw lower cost for energy and bad debt in Q4, which largely compensated for slightly higher IT costs and increased spending on sales and marketing to capture identified growth opportunities in our 3 main markets. OpEx as a percentage of service revenue continued to trend down and decreased by 200 basis points to 31.9% in 2025. Whilst it's, of course, encouraging to see that we managed to do more with less, we see many more opportunities. We will not sit idle, and we will continue to make Telia simpler, faster and more efficient. Consequently, we announced early this month that we are targeting a net reduction of at least another 450 positions across the group this year.

Moving on to the graph in the middle, you can see that we also remain disciplined with our capital expenditures, ending the year with SEK 12.8 billion for the full year, ahead of the improved guidance of around SEK 13 billion that we gave you at Q3 and significantly better than the initial guidance of less than SEK 14 billion that we had at the start of the year. For 2026, we expect CapEx to be below SEK 13 billion, in line with how we currently are trending and well below the SEK 14 billion of our initial and medium-term guidance. Finally, as you see on the right-hand side, EBITDA minus CapEx as a proxy for free cash flow was SEK 19 billion on a 12-month basis, a step-up of SEK 1.5 billion or 9% versus last year. We also improved our cash conversion to 60% on a 12-month rolling basis, up from 57% a year ago.

Let's now have a look at our free cash flow. Free cash flow for the fourth quarter came out stronger than expected, mainly due to working capital. This was driven partly by our own initiatives, including earlier billing and better inventory management and partly by external factors such as early payments by enterprise customers. For 2025, we delivered SEK 9.6 billion free cash flow on a normalized spectrum CapEx basis, significantly ahead of our initial free cash flow of around SEK 7.5 billion that we had upgraded to around SEK 8 billion at the Q3 results. On a reported basis, free cash flow was SEK 9.3 billion after paying SEK 800 million in a final installment for the Swedish 2023 multiband auction and with ForEx headwind of more than SEK 300 million as the Swedish krona strengthened versus the euro.

This year-on-year cash flow growth was structurally driven by SEK 1 billion increase in EBITDA due to profitable growth and cost savings and circa SEK 600 million in reduced interest payments as a result of lower gross debt, lower average interest paid and strong working capital inflow. Looking ahead, we currently don't expect to have any significant net contribution from working capital in 2026. And we also don't expect paid CapEx to exceed booked CapEx like it did in 2025. Together, these 2 items contributed around SEK 1.5 billion to our cash flow last year. This is not expected to be repeated this year. That sets our free cash flow starting point back to around SEK 8 billion as we head into 2026. From there, we expect to grow our free cash flow to around SEK 9 billion, as you have seen us guide for this morning.

This growth will be mainly driven by increased EBITDA, which we have guided for to grow by around 3%, which is circa SEK 1 billion in absolute terms. Overall, we currently expect free cash flow to be quite back-end loaded in 2026, even more so than it was last year. We expect relatively low cash flow in Q1 as some reversal of working capital should be penciled in considering the strong inflow we had in Q4. Interest payments are also seasonally high in the first quarter, just as a reminder. We expect cash flow generation to then strengthen quarter-by-quarter as profitable growth accelerates with the impact of continuous cost improvements taking hold.

You know we are very focused on improving Telia's free cash flow generation capability. We made good progress in 2025, but we aim to make more progress in 2026. Our target remains to exceed SEK 10 billion in free cash flow by 2027.

Let's now briefly look at our net debt and leverage development. As you can see on the right-hand side, in Q4, our net debt increased slightly by SEK 400 million. But with EBITDA growing in equal measure, leverage was 1.93x, the same as in the third quarter. Perhaps more importantly, looking at the bottom left bar chart, we can clearly see that leverage has come down materially over the last 2 years as we have expanded EBITDA and used the cash proceeds from selling noncore assets to actively manage and strengthen our balance sheet. The benefits of this much healthier balance sheet are threefold. One, we pay significantly less interest as debt has come down materially. Two, it enables us to actively think about increasing returns to shareholders as evidenced by our proposal to the AGM to increase the dividend per share. And we can strengthen our core business via accretive acquisitions such as Bredband2 in Sweden and fiber investments in Norway and Finland.

Finally, before I hand back to Patrik, I would, as usual, like to say a few words of some of the achievements we've done in the quarter and how that resonates with our value creation agenda laid out at the investor update in September '24. Firstly, free cash flow more than covered our dividends paid in 2025 and exceeds the dividend being proposed by the Board for the fiscal year 2025. Furthermore, we delivered on our commitments for 2025 in terms of EBITDA, CapEx and free cash flow. Secondly, we continue to work diligently on our active portfolio management agenda. We received the regulatory approvals related to the Bredband2 deal and significant effort was also spent on a transaction to divest Latvia, where work continues with our counterpart to ensure that we reach an agreement this year.

Thirdly, and as just mentioned, our balance sheet improved again this year, ending the year at 1.93x, just below our target range of 2 to 2.5x net debt to EBITDA. Finally, we paid another quarterly dividend of SEK 0.5 per share to our shareholders. And as you have seen today, the Board of Directors proposes a dividend increase of 2.5% to the upcoming AGM. This would mean that for the first time in a long time, we will deliver on our commitment to a progressively growing dividend.

And with that, I hand back over to you, Patrik.

Thank you, Eric. The past year was a year of significant progress for Telia as a company. Our customers are becoming more satisfied and our services are more relevant. It was also a year in which we delivered on our EBITDA and cash flow promises and made progress in both CapEx efficiency and portfolio management. We have taken several steps to create a simpler, faster and more efficient Telia. Also, the strong end to '25 confirms that although there are challenges still to overcome, we have a solid foundation in place that will enable us to deliver on our 2026 plans and our midterm plan targets for 2027. This comfort is also shared by the Board of Directors who will propose to the AGM in April a dividend raise from SEK 2 to SEK 2.05 per share.

And with that, I will open up for questions.

[Operator Instructions]

Our first question comes from Andrew Lee with Goldman Sachs.

Here is actually [ Sofia ] from Goldman. Today, we have 2 questions. The first one is on Finland. What is your time line to reach stability on EBITDA there? And the second one is on cost cutting. So you guided to just 3% EBITDA growth of 2% service revenue growth for 2026, and you've already announced 450 headcount reduction this year. So is the EBITDA growth guide conservative? Or are there headwinds such as lost high-margin revenues greater than expected? Or is cost efficiency opportunity just not as high as you'd hoped initially?

I can take the first question. It's Patrik here. Regarding Finland. I mean, if we start with Finland on a broad perspective, first of all, we are not, of course, satisfied with the performance in this quarter. But we continue to focus on -- first of all, we continue to focus on our customer experience and the satisfaction. And I mean, we have also been credited for the best network and also the best customer experience, highest NPS in Finland, which we are, of course, are proud of. Then just to remind you what we're working on. I mean, we have 3 main activities in Finland. First of all is to stabilize the customer base that we're working on. The second one is to improve the profitability, which clearly you can see in the financials for 2025, where we improved the EBITDA by 4.4%. And then we want to increase the share for our SME customers.

And on top, of course, we continue to simplify the business and clean up the portfolio and also in the organization. So then how does it look going forward? Well, we expect some improvements already now in Q1 and also towards the rest of the year. So we would expect improvements both when it comes to service revenues and EBITDA. And if you look at the takeout that we just also mentioned, which is the second question, and Eric will take that one. The major part is actually coming also from Finland or a big part is coming from Finland. So we are doing activities. We have a plan in place, and I think we will see improvements in this year now in 2026. Thank you. Eric?

Yes. With regards to the guiding of 3% EBITDA growth for 2026, well, first and foremost, it's very much in line with our midterm ambitions. If you recall, that's a 4% CAGR over that period, '25 to 2027. And as a reminder, we did 5.2% in 2025. The other thing to remember is 2025 obviously enjoyed the great benefit of the Change Program, taking out 3,000 net positions. And of course, we will continue to find other cost savings. But the impact in 2026 from headcount -- lower headcount will be less because as we just said at that announcement, there's a net positions of 450.

Our next question comes from Owen McGiveron with Bank of America.

It's McGiveron at Bank of America. First one also on Finland. Just maybe a bit more color on the weaker enterprise deal flow that you've seen in B2B. Would you say this is a continuation of kind of a tough market backdrop that we've seen across the year? Or are there idiosyncratic factors here for Telia? And then the second one, Norway growth remains challenged. Now with the new CEO in situ, how should we think about the phasing of the recovery over full year '26, noting that the comp is probably quite tough in Q1?

Yes. Shall I start with Norway maybe first. So we still have 1 quarter of ICE impact in Norway, which as we said at the time was around SEK 400 million for that full contract, both revenue and EBITDA. So there's about SEK 100 million left impact in the first quarter. And then as we've said, with the investments we've done in sales and marketing and in general, how that market is developing and the impact that [indiscernible] will have, we feel quite confident that, that business will improve through the year. With regards to Finland and the weak enterprise, it actually -- it was a very strong, exceptionally strong Q4 in 2025. And these enterprise sales are always very, very lumpy.

So we had quite a few in Q4 last year and a few less this year. I don't think there's anything structural on it. The macro economy that we see in Finland is in our portfolio, one of the weakest, but it's not particularly weaker now than it was last year or the year before. If anything, Patrik pointed out to what we are focusing on, which is making sure we stem the decline in mobile market share, but also capturing that opportunity in SME, small, medium-sized enterprise market is super important for us. And there, we had very, very good traction.

The last point on Finland is EBITDA margin. So EBITDA went up -- margin went up 120 basis points, if I'm not wrong, this year, up from below 30% to above 31%. And there is more to be done there. This historically has been a business that was less efficient. And it's one of those things that we called out in the September '24 Capital Markets Day. Margin expansion is important for all our countries, apart from Norway because of the ICE contract, all countries have improved their margin. There is particularly more upside in Finland to go in 2026.

Our next question comes from Erik Lindholm with SEB.

So 2 questions, if I may. I just wanted to start on Sweden, mission and business critical revenues, really strong, as you said. How are you thinking about the opportunity to drive continued growth here in '26? And is this something we should sort of expect to see driving growth for several quarters in a row? And then secondly, on Norway, you mentioned quite clear improvements in terms of ARPU in this quarter. What are you seeing in the market, I mean, both fixed and mobile that is allowing you to push through these quite large price increases?

Erik, I can start with the first question regarding Sweden. And we have good momentum in Sweden, as you saw also in Q3, which is very positive. It's obviously the biggest market for us and the most important one. When it comes to mission critical, we continue to see the demand that will not change compared to this year. But you cannot say it will continue in the same pace every quarter. It goes a bit up and down depending on the demand and also timing questions. But we expect to see a similar demand in that segment also in 2026 as we saw in 2025. So -- and this is one of the growth drivers that we have here in Sweden, but a very solid performance, and I would expect this will continue into the next year as well.

Yes. Then on Norway, with regards to ARPU, absolutely, it was important for us to make sure that you have the right combination of volume and pricing. So quite a lot of price increase, both fixed and mobile towards the end of the year. Why is it possible was your question? Because it's a very healthy market. As many of you write, it is one of the best markets in Europe. And I would say, if you look at our Sweden performance, may be challenged by -- start to get challenged by Sweden. The other thing is we continue to invest there. So if you look at that 3-player market by continued investment in fixed, whether that is fiber, but also on network coverage on 5G, where we have a leading network that allows you actually to price that with customers.

And I think thirdly, what defines that healthy market is good macro, clearly, a good macro economy. And on top of that, it's very, very rational, yes, acting by the incumbent as opposed to Finland, which really, really helps this market.

Our next question comes from Andreas Joelsson with Carnegie.

Two questions from me as well. You have touched upon it a little bit, but on the growth guidance, could you state the 3 most important factors that you expect to drive that growth to 2%? You have had some headwinds in 2025 that will fade but other than that, what are the key critical factors for the 2%? And secondly, on the balance sheet, you will now pay for Bredband2 soon. But I guess Bredband2 will generate positive cash flow, which is not included in the guidance. And then hopefully, you will divest Latvia. So in the event that you would return to below 2x leverage after you paid for the acquisition, what is the main priority for that sort of excess cash, if you could call it like that being below the leverage target?

Yes. I can start with the growth going forward. I mean the elements of what is important, what the question you asked, I mean, of course, it's important for us that Sweden continues to perform, especially we have the mission critical. We know that, that will continue. The demand will be there also for 2026. But then we have also pricing, which we have done. We are doing some pricing now in -- we have done recently in Norway, et cetera. So we are doing that all the time. So I think those in combination will then help us to reach the around 2%, which we are guiding on the outlook for 2026. And then, of course, we expect also some improvements in Finland and yes, then Baltics continue to drive. So I think that is overall, I feel quite comfortable on that outlook for 2026.

Yes. Then with regards to the balance sheet. So when we do Bredband2, just to remind you, it's about SEK 3 billion, right? So that adds, what is it, 0.1x to what we have, which brings us then slightly above the 2x. And then let's see when Latvia materializes. So we will be close to the bottom of that range, and we feel quite comfortable with that. The second part of that question is related to what do we do when this excess cash? Maybe it's best to explain it as follows. We take, as we said at the investor update, capital allocation very seriously. And in that vein, you've seen us reduce OpEx. You've seen us reduce CapEx, and we will continue to do that going forward. Then we invest in growth, like, for example, mission critical, right? Sweden's strong performance is partly because of mission-critical accelerated that requires investments, both people and also CapEx.

And then we have a balance sheet, a balance sheet that allows us to do, as I just said in the analyst presentation, accretive bolt-ons, which is great. And as cash flow continues to grow, then we can start to think about what are we going to do with regards to shareholder remuneration. Well, today, as you've heard, we announced to increase the dividend. And then let's start to get through 2026 when we start to deliver on the guidance of SEK 9 billion on a path to SEK 10 billion by 2027. And I think sequentially, we then can think about with a healthy balance sheet, what we can do in terms of shareholder returns.

The next question comes from Fredrik Lithell with HB.

I have 2 questions. The first one is really if you could elaborate a little bit on the net working capital in Q4. You have spelled out the phasing of billing and customer payments. But if you could sort of put some type of numbers on it would help a little bit. Second question is on the upcoming regulation in Sweden on B2C fixed fiber SDU. When that comes into effect, I mean, that's a stronghold for you, that market. How will you go about to defend your position there when it's going to be open for more competition? It would be interesting to hear.

Competition, do you want to take that?

Yes. Fredrik, on B2C fiber SDU, I think that regulation has been in the -- it's been worked on for several years. It's still not in place. And once it gets in place, it will take time to implement it. So -- and some of the proposals that have come along has been a bit more positive and some a bit less positive from our point of view. So I think we need to sort of see where it lands before we can say exactly. But in general, we are regulated today, and we see that the -- hopefully, the regulation will create a more level playing field going forward. There might be some drawbacks for us, but there might also be opportunities for us to invest into networks where we're not present today. Sorry for a vague answer, but the regulation isn't really in place fully yet. So I don't think we can say more than that at this point.

And I can just add, I mean, it's a bit difficult, as Erik is saying, to judge where we'll end. But clearly, we have pushed for a more level playing field in the market given that we are regulated. So I think that is an opportunity for us, but we have to wait and see where the outcome will be because it has changed during the years a bit back and forth. So let's see where we'll end. I'm not even sure that there will be a regulation this year, given that we have thought this for many years now. So let's see. We will -- but I think for us, it's actually more an opportunity than a risk. That is our internal judgment so far.

Yes. Then with regards to working capital, you're going to get an equally vague answer, I'm afraid. So as I said in my voice over doing the analyst presentation, it's partly planned, the work that we do, which is what making sure that you issue invoices early and that you do good management of your inventory, et cetera. All of those have benefited. But there also were external factors, as we said, which is people literally paying us that typically wouldn't pay us as we've seen in the last couple of years. Read into that what it is. Part of those planned initiatives, for example, is the way we're billing people in Norway, which had roughly a SEK 400 million impact.

So it's part of the work that we did, and it also allowed us, obviously, during the year to do the free cash flow upgrades. But it was certainly more than what we had planned. I think maybe equally important is to talk about what it means for this year. And again, just to repeat that, what I said in the analyst presentation is we expect it to be neutral for 2026. Partly that is the reversal -- some reversal of the high inflow that we had in Q4. And on the other hand, the work that we continue to do to improve working capital. So where in the last 2 years, we were guiding for inflow; for 2026, we're guiding for neutral working capital.

Okay. And in that neutral working capital, will you still have sort of pensions coming your way in that equation?

Pension, look, we pay pension to the people that have worked here in the past, and then we get the refund from the pension foundation, as you know. So that's normally a sort of a wash more or less. And that doesn't -- this shouldn't really affect working capital. So that's not really a part of that. But I think we expect -- as a starting point, we expect the normal sort of SEK 900 million per year refund that we usually get for 2026 as well.

Yes. If you think about the growth, right, from where we guided for SEK 8 billion last year, and we're guiding for SEK 9 billion now, that increase, it's not driven by pension. And as I said, because working capital is neutral, it is also not driven by that. It is driven by our EBITDA growth.

Our next question comes from Nick Lyall with Berenberg.

It was a quick question about Swedish service revenue growth, please, and the improvement there. About half of it seems to have come from other. So could you maybe just tell us what the other bump up is? And then in mobile as well, the ARPUs improved quite strongly this quarter. So could you tell us -- is this the timing of price rises? I was surprised a little bit about your comment that you thought that growth would keep on coming, but at a lower rate. So could you just explain also why that lower rate for 2026? Is that just a function of other not being repeated? Or is there something that's going to be lower in maybe mobile or fixed as well?

I didn't hear all the questions, but I will try to take the first one because that one I could follow, but help me and colleagues here in the room here. So when it comes to other revenues, that is partly the mission-critical that is included in that one. So if we start there first. And then the next question was? Eric?

I understood mobile ARPU.

Nick, go ahead.

Yes, the mobile ARPU was quite strong in the quarter, so improved quite sharply. So is that the timing of price rises? Or is there something a bit more fundamental there? And the final question was just about, I think, Eric you mentioned about maybe slower continue...

We lost you, Nick. We heard the beginning of the question. Is mobile ARPU up because of pricing or something more fundamental, I think, was the question.

Yes pretty much on timing, yes.

And was the mobile ARPU question about Norway or Sweden?

Sweden, please.

Yes, I think it is a smaller increase, and it is because of the ongoing amendments of the portfolio and price changes we are doing. So nothing really big there, I would say, on the pricing side. It's just the ongoing strategy.

[indiscernible].

We hear you barely.

I'm sorry, actually I'll try once more. And if it doesn't work, just cut me off. But you mentioned as well about the growth coming through but at a lower rate in Q4, Eric. So would that -- is that mobile and fixed at a slightly lower rate? Or is that just a function of that other revenue growth falling away? Why at a slower growth rate in Q4 for 2026, please?

In Norway or which country?

Which country, Nick?

Still Sweden.

Still Sweden. The other is really strong. So I'm not sure what we're looking at and partly it is the bad connection, I think. But mission-critical is really driving other in Sweden. It sits in different buckets. But to be clear, that is, if you think about the strong growth in '25, but certainly also in Q4 for Sweden, which is driven partly by fixed, which is TV and broadband. But then on top of that, you have the strong growth in mission critical. Thinking about it in a slightly different way, very strong performance in consumer, up 4%, slightly less good in B2B because we've seen that takes a while, right? So...

And we haven't really guided per quarter. So if that was a misunderstanding, sorry about that. But there's no -- we haven't really got into that. As Eric says, consumer is strong over 4% growth and the mission critical is strong. So those are the main growth drivers in Sweden at the moment.

Our next question comes from Abhilash Mohapatra with BNP Paribas.

It was just around your sort of free cash flow and FX actually. So you mentioned in Q4, how there was a sort of FX headwind of SEK 300 million, which you managed to offset. Obviously, the Swedish krona has strengthened quite a lot over the last 2 or 3 months and since your Q3 results. But you still reiterated your 2027 free cash flow guide for sort of greater than SEK 10 billion. And today, obviously, you've sort of guided in line with consensus for 2026 on free cash flow. I was just wondering what steps are you sort of taking to offset what looks like a pretty material FX headwind? And also just related to that, if we didn't have that headwind, all else equal, would your free cash flow guidance be higher?

So first and foremost, the SEK 300 million wasn't the Q4 effect. It's a full year 2025 effect because if not then, we were talking north of SEK 1 billion. Of course, you have to take that into account when you are guiding at some stage, you need to fix it and let's see how SEK trades versus the euro. So for us, delivering that SEK 9.3 billion or the SEK 9.6 billion depending if you look at our report on a normalized, it's obviously very good to see that in the context of all the headwinds that we saw, if you think about the Norway wholesale contract, if you think about Finland, in Q4 and if you think about FX not being or being upfront. So from our side, guiding for SEK 9 billion for this year is something that we feel very comfortable with that we, as a team, feel that we can deliver. And let's see how the year evolves.

Our next question comes from Ajay Soni with JPMorgan.

I've got 2 questions. The first is Finland. You mentioned there's much more upside on your EBITDA margin there. So you've obviously mentioned the FTE reduction mainly come from Finland. What are your other key priorities in this region to step up that margin? And my second one was just around your midterm CapEx ambitions. I see they're still below SEK 14 billion. Obviously, you've guided to below SEK 13 billion for this year. So is there anything you're expecting to change into 2027 where you expect CapEx to step up because obviously, the trend has been broadly on the way down.

I can take the question number 2 regarding CapEx, starting with that, first of all. No, we have guided on outlook for '26 at around SEK 13 billion, and we don't see -- I mean, the targets for 2027 we set back in September 2024. So they still remain and are there. And the most important part there is actually for us to deliver above the SEK 10 billion in free cash flow for that one. Then we changed the guidance for the CapEx in 2025 to SEK 13 billion, and we stick with that for 2026. We don't see that we will increase that in 2027 either. So this is just what we are just guiding at the moment for 2026 for the outlook, not for 2027 at the moment.

Yes. And on Finland margin, in essence, it's a handful of things. First and foremost, we are a people-intensive industry. So making sure you have the right number of resources there is what is driving that. You already saw that this year in the EBITDA margin increase in Finland and more of that will come because as we said, a disproportionate amount of those net reductions, grow 600, net 450 because we're also growing in other parts of the organization will take place in Finland. So that naturally will help. It's also the market where we have the lowest salary inflation.

So that helps us a little bit. And there are further initiatives that we are taking to make sure, yes, we are disciplined when it comes to cost. I think the other one is what type of products are you selling? And we've been very clear about last year selling this noncore e-invoicing business, which was about EUR 12 million of revenue, let's call it, SEK 150 million with pretty much no margin on it. We own more of those businesses. So rationalizing this portfolio in Finland, focusing on core, focusing on more profitable products will also help us to increase both gross profit margin, but also EBITDA margin. Those are the initiatives that we're taking.

Our next question comes from Terence Tsui with Morgan Stanley.

Just back to Finland again, I'm sorry, but focusing a bit more on consumer mobile. Are we seeing some structural changes in the market in your view now? Is it being a bit tougher to do more 5G upselling and the consumer being a bit more price sensitive? I'm just looking at your mobile churn number and Q4 is always seasonally high, but this year, it's much higher than what it was last year and the prior year. And then secondly, on free cash flow. Can you just repeat the comments again why you expect free cash flow generation to be a bit more back-end loaded this year? I've noticed in previous years, it's been a little bit back-end loaded, but not significantly. So just wondering why this year may be particularly different.

Yes. I can take the first one regarding Finland. Yes, we see some more intense competition in Q4 this year compared to previous years. And we see also more customers changing operator in this quarter. This is driven also by entrance of 2 new MVNOs coming into the market that will obviously want to take their share of the market. And also we, of course, because we want to try to defend the market share. But we have seen some more activity also on the lowest price levels, but we didn't compete. We didn't actually go into that war. So we stepped out a little bit on the lowest price levels. But clearly, we have seen an increased intensity in the market now in Q4, definitely. But let's see how that will develop now in Q1.

Yes. With regards to free cash flow, yes, absolutely, it's more back-end loaded than last year. And just to give you a sense, last year, it was roughly around the numbers, 40%, 60% H1 versus H2. We're looking at around 30% to 70% for this year. So a bit more skewed towards the second half. Why is that? And also in the comments, we said a soft start to the year with regards to free cash flow. Partly it's the working capital reversal, right? The big inflow reverses mainly in Q1. So that is a lower starting point. And also the interest payments, they tend to be more H1 weighted. They are even a bit more this year.

Why is that? It is because if you look at the big decrease in gross debt that we have had as a company, we still have the same number of hybrids. The payments for those are more skewed towards Q1. And yes, and the last point I would make is we had a really good Q4 performance in Sweden. We're saying that will be a bit softer in Q1. And the reason for that is the lumpier nature that we have of part of our enterprise business, including a very successful mission-critical and business-critical business. The combination of those 3 make it a slightly slow start to the year, which we prefer to tell you now rather than have any surprises when we report in April.

Our next question comes from Ulrich Rathe with Bernstein.

Two questions from me, please. The first one is you explained the EBITDA trends in the fourth quarter in Finland and Sweden, in particular, with reference to marketing, higher marketing and marketing phasing. The KPIs aren't obviously strong in mobile. I think excluding M2M, you're still losing customers after pretty encouraging results in Sweden in the second and third quarter. So my question is, how do you actually measure success of marketing if it's not the KPIs? Is it KPIs a quarter out then because it's a delayed effect? Or I think you referenced NPS earlier without actually giving numbers. Or what else do we sort of look at when we want to see whether -- how effective your investments in marketing really are, especially when you ramp it up in a given quarter?

My second question is on the dividend, you highlighted the growth, but it was below market expectations. I think that was pretty clear. So why the free cash flow was above market expectations. I'm just wondering what thinking was behind setting the dividend at this particular level, appreciating its growth, but obviously slightly below what we all expected.

Yes. No, we see different consensus numbers because it's very much in line what we saw with what the analyst expectations is. It's also -- we're not there to beat the analyst expectations. We have a stated dividend policy, and that stated dividend policy says that we will grow the dividend by mid to -- low to mid-single digit. And then the other point is I'm very happy that finally, we are in a place after a couple of years of keeping it flat that we're able to fulfill that based on the strong performance in 2025. I think the next one is we want to have a sustainable dividend growing because that's what ultimately is attractive for capital markets. So that's why we came up with this choice of increasing it by [ 5% ].

Then when it comes to marketing, there are different ways here. What we have invested is more in marketing. This is not a short-term impact. It will give impact for a longer run regarding this. So if you pay more commissions, you get an immediate impact. But if you do marketing, that will take some time before it comes to be visible in the market. And we are measuring the KPIs that everyone else is measuring when it comes to performance marketing, et cetera. So there's nothing unique for us. So -- but I think we will not see an immediate impact on that one. We see a bit longer impact on increasing marketing spend. So this is actually for preparing us for 2026.

Yes. If I can build a little bit on it, it was Finland and Norway that we flagged for increased marketing this quarter. Finland is an unusual quarter in terms of the market situation. Norway is a bit of an unusual quarter when it comes to our actions because sales were actually very good, but we did a couple of things. We did increase prices quite a bit, which you can see in the ARPUs. And we did also do a billing shift where a lot of customers were asked to pay 2 bills in a month basically because we started to bill in advance, which many operators do, but we introduced that in Norway this quarter. So those things always have a predictable churn effect, and they did, and that was fine. That was in line with expectations. But considering that, I think we're quite happy with the sales in Norway.

Our next question comes from Oba Agboola with UBS.

Just to ask about Finland again. So there was a comment in the presentation or press release that said the financial impact of increased competition was limited. So I just wanted to understand, given the uptick in competition, how are you able to limit the impact on service revenue? And then also just a bit of color on potential phasing. Do you see Q4 as kind of the peak in mobile competition? And how should we think about competitive developments in Q1 and beyond?

I think I can answer the first one because it was probably in the e-mail we sent out with the report. We just wanted to be factual about the financial impact. Of course, there is financial impact from the market situation. It just in the short term, it is a bit limited. The major part was how the timing of B2B deals come in. So it's just to clarify that. And so let's see over time how that financial impact, it depends how the market situation develops, which is your second question. And it's not really, of course, in our hands. There are 2 new players in the market. We'll see how those act. But we focus, as Patrik says, on the customer experience and our basic strategic goals.

And also, we think it will be a bit -- I mean, -- we think we will have an improvement in the first quarter. And I think also the market will calm down a little bit. Q4 is always extremely intense when it comes to competition. This year, extra intense in Finland because of launch of the new 2 MVNOs coming into the market. So I think that is also pushing the market in Q4. So we think and believe it will be calmed down a little bit now in the beginning of the year.

Okay. And just a quick follow-up. Have the 2 new MVNOs been particularly aggressive? And are there any differences in the behaviors between the 2 just initially from what you guys think.

So competition varies from week to week. There's been -- it's been already discussed, a very, very intensive quarters. The number of people changing operators have been the highest for many, many years. And -- but it is also the usually high campaign season. So it's -- we just have to monitor the situation and focus on our own customer base basically.

Our final question comes from Siyi He with Citi.

I have 2, please. The first one is just really a follow-up on your dividend policy, which you're guiding for low to mid-single-digit growth. But if we look at your free cash flow profile, I think underlying is growing more than 10% every year over the next 2 years. Just wondering if you can help us understand how to bridge the current dividend policy with your free cash flow ambition and whether you could -- you think there could be a scope to update on that policy?

And the second question is a clarification really. I think, Eric, you mentioned that you see Sweden as a market is challenging Norway as one of the best markets in Europe. I'm wondering if you can talk about where you see the dynamic changes and whether that gives you more confidence on the growth profile in Sweden?

Yes, Sweden has had an amazing 2025. If we look at the consumer growth, how B2B is holding its own, what is a more competitive market is -- I think it's a really massive result. And I think it's that -- again, go back to the investor update in September '24, we had this thing that we call the smiley face, which is including legacy, of course, you have service revenue declining for year after year that kind of bottomed out in '24. And since then, we have this growth, right? So pictorially, it looks like a smiley face. That has -- yes, that has been a massive success. And if you then look at what the competition is doing, if you look at their results where they also have profitable growth, yes, that bodes well for that market. At times, we have said the only part where that is not the case is sort of the no-frills mobile segment because there's so many brands there, but it's such a small part of our business and it doesn't really affect us as you have seen in the Q4 results.

So the other one, I think, at the growth in mission critical, we said it's going to double. We have done more than that, and that continues to accelerate, which again bodes well for our path to SEK 10 billion. I think the last point that I would make is the price increases that we have seen. right? What typifies a rational market is where people are not lowering prices, but actually increasing prices. And what we have seen of our competitors, yes, even this year, they have started with increasing prices across the board, both fixed and mobile. For us as a market leader, that obviously is good because that allows us to continue to have that price differential given that we are the premium brand. So put all of those together, even though we are a 4-player market, as we sometimes say, yes, it's a very, very healthy market. So very happy with that.

With regards to the dividend policy, yes, I think on several occasions, we have said, I think it was even at your conference that at some stage, we need to come out with sort of that final leg of this -- of a clear policy that says, basically, it could say something like what are you -- what is your payout ratio? How much of your free cash flow are you paying out? For us, it's -- we were on this value creation path of going from what was less than SEK 5 billion to SEK 10 billion by '27. During this period, I think we will decide what that ultimately looks like for the years beyond that, but it's a bit early days. But for now, we're very happy with the fact that we covered the dividend with our free cash flow and that we were able to go back to what our current stated policy is, which is this growing dividend per share. So we're very happy with that after 2 years of running the business.

Can I just add something also on Sweden also on the consumer side? I mean, we have a well-functional machinery there when it comes to convergence as well. So we have called that out in previous quarters as well, where we sell both broadband TV and mobile and especially when we focus on TV, and you see that we continue to grow in that kind of services. And it's a really appreciated service from our customers so the converged play that they have both broadband TV and mobile on top of. So we are very happy with the machinery we have in Sweden and the consumer side that actually takes that position. And we have a quite a unique position there in the Swedish market. So that's very valuable for us.

Operator, are there any more questions on the line?

That was our last question. Thank you very much.

Thank you. Thanks, everyone. Many good questions today. We look forward to seeing you face-to-face in the next few days and weeks, and thank you, and goodbye.

Welcome, everyone, to Telia Company's Q3 2025 Results Presentation.

And with that, I will now hand it over to Telia Company's Head of Investor Relations, Erik Strandin Pers. Please go ahead. The floor is yours.

Thank you, Jen. Welcome, everyone, to the call. We have our CEO, Patrik Hofbauer; and our CFO, Eric Hageman, in the room, and I hand over the word to Patrik. Please go ahead.

Thank you, Erik, and good morning. Q3 was, in many ways, an important quarter as it confirms that we are doing the right things for our customers. Our group-wide NPS, so Net Promoter Score, continued to improve and has trended positively all quarters this year. Telia Sweden again won a clear majority of awards in the customer satisfaction survey by SKI. And in both Finland and Norway, we had strong outcomes in the EPSI surveys on our customer satisfaction. We also continue to deliver on the value creation plan that we laid out in Q3 last year with EBITDA growth supported by profitable growth in service revenues as well as cost efficiencies. This helped drive an increase in free cash flow, which again more than covered our SEK 2 billion dividend for the quarter.

And as we talked about already 3 months ago, it was an eventful M&A quarter. The closing of TV and Media transaction strengthened our balance sheet further. In July, we also signed a memorandum of understanding with our partner in Latvia, and we are now working hard to ensure that both parties fulfill the commitment to sign a share purchase agreement before year-end. We have also launched a formal offer to buy Bredband2, which will strengthen our consumer business in Sweden. And finally, we are upgrading our full year outlook for the free cash flow to around SEK 8 billion from SEK 7.5 billion before, reflecting, among other things, strong CapEx discipline. And we are also now changing our full year outlook for booked CapEx from SEK 14 billion to around SEK 13 billion.

Now let's go into the financial highlights. Service revenue growth continued to be good in Sweden and the Baltics, but partly offset by decline in Norway, meaning overall growth of 1%. EBITDA growth of 4.4% was as expected, a bit below the ambition for the full year, but not too much, and with both Sweden and Finland continued to perform well. CapEx continued to be well below our SEK 14 billion limit. And even though we expect a seasonal pickup in Q4, we are already comfortable -- we are very comfortable, sorry, to lower the full year outlook to around SEK 13 billion. Free cash flow will continue to be strong, driven by higher EBITDA, lower interest payments and positive working capital movements. This, together with growth in EBITDA and proceeds from the TV and Media divestment resulted in a lower leverage, and we ended the quarter at 1.93x.

Moving now to Sweden that is performing well on customer metrics. We had a strong outcome in the 2025 SKI survey. For example, Telia won the award for most satisfied enterprise mobile customers. And in consumer, Telia again had the happiest customers among the mobile main brands and fellow came out well among sub-brands. Telia's TV service also had the most satisfied TV customers. More importantly, new customers signing up across mobile, broadband and TV, as you can see here, the broadband intake stands out as it actually is a result of 2 good quarters rather than one since around 10,000 new customers in Q2 were registered in Q3. The late registration was related to our transition into a new system. In Enterprise, we signed a long-term partnership with Sweden's largest train operator, SJ, to deliver high-quality communication for the entire train fleet. Financially, Sweden is well on track to reach the full year plan with service revenue growth at 2%, driven mainly by broadband and TV. As a reminder, revenue growth on a quarterly basis is affected by project-based revenues, which is lumpier than subscription-based revenues. In Q4, we expect more project-based revenues than we had in Q3. And EBITDA growth was again strong on the back of profitable growth and cost savings driven by the Change Program.

Let's now move east to Finland. That came out as the #1 in the EPSI's survey on customer satisfaction in both Consumer and Enterprise. This is promising and shows that we have good foundation in Finland to build on. Mobile net adds improved, and we did not lose any mobile handset customer this quarter. The net loss was due to mobile broadband, where the market is declining. Our SME base grew as did the number of consumer handset customers for the first time in a very, very long time. ARPU grew at the same time by 4%. On fiber, we are also adding customers not least from being a service provider in our Valokuitunen JV network.

Financially, we saw a slight improvement in service revenue trends with growth in Consumer and a decline in Enterprise, driven in part by our choices to discontinue noncore activities and in part by a weak market. And finally, the strong execution of the Change Program continued to give tangible savings and resulted in EBITDA growth at high single digits with a margin climbing to 34.6% versus 32.5% one year ago. So in summary, we are making progress on all 3 of our midterm ambitions for Finland that we presented 1 year ago, stabilization of the mobile market share, improvement in SME and improved profitability.

Now moving west to Norway, which is, as expected, saw another challenging quarter with both service revenue and EBITDA growth clearly in negative territory due to lower mobile wholesale revenue and headwinds in the broadband and TV. Like for Sweden and Finland, Norway came out well in customer satisfaction surveys with Phonero winning the EPSI survey for the fourth consecutive year in the B2B category. We expect to have reached the low point when it comes to service revenue, although not yet when it comes to EBITDA because of the timing of OpEx. So EBITDA decline in Q4 is currently expected to remain similar to the levels we have seen in Q2 and Q3. The reason for headwinds in Norway are well known, and the mobile wholesale decline is expected to be around SEK 95 million in the fourth quarter. The other part, a weak performance in our fixed business is something we are addressing very actively. And on the next slide, I want to share some more information about this development.

So we have now launched a new value proposition in all segments, modernized our TV platform, modernized our installed base of CPEs, signed future-proof new content agreements and created a dedicated organization for fixed consumer services. Network quality has improved. And as you saw, we added TV and broadband customers in this quarter. At our investor update 1 year ago, we talked about our backbone of our network being already fully fiberized and around 50% of our broadband customers were on fiber or fixed wireless access connections. Today, the share is around 55%. And as we have said before, this is too slow. And from next year, we will see a clear acceleration in the coax to fiber upgrades, in line with the commitment we made last year to invest more. This will be done within our existing CapEx frame.

Now moving on to Lithuania, which had a solid quarter with healthy service revenue growth supported by both mobile and fixed, something that together with continued efficiencies resulted in an EBITDA growth of 9% and EBITDA minus CapEx that remained at a record high level of SEK 1.6 billion on a rolling 12-month basis. At the end of the quarter, Lithuania successfully launched Telia Safe, a security add-on, and it's also completed an IT transformation within B2C, 2 achievements which will help our growth journey going forward.

Now let's move to Estonia. That saw both service revenue and EBITDA growth accelerating following great momentum in especially the public sector and good work on generating efficiencies. And like for Lithuania, cash conversion remained at record levels.

And with that, I hand over to Eric before I come back to summarize the quarter.

Thank you, Patrik. Let me now go through the financial development of the quarter, starting as usual with service revenue and EBITDA. In the quarter, service revenue growth remained at 1% as stable or improved performance in Sweden, Finland and the Baltics was offset by pressure in Norway, predominantly driven by lower wholesale revenue. In Finland, we also continue to simplify our product portfolio, and we are now getting close to the end of the ramp down of the e-invoicing business. Year-to-date, we are at 1.3% service revenue growth. And looking into the last quarter of 2025, we expect an improvement related to pricing, growth in Enterprise and public sector contracts and less revenue decline in Norway.

Moving to EBITDA. Growth in Q3 was somewhat below the 5% ambition for the year as we flagged 3 months ago, with all markets except Norway growing on the back of higher service revenue growth and efficiencies created by the Change Program. We're also encouraged to see that our EBITDA margin was 140 basis points higher than in the same quarter last year, in line with our margin expansion promise at the investor update September last year. As mentioned, we expect improvement in service revenue growth in Q4. For EBITDA, we currently expect growth in Q4 to be approximately similar to the growth rate we saw in Q3, penciling in a modest increase in sales and marketing costs, both in Norway and Finland.

Moving now to OpEx and CapEx. As we can see on the left-hand side of this page, continued cost discipline and the positive impact of our Change Program continues to drive down resource costs. Our operating expenses declined by 2.9%. This more than compensated for an increased level of marketing spend across the Nordic markets as well as higher pricing from IT vendors. OpEx as a percentage of service revenue continued to trend down this quarter, this time by 120 basis points to 28.4%. We increasingly managed to do more with less and have only just started on this journey to become more efficient. We also remain very committed to being disciplined on our capital expenditures. As you can see from the middle graph, we ended the quarter with CapEx of SEK 12.5 billion on a 12-month rolling basis, more than SEK 2 billion less than 24 months ago. This shows how being focused and having clear priorities can be translated into better capital efficiencies. CapEx spend is expected to increase somewhat in the last quarter of the year, in line with normal telco seasonality. But overall, we don't expect the current run rate to change much, which is why we today lowered our expectations for the full year to around SEK 13 billion. Finally, as you can see on the right-hand side, growing EBITDA and lowering CapEx resulted in EBITDA minus CapEx comfortably above the SEK 19 billion on a 12-month basis. This equals a step-up of 9% versus a year ago and also resulted in a much improved cash conversion, which is now 61% on a rolling 12-month basis, up from 58% a year ago.

Let's now have a look at the free cash flow for the quarter. Free cash flow improved by SEK 1.5 billion compared to the corresponding quarter last year. And as for several quarters now, the key building block is our profitable growth. Cash CapEx increased by SEK 300 million, which was driven by phasing in payments and a rebalancing of the vendor financing program, the latter, however, having an equal positive contribution to working capital. Interest payments declined by SEK 300 million due to lower debt and partly also because last year's number was rather unusual high due to phasing of interest between Q2 and Q3. Working capital was, as you can see, marginally positive, which was a significant improvement versus last year as the number then was impacted by the rightsizing we did of our vendor financing program.

Finally, we saw a SEK 200 million higher outflow of minority dividends in Q3 related to a catch-up dividend paid to our co-owner of our mobile business in Latvia. Overall, with SEK 6.9 billion free cash flow delivered in the first 9 months of the year and the clear belief that the cash flow generation will remain strong also in Q4, we raised the outlook today for the full year from around SEK 7.5 billion to now around SEK 8 billion.

Let's now briefly look at our net debt and leverage development. As you can see on the right-hand side, our net debt decreased by SEK 7.1 billion in the quarter as free cash flow more than covered our quarterly dividend payment, and we also received the proceeds from the divestment of TV and Media. The combination of lower debt and growing EBITDA reduced leverage to 1.93x compared to 2.09x at the end of last quarter. Looking at the longer-term trend on the bottom of the left of this page, we can clearly see that leverage has come down over the last 2 years as we have grown EBITDA and used the cash proceeds from our divestments to improve our balance sheet. This now puts us in a very good position to further strengthen our business, like, for example, the last quarter, we announced SEK 3 billion acquisition of Bredband2 in Sweden. The phase 2 investigation of Bredband2 has now started. And as said before, we expect to close the transaction in Q1 next year.

Finally, before I hand over to Patrik, I would like to say a few words on some of the milestones we have achieved in the third quarter and how that resonates with our value creation agenda laid out at the investor update about a year ago. As you may remember, we laid out a clear agenda at the investor update on how we aim to create shareholder value. And I believe we continue to make good progress on it. Firstly, free cash flow has covered our dividends for the first 9 months of the year. And as you have seen in our updated outlook, we expect that also to be the case for the full year. 2025 is the first time in quite a number of years where our free cash flow generation covers our dividend commitment without the recourse to growing vendor financing. Largely, this free cash flow uplift is driven by our profitable growth trajectory and CapEx discipline, the latter which we also upgraded today.

Secondly, on active portfolio management, we closed the TV and Media transaction this quarter and are making a bolt-on acquisition to further strengthen our core business in Sweden, while we are working hard on securing the full exit for Latvia. Thirdly, our balance sheet continues to strengthen. Liquidity is strong. And after closing the TV and Media divestment, we are below the 2 to 2.5x net debt-to-EBITDA range. Fourthly, we paid another quarterly dividend to our shareholders, and we remain committed to deliver on a progressive dividend policy. And finally, at the CMD last year, we set out a plan to return to an all-in free cash flow covering our dividend commitment. Our free cash flow guidance upgrade today means we will be covering the dividend despite the absence of the free cash flow from our TV and Media business. See this as another proof point that we are very serious about delivering on our commitment to shareholders.

With that, I hand back to you, Patrik.

Thank you, Eric. Before I summarize the quarter, I want to reflect on what has taken place since we launched our change program last year and how we are taking steps toward a simpler, faster and more efficient Telia. The number of employees and resource consultants in Telia is now almost 25% fewer than it was in the start -- or at the start of 2024 after our Change Program and the exit from TV and Media. Central resources are down by half. We also have half as many products and half as many IT systems managed centrally compared to the start of last year. Many have been moved and are now managed by the country organizations who are closer to the customers and some have been closed down. We are encouraged by the results so far. Network incidents have continued to become fewer and so has incoming calls from customers who are contacting us with issues and questions. This means both better customer satisfaction and material monetary savings. Meanwhile, employee engagement is up and our people see that barriers to execution are being removed, collaboration and decision-making is improving and of course, EBITDA growth has improved. This is a promising start of first few steps, but we intend to do more on all parts of our agenda. We can still become much simpler, faster and more efficient than we are today.

And then on the summary of the quarter, which was overall in line with our own internal expectations, we continued a healthy group EBITDA development, supported by profitable growth and efficiencies from the Change Program. And we continue to see clear signs that customers appreciate our high-quality services and see the benefit from how those improve their everyday lives. We continue to execute on our agenda, and we can now upgrade our free cash flow from outlook to fully cover our dividend, as Eric said, which is a key milestone for us.

And with that, I will open up for questions. Thank you.

[Operator Instructions] Our first question comes from Owen McGiveron with Bank of America.

It's Owen McGiveron from Bank of America. So on your upgraded guidance, how should we think about 2026 and 2027 CapEx within the frame of your medium-term ambitions? Should we expect similar levels versus 2025 or more moderation? And how does the additional investment in Norway play into this? Just wanted a few more details on the moving parts.

I can start. It's Patrik here. First of all, we are not guiding yet on '26 and '27. We will come back to that in January. But I can say we have worked hard and actively to improve, I would say, the discipline when it comes to cost and also how we use the capital. That discipline will not be less next year or the coming year. So we continue to see how we can use the capital much more efficient than we are today, and that will continue. But we will come back in January with the guidance or update or whatever in January -- in that call. So Eric, do you want to add something?

Yes. I mean that would -- just my simple observation that it doesn't change so much from one moment to the next. And with regards to Norway, it's part of that. So the slide that Patrik talked about where we say we want to accelerate the rollout of fiber. That part is at the SEK 1 billion that we already talked about in the investor update last year. Part of that money is being invested this year. Part of it will be invested in the coming couple of years, but it's firmly part of that CapEx guidance that we have just talked about.

Our next question comes from Andreas Joelsson with DNB Carnegie.

Just to follow up on your comment on further efficiency gains. Could you perhaps describe how you view the cost base currently and what else you can do? From the last slide, it seems like you have been able to do this Change Program without any basic negative effects. So are you encouraged to do more? Do you think you can do more on the cost side in order to get these efficiency gains? Blurry question, but I hope you understand.

Andreas, I understand your question very well. It was not blurry at all. So first of all, the Change Program went obviously very well. We have delivered on basically all parameters, and we see that the operations is really much more stable, which we had, of course, the concerns about when we do this big change that we did last year. But so far, everything is running very well.

Then remember, last year, we had this investor update, we gave out a 3-year plan with a CAGR on service revenues around 2%, EBITDA at 4% and then a free cash flow above SEK 10 billion in -- or at least SEK 10 billion in 2027. And that requires to continuously work with efficiency to deliver on that plan. And we are fully committed to deliver on the plan that we have put in place, which means that we will actively, of course, to improve the operations from year-to-year. So I think that is a clear answer on your question where we are heading. Well, I hope at least.

Yes, absolutely. Less blurrier than the question.

Thank you.

Our next question comes from Andrew Lee from Goldman Sachs.

So I have a question each on Finland and Norway, which are 2 of the areas where investors had a bit less certainty recently. Just on Finland, there's some improving -- slightly improving service revenue growth trend today and also sub-trends. Could you just talk about how you're achieving that? And also how you're thinking about the balance of not disrupting the market too much, given we've had one of your competitors basically disappointed fairly materially on their mobile service revenue growth outlook in the near term. Just comments around kind of how you're improving and how you don't disrupt the market too much would be helpful.

And then secondly, on Norway, there are quite a few tailwinds or easier comps as we go into Q4. One of the ones that's harder for us to judge is the price rises that have been put through in Norway in September. I wonder if you could just talk about how you see the competitive environment and price rises boosting growth from Q4 onwards.

Andrew, thanks for the questions. I can start with Finland. I think, Eric, you can take Norway then, so we divide a little bit here. Starting off with Finland first. I mean, the most important part is actually the customer satisfaction, which we have been invested quite heavily in. So we have upgraded our network and then several activities that we're now seeing is paying off. Then on top, we also had some good execution here, especially in the consumer side to turn these trends around. And we are not at all disrupting the market. I don't know what that is coming from. We are very disciplined, but we have good offers in the market together with a good network and good services overall. And then we have also a consumer operation that is more efficient every day. And remember, we have said clearly that we are accepted to lose market shares in Finland for too many years now. And we said clearly, we want to stabilize that, and that is what we're doing. So we see good development in Finland when it comes to the consumer business. Still, we have a lot more to do.

And then also on the SME side, on the small and medium enterprise segment, where we have a clear underrepresentation versus our total market share, where we are focused on and having good also development on. So I think this is not -- I think it's a healthy operation. We are improving, and we will continue to improve during 2026 as well actually to defend and stabilize our market share. That's actually what we're doing. So I think good done by the whole team in Finland.

Yes. With regards to Norway, so very encouraged by preliminary results of those price rises. Obviously, the market is, as per your Finland question, is never to disrupt, but certainly to defend our position. So let's see what that does to our churn numbers. I think the main thing when it comes to Norway is, as we said last quarter, it will take some time for this to turn around. One, we haven't quite lapsed the wholesale loss, that ICE revenue was an impact of SEK 150 million on our revenue in the quarter. So we're working on that. We've made some management changes in the organization. We're fixing fixed, as Patrik just talked to in this slide, and that will take a bit of time. So we guided again for what is likely to be another soft EBITDA quarter for Norway, but hopefully slightly better on the service revenue because they are slightly easier comps.

Our next question comes from Fredrik Lithell with SHAB.

I have two of them. You have, on earlier calls, talked about that service revenue should be a bit slower, both in Q2 and Q3 and then to reaccelerate a little bit in Q4. And I think, Eric, you alluded to that in your part of the presentation. If you could sort of stack up and rank the important part for the improved service revenue growth in Q4, that would be interesting to hear. And then also the CapEx, the lower CapEx from SEK 14 billion to SEK 13 billion on a booked level versus your raised free cash flow of SEK 1 billion down and SEK 0.5 billion up. Could you sort of walk us through a little bit what movements you have that support your free cash flow raised guidance would be interesting.

I can start with a comment on the service revenue. And right, you said that we said that Q2 and Q3 will be a bit softer, but then we'll see an improved situation in Q4. And we do expect better growth in Q4 than in Q3 with especially Sweden to continue to look solid, and we expect more project-based revenues to step up here in Q4, and that is the main reason.

It's mission-critical, as I said a few times.

Yes, on CapEx, it's very simple. We sort of never felt we're going to do the SEK 14 billion, right, when we guided for less. We're very happy with the progress that we've made as an organization on a profitable growth, which ultimately drives our free cash flow growth. And then when you go through 9 months of the year, where you then feel is this the moment where we have that visibility. It's pretty clear when you do almost SEK 7 billion of free cash flow that an upgrade was necessary. And on the CapEx, yes, we have good visibility for where we will land for the year and also where that will trend going forward as per the first question we got. So very happy with how that goes through. And yes, let's see where we land for the full year when it comes to free cash flow.

If I may add a clarification, Fredrik. We never plan to invest SEK 14 billion. It was always below, right? So it's not a SEK 1 billion downgrade as such, but yes.

Our next question comes from Erik Lindholm with SEB.

So maybe a follow-up to Andreas' very clearly worded question. Just thinking of the current trends here, it looks like you will exit the year at about 4.5% perhaps EBITDA growth rate approximately and the comparisons seem to get a lot tougher from Q1 and onwards. I'm just thinking of the outlook here for '26 and beyond. I mean, do you think you need to clearly accelerate cost savings to reach your targeted EBITDA CAGR of 4% between '25 and '27?

I think the answer will be pretty much in line with Andreas' question. So we -- I mean, when we set the plan, the 3-year plan of the 2% and the 4% then related to EBITDA, as you know, we were clear on that, okay, this is a rightsizing that we did with Project Sprint. It was an internal name on it that we did last year, the minus 3,000, and we executed on them. And then we need to continue to take out cost, and that will be in every aspect and every area of the cost base. So this is work ongoing. So I don't -- and I don't want to be more specific on how we'll do that, but we will show you quarter-by-quarter that we are able to take out cost to defend because we want to -- we are fully committed again to deliver on the 4% CAGR growth on EBITDA. Then we need to -- because that's a combination of service revenue growth and cost out to be more efficient.

Yes. Maybe to add from my perspective is, as time goes on, now having done 9 months, SEK 7 billion of free cash flow, the upgrade that you've seen, it gives us more confidence as a management team that we are on the right path to deliver what we promised, not just the 2% service revenue and the 4% EBITDA in the coming years, but also the free cash flow that we've promised for 2027 of at least SEK 10 billion, right? The combination of profitable growth, good CapEx discipline leads to better free cash flow. The visibility that we have gives us confidence that we're on the right path to deliver on that promise of SEK 10 billion plus by 2027.

Our next question comes from Maurice Patrick with Barclays.

For me, just a question on Sweden, please. So yesterday, it was interesting to hear Tele2 talking strongly about the increase in pricing or cost of the open fiber networks, the dissatisfaction about delays on regulation. Just curious for your insights in terms of these kind of key trends, the increase in wholesale pricing on open networks, upcoming regulatory changes and delays and how that impacts you. I was intrigued that Tele2 sort of talked about how they were going to push fixed wireless access more, which sounds probably more like grabbing headlines than reality. But again, curious for your insights in terms of how you see that in the context also of you delivering a pretty solid broadband number this quarter and last.

Yes. I mean, coming back then to the access cost for local networks. I mean, we have seen the high cost for the local networks access for several years. It's nothing new. So -- and that is driven basically by ourselves growing service provider in these local networks and then also higher access prices. So we haven't seen any recently that increase. This has been going on for a while. So I don't know exactly what happened there. And so yes, and also on our own networks, we have made very modest increase in our [indiscernible] business, a couple of percentage points only. So I'm not -- I don't recognize really the whole situation from a new thing. This has been going on for many years.

So that, yes, around regulation...

Yes, regulation has been postponed as you know again -- so we'll see what happens when we eventually get there. But I think you're right, that's probably what brought the topic up this quarter.

But maybe overall on Sweden, we are incredibly happy with the performance there. As you saw, very good service revenue growth, perspective of even more service revenue in Q4, as we indicated, very strong cost control leading to good EBITDA growth. So yes, we hear what others are saying, but we are very happy with our developments in the Swedish market.

And I think you also mentioned the broadband intake, Maurice. It's a good work over a couple of quarters. As we mentioned, this is some delayed registrations from last quarter as well. Good anti-churn measures after the price increases we did in the beginning of the year. So that's working. And so overall, we're happy with that.

And continues to perform -- TV continues to perform well and not a surprise. I mean, we have the best product in the market. And obviously, customers are appreciating it. And for the fourth year now, we have got the best feedback from the customer surveys on TV. So all in all, happy with the performance. And again, remember that we have seen a more household perspective on the consumer market in Sweden rather than looking each for the products because our easiest win here is actually to sell more products to existing customers, and that is actually paying off in the strategy.

Our next question comes from Ajay Soni with JPMorgan.

My one is just around leverage and shareholder returns. So obviously, you're below your target at the moment. We have some acquisitions coming maybe in the next few months. But it feels like you'll still end up below your target range of 2 to 2.5x. Do you see an opportunity to maybe distribute some of the proceeds from the TV and Media sale as buybacks or extraordinary returns? And if so, when would this -- when would you approach this decision with the Board?

Thank you. Good question. We're very happy with the direction of travel. As a team, we've worked very hard because it's one of the building blocks of the value creation plan is having a healthier balance sheet, one, because we pay less interest than on the debt that we have outstanding, which helps our free cash flow growth, which is the other pillar of our value creation. So that's a benefit from that. Secondly, we are a simpler organization to run based on all these divestments. We're very happy with the progress that we're making. We have that final building block, which is doing, as I said earlier today, coming right on progressively growing dividend, next year is when we'll come back to that. And the beginning of the year is when we will set out our store with regards to the guidance is when we have our conversations with the Board. So we will come back to that.

Maybe the last point is, we obviously also use our balance sheet to strengthen our business. We've done the announcement of Bredband [indiscernible]. So it's important for us that we have the flexibility to be able to do that as well. So -- but we know it's an important pillar of our value creation plan, and we'll come back to that at the beginning of next year.

Our next question comes from [indiscernible] from BNP Paribas.

I had a question, please, on Finland, where you've delivered strong EBITDA improvement over the last sort of 3 to 4 quarters. You're now talking about how you're seeing underlying improvements in your commercial trends as well. Could you maybe share some thoughts on how you see your Finnish profitability evolving over the next couple of years, say? And then just a quick clarification around the Norway CapEx, I'm sorry if I missed this. Does this at all change your thinking around the FY '27 free cash flow target of SEK 10 billion plus? Or is that reflected in this?

So I can start with the later one with the CapEx. No, it's reflected in the figures and will not impact our 2027 target. So to be super clear, it's in the envelope of that. And then Finland?

Yes, with Finland, maybe a step back, a big part, and we talked about it today in the voice over as well of the analyst presentation, which is margin expansion was a very important part of what we talked about in the investor update last year for all countries. If you look at the Q3 results, you see that apart from Norway because of the loss of the wholesale contract, but all other countries, you see the margin expansion coming through. And what is that? It is our discipline around the programs of doing more with fewer people, but also the ancillary costs that we have. We have a very, very clear plan, and that underpins that delta between the 2% service revenue and the 4% EBITDA growth that Patrik mentioned earlier in his answer to the first question. That is still very, very high on the agenda. So you should expect more margin expansion, including in a market like Finland in the coming years.

Can I just add also Finland? And don't -- to build on what Eric said, don't also forget to look into the ARPU development that we have in Finland, which is 4% up on the mobile postpaid, which is also very positive. And that has been driving the agenda to run price increases, but also a better mix in the portfolio. So all these activities are actually paying off at the moment. But we're still a way to go to be where we want to be in Finland, to be clear.

Our next question comes from Keval Khiroya with Deutsche Bank.

I've got two questions, please. So at the CMD, you showed a target for mission-critical revenues to more than double from '23 to '27. You've been quite clear on this as a source of support for Q4. But can you comment on how we should think about the mission-critical growth in '26 compared to the growth in '25? It's obviously a bit difficult for us to model. And then secondly, on Norway, you've talked quite clearly about the moving parts. But can you comment on when you actually expect Norway to stabilize EBITDA?

Yes. I'm not sure I understood the first question on

mission critical. But I can give you -- I mean, we have a clear -- I mean, we said it will double rightly, as you said, for the coming years, and we see that it's coming into now to our books and orders and also that's the reason why we will see a comfortable increase in Q4 in Sweden. So that's part of it. And this will continue, but they are a bit more lumpier, these revenues. So we will see it continue in the coming years as well. But we have not been explicit more than say that we will double from where we came from. And we will still stand with that. We are delivering on what we have said and on the expectations. So no surprises coming in.

Yes. With regard to Norway and sort of the negative EBITDA that we've seen, we've guided already for that for Q4, as you heard earlier today, that will take a couple of quarters. We're still not quite out of the impact of the wholesale revenue. We've seen some increase in energy costs there. We typically have salary inflation in our countries as well that we have to work with. So we do see great opportunities to turn around that business, fixing fixed, making sure we stem the losses we have on mobile. TV is back on after the outage that we had, but it takes us a couple of quarters. So as we said last -- at the half year results, we need a bit of patience before we also, from an EBITDA perspective, turn around this business.

Our next question comes from Viktor Hogberg with Danske Bank.

So just a question on the new free cash flow guide. Just a clarification maybe. Given the assumption of SEK 650 million in spectrum CapEx annually included in the guide for this year, would you say that you still expect the real free cash flow that is including the higher spectrum CapEx to still cover the dividend this year as we're getting close to the FY results? Just want to make sure that we're all speaking the same language. That's the first question.

Thanks, Viktor. It's Erik here at IR. We don't guide for free cash flow, including the real spectrum cost as you might understand, simply because we're not able or allowed to speak about spectrum CapEx ahead of the auction. So we have to stick to the normalized spectrum when we talk about free cash flow guidance. But maybe it's worthwhile to add a comment to that. So SEK 650 million is kind of a rough average for what it's been over a decade. Last year was lower than SEK 650 million. This year, we know it will be higher because we have already the SEK 780 million from the 2023 auction to pay plus, let's see about the SEK 1,800 million in Sweden. Next year, we don't have any big auctions coming up. So it goes up and down. But yes, that's where we are.

Okay. Fair enough. On the second question, just another clarification, maybe if you were talking about the group or just Norway on Q4 group EBITDA growth, the trend being in line with Q3. Was that for the group or for Norway, so below 5% that is for Q4.

So Eric said in his presentation that the EBITDA growth for the group is expected to be roughly the same in Q4 as in Q3. So that's for the group. And for Norway, we expect EBITDA improvement to take a couple of quarters, as Eric said. So we need some more patience for Norway specifically.

Our final question comes from Siyi He with Citigroup.

I have two actually. And my first question is on Finland. I mean, the ARPU development is quite encouraging. I'm just wondering if you can share with us how you think about your price increase strategy because I think you so far haven't really followed the security added tariff changes that put through by 2 of your competitors in Finland.

And my second question is on service revenue growth in Sweden. And I just want to ask about how we think about 2026 and '27, given that the price is still doing quite well and have lower legacy drags and mission-critical revenues should also come through. Do you think it's fair to assume that the top line trend is next year and year after could be better than what we have witnessed this year so far?

So I can take the first question on Finland. I'm a bit surprised that we get the question all over and over again regarding the package, the security package. Look back in Finland, we have been driving the price increase raise there and the value creation agenda for many, many years. And remember, our position, we are the #3 mobile operator in the market. And if we look at the ARPU levels, they are very similar to each other. And we should be the challenger in the market, not the responsible leader in the market. So look at our position, I think, we are looking into different ways of driving price increases, i.e., ARPU increases. And we don't need to follow what our competitors are doing all the time. We have our own agenda that we are running and that we're looking into to make sure that we continue to grow and defend the position that we have in the market. And that you will see going forward as well. And I don't want to go into commenting on every package and price, et cetera. So we have our agenda. We are running that. We are #3 in the market. We should be the challenger. We have been too much more -- too responsible as a #3 player and acting like we were the incumbent almost in Finland or the leader. So I think we are well positioned. We have done a good quarter and good improvement during the year, and that will continue. I expect that will continue in the next year as well.

And to add a little bit, I think that our main way to drive ARPU is probably not that different from the competition. We look at the subscriber base cohort by cohort as certain cohorts exit a certain tariff or contract, then we can move them up to a higher value, higher price level, and that's how you work through the subscriber base with different prices. And that's giving the results. You can see there. I think the 4% is roughly in line with the competition. So even though we don't do exactly the same thing on security add-ons.

Yes. With regards to Sweden or specifically service revenue in Sweden, very encouraged by what we saw in Q3, the first 9 months performance and what we're expecting for the full year. A little bit like our answer on CapEx, that's not something that changes overnight, right, when you have certain momentum. And clearly, we're guiding for a stronger Q4, driven by what we're doing in mission-critical, particularly, but also just the underlying business in broadband, in TV, the convergence play is really working well for us. And on top of that, some price increases. So we expect that momentum to continue. Said in a slightly different way, if you think about a medium-term guidance, the 2% and the 4%, that would not be possible without Sweden delivering that, right, because it's roughly half of our business. So again, we feel comfortable with that medium-term guidance, and we're very encouraged by the performance that we're seeing in Sweden.

There are no further questions.

All right. Thank you very much, everybody, for calling in. Many good questions, and we look forward to continuing the discussions over the next quarter. Thank you, and goodbye.