Event: Tele2 Interim Report January - September 2012 Date: 18 October 2012 Speaker: Lars Torstensson Mats Granryd Lars Nilsson Call Duration: 01:16:06 LARS TORSTENSSON: Good morning everyone and a warm welcome to Tele2’s third quarter 2012 conference call. The reason for the slight delay was because of a technical snag. It’s now solved. We feel very comfortable about that. So let’s continue. My name is Lars Torstensson, and together with me today I have our President and CEO, Mats Granryd, and our CFO, Lars Nilsson. Now we are able to send this presentation live over our dedicated web page, so I also would like to take the opportunity to welcome everyone that has joined us via internet. After the formal presentation - as always - there will be a chance to ask questions, either over the phone or it’s also possible to send questions via the web format as well. But enough said by me. Mats, could you walk us through the third quarter? MATS GRANRYD: Yes, thank you very much, Lars. Good morning, everyone, from a rainy Stockholm. I would like to present the third quarter results. We feel that this is a robust quarter, robust results, and very much in line with the second quarter result. We had an intake of 1.4 million new customers, so we’re almost at 38 million customers, customer base. Sales grew with 9% to just shy of SEK 11 billion, EBITDA just about SEK 3 million, and then margin is down 28%. Worth noting is that we have never been as high as SEK 3 billion before, so this is a record quarter from that perspective. CAPEX SEK 1.2 billion, SEK 1.3 billion. So let’s move over then to Russia. Russia stands for 30% of our sales in the quarter. Some of the highlights: we added 710,000 new customers, which is a very good customer intake; EBITDA margin up 1% from the second quarter. It’s 37% up 2 to 38%. I would also like to highlight the fact that ARPU is growing, and the growth rate is 4% year over year. (inaudible) is up 7%. Revenue, as I said, grew with 8% in the quarter. New regions margins is up to 14%, old regions is at 47%. So, all in all, a very stable quarter with a very good customer intake and you can see on the upper left-hand graph, market share is now at 9.5%. The ARPU development RUB 234 per month and that is equivalent to the 4% growth, as I said. Last quarter we added an astonishing 40% of all net adds. This quarter we don’t know yet, but we have a good chunk of 710,000 to start with and we will see what the other competitors come in with. Also encouraging is to see that the annualised churn rate is still on a low level. We are at just shy of 8% per quarter, so it’s around 30%, 32% on an annualised basis, which is significantly lower than our competitors. And that is one of the positive signs and positive impacts that make our net editions so very strong. If we move on then to our sources of revenue in Russia: 92% comes from voice, 8% from data and, if you look at the year over year growth rate, data grew with 12% and voice with 8%. Of course we’re happy with the 12%, no doubt, and as you all know we are only on 2G data on edge, so with 12% we’re happy with that. However, our competitors are of course growing significantly faster on data. They might be up to double percentage points than what we have, but 12% on edge is a good result on data growth. Moving on to the regulatory update, as you know, we are disappointed on the no decision on 2 October, or the technology neutrality. There will be another meeting in December we believe, and there will be further studies conducted between now and that meeting. We do not think that there will be a decision at that meeting, and 3 when techno neutrality will happen is still written in the stars. However, we believe firmly that it will happen. The question mark is when. We have also chosen to put in the new regional licences, so it is nine new licences, so on the 1800 band. They will be distributed some time in the future. We don’t know exactly when and we do not know exactly the principle if it is going to be a beauty contest or a paid auction. These are in good regions, regions where we are not present today, but it is not a whole lot of megahertz. I think it is up to 10 MHz in a region, and then it can be down to just a couple of megahertz in other regions. Worth noting as well is that in LTE development EIKS Consulting has done a study on what percentage of the Russian population that will have LTE by 2015. If you remember we did a similar study in Sweden and we think that by 2015 roughly 20% of the Swedish population with have LTE or a 4G subscription, and the same number in Russia is 5%. We can sort of conquer with that we think. That is a fair assumption: Sweden 20%, Russia 5% on 4G subscription by 2015. So with those words I -- you know, we are disappointed but it is not a falling off the cliff event by no means. We have plenty, plenty of time to make sure that we get the data licence. Moving on then to the forward looking statement. In Russia we have increased our subscriber base slightly from 22 to 22.5. ARPU is still 3% to 5%. EBITDA 37% to 39% and CAPEX we expect that to be between SEK 1.3 billion and SEK 1.5 billion. Okay, so let’s move over then to the Nordic region: 40% of our revenue comes from the Nordic, which is Sweden and Norway. Let’s look at Sweden firstly. We had a service revenue growth of 4% year over year, which we’re very proud of, and you should also know that SEK 966 million in EBITDA is the highest ever in Sweden. 4 So that’s another first and another high which we’re also very proud of. The EBITDA margin is 33% and of course is affected by the introduction of iPhone 5, and I’ll go through some of the sales numbers on iPhone 5 later on. We believe that we have increased our market share slightly on post-paid, and we believe that we have lost slightly on pre-paid, but very small changes in the market. We have added 60,000 on post-paid customers and we have lost 30,000 on pre-paid, so we have added 34,000 mobile subscribers in total, post and pre-paid. Just a slide on what we believe is going to be the future. We are strong believers in the bucket price plan, and on 15 August we launched Convik(?) post-paid, where everything will be on line and it’s only a SIM only offer. You can see that our volume products, the low, medium and large, has continued in good demand going forward. I think that with this, what we would like to say is that we believe in bucket price plans where you include data, voice and SMS in one bucket. Moving on then to some of the developments on the 4G and 2G networks, we have today a population coverage of 80% in Sweden and we are committed to do 99% by yearend on 4G. As you might be aware, we are now moving over all our networks to the shared network, something called MOCN, Multiple Operator Core Network. We have activated that in two regions of Sweden and in a couple of weeks’ time or actually sooner than that, in a week’s time we will move the east coast over as well, so we will be in a combined network together with Telenor in our joint venture net formability. By doing this we are saving quite a lot of money and we estimate it to be around SEK 300 million, SEK 350 million. Now this is gross. This is nothing that we will see on the bottom line. You can argue that by doing this we are actually getting one network free of charge. You can also see that the SEK 300 million, 5 SEK 350 million and saving on gross means that we will continue to focus on our marketing activities and continue to be pushing good offerings out to the market. This is the typical Tele2 way of doing things, of being brutal on costs and making sure that we have money over to do interesting stuff in the marketplace. The next slide on the Smart Phone development. I think if you start with the graph you can see that in April you had a little jump up, and that was the 345 campaign, and after that it has been a fairly stable growth rate on Smart Phones. We have now an installed base of little more than 70%. It is worth also noting that iPhone 5 have taken a number three position, and that is only after three days of sales in the third quarter, which I think is pretty astonishing. This is then a combined top ten list of our stores, post-paid subscriptions in our stores. Good. So then moving on to the forward looking statement in Sweden. We believe that service revenue growth will be around 3% to 4% and the EBITDA margin will be between 30% and 32% but do need to say, as well, we believe it is going to be in the lower end of 30% to 32%. Moving on to Norway. We have a strong focus on our network rollout in Norway. Today we have roughly 45% of Norway being built out on our own network and roughly 30% of the traffic volume is on our network, and we’re aiming for 75% of Norway to be built out over the third network. We had a good intake of new customers, 14,000 new customers. Our market share in Norway has increased slightly. I shouldn’t over emphasise that, but from 18.5% or so up to 19%. As you can see later on, that we have had -- we are guiding for significantly less CAPEX expenditure in Norway and that is due to two things: one is that there is a 4G licence that has been postponed to the future; and the second is that we have had some 6 difficulties in being able to co-locate our base stations in our competitor sites. This is something that we have made the NRA aware of, and it’s not our intent not to spend but it is our inability, if you would like, to push forward there. So that is something we are focusing on to continue to build out the network. Looking at the forward looking statement, the revenue we believe will be in the lower end of the guidance of 4.8 billion to 5 billion EBITDA. We have increased that from 2%-3% to 4%-6%, and as I said CAPEX we have reduced the guidance down to SEK 450 million to SEK 550 million. Okay. Moving over to Western Europe, 16% of our sales come from Western Europe. Starting with the Netherlands, I would say a stable financial performance. Net intake on the mobile of our plan 51,000, so areas that are going well for us is the mobile as well as business to business. We have in the quarter attracted -continued some strong brand names. Accor is one. A couple of water companies, the Dutch railway and many more have joined us in the business to business segment. Where we are feeling pressure is on the residential side. We have historically been strong with our single and double play offering. Now lately triple play is becoming more and more important, and we are not competitive enough throughout the market on our copper lines there. So fixed is under pressure, residential is under pressure. The mobile side and the business to business side are going very well for us. So it’s a little bit of a mixed bag in the Netherlands. Financially it’s stable. Moving over to Germany and Austria. Germany I think is a fantastic example of how to milk out as much as one can. We are now at 30% EBITDA margin, pretty much where we were a year ago from now. This is despite the fact that we have 7 lost almost 20% - or actually somewhat more - in fact, 3% of our subscriber base, but we still managed to keep our EBITDA margin up, which I think is a very encouraging sign. In Austria we are doing a lot of good activities. We’re focusing on consumers and on the SME side, on the business to business, and we have seen improved sales in the Vienna region after we acquired the Silver Server company, and that is yielding good results for us in Austria. The EBITDA margin, as you can see in the graph, is slightly improved quarter over quarter. Moving then over to Central Europe and Eurasia, 13% of our sales is coming from that region. I will not spend too much time on these, but Estonia a very stable financial performance, positive net intake of roughly 10,000 customers, and we are modernising our network and rolling out 4G. Moving over to Latvia, tough competition in the market, EBITDA margin 34%, customer intake strong with 21,000 new customers, and we will launch 4G when we see that it is commercially attractive for us. Lithuania then 38,000 mobile customers added in the quarter. EBITDA margin of 35% and, yes, there is a continued strong performance of Lithuania. Then if we take the next slide you can see that this is a true success story. One should know that we started this operation by ourselves ten years ago in 2002, with only licences, nothing, and now ten years later we are the undisputed number one, literally, regardless of how we measure. We have a market share of subscribers of 53%. We have a revenue market share that is -- yes, it’s very close to being number one if we’re not number one, and on EBITDA we are also number one on market share. So, regardless of how you measure, Lithuania is a true success story. Croatia is not that much of a success story yet. We have however had a good quarter of positive intake of 33,000 customers in the quarter, and we are 8 focusing to maintain the positive cash flow. As I think you are all aware, we have changed the management. It is still very early days but we are seeing positive trends in the market. So a lot of focus and a lot of hard work need to go into Croatia. The forward looking statement in Croatia is that we believe the EBITDA margin will be between 4% and 6% for 2012. The last country is Kazakhstan. A very good strong customer intake of 589,000 customers. We now have 3.1 million customers in the country and we are continuing to focus on a rapid rollout of new base stations. One should note as well that we have a very good data network. We have pushed ourselves further out in the region and we can see now that ARPU is decreasing slightly. Due to that fact we see the purchasing power out in the regions is slightly less than the bigger cities, which is to be expected. The revenue growth over the first nine months is astonishing, 134% which I think is fantastic, and we are focusing and continue to take a lot of subscribers in Kazakhstan. The market share now is around 10.5% in the second quarter, and that is after 18 months of operations or so. I think that is a very good development. The last quarter, as you can see, we added 55% of all net adds. This quarter we still don’t know. Beeline, Kcell added slightly more than what we did but we will still have a good chunk of the net adds in the quarter. So I think we are doing -- posting on very nicely in Kazakhstan. The forward looking statement is pretty much the same. We have moved up the subscriber base from 3 million to 3.4 million. We have the same EBITDA contribution. We have lowered our CAPEX expenditure slightly, from 550 million to 600 million down to 450 million to 500 million. We are committed to have an EBITDA break even in the second half of 2013, so basically a year from now. Of 9 course we believe that we will be able to reach a 30% market share at one-third of the market in a more longer term perspective in Kazakhstan. So with those words, I would like to hand over to Mr Lars Nilsson to go through the financial review. LARS NILSSON: Good morning, just a short review around the numbers. First of all, on this PNL statement you can see that we had net sales of 10.9 billion and then an underlying growth of 9%, and then as already mention a record EBITDA. Now we are -- we start with 3 billion and a margin of almost 28%. The normal appreciation is around 10.5%. I will come back to them. Then during this quarter we have three nonrecurring items or one-off items. Two of them affecting the EBIT result, and that we reported about last week, and then we also have a one-off item when it comes to taxes, which I will come back to. So with that I think we can go to the next page, where it’s just the full year statement, which you also see, and then we go to the currency impact. The currency impact, as you can see here on this slide you see our three main currencies, and there you can see that on average we see krona strengthen against the euro of some 3%, but if you look at the situation when we end the quarter the euro was down almost 5.5%. You can see the same trend for the rouble: 1.5% if we compare with the same period last year and then -2% at the end of the quarter. Coming back to depreciation, somewhat down compared to what you saw in the last quarter and if we compare the numbers year-on-year we have to add a net (inaudible) of course, which will impact depreciation with SEK 80 million. Then we have speeded up the depreciation for the networks in the Baltics, due to the fact that 10 we are just in the middle of a swap, and a reduction in Sweden due to the fact that the old 2G network now is written off, but then of course we have to handle the growth in Russia and Kazakhstan, and there we have added in SEK 61 million. And as already mentioned 10.5% of revenue is depreciation. Financial items, yes, just to explain interest income has cost SEK 259 million in line with what I think you should assume, and then you can also see that we have added the cash flow effect. The cash flow effect of interest paid for the period is SEK 154 million. The same numbers for the full year is interest costs net of SEK 710 million but the cash flow is affected by some SEK 400 million. To continue with taxes, what you can see here is that we had a normal tax cost of SEK 380 million for the year, so far almost SEK 1 billion. Then we had a positive one-off item, due to the fact that we could actually have a devaluation of deferred tax assets in Austria, where we could add another SEK 262 million on the balance sheet. Deferred tax assets now amount to SEK 2.5 billion. What you can also see for the quarter as well as year to date that we have had a positive effect, if you compare with what we actually have as taxes in the income statement compared to the cash flow situation. That is just due to the fact that we can utilise our loss carry forward. Cash flow, I would say a very stable situation for the quarter. Cash flow from operations is strong at SEK 2.9 billion and then we also had a positive change in working capital of SEK 244 million. If you look at the full year we have a negative outcome of change to working capital of a little bit more than SEK 400 million. That is mainly due to the fact that we had to put more handsets in the balance sheet to the handset sales, and the main source of this is coming from Sweden. 11 CAPEX for the period, the cash flow statement is SEK 1.1 billion and year to date is SEK 3.3 billion. There I will fortunately tell you that we have built our forecast statements a little bit when it comes to -- a little bit we have built up the forecast when it comes to Kazakhstan because there we actually talked about cash flow CAPEX. We will make a correction so we can guide you in the right way, but actually we have from the beginning talked about cash flow in Kazakhstan but that will change. I apologise for that. Then we go over to the debt profile. We now have a net debt of SEK 15.2 billion, and on this slide you can also see the different sources of financing, and you should note that we are not utilising our revolving credit facility of SEK 10 billion, and you can see that is a credit for a contingency. We think that we are in a good situation when it comes to the debt profile, when it comes to tenders and sources. Finally, I think it is almost there, the debt position. You know that we have our frames when it comes to net debt to EBITDA and we are close to 125. We are not there. You can follow the black line. You can see where we are. As I already said, the net debt was SEK 15.2 billion. Finally, group financials, I will just focus on return on capital employed. There you can also see that this quarter was from a financial point of view, and also from other points of view of course, a very strong and solid quarter. With that I leave the word ... MATS GRANRYD: Thank you very much, Lars. Some concluding remarks then. We continue to grow as an operator. I think it is important to note that a couple of years ago we took a strategic decision to move into mobility, and that has paid off. At that time we had 12 far more sales on fixed than we had on mobile. Today our mobile portion of revenue is more than 80%. So I think the growth that we are seeing comes from mobility and also, the second concluding remark, managing the shift from voice to data. I think it is really imperative that operators are focusing on - and we are focusing on - the shift from voice to data. We need to realise that we’re entering into a data-centric world and that is slightly different of that of a voice-centric world. The continued migration from pre-paid to post-paid, we believe that having a longer term relationship with customers is ultimately better than to have a short term relationship, so we welcome the migration from pre-paid into post-paid. Of course we do want to exploit new services and opportunities by offering our customers what they need for less. That is in our vision and in our mission statement. What they need for less is back to the best deal, to make sure that we continue to be cost focused, continue to make sure that our customers appreciate our service from a cost point of view, and also launch new services, like the plus 46, the roaming buckets, the WyWallet initiative we had in Sweden and other services like that going forward. So with those words, I would like then to hand over to Lars Torstensson. LARS TORSTENSSON: Thank you, Mats. That concludes our formal presentation regarding the result for the third quarter 2012. I would like to make a small but important disclaimer as the last quarter we will not be able to answer any questions about the upcoming licence auctions in the Netherlands today. But of course we are happy to answer any other questions you might have. 13 So with that said, we will now be happy to take any questions you may have. Operator, let’s start with the first question. OPERATOR: The first question comes from Mr Andrew Lee at Goldman Sachs. Please go ahead. ANDREW LEE: Hi, morning everyone. A few questions on Swedish mobile if that’s okay. It was a good performance in the quarter, but why should we not expect competition to accelerate here? I mean Telia has just gone ex-growth in the region, and that’s partly due to your foray into corporate mobile. Do you not expect it to retaliate? And why should we believe you can continue to grow in Swedish mobile when there is barely a market or company in European mobile that is managing that? And then just an additional question there is it a slight change in rhetoric, what you said earlier in the call, that you will use cost savings from your network turn off to market more aggressively? Thank you. LARS TORSTENSSON: Thank you, Andrew, I think those are two excellent questions. I believe that Mats Granryd could have a stab at them. MATS GRANRYD: Yeah. No, on the Swedish side obviously Sweden is a highly competitive market, four operators with only 9 million people. But I think, as I said in my concluding remarks, it is really important to be lean and agile and nimble to understand what is going on, when we’re moving away from voice to data. We think it’s equally important to focus on mobile mobility. The vast amount of sales is coming from 14 mobile in Sweden. We are focusing on the business to business segment to augment that offering as well, and that is going nicely for us. We believe we are taking market share in the business to business segment, and I don’t think that I can say much more than that. We’ll see a continued highly competitive environment in Sweden, and that is nothing new to us. We do not think however that there will be the type of price wars that we saw in the spring. We don’t know that obviously but we don’t see any signs of that. When it comes to the cost savings on the network, 300 plus depreciation of 50 or so, the SEK 350 million to SEK 400 million, I think what one should take away from that is that by sharing networks we save a significant amount of money, and in the net formability mobility case it is around SEK 300 million to SEK 350 million gross. We will not see that on the bottom line. You can say that that money will go in order to get two networks. We have had yesterday a 2G network and today we have a 2G and a 4G network without putting in extra money. So we can do that by saving on operation and CAPEX costs by moving into a shared network. I also think in -what I tried to express, but maybe I didn’t do that good enough, that the continued strong focus on our costs leadership position means that we do have manoeuvrability of launching new products, we’re not going to be aggressive in the market, and we’re not going to initiate any more price wars, for sure not. But we will be able to sustain increases in costs slightly, due to the fact that we are so good in managing our cost portfolio. And we are not launching - and you know that as you have followed us for a couple of years - new cost savings programmes. That is something that is inherent in our DNA. 15 LARS TORSTENSSON: Thank you and I hope that answers your questions. ANDREW LEE: Yes, nearly. LARS TORSTENSSON: Operator, can we have the next question please? OPERATOR: The next question comes from Mr Barry Zetuni at Berenberg. Please go ahead. BARRY ZETUNI: Hi, good morning, gentlemen, I’ve got a few questions. Actually, if I just quickly follow up on one of your answers to Andrew’s question. Could you just tell me whether the SEK 300 million to SEK 350 million cost savings is incremental to where we are today, or whether you are actually seeing some of those savings already? My second question also on Swedish mobile, is looking at the margin that we’ve done for the quarter of 33%, my understanding is that the exit rate in September was lower than the average for the quarter. So how can you be confident that you can do a 35% margin in Q4 and meet the bottom end of your guidance with that 35%, so how can you be so confident that you will see such a material pick up in margins as we go to Q4? And how does that make you think about margins going into next year as well? Then if I can also just -- I know you won’t answer questions on the Dutch spectrum auctions, but if I can just take your view in terms of how you think we’re doing in terms of mobile ads in the Netherlands and whether that has given you any kind of clarity or given a positive impression on what you feel might make the benchmarks 16 of a mobile strategy, were you to continue accelerating additions or try to continue accelerating additions in the Netherlands? Then my final question is just on Russia. I just want to have your take as to why you think the state commission on radio frequencies has delayed the decision on technology neutrality. Thank you. LARS TORSTENSSON: Okay, thank you, Barry. That was a lot of good questions there. I think we will do it like this. So, when it comes to the network savings and how to reach the margin target, that is of course a Lars Nilsson question, supported by us, and then we have mobile progress in the Netherlands, Mats. Then I will take the opportunity to have a stab at technology and strategy in Russia. So, please, Lars would you begin? LARS NILSSON: Yes, I don’t know if this will answer your question but I think the way you can see this is actually as much as we have gross savings around SEK 350 million, but that also in a way means that we will have one network for free, and that is sort of -- that we should maintain on the level of what you see right now. I think that is a good answer. But then we will get a totally new and fresh 2G and 4G network. LARS TORSTENSSON: But I mean when it comes to the network benefits, I don’t know if we could say anything there because we’re just working on merging the two networks. LARS NILSSON: Yes, just working on merging the two networks and you also know that we have taken some extra depreciation costs this year. But of course going forward there will also be depreciation for the new network as well as for the 4G licences. All in all 17 we will sort of have a ... I think it’s a good way of saying we will get one network for free. LARS TORSTENSSON: Yes, and then when it comes to Sweden mobile. LARS NILSSON: Yeah, when it comes to Sweden mobile. I mean you said: how can we be so confident? A forecast is always a forecast, but based on the performance so far and based on the portfolio we believe that the guidance we have given you is achievable. I don’t think we can give you a better answer than that. LARS TORSTENSSON: No, but you are correct, Barry. I mean September was associated with a lot of activities. Of course the launch of the iPhone 5 did require a lot of preparatory work from our side as well, and hopefully when we go into the fourth quarter some of that has been already taken, or we have invested in that launch as well which is something that we might not have to do then going into the fourth quarter. The mobile progress in the Netherlands, Mats? MATS GRANRYD: Yes, no, as I said, we have had a good quarter of 51,000 new customers and our fixed portfolio in the Netherlands is under pressure, and I think that our MVNO brand is working nicely for us and we’re going to continue to push that and see how much money we can get out of that. We need to differentiate ourselves and hedge ourselves, if you would like, slightly away from only being a fixed operator in the Netherlands. 18 BARRY ZETUNI: Can I just ask how are you differentiating yourself with your mobile strategy in the Netherlands? MATS GRANRYD: Well, I mean we are still a discounter brand and we have launched some new products whereby you will be able to compose your tariff plan as you wish, with both data and voice, a little bit more tailored to your own needs, like we had in Sweden for a while. And I think it’s no secret that the discounter position that we’re having with our footprint is a very successful position to have, and that is our strategy. LARS TORSTENSSON: Okay, when it comes to Russian and technology neutrality, I think as Mats said before we do expect to see support from the regulatory board towards regional operators going forward. The delay in technology neutrality should probably be seen in the light that there was earlier on this year an auction around new dedicated 4G licences, and there needs to be some compromising on top of that when it comes to how technology neutrality should be introduced, in combination with requiring the new licence owners to free up their spectrum and rolling out their 4G network over new frequencies. So we are not surprised that technology neutrality is a topic that is being debated. The only thing that we are asking for is clarity, clarity on when technology neutrality could be introduced. And as Mats mentioned before, there is a lot of statistical evidence saying that there is no rush to introduce LTE, but from our perspective it would of course be appreciated if we could get clarity on when we could start using it commercially so we could start preparing for that. But currently, the regulator is asking for more test results and those test results should be done together with -- between all operators. So you will see us doing tests 19 together with the big three and also Ross Telecom, and that result will be presented on 1 December and then we will discuss during the GQRCH meeting on 7 December, so that is what we see. But as we have said during this conference call we are still expecting support -- the region operator model and that technology neutrality would be very beneficial to the Russian state. BARRY ZETUNI: Great. Thanks very much, guys. LARS TORSTENSSON: Thanks. Operator, could we have the next question, please? OPERATOR: The next question comes from Mr JP Davids at Barclays. Please go ahead. JP DAVIDS: Yeah, hi. Good morning, guys. Two questions, please, the first one on Russia. Your guidance implies a slowdown into the fourth quarter. The question there is why not just carry on pushing for subscriber share while the market seems to be, as you call it, quite balanced at the moment, and so sacrifice a bit more short term margin for scale? And then coming back to Sweden, just as a precedent, Mats mentioned evolution from voice to data. Maybe you can just touch on the sort of economics you’re seeing pushing subscribers from 3G to 4G, i.e. the cost savings per subscriber or the data efficiencies you’re seeing as you’re pushing up the technology bands. Thank you. 20 LARS TORSTENSSON: Okay, thank you, JP. That is a good question. I think they are both well suited for Mats. MATS GRANRYD: Yes, I’ll try. The Russia, if you say why not continue to push more subscribers. I think, you know, life is grey. It’s not black and it’s not white. We do need to make sure that we get sufficient amounts of money out of our customers as well. So having that healthy balance between growth and profitability is what we’re aiming for. We think that we will be slightly less aggressive in the fourth quarter when it comes to -- and you can see that from our guidance as well on subscriber growth. So that’s Russia. On Sweden then the voice to data and 2G, 3G, 4G, it’s still very early days. As I said, we cover 80% today. We have ambition to cover 99% by the end of the year. Our 4G network is growing faster than our 3G network when it comes to data, and you should know that our 2G network in Sweden, our legacy 2G network on Motorola equipment did not have edge capability, so it was only GPRS. What we’re now doing is to migrate over to one network in net formability, and that network will have state of the art 2G, including obviously edge, GPRS and it will also have 4G in it. So I have no problem saying that we will have, if not the best, among the best networks in Sweden when it comes to both capacity and coverage, but exactly how much the financial voice to data, I think that is a very good question but it’s a little bit too early for us to elaborate on it. Our 4G network is growing faster than our 3G network. That is so though -- LARS TORSTENSSON: And we do expect a much more efficient network compared to the 3G network. 21 MATS GRANRYD: Absolutely, and we have done several different studies on how much more effective it is, and you can say that 3G is three times more efficient than 2G, and 4G is another three times more efficient than 3G. But I would keep those numbers very fluid. LARS TORSTENSSON: Yes, because at the same time we see that we need to cater for much larger volumes as well. MATS GRANRYD: Yeah. Yeah. LARS TORSTENSSON: And there are moving pieces here that we don’t yet have full control over. MATS GRANRYD: What one can say is that in our strategic ambition we are focusing on two things. We’re focusing on our network to make sure that our networks are fully data capable and state of the art in all that. We believe network is really critical for us, and we also believe in the customer relations. That is absolutely critical for our success to have a tight relationship, and remember what I said in the concluding remarks, moving from pre-paid to post-paid, even though the pre-paid customer normally has a higher profitability we believe that in the long term it is better to have a long term relationship with customers. So customers is key, customer care is key, shops are key, innovative tariff plans and applications are key, and our networks are key. 22 LARS TORSTENSSON: I guess you can say when we consider the pre-paid to post-paid migration it -margin-wise a prepay customer is better but if you look at absolute contribution over the term then the post-paid customer is much better, so you’ve got to see a tendency of that. I mean we need to -- it’s not a margin focus for us of course but, going forward, as we’re moving on and we see the absolute contribution hence the absolute value for the group might be lower margin but the value for us over the longer term is better, so I think that is something we need to discuss further going forward. JP DAVIDS: (overspeaking) LARS TORSTENSSON: Yeah. Okay, operator, can we have the next question, please? OPERATOR: The next question comes from Mr Andy Parnys at UBS. Please go ahead. ANDY PARNYS: Yeah, hi, guys. Thanks for taking the question. Two questions, one to just quickly follow up actually on the post-paid migration. It seems to be that you’re winning share now in post-paid and potentially losing it in pre-paid. Could you give a bit more detail on, I guess, what the ARPU uplift is from moving a customer on average from pre-paid to post-paid? And then also how many of those post-paid, new postpaid customers, are SIM only versus those that are getting a subsidised handset? And the second question was on Russia. You seem very confident that you will get tech neutrality. That’s a question of when it will happen. Can you just give a bit 23 more detail on what discussions you’ve had that make you so confident that it is a question of timing and that it’s not definitely off the agenda? Thanks. MATS GRANRYD: Yeah, I can possibly ... oops; I can possibly start with the second question which was even though it’s difficult maybe it’s slightly easier than your first question. I don’t know, Lars, if you can take the first question maybe or the post-paid to prepaid migration there. On technology neutrality, the Ministry of Mass Communication has been out talking very positively about tech neutrality, on several occasions, both Mr Nikiforov the Minister and also the Deputy Minister, Mr Denis Sverdlov, in several medias. And I think that is for us a key point that they believe in shared networks, they believe in tech neutrality. They believe in regional operators and they believe in united -- or making sure that Russia is not divided through less good digital means, so to speak, bridging the digital divided. So I think all those components are talking in the way that tech neutrality will happen. And when we meet other regional operators they claim the same thing. They are confident that technology neutrality will happen. The question is when. There are several obstacles. One is of course that the proposal was that tech neutrality on 4G on 1800, the band was 10 MHz. The big three, including Ross Telecom, I believe got a 4G licence this spring and the band width of that was 7.5 MHz. So that means that they need to share networks in order to make the 4G spectrum useful. That is of course another sort of constraint that the ministry needs to deal with. How to handle the 7.5 MHz versus the 10 MHz. Now for us we, as Lars said here, we would like to have clarity. We might not start pushing out 4G or 24 LTE services for several years but we would like to have clarity, and I think that’s what the investment community would also like to have. And for us the less spectrum the better. However, 10 MHz we can certainly handle that as well. In many regions we have 15 MHz or more spectrum, and so dividing that between 2G and 4G is certainly doable. So I don’t think I can paint more of a picture than that. We don’t think that there will be a decision in December but we hope to have more clarity on the process going forward. LARS TORSTENSSON: Okay and I would have a take on the pre-paid post-paid migration. I think when it comes to ARPU and ARPU assumptions, as an operator we like to move away from that. We are not that focused on what the SIM card can do but what the account can do and how much money we can make on each individual. I think that that’s why talking about ARPU and ARPU contribution over time, you end up -- there is of course a positive movement going from pre-paid to post-paid. We believe that it’s more important to talk about the total worth of that account. It might be that the individual has two SIM cards or three SIM cards, and that is what we need to service. And your second theme(?) and third theme with a yield less than your first theme but they are still very valuable to us. That’s why I would like not to go into a specific SIM card for SIM card discussion because that is getting -- that KPI specifically is getting a little bit old and outdated, because now we need to talk about can we grow as an operator, which I think we have proved in this quarter, and how should we cater for that growth going forward as well. So that is more important. 25 Thank you. I hope that helps. But, Operator, could we have another question please? OPERATOR: The next question comes from Mr Ulrich Rathe at Jefferies. Please go ahead. ULRICH RATHE: Thank you very much. Three short questions please. And the first one on the Netherlands. You mentioned that the market is moving triple play and you’re having some issues there with the fixed set up. Could you talk about how you actually see potential for mobile only growth or your standing in the market, when the market is actually moving triple play. How are you intending to address this trend that you’re seeing? The second point is on Kazakhstan. You are attributing the ARPU trends to moving into the regions, but I think there has also been some price pressure from Beeline I think, in particular, who has sort of pushed back against you also in the more urban areas. Was this also a contribution -- was this unexpected and how would you react to that? And the last one is on Sweden. I mean just very tentatively putting your service revenue growth of 4% into the numbers, it looks to me as if the equipment revenues actually went down maybe SEK 50 million or so sequentially, so significantly less equipment revenues in the third quarter. How does this gel with the comment about the iPhone sales and the margin impact, if you had really so much less equipment revenues in the quarter? Thank you. LARS TORSTENSSON: Thank you. Three good questions. I think, Mats, can you please? 26 MATS GRANRYD: Yes, I can start. Netherlands, triple play, you’re absolutely right we are under pressure on our fixed offering. Previously one play and double play worked perfectly okay on our fixed copper offering. Now with triple play coming more in vogue we do have a problem there, and the way that we handle that is to focus more and more on mobile. You know, we have the MVNO set up with Team Mobile, and then that is what you can see that we’re growing nicely on that set up. And we’re doing some more experiments on the fixed side, but I would not emphasise that. I would emphasise the mobility would be our avenue as an MVNO to continue to grow in the Netherlands. On Kazakhstan, you’re absolutely right, ARPU is trading down slightly and we see it -- as I said, we’re going out to the regions. The purchasing power is less, less there than in the cities, but obviously there is price pressure from our competitors. They’re not sitting still. Both Beeline and Kcell have been aggressive in the market, no doubt about that. We have a -- as we have in Russia we have a superior - I would argue at least - cost structure and a superior operation in Kazakhstan. So we are competing that nicely. But for sure there is price pressure in the major cities as well. And on the Sweden less equipment (overspeaking) LARS TORSTENSSON: I should say that discussion -- when we talk about underlying service revenue growth, we talk about service revenue growth excluding the impact of interconnect, so including interconnect service revenue growth was around 2%, so we still have 27 some equipment sales there. So I think that we need to go through that calculation, Ulrich. So that one we should not step away from, not at all. We’re quite happy with how things have developed during the quarter and there is still a large component of equipment in the numbers. ULRICH RATHE: Thank you very much. LARS TORSTENSSON: Thank you. So, Operator, can we have the next question, please? OPERATOR: The next question comes from Ms Lena Östberg from Carnegi. Please go ahead. LENA ÖSTBERG: Yes. I'm sorry to come back to this question on the gross and net savings from launching of the new network in Sweden. But if I remember correctly when you announced this, there should be significant savings from the OPEX line on electricity because the old GSM network was significantly outdated, and also currently -- I mean you’re saying you’re getting two networks but you’re actually running 4G and 2G on the same network. And you’re sharing it with another operator so, therefore, I find it really difficult to understand why there should not be any net savings from this? LARS TORSTENSSON: Okay. Thank you very much, Lena. Of course we need to elaborate a little bit more on that. We’ll see if we can do that. Lars Nilsson, would you like to start? 28 LARS NILSSON: No, no, I can say what we pointed out if you look at all costs round the network going forward compared to what we did in the past, and you should also take into consideration the depreciation of the licences and all these aspects. And we are actually now -- if you look at the new network we are running also on 2G. We actually have more base stations operating there compared with the old network. So hence, we think that it’s a good achievement that we actually can run this network on the same total cost, including everything I would say. LARS TORSTENSSON: Yes, and you should remember we have built - this is Lars - and we try to emphasise this of course that the alternative would have been building this by ourselves and now we get a brand new 2G and 4G network for the same cost as we were running more or less an old network for, the old 2G network for. So it’s been a great achievement, and something that we will benefit from. Then it always becomes like that, Lena, I mean that in the end the question is what if we would not have done this? We are always looking for additional savings in operations and this has been a significant saving for us, but at the same time we have had -- the market has been changing and we have been able to maintain profitability fairly decently during that time period as well, so I think you do see some of the benefits already today. However, having said that, we are still working on merging the two networks, yeah, and reaping the benefits also going into next year. LARS NILSSON: Once again I would like to emphasise that this is total cost including depreciation for the licences and all that stuff, and then we are actually having access to more base stations than before. 29 LARS TORSTENSSON: Exactly. I think we have increased the amount of base stations by around 15% or something like that, which means that we also get a greater -- or even 20%, which is giving us an even greater benefit also when it comes to compare ourselves to the incumbent on the quality side, which is also very important of course when it comes to gaining interest, for example, from the business to business side where it is crucial to be able to come up with a very good proposition when it comes to coverage. LENA ÖSTBERG: But if we look at how much you have still left to close from the old GSM network, should we not expect any additional savings when you close that down? LARS TORSTENSSON: When we close the full network down in Q1, so to speak, if we get additional savings then? I don’t know, Lars, if we are ready yet to elaborate on that? LARS NILSSON: No, no, no, I think you can see some of the savings now, Lena, when it comes to the depreciation has come down but now we will gradually move into the new situation and I think we - going forward - maybe can come with some more detailed forecasts, but I think right now we can assume that it will be to run the new network for the same cost as the old one. LENA ÖSTBERG: Okay. Can I just ask a final question on Swedish mobile then? You said you’ve taken some investments ahead of the iPhone launch. Can you say maybe how 30 much they were in the quarter, and what they were if they were sort of built up of inventory or if there was marketing related? LARS NILSSON: Lena, you broke up there. Can you just repeat that question, please? LENA ÖSTBERG: Yes. You said that you’ve taken some extra costs ahead of the iPhone 5 launch in Q3, which you would not have to carry in the fourth quarter. So I was just wondering if you can say maybe roughly how much that was and what it was related to? I mean how much was inventory build up? How much was marketing? LARS NILSSON: No, Lena, we don’t go into that. As you know, it’s very exclusive what we have when it comes to volumes, prices and so on. And we are not allowed to talk about that from that perspective, I'm sorry. LENA ÖSTBERG: Thank you. LARS NILSSON: Thank you. LARS TORSTENSSON: So, Operator, do we have another question, please? OPERATOR: The next question comes from Mr Thomas Heath at Handelsbanken. Please go ahead. 31 THOMAS HEATH: Thank you. A few questions. You mention the long term sort of view on LTE to reach 5% by 2015, and I believe you’ve previously said that without tech neutrality you expect growth in Russia to last 18 to 24 months. Does this mean that you in your internal forecast expect flat or negative growth in Russia before LTE takes off? First question and the second question is on the new regional licences coming up. Is it worth bidding cash for these regions without having tech neutrality? Third question on Croatia. As I understand it, the brand is a little damaged in Croatia and it’s been tough over the years. Would you consider divesting that asset? And lastly, Norway is doing very well on EBITDA. Can you sort of extend this over the coming years? I previously had a view that you were locked into traffic agreements with Telenor and Telefonra, which sort of prevented EBITDA from rising. Thanks. LARS TORSTENSSON: Thank you, Thomas, so we have two questions on Russia, one on Croatia and one on Norway. I guess, Mats, whose would be for you, I think? MATS GRANRYD: Yeah, absolutely. The first one, LTE Russia 5% 2015, and what we said before is that our 2G offering we believe will continue to grow for several more years. You said 18 to 24 months, and maybe that is being pushed out a little bit, but in that region. Then we’re going to see a levelling off we believe on our 2G offering. I think that is where we are and tech neutrality or a way of achieving a data licence will be important for us in coming years. And I say that just because I want to make sure that everyone understands that we’re not pushed against the wall here. We still see 32 good growth in our 2G offering. LTE is growing 12% year over year. However, in the future having a good data offering will be, you know, pivotal of course to our success but it’s quite some time in the future. On the new regions, the nine new regions, obviously we don’t know if it’s going to be a beauty contest or if it’s going to be a paid auction and obviously it needs to be a business case per auction, the business case per auction to see if we’re going to participate or not. And we would need to see the process as well, which is not clear at all for us. LARS TORSTENSSON: It could be said, though, that the licences that have -- with the auction out it’s something that is a suggestion from our side. MATS GRANRYD: We have been pushing it but that doesn’t mean that we have to buy everything. LARS TORSTENSSON: No, exactly. MATS GRANRYD: Okay. And Croatia, you’re absolutely right, we have a slightly damaged brand and then we’ve had a rocky ride, and we’re not happy with the progress. Seven years and we still only have a 16%, 17% market share. As I say, everything is for sale at the right price. So, I don’t know, I don’t think I can comment more on that. But we are working with new management there to make sure that we get back on track, regardless of what happens in the future. And then Norway, on the EBITDA margin, we have increased the guidance and as we talked about yesterday there is a Christmas season in Norway as well, so I think 33 that we need to be not overly joyful over the 10% EBITDA we achieved in the third quarter. We will see more investments going forward in the fourth quarter. So, you know, that’s why we increased the guidance but we didn’t take the full potential there. LARS NILSSON: No, and you talked about what will happen next year. I mean next year we will still have these MNO agreements with commitments, so you will see the EBITDA expansion coming in 2040, hopefully. LARS TORSTENSSON: Very good. Thank you, Thomas. And Operator, can we have another question, please? OPERATOR: The next question comes from Mr Terrence Tsui of Morgan Stanley. Please go ahead. TERRENCE TSUI: Yes, thanks very much. I’ve got two questions, please. On the Russian 4G landscape there has been some speculation in the local press on Yota potentially opening up its LTE network for other operators. Is that something that Tele2 is discussing with Yota, and do you think this could be a satisfactory near term solution, given the uncertainty right now on the timing of tech neutrality? And secondly, on Norway regarding regulation, can you remind us again when we should expect a decision on your appeal against symmetrical NCRs, due to be implemented at the end of next year, and the arguments that you have put forward to support that? Thanks very much. 34 LARS TORSTENSSON: Okay, a question on Yota and a question on Norway on interconnect. We will start with Yota. MATS GRANRYD: Yota, yes, I mean as you might have read they have opened up to have more operators. I think up to six operators now in the Yota network, and we’re obviously discussing with them. But it needs to be financially viable. It needs to make sense for us to go in there. So it’s still early days but discussions are ongoing with Yota. And on the regulatory, maybe, Lars, you can take that? LARS TORSTENSSON: Yeah, sure, I mean we -- the base case is of course that we will have symmetrical interconnect by the beginning of next year in Norway. We are still arguing for a prolongation of symmetry when it comes to Norway, and we are basing that on that would help us building out a more complete network in the Norwegian market. With the current regulatory glide path we would build around 75% population coverage, but if we see a prolongation of that asymmetry we could see ourselves reach as high as 90% population coverage as well. So I hope that answers your question, Terrence. TERRENCE TSUI: Thank you. LARS TORSTENSSON: Thank you. Okay, Operator, could we have the next question, please? OPERATOR: The next question comes from Mr Peter Nielsen at Cheuvreux. Please go ahead. 35 PETER NIELSEN: Yes, thank you. Just two questions, please. The first one relates to a comment by Lars earlier on, on Swedish mobile revenue growth. Just to make sure. The guidance for 3% to 4% service revenue growth in Sweden, that is reported revenue growth, yeah, reported service revenue, it’s not some underlying revenue growth? And the second one relates to Mats’ comments about the Dutch triple play market, which sort of suggests you’ve given up being competitive here, Mats, which I find a little surprising given where you’re coming from. You have no plans for sort of upgrading that -- the cover network on your video sales side, etc, to be more competitive on the triple play market? Thank you. LARS TORSTENSSON: Okay. Thank you. I would like to start with the first question and, Mats, if you could take the second question. When it comes to revenue growth in the Swedish market, we talk about excluding interconnect in that assumption, and that means that what we had in the third quarter with that assumption we grew by 4%, and we included we grew by 2% or a little more than 2% in revenue. So, Mats? MATS GRANRYD: On the Dutch side, absolutely. You’re absolutely right we have not given up, by no means. We are doing experiments. We’re hoping to see more wholesale agreements. We will be able to buy fibre to offer then the -- or offer the triple play solutions to our customers, so we have not given up - absolutely not - on the fixed side in the Netherlands. 36 PETER NIELSEN: Okay. Thank you. LARS TORSTENSSON: Thank you, Peter. And Operator, can we have the next question, please? OPERATOR: The next question comes from Mr James Britain at Nemura. Please go ahead. JAMES BRITAIN: Hi, it’s James from (inaudible). Good morning, guys. I’ve got two questions, please. On Sweden, can you just give us an update on how LTE is going in terms of customer ads and whether the customer feedback is that this is now good enough to substitute fixed broadband for them? And then in Norway could you just clarify for us what revenue you get from interconnect in that market, so that we can just assess how important the termination rate decision is for profitability? Thanks. LARS TORSTENSSON: Yes, I think those are good questions, James. I would like to hand them over to Mats. MATS GRANRYD: Well, at least the first one, I’ll try. You said customer feedback on LTE. I am not 100% sure how many customers we have on LTE. We’ll see if we can find that out. LARS TORSTENSSON: Around 80,000. MATS GRANRYD: 80,000, 80,000, yeah. And then when it comes to customer feedback, I only hear positive feedback, maybe just that’s because I'm the CEO of Tele2, but if you look at 37 myself and what type of solution I have at home, we don’t have any fixed solutions at all. I have the home router, and that is backholed through 4G and I have a wi-fi solution at home and that is the product that is actually selling the best in Sweden. It is sort of the BT home hub but not a fixed backhole. It’s a 4G backhole. And you typically get -- it’s not the 4G network that is putting the limitation on capacity, it is the router. So I get steady 25/27 megabits per second. On my 4G handset I get various speeds but never lower than 20. I get 30. Here in the office in downtown Stockholm I get 70 or maybe even 80 megabits per second, with a latency of 20 milliseconds or 30 milliseconds. And then I was trying to say on an earlier question that the experience of going from 3G to 4G is a fairly big jump actually. The 4G experience is a different thing. It is really truly like turning a page in a book. It is that fast and there is no -- it’s completely seamless. So I only hear good feedback from customers and I have an experience for myself. Yeah. LARS TORSTENSSON: And when it comes to interconnect we have not disclosed the absolute amount of revenue that has been derived from interconnect in Norway. What I could say, though, is that we did have an interconnect cut as of 1 July and as you can see we still did quite well on the margin side. The last cut would then be at the yearend. Of course it has an impact but once you remember we are working really, really hard when it comes to realise the synergies between the two companies, and also moving more volume, as much of a volume as we can towards our own network when possible. So I think that we will be able to manage that in a good way. 38 JAMES BRITAIN: Okay, thanks. LARS TORSTENSSON: Thanks, James. And Operator, could we have the next question, please? OPERATOR: The next question comes from Mr Sasu Ristimaki of Merrill Lynch. Please go ahead. SASU RISTIMAKI: Yeah, good morning. I wanted to come back to this issue of mobile data in Russia. You talk about 5% LTE penetration by 2015, but surely if we think of mobile data revenues as a percentage of ARPU we’re going to be talking about much higher numbers, and I would like to propose something like 25% to 30%. Now, if your competitors are going to be looking at replacing voice ARPU with data ARPU, and you’re stuck in a voice-centric revenue model, how are you going to address this? And specific to that, if your ARPU actually gets on a negative trend, what strategic alternatives do you have apart from still talking about this technology neutrality? LARS TORSTENSSON: Thanks, Sasu, those are good questions. Mats, would you like to elaborate? MATS GRANRYD: A very good question but not completely simple to answer. But 5% in 2015, I think that is the proof of a fairly slow pick up, at least from Swedish eyes, and I think it sort of proves the point that things do not happen overnight in telecom. The world is changing quickly, for sure, but as consumers we are fairly lazy, within brackets, to change technology. I think it is more important for us to focus on - as you rightly said - ARPU and how we continue to grow that ARPU and the minutes of use. And 39 I guess that question is: how can you have such a positive trend in Russia? I think that we have got the recipe right with a transparent approach, good solid network and a very, very healthy discount brand name, or discount approach. I think those things are -- will not change, regardless of 2G, 3G and 4G. Edge, as I said, on our network is growing with 12% but you’re absolutely right the data growth in our competitors that have 3G is growing faster, maybe with 20%, 25%. That’s just a fact of life. And tech neutrality will of course mitigate that, but if I would get a 4G licence tomorrow, and I would start burning a lot of CAPEX, you would then turn around and ask me, “Mats, why are you spending all that CAPEX? There’s not going to be any 4G pickup for years to come”. So I think one needs to be mindful of the fact that it takes a lot of time and, as I said on a previous question here, 2G will continue to grow and our forecast is it will continue to grow another two to three years. But we might be wrong. It might continue to grow even longer. We don’t really know that. I don’t think it’s going to stop growing shorter than that. I don’t think so. The importance is to have a good network, good solid customer relations and a good brand name in the market. Then you will be able to handle quite a lot of disturbances, both on price wars and new technologies. I don’t know, Lars, maybe you can -- LARS TORSTENSSON: No, I think that is a very good answer. Would you like to follow up on that question? SASU RISTIMAKI: No I think that’s fine. Can I just ask a follow up on just CAPEX? If I look at your overall CAPEX guidance, your comment, it seems that you may be doing a little bit 40 of a pull back on expenditure this year and I was just curious is that reflecting any kind of all overall strategic thinking on CAPEX at the moment or is it just more kind of opportunistic and timing related things? MATS GRANRYD: I can say it’s the last thing. We can see that we are for different reasons late in some areas. For example, we talked about Norway where we actually have planned for this LTE licence as well as -- and then some other problems with the rollout and we are also somewhat late when it comes to CAPEX in Kazakhstan, for example. So it’s not sort of that we have said that we should slow down for any other reasons. SASU RISTIMAKI: Right. Thank you very much for that. LARS TORSTENSSON: Operator, can we have the last question, I think, for today, please? OPERATOR: The last question comes from Mr Henrik Herbst at Credit Suisse. Please go ahead. HENRIK HERBST: Yeah, thanks very much. I just want to double check, really, firstly on Russia. When you’re saying you’re focusing on a more balanced approach between subscriber growth and profitability, is that just for Q4 or is that kind of more -- a bigger change in strategy? And then I wanted to follow up on LTE in Sweden as well. Of those 80,000 LTE customers, how many of those are LTE wi-fi modems, and if you can give a bit of colour in terms of what you’re saying in uptake is it accelerating and where are the 41 customers coming from? Is it Tele2 fixed line customers migrating to mobile only or are you taking customers from other fixed line operators? Thanks very much. LARS TORSTENSSON: Thank you, Henrik, also good questions. When it comes to that I think Mats could take both of them, please. MATS GRANRYD: At least the first one. The Russia balanced approach, and that is for the fourth quarter. We need to have split vision, sometimes your foot on the gas and sometimes foot on the brake, and we’re sort of in between there now. And then on the LTE Sweden, where they come from, I don’t have that. LARS TORSTENSSON: Well, the (overspeaking) wi-fi routers as I understand it, the longer(?) distances are probably not as attractive anymore. We allow tethering on mobile phones as well, and that’s what people can do. So when you look at 80,000, that is predominantly cut the cord products, which is a very good alternative to your ADSL VDSL connection, which has been quite popular. Now, having cleared that, we are assuming a lot of interesting handsets coming in here during Q4 as well, based on other operating systems than IOS, which could also be pushing the needle but we see good solid interest for 4G services today, and it’s quite easy to sell those as well because we can provide such good quality and such high speed on that service as well. And of course you get the mobility on top of that, which is excellent. MATS GRANRYD: Mats here. I know there are a lot of Swedes at their summer houses somewhere out in the Archipelago, or up north or south, and the home router is a fantastic 42 product to bring with you to both enjoy wi-fi in the car if you have a battery, and also when you actually arrive at your summer house. So it is a good product, and as Lars said easy to sell. LARS TORSTENSSON: Yes. Thank you very much. I think even though we have a few more questions in line, we do need to rush to the physical meetings. Of course we would love to follow up with those who still have questions, so feel free to give me a call at any time. And just as a reminder, we will release our result for the fourth quarter on 5 February. Thank you all for participating in today’s analysts’ conference call. Have a great day. Thank you. MATS GRANRYD: Thank you. 43