Active capital allocation continues and, after the close of the quarter, we successfully structured a DKK 6.25 billion deal to sell our Danish business (subject to a final agreement and regulatory approval) to Norlys, the leading energy and telecoms group in the country. This divestment is in line with our strategy to focus on markets where there is a clear path to securing and defending a leading position. It also offers both immediate value creation and the opportunity for Telia’s Danish business, and team, to become part of a new national challenger, offering a broader range of services to Danish customers, large and small.

As we head into the second quarter, our approach to building a better Telia continues. By Inspiring customers, Connecting everyone, Transforming to digital and Delivering sustainably, we are continuing the hard work of returning the company to sustained, profitable growth. We are maintaining our technology leadership and driving modernisation of our operations, to make Telia a better company for all its stakeholders today, tomorrow and into the future.

Executing on its broad-based turnaround, our business in Finland saw growth in both mobile and fixed services, with a return to EBITDA growth underpinned by digital transformation, lower customer churn and improved productivity.  In February, Telia Finland won independent research company Opensignal’s top global award for user experience in a study of 250 operators, reflecting our commitment to customer experience and investment in our already excellent network. This contributes to further improvements in brand consideration, and it is particularly encouraging to see a significant improvement this year in the Sustainable Brand Index ranking in Finland.

Norway’s financial performance remains solid, with growth in both mobile and fixed services, including a healthy growth in broadband and TV. EBITDA grew 2.7 per cent, a slightly higher rate than in the previous quarter, as the impact of increased energy costs starts to subside. Our 5G roll-out continued into new communities such as Tromsø and Bodø this quarter, driving regional business momentum and taking us to a population coverage of 89 per cent, sustaining our 5G frontrunner position.

Lithuania and Estonia further expanded their leading infrastructure positions, with Telia Lithuania confirmed as having the fastest mobile internet service in the country, while Telia Estonia won several categories in Opensignal’s Global Mobile Network Experience Awards. Customer sentiment is improving in both markets, and so both units delivered excellent mid-to-high single digit service revenue growth which, despite the cost inflation environment, converted into double digit EBITDA growth.

In Denmark we continue to restructure and rebuild the business. While service revenues were flat, successful cost transformation resulted in EBITDA growing by double digits. 5G roll-out continues, with 85 per cent population coverage at the end of the quarter and customer intake on the new 5G internet proposition is strong.

Our TV and Media unit is in the midst of its restructuring. After the end of the quarter, the new TV4 Play with a hybrid offering was announced, with a planned launch after the summer. This will enable a gradual redesign of the content portfolio and content rights overall to offer a broader and richer set of viewing and advertising options. The unit saw a 2.4 per cent decline in service revenue driven by a softening advertising market, while Pay TV revenue grew slightly, but with higher year-on-year content costs, EBITDA declined.

Transformation of our systems, processes and ways of working continue across the Group. Another 10 IT legacy systems were decommissioned in the quarter, and close to 50 per cent of the systems targeted for removal before 2025 are now out. Legacy dismantling, important both for the sustainability of energy consumption and for cost and customer experience development, is on track with 3G now entering its final year across most of our footprint. Despite all our hard work, heightened and continued inflationary pressure is masking the underlying cost take-out, and this is likely to impact our 2021-2023 cost ambition.

On sustainability, the work we do across our supply chain is having meaningful impact, with 45 per cent of our total supply chain emissions now covered by Science Based targets, up from 26 per cent one year ago and on track towards our 2025 target of 72 per cent. In a recognition of our efforts, Telia was recently ranked first among Europe’s Climate Leaders by the Financial Times, in a study comprising 500 large companies.  Within Digital inclusion, we have seen stronger than expected progress and have doubled the target for the number of individuals to be reached by such initiatives by 2025, from one to two million. Within Security, another key sustainability priority, we were awarded preferred partnerships with several key global security solution providers during the quarter and supporting the mid-single digit growth we are seeing in security services.

Cash flow was, as expected, negative in the quarter due to phasing in our vendor financing program. This will be fully reversed in the remainder of the year. Net debt to EBITDA is at the higher end of our leverage target range but is expected to decline in the next 12 months on the back of a stronger operational free cash flow, and the proceeds from the divestment of Telia Denmark, which will be used for deleveraging.

Looking ahead, our full-year outlook is unchanged. With energy headwinds starting to subside, pricing initiatives in place, and peak network investment now behind us, 2023 is a year for us to restore confidence in our strategy and improve cash generation, despite current challenges in TV and Media. That being said, we remain vigilant to continued macro-economic uncertainty and responsive to rapid changes in customer behaviors and expectations and will take necessary actions to respond to the changing environment.