Telenor ASA (TEL) Q1 FY2026 Earnings Call Transcript & Summary

Good morning, and welcome to Telenor's First Quarter Results Presentation for 2026. Joining me today are our CEO, Benedicte Schilbred Fasmer; and our CFO, Torbjorn Wist. Before we start, a quick reminder, unless we state otherwise, all revenue and EBITDA growth rates are organic and on a constant currency basis. And EBITDA refers to adjusted EBITDA. Today's agenda will follow our usual structure. And at the end of the presentation, we'll open the line for Q&A. To give everyone a chance, we kindly ask each of you to limit yourself to one question. And with that, Benedicte, over to you.

Thank you so much, Frank, and good morning, everyone. In the first quarter, Telenor continued to execute on its strategy and deliver steady performance despite challenging external backdrop. The closure of the Straight of Hormuz pushed up consumer energy prices and created a new supply chain uncertainty, particularly across parts of Asia, including Bangladesh. We delivered service revenue growth of 1.6% and EBITDA growth of 3.1%. Free cash flow before M&A was NOK 2.1 billion, a solid start to the year on cash generation. We also progressed well on our portfolio simplification, supporting our strategy to become a more Nordic-centric company over time. After divesting Telenor Pakistan at the end of 2025, we completed the sale of the 25% stake in True Corporation in March, receiving NOK 30 billion in proceeds. The remaining 5% stake in True will be sold within 2 years. Including the True proceeds, total free cash flow amounted to NOK 32 billion in the quarter. Following the simplification milestones, we have a strong financial position. Leverage is at 1.2x, and we plan to commence our 3-year NOK 15 billion share buyback program after the AGM. In the Nordics, competition is still intense, but it has eased somewhat compared with the pressure we saw building through 2025. Mobile service revenue growth was around 3% when adjusted for business transfers. Fixed service revenues rose by 1% year-over-year. In March, we launched Sikre in Norway, an innovative security integrated subscription. This is a good example of the services-first strategy we presented at the CMD. In Asia, Bangladesh remains challenging. Energy supply vulnerabilities and cost of living pressure continue to outweigh the positive effects of the February election. [indiscernible] returned to negative growth due to affordability pressure and tough data competition. However, we remain confident in our medium- and long-term ambitions as we invest in transformation and simplification to build an even stronger, future-fit Telenor. However, we are lowering our EBITDA growth outlook for 2026 due to the top line headwinds in Bangladesh and Finland and because of the effects of the transfer of managed IoT and Coastal Radio in the Nordics. Torbjorn will explain that in more detail. Turning to the Nordics. Growth has softened compared with the strong momentum we saw in 2025. In Q1, Nordic Mobile Service revenues grew by 2% or close to 3%, excluding the internal transfer of the managed IoT business to Telenor Connection. Fixed service revenues grew 1%, supported by fiber growth in Norway. EBITDA in the Nordics grew 3.8%, driven by service revenue growth and higher wholesale revenues in Norway. And we continue to see cost benefits from transformation most notably within customer service and due to closure of legacy networks in Sweden. And in line with what we said at the CMD, 2026 is and will be a peak year for implementation costs of transformation initiatives. Overall, OpEx increased 2%. Nordics had higher amortization of sales commissions and continued high activities in transformation projects, particularly in Norway. And the higher sales cost reflect the churn increase we saw last year. Encouragingly, in Q1, we were able to bring churn back towards a more normal level across most markets and segments. And we are so proud because Opensignal's latest user experience measurements recognized all our Nordic business units for top-performing mobile networks, underlying the value of our continued investment in network quality. This slide summarizes market-by-market performance across the Nordics. Starting with Norway, where we continue to execute on our now very well-established commercial strategy with more for more and services first. Value-added services within entertainment and security are key elements of this and stand-alone value-added services revenue in Norway grew 8% in the quarter. ARPU increased and EBITDA grew strongly, supported by higher wholesale revenues and easier year-on-year comparisons following last year's NOK 100 million TV VAT charge. And while B2C campaigning held the mobile ARPU uplift back somewhat in Q1, we are encouraged to see a positive shift in B2B as we work to turn around the previous negative trend. The Norwegian Competition Authority is reviewing our latest remedy proposal on the deal with GlobalConnect, and we expect to be able to close the deal within the next 4 to 6 months. In Sweden, mobile continue to grow, supporting profitability despite a managed decline in low margin fixed revenue. Denmark sustained customer momentum, particularly in fixed wireless access, while EBITDA was pressured by introductory offers and higher third-party commission costs. Overall, Denmark is executing in line with our plan, and they are in the middle of a very ambitious transformation. So we expect a clear pickup in EBITDA growth over the coming quarters. Moving to Finland, where mobile competition eased somewhat in Q1. And DNA delivered underlying mobile service revenue growth of 2.2% while competition in the fixed segment intensified. Churn normalized and we saw a gradual improvement in new sales ARPU. However, the pricing impact from Q4 still held back reported service revenues. And even though pricing is gradually improving, volumes have been softer and prices on new sales renewals are still not back to the levels we saw in the first half of last year. In some cases, there is also a lag between sales and when revenue is recognized. So improvements may take time to show up in the reported numbers. As such, we believe it will take a couple of quarters before Finland returns to the mobile service revenue growth level we are aiming for even with a continued gradual recovery. So turning on to Asia. In Q1, we reached a major milestone by completing the sale of our stake in True, receiving NOK 30 billion in cash proceeds from the first tranche. At the same time, the region is being affected by the fallout from the Iran war. And unfortunately, Bangladesh is among the most exposed market, given its import dependency, limited LNG storage for power generation and the risk for further pressure on energy costs. Grameenphone's service revenues declined 2% in Q1 while EBITDA was down 1.5%. The quarter also reflects the continued shift from voice to data alongside intense price competition. Year-on-year, the decline was driven by weaker macro backdrop, which intensified in March as customers were affected by shortages, saving measures and energy prices. We are mitigating some of the top line pressure through cost measures. And while we remain focused on supporting customers, we are keeping spending highly disciplined in this environment. In Malaysia, CelcomDigi showed continued top line progress in its most recently reported quarter, and we received stable dividends. Importantly, new 5G spectrum is underway for the company's network JV, DNB. And we believe it's key to the improvement of the longer-term financial prospects of DNB. We also recognized an impairment of the recorded value of our shares in CelcomDigi after the market value fell significantly below our carrying value. And with that, I'll hand over to Torbjorn to walk you through the financials in more detail.

Thank you, Benedicte, and good morning, everyone. Let me kick it off by taking you through the group financial highlights for the first quarter. Overall, service revenues came in at NOK 14.8 billion and EBITDA was NOK 8 billion. Service revenues grew 1.6%, while EBITDA grew 3.1%, resulting in EBITDA margin of 44.2% based on the total revenues of NOK 18.2 million. Free cash flow before M&A in the quarter was NOK 2.1 billion. And if you include the True proceeds, total free cash flow was roughly NOK 32 billion in the first quarter. Net income was NOK 3 billion and EPS was NOK 2.22, both up 15% year-on-year. Note that most of our operating currencies weakened materially against the NOK during the quarter. In nominal terms, FX affects reduced reported service revenues, EBITDA and free cash flow by some NOK 0.4 billion, NOK 0.3 billion and NOK 0.2 billion, respectively. The group's CapEx to sales was 12.5% in the quarter. The leverage ratio strengthened materially to 1.2x driven by the disposal of our stake in True. On the other hand, Group ROCE was negatively impacted by the impairment of our stake in CelcomDigi. While the True transaction improved leverage, the accounting gain in that sale is not included in return on capital employed because True is no longer an associated company. The CelcomDigi impairment, however, reduces return on capital employed. Importantly, return on capital employed, excluding associated companies was 13.6%, demonstrating a strong underlying result for our controlled assets. Finally, please note that we have changed the calculation of capital employed in our ROCE definition. In essence, we have moved from defining capital employed as equity plus net interest-bearing debt, including license obligations to noncurrent assets plus working capital. This makes the definition of capital employed and more influenceable management metric in measuring business unit performance. This is very important because, as you may remember, Benedicte and I highlighted the importance of implementing ROCE throughout the organization and the new definition is better suited for that. Now starting with the top line. In reported terms, service revenues were down year-on-year due to FX, while growing 1.6% organically. This growth was primarily driven by mobile in Norway, Sweden and Denmark. In the Nordics, mobile service revenues increased 2.7% when adjusted for the transfer of the IoT business supported by the ARPU uplift across Scandinavia. Finland was impacted by carryover effects from lower campaign prices in Q4 last year and front book pricing in Q1 was still below the level we saw a year ago. On fixed, service revenues grew 1.3%, driven by a larger fiber subscriber base in Norway. Asia was, as Benedicte highlighted, the main drag on growth, driven by the weaker performance in Grameenphone. Turning to OpEx, which came in at NOK 6.2 billion, down 2.4% year-on-year in reported terms and up 0.5% organically. Higher personnel costs and higher amortization of external retail commissions from prior periods were partly offset by lower O&M costs. This was achieved despite significant implementation costs for transformation and robustification which we went through in detail at our CMD in November. In '25, these costs were more back-end loaded than we expect the profile to be this year. Transformation continues to deliver cost benefits in the Nordics, as highlighted by Benedicte. And in Bangladesh, cost measures also helped mitigate the top line decline. Then moving to EBITDA, which was just above NOK 8 billion, roughly flat in reported terms, but up 3.1% organically. The Nordics delivered 3.8% growth in EBITDA, driven by ARPU growth in Norway and continued fixed transformation benefits in Sweden. After the improvement in the second half of '25, Grameenphone unfortunately declined again. As a result, EBITDA for Asia was down 1.7%, weighing on the group results. Now then let's zoom in on the profitability in the Nordics. EBITDA in the Nordics increased 3.8% or 4.9%, excluding the impact of the transfer of managed IoT and Coastal Radio. Norway and Sweden were the strongest contributors and Norway also benefited from easier comps in Q1 last year, including the VAT related item and the limited national roaming revenue contribution in the prior year quarter. Denmark and Finland contributed negatively, reflecting the commercial and cost dynamics we discussed earlier. Denmark stands out at minus 13%, and this mainly reflects introductory offers that weighed on gross margins combined with higher amortization of commissions from previous periods following a shortened amortization period. Overall, Denmark is executing in line with our plan, and we do expect EBITDA growth to pick up meaningfully over the coming periods. Now then moving to Asia and focusing on Grameenphone. As Benedicte highlighted, growth turned negative in the quarter, consistent with what the company communicated to the market in March. The quarter reflects the tough macro environment, election-related restrictions and a lower-than-normal uplift from the Eid festive season. Higher fuel and gas costs have added to cost of living pressure in the country. That increases price sensitivity when customers shop for data packages at a time when competition remains intense. Tight cost control and a one-off settlement with the supplier contained EBITDA decline to 1.5% in Q1, somewhat better than previously announced by Grameenphone. Now in this environment, we remain focused on tight cost control and disciplined release of investments. Now then let's move to the P&L and cash flow. In the P&L, there were several material movements on the associated companies line this quarter. Operating profit was broadly flat in nominal terms, held back by FX. We booked a net gain of NOK 12.2 billion from the disposal of our shares in True corporations. But on the other hand, we also recognized an impairment of $8 billion related to CelcomDigi as its market value at quarter end was significantly below the carrying amount in our books. Net financial items were positive at NOK 549 million. This was driven by net currency gains of just over NOK 1 billion, mainly related to derivatives, hedging the FX conversion of the True proceeds as well as improved liquidity and lower interest rates. Tax expense was NOK 1.1 billion, corresponding to an effective tax rate of 12%. Net income to equity holders was NOK 8.2 billion. Adjusted net income, excluding the associated companies, FX impacts and other smaller items, was NOK 3 billion, corresponding to an adjusted EPS of NOK 2.22. Then turning to cash flow. Total free cash flow was roughly NOK 32 billion, including cash proceeds from M&A activities of roughly NOK 30 billion. The sale of our 25% stake in True, which was the first tranche, generated cash proceeds of NOK 29.8 billion, excluding the hedging effect mentioned earlier. The related positive cash impact of NOK 0.6 billion was offset by the first installment of NOK 0.6 billion for residual obligations in India. Free cash flow before M&A was NOK 2.1 billion. The year-on-year reduction in free cash flow before M&A was NOK 0.8 billion and was mainly due to timing effects last year and the divestment of Telenor Pakistan. In addition, FX reduced free cash flow by [ NOK 7.2 billion ] in the first quarter. The first quarter of '25 benefited from working capital inflows, driven by Grameenphone due to the Eid season timing as well as handset financing in the Nordics. Q1 last year also included NOK 352 million of cash flow from Pakistan, most of that entity's full year contribution, which is no longer part of the portfolio. The main contributors to free cash flow before M&A were the Nordics at just shy of NOK 1.8 billion and Asia just over NOK 1 billion, the latter supported by NOK 342 million in dividends from CelcomDigi. The quarter was also relatively heavy on spectrum payments with NOK 0.7 billion paid, including incremental right-of-use prepayments related to the recent awards in Sweden and Bangladesh. Overall, it was a solid quarter for free cash flow before M&A, keeping us on track versus our full year outlook and, of course, a very strong quarter in terms of M&A cash flow. Now this, of course, has clear implications for the leverage and capital allocation going forward in line with how we outlined the use of proceeds on our Q4 call. We can now see the true proceeds impact on the balance sheet. Leverage ended the quarter at 1.2x, well below our target range and net debt declined to NOK 46.2 billion. This creates headroom for incremental shareholder returns such as our proposed buyback and disciplined value-accretive investments in our Nordic core markets. Of the NOK 15 billion program, we will propose to start with up to NOK 6 billion in the first year, which includes the government's portion subject to AGM approval and available liquidity and again, if value-accretive investment opportunities do not materialize, we will consider further return to shareholders. And that brings us to the 2026 outlook. On our full year guidance, we have updated the 2026 EBITDA outlook for the Nordics and for the group. For Telenor Nordics, we still expect low single-digit service revenue growth and around 14% CapEx to sale, excluding leases. We now expect low- to mid-single-digit EBITDA growth updated from mid-single digit. The main reasons are the somewhat slow market normalization in Finland and that we have chosen to not adjust for the impact of the business transfer of managed IoT and Coastal Radio from the first of January, which we had assumed in Q4 when we made the original guidance. As stated in the Q4 report, these transfers reduced EBITDA by around NOK 0.2 billion for the year, equivalent to about 1 percentage point of growth for Nordics. For the group, we now guide flat to low single-digit EBITDA growth updated from low to mid-single digit. In addition to what I just mentioned, the key driver is the impact of the unresolved situation in the Persian Gulf and what effect that is having on Bangladesh. While everyone hopes for a quick resolution to the conflict, Bangladesh is a vulnerable economy and the exposure increases the longer this situation persist. That said, several factors help protect the flow-through to free cash flow from EBITDA sensitivity in Grameenphone. [ Key shield ], I'll remind you, are the 44% minority ownership and the 40% corporate taxes and, of course, our own operational measures in the company. We maintain our free cash flow guidance of NOK 10 billion to NOK 11 billion before M&A and incremental spectrum commitments post CMD, excluding dividends from associates despite a negative FX impact of around NOK 0.4 billion from the stronger NOK. On the quarter-by-quarter profile in '26, please note that Q2 will be particularly challenging for EBITDA growth due to a difficult comp given the standout second quarter last year in the Nordics, lapping of the Norwegian roaming agreement from mid-March, a smaller year-on-year impact from already implemented back book price migrations, continued high transformation activity in the Nordics in the first part of the year, and bigger impact of energy shortages and related inflation in Bangladesh. And while '25 had a back-end loaded cost profile for both sales and marketing and transformation costs, we expect a more even distribution throughout 2026. For Grameenphone, we expect service revenue growth to remain negative in the near term. The timing of recovery remains uncertain given the indirect exposure to the Iran war. And then finally, just to point out, our medium- and long-term financial ambitions, they remain unchanged. And with that, Benedicte, I'll hand it back to you for the wrap-up.

Thank you, Torbjorn. To sum up, we delivered steady performance against a shaky international economic backdrop in Q1. We continue to execute on the strategy described on the CMD to build a stronger and even more future fit and Nordic-centric company. The True deal was another milestone in this respect, materially strengthening the balance sheet and enabling increased capital returns including initiation of the 3-year NOK 15 billion buyback program after the AGM. At the same time, we are realistic about near-term headwinds, particularly in Bangladesh, and we have, as a result, adjusted our 2026 EBITDA growth outlook accordingly, while maintaining our free cash flow guidance. Our long-term view and ambitions remains unchanged. We will continue to drive service revenues through relentless improvements of the customer experience based on excellent networks and services led growth. We will accelerate the pursuit of efficiencies through continuous simplification and tech-led transformation and we will continue to honor our track record of effective capital allocation and shareholder returns. And now I'll hand you back to Frank to moderate the Q&A.

Thank you, Benedicte [Operator Instructions] Operator, please go ahead.

Our first question will come from Ondrej Cabejsek from UBS.

I wanted to ask on your guidance. So I understand that Grameenphone is obviously challenging. You've also had some reclassifications as you pointed out in the Nordics and obviously, the weakness in Finland. You also flagged some kind of IFRS effects that have been -- I think it has clear kind of expected by you in Denmark. So in terms of the Nordic EBITDA specifically, can you speak also about the kind of Norway and Sweden developments whether these are kind of in line or perhaps in the case of Sweden, maybe even better than expected? So what is the outlook kind of outside of the thing that you already touched upon in the Nordics, specifically on EBITDA and associated with this, the weaker EBITDA outlook, is it kind of absorbed on the free cash flow level simply by the fact that you've got this kind of NOK 1 billion range within the guidance? Or are there some mitigating measures that you are kind of taking or have to take to actually preserve free cash flow guidance at this kind of NOK 10 billion to NOK 11 billion range?

That was a lot of questions in one question. But if we try to kind of pick up your main points, to start with Grameenphone, I think it -- in our guidance, we expect the situation to remain challenging for the first half year. If the challenges persist, of course, we might have to change our guidance going forward. But we are pretty tight on both OpEx and CapEx. And we are taking measures in order to alleviate the consequences as best as we can. However, we also do need to take our new spectrum in use and to have some investments in order to meet the competition on the transition from voice to data. Would you like to cover Denmark, Torbjorn?

Yes. No, Denmark, as we said, the 13% negative was a bit of a standout, but that was due to costs associated with new offers in addition to the shortened amortization period. But Denmark is certainly expected to perform much stronger in the quarters ahead. I think the -- in terms of the bridge to free cash flow, there are, of course, many different elements that contribute towards that. Yes, you have some FX that is pulling it down and then you have some of the negative impacts from the likes of Bangladesh. Then as you remember, when we guided, that excludes incremental spectrum and there's been some incremental payments into this year, that needs to be added back. We also have significant efforts to mitigate cost of goods sold, OpEx, working capital measures across all business units. And then in terms of the flow-through of the Grameenphone, remember that there's a high corporate tax rate and whenever there is dividends paid out to shareholders, there's some significant minority leakage, which, of course, gets reduced if the results are lower. So there's a number of shields and sort of the rough rule of thumb is that if you assume that there was NOK 1 billion effect on EBITDA, maybe only 1/4 of that would flow through to the cash flow.

And then you had a question -- again, many questions in one. But we saw the competition as very stable in Sweden and in way, which is one of your question. And not to offend our Swedish colleague, but in a way, boring is good, which is why we didn't highlight that many news. However, we were in Sweden last week. They are doing a lot of good initiatives in order to improve our market position, particularly in the fixed wireless access. We have a good growth and we -- which adds to the mobile net adds. And again, we do see positive effects on the gross margin on the very deliberate phasing out of unprofitable products on the fixed side. So good performance also in Sweden.

Our next question comes from Keval Khiroya with Deutsche Bank.

I appreciate [indiscernible] want to give quarterly EBITDA growth guidance, but can you talk a bit more about the moving parts on Nordic EBITDA growth for the rest of the year?

I think we highlighted clearly some of the things that is going to affect the Q2 growth given the rather difficult comp last year when you had, for example, the full inclusion of the national roaming agreement in the numbers. And then I think we've also highlighted that some of the sales and marketing related and transformation costs are spread more evenly out throughout the year relative to a more back-end loaded profile last year. I think that's about the degree of detail we will go into.

Yes. And as I just mentioned, we have anticipated a difficult situation in Bangladesh throughout first half of 2026.

That's helpful. Just a bit of follow-up, can I ask, I mean, obviously, there's been a little bit less price rise support in the Nordics in Q1, and it sounds like for Q2 as well. How much of a factor is that for those two quarters? And at this stage, can you say anything about price rise support for H2, where that's a delta?

Sorry, you said a price rise support? Yes, just we -- as you know, we don't comment on sort of forward-looking price initiatives, what have you, we stick to what is behind us, obviously, for competitive sensitivities. So I will not comment on sort of price rise support going forward.

Our next question comes from Nick Lyall with Berenberg.

It was a quick one about the -- well the usual question about consolidation really. On the Swedish and Danish consolidation, you've got the cash in now for the True deal. So do you think you've got the political support you need from the local competition authorities, not being Sweden, in particular, on the political support from Sweden? And Torbjorn, when you mentioned looking at value-accretive deals and then if opportunities don't materialize, how long would you wait to decide whether those are going to materialize or not, please?

I think, as you know, we cannot comment on any particular transactions. But I think -- we need to close the gap in Europe on building scale within technology. And I think we need a framework that enables scale and the emergence of the possibility of emerging stronger national and European champions. So in light of that, we really believe that consolidation in our industry is key in Europe. And at present, there are still mixed signals from EU to whether that might be allowed. However, the latest last week's change in signals might imply that it's easier now than it has been for a while. However, I think to sum it up, we are taking a wait-and-see approach pending the further developments in the EU.

No. Just to come back on that point, does that mean you'd rather wait to see some draft in emerging guidelines first before you prepare to take any -- or would you go for it first before you see drafts coming out? Is that a sort of prerequisite for any general action, do you think?

I think you can rest assured that we contribute to the extent we can on advocating what we believe is right, both for our industry and for Europe and the countries. And in light of the geopolitical unrest, I think to head in a more lighter environment to merge is key. And then I will not comment on what we do first and last, and that we have to come back to you when we have something to communicate.

Yes. I think there are many promising developments in terms of what you hear, but there's a lot of conflicting messages. I guess it will be interesting to see how some of these live deals that are out in the market will be treated. With respect to the second part of your question very quickly, we have just closed the transaction. I think we have just announced a very shareholder-friendly buyback program, and we'll implement that as soon as we have the necessary approvals. And then we will have to wait and see in the future in discussions with our onboard on any future remuneration initiatives.

Our next question comes from Christoffer Wang Bjornsen with DNB Carnegie.

So first of all, on the GlobalConnect, the pending transaction, GlobalConnect, helps us understand -- I know you can't give all the details on the [ post remedies ], but at least can you give some color on the -- on how material they are looking to be, like, are they material enough to change the financial trajectory you gave for the effect of the deal? Is it [ closest ]? Or is it more minor. That's the first one, I guess.

We can't comment on any specifics, I'm afraid, because the process is ongoing. However, we do expect the competition authority to conclude within the end of June, and we just received their so-called 70 days notice. We are still optimistic to close the transaction and then the underlying of that you do understand that we still can calculate or have a good decent return on the investment if it goes through.

All right. And then just a quick follow-up on the Elisa and [indiscernible] agreement. So just to me, it seems like if you pencil in typical seasonality for the business that you are tracking a bit ahead of the revenue last year, but you're still kind of saying that you expect it to be broadly in line with last year. So is that kind of factoring in some kind of tapering off of that business as they move to their own network or am I getting that one wrong?

I think we obviously don't discuss, call it, the overall prognosis and the sort of quarterly movements of it other than to say that we still expect the contributions from the Elisa-Tele agreement to be in line with what it was last year.

Our next question comes from Andrew Lee with Goldman Sachs.

So obviously, everyone's just trying to unpack this morning the changes that are just accounting adjustments with what's actually going on underlying from a structural perspective. One of the key structural concerns that investors have from today is on your Finnish fixed broadband trends where you've got basically a weaker finished fixed revenue growth or decline. What is driving that? That's question number one. Secondly, what exactly surprised you in Finland and Denmark in the first quarter more broadly? I mean we knew Finnish competition was intense in the second half of '25. I guess you knew their introductory offer investments in Denmark. So what surprised you within those 2 markets that have caused the underlying downgrade to guide? And then just lastly, in Sweden, your broadband trends look a bit weaker and slightly easier comps. Have you got any commentary around that?

Okay. Let's just start with -- on the fixed side, what we saw there was that there was quite a lot of activity, particularly on the SDU segment, which traditionally is a more attractive relative to MDUs in terms of ARPU. So we saw a lot of activity there. We also saw more -- and that impacted some of the, call it, cable subscribers that we have in Finland on the SDU. We also saw more activity on the MDU side. So just in general, there was sort of a switch out from both fixed wireless access and cable customers activity in the first quarter in Finland.

And as you may remember, we announced last year that we have an investment activity on the MDU side, replacing our cable network with fiber. And that's ongoing, and it's progressing according to plan, although there is also increased competition in that segment.

Yes. And that's an important upgrade because keep in mind, Andrew, that in Finland, the degree of cross ownership between, let's say, fixed and mobile customer is over 50% so there is a strong ability in that market for cross-selling of products, not bundling with cross-selling, which, of course, is important. Just in terms of -- yes, on your second part of your question about surprising. I don't think Denmark was particularly surprising. It was a competitive intensity, which had more introductory offers that weighed on gross margins. And then we had the change in commission amortization of commissions. But in Finland, the flow-through effect perhaps was a little bit bigger than we would have liked to see in Finland. But we are pleased to see that things are normalizing back slowly but surely in that market now.

And then just on Sweden. So Swedish, your broadband friends, were they weaker this quarter despite having [ relatively easy comps ]. Anything going on that?

Yes. Well, as you said, it's a managed process where we are phasing out unprofitable products and you'll find actually some of the fixed market in our mobile subscriptions because we've had quite a good success in fixed wireless access. So -- but that's reflected in the mobile subs numbers.

And keep in mind that the managed out of unprofitable customers on the fixed side in Sweden has been a very strong contributor to gross margins and also to EBITDA performance in the country.

Our next question comes from Ajay Soni with JPMorgan.. My question is just around Finland. So you mentioned lower volumes. So I just wanted to know where are you seeing the pressure? Is it from the main operators, the MVNOs? Is it within BC or B2B? And then just related to that, Elisa mentioned they were maybe less reactive to commercial offerings from other operators? And is that a similar strategy that you guys might [ follow with me ] except some short-term subscriber losses to encourage a more rational market within Finland?

I think we have seen some uptick in the numbers for the MVNOs, but it's still manageable within -- in the market. On the B2B side, that's actually quite colored by the macro conditions in Finland, whereby there is 11% unemployment. There are not a good growth in the B2B market which is impacting the market conditions as such. However, we actually progressed fairly well on the B2B market, and we've also had some new solutions and launches to the customers that have been well received. So in a bit of a slow growth market, we are performing fairly well in that segment.

And I think you said lower volumes in your opening of your question, it is more lower churn that we're seeing in the country. It's actually normalizing back to the same levels that we saw 12 months ago. And lower churn is better than lower volumes, so to speak.

And then just on the second part which is around maybe the behavior from [indiscernible] Russia. Is that something, again, that you guys are maybe trying to encourage just to encourage the market rationale?

Look, we -- yes, that's -- we try to avoid sending signals to the market. We were very clear that Q4 was a significant competitive intensity, thanks to one of the players. I won't mention the name. And what is good is that we have seen that come first quarter the situation has definitely improved.

Our next question comes from Ulrich Rathe with Bernstein.

I have actually two clarification questions only if I may. The first one is on the Nordic EBITDA downgrade, you talk very much about the factors already. I was just wondering whether you'd be willing to talk a little bit about the scale of these different factors, in particular, the inorganic versus the organic factor. I think from Investor Relations, we learned this morning that the inorganic factors were about 160 basis points in the quarter. Is that for the Nordic EBITDA? Is that sort of representative of how it might look for the full year? Or is anything in particular going on in the first quarter for the inorganic contribution? That will be my first clarification question, please.

Yes, I wasn't part of the call, so I don't know what the.

We didn't have a call, but it's just in the summary. It's -- I would say, the business transfer effect is about a bit north of 1 percentage point for the full year, Ulrich. So there were some other factors in there in the first quarter. The VAT effect from last year and so on. So don't recognize 160 in terms of the organic, nonorganic switch there. But about 1 percentage point for the full year is relating to the business transfers for the Nordics.

Yes. And just to be clear, that's the internal move managed IoT services from Nordics to Amp So it's internal moves, right.

yes. In addition to the Coastal Radio of course [indiscernible] going out. So -- but it's -- that's the main part. And then there's a contribution of to some extent also in Finland, which has picked up in a bit of a slower pace than we had anticipated in January.

Okay. So it sounds like a percent, a bit more than a percent from inorganic and probably then a percent or so from Finland, right, I mean give and take. The question on the -- the question is [indiscernible] next question. So just to discuss the motivation of the wait and see approach and obviously operators in France are taking a more active role there. They're trying to test the [indiscernible]. Why is it the right choice for you to go into this wait-and-see mode in relation to the potential change of the [indiscernible] on the market consolidation?

Yes. Look, the -- I know that the interest is high, and we spend a significant amount of time in most investor meetings fielding questions on this regard. We tend not to go into any details about motivations. But clearly, the sort of slight positive signals, but still contradictory signals from the EU Sphere makes us take a more cautious approach because we need to see how this is implemented in practice. We've been very clear that we think consolidation is good for Europe if they want to have a thriving digital sector. But so far, not everybody is seeing from the same hymn sheet. And as a result, we're taking a little bit more of a wait-and-see approach.

If I may challenge you on this, right, if there's uncertainty, right, in this regard, one could take the view that there's really a pot of gold at the end of the rainbow. So why is it the right approach not trying to test it? I mean I understand if the signals were very negative and cautious then you don't want to try, right? But if there's uncertainty and then there is a significant benefit, why not try?

Look, we will not go into tactics. And if we test it and succeed, then you'll be the first to know along with all other investors if and when we have something to announce.

Thank you, Ulrich. We'll go on to the next question. We have a few left. So please let's all keep -- and stay short.

Our next question comes from Felix Henriksson from Nordea.

Just a couple of clarifications on the Nordics. Firstly, on Denmark, you mentioned that execution is basically in line with your expectations, but there was a fairly large drag from legacy [indiscernible] in the quarter and also these higher commissions on FWA. So can you just expand a bit on why you're so confident that trends in Denmark will improve in the coming quarters and why this will no longer be an issue?

Denmark is -- or Telenor Denmark is conducting probably the most fundamental transformation of any of our operations. And we are very confident that, that will deliver results longer term. On top of that, you have the change in amortization on the marketing cost, which was shortened, which took the EBITDA down somehow. And then on the broadband in Denmark, I think you need to help me a little bit, Frank.

Well, on the broadband, we closed down broadband going into the year. But I think the main part really as to the last part of the question, why we're so confident that this will improve is basically due to the introductory prices that we mentioned during the call. We have a few offerings, especially in fixed wireless. But also I think a few other ones in Denmark, which have been on introductory prices obviously lowering gross margins as well, and they will normalize during the second quarter and beyond.

Yes. And on the fixed wireless access side in Denmark, we have good traction. But again, please remember that, that is reported under the mobile volumes.

In Denmark and Sweden.

Yes.

Yes, they're mobile. Okay. I hope that answers your question.

Absolutely. And if I may, just a quick follow-up on Finland. Was there anything that went incrementally negative in Q1 because it seems like this slowdown in growth that you're seeing is mostly due to the carryover effect from Q4, which presumably was already in your knowledge when you were giving out the original guidance for the year.

I think I outlined that in my answer about the development on the fixed side, which was quite intensive in the first quarter.

And of course, that was not Nordic. That was on group. But of course, what happened in Bangladesh was also incrementally negative in Q1 due to the global situation.

Yes. Okay. Thank you, Felix. I think we have a question questions left. So operator?

Our next question comes from Fredrik Lithell with Handelsbanken.

Fredrik. Are you with us?

Fredrik, please unmute your line, turn on your video and ask your question. We will move on to our next question. Our next question comes from Abhilash Mohapatra with BNP Paribas.

I had one around Bangladesh please. Can you just maybe give us an update on what's happening around [indiscernible] and if you've had any further updates there, that would be helpful. And then just related to that clarification on your guidance comment from earlier, you mentioned that you're essentially assuming that the backdrop remains tough in H1 before potentially getting better during H2. And you said that if that changes, then you might have to sort of revisit the 2026 guidance. Could you maybe just clarify that a little bit? Is that sort of EBITDA or sort of free cash flow guidance that might be impacted if things don't pick up in H2?

Just in terms of the spectrum, we do have a policy of not making predictions or forecast or comment around spectrum renewal processes. As you know, and you can see on the IR website, you can see there which spectrum bands are up for renewal. So those we will, of course, look at what we need and all those things, but we don't comment on that.

There's nothing public either, which is [ new in the process ].

Right. And then with respect to some of the guidance, I think there, to the extent things get prolonged, it mainly comes on the EBITDA side, less so on the free cash flow side. But keep in mind, we are, of course, as I said in my presentation, focusing on mitigating the effects on the top line with cost initiatives and also disciplined release of investments in order to offset the negative impact on the top line.

Yes. I can also refer you back, Abhilash, to the sensitivity Torbjorn mentioned in his main address about if you have NOK 1 billion on EBITDA, just to pick a number for sensitivity purposes, in plus or minus in Bangladesh, kind of the rule of thumb is that you'll have a NOK 0.25 billion impact from that EBITDA billion on to the free cash flow.

That's fair. If I may just follow up very briefly. So for example, Q1, I think we saw the EBITDA there declined 3% year-on-year without the one-off. Are you sort of assuming a return to stability in H2 within your guidance. So is that something you could [ provide ] on?

Yes. That's what the underlying anticipation is.

Yes. And that is, of course, subject to what happens on the energy supply in particular. I think we need to move on because we've got a couple of more people.

Our last question comes from with Siyi He with Citi.

I just have two follow-ups, please. And the first question is really on the OpEx development in Nordics. Just wondering if you can share with us how should we think about the actions that you could take during the remainder of the year to balance the OpEx inflation that you saw in also in Sweden specifically? I think a lot of the OpEx reductions that you have achieved is through migrate traffic of the legacy network. Just wondering if you can give us an update on how far along are we with these activities? And when should we expect the comp getting harder because of the completion of the movement?

Yes, should I jump into it or you?

Go ahead.

Yes. I think there was a lot to unpack there. But the migration of traffic is mainly a COGS situation, I believe. But on the transformation agenda, we -- that combines local programs in each business unit with Nordic initiatives where, call it, scale and collaboration, create value. And I think we went through those in some detail. I refer you back to the CMD. So we do -- '26 is a year where there are significant implementation costs on legacy out in Norway, implementation of BSS in Denmark. So we -- I think we've highlighted that. Of course, when things are -- if there's a little bit of headwind, we will, of course, turn every stone to ensure that we focus on initiatives that mitigate those effects and that will, of course, continue to offset things like we have seen in Finland and we've seen in Bangladesh.

And then also remember the back-end loading difference from last year that Torbjorn mentioned with this year, which is going to be more even. So that also is the reason for that partly being the [indiscernible] transformation projects ramping up towards the end of last year and continuing through the first half of this year and into the second half before then gradually starting to give benefits as you approach '27 and beyond. Well, then we're at 10:00. So I will just thank everyone for their attention. And if you have further questions, please reach out to IR through [email protected], and all the presentation material is available at our website at telenor.com/ir. Thank you very much, and have a nice day.