Tele2 AB (publ) (TEL2B) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for all standing by, and welcome to this Tele2 conference call. I would now like to hand the conference over to your first speaker for today, Ms. Carla Smits-Nusteling. Please go ahead, ma'am.

Thank you. Hello, everyone. Hopefully, you hear me better than the operator. My name is Carla Smits-Nusteling, and I'm the Chairman of the Board of Tele2. Thank you all for listening to our call today. And with me here, I have Anders Nilsson, CEO; Mikael Larsson, CFO; and Stefan Backman, General Counsel. The purpose of this call is to address the announcement we made this morning concerning Anders Nilsson's departure from Tele2 and appointment of Kjell Morten Johnsen as the new President and CEO. I would like to start off by saying a few words about our announcement, and then I will hand over to Anders, and then, of course, we open up the lines for questions. Earlier this year, Anders indicated to the Board that he was considering stepping down from his role at some point in the future, provided a solid succession plan was in place. Myself and the rest of the Board has, therefore, conducted a structured process for CEO succession, which was finalized today, July 6, 2020, when we made the decision to move forward with Kjell Morten Johnsen's appointment. We note that Kjell Morten Johnsen's vast experience as a leader in global telecommunications will serve our company well, and I'm certain that Tele2 will continue to thrive under his leadership. While the Board, of course, regrets to see Anders leave the company, we respect this decision and would like to thank him for his great contribution to Tele2. Under Anders' leadership, the Com Hem integration, which was expected to take 3 years, was successfully completed in just 1 year. This rapid and successful transformation created a lot of shareholder value while making the company much stronger and better prepared for the future. On top of that, Anders and the rest of the leadership team has laid the groundwork for the next phase of transformation, which is expected to reduce costs by at least SEK 1 billion over 3 years and turn Tele2 into the telco of the future. Anders has indeed had a very successful and intense career as CEO of 2 public companies over the last 6 years, steering them through large transformations. On behalf of the Board, I thank Anders for his contribution to Tele2 and wish him all the best for the future. With that, I would like to hand over now to Anders.

Thank you for the kind words, Carla. And this has not been an easy decision for me, but it's the right one. The last 6 years running public companies, first Com Hem, followed by Tele2 -- there is a very bad sound in the background somewhere. I don't know where it comes from. Please go on mute. Excellent. So I continue. The last 6 years running public companies, first, Com Hem followed by Tele2, have been the best and most memorable in my career. I've had the privilege to work with and meet so many great people, and I'm very proud of what the team has achieved. I spent almost all my career working in companies founded by Tele2's founder and largest shareholders. So for me, this is an extra-emotional decision. Being CEO of companies going through continuous transformation at high speed takes full focus and the highest priority. And after 6 years, it has led me to the decision to take a break and focus on other things in life for a while. There is never a good time to leave a successful company. However, the plans for the coming years are laid and being executed by the team, which should give us room for a transition of CEO without interruption in delivery of our plans and promises to the market. That is important to me. And the reason I flagged to the Board well in advance of making my decision, so succession could take place in the smoothest possible way. I would like to thank the team here at Tele2. You are truly special, all our supporting shareholders, scrutinizing analysts and my very supportive Board. You have all been important to me, and I thank you very much for your contribution to this journey. Now it's time for the next chapter in the Tele2 history to begin. And with that, I hand over to Carla.

Thank you, Anders, and we will now open up the lines for Q&A. Before we do that, first, I would like to remind everyone that we are in the silent period ahead of the Q2 2020 report. So well, we only answer questions that are related to today's announcement. Operator, could you please start Q&A?

[Operator Instructions] We have 3 questions just came through. The first one is from the line of Terence Tsui from Morgan Stanley.

Anders, all the best in the future. It's been a pleasure following your progress at Com Hem and at Tele2. So just a couple of questions. Maybe firstly for you, Anders. I was just wondering why you made the decision now. What was it that prompted you to feel that now is a good time for change? It's quite interesting that the telco sector has been going through a phase of cost-cutting and heavy regulation. Did you find that some of these industry trends are just becoming a bit too tiresome and overburdening? And then the second question is to the Board. So I was just wondering whether there was an option for maybe Anders to have stayed within the Board of Directors, maybe to ensure some continuity, to make sure that the transition and the future strategy could be executed.

Anders, do you start?

Yes. Yes, I can start. So thank you very much, Terence, for your questions and your kind words. So for me, this has nothing to do with the Tele2 or the business or where our industry is. It is -- I think we have a very, very good plan on how to develop Tele2 going forward, which we're now executing on. And I have very good views on where this company is going to head in the future. So this is more a personal decision. And as you may imagine, the job I have and have had for 6 years, that -- in order to do that in the way I've done it, I need to spend all my focus and prioritize that highest in life. Otherwise, I can't sleep well at night and feel that I deliver what I think I should deliver to the company and all the stakeholders. And after having done that for 6 years, I came to the realization that there are other things in life that I've sacrificed. And I think it's time for me to take a break and focus on those things, and you may wonder what are these things. Well, I have a family, which I would like to spend more uninterrupted time with. I love the sea, for instance, so I'm going to spend more time there. And I have other interests, which basically have to -- have been in the backseat for the last 6 years, which I'm going to spend more time on. And then we'll see what happens after that. I see this as a break after having focused very intensely on work for 6 years. And that's the reason for this decision. And I hope that answers your question, Terence.

Okay, the question for the Board. Yes, it's implicitly you say, could Anders stay. I think Anders has just explained that he wants to do some other things. We respect that as a Board. But of course, Anders has not been alone. We have a great leadership team. I have also very good Board colleagues and we're all determined to continue on the excellent track that Tele2 is on. We have, we believe, an excellent new CEO with Kjell, and we will all build on the strategy that has been set. And Anders is also still available to consult, so he's not gone. But we are fully confident that we continue on the track where we are.

Next question comes from the line of Peter Nielsen from ABG.

Congratulations on your decision, Anders, and all the very best for the future. I guess we will have the opportunity perhaps to speak to you before you leave. But at least for now, thank you and all the best. I have a question for the Chairman, please. From the Board's perspective, I mean, you highlighted the integration will come -- is completed earlier than expected. From the Board's perspective, where do you see Tele2 now in the company's strategic development, so to speak? And what are the main attributes you've been looking for in the new CEO? It's obviously replacing Anders, which has been a strong profile within Tele2. So you mentioned that you're now embarking on the next transformation, executing on the SEK 1 billion OpEx cost reductions over the next 3 years. You didn't say anything about returning to growth or other factors. Could you perhaps elaborate a little bit and see where do you see the company now? What have been the main characteristics in the new CEO you've been looking for?

Yes. Yes, absolutely. Thanks. So where we are, and I will later on also ask Mikael to elaborate a little bit on this, our CFO. But so as said, in the Board, we want it all. So we want both the cost reduction, but we also want a little bit of growth, as you know. So it's a combination that we are looking for. That is also what we're looking for when we started to look at the candidates for the job. And we had a great pool, both internal candidates as well as Swedish as well as international. Tele2 is a great company. And a lot of people would like to join us, and that's very positive, and to embark on the journey where we're on. Your question on what were you looking for in the Board. A couple of things. First of all, we wanted to have someone who knows the telco industry with vast experience. Second, we were looking for someone who is -- can be on top of operations. And that's -- as you've maybe seen in the meantime, Kjell has quite a lot of operational experience and is on top of the operations. And thirdly, we want a great leader who can energize the team, who can live the values of Tele2, and who also has a track record in simplification of how to deliver telco services. And from his background, as you've probably seen Kjell has also worked in Telenor. He knows the Nordics market. He has been in very difficult markets and he has a huge amount of experience to build on the strategy and to make even better. Maybe on -- I just said, we will also give Mikael an opportunity to say some words of -- for the next period of the transformation project growth where we're on. So Mikael, can you add on this?