Viaplay Group AB (publ) (VPLAYB) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to our Q4 2021 results presentation. My name is Matthew Hooper, and I'm NENT Group's Chief Corporate Affairs Officer. I'm joined here today for this live stream from our studios in Stockholm by our President and CEO, Anders Jensen, welcome Anders; and by our acting CFO, Asa Regen Jansson, welcome Asa. After presentation of the results, we will focus on the Q&A session and answer as many of your questions as possible. [Operator Instructions] Presentation materials are available from the IR section of our website as usual. So let's get started now. And over to you, Anders, for your presentation.

Thank you very much, Matthew, and a very good morning, everyone. We are actually now already 10% of the way into 2022, and we have kept up the momentum as you have seen from our busy news flow, but let me start with a few words about Q4 and how we ended 2021 with our fourth consecutive quarter of double-digit organic revenue growth. First and foremost, we hit or exceeded all of the targets that we had originally set and then upgraded for 2021. We ended the year with a total of over 4 million paying Viaplay subscribers. This is an increase of 33% or almost 1 million subscribers for the year, an 11% or almost 400,000 subscribers compared to the end of Q3. We exceeded our guidance for 400,000 new subscribers in the Nordics in 2021 by adding 438,000 in total, and we also exceeded our guidance for 500,000 new international subscribers by adding 547,000 in total, after a particularly strong performance in Poland. This sets us up very well as we head into this busy year, and we're making no changes today to the ambitious targets that we set out at the Capital Markets Day in September. Viaplay revenues were up 21% in the quarter and 22% for the full year on an organic basis, with Viaplay now firmly established as our largest revenue-generating unit accounting for 35% of full year group sales. Viaplay's Nordic revenues were up 16% in Q4 and 20% for the year, with our underlying Nordic profits up 31% for the year. We therefore delivered a 9.7% Nordic operating margin in Q4 and a full year margin of 8.8%, which was well above the 7.7% underlying margin in 2020. Our Q4 Nordic profits were down year-on-year as expected due to the planned reinvestments of the savings that we achieved in Q4 2020 into new sports rights and original content. At a group level, our sales also reflected healthy advertising and linear pay TV sales growth, while our profitability reflected the investments into the international expansion, which were bang in line with the SEK 500 million that we guided for. The important thing to say upfront is that more than 60% Viaplay subscriber growth that we have guided for in 2022 is based on some key developments that are unique to our story. And let me take you through them. First of all, the 25% forecasted Nordic Viaplay subscriber growth is based not just on the secular growth in the streaming penetration and subscription stacking, which is still far behind U.S. levels, but also on major additions to our content offering. We aim to add 850,000 new Nordic Viaplay subscribers this year, which is twice as many as last year. And this is based on us having the Nordic and Alpine skiing rights for the first time, the F1 rights -- the Formula 1 rights in Finland for the first time from next month, the Premier League football rights in Norway for the first time from August, and new Men's and Women's Football rights in Sweden for the first time this year. These events have already attracted hundreds of thousands of subscribers on rival platforms, and we'll do the same and more as they move to Viaplay. And on top of that, we have maintained a full Hollywood content offering in terms of numbers of hours, and we plan to add more than 70 new Viaplay Originals this year. Then there is the international expansion, where we aim to add approximately 1.6 million new paying Viaplay subscribers, which is almost twice the number of the new subscribers that we plan to add in the Nordics. Again, there are some very specific reasons for these that are unique to our story and that go well above and beyond the growth of streaming and stacking. We already have considerable momentum in Poland with good direct-to-consumer traction, great partnerships with 3 major distributors, and we will add the English Premier League football rights in August. Most important of all though is that we will enter the Netherlands next month for the first time. And with the strongest ever content offering for a new market entrant, combining our original and acquired programming with coverage of the new Formula 1 season, the Bundesliga, Dart and from August, the English Premier League Football. The Formula 1 races alone attracted a race day TV audience of over 2 million last season. And now that we have a Dutch Formula 1 world champion, with whom we have signed a multiyear exclusive and global content ambassador deal, we are very, very excited about the opportunities with Formula 1. And we have distribution agreements with KPN, Ziggo, and now also T-Mobile. Together, our distribution partners already have most of the Dutch households as customers. Then we will enter the U.K. in the second half of the year with more news to follow about our content offering in the U.K. in the coming weeks and months. So all in all, every reason to be confident in our subscriber growth targets. By the end of this year, we will have over 200 original series on Viaplay, and we'll be showing more than an astonishing 100,000 hours of live sports. This is actually unparalleled in our industry, and, of course, relies on delivery by a very stable and scalable platform, which we have built, invested in, and developed in a very focused way over many years. The uptime or level of service accessibility on Viaplay was 99.97% in Q4, and remained at that level or even higher throughout the year. But we are, of course, very mindful about the remaining 0.03%, given the potentially significant impact on the viewing experience of any interruption during major events. So mitigating this risk is a top priority for me and the whole team. From a revenue perspective, we are also expecting significant traction this year, approximately 28% group growth and 20% in the Nordics. Viaplay is, as you would expect, the main engine of this growth with the Nordic and international subscriber growth to be complemented by upwards pricing adjustments in the Nordics, in particular, given the significant enhancements to our content offering. We have just announced a 14% increase in the premium price in Finland ahead of the Formula 1 rights moving to Viaplay next month. And there is also an additional positive ARPU dynamic in the Nordics as our subscriber growth will, to a greater extent, come from the addition of direct-to-consumer and sports subscribers, both of which are ARPU-accretive. On top of this Viaplay growth, the Scandinavian ad markets are looking stronger, and we expect mid-single-digit percentage growth this year, as prices rise again to more than compensate for falling linear viewing. And our linear wholesale Pay TV subscription business will, of course, also benefit from price increases this year as we add more content and further penetrate our telco and broadband partners' subscriber bases. This is particularly true with Allente. 34% of their subscribers now have our fee channels. And please remember that our free TV channels are now also becoming basic or premium pay TV channels, so that none of our channels will rely solely on advertising revenues. Nordic profits will be up again in 2022 with sales and investments, both growing substantially. The 2021 Nordic margin of 8.8% was significantly better than the slight or limited margin growth from 7.7% in 2020 that we previously guided for. But we do expect the full year margin this year to be in line with, maybe slightly below 2021, given the better-than-anticipated outcome in 2021. 2022 is a year with many contributing factors, but we entered the year with strong momentum, which supports this forward-leaning outlook. And as before, we do then expect the margin to rise each year towards the 15% level that we have guided for in 2025 and that will be almost twice the level of 2020. On the international front, the SEK 1.1 billion-or-so of international revenues this year will come with an international cost base of approximately SEK 2.6 billion. and we expect an EBIT result of minus SEK 1.5 billion, just as we guided for at the CMD, so all in line with our plans. Losses will then come down moving forward as sales grow with a profit for the international operations in 2025 at the latest. Long term, we expect margins of approximately 20% in the Nordics and up to 25% for the international operations. The final point to consider is our joint venture, Allente, where the integration costs were all taken in 2021, and we now expect associated company income of approximately SEK 350 million this year and the same again next year, as the SEK 650 million of synergies hit their full stride. And there is also the sales synergy with 70% of Viaplay subscribers now also subscribing to Viaplay compared to 50% a year ago. I will leave to Asa to discuss the cash contribution later. But please bear in mind that this is a business doing SEK 6.8 billion of revenues a year with a 20% healthy EBITDA margin, also healthy cash flows, leverage of 1.6x underlying EBITDA and attractive dividend payout ratios. So I feel that the equity value is considerably higher than this associated company income would suggest. Summing all of this up, this will be a year of accelerating sales and accelerating investments. Overall, we do expect to deliver a small profit for the group including the contribution from Allente on revenues up approximately 28% to around SEK 16.2 billion. We then expect continued strong top line growth and high incremental margins next year and moving forward, given our largely locked in and inflation-protected fixed cost base. I will now cover off a few other points on Q4 and more generally before I hand over to Asa. Viaplay viewing levels were again very strong in the quarter. We streamed a total of 13.4 billion minutes in Q4, taking the full year to an astonishing almost 57 billion minutes. We premiered 46 originals in the year, 12 in the quarter and now have a total of 102 titles and 152 seasons on the platform. Five of the top 10 scripted shows in Q4 were Viaplay Originals, including the top 3. In fact, 5 of the top 10 shows overall on Viaplay were originals or own productions. The viewing of original scripted drama, unscripted content and documentaries all grew in the quarter. The Women's Handball World Championships were held in Spain in Q4, with local viewing boosted by Norway bringing home their fourth gold medal and Denmark taking the bronze. The Bundesliga, the English Premier League, Winter Sports and Formula 1 were the most popular sporting events overall with the addition of the Europa and Conference League coverage also ensuring that we had more UEFA football than ever. We introduced a new mid-tier priced package in Sweden for the winter sports fans specifically, who have previously watched the sports rights on public service channels. This has worked very well and brought in a good number of new subscribers and will add over time to the positive ARPU development. As promised, the Viaplay sales growth in the Nordics exceeded the subscriber growth and that will continue moving forward. Our primary competitor followed our price increases, which further reinforces the point that streaming services offer tremendous value for money. New competitors are entering the market, as expected, and this just adds to the stacking and popularity of streaming. So it's complementary rather than substitutional. Our own direct-to-consumer churn levels for sports and nonsports subscribers declined year-on-year and quarter-on-quarter, with conversion rates remaining high in both categories. Industry experts estimate the total streaming subscriber volumes in the Nordics will grow approximately 16% in 2022 and 11% in 2023. So we are set to gain market share. We have also struck a number of new and extended deals with our distribution partners and B2B sales of the TM package continue to drive our performance. We've posted a video on our website this morning with an interview that I did with our Chief Commercial Officer, Kim Poder; and our VP of Viaplay International and Commercial, Andrea Sahlgren, talking about, among other things, our key distribution partnerships. So when you have a few minutes, please do take a look at that video. We have had a long and successful history in the Nordics of building our linear channels and Viaplay together. This enables more traditional subscribers to get used to streaming, while also watching our sports content, in particular, on linear channels. It is very likely that we will take the same approach in some of the international markets where we have very strong sports offering. And this will also allow time for the development of capacity in the local network infrastructure. Poland has started very well and accounted for the majority of the international sub base at the end of the year. We have good direct-to-consumer traction, especially with the recent addition of the NHL Ice Hockey and KSW Mixed Martial Arts coverage. Our partnerships with UPC, Vectra and Play are all working very well. SVOD penetration remains low in Poland. So there is plenty of scope for further growth. This month, we are adding the IndyCar Motor Racing coverage and then in August, the English Premier League, and Formula 1 to follow in March next year. And we will be streaming our first Polish original dramas and documentaries later this year. The Baltic sub base is gradually growing as we add more content, and the partnerships with Tet and [indiscernible] are also working well. Overall, international revenues of SEK 55 million for the year reflected the early stage of development and the fact that subscribers were still on introductory offers. Then we launched in the U.S. on the 15th of December as planned on the Comcast's Xfinity and Flex platforms, which are available in 50 million homes. We are offering approximately 1,500 hours of Nordic content from our own portfolio and third-party broadcasters. We have only just received the first subscriber numbers. So nothing was included in the Q4 numbers. Early signs are encouraging. We are in the beginning of our journey, and we will see an acceleration in the growth as we add new distribution partners and then, of course, launch our own app in due course. But do please remember that the U.S. accounts, big as it is, for 10% of our 6 million sub target for 2025, and we need less than that to start to make good money, of course. The final point that I would like to make is about our progress when it comes to integrating sustainability into all of our operations and planning. We will publish our new 5-year sustainability strategy and road map in April, together with climate-related science-based targets and various sustainable development goals. This will also be accompanied by the publication of our first task force on climate-related financial disclosures report. We are committed to being the most diverse and inclusive company in the entertainment industry and to creating and delivering the best content in the most responsible and sustainable way. Our work to date has led to our inclusion in both the world and European Dow Jones Sustainability Indices and our recognition as a top-rated sustainability performer by Sustainalytics, who ranked us 10th out of 299 global media companies. We've also recently been included as a best practice leader in the latest Gender Equality Index Report by European women on boards and ranked in the top 10% of European companies for gender equality in corporate leadership. This is, of course, great to see, but we have much more to do. We have learned a lot from the pandemic about sustainability. First and foremost, about the priority of keeping our people safe and well inside and out, both physically and mentally, when working remotely and efficiently from home or more flexibly in our new hybrid and collaborative office setups. Secondly, we have learned that the shift to streaming has accelerated and it is here to stay with consumers of all ages demanding more and more diverse and high-quality content. And thirdly, there is so much more that we must do to positively impact the environment and society. That's it for my initial comments. I will now hand over the call to Asa for her comments on our final financial performance and position. Asa, over to you.

Thank you, Anders, and good morning, everyone. Q4 was another very busy quarter in which we made substantial progress on a number of fronts. Our 12% organic revenue growth was impacted by relatively minor positive FX effects of plus SEK 11 million, and there was also a minimal positive FX effect on our profits. Nordic revenues were up 11% on an organic basis and reflected the Viaplay growth in particular. Our operating profits before associated income and items affecting comparability totaled SEK 121 million and included a negative impact of SEK 219 million related to the international expansion of Viaplay. Our underlying Nordic profits, when excluding the international expansion, were down year-on-year as anticipated, with a margin of 9.7%. This reflected the reinvestment of the majority of last year's Nordic cost savings into the new sports rights and original productions in order to drive our growth moving forward. Our Nordic OpEx was up 15% year-on-year. As Anders mentioned, we have previously guided for some but limited full year Nordic margin upside in 2021 when compared to the 7.7% like-for-like level in 2020. We outperformed this expectation and delivered a full year margin of 8.8%. Moving forward into this year, we had previously guided for a stable margin progression in the Nordics. We now expect this year's margin to be in line with or slightly below the 2021 level given the better-than-anticipated outcome in 2021. The Nordic margin will then rise in 2023 and onwards to reach approximately 15% in 2025 at the latest. On the international front, we delivered Q4 and full year's results almost precisely in line with our guidance and are making no changes to our expectations for 2022 and onwards. We had no impact from IACs this quarter and no results for discontinued businesses following the sale of the studio businesses in September. The remaining studio businesses have been rebranded as Viaplay studios and focused on producing original content for Viaplay. We, therefore, expect limited external sales moving forward, and as we mentioned last quarter, may well stop disclosing the sales line separately. Our Allente joint venture has continued to perform well and as expected. They took the remaining part of this year's SEK 700 million of post-merger integration costs in Q4. And as indicated on our Q3 earnings call, Allente delivered a total net income of under SEK 100 million for the year. This included the approximately SEK 330 million of annual PPA amortization charges. The company distributed a total of SEK 1 billion of cash dividends in 2021, of which we received SEK 500 million, including SEK 125 million in Q4. Moving into this year, when the SEK 650 million of synergies are fully impacting, we expect to receive approximately SEK 350 million of associated company income and SEK 400 million of cash dividends. The larger part of the cash dividends is expected to be paid in the second half of the year. Allente had a net debt of SEK 2.16 billion at the end of the year, which is 1.6x its full EBITDA before IAC of SEK 1.33 billion. Moving on to our net interest and other financial items, which totaled minus SEK 22 million this quarter. It included some positive impact of exchange rate effects on revaluation of financial assets and financial income from cash deposits. These line items totaled minus SEK 98 million for the year, which was in line with our guidance to approximately SEK 100 million. We expect the same levels in 2022 as we do not foresee any major changes in the funding profile. Our effective tax rate in Q4 before IACs and when excluding our share in the net income from associates amounted to 17%. The full year rate came in at 21.8%, also when excluding IACs and associated company income, which was in line with our guidance for approximately 21%. And we expect approximately the same rate for 2022. Our cash flow from operations amounted to SEK 318 million in Q4 and included SEK 125 million cash dividend from Allente. We reported a SEK 391 million positive change in working capital in Q4 and a full year negative change in working capital of SEK 817 million. This is considerably better than the full year negative change of SEK 1.3 billion that we had previously anticipated. Approximately half of the almost SEK 500 million difference was due to improved cash management throughout the quarter and the other half of the difference related to changes in the timing of our ongoing investments in new sports rights and Viaplay Originals. These will reverse during 2022. However, we expect to manage this within our previously provided 2022 guidance for a negative working capital change of approximately SEK 3.2 billion. This outlook reflects the ramping up of our investments in content and international expansion. Our net operating cash flow for the quarter amounted to SEK 710 million. CapEx was per previous quarters, with little change in investing or financing activities and no net change in our borrowings. We therefore ended the year in a SEK 2.1 billion net cash position. Our short-term debt of SEK 0.8 million comprises a bond that matures in May this year, and our long-term debt was unchanged from September at SEK 2.5 billion. Our financial net cash of SEK 2.4 billion included SEK 5.7 billion of cash and cash equivalents and SEK 3.3 billion of total financial borrowings excluding lease liabilities and sublease receivables of SEK 364 million. We are operating with a net cash position after the SEK 4.35 billion equity raise a year ago. We have a balanced and flexible range of borrowing facilities in place, including long-term corporate bonds, a currently unutilized short-term commercial paper program and undrawn revolving credit and overdraft facilities to make best use of moving forward. In summary then, we have made great progress on many fronts in 2021. We have seen a continued recovery from the pandemic and an acceleration in the shift to streaming. We have a clear strategy, plan and targets that will create substantial and sustainable value, and we are well on track to deliver on these. We have streamlined the group, are fully funded, and have a disciplined capital allocation approach when it comes to how, when, and where we invest. 2022 is a big year for us, and we are looking forward to it. That is it for my comments, so now back to you, Matthew.

Great. Thank you very much, Asa, and thank you, Anders. We're now ready to take your questions.

[Operator Instructions] So looking at the first questions. We have 1 coming through the Message Board here, which is for you, Anders, which relates to the subscriber growth. And the question is, how much of that came from the U.S., and how much came from Poland? I know you answered the first question earlier, but we'll take it again.

Well, I think it's fair to say that Poland was slightly bigger than the U.S. So we should remember that we only launched in the U.S. towards the end of the year with a short free trial period and limited to Comcast platform. So it's early days. So humble beginnings in the U.S. is to be expected, but we don't have any numbers to disclose at this point. Q4 was driven by Poland, which is very good, which is exactly what we want to see, continued strong momentum in Poland, building up. We are now out of free trial periods in Poland. So it's payment from day 1 for all new subscribers, and that sets us up for a stronger-than-anticipated start in 2022.

Great. Excellent. Thank you very much. Then we'll have the next question will come on the phone line, and that is from Mikael Laséen at Carnegie. So Mikael, please go ahead and ask your question.

I have a few questions, hope it's okay. The first one is about the Winter Sports offering that you kicked off here in November '21. And just wondering how that's developed, if you can talk about that?

Yes. The Winter Sports has started very well. Let me start by saying that I am very, very proud of the editorial approach that we have taken and the investments that we made in the new studio, a fantastic lineup of hosts and experts that has received a very good welcome, I must say. It's not easy to take over a sports right that has been so associated with public service for so long. So I'm very proud of that. And it is also reflected in the numbers. Good viewing on the linear channels. We have taken a generous approach to the Winter Sports, to have a lot of the content on our linear channels to allow for a gradual move to Viaplay. But the introduction of our mid-tier package in Sweden, which is targeted at those who are very interested in Winter Sports, but don't necessarily want to pay up to also watch Premier League and other premium sports content. That has gone very well, better than anticipated, and is then driving sort of accretive ARPU growth moving into 2022. So in summary, I'm very, very happy with the start for Winter Sports. I'm proud.

It was about the sort of mid-tier package, the medium package. What sort of impact did that have in Q4? You had the introduction offers, I noticed.

That's right. We had an introduction offer. So the revenue and ARPU impact is quite small in Q4. But some of the growth that would have come normally in the TV series and movies package now moved to the mid-tier package. So even if there was a short introductory offer, where you paid less, so you pay the TV series and movies package, you pay from day 1. So the free trial period was not there. So it was slightly accretive to ARPU already in Q4, but will be much more visible in the ARPU development in 2022, and that was very positive.

Okay. Got it. And just a question on the direct-to-consumer subscriber base in the Nordic region. Can you tell us how much that is approximately?

Yes. In Q4, we saw a different balance than we saw in Q3 with more direct-to-consumer growth coming back, but it's still quite B2B driven in the Nordics, which are subscribed to the very, very fast maturing markets. We are well over 50% penetration now in the markets. So it is expected in the markets where we are well penetrated that a lot of the growth will come from B2B also going into '22. But there is a difference in the sense that we have new sports rights that are direct-to-consumer driven in the Nordics, Formula 1 in Finland, Premier League later in the year in Norway, and a few other things coming in Sweden. So the mix will tilt towards direct-to-consumer as a consequence of this. But in a like-for-like scenario, B2B continues to be quite dominating. And we see that also very clearly in our discussions with our distribution partners that the interest yesterday to pay for linear channels is now moving over for tomorrow to be paying for the access to streaming services in their entertainment packages. And that is a shift that is very much in line with our expectations and how we want to progress going forward. So B2B dominated in Q4, a bit stronger on direct-to-consumer, and then stronger on D2C in '22.

Okay. Can I ask one final question on the international part?

It would be very impolite to say no. So absolutely.

Okay. This is just about the most important lessons you have from the launch so far in the Baltic Iceland, Poland and the U.S., and what you can say about the stock in the Netherlands. So what we can expect for Q1 and Q2 there?

Yes. It's a very big and broad question. There's a lot of learnings from 2021, Baltics and Poland. The difference between Baltics and Poland and one of the key learnings is about timing, to launch in the beginning of a season to get the right traction in the Baltics. We launched for all sorts of good reasons, but it was towards the end of seasons and didn't really drive the interest in the same way that we saw in Poland. So timing is important. Then from time to time, we'll have to choose to launch outside that ambition for technical and timing reasons, but that is a key learning. To really connect with the local mentality. We came in again to the Baltics with a more sort of outside-in perspective. In Poland, we were very local in our tone from day 1 that resonated much better with the local audiences. So we take these learnings with us, and as we have now started our campaigning in the Netherlands, we are very local in our tone. We have a fantastic cooperation with Max Verstappen that would be all over the Netherlands in the coming weeks and months. And we've started to take orders from February 1st. You can sign up to our introductory offers in the Netherlands. We will start streaming from March 1. So we don't have the service up and running. But I can say that I am very, very happy with the sales so far. So you should expect a visible impact from the Netherlands already in Q1.

Good. So I think that's questions from Mikael. Just, Anders, 1 follow-up on that, if I may, which is the structure of the initial offering in the Netherlands, because we know that's already out now and perhaps we could just share this with this audience.

Yes, unlike Poland, we have opted out from a free trial offer in the Netherlands given the strength of our portfolio and given the maturity of the market. We also know that there is a willingness to sign up to get a discount. So we have this introductory offer where you can get a full year of Viaplay for EUR 99, to be compared with EUR 13.99 per month. So it's a very good offer for those who are very dedicated to watch Formula 1 and then get Premier League as a bonus later in the year. And that package is doing very well for us. And there may be some other introductory offers at launch, but I'll save that for March 1st.

Another cliffhanger.

Another cliffhanger. That's what we do.

Good. Okay. Then we'll go back to the phone lines next. So the next call is from Tom Singlehurst at Citi. So Tom, please go ahead.

Tom here from Citi. A couple of questions. Actually, maybe starting with the Netherlands. I appreciate Lewis Hamilton wouldn't have been thrilled with Michael Masi and what happened at the end of the season, but it's obviously a great start for you guys. I mean, I'm just wondering whether the comment about making sort of linear channel capacity available for the launch, whether by that you're trying to indicate that we already should be expecting very material numbers in terms of sub-additions in that first quarter? Any comments on that? And specifically, what tips you over the edge with opting to have that additional linear capacity alongside the SVOD offering, would be very interesting? And then the second question, I mean technically, you've got this slight -- the margin guidance where you say it might be slightly below last year. I know you've just delivered a slightly better margin last year. So maybe it's just rounding and the effect of that. But it does strike me that you have also increased the number of originals you're planning. So I just wonder whether there is any incremental investment going in, in 2022?

Thanks, Tom, and a very good morning. Linear channels in Netherlands is a very interesting topic to discuss. We have assessed the potential in Netherlands and how we should connect with as many households as possible, as early as possible. Also recognizing what a big deal Formula 1 is in the Netherlands. And many of the subscribers that will move over to Viaplay will come from Ziggo, who had the rights up till recently. They will come from KPN, who have not had access to the rights before. Many of those households have had a sort of a linear approach to consuming content. We want to move them over to streaming over time. But by adding a linear channel as an available benefit for those who sign up to Viaplay. So very clear, we will not sell these linear channels on a stand-alone basis. You need to have a Viaplay subscription. But you will then, through these partners, potentially have access to these channels. We are in discussions, and this is still being massaged, but I think it's important to discuss it already now because there is 1 important factor that we need to consider and that is, again, the interest in Formula 1. And if we get massive streaming on Viaplay at the first race in March, we put a lot of load on the local infrastructure. And while we are upgrading with our CDM partners and while our partners in the Netherlands are ready for a lot of traffic in their networks, we need to be mindful about the user experience. And we don't want to take unnecessary risk and put pressure on the networks that may spill over to other elements of the Dutch connectivity. So it is both a customer friendly approach and it's also a prudent approach when it comes to the pressure on networks that we're taking. And yes, I do think that this will drive additional interest in the subscription takeup in the Netherlands. And this is also confirmed from our partners that this is a good way to get going. I hope that answers your question. We will also consider this in other sports markets going forward. It could be something that could be interesting also in Poland, as an example. When it comes to the margins, we came in slightly higher than we originally anticipated and guided for. When we now say that we will come in, in line with or slightly below, it's actually an upgrade to what we've said before. And we are confident to do this because we are slightly ahead of our schedule. We have seen good traction in our margin driving new packages like the mid-tier package in Sweden. And we are fully financed. We have a clear line of sight to what we want to invest in. The reason why we're not sort of really saying now we are upgrading is that we don't want to take away the opportunity to invest where we see opportunities. But we also want to, like I also said before, we want to stay very, very disciplined on how we invest and that's why we are remaining to our guidance to stay in line with year-on-year despite the higher outcome in 2021. I hope that answers your question, Tom.

That's very clear. And on the originals, I think you've gone from 60-plus to 70-plus. I mean I guess that's largely captured in the working capital, but is there any incremental investment associated with that going through the P&L?

No. There is nothing that sort of drives cost in a way that we don't cover within sort of the total investment. Some of it goes through working capital, like you say, and that we are well covered for, like I also said. Then we are shifting what I would describe as Hollywood money into originals money. So some money is repurposed to be able to drive additional push in our originals. We've come a slight further than we anticipated in our new markets. We will launch original content on Viaplay in both Poland and the Netherlands later this year. So the 70 number is a number that I'm very confident in and a number that we will strive to actually increase later as well. But it's all covered within the cost estimates and the working capital estimates.

Thanks very much, Tom. And as you know, we amortized the cost of those originals over the 6 years, so they are spread out, as you know. I think we now have a question speaking of financing for Asa, actually. And that's regarding the bond that falls due in May this year, the SEK 800 million. And the question is what our plans are in terms of the refinancing of that bond given the wide range of facilities we have available to us at the moment?

Yes. We do believe that we have a good and prudent funding profile as is. And although we have a very strong position, we are looking into replacement of the bond that matures in May.

Okay. Great. Thank you. Then we have a question on the Message Board from Klas Danielsson at Nordea. This is one for you, Anders, I think. Could you outline your process in how you calculate the targets in the international business and your visibility there? You touched upon viewership levels and sports rights earlier. Is that really how you're thinking about it in terms of setting those targets?

Well, it's a very good question. There's a lot of thought and analysis that goes into the target setting. It's a question of penetration in the market, it's a question of quality in the networks, it's a question of the historic viewing of some of the rights that we take over, and then we make a discount to it given that we come with a new technology into the markets. And we set targets in line with that. And then we try to be not overly ambitious, but be a bit sort of mindful about the fact that we are reshaping some of these markets. But you're right, Klas, to assume that historical viewing and expected viewing growth is a very key component in the target setting. And also, of course, like we alluded to earlier, the known number of subscribers for Formula 1 in Finland, Premier League in Norway, and of course, we have an ambition to deliver a better coverage. Even though it has been very well covered in the past, we have higher ambitions and that should yield growth in the future.

Great. Okay. And there was a second part of the question from Klas. Could you touch upon how we should expect ARPU levels to develop in Poland? How the share of B2B, D2C is developing and whether this provides a sort of map, if you like, or a template for the Netherlands?

Yes. We started very B2B driven in Poland, a very conscious decision to get penetration in a low penetrated market. Then we had a plan to add sports rights that had a slightly different profile, which we accomplished with the KSW fighting package, which used to be a pay-per-view offering in the market. We moved it to Viaplay and then moved a lot of direct-to-consumers over to Viaplay subscribing to Viaplay instead of paying pay-per-view and we removed the free trial offering, which means that we're moving into 2022 in Poland with a completely different profile on revenue generation than we had in the early months of the launch in Poland. And this is all very much in line with the ambitions that we had to get a lot of attention in the market, start to move up sort of the ranks in direct-to-consumer awareness with the right kind of rights, and then supplement that with Premier League later this year, and of course, more original content that drives more awareness among D2C. So the shift will drive more towards D2C, even though it will be a B2B market for quite some time. But the revenue generation and the ARPU will be positive.

Very clear. Okay. We'll go back to the phone lines now. And next up, we have Jamie Bass from Berenberg. So Jamie, over to you.

Just 2 for me, please. The first one is you mentioned the inflation protection that you've got on your fixed contracts. Could you just confirm that in the International segment any other new contracts you signed of importance with the U.K. I know you can't give too much detail on it, but if we do see significant inflation in the next couple of years, are you fully prepared to turn that from the International segment? And then also with the price increases in the Nordics, could you just give a bit more detail? So you've obviously got the price increase coming through in Finland, you've got the new mid-tier in Sweden, what are the other price increase expectations across the rest of the Nordics for this year and the sort of timing for that?

Sure. Jamie, thank you very much for your questions. If we start with the inflation, which is a big theme, of course, these days. All of our sports rights that we have across the Nordics and the international markets that we have built in to our long-term outlook and our 5-year plan and our guidance are known costs. We don't expect any inflation in addition to this. The only thing that could happen is incremental costs if we decide to add additional sports rights, but that will then, of course, naturally come with incremental subs upgrades as well and opportunities that will drive further growth in those markets. And we've been fighting very hard to make sure that there is no cost per subscriber in neither sports rights, nor Hollywood contract. And that has been a big shift over many years in our industry. And now that we see future with potentially more inflation than we have been used to, this, of course, is a very, very strong part of our position. We also have a fairly long line of sight and fixed costs on our originals ramp-up that takes us well into 2024 before any inflation may hit us. As a company, we are, of course, subject to inflation in the society at large. That will sort of then translate into labor cost, as an example, I would say, in general and in the tech segment in particular, which is something that we are sort of preparing for and have built in some cushions around in our plans. But the big cost drivers, content, has been taken care of for the majority of the strategy period. And that, I think, in the current market landscape, that is a very strong position to have for a company such as ours. On the Nordic price increases, as you said, we have announced Finland, 14% up, EUR 5 on the Viaplay total package when Formula 1 comes in, in March. We've introduced a mid-tier package in Sweden. The next big theme will be Norway, where we, in August, take over the Premier League that is priced at a considerably higher price point than our current sports package in Norway. So there will be a price increase, yet to be determined the size of, on the Viaplay total package. And I wouldn't rule out that we would probably also introduce a mid-tier package in Norway given the breadth of service we have, especially with the Winter Sports, which is, as you probably know, a very, very big thing in Norway. So Norway will be sort of a major driver for mixed benefits and ARPU increase this year. Whether we will do additional price increases in any of the international markets or Sweden or any of the other Nordic markets remains to be to be seen. We're following and monitoring the market landscape carefully to make sure that we take full advantage of our pricing power, but we don't want to price ourselves out of the market. But Finland and Norway and new packaging will be significant drivers.

Okay, Jamie, thank you very much for the questions. Now we'll go back to the Message Board again. And this is more of a generic question, but a very important one, which is what are the biggest challenges in the new mature streaming markets that we face? And that is basically the U.K., the U.S., and I think we've dealt with Netherlands. And tied with that is the question, how will the content offering develop in the U.S. given the number of hours we've got right now, the launch of the app, the broader distribution, how will that look moving forward?

Yes. I think we talk a lot about the challenges in the more mature and competitive markets, but we should not forget the benefit of going into a mature market because talking about streaming and content in the mature markets, is, of course, this much more resonates with where the audience is and how educated they are, so to say, when it comes to streaming. So if our content offering is targeted at a specific target group and we talk about streaming, they know what it is. We don't have to educate around the technology, we don't have to do a lot of tests on the local infrastructure because it's there in the U.S., it's there. So our niche offering in the U.S. around Nordic content, where we have a lot of new exclusive content coming into the U.S. that hasn't been there before, we know there is a target group. Yes, it's not the biggest target group in the U.S., but it's big enough for us to make money and they know what we talk about from day 1. So it's a balance between the 2. U.K., I would say the same, slightly below on penetration compared to the U.S. And we do have some broader plans in the U.K. when it comes to sort of Nordic drama, but we also have a decent slate of international dramas that will also stream on Viaplay in the U.K. So it's a mix between the 2. And then let's see how we deal with sports in the U.K. in the future.

Great. Okay. Thank you very much. And now a question for you, Asa, which is related to Allente and our joint venture there. And the question really is about the cash flow profile there. So in terms of dividends for this year, we heard what you said earlier about reiterating the guidance, but when should we really expect those dividends to flow during the year? And are they on track with the full synergy potential for 2022?

Yes. I can confirm the last part. They have made a tremendous job with both the rebrand and also the integration work. Now in December, they finalized the satellite migration, which will enable a full year of cost synergies in 2022 of the SEK 650 million that is anticipated since previously, but to compare with this year of approximately SEK 400 million of realized cost synergies. So I would say that they are definitely on track. When it comes to the dividend, the plan isn't fully set, but we anticipate to receive the larger part the second half of this year.

Great. Very clear. Thank you.

I think just to add to that, Matthew, I think what you also say, Asa, they've done a great job. We must remember that they've navigated a merger between 2 companies in a number of markets during a pandemic. And the satellite migration is done. It has been fairly smooth, not without challenges, but fairly smooth. So as I also said in my remarks earlier, I think, Allente deserves sort of the right kind of appreciation in our equity story. It's a good part.

No, absolutely. And having 70% of their subscribers now having a Viaplay subscription is obviously a great, great momentum as well. Good. Okay. So we'll go back to phone lines again. So the next question comes from [ Fuentes Forstmeister ] at SEB.

So a lot of them have actually been answered. But I want to come back to the impressive performance in the Nordics in the margins. Like this seems to be efficiency here on the cost side. Can you just give me like some color on what progress you're making -- or what strengths you're having there and why you think that is sustainable, so to speak? Because I think it's really the core of the business and it's very important that you show the strength there on margins.

Yes. Thank you very much for that question, a very important one. I think one of the drivers that sort of allowed us to overperform on our margin in the Nordics is driven by the fact that we've learned a lot throughout the pandemic on how to manage cost and what cost that will flow back, and what cost that will actually be part of the new, new, so to say. And it is about efficiency. It is about making sure that we don't spend time, money and efforts in areas where we don't need to. Obviously, travel is a good example, not the biggest cost driver, but a good example, nonetheless. There are other bigger ones that we see ourselves being more efficient around in '22 and onwards. There has been some fluctuation in sort of the more content-driven investments, but nothing that will impact our ability in 2022 to continue to drive this positive momentum around margin. And if there is any ambition, of course, that we have is to be able to say that we have fully invested in our growth in Nordics and International, but we managed to pull the margin upside closer in time. That, of course, increases the attractiveness of the sort of the growth value hybrid that I think our company is becoming over the coming years. So this is an important part. And it's about cost control.

Okay. Thank you very much. We have one question left. [Operator Instructions] But the one remaining question I have at the moment, Anders, again, for you, relates to this new Max Verstappen deal. Now I mean, obviously, that's built a long way on the Formula 1 race, and obviously, we've seen him gain an extraordinary profile internationally in the world championship and you're going to push that further. When we think about that in terms of content origination and what could be done with this 100,000 hours of live sports every year, I mean how ambitious can we be here about what we do on the sports content side?

Very ambitious, I would say. I think the cooperation with Max is the first of a long line of plans that we have to extend our profile in sports above and beyond the actual events in the races around the pitch and to work with these profiles and let them connect with their audience. There are, of course, fans of the sports, but increasingly also fans of the persons, right? And to use various platforms, including social media, to drive interest and build up interest for the sports rights in the future is probably the best way to ensure revitalization and renewal of the sports rights into younger demographies by working with these fantastic profiles. And Max is a great guy, and we've be shooting long days of commercials now and starting to do the documentaries together with him and his family, and it's going to be fantastic content, exclusive to Viaplay. It's going to be fantastic for Max and his brand. And it adds to the value of the Formula 1 properties. So more of that to come, for sure.

Great. Okay. Well, thank you very much. I think that's it actually on the questions now. So thank you all very much for your time today. We're going to be almost to the minute an hour here. So it's been a great hour. I hope it's been very useful for you. That does conclude the Q&A session. We really appreciate the level of interest. Overall, we will be hosting digital roadshow meetings today and tomorrow and attending various conferences moving forward. So we really look forward to meeting as many of you as possible, and hopefully, face-to-face in as well. As ever, please do come and talk to Joel and me if you have any questions or requests. But that's it for today. I hope you've enjoyed the show. We look forward to continuing to keep you updated on our progress moving forward. So goodbye for now, and see you soon. Thank you.

Thank you. Have a great day.

Thank you.