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

Good morning, everyone, and welcome to our Q1 results presentation. My name is Matthew Hooper, Chief Corporate Affairs Officer. And I'm joined here today for this livestream from our studios in Stockholm by our President and CEO, Anders Jensen; and our acting CFO, Asa Regen Jansson. We are making some changes today, and we will have much shorter presentations from Anders and Asa so that we can focus on moving to your questions as quickly as possible. [Operator Instructions] Presentation materials are available from the Investor Relations section of our website as usual. So let's get started. And first of all, over to you, Anders.

Thank you very much, Matthew, and a very good morning, everyone. Let's see how short I can make this, but I will do my best. Q1 has been another busy and very eventful quarter for us. Our momentum has accelerated, and we have announced some big headlines today that mark us out from our competition, both locally and globally. The expansion of Viaplay in the Nordics and internationally has added 1.6 million paying subscribers in the last year. That is 52% increase. And we had almost 4.8 million subscribers at the end of March. We added 778,000 subscribers in Q1 alone. So the base has grown by 19% in just 3 months. A year ago, we had only just launched our first international operations outside the Nordics, and now we have over 1.2 million subscribers and are already more than halfway towards our year-end international subscriber target. Given that over half of our 1.2 million international subscribers came from the Netherlands, where we only launched at the beginning of March, you can see just how successful that launch has been. We have achieved high awareness levels already. And both our F1 coverage and the Lion Unleashed documentary about Max Verstappen were in our top 10 overall Viaplay titles in Q1. We have also already announced our first Dutch original titles. The partnerships with Ziggo, KPN, T-Mobile and DELTA are all working very well. And we have seen a good combination of D2C and B2B sales. The technical delivery and pricing strategy have both worked well. We are, of course, aware that there's a lot of hard work ahead of us to firmly establish Viaplay in the Dutch market and to win the respect and trust of the Dutch audience as we must do in all of our new markets. The Nordics also contributed well, in line with our expectations, adding 117,000 new paying Viaplay subscribers in Q1. That means that we have added 429,000 subscribers in the last year, an increase of 14% and ahead of the estimated market growth. The addition of the exclusive winter sports coverage in Norway and Sweden and the Formula 1 rights in Finland, both for the first time, have contributed to that growth, which will accelerate in the coming quarters as more of the rights that we have acquired come on stream. We are not changing our 2.2 million year-end international subscriber target at this time as we want to see how the Dutch base continues to build and how the next phase of growth plays out in Poland. And remember that we will add Premier League rights from August in both Poland and the Netherlands. Then we will launch in the U.K. in the second half of this year, where our ambitions are rising as we have added a slate of winter and other sports that will broaden our appeal, including yesterday's announcement of the NHL ice hockey and the KW martial arts rights. What we are changing today is our Nordic Viaplay subscriber growth target for this year, raising it from 4.3 million to 4.8 million paying Viaplay subscribers. This reflects the new deal that we've signed with Tele2 in Sweden where Viaplay and the V-channels will now be present in all of the Tele2 new pay-TV packages. And Viaplay will be offered together with the Tele2 Play+ SVOD service later this year. This is all about future-proofing our business and addressing an even larger market. It will not change our revenues this year as we are effectively moving payments from linear channels to Viaplay, but it sets us much better for the future to benefit from and contribute to Tele2's growth. From a revenue perspective, this was our fifth consecutive quarter of double-digit organic revenue growth. The main driver was Viaplay, where revenues were up 26% on an organic basis, with the Viaplay Nordic revenues up 17%. The international revenues were, as expected, fairly low, given that we have only just launched in the Netherlands. The revenue growth will accelerate now as we get a full quarter's benefit, of course, and then move to the higher price point in August. Viaplay accounted for 39% of our sales and is clearly now established as our largest revenue-generating unit. This is why we're taking the natural next step of proposing to the next month's AGM that we will rename NENT Group to Viaplay Group. Our 28% group revenue growth and 20% Nordic revenue growth targets for 2022 are intact. And the revenue growth will accelerate as we move forward this year, in H2, in particular, given all the sports rights coming onstream, anticipated price rises and the ongoing expansion of the international operations. Please remember that our Nordic subscriber growth will, to a greater extent, come from the addition of D2C sports subscribers, which will be ARPU-accretive. I have commented on our Viaplay revenue growth, so let's move over to our advertising revenues now, which were down roughly 1%. This primarily reflected lower advertising market shares due to the Winter Olympics being shown on rival commercial channels, a trend that we expect to be reversed in the second quarter when we will show our exclusive coverage of the Ice Hockey World Championships from Finland. The Ukraine crisis is, of course, impacting overall market sentiment, but we have now signed almost all of our annual agreements at higher prices with stable volumes. So we're not changing our outlook for a mid-single-digit growth for the full year as price -- increased prices continue to compensate for falling linear viewing. We have merged the studio revenues into the linear subscription sales line as it was simply too small and will get even smaller as we focus on productions solely for Viaplay. The 4% organic revenue growth for the combined revenue line will accelerate further during the year given the anticipated price increases on the linear channels as the new sports -- new rights -- sports rights come onstream and we further penetrate our telco and broadband partner subscriber bases. The new Tele2 deal plays an important part here, of course, as the revenue that we get from them is now reweighted from linear subscription revenues to Viaplay revenues. This will reduce the linear subscription growth for the year to between 10% and 15% rather than the 15% to 20% we expected previously while increasing the Viaplay growth by at least the same amount. When it comes to our profits, our Nordic profits were up 29%, with a 7.9% margin. This was better than expected, and we have reiterated our full year target for a stable or slightly lower Nordic operating margin when we compare to the 8.8% level we had last year. The international losses were bang in line with our expectation, and there is no change to the full year expectation of approximately SEK 1.5 billion of international EBIT losses. Then we have the anticipated Allente full year contribution of approximately SEK 350 million and the SEK 595 million one-off IAC from the Danish court case settlement that we received in Q1. The Nordic operating margin is then expected to rise when the international losses come down gradually in 2023 and beyond as we track towards our 2025 margin targets. Now I would like to focus the rest of my talk here today on the -- on a few questions of what makes Viaplay different from other subscription-funded streaming companies. Well, we are a very different animal in the streaming jungle. And I would like to highlight 3 particular points of key differentiation. First of all, our Nordic growth runway based on specific events that are unique to our story and not just the secular growth in streaming penetration and subscription stacking, which is still far behind the U.S. levels. We have major additions coming to our content offering and sports, in particular. We have already added the Nordic and Alpine skiing rights in Sweden, Norway and Finland and the Formula 1 rights in Finland. We will then add the Premier League football rights in Norway for the first time in August as well as Swedish Men's national team football and Sweden's Premier League women's football rights in Sweden this year. So the list goes on, but these events have already attracted hundreds of thousands of subscribers on rival platforms and will do the same and most likely more as they move to Viaplay. And on top of that, we have maintained a full Hollywood content offering, with even more exclusive new series by signing new and extended partnership deals. And we have already premiered 13 out of the 70 new Viaplay Originals that we will launch this year. So this combination of live sports, local originals is very compelling and a very key differentiator for us. Then secondly, there is the international expansion where we have only just started to penetrate the markets that are themselves in many ways at the beginning of their SVOD journey. So there is a lot of room for growth. And again, there are some specific reasons for this that are unique to our story and that go above and beyond the growth of streaming and stacking. We are not operating a one-size-fits-all strategy here, but we tailor our offerings to each market, which you can see has worked very well in all of our markets and now most recently in Netherlands, in particular, where we have combined a very strong sports offering with unique content deals with Formula 1 world champion, Max Verstappen and others, content from other streaming companies like Starz and hayu, Hollywood content and, of course, our own original content. Poland has also worked very well, and please remember that we need relatively low market shares in order to have a very successful business in these markets. The U.K. is a case in point here where you can see that we are developing a hybrid model by combining our -- the offering of our own and third-party Nordic content with sports. And thirdly, underpinned both of my first 2 points are our B2B Viaplay distribution partnerships. We now have these in place with all of the major Nordic players and have negotiated new long-term innovative deals with all but Telia, who we are talking to now. Roughly half of our Viaplay subscribers come through B2B deals. And some of these subscribers also take our linear channels. This is a key growth driver for us, and we have replicated this strategy in the international market as well. This means that Viaplay is available in virtually all households and that the partners are able to offer their subscribers our great content in a new and innovative way. These deals are structured as revenue shares, so they are lowering our ARPU, and they have a lower ARPU than direct sales. But we do not pay the customer acquisition costs, so the gross profit contribution is roughly the same. The Tele2 agreement I talked about earlier is a great example where all of their pay-TV packages will now include Viaplay while the Dutch examples enable B2B subscribers to opt in for Viaplay, and we will get paid the full price minus the revenue share. And we're now also developing a new type of partnership for Viaplay announced today. It's called Viaplay Select. It is a curated and Viaplay-branded content offering that will be made available on partner platforms in markets where we do not currently have a D2C offering or app. It's now live in Japan with our partner WOWOW, and we expect to add at least 4 more markets this year. And needless to say, the profitability margin here is very high as there is little or no incremental cost for us to take this step. The result of all of this is that our subscriber and revenue growth is expected to accelerate, not decelerate, and that we have high incremental margins once we cover our largely fixed cost base. So a few other questions. So competition, has it increased? Yes, of course, and just as we expected. We are building the streaming market with our peers, and this is not a winner-takes-it-all strategy. There is plenty of room for multiple players, especially given the increased demand for more diverse content. And we do see an attractive role in becoming a streaming aggregator over time, which is something that we have already started with partnerships. The key thing is to have unique, local, relevant content, which we have a lot of. Another question is if COVID has pulled forward the transition from linear to on-demand viewing. Yes, definitely. And that has accelerated our development and the conversion of later adopters. Our forward momentum is as much about new content and new market as it is about secular trends. So there is plenty of room to grow in our existing and new markets. Then, of course, we all feel the pain from the Ukraine crisis. And the question is if it has had an impact on viewing. Yes, it has. People are watching more news coverage and current affairs programming naturally. But we continue to see very strong traction with our live sports and original content viewing. And we have a fantastic slate of content coming up this year. I have mentioned the sports but, to add, at least 57 more originals, including new seasons of established favorites, such as Partisan, Honour and Face to Face; and highly anticipated new titles like THE KINGDOM, Billy the Kid and The Dreamer; the return of Hollywood A-listers like the likes of Renee Zellweger in the past thing -- The Thing About Pam and Julia Roberts in the recently premiered Gaslit; the updated and hugely popular paradise reality formal -- format, the very topical Litvinenko show that we have coproduced with ITV; and then something that I'm very proud of, our own original feature film directed by Lasse Hallström about the life of Hilma af Klint; as well as the fantastic Norwegian original Gulltransporten. What a lineup we have ahead of us. Not only do I believe in the strength of the proposition we have, but I'm also extremely proud of what we are achieving and contributing to with the world -- in the world of entertainment. Key question these days, if we expect people to let go of their Viaplay subscription because of the impact of inflation and household spending. Well, over the years, pay TV has proven to be a staple in previous periods of economic pressure and streaming even more so, given the range and depth of content available and what we think is still low prices and a low share of consumer wallet. Viaplay is tremendous value for money when you compare with the cost of going to live sports event or even the movie theater. And we expect our unique sports proposition to be particularly sticky in this period. Are we then seeing higher churn rates? Yes, but only slightly higher this first quarter. Should we be pushing advertising on Viaplay and have an advertising-funded version of Viaplay? No, at least not now. We have had such a service for a number of years called Viafree. It has not proven to be a real escalator to Viaplay or a big growth driver. So we announced last year that we're merging it with Viacom's Pluto TV, which is launching around the world and that we will become the exclusive sales agent for all of Pluto TV's inventory in the Nordics. So here's another win-win partnership that will boost our sales with no increase in costs while maintaining our laser-like focus on growing Viaplay. But important to say, we are technically fully ready to engage with advertising opportunities if and when the time is right. But we will engage if and when it is an accretive opportunity, not just as a reaction to slowing growth. And then are we are fully funded? And will we continue to invest? Yes, and yes. The SEK 600 million from the Danish court case settlement has just further strengthened our net cash position. And finally and very importantly, do we have the very important visibility over the larger part of our content cost? And are they fixed for years to come? Yes, which is a particularly important component in an inflationary environment. The final point I would like to make is about the recent launch of our new 5-year sustainability strategy, which is a cornerstone of our business strategy. It reflects our dialogue with a broad cross-section of stakeholders last year and has 3 critical focus areas: taking climate and environmental action, advancing diversity and inclusion and promoting well-being as well as ethics. The strategy and road map include new science-based emission reduction targets and climate action initiatives to help limit global warming levels. We will road show the new strategy in May and also soon publish our first task force on climate-related financial disclosure reports. The recently published 2021 annual and sustainability report details how much progress we have made. It has been great to see how we have been recognized as one of the best companies globally for gender balance by Equileap. We've also taken a number of action in response to the terrible war in Ukraine in order to support the victims of the war and to bring pressure to bear on the Russian government. Among many other initiatives, we established a fast-track recruitment program in Sweden for Ukrainian applicants, which has already resulted in Ukrainian candidates taking up positions at NENT Group. It is an absolutely horrible situation with the Ukrainian -- which the Ukrainian people are battling so bravely. And we all hope, of course, that the war can be brought to an end as soon as possible. So that's it from my initial not-so-short comments. So I now will hand over the call to you, Asa, for your comments on our financial position, please.

Thank you, Anders, and good morning, everyone. I would just make a few comments, so we can move on to your questions even more quickly this quarter. First of all, a weaker Swedish krona has given us a reported revenue tailwind this quarter, which is why our organic sales growth is lower than the reported growth. This has also increased our reported cost base and local -- and total currency effect is broadly neutral at an EBIT level. We hedged the majority of our committed U.S. dollar costs on a forward basis, which delays the impact for a minimum of 12 months. The other effect on the organic versus reported growth rate was the sale of the NENT Studios U.K. business in June last year, which contributed SEK 39 million of external sales in Q1 and SEK 9 million in Q2 last year. Our operating expenses was up 20% in Q1, which was primarily driven by the international expansion as well as our sports and original content investments in the Nordic markets. Our Allente joint venture has continued to perform well and as expected. They had a few remaining post-merger integration costs in Q1 and are now at the full run rate of cost synergies of SEK 650 million. The SEK 58 million associated company contribution from Allente this quarter will rise in the coming quarters. So we still expect approximately SEK 350 million of associated company income from Allente this year. We also continue to expect to receive approximately SEK 400 million in cash dividend this year, with the majority to be paid in the second half of the year. This is a business doing SEK 6.8 billion of revenues with a 20% EBITDA margin, healthy cash flows, leverage of [ 1.5 ] EBITDA and attractive dividend payout ratios. So the equity value is considerably higher than the associated company income would suggest, not least given the approximately SEK 330 million of annual noncash PPA amortization charges. The large IAC of SEK 595 million this quarter relates to the settlement of the Danish court cases that date back many years. This is net of adviser fees, and we received the cash at the end of March. We have also booked a provisional tax charge of SEK 113 million related to this income, with the tax -- cash tax to be paid later. Our effective tax rate in Q1, when excluding our share in the net income from associates, was 18.9%. And we still expect a rate of approximately 21% for the full year before associated company income and IAC. Our cash flow then. Our cash flows from operations included the SEK 595 million settlement. The SEK 1.4 billion increase in working capital primarily reflected the increase in content investment levels as well as changes in the timing of payments that we had flagged previously. We still expect a negative change of approximately SEK 3.2 billion this year. Group borrowings increased by SEK 900 million in the quarter. We refinanced the short-term debt falling due in May with a new 4-year SEK 600 million bond and ended the quarter in a net cash position of SEK 1.1 billion. Our financial net cash of SEK 1.46 billion included SEK 5.64 billion of cash and cash equivalents and SEK 4.18 billion of total financial borrowings, excluding net lease liabilities of SEK 355 million. So we are fully funded for the ongoing expansion and strategy period with a balanced and flexible combination of equity and debt. 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. That is it for my comments. So now over to you, Matthew. Thank you.

Thank you, Asa, and thank you, Anders. I think we got through that a bit quicker than last quarter, so many thanks. It's a lot of real estate to cover. So thanks for that. Now we want to get to your questions.

[Operator Instructions] So let's get started. And I think the first question we have is from a new analyst covering us actually. It's from Derek Laliberte from ABG. So Derek, please go ahead.

I really appreciate the strong performance in Viaplay international here in the quarter and the Netherlands, the start in the Netherlands specifically. I was wondering if you could give some additional comments on the performance in Poland in this quarter as I didn't see much about that in the report or in the presentation.

Of course, we're very happy to do that. Yes, Q1 has been driven in the international by Netherlands. That's for sure. We did expect the growth in Poland and Baltics to slow down somewhat since we were mid-season in Bundesliga, which primarily has been the growth driver in Poland. So the growth is a bit slower and a bit lower but in line with our expectations. And you should remember that the next sort of level of growth in Poland will come from the addition of the Premier League rights in August. And then next year, we bring Formula 1 onstream in Poland as well. So it is sort of a staged approach that we are taking in Poland. And I also would like to take the opportunity to comment on, obviously, the impact on Poland from the Ukrainian crisis as they are very close to this terrible event and the country has been impacted directly by the crisis. We don't see any increase in churn. Sales are stable in line with our expectations. Viewing, in general, has been tilting towards more, as I mentioned earlier, news-related content. But I think a lot of people find a sort of safe haven in sports. So we continue to operate at very attractive viewing levels when it comes to our sports streams in Poland and the Baltics. So that is a good point for the future. But Q1 has been a very, very good start in the Netherlands.

Great. I appreciate the color. And if I may ask also, you had some great comments, Anders, I think on these recent concerns. We all saw Netflix and some reports out that people are cutting down on the number of SVOD subscription. You mentioned some slightly higher churn here. Is that -- would that hold sort of across your markets? Or are there any particular market or market stand out here in terms of increased churn or macro headwinds?

No, it's -- the churn increase, as little as it is, is on the balance. It's on the margin. We remain at lower-than-market-average levels. And all indications we have still point to Viaplay and Netflix being the most common combination in the Nordic households. And that is important because I think if we go into a more sort of stagflation or inflation-driven environment and share of wallet becomes extremely important, you want to be 1 of those 1 to 3 top services in each market and stand out in your area so that you're not easily replaced. And that is one of the things that I think the market need to understand that it's not a one-player-takes-all market that's, as I mentioned before. And sort of the global platforms, the U.S.-based platforms are becoming increasingly alike, and that is actually an opportunity to stand out more specifically for us and other local players that have a slightly different proposition. And I do think that the sports play a very important role here. As we have seen in historic financials, sort of more bearish periods, is that the stickiness in sports remains very, very high and one of the last things that you sort of get rid of if you want to reduce cost. So there are no trends pointing to an increase in our overall churn rates.

Okay. Great. And finally, from my side, I was wondering if you could give just a brief update on the how the Viaplay Medium sort of package has fared here given that, I suppose, many of these initial offerings have expired now?

Yes. No. Viaplay Medium has been accretive to us, both from a total volume perspective and from an ARPU perspective. As it leads to upgrades in the base, no downgrades more or less, because the propositions are quite different. And it offers a new opportunity to households that don't want to commit to the higher price point because they may not have a Premier League or Formula 1 preference, but they are very sort of keen on the mid-tier rights, especially the winter sports. So that has been a positive experience for us. And we will most likely do the same in Norway when we introduce Premier League in August. It's a way to broaden our footprint and proposition in those markets that are getting increasingly mature and where our portfolio is basically too big to cover with only one package.

Okay. Thanks very much, Derek. Now changing gear but not actually contrary from Derek's first question, one for you, Anders, again. Poland, it's a question from [ Per Johansson ]. So how worried should we be about Robert Lewandowski going to Real Madrid? And if he does, what impact could we expect that to have on the subscriber base in Poland?

Well, it is a very good question, of course. And let's see what happens. Robert, is very, very, very committed to Bayern Munich. So let's see what happens. But we have, of course, built our cases on the risk of Robert moving on at some point so that we can deal with that from a growth and total base perspective. These things happen in the world of sports. And we've been through it both positive and negative over the years. We have a flip side to that question: what will happen with Premier League in Norway when Haaland moves to Manchester City? And it's always something that you never know until it happens, and you can't build your cases on those assumptions. So you simply have to make sure that you have a steady state and are ready for these kind of swings. So we prefer if Robert Lewandowski does not move to Real Madrid. But if he does, it is assumed to be something that we can deal with in the way we see cost and upside in Poland. There are new Roberts around the corner in Poland as well.

Okay. Great. So going back to the phone lines again. So the next question comes from Omar Sheikh at Morgan Stanley. Go ahead, Omar.

[Audio Gap] subscribers, could you maybe just give us a bit of color on kind of who's adding -- what's the sort of mix between wholesale and D2C? For example, are people watching primarily F1? Or is there other content that people are watching? And in the context of what you said about kind of what other subscriptions people have, can you sort of make -- do you have any sort of information about whether these are kind of add-on or Viaplay is being used as an add-on subscription to pay-TV subscribers or to Netflix or other SVOD services? So just some color on Netherlands would be useful to start. And then secondly, on the Tele2 agreement, is there any -- was there any impact in Q1? Or is that just going to phase during the course of 2022? That would be helpful. And then finally, on Select, could you just give us a sense of what your expectations are on additions in the year? Will that be additive to your full year international Viaplay subscriber numbers?

Thank you very much, Omar. I didn't get the absolute first part of your first question. Maybe you were on mute as we are from time to time these days. But I think I got the sort of the question at the summary around Netherlands. So some additional color on the position B2B and D2C if we start with that. So it has been a very good balance. The first part of our launch was very D2C-driven, especially with the early bird offer. And then when our partners came in with their campaigns, it tilted over to B2B. But you should remember that in the Netherlands, there are no hard bundles. It's all opt-in. And whatever campaigns our partners do, they pay for. So the mix here between B2B and D2C is a bit different from some other markets when it comes to ARPU dilution and margin contribution. B2B in the Netherlands is very attractive for us in many ways. And it also demonstrates the commitment from the subscribers. They commit to the service, and they use it. Viewing on Formula 1 has been on absolute record levels across all markets. And of course, Netherlands has taken Formula 1 on a streaming service to a complete new level with the way we have approached the market. But I'm very happy to say that the reach in the base on non-Formula 1 content has been good, very strong. Most people in the base have watched something else. A good majority of people come back from time to time to watch something else than Formula 1. So we are gradually, in less than 2 months, building our position as a household service in the Netherlands. I don't have that much data on how it's combined with other streaming platforms yet in the Netherlands. We will get more color on that as we have in the Nordics as time sort of goes by. We've only been there for less than 2 months. So we want to have sort of a reasonable period before we can draw any conclusions on the mix. But our ambition is to be 1 of the top 2 services in most households. And that ambition will then future -- will be further fueled when we bring on Premier League, and we do have some other ambitions as well for the Netherlands. So it's a good mix overall, viewing patterns, the way sales has been distributed over B2C -- D2C and B2B and the engagement on Formula 1. And especially, I would say, the partnership with Max around the original content and the Lion Unleashed documentary, as an example, has gone fantastically well. So very, very happy with the whole mix situation, I would say, in the Netherlands. Your second question on Tele2. The short answer is no. There is no impact from the new Tele2 deal in Q1. It will gradually build up from Q2 and onwards. It's a little bit of a moving target since we are dependent on Tele2 migrating their entire base onto a new platform. And having been where our partners at Tele2 are now in previous life, I know how difficult it is to make this kind of migration. So it will probably take a little bit of time. But we do expect to see some impact in Q2, both on revenues and subs. And the revenues then, just to remind you, is this move from linear revenues to Viaplay revenue. So they are more or less like-for-like on the revenue side but will have an impact on the subs. And then finally, on Viaplay Select. It is a new approach, you could argue, to how we distribute our content. We could, of course, have sold the rights to the productions that we control to different markets and just have it as a white-label distribution. We think that is less interesting for us and our partners because you want to be able to package and stand out. So to have these branded sections on our partner platforms under the Viaplay Select umbrella is attractive for us because we gradually build the Viaplay brand, and we get return on investments in content that we're doing anyway, which means that the margins are very high, 80% to 90%, depending on marketing cost. So there are license fees and some actor skills fees and these kind of things that we need to pay, but they are very limited compared to the opportunity. So more or less, the whole value of each and every deal trickles down to the bottom line. They are quite modest in size, at least for this year. But we do hope that they will grow over the coming years as it is just an incremental scale benefit that we have from controlling more and more high-quality diverse content that we know are in demand in large areas outside those areas that we have identified as direct-to-consumer market for us in the near term.

Great. Thanks very much, Omar. This is a bit of a memory test exercise, isn't it? But well done. Three questions.

It is. I had to tilt my head, so both sides work here.

And none of it's written down. Okay. I think just one follow-up on that Anders' view again. Were you tempted to raise the international subscriber target? Because obviously, given the traction that we've seen so far in the first quarter, one could think that, that 2.2 million looks achievable.

Well, as our commercial team are painfully aware, I'm always tempted to increase subscriber targets. But no, jokes aside, it is a balance. And we have to take, of course, a prudent approach to the fact that we find ourselves in uncertain macro times. And that will have an impact in one way, shape or form. If I was looking only at the underlying momentum and the things that we know, yes, then we probably would have upgraded. But then it's better to do like we do in the Nordics. We upgraded when we have proof on the table that will not be significantly impact whatever happens in the world around us. I'm comfortable about our delivery ability for international. And will we continue at the same pace in Q2, then I think we would probably have to look at a higher target for the full year. But we're one quarter into this year in an uncertain world. So I think it's a sign of strength actually to just hold on to everything that we said before this uncertain time hit us. We're staying firm to what we have said basically.

Good. Okay. Early days.

Early days.

Right. One for you now, Asa, if I may, and this relates to Allente's dividend plans. So we've talked previously a bit around SEK 400 million or so receivable dividends from Allente this year. Nothing in Q1. So what are the plans for the coming quarters?

Well, the plan basically remains of the SEK 400 million for the full year. But the plan hasn't been formally agreed yet. But for now, we stick to the assumption or the expectation that we will receive the lion part in the second half of this year -- of the SEK 400 million.

Great. And we had a sort of follow-up from [ Paolo ] at Tower House here, saying, what is the right capital structure for the company -- I think maybe just one for you, Anders -- in terms of could it return special dividends? And since you are fully funded, would they then be returnable to shareholders direct? Or would they be kept by NENT, soon-to-be Viaplay Group?

Well, [ Paolo ], I think that's a discussion that we would like to have with you and others on how we best create value for our shareholders. In the short term, there are a lot of investment opportunities that will yield quite significant returns in the not-too-distant future. So for now, we stay very focused on taking that money and making it work for the returns that we have in sight. But then we do see a smorgasbord of opportunities to work with what will be very attractive cash flows in the not-too-distant future that we can sort of use to not just with dividends but in other ways to create value for our shareholders and still continue to use the lion part -- lion's share of the capital to drive growth. But in the near term, given that we are strong in our cash position, but we do go to a debt position already this year. We just stay focused on making sure that we turn the cash into growth and then returns, and then we'll see. But it's a couple of years into the future. This is a discussion that will be very, very sort of timely and relevant to have. And we are in a good position to deliver some very attractive returns.

Great. Good. Then back to phone lines again. And next up is Martin Arnell from DNB Markets. So please go ahead, Martin.

So my first question is on the Dutch market. You saw that strong increase in March. But what about April? Can you say anything on how it has progressed?

Yes, Martin. Absolutely. We -- I could basically do it like this and say, we have seen 3 phases so far in our growth in the Netherlands. We had the February early bird offer where people could sign up before we actually were live onstream. So there was nothing to stream. It was just an early bird offer, where you could sign up for a full year subscription at a discounted price. And we have seen a very good take-up with roughly around 10% of the base subscribing to that early bird offer, which is, of course, very attractive, all D2C, full year commitment. And then the massive ramp-up in the first part of March, which was driven by D2C, and then the second half of March, which was driven by B2B because then our partners came on with their campaigns. And then we hit sort of a very high level, well above our targets. And then anticipated maybe that growth would stagnate or go to almost 0, but it hasn't. It is sort of continue to go on a lower but still very attractive level compared to other mature markets because we should probably rate Netherlands as fairly mature. But just ahead of this weekend, there was good growth again, obviously, with the Italian Grand Prix, and also, for the first time, a big boxing event, not on pay-per-view but available for all subscribers in the Netherlands and Poland, which drove good sales in both Poland and Netherlands. So it has stagnated on a lower level, of course, but it's still growing. Then I think it will slow down a bit more in May, June before we hit the next level of growth in August with Premier League but very positive. And as we have concluded now a number of times, we are well ahead of our plans in the Netherlands. We've broken streaming -- concurrent stream records time and time again now in the Netherlands.

And how popular is the premiership in these markets? Can you -- do you have anything to comment on that?

Yes. In Poland, the Premier League is 1 of the 3 most popular football leagues. You have the Bundesliga, the local league, and then Premier League. So it is significant, not as significant as we know it from the Nordics as an example, but it is significant. We do have some facts from the previous rightsholder what kind of numbers they could get out of it. Even though nobody has done a full streaming proposition like we're doing, we still have some good data supporting that Premium League will give us another round of boost in Poland. If we take the Netherlands, then it's on the top 5 of sports, right? So you have Formula 1. You have the Eredivisie, the local football. And then you have Premier League and Champions League on that top roster of rights. So again, it's not as popular as it is in the Nordics in general and maybe Norway, in particular, but still very strong. But you should also remember that the cost for these rights are significantly lower in these 2 markets than they are in the Nordics.

And you mentioned Haaland before possible move into the Premier League, the Norwegian there. What should we look for? I mean when you look at the Viaplay price in Norway and considering you're adding the premiership rights, will you be up there at [indiscernible] place previous price or close to that? Or how should we think?

We are yet to announce our price in that market, but we will be around that range. I can already now state that we will not go over it because I then -- I think then we will price ourselves out of the market. Even if Norway is a very price-resilient market, we want to tap into the base, and we want to provide a richer offer than the current rightsholder. But it's in that range. But one of the key differentiators that we will have is, of course, our very broad portfolio that will allow us to have an entry package, a mid-package and a top package also in Norway, like we do in Sweden, so we can address more of the Norwegian households. And while on the topic, Norway has actually gone from being a market under a bit of pressure some years ago, especially when we were more linear-focused to be one of our stronger markets, not just for Viaplay but also for ad sales on the back of using the sports rights in a good way on our linear channels. And Norway is now very high on the list of top markets for us. And we've gone from #4 sort of position to a #2 position in Norway. This will be fueled even further. And of course, if Haaland moves to City, Premier League will be on fire in Norway. But it is anyway, actually. So let's see what happens, but we have seen in the past when Zlatan signed for Manchester United what that did for Premier League. So of course, there are these temporary ups, but we have to be ready for the downs as well if somebody leaves.

Yes. Just a final question for me. On your Nordic margin, 7.9%, is that any timing effects in that, that could sort of spill over and hurt Q2? Or was that normal for you?

Yes, it was slightly better than anticipated. And it comes down to making sure that we optimize our business and that we stay vigilant on our cost. But there is no pull-forward that puts pressure on Q2 and isolate it as a consequence of what happened in Q1, no.

Okay. Thank you, Martin, our big sports fan. Get your transfer news here first, as always. So we're going to move straight on to our next caller now. We've got a few to get through. This is Tom Singlehurst from Citi. So please go ahead, Tom.

First one. Netherlands, I mean, obviously, you sort of did a good job trailing the launch. I mean I assume everyone that wants Formula 1 has now got it. So I suppose in the context of you not raising the international subs sort of guidance for the full year, what else is there beyond the Premier League to get people onto the platform over the next 2 or 3 months? Will we see a precipitous slowdown in the Netherlands? And then the second question, very briefly on advertising. You talked about the annual contracts, higher prices on stable volumes, but just a bit more color on that.

Certainly. Tom, we'll start with the Netherlands. Yes. I think the hardcore Formula 1 fans has signed up by now. And there was more of them than we originally anticipated. So that case for Formula 1 has proven to be stronger than we anticipated. Then we have the next level of growth, which is when the football package becomes stronger. Remember that we already have Bundesliga, and then we have a Premier League. And we do have some other things up our sleeve as well along the way to broaden the appeal of Viaplay in the Netherlands from a sports perspective. That's one growth driver. But that needs to be -- given that we are ahead of Formula 1, we can afford to have that be coming in a bit lower than we originally anticipated and will still meet our targets, which means that if we are right on the other assumptions, we will beat the overall ambition for the Netherlands this year but a little bit too early to say. But it is important to remember that the Netherlands is not just about sports. We are -- we have a very, very strong nonsports proposition in the Netherlands. The Hollywood slate is very strong. We have all of our originals that are doing slightly better. We did anticipate Nordic content to do well, but it has done a little bit better when it comes to the top list on viewed content. So that's a positive. But maybe most importantly, we are now engaging with a number of local Dutch productions. The first one will come onstream now any day now with Dragons' Den, a well-known format that we moved over to Viaplay. We have Master Chef coming on the nonscript. And then we have announced both developments and productions for dramas in the Netherlands as well. So as we are there for the long run, it is about building and broadening the appeal so that F1 becomes one very important sort of staple in our proposition but far from the only one. That is the ambition. But it's, of course, good to have more people signing up than we anticipated in our business case. That means that we can build from there and there to invest in other areas. We have already announced the slightly higher price points that we will have in August, so people know what they have signed up for. And we have STARZPLAY included. We have hayu included. There are separate services in the market at price points, slightly below what we have. But for Viaplay, you get it all, right? So it's the aggregation that I talked about in my initial remarks where we're actually -- we aggregate not just our own but others as well, and it becomes a very affordable proposition. So there's definitely more growth to be captured in the Netherlands. But we have moved from 0 to I would suspect top 3 when it comes to streaming services in the Netherlands. Let's see if we can sort of verify that, but I suspect we are top 3 now. When it comes to the ad sales, we have signed all of the full year agreements. The price increases has come in, in line with or slightly better than anticipated. The ad hoc market remains reasonably strong, and we are on high sold-out ratios. So we see no reason to be more bearish around the outlook for ad sales this year. There was some slowdown in Q1 related to the crisis that we didn't anticipate, of course. But we did anticipate a slowdown as a consequence of the Olympics on other platforms. So I think we are pretty much in line with where we expected to be. I hope that answers your questions, Tom.

Thank you very much, Tom. And I think just dwelling on the first part of your question there, I mean, the emerging rivalry, very friendly rivalry between Leclerc and Verstappen is probably going to build even more interest around Formula 1. So it's not a static fan base. It's a growing fan base.

And Formula 1 is interesting because it's one of those sports rights where you don't need to be a hardcore Formula 1 fan to be entertained by the entertainment factor around it. And that's why the content that we're producing with Max that will be around him, his life, his ambitions, not just on the race track but in general, will create even more sort of interest around Formula 1. And that is one of the key things that we have to achieve is to find a new audience for these sports rights because they're moving into the future, and they have to upgrade their game, and we're helping.

Absolutely. And I think just a follow-up question on the second part that Tom raised there on the advertising revenues, the ambition levels around Pluto TV, because that sounds like a very innovative and interesting deal, what kind of ambition levels can we have there? And what could that add to the traditional kind of advertising business? What sort of scope is there for that?

Well, I think the scope is now in line with what we have anticipated before. But we do see some potential upsides to add to that because that's how all the local traditional broadcasters have moved -- have to move over to a play platform to be able to sustain the kind of level of price increases that they need to have on a declining market. As we don't have that need in the same way, Pluto TV growing over time means that it has probably a good chance of being accretive to our ambitions in assets without actually investing more in that platform. That's why I'm not so stressed around sort of do we need to have an ad-funded version of Viaplay. Well, we don't right now. It will only mess up the clearness of the customer proposition. But eventually, we could if we want to. But I'm not so sure it's necessary because these kind of partnerships, you don't have to build everything yourself. And Pluto TV is a good example of that.

Okay. Great. And thank you to [ Emil Olsson ] for that second question regarding Pluto TV. We'll go back to the telephone lines now. We've got a few minutes left. Next up is Jamie Bass from Berenberg. Jamie, over to you.

Just a couple for me. So on the Tele2 deal first up, you said that it's sort of moving around of revenues. But could you just confirm, so is this -- if you've left revenues unchanged and you haven't changed your margin outlook for the year, does that mean this is also EBIT-neutral? And if so, is that going to be the case moving forward? Or does this -- is this slightly accretive when you move into 2023 and beyond? Second one, really quick and easy question just to make sure the Viaplay Select product, will that be accounted for in the international Viaplay line moving forward? And finally, the price increases in Denmark, could you just let us know what the sort of reaction has been and any trends in churn as a result of that?

Thanks, Jamie. Great questions. So if we -- so look at the Tele2 deal first and look at the structure of that deal, we have a number of new sports rights coming onstream or coming on TV channels. And in the old world, you would negotiate a new deal, and you would increase the CPS, the cost per subscriber, for those channels. But that's a declining business for us and for the distributors. And to get those price increases is getting increasingly difficult for obvious reasons. But it's still important for us to sustain the kind of growth that we want to achieve on the back of these rights. By doing this change from not using our channels as the main driver but actually Viaplay as the main driver in the Tele2 packages, we future-proof our business. And the growth ambitions that we had for that particular negotiation related to what was previously wholesale is now moving to Viaplay. So it's neutral, but we are -- but it's actually growing as a consequence of us just moving that growth, but we are achieving it in a more future-proofed way. That means more subs but not necessarily more revenues this year. But I know that Tele2 has ambitions over time, and they will work very hard to gain additional market share in the future with this new innovative packaging, which means it will be accretive. So their growth will benefit us in the future. So it's a win-win in that. So for this year, neutral on sales and EBIT and a potential upside the coming year. But the most important part is, of course, that we have sort of secured important money in our growth, and we have moved it to Viaplay. And that is probably the way you have to evolve in the future with these kind of deals because getting paid for TV channels where viewing is going down is getting more difficult. And the second question is -- the memory...

Viaplay Select and where it's going to be accounted for.

Viaplay Select. Sorry, now the memory starts to...

It's been an hour.

So Viaplay Select will be accounted for in the international revenues, high margins, so it will trickle and [ settle ] down directly and support the profitability ambitions in a good way in international. We will not count any subs, as you can imagine, for this because that will dilute the view of what is actually a sub in our base. So it's a pure revenue game. But it's also a brand game because we get Viaplay live on a number of new markets that who knows what we want to do in the future.

And the Danish pricing.

And the Danish price increases has -- they actually were last year. So they have played out more or less bang in line with expectations on when it comes to churn and the revenue impact. So -- and remember that we did a quite steep price increase on sports that, of course, wasn't that well received, but it was time we had to do it as an inflation protection. And the churn came in as expected. And now we're back at levels where we anticipated with then the higher ARPU for the sports customer, so in line. And sorry, for the memory failure here at the end.

It's my turn now. All right, Jamie, thanks so much. One for you, Asa, now if I may. Working capital. So obviously, we saw the impact in Q1. Should we -- first of all, is the guidance still intact for the year? And secondly, how would that be expected to flow during the remaining quarters of this year?

Yes. Firstly, then the guidance is intact, and we anticipate -- I mean, what we foresee is largely the same patterns as last year, where we have a moderate decrease in Q2 and a higher increase in Q3 on the back of the new investments, whereas Q4 is anticipated to be quite flattish or a flattish development.

Okay. Excellent. So as before. Very clear. Thank you. Good. And then we have our last question coming from the telephone lines, which is from Klas Danielsson at Nordea. So Klas, please go ahead.

Yes. Thank you very much for taking the time. I know it's little left here, so I'll be quick. But essentially, I appreciate a lot of the comments on the Netflix side, and you are obviously in a much less mature state. But I think one of the kind of issues that they had is actually that, that maturity has come much quicker than they actually had expected. So I think if we look at the long-term side and then look at your 2025, '26 targets, do you have any learnings? Or is there any kind of assumptions that you need to reassess following this? Or how should we kind of look up on that side?

Klas, that is a very good question. And I think your maturity hits any industry in any business at some point in time, and it is to actually stay ahead of the curve and look at what you can do with it and how you can take your business to the next level. That is, of course, the most important growth trick for any company and any management to work with. And we've been doing that for many years in mature pay-TV markets or mature markets in the industry we have worked in. And what surprised me a bit with sort of Netflix is that they seemed a bit surprised, to be honest, around the fact that this was happening and didn't seem entirely prepared for it. We have to be prepared for it. But if our maturity comes earlier than anticipated in the 5-year plan, well that's a positive because that means we're going to hit profitability and margins ahead of the curve, and then we can start to work actively with how we fuel future growth and future profitability. So if we just arrived at that and the fact that we're doing a bit better and markets are maturing a bit quicker, that is ultimately a positive because that will yield very, very good returns, high cash flows and a very, very attractive discussion to be had around how we create the most attractive shareholder return in the future. And I've worked with maturing businesses and for many, many years before media, telcos, and you still can find a way to create value. In our business, it's about being better than the rest when it comes to those areas of content that let you distribute, which means you have to be innovative, you have to find the next big thing, and then there is more growth to be captured. But then it's market shares rather than secular or organic growth. And we're ready for that. You have to be ready for it. You can't be surprised and talk about the issues of account sharing or the need for advertising or whatever. Maturity will hit you at some point. Then you need to be ready.

Yes. And there are, I guess, no kind of reasons to why you need to change your assumptions on penetration rates or stacking and so forth. I guess those are -- you feel comfortable with those and in 2025 and '26, I guess?

Yes. I think that there is one flaw in the sort of the debate around share of wallet and people signing up or churning from streaming. There is still a lot of traditional TV packages out there. And if anything, streaming is more cost-efficient. So if you're a household and you really want to look at your overall spend on entertainment, you need to look at everything. And then having 3 or 4 streaming services and maybe only a more skinny bundle on traditional TV, that's a much more cost-efficient way to be sort of connected to the content that you love rather than to churn from your streaming services. And that is a future evolvement that I think will only be fast-forwarded, if anything, by the more inflation-driven situation that we're in right now. So it's -- I think it's a bit of a cheap conclusion to say that, well, we're in tougher times, you will churn out from your streaming because it's a bigger picture than that. And streaming is massively more cost-efficient, both from a production point of view, from our point of view and from a consumer point of view. And that will play itself out the coming years, my speculation, but that's what I think.

Good, Klas. Thank you very much for that. I think that's probably a good place to end. Saving the best for last, as always.

That's you.

Here we go. Okay. So that concludes the question-and-answer session for today. Thank you for your time and for your questions today. We really appreciate your interest and hope this format works well for you. Let me know if it doesn't or you'd like to see any changes. We're doing our first physical roadshow meetings this week after more than 2 years. So we're very excited about that and looking forward to meeting with as many of you as possible. As ever, please do not hesitate to reach out to Joel or me with any questions. That's it for today. I hope you've enjoyed the show. We'll continue to keep you updated on our progress as always. So goodbye for now and see you soon. Thank you.

Thank you.

Thank you.