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

Good morning, and welcome, everyone, to the Viaplay Group Q3 Results Webcast and Conference Call. My name is still Matthew Hooper, Chief Corporate Affairs Officer, and your host for today. As usual, I'm joined today in our Stockholm studio by our president and CEO, Anders Jensen; and for the first time, by our new CFO, Enrique Patrickson, who joined us in August. Welcome, gentlemen.

Thank you.

As usual, presentation materials are available from the Investor Relations section of our website. [Operator Instructions] So let's get started. And first of all, over to you, Anders.

Thank you very much, Matthew, and a very good morning, everyone. Q3 was another important step along the path towards our strategic goals: 78% Viaplay subscriber growth, with a record 879,000 new subscribers added in the last quarter alone. Those are the headlines. The international markets performed particularly strongly in the third quarter as we added more than twice as many subscribers as we did in the second quarter. And both Poland and the Netherlands ended the quarter with over a million subscribers each. This is well ahead of the schedule, and shows the popularity of our content offerings as well as the strength of our local B2B partnerships in both the Netherlands and Poland. With over 6.4 million subscribers, we have now more than double the number of subscribers than we had at the beginning of our 5-year strategy period in January 2020, and we are now more than halfway towards our 5-year target of 12 million subscribers after only 2 of the 5 years. As a group, our organic sales growth has accelerated again, this time to 25% compared to 18% last quarter and 10% for the first quarter of this year. Viaplay, which now accounts for almost half of our total sales, was the main driver with 64% organic sales growth up from 42% in Q2 and 26% in Q1. This accelerating growth not only reflects the higher levels of subscriber growth, but also the price in the Netherlands effectively increasing by 40%, and then wage and premium price point more than doubling. In August, we added the English Premier League to our sports coverage. We added the English Premier League rights in Poland too, but are not raising prices until next spring when we also bring Formula 1 to the Polish audience. The addition of the English Premier League coverage in Norway combined with continued B2B sales growth helped us deliver 28% growth in the Viaplay Nordics subscriber base. The extraordinary and record-breaking success of Norwegian local hero Erling Haaland's start in the Premiership is building a large fan base. It takes time, especially in the current economic environment, but our ambition remains high as we expect to attract more subscriber than the previous holder of the rights. The price increase in Norway will continue to drive our [ profit ] further once the larger base is installed. Nordic Viaplay sales were up 27% in Q3 and we expect the growth to accelerate further in Q4. Viaplay is a clearly differentiated products with a unique and universal appeal due to the mix of live sports, local, regional content, international series and movies. This is why it's so attractive to both consumers and distributors, and we believe we'll remain so as the consumer spending comes under pressure due to the economic situation we all find ourselves in. We do not demand a high price compared to other forms, out-of-home entertainment, when you consider that a month's subscription to Viaplay costs less than taking the family to a single sports event or a trip to the cinema to watch a single movie. We have previously seen how sticky or resilient pay-TV is during such times, and churn rates are continuing to decline in the Nordics, which proves this point. This is also why we will continue to raise our prices moving forward as we have recently announced in Sweden, for example, with a 22% increase in the top tier. We have maintained our target of having 7.3 million subscribers by the end of the year, which would be equivalent to 82% growth this year. And remember that we started the year with a target of 6.5 million. We have shifted the mix. So we have raised our international expectation from 2.5 to 2.7 million to reflect the addition of Premier Sports, while reducing our Nordic expectations from 4.8 to 4.6 million, the reduction in the Nordics reflects the slower current direct to consumer growth as well as the termination of the Telia agreement in Sweden. Our decision regarding Telia is a strategic one, and we do not expect a new agreement to be signed. We have partnered with all other major distributors in each of our markets on a long term basis, finding common ground, value and objectives that work for both parties and ensure that consumers get what they want, great content at an affordable price. Now Telia has decided to pursue a different strategy, and if we can't create mutual value, well, then there is no deal to be made. We're now moving on to ensure those subscribers who have lost access to our content to get it either directly from us or from one of our other distribution partners. Our linear subscription and other sales accounted for just under 1/3 of group revenues and we're up 9% on an organic basis. This is an acceleration compared to 7% in Q2 and 4% in Q1. Wholesale channel sales were up 13% and reflected the new distribution agreements that we have signed and the price increases in Norway, in particular. We have had limited sublicensing sales currently. We expect a similar level of growth in Q4, which will then result in a mid-single-digit organic sales growth for the full year. Our advertising revenues accounted for just over 20% of the total revenues and were down 3% on an organic basis. All 3 TV ad markets were down in Q3, while the Swedish radio ad market grew, and the Norwegian radio ad market was stable. On a combined basis, we estimate that the market was down mid-single digit percentage points. The relative strength of the radio market is not unusual in a situation where TV sold out ratios are high. We took significant TV advertising market share in Norway and benefited overall from the sports content that we have showed on our channels, including the Nations League, the English Premier League and Formula 1. Our radio operations in Sweden performed particularly strong, delivering their sixth straight record sales month, with an all-time high sales for a single month in September. Looking ahead to Q4, the TV and radio ad markets are expected to be down on an aggregated basis despite the expectations that the radio markets will grow. However, the environment is very uncertain due to the broader economic context. The football world cup will provide a temporary boost to the overall market, but we do expect further volatility. If we were to deliver stable to slightly declining organic advertising sales in Q4, then that would also be the result for the full year. We have the benefit of our annual agreements having been locked in at higher price points this year and we will enter the negotiations for 2023 next month. In aggregate then, this means that we are reducing our Nordic full year organic growth target from approximately 20% to approximately 10%. However, such is the outperformance in the international market that we're only reducing our full year group organic revenue guidance from at least 28% to approximately 20%. This implies international revenues of over SEK 1.3 billion, which is significantly ahead of the plan. We do also expect Nordic revenues to grow faster in Q4 than Q3, not less given the fact that Viaplay has brought in more subscribers at a higher ARPU in Q3 and is expected to continue to do so. On the profitability side, profits were down in the Nordics as we added all of the new content in Q3. Our international losses were lower than expected and reflected the strong top line development. This is expected to be the peak losses quarter for the international operations and we have not made any adjustments to our expectation for international losses of approximately SEK 1.35 billion this year, having reduced this target from losses of SEK 1.5 billion last quarter. Nordic profits in Q4 will be impacted by the lower entry point when it comes to subscribers and the fact that we have slightly less premium Norwegian subscribers than we expected at the end of Q3. This is compounded by the short term impact by the Telia termination and the lower advertising sales expectations. We have, therefore, reduced our Nordic margin expectations for the year to approximately 7%, which indicates a lower absolute profit number for 2022 compared to last year. All in all, then, with the income coming from Allente, we expect to be at or around group profitability this year before the very positive SEK 595 million IAC from the Danish court settlement. And please remember that this is our trough earnings year. The changes to our short term sales and profit guidance do, of course, have an impact on our longer term guidance. The international operations are clearly ahead of plan and the launch in the U.K. next week followed by the U.S. and Canada early next year will further accelerate the development. We are looking closely at our plans for the DACH markets, Germany, Austria and Switzerland, which we have had intended to launch next year, but we are now considering to delay. We will do many more select agreements which add revenue but little cost, and we look forward to talk much more about this at our upcoming Capital Markets day. But we now expect the international operations to reach breakeven already in 2024 with margins to then rise over time. And we continue to expect positive group free cash flow in 2024. In the Nordics, we are reducing our 5 year revenue growth target and now expect a compound revenue growth of approximately 10% to 12% compared to the previous 13% to 15%. This reflects the broader economic outlook and the fact that we will enter 2023 at a slightly lower altitude than planned both in terms of subscribers and revenues. From a profitability point of view, we now have a lower starting point for the remaining years of the strategy, but still expect to get to the very healthy double digit margin in 2025, which will then rise over time. Combining these 2 outlooks, give us a group compound revenue growth of approximately 16% to 19% of the period, and this includes the Premier Sports acquisition, but with no other M&A assumed. This compared with the previous 18% to 20% organic growth target. The total group revenues would then be approximately SEK 25 billion in 2025 based on the midpoint in the guiding range. And from a profitability perspective, we expect to achieve a group EBIT margin of approximately 13% in 2025, which is very close to our original guidance and would imply group profits before ACI and IAC of above SEK 3.2 billion. We will provide an outlook on 2023 once the budget is done and approved, but we do expect group sales growth to accelerate further next year. International losses are expected to come down closer to the SEK 1 billion mark and the substantial cost savings program that we will implement in the Nordics will result in higher profits and margins for the Nordic business. Overall, it is quite clear also in this highly uncertain times that our decision to expand beyond the Nordics was the right one. The scaling of the group give us many more ways to monetize our content and it enables us to access even higher growth markets. And with the more uncertain market outlook and slower growth in some areas, I also take great comfort in our ability as a company to work swiftly and proactively with our cost base, as we did during the pandemic and will do again to safeguard both our profitability targets and our ability to continue to invest in our future as a company. I am very excited about our upcoming launch in the U.K., which is our biggest market yet when it comes to D2C launch. The acquisition of Premier Sports gives us a head start and some very attractive price points at the launch. The sports offering is well differentiated with good distribution through partners. We will look to build on this with the sports content that we have acquired and our ever-increasing originals catalog that we know is popular in the U.K. A range of our shows have already been shown in the U.K. through deals with other broadcasters, and we are also now adding content from other Nordic broadcasters and content creators. Across the group, our content is stronger than ever with the Viaplay platform delivering a 99.9% service level. Even with the huge increase in the volume of content and the number of live hours that we are showing, 12.7 billion minutes of content were consumed on Viaplay in Q3. And together with the new sports events I've talked about, 21 new originals also premiered. That means that we have premiered 44 originals so far this year and we will have premiered more than 70 by the end of the year. As planned, sports topped our -- sorry, sports topped our viewing list this quarter, unsurprisingly, given Max Verstappen's brilliant driving and early crowning as the Formula 1 World Champion for the second consecutive year, and Erling Haaland's record-breaking start to his first season in the premiership. The multiyear and exclusive content partnerships that we've signed with Max and Erling are big viewing drivers for us moving forward. Our originals accounted for 3 out of the top 10 most watched programs on Viaplay globally in the third quarter, with international format, Billy the Kid, again proving very popular alongside established favorites such as the Swedish soap drama, Lyckoviken, and the new crime series, Cell 8. Finally, all of our plans and actions are about building a sustainable long-term business together, where financial metrics are only part of the story. Our most recent group-wide engagement survey again demonstrates that we have a very engaged and energized organization. Our new hybrid ways of working are working well and they are constantly evolving with the world around us. As we are -- and we are well on track with our primary sustainability objectives, which were set out together with you and all of our stakeholders. These strategic objectives include our science-based targets to limit climate change, to improve diversity and inclusion in our workforce and our content and the promotion of physical and mental well-being. That is it for my initial comments. Now I am very proud to hand over to our new CFO, Enrique, for his comments on our financial performance position and outlook. Enrique, over to you.

Thank you so much, Anders, and good morning, everyone. I'm looking forward to taking your questions later. But first, a few comments on our financial performance, position and outlook. First of all, the weaker Swedish krona has again meant that our reported revenue growth was higher than our organic growth, this time by about 4.5 percentage points at the group level and 4 percentage points in the Nordics. This also means that our reported costs are higher actually by the same amount, roughly. Hence, the impact on profits is broadly neutral. Our operating expenses were up by about 41% in the quarter, which was primarily driven by our ongoing international expansion and the new English Premier League agreement, which kicked off in August. And not only did we extend the rights in Sweden, Denmark and Finland, but we also took on the rights for the first time in Norway, the Baltics, Poland and the Netherlands. The international expansion accounted for about half of the cost increase. We have also continued to invest more in original content, especially in the Nordics. Content is 70% of our total cost, and the vast majority of these costs are fixed for many years to come. We, therefore, have full visibility over the majority of our costs, and this line of sight means a lot to us, means that the current rising inflation rates have limited impact. We hedged the majority of our committed U.S. dollar cost on a forward basis, which delays the impact of FX changes and give us time to plan any measures ahead of FX movements. We're seeing little EBIT effect this year as dollar hedging rates are more or less the same as in 2021, while gains on the Norwegian kroner have been offset by losses on the euro. The dollar has been steadily appreciating against the SEK this year, and we will have a negative impact of approximately SEK 350 million next year. As Anders has said, we will offset this through cost savings, which we will talk more about at our Capital Markets Day in 2 weeks' time. On Allente. Allente is performing broadly in line with expectations and is also beginning to feel the effects of a slower market in Scandinavia. We now expect the contribution to our earnings this year to be closer to SEK 300 million than SEK 350 million. We received SEK 100 million dividend this quarter and expect a further SEK 200 million in Q4. This is lower than the SEK 400 million we previously expected, but still at a very, very good level. I would again point out that Allente is a great business, generating annual revenues of approximately SEK 6.7 billion with a 15% to 20% EBITDA margin, healthy cash flow, good cash conversion, limited leverage and attractive dividend payout ratios. Over 70% of Allente subscribers now have Viaplay and 30% have our V-channels as part of their subscriptions. So the synergy of the merger is largely accomplished. As before, we know that we are not the best long-term owner of this asset, and we will continue to discuss our options with our co-owner. Our effective tax rate for the year-to-date when excluding the share in net income from associates was 16%. We now expect the full year rate to be at around this level when excluding that associated company income before returning to a higher level next year as our international losses reduce. Let me elaborate a bit around our cash flow and financial position. Our cash flow from operations reflected the investment in international expansion with a negative change in working capital following the usual seasonal patterns and reflecting our half yearly sports rights payment, in particular. We still expect the negative change in working capital to remain at what we guided before of SEK 3.2 billion for the year, and that means very little change in Q4. We ended the quarter with SEK 546 million net debt or SEK 215 million if excluding lease commitments, which compares to our Nordic operations trailing 12-month EBITDA of SEK 1.4 billion. We had SEK 3.2 billion in cash and cash equivalents and SEK 3.4 billion of total borrowings at the end of the quarter. We have no debt falling due until June 2023, and that's SEK 150 million bond. And the remaining SEK 3.25 [ billion ] doesn't fall due until -- between 2024 and '27. And as a reminder, all of our bonds are in Swedish krona. We have a very balanced and flexible range of facilities available to us, including access to a SEK 3.5 billion commercial paper program and an undrawn SEK 4 billion revolving credit facility. We were paying at the end of the quarter 3.7% on our debt at the end of Q3 and earning 1.3% on our cash deposits. Our net interest for other financial items are expected to total approximately SEK 100 million for the full year. So in other words, we have a good line of sight over majority of our operating expenses, our financial and tax expenses. However, in a more challenging environment now, we will embark on a cost saving program to offset headwinds that we see. We're fully funded for our expansion and we will adjust to a new economic reality. At the same time, we remain one of the fastest-growing media and entertainment companies in the Nordic and international markets. We have updated our targets, and delivering on these will create substantial and sustainable shareholder value. Lastly, having been here just a few months, I wanted to say that I'm very proud and humbled to be working with such an engaged and motivated team. That is it for my colors. Now back to you, Matthew.

Thank you very much, Enrique, and thank you again, Anders. We're now ready to take your questions. [Operator Instructions]. All right. So I think first up here, if I could just ask Anders about Norway. So I think 2 questions here. One is, are the ambitions still the same? And secondly, to what do you attribute the somewhat slower start? Is that the macroeconomic situation? Or is it something specific to the product?

No. I would say, first, yes, we are maintaining our ambitions in Norway. And no, I don't think it relates to the product. The ramp-up of the new sort of Premier League package and the new total package in Norway went very quickly to a level that sort of equivalated what we have seen from previous rights holders. But in this macro environment, also in Norway, we see that the ramp-up to get to the next level is taking longer than anticipated. And we're going to have to work very focused and very dedicated to get to the level where we need to be to feel comfortable with the kind of growth that we are generating in Norway. But the short and honest answer is, yes, it has been slower than anticipated. I wouldn't call it bad and I wouldn't call it a failure in any way, shape or form. We just need to be a bit more patient in this environment.

And then a question, if I may, for you, Enrique. Working capital, is that still at the same level that was previously estimated? And then does that play out into still a free cash flow generation in 2024 as previously indicated again?

Yes. Actually Matthew, that's a very, I would say, quite simple question because we expect our cash flow for this year to be as per what we guided in terms of the working capital buildup of SEK 3.2 billion, and then for 2024 and for the long-term plan, sitting at the same level. So we expect free cash flow generation in 2024. And by the way, we're anticipating the year when our international losses will -- where we will stop being in loss-making position to 2024.

Okay. Great. And just to make the point again on the funding profile. We remain fully funded for all expansion plans we have?

Absolutely.

Okay. Great. I think what we'll do now is we'll go to the conference call line or the phone conference line, and we will take the first question there from Derek Laliberte, who's calling in from ABG.

So looking at this weaker than expected performance in Viaplay Nordic in the quarter, I mean, is this basically solely driven by Norway? Or what are you seeing in the other Nordic markets?

The answer is that it's a mix of predominantly 2 things. It is Norway, where the high ARPU packages, of course, have a direct impact given that it has taken a bit longer and spills over into Q4 and probably into 2023. So that has a significant impact. But we've also seen 2 very important things: a general slowdown in the market, meaning that many households are less willing to sign up to new services than they were in the past. The flip side is that we have also seen lower churn, meaning that the willingness to continue to consume the ones that you have signed up for remains very high. The combination of that is, of course, that the growth goes down somewhat, but we have sort of a stable outlook for how we can maximize the value of the base that we have, invest in a smart way so that we can stand strong also when this inflationary and recession-driven environment goes away, as it will at some point. It's a matter of navigating in the smartest possible way. But the combination in the Nordic is 2-fold. It is the slightly slower ad sales, but we think that spills more into Q4. But predominantly, slower buildup in Norway and generally slower organic growth, but lower churn.

Okay. And given that you now don't expect a new agreement with Telia, how long do you think it will take to recoup this lost revenues through the various measures that you're employing?

Well, we are anticipating, like you say, that there will be no new contracts. We, of course, are open for discussions. But any agreement, as you know, need to be mutually beneficial for -- and 2 partners that see sort of the opportunity to build on the agreement. So it looks like there is no agreement currently. For us, that will take something between 6 and 12 months to recoup. It very much depends on how many customers that will go to other distributors and how many customers that will sign up directly to us. We saw record high sales in the first weekend after the termination of the contract, and we have continued to see high degrees of sales in Sweden. So it's building, but it will take some time. And our decision is, of course, deciding on the fact that we have to have sort of the cost covered and the margin targets in place for any agreement that we do. Otherwise, it will be dilutive over time. These are quite significant agreements, and we have reached such agreements with all other distributors in Sweden and in the Nordics. But 6 to 12 months is the short answer to your question.

And finally, from my side, I was thinking if you could give some comments about the response to the recent price increase that you communicated in Sweden and the connected campaign. I guess it won't be until year-end when you'll see more -- after that, you'll see more effects. But any comments on that would be great. And also, I was wondering if you've seen any -- what effects have been, if any, from letting the NFL rights go to Telia.

First question on the price increase, if that has sort of manifested itself in lower sales, no. Rather the contrary, given the sort of the high inflow of customers that are signing up now on the back of the exit from Telia. But the real test only comes, like you also alluded to, early next year when the price goes up for existing customers. But remember that we haven't increased our prices for a number of years now. And this price point puts us more or less in line where the market has been. So we've been slightly below the market average. And I believe and feel confident that our very strong portfolio on the sports side will sort of keep the churn limited also on this new price point. NFL is a sports right that we've had for many years. We like it. But we have to -- given the vast sort of and very big portfolio of sports rights that we have, we have to pick our choices. We can't keep everything. And NFL is a niche -- it is a niche sport. And then we've chosen to exit that and rather invest in Swedish women's football instead, which is something that is growing much faster than NFL. So we are managing our portfolio not just here and now, but also to what we believe is the future of sports consumption.

Now we'll take a question from the message board, one for you, Anders. You've talked about focusing on Poland, the Netherlands and the U.K. moving forward. What does that mean in terms of implications for the North American launches towards the beginning of next year and then, of course, for the plans around the DACH, Germany, Austria, Switzerland market?

Yes. With the launch in the U.K. next week, we will be in 11 markets in Europe. And all of those markets will gradually build up with the U.K. to broad markets, including sports and entertainment. That gives us a rather sort of coherent approach to Europe to begin with. And then we will have 2 large, but nonetheless, niche markets in North America, where we will go direct to consumer in the U.S. and Canada during the first quarter next year. And we're making plans, both with potential distribution partners and campaigns as we speak. That takes us to 13 markets. And those 13 markets is a good footprint to build on our investments, on the cash that we expect these to generate and to deliver on our profitability target. In this time to invest in the DACH region, which is extremely hard hit, especially by the energy crisis is probably not the wisest thing that we can do. We think the region is very interesting, but the region will still be there. And our content remains very strong. And our ability to ramp up and down is very, very efficient. We can go in -- if things change quickly, we can launch very quickly. But for now, I think it's fair to assume that we will not launch in DACH during 2023.

Okay. And then we have a question on the message board from Tom Singlehurst at Citi. Tom is asking, can you talk about the scale of the cost savings you anticipate in 2023 next year? You have shown in the past that you have cost flexibility, but can you talk about the cost of achieving the savings? And whether the costs can be held down permanently or whether this only provides temporary relief?

Yes. Now we will provide more color on that, Tom, at the coming Capital Markets Day. But it's fair to assume that we need to find savings around SEK 1 billion to deal with the lower ingoing altitude that we have going into 2023 and the headwind that we're experiencing from the U.S. dollar. This SEK 1 billion is a mix of investments that we are waiting with such as DACH, some variable content investments that we can either just discontinue or push forward, as we did during the pandemic. And then there is a bucket of run rate savings that will come at some cost, but not significant cost. So it's not a massive IAC snowball that we are sort of rolling in front of us here. This is a matter of working with the flexibility that we have very deliberately built in our cost base to be able to hit the throttle where it makes sense and pull back when we have to. And that should take us to a situation where the mix change between Nordics and international is compensated by cost savings and higher growth in international. And that will lead to the profitability target that we have communicated today.

I think the other question we have here from Tom is related to the change from organic to absolute or reported sales growth. And the question there is about whether this signals any additional M&A. And I think, to be honest, Tom, I can answer that one, which is we're clear in the script that it's really only including Premier Sports. That is what we're referring to there. And the organic definition takes currency out of the equation, so hopefully it makes it a lot easier for everyone.

No, absolutely. And to give a little bit more color. I think the use of capital and the cost of capital and how we use our capital in the most efficient way has sort of manifested itself in the relevance of the investment in Premier Sport. At the same time, we're dealing with various headwinds on the currency and other things that we have to deal with. So it's better to talk about this is our growth, this is our reported expected growth rather than using organic as a definition going forward. Like Matthew says, and I also said previously, this is the M&A activity that we have built in. Nothing else is assumed, which means that if you expect us to do anything more in the future, that is not part of the current guidance.

Great. So I think we're going to take the next question from the telephone line again, please. So this time, we will have a question from Omar Sheikh from Morgan Stanley. So Omar, over to you.

I've got 3 questions, if I could. Maybe first of all, on Norway, Anders. Could you -- you mentioned that -- or you kind of cited the weakness in Norway as being principally macro driven. So maybe if you could just tell us how you're thinking about the macro sort of impact developing over Q4 and into next year? That will be the first question. Secondly, on Telia, you said 6 to 12 months to recoup the subscribers. Could you maybe just talk about whether you expect those to come in D2C or through other distributors and what the revenue impact would be relative to your Telia revenues prior to the blackout? And then thirdly, maybe one for Patrick. Just wondered if you have the revenue from Premier Sports. So can you just give us what the revenues were with the business as you acquired it? And then maybe on your long-term targets, what would your long-term absolute sales growth target have been if you strip out Premier Sports or whatever you're assuming for Premier Sports within that over the 2020 to 2025 period? Hope that last question isn't too complex.

No, it is very complex. So I'll ask Enrique to answer that question.

Starting with Norway, we're seeing a slowdown in all markets driven by the high inflation and increasing household cost environment. It is less so in Norway. We have seen a bump in Sweden driven by sort of people coming on board, and I'll come back to that in a sec. But underlying, Norway is performing stronger than the other Nordic markets. And the expectations on inflation by all metrics that we're looking at is looking to be lower in Norway. But it's not 0. And to commit to a EUR 65 price point in this environment takes longer. So I think we have achieved what we set out to do. We have all the -- all the core fans are on board. And then we are working to extend the footprint, not just with EPL, but with other content to get people to say, "Well, EUR 65 per month is actually a very affordable way of being entertainment." And I am sort of fairly interested in Premier League. That one takes a bit longer than we anticipated before. But we are still on our way to make our targets, and we will invest to get there. But it takes a bit longer. But in a situation such as the current, Norway is at least the least negative market when it comes to inflation and household confidence. When it comes to Telia, we should remember that there are 3 buckets of revenues that need to be recouped. Recouping the subs, which is approximately 200,000, Viaplay subs, that will go fairly quickly. So those revenues generated by that part will take less than the indicator 6 to 12 months. Then we have the carriage fees for our channels, which we have to build up with other distributors. And remember that we have now signed with all the rest. So that will take a bit longer. And then we have the smallest of the 3 buckets, which is sort of the reduced reach for our ad channels. And that will then go from a gross impact to a net impact as and when sort of those households are restored with other distributors. So it's a different kind of level. But my indication of 6 to 12 months covers sort of the whole package, all 3 buckets, where we will be back at the run rate that we anticipated to be before the exit from Telia. Then to the last, not so complicated question, on Premier Sports, Enrique, over to you.

So your question on the revenue, it's around SEK 450 million to SEK 500 million in revenues. But I think the more important part is that how it complements actually our U.K. launch that we start next week. We actually closed the transaction Friday this past week. And so essentially, it fits perfectly in terms of kind of combining with the Nordic content that we are launching as well as the sports that they have. So that's about the number, but I think it will help us to get faster to profitability as part of the overall U.K. launch.

Sorry, actually, Anders, could I just follow up very quickly on the Norway point. So are you tempted in any way to modify the prices in Norway? Are you thinking about maybe whether that decision to take the prices to where they are now was the right one? Is there anything you can do on bundling or discounting that might help that process of kind of persuading Norwegian subscribers to take the product?

Yes. No, I think the decision on the NOK 649 price point was the right one and remember that is NOK 50 less than the previous rights holder charged for the equivalent sort of package, but with much less content. So the price point is the right one under normal circumstances. But of course, in this environment, it is a significant investment for any household. I'm not sort of tempted or considering to take down that price, but we will work more with what you sort of allude to, bundles, campaigns in various ways, so we keep sort of the run rate at the right level going into, hopefully, more sort of financially benign environment in the future. So we keep track and line of sight to additional and planned price increases in the future. So we don't create a massive delta and then have to do this massive ramp-up in a market that just generates unnecessary consumer dissatisfaction and the risk of churn. So we will work with campaigns, with bundles, everything you can think of. But the price point is this right one.

I think just to make the point again, that if you look at the previous guidance's midpoint on revenues for 2025, we were sitting at around about SEK 26 billion or so. The current guidance would imply a midpoint of around SEK 25 billion. And I think on the profitability side, it's also important to emphasize that, again, looking at the previous midpoint in the guidance, you were talking around probably SEK 3.4 billion or so of EBIT in 2025. Now we're talking between SEK 3.2 billion and SEK 3.45 billion. So these are very, very similar levels over the [indiscernible], which I think is an important point to make.

The journey will look slightly different. And we have to be quick, nimble and flexible in this environment. And the beauty of our model is that it is -- we have a product that scales up and down very quickly. We have variable investment levels that we can work with in a very sort of -- in a very efficient way, which means that there is no straight route in this environment. I think most of us experience how difficult it is to navigate these days. But under any circumstances, we have the toolbox to navigate through it and get to where we want to get.

Yes. That's the theme that's coming through the message board actually, that there seems to be a shift here from -- to some extent, from Nordic to international growth and to some extent from subscriber to ARPU growth. And that seems implicit in the discussion.

That is correct. And we should remember that, that penetration and maturity in the Nordics is higher and we have more exposure to various revenue streams in the Nordics. So in a slowdown environment that we are seeing right now, of course, Nordics will be harder hit. But we've gone from 0 to top 2 on streaming services in 2 of the most significant markets in our expansion, Netherlands and Poland. We continue to grow. Our margin uplift and the operational leverage is significant in those markets. And I think this just underlines the relevance and how correct it was to make a decision to broaden the footprint for our company and to use ways of monetizing on our content and to not be exposed just in one region.

So I think the next question we'll take is again from the telephone line. So this time, the question comes from Martin Arnell at DNB. So Martin, please go ahead with your question.

So just on the -- my first question is on the churn levels. You mentioned that churn is actually down. And if we look into the coming months, do you not expect churn to increase? Or is an increasing churn included in your guide for the full year?

Yes. That is a good question. And churn is, of course, a tricky one in a non-commitment environment, meaning that we don't commit to our customers to more than 1 month at the time. But we have some pretty good sort of tools in how we keep our dialogue with our subscribers to make our churn prediction fairly robust. So we know fairly well a couple of months ahead what the kind of churn levels that we are looking into. And they do not indicate any increase in churn towards the end of the year or in Q4, rather the contrary, actually. The only uncertainty that we have -- and we should mention it -- is, of course, the football world cup in December. We haven't tried to have a world cup in December before. And some of the big football leagues will, of course, be on hold when that happens. But there are so many other things going on. So with everything that we have available in terms of data and facts, nothing suggests that the churn levels will start to rise and become a bigger problem in the fourth quarter. But there is no silver bullet. This is a product that is completely built on the viewers, the consumers' willingness to interact and to commit. If we don't deliver on the content, it's very easy to leave. But we are ramping up. And we have a number of very strong premieres coming up in Q4, content that is related to our sports rights when they go on hold, et cetera. So I think we are feeding the platform with as much reason to stay as we possibly can.

Okay. And then a question on your pricing. It's obviously up in many markets, and you have a bit more to do. Can you talk about the gradual impact on growth and margin next year from your pricing initiatives?

Yes. Well, we'll come back in much more detail on that at the CMD when we can talk about '23 and onwards in a bit more granular way and to sort of dissect the numbers that we are giving today. This outlook and the numbers do anticipate that we continue our work with price increases on a not so dramatic, fairly modest, but nonetheless stable level into '23 and onwards. As is the case for all companies faced with an inflation environment and in our case, also exposure to the dollar, we will have to continue to put up our prices. But not at levels where I think we are jeopardizing our ability to keep people on the platform. But much more will follow on that at the CMD.

Okay. And can you just remind us on your cash flow and your international losses, what do you expect for the full year next year in terms -- do you expect Netherlands to be breakeven end of next year? Or -- and what about Poland?

Well, Netherlands is well on its way to hit breakeven towards the end of next year. Poland is a lower penetrated market and it's a much bigger market, which, over time, gives it a significant operational leverage and upside. But it will probably take it into '24 as we sort of alluded to now that we will go breakeven in international, all markets in 2024. This year, we've guided for losses over SEK 1.35 billion. And as mentioned earlier, we expect that to go down to around SEK 1 billion next year and then fall quite dramatically from there into breakeven. So once we've sort of come over this trough earnings year that we are facing this year, the reduction in losses in international comes quite quickly. And then we need to side that with managing our ramp-up in the Nordics with cost and price measures. So that once those 2 meet, the upside and the profitability is what Matthew indicated just now.

Yes. And you mentioned the savings upcoming sizable numbers there that you're going to talk about at CMD. But when we look at your financial position, you have net debt of just above 1x EBITDA, and it looks probably like you're going to be at cash burn in next year as well. My question is, firstly, how confident can you be in those working capital guidance for next year. Is the risk here that you expand with a stretched balance sheet at the end of the day?

Enrique, you want to comment?

Yes. I mean, we are quite confident, very confident that the -- I mean, as I indicated before, that we have a good line of sight in terms of what payments we have upcoming. So we are in a good position in terms of reaching our targets when it comes to our financial position and to reach a free cash flow position in 2024.

But is that -- those cost savings that you mentioned, the SEK 1 billion, are those necessary for you to sort of...

That's an important part of it on that equation and the overall guidance that we have as a -- for the total group.

I think, Martin, just to add to that, I mean the SEK 1 billion is, of course, a big number, and it needs to be a big number so that we prepare accordingly. It may be at the high end of what is necessary, but we now find ourselves in the environment that has gone from bad to worse since February this year and a lot of moving parts in the world around us. What we do now is that we try to take in as prudent approach as possible to making sure that we combined our ability to continue to invest with measures that safeguards our balance sheet and our sort of capital position. That's why we feel fairly confident that we have the toolbox to actually deal with this and that the growth will continue to be strong. We should not forget that also in this environment, we remain a quite unique growth company in our sector or in general. And the line of sight now to the kind of margins that we set out to deliver in 2020, that line of sight has, if anything, strengthened.

We've got another few calls coming through the telephone conference line. I want to get through these in time. I think we're going to overrun a little bit, but we'll keep going. So we're going to go next on the telephone conference line to Rasmus Engberg, Rasmus from Handelsbanken. And so over to you, Rasmus.