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

Good morning, and welcome, everyone, to the Viaplay Group Q4 Results Webcast and Conference Call. My name is Matthew Hooper, and I will be your host for today. As usual, I'm joined in our Stockholm studio by our President and CEO, Anders Jensen; and our CFO, Enrique Patrickson. Welcome, gentlemen.

Thank you.

You can find the results presentation materials on the Investor Relations section of our website as usual, and you can pose questions at any time on the message board by clicking on the Ask a Question tab at the top right-hand corner of the webcast window, or you can ask questions yourselves by registering through your phone keypad, but more about that later. So let's get started and first of all, over to you, Anders.

Thank you very much, Matthew. Good morning, everyone, and Happy Valentine's Day. Q4 brought to a close an extraordinary year in which so many things changed around the world. A year that began with the COVID pandemic, supposedly behind us, then witnessed what few believed was possible a land war in Europe, which in turn sparked global supply chain disruption, spiking inflation, rising interest rates and economic recession. Such periods tests everyone, and we were no different. The resilience and potential of our products, our people and our plans enabled to end the year having grown our Viaplay subscriber base by some 83% to 7.3 million subscribers. And with Viaplay revenues up 52% to SEK 7 billion, of which SEK 1.4 billion came from our international markets. We added 3.3 million paying subscribers last year, with the Nordics markets growing by 1.2 to end the year with 4.6 million subscribers, and the international markets growing by 2.1 million to end the year with 2.7 million subscribers. Viaplay now accounts for almost 50% of our quarterly revenues, and we are well on track towards our 5-year goals. We launched Viaplay in 2 new markets in 2022, firstly, in March in the Netherlands to coincide with the start of local hero Max Verstappen's ultimately successful defense of his F1 World Title. By the end of the year, we already have more than 1.2 million subscribers in the Netherlands as many as we have in Poland, and swiftly catching up with our yet largest market, Sweden. Then we acquired Premier Sports and launched Viaplay in the U.K. in November, where we are establishing ourselves with existing and new distribution partners. We are building our brand, and we are carefully considering the addition of attractive new content. We will now shortly launch Viaplay direct-to-consumer in the US and Canada, which will take our Viaplay footprint to 13 countries. The Viaplay brand is also present in a further 20 countries through our Viaplay Select service, where we make our curated and branded content available to ingest on third-party streaming and broadcast platforms around the world, from Latin America to Australia, Central Europe to Japan. We started 2021 with 3 million Viaplay subscribers. So, we are now almost halfway towards our 5-year target of adding 9 million subscribers after only 2 years of the 5 years in our strategy period. As a group, we delivered on our guidance for 20% full-year organic sales growth with 24% in Q4, including a further acceleration to 73% Viaplay sales growth. We also delivered on our 10% full-year organic sales growth target for the Nordics, with the same pattern of accelerating Viaplay growth, up 33% in Q4. This accelerating growth not only reflects the subscriber growth but also ARPU growth, as we have commenced our well-planned series of price increases. 2022 was always the year of substantial subscriber growth, while 2023 is more about prices being adjusted upwards to reflect our enhanced content offerings and our now more established positions in our new markets. The subscriber growth has been particularly driven by successful partnering across all of our markets, be it CANAL+ in Poland, or new and extended deals with KPN in the Netherlands and its subsidiaries, Telia in Sweden or Norlys in Denmark. These revenue-sharing deals are linked to our local recommended retail price. So the price increases that we are now putting through impact both D2C and B2B basis, and will help drive our growth this year and into the future. And to be very specific on pricing, we have already put out base tier prices up by between 8% and 16% across the Nordics this year. We have also increased the premium price by over 20% in Sweden, the first time since 2016, and we have increased the premium price in Norway by a further 15%. And with regard to Norway, where we launched the Premier League -- premium package in the middle of last year, we now have more subscribers than we anticipate the previous rights holder to have had, but we're still a little shy of our initial very high ambitions. We have, therefore, increased our prices a little earlier than the original plan. The record-breaking goal scoring feat of local hero, Erling Haaland, for Premier League Champions, Manchester City, continue to heighten interest levels. And it is no accident that we have replicated the exclusive content deal with Erling similar to the one we have with Max Verstappen, so that we have fascinating documentary coverage of the professional and private life of this extraordinary man and player. We raised prices in Netherlands by some 40% last year, where we now introduced tier pricing in Poland to coincide with the additional of the Formula 1 rights from March this year. The premium price is going up 60%, while we're also introducing a base and medium tier as we have in the Nordic countries. The basis for these increases is not inflation. It is the content offering. We have added a wide range of new rights with the English Premier League now available in 9 of our markets, Bundesliga in 10 markets, Formula 1 soon to be and also 10 markets, and the world's largest hockey league, NHL, in all 11 of our European markets. And in addition to this, we have an even wider range of national team sports coverage, winter sports and local favorites like field hockey in the Netherlands, KSW, fighting in Poland and rugby in the U.K.. And our mix of original and acquired programming is bigger and broader than ever. We premiered 75 Viaplay Original features, series and documentaries last year, as well as a further 51 non-scripted and reportage shows. This year, we will premiere more than 130 more original productions. So, you can see that customers are getting fantastic value for money in a very competitive landscape, where they can pay a lot more for a lot less from rival services. The consumer wallet is undoubtedly under pressure, which is why it's so important that our unique and affordable offering of live sports, local original content, international series and blockbuster movies has universal appeal for all of the household and family. Our price points for all you can eat, all in all, you can watch packages are fantastic value when compared to visit to a movie theater to watch just 1 premier or ticket to watch just 1 sports event or even a family out at your favorite pizza restaurant. The unprecedented and unpopular, I would say, timing of the Football World Cup in Q4 did cause a temporarily higher churn rate as all domestic football leagues paused for a month. But when the leagues restarted with some fixtures and big ones, the churn fell again very quickly and all the football fans returned. We are seeing some impact right now during the Formula 1 off-season, but we have a lot of other complementary sports and non-sports content on the platform to keep customers entertained 24/7. Our linear subscription and other sales accounted for around 30% of group revenues in Q4 and for the full year -- in Q4 and for the full year. And we're up 7% on an organic basis for both periods, in line with our guidance. Wholesale -- channel sales, sublicensing and studio sales were all up. We expect this growth rate to accelerate this year, given the price increases that we are introducing for the linear channels. Our advertising revenues accounted for 23% to 24% of total group revenues in Q4 and for the full year and were down 9% on organic basis in Q4, just over 2% for the full year. This is a slightly weaker development than we had expected. The Q4 results not only reflected the fact that all 3 countries ad markets declined in aggregate by mid-single-digit percentage point, but also the fact that the Men's Football World Cup was shown on rival channels. And that we lost some penetration -- penetration points due to the temporary removal of our channels from Telia's network in Sweden. We expect this trend of lower advertising spend to continue for at least the first half of 2023, albeit with lower levels year-on-year decline than what we saw in Q4. We are raising prices again this year by double-digit percentage points in the annual upfront negotiations in order to offset linear viewing levels and reflect the broader inflationary environment. Norway has been the most resilient of the 3 markets. And radio is performing better than TV in both Norway and Sweden, given its lower cost, shorter booking cycles and ready availability of inventory. On the profitability side, I will leave it to Enrique to comment other than saying that we delivered on our revised guidance for 2022 in terms of the Nordic margin. We had slightly higher cost on the international side due to the acceleration of our development. We are not making any changes to any of our '23 or '25 guidance at this stage. The progress we made in Q4 has strengthened our ability to deliver on our ambitions. But in the current uncertain market environment, it is simply premature to make any upward revisions. We are working through our cost savings actions, and we are balancing those against the benefits of new distribution deals and the unpredictability of the ad market development. Our international sales are ahead of plan, and we continue to expect to deliver a combined profit for the international operations in 2024, 1 year ahead of schedule, as well as group positive free cash flow next year. It is worth saying that our strategic goals imply total group revenues of approximately SEK 25 billion in 2025 based on the midpoint in our guiding range, and we expect to achieve a group EBIT margin of approximately 13% in 2025, which would imply group profits before ACI and IAC of above SEK 3.2 billion. Group and Nordic sales growth is expected to accelerate this year, with rising ARPUs and with a higher Nordic EBIT margin and lower international losses. In conclusion, as I said on our last call, all of our plans and actions are about building a sustainable business, one where financial performance metrics are also only part of the story. We have a strong culture at Viaplay Group, one that is purpose-led and values driven and one that embraces change precisely because of the opportunities change brings. We know this because of our internal surveys clearly show that we have a very engaged and energized organization. We also carefully measure our sustainability status, work and ambitions against our local and global peers through ESG assessments by the likes of MSCI, Dow Jones and Sustainalytics, which is why it has been so great to see that we have again been included in both the world and European S&P Dow Jones Sustainability Indices as well as recognized as best-in-class in the latest Albright Report's Green List when it comes to gender equality. And we're being ranked 8 out of 294 global media peers. Still some way to go to #1, but still. That is it from my initial comments. I will now hand over to 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. So first of all, the weaker Swedish krona has again meant that our reported revenue growth was higher than our organic growth, this time by approximately 6 percentage points at group level and 5 percentage points in the Nordics. The acquisition of Premier Sports added about 1.5% to our group sales. Adjusted for that, then our Q4 organic growth was 24%, and our Nordic growth was 10%. Our reported costs grew by about the same percent growth. So, there's little impact on profits from that. Our full-year Nordic and group sales came in, in line with our guidance levels of 10% and 20% organic sales growth, respectively. The Nordic full-year margin also came in as expected, just about 7%, with the losses of our international operations slightly higher than expected as we consolidated Premier Sports, invested in our launch in the U.K. and prepared more for the launch in North America. Despite this, please remember that our full-year international losses came in more than SEK 100 million better than the originally anticipated number in the beginning of the year. Our operating expenses was up 46% in the quarter, which was primarily driven by our ongoing international expansion and the sports rights that we acquired or extended last year, including the new English Premier League agreement, which kicked off in August and expanded from 3 territories to 9 territories. The international expansion accounted for approximately half of the cost increase. And then we have also continued to invest in other content like original content, as Anders was mentioning. And our total content spend was up 63% in the fourth quarter. We straight-line amortized the originals investments over 6 years. And content accounts for about 70% of our total costs, with live sports being the largest category. The vast majority of our content costs are fixed for many years to come. So, we have very good visibility on this moving forward. We hedged the majority of our committed US dollar cost with forward contracts, which delays the impact of FX changes, and that gives us good time to take any measures as a result of FX movements. Due to the previous appreciation of the dollar against the SEK , we will have a negative impact of approximately SEK 350 million this year. We are offsetting this impact through cost savings. We announced today also one-off costs of about SEK 130 million, of which SEK 86 million hits the fourth quarter accounts and the remaining balance will land in the Q1 2023 results. All of this as items affecting comparability. The one-off items cover essentially 3 areas. First, the -- sorry, the reorganization and redundancy costs as part of the new organizational setup that we announced in November. Secondly, it includes integration and transaction costs for Premier Sports, the acquisition we completed at the end of October. Lastly, we closed down a studio here in Sweden and wrote down related content. Accounting wise, we're not able to book all these costs in the fourth quarter and part of it will be reported in Q1 2023. Please remember that we also had a positive one-off in Q1 of 2022 of close to SEK 600 million. So for the full year of 2022, our total one-off or IACs amount to a positive of SEK 510 million. A couple of words on Allente. So Allente is performing broadly in line with expectations and contributed to SEK 282 million of associated company income in 2022, with SEK 78 million in the fourth quarter. As expected, we received SEK 200 million in cash dividends in Q4, which took the total for the year to SEK 300 million. So, we have now been a 50% owner in Allente for almost 3 years. The company has been restructured, and we have captured the synergies from that merger. It's a great business, generating annual revenues of approximately SEK 6.8 billion with 19% EBITDA margin, healthy cash flows, limited leverage and attractive dividend payout ratios. And over 70% of Allente subscribers now have Viaplay, and 37% have our V-channels as part of their subscriptions. We do not believe that we are the best long-term owner of this asset, and we'll continue to discuss our options with our co-owner, Telenor. Our effective tax rate for the full year when excluding our share in net income from associates was 3%. Our average effective tax rate going forward is expected to be at approximately 21%. On cash flow. So, our cash flow from operations reflected really the investments in our international expansion, the Allente dividend and the negative change in working capital arising from sports rights payments in particular. We had SEK 3.3 billion of negative change in working capital for 2022, and that was slightly above our previous guidance of about SEK 3.2 billion. And that reflects the increased investments in sports rights and original programming. These investments will continue to grow but at a slower pace. So, we continue to expect a further buildup of working capital this year to the tune of about SEK 2 billion. We ended the year with SEK 1.5 billion on net debt, or SEK 1.1 billion, excluding leases, and we had SEK 2.8 billion of cash and cash equivalents and SEK 3.9 billion of total borrowings. We have proactively added about SEK 500 million of short-term borrowings through commercial paper programs, as we have a seasonal buildup of working capital in the first quarter. As a reminder, we have about 100 -- or we have SEK 150 million bond maturing in June of this year, which will be covered with short-term funding. The remaining SEK 3.25 billion of bonds, which are only Swedish krona denominated fall due between 2024 and 2027. And we're paying a blended rate of 4.1% on our debt at the end of Q4 and earning 2.4% on our cash deposits. Our net interest and other financial items totaled minus SEK 88 million in 2022, and we're expecting this number to grow to about minus SEK 200 million to SEK 250 million for this year. So as you note, we have a very good line of sight on the majority of our operating expenses, financial and tax expenses. Our 2023 and 2025 long-term targets and outlook remain the same. We're operating in a less certain environment and more challenging markets right now, which is why we're saving on costs to offset the headwinds that we see. And we also have the benefit of the new improved Telia deal in Sweden, of course. Importantly, we are fully funded for our expansion, and we have focused our resources on our key and larger markets. Our growth and earnings profile for this year are expected to be, as we presented at the Capital Markets Day in November. So the Nordic margin will be below 7% for the first half of this year, as we continue to see the cost increases from new sports contracts taken on in the second half of last year. And then the margin will increase in the second half as costs are in the comps, are with a better price increases that we're introducing in the first half of this year and they are then fully embedded in there. Our international losses are expected to gradually reduce during this year. We are adjusting to a new economic reality, but still remaining one of the fastest-growing media and entertainment companies with 83% Viaplay subscriber growth last year, 20% organic sales growth and our prices now being raised in most markets as planned and to reflect the significant content and customer experience investments that we have made. This is all for my comments. So back to you, Matthew.

Thank you, Enrique, and thank you, Anders. We're now ready to take your questions. [Operator Instructions] Okay. So, we'll start off then with some questions on the message board, if I may. So Anders, first of all, in relation to the price increases, quite a lot of price increases and quite a lot of markets there. How are they landing? What sort of responses are we seeing from customers so far?

Well, we have rolled out virtually all of our price increases now. And we can see what is typically the pattern in a price increase. You get some churn upfront and then it goes silent, and then you see sort of a second round of churn when people start to sort of see the impact on their credit cards. The initial churn is slightly lower than we have anticipated, which is, of course, positive. And that usually sort of sends a signal that the churn overall will be in line or slightly better than we have anticipated. And I think if anything, it sort of demonstrates the importance of the products that we represent in this market where you spend less money outside your home. Still early days, but this is positive. And this is a very important sort of counterweight and counterbalance towards what we expect to be a generally slower market in terms of growth. So keeping customers, engaging them, making sure they stay for as long as possible is absolutely key, and this is a positive indicator.

Great. Good. And I think following along the same sort of vein, Tom from Citi has a question. We've introduced tiered pricing now or in the process of doing that in Poland. Is the same sort of structure possible in the Netherlands? Would it make sense?

Yes. Thanks, Tom. That's a good question. Yes, it's absolutely possible. And yes, it would make sense at the right time. We have unlocked so much more interest in the Dutch households around our content in general, but of course, around Formula 1 in particular. And we want to stay as focused as we can to unlock as much more potential as possible in the households before we start to work with the tiers and variated pricing. And this is a future upside that we are planning very, very carefully. But yes, in all of our broad European markets, you should expect a tiered pricing structure to be the case when the time is right.

Okay. Very clear. So, we'll take the first question now from the call line, if I may. So, I think first up, we've got Klas Danielsson from Nordea.

Yes. Can you hear me?

We hear you.

Fantastic. So first off, I have a couple, actually, if I may. But first off, clearly, a strange quarter with the World Cup being in Q4, quite irregular and so forth. But you're clearly picking up a good chunk of kind of subscribers despite that. And I guess you detailed the churn effects earlier. But could you maybe also touch up on the gross adds and how that has developed over the quarter? And then also on that side, if you're kind of seeing any irregular seasonality coming in during January instead and are kind of picking up more subscribers then, or how that's looking? I'll start off there.

Yes. Thanks, Klas. Very good questions. If we look at the gross adds during the fourth quarter, as I mentioned, the churn related to the World Cup came in more or less as we anticipated. But the underlying growth in especially non-sports came out particularly strong in the fourth quarter, which means we're taking a little bit of ARPU pressure as a consequence of the churn due to the World Cup. But we are compensating then with significantly higher volumes on the entertainment package, the TV series and movies package. Some very strong premieres that has performed well towards the end of the year, both features on series and movie side. Norway has continued to develop very strongly on the TM side. So, there's a lot of positive momentum underlying despite this, as you say, a rather strange quarter and hopefully a one-off situation with the World Cup in the fourth quarter. When it comes to seasonality in the first quarter, it is a generally slower quarter in terms of growth, and we anticipate this year to be no different. But the churn has started out on the low side as well, despite the price increases that we are rolling out. So early indications are positive. And remember that especially in our more mature markets in the Nordics, the growth for this year is on a significantly lower side than it was last year. And now it's more about price increases and ARPU development. So, these indications are very positive. In international, it remains to be about continued market maturity and growth of subs. And we have seen that in general, in particular, in Poland, I should say, where we have started the year slightly stronger than anticipated. But as mentioned in my CEO comments, we now have more than 1.2 million or we closed the year with more than 1.2 million subs in both Poland and Netherlands, so very strong. So, we're not seeing any fluctuations due to seasonality.

All right. That's fantastic. And then I guess, you started to touch upon it also in the international segment. But I guess some of us were pretty scared of the Netherlands and Poland in this quarter with the lack of F1 and the lack of Premier League sports also in December for a large part of that side. But could you maybe detail on the international specifically, what's behind the growth? Is it primarily the U.K.? Or how is kind of the Netherlands looking as well?

No, it's not primarily U.K. yet. Matthew will fix that as he takes on his new role. But it is actually about 2 things. It's continued solid growth in both Netherlands and Poland, but significantly lower seasonality churn that you mentioned. We, of course, we're also working very hard to avoid the Formula 1 related potential churn as the season was concluded and added a lot of both F1 related content with documentaries and programs around Max Verstappen. And we added a lot of other new programming that made sense for the kind of audience that were very sort of F1 focused. And that paid off. In terms of the entire base in Netherlands, less than 10% left when the F1 season was over and most have now returned. And now we are just 1.5 months into -- before we kick off the new season. So, that was a very, very strong vote of confidence in our product in a new market like the Netherlands. In Poland, we didn't see any seasonality churn at all, actually. And when it comes to the World Cup-driven churn, Poland was probably one of the better performing markets actually.

Okay. Okay. That was fantastic. And then lastly, if I may sneak in a last one here. Looking at the ARPU side, that's clearly been in focus during the last 2 quarters. And I guess in the Nordics, we kind of finally saw a bit of a step-up there and this one, still more to go, I guess. But it's quite difficult for us to track. And I mean you mentioned that the timing of price increases will impact margins a bit. So could you help us understand what the puts and takes on the ARPU side is ahead of next year? What's the kind of progression, I guess, on that side as well?

Yes. Yes. All D2C customers, as you know, will sort of start to pay the new prices immediately. So, that will be visible already in Q1. And then it takes us into Q3 and early Q3 until we see the full base based on the agreements -- the various agreements we have with distributors. In our new agreements, the link to recommended retail price is very strong. So the price increases will fall through quicker than they've done in the old kind of distribution agreements that we've had. So come Q3, we should be fully up to speed on the ARPU increases. We do take the cost for the new rights and the inflation on existing rights already from the beginning of the year, which is why, as Enrique mentioned earlier, Nordic margins will be under pressure in particularly Q1, and then gradually increase to be up for the full year. So, you should model an ARPU based on sort of increase throughout the year, but more modest in the beginning and then progressively upwards from end of Q2, early Q3.

We're a tech company. [Operator Instructions]

So, we developed that.

We have developed that in app, in call. So next up on the call, we have Omar Sheikh from Morgan Stanley.

So I've got 3 questions, if I could. Maybe, Anders, to start on the price rises, you've talked a lot about the price rises you're putting through this year. But could you maybe just talk about your strategy beyond this year in relation to pricing? So where do you want Viaplay's pricing to be relative to the competitors, both within the Nordics and in international? That's the first question. And then secondly on advertising, just want to make sure I understand exactly what you're sort of guiding to for the full year. Are you saying that advertising will decline sort of in line with the decline that you saw in 2022? Or do you expect some growth in the back half of the year to offset the early declines in the first half as you've guided? I guess the message on that, I think, would be helpful to clarify. And then finally, maybe for Enrique, what's the guidance on leverage for the full year? And where do you expect or which quarter do you expect peak leverage to come in? Is it sort of Q2 and then deleveraging thereafter? Just some color there would be helpful.

Thank you very much, Omar. Let me start with the price increases. In essence, we are more or less following exactly the plan that we laid out when we started this journey in early 2021. So the price increases that has now been rolled out are of slightly higher nature than we then have planned for '24 and beyond. So, we are now on the back of more content and new content, resetting our cost baseline -- sorry, the price baseline in most of our markets. And then you should expect yearly inflation-related price increases across our packages. We, of course, want to be priced at a premium because of our exclusivity, particularly in our sports content, but of course, we don't want to price ourselves out of the market. So, we need to strike that balance between what is sort of fair price for the products and people's willingness to pay. But 2023 is the year where we are resetting a lot of baselines and start the journey with additional packages like we're now doing in Poland, that you will probably see more of in more markets in '24 and beyond. So, we work with our sort of generation of revenue based on our assets in a different way, the coming years. And this is why it's so positive that the early indications of churn being on the low side is a positive because once we reset the baseline, then based on the largely fixed cost base, the upside on margin is quite substantial, as you know. On the advertising, we expect the first half of the year to be not down 9% as we saw in Q4, slightly less bad than that, but nonetheless down. And then everything that we're seeing and every discussions that we're having is talking about a slightly backloaded market. So on aggregate, when I look at the numbers, we're probably looking at a mid-single-digit decline for the full year, with some potential upside if the market gets stronger in the second half. Our very ambitious and very competent advertising teams are pointing to a slightly lower decline than 5%, but there are many swings in this market. So if you think about a 5% or so decline for the full year with more so in the first and less so in the second half, that's probably what we are seeing right now. Enrique?

Yes. Thanks, Omar, for your question. So really the -- what is impacting this is really the work --sorry, it's really the working capital. You can hear me, right? So it's working capital that is impacting the leverage. And it's really a contest between the first and the third quarter if you kind of asked for kind of like how it looks in the year. And first and third quarter has the kind of more of a seasonal buildup of working capital. So, that is really what will be -- what we expect to be driving kind of peak leverage during the year. So, we expect -- for the first quarter, we expect to get in the kind of area of SEK 3.5 billion. It's not super easy always to predict working capital, but around SEK 3.5 billion on net debt, and that could be about the same level for the third quarter. So it means then kind of reversals in the second and fourth quarter.

Good. Thanks, Enrique. So, then we have a question from Per Johansson at D&G. This is a multilayered question. Can you elaborate on the competitive environment in the Nordics and the different international markets, given we see Telia comment about not being a content owner anymore? We see international companies focusing on the core. And are there other tangible evidence of a changing competitive landscape or environment and what are you doing yourself? Where do you see most adverse end market developing? There's a lot of questions in there, but I think you get the gist of it.

Yes. I get the gist of it. It's a very good question, and it sort of frames a lot of the moving parts that we have to consider for this and for the coming years. If I try to sort of make a little bit of a prediction what is ahead of us and try to interpret what we're hearing from various corners is that some players will scale down their ambitions with content in general and sports rights in particular. That is positive. That will lead to a more predictable outcome on future tenders and renewals. Bear in mind that we have nothing coming up that is of fundamental importance to us, but it can open, of course, opportunities along the way, and it sets the pace for things further down the line. And this is actually true for all markets. The other side of the coin is, of course, the high competition leading to some form of consolidation and settling in many of the markets. And that will open for some, opportunities. We have seen some in-market consolidation in, for example, the Netherlands not being approved by the regulatory authorities. That will lead to some changes. You mentioned Sweden, where we have seen some comments made by other players in the markets, that will lead to some form of changes. So the question is very broad and a very good one. But what I think is the essence of what we're having in front of us is now sort of the second phase of a massive growth journey for a lot of players is that not everybody will be left standing when the dust settles. Costs will have to come down. And the further market maturity that we are now moving into is one of lower churn, less of a growth rate and more stable price increases every year. Then we have built a sustainable future for streaming at the core of our business. And we are very well positioned in that journey, both when it comes to improving our costs and seeing new opportunities and also participating in in-market consolidation opportunities. So it's a multilayer like you said, Matthew, question, a good one. But I think in essence, to boil it down to something is that what is happening now is positive.

Yes. Shifting sands with people focusing on core.

Yes. Indeed.

So, we'll go back to phone lines now. So the next question comes from Martin Arnell at DNB.

Question is on the content costs. It looks like it was a little bit higher in Q4 than you thought. But how should we think about the full year now? You say gradually diminishing loss internationally. But can you just elaborate a bit on the cost side in international?

Yes. Absolutely. The slight overrun on costs in international was related to one-off costs that we decided to just take and get it done related to Premier Sports in the U.K.. And we had some other sort of one-time costs that we decided not to bring with us into this year. So, there is no run rate in what you saw in Q4. It is on the balance, roughly SEK 30 million versus what we anticipated for the full year. And like Enrique also said earlier, remember that we came in more than SEK 100 million better than we anticipated on losses for the full year when we started the year. So, there are no indications or anything from the proof points that you're looking for in Q4 that will change the outlook for this year, rather the opposite, actually.

Yes. Okay. Great. And you expect a gradual improvement there throughout the quarters in the year, right?

Correct. Correct.

Okay. And then just on Norway, I think you mentioned price hikes a little earlier than originally planned. Could you just say what was the logic behind that again?

Yes. Well, if we just take a step back to our ambitions for Norway, when we took over or decided to invest in Premier League, we did it on the back of the belief that there are more households ready to sort of buy into Premier League than was previously covered by the previous rights holder. And we proved that when we launched. As I mentioned, we anticipate to now have more households connected than has been ever before in Norway, slightly less so than what we aimed for, but still better. But what we did was that we took down the price versus the previous rights holder from 6.99 to 6.49. And then we had an ambition to increase the price after the first year. And given the slightly lower volume, we decided to make that price increase that was planned for the beginning of next season to do that already now to make sure that we can continue to invest in the experience in Norway, and that we have an ARPU and revenue generation from Premier League at the level that we needed to be. So that's the whole reasoning, slightly lower volume, price increases according to plan, slightly earlier, baseline reset. That's the way to think about it.

And you still expect to be able to tap into the market, which is the story, I guess?

Yes. Absolutely. Norway has quickly moved from back in -- not that many years ago, being an underinvested, unprofitable problem market to now becoming one of our most attractive markets in the Nordics. It's performing very, very well. And some of our biggest hits on the non-sports content side sits in Norway. So yes, absolutely.

And just finally, one final question. You added the Telia partnership in Q4, but you didn't revise the guidance after that, despite the new contract is better than the one according to you. So can you just elaborate on the rationale?