Good day, ladies and gentlemen. Welcome to KPN's Fourth Quarter and Full Year 2020 Earnings Webcast and Conference Call. At this time, all participants are in listen only mode. We will be facilitating a question and answer session towards the end of today's prepared remarks. If you would like to ask a question, you may do so by pressing star one on your telephone. Please note that this event is being recorded. I would now like to turn the call over to your host for today, Mr. Reinout van Ierschot, Head of Investor Relations. Go ahead please, sir.
Good afternoon, ladies and gentlemen. Thanks for joining us. Welcome to KPN's fourth quarter and full year 2020 results webcast. With me on the call today are Joost Farwerck, our CEO, and Chris Figee, our CFO. As usual, before turning to our presentation, I'd like to remind you of the Safe Harbor on page two of the slides. That also applies to any statements made during this presentation. In particular, today's presentation may include forward-looking statements, including KPN's expectations with respect to its outlook and ambitions, which were also included in the press release published this morning. All such statements are subject to the Safe Harbor. I would now like to hand over to KPN CEO, Joost Farwerck.
Thank you, Reinout. Last year was dominated by COVID-19, we were able to make a valuable contribution to people, households, businesses, and government in the Netherlands by keeping everybody connected. At the same time, we delivered on our full year outlook. That's what we're going to tell you about today. Welcome. Our networks were ready to accommodate a significant increase in traffic. Our people in the shops, in service centers, in operations, sales, our field engineers, had to adjust the way of working, and I'm grateful to our colleagues, our KPN colleagues for making this possible. We're now in 2021, and the virus is still not under control. Same for the Netherlands. We know, and we have shown that we are a robust and resilient company.
During the pandemic, we are prepared, and we are executing and delivering on our strategy, which we shared with you at the end of November. Accelerate to grow. Let's start with some highlights from the fourth quarter and the full year 2020. In the fourth quarter, we saw encouraging developments in our mass market service revenue trends, driven by wholesale, and we managed to further stabilize our broadband base and grow in post-paid. This quarter, growth in fiber revenues outweighed the loss on copper service revenues for the first time. We added close to 320,000 households to our fiber footprint in 2020, and we reached the required weekly rollout speeds to deliver half a million homes passed this year. Our efforts in modernizing our mobile network have paid off, and our 5G network was recognized as the fastest and most innovative 5G network in the Netherlands.
Yesterday, we were officially announced as being the best mobile network in the Netherlands by Ookla. Today, we reiterate our ambitions for 2023, and at the end of the presentation, Chris will give you more details on our financials and walk you through our specified outlook for 2021. Let me highlight a few key figures for the fourth quarter. Corrected for a number of divestments, revenues declined by 1% year-on-year. Growth in wholesale and consumer fixed was offset by lower revenues from business and the B2C model. EBITDA increased 1.2% year-on-year, as the effect of lower revenues was more than offset by continued progress in our cost savings. Full year free cash flow increased 6.6% year-on-year to EUR 765 million, and return on capital employed improved significantly to over 10%. We delivered on our outlook.
EBITDA came in at EUR 2.32 billion, in line with the specified outlook we gave at the Q3 results. CapEx was just within the EUR 1.1 billion bounds, and free cash flow came in at EUR 765 million, a bit ahead of our outlook. We reiterate our dividend commitment, and we will pay a regular dividend per share of EUR 0.13 over 2020. Our accelerate to growth strategy is supported by three key pillars, as outlined during our strategy update. Let me briefly remind you of the highlights. First, we leverage and expand our superior networks. The fiber business case has proven itself, so we will ramp up further and cover the Netherlands with fiber. Second, we grow and strengthen our customer base in consumer and in business, supported by differentiated services and an outstanding digital customer experience.
Third, we will further simplify and streamline our operating model, supporting new ways of working digitally, we launched a next wave of cost savings. Together, these strategic priorities support our ambition. Our ambition to connect the Netherlands to a sustainable future, to grow mass market service revenues by the end of this year, to grow EBITDA, and to provide attractive shareholder returns covered by a growing free cash flow. Let's start with the first pillar, which is our focus on leveraging and expanding our superior networks. Fiber is at the heart of our strategy to return to growth in the mass market. Investing in fiber creates value for KPN as it sees attractive returns driven by increased network penetration, more loyal customers who are increasingly willing to pay for quality, and lower maintenance costs.
This year, we will ramp up our fiber production further to a run rate of approximately 500,000 households. This means we will cover more than half of the country with fiber in 2023, and almost 2/3 by the end of 2025. Let's look at the details of the acceleration. In the fourth quarter, we expanded our fiber footprint with 112,000 homes passed. That means an average of more than 8,000 homes passed per week and exceeding over 10,000 homes during some weeks. We reached the required run rate to deliver on our target of approximately half a million per year. We activated our 5G network in July, right after we obtained the spectrum licenses. We modernized more than 2,800 sites to date, and our 5G network already reaches 70% of the Netherlands on 700 MHz spectrum, the real 5G.
We're proud that Ookla awarded us, as I just mentioned, as the best mobile network in the Netherlands, being the fastest. The fastest download speeds, the fastest upload speeds, the best coverage. That is quite important for us as a company. After a couple of years, the best network in the Netherlands again. Outperforming on all net metrics when it comes to networks. Download speeds of 90 Mb average, above 90 Mb . Upload speeds of average 20 Mb , and our coverage is more than 30% better than the number two. Next to this, our brand new 5G network is recognized as the most innovative by umlaut connect, and this is an excellent position to provide differentiated 5G services to our customers, and the first we launched already the fourth quarter.
We will discuss our segment performance by turning to our second pillar, enhance the customer focus. In consumer, we focus on delivering the best digital access and best customer experience. Our ambitious fiber plans are fueling base growth, and the ambition is to grow service revenues by the end of this year. In Q4 last year, we saw an improving trend in fixed services revenues, declining a bit less than 1% year-on-year. Growing service revenues from fiber were offset by declining service revenues from copper and the continued decline of legacy services, traditional voice and Digitenne, mainly. Although still declining at 2.1% year-on-year in the fourth quarter, we see the trend for mobile service revenues steadily improving. In the fourth quarter, our Net Promoter Score stood at +11 and has come down during the year.
As customer satisfaction is one of our main priorities, this result is of course disappointing, and we have taken actions to restore customer appreciation. We saw increasing Wi-Fi usage and rising customer expectations. The majority in the Netherlands is working from home, resulting in pressure at our customer service centers. During the fourth quarter and into Q1 of this year, we invested to increase capacity to improve the customer satisfaction. We also experienced some technical issues with the change interface of the IPTV products, and we have updated our software to resolve this. Let's take a deeper look into consumer KPIs. We've seen solid fiber inflow reflected by 20,000 new customers on fiber, fueling a further stabilization of broadband net adds. Fixed ARPU increased 4% year-on-year in the fourth quarter.
Postpaid net adds were in positive territory for the second quarter, and at the same time, we kept the postpaid ARPU broadly stable at EUR 17. That's despite the loss of roaming as a result of COVID-19. We see a higher inflow ARPU and driven by increased demand for unlimited bundles. Now we see fiber clearly outperforming copper, confirming our decision to accelerate our rollout. In fact, fiber revenues grew more than 8% in the quarter. For the first time, the year-on-year improvement in fiber revenues more than offset the decline in copper revenues. This led to higher total on broadband revenues. As of the first quarter, we will improve our consumer segment disclosure to better reflect our focus on convergence and on households.
We've identified fixed mobile, fixed only, and postpaid only households. Reassuringly, we see an increasing number of fixed mobile households as we improve our convergence penetration. We measure the value from each household by average revenue per address, or ARPA, next to ARPU, which is based on products. The added value of using ARPA besides ARPU can, for instance, be explained by example, our Kids Sim. This product might not seem attractive based on a EUR 9.5 ARPU, but it's significantly increasing customer satisfaction, lowering the churn, and improving ARPA. In addition, we will clearly identify revenues from our so-called legacy portfolio, including PSTN, Digitenne, and prepaid services, in our disclosure. Let's now move over to our B2B segment. The organic revenue trend in B2B has gradually improved over the past years.
In 2019 and 2020, this was impacted by self-inflicted strategic actions such as the migrations to target portfolio and our value over volume focus. In 2020, the performance was, of course, also impacted by COVID-19, as we've seen limited roaming revenues coming in. Underlying, we can see the performance steadily improving. In the fourth quarter, revenues from communication services were impacted by customer migrations to target portfolio and a loss of roaming revenues, partly offset by favorable base developments in mobile and fixed, and increased take-up of unlimited data and mobile. Revenues for IT services declines mainly driven by delayed IT projects due to COVID-19. Revenues for professional services declined in the fourth quarter. The fourth quarter is usually a strong quarter seasonally for professional services, this year was impacted by different phasing over the quarters. For the full year, revenues from professional services increased.
Full year non-service revenues declined over 7%, indicating an improved revenue mix compared to last year. NPS on B2B improved year-on-year to - 2, came down a bit versus the third quarter. This was like in consumer, mainly driven by rising customer expectations, putting pressure on our customer services center and also there we took actions to improve our NPS. As you know, we have clearly segmented focus in B2B, when it comes to customer segments, SME, LCE, and tailored solutions. In SME, we expect to stabilize service revenues by the end of this year by finalizing migrations and cross-sell opportunities from the KPN ONE platform. The speed of migration has slowed somewhat in the last quarter due to COVID, making it harder to physically perform migrations at customer premises. At the end of the fourth quarter, 76% of LCE customers have been migrated.
The LCE strategy is fully aligned and the transformation is lagging SME by one or two years as we planned for. In wholesale, our revenues increased 10% in the fourth quarter, supported by our attractive open access policy. This quarter, we added 30,000 broadband lines and 8,000 post-paid customers. In December, the European Electronic Communications Code was implemented and BEREC issued guidelines on the application of symmetrical access. In our view, these guidelines suggest symmetrical access obligations cannot be used to replace nationally binding regulations like significant market power, and it has a clear local focus. We continue our open wholesale policy built on reasonable and non-discriminatory terms. As such, we believe to offer an economically viable alternative for current and future wholesale partners. We therefore believe we operate in line with the new legislation on symmetrical access.
Our open wholesale policy is also important for competition in the Dutch market. The growth numbers of our wholesale partners show this open access policy is working quite well. Let me turn to our sustainability achievements. The pandemic has prompted us to reflect even more on our role in society. We've crossed some important milestones, and we have an ambitious agenda for the years to come. During the fourth quarter, our efforts were again recognized by several benchmarks. For the fifth year in a row, we are in the top five most sustainable telecom operators worldwide, according to Dow Jones Sustainability Index, and we are on CDP's Climate Change A List. These are very important results for us and to our stakeholders. Let me hand over to Chris to give you more details on our financials.
Thank you, Joost. As Joost mentioned earlier in the presentation, we delivered on our outlook for the year, and we are confident that we will continue to do so going forward. Now let me start by summarizing some key figures for the year. These figures are adjusted for divestments. First, our adjusted revenues declined by 2.4% compared to last year, mostly driven by B2B and reflecting solid growth in wholesale. Secondly, the adjusted EBITDA after leases increased by 1.4%, while lower revenues were more than offset by cost savings, mostly on staff expenses, whereby COVID-19 gave us a bit of a tailwind in terms of cost. EBITDA margin improved 180 basis points year-on-year to a good 44%. Thirdly, free cash flow grew by 6.6% versus last year. Finally, our net profit was EUR 54 million lower year-on-year, impacted by several incidentals, both in 2019 and 2020.
Excluding these incidentals, net profit would have increased by about EUR 42 million. At the strategy update in November, we indicated that we expect mass market service revenues to grow by the end of 2021. As a reminder, mass market service revenues will be at our customer base, SME segment, and our wholesale segments. As Joost already said, the mass market service revenue trend in Q4 was encouraging. We must say, though, that the reported number is supported by a very strong fourth quarter in wholesale due to several smaller one-offs that were not adjusted. We see the underlying trend improving for the third quarter. Our momentum is there. By the end of the year, we expect service revenues from B2C to grow, for SME to stabilize, and we see continued growth in wholesale. Let me stress, this is a significant and very important development for KPN.
Since we have seen declining revenues for the past decade, this change requires a new mindset, and I truly feel this greatly invigorates morale and excitement within our company. We're proud of what we're achieving, and the momentum is on our side. We are continuously digitalizing and simplifying the company in order to deliver improved services, a better customer experience, and more efficient operations. After two years with approximately EUR 140 million savings in each year, we've made strong progress this year in further optimizing our cost base.
We're very well on track to reach and exceed the initial EUR 350 million savings target, with about 80% of the target met for after three years total. In 2021, we expect a somewhat lower run rate in cost savings, since 2020 was supported by COVID-19-related savings. As was stated during our strategy update, we now move forward with a new cost program.
For the coming three years, we expect to save at least another EUR 250 million, driven by a combination of portfolio simplifications, digitalizing our customer journeys, rationalization of legacy IT systems and technical infrastructure, and executing on further COVID-19-related opportunities, such as reducing our lease fleet and more working from home. Now turning to CapEx. To accelerate the rollout and prepare for the years to come, we more than doubled our fiber CapEx in 2020 to 5.6% of revenues, compared to 2.4% in 2019. We even came in ahead of the homes passed range that we communicated at the end of November due to the very strong rollout numbers in December. On the other hand, we've been quite successful in lowering non-fiber CapEx to just over 16% of revenues from 18% last year. Fiber generates long-term value for KPN and all our stakeholders and shareholders.
We strongly believe that accelerating the fiber rollout is the best decision we can make for our customers, society at large, and of course, for our shareholders. In the coming year, we expect another step-up in fiber CapEx as the rollout will ramp up further to approximately 500,000 households. We keep a strict eye on CapEx in order to not exceed a hard line of EUR 1.2 billion. During the year, we've worked really hard to further improve our working capital position, and we successfully mitigated the effect of accelerated fiber rollout. Most notably, we further optimized our payment terms with suppliers, moving more to 90 days, which is also more in line with industry average, and we're keeping a keen eye on prepayments, especially with our fiber contractors. Working capital improved as quite some invoices were already paid early in December.
Our working capital program has delivered strong results, and we have confidence that this will continue in 2021. For the coming year, we'll keep an even closer eye on the ball, amongst others by additional actions to improve payables, optimizing receivables terms, optimization of our inventory, and lowering our bad debt. We run a list of initiatives that makes us confident to further reduce our investment in working capital despite our strong step-up in fiber rollout. Operational free cash flow for the year was just shy of EUR 1.2 billion and stable around 22% of revenues. In 2020, we've seen a healthy increase in free cash flow despite higher CapEx. Our free cash flow of EUR 765 million was 5% higher than last year, and our free cash flow margin improved to 14.5% of revenues.
This was mainly a result of lower cash restructuring, lower interest costs. We ended the year with a strong cash position despite having paid more than EUR 400 million in spectrum and missing the cash in from divestments and the sale of our stake of Telefónica Deutschland last year in comparison. The return on capital employed for KPN improved 80 basis points year-on-year to 10.1%. This is notable as the accelerated fiber rollout merely adds to our capital employed base. Operating profit is not instantly generated. It takes a bit of time. Our ROCE has moved up due to increased operational efficiency, which was driven by strong cost control and lower restructuring charges. Capital efficiency was somewhat lower than last year, mainly driven by increase in capital employed as a result of the acquired spectrum licenses.
For the coming years, we see scope to further optimize our ROCE as evidence of our continuous pursuit of shareholder value creation. We ended the year with a strong and resilient balance sheet. From Q3 to Q4, net debt declined EUR 250 million, mainly driven by free cash generation during the fourth quarter. At the year-end, we had a leverage ratio of 2.3x , well below our ceiling at 2.5, and we further enhanced our interest cover. Our total group liquidity was very strong at the end of the year. It consisted of EUR 864 million in cash and short-term investments and an undrawn revolving credit facility. With this, we cover debt maturities for the next three years. At the Q1 results, we provided a disclosure agenda for the year.
We've consistently delivered more disclosure on critical items. I'm proud that as of today, we fully delivered on this agenda, even though some of these KPIs required hard work to deliver in an auditable way. Some of these new KPIs will be part of a structural disclosure as of Q1 2021. For instance, the new revenue breakdown for consumer ARPA, some fiber KPIs, and new revenue breakdown for business. That we'll continue to report on. Now let's turn to our outlook for the year and ambitions for 2023. We further specified the 2021 outlook provided in the strategy update. We now expect adjusted EBITDA after leases to come in at at least EUR 2,345 million, a broadly 1% improvement versus 2020. We're encouraged by mass market service revenue growth trends with KPN. We also expect another solid round of cost savings.
We will not limit our commercial success by under-investing in it. We anticipate also some higher direct costs related to our commercial organization, and some additional costs for our service centers. Compared to 2020, we see revenue and cost improvements phasing in during the year. We therefore expect EBITDA growth to be most visible in the course of the year, with Q1 to be relatively subdued versus quarters two, three, and four on a year-on-year growth basis. We will ensure CapEx does not exceed EUR 1.2 billion, EUR 1,200 million. We expect free cash flow of EUR 765 million, in line with this year, and increased versus our earlier guidance. Growing EBITDA and less interest paid are largely offset by higher CapEx.
We expect to pay a regular dividend of 13.6% per share over 2021, which is up almost 5% compared to the EUR 0.13 that we paid over 2020, at the upper end of the 3% - 5% annual growth rate targets. In addition, we reiterate our ambitions for 2023 as outlined in the strategy update. All in all, a clear outlook for the year with free cash flow somewhat higher compared to the outlook provided in November. To summarize, KPN had a healthy financial quarter, showing an improved revenue trend, growing EBITDA, and we delivered on our outlook for this year. We see an encouraging trend from mass market service revenues, with positive signs in consumer, with fiber fueling a stabilizing broadband base, and continued post-pay base growth. In B2B, we continue to face revenue headwinds due to ongoing migrations and COVID-19.
In SME, we're on track to stabilize service revenues by the end of this year through finalizing migrations and cross-sell opportunities. At wholesale, we see the ongoing success of our open network policy leading to continued growth. We have significantly accelerated our fiber rollout with an attractive return profile, and our return on capital employed increased significantly. We updated the outlook for the coming year with growing EBITDA, clear CapEx, and somewhat higher free cash flow than earlier anticipated. Finally, we expect our dividend to grow almost 5% in 2021, which is at the upper end of our range. Thank you for listening. Now let's turn to your questions. Back to Reinout.
Thank you, Chris. We will now start with Q&A. I'd like to ask you to limit your questions please to two. If there's still time at the end, you can always ask more questions. Operator, over to you.
Go ahead, please. Our first question is from Mr. Simon Coles, Barclays. Go ahead.
Hi, guys. Can you hear me?
Yes.
Yes.
Great. Hi. The first question is on mobile. I guess it showed quite an improvement in consumer this quarter, with ARPU only declining 1%. I'm just wondering if you can talk us a little bit through around how much of that we're washing through that repricing pressure we saw over the last few quarters, and how much is the uptake of unlimited having an impact on that? I'll ask my second question after that. Thank you.
We've been in some decline over the last years in mobile. Like you said, it's all about repricing the back book for main parts. I think we did a good job there, stabilizing things when it comes to revenues. Not completely, but we see the positive trends coming in. We launched unlimited a couple of quarters ago. We see a strong inflow on unlimited as well. The combination of things works when it comes to base growth. Especially when it comes to the service revenues, we see the trends improving.
For us, unlimited is important, like fiber is important in the Netherlands. We're a super digitalized country. We think we're typically a country for unlimited, especially in the bundle. In the bundle, it's cheaper, but otherwise it would be around EUR 30 or EUR 32. These are high ARPUs, and even in the bundle, it's still EUR 25 or a bit higher. We see the success of the launch of unlimited, and we will focus on pushing unlimited more in our base.
That's great. Thank you. I guess my follow-up is, you highlighted that you're making great progress on upgrading your network to 5G, and you're pushing unlimited more and more. Does this mean that you're potentially going to need more sites in the coming years? If you could give us some color around what your plans are there. I guess we've seen T-Mobile sell their towers with Cellnex, so does that make it easier for you to add coverage and capacity to your network than maybe in the past?
Well, in November we launched our. We updated our strategy in the Capital Markets Day, and there we said first focus point is superior networks that fits us. For the last three years, we were number two when it came to mobile network quality. This year, we outperform all the other players big time. Upload speed, download speed, coverage is much better than the number two and the number three in the Netherlands. That is because we think it's important for a company like KPN to attract more customers, especially on the B2B side.
I must say, our customers are very much focused on service and high quality of the network. When it comes to unlimited, when it comes to future 5G services, and especially when it comes to B2B, I think we will benefit from all the investments we did last year in the upgrade of our network, and currently, we can all serve 70% or more of the country based on the investments we did in 2020.
Okay. Do you need more sites or is the network fine as it is and it's just an upgrade process at the moment?
Well, I must say, we really invested a lot last year, so we're not planning to do that much. Every year, of course, we invest in our networks, and every year we invest in our mobile network, but last year was higher than usually, I should say. I expect, I know, that in our CapEx steering we will step down in investments in our mobile network. Like I said, we're number one, we want to be number one, we want to stay on number one, but we did a good job last year.
Okay, that's great. Thank you very much.
Our next question is from Mr. Steve Malcolm, Redburn. Go ahead please.
Yeah, good afternoon. Can you hear me, guys?
Yeah.
Just a couple then. First of all, on consumer NPS, I noticed that had drifted down a little bit in the quarter in Q4. Just update us on your thoughts on how you're performing there. I think you're investing a bit more in customer service, how you intend to see that move through 2021. Maybe just a question on leverage. You've obviously flagged the ceiling of 2.5x . Can you give us some steering whether you see a floor on leverage going forward? When you reach that floor, what you might do? Thank you.
I'll take the first one. Chris, you take the leverage question. Of course, Net Promoter Score in consumer came down. Well, it's related to a couple of items. First of all, by the way, NPS is super important for the whole company. We're all rewarded when we do a good NPS. Last year, we increased the NPS big time. Also when it comes to the benchmark with competitors in the market. Now we decreased. It's related to, first of all, we're in a lockdown, so all our customers are working from home. We serve B2B customers on Workspace. We moved to Workspaces in Home. Children, the schools are locked down in the Netherlands, are at home. There's a huge increase on request on Wi-Fi services. We launched Super Wi-Fi, which is a success, sold out twice.
It increases the load on our service center, especially since we closed almost all our shops. We have 110 shops in the Netherlands, and only 30 are open today. That combination is increasing the calls in our service center, and that's why we upscaled last quarter there. Second, we launched a new interface, or we upgraded our interface, iTV, in the Netherlands, that related to some issues on recording and other services. We had to upgrade our software there. That's done, that's solved, that was leading to more calls coming in. We migrated the full Telfort base to KPN, NPS is not about customer satisfaction because our customers are, I must say, satisfied, especially under the, today, under the COVID situation. The NPS is really if you want to advise spontaneously KPN to your neighbor.
For Telfort customers, that question is difficult to answer, but because they need to be in the KPN base for a couple of quarters. Also related to that, we see some pressure on our NPS. We are focused on quality steering as a board, as management, and as the whole company. I'm confident that we will increase NPS again like we did last year. This is where we are, and fair to say that we have to repair there.
Right, Steve, on your question on leverage. As a background, if you look at our financials, we tend to reduce a normal year leverage by 0.1- 0.15 turn to free cash flow minus dividends. If you don't have anything weird, you shave off 0.1- 0.2 of leverage every year, which then fluctuates a bit around spectrum. Last year with the spectrum auction, this year we won't have those. This year there will be no spectrum auction. We've got a few redemptions coming up, so it's fair to assume that leverage will gradually decline during the year. Next year there will be a spectrum auction. First of all, let me say, if we don't act, leverage will gradually decline by like 0.1, 0.2 per year. Depends a bit on with some fluctuation around the quarters. Is there a formal floor?
It's hard to give a formal floor. You need to take into account the market environment, macro environment, your balance sheets, and more fiber can sustain more leverage. The safe answer is it depends, but when you get close to two, I think our balance sheet will look a bit more, less efficient. No formal floor. When you start to approach 2x, ceteris paribus in terms of circumstances, you might think about doing something else because then your balance sheet starts to become a bit more inefficient.
Chris, can I just ask a quick follow-up on IT costs? You just mentioned the investment customer interface in Q4 to help improve the customer experience. Does that explain why the IT costs are up in the fourth quarter? They have been trending down.
We've done a lot on IT investments, but in the fourth quarter, we made more cost to upgrade software to scale up on service centers. We also book a lot more OpEx for this year to serve all our colleagues, employees at home. We have now in the Workspace service for our employees at home. That one was booked in the fourth quarter as well. There are different reasons why our costs went up in the fourth quarter. On IT, I must say, we used to run these large projects, programs to improve things on the BSS, on the OSS, on customer journeys. This year, we move to smaller, faster programs, and we will lower our spend on IT.
Okay. We think there's more further IT savings to come, or should we think the well has run dry given the need to invest in customer interface and stuff like that?
In our investment pattern, you see a clear shift from IT kind of TI kind of investments we did over the last year and in the past to fiber. Less mobile investment, less IT and TI spend will support the fiber investments.
Okay, thanks a lot.
Our next question is from Mr. Conrad Siem of ABN AMRO. Go ahead, please, sir.
Hi. Good afternoon, gentlemen. Two questions, please. The first one on your outlook for CapEx. It suggests that in 2023, it might be somewhat lower than in 2021. Given the acceleration of fiber that is expected to continue, can you explain why CapEx would be down in 2023 from prior years? My second question is on your wholesale business. You indicated that the 10% growth in Q4 was positively impacted by a few one-offs. Can you maybe share with us what the underlying growth rate of that business was in Q4 and what is probably a more sustainable level going into 2021? Thank you.
Look, Conrad, on your CapEx question, we've said on our capital markets day that our CapEx is between EUR 1.1 billion and EUR 1.2 billion. EUR 1.2 is a pretty hard upper ceiling. It will be at EUR 1.2. We see scope for the coming years to not reach that ceiling in the years to come. Not so much at the detriment of fiber. We should save back on non-fiber CapEx. We'll continue to roll out fiber CapEx, fiber around 500,000 a year, spending about between EUR 450 million a year. As we indicate on our capital markets day, that belief is unchanged. I think it's our duty and our strive to reduce non-fiber CapEx and make sure we stay as far away as we can in the future from the EUR 1.2 billion upper ceiling.
When it comes to wholesale, I can see in the fourth quarter, three types of incidentals. A couple of those typical provisions that were released for all the right reasons. Secondly, changes in roaming revenues, and thirdly, higher interconnect revenues as our clients start calling 0800 COVID information numbers. I think you strip those out, I would estimate that the underlying profit growth in wholesale, I'm looking at profit growth rather than revenue growth, is probably around 4%-5% per annum. That's the sustainable profit growth in the wholesale business. Wholesale is a business that has, by its very nature, somewhat more incidentals than the others. That would be my estimate on the underlying structural EBITDA growth.
Okay. That's very helpful. Thank you.
Our next question is from Mr. Paul Sidney, Credit Suisse. Go ahead, please, sir.
Yeah, good afternoon. Can you hear me okay?
Yes, we can hear you.
Great. Yeah, I have two questions, please. Firstly, looking into 2021, is KPN happy to keep its consumer mobile postpaid and consumer broadband base broadly stable while the mix within both of the bases improves? In other words, I'm just wondering how you view the balance between retail and wholesale market share. In second question, looking into 2021, I just didn't hear your comments, Chris, on EBITDA growth phasing over 2021. I think you said you'd be more subdued year-on-year growth in Q1 and then higher in Q2, Q3, and Q4. I was just wondering, is that right? Why is that? Is it just a tougher comp or is it linked to any commercial initiatives or other expenses that you've got planned? Thank you.
Yeah, thank you. First of all, it is very important to stabilize our base. We didn't like the idea of the decline we were in in 2019 and 2018, that doesn't feel good for a company like KPN. On the other hand, pushing the growth too aggressively could lead to all kind of market reactions. It's very important that we all understand we want to create value, we expect the other players in the market to focus on that as well.
We understand that value creation is the most important thing now, not only focus on net add growth, which is a bit traditional telco kind of running your business. Having said that, I think on broadband, the market is growing every year, 60,000 new build houses, 40,000 new broadband users still growing in. The market is growing roughly, I think with 100,000, and at least we should pick our fair share there. That is not.
Too aggressive for a company like KPN. When it comes to mobile, it's more important to have the base a bit growing, but focusing on the good ARPU inflow than focusing on strong net add growth. You're quite right. In Q3, we did a +9,000. In Q4, a +1,000. The plus is important, but more important is the total things on value. Chris just mentioned wholesale. Strong growing, over 51% of all the households from a broadband perspective now are served via our network, retail and wholesale together. Also there, it's very important that we look at the total things and the total value we can create. It's a balancing act. The decline is not in our plans, that's for sure.
A question on the EBITDA in Q1 for the rest of the year. There are a couple of things at play. On the positive side, I think we ended the year with pretty encouraging base development general in retail, corporate market, and wholesale. That is actually on the good side. There were a couple of things that will be at play in Q1. First of all, of course, roaming. Last year, the first quarter, we had two more months of roaming, January and February and the early period of March. That roaming we don't have. It's completely fallen flat because travel has been completely subdued even more than we've had in the past. Also we see a little bit less support from out-of-bundle calling. People are working from home and calling on their Wi-Fi network. It's a roaming delta that hurts us somewhat.
Secondly, we'll have continued spend on NPS support measures, so an increase in consumer support staff and mechanics. I would expect and hope that to be scaled down somewhere in Q2, but we have a backlog and a big amount of work to do to reduce the amount of customer calls. It's a roaming delta. It is NPS correcting investments in consumer support staff. Thirdly, when it comes to COVID savings, some of the easy savings have been grasped and are turning around. We've given, like everybody else in the Netherlands, a work from home allowance of a couple of euro a day per employee. That has caused a bit of higher spend. We see a new wave of savings, but those require investments.
For example, we're trying to reduce our lease fleet. We're one of the largest lease fleet operators in the country. Supporting and encouraging our staff to give back their lease car. That costs a bit of money. That is a positive NPV case, but the spend will be in Q1, and the results will be later. You see a combination of, I think, the roaming delta in Q1. It's the consumer support spend to support our NPS, which will wind down in Q2 but will cost us money in Q1.
Thirdly, on COVID savings, some of the benefits of last year will not be as prominent this year, and we're investing in the next wave of savings. Costs go first, revenues go later. It's that set together that makes us. We're still confident on the year. We commit to our outlook. The timing will be Q1 subdued and higher growth in the back end of the year.
Well, let me add to that KPN is always focused on cost reduction. We have a strong cost reduction program ongoing. We expect this year to step down on indirect costs, as we mentioned earlier, roughly EUR 100 million. In total, we will do EUR 250 in three years. We're pretty good on track. Cost reduction, OPEX reduction, and making the whole operating model leaner and meaner is very important, and we will keep on focused on that.
That's really helpful. Thank you very much. Appreciate it.
Next question is from Mr. David Vagman, ING. Go ahead please, sir.
Yes. Good afternoon, everyone. Thanks for taking my question. First, on the working capital, can you update us on your working capital development expectation in 2021, 2022, 2023, and why actually the improvements that we've seen, or let's say the better resolution on the NPS, so the net promoter score, what is your consumer NPS ambition for 2021, and what would be the trade-off that you would be ready to make financially to reach this ambition, having in mind the difficult savings trade-off, the investment in call center, customer journey, support services, and solving maybe technical incidents and so forth? Thank you.
David, let me take the first question on working capital. This year, we spent or invested EUR 34 million in working capital. That was actually quite a good result because it's the fiber rollout increase of working capital, because typically fiber rollout requires earlier payments than traditional CapEx. We counter that through a working capital program. The net capital commit or cash commit were EUR 34 million. In our capital markets day, we said for next year, we expect another EUR 30-odd million, which then gradually goes down to flat thereafter. Depending on if you build a EBITDA bridge to set your free cash flow, then from EBITDA to free cash flow, we tend to invest about EUR 30-something million. If you build a year-on-year free cash flow bridge, the working capital delta will be zero, right? Which is the same amount as last year.
Thereafter, there will be free cash flow support from working capital. Having said that, EUR 34 million is a safe, reasonably conservative estimate. If I look at the measures we're taking right now, I see a bit of opportunity to have a little bit more support for working capital. That also is behind the increase in cash from EUR 750 - EUR 765. That we may have the opportunity to have a little bit benefit from working capital, safe to be on the EUR 34 million as of this year, and then release in working capital in the years thereafter. 2020 and 2021, and release in 2022. We see a bit of upside there, which supports our commitment and increased free cash flow guidance.
Thank you.
Yeah. Your question on NPS. First of all, NPS is an interesting tool, especially when it comes to one strong brand in a country. We serve more than one brand. We're focusing on NPS per brand and per customer segment. Blended, it doesn't say that much, but for us, the most important thing is to show an improvement in the coming year. We don't really disclose NPS targets we give to the company, but I can assure you that they are there. At the end, it's all about an increase in NPS, in consumer and in B2B. That is important for us.
About the trade-off, let's say, in 2021, is there a point where you would say, okay, that an improvement in NPS would jeopardize our financial targets? Let's say it's a bit of a philosophical question here that I might think on, but how would you think about this trade-off?
I expect NPS to be a little bit lower in the months to come because it's a rolling forecast mechanism. At the end, I've been in the company quite a while, and I know exactly that end-to-end steering of the main service channels is very important. It's really about us as a company running the whole end-to-end chain on broadband as an example. People at the service centers, people in the middle, our field engineers, our shops, that's what we're running.
Every Wednesday morning as a board, we have a pretty good picture on what's happening in the markets. We identify what the main topics of the calls are that's coming in, and our people are very good at improving the quality. That's why we improved on iTV as an example. I'm sure that we've done this before, that with the team in place, the way we are focused on this, we can improve our Net Promoter Score. It takes hard work.
Okay. Thank you very much.
The next question is from Mr. Polo Tang, UBS. Go ahead, please, sir.
Hi, thanks for taking my questions. I have two. The first one is just really clarification around your guidance and specifically, the COVID-19 impacts that we should think about for 2021. Can you clarify, for example, what your guidance assumes in terms of any recovery in mobile roaming? On the flip side, what you're assuming in terms of any risks around business revenues? That's the first question. The second question is really about América Móvil. I've obviously seen the AFM filing earlier today indicating that América Móvil have increased their stake from 16%- 20%. What's your perspective on their intentions, and can you remind us how many board seats they're entitled to with a 20% stake? Thank you.
Well, let me take the second question first. AMX is an important shareholder of KPN already for a long time. We have one board member, which is an independent board member appointed by AMX in our supervisory board, I must say. AMX moved up from 16- 20 over the last 12 months. In the third quarter, we saw that AMX was owning roughly 18% on KPN, and yesterday evening, this morning, they notified the market that it's a bit above 20%. That's all I can say. We have a good relationship with AMX. It's an inspiring company. Every now and then, we exchange information. It's a pity we can't visit the company today due to COVID-19, but I really like the way they run their Claro business. I like the way they digitize their customer processes.
It's a shareholder on one side, but it's also an interesting company we every now and then can learn from. Yeah. One board member seat in our supervisory board. When it comes to 2021, we don't really anticipate on roaming coming back. We think that COVID-19 will be here for a longer term. When I see what's happening all over the world, when I look at the Netherlands, we're in the middle of a lockdown. Shops are closed, schools are closed. We don't expect that to open up soon or that virus under control. That will take a couple of quarters at least.
We don't anticipate on the roaming coming back, I must say. Our business customers are doing okay-ish, I must say. Of course, we help them here and there, but when it comes to payments, it is clear that that goes well. We supply vital services to SME, to consumers, so it's super important to use that, and we did not see a lot of customers switching off until today, right?
Yeah, Polo, if you look at 2020, we reported EUR 5 million-EUR 10 million EBITDA impact negative by COVID-19, which is roughly made up of revenue headwinds of EUR 25 million-EUR 30 million, countered by EUR 5 million of lower direct costs and EUR 10 million-EUR 50 million savings on indirect costs gives about EUR 5 million-EUR 10 million of COVID-19 headwind. Of course, it is more art than science to estimate what the real impact is. As Joost, for this year, we basically assume continuing of the current situation. No major return of roaming. That is one. Possibly, slightly less cost savings tailwind as by most companies. We give a bit of the COVID-19 savings back to our employees with a work-from-home allowance and more support for people to buy their own desks and monitors at home.
Similar to this year, EUR 5 million-EUR 10 million, possibly slightly more negative, given that some of the real COVID cost headwinds, tailwinds may not be there again. I think it's probably the safest way to look at it right now. We don't also assume major defaults or bankruptcies. We've not seen anything like that. If anything, we see our clients actually are cash rich, often due to government support programs, willing and able to pay their bills on time. It's kind of continuing as we had this year, but with EUR 5 million-EUR 10 million headwinds. Possibly more on the upper end than the better end, given the fact that some of the cost benefits may not return on year-on-year comps.
Thanks.
Our next question is from Mr. Frederic Boulan of Bank of America. Go ahead please, sir.
Hi, good afternoon. Two questions, please. First of all, on B2C, good performance in Q4. You seem well on track to grow that business in 2021. What's keeping you from being a bit more bullish? Is it about the roaming delta in Q1? Any other considerations we should have in mind? Maybe similar question on the EBITDA side, the guidance you have for 2021, about 1% growth. When we look at the scope of cost-cutting that you have in the pipeline for this year, any specific consideration from a mix or phasing of the cost? You seem to be a bit more prudent in this timing for 2021. Any color on this would be great. Thank you.
Thanks for your questions. We're super focused on improving the broadband and the consumer base in B2C. I'm not unhappy with the developments over the last quarters. In our business, it's all about the trends, and the trend for me is a couple of quarters in a row. We're doing good. Especially the decline of over 20,000 customers quarter per quarter moved to an increase in mobile and an almost stabilization in broadband. I will be more bullish when the broadband base starts growing instead of declining minus 3,000. I give you the promise that then we will be more bullish. I can assure you that we're pushing our people to move in that direction. When it comes to EBITDA, your point well taken. I think we're pretty okay on the service revenue trend.
I said, the momentum is there, we need to be fair, things rarely move in a straight line. Momentum is there. There will be some fluctuations around it. Underlying developments are there, with maybe fluctuations from quarter to quarter. What other things are we looking at? I talked to Polo, costs in Q1 will be higher. The consumer service cost will be a bit higher. It may take a bit of time for the next wave of cost savings programs to kick in. The year-on-year comps on roaming will work as against in the first two months and be flat on the final months. It's that combination of things where we see the second half of the year doing better. That's why we stick to our forecast for 2022 and 2023.
It's really about the service revenues to really sustainably grow that will support us. Again, we think the 1% EBITDA is achievable, but yet, especially in the first period of the year, we may have some higher costs around investing, almost like investing in next cost savings wave and investing in consumer support. That may counter some of the underlying momentum in revenues. That together builds for a 1% EBITDA growth.
Okay, thank you.
Our next question is from Mr. Michael Bishop of Goldman Sachs. Go ahead please, sir.
Thanks very much. Good afternoon. Just two very quick questions from me. Firstly, on slide 17, I thought this was quite interesting in terms of the multi-year B2B development. Could you just give us a bit more color on what is in the other buckets? I think it's quite clear you've got COVID-19 migrations, which I presume include the deflationary element in terms of the B2B pressure and then non-service. Just that other bucket is still quite large. I'm just wondering what's in that, and whether that sort of phases out over time naturally. My second question is just picking up on a couple of the comments so far around how you're pushing mobile in terms of the unlimited offers.
It looks like since you first launched them in 2019, as we sit here today, they're about EUR 5 or so cheaper than where they first launched. Mid to high, EUR 20 level in terms of converged and then EUR 30-EUR 50 for non-converged. Is that a sort of sensible level, do you think, for unlimited, just more broadly in the Dutch market as we look forward? Thanks.
Yeah, Michael, on your question, what's in the bucket of other? We feel sorry for the head of other at B2B, of course. What's in there, a couple of things. One is the structural decline in traditional voice. Traditional voice is a business that is in decline. The decline is slowing down. If you look at the last quarter, the number of seats we lose. It's actually stable. It's not declining further, not declining faster. There's a gradual decline in traditional voice, compensated by voice over IP, but at much lower margins. First and foremost, it's the traditional voice decline. Secondly, it is ARPU pressure.
There's some ARPU pressure especially in mobile for larger customers, where some of our competitors are still pushing for relatively low prices. It's the ARPU pressure on mobile and to a lesser extent, in networking and broadband. The combination of traditional voice decline, not fully counted by Voice over IP, and pricing pressure, mostly on mobile, some of it on networking and cloud and Workspace, and to a lesser extent on broadband. That together constitutes the remaining 2.3% decline.
Yeah. When it comes to our mobile base in consumer, we've been in a decline for quite some time when it comes to our ARPUs. First of all, stabilizing around 17 was very important for us, and we've done that now for seven, eight quarters in a row, which is all about the repricing of your back book, as you know. How we do that is that we eliminated the lower price points. Not only us, but the whole market started to do that. That's one of the reasons we also took out Telfort out of the market. We saw others eliminating lower price points. Youfone was consolidated by T-Mobile back again.
What we see is that the market is moving in the right direction, and us as the high-quality supplier in the Netherlands should lead the way to higher ARPUs in the Netherlands, to put it that way. Launching unlimited, I think it was in the fourth quarter of 2019 we started. Pricing it pretty strong above EUR 30, and we balance it now between EUR 25 and EUR 32, depending on the package. That's really helpful, of course, when it comes to improving the ARPU.
Pricing, mobile, and the propositions we put in the market are super important for us, and we should be prudent and limit ourselves to go too aggressively. We're not a follower on aggressive price points in the market. That works. It's very important to keep our salespeople under control and really talk about the most intelligent price points for KPN in the market. The higher end, 25 or above for unlimited, that works quite well.
Great. Thanks. That's all really helpful.
Our next question is from Mr. Keval Khiroya of Deutsche Bank. Go ahead, please.
Thank you. You've talked previously about a bit more of an EBITDA focus for large enterprise and tailored solutions. Can you talk a little bit more about what that could mean for the revenue streams for these two businesses in 2021? I guess I'm trying to think about the overall shape of the B2B revenues in 2021 versus that minus 2.3% underlying we had if you have SME improvement on one hand, but still these two segments a little bit under pressure. Thank you.
Well, look, it's fair to assume that in this year, on SME, there'll be movement to stabilization of revenues in the second half of the year. Some small decline in H1, stabilization somewhere in H2, whereas the total of the B2B business will continue to decline. Not as much as 5.7% this year. If I have to put a finger in the air, I would say like 80%, 70% of that number will probably be the remaining decline of the business, but that's going to have to be seen how the year unfolds. Given the mix, I think you can do your own calculations on what it means for the implied decline on the LCE tailored integration. Baseline, less decline, less shrinkage in our B2B business. With SME, a small decline in H1 and stable in H2.
The remainder means that we'll see consistent revenue decline in the large corporate and tailored integration business. That's on the revenue side, much less on EBITDA. That's how we steer the business. Where, how it exactly will unfold, it depends a bit how the economy moves. Of course, this was also the business was held back mostly from COVID-19 because of the IT work that we normally do that we can't do right now. Even when the country awakes out of its lockdown and gets to be more economically reinvigorated, we see a bit of upside there. Secondly, we do have a few ideas on how to push for some of the large corporate business going forward.
Especially now that our network is doing so well, we see some increasing inbound, some customers looking at switching back their mobile network to KPN, so regaining some former client losses. Given all that needs to be achieved rather than promised. It's fair to assume that with SME declining H1, flat in H2, B2B as a whole declining, but less than this year, you can figure out roughly where the base expectations is for the large corporate segment.
Yeah. That's great to hear. Thank you.
Our next question is from Mr. Emmanuel Carlier of Kempen. Go ahead please, sir.
Yes. Hi, good afternoon, all. My question is on ARPU. The question is, if you're getting more positive on ARPU, not from headline price increases, but from mix effects, like customers taking more unlimited data, customers upgrading to high-speed broadband. If the answer is yes or no, I would also be happy to get a little bit more color on why that is. Maybe you could share percentage of mobile customers that are on unlimited mobile data plans today. With respect to high-speed broadband, maybe you could share also a kind of percentage on how much % of your base is on high speed and what it could mean if they would upgrade that. Thank you.
Of course. When we invest in our networks and we invest in the quality of our services, the whole idea is that at the end, we can upgrade customers. Lots of customers still on copper are on 50 Mbps , which is low speed. The average 70% buys on fiber still, around 100 Mb . The good news is that the trend is moving more to the higher speeds on fiber, especially. Customers are now buying more 200 Mb or 500 Mb . Which is also about how we price it, by the way. In the past, 1 gig or 500 Mb was very high priced by KPN. In the Netherlands, every EUR counts for people, so it's very important that we pick the right price points on the higher speeds.
Recently we see an increase of people buying 200 Mb or 500 Mb on fiber and people asking for upgrades on copper as well. Our copper network is, compared to other countries, in a pretty good shape. We can do average 100 Mb per household on copper as well. Especially supported by the current situation, we're upgrading customers on existing infrastructure to higher speeds. I think that's also one of the reasons why we see the inflow of unlimited on the mobile side increasing.
Two reasons: the way we make it more attractive to buy it in a bundle for 25, but also people working from home and needing more speed on the mobile side. I think the timing is right. With all the investments we did in our networks, how we position ourselves as a quality player to upgrade customers to higher quality and higher speeds. We talked about this in the past, but it's working this year.
I don't know, have you done any calculations on that? I think on average you have been raising your prices by 2%-3% per annum, if I'm right.
Yeah.
Could this become a tailwind going forward and any way to quantify that? Because it looks a bit like a potential sector trend.
You are quite right. We do not increase tariffs blended EUR 1.50 for the whole base. It is done service by service. An increase on fiber could be a bit more than on a low-speed copper line. The more customers move to higher speeds, the more potential we see in our Q improvements of course. Also when it comes to new pricing, we every now and then investigate. Of course, an increase on fiber is a different thing than an increase on a low-speed copper connection.
Okay, thank you.
Next question is from Siyi He of Citi. Go ahead, please.
Thank you very much. I have two questions, please. The first one is on fiber. We have seen that you had a huge acceleration in your home pass, but the actual activation seems stable quarter-on-quarter, and the fiber customers net add was down quarter-on-quarter. Just wondering if you can help us to understand why that's the case, maybe seasonality effect. Also, I wonder if it's possible to indicate whether there is a target of activation rate or customer take ups as you roll out fiber. My second question is on the Mass Service revenue, it was down 0.1%, you still suggest that it will grow only in the second half. I understand that wholesale one up could impact a little bit, and just wondering if any other headwinds that we should consider why the Mass Service revenue could not start to grow from Q2 next year. Thank you very much.
Yeah. First on fiber. Activation rates will continue. We're positive on the results. It goes batch by batch. Our experience is that rolling out fiber, the first wave we bring in roughly 30% penetration. It's some kind of an S-curve. After a certain period of time, we move up to above 50%, and in some areas we now reach a point of 60% penetration. The more we roll out, the lower the activation blended rate will be in the Netherlands because we're rolling out in a speed of 500,000 per year, which is something we never did before. What we changed is that we now move in our commercial people first in the area, and then we roll out. It used to be the other way around.
With the experience from the past and the new things we installed today, we think we can go faster from a commercial standpoint. We're building batch by batch. Not every region is the same, and we think with the full targeted organization only responsible for fiber only, we think we will do a good job on selling fiber as well.
Yeah, on your question on mobile and mass market service revenues. Agree that the wholesale is already growing and will continue to grow. As we said, maybe the Q4 had. Tailwinds, one-offs. The underlying growth is there. If you look at the consumer market, in mobile, we've been growing our base since June. There will be some pressure on ARPU because roaming year-on-year comps in the first quarter.
We think on mobile we could see upside for service revenues. On fixed, it's almost like the battle between base developments and price developments. At this point, that mix has some positive connotation to it, but that needs to be sustained in the year. On SME, our base has been growing well, but we've seen some ARPU pressure in SME from a combination of intense competition. Secondly, year-on-year again, the bloody roaming comparison that hurts us. In SME, the trick for us is to increase our cross-sell.
If you think about the numbers in clients that have triple play customers in our SME base, which is what the proposition is all about, it is growing, but it's not there we want it to be. Could it grow in Q2? We don't rule it out, but it's safer to bet that's going to happen after the summer where we will have the continued growth of fiber kicking in, the higher ARPU of fiber kicking in, compensating copper churn. That will help the mix of base and price in consumer broadband.
By then we'll have the roaming comparisons no longer working against us, possibly increase in share unlimited mobile consumer. That will continue on wholesale. Then also we have on SME, the roaming year-on-year comps behind us. We have made further progress in cross-sell. I think my safe is better still to think about Q3 this year and if it happens in Q2, we'll open an additional bottle of champagne, but let's plan for Q3 first.
That's very clear. Thank you very much. Our next question is from Mr. Ulrich Rathe of Jefferies. Go ahead, please sir.
Thanks very much. I apologize if one of my two questions has been answered earlier. I had some audio problems. The first one would be, the joint dominance regulation at ACM, it was squashed in court now some time ago. Could you talk a little bit whether you see signs of that coming back through changes to legislation or through renewed regulatory efforts? My second question is on the dynamic of the fixed mobile convergence intake. In the first three quarters, I think it was net negative on the fixed side, at least.
There was a strong uptick in the fourth quarter because of the Telfort migration, and the pattern looked similar in mobile. What's the outlook there? Is the fixed mobile convergence going to slow from here because it's pretty high already, or do you see significant potential for that to grow further? How should we think about that? Thank you.
Yeah. On regulation, after 25 years of regulation in the Netherlands, we're in a situation that we're no longer regulated as a company with significant market power. That was a long discussion, debate from a legal standpoint with our regulator, based on complaints from dear friends doing business on our network. Of course, symmetrical access regulation coming from the E.U. The framework is implemented in the Netherlands, and now there's a translation ongoing, and somewhere mid this year, we will have a clearer view on how our regulator looks at the implementation of symmetrical access. Like I said in my introduction, it's clear for us, and not only for us, but also when it comes to legal professionals, that this symmetrical access is really meant for local situations, for more than one network situation. We think that's not replacing a significant market power reasoning.
Our regulator, of course, was very disappointed that we won that case. We know that they are always investigating the opportunities to look at new ways of introducing the whole line of reasoning around significant market power. We are pretty confident that that will not fly. First of all, the whole reasoning around dual joint dominance, was based on the rules and definitions of our regulator. A strange line of reasoning. Dual dominance did not work in the Netherlands. We're not the largest broadband player, but almost the largest broadband player. We think that with the open access model we did put in place in the Netherlands a long time ago, it was regulated. There was a commercial framework around it, and that still is in the country. We didn't shut down the ODF or MDF footprint. We didn't change the pricing on our wholesale framework.
In fact, the strongest growth in the broadband markets is third parties doing their business on our network. What it means is that the market is working in the current framework. We're not against being regulated, but we don't think that significant market power regulation will work in the Netherlands. I'm pretty confident that the largest player on our network will start complaints against KPN. I would be disappointed if they don't, because they always do. From a legal standpoint, we think we have a pretty strong case.
Fixed mobile, like Chris said, is one of the new items to report on, because it's a way of steering that improves our business. Do you want to say something on that?
It's still an important priority. I think we're one of the inventors of fixed mobile conversion in the Netherlands. We see fixed mobile conversion having higher NPS, much lower churn compared to your not converted customers. As you can see, that in Q4, we actually accelerated it more on fixed mobile conversions. Is this a priority for us? Absolutely. We see opportunities to add Kids Sims to a household, to have more additional SIM cards to a household. Kids Sim is a special offer. Particularly, we think selling more mobile on fixed lines is an offer.
We still have, we look at our base, quite some clients that have KPN broadband lines but don't have a KPN mobile subscription. If you look at our competitive position, especially our unlimited offer for fixed mobile customers, is quite competitive. It's still actually we've yielded ARPU uplift if clients moved in there. We see fixed mobile conversion still a priority. It has accelerated in Q4, and we see opportunities, especially adding more mobile on our fixed base. That's where I think the most cross-sell opportunities are, on Kids Sims or on the higher bundles.
Thank you very much.
Our final question is from Mr. Usman Ghazi of Berenberg. Go ahead please, sir.
Hello, gentlemen. I've just got two questions, please. The first one was on taxes. I guess, this year, we were expecting around EUR 15 million of cash taxes. It didn't happen. I know at the CMD, you outlined the phasing of payments going from EUR 50 million-EUR 150 million, but I was just wondering if anything had changed, which would suggest that phasing might be a little bit more moderate than you had expected. That was the first question. The second question was just going back to the B2B segment. I just wanted to understand that the impact that you're seeing on ICT revenues.
Is it that we're just in a lockdown, therefore, your engineers can't go out to client premises, therefore, they can't install, therefore, there's no revenue from this? Is it that clients are actually, in the wake of budgetary pressures, are actually cutting back on spend itself? I'm asking that question just to understand if there would be a pent-up demand here as the lockdowns begin to be lifted. Thank you.
When it comes to ICT services in B2B, there's a delay, like we said, due to COVID. People work from home, it's difficult to run large IT redesigns for larger institutions. These are delayed. Sometimes we do it as well. It's difficult to run integrated projects with people from different departments when they are all working from home. Better to start such a thing later in the year. There we saw a delay. I don't see companies cutting back. There's another discussion ongoing that the Netherlands should speed up investments in digitalization, in digitalizing customer interfaces. The government is digitalizing a lot. There's a lot to do on cybersecurity. I think in the Netherlands, you will see an increase in investments in these kind of programs, not a decrease. There's also a third thing, and that is our focus on ICT kind of business.
On our capital markets day, we made clear that 90% of our EBITDA is coming from mass market. That's a consumer. That's wholesale and the SME business. 10% of the EBITDA is coming from LCE and integration kind of solutions. For us, it's very important that we are sure that when we are hunting for a contract, when we're in the tender, that we make a decent profit on it. Otherwise, we will not do it. We're not interested to be the largest IT player in the Netherlands.
Sometimes we should partner there in a better way, not take the full ownership of the whole contract. We should do what we can do. Our core case is connectivity, Workspace, security, things like that. We're not an IBM, we're not a Capgemini, in the future, we will partner more on these kind of contracts. There we focus more on the value of the contracts than on the total of revenues only. Your first question was about taxes. I'll hand over to Chris for that.
Yes. Also on taxes, on the effective tax rate of the year, let me walk you through the bridge. The corporate tax rate is 25%. We have, of course, innovation box savings. Some of our activities are just tax exempt or lower tax rate because of the innovative nature. That brings you to about 222%. This year, the corporate tax rate was actually increased to 25%, as opposed to previous government plans. When you don't pay tax and have a DTA, which is good news, because a higher corporate tax rate increased the value of your DTA. That brings an effective tax rate to KPN to around 14%, which is, of course, a theoretical tax rate. From 25- 14 is innovation box in a delta DTA. Of course, we don't pay cash taxes because we still have a EUR 560 million DTA of tax compensation losses.
Now, shifting to 2021 and forward, a couple of things at play. As we said on our capital markets day, we're shifting from termination losses to liquidation losses, which is a slightly different application to our profits. We have different use of or lower use of innovation box. That innovation box use is going to be more limited. Over time, the use of DTAs over time actually limited. You can still use the entire DTA, but the timing of your cash taxes will be different. That latter thing has to be enacted. It has gone through the parliament and to the first chamber to the Senate. Because the cabinet has now resigned, it hasn't been officially published, and probably therefore not officially enacted. I expect it to happen, but when, it's a bit of a mystery.
As a result of all of this, I expect still cash taxes between EUR 50 million and EUR 60 million next year, similar as we outlined in the Capital Markets Day. We are trying to optimize it. We want to pay fair taxes, not a dime too much. We're in discussion, of course, always with the tax authorities, what the right way is to interpret these new tax laws. There could be some way to shave a bit of those tax forecasts, but it's fair to say at this point, EUR 50 million -EUR 60 million cash taxes next year, zero cash taxes this year, and a lower corporate tax rate because of the DTA change. A long technical story, I hope that clarifies it for you.
Thank you very much.
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Thank you.
Thank you.