Earnings Call: Q4 2020

Jan 27, 2021

Good day, ladies and gentlemen. Welcome to KPA's Fourth Quarter and Full Year twenty twenty 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. Please note that this event is being recorded. I would now like to turn the call over to your host for today, Mr. Rainel von Erskopf, 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 twenty twenty results webcast. With me on the call today are Joost Farrek, our CEO and Chris Vige, 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's CEO, Joost Faerberg. Thank you, Reinhaus. Last year was dominated by COVID and we were able to make a valuable contribution to people, households, businesses and government in The Netherlands by keeping everybody connected. And at the same time, we delivered on our full year outlook. And that's what we're going to tell you about today. Welcome. Our networks were ready to accommodate a significant increase in traffic. And our people, 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 all 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. But we know and we have shown that we are a robust and resilient company. Also during the pandemic, we are prepared and we are executing and delivering on our strategy, which we shared with you at the end of Accelerate to Grow. Now 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 postpaid. 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 5,000,000 homes passed this year. Our efforts in modernizing our mobile network have paid off, and our five gs network was recognized as the fastest and most innovative five gs network in The Netherlands. And yesterday, we were officially announced as being the best mobile network in The Netherlands by UCLan. Today, we reiterate our ambitions for 2023. 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 bit consumer 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 €765,000,000 and return on capital employed improved significantly to over 10%. We delivered on our outlook. EBITDA came in at EUR 2,320,000,000.00, in line with the specified outlook we gave at the Q3 results. CapEx was just within the EUR 1,100,000,000.0 bounce and free cash flow came in at EUR765 million, a bit ahead of our outlook. We reiterate our dividend commitment and we will pay a regular dividend per share of EUR0.13 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. And third, we will further simplify and streamline our operating model, supporting new ways of working digitally and we will or we launched a next wave of cost savings. And 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 and to grow EBITDA and to provide attractive shareholder returns covered by a growing free cash flow. Now 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 markets. And 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. And this year, we will ramp up our fiber production further to a run rate of approximately 500,000 households. And this means we will cover more than half of the country with fiber in 2023 and almost two thirds by the 2025. Then 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, so we reached the required run rate to deliver on our target of approximately 5,000,000 per year. We activated our five gs network in July, right after we obtained the spectrum licenses. We modernized more than 2,800 sites to date and our five gs network already reaches 70% of The Netherlands on 700 megahertz spectrum, the real five gs. And we're proud that UCLA awarded us, as I just mentioned, as the best mobile network in The Netherlands, the fastest, the fastest download speeds, the fastest upload speeds, the best coverage. So that is quite important for us as a company after a couple of years, the best network in The Netherlands again. So outperforming on all metrics when it comes to networks. Download speeds of 90 megabits average, above 90 megabits, upload speeds of average 20 megabits and our coverage is more than 30% better than the number two. So next to this, our brand new five gs network is recognized as the most innovative by Umlaut Connect and this is an excellent position to provide differentiated five gs services to our customers and the first we launched already in the fourth quarter. So we will discuss our second 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 digital media 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 plus 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 WiFi usage and rising customer expectations. Now the majority in The Netherlands is working from home, resulting in pressure at our customer service centers. And 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 changed interface of the IPTV products and we have updated our software to resolve this. Now 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 €17 and that's despite the loss of roaming as a result of COVID-nineteen. 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 and for the first time, the year on year improvement in fiber revenues more than offset the decline in copper revenues. And 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 and reassuringly we see an increasing number of fixed mobile households as we improve our convergence penetration. And we measure the value from each household by average revenue per address, or ARPA, next to ARPU, which is based on products. And the added value of using ARPA besides ARPU can, for instance, be explained by example our Kidsim. This product might not seem attractive based on a €9.5 ARPU, but it's significantly increasing customer satisfaction, lowering the churn and improving ARPA. So in addition, we will clearly identify revenues from our so called legacy portfolio, including PSTN, Digitena 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 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 loss of roaming revenues, partly offset by favorable base developments in mobile and fixed and increased take up of unlimited data in mobile. Revenues for IT services declined mainly driven by delayed IT projects due to COVID-nineteen. Revenues for Professional Services declined in the fourth quarter. The fourth quarter is usually a strong quarter seasonally for Professional Services, but this year was impacted by different phasing over the quarters. But for the full year, revenues from professional services increased. And 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 minus 2%, came down a bit versus the third quarter. And 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, seventy six percent of LCE customers have been migrated. The LCE strategy is fully aligned and the transformation is lagging speed 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 postpaid customers. And in December, the European Electronic Communication Code was implemented and Barrick issued guidelines on the application of symmetrical access. And 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. And we continue our open wholesale policy built on reasonable and non discriminatory terms. And as such, we believe to offer an economically viable alternative for current and future wholesale partners. And we therefore believe we operate in line with the new legislation on symmetrical access. And our open wholesale policy is also important for competition in the Dutch market and the growth numbers of our wholesale partners show this open access policy is working quite well. Now 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. So these are very important results for us and to our stakeholders. Now let me hand over to Chris to give you more details on our financials. Thank you, Jorst. As Jorst 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 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. And finally, our net profit was CHF 54,000,000 lower year on year, impacted by several incidentals, both in 2019 and 2020. Excluding these incidentals, net profit would have increased by about CHF 42,000,000. At the strategy update in November, we indicated that we expect mass market service revenues to grow by the 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 the fourth quarter is 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. Still, we see the underlying trend improving versus the first 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. And 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 that it greatly invigorates morale and excitement within a 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 €140,000,000 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 €350,000,000 savings target, with about 80% of the target met for ALD after two year after three years total. In 2021, we expect a somewhat lower run rate in cost savings, since 2020 was supported by COVID related savings. As was stated during our strategy update, we now move forward with a new cost programme. For the coming three years, we expect to save at least another €250,000,000 driven by a combination of portfolio simplifications, digitalizing our customer journeys, rationalization of legacy IT systems and technical infrastructure and executing on further COVID 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 November due to the very strong rollout numbers in December. On the other hand, we've been quite successful in lowering nonfiber 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. However, we keep a strict eye on CapEx and are not let, not exceed the hard line of CHF1.2 billion. During the year, we've worked really hard to further improve our working capital position, and we successfully mitigated the effects of accelerated fiber rollout. Most notably, we further optimized our payment terms with suppliers, moving more to ninety days, which is also more in line with industry average, and we are keeping a keen eye on prepayments, especially with our fiber contractors. In addition, 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 will 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 €1,200,000,000 and stable around 22% of revenues. In 2020, we have seen a healthy increase in free cash flow despite higher CapEx. Our free cash flow of €765,000,000 was 5% higher than last year, and our free cash flow margin improved to 14.5% of revenues. This is mainly a result of lower cash restructuring, lower interest costs, and we ended the year with a strong cash position despite having paid more than EUR 400,000,000 in spectrum and missing the cash income divestments and the sale of our stake of Telefonica 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, but operating profit is not instantly generated, 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. This is fully consistent with our increased operating margins. 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 €250,000,000 mainly driven by free cash generation during the fourth quarter. At year end, we had a leverage ratio of 2.3 times, well below our ceiling at 2.5, and we further enhanced our interest cover. Our total group liquidity is very strong at the end of the year. It consisted of €864,000,000 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, and 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. And some of these new KPIs will be part of a structural disclosure as of Q1 twenty twenty one. For instance, the new revenue breakdown for consumer, ARPA, some fiber KPIs and new revenue breakdown for business that we will 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 at the strategy update. We now expect adjusted EBITDA after leases to come in at least 2,345,000,000, a broadly 1% improvement versus 2020. We are encouraged by mass market service revenue growth trends at KPN. We also expect another solid round of cost savings. However, we will not limit our commercial success by underinvesting it, so 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 first quarters two, three and four on a year on year growth basis. We will ensure CapEx does not exceed €1,200,000,000 €1,200,000,000 We expect free cash flow of €765,000,000 in line with this year, an increase versus our earlier guidance, as growing EBITDA and less interest paid are largely offset by higher CapEx. And we expect to pay a regular dividend of $0.01 €36 per share over 2021, which is up almost 5% compared to the €0.13 that we pay over 2020 and at the upper end of the 3% to 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. So 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 for mass market service revenues with positive signs in consumer, with fiber fueling a stabilizing broadband base and continued base growth postband base growth. In B2B, we continue to face revenue headwinds due to ongoing migrations and COVID. In SME, we are on track to stabilize service revenues by the end of this year through finalizing migrations and cross sell opportunities. And 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 our outlook for the coming year with growing EBITDA, clear CapEx and somewhat higher free cash flow than earlier anticipated. And 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 Reinhard. Thank you, Chris. We will now start with Q and 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. Our first question is from Mr. Simon Cowell, Barclays. Great. First question is on mobile. I guess it showed quite an improvement in consumer this quarter with ARPU only declining one percent. I'm just wondering if you can talk us a little bit through around how much of that is 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? And then I'll ask my second question after that. Yes. So we've been in some decline over the last years in mobile. And like you said, it's all about repricing the back book for main parts. And 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. And we launched Unlimited a couple of quarters ago, and we see a strong inflow on Unlimited as well. So the combination of things works when it comes to base growth, but especially when it comes to the service revenues, we see the trends improving. So 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 will be around EUR 30 or EUR 32. These are high ARPUs. Even in the bundle, it's still EUR 25 or a bit higher. So 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. And I guess my follow-up here is you highlighted that you're making great progress on upgrading your network to five gs and you're pushing unlimited more and more. Does this mean that you're potentially going to need more subs in the coming years? So if you could give us some color around what your plans are there. And then I guess we've seen T Mobile sell their towers to sell next. So does that make it easier for you to add coverage into your network than maybe in the past? Well, in November, we launched our or we updated our strategy in the Capital Markets Day. And there, we said first focus point is superior networks that fits us. And for the last three years, we were number two when it came to mobile network quality. This year, we outperformed 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. And 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. So when it comes to unlimited, when it comes to future five gs 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 is this 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. So I expect, I know that in our CapEx steering, we will step down in investments in our mobile network. And 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. Our next question is from Mr. Steve Malcolm, Redburn. Yes. 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. And I think you're investing a bit more in customer service, how you intend to see that move through 2021. And maybe just a question on leverage. You've obviously flagged the ceiling of 2.5x. Can you think you give us some steer on whether you see a floor on leverage going forward? And when you reach that floor, what you might do? I'll take the first one. Chris, you take the leverage question. Yes, of course, net promoter score in consumer down came 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. So also when it comes to the benchmark with competitors in the market, but now we decreased. And 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 move to workspaces in home. Children's, the schools are locked down in The Netherlands are at home. So there's a huge increase request on WiFi services. We launched Super WiFi, which is a success, sold out twice, but 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 opened today. So that combination is increasing the calls in our service center, 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 on our other services. So we had to upgrade our software there. That's done. That's solved. But that was leading to more calls coming in. And we migrated the full Telford base to KPN. And NPS is not about customer satisfaction because our customers are, I must say, satisfied, especially under the today, under the COVID situation. But the NPS is really if you want to advise spontaneously KPN to your neighbor. And for Telford customers, that question is difficult to answer, but because they need to be in the KPN base for a couple of quarters. So 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. And I'm confident that we will increase NPS again like we did last year. But this is where we are and fair to say that we have to repair there. Right. Steve, on your question on leverage, Alex, as a background, if you look at our financials, we tend to reduce a normal year leverage by 0.1 to 0.15 turns of free cash flow minus dividends. So if you don't have anything weird, you shave off 0.1 to 0.2 of leverage every year. We saw fluctuations with around spectrum. So last year, did spectrum auction. This year, were one of 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, gradually decline during the year. Next year, there will be spectrum auction. But first of all, let me say, if we don't act, leverage will gradually decline by like 0.1, 0.2 per year. It 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 into account the market environment, macro environment, your balance sheet, so more fiber could sustain more leverage. So 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. So no formal floor when you start to approach two times. So there is probably 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? And just on IT costs. You used to mention the investment in customer interface in Q4 to help improve the customer experience. Does that explain why the IT costs are up in the fourth quarter because they have been trending down? Yes. So we've done a lot on IT investments. But in the fourth quarter, we made more costs to upgrade software and to scale up on service centers. We also booked a lot more OpEx for this year to serve all our customers customer, sorry, colleagues, employees at home. So we have now in the workspace service for our employees at home. That one was booked in the fourth quarter as well. So there are different reasons why our costs went up in the fourth quarter. But 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. So should okay. So we think there's more further IT savings to come? Or should we think the well is run dry given the need to invest in customer facing 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. So less mobile investments, less IT and TI spend will support the fiber investments. Our next question is from Mr. Konrad Zomer 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. But given the acceleration of fiber that is expected to continue, can you explain why CapEx would be down in 2023 from prior years? And 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? Look, Konrad, on your CapEx question, we've said on our Capital Markets Day that our CapEx is between 1,100,000,000.0 and 1,200,000,000.0 EUR 1,200,000,000.0 is a pretty hard upper ceiling. Next, it will be at 1,200,000,000.0. 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, but we should save back on nonfiber CapEx. So we'll continue to roll out fiber CapEx, fiber around $500,000 a year, spending about between $450 ish million a year, as we indicated on our Capital Markets Day. That belief is unchanged. Think it's our duty and our strive to reduce nonfiber capings and make sure we stay as far away as we can in the future from the 1,200,000,000.0 proceeding. When it comes to wholesale, I mean, 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, change in roaming revenues and thirdly, higher interconnect revenues as our clients start to call in 800 COVID information numbers. I think you strip those out. I would estimate that the underlying profit growth in wholesale, I mean, looking at profit growth rather than revenue growth, is probably around 4% to 5% per annum. That's precisely sustainable profit growth in the wholesale business. But Wholesale is a business that has, by its very nature, somewhat more incidental than the others. But 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. Yes. Good afternoon. Can you hear me okay? Yes, we can hear you. Great. 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? And then in second question, looking into 2021, I just didn't hear your comments, Chris, on EBITDA growth phasing over 2021. I think you said it'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? And 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? Yes. Thank you. So first of all, it is very important to stabilize our base. We didn't like the idea of the decline we were in 2019 and 'eighteen, and 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. So it's very important that we all understand we want to create value, and we expect the other players in the market to focus on that as well. So we understand that value creation is the most important thing now and 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. So 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. And 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 net growth. So you're quite right. In Q3, we did a plus 9,000 in Q4, a plus 1,000. So the plus is important, but more important is the total of things on value. And 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. So also there, it's very important that we look at the total of things and the total value we can create. So it's a balancing act. But the decline is not in our plans, that's for sure. And 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 developments general in retail, corporate market and in wholesale. So that is actually on the good side. There are a couple of things that we have play in Q1. First, of course, Last year, the first quarter, we had two more months of roaming, January and February and the March. That roaming, don't have. It's completely fallen flat because travel has been completely subdued even more than we've had in the past. And also, see a little bit less support from out of bundle calling. People are working from home and home and calling on their Wi Fi network. So 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 in 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. So it's a roaming delta. It is NPS correcting investments in consumer support staff. And thirdly, when it comes to COVID savings, some of the like, the easy savings have been grasped and are turning around. So we still have, of course, people working from home, less travel. But we've given, like everybody else in The Netherlands, a work from home allowance of a couple of euros a day per employee. That has caused a bit of higher spend. And then we see a new wave of savings, but those require investments. So for example, we're trying to reduce our lease fleet, one of the largest lease fleet operators in the country, supporting and encouraging our staff to give back their leased car. And 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. So you see a combination of, I think, the roaming delta in Q1. It's the consumer support spend to support R and PS, which will wind down in Q2 but will cost us money in Q1. And thirdly, on COVID savings, of the benefits of last year will not be as prominent this year, and we're investing in the next wave of savings and Costco for its revenues go later. It's that set together that makes us We're so confident on the year. We commit to our outlook, but the timing will be Q1 subdued and higher growth in the back end of the year. Well, let me add to that, 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 100,000,000. In total, we will do EUR $250,000,000 in three years, and we're pretty good on track. So cost reduction, OpEx reduction and making the whole operating model leaner and meaner is very important, and we will keep on focus on that. That's really helpful. Thank you very much. Appreciate it. Next question is from Mr. David Bachmann, 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 improvement that we've seen or let's say, it is a better position on the NPS, so the Net Promoter Score, what is your consumer NPS ambition for 2021? And what would be the trigger that you would be ready to make financially to reach this ambition? I have in mind the, let's say, cost savings, trade off, the investment in call center, customer journey, support services and solving maybe technical incident and so forth. Thank you. Good. David, let me take the first question on working capital. This year, we spent or invested CHF 34,000,000 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 countered that through a working capital program. The net capital commit or cash commitment was CHF 34,000,000. In our Capital Markets Day, we said, look, for next year, we expect another 30 odd million, which then gradually goes down to flat thereafter. So 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 30 something million. If you build a year on year free cash flow bridge, the working capital delta will be zero, right? This is the same amount as last year. And thereafter, there will be free cash flow support from working capital. Having said that, 34,000,000 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 some a little bit more support for working capital. That also is behind the increase in cash from CHF $750,000,000 to $7.65 that we may have the opportunity to have some little bit benefit from working capital, safe to be on the CHF 34,000,000 as of this year and then releasing working capital in the years thereafter, also 'twenty and 'twenty one and the release in 'twenty two. But we see a bit of upside there, which supports our commitment and increased free cash flow guidance. Yes. And 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. So 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. So we don't really disclose NPS targets we give to the company, but I can assure you that they are there. And at the end, it's all about an increase in NPS, in consumer and in B2B. That is important for us. And about the trade off, let's say, 2021, would you be is there a point where you would say, that an improvement in equity and assets would jeopardize our financial targets? Let's say, it's a bit of a philosophical question here that I might think on, how would you think about this trade off? Yes. 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. So 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. So 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, but it takes hard work. Okay. Thank you very much. And 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-nineteen impacts that we should think about for 2021. So can you clarify, for example, what your guidance assumes in terms of any recovery in mobile roaming? On the flip side, what are assuming in terms of any risks around business revenues? So that's the first question. And the second question is really about America Movil. I've obviously seen that the AMF filing earlier today indicating that America Movil has increased their stake from 16% to 20%. So what's your perspective on their intentions? And can you remind us how many board seats they're entitled to with a 20% stake? Yes. 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 60% to 20% over the last twelve months. So 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, but I really like the way they run their collateral business. I like the way they digitize their customer processes. So it's a shareholder on one side, but it's also an interesting company we every now and then can learn from. So yes, and 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 will be here for a longer term. I when I when I when I see what's what's happening all over the world and when I look at The Netherlands, then we're in the middle of a lockdown. Shops are closed. Schools are closed. So we don't expect that to open up soon or that virus under control. That will take a couple of quarters at least. So we don't anticipate on 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're vital 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? Yes. If you look at probably if you look at 2020, we reported 5,000,000 to 10,000,000, you know, EBITDA impact negative by by by COVID, which is roughly made up of revenue, you know, headwinds of 25 to 30,000,000, counted by 5,000,000 of lower direct costs, and CHF 10,000,000 to 50,000,000 savings on indirect costs gives about CHF 5,000,000 to 10,000,000 of COVID headwind. And of course, a bit of a it's more art than science to estimate what the real impact is. And as Joao said, for this year, we don't we basically assume continuing of the current situation. So no major return of roaming, that's one. And possibly slightly less cost savings tailwind as by most companies, we give a bit of the COVID 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. So say similar to this year, CHF 5 to 10,000,000, possibly slightly more negative given that some of the real COVID cost headwinds, tailwinds may not be there again. And 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 quite of are cash rich, often due to government support programs willing and able to pay their bills on time. So it's kind of continuing as we had this year, but with a CHF 5,000,000 to 10,000,000 headwind, 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. Friedrich Boulain 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? And 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. So any color on this would be great. Yes. So 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, but in our business, it's all about the trends. And the trend for me is a couple of quarters in a row. So 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. And I give you the promise that then we will be more bullish. But we'll I can assure you that we're pushing our people to move in that direction. Yes. Well, thanks to EBITDA. Your point, well taken. Look, I think we're pretty okay on the service revenue trend. As I said, the momentum is there, although, you know, we'd be fair, things rarely move in a straight line. So momentum is there. There will be some fluctuations around it, but underlying developments are there with maybe fluctuations from quarter to quarter. Where are we looking at? What other things are we looking at? As I talked to Paulo, costs in Q1 will be higher. The consumer service costs 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 comes on roaming workers against in the first two months and be flat on the final months. So it's that combination of things where we see the second half of the year doing better. So that's why we stick to our forecast for 2022 and 2023. But it's really about the service revenues to really sustainably grow that will support us. So 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 the 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 for me. Firstly, on Slide 17, I thought this was quite interesting in terms of the multiyear B2B development. But could you just give us a bit more color on what is in the other bucket? Because I think it's quite clear you've got COVID migrations, which I presume include the deflationary elements in terms of the B2B pressure and then non service, but 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. And then 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 €5 also cheaper than where they first launched. So, they're mid to high €20 level in terms of converged and then €32.5 for non converged. Is that sort of sensible level, do you think, for unlimited just more broadly in the Dutch market as we look forward? Yes. On the Michael, on your question, what's in the bucket of Other? We feel sorry for the Head of Other at B2B, of course. Look, what's in there, a couple of things. One is the structural decline in traditional voice. So traditional voice is a business that's in decline. The decline is slowing down. As if you look at the last quarter, the number of seats we lose is actually stable. Look, it's not declining further, not declining faster. So there's a gradual decline in traditional voice compensated by voice over IP but at much lower margins. So first and foremost, it's the traditional voice decline. And secondly, it is ARPU pressure. There's some ARPU pressure in especially in mobile for larger customers where some of our competitors are still pushing for relatively low prices. So it's the ARPU pressure on mobile and, to a lesser extent, in networking and broadband. So 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, in broadband. That together constitutes the remaining 2.3% decline. Yes. 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. So first of all, stabilizing around 17% was fairly 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. And 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 the Telfort out of the market. We saw others eliminating lower price points. SIMPLE was consolidated by T Mobile back again. So 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. So launching Unlimited, I think it was in the 2019 we started. Pricing is pretty strong above EUR30, and we balance it now between EUR25 and EUR32 depending on the package. But that's really helpful, of course, when it comes to improving the ARPU. So 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. And that works. But it's very important to keep our salespeople under control and really talk about the most intelligent price points for KPN in the market. And the higher end, euros 25,000,000 or above for unlimited, that works quite well. Great. Thanks. That's so really helpful. Our next question is from Mr. Pavel Chirouya 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 the one hand, but still these two segments a little bit under pressure? Well, look, it's fair to assume that in this year, on SME, there will be movement to stabilization of revenues in the second half of the year, so 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'd 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. And given the mix, I think you can do your own calculations of what it means for the implied decline on the LC pivot integration. So baseline, less decline, less shrinkage in our B2B business. With SME, a small decline in H1 and stable in H2. And the remainder means that we'll see consistent revenue decline in the large corporate and tailored integration business. But that's on the revenue side, much less on EBITDA. That's kind of how we steer the business. Where how exactly will it all unfold? It depends a bit how the economy moves. Of course, was also the business was held back mostly from COVID because of the IT work that we normally do that we can't do right now. So if and when the country kind of awakes out of its lockdown and gets to be more economically reinvigorated, we see a bit of upside there. And secondly, we do have a few ideas on how to push for some of the large corporate business going forward, especially 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. But that needs to be achieved rather than promised. So 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. Our next question is from Mr. Emmanuel Carlier of Kempen. Go ahead please, sir. Yes. Hi, good afternoon all. My question is on ARPU. So 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. So if the answer is yes or no, I would also be happy to get a little bit more color on why that is like 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 kind of percentage on how much percent of your base is on high speed and what it could mean if they would upgrade that? Thank you. Yes. 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, can upgrade customers. Lots of customers still copper are on 50 megabits per second, which is low speeds. The average 70% buys on fiber still around 100 megabits. But the good news is that the trend is moving more to the higher speeds on fiber especially. So customers are now buying more 200 to 500 megabits, which is also about how we price it, by the way. So in the past, one gig or 500 megabits was very high priced by KPM. In The Netherlands, every euro accounts for people. So it's very important that we take the right price points on the higher speeds. But recently, we see an increase of people buying 200 or 500 megabits of fiber and people asking for upgrades on copper as well. Our copper network is compared to other countries in a pretty good shape, and we can do average 100 megabits per household on copper as well. So 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 mobile side. So we're 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. And and I don't know. Have you done any calculations on that? Like, I think on average, have been raising your prices by, 2% to 3% per annum, if I if I'm right. Could this become a tailwind going forward? And then any way to quantify that? Because it looks a bit like a potential sector trend. You're quite right. We do not increase tariffs blended 1.5 for the whole base. It's done service by service. So an increase on fiber could be a bit more than on a low speed copper line. So the more customers move to higher speeds, the more potential we see, in our view, improvements, of course. And 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. Thank you. Next question is from Ms. Siyi Hay of Citi. Go ahead please. Thank you very much. I have two questions, please. The first one is on fiber. And what I've seen that you have you had a huge acceleration in your home pass, but the activation rate seems to stable. The actual activation seems stable quarter on quarter and the fiber customers net adds was down quarter on quarter. Just wondering if you can help us to understand why that's the case, maybe seasonality effect. And 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? And my second question is on the mass service revenue and it was down 0.1%, but you still suggest that it was grow only in the second half. I understand that wholesale one off 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? Yes. So first on fiber, I mean, 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 and it's some kind of an S curve. Then we, after a certain period of time, we move up to above 50%. In some areas, we now reach a point of 60% penetration. So 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. But 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. So 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. Yes. On your question on mobile mass market service revenues, agree that the wholesale is already growing and will continue to grow. As we said, maybe the Q4 had a bit of tailwinds, one offs, but 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 we're roaming in year on year comps in the first quarter. But we think on mobile, we could see upside for service revenues. And on fixed, it's almost like the battle between base developers and price developments. At this point, that mix has some positive connotation to it, but that needs to be sustained in the year. And on SME, our base has been growing well, but we've seen some ARPU pressure in SME from a combination of intense competition. And secondly, year on year, again, the bloody roaming comparison that hurts us. So and 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 our proposition is all about. It is growing, but it's not where we want it to be. So 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 ARPUs 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 in unlimited mobile consumer. That will continue on wholesale. And then also, we have an SME. The roaming year on year comes behind us than and we have made further progress in cross sell. So that I think my save bet is still to think about Q3 next year Q3 this year. And if it happens in Q2, we'll open 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. Had some audio problems. The first one would be the joint dominance regulation, the 10 was obviously 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. And then there was a strong uptick in the fourth quarter because of the Telfort migration. And so 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 a significant potential for that to grow further? How should we think about that? Yes. So on regulation, after twenty five 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. And of course, symmetrical access regulation coming from the EU. The framework is implemented in The Netherlands, and now there's a translation ongoing. And somewhere mid this year, we will have a clear 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 lawyer legal professionals that this symmetrical access is really meant for local situations, for more than one network situation. So we think that's not replacing a significant market power reasoning. Our regulator, of course, was very disappointed that we won that case. And they 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. Yes, but we are pretty confident that, that will not fly. For first of all, there's the whole reasoning around dual joint dominance was based on the rules and definitions of our regulator, a strange line of reasoning. So dual dominance did not work in The Netherlands. We're not the largest broadband player, but almost the largest broadband player. So we think that with the open access model, we did put in place 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. And in fact, the strongest growth in the broadband markets is third parties doing their business on our network. So what it means is that the market is working in the current framework. We're not against being regulated, but we're 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. But 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 the Yes. I mean, it's still still, Uldik is still an important priority. I think we're one of the inventors of fixed mobile convergence in The Netherlands. We see fixed mobile convergence having higher NPS, much lower churn compared to your non converged customers. As you can see that in Q4, we actually accelerated more on fixed mobile convergence. Is this a priority for us? Yes, absolutely. We see opportunities to add kids SIMs to households, have more additional SIM cards to households. Kids SIMs is a special offer. Particularly, we think selling more mobile on fixed clients is an offer. We still have we look at our base quite some clients that have KPN broadband lines. We don't have a KPN mobile subscription. And if you look at our competitive position, especially our unlimited offer for fixed mobile customers is quite competitive. It still actually would yield an ARPU uplift if clients moved in there. So we see fixed mobile convergence still a priority. It has accelerated in Q4, we and see opportunities, especially adding more mobile on our fixed base. That's where I think the most cross sell opportunities are, on kid sims or on the higher bundles. Thank you very much. Our final question is from Mr. Usman Gazi of Berenberg. Go ahead please, sir. Hello, gentlemen. I've just got two questions, please. The first one was on taxes. So I guess, I mean, year, we were expecting around $15,000,000 of cash taxes. It didn't happen. I know the CMD, you had outlined the phasing of payments going from €50,000,000 to €150,000,000 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 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? Or is it that clients are actually, in the wake of budgetary pressures, actually cutting back on spend itself? I was just asking that question just to understand if there would be kind of a pent up demand here as the lockdowns begin to be lifted. Well, when it comes to ICT services in B2B, there's a delay, like we said, due to COVID. I mean people work from home, so it's difficult to run large IT redesigns for larger institutions. So 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. So 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, in the government is digitalizing a lot. There's a lot to do on cybersecurity. So 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 markets, so that's a consumer, that's wholesale and SME business. And 10% of the EBITDA is coming from LC and integration kind of solutions. And for us, it's fairly important that we are sure that when we are hunting for a contract, while 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. So in the future, we will partner more on these kind of contracts. And 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. Look, Also on taxes, the effective tax rate of the year, let me walk you through the bridge. I mean the corporate tax rate is 25%. We have, of course, an innovation box savings. So some of our actual activities are just tax exempt of lower tax rate because of the innovative nature. That brings you to about 22%. And this year, the corporate tax rate was actually increased to 25% as opposed to previous government plans. And when you don't pay tax and have a DTA, which is good news, we took a higher corporate tax rate, increase the value of your DTA. That brings an effective tax rate to KPM to around 14%, which, of course, is a theoretical tax rate. So from twenty five percent to 14% is innovation bucks in a delta DTA. And of course, we don't pay cash taxes because we still have a €560,000,000 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 has 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. And over time, the use of DTA is over time actually limited. You can still use the entire DTA, but the timing of your cash taxes will be different. The latter thing has to be enacted. It has gone through the parliament and to the first chamber to the Senate. But because the cabinet has now resigned, it hasn't been officially public and probably is definitely not officially enacted. I expect it to happen, but when, it's a bit of a mystery. Now as a result of all of this, I expect still cash taxes between CHF 50,000,000 and 60,000,000 next year, similar as we outlined at the Capital Markets Day. We are trying to optimize it. We want to pay fair taxes, not a dime too much. And we're in discussion, of course, always with the tax authorities what the right way is to interpret these new tax laws. So there could be some way to shave a bit of those new tax forecasts, but it's fair to say at this point, $356,000,000 cash taxes next year, zero cash taxes this year and a lower corporate tax rate because of the DTA change. A long technical story, but it helps that clarifies it for you. Thank you very much. Okay. With that, we will conclude today's webcast. Thanks for your attention. And if you have any further questions, please contact Thank the Investor Relations you very much. Thank you. Thank you.