Hi everyone, and welcome to our strategy update live from our headquarters in Rotterdam. We'll start in a minute, but first I'll hand over to Reinout for a short introduction.
Good afternoon, ladies and gentlemen. Welcome to KPN's Virtual Strategy Update 2020. We're here at our headquarters in Rotterdam, and it's great to see that so many of you joined us online via webcast. Let me run you through today's agenda. Our CEO, Joost Farwerck, will kick off the presentation. Together with our CFO, Chris Figee, they will take about an hour to present our strategy update. The slides have just been published on our website. After a 15-minute break, we will move to your questions. Our full board of management will be part of this Q&A session. As usual, before turning to the core of the presentation, I'd like to draw your attention to the safe harbor included in the pack, which also applies to any statements made in this presentation.
In particular, today's presentation may include forward-looking statements and ambitions, which were also included in the press release published this morning. All such statements are subject to the safe harbor. Well, it's time to start. I'd like to give the floor to KPN CEO, Joost Farwerck.
Thank you, Reinout. Welcome everyone. Welcome to our Strategy Update 2020. Thank you all for connecting to this webcast. First of all, I hope you and your families are healthy. This is a brief virtual strategy update. COVID-19 restrictions mean we can't be together with too many people in the same room. Our full board of management is joining the session. Following the restrictions, we use several locations here at our head office in Rotterdam. First, Chris and I will take you through a short presentation this afternoon. After the presentation, our other four colleagues in the board of management will join us in the Q&A session. We've noticed several rumors in the market recently. As usual, we don't comment on rumors.
We, as a management team, focus on completing this year, 2020, in the right way, we especially focus on the execution of our strategy for the next few years and creating the optimal value for KPN and its shareholders. That's why we're here today. I'm very excited to present our strategic plans to you. We accelerate to grow. We are well positioned to do so. We build a strong foundation, especially in the mass market, representing 90% of our EBITDA. Today, we cover more than a third of the country with fiber, and we've been ramping up our fiber machine to connect nearly 10,000 households per week lately. We see positive signs in the consumer markets. In the third quarter, we saw our mobile base return to growth and stabilization of our broadband base fueled by fiber.
We've made huge progress in migrating our SME customers in the business segment from legacy products to our future-proof portfolio, KPN EEN MKB. We grow in wholesale, leading to a total of 52% of Dutch households connected via our network. We have become a much leaner, faster, and simpler company, and we saved EUR 256 million since the start of the latest program in 2019. I can assure you we're not done yet. All of this has resulted in improved financial results with a return to EBITDA growth and a strong balance sheet. We've set the stage, and now it's time to accelerate to grow, not only EBITDA, but top line as well. Our strategy is supported by three key pillars. We leverage and expand our superior network. That's the first one.
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 business, supported by differentiated services and an outstanding digital customer experience. Third, we further simplify and streamline our operating model, supporting new ways of working digitally and the next wave of cost savings. As a result of this, we connect the Netherlands to a sustainable future. In three years, we will reach more than 50% of the country with fiber, and in five years, we move to about 65%. We differentiate through B2B services on real 5G based on 700 MHz. We further digitalize customer interaction, and we further simplify our organization. We upgrade the current cost program for next year, and we launch a new cost program.
We grow mass market service revenues, which is B2C, SME, and wholesale, by the end of next year. We grow EBITDA next year, and we continue to provide attractive returns to our shareholders with a progressive dividend covered by a growing free cash flow. Now, before we dive into the details, let's take one step back. The world is changing at a rapid pace, and above all, becoming more and more connected. The global pandemic has further accelerated this trend. For people, having access to the best-in-class digital infrastructure is more important than ever, and telcos play an important role to facilitate this by building a future-proof and secure infrastructure for the next generations. Massive growth of new applications and connected devices will further increase data hunger.
A demand will become more sophisticated with, for example, industrial applications requiring ever high quality of services. The demand will also become more differentiated, with applications having different bandwidth and latency needs. Low latency and super fast networks are key to service our customers and to be able to earn and retain the public's trust. This is an important license to operate, and that's why KPN will continue to expand its leading fiber and 5G network in the Netherlands. We are a Dutch company with a single country focus, and the Dutch economy is expected to outperform the Eurozone by 3 percentage point this year. The Netherlands has a AAA rating and a debt to GDP ratio far below average. This means that our government has ample room to support the economy by continuing the COVID-19 support packages for businesses into the first half of 2021.
At number four, the Netherlands is the highest ranked country in Europe in the World Competitiveness Index. This indicates we're operating in an extremely attractive environment to do business. We're number six in the ranking of happiness, and according to UNICEF, the Netherlands is the best place for a kid to grow up. The population in the Netherlands is growing, and the numbers of households is growing with approximately 65,000 per year. The Netherlands is also widely considered as ahead of the pack in terms of digitalization, and KPN is important to support these developments. The Netherlands is second in the EIB's digitalization index with the best digital infrastructure and highest digital intensity. This is also evidenced by very high fixed broadband penetration and all three Dutch mobile networks ranking in the global top 10. In the Netherlands, we have the largest Internet exchange hub in Europe.
As KPN, we own a leading Internet exchange, connecting more than 100 data centers through Europe. This enables our customers to peer and exchange Internet traffic while decreasing bandwidth costs and improving network performance. Let's take a brief look into the Dutch telco market. We operate in, one could say, a mature three-player converged market. KPN and VodafoneZiggo have both a mobile and a nationwide fixed network. T-Mobile has a mobile network and is one of our wholesale customers when it comes to broadband. Including wholesale customers, we have a broadband network share of around 52%, and we have a mobile value share of around 37%. All three players currently focus on fixed mobile convergence. With about half of the broadband base and 60% of the postpaid base being converged, we have a leading position in this field.
In the business markets, KPN is also a clear market leader, and we cater to all market segments, from small businesses to large enterprise and corporate customers. We are the network of the Netherlands. Out of a total of about 8 million households in the Netherlands, we serve 4.2 million broadband customers, and we serve 7.2 million SIMs through our best-in-class networks. Every year, we invest over EUR 1 billion in Dutch infrastructure, more than any other company in the country. The foundation of our strategy is a very strong network layer based on fiber. Next to this, we are on track to create a very lean service provider. We see benefit in the integrated view, but we also look at the most efficient way to run these layers of our company. Our network is supporting the commercial activities, and the commercial activities support the network.
We see an optimized network penetration by combining both consumer retail and wholesale, and this is also an important component in our fiber business case. The operational fiber rollout goes hand in hand with commercial actions providing for solid momentum to monetize these investments. The simplified IT and our lean operating model are designed to act as a linking pin between the layers. All in all, the two combined strengthen each other. Our people make the difference. They are the network behind the network. I'm proud we have, for example, the best service center agents, the best field engineers, and the best sales force in the business. Our people continue to put our customers first in these dynamic times, and we have a very flexible and resilient workforce. To keep our 10,000 colleagues motivated and engaged, the right leadership is crucial to empower them.
We've developed a strong, adaptive people strategy, enabling our people to be their best, leading to excellent performance in this strange COVID era. COVID brought challenges and of course, many of our employees want to work at the office more often. However, at this moment, they are more engaged than ever. We've seen a major increase in employee engagements, putting us amongst the top performing employers in Europe. Our people, they are ready to accelerate the digitalization of the Netherlands. We also believe that sustainable business is better business, and that's why ESG is fully embedded in our organization, our strategy, our networks, and our products. We focus on three areas linked to the United Nations Sustainable Development Goals. Innovation. We stimulate innovations with the latest safe technologies. Sustainability. We reduce our carbon footprint, and we help our customers to reduce theirs. Third, social and digital inclusion.
We leave no one behind. This year, the COVID pandemic underlined the importance of being connected. It makes the difference between participating or not. As a leading responsible telecom operator, KPN has taken additional steps to help Dutch society through this period. Digitalization is a catalyst for the country's economic recovery, and it pays off in social and ecological fields such as clear air and the avoidance of carbon dioxide emissions. It's our ambition to be an inspiring leader in sustainability. We crossed some important milestones in this respect, and we have an ambitious agenda for the years to come. Our ESG efforts are recognized by various external benchmarks. We are on the A list of CDP.
We have a AAA status at the MSCI, we recently have been included in the top four of the global Dow Jones Sustainability Index for the fifth year in a row. We have three strategic pillars underpinning our ambition to connect the Netherlands to a sustainable future, to grow mass market revenues and EBITDA as from next year, and to provide attractive shareholder returns. We will now share how we leverage and expand our superior network. Over the past years, we built the state-of-the-art network architecture that we have today. We have a full fiber backbone connecting our four core locations and our 161 metro core locations in the Netherlands. As a result, we have extremely low latency in our network, and we are well positioned for edge computing solutions.
We cloudify a lot of components in our network, and we are accelerating the move to software-defined network solutions. The vast majority of our mobile sites are built for high capacity with over seven bands and are connected to fiber, as well as one-third of the Dutch households. Rolling out fiber creates the opportunity to phase out a lot of legacy. As from 2023, we will start to switch off part of the copper network that is still running today with 1,300 number exchanges, 8.5 million copper lines, and 30,000 street cabinets. This will, of course, take a while, but it feeds a new simplification program in a couple of years from now. Our next step is to cover the main part of the Netherlands with fiber.
I will now hand over to Chris to take you through our fiber investment case and our 5G mobile network strategy.
Thank you, Joost, and good afternoon, everyone. I'm very excited to share how we will fast forward fiber. As Joost indicated at the start of his presentation, we see several industry trends underpinning the need for the next generation of fiber infrastructure. Data demand is ever increasing, and people want fast and reliable internet now that working from home is the new standard. That is what we offer. Our fiber network today is capable of handling symmetrical up and download speeds of 1 Gbps. Tests have shown that we can quickly upscale to even 10 Gbps . That's why we are investing in the next generation of fiber infrastructure. We have a very strong fiber foundation with one of the larger footprints in Europe. We cover 1/3 of the Netherlands, or about 2.7 million households with fiber to the home.
On top of that, 55% of our households are covered by fiber to the cabinet. We are currently rolling out in 19 construction areas across all provinces. We grew production capacity from about 4,500 homes passed a week in the beginning of the year to almost 10,000 homes passed a week right now. Mind you, this equates to 2,000 homes passed per day or about 250 every hour. Since we started our rollout program a few years ago, we have already dug more than 45,000 km, which is actually one time around the Earth. We see all this bearing fruit in our financials. Looking at our Q3 results, we currently generate EUR 820 million of annualized fiber service revenues, and this number is growing rapidly. In Q3 of this year, our consumer fiber revenues increased 7.6% year-on-year, driven by a higher base and attractive ARPU.
I would now like to go a little bit deeper into our fiber business case. Key is that the most important drivers in the fiber case are network penetration and ARPU uplift. First, let me say a few words on penetration. We see a significantly higher penetration in fiber areas over time. Typically, one year after the first connection in an area, our penetration grows by about 7 percentage points. In our track record, four years after rollout, total network penetration rises between 50 points and 60 points, with only a fraction of customers left on copper. This number rises even further after seven years, when our average network penetration reaches a number over 60%. Interestingly, this follows a pretty linear and therefore rather predictable pattern over time, which clearly strengthens our belief in fiber.
We see a positive effect on network penetration and many customers actually switching over to fiber. Secondly, on ARPU, while we do not charge a premium for fiber itself, the beauty is that fiber customers on average do have an almost 9% higher ARPU. That is because they more often buy higher speed levels and more value added services such as content packages. Finally, the fiber network quality is also better and less prone to disruptions. This in turn leads to fewer service tickets, higher customer satisfaction, and increased loyalty, whilst also lowering subscriber acquisition and retention costs. We should not forget that fiber tends to consume much less energy and therefore is contributing to our sustainability objectives. To continue on costs, maintenance costs for fiber are about two thirds lower when compared to copper.
Rounding it off, there's a clear opportunity for mostly phasing out our copper infrastructure in the long term, starting with a gradual switch off as of 2023, as we already announced this year. To be able to calculate the return on fiber investments, we need to incorporate a number of factors. As I just said, a higher and growing penetration in both retail and wholesale are essential. On top of that, we see an attractive ARPU uplift. Finally, you should also consider the churn on copper that we prevent by rolling out fiber in those areas. As we are accelerating our fiber rollout, the growing fiber footprint combined with improved penetration rate on this network mean that we expect a growing customer base. With every additional household adding value to our fiber case.
Let me walk you through a simplified do-it-yourself fiber model to help you assess the value creation potential of fiber. First, take the starting penetration in an area and model an uplift in fiber take-up and a decline in copper penetration. Do this both for retail and for wholesale. Apply higher ARPUs on fiber than on copper, also for retail and for wholesale, and add over time a CPI type price indexation going forward. Estimate the margin on fiber and copper, and you are able to derive the marginal incremental cash flows from fiber investments from the coming decades. This gets you to a simplified but yet very effective model to estimate the fiber value case.
If you built such a model, and because fiber is a very long-term investment, you can see that the cost per home passed is actually not that much of a factor in determining the NPV. It really is the penetration that matters, followed by ARPU uplift. KPN, with its existing client base and existing brand, is very strongly positioned to migrate customers and win share, and thereby achieve solid penetration levels in new fiber areas. Taking all these factors into account, we get to a positive NPV and internal rate of return that clearly outweighs our cost of capital. Thus, investing in fiber creates value for KPN, its shareholders, and a broader set of stakeholders. We see clear value from fiber investments. Fiber is one of the key drivers for our strategy to return to growth in the mass market.
Therefore, we are continuing and accelerating our fiber rollout. We produce about 10,000 homes passed per week today, and we'll ramp up further to a run rate of about 500,000 homes passed annually for the next five years. This is equal, mind you, to the entire production capacity of the Dutch market in this year. Because construction capacity in the field is quite scarce, we've already secured capacity at reasonable terms for the first couple of years, giving us a very clear and secured view on the future fiber footprint of KPN. To select the areas where we roll out first, we've built a sophisticated tool. This takes into account all the important factors like demographics, competitive positioning, current penetration, rollout costs, speed of the existing copper network, and so forth. With this tool, we select and prioritize regions.
It's our ambition to cover the Netherlands with fiber. Importantly, in the short term, we will cover more than half of the country in 2023 and basically double our footprint by the end of 2025. Our ultimate goal is to reach substantially more than 80% in the Dutch market. Our open access wholesale model is, as you've seen in the drive of the fiber case, an integral part of our strategy. Through our wholesale activities, we support the Netherlands by fostering competition and innovation, and support KPN as our wholesale activities allow us to further optimize network utilization and subsequently invest in the long-term quality of Dutch infrastructure. Already today, our wholesale fiber client base is growing strongly to nearly 250,000 lines. Since March of this year, our fixed access is no longer regulated.
As everywhere in Europe, the Dutch government is preparing to implement the European Electronic Communications Code, or the EECC. In this code, there's a new instrument for regulators, so-called symmetrical access regulation. Which means that access obligations to any network may be imposed if there is no economically viable alternative. At KPN, even as we are not regulated, we stand by our open network policy, which is built on reasonable and non-discriminatory terms. As such, we believe we offer an economically viable future alternative to today's and future wholesale partners. Therefore, we already operate in line with the upcoming legislation. We welcome every provider to join us, to join the network of the Netherlands. Now let's turn to our 5G mobile network. In July, right after we obtained the spectrum licenses, we activated our 5G network. All our customers with a suitable device can instantly use 5G.
Last month, we announced that we will renew our mobile core network using the latest network technologies that the market has to offer through our technology partner, Ericsson. This makes us ready for the data flows of the future, real-time communication, and massive IoT. It will open new digital solutions for our customers. Already, our 5G network covers 2/3 of the country. The investments we made in our network have led to 50% improved download speeds on 4G and over an average of 225 Mbps on 5G using the 700 MHz frequency band. Where 4G and prior mobile generations were mostly about coverage, 5G, we believe, is mostly about industry solutions. As the first operator in the country, we offer our business customers differentiated services on 5G, such as coverage on demand, guaranteed bandwidth, and application priority.
This enables business customers to have tailor-made indoor and outdoor coverage with guaranteed bandwidth for business applications. Think for example about remotely controlled forklifts or drones continuously carrying out autonomous tasks on company sites. We already have more than two years of experience in testing 5G applications together with our customers and partners to validate business cases in specific industries. We are focused on innovations in the field of safety, of healthcare, agriculture, and sustainability, which we believe are of great value to society. A great example is Shell Pernis, where basic chemicals and fuels are made, and safety on site plays a crucial role. Using 5G technology, we are investigating with Shell and partners how we can further automate inspections and maintenance and enable remote monitoring.
This includes use of inspection robots, smart helmets, AR solutions, and the use of advanced wireless sensors, all connected by an on-site private 5G network. To summarize, we will leverage and expand our superior network. Fiber provides superior and sustainable connectivity for all our customers, retail, business, and wholesale. We will cover the Netherlands with fiber, doubling our footprint in the coming five years, ultimately aiming for 80% coverage. The fiber investment case drives attractive returns, particularly through higher penetration in ARPU, and is fully consistent with creating value to our shareholders. We'll continue our open access strategy to facilitate other service providers, whilst increasing utilization of our network and enabling us to invest. Last but not least, we're offering differentiated 5G services to our B2B customers, an area where opportunities are increasing. Joost will now continue with our second strategic pillar.
Thanks, Chris. Like Chris said, we'll now move to the second pillar of our strategic framework, and that's grow and strengthen our customer footprint through an enhanced customer focus. Now, if you take a step back and look at KPN, you will see that for the main part, we are a mass market company. We deliver services to families and small businesses in a standardized way throughout the Netherlands with our consumer, SME, and wholesale segments. We consider SME to be mass market because we've standardized our offerings for these customers, and wholesale as well, which is serving households through a B2B2C approach. Via these mass market segments, we are generating 75% of group revenues and about 90% of group EBITDA. This does not mean LCE and tailored solutions within our B2B segments are not important to us.
It still represents 10% of our EBITDA, which is EUR 230 million. When it comes to growth areas, it is relevant to mention where we mostly make our money. Considering where we are today, we are confident that we can return to revenue growth in these mass market segments, so in consumer, in SME, and in wholesale. That will happen end of next year. We further work on the migration of our LCE customer base to a standardized solution, which will take a bit longer. In consumer, our strategy has always focused on households, and we've taken bold actions to ensure that we're the leader in this market. We were the first to introduce fixed mobile converged propositions. KPN Compleet was widely considered to be a blueprint for converged offerings. We were the first to fully integrate digital partners like Spotify, Netflix, and Amazon into our propositions.
We were the first not to increase, but to reduce the number of our brands with which we serve the market. Our B2C strategy is centered around three focus points. We offer the best digital access, the best digital experience, and the best digital third-party services. We're accelerating fiber to strengthen our digital access position. Combined with our KPN SuperWifi proposition, we can guarantee our customers high speeds and reliable connections throughout their homes. We changed the way we interact with our customers. We will provide mobile first and app native customer journeys. We enrich our own services with a world of distinctive and innovative services from partners. This is, for example, in the field of entertainment, gaming, and smart home, that can be directly ordered at KPN. We create a single platform for households to order and manage all their digital services.
Beginning of last year, we announced our plan to phase out our Telfort brand. This brought us benefits in terms of cost savings and value. With Telfort, we basically operated the second company, smaller, though similar to the KPN brand, at a lower retail price. Taking out this entire second company, including the IT backend, the shops, et cetera, led to substantial savings. We saved a lot of costs by phasing out Telfort. It also impacted our base development in the last 18 months. We completed the migration of the mobile base in the second quarter. This quarter, we completed the migration of Telfort broadband customers to KPN. We are now seeing a solid base momentum in consumer. Broadband and postpaid net add trends have improved in the past quarters.
We're drawing a line in the sand regarding our market shares, and we are dedicated to further improve the base trends going forward. Today, our strong flagship brand is KPN. Over the years we've integrated numerous brands into KPN, most notably Hi, and as I just mentioned, Telfort. As a result, we went from about 800,000 mobile consumer customers on our KPN brand back in 2014 to over 3 million today. We now have more than 2 million fixed broadband customers on the KPN brand. NPS, Net Promoter Score, has strongly improved in recent years, and customers value us for our quality, our reliability, and premium service. We built a very strong position in convergence with high fixed mobile penetration in both our fixed and mobile base. We're in a good position to take the next steps in convergence and digitalization, steps benefiting our customers.
Our customers, Dutch people, are generally known to be early adopters of technology and tech savvy. This is one of the reasons why Spotify, Netflix, and Disney choose the Netherlands as one of the countries to test and introduce new features first. We see a clear trend. Our customers want to be in control without too much intervention from KPN, and they want to be able to do this within just a few clicks on their phone. It's our ambition to become a telco at the fingertips, simple, fast, and flexible. With our upgraded MijnKPN app as a primary channel for customers to control every aspect of their services. This will boost the number of active app users and digital-only sales and service journeys. We're confident that this digital omnichannel experience will result in improved customer satisfaction, more loyal customers, and lower costs.
We are an aggregator, and we combine services for households. End of 2019, we introduced KPN Hussel to give customers more control. This was, I think, the first proposition in the telco industry where customers are free to tailor all available products and services to their own needs. KPN Hussel is built around the households, and customers can freely combine high quality broadband, mobile, and TV services and enrich their experience with those of premium partners for content, gaming, and other solutions. We won't stop fine-tuning Hussel. Soon we will add pre-selected Hussel packages for households, helping them to pick the right packages to start with, and gaming is becoming increasingly popular. We will add that to the propositions as well soon. Of course, to make sure our customers have the best in-home experience, we offer the successful mesh-based Wi-Fi solution, KPN SuperWifi.
Best in class, very good product, has been sold out multiple times since we introduced it earlier this year. That is super relevant in this COVID period. We drive household value by optimizing the share of wallet and reducing churn. We measure this by ARPA, the average revenues per address, which we will start disclosing as per first quarter next year. We're confident our focused efforts in consumer result in a return to service revenue growth by the end of 2021. In fixed, the current commercial trend, the accelerated fiber rollout will fuel our broadband base. In mobile, also the current trend is supporting. Convergence and unlimited data bundles will grow the base. ARPA will further increase by pushing more services to the household through personalized offers. Combining these trends, service revenues in consumer will grow again by the end of next year.
Let's now move to the B2B segment. Now we have a leading position looking at business market presence and capabilities. We are the clear leader in telco revenue market share, and also, we are the only operator in the Netherlands that acts as a one-stop shop platform offering our own core products enriched with strategic partnership products. We run the business segment focusing on three distinctive customer segments. They all have different characteristics and margin profiles, each requiring their own approach. First, I mentioned this already, small medium enterprise, SME. Second, large corporate enterprise, LCE, and thirdly, tailored solutions. For SME and LCE, we have introduced a simple target portfolio offering standardized building blocks to remove complexity and to improve efficiency for our customers. Tailored solution caters to large customers, often with an individualized approach.
These customers are generally our partners for life, but we have to be aware that the deals we do are sustainable and profitable. We see options to improve the tailored solutions business and to keep the margin up and focus on core connectivity services. We will monitor and report the sub-segments within B2B separately going forward. We intend to provide you with revenue disclosure on this as of next year. I mentioned SME, roughly half of B2B EBITDA comes from SME. This is the reason why we've prioritized transforming this segment by standardizing the portfolio in KPN ÉÉN and migrating the customer base to this new environment. The organic revenue trends in B2B has been gradually improving over the past years. In 2019 and 2020, this was impacted by self-inflicted strategic actions such as migrations to target portfolio and our value over volume focus.
This year, the performance of course was further impacted by COVID. We’ve seen no roaming revenues, and we’ve seen IT projects being delayed this year. Underlying, so stripping out the effect of COVID and our own strategic actions, we can see performance improving year on year. The migrations in SME are now nearly finalized. If we zoom in on our SME segment, where we are most advanced with the transformation and where we have migrated 86% of our base to KPN ÉÉN. This target portfolio is best in class, a simplified and converged proposition. SME customers can get everything from voice and TV to workspace, security services in one application and manage all employee seats in an efficient way with one bill. In the past three years, the number of KPN ÉÉN subscribers has grown by about 400,000.
This has great benefits as customer satisfaction levels are much higher than on the traditional portfolio, resulting in a churn of only 6%. Additionally, the cost to serve is nearly 40% lower. The customer migrations caused serious revenue challenges, as you know. The good news is that we, by the end of 2021, expect to have only 6% of the revenues from the legacy portfolio remaining compared to 40% last year. We're finalizing the migrations, and nearly all SME customers will be on the future-proof portfolio, which is perfectly designed for up and cross-sell. We see positive proof points here. Triple play customers grew by more than 50% and now account for more than 20% of the base. Double play customers with Internet and voice are currently in the biggest part of our base in KPN Compleet.
We're confident our KPN ÉÉN base will grow further, for instance, through by fiber, and we also see the launch of unlimited in KPN ÉÉN drive higher inflow ARPU. All these effects will lead to stabilization of SME service revenues by the end of 2021, and that will be a great turning point for our B2B segments. Turning to our large corporate enterprise customers. Like KPN ÉÉN, we have developed a simplified modular and one-stop shop proposition called KPN Smart Combinations. In terms of strategy, SME and LCE are pretty much aligned, but they are in a different stage of transformation. LCE is lagging SME by about one or two years. We're on the right track, but it will take some more time. Within LCE, we see great potential for up and cross-sell driven by cloud communications, secure networking, workspace, and security.
Together with our recently launched and differentiated 5G services, this will drive performance. We see growth on our new portfolio. The growth of new revenues is not yet outperforming the rationalization and the migration impact. Also for LCE, our medium-term strategy is to return to revenue growth, leveraging our long-standing customer relationship as market leader. The COVID situation sometimes also brings opportunities. For an example, when it comes to our largest customers, we are one of the largest workspace providers in the Dutch market with about half a million workspaces out there. Here we see the opportunity to strengthen our consumer segment, leveraging a B2B2C approach through the two segments. Behind every workspace is a person, and behind that person is a household. Not all of these households are connected via KPN.
By providing some attractive benefits to them, we see an opportunity to grow our share in this space, and we support our large B2B customers by providing excellent in-home connectivity for their employees. The transformation of our B2B segment is taking shape, and it contributes to a much improved customer experience. While B2B customers still mostly interact personally with KPN, we now plan to move fully digital customer interaction, enabling customers to easily activate and manage products themselves. This reduces lead times and costs, and it improves customer satisfaction. Over the past two years, we've largely simplified our B2B product portfolio, and we've stopped selling more than 40% of what we had on the shelves at the end of 2018. We're also simplifying our IT architecture, and we reduced the number of systems by 60% in the same period.
All our efforts on this front are paying off, as customer satisfaction for KPN ÉÉN and KPN Smart Combinations is much higher than the legacy portfolio. That's for B2B. Our final segment is wholesale, which is mass market as well, mostly serving families via our wholesale partners. As Chris mentioned in his presentation, we continue to offer the full portfolio via our open wholesale model, and we see further growth in both broadband and mobile services. In fixed, we see continued growth of our wholesale broadband access portfolio. In mobile, postpaid is growing mainly at the expense of prepaid, while ARPU is supported by increasing data usage. All in all, we expect wholesale to continue its steady revenue growth trends. To summarize, we have a clear plan to grow mass market revenues by the end of 2021.
In consumer, the focus is on best digital access experience and partnerships via the flexible KPN Hussel proposition. Our ambitious fiber plans are fueling base growth, and we expect to grow consumer service revenues by the end of 2021. In business, we have a clear segmented customer focus. SME is the largest contributor in terms of profitability, and here we focus on finalizing migrations and increasing product density, leading to a stabilization of SME service revenues by the end of next year. In wholesale, we stay committed to the open access policy, and we see continued growth also driven by fiber. Let's now turn to our third and final pillar. We simplify and we streamline our operating model by accelerating the digitalization. We are accelerating the simplification of KPN in all layers of our organization. It all starts with our customers.
Our goal is to offer an outstanding digital experience. Therefore, we're investing heavily in a digital omni-channel experience for customer to be fully in control and capable of easily activating and managing products and services themselves. To offer an excellent experience and amaze our customers in today's world, we need new ways of working in digital capabilities. We need the right people for KPN with a digital mindset. We're scaling up these capabilities, as our people and data analytics will be key to improve customer journeys and support customer experience. This only works with a simple and straightforward IT backbone capable of handling everything in real time. Now, this is not the first time you hear me talking about the simplification and digitalization of our company. We've made a lot of progress, and step by step, we simplify the company and the customer journey.
Every quarter, we step down in our cost run rates as well. We started the program beginning of last year to save EUR 350 million in direct OpEx, and we are well on track, and we upgrade that program to EUR 375 million-400 million. We launch a new program for the next years to save more than EUR 250 million over 2021-2023. Over the past years, we've been simplifying our BSS and OSS. These are systems a lot of telcos don't dare to touch at all, as it is really at the core of the business. We went from numerous interconnected systems to a few simple, agile IT stacks. We now have state-of-the-art BSS and OSS, which is important for our channel strategy. Especially after phasing out brands, we're now able to move to single shop. This improves the customer journey and our time to markets.
For the business segment, we already have the target architecture in place, but we still have a lot of customers to migrate from the legacy IT to these new systems. When customers are live on the new IT, we're able to decommission the legacy systems. Since we have much fewer IT systems and the new ones are more energy efficient, we can save on maintenance and energy costs, and it makes our network more future-proof and flexible, and we can offer an improved customer experience. We are in the middle of a major digital transformation to create a more effective and efficient organization. Work processes are being digitalized and require skill sets that are different than we used to need. This is even further accelerated by COVID.
During the pandemic, we have about 8,000 employees working from home, and that was realized within a couple of days. Without meeting at the office, it's very important to know what's moving and what's motivating our people. We offer modern remote workspaces where employees can work anywhere in secure digital environments. We're also providing proactive support to create an optimal work-life balance and keep our people fit. The times where we went to the office five days a week are over. We tested this with our employees, and they are supportive of this development. Currently, we're working on a new remote working policy, which will be implemented in cooperation with our works council.
While we have the responsibility to contribute to a proper home office environment for our people, we're confident that this will lead to structural benefits in the near future as well, such as reduced office footprints and less travel spends. We have a strong foundation to further simplify and streamline our operating model. Going forward, we follow an ambitious digitalization agenda. We move to a new way of working, and we further rationalize our IT infrastructure. This will result in an outstanding digital customer experience, and this will also contribute to the next wave of cost savings. Now, Chris. There he is. Will tell you all about that next.
Thank you, Joost. Here I am indeed. Thanks again. Now let's turn to the financials. I've said it more than once since I joined the company back in February, KPN is a healthy company with a strong balance sheet, generating strong margins with an operational delivery track record. We're very disciplined on cost and have managed to offset revenue headwinds, resulting in a growing EBITDA. In fact, our EBITDA margin is around 44%, that means it's around best in class in a European perspective. As Joost explained, we're confident to start turning the tide on revenue growth as well. Even though we are in the middle of a fiber investment cycle, and to be fair, run with a quite high CapEx to sales ratio, we still manage to comfortably place ourselves in the top half of Europe in terms of operational free cash flow generation.
I'm also pleased that our cash flow definition is quite clean. The operational cash flow developments are therefore easy to understand for you. Our return on capital employed, or ROCE, is solid and has increased in recent years. KPN clearly creates value for its shareholders. While fiber investments have had adverse effect on short-term ROCE as they increase capital employed but do not yet instantly deliver EBIT, we intend to keep improving our ROCE like we've done this year. Our investments, cost savings, and improving growth profile will continue to underpin our growing return on capital. Our mass market strategy for B2C, SME, and wholesale will derive an improvement in the service revenue trend in these segments. As such, we aspire to have our total mass market service revenues return to growth by the end of next year, by the end of 2021.
At our Q3 results four weeks ago, we said we expect to exceed the EUR 350 million cost savings target. Today, we announced a new program, a new indirect cost program of at least EUR 250 million, or about 15% of our current indirect cost base, starting 1st of January. This is in line with the 17% cost ambition that we expressed back in 2018. As this new program also covers 2021, which is the final year of the previous program, the new three-year program of at least EUR 250 million effectively raises the old target of somewhere between EUR 375 million and EUR 400 million.
As you are used to, we will enable you to track our cost progress in our quarterly disclosures. We believe this next leg of cost savings clearly illustrates our continued strong and disciplined cost control mindset, whilst at the same time returning to mass market service revenue growth.
To give you some more flavor on our cost program, we've identified five main buckets to tap for additional cost saving opportunities for the coming years. First, we continue our portfolio simplification in both B2C and B2B. Although we've decreased the number of services and brands across the segments, we're not done yet. Phasing out legacy will definitely help in that process. Second, digitalizing our customer journeys across all channels touches upon various cost areas. It enables to reduce cost on disruptions, on onboarding of customers, on the number of incoming customer service calls, and in many more areas of inefficiencies, whilst at the same time improving customer experience. Third, IT rationalization has always been a substantial part of our cost savings program, and this will continue.
We will implement an entirely new ERP system, which enables more effective support processes for finance, procurement, supply chain management, and HR. Fourth, the ambition to become 100% all IP by end of 2021 hasn't changed. We'll start phasing out copper on a large scale from 2023 onwards, contributing significantly to cost savings as of then. Finally, COVID-19 has recalibrated our thinking about the way we work and fast-forward digitalization and automation initiatives, allowing people to work from home more often, which makes them happier, whilst also bringing new sources of cost savings, looking, for example, office space and travel. As outlined earlier, fiber generates long-term value for KPN and all our stakeholders. We strongly believe that accelerating the fiber rollout is the best decision we can make for our customers, society at large, and our shareholders.
As such, we will step up our CapEx envelope to EUR 1.2 billion in 2021, driven by a significant increase in fiber, in fiber CapEx, as we move to an annual run rate of 500,000 homes passed. This is partially funded by declining non-fiber CapEx. As we show on this slide, we see total CapEx increasing in 2021, driven by an increase of fiber investments to about EUR 450 million-EUR 500 million or about 9% of revenues. Non-fiber CapEx declines to somewhere between EUR 700 million-EUR 750 million or around 20% of revenues in next year. Mind you, that was over 18% of revenues in 2019, thus demonstrating our ability to reduce CapEx over time. It's important to know that non-fiber CapEx also contains consumer-driven CapEx like CPE or customer premises equipment.
About one-seventh of non-fiber CapEx is directly related to revenues, which effectively means that non-fiber, non-customer-driven CapEx is seeing an even steeper decline. Indeed, let me be frank. The 500,000 homes passed fits within our previous target of 1 million homes. Yet we increase our CapEx budget for next year. On one hand, it took us a bit longer to hit the right rollout rate. On the other hand, this has to do with the long-standing rules of supply and demand for field services capacity. Basically, the demand for fiber contracting capacity in our country has risen dramatically in the past two years, while supply hasn't shifted that much. Overall CapEx will therefore rise to a peak of about EUR 1.2 billion, about 23% of sales next year.
We are confident this increase will harvest a good return over the long term as we are already showing in today's fiber performance. We plan for an elevated CapEx over sales level for next year, but clearly different for some of our peers as our base case rollout is fully financed through our own balance sheet. For the years 2022 and 2023, we expect CapEx to end up somewhere between EUR 1.1 billion and EUR 1.2 billion. With a stable run rate in our fiber rollout, fiber-related CapEx is expected to be broadly stable at EUR 450 million-EUR 500 million going forward. Thus, we will continue to drive non-fiber and non-customer CapEx, such as investment in IT and TI, further down. That should help fund the increased fiber investments.
Customer-related CapEx may be stable or even go up. That will be a good news as that would indicate stronger sales growth. In effect, we fund the increase in our fiber CapEx ourselves by lowering non-fiber CapEx and by lowering our costs. Now let's zoom in on the moving parts of our free cash flow for the coming years. Adjusted EBITDA after leases will grow sustainably in the coming years as we're growing mass market service revenues from the end of next year. This will be further supported by a new wave of cost savings.
We just talked extensively about our CapEx profile for the coming years, which is obviously going up next year and will be between EUR 1.1 billion and EUR 1.2 billion thereafter. During 2019 and 2020, we took actions to lower our cash interest. For the next year, we expect to reduce it by another EUR 30 million.
With current market conditions, we see opportunities to gradually lower our interest costs going forward. Another important topic, I will not beat around the bush here. Cash taxes are set to increase over the coming years. In 2021, we expect a cash out of about EUR 50 million to EUR 60 million, a tad higher than we had initially planned. A combination of things is at play here, and for the technicians among you, we're shifting from using termination losses to liquidation losses. The Dutch KPN business is and was structured in several fiscal unities. These fiscal unities had their own tax losses, which could be offset against taxable profits. Nowadays, KPN is structured as one fiscal unity, not all taxable profits can be offset against these losses. The most important impact is due to recent tax law proposals in the country to limit the annual use of tax losses.
In anticipation of these new rules, as from 2022 and beyond, KPN expects cash taxes of about EUR 150 million, but KPN's tax losses will be available for use indefinitely. In the medium term, say 2025, in other words, this new law benefits us as we can still use part of the DTA, which we otherwise would have consumed fully by then. In summary, the government's proposal does not affect the total taxes paid by KPN but changes the timing of the payments by maximizing the annual usage of the tax losses. In the long run, there's no difference to our total cash flow from our proposed new tax law. It's merely a timing difference. Of course, okay, there might be a marginal value effect as of something like the time value of money. Then another topic which we frequently discuss with you, working capital.
Investments in working capital will persist and be a small drag on cash flow in 2021, although they'll be much less compared to the expected level of this year. We are approaching a steady state fiber rollout at the end of next year, which then eases the impact of working capital after 2021. By then, the working capital drag should have faded. Next to that, we'll of course continue our cash optimizing efforts. Free cash flow for 2021 will be in line with this year. Effectively, we are able to offset about EUR 200 million higher fiber CapEx next year by further reducing non-fiber CapEx and continued cost savings. We're looking through a discretionary fiber rollout, we will be delivering a much higher quality cash flow. Not unimportant, we're confident to grow our free cash flow in a strategic period. We have a very solid balance sheet.
Strong cash generation helped create a cash position of almost EUR 800 million at the end of Q3. Adding our undrawn revolving credit facility results in a robust liquidity, safely covering debt maturities until 2023. Leverage has come down over the past years and is currently just a touch below our ceiling of 2.5x . We stay fully committed to an investment grade credit profile and a lower than 2.5x leverage target for the coming period. Our leverage could even be coming down to 2.0x in the coming years, giving us ample financial flexibility. Credit rating agencies have acknowledged our strong balance sheet and market position, which is evidenced by solid ratings and a stable outlook. Even though our EBITDA margin is already best in class by European standards, we do not get complacent.
We're confident we can improve our operational performance further and reach a margin of more than 46%. At the same time, return to mass market revenue growth. On the back of that, we see opportunities to improve our operational free cash flow margin as well, as we cap our CapEx in the coming years. Possibly move to the lower bound of the EUR 1.1 billion-EUR 1.2 billion CapEx band, and move thereby to the top quartile of our peer group in terms of cash generation. Let's turn to our outlook and ambitions for the coming years. We reiterate our full year 2020 outlook, which we already shared at our Q3 results. When we take everything together that was shared with you today, we come to the following financial ambitions for the 2021-2023 periods.
First, adjusted EBITDA after leases will grow in 2021, grow further to at least EUR 2 .45 billion in 2023. We aim to provide you with a more detailed outlook for the 2021 EBITDA at the full year 2020 results at the end of January. CapEx is set to increase to EUR 1.2 billion in 2021, stay in the range of EUR 1.1 billion-EUR 1.2 billion in 2022 and 2023. The final number in those years will depend on the combination of the fiber rollout and the further step down in non-fiber CapEx. Importantly, the top line inflection in mass market service revenues. Free cash flow will remain broadly stable in 2021 and grow to at least EUR 870 million in 2023, which implies a CAGR of at least 5%.
We remain fully committed to a progressive dividend policy and intend to grow our regular dividend by 3%-5% per year. Our commitment to a clear annual dividend growth underpins our confidence in KPN's ability to grow its free cash flows. At KPN, we've increased our regular dividend per share on an annual basis for the last six years, and we expect another increase for the dividend to be paid out over 2022. Maintaining a progressive dividend policy is sacrosanct to us. For the period until 2023, we commit to a growing dividend per share with a growth in the range of 3%-5% per year. Importantly, we see the dividend being comfortably covered by our free cash flows, ensuring a healthy payout ratio which hovers in the low 70s in terms of % of free cash flow in the coming periods. Thank you.
Now back to Joost for some final words of wisdom.
Thanks, Chris. Before we move to your questions, let me briefly wrap up the key highlights of our strategy update. We accelerate to grow, not only after three years, but already by the end of next year. We have set out clear goals for the next years to grow mass market service revenues, to grow EBITDA, and to grow free cash flow. We accelerate our fiber rollout on our own. We will cross a level of 50% footprint in three years, and we will double our footprint in five years. Combining that with an outstanding experience and the digitalized customer journeys, we will offer our customers the best sense of quality and service. We will continue our disciplined approach on cost leading to a growing EBITDA and further improving margins.
Although we will prudently step up investments next year, free cash flow will grow and fully cover our progressive dividend policy. We're very pleased to have updated you on our strategy and ambitions today, and I'm very confident that our strategy will maximize value for all our stakeholders. Thank you very much. We will now take a 15 minutes break before we start the Q&A session with our colleagues.
[Break]
Welcome back. We will start the Q&A in a moment. First, as usual, I'd like to ask you to please limit your questions to two each. In case there's still time left, you can always ask more questions later during the Q&A session. Before we start, we will play a short KPN brand video. Now, we hope you feel inspired and that you're ready for the Q&A.
First, please let me introduce my colleagues who are joining us from different locations here in our headquarters building. Hilde Garssen, our Chief People Officer, and Babak Fouladi, our Chief Technology and Digital Officer. Then Marieke Snoep, our Chief Business Market, and Jean-Pascal van Overbeke, Chief Consumer Market. They're all ready for your questions just like we are. Operator, please open the line for questions.
Thank you, sir. Ladies and gentlemen, we're starting the question and answer session now. If you have a question or remark, please press star one now on your telephone. Star one for your questions or remarks. Go ahead, please. Our first question is from Mr. Keval Khiroya of Deutsche Bank. Go ahead please, sir. Your line is open.
Thank you very much. I've got two questions, if I may. Firstly, you've talked about the benefits from FTTH, bringing the guidance period through to 2023. You will obviously look at its impacts of FTTH and presumably only some of the OPEX savings. You did touch on this to degree, but longer term, is there any reason to think we shouldn't see the CapEx sales trending back towards the 13%-15%, which is what it shows for the non-fiber CapEx? How should we think about the nature of the OPEX savings or the potential of the OPEX savings, given the copper switch off will only start in 2023? Secondly, just on wireless, obviously we have seen the mobile environment at least starting to stabilize and Simpel has now been consolidated as well.
Do you think you could lead the market in driving price increases in mobile as you have done in fixed line? Thank you.
Chris, will you take the first question?
Yeah, I think, Keval, I think I spotted three questions in two, but that's fine. I'll take the first two from you. At least the first one on CapEx to sales. If you look at our CapEx to sales ratio, it's over 20% at this point. It goes to about 23%. About 9% is fiber and 14% is non-fiber. If you go back over time, that ratio was below 20% for quite some time. Will we go back to 14%? That's really not in conceivable. I think there will always be some amount of network spend, network optimization. I think the point of going back to 14%, 15% over time isn't a weird suggestion. Of course, we then need to first have finalized the fiber rollout first. The number you mentioned isn't too far off for your long-term model.
The second question was, I think it was on OpEx timing. I think it's fairly evenly spread over time. We continue to round off the existing program and accelerate our savings over there. You might see a small dip in the end of next year and a reinforcement of savings at the end of our plan period. Your final question was about mobile, if I'm correct, right?
That's correct, yeah.
Maybe, Jean-Pascal, you can add more to that. What we are currently doing is, what we are seeing is that the whole market is, first of all, consolidating, and secondly, moving to a more higher quality, unlimited proposition market, which we embrace. On our side, I would say our base is developing in the right direction, and also the inflow is of good quality, but maybe, Jean-Pascal, you can add more to that.
Yes, indeed. We achieved in broadband to a bit show the way in the market by repackaging and merging of different brands and making sure that we focus, as always, on value and the best value of the market. In mobile, we intend to do the same. We first, with Telfort, when we merged two brands, we have kind of removed a few tariffs from the market, which are the lowest end of the tariff. As you know, we are focusing today on the super high-end of the market. Focusing massively 30%, 40% of our shares of sales onto unlimited tariff, which are the highest price point in the Netherlands. It's a mix effect, right?
We are never going to try to compete on the low end and always try to lead with a premium service and a premium quality product on the higher end of the market. We think that with the movement we did on Telfort and the acceleration we have on our high-end premium products, we can hope or we can at least show the way towards a pricing and a value improvement in the market.
That's clear. Thank you.
Our next question is from Mr. Luigi Minerva of HSBC. Go ahead, please.
Yes, good afternoon. Thanks for taking my questions. About the B2B segment, I noticed again a focus on revenue growth. Over the last couple of years, you have rather focused on EBITDA and profitability. I remember you mentioned an ambition to bring EBITDA growth back to stabilization in 2021. I was wondering, well, first, if your priority is again focused to winning business rather than profitability. Second, what we should expect with regards to that target about EBITDA stabilization in 2021. The second question is about the behavior of customers in the FTTH areas. Whether you are winning shares from cable or from smaller players, or whether it's internal migration from copper to fiber. What are the dynamics when you deploy FTTH? Thank you.
Thank you for your questions. We move to the commercial room. Marieke, can you take the B2B question?
Of course. When we look at B2B, we will not let go of the total end-to-end EBITDA inflection, but we'll focus first on fixing the top line, and we'll continue to focus on fixing the top line. We'll first finish SME, like Joost has explained. We already see broadband growth. We already see mobile growth. We already see triple play growth there. You can assume that end-to-end EBITDA there will also inflect. We will continue to lower our cost per customer. We will continue to lower by moving to that standardized portfolios to lower the cost per customer in every single segment. I will not let go of also inflecting the end-to-end EBITDA, and we will continue to focus on delivering the services that we have, the core services to our customers, because that's the best strategy, but they will be profitable services.
Now over to Jean-Pascal.
On the question on FTTH household behavior. It's a bit of a combination of the two component of your question, right? There is a part of migration and there is a part of conquest and new customers. The business case, obviously, doesn't work just on migration. We are firmly and aggressively targeting increasing market share, and we have targets of market share increase in every places where we deploy FTTH. It's not just that. It's also that customers, when they migrate to FTTH, increase their value. Not only they improve their satisfaction and reduce their churn, but we see that also buy better bundles with higher speeds and better content products and so on. Even migrations that are not directly increasing market share are increasing value and satisfaction, which is also an important driver for the stabilization of our broadband base.
Okay. Thank you.
The next question is from Frederic Boulan of Bank of America. Go ahead, please.
Hi. Good afternoon. Thanks for taking the question. The first one is just a follow-up on the previous question from Luigi on the dynamics, more on the network share. You talk about your current network share, and how that can evolve. Arguably, you must already have 100% share retail and wholesale outside of cable. Who do you think you're going to take share from in your business case? Secondly, on the phasing of revenue growth. 2020 in consumer was heavily impacted by COVID-19, especially in mobile. Fixed is actually performing pretty well. Now we see on the running up we're stabilizing. Can we expect growth for the whole of 2021? Or that seems a bit premature, if I understand you correctly.
Yeah. To start with your second question. You're right, we lost mobile revenues due to COVID. We're not anticipating on getting that back in the first or the second quarter, because that's for us very difficult to predict. At the end, we expect our revenue to inflect in the second half of the year, and especially at the end of the year. Who knows what happens when COVID, when things get better, and roaming gets back into our business. That's not where we aim for the first six months coming year, I would say.
Yeah. You also asked for network share in the fiber areas. These shares are much higher than in copper areas. The inflows, like Jean-Pascal was already mentioning, it's not only us migrating customers to fiber, it's not only service providers on our network adding more customers.
We also see a inflow from other service providers not being on our network. All in all, I would say that the penetration on fiber is much more healthier than on copper.
Perfect. Thank you very much.
Our next question is from Usman Ghazi of Berenberg. Go ahead, please. Mr. Ghazi, please unmute your line.
Hi, gentlemen. Thank you for taking my question. I've got two, please. Firstly on, just the fiber rollout. You said that you're going to be spending EUR 450 million-EUR 500 million based on a run rate of 500,000. However, you've also disclosed a cost per home of EUR 700-EUR 900. If I multiply 500,000 by EUR 700-EUR 900, I get to a range of EUR 350 million-EUR 450 million for fiber CapEx. Obviously there's a difference there. I was wondering if you could indicate what that difference related to. The second question, this relates to the fiber plans that you have. Given that your network share is sitting at around 50%, so 40% retail and then the rest wholesale, why are you so keen to go and deploy fiber to 65%-80% of the country? Because that would suggest that would destabilize the market, particularly from cable. Thank you.
Usman, it's Chris. Let me take the first question from you on the CapEx side. Look, the fiber CapEx is not all fiber to the home. A big chunk of it is fiber to the home. That contains the fiber to the home for new build and for overlay, speaks to existing copper networks that we overlay. It also contains activations, putting light into the dark fiber. Next to the fiber to the home, fiber also contains more backhaul related investments. Fiber to the core, fiber to the site, outer VDSL rings, et cetera. You can't divide EUR 450-EUR 500 by number of homes passed, because a chunk of the fiber that's in the fiber bucket is not all fiber to the home, it's fiber backhaul related. That helps hopefully clarify your question.
The cost per home passed really is in the EUR 750-EUR 800, EUR 850 per home area. Differs of course, per region. Maybe onto network penetration. On average, our network penetration is around 50%. Over the country, it differs. You've got areas where it's lower, areas where it's higher. We see fiber allowing us to increase our penetration, especially in the lower penetration areas. It decreased the risk of churn. It will take away some share from our competitors. Secondly, the number of households in the Netherlands is still growing. Especially when you put on newly built houses, we put fiber in there, you capture a bigger share of newly built houses. The answer to your question is, one, penetration is not the same everywhere in the country. It differs. That's what we pick up in our area selection tool.
Secondly, you will get some share from competitors. Thirdly, taking more share from newly built homes. The amount of new built homes in Holland is actually quite large.
Our following question is from Mr. Konrad Zomer of ABN AMRO. Go ahead, please.
Hi, good afternoon. Thanks for taking my questions. Two related to fiber, please. The first one is, the percentage of homes activated is roughly 50%. How high do you think that could go, how high should it go to capture the growth that you expect? My second question is, if you look at the consumer business only, so excluding SME or wholesale, why do you think that business should return to growth? If you exclude fiber and a flat ARPU, do you still think that the underlying trend of that business could return to grow by the end of next year?
Okay, Konrad, I'll take the first question on the penetration level. Indeed, today, homes activated for homes passed is around 50%. The case works at around 50% penetration. The NPV works, NPV is positive. We think in areas we could move it to 60%. If you select the areas wisely and market it well. We obviously love it to go further. It works at 50%, and we think 60% is not unattainable, especially if you look at the older vintage years. If you look at the first vintages of fiber that we rolled out, there we quickly got to penetration levels of over 60%. It just takes a bit of time to get there. On consumer, Jean-Pascal?
Yeah. If I understand well, the question is about how and why do we believe we can grow in the broadband consumer market. It's a combination of these two things. The sense of the question is really about the mix between DSL and fiber. We see indeed today a very different dynamic, right? On the DSL market, we have still a decreasing market and a very highly growing market on fiber. Obviously, the more we cover the country with fiber, the more we are going to invert or balance these two dynamics and be able to compensate the degrowth in the DSL by growth in fiber. Which is only not in terms of number of customers, but also in terms of value.
What we see in the run rate that we have in the last quarters is that the DSL customer base is still decreasing indeed, but at a lower pace than it used to be. The fiber is growing very fast. We are now almost being at a point where we balance these two, and we think in the coming month and quarter, we will be able to compensate the DSL loss with the fiber gain. On top of it, you have the pricing dynamic, which on one side, the fiber customers are spending more, equipping themselves better with our product. You have stable base with higher ARPU. In the Dutch market, you have a dynamic where every year you have a price increase, which is going to increase again the ARPU next year.
Stable towards growing base plus growing ARPU means we are quite confident that by the end of next year we should be able to increase our revenue.
Yeah, that's very clear. Thank you.
Next question is from Michael Bishop, Goldman Sachs. Go ahead, please.
Thanks. Good afternoon. I'd just like to ask a question, firstly, on the capital structure. Given you've outlined very detailed plans for the next three years, I was just wondering what discussions you had around keeping the current capital structure under less than 2.5x leverage target, as opposed to, say, something like maintaining 2.5x and regearing any EBITDA growth through the cycle, given the visibility on CapEx now. The second question on CapEx. I think previously we had seen some small fiber to the home acquisitions. Given you are now very granular in terms of locking in the build capacity and also your longer term targets, is that something that's a bit more off the table now, and we should just think that you do this all organically? Thanks very much.
Yeah, Michael, let me take your question on the capital structure. Indeed, we defined our net debt EBITDA to not exceed 2.5x. At this point in time, we're 2.4x, dropping to around 2.3x by end of year, so very much close to that ceiling. We said, look, if nothing else happens, debt ratio will drop to 2x. It doesn't mean I need to go there. Just saying, this is the potential for the group that we're in. To me, it's a demonstration of the cash generating ability of KPN.
If you roll through our plans and you look at revenue stabilization, if you look at another wave of cost programs, a CapEx stabilization, and possibly move to the lower end of the EUR 1.1 billion-EUR 1.2 billion CapEx envelope, these groups had to spit out a lot of cash actually, which is a very, to me, attractive prospect for the future. That means we're flexible on our capital structure. It doesn't need to drop below two. I don't strive that. I'm just saying if we don't act, that's where we get. That just means that we've got much more flexibility going forward to invest or to distribute capital to our shareholders. The 2.5x is the ceiling, and we'll manage it to be in a very efficient way. Don't worry about it. In terms of acquisitions, our focus is and has always been to organically roll out fiber.
We select the regions that we want to be in. We roll out fiber most efficiently. We try to avoid overbuilds, but sometimes you bump into other providers that have come into an area that we find of interest. We engage in conversations with these other providers, and we often get to a solution. Sometimes we rent on their network, we rent and have a call option on the network, or we even buy out their network. For buying other networks, we tend to be quite opportunistic and say, look, it's a make versus buy decision. Is buying a network as good and as attractive as making it ourselves? Does it meet our own IRR criteria? Is the seller willing to sell, then we might take it up. We don't exploit or pursue a dedicated M&A strategy.
It's something you bump into when you roll out fiber in the country. We have conversations with smaller providers, smaller overbuilders all the time. It's not off the cards, it's not on the cards. We tend to be opportunistic when we see these opportunities. If they meet our return thresholds and create value to our shareholders, we still can do them. Our focus clearly is on organic rollout first.
Thanks very much.
Our next question is from Steve Malcolm, Redburn. Go ahead, please.
Good afternoon, guys. Thanks for doing this today. Really interesting stuff. A couple of questions. One on, just going back to CapEx, and on the non-fiber bit that you talked about. Can you just, first of all, confirm that what's happened to your sort of assumptions around fiber take-up within the overall CapEx envelope? Have they changed over the course of a year? Are you anticipating you'll be spending more? On the back of that, the EUR 100 million saving that you found to help fund the extra EUR 200 million in fiber, can you just again shed some color on where that comes from and give us some reassurance that it doesn't sort of snap back, in a couple of years' time, having saved that money to spend on fiber? A quick one on tax.
The EUR 150 million guidance you've set for 2022 looks like around a 20% tax rate, which is pretty close to Dutch rate of 22%. Can you just help us understand how we think about that going forward, whether there's any adjustments we need to make to the statutory financials to get the fiscal number, and how we think about that, those tax models being used beyond 2022? Thank you very much.
On our CapEx on non-fiber, I think we'll just be very careful on reducing it. To your question, will it flip back? Odds are very low. We're still actually taking measurable, sensible steps. The acceleration and simplification of our programs are gradually making progress. I think we've done a lot in the past years. We still continue to do a lot. We carefully prioritize where we spend our money on. I don't see it flapping back immediately. I think we're trying to lock in that spend level and being very responsible around it. Where does the savings in CapEx come from? We've done a lot in our mobile network modernization. We'll continue. We've done a lot already. We've done a lot on our platform upgrades in IT.
Gradually, you're moving to the next wave of your simplification program. Gradually, some of the big, the heavy lifting is behind us. Maybe, Babak, you can comment on it further.
Yes. Thank you very much, Chris. The flip side of the cost-saving program that we have is also efficiency in the platforms and the products that we offer to our customers as well, which enables us to make our CapEx investment more efficient. We first look at the product portfolio, as Marieke and Jean-Pascal said. We've rationalized that. We simplified it for our customer bases. That in turn makes our application portfolio simpler. We have at about a 60% reduction on our application portfolio. Reduction of that makes investment less on all those applications. Less investment on those means that the platforms themselves are virtualized. They're put in the cloud. We closed down data centers. Once again, less CapEx investments in that area as well. We bring that the IT spend will come down. We make also then our operations much more software-defined automated.
Therefore, once again, less investment in new systems because now they're much more automated, also giving us OpEx saving. Of course, the network rationalization that we have done enables us to focus on the fiber and the mobile investments that you have seen. With that investment in new technologies, we're able to carry on the capital efficiencies for years to come.
Okay. Steve, to your third question on tax. I had actually prepared a whole narrative on fiscal unity and tax loss compensation, but your question is more about the actual tax rate, which is a lot more simpler to answer. The corporate tax rate is 25%. We tend to be effectively a bit lower for a couple of reasons. First of all, you get always permanent and timing differences in your fiscal accounting and your tax accounting. Secondly, there is still a chunk of costs and earnings at KPN that are subject to the innovation box or other innovation rulings by the government that are taxed at lower rates. Some of those innovation levels are changing, so the tax rate on the innovation box is going up from 7% to 9%. One of the small explanations why our tax rate is going up.
Effectively, KPN tends to be a little bit below the 25%, mostly because of those differences, but especially because of us using some of the specific innovation arrangements that are taxed at a lower tax rate. The blend will always be a bit lower than 25%.
Chris, can I just follow up quickly? I think the corporate tax rate is going to 22% next year, isn't it? The EUR 150 million guidance you've given for 2022 looks like around a 20% tax rate. I'm still confused. If you can offset 50% of your profits against losses, why that EUR 150 million is such a high implied rate, given the comments you made this morning?
I think what's at stake here is that I'm going to go into fiscal unity anyway. If you think about our business, you've got a fiscal unity, and you've got tax losses in history that are compensating future tax gains, taxable gains. There are two types of losses, termination losses and liquidation losses. We've used the liquidation losses by the end of the year, and moving to termination losses at the end of the next year. The issue of termination losses that I don't cover all parts of the fiscal unity at KPN. Some of our earnings cannot be offset against those because those businesses were added to our group after we decide to liquidate the relevant businesses. You've got a chunk of earnings that is no longer covered by liquidation losses. They were covered by termination losses, but not by liquidation losses.
That's where next to the new tax laws that actually limit the amount of uses of your tax loss against your profitability, that's one thing. You can only use against 50% of your net earnings. Secondly, there's a chunk of earnings that is not covered by liquidation losses. It's the interplay between those two, add to that the complexity of the innovation box and tax changes there. That leads to a number. I can't make life more simple to you. That's unfortunately the way the tax law works. It's a combination of the changing tax laws around what you can use in tax in general. Secondly, us moving from termination to liquidation losses and how they apply to the KPN fiscal unity.
Okay, understood. The net result, we should be looking at is sort of high teens cash tax rate beyond 2022?
Sorry, the high?
A high teens net cash tax rate from 2022. Is that the net result of? I'll leave all the details up to you, Chris.
Fair enough. If you apply to the total taxable amount, the blend of taxable and non-taxable earnings together, will probably give a mid to high teens effective tax rate.
Great. Thanks very much.
Next question is from Mr. Polo Tang, UBS. Go ahead, please.
Yeah, hi. I've got two questions. The first one around your EBITDA guidance, and the second, some clarification around business. Just in terms of your EBITDA guidance, you're guiding for EBITDA to be EUR 2.32 billion this year, for it to grow by just over EUR 130 million to more than EUR 2.45 billion in 2023. Given that you've got EUR 250 million of incremental savings, and given that you've got a return to top line growth, is your EBITDA guidance not conservative, or are there other factors to consider that would offset and impact the EBITDA? Second question is really just around business. You're calling for stabilization in your large enterprise and corporate revenues and growth in SME revenues, but can you clarify what you're assuming in terms of the macro environment and COVID-19 impacts for 2021 and beyond?
Also for business, can you clarify the concentration of revenues and maybe give some indication, in terms of your top 10 customers, percentage of large enterprise and tailored solutions revenues would they account for? Thank you.
I'll take the EBITDA guidance. Chris takes the first question. Marieke, you'll take the second?
Absolutely.
When it comes to EBITDA guidance, us moving forward to EUR 2.45 billion of EBITDA in 2023. Is it conservative? I think it's realistic. It's a number that we think we can achieve with a fair degree of certainty, if you wish. Is it conservative? Possibly a bit, but at least it's realistic. I think that's most important at this point in time, to give a realistic outlook, with some degree of conservativeness around it. In terms of the macro environment assumptions, actually, we're assuming continuation as of today. Obviously, we don't know if and how and where and when COVID's going to change. The assumption effectively is, as it is today, we don't plan in for a massive return of roaming revenues. That could be a degree of conservativeness in our estimates.
At the same time, we also don't factor in a massive wave of bankruptcies. It's the stumbling of the economy as it is today, with upside if the economy recovers, if our clients start to travel again and making roaming revenues. There's some downside if the economy falls off a cliff and the amount of bankruptcies rise. The best thing we know is continuing the line as it is today with a continued low travel, subdued economic environment, but not falling off a cliff as well. We think that actually is a reasonable, and again, slightly conservative outlook, given that probably at some point in time, a vaccine will be there and the world will be gradually returning to normal. We thought it was too early to plan it and to book it into our revenue guidance.
Following up on B2B. First of all, we have a very clear and segmented approach. We have the SME segment. You should think about that about half of the companies in that segment are with KPN. We have the LCE segment. We have around 1,900 customers there. Then we have our tailored solution. You should think about double-digit customers there. That's one. When we look at SME, we will see that our migrations will have finalized completely to KPN ÉÉN and KPN Kleinzakelijk next year. Our target portfolio allowing us for that cross and upsell against a lower cost structure. We already see growth on every core product we have there in the market. That gives us a lot of proof points that that will only continue going forward.
We will have 6% in our legacy services in that segment, but we will not actively migrate those services. You should think about PSTN, but also telephone conference services, that we'll just deliver to the clients in that specific segment. But migrations, as we have defined them, will be done. In the LCE segment, we see already that we have also there modular tailored core products. Slightly more advanced, like cloud communication, secure networking, a modern workspace, together with our partner, Microsoft. We see those new areas growing every single week. We see our new portfolio growing. We see broadband growth in that segment, and we see mobile SIM growth in that segment already this year.
We do, however, see that the impact of the new revenues coming in is not yet compensating for our rationalization that will continue because it's more complex situation with those customers and our migration impact next year. We expect the LCE is lagging with one to two years to the SME segment. When it comes to our top customers, I will not mention the top 10 customers, I will mention that these are very long-lasting relationships. For some customers, it's our noblesse oblige as KPN to serve these customers and to digitize the Netherlands with these customers.
We have full P&L per customer here. What we do there is we standardize our way of working, we up the core, we partner with other companies to deliver the use cases to those customers, and we optimize that specific segment actually per customer on the right win for the customer and a win for KPN. That's it on the segments and on the growth story behind those segments. When we look at COVID, around 10% of our SME base is in the highly impacted areas, like restaurants, like events management, and like travel. A small part of the base is in that segment. We do see, of course, the impact this year of roaming. We also see the impact of delayed IT projects.
When we look at the LCE segments, we see some companies that might rationalize their products as a result of, but we also see, mainly, for example, the public sector, where we're very big, ramping up their investments now to go from bricks to clicks and to really solve their technical debt right now and digitize and take advantage of the digitized customer. What we do see currently is that the bankruptcies in Holland are not increasing, and that's because our government is heavily investing to keep all entrepreneurs in Holland alive. They're really vested in making sure that the impact on our economy and our businesses is minimal.
That's why we've planned prudently for the roaming in our next year's plans, so roaming not to return anytime soon, and we are awaiting the final effect when the government regulations will cease to exist mid next year. That's it.
Polo, as you know, we've talked a lot about B2B and how to stabilize and grow the business there. I think it's very useful that we will start disclosing these sub-segments as from Q1 next year because then we see where we can make our profits, that we can show you and how we run it and how we stabilize it. Also for us, it was quite useful to organize it like that.
Thanks.
Next question is from Mr. Ulrich Rathe, Jefferies. Go ahead please, sir.
Thank you. My first question comes back to the fiber take-up volume. In your answers to the various questions on that so far, you seem to say there is an element here, at least, of market share gains from cable, specifically gaining from the main other network you have in the Netherlands. Now, I heard also that you talked about drawing a line in the sand on volume loss. Is this related? Do you ultimately feel that there is room for you to essentially turn around the situation and then go back into a bit of share gain versus cable and they'd be okay with it? What are you anticipating in terms of a competitive reaction? I do remember there was periods in the past where there was a pretty destructive price type competition for share in broadband between cable and KPN.
What makes you confident this wouldn't happen on the fiber rollout? My second question is on the non-fiber CapEx, would it be possible maybe to outline the main areas where you can cut back so sharply? I'm not entirely sure I fully understand because obviously you have said that one seventh of the overall CapEx is related to direct revenue opportunities. There's a relatively small part there that you're cutting back quite sharply. What is that? Thank you.
Jean-Pascal, can you take the first one and then Babak the second?
Yeah, sure. Indeed. We are convinced that by deploying fiber and accelerating our deployment, there is an opportunity to regain some share. Now, we are not focusing massively on volume share, but rather focused, as usual with KPN as a premium positioning, on revenue share. Nevertheless, we think that there is a space for us to regain some market share, volume share, but the disruption we expect to bring here is not that disruptive in a way. Up to, we think, being forcing the competition to react in a very reactive, aggressive way, mostly by playing on prices or other tactics. We think that the way we look at it is that we stop to decrease, we start to increase revenue share and volume share, but we're not going to war.
We're not going to try to disrupt the market up to the point that everybody has to react to what we do. We think that we have been always leading into premium pricing and positioning and quality of service, and we're going to continue to do that. If there is some time some war happening, it will be on that segment, but we're not planning to disrupt the market up to forcing our competition to do less rational pricing tactics on the market. We don't expect an aggressive reaction from our competitors.
Great. Thank you very much, Jean-Pascal. On the CapEx, if you saw through the presentation, in 2018 in the non-fiber CapEx, we sort of were hovering around EUR 980 million, and this year about EUR 700-EUR 750. Your question is, break that down. Where does the CapEx efficiencies come in? If we take the fiber out, we can now say part of the non-fiber CapEx is consumer-driven CapEx. Those are our CPEs, as Chris mentioned. Those are related directly to the sales that we have, so we put that aside. A big part of the CapEx is IT. We have done massive rationalizations throughout the past couple of years. We used to have about 20 different stacks. Now our architecture is based on two stacks, one for B2C and one for B2B.
That enables us to just do the investments on our target architecture going forward and not on all of the legacy stuff. All of the applications that we have built in IT are now cloud-based, virtualized, therefore the investments are significantly more efficient going forward. Traffic is increasing, but we're introducing new technologies. We're consolidating our data centers, and also the backbone and the transmissions. Once again, future-proof investments at the beginning has enabled us to make it efficient going forward. We have investment in mobile. As you know, we've gone through a mobile modernization. We had a peak, and now the investment is standardizing itself to standardized levels. Once again, the mobile investments that we're doing, we're putting seven bands in all of our sites from the very beginning. That brings us ready for future growth quite a bit.
All of the backhaul transmissions are 1 Gb enabled, and fiber to the sites are already at 90%. Once again, that peak is gone, and we can do the savings going forward. We have investments in service platforms like TV or value-added services. Again, our investments have peaked, and now we're actually making it efficient going forward. As Marieke was saying, with the standardization of the portfolios that we have to our business customers, we also start seeing that we don't have to invest in some of the legacy applications, that we invested only on the new stuff. All the new stuffs are now software defined. They're cloud-based, therefore making CapEx efficiency possible.
Thank you very much. Thank you.
Next question is from Emmanuel Carlier of Kempen. Go ahead, please.
Hi, good afternoon. Thank you for taking my questions. I have two. First of all, on the cost savings target, could you quantify how much of the savings are unique to KPN? You brought it down in five buckets, but it looks like most of them are kind of savings that also apply to your competitors. Just wondering how much that will stay in terms of savings. Secondly, it looks like your guidance assume that peers will not build fiber. How realistic is that, and why do you believe that it's realistic? If you intend to gain market share, I would expect that the cable operators will also try to defend that and maybe selectively roll out some fiber. Thank you.
Well, maybe to start with your second question. Look, we've done 1/3 of the Netherlands, and we're busy there for more than a decade. We think it is important, especially for KPN, to scale up. We're proud of where we are, 300,000 lines this year, and we scale up to 500,000 next year. Doing that in a couple of years will add a number of households to our footprint, which is important to us. We also lock in most of the construction capacity that's used today for the consolidated market. Of course, we're not against other third parties to roll out fiber as well. That's why we say we will not do 100%. I think it's fair to anticipate on others to roll out fiber as well. Every now and then we meet others, and we try to work together.
I'm pretty convinced that for the coming three years, we can add 1.5 million and reach the level of 50% and after that continue. There will be others that roll out fiber as well, because that's the hot infrastructure, future-proof, and very important for the Netherlands. On cost savings, Chris?
Well, yeah. Emmanuel, are these cost savings unique to us? In all fairness, to some extent, yes, to some extent, no. I think some of the things we do, others could do as well. It's the execution really counts, and I'm proud of our execution skills and what we've delivered in the past. I hope what stands out is not our plans. What stands out is our ability to deliver. Where could we be unique? Decommissioning copper. Not everybody can decommission the existing network. That's something that's unique to us, moving from the old network to a new network. That's a unique thing to us. I think we might have a little bit more legacy to others than others in our networks, in our products. We've got a big B2C and a big B2B environment. When you've got more legacy, you've got also more cost to save.
To me, I can't give you a percentage. Some of it will be compared to others, and then it boils down to execution, delivery. Some of it's unique to KPN, given our legacy, our existing multiplication of IT stacks and networks, and in fact, we're decommissioning copper. How it stacks up to competition, I honestly don't know. You should ask them. For me, it's important we deliver on the EUR 250 million as we've delivered on the EUR 350 million before.
Yeah. We have a good track record when it comes to OpEx savings, and we will always be super focused on cost cutting and cost savings as we did in the past.
Maybe two very small follow-ups. With respect to the cost savings, how much will that result in restructuring costs? With respect to the fiber question, so is it correct then to assume that your plans does not assume that VodafoneZiggo, for example, would start building fiber in the coming years? Thank you.
Well, on your restructuring charges, if you recall well, in 2019, we had EUR 128 million of restructuring charges. This year, it will be significantly less for the full year. We have three quarters on the way. Fair to predict it's going to be about half of that in this year. I think next year is going to be probably around the same level and then lower a bit further. Please note that, for example, the restructuring that we're doing in this year are back-end loaded due to the COVID-19 situation. That means that some of the restructuring spend cash out this year is going to overflow into next year. You will make the announcement right now, the cash payment is going to happen next year. Think about EUR 128 million was 2019. Half of it is going to be this year.
Next year is going to be the same number. Underlying is going to be lower because there's going to be some overflow from the back-end load of restructuring this year into next year and then gradually come down. It's not going to go to nil. We do see and do expect restructuring charges to come down gradually over time.
On your fiber question, yeah, it's not up to us to consider what VodafoneZiggo is going to do. Currently, they're in the upgrade of their network to DOCSIS 3.1. Listen, we have an open access model. We have an open network. They're always welcome to join us on our fiber network.
Thank you.
Next question is from Ms. Siyi He of Citi. Go ahead, please.
Hello. Hi. Thank you for taking my questions. Two, please. The first one is actually a clarification. I think your answers to fiber seem to suggest that while you could go higher with a market share to about 60% on your fiber network, but you might not maximize opportunity in your fiber market share case just to balance the competitive dynamic. Just wondering if this is the right way to think about your fiber plans and whether that's a base case built in your IRR calculation. My second question is on shareholder remuneration. Your balance sheet is very strong, and dividend is very well covered. Maybe you can talk us through your thinking behind the 3% to 5% growth cap in your dividend policy. Given the deleveraging trajectory, when do you think that you would be in position to maybe consider additional shareholder remuneration like buybacks?
Thank you.
Okay. Let me say a few words on the assumption. If you look at the history and, as I said, the older vintage years where we rolled out fiber, we achieved penetration rates about 60% without going into all out war with competition. In a reasonably stable and rational market, we're able to achieve quite high penetration in fiber. Also this year, when you look at the fiber net adds, the fiber net adds are positive and growing, and we expect that growth to continue next year without risking massive market disruptions. The fiber business case works at lower levels than 60%. I'm just saying, look, if you look at history, we've been able to achieve a 60% type of penetration over six, seven years of time without disrupting the market.
I believe we can go to fair amount of penetration, possibly higher than the average penetration that we're having today, gradually over time. That doesn't make or break. Well, it helps the business case, of course, but it's not the threshold. The business case is actually with a lower level of penetration already. When it comes to our balance sheet, well, thank you for the compliments of our strong balance sheet. We, of course, appreciate that, and we concur. Our balance sheet is strong. Liquidity is strong. Dividend is well covered. We're predicting 3% to 5% dividend growth. If we deliver on our plans, I think we could move to the upper end of that range. That would clearly be our desire to do so. Could we do more with the excess cash or our balance sheet flexibility?
Today, our net debt to EBITDA is around 2.4x . It's not even that far off from our ceiling. If the debt leverage ratio drops towards lower levels and the headroom towards our ceiling becomes larger, surely we find additional ways to deploy that cash. Traditionally, there are three ways to do it. Delevering, that's no longer really required. Inorganic opportunities, they will probably be relatively small, a lot consuming the entire debt or cash headroom. It's fair to think about shareholder remuneration going forward, which to me comes on the one end of seeking the upper end of our dividend growth path, possibly supplementary ways of distributing our shareholders. I think we should deliver first, distribute to you guys.
That's very clear. Thank you.
Next question is from Joshua Mills, Exane BNP Paribas. Go ahead, please.
Hi there, guys. Thank you very much for taking the questions. Two from me. The first is on the slide number 20 of the presentation, where you lay out some of the assumptions for your fiber returns. On here, you're showing that there's a EUR 4 retail ARPU uplift expected for moving customers from copper to fiber. I'd just like to understand how confident you are in that number longer term, and how you get to it. If we go back two years, I think you cited the fiber uplift on ARPU is around EUR 6. You could argue that what that shows is some of the early adopters are some of the higher spending customers today, and maybe longer term, the price differential may not be as high. Just to understand your sensitivity around that and how you get to that EUR 4 figure would be very helpful.
The second question is on your construction cost per home passed for CapEx. Again, going back to the last Capital Markets Day and even the Capital Markets Day before that, there was, at that point in time, an ambition to bring fiber build costs down towards the kind of EUR 500, EUR 600 level, I believe. Just be very good to know why the cost is higher. Is it because the areas you're building to are more expensive? Are there any other factors at play? On top of that EUR 700-EUR 900, how should we think about the cost of connecting the homes to fiber? That'd be great. Thank you.
Jean- Pascal, can you take the ARPU question?
Yeah. If I understand well, the question is about how sustainable is the ARPU difference, or gap between DSL and fiber, and how sustainable is the growth in ARPU, in fiber. Two variables there. The first one is that, in this context today, even more than ever, customers would need more and more of their internet connection. Fiber offers upgrade possibilities that DSL doesn't offer. We can upgrade speed further, and a lot faster than what you can do in DSL. We can see already that customers that are choosing fiber choose faster, and better upgrades to their product than what they are choosing DSL. The demand for high access, high bandwidth, and speed is going to increase. These are today in the Dutch market, opportunity to monetize. It's not free to increase your speed. That's one of the X.
The other one is that by deploying fiber, we can also deploy future-proof technology. We know that convergence, as much as today was mostly about bundling fixed and mobile, is evolving. That's the reason why we launched Hussel, we mentioned it earlier, towards multiple dimension bundles where it's just not going to be about access, but about services as well, like gaming or content or other entertainment products for households, or even about remote working solutions. All of that are going to be opportunities that will be offered to fiber customers to upsell, to upgrade themselves into better products than what they have today. We think that there is this double component to it. One is the pure quality of that network, which allows you to do better speed, better connectivity.
The other one is to be open to future bundling of additional services and products. We think that it's sustainable to imagine that it will be a differential in terms of ARPU. This ARPU is going to probably, and we believe so, is going to continue to grow in the future.
Yeah. Your question on construction cost on fiber. It really depends on the areas to select. We can do it for EUR 400 or go far above EUR 2,000. It's difficult to talk about fiber rollout cost blended. It depends on the areas to select. It's not that significant for our business case. That's all about the ARPU and the penetration. Of course, we aim for construction cost and reduction there as well. The connection fee, Chris, you can-
Well, the EUR 750 to EUR 800 , EUR 850 per home passed gets you to a line actually nearing the front door, depending a bit on your house. It's very close to the house. It's nearing to enter the house already. Actually activating the customer makes this additional investment. If you look at those investment, the cost to do it, the hardware cost of sending a mechanic in could be, depending on the house and the situation, EUR 150 to EUR 200 per home. To me, that's acquisition cost. If I were to model it out, you could either model it in your cost per home activated, but then you take up the margin or you put it in the margin you make on fiber. Think about moving from the line.
The fiber line sticks out the ground next to the front door into the house, almost into the set-top box. Not even the last mile, last meter, last 50 cm could be around EUR 150-EUR 200, including mechanic cost, set-top box and everything.
For a fully activated household.
A fully activated household for which you're sure that the house is going to be a client and giving you that ARPU uplift going forward.
Yeah. Thanks. That's clear. Just to come back though on this EUR 4 ARPU number, I'm sorry to just get clarification here. Is the EUR 4 difference the price difference you see between your average fiber base and your average copper base today, or is EUR 4 the amount which people pay extra when they move from copper to fiber? I'm just trying to understand whether, obviously fiber customers today might be higher quality and therefore spend more anyway, or there's an actual ARPU uplift in incremental spend that we should be putting into our model, and where you get that EUR 4 from when we think about building the fiber returns.
We do not differentiate in prices between copper and fiber. The main difference is in speed.
And-
Customers on fiber, they buy higher speed.
Also a higher penetration of television products and other content products.
Okay. Thank you.
Next question is from Paul Sidney, Credit Suisse. Go ahead, please.
Yeah, thank you very much, and good afternoon, everyone. Just a couple of questions from me, please. The first one, just a follow-up on the previous question. We've clearly discussed that EUR 4 retail ARPU uplift in a few questions on the call. I was wondering, would it be possible to get more detail on the wholesale rates? What is the current copper wholesale rate on average, and what's your expectation of the uplift you get when your wholesale partners upgrade a customer from copper to fiber? The second question is just on 5G CapEx. We haven't heard much discussion specifically today on 5G CapEx. I think an answer to the previous question was that mobile CapEx had maybe peaked, at least for the medium term. Maybe I got that wrong.
Just maybe a clarification on mobile CapEx and how 5G CapEx feeds into that over the next few years, especially given that the mid 3 GHz spectrum auction still seems a long way off. Thank you.
Babak, can you take that question on the 5G CapEx?
Yeah. Thank you very much. Yeah, we started our modernization in early 2019. As we modernize our mobile sites, all of the baseband and the radio units are getting us ready. We've launched on 700, but as you mentioned, 3.5 GHz will be probably auctioned in 2022. The network, the radios that we've installed, is already ready for the 3.5 GHz upgrades. We of course need to put the antenna up, but the base and the radio units are already 3.5 GHz. A lot of the investments in this modernization has been made for the 3.5 GHz upgrades coming up in the next several years to come.
Just to add up, I'm very proud of that as well, that on top of the actual radio unit and the antennas, the backhaul and the transmissions, I think we have one of the highest penetrations of fiber to the sites in Europe, at 90%, and all of them are at 1 Gb+ enabled. Once again, ready for the 3.5 GHz when we roll out in 2022 and onwards.
Your question on the wholesale rates, copper compared to fiber. The market moved to wholesale broadband active connections. We're connecting most of our customers on the wholesale side, not on the passive layer, but on the active layer. Price scheme, by the way, is on our website. If I'm not mistaken, wholesale rates for a WBA line on copper is around EUR 14.80, and for a fiber line is around EUR 24 on average. Of course, that depends on the speed. It moves up when the speed gets higher. There's a big difference between a wholesale copper and a active fee.
Could I just have a quick follow-up? Does that mean that actually going forward, you're pretty agnostic about whether you sign up a wholesale fiber customer versus a retail customer on those wholesale rates?
Well, I'd say whether agnostic or not, look, to some extent, when a customer is a customer, from a margin perspective for KPN, of course, it's more beneficial to have a customer on retail than on wholesale, because you get a higher share, for example, TV product, et cetera. In general, our retail customers tend to bring a little bit more profit than wholesale customers. At the end of the day, we're actually happy with every customer that's on our network.
It is indeed about profitability because in the Telfort base, we had customers that were less profitable than on the wholesale side. One of the reasons to move Telfort into the KPN base and be more efficient on that is that's all about profitability. Like Chris is saying, yeah, we welcome all users on our network, also on the wholesale side, and that's why we have 52% penetration on our network today.
That's perfect. Thank you very much.
Next question is from Nawar Cristini of Morgan Stanley. Go ahead, please.
Thank you very much for taking my questions. I have a follow-up on the COVID-19 impact on B2B. Beyond the risk on bankruptcy that you discussed, I was interested also to hear your take on potential impact on the competitive dynamics as well. Could you discuss the competitive dynamics you see at the moment in the B2B market across the different segments, and whether you are anticipating any change in the competitive intensity as the B2B clients are likely to look for cost savings given the COVID-19 backdrop? Secondly, you indicated that the ultimate fiber coverage goal is 80%. Could you elaborate a little bit on the thinking process behind this particular number and the potential timeframe as well? Thank you.
Marieke, could you-
Yes. Let me first take the COVID impact. As said, in SME, we have about 10% of our base in categories that are at risk. We have already addressed that. Let's zoom into the bigger customers and whether they might rationalize. We see about that 20% of our LCE-base also might have areas where they want to rationalize costs. What we especially see now in this moment is how relevant we are in the services. We also, like I said, see a huge demand not to cut costs now on digitization. We actually see, for example, the public sector doubling down on their digital investments to leverage the digitized customer that they have now, or the digitized person in Holland when you talk about municipalities, for example. Yes, we are looking into might some customers optimize.
We'll think with our customers, our whole business case is also about cross and upselling our products to our customers. We have so much more in our one-stop shop than only traditional access and only the fixed and traditional broadband and voice. We are really geared towards that, and we make sure that we get a nice solution for our customers. They buy more for the same price, they get more for the same price that they have today, and we make our relationship very future-proof. When I look at the competitive areas, we still see some pressure on mobile. Mobile ARPU in the B2B market, especially in the LCE segment. Again, COVID has sort of really made our product more relevant than ever.
We see that our customers really are staying longer with us, that's what we see at KPN, on all our products because they love the reliability, and they love the security by design. At this moment, I do not see the competition heating up. I see the same competitiveness as always. Some price pressure on mobile in the top segment. We hope that with also our 5G slices, we have a brilliant business case to bring mobile back to KPN because we are the only one to deliver those business facets on 5G for our customers. We already see that happening. Customers choosing us because we can develop the new business models on mobile with them towards the future. We continue to believe in bundling when it comes to mobile and when it comes to an IP-based world. We also see more competition in IP-based world.
Again, we trust the quality of our products and our propositions, and we don't see the competition heating up at this moment. I hope that answers your question.
I'm sorry, I didn't get your second question. Would you be kind to repeat it?
Yes. Of course. My question was on the ultimate fiber coverage goal. In one of the slides in the presentation, you indicated that the ultimate goal is to reach 80% coverage of households. I was interested to better understand what is the thinking process behind this particular number. Why is it 80%, not less, not more? Potential time frame to reach that 80%.
That 80% is, of course, a big ambition that fits a company like KPN. For me, now it's more important to focus on the coming three to five years and first follow that rollout scheme, and then we'll see where we end up. It's also realistic to say that already 10% in the Netherlands is covered by third-party fiber initiatives. There's a possibility that also these initiatives will further expand their footprint. Let's put it this way, let's first take the first few years and see where we get in 2023.
That's helpful. Thank you.
Thank you.
Our final question is from Mr. Usman Ghazi, Berenberg. Go ahead please, sir.
Hi. Thank you very much for giving me an opportunity to ask again. I just wanted to come back to the business segment where you show the service revenue trend of -2.6%, excluding the migration, et cetera. Could you tell us what the -2.6% looks like between the LE and the SME segment, please? My second question is just to understand the copper switch off to 2.3 million kind of addresses. That's only allowed to be done in 2023, right? I believe it's October 2023. Is it right to assume that the bulk of your savings in this wave do not include the savings from the copper switch off? Thanks.
To start with your second question, that is right. We do not anticipate on cost gains from copper switch off because we announced it, but we have to wait until 2023 before we start it. It's a huge opportunity, I think, because it's not only about switching off copper street cabinets and number exchanges, but also to free up real estate and sell it. That's for later. That's not in our current cost program. Your first question was on service revenues in LCE and SME. Did you get that, Marieke?
Yes, I did. Well, I'm sorry to say we won't disclose specific splits in the 2.6%. What I will tell you is what the 2.6% consists of, and that is mobile price pressure. That's also price pressure on our VPN services, and that's sort of augmented back by the growth that we see. I'm happy to say that we have a growing mobile base and in all segments, and that we see growth across the board on our core portfolio. Price pressure is the main driver in the -2.6% mobile, core VPN.
Thank you.
Thank you. Well, that concludes our strategy update for today. Thank you all for attending. Hope to see you soon or speak to you soon. Stay healthy, and until next time. Thank you very much.