Earnings Call: Q1 2020

Apr 30, 2020

Welcome to KPN's First Quarter twenty twenty Earnings Webcast and Conference Call. At this time, all participants are in listen only mode. We will be facilitating a question and answer session towards the end of today's prepared Please note that this conference call is being recorded. I will now turn the call over to your host for today's webcast and conference call, Dicera Grubesic, Head of Investor Relations. You may begin. Thank you, operator. Good afternoon, ladies and gentlemen, and welcome to KPN's first quarter twenty twenty results webcast. With me today are Joost Farberg, our CEO and Chris Fiche, our CFO. Before turning to the core of the presentation, I would like to draw your attention to the safe harbor statement on Page two of the slides that also applies to any statements made during this presentation. In particular, today's presentation may include forward looking statements, including the company's expectations with respect to its outlook and ambitions, which were also included in the press release this morning. All such statements are subject to the Safe Harbor statement. I would now like to hand over to our CEO, Io Sverdrup. Thank you, Bisra, and welcome all to our first quarter results presentation. We've had a solid start to the year, delivering meaningful year on year growth of adjusted EBITDA after leases and the rate of revenue decline slowed sequentially. Our strategy remains on track and following a court ruling in March, KPN's fixed network is currently no longer regulated. The impact of COVID-nineteen on our first quarter results was limited. We consider our business relatively resilient. However, it is premature to say what the operational and financial impact will be for the remainder of 2020. I would like to highlight a few key figures corrected for divestments. Adjusted revenues declined 1.9% year on year. Growth in Wholesale and Professional Services and Security Services in business was offset by lower revenues from KPN Consulting, a business we, by the way, recently sold, and continued pressure on fixed voice and mobile services. Adjusted EBITDA after leases increased 3.1% year on year as the effect of lower revenues was fully offset by strong cost savings. Free cash flow increased 23% year on year to €18,000,000 despite higher CapEx. Chris will give you more details on our figures in a minute. Now let's move to our outlook. Like I said, we generated solid results in the first quarter and we are on track with the execution of our strategy to which we remain fully committed. Demand for our essential connectivity and communication services remained solid and we have a robust liquidity position. While it is clear that the external situation increases the risk to our stated 2020 outlook, the combination of our good start to the year and our lack of visibility into the remainder of the year means it would be premature to confirm whether our 2020 outlook needs to be updated. We expect to have a better visibility on potential impact at the end of the second quarter, and we expect to be able to clarify our position then. Meanwhile, we remain fully committed to our strategy, and it is our ambition to reach our 2020 outlook as provided in January. As shown on Slide seven, we continue to manage our business through the crisis and we closely monitor several business drivers, including payment behavior of our customers, net working capital and credit quality. We saw limited impact in the first quarter, but we remain alert. Meanwhile, we prepare to take more necessary measures. We're also looking closely at our revenue risk profile. Consumer, Wholesale and B2B SoHo segments account for a large part of our revenue base and are mainly served by our relatively resilient consumer services. The main impact here could be in mobile through lower roaming revenues. Importantly, customer segments most exposed to COVID-nineteen measures and economic downturn account for around 10% of total group revenue. Our SME exposure is relatively limited and sectors such as hospitality, leisure, travel represent a minority within that SME base. Also many of our LCE customers are active in the public sector. Our society has changed radically because of the government measures taken to prevent the spread of the COVID-nineteen virus. At KPN, we are trying to help everyone through this exceptional period as smoothly as possible. We have initiated many measures for our stakeholders. We are more aware than ever that our responsibility to keep our network as stable as possible is super important for The Netherlands. Our technicians and experts are working hard to prevent and respond to outages while also taking appropriate safety measures into account. We are closely monitoring privacy and security. We've also upgraded a lot of our customers to enable them to work from home, and our services have remained stable and cope well with this increased traffic. Social distancing measures have driven a large increase in network traffic. Mobile traffic has doubled in recent weeks with broadband traffic increasing 25%. We're handling this traffic well. In the recent past, we built a decentralized content delivery network supported from 160 metric core locations in The Netherlands. So our network is designed to cope with these peak capacities. And in the past, we provisioned for 100% additional capacity on top of this. We're taking every precaution to ensure that everyone can count on our networks to be reliable and safe. Let's now move to our business performance updates. As I said earlier, we remained on track with our strategy. On fiber, we added 58,000 homes, almost half of the full year 2019 production in three months. We upgraded 300 mobile sites with the latest equipment. In Consumer, we're executing on our brand strategy, while competition remained intense. In Business, we continued good progress in migrating our customers. In Wholesale, we reported a growing broadband portfolio, and our cost savings program added indirect OpEx savings of €38,000,000 in the first quarter, resulting in a total of €180,000,000 of savings since the start of the program in 2019. We have a total fiber footprint in The Netherlands of more than 2,500,000 households and one of the larger fiber footprint in Europe. With 30% of households covered by fiber to the home, and on top of that 55% of households covered by fiber to the cabinet, the speeds we offer to our customers are highly competitive. We are investing in future proof digital infrastructure and we are targeting partnerships with third party fiber operators for complementary rollout in other areas, so that everyone can access KPN's services. Our ambition is to cover more than 40% of households with our own fiber network by the 2021, and we expect to continue the fiber rollout thereafter, as we're just getting the machine up and running. During the quarter, we added 58,000 households to our fiber network. We activated 23,000 customers, meaning a solid activation rate of 57% over the past twelve months. We accelerated our rollout to an average of 4,500 households per week, and currently we're active in 77 areas in The Netherlands with a quickly growing number of construction crews. We have a unique self funded rollout plan. This year, we expect to invest around €300,000,000 in our fiber network. And by committing to our long term goal, we are ensuring employment for the thousands of people that are helping to build our fiber networks. We're fully committed to these investments as the economics and value creation work very well. In the first areas, we see network utilization growing by around 8% during the first year, and this together with solid commercial momentum provides for good returns on fiber investments, exceeding cost of capital upon reaching maturity. Let's now briefly discuss the performance of our Consumer segment starting with Slide 14. We continued to execute our brand strategy and we have integrated Telford Mobile customers to KPM. In the first quarter, fixed revenues were flat. Mobile service revenues declined 5.6% year on year, which is an improved revenue trend sequentially. We further strengthened our position in the premium segment by making several high quality features available to KPN customers, introducing Super Wi Fi, and we commercially launched one gigabit proposition of fiber. A few words on our consumer KPIs. In the quarter, our customer base for converged broadband and mobile services declined, driven by our brand strategy and increased competition. We see aggressive promotions in the fixed markets and competition from local fiber operators in rural areas. Also, the mobile market remained competitive, moving to the premium segment with all operators now offering unlimited data. Looking at our broadband base more closely, we added 13,000 fiber customers. In mobile, we added 24,000 KPN brand customers and the total decline in net adds is sequentially lower and slowed down during the quarter. Our focus on value is demonstrated by fixed ARPU growing 5.4% year on year and mobile postpaid ARPU being at 17% for the fifth quarter in a row, showing an improving trend. As we continue to migrate our business customers, the impact of our strategic actions remain visible in the performance of our B2B segments. We completed the divestment of KPN Consulting the April 1. So KPN Consulting still contributes to first quarter results, but will not be in the Q2 numbers. Corrected for divestments, revenues in B2B declined 4% year on year, and this was fully driven by communication services, partly compensated by higher revenues from IT and professional services. We see an improving revenue trends and sequential improvement in NPS. We had another good quarter in terms of the operational transformation of our B2B segment. Since we announced the end of life of ISDN and PSTN services, most of our customers have now switched to a future proof portfolio such as KPN Klayzakolik for SoHo, KPN ONE and KPN Smart combinations. We've now migrated 82% of SME and 62% of LE customers, and our SoHo segment saw continued take up of converged services. Now let me move to Wholesale. Correcting for divestments, adjusted revenues in Wholesale increased 5.2% year on year. And both mobile and fixed revenues contributed to that growth. We added 21,000 broadband lines and 12,000 postpaid SIMs in the quarter. This quarter, the court ruling announced the Wholesale Fixed Access Regulation. And as a result, ACM's assessment of KPN's regulated tariffs, such as ODF and VULA Copper and VULA Fiber to the Home were discontinued. Preparations for wholesale access to cable were canceled, and KPN fixed network is no longer regulated. The Dutch government will implement the European electronic communications codes in The Netherlands, as regulators will do in all European countries. This is nothing new, it has been known for a while. And in the code, there's a new instrument for regulators. It's the possibility to enforce so called symmetrical access. Access obligations to any network may be imposed if there is no economically viable alternative. This instrument is different than ex ante regulation based on significant market power. The conditions, first of all, of enforcement and harmonized application across the EU have to be further clarified by BEREC guidelines first. And as mentioned in the codes, regulation should protect both end users and stimulate investments in very high capacity networks like fiber networks. And the rollout of these networks is a priority for any country, including The Netherlands. KPN stands by its open network policy, and this entails access to our network against reasonable and non discriminatory terms. Our policy is in our own interest as wholesale partners support our fiber to the home strategy by offering end users choice of providers via our fiber network. We are convinced that our open network strategy meets the EU law, and we welcome every provider to join the network of the Netherlands. This ends my part of the presentation. I would now like to hand over to Chris to talk you through our financials. Thank you, Joost. Let me summarize our group financials for the first quarter. I appreciate that some of you might think that pre corona numbers are as up to date as my fashion preferences, but we think they're still highly relevant as they show the underlying strength of KPN. I'll go through the numbers pretty quickly, taking what I call the magpie approach, just focusing on the shining and shimmery elements. Page 20 shows our group financials. Our adjusted revenues like for like declined by just short of 2% year on year, which is an improving trend sequentially. Our adjusted EBITDA after leases arrived at €575,000,000 increased 3.1% year on year. The effect of lower revenues was more than offset by net indirect OpEx savings of €38,000,000 Our margins improved 180 basis points over the last twelve months in EBITDA and about 130 basis points in operational free cash flow. Our margins are improving further and are testimony to our value of our volume strategy and our strong cost track record. The high margins enabled us to self fund our excess investments. Net profit was €31,000,000 higher year on year due to lower financing costs and a higher share of profit from associates and joint ventures. Moving on to our cost program. We realized €38,000,000 in net indirect OpEx savings in the first quarter, bringing us to a total of €180,000,000 realized savings since we started the program. The savings are driven by less staff and IT and TI expenses. We are fully confident that we will reach our €350,000,000 target by the 2021. I'd also like to point to the P and L restructuring costs for the quarter. They were €10,000,000 in Q1 compared to €36,000,000 in the first quarter last year due to the fact we achieved and reached a lower FTE count already at the end of last year. When it comes to cash generation, we intend to disclose our cash more comprehensively. We disclose going forward the operational free cash flow, the classical free cash flow definition and the actual delta cash at hand. The operational free cash flow equals adjusted EBITDA after leases minus CapEx and gives you an insight into longer term underlying cash generation trends. In this quarter, we remained strong at about 300,000,000 flat year on year when corrected for the impact of the investments. The margin on operational free cash flow went up by 130 basis points. We generated a free cash flow of €80,000,000 in the first quarter, which is €15,000,000 or 23 percent higher year on year when adjusted for divestments. The strong increase in free cash flow was driven by higher EBITDA, lower cash interest paid and lower restructuring costs and absorbed higher CapEx and a higher cash commitment into working capital compared to last year. We ended the quarter with a strong cash position, totaling just shy of €700,000,000 in cash and marketable securities. So going forward, we'll disclose cash through three levers: operational free cash flow, free cash flow and net cash at hand. In terms of working capital, Page 23, an important element in our cash generation, we highlight going forward what happens on our working capital. The change in working capital in our free cash flow statement was €86,000,000 in the first quarter, a bit higher than last year. The main drivers were higher prepayments, partly in line with regular trends as invoice receipts for annual commitments are concentrated early in the year and partly by prepayments for licenses for business customers. Lower trade payables, mainly driven by payment of end of year peak incoming invoices. You may remember the Q4 CapEx peak we had last year, which echoes into invoices into Q1 this year. And finally, some higher accrued expenses, mainly driven by our fiber rollout and mobile network mobilization. Think about 8,000,000 to 10,000,000 operational fiber commitments into working capital in the quarter. We have a strong liquidity position on Page 24. Total committed liquidity at the end of the quarter was €2,200,000,000 consisting of three elements: cash and short term investments of €696,000,000 a €1,250,000,000 revolving credit facility and a €300,000,000 EIB facility. We drew down the latter on early April. Our total liquidity position is sufficient to cover debt maturities until the 2022, including the final dividend payment of 2019 of €348,000,000 which we paid last week. Our leverage position is very strong. I'd like to highlight Page 25. We have a strong balance sheet, which is more important than ever. Dollars 6,300,000,000.0 of nominal debt outstanding at the end of the quarter, of which $461,000,000 is maturing in September year. Our net debt to EBITDA ratio is 2.2x and the interest cover ratio going up at 8.7x. We're able to self fund our fiber rollout. As Jos reiterated, we invest €1,100,000,000 in CapEx, of which a significant portion relates to Access and around €300,000,000 to fiber. We could even afford to step up our fiber investment from a cash perspective and still be fully self sufficient. We are not dependent or not constrained by our leverage. We believe in investing in disclosure to our shareholders, and we want to be open and transparent. On Page 26, we disclose our disclosure agenda for the rest of the year. Already in today's presentation, winning in house disclosure, and we will continue to do so in the rest of the year. This year, we started by changing our format and structure of our presentation, gave more insight on our fiber activities and corresponding KPIs, enhanced our cash generation disclosure. In the future, we plan to enhance disclosure, as indicated on the slide, including ARPA, average revenue per address and new revenue breakdown in consumer. And in this segment, you'll get from us during the year more insight into revenue breakdown per customer segment and more insight into end to end EBITDA after leases. And finally, during the year, we'll spend more time, more emphasis on return on capital by ROCE and segment adjusted EBITDA numbers. You'll get that from us in the course of the year. So a few closing remarks. We delivered a solid year on year growth of adjusted EBITDA after leases, particularly when corrected for divestments. Strong cost savings compensated the revenue decline this quarter. The rate of revenue decline slowed sequentially. We remained on track with executing our strategy and ramped up our fiber rollout. In Consumer, we continue to execute our brand strategy in the face of strong market competition. And in Business, we showed good progress in migrating our customers to future proof portfolios. In wholesale, we reported a growing Boardman portfolio. I'd love to guide you to remember, we've got strong margins that are improving further. We have a significant fiber business and we're able to sell some of our fiber rollout due to our strong margins. And we believe shareholders are an important stakeholder, as we have shown by paying our closing dividend over the last year. As said on the subject of COVID-nineteen, during the first quarter, we had limited impact for a period of two to three weeks, and we remain on full alert for the rest of the year and in Q2. Overall, while it's clear the external situation does increase the risk to our stated outlook, the combination of a good start to the year and lack of visibility into the remainder of the year means it would be premature to confirm whether our outlook needs to be updated. We expect to have better visibility of potential operational and financial impact at the end of the second quarter. Meanwhile, we prepare and set ready to take more necessary measures. That closes our presentation and introductory words. Now let's turn to your questions. Thank you, Chris. Ladies and gentlemen, we are ready to start with the Q and A. I would like to ask you to please limit your questions to two each. And in case there is still time left, at the end of the call, you will be given a chance to raise your follow-up questions. Operator, please start with the Q and A. First question is from Mr. Kefal Kreher from Deutsche Bank. Go ahead please. Thank you. I've got two questions, please. Firstly, you've highlighted that the COVID impact was quite limited in Q1. We are one month on now. Would you be able to comment on whether that also stands for April as well and whether that would still leave you happy with at least for now the guidance you'd set? And then secondly, you've mentioned within the release that you have identified some potential cost opportunities as mitigation measures. Would you be able to talk about the envelope of these opportunities or at least what types of cost reduction we could see additionally? Yes. On the April numbers, well, okay, well, I'm as anxious as you to see the full April results. I mean, month is not yet done, which is the last day of the month. So you have to bear with me for a few days after closing to give you the full results. However, if I look at early indicators, I see still relatively limited impact. We especially monitor very closely payment behavior by customers and request for extension of payments. That actually that result is actually very low at this point in time, very limited impact at this point in time. And I would expect in the month of April to see lower costs, I mean, costs, fuel costs, housing costs to be down significantly. But to be quite frank, bear with me, we have to wait until the closing of the month. Yes. Maybe your question on additional cost measures, of course, we are super focused on our spend. And especially in these times, we're preparing for additional measures. Cash in, cash out is guarded by a special team looking at every euro we spent or we expect as an income. So that is very important. We have a flexible workforce. So we did send a lot of people out of the shops to home, and then we moved them to call centers to support our call center agents. But we also scaled down on the flexible workforce, 200 FTE of hire people, and we still have a lot of, yes, flexibility in our workforce. So that could be one of the measures we have to take if necessary. And like Chris said, there's smaller and bigger buckets in our operations that we will that we can use to take measures on when needed. That's very clear. Thank you. Next question is from Mr. Joshua Mills from Exane. Go ahead please. Hi there. Thanks very much for the two questions. The first one was just on the impact of the brand strategy. So clearly, you're continuing to wind down the Telfort brand. I wondered if you could give us an idea of how much of an impact that had on the broadband base as well as mobile as you provided. And then also just a sense of what percentage of your customer base today is still left on Telfort? The second question is just around the Fiber to the Home rollout. So you've given us some great detail there on the pickup in rollout quarter on quarter. How do you expect that to develop through the rest of this year? Is the 4,500 a week still sustainable with the COVID impact? And should we be thinking about any impact on working capital as a result of that as well? Thank you. Yes. So on our brand strategy, important moment last year was that we announced the elimination of the brand of Telfort. And last quarter was fairly important because we migrated all our mobile Telfort customers to KPN in two weeks. So on mobile, there's no Telfort customer left in The Netherlands anymore. On broadband, we're preparing for the migration, and we only give it a go when we are sure that it will go just as smoothly as on the mobile side. So the impact on our broadband base is one of the reasons our base is impacted is because of this elimination of Telfort and the strong competition, as we say. And we of course, this is, for us, one of the most important focus points to improve. We see a strong inflow of KPN customers, and we see a stronger outflow of Telfort customers. As you know, it's leveraged by the inflow of wholesale customers, but of course, we prefer to stabilize our consumer base looking forward. So that's very important for us. But we took into account when we eliminated Telfort, this could happen for a couple of quarters. But still, I'm convinced we did the right thing by doing that because the cost in our operations improved extremely well. We can brand and marketing market our company in a much more focused way in The Netherlands. It's a small country. So we will recover there, but it's an important one. And on fiber, we have a couple of stakeholders who support us in the fiber rollout, the government, the construction companies. It's super important for The Netherlands that construction continues in general. And so we are supported not only by ourselves, it's relevant for our customers, but also by other stakeholders to make sure that we can roll out as fast as we can. And if needed, we can adjust the program a little bit, and we go faster in the streets and connect houses a little bit slower due to COVID-nineteen situations. But until now, we're all focusing on speeding up fiber rollout instead of slowing down. Ann? Yes. I think to add, think we're the fiber rollout is something you plan ahead. It's about locking in building streams. So we look at the building streams we're locking in today, I'm pretty confident we can ramp up our fiber rollout because actually in the plant, it's committed construction capacity. I think the risk probably is around the availability of these buildings work streams going forward, and we need to monitor our supply chain carefully. But you do expect us to further ramp up our fiber rollout. The nature may change a bit that we focus more on home passed and less on home activated because it's more difficult to enter someone's house in these days. But we're planning for that to then focus on passing homes and doing the connection in second or third waves after that. But we're pretty confident that we can continue to ramp up our weekly fiber rollout. Next question is from Mr. Frederic Boulan from Bank of America. Go ahead please. Hi. Thank you very much for the question. The first one is on COVID-nineteen. At this stage limited impact And you mentioned some mitigating factors. Is the ambition and the strategy to first protect EBITDA as a main criteria in the guidance? And is also are there also other things you can action at a free cash level to also protect your free cash flow guidance? So when we talk about I mean, you reconfirm the entire range of the guidance, but is there one element you think is more under your control? And in particular, is CapEx one tool to manage free cash flow? It doesn't seem like it when I just listened to you on fiber, but interested to have your view there. And then if you can spend a bit of time on the mobile market and what you're seeing there. You've taken some steps around pricing, but if you can comment a little bit on what you're seeing there. You seem to be satisfied with a more stable ARPU. Do you think that you can sustain in the medium term? And yes, so any color on the mobile market would be great. Thank you. Okay. Yes, perfect. On your first question, do we prioritize EBITDA or free cash flow? I think both are important. I mean, EBITDA is our margin, but free cash flow is actually ultimately what's in the bank. So both are, I would say, equally important. On the CapEx side, the main difference between the two is, I would say, there might be an opportunity to continue to roll out fiber, especially in the current environment, and this might provide an opportunity to get more or faster fiber rollout. I don't want to sacrifice that. But I think the combination of EBITDA management, cost control and working capital management should enable us to protect both, and we're focusing on both. The biggest unknown, I think, is at this point payment behavior by our customers. There are other requests for delayed payments. That's something we monitor actually very closely and does not show up yet in our numbers. So there's no observation there, but something we monitor very closely when it comes to working capital. But we're both EBITDA and free cash flow focused. Yes. And you asked on mobile, your question on mobile. Yes, mobile, of course, super important that we improve value there. In general, the Dutch country, The Netherlands should be seen as a country where the market is improving. We had some consolidation in the market of VodafoneZero, T Mobile and Tele2. Last year, we saw really aggressive low price propositions moving out of the market, us taking out Telfort. So now the whole market moved up to unlimited, T Mobile being the cheapest, but I think that's their role, us and VodafoneZiggo a bit more expensive. But still, if we move the market up to more unlimited, then it will create value. So the first indication is the inflow in March, which was much better than the first two months of the quarter on net adds. And the second is, of course, the ARPU for the fifth quarter in a row on 2017. I like to see a two as a first number there, but 2017 now for five quarters in a row is much better than we did over the last years. We faced a decline every year of at least €1 So too early to be super happy, but we will focus on this to improve the value of mobile in general. Okay. Thank you. Next question is from Mr. Michael Bishop from Goldman Sachs. Go ahead please. Yes, thanks. Good afternoon. Just the two questions, please. Firstly, as you think about the lockdown and the impact there, could you give us any indication on how much lower churn is in the Dutch market? I understand quite a lot of shops were shut. And I I guess even if the shops reopen, is it likely that you have a sort of extension of lower churn because people, a, valuing their telco connection a bit more and, b, not wanting to go to shops? And then second question is coming to this 10% of group revenue definition that you've mentioned today, which I think is really helpful, I'd just love to understand, you know, exactly which industries you're including in that and how you're thinking about that 10% exposure given your previous comments that you're not actually seeing any bad debt or late payments. Yeah, thank you. I will do the first question. Chris will follow-up on the second one. Yeah, that lockdown, you're right, churn improved very well. On the other side, acquisition came down more or less on the same level in general. So we closed all our shops. That was a tricky decision, but we had to do it. Next day, T Mobile and Father Franzig are followed, by the way. We opened up, but we opened up only 16, and we're preparing to open up 20 more. And we move now in yes, as an in between solution to a more IKEA kind of model, not 120 shops in The Netherlands, but you have to step into your car twenty minutes drive and you're there. It works. But in general, what we see is that both slowed down the acquisition and churn and moved well to online. So I hope that some of the things we experience now in this lockdown and we learn in a different way of working, we can cherish and keep in our future operating model. On the 10% revenue? Yes. On that margin, we went to all our clients in the first, let me as Joost reiterated, 65% of our clients are retail type clients or wholesale clients, which we see as limited at risk because of this provider, such a vital infrastructure to these clients. Then we zoomed into our business clients. We went through segment by segment. So we looked at travel, hospitality, non supermarket retail, leisure, personal care. So segment by segment, we classified our clients. Of that 10%, the lion's share is in RLCE, where we have more service rate revenues, but 20% or just below a quarter is in the SME space. So in that high risk, I would actually qualify the SME as the highest risk of those two. So if you become more granular of that 10%, only a quarter is in the SME space, another 75% is in LCE space. LCE customers are more telco related clients or SME. The large corporate are more service related clients. But the sectors are travel, hospitality, non supermarket retail, leisure, etcetera. So we went through all our clients on a segment by segment basis and classified them. And I have twice a week a call with the team to look at payment behaviors or request for payment extensions. And there's a very stringent and structured approval process before we allow our client to actually extend its payment. And as I said, we haven't seen anything major at this point in time. Yes. And some of our important part of our LE corporate customers are state owned or partly state owned. And then, of course, we think it's up to our government to support these companies in the first place. It's not up to KPN to act like a bank in The Netherlands. Thanks very much. Next question is from Mr. Louis de Minerva from HSBC. Go ahead please. Yes, good afternoon. Thanks for taking my questions. The first one is a follow-up on the 10% group revenue at risk. I was wondering if we can do a step further and think about the EBITDA percentage being at risk. If you can help us on that, that would be very helpful. And secondly, I wanted to ask about dividend. So whether there is any pressure in The Netherlands on limiting your dividend policy, whether the Supervisory Board has considered changing the dividend outlook? How does the Board think about it in the current context? Well, look, perhaps on your first point to elaborate on that, I mean, said that we said 8% to 10% at risk. These are full year revenues, right? And these are not revenues at risk, but clients in higher risk sectors. Maybe to elaborate with that client, the revenues of clients in higher risk sectors. I don't think the entire revenue will disappear overnight, which would mean that all the high risk clients would go bankrupt. We're saying this has clients in high risk sectors. So it's not really relevant to attach a margin to it because it's clients in high risk sectors. But if you would want to, that's kind of on your responsibility. 20% is in SME, 80% in LCE. The SME clients are more telco oriented and the others are more service oriented. So you could come up with a theoretical EBITDA margin in high risk sectors, but I would be very hesitant to add a number to it and to assume it's going to go away because this is a full year number and this is actually total exposure of these clients. So to me, it says this is revenues that we are on watch out for, that we monitor carefully, but doesn't mean that you can strike out the EBITDA very quickly. Just to make sure that we understand what's in it. These are revenues of clients in high risk sectors. Yes. And on your second question, since February, we have more interaction with our Boards, our people, our top management than before. And we clearly focus on all our stakeholders. So that's employees, our customers, the health sector as an important stakeholder in The Netherlands, but it's also shareholders. And we are a dividend stock. Dividend is important in our strategy. So after the first quarter of this year, which was very solid, there's no reason to challenge our dividend policy. And yes, let's see what happens in The Netherlands. Of course, there's pressure on a lot of companies, but there's companies in real trouble or state owned. It's up to us. And so it's up to us to make sure that we try to meet our guidance from January and fulfill to our strategy. Thank you. Next question is from the CAH from Citigroup. Go ahead please. Hello, hi. Good afternoon. Thanks for taking my questions. I have two, please. And the first one is just on the COVID-nineteen impact. I think in your press release, you talk about potential delay in some of the restructuring initiatives. So I was wondering if you can mention about how you see the COVID-nineteen could potentially impact the plans that you have on restructuring and potential price increases for this year. And my second question is on your brand strategy. It appears that since you removed the Tipper brand, your broadband have seen about 20,000 losses every quarter, and now you see losses in the converged phones. I understand the rationale to focus on the premium range and one brand, but it looks like the competition is increasing in The Netherlands, especially in the low to mid tier fixed or converged market. I was wondering whether you can comment whether this make it more difficult to raise prices in the meantime, still keeping the base stable? Thank you. Yes. So COVID-nineteen, we mentioned the delay of the reorganizations. That's a decision we took for eight weeks. We fought in the first wave of this, people working from home. We continue, by the way, all reorganizations that we already were executing on. And those scheduled for the last eight weeks, we said we will delay the execution on that until the June 1. Meanwhile, we will change our plans by delayering more hired people. So like I just said, we're flexible there. But it's not our objective to delay reorganizations for the full year or something like that. So that's in our own hands. That's not the pressure coming from anyone else than our own decision. And we're doing better than planned on FTE. We launched a hiring freeze, so we will make sure we meet the targets on FTE. On price increases, I can only say that we, over the last years, increased our prices in a reasonable way every year. And we have our pricing strategy, but we will first announce to our customers and the markets what we will do and when we will do that before we really can communicate on that. But yes, we're always focusing on creating value. And you're right, the broadband base, we moved up, ARPU improved, euros 4, something like that. So over the last two years, And so we're really focusing on value. We launched Simio, by the way, on mobile a bit better to position ourselves there. It's a very popular low priced brand. We still have it. But on broadband, it's super important that we understand that part of the declining convergence comes from our own hustle proposition. Customers can optimize and click for only one service instead of a combination. And second, by third party fiber networks in rural areas, and we're focusing on that as well. So all in all, we anticipated on the loss of broadband and converged customers, but we're also super focused on the improvement there. Thank you very much. Next question is from Mr. Simon Kolz from Barclays. Go ahead please. Hi. Simon from Barclays. Thanks for taking the question. Just one on wholesale strategy, actually. So we've obviously seen the court decision, and now there's the EC code, which the government and the ACM are looking at implementing in The Netherlands. Was just wondering, because you no longer have the obligation and you've taken away some of your products, what actually is your strategy? Because you say the network is open, are you just trying to drive your wholesale customers to push their customers to faster speed products? I'm just wondering if you can give some more color about how you see your wholesale strategy going forward. Thank you. Yes. So two years ago, we moved the market to a more commercial portfolio. So we moved away from MDF access, ODF access to wholesale broadband access products. Also to avoid customers rolling out to local points of presence to make use of ODF Access, we introduced Vuela. And this open access model is still our proposition. We didn't stop any service in our portfolio on the wholesale side. There was pressure on us to decrease prices in wholesale, and that pressure was coming from third parties making use of our wholesale portfolio and from our regulator. And we're not against regulation. I appreciate we need some kind of a regulatory framework, and we need a supervisor as well that's important in a competitive market. But I don't think that we need a regulated decrease of broadband prices in The Netherlands. So that was our main concern. So our strategy is that we still do business with service providers, and they still make use of our services, and that is on voluntary deals. And we are currently negotiating new models, and that is purely, yes, a commercial discussion. And we are no longer at this moment pushed by ACM to go in a certain direction. So we have to do it together with our wholesale partners. It's not our strategy to suddenly stop certain kind of wholesale services, because that could trigger the different yes, the wrong discussions in The Netherlands. So we will continue our strategy on wholesale, and we will try to negotiate good deals with our partners. That's great. Thanks very much. Next question is from Mr. Usman Ghasi from Berenberg. Go ahead please. Hello. Thank you for taking my question. I've got two, please. Firstly, on roaming. Could you indicate how, you know, how much roaming constitutes as a percentage of EBITDA or revenues or or in absolute terms, what the exposure here is and, you know, if you are a net payer? So that was the first question. The second question is just on potential for optimizing working capital. I mean, you know, this seems to be have become more of a focus area for you now. And, certainly, I mean, the work we've done suggests that your your supplier payment terms are are you know, have scope for improvement here. So, you know, is is taking into account the potential headwinds from COVID, I mean, is there a potential for you to do something on working capital to improve the cash conversion run rate? Thank you. Yes. Chris, we'll do the second question. Yes, one of the advantages of being active in a supercompetitive market like The Netherlands is that we have at least two mobile networks of international operators. So roaming is no longer a really significant business for KPM. And that is because Roam Like Home eliminated some of the margins. We're not a holiday country like France, visitor roaming is limited. But it's also limited because of the mobile networks of international players like Vodafone and T Mobile. And we are net payer of roaming fees. So on the consumer and business side, clients of course will make less use of roaming. We I expect some more international traffic there. So we will see some pressure on roaming, but it's fair to say that it's not a super significant business stream as it could be for other telcos. Sorry. And on the business segment, I mean, there a risk of I mean, are some of your peers have indicated that international call in traffic revenues have been significantly impacted. Yeah. So we're in in in in our in our in our in our businesses segment. Of course, we see roaming going down. We see fixed operator, an increase of international outgoing traffic. But all in all, it's less than 1% of our revenues roaming. And like I said, it was much more in the past, but due to all these different international networks in The Netherlands, less visited roaming in our run rate, a little bit we will do something on the cost side. We're a net payer, like I said, so we have to work on that. And we will be impacted, but it's I dare to say, pretty different than compared to other telcos. Yes. To add to that, mean, we see, of course, roaming traffic If you look at March, the pre- and post lockdown traffic levels have come down quite dramatically, especially rest of the world roaming. But of course, you have to wait for Q2 and Q3 to see what actually happens. If you look at our scenarios, as Joe said, we're a net payer. Roaming is a profitable business. But if you went through some drastic scenarios with regards to reduced traffic, the impact is probably less than 1% of revenue. So it's something we look at, but not something that keeps us awake at night. In terms of your working capital question, yes, Usman, indeed, we have a very tight working capital steering. We've actually installed much tighter working capital steering in the past months. I think, yes, you have to cope with the fact that our CapEx went up last year, so that echoes into working capital in this quarter. You have to cope with seasonalities when it comes to some of lease payments or license payments, etcetera. But we see scope to control and upgrade our working capital. We are looking at payment terms to our suppliers that we are discussing with our suppliers very intensively. We're looking at payments to our from our clients as well. So there's a very tight steering on that. I will expect some benefits from that, not in the immediate period that takes the best time for these things to commence and kick off. But I'd expect that our payment terms that we have with our suppliers to improve during the year and during the year also to show up in our working capital. And secondly, of course, when it comes to payment by our customers to us, we monitor that very carefully and are very careful not to extend payment terms too easily. So it's something we yes, we've got a tight control and a tight working group on. Great. Just one follow-up on that. I mean, you mentioned that in Q1, the FTTH kind of headwind on working capital was around 8,000,000 Could you give an indication, given that you've indicated you're going to be spending $300,000,000 on FTTH and accrued CapEx, what the working capital kind of impact of that would be this year? Olivier, I don't want go that far. Mean, 8,000,000 is an estimate. It's not easy to lift go to a number of them, especially lift out the fiber. It's kind of where roughly is. I think it would be to go far go too far at this point to make a full year impact on that, also because we may have compensating countervailing measures. Thank you very much. Next question is from Mr. Roman Arboussard from JPMorgan. Go ahead please. Thank you very much for taking the questions. I had two, please. So the first one is just continuing the topic of customer losses, which you've already provided some very helpful color on. Thank you. So the the question is with COVID environment, perhaps the customers are going to become somewhat more price sensitive. So is, you know, is this a concern for you at all? And, also, in this environment, presumably, it becomes harder for you to manage the Telfort broadband customer base migration as well? And, you know, in this slide, what are the tools that you have at your disposal to become more competitive at the lower end of the market, especially if, especially if people are chasing basically attractive price deals? That's the first one. The second one is just a clarification on CapEx. I think the the industry discussion so far in the context of coronavirus has been that CapEx is going to decline, mostly in the mobile side. I guess what we're hearing today is that you may actually increase CapEx, if I understood you correctly. I mean, you do see opportunities in the fiber side to deploy more capital. So can you just elaborate a little bit more on that side? For example, do you mean to say that you will spend a bit less on mobile and increase your fiber spend, thereby you'll keep your 1,100,000,000 envelope? Or is there upside risks to CapEx so that you can take advantage of the fiber opportunity this year? Yeah, on the question on customer losses. So yes, we took out Telfort. We moved up the lowest price point from average €35 to €42.5 So that is a decision. We are focusing on the value creation related to the total base. We're not running net adds only. Having said that, of course, it is important. I don't expect people to be super price sensitive in this period of time. I expect migrations to slow down in general. It's not the time to swap from broadband provider. And that's why we see churn improving heavily and also acquisition, because this whole market is just, yes, sitting down and wait until things will change to better circumstances. And that is a much healthier situation, one could say, less rotation in the market is, I think, fair to predict related to COVID. Broadband migrations is a delicate process. I've done it a couple of times with smaller bases to Telfort or to KPM. And we will look at it in a very detailed way. And we will only migrate when we're super ready. Just like we did on mobile, it is very important to prepare from an operational point of view and to do it smoothly. And when customers land in the new brand environment, it should feel like an improvement and not like a step back. So that is our goal. We embrace Telford customers to move to the KPN broadband environment, and we will make sure that they feel rewarded for that. So that's the idea. Yes. When it comes to your CapEx question, we're quite committed to the 1,100,000,000 CapEx this year. That's a pretty strong commitment that we intend to hold. Inside of the envelope, you might see some changes. And in COVID, the mobile site swaps are a bit more challenged simply because in the previous weeks, it's difficult to get into someone's rooftop because some of the office buildings are closed or don't let people in. So there's some restraint on mobile site swaps. There's some less customer related CapEx, and we intend to do continue to deliver on our fiber rollout. So it's more the mix inside the 1.1 and then changing the 1.1 itself. On top of that, we might see some smaller M and A opportunities to acquire small fiber networks. So where you sort of make or buy decision, you can acquire a small local fiber network somewhere in The Netherlands. That would officially classify as CapEx, although it would be small acquisitions to further accelerate our rollout. When it comes to opportunities, it's too early to say we are looking at the fiber market to see whether the current environment allows us to make more attractive fiber deals. But it's a way to conclude that we're going to spend more CapEx than €1.1 anything, we look at the ROCE, return on capital, very carefully. So there might be opportunities for us to do more in fiber. That would first need to come out of the mix. And if we want to do really more than 1,100,000,000.0 that need to be a real convincing business case. But perhaps there is one in the year if the economy and the position of the construction sector develops that it may be value creating for us. But for this year, we're committed to the €1,100,000,000 And sorry, and just to follow-up, where do these opportunities come from? Is it the fact that there is just more spare capacity in the construction sector? Is that the kind of current bottleneck that will be less of a factor going forward? And also the third party partnerships in fiber, how big of an opportunity is that, please? When I think about capacity, there might be an opportunity to strike more longer term deals with construction companies in this day and age to have a larger joint commitment where you trade off both volumes, price, payment terms, etcetera, and commitments on both sides. That's something that we'd like to see like to explore further. And we look at these smaller deals. You're looking at not massive amounts, but between 10,020, possibly 30,000 homes passed in the year could be done. I'm not saying we will do it, but that's something we have an eye on and always look whether make is an exceptional or buy for this make makes a good trade off. Next question is from Mr. Polo Tang from UBS. I've got two questions. The first one is really just about COVID-nineteen and a follow-up. Could you clarify the impact on commercial costs and subscriber acquisition costs? Because you mentioned that you're seeing lower churn and lower gross adds going into Q2. So I'm just wondering whether this could be a benefit in terms of EBITDA. So could you talk through that? And the second question is really just about revenue growth. So I appreciate that you have uncertainty because of the current COVID-nineteen situation. You've obviously got promotional activity in the market today from T Mobile Netherlands. But do you think KPN can grow revenues over the longer term? And what are going to be the levers to drive growth in consumer and growth in business? Well, think on the commercial costuming, it's too early to say that. But let's see how the world develops, how April or Q2 developed before we can say a bit more on that. We've got hopes and dreams. Let's see how the world evolves, and we'll give you more color on Q2 when we have actual facts behind it. When we come to revenue growth, can we grow revenues? I think we can. I think we should. We want to. It will take some time before we reach our inflection point. I think it's important to note that the revenue decline is declining. So the second derivatives, if you wish, is coming is turning positive. That's an encouraging trend. And we want to first go from decline to flat and then to increasing revenues. So I think we have to believe that we can. But at this point, we're focusing first on the here and now, which is decline in the decline and getting back to flat revenue growth revenue developments first. Can you maybe talk about the levers that you see to get to that stabilization and the moving parts? Yes. I think we always said in B2B, we will first focus on inflection of EBITDA, and then the revenue will follow in our industry. That is what I truly believe in. That's what we did in consumer. That's what we did in wholesale. So we focus on the value of the revenues instead of revenue only. In the past, we, every now and then, celebrated the inflection of revenue in B2B, but wasn't really supporting our margin. So I think this year in our strategy is the year of end to end EBITDA inflection in B2B. So we're focusing on that, and that's our objective. Of course, due to COVID-nineteen measures, yes, risks increased on that, but let's see how we develop. But I think something later after migrating SME and Nelly to the future proof portfolio, after discontinuing business like consulting and other entities we disposed off, focusing on connectivity, communication, security. On top of that, then our revenue inflection will follow after our EBITDA inflected. Thanks. Next question is from Mr. Oleg Rathe from Jefferies. Go ahead, please. Thank you. Two questions. The first one, again, on this TelForward migration. Sounds a bit like this is over now for now, but because the broadband migration isn't happening yet. So could you just quantify how much of what we're seeing, that 18,000 in the quarter, is from the TerfWard migration? How much is actually sort of more underlying from the rough competition you are seeing there? That will be my first question. Second question is when you do roll out fiber, how do you prioritize geographically? Is it where it's easiest to build or where, for one reason, other competition is lowest or where the commercial opportunity is highest? How do you actually decide where to put the fiber at this point in time? Yes. So on the Telfort migration, it is not the base the broadband base migration, but it's the elimination of the Telfort brands. The pricing competition and the rural players in some areas on fiber that we see this pressure. It's also our own pricing strategy we follow partly. And that's the reason that we see a strong outflow of the lower priced Telfort broadband connections. And having said that, seeing a strong inflow of the higher priced KPN broadband connections. And also on the wholesale side, we see an inflow. So all in all, on value, we do okay. But of course, like I just said, we're focusing on stabilizing that base. Fiber rollouts, we have a tool built on a couple of elements. ROCE is our main value creating objective there. It's about the markets, the quality of our network, the profile of the customers, the rollout costs, and all this combines our market share, how competition is doing there, and that leads to the decision to pick an area. Main important drivers are ARPU and penetration grades. And for the first year, of course, to manage our CapEx rollout costs are important as well. So we have a clear yes, pretty sophisticated tool to select areas. Every now and then, we as a Board challenge the selection of these areas because what comes out of a tool sometimes doesn't feel all right. But all in all, I must say that we're more successful in picking the right areas than we were a longer time ago. That's very clear. So the returns you're seeing on the fiber now are the highest, and that will sort of tail off as the coverage increases beyond the 40% in future years? Yes. We run an S curve. And due to less regulation, we can now go with the commercial in Elite instead of operations in Elite. So that's a big benefit. We're redesigning our process a bit there. When we're running an S curve, we have a certain penetration grade in the area on our copper network. We expect an inflow of 8% in the first wave, then we wait for the next wave, and then we will approve again. That's more or less roughly how it works to be efficient. In looking backwards over the last years, we did quite well, better than we expected eight to ten years ago. So and now we're trying to optimize this process further, learn from what we did in the past and yeah, speed up the penetration rate. That's super important. Thank you very much. Thank you. Our next question is from Mr. Paul Sidney from Credit Suisse. Go ahead please. Yes. Thank you very much. Good afternoon. Just a couple of questions for me, please. Just again, focusing in on the consumer broadband losses. You lost 25,000 broadband subs in the quarter, but you gained 21,000 back on wholesale. And that's something we've seen for the past, what, four or five quarters. I was just wondering, is this something that concerns you given that the customers are largely staying on your network and presumably you're saving on acquisition costs on the retail side. And also maybe it just takes a bit of sting out in the market. I just wondered that dynamic of those customers staying on your network, is that as much of a concern to you as it seems when you just look at the retail numbers? And then just secondly, staying with consumer fixed, mentioned aggressive promotions and the impact from rural fiber operators. I was just wondering if you could give us a bit more detail on which operators are being the aggressors and what sort of promotions they're out there with? Thank you. I think when it comes to the retail plus wholesale trade off, I mean, to us, wholesale is an important business line. It's a part of our core part and parcel of what we do. I think margin wise, I'd rather have the customer stay in retail, to be quite frank. I mean, that's where we make the highest margins. But then if I have to lose a customer, I'd rather gain that customer back into wholesale than lose them altogether. So from a margin perspective, on consumer side, margins tend to be higher. But we do retain the customer, retain margins when they stay in wholesale. That's how we look at it. And of course, wholesale is a business itself with relatively high cash conversion ratios, a relatively high margin as well. But in total, consumer first. But then if you lose a customer, I'd love them to stay on in the safety net of our wholesale business. And to that, our total market share has been about 50% for quite some time now. Yes. And in the fiber case, wholesale is very important. We're never going to reach 60% to 70% on our own. But supported by the other players, we believe we can. So already a long time ago, we anticipated on wholesale being important. And when we look into the broadband base of Telford, one of the reasons we said, okay, let's move to one brand is that there is an installed base of Telford being less profitable than broadband wholesale lines. So of course, yielding a network is super important, 52% connected via our access network. And like Chris said, we have a retail strategy. So of course, it is our first choice to keep them in retail. Your second question was on promotions. I wrote down. Yes. Was just the you mentioned in your release just some fairly active promotional activity in Q1 in the consumer segment. And also, you mentioned rural fiber operators. That's the first time I've seen you mention. I'm just really just wondering if you can give us a more detail on what's going on. Yes. Sorry. So yes, so by selecting a lot of areas, we also made a choice not to select other areas, for instance, super rural areas and some other initiatives popped up there, supported by external financials. And sometimes we meet such an initiative in an area. It is then our objective to come up to a deal that benefits both parties. And sometimes we succeed in that, then we make an access deal, we make use of the network with the option to consolidate it later in the future. And when we can come to a construction like that, then we think it fits in our access strategy to make such a deal. So with some of these players, we have a deal. And with some of them, we don't have a deal. And we're always considering and looking at opportunities. Great. Thank you very much. Next question is from Mr. Steve Malcolm from Redburn. Go ahead please. Yeah. Good afternoon, guys. Just two questions, which I think is what I'm allowed. First of all, just on regulation. Obviously, you had very good news from the Court of Appeal last month, but you did talk a little bit about the risks of symmetrical access being applied in the Dutch market. It's quite a new concept in the code. Can you maybe just sort of walk us through how we should think about the risks, the regulatory risks attached to that, how it could be implemented, what the hurdle rates are? I'm not sure that it's particularly clear whether SMP is one of them, so it'd be good to hear your thoughts on that and and whether the implementation of symmetrical access would have an impact on your decision to accelerate fiber roll out, that would be great. And also just to sort of maybe a a more strategic longer term question on COVID. I mean, guess, all of us, you've got a lot of employees working from home now, and the business, by the sounds of it, is operating extremely well. I mean, does this make you think longer term about your property costs and other costs in the business that may open up new sources of cost savings that we're not fully thinking about at the moment? Lot. Yes, to start with your second question, we have a crisis team in place. And the first weeks, they, of course, were focused on daily operations, business continuity, the health of our people and our customers. But now we have important work stream in place to see what we can continue to do and what we can learn post corona. Because what we find out is that we are super efficient in some ways of working, and we think it's a good idea not to leave that model or partly keep use of it. So I think in our distribution strategy, the way we use offices, the way we travel through the country, we organize meetings. There is a lot to learn from what we currently do in the COVID-nineteen situation, and I hope we can benefit from that. So that is an important one. And as a Board, we have a couple of working sessions for the coming weeks to discuss this in more detail. On regulation, it's new, like you said. This European electronic communication codes, Derek came up with. I think it is, in a broader sense, good for a lot of countries in Europe. If you pick one thing out of that, then that is that access obligation, and that is to any network in a country. If there's no economically viable alternative. And I think in some countries in Europe, that is important to introduce. So I think it's relevant. But in my opinion, it is not relevant for The Netherlands as long as we continue with our open network access strategy in a reasonable way, which we currently do. Of course, Barrick has to come up with worked out guidelines. Our government will try to accept something in this year, then our regulator is going to implement certain stuff, which will take three to six months. So probably they are working on something to implement mid next year. But I can tell you that we will make sure that on the European level, we will have good conversations on the guidelines and with our government and with our regulator on what the translation of these very guidelines should be to The Netherlands, how we look at things. And I'm pretty convinced that with our open wholesale access model, we can be an economically viable alternative as asked for by Barrick. Yes. I think what I understand is that, Steve, it's really different from the exemptive regulation based on significant market power. I mean, it's been driven by what's happening in Europe and some of the French dwellings where we want to have access to close to a customer, a rack in basement, which allows you to access the customers. I think it's understanding that it's about allowing someone to make a reasonable economic case if he or she is on your network on reasonable terms. And I think we have that because we have a fully transparent wholesale catalog open on our side that is accessible to our customers and allows our customers to have a viable economic business case. I think that's the one thing that's important. And secondly, the language still speaks about supporting the world of digital infrastructure and support the new regulatory framework should not hamper your investment into digital infrastructure. So it's different from what the market power driven regulation was. It's about maintaining and supporting digitalization of the country and about allowing third parties to have a reasonable economic model and business case whilst they're on your network. And we believe we have that at this point in time, a testament to our wholesale catalog and our wholesale client base. But again, the depth on the details, and we need to see how that works out. Sure. And and if they decide for whatever reason there is no economically viable alternative, do you have any color on the the economic basis for symmetrical access implementation? I mean, you're saying it's it's not ex ante. So does that mean you don't think it's cost base? Is it retail minus? I mean any color on that at all? Well, it's too early to tell because it's we are waiting for Barrick to explain in our guidelines what they meant with this. So that's all new for any of all countries. We cover 98% of The Netherlands with our network. And if not, then there's a third party fiber initiative somewhere in the rural areas. So I think in The Netherlands, there's always an alternative. And the question is, is it the economically viable? We say yes. And on the other hand, the implementation of Barrick guidelines and EU law should not frustrate the rollout of fiber, because that is a very important statement Barrick also made. So I think it will never be successful when someone is trying to implement guidelines or rules in The Netherlands that will frustrate rollout of fiber. So I think if we discuss this in a proper way in Europe, in The Netherlands, then we will not be hampered by these the implementation of this law. And just speculate, you mentioned other markets that it would affect. I'm thinking is it markets of large housing associations where there's effectively no competition for access? Or is that the sort of market you're thinking about that it could affect? Yes. In a lot of countries around us, there's still only one provider in areas. And there's probably more need for this kind of regulation than in The Netherlands. So in The Netherlands, we have cable and KPN. KPN with an open access network almost fully covering The Netherlands. So that's why we have such a strong third player in The Netherlands on our network. And if you look at our inflow on the wholesale side, it's not frustrating that player to play their parts in The Netherlands. And I think that's pretty convincing enough. The market speaks. So yes, but let's put it this way, we have one point five year to discuss this, debate this, but I'm pretty sure that we had a very difficult and tough debate with our regulator on cost calculation and dominant our dominant market position, etcetera. We won that one. I think this is less complicated, but until now, not super clear because it's all new, and we have to first wait for Barrick to explain their guidelines. Next question is from Ms. Nara Cristini from Morgan Stanley. Go ahead please. Thank you very much for taking my questions. I have two questions please. So firstly, a follow-up on the cost flexibility discussion. So clearly, plan does not change. You guys are keen to do more. I was I was curious to discuss a little bit the external factors, in particular, the health of the labor market. So in the past, you said that the good health of the Dutch labor market was supportive for the ability to reduce FTE, but also for restructuring costs as well, thanks to natural attrition. So now that we go to a different picture with probably unemployment pressure rising, how should we think about your ability to to reduce FTE in a way that you would like to to to push in particular in terms of negotiations with the unions? And then my last question, a quick question for Chris as a newcomer. So probably, I guess that there's a lot going on. But probably if you could discuss a little bit, the first impressions on the business, in particular, if there are any areas where you see scope to do things differently? Well, so yes, FTE reduction is we're convinced that we can move our whole company to a much leaner and meaner operating model. We're in the middle of that, and we will continue there. Until now, this moves in the right direction. We're a little bit ahead of the plan. We anticipate on a more difficult market than we experienced last year. But we learned a lot from last year, also to rotate more people internally than have strong outflow and a strong inflow, we still had a lot of people moving out and a lot of people moving in. But because of this difficult market, we learned ourselves to make more use of people being redundant in KPN to place them somewhere else. So I think all in all, we will reorganize this year and next year in a much more efficient way than we did in the past in general. We installed a hiring freeze to avoid that we do the inflow according to plan, but not the outflow. So that's an important one. And of course, we will continue to reorganize in a decent way, but also fair to our people. And like I said earlier in the call, we have a flexible workforce, a couple of thousand people we hire on a daily base. So if needed, we can take our measures there as well. I'm not sure how the market will look like in two or three quarters from now, but until now, we are doing okay. March was good as well on the reorganization side. So until now, we're okay there. And now to Chris, I'm very curious. Yes, so the famous last words, words of wisdom. Look, let me say first, I buy into the KPN strategy completely. I think we are going to continue on the strategy as we communicated. There are many things I'd like to maintain, especially the strong cost orientation. We've been very cost focused and successful in our cost discipline. I would want to definitely maintain that. You can count on me to do that. Would be a bit arrogant to say like I'm going to change this company. It's not. The company is on the right path and the right trajectory. I can relate different emphasis. Something on disclosure, I think you've seen that. Other areas of emphasis that I might be changing a bit would be so it would be a little bit return on capital oriented, so ROIC as a metric to drive decisions that we make and to spend more time on our cash management, especially working capital and cash flow management. Those are like the immediate topics on my mind. And then together with the team, see if the fiber opportunity that we see kind of manifest itself further. So no revolution, but evolution and slightly more different points of emphasis, but continue on the track that we're on. Okay. Thank you, guys. Good luck with everything. Thank you very much. Much. This was the last question for today as we our call has run well over time. If there are any further questions, please reach out to our Investor Relations team. Thank you, everybody, for joining us, and have a good day, everybody. Operator, you can close the call. Ladies and gentlemen, this concludes today's presentation. Thank you for participating. You may now disconnect your lines. Have a nice day.