Good morning, everyone, and welcome to Alisa's Third Quarter 2021 Conference Call. I'm Vesa Sahibirtha, Head of Investor Relations. And here together with me is a very familiar team, CEO, Veli Marti Martila and CFO, Jari Kinnonen. We start this meeting with a presentation followed by Q and A. And we don't have at the moment audience here, so we go straight to the conference call lines.
Welimati will go through the main points of the interim report, and Jari will focus more on financials. Now we are ready to start. So I give word to Welimat, please.
Thank you, Vesa, and welcome on my behalf as well. 3rd quarter was another good quarter for Bessasahayvierta. Bessasahayvierta. Our strong development continued by revenue growing by 6%, our EBITDA Service revenue was also increasing by 5.5% year on year. And in Finland, postpaid churn decreased to 16.3%.
Postpaid mobile subscription base increased by 53,000 700, of which machine to machine and IoT accounts for 38,600. Trend base was also increasing by 1800. And overall, the good momentum for 5 gs continues. Network covers, now over 60 Percent of Finn's, Elisa's network has the widest coverage in Finland, and we are in nearly 130,000 cities. The revenue growth was coming partly from acquisitions and our content partnership from Nordic Entertainment Group.
But of course, mobile services, Domestic digital service businesses as well as equipment sales increased revenues. And of course, the revenue growth and This revenue growth, of course, comes from 5 gs upselling, but also from upselling higher speeds in 4 gs. Contributing was coming mainly from B2B side since we have this one big public sector The contract where the different cities have moved to another operator during the past couple of quarters, now For the Q3, we see clearly less movement, and thus, this decrease in the mobile churn I really came from B2B side. And since we have had or we had some discussion in the Q3 conference call regarding to the operating leverage. I'd like to point out also a couple of things.
In Q3 'twenty one, our revenue includes low or 0 margin items that we did not have, And high equipment sales, altogether €12,000,000 If we exclude those, 3rd quarter revenue growth was 3.6 percent and EBITDA 3.4%. So there's really no change in operating leverage compared to Q3 'twenty. Mobile service revenue, entertainment business as well as equipment sales increasing the revenues And the traditional fixed line services are in decline as they have been for many years. EBITDA growth was 2%. In In the corporate side, the revenue was growing 8%.
CamLine acquisition contributing to this, but Also, the domestic digital services, our IT business as well as mobile services and equipment sales contributing positively. And again, traditional fixed line businesses and other fixed services contributed negatively. EBITDA growth We see a clear potential for additional growth. Our upselling continues in mobile side, now 5 gs driven driving, Of course, very much the smartphone penetration of the new kinds of smartphone penetration, that is 2% and 14% of smartphones are now 5 gs devices in our base. 80% of the voice subscriptions are at Meaning that there is movement not only to 5 gs, but also to higher 4 gs speeds in our customer base.
And And also the proportion of data bundles continues to grow. So the business model change that we have been doing over the years is I see that our 5 gs customers are most satisfied. In our Capital Markets Day in March, we gave some data. We do not Continue to give the data every quarter, but we can say that the same development and the same kind of difference we see continue to see with 5 gs 5 gs services, we have also launched for prepaid, and the latest operator study Shows that the Elesa's 5 gs network has the widest coverage in Finland. In our digital service businesses, Won the top prize for the best series at this year's Cannes International Series Festival, really good evidence of the Quality that we are producing with our original series.
Also, we have a season 2 of El Saiv, the original series, Norki, launch in September with really positive reviews, also was among the most popular content during the launch period. These two examples are showing the strength that we We have in our streaming services, Elisovide via Play when the market, of course, has many international competitors. And the competition is, of course, high, but our strength is really in the unique And widest set of Finnish content. In IT Services, we have we see Growing demand for identity management and speech recognition services that we do provide and also increased Demand for workstation and support services that Elisa provides, we see increased demand. In the international digital Services site, we launched the new brand for our industry software business.
We call it now Elisa Industry. And in the beginning of September, Tenfors joined Elisa Industry team and complements our offering with The EHSQ capabilities for operational risk management capabilities and digitalization of those to our factory customers. Calcukot again broke the threshold of going above 200 customers in electronics manufacturing and is Really making great growth in their product area. In Elisa Videra, we start to see Organizations to return to the office and the hybrid working really starting. There are multiple Global rollout agreements that we've done now with Microsoft Teams Rooms, and we are expecting 700 plus because of theme rooms to be delivered by the end of the year and with Vida's capabilities really to deliver Multi device, multi vendor solutions with high quality to customers seems to be a adapting to the new hybrid working capabilities by combining the video capabilities at the office and at the home office.
And then in regards to our outlook, we The outlook for macroeconomic environment has improved in Finland to somewhat some sense, competition in the Finnish telecommunications Market remains keen. Revenue will be slightly higher than in 2020,
Thank you. Let's first go to profit and loss. Q3 continued a good growth trend in revenues and earnings lines. Revenue growth, 6.2 percent or €29,000,000 If you take a Look to or breakdown of the growth. Maintenance sales in both segments was growing with €7,000,000 Service revenues in corporate customer segment was growing 11 €1,000,000 and mobile service revenues, both domestic and international Digital service revenues contributed positively, negative impact from €13,000,000 and mobile services as well as domestic digital service revenue contributing positively negative impact from traditional fixed line Voice Services.
And in terms of Equipment sales and meant cooperation, Revenues, which were altogether €12,000,000 and as mentioned by Velimatia, Growing with €6,000,000 or 3.4 percent to 100 €86,000,000 EBIT growth was €8,700,000 Or 7.8 percent to €121,000,000 EPS growth, €6 All in all, best ever earnings in Q3. Then if we move to Estonia with Continued strong performance, both revenue and EBITDA growing and revenue With 8.2%, mobile and fixed services growing as well as equipment Sales, EBITDA growth at 4.5%. In mobile services, growth driven by upselling A fairly low level, 8.9%. Then CapEx, which is in line with 12% From revenue guidance, reported CapEx in Q3, €64,000,000 Excluding license leases and acquisitions, EUR 60,000,000 Venues. Main CapEx areas, 5 gs network rollout and coverage Then moving to cash flow.
Q3 cash flow reported cash flow was €86,000,000 and comparable cash flow €89,000,000 Last year, €97,000,000 positive impact The impact coming from networking capital change driven by higher inventories and Higher taxes through higher paid tax advances and Higher interest paid interest, which was due to change in Timing of interest payments as a result of at €50,000,000 last year €255,000,000 And Then to capital structure and returns also continuing in line with Targets net debt to EBITDA 1.9 in Q2 So slightly down from Q2, which was 2x. Equity ratio 38.5 percent also in line with the target. And return ratios continued at good level driven by In financing, we did Renewal of committed revolving credit facility of €130,000,000 in Q3, new maturity, 5 years plus option for additional 2 years. And we did also include sustainability targets In the loan and sustainability grid for the pricing. Maturity debt maturity profile is well balanced and And average interest expense, below 1%.
And now I will give word to Vesa,
please. Thank you, Jari. And now we move on to Q and A. And we ask first question from conference call lines, please.
Thank Our first question comes from the line of Maurice Patrick from Barclays. Please go
ahead. Good morning, guys. Thanks for taking the question. Just a question on the B2B side. At the 2Q results, you talked about how businesses are delaying decisions on purchasing, but you are confident That would come up, come back.
It seems like it has this quarter. So can you talk a bit more about like the business environment generally for corporates? Are you seeing a change in behavior? Are they starting to spend again? Those dynamics would be very helpful.
Thank you.
Okay. Thanks for the question. We see somewhat kind of change in the momentum, not radical change, but there is a little bit of more Demand and more activity by the corporate customers. What we've seen, especially in the area of Videoconferencing solutions for Videera. See clearly, companies are coming back to the offices.
They understand that there's a need for video This is combined with the remote working employees. So we see somewhat Demand into that. Of course, there is also a bit of a challenge or, let's say, risk for many Companies that due to these supply chain challenges in the world that we have at the moment that Not all the screens and other equipments are coming on time, but that's a bit a separate topic of that. But Yes, in that front, we see some more activity. But I would say that there's still also hesitancy for companies to kind of be active Due to the kind of pressures that they experienced in the COVID and also Uncertainties, they still see a bit in front of them.
So we are not yet back in the new normal activity in the corporate sector, but there There's some improved situation.
That's very helpful.
At the second quarter, you also said that you didn't expect much increase in roaming in the second half. But your B2B contract ARPU seems to have improved about 5 percentage points sequentially. How much of that improvement was roaming? Was it quite material or
Roaming didn't have hardly any impact into that since still the traveling that We've seen a bit kind of restarting Easter traveling within Europe and the roaming revenues in the European travel are Very small, if any. We will start to see traveling starting to Americas. That may in November or December, that may give some help, but we are not expecting too much. Asia traveling seems to be very So the roaming revenues are still they are down. What has made the improvement in Corporate ARPU is really that we have been kind of shifting really low ARPU customers to one of our competitors.
Great.
Thank you so much indeed.
Sure.
And the next Question comes from the line of Peter Nielsen from ABG. Please go ahead.
Thank you. Yes, good morning, gentlemen. Just a question, Bedi Matzi, related to your comments 5 gs. You said that 5 gs is the first choice is customers' first choice now. What do you mean by that?
I'll be interested in how you see that. And also, what is driving the uptake of 5 gs at this point, given that we have no Sort of new 5 gs applications. Is it just the highest speeds as in 4 gs upselling? Any color on that would be much appreciated, William, Massie, given that you are one of the first operators, obviously, Okay. On 5 gs, and then just have you seen any demand for 5 gs solutions in the enterprise business, which we have spoken much about But seeing a little of to date.
And then just a third sort of small follow-up. You mentioned the supply side issues, And yes, I did as well. Have you seen anything in Q3 or towards the latter end of the quarter perhaps or any indication of any issues here to come? Thank you.
All right. Thank you, Peter Kurth. First choice means that, for example, for the devices, customers really go For 5 gs more than for other devices at the moment, that also turns the capability for us to Sell 5 gs more, so that's what we mean with the first choice. The uptake really is I. E, 5 gs itself.
Then we have, of course, many customers who understand that the higher speed is really something that helps them. But more and more, of course, the customers We'll experience just better kind of mobile connectivity overall. Let's say, the mass market doesn't care whether It's 5 gs or 3 gs or 4 gs or whatever gs it is as long as they see value by the improvement of the experience they have While utilizing various applications. And even if you have a decent quality and quite good quality with 4 gs, when customers are taking the 5 gs, they will still have, on average, better experience. Everything works much better in all kinds of circumstances where they are when they are mobile.
So that's kind of the driver From segment to segment, a bit different, but basically same source, higher speed and better service quality by that. And I'm kind of committed to explore and find, and there are great applications already visible. And then some companies are still a bit less active, but it is mostly a piloting phase still than that it would have been realizing to a extra revenue really much to us yet. But I believe that over There will be great applications which demand 5 gs, and that is driving the 5 gs in In Private Network Solutions, but also otherwise in the B2B environment. And finally, about the supply side question.
So far, we have not seen any Major impacts from the supply challenges, global supply challenges. But of course, the uncertainty is there. We all know How the containers are there's a lack of containers and many other things. So it may happen that there is Some challenges in terms of the deliveries, maybe delayed delivery times or so. But We, of course, trying to mitigate in different kind of actions beforehand, for example, having a bit higher inventories.
But like I said, so far, we haven't experienced any major challenges.
Okay. Thank you very much. I appreciate that color. Thank you.
Thank you.
And the next question comes from the line of Terence Tsui from Morgan Stanley. Please go ahead.
Yes. Thank you. Hello, everyone. I just had a question around your expectations for churn for the rest of the year. Obviously, as Finland fully emerges from lockdown restrictions and people get back to normal, Are you expecting like a particularly intense campaigning period for Q4 around Black Friday, Independence Day, Boxing Day sales, all of these special events, do you think it's going to be more intensive in 2021 compared to Previous years that have been affected by the pandemic.
Thank you.
All right. Thanks. I cannot give you really any Quantitative expectation for churn, but like you said, the Q4 is full of active Sales seasons or sales events, Black Friday, Singles' Day, Independence Day of Finland, We, of course, promotions, and we are expecting our competitors to be maybe a bit even overactive. So it is highly likely that the sales Costs for Q4 are going up. It will be an active season.
Like I said earlier, we are not driving the unnecessary Competition, but we are really prepared and expecting quite active season.
Okay. Thank you.
Welcome.
The next question comes from the line of Stefan Gauffelin from DNB. Please go ahead.
Yes, hello. A couple of questions. First of all, We have seen acceleration in machine to machine subscribers with 2 quarters at +30,000. And you mentioned last quarter that there are new devices and new services in the market. Should we expect Machine to machine, to continue to at this level?
Or has there been some special Items this quarter. And then on the mobile churn, if you exclude the loss of the large Corporate subscriber, is the churn level stable? And yes, so has the market situation been fairly stable? And then on Estonia, I've seen that the subscriber development has picked up in 2021 compared to previous years. What is driving this change?
It seems like you're doing better than your competitors in that market. Thank you.
In regards to this machine to machine IoT subscriptions, of course, It is difficult to say how the kind of additions or new subscription and And the growth will further develop. We are in quite early days of the, let's say, mass IoT The market yet, so there will be probably fluctuation in the demand, but we are positive that there will be more and more devices, more and more use Or different kind of cameras you want to have in different places, many, many different kind of sensors and so forth. So there is clearly a drive for A little bit to be said more in details. In terms of the mobile churn, we could say that If the kind of decline in this one corporate customer Kind of or the losses from the to 1 in 1 corporate customer segment or corporate customer contract, frame contract, if that Had been on the same pace as earlier quarters, the churn would have been pretty much on the same level as in Q2. So we had a deceleration The losses for that frame contract in Q3, meaning that to your question that, yes, the Competitive situation was pretty much overall on the same level in Q3 what it was in Q2.
Estonia, it is just that our Estonian operation is really doing a good work, Good development overall. There's no one silver bullet that would have made the growth to take place there, But there is high quality services, innovative services. Also, we provide the full service From fixed to mobile and also good video content there, also content that has been awarded original content also in Estonia. So there's various great developments that the organization in Estonia That's done and that's then the result.
Okay, perfect. Thank you.
The next question comes from the line of Sami Sarkomish from Nordea Markets. Please go ahead.
Virtan. I have two questions. Firstly, going back to the sort of more limited operating leverage at the Consumer Segment. I think you, to some extent, addressed this in sort of the prepared remarks, but Just wanted to understand, in Q2, we saw 4.5% EBITDA growth at Consumer. Now it was only 1.6%.
So where did the change come from? Did you, for example, have some Sort of high cost elements in the Q3 and how do you see this developing going forward?
Okay. You take 1 by 1. Overall, first, the quarters are a bit different. So you shouldn't draw a conclusion based on 2 quarters. There need to be further quarters to see what the real trends are.
But what I explained about the operating leverage overall, that, of course, reflects to the consumer segment, Especially, knowing that there is a lot of device sales and there's also this wire play cooperation. But Jari, maybe you can elaborate a bit, if you like.
Yes. Indeed, those impact Both of those and cooperation impacts as well as high device Sales in Corporate segment. Then it's really that Quarters are different, and we had some Marketing sales and marketing related expenses, for example, this quarter that were at a higher level.
Okay. That's we have to go back to 2016 before seeing you having Less than 2% EBITDA growth at Consumer. Then secondly, I would continue on the churn topic, Which was quite sort of good in the Q3 and came down from Q2. I think you said that most of this was driven by the corporate segment. But how did the development look at the Consumer segment.
And how do you expect the churn rate to develop going forward?
Yes. The improvement in churn was driven by corporate So it means that the churn in the consumer segment was pretty much same level as it was earlier So we are doing that. But there is intense competition going on in the consumer segment. And we are prepared for it. And we continuously improve Our productivity to keep our EBITDA growing like it was growing €6,000,000 now year on year.
Thank you very much. I don't have any further questions.
The next question comes from the line of Batra from Berenberg. Please go
ahead. Yes, good morning and thanks for taking my question. Sorry for coming back to this operating leverage point. I know you already discussed this. Just to sort of follow-up on that comment there about the higher marketing costs.
Could you maybe just give us a bit more color on How exactly that sort of flows through your costs? What is that money being spent on? And I guess, how do you sort of see that evolving, That marketing has been evolving over the next sort of few quarters.
Well, We, of course, like I said, have intensive competition in both in consumer and in corporate segment. And the it also at the moment or let's say, for a couple of quarters, we have seen quite of euros by our competition. We do respond to those because that's something we've said that we are not They're willing to lose customers based on price, so we will kind of respond to that. There's no easy way to get customers from Elisa in that sense. How much and which kind of sales and marketing cost we are putting our money?
Unfortunately, we are not disclosing in further details.
That's helpful. And did you see that situation changing anytime soon? Is it fair to expect that, that's the status quo for now?
Well, as I said earlier to earlier question, we Foresee that the Q4 is especially heavy with different kind of, let's say, sales events of single days and Black Fridays and so forth. So we expect the competition to utilize campaign money and promotion money a lot, and we are prepared to kind
That's very helpful. Thank you for the detail. Thanks.
You're welcome.
The next question comes from the line of Roman Abouza from JPMorgan. Please go ahead.
Good afternoon or good morning rather, and thank you for taking my questions. Sorry to elaborate on this operation operating leverage point, but I did want to return to it. Perhaps I will try and ask the question In a different way, if I look at mobile service revenue in absolute terms in 3Q 2021, Year on year, you've had an increase of €11,000,000 And I do remember a point that you used to make historically that Incremental mobile service revenues come with a 95% incremental gross margin. So I guess as the base case, 1 should expect all of this €11,000,000 to fall down to EBITDA. And yes, when we look at EBITDA, There is only around the SEK 6,000,000 increase once we factor in some of the M and A contribution, so organic increase of €6,000,000 So you lose about €5,000,000 And the question is, as you said, things vary quarter to quarter.
Some quarters you may incur more marketing expenses, for example. But generally, as a rule of thumb, do you think it's And given today your business models and your priority,
does it make sense to expect
Salute amounts in €1,000,000 of euros as opposed to percentages. So that's the first question. And then the second question is just around the Strong MSR growth momentum that we've seen this quarter. You're perhaps highlighting the 5 gs Has been one of the key drivers along with 4 gs and also some selected price increases. Is 5 gs now contributing The most about growth, do you think?
In terms of prior quarters, you used to say that plant use around 1 percentage point of growth contribution. It is now the bulk of that 5.5%? Thank you very much.
Okay. To your first question, I don't know where you got this 95% margin, if it's coming from has come from Then it's miscommunicated. Even if the MSR revenue is of high margin, it's a bit of an overestimation of this number. So this €11,000,000 is not turning all to EBITDA for the first. But of course, the MSR is generating good EBITDA and continues to provide good EBITDA.
Quarters are a bit different, so the Kind of total contribution is, of course, of our EBITDA growth dependent on also many other developments that we have in our different businesses. For the MSR and 5 gs contribution to MSR, like we said in the second quarter, Approximately 2 percentage points we get help from the comparable that in the comparable For quarter, we do not have roaming revenues like we do not have now. So it's easier by 2%. And the remaining It's coming from 5 gs.
Okay. Thank you very much.
You're welcome.
And the next question comes from the line of Panu Laidmaki from Danske Bank. Please go ahead.
Thank you. I have two questions. Firstly, on 5 gs. Can you comment on what is the penetration or the subscription number roughly Currently. And then secondly, on the competition, do I kind of understand it correctly that it has intensified somewhat?
And the question is basically that, is there a difference between 4 gs and 5 gs? Because it seems to me that the And the 4 gs pricing is we continue to see campaigns, and they might be even more widely available than previous like Previously, I had to go to the store, but now I can see it from operator websites by inputting my current phone number. But then do you see that 5 gs is still like less completed? Or do you see price erosion there as well?
Okay. In regards to 5 gs penetration, unfortunately, we rather say that we are making more money with 5 gs. For example, we do state that it is more than €3 per every customer we are gaining to 5 gs With higher Net Promoter Score, I. E, with higher customer satisfaction, also we reiterate that For the full year, approximately 1 percentage point of the full year MSR will be or there will be Approximately 1 percentage point positive contribution from 5 gs to MSR for the full year. So that's kind of the data we like to underline.
And unfortunately, for the time being, we do not disclose the 5 gs subscriber numbers, there is a good growth. And like I said also that we do not try to get all Additional value of 5 gs and when they are step by step or segment and segment, segment after The segment the customers are getting the realization of the higher value of 5 gs. They also are willing to pay more, and that's important for But the pace how we are getting customers is satisfactory and basically a bit above our plans. But this is the kind of disclosure of the number of customers, unfortunately, at the moment. In regards to the competition, We can say that the kind of straightforward gift card and promotion competition Might have increased during the year, not necessarily during Q3, but it has been maybe a bit higher level in the whole year.
Now like I said earlier, we expect that there might be some increase In Q4, because of these different campaign events, and that's why we assume
Thank you. Can I still have one follow-up related to the MSR discussion earlier? You said that out of the like 3.5% growth, About 1 percentage point came from 5 gs, but what about the rest of the 2.5 percentage point? Is this like the price changes or just the 4 gs upselling to higher speeds That's right in that.
Yes. Yes. Somewhat more than 1 percentage point came from 5 gs. And like you said, for the some of the price increases, but also the 4 gs upselling contributes to the rest.
All right. Thank you.
The next question comes from the line of Artem Beletski from SEB. Please go
ahead. Yes. Hi. Thank you for taking my questions. I actually have 3 to be asked.
So first of all, continuing with MSR discussion and this impressive 5.5% growth in Q3, could you provide some color on, let's say, Outlook for upcoming quarters, is it fair to assume that comparisons are still fairly undemanding when it comes to also, say, roaming impact and the 5 gs trends are There and to continue. Then the second question is relating to your corporate business. And indeed, the earnings momentum clearly improved In Q3 compared to last year and also looking at ARPU trends, so it has been better compared to What we have seen previously, is it basically the cycle of reopening effect as it is now becoming more visible there, So people coming back to work and basically consuming more data. And the last one is really to Jari, just On NAND related impact, maybe you mentioned in the call, but could you maybe quantify what was The amount in Q3 in terms of euros.
All right. Thank you, Artem. In Regards to the MSR and the outlook, like we've said, the only outlook we really give is that we have a positive number in the growth. But what we could say that for following quarter, it will be somewhere like We have had in the 2nd and third quarter. Then the corporate segment improvement, I would not say that it is about 3 opening yet.
The momentum is not that strong. We discussed earlier With one question about that, there is some kind of momentum for reopening, but it is more about our good development in mobile In our IT business in Finland, of course, Camlion also contributing, Camlion acquisition to the improvement. And then Jarek, please.
Regarding NAND contribution, it was approximately €5,000,000 in revenues. And as said earlier,
Okay, great. And maybe just to Jari, as a follow-up, relating to Nenssel, so it has been consistently €5,000,000 a quarter during this year, is basically the Q4 the last one when we should basically modeling Similar impact?
Approximately, so other than that, we had The 1 month in Q4 last year sort of consolidation. So 2 months not consolidated, but otherwise, yes.
Okay, Tam. Great. Thank you.
The next question comes from the line of Andres Sebasak from UBS. Please go ahead.
Hi. Thank you for taking my question. I have a couple of follow ups on the MSR trends, please. So you mentioned that 5 gs is the first choice for consumers today. Is there a number that you can put in terms of how what percentage of gross adds are coming in on 5 gs?
I know you said you wouldn't talk about the total breakdown, but at least in terms of the gross adds, that would be helpful. Could you also break down the contribution in terms of Service revenue in mobile from consumer and corporate, because you've done that for 4 gs and 5 gs. And then maybe 3rd question. I hope this isn't silly, but you said in terms of roaming that basically there's been or at the beginning of the call, you said there was no Impact year over year from roaming. So no kind of recouping of the €4,000,000 per quarter that you said is lost.
But then when you broke down the 5.5 percent, you said 2 of that is roaming. So how do those 2 kind of Piece of information reconcile, please. I don't understand that part. If you could clarify.
Okay. In regards to the MSR and 5 gs growth, unfortunately, we are not disclosing the cross adds neither. We focus on that We will we are making more money with 5 gs. That's what we are disclosing, €3,000 plus more per user and MSR contribution now a bit more than 1 percentage point for this quarter. The service revenue between consumer and corporate customers, that division, we are not disclosing either, unfortunately.
And then I give the Jari to respond to your third question about roaming.
Yes. In that 5.5% growth, roaming was neutral. So there was no roaming Growth in Q3. The 5.5% coming from asset 5 gs, 4 gs upgrades, price increase is also what we've been doing earlier.
Thank you. Can I just clarify then because you I think previously it was implied that out of the 5, the breakdown was Kind of 2 roaming 2 ish 4 gs and 1.5 gs? So can you just Without the 2 percentage points, can you maybe clarify that the breakdown would roughly equal The equivalent on 5.5% versus 3.5% somehow? Or Just to get that correct, please. Completely wrong.
But I believe previously you mentioned roaming was 2% of the 5.5%, but now you're saying there is no roaming in that 5.5%. If you're saying slightly more than a percentage point coming from 5 gs, then is the rest, which would be up to 4 percentage points Attributable to 4 gs then without the roaming impact? I think I'm confused with previous and current comments on roaming contribution.
Yes. If you are comparing Q3 to last year, Service revenue growth 5.5%. So it's in terms of roaming, there is from 5 gs, 4 gs upgrades and price increases.
All right. Thank you very much for confirming.
And the next question comes from the line of Andrew Lee from Goldman Sachs. Please go ahead.
Yes. Hi, everyone. Just another question on the margin trends. Can you just give us an idea on whether the revenue mix With organic growth going forward, is it deteriorating impact or a sort of supporting impact to your margin going forward? Thank you.
We have not basically given margin as our financial target as we change as you Remember, certainly, in our Capital Markets Day, we are going after 3% EBITDA growth, absolute It is, of course, important for us to drive margin as an internal parameter and To make sure that we are improving the efficiency, but our business portfolio is evolving so that We have, let's say, businesses where the EBITDA contribution is Essentially EBITDA contribution, potentially, is lower than in the telecom services. And this Kind of phenomenon has taken place already some time, but it also but it doesn't mean that we wouldn't Be very fierce driving our margin, EBITDA margin. But on the other hand, end of the day, what we are driving, we are driving the Cash flow and EPS growth, where you and how you see that the 6% revenue growth is It's turning to 9% EPS growth. So but the focus is not only in cash flow and EPS. It's, of course, also on the EBITDA margin, but for our kind of financial communication, we go for the EBITDA growth target, which we Now surpassed, for example, for this quarter being 3.6.
Thank
you. And we have one final question from the line of Adam Foxworthy from HSBC. Please go ahead.
Thank you very much. I apologize if this has already been asked to join a bit late. But you mentioned Rising competition in the mobile market through
the course of the year.
But I thought postpaid churn was actually particularly strong In the quarter at levels that we haven't really seen for quite some time. So notwithstanding the fact that you think competition will drive
a bit in the Q4,
Are you optimistic that perhaps churn levels are on a downward trend? Or I remember levels that were much lower than this several years ago. Do you think that's the way we're going?
From the corporate side, so the consumer side churn was pretty much stable. We are not giving outlook for the churn. It's not the 1st parameter we are optimizing when we are running our business. Of course, we are trying to have it as low as possible, but it is I would say that the churn levels probably will not change that much going forward. But what I said earlier about 4th quarter, a bit somewhat more intensive competition relates to these campaign days That we see or seasons that we see in the Q4 especially, and that's what we are anticipating But like I said earlier, for the sales cost, it may be a bit of a hiccup.
Thank you. If I could just follow-up, is there any reason to think that the 4th quarter activity levels should be Higher than they are because these holidays come around each year. Is the launch of a new iPhone This time more of a catalyst than it was last time to trigger behaviors?
In the Q4, we have the Black Friday. We have the Singles' Day. We have the Finnish Independence Day. We have the Christmas. We have also Finnish taxpayers are getting back their kind of if they Overpaid to the tax, they have money.
That's there are quite a few kind of commercial events in the Q4, particularly many. And we are used to have our competitors to try to be very active on those days, particularly in the Q4. That's what we see And we are prepared for and we highlight it now.
Okay. Thanks very much.
Just have another question from the line of Sehee from Citigroup. Please go ahead.
Hi. Thank you for taking my questions. I just have 2, please. And the first question, I want to ask if you can help us to think about The EBITDA contribution from the newly added services like from Kline and NAND. I think you mentioned in Q2 that the cost cycle, I think, quite different from Camlion and then.
So I wonder if you can talk about The EBITDA that you generated over the last three quarters and compared to the expected full year number, So do you think that there will be a much higher EBITDA contribution from those two services in Q4 compared to the 1st 9 months? And the second question, sorry, if I can go back to the operational leverage. I want to ask, when you look at consumers, do you see there is a higher equipment subsidies that you that's on that equipment In order to promote 5 gs and 4 gs. And also, I think you mentioned that sales cost is going to go up In Q4, given that traditionally is a highly competitive market season. But from a year on year basis, Should I think that the sales cost will go up in Q4 compared to Q4 'twenty because the higher competition you mentioned during the call?
And maybe there could be some hard comps versus last year because it was affected by the lockdown. Thank you.
Okay. If I start from your second question. For the first, we hardly have Any subsidies in the devices. So we don't have that in Finland really. In regards to the sales cost, We believe that the sales cost may go up year on year somewhat comparing to the Q4 'twenty.
To your first question, I didn't quite hear you were referring to 2 services and EBITDA contribution of those. So could you repeat which two services version of those. So could you repeat which two services? And what was your question related to that?
It's the CAN line and And also the net contracts. I think you mentioned before there will be some contracts, but then the cost, but then the EBITDA contribution could vary Across different quarters. So I'm just wondering for Q4, maybe we should think about higher contribution from those services compared to previous quarter just Simply because of the spread of the EBITDA cycle.
Thank you.
Okay. Yes. Okay. Camline and then the And Nordic Entertainment Group contribution. Jari, you maybe can give elaboration for that.
As Already referred earlier, the net cooperation contribution to EBITDA is 0 and and also in Q4. And CamLine, when we While the company, we set approximately €20,000,000 revenue €5,000,000 EBITDA annually. And so it is a minor contribution in Q4.
So should I assume that it's the EBITDA contribution is more of evenly spread out Through the 4
quarters. It's slightly back end loaded, so Second half is slightly better, but it's not a big difference. So it's Between €1,000,000 and
€2,000,000 That's
very clear. Thank you very much.
You're welcome.
And we have just a follow-up question from Andres Sebesik from UBS. Please go ahead.
Yes, thank you. One short follow-up please, if I may, on the corporate Segment. So you mentioned a couple of potentially kind of special effects as consumption was delayed over the past year, year and a half And coming back strongly now, you also mentioned in your guidance that the macroeconomic environment is much more constructive in Finland. And I guess at the same time, you mentioned potential supply issues, which could have a kind of, I guess, impact of corporate's pre purchasing Pre installing some solutions. So if we kind of strip out these 2 potential impacts that potentially came together and it's quite First of all, do you see that?
And if so, what's kind of the run rate without that and the normalized run rate going forward, say, Over the next year or so in the corporate segment.
I'm sorry, I didn't quite hear that excluding what You would like to hear the run rate of Corporate segment.
So you mentioned that there is some Delayed consumption from the past year, year and a half, that is coming back now in the Q3. And then you also mentioned some potential supply chain issues, which you said, I guess, customers are kind of implementing solutions potentially ahead of Usual schedule. So if you could maybe elaborate on the impact that led to the very good numbers in terms of corporate Performance this quarter. And then implicitly, what the kind of base run rate without those two impacts would have been? Thank you.
I'm
Bessar Sahibirtan. I'm sorry, but in that detail level, it's a bit speculative to give any numbers. And we are not going into that disclosure level. I'm sorry.
Okay. Thank you.
Welcome.
And as there are no further audio questions, I'll hand it back to the speakers.
All right. Thank you for your questions. We hope you all have a productive reporting seasons. Have a nice day, and goodbye now. Thank you.