Good morning, everyone, and welcome to Elisa's First Quarter twenty twenty one Interim Report Conference Call. I'm Vesa Sahe Virta, Head of Investor Relations. And here together with me is a very familiar team, CEO, Veli Maktimartila and CFO, Jari Kinnoren. Also, the agenda of today is very familiar. We start with the presentation followed by Q and A.
And in Q and A, we go straight to the conference call lines because we don't have any audience here due to this COVID situation. We are ready to start so I give word to Wellimak. Please.
Thank you, Wesa, and welcome to Elisa's first quarter twenty twenty one interim report on my behalf as well. We had a good quarter, the first quarter of this year according to our plans. And revenue was growing by 3%, while EBITDA was up 2%. Mobile service revenue increased by 0.9 year on year. We still have the full impact of lack of roaming due to lack of traveling, impacting especially in the corporate side, but overall in the business.
Our postpaid churn decreased a little bit to 18.3% from 19.8% in the fourth quarter. There was maybe a bit more restrictions for the quarter for people to move around, and we have a bit less traffic than normal in the retail channel. Postpaid mobile subscription base increased by 27,100, of which M2M and IoT subscriptions were 48,700. Fixed broadband subscription base decreased 31,400 this quarter, mainly due to the reporting change and also discontinuing of subscriptions in the rental local loop business. We had a good momentum in five gs to continue.
And our network at the moment is covering approximately half of the fence in over 80 towns and cities. Revenue growth was coming mostly from our acquisitions and cooperation activities and businesses having cooperation And also, mobile services was growing as well as domestic digital services and equipment sales. Those were contributing positively. Mobile service revenue growth, of course, had impact from lack of roaming, but the upselling continues and also the product changes that we do time to time also contribute to the positive development. In EBITDA, revenue growth, of course, is positively impacted as well as the continuous improvement of our operations, quality first in mind, but productivity improvements bearing to efficiency and profitability improvements.
The competitive intensity remains pretty much on the same level as we've seen in the market, a lot of campaigning time to time, also different kind of gift cards and things like that. Competition remains pretty much on the same level as said as previous quarters. In the Consumer Customer segment, revenue was growing by 4%. Elisa Widewireplay Corporation as well as mobile service and equipment sales contributing positively, roaming and traditional fixed line services having negative impact. EBITDA was having a 7% growth.
In the Corporate Customer segment, revenue was growing by 1%. Positive contributions from CanLine acquisition, domestic digital services as well as from equipment sales and roaming, which impacted more the corporate segment than the consumer segment having negative impact and also fixed and mobile services having a slightly negative impact. EBITDA was minus seven percent for Corporate Customer segment. We continue to execute our strategy, and we are inspired by our mission to create a sustainable future We have selected six of the 17 United Nations Sustainable Development Goals as the areas where we can clearly contribute with our activities to create sustainable future.
And of course, digitalization is the mean how we can contribute to this positive development. We focus on the three strategic focus areas, which all have great potential for improved and larger results. Upselling of mobile services, higher speeds that continues. 91% of our customers for the first have now a smartphone in our customer base. The penetration of smartphones continues, and now 7% of the smartphones are five gs capable.
Not all the five gs capable devices, however, have five gs subscription, but that's, of course, one driver for the growth for five gs to have the equipment base for the for five gs subscriptions and services. We have now 79% of our customers in four gs or five gs speeds. But in the lower level of four gs speed, the number of customers is decreasing, which is indicating the change of customers upwards in the speed tiers. So upselling to higher speed continues as it has done quite some time. We have now 2,500,000 Finns under coverage of our five gs network.
And our five gs network has the widest coverage in Finland of all the five gs networks. It is very clear now with the pandemic that remote working has become one of the main drivers for utilization of five gs, but we have several different applications and use cases driving five gs overall, the improved customer experience being, of course, the main one overall. We estimate that by 2023, five gs network usage will exceed four gs networks traffic. And five gs customers' Net Promoter Score is growing in both voice and mobile data subscriptions and it is higher than the non-five gs customers' Net Promoter Score, indicating clearly that we are creating additional value with the five gs upgrade to customers, which we can also benefit by having higher ARPU on average from five gs customers to compared to non-five gs customers. In our digital service businesses, in the domestic side, our Elisa IPTV Entertainment business is moving ahead in many ways.
For example, we have launched two new original series. And also, we have got really good success and popularity for the series we have. For example, this Pohlalaki, Loss of the Man became the most watched series Elizabeth Epi ever during the first quarter. We have also had our contents to be sold abroad. Overall, we have been selling now already to 50 countries the original series and our content.
But we also made several deals with several TV channels in Great Britain, for example, for the series of all the Sins Room three zero one, Bullets and shadow lines. In the IT side, one area we have been focusing on and creating progress very well is that we have been developing Finnish natural language processing capability, which provides world class accuracy. And we have launched a speech robot service, Elita Poepotti, for example, to help customers, for example, to automate their customer service. And this world class capability is trainable by customers' industry specific vocabulary, which is unique feature that customers can even further improve the capability of this Finnish natural language processing capability. In International Services, our virtual NOK automation service is selected by Transthema with a cloud based solution.
And Telefonica, for example, is testing automation solutions in its global transport SDN network laboratory. In the industrial software side, we announced an acquisition of minority share of Zedapta Group, which is specializing in digital supply chain and smart manufacturing, leading that to having over 1,000 manufacturing industry customers for Elisa's AI M and L Smart Factory solutions. The uncertainty in the macroeconomic environment is still prevailing. Unfortunately, even if we see some light in the tunnel in regards to the pandemic development, the uncertainty still seems to take place quite much by especially in B2B customers in customers. Competition in the Finnish telecommunication markets remain key.
We reiterate our guidance for this year. Revenue will be slightly higher than 2020 and comparable EBITDA at the same level was slightly higher than 2020 and our CapEx maximum 12% of revenue. Now I ask Jari to continue, please.
Thank you. Let's first look at profit and loss. Q1 was continuation of both revenue and earnings growth. Revenue growth 2.9%, €13,400,000 And inside that growth, there was a negative impact from interconnection and visitor roaming, minus €2,000,000 Equipment sales was growing in both segments, altogether €6,000,000 Services in Corporate Customer segment, adding everything together, minus €1,000,000 And of course, outbound roaming impacted negatively to both customer segments. There was also negative change in mobile and fixed services positive change in both domestic and international digital services in corporate segment.
Consumer customer segment mobile services growing as well as digital services, a negative impact from traditional fixed voice. In expenses, Materials and Services, growth is driven by equipment purchases increasing as a result of equipment sales growing. In employee expenses, more than half of the increase is due to Camline consolidation. EBITDA growth was 2.4% to €170,000,000 Depreciation slightly higher than last year. EBIT 3.1% and EBIT margin 21.2%.
Financial expenses decreased by €1,000,000 mainly due to refinancing of €174,000,000 bond in January. And all this translated to EPS growth of 4.7% to €0.51 in Q1. Similar trends continued also in Estonia. Both revenue and EBITDA improved and revenue was growing 2.3%, Services and Equipment sales growing. EBITDA growth was 4.9% as a result of revenue growth and cost savings.
Mobile postpaid subscriptions continued to grow this quarter. Growth was 5,300. Prepaid subscriptions decreased almost the same number. And CERN continued at relative low level at 10.5%. Then CapEx reported CapEx was €53,000,000 and excluding shares and lease agreements 48,000,000, which is same as a year ago.
Consumer segment EUR 32,000,000 and corporate segment EUR 20,000,000. And main CapEx is, of course, five gs network rollout and coverage increases some four gs investments and other network and IT investments. Then cash flow reported cash flow was €50,000,000 and comparable cash flow €60,000,000 Year ago, it was 73,000,000 There was negative impact from net working capital change, also paid taxes slightly higher and positive impact from higher EBITDA. In net working capital change, inventories were higher as a result of better availability of equipments of certain suppliers in payables, lower payables as a result of operating expenses lower and roaming as well lower. Also end of last year, we had somewhat higher than normal receivables payables amount.
Sorry, comment was relating to payables and not receivables. Operating operative cash flow conversion from EBITDA continued to be high at 71%. Then capital structure and returns. Capital structure continues within target range. Net debt to EBITDA, 1.7% equity ratio, 41%.
Return ratios continued at good level. Return on equity, 9.2% and return on investments, 16.3%. And liquidity position is end of Q1 strong, and cash and committed limits were EUR €574,000,000 In terms of financing, as mentioned, we did refinancing January regarding €174,000,000 bond at lower interest. And as a result of that, there is approximately €4,000,000 positive impact at annual level in interest expenses. Also, we issued a new Schuldschein loan, hundred point four million days short term loan, and we managed to get that first time at negative interest rates.
And currently, average interest expense as a result of these transactions is below 1% on interest bearing debt. AGM earlier this month decided on dividend 1 point euros 9 per share and total amount €312,000,000 that was paid yesterday, which is payout ratio of 95% and represents dividend yield of 4.3% against the share price end of last year. Also, AGM decided on EUR 5,000,000 share buyback authorization to the Board of Directors. And now this is seventh consecutive year of growing distributions and underlying strong long term commitment to competitive shareholder remuneration. And now I give word to Wesa, please.
Thank you, Jari. And now we move on to Q and A part, and we ask first question from the conference call lines. Please.
Thank you. And our first question comes from the line of Mick Lila from Subgen. Please go ahead. Your line is open.
Good morning, everybody. Hope you're well. It was a question on B2B, please, if that's okay. You sounded quite downbeat or a little downbeat at least when you gave the guidance, but the B2B numbers seem to look a little bit better. Certainly, on the corporate subscribers in mobile, they still look strong.
So has there been any change in the background on competition? And on ARPU, corporate ARPUs, they seem to have stabilized in Q1 as well. So it seems a little bit early to talk about the annualizing of the COVID impact. So is there an underlying improvement so far in the ARPUs, please, in corporate?
All right. Thank you for your question. In regards to B2B, yes, we have relatively good development there in B2B segment. In terms of the subscriber numbers, we think we have kept pretty much the market share. I have to remind that going forward, we have this one public sector deal that we lost last year, low ARPU customers, however, financial impact being quite small to us.
So going forward, there will be some reduction in the number of subscriptions due to that during this year. But overall, we think that the subscription amount of subscriptions remains pretty stable overall pretty much going forward. In terms of the ARPU, yes, we see, of course, the impact from five gs and upselling also visible. But still, the uncertainty that exists in the market due to this pandemic development and when and how the exit of the from the pandemic will take place still creates uncertainty to quite a few customers, especially in B2B side really. And going forward, that, of course, still pressures somewhat the kind of P2P business in terms of the timing of projects.
There are delays from the projects, which also has some impact in the mobile side. But the underlying development with the upselling of higher speeds, providing more value with five gs and its speeds as well is, of course, on good progress.
That's great. Thank you.
Thank you. Our next question comes from the line of Peter Kurt Nielsen from ABG. Please go ahead. Your line is open. You can go ahead, your line is open.
Sorry, I just needed to unmute. Thank you very much. Good morning, everyone. Just a question, please. The EBITDA growth is slightly below revenue growth.
Anything you care to elaborate on there, William, actually? Is it the new acquisitions, which has perhaps slightly diluted? And also, could you give us any indications on what uplift you anticipate in the coming quarters from the annualization of the roaming impact, so to speak? And whether the uplift you have seen or mentioned at Capital Markets Day, five gs services expected to increase mobile service revenues 1% roughly this year, whether you have seen a similar impact in Q1? Or I would anticipate that will mainly come in the second half of the year.
But any additional flavor on this would be appreciated. All
right. There are no specific things making EBITDA to grow a bit slower than the revenue this quarter. Of course, we have this Elisa Wide Entertainment cooperation with Nordic Entertainment Group, where we get some €5,000,000 of revenues per quarter, but the EBITDA impact is close to zero from that. So that is, of course, one dilutive thing. But overall, quarters are a little bit different time to time, but there's no specific reason for the EBITDA to grow slightly less than the revenue.
Just to remind that EPS had a 5% growth during this quarter, which, of course, is even more important than EBITDA. Uplifting things in regards to the roaming, still, we believe that traveling will not take place too much on second quarter neither in the third quarter. That's our estimate even if there are already good exit plans and actions taking place in different countries. But still, we believe that the kind of increase of the roaming revenues from the close to zero what they are today doesn't take place on second quarter and not so much on third quarter either remains to be seen. There is some uncertainty with that.
Of course, when we look at the year on year comparison, second quarter already last year, we had negative impact of roaming to come pretty much down. So that comparable is easier. However, we got also in the beginning of the pandemic special, I would say, onetime revenue due to the usage increasing in the early days of pandemic in those subscriptions where we didn't have unlimited, it was usage based. We saw some kind of peak some improvement there, an intermediate improvement, which, of course, helped last year's second quarter. But in terms of the roaming revenues, the comparable is now different than what we had this year.
Five gs, we reiterate that we see approximately 1% impact this year for MSR. Five gs is gradually building up the five gs business. And as said, 7% of our mobile devices right now in the network are five gs capable. Number is increasing. More than half of the devices we sell at the moment are five capable.
So the base and our opportunity for selling and upselling five gs is getting larger for us, and we are moving according to the plan like we've said.
Thank you very much, William.
You're welcome.
Thank you. Our next question comes from the line of Aten Beletsky from SCE. Please go ahead. Your line is open.
Yes. Hi, thank you for taking my questions. I have actually two to be asked. So first of all, when it comes to digital services and growth of 12%, in Q1, taking out the impacts relating to NAND, as you mentioned, was 5,000,000 and presumably some impacts relating to Camelion, it seems to be that underlying growth has been roughly flattish. Is it a fair calculation?
And has there been some lumpiness in the business that has been impacted basically Q1? Then the second question is related to the supporting changes when it comes to subscriptions, basically some shift from fixed to mobile. Did it have any impact on growth numbers when it comes to basically fixed networks revenues and mobile service revenues in Q1? Or will it seen basically going forward only?
All right. In regards to the digital services, we had good development overall with the digital services. But we can say that in the B2B side, especially in some business areas like in the videoconferencing, we see saw even year on year decline due to the projects being delayed by customers. So we see still some customers in the B2B segment to delay projects, which has some impact to B2B numbers overall, but also to the Digital Services numbers. But the overall development is good.
We haven't really lost kind of market share or deals. But it is those delays that impact somewhat to the digital services development in P2P side. But overall, momentum is good. For the second question, I ask Jarri to give some highlight on that.
Yes. Regarding reporting change in subscription numbers in fixed broadband, the financial impact is very minor. So there is, in practice, no financial impact. But it is an well, correcting the subscription number reporting according the right definition of fixed and mobile is. But said, financial impact, very minor.
Maybe just a quick follow-up on this latter question. Could you maybe provide some color what type of ARPU customers also have been basically in line with mobile postpaid? Or is it high or lower?
Are you are you referring to which customers? Sorry.
Oh, basically, those customers which have been from reporting level, been shifted from fixed to mobile?
It's an average ARPU that in corporate segment customers do have. But it is already calculated before this subscription base change so that the earnings sorry, the revenue is accounted in the mobile. So this change is only correcting subscription number, and the financial impact was already in line.
Our next question comes from the line of Terence Chu from Morgan Stanley. Please go ahead. Your line is open.
Hello, everyone. Thanks very much for the presentation. I just wanted to pick up on the earlier comments that you made around the corporate segments. In particular, can you just give us a bit more detail behind the EBITDA decline this quarter of 7%? You mentioned the decrease in roaming revenues.
I'm just wondering whether you can quantify how much was roaming, how much was the delayed business activity that you've mentioned earlier on this call And whether you think we should see some stabilization in corporate EBITDA as the comps get a bit easier for the rest of the year? And then my second question was just on Estonia. Just what's the latest there regarding the network and the use of Chinese vendors and whether you're progressing with a swap out of the network there?
All right. Thank you. In regards to the corporate segment EBITDA, yes, the roaming has still a negative impact to the Corporate segment especially and driving the negative development for the most. Then like I said, in some digital services, we've seen postponing of projects like in videoconferencing also impacting somewhat negatively to the EBITDA. In corporate side, we believe that as long as we get the pandemic situation to get improved some point in time.
There is, however, uncertainty how the timing really plays out. But we believe that these uncertainties in the projects of various kinds in P2P side will be resolved, and we will get more to the normal level. So in that way and also in regards to the roaming, we should start to see less negative impact from roaming going forward now in the corporate segment as well. In Estonia, the government has been very busy on handling the very difficult pandemic situation in the springtime. They are working on the five gs license conditions and terms and conditions there.
It seems that there will be kind of a de facto ban for Chinese vendors. There's no decision yet, but what has been discussed that five gs equipments can be used till 2025 and the four gs equipments of from, let's say, Chinese vendors can be used till 02/1930. And with these kind of guidelines, we, of course, need to do some changes at some point in time, but the financial impacts are not anything major in the ELISA context, remembering that Estonia is less than 10% of our investments. And also, we can mitigate with the transferring period this change out. Also, we have discussion ongoing since this is really a government decision to kind of ask us to take out some equipment that still have time to be used, that was the compensation the Estonian government can provide to us, that's also still under discussion.
That's great. Thanks for the color.
You're welcome.
Thank you. Our next question comes from the line of Andrew Lee from Goldman Sachs. Please go ahead. Your line is open.
Yes. Good morning, everyone. Apologies. I have three questions, but hopefully, they're all quite brief. The first one was just international digital services business, where you mentioned in the telecom software part that Telefonica's testing automating solution automation solutions with you.
Is that the same part of the business forgive me if I'm getting this incorrect. Is that the same part of the business that you sold some services to T Mobile to that you highlighted at your CMD and also to a Swedish operator? And if not, how is that efficiency or network efficiency services business going? Any more contracts signed there? Second question was just on the corporate segment around competition.
I know there's some a bit of low end price competition from TelenorDNA there. And just wondered how much traction that's getting and if we're seeing the full impact of that in this quarter's results or if that should hinder more in the second quarter? And then last question is just a clarification. So while five gs should continue to help accelerate revenue growth this year, and you reiterated your percentage point boost comment earlier. Did I understand correctly that you're saying that we may not see much of an acceleration in the second quarter because of tough comps from usage benefits from a year ago?
Thank you.
All right. Thank you for your questions. First, in regards to the IDS and this Telefonica thing, what we cooperation that we do with Telefonica, actually, it is a bit of different automation solution that we sold to T Mobile and to the Swedish operator. It is to a different part of the network. So it is an additional offering that we have developed.
And Telefonica is one of the first to test that, which is, of course, expanding our offering, let's say, organic offering that we have developed at ELISA in the IDS. So that's why it's also very remarkable that for another part of our offering, we get a world class reference hopefully soon, really after their testing. The also in regards to the competitive situation in the corporate segment, yes, we do have a quite fierce competition there, not only in the large customer segment, but also in SME side. Competition, of course, belongs to market economy. And so we see time to time quite fierce pricing, especially in the four gs domain.
They are kind of not maybe list pricings, but they are time to time happening. And we see without mentioning the names of competitors, but we see at least one competitor being quite active there, obviously, having pressure for their subscription numbers. And but we focus on providing good value, good quality to customer, additional customer perceived value that we could have customers to be selecting Elisa also going forward and also to be paying a bit more than for the competitors' services. However, saying that, of course, we cannot disregard the, let's say, pricing aggressions or so from the competitors. Time to time, we are matching that.
That is something we have been doing over the years already now. But we do set that competitiveness at the market. There hasn't been really change if you think about first quarter in this competitive activity versus what we saw last year. But it is, of course, good to understand that that is, of course, also pressuring the B2B segment always. In terms of the five course, something that is growing and bringing additional growth for mobile service revenue growth numbers versus what we had second quarter last year.
We had, of course, the roaming decline already have taken place in the second quarter last year. But these additional usage based things, they helped especially the, let's say, the profit of second quarter. So we didn't get hit to our profit and result in the second quarter even if the roaming went down and impacted negatively. But there was some balancing revenues for second quarter last year. So that way, the comparable is different.
But in terms of the mobile service revenue growth, the comparable is now for the second quarter a bit different what it was for the first quarter.
Thank you. So should that mean that we don't get to see or is that a headwind that offsets any kind of tailwinds from five gs from greater five gs take up? Should we expect to see some kind of acceleration in the second quarter? Or is it a second half thing that we need to wait for?
It remains to be seen how the five gs acceleration takes place. We think that we have a good momentum as we speak. But it's, of course, a function of many factors like how the coverage will be build out, how the devices can be sold and some other factors. But there is a good momentum of customers, more and more customers moving to five gs. And as said, the Net Promoter Score for five gs customers continues to be higher and developing positively.
So there is clearly a better experience we provide with five gs to customers, and that is of value of money in the value capture side for us.
Thank you.
Thank you. Our next question comes from the line of Stefan Gurfin from DNB. Please go ahead. Your line is open.
Yes. A few short questions. First of all, could you just provide the number of broadband subscriptions that was moved to mobile? Secondly, last quarter, you provided that you had reached close to 200,005 gs subscribers in Finland. Could you provide us with an update on that number?
And then thirdly, if you could provide Camline contribution on sales and EBITDA so we can calculate organic growth. Thank you.
You're welcome. For your first and second question, unfortunately, we do not disclose any further numbers, not to the number exact number how many we moved to mobile, neither what's the update for five gs. What we can say about the five gs is that we are getting more customers, but we are getting well paying customers, more than EUR three more ARPU per on average for five gs customer than for non-five gs customer. And that's what we are really looking for rather than optimizing just the number of five gs customers. We could swap the customer base of four gs customers to five gs customers overnight if we like to, but we would not make any additional revenue.
So you understand that our logic is more towards the revenue than revenue increase than to the number of five gs customer increase. But that's kind of the situation. In terms of the for your first question, still coming back to that, the majority of the 31,000 what we lost in the fixed broadband, Majority of those customers were moving to mobile, but the exact number we are not disclosing. In terms of the CamLine sales, it's approximately 20,000,000 on annual level and EBITDA approximately €5,000,000 on annual level.
Thank you.
A
small comment to CamLine EBITDA. It's there's quite strong seasonality. Much of the approximately €5,000,000 EBITDA is in the second half.
Okay.
Thank you.
You're welcome.
Thank you. Our next question comes from the line of Sami Sakamyas from Nordea Markets. Please go ahead. Your line is open.
Hi. I would still have two questions. Firstly, are you seeing any impact from component shortages thinking of your rollout plans? For example, it's been reported that both fixed and fixed wireless home routers are seeing very long delivery times at the moment? And then secondly, on sales mix, what drove high equipment sales in Q1?
What's the stress about the new iPhones becoming broadly available or something else?
Okay. We have seen, let's say, some indications of potential impacts due to these component shortages. We haven't really seen strict impacts as we speak now other than maybe some game consoles delivery time being quite long at the moment. But there are some dark clouds that we may have some impacts to certain, let's say, equipments that we need to have for our subscription products. No major impacts visible, but some impacts, especially in the second half of the year, may take place, remains to be seen.
Your second question, can you repeat? I didn't quite capture what was the essence of that.
Yes. So just wondered what drove high equipment sales in Q1. Was that about the new iPhones?
Okay. Well, for the first, we have good equipment sales, especially the device smartphone sales machine, if you will. We are very large sales channel to Finnish market. But there was no specific one thing influencing on the device sales up. Of course, we have, like I said, the iPhone now quite new still to the market impacting positively, but that was not the kind of only reason at all.
Okay. Thanks.
Thank you. Our next question comes from the line of Phoebe Yi from Citigroup. Please go ahead. Your line is open. Hello, and thank you very much for taking my questions.
Actually, just two small clarification, please. And the first one is on your b two b. I think you said that the the subscriber numbers is impacted by the fixed to mobile reporting shift. So if I took that majority of the fixed broadband decline is shipped to mobile, that would imply that your b two b subscriber as my house seeing some decline this quarter. Should I think that the public contract losses have started to having an impact of your sub subscriber trends in b 2 b?
That's my first question. And the second question is just on a follow-up on the on the equipment sales growth. I was wondering whether you could give us some indications on what percentage of the customers are taking the five gs subscribers so that we can have an idea of how we should anticipate the impact of five gs going forward? Thank you.
All right. Thank you for your questions. In regards to the B2B side, yes, we have seen, if we take away this fixed to mobile transfer, a slight decline in the amount of subscriptions in five gs in B2B side. Going forward, we will as I said earlier, we will see maybe some impact because there was quite a big private public sector deal that we lost, which will take more place. It has already started, so we may have seen some losses from that in the first quarter, but it will be more during the rest of the year.
But again, like I said, the financial impact of those losses are quite small, and we can mitigate that those by some with some other deals. We don't disclose really the percentage of five gs device buyers, how many of those are taking the five gs subscription, but it is a good number. We are selling the bundled or not bundled, but at the same time, the five gs subscription as well as device at the same time with good percentages. But unfortunately, we are not disclosing the number. That number is going up also.
And of course, it is valuable for us to have five gs device base where even if there is no five gs subscription yet because our, let's say, selling machine is, of course, meeting the customers in different ways to get them also the subscription in due time.
That's very clear. Thank you very much. Thank you. Our next question comes from the line of Abhilash Mordhatra from Berenberg. Please go ahead.
Your line is open.
Yes. Good morning, and thank you for taking my question. I just want to come back to the sort of proposed change in the maximum contract length. I think that there was a proposal to reduce that from twenty four months to twelve months last year. Just wanted to check if that's something that's actually been implemented.
And if yes, what impacts you're seeing from that? Thank you.
All right. Yes, that regulation has taken place. It's maybe a bit early days to say which kind of impacts that has had. But as said, that is improving the customer satisfaction overall to the industry because there was also not only this change of the maximum length, which is, of course, important, but the more important where these, let's say, practices that operators can have and should have while, let's say, acting with the customers when customers' contract period is ending. And if the customer is changing an operator, how this, let's say, locking of the customer is not done in a customer unfriendly ways.
So those parts of the regulations are more important. And it remains to be seen how that impacts to the market.
That's helpful. And if I just recall correctly, it's obviously something that you don't expect to have a sort of negative impact on your business because you don't have customers under fixed contracts?
We rather see that that's a positive thing for Elisa. The quality and customer satisfaction has been the main driver of our business not to create unhealthy stickiness with the customer relationships, which then are spoiling the whole industry reputation. So that's why we like this regulatory change, and we believe that it fits very well to our strategy and should be neutral or slightly positive for us.
That's great. Thank you.
Thank you. Our next question comes from the line of Adam Franschromley from HSBC. Please go ahead. Your line is open.
Thanks very much. Good morning, everyone. I wondered if I could ask you to make a comparison between the upselling of four gs and your expectations for five gs, please. So your presentation mentions that you think the majority of your traffic will be on five gs by 2023. Do you think that the €3 price premium can be sustained until then?
I guess, did you see a realized ARPU premium for the first three years or so of four gs sales, for example? And then secondly, a question on working capital. I just I think you mentioned this in your presentation, Yari, but was Q1 an unwind of Q4 or a partial unwind? Or do you expect more of an unwind of Q1 and Q2? Okay.
I'll take the first question, and then I'll ask Jari to respond to your second question. In regards to the upselling of four gs and versus five gs, the more than €3 average difference and higher revenue we get from the customers with five gs, whether that will continue over time. That's, of course, our target. And our target, of course, is to even have higher difference. But of course, it is a function of many factors, one being very much of the competitive rationality in the market.
We see that customers are getting more value based on the measurements that we do with the Net Promoter Score. So there's a rationale why customer would pay and why they are paying and willing to pay more for five gs than four But then again, of course, the competitive situation is also a big factor in this. So target is yes, but then we it remains to be seen. Even if we are reporting this continuously, the ARPU difference, we certainly will return to that in the later stages. One, we need to remember also that five gs is not just the one step forward or one stage from four gs to one level of five gs.
There will be additional speed tiers in five gs, also additional quality improvements to the customers. We get to the stand alone five gs where the delays can be much lower. We will have slicing and other features coming with five helping customers to get benefit in different other ways. And the better we are to monetize those performance improvements that clearly come with five gs going forward comparing to four the more ARPU and revenue uplift we can have. Sorry for a bit open ended answer, but the target clearly for us is and the logic for improved customer value and also willingness to pay, but future will tell where we will get.
Regarding working capital change, yes, there was some part in payable side unwinding from high payables balance end of last year. Also lower operating expenses resulted to lower payables. And regarding Q2, there is not such an unwind impact expected. Of course, quarters are different and timing of invoices vary from month to month. And so there are some differences between quarters every now and then.
Thanks guys very much.
You're welcome.
Thank you. And there are no further questions at this time. Please go ahead speakers.
Thank you for all questions and thank you for participating in this call. We wish you a very good reporting season and goodbye now.