Good morning everyone, welcome to Elisa's third quarter 2020 analyst meeting and conference call. I'm Vesa Sahivirta, Head of Investor Relations, and here together with me is a very familiar team, CEO Veli-Matti Mattila and CFO Jari Kinnunen, and we have some audience as well. We start this meeting with the presentation followed by Q&A. In Q&A, we take first questions from the audience and then from the conference call lines. I think we are ready to start, so I give word to Veli-Matti, please.
Thank you Vesa, welcome to Elisa's third quarter interim report in 2020 on my behalf as well. We had a solid development continuing regardless of the COVID-19 impacts, revenue growing by 1%, and our EBITDA was going up by 1%. Mobile service revenue decreased 0.5% year-on-year, mostly by the decrease in roaming because the customers have not been traveling. Postpaid churn increased from second quarter to 17.6% year-on-year, slightly down. Our postpaid mobile subscription base increased almost by 25,000, and also the fixed broadband subscription base was in increase by 6,700. Our 5G services rollout continues favorably. We have networks now in more than 50 cities. The coverage is built to 1.6 million Finns. We have the widest selection of devices on the market and so forth. The momentum is building up for 5G.
Our revenue was positively impacted by our digital services businesses, equipment sales, and the developments in Estonia. EBITDA positively impacted by our continuous improvement with productivity improvements. The mobile service revenue growth, even if we had a negative impact from the lack of roaming revenues, upselling within 4G speed tiers and also to 5G continues. We are able to do some product changes by providing more value to customers and having slight increases in prices. The competition remains keen. No big change in the competitive landscape. Campaignings also are quite regular in the market. When we look at the segments, consumer customer business had 1% revenue growth provided by the domestic digital services, mobile services, and Estonian business. Interconnection prices decline and the lack of roaming revenues had negative impact as well as the traditional fixed line services decline. EBITDA was growing by 5%.
In the corporate customer segment, revenue was down by 1%, also interconnection and roaming having negative impact, but also in the mobile services side because the roaming really had more impact in the corporate customer segment than in consumer segment. Equipment sales also was down, but the domestic digital services was going up. EBITDA was minus 8% in corporate segment. We continue to execute our strategy with three focus areas, and focus is really with the help of new technologies like 5G to bring more value to customers and increase then mobile and fixed service revenues. We are building the momentum for digital service businesses, especially internationally. Of course, we continue our quality-driven efficiency improvements in all parts of Elisa's operations. For all focus areas, we see continuing strong potential in the future.
Upselling is continuing. We can take a look that the number of, or the proportion of smartphones continues to increase in our network step by step. Now 87% of our customers having a new type of smartphone. When we look at the speed tiers, 4G penetration is up to 76%. As we see the lowest speed tier of 50 megabits per second in proportion, that is declining, which indicates clearly that the customers are moving upwards within 4G domain, and also some customers are also moving to 5G speed tiers. The upselling continues as before. The fixed monthly fee data bundles, the proportion of that also is going up. The usage-based subscriptions and the number of that is declining as before. In 5G, like I said, we have already coverage to more than 1.6 million Finns.
We have also finalized the procurement contracts with Ericsson and Nokia. The procurement round is still going on. We have the widest selection of 5G devices, more than 40 different kind of devices. It's probably the widest selection in the world, I would assume, based on the data we have found from other places. Of course, as of today, we are taking advanced bookings for the new 5G iPhone, and deliveries will start sometime next week. The data growth continues, year-on-year growth over 30% in third quarter, and our capacity continues to meet the growing data usage demand without any challenges. We also are working with innovative 5G pilots, improving, for example, the operations in schools, hospitals, in environmental and rescue services. The different kind of enterprise solutions in 5G domain seem to get more and more momentum as well.
In digital service businesses, we continue in our Elisa Viihde TV entertainment solution. The focus also in e-sports. We have the Elisa Invitational, which is the most significant tournament in the history of Finnish e-sports. We are continuing the launches of original series like "Makkari," which was in August. We have in many ways participated in the development of different new applications and help for the COVID-19 situation management, for example, to the Finnish COVID-19 alert application, where we have been helping the authorities to develop and have anonymous data to help to take into that use. We have moved more and more to virtual business. For example, with virtual customer seminars, we had Elisa ICT Day, which was gathering over 1,500 visitors and hundreds of participants in each virtual partner demo stand.
In international digital services side, we acquired a major stake in a company called CalcuQuote, which is a U.S.-based supply chain software provider for electronics manufacturing services industry. It's still a growth company, but has a very advanced and interesting solution, and it is complementing our smart factory management solutions to electronic manufacturing industry. It is really according and aligned with the strategy we have to grow our digital businesses internationally, and accelerate our industrial software businesses. Also, we can say that the manufacturing industry is picking up after the early COVID-19 slowdowns. We have got four new Elisa Smart Factory customers signed in third quarter. Regarding the outlook, unfortunately, the current COVID-19 situation with the second waves in different parts of the world will slow down economic growth, and the uncertainty is created in macroeconomic development.
Competition in the Finnish telecommunications market remains keen, we are keeping our guidance unchanged. Our revenue will be at the same level or slightly higher than 2019, our comparable EBITDA also will be at the same level or slightly higher than last year. CapEx will be maximum 12% of revenues. Now I'll give the word to Jari, please.
All right. Thank you. Q3 continued with revenue as well as earnings growth. In revenue, 0.6% growth. Although there was continuing negative trend in interconnection and roaming, especially, of course, impacted by the COVID-19 situation. Interconnection and roaming, EUR 1.6 million decrease. Equipment sales was slightly up EUR 1.3 million. Service revenues in corporate segment altogether was down EUR 1.6 million. Digital services inside service portfolio were increasing negative impacts from mobile and fixed services. Consumer segment service is growing with EUR 4.4 million. Comparable EBITDA was 0.8%, EUR 1.5 million higher than a year ago. EBITDA, -EUR 600,000 or 0.6% at EUR 112 million. Financial expenses decreased from EUR 6 million to EUR 4 million as a result of refinancing that we did in Q4 last year. As a result of that and higher taxes in comparison year, net results increased with 5.4% and EPS 5.2% to EUR 0.55.
In Estonia, solid performance continues and both revenue and EBITDA continued to grow revenue at 1.1% and EBIT 1.9% growth. Mobile and fixed services both continuing to grow. Roaming had a negative impact to revenue. Subscription base growth in postpaid was 5,000, and churn continues to be low at 9.7%. Full year CapEx, 12% guidance continues to be intact. Q3 guided CapEx was EUR 61 million. Year to date, guided CapEx EUR 174 million or 12.5% from revenues. Reported CapEx in Q3 was EUR 75 million, and this quarter there was a new lease agreement that impacted reported CapEx with EUR 11 million. That's the biggest difference between reported and guided CapEx. Moving to cash flow, and comparable cash flow was same level as last year, EUR 97 million.
Positive impact from higher revenue as well as networking capital change that was less negative, -EUR 6 million compared to -EUR 12 million a year ago. CapEx was higher and had a negative impact to comparable cash flow. Cash conversion remains high and operating cash flow, EBIT conversion to operating cash flow was 66% or EUR 119 million. Capital structure remains in guidance. Net debt to EBITDA decreased from Q2 to 1.8x , and equity ratio was 36.2%. Return ratios remained at good level and return on equity 29%, and return on investment 16.7%. Return on investment was slightly down from previous year as a result of high cash situation end of Q3, which was a result of a bond issue that we did in September. It's temporary impacting negatively to return on investment.
We did issue a new bond, EUR 300 million, which is to be used to refinance EUR 174 million debt maturity in January. We had very good investor demand, and we're able to reach the lowest ever coupon for 7-year bond in Finnish corporates at 0.255%. This will have, after refinancing the next maturity in January, this will have EUR 4 million positive impact in interest expenses next year. Currently, approximately 85% of interest-bearing debt is in fixed rates and average interest 1.2%. Vesa will continue from here.
Thank you Jari. Now we move on to Q&A part, and first we ask if there's any question from audience. Artem, please.
Yes. Hi. Artem Beletski from SEB. Three questions from my side. Firstly, what comes to mobile service revenue development, what is the outlook looking at next couple of quarters? Is it pretty much similar development what you have shown in Q2 and Q3? Close to zero, maybe on negative side. The other question is relating to corporate segment and macro-related uncertainties, what you have already flagged earlier this year. Have the development been in line with your expectations of what you had previously? The last question is relating to this potential change relating to fixed-term contracts on mobile side and the maximum duration of those ones. Is it still this kind of regulatory change coming around the end of this year, basically from two years to one year?
All right. Thank you for the questions in regards to MSR. As earlier, we are not giving any guidance for that. We do see that the underlying positive developments on upselling, they do continue as earlier. Of course, with the kind of positive in mind, we could think that the increased amount of traffic that we've seen now with the virtual working, virtual doing business and everything doing remotely, the capacity increase would lead to increased need for speed upgrades. Even without having any acceleration, we do have the underlying upselling working very well. Now 5G clearly starts to attract customers. Saying that, we continue to see traveling very low, and people are not really then spending any money for roaming and neither are companies. For that, the visibility for us is the same as for anybody.
We just don't know how long this COVID-19 will take place. When it will be over, there will be traveling and roaming revenues will pick up again, and we'll see improvement there. Other than the roaming revenues, the MSR development seems to be moving ahead favorably. The corporate macro, whether the developments have been according to our expectations, I would say that yes, we have seen some impact on corporates, some, let's say, delaying of projects, but nothing major in there. In terms of layoffs or temporary layoffs, the impact of those have been, let's say reasonable, not so big, at least so far. The uncertainty, of course, exists for the global markets. We have now seen the second waves to come, and of course it was quite evident on our expectations that the second wave will come.
Of course, we cannot predict how it will evolve and how it will impact to the, let's say, macro in the whole world and to the exports countries of Finnish companies, and then to Finnish and Estonian business customers. There is high uncertainty for the, let's say, worst case scenario and the best case scenario. We, of course, continue to work with our customers, promoting digital solutions in many areas, what we have to offer with the widest selection of services to corporate customers. There seems to be interest and demand for that. The fixed-term contracts, yes, our understanding is that they will come to take place. We have this whole new legal package in the parliament this fall, and our expectation that sometime in the beginning of the year it will take effect.
It is, of course, still in the parliament, but we don't have any information that there should be any delays or problems with that.
Maybe just to follow up on fixed-term related question. Do you expect potentially any bigger changes in terms of competition landscape and so on? I guess you are not really exposed to this fixed-term contract, so you should be relative winner from potential change in the regulation.
Of course, what kind of impact it will have for the competitive landscape remains to be seen. We are not the only actor who can influence on that. Of course, the main thing is that the customers can be aware of their contract lengths better. There has been clearly a lot of this dissatisfaction in the market by customers because they are confused, and they have hard time to get information when their contract is ending. This new legislation should improve that transparency, which is improving the reputation for the whole industry, and that way increasing the demand for everybody in the industry.
Yes. Thank you.
You're welcome.
Thank you. Next question from the audience.
Hello, Joni Grönqvist from Inderes. I have two questions. First on 5G. When do you expect to give more details maybe on subscription numbers? That's first. Secondly, you've been, in the past, really good in efficiency measures. How do you see the potential now going forward on this side?
All right. In terms of 5G, I would believe that sometime next year, we can release more and release more information about the number of subscriptions. The number of subscriptions is growing and the amount of customers embracing 5G is increasing, both in the consumer side as well as in the corporate side. Sometime next year, probably we will disclose more. In terms of efficiency, our philosophy is not to go big bang cost reduction programs because that is really destroying customer experience many times. Instead, we have the long-term continuous improvement, productivity improvement development going on continuously. Now in the situation like this, when we suddenly have some revenue line to drop dramatically like the roaming, we are not panicking and trying to cover it up with some drastic measures, which would then again impact to something else negatively.
Instead, we continue with our long-term development, and for that matter that whether we have potential, yes, we definitely have a lot of potential over the months, quarters, and years to improve our productivity. We are not at all as efficient, as automated as an operator can be, even if we have made some steps ahead, but there's definitely a lot of things to be done. We continue our own ways to improve productivity so that the quality can be continuously also improved. That's of course helping in the market in reality for our competitiveness when there's intensive price competition also.
Any further questions from audience at the moment? No, there are not. We ask first question from the conference call lines, please.
Thank you. The first question comes from the line of Stefan Gauffin from DNB. Please go ahead.
Yes. Hello. You have recently announced Ericsson and Nokia as 5G RAN providers. Does that mean that you will also swap out Huawei equipment from 2G to 4G? How will that impact CapEx to sales over the coming, say, three years? Should we expect a higher CapEx to sales during this rollout period?
For the first, we continue our procurement round. Yes, we made contracts already with Ericsson and Nokia, but we have some other vendors we are still discussing, and we have no decision whatsoever to swap out Huawei. When we have taken a look based on our experience in the past and also our understanding overall, if we would need to swap out any vendor due time, it would happen gradually anyhow and without any impact to CapEx. Our CapEx guidance, 12%, is intact.
Okay. Thank you.
The next question comes from the line of Paul Sidney from Credit Suisse. Please go ahead.
Thank you very much. I just had two questions, please. Firstly, on the B2B space, it clearly remains challenging, especially with Telia bidding aggressively for contracts like the Hansel public sector contract win in July. My question would be, are there any large B2B renewals for Elisa coming up or any large Finnish B2B tenders in the coming months and years? Secondly, on 5G, Elisa clearly leading Europe on 5G, driving data usage. Are there any interesting consumer or B2B applications that are emerging that you think can drive revenues higher? Is there something else in terms of applications other than just greater data usage going forward? Thank you.
All right. Thank you. In terms of B2B side, there are of course, various kind of contracts that are coming to an end and to renewal. I'm not aware of any larger contract, but just to mention about this public contract you referred to, even if there is a quite large number of subscribers involved, the prices are very low, and from our point of view, the maximum loss for that contract for us is less than EUR 1 million per quarter. It's not a really major event that took place. It's one of those kind of larger contracts, and we do have similar or almost similar kinds of a few per year. We have been very competitive on those and we can compete and win enough in those, let's say, deals.
In terms of 5G, yes, we do see the primary or first application for 5G for customers to buy more speed and better experience based on lower latency. We have clear indication that customers are valuing it. Customers are valuing the higher quality overall and customer experience. Saying that, we have more than 100 B2B customers we are working with various kinds of applications relying on 5G. Very interesting applications, it's quite early days for enterprises yet to kind of find their ways to embrace and get benefit of 5G. That track is moving ahead and we will see new, let's say, applications, especially in B2B side, to take usage of improved performance of 5G. In the consumer side, of course, later on, we will start to see higher and higher quality videos. We will see augmented reality and all the rest to come.
Maybe they are not the first ones why consumers are changing. They are changing just for kind of the existing applications that they have to get even better experience, what they have got earlier.
That's great. Thank you very much.
The next question comes from the line of Nick Lyall from SocGen. Please go ahead.
Morning, everybody. It was two questions, please, if that's okay. The first one was on the other expenses in the P&L, when they fell this quarter and that allowed you to grow the EBITDA a little bit. Could you just discuss where that's come from, please? Is there any scope, do you think, for having to increase marketing budgets again as competition revives and subscribers come back in the fourth quarter? Is that a sustainable number, I suppose, is my point. The second was on 5G as well, please. Any first thoughts about fixed wireless access on 5G? I understand it's very early, but are you gaining subscribers outside your usual fixed areas and in, say, the cable areas of either DNA or Telia? Thank you.
Thank you for the questions. I respond first to the second question. I ask Jari to give you some light in terms of the first question. In terms of the 5G fixed wireless access, it's mature in technology, if you will. We of course have seen customers to be very pleased with the solution and also with the price points that we have with the EUR 500 installation package, including also Wi-Fi equipment to the household. The customer experience has improved greatly. We have seen very satisfied customers. It is a bit of an early day to kind of declare any major commercial successes, and even more too early to say anything in which kind of areas we are winning customers. It is certainly a very good complementary offering, especially for the customers in the more rural areas where fiber is really not an justifiable option.
There has been some technological, let's say, issues in the technologies which are still maturing, but it is just a matter of time that the quality of different equipments is getting up to speed. It is certainly a very good complementary offering. How big a game changer it might be in terms of the, let's say, in the competitive landscape remains to be seen.
To your question regarding other expenses. Well, there are two main elements, continuous productivity improvement measures that we do, and for example, increasing automatization in different processes. Another thing relates a bit to COVID situation as well, like traveling expenses. Of course, as there is no traveling happening, so they are lower. Regarding, if I heard right, you mentioned something about marketing and marketing expenses. Those, of course, vary from quarter to quarter. Quarters are not equal. We act according to need, also regarding those.
Okay. Thank you very much.
The next question comes from the line of Sami Sarkamies from Nordea. Please go ahead.
Hi. Thanks for taking my question. I have two of them. Firstly, we have already discussed the corporate headwinds, but I would like to understand how normal third quarter was thinking of campaigning activity, marketing spend, and customer behavior in the consumer segment.
All right. In terms of the competitive intensity in the third quarter, I would say that no major changes, what we've seen in the, let's say, previous quarters overall. There are, of course, some ups and downs in the intensity during the quarter, but overall, when we look at the overall trend line, no major changes in the competitive landscape. Of course, during the third quarter, we saw customers more in the shops comparing to second quarter when people were at home more. Other than that, no major changes. Did you ask something about the corporate customer segment? I didn't quite get your question.
No, this is purely on consumer segment.
Okay.
I would have another question also regarding consumer segment. You mentioned price changes. Can you be a bit more specific on when these took place and how meaningful they were? Just trying to understand if you already benefited from this in the third quarter.
Well, our disclosure in terms of the price changes is somewhat limited because we are doing it in the price changes in different, let's say, cohorts of customers. There are things happening every now and then. Anyway, we are not definitely disclosing the size of different cohorts that belongs to this price change segment at that time. Unfortunately, I cannot give you more details on that. It's a bit of ongoing phenomenon. Let's say that we continue to have those kind of changes because there are continuously things and changes happening in the pricing environment.
Okay, thank you very much. I don't have any further questions.
You're welcome.
The next question comes from the line of Terence Tsui from Morgan Stanley. Please go ahead.
Yeah, thank you. I just had one question, please, and just picking up on some of the earlier points you made around promotional activity in the competitive landscape. I'm just thinking as we go into Q4, you get the impression that it's kind of back to normal in terms of activity and promotional activity. By that I mean, are you expecting some big campaigns around Black Friday, Singles Day, Independence Day that we've seen in 2019 and 2018? Do you think it'll be a bit more subdued in 2020 as we gradually make ourselves adjusting to this new normal post-lockdown? Thank you.
All right. Well, we have, of course, fourth quarter with several campaign events, if you will, like you mentioned Black Fridays and all the rest. We are not expecting any major change from the past. We do see some major campaigns happening in some or any of those kind of events. We are well prepared with our competitiveness to kind of take our share during the fourth quarter as well. No major changes what we've seen in earlier years as we expect to take place.
Okay. Thank you.
Maybe underlying the fact that sometimes is missing out is that Elisa is not driving the kind of search for more market share, but we are ready to respond as always.
Great. Thanks for the added color .
You're welcome.
The next question comes from the line of Peter Kurt Nielsen from ABG. Please go ahead.
Thank you. Just a comment, please. Sorry to annoy you if I may return to the service revenues. According to you, I believe the roaming impact is less than EUR 2 million in the quarter, which isn't that much. Even adjusted for that, the revenue trend seems to be sort of flattening out. Could you elaborate a little bit on why that is given upselling small price increases, etc. ? Just curious in how you're seeing this. Just on the question on Polystar, please. Have you seen the uplift or the support for the digital services business for you on the international side that you anticipated from the acquisition of Polystar? Is it sort of a work in progress? Perhaps a bit too early, but are you seeing the positive impact or is this also something which is perhaps not becoming visible because of the COVID-19 situation?
Then just certainly quickly on 5G. Have you seen demand from Finnish corporates for the industrial solutions for 5G? Is this something which you're feeling there is a pull from industry side? Thank you.
All right. Thank you very much. If I heard you right regarding roaming, the kind of level of roaming we lose per quarter is a bit more than what you highlighted. It is more close to EUR 4 million per quarter.
Okay.
In terms of Polystar, yes. We've seen Polystar first as a very, let's say, successful acquisition. Polystar moving ahead as a standalone very well as it did before the acquisition, but it has continued its development forward, but also having synergies with our Elisa Automate solutions and building a platform for further growth in that segment. It looks like a really positive development there. In terms of 5G, there's more and more momentum and discussion about industrial solutions in enterprises for 5G, and we do see many companies interested in utilizing 5G in order to improve their efficiency or automate some of their sites in factories or in harbors or in mines, for example. Let's say that it is still early days, because it's not only the 5G connectivity that needs to take place.
There needs to be also applications that are really taking the benefit of the performance improvement that 5G will bring to the table. We have many promising experimentations and pilots going on, and I believe that in many of those, there will be a clear business case for the enterprise customer, for industrial enterprise customer, or it can be also in other domains, other industries, like in retail. We will see those to happen, but it will, of course, take time because there needs to be the development, at least per industry or even per customer to have the kind of business case for moving ahead.
Very good.
A lot of experimentations going on.
Thank you very much.
You're welcome.
The next question comes from the line of Panu Laitinmäki from Danske Bank. Please go ahead.
Thank you. I have two questions. The first one is on the fixed and digital services revenue, which was up 2% in Q3, and I believe this was fully organic, and it was a better trend that you had before consolidating the Polystar acquisition. The question is really, can you give more color on what's happening in this business line in total? What is driving this, and how sustainable it is? The second question is on 5G, one more on that topic. What's your initial experience from take-up of 5G subscriptions for those people who buy 5G handsets? Do they all take a subscription for 5G, or is it like 80%, or what's the success rate, so to say, in those? Thanks.
All right. In terms of the fixed and digital services business, it's really the new digital services that are driving the increase in our revenues. Our entertainment business, IT business, and also the international businesses, they are contributing to the growth of fixed and digital service businesses. In terms of 5G, we have, of course, as I mentioned earlier, very wide selection of good 5G devices and handsets. We do see many customers buying 5G device, and they have not yet taken the subscription necessarily. It is, of course, a great position for us to upsell the subscription to the device. Some customers are buying the 5G subscription and device at the same time, but for some customers, they go first for the device and then for the subscription. This is pretty much the same phenomenon we saw in the 4G when 4G started to take up.
All right. Thanks a lot.
You're welcome.
The next question comes from the line of Siyi He from Citigroup. Please go ahead.
Thank you very much for taking my questions. I have two things. The first one is still on 5G. I'm just wondering if you can just shed some more light on what you're seeing in terms of the ARPU uplift, and also the speed of the 5G handset take-ups compared to maybe a quarter or two quarters ago, whether you have seen a clear acceleration on that. The second question is really about the fixed competition. I think one of your competitors has bought Champions League rights and also doing fiber joint ventures to roll out fiber. It would be interesting to know how you think that's a dynamic in fixed, going forward in terms of competition. Thank you very much.
All right. I'm sorry, the line was a bit bad. I'm not sure that I captured your question correctly, but I will give it a try anyhow. In terms of 5G, we do see, let's say, ARPU uplift because we see customers paying more for 5G, what they paid for 4G subscription. We clearly see the increase in the monthly fees for new 5G customers. It's too early to say that which kind of dynamics there is further on. The positive thing is that customers clearly value the 5G and the better performance in 5G by paying higher monthly fee. That's what we expected to happen, and that's what has happened, and we continue with that.
In terms of the competitive dynamics in the fixed side, if I understood right, you were referring to the fiber? Yes, there are different kinds of collaborations, plans, and activities in fiber rollout. The fact just in Finland is that Elisa is the biggest fixed network operator. We have a lot of fiber in our market here. We continuously build also fiber further on based on the demand. The challenge in Finland in terms of fiber is the demand, not so much the supply, because we have totally different markets, comparing to the most of the other markets close by, that we have unlimited mobile data with very good service level, even in 4G, not to say in 5G.
Many customers, they can very well work with 4G, and then later on 5G, fixed wireless access or mobile data connectivity, without willingness to pay for couple thousand EUR for the starting fee for fiber installment. That's the dynamics which is quite Finnish specific, and that's why we see that gradual demand-based deployment of fiber is applicable, but larger fiber installments, there just isn't a demand for that in the Finnish market as we see. We understand that there are players who have maybe a different view, and we of course, do follow up that. If the demand suddenly starts to take up, we are also ready to speed up our fiber installment.
That's very clear. Thank you very much.
The next question comes from the line of Matti Riikonen from Carnegie. Please go ahead.
Hi, it's Matti Riikonen, Carnegie. Four small questions, if I may. First of all, regarding the mobile service revenue growth. In Q2, you said that excluding roaming, your mobile service revenue growth would have been positive. Was it the same situation in Q3, so positive but not reaching the earlier 3%-5% growth range?
Okay. One by one. The answer shortly is yes, it would have been positive excluding roaming.
Good. Two questions related to 5G. You earlier talked about a couple of thousand 5G customers. Is that still valid, or have you already exceeded the 10,000 limit?
We continue to say that we have thousands of customers and the amount of customers is increasing.
Fair enough. Then in September, you talked about 5G population coverage of 30%. What is your plan towards the end of the year or by the end of the year?
When disclosing our plans, it is a competitive market, as you know. Of course, our leadership in coverage is continuing, and we will have more coverage further on towards the end of the year. Of course, we also take notion on the demand, where we see more demand, and we are moving accordingly. Yes, the coverage is increasing. Unfortunately, I cannot disclose more details for you.
All right. Fair enough. The last question is for Jari, actually, and it's related to the interconnection and visitor roaming number that you gave on slide 11. The EUR 1.6 million decline on a year-to-year basis in your total revenue. Now, you reported EUR 0.6 million delta in interconnection and visitor roaming within the mobile revenue as a separate line in the operational data. Is the EUR 1 million delta to that, to the EUR 1 billion difference, is that the part of mobile service revenue, which you report as one number in the mobile line, or how else should we get to the EUR 1.6 million in Jari's slide?
0.6 million is visitor roaming. It's inbound roaming and other roaming impacts, they relate to our customers going abroad. Outbound roaming is another element in the total roaming change. This interconnection and roaming EUR 1.6 million, that is interconnection and visitor roaming together. Outbound roaming, which is our customers going abroad, that is included in the service revenue.
Right. That was the EUR 1 million difference between your EUR 1.6 million number and EUR 0.6 million number that you report separately.
It's the service our customers going abroad and, the outbound roaming relating to that, it's included in the service revenue. In the segment service figures, it's not in the EUR 1.6 million.
The roaming impact is partly in the service revenues and having a negative impact there.
Yeah, I think that was exactly my question, that when you report mobile service revenue, which now declined by 0.5% year-over-year, is the EUR 1 million delta that you gave in the EUR 1.6 million on slide 11, and then the EUR 0.6 million as visitor roaming, which is also part of that mobile sales calculation. I'm just trying to find what is the part of mobile service revenue, which was affected by roaming.
Outbound roaming effect is more than EUR 1 million. It is included in the mobile service revenue line. The interconnection and visitor roaming, it's only part of the roaming that is included in the other line. You don't see that the impact of outbound roaming, which is included in the mobile service revenue and in our customer invoicing.
Okay. Maybe we can take this separate. Thank you for this.
You're welcome.
The next question comes from the line of Florian Henritzi from Bank of America. Please go ahead.
Yeah. Good morning. Thanks for taking my question. I also had two. Firstly, I wanted to come back to a previous question on the digital service business. Sorry, actually the fixed and digital service business. I think at the moment you're growing around 2% there. You're flagging sort of the traditional telecom services are declining. Maybe your digital services are growing. I guess the margins on these digital services are somewhat lower. Does that mean that over time the growth you're seeing on this line is somewhat dilutive to your overall margins? Maybe in connection to this, are you planning to give any sort of increased disclosure maybe on the digital services going forward?
All right. Thank you for the questions. Yes, as we have actually told earlier quite a few times that the digital service business is overall their margin level for EBITDA is lower than what we see in the telco services in terms of the EBIT and so on. The margins again start to remind same levels that we see in the telco side. Of course, the other impact or reason for digital services margin to be lower is that we are in the earlier phase of the development of those businesses and we have business development ongoing in some parts, and that is of course diluting it. Whether that would dilute the whole corporate margin, we have our ambition, as we have said in the medium term target, that we are aiming still in the corporate level to get beyond 37%.
That remains intact because we have also visibility, or improving, for example, in the mobile side, our margins. Saying also about the digital service businesses, the margin there, as we move ahead, is also improving, because we are scaling some of the services in the whole digital services portfolio. The disclosure in digital service businesses will be increased due time. I cannot give you any timing for that, but of course, going forward, we will give more financial information and other information about the development of digital service businesses as we grow them further. Any timescale, timeline, I cannot give you at the moment.
Okay. Thank you very much. I just had maybe a second one. I was wondering, what's your view around further acquisitions at the moment? I guess your sort of Polystar was the latest big deal. Now you've announced this small acquisition of CalcuQuote. How do you see potential for further deals in the digital service space in the current environment? It looks like your leverage could certainly accommodate that, but, I was interested, are you seeing any kind of interesting opportunities out there at the moment?
Yes. The short answer is yes. We see both in our, let's say, telecom efficiency solutions, i.e. Elisa Automate. In that business domain, we see several potential candidates for further acquisitions. The same thing with our industrial IoT and smart factory management. We see also interesting opportunities for acquisitions, several of them in that domain as well. It is then up to us to have really win-win solutions with potential sellers. I'm quite optimistic that during the next couple of quarters, we can inform some of the next steps in that front. It is, of course, dependent on win-win situations to be found. Let's say the addressable market, if you will, in terms of acquisition targets, is very lucrative for us in both of these two domains.
Yeah. Okay. Thank you very much.
You're welcome.
The next question comes from the line of Adam Fox-Rumley from HSBC. Please go ahead.
Thank you very much. Just building on that last question, actually. I wondered if you could talk a little bit about how we should think about those digital services businesses. Essentially, are these lines of businesses that are self-supporting, or are they things that ultimately have a cross-sell benefit into the telecoms business as well? I think it feels like it's more of the former. The second question was on your midterm margin target. You mentioned that 37% is intact, but should we really now be thinking about 38% when we adjust for IFRS 16? Finally, there is a small reference in your release to a legal case with the City of Espoo. I just wondered if that was material enough to talk about its implications, please. Thank you.
All right. Yes. How you should think about our digital service business is, the whole domain of our digital service business, especially the international ones, is a lucrative growth domain for Elisa. It is still very much in the early days. The revenue is being around EUR 50 million-EUR 100 million altogether for the international businesses. It has a clear growth potential. We do have competitiveness and really, let's say, logic to drive those businesses from our core capabilities in automation that we have done in our own network operations in the telco business, really leading in the world in the automation of telco operations in operators' side. We continue to do that as we speak, just for the sake of our core business, to have also high quality and automation moving forward for 5G customers and so forth.
That is the base and capability that we can kind of elaborate for businesses internationally. It is very good growth platform for us going forward, also with the help of acquisitions, and it is meant to be self-supporting own business domain. We are not reporting it yet because it's a bit early days, but that's the plan and that's how we think about it. In terms of the midterm target, we have set it above 37%. We are not there yet. Based on our development, we think that we can get there. Whether we will upgrade it some of the stages remains to be seen. That's the current target level, what we have.
The City of Espoo case, there's some complaints that City of Espoo needs to do with the procurement, but we are quite confident that that's not going to be a larger issue for us going forward.
Okay. I really appreciate that color. Thank you.
You're welcome.
The next question comes from the line of Kohulan Paramaguru from Exane BNP Paribas. Please go ahead.
Hi. Maybe you've already covered this, but I just wanted to know the impact of roaming on EBITDA in the quarter.
Can you repeat the question about revenue and EBITDA?
The impact of roaming in the quarter on EBITDA, how much of it fell through onto EBITDA? Are you able to disclose that, or do you want to take that offline?
I'm sorry. I still didn't hear what you want to hear of our revenue and EBITDA.
Are you still struggling? I just wanted to know the impact of roaming on your EBITDA this quarter. How much of it fell through onto EBITDA?
Okay. Jari, please.
Well, in revenue, it's roughly EUR 4 million, and most of that is also going to EBITDA. It's not 100%, but a big portion of that.
Okay. All right. That's very good. Thank you.
Last question comes from the line of Christopher Kalliszkow from Handelsbanken. Please go ahead.
Well, thank you guys for taking my questions too, if I may. If I may return to 5G first. You're one of the pioneers in the industry. It would be great if you could talk a bit about what kind of milestones we should expect in the coming years. For example, in terms of nationwide coverage. Also, if you could share something of how you're thinking about upgrading your core network to stand alone to cater for the full 5G experience. Also, if I may, on esports actually. Veli-Matti , you mentioned in your presentation something about esports. It'd be great if you could elaborate on what you're doing in this area and what your strategy is going forward. Do you, for example, cooperate with the market leader, MTG? Thank you.
All right. In terms of the 5G, we have not disclosed very clearly for competitive reasons, of our steps. Like I said earlier, we will build up coverage, nationwide coverage. One could believe that sometime at least 2025, we will have nationwide 5G coverage, something like that, 2025, at least. The kind of standalone 5G, we have already tested that, and gives clearly advantage to our customer benefits. When we will start to deliver, and offer standalone 5G services, it's also something that we are not disclosing, but it is of course on our plans. Esports, yes, it's part of the activities we do with our IPTV Elisa entertainment business domain. We see clearly that is one type of content where customers and certain segment of customers are more and more interested.
We are, of course, having various kinds of cooperation with the esports actors in the domain, and making sure that we can fulfill the promise of having widest set of content to our customers, also including esports. Whether we have cooperation with MTG remains to be seen in that domain.
Thank you.
Welcome.
As there are no further questions, I'll hand it back to the speakers for closing remarks.
Okay. Thank you. Well, thank you for the questions and participating to this meeting and conference call. We wish you all very good reporting season. Thanks and goodbye.
Thank you.
Thank you.