Good morning, ladies and gentlemen, and welcome to Elisa's first quarter 2020 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. We start this meeting with presentations, followed by Q&A. Because we don't have any audience here, we go straight to the conference call lines. I think we are ready to start, I give word to Veli-Matti, please.
Thank you, Vesa, good morning, everybody, on my behalf as well, welcome to Elisa's first quarter result review. Let me start by going through the highlights first. Our revenue was growing by 6% during the quarter. Comparable EBITDA was up by 5% as well. Mobile service revenue was growing 2.1%, we saw churn to come down to 18.9% during the quarter. We had increase in postpaid mobile subscriptions, over 20,000. In the fixed broadband side, the development was quite flat, slight decrease by 400 subscriptions. We continue actively to deploy 5G services and 5G network. Now we are almost in 20 cities. Our population coverage is above 13%, we have thousands of customers using the services. Our AGM was held according to the plan, we also made, among other decisions, the AGM made decision to the distribution, the dividend of EUR 1.85 per share.
This COVID-19 crisis has impacted to market situation to some extent. For example, roaming revenues going quite much down, usage of network up, and some other activities or changes to the market situation. Our revenue grew due to Polystar acquisition, partly also due to mobile service revenues growing as well as the equipment sales. Our equipment sales was growing percentually quite much due to the fact that the comparable quarter for equipment sales was maybe a bit lower. Mobile service revenue is growing based on the speed upgrades in 4G network and also the upselling of 5G. Also we have made some product changes in terms of pricing during the quarter. EBITDA growth, of course, comes with the help of revenue growth, but also our continuous long-term development of quality, and through that quality development, improving productivity and profitability creates improved financial result as well.
The competition continues to be keen in different segments of the business, and the campaigning seems to be continuing as well as the activities also in different segments of corporate customers. When we look at the segments, we see revenue growth by 5% in the consumer customer segment and EBITDA by 4%. In the corporate customer side, revenue was growing by 9% and EBITDA by 7%. Polystar acquisition is reported in the corporate customer side, but there was growth also in the domestic digital services as well as in equipment sales. In the consumer side, we saw revenue growth both in mobile and domestic digital services, equipment sales, and also the Estonian business is contributing to the growth in consumer customer segment.
We continue to execute our three focus areas strategy. We see great potential to bring results and benefits to our customers and shareholders in all of these areas going forward. In the mobile side, the upselling continues. 5G is progressing according to our expectations. We see now 73% of customers who are at least on the 4G speed level. Of those, more and more have higher than 50 mbps speed. The lowest speed tier in 4G, i.e. the 50 mbps speed, is proportionally going down. The other higher speed tiers and speed plans are increasing. The change from usage-based subscriptions to data bundles and fixed monthly fee plans is continuing now, the usage-based subscription representing 23% of the customer base at the moment. That is thus going down.
We are successfully deploying 5G in Finland as a leading provider of 5G services. We have now 18 cities where we have launched the network. The demand for Fixed Wireless Access services is increasing. That is really enabling 5G to be used as the main home internet connection. A positive thing is that even regardless of the COVID-19 developments, the handset deliveries are moving ahead. We got Samsung S20 5G handset and OnePlus and Xiaomi devices. The devices market is developing to more and more affordable devices as well, which is, of course, positive for increasing the number of 5G users. In February, we had the Port of Helsinki, one of the first Finnish companies to introduce 5G services in their business for travelers, in this case, with cooperation with us. We have continued the 3G network ramp down.
We announced the ramp down really to take place by the end of 2023, which is, of course, helpful, freeing up resources for further development of our 4G and 5G services. In April also, we were chosen as the sole radio network supplier for Finnish government's public safety network called VIRVE 2.0. It's a 10-year contract. It was a good proof for Elisa's competitiveness in quality and coverage with this organization, which has done a thorough work to study not only the pricing but also other quality aspects. Elisa was a clear winner, which is proving our level of competitiveness in these matters. When we look at the development of digital service businesses, a few updates on that. In the domestic side, Elisa Viihde, the IPTV entertainment services, we continue to have launches of new online series and contents.
We have continued increase in their usage of those. Also this COVID-19 situation impacting customers to take and use these services more. Also, we have brought forward the new launch window for six premiere movies. When people cannot go to the movie theaters, we have enabled the new movies to be launched also through our service earlier and brought enjoyment to our customers with the new movies like that. In international services side, our Videra video communications service business have developed according to our plan. There's a lot of demand, of course, nowadays for different kinds of video solutions. Videra being really focusing on the segment to serve large multinational global organizations who also want to utilize different vendors, different kind of equipments, including room systems.
Elisa Automate, which is a leading-edge network optimization solutions, they have been recognized by several international reports, by GSMA, by Boston Consulting Group, and STL Partners. The cooperation with customers is moving very nicely ahead. Also, our Polystar is making or made a solid quarter and has a double-digit year-on-year growth and integration of Polystar and Elisa activities is moving according to plan. In regards to the COVID-19 situation, we have adapted our operations quickly. Majority of Elisa's personnel moved very naturally and immediately to remote working. Safety is also ensured in customer interaction premises. We are one of the leading company to, before the COVID-19, for flexible remote working. This was quite natural move for most of the Elisans to move quickly to remote working. 24/7 monitoring of network capacity and intensive follow-up of customer demand for services have been intensified.
Our network capacity has met the growing data usage in Finland and Estonia very well. We, of course, have extensive support now in all virtual services channels to our customers, and we have been helping with faster and faster delivery times our customers to adjust to the new ways of working under the COVID-19 situation. We have a new mission, sustainable future through digitalization, and this is really a good time to deploy our mission. Our connections are supporting safe and remote working, also safe in terms of cyber threats that seem to be now also raising more their head during this COVID-19 situation. Devices from our web store are very well available to our customers. Our digital solutions and support for medical and education professionals has been well received. We have extended billing periods for some of the customers.
We have created free remote solutions for entrepreneurs as well. We have given digital support for elderly people and young people, especially at risk of social marginalization. It's very important when the remote working and the isolation has been quite extensive to take care of these special groups as well, and we have taken a step to do our share of that. We have given, for example, free data subscriptions for those young people in the special families that they can continue their studies in the lower income families when this distance learning and remote school is being held. We have also given some free entertainment campaigns in Elisa Viihde, the IPTV solution, and we have virtual Elisa Live events in social media supporting Finnish artists. In many respects, while we are doing business, we are also very responsible, deploying our sustainable future through digitalization mission.
We believe that working on that brings long-term benefits to our shareholders as well. In regards to our outlook and guidance for the rest of the year, the current coronavirus COVID-19 situation may significantly slow down economic growth, and create uncertainty in macroeconomic development. Competition in Finnish telecommunications market remains keen. We are having our guidance for 2020 unchanged. We reiterate that. Revenue will be at the same level or slightly higher than 2019. Comparable EBITDA will be at the same level or slightly higher than 2019, and our CapEx maximum will be 12% of revenues. I'll leave the words to Jari to continue. Please, Jari.
Okay. Thank you. Q1 was both in terms of revenue growth and earnings growth, a strong quarter, 6.5% revenue growth. Service revenues growing both in consumer segment and corporate segment. In consumer segment, mobile and digital services growing. Negative impact in service revenues from fixed line analog telephone. In corporate segment, EUR 11 million growth was largely coming from Polystar first consolidation impact. Polystar revenue was EUR 12 million. In mobile services and fixed services, there was a decrease in corporate segment. Equipment sales was growing with EUR 11 million. Interconnection and roaming was flat. This 6.5% total growth excluding Polystar first consolidation impact gives organic growth 3.6%. Comparable EBITDA growth was 5% or EUR 8 million. Revenue growth contributing as well as cost efficiency measures. EBIT growth was EUR 6.5 million, 7% growth. Depreciations same level as Q4, excluding Q4 one-off cleaning EUR 1 million.
Financial expenses improved clearly, now EUR 4 million versus EUR 7 million interest expenses net due to refinancing that we did last year. As a result of these changes, EPS growth was 10%. Estonia continued to grow revenue 10% and EBITDA growth 5%. Service revenues, both mobile and fixed services and equipment sales contributing to revenue growth. Churn was 9.9%, continuing at fairly low level. CapEx was excluding IFRS 16, EUR 48 million. It was a bit lower than previous year, 10% from the sales. There are different quarters of different CapEx and whole year guidance, 12% is unchanged. Between segments, consumer segment CapEx was EUR 32 million and corporate customer segment EUR 18 million, main CapEx was in 5G and 4G capacity and coverage, as well as fixed network and IT investments. Cash flow. Solid growth continued with cash flow 7.3% to EUR 73 million in Q1.
EBITDA growth and lower CapEx, as well as lower paid interest and taxes, contributed positively. Negative impact from less positive change in networking capital and higher license fees. Operating cash flow conversion was growing to 71% from 68% last year. Balance sheet KPIs and net debt to EBITDA reduced from Q4 to 1.7. Equity ratio was also in target at 42%, and return ratios remained at a good level, return on equity at 28.6% and return on investment 16.9%. In terms of financing and debt maturities this year, there are no maturing long-term debts. Next one is due to next year, EUR 174 million. Financing is in a good situation. Also, in terms of interest rates and recent changes in interest rates, 77% of interest-bearing debt is at fixed rates.
AGM was held 2nd of April as planned, after that dividend was also paid as planned a week ago, EUR 0.0185 per share. Continuing strong commitment to competitive shareholder remuneration. Now I give word to Vesa, please. Thank you, Jari. Now we move on to Q&A part, and we ask the first question from Conference Call Lives. Please.
Thank you. Our first question comes from the line of Abhilash Mohapatra of Berenberg. Please go ahead. Your line is now open.
Yes, good morning, and thank you for taking my questions. I've got two, please. I've got one on fixed and digital services and one on B2B. Just on the fixed and digital side, in Q1, you mentioned EUR 12 million revenues from Polystar. If we strip that out, it looks that organic revenue growth in this segment improved materially to plus 2.5%, if I'm not mistaken, is a significant step-up versus history. Just wondering if this is just a quarterly phasing thing or if there's something that we should be thinking about here in terms of the organic trends. Secondly, just around B2B. Just wondering what your thoughts are here in a sort of COVID context.
I guess if you think about the last crisis back then, you probably had more variable usage both on the fixed and mobile side, and there was some impact from roaming as well. Just be interested to hear your thoughts on B2B heading into sort of post, in a sort of COVID environment this time around. Just a final follow-up on B2B, please. Could you maybe remind us, there was a large contract in B2B last year, which has driven stronger sort of customer numbers, but ARPUs have been declining. Could you maybe just remind us of the phasing impacts of that on the B2B mobile ARPU side? Thanks.
Thank you for the question. It was very hard to hear your questions properly. I have to ask you a repeat, but the first one and maybe the last one. I heard the second one a bit more.
Yeah
If I start from that in general, if we think about development on B2B segment, that's what you ask in terms of the, let's say, learnings from previous financial crisis.
Yeah
for example. Of course, that time we saw B2B customers and businesses turning very much on cost-effective and cost-cutting mode, meaning that while they still continue to use our services, which they need, the more future-oriented developments in terms of developing digital ways of working got more on hold. What it would look like in this situation, again, I believe that if any activity is around here in the globe, telecommunication services are needed. We have demand for our services going forward for the basic services. In the terms of the more help and product services from the digital development of our customers, I have a feeling that some of customers may turn to cost-cutting mode more, and then they are not kind of developing for the future.
Again, this is the golden time for many businesses to leapfrog with the digital developments and find and innovate new modes of working. I'm a bit more positive in regards to that. Please could you repeat the first question? It was related to Polystar impact and something else, but I didn't quite hear as well as the third question.
Better now. Sorry about that. Is it better now?
Hear you better now, yeah.
Yeah, sorry, I'll be very quick. Just on Polystar, I think even if you strip out the EUR 12 million of revenues from Polystar, it looks like organic growth improved quite a bit in the fixed and digital services side. I was just wondering if that's a quarterly phasing thing or there's just better demand and how we should be thinking about that going forward. The other one was on B2B mobile ARPU, where I think you had a big contract in last year that stripped the subscriber numbers, but B2B mobile ARPUs have been falling.
Yeah.
Could you maybe just remind us of how we should be thinking about the phasing of B2B mobile ARPU going forward? Thank you.
Yeah. I'll respond to the third one first, and then I leave the second one to Jari. In terms of the public sector large contract, we achieved already 2018, and we have got customers during 2019. We are leveling off with the increase of those customers for the time being. We have, of course, other public site contracts to come in. That was quite big. They were low ARPU customers, and they have impacted to the ARPU in the mobile business for B2B market. I cannot give you any guidance for ARPU for B2B side going forward. We would see that the mobile service revenue will be positive going forward, as long as the general economic situation is turning not to very severe situation. Jari, please, if you can.
Yes
respond to the first one.
If we heard you correctly, it was regarding Polystar and Polystar seasonalities. If that was the question, both Q4 and Q1 are typically strong in terms of revenue and earnings as well. There is certain seasonality with Polystar quarterly revenues. Regarding service revenue developments excluding Polystar impact and Q4 are now Q1. Q4 was minus, if I recall right, -EUR 4 million in corporate segment excluding Polystar, and now it was better than that with -EUR 1 million.
That's great. Thank you.
You're welcome.
Our next question comes from the line of Terence Tsui of Morgan Stanley. Please go ahead. Your line is now open.
Yeah. Thank you. Morning, everyone. I just had a question on roaming, please. What sorts of margins do you see on your international roaming revenues, please? It seems likely there'll be a sharper turn-off in Q2. I'm just wondering whether you are confident in being able to mitigate this to protect EBITDA. Secondly, just on 5G. Thank you for sharing that you've got a few thousand customers using 5G. Just wondered whether you can share a bit more information, things like maybe ARPU, what the ARPU uplift is compared to 4G? Anything else that you think is interesting on that front. Thank you.
All right. Thank you very much. In terms of roaming, as we know that the lockdowns in every country are pretty severe, the traveling cross border is very limited. Meaning that, of course, we also have been impacted negatively with roaming revenues to come down, and roaming is typically a relatively high margin level revenue. It is, of course, high level margin business. As we said, we reiterate our guidance, but of course, we have some developments that are pressuring us, like the roaming, but then we have some areas where we do better than before. Of course, we have also many mitigation activities that we do in this special situation. That's how we feel comfortable to in these, let's say, circumstances, as we see the development now, comfortable to reiterate our guidance.
As we said, there is a high level of uncertainty overall in the general economic situation, and there is quite a wide distance from the positive scenario going forward and negative scenario. If there would be a situation for negative scenario for general economic situation to develop, Elisa is, of course, not immune to that. That might have impact to us going forward. However, saying that, we have, of course, proactive plans to mitigate that proactively. That's in summary our view of the future. Just underline that there are, of course, quite heavy uncertainties around us that we cannot kind of mitigate that uncertainty itself. 5G ARPU is higher than what we have 4G. It is promising to the future of going forward with the upgrades to 5G.
Maybe a bit too early to say that which level of let's say increase it is to highest 4G prices, but it is promising, I would say.
That's great. Thank you.
You're welcome.
Our next question comes from the line of Peter Nielsen of ABG Sundal Collier. Please go ahead. Your line is open.
Thanks very much. Morning, gentlemen. Well done on a good, strong Q1. Can I just follow up on Town's question, please? Veli-Matti, do you see any impact on obviously you can't say for certain, but anticipating the impact on 5G rollout plans and momentum and speed during the year potentially? I know you've had, as you say, also strong lockdowns in Finland. Any hindrance here in your plans for 5G rollout? Can I also just ask on the corporate side in Finland, have you seen any change in momentum or obviously there has been a change in ownership in one of your competitors and potentially a change in position on the corporate office here, et cetera. Have you seen any impact here? Anything you want to share with us on competitiveness on the corporate side in Finland? Thank you very much.
All right. In terms of 5G rollout, we deploy 5G as we have planned. In terms of supply, we haven't got any major challenges in the supply side due to COVID in regards to 5G. It seems that now the capacity and speeds are on demand, it may be even somewhat more by our customers, both in the consumer and the corporate side. In terms of the demand for 5G services, that's promising. We are moving, however, step by step, and of course, the coverage need to be built out clearly more that we can get, let's say, more significant increases to the numbers of customers. Also the device side developing so that we get more affordable 5G devices, high quality devices to the market helps. It is going according to plan.
How significant it is really for this year's result it's maybe more coming to be next year, but we see some positive kind of contribution already this year from 5G. It is a step-by-step development, but leading the kind of industry and leading the way in Finland for 5G services, we are very much doing as planned. In terms of corporate segment for changes in momentum, in the competitive landscape we have always had the B2B market in Finland very competitive in entrepreneur, in SME, as well as in large corporate customer segment. We haven't really noticed any more or not so much different competitiveness. We are used to have a very high competitiveness in that segment.
Of course, our long-term development of our competitiveness based on high quality, high availability of our services, good customer care, and also wide variety of other than connectivity services to help the different situations in digitalization of our customers' operations, of course, helps us to be competitive. Like said earlier, this big public contract deal that we won this quarter is a good proof of our competitiveness in terms of quality.
The change in your Nordic alliance partner in terms of international services, that hasn't changed anything for you, has it?
Okay. Yeah. We have now announced our partnership with Tele2 to provide kind of pan-Nordic solutions better. There's no material changes with that change of partner. Tele2 is very good partner for us now instead of the other one that we used to use. We have a very good offering together with Tele2 and Vodafone, which is even more important since Finnish companies are not bound to Nordics. Most of the companies while doing international business, they need international coverage. With these two main partners and couple of others, we have a very competitive portfolio for international services to our international customers as well.
Very good. Thank you very much.
Thank you, Peter. Good.
Our next question comes from the line of Panu Laitinmäki of Danske Bank. Please go ahead. Your line is now open.
Yes. Thank you. I have one question on this mobile trends that you mentioned, as a result of COVID-19, especially mobile churn. You mentioned, in the market outlook that mobile churn is decreasing and so is mobile equipment sales. We didn't see a significant change yet, like one percentage point. The question is that how much more decrease in churn do you see going forward and how much impact does that have on your margins?
All right. Well, the mobile churn due to COVID-19, that impact of course, had kind of impact on March only for this quarter. If we would have similar impacts throughout the quarter, we would have less churn going forward. Of course, it's always a competitive market. We cannot control the competition. We don't know, but the main driver has been that people are visiting the retail channels less hours, but also our competitors, and that slows down a bit the kind of impact to competitiveness thus lowering the churn. The churn of course impacts our cost, but you shouldn't draw quite a linear kind of correlation between the churn and our cost for customer acquisition cost because, of course, we are then doing customer acquisition with other channels, maybe more now. There are other things that are going on.
Of course, it's positive that the churn is coming down and we can focus more to bring value for the same customers more than just kind of turnaround of the customers from one operator to another.
Can I ask as a follow-up, is it like other channels than physical stores, like better channels for you for acquiring customers in terms of achieved ARPU for those customers?
They are definitely more cost-effective. Yes.
All right. Thank you.
You're welcome.
Our next question comes from the line of Andrew Lee of Goldman Sachs. Please go ahead. Your line is now open.
Yeah. Hi, everyone. I had a couple of questions. Firstly, just on the mobile run rate. I think you've had a further reduction in the promotional discounts you've seen in mobile through Q1. The question is, did you see an improving run rate through the quarter in terms of revenue growth? Is stripping out COVID uncertainty, should we expect Q2 to show further improvement in terms of your revenue trends in consumer mobile versus Q1? The second question, I thought that the fixed broadband service or fixed service revenues ex-Polystar looked a bit weaker this quarter. I just wondered if you can comment on what you're seeing here. Is competition getting tougher and kind of any insight into the competitive environment there would be very helpful. Thank you.
All right. Thank you, Andrew. In terms of the mobile run rate, we of course had a much better mobile service revenue. As we said, it is fluctuating depending on, let's say, of the quarter of course, but also the competitive intensity. We continue to reiterate that it is positive going forward. Unfortunately with the even increased uncertainty of the market, we cannot give further numbers on it, but it will be positive as we see. There are many positive momentums coming also from COVID-19 situation that the capacity and speeds are in demand.
We are working on that, but unfortunately this is all I can tell about that. In terms of fixed revenues excluding Polystar, now we have certain areas of business like the sports content in pay TV that have, of course, come down because there is no really sports to be provided to customers, and that's why we cannot charge our customers for that. There are some elements from that, from COVID-19. Other than that, it is a bit sort of a natural variation between the quarters. Nothing especially material isn't there more.
Thank you.
You're welcome.
Our next question comes from the line of Artem Beletski of SEB. Please go ahead. Your line is now open.
Yes, good afternoon. This is Artem Beletski from SEB. Still a couple of questions from my side. First of all, starting with equipment sales and margins from that front. Is it still, low, maybe at least single-digit margin business for you? I guess in Q1, trend was still quite strong, but could be weakening going forward. The second question is relating to 3G network shutdown by 2023, and could you elaborate what type of cost savings you would be able to achieve from this shutdown and when it should be visible? The last one is relating to this interesting public safety network deal win here in Finland, Virve 2.0. Could you maybe elaborate what type of top-line implications and maybe net subscriber impact we should be expecting going forward from the deal? Thank you.
Okay. Thank you, Artem, for your questions. In terms of the equipment sales, it is low margin, single-digit number of margins percentages business. Continues to be like that and, of course, the COVID-19 may have both positive and negatives to that, depends how the scenarios are evolving. 3G cost savings, we haven't really elaborated the cost savings. It's maybe not so much on cost savings directly. The main thing is that we can release resources from the 3G networks to further develop the capacity in the 4G and 5G side, where the capacity is more efficiently produced to our customers. The public safety contract, why we took that up was not so much on their direct impact to top line, even if it's a 10-year contract and relatively big as such. In Elisa level, it's not the major thing in terms of revenue increase.
The main thing was that it is kind of demonstrating very clearly our competitiveness when it comes to quality and service levels when there is a really demanding customer from business side.
Okay, very clear. Thank you.
You're welcome.
Our next question comes from the line of Sami Sarkamies of Nordea Markets. Please go ahead. Your line is open.
Hi, thanks. I have three questions. Firstly, continuing on COVID-19 topic. Could you please open up your thinking on what kind of direct impacts we could see in Q2? For example, still in Q1, you did achieve growing equipment sales as well as interconnection and roaming revenues despite the lockdowns impacting the latter part of March negatively.
Okay. We are not giving guidances per quarter that much. Overall, the uncertainty is quite high how the COVID-19 activities or COVID-19 impacts will be because it is very much also dependent on the government of Finland or, let's say, government of Estonia's decisions to release the restrictions and lockdowns decisions they've done. I.e., how the companies and people are getting step by step back to reopening. There's high uncertainty what the government is doing and how the companies and people are behaving. As we see now, we have very good development on the use of our services. Many companies, also individuals, are utilizing this time to develop their digital capabilities.
Okay, thanks. I would continue on the consumer sales channels. Can you help us to understand what share of equipment and subscriptions is moving through online channels?
Sorry, I didn't-
Have you noticed any? Yeah.
Okay.
I was asking what share of consumer sales equipment and subscriptions is taking place through online channels and how much through traditional retail? Have you noticed any change in consumer behavior on this front?
Consumer behavior change is, of course, that we have half of the people and population in the retail channels. People are, of course, careful, and they are not visiting so much the shops. Proportionally, we are doing more sales in other channels. We are not disclosing the amount of sales we do in online, but I can say that our online sales is very well developed, and our e-commerce offering and, let's say, user experience is even rewarded. We are very trustful that with this moving towards the more online and e-commerce, also with subscriptions, we have very good capabilities.
Okay, thanks. Finally, on Polystar, could you disclose the EBITDA contribution in Q1? I think it was EUR 1 million in Q4, and you did indicate strong seasonality also in Q1.
All right. Thank you for that. I ask Jari please to respond to that, please.
Yeah. EBITDA impact was around EUR 3 million-EUR 4 million.
Thanks. I don't have any further questions.
All right. You're welcome.
Our next question comes from the line of Florian Henritzi of Bank of America Merrill Lynch. Please go ahead, your line is now open.
Yeah. Well, thanks for taking my question. I just wanted to come back on the digital services. I think they were, again, pretty strong in the quarter. I was just wondering if that's something we can also expect for the upcoming quarters, for example, the good demand you flagged for your TV offering and also the international digital services. Maybe also, could you remind us what's the kind of margin you get on these businesses and maybe how that compares to the overall group EBITDA margin?
In terms of the digital services, we believe that in many fronts like the, let's say, exclusive content and the other content that we have in our IPTV entertainment service, there will be more demand for that going forward. It's maybe not a massive kind of change in Elisa's scope, but for Elisa Viihde entertainment IPTV service, there is a positive development going on there. In the international digital service businesses, they are mostly B2B businesses, and we see some of the customers maybe to some extent take a bit more time for their decisions. Overall, there is, of course, need for these digital solutions for our customers also now, and especially when developing for the long term. The outlook for the international digital service business is very good.
In terms of the margin, of course, these businesses are not so CapEx heavy, and they have lower EBITDA margin comparing to our, let's say, average margin at Elisa and comparing to the connectivity services. Overall, they are contributing to the bottom line already now. Of course, while scaling up, there is improvement potential for all of these digital service businesses.
Okay. Thank you very much for that. Just a second question on Estonia. I think Tele2 mentioned on their results call that they see in the current environment less headroom for growth through pricing or price increases. Just wanted to hear what you think about the outlook over the next coming quarters for your Estonian business, which is at the moment still doing very well. Thank you.
Okay. We are not really guiding the Estonian business separately, of course, this situation in Estonian market is also very much dependent on how the government and the general economic situation is further developing in Estonia. The different scenarios have quite different outcomes, we have uncertainty now which direction it will go. That's the reason I cannot really make a very heavy comment on how much price increases could be done. Always the price increases they are quite limited. What we maybe have more focus is to make sure that we are serving our customers in Estonia also, and also in the new ways that we can take the opportunity of, let's say, these situations where we can provide the solution where something else is not working due to the COVID situation.
The digitalization is moving forward also in Estonia, and we of course try to do our best there and take our opportunity there as well.
Okay, perfect. Thanks a lot.
You're welcome.
Our next question comes from the line of Adam Fox-Rumley of HSBC. Please go ahead. Your line is now open.
Very much. I've got two questions, please. I'm sorry if I missed it in your prepared comments, but I wondered if you could talk a little bit more about your mitigation plans, if indeed the economy does begin to turn down. I guess in an environment of continuous improvement, you may have to step up things slightly more dramatically. Are there any areas you're thinking about in particular? My second question is on Elisa Automate. It seems like a great time to be in that business. I'm interested to hear if customer interest has stepped up, whether you've signed any new business there. I guess, what kind of lead time does that kind of business have? Because my suspicion is it's quite complicated to integrate. Thank you very much.
All right. Thank you for your questions. In terms of the mitigation plans, of course, we have the continuous improvement, improving our productivity and profitability going forward. We continue long-term in mind with those plans and with the culture we have at Elisa, focused on quality and creating better results for customers and shareholders. We continue with that very determinedly. Saying that, we, of course, have taken a look of different scenarios, what the different, let's say, The demand for different services, how they might evolve and what we should do, in different situations and without going into any further details, we have made quite kind of elaborate study and review, which we continuously update. Like I said, there is high uncertainty how different things are evolving just based on the general economic situation and then especially to the demand of our various services.
The scenarios are wide apart, but we are working on, and we have kind of plans and activities for different outcomes. Elisa Automate, yes, the customer interest for solutions is increasing, and we have very good, let's say, interactions with many customers. Hope to report some great achievements there going forward. Also important to understand that we have the family of operator efficiency solutions where Elisa Automate and also the Polystar plays a role and, of course, also other inorganic opportunities to develop that business domain exist. We are active there. Of course, the M&A front during the COVID uncertainties is somewhat disturbed, but we still have kind of continuous activities on that front as well.
Thank you very much.
You're welcome.
Just to remind everyone, if you want to ask a question, please press zero one on your telephone keypads. We have a question from the line of Siyi He of Citigroup. Please go ahead. Your line is open.
Hello. Hi. Good morning. Thanks for taking my questions. I have two, please. The first one is on your thoughts on back book price increases. I think in the past, Elisa has been putting through some back book price increases, especially in Finland. I wonder what's your view now, especially given the COVID-19, about the potential back book price increases for this year? The second question is on roaming. Sorry that I might have missed this. Would you just remind us what the size of the roaming revenues that you have and, I guess whether there is still some customers paying for European roaming, the out of bundle European roamings and whether you get a margin on that? Thank you very much.
All right. Thank you for your questions. In terms of the back book price increases, of course, it is very important also to always when looking at those two, understand the market developments overall and from the competitive front. We might or we might not have price increases on our way. It is something that we are not too much disclosing, but however, we have, of course, and we are delivering a lot of value with our unlimited plans, for example. Customers are getting a lot of value. Maybe that's for that. In terms of the roaming, for us, the roaming revenue, of course, has less proportionally value than for many other operators. Certainly, it is an important revenue for us and the margins we are getting also, they are very good margins without disclosing any numbers.
This is probably all I can tell you, and unfortunately, I cannot quantify more. Thank you.
Thank you very much.
Our next question comes from the line of Abhilash Mohapatra of Berenberg. Please go ahead. Your line is now open.
Hi. Thank you. Thank you for allowing the follow-up. Just maybe a quick follow-up on Andrew's question earlier. Just be interested to hear any sort of thoughts on the competitive environment in the consumer space and if you're seeing any changes to the sort of below the counter offers and then if things have changed in Q2 versus Q1. Just be interested to hear your thoughts on that. Thank you.
All right. Thank you for your question. I wish I could help you with your connectivity because it seems to be having some troubles hearing exactly your questions. We do everything we can from Elisa if you like and if we can. If I understood right, your question, it was related to the competitive landscape and the below the counter offers and so forth.
If there is any difference, if we exclude the March, which has been a bit special month with the COVID now kicking in, we can say that there is not that much of a change for the fourth quarter. Not to worse, let's say, not to more active campaigning and not to less active campaigning. Pretty much on the same level. Ourselves, we are focused on providing rather more value to existing customer base than just trying to chase desperately customers from other operators. Saying that, we are defending our market position very determinedly. If there are players who try to utilize special offers to win customers from us, we will hit back as we have done. No major changes if you ask that.
Our next question comes from the line of Roman Arbuzov of JP Morgan. Please go ahead. Your line is open.
Thank you very much for the opportunity to ask questions. I just wanted to follow up on the mobile service revenue growth outlook, and specifically within the consumer segment, which is somewhat less directly impacted, perhaps, than the B2B side. There's a few factors at play simultaneously, one of which is the fact that there is a lot of demand, as you say, for your services and usage is higher. On the other hand, there may be some political or social responsibility types of pressure, and also low purchasing power of consumers. If you take the balance of these factors, just directionally perhaps, would you be able to comment whether should we expect a step down in terms of the MSR growth rate?
Do you think that, as long as competitive environment remains reasonably benign, as it seems to me the case currently, do you think you can actually monetize some of this increased usage going forward? That would be the first question. Secondly, I was wondering if you can comment on one of your competitors to the extent that you can. I was looking at Telia postpaid customer intake, and it's been persistently negative over the last five quarters. I guess some of these questions are better directed to Telia, but I wouldn't be surprised if that is also concerning to you directly. The way it seems to me is that it's Telia's consistent loss of market share that's potentially one of the biggest risks to the current benign market competitive environment.
Perhaps you could share some thoughts in terms of whether you think this is a concern? I don't know if you could share anything in terms of the causes of why they continue to lose customers, despite the fact that they seem to be more competitive on price compared to yourselves and DNA? Thank you very much.
All right. Thank you, Roman, for your questions. I really follow your thinking and analysis in terms of the MSR and appreciate your question. I have to reiterate that our guidance is that MSR continues to be positive. However, we are not quantifying the number. Let's say drivers for how the MSR is developing are quite many, and especially the competitive situation being one of the biggest, as discussed earlier. Since we cannot control the competition, it's a bit difficult to give more detailed MSR forecasts. Of course, we see a lot of opportunity asset of upselling some of the price increases and also 5G. That's what we're working on. In terms of Telia's postpaid customer base, Yes, I do agree with you that they are probably in the best position to explain.
Of course, we did win one large public sector contract 2018 and impacts came in 2019 and even somewhat this quarter. That may have impacted to Telia somewhat. I want to remind that Telia was very active to some of their large customers late 2018, early 2019, creating negative impact to us. We have made a bit similar steps forward, which we have gained now from them, maybe, and that has maybe had impact. Nevertheless, it's better that Telia itself responds to your question.
Okay. Maybe just one final follow-up. In terms of the mitigation of measures, I didn't quite catch whether you're already active on that front and this is something that you're implementing, or you're still waiting to see how the situation developed to enact any potential contingency plans?
Well, the continuous improvement and a good high-quality execution of our continuous development-based plans is vital for us. We have a long-term perspective in our activities, but we tend to be proactive with mitigations.
Okay. Thank you so much.
You're welcome.
We have no further questions on the line. Please go ahead, Sahiv.
Thank you for the questions. We stop here. We wish you a very safe future. Take care of yourselves and your families. Have a nice day and the rest of the week. Thank you and bye-bye.
Thank you. Bye.