Good morning, everyone. Welcome to Elisa's second quarter 2019 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. We have also some audience and some of my colleagues here. Welcome. We start this meeting with a presentation followed by Q&A. First, we take questions from the audience and then from the conference call lines. Veli-Matti will go through the Q2 report, and Jari will focus more on financials. Now we are ready to start, so I give the word to Veli-Matti, please.
Thank you, Vesa, and welcome on my behalf as well to our second quarter report. Just let's get started. The second quarter was another good quarter. Our execution was going according to our plan. Our revenue was slightly down. We saw growth in comparable EBITDA. Mobile service revenue growth came to 1.9%. We also had postpaid voice churn slightly down from 19.7% to 18.0%. Postpaid mobile subscriptions growth was up to 27,000, and we had fixed broadband subscription amounts base go down 5,100. We made Polystar acquisition and completed it during the quarter, and we have also started the sale of 5G services with new phones, first phones, and subscriptions in commercial use. The revenue came down mainly due to the fact that the equipment sales came down slightly. Also, interconnection prices have decreased in Finland, and also we still had some divestment impacts to the revenues.
In mobile service revenues, the 4G speed upselling continues very nicely. We have also sold our first 5G subscriptions. We have made some product changes, but we have also seen, as we have earlier communicated, the impacts now from the earlier price decreases in some large corporate customer cases, and also from some public sector customer cases. EBITDA was slightly up, and of course, we got some benefit from IFRS 16. Regardless of that, we saw year-on-year comparable EBITDA growth somewhat. Of course, our productivity improvements, as earlier said, have worked. In terms of the churn, the churn came down. As we earlier communicated, we had slightly higher churn in first quarter coming from the corporate sector. As we communicated those at that time, our competitiveness is strong, and the churn came slightly down.
R egarding to the ARPU, even if we had some growth in the postpaid subscription side, the ARPU came down mainly due to the lower interconnection prices. Also based on the fact that in some of the larger corporate B2B side, these lower prices earlier indicated, they now came more into effect. When we look at the segments in the consumer side, revenue came down 1%, and EBITDA was growing 3% year-on-year. In the corporate segment side, revenue was coming also down with 1%, and EBITDA was growing 6% year-on-year. Pretty much the same reasons in both segments for the revenue impacts as well as to the growth in profitability. We continue to execute our strategy with three focus areas. If we think about the mobile data selling, the growth in 4G smartphone penetration is increasing. We still have growth there.
Having 84% of all the phones being smartphones and pretty much of those are 4G phones. The 4G penetration in subscriptions is now 70%, and the lowest speed level, 50 Mbps penetration in our subscription base, is now 33%. Which indicates that after getting customers to the lowest speed level of 5G, we are getting more and more customers to the higher speed levels in 4G, and also now starting to have gradually some of the early first movers to 5G speeds. There's a very good business model, what we have done on the past couple of years in 4G to sell speed and upsell customers to highest speed levels. It is very suitable to 5G as well, even if we believe that in the 5G era, we will have other business models as well to benefit our mobile service revenue growth.
Moving on to 5G, we have, as said, started first the pre-sales of Huawei, OnePlus, HTC, and ZTE devices. We have started the real sales of 5G mobile broadband subscriptions. We have two different speed tiers. We have 600 Mbps with the price of EUR 35 per month and 1 Gbps with the price of EUR 45 per month. The first 5G phones have been sold also and delivered to customers, and they are in commercial use. We have the widest 5G coverage now in Nordic countries, in the city of Turku. We have also coverage in three other cities, in Helsinki, Tampere and Jyväskylä. Of course, early on, these coverages are still limited to the city centers, but the coverage will be expanding based on the demand we start to see.
Of course, that is very much going hand-in-hand in the increasing device offering that will be expanding also later this year and more next year, and the following year with more and more affordable smartphones, but also with other devices like the different devices for IoT cases. We're also actively enabling 5G for new services and innovations to take place in the Finnish and Estonian markets later on. We have startups developing 5G services with our co-creation challenge, and the winners will be announced in the Slush event in November. We have also made 5G TV broadcast, 4K TV broadcast first in Finland. Of course, the IoT is very lucrative area, and there we have cooperation with more than 100 B2B customers and more to come. The subscription and device sales has started commercial use early.
Lower volume sales, of course, at the moment, but the first movers are now using 5G in Finland, and the application area is also enlarging and developing. In our digital service business, the original content is moving well ahead in Elisa Viihde. Our Arctic Circle original series has now been sold to more than 20 countries. For example, ZDF will be broadcasting that in Germany. Also, the All the Sins original series this spring was one of the successes and continued successes of Elisa Viihde's original series production and co-production with others. We also are involved with esports, and the engagement is expanding. For example, for one game, we had more than almost 500,000 viewers on Twitch in May just alone. In the international digital service businesses, we completed, as said, the Polystar acquisition, a Swedish analytics and assurance software company.
As earlier also indicated, we want to speed up the automation, also potentially our Smart Factory management businesses with acquisitions, this was one that we now completed. Our Elisa Smart Factory management business continues to move ahead very nicely, having a larger and larger customer base internationally, and also some new solutions in the offering have been released. Finally, about the outlook and guidance. Unfortunately, the positive development of the macroeconomic environment in Finland seems to be decelerating. We have competition still remaining keen in the Finnish market. We reiterate our guidance that our revenue will be same level or slightly higher than in 2018. Comparable EBITDA will be same level or slightly higher than 2018, and our capital expenditures will be maximum 12% of revenues. Then I turn the word to Jari, please.
Thank you. Let's start with profit and loss. As mentioned by Veli-Matti, Q2 was again good quarter and in line with our expectations and guidance. Revenue change was - 1.3% or EUR 6 million, mainly negative impact coming from interconnection price decreases. Interconnection and roaming decreased by EUR 4 million. Another negative impact from equipment sales, -EUR 4 million. Net impact from divestments and acquisitions in Q2 was EUR 2 million. That includes Polystar, one-month consolidation, and divestments done last year. Excluding those items in both segments, service revenues in corporate customers was slightly negative at EUR 2 million, and consumer segment +EUR 2 million. In both segments, traditional fixed line services continuing in decreasing trend growth in both segments in domestic digital services, and in consumer segment, mobile services. In consumer segment, the mobile services were, in Q2, slightly negative.
In earnings development, EBITDA, excluding one-offs, was increasing EUR 7 million or 4.4%, and in reported EBITDA, we had EUR 5 million one-offs. Out of that, EUR 4 million relates to personal reductions costs, and EUR 1 million relates to Polystar acquisition transaction costs. This EUR 7 million change in comparable EBITDA. Out of that, EUR 4.2 million is coming from IFRS 16 change. Polystar impact is approximately EUR 400,000. We have continued with productivity improvement measures as we communicated earlier, and we will continue with those. They will contribute more in the second half, as we have said earlier. Comparable EBITDA margin increased clearly to 36.2%, and even excluding IFRS 16 change, it was 35.4%, clearly up from last year. Comparable EBIT was slightly down from last year. Depreciations increased by EUR 7.5 million. Out of that, EUR 4.5 million comes from IFRS 16 change.
Approximately EUR 500,000 relates to 5G license that was acquired end of last year and depreciations from that. Also, we had, in Q2, EUR 1 million one-off type of write-down in depreciations relating to assets that are not used anymore. EPS was comparable to EPS EUR 0.47, same as last year. If you look at Estonia's performance, which continued to be positive. Revenue increased by 1.2%, and EBITDA strong improvement, EUR 1.2 million or 9%. Mobile and fixed services are growing. Postpaid churn still low level at 7.9%, and postpaid subscription base increasing 1,700. Total CapEx was EUR 61 million, and excluding IFRS 16 change, EUR 55 million. In line with 12% revenue guidance. 67% in consumer segment, 33% in corporate segment. Main CapEx in 4G network capacity and coverage, other network and IT investments.
Investments in shares was higher, EUR 89 million, and of course relates mainly to Polystar acquisitions and some other minor share purchases. Cash flow growth was strong. Comparable cash flow growing from EUR 87 million last year to EUR 102 million, 17% growth. Net working capital change was positive year-on- year comparison. CapEx was lower as well as paid taxes lower. IFRS 16 impacted positively, EUR 4 million. Half-year comparable cash flow is EUR 170 million, which is EUR 30 million higher than a year ago or 22%. If you look at the operating cash flow conversion, still high at 66%. Capital structure, which remains as well according or in line with targets. Net debt to EBITDA was 2 x, somewhat higher against the end of last year and Q1. We had dividend payments, and of course Polystar acquisition impacting somewhat IFRS 16 impact to net debt as well as assets is EUR 70 million end of Q2.
Going forward, we see that net debt to EBITDA goes and reduces down as cash flow generates in the second half. Return ratios at good level. Return on equity was 28%, and return on investments 17.1%. We completed a month ago Polystar acquisition. Polystar offers and provides software solutions to network management and network operations to mobile operators, and is very complementary to our own Elisa Automate service offering and offers an interesting opportunity to accelerate the growth. Polystar headquarters in Stockholm, subsidiaries in North America, Australia, Singapore, and Russia. Approximately 200 employees and more than 100 customers in 50 countries. Acquisition price enterprise value was EUR 70 million. Additional maximum EUR 5 million acquisition price if growth targets are achieved. Polystar's last financial year ending April revenue was EUR 38 million, EBIT, EUR 6.4 million.
We started the consolidation now, 1st of June, and impact in Q2 figures revenue EUR 3 million and as Matti said, EBITDA EUR 400,000. This acquisition is EPS positive from day one and no impact on midterm targets or dividend payment capabilities. Now I give word to Vesa, please.
Thank you, Jari. Now we move on to Q&A part, and we start from the audience. First question comes here, Matti.
Hi, it's Matti Riikonen, Carnegie. Couple of questions. First, about mobile service revenue. I think you mentioned in Q1 that you would expect mobile service revenue to start accelerating as of Q2, and that was not the case. Do you still think that there's potential to mobile service revenue to accelerate in the second half? Second question is that related to the restructuring costs, which you book as extraordinary. I think in earlier years, you had a habit of making a lot of cost reductions, but you did not show that many one-off restructuring costs. I'm wondering what is the reason to book them as extra now? Do you still expect that there would be additional one, of course, in the second half related to the cost savings?
All right. In regards to the MSR, I don't know where you have heard about us saying that MSR is accelerating. What we have been trying to communicate at least is that we don't give guidance for MSR. We see that the MSR will have a positive sign in the growth rate. We have not taken any position for a couple of quarters what the growth rate will be, because of the competitive dynamics changing in the market very heavily. We see that with the upselling of our higher speeds to customers, as well as with some product changes, we can generate some positive development on the mobile service revenue growth rate itself. I'm sorry if we have miscommunicated and made the wrong impression. Clearly, we have been very consistent on communicating that we don't give any guidance where the MSR will be.
We have said that it will be with a positive sign with the growth rate going forward. In terms of the restructuring cost, we have made some restructurings during the quarter, but I'll let Jari to explain a bit more further details on that.
Yeah. Regarding those, there's no change in accounting or booking them, and treating them. We always had personal reduction- related expenses as one of expenses, and these reduction costs in Q2 as well as in Q1, they all relate to personal reductions. This is the way that we booked those earlier as well. No change in that.
Do you expect that you would still have those in the second half? Are you mainly done with the cost savings now, and the impact of those would be seen more in the second half?
The cost savings are also coming from various sources, it's not only this reduction. There are many productivity improvement measures ongoing and taking place. We don't give any forecast regarding restructuring costs.
All right. Finally, when you add Polystar into your numbers from June, don't you think that with the revenue contribution from Polystar, do you think it would be fair to guide or change your guidance so that the top line should be growing and it should not be possible to remain top line as flat with the Polystar included, as I assume that it's part of your guidance at the moment?
Yeah. We reiterated. From the Polystar, we will get half a year of the revenue to our numbers, we reiterated our guidance, which says same level or slightly higher.
Fair enough.
Okay, next question. Sami.
Sami Sarkamies, Nordea Markets. I have a couple of questions. Firstly, on net adds development in Q2. You were quite successful on the mobile side. Would it be possible to get a bit more color on how you did achieve the positive net adds? On the fixed side, you did lose quite a bit of broadband customers. Were there any exceptional developments in Q2? That would be my first question.
All right. In regards to the net adds, mostly coming from the corporate side, and we have had, let's say, good success. While we have seen in the large corporate customer segment heavier price competition starting already early last year, as we have communicated earlier, creating some more churn for first quarter this year. With our competitiveness, we have gained customers. As we have responded to this competition, we have been quite successful. For example, in the public sector large deals, we have been winning, and we are now showing that results, which continues to be visible from these public sector deals that are rolling in still this year and maybe some of that next year as well. In some of these large customer deals, the price levels have been quite low, as well as these public sector deals, generally, they are of the lower ARPU.
That's why the ARPU impact has been a negative, even if we have had increase in net adds. Of course, this increased customer base is giving us a very good base to sell other services that we have for portfolio, from IT to other digital services, to these customers. In terms of the fixed broadband side, we have some large B2B customers who stopped buying fixed broadband to their staff to their homes. We got some kind of one-off type decrease there, which explains mostly this decrease of fixed broadband customer base. Other than that, the fixed customer base is quite stable. However, there is, of course, more and more MDU- type of customer base there, so there's a slight erosion in ARPU in that fixed broadband customer base.
Again, the customer base is very good, and we see various different kinds of other services that we can sell on top of this good customer base.
Okay. My second question would be on your 5G vendor selection. There's been plenty of news flow regarding Huawei that you've been ramping up in the recent years. Can you share your thoughts regarding this topic at the moment? Obviously, we have had these security concerns for some time; more recently, also other angles to this topic.
Well, yes, this topic is quite heated and maybe overheated, and there's maybe a bit mixture of global trade war discussion and activities, events, and then cyber threat discussions. Of course, very important would be that those two different important topics are not mixed together. The trade policies, and the global trade rules, and discussions are one topic. There are certainly issues on a global level has to be dealt with. Cyber threats and cyber development overall is an important, serious topic, and there are solutions to that. Now we have in the discussion, there's certain maybe agendas to mix these two, which is a bit unfortunate because then we are creating wrong impressions. To answer your question, really, we are in the middle of our 5G vendor selection, so I cannot really comment on which direction we are going.
I don't even know myself yet properly where we are heading. We, of course, have very active discussions and active vendors working with us in order to provide us good solutions to really ramp up volumes in 5G when the time comes.
Finally, a housekeeping question regarding Polystar. Could you share the EBITDA contribution for first half of this year and then for last year as well? Thanks.
You mean Polystar's EBITDA contribution to Elisa's numbers?
I mean their first half EBITDA number and then their EBITDA for last year, if you can share those numbers.
Jari, you can maybe answer that, please.
Yeah. We gave in the notes the net impact of six months if it had been consolidated. Its net results, EUR 1.8 million. It's not EBITDA, it's net earnings, and it includes depreciations from the customer base. We have allocated from the purchase price EUR 8.1 million to customers, which is depreciated in four years' time.
Okay, thanks.
You're welcome.
All right, next question comes here. Panu?
Thank you. Panu Laitinmäki from Danske Bank. I have a question on the mobile data volumes. It seems that the very strong growth is starting to level off. Q2 was the first quarter when the data volume was actually down from the previous quarter in many years, based on your figures, and the year-on-year growth is kind of flattening. What are your thoughts on this? Is this positive, kind of reducing the pressure to increase the network capacity, or is it the other way around, that when the 5G is coming, the demand has already saturated, and there will be perhaps less need to upgrade?
Well, I believe strongly that the mobile data usage will grow. Of course, we have had strong growth in terms of the volumes. They are still increasing. Of course, since there is a certain leveling off time to time in any development, we start to see in mobile data. Now, when we are moving to 5G gradually in the beginning now and maybe next year more and following even definitely more, it is evident that there will be volume growth. On one hand, of course, the volume growth decrease is good in terms of our CapEx or OpEx base. We are not, as we have never been, fearing the fact that customers are using plenty, because then it means that customers are getting value, and then they are more willing to pay more for the higher speeds.
We strongly believe that that is one very good business model to continue with 5G for customers to take more speeds with their subscriptions. There will be applications. There are already applications where you can see clear difference when you use good 4G subscription versus the 5G subscription. There are more applications like that to come in the coming months and years. We foresee the, let's say, business model with speed-based tiering to continue to be successful. Of course, the competitive situation in the market always then has an impact. Is it very successful or successful? We are also working on IoT side. There is additional revenue potential on the IoT side when that really gets off and maybe also some other new, let's say, performance improvements that 5G will bring you time comparing to the 4G.
Okay. Thank you.
You're welcome.
All right. The next question, Artem, please.
Artem Beletski from SEB. A couple of questions from my side. Starting with strong net intake, what comes to post-paid in Finland? You mentioned about some public sector wins, which have been impacting the number in Q2, but apparently, some further flow will be visible in coming quarters, what comes to new customers. How big is this number? Are we talking about some 10,000s or how many subscribers you have won, which are not yet visible in your numbers? Maybe the second question is relating to Polystar acquisition, which is quite nicely filling your offering, what comes to Elisa Automate. Do you need to make some further M&A days in Elisa Automate going forward? Do you see that your portfolio is now basically completed on that front?
Maybe just generally on digital services, how good M&A opportunities are you still seeing there, and how eager you are implement them in coming years?
All right. Regarding the net adds, we are not giving a guidance for net add development going forward. What we can say, for example, from this public customer deals, because they are quite large frame contracts, so we have tens of thousands of new customers coming in, in coming quarters. Timing is a bit still, of course, up to the customers, but we, of course, are actively working to get to the best mobile networks in Finland. The net impact is, of course, dependent how we will compete in the other customer cases. However, we are quite comfortable on our competitiveness as we have been able to show with these numbers and these executions in the past quarters. Just taking alone these public sector customers, there are tens of thousands of subscriptions coming in the next quarters.
In terms of the Polystar, as we have communicated, we have a strategy to grow our digital services, the international digital service businesses, also with the help of acquisitions. First, now bolt-on small medium type of businesses. We are not in a desperate need, but we see that as a further opportunity to accelerate. Now that Polystar is opening us doors to 100 other operators with their sales force, that we can have Elisa Automate product line introduced to them, slightly have a positive impact to Elisa Automate sales, while Polystar is executing their very successful own business at the same time. They are very complementary. We are not in a desperate need to buy further companies, but we have an opportunity, of course. There are quite a few potential targets that we might buy. We are not in a desperate need.
We, of course, want to make value- increasing acquisitions so that they are creating shareholder value to our shareholders, but also that they are nicely fitting to the Elisa Automate Polystar family. Overall, with our digital service businesses, international digital service businesses, taking the Smart Factory and video conferencing , we have also potential M&A opportunities there. No desperate need to buy something, but more as an opportunity to find suitable good deals.
Maybe just a quick follow-up relating to cost efficiency actions. Basically, this is a message is still unchanged when it comes to benefits that we basically have seen some in Q2, and full benefits will be visible in the second half of this year. Is this still the message?
Exactly. As we said that we have accelerated productive improvements, taking more impact to the second half of the year. We are executing according to the plan. If I may add just one clarification or add to the earlier answer. While we have these bolt-on acquisition opportunities in sight for the coming quarters, those will not have impact on our dividend policy.
Very clear. Thank you.
You're welcome.
All right. Thank you. At the moment, we don't have any further questions from the audience, and there are a few questions coming from the conference call lines. Let's take the first one, please.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad, and you enter a queue. After you're announced, please ask your question. Our first question comes to the line of Abhilash Mohapatra from Berenberg. Please go ahead, your line is now open.
Yes, good morning. Thanks for taking my question. I'd just like to come back to the sort of corporate segment, please, and the performance there. A very sharp decline in the ARPUs. I think ARPUs are down about 5% year-on-year. You've talked about the sort of changing subscriber mix as some of these lower- priced, sort of new contracts come into effect. I'm just wondering, as we sort of roll forward and these sort of new tens of thousands, sort of new customers that you expect to onboard in the coming quarters. I'm just trying to think, is it fair to assume that we should see ARPUs continue to come down for a while as you sort of move towards a new lower level of ARPU because of this deflationary pressure?
Just as a follow-up on that, can I just also confirm if these sort of corporate net adds have any sort of significant machine-to-machine kind of sims in there, which might also be deflationary for ARPUs? Thanks.
Alright. These corporate net adds doesn't have any significant amount of machine-to-machine subscriptions in them, they are quite kind of normal subscriptions for persons to use in the companies or organizations. In terms of the ARPU forecast, like I said, we are not giving ARPU forecast neither. Of course, while we are adding lower ARPU public sector customers, it has a dilutive impact to the ARPU. We have also positive impacts to ARPU from upselling higher speeds in the rest of the B2B customer base, which is much bigger than even if we are adding some tens of thousands of B2B customers, our corporate customer base is much, much bigger. What the kind of net impact for the ARPU development of these two different trends will be remains to be seen.
The main thing is that we see quite positive development of the mobile service revenue side overall on absolute terms, for the corporate segment.
Thanks. Just a very quick follow-up on that. In terms of the sort of underlying trends, you said, obviously you're sort of seeing success in being able to upsell your corporate customers onto higher sort of value packages. Just trying to think about the sort of push and pull there. You've got that's a positive, on sort of negative side, are you seeing more pricing pressure when maybe you try and renegotiate contracts or renew contracts with some of your corporate customers? Is the net of those two still positive for you? Thanks.
Well, as maybe we have earlier discussed, the corporate segment really for us is consisting of three different areas: the entrepreneurs, the SME segment, and the large customer segment. The competitive dynamics varies in these three segments. What we've now seen mainly is the, let's say, more intensive competition in the large customer segment, which is maybe 33% of the total mobile or total B2B segment. In that area, we have clearly seen our competitiveness. We have seen some ARPU decline for some customers, and now for these new public sector customers. Overall, what we see overall for the corporate segment with these three sub-segments that the tough competitive situation is overall and in general pretty much what it has been always. We are comfortable that we can have positive development for the total revenue in the corporate segments.
That's very helpful. Thank you.
You're welcome.
Thank you. Our next question comes to the line of Stefan Gauffin from DNB. Please go ahead. Your line is now open.
Yes, hello. Coming back to the mobile data growth, it declined quarter-on-quarter. Can you explain if there are any sort of one-off type impact in here? Secondly, have you seen any change in the momentum relating to speed upgrades for the subscriber base? It's a question on if subscribers are waiting now to jump onto 5G? Thank you.
All right. In terms of mobile data growth rates changing from 2.1% we had in the first quarter to 1.9%, they are relatively close to each other when you think about different dynamics that is taking place. Of course, the negative impact of mobile service revenue growth is coming from the corporate segment, large customer segment, some customer cases where these lower prices we've experienced, especially last year, for some cases have now materialized. That has been the slight negative impact that we've seen. In terms of the speed upgrade momentum, we see customers moving ahead with 4G speed upgrade still. We don't see so much customers yet starting to wait for 5G because we have a very good 4G higher speed tiers as well to offer before customers who many are expecting to have a bit more affordable 5G devices coming next year.
That's what they are more waiting than waiting for speed upgrades.
Can I come back? I was talking about the mobile data, the million gigabytes that has been growing every quarter, and now it's a sequential decline. I'm just wondering if there is something that's impacting this?
Like I said already earlier when I addressed the same question, that sometimes with these developments, there is some leveling off. We are very comfortable that the usage will continue to grow with our customer base. Customers continuously moving to higher and higher speed subscriptions, where they can consume more mobile data for their video and other applications.
Okay. Thank you.
Thank you. Our next question comes to the line of Henrik Herbst from Credit Suisse. Please go ahead. Your line is now open.
Great. Thanks very much. I had two questions. Firstly, just to follow up on B2B again. I guess you got pretty good visibility on big contracts coming in. I presume you would have the same visibility on contracts lost and sort of customers migrating off to other operators. Are you seeing any of that? Or is it sort of more of a question, what contracts will be up for renewal, and whether you'll sort of win or lose contracts from here on? Secondly, if you can give an update, maybe on the competition in the consumer segment. I guess it was pretty tough last year and got a little bit better in Q1, it sounded like, and sort of what you're seeing below the line, promotions, et cetera, in Q2. That would be great. Thank you very much.
Well, as earlier communicated, we started to see some new kind of behavior for pricing in some of the large corporate customers early last year. We lost some customers, as we explained first quarter. We saw the increased churn because we had the migration of those customers out from Elisa during the first quarter. While understanding that there are also some new dynamics in the corporate large customer segment pricing, sometime last year. We, of course, learned about that, and since then we have been very competitive, and I'm not expecting us to lose customer base. We are not searching for more increase in our market share in large B2B customer base. Since we have been now learning to use the pricing different way, what we learned, we have been winning actually more than we've lost.
Definitely, we're going to defend as long time we have said that we are defending our market share, even with the cost of some short-term pain with lower prices. When it comes to the consumer segment, the competitive intensity didn't change in second quarter so much comparing to the first quarter. However, of course, the competitive intensity now in the second quarter was not at all to the level what we saw a year ago and at the same time.
That's great. Thank you very much. Given the visibility you got in sort of contract in B2B, you're not expecting to have a big outflow of customers in the second half. Is that correct? Did I understand that correct? Thanks.
Yeah. Yes.
Thanks very much.
You're welcome.
Thank you. Our next question comes to the line of Siyi He from Citi. Please go ahead. Your line is now open.
Hello. Good morning. Thank you for taking my questions. I just want to follow up on the B2B side, if you don't mind. If I can understand it is that your ARPU is down 5%, but obviously had a good add and a reducing churn. I'm just wondering if it's fair to say that your B2B strategy now is to be more proactively repricing your offers to keep your dominant position. I mean, I understand that your competitors has been quite pricing- aggressive. Given that you're successfully in capturing the municipality's public contract, I wonder if you see have any response so far from your rivals. And my second question is on the Polystar. I was wondering if you can give us some visibilities on how the business has been growing in terms of revenue and the EBITDA over the past, let's say two to three years.
Thank you very much.
Okay. In regards to the B2B side, the competitive dynamics, like I said, for the first is a bit different in relation to which subsegment we are talking about B2B business. When we talk about the large customer segment, the situation varies really very much on case-by-case basis. For many of the customers, we have very good competitive situation because our quality of service in the past couple of years is really very good. Our customers are really happy customers. We have also been able to provide the largest portfolio of different kind of digital services to our customers, also making our customers even more happy. Every now and then, when somebody is knocking our customer's door with very low prices, we also learn to respond to those kind of things a bit more than we did.
In that respect, we see that we are in a very competitive position. Of course, when some of the customer cases in the last customer segment will be repriced with lower price level, a bit more, we of course, continue more fiercely with our productivity development in order to make sure that we are making good profit. As you have seen, the profitability of the corporate customer segment has gone upwards. In terms of the Polystar numbers, I can refer to Jari that Jari can give you a bit light on that, please.
Yeah. Polystar has had good growth numbers in the past years. Indeed, revenue has been growing with double-digit growth rates and also margins have been improving so that EBIT margin is clearly in double-digit area. 2019 versus 2018, there was 17% growth in revenue, even much higher growth in earnings. However, that was partly helped by currency exchanges. Even excluding those, EBIT margin, as said, is clearly in double-digit area.
Thank you very much.
You're welcome.
Thank you. Our next question comes to the line of Andrew Lee from Goldman Sachs. Please go ahead. Your line is now open.
Yeah. Good afternoon, everyone. Just a question on a topic that is being raised in almost every other conference call over the last three to six months with operators, you haven't touched on, which is just on your network, and particularly your mobile towers. Other operators are basically having to try and look to these to drive efficiencies, given that their returns are so minimal. Presumably, you have an opportunity to raise returns further by being more efficient with your towers. Just wondered if you could give us a little bit of color in terms of how you think about maximizing the efficiency of your mobile towers, what kind of degree of network sharing you have at the moment, and what, if any, is the opportunity there? Thank you.
All right. Thank you, Andrew. In regards to the towers, of course, that's one area where we also are looking always to improve our efficiency productivity. At the moment, as you may know, in Finland, we are sharing somewhat the usage of towers between all the three operators. We have one situation where our two competitors also share their networks in the eastern part of Finland, where there's 15% of the population. There's nothing specific in terms of the efficiency, but of course, that's an area where we look at all the kinds of opportunities to improve our efficiency, which will help us going forward as well as one ingredient of our efficiency improvement.
Thank you.
You're welcome.
Thank you. Our next question comes to the line of Peter Kurt Nielsen from ABG. Please go ahead. Your line is now open.
Thanks a lot. You'll be thrilled to hear that I have another question on the corporate segment, please. I'll be specific. Given the size of these net adds from the public sector, could you tell us, Veli-Matti, or an indication, what is the ARPU we are talking about here? Is it EUR 4, EUR 5 for these public sector contracts, please? Thank you.
Thank you, Peter Kurt. I'm sorry, I cannot give you our customers' prices. I cannot really give you any light into that. Just as an indication, the numbers you gave seems a bit low to me.
Okay. Did you want to secondly, just is there any significant new corporate contracts coming up for renewal without being specific over the coming year or two perhaps, that you would say or highlight to us? Not names mentioned, of course, but any periods with particular renewal of contracts that are coming up?
The corporate B2B customers, they are kind of renewing their contracts, as you may know, continuously, depending on how long contract periods they have, from one year to even to seven year. There's no kind of change with the rhythm or so how the contracts will be renewed going forward. There is no acceleration of contract renewal, not so much deceleration. That's quite business as normal for us, that there will be coming contract renewals with a certain pace continuously. We are quite active, of course, to make sure that our customers are happy to continue without any major administrative hassle for negotiating with many vendors and so forth, but just continue with the good service they have got from us.
Super. Thank you for that.
You're welcome.
Thank you. Our next question comes from the line of Adam Fox-Rumley from HSBC. Please go ahead. Your line is now open.
Thank you very much. I have two questions, please. Firstly, I wanted to ask about the strategy around mobile equipment sales. If I look back over the last few years, the level of sales are up quite substantially. Now, it's down maybe 10% for the last couple of quarters in a row. I wondered if anything had changed in your appetite for those sales, or whether it's a market thing. Secondly, if I look at the difference between the churn levels in Estonia and Finland, there's an enormous difference. The trajectory in Estonia has been very positive over the course of the last year or so.
I wondered if you could talk about what you're doing there to improve churn, and whether or not there's any scope to take any learnings back into Finland, or whether it's all just completely market specific and a function of the prevailing competition? Thank you very much.
All right. Thank you. In terms of the device sales, we are the largest seller of mobile devices in Finland, and we have very much appetite for that going forward. The development in past quarters, again, there has been some impact from the Google- Huawei Android kind of announcements. The different quarters have a bit different timing for new gadget or device introductions to the market, and there are some other elements impacting on how much we are selling time to time. We had pretty good, successful quarters, very successful quarters with some introductions with the comparable quarters. That also has some impact that when you don't have very good quarters, then it looks like it is, and it is then showing a bit negative.
Going forward, of course, we have appetite, and we are the first one who has introduced 5G devices to Finnish market, and we continue to provide a very good portfolio of devices to our customers. In terms of the churn in Estonian market being quite much lower. Yes, the Estonian market is different market environment comparing to Finland. All the countries pretty much have a bit different competitive dynamics. Of course, our organization in Estonia has executed and performed really well, and certainly we are taking learnings, and we have been taking learnings from our Estonian operations, anything we can learn, and also other directions. That's what we do constantly with our business, that we take learnings to both directions.
If I could just follow up on that last one. Thank you. Those are helpful comments. Has the addition of Starman in Estonia led to improvements there?
Of course, the Starman acquisition has helped us to even improve the, let's say, customer stickiness because many customers have now more and more services from us. Also, as we expected and we planned, the cross-selling has been working pretty well between the Starman and our Elisa service portfolios.
Thank you. Our next question comes from the line of Ondrej Cabejšek from UBS. Please go ahead. Your line is now open.
Good afternoon. Thank you very much for taking my questions. My question on B2B have been asked, perhaps just to follow up on the early questions around revenue guidance. I appreciate you don't guide on individual revenue line items. Given the reiteration of guidance this morning, I was wondering if you could help us think about how you see the broad building blocks to go from the slightly negative position we have here in H1 today to the guidance of flat to slight growth. Presumably, when you set your guidance, you weren't factoring the benefit of Polystar into these numbers. Can I just confirm that you believe you'd still be able to achieve your revenue guidance without the positive benefit of Polystar? Thank you.
Thanks for your question. I didn't quite hear well your first question. Can you repeat the first one?
Yeah. It was just to understand, I suppose, how we go from the situation we have in H1 where it was sort of slightly negative to a position of flat to slight growth in terms of full year revenues. It was just the question around Polystar.
You're talking about the total revenue at Elisa?
Correct. Yeah.
Okay. As we have said, we have had some divestment to impact the first half of the revenue, the interconnection prices to decline, and now also the momentum in the device sales side being a bit less successful as we had with the comparables. Those are the main reasons for decline. How that will develop going forward, we, of course, are very comfortable for our guidance for same level or slightly higher revenue development for the full year. You asked also that whether that would hold without Polystar. The answer is yes.
Thank you very much. Very clear.
You're welcome.
Thank you. Our next question comes to the line of Simon Coles from Barclays. Please go ahead. Your line is now open.
Hi, Simon Coles from Barclays. Thanks for taking the question. It's just on the fixed revenue, which you haven't really talked about much. At the CMD, you gave some quite helpful indication on what the different revenue lines in the fixed revenues are doing. Has there been any major changes to that? Are you seeing anything different in some of those lines? Just wondering if you can give us some more color on what the drivers are on the fixed revenues. That'd be great. Thank you.
All right. In terms of the fixed revenue side, there are several drivers or fixed revenue streams that are coming. The fixed broadband has been slightly down now because of some of the price pressure coming from the MDU business, and also some decline that we said, which was partly one-off type of decline. Other than that, the fixed broadband revenue side is pretty stable. Fixed voice, of course, bringing the revenues down. We have some corporate data networking and cybersecurity, and some other areas where we see a pretty good, stable or slightly growing development on the fixed revenue side.
That's super helpful. Thank you.
You're welcome.
As there are no further questions registered at this point, I will hand the word back to the speaker for any closing comments, please.
Okay. Thank you for those questions. Any further question from audience? No, there seems to be no further questions. Thank you for participating in this meeting and conference call, and we wish you a very nice summertime. Goodbye.