Good morning, everyone, and welcome to Elisa's Q2 2023 conference call. I'm Vesa Sahivirta, Head of Investor Relations, and here together with me is a very familiar team, again, CEO Veli-Matti Mattila and CFO Jari Kinnunen. We start this call with presentations, followed by Q&A. Because we don't have audience here now, today, we go straight to the conference call lines. Now we are ready to start, so I give the word to Veli-Matti, please.
Thank you, Vesa, welcome all to our Q2 interim report for 2023 on my behalf as well. We got a good quarter despite the anticipated challenges. Our revenue grew by 2.2%, and comparable EBITDA was up by 1.8%. Mobile service revenue continued to increase well by 5.4%. In the international digital services, the year-on-year revenue growth was slightly negative due to the expected volatility in the business. For the full year, we expect strong double-digit organic growth to continue for the full year. In Finland, postpaid churn decreased to 13.6%, and postpaid subscriptions was growing more than 43,000, of which machine-to-machine and IoT subscriptions contributed almost 33,000.
Fixed broadband subscription base continues to be quite flat, decreasing 2,200. Very good momentum with 5G continues. Now, our networks is covering 90% of the Finnish population, over 70% for Estonia. We are commercializing very well the 5G going forward. The revenue growth was contributed by mobile services and fixed services. The EBITDA increase, of course, comes from the revenue growth, but also our continuous improvements in excellence, improving our quality, productivity, and efficiency. Mobile service revenue growth comes from the fact that the upselling works, upselling to 5G and otherwise, but also some of the product changes, where we also have made some price increases contributed to the growth.
Even if the churn now continues for the Q3 , the decreasing trend, we still have a very intensive competition in the market. There are still campaigning and some low prices also here and there. Overall, we can say, of course, that market has been somewhat more rational. When looking at the business segments in the consumer side, the revenue growth was 2%, the contributors were mobile and fixed services. In the consumer business side, we also saw some increase in the digital service businesses. Interconnection prices have been regulated down. That's why the revenue has come down for interconnection. Of course, our cost for interconnection has come down pretty much the same level. The traditional fixed line services revenue decrease continues.
EBITDA percentage, EBITDA was 4% higher for consumer customer business year-on-year. In the corporate side also, the revenue was growing by 2%, the growth contributed by mobile and fixed services. The digital services were having some decline, as we indicated for this volatility for the international digital service businesses, and the same thing for interconnection prices and revenues and traditional fixed line services decreasing somewhat. EBITDA was -4% for corporate customer segment due to the fact that the decrease year-on-year in the international digital service businesses were contributing negatively.
We have a very good strategy at Elisa, which has paved the results also for this quarter, despite some challenges and expected challenges, and we continue to see great potential in all of the three focus areas to provide value to our customers and shareholders as well. In the mobile side, the customers are moving to higher speeds. At the moment, we have 47% of customers now over 200 megabit per second speeds, and below 200 megabit second speed customers are now 53% of the customer base. Smartphones are more and more 5G devices.
46% of the smartphones in our customer base are 5G capable, which, of course, paves the way for increased 5G subscriptions. Coverage is being built continuously, both in Finland and Estonia, and together with the increased 5G device space, it's really creating opportunities for further upselling to 5G. Average billing increase is clearly over 3%, EUR 3 per month per customer on average, when we are doing 5G upgrades, and that is intact. We are doing this first. Again, we were the first telco in Europe to deploy in-service software upgrade capability in the live production 5G standalone network, showing that we are continuously also taking steps with the new technology, which is, of course, creating new benefits for our customers and for our productivity.
We are also piloting and deploying private 5G network solutions in with many customers. It's a market that is gradually picking up as we have said earlier, not in a very speedy way, but step by step. In Hamina-Kotka, port of Hamina-Kotka, we piloted automatic working machines with remote control. There we were using Elisa's 5G standalone network, and this remote driving clearly increases the safety and productivity in the harbor and also reduces emissions. That's what this pilot clearly proved. We continue also our active investments in fiber network, and we also have announced EUR 200 million investments in the coming years to expand our FTTH connections in the market.
What we do is of course, based on the customer demand, which is still very different from other markets since we have a very good mobile broadband and 5G fixed wireless access products. Some customers also are willing to invest in fiber connectivity, and we are certainly making sure that customers who are very much valuing Elisa's reliability and simple pricing model are getting also the best possible fiber solution. The year-on-year revenue growth was slightly negative in IDS businesses, and that is due to the expected volatility of the business. We are still in that level of our size of the business that large customer projects when they are not timed really exactly to the all the quarters
That is, of course, creating this volatility that we have also highlighted earlier. That was the reason for slight decline in the IDS revenue, but we expect, based on our order backlog and the visibility for incoming orders, that the full year growth will be on track, creating strong double-digit organic growth for the revenues. And for both businesses, we are also looking at accelerating growth with further M&A. In Polystar, we recently received significant contracts for AI and analytic solutions with two large European operators. And in the industry, there has been a strong order intake in all industry verticals in Q2, despite the tough market conditions. We continue to invest in sales, and we have recruited new salespeople in several regions for the business.
In domestic and other digital services, in the entertaining video side, we have created very attractive Elisa Viihde original series. Two series, Renki, and the Season 3 for Sipoon Herttua became the most popular comedy series in Elisa Viihde, Via play streaming during the 2Q, for example. In the IT side, we are making growth. For example, Aktia Bank was choosing Elisa as the partner to provide IT services, and we also were acknowledged for our expertise in automation and artificial intelligence with the Microsoft Partner of the Year award. In Visual Communications, there continues to be more demand for Videra solutions because of the hybrid working getting increased in the after COVID.
Videra, for example, was successfully onboarding 1,400 Government of Finland ICT centres, room systems to its managed service. Number of Elisa Videra Hummingbird monitored customer devices grew by 33% during the first half of achieving an 85% proactive incident management. We are creating sustainable future through digitalization in various domains. We have four areas for sustainability, where we have set targets. When we are looking at the quarterly results for mobile network efficiency, energy efficiency in Finland, we are getting decrease according to our targets pretty much. Also, we are increasing the population coverage of more than 100 megabit per second connections. The penetration or the availability is getting close to 90%.
The proportion of female supervisors came a notch down. It is also a development that has sometimes steps back, but we are creating momentum for further increase of the share of female supervisors at Elisa. We are making also continuously more and more patents. The patent portfolio and the new first applications are increasing. Elisa also was ranked on the Financial Times Europe's Climate Leaders for the third year in a row, with highest total score of any Finnish company. Really, again, underlining our efforts for sustainable future. We also showcased Finnish cyber security expertise at the RSA Conference together with Traficom and Finnish National Bureau of Investigation. Finally, about the outlook and guidance for the rest of the year. The development of general economy includes many uncertainties.
Growth in the Finnish economy is still expected to stall, and in particular, uncertainty related to Russia's war in Ukraine, such as inflation, energy prices, and global supply chains will continue. Competition remains keen, and we reiterate our guidance, revenue will be at the same level or slightly higher than 2022, and comparable EBITDA will be at the same level or slightly higher than in 2022. Our capital expenditures will be maximum 12% of revenue. Now, I ask Jari to continue, please.
Thank you, good morning. Let's first start with profit and loss. Q2 continued growth in revenue and EBITDA, pretty much as expected and said before. Revenue growth 2.2% or EUR 11 million, inside that, interconnection and visitor roaming was reducing by EUR 3 million. Interconnection prices, at a lower level impacting that. In equipment sales, development was flat. In corporate segment, services, both mobile and fixed services were growing, whereas digital services, including IDS volatility, had a negative impact to revenue growth. Consumer customer segment, all service revenues, mobile, fixed, and digital services were growing, in both segments, traditional fixed voice was reducing.
In OpEx, materials and services, expenses were lower than a year ago. Lower growth in equipment sales, impacting that. As interconnection prices reduced, interconnection expenses were lower. Employee expenses, growth was EUR 9 million. Most of that, coming from number of employees increase, also including acquisitions. Salary increases, impacting, and this quarter included one-time payment that was agreed in the collective labor agreement earlier this year. That impacted by EUR 2 million.
re traveling and customer entertainment, employees training, and so on, impacting after COVID, lower, a bit lower levels. Comparable EBITDA growth 1.8% to EUR 182.7 million, and margin was 34.3%. Comparable EBIT increased by 2% to EUR 115.7 million, and EBIT margin was 21.7%. EPS was same level at EUR 0.56.
In financial expenses, there was a change by EUR 2.6 million increase in net financial expenses to EUR 5.7 million. That was due to higher interest rates to those loans that had variable interest. In Estonia, strong growth both in revenue and EBITDA. Revenue growth 7.7%, both mobile and fixed services growing. EBITDA even though inflation still high, it is decreasing, but still high, and especially energy prices and wage increases impacting, but EBITDA increase at the same level, 7.8%. In subscription base, postpaid mobile base, growth continues this quarter, 3,000 growth. Prepaid reduced by 5,000 subscriptions.
Churn slightly increasing from previous quarter to 10.8%. Investments reported CapEx was EUR 70 million, EUR 45 million in consumer segment and EUR 24 million in corporate segment. Comparable CapEx, excluding licenses, lease agreements, and acquisitions, was EUR 64 million. Main investments relate to 5G coverage increase, fiber investments, and other network investments, and IT investments. Cash flow strong growth. Cash flow comparable cash flow was EUR 108 million, EUR 27 million growth or 33% growth. Main impact from net working capital change, also higher EBITDA contributing positively, as well as lower license payments, and negative impact from higher CapEx, taxes, and interest payments.
Net working capital change was positive EUR 22 million, and behind that, inventories reduced. Also, positive changes in lower amount of receivables and higher payables. EBITDA operating cash flow conversion remained at a good level, 65%. Capital structure and balance sheet. Solid balance sheet and financial position, continuing capital structure according targets, net debt to EBITDA 2x, inside the target 1.5-2, and equity ratio higher than target, 35%. Average interest on interest-bearing debt is 1.9%, and return ratios also remain at a good level. Return on equity, 31.2%, and return on investments at 18.2%.
Now I give the word to Vesa, please.
Thank you, Jari, and now we move on to Q&A part, and we ask first question from the conference call lines. Please.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Ondrej Cabejsek from UBS. Please go ahead.
Hi, everyone. Thank you for the presentation. You can take my question. I had a couple on CapEx, please. Related to this announcement of you targeting roughly EUR 200 million in investments into fiber over the next couple of years, I was going to ask, first of all, how does that change your current, kind of, CapEx profile? If you break down the CapEx envelope today between 5G, for example, or mobile investments in general, and fiber, how does that profile change going forward? Is it still the case that most people or most consumers that are asking for fiber to the home connections in Finland are actually paying for these? Just can you explain to us in terms of 90% population coverage today?
You're moving them to densification and geographical coverage. How does the profile of 5G investments in general, look like going forward in terms of the various kind of stages, so first the population, and the geography, and then some kind of densification? Thank you very much.
All right, thank you for your questions in regards to the fiber build-out. We are investing, as said, we have invested in fiber build-out in the past, and we continue to build. We make the announcement for a couple, several years, that we will lay out at least EUR 200 million worth of fiber. We wanted to make that to ensure that our customers know that there will be also fiber alternatives. It's not gonna change our 12% CapEx guidance. There are, of course, some changes in how we invest in different things. Fiber is having a bit more share of the total investments, but the total level of investments is the same 12% of revenues.
Understanding also that our revenue is increasing to some extent. That is also giving absolute increase in the total investment. I didn't quite hear. You may be asking that how many customers are paying for the installation fee or something like that? The second question, was that it, or?
Yes, please, 'cause I guess it's, or has been at least until recently, quite normal. We've had some of these smaller players come up with more aggressive offers, where people weren't actually, you know, required to pay for this. This is something that is the assumption going forward, that at least you as the big player, I guess one of the big players in the market, will be asking for customers, for the, say, 1, 2,000 EUR connection fee, or whether this is almost pure CapEx without any revenues from the connections.
Well, this is very regional business. Different regions have a bit different competitive situations and offerings. In some areas, there are offers that there is no installation fee. There is also a lot of uncertainty or, let's say, unclarity in the pricing models, which we have seen customers to be quite unsatisfied. What we are offering, we are offering very clear, transparent pricing, which clearly customers seem to like. Time to time, we are also, depending on the competitive situation, we can also go forward without very low installation fees if that's needed. This thing varies in depending on the market areas and regions. In terms of the 5G customers going forward, we have very strong demand for mobile broadband continuing.
The 5G fixed wireless access business is going really well. There are a lot of customers who, you know, take that alternative, and we are expecting that to continue when we are increasing the penetration from 90% to the higher levels.
Thank you. If I may have one quick follow-up. You mentioned, you know, the growing revenue base. Can you please remind us in terms of the international digital services in general, the growth there is obviously creating some headroom on the total revenues, but that then kind of allows CapEx into the telecom side to be higher. Can you remind us what the CapEx intensity roughly is on the digital side, please?
In the digital side, the CapEx level is clearly lower. We have not kind of disclosed the number, but it is clearly lower than in the telecom side.
Thank you very much.
The next question comes from Nick Lyall from Société Générale. Please go ahead.
Yeah. Morning, everybody. Hope you're well. Just a quick question, if I could, on the costs, please. On the material and services costs, it seems like quite a big delta this quarter. I think, you know, it's down versus quite a big rise last quarter. Would it be possible just to break down, Jari, the change in interconnect costs in there and also equipment costs? Cause they only seem quite small, and to tell us what else might have moved that line by so much, please. Also, when you're doing that, would it be possible to explain to us how the move in IDS revenue also affects EBITDA, you know, with respect to those costs as well? Thank you.
Okay. Let me start from your latter part of your, two questions. The IDS revenue, of course, is contributing to the EBITDA. Of course, this negative revenue development year-over-year had also negative impact on EBITDA year-over-year to some extent. As we have said earlier, the outlook and our view for the business remains. For the full year, we see strong double-digit revenue growth, and we also see improving EBITDA overall. It is just this volatility that is created by the nature of software business between the quarters that has impacted to some extent. In regards to your other question, or first question regarding the cost in material and services, I ask Jari to elaborate, please.
Of course, the whole materials and services, it has a lot of different items inside that are impacting, and in many, many lines, there are also negative changes. Equipment sales in the past quarters, the equipment sales have been, let's say, both sides of EUR 6 million quarterly. I mean, the equipment sales growth, and now that it was flat this quarter, so approximately same impact in the expenses. Regarding interconnection, price change was reducing the interconnection expenses, but the impact is fairly low and much lower than equipment purchase cost change.
That's great. But that suggests, 'cause as I said, last quarter, your costs were up about EUR 10 million or EUR 15 million, rather. This quarter, they're down for material and services, so it suggests some other growth somewhere else has slowed sharply. I mean, would that just be basic stuff like energy costs already helping you, or what's the, what are the other item? There must be a much more significant other item that slowed.
Energy costs are still higher than a year ago, but the difference is smaller than what it was in Q1 year-on-year comparison. As we said, also in the beginning of the year, that the overall growth for first half is more challenging and in the second half, for example, comparison in energy is a bit easier. Also, the wind power PPA agreement that we made in the Q2 contributes in the second half.
Okay. Thanks very much.
The next question comes from Sofija Rakicevic from Goldman Sachs. Please go ahead.
Are on digital services, just going back. Firstly, you said the declines in 2Q are a result of normal business volatility. I was wondering, is it only normal business volatility, or there is some macro volatility in the play as well? Secondly, can you explain, is the decline largely due to revenue recognition of certain contracts? If so, is the corresponding OpEx of those operations recorded more consistently? Thirdly, if possible, can you provide us with any color on expected digital service services performance in 3Q, or what are you witnessing so far in July? Thank you.
All right. Yes, the volatility in the international digital service business is really based on the nature of how we are landing contracts to different quarters. Comparing to Q2 last year, there was not that level of contracts landing. As we see from our kind of incoming orders and also the backlog, overall, we are very comfortable about the second half of the year to contribute. That the full year will have a strong double-digit revenue growth for the IDS. The OpEx side is running pretty much on the same level over the quarters, so the volatility is not that much moving with the revenue volatility.
I cannot give you any guidance further on for the Q3 for digital service businesses. We, as said, we see for the full year a strong double-digit growth, which is, of course, giving you some indications, at least for the second half of the year.
Thank you very much.
The next question comes from Siyi He from Citi. Please go ahead.
Much for taking my questions. I have two, please. The first one is actually a follow-up on the question on OpEx. It seems that you have added 100 staff on your employee base. Also, there is a great salary increases and one-time bonus. Looking at the development of your employee costs, it seems to have actually come down quarter- on- quarter. Just wondering if you can give us some light on that. Second question is on mobile market. I wonder if you can talk us through about the mobile market dynamics. We've seen that the churn come down quite a lot. Also, the growth adds as well. On top of that, you have seen equipment sales flattened this quarter.
Just wondering if what you see in the market, and, how do you see if there's any changes in customers, consumer confidence on that? Thank you very much.
Okay, again, I will start from your second question, and then I'll ask Jari to respond to the OpEx a bit more. In the mobile market, overall, like I explained earlier, the churn has come somewhat down, and the market has maybe got a bit more rational. The reason I assume is that there's a bit more focus on own customers due to inflation, especially. Then, of course, we have made price increases that we have seen also competitors to do. It's of course then important to focus on your customers also getting higher prices that they would also kind of get more value. That what I assume, one reason for the a bit more rational activity in the market.
Saying that, 13%+ is not a low percentage. It means that there is still competition and sometimes some campaigning, still some free gift cards also given in the consumer market. Also, time to time, we see some, I would maybe say desperate efforts to put some low-ball pricing sometimes to corporate customers, which is very easy to, for, at least for us to respond. We see that kind of activity, like I said, our competitiveness is strong for consumer side, for the corporate side, so we are very comfortable on our performance in that respect. In regards to equipment sales, that has come somewhat down.
If this inflation and macro environment has created any kind of slowness, it seems to be that in the equipment sales side, both consumers and corporate side, there has been some slowness. Not dramatic, but some level that the equipment sales was not growing overall for us. Overall, for the market, in terms of the macro environment, even if the uncertainty is higher than normal uncertainty, strong negatives we have not seen in addition to what I mentioned. Jari, please, if you can talk about the OpEx and the employee cost side.
Yeah. As already said earlier, the EUR 9 million change in Q2 year-on-year, and there was impact from the higher number of employees, which is the main contributor to change. Also, as a result of acquisitions. Salary increases, we agreed, or the unions did agree earlier this year, in the collective labor agreement, 3.5% salary increase, and additionally, there was agreed one-time payment, which happened now in Q2, and that was approximately EUR 2 million. In comparison year, we had some impacts as a result of a strike, so the personal expenses were slightly lower because of the strike the year ago.
Thank you very much. If you don't mind, just want to follow up on your comment on the employee costs. I mean, if I deduct all the one-offs, it feels like the employee cost is actually growing much slower compared to the level we see in Q1 this year. I just wondering if we should expect some pickup in employment cost increase for the second half to compensate the low growth in Q3? Just, it would be great if you can just help us to think how should we think about employment costs for the rest of the year. Thank you.
Yeah. Of course, that is impacted by development in number of employees as well going forward. We will have this 3.5% impact there in the second half. As I said, collective labor agreement, 3.5% compared to situation a year ago.
Thank you very much.
The next question comes from Sami Sarkamies from Danske Bank. Please go ahead.
Hi, I have two questions. I will take those one by one. Starting from EBITDA growth. If you look at EBITDA growth by segment, there's been quite a bit of volatility more recently. For example, at the corporate, EBITDA was down by 4% in Q2, after 9% growth in Q1. On the consumer side, growth picked up from 1% in Q1 to 4% in Q2. What explains this volatility during the first half of the year? I think we have probably talked about some of the items, but if you can try to pull it together, please.
Well, the percentages may feel like big from 1%- 4%, when you look at the kind of really the EUR, how many EUR or EUR million they are, they are still quite small things, which means that in our kind of size of business, quite small things between the quarters that sometime vary and are different from quarters- to- quarters also create some kind of volatility, if you will. The main thing then for corporate side is that we have the international digital services now, which we have said that will be more volatile from quarter- to- quarter, at least to the situation when we are larger and when we have more SaaS-based business model, creating less volatility to the revenues.
That's kind of the main reason for the kind of corporate side volatility what we've seen.
Okay. What about the consumer side? Is that related to energy cost or something else?
I would say that there is nothing, you know, one specific thing. Sometimes, there are small things in different quarters than, at the same time, and that is basically creating, these, changes time to time. There was nothing specific in the consumer side.
Okay. My second question would be about, postpaid, voice customer net adds, which were positive now in Q2, I think for the first time since, Q2 last year. Can you please, explain why this has been possible even though you've been, continuing with your price hikes also in the second quarter?
Again, in the customer base, there are different kinds of postpaid customers, and in the, let's say, past quarters, we have got still some, if you remember, a bit longer time before, some second and third card SIM cards and tablet SIM cards that customers have left, which have been with quite low ARPU, but still in the numbers of postpaid. That kind of, those kind of changes are creating also sometimes or have dragged our numbers somewhat down, which they probably didn't for this quarter. In terms of kind of, kind of market share wins, I don't think we have gained or even tried to gain per se, any market share. I think it's quite flattish with these numbers.
If you look at the kind of, from the percentage point of view, the changes are not that big. Time to time, these changes happen, and now it was positive for this time.
Okay. Thank you. I don't have any further questions.
The next question comes from Peter Nielsen from ABG Sundal Collier. Please go ahead.
Thank you very much. Hi, everyone, and thanks for taking my question. Just a quick one, and then a sort of a broader scale one. Just returning, sorry, Veli-Matti, to the international digital services. You've elaborated extensively on this. Just one question. I don't think you've mentioned macro-related factors impacting Q2 sales here. It's not related to that also, I guess, if I listen to your comments about the full year guidance. Then just on a more broader scale, Elisa and Finland is, of course, one of the, if not the, first and leading 5G markets in Europe, and I think your upselling, monetization, and growth from 5G has been stellar.
I guess that will continue for a while longer. Can I ask you, Veli-Matti, how do you see the next phase of 5G growth? What will drive that? Some of your main vendors, equipment vendors, speak enthusiastically about supporting application developers, developing new application interfaces for application to drive 5G traffic, and they at least claim that the operators are also positive on this. What is your view on this, Veli-Matti? How do you view this from your operator perspective? There's something you see interest in, upside in, more growth to 5G from? Thank you very much.
Thank you, Peter Nielsen . In regards to the IDS development, you were quite trying interpreting what we have tried to communicate. There has not been so much macro kind of impact. Of course, the environment from the competition point of view, and always customers are willing to cut cost and be very cost conscious. That kind of situation, of course, takes place. But the volatility, for example, that we have was just that the business itself is a bit volatile, how we are getting orders in and the deliveries, how they are timed between the quarters.
For your second question, it's a very important question. For the first, yes, we foresee 5G upselling with our speed-based unique pricing model to continue very well going forward. Of course, we have passed long time ago, the kind of early adopter segment and innovator segment, so we are in the early maturity, and there is no kind of indication that the customers would not be willing to move forward with the higher speeds, with higher prices. That will continue, but it is very important, which we also have done, to explore and experiment other values that we can create with 5G, new elements.
We were talking here about this port case, this harbor case, where we have brought the standalone network, 5G network, to provide really capabilities for remote kind of controlling and so forth, for vehicles in the harbor, creating clear benefits. Those kind of experimentations we've done, I know we have colleagues who have done as well. Different kind of new applications are on the roll. We have Apple to bring their kind of virtual reality or augmented reality glasses to the market. Is that gonna create kind of a wave of new, especially augmented reality applications that really will take volume?
The challenge with these, all of these exercises or experimentations is that it is always very difficult to find a very strong killer application, which is really prevailing through different customer segments. It's yet to be found. We are eager and putting a lot of energy to work on those experimentations. We are following what the other operators and equipment vendors are doing. I'm quite positive that the standalone improvements in performance, they will create enablers for relevant values for customers other than the speed upgrade what we are offering. It may well be that then we need to have several of those different to create more volume, segment by segment. Hopefully, this explains our thoughts.
It does. Thank you very much.
You're welcome.
The next question comes from Francesca Schild from BNP Paribas Exane. Please go ahead.
Thanks very much for taking my question. I've got a question on EBITDA evolution for the rest of the year. In your release, I don't think you said again that the evolution is meant to sort of pick up for the second half of the year. Just to clarify, I think in the comments, you mentioned that that is still the case. Then in terms of sort of looking at the EBITDA growth that's been achieved already this year, I mean, I'd say that it seems like it's sort of already towards the top end of your sort of full year EBITDA guidance.
Just was wondering what you see for the rest of the year, whether we should expect an acceleration in EBITDA growth, whether that's purely energy costs or anything else, and any other headwinds to look out for? Thanks.
All right. Thank you for your questions. Basically, like we said, we reiterate our guidance for EBITDA to be same level or slightly higher than last year. We have been a bit higher than last year for the first half of the year. There are still uncertainties in the business environment why we are a bit cautious here. Of course, we are working with all of our energy to make sure that we would be in the upper end of our guidance in the end of the year. Remains to be seen. There are, like Jari explained, some elements like the collective agreement, salary cost increasing 3.5%.
We have got now, comparing to the first half, we have got, in the year-on-year comparison to maybe a bit more positive situation in the energy price increase, kind of development. There are positives and negatives, and we are working on to kind of get to the higher end of our guidance. We didn't change the guidance because of the uncertainty still at the moment in the market and in the global economy.
Thank you. Just to clarify then, are you saying that the first half of the year was more challenging, and you expect there to be an uptick? Are you saying there are puts and takes, and you're not really reiterating that?
I'll ask Jari to elaborate a bit more, please.
We took that sentence away. That's more like technical thing, because the first half is already there, and it's sort of technically the technical change to the outlook rather than substantial change.
Okay, thank you.
The next question comes from Adam Fox-Rumley from HSBC. Please go ahead.
Thank you very much. I had a couple of questions around fiber CapEx, please. I suppose I'm not expecting you to give us kind of really you don't normally give us very detailed kind of insight into where your network's at. For many years in your reports, you've spoken about high levels of competition in Finnish broadband and the pricing environment there. I guess I'd be keen to see if you can reassure us about the returns that you think you can get on the fiber build. Whether or not the EUR 200 million of spend that you're calling out is really incremental allocation, or is this an announcement of plans that were already in the pipe?
I mean, I fully understand why you would want to shout about the investments that you're making in the market, but is this incremental money flowing to that part of the market? Then as a kind of related specific that you may not want to tackle, but are you able to talk to us about the average cost per home passed in Finland? Is EUR 1,000 a really reasonable approximation? Is it much lower, much higher than that? That would be very helpful, too. Thank you.
Right. The fiber CapEx and what we announced was, of course, an indication that we are increasing somewhat the investments to fiber. However, we are keeping the CapEx intact, the CapEx guidance 12%. Of course, we have moved on with the 5G kind of investment cycle quite much, and there are some other ways how we can then have a bit more to the fiber. The returns, we are not speculating or giving any guidances what kind of returns for different kind of businesses we have. We have our financial medium-term targets, revenue growth for EBITDA, and it is the kind of combination of various of our businesses contributing to that.
Adding a bit more investments to fiber is not changing our view of the capabilities of us to execute and perform according to our financial targets. The average cost per home passed, it varies very much in Finland. It really varies from a bit kind of below 1,000 to several thousands, depending on. It also varies, of course, based on how, let's say, capable you are in the business of fiber build-out overall. We, of course, are volume provider in Finland. We have a strong history of building fiber. We have a very capable organization and a strong network of partners.
Of course, what helps us is that, based on our studies, customers are clearly preferring Finnish, very transparent pricing, fiber solutions from Elisa comparing to competitors. That also, of course, helps for the total cost of getting fiber customers and for the whole business case.
That's very helpful. If I could just ask a couple of follow-ups very briefly. Do you work on the basis of pre-commitment ahead of the build that you roll out? Secondly, are you able to say anything about a kind of urban, rural ambition for the incremental network that you're talking about within this envelope? Thank you.
Well, for the first, the fiber market in Finland is not one fiber market. We have a quite a different situation in different regions. Of course, as the biggest operator in Finland, we have capabilities to compete in the fiber market. We are looking at also the market as the home broadband market, because like I said, in Finland, still, the number of households without fiber is over 20%. It will be increasing the amount of customers who are very happy with the mobile-based broadband, with fixed wireless access or with 5G mobile broadband. We are using all of our strengths in the offering very well, but also, you know, providing a different kind of solutions in the fiber market as well.
I, for competitive reasons, already now, I cannot elaborate even more, but we feel comfortable on playing this market, where now we've seen a bit more activity in the fiber part.
Thanks very much.
The next question comes from Felix Henriksson from Nordea. Please go ahead.
Felix Henriksson. I only have one. Could you please remind us of the magnitude of the price increases that you've done more recently in both B2C and B2B, and perhaps elaborate on to what extent have these contributed to your sort of 5% mobile service revenue growth in the first half of the year? Thanks.
Okay, if you think about the B2C price increases, of course, for the kind of fixed front book pricing we have done for 4G prices, already, the latest ones have been in October last year and January, and now then April this year. We have lifted the kind of mainstream 4G subscription price 3x . Our competitors have mainly followed those price increases. In the corporate side, there has been different kinds of price increases also, depending on the customer segment, whether we talk about the entrepreneurs, SME or large customers and various price increases there. Of course, they have contributed somewhat all of those to the mobile service revenue growth.
Of course, the just getting customers to move on to higher speed tiers themselves is contributing as well.
Okay, thank you.
The next question comes from Saim Saeed from Berenberg. Please go ahead.
Hi there. Thanks for taking my questions. Just two. The first one is just on Finnish corporate pricing. Should we expect to see some benefit from inflation-linked contracts in H2 that wasn't present in H1? The second one is just on Finnish fixed subscribers. You're giving quite a bullish outlook on fiber, but I'm sure there's probably a lot of DSL and cables still remaining in the base. Do you have a sense of when that broadband base stops declining on a quarter-over-quarter basis? Is that still a couple of years away, or could it be maybe slightly nearer than what we're thinking at the moment? Thank you.
Okay. Can you elaborate the, or repeat the second part of the question? I didn't quite capture your question. What was your question?
Just on the broadband subscriber base in Finland, given your sort of bullish fiber outlook, could we maybe expect some quarter-over-quarter growth sooner than what's currently expected?
Well, we are not giving guidances on broadband customer bases themselves. If I understood your question right, what I can comment is that the market situation is quite flat. There is a kind of change out from older technologies to new technologies like fiber and also fixed wireless access, mobile broadband, but the kind of average number of the even the fixed broadband market, the number of customers pretty much remained, remains the same, I believe. Yeah. The first question, Jari, please.
Yeah. If I heard right, question was regarding corporate customer contracts, inflation linkages, if that was the question? Yeah, there are a lot of different contracts with the corporate customers, and some of those have some inflation linkages, but that is not the case with all contracts, so it really varies quite a lot.
Okay. Thank you.
The next question comes from Stefan Gauffin from DNB. Please go ahead.
A couple of questions, please. The first one, just get some flavor on the 5G development in Finland. First of all, if you could give some information on the 5G share of subscriber base, or if you could give some information on 5G contribution to mobile service revenue growth. Second question relates to Estonia, which I think had a good mobile ARPU development. Have you done some price increases? When were these done, and the magnitude of those? Thank you.
Okay. Like you certainly know from the past, we are not providing information about the number of 5G customers. We focus on providing the information about our MSR development. The contribution of 5G to MSR is good. We are not detailing that either, but it is, of course, while we move forward, it is the 5G customers are contributing more and more overall to the mobile service revenue. For the growth, of course, that is one element, the 5G upgrade. We still upgrade customers in other technologies as well. As well, we also have some price increases, so the MSR is a combination of those. In terms of Estonia, yes, we have done price increases during the past year. The inflation has been higher there.
All the competitors have also done price increases. There has been, of course, several different events, depending on the customer segment. And of course, that has also contributed to the ARPU increase. Also in Estonia, we are selling higher speeds, and more valuable subscriptions to customers, contributing to the fact. Of course, the price increases have had a clear role in the ARPU increase in Estonia.
Okay. Thank you.
Okay, thank you. There are no further questions. We thank you for the questions. Really appreciate. Thank you for speakers. Now we wish you all a very nice summertime. Goodbye now.
Bye, and thank you.