Good morning, everyone, and welcome to Alisa's Second Quarter 2021 conference call. I'm Vesa Sahibirta, Head of Investor Relations. And here together with me is a very familiar team, CEO, Veli Matti Mattila and CFO, Jari Kinunen. We start this call with the presentation followed by Q and A. And because we don't have any audience here, we go straight to the conference call lines in our Q and A session.
Now we are ready to start, so I key word to Welimert, please.
Thank you, Wesa, and Welcome to Elisa's interim report, 2nd quarter 2021 on my behalf as well. Let me start off the highlights from the Q2. We had a good development continuing at Elisa, revenue Growing by 5%, EBITDA comparable EBITDA being up by 2%. Mobile service revenue was increasing by 4 0.2% year on year. And the postpaid churn stayed at the same level comparing to the first quarter this year, but it was up from the Q2 last year when we had the COVID Limiting the traffic in the retail channel, and that time, the churn was somewhat lower.
Postpaid mobile subscription base increased by 36,700, of which machine to machine and IoT contributed $30,800 fixed broadband subscription base was decreasing a little bit, 5,100 Great. And the good momentum in 5 gs continues. Our network, which is the which has the Largest coverage in Finland covers now over 50% of Fins in 110 towns and cities. Also, we continue To see higher satisfaction by our customers of 5 gs comparing to the 4 gs customers. And also, we see It's more than €3,000,000 higher monthly billing for 5 gs customers.
Revenue growth was coming partly from the acquisitions and the content partnership with Nordic Entertainment Group, but also organic Development came brought with mobile services, domestic digital services and equipment sales growth to the revenue. In terms of the EBITDA growth in comparable numbers, the revenue growth, of course, was contributing as well as our continuous improvement in efficiency. Mobile service revenue growth, of course, was partly contributed Due to the fact that the comparable a year ago, East, because now Also the comparable quarter, I. E. Q2 2020, didn't have roaming revenues Hardly at all like it was now, but that the underlying growth in our upselling as well as in 4 gs as well as in 5 gs and also some product pricing changes contributed to this good development.
The churn, of course, reflects the competitive intensity, which is quite high in the Finnish market, both in the consumer segment as well as in the corporate side. And the for We see gift card campaignings and things like that, which is, of course, creating traffic in Between the operators of customers, but we are capable of responding to that, but that reflects to the higher churn and explains the higher churn. In general, we can say that there's no material change in The level of competitive intensity in the market, it has been intensive, and it was intensive in the second quarter as well. When we look at the segments, 1st, in the consumer side, revenue up 6% with the already mentioned drivers. And EBITDA was up by 5% in the consumer customer business.
The corporate side, the revenue growth was 4% and the EBITDA was Minus 2. And as we see, the negative EBITDA development It has turned less negative. It still is slightly negative, but I have an assumption that we with the continuous improvement, we can get The EBITDA development positive in the corporate side as well going forward. We execute our strategy Continuously, we have a clear purpose to create sustainable future throughout and that inspires Elesians and we have really a wide range of deliverables that we can do To improve the environment, improve the different aspects of the society with Our services and by focusing on increasing the mobile and fixed service Fixed services and the value of those services to customers, we know that we can also increase the revenues. Also in the digital service areas, we have both in the domestic side as well as in the international domain growth opportunities also Inorganically and of course, the continuous improvement focusing on the customer quality by which we are differentiating ourselves clearly So the competition continues and is has broad results, but also all of these three focus areas have great potential going forward.
In the mobile side, we Continue to see the smartphone penetration going up step by step now. 92% of Customers are using the kind of new type of smartphone, and 10% of those are now 5 gs capable. So So the kind of addressable market for mobile data connectivity continuously increases in our customer base. 80% Of the voice subscribers are at the moment at 4 gs or 5 gs speeds. But as you can see from the picture here, The lowest speed tier continues to go down in 4 gs, meaning that the upselling within the 4 gs also continues favorably.
And the proportion of data bundles of the subscription base also continues to go So the long kind of lasting business model change continues from the usage based subscriptions to the fixed monthly fee bundles. Elisa is a leader Globally in the 5 gs deployment, and we continue to have most extensive Network in Finland, like I said, the availability is in 110,000 cities. And We have overall population coverage of 50%, but in the largest cities, over 90% And up to 90% of the population coverage in the largest cities. The customer demand for The loan continues and customers are more satisfied. We continue very, Let's say precisely to measure the satisfaction of customers within Our mobile base like in all the customer base and we see clearly that 5 gs customers have higher recommendation Clearly than the 4 gs customers.
And that is, of course, the main driver that The better customer experience overall now driven mostly by higher speeds that makes customers To pay on average more than 3% in the monthly billing. And as a leader To commercialize 5 gs really in the world, we can show this kind of great development, of course, contributing to the positive development in MSR. In MSR. We have been also the 1st operator in Nordics to pilot a stand alone 5 gs network in our commercial network. And we have it in the limited areas geographically at the moment, and it is in the pilot phase.
But we are expecting that Sometime next year, we will have a very wide delivery of standalone 5 gs to customers. Of course, there's also a need for end user equipment that are supporting the stand alone, providing, of course, great new opportunities for improved applications for our customers. We also delivered private I've seen networks, for example, to the ports of Pori and Hominakotka. And we have tens of customer cases where Where companies are piloting and they are starting to utilize these private mobile networks of different sorts, they are starting to use Then to benefit of the more advanced applications for the needs of the industry logistics among other things. In digital services, we see growth both domestically and in international domain.
For example, at Elisa Vita IPTV, we have launched original series successfully, Bad Apples and Bull by the Horns, for example, became the most popular titles in the service during their launch period. Also in our IT services. We have solid growth and we are helping customers to have IT more automized way, but also So we, for example, utilize the deliveries of Google Cloud Platform to help our customers to move forward in digitalization. In the international digital services, we had a record second quarter for CamLine in the invoice services and, for example, Calcocoat for customer acquisition in Europe. And we also had a first sale of 3 d Visualizer solution to set up the customer base during the quarter.
So active cooperation between the acquired companies and our organic development in these international Business services continues and further develops. And we continue active scanning for the new acquisition opportunities in the international digital services businesses domain. And then I To go through the outlook and the guidance for the rest of the year, the uncertainty in the macroeconomic environment is still prevailing and the competition in Finnish market continues to remain keen. We reiterate our guidance that our revenue will be slightly higher than 2020 and comparable Parable EBITDA will be at the same level or slightly higher than in 2020. And the capital expenditures will be
Thank you. Let's First go to profit and loss and Q2 was a good continuation of growth trend both in revenue and earnings, 5% growth in revenue, €23,500,000 And And if you look, different elements behind that, interconnection and visitor roaming had slightly The impact of minus €1,000,000 Equipment sales, €6,000,000 increase. In Corporate segment. Service revenues, there was a positive trend. Last quarter was still Slightly negative, minus €1,000,000 now plus €2,000,000 Both Consumer segment, strong €16,000,000 service revenue growth, Mobile service revenue and domestic digital services contributing strongly to that.
Negative impact from traditional fixed services. Thanks, WISE. Reported EBITDA includes 6,000,000 personnel reduction expenses, one off personnel reduction expenses in employee expenses line. And comparable EBITDA, excluding that one off 2.2 percent growth to 170 €2,000,000 EBIT growth was 4.4 percent to 100 €5,000,000 Financial expenses, slightly lower than a year ago and EPS growth, 5.9 percent to €56, Also in Estonia, good development And revenue growth was 8.4%, EBITDA growth of 1.4 percent. Revenue growth driven by equipment sales and service revenue, both fixed and mobile service revenues.
And service revenues, both number of subscriptions as well as some price changes, price increases and in mobile services, upselling to higher speeds, all contributing to growth. In mobile subscription base, growth continued as well, 10,800 growth and in prepaid subscription base 2,900 decrease. Churn was at low level, 8.5 percent. Capital expenditure and CapEx, Comparable CapEx, excluding licenses and lease agreements, was €64,000,000 in Q2. First half CapEx excluding licenses and lease agreements, €12,000,000 very much same level as last year and First half CapEx to sales, well in line with guidance at 11 point 6%.
Main CapEx, 5 gs and 4 gs capacity and coverage increases as well as network and IT Investments. Q2 cash flow was Strong and comparable cash flow as well as reported cash flow, 100 €1,000,000 19% increase from last year. Positive contribution from Net working capital changed as a result of lower inventories and higher year. Payables, also slight positive impact from lower Financing expenses, negative cash flow impact from higher paid taxes and lower reported EBITDA. First half comparable cash flow, slightly higher than last year at €161,000,000 Operating cash flow Conversion to EBITDA at 63%, slightly up from last year, Then capital structure, net debt to EBITDA end of Q2 was 2, same as a year ago, distributions So we're paid in the second quarter and impacted net debt.
We We expect that in the second half net debt will reduce. Equity ratio was also Well in line with the target, 35.8%. And return ratios continued at good level. Return on equity, 29.4 percent and return on investments at 16.3%. In terms of financing, good maturity profile, no short term financing needs and average interest expense well below 1%.
And now I We'll give it to Reza, please.
Thank you, Jari. And now we move on to Q and A and to conference call lines. May we have the first question from the line, please?
We have our first question. It's from Andrew
Lee from Goldman here. I had Two questions. First was on operating leverage, which is, I guess, the key investor concern this morning. You obviously had some dilution from acquisitions and also you had tough churn comps this quarter. But how would you Convince investors that the underlying business is continuing to generate decent operating leverage of What was quite a good underlying growth top line growth quarter?
That was question number 1. And then question 2, We'd anticipated 5 gs to boost your growth your top line growth And mobile service revenue this year, I think you'd previously suggested it would be more maybe second half loaded. So So I wonder if you could just talk through if we should anticipate an acceleration in mobile service revenue growth into the second half And how we should think about the comparable EBITDA trends in the second half? I know you've guided to overall EBITDA being flattish. But on a kind of underlying basis, should we see comparable EBITDA trends improve in the second half?
All right. First, in regards to the operating leverage, we have been growing our comparable EBITDA this year. And as you mentioned, we had in the comparable quarter lower churn, which meant that the sales cost in They're higher than in the comparable because the churn was higher here. So the sales costs have built some Kind of negative development, if you will, from that end. Of course, we are Going forward with the revenue growth as we have been guiding and the EBITDA guidance stays very In fact, same level or slightly higher, and we believe that we can, with our revenue growth as well as with our continuous Improvement in productivity to continue to have positive development in our on our results and EBITDA as well.
In terms of the 5 gs, we have, of course, 5 gs momentum going and moving and continuing. As we have said already 2, 3 years ago, 5 gs will first bring Benefits for the customers with higher speeds, and that's what takes place now. We still can sell Upgrades in 4 gs domain as well, even if the price competition is more Heavy in the 4 gs domain. In 5 gs side, the price competition is still limited. We do see some time to time some aggressiveness with the 5 gs pricing, but the price aggressiveness is mostly focusing on the 4 gs domain.
However, also the 4 gs domain in that area, we can have upselling to work. In terms of MSR forecasts, even if we have tended not to I'll give any numbers, but we would think that the MSR will be approximately on the same level for the second half as we saw in the during the Q2. Roaming revenues, we do not expect to Have any material increase in the second half of the year.
Thank you.
You're welcome.
We have a question from Michael O'Joel. The line is now open for you. Please go ahead.
Hello, can you hear me?
Yes.
Sorry, it's actually Nick Lyle. I must Very mumbled when I said my name. Sorry, it's Nick from SocGen. Could I ask, guys, on the going back to Andrew's Point just there about operational leverage. Could you talk a little bit about the staff costs this quarter?
They were up sharply even before the restructuring €6,000,000 So could you just tell us what's going on there? And you do look as if you've added 100 staff as well in the quarter and inflation is quite high. So is that something we need to I I want to be concerned about it, but something we need to bear in mind for the second half. Is there something going on there? Thank you.
Okay. I will start and then I'll let Jari to elaborate. As you know, we are doing acquisitions, which means that we are getting more people. We are getting, of course, more revenues And potential for further increase in the revenue and profit. We also had quite many small restructuring projects leading to reduction of personnel, close to 100 people, which was not visible yet In the reported numbers, but that relates to the €6,000,000 restructuring cost.
But I'll let Jari to elaborate a bit further on the employment cost side.
Yes. I'm not saying €17,000,000 So Of course, restructuring costs, €6,000,000 is big part of that. Can Line acquisition impacted €4,000,000 We had Collective labor agreement increases beginning of the year, so approximately 2% increase. So it's between €1,000,000 and €2,000,000 impact Coming from that, so these are the main impacts. Also, there was Somewhat higher number of employees compared to a year ago other than acquisitions which impacted to that.
Now this €6,000,000 as well, Matti said, close to €100,000,000 reduction, That is still in the number of employee numbers included, But it will reduce over the time from the employee numbers.
Okay. But The extra €6,000,000 this is a sustainable number for staff costs. There's no other one offs in there.
So €6,000,000 It's one off restructuring.
Yes. And then the rest is normal. Okay. Thank you very much.
You're welcome.
We have a next question by Maurice Patrick at Barclays. The line is now open for you.
Good morning, guys. Thank you for taking question.
Just a couple
of questions for me, please. In the slide deck, you talk about private networks on 5 gs and you cite A couple of calls. I'm sure you don't want to give details of those contracts, but could you help us understand the sort of magnitude of these kind of contracts in the sort of wider It's a question that investors get a lot around how big is the private network opportunity. So any thoughts on sort of KPIs on that would be helpful. And the second question really relates to, Betty, your comments in your prepared remarks around B2B, where you said you were conference to get EBITDA back to growth again.
I mean, how much of that is on the new growth areas? And how much of that legacy sort of turning around some of the legacy So the impact of competition you think? Thank
you. Okay. In terms of these private network 5 gs, let's say, businesses. At the moment, the revenue impact is still quite low. We are in the beginning of, let's say, Utilizing 5 gs in new ways for businesses, for example, with private network solutions.
I believe that The opportunity is really, really big going forward, but it comes over time, over Several years due to the fact that in order for companies to kind of additionally invest in private 5 gs networks, they, of course, need to have Some benefits for it. And the benefits come not until there are specific applications for That industry or that company that they are taking into use or they can have some Or they have some existing applications that can be really utilizing The higher performance that the 5 gs private networks can be produced because the 5 gs private network is an additional cost, Of course. And it needs to be financed somehow. And the financing comes when there will be some cost Production, productivity improvement, quality improvement, you name it, benefit for the company. That's why I believe that it will take some time That these benefits are being found by piloting, experimenting and so forth.
We are doing a really active work With the large customer base we have in Finland and also in Estonia later on, we will do. But we I'm sure that we will We are finding together with the customers real, let's say, material growth opportunity. But at the moment, It's the revenues from those cases are not so significant at all. In regards to the B2P EBITDA improvement. We know at Elisa, we have the culture for continuous improvement, and that is bearing the results anyhow Over time, also in B2B side, that's why I have strong trust on positive development.
But also, we have even if The roaming comparable is not hurting the corporate business so much at all anymore, but the There are still some companies that are delaying their decisions, for example, for some new projects due to the COVID uncertainties. And when the vaccination rates are going up, I'm sure that these uncertainties will be going away, and we will get more to the normal, Let's say appetite for digitalization with all the companies, this uncertainty and delayed projects delayed decisions is not over all the P2P customer base, but there are Enough customers, which have some negative impact to the B2B business.
Our next question is by Terence Su. The line is now open for you.
Thank you. Hello, everyone. I just got a couple of questions on mobile service revenues, please. First one is you continue to make quite optimistic comments around 5 gs. I think in the past, you've said that 5 gs should Contribute around 100 basis points to MSR growth this year.
Does that continue to be the case? Or are you feeling a bit more optimistic about that after the strong Q2 print. And then secondly, just a quick clarification on the answer you gave to the first question around the trajectory of MSR for H2. Were you saying it's going to be similar to Q2 on an absolute basis or in the growth rate, please? Thank you.
Okay. Thank you for the questions. In regards to the MSR, our estimate For 5G's contribution remains the same. Approximately 1%, it's 100 basis points for the full year. And Of course, we are doing everything that it would be more, but that's our estimate what we can provide you with.
The other Elements, of course, contributing to the great development in MSR where the speed upgrades Upselling in other areas than 5 gs, some of the price changes and, of course, this roaming comparability situation changing. In H2, we believe that from the growth point of view, the growth percentage It will be approximately the same level in H2 what it was in Q2. Hopefully, this explain.
All right. That's really clear. Thank you.
Welcome.
The next Question is by Peter Miesen. The line is now open for you. Yes.
Thank you very much. Two questions, please. You partly covered one of them, Willi, Matti from the previous questions. But there clearly has been an uplift to service revenues. And it would appear that There is a boost from the fact that Q2 last year was obviously severely impacted by the pandemic.
And my question would be And if you expect to see that sort of similar uplift in the coming quarters simply from the fact That we are sort of not coming fully out of the pandemic, so there is a recovery versus last year. But I guess you already answered it in the preceding question. But any color here? How much You think it's just simply a year over year basic effect? And then can I just ask on your comments on 5 gs, which are obviously very positive?
Can you tell us anything really, Matti, about how do you feel your share of new 5 gs customers
Of course, that you've got
to take in the Finnish market. Would you say that within 5 gs, you're taking more than your fair share Of customers at the moment, given your leading position, any color you can give us would be helpful. Thank you.
All right. Thank you, Peter Kourd. The MSR, really, what we see is that we can say that Approximately, with around 2%, the roaming has been contributing negatively during the Now we don't have that headwind. So it means that the underlying MSR growth has been 2% and continues to be, and now we don't have in the comparables in the next couple of quarters. Of course, next year, 2nd quarter The situation is different, and we will kind of gain for the year.
So that's how it looks like, The development. Of course, then when we hopefully will start to see roaming revenues to go up to the levels approximately what they Where there is, of course, a positive momentum again. But like I said, we are not expecting that to And during this year, the traveling still seems to be getting up and running, if you will, quite slowly. In regards to the share of 5 gs upgrades, our belief is that we are getting Approximately our worth of our market share of these new 5 gs customers. We see our Competitors also being active in the 5 gs market.
So our target is really and focus is really upselling Our own customer base and get the customers to move overall, not that much of kind of Increasing our market share with 5 gs. We are really eager to make sure that we can create value Our customers so much that they are happy to pay like they are a bit more. And with this upselling, we can make good development going forward.
Great. That was useful color. Thank you very much.
Our next question is by Si Hoo of Credit Plus. The line is now open for you. Please go ahead.
Hello. Hi. Si here from Citigroup. And I have two questions, please. And the first question is on the MSR growth trajectory.
I understand that for the second half, you think that you could be able to grow similar level to Q2, which is around 4%. I mean, given the strong performance in Q2, I wonder whether this gives you more confidence that And the mobile service revenue growth going forward could actually go back to the 3% to 5% gross full pack that Elisa used to target. And my second question is on 5 gs customers. I know you don't give 5 gs customer numbers, But I wonder if you can comment on the pace of the customer migrates. I think in from 3 gs to 4 gs, Every quarter, we see about 2% to 3% of customer base migrate to 4 gs from 3 gs.
And what is I wonder if you can talk about What you see your 3 gs to 4 gs customers migrate to 5 gs every quarter? Appreciate some color on Thank you very
much. Thank you for your questions. In regards to the MSR And going forward, like we have discussed many times in the past, MSR is also Very much related to the price competition that we see in the market, which is something we cannot control. We have quite intensive and quite price competitive market, especially in the 4 gs domain. There's, of course, Potential there to have even improvement in MSR if that would be somehow changing, but we are not counting on that.
And Like I said, we cannot forecast how the pricing is developing and the price discipline is developing in the market. But with the level what We see now in the market, we can say that we believe that the second half of this year, maybe even Going forward would be the level of what we saw in the Q2. In terms of the 5 gs customer increase and the pace of how the customers are migrating, first, I can Say that it is going according to our expectations, but I would also like to say that we really are focusing On making sure that we are generating value additional value to our customers, it's more Important for us to generate more higher customer value with 5 gs, secure that and by doing that securing We will get more money. We will get higher customer billing, which we continue to do. So that's why we are not so eager to kind of Accelerator have kind of all the efforts to do the accelerate the migration because it would be for nothing We could like I said earlier also have said, we could by overnight have all the customers, 5 gs customers, but we Wouldn't get any additional MSR.
So we are focusing on all the things to make sure that customers are Customers are perceiving to get higher value and they are then willing to pay more. And that's what we see. Unfortunately, I cannot comment more on the Base what it is, but that I can say that it is according to the expectations we set to ourselves already 2, 3 years ago. And we are continuously working, of course, that we understand all the potential value improvements that customers As can get from 5 gs, of which, of course, the one main thing is the additional speed, but there are many other elements also going forward. And That's why we are we can give this kind of forecast also for the rest of the year for MSR.
That's very clear. Thank you very much.
You're welcome.
We have the next question by Sami Sarraf Kamis. The line is now open for you.
Okay. Thank you. I have three questions. Firstly, going back to the operating leverage discussion earlier. If we look at the underlying OpEx development, it grew 8% in Q2 after 4% in Q1.
Did I understand it right that this was mostly driven by the abnormally low churn in Q2 last year And then going into second half of the year, when you're against, let's say, more normal comparables, we should go back to the OpEx growth rate of Q1.
Okay. Yes, for the most, you have Analyze it well, yes.
Okay. And then the second question is on the restructuring charges and programs you conducted in Q2. Can you elaborate A bit more on what these were about. And then was it so that the sort of savings impact was not yet visible in Q2, but it will become visible later on.
Okay. Very good. Just having a first comment here, I'll let Jari to elaborate a bit more. When we are having these restructurings, just Want to maybe repeat what I've said. We've said earlier that when we are developing our Productivity at Elisa, we are doing that from the customer quality improvement point of view first and also Improving automation, of course, to make lead time shorter and quality higher.
And time to time, those kind of developments, they lead to They lead to reduction of tasks and jobs. And now we just had quite a few of those kind of projects, Smaller project, not one big project, but smaller projects to be completed. And that's why we had quite a bit of one time restructuring cost. But I'll let Jari to elaborate a bit more.
Yes. Your conclusion Regarding savings impacts is correct. So we have now the €6,000,000 restructuring expense, but The benefits are reducing expenses are coming later In the coming quarters out of that.
Okay. Thanks. And then finally, A detailed question for Jari. Can you disclose net sales and EBITDA contribution from CamLine in the 2nd quarter, please?
Revenue, approximately €5,000,000 EBITDA Yeah, impact, 1.5.
Okay, thanks. I don't have any further questions.
Thank you.
Our next question is by Anton Zorniewski. The line is now open for you. Yes, I guess it's Priscilla Mimi. Hi, this is Artem from
SEB. Thank you for taking my questions. Still 2 from my side. So first of all, starting with digital services, could you maybe talk about different business lines, how those have been developing during the quarter? I remember you have been talking about video conferencing, for example, being impacted by lockdowns versus that situation has now improved.
And the second question is relating to machine to machine and IoT subscriptions. So you Sure. Still continued very robust growth on that side. Could you maybe talk a bit more about key growth drivers there? Is it basically just the amount of connected devices or potentially some services what you are introducing to the market or then also, for example, 5
gs. Okay. In terms of the digital services, if we take the domestic first, both the Elisa Video IPTV has growth. It has, of course, growth from the Nordic Entertainment Group Corporation because we kind of Are having the revenue they used to have in Finland, but we have also kind of separate Elisa Video IPTV Revenue growth there as well. IT business has some growth as well continuously Step by step, in the international side, in our videoconferencing, we have faced Some challenges still in regards to the fact that companies are not at the offices and the demand For Videras, gateway and integration solutions haven't been that large, so that we haven't And seeing the growth in the video conferencing that these cloud providers.
However, saying that, now we have positive signs when the companies have really started To plan to return to the offices and to the hybrid work, and that's exactly the time now when the Videras Unique capabilities will be in demand to integrate the room systems and the systems of Various vendors also to the cloud video systems like Zoom or Teams or so and to make That's fluent. So we see early signs now about positive development for Videras demand. Then in the Yes. Of International Software Business, there is a very good continuous improvement in revenue side there, Good work together with the organic services and also our acquired In the telecom software business, there's many positive things going on. One thing is that Operator telecom operators seem to be also a bit delaying their projects, even kind of ordered projects.
So we see a little bit COVID related headwind from for the TSP business, but overall, the outlook and the developments Also in that front look positive going forward. In regards to the machine to machine IoT, it is really that There are more and more connected devices. For example, for people who want to have different kind of cameras As for hunting reasons or so, there are many, many, many connected devices now coming to the market, and we have been able to relies on that. There are some companies also starting to utilize more and more different sensors. So this market Probably, we'll continue to have great growth.
Of course, the ARPU for these subscriptions is low, but anyhow, it is a positive business line
as well. The next question is from Adam Fox at HSBC. The line is now open for you.
Thank you very much. It's Adam Fox Rumley here from HSBC. I just had a couple of follow ups, if you don't mind. So firstly, I wondered if you could comment on The customer perception and how that's changing of your mobile network with the 5 gs push, obviously, Alisa is Pushing hard, but so are your competitors. So is this a case of relative gain?
Or is it yes, just I'd be interested to know your comments there. Secondly, going back to the workforce, I suppose at a slightly higher level, I'm interested in whether as your digital services business gets more traction, Whether you which direction you think the workforce will go, do you think that into the medium term, you need to be a bit larger as you take on more projects All those become more complicated or does the continuous improvement that you've been talking about just continue on that side? And then a final question on Estonia, Where I think the operating leverage is kind of most stark, lots of revenue growth, but your margin is 2 points lower year on year. So if there's anything you could say Specifically about that, that will be helpful.
Okay. In regards to customer perception of our network quality. Overall, we have the best quality in our mobile network we have had, and it is driven And by the automated solutions that we've done, but also of the many improvements we've done, quality driven for our operations. When we then think about having the 5 gs, of course, having the largest coverage of the network Improve the perception competitively. Our competitors have quite good coverages as well.
So how large this difference is in perception, I cannot really say. But when we have measured the net promoter And that has been measured also for our competition. We are somewhat ahead with the Net Promoter Score for 5 gs in regards to or in comparison to our competitors. But that's continuous improvement that we do. It is step development of both the real quality in the network, but also the different other aspects, which are impacting to the perception of our customers.
In terms of the workforce, the main increase for our work Of course, in the future comes from the acquisitions that we believe I believe we are continuing to do. We, of course, have the continuous improvement for our existing activities, which has time to time Negative or decreasing kind of impact to the tasks and workforce, But the increases that we may see, they relate to the acquisitions. In the Estonian business, I can let Jari to comment on that. Jari, please.
Yes. First of all, of course, quarters are not always equal in terms of OpEx, and it varies. And this is also relating to earlier operating leverage discussion in the group level. And we had in Estonia, we had last year 1 credit, so €500,000 credit This reduced expenses, so that's one thing Revenue growth, of course, 8 percent growth. As said earlier, that there were 2 elements, sort of service revenue growth and meant sales growth and equipment sales are low margin revenues.
So that is also a contributor in this quarter.
Thanks very much.
The next question is by Mr. Padejcik. The line is now open for you.
Hello.
Hi, I guess, this is Nijs. It's Onzej from UBS. I had a clarifying question and And sorry, to the on the 5 gs still, and I apologize if this was addressed better, but I got disconnected for a while. So I want to ask about A slight contradiction at least in terms of my perception as to the first of all expectations that you were saying are going according to plan in terms of the migration from 4 gs 5 gs. And we saw this quarter that assuming there was a roughly neutral year over year impact in terms of roaming that the majority of the 4 That growth and service revenues would have been down to 5 gs.
So you're already kind of ahead in terms of your year end guidance, which is the kind of second point that we have from you, the 1 percentage point contribution. So can you maybe address a bit The expectations that clearly are, I think, ahead of your initial guidance and how we should think about that in terms of the second half and then onwards?
Thank you for the question. I'm not sure if I heard properly what you were asking. I'll try to respond and then please ask again if I missed your point of your question. But In terms of MSR contribution from 5 gs, we still reiterate that it is approximately 1% points for the year. The additional MSR growth comes from the vast base of our other customers than 5 gs customers still moving up to the higher speed tiers, which we have several and in those areas as well.
So it's not only that we can get from customers to move from one technology generation to another when we can do upselling. It is also within Those generations like within 4 gs generation when the customers stay in 4 gs, we can have them to move To higher speeds, also what we do, we have some price increases to take place when we are modifying a bit of the value and deliverable that the customers are getting from the 4 gs subscriptions. That contributes as well. So those The 5 gs as well as the upselling price changes for the other customers, Those are contributing to the growth of MSR.
So just to confirm that the up So on 4 gs is a bigger impact than the composition that you are stressing is still pretty strong on 4 gs. So there is still positive growth on 4 gs at this stage.
Yes. Yes, exactly. Even if the competitive situation in terms of pricing Is having a negative impact in the 4 gs domain. We still can make some growth in MSR within 4 gs, Yes.
And so that would imply that the if we break down the 4% 4.2%, The larger contribution is still coming from 4 gs than 5 gs. Can you confirm that?
Well, since the we can say that the underlying growth, Except the roaming comparable impact was around 2%. So we can say that we have Approximately half and half, we can say, going forward from 5 gs and then 4 gs.
Thank you very much.
You're welcome.
Our next question comes from Abhilash Machapapp. The line is now open for you.
Yes. Thank you. This is Avila Shmoopadz from Berenberg. Thank you for I've got 3, please. Specific on your the corporate mobile ARPUs, which seem to recover So definitely at least sort of better than what I was expecting.
Just given there's no There hasn't been any real return in roaming. Would just be interested to hear your thoughts on sort of the trends that you're seeing there and then why that sort of picked up. Secondly, just a quick one around the sort of employee and then sort of restructuring costs. A few questions on that today. I mean, just big picture, I mean, if you look at your trends historically, I mean, you're probably one of the few telcos who have We continue to deliver growing EBITDA despite a rising headcount and you've had very low restructuring costs compared to the sector barely.
I'm just looking at the numbers here, barely EUR 40,000,000 cumulative restructuring costs over the last decade. I mean, is there any reason to think that any of that is changing sort of going forward? And then finally, just a broader question on growth. You sort of outlined a few impediments to growth at the moment. There's obviously you talked about the price competition in 4 gs, which is sort of Dampening ARPUs, you talked about the slow demand in B2B, which sort of hasn't picked up yet post the sort of COVID pandemic.
I mean, if these and then despite that, you sort of delivered the 4% MSR and then 2% EBITDA. So as these headwinds start to abate, is it fair to expect that growth should get stronger from these levels generally? Thank you.
Okay. Thank you for the questions. In terms of the corporate mobile ARPU, of course, we see the 5 gs To contribute in the 4 gs side in the corporate side as well, but also the fact that We since we lost the one quite large public sector deal where The many of the cities step by step are changing from From Elisa subscriptions to the competition, those subscriptions are very low ARPU subscriptions. So the dilutive impact That customer is gradually also raising our ARPU, even if On absolute terms, it's a bit negative to our MSR. But as we have said earlier, It's less than €1,000,000 per quarter on absolute terms if it kind of realized will be realized for For all the cities.
So that is partly improving the ARPU, that Losing the low ARPU customers, but also the 5 gs is starting to show in corporate ARPU side. The employee situation and The development there, the restructuring cost levels. So I don't expect to have any major change over the long What you've seen in the past at Elisa, how we move forward, we work with the continuous improvement where, of course, When we will have tasks to be seized and completed in certain projects It's for automation or just project process improvements. We also find new task for Elesians in some new areas of our business. But time to time, there will be kind of reductions.
But they are quite small Overall, over time. So I don't expect major change on that development bearing to what you've seen in the past years. And thirdly, in terms of the Kind of headwinds, short answer is yes. If those headwinds start to become positive, for which I Definitely believe that for this some of the slowness in the B2B side Will go away some point in time. There will be kind of normal activeness.
So when those headwinds are And if they are kind of fading away, that will improve our results, certainly. When and how they that will take place, I cannot say. But I believe especially for the headwind that we see for in some of The B2B customers' decisions, that certainly will be ending some point in time.
That's great. Thank you. Thanks for the answers.
You're welcome.
There are no further questions at this time. Please go ahead, speakers.
Thank you for all participants and your questions. We wish you very good reporting seasons. But now from our side, we wish you a nice summertime, and goodbye.