Earnings Call: Q3 2019

Oct 18, 2019

Good morning, good afternoon, ladies and gentlemen. Welcome to the conference call. Will you please begin your call and may disconnect your Q and A. Thank you. Hello. Hi, everyone. Good afternoon. Welcome to Digi's Q1 earnings call. With me here is We have our DG management team, our CEO, Alvin Morrissey, our CFO, Gina Fokossen as well as other members of our management Today, I will walk us through the Q3 performance and then we will later begin a session for question and answers. So without further ado, I'll pass the line to Albert. All right. Thanks, Winnie. Good afternoon. Good morning to everyone. Thank you for joining us for our Q3 2019 call. We'll go through the lot of presentation from the management team. Together with me today, the CFO, Inger and the CMO, Lo The CTO, Keesevan Nisia and the rest of the management team, but the 4 of us will be the ones that will add to this presentation, but also take some of the questions. The agenda will cover key highlights, performance, and we'll wrap up with other updates and priorities with a lot of our outlook. So please allow me to start. The 1st 9 months of 2019, we have seen Tracking well towards the Internet growth ambition that we have. Year on year comparison, you see 11% improvement on Internet and digital revenue. And this has been a key focus from us as part of our changing strategy on data subs and data revenue, and that's also been translated to 4% increase in subscribers For the subsequent period. What we see is that we've been able to achieve this through continuous focus on the right plans and products, But also definitely on deployment of much better 4 gs network experience, given better speeds, and I'll cover that in this one. The base, as I said, has improved and the usage on the base has also increased. That's giving us solid Internet and post revenue growth, which can see from the Q on Q improvement in the chart below. If you look at 9 months of 'eighteen versus the same period in 'nineteen, you see The postpaid growth has is now 12% to 10%. And when you look at service revenue overall, there is a one A reduction of 1.9%. But if you look at the overall performance, we are quite happy on a positive part. We are committed to that in a short while. Digital Solutions continue to take a position. We have reached 6,000,000 customers using the MyDG app. We also have some good traction on digital services, particularly around games with Lubbock GG and India, which is a new platform that we just launched. We continue to expand our B2B ambition. Besides deploying on SME solutions, we have now also opened our retail Several customers for the business. On this slide, you'll see that we have also mentioned the 5 gs OpenLab, A field trial that we're working with partners is a collaboration to partners to sort of test the open 5 gs market On this slide, on the next slide just to give you a little bit of the key highlights. Internet revenue, Saisha is 11% year over year, postpaid revenue is at 12% year over year and service revenue Supply contraction of 0.7% year on year and it comes from the previous quarters, then taking the quarter to a positive 0 point 9%. On OpEx, happy to report that it was a flat OpEx year on year and quarter quarter, Taking higher margins to 48 percent sorry, 46% or $725,000,000 in absolute. CapEx, A little bit into my point earlier on the network and the deployment, it's now at 548,000,000 year to date, Giving us a strong network position and also here, I will talk a little bit about it in terms of how we have taken our number 1, number 2 position And 4 gs network experience in some states. On myDG, I covered that earlier, but myDG 3.0 continues to Rana, customers' choice in terms of rewards and account management. We have launched DG Wi Fi extension, so we have proposition, Now providing close to 7,000,000 of WiFi support nationwide, so that consumers can use WiFi as an option for connectivity. And not forgetting, going beyond what the business is also then taking our privileges to senior citizens and It's a meaningful person as part of our digital inclusion from the society. Our commitment to placing customer first as the slide indicates here is a combination of engagement that we take out to market. We are still the only brand that does this consistently, and here you would see a couple of images. The one on the left talks a little bit about taking employees and reaching out Over 7,000 Malaysian listening and also providing them services or just engaging them. On the right side, You will see that digitization of SMEs have agreed to the additions that I talked to you about a couple of quarters ago. We are now going one step further to actually bring out that educating and training SMEs, even the tools and the capabilities to actually grow our Business for Digital Platform. So very well received events for all these nationwide across this period, And it was very well received and we are expecting to continue to engage SME in this space. Next slide, within the network that I talked about, investments in the network was very visible and you saw that reflected On 4 gs, we LCG, we have now reached 90% coverage, LC Advanced at 70%, Driver is 9,020 carriers nationwide. On the subscribers, the 9.4 that I mentioned earlier It's our 4 gs Internet subscribers at 9,400,000. On the network, I just wanted to highlight to you earlier, we are now ranked number 1 and number 2 on UHAS P test across 13 states nationwide. And that has come from the 2 things. 1 is the investment and second is the management of the network. 2nd one is also optimization For the experience from our core customers. Mobile data usage is now around 12.96% per month In the Q3, and as I mentioned earlier, I covered the Internet. In this type, revenue just split between postpaid and Internet postpaid and prepaid, We're showing positive growth on Internet usage. Inger, you walk through the next slide please. Thank you. Thank you, Alvin. Then I will go into subscribers and ARPU. So we are building base to become a much So we have continued to focus on capturing our customers into device ownership programs And that's for the Q3 of 316,501. And we are also seeing very good traction on the prospects, assembly plant and also The free to post the conversion as well. And I will then touch upon also the prepaid in cement And that is resulting in prepaid revenue cycle. So in total, We see that our subscribers coming from prepaid Internet and postpaid is increasing year over year by 3.7%. And the decline that you see here from non Internet prepaid is narrowing. So it was minus Fibroaches this quarter, narrowing from 9.2% last quarter. So in total, we have Strengthen our subscribers of Pulsepad and prepaid Internet by 341,000 Subscribers are 3.7 percent year over year. Our blended ARPU is RUB2 billion at RUB40, Due to the stronger Internet and posted revenue, and this is sufficient to cushion the non Internet cost dilution that we see. And total ARPU has actually increased to BRL71 from BRL70 last quarter, and this is due to our Our key focus challenge for new entry level customers that we also want to come into this profit segment. But we continue to grow with our customer needs To have a continued focus on our Priyatil. Moving on to the service revenue. We see solid Internet growth as we mentioned before. And the service revenue overall excluding the contract Question, quarter on quarter has increased 0.9%. The decline has also narrowed year over year To minus 0.7%. Last quarter, it was minus 2.2%. And if you Actually, our service revenue grew by 2.4% quarter over quarter and 8.9% year over year. The Internet and social revenue growth, we really see that it's gaining momentum. But we also The increase in higher demand on digital services, which for the first time see Very visual here on the chart, dollars 7,000,000 this quarter. So in total, our noninterest revenue By 3.7 percent quarter over quarter. And we continue to see the impact from, of course, the revision of Intuit Connect The rate and also the increase from the higher contract asset expectations. Moving to the cost side. So we continue to deliver very efficient operations. As you can see here, our underlying costs have remained flat. Last quarter, we had non recurring traffic cost of BRL34 1,000,000 we get, meaning that We can actually see that we have been able to have a pretty flat comp quarter over quarter if you This regard. Auto, it's 5.4% year over year decline also coming from the interest of On the OpEx, we have managed to remain flat both year over year and quarter over quarter. And this is actually very favorable 34.6 Service revenue only. Even as we continue to invest in our network, which also increased our OpEx, we With efficiency initiatives as well. Actually, our underlying OpEx is lower compared to the last quarter Because the one off and nonrecurring costs that we have this quarter of $17,000,000 is lower than $28,000,000 that We continue to have a very high commitment and focus on driving our operations efficiently. Moving to the EBITDA and full cash tax, relatively resilient and we've Thank you for your transparency, the nonrecurring ops that we have mentioned in the previous quarters as well. So as you can see, the underlying EBITDA has increased by 2.7% quarter over quarter and it's minus 0.6% year over year after the normalization and the And the construction for the amortization. It's basically trickling down from the top line, We have improved our earnings quarter over quarter mainly as we focus on stronger service revenues And also more efficient operation. So our reported EBITDA, as Alden mentioned, is now at ING 725 1,000,000, Resulting in a 46% EBITDA margin. And our underlying profit after tax have increased 22% And we are recorded. And also a decline of minus 5.8% year over year after the normalization I'll mention it here. Then I reported So minus 12.6 percent quarter over quarter and minus 10% year over year because we have accounted for €100,000,000 €72,000,000 in depreciation costs and an increase in finance costs, but also higher effective tax rate. And this is related to additional tax from finalization of our tax return filing and prior non tax deductible costs. Moving on to the CapEx. We are in line with our strategy on investing in what That air is small for our customers. And we are seeing that our cumulative CapEx year to date Now we show $748,000,000,000 and that is equal to 13% CapEx service revenue. This has given us a more optimized 4 gs network. You can also see that we have enhanced our capacity with the building fiber network Extension now reaching 9,200 kilometers. And we're also using more spectrum that is specifically for 4 gs. And as Alban also mentioned, now we have a result from UCA that we are ranked as number 1 and In the same assessment, 4% quarter over quarter to RBL 606 1,000,000, giving us 39% margin I'm sorry, recording a relatively lower CapEx this quarter, which was part of our plan. It was concluded to accelerate the network experience in the first half. Moving on to the dividend. So based on the earnings per share, it's at €0.07 or €0.46 after adjusting to the MSR This was presented to the Board and they have declared a fair interim dividend of €0.05 per share The equivalent of R350,000,000 that will be payable to our shareholders on the 19th December this year. For the information, also we speak to the RMB900 1,000,000 of RMB900 1,000,000 of RMB250 1,000,000 for This is part of our already announced 5,000,000,000 yen program And we'll support us in investing in our business going forward. And we We made our adjusted EBITDA healthy at 0.8x before MFR 16 effects and 1.5x after. Our conventional total assets is at 10% after fiscal 'sixteen. Moving to the impact of the IFRS 16 leases, this is something we continue to report Just to show you guys some facts, basically, we continue to move our leases from our fixed line down to the rights of use assets. This time, it's NOK 109 Then we move it back up into depreciation and amortization and finance costs, giving us a delta of minus €6,000,000,000 this quarter. Okay. Inge, thank you very much. And just to wrap up the last couple of slides, so I'm just shifting gears a little bit to give you a little bit of a better future as the brand and the company As I said, the financials, ambition that we have on this slide, you will see that we have impact on being a top leader, but also a leader in the space of Sustainability, bringing programs across SMEs and across the business partners, where we're talking about The importance of sustainability in the visual update with the engagement on sustainability that we just had, where we have brought in external parties, About 150 different companies joining us for that event. Also, you will see that we have launched a Yellow Hut Ram, I talked about this before with the Pick and Yellow Hut, the retailer making this an opportunity for us to differentiate the brand. In this instance, we have now extended what we did previously to the different VAEs per person by offering us I stand 10 ringgit monthly rebate. We have now extended that offer to Steven as well. We truly believe that everyone deserves to use the Internet And yes, any inclusion. On the last one is empowering the next generation. While we sell the inside, I've always said that we have a Responsible for Eddie Kate and Bill's resilience for children. Here you've seen that we have over 100 and 30,000 students across the country through various Next slide, just to share with you that while we are pushing our business to date in growth, We are recognized and we are humbled by the recognition that we received and it's dedicated to our employees, to the brand overall, to the strategy And to our investor community. And on the last slide, just to close off with the priorities and outlook. What we've seen is basically that we've been able to provide sustainable interim revenue growth of 11%. You've seen that postpaid has maintained its momentum From the previous quarters but also from last year, we're here with 12% growth. Efficiency remains Our main focus is also driving the mindset but also the culture in terms of delivering good quality network, good quality service, but in an efficient manner. Yes. If you start off back then, sorry for the EBITDA margin. With healthy returns that Inger shared earlier, we've and delivery in the channel, driving postpaid B2B and prepaid Internet growth, that has been our strategy for the start of the year and we're going to continue to do that. We've seen now is the 3rd quarter improvement in all the three areas that's listed below. We're also going to continue to focus on structural efficiencies. We believe that we can do even more in this space. And on the network side, we continue to expand and improve the quality of our network as we're coming to On the guidance, on the based on the performance, we've also now looked at a key cash ratio of 12% to 13%. On the EBITDA, we've taken that Now to low to medium single digit decline and on service revenue, it makes that low single digit decline. With that, I'll Our first question comes from Arthur Katter with Citigroup Inc. Hello. I'm sorry, Mr. Arthur, would you please stay on the line because our speaker's line has just been disconnected. Several questions, please. First, if you clarify on the guidance, it seems like the CapEx guidance is now slightly higher To 13%, what's driving this change on the guidance? Second question I had is on the prepaid side that continues to be problematic with What can be done within the prepaid decline? What's being done on that side? And lastly, a housekeeping question. Can we clarify the non recurring items booked for this quarter? Thank you. Thank you. I will start with the CapEx guidance. So basically, it's a combination of 2 things. 1 is that CapEx guidance is on a complexity sales. And since our sales revenue has a slight decline, it also increased the ratio in However, we have also invested slightly more than we thought at the beginning of the year because we want We continue to deliver on our customer from it, on the customer experience, and that's also what we see with SoftBank. So As mentioned earlier, we front loaded our investments this first half, and we see those results now in the second quarter. Back to the questions on the prepaid, I think as what we shared in the earlier slides, There's really 2 components in the pre bid. If you look at the impact, definitely I think we are Narrowing the gaps and it starts to show some of the top trends again. Again, I think if you look at the private process segment, the Internet user behavior always is a very different For this commitment, a bit more stable and there's a lot more choice and Personally, the competition for the fees are still abundant, available in the market. And on the third question on the nonrecurring items in Q3, quite similar to the previous quarters. We it's a combination of efficiency efforts we are doing on the consultation. So we are reversing some of our approvals based on the new prices we get As well as some geo cleanups that we have in the balance Sorry, sorry. The line was not very clear. What's cleanup in the balance sheet? Some aged Okay. Fine. I understand that you mentioned that that's being problematic, but is what can be done to actually reverse this So again, I think that's really I think that in terms of Internet, you switch that will continue to grow. Of course, we are continuing to leave Now going to segmentation models, work on the different offerings, different affordability level That will allow us to continue to Internet and monetize the Internet. But again, right, I think you also have to take into consideration What you see in the prepaid is after the pre to post migration. So I don't think we can look at pre and post I think you really need to look at it as a bit more in totality as well. Arthur, just that in the last comment that Laure had, which Speed to post, basically there's a couple of methods that you would defend the growth and expand the ARPU levels. One is speed to post and as you know, the news been doing that The other part is there are pockets of growth that we have in several data which we have our fair share of intentions to go in there. So those two things combined and the network expansion that Inger mentioned, so that is that we'll track towards managing Our next Hi. Thank you for the opportunity. Two questions from me. First of all, more shorter term, do you think that the industry has come to a Point where we can actually start seeing positive service revenue growth going into next year? Or do you think That competitive pressures are still intense and there's no hope in sight or no chance of us getting positive service revenue growth Industry over the next 12 to 18 months. That's the first one. Second one, a bit more longer term. Could you give us some comments around what you think about the NSCP and all the stock around 5 gs network? And how does DG fit into this strategy? And what implications does it have for your long term CapEx requirements? Thank you. Prime, back to the question number 1, right, of course, I think if you look at the service revenue today with the Internet revenue component and the non Internet revenue, Dave, you see some of the our progress on the Internet. Really, I think, of course, the postpaid Internet has grown Much promising compared to the prepaid as what we have just explained just now. But really I think it's another component right in order for the industry We do have a positive service revenue and then there's a non internet portion which is really still there's a lot of other element there within our Let me just leave the connect and also voice to I mean Voice data cannibalization is going on. And as I mentioned, we go into more and more bundle. I know the voice bundle, voice there is a price dilution as well on the non Internet. But again, I think the focus is how do we continue to The net business in a sustainable and a profitable, I think that is still what we are focusing on in the near term. Yes, Priyen, thanks for the question. On second question, in terms of NSCP and 5 gs, The way we look at it is, first of all, NCP was a very clear decision from the government in terms of how they actually see improving connectivity in for the better of the consumer. And I think that is very much in line with NFFT mission. There are several As you know, you're part of the launch. I think on the mobile space, we're looking at improving the quality and also making sure that we're able to perform on a coverage side. So it's very much part of what DG would look at in the momentum expansion and quality improvement to serve our customers in that period. And then we'll be then translated into the CapEx that we would already have provided for that period and our customers. When it comes to 5 gs, it is a step by step. And you have seen how they've done we've been together as an industry, together with MCMC and the regulators, terms of taking from a showcase to trial to field trial and there's a road map that we shared with them as well is my understanding. And the other thing that's quite different is how the federal and the states are working together with the operators to actually find a much More effective way of rolling out connectivity in this various state. So for me, it's very much a lot of it and it's Thanks, Alvin. Do you think that DG would look at building its own 5 gs network? Or do you think Something closer to what China Unicom and China Telecom have done where we have some form of an infrastructure layer For players to come on board and therefore save on the CapEx, Alan, what do you think that long term direction is? Yes. So as you said, it's a long term direction and it's very early days. So right now, we are actually doing A trial and we're also doing a open lab, the 5 gs open lab. So we're taking a very pragmatic approach that we're looking at it and we're looking for setting an assessment in terms of What would the use cases of RGP? I mean, you know this, but just to remind everybody that we also have a partner group. And then we also have the potential of looking at what not just the use cases, but what are the methods in terms of deploying the 5 gs that we could get and explore. So very early days. We're seeing our options open in terms of whether we build or whether we do anything else. And we will collect once we have a clear And vision, but as you said, that's a little bit of a long term view right now. All right. Thank you very much. Thank you. Our next question comes from Alice Koh with Yen Banking Care. Please go ahead. Thank you. Thanks for the opportunity. I got several questions. The first is regarding your operating cost. I'm just looking in terms of your traffic, your O and M and your material cost. Quarter on quarter compared to the second quarter, I noticed they ran up to them. Can you just give us a bit of Can you just give us a bit of our guidance? Are these seasonal or is there something that we should bear in mind going into the 4th quarter? My second question is regarding your tax rate. Can I know that this is now your normalized Great? This third quarter was 27% reset, the rate that we should be looking at going forward. And the third question is regarding your home fiber plants. Can I know what are your plans for expansion Even in light of your comments earlier on the NSCP, how does that fit into the overall plans for Alamo as well? And my 4th question is regarding your NISR 19,000,000,000 Subgroup. Are you planning your funds Is it CapEx or is it on Spectrum? What do you have to do with the funds? Thank you for your question. I'll do number 1, 2 and And then I'll hand over to Albert. So the increase quarter on quarter on O and M and Joe, The reason it went up is related to the one off that we had last quarter in this area. On the effective tax rate that we had this quarter was related to additional commercial standardization of our tax But also a higher non tax deductible cost, it will not be our run rate going forward. And as The tax rate is 34%. And the average, I think, we would rather look at annual basis. When it comes to question for the RMB900 1,000,000 that we have issued this Quarter is for our working capital management as well as our CapEx I'd like to just take the last question that you had on fiber to the home and as part of fiber to the home. So the private to home position that we've taken is that we have done some pilots at the industry. And then in the last quarter, we talked about some launches that we've had, We've taken a few positions in strategic locations that we feel that we wanted to get better knowledge of how fiber would be as a bundle and we've done that now in But the latest one was that we launched in Sabah. And we are looking at that in terms of being able to provide to customers a bundle of every proposition, but we're taking it Step by step, and we're making sure that we're able to have value proposition and a differentiation that makes So it's very early for us. We are open to exploring all ways of Thank you. Next question comes from Fong Chong Chen with CIBC and KLL. Please go ahead. Thank you. Hi guys. Thank you so much for the call. Four questions from me. Firstly on the postpaid ARPU increase, right, on the Q on Q basis. Can you give us a sense of the plan of rates that you're seeing? Is this happening at the lower end level or are you seeing that across all your various postpaid plans? And Inger mentioned earlier on about efforts to ARPU uplift. If you could also elaborate on that. And then my second question regarding the FUKA e test result, that is very encouraging. And you also mentioned that you're now putting more spectrum dedicated for 4 gs. So on that, can you just sort of Quite more color as to what spectrum you're using for 4 gs, how much bandwidth is allocated on that use case? And then my third question regarding your cost, We look at the underlying QSO and also the OpEx overall about flat for the 1st 9 months if you take out all the exceptional or one off items. And given the fact that your 4 gs coverage is already quite high and I think going forward probably incremental expansion, do you think that there is more room to sort of drive down The overall cost levels over the next 12 to 24 months? And if so, what particular areas would you be looking at? And the final question regarding your 7,000 WiFi location, right. Do you see that as essentially Contributing in a material way to your top line and earnings and perhaps more importantly, how are you going to be paying for this? Is this a variable cost or is it a fixed cost Thank you, On the postpaid ARPU uplift activity, I think it's closely linked back to what we have Jerry, we've built a lot of effort on the food waste management and that's really cut the cost from free to post. Of course, In the last many quarters, we are building the postpaid base and that's really seen time move into The wise plans as well. So it's really a mix of activities across the entire base and matching Yes, usage pattern to the whatever that we believe that ARPU is relevant and affordable to the segment. That's what we are doing, but I just jump quickly on the question number before passing here. Back to the WiFi, that's really more on I don't think there's a Significant contribution, but it's really more on the convenience and also loyalty, seamless productivity to the And they can actually subscribe it to the YGG, our digital channel. And how fast year over year, year to date, even though we have an increase in our headwinds. So basically, we continue to work on efficiency measures in order to be able to offset the cost And we will continue to do that going forward as well. Okay. Thank you. Our next question comes from Ranjan Sharma with JPMorgan in Singapore. Please go ahead. Hi, good afternoon and thank you for the presentation. A couple of questions from my side. Firstly, on your digitalized Vision Initiatives and the Embassy App, how should we think about the cost savings going forward from potential reduction in channel cost? And also is that allowing you to learn more about your customers' which confirm to upsell services or offer tailor made Plans for customers, maybe that can help stabilize some of the revenues. The second question would be on the industry. You have seen industry revenues declining for years now, at least for the big three players. Because on capital have been the pressure as well for the entire industry, when is it When should we realistically think about industry revenues turning around? I know it's a pretty broad question, but would appreciate your thoughts. Thank you. Back to the question from the My Digi, really I think here We see 2 benefits. 1 is really of course allow us to now engage our customers In more frequent and also able to deliver a pro offering or personalized offerings that we believe based on their usage On the cost side, we believe also as I met more and more customers are connected to this digital channel, It will also allow us to simplify across a lot of the you see today I think we deliver our service In the number of channels and that over years create complexities as well as you will have Direct impact to the cost. So I think this is one initiative that we believe is to continue to build on the platform. This will allow us to redefine some of this work And of course, we will hope that this will translate into a Positive cost savings in the future? Yes. Energy has really come A long way, and it's actually been very pleasing for us to see the development of it and also the pickup of it. And so we besides what Bill said in terms of the benefits It's a much better way of us communicating this loyalty and this benefit to customers without being intrusive. And yes, the stickiness is created. So it's been an extremely positive upside for us and hence why we also report the NAU to get requested as far as that's a Okay. So hi, Ronda. I think I'll just A little bit on the revenue, the turnaround in the revenue. But you've seen we've had They've increased quarter over quarter in the past 2 quarters, but our main focus is on the growth that we see in social media and Internet revenue growth, We So I think, yes, we will continue to see decline in the traditional services in long term and competitive as well. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] As I receive, that it's flattening out slightly the past quarter. So next year, it's also this loyalty and also monetization On the data, I think the key focus in order to do it in this market is on the customer experience on the data In order to be able to do that monetization, so I think we will continue to see How did you place it in that going forward? I think the opportunity is all up to us, Rajin. So 2018, you saw that you did a recovery after change in And in 2019, of course, there are headwinds, mainly on prepaid. But for us, the importance was growth on postpaid, which has maintained double digit. And as I indicated earlier, our growth on B2B is also progressing extremely well, Along with the short services and hence why those combination of the 3 and the stabilization of B2B going forward Could potentially see a different picture going forward in the long term, as Inger mentioned, where customers appreciate the better network And getting nice to the KFOR battery network experience, whilst receiving the benefits from the other platforms that we offer. Okay. Thank you so much and good luck. Thank you. Thank you. And next we have a follow-up question from Arthur Beneta with Citi in Singapore. Please go ahead. Hi. Two follow-up questions for me, please. Firstly, just wanted to get management's Thoughts on TM's proposal to build the national 5 gs network? Is this something you'd be supportive on? Or do you think the mobile player should own their own networks? Thanks, Christian. I had with regard to the margin differential between prepaid and postpaid. Obviously, you've been pushing more subs to Postpaid, when you do that migration, are the margins actually better considering there are subsidies implied with postpaid? Thank you. So let me take the first question On TM, we actually don't comment on anyone else's proposal. And that's also from a public inquiry from what I understand. So we just focus on our own plans, and we are evaluating all options, as I mentioned earlier, to another question. And we will basically look at what makes sense for DG in terms of our deployment and our hydro plans going forward. On the margins, we don't specifically comment on the margins on the pre and post state level. I think I thought this is what Lars mentioned as well. I think There's not really a pre and post anymore. It's more catering to what the customer needs. And if the customer needs a good bed We will offer and deliver that to that customer in the best possible way. When the customer is ready to move over to We offer the best package and product to the customer based on their needs. Okay. Thank you. Thank you. Thank you. First name is Albert Mathew. There seems to be no further question at this point, Tom. Thank you. Thank you very much. There will be a second time to join us on the Q3 2019 call. Thanks a lot. Have a good day and a good weekend ahead, guys. Thank you. Thank you. Thank you for participating. This concludes the conference.