Good morning, everyone, and welcome to the hub. It's a new concept, so I'm happy that you found this place and not where we used to be. Also, good morning to all of you that are following us on the video stream. We have put together a packed program today. I hope that all the deep dives we are going to have after I have done the more overall strategic story is going to give you useful and important information. Let me start with, what is really Telenor? Telenor, a company with 186 million customers operating in nine markets, and with that scale, now have an ability to compete in more a global marketplace. As you know, we have a unique combination of presence in the advanced digital societies here in the Nordics, but also in growth markets in Southeast Asia.
We have operational control in all our nine business units, which gives us an ability to execute. Basically, it's in our hand to do what we think is necessary to position the company for the future. Today, we are going to take you through our strategic ambitions. We're going to talk about how we want to take Telenor to the next level. Also give you some flavor to our financial guiding going forward. Let me start with the big picture. We say that connectivity is the backbone of modern societies. The mobile industry, the telecom industry in the world has come far. 66% of the world population is now being connected. We are also having an important part of the world GDP. The contribution from our industry is 4.6% of the world's GDP.
We are creating 32 million jobs, and that's only the direct jobs we are creating, plus all the indirects. According to McKinsey, they say that in 2030, you can put another 15% contribution to the GDP coming from digitalization, automatization, and AI. Still, as this slide shows, there are many that are not connected. For example, in Pakistan, only 25% of our customers are using data on a frequent basis. Even in Denmark, it's 20% of our customers that are only using voice and not data. This is our opportunity, but this is also our responsibility. That's why we say that connectivity is developing societies, and it goes hand in hand. The role that we see ourselves having in these societies is to invest, is to engage, and is to contribute.
It's basically to give access to the digital world because that access, and we're going to talk more about that, reduces inequalities and is raising the standards. Telecommunication has become a more and more important part of society's critical infrastructure. The stakes are raised, and our stakeholders, including you as investors, are expecting more. It's about trust and business sustainability. The way we look at that is basically to create a sustainable license to operate. That's why we, in our purpose also say empowering societies. That's why we have included a section at this Capital Markets Day about sustainable business and business practices. Let me take you back three years ago to the Capital Markets Day we had in 2017. Since 2017, we have been on a journey to position Telenor for the future.
We have developed a clear purpose for the company, connecting you to what matters most, empowering societies. We have started to execute on how to position Telenor for the future. We believe that telecom, Telenor included, will go through big changes in the years to come. We see that we are being attacked from destructive players. We see consolidation, we see infrastructure sharing, we see new partnerships being formed. We therefore need to have a company which is more robust, more efficient, also a company that have room to grow and room to be flexible, both when it comes to costs, also when it comes to the way we look at investments. At Telenor, our ambition is to be a top performer in the way we execute on this. The journey, it's also about culture, leadership, and attitude, not least, business models.
We have changed over the last few years the way we work. We have worked with our leaders' mindset. In the past, Telenor was a quite decentralized company. Today, we are working more globally. We are trying to find a balance between globalization, standardization, centralization, but still keep the local agility. For example, global procurement and infrastructure architecture are examples of how we have globalized and standardized the way we work. At the same time, we have worked further with local employments when it comes to sale, distribution, and marketing. In the last three years, we have come a long way, and our journey has basically been to digitalize the core business, not only for saving costs, but also to improve customer experience and increase flexibility going forward. As a result, as you can see on this slide, we have steadily been improving our EBITDA margin.
The dip you see in 2019 is due to one-offs. If you adjust for that, you will also see that 2019 is following the same trend. In addition, we have repositioned our portfolio and we have done quite a few changes over the last three years, even more than what you see on this slide. I must admit that it was hard to decide when we exited India and Central Eastern Europe, because that's not what we have done a lot in the past. But we did it, and I hope that we then have demonstrated for you that we are value-driven in the way we work, and we are rational when we make these choices. We have also created value through new partnerships.
Partnership with [NENT] here in the Nordics on the DT8 business, partnership with Carousell in Southeast Asia on the online classified business, and partnership with Ant Financial in Pakistan when it comes to the financial services. When we then have done all this has then created a room for us, a clear portfolio, which also enabled us to do an acquisition in Finland last year, and also explore structural opportunities in Asia. One of the values we have in Telenor is keep promises, and what that basically means is that we want to do what we say. That's what we are trying to do the last three years. This is the numbers that we gave you three years ago, the financial targets that we showed you three years ago, this is exactly what we have delivered on.
We have used these numbers, also these guidings, to drive the organization, and I'm quite pleased with what we have delivered. We have basically ticked off all the three areas that we talked about, organic SMT revenues, OpEx reduction, and CapEx to sales ratio. This is exactly what we are going to do for the coming three years. The guiding we are going to talk about today is the guiding we are going to drive the organizations on in the coming three years. Ultimately, these targets are all about value creation, and we will continue to focus on cash flow generation and a rational portfolio approach. This is to keep our promises also when it comes to our ability to deliver on the dividend policy, as we have done in the last three years and as we plan to do in the coming three years.
We are well-positioned, as I said, in two very attractive regions. The Nordic markets, the four markets we have here in the Nordics, are standing out in the European telecom sector. The Nordic markets are growing premium tech-focused markets. We see quality-conscious customers that are willing to pay. We see relatively low spectrum prices, and we see stable macroeconomics and regulatory frameworks. At the same time, we are in the Southeast Asian markets, where we see still large unconnected and unserved population. We see a real penetration in, for example, Pakistan and Bangladesh, of only 50%-60%. Only half the population even have access to basic services. We see a young and growing population. We see a growth in data consumption. Look at the numbers here from dtac. In one year, we almost double the users per customer in Thailand.
We see that prepaid customers are now migrating into postpaid with data bundles, with also a growth opportunity. In our portfolio, we believe that consolidation is going to happen in several of our markets, and we are willing to participate if the conditions are right. Value creation is obviously the most important condition, but an important condition for us is also our principles around responsible business practices. The size we have then in the group and with the presence we have in the two regions give us scale. Scale that we use to centralize global procurement. Scale that we use to standardize infrastructure architecture.
Scale that we use to systematically benchmark all our businesses through global expert teams. The two different regions we have also give us an opportunity to, for example, test out efficiency concepts in very cost-related markets in Asia, and to bring those efficiency concepts to Europe or to the Nordics. At the same time as we can test out advanced services in the Nordics and export that to our Asian business units. Four examples that is illustrated on this slide. Let me go through that. For example, in product and pricing, the data pricing, the upsell into data bundles we have experience with here in Norway, we now are taking with us to Asia, when we are migrating prepaid customers into postpaid data bundles.
The swap program as device financing that we have also had success with here in Norway, we are now exporting to other markets where that also it's applicable. The fighting brands that we have, Talkmore, Dipper here in Norway, Skitto in Bangladesh or Vimla in Sweden, those are our fighting brands, which we are also testing out how far can we take digital journeys and again, taking that to other markets. We have been building a global backend software platform, which has basically enabled third parties to have one API integration with Telenor and get access to all the nine business units and also all our 100 and almost 90 million customers. The direct operator billing system, where you basically can use your mobile phone to pay for third-party services. 5G pilots, we have been running 11 5G pilots in Norway.
We have been running pilot in Denmark, in Malaysia, and in Thailand. All these pilots are to test out different technologies, but also come up with different use cases. Again, learning from that in one market and bringing it to new markets. The common delivery center that Ruza is going to talk more about is basically to use scale with partners to then reduce the cost, but also to automate the services. It's both in running our networks and also running our IT services. The ambition here is actually to have no touch operations, both in IT and in network. We have tested this then out in the Asian markets, and then we are bringing it to the rest of the portfolio. Last but not least, the procurement company. We set up a procurement company, global procurement company in Singapore. That was in the beginning of 2017.
If we compare now the unit prices that we paid for back then and the unit prices we pay for today, we have a saving of almost NOK 7 billion over those three years. We see now that per project, when we are combining the scale of Telenor, we get an average 20% price reduction, compared with if we did not have a global approach here. This was some reflections on the last three years. It has given us a solid platform, and we are now ready to take the next step. The next step will be within the three areas that you see on this slide. It's growth, it's modernization of our operation, and it's responsible businesses. You will hear us talking about these three areas in the coming quarters.
Growth, we think that what we have done on the portfolio simplification, what we have done on cost efficiency, what we have done with increasing the focus in all our nine business unit, has given us a platform where we now are well positioned for growth. I'm going to talk more about that. The modernization of our core business. Three years ago, we started with cost-cutting. We started to attack the low-hanging fruits or the waste, if you want. We moved it into an efficiency program, which was more about structural initiatives. Now we talk about modernization. Modernization, the driver for that, it's basically to improve customer experiences, it's to create flexibility, and increasing the speed. It's to create room for new type of services, and Ric is going to talk more about that.
As a result of all that, we are continuing to reduce our costs. We are now moving then into the next layer that we are also going to talk about later. The third area, responsible business as an integrated part of our strategy. This has always been something that has set Telenor apart, but we now see an increasing need to have trust and sustainability as an integrated part of everything we do. Our ambition, Telenor's ambition, is to be standing out in this area in all our markets with high standards and policy across the group. Let me then now go through a little bit more in detail in each of these three areas. Starting with growth. We believe in the purpose that I already mentioned, connecting you to what matter most.
We believe that we have an opportunity now with the presence we have to continue being a growth company. We have not given up on growth. Telenor believes that future growth will come also with trusted brands and secured quality connectivity. Therefore, you are going to see that we're going to focus more on the importance of security and data privacy going forward. Some examples on where we think the growth is going to come from. Start with Asia, as you see on this slide. As I said, there are still millions of customers in our Asian units that are not having even access to basic services. We have a low data usage. Grameenphone as one example, out of the 70-something million customers we have in Grameenphone, only 15% of them are using data on a daily basis.
A big room to grow, or Pakistan 18%, or Myanmar 25%. Even after they start using data, we have the opportunity to migrate them from prepaid into postpaid bundles, and we also see growth coming every time we do this. The examples in the middle here, it's the service bundling that we are starting to see works here in Norway. We believe in connectivity, going back to what I said about the purpose. That's the platform or the base for our business. We also believe that we can serve customers with services on top of the connectivity. As you may remember from the fourth quarter, Ric is going to talk more about this, Telenor Norway had a 4% ARPU growth in the fourth quarter. Two-third of that 4% ARPU growth came from the new services, and one-third came from continuous data upsell.
We believe that adjacent services close to our core, we can deliver ourself. Other services, we will then deliver through partnerships. To the one at the right, fixed. In Norway, we now are investing heavily on rolling out the fiber. We think there is still land grabbing of fiber in Norway for the coming few years. At the same time, we're now starting to get experience on fixed-wireless access. All this we do in Norway to modernize our network. We see that when we do this, we have an opportunity to do speed upsell. Speed upsell on fiber, speed upsell on fixed-wireless access. With that speed upsell comes an ARPU growth. In addition to that, when we do fiber roll-outs or fiber connections, we are bundling that to our TV products.
More than 90% of the new fiber customers we get in Norway are taking our TV products as well. With that, you also see an ARPU growth. In the fourth quarter, this was the first time in many quarters where you saw that the growth we have in fiber and fixed wireless access is more than compensating for the decline we have in the corporate legacy business. Fixed wireless access is also a solution we see that we can do in other markets. We launched 5G in Finland before the end of last year, and in the Helsinki area, we are using 5G to provide a wireless broadband access to the homes. We also believe in the potential of IoT, but mainly as a part of our B2B offerings.
Our focus going forward in the B2B offerings across our portfolio, it's to go into more integrated solutions, not only selling access, and IoT will be an important part of that. Again, coming from learnings that we have done in Norway. However, we believe that most of the innovation that we will see in the IoT space, especially in the IoT verticals, will come from partnerships. Some words on the modernization journey. As I said, Telenor wants to be a leader in the way we modernize our company, modernize our core operations. The last three years efficiency focus has given us a lot of learning. It has also given us inspiration. Inspiration to see what is actually possible when you start pushing the conventional wisdom, and inspiration to do more on our digitalization of the core business.
We see that when we digitalize our businesses, we are not only saving costs, but we are also improving customer experiences. We make ourselves more agile and being able to move much faster. Some examples of that as well. Let me start with one of the boxes that talks about the cloud-based scalable network. Ruza is going to talk much more about this. What this basically is that we are moving our network operations into the cloud, hybrid cloud. We believe that we are an industry leader in the way we do that, and 83% of the data traffic is now in the hybrid cloud. What we see is that software-based solutions gives us a significant cost reduction, but also more flexible solutions. Again, Ruza is going to come back to that. The digitalization of the customer journeys and the customer touchpoints.
We have been working with this for some time. We have been working with digitalizing the customer connection we have. That's why we now have more than 30 million or around 30 million users on MyTelenor app. These users are using our MyTelenor app on a very frequent basis. We have then taken it one step further, that's what you see on this slide. In Asia, we have more than 1 million point of sales that are selling our products every day, selling our SIM cards, doing the top up to our consumers. In Asia, it's not, as you know, such that you pay once a month. You may go and top up your prepaid account once a day or once every second day.
What we have done is, rather than only having physical interaction with those 1 million retailers, we have developed an app on a smartphone that we give them. In Grameenphone today, 13% of Grameenphone, more than 100,000 retailers, is already using this app. Their plan for this year, it's to move that up to around 40%, and Azman will talk more about that. When we do this, when we are digitalizing the customer journeys, when we are digitalizing the physical distribution, what does that give us? Well, it basically give us closer customer relationship, and with that closer customer relationship, we can then also work with personalized services. We can do upsell to customers digitally, either through the app or when the customer comes to one of these 1 million point of sales.
The retailer have the customer information in this app, and he or she can also do upsell. With that, we can also lower distribution, and we can lower customer service costs. There's also one box here on the way we are modernizing our organization. We have started to implement a new way of working in Telenor, more agile and more project-based way of working. We have removed layers, increased the span of control. We have a much more focused strategy execution. We have also started now to automate processes throughout the organization. As a result of this, since 2015, we have reduced the number of FTEs, number of employees, with 22%, and this is excluding the exits that we have had. 22% reduction in the core business.
We believe that the future need of competencies in a digital world is not going to only come from new hires. We also need to upskill and reskill our entire 20,000 employee base. That's why we have started to do that. We have defined seven critical digital competencies areas, which we think is very important for us to have competence on in the future. Already, 15% of our 20,000 employees are experts in these seven areas. In addition to that, two years ago, we launched a 40-hour challenge, where we basically said to all our 20,000 employees that you should take off at least 40 hours during a workday, during a year, to learn something new. I'm very pleased to see that we more than met that target. In addition, we have taken now 5,500 of our leaders through strategy execution programs in cooperation with INSEAD.
Last figure here is about investments. We have implemented a more centralized way of looking at our investments, and with this comes a much more disciplined way of working, both when it comes to investing in spectrum, but also when it comes to investing in our networks. The global procurement company is a part of that. Equally important is the way the group CFO, Jørgen, and the group CTO, Ruza, is sitting together with the business leaders out in the business unit to scrutinize investments and to make sure that everything we invest in the networks or CapEx and spectrum, it's to optimize these investments. We have also implemented new advanced analytics to steer investments through granular models of demand. The picture you see here is an example of that. It's a picture which shows a distribution of site profitability in one of our business units.
As a result of all this, you see that we have a lower CapEx to sales ratio than many other companies have. Sometimes I get the question, "Are you underspending?" My answer to that is no. These processes have enabled us to basically get more for less. On the responsible business. I've talked already about the trust and the stakeholder expectations. This is why we now are moving responsible businesses into an even more integrated part of everything we do. This is not only what we do in Telenor, it also includes what we do with our partners and our suppliers. Anne, our Head of Corporate Affairs, is going to talk more about that. Let me give you some highlights. The base, the fundament for everything we do in this area, it's our code of conduct.
It's the foundation of responsible business practices, not only here in Norway or in the Nordics, but across also our Asian markets. It's based on continued improvement processes, the last few years, we have also strengthened and implemented more robust systems in this area, more audits, and also more awareness programs. On top of that base of code of conducts, we are talking about two main pillars. It's access to services, and it's raising standards. On the access to services, we believe that connectivity can play an important role in delivering the UN's sustainability goals. Providing access, which we do, is not enough. Our ambition on digital inclusion is also to build digital skills, and even do basic things like we do in Pakistan and in Myanmar, giving people that digital ID, going into the villages.
We have chosen to partner up with UNICEF and Plan International in the way we do this. The other pillar I talked about, it's raising standards. We have relatively big operations in nine markets, nine countries, 20,000 employees and 10,000 of suppliers. Raising standards, it's an important area for us. Not only what we do ourselves, as I said, but also what we do with partners and suppliers. We today also now are announcing concrete targets in these areas. It start with giving everyone internet for all. Our ambition is that by 2023, 65% of our customers are using internet. We have also worked on diversity in the Telenor Group. Gender diversity, we have a target here to now move up the around 30% gender balance we have with our top leaders to 35% in the next two to three years.
The top leaders is around 140 people. It's my team and also the management team out in the business units. It's not only about gender. We have also now set targets for culture diversity. I have six nationalities in my group executive management team. Not many companies here have that balance. We also have diversity target when it comes to the business units and backgrounds, age, competencies, so on and so forth. We have also set a target on the training of suppliers. The target is that we want per year, annually, to use at least 17,000 hours of training. These are the suppliers that are working together with us across all our markets. Train them on our standards, train them on health, security, environment, and so on and so forth. We have also now set targets on carbon neutrality.
The target is that we want to be carbon neutral in the Nordics, our four operations here in the Nordics, by 2030. However, the CO2 emission we have as a group, only 4% of that actually comes from the Nordics, and 96% of that comes from Asia. That's why we really have to do something with the emissions we have in our Asian assets. We have said that we want to reduce the CO2 emission in Asia with 50% in 2030. 80% of the emission we have in Asia is coming from the national grid. Most of that is dirty power. Only 16% is coming from diesel consumption. What we have to do is to continue to work on reducing the diesel consumption. We already have 3,000 base stations that we are fueling with solar panel, and we need to continue to do that.
We also need to work on the dirty grid power. That's why to meet these targets, we also need to find models where we basically can go in a partnership and produce more clean energy. On reporting, we are going to continue the reporting we have on transparency and responsible business. We will also now from today start reporting quarterly on how we are trending on our climate goals. Let me close up with talking a little bit about how we are seeing the 5G strategy. 5G will be an integrated part of our modernization journey. All our business units, all the nine business units, have already taken steps to be 5G ready.
Taken steps to be 5G ready in the network and the IT infrastructure, taken steps on the security, taken steps on building competencies, and also the way of work and our operating model. The way we look at it is basically three different tracks. You see that illustrated on this slide. It's about organic enhancement of existing mobile business. For example, we see that 5G is a more cost-efficient way of delivering high data volumes. The next step, the next track, it's within the fixed wireless access. As I said, we are doing this in Norway already. We are doing it in Finland. We will see then opportunities across our portfolio to take a position also in the fixed business. The third track is about new business opportunities. This is basically in the B2B area together with partners.
We have then trialed this out now over the last one year. We are in the process of developing business cases here in Norway. We will start here. We do that after we get some result of the pilots. We will have a business case-driven rollout. As I said, we have launched in Finland already. We will launch in Norway this year. The rest of our markets, we will launch in accordance with the market needs. That's why there is also a timeline on this slide. We talk about going through pilots, going into spot coverage when we have a business plan, and then go nationwide later. The 5G CapEx is included in our CapEx guiding for the coming three years. We are able to do this because of the efficiency CapEx processes that I already have talked about.
Let me close with the midterm targets. On the subscription and traffic revenue growth, we talked about when we announced our fourth quarter, that for this year, we have a 0%- 2% ambition, and that's also the ambition we have for the coming three years. I've talked a little bit about how we plan to do that. We have aligned these targets now with all the business units. You will hear both from Ric Brown, but also from Azman later, how we are going to do this in both the Nordic markets, but also in Asia. We also said, when we presented our fourth quarter, that this year we have an ambition of 2%- 4% EBITDA growth, and we will keep that. In the three years, we are continuing to guide you on the OpEx.
We have learned from the last three years, and I've said that we both take learnings, but also inspirations with us to continue the 1%-3% OpEx reduction. We have a 15% CapEx to sales target, and we are quite comfortable with that, including the network modernization we do in Norway that Petter will talk more about, including the 5G investments, and including the continuous upgrade our networks in Asia to data networks. We will continue our dividend policy, which is exactly the same as we had the last few years. Ordinary dividend, sorry, year-on-year growth of the ordinary dividend. We hope that during the day, we will give you confidence that we will be able to deliver on this, and also that we have the capacity to do that.
These are the targets that we are going to drive the organizations on in the coming three years. These are the targets you are going to hear us talk about for every quarter that comes in the coming three years. That was to give you the more broader picture. What we're going to do now is to invite Ric Brown, our CMO in Norway, to talk more about how we see that we can grow up in Norway with building services on top of the connectivity. After that, Azman, our CEO in Grameenphone will talk about how we are going to drive growth in Asia. The three of us will have a short Q&A in the end. Please, Ric.
Thank you very much, Sigve. Good morning. Yeah, Ric Brown in charge of the consumer mobile business in Norway, that's the business I'm going to be talking about this morning. Going to focus on how we think about delivering growth in a really tough competitive environment. As Sigve has talked about, the importance of adjacent services, I'm also going to share a few more thoughts about 5G to add to what Sigve spoke about. I thought I'd just start with a little reminder on some of the figures. If we choose the two most important areas for adjacent services that we sell to consumer mobile customers in Norway, handset insurance and digital security services, we've delivered more than a doubling in the period from 2017 to 2019, we had in 2019 about NOK 430 million revenue.
It's a sizable part of our business, and we see now on the way into 2020 that this growth is accelerating. I really want to tell you about the story about how we get that growth to accelerate. That new services growth is a fundamental reason for why in the consumer mobile market, we managed to deliver from 2018 to 2019 a 5% ARPU growth, and why we see a similar level of ARPU growth continuing now on our way into 2020. We've managed to get a good ARPU growth. We're managing to sustain it, at least on the way into 2020, and we're doing this somewhat better than our competitors in the market and somewhat better than our peers in other comparable countries. I really want to explain what is our thinking behind that and why we can achieve that.
We see that as an industry, we struggle to get strong growth. To understand how we should get growth, I think we have to start by understanding why growth is difficult. If we look at some of the fundamentals in the industry, well, some of them are actually very positive and would indicate that growth should be possible. We're selling what has become an indispensable product. There's still a high increase in consumption in the amount of data the customer is using. Generally, at least if we talk about the operator market, it's a relatively consolidated market structure that we have with typically three or four operators in most of the countries. You would think with these three things that growth should be possible. Of course, as you all know, what makes growth very difficult is that there is very tough price competition.
We of course, see that also in Norway. If we look at the figures from our regulator Nkom for the last period, what we see is that the fall in average unit price is about 20%. And essentially perfectly balances the growth in consumption in the market, which is also about 20%, leading in total to a flat market. All of the growth, the value of that, is eroded by price reductions in the market. That's of course, because we have a lot of competitors in the market looking to win market share. What I'd like to do is I'd like to just dig a little bit deeper into the competitive dynamics to explain a little bit more about how we think about managing this situation where prices are falling so much that there's little growth.
You can think in any market, or any mobile market, I mean, that there are essentially two arenas of what are essentially equally tough competition, but which have different dynamics. These two arena have a very strong interdependency. They impact each other a lot, but they nevertheless are different. The first of those arena, I think it's the one that's easiest to see from the outside and the one that you probably understand immediately, so I don't need to spend maybe so much time on, but it's a competition where the customer perceives the services from different suppliers as being pretty much the same, relatively close to commodity. Where it's really easy to switch operators in the market, and where there's a high saturation, the market is fully penetrated.
Obviously, if you take a market like Norway, when we've got 20 players with a lot of independent service providers and three network operators, all fighting really hard for market share, if the customer perceives the product as commodity, then there's going to be an intense competition with price being the primary competitive weapon. That, of course, then leads to falling prices in the market and puts a lot of pressure on revenue in the market. This is competition working. This is a good thing. This is the customer getting lower prices, getting a better deal, getting more for their money. That's good. It's also pretty good for us as an industry because it forces us to be effective.
It forces us to develop our business in a positive way, to have operational excellence and low costs in running the business, also to have very effective sales and marketing capabilities so that we can perform well and compete well in this market. In Norway, this kind of competition leads to about 1 million customers switching operators each year. Obviously we have to be very effective at our sales and marketing. There are a lot of good things here with this type of competition, obviously there are some challenges as well. There's a challenge for us as the industry that it's difficult to get growth through this kind of competition. There's also a big challenge that there is little incentive in this kind of industry to deliver better services with higher value to customers.
That's the core challenge with this kind of competition, is because we know that whilst the customer obviously wants a low price, actually it's only about three in 10 customers in our market who primarily want a low price. About 30% of customers want a basic service at the lowest possible price. Many more customers, about 70% of customers, want more than that. About 70% of customers are looking for other things from their operator, not just the lowest possible price. The most fundamental thing they're looking for is a great network experience on the core product. They're looking for coverage, reliability, speed of connection. They're also looking for other things.
They're looking for help and advice if they have a problem or an issue, they're looking for a higher degree of security and safety in their digital lives, and they're looking for simplicity and they're looking for convenience. Seven of 10 customers value these things more than they value the lowest possible price. That gives us in the industry an opportunity to have a different kind of competitive arena, which is based on us offering a more differentiated product to the customer, where the customer perceives significant difference between players in the market, even though it's very easy for the customer to move between different operators, they've got lots of good reasons to stay with their existing operator, and hopefully, obviously in our case, with Telenor.
Because we have a good long-term relationship with the customer, we have the basis for selling other things to the customer, which are covering the sorts of needs that I talked about, and that is what gives us adjacent growth. In this kind of competition, we can have an increased value in each of the transactions we have with the customer, whether it's when the customer moves operators or for existing customers, and we have a better perspective for driving growth. We shouldn't misunderstand that to mean that in this kind of competition, price isn't important, because price is still very important with this competition, and there is a very strong disciplinary effect from the very price-focused competition to the value-focused competition. There's always going to be pressure on price in the market, but with value-based competition, we nevertheless have a better opportunity for growth.
For us in Telenor, we want to compete in both of these arena. It's good business in both areas. The very price-focused teaches us to be really effective in our operations. The value-focused gives us the best opportunity for growth. What we need to develop our business is we need a healthy combination or a healthy balance between these two types of competition. It's very easy to have enough of the price-focused competition in a market. We get a lot of help from our environment to get a lot of price-focused competition. For example, media, regulators, authorities, are all, with very good intention, wanting to help the customer to get the lowest possible price, which are pushing towards price competition.
Our competitors and ourselves, with our actions on pricing, on discounting, on special offers, or maybe handset bundles or good prices on your new phone, and in our market communication are often talking about price. There's always going to be a lot of this kind of competition for price in the market, and we want to compete strongly in that, and we do that, but we do that primarily with our Talkmore brand, our sub-brand. If we're going to get the healthy development of the market, we need to balance that with enough of the other type of competition. With our main brand, with the Telenor brand, we do less of the price and discount-focused activities in the market, and we use our resources more to drive the customer and to present to the customer a greater value in our offers.
I want to explain a little bit about how we do that. As I said, seven of 10 customers are very open to the idea of us delivering more value to them and us making a differentiated offer. What are the things that they value most in the areas that we have to be better at delivering on than our competitors in order to win the customer? The first and most important one is that we have to have a very strong brand, which is trusted by the customer, which gives them the feeling that the products they buy are reliable and safe, and meet their needs in an effective way. The most important core of building this brand is having a fabulous network like the network that we have in Norway.
The reason why we have these fabulous networks is because the customer is actually willing to pay for them. The customer would rather pay a little bit more for a great network than get the cheapest possible solution. On top of the great network, we have to deliver even more value to the customers. Amongst the most important things we do is that we say that if you're a customer of Telenor, we give you free of charge, safe, secure storage of your digital content from your mobile phone, unlimited, all of your photos, all of your videos. We give the customer the opportunity to buy the phone they want in a very smart program with low upfront costs, financing over a period, and great insurance included. We give the customer smarter ways to buy their phones.
We give the customer higher level of digital security. In particular, we automatically protect all of our customers from malicious websites. If you're surfing on the network and accidentally press a link to a malicious site, we'll protect you from that. If there's an email fraud attempt, a phishing attempt, we'll protect you from that as long as you're in our network. We're giving the customer a higher degree of digital security included in our subscriptions. The last point is that we make solutions which are well-tailored to the individual needs of different market segments. For example, young adults are looking for advanced, high quality, high speed solutions, but have a somewhat more limited budget. We make tailored solutions for those.
We make tailored solutions for families, particularly great solutions for kids to make the kids safe and to give the parents good cost control. The combination of all of those things means that we manage in Norway to have quite a lot of this healthy competition that allows growth. We, as Telenor, manage to take a little bit more than our fair share of this part of the market. The combination of those things means that we have good ARPU performance. We have about a 30% higher ARPU than the number two player in the market, and we have substantially lower churn, 40%-50% lower churn than other players in the market because we're delivering more value to the customer. We're giving the customer more reasons to stay. I think that's clear proof that we don't operate just in a commodity market.
We also operate in a value market where the customer is willing to pay and where the customer would choose to stay when they get the right services. A core part of this is these adjacent services that Sigve mentioned that I've talked a little bit about. I want to come back to them. These adjacent services are a potential for growth in their own right, but they also contribute positively to the two other points that I have here about having clearly differentiated offers and many reasons for the customer to stay. It's kind of three birds with one stone if you manage to be successful with these adjacent services. It's also the case that these adjacent services have got pretty robust business models for us. They give the opportunity for significant growth and for healthy margins.
I mentioned briefly at the start the two most important areas for us, handset insurance and digital security services. These areas are important for us primarily because these are areas where there is very strong demand from the customer to buy this sort of service from Telenor or from their operator. Handset insurance is kind of obvious. These new mobile phones are extremely expensive. Expensive to buy, expensive to repair, and very easy to damage. The customer's often looking for a good insurance policy to manage that. Digital security is very important because there is a lot of focus in the media about digital threats, whether that be ID theft or phishing, email fraud, credit card fraud, and so on. It's difficult for the customer to understand the nature of these threats.
The customer is looking for somebody who can help them understand the digital threats and protect them from them. Here we have two areas which there's a very high demand in the market and where our brand is very well-positioned to deliver services. When we look at these two areas, these are not areas that we traditionally produce the product. In what we're doing in the market today, we're primarily not producing the product ourselves, but we're working with partners. The advantage of working with partners is we can then go out and we can find partners who have really world-class products, which can support the strong premium brand position that we have in the market. These partners with these world-class products often don't have any particularly good access to the Norwegian market. They don't have a strong brand, they don't have distribution channels.
That means that they're willing to do a good deal with us to give us a good financial deal to take their products out to market in Norway, because they otherwise don't have any particular opportunity here. They're willing to do the job to integrate their products well into our channels, such that we give the customer a good, seamless experience. That means that our brand and our sales channels, which if you remember, are very effective because we've been taught to be very effective by the very tough mobile subscriber competition, give us a strategic asset that we can monetize. I think that if you look at who is good at selling digital subscription services in any market, that probably the best of all players are mobile operators. We really have some assets here that we can utilize.
The fact that we have brand and distribution gives us a big business opportunity. There is one last element, which maybe isn't quite so clear, which is what we call service bundling. In service bundling, what we do is we take several different individual products and we combine them together in one package. We've done this recently with a new digital security product that we call Safe, where we've taken five sub-products and combined them into one package. When we do that, we simplify the world for our customers, because rather than having to make judgments about lots of different individual products, they get a package which covers a great part of their need. We do good business for our partners because then they're selling more of their products to more customers.
We do good business for our channels because the combined product is somewhat more valuable than the individual products, and that means that we can give a better incentive to our sales channels to sell these products. The combination of these three things mean that we can have a high volume of sales delivering on a very strong customer demand, but with good profitability for ourselves, for our channels, and for our partners. At the end of the day, great products for our customers. That is what allows us to get the strong growth that we've seen in the last couple of years, and that is now accelerating into 2020, where we think that we're going to get a growth of about NOK 300 million on these two product areas, up to about NOK 700 million this year.
Just one last example of that is this Safe product that I talked about, this digital security product with the five elements. We launched that on the 14th of January. It costs NOK 129 a month. We're selling right now about 3,000 per week of these. That shows that we've delivered on a real customer need, there's a high volume, and the customer has trust in us in delivering that sort of product. To finish off then, I'd just like to add some more words about what Sigve said about 5G. I am super optimistic about 5G as a technology and a future, but a little cautious and prudent about how quickly things are going to happen. It's important that when there is uncertainty about timing, that we manage our investments and our rollout in an effective way, as Sigve talked about.
I wanted to share with you anyway some of the enthusiasm and some of the optimism about 5G. I think the fundamental reason why we can be optimistic about 5G is that 5G is fundamentally different from the previous mobile technologies. If you look from 2G to 3G to 4G, there's been a fantastic technological development. We've gone from a voice-centric industry to a data-centric industry, and customer uses their phones for all sorts of different things. The fundamental of what we're offering to the customer, the dominating product is still connectivity for phones, and the dominating business model is still selling mobile subscriptions. With 5G, we get a much wider set of use cases.
In fact, the 5G networks are so good in terms of speed, number of devices you can connect, the delay in the network, the reliability, the security, the guarantee of performance, that 5G can essentially support any kind of business application or any kind of application, any kind of use case. Particularly as the copper networks disappear, 5G will be the dominating technology in large parts of the country. All of this fantastic connected world that we're going into is going to be delivered over 5G. 5G will be an incredibly important technology for our customers and for our societies, and incredibly important technology for our industry. Despite all of my optimism about this, it's important to start carefully. The first things that happen with 5G are kind of close to home. 5G will give an even better smartphone experience than 4G.
The 4G experience is pretty good, but it'll be even better with 5G. 5G will prevent the degradation in that performance as the 4G networks get more and more loaded. 5G, as Sigve talked about, will deliver fixed wireless access, and it's pretty good timing that as the copper networks are disappearing, the 5G networks are coming online. 5G is better suited than 4G to deliver fiber-like performance and fiber-like quality and a broad range of services, including TV, to fixed wireless access customers. These are the two most certain, clearest, easiest to understand things that come from 5G. We think in the longer term, more will happen with 5G. We think that we will move from having so many sector-specific or private networks like corporate campus networks or the emergency networks or transport sector networks.
Many of those will migrate over to 5G because 5G will be a more effective way to deliver on those requirements and will be a technology which is really future-proof. 5G will also create a myriad of new use cases and devices. The combination of 5G, IoT and sensor device, and artificial intelligence, we think is going to create an explosion of new innovation. It's difficult to know exactly when that's going to happen. That's still some time into the future to get the really strong effects of that. It does give us a very promising future. I think that when we look at the opportunities that come from 5G now, we can identify some of them. Things like augmented reality and virtual reality, robotics, remote diagnosis, automation, and so on. I think we probably just see the tip of the iceberg.
I think it's like when the iPhone came, or like when the World Wide Web came, that you see some of the opportunity, but you don't see the whole opportunity. I think that we can be really optimistic in the long term about 5G. Take a very brief summary. There is and always will be tough price pressure in our market. The only way to grow is to deliver more value to each customer. Adjacent services are absolutely at the heart, at the core of that, and there's a really good business model there for us to drive revenue. Local presence is one of the things that really makes us able to drive these adjacent services, and also in the longer term, will be very important in our competition, which will be on a greater and greater scale at a global level.
5G will give us substantial growth, but starting carefully with the well-known business models of fixed wireless access and premium smartphone experience. 5G will accelerate digitalization. It will give us more opportunities for more adjacent services. I'm pretty optimistic we can keep on growing in the Nordic region. Thank you for your time. I'd like to invite one of the most inspiring people in Telenor Group, my friend Azman, CEO of Grameenphone, to say why we should be optimistic about Asian growth.
Thank you.
Az-
Thank you, Ric. Very inspiring presentation.
Thank you.
I'm working as a CEO in Grameenphone, just to note here that I've been in this market for last five years as Chief Marketing Officer. The story from Asia, the growth story I'm talking about is basically what we have been delivering over the last five years. What we tried, failed, and picked the right things to scale for the days ahead. To start with, let's try to understand our customers in Asia. As a very simple manner, we have basically clubbed our customer into three different distinct group. The pioneers. These customers, those are still using our basic services. Using voice with a basic or feature phone. Then we have these very basic internet users. Then finally, these advanced users of internet.
If you see the growth of this market, that we have still 62% of our customers are using basic telephony services. There, it's like when they convert to internet users, be it a basic or advanced internet user, advanced internet user gives 130% higher output than this customer, basic customers. There, the building this society, what Sigve talked about, that whether that customer will use our data and advanced services, and that's what we see in their life for the first time probably coming a device as a color TV to them. Through this smartphone, they for the first time in their life probably having access to health services. There, the data users actually becoming multiple times in a year. There, the growth of this customer when moving to that other side, we are seeing is multiple.
On the other hand, this is a market where the age of the population is very young countries. The millennials are basically for the first time using mobile phone, they started using with an high-end devices. These days it is 4G devices, and with the highest speed data, with the new digital services. The users of data starts with multiple than with our pioneer customers. These are the customers, the profile, which leaves us an opportunity to how to basically deliver experience in the new world, in the digital world, to use the digital services riding on our network. We have this very strong base, the customer base, with the growth potential, converting them from a basic users to an advanced internet users, the country profiles, the cluster profiles also give you a strong opportunity. 440 million population.
We have 144 million customers in these three countries, Bangladesh, Myanmar, and Pakistan. The age of this country, 40% are below 25 years old. The literacy rate is increasing, now 69%. These customers, when they're coming to this network, they have a complete different demand than what we used to see five years back. The GDP growth, the growth in the middle class society with a higher expenditure, HDI, Human Development Index, these are promising in this cluster. With the profile we have of our customer base and the untapped potential in this market, and the potential in this market in terms of the country profile, the socioeconomic condition, there is an growth potential which is very solid in this market.
That's the probably story I would like to talk about in the next slide. It is very important for us that it is not only this customer profile or the country profile you give us growth, rather knowing these customers better, understanding their need, finding out a solution for them, that will give us the competitive advantage in this market. How do you modernize our way of work when we use these 140 million customers, taking from basic features to advanced internet users? There are a couple of areas I would like to highlight. If I divide these areas into three different distinct area, the first is that how are we basically managing our existing customers and still growing in our customer base? How are they using data? What sort of devices they are using?
The second important thing, that if you have a base of 144 million today, how do you increase ARPU? My friend Ric talked about service bundling. The same thing we started seeing in Asia now, probably a little different sort of product. How do you basically modernize your distribution, what Sigve talked about, that use the data analytics, AI, and machine learning to understand your retailer better, understand your sales executive better, build a recommendation engine so that our sales force, our retailers are much more efficient when delivering value to your customers and creating value for the company. Finally, the third thing is how do you basically be granular to manage your performance and be relevant to your customers? 41% untapped customer base. All the operators will go for these customers. Are we able to deliver a quality acquisition machinery?
That is the focus in EA. We focus on how do you basically keep our customer three months in our network. If a customer is three months in our network, then they will continue. It is not a subscriber to acquire and get breakeven. It is rather how long they will create, give value to you. That's how the acquisition game is different in Asia for Telenor. 42% smartphone only in this base. How do you basically reduce the price of a smartphone so that feature phone getting converted? We started seeing in these countries now government are basically promoting the local production of a smartphone. Samsung is already in Bangladesh having a big plan. Within a year, they sold 300 smartphone devices in Bangladesh. Huawei and other vendors are now following. Everyone is putting up a plan there in Bangladesh. No more feature phone.
When the smartphone coming into network, into the 4G network, the increase of data usage happens. If you see today, 2.8 GB data users per customer. We have seen the previous presentation in dtac, in our adjacent country is more than 10 GB now. The question is how efficiently we can deliver this data hungriness in our market, and how do I monetize? These are the opportunities where the existing customer with the basic services. Then moving from there with this data, how can you bundle different services? When you have a strong brand and strong distribution, there is a possibility you take all those third-party services, bundle with your data, vanilla data, and distribute through your distribution channel what you have built over the last 20 years.
Ric talked about safety, Ric talked about insurance, but in our countries probably it's more of now entertainment. The videos, the music, the games, those are the services we bundle. The experience says over the last one year, the moment a customer start using one service on top of our data pack, their stickiness increases by two days minimum in our network, and their ARPU goes up by 10%. This proven. How do we scale in 2020? That is something our job now in EA Cluster. How do you distribute this? All these services may not be probably possible to this physical world to distribute. There we are talking about building digital distribution. We have probably talked about years for MyTelenor app, but now we see the real traction.
In EA Cluster, we have 16 million customers now using app regularly, which means it is not only savings commission, rather also capturing your customer data to bring in the relevant services to them. Keeping, of course, the privacy policy in your mind, how do you use this data only to make your product and services relevant to your customers? When you have your best customers driving usage, you are bundling your services to increase ARPU, and we are building a distribution channel to bring efficiency and drive ARPU. The last piece remains is how granular you are. It is 144 million customer and it's still growing. It's growing 5%- 8% country to country varying. Having all these customers into one size fits all doesn't work. There, how can you basically one-on-one build relationships with this customer? That is something we focused on.
It is not only your customer. Every investment, every site investment in every cluster, how do you measure your performance, be it from the customer angle or your network investment angle, or a price of product angle? This granular way of performance management on all those areas of your customer and service bundling and distribution gives as a whole, holistically, a model which secures your growth. These are the areas which we have tested in couple of last two years, and now this is the year we are bringing it in scale in EA. Next slides are basically a little bit of details on these areas. I would like to talk about how we see the growth in customer. If you see that only 59% is basically penetrated in EA cluster, 41% is still untapped. I talked about the quality acquisition.
42% is smartphone, where this country is talking about now how can we bring a smartphone and replace feature phone at a much faster track. In these countries, the government has an agenda to build the Digital Bangladesh or Digital Pakistan. That will basically create the platform in the ecosystem to bring in smartphone, develop the services which are locally relevant, and take those to the customers. That brings the transparency in our system and brings better business environment. We have seen the data usage in our market is 57% level of our customer, whereas I mentioned that 42% is smartphone. It's there already around 13%-15% customer using data in feature phone. In feature phone, data usage is very low. The moment you convert them to a 4G high-end devices, it's just gone 10x higher data usage.
You need those relevant services to bundle with this device. There you increase your ARPU. The next is how can we basically see that our customers when coming onboarded, are they basic users again with the high-end devices, or is that there's the advanced internet users? In Bangladesh, 60% of our new acquisition from the day one using internet. It's a similar trend in other markets. They are coming into the 4G network and their first device is 4G smartphone. Last year, we started seeing 3G smartphone going down. That's the reason that customers starting with higher data usage. The ARPU of this customer's data ARPU in Bangladesh, the new customer's data ARPU is higher than the existing customer's data ARPU because of the legacy devices they're having in their hand.
Unless these old customer are replacing the hand devices, ARPU will not be higher than the new customers. While we in Bangladesh, we have an wider 4G network, we see the ARPU of the new customer is higher than compared to other two countries, but the similar trend will follow. We have only 30% level in general for the cluster, the data revenue contributes to the total. We have a still room to continue building these capabilities and deliver on this growth agenda. Our voice revenue contributes 70% in this cluster. When we are scaling, we have room for testing new things, new services, taking learning from some of the markets in Europe and developed Asia while we are doing this service bundling and take this to the markets. This is how we are talking about the customer's base.
When you have this base, the question is: how can you basically increase ARPU? I talked about the service bundling. In our cluster, I've already touched upon, it's all entertainment. It's videos, it's music, it's games, it's Facebook, it's basically IMO to bundle with a pack and find out the relevant customer to deliver to them. Last year, we started pushing this to other customers. First time educating them that this is how you basically get better value proposition from Grameenphone. The similar thing happened in Pakistan and Myanmar. 2 million customers in 2019 given 10% higher ARPU. In this year, we believe 1% growth will come from service bundling. That's the ambition. It talks about 100%-200% growth, but of course, the revenue base were very low because it's early days.
If you have a 10% growth and 5 million customer you can onboard in this year when we are scaling, that's contribute big in overall growth. On top of that, the other segment, SME, how can you use IoT and ICT with a similar model, bundling with the basics, data and voice, and provide a solution. We are not talking about big corporations, those will use global solutions. We are talking about a country which is having seen the socioeconomic development, and there are millions of SME. How can you bring solution for them? We have a brand and we have a distribution mission out there. We have a trust in our customer. The next thing, how do you deliver this to the customers? MyTelenor, MyGP, these app, we are talking about last few years.
I think it's like last two years, we have seen the real traction. There's 2 million daily users in Bangladesh. In EA Cluster, the monthly users is now 16 million. This is becoming a growth engine for this cluster. If we divide Bangladesh into five different regions, this is now bigger than one region, the revenue it contributes. When a customer, basically buying packs and minute packs or data packs, we are saving the commission we give to the retailers. That was a start point, that modernize your distribution and you bring efficiency. Interestingly, we find that when they start this app, they are more into our network and their ARPU increases. 5% ARPU increase happens for these 2 million customer. This is what we are basically concentrating to build and scale further.
This, to keep ourselves relevant on the daily life, it is not only selling data pack or minutes pack, all the other services, the startups coming into the country, they are getting space in this platform to integrate their services and offer to our customers. There we find the more insight about our customers, their usage pattern, and how you can protect their privacy, but you can push the right product and services to them. 136% growth is, of course, with the lower base. The key is the ARPU growth of 5%. The last ARPU increase initiative is personalization. In our telco industry, we started with customer data of SMS users, minutes users, or USSD. We started the second layer where we have our own digital platforms like MyTelenor I talked about and some other digital platforms we have from the internal.
This gives you the customer data. Finally, the users of the third-party channels, the Facebook, Google, the global platforms, the users trend of those platform of our customers. If we bring all this customer data in one data lake and get a better clarity of our customer, we can make better services for them, and we see ARPU increases. At this time, we are having only our data of both telco and digital. We are not yet fully integrated with the third-party data, which we are basically now working on. 35% of our customers offer they're taking are coming through personalization. That's a big jump over the last two years. The more and more data we can integrate in our data lake, we become more efficient.
If we are not able to do that one, it will be very difficult because we are talking about 144 million of our customers. This is a must-win battle. This gives you a clear advantage of your competition. At the same time, when you have any stickiness increases, which churn goes down. These customers, those 35% of our customers, those are taking the personalized offer. They have 2% less churn than the average churn in Grameenphone. That 2% less churn is a big chunk of our revenue. This is an area we continue to build and create efficiency further. In net, you have this customer base. Those are still basic, still using less smartphone at 42% level, still the opportunity of using more data, and we are seeing is accelerating now with 4G and 4G devices.
How can you basically bundle your services and use digital distribution to become more relevant to them when they are at your sites or at your apps? The personalization engine, how it works so that our customers are getting the right services. In this machinery, the last game plan is how do you measure your performance? How can we together in a telco industry, a CTO, a CMO, a sales, and a marketing guy, can stand in one room and visualize it that what's the happening in our customer base? What sort of utilization happening in our network? What complaints coming from the customer touch points? We have the situation room which integrates all the customer data. Standing there, you can see that from the whole country what sort of complaint being logged by the customer.
You can take decision from there if there is any hiccup. How do you understand that which price point and product is picking up in a particular day? Can you do more on that area? This platform gives you what's happening in the whole country in terms of competition. When our retailers are basically sending us any offers competition being launched directly through SMS and is visible there. How can you understand that where the 3G utilizers are low or 4G is high, and how can you balance this with the different product and services? Where do you stop pushing more data? Where do you probably give free data, where there is a free space to increase utilization and start monetizing later on? We have talked about using data analytics, machine learning for years, but now it's in an execution.
It's in real time monitoring our performance, standing there at this right at this moment, you should able to say that this is what we will get as revenue by the day end. That's possible. That's happened. I'd like to summarize that it is not only you have the base of your customer, how do you manage, how do you bring relevant services, how do you personalize, and at the end, how do you manage your performance? It's not your company performance. How do you manage what are you delivering to your customer? If we create value to our customer's life, we create value for the company. That's how it works when you have this holistic view of performance management. Summary as a takeaways, with this customer profile, with this cluster profile we have, it gives us solid growth opportunity in Asia.
It is very important, and also Sigve highlighted, how are we building, upscaling our resources. How are we building the capabilities of our resources to deliver on this new era when these millennials are coming with a 4G device and they are no longer only talking about mini packs? Rather, they are looking for bundles which have the other services attached with it. How can we basically modernize our entire distribution machineries? I've highlighted the digital distribution part, but at the same time, we have 1 million retailers where every day millions of data are being generated through our retailers. We have 6,000 sales executives in Bangladesh. Every day they are traveling 20- 25 retailers, and they are also generating data.
How can you basically bring those data together and build that modernized recommendation engine so that we are efficient managing these millions people working out there in the market? Finally, this granularity, the managing your performance and investment. Take the informed decisions. Just not launch a product to the market and wait after seven days how it's performing. Rather, how can you basically get the customer insight upfront, and your product is being launched based on what customer is asking for? That at the end, you see the value you create for both. Thank you.
Okay. Thank you, Azman, and thank you, Ric. The way we are going to do this, we're doing a Q&A now, around 10 minutes, focusing on the first section, meaning the growth section. After a break, we will do a section on the modernization and also have a Q&A after that section. We will have a section on the responsible business, and we'll also do a Q&A after that. In the end, myself and Jørgen, we will summarize the day, and then you can ask us about whatever you want. It's the last section where we also open up for our colleagues that are not here but are streaming. As I said, you can ask about whatever you want, but it would be good if you could try to get your questions into the bulk that we are doing here. Let's start with Yeah.
Please, you start.
Thanks. I'm quite impressed with seeing, first of all, Fredrik Thoresen with Storebrand. I'm quite impressed with maintaining CapEx to sales at 15%, despite modernizing networks to 5G and doing the large fiber roll-outs. If you look beyond kind of the 2020 and 2021, and see into 2022 and 2023, shouldn't we expect that we see a nominal decline in the actual CapEx budget as your production cost is going to decline?
Yeah. The 15% is a guiding we have for the coming three years. I don't really want to go beyond those three years, because the future is unknown. Of course, what we are doing now, what we are spending the money on now is to modernize the network in Norway. We are spending it on rolling out 5G in at least two markets. We are spending it on continuing to invest in the data network in Grameenphone and the other markets. I don't want to really speculate on what will it be next year and the year after. I think the best estimate I want to give you now is the 15% in the coming three years. Ruza will go a little bit more into this and maybe indirectly answer your questions a little bit better. Please.
Yes. Morris from Barclays. Been very interesting in the Nordic presentation to hear about the sort of the two-tier segment, and the 30% being price conscious, 70% focusing on value. I suspect that's probably a higher number in Norway than maybe other European markets. Are you seeing much shift in that 30/70 split as you see aggressive price competition? Are there more customers going price conscious or in fact, does it move in the other direction? Across the other Norwegian Nordic markets, so Denmark, Sweden, Finland, is that a similar split? Thank you.
To your first question, if there's a big change in that split, no, not really. When we do our market research, which we've done for many years, we get pretty much the same split as we've had previously. Now, there's obviously a competitive dynamic in this, so this is not just kind of the customer's own view, it's also what the market's doing. I think that generally that's pretty stable. To your question for the other markets, I don't have specific figures for the other markets. I think that there is a similar split, but it might be, as you indicated, might be different percentages in each of the markets, but I'm afraid I just don't have the figures for those here and now.
Yeah, please. Anette.
In Asia, you didn't talk much about dtac, but on the last spectrum auction in Thailand, you acquired less spectrum than your peers. Any thoughts on the reason for this, and if this might give you a spectrum disadvantage in 2021 and also in Thailand? What is your view of the new entrant risk from the government-owned TOT, CAT to compete against the telecom operators, considering that they acquired spectrum in the recent spectrum auction?
The second question first, I'm not so worried about that. I'm not so worried about CAT and TOT, the two government-linked organizations, actually going in and competing in retail business. As you know, TOT already have spectrum, and that's the 2.3 spectrum that we are leasing. It could be business models like that going forward also. To get a new retail competitor, I'm not so worried about. In Thailand, we have now a very good spectrum portfolio, actually. The combination on the 2.3, 2.1, 1800, and also the lowest spectrum we are sitting on, actually gives us now the best data network in Thailand. We see that the data throughput we have now is better than our competitors. We also see that more spectrum is coming.
The 700 spectrum we bought last year is going to be available for us now during the second half of this year, and that's a 5G spectrum. We bought the 26 gig spectrum, and there is also 3.5 spectrum coming either end of this year or during next year. We chose to be quite rational in the last spectrum to only buy the very high millimeter wave spectrum, and then position ourself for utilizing the 700 spectrum and also for the upcoming 3.5 GHz spectrum auction.
Thanks, Sigve. Annet. Last question from me. The coronavirus, have this have any impact on the mobile activity or CapEx deployment in the Asian markets?
Yeah, I think I can answer that. Of course, there are two answers to this, or three answers to this. One is that the connectivity, I think when people are reducing their travels, are becoming even more important. Of course, there could be some effect on the roaming revenues, but that's not a major part of our business. The second part of it is that we could have some effects of delivery of hardware from some of the markets if factories are being shut down. Overall, I will say that we haven't seen any major impact so far on our business, and we do not really expect that going forward either.
Thank you.
Okay. Shall we try over there?
Hi. Thanks for taking the question. It's Usman from Berenberg. I've got two questions, please. Firstly, on Norway, you said four to five-year target to roll out 5G nationwide. What kind of 5G are we talking about? Is this 5G on low band, 5G on mid band? Just any clarity on that would be helpful. Just related to that, one of your competitors has argued that because you have a dual vendor strategy versus your peer with a single vendor strategy, they might be able to roll out 5G faster in Norway than yourselves. Any kind of comment on that would be interesting. Secondly, just a comment on Asia. I guess, everyone can sit back and understand that there is a big kind of structural growth opportunity here.
I guess there are risks, like you mentioned in the last call, like we're seeing in Grameen with the relationship with the regulators. Is there any way to better align the objectives that you have as a business with the governmental broader objectives, such that the regulatory risk is reduced in these markets relative to today? Thanks.
Yeah. I can just comment a little bit on the decision we made on vendor for 5G in Norway. As you know, we came up before Christmas and said that we have chosen Ericsson. We have a 4G network on Huawei, and the gradual rollout that we're going to have means that when we are then deploying 5G with Ericsson in Norway, we will still also have to rely on the Huawei network, because this rollout will take time. I don't see that the strategy we have chosen here will slow us down. What will be driving the 5G in Norway is more what I talk about on the commercial viability on the business cases that we see. I don't see any issues on the vendor selection on the rollout. Maybe you can comment a bit on the commercial part.
Yeah, I think it's essentially the same thing. On the commercial part, there will be competition on 5G, obviously. I think that it's not necessarily the goal to roll out as much as possible, as quickly as possible. It's to optimize that rollout compared to where we see the commercial benefit from that. That would be primarily in areas where it's important for fixed wireless access as we phase out the copper networks, and in the areas where there are most people and there's most value from the 5G. And I think that we have an inherent advantage in the 5G competition that we have a more dense good structure in our network and that is important to give a good seamless 5G experience. I think that gives us a significant competitive advantage as we move towards 5G.
Yeah. You want to comment a bit on?
Yeah. I can comment on that one. It's like when it comes to the specific thing what's in Bangladesh now, it is an specific body of the government, which is BTRC. That's not all the government. There are other bodies.
Yeah.
That's the regulator. There we have this disputed audit. There are other bodies, National Revenue Board and then ICT Division and other. We are working very closely with them. We will basically have even a stronger program to continue that work with the government.
But generally.
Yeah.
Of course, this is a concern for us. I think over the last 20 years, after we entered Asia, we have been able to manage the relationship with both the regulators, but also with the governments quite nicely. That's also why we are talking about empowering societies. We want to be seen as someone that is contributing to the growth of these societies. I also said in the Q4 presentation that we are working now on seeing if we can strengthen our presence in Asia further to handle those issues in an even better way going forward. I think you have tried for a long time.
Thank you. Peter Kurt Nielsen, ABG. Sigve, when we met here three years ago, you presented a new strategy, which was more of a dramatic change, as I think you recognized at the time. Now it's more a continuation of the same strategic framework. On the one hand, you could say it's less dramatic. On the other hand, I guess you could say the argument is a need for perhaps a bigger picture change related to the Asian cluster, or at least addressing that, which I believe you did acknowledge by the transaction you announced last year, which certainly didn't materialize. How do you think about this, and how would you like us to think about it?
I'm talking about the fact that you're talking about two attractive regions, arguably one of these regions, the cost of capital has increased not just directly for that business, but perhaps even relating to indirectly on the rest of your business. How do you think about this? How would you like us to think about this bigger picture issue? Thank you.
Yeah, you are right. This is not a dramatic, to use your words, new strategy. It is to continue the strategy that we have started to implement. However, to be able to grow, as we have tried to talk about today, is not easy. To be able to take down our OpEx base, we want the 3%, is not easy. I will say that we now have got inspirations from what we have done the last three years to continue to deliver and modernizing the company. It's not a new direction, but I will say that it should give you confidence that what we have started on, that we are able to continue to deliver on that. To your second question, I think that we now, after what we have done, have the capacity to do more. That's why we did acquisition in Finland last year.
That's why also we tried to see for some structural alternatives in Asia. We have the management capacity actually to do those type of things. It didn't materialize what we tried to do with Axiata. Of course, we will now be looking out for opportunities in that part of the world. We are conscious on the cost of capital going up, which means basically that we need to continue to grow in Bangladesh, but we also need to continue to bring down costs. I don't want to give you any more flavor to alternatives that we see in Asia. I did say in my intro, we see consolidation probably to happen in the markets where we are in. We see the value creation coming out from structural deals. One more, and then I think we need to end. Yes, please.
Thank you very much. It is Roman Arbuzov from JPMorgan. Both my questions actually for Mr. Azman about the Asian growth opportunity. I just wanted to challenge you a little bit on the Asian growth opportunity. The first slide that you started with in terms of breaking down the customers into basic, intermediate, and advanced users, is that also highly correlated with social factors? Basically, you have people who are educated and rich, and then you have the middle class, then you have people who are relatively poor.
Presumably, that pyramid will be relatively stable and can you actually basically get everybody towards that higher bucket? Is that possible? The same thing about data usage. Ric has said that basically data usage growth is diluted by the falling prices per unit. I was curious, maybe a good test, if you could tell us whether the mobile spend in Asia is growing as a percent of GDP over time. Is it a growing industry? I think that's an interesting test. That's the first one. Yeah, maybe start with that.
It's a very interesting question that the pyramid of basic users that whether they will basically convert to the high-end data users. What we see the very interesting trend when these solutions, digital services coming up, is there are millions of women in rural Bangladesh, they have never seen probably any health services, have never seen any doctor in their whole life. Today they are using smartphone and getting the health services. That's the change we see. There are basically around 10 million fishermen in Bangladesh, and I've been spending like two days with them in the sea. We have seen that they goes out to the sea and never been connected to their families, but now they are using a smartphone and selling upfront what they are fishing.
Even though that literacy rate is very low. If you talk about really developing society and empowering society through our connectivity, there is the possibilities. The challenge is that you cannot deliver on all those services. You are basically providing the connectivity solutions. How do you bring the other services from the ecosystem to bundle with your connectivity? That's what we see and that's why we see this conversion giving higher ARPU.
Do you think mobile ARPU is a percent of GDP per capita, for example? Is that growing, do you think?
You see last two, three years constantly what we are seeing around 3% ARPU growth for the existing base. Because we bring in low ARPU customers, marginal customers, and then we nurture them and take them through ARPU growth. Overall growth is coming down to 3%. In real sense, if the existing customers, those are real users of mobile, its growth is higher.
Maybe just a quick second one. In terms of macro versus competition, what matters more? When you think about the Asian growth opportunity, what do you think will be a greater driver, the macro kind of backdrop or the competitive dynamics in your markets? I'm talking about Asia specifically. I guess with Telenor's portfolio, we see pretty contrasting examples, right? We see Myanmar, you show that the new customer ARPU is much lower than the existing ones and that's competition. You have Pakistan, similar picture, but that's macro. What do you think? If you were to rank and prioritize those two factors, what do you think is more important?
It's competition. Myanmar is one example of that. You saw what happened when we got the fourth entrant into that market with a very aggressive price approach. It's much more that than the general GDP development in the market. That's why I also saying that I think you will see consolidations in these markets, such that there will be a little bit more sustainable business models for the players. We have to stop there, but there will be three more opportunities to ask questions. We take a 10 minutes break and the next session will then be on modernization. Thank you.
Hello everybody, I'm happy to see that we are serving great food in the back there. You can eat while we are talking, bring it forward, please. For you on the webcast, I'm sorry we cannot serve you food, hopefully you have food for thoughts. It's great to see you all. Thank you for being here with us, either at Fornebu or on the webcast. We are very pleased that you are joining us today. I hope the first session was okay, the next one also will be to your satisfaction. We are on a modernization journey, as you know. We want to make sure we are not only fit for future, maybe the most fit for the future. Perhaps the biggest modernization initiative that we are running now is the decommissioning project in Norway.
We have seen quite some interest from many of you to learn more about that, and we have promised to get back with more details. We are well on the way, and it's a pleasure for me to invite Petter and Camilla from Telenor Norway to stage to share their insights of this key project for us. Welcome.
Thank you, Jørgen, and good morning, everyone. Before I let Camilla, our CMO for Fixed and TV, take us through the plans and the execution of the network modernization project now one year in, I thought I'd start by saying a few words, placing the network modernization into our strategy for Telenor Norway. Telenor Norway has a proud history, almost 160 years. Our predecessors have all been good at adapting to changing customer needs, to changing technologies, and also to changing business models. It's with this proud background and history that we have this phenomenal platform in Norway for growth. The history also has a flip side. The history comes with legacy. We are battling with legacy, both within the technology and network area, as well as with legacy in the IT area.
We also battle with legacy in how we serve or treat our customers, as well as how we are working internally in Telenor Norway. Our strategy for the years to come is then based on balancing out the need for growth and how we're going to cater for growth, as well as the modernization, and then also do it in a responsible and good way as a citizen of Norway. Our growth story is built on three main drivers. The first one is the phenomenal position we have on the network side. We have been able to proudly say that we have the fastest and best 4G network in the world.
We have, for more than a year now, been piloting 5G in 11 different locations with 11 different use cases. We are confident that we will very soon be able to launch 5G also commercially in Norway. This strong network position is proving itself in a significant ARPU premium and a significantly lower churn, which you heard Ric talk about earlier today. It shows also very clearly that our customers do value what we bring in terms of coverage and quality to the Norwegian market. The second growth driver is what we bring in terms of services on top of the access. Business customers, as well as consumer customers, do get services on top of our access, both on the mobile access as well as on the fixed access, and Camilla will talk about our TV service later.
As Ric said earlier, our position in the Norwegian market and our growth strategy is based on bringing more value to each individual customers. We see again the results coming through in our numbers. In 2019, 60% of the ARPU growth was from services on top of access. The third one, which we also will talk more about here today of the growth drivers, is that we are rolling out and building more fiber than ever before. Last year, we added more than 50,000 net new customers on fiber, and in Q2, we launched our fixed wireless service, and by the end of the year, we had 18,000 customers on fixed wireless service. On top of our fiber and on top of our HFC network, we're also delivering TV. Last year, we added 18,000 new customers on TV.
We are today Norway's largest TV distributor, and our customers are viewing more than 500 million hours in 2019 on streaming or on TV. To deliver on the growth, we've also put up modernization, and the modernization that we will talk about here today is the network modernization. We're also embarking on the modernization related to our IT stack. This will be supported by a strong program for simplification of business rules, customer journeys, as well as products. We're also embarking on modernizing the way that we're working. Sigve mentioned it earlier. Agile ways of work, end-to-end responsibilities, cross-functional teams are the way that we are going to drive Telenor Norway going forward. Lastly, responsible business. We are by far the largest and the leading telco in Norway. We deliver critical infrastructure to the Norwegian society.
The network modernization is generally today supported by both national stakeholders as well as local stakeholders. They see it as a way of improving the internet connectivity and the services provided to people working and living in Norway. However, the copper decommissioning program has increased the focus on the need for coverage, particularly where today the copper is the only access technology. It has also increased the focus by stakeholders on how vulnerable our technology is, and how it's expected that we, going forward, are able to both deliver secure as well as robust networks for all parts of the Norwegian society. As Telenor, we are very conscious of the huge responsibility that we are carrying in the Norwegian society.
We are in constant dialogue with Norwegian authorities, both at national level as well as at local level, to ensure that we are able to plan and execute this program in a good way. Last year, we met one-on-one with more than 80% of the municipalities in Norway to discuss and plan exactly how the decommissioning will play out in their municipality. With active engagement towards stakeholders nationally and locally, I'm quite confident to say that today we are no longer challenged on why we are decommissioning the copper, but we are constantly challenged on how we're going to do it. That will be the ultimate test for us. What also, of course, supports our story in Norway today is that the customers have already decided.
If you look at this chart for the last five years, you see that we've had an average decline in DSL customers of 11% and 17% for POTS, the decline is accelerating. The customers no longer see this product fit to their needs and for the future. We also see this clearly in Telenor Norway's numbers. For the last four to five years, from 2015 to 2019, we have invested significantly in fiber to home, and we've seen that our market share has gone from 18%-23%.
We've also shifted the focus from MDUs to SDUs, and today we have a split of 66% on SDU and 34% of MDU. As you can see in terms of the potential, we're today covering 910,000 homes when you include both the fiber and HFC in terms of homes passed. This is a good base for now doing the modernization. Camilla will take us through what we launched in 2019, what we have learned so far in the one year, and what our plans are going forward. Camilla, please.
Thank you. Back in 2018, we had a situation where we had around 900,000 copper customers directly or through our wholesale partners. Our revenues, they were falling. We lost 15% of our DSL broadband customers that year, and we lost 25% of the POTS consumer customers the same year. A challenge was that the cost base remained the same. At that time, and also today, the customers, they had a clear preference for fiber and mobile over this more than 100 years old copper network. If we had continued on the journey we were on at that time, it would have taken us eight to nine year to phase out the copper network. We decided to change. We decided to change strategy. We decided to, instead of focusing on the infrastructure, we wanted to deliver what the customers wanted to have. They wanted to have future-proof technology.
We had seen the trend for years. We set a high level goal. We decided to phase out the old copper network over the four next years. It's been just one year, and we have less than three years left to phase out this copper network. We set some high level goals on how to deliver on that. We are going to migrate 60% of the customers to this future-proof technology. Before we changed our strategy, we only managed to maintain 25% of the DSL churner. We raised the target from 25% to 60%. We are also going to take out the copper-related cost base, and that is NOK 1.2 billion . We are going to do this over these four years. How have we been working with this?
We have had a year with a lot of learnings, and I am glad to tell you that we are delivering according to our new strategy. We have to change on our way. In the beginning, we got a lot of resistance. We got more than 300 headlines during the first two months. We didn't get the understanding for why are we doing this? What does this mean to me? We really had to step up on our communication plan. We had to go from a national communication to a much more local communication. We had to talk directly to the consumers, we had to meet up with all the municipalities, and we also had to talk on a governmental level. Today, we are at a completely different stage. Today, we have reduced the 900,000 copper accesses to 700,000.
When we started, as I told you, and as you can see here, we managed to migrate 25% of the customers. Today, we are close to 60%. In order to do this, we needed to launch fixed wireless access, and we launched that product. The very first version of that product we launched May last year. We managed during 2019 to get 18,000 fixed wireless access customers. Today, we have 29,000 fixed wireless access customers. The customers are satisfied with the new product. 78% say that they are happy or more happy than what they used to be, and 70% are satisfied with the customer journey. Of course, we have to improve this further. In the beginning, we didn't get these numbers. We have worked on improving them, and we need to improve that going forward. We also have the fiber land grab that has been ongoing for some years.
That's been continuing, and we are going to keep that pace going forward. With these two together, we managed to migrate 60% of the customers to future-proof technologies. Going forward, we need to continue to build out so that we have migration-ready infrastructure for these customers. We continue to build out fiber. We have the densification on fiber and HFC, and we need to improve our mobile network. We need to strengthen the 4G capacity and coverage so that we can migrate and build out more fixed wireless access. We are also starting to build out our 5G network, and this gives us a huge potential to deliver even better products to the customers. We will continue to develop the fixed wireless access product. We will deliver the product with better speeds. We will deliver the product with home Wi-Fi solutions.
When we have got 5G in place, we also have the opportunity to deliver TV and streaming services in bundles over this network. This is a huge potential for us, and it's what the customers want to have. When we roll out fiber today on the SDU customers, 95% of them choose to buy in bundles. Of course, this is a huge potential. The DSL customers cannot have our TV and streaming services today, but on this new solution, both fixed wireless access and fiber customers will have these solutions. In addition to this, as I mentioned, we will take out the cost potential during this year, and we have already started. We can close down sites where we have migrated out the copper customers that have future-proof technologies now. We don't need that anymore, so we are closing that down.
We have also stopped our fault handling. When we have fault situations in our copper network, instead of investing in this old network, we invest in future-proof technology and deliver that to the customers instead. It's better for the customers, and it's more cost efficient for us. Looking into the financials, before we started to change the strategy a year ago, we had the copper revenues that were declining, and we were only able to migrate 25%. By changing strategy, we are now able to deliver a much higher fixed future. I have to remind you, I have to say these numbers are only for the legacy project in itself. We are having land grabbing in addition to this, but this is all DSL related. We managed to migrate 60% of the customers and recreate a lot of value.
We have a cost base, 1.2. When we are finished, we will of course take out the copper cost base, and the fixed future base is also lower than what it used to be. What you can see there is that in 2021 and 2022, the costs go up, and that is due to migration, because there is a cost related to migrating customers from legacy to future and new technologies. You can see that in EBITDA 2021 and 2022, that this will be influenced by this before it goes back up again. What about the endgame? How will the fixed endgame be? In 2019, we had 260,000 DSL customers for consumer and business. We are migrating 60% of them. At that time, we had a 37% consumer market share. We believe that in 2023, we will have 1/3, around 33% consumer fixed market share.
There is also a potential upside, and that is from the future open access networks. If we do get that, we can get additional market share. To sum up, in this modernization program, by delivering what the customer wants and by doing this in just four years, we are able to generate significant growth and at the same time take out the legacy costs and also simplify our value chains. We are not only modernizing the broadband and the copper network. We are also modernizing our TV delivering. We can see that the customer behaviors and needs are changing. We used to have traditional linear TV viewing, and that's been falling year-over-year for many years now.
We have the streaming services that are growing. Some years ago, we used to have a streaming segment, but this is not a segment anymore because now everybody is streaming. What we do have is a cord never segment, the segment that is only streaming, and that is a new segment. The content is much more fragmented. We have the huge international streaming provider as HBO and Netflix. We have the more local streaming providers, that's the broadcasters going direct to their consumers. We have more niche content coming, and we also have, of course, our distribution model, where we are aggregating everything together. It's hard for the customer to find the content that they need. We need to help our customers to find good and relevant content. Today, the customers spend as much time as searching for content that as viewing the content.
Another pain point that we are solving for our customers is that you have a lot of logons. It's complex. Where did you have that content? Was it there? Was it there? We need to help them on that, as well. We have a clear aggregator role. We make all content available for the customers, both linear and streaming content, and the customers can choose. We have launched last year a point-based system, portfolio solution, so that customers can choose what they want to have in their package, and they can also up-buy additional content, in this solution. It's easy for the customers. We have already integrated streaming services at Netflix and HBO, and we are going to integrate more streaming services, Dplay, Viaplay, and we are deep linking this so that we can give good recommendations to the customers.
They can create their own profile, we can give good recommendation for them so that they do not have need to spend time searching for content. It's easier. They do not have to log on different places. It's definitely an increased flexibility for our customers. We also launched a new TV solution last year. Instead of focusing on the channels, we are focusing on the content. It's all about the content and to make it available for the customers. Also, we have a new and better hardware in place.
We are growing our TV streaming service base, and as Petter-Børre , our customer said, our customers are watching, and use more than hundreds of million hours on this service, and they did in 2019. We probably offer the biggest TV and streaming service that we do have in Norway. As I said in the modernization story, there is a great potential for us to continue to grow this, with fixed wireless access and 5G, where we can deliver TV as well.
Thank you, Camilla. That's a nice hand over to 5G because 5G, as I said, we are in the process now of hopefully going very soon commercial. For the modernization project, 5G is an important component. We believe that this is the product that will ensure that also the most rural parts of Norway will have an experience similar to what you can get with fiber at a cost level which it can justify. We also believe that, as Camilla said, that with 5G, we will be also able to enhance the service by offering TV on top. Today, that is still possible, also with 4G, but it has certain limitations. As also pointed out by Sigve and Ric earlier today, our 5G approach is very much a value optimized 5G approach.
We see that the fixed wireless is probably the strongest near-term business case for our 5G expansion. To round the whole thing off, we're very confident that, in the coming years, we will become an incumbent without legacy. Our customers will be able to continue to benefit from a broad range of services, which we will offer on top of a modernized access network consisting of fiber and 4G, 5G mobile networks. Further, we see potential also in driving efficiency through simplification of also our IT stack and also to change the way that we're working. With that, I'd like to say thank you on behalf of Camilla and myself and hand the podium over to our next speaker, who is Ruza, our Group CTO, who will talk about modernization through global scale. Thank you.
Thank you, Petter-Børre. Hello, everyone. In Telenor, we exist to connect our 186 million subscribers across nine markets, both in Nordic and in Asia. We are very much proud and take full responsibility to deliver well-functioning, good quality, reliable, and secure services to our customers so that they can trust us. The trusted brand in everything what we do. We are very happy that we are providing those services from more than 110,000 sites across Nordic and Asia. More than 1,800 applications are serving those products to our customers. At the same time, we fully recognize the power of our global presence. Our global presence, both in Nordic and Asia, enables us to take the know-how and the very strong engineering and heritage from Nordic to Asia.
We are able to basically innovate in our innovation of the operating model and the ability to produce the traffic much more efficiently than anyone can do, given the strong volumes. Because we work in the global way work, we are able to share much faster, to learn faster, scale, and thus execute what we believe better than our competitors. While we will have this presentation in the next 30 minutes, our 3,500 colleagues across Telenor, with as many working from the partners, are working very hard to produce this massive volume of voice and data that we need to deliver every second, every minute to our customer because that's what they rely on them to us. To really believe in us and deliver the trusted services to them.
In this session, for the next 30 minutes, we will talk about our modernization journey, and we call it a journey. It is the culture of the continuous improvement with a clear purpose to deliver the excellent customer experience and deliver the secure, trusted experience to our all customers. It is built on two main pillars. One is about digitalizing our technical stack, which is leveraging the modality of our innovation on every single element of our stack, preparing us for the 5G and delivering everything as a service. The second stack is about innovating our operating model.
We are very proud when we talk about operating model because it is a global operating model, talks about the global teams that are working across the Telenor, working very closely and strongly with our partners to innovate on the capabilities and the competencies, and at the same time, as well, having some centralized capabilities like Telenor Procurement Company. If we deliver, and as we will hopefully demonstrate in the next session that we are delivering as per our promise, we will be able to stay true to our purpose and to our mantra, deliver more for less. Which is measured by the continuous improvement of the customer experience, and at the same time keeping our CapEx [to] sale efficient, as we said, and we heard previously, 15%. We have delivered since the 2017, since the journey has started.
We are happy to inform that as of today, we are more than 50% in digitalizing our technical stack, more than 70% when it comes to delivering on our operating model with a clear ambition by 2023 to become a touch-free operation, both in network and IT, and we will talk a bit more about that in the later slides. At the same time, maintain stable our CapEx per sale ratio. However, it's not all about the figures. We strongly believe that this is a culture change. It is a mindset shift that takes the whole organization to change, not only technology and not only the Telenor, it is a small impact when it comes to our partner, the way how we interact and how we innovate with them.
That's why we have introduced the architectural principles to support everything as a service journey, which is talking about the touch-free operation by 2023, talking about the cloud first principles, privacy and security by design, as we call it, our defendable architecture, working internally and with the partners, as well as we have it a 5G ready as spectrum efficiency. All of that we do because we want to deliver the excellent customer experience. At the same time, we want to empower our customers so that they can make choices that they want, where they want, and that they can pick the services that they find are most suitable for them. We continuously stay true to our purpose, which is connecting you to what matters the most, but at the same time, empower the societies and each of our customers.
We strongly believe that what takes Telenor apart is the execution. That is the reason why we systematically and relentlessly are measuring every part of our execution journey. As you can see on the slide, we have identified four areas where we are since 2017, every day, every month and every quarter, jointly with our colleagues in the business units, measuring the progress in each of identified KPIs that we believe can help us reach our ambition. Of course, we start with the customers, we are measuring the customer experience measured by the continuous improvement in net promoter score of our network. At the same time, we believe that security is the key differentiator in our services. We are systematically and fully committed working to deliver the secure services to our customers to protect their digital life every day.
We are doing that not only with our systems, which we execute through our defendable architecture, we are doing that through the secure processes, managed security and together with our partners. The other category is about digitalizing our technical stack, where we are measuring our readiness towards the 5G. At the same time, migrating all our traffic from the closed integrated infrastructure to the open cloud infrastructure. We will talk more about that, as well measuring both the traffic and applications that we are able to transfer from the closed system into the more open and cloud-based. At the same time, as Sigve mentioned earlier, fully committed to our CO2 emission ambition and working very diligently, systematically to reduce the energy consumption. At the same time, applying the most advanced technologies and optimizing our solution at the sites. The third category is innovating our operating model.
I mentioned about the global way work, which is both applying to the people, it is applying the way how we work with the partners, and you already have heard quite a bit when it comes to the common delivery center, both in network and IT. That is getting fully operationalized in Asia as we speak, where we are not only gaining the efficiency, but more importantly, we are innovating together with the partners. We are building jointly the capabilities that Telenor can leverage, but more importantly, the whole industry. We do, in certain selected areas, centralize our capabilities because we believe that's what will drive the scale, that's what will drive the efficiency, and will enable and help us to stay true to our ambition on the CapEx per sale percentage.
If we deliver all of that, we are continuously focusing on our mantra, which is deliver more for less. That's why you can see on the slide, we were able to year-over-year reduce our production cost. This is as well of the main focus when we do the performance management. You heard quite a bit about how granular we are and measuring basically every base station as a factory. Because our ambition is not only to deliver the good quality services, but to deliver relevant and effective services to our customers. Our global presence, both in Asia and in Nordic, enable us to learn how to produce much faster and much more effective in Asia and bring those learning to the global setup and global teams faster to Nordic, learn from that and execute faster and better than our competitors.
In the next part of this session, we will go a bit more into details and showcase some of examples, some proof points, as we would like to say, demonstrating how far we have come in our execution journey. Let us start with digitalizing our technology stack. It is the concept of everything as a service, which we believe unleash the potential that every new technology brings. We are starting with the customer, making security by design in everything what we do. Of course, implementing the APIs. We have 216 standardized APIs, the access points for the data that enable us to interact much easier with the better quality and accuracy with the third-party services. At the same time enables us as well to scale those learnings and those services much faster within Telenor Group.
We see, for example, in the big IT transformation program that we are running in Sweden, by implementing those capabilities, we were able to improve the delivery time of the development by 80%. Analytics is the key, and being the data-driven and fact decision-making approach and processes is a key for us to succeed. Till now, we have been focusing building those capabilities. You've heard, and you will hear a bit more later, how we are using those analytics and data points in order to make the right decisions towards the customers, what you heard from Azman in the sales and distribution channel, but as well how we operate our networks and IT. How we basically transform our operation to be system and more KPI-driven towards the customer and more predictive. There are a lot of examples that we see.
By applying the artificial intelligence and machine learning, we are able to basically predict and make the accuracy of the net promoter score of network in Malaysia 70% and improve at the same time by 21% the customer experience. Cloud and access, we will talk a bit more, and in the breakout session, we will talk about our approach to 5G. What is extremely important, when we discuss about the digitalization of the technology stack, we link that to our architectural principles. Now we will talk about that and give some examples. If we talk about 5G readiness principle and more details will follow in the breakout session, what we are trying to do here is how do we create the environment where we innovate without the legacy?
How do we remove the legacy burden of 2G, 3G. You heard the story from Petter-Børre and Camilla on the copper. By the way, we are just about to sunset 3G in Norway as well. This is what we are trying to do, and transfer all the voice and data to the most efficient technologies. As you can see, more than 80% of our base station are 4G enabled as we speak. 72% of our total spectrum holding is basically at the 4G. It is leveraging the 4G technology, which is giving, you've heard Azman, 10 x better customer experience and better services than 2G. At the same time, it is not only adding new. That was your question, are we going to talk about new spectrum and the new investment? It's about refarming. It's about reinventing the existing assets.
As you can see that till 2019, we are close to 60,000, basically, base station refarming our 2G and 3G capabilities to the 4G. More importantly, in the last two years, we have been investing only into the new technologies. We had the principle, no investment into the legacy. It's a tough discussion sometimes with the business, but that's the only way how we can become the company, the modern company without the legacy. Another architectural principle that we would like to touch upon is the cloud first. We believe that we are the leading in the industry when it comes to transferring our data traffic into the hybrid cloud setup. 154 million subscribers as we speak today are being served by that hybrid cloud platform. You heard Sigve, 83% was the end of 2019 data traffic being generated from this platform.
Today, we are 87%. It's a massive journey for us, and more importantly, as we speak, our colleagues in Myanmar are working on testing the IT application. It is the analytics enablers from this platform, which is generating 50% of the IT workload, working to basically explore and validate the converged cloud capabilities, maybe among the first in the industry. Besides the efficiency and the scale that we are able to achieve through this cloud platform, we are very much as well working on the innovation. How do we bring open systems so that our customers can innovate with the product and services on the top? We have been recognized by the industry being the leading in that. IT, we have taken slightly different approach. Till 2018, main focus has been on the virtualization. Now we are moving into the cloud native.
16% is the application of the IT that we are in the public cloud. Just one more important thing. You heard we said 1,800 applications we have across Telenor, not all 1,800 will be moved to the cloud. This is the modernization journey, which we will try to simplify by applying business simplification processes and changing the business rules in order to reduce the number of applications that are required for us to serve in the 5G era. Touch-free operation ambition by 2023 is integrated not only in the operation. You will hear equally Jørgen talking about financial processes or Cecilia in the agile processes about automation. That's why we started with the automation first principle across. We started with the CDC doing with the partners where we, as we speak, more than 600 use cases.
Only one business unit we have 282 use cases which are already automated. Which are basically bringing the simplification, but more importantly, not only to demonstrate the faster time to market, but as well, cleaning up the legacy and all the hurdles to our customers so that the end user experience is much better than it was before. On top of that, we are adding the cognitive capabilities. Artificial intelligence and the machine learning already giving examples. Very good results. Mentioned about the net promoter score in Malaysia. At the same time, we are doing with our partner on the energy front, whereby applying those platforms and solution and soft blocking on different functionalities, we are able to achieve 27% savings when it comes to the energy. Of course, it's a journey, and not every business unit is at the same level of maturity.
This is our star business unit. As we speak today, they are close to 80% of being fully automating, applying the machine learning and artificial intelligence. As you can see, the customer-facing part of that operation is already fully automated. It's a lot of learning that we take from there, and we try to replicate, and that is possible because we have global teams to work on that. We will move into another pillar, which is innovating on the operating model. It is about the people, upskilling the capabilities of the people. It is about the processes, both when it comes to the automation and the centralization, working with the partners and the global way work.
Global way work, where we put the competencies that work together across Telenor, staying closer to the customer needs, understanding the business, at the same time, able to get access to the expertise and competencies much faster and then share it and scale it as well much faster. We will go in some examples. The whole global way work that we have implemented in Telenor is built on our two out of four behaviors, create together and always explore. That is internally, cross-functional in Telenor, but more importantly with our partners. Without our partners, we would not be where are we today. Even though we have in the last year reduced our number of FTEs in technology and security by 25%, close to 80% of that resources has been transferred to our partners. In the meantime, we managed to get 25, as we call it, global teams.
The 20% of the total resources in Telenor in technology and security are working through the global teams, enabling faster, first of all, learning, then sharing across the geographies and much faster execution. We don't need to fail nine times. For us, it's okay to fail once. Then we get the learnings and scale it and implement much faster. We heard Usman talking about the granular way work, this is as well where we believe that execution, the hands-on leadership, and very religious systematic performance management comes into the place. Where both business, finance, and technology are measuring every single site as the factory. We are measuring not only the customer experience and deployment of the traffic or the services, we are measuring profitability. That's how we are measured in technology equally as the business side.
We mentioned that some capabilities we have centralized. That is the Telenor Procurement Company. The reason is that we believe that this is the right place to leverage our global presence and to increase the efficiency. Since the establishment, April 2017, we managed to transfer more than 60% of our total spend to Telenor Procurement Company. We have concluded 400 global frame agreements, which enables us to have a one price which is equal across the Telenor, and to generate till now close to NOK 7 billion savings. Of course, it is possible to do like that because as well of our global way of work.
Our 25 global teams consist of the architecture and strategy, site designs, different network and IT solutions that enables Telenor Procurement Company to standardize the elements that we are going to source and thus yield these scale effects and good efficiency results. At the same time, Telenor Procurement Company is digitalizing and modernizing its own operation. You can see as well that 70% of the invoices has been reduced, time to serve the invoices, 70% of the time of production has been reduced, and we are approximately 50% of the touch of invoices production. For us to leverage and maximize the value of 5G and the new technology, we first need to modernize and we need to transform ourselves.
That's the reason why we believe through these results that by staying focused on digitalizing our technology stack, continuously challenge the established practices and status quo when it comes to the operating model, working closely with the partners, we have demonstrated that we can break the curve when it comes to decoupling the traffic growth from the cost. We have grown 4x , and we managed to reduce the overall cost when it comes to the operation, and at the same time, continuously working on improving the customer experience. This is the way of work that we have established, and it's not over. That's why we call it it's a journey. Every day we learn. We learn something new.
In our agile way of work and set up and in the leveraging the capabilities of the global teams, we believe that we are able to grasp those learnings faster and better than the others and execute on those, measure the effects of everything what we do. That's why it gives us a confidence that we can set up what will be our objective for 2020 and to 2023. As we see the progress since 2017, and as we will continue to systematically and diligently work on outcomes of everything what we do. We are measuring every single outcome, not the effort that we are putting into that. That is as well the reason to give us the comfort that we can say that by 2023, we will be more than 90% in our journey digitalizing technology stack.
We will continue to innovate on our operating model and achieve our ambition of being touch-free operation by 2023 while we are keeping CapEx for sale at the level of 15, because that's who we are. This is Telenor. It is a global team that is building on the very strong know-how and the very strong engineering and heritage in Telenor. We heard more than 165 years old, multinational company, bringing the learnings much faster, learning and as well, sharing faster than the others. We have demonstrated till now that we can execute as well, and we will continue in that journey. Okay. Now we have the next part, which is Jørgen taking us what is next.
Thanks, Ruza. Ruza never leaves town without her book. All the secrets is in that book. We maintain, as was also commented from the room here, our strategic direction in Telenor right now. We continue to build on the foundation that we have laid out over the last couple of years. If you have seen today's presentations, going forward, growth and revenue renewal, modernization, and responsible business is going to be the main pillars in the strategic agenda. Modernization will be a key enabler to stay relevant for us, to have the agility we need to adapt to what we believe will continue to be changing market dynamics and be very fit to meet the future challenges. As such, structural initiatives which will improve efficiency and change the way we work will, compared to previous strategic periods, play an even more predominant role.
As you know, for years, customer growth in Asia was driving solid revenue growth for Telenor. Consequently, the cost base was also increasing by around 3%-5% per year. At last Capital Markets Day, very early 2017, we had seen that revenue growth started to slow down, and in combination with the growing organizations and general increase in complexity, we saw a need to simplify and become more efficient. We wanted to have an organization, a culture, and a way of work that was more focused and fit for future opportunities. In 2017, at that Capital Markets Day, we said we aim to stabilize the OpEx in the year 2017, and then from 2018 to 2020 take cost base down 1%-3% per year. The numbers ended up with 3.5% down in 2017, 3% in 2018, and 1% in 2019.
On an organic basis, more than 7% reduction over these three years on top of the structural simplification that we have done. We also said that we want to get out more of each dollar spent on investment. Ruza talked about this. She talked about it also in the context of the Telenor Procurement Company in Singapore that we established at the same time as we started on this strategy. As you heard, since then, we have been able to significantly reduce unit cost because of the size and the purchasing power that we have with this company. We estimate that we have, on an accumulated basis to this time, saved NOK 7 billion. Thus, as we are saying, we are able to do more than previously with the same 15% CapEx to sales ratio on investments.
This is why we want to express today that we are confident when we are saying that we have delivered what we promised, and we think we now have a leaner Telenor with a foundation for further improvements in the coming years. During the period 2017 to 2019, we have increased the competence in our organization. Sigve was alluding to this. We believe we are working smarter, faster, more focused, and he also used the word with more agility than we previously did. The organization has become leaner, and we have managed to take out efficiency gains from the way we work without, and this is of course the whole key of it, without compromising on our ability to execute. We think it is rather opposite. Since 2015, we have organically reduced the headcount by 22%, while as for group functions, the number is more than 30%.
Another example, in customer service in Norway, we have reduced number of employees by 1/3 since 2016 due to more digital interactions and easier self-service. In parallel with that, we continue to upskill our own teams and also to hire new critical competencies. Right now, the focus is within the digital disciplines, and we have around 3,000 people or 15% of our workforce that are now having jobs or significant competence within these new critical areas. In addition, also pointed out by Sigve, we are running every employee on yearly online training programs. We have made specific decisions on what to centralize and what to keep with local market execution.
It started with a perspective that we had to change the way we work as we saw significant value creation opportunities in targeting certain areas and become a lot more focused and granular than what we previously had been. To reap the benefits and to make the best possible decisions, we needed to take holistic views, for example, within technology, and also view this across multiple areas. One example, network planning, spectrum, and capital allocations are extremely closely interlinked in our business. It has been very natural to bundle these processes, to bundle the professional environments, and also to address this with a very clear voice from the group level. Another example, coming from years of increasing cost base, we saw the need to take action. We identified, as we know, large potentials, and then we started to steer behavior in the new direction.
You were asking us, is it difficult, or is this only executing on the low-hanging fruits? We say there are no low-hanging fruits because this is a matter about a new direction and setting new behavior. It is challenging at first to change mindsets. We all know that. Over time, we see clearly that we now have built a culture for improvement and consciousness around the fact that we are on a much longer and much more exciting journey of modernization. All these elements has also resulted in what has been alluded to, a focus on organizational redesign to optimize the way we work. This will again lead to further efficiency combined with, again, improved quality in execution. Let's not forget the local perspective. Local market execution is, of course, still extremely important, and we hope the two examples earlier this morning is illustrating that point.
We believe that local know-how of market dynamics and customer behavior and preferences makes customer-centric decisions much more suited to be in the hands of local management, while centrally we are forcefully and granularly benchmarking this. The modernization journey so far has built improved competitiveness and will be an important enabler to secure our long-term position. Even though we have taken out 7% of the organic base, cost base, since 2016, we still have a way to go to be lean and focused enough in order to fit for what comes next. Thus, the modernization journey will continue in a foreseeable future actually, and will result in further efficiency gains in the coming years. Today, we have an OpEx base of around NOK 35 billion, of which sales, marketing, and customer service accounts for 40%. Network IT accounts for 30%, and the remaining 30% is other costs.
It is regulatory license related, it is staff support function in business units and group costs, et cetera. Cost of salaries, as you can see, and personnel is spread across all these categories and constitute approximately 30% of the total OpEx base. The main levers for efficiency gains going forward will be a combination of continuous improvements, as we have done for a long time, and more structural initiatives. Continuous improvements is the part of ongoing work that become more efficient and optimize the day-to-day businesses. This part of the modernization has been the biggest contributor to the cost reductions we have seen in previous years. We expect this will continue to be an important part also going forward and account for 40% or a little bit more of the net savings going forward. There are three main areas to this.
As you can see, technology, energy optimization, improving planning processes with contractors, vendor renegotiations are where we see most potential. Sales and marketing, commission structures, try to optimize advertising spend and use benchmarking as a guiding tool for that, continue to be selective and smart in campaigns that we run. Other gains is expected to come from just simplification, standardization in general across the board continuously. There is a lot of potential by just keep doing this. Even more importantly, we have started several structural initiatives the last few years, the last couple of years. These initiatives are more transformative in nature, will take longer time to realize. Last year, up to maybe half of the cost efficiencies came from structural initiatives. Going forward, this will increase in contribution. The biggest structural initiative we have ongoing is the copper decommissioning in Norway.
You heard Petter and Camilla giving you an update on that. A very important initiative of course, and as Petter was saying, probably make us the first incumbent without a legacy fixed service. It might also be a little bit of a milestone in an industrial context. Strong execution is needed. So far, we are okay where we are. Furthermore, we are in process of modernizing networks in Sweden and Thailand, and running IT transformation projects in Norway and Sweden. This is, and Ruza pointed to it, modernization of network and IT systems is, in our view, an enabler for digitalization and automation, and it's also hopefully, and we believe it is, a controlled and efficient enabler in the transition to 5G. I also have to mention the important modernization we are doing in Asia, where we have been partnering up with vendors to improve our network and IT operations.
Ruza were alluding to that these models imply around 30% process efficiency. Obviously, it would also have a cost impact, cost benefits for us when we carry this through. In order to improve efficiency in customer interactions, we have to digitize the customer touch points. Today, 15% or 30 million customers, subscribers, use one of Telenor's mobile apps, where we get, as a result, more efficient distribution, upselling opportunities, specialized offers, very granularly placed to the right customer. On top of that, quicker feedback from the customer. Increasing this share going forward is essential, we believe, to reduce cost related to acquisition and retention, and also sales cost. Again, it is in no conflict. It will also make us a better service provider to our customers through this upgrade.
Across several operating units, in particular, five of our business units, we are significantly modernizing the organization to improve the way we work going forward. This means that we can reduce the number of employees, but again, while at the same time seeing actually improved quality in execution. To give you some numbers on this, the expected gross savings from the main categories of structural initiatives is a yield of NOK 3 billion-NOK 4 billion in the period of 2020 to 2022. The guiding period that we talk about. In 2019, we started to see that modernization and structural part of the efficiency was close to 50% of total savings. This increasing development is expected to continue in the coming years. Continuous improvements will be important, but the bulk of efficiency gains will come from the structural modernization and renewing the company.
With the momentum we now have and the pipeline of initiatives, we are confident that we will be able to continue to deliver net OpEx reductions. The ambition from the previous Capital Markets Day of 1%-3% reduction is therefore prolonged to at least 2022. The overall ambition of the ongoing modernization journey is then, of course, again, to prepare ourselves and be positioned to deal with future new business models, possible interruptions, disruptions, and also, of course, opportunities that will arise from all this. A core part of our modernization journey will continue to be optimization of our asset portfolio. Make sure we have a company that is well-positioned. We will continue to look at our portfolio. Our main focus will be on value creation in core telco assets.
We believe that the regions we are in today gives Telenor a robust exposure towards the very advanced Nordic markets, combined with Asian growth opportunity. We are obviously reviewing, looking into other things, and one of those is the infrastructure part, the towers. Another one is the real estate portfolio assets. When optimizing our portfolio, we will have the aim to continue to be disciplined in our approach, and make sure we are supportive of both our dividend and also capital structure policies. Sigve was touching on this. We expect that some of the Asian markets we are present will consolidate to extract synergies. We are prepared and ready to participate. That will, of course, have to make sense from an industrial as well as a financial point of view.
In such a case, we would normally seek operational influence to ensure execution of scale effects and also to ensure responsible business conduct. In addition, we would also normally be reluctant to use cash in such transactions. We have previously indicated that we are reviewing our real estate portfolio in Norway, and that we are considering divestment. The portfolio we now are evaluating includes 85 properties with development potential across Norway, in addition to the headquarters here at Fornebu. We still then have a number of smaller copper exchanges across Norway, a few thousand actually. They are less mature, they have lower value. We will look into that down the road. The gross rental income from the considered portfolio is approximately NOK 400 million per year, with the majority coming, obviously, from the facility at Fornebu.
This is the commercial of the day for those of you that might be interested in more details. We have recently engaged Arctic Securities and UNION to help us with this process, feel free to reach out. Passive infrastructure, important topic. We therefore think we should give you a small update on how many sites we are using and what we plan to do. First, as we have said before, across our portfolio, we have chosen different operating models because they have fitted into the local market context and because this portfolio of companies and markets has developed over several years. In Myanmar, we have a very asset-light model with few owned sites. On the other side, in Norway, we more or less own all the sites that we are using. The rest of the portfolio is placed between those two ends.
In the Nordics, we use approximately 40,000 sites, of which Telenor or Telenor joint ventures owns 30,000. It's 70% we own ourself in the Nordics. In Asia, the number is 70,000 towers used, 40,000 we own, i.e. approximately 60% we own. This is a portfolio we believe is important to give the right attention to be able to extract more value from it. Our strategy going forward is to optimize the tower and passive infrastructure operations. We see that, for instance, the average tenancy ratio in our own sites vary from 1- 1.3. I believe the [TowerC o] best practices is 1.8 and probably north of that even. We are therefore obviously exploring if and how it is possible to increase this ratio. In addition, we are certain there lies a potential in how we run these operations.
The aim going forward is to treat passive infrastructure as separate business lines in each BU in order to optimize the operational performance, regardless of decision to carve out or not. Transition to 5G can lead to more network sharing and could potentially also end in infrastructure consolidations in the Nordics. In Norway, we have already taken, as some of you know, the first step in improving the way we manage and operate the passive infrastructure. From January this year, we have established a new unit to manage and operate passive infrastructure in Norway. The unit combines teams and responsibilities from three different operating entities previously, being Telenor Norway Broadcast and the real estate organization. We have bundled this together to one entity. We believe that this new entity will have significant operational synergies from developing a much more efficient and sustainable organizational setup.
Improve processes, improve vendor dialogues and planning with vendors, as well as increase ability also for long-term investment planning and asset management. It will also be natural for this entity to explore further commercial upsides, initially in the form of more site sharing. A key priority for us has been to make sure that the strategy we are pursuing over time will generate a solid return on the capital we employ. This is extremely basic. I know that it is so important for us to have put that guiding star high on the wall and really look to that when we are making our calls. Looking back, we see that the journey we have been on for the last few years has had a positive impact on return on capital employed. We have had a clear strategy, we believe.
We have been focusing on value creation within core telecom assets. Our investment decisions are continuously trying to balance value creation opportunities with very firm capital allocation priorities and with a clear eye on the risk side of our business. It has also been to optimize our asset portfolio. As you know, the decision to exit India and VEON are both positive contributors to the return on capital employed development. The dip you see in 2019 is primarily caused by the tax we had to pay Norway due to non-deductible losses in India. As you know, we disagree on that decision. Let's leave that aside now. We had to pay for the process to continue in court. Excluding this item, 2019 would have been on level with 2018. It's a different level now.
At the end, it all comes down to our capability to generate free cash flow and ability to cover the growing ordinary dividend. Our modernization journey and growth ambition should be supportive of a clear growing EBITDA. In combination with a stable CapEx to sales ratio of around 15%, the normalized free cash flow before spectrum is expected to continue to improve. 2019 is a good, or if you want, a bad example of a year where free cash flow generation was unable to cover the ordinary dividend due to some special items and high spectrum payments. Spectrum is one of the biggest factors impacting free cash flow differently from year to year, and we really work hard and deep on our spectrum decisions. Some years as a result of the decisions we are making, we have high payments on spectrum, while the next might be significantly lower.
Over time, average should not exceed a level where normalized free cash flow is able to cover the ordinary dividend. Our dividend policy has served us well, we believe, and continue to deliver on this commitment is important for both the board of directors and management of Telenor. For us to succeed with our strategy by modernizing, we have to be able to capitalize on the digitalization, we call it here mega trend, to drive new and efficient go-to-market models. We have tried to address that today. We need to be able to increase the network productivity in order to handle the data growth at an affordable cost. Ruza tried to illustrate that. With 5G coming, we need to be curious and look for valuable use cases and opportunity.
We have a lot of experience gained through the exercises we have done now. We will do this forcefully, roll it out where we should, but we want to see that we are getting return on those investments and do it where the market wants it and pays for it. We need to further develop the organization to take out efficiency gains, again, with modernizing the competence and without compromising on our ability to execute. All of this we have to manage sorry, with continued strong focus on financial control and allocation of capital. That is the end of our modernization session. Can I invite Ruza and Petter back here? If there are any questions, we have a few minutes for some questions. Not sure how much time we have.
We are good.
learn that in a minute or so. Please let us, yeah, go ahead.
Thanks again. It's Terence here from Morgan Stanley. Just had a question around the OpEx reductions target. When you first introduced it three years ago, I think it's fair to say that you made a very fast start with good progress in the early years. For the upcoming three years or the three years ahead, do you expect the progress to be more moderate or more even? Related to that, you mentioned the gross savings of potentially NOK 3 billion-NOK 4 billion. How much of that do you think will translate into, say, net savings, and how much do you think will be reinvested? Thank you.
I very much both understand and appreciate the question. You know I really hesitate to guide within the guiding. I think we should leave it at the 1%- 3% level. You could speculate, is there a trend from 3.5% and down to 1% in 2019? No, there is not a trend, and we are just doing this as we can and as timely as possible. We need to have a certain degree of flexibility here. It is about our timing. It is about our success rate. It is about also not locking ourselves in to not be able to act forcefully, fueling a market activity or doing other things when that is the right thing to do. It is to give ourselves some flexibility.
I think you will see that we will continuously deliver on this and also report on it and be very transparent on it. When it comes to the three to four, again, it is a gross number. There are other moving parts here. Camilla showed you more transparency now on the modernization in Norway, for example, where we also showed not only the revenue side and not only the cost side itself, but we show the revenue side, and we show the EBITDA consequence. Bear in mind, the EBITDA consequence was, again, only for the decommissioning and for this exercise. Telenor Norway's EBITDA is, of course, different, and on top of that comes general efficiency and what Ric talked about. I don't think we want to elaborate and go more in detail on it right now.
Hello. Thank you. It's Usman from Berenberg. Two questions, please. Firstly, on infra sharing. You said that 5G might result in this becoming a bigger trend in the Nordics. I guess the market where there is the biggest potential is Norway, given there is already infra sharing in Sweden, I believe also in Finland. In Norway, there seems to be a regulatory desire to have effectively three networks in place. Do you see that changing? The regulatory priority in Norway changing, or is there something else that you're referring to when you talk about potential for more infra sharing in the Nordics.
The second question was just on spectrum decisions that you're making. I guess it's interesting that you said that the spectrum is a decision that's taken really centrally, whereas you give more customer control to the local OpCos. Is there a conflict here that, I guess local management probably want more control over the spectrum decisions? I'm asking specifically because at least from an analyst or an investor perspective, it seems this is playing out most vividly in Thailand, where maybe dtac could have done with a bit more spectrum in mid-band, which they haven't been able to get. Thanks.
First, on the network side, we don't see any change in regulatory and governmental perspectives on this. We simply believe that there will be opportunities, there will be actions, there will be even maybe needs in several of the markets to continue to bundle and to share as much as possible, and it will be triggered by also higher granularity on the 5G side. I don't think there is a conflict in the way we talk about spectrum. Obviously, this is very integrated work with the local business unit. All the data comes from there, and a lot of views and all the market perspectives, and the effect on churn and customers and the opportunities and so on. Technology, commercial, and finance, et cetera, works very closely together. It's just that these are really important, big-ticket items in our decision structure.
It's also that in the end, to make the final call, it's probably good to have a meter or two in distance to the most hectic atmosphere around it. We are in a very good and comfortable position in Thailand. Sigve elaborated on that. We have a fantastic network. We will participate in 5G in the way we think is right. That goes also for the other markets. We think the industry has a big problem if the industry is overspending on spectrum, because the industry as such need higher profitability. That is what we are trying to balance out. Just pass the microphone one step forward.
Hans Slob, Carnegie. I was just for you, Jørgen, wondering, you're sort of aiming for increasing free cash flow year-over-year. In your dividend policy and regarding your balance sheet, have you removed sort of share buybacks and extraordinary dividends?
No.
From your strategy?
No, we have not. It's definitely there as a tool we want to deploy. We didn't put a belt on our slide. I should have commented on it. Thanks for reminding me. No, we have not. The board has no intention of asking for it this year, and we have communicated that. Clearly that is a tool when and if.
Just one more question on your sort of fixed future. Going forwards now, in Q4, you had extremely good growth, even looking at your legacy decline. Now you're showing sort of an EBITDA decline for your, if you can call it, back book. How is the payback periods and return on investments and the business case for sort of the migration compared to the front book and back book on those investments?
I don't know how much I'm allowed to go into details on that. Generally, we are building out the fiber to home with very strong business case and good profitability. We're still doing our fiber rollout based on profitable business cases and taking kind of a land grab approach, which is then benefiting the decommissioning. It's not necessarily driven by the decommissioning. When it comes to the fixed wireless product, which was also growing very healthy in Q4, we're also still very comfortable with the profitability of that product. Of course, it depends a little bit over time in terms of how the usage will develop.
Is it fair to say that at a certain point, we will probably get where not much more fiber should be built out and more others, but we are not there now?
I think that's fair. What we see in the Norwegian market overall is that there are, broadly speaking, probably three categories. You have the commercial fiber build-out, where there are 100 fiber operators in the Norwegian market building out more fiber now than ever before. You have a second category, which are government-supported initiatives, where the government is putting in NOK 250 million through the state budget, which is then multiplied by local municipalities and regions, plus the commercial value, which also is increasing in volume in this last year and also in the years to come. You have the opportunity where even that is not profitable, where we believe that mobile will be the technology that actually will cater for the needs for the more remote areas. You can also see fixed wireless be a supplement in already fiber-covered areas.
It's Ian Morris again from Barclays. Very encouraging to hear you talk about the importance of global scale, and then moving towards cloud, hybrid cloud as a sort of a driver of that efficiency. First question, as we look forwards, does that sort of global reach enable you to sort of differentiate further against the competition as you see the importance of driving those centralized benefits? Linked to it, you talk about M&A coming in Asia. Moving towards a model where things are centralized, you've got centralized procurement. Does that enable an M&A? Does it make it harder? How do you think about the portfolio optimization once you've centralized so much of your organization? Thanks.
Right.
Yeah. So far, and based on our experience from 2019, actually, we see that this is our competitive advantage. We can say it like that. First of all, because to make the centralized procurement function, we need to drive quite a lot of simplification and standardization, which makes us much enabled to scale in the markets where we are faster. We can replicate those solutions. It doesn't have to be just a global reach solution, it can be as well on the prem, as we have deployed in Asia. Then when we compare ourself with the M&A cases where we've been exposed, we see that there is a value that we can bring on the table by this scale and efficiency factory, as we call it. More importantly, of course, at the end, it is the prices.
It's more importantly about the solutioning, how we start design, how do we prepare the implementation, how do we interact with the partners, how we leverage the ecosystem overall capabilities more than what we do before. It is this global way of work that makes us stand out compared to the others. The procurement capabilities is just the machine that is running underneath to enable us the end results.
Hi. My name is Frank Maaø of DNB. I have a question about the cost inflation that implicitly offsets some of the gross savings that you are doing. If you can talk a little bit about that. If you take the NOK 3 billion-NOK 4 billion cost reduction, gross cost reduction that you're talking about, structural improvements, which would be about half of the net OpEx improvements, and then you have the continuous improvements, that would add up, if you see the logic at around 17%-20% of the total. I mean, it would be like NOK 6 billion-NOK 7 billion in aggregate for both types of savings. Would that be the right way to think about it? NOK 3 billion-NOK 4 billion structural and then the continuous improvements on top would be around NOK 6 billion-NOK 7 billion, which will be 18%-20% of the total NOK 35 billion base.
That would make up some 5%-6% cost reductions per year in gross reductions. Would that be the wrong way to think about it? What would be the reconciliation from that to the net 1%-3% savings? Would that be the regulatory cost increases?
I'm so glad I've practiced on answering those questions. I understand the question. I appreciate it. I'm not going to go into it. Of course, your line of thinking is good. I'm not going to verify the numbers. We wanted to show the magnitude of the structural part of our effort for a couple of reasons. First, to leave an impression that we are working with firm and real issues here. We have a plan. I remember Sigve and I in 2017, when we came out with this measure, we spent the next four months to six months trying to convince you guys that we actually believed in it. That was a way to mitigate that. We have a plan for it.
Also to leave the impression that working on the structural side, which has modernization aspects, it is future-proofing Telenor, and it also have a big cost implication and hence steering activity. Of course, there are many things that are coming up and that we have to cater for. The digitalization is not free. The modernization of Norway and the new products and services we are delivering, fixed wireless access is not free, et cetera. I hesitate to do it. The reading from what you're saying is that big things are happening. We are really changing the way Telenor works and what Telenor do here. We have one more question after that.
Thank you. It's Roman from JPMorgan. A question for Ruza and one for Jørgen as well. On the network efficiency, tremendous work, and whenever operators talk about network efficiency, I can't help but also think about VEON, which is, I guess, a smaller brother of Telenor in many respects. VEON, they basically failed miserably, right? On the network efficiency side. When you think about the KPIs that help you sleep well at night and give you comfort that you are spending less and actually delivering more, what are those key KPIs? You gave us a whole bunch, but I guess, what are the key few ones?
Yeah. For Ruza, it's all of those, but of course.
Yeah. I would like to highlight maybe the ones that the whole organization, this 3,500 are being measured about. Before I come to that, I just want to tell you that all of those that you saw are part of our technology strategy execution. The CTOs and the people in the business units are relentlessly following those. The ones that we are measuring and really making sure that we are on the right track is the net promoter score when it comes to the network quality. We are day by day measuring that and across the markets and trying to learn and compare and see how we can basically increase the customer experience for whatever we do. The second one is the cloud.
The cloud is not only to report that we have moved to the more efficient technology, but it's really to demonstrate that we have transformed ourselves from the closed vertical system into the more open and horizontal to stimulate the innovation. That will be another one. The third one that we are measuring is the global way work, these common delivery centers. Again, I didn't on purpose mention the presentation, the efficiency, which is 30% or on the cloud, 40%.
It's really to take us forward and foster the innovation with the partners, and to take us to this touch-free operation, because that's extremely important parameter that we are measuring. That we demonstrate that we are simplifying, that we are moving to the new technologies because both cloud and 5G are having the automated processes, as I believe you are aware. At the same time then we are reducing time to market and basically delivering on our, I would say, the main concern is the speed of the change. Are we able to change as fast as the customer would like us to change? This is the third one that we are measuring.
Thank you very much.
You have the mic, so you will have the last one.
Yeah. Why not use cash for Asian acquisitions?
Well, I said normally we wouldn't, and we don't plan to do that. I didn't totally exclude it. It's simply that we think there should be ample opportunities for consolidations in some of the Asian markets, either with or without Telenor, but it should benefit all. There are, in some markets, too many players, and it's not good for the customers, it's not good for the societies, and it's not good for the players. We think it is not warranted and not important to use cash for that purpose. We don't think we should deploy more capital into Asia right now. That is the view we have on it.
Good.
Okay. I think Is it lunch now? Is that correct? It's lunch. 45 minutes from now. What is
Huh? 1:15.
We are back 1:15 P.M. Oslo time. A break until then. Thanks.
Okay. I hope you were able to grab some food. Still some people that are settling down. What we're going to do now, it's two sessions. First, I'm going to ask Anne Kvam, that is Head of our Corporate Affairs, to come here to talk a little bit more about what we do on the business conduct, sustainable business. After that, there will be a short Q&A with me and Anne on that topic. Then, I will have some closing remarks, and then we will have a Q&A with Jørgen and myself, where we also are opening up the line for all our people that are calling in and watching us on video streaming. After that, we are going to have break up sessions. Anne, are you ready? Please.
I am. Indeed. Thank you, Sigve. Throughout the course of the day, responsible business has been highlighted as an integrated part of our business and our strategy. For the next 35 minutes, I will walk you through our responsible business practices, our ambitions, and way forward. Is this changing?
I think it's the other one.
It's the other one. Sorry about that. There we go. Responsible business practices lie at the core of Telenor operations in everything that we do, including with our partners and suppliers. This means is that we maintain focus on the most critical business environment risks, seizing opportunities to generate positive long-term value and meeting stakeholder expectations. Telenor's Code of Conduct is the foundation of our responsible business practices across the markets in which we operate. This means that we work structurally, systematically, with the same standards and with sound corporate governance mechanisms across all our markets.
This includes training, capacity building, and monitoring in, for example, anti-corruption, human rights, privacy, and environment, among others. Telenor has connected peoples and society for 165 years. It's what we do best. We use this experience to spur development and offer services that makes a difference. Now I can get rid of this scratching, maybe. Do you think it is going to be better?
I'd say.
All right. Thank you so much. We've used this experience to spur the development and offer services that makes a difference beyond our native Norway, and now have a unique geographical footprint across Asia and the Nordic region. We have done this by staying true to our values, using our expertise of connecting people and society for more than a century and a half, and maintaining a high standard everywhere we operate. This has allowed us to make a difference and raise standards across the markets in which we operate. When used responsibly, mobile technology can be used to promote human rights. It can be used to create new opportunities and enable sustainable development. Connecting people to social and economic resources isn't just the right thing to do, it is also good business.
Our customers are expecting not only real-time, relevant, and individualized services, they also expect their privacy to be safeguarded. As a provider of mobile and internet connectivity, respect for the rights of privacy and freedom of expression is central to Telenor's core business. The company approaches these issues from a privacy point of view, as well as from a security angle, with policies and manuals set out as mandatory requirements across all our markets. The point of this slide is to show how important responsible business is, has always been, and will be for Telenor. I will now go deeper into the approaches we've taken in order to set these priorities in motion.
Telenor is committed to all the 17 of the UN Sustainable Development Goals, and we have a strategic focus on the SDG number 10, reduced inequalities, where we believe we can contribute most through our business. Our approach rests on two pillars, also mentioned by Sigve earlier today. Leveraging impact of connectivity and delivering wider access to our services, raising standards across our operations and responsible business. Through this approach, we are determined to reduce inequalities and empower societies. We aim to raise standards in our operations and in our supply chain. With a portfolio of countries that have different standards on responsible business conduct, we strive to raise them wherever we operate. This includes promoting human rights and labor rights, including working conditions, diversity inclusion, reinforcing supply chain management, and striving for transparency and accountability.
We maintain a clear privacy position and strengthening our capabilities to become even better prepared to manage cybersecurity risks. Climate change is a defining agenda of our times, and climate and environmental agenda will be an integral part of how we do business. Through a foundation of responsible business conduct, we are leveraging the impact of connectivity to promote digital inclusion by extending connectivity, building digital skills and resilience, and stimulating digital identity projects. We're also making available financial inclusion services, health and educational services, and solutions with big data, machine learning, and AI to further enhance and personalize services and contribute to social goods. In addition to these actions, we have long held that a crucial part of our focus on responsible agenda is openness and transparency. We have reported on our responsible business and sustainability performance for many years.
This we have done through our annual sustainability report, the CDP reporting, the SDG impact report, the annual authority request disclosure reports, and others. We believe that openness and transparency is a key element in how we do our responsible business. Systematically working towards our targets and be transparent on our performance fosters a conducive environment to do business. It allows us to create a sustainable and contribute positively to the development in the many different country and context that we operate. Telenor operates in markets with challenging political, socioeconomic, macroeconomic, and regulatory contexts. Digitalization of societies and ever-increasing demands for connectivity represent an opportunity for our business, but will also entail more complexity in navigation of the business environment. Throughout 20 years in Asia, we have proven capable of delivering sustainable value creation across our footprint and contribute to the overall development of infrastructure and connectivity in these markets.
Telenor works proactively with governments and international stakeholders to create more predictable national frameworks for both telco and digital regulation, tax, technology development, including spectrum. The aim is to both create the necessary permission space to develop our business and to mitigate risks that challenges our daily operation. Strengthening awareness, accountability, and transparency will remain key to securing our license to operate and ensuring ethical and responsible business practice. Telenor will also continue to raise standards in its operation supply chain, and we will provide access to services and skills for a digital future to impact societies positively wherever we operate. Our impact on societies is significant. Telenor is a long-term investor, an employer, and a taxpayer in the markets we operate. In addition, the telecom sector in general, and Telenor specifically, improve business efficiency, accelerate innovation, and drive the establishment of markets for new products and services.
A recent study that we have commissioned by Frontier Economics show that Telenor contributed $4.1 billion in economic value to its Asian markets in 2018. From 2015 to 2018, Telenor invested $5.5 billion in its five Asian markets, that's excluding spectrum auction and fees, making us one of the top foreign investors. I will in the following slides present four material areas within our responsible business agenda. For the last two areas, I will present targets that we have set and that we will report on going forward. Connectivity can play a key role in achieving the UN Sustainable Development Goals. Telenor's active internet user base stands at 57% by 2019. Again, as also Sigve mentioned, we forecast an increase to 65% by 2023 as part of our business strategy. However, we believe that connectivity in itself is not enough.
Our efforts on digital inclusion aim to build digital skills that help people take advantage of that connectivity. Access alone does not solve the puzzle of digital inclusion. Everyone should be able to make the most of the world of opportunities that it represents. This is why we, together with our partners, UNICEF and Plan International, have initiated a range of initiatives to promote digital inclusion and build skills for a digital future. These include providing access to opportunities such as digital literacy and training on being safe online, as well as building government's digital capacity to deliver services. We are running programs in all our markets to help children and young people build capacity and grow their resilience on online safety. 780,000 children in Pakistan have been registered through our digital birth registration project, and we have built the capacity of thousands of government facilitators to use this system.
Our services are also enabling financial inclusion for the unbanked, mAgri solutions for farmers, and the use of big data solution for social good such as disease mapping and prediction. For example, in Myanmar, Wave Money is offering the largest financial services distribution network and has ongoing initiatives for humanitarian aid distribution and pension payments. Our mAgri service in Pakistan has 7.5 million monthly active users, and we are broadening the reach of our dtac Smart Farmer initiative through partnerships. In 2019, we launched one of the largest studies of its kind, which shows that combining malaria genetic data with human mobility data from the mobile networks can help map and predict the spread of drug-resistant malaria in Bangladesh. To measure our performance and be transparent on our impact, we set ourselves targets in 2017 until the end of 2020.
We set a target to reach 7 million birth registrations and 4 million children trained on online safety by the end of 2020. At this junction, we stand at 780,000 birth registration and approximately 3.3 million children trained. On the former target of birth registration, we are transparent about the challenges faced and that we will not likely reach this target. We have therefore calibrated the ambition to 2 million by the end of 2020. However, we believe we will reach a target of 4 million children trained by the end of the year. Post 2020, we will reassess our performance and targets on digital inclusion and will share our renewed commitments in 2021. Another focus area for us is supply chain sustainability.
In order to support Telenor's long-term strategic ambitions, we need to continue the focus on maintaining high operating standards in line with international best practices and secure working conditions throughout our supply chain. Sustainability risks in our supply chains are still very high in selected geographical areas across the group, and fatalities, serious accidents, and major non-conformities of requirements outlined in our supplier conduct principles makes it imperative to have a strong focus on these risks. Through our supply chain sustainability work, we continue to raise standards and strengthen a risk-based approach towards mitigation. This is done through supplier risk assessments, monitoring, and capacity building. Our supplier monitoring activities range from simple site visits to more comprehensive inspections or audits conducted by trained resources. In 2019, we conducted 3,616 such monitoring activities across our markets, and 86% of these were unannounced.
The monitoring activities are complemented by extensive capacity building of the supply chain through e-learning programs, classroom training, and most importantly, on-site safety briefings conducted by our in-house resources. We set ourselves ambitions in this area, and we have reached a cumulative total of 134,000 hours by the end of 2019. We aim then to add another 17,200 hours in 2020. We will continue to drive these efforts across our supply chain as we believe that this is an important tool for raising standards. While we will continue to conduct monitoring activities, it's important to measure the closure rate of non-conformities to the requirements set by Telenor or to the local law that we identify during these inspections. This gives a better assessment of improvements made through our efforts in raising standards in the supply chain.
By the year-end 2019, our closure rate of the major non-conformities was 81%. Major non-conformities are the ones which can result in, for example, life or health-threatening conditions. Road accidents, labor rights, and working conditions remain key risks in the Telenor supply chain. While 100% closure rate is the eventual ambition, some issues are more complex than others, particularly ones that involve behavior change or those that are deeply ingrained culturally, such as lack of enforcement of driver's license, but by the state. These are deeper issues that need time for effective closure. Holding ourselves accountable in this area is a step in continuously improving what we do, but we do remain humble and realistic on this challenge. We will continue to report on our supply chain performance as we have in the past, and we will reassess the targets we've set in this area going forward.
In the longer term, we are also updating our broader commitment to sustainable development as it relates to climate and environment. The growing demand for ICT products and mobile devices, and their increasingly short lifespan, has resulted in e-waste becoming a significant concern and a risk for the ICT industry. In this regard, all Telenor business units are mandated to secure sustainable waste management. All electronic waste is to be reused or recycled along internationally recognized standards and regulations. During 2019, Telenor's business units reported close to 3,900 tons of obsolete electrical and electronic equipment waste, which was removed from active operations. 99% of this was reused or recycled in an environmentally sound manner. Over the last decade, Telenor has worked on transparent reporting of emissions, focusing on energy efficiency initiatives in our network operations, understanding climate-related risks, and business potential for climate-friendly IoT solutions.
Going forward, we will step up on our ambitions on climate change, first of all, on reducing the carbon emission in our own footprint. This comes with some challenges. We have seen an increase in our energy consumption over the last years. This is driven by significant growth in data traffic. More than 600% increase in data traffic over the last five years. Over the same period, our total CO2 emission has increased by approximately 66%, and we expect to see a further increase in data traffic with technologies like 5G, IoT, and AI. We expect this data increase to lead to increased emissions in the near future. Our prospects for increased access to renewable energy, especially in the Asia region, will remain limited. The emission of greenhouse gases in 2019 for Telenor Group was a total of around 1.1 million tons of CO2.
That's in accordance with Scope 1 and 2 of the Greenhouse Gas Protocol. The operations in Asia account for 96% of the CO2 emissions, of which 80% is related to grid electricity, while the remaining 16% stem from diesel generators. Nordic operations accounts for 4% of the group's CO2 emissions. Our biggest challenge is access to clean energy, and this varies widely across the markets, and especially between the Nordic and the Asian market. This is why we have chosen to set regional targets, one for the Nordic operation and one for Asia. Telenor's target for the Nordic is carbon neutral business operation by 2030, focusing on energy efficiency measures in network operation, purchasing renewable energy, and enabling carbon neutral transport. In Norway, our largest footprint comes from ground transportation, mainly from car, machines, and equipment operated by Telenor and our suppliers supporting our network operation and maintenance.
In upcoming sourcing processes from 2021, Telenor will start implementing new climate requirements both internally and towards our vendors, gradually phasing in electric as a replacement for fossil. It is important, however, to highlight that transferring the car fleet to electric vehicles in Norway demands a significant step up in the number of charging stations in the rural areas of Norway. Telenor's target for Asian operation is minimum 50% reduction in carbon emission by 2030. As for the Nordics, we will also here focus on the increased energy efficiency programs in all our business units. The main challenge in Asia is the access to clean energy. We will explore and collaborate together with local governments and partners to increase the access to clean energy.
This includes seeking opportunities for power purchase agreements. Our ambition is to have at least two to three power purchase agreements in place by 2025. In Asia, 16% of our footprint comes from diesel generators, base stations that are in areas where there are no or limited grid solutions. By the year end 2019, Telenor had installed solar energy solutions for close to 3,000 of these base stations. We aim to double this number within the next three to five years. We see that installing solar solution is a good business case with payback times down to two years for some markets. These targets, especially for Asia, are stretch targets. We believe they are achievable based on our analysis of the solutions available to us.
As mentioned, technology and energy markets are developing quickly. Our strategy needs to be flexible in order to accommodate new solutions as they become available over the coming years. We cannot do this alone. We will be working with partners, with suppliers, with industry organizations such as GSMA and other mobile operators, partnering with the international community, climate experts, and third-party organizations to advance industry progress and develop best practice. Telenor will continue reporting on our CO2 emissions through CDP. We will also start reporting on our CO2 targets in our quarterly reporting going forward. However, our climate ambitions are broader than reducing our own footprint. Through our services and IT solutions, we enable our customers and other industries to be more energy efficient and to reduce their carbon emissions.
Our climate and environmental agenda will be an integral part on how we do business and a way for us to capture new business opportunities, enabling our customers to reduce their footprint and contributing to low carbon economies. Another component of our climate focus is to ensure the resilience of our physical network to mitigate continually increasing climate risks in the future. In Telenor, we encourage diversity because it's good business. We believe that we achieve the best possible decision-making when our teams reflect the society in which we operate. It's about creating services and solutions together that include different perspectives from our employees, from our customers, from our stakeholders, and from our partners. While diversity has been on Telenor's agenda for many years, we started the journey of systematically working with diversity in 2014.
In 2018, the diversity agenda was broadened from gender balance to focus on abilities, competence, nationalities, and LGBTI inclusion. By year end 2019, the percentage of women in senior leadership roles and in total workforce increased by 2% compared to 2018. The mix of nationalities in Telenor's senior leadership also diversified compared to 2018. During the year, most business units had two non-nationals in their management teams. We continued to set a strong tone at the top towards diversity and inclusion in 2019 through several initiatives. Recruitment and selection of senior leaders through the people committee, which is chaired by our president and CEO, is ensuring a diverse leadership pool. We have online training and awareness portal programs for employees and leaders. We carry out gender pay equality analysis based on job grades and organizational functions, and outlined action to close the gaps.
In senior leadership level, there were no material or significant gaps outlined in the roles. Our president and CEO signed the UN expression of support for LGBTI rights, reaffirming our stance on non-discrimination in the workforce. We continue to strengthen our Telenor Open Mind program in Norway, Sweden, Pakistan, and most recently in Myanmar. Telenor Open Mind is a one-year job training initiative for people with disabilities. We also promote diversity in the societies in which we operate. Telenor Norway and Plan International have launched the Girls Create Tech Academy, a mentorship program to inspire more girls to choose education and careers within technology. 30 mentees under the guidance of female Telenor Norway employees are part of the one-year program. Telenor's Khushaal Aangan initiative in Pakistan aims to empower Pakistan's female farmers with an interactive voice response information service on agriculture and health.
Telenor has set clear targets on diversity, anchored in our people strategy, with a broad set of initiatives to support this ambition. Based on the positive progress and broadened diversity and inclusion agenda, Telenor also recently defined new long-term targets that we will report on annually towards 2023. In summary, responsible business is and has always and will always be central to our business. In the three strategic pillars, they are interconnected, and this is how responsible business will impact the broader strategic focus and the ambitions of Telenor. Thank you.
Thank you, Anne. Well done.
Thank you.
We have time for if there are any questions on this topic before I will open up for more general questions later. Yeah, please. Maurice.
Hi, I'm just curious how you balance, as a senior leadership team, the financial commitments you give them to the market with these agendas, especially around climate change, for example. Surely you will encounter difficulties delivering it, which may result in hard choices as to whether you maybe miss on financial promises, but deliver on the climate change. How do you balance those? How do you intend to balance the relative importance of those when thinking about the sustainable agenda?
I actually don't think that's so difficult. For example, as Anne talked about, 16% of the CO2 emission we have in Asia is coming from diesel consumption. We have now 3,000 of our sites in Asia powered by solar panels. It is actually a very short payback time when we start using solar panels rather than using diesel. That's an example of that we are doing something with the way we change into more clean energy, and at the same time, it's actually good business and we are reducing the OpEx costs. You will see several initiatives of that. What Anne is talking about here does not compromise our financial targets. It's actually good business, and it goes hand in hand.
Thank you. It's Terence again from Morgan Stanley. Just trying to bridge the presentation on responsible business with some of the financial opportunities you have available. Do you think your new investments in things like fiber and 5G will open up potential new funding opportunities? I'm thinking maybe like green bonds, maybe open up a new investor base that could be interested more as Telenor as a ESG or SRI investment over time.
That was a very general question. Let me answer them with a general answer. We think that every company in the today world, and at least big companies like Telenor, you need to have an agenda on these points. That's actually required by you guys, as investors. You want to invest in companies that are sustainable. It's required by our employees, and it's required by the stakeholders at large. What we are trying to do here is not creating some new business models. We are just trying to basically use what we already have in a more environmentally friendly way. At the same time, everything we talk about on the supplier training, what we talk about on diversity, it's because it's good business. It's not because we just want to tick off the box that we want to be focusing at this is all.
I don't see any difference between having this focus and actually developing the businesses we have. We haven't talked about or even thought about what you said about the green bonds and all that. Of course, as Anne said, if we really want to change the way the power supply is in Asia, also 80% of the CO2 emission in Asia is coming from dirty grid power. If you want to change that you cannot do alone. That we need to do together with partners. We probably need to go into power purchase agreements to do that. In a way, that's good for us, but that's also good for societies if we can start producing more clean energy in these markets. Please. You have to answer the next question, whatever it is.
Fine, bring it on.
Okay. Just to follow up on the solar panel-driven base stations part, could you be more specific about the potential numbers? I remember that I read, I think in one of your previous reports, that you had 600 solar panel-driven base stations, if I remember correctly. Now it's 3,000. That might have been a while ago. How high is the potential out of the 105,000 you have, and how many of those are actually diesel driven, so it would help with solar particularly? Do you have any numbers on that? Given also the short payback time, you would surely then have quite high ambitions.
Well, as we're saying, we will double that figure. We have 3,000 now, and our plan is to double that up to 6,000. At that stage, how many are left on the base station that are not connected to grid? I can't answer now. I think what we're saying is that we are certainly addressing those opportunities quite aggressively, and we actually see that those are good business cases for us.
Any last question before I move on? Yes, please.
Hi. Thank you. You spoke about Telenor being one of the biggest foreign direct investors in these Asian markets. Is that recognized or is appreciated by society or the governments in these markets, or is that message need to be reinforced? Thanks.
I think we are recognized in those markets for our contribution. I think that enable us to have a good dialogue, to have interaction, both with our government stakeholders and all the stakeholders in those markets. I think, yes. On the general business, among the broader stakeholders, I think maybe it's something that we should be able to speak up a bit louder of as well.
Yeah, just add to what you said. We are definitely recognized for that. For example, Pakistan. We entered Pakistan in 2005, and we are still after now 15 years, the biggest European foreign investor in that country. Of course, that's recognized. That it's not enough. We also need to show that with that comes a responsibility, and that's why we are talking about connectivity and developing society goes hand in hand. Okay. Thank you, Anne.
Thank you.
We will move to some concluding remarks before I invite Jørgen on the stage. If I should summarize everything you have heard during the last few hours into one sentence, it would be to repeat our vision or our purpose that you have heard about several times today, connecting you to what matter most, empowering societies. That sentence is trying to describe actually what we do. It is about connectivity and our belief in making money out of connectivity. It is our belief of making even more money if we put services on top of that connectivity. It is about connectivity and developing societies, and that goes hand in hand. There was a question earlier today that there is nothing dramatic new in this strategy. No, correct. Why should it be?
I think what we have been doing the last three years is working, and that's why we are continuing with doing exactly that. In Telenor, we don't think that there is any golden eggs that we are not pursuing, and we don't think there is any easy quick fixes for the challenges that the telecom industry has. We don't believe in big words either. We frankly believe that this is about hard work and execution, and that's why I hope you have observed that all the leaders that has been on the stage today, they know their stuff. You cannot be a leader in Telenor today if you don't know the details. That's why Ruza is talking about that every single base station, 110 base stations, is a factory, and that she understands that as a CTO.
That's why you heard Azman talked about that every single 1 million point of sale is an opportunity for us to digitize. You need to understand what's going on at that point of sale. You heard Camilla saying that we have been traveling Norway and visited every single local community to figure out almost household by household, what is the replacement product when we then take away the copper legacy business. We have made a plan for that. That's the hard work. That's the execution I'm talking about. If I would like you to remember only three things from the presentations today, it would be about us being a growth company. Sorry. Yeah. We believe in growth. We believe that we are well-positioned to deliver on that growth. With the balanced portfolio we have in the advanced Nordic markets, but also in the Asian growing markets.
We believe that growth is coming from connectivity, getting more and more people to start using data in Asia, getting services on top of the connectivity in the Nordics. We also believe in the fixed and the fixed wireless opportunity that we see. This modernization is enabling us to do the growth. Modernization for us is not only about cutting costs, it's actually about making us able to capture this growth opportunity. The first thing I want you to remember is that we want to be measured as being a growth company going forward. The second part is that we want to continue to modernize our business. We believe that what you have seen the last three years, it's just the first step into that modernization. There is more we can do on digitalizing the customer journeys.
There is more we can do on digitalizing and modernizing our infrastructure. There's more we can do in changing our organizations, modernizing way of work. To do that, you have to work with mindsets, as Jørgen also talked about. You had to work with the operating model. You had to then also questioning some of the conventional wisdoms in the industry that has served you well in the past, but may not be a part of your future. We want to be seen as an industry leader in the way we modernize our core business. The third part is that we have now been sticking our heads out with some very concrete targets on what we want to do on our sustainability agenda, and how the responsible business is now an integrated part of everything we do, going forward.
Not just because we want to tick the box, but because we think this is good business, and because we think this is necessary for us to continue to be relevant in the societies where we operate. That's the summary, basically, of what we have been trying to go through today. You will then hear us in the coming quarters talking about this over and over again. How we are then developing our growth story, how we are pursuing and how we are executing on our modernization story, and how we also are doing on the targets that we have put forward today on our responsible business. Jørgen. We will then open up for Q&A.
I will start with, if there are some questions left here in the audience, and then I will open up. I think we have more than 200 people that is with us on video streaming or on the phone. We will start with the audience here. Please.
Thank you. This is not a time to ask a question for Norway, is it?
You can ask whatever you want.
I just want to ask Petter Furberg. He talked positively about 5G, but still adopting a tentative approach. Fixed wireless access, B2B, it seems as if the B2C mobile upselling opportunity is not rated particularly high. There are those who believe that there is tremendous revenue opportunity in B2B industrial application for the operators. Do you share that view? How do you position yourself considering the increased competition?
On the B2B or B2C?
Yeah, on B2B. Industrial applications, private networks, network slicing, et cetera. How do you prepare for this, and why perhaps not a bit more aggressive on the 5G side? Just a question for Jørgen, if I may. Jørgen, you told about the sustainability of cash flow covering dividends. You also said that spectrum payments will vary, necessarily. How much flexibility do you have to adapt your spectrum payment, say in Asia, if the investment environment remains less friendly at times? I mean, how much room for maneuver do you have?
You obviously need to protect the value of your business. Thirdly, and lastly, and then I'll go away. Sigve, last time we were here, we talked a lot about analytics and something our friends at DNA has spoken about before. We haven't really heard about analytics as an opportunity today. Has it turned out to be not what you hoped for, perhaps? Is there a reason we're not really hearing more about this? Thank you.
Wow. That will take me about an hour to answer that question, but let me try to do it shorter. Start with analytics. No, we are in the midst of executing on what is said three years ago on analytics. Analytics is what we use to measure profitability in our base station factories. I talked about that, and I showed a picture also of how we are looking at each one of the base stations using analytical tools in a very granular way. Analytics is what we use to use customer data for personalized upsell opportunity, both in Norway but also in Bangladesh. Analytics is the dashboard that Usman showed you. That it's a live dashboard where we are basically combining all data we get from the network, data we get from the distributors, and data we get from the customers.
We're putting that together on a live dashboard so that we can make fact-based decisions. All that is analytics, all that is AI, and all that is also machine learning. Everything we talked about on analytics, we do. What we are not doing, it's building analytics as a new business area. That we don't do. We're basically using this as an important part to digitalize the core business. We see limited opportunities for us to build some very new revenue streams on things that we basically, it's very far from the core business. To the 5G in Norway. We believe in opportunities in the B2B segment for 5G in Norway.
We believe that it's a connectivity part of that we build 5G network for connectivity, but we also think that there are some verticals that we can go a little bit higher up in the value stack than on the connectivity. As Petter said, we have 11 use cases now in Norway. We are testing this out with boats, ferries. We are testing it out in the maritime sectors. We are testing it out with the smart cities. We are testing it out with emergency services. We are testing it out with fish farms. Can we actually manage a fish farm completely digital? We have several use cases now, and that's why I said that the 5G rollout in Norway is going to be based on those business cases.
We are then taking the pilots now into business cases and then use those business cases to steer the 5G rollout in Norway. We think there's a big opportunity here, and there are different models with different partners. We want to do more than just the connectivity part on 5G. We also want to work together with partners.
Yeah.
How big that opportunity is? That I don't know. That's yet to be seen. At least we think that this kind of gradual business case driven approach is the best way that we can create value out of this.
I guess what we have tried to do is to talk about both topics, analytics and 5G, in the context of the customer and the business we are running.
Yeah.
Not as separate topics. There will be a 5G deep dive, but we are trying to ingrain that in our story, because we think that is the best way of really getting value out of this, whether it's analytics or 5G. What is the context of where we are and how we apply it?
Yeah. That's true.
what we're trying to do.
How you get first question?
You were talking about cash flow and flexibility and environment and demanding issues and defending the positions in markets in particular in Asia, in spectrum exercises. I guess we should come from two angles. We very much would like to maintain a solid balance sheet. We have said 1.5- 2, or with the IFRS 16, 1.8- 2.3, and we are there in the middle of that range. That is a place where we think we should be. We haven't said that we never can be above or below, but we have said that's the range we will seek to be within. From that perspective, we have flexibility to cater for spectrum auctions and things going forward. Yeah.
My question was more, how much flexibility do you have not to invest in these markets? I am not talking about stretching your balance sheet, the opposite, so to speak. If the investment environment climate locally is not conducive or unfriendly, how much room do you have to hold back on spectrum payments?
Okay. Flexibility in the spectrum programs, you're saying. Yeah, we are talking about what programs, what spectrum auctions we believe is coming forward, that we are talking about to the market. We are never commenting on what they will cost, how much we will spend on this, and hence I cannot take the opposite approach either. I'm not sure if I'm able to answer your question.
It's a little bit related to the spectrum question we got earlier today on Thailand. When we approached the auction now, the 5G auction in Thailand, we did that with both a rational view, but also a long-term view. We could have gone in there and aggressively bid for a 2.6 spectrum. We didn't do that, because we saw that there are other alternatives. We saw that we have 700 spectrum. We saw that we have a superb position now on 4G on 2.3, and we saw that 3.5 is coming. It was a rational view, and we took all this into account. That made us staying out of the 2.6 auction. Those are the type of discussions we have on the group level. There was also a question earlier today on how do we do this in practice.
Of course, it's based on input from the business units. In the end, it's Ruza and it's Jørgen and myself that make the decision together with the local CEOs, because we really think that we should be value driven also when it comes to this type of investments.
We did that in Thailand the previous round.
Exactly.
of 1,800.
Exactly.
Putting up investment in networks, and building new network as opposed to going in and renewing the same spectrum, simply because we think it is more valuable to do so, in every sense of the word. Including the fact that we might lose a percentage point or two on the market share. It is simply important to take this very thorough analysis and positions on this. There are more elements to that equation than only buying the next spectrum. We might be acting a little bit different than many of our competitors. We still do that very cautiously and carefully and thought through.
One more question from the audience. Yes, please. Over there.
Yes. Thank you. Jörgen Wetterberg from Nordea. I have a question on the device side. How do you view the supply situation for 5G devices now going into 2020? Is it a limiting factor for how fast you can pace your 5G rollouts, or is it not an issue? Norway and your other markets are not top on the list of the big flagship vendors. How do you manage that? How do you see that going forward? Thank you.
This is not an issue we spend a whole lot of time on. We think it will come fairly okay in place. First of all, we don't see any new significant issue on the handsets. It is the development that we have seen over time. It will come to Norway eventually, it will come to Sweden, it will come to other places eventually. The 5G development, it's not like we are pushing the door. We are trying to do the right things and build it out in the right sequence. The handsets will be there in time, and this is not a big issue for us at all. One more question, and then I will open up for the audience, please.
Henriette Trondsen , Artic. In Malaysia, there have been some media articles that you will explore a joint fiber infrastructure development with Telekom and Maxis. Any comments on that would be appreciated. Also in Pakistan, any conclusion on the spectrum here? Yeah. Thank you.
Yeah. On Pakistan, we don't have any more updates than we actually gave you when we had the fourth quarter. We are still in dialogues, and there is nothing new. We are implementing some operational changes to trying to stay competitive, but I don't have any updates there. In Malaysia, it's actually a government initiative. The government initiative is to see if they should build a consortium. A consortium between the operators, and that consortium could then be given 5G spectrum, and then roll out a 5G network based on that consortium. We have said that we could be interested, but it depends on how all this comes together. We are in the midst of the discussion there.
Thank you.
I think we should open up for the ones that are not here. Moderator, do you have a call?
Yes, sir. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. Our first question comes from Johanna Ahlqvist with SEB.
Yes, thank you. Two questions, if I may. The first one relates to your growth target. Obviously, you emphasize a lot that you are a growth company. I'm just thinking the growth target of 0%-2% over the midterm or the coming three years, when you talk about that you clearly expect some slight growth in the Nordics, and I would assume that you expect to grow more in Asia, given the inflation environment there. I'm just wondering, is the growth target cautious, or what am I missing here? That was the first question. Thank you.
It is 0 to 2%. As Jørgen said in his presentation, we don't guide within the guiding. It is our best estimate as we see it now, and that's why we are putting that out. I don't want to give any more flavors to that. Please.
Okay. You can't state sort of what you expect for Asia and the Nordics?
No, we are not breaking this up on the different pieces. We are only guiding on the group level.
Okay. A question on more related to ESG. I'm just thinking Myanmar, given the state of the country, I'm just wondering how you can maintain or make sure that you work according to sort of Nordic ethical rules in a company or in a country like that. Any comments would be very helpful. Thank you.
Yeah, that's a good question. We really thought hard about that before we entered Myanmar. I think that now after four, five years, I think we have been doing quite well. We have made it very clear to both the regulator but also to the government in Myanmar that there are issues that we are not tolerating. For example, illegal intercept. We are not letting anyone get into our network without following the right processes. We have made it very clear to the Myanmar government that we are concerned about what's happening up in the Rohingya area. We are also making it very clear to the government that our way of working, it's no acceptance of corruption. It's focusing on developing a supply chain and all that.
I would say that we were well prepared for this when we entered Myanmar, and I will say that our stand on this has been respected by the government. Here we are really working with continuous improvement. We are continuously improving the supply value chain in this country. We are significantly continuing to raise our voice to try to be a part of changing the way the government looks at some of those human rights issues. We feel that we are actually a part of changing the country. We do that with this taking step-by-step approach without compromising on any of our principles.
Okay, thank you very much.
Thank you. Our next question comes from Andrew Lee with Goldman Sachs.
Good afternoon, everyone. Thanks for taking the question. I had two questions, one on revenue growth and trying to follow up on the previous question. The second question was on the Asian consolidation opportunities. On the revenue growth angle, I take it you don't want to split and give us explicit guidance on the growth between Nordics and Asia, but do you see at least top-line growth in Nordics over the next two years?
Anything that can just give us greater confidence that the top-line growth that you see over the next couple of years is not just beholden to FX, and therefore, in terms of the free cash flow impact, could be wiped out. The second question was on the Asian consolidation opportunities that you mentioned through the course of today. Are you in any active discussions today on those consolidation opportunities, and do you see potential for this in 2020? Thank you.
Yeah. I can answer the consolidation, then you can take the revenues.
Yeah, fine.
Because I didn't like my answer on the revenues.
I'll repeat your answer. You go first.
Now, on the consolidation, there is no active discussions between ourselves and Axiata as of now. We stopped those discussions back in October. Was it September or October? We said back then, and we still say, that if those discussions may come again, of course, we will look at it. Right now, there is no active discussions.
Next time we answer this, we will say, "No comments. We don't comment those things." You shouldn't read more into it that it won't be any comments. It's the growth part. I think we just want to stick to how we have done this before and what is working for us. We believe in moderate growth for the company going forward. We have defined that as low single digit or 0- 2%, as we have called it. We give you that as the best indication of the development of the group in the three years period we talk about. It's not something we have put as a target. It's just an indication of where we think we will be, and then we will continue to give a guidance on a yearly basis. All that is as we have done it before.
We have indicated through the presentations this morning, tried to explain where that growth is predominantly coming from and the nuances and the differences between Nordic, represented by Norway, and Asia, represented by GP predominantly or Emerging Asia. It doesn't make much sense for us to break it down further. I think we just plan to leave it there. That combined with working on the modernization and efficiency element should give a good development in EBITDA. If we manage to keep CapEx where we are indicating it, around 15%, that should give also then a good development in cash flow. We have the element on spectrum.
Please, next caller.
Our next question comes from Nick Lyall with Société Générale.
Afternoon, everybody. It was two, one again on M&A in Asia, please, and one on towers, if that's okay. Just on M&A in Asia, I think you mentioned your focus was possibly on control and that there were too many operators. I'm assuming you don't mean in-market mergers as your market share is big, and you've tried and failed with Axiata. Is it right to assume that any deal now would have to be expansionary, so expanding into new markets in Asia? Secondly, again on towers, but this time in Asia as well, why can't your targets just be achieved with simple country-by-country sharing agreements or with tower sales? Are you targeting more than that, or is it just a more simple, straightforward country-by-country rationalization? Thank you.
I didn't get the second question.
No. Can we start answering the first one, and you can repeat the second?
I think the first one we got, yes.
In-market versus expansions in Asia, I think it was.
Yeah. Now I think we are in the no comment zone. What we said is that we think that the markets where we are in Asia, there may be some consolidation. We said that, of course, if the conditions are right, we will look at that. I don't think we want to comment more than that. The second question?
Yeah. It was on towers in Asia. Why can't your targets be achieved with just simple sharing agreements or with selling the towers? The Asian markets are pretty developed on TowerC o's. You seem to be suggesting you're going to do more than that, but it seems a little strange. Could you just expand a bit on really what you're thinking of in terms of Asian towers, please?
It's Asian towers.
Yeah.
I'm not sure, did you get the question yourself, Espen, or?
Oh, thank you. I said short version of that.
Yes.
Talk about what we think about Asian towers. It's 70,000 of them, so we think a lot about them all the time.
Interesting.
As I said, for us, it's important to apply an industrial approach to this. We are first now increasing the focus, the transparency around it, make them very visible, and put dedicated management within the same business unit context as they are in now, in order to advance the way we operate the towers. Then obviously, for a company with that kind of assets, taking care of the sharing ourself rather than let the tower company do that, is beneficial as a starting point to take out the synergies and the sharing effects. We will do that.
Eventually, whether we go in clear joint ventures in market, whether we embark on an Asian tower co, or whether we are happy with the way it is, well, that we will come back to and we will see and we will discuss. It depends on how things are developing. We put more emphasis on towers now, but we do it the same way as the rest of the things we have talked about. We take it step by step and get more advanced as we run.
I think we have one more caller, and then I will turn back to the audience here.
Our next question comes from Ulrich Rathe with Jefferies.
Yeah, thanks very much. I have two questions, please. The first one is on the financial goals. Could you maybe talk about where you see gross margin develop? You're talking about top line, you're talking about OpEx, missing gross margin. I assume you won't give guidance there, but can you just talk about trajectory on the indications where this is heading? The second question is on Norway. You talked about the fiber land grab from the alternative network built there, and also the market share loss that you're facing partially as a result of that. Is there a possibility, or do you see potential for consolidating the alternative fiber networks there at all? I mean Telenor consolidating these fiber networks, or is this simply out of the question from a political standpoint or regulatory standpoint or otherwise? Thank you.
I can take the last one. You take the first one. I think there are regulatory hurdles that make it difficult for us to consolidate some of the big fiber players in Norway. Of course, if that would be possible, this is an opportunity we will look at. What we are focusing on now is not doing that, but is actually to continue to roll out our own fiber network. I think we are quite busy on doing that for the coming few years, couple of years, because there is more land grabbing that we can take.
We are guiding on subs and traffic revenue. It's the most valuable part by far of our revenue basket. We are not guiding on gross profit or gross margin. I don't think we should do so either. There is one element that you probably are aware of, and that is that the story that Camilla and Petter told today includes, of course, a little bit of a shift on the gross profit side. COGS, cost of goods sold, is different in the new world than with the legacy fixed setup. It will have a little bit of an impact on the profit that we bring to the EBITDA from that.
At the same time, what you saw from the curves they showed, we are almost able to maintain the EBITDA level, before we talk about all the other things that Norway is doing on the revenue side, on the cost side, including things they can do on the cost side because we are simplifying the legacy activity within Fixed. It's all a put together picture, and it actually looks, to me, better now because of also the success so far on fixed wireless access and the speed we have than I was, should I say, afraid of a year ago when we decided to do this. I don't want to give more guidance. We are very clear to focus on the important part of the revenue line, and that's also why we are guiding on it.
Do we have any other questions here?
Yes. Thank you.
Any questions in the audience here?
We have another from.
Yes, please. We take a question here from phone first.
Okay. Our first question comes from Usman Raja with Citigroup.
Hi. Usman from Berenberg again. Let's say we fast forward three years now to 2023. Like you said, you're an incumbent now without any legacy. Your mobile network's fully automated. What does that mean? I guess as analysts and investors, we're probably entering uncharted territory here in terms of what a mobile operator looks like or what a telecom operator looks like without any legacy and fully automated. The way I'm thinking is that you still got a big headcount relative to, let's say, an over-the-top kind of player today. Do you have any kind of, I guess you can't give any financials around it, but do you have any rough idea of how you can picture an operator that can exist from that kind of paradigm?
Yes and no. I think three years is a long time, but this is exactly why we now are embarking on this next level of modernization. Modernization for us, as you know, it's to digitalize the core business. With that comes more modern infrastructure, more modern organization, more modern or digitalized customer journeys, and with that, also smaller organizations. This is something that we have seen coming for the last three years and something we are continuing to develop. We strongly believe that the operator that is able to do this quickest are the operator that will be most suited to actually handle that situation, whatever that will be in three, four, five years.
I guess another way to ask it is, you're investing quite a lot right now in terms of reinvesting all of the savings you're driving into modernization. I guess in three years' time, the big cost required to modernize are basically finished then, right?
It's finished.
From today's standpoint, it looks like it would be predominantly finished given you're onto a fiber/5G infrastructure, you're fully automated on mobile. There would be a huge chunk of costs that potentially just drop away after three years, or is that not?
Yeah. It's impossible to answer your questions. What we are doing now, it's day by day, making sure that we are in a position, both when it comes to the cost base, when it comes to flexibility, when it comes to focus, to handle whatever situation that will come in the future. I think that we have to leave it at that. Should we have a caller again, moderator?
Yes, sir. We have one last one from Adam Fox-Rumley with HSBC.
Thank you very much. I wonder first if I could ask you to reflect a bit on the balance sheet in light of the large contingent liabilities that you're exposed to. Maybe if you could comment on how that factors into your capital allocation decisions and guidance over the course of the next few years. A very quick second question. I wondered if you were factoring in any changes in the Norwegian mobile market shares over the three years or changes in the way they're evolving. Thanks.
I just heard balance sheet. I'm sorry, I didn't hear what part of the balance sheet you were asking about. Can you repeat?
I think it was the leverage, if that is hampering our investment appetite.
Was it the leverage? I assume, and tell you, sorry, that it was the leverage.
It's just one thing that is different from Telenor than lots of other European incumbents, is that you have quite large contingent liabilities compared to others. You're at risk of various fines across your businesses, and I wondered if that changed, particularly as some of those may get resolved over the course of the next few years, how you're thinking about the balance sheet as a consequence of that.
That's a typical question for you, Jørgen.
Yes, it is. We are, first of all, having the policy of 1.8-2.3 debt- to- EBITDA. That is not including forward license obligations. We include that in the measure and in the ratio when we pay for spectrum. You need to take that into consideration. We do. In addition, we believe that it is prudent, being in the Asian markets, which are more volatile than a pure European play, to be a little bit more restrictive than the rest of the industry. Besides that, we think the industry has burdensome balance sheets. We think the industry is actually too rough on how they are borrowing up and taking liabilities on their balance sheet. This is where we are.
We believe this gives us ample flexibility, both to participate in the spectrum and other things when needed, and also to maintain a strong relationship and good access to borrowing with the banks. I don't think I have any more comments to it.
I think that emptied the questions from those of you that are not here.
There was a Norwegian market share in there.
I didn't get that.
Yeah. Okay.
Any more questions here at Fornebu? Okay, that ends the plenum discussion. Øystein, we have one more thing here.
Yes, we have. Thank you, Sigve. I think that ends the plenary session here at Fornebu. I think it's now time to activize the audience a bit, so we have prepared a challenge for you. We have put together four breakout session, and what you need to do is to first choose three of those which you like to participate in. I can list the four. We have the 5G era in Finland, hosted by Jukka Leinonen. We have Telenor Sweden, hosted by Kaaren Hilsen. We have a breakout on copper decommission, hosted by Camilla Amundsen. We have our 5G approach, which are hosted by our CTO, Ruza Sabanovic. First you need to choose which three you like to attend. Then you need to find the location of the breakout session, and we have prepared a small map.
We have also to help you find the location, we have placed the name of the breakout session out on the signs above the rooms. I think we should manage. Thirdly, if all goes to one breakout session at once, you then need to see that these are full and then circle to your next on your list, and then circle back again afterwards, because we haven't actually any organized system of this. I think we will manage. We start the breakout session in, let's say, five minutes. Okay? Thank you very much.