Good morning, everyone. Or should I say good afternoon? Today I'm presenting our second quarter results from Bangkok. I'm here in Asia to discuss business opportunities and status with our Asian business units. In the second quarter, I'm very pleased to see that both revenues and EBITDA growth is back. We see strong development in our Nordic portfolio and also good customer update, customer additions and growth, especially in Bangladesh and in Pakistan. This is resulting in a 2% organic subscription and traffic growth. I'm particularly happy to see that we are able to deliver such strong results despite the continued pandemic impact here in Asia. The revenue and subscriber growth is also implying that part of the marketing activities which were reduced to a minimum last year is coming back. However, our focus on modernization and digitalization continues, resulting in an organic EBITDA growth of 4%.
As you all remember, in the beginning of July, we announced to sell our operation in Myanmar and exit the country. Last quarter, I stated that Telenor would strive to continue our operation and serve our customers at the best of our ability. Since then, we have unfortunately experienced a further worsening of the situation in Myanmar. It therefore turned out to be impossible for us to continue our operation. Exiting Myanmar was a very tough decision, but it does not change our ambitions in Asia. I'm coming back to both Asia and Myanmar later in the presentation. To the results. Let me start with our home market. We are now at peak run rate of the copper decommissioning program with an approximately NOK 220 million S&T revenue drag every quarter.
We are only 18 months away from actually being, and I think, the first modernized and future-proof incumbent in Europe, having migrated all services over to a modern and efficient network. The NOK 1 billion annualized revenue drag that Norway has to replace is done through growth within fiber and fixed wireless access solutions, but also from continued growth within mobile, coming from both subscribers, upselling, and value-added services. In the quarter, Norway delivers a mobile S&T growth of 1.5%. This is coming from a 4% ARPU growth, of which around 50% of that growth is coming from upselling on speed, and some of the popular speed-based unlimited products that we have launched in the market, and the other 50% is coming from value-added services on top of the data connectivity.
On the fixed side, the fiber and FWA growth of 28% is almost now compensating for the legacy decline of 41%. In parallel with the focus on revenue growth, Telenor also continue its modernization journey. This is giving an underlying 1% reduction, and yielding consistent EBITDA growth over the last six quarters. Let me move to the rest of the Nordics. I'm pleased to see that Finland and Denmark continue to deliver very strong results, and that we now see a stabilization in Sweden. Finland delivers continued growth from speed upselling to 5G and also from subscriber growth. The 5G population coverage that DNA now has is around 43% of Finland, and we have in the quarter added 12,000 new mobile subscribers. Finland also delivers strong growth on the fixed side with an 8% S&T growth from new fiber and cable subscribers.
Denmark continue to execute on their modernization programs. I've been talking about that for several quarters, and it's really impressive to all of us. I'm very pleased to see the 18% EBITDA growth now coming out from Telenor in Denmark. That's not bad in a continuing very competitive market. This comes from a lot of hard work and also a strong modernization drive, resulting in a 2% growth in mobile subscription year-on-year and a 7% OpEx reduction. In Sweden, we finally see a stabilization of the S&T revenues. We have had challenges in Sweden for several quarters, and I've been saying that our target has been a stabilization during the second quarter, and that is now happening. This is coming from fiber and TV revenues offsetting the ARPU decline on mobile. Sweden also delivered on this fourth consecutive quarter with positive net adds.
We added 22,000 new subscribers, mostly on our Vimla brand, also in the large enterprise segment. As Telenor Sweden now has successfully migrated customers to its new IT system, and we are ramping up our 5G rollout also in Sweden, we believe we are better positioned than ever to deliver value for our customers. On that note, the value for our customers. A year ago, you may remember that we announced an establishment of what we call a Nordic product house. The ambition was to develop value services on top of the data connectivity across the Nordic markets, and building on the experience we have from Norway of this. We see how this now is driving the ARPU growth in Norway, as I mentioned. We have now launched also these services in Denmark. We launched that a month ago.
We call it NetSikker or Net Security. We have also launched a similar security offering in Sweden. Early indication shows positive reactions from our customers to this product. Moving to Asia. In Asia, we see an S&T revenue growth despite the ongoing COVID situation. On this slide, we show you the same graph that we have shown you several quarters in a row to give you an overview of the effects that comes from COVID and market lockdowns. We believe that our Asian operations have adapted well to the situation, and as we learned to operate in this challenging environment. This is why you see that we are able to bounce back rather quickly and get into growth again.
The modernization programs that we have been running with our Asian business units now for the last few years has made our Asian companies even more robust during the COVID pandemic. This is a result, then, of the digitalization of the core business that we have talked about before. Another example of that, in Grameenphone and in Pakistan, we have seen a continuous growth in digital recharge. Remember that this growth shown here on this slide is coming on top of the increase we had in the second quarter last year when the market first closed down. We see a 15% increase in digital recharge in Grameenphone and an almost 30% in Bangladesh. We also see strong revenue development in Pakistan and Bangladesh from data and subscription growth. We added 1.6 million new subscribers in the quarter.
The smartphone penetration in these two markets is now around 40% of the customers. We also see data users still below 50% of our customer base. If you combine these two things, you will see that there is still a long way to go before all our customers are using data. In Thailand and Malaysia, the top line is stabilizing, supported by targeted market initiatives that we have done, but also government stimuli packages. In the last couple of weeks, strict lockdown measures have been imposed in both Thailand, Malaysia, and in Bangladesh to prepare for the third wave. Therefore, the uncertainties related to the duration of the pandemic continues in these markets. We know that historically, Asian economies are quicker to bounce back. As I already mentioned, we also have a business model that enable us to quickly adapt to lockdowns, but also to re-openings.
To Myanmar. As you all remember, the 8th of July, Telenor entered into an agreement to sell 100% of our business unit in Myanmar to the M1 Group. When we announced in the last quarter the impairment of Telenor Myanmar, we underlined that our future presence depended on development in the country and our ability to contribute positively to the people of Myanmar. Unfortunately, since then, we have experienced a further worsening of the situation. We have had some very difficult dilemmas between ensuring the safety of our employees versus also complying to regulatory orders that we have got from the military authorities that we find challenges the premises to how we can do business. The dilemmas made this therefore impossible to stay.
The decision to exit was not based on business or financial consideration, but it was based on our commitment to responsible business and our need to comply with those laws we are regulated by. As I said already, the exit from Myanmar has been a very difficult decision, but it proves that Telenor, we are not willing to compromise on our ethical standards and policies as well as international laws. Thinking back to 2014 when we entered Myanmar, we do not regret our entry. Telenor entered Myanmar because we believed that the access to affordable mobile services would support the country's development and growth. I must say, looking back, I'm proud of the achievement that our team in Myanmar has done since the start in 2014.
They managed to build a state-of-the-art network in a record time and supported an unprecedented growth and service uptake of modern data services in the population. In addition to this being a profitable business, we have, through our responsible business agenda, made a difference in the country, with our focus from day one on raising health, safety, and security standards, our no corruption policy, transparency, and strong support of universal human rights. I still believe that we have contributed positively to the people of Myanmar. As head, to exit Myanmar was a tough decision, but it does not change our Asian strategy. Our Asian strategy is built on these four beliefs. We believe in growth in data usage, and we are well-positioned to serve the data revolution in our Asian markets.
The second quarter results support that, where especially Bangladesh and Pakistan see data revenue growth fueled by hybrid bundles to bring new customers into the digital world. We also believe that digitalization has leapfrogged into Asia during the COVID crisis and will now transform how we run our operations and distribution model. We also see a growing digital ecosystem in all our Asian markets. In addition, we believe in a digitalized community opening up for new business opportunities. This is both in the B2C segment with the value-added services on top of data connectivity as we now start seeing in the Nordics, as well as new business models in the B2B segment. Our market position across our Asian markets are mostly in the B2C segment.
With new technology like 5G, AI, cloud computing, or edge cloud, we believe that the B2B opportunity and the potential services in this sector also can go beyond data connectivity. We have, therefore, the last two years, prepared ourselves for that, and setting up dedicated organizations to capitalize on our competencies and experience that we have with us from our Nordic markets to further develop and take a position in the B2B segment. Over the last quarter, we have seen growth in all our Asian business units in the B2B segment, although it's still a small part of the overall S&T revenues. A year ago, we established a hub in Singapore, a team on the ground in Singapore. We did that because our approach is a hands-on execution model with then a regional focus.
We have during the year experienced that the Asian hub and the management team on the ground takes us closer to the markets, enabling a strengthened governance and stakeholder dialogue, and also active shareholder approach. Lastly, our strategy aims to strengthen our position in the markets where we are present. This we do to take our synergies, create scale, and strong operations positioned for future growth. You have seen this intention mirrored in the announcement of the merger in Malaysia. As I also have stated several times before, we will look for similar structural opportunities in other markets as well. At the same time, we are also exploring larger structural options for our combined Asian portfolio. Tone, with that ends my intro. I now will hand over to you for the financials. Please, Tone.
Thank you, Sigve, good morning, everyone. This has been an eventful quarter in many aspects. In June, we signed the agreement with Axiata to merge Digi and Celcom. This will create the leading telecom operator in Malaysia, which will benefit the shareholder in the form of material synergies. Furthermore, as Sigve also talked about, we announced the exit of Myanmar in the beginning of July. This decision was not based on financial considerations, but rather on our commitment to responsible business and also our need to comply with the laws we are regulated by. As a result of the Myanmar exit, the Myanmar operation will now be treated as a discontinued operation in our profit and loss statement and as asset held for sale in our balance sheet. Previous periods' financial records have been represented accordingly. Now to the second quarter performance.
In the quarter, we deliver strong financial results driven by healthy customer uptake in Bangladesh and Pakistan in combination with the solid Nordic performance. Organic S&T revenue and EBITDA increased by 3% and 4% respectively, and were supported by a 1% OpEx reduction. Free cash flow for the period ended at NOK 2.1 billion. Due to the strengthening of the Norwegian kroner against most currency since the second quarter last year, we see material effects impacts year-over-year on our reported figures. I will come back to this when I take you through the net income later in the presentation. Let us now have a closer look at the group figures, and I start with revenues.
As said, the organic S&T revenues increased by 2%, partly as a result of easier comparables, but also from continued strong market execution in Bangladesh and Pakistan, resulting in steady customer intake and revenue growth. Since last year, these two operations have increased their subscriber base by 10% and 8% respectively, and which is supporting the revenue development. In Pakistan, we also see a material increase in data usage, further lifting the ARPU by 3%. In Finland, we are pleased to see a 3% subscriber and traffic growth coming from mobile upselling and 8% growth in fixed revenues. We also see a continued solid performance in Denmark as a result of both a resilient ARPU and subscriber growth. In Norway, and as Sigve also said, we have reached what we believe is the peak impact of the copper decommissioning.
The current run rate equals almost NOK 1 billion in lost revenues in one year, or - 41% as you see on this graph. The S&T revenues excluding legacy grow by 5% this quarter, driven by a continued growth in fiber and fixed wireless access, but also the 4% growth in mobile ARPU, ending the quarter with a stable S&T revenue in Norway. In Sweden, as you know, we have been targeting a stabilization during the second quarter. Despite the continuing tough competitive pressure we see in the market, we are delivering a stable S&T this quarter. This stabilization comes from a 2.5% increase in growth in fiber and TV revenues, which is offsetting the ARPU decline we see on mobile. In Malaysia, subscription and traffic revenues increased by 2%, mainly from growth in prepaid revenues, but also supported by government relief initiatives.
In Thailand, the positive momentum in subscriber trends continues from the previous quarter. Pressure from downselling with the postpaid segment led to an ARPU dilution and a negative revenue development. Looking at the OpEx. In the second quarter, Telenor delivered yet another quarter with year-over-year reduction in OpEx. The reduction came on top of a very strong quarter last year, which showed a 12% decrease, as you might remember. Last year, we said that around NOK 900 million of the OpEx reduction that we saw in 2020 was related to COVID effects, and primarily then within sales and marketing cost. As stated back then, some of these costs are expected to come back when revenue comes back. This quarter, we saw opportunities in the market to grow the revenue, and we have increased the marketing spend.
Despite both tougher comparables and also, as you see, higher sales and marketing costs, we still manage to keep the overall OpEx below last year's level. The increase in sales and marketing spend is primarily coming from our Asian footprint. This is more than compensated by cost reductions across salaries and personnel, and operational and maintenance, in addition to some support from the deconsolidation of Tapad and Value, and also lease capitalization. The Nordic region continues its strong cost management this quarter, as you see on the graph. However, we also know that the DNA figures are also aided by lease capitalization. Then to EBITDA. In the second quarter, we see a solid EBITDA contribution across most business unit, driven by steady customer growth and also modernization and cost management.
In Bangladesh and Pakistan, we see strong growth in subscriber base, which is supporting the revenue development, and this is partly offset by increased spending related to market activities. However, we still see a solid flow-through to EBITDA. In Finland, we see 12% growth in EBITDA. As I said, this is aided by lease capitalization. Adjusted for this, the underlying EBITDA growth in Finland is 5%. Denmark delivers another strong EBITDA quarter with 18% growth from a combination of revenue growth, but also solid cost management with the 7% OpEx reduction. In Norway and Sweden, EBITDA increases by 2%, and this is primarily driven by gross profit improvement and OpEx reductions. As I just said, the S&T revenues remained stable this quarter. Thailand sees an EBITDA decline of 1% in the quarter.
However, this is positively impacted by a couple of one-off effects, and excluding these items, EBITDA decreased by 5% as a result of the pressure on the top line, as we've seen. In Malaysia, EBITDA decreased by 4%, or 1% if we exclude one-offs from last year. This is based on that the revenue growth could not fully compensate the higher OpEx and the increased subsidy spend due to handset sales, which is supported by the government relief initiatives. Net income to equity holders of Telenor was NOK 2.2 billion in the quarter, which is a decrease of NOK 2.2 billion from last year. This is where we see the material currency effects I mentioned in the beginning of my presentation.
If we look at net financials, we see a material negative contribution of NOK 1.9 billion from the strengthening of the Norwegian kroner compared to the second quarter of last year. Adding to this, the reported EBITDA was down NOK 0.8 billion, or a reduction of 6%. This is, of course, then compared to the organic growth of 4%. In the second quarter, CapEx amounted to NOK 4.4 billion, or a CapEx to sales ratio of 16%. The investments were primarily a result of 5G rollout in Norway and Finland, the fiber rollout in Norway, and also capacity and coverage expansion in Thailand. In Norway, we have a strong CapEx momentum on fiber and 5G, and we see additional investment opportunities. As such, we believe Norway will end the year with a CapEx of close to NOK 6 billion.
The increase in CapEx of NOK 0.7 billion from last year was primarily driven by capacity and coverage expansion in Thailand, but also the higher investment level in Bangladesh. You remember, there were very low investment level in Bangladesh in the first half of last year. Free cash flow before M&A in the second quarter was NOK 2.1 billion. This is a reduction of NOK 1.9 billion compared to last year. The reduction was also here primarily coming from FX resulting in the lower EBITDA, but also coming from higher taxes paid and negative working capital development. Leverage ratio in the quarter increased by 0.2%- 2.0%. This was a result of payment of the first tranche of this year's dividend to the shareholders of Telenor ASA, and also the deconsolidation of Myanmar. These two elements contributed approximately half each of the change in the leverage.
Now I would like to give you an update on where we stand on infrastructure. Telenor has an industrial perspective on towers and infrastructure. We believe we can improve the operations of these assets and capitalize synergies by increased focus. To achieve this, we have for the last six quarters run a passive infrastructure operations in Norway, and we are now, as we have talked about before, also setting up tower companies in Sweden and Finland in this quarter. On June 1st, we announced a Nordic tower holding where our Swedish CEO, Kaaren Hilsen, will take the helm and further develop the strategy and the portfolio. We intend to report Nordic Towers as a separate segment from the first quarter of 2022. Now to the outlook.
As you know, Myanmar was taken out of our outlook in the first quarter and is now classified as discontinued operation and asset held for sale. If we look at the rest of the group performance in the second quarter, this came in strong with solid performance both in the Nordics and in Asia. Although the pandemic still represents continued uncertainty for our Asian operations, we still expect a gradual recovery to happen during the second half of the year. With the first half of 2021 behind us and a strong set of numbers in the second quarter, we adjust our expectations for the full year 2021 to a growth in the S&T revenues of 0%-1% and a growth in organic EBITDA of 0%-2%.
Coming from a low CapEx level of 13% last year, we enter this year with the expectation of CapEx to sales in the range of 15%-16%. The deconsolidation of Myanmar and additional investment opportunities in Norway brings our expectations for the group to the higher end of the guidance range. By that, I believe we are open for Q and A. Moderator, may we have the first question, please?
Our first question today comes from Peter Nielsen of ABG. Please go ahead.
Yes, thank you very much, and morning, Tone, and good afternoon, Sigve, I guess. I have a question related to Norway. I first commend you on your strong performance in the Nordic region, and then Sigve, I'd just like to follow up and take advantage of your local presence in Asia. Sigve, when we met the last time in person at the capital markets day early last year, you did outline that the modernization in Norway, the copper decommissioning, would imply a negative EBITDA impact and EBITDA growth during the peak years, one or two years. As you highlighted at the beginning of your presentation, that has not materialized, at least not yet. What has changed here, Sigve? Have you been able to do this more efficiently in Norway? Are the benefits coming early? Are the costs coming later?
Can you elaborate a bit on why you're doing better with the overall cost impact of the modernization in Norway than anticipated? Then just, Sigve, if I may follow up on the outlook as described by Tone, it does imply accelerating service revenue growth or further improvements in the second half of the year. The chart you showed with service revenue trends in Asia on page six would suggest that it's going the other way at the moment, momentarily in Asia. Your local impression is, are you still confident that we will see a continued recovery, as Tone said, in Asia in the second half? Thank you very much.
Yeah, thanks for the question. I think the question went to me, Tone. Let me try to explain. Yes, I am confident with everything Tone said. We don't do any guiding. We did the guiding. As you rightly pointed out, we see now that especially in Malaysia and in Thailand, and also in Bangladesh, the third wave is coming back. That's why we had that dip on the curve. Also, as you saw in the previous quarter, quite quickly, we have been able to come back to growth after the first lockdown. That's why we believe that the full year revenue growth should be between 0%- 1%. I cannot give you more comments into that than that. Of course, there is a lot of uncertainties here.
We do have that operating model which enable us to actually adjust quite quickly when we have those market lockdowns and come back to growth. To your first question, I don't recall I said exactly what you referred to. I think what I said was that some of the modernization programs are also dependent on investments. We do invest now in new IT infrastructure. For example, as we just did in Sweden, we do also invest in actually the capabilities we now have to develop new type of value-added services. I said that some quarters you will see that we need to invest and focus, and then get the results later. I may have said that don't expect us to continue just to drive down cost for every quarter, because it could also be some quarters where the cost increases.
I think I said something like that. Looking back now, we are doing exactly that. We are able to continue those modernization programs. During last year, I will say that we even accelerated those programs in what we call the no-touch operations. We are already trying to run Telenor remotely, but also in terms of digital customer journeys or digitalizing the customer contacts. I'm quite confident that these programs will continue to give us efficiency gains going forward as well.
That's great. Thank you.
We will now take our next question from Andrew Lee of Goldman Sachs. Please go ahead.
Yeah. Good afternoon, Sigve, and good morning, Tone. I had one question, which was just on your comments around exploring the larger structural options in Asia. Could you just maybe give a bit more color on what you mean by structural? Obviously, there's synergy opportunities and value creation from that, but does portfolio simplification come into the discussion there? Number of positive investor reactions to the simplification we've seen so far. If we are allowed a follow-up, just the follow-up question will be on the TowerCo. Just wondered if you could share any more insights into how you think about your tower operations. We've seen Telia sell a minority stake in its towers recently. Would you only consider minority sales and then stop short at that? Would you consider selling or giving up majority control? Thank you.
Maybe I should take Asia, Tone, and then you can take the infrastructure. I don't want to give you a lot more comments to the Asia story than what I already did. I think what we have said now several quarters in a row, that we see a need to strengthen the position in the market where we are. That's exactly the rationale for what we are trying to do in Malaysia. There may be similar in market opportunities in other markets without being more specific than that. I also said in my presentation there that we will look at also are the structural opportunities for the combined portfolio we have in Asia. What those opportunities are, I don't want to speculate in that, but we are looking at that as well. I think I want to leave it with that comment.
Please, Tone.
Yes. We have seen, of course, that the development on the tower and the infrastructure, as we've seen in Europe over several years, has over the last year also reached the Nordics. We have had our agenda of strengthening the operations, increasing the tenancies for the Norwegian part, and now we are expanding this to the rest of the Nordics. We do have, as I said, we have an industrial perspective on towers. We believe we are strong operators of the infrastructure assets and the towers. Going forward, we will evaluate how we can take this industrial perspective going forward.
Thank you. Just what does that mean in terms of ownership? Just no decision made as yet, I take it.
Yeah. We will continue to develop our strategy, and there is no decision taken on that as of now. That is why I'm confirming our industrial perspective, but there is no other decision than that taken.
Thanks very much. Thanks, both.
Our next question comes from Maurice Patrick of Barclays. Please go ahead.
Yeah, morning. Morning, guys. Thanks for taking the question. If I look at your comments around subsidies and SAC and marketing, where you indicated you sort of spent more to drive growth in the Asian operations. I'm just wondering how you think about the direction of SAC and marketing spend for the rest of the year into the year ahead. I mean, on the one hand, you could be cautious and say, Well, let's focus on free cash flow. On the other hand, maybe there's this untapped growth as people come out of COVID, you can capitalize on where maybe some of your competitors don't. I guess that applies to Asia and also the Nordics as well, even though you called it Asia.
I guess your thoughts in terms of how your desire to or ambition to push for more growth, far higher SAC spend in the rest of the year? Thank you.
Yes. Maybe I should take that, Sigve. We have updated our guiding. As you see, we are forecasting a 0%-1% growth for the year within subs and traffic. That also, of course, requires some investments in sales and marketing. We believe that we have, over the last year, had a good model for when we hold back and when we infuse. We see that this quarter, that we increased the sales and marketing spend by approximately NOK 200 million. With the continued uncertainty on the COVID situation, and particularly in Asia, we think that we will continue to manage in this way going forward. However, we also want to, as I say, capture the growth when we see the opportunities, and that will imply that we need to spend sales and marketing funds.
Beyond that, I cannot guide on OPEX, which is outside our EBITDA and S&T outlooks.
Thank you.
We will now take a question from Terence Tsui of Morgan Stanley. Please go ahead.
Thank you. Hello, everyone. I just had a question around Sweden, please. I thought it was interesting that you made some comments that most of the growth in mobile is coming from the fighter brand, Vimla. The price points of Vimla are so much lower than the premium brands. I was just thinking twofold. Firstly, how confident are you that these new customers that you've gained on Vimla are here to stay in the longer term? Secondly, do you have any plans to price Vimla upwards to more of like a mid-market fighter brand, a bit like Comviq that Tele2 has? Would it continue to be at the low-end fighter level? Thank you.
Sigve, should I start and then you can fill in?
You can start, Tone.
Yes, you're right that the increasing customers are coming from more lower ARPU customers, both within the B2B and within Vimla. We see that in the decline in the subs and traffic for mobile. We will, of course, not talk about our pricing strategies or our market strategies, but we are continuing to fight in the market, both within the main brand and also in the fighter brand, Vimla. Now that we have modernized our BSS stack, we believe that we should be able to also provide additional values to our customers to a larger extent in the main brand. We will maneuver in those two segments as we see based on our position in the market.
Do remember that Vimla is not only a fighter brand, it is also 100% digital brand, with a very smooth digital customer journey. We see that there is a segment in Sweden that also see the benefits of such a digital offering, and we are going to strengthen that further.
Okay. Thanks for the color.
We will now take a question from Ondrej Cabejsek of UBS. Please go ahead.
Hi, thank you for taking my question. I have two follow-ups actually, if I may. One on the Asia situation and related to your outlook. Clearly, you don't want to guide within guidance, but in terms of Asia in particular, going into the third wave, you are implying an improvement in S&T revenues in the second half, while flagging that Asia is going into a third wave and then some local lockdowns. Can you maybe describe in detail how well equipped the companies and the populations in these countries are to deal with the lockdown, and why the impact should be say lower this time around than in the previous two waves. That would be one follow-up, please. The second one, just on OpEx. I know you've already spoken about some of the commercial costs, especially probably ramping in the second half of the year.
Still, if we look at the year-over-year trends and last year, you bring a lot of the emergency measures, you took OpEx down by 8%. If we take out the deconsolidation effect of some of the businesses that you disposed of, you're still flat year-over-year. Would you be more comfortable now saying that maybe a large part of the 8% run rate from last year would be sustainable? That would be the second follow-up. Thank you.
Yeah, I can take the first one, Tone, and then you can take OpEx. Now, the situation in Asia, of course it is uncertain. The facts is like this. We see not a real lockdown situation in Pakistan. Pakistan continues, as we saw it in the second quarter. As of now, of course we don't know, but we don't see any lockdown measures. In Bangladesh, we do see that. However, we also see, as I also said in my intro, how quickly our customers are adapting to new ways, to keep their services. They are quickly adapting then to digital recharge, for example, not being dependent on the telecom outlets. They are also using data more, actually, in lockdown situation. It's our ability to do that adjustment. We see Thailand and Malaysia.
The most impact in these two markets is that the tourists are not coming back and the migrant workers are not coming back either. We had hoped that would have been different in the beginning of this year, but with now the additional lockdowns, that will not happen. Again, also in these two markets, we see that we benefit out of some government stimuli packages in both Malaysia and in Thailand, and we also see that customers are adapting to it. That is the reason why we then decided to do and changing our guidance. It's on the back of that. I just need to say again that this is uncertain what the effects will be, how quickly we will come back.
We have also learned how to handle this type of situation and what type of marketing activities we can do, even though the markets are locked down.
Yes. On the OpEx, as you rightly point to, we are entering now, of course, tougher comparables. We also said, as I said in my presentation, that some of the cost we saw last year, which were directly related to COVID, will come back. We've seen this quarter that sales and marketing activities have picked up, and particularly in Asia. We have also said that the modernization program can vary and fluctuate the effects between quarters. Beyond that, I will not comment on what we forecast for the OpEx going forward, because that will, of course, depend on the market developments. What I can say is that we have found a model which we think is very good when it comes to handling the situation we're in.
We are running our modernization agenda as we have been for several years, and that agenda is running as planned also for this year.
Thank you. If I may, a very short follow-up for Sigve. The way you rounded up that list seems like the main reason why you're upgrading guidance today is the outlook in Asia. Is that a correct reading of what you said?
Well, you are trying several ways. Again, when we look into the second half of the year, that's why we do that upgrade from flat to revenue development to 0%-1%. That's the basis for the upgrade. I cannot give more guidance what is behind that.
Okay. Thank you very much.
We will now take a question from Ulrich Rathe of Jefferies. Please go ahead.
Yeah, thank you. On the strategic options, does that include footprint expansion? That would be my first question. The second question is, you said we're not changing strategy in Asia. It's all as it was before. Surely some parameters change when India doesn't work and the Myanmar didn't work, and obviously there were in the sort of further past situations where you were forced to reduce stakes in Malaysia and Bangladesh, and then we have that also longer term sort of issue in the Ukraine. Would you not say that the assessment of risk for these sorts of projects is changing when you consider strategic options in Asia? Thank you.
No, I think you cannot compare India and Ukraine with Myanmar. Let me start there. Myanmar was actually a very profitable business for us, as you all know. We were quickly going into a positive cash flow generation. We have a very good EBITDA margin, and all went very well until the military takeover February 1st. That's a very different situation than the two other markets that you mentioned. I think that what we see now, when these markets are getting more penetrated, we see the potential for the next growth wave. I think I want to call it that. That potential is then that people are moving to data consumptions. Also the B2B opportunity that I said. To capture those new growth opportunities, we need to strengthen our presence. That's how you should look at what we are trying to do in Malaysia.
Not that we are going from a 49% ownership that we have in Digi today into a 33% ownership in a merged entity. You should look at that merged entity then, okay, being able to take a clear market lead in the market, well-positioned then for the future growth. That's behind what I said around the structural opportunities. It is to strengthen the position in the markets. It's not an exit, it's not a deleveraging, it is strengthening our ability then to take our fair share of that coming growth. That's why I said that we want to strengthen our position in our present markets, and then I also said that we want to, at the same time, look at larger structural opportunities in our combined Asian portfolio.
You have to take those two statements, and then I cannot give you more clarity on what those options will be and our exact thinking on this. That is the focus that we have.
No, that's very clear. On the footprint expansion, something of the sort, I understand that sort of in the bigger picture could imply footprint expansion, of course, if you do larger deals, I understand that. The idea of Telenor moving into, I'm just pulling out of thin air here, Indonesia by itself or anything of that sort, would you go as far as saying that's not really what we're thinking about here?
I just want to repeat exactly what I said. We want to strengthen the position in the markets where we are present. In addition, look at the potential of combined structural options where we are combining our portfolio. I don't want to say anything more than that.
I understand. Thank you very much.
Our next question comes from Frank Maaø of DNB. Please go ahead.
Yeah. Hi, good morning and good afternoon. My first question goes to Sigve, and then I have a follow-up, if I may, which might be answered by Tone perhaps. Let's see. My question, Sigve, is regarding Thailand, kind of following up a little bit on also the risk in Asia topic. We've seen that government representatives this year have been backing quite ambitious, even perhaps unrealistic targets set up by the newly merged national telecom entity, which previously was the CAT and the TOT. Correct me if I'm wrong, but we have still not seen any permission to use 5G new radio on the 2.3 gigahertz band that you are deploying widely in Thailand, which you're basically using a 5G technology with massive MIMO in that band, but you're not allowed to call it 5G yet or software upgrade it to 5G in that band.
Given that is now a quite important marketing topic, at least in the high-end market in Thailand, high-end parts of the market there, that your competitor is exploiting, and you've not yet received any permissions for that. It's been over a year that that should have been granted. Given that that should have been rather positively and straightforward grant to make from the government and TOT, to what extent are you concerned with regulatory relations in Thailand? That's my first question.
That's a long story, Frank. The attempt to merge CAT and TOT has been around for 20 years, and the ambition to be a retail player has also been around for 20 years. They've never been able to do that in practice. I'm not so worried about the combined entity when or if they are able to combine that to actually go and take a retail position. I'm not so worried about that. To your question. Currently we are now using the 2.3 frequency and also the 2.1 to deliver superb 4G services. The throughput we are having on those two frequency band is good. In addition, we have now rolled out, I think it's 9,000 sites on the 700 frequency, and that is really helping us in rural areas.
It does also help us to see the 5G symbol on the mobile phone in the more urban areas. The government has all along been clear that the 3.5 frequency band will be cleared up during the second half of this year. That's why we hope that that will then come into an auction during next year. If we get that band, we are not dependent on the 2.3 and to do something on 5G on that. I do see that we will be well-positioned to hopefully pick up some spectrum in the 3.5 band. At the same time, we are continuing the discussion with TOT and with the regulator to utilize the 2.3 also for 5G services. The long answer to your question, but I'm not so worried actually about the network position we have in Thailand.
In a way, we are also being helped by COVID. I don't really see that 5G is picking up with the consumers. Of course, it is in advertising and in claiming. With the consumers, I think we are actually quite well-positioned with the combination we now have with the 700 and the 2.1 and the 2.3.
Hey, great.
You have another question also.
My follow-up. Yeah, it was perhaps aimed at the fact that you are deconsolidating Digi to create a stronger company and a market leader in Malaysia. To what extent, given the fact that that resulted in a 33% owned entity, to what extent does that affect your ability to reap economics of scale in sourcing now, given that also Myanmar is now exiting the pool of the Telenor procurement company in Singapore? Do you expect vendors to approve of the frame agreements being amended to include the 33% affiliate, CelcomDigi, and to what extent do you see economics of scale being affected in sourcing a national?
Well, I don't want to give you the detailed answer on this. In the discussions or the negotiations we have with other party in Malaysia, this is a topic that we are discussing. How to benefit out of both the two groups, both Axiata Group and Telenor's procurement scale outside Malaysia, such that we can take the scale benefit and actually also apply that in our combined assets in Malaysia. I'm not able to give you more detail on it than that, Frank.
Okay, thanks.
We will now take a question from Usman Ghazi of Berenberg. Please go ahead.
Hello. Thank you for the opportunity. Just got two questions, please. Firstly, I was hoping if you could update us on the regulatory kind of market analysis in Norway, if there's been any positive signals or just timing regarding that with respect to the broadband regulation. Secondly, I guess this is a question to Sigve. Sigve, I can see that, I mean, the government stimulus programs in Thailand and Malaysia are definitely helping the revenue trajectory. Could you help us understand how long these stimulus packages are in place for, and what happens once, presumably these are not indefinite, so what happens when these are removed? Would you expect the subscribers that have been gained on these kind of cheaper packages or subsidized packages, how do you end up retaining them once the stimulus runs out? Thank you.
I can start with the second one. I don't know how long that will be going on, but it is different from what it was in the beginning. In the beginning, we had to give free services without any compensation to boost the data consumption with customers. That being both in Thailand and in Malaysia, and I'm talking about one and a half years ago. That has then changed into subsidy programs, where mobile customers get money from the government to boost the usage. What we see here is that that money is actually being used to boost the data usage for those customers beyond what they used before. Hopefully, when those programs are over, customers are more used to the data consumption than they have, they will then continue with the type of behavior that they had before those programs.
I don't know how long time it will last. On your first question, are you referring to the wholesale regulations on our copper network?
Yes. You know what I mean, the idea that you could offer wholesale on utility fiber network to expand your coverage area in Norway.
No, there is access regulations in Norway, and we are regulated on all different type of access. Mobile access, fiber access, and then copper access. Those regulations are already in place. The issue we have with the regulator now is that we would like to completely move out of the copper business within 18 months. We hope that we can manage then the wholesale customers we have on the copper network such that they also can be migrated out before the end then of next year. The regulator is also asking us to do that actively. If not, we may have a long tail that we need to continue to support even after the end of next year. There is no change in regulations here. The regulator has said that. Yeah. Please.
No, sorry. I was going to ask, I mean, there was some, I guess optimism that Telenor might not be regulated on fiber going forward. Is that no longer a possibility or is that still in discussion?
What did you say? Optimism around fiber access?
Yeah, that Telenor, because of the lower market shares in fiber in Norway.
Oh, I see.
might not be regulated on fiber.
Oh, yeah. No, well, that's the dialogue we have with the government that I've had for a long time. We are trying to tell the government that you cannot regulate us on fiber with the market share we have in fiber on, how much is it? 23%, 24%. The same way you are regulating us on 50% almost market share mobile. That's a dialogue we have with them. Our argument would be that you should not regulate us as a sizable player in fiber. You should also look at regional regulations here, because in some of the regions we are almost not present at all, and the fiber position is taken by retail players. This is an ongoing dialogue we have with the regulator. There is no solutions as of now.
Thank you.
Thank you very much.
Adam Fox-Rumley of HSBC will ask our next question. Please go ahead.
Thank you very much. I had a question on Myanmar first of all, which kind of extends into the group. I imagine it's been an incredibly stressful time over the course of the last couple of quarters, and it must have taken up a lot of management time. I was wondering, if that's the case, where are you now going to reallocate your attention? Is it to the Asian growth opportunity? Secondly, there's a very helpful slide in the appendix, which I'm not sure I'd seen before, which is the breakdown of the fixed line connection methods across the Nordic markets. I wondered if I could just have an update on your thoughts on hybrid fiber coax networks. We're seeing some European operators going as far as overbuilding that technology. It's obviously in Finland in particular, quite a big part of the fixed network.
Just wondering how you were thinking about that in the context of the fiber networks that you also have. Thank you.
To your first question, yes, since February 1st when the military took over, this has taken management attention and time, of course. All the way from me through Tone, not least with the team we have in Singapore. It's still taking time, I must admit that we are still not out of this. Now we have to focus on getting the necessary regulatory and competition approvals for the sale, and at the same time manage it on the ground. We have now a separated team that is handling the Myanmar and the development there, such that the line organization now can spend more focus on the other business. I think we now have found a good balance here to do exactly that, and to make sure we are not losing any opportunities in other Asian markets or being in Nordic markets.
On the second question, Tone, do you have something there?
I would just like to say, I'm pleased that you find the information that we provide between the MDUs and the SDUs useful. I think you should follow up for the detailed questions with the investor relation after the call.
Okay, thanks very much.
I believe that ended the session, Sigve. There appears to be no other callers. By that, I guess we say thank you and have a nice day to the callers, and a nice afternoon to you, Sigve.
Thank you so much to everyone. Thank you.
Thank you.