Good morning, everyone, and welcome to the presentation of Telenor Group's results for the first quarter, 2018. My name is Marianne Moe. I'm head of Investor Relations, and I have the pleasure of guiding you through the session here today. As usual, the results will be presented by Group CEO, Sigve Brekke, and Group CFO, Jørgen Rostrup . I hope you all have the presentation material available. And as usual, there will be a Q&A session after the presentations. We expect to finish in about one hour. For media present here at Fornebu, there will also be a separate media session after the session here in the auditorium. More about that later on. So without much further ado, I leave the floor to Sigve Brekke, our Group CEO, who will take you through the highlights of the operational performance in the quarter and our strategic agenda.
Thank you, Marianne, and a very good morning to everyone, both the one present here in Oslo, but also those of you that are following us on the video streaming. I'm pleased to present our Q1 figures. It's a solid quarter, 1% subs and traffic growth. I'm especially satisfied now that after two years we are coming back in Thailand and Malaysia. I'm also satisfied that we are keeping our strong market position in Norway. A little bit slow start in Pakistan and Bangladesh. However, we see now that we are coming back to a good growth month-over-month, and I'm optimistic for the rest of the year on the revenues.
We added 2 million new subscribers in the quarter, most of them from Emerging Asia, and it just shows what we have said before, that the penetration is continuing to increase in Bangladesh and Pakistan. We have still several million customers that do not have even access to basic services. A 10% increase in data subscribers, and we see the data growth and the data demand happening in all our business units. And a 10% EBITDA growth, visible results from our transformation and our efficiency agenda. We have also, in the quarter, taken new steps on our portfolio simplification, coming to a leaner and more focused Telenor.
This is a slide I showed you in the last quarter, and it's a slide, giving some guidance on our 2018 priorities, or as we like to, to call it, our must-win battles. Now, four months into 2018, I'm pleased to see the progress on these main battles that we have to win. First, our digital transformation journey continues. We had a 7% cost reduction in this quarter, and we are continuing to digitalize our core business, focusing on digitalized customer journeys, IT, and network. I'm also happy to see that the digitalization, meaning taking our customers over to digital channels, is improving our customer satisfaction. We said that we are going to focus on maintaining our market position in Norway, and that's exactly what we have done.
We see that this quarter, we are maintaining the revenue, the mobile revenue market share, and we also are improving our product position through increased rollout. We said that we are going to focus on the regulatory and the spectrum situation in Thailand, and that's also exactly what we have done. Yesterday, we finally signed the important agreement with TOT, giving us access to 60% of 60 MHz 2.3 spectrum. With that, we can significantly reduce our spectrum risk, and we are well prepared now starting using this spectrum and roll out the services. In the last quarter, we also talked more about our digital transformation, and I wanna also take this opportunity to give you a quick walkthrough on some of the main programs that we are having.
Starting up in the left corner, common delivery centers in Asia. We talked about that in the last quarter, and in the first three months of the year, we have now three operations that we have been onboarding on the network side. It's Malaysia, also Digi, it's Grameenphone, and it's Myanmar. And the ambition here with this common delivery center is to deliver a better and more efficient service through common and shared resources. And as the slide shows there, our estimate is a 20%-30% saving out of a baseline of NOK 2.6 billion. This is on the network side, and then we're also going to move with the same concept on the IT side later. Business simplification, we started in Sweden.
That's up to the right-hand corner in the slide. We started with this in Sweden last year, and Sweden was a front runner in testing this out. And what it basically is is to go through all the customer-facing activity that we have to see, can we simplify the way we approach our customers? And we have seen a significant cost saving coming out of that... but we have also seen an improved customer perception coming out of that. We reduced 80% of the price plans through this exercise in Sweden, and we also saw then an NPS, or Net Promoter Score, increase of 15%. So as I said, it's a good combination of cost saving, but also improved customer satisfaction.
In the last year, we have established a procurement company in Singapore. The aim was, as it is, to cover 75% of all external spending through a centralized purchasing organization, and based at Singapore. Since we started this in 2017, we have already seen that contracted savings of more than NOK 700 million, and this is just the beginning of it. Most of this is coming from CapEx, but some of it is also OpEx savings. Sorry. Oh, it's working now. Can you help me with this one? Go back to the slide. This one, yes. Not that one, the previous one. This one.
On the digitization journey, as described in the right-hand side here, in the right corner, we are able to reduce the costs, but also to improve the customer perception. One example, we took down 40% of the call center traffic in Digi from 2015 and 2017, and the NPS is increasing. Most of the digital customer channels we now have, we do it through our Telenor app. We increased that with 11 million users during last year. And to take one example, when we had the Olympic Games in Norway, Telenor Norway was able to add 200,000 new MyTelenor users through a campaign we run every time Norway won a gold medal.
As you know, that happened quite, quite often during the Winter Olympics. We are also rolling out a contextual multi-engine in our Asian BUs, helping us to improve market efficiency. All in all, these activities are examples on how we are driving our transformation agenda, and also then the background for an OpEx reduction of 7% year-over-year. Jørgen will talk more about the details on that. In our capital markets day a year ago, we talked about our transformation and efficiency agenda. We talked about how we want to simplify and focus Telenor, and we talked about the need of doing that to make sure that the management attention and our financials are put to where most value can be created. This is exactly what we have done.
As you know, we decided to exit India, and we are now very close to a final agreement with Bharti. We decided to rearrange our online classified portfolio, selling out of Latin America and then buying up our stake in Asia. We decided to sell out VEON. And in this quarter, as you also know, we decided to sell our CEE assets, and we also have partnered up with Ant Financial in Pakistan, allowing us to develop further the 20 million financial service customers we have in Pakistan. All in all, this allows us to focus now our portfolio in two main geographical areas, Scandinavia and East Asia, and with this, where we can create the most value, because that's, this is where we think the growth is.
I believe that the new and more focused Telenor is very well positioned for the future. We have strong market positions in all our markets. We have operational control in all our business units, which allows us to do what we think we are best at. And with this, we have a strong portfolio, which is a solid platform to create value. In our Emerging Asia portfolio, Bangladesh, Pakistan, and Myanmar, our focus is to still grow voice, still add new customers, and is to continue to take market share in a growing market before it's fully penetrated. It will continue to roll out our 4G services, and with that, monetize data demand. Still only 30% smartphone penetration in Pakistan and Bangladesh.
And now when we see the smartphone prices coming down, and Jørgen showed me this morning, a $20 smartphone coming from India, we see that, the mass market can allow-- can afford having a smartphone, and that is then enabling a data growth. And we will also, in Emerging Asia, focus on selective, digital positions, as we do with financial services and the deal we signed with Ant. In Developed Asia, the cluster, which is Pakistan, Malaysia and Myanmar, and Thailand, we continue to invest and strengthen our 4G networks. We continue to transform our business operations from typical Asian price-sensitive prepaid market into digital data, postpaid markets. And, as we have talked about before, remember that the postpaid customers gives us 3.5 times the ARPU of a prepaid customer.
So actively migrating a prepaid customer into postpaid and data bundles, pays off. In Developed Asia, we will also focus on, increasing our efforts on the B2B and the SMB market. I've got a new clicker today, that's why this is. Can you bring me back again? Sorry for that. In Scandinavia, we saw a 50%-60% increase in data demand, and we used that demand, to, do digital upsell, and with that, increasing the ARPU. I will talk a little bit about, that later. We continue to increase our fiber rollout in Norway. We now focus more on IoT as an integrated part of our, business segment, and we continue to look at efficiency gains across our Scandinavian units. Developing Telenor also mean screening inorganic opportunities.
We believe that in the coming years, we will see good opportunities within our core business and our core geographies. We will, however, continue to be selective, disciplined, and focused on value creation. So with that, let me go through some of the operational highlights. Starting with Norway. In Norway, we saw another quarter with ARPU growth, both in mobile and fixed, and with a very good cost control. In the mobile market, we saw a 60% increase in data usage year-over-year, and as I said, we take the opportunity then to upsell our customers into richer data bundles, and with that, we are able to grow the ARPU in the mobile segment to 4%. In the business segment, we see that we're getting paid for a superior network position and good service offering.
And with that, we are growing our customer base in the business segment. We are also taking a leading position on IoT, and we are also deploying Narrowband IoT network in, on all our 4G base stations by October this year. On the fixed side, we are continue to focus on fiber growth, and we now have more than 200,000 active fiber connections. We saw a little bit lower growth on fiber in the first quarter that than we planned for, due to a long and cold winter in Norway, but we think we will catch up in the, in the coming quarters. On the fixed side, we also see ARPU increase from customers going from lower speed connections into, into fiber connections.
Our operation in Norway continued to deliver on OpEx improvements, -6% this quarter, and the last month, -5%. Most of the savings comes from digitalizing the sales, digitalizing marketing, and digitalizing customer care, but also our reduced personnel costs. So all in all, I'm very pleased to see the 7% EBITDA growth in Norway in the first quarter. Moving to the neighboring countries in Scandinavia, both Sweden and Denmark are showing good progress on efficiency and costs. Both operations are reporting an 8% decrease or decline in OpEx this quarter. In Sweden, we have seen revenue growth now many quarters in a row, and this quarter as well, with a 1% revenue growth. We see the growth coming both from consumer mobile, and we also added 8,000 new fiber connections in this quarter.
Being true, the business simplification model, as I explained earlier, we see positive effects from, from the cost side. And we will continue to make sure that we are simplifying our business model, such that we can continue also to increase the customer satisfaction. Denmark remains being a very competitive market. Despite that, we are able to continue our turnaround or transformation program, reducing complexity and costs, and they're also increasing customer satisfaction at the same time. I'm pleased to see a 1% growth in mobile subsidy traffic in Denmark this year, this quarter, and a 20% EBITDA margin, which is actually the highest Q1 EBITDA margin we have had in Denmark for the last five years. Then going to Thailand.
The last two years, dtac has focused on transforming its business from a price-sensitive prepaid market into being a postpaid data operator. We are also focused on digitalizing the customer journeys in Thailand. And with that, we have stayed away from aggressive prepaid competition and aggressive device subsidization, subsidies on prepaid. And they have actively migrated them prepaid customers into postpaid. And this is paying off. We now see a 6% ARPU growth, and 54% of our revenues are now coming from postpaid. I also want to take the opportunity to give some credit to our employees in dtac. They have been through a very challenging two years... where there have been uncertainties around spectrum and the future regulatory situation, and there's also been uncertainty with the transformation that we have done.
But our employees, our organization, has stood firm and to deliver on the transformation, which is now starting to pay off. In dtac, we also see now that we have a good cost management, coming from digital sales, marketing, and care, and also, of course, from reduced regulatory fees. 21% growth in EBITDA and a record high 43% EBITDA margin. Then on spectrum. Yesterday, we announced that we now have signed the final deal. We are well prepared, and we will launch a limited coverage based on the 2.3 GHz band very shortly, and then roll out aggressively in the coming months. Access to the 2.3 GHz spectrum will give us superior speed and also deal with capacity in the data network.
With this, we are in a much better situation up against the concession end and upcoming spectrum auction. We are also working with CAT to secure access to tower and fiber when the concession ends. Then Malaysia. The same transformation as I talked about in Thailand, we have done in Malaysia the last couple of years. Moved from legacy voice and SMS in prepaid, and especially in the migrant segment, into more internet, data, and postpaid bundled business. And now we are seeing some results. This is the first quarter in a very long time that we are back to revenue growth of 2%, and I'm very pleased by that. This is then coming, this growth is then coming from a double-digit internet revenue growth, both on prepaid and postpaid.
For several quarters now, we have focused on investing into our 4G network, and this has given us a leading LTE on 4G position. We also now have a strong spectrum portfolio in Malaysia, after we secured the 2.1 spectrum in this quarter. And as this slide shows, we now have a solid spectrum position in all the four bands. That, with that background, we were able to add 400,000 4G customers in this quarter, taking our overall 4G base to 6.6 million customers. And we also focus on the efficiency program, growing our EBITDA with 4% and a strong margin of 46%. Moving to then the Emerging Asia, starting with Bangladesh. Once again, Grameenphone is the growth engine in Telenor.
We added 2.1 million subscribers in Grameenphone in this quarter alone and are now passing 67 million customers in our operation. Data traffic grew 6%. As I said, a little bit slow start in January and February, but when we now see the month-over-month growth going to March and April, I'm quite optimistic on the growth perspective for this year. Grameenphone is well positioned for taking a position in data growth. 30% smartphone penetration, data usage is still low, low number of customers that actually are using data, and those that are, are doing that on smartphones, so the actual usage is low.
In this quarter, we were able to make the existing spectrum that we are sitting on, which we have operated 2G and 3G on, technology neutral, so we can use that for 4G. In addition, we also bought 5 MHz 1800 spectrum that we can use for 4G. We will now deploy 4G at more than 4,800 base stations, which we are aggressively rolling out in the coming months. In addition to that, we will also focus on supplying the market with affordable 4G handsets. And with the Grameenphone brand, the superior distribution and network position, I see that Grameenphone is well positioned for this year also to be the growth engine in our portfolio. Pakistan and Myanmar. Both these markets, we see that we are able to maintain a strong EBITDA margin.
We have good cost control, and we are digitizing our customer journeys in this market as well. We believe that we are able to maintain the market share. Pakistan added 1 million new subscribers, more or less the same as we see in Bangladesh, where still there are millions of people, of course, that don't even have access to the basic services. We grew our revenues by 2%. However, if you adjust for the new tax that we got in this quarter, the underlying revenue growth is more similar to what we saw in Bangladesh, with mid-single-digit growth. The same as we saw in Bangladesh, we started the year a little bit soft, but month-over-month, we are coming stronger into March and April.
We are also in Pakistan, focusing on rolling out our 4G network and position ourselves for the increasing data demand. And with this, we foresee a good growth prospect for Pakistan for in 2018 as well. In Myanmar, competition remain intense, and all the three competitors are still continuing to position ourselves for the new entrant. The new entrant had launched, but it's not really a commercial launch yet, so it's yet to see the effect of the market. We saw the prices being reduced in the second and the third quarter last year, which is also impacting the ARPU this year. However, we see now a stabilization in ARPU coming from a growth in the number of unique users.
In these markets, we are measuring their unique users on a daily basis, seeing how many days a month they are using us versus then our competitors. I think we are well prepared for the real entry of the fourth new operator. We have the widest distribution, we have the leading brand, and we have the best network. We just had an Ookla test showing that we actually are demonstrating 20 Mb ps in our network in Myanmar. So let me then sum up. It's a solid quarter. We've continued to execute on our transformation and efficiency agenda, and we are well positioned to also continue the data to meeting the data demand with data growth in all markets. And with that, I hand over to you, Jørgen.
Thank you, Sigve. Let me see if we pass communications test on the new hardware. So we mark this quarter as a good set of results. We would characterize it as a promising start of the year, in particular in terms of profitability. Core revenues grow. We are successfully attracting new subscribers and data users. We believe this will drive growth on the longer term. Again, it is very encouraging to see the efficiency agenda developing and yielding strong results. 7% OpEx reduction year-over-year is an important achievement for us, and it is also important to mark that we see improvements within all cost areas in the group. Profitable growth, cost reductions, results in a 10% organic EBITDA growth, so all in all, a good start of the year. Now I see what you're saying, Sigve.
Like you said, during Q1, we made important progress in terms of simplifying and developing our portfolio. Before I go into details on the quarterly results, let me quickly recap on how the recent announcements in the CEE operations, as well as the financial partnership that we have established in Pakistan, is impacting our P&L and operational metrics. Here illustrated by the effect that we will now present based on 2017 numbers. These units that I'm talking about will, as of Q1, report numbers, be reported as discontinued operations, and we have therefore represented historical figures accordingly. As you can see, representing the new Telenor for 2017 gives us a revenue baseline of NOK 112 billion, an OpEx base of NOK 40 billion, and an EBITDA of approximately NOK 45 billion.
Then remember that the structural changes also impact the number of employees, which now, should I say technically, goes down to around 22,000 people on the continuing business after the demergers. Then also for the quarter, in addition to the new reporting structure, starting from January 1, 2018, we have implemented a new accounting standards for revenue recognition, IFRS 15. In short, the impact of this accounting standard is marginal for Telenor. I will get back to that when we come to the P&L slide, the income statement slide later on. But in the coming slides, the comments will be made on the old accounting standard. This is how we, for now, are following up the business internally in Telenor.
Like previous quarter, we report a decline in total revenues, but growth in the core revenue base, the subscription and traffic revenues. Reported revenues declined by 2%, explained by lower interconnect revenues, low margin device, and global wholesale revenues. In total, the decline on these revenue elements were around NOK 450 million. In addition, there are currency movements that impact the growth negatively with some NOK 240 million. More importantly for us, subscription and traffic revenues from mobile, fixed, and TV services—as I said, our core revenues grew by 1%, roughly in line with the growth rate Q1 last year. And then although the overall growth in core revenues are stable year-on-year, there is a significant shift, as you can see, in the growth mix.
We are very encouraged to see that our two largest regions, Scandinavia and Developed Asia, show improved growth rates compared to last year. In total, these two regions contribute with around 70% of total service revenues. On the other side, growth has declined, as Sigve talked about for Emerging Asia, both due to the development in the market in Myanmar and a slower start in Pakistan and Bangladesh. And again, remind what Sigve said, it is good to see that the month-over-month improvement in Bangladesh and Pakistan during Q1, and we also expect to see stronger growth in the coming quarters in these markets, in particular, second half of the year.
Those familiar to Telenor and what we have talked about the last year and a half will know that the efficiency improvement has been, and still are, one of the elements on top of our agenda. We believe we made significant progress on this in 2017, and I'm very pleased to see that we have further progress in 2018. In Q1, we reduced OpEx with around NOK 700 million or a decline of 7% on a FX adjusted basis. This, we believe, is a strong number. And then we should bear in mind that we have the easiest comps in 2018 in first quarter, because the effects from the program came into our P&L last year from second quarter onwards. But we will continue this program.
There is no mistake about it, this is a result of very, very high focus on it and a lot of work from an entire organization. It goes throughout our business. We see solid contribution from Scandinavia, Developed Asia, and not least from initiative implemented here at corporate functions and within digital business. OpEx in Emerging Asia increased on an average of 4% in the quarter, primarily due to fueling growth within 4G and strong subscriber intake in Bangladesh. Then for me, it's also important to follow where we are getting these reductions. How does it look on a cost area per cost area basis, to make sure we strike a good balance in how we do this? It's good to see that we are relatively balanced in the results for this quarter.
All cost areas contribute to OpEx reductions in Telenor in the first quarter 2018. So then, this profitable growth in the core revenues that we talked about, combined with the strong efficiency improvements, give us a 10% organic EBITDA growth in the quarter to NOK 11.3 billion. And as you can see, we have a very good trend on the EBITDA margin development as well. It delivers 42% EBITDA margin or four percentage points up from same quarter last year. This EBITDA growth is supported by the fact that seven out of the nine business units deliver organic EBITDA growth, with consistently strong margins across most of our markets and operations.
We see solid development in Scandinavia and in Developed Asia, while EBITDA growth in Emerging Asia is more, should we say, muted, due to investments that we're making, in fueling the market growth and the market situation in Myanmar that Sigve talked about. I would also like to mention the good performance in broadcast, with 9% EBITDA growth, and also significant improvement of close to NOK 200 million, from other units, which includes corporate functions. Let me just pause a little bit there. Other units is also a big activity area with us. This is not typical elimination effects. These are real effects, improvements, efficiency, and more concentrated agenda, both in corporate functions, in corporate staffs, in expert functions, in our digital business, but also throughout several smaller businesses that is part of the Telenor family.
These are fundamental and lasting improvements. CapEx. We spent NOK 3.1 billion in Q1, around 11% of sales. This is what we could characterize as a somewhat low activity level compared to what is a normal run rate, and is explained by predominantly two elements. It's been a tough winter in Norway this year, cold, a lot of snow and ice in also first quarter of the year, which has delayed some of the fiber rollouts. There is no change in our program. It's just been hard to dig those, do the digging to lay out the fiber.
In Thailand, we have held back a little bit on the investments, waiting the clarity on the 2.3 GHz agreement with TOT, and now we will speed up that process again. So we expect activity to increase in the coming quarters, including fiber Norway, 4G rollout in Bangladesh, and then the densification in Thailand. And we maintain the outlook for the year, with the exception that we are adjusting for the divestment in Central Eastern Europe. So we have talked about revenues, EBITDA, and it's a quite straightforward income statement this quarter. Couple of elements, you see other items of a negative NOK 176 million. That is primarily related to workforce reductions, NOK 91 million in Norway, NOK 38 million in other businesses, group functions, and then spread around on other units, the rest.
Then you see a depreciation increasing NOK 600 million year-on-year, primarily explained by Thailand, related to end of concession agreement. This will come down significantly in fourth quarter 2018. Net financial income and expense on a quarterly basis is positive by almost NOK 2 billion. There are two main categories in that change, except from the underlying and normal numbers. It is NOK 1.2 billion, approximately related to VEON, and NOK 1.2 billion related to currency effects. So, VEON is NOK 345 million in dividend, and NOK 825 million non-cash gain on financial derivatives related to the exchangeable bond. And then there is NOK 1.2 billion related to currency effects on liabilities held in other currencies than Norwegian kroner. Solid operating results.
The positive contribution from financials is a net income of NOK 5 billion, or 3.35 NOK per share, which is approximately a 20% uptick compared to first quarter last year. Then, as you can see on the right-hand side of the slide, the effects from the new accounting standard, IFRS 15, is marginal for the group. This gives us a cash flow for the quarter of NOK 2.6 billion, up from NOK 2.2 billion last year, predominantly then due to EBITDA and lower paid CapEx, more than offsetting the higher spectrum payments this quarter, primarily related to Bangladesh and Myanmar. The balance sheet continues to be solid, with the net debt of around 0.9 times EBITDA.
Net debt decreased by NOK 4.7 billion in the first quarter, then due to the NOK 2.6 billion in free cash flow and the currency effects of NOK 1.5 billion, explaining the most of the rest of the part. And you know the maturity profile, we have an upcoming maturity of $500 million in May, that we think we will handle without going in the market again. Then we have tried to be very transparent and clear on our shareholder remuneration ambitions and plans. We want to have attractive shareholder remuneration. This is important for Telenor. It's a priority, and we believe 2018 will be a record year in terms for Telenor, in terms of distribution to shareholders.
As previously communicated, the board is proposing an ordinary dividend for 2017 of NOK 8.10 per share, which represents a 4% growth in dividend compared to 2016 numbers, and a total payout of NOK 12 billion. Then, as communicated when we announced the disposal of CEE operations, the board is asking the AGM in May for a mandate to pay out a special dividend of NOK 4.40 per share, following completion of the transaction. Including the special dividend, this means that the total dividend payout this year will amount to some NOK 18.5 billion, which is an all-time high in Telenor. In addition, we completed the market part of the 2017 buyback program in February, and the proportionate purchase for from the Norwegian state will be done mid-2018.
And then, as you know, the board is also asking the AGM in May for a new 2% buyback mandate, which is roughly NOK 5 billion at current share price level. All in all, this could bring our total shareholder remuneration in 2018 up to a number between NOK 23 billion and NOK 24 billion. When it comes to the outlook, we maintain the revenue guidance on 1%-2% organic growth in subscription and traffic revenues. And then while still early in the year, the EBITDA outlook has been narrowed from a previous 1%-3% to now 2%-3% growth organic, reflecting a good start of the year and also increased visibility in Thailand with the recent signing of 2.3 GHz that Sigve commented on.
The CapEx outlook has been adjusted down, then, by NOK 1 billion to NOK 17 billion-NOK 18 billion to reflect the disposal of Central Eastern Europe operation. As I, yes, I already mentioned, the CapEx plans for the rest of the year for the continued operations are unchanged. Solid start of the year, we believe. Lot of work to do, and we will keep up the speed, but we believe we are creating a solid platform for future value creation. Thanks a lot, and see you at Q&A.
Thank you, Jørgen and Sigve. We will now, as usual, start with taking questions from the audience present here at Fornebu before we open up for questions from the conference call participants.
Hi, Hovig from Carnegie. I'm sorry, but I have to ask you about your capital structure again. Seeing in light of your, your peers, Telia and, and, and Telia seemingly being comfortable with a net debt to EBITDA ratio of two to three times, I'm or we're just wondering, what are you seeing on the investment horizon that we're missing, sort of explaining why you, strive to have such a strong balance sheet?
Yeah, I think the balance sheet is one issue. The plan for remuneration is a related issue. So let me just repeat what we have said, and then we don't have much more comments to it. We have been very clear and transparent on this. We have talked a lot about it, and we have, since January last year, communicated a plan of increasing dividend and to use special dividend and extraordinary dividend on a case-by-case basis. So far, we have used or announced in total three times where we plan to pay out extra dividend or buyback shares. So we are using the tools that we communicated from January last year.
To have an attractive remuneration is important for us over time, we are very concerned, focused on that, and we are also focused on keeping a solid balance sheet. There is always—there will always be different views on what is a solid balance sheet. It is not one for us, it is not two, it is a solid balance sheet. We have said we want to be below two and then just have a solid balance sheet, balanced with a transparent, predictable, and attractive shareholder remuneration. And then we have significant investments. We are still sorting out the issues in Thailand. We are still in the mode of exiting India, and we are working on our transformation journey, and that takes most of our capacity.
And then, as Sigve said, on top of that, we do believe that we have exciting opportunities within our present system and very close to our present system in the regions where we operate today, and we don't have much more comments to it.
Thanks a lot.
Next, please.
Should I interpret you as you're weighing more towards having or being comfortable with increasing dividend over time rather than distributing it all at...?
You should just read me the way I say. We will, we will continue to follow our policy and our plans and what we have communicated, and we will continue that in a balanced way together with developing our business and also have a strategic flexibility for investments should they be there and be attractive.
Maybe just add to what Jørgen is saying. We have communicated also very clearly that, the dividend, plan is to have an, increased actual payout year by year. And this year, we increased by 4% the normal, dividend, over last year. So, so that we plan to continue to do.
Next question, please.
Yes, my name is Frank Maaø from DNB Markets. So first of all, I want to congratulate you on a really great performance operationally this quarter. But I have two, three questions. The first one is relating to, it's basically a follow-up on the financial strategy and the fact that Telenor appears to be hoarding cash at the moment. So I think, you know, we're all aware of the fact that what you've been saying and your maximum ceiling and so on. But it appears now with the divestment of CEE, that, you know, the room and headroom to that appears to be quite, quite large.
So I think it would be really helpful also in light of the current share performance, to have some more color on why, you know, you are so, you know, at the bottom of the range of all your peers in terms of leverage, and why you see that necessary. The second question is about Asia and Emerging Asia. You know, do you see a risk for data growth in Emerging Asia being cannibalized by... Oh, I mean, cannibalizing voice growth? As we have seen some examples of in the past, by people moving to digital platform to call and text.
And the final question is about your supply situation in Malaysia with your network provider there facing some difficult issues at the moment. Do you think that will affect your planning for the network and capacity and so on in the time to come? Thank you.
Yeah, I can address, try to address those questions. The last one first, I guess you are referring to the situation with ZTE, the Chinese network vendor. We have ZTE in three of our operations. It's in Malaysia, it's in Pakistan, and it's in Hungary. We are following the situation closely with ZTE, and I cannot say more than that. This is something that we have been following for actually the last 1.5 year, when the first order came out. So, as you see it now, I cannot comment more on it than that. The second question, yes, some of the voice revenues are being cannibalized by data.
We see people using the WhatsApp, the Line in Thailand, the Viber in Myanmar, to make calls over OTT apps rather than another call. However, we see that we are able also in that part of the world to do upselling. And we see that the data demand is such that there is both a willingness and affordability to pay. That's what we see in both Pakistan and in Bangladesh. So the limitation of the data growth is not the affordability or the cannibalization, it's actually the access to smartphones. And now when smartphones are becoming more and more also cheaper and cheaper, we see that the mass market can afford it.
The moment a customer migrate from a 2G phone or a 3G phone into smartphone, we see automatically the data consumption start increasing. So, and that's why we are aggressively rolling out the 4G network now in all these markets. And then in parallel, we see smartphone penetration also increasing. So I'm quite optimistic on the ability to actually continue the growth there on data. But you also see that the voice is growing. Both in Pakistan and in Bangladesh, we saw also a good voice growth in the first quarter, and this is coming then from the 2 million new subs in Bangladesh and the 1 million new subs in Pakistan. People that never had any access even to voice and SMS, basic services.
Our estimate is that the real penetration in this market is still below 60%, if you adjust for the multiple SIMs. So there are still millions of people that will get their first experience with mobile technology. To the first question, I think Jørgen already answered that. We wanna have a solid balance sheet. We want to keep our dividend policy. We want to be taking some careful steps into looking at inorganic opportunities in core business and in core geographies. That's what we want to say about that.
Next question, please. I kindly ask you to limit yourself to one question and one follow-up, please.
Thank you. Henriette Trondsen from Arctic. Most of the questions have already been taken, but on Thailand, I understand that the NLA has now rejected the entire list of candidates for the new board. Do you expect that to impact the timeline for the spectrum auction in Thailand? And also on Myanmar, we understand that Viettel is targeting mainly rural areas, and any insights into their strategies or impact on Telenor would be appreciated.
Sure. Taking on Myanmar first, what we have seen is that Viettel has launched within the military segment, if I should use that term. So, we see that this is probably a soft launch. What we have seen so far is that they are going to go broad, they are going to go into the rural areas. However, they are not even close to our network coverage, and they are even further away from our distribution coverage. So rural for them means not the same rural for us. We are going to most of the villages. So it will take time for them, especially to build up the distribution network into the rural... Yeah, small digits.
So what we have seen so far is exactly what we expected. We have been studying with the Viettel, which is the operating partner of the MyTel, and what they have done in other markets, being in Vietnam, but also in some other markets. And they are going for a mass market approach. So no big surprise here. And that's what we are preparing ourselves for also. Preparing ourselves now for going down to the price floor. And as you know, there's a set price floor in this market. All three operators are now going down to that price floor, which is limiting the room for MyTel to go very aggressive on pricing. And we are continuing to build the brand, continuing to build distribution network, and now also to roll out the 4G network.
So still a little bit early, but what we are seeing so far, no big surprises. On Thailand, yes, you are right. The NBTC or the regulator were supposed to get new commissioners. The list of the candidates were all canceled, so they have to restart the process. What that means, I don't really know. What it means in terms of how long time it will take to get a new board of commissioners in place, I don't know. And I don't know either what it means in terms of the spectrum auction, if that will now be managed by the existing lame duck commissioners, if I should use that term, or if they will postpone that until a new set of commissioners are in place. That I don't know.
Are there any more questions from the audience present here at Fornebu? Doesn't look like there are more questions here. I will ask the operator to connect for questions from the conference call participants, please. Operator, may we have the first question from the conference call participants?
We will now take our first question.
Hello?
-from Ulrich Rathe from Jefferies. Your line is now open. Please go ahead.
Yeah, thank you very much. My question is about the revenue momentum. You highlighted that it did step down, but you've seen in some countries, but you're seeing month-on-month improvements and confidence for the outlook. But the fact is that it did step down, and I was just trying to explore to what extent you are willing to see a correlation between the step down in the momentum that you did observe to some of the cutbacks in the sales and marketing spend that are part of the cost reductions? That would be my question. Thank you.
Yeah. I think we basically covered it already, but just a quick repetition. Very happy to see Malaysia. Happy to see that Thailand is also now coming back to a stable situation. Happy to see Norway. And Myanmar continues to be challenging. Bangladesh grew 6%, but remember, that is 6% on how much was it? So 13%-14% in the Q1 for the last year. So it's really really needing now very high growth numbers in the last year. And Pakistan, the real growth, if you adjust for the taxes, it's in the mid-single digits. So we don't think that the growth is over in Pakistan and in Bangladesh. And we see encouraging month-on-month growth going into March and April.
I do not think that the efficiency we do now on sales and marketing and distribution is hampering our growth. We are sitting very close to the development in all these markets. As you saw from Jørgen's presentation, we are adding or continuing to invest in sales and marketing in Pakistan and in Bangladesh. We keep a close eye on measures like, for example, market share, on daily active users, on unique users, on activity per users, although on subscriber market share, all those parameters, which gives you indication on how we are doing relatively to your competitors. We also know their, our competitors' market share numbers from the fourth quarter. We don't see it that way. We're keeping our market share.
A lot of these savings is coming then from dispersion of sales, marketing, and distribution, and not least customer care. Remember what I talked about in my presentation, we took down 40% of the call volumes in Digi, as one example, and even more so in some of the emerging market operations that we have. That gives us significant cost reduction. Of course, this is something we are closely following, but there is no link between the growth and the marketing and the sales efficiency.
Thank you.
Next caller, please. May we have the next caller, please?
We will now take our next question from Terence Tsui, from Morgan Stanley, London. Your line is open. Please go ahead, sir.
Yeah, good morning. I've got a question on the efficiency focus, please. Would you say that the good progress to date is due to timing, so cost cutting plan is ahead of schedule? Or actually, the scope of the savings is higher than initially anticipated, or actually maybe a combination of the both? And related to that, do you think that the target of 1%-3% annual reductions is ambitious as that, given that you clearly delivered way ahead of that in Q1? Thank you.
Well, I think it's fair to say that we last year had a higher, quicker development than planned for. And if you recall, we then said the ambition for 2017 was to have a flat year-on-year development and then to have the 1%-3% gains, going from 2018. So clearly, we got a quicker pickup in 2017 than anticipated. And the way we dealt with that was to say that, we think that is good, but let's maintain the program. Because remember, the program is much more than reducing short-term costs. This is a way to foster and provide for the transformation of the company, including the digital part, but also in the way we work and the way we collaborate, and so on.
So, it all relates to all, and therefore, we are maintaining the plans as we have set them out. And for 2018, we got a good start of the year. It's the easiest comps as we commented on with this first quarter, and we will just continue. And we maintain the ambition of 1%-3% for the coming year and years, and that's where we are. This number will go up and down a little bit per quarter, also related to what Sigve discussed. We are close to the market, so there are cost elements here that we will use actively up and down according to what we see fit, fits the operation and the market picture there and then.
Thanks, Jørgen. That's very clear.
May we have the next question, please? Irina Idrissova from RBC Capital Markets, please go ahead.
Yes. Hi, just a follow-up, I guess, on the OpEx savings. On the sales and marketing expense for this quarter, can you talk about how much for, of this is structural, and how much might be due to the decisions to postpone some of the spend?
No, I don't think I should. We will aim at when we see more of the total 2018 picture to give a kind of a structural, non-structural picture again. But to do that on a quarterly basis, we haven't planned for. But I think you can assume that in general, more and more should be structural. And I think also, you can assume that that the part of what we have done so far, there is a significant part of increasing efficiency in sales and marketing. It's to take out the elements that Sigve talked about, and then there has been a an efficiency upside and getting a higher yield by being a little bit smarter in how we execute on sales and marketing, that is included here.
Then it's interesting to see now that we get the manning numbers in and the effect on the salary side in, and we get all those other cost categories in. And also that we get the smaller businesses in the other segment, the last business segment, which adds up to significant important activity for us, and that there we get tractions as well. So the good takeaway, except from the number itself this quarter, is that we are now getting a broader, even broader base than we saw in 2017, and that's what we are pleased to see.
Let me just add, I think you used the word postponed in your question. We are not postponing spending just to save costs in the quarter. In all our markets, we are working in very, very competitive situations, and there is basically a winning every day concept. So you need to stay relevant every day, and that's exactly what we do.
I believe the OpEx increase of 14% in Bangladesh this quarter is a good example of how we are also spending OpEx on sales and marketing when there is a good reason for that. In Bangladesh this quarter, the sales and marketing spend is driven by a very strong customer intake and 4G promotions. May we have the next caller, please? Sorry, sorry, Irina. Please go ahead. Oh.
Our next question is from Andrew Lee from Goldman Sachs. Your line is open, please go ahead.
Yeah, thanks for taking my question. Just, I just wanted to follow up on the cost-cutting sustainability, which seems, there seems like, yeah, somewhat lack of confidence there from some of the questions earlier. I think you already answered, you know, around the fears of sacrificing marketing and commercial spend in EM, which it doesn't appear you think you're doing. But could you just, what else can you say to give investors confidence in the sustainability of your cost cutting? How much of the benefits of the cost cutting that you're delivering today do you think you can retain for the long term? And maybe specifically, are your competitors doing similar things?
I mean, we know, we know that Telia is in Sweden, and therefore, do you think you can hold onto the benefits of cost cutting, or do you think some of those will be competed away? Any further color would be much appreciated.
Well, first of all, let me say, I think Sigve had a many important comments, but you had one just now, and that was that we are not designing the cost cutting and the spend to achieve some numbers. I mean, we are working on along two axes here. We are competing in the market and fueling what we need to fuel in order to stay as competitive as we can and as we want to be. So that is on one side, and on the other side, we are working tremendously on being more efficient and to have the transformation program going. We think there has been effect from the latter, plus general efficiency gains to be made. So that is the core basis here.
Therefore, we believe that this is sustainable. You know, we already in 2017 argued that we think that half of the cost achievement is what we would call structural. Of course, this is a difficult analysis to make, but that was the best effort numbers that we could come up with. And that number surprised even me a little bit, to the magnitude that almost 50% could be of structural nature. But this is a very good and rewarding, and over time, at least, logical numbers based on the effort we are running in the group.
So we believe that this is, a lot of this is sustainable, and that is, of course, what we are working for, because we are not on a short-term rally here, to achieve high EBITDA, that will hit us, the following year. When it comes to what others are doing, I don't know what others are doing. I don't pay much attention to it.
We believe that our program is quite competitive in the industry context, but we would love feedback on that so that you can tell us when we sit one-on-one. But we believe so, and it is at least a program which we believe strongly in and are developing. Can we maintain the basis of it? I think we see that we live in a very competitive world. This is what we will do in addition to grow the top line, in order to provide a good returns in the company.
Let me just add, because a lot of the questions now have been cost cutting on sales and marketing. But I think there is a difference in what we present now and what we presented in 2017. Now you see that we are doing cost reductions in the way we do procurement for the procurement company. The move we do now on creating a common delivery centers on network. What we do on the slicing both the network, but also cloud-based IT system. What we do on systematically also making the organization more efficient and taking out 700 FTEs, or what we do on also making the staff functions more efficient.
So you see now that the cost reductions is in very different areas than it was when we started the program, which means that the machine is starting to work. The transformation programs are starting to yield some results, and I think that's a good thing, obviously.
Thank you. That's helpful. Is it possible to ask a follow-up question?
A quick one.
Okay. I'll try to be quick. It was just on the, on the fixed line side. Your trends are improving on ARPU, but they're still negative on broadband adds. So I just wondered if you have any further thoughts or kind of new thoughts on how long it is before you can. Or, or can you ever grow this, this revenue line? And what should-- what kind of signposts should we be looking for, in, in terms of an inflection there?
Your question was fixed revenues in Norway, was it?
Yeah, yeah. Fixed revenues in Norway, which the ARPUs are getting better, but the broadband adds aren't improving enough. And so when can we, or how can we expect an inflection to growth in that revenue stream?
Yeah, I cannot give you an exact number or date on that. But what we are seeing is that the decline in the legacy fixed business, meaning fixed telephony and also the copper or the ADSL, is going to continue. But we are more than compensating for that on the fiber growth. And that's exactly what we are going to continue to do. And a year ago, we decided to increase the fiber rollout, and now this program is starting to get momentum. And so that's the focus moving forward also. So the plan, I will say, is to more than compensate for the decline in the legacy fixed business, but I cannot give you any more numbers than that.
Thank you.
Okay. We then have time for one last question.
We'll take our next question from Sunil Patel from Bank of America. Please go ahead.
Yes, thank you. Ma'am. My question may mainly been answered, but just on one last point, I mean, when I look at Pakistan and Bangladesh, the revenue growth, as you mentioned in your slides, has slowed down quite dramatically from what we were seeing year-on-year this time last year. When you say, April, May, or March, April are getting better, how sustainable is it that we reach the sort of high single digits that we saw in 2017, in the second half of this year, for the subscription traffic revenues in both those two markets? Thank you.
Yeah, I don't want to give you any guidance on that other than what I said. That we see now the growth in March and going into April better than we saw the two first months, which gives us a clear indication that these markets are continuing in growing. In addition to that, we also will see now that the 4G investments we do in Pakistan and the continuous 4G investments we do in Bangladesh and the continued 4G investments we do in Pakistan is also going to yield some results. So that's why we are quite optimistic when it comes to a better growth in the rest of the year than what we saw in the first quarter. But I don't want to give any more specific numbers than that.
Thank you.
Thank you, Sunil. And that was the final question, the final caller here today. Thank you all for attending this session. And for those of you having follow-up questions or did not get through with your questions, please don't hesitate to contact our investor relations team. For me, we are presently at Fornebu. As I mentioned at the beginning, here today, there will, as usual, be a separate session with group CFO, group CEO, and CEO of Telenor Norway, that is Frank Maaø. That session will take place in the meeting room next to this auditorium. Thank you so much.