Good morning, and welcome to the presentation of Telenor Group's results for the 1Q. My name is Marianne Åmo, I'm head of Investor Relations, and I have the pleasure of guiding you through the presentation here today. The results will be presented by Group CEO, Sigve Brekke, and Group CFO, Jørgen C. Arentz Rostrup. There will also, as usual, be a Q&A session after the presentations, and in total, we expect to finish here in about one hour from now. Without much further ado, I will now leave the floor to Sigve Brekke to present the highlights for the quarter and the operational performance.
Thank you, Marianne, and good morning to all of you. The 1Q, it's characterized by stable organic revenue, EBITDA margin expansion, and an increase in free cash flow. I'm happy to see that we have a solid revenue growth in core part of our operations. In the emerging Asia cluster, we have double-digit revenue growth coming from data monetization. In Norway, Sweden, we see that we are monetizing our efforts on fiber rollout, where in the developed Asia cluster, we see a continuous pre to post migration, resulting in a double-digit postpaid revenue growth, but also with very challenging prepaid developments. As we talked about in the Capital Markets Day in February, we have making progress on our strategic agenda, having taken several steps towards simplification of our companies, and I will come back to that.
So all in all, Q1 is in line with our expectations. Let me start with Norway. Overall, I want to say that I'm satisfied with the trends in Norway. On the mobile side, we have total mobile revenues, which are stable when we adjust for the Data Rollover. On the fixed side, this is the 1Q in a very long time, where the growth in fiber and TV is more than compensating for the decline in the legacy fixed business. And Norway is also continuing its focus on cost efficiency. So if we adjust for the one-offs and also for the Data Rollover, you will see that Norway have a stable EBITDA margin year-on-year. Norway also took out around 180 FTEs in the 1Q, and we will see the effect of that in the coming quarters.
Going a little bit more into each of the business lines. On mobile, we see a continuous good uptake of the upsell efforts that we have. We have now upsold around 60% of the postpaid base into packages, which include Roam Like Home. We see a increased ARPU development coming out of those upsold packages. We will also include Roam Like Home for all the subscriptions with effect of from June 15th. We see that the introduction of the roaming Data Rollover for the main customer plans have NOK 85 million effects, both on revenues and EBITDA in this quarter. We have, during the quarter, also launched a new concept for a youth segment, and so far, we have received very good feedback from the market. We continue the handset swap program in Norway.
This is a program which is very well received by the customers. It has a negative revenue effect with taking down the part of the ARPU that came from the previous subsidy program, but it has a very positive EBITDA contribution. And we also see then an underlying ARPU growth, driven by the continuous increase in data consumption. We also see that we are able to keep our position in the valuable customer segment. However, we see that we have some disconnection of data cards, and we also have lost some customers in the low-end, price-sensitive, price prepaid market. On the fixed side, we continue our rollout. We have added 12,000 new households on fiber this quarter, giving us a 5% growth on the ARPU.
So, we are also upselling, not only adding, and we also see a supporting growth in TV subscription of 6%. Moving to the neighboring countries, Sweden and Denmark. In Sweden, we have a very positive revenue development, supported by a positive one-off in this quarter, but the underlying revenue growths are also very healthy, 3%, also driven by a consumer postpaid performance. We see that in the quarter added 20,000 new fiber connections, so we have continued the SDU fiber rollout program, also then supported by fiber growth through open networks, resulting in a 5% growth in the fixed revenues in Sweden.
Based on our competitors' reporting, we also now see a slight increase in revenue market share during the 1Q, both in mobile, but also on fixed broadband. In Denmark, our focus is on improved efficiency in our operation. As you can see from the figures, we have a significant reduction in OpEx year-over-year. However, that's mostly due to last year high cost on implementation of a new business support system. We are also pleased by 9,000 new net adds in the mobile subscription. Moving to the Central and Eastern Europe cluster, we see that in this cluster, market development, industry development, and also our own performance is in line with the previous quarters. In the cluster, our focus is on continuing to strengthen our network position, and we are continuing to build out our 4G network.
Independent speed tests shows us that we actually are having the fastest mobile network now, both in Bulgaria and in Hungary. The other focus is that we continue to focus on the value customers, the pre to post migrations, the postpaid upselling, compensating them for pressure on the prepaid segment, but also with continuing to offer competitive customer offers. We also have cost efficiency focus, and it's starting to yield some small results. And as you can see from the EBITDA growth there, we are able to demonstrate a higher EBITDA growth than revenue growth in the cluster. Moving to the Developed Asia cluster, Thailand and Malaysia. In the cluster, we see that the market continues to shift from a typical prepaid, price-sensitive competition into more postpaid packages with the data and device bundles.
I'm happy to see in both the two companies that we have a very solid postpaid growth. In dtac, we grew 20% year-over-year on postpaid revenues, and postpaid is now accounting for approximately 50% of the total revenues in dtac. The same happens in Digi, 12% postpaid growth, and postpaid is now accounting for 36% of the overall revenues in Digi. We also see that we continue to focus on positioning ourself in the postpaid segment with new innovative offers. In Thailand, we introduced a speed-based pricing in the quarter, and we also introduced a new brand platform to better position ourself for the change in the market in the industry or the market. We are continuing also to roll out our networks.
In Malaysia now, as one example, we have 85% population coverage on 4G, and we continue also to take position in postpaid distribution, being the service points, but also starting to introduce digital sales and marketing. Then go a little bit more into detail on the two companies. In dtac, the revenue shows a -9% year-on-year, mostly due to lower handset sale in this quarter compared with the quarter last year. And the main reason for that is that we have chosen to stay out of the very competitive prepaid subsidy program that our competitors have had. We then see that if you adjust for the handset revenues, we have now almost a flat subset traffic development, -1% year-over-year.
I'm happy to observe now that it seems like the prepaid decline in revenues is starting to flatten out. We, we also see that despite the intense competition, we are able to protect our EBITDA margin in Thailand. In Malaysia, as I said, postpaid it's growing, 12% growth in that segment. The -6% on the revenues is then mostly coming from an intense competition in the prepaid segment. In the prepaid segment, Digi is the largest player. So when the competition is more incentivized, of course, we are being hit harder.
In addition to that, we are also having the highest position in the migrant base, and we see that there are fewer migrants coming to Malaysia than it was in the past, and we also see pressure on the international traffic for the migrant workers. Moving to the Emerging Asia, which is the growth star of this quarter. In the cluster, we see that we have added now 10 million data users in the last year. This is coming from improved data networks, and we are continuing to roll out 3G in Bangladesh, 4G in Pakistan, and also starting to roll out 4G in Myanmar.
For example, we have now moved up the population coverage on our network in Myanmar from 62% to now 90% coverage, in the end of the 1Q. We also see that the data increase is driven by smartphone increases, more smartphones out in the market. You get now a decent smartphone at $230 price, in these markets. That's a 20% reduction in the smartphone prices year-over-year. And we see that the smartphone penetration, especially in Bangladesh and Pakistan, is still low, so we foresee a continuous growth in the data segment in this cluster.
We also see that the growth on data, of course, is giving us a better margin than the voice, and that's the main reason why we are able to grow the EBITDA way above the revenue growth. Plus, of course, also a continued focus on cost efficiency, despite also adding cost on increased network rollout. Then go a little bit more into the details again. In Grameenphone, 11% revenue growth coming from both new customer additions and an increase in ARPU. And I'm happy to see that we are able now to not only reach more customers, but actually also grow the usage with the customer base.
Again, we see that the data growth gives us a very high EBITDA margin growth, a 70% EBITDA growth year-on-year. In Pakistan, 10% revenue growth, and all this growth is now coming from the mobile business. In this quarter, we have moved financial services down to other units as of this quarter. In Myanmar, a 13% revenue growth coming from, again, increased rollout and then reaching more subscribers. And as I said, we have 90% population coverage now in Myanmar. And I'm happy again to see that despite and now going into the villages, we are able to have a stable ARPU development.
In the quarter, we also introduced SIM registration in Myanmar, similar to what we have done both in Pakistan and in Bangladesh, and 88% of the SIMs are now registered, which covers 98%-99% of the revenue-generating SIMs. Then closing up with what we talked about in Capital Markets Day. So what we focused on, or what we told you about then, was that we are going to step up our cost efficiencies, utilizing the digital opportunities to digitalize our core business, but also to leverage scale across our footprint. We also talked about in Capital Markets Day that we want to prioritize and simplify our portfolio. During the quarter, we have taken several steps in that direction.
We have, as you know, reached an agreement with Bharti to exit India, and, as we said when we announced that, we estimate the closing of that within 12 months. And, we are now in the process of getting the necessary approvals. We have also launched a new cluster-based organization, basically clustering our 12-plus India operations into 4 clusters. That is to get more focus on these clusters and also to have a potential of developed cooperation and efficiencies in the clusters among the business units in the clusters. We are also, as you know, taking next steps of exiting VEON or previously VimpelCom. We are now down to a 19.7% ownership in VEON, and our intention remains of having a complete exit out of this company.
Although minor, we have also sold Startsiden, which is a Norwegian internet portal, and I'm using that also here as an example of our efforts of focusing our portfolio. So to summarize the quarter, I'm pleased that we are delivering organic EBITDA growth, and we see solid revenue trends. I'm also pleased by seeing that our efforts on efficiency focus will lay a good foundation for a strong operations in the quarters to come as well. So with that, I will ask Jørgen to come and go through the financials. Thanks.
Thank you so much, Sigve, and good morning to all of you. As Sigve showed you, we are reporting a quarter with stable revenues, with increasing EBIT, EBITDA margin and increasing cash flow. On the cost side, we are starting to see signs of our efficiency initiatives. We continue to stabilize OpEx this year and prepare for a gradual reduction next year. Following our announcement in February of exiting India, our financials are now presented with India as discontinued operations. My comments on financial performance and the outlook for 2017 will therefore be made on the basis of the current group structure, excluding India. We have reported revenues for the quarter of NOK 30.5 billion, which is down 3% year-on-year due to negative currency effects in the range of NOK 1 billion.
Adjusted for these, currency effects, revenue are stable, year-on-year. Then last year, we had a, positive one-time effect of, in the range of NOK 0.2 billion from a settlement in the broadcast division. You will see it in influencing the numbers in broadcast quite significantly. But also adjusted for this on a group level, organic growth was around 1%, i.e., in line with the trend from last year, where we had, 0.8% growth if you exclude India from the number in 2016 in total.... Looking in more details, on the revenue development, the main positive contribution to reported revenues, are coming from emerging Asia operations, as Sigve was, talking about, which all deliver double-digit growth numbers or, approximate an effect of NOK 0.4 billion, on the top line revenue increase.
Thailand and Malaysia both contribute negatively in this slide. Reported revenues in Thailand, in particular, as Sigve said, due to lower device sales, which accounted for two-thirds of the drop, and in Malaysia, due to prepaid development and also negative currency movements, as we have seen in Malaysia for some time. The decline in broadcast, again, is mostly explained by the positive one-time effect last year and a little bit currency effects. As you know, it's our ambition to break the trend of increasing OpEx in 2017. This we talked about at Capital Markets Day in February. We are looking both at initiatives to lower cost base long term, but obviously also everyday cost control is very high on the agenda in Telenor these days.
In Q1, we reported an OpEx decline of 3%, or NOK 0.4 billion, with lower marketing and also regulatory costs being the key drivers in addition to currency movements. Among other things, we have continued our right-sizing activities during the quarter, and we are approximately 600 full-time employees less at the end of this quarter than at the end of quarter four. Then also, obviously, OpEx are fluctuating quarter to quarter, but when we measure it on a rolling, four-quarter rolling basis, we see a stabilization of OpEx, as has been the ambition for the year. EBITDA came in at NOK 11.5 billion in the quarter, equal to an EBITDA margin of 38%, which is one percentage point higher than the same quarter last year.
The EBITDA margin improvement is predominantly coming from a higher gross margin as the OpEx sales ratio were fairly stable. Organic EBITDA growth was 3%, and then if you adjust for the, for the broadcast effect, growth was 5% for the quarter. Looking at EBITDA, again, contribution per operation, the trends are similar to the revenue development. Profitable data growth in Bangladesh and Pakistan translating into solid EBITDA growth, contributions from these countries. In EBITDA in Norway, EBITDA was down approximately NOK 200 million in the quarter. Then remember what Sigve said, that Data Rollover in Norway during the quarter had a negative effect of approximately NOK 85 million. There were also a positive one-time effect related to our STAR project in Q1, 2016 of NOK 50 million.
Adjusted for these two elements, EBITDA margin for Norway is at the comparable levels. Then, as the previously mentioned, settlement in broadcast also impact EBITDA. All in all, we believe we have expanded the margin and delivered healthy organic EBITDA growth, even in times with a less top line growth in the numbers. CapEx in the quarter was NOK 4.5 billion, decreasing from the high levels that we saw both in Q1 and also in Q4 of 2016. Investment in Thailand and in Norway constitute of half of the CapEx that we have spent in the quarter. In Norway, as we had talked about before, it is fiber, and it's 4G rollouts, which constitute most of the CapEx in Norway.
This quarter, fixed and TV investments is the key reason for the increase in Norway's CapEx, and it constitutes around 30% of the CapEx spent in Norway in the quarter. In Thailand, investments are still focusing on network densification, both on 3G and on 4G. dtac in Thailand almost doubled its 4G sites the last year. The CapEx to sales ratio for the group is approximately 15%, that is comparable to the 17% level that we held in 2016. There were no spectrum or licenses investments in 1Q 2017. The income statement shows a net income to Telenor equity holders of NOK 4.2 billion this quarter, representing an earnings per share of 2.78 kroner.
I have already talked about the revenue line, about the EBITDA line, and as depreciation, financials, net financials, and also taxes are approximately the same level as Q1 in last year, I will only comment on a couple of other items on this overview. Other items of NOK -178 million include restructuring costs related to workforce reduction, primarily in Norway, with approximately NOK 165 million in the quarter. It also include a gain of NOK 65 million resulting from disposal of Startsiden, as Sigve commented on. The effect on associated companies and net financials are related to the change in market value in the period of VEON and the exchangeable bond, the VEON shares, as that has the VEON shares as the underlying security.
If you look at the other line, in Q1 2017, we have a marginal effect from continued operation—discontinued operations, in India. And then bear in mind, according to the IFRS accounting principles, the profits from discontinued operations include only external transaction. Hence, it's not fully comparable to a standalone business overview. Free cash flow of NOK 2.2 billion in the quarter. Net cash flow from operating activities this quarter is NOK 9.2 billion. The reported EBITDA of NOK 11.3 billion is then partly offset by taxes paid of NOK 1.1 billion, and net financial interest payments of NOK 0.5 billion, and operating capital increase of NOK 0.4 billion.
Net cash outflow from investing activities is NOK 5.4 billion in the quarter, predominantly consisting of NOK 5.3 billion in investments paid in the quarter, heavily influenced by the high investment level that we saw in Q4 of 2016, having the cash effect now in 1Q of 2017. In addition to the cash flow from operating and investing activities from this slide, the free cash flow reconciliation also have some effects from financing activities. This quarter, it includes NOK 0.3 billion paid in dividends to non-controlling interests of Digi in Malaysia, and also NOK 1.1 billion related to the supply chain financing arrangement in Norway, which is actually a working capital element. In total, this gives a free cash flow of NOK 2.2 billion in the quarter, as I said.
Telenor is in a solid financial position, which also is a key priority for us, to maintain. As you can see from this graph, the net debt decreased by NOK 0.7 billion in the quarter, while the net debt to EBITDA ratio remains stable at 1.2 x . Then the net debt reconciliation that we have put up on the right-hand side of the slide should be fairly straightforward. The negative currency effects of NOK 1.2 billion this quarter comprised translation effects of debt held in other currency than Norwegian krone, due to the weakening of Norwegian krone in the period. Then we have capital changes in working capital and other of NOK 1.9 billion, which is including the supply chain financing model that we talked about from Norway.
We continue, as Sigve said, to sell down our position in VEON in 1Q. We sold 70 million ADS, American Depositary Shares, comprising around 4% of the total share capital in VEON. And this resulted in proceeds, net proceeds for us of NOK 2.2 billion. It took, as Sigve said, our ownership down to 19.7%, and the transaction followed the transaction we had in September, where we sold shares and also established an exchangeable bond based on the VEON shares. Following the transaction in April, VEON will no longer be treated as an associated companies with us. We will treat it now as a financial investment in our financial reporting.
This also means that, all previously recognized currency translation differences, a total of NOK 7.5 billion effect, which has been accounted for directly to the equity on the balance sheet, will now have to be reclassified to the profit and loss statement with no net effect on the balance sheet, equity, and the cash, and this will happen in second quarter. Also, the cash effect from the sale, the proceeds of NOK 2.2 billion, will be accounted for, and registered in second quarter. And then, as Sigve said, we will continue with the aim to sell down, but the timing of this, we have no comments to, and we have the time we need. Outlook for 2017. To us, it's still very early in the year.
So we have simply made one basic adjustment to the outlook, and that is a technical adjustment due to the fact that we are taking India out of our financial core communication around our development of the business. So it reflects the current structure, group structure, excluding India. And excluding India from group numbers improve EBITDA margin, we believe, by around one percentage point while the impact on the revenue and CapEx to sale is estimated to be marginal. Hence, this means that for 2017, we still remain 1%-2% organic revenue growth. We are saying that EBITDA margin around 37%, which is up from around 36% when India was included, and CapEx to sales ratio, excluding spectrum licenses, in the range of 15%-16%, i.e. that is unchanged.
To summarize the quarter, we are reporting, we believe, solid revenue growth in several of our core areas, and are working actively to strengthen performance in areas where we see potential for improvement. For the group as a whole, we delivered a quarter with stable organic revenues, with the margin expansion and increased free cash flow in the quarter. All in all, I would say that the performance in 1Q was in line with our own expectations. Our approach to value creation, that we talked about also in February when we met, focus on innovative and customer-friendly offerings, efficient operations, and simplification. These are the themes that goes through the group and through the discussions, on a regular basis.
Although still in an early phase, we believe that the activities we are ramping up within these areas will continue to take us to in the wanted direction and shape the future of the group. So with these words, maybe it's time for Q&A.
Thank you, Jørgen and Sigve. We will, as usual, start the Q&A session by taking questions here from the audience presently at Fornebu, before we open up for the conference call participants.
If you'd like to ask a question over the telephone, please press star one, and please limit yourself to one question. Star one to ask a question.
light of your revised dividend policy presented in February, from what I can calculate, net debt to EBITDA is now adjusted for this NOK 2.2 billion, close to one. And on Data Rollover, can you also provide some insight into how we should think model around deferred revenues with regards to seasonality patterns and also churn in Norway? Thank you.
Yeah. On the proceeds, the only thing that I think I wanna say about that, it's to repeat what we said at the Capital Markets Day. Our financial policy is to continue to have a very healthy and strong balance sheet, and it is to deliver on an increased actual dividend payout in the years to come. And that's something that everything we do is going to be linked up against, because we really wanna deliver on that policy. And on top of that, we are going to the annual general meeting next week to ask to get an approval for a potential shares buyback. But more than that, I don't think we will wanna go into comment on the proceeds. You wanna add something to that?
No.
No. On the Data Rollover, I think that's too early to say. We need to see how our customers are adjusting themselves to a very customer-friendly Data Rollover package. So we need another quarter, I think, before we can be specific on where we see this developing and what type of effects it will have. However, I think the NOK 85 million effect we saw in the 1Q, I think that's on the higher side. We don't expect that to continue.
Keep in mind that this is an accounting effect with no cash flow impact. Next question, please.
I don't think we have more questions here from the audience present at Fornebu, so I will then ask for the first question from the conference call participants.
We'll take our first question from Roman Arbuzov from UBS.
Oh, hello. Thank you very much for taking my question. My question is on cost. With your renewed focus on cost reduction, can you just first please clarify whether when you were talking about flat OpEx for the year, were you talking in organic terms or reported terms? And I was also wondering if you could just give us a little bit more granularity in terms of which cost line items, perhaps, we would expect to increase during the year, and where is- where do you see, a lot of room for improvement? Thank you.
Yeah. We haven't been very precise on the organic versus the reporting, because following every effect on that is going to be very challenging. So basically, we are relating to the reported numbers in this. When it comes to giving more information, we have been through this in Capital Markets Day, and at the Capital Markets Day, we said we will get back to it during the year, and that is probably going to happen in third quarter. But it is within the large cost bracket, so to say, and in all parts of our organization and in all business units.
It's a large effort, both with the short-term measures for this year, in order to curb the trend that we have pointed to, and then with longer-term measures in order to get a different development going further.
Thank you.
Next question, please.
Can I just have a quick follow-up related to cost for Norway? Did you expect your costs and margin to normalize or broadly normalize from next quarter already?
What, was this for Norway?
Yeah.
Yeah. Well, Norway has shown over several quarters an impressive development in taking down cost, in particular, obviously, on its legacy business. This quarter was flat, and there was no further reduction in cost this quarter. But at the same time, Norway has this quarter, again, increased efficiency by taking out full-time employees according to our general development. And that will continue, and we will get effects from the action taken this quarter, next quarter, we believe. And then there is a significant program in Norway that still is rolling quite well. But we shouldn't be prepared to, for every business unit to see these effects every quarter. We have to see this over time, but the program is going forward with full force.
Thank you.
Next caller, please. The next question comes from Peter Nielsen from ABG.
Thank you. Question on Norway, please. ARPU, as you highlighted, underlying ARPU trends are positive if we adjust for the sort of Data Rollover, et cetera. I assume part of this underlying ARPU improvement is due to the simple fact that you have been losing low-end mobile customers. So don't you comment on that, how much of an impact that has, and also, how long or how deep your tolerance levels are for continued loss of mobile customers in Norway, please? Thank you.
Yeah, I can comment on that. I think the main effect behind the ARPU increase in Norway, it's that we are able to upsell customers, postpaid customers, to richer packages. And as I said, so far, we have upsold around 60% of the postpaid base are now on packages, which includes more data and also includes Roam Like Home. I don't have a number on the ARPU increase of that, but all those packages would be... The ARPU effect of that is quite significant higher than the ARPU effect of the previous packages. So that's the main way that we are driving ARPU in Norway, and it's all coming from a continuous increase the monthly data.
On your second question, yes, we disconnected some data card users. So in the numbers, the 40,000 numbers you will see in the report, a part of that is actually data cards. We are not selling that actively in the markets anymore. So this is disconnecting of old customers, moving then into more normal data packages. And then we are also losing some customers in the price-sensitive segment. But this we have seen for some time, and yes, there is a competitive market in Norway. I wouldn't say that that's getting worse than what we have seen over the last few quarters, but of course, this is something that we are actively monitoring.
We also are fighting this with our fighting brand in Norway, Talkmore, which I think is very competitive in this segment, whereby the mother brand, Telenor, is then making sure that we continue to keep our market share in the value segment.
Next question, please. We'll now take our next question from Simon Dillon from Exane BNP Paribas.
Oh, hi, guys. Just one question. A lot of the OpEx simplification and reduced CapEx you just discussed, it kind of strikes me as a business that isn't particularly frustrated delivering top line expansion, is happy with a stable revenue outlook. Would love to get your thoughts on that statement. I'd also would like to know if you expect to reinvest any of the efficiencies you expect to deliver in the coming years back into the business to deliver revenue growth?
Yeah, maybe I can... Yep. So thanks for that question. So we believe that based on the very successful growth period that Telenor has been through for many years, that there is also a scope for adjusting the cost base without harming the growth top line. We also believe that an investment level of 15%, 15%-16%, is more than adequate to also foster growth where we have good growth opportunities. So we are very careful about doing something that will harm profitable growth for the group. That is a very key element in our discussions. But as I said, we still believe there are rooms to improve efficiency and adjust how we work and how we prioritize in some areas.
simply as a very natural consequence of having a fantastic growth period behind us, and still stimulating the growth that we see we can have in our portfolio going forward. If these impressions change, we will have to discuss that, but we are not there at all now. And the 15%-16% CapEx is a relatively high level, CapEx-wise historically, and we see that we are still fueling significant network expansion, 4G and 3G expansion in Asia, and also the fixed development in Norway and Sweden.
Okay. Just a quick follow-up, if I may, and possibly I could look at your annual report to find out, find this out. Is any of your shareholder remuneration linked to revenue growth, or is it more free cash flow expansion?
Uh.
Your m- your, your m-
Yeah, you say shareholder, but do you mean management?
Sorry, management. Yeah. Yeah.
Okay, because the shareholders should be rewarded for everything we do, I hope. But management has a balanced scorecard, which means that the board has a clear expectation to management, both on foster growth and also to work on efficiency and to work on portfolio, together with working on how we behave in the society and how we develop a leadership agenda in general. So it's a balanced scorecard, which is deciding the bonus for management. And the ambition to the board is quite clear along the lines that we have discussed at Capital Markets Day, a balanced approach.
Maybe just add to that, but I think, in addition to what Jørgen is saying, I think it's fair to say that we are putting more focus on cash flow generation now, than only keeping the top line growth. That's a clear message from the board, and also then reflected in the scorecards that the management has. And that's also lined or, of course, as a result of what I said, that we really wanna make sure that we are driving shareholders' value. And that's why it's so important for us to make sure that we are generating enough cash flow to keep a healthy, strong balance sheet and deliver on the dividend policy that we have communicated.
Thank you both. Next caller, please.
We'll now take the next question from Andrew Lee from Goldman Sachs.
Thank you. Good morning, everyone. The first question is just on Sweden. I just wondered what your early thoughts about the Kinnevik taking a stake in Com Hem. I guess it makes it more likely Com Hem will get an MVNO from Tele2. I just wondered if you would now think about offering Com Hem a competitive MVNO, and more importantly, what does this do to market dynamics and your view of your Swedish strategic positioning? And then the second question was just, I guess, following on from Sigve's comments on growth, and particularly on Norway. Could you just give us, like, a bit more color on the competitive intensity in Norway, and when and how do you get back to growth in your home market, top-line growth in your home market? Thank you.
Yeah, I can obviously not comment on what our competitors are doing in the Swedish market. I think we are very satisfied with the position Telia has in Sweden. As I said, it seems like we actually took market share, revenue market share, both on mobile and fixed in the 1Q. So, we are continuing then to drive top-line growth, both in mobile, but also see now that we are able to monetize our fixed position in the Swedish market. So that's solid position we have. I think we can continue to grow based on. Your second question was on the-
On the competitive situation in Norway.
Yeah, I think I already answered that question. I will say that the competitive situation remains. Yes, there are three aggressive players in Norway, and that we have seen for some time. So I wouldn't say that we see any change of that in this quarter. And we stay competitive, and we have launched several offers for the youth segment. We are focusing on delivering value to our customers with the growing data demand. We have the swap program on handset and so on and so forth. So I think we are well positioned. And to your question on the growth in Norway, I think we are very satisfied with the growth we see now on fiber and TV, which is supported by that.
And we also hope that it will continue with the upsell logic. And we see that there is still data demand in Norwegian markets that we would like to deliver on. And that's why we also have, as you also know, taken a decision to invest on 4G even faster than original plan. So during the year, we will have 4G on all our 2G base stations, covering basically the entire population. And with that network, I think we are in a very good competitive position.
Next question, please.
We'll now take the next question from Ulrich Rathe from Jefferies.
Well, I would use my question on, on Pakistan. Obviously, the deconsolidation of the financial business sort of changed the numbers, but still, the 1Q margin looks exceptionally high compared to the restated numbers for last year. At the same time, you have somewhat slower intake. I'm just wondering whether there's a new balance to be struck now that the ID sort of systems are in place, or whether this is just a quarter with slightly slower growth and higher margin, or, you know, how this is sort of going to pan out in terms of, you know, the balance between intake, costs, and, and margins in Pakistan. Thank you.
... Well, I think as both me and and Jørgen commented on, the main reason for for the the margin, the development, of course, is that when you grow double digits on data growth, you get a good, better margin than than the traditional voice business. So that's why you see an a significant EBITDA growth. And I think this is also a competitive market, even though it's now being consolidated down to a fewer players. So in these markets, it's competition, it's seasonal factors, and that's the reason why you see the the quarters going up and down. But I think that what we see in the Pakistan market is that we are now well-positioned with our data network. We are well-positioned with our customer offers, and we see that this smartphone penetration is still relatively low.
And that's why we foresee a continuous, significant growth on data customers in the quarters to come.
Next question, please. We'll now take the next question from Thomas Heath from Danske Bank.
Thank you. Thomas here. Just a question on IT partner being moved from other to Denmark. Does this mean that this will only service Denmark with the new IT platform? And then on fiber CapEx, is there any way to quantify how much installation of residential fiber impacts CapEx and EBITDA in Sweden and Norway? Thank you.
On the first question, we now have launched our IT solution, BSS solution.
The next question comes from Jakob Bluestone from Credit Suisse.
Hi, good morning. Can you hear me? The line went dead for a little bit. Hello? Hello? Hello? Hello?
One moment, sir.
Hello?
Just, just one moment. Ladies and gentlemen, we're experiencing a moment interruption in today's conference. Just one moment, and please continue to hold.
Hello?
Hello, is it Jacob? We can hear you.
It is, indeed. Brilliant.
Mm-hmm.
So that wasn't a telenovela line, so. I had a question on the outlook, please. I mean, the revised outlook is basically indicating that you expect EBITDA margins to be flat to slightly up in 2017, which I guess is pretty consistent with what you've delivered during Q1. However, Q1 was impacted by the rollover effects, the base effects in broadcast, and the later quarters should benefit from some of the OpEx reductions you outlined, including the reduction of headcount of about 600 full-time employees. So can you maybe comment on, is there—are there any sort of particular headwinds later in the year that we need to bear in mind, or is this guidance perhaps a little bit conservative, given that presumably your margin trend should accelerate later during the year? Thank you.
Yes, thanks for that question. It is as simple as I pointed to. We have simply made a technical adjustment for India in this quarter. Normally, we would expect very, very clear signals on a particular development if we were to adjust our forecast as early as 1Q, then it had to be something very, very significant. So, you know, some people would view that one of these are on the short side or the long side of what they believe in. But simply, we have just made a technical adjustment for India, and we'll follow this, and this is our best estimate.
Next caller, please.
We'll now take the next question from Dominik Klarmann from HSBC.
Yeah, thank you. Sigve, just interested to see how far you're ready to go with your vision? So don't think that Russia and then-
Dominik, it's very difficult to hear you. Could you please try to,
Yeah, so just an update on how you think about your ambition to simplify the north value and so on, and don't think that Russia and again, large assets, like-
It's very difficult to hear you, Dominik. So I hear you're talking about simplification, but could you please try to shorten the answer, the question, so we can try to answer it? The line is still very poor quality.
So, what assets are core assets for you? Is Digi, are you happy with that? What are your discussions around Eastern Europe and Australia?
It seems to be a question about the simplification and the next step on, on simplification. I guess there are no precise-
No.
Answers from our side.
As we talked about in February, we want to simplify, and we want to make sure that we have a prioritized portfolio. That's why you see that we take action on India, that's why you see we take action on VimpelCom, and that's also why we are clustering or grouping the business unit into clusters to make sure that we're also trying to take out synergies in these clusters. I also mentioned this with the pages as one small example. So we will continue to do that. As we also said in the capital markets day, we will look through our non-core assets. And all this will be done in the light of how can we make sure that we are driving shareholder value?
And how can we make sure that both management of efforts, but also the money deployed, are then giving us shareholders value or yielding results? So more than that, I cannot say. It's a direction which we have started to deliver on, and when we have more to announce, we will announce.
Okay. Thank you, Sigve. We have time for one more question. Final question.
We'll now take our last question from Keval Khiroya from Deutsche Bank.
Thank you. I've got a question on Denmark, please. Obviously, saw a very strong margin improvement in Q1. Do you see scope for further margin improvement in Denmark? And if so, does it improve your organic case in the country, or do you still feel the Danish market needs some kind of structured solutions towards consolidation? Thank you.
Yeah, the Danish market stays very, very competitive. So in that sense, there is no real change. And as you know, we have been evaluating different alternatives. Right now, we think the best alternative for us is to increase the efficiency and improve the profitability of the Danish operation. And that's the main focus that we have right now. Of course, we'll be. We will have our ears and eyes open. But in the meantime, to improve the bottom line and efficiency is the main focus that we have. I cannot give you any guidance on what that means in practice, but that is the focus, and this is what we hope that we can demonstrate in the quarters to come.
That's clear. Thank you.
Thank you, Sigve. That ends the presentation of the 1Q results here today. Thank you, Sigve and Jørgen, and all of you participating. If there are any further questions regarding results, I mean, the investor relations team is as always happy to take your questions after this session. There will also now be an opportunity for media present here at Fornebu to ask questions to the group CEO and group CFO. That will take place in the room next to the auditorium, and Meera Bartia will follow the way. Please, please follow media to Meera to that room. Thank you.