Good morning, and welcome to Telenor Group's first quarter results presentation. My name is Meera Bhatia, and I have the pleasure of guiding you through today's presentation. We have our CEO, Jon Fredrik Baksaas, and CFO, Richard Olav Aa who will present the financial results today. As usual, there will be a Q&A session directly after the presentation, first to hear from the audience, and then from our phone and webcast participants. We aim to end the session at 10:00 A.M., and for media present, there will be the opportunity to speak to both our CEO and CFO after the Q&A session. But without further ado, I will leave the stage to our CEO, Jon Fredrik Baksaas.
Yeah, thank you. Thank you, Meera, and also welcome to Fornebu, and also those on the net to this first quarter 2014 presentation. I'm glad to say that we had an encouraging, encouraging start of 2014. We are growing in terms of revenues, EBITDA, and subscribers, and this happens both for voice services and data services. The organic revenue growth improved this quarter to 1.5%. We're up, well, 0.5 percentage point from last quarter. We saw a 5% underlying mobile service growth, which is a stronger figure that we've had averagely on the fourth quarters last year.
This is, among other things, fueled by an impressive subscriber intake in our Asian operations, with 6 million new subscribers in Q1, which is the highest intake of new customers in two years. On the profitability, we had an EBITDA before other items of NOK 9.3 billion. And this translates into 4.9% organic growth on the EBITDA in nominal terms year-on-year. Key drivers for this is the growth and efficiency initiatives that we're running in Norway, and the regulatory cost savings that we now see in Thailand. But as usual, there is also a lot of work to be done in the rest of the year.
And we are starting the year optimistic on the score that we aim at deliver and continue to deliver profitable growth. Aiming also then to grow the operating cash flow into 2015. And as I said, the important element to this is our ability to execute on the mobile data opportunity, where we have initiatives in all markets, aiming, of course, to to monetize this significant growth potential that we see across all our markets. Let's take a look to Norway. I'm very pleased to see that Norway now, in this quarter, reports the top-line growth again, which is the first time since Q4 in 2012. The 2% revenue growth is driven by both mobile and fixed internet and TV services.
Mobile service revenues, excluding interconnect, increased by 2%, which is significantly, of course, better than the 2% decline that we saw in the previous quarters. We still see an improved sales mix in the consumer mix, in the consumer segment, versus the beginning of 2013. Telenor Norway recently launched a new portfolio, which we believe will support these trends going forward. Telenor Norway is also focusing on selected digital services to drive its core business. Already seeing a significant uptake of the online backup service, My Cloud, or Min Sky in Norwegian. Being launched as early as in February this year, we can last week see that the growth has come up as high as close to 90,000 users already.
And this is then an added feature that we bundle together with our subscriptions. While these positive trends continue in the consumer segment, we have to say that we see a continued price pressure in the enterprise market. Fixed internet and TV services increased by 7%, again, driven by price increases on cable and the growing number of fiber customers. The total customer base now is close to 90,000. The competitive pressure and declining revenues in the traditional phone business has required then, unfortunately, special focus on streamlining operations and cost efficiencies in that part of what we're doing. And this comes on top of the heavy investments that we drive in both the mobile space as well as in the fiber space.
Through these efforts, we have throughout March concluded the right-sizing exercises that we introduced at the beginning of the year. We continue the high investments in infrastructure, initiatives to increase revenues, and to reduce costs further. This will, of course, be high on the agenda in all aspects of what we're doing in Norway in 2014. Moving then to the other countries in Scandinavia, there are a two-sided story for Sweden and Denmark. In Telenor Sweden, delivers another strong quarter, with strong EBITDA margin, EBITDA margin development in Q1. Again, driven by mobile revenue growth and lower sales and marketing costs, following a quarter with lower marketing market activities overall.
The underlying EBITDA in Swedish kronor increased by 12% in Q1, following improved gross profit from the mobile operations, lower subscriber acquisition cost, as well as effects from several operational efficiency initiatives. The acquisition of Tele2's fiber and cable business was completed on January 2nd, and the integration work is now going according to plan. We are significantly strengthening our position in this segment in both fiber and TV markets in Sweden. Denmark is, again, a challenging market also in this quarter. Revenues were down 10%, out of which 2% comes from Interconnect, 3% from fixed services, and 5% from service revenues in mobile. On the positive side, we have seen a stabilization in the postpaid subscriber base in the past quarters.
Customer base is now minus a few percent year-on-year, if we compare quarter-to-quarter, and our network has recently come on top in a series of measurements. So the operating position has improved throughout 2013 into 2014. We are in a transition in Denmark, and it will take time to reposition the company, and we hope to see effects late 2014 into 2015 of these efforts. We then go on to move on to Asia. We have two very strong South Asian activities in Thailand and Malaysia. In Thailand, DTAC, DTAC's migration to the license network is on track. The move from the concession to license regime is already contributing significantly to regulatory cost savings.
The new 3G network now covers 70% of the population, and almost 60% of dtac subscribers have been transferred to the new network, and also explains, of course, the higher CapEx in this period for dtac. Interconnect cut from 1st July 2013, continues to weigh heavily on the reported revenues. In addition, the competition remains intense, and the recent weakness of the Thai economy also put some pressure on the top line in this quarter. Digi in Malaysia once again demonstrates its robust performance, both in terms of revenue growth and profitability. The 7% organic growth in subscription and traffic revenues is driven by solid mobile data trends on the back of the company's very focused Internet for All strategy. A bit further north, we have also two strong performing activities in Bangladesh and Pakistan.
Both countries see an improvement in the business environment this quarter, where we have seen both regulatory changes and political unrest in previous quarters. In Bangladesh, we've seen less disruptions and a resumption of economic activities after the elections in January. Grameenphone added 1.6 million new subscribers, and average daily service revenue showed a positive development during the quarter. The 3G network now covers all 64 district headquarters, and around 40% of our customers are now having access to the 3G network. Several initiatives to drive awareness and relevance of mobile internet are taking place in this period in Bangladesh. In Pakistan, Telenor Pakistan added 1.8 million customers and saw 9% organic growth in subscription and traffic revenues this quarter. 2% of this growth comes from financial services.
In April, we secured 3G spectrum in a 2.1 gigahertz paired band, for the reserve price was $147.5 million. With a 3G-ready network already in place, we are planning a rapid rollout across Pakistan, and service offerings have already been developed and introduced in partnership with Facebook, for example. For the last operation in India, fully now operational, not forgetting that Myanmar will come on board later this year. In India, we have seen a very solid customer uptake period in this quarter. 2.5 million new subscribers versus 2 million in Q4 2013. And this quarter reports a 44% organic revenue growth, compared to 36 in previous quarter.
So we are on a solid growth line. In parallel to this, churn continues to decline and is currently around 4% per month, which is in line with incumbents. We are now taking the leading challenger position in the circles where we are present. We are successfully positioning ourselves as a provider of affordable, basic data services. Our Internet For All strategy was launched in March, focused on the time-based offerings of both Facebook and WhatsApp usage, by running fixed offers in INR per day or per a time period. 15% of our customers in India are now active data users. In February, we also secured a supplementary spectrum in four of our circles and added a new circle, Assam.
As communicated in February, we plan to redeploy 5,000 sites this year, sites coming from those circles that we closed during the difficult period around the license. The launch on new sites will impact operating cash flows in India this year by approximately NOK 600 million. In the first quarter this year, we have been able to launch around 1,000 new sites, and we already see a quite promising revenue contribution from these new sites. We also have a record high average revenue per user in India throughout this quarter. To conclude then, mobile data represents the next growth curve for Telenor. Our total consumer base is now 172 million, 20% are currently active internet users.
As we can see from the graph here, seeing Europe more or less 50/50 on being internet users, this percentage is low in Asia, and we see this as a very interesting growth potential going forward. We are working hard to increase the number of active internet subscribers across all our markets by enabling and stimulate usage. At the same time, of course, we have to make sure that we monetize on the, on the heavy networks investments to realize this, also including the spectrum processes, which are becoming more and more sophisticated as we move along. All in all, we look at this first quarter in 2014 as a solid quarter, and we believe that it leads to an exciting start of this year. Thank you. So then, I leave the floor to Richard.
Thank you, Fredrik. Yes, an encouraging start to the year. A lot of positive one-time effects in this quarter, which I'll come back to. But maybe most importantly is that the big Telenor machine is ticking very well in this quarter. And I will take you through some of the metrics that are key to understand why I can say that, and that goes on the revenue, and it goes on the cost programs, and it goes on the CapEx. I'll go through that in more detail in my presentation, and including the guiding. But let's start with the revenues. We have increased revenues year-on-year by NOK 1.8 billion this quarter. That is one of the highest revenue growths in nominal terms we have in Telenor. Three factors contributing to that.
We have some acquired entities, Globul and the Tele2 fiber and cable business, contributing about 3 percentage points to the growth. Then we have currency effects, positive this quarter, also 3 percentage points to the growth. And then the organic revenues have grown about 1.5%. So in total, more than 7% reported growth this quarter. But the main thing is the organic service revenue growth, and we try to visualize that in the right-hand chart here. And as you see, organic revenue growth is at 1.5%. But then it's very important to remember the interconnect effects in Thailand, taking the revenue growth down by 1.7%. And remember, this has no profit effect because we have an offsetting on the cost.
So what matters are the green bars here, and particularly the two to the left, which is related to our mobile business. The mobile business, underlying growth in the mobile business, contributes 3 percentage points to the growth of Telenor. That's key. That's where we make the profit. And 3% on the mobile, subscription traffic, and then including devices, because it's a part of it, that translates into approximately 5% organic service revenue growth on the revenue base on mobile, which is around 60% of the revenues. So when Fredrik said in his presentation, we have 5% underlying service revenue growth, that is on the mobile revenue base, and that's what we measure on this slide, which is key to understand the profit development of the Telenor group.
The blue line here is the sum for the group in underlying mobile service revenue growth, and that has been fairly stable over the last two years, as is visualized here, between 4% and 6%. This quarter, we see Asia, the red line, is stable. dtac is down, which I'll come back to, but that is compensated by improved growth in India and then Pakistan in particular in this quarter. Europe, more or less stable, but the most encouraging in this quarter is that we have managed to turn the black line, Telenor Norway, into positive organic service revenue growth. And with big investments in Norway, that is absolutely vital, and that is a trend line we work to continue to work in this direction. So it's a good start of the year.
Our ambitions are actually higher. As we said in 2013, the blue line is strong, but our ambitions also in 2013, are higher. So we're dependent on solid, momentum, on, the investments we're making in Norway, and also revenue pickup in Thailand, which I'll, come back to. But all in all, going in the right direction. And this revenue growth of NOK 1.8 billion for the group, that translates into a gross profit improvement of NOK 1.5 billion. And that comes from three effects again. About one third comes from currency, one third come from acquired companies, you see it here from Globul and also then Tele2. But strong underlying service revenue growth translates into gross profit improvement across the group, and particular in this quarter, Grameenphone, Sweden, Digi, and India, are contributing very well to the gross profit development.
So then we're down to gross profit, and what's next? Yes, that's OpEx, and we have laid out a cost program back in 2012, where we should save gross OpEx of NOK 5 billion in the years 2013, 2014, and 2015, and we're well on the way to achieve that. We have visualized here, the two biggest mobile units and their progress, towards the cost target. Norway aim to contribute NOK 2 billion, of the NOK 5 billion in the cost target. And as you see, Norway delivered on the cost-saving ambition in 2013, and with the actions now taking in 2014, well on the way to deliver on, the saving target for 2014. And then the pipeline for 2015, with concrete initiatives, are also starting to fill up. And also, a lot of the CapEx we're using in Norway is intended to take out, costs.
So well underway and good progress so far this year. And then the regulatory cost savings in Thailand, which is, together with the cost-saving program in Norway, the biggest cost-saving initiative in the group, where we spend significant CapEx, close to NOK 3 billion, both in 2013 and 2014, to migrate the network from concession to license. And dtac has laid out ambition to halve the regulatory cost as a percentage of service revenues towards 2016, from 31% to around 15%. And they're progressing well. Now in first quarter this year is the first quarter where we see significant improvement on the cost side. And EBITDA margin in dtac is improving from 31%-37% year-on-year, largely due to the regulatory cost savings coming through.
So the two big units are contributing very well now to the cost agenda, and in general, across the group, we are delivering on the cost-saving agenda. So that translates into solid improvement in EBITDA. EBITDA margin stands at 35%, that's up 1 percentage point from last year, and the EBIT- EBITDA improves close to NOK 900 million year-on-year. Some comes from acquired companies, Globul NOK 238 million. But you see the strong performance on both the revenue and the cost sides, translating into solid EBITDA improvement in Grameenphone, Sweden, Digi, and in general across the group, with a few exceptions. Then to the CapEx, because we don't see a similar improvement in the cash flow, because we are increasing CapEx year-on-year with more than NOK 800 million kroner.
As you see here, CapEx is NOK 3.7 billion in the quarter, compared to NOK 2.9 billion in the similar quarter last year, and that is 14% CapEx to sales. We're guiding the full year 16% CapEx to sales. So 2014 will be a very heavy CapEx year for Telenor. We expect that to come down in 2015, which I will come back to. The right-hand chart here is very important to understand where we are in the cycle now, Telenor. As you see, we have visualized here Sweden, Digi, Denmark, and Hungary as a representative for our mobile operations. We have been able, during the last four years, through heavy network swaps and heavy data growth, to run those operations at around 10% CapEx to sales, like we said on the capital markets day back in 2010.
And how have we done that? Yes, we have deployed network sharing. We have worked with partners to become more efficient. We have utilized global's or global sourcing strength and new vendors, in particular from China. And we have executed the network swaps well and deployed the CapEx carefully. So the underlying CapEx for our mobile operations are around 10%. So why are we then guiding at 16%? is a question we're asked all the time, and we're asked a lot after the Q4 presentation. First of all, we're launching a new satellite this year. That's about 2 percentage points, so it's you can take from 16 down to 14, which is the level we are at now. And then I want to explain DTAC.
DTAC is the purple line, and DTAC, before we started the moving the network from concession to license, had a CapEx to sales on average around 10%. We had some very low years, before we swapped the network and also built out 3G on 850 under concession. But now we're spending now close to NOK 3 billion, both in 2013 and 2014, to move the network from concession to license. We would never done that unless we saw the regulatory cost saving, not at least in that speed. But that has a very strong return on its own and should normalize back to the levels where you see, the other companies. And we will, see a lower spending on that in DTAC, next year. So that, including the satellite, is the second explanation.
And then the third explanation is the increased CapEx in Norway. We have increased CapEx spend to fiber because we see we can now deploy fiber profitably to the home, and increased fiber spending to the base stations, which we also share with our competitors, where we get the revenues. And we were later on our competition with 4G deployment, but when the handsets were ready and we had the spectrum, we have increased the CapEx spend on 4G. And that is a lot on coverage as well, and coverage in Norway is expensive. So the CapEx trend in Norway is going up from 12 percentage points of revenue to 18 percentage points of revenue, which is then the key underlying reason why we deviate from 10%.
But if you take out the satellite and DTAC, you're back to a level of around 12%+, so then the big, big, trend shift is in Norway. And that's why we're so concerned when Norway shows negative revenue figures, because we need to see profitability on these increased investments. And that is the variable going forward, how much CapEx will we deploy in Norway going forward, and that depends on how well we're able to monetize. And again, a very encouraging start of 2014 on this metrics. Then on the cash flow, yes, a strong EBITDA improvement of close to NOK 900 million, but then NOK 800 million more in CapEx, so cash flow is only marginally up for the group, but still very strong at NOK 5.6 billion, despite very heavy investments.
So we're able to improve cash flow in a record high, investment environment. Then on the P&L, I said we had very many positive events, this quarter. Some of them are hitting, the P&L, some of them are not showing up in the P&L, but let's maybe start with some that not showing up. We had the license award in, or final license award in Myanmar. We had two successful license auctions in, Pakistan and India in this quarter. Then we have sold, Conax. That will give an accounting gain of NOK 1.2 billion. The cash came in April fourth, and it will give a cash gain of around NOK 1.5 billion to the Telenor Group. We finally got the license offset in India.
That will have a cash effect over the next 10 years, as it will be spread out of the deferred payment we have to the Indian authorities. But in total, we could book an income of NOK 1.8 billion, distributed between EBITDA and net financials. Then we have one negative, that's from VimpelCom. VimpelCom resolved the situation in Algeria. That resulted in a settlement of tax disputes in Algeria of a total $2 billion. VimpelCom owns about 50% of the asset in Algeria, and we own about 33% of VimpelCom. So we take 1/6 of what VimpelCom books. So when VimpelCom books $2 billion as a cost, 1/6 of that is NOK 2 billion . So $2 billion becomes NOK 2 billion for us.
So in total, from these events, we have a net impact of NOK 1 billion to our P&L this quarter. Then the full P&L, we have been through down to EBITDA. You've seen all the items there, positive of NOK 2.6 billion. The main effects there are the sale of Conax and the license refund in India. So a very strong EBITDA due to those one-time effects and strong underlying EBITDA. D&A up, we're writing off the network in Globul, in addition to increased depreciations following the high CapEx in Norway. Associated companies are negative, largely due to the settlement in Algeria that we went through. Low net financials this quarter, lower interest costs and currency effects and so on.
I would say normal taxes, but important to note, an increased leakage to minorities in non-controlling interests, because we see strong profit development in GP, dtac and Digi, where we don't have 100%, so that leaks out the minority. So the net income to Telenor this quarter is, NOK 3.7 billion, or NOK 2.43 per share. Then to the balance sheet, net debt. We're also improving, our financial position, this quarter. Net debt to EBITDA is down from 1.1 to 1.0. EBITDA is up and debt is down. EBITDA we've been through. The debt is down approximately, NOK 2 billion. Strong EBITDA, but two of the one-off items, like I said, both, license refund and the sale of Conax will not have effect in the first quarters. You have to correct that.
That's the 2.9 billion you see there on the, on the right-hand side. Then significant CapEx this quarter, NOK 5.9 billion. That's also license payments in Myanmar and other license payments, in addition to the operational CapEx of NOK 3.7 billion I went through earlier. So despite a record high CapEx level and license payments, we're able to reduce debt. Low taxes this quarter, but also we have some positive effects on working capital and revenue share and currency effects. And I would like maybe a small comment on working capital. If you follow this over the last two, three years, you can see a lot of money coming in on the working capital by systematic work on improving working capital in the group.
Important to continue to work on that to control the debt level. Then to the guidance. We are maintaining the guidance for 2014. On the revenue growth, we have a good start of the year, 1.5%. Like I said, we aim higher. We see a need for strong profitability on the investments in Norway, and we expect a revenue pickup in Thailand, and the interconnect effect in Thailand will disappear from the second half. So I think the guidance there should be fairly robust. Then the EBITDA margin, we maintain the guidance in line with 2013. We are 1 percentage point ahead so far this year, so you may say it be on the conservative side.
But it's still early in the year, and there's a lot of work to be done in all our units, both on the revenue side and the cost side. So, we decided to maintain the EBITDA margin despite that we are well ahead in the first quarter. CapEx to sales, I've been through 16%, with explanation on satellite, Norway, and dtac. There's nothing mysterious there, and that should come down significantly in 2015. And that, I will make some words then on the 2015 ambition. We have an aim of an operating cash flow in 2015 of NOK 28 billion-NOK 30 billion. The main drivers behind reaching that ambition is a continued strong mobile service revenue growth, combined with good cost control.
In 2013, our trends were not as strong as we expected and made the ambition harder to reach. We have an encouraging start of 2014 that takes us in the right direction, but we're now fully dependent upon strong profitability from the heavy investments in Norway, improved revenue growth in Thailand, and good execution on our plans for the rest of the group. Summing up then, a good start of the year, solid start of the year. A lot of solid, positive one-time events around, auction in Pakistan, auction in India, license award in Myanmar, license refund in India, and the sale of Conax. But maybe more importantly, is that the big Telenor machine is now back on growth, and we're executing well on the cost programs.
Then finally, I want to end with an invitation, like Fredrik ended his presentation, showing that about 80% of our customers are still not connected to the internet, with a big potential in our Asian operations. We have arranged investor seminar in London, the sixth of June, where you'll get the opportunity to meet people from our business units that are executing on the Internet for all strategy in Asia on a daily basis. I think that will be highly interesting, and I hope we see as many as possible of you there. So Meera, then we can take Q&A.
Thank you, Richard. Could I ask Fredrik back on stage, please? We will now open up to the Q&A session. We'll start here with the audience present. Any questions? The microphone will be reached to you. No questions at all? All crystal clear, it seems. Okay, we'll take one of our online questions before we open up to the phone lines. It's actually a question on Globul, Bulgaria. What is your evaluation of Globul's performance? Are you satisfied as of yet?
I would say that, Globul coming in is actually as expected, even a little bit ahead. The company has come into the Telenor Group and showed eagerness to share in, in what, Telenor as a bigger industrial system has to offer. And of course, some of the decisions that have been taking, leading to a complete network swap, embarking on a new phase for the company, is also a big motivating factor. So, as for now, no negative surprises of significance. A positive drive in the whole of the organization, and a little bit ahead of plan, on integration to the Telenor Group.
... Thank you. Any questions from the audience? If not, we will open up the phone lines. Could the operator please take the first question?
Our first question comes from Andrew Lee of Goldman Sachs. Please go ahead.
Yeah. Good morning, everyone. I just had a question on Norway, and then one on Denmark. Norwegian Mobile, you delivered weaker growth than might have been expected in what should be a strong market, last year, but this has recovered well. I just wondered how sustainable you think the current growth rate is, and in relation to, Richard's, closing comments, and what growth rate do you need at a minimum to get, from your Norwegian mobile business to get towards your group 2015, ACF guidance? And then just secondly, on Denmark, clearly, conditions are still very difficult there. We asked last quarter if you need to have a consumer business in Denmark to fulfill your Pan-Nordic service offering to corporate customers. So I just wondered if you had any update on your thoughts there. Thank you.
The sustainability of what we've been doing in Norway, I believe, is quite strong. And the way we have repackaged the pricing structures towards the end of 2013 and into 2014, also trying to conclude with new service offerings towards specific segments just recently, this month. We believe it will give a long-term visibility on better aligning the underlying consumption and the growth in the data consumption and data activities in general with the pricing mechanisms. But of course, this also depends fully on how competitors view this landscape.
We have always been talking about the need to link revenue drivers with cost drivers, and we believe that we have a better alignment on this as we move into 2014 than what we had in a couple of quarters last year. To move into metrics on how much do we need specifically, I don't think that that becomes a little bit too detailed, so I don't want to go into that one. As for Denmark, the question that you raised is also on our mind, and we addressed the question in as well. It is a fact that the market leader, TDC, has the overall momentum and a very strong position in particular in fixed line services.
The three competitors struggle to find their way on sustainable economics in their investments. One could anticipate that the sheer facts on how the Danish market is structured should lead to this kind of discussion, not only on our table, but also on other tables.
Next question, please.
Thank you.
Operator, the next question, please.
The line has been cut.
Anyone on the phone? Do we have any questions from the audience in the meanwhile? Anyone curious?
Mr. Torgersen is not here today, so.
Marius from E24?
Someone might step in.
We have a journalist, a curious journalist.
Yeah. Oh, welcome.
Marius Lorentzen from E24. I have a question about Myanmar. You started reporting it as a separate segment this quarter. And you noted that you spent about NOK 3.2 billion in CapEx, of which 2.9 is the license. But how the pace of investments of about NOK 300 million, which I assume is network and operations, is that a pace that will continue over the coming quarters, or are you expecting it to be more front-heavy this year?
Well, this is front-heavy, the first year, of course. However, the coverage that will be in place by the end of the year is not at all the full coverage needed, so it will be a, as always, the two-three first years of a normal operation have significant investments carried in, carrying with them. But here we are also then doing tower rentals, so we don't carry all tower structures on our own investments. That is an OpEx structure, which is more usual in India, sorry, in Asia than in Europe. I think we can say that progress is very good in Myanmar. We have all aspects of preparing for launch under reasonable control.
The most challenging part has been that of getting the tower companies in up to speed when it comes to get the tower physically into the geography. And this is a also mind I have to remind all of us that the fact that there are no administrative procedures in that society for such a industrialization process, which now is starting in the country. So, this is quite groundworks. If greenfields had a, in a way, it's the right expression, it must have been born in Myanmar, because this is really a greenfield. Thank you.
... Okay, thank you very much. I think the operator should now be online. Can we try again? Next question, please.
Yes, our next question comes from Peter Nielsen of Kepler Cheuvreux. Please go ahead.
Thank you. Two questions, please. One on Sweden and one on Denmark. You already discussed Norwegian revenue trends. Sweden, you have for the past year, I guess, reported extremely strong underlying mobile service revenue trends. Did you see those trends continuing for the remainder of this year? Do you see any reason why it shouldn't? And secondly, when will the strong underlying service revenue growth, i.e., adjusted for the handset discounts, come through in reported service revenues as well? And secondly, if I may return to Denmark. You've obviously seen improved momentum in subscriber intake, but clearly it comes at a high cost, both to yourselves and to the market. You contributed to the reintroduction of handset subsidies in combination with very low prices.
You are expecting to see improved trends at the end of the year. Do you think these current negative trends can be reversed later to the benefit of yourself and the whole market? Thank you.
Yes, in Sweden, what we have seen in Sweden, and I think that's the market in general for the market is a slowdown in handset sales. I think the Swedish market is now waiting for new innovations from Apple. And then you will see a pickup in the overall reported growth. But the reported service revenue growth now in first quarter is also stand at 2%. And you'll see the effect of the handset discount gradually being washed out, as this was a new way of packaging or offering in Sweden that was introduced, I think now two years ago, and it takes a while before everything is moved over to the same structure. But the main factor will be the handsets.
When it come to Denmark, yes, we see, like Fredrik said, is that the EBITDA pool in the Danish market is largely taken by TDC. And unfortunately, it's a market also that is moving with subsidies, even if you only have a six-month commitment to the customers. But we had so massive subscriber losses last year when we tried to be more rational in the market, that that could not continue. So we had to use the measures available to stabilize the customer base. And unfortunately, that results also then in a, in a lower EBITDA for us in the Danish market. Whether or not this will pick up, it's very hard to say. It depends on the market situation.
I think, unfortunately, we see offers in the Danish markets that are price data very low from our competitors. So, the Danish market is in a very difficult condition, and it's very hard to point to an improvement in that market.
Okay, thank you.
Next question, please.
As a reminder, to ask a question, please press star one on your telephone keypad. Our next question comes from Dominik Klarmann from HSBC. Please go ahead.
Oh, yeah, thank you. Well, firstly, just to clarify the 2015 operating cash flow target, that still includes the Myanmar startup losses. And maybe you can share a bit more color on how we should think about you getting there. I mean, if I assume a sharp fall of CapEx sales to just 10% next year, I would still need a significant acceleration of EBITDA growth. Where is that coming from? And then, secondly, on India, maybe it's just a big picture question.
Does India look more attractive to you today than, say, two or three years ago, when you, you know, balance the improving pricing environment, the improving regulation against the operational challenges and, you know, the challenge to get breakeven and actually generate returns? So curious about your thoughts there. And then maybe just a third question on the idea behind the new mobile tariffs that you introduced in Norway and why you are launching those now. Thank you.
This was a whole series of questions. So, let me start on the aim for 2015 cash flow targets. Yes, it includes Myanmar, but it also includes Global. So, in the first three years, those two operations more or less compensate each other. And in 2015, what then is EBITDA contribution, cash flow contribution from Global should in a way, more or less compensate for the programs that are executed in Myanmar. And yes, you're right to the effect that we need that kind of improvements.
But as also Richard tried to allude to through his presentation on CapEx, there are a pretty important CapEx element in this. Number one, the satellite will not be there in 2015.
... most of the program for DTAC when it comes to heavy investments to do the 3G generation deployment, moving from concession to license will more or less be done. And on top of that, the growth aspects of the Thai economy should also be there. It's slow in this quarter and probably also slow in the first half of this year. But we hope that second half year can show more dynamics in the Thai economy. And then, of course, what is needed here is to see that the trend line that we now see in Norway continues.
And that alludes strongly to the third part of your question, namely that of a successful redefine of the service offerings in Norway, in such a way that we stimulate our customers to upgrade to a higher service offering. And we see that is working quite well right now, but that trend needs to continue. And more so, India will not be on the minus side in 2015. India will be on the positive side. So there are a number of elements here, which clearly can show that there is a realistic possibility to aim for the targets in 2015, that we've spelled out to be between NOK 28 billion-NOK 30 billion operating cash flows.
Then, for India, more attractive? Yes, of course. But by all means, when you referred two-three years back, that was at the bottom of the curve. But does the lines in India go to sky high from here? Absolutely not. But we are differently positioned. We are on the move. We have a very good traction where we offer services. When you saw the March statistics of customer acquisition, in relative terms to where we are having distribution in India, we are clearly on top of the statistics on getting new customers on board.
So that means that our affordable service offering really is broadening into segments that get the taste of mobile communications for the first time in their life. And at the same time, we see the average revenue per user growing. And of course, one important effect is that also churn is coming down. And when we add all these kind of elements, we are on the positive trend line in India. But we've also come to learn that India is full of surprises. So we are preparing ourselves also for some elements of surprise. And what it will be this time that is difficult to say. But in the meantime, we are positioning and making the Uninor operation as strong as we possibly can do.
It is very, very good to see that Morten Karlsen Sørby, who moved from group management to India as a CEO, really has got the grip on this in his first quarter, based upon what was so solidly executed in 2013.
Thank you.
Great, thank you.
Next question, please, and could I ask you kindly to limit yourself to one question? We have quite a few callers on the line. Thank you.
Our next question comes from Barry Zeitoune from Berenberg. Please go ahead.
Hi, it's Barry Zeitoune from Berenberg. I'll keep my question to Denmark. A lot of the focus has been on whether you could be a seller. I'm also interested in whether you could potentially be an acquirer. I'm not really talking about mobile assets, but more in terms of the fixed line assets in Denmark. We've seen you are building out fiber in Norway, you've acquired fiber in Sweden, and the fixed line market in Denmark is obviously a very good market, and there could potentially be a number of fiber assets available in that market. So I was just wondering whether you've got any interest in investing further in fixed line in Denmark, or whether you're just comfortable where you are, and want to see where that business goes. Thank you.
Well, we're not comfortable with what we have and where we are. On the contrary, we are putting a lot of efforts into improving the existing operation, and right now we're concentrating on that. And that means that we are not extending the operation in any direction in Denmark, in our fold right now. That doesn't take away how the mobile space is going to address the fixed issue over time, because fixed line operation also will play a role, in particular, when it comes to Wi-Fi offloading, and when it comes to how the last mile actually eventually evolve into the future. So let's make that a bigger and more strategic industry question at a later stage.
Thank you.
Okay, thank you.
Next question, please.
Our next question comes from Stefan Glevén from Nordea Bank. Please go ahead.
Yes, hello. We've already talked about the cost initiatives in Norway and the entire regulatory improvements. I would like to focus on some other issues relating to Pakistan and Hungary. Despite a record high or a very, very high subscriber intake in Pakistan, you had a fairly good margin, and I believe that comes from impact from the network swap. And I wonder if you could give some information regarding the energy savings that this network swap has created. Secondly, last quarter, I sensed a concern how the telecom tax in Hungary would play out, given unlimited voice and SMS plans. And I wonder if the development in Q1 has eased your concern related to this?
Yeah, let's start with Pakistan. We have concluded a network swap, and we see significant energy savings from that. We also changed the battery systems on several of the base stations, which also contributing well. But we're also seeing a somewhat better energy situation in general in Pakistan in the first quarter. But your question is appreciated. It's on our top five list of OpEx initiatives in the group to improve the energy situation in Pakistan, and so far we have delivered well. When it comes to Hungary, the same concern is there. It's a very strange situation when you include free SMS and minutes in your packages, and the telecom tax is based on the consumption.
So, you're really paying tax on something you cannot price, so it's a very unfortunate development in the Hungarian market.
Okay, thank you.
Our next question comes from Jakob Bluestone from Credit Suisse.
Hi, good morning. I've got one question on VimpelCom. Could you perhaps just update us on what your, your current thinking on the ownership of the asset is? How core you see it, particularly, in light of the sort of political situation with the sanctions on Russia? You know, does that affect your desire to have a material exposure to the Russian market? Thank you.
I think the whole situation between Ukraine and Russia is a very unfortunate one, not only from an economic and investment point of view, but also from a human point of view. So I really hope that the parties there can get to terms and get to the table. From a business perspective, we are in VimpelCom, and we are where we are, and right now, we have to position the company on operating aspects in each and every market that VimpelCom has. And I think the VimpelCom management is exactly doing that. It's far too early to speculate on what kind of development the potential sanctions can have on this operation, all in all.
Generally speaking, though, telecoms, as an industry, also is a needed infrastructure, a needed service under all circumstances. So from that perspective, the operation as such will move on. But of course, how deep potential sanction, sanctions will go, that remains, remains to be seen. And I really hope that that kind of escalations can be avoided.
Thank you very much.
Thank you.
Next question, please.
Our next question comes from James Britton of Nomura. Please go ahead.
Hi, good morning. I have some, well, a question around the new mobile plans. Can you just detail how these plans are likely to drive forward your revenue growth in the Norwegian mobile market? How quickly do you actually expect the customers to actually move over to the mobile and new 21 plans? And is this going to be a matter of years, or can you actually accelerate the transition? Thanks.
Yeah, thank you, James. I think if you look at our reporting for the fourth quarter and the first quarter, we had a lot of focus on upselling to higher price plans, and that's been quite successful. So now we have changed the portfolio somewhat for new subscribers, and we have increased kind of the entry fee to get into Berit's excellent network. So the lowest package you get for NOK 199 , you get a fairly limited data volume, and then you pay more logically for how you increase the data volume.
And maybe, most importantly is, the new price point, which we introduced at NOK 349, because we felt the step from NOK 299 to NOK 399 was maybe too big for some consumers. So now we have a good package, to upsell from NOK 299 to NOK 349. And at NOK 349, you get 4 GB included. So we feel with these adjustments, and also simplifying the overall portfolio structure, we have a structure that now starts to look more like we've seen in the Swedish market.
We've also taken away a lot of the kind of more voice-centric plans and introduced a simple voice package, which also have some additional benefits around at NOK 119. It will take some time to move customers over, because this is for new customers only. But we have fairly good track record on this now, and I would especially, in a way, salute our customer service activities that have been very strong on upselling and giving customers good advice on what kind of package they should use, which is a win-win both for the customer and Telenor.
We'll take a few more questions due to the technical mishap early on. So next question, please.
Our next question comes from Ulrich Rathe from Jefferies. Please go ahead.
Thank you very much. In the big picture, where would you currently put the emphasis if you had the freedom as the year unfolds, to maybe stimulate growth a bit more, or indeed, sort of try to report better margins? Where would the emphasis be? And in particular, in this context, how would this balance look for you in Norway, given that the headcount cuts will contribute in terms of cost savings only from the second quarter, and you have very strong growth already? Would you then reinvest the potential upside to really sort of keep the momentum up, or is this really something more on the margin? If there's a simple answer to that. Thank you.
There is a simple answer. In Telenor, we always think long term, and that means that if a short-term exercise or decision looks stupid, then we wouldn't do it. So that depends on the market situation, and we will prepare for the future at any point of the decision-making.
Next question, please.
Our next question comes from Thomas Heath from Handelsbanken. Please go ahead.
Thank you. Question first on India. Could you update us perhaps a little bit on the room for consolidation there, given that the regulatory climate has changed a little bit from time to time, and if you see any opportunities to grow size non-organically? Secondly, Schibsted reports a quite significant loss in your joint online ventures today. Is there any cap to how much money you're willing to inject into those ventures? Thank you.
Consolidation India. Of course, we are a player in India. That means that we follow what goes on in India, and as usual, India will be full of speculations and rumors and headlines. So, what can be said on that score? We're following, and we're in a way trying to have a radar screen and see what kind of moves there are and what kind of windows there might be. So that is a general kind of answer. Yes, any Schibsted any loss-making on a business initiative like classified will have a start-up period, and this one is no exception. And yes, there is a maximum kind of investment limit that has been discussed and agreed between the partners.
So, the way we see this develop for the time being is that the most of the markets are in really speedy development into classifieds, and we believe that this trend will follow in Asian countries, as we've seen it in Europe, as we can see it in Brazil these days. And we also reckon that the relationship between the mobile business model and the classified model is an interesting model to try to find out new dynamics and deploy them in the marketplace.
Next question, please, and could I kindly ask you once again just to limit yourself to one question? Thank you.
Our next Maurice Patrick of Barclays. Please go ahead.
Oh, hi, guys. Yes, Maurice here. So you talked about data growth in India. You haven't got that much spectrum in your circles, and I guess I'd love to get your thoughts in terms of how long you think the current spectrum allocation you have will suffice. Thanks.
Yes. Good morning, Patrick. We, we acquired some more spectrum in, in the last auction that will, carry us further. And, but I think maybe more importantly is, is how we, do the go-to-market and the total end-to-end planning of this, because we are doing this differently, in Uninor than we've done in any other market, where we introduce this, on light, usage services. For example, Facebook without video and, high-resolution pictures consume very little data, and we use the latest on compression, technology, and Uninor is world-class is also utilizing the, the network assets. So the combination of all these three things makes us think it's viable, to continue on an internet strategy, at least, for the next two, three, four years.
Uninor has broken barriers continuously on this to package this way. This you'll also have an opportunity to go through in detail with Uninor on the sixth of June, on our Internet for All seminar.
Thanks very much-
Just a remark. This is the way to sell internet in very low-cost, spectrum-scarce market. Then you have to do it completely differently than we've done it in Europe, and that's where we see Telenor now in the front, and where we see a big value creation opportunity for Telenor going forward. So to really for you to understand this, I encourage you to-
... to come to our seminar in London.
Okay, thank you.
Thanks. Time for two more questions, please.
Our next question comes from Allan Nichols of Morningstar. Please go ahead.
Hi. Malaysia, your subscriber numbers declined in the quarter. Is that purely just that you have a lot of churn in the first quarter, and you expect things to continue to grow going forward? Or what exactly are your expectations for Malaysia going forward? Thank you.
First quarter is purely seasonal. The trends in Digi are very steady, no change.
Thank you.
Next question, please.
The next question comes from Satu Ristimäki from Merrill Lynch. Please go ahead.
Yeah, thanks. I wanted to raise or focus on the Norwegian fixed line situation, that you're seeing quite a lot of increased competition from basically fiber providers. And I was just wondering, how do you see that affecting the broadband pricing? And do you have a specific objective in terms of what should your kind of fiber retail share be in 2015 with your investment program? And then kind of tied into that, at the moment, you're still seeing pretty strong ARPU development on the TV product. And again, kind of, do you see any pressures on the pricing situation there? Thanks.
You're right that the main competitor comes out of the utility side, the electricity sector. And as the market stands there now, we can roughly say, all in all, 340,000, roughly, houses connected in the electricity sector, and roughly 90,000 connected in on fiber in the Telenor space. Plus, of course, that we have around 600,000 on coax in already. So, we are already very visible in broadband to the home and broadband to the business. And of course, we are a player that will consider this as a natural investment area for us.
But if we then combine the three platforms here, the DSL, which will be gradually re-reducing, but still not disappearing completely. And then we add on with low frequency, the low-frequency brand in mobile, the coax and the fiber deployment, we will be a significant market player in broadband to everyone in Norway long term. From a price perspective on fiber specifically, it's not a price competition really, it's more a geographical build-out competition. Who is where, when a geography is ready to receive this. And as you know, the geography in this country is fairly, fairly distributed.
So, some of this geography is very challenging from a cost point of view to do with both fiber or coax, and that's why the old structure, DSL, will survive for a period of time, but gradually also being compensated by low-frequency mobile service offerings.
Thank you, Fredrik. This was actually our final question. This concludes our session today. Thank you for your participation, and apologies for the little technical mishap at the on.