All right. Welcome, everyone. As you can imagine, very little sleep the last couple of weeks, so we are basically running on pure adrenaline, but are really excited to welcome you to demonstrate and showcase to you what we recently have just announced: a bid to acquire the shares in the tech company Doro in Sweden. I think we have record numbers joining us live, and even on this very, very short notice, we almost have a full crowd here physically today as well. So really, really excited. I will take you first through some of the key takeaways on why we think this has a huge opportunity as an acquisition opportunity. Knut will take you then through some of the details in how you can model and how we look into the potential financials.
At the end, we will have a Q&A, where also Kjetil will join, as this is very much so related to SIM and subscriptions. Without detailed information about Xplora itself, but I know actually we have some new potential investors, joining us live today as well. Just one quick slide on Xplora. As you know, we are a category leader within kids' smartwatches for kids age four to ten. Our pure core business model is to sell smartwatches for kids to enable us to activate high-margin SIM and premium services. We have sold roughly 1.5 million smartwatches over the time of our existence, and currently, we have more than 300,000 SIM subscriptions. And as you probably also know, we have three ways to monetize, where our two most common is currently from margin on selling the products, still being north of 30%.
But of course, it's really the key essence of our business model to activate SIM subscriptions, where we have north of 80% margin. Lately, we have also started to announce that we have entered into partnership with revenue-sharing model with some of our strategic partners. Some very few months ago, we invited you all to a Capital Markets Day, where we announced our long-term vision, where we said, quite boldly so, that our objective is to aim for 1 million subscriptions. Those subscriptions should come from our current category, being kids, already 300,000 subscriptions. And as you know, the number one reason, and really the only reason, why we currently have churn is that at the age of 10, kids grow into having their first cell phone, and we have no more products.
So of course, for us to enter into the youth category in the future is a natural way for us to actually reduce our churn. More on that to come when we are ready. The third category that one million subscriptions should come from is the senior category. And as we also said during the Capital Markets Day, we had a very clear focus from 2023 to 2024 to make sure we could pivot from negative EBITDA to positive EBITDA. If we manage that, and only if we manage then, as we have done so in 2024, we should then start to explore new growth opportunity. In the last Capital Markets Day, we announced our goal of one million subscription, and we said that could happen organically or via M&A strategies.
That's why we have been working late hours. We have actually been working on this case for 12 months, last 6 months extensively. So we have a lot of data, insight, and knowledge on why we do this and how we are going to capitalize on such a potential acquisition. So by acquiring Doro, we will go from being a leading provider of a proposition in the kids market to be a European, by far, de facto category leader in both kids and senior. And at the same way as we have our product in that category, Doro have a lineup, which I will show you, in the category for the senior markets. And just to give you a very quick overview on what does this mean just by merging those two companies together in terms of number?
And as you know, this is using 2023 numbers. You can see we have almost NOK 700 million worth of revenue, and you see Doro, roughly SEK 1 billion in revenue. I will showcase to you afterward, but one of the things we have really appreciated with Doro is the stability of their sales and how we can predict it also into the future, but combined, almost 1.7 billion worth of revenue. And we have said several times before that, actually, from just a hardware perspective, we have been quite in the higher end within our category, within our field, having 30% on hardware. Doro actually have demonstrated a gross margin on 40%, which is quite unique because they are currently only selling hardware product as well.
Combined, it's a company that will have, just as is, '23 numbers in EBITDA on roughly NOK 150 million. We also said on the Capital Markets Day, the only way we would ever consider a merger and acquisition would be with someone that could, from day one, provide positive cash.... Knut will take you through some of these details a little bit more, but also, as you can see, more than two million units in accumulated sales from 2023 perspective. It's a really powerful overlap. We are both strong in the Nordic market. We're still stronger in the German market, although as you can see in markets like Spain, France, and UK, which currently are the markets we would like to see more growth, they are very, very strong.
Being in the market for many years, Doro has even broader distribution footprint than Xplora has, which we also can capitalize from our own products. So as I said, this is what we really like with the way we can predict also the future with Doro, very stable, roughly SEK 1 billion worth of revenue, and also over years, north of SEK 100 million in EBITDA, which is something we really like. In total, 26 markets, although the correlation apply to 80/20 rule, most of the volume comes from the same market where we have our MVNO setups. And the product lineup from Doro is not just a couple of few product. They have a broad lineup of product feature phone, where you can actually push some physical buttons, but also they have introduced a lineup of new smartphone.
But their key intellectual property is related to the user interface and how the users are engaging with those products in terms of the software, the application, even the sensitivity and the temperature on the screen optimized for senior users. This is something they have been doing for fifty years and are really the best in class of providing these products. Knut will showcase a little bit more how you can model this. We have done extensive testing. Actually, we have done testing from 10,000 actual live users of this target group to know exactly the data consumption and the profile on their SIM card. That way, we have been able to calculate our expected gross margin on the SIM card, and we know exactly what is the price point that is at average in the market they are buying and using today.
If we could enter into the market with an average end price, monthly NOK 200 per SIM, it will be a very price competitive price point, as well as drive still north of 80% margin. That is done by physically testing 10,000 actual users in that category to optimize the or understand the profile. Okay, the opportunity itself can be summarized in one single slide, and it's the most important slide of today. As we have said, we are doing this for one reason and one key reason only: to accelerate our service revenue, to add more SIM cards in the market to drive service revenue. Xplora today, on an annual basis, we're selling roughly 500,000 units, of which, at average, 25% will activate our pre-installed SIM card, which up today have led us to 300,000 subscriptions.
When we are now hopefully closing the deal to acquire Doro, we will access an annual 1.5 million sales. That's three times the volume we have today, or a total quadruple of the sales volume. We just also said we have tested the SIM profile. We know we can achieve the same gross margin, north of 80%, on those SIM cards. And also, we have estimated a roughly 30-month lifetime on kids, because at the age of 10, you outgrow that category. We estimate at least twice the length of the senior market, so from 30- to 60-month lifetime value over time.
So our number one key focus is to allow Doro to continue to sell steady pace as one point five million units, and our objective will be to pre-install our SIM card exactly the same way we pre-install in our watches, to aim for the same conversion rate, to aim for the same number upwards toward the same percentage that activate our pre-installed SIM cards. That's a single one success factor and our objective. And the question will naturally be, okay, how do we do that? Who's the customer, and what happens during point of sale? That's what we have been working with intensively for the last six months, part of the due diligence. This is two typical customer users of Doro. It's actually real customers. The primary audience, or the audience, is primarily two different target groups. Number one, the user themselves, that is normally average age sixty-five plus.
The second category that buy the highest portion of the volume is the family members and caregivers, us sitting here buying to our parents, or primary, the user themselves, 65-plus. The distribution in gender is almost 50/50, but slightly geared toward women, or the female population, simply because of higher life expectancies... and as personas, it's persons that are normally within the independent seniors that would simply just like to use technology to be more independent and more safe. Although they find current smartphones and Apple's and Samsung's, and applications, and downloads, and upgrades, and activation, and all that, simply just too complicated. But still, they would like to have the independence by having something that is really simple to use for their purpose.
Also, normally a slightly target group that is more focused on health-conscious, which is why they have also introduced new products, and of course, the typical caring family members that are buying it for their parents. And what we have really learned is that when that target group, and remember, one point five million purchases every single year, so it's not just something about: Yes, but do people buy this? They have bought this for years at a steady rate. When they come into the store, and we know this by fact, because it's the same distributions as we have on our smartwatches, Elkjøp, MediaMarkt, and so on. When they come into the store, it's not just, "I'm going to buy a watch, a phone that works to me."
It's very clearly, "I'm going to buy a Doro phone. That's what I would like to have. What do you have? Which Doro phone do you have?" It's a very specific request in order to buy. What we will do, same logistics as we have today, we will pre-install our SIM card in every single phone that is being distributed to the retailers and the online distribution channels, every single Doro phone. What we also know on top of that, we have three very compelling marketing, communication, and USPs. It's easier for the user to buy and set up because it's pre-installed, which is very well received by that target group. It's just easier to set up. The SIM card is pre-installed.
We know we can, if we have to, go below the average price point, because the data consumption is so low, that if we would like, we can compete with every single telco in the market in this category, so we could use price. And exactly the same way as we have done with our smartwatches, we can add services on top of the SIM, so we can add, if you choose our SIM card, to also introduce unique services for that target group. So we have three strong USPs to really drive the conversion on our SIM. It's two scenarios. You have Jens, he already have a SIM and a phone number from an existing phone company, or you have Agnetha, that doesn't really care or do not have any preferences on phone number or a previous phone.
That's the two scenarios. Luckily, part of our global MVNO setup we have in nine markets, we, of course, have the technology that makes it super simple to port an existing phone number, which will mean with the ones that already have a SIM card from another provider, the salesperson in the store can say, "Yes, you would like this Doro phone?" The client is saying, "But I already have a phone number." "No problem at all. Just provide me the phone number. I enter that when I punch the bill," and automatically that phone number is activated, pre-installed with the same number. The customer does not have any preferences or a previous SIM card, we just enter the phone number that is on the SIM card in the box.
So we can handle all the scenarios. Technically, no barrier, and a lot of USP to drive high conversion. So we think it's reasonable to believe that over time, we should be able to aim for the same conversion rate as we have on our smartwatches. Currently, roughly 25% of all the watches we are selling. Now, we are heading on a path to do the same on senior, and then Knut will take you through some dynamics in the business model.
Thank you, Sten. It's my pleasure to take you through some of the business impacts of this plan. As Sten went through, this is the combined topline of Xplora and Doro by year end 2023. He also said that the two companies are together providing a very strong EBITDA, 154 million in 2023. The key for us is to be absolutely sure that we protect, first of all, Xplora, what we are doing today, and develop that, and continue developing that as is. We need also to say that what Doro is doing is that they are selling 1.5 million phones. They should continue doing that. So we want to protect both entities, and the only thing we are going to do, as Sten said, we are going to put SIM card into the Doro phones.
Sten also said that today we have about 25% connectivity on our sales of devices or watches, and therefore, we have modeled a similar using a similar approach also for putting the SIM into the Doro phones. In this slide, we have, for the simplicity of it, we have four different connectivity percentages: 5%, 10%, 15%, and 20%. And the good thing about this is that we have a longer lifetime value from 13 months to 16 months on the Doro side, meaning that when they have a SIM card, we will gradually build that on top of each other. So if we, for instance, use a 10% connectivity starting at the time we start push SIM cards, we will have approximately NOK 400 million in additional EBITDA at the end of the period.
It's so simple. It's adding SIM cards, and we can focus on how much connectivity are we actually able to connect to Doro's phones. That's the only thing we are going to do on the business case, and we are only going to sell this to the existing phones in this business case. There is also a history of NOK 1.5 million for previous years as well, but we have not put that into any business case for this. The timeline for this, and that's quite important, is that now we are announcing it. We will send out the offer to Doro shareholders mid-October, that value the company at about 830 million SEK, and we have secured this by debt from two of the big banks in Norway. We fully funded this acquisition by the banks in Norway.
What they have been doing when they actually looked into this case, they only looked into the combined call case, meaning this case, existing case, historical case. We have also included our Q2 numbers. So we are given the loan based on the existing setup, combined call, and they are not taking into consideration anything about the future. So that's the condition that we have received the loan on. So what happens then is that we have already received a positive feedback from 46% of existing Doro shareholders. And we will then. When we have issued the offer, it will probably close around November 8th. We are not completely sure about the timeline, but November 8th is our best guesstimate for the time being, and this is the time when we execute the transaction and the banks issue the debt.
So that's basically the timeline that we have on this transaction. To sum it up, as Sten said, the key thing we are doing here is that we are activating the SIM growth. We are focusing on the SIM growth. This is a pure play, putting SIM into Doro phone, and we have the capability of all our history of setting up this MNO. We know how to do it. We have done it for watches, now we are doing it for phones, and by doing that, we believe that this will create a very strong additional cash flow for the companies.
All right. Actually, with that, we go straight into the Q&A, where we also will have Kjetil to join, since this is heavily related on SIM and mobile connectivity, which is your core area with the team, and we will get all questions from the live audience. Let's start here. Feel free. Øystein?
Thank you. Øystein Lodgaard, ABG. I have a few questions, starting with: you want, of course, to get the highest penetration of SIM cards as possible. How will you price it to make sure that the penetration is as high as possible? Would you price it below competitors? Can you say anything about that?
Yeah, I mean, we have, of course, looked into the pricing in all the nine markets where we are present from different providers and found, like, what we believe we can take for it. We know the data consumption and the voice consumption, so we have calculated, I mean, quite, quite attractive targets for it. But it's also about how we bundle it. I mean, today, with our Xplora watches, we don't offer always the cheapest connection in any market, but it's also the way we bundle and combine the offer. So it doesn't have to be the cheapest one to get the customers.
Good answer. Thanks. And also, of course, you're getting a whole new organization also here on board. Can you say something about what is the technical expertise of this organization? They have a broad product portfolio. Can you utilize that expertise to also develop other Xplora branded products?
I think the simple answer to that is, based on Knut's statement, that we will run it as two separate entity as is, because the number one priority is to allow Doro to do exactly what they have been doing so well for many years, to secure one point five million, where we can drive conversions. But of course, there is complementary and potentially also products that can be a synergy. Like we saw, they have tablets, and they even have phones that we also could potentially explore and assess for kids and youth. But that's more to explore in phase two. Phase one is two separate entities and secure one point five, where we can converge.
Yeah. Thank you. And, then I think you also maybe answered my next question, but I'll take it, either way, just to be clear. So you'll continue to have both separate brands? Will that also then, I guess, apply to your Xplora senior products? Will that- those continue to be under the Xplora brand?
Yeah. So first, two separate brands, for sure, and we're still in the piloting as we went through on the Capital Markets Day, piloting our senior watch. And it's natural to see potentially we can extend our distribution and reach with that product, but details on that to come.
Thank you.
Hi. Hi, Lars Thorsen, private investor. So, I'd really like to stress this one point that I find really intriguing, which is, it's a very simple business case. It's all about how many SIM cards you can sell on Doro phones. Why don't you comment a little bit on actions, activities, incentives? Clearly, you can use pricing. I think you have already told you have put margin potentials on the subscriptions, so you could use pricing. But beyond pricing, why don't you say a little bit about things, activities you envisage to help drive that penetration? Because I think that's going to be the key question.
Yeah. Well, I think we have learned over the years how to sell our watches with our Xplora connectivity. One is, of course, to physically bundle it. One is the different sales channels. I mean, when we sell on web, then it will be relatively easy to do it. It's the onboarding process for new versus existing SIM card holders, and it's, of course, the whole value proposition to the customers. In addition, different pricing models. So with pricing, you can do all kind of combinations, not necessarily to have the cheapest tariff, but to have a compelling offer as a combination of the product and the SIM service, but also additional services. Like we have been able to grow the RPU on our Xplora SIM watch connectivity by adding the premium service, for instance.
We have extended warranties. There is a set of different elements you can add to the pricing to have an appealing approach for the customers.
And I think also you can mention it's a lot of the same retailers where we already have a lot of training structure in place on how to convert in store, which we are doing with the retailers on our current product. And a lot, it's the same sales team even in those channels that we can utilize as well to do the same training on how to sell with SIM. One more in the studio before we go into the live or chat questions.
Yeah. So how many of Doro's devices are sold through the telco channel versus the retail channel?
We have... Let's say, without going into too many details, we have mapped the whole distribution of the Doro between, let's say, the countries, what is addressable and non-addressable today, and that is, let's say, telco use their own SIM cards. So I don't know if I should go into the exact number of it, but it's a large number.
Yeah. I think what we can say is that high level, it's the same channel split as we have, so online, retail, and telco. And also we see it's a correlation, so we have the majority of the volume from online and retail, where we can pre-install the SIM.
Yeah.
So it's mapped out to be quite similar with our current distribution split.
Yeah. But as you see, I mean, we have told you several times here during the presentation that 23% of the volume is what we are aiming for.
Mm-hmm. Just some questions online as well. Can the customer keep their old phone number if they choose to use your pre-installed? Yes. Apology if I was not clear in the presentation. Yes, we are porting the number. Like we said, you can just enter the phone number you have from previous, and we can port that. Another question: Doro sells part of their phones in network operator distribution in different EU countries. What's your approach regarding this? That's also a good question, because as we showcase, even if they are in twenty markets, the majority of the market is really spot on where we have MVNO, so eighty to twenty rule roughly apply. So we'll basically use the same distribution they already have, but since it's in the market where we have SIM, we will, like we said, include our SIM card.
And of course, if they are very strong in some markets where we are not currently present, I think that's the key question also. Of course, we can consider that to be our next MVNO market to set up a new MVNO. How can you capitalize on Doro during your acquisition through potentially new revenue-sharing agreements? That's also a very good question, and like we just touched upon, they have the same online retail telco. Currently, there are no rev share models in the current business of Doro, at our knowledge. But of course, same as we are doing on our kids' watches, we will of course aim to find similar agreements also with the telco. And as Kjetil said, particular, since we will be working hard to add value-added services on top, so both the telco and ourselves can easily increase the RPU.
Last question in here, Can you add some more details on the financing structure, Knut?
I think it's pretty clear that our focus now is that we have been able to secure the funding for to acquire these shares. We have a higher amount as debt compared to the acquisition price of Doro in order to have some flexibility and also to have some additional working capital to and to pay the fees for the transaction. So that's the key focus that we have had for this financing.
Okay, what will be the market strategy with Doro, starting with the big ones or with the one that has a more old population? That's actually a very, very good question, and something we are still exploring to finalize, because we have nine MVNO market, and of course, one key driver for us will be, of course, to demonstrate the conversion percentage as quickly as possible. So of course, we'll be able to look into which market we quickest can roll out the product pre-installed with the SIM, and of course, also into market where we see a high percentage in a short period of time. So we can start to report back to the market, when we start to see that conversion.
And most likely, we will, of course, add this to our already monthly subscription volume at some point when we have a meaningful distribution, because it will all go into the total volume of our subscription with a target of one million. Will you continue to sell in Doro markets where you don't have your own MVNO SIM cards? Answer to that is, short term, yes, potentially also long term. Like also Knut was emphasizing, we will do no changes at the current setup at Doro. It's a very successful business. They do a lot of very good things. Our number one focus is to continue with that one point five volume and add our SIMs. Yes, while you will continue to operate the two companies, do you see the potential of any cost synergies from the acquisition over time?
Which we have not commented, because number one priority, to keep two separate businesses as they are. It's like Knut was saying, the upside on driving the SIM conversion is so significantly large that it outperforms any short-term synergy you could do from operational standpoint, is our point of view. So just to be clear on that. All right, we are on thirty minutes. If no more question, we really thank you for this quick turnaround. Oh, one last question.
One last question from Lars Thorsen.
Yeah.
A shareholder and investor. Any risk for competing offers?
That's also a very, very good question, and of course, we don't know. We have been monitoring both the share prices today, which could give an indication, and so far, no news in that regard. And with the 46% pre-confirmations or positive confirmation, including the larger shareholders and a full vote from the board, we feel comfortable currently at the bid, and we'll work hard to get to the 90%.
Okay, thank you.
All right, we will stay here, 15 more minutes for Q&A with you guys afterward, but thank you so much for joining live and online. Thanks.