Earnings Call: Q2 2018

Jul 18, 2018

Good day, and welcome to the Tele2 Q2 Interim Report 2018 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Derek Stranen, Peres, Head of Investor Relations. Please go ahead, sir. Thank you, Kevin, and good morning, everyone, to our Q3 results presentation. We have, as always, our President and CEO, Alison Kurtzky and our CFO, Lars Nordmark on today's call. You will find the presentation on our website alongside with our quarterly numbers. And as a reminder, on July 10, we published a few restatements to our financials for previous periods following the deal that has been made ahead of the submitting of the merger documents in the U. S, just in case any of the historical numbers look slightly unfamiliar. With that comment, I leave the word over to Alifan. Good morning, everyone, and welcome to our second quarter results on what is a very warm and sunny Stockholm morning, and I can only apologize for the fans in the background. As Northern Europe is obviously enjoying one of its longest and hottest sales on record, mobility is critical to liberating a more connected life, and our mission is resonating very well with customers as we saw yet another quarter of solid growth. Revenue amounted to DKK6.5 billion, up 5% on a like for like basis, driven by both strong data monetization, especially in our international market and from higher equipment sales. We also saw solid mobile engine as a service revenue growth of 5% with very strong momentum in the Baltics, Croatia and Kazakhstan. On the same basis, EBITDAR was up by 12%, mainly driven by the top line growth, which flows through to an excellent 20% increase in rolling 12 months operating cash flow, excluding Netherlands. And if you include the Netherlands, operating cash flow was up 38%. The reason we're excluding Netherlands is as you know, it's now classified as discontinued due to the impending transaction with T Mobile. We are now halfway through a year of major transformation for the Teligent Group and the agenda is running at full speed. In parallel, we continue to deliver results ahead of expectations. This is our 12th consecutive quarter and one in which every market outperformed expectations. This is providing us with the confidence to raise our full year guidance by around 5% as Lal will explain in more detail towards the end of the presentation. But before getting into more details, let me highlight some key successes in the quarter. Starting with our Baltic and Challenger markets, Sweden showed solid underlying trends despite low market hold headwinds and private competition, proving the resilience of both our B2C and B2C businesses. In the Baltic, we continue to deliver excellent revenue and EBITDA growth by 7% 10%, respectively, in low term sense. And as a result, our Baltic Sea Challenger businesses collectively achieved a 5% increase in operating cash flow on a rolling 12 month basis, amounting to DKK4.5 billion and an outstanding 80% cash conversion. In our investment markets, we have excellent momentum, thanks to 4 gs rollout, fearless commercial offerings, improved brand perception and our customers' inspeachable customer data. Kazakhstan delivered another excellent quarter with mobile end user service revenue up 20% in local currency on the back of continued growing ASPU and continued growing customer base. As a consequence, further repayments of its shareholder loan were received during the quarter and total repayments now amounted to DKK600 1,000,000. Croatia also delivered an excellent mobile end user service revenue growth of 13%. The core pillar of our strategy is to have the most engaging, fun and positively fearless brands that our customers love. And a proof point for this customer centric approach is that Palm Beach and Tele2 Sweden were placed number 1 and number 2 in the telecom segment in ServiceScore's annual survey where Swedish consumers make the service provided by service companies. Another highlight in the quarter was the nomination of Tele2's Legenius campaign, the flying house and the Cannes Lion Award, a fantastic recognition for our world class creativity and storytelling. And in Estonia, we took another step of our customer first journey, whereby we closed our Estonian telemarketing channel and redirected resources to better serving existing loyal customers. This initiative also paves the way for a new industry code of conduct to stop pestering unsolicited telemarketing. With respect to our upcoming mergers, a number of key milestones were achieved in the quarter. Starting in the Netherlands, the transaction with T Mobile entered as expected into Phase 2 and we're having constructive dialogue with the European Commission. Moving to Sweden and the merger with Com Hem, we have now submitted the merger documents to the U. S. Securities and Exchange Commission and to Sweden's financial supervisory authorities. And we are also in constructive dialogue with the EU on full sales. We expect to formally file our notification for the Cromm Hem transaction after the summer, and both deals are still expected to close in the Q4 of this year. So let's move into the markets in a bit more detail and first our Baltic Sea Challenger businesses. In Sweden, following a difficult first half of the year with new price plans launched in the price sector segment and increased competitive activity, our business is remaining resilient with both consumer and D3 segments driving asset adjusted for Room Like Home, an underlying growth of 1% in mobile end user service revenue. EBITDA was flat with difficult cost control compensating for a Roam Like at Home impact of DKK37 1,000,000 and a continued decline in our legacy fixed businesses. Our rolling 12 month cash conversion continues to be outstanding and sustained up to 80% with an operating cash flow for the same period of DKK3.4 billion. Despite the strong competition, consumer mobile edge as a service revenue showed a positive underlying trend, up 1%, driven by continued strong growth in Combi postpaid and also IntelliJU SmallScreens, which have positive pass through development on the back of rising data consumption. This was partly offset by continued declines in the prepaid segment. Periods of increased activity in the Swedish market, as we've seen in the last few months, have a trend before. And as we have done before, we have leveraged our strong Geo brand position and our strong customer value proposition to successfully navigate the competitive environment. Combiq's new price list launched in March is working well and also Tele2 have taken successful actions, including a number of targeted campaigns towards high data consuming families, kids and international travelers in particular. So far, these new campaigns are working. And in a metaphorically hot market, we ended the quarter in better shape than at the beginning of the quarter. Postpaid absolute was up 2% in the quarter, mainly driven by Tele2 as customers continue to embrace the benefits of the connected life and in the process consume more and more data with volumes per postpaid subscription increasing by around 50% over the past 12 months. Customer satisfaction, as you know, is our overarching mission to grow sustainable value in our business. Our numerous new commercial propositions and increased service standards continue to improve our satisfaction with Comviet's Metro Motor Score reaching another record high during the quarter and Tele2, despite the pressure from price cycle brands, remaining stable. As in previous quarters, the B2B market continued to be price competitive. Revenue growth was as expected flat as high equipment sales and growth in mobile compensate for the continued price competition, especially in the large enterprise segment. Service revenue was down 5%. Headwinds for Role Like Home and price erosion of the legacy fixed business was partly offset by underlying growth in mobile, which adjusting for Road Life at Home was up 1% as we increased our customer base and hold after is basically stable. Our B2B sales organization is building in effectiveness and confidence every month that passes by. We again had a very successful quarter when it comes to winning new and retaining existing customers. A few new names in our customer portfolio includes the municipalities of Uppsala and Rothenburg, Eperol, Yetigny and the Swedish Sports Federation. We expect this growth in our customer base to enable a continued and gradual recovery of revenue trends in the coming quarters despite the pressure on fixed line services. And we're therefore targeting a stabilization of service revenues before the end of the year. Moving to the pulp ticks, it was another strong quarter for data commercialization. Mobile end user service revenue growth was 7% in local currency, driven by excellent like for like growth in Lithuania and Latvia by 12% 10%, respectively. As expected, this was partly offset by a decline in Estonia, where we suffer from aggressive price competition in previous quarters and the loss of a mobile broadband MVNO arrangement. For the region as a whole, EBITDA increased by 10%, driven by the top line growth and continued excellent cost control, filtering through to a strong increase in cash flow with rolling 12 months operating cash flow up by 12% and an excellent cash conversion similar to our Swedish business of almost 80%. In the quarter, we saw again a strong asset development of 6% as the transition from prepaid to postpaid subscriptions continue and customers trade up to larger data buckets. As in previous quarters, smartphone penetration continues to increase, which obviously supports the uptake of larger data bucket sockets, but there is still room for even more growth there. Our loyalty teams are always fearless accretive when it comes to advertising and PR. And so we were immensely proud of the recognition of our successful flying house campaign with Sleeping Can as we promoted our fantastic 4 gs coverage in Lithuania. Our Latvian network also received positive recognition in the quarter as it was named by the regulator as offering the highest Internet speaking in the country. Estonia, our customer first initiative to end uncoated telemarket telemarketing led the way towards a new core of build up in the industry with the aim of improving customer satisfaction and trust and at the same time as redirecting investment towards our more loyal and our more valuable customer base. So, next, I move on to our investment markets. And in Kazakhstan, despite increased competitive pressure, mobile end user service revenue was up by 20% in local currency, driven by strong monetization of increasingly larger data budgets, as well as continued growth of the customer base. EBITDA was up by nearly 80% in local currency, and we continue to improve our margins, now at 34%, thanks to the benefits of higher ARPUs, increased scale and operational efficiencies. As a result of this excellent momentum, Tel Aviv ability to generate cash continued to improve and is now at 59% cash conversion on a rolling 12 month basis. Further repayments against the shareholder loan of 10,000,000,000 yen which is approximately DKK685,000,000 were made during the quarter. Accumulated repayments now amount to almost DKK600 1,000,000 and the outstanding balance of our shareholder loan as of the end of June was $2,600,000,000 Looking at the CapEx results in a bit more detail, our customer base grew by 4% year on year and absolute was up by 14%, driven by our 4 gs advantage, improved network quality perception and our dual brand strategy with new tariffs on both brands. As I said, despite the increased competition, our focus on improving customer satisfaction continues to drive positive net intake for both the Telesu and Altell brands. As more and more CapEx citizens discover the benefits of the connected life through our market leading 4 gs coverage and our great value from our position, we are happy to see Net Promoter Score continuing to improve for both brands and paving the way for further growth as we look forward. And before I hand over to Lard, we've had a lot of questions recently following the press release from the Kazakh anti monopoly authorities just last week regarding their decision to give a regulatory clearance for Kazakh Telecom to require percent of the voting rights in Capell. Just to be clear, and as far as we are aware, this transit action is still speculative in nature. But to be even clearer, our shareholder agreement has a non compete clause that is applicable in the case the transaction were to proceed, which means that our true option would be triggered. Now with that, I'm going to hand over to Lars, who will go through the financials. Thank you, Alison. I will start by making a few comments on the P and L. We saw a 6% quarter growth of revenues driven by mobile end user service revenue and by strong equipment sales, which more than offset the decline in speech revenue. The quarter revenues were held by an FX tailwind of approximately 1 percent into the weak sector of the euro. At the adjusted EBITDA level, the reported growth was 13% again helped by an FX tailwind of around 1%. In line growth is mainly related to a strong contribution from Kazakhstan with Croatia and the Baltic also producing significantly better figures on the track of strong growth in local end user service revenue. The latter was partly offset by the drag from fixed services and the negative effects from home like at home. Moving down to P and L, we see that items affecting comparability were a bit higher this quarter, which is mainly explained by more cost related to the merger. On the items, we reported changes in the situation of our earn out obligation related to CapEx owned every quarter. This quarter's value has increased to around SEK560 SEK560 1,000,000, which is a good performance of our cat tax business. As a result, this quarter's $54,000,000 non cash cost in our P and L as the value of our liability increased. As for the remaining line items, we saw no major change compared to last year, meaning that a large part of the increase in the operating profit is still to include net profit. Moving on to the next slide, you can see the changes in the cash flow compared to the Q2 last year. Do note that the cash flow statement is on a total operations basis. Here, we'll make some short comments. Jumping to the middle of the table, we can see that taxes paid is elevated compared to last year due to some timing differences. As for the changes in working capital, we saw some effects from timing differences as well as high inventories from the increased equipment sales to Schuhaz Group as well as both selling of more phones as well as an increase in demand for more expensive phones. Looking at paid CapEx, the main difference to last year was lower investments in CapEx Plan and the Netherlands. Again, remember that one difference to the reported balance sheet CapEx is that we have evidence included in this cash flow table. The last line item is other cash items, which mainly includes items affecting comparability. These are, as I mentioned on the last slide, a bit higher due to more costs related to the combined merger. Now let's turn to Slide 16 and one of my favorite slides, showing our operating cash flow with finance adjusted EBITDA less CapEx on a rolling 12 month basis. We have seen and are continuing to see a solid cash flow generation from our Baltic Sea Challenger businesses and our smaller business units, which together drove well over SEK4 1,000,000,000 over the past 12 months. The leading investment markets, Sasakhan and Croatia, continue to go from strength to strength with an operating cash flow contribution exceeding SEK0.005 over the past 12 months. All in all, continuing operations are now at an operating cash flow contribution of about SEK4.7 billion with the Netherlands fee considered cash although at a lower pace than before. Moving on to the balance sheet on Slide 17. During the quarter, we paid out a dividend of SEK4 per share amounting to SEK3 1,000,000,000 in total, thus increasing our economic net debt to SEK11.4 billion. This corresponds to an economic net debt to adjusted EBITDA of SEK1.7 billion, which is reflected in the solidness of our balance sheet. Over the past 12 months, we have generated free cash flow of ZAR2.1 billion plus a cash contribution from the sale of Austria. Paid dividends of SEK3 billion, giving us a stronger balance sheet than 12 months ago. Let's turn to the next page, financial guidance. I'm excited to say that on the back of strong financial delivery in some of our markets, we are upping the full year adjusted EBITDA guidance to between SEK0.068 billion and SEK0.07 1,000,000,000. Guidance from mobile lending to service revenue and CapEx remained unchanged at mid single growth and between SEK2.1 billion and SEK2.4 billion, respectively. And with that, I'd like to hand over to Allison for an update on the merger and concluding remarks. Thank you, Lars. So let me give you a brief update on the timeline for the merger of Cowen. As it was mentioned there in the call, we have now completed an extensive reorder of our financial statements for the year 'fifteen, 'sixteen and 'seventeen. And following that, we submitted merger documents to both the SEC and to Sweden's financial supervisory authority. Additionally, the regulatory process has moved forward as Tunica has announced 2 competitive measures that it committed to at the time of the merger agreement. Looking forward, we plan to make the regulatory filing with the European Commission once these measures are effective. Following review and approval of merger documents in the U. S. And Sweden, we will make those public and announce the date for the extraordinary general meetings, and we're therefore on plan and expect to close the transaction during the Q4. Integration planning is also moving forward according to plan. We're doing as much as we're allowed to from a legal point of view and with great collaboration in the various work streams. As a result, we are now confident that the OpEx and CapEx synergies from the merger will be higher than the previously communicated annual target of SEK450,000,000. So to conclude, let me briefly end with our priorities. 1st and foremost, it all starts with our purpose to fearlessly liberate people in a more connected life, enabled by the 4 key strategic pillars of positive and fearless brand, connecting to our customers' love, a digital first customer experience and a winning cost structure. By continuing to leverage these strategies, we will return fleet to growth despite the headwinds in B2B and room at home. We will feel interesting momentum like we continue to see in the North Korea and Kazakhstan. And alongside that, in parallel, we prepare to close both branches in the Netherlands and Sweden. And as you can see, we will not lose focus on driving excellence in financial discipline and operational execution. Our upgraded guidance is a tangible result of all of our strategies, but most importantly, the confidence that we have that our focus on monetization of connectivity will deliver long term value first and foremost to our customers, but ultimately to our shareholders and our employees. And with respect to our employees, I am hugely proud that in parallel with running our transformation agenda at Bloomfleet, we continue to deliver quarter after quarter of solid progress. A huge thank you to all of them for their continued commitment to fearless deleveraging people to live a more connected life. And now, Lars and I will be very happy to take your questions. Thank you. We will now take our first question from Mr. Stefan Hoeffman of BNP. Please go ahead, sir. Your line is open. Yes. Hello. So it's a really solid EBITDA development for the mobile operation in Sweden. At the same time, there's, at least compared to our forecast, some weakness in other operations in Sweden. Can you explain this development? What's behind this? Thank you. Sure. It's a combination of a few factors, I would say. One is on the top line, we see a reduction in wholesale carrier revenue and an increase in equipment revenue. And their margin on the wholesale carrier is higher than it is on equipment. In addition to that, we also had slightly different marketing activity this year versus last year. So if you remember, the whole segment was quite active last year with a Tele2, Genshin, or PowerTube. That was quite high. So that's the second contributing factor. And the third one is that we obviously have adaptation between the mobile and the fixed segments. So that adds a little bit of it to it as well. I think net net, we like to see this margin obviously improve, plus it will be 5% that is all in Q2. To ambition. But it's mainly a mix effect in the quarter. Okay. Thank you. Thank you, sir. We will now take our next question from Lena Osterberg of Carnegie. Congratulations on very good numbers. I was wondering a little bit about the quarter. I think you mentioned already before this quarter that you raised prices last year around Q2, that you were going to have the comps and maybe revenue growth to come down. But now we've seen another very strong profile of better revenue growth. So are you still concerned that growth rates will come down in Or are you now more confident that you can keep growth rates up at the levels between the cost Thank you, Lena. So yes, regarding the Baltics, during May, June last year, we took price probably more pricing in Latvia than the other markets. And so definitely that the pricing benefit that we've had through until June this year will diminish in the second half. That being said, we are making great progress, particularly in Lithuania outside of price increases through trading up to larger data budgets and making great share gains in both the mobile broadband segments, where we offer faster fixed wireless alternatives in parts of the countryside where fixed lines are very slow. And we're making great progress in the B2B segment across the region. So we do expect the growth rate to soften in the second half, but it's not all being driven by pricing in the first half of the year. So we're at this kind of double digit level at the moment, that will get closer to the mid single digit over time. Okay. So just maybe also ask you, if you could remind us, if your put forward in Kazakhstan will be triggered early, What is the valuation mechanism to put the value to your stake in Kazakhstan? As I said, as far as we're aware, this is all speculation around the T cell deal with Cabot Telecom. But within our shareholder agreement, if it were to proceed, we would be able to reserve the 2 options earlier than March, if it was to proceed earlier than March. In terms of the valuation, we currently now have an outstanding shareholder loan worth DKK2.6 billion. We've just revalued our 18% that is outstanding as an earnout to our Canadian partner and that's now just under the DKK600 million level for an 18% stake. So in the 31% stake, which is our fully diluted level, is obviously getting close to 1,000,000,000 dollars over and above this is a 1000000000 shares per loan. Okay. So it's based on the same valuation exactly as you value the earnings, there is no other way to value it? Well, no, it will be we've always valued the business under a DCF valuation metric since we went into the JV and how we look at it going forward. Of course, at the point of having the 2 options, there will likely be a negotiation around that valuation. The next question comes from Mr. Terence Cley of Morgan Stanley. Your line is open. Please go ahead, sir. Yes. Thank you. Good morning, everybody. I was just wondering if you could give us a few more comments about the competitive dynamics that you're seeing in the Swedish consumer mobile market. Obviously, there's been a lot of focus about the low end competition. But I was just wondering if you can give us a bit more forward looking comments about what you've seen or what you expect to see around the summer campaigns. And it seems that everything is going quite well from a Tele2 execution perspective. So I'm just wondering when you expect to reach perhaps the low single digit mobile service revenue growth that you've talked about in Sweden. And then secondly, also just sticking with Sweden, has there been any impact from a kind of push by your competitors on converged products in the quarter? I think Com had mentioned that Telenor and Telia are making great marketing efforts on that front. Just wondering if you've seen any impacts there. Thank you, James. So as I said, the competitive dynamics that the intervention that we have put in place with on both Combi and Tele2 seems to be resonating well with our customers so far. We haven't seen any change in the dynamics. They remain hot. Our campaign to really push unlimited into wider groups, into kids, offering a broader range of international growing is really helping Tele2 get back do that towards stability. Because at the Atela 2, they're lower end price buckets that was suffering That is that they are probably more price focused customers than our higher end customers. But so far, so good. And obviously, we watch the market every day. In terms of looking forward, we obviously aim to get Sweden back to low single digits. We're still in a transitionary phase with our B2B business. But as I mentioned in the call, our team are building more confidence with the successful large enterprise customers that we continue to win. SME is back to growth as well. So we are planning for sequential and improved progress in the B2B business over the coming months too. With regard to FMC, we are seeing no change in the churn pool for mobile customers as a result of FMC and we're seeing no increased churn towards Telia and Telenor with respect to FMC. However, it is an increasing reason for why a Telenor or Telenor customer churn, but it's not increasing their churn away from either Telenor or Kopi. That's great. Thank you. Our next question comes from Julio Racinias of Royal Bank of Canada. Your line is open. Please go ahead. Yes. Good morning. Thank you for taking my question. As you know, the EBITDA upgrade has been driven by better performance in the international operation like Cajunistan, where the performance has been driven by mobile data or tariff upgrades. So basically items that are related to top line growth. Hence, why the company didn't upgrade the revenue guidance if the company expected further pressure in other markets, for example, Sweden? Giulio, thank you for the question. You're right. The EBITDA upgrade is very much driven by significant outperformance across the international footprint in the first half of the year. And but the top line growth, mid single digit covers a wide band. And obviously, we think the mid single digit target is the right target to have considering, as I mentioned earlier, we'll be comping price increases in the Baltic market, in particular, once we move into the second half of the year. So I think the single digit is the right parameter to give the white Our next question comes from Mr. Sunil Patel of the Bank of America. I just had one. And it was on Sweden B2B. I mean, you've clearly started to see a sort of improvement in service revenue trends. I think you had minus 8% last quarter and minus 5% this quarter. I just wanted to know the outlook for the second half and really into 2019. Is this a business that we should think about as actually coming into growth in the second half of the year? Or will it take longer than that and we should be patient into 2019? Right, Sudo. No, you're right. Sequentially, definite improvement, and we expect that sequential improvement to continue in the coming months. But that being said, we still have a very price competitive market, particularly in the fixed legacy segments. So what we're we expect to move into stabilization during the second half and get back into growth in 2019. But very, very happy with how the team are really resonating with our challenger and converged proposition for the large enterprise segment. And it'd be great once we have all that new business actually in our revenue. Our next question comes from Usman Ghazi of Berenberg. Your line is open. Please go ahead. Hello. Thank you for taking the question. I just had a question on Sweden again. I mean, if I look at the consumer mobile service revenues, excluding the roaming impact, I think the growth was around 3% in Q1. This is also excluding the one off kind of Are you expecting consumer mobile service revenues to kind of recover ex roaming drags in the second half? Or is there going to be continued moderation on consumer with slightly improving trends on the business side? Right. So in Q2 last year, we had a very small a very strong prepaid campaign. And so that's why you saw some slippage from Q1 into Q2. But if you look at our underlying postpaid momentum, it's very consistent quarter on quarter. We do expect rough recovery as we move into the second half of the year because we don't have to roll like a whole drag and we don't have that same strong prepaid quarter that we have in Q2 last year. Great. Thank you very much. Thank you. Our next question comes from Johanna Alkrest of SEB. Your line is open. Please go ahead. Thank you very much. So we've been discussing Sweden a lot. Just a sort of minor question maybe on Sweden on the Tele2 brand. Can you comment anything? Is the intake positive or negative on the Tele2 brand isolated where you sort of had some impact from recent price wars in the Swedish market, if you expect us like that? And then second question related to the Com Hem merger. You stated you feel confident that synergies will be exceeded. And I'm just wondering where what type of synergies are you seeing more of? Is it on the cost side, revenue side? If you can give any clarity on that, it would be helpful. Yes. Thanks, Kjell. So Tele2 Brands intake was negative in the quarter, but the negativity reduced during the course of the quarter as we put new campaigns into place. And it was very much focused at the smaller bucket end of our Tele2 business. 10 flight act dues on the Tele2 brand actually grew year on year in the quarter. So despite negative intake, revenues actually went up. In terms of the Com Hem merger, yes, we got great collaboration across all of the work streams. And we're seeing an over delivery kind of everywhere, whether it be customer service or SG and A or in marketing as we get clear on how we want to specialize our new propositions in the future. So it's basically across the board. And obviously, one of the answers takes control of the company, I'm sure he'll be very happy to give you more details. Our next question comes from Mr. Nick Lyall of Societe Generale. Please go ahead. Your line is open. Good morning. It's Nick at SocGenkier. Just ask a couple, please, Harrison. On Swedish costs, firstly, can you just give us a quick update on where you are on Challenger and the TDC synergies, please? And I'm assuming from your comments, it doesn't sound as if you're saying marketing was low in the quarter. It was more the comp was high. So there's no suggestion that marketing has to rise, for example, for second half versus this quarter. Could you just sort of clarify that, please? And secondly, on the Dutch business, the subseam pretty weak for the quarter. Is it sluggish? Is it tough competition? What's going on in the Dutch business at the moment, please? Thanks, Nick. We're kind of moving towards the end of the Challenger benefits. There was some benefit in the quarter. We will annualize most of those during Q3 really. There is still obviously the CDC synergies coming through. And but again, they are trying their they will feature out as well. But the big opportunity coming forward is the Com Hem synergies and the restructuring that we can do as a company as we become a much more strategic operation going forward. In terms of marketing, yes, last mentioned, the Q2 last year had the launch of the School of Power. The second half of the year always has more campaigns around new handsets. And obviously, we will be when we close this transaction, we'll be launching some new propositions into the market as well. So I wouldn't we're not expecting any major change in marketing spend outside of when you close the transaction comp. Out? I think we're slightly Nick, we're slightly higher than $150,000,000 year to date, the first half year on DTC synergies. So like we said in Q1, we're targeting now higher synergies than the 300 that we communicated at the inception of the year. In terms of the Netherlands, yes, the duopoly is continuing to shrink the available churn pool for the mobile only brand. They are pricing up their fixed lines and using that to defend their mobile businesses and testing back into mobile. And the MVNOs have been pretty aggressive the beginning of this year as well. So yes, it's a tough market. Our next question comes from Ulrich Rathe of Jefferies. Please go ahead, sir. Your line is open. I have 2 clarifications really. First one is on Sunil's question. I think you sort of highlighted the B2B trends improved. But I think last quarter, you actually did say that the underlying B2B trend, excluding some write offs, was actually minus 5% as well. Now in answer to the question, you sort of suggested, yes, B2B is getting better. But in underlying cases, it looks very much as it was the same trend in the Q2 compared to the Q1. So I was just wondering what were you referring to in terms things getting better than B2B at the moment? And the second question I have is on the operator revenues in Sweden. That seems to have actually gone a lot better this quarter than last quarter and quarter before. So I'm just wondering, is that roaming in? Or what's happening on the operator revenue line? I know it's a small line, but it's still big enough to be relevant. Okay. On the B2B trend, you're right. If you take out the one offs, the underlying was 5%. But what is acting better is mobile revenues are getting better, and we are continuing to win significant new business and retain existing customers as well. But the mobile business is sequentially much better. And in terms of operator revenues? Yes, related to visitors, which is coming through now in Q2. Yes. I didn't hear that. Visitor revenue is mainly related to visitor revenues coming through in Q2. Okay. Thank you very much. Our next question comes from Mr. Henrik Herbst of Credit Suisse. I have a couple of questions on Sweden. Firstly, in terms of maybe give an update on where on data usage and data usage growth year over year? And also maybe if you can I think you said low teens uptake on the unlimited plans? Is that changing as data usage sort of goes up and more and more customers are on bundles closer to the unlimited plants? And then secondly, I wanted to ask about CapEx. I mean you've been talking about CapEx going up in Swedish business for quite some time. You're still sort of mid single digits. Have you just found a very good way of running it quite efficiently? Or should we still expect Swedish CapEx to increase? Thank you. So, Lars here. I think on the CapEx, we are saying that we will be in seat around 3% to 5 percent. It is lower at the moment. But we still stick into the fact that 57% is a big number for the Swedish business. But we're not holding back on everything. So I mean, if we see the threshold being reached in starting to kind of sell, we obviously have pretty much capacity. So we are not holding back on investment to drive revenue growth. And then on data usage in Sweden, this is consumer mobile postpaid. We are at 7 gig on average per customer per month and that's up from slightly south of 5 a year ago. And then in terms of unlimited, the uptake remains in the loan to 'eighteen. Our next question comes from Richard Jones of Tower House. Your line is open. Please go ahead, sir. Yes. Hi, Alison. Actually, this is Paolo on behalf of Richard. A couple of questions, please. The first one is on the Com Hem merger. Initially, during when in the early stages of the announcement, there was a bit of a mixed reaction from shareholders on both camps. My perception is that actually now the deal is better understood both from an industrial and the financial standpoint. Maybe if you could characterize how the investor landscape is evolving in merit of the support of the deal? That's the first question. And the second question has more to do with your reference to data growth and this medium term question on what you think the structural impact of this data growth could be, particularly with respect to some of your competitors in the MVNO space and competitive slide 3? Thank you, Paolo. Yes, there was a mixed reaction in the beginning of the when we announced the deal. We had 2 very different shareholder bases. Tele2 was a very Swedish shareholder base who had become accustomed to have been very focused on mobile and going on a journey of increasing our decreasing our footprint and returning proceeds from asset sales to shareholders. And then we'd obviously had the Com Hem Shareholder Day that we're used to a very the Mexico only story, a very strong shareholder remuneration story as well, but based on returning more than 100% of equity cash flow to shareholders year after year. And there was obviously there was a surprise around some of the synergies as well. Both Anders and I spent a significant time with different shareholder bases, and the story has become more and more understood. One of the big pieces of education that was required was here in Sweden. Swedish investors had not bought into the Com Hem story. They didn't have any Swedish shareholders. And so a lot of them had not really understood what a great job the Com Hem management team has done in improving customer satisfaction of Com Hem, increasingly turning it into a connectivity company that was less reliant on the TV piece and was investing in higher broadband fees and improved technologies to deliver both linear television, cable television and OTT television. So with more understanding and with the new shareholder remuneration call, let's say, that we announced alongside our Q3 results, we have felt a very positive reaction from both sets of shareholders now. The industrial logic clearly makes sense for Tele2 and Con10 together. We are increasingly confident that the synergies will be more from an OpEx point of view, and we're still confident on the revenue synergies as well going forward. And so I would say at this point in time, both types of investors are looking forward for the combination as our employees are as we really start to create a new converged connectivity challenger for the Swedish market. In terms of data growth and the structural impact, Pillar 2 is structurally advantaged in that it shares its 2 gs and 4 gs network with Telenor. So we will go into spectrum options and we'll go into new technology investments such as 5 gs in partnership with Telenor, which gives us a structural advantage versus the others. We aim, as a company, to have a winning cost structure more efficient than others. And what 5 gs brings is the opportunity to make the network even more efficient and support continued data growth. It also gives you the opportunity to slice and dice the network services so you can monetize different quality of service to different customer bases dependent on what they want. And certainly, with 5 gs and its lower latency and higher fleet, that will bring us new commercial commercial positions for the future. And particularly now that we're in partnership with Com Hem, we'll be able to work that around video solutions and perhaps and other solutions as well. So we have a structural advantage. In terms of competition, I think in general, 5 gs and fiber rollout and, in general, what's happening in the industry will drive the next round of consolidation at some point. Increasingly, you need scale to be able to offer data at a lower cost per day. And we're in a strong position. I think ultimately, there will be further consolidation like we are proposing in the Dutch market at this point of time to properly defend against the FMCG operator there. Our next question comes from Frederic Littel of Danske Bank. Your line is open. Please go ahead. Thank you. My questions have been answered. Thank you. Thank you, Patrick. Happy summer. Thank you. We'll now take our next question from Mr. Usman Ghazi of Berenberg. I just wanted to ask about this, the investigation into mobile kind of rice fixing that made the news early last year. I mean, is there any update on that? I mean, is the investigation just been closed? Or is it ongoing? We have no updates. They came, they went. We've not heard anything else. But we're not aware that this investigation is full. There's been no