Earnings Call: Q4 2017

Feb 2, 2018

Day, and welcome to the Tele2 Q4 Interim Report 2017 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Erik Strandin Paris, Head of IR. Please go ahead. Thank you, Roman, and welcome, everyone, to Tele2's Q4 2017 results call, which we are hosting from London this morning. We will do a presentation, and you will find the slides on tele2.com. And after that, we will do a Q and A as usual. And I have with me here Alison Kirkby, our President and CEO and Lars Nordmark, our CFO. Please, Alison, go ahead. Thank you, Eric, and good morning, everyone. So as you all know, liberating a more connected life remains our ultimate priority, and we saw this drive yet another quarter of solid growth in the Q4 with mobile end user service revenue up 8% on a like for like basis including Netherlands and that was despite the impact of Roam Like Home, because we're continuing to deliver very strong growth in the Baltics and in our investment markets. Net sales were around DKK 8,000,000,000 down a percentage point like for like, very much driven by the effects of the consumer credit legislation introduced last year in the Netherlands. And EBITDA was up by 19% to 1,700,000,000 dollars mainly driven by the mobile end user service revenue growth and also Challenger program and synergy benefits. And now having agreed to merge the Tele2 Dutch operations with T Mobile in the quarter, Netherlands, as you will see, is reported as discontinued. So you've got 2 sets of numbers to look at this quarter, which I am sure you are enjoying very much. But the 4th quarter was not just a quarter of strong financial and operational progress. It was also a quarter where we made a number of transformative strategic moves. First, we exited Austria and received the 1st transfer proceeds from Hutch. 2nd, we announced the combination of our Dutch business with T Mobile Netherlands, a major and logical next step for us to create a strong customer champion for Dutch consumers and businesses. And similarly, just a couple of weeks ago, we announced our intention to create a leading integrated connectivity provider in Sweden by merging with Com Hem. The new company will be uniquely positioned to meet the evolving customer needs for seamless connectivity and digital services and create significant value for both Tele2 and Com Hem shareholders. And I would touch on that transaction towards the end of the presentation. So as Lena has said, telcos are boring, Tele2 is not. This has definitely not been a boring quarter for all of us. But let's get into the operational highlights, starting first with our Baltic Sea Challenger markets. Sweden, as you know, is still being affected by the room like at home regulation. So as a result, mobile engine of service revenue was slightly down 1%, but if you remove the room like at home impacts, we actually grew 1% and EBITDA grew by 3% like for like. We were less affected by Roadmaster over in the Baltics and continue to deliver very strong mobile service revenue growth and EBITDA growth of 9% and 21 percent respectively. Therefore, our Baltic Sea Challenger businesses collectively achieved a 26% increase in operating cash flow on a rolling 12 month basis as our mobility for our strategy continues to serve us well with outstanding cash conversion. In our investment markets, we have great momentum on the back of increased brand awareness, improved customer satisfaction and increasing scale. Kazakhstan delivered another strong increase in mobile end user service revenue, up 20% 26% sorry, with an EBITDA margin of 28%. The big news in Netherlands was obviously the agreement with T Mobile to form a combination that significantly improved the ability to take on the Dutch FMC duopoly, while also bringing forward cash returns to the Tele2 Group and improving our risk profile going forward. And so for the investment markets as a whole, including the Netherlands, the negative 12 month rolling operating cash flow is almost 80% lower than it was a year ago. Our positively fearless brands fueled strong progress both financially and also towards our customers. In the first half of the year, we launched new commercial propositions in all of our key markets and these propositions including unlimited continue to be embraced positively by customers with strong uptake across the group and solid progress on ASPU as well as brand preference and customer satisfaction metrics. More specifically, the Tele2 brand grew its net promoter scores in all markets year on year, supported by our unlimited propositions, which drive ASPU as well as brand perception. And in Sweden, Combi's Christmas campaign broke sales record for the 4th consecutive year. Our winning cost structure was also strengthened in the quarter with Challenger program run rate savings now exceeding our DKK 1,000,000,000 target and also the TDC OpEx synergies are approaching run rate target after only 1 year from closing. With the combination of both these programs ahead of plan and our top line growth, this resulted in a 2 percentage point increase in group mobile EBITDA margins to 25%. So moving on to the markets in more detail and first our Baltic Sea Challengers. In Sweden, in line with recent quarters and putting aside the Roam leg at home impacts, the Swedish market continues to be stable, but competitive with intense campaigning in both bundled and sim only segments and additional competing brands starting to use introduction discounts as a customer acquisition tool. But as you know, our Swedish business was affected by Roam Like Home and a decline in legacy fixed revenues. Excluding the Roanoke Home, mobile end user service revenue was up 1% with growth in the consumer segment offset by declines in the business segment. And the EBITDA growth was realized as synergies in the TDC integration and Challenger program benefits were able to compensate more than compensate for the effect of Road Back at Home and the decline in fixed and B2B revenues. So as we go into the Swedish Consumer segment, here you can see an underlying trend of solid growth, up 3%, driven by strong growth in Cromviq postpaid due to the continued migration from prepaid and as I said boosted by the successful Christmas campaign. Staying true to our purpose of fearless and liberating people to live a more connected life, we are happy to see the strong thirst for data among our Swedish customers as Tele2 postpaid data consumption increased by over 60% on average in the quarter, which allowed us to continue to monetize data as the demand for the larger bundles just keep growing. Our focus on growth through customer satisfaction is also continuing to show positive signs as both Tele2 and Combi have maintained and even increased high customer satisfaction scores and increased their net promoter scores compared to the last year with the Tele2 brand now best in class together with Telia in the main brand segment. Moving on to B2B, and as expected, the market continues to be price competitive affecting both our fixed and mobile service revenue. We are, however, ahead of expectations on the synergy realization plan from the terminated MVNO contract and headcount reductions and within scope, therefore, to exceed the initial synergy target level of DKK 300,000,000 and also we expect to invest in lower integration investment than previously expected. The lower costs are helping offset the lower sales as we have not yet recovered from weaker sales in the large enterprise segment in prior quarters, resulting in a decline in net sales of 8% like for like. Remember, unusually high sales of low margin equipment in Q4 last year also contributed to the year on year decline. The combined product offering, however, of Tele2 and TDC is now enabling us to be a full service provider to our customers, and we remain very excited about the potential of the new contracts we signed in the quarter, including the Swedish Migration Agency and the extended contract with PostNL to name a few. So really, it's been another quarter of winning great names and extending existing contracts. But as I said previously, we won't recover from the churn that we had in prior quarters, probably until the second half of this year where we expect to be back to growth again. But we're very, very happy with the customer retention and acquisitions that we've been seeing in the recent months. So in summary, B2B synergies and Challenger Program are really helping offset the drag on the top line in the quarter. Moving on to Baltics, continued commercialization and monetization of 4 gs investments continue to drive strong top and bottom line development. Net sales growth of 11% was excellent, thanks to an ever increasing demand for data and premium handsets. Mobile end user service revenue growth was up 9%, largely driven by higher data consumption, increased ASPU levels and growth in B2B. EBITDA increased 21%, driven by profitable revenue growth and benefits from the Challenger program. And the lower investments in mobile broadband versus last year have also had a positive effect on the EBITDA performance. In the quarter, we saw again a strong asset development of 8% as the transition from prepaid to postpaid subscriptions continue and customers traded up to larger data buckets very much encouraged by our new propositions. Smartphone penetration continues to increase, which also supports the uptake of larger data bundles. And in the quarter, we saw average data usage per customer more than double. Additionally, the focused investment into mobile broadband has fueled a revenue increase of more than 12% and is now establishing Tele2 as the liberator of connectivity, both in the home and on the go. And also, we're very proud of the moves that we're making into an improved digital first customer experience in the Baltics, and we saw great progress in Estonia behind the online only brand Snap, which was awarded best website for digital sales. So in general, we continue to be very proud and excited about the continued opportunity in our Baltics business unit. Looking at the investment market and we'll just focus on Kazakhstan first. Net sales were up 7% year on year in local currency, driven by continued strong momentum in mobile end user service revenue, up 26% in local currency, offset by high equipment sales in the same period the year before. This momentum was built from strong customer growth and increasingly large data bucket. EBITDA more than doubled year on year as we reap the benefits of the higher ASPU levels, improved scale and integration synergies. And as a result of this excellent momentum, Tele2 Kazakhstan is now cash generative and a first repayment to Tele2 Group of 3,300,000,000, which is approximately DKK80 1,000,000 was made in the quarter for the shareholder loan and we expect those shareholder loan repayments to continue through the year. Looking at our CapEx results in a bit more detail, our customer base grew by 7% year on year to just over 6,900,000 customers, driven by our expanded distribution network and our successful Duo brand strategy. ASPU was up 17%, driven by a higher margin product mix and continued demand for our higher data bundles. As we announced last quarter, the network integration is now complete and we are now focused on expanding our market leading 4 gs coverage to support further untapped customer demands. The upgrade from LTE to LTE Advanced allows speeds to triple and we are therefore excited to offer the Cabec consumers faster speeds with our LTE and our LTE Advanced coverage now reaching 73% and 44% of the population respectively. And with that, we'll now move to the Netherlands, which after having announced the merger with T Mobile is reported as a discontinued operation. Net sales declined as expected due to the change in the accounting rules with respect to third party handset sales, VFK and lower fixed legacy revenues. Mobile end user service revenue, however, was up 30% with a growing mobile customer base increasing by 16% and ASPU growing by 11%. EBITDA was again positive in the quarter and increased due to the higher mobile revenues, the lower expansion costs and a one off positive court ruling of DKK 97,000,000. We continue to take around more than 20 sorry, we continue to take more than 20% of the postpaid contracts market. However, there are signs that the FMC duopoly is starting to have an impact on the available pool of customers, which resulted in 43,000 net adds slightly lower than the previous quarter. According to plan, in terms of the merger, the combination progress, T Mobile have now kicked off the pre notification phase to create a strong number 3 player, which has the resources to mount a strong long term challenge to the market share of the FMC duopoly, both in mobile, in fixed consumer and in B2B for the benefit of all Dutch customers. So with that, I'm going to hand over to Lars now. Thank you, Alison. Let's turn to the next page for an overview of the mobile end user service revenue development. As we have talked about, mobile end user service revenue has grown 8%, including the Netherlands. But in these slides, we are looking at the continuing operations and reported year on year increase came in at 5%. FX effects were quite small this quarter. On the right hand side, looking at the individual operations, we have seen positive trends across all our markets. The convenience increase of SEK13 1,000,000 was mainly related to the TDC acquisition. It was offset by Roam Like at Home, resulting in a like for like decrease in mobile end user service revenue of 1%, which was in line with our expectations. The Baltics contributed SEK 47,000,000 in the quarter, thanks to continued successful data monetization. The biggest contribution this quarter came from Kazakhstan, which increased top line by 18% or SEK 84,000,000 and came as a result of a continued shift towards higher ASPU bundles. Moving on to EBITDA. Compared to Q4 last year, we have reported a growth of 5 percent. In Sweden, integration synergies and benefits from the Challenger program exceeded the negative impact from Long Life at Home and thereby delivered a positive EBITDA development. The Baltics delivered an EBITDA that was S56 $1,000,000 higher than last year, which to a large extent was explained by top line growth. As for the mobile end user service revenues, the biggest EBITDA contribution came from Kazakhstan with more than $100,000,000 improvement year on year. This is a result of an increased top line, improved scale and successful cost management. In Croatia, we made a provision in the quarter related to doubtful receivables, which had a negative EBITDA impact of SEK89 1,000,000. If we exclude this provision, EBITDA for continuing operations grew by 9% on a like for like basis. Turning to CapEx. Although we had a bit of a catch up in the quarter from low levels earlier in the year, investments for the quarter were 13% lower than last year. This is primarily explained by lower investments in Sweden as Q4 2016 included some investments related to the new office. Turning to the next page. We switch from continuing operations to total operations as this is the basis on which we report cash flow. We see that free cash flow decreased by 16% versus the same quarter last year. This was mainly attributable to a big shift in working capital as Sweden went from a positive change in working capital last year to a negative one this year. Working capital, of course, has to be looked at over a longer period. And for the full year, we note that we had limited negative cash flow effects from working capital of SEK135 1,000,000. The negative year on year development in Q4 was partly offset by a reduced cash consumption in the Dutch business, which is reported as a discontinued operation. Moreover, we consume less cash and at lower Challenger integration costs, which make up the lion's share of the green box highlighting 1 off items. As you know, we also like to look at the evolution of cash flow from a longer term and more operational perspective. So if we turn to Slide 21, we have the rolling 12 month operating cash flow, which we define as EBITDA less CapEx. The graph shows operating cash flow split into our Baltic Sea Challenger and Group units, including Germany in IoT, our investment markets and lastly, the Netherlands. As you can see, the Netherlands is now shown as standalone in orange as it is reported as a discontinued operation. Baltic Sea Challenger and Resto Group continue to grow its operating cash flow to a record SEK4.3 billion, reflecting both solid EBITDA development and a disciplined investment policy. Our investment markets, now including Kazakhstan and Croatia, have been on a positive trajectory for the last 2 years and turned cash flow positive on a 12 month rolling basis last quarter. Moving on to debt and leverage. Our economic debt to EBITDA decreased compared to last quarter to 1.5%, largely related to the proceeds from the sale of Tele2 Austria coming in during the quarter. The chart also shows the upcoming dividend payment of SEK2 billion, which will take the leverage to approximately SEK1.8 billion. Million. Turning to Page 23, where we summarize the Challenger program, which has been a major contributor to our performance over the past years. The program has now been concluded as we reached the run rate benefit target of SEK1 1,000,000,000 at the end of the quarter with SEK900,000,000 in accumulated benefits the full year 2017. As a CFO, I'm proud to say that we have reached our target with lower investments than anticipated as these came in just north of SEK700 1,000,000 compared to our initial estimate of SEK1 1,000,000,000. Some key takeaways from the program include the new operating model with our shared operations in Riga and India that was introduced fully 2 years ago, an improved way of working with customer service that not only have reduced costs, but at the same time have also increased customer satisfaction. Lastly, the product portfolio has been reduced by roughly 3,000 products. Although the program has been concluded, we will continue our mission of improving productivity and striving for operational excellence. And as many of you know, cost consciousness is and will remain one of our key values at Tele2. So in line with this value, new initiatives improve effectiveness and flexibility have already been launched during January 2018. Now moving on to our guidance for 2018, which is based on continuing operations and constant currencies. We are guiding for mobile end user service revenue growth of mid single digits and EBITDA to come in between SEK6.5 billion to SEK6.8 billion for the year. We have decided not to guide on net sales this year as we think that the other parameters were the most important and attracted nearly all of the focus. Our CapEx guidance, which excludes spectrum investments, is in the range of SEK2.1 billion to SEK2.4 billion. As confirmed in relation to the merger announcement, the Board of Directors has decided to recommend to the AGM an ordinary dividend payment for fiscal year 2017 of SEK0.04 per share. And as for leverage, we are confirming our current target of 2x to 2.5x over the medium term. And with that, I'd like to hand back to Alison. Thanks, Lars. So let me finish with our priorities moving forward before getting into a brief update on the Com Hem merger. 1st and foremost, it all starts with our purpose to fearlessly liberate people to live a more connected life. And that purpose is enabled by our 4 key strategic pillars: Positively beerless brands, connecting things our customers love, a digital first customer experience and a winning cost structure. By continuing to leverage these pillars, we will return Sweden to growth despite the headwinds in both B2B and Roam Like Home. We'll fuel industry leading momentum in the Baltics and Kazakhstan, and we'll prepare to close both mergers in the Netherlands and Sweden. As a result, we will continue to deliver sustainable and growing shareholder value, while not losing focus on driving excellence and financial discipline and operational execution in order that our top line momentum continues to flow down to bottom line momentum and improved cash generation that fuels increasing shareholder remuneration. So it really has been an extraordinary year and a very strong quarter, and I'd like to thank all of our Tele2 employees and colleagues for their amazing challenger spirit and many, many contributions without which we would not have been able to deliver this winning set of results. But let's just before Q and A talk a bit about the merger with Com Hem. As you know, we announced our intention to create a leading integrated connectivity provider in Sweden through merging with Com Hem. Since the announcement, we have met both Anders and I with many of ours and Com Hem shareholders. The strategic rationale is clear and the complementary nature of the two businesses are fully understood. The Enlarged Group will have a greater diversification in terms of services to our customers and will thus have a much more resilient and broad based cash flow generation. The majority of cash flows will be driven by connectivity services just as it is today for both Tele2 and Com Hem as rising data consumption drives demand for better fixed and faster mobile connections. Much of this is fueled by video and Com Hem's leading digital TV business is therefore a great strategic opportunity for the Group. Having said that, TV in itself is a limited part of the combined Group cash flow given that broadband has higher gross margins and lower CapEx than TV and TV itself will benefit from a reduction in CapEx in the coming years as TiVo boxes are replaced with lower cost Com Hem Hub boxes and of course further replaced by app that will provide flexibility in pricing and opportunities for growth and cash generation going forward. There are also significant costs and revenue synergies of DKK900 1,000,000 in total, which we have set a level that we believe we can confidently deliver. The cost synergies are clear and based on our track record with TDC, you should feel confident that we will deliver them with excellence and quickly. Our revenue synergies, while they mainly come from cross selling and churn reduction, that based on comparable precedents are conservative with further upside especially on churn reduction. Several additional possibilities like cross selling of the digital TV product, cross selling to B2B customers or cross selling to Boxer customers have not even been included in the assumptions and should therefore come on top when they materialize in the future. But the final strategic rationale is all about the attractive financial profile of the new combined company. And I just want to illustrate that a bit further now that we have the full 12 months for both ourselves and Crom Hem. In 2017, the continuing operations of Tel II, so that's mainly Sweden, Baltics and Kazakhstan, produced an equity free cash flow of DKK3.1 billion. Colm Hem produced an equity free cash flow of DKK1.5 billion and will as you know soon start to pay taxes of around DKK 300,000,000 per year. If you add the DKK 900,000,000 of annual synergies to this, net of taxes and added interest costs, we are already looking at a group with the ability to generate in the area of $5,000,000,000 of annual equity free cash flow. And that is before underlying organic growth continues to build on top of that. Foam Head shareholders will, as you know, own about 27% is a merged entity and Tele2 shareholders around 73%. So while it's now up to us to show that we can deliver these synergies and grow the underlying cash flow in the meantime, this illustrates why we think that there is scope to make this a very highly accretive deal for shareholders on both sides. And let's not forget the investment optionality that Tele2 has around the Dutch and the CapEx assets on the top of this. So with those words, I'd like to finish our presentation and open up for questions. Thank And we will now take our first question from Henrik Herbst from Credit Suisse. Please go ahead. Thanks very much. I just wondered if you could give a little bit of update in terms of your unlimited plans. Is the uptake I think you said low teens recently, whether that is increasing or not. And then also in terms of the competition in the consumer market, it sounds like in your release that it's becoming a little bit more competitive. Can you give any more sort of concrete examples of what you're seeing? Thanks very much. Yes. Hi, Henrik. Thanks for the question. Yes, the unlimited plans, we've spoken about low teens in Sweden and it continues about that. Certainly, during the Christmas period, you get a lot of Swedes on vacation, streaming for their children and themselves, lots of video. And therefore, those propositions are very popular, but still in the low teens area. And still in absolute terms, a very small percentage of our total base, but growing nicely. In terms of competition in the consumer market, it's, as I said, stable but competitive. We continue to see in some of the price fighter brands, some very attractive introductory discounts, but then the pricing goes back up after the period. And despite that, Comvique has just continued to go from strength to strength in that segment. So I think it's stable, but it's a competitive market, Henry. And we're doing great in it. We grew if you strip strip out the impacts of Road Market Home, we grew our consumer business 3% again in the quarter. And as you saw, we have very strong EBITDA and cash generation suite. Suite. We'll move on to our next question from Lena Osterberg from Carnegie. Congratulations on delivering again. I have one question. You indicated in the conference call now that you now see some additional synergy upside. And also, you've been extremely fast in extracting the synergies for TDC. You expected 4 years, and now you're at a full year run rate already after a little bit more than a year. So I was wondering, are you not being overly conservative with the 5 year plan target for the merger with Cobham? And in which areas do you think you would be conservative on the synergies? Hi. And thank you for the congratulations, Lena. The continued support is great. Thank you. Yes, very listen, we are we always give estimates that we are highly confident in delivering and we always aim for that little bit more, Lena. TDC was particularly unique in a large chunk of the synergies within the MVNO. And contractually, we might have been held to that for actually a further 3 years. But the company that had the MVNO wanted us off of their network much quicker than planned. So that's why TDC has delivered so quickly and so well. That being said, as we look at all programs, Challenger program included, we'll try to achieve everything we possibly can as quickly as possible. The reason for the 5 years on the Com Hem synergies synergy is not really from the OpEx point of view. The OpEx synergies will be in the 1st 2 to 3 years. It's the revenue synergies that we have said could take up to 5 years because the Swedish market is not yet a market that is the consumer market is not yet used to buying converged services. And so that's why we've said it could take up to 5 years. Where we think we've been conservative, however, in those revenue synergies is the churn reduction. The revenue synergies are about DKK 450,000,000 per year, about a third of those are from churn reduction. It is well proven that those operators who sell multiple services reduce churn over time. And every additional service you sell in reduces churn by 3 to 5 percentage points. Our churn reduction only assumes around a 1 percentage point reduction over the 5 year period. And so that's an area where we do believe once we're able to start working more closely with the Com Hem team that we could perhaps start to see a more ambitious set of goals. But it's too early for us to promise anything at this time. But that's an area that I think is a big area of opportunity, Lena. Thank you. Thank you. Thank you. We move on to our next question from Irina Irysova from RBC Capital Markets. Please go ahead. Good morning. Thank you. So on Sweden, could you talk about the net ad dynamics between the Comvik brand versus the main brand and the postpaid to from prepaid to postpaid migration rather, any changes in trend? Then also on your mobile end user service revenue growth guidance, what are you assuming for growth in Kazakhstan versus the rest of the business? Put it another way, do you expect the current growth trajectory to continue? And then finally, my question is, now that you have you will have a converged presence in Sweden post merger, how do you think about your mobile focused footprint elsewhere, say, in the Baltics? Any thoughts about pursuing fixed presence in those markets as well? Thanks, Serena. So on net adds, we saw positive postpaid net adds. We never split Combi and TeleQ down. But from a postpaid consumer perspective, it was another positive quarter of growth. You are seeing prepaid. Prepaid has been declined for a number of years. It's declining further at the moment, particularly driven by Roam Like Home. So the prepaid to postpaid migration is definitely being accelerated by Roam Like Home. But we are building great momentum in postpaid and therefore that doesn't concern us. We also saw some negative net adds in the mobile broadband segment, which is normal for the time of the year, but that's also being affected by increased fiber rollout in the Swedish market. In terms of mobile end user service revenue guidance for next year, what we're assuming is low single digit in Sweden, mid single digits in the Baltics and double digits in Kazakhstan. I can't say it will be at the 26% growth rates in Kazakhstan than it was this quarter, but we're still aiming for double digit growth in Kazakhstan again next year. And then in terms of convergence in Sweden, we build a strong mobility first position first and then we expand from that. And we have still lots of room for opportunity to grow our Mobility First position in the Baltics and certainly in Kazakhstan. And we don't yet see a need or the opportunity to take it beyond mobile only in the Baltics. But the Baltics are core assets for us. They are very much linked to our Swedish assets. And as we progress further with our more integrated position in Sweden, we'll of course continue to compare that to what could create further opportunities in the Baltics. We are now moving to our next question from Robert Slorach from Handelsbanken. Please go ahead. Thank you very much. A question on CapEx and capital sales. Do you see the level you're now guiding to? Do you see that level as sustainable going forward if we talk about kind of capital sales levels that will be interesting to hear? Yes. Excluding spectrum pretty much. But Lars, do you want to take that? Yes. And I think if you look at the different countries, Robert, I mean, Sweden has been around 67%, and that's kind of what we're guiding for the next year. And the Baltics has been slightly higher than that. And Kazakhstan, obviously, they are growing their network as they grow their customer base. So we see that to be at a similar level as well going forward. That's obviously before any spectrum and any larger kind of 5 gs potential investments that we see further down the road. All right. So on 5 gs investments, you will see that driving up the CapEx level. Is that kind of the base case? I think we will take that. We see what use cases would come through, and we'll see what those business cases look like before making a larger investment in 5 gs. We don't see that coming through before 2020, 2021. Exactly. Obviously, there'll be the Swedish 700 megahertz in 2019. That's already been announced. But it's not clear where the consumer use upside of 5 gs is. And so it will be well into 2020 2021, as Laura said. We will now move on to our next question from Thomas Heath from Danske Bank. Please go ahead. Thank you. Thomas Heath here. Two questions, if I may. Firstly, on Sweden, at least compared to my own estimate, it's the revenue beat in this quarter was driven by handsets. And yet OpEx in totality was pretty much as expected. So I'd assume that handsets, especially in the acquired T2C business, isn't a very high margin business. So that leaves me wondering a little bit how OpEx came in as low, if you can highlight a little bit what's going on there. If it's late Challenger effects or if it's TDC or just a mix of everything? And then my second question on the CASAC denominated low internal loan, if you could give an update on the size of that loan now that you've started paying it off. Thank you. Right. Thanks, Thomas. So on the loan, we're about SEK 2,800,000,000, about SEK 114,000,000,000, and that loan is obviously CHF denominated. That's where we were at the end of the year. And as far as Sweden is concerned, I mean, when we look at the Q4 and Q4, we see benefits coming through on the OpEx side from the step up program that we have discussed that was implemented in the beginning of the year. And then we obviously see the Challenger benefits coming through as well. So those are some of the key drivers that drive the OpEx benefits. And then obviously, we have the TDC synergies coming through with the MVNO piece being a big part of that. That's very helpful. Thanks. Yes. Thank you. We move on to our next question from Stephan Goffin from DNB. Please go ahead. Yes. Hello. I was actually mainly interested in the Swedish OpEx as well. But could you take a question on the B2B market in Sweden, how you're seeing that is developing? And I've seen you've taken some contracts. Are you mainly winning on price? So are you, in effect, driving down prices in the market? And then on working capital, what can we expect going forward? I think this was quite a large swing this quarter. So anything on working capital for 2018 would be helpful. Thank you. Thanks, Stefan. I'll take the first question and then Lars will do the working capital question. The B2B market in Sweden, yes, we are very happy with some of the successes we've had recently. And no, it's not just about price. It's at what we're really starting to see when we go into these processes is our combined offer of integrated services is really starting to resonate with the customers that are choosing us. And that really builds on the TDC ability to be really flexible and understand what customer needs combined with the broader range of services that we are now able to offer as a combined company. Of course, the market remains very price competitive, and we expect that to continue. But based on what we've seen in terms of the acquisitions and the retention, I think we will have these headwinds behind us in the second half of twenty eighteen and we'll really be able to build momentum and market share behind the new combined offer that we can take to customers. And on working capital, Stefan, we would expect 2018 to be fairly neutral. If you look at, I mean, the developments that we saw during 2016 and 2017, we implemented the handset financing program in our Swedish business, which was a big contributor on the receivable side. But that is now approximately the same at the same levels of volume. So we expect them to be quite neutral. Okay. Thank you. Thank you. And we move on to our next question from Victor Holden from SEB. Please go ahead. Yes, good morning. Two questions here, if I may. Most have already been taken. I was just wondering if you can say where the big EBITDA drivers are for 2018? So what countries do you see contributing? And where do you see other way around? And then also, if you can just give a brief comment on your view on the Holland outlook kind of that. That will be of course reporting in a different way, but if you can say anything on that, that would be great. Thank you very much. Yes. Thanks, Victor. So the big drivers of EBITDA in 2018 are obviously continued data monetization of our ever increasing larger buckets in our core Swedish and Baltic businesses. And then continued great market share and scale benefits in our Kazakhstan business. We will obviously continue to get rollover benefits of synergies and Challenger program in the year. And then all those will be partly offset by Roam Like Home still hits us through until about June. So that's about $100,000,000 to $150,000,000 hits that will be best in the first half of the year. And then some of our legacy fixed business is declining as well. But it's very much from a continued operation point of view, the same story as this year. And then on the Netherlands, the outlook there is very much business as usual aiming to take around 20% of the available market and continuing to build our market position with some of the best customer value for money propositions in the market, at the same time as preparing for the merger with T Mobile so that we can create an even stronger challenger to the FMC duopolous. Super. Thank you very much. Thank you. And we move on to our next question from Ulfi Shweta from Jefferies. I have 2 related questions. The first one is on convergence in Sweden. Chile obviously stepped up language, I think, a bit on sort of their convergence ambitions in Sweden. How do you see them potentially attacking or even diluting some of the benefits you would see by sort of trying to lock down the market during the in the run up to the merger closing? Do you think there's any sort of material risk of them trying to accelerate in the meantime? And the second question sort of related to that, what I mean, you're highlighting sort of conservatism on aspects of the synergies you gave for Com Hem. What would you consider the main areas of uncertainty in the Com Hem project now, in the Com Hem integration project? Where would you say are the main challenges? Thank you. Okay. Thank you, Ulrich. So yes, there's been a lot of talk by our main competitor in Sweden about their convergence strategy, but we've not really seen any impact in the market as of yet. And we would have a lot to do to be able to lock down the market before we did anything. And I see that there will be room for both of us to grow in the market because there isn't converged services today. And we are going to have the uniquely best TV product in the market with we already have the leading market share there. It's increasingly becoming a a platform that will take on more OTT options and will increasingly become app based that we can move on to all devices. So I don't see that as a risk at all to our merger. But we're always paranoid about competition and we watch every move, but I'm very confident that we will both be able to introduce converged services as and when and do our own thing in our own special ways and create value for customers and shareholders alike. In terms of synergies with Com Hem, yes, I've been no haven't changed my opinion on the ability to achieve those synergies. We are in the early days of discussing how we bring the discussing how we bring the 2 companies together. I think the great news is we are not culturally dissimilar. So I see the Com Hem sees itself as a challenger in fixed. We see ourselves as a challenger in mobile. We'll create an even stronger challenger together when we bring the 2 cultures together. The main area of risk in this time is obviously uncertainty around people. But as we mentioned at the time of the announcement, we have put retention packages in place that very much incentivize key talent to stay, but also contribute to getting off the ground running on day 1 and contributing to synergies and integration ambition. So it's all really about culture and people, and Anders and I are working very close to ensure that a very smooth transition, and we're able to go to market quickly with the new combined opportunity for customers. Thank you very much. Thank you. We now move on to our next question from Lena Osterberg from Carnegie. Please go ahead. Yes. I was wondering a little bit if you could give us some more detail on the timing of the approval, the expected timing from the comments from regulators? For Sweden, Elena? Yes, for the merger with Com Hem. Yes. No change there. We said it would be second half of the year. We from a regulatory point of view, that's kind of standard timing. It's very early days. It's only 2 weeks since the announcement. There's been no filing or anything done yet, but we still expect EDMs after the summer and closing in the second half of the year. Sorry, did you say that you haven't filed yet? No, just too early. We're just preparing the documentation. Okay. Thank you. As there are no further questions in the queue, I would now like to turn the call back to the speakers for any additional or closing remarks. No. If there's no more questions, thank you all for joining the call. And I look forward to meeting a number of you over the coming days as we go out to meet with analysts and investors. Thank you, everyone. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.