Good day. 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 Pers, Head of IR. Please go ahead.
Thank you, Roman. Welcome everyone to Tele2's fourth quarter 2017 results call, which we are hosting from London this morning. We will do a presentation. You will find the slides on tele2.com. After that, we will do a Q&A as usual. I have with me here, Allison Kirkby, our President and CEO, and Lars Nordmark, our CFO. Please, Allison, go ahead.
Thank you, Erik. Good morning, everyone. As you all know, liberating a more connected life remains our ultimate priority. We saw this drive yet another quarter of solid growth in the fourth quarter, with mobile end-user service revenue up 8% on a like-for-like basis, including Netherlands. That was despite the impact of Roam Like at Home, because we're continuing to deliver very strong growth in the Baltics and in our investment markets. Net sales were around SEK 8 billion, down a percentage point like for like, very much driven by the effects of the consumer credit legislation introduced last year in the Netherlands. EBITDA was up by 19% to SEK 1.7 billion, mainly driven by the mobile end-user service revenue growth and also Challenger program and synergy benefits.
Now, having agreed to merge the Tele2 Dutch operations with T-Mobile in the quarter, Netherlands, as you will see, is reported as discontinued. You've got two sets of numbers to look at this quarter, which I am sure you are enjoying very much. The fourth 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 first transfer proceeds from Hutch. Second, 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. 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. I am going to touch on that transaction towards the end of the presentation. As Lena has said, "Telcos are boring, Tele2 is not." This has definitely not been a boring quarter for all of us. 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 Roam Like at Home regulation. As a result, mobile end-user service revenue was slightly down 1%, but if you remove the Roam Like at Home impacts, we actually grew 1%, and EBITDA grew by 3% like for like.
We were less affected by Roam Like at Home in the Baltics and continued to deliver very strong mobile service revenue growth and EBITDA growth of 9% and 21% 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-first 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 26%, 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 for the Tele2 Group and improving our risk profile going forward.
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 ARPU 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 ARPU as well as brand perception. In Sweden, Comviq's Christmas campaign broke sales records for the fourth consecutive year.
Our winning cost structure was also strengthened in the quarter, with The Challenger Program run rate savings now exceeding our SEK 1 billion target, and also the TDC OpEx synergies are approaching run rate target after only one 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%. 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 Like at Home impacts, the Swedish market continued 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.
As you know, our Swedish business was affected by Roam Like at Home and a decline in legacy fixed revenues. Excluding the Roam Like at Home, mobile end-user service revenue was up 1%, with growth in the consumer segment offset by declines in the business segment. The EBITDA growth was realized as synergies in the TDC integration and The Challenger Program benefits were able to more than compensate for the effect of Roam Like at Home and the decline in fixed and B2B revenues. If we go into the Swedish consumer segment, here you can see an underlying trend of solid growth up 3%, driven by strong growth in Comviq postpaid due to the continued migration from prepaid and, as I said, boosted by the successful Christmas campaign.
Staying true to our purpose of fearlessly 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 Comviq 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, as expected, the market continued 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 SEK 300 million. Also, we expect to invest a 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 PostNord, to name a few. Really, it's been another quarter of winning great names and extending existing contracts. As I've 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. We're very, very happy with the customer retention and acquisitions that we've been seeing in the recent months. In summary, B2B synergies and The Challenger Program are really helping offset the drag on the top line in the quarter. Moving on to Baltics.
Continued commercialization and monetization of 4G 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. 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 ASPU 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 continued 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. 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. In general, we continue to be very proud and excited about the continued opportunity in our Baltics business unit. Looking at the investment market, 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 buckets. EBITDA more than doubled year-on-year as we reaped the benefits of the higher ASPU levels, improved scale, and integration synergies. As a result of this excellent momentum, Tele2 Kazakhstan is now cash generative and a first repayment to Tele2 Group of 3.3 billion KZT, which is approximately SEK 80 million, was made in the quarter for the shareholder loan. We expect those shareholder loan repayments to continue through the year. Looking at our Kazakh results in a bit more detail.
Our customer base grew by 7% year-on-year to just over 6.9 million customers, driven by our expanded distribution network and our successful dual 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 4G 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 Kazakh consumers faster speeds with our LTE and our LTE Advanced coverage now reaching 73% and 44% of the population respectively. 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, [VFT], and lower fixed legacy revenues. Mobile end-user service revenue, however, was up 30%, with a growing mobile customer base increasing by 16% and ARPU 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 SEK 97 million. We continue to take more than 20% of the postpaid contract market. 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 combination progress, T-Mobile have now kicked off the pre-notification phase to create a strong number three 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. With that, I'm going to hand over to Lars now.
Thank you, Allison. 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. 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. Sweden's increase of SEK 13 million 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 million 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 million and came as a result of a continued shift towards higher ARPU bundles. Moving on to EBITDA. Compared to Q4 last year, we have reported a growth of 5%. In Sweden, integration synergies and benefits from The Challenger Program exceeded the negative impact from Roam Like at Home, and thereby delivered a positive EBITDA development. The Baltics delivered an EBITDA that was SEK 56 million 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 SEK 100 million 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 SEK 89 million. 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, the investment 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 SEK 135 million. 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 consumed less cash and had lower Challenger integration costs, which make up the lion's share of the green box highlighting one-off items. As you know, we also like to look at the evolution of cash flow from a longer-term and more operational perspective.
If we turn to slide 21, we have the rolling 12 months 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 and 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 rest of group continued to grow its operating cash flow to a record SEK 4.3 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 two 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 SEK 2 billion, which would take the leverage to approximately 1.8. 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 SEK 1 billion at the end of the quarter, with SEK 900 million in accumulated benefits for the full year 2017. As the CFO, I am proud to say that we have reached our target with lower investments than anticipated, as these came in just north of SEK 700 million compared to our initial estimate of SEK 1 billion.
Some key takeaways from the program include the new operating model with our shared operations in Riga and India that was introduced fully two 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. As many of you know, cost consciousness is and will remain one of our key values at Tele2. In line with this value, new initiatives to improve effectiveness and flexibility have already been launched during January 2018. 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 over mid-single digits and EBITDA to come in between SEK 6.5 billion-SEK 6.8 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 SEK 2.1 billion-SEK 2.4 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 SEK 4 per share. As for leverage, we are confirming our current target of two to two and a half times over the medium term. With that, I'd like to hand back to Allison.
Thanks, Lars. Let me finish with our priorities moving forward before getting into a brief update on the Com Hem merger. First and foremost, it all starts with our purpose, to fearlessly liberate people to live a more connected life. That purpose is enabled by our four key strategic pillars, positively fearless 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 at 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.
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 contributions without which we would not have been able to deliver this winning set of results. But let's just before Q&A talk a bit about the merger with Com Hem. As you know, we announced our intention to create the 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, 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 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 apps that will provide flexibility in pricing and opportunities for growth and cash generation going forward. There are also significant cost and revenue synergies of SEK 900 million in total, which we have set at 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, 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. The final strategic rationale is all about the attractive financial profile of the new combined company. I just want to illustrate that a bit further now that we have the full 12 months for both ourselves and Com Hem. In 2017, the continuing operations of Tele2, so that's mainly Sweden, Baltics, and Kazakhstan, produced an equity free cash flow of SEK 3.1 billion.
Com Hem produced an equity free cash flow of SEK 1.5 billion and will, as you know, soon start to pay taxes of around SEK 300 million per year. If you add the SEK 900 million 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 SEK 5 billion of annual equity free cash flow. That is before underlying organic growth continues to build on top of that. Com Hem shareholders will, as you know, own about 27% of the merged entity, and Tele2 shareholders around 73%. 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.
Let's not forget, the investment optionality that Tele2 has around the Dutch and the Kazakh assets on the top of this. With those words, I'd like to finish our presentation and open up for questions.
Thank you. If you would like to ask a question at this time, please press the star or the asterisk key followed by the digit 1 on your telephone. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. If you find your question has already been answered, you may remove yourself from the queue by pressing star 2. Again, please press star 1 to ask a question, and we'll pause for just a moment to allow everyone to signal. 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? Then also in terms of the competition in the consumer market, it sounds like in reading 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.
Yeah. 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. Therefore, those propositions were very popular, but still in the low teens area. 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. The pricing goes back up after a period. Despite that, Comviq has just continued to go from strength to strength in that segment. I think it's stable, but it's a competitive market, Henrik. We're doing great in it.
If you strip out the impacts of Com Hem, we grew our consumer business 3% again in the quarter. As you saw, we had very strong EBITDA and cash generation in Sweden.
Great. Thanks very much.
Thanks, Henrik.
Thank you. We will move on to our next question from Lena Österberg from Carnegie. Please go ahead.
Yes. Good morning. Congratulations on delivering again. I have one question. You indicated in the conference call now that you now see some additional synergy upside. 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 one year. I was wondering, are you not being overly conservative with a 5-year plan target for the merger with Com Hem? In which areas do you think you would be conservative on the synergies?
Hi, thank you for the congratulations, Lena. Continued support is great. Thank you. Listen, 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 that a large chunk of the synergies was in the MVNO. Contractually, we might have been held to that for actually a further 3 years. The company that had the MVNO wanted us off of their network much quicker than planned. That's why TDC has delivered so quickly and so well. That being said, as we look at all programs, The 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, it's not really from the OpEx point of view.
The OpEx synergies will be in the first 2 to 3 years. It's the revenue synergies that we have said could take up to 5 years because the Swedish market, the consumer market is not yet used to buying converged services. 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 in the churn reduction. The revenue synergies are about SEK 450 million 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. 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.
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. It's too early for us to promise anything at this time. 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 Isailova from RBC Capital Markets. Please go ahead.
Good morning. Thank you. On Sweden, could you just talk about the net add dynamics between the Comviq brand versus the main brand, and the prepaid to postpaid migration, any changes in trend? 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? Finally, my question is now that 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, Irina. On net adds, we saw a positive postpaid net adds. We never split Comviq and Tele2 down. From a postpaid consumer perspective, it was another positive quarter of growth. You are seeing prepaid. Prepaid has been declining for a number of years. It's declining further at the moment, particularly driven by Roam Like at Home. The prepaid to postpaid migration is definitely being accelerated by Roam Like at Home. 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. 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 digits 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 that it was this quarter, we're still aiming for double-digit growth in Kazakhstan again next year. In terms of convergence in Sweden, we build a strong mobility-first position first, we expand from that. We have still lots of room for opportunity to grow our mobility-first position in the Baltics, certainly in Kazakhstan. We don't yet see a need or the opportunity to take it beyond mobile-only in the Baltics. The Baltics are core assets for us. They are very much linked to our Swedish assets.
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.
Right. Thank you.
Thank you. We are now moving to our next question from Robert Florack from Handelsbanken. Please go ahead.
Thank you very much. A question on CapEx and CapEx to 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 CapEx to sales levels? That will be interesting to hear.
Yeah.
Yeah.
Excluding spectrum, pretty much. Lars, do you want to take that?
Yeah. I think if you look at the different countries, Robert, Sweden has been around 67%, and that's kind of what we're guiding for next year. The Baltics has been slightly higher than that. Kazakhstan, obviously they are growing their network as they grow their customer base. We see that to be at a similar level as well going forward. That's obviously before any spectrum and any larger kind of 5G potential investments that we see further down the road.
On 5G investments, you will see that driving up the CapEx level. Is that kind of the base case?
I think we would 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 5G. We don't see that coming through before 2020, 2021.
Exactly. Obviously, there will be the Swedish 700 MHz in 2019. That's already been announced. It's not clear where the consumer use upside of 5G yet is, we will into 2020 and 2021, as Lars said.
All right. Thank you very much.
Thank you.
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, the revenue beat in this quarter was driven by handsets, yet OpEx in totality was pretty much as expected. I'd assume that handsets, especially in the acquired TDC business, isn't a very high margin business. 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. My second question on the KZT- denominated 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. On the loan, we're about 2.8 billion SEK, about KZT 114 billion, and that loan is obviously KZT denominated. That's where we were at the end of the year. As far as Sweden is concerned, when we look at the Q4 on 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. Then we obviously see the Challenger benefits coming through as well. Those are some of the key drivers that drive the OpEx benefits. Then obviously we have the TDC synergies coming through, with the MVNO piece being a big part of that.
That's very helpful. Thanks.
Yeah.
Thank you. We move on to our next question from Stefan Gauffin from DNB. Please go ahead.
Yes, hello. I was actually mainly interested in the Swedish OpEx as well, but could take a question on the B2B market in Sweden, how you're seeing that is developing, and I've seen you're taking some contract. Are you mainly winning on price? Are you, in effect, driving down prices in the market? On working capital, what can we expect going forward? I think this was quite a large swing this quarter. Anything on working capital for 2018 would be helpful. Thank you.
Thanks, Stefan. I'll take the first question, 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. No, it's not just about price. 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. 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 the combined company. The market remains very price competitive, and we expect that to continue.
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 2018, and we'll really be able to build momentum and market share behind the new combined offer that we can take to customers.
On working capital, Stefan, we would expect 2018 to be fairly neutral. If you look at 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 receivables side. That is now approximately at the same levels of volume. We expect that to be quite neutral.
Okay. Thank you.
Thank you. As a reminder, ladies and gentlemen, if you wish to ask a question, it is star one on your telephone keypad. Now we move on to our next question from Victor Holdand 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. What countries do you see contributing and where do you see other way around? If you can just give a brief comment on your view on the Holland outlook and all that. That will be, of course, reported in a different way, but if you can say anything on that would be great. Thank you very much.
Yeah. Thanks, Victor. 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. Continued great market share and scale benefits in our Kazakhstan business. We'll obviously continue to get rollover benefits of synergies and The Challenger Program in the year. All those will be partly offset by Roam Like at Home still hits us through until about June, so that's about SEK 100 million to SEK 150 million hits that will be with us in the first half of the year. Some of our legacy fixed business is declining as well. It's very much, from a continued operation point of view, the same story as this year.
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 out 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 duopoly.
Super. Thank you very much.
Yep.
Thank you. We move on to our next question from Ulrich Rathe from Jefferies. Please go ahead.
Thank you. I have two related questions. First one is on convergence in Sweden. Tele2 obviously have 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 run-up to the merger closing? Do you think there's any sort of material risk of them trying to accelerate in the meantime? The second question, sort of related to that, 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. Yeah, 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. They would have a lot to do to be able to lock down the market before we did anything. I see that there'll be room for both of us to grow in the market because there isn't converged services today. We're going to have the uniquely best TV product in the market, we already have the leading market share there. It's increasingly becoming a platform that will take on more OTT options and will increasingly become app-based, that we can move on to all devices. I don't see that as a risk at all to our merger. We're always paranoid about competition, and we watch every move.
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, I've haven't changed my opinion on the ability to achieve those synergies. We are in the early days of discussing how we bring the two companies together. I think the great news is we are not culturally dissimilar. I see that 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 two cultures together. The main area of risk in this time is obviously uncertainty around people.
As we mentioned at the time of the announcement, we've put retention packages in place that very much incentivize key talent to stay, but also contribute to getting off the ground running on day one and contributing to synergies and integration ambitions. It's all really about culture and people, and Anders and I are working very close to ensure that it's 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 Österberg 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, Lena?
Yeah, for the merger with Com Hem.
Yeah. No change there. We said it would be second half of the year. From a regulatory point of view, that's kind of standard timing. It's very early days. It's only two weeks since the announcement. There's been no filing or anything done yet. We still expect EGMs after the summer and closing in the second half of the year.
Sorry, did you say that you haven't filed yet?
No, 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. 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.