Tele2 AB (publ) (STO:TEL2.B)

Investor Day 2017

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Jun 1, 2017

Hello and welcome everyone to Tele2 Netherlands. We are very happy to see everyone here. We will have a session today which will be recorded and webcasted and the slides for the presentation will be available afterwards at tele2.com. So you can find them there. And with those quick words, I would like to welcome our CEO, Alison Kirkby, up on stage. Thank you, Erik. Thank you and welcome everyone to our 2nd bite sized Tele2 update. We've put on the weather specially here in Amsterdam for you today. And John has recently shaken up the market update is very much focused on our investment markets. Update is very much focused on our Investment Markets. And so I'll be joined here today by John, our CEO of the Netherlands Guillaume, our EVP for International and that is all of our markets outside of Sweden and the Netherlands. He will also be joined by Roman, who is our CEO for Kazakhstan. And Lars and I will close the session off later where we can touch on some group aspects as well. But really today is very much to give you a deep dive into our international businesses. And in case you don't know who the individuals are and you haven't seen them before, That's John before he had his haircut. And you know Guillaume, and obviously, it's probably the first chance for you to meet Roman, who joined us just over a year ago to take over to run the JV in Kazakhstan. He joined us from Tele2, Russia. So it was he was actually a boomerang that came back to us and knows Tele2 very well from his track record in Russia before now his great track record in Kazakhstan. We've also got a number of the Tele2 team here today that will be around for Q and A and for the mingle later. I just want to call out 3 individuals. We have Ilsa, who heads Regulatory Affairs and Corporate Responsibility. And since we've got some emphasis for ESG Investors here today, I want to make you aware that Ilsa was here to take Q and A. We've got Barry, who heads up B2B here in the Netherlands, who will support John with any particular interest you have there. And then we have Zourab, who is our CFO for the international region, and he was previously the CFO of Kazakhstan and helped make the JV happen with Altell in Kazakhstan. And then we've got a number of others that I can introduce you to later. So you all know Tele2 very well. But just as a reminder, Tele2 is one of the fastest growing European telcos, thanks to a few key things that we believe makes us special. First, we've got some of the most positively fearless brands in the industry that really stand out. Secondly, we really take a mobility first position as we believe the world is increasingly going mobile. 3rd, we see ourselves as a connectivity innovator. So we're taking our mobility first position into connectivity and thinking about how we continue to innovate in that space as increasingly consumers and businesses want to be more connected. And that is all underpinned by our unique Tele2 culture. We call it the Tele2 way, and it is our deep challenger spirit that helps us stand out and has been with us since Jan Steinbeck founded us over 20 years ago. Those foundations are enabling us to have a set of complementary businesses. 1st of all, very well established cash generating businesses around the Baltic Sea that consistently deliver industry leading return on capital well above 20%. And the focus for today, very exciting high growth markets that are coming to the end of their investment cycle and very much accelerating towards that and will reap the returns of the significant investments that we put into those markets over a number of years. Our goals for the coming years are very much focused on three things. First and foremost, we have some of the most engaged employees, not just in Telco, but in most companies in the world. And those employees are single mindedly focused on delighting our customers with great connectivity and a great customer experience so that those customers will increasingly consume data on our networks, will increasingly become more loyal and recommend us to others, so that through data growth and data monetization, we can return the company to our return on capital above 20% for the whole group in the coming years. And that is our medium term ambitions. How we achieve these goals are via our strategy house or our what we call our unique way to win, which we have recently refreshed to take us forward into the coming years. And the refreshment was about giving us a clearer purpose on our role in the connected world because we believe the connected world is a better world and we want to better define our role within that. Our purpose, therefore, is to fearlessly liberate a more connected life for our customers. And the way portfolio in 4 very clear buckets and focusing our capabilities also in 4 very clear differentiated buckets where we believe we can stand out versus other telcos and other players in this space. Looking first at the portfolio then, the 4 buckets are 1st and foremost, our Baltic Sea Challenger businesses, very well established, delivering sustainable and growing cash and great returns for our shareholders and more than fund our annual dividend every year. We then have our cash generators. What they do is what it says on the tin. They are there just to generate cash for us to invest back into higher growth opportunities, either in our Baltic Sea Challenger footprint or in our high growth investment markets or in our small but very fast growing global space in IoT. And today, as I said, the focus will be very much on our key investment markets of Netherlands and Kazakhstan. Today, we will also try to bring alive how we win, particularly in those two markets, via the 4 differentiated capabilities that make us different. We believe we have some of the most fun, some of the most fearless brands in the telco space that really stand out because they have a personality that no other telco company has managed to achieve. And you will have seen across the footprint in recent weeks, we have been relaunching those brands to make them fit for purpose and even more relevant in a connected world going forward. Secondly, our aim is to connect the things our customers love to the data and the content that they increasingly consume all of the time on the go no matter where they are. And we are encouraging that and stimulating that because we've got the most wonderful 4 gs networks that have great spectrum, great fiber backhaul and therefore lots of capacity to stimulate even more growth that we can monetize in the future. And we have a roadmap towards 5 gs already planned out. Next is a big opportunity for us in terms of customer experience. We see a huge opportunity in digitalizing how we interface with our customers through new tools, new services to make them make easier for them to connect with us, make it easier for them to stay with us, to make it easier for them to trade up with us and make it easier for us to better understand them so that we can work out how we can give them even more and make them even more loyal to us. And using digital tools will make us more efficient in the long run, which leads us into our desire to sustain and even further improve our Challenger cost structure in the coming months years. And all of those choices are very much underpinned by our unique winning people in culture and the responsible challenger position that we have taken since Jan Stenbeck founded us. So how is our Way to Win delivering? Well, as you have seen since about spring last year, we have really started to build momentum across the footprint as we've become more focused and more clear on where we will focus and where we will not focus. And we've had a very strong start to this year with mobile end user service revenue, organic growth of 10%, organic EBITDA growth of almost 30%, and a more than doubling of our operating cash flow. And that operating cash flow was driven by both strength in our established Baltic Sea Challenger businesses, but also us hitting an inflection point in the investment cycle in our investment markets. And that's why we felt now was an appropriate time for us to bring alive for you not just the strategies that have taken us to this point, but also give you a feel for how the acceleration of the reduction in the investment cycle and the that the teams in both Netherlands and Kazakhstan have. So this is the focus for today. I'm going to now pass over first to John, who will take you through what's happening here in the Netherlands. We'll then have some Q and A after that before we move on to Thank Thank you very much, Allison. There were some familiar faces for me from a previous career and some new faces, so I look forward to getting to know you. And thank you for coming to hear us or me tell you a little bit about the Netherlands. And it is a particularly exciting time for me to be joining Tele2 as a whole. And it's a particularly exciting time for me to be joining Tele2 in the Netherlands. I'm going to be talking to you today mostly about our mobile business. And a key message that I really want to convey to you is that our mobile business is ready here in the Netherlands for renewed growth, having put in the hard work over the 18 months or so since our original launch in October 2015. So I'm going to remind you briefly about the shape of our business in the Netherlands. I'm going to take you through a little bit of the journey that we've been on since October 2015, which has got us to the point that we're at now that allowed us to disrupt the market as we did on 17th May. I'm going to take you through the work we've done on network. I'm going to talk to you about the work we've done on our brand and our go to market strategy. The opportunity we see commercially that lies behind the proposition that we launched on the 17th May. I'm going to talk a little bit about our fixed businesses as well as mobile before having a look at the financials and how these changes, particularly driven by our mobile business, are helping us to accelerate the end of the investment phase here in the Netherlands. So with that, a brief look at the Netherlands business as a whole. You'll see from this chart, which is split out the same way that we do in our quarterly reporting, this is a business that is already 55% mobile in terms of revenues with a significant fixed component both in B2B and in business to consumer. And to be clear, the role of our fixed businesses here in the Netherlands is to be strong, stable sources of cash flow that help us to invest and accelerate our growth in mobile, which is where our intention is focused in terms of growing the business. As I said, from October 2015, we originally launched our proposition. And it's important to understand the journey that we've been on and why it is now that we are ready to disrupt the market. We're ready to change the game and not previously. The critical things that we've built in that time since October 2015, We've built a very strong network. We've built a very strong brand. We've built sales distribution. We've migrated customers to the point where we have some very efficient network economics. And now we're a business with significant growth behind us already, but we're still only at 5% market share, and we have an extremely strong network, great network economics, and we're poised to grow still faster. And we have the opportunity to transform the way that Dutch consumers think about mobile data and how they use it. So I'm going to talk to you about the progress we've made, firstly, on the network. The network is the foundation of everything that we can do, both in terms of quality and in terms of the level of disruption that we can bring to the market. So understanding that and the progress we've made is really the foundation. We have just seen the latest P3 report came out a few weeks ago. Many of you will see it as well. And what it says to us, and I think to those of you who are interested in such things, this is the first time that we've seen network quality data that tells us that our network here in the Netherlands has reached a level of being top quality and entirely competitive with our fellow networks here in the Netherlands. Ours is the only 4 gs only network here in the Netherlands. You can see from the data that we've been improving faster than anyone else as we've been rolling out that network. And we're really confident that as we continue in 2017, which is the last full year of our network build program, that we will see continuing performance improvements. We will see the benefits of a 4 gs only network starting to come through. So these are very high quality networks here in the Netherlands. Every one of the networks here in the Netherlands would be market leading in multiple other European territories. So we really do have a very high quality network to play with. Critically, in terms of the network economics and the performance and the pricing that we can give to our customers, the critical what's critically important is that our customers are using our network, our 4 gs network. So we've, as you can see, made great progress in achieving coverage. So our customers overwhelmingly are now in a position to get on our network for both voice and for data. It's available indoors and outdoors in almost every location they'll find themselves, which is the first step for us achieving that comprehensive transition to all our traffic being on our own network. We've made very substantial progress in VoLTE, particularly in the last few months as we've enabled that capability and encouraged customers both in the background and directly to migrate to VoLTE. So you'll see that we have 428,000 customers on VoLTE, activated on VoLTE today. That represents about 46%, nearly 50% of our voice traffic and rising very fast. That's helped by the transition in the Apple family, Android handsets lagging somewhat behind. So we expect to find progress will slow a little as we get towards a ramp, if you like, of older handsets. But we're seeing very substantial progress on VoLTE, which is fantastic, both in terms of quality for customers, but also in terms of the economics that our proposition can rely on. But we're particularly pleased with our success on data. We have implemented 3 gs barring on the 1st February. As a consequence, no new customers, whether on SIM only or handset, will be joining us on 3 gs. In addition, clearly, customers are busily swapping their 3 gs handsets to 4 gs. So the level of migration of data to our own 4 gs network is climbing very fast. We're 88% in the latest April numbers and that is going to, as you'll see in a few minutes' time, really help us in terms of both quality, but in terms of particularly in terms of giving us the network economics, which are fundamental to us doing what we plan to do in shaking up the market. So a couple of slides on the network there. I'm now going to turn talk to the brand, which is as fundamental for us at Tele2 as it is as the network. And we're very proud of the brand that we've built here in a very short time in the Netherlands. And in common with Tele2 territories elsewhere, we have created a brand that has a very distinct, not to say crazy personality. And I look forward to sharing with you some of the work we've done for our most recent campaign a little later on. But it's very important for us that this fund rebel positioning, which we adopted from the very beginning of our launch here, is completely our own and completely distinctive from our competitors who are, broadly speaking, more corporate. It's for us, we are here to shape up the market. That's what we do. And our persona reflects that ambition. And we're delighted with the progress we've made with the brand in, after all, a very short period of time. You can see from the numbers on the chart, we've always been defined by being great value. We started our journey here in the Netherlands with the brand, with the proposition focused on cheaper entry level bundles in the early days as we began to build our network. But as we've evolved and we've become more and more competitive in the mid range and beyond and as our brands have become more familiar, we've seen some real progress in not just being seen as great value, but also being seen as a quality network, competitive to the other players in the market, but also being really clear and easy to deal with fundamental Tele2 value. And you can see from the consideration numbers that the Tele2 brand now is over the 50% consideration mark. That's a critical threshold for us in terms of competing directly head on with the KPNs, the voters and the TMOs for customers right across the range, including the higher value, higher data usage customers who want data freedom. Finally, on customer experience, on NPS on the right hand side, you can see that we have improved. This is one area of our transformation that we are not yet happy with. The Tele2 brand, whether in the Netherlands or elsewhere, must be associated with not just good customer service, but customer service that is a delight to deal with. We have more work to do there and we have underway already a very substantial customer experience program with the goal of taking our customer experience towards the goals in terms of NPS that Alison outlined earlier, a fundamental priority for us here today in the Netherlands. And in parallel with the brand and moving our perception on, we've been working extremely hard in parallel with network and brand work to create a very powerful sales engine that can take the quality network, take that strong brand and convert it into great value sales. We've been focused particularly on building a strong direct sales footprint, channels that we own and control. So that's online. We have 16 stores today. We're planning to expand our Rochelle footprint over the coming months. And obviously, we have both inbound and outbound telesales that we control. Those channels typically deliver to us higher value customers, a better customer experience and higher ARPUs. We've been focused on growing their share. As you can see, we're over 50% in terms of sales coming through our direct channels, and we'll continue to drive that number upwards as we go through this year. That sales engine has successfully delivered for Tele2, depending on the month, depending on our tactical activity that we've been doing, very substantial shares. So as you can see from the middle chart, we have successfully taken 35%, for example, in March in handset sales in the market, so taking over a third of business in the handset market. So that sales engine is performing. It's capable of disrupting the other players, moreover, being the leading player in terms of acquisition as we were in March. You can see that in SIM only, we're less we've historically been less strong. Our focus has been on handset. That's a shift from handset to SIM only that we're making with our new proposition. I'll say a little bit more about that as I take you through what the opportunities were that led us to the new proposition. So why was it that we decided to launch on May 17? As I said, we have been working for 18 months to get our network and network economics to the right place. But it and that is we're now in a position where we can disrupt the market of which May 17th was the first step. What opportunity was it that we were going after? Ultimately, it's the same opportunity that brought Tele2 to the Netherlands with mobile in the first place, which is that Dutch customers are paying too much for too little data. This is Q1 2017 data, quite a similar picture from 'sixteen and 'fifteen as well. Dutch customers pay more per gig. And as a consequence, Dutch customers quite sensibly are choosing to ration their data consumption. And it's precisely that opportunity that we want to take on. We think there's a great opportunity to target customers who want data freedom and don't want to pay the earth for it. That's exactly what we're trying to do here. It's an untapped opportunity in the Dutch market to transform it and make Dutch consumers among the most data consumptive out there at great value. That's precisely what we're trying to do with our new proposition and our plan for the rest of this year. So let's have a look at how that turns out how that turns into opportunity in the market itself. Firstly, let's have a look at mobile only. So in mobile only, you can see pretty straightforwardly, these are the prices for mobile bought without a fixed subscription. But you can see here that with our new pricing and the latest pricing from our competitors, including KPN's pricing that actually comes online today. We have a very clear advantage at Tele2 over the rest of the market. So we are the clear price leader now at every step of the market, but particularly for those customers who value data freedom. Those are the ones, if you go back to the previous chart, who are being most ill served by being having to pay too much money for too little data. And that's our focus in terms of value. We think we've got a great opportunity just to be better valued than the competitors and to stay there. So that's the first opportunity. The second opportunity is in the FMC market. Obviously, for KPN, for Vodafone, Ziggo, it is the fixed bundle, converged bundle is how they attempt to secure their customers to lock them in and to cross sell mobile successfully. And we just want to illustrate for you on this slide the costs for a family, 2 adults, 2 kids, a family who wants data freedom, they want big data buckets, the parents want big data buckets, choose to buy that from KPN or Vodafone and then compare that to the premium they're implicitly paying compared to Tele2. This is Tele2's mobile only proposition. What that shows you is that if you look at the prices that those customers are paying for their fixed bundles, and these are the bundles that are available from KPN and Vodafone today, then the you compare the mobile pricing within that and replace it with Tele2. The implicit premium, the implicit price that they are paying for their fixed broadband and TV, basic fixed TV and broadband is between €180 €200 In other words, customers inside fixed and mobile bundles are not getting great value as a consequence of the bundles. On the contrary, they are being overcharged. And they are operating in bundles that are typically complicated, opaque in terms of the charging and difficult to extract yourself from. And it's exactly that kind of charging. It's that kind of overcharging. It's that kind of complexity and lack of clarity that for us is a classic Tele2 opportunity. We want to go after those offers offering great data freedom, really clear pricing, simple and easy to deal with company with we're not trying to lock you in, indeed we'll offer you no contract. So that for us is a classic opportunity. Equally, we don't underestimate the determination of the incumbents to retain their customers, but we fundamentally see this as an opportunity to take on some legacy pricing behavior and disrupt a market. 3rd opportunity for us is that our ARPUs, by any measure, are the lowest of the major MNOs. So our opportunity to disrupt the market is pretty straightforward. We have had lower data buckets and lower pricing. That was where we entered the market. We are now operating at €17 on average for ARPU, and that's at least €7 lower than any one of our competitors. So that's exactly what gives us the headroom to come in, shake up the market and continue to grow both volume and our average revenue per customer. So that's the next opportunity that led us to the disruptive move we made on the 17th and we'll be making in future. The 4th opportunity came perhaps from an unlikely source. Many of you will be familiar with the VFTA regulation that came into play in the Netherlands on the 1st May, which required customers to take out a consumer loan, in effect, with additional steps in the sales process when they're taking a subscription out, which includes a handset where the value of the handset is more than €250. Now that legislation, which I'm happy to discuss in the Q and A, it's clearly been complicated and has had a number of effects in the market. But above all, it's clear that it has driven a shift from handset to SIM only. As you saw from our market shares earlier, we were overrepresented in the handset market relatively. We've seen this as an opportunity to strengthen our position in SIM only, which is precisely where we think customers over the coming months will be drawn in part by the VFTA legislation. So as we come on to the proposition, I'll explain how that strengthens our position in the SIM only market substantially. So here is the new proposition that we've launched on the 17th May. Many of you will be familiar with it. But let me explain why we designed it this way and how it takes aim specifically and those opportunities I've just talked about. Most importantly, our headline shout of €25 for unlimited data takes aim directly at those underserved Dutch customers who want data freedom, who are paying too much for too little. And where our price gap, if you remember, the mobile only pricing is at its most extreme now. There's a great opportunity for us to attract data hungry customers and say for €25, you can go for your life. That's available to not just new customers, it's available to all our current customers. And we've also upgraded all our customers who are on our top tier directly to the unlimited €25 proposition. We wanted them to hear it from us first and to get an equal crack at this great new proposition. Secondly, we've taken aim at the mobile only and FMC customers who don't necessarily need unlimited by cutting prices right across the board. So you can now see you can now take a gig offer from us for only €10, add unlimited voice of just €4,000,000 We've added no contract for just €1,000,000, a very popular feature. And this again is targeted at those customers who are in an FMC deal or a long 24 month contract and dissatisfied with their provider, we are stepping out and saying we're so confident in our price, in our network quality and in our commitment to stay competitive that we're willing to offer no contract. And we are the only people in the Dutch market doing that. And as you compare these pricing to our previous pricing, these prices, by the way, operate both on handset and SIM only. Handset pricing themselves is marked is charged separately to customer. As you'll see that our SIM only pricing is markedly more competitive now as a consequence of this change. So that is part of us chasing after a 4th opportunity, which is a shift in the market that we've predicted and that we've also seen happen from handset to SIM only. So let me proposition. And these propositions are targeted at 3 separate segments, short and punchy, and hopefully, you get the message. My Dutch colleagues are standing by to translate that for you, if necessary. But I hope you agree that Tele2 advertising here as elsewhere will always be distinctive and hopefully never sensible. Let me, with that, go on to give you a little bit of a flavor of how what we're doing in mobile, what we've done over the last year has contributed to our financial performance in mobile specifically. And that will give you a sense of where the business is as we've gone into Q2 and we've started to launch our disruptive activity. Even before we have begun our activity in Q2, which really marks the point at which we felt we were ready to shake up the market properly, the performance we've put in over the previous 12 months, the previous 18 months since we launched the network has been very successful. It's been disruptive in terms of pricing and it was only the beginning. And you can see that in the financials in that we've managed in the last 12 months to grow the customer base by 20%. We've also, in parallel, managed to grow ASPU because we've been moving from our starting point in lower end data bundles. And as our network has rolled out and our network economics have improved, so we've been able to move higher and higher in terms of the tiers of service that we're offering. And the combination of the base growing and ASPU growing at the same time gives us great momentum in terms of revenue growth. And again, this is our starting point before we cross the line into the world we're in now of generally disruptive behavior as we head for accelerated growth and aim to bring the end of the investment phase closer. And in parallel, with growing our top line fast in mobile, with great subscriber growth and ASPU growth, we have begun to collect the benefits of our expanded network coverage. So 2014, 2015, '16 have seen substantial investment in expanding our own network, our 4 gs only network, and you can see that in the site numbers on the left hand chart. As I said, 2017 is our last full year of complete network rollout. Next year is really about some of the tougher, smaller sites that, for example, the Rotterdam Tunnel, which are less consumptive of cash and time but are complex and difficult to get into. The consequence of us growing that network coverage, which you saw in the earlier charts, is that more and more of our traffic, both voice and data, is on that network. And if you look at our total network costs, this is excludes CapEx, this is our ongoing costs, you can see the very healthy dynamic we've got there, which is that as we see some modest increases in the direct costs associated with our own network, for example, site rental, paying to land owners, building owners to put our antenna in their environments, You're seeing much sharper falls in our roaming, our domestic roaming costs as data and voice are moving aggressively into our own network. So at the same time as our subscriber base is expanding and our revenues are expanding, we're actually managing an absolute terms decrease in total network costs because the pace of cost reduction on roaming, 3rd party costs particularly, is outpacing the increasing cost of running our own network. So with tight financial discipline, we've already managed to turn that corner in reducing network costs in absolute terms. And of course, that means that our network costs per customer per month are falling even faster as our subscriber base grows and that in turn translates into network economics, which are very strong and allow us to do the disruptive activity that we've been talking about in the market. I'm now going to talk about the fixed broadband and business to business operation. Again, the role of our fixed businesses, both in consumer and in B2B, is to provide strong and stable cash flows that support the business as a whole specifically are there to help fuel our mobile growth engine. And as you can see from these numbers, these businesses are generating material operating cash flow to do just that, to fuel the mobile business with disciplined cost control. We've managed to deliver steady improvements in our cash flow. This is flattered somewhat by some VULA costs in Q1 'sixteen, but the underlying picture is one of improving cash flow support for the mobile business from the fixed businesses. And that's despite the fact that both revenue and EBITDA are experiencing slow declines, largely driven by the decline of fixed voice in B2B and by price erosion in contract renewal in B2B, a familiar story for telcos in most places. So these businesses continue to do what we ask of them, which is to deliver cash flow to support the mobile businesses. Firstly, fixed consumer broadband. We are maintaining a price leadership position in fixed broadband and TV. So that enables us to maintain a steady subscriber base, also to invest in steady improvements in our product portfolio. Around 50% of our customers are now on Vula and we continue to match the progress in terms of broadband being made elsewhere in the market, but at the same time to keep a very tight lid on costs and to generate cash flow for the rest of the business. The base you can see there is stable and we are that includes a small number of B2B customers is predominantly a fixed consumer count, that number. If I turn to our B2B business, our B2B operation is a significant force in the business telecoms market here in the Netherlands. It's number 3 in the market after KPN and VodafoneZiggo, and we are led by value. We have a direct and likable, if you like, position in the market compared to players who are more perceived as incumbents. And we're moving faster than the others in taking advantage, for example, of FMC. While we are not pursuing an FMC strategy in consumer, given the broad access to infrastructure we have in B2B, we are pursuing an FMC strategy enthusiastically. So we are have moved quickly to offer FMC. And our traditional business in large enterprise, including government continues to perform well. At the same time, we are switching our focus steadily to secure growth from smaller enterprises, very small enterprises and SME, where our FMC proposition is very powerful and also our mobile only proposition gets great traction. So you could see here some of the clients that we support from our B2B offering. Again, our B2B play is a significant part of the Dutch business telecoms market, whether it be the police, some of the major banks, whether the Dutch tax authority, these are we have a very significant hold in the large enterprise market as well as seeing rapid growth in FMC, as you can see on the bottom left, by combining our fixed assets, both the traditional Avula and KPN assets with our own network together with our mobile assets. So that hopefully that gives you a flavor of both of our fixed assets, which are really here to support our mobile business, which is poised for the next phase of its growth. So I'll just give you a quick picture of the overall financials for the business, and then we're going to wrap up and take your questions. You can see from the total financials that we report that we are combining consistent revenue growth and moving towards in the right direction on EBITDA. Q1 flatters us with a one off, but we are maintaining our flat EBITDA guidance for the full year. And as you look at the cash flow, you can start to see the underlying trends that I pointed you to driven by the mobile business, which is that as we start to exit the intensive phases of network build, again, this is the last year or last full year of intensive network build. As we start to turn into significant subscriber growth into great margin, thanks to a declining network costs, you'll start to see the benefit of those changes coming through in the operating cash flow. So from our point of view, we think we are well on track to accelerating at the end of the investment phase. In terms of the business, as I said at the beginning, we are really focused on growing the mobile business. We are moving aggressively in the market precisely because we've reached the point after 18 months of hard work where we have exactly the right brand network and network economics to be able to go and shake up the market in the way that Tele2 should. We're going to be creating a customer experience that we believe is generally Tele2 and ahead of the market. That's going to be a digital identity that is distinct, not just in the way that our Tele2 brand is distinct, but distinct in terms of the way that customers deal with us from our more corporate competitors. And we're going to work really hard to drive customers who want data freedom to fill our network with data consumption and nonetheless do that in a way that is disciplined so we can accelerate the end of that investment phase. And most importantly, we want to use this moment, our brand, our network to lead a genuine transformation in how Dutch customers use data so that in 12 or 24 months, we don't say any longer that Dutch customers pay too much for too little. We have a great brand. We have a great network, which is almost empty. We have 5% market share. We have great network economics. We have a low ARPU with loads of headroom to grow, and we're ambitious to go and shake up the market. So with that, thank you very much and I will happily take your questions. Thank you, John. So before you ask a question, please wait for the microphone. We have Mark here and Olivia there with microphone. So, yes, please go ahead. Matthew Blockson from JPMorgan. So I kind of understand the opportunity in the SIM only market. How much extra complexity do you anticipate in the sales process to make sure that customers, if they're bringing an existing handset, it's going to work okay with their networks, it could be 4 gs, it's not going to kind of cause after sales problems? So we have some practice now because actually it's not VFTA or a new proposition that has that triggers the 3 gs barring, if you like. We introduced that proactively ourselves on the 1st February, a customer who joined us then or today with a 3 gs handset, having passed through the various checks of handsets that we do in the sales process and ignored them or given the wrong handset type, when we see a 3 gs handset on the network, we'll warn them by text and then stop the service. And actually, that has been a very straightforward process. And I think that's a testament to the pace at which 3 gs handsets are disappearing from the market. So that's been very successful and that's contributed to the rapid transfer of data from roaming environment to our 4 gs only market. VoLTE is a somewhat harder challenge, but one that we're very focused on and intend to bring the same approach to. Are you able to give us any sense of how many people actually are coming? How much kind of noise that's creating in the process, people bringing the wrong kind of I think minimal, minimal. That's a process that's been probably surprisingly successful. It's Kerver Croix from Deutsche Bank. Obviously, whilst you have a very attractive SIMONI proposition, Capen and Vodafone are working quite hard to go down the converged route. And although the unlimited data price points are very expensive, under KPN convergence, you get 20 gig of data for €26, which for many customers may seem like a lot of data. So do you think the price points are sufficiently low enough to actually steal away these customers? Or are we focusing more on just the mobile only types of customers in the market? I mean, as I implied, as we talked about the market, we're going after both. Clearly, we think the mobile only market, we have a very straightforward price led route. And FMC comes with some inevitable complexity. We it's exactly because customers have to sign up to multiple contracts and are locked into those discounts and in some cases are not getting straightforward discounts, but are getting added extras like value added security because they feel that they are often unable to extract themselves easily from those contracts because they have overlapping contracts. It's precisely that which we think drives customer satisfaction and that's our opportunity. But as I said, we are sure that KPN and Ziggo will do their level best to cross subsidize, to hang on to those customers despite our stronger propositions. We don't underestimate their determination to hold on to them by fair means or foul. So I think it's a straight fight. And may I just ask on the OpEx space? You gave us some insight into how the network costs are developing. Is there any more sense you'd give us on how the other costs within the business are developing? Because I guess, on the one hand, you have the benefit of scale, but on the other, maybe you're now fighting a little bit more aggressively with more shops, perhaps more employees. How is the OpEx space generally going to develop going forward? Thank you. Yes. So we don't disclose more detail between than you can see in the quarterly numbers. But all I would say is that Tele2 is the Tele2 is habitually a lean operator and our focus on customer experience is intended to make us a very lean and digital operator with a cost base to suit. We firmly believe that having the best cost base in the business or in the market is going to be critical to supporting the continued moves in the market that we plan to make. So that's as essential a part of our strategy as the more visible and perhaps glamorous parts of marketing and pricing. But there's a lot of work going on behind the scenes to streamline this operation. This is Nick Lyle from SocGen. Can I ask a couple of questions, please, John? Firstly, on the market and subs growth. It didn't look as if the market growth was particularly strong still in April. Is that a function of the VFT legislation or is that Quad Play Churn or Quad Play Driving Down Churn? I mean there's not much growth left in the postpaid market. And then secondly, just to come back to this, you're attacking quad play as well. Do you need to revamp your TV product because of that? Okay. So first question was really about the source of business in the market. I mean, I think it's unclear to us whether there's a material effect in the most recent period from FMC. There are if you look at the share that's been taken by ourselves and Timo among switches, clearly mobile only players are doing well. At the same time, I do think that there is some evidence, particularly in Q1, that the VFTA introduction, because the warning came in at the beginning of January, and that we believe did chill the market particularly in handset and may have contributed to a shrinking of the available pool in handset particularly. Pardon me, remind me of your second question about the TV product. You mentioned you might also be going after quad play services, well, not just mobile only. So do you need to revamp the fixed and TV side of the product if that's the case? I mean, I think that the we're not going after Quad Play by offering a Quad Play. We are targeting FMC customers by saying, listen, we've got an incredibly simple straightforward mobile proposition that can allow you total data freedom, you're being overcharged for your mobile bill within your FMC proposition. So we will continue to evolve our fixed business, our fixed consumer business, both in terms of TV and broadband, but that's not the thrust of our challenge to the Quad Play Home. We are trying to tempt them out with much better value, much more inclusive mobile bundles. Irene Driesova, RBC. So first question on your spectrum portfolio. There are a number of auctions coming up in 20 18, 2019. Could you just talk about your how do you feel your position with the spectrum? And my second question is, what do you see as the biggest risks to the EBITDA breakeven targets? Okay. I mean, I think on Spectrum, all I'd say is, you know, we're very focused on that auction and we're already very involved both internally and with the regulator in thinking about how we best take advantage of that auction. And remind me of your second question? The risks to the Yes. So I think we are confident that's why we are guiding again on EBITDA for the full year. Clearly we have to continue our pace in terms of our network rollout, so we can reduce that cost base. We have to make progress in terms of being a lean organization and we have to translate great propositions in our brand and network quality into real progress in terms of revenue. But those are the key drivers and we're confident we'll achieve them, hence the reaffirmed guidance. Thank you. It's Sedol Patel from Bank of America. Just two questions. 1, you had a slide earlier about the amount of voice on your own network, which I think stood at 46%. So I imagine that 54% is on the T Mobile network. Has the new the FDA regulation slowed down VoLTE handset sales? And is what's changed that you are going to be more reliant on T Mobile for a longer period of time than you thought at the beginning of this year or before the regulation came in? And my second question really is around sort of your market share ambitions and this whole point around the churn pool and the adds. I mean, I think back in 2015, you talked about sort of 20% by 2020. When I look at the net adds numbers, even at 55,000 to 60,000, it's hard to see that really being true. What is your market share ambition with your new pricing as it stands today and by when? I mean the simple answer on the net adds is more. We're not going to be guiding on specific market share ambitions or net adds, But clearly, where we the point we've got to with the network and with our brands and with our propositions is a point which we think allows us to go aggressively and to disrupt and shake up the market. That's absolutely why we're here, why I'm here. And so we are we're not going to give further guidance on that. Is it fair to say there's plenty of changes going on in the market as well with VEFT, with our proposition, with competitive response? So I think I'd rather be judged on the basis of our quarterly performance. Thanks. And sorry, on the VoLTE question? So on VoLTE, you're absolutely right. There is clearly a possibility that a shift in the market as a whole towards SIM only may drive a change in the VoLTE percentage. We are confident that we will across data and voice continue to make excellent progress as we have been doing. We expect to have more challenges in the voltage than we have done in data, which has moved very fast. And we're working very closely with Apple, but particularly with Samsung and the Android vendors to make sure that both existing handsets and new handsets work seamlessly with VoLTE. And it's too early at this stage to say whether the SIM only change is driving a material shift in, if you like, non handsets that will never be VoLTE capable, particularly in the Android range. Just a small follow-up, when do you think you'll rid yourself of the T Mobile roaming contract? It's part of our ambition to do that as soon as we can. It's great for our network economics, but I can't give you a date. Robander Ruizso from UBS. So just one question on NPS. I was a little bit surprised to see that you were lagging behind peers in NPS. And usually, I guess, pricing is the major driver of NPS. So it's a little bit uncommon to see a price challenge lagging behind in NPS. So can you just elaborate a little bit on what's going on and what needs fixing, please? Yes. I mean, we're a new business and our mobile operation is new to the market. As you saw, we've made some substantial improvements in NPS in terms of improving processes and systems. I think most of our issues are to do with the ease of dealing with us and we are absolutely focused on that because as you say, as a challenger, we should be in a great position on NPS more fundamentally. As Tele2, we are very focused on having the best NPS in the market. We're not there now. And the principal focus here in the Netherlands at the moment is customer experience transformation. So I'm very clear that we will improve that number dramatically over the coming quarters. Leon Astorbeek, NEGI. I was just wondering another question on sort of CapEx and T Mobile dependency, because you state now that you are close to being past your investment peak. So when you completed this year or say next half year twenty eighteen of the rollouts, where will your CapEx to sales be? And roughly, where do you think your T Mobile costs will be at that point? I can't give you the specific guidance either on where we are with CapEx to sales now or in terms of the specifics of our Timo deal, which for a start are confidential to us and Timo. We've said that we're going to we believe that we are accelerating the end of the investment phase and that this is the last full year of network investment. We will continue to build the network indefinitely as we accommodate the growth that our customers will be bringing us. But clearly, we would have exited, we hope by the middle of next year, the phase of completing the initial network rollout, which is the most intensive. Could you maybe say something on the CapEx level versus this year or last year? How much of a decline coming from? I'm not going to guide specifically on CapEx. All I can give you is the background color of 'fifteen, 'sixteen, 'seventeen have been full years of investment in rolling out our network. You can see the site progress on the chart in the graph. And next year, we're doing significantly fewer sites, which are more complicated, and that will complete the first phase, the most significant phase of our network rollout. Yes. Johan Alkviss from SEB. First of all, if you can say something, handset subsidies to all sort of the retail network and sort of given them the subsidies away to sales commissions instead? No, that wouldn't be fair. The I think one way of characterizing what we've done with our proposition is that we have shifted a significant amount of handset subsidy into everyday low pricing, absolutely. And that's a reflection of our own ambition to compete at that level. It's also a reflection of the VFTA legislation, which doesn't stop handset subsidy, but it does put some significant limits to how you do it and particularly how you tie it to different tariffs. So it's certainly not about us taking money from handsets and giving it to retailer commission. It is about there was a significant element of moving handsets obviously into everyday low pricing. But should we expect the SAC to come down significantly given this new regulation? I think there's a couple of dynamics. Clearly, as handset subsidy reduces across the market, as a consequence of AFT, our ambition and that I'm sure of our competitors will be that we can reduce that investment and turn it into either pricing or improve margins. At the same time, clearly, we have largely been responsible for an increase in competitive intensity. And so we reserve the right to continue to invest hard to acquire business in the market depending on where the market goes as long as we continue to do it in a financially responsible way. And then just a second question, if I may. Given the unlimited subscription you have now for EUR 25, can you limit that to just using one subscription or can I use multiple SIM and can I use it as a Wi Fi and so forth? I know the regulator was a bit hassling T Mobile on that note, so I'm just wondering what do you see? Yes, indeed. So we permit tethering for private customers, but we are clear that we do reserve the right. We think that or other limits of the subscription are being abused to block the subscription. Thank you. Peter Kirtan, ABG. As you mentioned, you have some excellent networks here. 3 gs is being phased out, prices have come down. Are you seeing a material increase in data usage in the Netherlands? And also just secondly, if I can press a bit on the preceding question. I appreciate you're not giving guidance for net adds, but when sort of when we get to the next earnings call or the next one later after that, if you reach a net add levels, let's say, at level with last year's average sort of, would you say that was a success? Would you be happy with that or less so? Thank you. Yes. So, Dayton, to answer your first question, data growth on our own network and elsewhere in the Netherlands is clearly growing, growing substantially from 1 gig on average to 1.5 in the last quarter. At the same time, the rate of growth and the absolute level of consumption still remains materially behind other more advanced, if you like, markets in Europe. And that's I think that will be a measure of our success will be if we've successively managed to challenge the offers elsewhere in the market and increase that data consumption both for our own customers and elsewhere. So that's exactly where we see an opportunity. It's growing more slowly than elsewhere. And as far as net adds, I'm afraid I'm just not going to guide other than saying more is good. Okay. Just following up on the first answer then, does that mean that the unlimited offers now, which is where you have the biggest gap, is perhaps not the greatest selling point at the moment? I mean, as was alluded to earlier, the 10 gigabit offers here would seem to be more than enough except for a very small proportion. Listen, we've launched the offer. We're delighted with the response across every channel. I'm not here to give a running commentary on sales progress in the quarter, but you'll be wrong to draw that conclusion. Thanks very much. It's Henrik Harps from Credit Suisse. Just want to I mean, you've talked a lot about profitable growth. I just want to ask about the production cost of your bundles. I think as you move traffic onto your own network, when you launched a big data balance in Sweden, I think you talked about the production cost of SEK 50 per gigabyte, which is obviously very low. I was just wondering, and in the Netherlands, we only have a 4 gs network much more efficient. If you can talk a little bit about how you think about the cost of producing a gigabyte of data. And then also I wanted to ask how you think about further build out of your network with small cells and 5 gs eventually. If you I mean, I know you got a little bit of fiber, but how you look at the need for fixed infrastructure and if you could partner up with someone to build basically? Thank you. Right. Okay. A few there are a few elements in there. I mean, in terms of production costs, happy to look at the Swedish comparison that was done. And I've talked about the broad themes that we're very focused on in terms of reducing production costs as we move traffic onto our own network. But in terms of giving beyond the data I've shared today, in terms of giving specifics on production cost and the elements of the NRA, we can't go further than that. As far as 4 gs and 5 gs rollout, as I said earlier, there is potential 5 gs spectrum coming up in the auction in 2019 in the 700 megahertz band and that's clearly of interest to us as we look at the increasing demand for our services. A full 5 gs auction in say, for example, 3.5 gig may not be coming in the Netherlands until the middle of 2020s. That auction timescale is unclear at the moment. So there remains substantial uncertainty about the timescale for small cells. We are in the luxurious position of having a relatively empty 4 gs network with only 5% market share. So we are, at the moment, very focused on filling that with data. So that's we are in a relatively luxurious position. Emmanuel Kalira, N. G. Two questions. Do you believe there's room for 2 mobile only operators in the Netherlands? And if so, why? And then on having a 4 gs only network, where is the main benefit? Is that on the OpEx line or on the CapEx line? Because we all know that mobile operator typically has around 12% to 14% CapEx to sales level. So I just want to check if it could be materially lower. Thank you. Yes. So clearly, as far as mobile operators go, we clearly do believe that there's space for us in the market. Specifically, we think that being a distinctive brand, 4 gs only operator with a very lean cost base and very focused on mobile only propositions is distinctive and creates space for us. And as you've seen from some of the data we've seen, whether it be in the handset market in March when we took 35% or in terms of ability to acquire customers, I think we've demonstrated that we can do that successfully. I would add, it's probably not yet clear that Timo is genuinely aiming to be a mobile only operator given their fixed assets. That's a question mark. And then in terms of the efficiency of the 4 gs network, I'll just comment on the OpEx side of it, which is I think we see ourselves as having a significant advantage in terms of the cost of managing our infrastructure as we have a very simple and straightforward infrastructure regime, single or dual and tender in most locations that allows us to keep site OpEx under control and it allows us to migrate customers very elegantly and single mindedly from 2 gs and 3 gs to 4 gs. So I can't give you a comment on the specific CapEx distinction between us and the hybrid network. But from our point of view, being a 4 gs only network certainly gives us a material OpEx advantage compared to our competitors. So there's another question over there. Hello, it's Usman from Berenberg. I was wondering if you could give any clarity on the churn, mobile churn because that used to be an issue for Tele2 and I know that there might be some churn right now from legacy 3 gs customers, but if you could give an underlying kind of churn assessment where we are? And then the second question was, I guess this is more general. You said this is the start of disruption in the Netherlands, right? Some would see some would however see the unlimited offer at 25 is the last throw of the dice, right? Because I mean no matter how I mean no doubt the brand is great, the pricing is great, the network great, but the reality is this is a very competitive mobile market. So you're at 5% share now, maybe you get to 10% to 15% share. Is that still doesn't seem like a sustainable situation for a 4 gs network offering unlimited tires to €25? Okay. Thanks for the question. I mean, clearly, we believe it is a sustainable position, but it is dependent clearly on us, a, executing in terms of acquiring, taking share in the market. We said this was the I said that this was the start of our disruptive phase. Clearly, the market has been in change for some time, particularly since we launched and since T Mo introduced unlimited at 35. So we're well aware of that market context, which is why we're very focused on delivering a mobile business, which is distinctive in terms of its brand, extremely lean and effective in terms of its cost structure that is focused on 4 gs only, which is the most efficient way of managing a mobile network. And we have a very singular mission and we intend to do it in the most efficient and ambitious way we can. So I look forward to proving you wrong. We have a question from Johanna here. Yes, just a follow-up. I was also interesting in the churn, if you can comment on anything. Apologies on that. Neglecting your churn question. And then I have another question from my side as well. So do you see any possibility to divest a fixed part? Or how sort of important is it for you to have given that you have the focus of the mobile only offering in a sense? Yes. As I said, I'll just take that question first and then come back to churn. Our fixed businesses, business to consumer and business to business are fundamentally there to drive cash flow to support our mobile growth. Equally, clearly, we rely on certain assets jointly. But so that they remain business. We have different they play different roles. And in terms of any potential divestment or M and A, I can't comment on that. As far as the churn goes, I mean, I'd say as a new operator with very attractive pricing, we are a beneficiary of churn as a general concept rather than someone who worries about churn. Clearly, we are very focused on customer retention for our base and the kind of actions we did when we launched Unlimited and the new pricing helps to solidify that churn. But probably the most eloquent thing that we can point to is that by being the only player who offers no contract, that is really a sign for us of our confidence that our customers, when given the choice to leave, will choose not to do so. And we've had no contract for this so far all year. And we're very enthusiastic about the reception it's had. So I can't give you specific numbers on churn, but hopefully by pointing to that context and specifically contract gives you a sign of my confidence that churn is not churn from others is a much bigger opportunity than churn from us is a threat. Great. We have a question over there. Yes. Hans Lobner, Nederland. I've got a question, let's say, on the invested capital in the Netherlands. What has been, let's say, the cumulative amount of invested capital in the Netherlands? And what kind of size of business do you need? And what kind of margin profile do you need in order to make, let's say, a normal, let's say, return on your invested capital? Not a question I think that we have answered in the past. Putting aside the fixed investments that were made over a number of years, we have invested around €500,000,000 into the network and getting the mobile business up and running. Was that the question? Well, we've always spoken about a very long term ambition of a 20% market share. That is a very long term ambition, but we don't need to be anywhere near that to get a return on that investment. Sander van Wort, Kempenco. Getting back to your B2B business, which is suffering from a mid single digit sales and EBITDA decline in the Netherlands. Maybe you can elaborate a bit to what extent that's caused by losing clients or price pressure? And do you expect this trend to reverse anytime soon? And secondly, maybe you can elaborate a bit on the tender activity in general in the B2B market at this stage? I can give you a high level comment, maybe that, Barry, you want to give a comment on the tender market in the B2B market. I mean, I pointed to the single digit declines in revenue and EBITDA, which we're with good cost discipline, we're managing to keep our cash flow generation. The principal drivers there are traditional to B2B operations in the Netherlands elsewhere, which is firstly, the decline of fixed voice, fixed voice usage and secondly, price erosion in B2B contracts, both in terms of access and in terms of to a lesser extent, in terms of services at renewal, given the competitive nature of the market. So those are the two principal drivers. Yes. On the tender part, I think we see the same trend as we have seen in the past. What we see is that a lot of tenders are now into FMC propositions, and I think we are very well situated for that with a good proposition. So I think that is looking good. Great. Any other thoughts, yes? I think I won't take a question now, apart from you, Eric. Okay. So John will be available during the break as well, of course, for questions. So unless you have any further thoughts right now, we have a break of about 20, 25 minutes and we come back here about 20 to 3, I think it should be. So great. So you have coffee and cookies over there, I think. Thank you. So please find a seat. We'll find your seats. Okay, great. So let's get ready for the next session. We have a presentation on Kazakhstan from Guillaume and Roman. Please welcome. Okay. Good afternoon. Are you guys ready to move from Netherlands to further east in Kazakhstan? Yes. Good. So with Roman, the CEO of Tele2 Kazakhstan, it's a great pleasure to give you an update in the country further away from Stockholm or Amsterdam. So we will take you through a few important items. First, it's a great pleasure to give you an update in the last 14 months of the JV creation. We will then give you some updates in our dual brand strategy, which is delivering strong results. We will also show how much are we able to actually monetize data and leverage our great network. We will also give you an example of how digital is also transforming some of our customer experience interfaces in Kazakhstan. We will not forget before we conclude to give you an update on CR, Corporate Responsibility. First, you guys and I have probably gone through a lot of mergers and integrations. You followed a lot of projects around the globe. And it is fair to say in my mind that this is one of the most amazing integration that has been achieved in the industry. If we look at the few milestone in the last 40 months, for me this is outstanding for various reasons. First of all, very early on, we had positive mobile mobile portability. We were negative. We became suddenly positive. Why? Because actually we offered really rapidly 4 gs to our 2 gs and 3 gs customers when they were Tele2 and we offered suddenly coverage to the 4 gs Altel customers. Very early on, we had positive momentum in the market. Other examples. In 6 months, all of our customer operations were in the same building working together on the brands, and they were integrated really quickly 6 months after closing. Probably the example that I found the most amazing is after 9 months, our IT system were 1. We merged billing, CRM, customer data. Give me an example of any integration or JV which is capable of doing this in the space of 9 months. This is really strong. When we measured how we were progressing in the 1st 10 months of the JV with this measurement point at the end of 2016, we had 17 very specific KPIs to achieve. They were part of our agreement and these 17 KPIs have met 100% of them. Not a single one was missed. They ranged from operation, merger, by duplication of accounts, by integration of our network. All of those steps were met at 100%. The great news is in that journey is actually that it has translated into strong performance on our profitability, as we have commented and presented to you this 19% EBITDA ratio that has been achieved at the end of March. Let's give also a bit more color to this JV, which I think has really been a success. A few weeks ago, we were actually able to decommission almost 10% of our network, meaning that we have closed sites, reused equipment somewhere else in our network, canceled rental agreements and lowered our costs. And this was achieved recently. So really an amazing achievement in our very wide network. 25% solid market share. Yes, we're number 3, but we have a solid market share, 25%, and for the last 15 months, M and P has been positive for us. Another indication, which it's also interesting to compare. Today, we have 30% of our customers on 4 gs. Now the price of the handset is more of an issue historically in countries with lower GDP, but in this instance, already 32% of the customers have 4 gs devices. One data that I love, because it's always difficult to grasp, it's a 115 petabytes of data covered in the Q1 of 2017. And it doesn't say anything if you don't compare it with other operations. This is 2.5 times more data than our Swedish colleagues cover in their network, very significant network. And this is one of the KPI we are, of course, following. I won't spend too much time on this slide, but of course, as an investment market for Kazakhstan, we are very happy to report the growth of the net sales, on the end user service revenue as well as, of course, a very significant step change in our profitability. No need to mention the percentage growth. I think what matters to us is the fact that we were almost not making an EBITDA, positive EBITDA. We are now into the 19% range, just in the space of 14 months. What did we say at the time is that we would deliver some improvements and we have. On the FTE, we have reduced the FTE in all the different areas of the operation by 32%. Just kind of a year ago, almost our indirect cost, which is production cost, commercial cost, SG and A, hit all of our end user service revenue and we were consuming 93%. Now today, this number has significantly decreased to 77%. To preempt one of the question is how were you able to achieve this, and this, of course, a combination of the great work done on the gross margin fueled by growth of usage and customers, but also significantly in this cost part when we were able to actually improve the profitability through all of the integration work. Again, as we communicated on our JV last year, we gave you some indication of how much integration will actually cost and how much the integration will actually bring. So from a cost perspective, to date, we have spent SEK52 1,000,000. We expect some investment during the summer because we are really speeding up our integration from a network perspective with a lot of work to be done in the next few weeks months. We are definitely on track to create 70% to 20% CapEx efficiency, but earlier than we probably envisage for a few reasons. First of all, because we are really rolling out fast and integrating the network fast. 2nd reason is that we are able to leverage much stronger buying power Because we now have such a position in the market, we were able to create very strong tension in our RFP for equipment vendors or IT solutions, therefore reducing our CapEx cost. On the integration, we have achieved 3%, but this is less than what we are aiming for because not 100% of the integration work has actually delivered. There are more work to be done on SG and A, on headcount optimization in the regions. We still have room for improvements. And there are also more work to be done on, for instance, the sales channels, where in some places in Kazakhstan, you still have 2 stores, one for Altell, one for Tele2. They will be combined to 1, and then we will continue to deliver some OpEx synergies. Last but not least, and one of the key elements we can leverage is that Kazakhstan as a country is doing well. And the telco industry, which we discussed during the break, was known for very strong price deflation is actually currently growing. So that gives us also a good platform. So let's enter into more details using, of course, the framework of Tele2 on the How We Win that was presented by Alison. And Roman will start with the brand. We will talk about data monetization, digital and I'll come back to talk about cost. Roman? Thank you, Guillaume. Good afternoon, everybody. It's really a great honor for me to be here and to present to you results of our Kazakhstan team and also to talk a little bit about our focus areas going forward. As Guillaume mentioned, first of all, I would like to start with our brand strategy because in Kazakhstan we have unique situation when 2 brands who've been very big competitors before the merge now working together and they're very complementary to each other And we were able during the last 12 months actually to do the huge job in order to differentiate the position of these two brands and actually to clearly define 2 target audience with whom we are working in Kazakhstan. And I would just would like to describe you, 1st of all, our target audience, how we see it. First of all, I will talk about the Tele2 customer. If you can visualize it, it's quite a young person. The core of the audience is around 25 years old. She or he lives in the city from starting from 10,000 inhabitants. He or she has the smartphone and the majority of them use actually 2 SIM cards. They are late students, how we call them, or first jobbers. So they work very hard to earn their money. And because of that, the price is very important for them. So they are really price seekers and they are looking for the best price for the data service because for them data is important in terms of their social connections. They use a lot social networks, OTT, messengers, etcetera, etcetera. They are quite active and they would like to see the operator who are ready to take risk. And also it's important for them, they pay a lot of attention to advertising of such operator because they want to be perceived in their community with an active person who is ready for adventures. From another hand, when it comes to hotel customers, we are first of all talking about a little bit older audience with the core target audience around 35 years old. They live in the bigger cities starting 150,000 inhabitants. They are well established in terms of their employment, either managers or the business owners. From that perspective, they earn enough money in order not to look for the best price. What is really important for them is to get the best data service in Kazakhstan. And of course this required for them in order to satisfy their data needs because they are really heavy consumers. In majority of cases, they use several devices, smartphone and a tablet. And of course, they consume a lot of video. When it comes to the figures, when we're talking about the Tele2 audience, this audience represents around 37% of the entire market population. And when we talk about Altell audience, yes, according to our assumptions and our estimations, this audience represent only 15% of the entire population, but it's very important that in terms of the revenues, they generate up to 1 fourth of the entire market revenue. Of course, those audience they require different communication and because of that we actually during the last 12 months as we introduced 2 new communication platform. In August 2016, we introduced the BOSS And in April this year And in April this year, we've launched the new communication platform which we call problem solver for Autel customers. In the Mingle area you can see some of the examples of commercials that we use now on air currently in Kazakhstan which just give you some flavor and understanding what are the difference. Not we because they are different not only in terms of the visual pictures and corporate CID, but what is also important they are different in terms of the communication, the tone of voice and of course the brand role. Tele2 plays the role of the active charismatic rebel who always fight for the customer interest and his main role is actually to ensure that the customers will be not ripped off by the big guys and the customer will pay the best price for the data service. On another hand, Altell communicates as the trendsetter, as the visioner, as the expert and his role actually to be an expert to provide the fastest solution for different problems or issues which customer could face in their daily life and routines. All this, this communication platform combined with the activities which we are running not only on the technical side, but also different commercial aspects we're able to provide to us quite significant improvement in the main brand KPIs. First of all, it's important to see that already at the end of Q1 this year, Altell and Tele2 took number 1 and number 2 positions in terms of the NPS. Yes, the market are quite competitive and you can see that there is not so big gap between all of the players, but it's really important for us to keep the leading position in terms of the NPS for the market. From another hand, when it comes to the top of mind brand awareness, historically Tele2 had a very strong brand awareness position. But with the launch of new platform, we were able to improve and to secure number 2 position on the market in terms of the brand awareness, meaning that among the 5 brands Tele2 recognized as number 2 brand. But of course for the Altell with a new platform which was just introduced 2 months ago, we have a big goal to become at least in top 3 brands when it comes to brand awareness. In addition to those KPIs, we're also chasing main brand attributes. For Tele2, it's price leadership perception and we were able to secure the leading position on that KPI and going forward with all the data monetization activities that we are running, we are going to keep this leading position. When it comes to Autel, what will be important for us going forward is to secure leadership position leading position in 2 main attributes. First of all, it's the perception of the fast mobile Internet and we see very sustainable growth for the last year. And the second one, it's actually to perceived innovations because Altell will propose to their to his customer going forward innovative products. Positioning combined with the pricing, with the changes in different commercial aspects allows already now to increase value of existing and the new customers which we are gaining. For the last 5 quarters, we were able to increase average service revenue per user by 9%. But what is also important for us, especially going forward, we were able to significantly increase the share of the bundles in our customer base. What does it mean bundle in Kazakhstan? It's some sort of mixture between old fashioned pay as you go subscription and the monthly commitment. Because now we have more than 4,000,000 customers in our customer base who are committed to pay us on the monthly basis at least €3,500,000 Of course, we provide some data and voice allowances instead of that, but it's really great potential for us to grow value of our customers going forward. It's and we see some additional areas to grow this area going forward. But on top of that, we recognize for us 3 main areas for growth going forward. The first one is growth in MBB and WTT segment. All of the operators including fixed operators, they're facing a lot of challenges in terms of providing the broadband connectivity in Kazakhstan, no matter fixed to mobile. But as we now we will talk about this a little bit later, we have the leading and the best 4 gs network inside the country. We have a good potential to grow in the MBB segment and that's what we will do starting second half of this year. The second area which we are focusing now is the growth in the B2B segment. Historically, Tele2 was focusing on the small and medium enterprises because of different limitations, 1st of all, starting from the network perspective. But as now we have the joint network, which is more or less on par with the main competitors and we have the leading 4 gs data proposition. Plus to that, we have a lot of synergies with Kazakhtelecom in terms of approaching big segments, big corporate accounts. We have a really strong potential to grow there. And the last but not least, of course, it's the partnership with the biggest fixed operator on the market. Of course, we as the mobile operator will play the role of the wholesale mobile connectivity provider and our connectivity will be used in the fixed packages or sort of convergent packages of Kazakh Telecom, which will be sold to existing Of course, all this will require really strong and superior connectivity. And with this, I would just would like to shortly highlight what we're doing on the network and what is the current situation. First of all, I would like to start with the spectrum portfolio, which are available for all players in the market. And as you can see, we have a unique situation because as of now, we have the widest available range for us in 1900 frequencies. Out of 40 megahertz, we already now use 30 to provide the 4 gs and 4 gs plus services. And we starting Q3 last year, we introduced the 4 gs plus technology. And the key and now we are able to reach more than 100 megabit per second peak throughput in the main cities. Going forward, our plan is actually to reform some of the frequencies and to allocate additional bandwidth for the 4 gs plus implement some technical features which allow us to increase peak throughput up to 200 megabits per second. On top of that, we are also investing in 3 gs development. And for example, we introduced as a part of the integration HD voice on the 3 gs. And this means for us that we really have equal or even better network than versus our other players. Here you can see some figures and comparison. If we'll talk about the 4 gs coverage, we at the end of Q1, our coverage in terms of the populations was twice higher than our competitors. And at the same time, we were able to provide despite the higher load on the network in terms of the traffic consumption, the higher amount of 4 gs users, we were able to provide much better quality in terms of the throughput in the main cities. And if some of you will visit Astana this year, for example, for the Astana Expo, you're really welcome to try and test the best 4 gs network in the country. Network development, introduction of the 4 gs to the Tele2 users combined with the data monetization initiatives which we started execute from April 2016, First of all, gave us a really huge growth in the data consumption. As you can see for the last year, we were able to grow traffic by more than 50%. It is really important to mention that as of now the 4 gs data represent more than 60% of our entire traffic and we believe that the share of this traffic will grow further. When it comes to the smartphone users, as you can see for the last for the previous year, the average consumption grew up by more than 70%. But what is more important for us that this consumption was also accompanied by the growth of the average bill. So it was not just the growth of the consumption because of price fights, cutting the prices down, etcetera, etcetera. Going forward, we need to leverage more, of course, on our superb 4 gs network. As Guillaume already mentioned, we now have a little bit more than 2,000,000 customers with a 4 gs enabled device. Yes, this figure grew up by more than 50% during last 12 months, but we're sure that we will be able to keep the growth going forward. And in order to do this, we of course introduced first of all the really affordable proposition in terms of the device, because in many cases the device is key showstopper to migrate from 3 gs to the 4 gs. At the end of Q1 this year, we introduced for the Tele2 customers best price proposition in terms of the 5 inches 4 gs device. Of course, it's the BIB brand device, which is bundled with a subscription, promotional subscription where customer pay roughly €7 per month. He gets on top of the data allowance, he get also the promotional 4 Gen Limited offered for the 6 months after the activation. As you can see, we definitely for the last 12 months as we saw the increase of the smartphone penetration and the 4 gs penetration, We also saw the increase in the data consumption and the share of active data users. Of course, this require from us a lot of improvements in terms of digital touch points because such users they are very eager to interact with the operator through the digital touch points. And with this, I just would like to shortly to describe to where we are in that area. First of all, it's important to mention that we provide to our customers different value added services, which could be activated and managed by the digital channels. But what is more important for us and what was our key focus area for, I would say, last couple of years, it's actually the self care, the mobile self care. We introduced mobile app for the self care in early 2015. And as of now, this is number 1 mobile application in Kazakhstan. If we will consider together Tele2 and Autel, the amount of installations around 1 point from €1,000,000 to €1,500,000 which is more than the total installations of similar apps from our competitors. And this is for us a really great opportunity to improve digital interaction with the customer because on top of the self care, we are now developing additional features in such application like upsell functionality, like buying additional services. And also through that application, we are able to measure in some of the elements of the end user experience, for example, for the data quality in particular. In the parallel, we also developed a lot of our website from channel e shop, also self care. And in the second half of twenty sixteen, we introduced self care Fortell on the web and we also introduced the mobile application for Fortell users. Here you can see the dynamic in terms of the visitors and in terms of the self care users. And what is more important for us here that on top of the improved satisfaction because customers if we will take for example our ratings on the Google Play for our application, were actually number 1, meaning that we have a score more than 4.5. So it means that customer is satisfied with our application. But on top of the customer satisfaction, of course, this drives a lot our savings in terms of the customer service and customer handling. And with this, I would like Guillaume to continue with the cost structure. Thank you, Roman. So as you can see, we have great commercial plans and there is still value to be delivered on our integration program. So to give a bit of perspective and give you some flavor of our ambition, if all of the environment remains as it is today and the momentum is kept, we believe that sometime in 2018, we will actually be in a situation where EBITDA minus CapEx will be positive and we will breakeven. So our investment market should be in a position to actually go through that important milestone. We also think that from an ambition in the midterm, we should be in a position to grow our EBITDA ratio to up to 30%. That will be achieved through all of the work that is being done on the commercial side with the gross margin improvement, with the revenue growth we've described to you, up to 5% from where we were in Q1 and there is more indirect benefits and direct benefits on the indirect cost to be delivered production cost, SG and A, license costs to be able to reach 30%. That is our ambition in the midterm. The key building blocks, they are very simple. The first one, gross margin, continue the growth on customer numbers, continue the growth on ASPU on data monetization, continue the growth on 4 gs devices. That's clear. The other element of growth, as we discussed on gross margin, is where we are under the competition in terms of B2B, fixed mobile convergence is an area and as we discussed also mobile broadband because we have a great network. On the cost side, the list is very long. We still have to optimize our retail footprint. We still have to compare our internal in sourcing versus outsourcing costs. We still need to grow our digital journeys. We are also looking at passive network sharing in order to limit our costs and share some locations with the competitors and these are definitely going to deliver some benefits. I would like to spend a bit more time on the CapEx side, We are also on the CapEx. The amount of work as I said which has been done and was still to be done on the network is significant. We have 7500 base stations in Kazakhstan. It's a very wide country, 7,500. 50% of those sites, one way or the other, would have undergone a transformation in less than 18 months. Those transformations are for 40% of them, we actually decommissioned the sites. 20% of those sites will be completely decommissioned, delivering saving on CapEx and OpEx. The rest is 4 gs for the 3 gs and 2 gs sites and 2 gs and 3 gs for the 4 gs sites. All of that will have been achieved in 18 months and this is going to translate through better efficiency, higher quality network that our customers are going to enjoy. Everything that is going in the integration is actually important from a financial perspective. But of course, we take great care on corporate responsibility on CR. And I'm going to update you on what we do on this field. At Tele2, we have 5 building blocks for corporate responsibility. The first one is privacy and integrity. The second is ethics and compliance, sorry. The second and third one, sorry, is on diversity. And we have 4th and 5th around child protection and environment. By the way, if we dismantle 20% of our sites, that's good news also for the environment. We consume less energy and this is also proving to be contributing from an environment perspective. But let's focus on the 2 first points in Kazakhstan. And for the 2 first points, we have taken the decision that we will communicate to you on a regular basis from the day of the creation of the joint venture in these 5 different areas. The first one is anti corruption. The second is the Tele2 code of conduct. 3rd area of focus on communication is the ownership structure, transparency and also privacy and integrity. These are the 5 blocks that we take great care of communicating to you and all of our stakeholders regarding our joint venture in Kazakhstan. And if we look at what we have achieved since the creation of the joint venture and what are we planning to improve, let us go through them 1 by 1. When we created the joint venture, we said that we have performed a very extensive due diligence. We had extensive reviews by advisors. We have performed what we call UBO from the beneficiary owners. We have also performed warranties on the use of proceeds. And one of the most important element from Tele2 perspective is that we kept management control. That's why we have a Tele2 appointed CEO as an example. We have this as a core element to our CR approach in Kazakhstan. Since the JV was created, we have made great progress in various elements. A good example is the fact that we've appointed a CR officer who is in charge of CR across in Kazakhstan. We have introduced a code of conduct not only to our employees who have signed the code of conduct, but also to our suppliers. And we are having some stringent process for government requests. Today, I'm also very happy, thanks to Hilsa, who is there to answer any of questions today, that we have published an update on these 5 blocks of CR in Kazakhstan that is now live on the website since the last few hours. That gives you a status, a very honest status of where we are. And as an example, we're very soon to be completed the full training of the code of conduct to all employees across all Kazakhstan. We have done the great work and there is still a few trainings to be deployed for the next few months. Another element is that we communicate to you on the work we're doing with the government and the relationship we have with the national regulation authorities. So that gives you a really strong picture. And for the ESG investors, Ilsa and Victor, and we are at your disposal for any questions you may have specifically on the field of CR. So this is clearly an important block for us in Kazakhstan as we operate in any of our footprint. Summary is simple and I guess you got the key messages. Summary is great momentum in our smartphone core business. This is growing from a customer number perspective, from a data monetization perspective, from a data usage perspective, and this should continue. We have also segments where we can have some breakthrough and the ambition from the teams and ourselves is that we go against those opportunities aggressively, of course. The full rollout of 4 gs will actually benefit our customers from an NPS perspective, from a customer experience perspective, but also from a cost saving on a CapEx and OpEx perspective. There are still more synergies to be delivered. Speed matters. We have been able to do this already in record speed. There is no question of us going slowly on those efficiencies and synergies and we have ambitious plan in the next weeks months to come to deliver the full benefit of network integration and synergies. And of course, as we spend a bit of time on this subject, we will always be a very responsible challenger in a country where we bring connectivity, which is important, but we also bring our Swedish way of operating and this is showing really positive sign. Thank you very much. So now, last is also sorry Eric you wanted to make the transition, but we are going to open for Q and A and I was going to invite Lars to answer any questions you may have. Thank you. Q and A time. We have the microphones. Questions on Kazakhstan? Johanna has a question. Yes, Johanna Alkviz from SEB. Two questions, if I may. First of all, if you can say something about the competitive landscape in Kazakhstan at the moment and do you foresee sort of a risk that someone gets irrational in this market or have things stabilized? And then secondly, perhaps, Lars, the exit or potential exit still 1 year or 2 years away, but how we sort of do you see right now that you have a potential equity value to that transaction? Yes, if you can comment on that. Thank you. Okay. So I will answer regarding the competitive landscape. The competition is still very high because some of our competitors they are performing not so well. Of course, it's difficult to predict what will be the steps, but we are ready for any developments on the market. And yes, of course, the main competition in our mind will be around the active data users and in particular the 4 gs users. But we see that the market improves slightly, but it doesn't mean that there is no competition anymore. So we're still fighting for the customer. We're still fighting for the perception. And all of the brands they're investing into 4 gs now. And of course, they're investing in order to gain data users. And on your second question, Johan, we actually got a slide on that later on. So I suggest we park that for now and we'll come back to your question later. First of all, again on competition, maybe Kcell is in the process of being divested and you can see the MPS scores that you had on the picture was not that great for that brand. So how do you view them? Are they a bit ownerless or not being steered properly? How do you view them as a competitor? And then the second, a CSR question. When you cooperate with Kazakhtelecom, I'm sure that you can ensure that your own business follows all your 5 boxes. But when you now start to bundle your services with Kazakh Telecom, how do you ensure that they also follow the same sort of rules and processes as you do? Yes, I will first of all answer regarding the KSL. Of course, it's quite difficult to comment on the competitor. Yes, we see some of their developments from the financial reporting. Yes, in our mind they have some challenges, but it's really difficult for me to say from the internal perspective how they managed from the group perspective. So I think it's more question for them and for their shareholders. Let's be honest, they're still number 1. They're the leading operator and we should remember that for them the main brand in terms of the customer base in terms of money is active. So we do not so we don't have any doubts that we have 3 very strong brands on the market and Kissele and Aktiv, the strong brands with very long history and with a success story behind it. Maybe if I may, the slide we presented may be confusing to the extent that Active is the very active brand of Kcell And you can see that they are competing in really strongly. Kcell is more of a B2B brand. So the Kcell downward trend is not a real correlation of their performance in the market. So just the NPS slide might have been a bit confusing, but the active brand is actually very active. But we also, as we know, in commercial terms, momentum matters and we have and we will remain very active and we want to keep the momentum. To the question of our collaboration with Kazakh Telecom, I have to report that this is a very beneficial collaboration. We have very strong governance rules, a very strong framework of relationship with Kazakh Telecom. They are owned and the number one mandatory shareholder is the Sovereign Fund, Samo Casina. They are also quoted and we have seen and observed absolutely no reason to worry. But we are, of course, as we said, CR is a day to day fight. Today, we have nothing that tells us that this is causing any issue from a structural perspective, but also on a day to day basis on their behaviors as a partner. Thank you. Maybe to add to emphasize that the Tele2 code of conduct is also signed by our JV partner. In addition to that, in our JV agreement, we also have a provision that allows us to exit the partnership in case of a material breach of our code of conduct. So that should also be a strong incentive for them to comply with our code of conduct. Thank you. Very clear. Good. Thank you very much. Roman Arbuzo from UBS. A couple of questions for Roman, my namesake. So firstly, on the 4 gs devices and also given your Russian experience, it strikes me as actually relatively high 32% 4 gs device penetration compared to Russia. It's only around probably 15% for the market average. What do you think is the secret? Is it the sort of proactive promotion of 4 gs devices from the operators? And also are there any subsidies in the market? Maybe we'll just start with that one. Yes, it was honestly, when I just entered the market, I would say it was a big surprise that the penetration of the smartphones in general and the 4 gs device was much more higher than in the neighboring country or countries, I would say. In my mind, it's some sort of mixture of behavior of the customers, their willingness to have the modern device, but also what is important that in general penetration of the fixed is lower. So the customers are now using more and more mobile Internet to access fab. And from that perspective, of course, they need to the more, I would say, modern device in order to experience to have a better customer experience. When it comes to the subsidies or the operator role in that segment, honestly speaking, operators do not play very significant role on the handset market. The majority of the market is controlled by the big retail chains. If we will consider separately our competitors on the Kcell doing a lot of promotions around the devices and time binding contract with some of course subsidies if you're buying like the latest iPhone or Samsung. But as you can also see from their public reporting, it's not some significant figures like 10% or 15% of the entire market. So still the customer are used to the fact that they go to the retail and they buy device there. Of course, there are some financial schemes from the bank or from the retailer could be applied, but it's not in clinic with the operator. If I may add on this one, let's not forget the number 4 operator, Altell, had only 4 gs. So they pushed aggressively 4 gs in 2015 as an example, which actually grew the base, which we then inherit. So this has also been not so much the case in Russia. Is there a large proportion of bundles within that number as well therefore? Sorry, bundles, dongles, is there a large proportion of dongles within that number? It's significant share, but still the majority is the smartphone users. The vast majority is the smartphone users. And then my second question was going to be around ARPUs. It's a high level question. You talk about ARPUs of €3.5 and Russian operators also like to say that ARPUs of sort of $5 being very low, meaning that there is a lot of upside. Of course, it sounds relatively low, but then once you take into account how much people earn and sort of GDP per capita. And also, I guess, given the fact that your usage is also pretty impressive already, 5.5 gig per month, do you how much upside side do you really see? And do you think of your services being genuinely sort of very cheap and there is a lot of upside? Well, I would say that if we'll compare the situation how it was 1 year before and if we will take comparable markets, of course, the Kazakhstan had the lowest prices for the data. It's no doubt with the average bill and with the consumption which we had. Now the situation improved a little bit, but yes, still we have quite one of the lowest prices on the market especially for the data services. So yes, that's true. Irene Idrisva, RBCA. Could you just give us more color on the market share you have in the 1st SIM for the customer versus this being the 2nd SIM on both brands Tele2 and Altel? And then another question I have is on regulation. Any kind of key issues or key changes that you see coming down the pipeline over the next say 24 months? When it comes to the market share in terms of the first SIM card, it's really difficult to evaluate because not all of the data about our competitors is available. As you know, some of them do not disclose results of the Kazakhstan. But we our estimation on the penetration, the general penetration that it's stable at around 142%. So as you can imagine, you can recalculate what is our share. But what is important here that what we see as a trend, there is now a little bit different behavior. So now the customers are splitting for example the usage. They now focusing they choose us in many cases to as a data connectivity provider in their dual SIM smartphones because honestly speaking, if you will tell if you will have a look at the entire smartphone universe in Kazakhstan, the majority of the vast majority of the device Android and they have dual SIM. So we in many cases use as a primary data connectivity provider and our competitors they used purely for the voice services, especially visible in the smaller cities where we have dominant position in terms of the 4 gs service. And the second one was about the regulation. I would say, yes, we have some changes in the discussion. In particular, this year, we will implement the blacklist functionality in order to minimize the criminal actions around the smartphones. But all other regulatory changes or actions there not something threatening. And there was to IMEI blacklist? Yes, it's the functionality which will be based on the IMEI database like we have in Europe for stolen devices. Thank you. It was really it was more of a clarification. You had a slide earlier which was talking about percentage of OTEL and Tele2 customers in bundles, and I just didn't quite understand what exactly those bundles were. Is that basically where you get an allowance of sort of minutes and text and data versus pay as you go? Yes. And why is it that so high? I'm surprised that the prepaid mix, if that's how you call it, what's driven that adoption for you? Well, I would say that of course it's visibly more, I would say, cheaper, more affordable for the customer to commit to some certain level of payments to us and as a trade off to get the sorry, monthly loans of voice SMS and data. The second thing is, of course, our initiatives in the distribution channels because we are focusing all our incentives for our employees and for the dealers in order to upsell customers for such type of products because it's a really good balance between customer interest and our financial targets. And of course, the entire market invest into this because now if we talk about the key buying factors that people are mostly searching for the data connectivity with the amount of smartphones which we have on the market. And when they come to the store, they see just the best offer for them is to go for the such type of bundle. Just as a follow-up, your competitors at that sort of percentage, is that a market phenomenon or just do you think you're higher than your peers? Unfortunately, we don't have any available data. But yes, we are running some research marketing surveys when we're asking customers also for our competitors what types of the product do they use. And we believe that according to that what we see from those research that we're at least on par, but in some allocations even better than our competitors in terms of such products penetration. It's the Kazakhstan version of evolution from prepaid to postpaid. It's our postpaid version buckets and that becomes the focus of competition. So this is really a market phenomenon also. We see this also in the Baltic countries where most of our prepaid customers have bundles, buckets, and they commit every month to those buckets, which is good also to avoid the multi SIM usage because once you commit it, you commit it. That's it. All right. So thank you very much. Thank you very much. Now it's time to welcome Alison with Lars for the summary. Thank you. Thank you, guys. Thank you. So let me start and then Alison will come up and do the wrap up. So looking at Q1, we came up with a very strong quarter. I hope you got a good sense for the delivery of Kazakhstan and the Netherlands this afternoon. We also had really good performance through across our portfolio, all the markets, Sweden had end user service revenue growth of 5%. The Baltics had end user service revenue growth of 12%. Also very satisfied to see that the growth on the top line also trickling down to the bottom line through good data monetization, also driving economies of scale in our footprint and also seeing the challenger benefits and synergies coming through across the countries. On the EBITDA side, also be aware, as you've seen, we launched new campaigns in a lot of our new countries after Q1. So there's a little bit of timing impact here on the expansion cost that is coming later. And also looking at the full year guidance, which Alison will touch on later, also remember that we got Roam Like Home coming through in the summer, which we guided for around SEK 200,000,000 and we also got slightly tougher comps in the second half of the year. On EBITDA minus CapEx, Q1 was very strong. Please bear in mind that Sweden was low from a timing perspective. So we had CapEx of sales around 3%. We would expect the Swedish entities to be at approximately the same level as in 2016, around 7%, 7.5%. And also the Kazakhstan was also a little bit soft in Q1. Looking at the investment markets and just building on the story that Guillaume and Roman and John have told. Mobile end user service revenue growth, tremendous performance coming through, a very focused approach on profitable growth, making sure that we get accretive customers coming through our channels. We see very good work done on the pricing element, which is a key focus area, in particular, in Netherlands and Kazakhstan, but also in the other countries. So good ASPU development coming through. And on the EBITDA margin, as Guillaume was mentioning, the midterm ambition in Kazakhstan is to get to 30%. That's not going to happen in 2018, but we're well on track to reach that level looking at the trading and the performance that we see coming through to date. In the Netherlands, the Q1 is not a trend, but we are still guiding towards an EBITDA 0 breakeven for this year as a Dutch entity. Looking at cash and where we spend our cash, it's a big focus for us at Tele2. Obviously, CapEx is one element, but also the indirect cost is another one. So when we look at this chart, let's start with the CapEx side. Here, we very much try to focus on network sharing, what can we do together with a partner to drive down the CapEx level. I just mentioned the CapEx of sales in Sweden. Obviously, network sharing fundamentally changes the CapEx profile that you got, and that is a key focus for us. Lena, coming back to your question, we're not guiding CapEx per individual country. Q1, as you know, was quite low. We're still sticking to the full year guidance. What I can say is that when it comes to the Netherlands, if you look at Q1, for instance, the mobile CapEx was lowered by about SEK 50,000,000. And if you look at fixed broadband, it was lower by about SEK 200,000,000. So that was driven a lot of VULA investments in Q1 of last year. We don't expect at this point in time to have Wula investments. So net net, without giving a hard number for 2017 for the Netherlands, our ambition is to have a lower overall CapEx level in 2017. In Kazakhstan, I had a discussion during the break regarding the CapEx to sales. The integration work and also some additional sites that we're rolling out through 2017 will lead to a slightly higher level in 2017 versus 2016, and that's also what we communicated when we released the Q1 results. And then after that, as Guillaume was mentioning, the ambition is to have EBITDA minus CapEx breakeven in 2018. That's obviously reflecting the fact that the CapEx level should then go down. In direct cost, the big buckets in that area is expansion cost, it's network cost, obviously payroll. And as we discussed during the course of the afternoon, there's a plethora of activities that are going on to work on network cost, what can we do with a partner, what can we do from a maintenance perspective to drive down cost. And we see this coming through in Netherlands and Kazakhstan, but also in the other countries in the group. So we see a double digit reduction of the cash that we spend on CapEx and indirect costs over the last quarters. Expansion costs, we talk a lot about how do we optimize our go to market, how do we get more sales put through in our online channels. As John was mentioning, we have over 50% of our sales coming through our own channels. Not only does that drive through cost, but we also see a better quality of customers coming through when it comes to entry ASPU and also from a churn profile perspective. So from a unit economics and ROI perspective, we're very much focused on driving those kind of channels. Other buckets is people costs, and we're looking obviously to always make sure that we are working in an efficient way. Roshan, the Swedish FD is here today. We had a step change program coming through in Q4 last year, and we are seeing the benefits of that obviously trickling through into the bottom line. Kazakhstan had a significant optimization on the payroll side during the course of 2016, and we see those benefits coming through as well. Customer service. Remember what Roman was talking about when it comes to online service and the tremendous improvements that we've seen there. There we're seeing a dramatic reduction in customer service cost. We're talking on a quarterly basis of single digit SEK1 million cost in the Kazakh business. So, it's a tremendous performance also in that area. So, that should give you a bit more flavor on when we talk about indirect costs, those are the big buckets that we refer to. Of course, we will always look to invest also from a CapEx perspective, but we try to go where the money is. So when we are putting up new sites, there are individual business cases for those sites to make sure that marketing, finance and technology are all aligned that we're putting up the sites we're actually going to get significant traffic through. Coming back to this slide, which Alison touched upon in her presentations earlier. This is looking at the EBITDA minus CapEx from an LTM perspective. And at the bottom half, we see then the inflection points that we had a few quarters ago, and we see then improvement in the EBITDA coming through and also the slightly lower CapEx levels. We see an improvement in the cash burn in the investment markets. At the top, we see Sweden and the Baltics, and we've been consistently around SEK 3,500,000,000. Those SEK 3,500,000,000 covered the SEK 2,600,000,000 dividends, but also the tax costs and the finance costs. And I think that's an important element to remember and that's very much how we look at the business from a leadership team perspective. So significant cash coming through. Another measure that we target as a leadership team is cash conversion. That's EBITDA minus CapEx divided by EBITDA. Sweden and the Baltics have been consistently around 75% to 80%, which is very much top of the line when we compare to our other competitors out there. If you even add Austria and Germany and group, we are looking at a cash conversion around 70%. So still a very good number coming through. And Q1 was obviously slightly elevated. And the way you should look at this is we're not looking at a step change going forward, but more of an evolution from this as a reflection of continuous cash generation in Sweden and Baltics and improvement in the EBITDA minus CapEx in the investment markets. And we're obviously very satisfied to see this reflecting in the share price. So if you look at the share, including the reinvestment of the dividends, we've almost have a return that is 2x the general stock indices. And this is from the beginning of 2014. So I'm going to invite Alison up. Okay. So before we close and get back out in the sunshine, just I thought I would summarize with some of our priorities as we look forward. First of all, our guidance, we introduced this guidance in January. We reconfirmed it with our Q1 results. We are reconfirming it again today. But as we said just a few weeks ago, we will be reviewing that guidance along with our Q2 results when we release them in July. And then finally, our priorities going forward, very clear, very focused and hopefully brought alive today and reconfirmed today by what you've seen from John, from Guillaume and Roman and also from Lars. We have 5 key priorities and that is to become the customer champion of connectivity in the footprint that we operate in. We will continue to stimulate demand for data and monetize that data despite headwinds from Room Like at Home, but that is our priority. And that focus on data monetization will sustain the momentum that you've seen in Sweden and the Baltics. I can't promise a Swedish quarter like that every quarter, but we do aim to sustainably have Sweden growing 2% to 3% on the top line, mid single digits in the bottom line and Baltics to be slightly ahead of that as they are coming from behind in terms of network rollout and smartphone penetration. We will continue to accelerate our growth in our investment markets of Netherlands and Kazakhstan and accelerate towards the end of the investment cycle, which hopefully you got great confidence in here today by really focusing in on those two markets. And finally, our Challenger cost structure remains a key priority for us. We will continue to execute with discipline on that program to realize the €1,000,000,000 per annum benefits by 2018. And of course, we have a number of synergy programs that we are executing on very successfully in Kazakhstan and now also in Sweden. And all of those priorities will ensure that we can sustainably and reliably create shareholder value over the long term for our shareholders. So that is us. It's getting very warm in here. But Lars and I are very happy to take any final questions that you might have. There's others in the room that can support any of those questions. But please go ahead. And I think we've got one question already lined up, which is a follow-up to what Joanna said. And it's we know it's a question that you have asked many times and I obviously failed to answer it as the CFO when we merged with Kazakh Telecom in Kazakhstan and we continue to try to answer it. But here is the answer on the Kazakh shareholder loans, which I know you've all been waiting for. Okay. So, Johanna, we'll see if you give me what grade you give me on this one. But this is the situation. So we got a 49% stake, economic interest. Kazakh Telecom got a 51% stake. We have a 51% management control. So we consolidate the business. We have a back to back 18% versus our previous partner with an earn out. So the effective economic interest is 31%. We have a shareholder loan that was really DKK 97,000,000,000 that is 10ge based, that is accruing at an interest, which we haven't disclosed. But currently, that's slightly north of SEK3 1,000,000,000 Then there's a put option and call option, please bear that in mind, in Q1 2019. And obviously, we will see where we are at this point or at that point in time. At that point, if there is an exit, we get the shareholder loan back and then there's an equity residual, which then gets distributed. Important to remember there is that Asianet would get the first €200,000,000 approximately of that equity. Then we also have a loan from Castaic Telecom and also a bank loan that is funding the JV expansion. This is also related to our economic debt definition, and they are guaranteeing that. Is that clear? Yes. Very good. Okay, Terence. Thanks. I just had a quick question on the overall group portfolio on the structure. Just given how successful the integration has gone in Kazakhstan, do you think there's more opportunities to do similar joint ventures elsewhere, maybe in the Netherlands or the Baltics? We are very focused on value creation. And when we can find opportunities like we did in Kazakhstan to strengthen a subscale position, then we obviously take advantage of it when it makes sense from a shareholder value point of view. We're not currently pursuing any at the moment, but it's always an opportunity to strengthen our scale. And we're big fans of JVs. We have wonderful network sharing agreements in Sweden. And so where we see those opportunities, we absolutely take advantage of them. Thank you. I mean you mentioned I think in both of the presentations around the brands and the Geo brand strategy. In Sweden, when you look at the Tele2 and the Combi brands, in the past, it's appeared they've been slightly too close for comfort. And I think at least some of the pricing in Tecombeg is particularly sharp. Are you happy in that market that the brands are sufficiently far apart and Tele2 is not just a sort of retainer of the high value customers but actually can grow going forward? I think what we've seen since we went to the dual brand strategy and we moved Tele2 into the value champion position has been a great success. Comvique is more clearly than ever the price fighter. And Tele2, as it increasingly sells larger data buckets and now unlimited is the real enthusiast of connectivity for those customers that want more access all the time at a great value for money price. So whilst we have seen the customer base in Comvique grow and the Tele2 customer base slightly decline, we've seen great revenue growth on the Tele2 brand and great customer and revenue growth on the Convey brand. So we are very happy with the development. We just launched the new commercials on Tele2 in April, the Tele2 School of Power, and that is again differentiating away from being a a price fighter. And we're very happy with the early reaction that we're getting to that. So we're very happy with our Geo brand strategy in Sweden. And to be honest, the market is very much going to where we had 2 brands with the right to win. And it's been a great pillar of our success. Thank you. Matthew Box from JPMorgan. Just to clarify on what you said about reviewing the guidance at Q2. I mean, I would expect you to be always reviewing whether you've got your guidance in the right range. But is that all you're saying or are you implying that there could be a change to the guidance? That's all I'm saying. Okay. July 19, if you're not on holiday. We will release our results, and we'll give you an update at that point in time. Thank you. You haven't talked discussed your 3rd investment market. So if you look in a broader picture, longer term, how do you see this business in the Tele2 Group, please? Croatia? Yes. It's very small. It is now getting momentum after completing the 4 gs rollout last year. We did a brand relaunch last spring that didn't have quite the impact we wanted. We have just recently refreshed that and launched some new propositions again in this quarter, so early days, getting good traction from Croatian consumers. But absolutely, we want to get we want to see the same kind of growth rates that we're getting in our other investment markets in Croatia, but we're not there yet, but we're nowhere near spending the same levels of investment in that market. We're very, very choiceful. I think every day is about to die in the heat. Just a very quick one. On the did Kinnevik consult you before the Com Hem stake acquisition the other day? And what are your general thoughts about the speed of convergence in the Swedish market and how you could prepare for that in the absence of anything larger? Well, first of all, Trinovit, of course, didn't consult us on that acquisition. That is very much their decision and a very independent decision, and they wouldn't consult us with that. Our views on convergence in the Swedish market, FMC hasn't really happened in the Swedish market for a number of reasons. Great 4 gs networks, great consumer habit already established on mobile networks, great value for money and great experience on those networks. And no one player has felt the need to discount any one part of the bundle to push FMC. You also see the Swedish market increasingly consumers are watching their content over the top. So there's much less force fitting of the content with the fixed connection in the home. So we monitor the situation closely. We're very aware of what Telia have said publicly, but they've also said that they don't really want to discount any part of the bundle either. So of course, you shouldn't forget, we do offer converged service to our B2B customers, which is an increasing the larger part of our business since we acquired TDC. And so we're able to offer a full suite of connectivity services to them. And we still see continued room for growth in the mobile space with the consumer, but we watch it closely. And we're learning a lot more now that we've got John on our leadership team. Any more questions? I think people might Lena, you put your hand up. No? Do you want to ask the last question and then people can get some fresh air? Yeah. Lena Sur by Kenege. Maybe if you could just reiterate Q1 because you're sort of alluding to the guidance change, Q1 was a massive beat. But then on the other hand, you had some less spend due to I mean, you pushed the marketing campaigns in Q2. So could you maybe just go say a little bit more about Q1? How much of that was temporary less marketing spend? How much of it is sort of a new cost base? Because you have lower costs here in the Netherlands, you've got synergies through in the Kazakhstan and in Sweden with TDC and you have the Challenger program. So what's the normalized OpEx base for Q1? Well, there is no real normal quarter. But I think what we said at the time, Lars In Sweden, we said about €30,000,000 €40,000,000 on the marketing. And I think, John, probably about the same amount in the Netherlands. That's really a bit softer due to delay in the launches. And then there was about €90,000,000 of one offs in Netherlands as well. In the Netherlands, correct. So they will not be recurring. And obviously, Q2, you've seen a number of relaunches and new propositions launched. But we'll be able to report more on July 19, a few days after my birthday. Okay. Thank you all. Thank you for taking the time to come here today. Thank you to all who helped make the presentations work and bring our investment markets alive. They don't always get the focus that they deserve. And we look forward to chatting further with you out in the sunshine and to seeing you or at least hearing you on the Q2 call on July 19. So thank you

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