Earnings Call: Q1 2016

Apr 21, 2016

And welcome to the Tele2 Q1 Interim Report 2016 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Louise Cheddar. Please go ahead. Thank you. Good morning, everyone, and a warm welcome beside me, I have our CEO and President, Alison Krogby and our new CFO, Lars Nordmark. We're also sending this presentation via our webpage, tele2.com. So welcome, everyone, that has joined us also via the web. Alison will start by going through the highlights of the quarter, followed by some further financials presented by Lars. Then as normal proceeding, we will open up for questions where you have the possibility to ask your question either over the phone or via the web. So with this, I hand over to you, Alison. Good morning, everyone, and thank you for joining us this morning on most beautiful spring morning here in Stockholm. So let's start with the highlights from the quarter as we continue to deliver on our long term strategy. As value champions, group mobile end user service revenue continued to grow in line with our mid single digit objective in the quarter. We enjoyed a particularly strong quarter in the Baltics and we saw continued growth in our Swedish consumer business, albeit at a lower level this quarter. Data monetization continues across the group, accelerating in March as a consequence of progressing the Netherlands launch strategy further and the actions we took in Sweden. In terms of technological development, 4 gs is now available throughout our footprint, having switched on in Croatia at the beginning of March and having merged with Alcel in Kazakhstan. As planned, we now have nationwide LTE advanced 4 gs network coverage throughout the Netherlands. And as a result, we have seen a significant increase in the number of 4 gs customers in our base. We also now have our first users on VoLTE and can officially say that we are the 1st 4 gs only operator in the world. On productivity, Challenger program remains on track to achieve the $1,000,000,000 savings per annum by 2018. And since closing the transaction in Kazakhstan, both cost and revenue synergy plans are well underway. As I said before, this JV creates a more sustainable and significant player for us in the traffic market, while derisking our investments there. And also in the quarter, we've announced the vendors and the plan to virtualize and cloudify our internal network and IT systems that to drive significant additions even the future and prepare for 5 gs. In terms of our people and our culture, we're delighted to welcome almost 1,000 new Altell employees to the Tele2 team. They are all now being actively on boarded on the Tele2 way to embrace and live our culture and our values. And it's my pleasure to welcome here today our new group CFO, Lars, who joins me on the call and who you'll hear from later. So moving to the headline financials for the quarter. Monetization of data has been and is still our key priority, and we continue to see growth in the quarter with mobile edge user service revenue up 4% on a like for like basis, which to be clear is on a constant currency basis and includes pro form a for Althell. Net sales were up 2% like for like due to lower revenues from fixed broadband and fixed telephony. And finally, EBITDA fell on €200,000,000 as a result of the planned increased sales and marketing investments in the Netherlands and actions required in Sweden in the quarter. This was partly offset by positive developments in both the Baltics and in Germany. So turning to the markets in a bit more detail. Sweden first. In Sweden, total revenue was impacted by lower equipment sales and declines in both fixed and the B2B segments. The latter was driven by a decline in SME given the continued price aggression in the market that has continued into the quarter and which we mentioned in previous quarters. Mobile end user service revenue was flat to down 1% year on year. The continued positive development in consumer is ongoing, albeit lower than we aim for, but we continue to see growth in large enterprise too. So all of this was offset by declines in SME. EBITDA was impacted by higher sales and marketing investment focused on regaining momentum in B2B and Intellate Residential. But it's also worth noting that in Q1 last year, we did have a particularly low investment quarter. The initiatives and the actions that we've taken recently, however, have driven improved momentum in March, and we continue to see that in the month of April. So let's go into Sweden in a bit more detail. Sorry, I'm jumping ahead here. So all of that said, continue to develop positively. 1st, our dual brand strategy and a particularly strong Combi brand equity and set of proposition continue to drive positive postpaid net intake and positive mobile NGO service revenue. Both comps the prepaid and postpaid during the quarter, resulting in a total consumer growth of 3%. Tele2's value champion strategy continues to attract higher ASU customers to the larger data bucket. And this strategy, in addition to an increased network coverage, is driving customer satisfaction to best in class levels. So whilst it was a fairly flat quarter from a revenue perspective, we are comfortable that the foundations we have in place and the actions we have taken will enable further opportunity for data monetization in both consumer and in DTV going forward. As we now look at the Baltics, we saw good top and bottom line growth from the commercialization and monetization of our recent 4 gs investments. Net sales growth was up 7%, driven by equipment sales, which is enabling improved penetration of 4 gs handsets and therefore potential for increased data growth across the region. Mobile end user service revenue was up 5% overall and in Lithuania and Estonia 8% 6%, respectively. EBITDA growth was 6% up, driven by Lithuania, which is up 14%, achieving a 37% EBITDA margin. The strong data monetization in the region in the quarter has been very much driven by the ongoing prepaid to postpaid transition, increasing penetration of 4 gs handsets, data centric pricing and increased 4 gs coverage to 95% for the region. After development, up 8%, is similar or slightly ahead of mobile engine service revenue development with mid- to high single digit development in Lithuania and Estonia. And if you look at how the penetration of 4 gs handsets is still only 25% on our base, there's lots of room for further assay development going forward. We were also in the quarter successful at securing the 91800 and 1800 megahertz spectrums in the recent Lithuanian auction, future proofing data monetization for the foreseeable future in that market. So let's get into the Netherlands now. As expected, we experienced a continuation of the trend seen in the Q4 into the 1st 2 months of this year, with momentum accelerating in the month of March. For the quarter, net sales were up 3%, driven by increased equipment sales and mobile revenues offset by declines in fixed broadband and telephony. Mobile engine as a service revenue was up 6%, but was a significantly higher run rate at the end of the quarter than at the beginning. As part of the launch strategy, EBITDA was impacted by the sales and marketing investments, although partly offset by a €7,000,000 one off benefit from a renegotiated property lease in the quarter. So let's get into the Netherlands in more detail so you can understand how we are gaining momentum. If you recall at launch, our primary focus was to build brand awareness, disrupting the handset section of the market and grow the share of VoLTE enabled handsets in the base. We launched with the disruptive handset offer, and in Q1, we continue to focus on putting in place the additional components necessary to enable higher customer base growth. In February, the 4 gs handset penetration in the Dutch mobile market allowed us to launch a SIM only a disruptive SIM only offer, and we saw good growth throughout the quarter on the back of that. We also completed our handset lineup by introducing the iPhone into our handset portfolio as a disruptive enterprise. The SIM only and iPhone launches had a step change impact on our growth through the quarter. Share of new postpaid contracts, so all new postpaid contracts, handset and SIM only, jumped from 12% pre launch to 20% in February and to 25% in March based on the information that we just got last night from GSK. And in March, if you recall, that's an all elements of our planned strategy went live. So brand awareness, consideration, 4 gs customers in the base and share of available switchers built sequentially across the quarter. On the fixed side, with a growing Bula high speed fixed broadband footprint, we have been able to stabilize our customer base after 4 quarters of decline. Operationally, we've been focusing very much on improving 4 gs onboarding to support our future profitability and increase the freedom that we have in our offers. We have continued to improve the network coverage throughout the quarter, but also put process in place to improve our steering towards 4 gs customers, which delivered a higher ratio of 4 gs versus 3 gs handsets in the base. At the end of Q1, our data usage on our own network have increased to 61% from 27% pre launch. All of that being said, churn is still higher than we glide, mainly in 3 gs, but continues to dilute the positive development and growth intake that we've seen since launching all elements of our plan. So if there's one thing we want to fix going forward, it's reduced churn going forward and work is very much underway there. Finally, on the network side, we continue to improve both our outdoor as well as our indoor coverage. And as planned, our LTE Advanced 4 gs network reached nationwide outdoor population coverage by the end of the quarter. We're now above 97% outdoor and 78% indoor. P3 earlier in the quarter also conducted a benchmark study and we achieved 9 out of 10, which shows that while still in rollout phase, we are already on a par with the other 3 MNOs in this country. And now, in the last week of March, we have our first users on VoLTE and can now officially say we're the 1st 4 gs O'Neill operation in the world. We expect to enable VoLTE for all our consumer and B2B customers during the Q3. So overall, good progress in the quarter, and we remain absolutely committed to our disciplined investment strategy in the Netherlands as we further establish ourselves as the preeminent challenger in that market. So let's go into Cabotet Sound. We saw underlying mobile end user service revenue growth in constant currency, up 31% from a higher customer base in what is an intensively competitive environment. The competitive environment, expansion costs and the devaluation of the 10 gig impacted EBITDA in the quarter, but we're still able to deliver a positive sum. As I said earlier, the closing of the transaction and the steps we've already taken on cost synergies and market pricing will enable a stronger and more sustainable platform for growth in the future. Since closing just 7 weeks ago, we have already launched 4 gs to the Tele2 customer base and national voice roaming to the Altel customer base. And we have started executing on the synergy plan. Also, as of April, we have discontinued Autel's unlimited data offering as part of the rationalization of the bundles offered by the new JV. These unlimited bundles were eroding network capacity and quality of service and were obviously unprofitable to us. So this was a critical part of the integration plan. As you can see, this will result in an increase in the price we charge per gig to around 168.10 which is around USD 0.50 So still extremely attractive considering bundles in the market are somewhere in the 10 to 30 gig range. So integration plans are progressing well. Briefly, before I hand over to Lars, I just want to give you an update on Challenger program, where we very much remain on track to achieve the $1,000,000,000 target per annum by 2018. We are showing good progress. We have 60 initiatives in place and the vast majority are all very much focused on execution now. In the area of simplification, we have defined a new approach to product development throughout the group and are on way to harmonize around half of our product development. We started to execute on simplifying product portfolios and expect to see results from this in the end of 2016 and onwards. Already, we've simplified the product portfolio in Estonia, down by about 50% and in Croatia, closing almost 80% of the product portfolio. In terms of improved discipline, we're seeing an increase in the spend we manage strategically and are well underway towards our target of 80%. As an example, we're implementing a consolidated approach for the group within handset management, covering both purchasing and campaign to better leverage scale and coordination across the group. The strength in the Samsung Galaxy 7 campaign is a result of a joint effort, not only resulting in campaign benefits, but also in greater efficiencies in working capital. So it's not just in our OpEx that you'll still see the benefits from Challenger ongoing. You will also see revenue opportunity and working capital opportunity too. In consolidation, I mentioned previously, we've decided to move our network and IT functions into the cloud to cater for 5 gs using network function virtualization in order to enable smarter, user friendly, future proof and even more cost efficient internal management of our network and IT stack. This shift to technology will enable us to deliver a wider set of services to our customers within all segments, including business, consumer and more importantly to enable development in the Internet of Things division. And in Transformation, as you saw in the results, German EBITDA is benefiting from last year's restructuring, and the new operating model we launched in October allows us to deliver economies of scale throughout the group, and we've already seen now around 100 FT feet feet feet feet feet feet feet feet feet feet feet Es outsourced to India, providing support to our Swedish, Dutch and finance operations. So on that note, I'm now going to hand over to Lars. Thank you very much, Alison, and good morning, everybody. Let's turn to Page 14 for an overview of the end use of Service Revenue Development. On the left hand side, you see the reported figures over the last 5 quarters showing a year on year decline in Q1 of this year of 1%. On the right hand side, I'm looking at the separate operations. We can see good developments in the Baltics, driven by good improvement in the ASPU and also a shift from prepaid to postpaid. In the Netherlands, we have seen an increased fuel by customer growth. And in Kazakhstan, due to the devaluation of the TEN, we experienced a decrease year on year for operations over there. Looking at the quarter from a constant currency and pro form a perspective, we saw a healthy growth of 4% year on year with the Netherlands, Baltics and CapExon were the main contributors. Moving on to EBITDA on the next page. We reported a decline of 14% year on year. As expected, the Dutch operations were impacted by the investments related to our commercial launch. In Sweden, we had increased variable spending related to sales and marketing to regain top line growth. In addition, we also saw some tailings in Q1 of last year. These investments had a negative impact on EBITDA in the quarter of this year. For the remaining countries, we have seen strong positive results coming through from the Baltics as well as good bottom line impact from Germany, but we restructured the business in 2015. In Germany, we had nonrecurring items approximately EUR 3,000,000 to EUR 4,000,000 in the quarter of this year. Turning to CapEx. We saw an increase of 23% versus the same period last year. This was primarily due to an increase in the Netherlands and the Baltic operations. Specifically, the increase in the Baltic was the result of us acquiring the 900 and 1800 megahertz licenses in Lithuania in the amount of SEK 123,000,000. Please note that only SEK 26,000,000 was actually paid in cash, and the remaining amount will be paid over the next 15 years. CapEx for the Netherlands increased due to investments in fixed broadband, where we continue to strengthen our ability to offer competitive offers in this segment with speeds up to 100 megabits per second. On the next page, we see that free cash flow at approximately the same level as for Q1 of last year. The improvement in interest is related to negative impact in Q1 2015 as a result of FX swaps for the Norwegian operations. We have seen an improvement in the change in working capital, mainly due to Sweden, where we have launched an external financing program for Hansek during the Q1 of this year. And the one offs were mainly related to costs associated with our Challenger program. Now let's look at our debt position and our leverage. Our economic debt, CDP, was at 1.7 at the end of the quarter. The chart also reflects the impact of the upcoming dividend payment, which will take leverage up above 2. This is in line with our previous communication where we have stated that we will be about 2 during the Investor Day in the Netherlands. The definition of economic debt, which is net debt excluding liabilities from Tabak Telecom and liabilities guaranteed by CapEx Telecom, also reflects the fact that we will not be required to provide funding to the CapEx business in the foreseeable future. And let me end on confirming our guidance, which we communicated during our last call. Please also note that mobile end user service revenue is based on constant foreign exchange and pro form a. And with that, I'm going to hand back to Alison. Thank you, Lars. So just to summarize, our priorities remain and very much focused on 5 key areas. 1, to maximize our dual brand strategy in Sweden to regain momentum in 2, to monetize 4 gs in the Baltics and now also in Croatia. 3, accelerate our growth in the Netherlands as our investment establishes us as the preeminent challenger 4th is to integrate our JV successfully in Kazakhstan and drive both the cost and the revenue synergies. And finally, to continue to execute on the Challenger program. So as you will see, we remain totally focused on further data monetization across our businesses in order to maximize the long term shareholder value. So thank you. That concludes our presentation for today. And both Lars and Louise and I will be very happy to take your questions now. Thank you. SocGen. Please go ahead. Yes, morning. It's Nick at SocGen. A couple of questions on the Netherlands, please, Alison. Can I ask firstly on the is it possible for you to tell us the 3 gs churn? Is it similar to last quarter? And also, you mentioned the P3 test, I think, in the release. It also looked like T Mobile did very well in those tests as well. So again, on the sub side, could you tell us how much you assume in the long term? How much share do you assume to is going to come from T Mobile in your assumptions? And the second one was on the fixed line side and the margin fall. Could you explain, does that have anything to do with one off costs on Druva? Or where does that margin come from, it slipped below 20% please? Thank you. Okay. Thanks, Nick. So yes, 3 gs churn was it was similar to last quarter. And I think the sale of the sub brands and the MVNOs are still being very aggressive at that end of the segment end of the market. But that's fine because those customers would be unprofitable to us anyway. What we are now seeing though is we've got 60% of our customer base is now 4 gs. So that's really positive development. In terms of the P3 test, yes, T Mobile did well, but we got 9 out of 10, and it was taken in January. And we built the network further between January and the end of March. So basically, we're already on a par with the others. Regarding taking share from any one player in the market, we are taking share from everybody at the moment. We've now got we're taking 25 percent of all available new postpaid contracts. So we are doing well against everyone. And we're still keeping firm to our 20% long term target market share target. And then finally, on fixed line, there I don't think there was any one off negative impact in the quarter. I think that's just a reflection of the business declined again, And we have an increasing percentage of the business off net now than on net. But gross margin was pretty stable. So there might be some marketing costs that are being allocated in that area because we're promoting the Tierra 2 brands at the But as I looked at gross margin, I think it was pretty stable. So in terms of Vula, it's still a very small effect for the quarter. Is it not sort of indication that Vula is going to bring margins down substantially below 20% or anything like that? No, no, no. As I think as we've always said in Vula, Vula will stabilize the customer base and that's what we've seen. The Q1 that we haven't declined in a year in over a year. And what you're seeing is, as we've always said, our aim is that Vula would help us drive ARPU up. And therefore, the margin dilution would not be as big if it was all being sold at the same price. But we're still early days in Zula. But and as I said, gross margin was stable in the quarter. That's great. Thank you. Thanks. Our next question comes from Henrik Herbst from Credit Suisse. Please go ahead. Hello. I've got two questions, please. Firstly, on the Netherlands. I'm just kind of trying to tie together your OpEx spend or EBITDA loss in Q1 versus your full year guidance of, I guess, an average of EUR 200,000,000 to EUR 300,000,000 loss per quarter? And how I should think of your EBITDA loss as your subscriber momentum kind of ramps up and given that you're now in Q1 already underlying kind of €290,000,000 EBITDA loss? And then secondly, in Sweden, I would just be interested in hearing what you're actually doing with this incremental spend? What is this going to? And I guess, how for how long do you think you'll maintain a higher spending level? And what do you expect it to result in? Is it improvement in ASPU, you'll migrate customers up to bigger data bundles? Or will it be better subscriber trends? Thanks very much. Okay. Thank you, Henrik, for your questions. So the first question on Netherlands and the OpEx spend and what we have been referring to as the normal EBITDA losses of 2 to 3 in the quarter. Alison, if you could ask answer on that question, how that would build that given that we will build that momentum in the customer. And then we'll just take Friedemann afterwards. Yes. So yes, hi, Henry. Good morning. So yes, you're right, underlying EBITDA loss in mobile for the quarter was around 290, which as we said, we will be around the €300,000,000 per quarter for the year. And that is still our projection as we look forward. So no change to that forecast based on what we've seen in the Q1. In terms of Sweden, what are we doing? So there are, I guess, 3 elements to the plan. The first of those was always part of the plan anyway, which was the spring campaign on Tele2 Residential, which was very much to focus on data and start to stimulate trade up of the bundles again and to keep that ARPU development. And so that's the first part of the plan. The second part of the plan was to look at 3rd party channels in the consumer segment to ensure that we were competitive in both direct, whether that be online or in our stores, but also in the indirect channel, where we did not prioritize last year. And then the 3rd asset is in the B2B SME area, where again, focus on 3rd party channel development and also starting to be more competitive against some of the below the line offers that have been out there. Now just as a reminder, last Q1 2015, we it was a low sales and marketing investment quarter anyway. And if you recall, around half of the benefit we got from lower expansion costs was because we've spent it in Q4. So the incremental spend in the quarter is not as much as the year on year trend because we had a very low investment quarter last year. So, you shouldn't expect to see that impact in all the quarters going forward. Yes, a bit higher at the moment, but we are seeing good early impact. And as I said there, we already saw momentum improve in March back to the levels that we aim to have in our Swedish business, and that has continued into April. And we are seeing the intake of the new customers and the Tele2 brand are definitely trending towards higher as 2 bundles. So, our Tele2 focus is much more about ASPU development, encouraging the higher value customers to be with us and stay with us because we give them bundles that give them more freedom to stream and surf and not have to worry about hitting the top end of their bucket. And then in the B2B SME segment and in the Combiq segment, that's a mix of both ASCO development and attracting new subscribers. Great. Thanks so much. Very clear. Just if I can follow-up on Netherlands, please. So as your I guess, as your subscriber adds goes up, I mean there needs to be cost coming out somewhere else if you're going to stick with the €300,000,000 Can you maybe explain that, please? Well, as you heard, we are already getting 61% on load on our own network. And so the more we have the customers consuming on our network, the more the cost of the roaming goes down. Thanks very much. We'll now take our next question from Andres Gulsen from DNB. Please go ahead. Yes, good morning. It's Andreas here at DNB. And also maybe the comment on the ASPU in Sweden? And also maybe the comment on the ASPU in Sweden, which is coming down, is that entirely related to a different mix in the subscriber base with more Combiq versus Tele2? And maybe also then give a sort of an indication of how much more ASPU a Tele2 customer is spending versus a Combi customer? Thank you, Andreas. So three questions. If you could give a little some indication on the spending in Sweden. And the second question on the ASPU coming down, if that is due to the mix in the base. And if you could give an indication on the ASPU relative and how that's trending? Okay. So I think if you look year on year, what was Sweden down? It was almost €100,000,000 roughly. So around €50,000,000 of that was getting back to more normalized levels of sales and marketing investments because we were very low in Q1 last year. The balance $50,000,000 around 2 thirds of that was we had real tailwinds last Q1 from the changing price plans from the old propositions into the new bigger buckets. And so then the final third is probably roughly around the incremental spend in the quarter. So it's nowhere near the $100,000,000 so just to reassure. And I would expect our spending to be slightly higher in line with Q1 in the next couple of quarters. In terms of ABPU, yes, ABPU is down and it is mainly because of mix. Comvit was very strong throughout the course of 2015 and have continued to be so in 2016. And the average ASPU of Comvik is probably about, what, 40% lower than territory 20% lower, sorry, 20%. And I don't think we've closed that. Do we really, Louise? No, we don't disclose it. I'm looking at her. So it's about a 20% difference between the 2. What we are seeing now though are real focus on data and the focus on getting back to the trading up that we were doing in the back end of 2014 and the early part 2015 is already showing that the new intake coming in Tele2 is coming in with higher And so early days, but we're seeing positive development there. Is that all your questions, Andre? Yes. Just had one more on the Netherlands. You mentioned that the measures you have taken in Sweden had a positive impact in March and also into April. Is that the same in the Netherlands after you launched SIM only offering and the iPhone as that continues in April? Yes. So I think the quarter January, February was very similar to Q4 and March as planned because we were switching on the final elements of or the next stage of our elements of our launch plan in the Netherlands, we saw Netherlands really spike up in March, and we've seen the same in Sweden. And that has continued into April. And so the market share results, that 25% share of all new postpaid contracts, handset and SIM only just came in last night, and that jumped from 20% in February to 25% in March. Perfect. Thanks. Thank you. You. Our next question comes from Ruben Abdu from UBS. Please go ahead. It's Ramanu Abdu from UBS. Thank you for taking my questions. I've got 2 in Sweden and one in Netherlands. So on Sweden, you've mentioned that the momentum of the business in March is already improving. So could you please just provide more color? Is it your initiatives that are already starting to bear fruit? Or is it the competitive environment that is improving? And you've also mentioned that the business is performing in March close to the level with which you're happy. So just to check which level is that, is it the 2% to 3% mobile end user service revenue growth that you have previously talked about as your full year target for Sweden mobile? And then for the Netherlands, just wanted to check if your strategic thinking about that operation has changed in any way following the announcement of Vodafone and Liberty of forming a joint venture in that market? Thank you very much. You very much, Roman. So the first two questions on Sweden. The momentum that we are speaking about in March improving, is that a result of the initiatives or competition? And also on the levels that we are in March, do you mean that, that is the 2% to 3% mobile revenue growth that we have been talking about in Sweden? Okay. So the yes, the momentum improving. I the B2B SME segment remains very competitive. So we've seen no change in the how fierce competition is there. But as I said, the initiatives are having an impact. In terms of the Consumer segment, I think no real change in competitive pressure there either. We have just strengthened the plan that we were always planning to do, which was about pushing data message and returning to ensuring that we were getting the right trade up in our base. And I think when I've been speaking to you and others over the last few months, Roman, I've expressed my disappointment at how some of the branding and communication was not getting across some of the great value and great quality that we can deliver to consumers. I think what we're now seeing is that it's starting to work as we focus on data again rather than focusing on bring back, which was rather confusing for the consumer. So yes, that has returned us to levels that I feel this business is achievable is able to deliver over the medium to long term, which is 2% to 3%. In terms of the Netherlands, has our strategic thinking changed? No, we are very much focused on building a preeminent challenger in that market that really focuses on Brilliant delivering great quality, coverage and a great source for consumers to consume lots of data at a great price. And that's what we remain focused on. And it will be great if Vodafone and Liberty are distracted for the next 18 months trying to integrate themselves. So So no change for us, very much focused on building another pillar to our value creation story. Thank you very much. Can I just squeeze one more in on Kazakhstan, please? In terms of the put option that you have 3 years from now, so keeping the business or potentially selling out, What's your thinking on that front? And what are the perhaps particular catalysts that would make you go either way? Well, at the moment, we're absolutely focused on integration, Roman. We've just started the integration. It's going well. We are still positive about the impact that we can have on that market. Now that as a combined entity, we have 22% market share and the vast majority of data market share. So that's what our priorities are at the moment and we'll decide what we want to do in 3 years as we see how the business develops between now and then. Thank you so much. Our next question comes from Ulrik Rat of Jefferies. Please go ahead. Hi, thank you. Maybe one on Germany and one on the Netherlands. Germany, you sort of talked about the sort of the changes due to your shift last year. Is the Q1 now represent a bit of what we should expect? Or is this just a ramp and things could get even better? And also just to clarify, the CFO comment there of these sort of various one offs, which you indicate in the report only summarily. I heard €3,000,000 to €4,000,000 Can you confirm that? And also, is that that's a positive one off, right? In the Netherlands, I mean, one can interpret sort of the sequence of events slightly differently. One could sort of argue that in the 4th quarter, the competitors have sort of tried to stonewall the launch a bit with their own measures and that Tele2 was sort of forced into adjusting on the SIM only front a bit. What confidence do you have that the status quo that you have achieved now and the competitive balance will not be disrupted by competitors from here? Do you sort of see them having spent their powder and now sort of Tele2 can execute? Or do you think there's a risk that they will take further measures which would sort of undermine the improved trends you're seeing in the mid March April? Thank you. Okay. Thank you, Ulrich. Lars, if you can answer the first question and elaborate a little bit on Germany and if they should expect this level going forward. And then, Allison, if you could ask answer on the ANAT question. Sure. Ulrik, so when you look at the German operation, the way you should look at it is that we had about 3000000 to 4000000 nonrecurring items in Q1, and you should not expect that going forward. And they were positive, correct. Thank you, Lars. And then, Allison, if you could elaborate a little bit on the math. So the German team have done a fast job there, I must say. And it just shows you when you focus a team on a set of metrics, it's all about cash generation. It's amazing what we can do. And so yes, Q1 is not representative going forward, but we're still going to be in a position going forward than we would have been if we continued without the current strategy. On Netherlands, you reckon they still hold us in the Q4, do you? And we were forced into adjusting our plans. Absolutely not. We always planned to become more disruptive and SIM only when we felt that it was the right time to do it. If you recall, for us to have gone disruptive on SIM only when we were only on loading 30% of data onto our own network would have not been a very financially disciplined way to do it. So it was always our plan to wait until there was higher penetration of 4 gs handsets in the base and for our network to have been rolled out further before we became more disruptive on SIM only, and we were able to take that decision in February. It was always our plan also to become more disruptive when we had the iPhone, and we bought the iPhone on 23rd February. So all of those plans came into place in March. And the market has been competitive since we launched, before we launched, since we launched, and it continues to be competitive. And I believe that we are performing well in a competitive environment. Okay. Thanks very much. Thank you. Our next question comes from Victor Hoglund of SEB. Please go ahead. Yes. Good morning. 3 and maybe I have a question here, if I may. First, here on postpaid B2C Tele2 brand, high end Sweden, is that positive trending out of Q1, the customer intake or negative? You say that SMB is tough and Comvik is doing good. I was just asking specifically on the Tele2 postpaid brand. And then secondly, on the Dutch market, well, just a quick question here. On the metrics that you specify on spontaneous brand awareness and your share of the churn, it seems like it's slightly down from Q4 or maybe I'm seeing this wrong. And could you just elaborate a bit on how you view that? Maybe it's a no issue. And then on Kazakhstan, can you just repeat what you said on the expected effects from the roaming agreement and network rollouts that you made on ARPU customer intake and major profits as well? And then just to go back to the question on Germany, can you just clarify, is it SEK 3,000,000 to SEK 4,000,000 or euros, the one off? Thank you. Victor, could you clarify the third question? You said Kazakhstan and roaming. Could you clarify that one? In the presentation, you mentioned that the effects now from the JV, you said that you have a better network and you can do better offerings. I didn't really hear what you said. So maybe you can just repeat that. Okay. Fine. Okay. So Alison, if you could answer the question how the postpaid brand new 2 momentum and then also on the Dutch market and the brand awareness that is slightly down. If you could elaborate on that and then again on the Kazakhstan. And Victor, the 4th question I got that. Yes, I'll take that Chairman question first. Yes, that was euros, euros 3,000,000 to €4,000,000 in the quarter benefit that unlikely to see in the quarter going forward. So start with Sweden, Tele2 Residential, so premium postpaid, as you said, in B2C. The subscriber base was fairly flat in the quarter. So we didn't really lose any, but we didn't really gain any either. In the Netherlands, spontaneous brand awareness, what we had in November, December was very, very high advertising levels. We were on air a lot. That came down a bit during January, February, and it ramps up again now, and we've got new advertising on air that just went on last week. So brand awareness does spike up and down based on how often people have seen it, and it is still despite all the other channels, mainly television that drives that. So I think we were at 44% in December and so it's gone down to 40% and that's actually in the February. We've not got the March brand awareness yet. I think it's February going into March. So as I said, that will change. The one that's more positive, I think, shows much more sustainability in consideration. So we're up to now over fat 50% of people would consider TELUS-two and that's a significant uplift since pre launch. So I think that is very positive. In terms of Kazakhstan, so we are now able to offer 4 gs to the Tele2 customers in 77% of the country, and we're able to offer national voice roaming to all of the Altel customers as a result of the JV, just 7 weeks into the JV. And in terms of the offer, we announced in mid March that we were removing with bundles that offer, with bundles that offer a price of around $160 to $10 per gig, which is roughly $0.50 for a bundle size of somewhere in the 10 to 30 gig range. Perfect. Thank you very much. Thank you. Our next question comes from Thomas Heast from Danske Bank. Thomas Heath here with Danske Bank. Firstly, just a follow-up on the Netherlands. What you could say about the traction in postpaid handset versus SIM only? Are these pulling sort of equal share of the weight? And then secondly, on Netherlands, again, you mentioned you want to reduce churn in the 3 gig base. But at the same time, you say that you make no money off these subscribers. So what's going on there? And then thirdly, Challenger program. You mentioned some positives coming in by the end of 20 16, I believe. Is that Q4 in our language? Thank you. Thank you. So the traction in we're still slightly more ahead on traction in handset versus SIM only. So if you recall, last quarter, we were focusing on the handset only segment, because that's what our priority was. And so the market shares we were giving you was just in that segment because we are selling into both segments now. So practically, we think the new market share information is giving you is much more it. But it's about since March, it's about equal, but we made more inroads in handsets between November and March than we did in SIM only. So SIM only starts to really improve when we switched on the SIM only deal towards the end of February. In terms of reducing churn, yes, very good point. I should be quite happy to lose all my 3 gs customers. But my point there is there must be some of those 3 gs customers that we can convert to 4 gs before we lose them. And so we should try and convert them first to 4 gs. But if we cannot convert them, absolutely, we should just let them go. And then in Challenger Program, yes, I think it was on the call I mentioned that some of the simplification and product harmonization initiatives will start to come through in Q towards the end of the year. Yes, the simplification and product harmonization piece was always one that would start to come through in 'sixteen and in '17. And I think, yes, it will be a little bit in Q4, but that will build into 2017. That's very helpful. Thank you. Thank you. Our next question comes from Kavil Kuroda from Deutsche Bank. Please go ahead. Thanks. We've got two questions on the Netherlands, please. Firstly, you sound a lot more confident on the data use on your own network. Should we therefore expect the total roaming payments to T Mobile to fall this year? And if so, how much by? I think previously you said that would rise to 2016. And secondly, you have this metric, the share of total postpaid new connections. Can you give us any color as to how large this pool actually is? And in Q4, if I just take a change, to the total postpaid subs accounted for by the 3 largest MNOs, it was around 90,000. So this pool, I thought, may be a little bit small if you are indeed tapping on that to reach your market share targets. Thank you. Hello, Thank you for the question. So Anderson, back to you again on the data used on our own net work and what you are thinking about Check to T Mobile going forward? Yes. And then share of course, yes. So basically, the roaming payments to T Mobile are flat year on year. And we are very happy with how the network is performing and how we are pushing more and more of that data consumption onto our network. I don't want to talk about what those payments might be going forward, because as we increase the customer base and we're still rolling out VoLTE, then we will still be reliant on the T Mobile network for a period. But we're happy with the progress we've made so far in that area. In terms of how I view the GSK reports and the trends that they give us, this is share of all new postpaid contracts of people that are looking to switch in the month. And I believe that the fact that we are getting 25% of those, no matter what the size of that market is, shows that we are attracting 25% of the market to come and switch to Tele2. And that is very positive. And actually, when I looked at the trends in terms of the total base that is now switching, we have stimulated more switching in the market since we launched. So there's been a spike in the available consumers wanting considering moving to a new provider, and we have taken 25% of those. That's clear. Thank you. Our next question comes from Ushman Ghazi of Berenberg. Please go ahead. Hello. Thank you for taking my questions. I have three questions, please. Can I just ask firstly, why the this €3,000,000 to €4,000,000 or €32,000,000 roughly was included in adjusted EBITDA in the morning? It just kind of gave a misleading picture of what was achieved versus consensus. The second question was on the mobile market. I was wondering, could you indicate what revenue declines you're seeing in the SME segment? Because you said that overall service revenues were down and consumer was up around 3%. So what was the SME decline, please? And then related to that, when you talk about mid term to grow mobile service revenues in Sweden by 2% to 3%, what is your assumption on what happens to the SME market in that assumption? Thank you. Thank you, Usman. So the first question, if you could explain why the EUR 4,000,000 was not included as a one off instead of an EBITDA? The second question is on the mobile market, if you could indicate the revenue decline in SMEs. And the third is on the midterm target of the 2% to 3% what assumption underlying assumption is on the SME as well. Well, it would on the first question, it would have been wrong to put it below EBITDA because it is real underlying performance benefit from interventions that we took in that business. So for example, the sale of bad debt, which our companies do all the time, and that goes into EBITDA. For example, renegotiating new contracts with people that goes into EBITDA. So that was treated in exactly the right way. And I think that I think Louise explained that on the calls earlier. In terms of and some of the elements of fundamental interventions that were taken as a result of choosing to milk out that business and restructuring online with our Challenger program objectives. In terms of Sweden mobile market, we don't give a revenue split in the different segments. But consumer mobile was up 3%, as I mentioned, and we were overall around flattish. So B2B was done with it. And over the midterm, yes, we still believe this is a market that can achieve 2% to 3% of mobile end user service revenue. That is reflects both growth in consumer and growth in B2B. Thank you very much. Thank you. As there are no further questions at this time, I'd like to hand the call back to the host for any additional or closing remarks. Okay. Thank you very much for calling in. We will release our results for the Q2 2016 on July 21. And by that, I just wish you all a very nice day. Thank you very much. Thank you. Ladies and gentlemen, that will conclude today's conference call. Thank you for your