Earnings Call: Q4 2015

Jan 28, 2016

Please go ahead. Hello. Good morning, everyone, and a warm welcome to Tele2's Full Year and Fourth Quarter 2015 Conference call and webcast. This is Louis Tedder speaking and together with me today, I have our President and CEO, Alison Kirkby and our EVP, New Growth and Strategy, Lars Tostratzoff. After the formal presentation, there will be chance to ask questions either over the phone or via the web. And with that, I hand over the word to you, Alison. Good morning, everyone, and thank you for joining us on this rainy morning in Stockholm as we present our Q4 of 2015. So let's start with the highlights. As value champions, our mobile end user service revenue has continued to grow and we enjoyed a solid quarter in consumer postpaid in Sweden with data monetization continuing across the group and particularly strong in the Baltic. In terms of technological development, as you all know, we launched our 4 gs only network in the Netherlands in mid November and now have 4 gs coverage of at least 90% in all of our major markets. Also, the network swap in Croatia is completed and we're ready for 4 gs launch there in the coming weeks. On productivity, mobile margin in Sweden increased to 28%. We also announced our JV in Kazakhstan, which I'm delighted to say has just in the last 36 hours received the final regulatory approvals required, and we will therefore close in the current quarter as was always planned. This will create a more sustainable and significant player in the Kazakh market whilst derisking our investment. Challenger program remains on track to achieve the $1,000,000,000 of savings that we set out to achieve by 2018. In terms of people and culture, in a year of significant change for our customers in Sweden in terms of offering them greater flexibility, greater transparency, greater simplicity, as well as the ongoing great network experience, we were delighted that Comvik and Tele2 have been awarded number 1 and 2 for the most satisfied Swedish Telecom customers in 2015, a large step up from the past. We also established shared operations in Chennai and India and expanded those already up and running in Riga and Latvia. And as you'll have seen this morning in the press release, I'm delighted to announce today 3 new leadership team members. Lars Nordmark will join us in April as Executive Vice President and CFO. Lars is a Swedish national with extensive experience in telecoms and currently CFO at Sweden's Securitas Direct. We also have new CEOs of Sweden and the Netherlands businesses. Samuel Scott and Malin Holmberg are both promoted from our internal talent pool, which reflects the strength of the Tele2 bench and the strength of the succession planning we have as we manage succession. With this new leadership team in place, we remain absolutely focused on further data monetization across the group. So as I just mentioned, monetization of data remains our key priority and we continue to see growth in the quarter with mobile end user service revenue up 2%. We've also shown this in constant currency here, which represents a much clearer picture of the underlying figures and shows a 5% increase, and we will continue to report in constant currency going forward as obviously there are some currency headwinds at the moment and excluding the currency impact is a much better reflection of the true underlying health of the business. Mobile EBITDA was down 4% as expected and average data usage was up 94%. Moving to the quarterly trends in mobile and user service revenue, currency basis, we saw an increase of just under 5% in the quarter and very consistent with our mid single digit objective for the year. By market, Sweden has been stable. Baltic's growth has been very good driven by data centric pricing and underlying growth in Kazakhstan was 25%, excluding the impact of the significant devaluation of the Calvectenge. And as you can see from the bar on the right, we continue to see enormous demand for data across our footprint. So let's get into each of the markets in a little bit more detail. In Sweden, our total revenue was impacted by lower equipment sales and declines in both fixed, prepaid and business. The decline was driven by a decline in SME given the price aggression that we are seeing in that market, which we have chosen to not fully participate in. We saw strong EBITDA growth of 8% in the quarter and 6% year on year. And further to my comments, earlier consumer mobile postpaid grew mid single digit, which was very much driven by Comvique and continues to reinforce success of our dual brand strategy. Mobile EBITDA margin grew 2 percentage points in the quarter, up to 28 percent, which means for the full year we delivered a mobile EBITDA margin of 31%. Now moving on to some of the more customer centric KPIs in our business. Our initiatives this year in Sweden and our value champion strategy have resulted in Tele2.0 providing greater flexibility, transparency and simplicity, which has led to increased customer loyalty and churn down 20% in the quarter compared to last year. Net intake was up 27,000 and grew across all segments, but particularly in mobile postpaid. As well as the awards for Comvique and Tele2 in residential, we were also awarded number 1 in B2B fixed telephony and broadband in Sweden by our customers. So this ends a year of good top line and strong bottom line growth in our core Swedish business. Our dual brand strategy, decoupling, big buckets and the removal of subsidies in the Tele2 brand has had a major impact on how customers view us and the value we therefore generate from them and puts us in a very strong position for further growth moving forward. In the Baltics, we saw strong growth where monetization was driven by data centric pricing and continued trade up in data buckets. Mobile end user service revenue in Lithuania and Estonia grew 8% and 10% respectively, and this very much reflects the shift to postpaid and prepaid declining as we anticipated. Underlying EBITDA was up 5% excluding the gains that we from the sale of a frequency license in Estonia in the Q4 last year. And we're the 1st operator in the region to test triple carrier aggregation, LTE Advanced, with speeds above 300 megabits per second. So in summary, Baltics is becoming another pillar of data monetization potential for our group. So then, the Netherlands. As communicated last quarter, the official launch of our 4 gs only network had a negative impact. Our growth intake has improved since launch, but net intake was impacted by pressures in the 3 gs SIM only market, resulting in higher churn, mainly in 3 gs customers than we had anticipated. Monthly 4 gs handset sales, however, did increase through the quarter and this has continued into the New Year. And in B2B, our funnel remains strong and we announced a significant contract with the recycling company Van Gansewinkle and I apologize to any Dutch on the line if that's a really bad pronunciation. In fact, in Q4, we actually had more intake in B2B than the whole of the previous three quarters. In terms of Vula, that obviously kicks in during this quarter, but we have launched 1st pilots and therefore on track to launch Avila product towards the end of the quarter. So now looking at, again, some more of the more customer centric KPIs in the Netherlands. We've continued to make good progress in the build out and in building the business for the long term. Our 4 gs network now has 95 percent outdoor population coverage, which has been reflected in recent positive consumer reviews on the TV show one of the Netherlands' largest consumer review shows. As you can also see here, brand awareness has improved significantly since launch, which will serve us well as we rebuild our brand in the Dutch market. Our share of postpaid switchers, so that is the market of available customers coming out of contract, increased to 20 8% in December from an average of 16.7% in the 1st 9 months of the year. Handsets sales are up 50% since launch, despite not being able to offer the full complement of high end brands. And just as a reminder, in the Dutch market, the iPhone represents 45% of handset sales. So looking forward, measures are now underway to reduce churn, to offer a full range of handsets, to offer a competitive SIM only offer targeted at 4 gs customers and to maximize the potential of VULA. We are committed to our extensive and disciplined investment strategy in the Netherlands as we further establish ourselves as the preeminent challenger in an important European market that generates more than $6,000,000,000 of total mobile revenues. And then in Kazakhstan, we saw strong underlying sales growth of 35% and net intake by 38,000 in what is an intensively competitive environment, which in addition to significant devaluation had an obvious impact on EBITDA in the quarter. But we are delighted to announce that we now have the final regulatory approval through our joint venture to proceed, and we anticipate the deal will close this quarter. Integration planning is well underway, and the Kazakh government have recently committed to technological neutrality. They've issued additional spectrum, which Altell have bought on behalf of the new JV. So we have a very strong platform to launch 4 gs LTE to all of our customers as soon as we can after closing. So let's look into the financials. These are the reported figures for the quarter and very much in line with our expectations. This results in the full year figures as you can see here where mobile end user service revenue was up 6% as per guidance of mid single digit growth and EBITDA in line with the revised guidance driven by our early commercial launch in the Netherlands. The Board of Directors have also recommended an increase of 10% in the ordinary dividend in line with the dividend policy that the 3 year dividend policy that we launched this time last year. Looking into the development of Mobile Energy service revenue by market, you can see that Netherlands and Baltics are the key drivers in the quarter. And on EBITDA, Sweden is the main contributor, whilst you can see our investment continues in the Netherlands. CapEx up 19% on the quarter and 23% for the year with a focus on Kazakhstan in Netherlands for investment to roll out 4 gs and geographic expansion across all of our footprint. In terms of free cash flow, you can see the waterfall here and you can see the cash outflow in Q4. The one off items incurred are mainly the cash costs related to both Challenger program as we've previously communicated and Kazakhstan transaction costs now that that transaction has been announced. On our balance sheet, we maintain our medium term range of 1.5x to 2x net debt to EBITDA. However, our continued investment in the Netherlands will require us to move above this in the near term as we communicated last quarter, and we're obviously taking advantage of the very low interest rate environment to ensure that we have the most efficient debt portfolio to see us through this investment phase in the Netherlands. So let me quickly update you on Challenger. This slide shows our progress towards our 2018 goals across the 4 pillars of the program. From a simplification point of view, we started the program with 30% of products harmonized on shared platforms. We have started our journey toward doubling of that, but those impacts will come later in the timetable of the Challenger program. In discipline, we started the program with 40% of spend strategically sourced and procured, and we're now seeing the spend that we manage strategically up to 67% well underway towards our target of 80%. From a consolidation point of view, it will be consolidation of resources that will drive down IT OpEx as a share of revenue. We started the program at IT OpEx as a share of revenues at 3.5%. We've seen a slight improvement so far and now at 3.4%, I. E. 4% lower, but that will ramp up over the coming years. In terms of transformation, we had 12% of staff and shared operations at the start of the program. We aim to double that to 25% by the end. Our new organization that was launched in October have already taken us to 15% and that will ramp up during 2016. So what initiatives did we start in 2015? We started to work to harmonize our new product development. We started application rationalization in billing systems, particularly in Austria. We built a common global infrastructure for developing future business opportunities in the ICB and roaming area. We're driving return on marketing investment tools in Sweden and in Austria. We've started field force outsourcing in Austria again and transmission network optimization in Kazakhstan, And we have started the offshoring of back office customer operations to support Sweden. They are now in India. And back office finance work has been transferred from Finance Sweden and Netherlands to Riga in Latvia. And as we've previously announced, we have restructured our German operation to align to our strategy for that market going forward. So we're still very much on track for the road map that we set out in December 2014. So this takes me to guidance. Mobile Energy as a Service revenue will remain at mid single digit percent growth for the coming year. Net sales will be in the $26,000,000,000 to $27,000,000,000 range, and the big impact on the net sales line is the headwinds from foreign currency, particularly in the Kazakh 10 gig as we go into this year, and obviously continued declines in fixed. From a CapEx point of view, the guidance range is 3.7% to 4.1%. And from an EBITDA point of view, our guidance reflects our continued commitment to our business in the Netherlands and the acceleration of the investment required in this market. This investment will deliver long term value for our business, our employees and our shareholders, but we will invest in 2016 to reap the longer term benefits. So in summary, our priorities are very much in line with what we've previously articulated. 1st and foremost, in our core business, we will continue to maximize our dual brand strategy in Sweden. We will also continue to accelerate our investment in the Netherlands to establish ourselves as the preeminent GV in Kazakhstan and establish a platform for more sustainable top and bottom line growth in the future. We will monetize our investments in 4 gs and in our networks in the Baltics and Croatia and continue to execute on the Challenger program. And with my new leadership team in place, we remain absolutely focused on further data monetization across our business and delivering long term shareholder value from our total portfolio. That's a reminder of our way to win, and I would be very happy now to open to you for questions. Thank you, Alisson. That concludes our formal presentation regarding results for full year and Q4 2016. We will now be happy to take any questions you may have. So please, operator, let's start with the first question. Certainly. Thank you. We take our first question today from Stefan Gauffin of Nordea. Please go ahead. Yes, hello. Stefan Gauffin here. I have a few questions explain the EBITDA guidance, consensus ahead of the report was at 5.5 to €5,000,000 And I guess a large share of the deviation is coming from the Netherlands. And last quarter, you stated an EBITDA loss of €200,000,000 to €300,000,000 per quarter. Can you explain where you see this in 2016? Secondly, this quarter, adjusted for one offs, you had an EBITDA loss of EUR 240,000,000 in the Netherlands, and that yielded 3,000 net adds. And I guess that now the market is treating higher investments as higher cost. Can you explain why you see that increased investments will give a positive return to the shareholders? And also if you can give an indication on if you don't see better results, how long time you will continue to invest? Thirdly, how large share of the subscriber base in the Netherlands is low end SIM only subscribers affected by the increased competition? And then 4th, how much of the increased cost is variable related to subscriber intake? And how much is more fixed investments? Thank you. Okay. That was a lot of questions. We'll need to try and limit those in future otherwise nobody will get a chance to put a question in. Anyway, Stefan, let me take them from the top. So in terms of guidance, yes, as we communicated last quarter and I reiterated today, 2016 is a year of investment in the Netherlands Mobile. We expect to be above the high end of the range that we communicated last quarter with respect to investments, very much focused on incentivizing and acquiring Dutch customers. So they are variable in nature, and we will do that to ensure we gain the momentum required to deliver on our long term ambition. This is a big market with a huge potential for 4 gs, a 4 gs challenger brand to enter and we are investing for the long term. In addition to the investment in the Netherlands, you should expect Kazakhstan progress to be limited this year. We're seeing significant currency headwinds. And you might have seen that Altel took pricing down again in recent weeks and now our cost of a gig to a consumer is only $0.10 in that market. So the JV gives us a great platform for the future, but we need to be cautious about what we can expect from Kazakhstan in the near term. And then just another headwind that's coming this year, I don't know whether people have factored that in is obviously the impact of the new roaming legislation, which particularly impacts our bolting business. But putting those factors aside, we're expecting continued progress in Sweden and positive momentum from the commercialization of our 4 gs investments in Baltics and Croatia and Challenger program benefits will also start to kick in. In terms of how are we viewing the impact so far, These results reflect 6 weeks of the launch, only 6 weeks. And as you recall, we only launched in a small subset of the market during those 1st 6 weeks. We didn't launch an aggressive SIM only offer because we didn't want it going into 3 gs handsets. We didn't have the full range of premium handsets and we didn't have a bundled offer with fixed. Those elements are all planned to kick in, in this Q1. What surprised us in the quarter was the scale of the churn, particularly in 3 gs. We've seen a significant reaction from MVNOs, so from 2 sub brands MVNOs who have gone very aggressive on 3 gs SIM only deals. That's not a market we want to go after. And 80% of our churn were those low end 3 gs low profitability customers. So those that is not an indication and in any case, it's just too early to comment. But as I said, we start to ramp up in the full range of the propositions during the Q1. And I said most of the investment will very much be variable. So that's why we're going to be above the previous range that we communicated previously. What is the percent of subscriber base now on 3 gs? Is that I'm trying to read. Yes, that's fair. Is that fair? Okay. So I think it's about 40% of our subscriber base is still 3 gs. And I would expect that we might continue to see further churn there. But as I said, they are low profitability to us, and we're really focused on the 4 gs end of the market. And that's where we saw good progress. So even with a limited range of handsets at launch, we were getting 28% of the available switch in markets in December. And we've not yet got the full range of handsets, which will kick in, in the Q1. Okay. Stefan, you had also a 4th question and that is if, Allison, you could quantify how much incremental variable cost there will be due to I would say it's all variable. So it's all marketing investment basically. Okay. Thank you. Okay. Thank you, Stefan. What we did see in the quarter is positive trends in terms of how much on load is on our own network now. So certainly that is that's great progress for the future. Operator, next question please. Thank you. We move on to Peter Nielsen from Kepler Cheuvreux for our next question. Please go ahead. Thank you. I'll just take one question please related to Swedish mobile. It's now been a bit more than a year since you introduced the new quite fundamental changes to your Swedish mobile pricing in the 2:2 brand. With a 12 month hindsight, I'd like to ask how you assess it now. I mean, you obviously talked about the positive impact on churn and customer satisfaction. But on the other hand, it does seem from our side that most of your net adds in the core in this year has been or last year, sorry, have been within the Comvig brand. And we have seen a gradual decline in mobile service revenue growth. I mean how would you as I said with a full year hindsight how will you now assess the impact of the changes you made more than 12 months ago? Thank you. We are very happy with the development that we've had in Swedish consumer mobile in the past year. The dual brand strategy and that's the way you've got to look at this is we had to differentiate those 2 brands. They were both playing in the price fighting segment of the market and were at risk of therefore cannibalizing in each other. So we have differentiated them much clearer. Tele2 is about value and customer service and Comvique is about price fighting. And as a result of that, we have had good sustained postpaid growth throughout the year and again another quarter of 5% growth in the 4th quarter. With Comvit, you're right, it's performing better than Tele2. But what we have seen in Tele2 is decoupling, big buckets and the removal of subsidies has had a major impact on how customers view us. And therefore the value we generate from them because we have less churn in Tele2 now, we have more loyal customers in Tele2 now whose average ASPU has gone up over 10% in the last 15 months. What's dragging us down in the quarter is more in the B2B segment. Large enterprise continues to grow, but just as we saw in the Q3, it was another fairly aggressive quarter from a price competition point of view. And so we saw B2B overall decline by 3%. We chose not to participate on some of the aggressive deals that were out there because we didn't see them as value creative. So that was a disappointment in the quarter, but I am happy that our Geo brand strategy continues to work in Sweden. Operator, could we have the next question, please? Certainly. We move on to Sam Dhillon of Royal Bank of Canada. Please go ahead. Hi, guys. Two questions, if I may. And perhaps I'm asking a bit too much here. On the Netherlands, could you provide a mobile EBITDA loss guidance for 2016 like you had done for 2015? And quickly, since the quarter end, I assume you haven't seen any competitive change in the low end SIM only environment versus 4Q in December? And quickly, on Swedish B2B, you mentioned that there has been far more competitive intensity in the B2 and the SME segment. TDC yesterday announced a strategic review of its business in Sweden. Would that be an asset that's of interest to you? Thanks. Okay. On the final point, we don't comment on M and A. On the second comment, we've seen the same competitive pressure in January as we saw in December from low end SIM only and very aggressive 3 gs deals on legacy iPhone products. And then on the first question, as I said on our guidance, we are expecting to invest above the higher end of the range that we communicated in the Q3. Okay. Cheers, guys. Thank you. Operator, we can take the next question, please. Thank you. We move on to Nick Lyer of Societe Generali. Please go ahead. Yes, morning. It's Nick. It's SocGen. Can I ask 2, please? Firstly, in the Netherlands, this doesn't make you rethink at all any of your pricing strategies, do you? I mean, do you need to be a bit more aggressive in the with handset market, do you think, given the attrition at the bottom end of the market, really to make an impression? And secondly, it looks like CapEx has risen a bit versus consensus as well. It possibly, again, is the Netherlands and Sweden. But could you detail some of the changes or some of the raised CapEx items for next year as well, please? Yes, of course. So Nick, as I said earlier, these results reflect the 1st 6 weeks of launch. So we are very much on we're not changing anything, but we're learning every day what it takes to succeed in the Dutch market. We didn't launch with a full range of handsets. We will have the full range of handsets during this Q1. And now that we have seen some movement in the market, we will obviously take those into consideration when we launch the new handsets during this quarter. In terms of attrition at the bottom end, we don't want to go after calorie free 3 gs customers. They're just not profitable to us. So we're willing to take a bit of pain there, but we are looking at how we drive a SIM only offer into customers that have got 4 gs handsets, and that's something that we're thinking about switching on during the Q1 as well. In terms of CapEx, yes, I think it's continued rollout in the Netherlands. We are we really caught up on ourselves towards the end of 2015, and we'll probably it's probably just some slippage out of 2017 that will come into 2016 now if we keep up the progress, the great progress we've had on coverage and geographic coverage that we aim for the year, and we are aiming to be at 90% by the end of 2016. And at the moment, we're just factoring in that we might get there during the 4th of 2016, but sometimes that gets slowed down due to things outside of our control. But that is what's in the guidance. It covers us for all those further rollouts. That's great. Do you have a number on where you are in indoor coverage just now in the Dutch market? Yes, 72. 72. Yes. And our real focus now is getting that up and investing in densification. Thank you. Okay. We move on to the next question, operator, please. We'll take our next question from Andreas Jolson of DNB. Please go ahead. Yes. Good morning, Andreas Jolson at DNB. Again a question on the Netherlands. You have seen some of the sort of have a pragmatic view on the Netherlands. Can you explain a little bit more what that means? And if you are sort of extremely committed to the guidance that you give now for entire 2016 and give it another year? And then also on Sweden Mobile, end user revenues grew by a little bit less than 2% for 2015. How are you thinking to accelerate that going forward? Okay. In Netherlands, as I said, we've just launched. We are very determined to have an impact and build a great business over the long term there that returns significant value to our shareholders. So we're determined, but we're also And we are determined enough to invest above the previous levels that we spoke about in the Q3 because we are seeing great early traction to the brand. We're seeing great customer reaction to the quality of our network, and we're already getting just under 30% of the available switching market even without a disruptive SIM only deal, the full range of handsets and without a broadband offer. So I remain of the view that this is a long term investment and we're determined to be successful in a way that does return shareholder value, but we'll be determined to take market share. In terms of Sweden Mobile, you recall, we have really transformed that business over the last 5 years and built 2 real pillars of strength in both the Comvique and Tele2 brand. Comvique is continuing to grow very nicely, and we're very happy with the progress we're making there. Tele2 customer base has stabilized and churn is very low now. And so that is a good platform for the future. And in terms of B2B, there's been some headwinds in the quarter. Where do I see growth? I think there's still growth in trading up our customers. We still only have around 750,000 customers on the new pricing plans, we have over 3,000,000 customers. So there's definitely trade up opportunity. We've launched a new bring back offer to make us more competitive against those that subsidize handsets in the consumer has not yet really seen the full value of that. So we're working on the communication to improve that going forward, so that they can really see that they can get a decoupled large data bucket and the latest handset at a great price with Tele2 as well. And then B2B, we continue to get momentum in the large enterprise segment, and we're obviously looking at how do we stay competitive in the SME segment despite not being dragged into price wars that some of our competitors are pursuing at the moment. First question is, a few after that. So the first question is, Alison, can you quantify the roaming impact in 2016? Yes, it's around 100,000,000 and we'll build to 200,000,000 by 2017. I think we guided on that previously. Next question is And that particularly hits the Baltic market. Yes. So next question is how sustainable is EBITDA margin in Sweden is 35% sustainable. Well, we're not at 35% yet. So mobile margin was 31% for the year and continued low single digit momentum on the top line and challenge our program implications in our cost base will take us towards that 35% over the medium term. Thank you, Elsern. And third question is regarding brand awareness in the Dutch market, if that plateaued in December? No, it continued to grow based on that. Yes, well, I guess towards the end of the month when it becomes Christmas time, that's always a seasonal time where they are more aware of other things. So that I wouldn't that's probably just the timing of the different campaigns. So I wouldn't read into a week of December results. Okay. And then we take a 4th question and that is when do you think dividend will be covered? Well, as you know, we launched a 3 year progressive dividend policy this time year. We are in the 2nd year of that. And we announced that our Board of Directors are recommending to the AGM in May for another 10% dividend per share increase this year. Certainly, during this period of investment in the Netherlands, it is not covered. But and that's why we have taken our leverage up to cover that over the short term. And but we are still very much committed to the dividend policy that we launched last year. Thank you, Lesan. Okay, we take a few more questions. Operator, please can you give us the next question? Certainly. We move on to Roman Arbuzov from UBS for our next question. Please go ahead. Thank you very much for taking the question. I've got 3 short ones. So on the Netherlands, can you actually tell us how many customers you have lost on 3 gs and how many customers you've gained on 4 gs? Is that possible, please? Then secondly, on the CapEx, in terms of Netherlands, obviously, CapEx is remaining at elevated levels. So in terms of Netherlands CapEx specifically, if we aim for roughly same level year on year, would that be roughly correct? And also thirdly, just wanted to check-in terms of the Swedish end user mobile service revenue growth. Historically, you've talked about the 3% to 5% and then I think that you've just mentioned? Okay. So, that you've just mentioned? Okay. So Netherlands, I'm not going to give that level of detail to you on what we've lost and what we've gained, but 80% of our churn in the quarter was 3 gs, if that helps you. In terms of CapEx in Netherlands, in 2016, it's quite flat. What we have got going in this year obviously is the VULA CapEx investment as well. So mobile does come down a bit, but Vula offsets some of that, but it is quite flat. And as I said earlier, because we are ahead of where we expected to be in terms of the rollout, we're probably bringing in a bit of investment that we previously expected to have in 2017 into 16 as well. In terms of Swedish, Swedish, I always said over the medium term, we would have a group mid single digit mobile end user service revenue target. And Sweden would be low and the others would be and our investment markets would be mid to high. When I talk low for Sweden, I'm talking in the 2% to 3% range. Thank you very much. And this applies to 2016 as well or not the 0.02% to 0.06% as well? Yes. Okay. Thank you. Thank you, Roman. Operator, please, next question. We move on to Henrik Herbst of Credit Suisse. Please go ahead. Yes, thanks very much. I had a couple of questions. Firstly, on Swedish mobile. I was just wondering if you could give a little bit more kind of color on what's going on. I think you said last quarter the consumer ASPU on the Tel 2 brand was growing 5%. If you can give an update in terms of how that is evolving and how what that growth rate was in Q4? And then also in terms of your take up of different bundles, I think you've previously quarter said 30% approximately take more than 5 gigabytes, if that's 5 gigabyte bundle, if that's changed? And then secondly, I was just wondering in terms of your net debt, it seems like you've changed the definition a little bit. And if you can explain what's driving that? And then also if you have any restrictions on your current debt in terms of if you have any covenants on net debt to EBITDA leverage or anything else? Thanks very much. Okay. Thank you, Henrik. So the first question is on Swedish mobile. What is going on the consumer side? And do you have any comments on the consumer ASP levels quarter 4? Could you comment on that please? Okay. So Swedish mobile Consumer ASPU, Comvique is obviously we took Comvique down last December, so that has trended down over the year. Tele2 has been growing mid single digits, has flattened out in the quarter. Some of that is less top ups in the quarter. And some of that is the way we account for certain services have changed the accounting treatment has changed. So for example, when you used to buy an insurance, you recognized it all upfront and now we face it over the period of the contract. So underlying is still up, but certainly in absolute terms because of the change in definition, it's kind of flattened out in the quarter because of less top ups. But where are we versus our plan? When we launched big buckets and we decoupled, we're very much in line with plan. Net adds, did we change the definition? I'm looking at my team here and I'm not aware of any change in definition. Yes, maybe we could take that offline and somebody will get back to you later. Well, maybe Henrik, you're referring to the change are you referring to a specific country or because we did Not net adds, net debt. Oh, net debt. Oh, sorry. No change in net debt definition. I think it's just in a note in your but maybe we can take that offline then. Okay. Sorry, no change. And then in terms restrictions on our debt, no, our covenants are 3, 3.5. Okay. Thanks. Thanks. Thank you, Henrik. Operator, please, the next question. We move on to Keval Khiroya of Deutsche Bank. I've got two questions on the Netherlands, please. Firstly, can you tell us how much of your traffic is now on your own 4 gs network? And related to that, could you give us an update on where you see just the MVNO costs and also your fixed production costs for the Netherlands in 2016 versus the level in 2015? And then question, you've obviously highlighted that you're getting a very impressive share of the postpaid switches market in the Netherlands. How large is that market now given obviously the likes of KPN suggesting that the postpaid churn is falling very quickly given they are now converged? Okay. So in terms of onload in our network, we're getting above 40% now is on our network. And I think as we communicated last quarter, we expected total fixed production costs to be up around $100,000,000 year on year, yes? Yes. Yes. What we are seeing though is that our T Mobile costs have actually stabilized, and we didn't see that increase in the quarter because we're slightly ahead of plan in the percentage on load onto our own network. In terms of share of switchers and the scale that is of the market, so it excludes SIM only. So this was just a handset piece that I showed you. So it's only half of the market. And I'm not quite sure, does it include bundled products? We can maybe get back to you on that. We'll come back to you on that one. Okay. That's great. Thank you. Thank you, Keval. Operator, please, we take the next question. Thank you. We move on to Sunil Patel of Bank of America. Please go ahead. Yes. Good morning. Just two questions from me. I mean, when you talk about the Netherlands, I think you talked about sort of the aggressiveness in the 3 gs market. But when I look at 4 gs pricing, competitors are very competitive and especially T Mobile. Do you think your discount to reach a 20% market share by 2020 is enough? And is some of the investment going into maybe tweaking your pricing? And I think the second question I had is, you previously talked in the Netherlands about heading towards breakeven, I believe, in 2017, obviously not necessarily for the full year, but towards that, is that still your far considering that your loss is going to be bigger in 2016 than you previously communicated? So we're only 6 weeks into the launch at the moment, Sunil. So our medium term objectives still stand, but we're learning more every month. In terms of what is happening in terms of 4 gs pricing, yes, we have seen competition come down since we launched. They've not matched us, and in fact, some even went start to go back up again. So that has allowed us to reassess what investment we want to put in behind the full range of handsets when we have them and the bundled product when we're able to offer 100 megabits per second on fixed broadband. So yes, a lot of the incremental investment is to shore up our competitiveness when we launch the next phases of our products and proposition. Okay. Thank you, Allison. We go ahead and take the next question. Next question comes from Johanna Agqvist of SEB. Please go ahead. Thank you. Two questions, if I may. First, one relating to Sweden. And given the fact that you show both the churn is coming down, customer satisfaction coming up and the handset decline versus last year, shouldn't you expect margin to be better in Sweden? Or is it something else than the B2B side that is sort of mitigating in the other direction? And the second question relates to the dividend policy that you have. Do you see any risk for increasing losses in Holland or other aspects that you could think of that could trigger you to change your dividend policy? Thank you. So I think in terms of Sweden profitability, we were up 2 margin points in the quarter year on year. And the 4th quarter is always the heaviest investment quarter, and we got to 31 percent for the year. So I'm actually very happy with the progress that we made in Sweden margin over the course of 2015. B2B is more of top line issue in B2B rather than a bottom line issue at the moment. And B2B is that margins are generally lower in B2B than in consumer. But I'm happy with the margin progress in Sweden. Dividend policy, as we've communicated, we have a very strong cash generative business in Sweden and the Baltics, a 31% EBITDA margin and cash CapEx of just over 6% in Sweden, that business throws off a lot of cash that gives us confidence in our dividend policy. And the reason our leverage is going up in the during this investment phase is purely for the Netherlands. And we are able to take advantage of a low interest rate environment to be able to get the debt at very low interest rates to support that. So at this stage, we are still committed to our dividend policy. Thank you. Thank you, Janne. Okay. So we take a couple of more questions before we end this call. So please, operator, can you give us the next question? Certainly. We move on to Lena Osterberg from Carnegie. Please go ahead. Yes. Good morning. One more question on the roaming impact. I think you said it would be €100,000,000 for this year and 200,000,000 for 2017. Was that on sales or EBITDA? Lena, EBITDA, I can tell you that now. Okay. All right. Good. Then to return to the dividend and dividend cover question we had before, because you didn't really answer it. If I say 2018, do you expect to cover dividends by cash flow then? It's a very important question. Looking that far out, I would expect so, but it is a long way out, Lena. That's why I gave you a long way out so you could answer. Okay, thank you. We're not far out at the moment, yes. Thank you. Okay. We'll take the next question please. We move on to Maurice Patrick from Barclays. Please go ahead. Yes, thanks guys. It's Maurice here from Barclays. Two quick questions. First of all, in Sweden margins, thank you for your earlier answers. Just how much obviously strong EBITDA growth despite a lack in revenue growth. Was all the EBITDA growth due to lower churn, lower subsidies? Or is there anything else? It would be helpful. And then the second question just on the Netherlands, not to do as a death too much. But when you talk about higher variable costs, is that because you expect more net intake at the same cost you expected beforehand or higher cost per addition for the same number of customers? Thank you. Okay. Swedish margins? Yes, Swedish margins has a stronger EBITDA. Is that due to lower churn and lower subsidies only or is there any? It's lower churn, it's lower subsidies, it's better channel mix. And if you recall, in the Q4 last year, we had higher spend than normal because we were launching Tele2.0. And then Netherlands, the higher variable costs are mainly higher cost per addition. Very clear. Thank you. Thank you, Morris. Okay, we take the last question operator, please. Our last question today comes from James Brighton of Nomura. Please go ahead. Good morning. James from Nomura. I've got a question on the bring back policy in the home market. So was this needed to keep the Tele2 brand competitive in what's still a pretty subsidized market certainly from your rivals? And were these cash back payments expensed in the quarter? Or should we expect a move on working capital to reflect the payments? Okay. Thank you, James. So the question is about bring back if that was necessary to stay competitive for Tele2 and also the question if that was expensed in the So the first question was that, well, we're always looking at how we offer the best value to our customers. And we previously saw moves. You've seen Apple move themselves to offering a similar subscription based thing in America. So just looking around the world, we saw this as an opportunity to enhance the value proposition in the Swedish market of the Tele2 brand. In terms of the cash back payments, the way this works is we've been doing bring back for a number of years now in Sweden and that has been very successful to us. And we've built up a relationship with a third party who basically guarantees the value of the phones that we get back from our customers. And it's that same contract that is allowing the bring back campaign. So that in itself doesn't have an impact on working capital. It does have an impact. Sorry, my finance team are sitting here saying it does. Yes. So it doesn't affect P and L, but it affects a slight change in working capital due to that we are holding the receivable throughout the period of time that they choose to keep the phone before they hand it back. And we hold the receivable until we get the phone back and then release it towards the 3rd party. Thank you, Louise. Great. That was very clear. Thank you. Thank you very much. Okay. So that concludes our formal presentation regarding the results for the full year and Q4 2015. The call as such and we will release our results for the Q1 2016 on April 21. And thank you all for participating in today's press and analyst call. Thank you very much. Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now