Earnings Call: Q2 2015

Jul 21, 2015

Good morning, everyone, and welcome to Tele2's Second Quarter Conference Call. Speaking is Luis Cheddar, and with me, I have our President and CEO, Mats Granul and CFO, Alison Kirkby. We're also sending the presentation live over our web page, tele2.com. So welcome to everyone that has joined via the web. After the formal presentation, there will be, of course, a chance to ask questions either over the phone and, of course, via the web. And by that said, I will hand over to Diomath. Thank you very much, please, and good morning, everyone, from Aesani, Stockholm. I will start with the first slide or Slide number 2 actually with the highlights from the quarter. We have a positive net intake across the group of just above 500,000 new customers joining us, 540,000. On the focused technology choices, we are now at 80% population coverage in Netherlands and growing roughly 50% indoor coverage, so well on the track there. Step change productivity, the Challenger program is now delivering results, and Anderson will go through that in somewhat greater detail later on. And in the Winning and People culture category, we are happy to announce that we scored in the 91st percent overall in the FTSE For Good Index. So that is the highlights from the quarter. If we then go in on the more specifics, the monetization data continues. End user service revenue for the group is up 7%. Mobile EBITDA is up 2% and a whopping 55% up on average data usage per mobile subscriber. So for sure, the trend of ever increasing consumption data is continuing. And we just take a look at the history of our end user service revenue. As you can see, it has been a 6%, 7%, 8 percentage points quarter over quarter and this quarter, 7.4%, a CAGR of 7.5%. So this is something that we track and we feel is an important factor. End user service revenue is, of course, a combination of 2 things. 1 is our spoons and the second is the subscriber growth. So it's important to focus on that. Moving in then to market year on year development. Starting over in the East in Kazakhstan, we have a 65% end user service revenue growth. The Baltics are doing very nicely between 6%, 8% and 4% in Lithuania. Croatia is up with 7%. And we see that continuing Q2, Q3 is, of course, the strong quarters in Croatia being a summer destination for many. Austria is flat to slightly down, but that is total sales, predominantly fixed. Netherlands up 8%, Germany 6% and Sweden then is 1%. And I will continue to discuss more on Sweden on the next slide because I know that is something that everyone is eager to hear more about. If you take the right hand graph there, the bar graph, as you can see, we have a 70% data growth in our own networks, almost 50% growth in Sweden as an example. So for sure, our networks are becoming more, more filled up with data, and that is something that we welcome, something that is very good. So moving on to Sweden. You can see we have a sales that is flat. We have an EBITK that is up 3%, with 52 1,000 new customers, and this is something we feel happy with. You can see the trend from Q4, Q1 and now Q2. The good thing with the net intake is that we are actually, in all disciplines, positive intake. So postpaid is positive, prepaid is positive, business to business and mobile broadband is also positive. And those add up €52,000 And this is really important. And we believe that this is a tribute to the value champion strategy. Leading indicators in the value of champion strategy is, of course, that we do want to come closer to our customers. So net promoter score, I. E, customers that are already Tele2 customers, are they promoting the service? That is now taking a hike upwards. Consideration is as strong as the biggest brand now in Sweden. That means that everyone else, are they considering to go to Tele2? That is a fact right now. So that is activities that we believe is really important going forward. Value Champion is all about changing the industry in Sweden to become continuously in a benign environment, but continue to become more customer friendly. And we believe these early indicators are an example of that, and it's testimony in the 52,000 net income statement. Moving forward. The mobile end user service revenue, if you look, as I said, is 1% in Sweden. If we divide that down of the postpaid segment, it is 6% up. The prepaid business to business and mobile broadband is either flat or slightly down, giving an average of 1%. But postpaid, and that is the segment that we're focusing most on, is up 6%. And that is something that we also think is a strong indicator. On the business side, we had a strong quarter, and it was primarily driven by the large enterprise segment where we were awarded some really big and important contracts. 1 is Jotavoice installed, which is a prestigious area to do business with. So by and large, we are okay with the Swedish progress, and I would say that we're very confident in the value champion strategy going forward of not only big buckets, but also the consideration and net promoter score is going in the right direction. Moving on then to the Baltic States, up 7% on sales, EBITDA up 3% and a customer intake of €10,000 in the quarter. Population coverage on LT is now roughly 80% in Lithuania. And by year end, we will have a 90% coverage in all the Baltic states on LTE coverage. So this means that we are well positioned for Value Champion launch in the Baltic states sometime in the future as well. Moving on to Netherlands. Sales up 5%. EBITDA is taking a tumble downwards 45%, very much in line with what we have said previously. I think I've said that it's going to get worse before it gets better, and this is certainly one of those quarters. Out of the SEK120 1,000,000 in deficit on EBITDA, roughly twothree comes from fixed and onethree comes from a continued focus on mobile. So the twothree in fixed is, of course, an issue for us. And we have been taking somewhat by surprise over the rapid decline of our fixed business. Now we have worked hard on a deal called the Pula, virtual abundant local access, and that is reselling KPN's fixed network across the Netherlands. And as you can see on the graph to the right there, we have not a great coverage, and more importantly, but but we will be able to offer as good of a coverage and speed as KPN in Netherlands. And this will be a mitigating factor and be a factor of us using that network to upsell and cross sell into our mobile business as well. So this is something that we're very proud of and we believe is going to give the fixed business a revigorating life going forward. And as I said, the network is now at 80% population coverage, and we have done the first vorte test That is completed successfully. And we are, as we speak, transfer our 4 gs customers over to our own network, I. E, putting them on our CRM and billing system. We also see a data offloading on our own network on small numbers, but it at least is going in the right direction. It's always encouraging to see that the thought process is actually going in practical terms as well. Moving then on to CapEx bonds. The grid sales of 54% up. EBITDA is up with 200%, but that's from very low levels. And maybe more importantly is that we see a net intake of close to 500,000, 470,000 net intakes. Equally important is that these customers are paying customers. They are not ones that we had before, just warm bodies coming in and then leaving us. These are customers that stay with us and actually use our service. And you can see that we have a voice traffic of 124% up and data 100 and 95% up year over year. Previously, we have been regarded as the data provider and not much of voice. As you can see, with 124% up on voice, we are now becoming more of an established player in a way. We're a more credible operator in Kazakhstan. That is something that we are happy and proud of. And the network rollout is on track, and we'll continue to build out geography as well as capacity coverage. We have a coverage of roughly 85% today, and we're going to continue to build that out. So with those words, I would like to hand over to Alison. Alison? Thanks, Matt, and good morning, everyone. So in terms of the financial headlines, total sales were up 4% to CHF 6,610,000,000 mainly driven by strength in mobile end user service revenue, and user service revenue, which was up 7% to CHF3.32 billion with all regions contributing to the growth. EBITDA was down 5% to CHF1.39 billion, driven by continued declines as we expected in the Netherlands. And CapEx was up by a third compared to last year to £1,130,000,000 driven by geographic expansion and LTA investments in almost all markets. In terms of mobile engine and service revenue, all markets are contributing to the growth. But as you saw earlier, growth in Kazakhstan was the real highlight of the quarter from a revenue perspective. Excluding FX gains, mobile end user service revenue was up 4.5% and still back in line with our guidance for the year. In EBITDA, all regions showed a growth in EBITDA except the Netherlands. The decline in EBITDA, as Matt said, is mainly due to the decline in fixed revenues. But recall, we did have a positive impact from the KPN settlement in Q2 last year. So about half of the fixed decline was a one off in our base year. And obviously, a third of that $120,000,000 is still cost that we're incurring in advance of our full MNO rollout. In terms of CapEx, we are investing for the future. CapEx grew by onethree, and you saw investment across almost all markets. Continued investment in the Netherlands for the MNO rollout, geographic coverage in Sweden and Kazakhstan and, of course, our network swap in Croatia. So as we'd expect, moving on to free cash flow, lower EBITDA and higher CapEx investments are having an impact on our free cash flow in the quarter as we expected. Additionally, working capital was a net outflow of £251,000,000 in the quarter compared to same period last year, mainly due to encouraging handsets across the group and Sweden as a result of timing of payment runs and from impact of the Tele2.0 launch. With respect to our first half twenty fifteen working capital compared to first half 2014 is significantly lower at the £52,000,000 cash outflow. So a bit of timing effect of payments going on in there. That takes us to our debt position, which is just over the CHF 10,000,000,000 mark at the end of June, placing us right in the middle of our new leverage target of 1.5 to 2. So before I hand over to Matt and as promised, I'd like to give you an update on the safety of our Challenger program. The program has now been up and running for 6 months with a therapeutic kickoff live initiative, and we are very happy with the progress with the progress that we are making so far. As a reminder, our overall objective is to generate productivity improvement of set €1,000,000,000 per amp by 2018. And we'll deliver those benefits via 4 key metrics that underpin the productivity improvements that we aim to make. 1st, we will simplify by doubling the amount of harmonized products to around 60% of all products managed from 1 common shared platform. 2nd, we will enforce discipline, particularly in our procurement area, by doubling the amount of spend that we strategically source and procure to around 80% of the total that we procure. 3rd, we will continue to consolidate our IT and network operations with an objective to reduce IT OpEx by 20 percent as a shade of revenue, taking it down to around 2.5% of revenue. And finally, we will transform our back office and non core activities to leverage scale and scale by doubling the amount of staff we have in shared operations. So how will each of these contribute to the €1,000,000,000 5% to 10% of it will come from simplification 40% to 50% of it will come from discipline, 30% to 40% of it will come from consolidation and 10% to 15% of it will come from transformation. So what progress are we making so far? The simplification area is the one that takes a bit longer, but we are making very good progress. We've already identified 8,000 300 billable products with only around 20% of those products accounting for 95% of our revenue. So we plan to close at least 20% of our current products. Obviously, the lowest revenue generating product to reduce product complexity and increase profitability across all our markets. Product harmonization will run alongside simplification, and that is focusing first on our mobile products. We've so far identified 4,000 products that are in scope for harmonization, and harmonization will realize benefits in IT by a reduction in the number of applications we have in network by standardized platforms in customer service by improved quality and efficiency and our core organization by getting synergies through less complexity fluidlining of organization scattered around the group. In terms of discipline, this area is already ramping up, and we expect to see benefits in the second half. We're seeing benefits accruing in how we monetize app to Pearson SMS, taking advantage of the central team that is already focused on roaming here in Sweden. We've now built that team to take advantage of this growing opportunity for us. In addition, we are proving improving our customer analytics. And by better targeting of our marketing investments and online targeting, we will be seeing benefits from those, hopefully, towards the end of the year. In the area of consolidation, we have started to relocate knob rooms to our shared service center operations in Riga. And we've also installed a new group wide purchasing platform that has already been launched in our Latvian operations and will be rolled out throughout the group in the coming months. And finally, in the transformation area, things have already started to happen there, particularly in the back office operations. A finance shared service center will be established in Riga in Q3 and TAS will start transferring from Sweden to Riga and India in the second half. We've also announced our intention to move non customer facing back office TAS to a partner in India from Sweden also in the second half. And in line with our mobile operating on our own network, we have made the decision to restructure our German operations with some redundancies already announced in June. So where do I take it? Well, we remain confident in our ability to deliver the SEK1 billion annualized productivity improvement by 2018 as a result of a SEK1 billion investment over the next 3 years. We expect each market will improve its productivity by at least 5% with high complications, Sweden, Netherlands, Austria and Germany, obviously contributing slightly more. Benefits will accrue predominantly in OpEx, but also in revenue. So of that €1,000,000,000 you can assume 90% will be in lower OpEx and 10% will be in higher revenue. We also expect CapEx and working capital benefits to accrue, but that will come on top of the building. And in terms of the investments to get there, the investments will be skewed 67% to OpEx and 33% to CapEx, although in this year, it's predominantly OpEx investment that we're making and it'll be more like a 90% to 10% split. So that's the Challenger program. I hope you see now the momentum is building. We are confident in our €1,000,000,000 benefit that we will accrue by 2018. We have more than 30 initiatives that are already in progress and kicked off through December, and we will continue to update you accordingly on our progress. Thank you, Alison. Once again, the summary of Q2, only one slide. The priority going forward is to for us to continue to focus on the monetization of data and getting ready for the 4 gs launch in the Netherlands and in the Baltics and also, as Alison continue to execute on the Challenger program. So with those words, I would like to hand over to Louise for any Q and please. Okay, perfect. We have the first question coming in from Mr. Peter Nielsen from Kepler Cheuvreux. Please go ahead. Thank you very much. A couple of questions please. Firstly, Mads, if I may return to the Swedish mobile revenue growth. I guess, yes, you said we'd all be interested in a of elaboration on why the end user service revenue growth has slowed so sharply in this quarter and whether you're happy with this and expect this to continue. Is what you're telling us basically that what you have gained on the postpaid subscribers you have lost on the prepaid? And perhaps if you could elaborate a bit that will be useful. And also secondly, you talk about continuation of growth in customer intake in DOS Mobile, but obviously the intake has slowed down significantly in this quarter. Again, considering your process there, 4 gs launch, etcetera, are you happy with this? And do you see any near term changes? And finally, just a very quick question, the Wula agreement with KPN, does that involve any upfront investments, any shared investments on your part? Yes. Peter Kuert, thanks for your questions. So the first question on Sweden mobile growth, if we could elaborate on that one and how we expect that to continue. And that will be Matt taking that question. And 2, continuation, of course, of the growth in customer in Netherlands. And then the third one on the Wuhla agreement for you, Allison. All right. Hi, Peter. Good questions. Yes. If we start with Metzelent, 7,000, honestly, I think we would have hoped to have a slightly higher customer intake than the previous quarter being around the 20,000 or so mark. It's, of course, a pacing exercise not to continue the bleeding, as you can see, that we're doing. But I would have hoped to see a little bit higher growth there. On Sweden, yes, 1%. And as I said, on the postpaid segment, we have a 6% growth. And if you dissect that further down, you can see that the lower segment, I. Conveig, is growing faster. And hence, you have a task that is 15%, 20% lower Combi postpaid than on the Tele2 brand. So that's why you see a combined the combination is only 1% growth. So the trick here is to continue with the Value Champion launch, continue to position ourselves as the operator that has the closest relationship to the customer. So we continue to see net promoter score and consideration going up and also making sure that we have a positive customer intake. Remember, Value Champion and our ambition to change the market in Sweden is not done in a quarter. It's going to take, of course, many quarters. And we been blessed with the 1st couple of quarters now with a very strong underlying service revenue growth. Going forward, I think it's going to be somewhat moderated. We see the continued trend as we have seen this quarter in Sweden that it is the lower segment that is growing faster. But again, remember, this is not a quarter over quarter exercise. This is a long term strategy that we are embarking. So Voula, maybe Anderson? Yes. Voula, yes. There are some upfront investments required of around €7,000,000 and that is in our CapEx guidance for this year. Okay. Thank you. Next question, operator. And we have our next question coming in from Mr. Stefan Gauffin from Nordea. Please go ahead. Yes. A couple of questions. Continue to elaborate a little bit on the end user service revenue growth in Sweden. You have earlier provided how much data top ups added or contributed with? And that would be helpful. Then a detailed question. The interconnect revenue is up 13% year over year. Just wondering what is driving that? And then a little bit on the Netherlands. There is an improvement in EBITDA quarter on quarter. And given the slowdown in subscriber intake, how much of the delta quarter on quarter is driven by lower SAC and how much is due to lower network cost after migrating customers onto your network? Thank you. Yes. So number 1, further elaboration on the mobile and digital service revenue in Sweden and a little bit more detail on the top ups developments. Matt will take that 1. Number 2, the interconnect levels year on year will be explained by Alison? And the third question on the NN EBITA improvement Q on Q or of improvement, sorry for that, and more detailed breakdown on the and network cost, etcetera, for Alfa. So if I start then with again elaborating on Sweden, I understand that this is a whole topic, obviously. But you must remember that value champion for us is a strategic change. We see again Net Promoter Score going up, consideration going up quite sharply. And this is something that is we feel is the right thing going forward. People are considering and promoting us as an operator. And therefore, we see churn going down in the quarter, and we also then see net intake going up. That is the proof point, we would say, of Agni Champion. Then we will have end user service revenue comparing to last quarter's going up and down a little bit. Again, postpaid up 6% and the other disciplines, the other product flat or slightly down. In Q3, Q4, remember, we're coming up against really very strong comps in those two quarters. So that's why I'm saying that it's I don't think that we're going to see a massive growth in Sweden on end user service revenue. Also remember, we are taking now this to the next level. I do believe that Q2 is the highest Q2 ever when it comes to end user service revenue in modern times. Yes, the comps are very tough, and that's why you might not see such a huge growth, but the level we're playing on now is on a different level than what we have played before. Top ups in Sweden is also up year on year. I think it's around SEK28 1,000,000 and that is up 20%. 7% up. 7% up Q2 over Q2. So it is holding up nicely. Alastair, do you want to pull it off the interconnect? Okay. So the interconnect, yes, it's not strong. It's mainly with And in terms of the Netherlands question, could you repeat that again for me, Stefan? Yes. Looking on the mobile side, the EBITDA loss is lower this quarter. And just try to understand what is driving the development. How much lower is subscriber acquisition cost this quarter? And how much is driven by moving 4 gs subscribers onto your own network? The vast majority of it is lower subscriber acquisition costs. And we're very much focused on retention and transition of existing customers at the moment rather than bringing in massive amounts of new customers, which we're waiting for later in the year. And then there is small amount of strong data loading as well. But the material amount is mainly lower to the type of averages. And I think that's the tip. And I come back to the earlier question from Peter on growth in Netherlands where I said that 7,000 we would have hoped to have some more. But it is the balancing act of making sure that we contain some of the money, not spending it continuously on getting more customers in before we have our own efforts. Could I add a question on the Vula agreement just to understand the impact of that. What kind of impact will that have on the margins? If you would have your customer base on the fixed broadband migrated to that the VULA agreement? I understand that you want to retain them on your own on the current platform, but Yes. So our priority is to retain customers on our own net first. But if they are at risk of churning or if we are failing to attract new customers, we will then offer them moving on to the Zula offer. So they obviously, the margins of those customers will be lower than our on net customers, but they will be better than our off net customers today because the margins will be better as a result of the Zuladio. And we'll be selling some products at higher speeds. So we'll be moving up to higher ARPU, ARPU levels in that area as well. Okay. Thank you. Thank you. Next question please. And our next question is coming in from Mr. Nick Lyall from SocGen. Please go ahead. Morning. This is Nick from SocGen. Can I ask you a couple please? Firstly on Swedish mobile costs, it seemed as if the costs were up a bit underlying this quarter. Is there anything going on either in one offs? Or would it be possible as well to tell us what the Tele2.0 impact is or benefit is this quarter, so I can get to sort of back to an underlying number? And then secondly, on the Dutch business again, what percentage of subs now are on the net? I think you said 35% of subs were 4 gs and could be moved across. Would it be possible to give us a sort of percent of subs over there? And how much more CapEx should we expect from the network as well? I think you spent just over €200,000,000 now versus the original €170,000,000 target. So is there a lot more to do? Or is this CapEx being used for something else? Okay. Thanks, Nick. The first question on Swedish mobile and if there are any cost up, what's the underlying if there's any one offs? That's Alison. And number 2, on the Dutch business, percentage of subscribers, that is math. And then the third one, how much more CapEx we will spend, that is Alison. Okay. So good morning, Nick. In terms of Swedish mobile, basically, the uplift you're seeing in the quarter is very much driven by the lower expansion costs that we communicated last quarter. So lower subsidies, we're also hitting lower commissions as well as we're doing a better job of channeling. The underlying revenue uplift is, however, being offset by increased production costs in the quarter. As a result of us increasing our geographic coverage of our network. We are seeing a slight increase in our network costs this quarter and we see that going forward as well. I think the big difference in the bottom line improvement this quarter is the fact that it's only a 1% end user service revenue rather than a 5% that we've seen in previous quarters. This cost structure and the benefits we're getting from more subsidy is still flowing through to the bottom line. I think mobile EBITDA was up 8% and mobile margin was up 2.2% versus the same quarter last year. So still a good solid progress in profitability. Yes. And on the Dutch situation then, 800,000 mobile customers, of which 45% or so and growing are 4 gs enabled have 4 gs enabled handsets. And we have migrated roughly 20% onto our own building and CRM system. And that is something that will be completed during early second half of this year to have all the 4 gs enabled customers that we have on our own CRM and billing system. And as said also, we are now seeing money not spend on T Mobile, but actually on our own network, and that is encouraging. That will also continue to grow from very low levels today, but will, of course, continue to grow in the future. CapEx? And then on CapEx in Netherlands. In terms of the original guidance we gave, the €350,000,000 that was related to the license and the radio network on its own. And we are about 80% of the way through the spend of that. So we're around the €275,000,000 mark of the €350,000,000 On top of that, there's obviously the cost of these other elements from launching a network. So the site, the IT systems, the BOPP pieces, which add up to another 100,000,000 just over 100,000,000 to 150,000,000 euros And we're probably about a third to 40% of the way through that investment. That's great. Thanks. And just sorry, on the Tilly 2.0 number, is there a number of for the saving you could give us this quarter roughly? In line with last quarter. And was that about 80 ish? That's correct. It was 25% of the 100 and sorry, it was 50% of the Operator, could we have the next question, please? The next question is coming in from Ms. Lina Osterberg from Carnegie. Please go ahead. Yes. Good afternoon or good morning. I was going to ask you on the cost cutting program. Just to understand it a little bit more in detail, you said that it's a net program and that you're half way through this year's savings of €50,000,000 you said now. So I'm just trying to understand how we should look at this because if we look at the OpEx base so far this year, it's up 600,000,000 in the first half versus the other half. So could you maybe say something a little bit about the addressable costs, the not addressable costs? How much are the not addressable costs growing? Do you include expansion OpEx in this? Or should we actually say that in 2018, your OpEx base on flat revenues will be SEK 1,000,000,000 lower than in 2014? Just to help us model this. Yes. Okay. And then also, I understand that you're nearing a launch in the Netherlands, but you have so far not said anything about how much that launch will cost. Could you please give us some more details on how much we should factor in for that? Okay. So the first question, again, could you just elaborate on your interpretation? You said something about half way through that? No, no. I mean, you've targeted for this year, I think, CHF 100,000,000 of savings, right? Well, we never gave a number. But if you try to work out on the chart, it is less than $100,000,000 and that will mainly come in the second half Lena. It will be in the first half. The first half will be more about planning. So that's that. That. It's very hard to hear you, Al. It's difficult when you're speaking, so it's very hard to hear. Okay. Sorry. Yes, we said roughly £100,000,000 this year, and that will build up during the year, but mainly in the second half of the year in Q3 and Q4 are where those benefits will come through. In terms of how do you view that $1,000,000,000 benefit between now and 2018, we're basically aiming to get $1,000,000,000 $900,000,000 will come from lower OpEx relative to our 2014 cost base and £100,000,000 will come from higher revenue. As I explained earlier, it's 90% OpEx based and 10% revenue based. Okay. But say then for just to understand for comparison reasons, you have an OpEx base in 2014. Assuming you then have flat revenues, your OpEx base in 2018 should be $1,000,000,000 lower net? Yes, exactly. And then all the revenue growth on top comes with additional OpEx? Yes. So how we are modeling it is we have our own 5 year plan. And there was a 5 year plan before the Challenger program that starts in 2014 and went all the way through to 2018. That $1,000,000,000 comes out of that new plan, that base plan. So it's a real $1,000,000,000 benefit to the bottom line relative if we had not done the Challenger program. Okay. But then also to understand for this year, your OpEx base is up, I think, SEK640,000,000 so far in the first half of the year. Do you still expect the OpEx to be down net this year? No. The CHF 100,000,000 benefit is offset to what the underlying growth was going to be anyway. So the €100,000,000,000 benefit was always within our GBP 5,800,000,000 to GBP 6,000,000,000 guidance range. And we already knew that we had an underlying increase in cost base because of expansion and that €100,000,000 is coming out of that higher cost base. So year on year, our cost base will still go up because of our expansion, particularly in Netherlands and Kazakhstan. Okay. And also one final question then on ARPU sorry, on data per user in Sweden. If you could say how much the average data usage is up versus the last quarter? Yes. Hi, Helene. Aman here. Thank you. Significantly, we are now on an average of 2 point 9 gigabytes. So 2.2 in the Q1, 4th quarter was 2.0 and now we're up to 2.9 gigabytes. So that's a hefty update. And I think you had one last question on the Netherlands launch, Lena. We obviously don't announce the launch date yet, and so I can't give you any guidance on launch cost either. But it's not included in this full year guidance? We haven't done the launch yet. We'll have to come back to you on that, Lena. Thank you. Okay. Thank you, Lena. Operator, do we have some more questions? Yes. We have another question coming in from Mr. Henrik Herbst from Credit Suisse. Please go ahead. Yes. Thanks very much. So I have just going back to Swedish mobile. I was wondering what you're seeing in terms of migration of customers on your new Tele2.0 plans? Are we seeing a lot of customers from 3 gig going to 5 gig, for example? So a little bit on kind of the trends there. And then also now you've had the Tel 2.0 strategy in place for almost 2 quarters. Is there anything in there that surprised you also with your doubling of data on the Comvik brands? And then secondly on Swedish EBITDA, I guess some of the impact is low subsidies. But can you also give any color on what's going on with working capital in the Swedish business and maybe versus what was happening a year ago, if possible? Thanks very much. Yes. So the first question on Swedish mobile and the migration of our customers to the bigger buckets, that is for the math and then the Swedish EBITDA development and specifically working capital that is for Allison. Good. So I think, Todt, and I will try to answer a little bit or elaborate a little bit more on Tele2.0 also. On the mobile side, it's still too early to see how customers are migrating back and forth. The big bucket launch, we did that in February, so we are only a quarter and a half or so into it. What we can see is that the average again, it's fairly boring because it has been the same all across that we tend to use roughly half the amount of data that the bucket size is. So 50% of the 5 gigabyte bucket is being consumed and roughly 40% of the 20 gigabyte bucket is being consumed. We also know that roughly 30% of our new customers are opting for bucket sizes bigger than 5 gigabytes. Half a gig bucket size. On the Tele2.0, I think we are experiencing pretty much what we anticipated. And again, then I would like to highlight the fact that Net Promoter Score and consideration is taking a sharp turn upwards. And that is unheard of if you go back in time. We have always been struggling. We've always been very strong on the perceived price leadership, but not so strong on the consideration at the Motor Score. Now that is changing dramatically with Tele2.0. And that's exactly what we wanted it to do. So we are becoming more of a value player, not only a price fighter, but a value player as well. So I think it's the strategy is paying off. We are seeing that consumers are choosing us for the right reason. And the reason is a fantastic network, freedom to choose and freedom to return if they're not happy with our service and not being locked in for 24 months. And I think we just need to be patient and continue this journey. We are changing the industry in Sweden, and that needs to take some time. And we can also see that data is being consumed at a larger pace than what was there before. And our large bucket initiative is a way to respond to that craving for more data, 2.2 in the first quarter now up to 2.9 gigabytes, and that's a hefty uptake. And I wouldn't be surprised if we continue to see an uptake of 20% or 15% percent quarter over quarter or so. So it's going to be a great run. And we need to position ourselves to continue to be able to monetize the data. Over to you, Allison. Yes. Hi, Henrik. So Swedish EBITDA, as I explained, mobile is up 8%, very much driven by continued lower expansion costs and the higher revenue is being offset by increased network costs as a result of our geographic expansion. At total level, we're up 3%, and that's because we have continued declines in our fixed telephony business. And we also had a small one off last year, the footnote case I think is referenced in the note to our account. Regarding working capital trends, the Tele2.0 launch had 2 impacts, but just timing impacts on working capital. Basically, we moved to billing in arrears instead of previously billing in advance, so that we would become in line with our competition and our peers. So that's one a result of decoupling our handset from the monthly subscription. We now have to pay the VAT on the handset upfront rather than paying it over the course of the contract, which has always been a bit of a delicate thing for the tax authorities anyway. So we now just pay the VAT right upfront on the handset. Okay. And then just if I can follow-up, Mats, on Swedish mobile and net promoter scores. You're saying that churn is coming down. Can you give any numbers on churn, what churn trends are in Swedish mobile, please? No, I don't think that we give that up. But it's very much in a positive trend. Sorry for that. Okay. Operator, do we have another question? Yes, indeed we have. And this question is coming in from Ms. Johanna Alquist from SEB. Please go ahead. Thank you. Yes, two questions from my side. First of all, if I you can have the post and pre paid split in Swedish mobile, you report a net intake of 52. And then if you can say something in Sweden again and again on why you saw Comvik was so significantly better in terms of intake and if that was a surprise to you? And if the reason is a migration from Tele2 to COMVIC or what is the reason behind this? And secondly or thirdly, perhaps, Kazakhstan, if you can say something what you're expecting in terms of the EBITDA contribution ahead given the fact that we've seen Telia reporting stating that competition has intensified and if that is your experience as well? Thank you. Okay. The first question, the postpaid and prepaid splits in mobile of the customer intake of 52,000 dollars that will Matt will take that one. And then also elaborate on why PhoneWake have a bit of a stronger customer intake and if there's any migration issue there between TEM2 and Comvik postpaid. And the 3rd, that is also that is Elatem, sorry. And then CapEx done, our view on the development EBITDA development is also Elephant. Yes. Then I can comment maybe to Bill on Kazakhstan. Okay. So the 4th paid prepaid, Ayanna, I think you can say that twothree of the intake comes from postpaid and onethree from prepaid. So out of if you combine postpaid and prepaid, under 35,000 or so, 20 plus 1,000 comes from postpaid and $14,000 or so comes from prepaid. We do not think that there is a little fact of COVID then why they have such a storm on the lower asset segment, why that is the case. We do not think that there is a huge cannibalization from Tele2 postpaid to Combi postpaid, but rather a migration from prepaid into postpaid. And this is something that we encourage. We do want to have a longer time relationship with our customers, not only a prepaid relationship, but also have a longer term billing relationship. So that is something that we will Just two seconds. And on Kazakhstan, I think we concur with what I heard you said at that the market in Kazakhstan is now becoming fairly bloody. Previously, we had a price war between us and OTEL, OTEL being the mobile norm of Kazakhtelecom. And both of us are very clearly the price factors. And as you can see in our numbers, we've had a very strong customer intake. And I will be and we have been anticipating a reaction from both K Cell and B Line. And as now the case, they are also joining in on the price fighting activity in Kazakhstan. So this will subside after a while, but it's going to be most likely during 2015, a continuous fairly bloody market. Now we are fairly well positioned. We are in a very cost conscious setup in Kazakhstan, but still it's not going to be a brilliant market. So we're coming from a very different base from Telia from a profitability point of view anyway. And so at today's pricing level and market share levels, we can start to generate positive momentum in EBITDA. And with the MTR cuts due in 2016, that will make that EBITDA contribution even more. But obviously, it's very dependent on what happens in the marketplace and whether if pricing was to come down further, then obviously that would be a challenge. But we are we've not got much to lose when you're generating such a small amount of EBITDA. And I mean with experience from other markets, these price wars take on and go. And after a while, now everyone realizes that it's really not that fun anymore, and then everyone stops. But it's important to note what you said, Alisson, that the termination rates will go down from the 8 10 gig as we have today down to 5 10 gig in 2016. And that's going to have a positive impact obviously on our EBITDA. Okay. Do we have another question before we go into the questions asked on the VAP? So we have question. Operator, please. Yes. And the final question is coming from Mr. Sandelin from RBC. Sorry to press the point on Swedish end user service revenue growth. Perhaps you could give us the prepaid postpaid revenue split or even a high level guide so as to make it easier for us to forecast what prepaid revenues are doing versus the postpaid growth of 6% you mentioned. And there was a question earlier on top up revenues. I think they were SEK 27,000,000 second 2Q 'fourteen and SEK 38,000,000 in the prior quarter. It would be great to get that figure for 2Q 'fifteen as well. Okay. Thanks, San. Both questions, both Swedish mobile user service revenue development for Allison and also the second question on the top up development. Yes, for Allison. So postpaid revenues in Sweden were up 6% and prepaid prepaid revenues, sorry, were down around 5% in the quarter. And top up revenues were up 7% to CHF28 1,000,000 in the quarter. Okay. Then we have some further questions. Terrence from Morgan Stanley. First question is, what are Teluetu's plans for fixed broadband and TV in Sweden when your comps start to push triple and quote pay more aggressively? That one Yes, should I take that one? Yes, it's from us. And then the second question, what are your expectations for EBITDA losses in Dutch Mobile for the full year as Q2 losses were lower than in Q1? And that is for Alison. All right. All of this depends. We have a third question from Terrence, and that is do you have any update on core versus noncore assets, whether you have any news on potential disposals in Austria and Germany? That is for Matt. Yes. So the court play discussion in Sweden is not very high on our agenda, and we don't see many or much movements either in the marketplace. With our 4 gs capabilities, we believe that we can handle the fixed broadband threat, if you would like, through our Wi Fi router of 4 gs. Now if this becomes a real deal breaker, I. E. That we just have to have what they offering. Let's say, Sweden will go the same direction as Spain or France. We have plans in place on how to handle that. And there are plenty of fixed operators that we can either team up with, acquire or buy capacity from. So we don't feel a need now to move from that angle. It's more important for us to continue the geography build out on 4 gs up to 90% geography coverage, for instance, and continue to intensify the higher density of the network. Then when it comes to the disposals or acquisition of new countries, I think we are right now, as I've said before, fully booked. We do believe we need to focus on Kazakhstan and Netherlands and also to continue to foster good climate here in Sweden with the value chain. So we're not actively looking for new countries to go into. And as we have said as well, possibly been before. And we have taken some redundancy costs out there. And possibly been before. And we have taken some redundancy costs out there and starting to become much, much, much more cautious when it comes to aggression and sales in that market. And I think you had a question Yes. And then on the Dutch mobile office, I think you can expect that Q3 and Q4 will more be aligned to Q1. There will be a point that we'll start to increase the expansion of both subscriber acquisition costs again. Okay. Thank you. And now that we take the last question, this is in the Netherlands, who are you losing customers to on the fixed line side? That's the first question, Matt. Would T2 be pushing Vola high speed services more aggressively than before? Yes. So in Netherlands on the mobile side, T Mobile lately has become more aggressive. That has subsided in June, but they were very aggressive previously in the quarter. On the fixed side, we are losing customers to literally everyone and to KPN and to Sigo. And when it comes to Vula, we will be more aggressive on pushing that deal going forward. This is, however, quite far out in time. The contract is not in force until 1st of January of 2016. So we need to pace ourselves a little bit. But we're going to primarily use it as a retention field in the beginning. We do want to have customers on our own network as long as we can since we are enjoying a higher margin on that network. But it will be, over time, migrated over to Vuhla, where we will have higher speeds and a significantly better coverage. Okay. Then this will conclude the conference call for the Q2. We will release our results for the Q3 on the 21st October. And thank you all for participating today in today's conference call, and have a very nice summer. Thank you so much, everyone.