Earnings Call: Q1 2020

Apr 22, 2020

Good morning, everyone, and welcome to this presentation of Telia Companies First Quarter for 2020. First of all, I would like to hope that everyone is well, including your friends and families in these quite challenging times. We are here in the office at Solna for the first time in a couple of weeks, and it's a fairly empty office, I have to say. So reminds us of the situation. As usual today, you that have dialed in will get some insights into our development in the Q1 of 2020 by first, our President and CEO, Christian Lourieger, that will give some insights into the operational performance. And after that, he will be joined by Douglas Loebbe, our CFO, which will give you comments and lights on the financial performance. So by that, I leave the floor to you, Christian. Thank you, Andreas. Welcome to this sunny morning. And it is a good morning for TLA performance, but it is a difficult time in the world for the society, for the companies out there and for individuals. And of course, it's always difficult in severe and difficult times like now to talk about something positive, but I will do that anyway. We have I need this sorry. We have a solid quarter in our telco business. I can remind ourselves that we came out already on the 26th March pretty much a month ago and declared that we will have a difficulty to give an outlook on EBITDA and cash flow, and we have a severe impact on our TV Media business. But that said, we do have a quarter where we are flat on service revenue if you disregard the TV media part. We are having an improvement in EBITDA in the underlying business of telco. Meanwhile, the TV media is hitting us quite severe. And we will come back to those two items and also the corona effect later in this presentation. Overall, a SEK 3,300,000,000 cash flow generation in this quarter. EBITDA less cash CapEx is growing 3% in this quarter. We lowered our dividend from SEK 4.10 billion to SEK 7,400,000,000 as an effect of the profit warning, but also investment rating. Stepping then into the COVID-nineteen impacts and implications. The Q1 is impacted, and it's primarily on the TV media side, though we do see risks in the telco business going forward. We have around SEK 100,000,000 which is directly identifiable as corona impact, but we also have corona impact on advertising and on sports effects that we haven't calculated into these numbers, but we know it's difficult to separate what is what. And that's why the TV media is down SEK 300,000,000 from last year, partly because of the direct impact of corona and then the also the effects on advertising and sports. Going forward, we see risks in roaming. We know we will have a dip in roaming. We know we will have an impact on TV distribution. We know there will be an effect on the customers' financial stability. We don't know how much yet and how to handle that. And we also know that the economic crisis, depending on how long it will be, will have an impact on our customers. So all in all, we have risks. But we also have some opportunities to take advantage now of this situation and make sure that where we are good, that means delivering good Internet services as we do right now and good TV services as we do right now. When things turn around and come back, that we will have an last year. We work very heavily on mitigating activities, and that will help us also through this journey financially. We do support the different stakeholders in these difficult times. We support authorities, both the European Union, but also all the countries, for example, with data insight, and that helps them to track the pattern on behavior of the individuals in the society. This is a product that we had already before, and it helps us to actually prove where we have good products that can be used. It was used for city planning and for bringing a better sustainable situation into the society with lower carbon oxide. So and then we also do support our customers now with offerings, sometimes for free and sometimes where they pay by increasing customers connected, helping elderly, looking at how to help schoolchildren, but also securing excellent Internet for our customers, both to B2B and B2C. We have had an increase in our network traffic, mainly in mobile voice and in fixed, but we have handled that without any problems. We there is a good proof on that we have a good solid network as a base, the best network in the Nordics. Then finally, the last cornerstone of our work in COVID-nineteen is that we early started up a crisis management team, and they have been working on 4 areas: the staff well-being, the security issues and the supply chain and the networks and TV daily running. And these four elements are important to keep track of during the crisis. And as we step into the next phase, it will be more focused on staff well-being and supply chain where the risk will remain longer. So back to where I started. It's a very solid good quarter when it comes to the revenue side. It's the Q1 since 2018 where we actually compensate for the legacy decline. And we can see that it's driven by the mobile revenue growth. 4 of 6 markets is growing in our mobile revenue. Sweden and Norway and Denmark is good examples of growth here. And we grow ARPU in most markets, but we're also starting to turn some of the trends in subscribers, more in Norway than in the other countries. This is something that also is an impact from the ARPU uplift we've been able to do during last year and the increased commercial focus we have on making sure that our offerings are fitting our customers better and well received through our marketing. And the same thing goes to the other bed and bread type of service that we have, which is the broadband. And in broadband, we have now 3 quarters with growth, and it comes from all areas. And in GET, we have a good subscriber development. We have in Sweden an ARPU uplift during the last year, but also we have a net intake. We can see that the OCN, the open city network sphere that we get into last year, we said we will start not pushing sales and letting the customers that want Telia to get Telia. And then we have slowly increased the sales incentives here. And we have now grown 40 percent in 1 year in the open city networks, and that helps very much to these numbers. So having 3% growth on mobile. Finally, in Finland, we did do the deal with Kathmand that we will jointly build fiber now in Finland, and that has now been improved, and we will get going now in quarter 2 building out the Finnish fiber customer demand. EBITDA growth. On the reported numbers down 5%. A big chunk of that is TV Media. Then we have some items affecting comparability that we will come back to. Douglas will talk about those when he goes through the countries. And then we have the underlying telco business that is running flattish, up SEK 100,000,000 year on year. Based on that, the service revenue is actually improving. And based on that, we have a good cost control. On top of that then, the TV media severely dying, and that is really a result of the corona effect and the market effects. But also, we said going into this year that 2019 was a record year. And we said when we reported the quarter four statement that we will have a somewhat lower EBITDA in 2020 than compared to 2019. We then profit warned in the 26th March, as I said, and said that the SEK 1,500,000,000 last year will come out now as a SEK 0 to SEK 0.5 billion result this year. But looking then at this TV Media business, we knew when we acquired this business that TV Media is extremely sensitive for economic downturn. We could see that already in 2,008, how it impacted advertising and TVV4's result and that it then returned in 2,009, 2010 quickly. So we feel that this is still a strong business that we will take us further, and we will continue on our revenue synergy journey as soon as we get out of these difficult times. And why is it then strengthening our view on this and what is strengthening during this time? Well, we are strengthening our market share both on the linear side and the digital side. And if we look at the linear side, it's actually growing 2% in March, and it's been flat in Sweden in the quarter. And in Finland, it's growing. And in the digital side, we're growing with 4% in the quarter in Sweden, and it's growing even more in Finland, but we are not allowed to show that number. And in total, this means that we increased our total TV market share. And we can see multiple examples of where the this is coming through, and we have still reasonable advertising pricing. We still have a good viewing. Viewing is going up dramatically on the digital side, 80% in March and 50% for the quarter. We see that series that we come out with, Bekstrom, Hamilton and Sol Sieden is making tremendous records on viewers. And this is the business case. We have bought something that is very broad, has a very good platform and will help us to have many legs to stand on when we get out of this crisis. And we will utilize this crisis to figure out how to strengthen our position and use that when we continue to drive the digital journey going forward. And this is done despite that the largest distributor in Sweden decided not to offer their customers all our channels. So we feel very strong about this. Another thing that we feel very strong about is the good B2C mobile and broadband revenue growth, as I said. And looking at Sweden, that is part of this journey. So in Sweden, we had the 2nd consecutive quarter with mobile growth, 3%. And we also have a on the B2C area, and it's around 1.5% in total. And then on the fixed broadband side, we are growing, as I said, open city networks, fiber price increases in the last year and people moving up in the bundles. And then we have also increased the pricing on the legacy products, as you know. So this is now coming through and shows that we are actually getting paid for the value we bring to the society when it comes to fix the Internet. Finally, we have decided in March to take away the guidance for cash flow and EBITDA and said we would come back as soon as we can. We still don't feel comfortable to give an adjusted EBITDA guidance for the year. There's a lot of things that can impact the guidance of EBITDA, but there's less things that can impact the guidance of free cash flow. And we feel quite that we have a solid position, and we have a good view on where the operational free cash flow will end. And we have then guided down from the previous SEK 10.5 billion to SEK 11.5 billion to SEK 9.5 billion, percent, SEK 1,000,000,000 down for the year on operational free cash flow, which is a bit above the dividend payout that we do for this year of SEK 7,400,000,000. And with that, I hand over to Douglas. Thank you, Christia. Good morning, everyone. It's a pleasure for me to present the Q1 results on behalf of the company. Even if it is under unprecedented times and really strange circumstances. If we go straight into the group view, service revenue, we show a decline of 1% for the group, clearly brought down by TV Media, as Christian has explained. And for reference, TV Media declined by about SEK 160,000,000 or 8 percent on a year on year basis. If we exclude TV Media, the other units actually only showed a decline of 0.2%, and this is despite the fact that we have a continued drag from legacy revenues and carrier low margin voice revenues. Of course, very pleased with the fact that Sweden has shown year on year growth in terms of service revenue, and I will unpack that a little bit later. And then finally, some solid growth from the Baltics in Lithuania and Estonia. When we look at EBITDA, of course, it is impacted by TV Media and that results in a 5.1% decline. As Christian mentioned, we do have some impacts that impact the comparability. That is a pension refund in Sweden that was lower this year versus the preceding year. And then in Norway, we had a receivable sale that we had in Q1 2019 that positively impacted by CHF 100,000,000 If we normalize for this, then the growth would actually be 1.7%. So that is excluding TV and Media. Christian talked a little bit about how mobile and broadband revenues are developing. I thought it would be a good idea to also show you how our B2B segment is performing. This is a segment that has been under pressure and we have said that we would work towards showing a better development. And again, this quarter reflects a better development with a decline of 0.9%, significantly helped by Sweden and Norway. In Norway, we've seen a really strong delivery in the public and SME segment, while in Sweden, we have had various product launches and we have assisted A lot of this growth does come from ICT and IoT, proof point that we are finding the right products and services. What I'd also like to highlight on this slide is that we are actually seeing an NPS improvement in Sweden, which shows that our products and services are resonating with our enterprise customers. Cost, clearly, we have indicated and during the last quarter report I mentioned to you that this is a cyclical type of environment where we will see decreases and then in some quarters, we will see increases. And that just depends on how things develop and then obviously, we have some issues related to comparability. So in OpEx, we have an increase of 3%. But if we normalize for the pension effect, it would only be an increase of 2%. This is due to certain impacts. First of all, we have higher IT and resource costs in TV and Media. Then we have some higher credit losses in Norway and Sweden. I will get to back to some of that when I speak about the specific countries. But finally, in Q4, we did mention that we saw a need in Sweden to increase the staffing and customer care to ensure that we deliver the quality of service that our customers are requiring. And this is an effect that we see in this quarter where we have increased those resources, but we've also seen an improved trend in customer service delivery. We do have some activities ahead of us because we have not abandoned our goal to reduce OpEx over time, And some of them are already in the making, and we will reduce resources in all markets for both employees and consultants. We will calibrate our marketing spend during this time and ensure that we invest in those areas that make sense. And then finally, we have now transferred all the resources into the Common Products and Services Unit as of the 1st January. And as per plan, we expect to see more efficiency gains in the second half of the year. Final point on this slide is that as the if the pandemic lasts longer, this does result in increased risk, not just from an execution principle, but we could potentially see some costs increasing in the light of bad debt or credit losses. If we now focus on the countries and, 1st of all, start with Sweden. Like I mentioned, very pleased with the service revenue development, the Q1 of growth since 2016. However, we still have been impacted by a drag from legacy revenues where we saw a CHF 70,000,000 decline in the quarter. This was somewhat softened by the price adjustments that we made in 2019, but these price adjustments are expected to lapse in Q2. Furthermore, we saw a lower contribution from OTC of around SEK 20,000,000 as we roll out less fiber. Finally, we do have an impact from regulation in relation to our mobile termination rates where we saw a drag of SEK 25,000,000 in this quarter, but that had a negligible impact, if any, on EBITDA. So B2C, excluding OTC, around 1.2% growth, which is really pleasing and shows that we have managed to find ways to drive the service revenue through our portfolio management and pricing adjustments. In B2B, we see a halving of the rate of decline on a sequential quarter basis, and this is driven by mobile in B2B and where we see a more stable ARPU and pricing development. If I then turn your focus to EBITDA, one item that we would like to highlight is that due to the lower pension refund, there was obviously less benefit. And if we normalize for that, then EBITDA would be growing by 2.4% instead of the 0.7% as reported. And that compares favorably to the 3% that we reported in Q4 excluding the positive 6% from the pension refund. In Finland, we see a 1.4% decline in service revenues. This is a continuation of the decline in the fixed telephony where we have shut down that service. But we are also unfortunately seeing a continued decline in customers, which we are clearly not happy about specifically in the mobile segment. If you look at mobile service revenues, there is growth. However, the consumer segment is in decline at 0.1% decline, so relatively flat. However, the Enterprise segment is at growing at about 2%. EBITDA, we do have a one off impact during this quarter of around SEK 40,000,000 and that relates to the content rights for Liga, the ice hockey league in Finland, which has been canceled. And in terms of IFRS, we are required to recognize the remaining content rights at that point in time. So this has been recognized in this quarter and has a CHF 40,000,000 negative impact. In terms of Norway, a decline of 0.7% in respect of service revenues. Mobile revenues continue to grow, where we've seen an increase in customers in the B2B segment, as I mentioned earlier, but we still see a continued decline into the B2C segment. B2C mobile service revenues declined by 1%, whereas in B2B, we see a solid 7% growth in terms of mobile revenue. Then in terms of EBITDA, we do have a €35,000,000 which relates to credit losses, half of which related to a distributor that went bankrupt during Q1. And then finally, as I mentioned earlier, in Q1 2019, we had a positive impact from the sale of receivables, which was about SEK 100,000,000. What is pleasing is the mix between B2B and B2C shows that we have a flattish subscriber development, which is the first time in a while. Lead have continued with their stellar performance that we saw in Q4 and really pleasing to see that Estonia and Lithuania have managed to continue to deliver strong service revenue growth both from mobile and fixed. What really stands out in these two markets is actually the TV revenue growth where we are between 10% 15%, which is great to see. In Denmark, improved mobile growth has softened the decline, but it still remains a challenging market for us. EBITDA, very happy to see that the Estonian and Lithuanian teams have managed to convert the service revenue growth into strong EBITDA development. And then equally pleasing is to see that Denmark has managed to continue with the efficiency and cost consciousness resulting in year on year EBITDA growth. If we focus in a little bit on the TV Media segment, we've spoken a lot already about the pressures that are there. But this is an unprecedented time where most of us who are sport lovers are finding Saturdays hard because we can't find any relevant content to watch, and that is the same experience that our consumers are experiencing. And as such, we can't charge the premium retail pricing for that content. And therefore, we've dropped our pricing to the minimum tariff plan, and we rely heavily on our drama and other content, which clearly resonates well with the customers, as Christian pointed out. And a point in case is that if you look at our SVOD subscriptions, we have seen a marginal decline from Q4. The decline should be noted that during Q4, we had the blackout with 1 of our major distributors. During that time, we decided to offer those impacted customers a free month of our C More package, which 60,000 customers took up. And as at the end of Q1, we've managed to retain half of those customers as paying customers, something that we see as a really positive indicator, not only in terms of how we dealt with the situation but also it resonates with the fact that we believe our content has a great value for the customers. Now if I turn to some of the other metrics. Cash flow, relatively stable development if you look at the rolling 12 months. There is, however, a decline in this quarter of about SEK 1,100,000,000. And I'd like to turn your attention to the fact if you look at EBITDA CapEx, an area that we've always said that we would focus on because that is more of a sustainable cash flow generation, Here, we've seen a 3% growth, which we are exceedingly pleased about, and we will continue to work on. We still get a positive effect from working capital where we've seen about SEK 900,000,000 coming through during this quarter, but it is about SEK 300,000,000 lower than what we saw last year. The main elements of the cash flow that differ from the prior year is that in 2019, we received a tax refund from the Swedish state, which we will not receive this year. And then we also, as mentioned, received less support from the pension refund and that is visible in the other segment, but a SEK 3,300,000,000 operational free cash flow for Q1. Net debt and leverage. Net debt has declined as has leverage based on the versus Q4. This does stem from the strong cash flow generation that we have, but then we have also issued the green bond, which has brought our leverage down. We are, however, negatively impacted by FX movements that do increase the leverage. But despite that, we've managed to show that we come down. Finally, we do have some dividends that we will pay in April or have paid in April. We have a maximum earn out of about SEK 800,000,000 in respect of Bonnier Broadcasting that is still to come. And then we are still expecting the 50% or SEK200 1,000,000 from the Turkcell Holding dividend. And the buyback program was concluded in Q1, which resulted in a total of 6% of the shares bought back during the program. Finally, our capital structure, we keep it in focus. And as we've communicated, we are committed to keep a long term solid investment grade. We have issued a €500,000,000 green bond, the 1st Nordic telco to do so. We're really pleased with that and it was a fantastic effort from the Yves the team. We have also secured a bilateral credit facility for SEK 4,000,000,000 that is just to secure that we can deal with any liquidity challenges that may come. And then we have lowered the dividend from €245,000,000 to €180,000,000 And finally, the rating has been confirmed by Moody's last week, a fact that we are very pleased about. So as I invite Christian Andreas, I'd like to thank you and I'd also like to thank all our staff that have prepared these results in trying times and still managed to deliver quality product. Thank you, Douglas. Thank you, Christian. So now it's time for my big contribution to this event, managing the questions. So we open up for Q and A. And operator, maybe we have the first question, please? Okay, sir. Our first question comes from the line of Roman Arbuzov. Your line is now open. Hello, Mr. Roman. Your line is now open. You can now ask your question. Should we go for next? We can go for next. We can't hear you, Roman. Next question please, operator. Okay. Our next question comes from the line of Nick Sjell. Your line is now open. Hi, I think that was me mentioning there. Sorry, there's a bit of an echo. But on the business performance in Sweden, Christian, it seems very strong at just minus 1.2% on the revenues. You say you've benefited from product launches this quarter. So you could just could you describe how much that contributes? Presumably, it's not enough to offset any SME decline over the next couple of quarters. So could you give us an idea of how B2B revenues might develop, please, over the next couple of quarters? Thank you. I mean the quarter of quarter 1 is not I mean the quarter of quarter 1 is not built up by actions in quarter 1. And then I you misunderstood me, so good that you asked me and I can clarify. So we have over the last year, as you know, we have worked with our pricing. On top of that, we have come out with a very good offering on the family side, and now we are working on the elderly side. So we are doing activities on offering packaging that is good towards the retention of the customers as much as creating new customers. And we're still losing, as you know, prepaid customers and we're gaining postpaid customers and that net is negative. But the ARPU uplift from our customers wanting to have a better total package and feeling the stickiness from like the family offering, which is very good. And also on the broadband side, where we have open up for OCN fiber, and we are continuing to also deliver on the fiber rollout, it gives this growth. And we have moved a lot of the fiber customers up in the speed last year, which also helps, and they pay more for that. So it's this gradual movement, the commercialization of our business and being closer to the customer that is now showing the proof point. We know some of these pricing increases will come out. But if we continue in this way, we will have a way to meet customers and get paid for Internet over time. Sorry, Christian. I think maybe I don't know, maybe there's much too much of an echo on the line, but the question was actually about the B2B. On the B2B side. Sorry. Okay. Yes, you mentioned I think you heard Douglas mentioned the product launches. And I just wondered, it does seem like SME has made much of an impact or anything yet, but it's early days. No, it didn't. I think you gave us a bit of an development? It's the you want to take that Douglas on the Yes. So it's not product launches that were done in Q1. It is more that we see a better trend and less pricing pressure in the market during this quarter. So there's nothing specific that points to anything. It's more the actions that we've undertaken. And then obviously, we've had a stronger quarter where we haven't lost any significant customers. But we did launch Ait as a service, and that has been received well. But it's not big enough to make a difference on quarter 1 numbers yet. Okay. Thanks very much. Thank you. Nick, can we have the next question please? Okay. Our next question comes from the line of Stefan Gauffin. Your line is now open. Yes, hello. A couple of questions. Stay still one question. Okay, please. Okay. Then I will focus on roaming and roaming revenues and EBITDA. Tele2 provided us with impact or the roaming revenues and EBITDA for 2019, which helps us model that. So can you provide us with that for Thalia? If not, then you can perhaps elaborate on profitability, where Elyse has stated EBITDA will see very limited impact from loss of roaming revenues, whereas Tele2 stated 75% EBITDA margin for roaming. So any clarity on this would be really helpful. Thank you. Okay. I'll try to start and then maybe Douglas or Andreas help me. If we have around 1% of our revenue on the roaming. And it's very different, and that's maybe why and Tele2 comes out different between the countries on how your contracts and population actually are using and how your B2B services are built up on roaming. And the wholesale part in Europe as well as the outside Europe part of retail revenue is impacting this. So in Estonia, we could have a lot of workers outside Estonia from Estonia or in Norway, we could have a different setup where we actually have an inflow of people. And that impacts the math of how it impacts you. So I'm not surprised there's differences between ELISA and Tele2, and there will probably be differences with us as well. But we have all those different kinds of situations. But 1% is pretty much how much we have on total roaming. Anything else to add, Douglas, on? Yes. I think it also depends on the mix of how much roaming you have that is related to within the EU Union where we know it's Roam Like Home. And then if you have a significant contribution from rest of world where it is still more on a variable model where we do make a good margin on the retail revenues there. Can I just follow-up? Can you say anything around the EBITA margin? Is it given what you say, is it more in line with the average for the business? I would say that it has a stronger EBITDA contribution than the rest of the business, but we're not going to give you any specific number. It's also part of the low visibility that we experienced and why we don't give any EBITDA guidance. But of course, we have a better look at the cash flow and therefore we have given a cash flow guidance. Yes, thank you. Thank you, Stefan. May we have the next question please? Okay. Your next question comes from the line of Maurice Patrick. Your line is now open. Good morning, guys. Just a question on Norway. You cite the improvement in commercial momentum in Norway in the quarterly report across many new brand launches, but you still have negative B2C development in the quarter. I mean, should we expect to see B2C improve in the coming quarters in terms of commercial momentum? And I guess related to it, just a few words on FWA, my favorite subject, which I know you launched and announced some customer numbers from that this quarter. Thank you. So thank you. I'll start with the overall picture of Norway. We said already last year that we are not satisfied with development in Norway, primarily on the B2C. We knew and we would lose market share since we bought Tele2 and had to do a remedy towards ICE. And that was given, but the question is how much. And it was too much. And so we started the journey of coming back. I think the positive signal this quarter is that the subscription on the mobile side is now flattening out from being declined, and we have just had the ARPU. Being a challenger in Norway on B2C, but also on B2B, we should not only grow ARPU, we should also grow subscribers or be flat as we go ahead depending on the brand, etcetera. One Call is doing excellent. B2B is doing very good. And the rest of the B2C is something we're working with. As much as it took some time to get to this position, it will take some time to get to the next position where we are satisfied. But we are satisfied with the journey and that we are on the right direction. Thank you. Thank you, Maurice. May we have the next question, please? Okay. Our next question comes from the line of Roman Arbuzov. Your line is now open. Friends are open. My question is on price increases. Price increases have been quite difficult to maintaining 70% of the market, such as despite the current COVID environment, to what extent do you see the ability to take the intriguing factors? Can you talk about your potential in 2020? That would be very helpful. Within the cost of EBIT, but also we can touch upon the sales, keep some positive price from competitive things to what I feel very happy. Very hard to hear you there, Roman, but I think it was related to price increases and whether we can do price increases also in 2020. And then I think I catch that something about the competitive environment. But on the pricing? So on the pricing, to start with, it's very difficult to go out with price increases now. And they wouldn't be responsible in this situation for society, for companies and for individuals to do that. But we have in where we have had price increasing as part of a plan since before, I. E, there's a migration already started and ongoing, those will continue. And but we will try and what we're looking at is how to utilize the increased awareness and importance of Internet. And you may want to then step up in your bundle or your speed instead. And that's a way of also increasing ARPU in these times. But we won't push pricing that wouldn't be responsible in a market like this. And can I just follow-up about Finland? So there's a competitive environment, maybe related to Finland. Well, all of your competitors in Finland have increased reduced accounts and from what I hear somewhat slow to follow-up. Do those comments advise you as well? I lost I think it's about the competitive environment in Finland and what we are doing on the campaign side. I think that was the question. I could be totally out of line here. Yes. Okay, good. I can start and maybe fill in a little bit, Oleg. But overall, I think that we have said we are fairly satisfied with the B2B journey we're doing. On the revenue side and the customer side, we're doing extremely well. We need to figure out how to handle that value chain from an end to end perspective to make it cost efficient for us to deliver that as well. On the B2C side, we have not a strong brand enough in the market, and that's something we will work with. And but we do have, we think, a good portfolio of products and services and both with the TV media and Telia Dot and with gaming. But we need to improve our brand position. But Douglas, anything to add on the situation in Finland? No, I think it is a highly competitive environment, and I think we are trying to find ways how we address our subscriber growth in the specifically the B2C segment, but that does not mean that we will make any irrational moves because we are trying to protect value. And that is one of the important factors, especially if you are talking about cash flow, which we do. It's also about the commercial agenda that we have talked about for a few quarters now where we need to start to execute a little bit better and what Christian and Douglas has been focusing on And most likely that will continue also. So it's about the commercial agenda that we have. Thank you, Roman. Thank you very much. I hope that was the questions. Let's get on with the next question. Operator, please. Okay. Our next question comes from the line of Frederic Bowman. Your line is now open. Hi, good morning, everyone. Thanks for taking the question. My question is on the free cash flow outlook. And if you can discuss some of the moving parts that you've embedded in the new range, especially around CapEx, interest, tax and the working cap along the lines of the disclosure at the beginning of the year? And more specifically on the EBITDA, you identified the impact on the TV and Media business. So I'm trying to understand what stops you from being a bit more specific for the rest of the group in 2020. So EBITDA is very much impacted by items that not always also impact cash flow, like the write down of the TV media content now in Finland in quarter 1 of SEK 40,000,000 doesn't impact our cash flow prognosis at all, but impacts the EBITDA. So there will be in an environment like this, it's very difficult to set out a EBITDA guidance. It is maybe difficult to set out a cash flow, but it's much easier because only one of the parameters in that is EBITDA. So I'll answer it in 2 sentences, and then I'll leave to Douglas if there's anything else. We have been showing in the past that we are good handling the EBITDA, CapEx and other elements like working capital to meet our cash flow guidance. And we have a fairly good control of those items in combination. And that's why we don't guide on CapEx. We try to do good business investments. And sometimes we will take it down and sometimes we'll take it up within the frame of delivering a solid good cash flow over time. So therefore, between the lines, we don't guide, but we guide on the total cash flow. And then there's a lot of those parameters in the cash flow, the second statement, that is going to be fixed. It's not going to change that much on the tax payments for 2,000 or the interest payments for 2020 just because of corona. It may do that in the future with lower profit this year or something else. We may have less tax next year. But this year is quite solid on those items. It makes it much more easy then to give a guidance on something that is very important for our investors. Yes. No, I think you've summarized it really well. And I think going back to the point that we're saying is that this is an unprecedented time and there are so many moving parts that could change. And what's important for us is to monitor those changes and the trends and we will react as appropriate. But we believe that we have a firm enough handle to provide the guidance on the cash flows we have. Okay. Thank you. Thank you, Fred. May we have the next question, please? Okay. Our next question comes from the line of Ulrich Rat. Your line is now open. Thank you. Several of my questions have been asked. But one thing that was very helpful from Tele2 yesterday was rather than guiding, they told us what the impact of COVID is per month and then left it to us to sort of decide how many months so that we want to stick into our models. I understand there are uncertainties here, but are you able to give us a rough impact of the identifiable COVID-nineteen impact that you are already seeing, you can quantify, you have visibility on a sort of run rate basis so that we can use that as a sort of minimum number? That would be helpful. I think there's 2 things here. Maybe it's good to get that guidance from Tele2 to say, we think it's better to give you the guidance of the cash flow for the year, so you can really put that number in. But when it comes to the effects, I mean, we have 6 different countries. And then on top of that, we have Latvia and international carrier and global. And they will all be very differently impacted by if it's opening up. Denmark started to open up and now going back to the office this week. Meanwhile, it's still closed in other countries. So you can't just take that number and put it on and place it on. And then as I said before, in roaming, we saw the difference between Elisa and Tele2. There's so much difference in logic and impact. So our we know that the impact we had in the 2 last weeks of March will definitely not be the same kind of mathematics when it goes into the next coming months because of the differences between the countries. So it's very hard. And that's why we also said we will stick we can see and we can follow the impact on how it impacts cash flow, what we can do to compensate, if it's CapEx or other means, and we will handle that throughout the year. But it's very difficult to give a specific guidance that is actually giving you a solid truth. Douglas working with this every day with your team? Yes. And I'd also like to just strengthen that in that we also have so we've had the league where we wrote off that content right during March. And if other leagues get canceled, the majority of sport is postponed at this point in time. How long that can continue, we don't know. So we have those effects that are really difficult to quantify and to estimate, and that's why we are steering clear of it. And I think it's not only a downside. I mean, we work with mitigating activities and that's what you do in times like this. You do it in other times as well. But and the success of those will also be important on the performance for this year. And most important thing is that we continue our commercial focus and we come out stronger as we should do every day from our office. Thank you. Thank you, Ulrich. We have a couple of more questions. So we take the next one, please. Okay. Our next question comes from the line of Lena Storberg. Your line is now open. We can't hear you, Lena. But since you have mailed your questions, I will take one of them, which is you have not yet made any reservations for expected credit losses. What are your early observations for the need here? Okay. I'm happy to take that one. I think it is still early days. And obviously, this is an area that we really focus on and that we keep close tabs on. At this point in time, we do have some incremental provisions, but nothing significant because we don't see any significant changes. And in fact, in some of our markets, when we've gone through the first receivable cycle, we've actually seen improved payments from customers. So we will closely monitor it and we will obviously then decide how we want to deal with it. But at this point in time, we don't have any significant reason to make more substantial accruals. And of course, we always have a provision in the balance sheet. So and that provision, we have felt, is good enough as a whole assess at this point. Okay. Thank you, Lena, although we couldn't hear you. Next question, please. Okay. Our next question comes from the line of Andrew Lee. Your line is now open. Yes, thanks, everyone. I'm going to try another question on the EBITDA impact from COVID. Not asking for guidance at all. Just asking for your what the pros, including mitigating activities and cons are ex TV and radio. You're saying a €100,000,000 impact from COVID so far in Q1. All of that is TV and radio. That seems to be saying you've seen a neutral impact across the rest of the business so far. That seems a fairly reassuring message on Group X TV and Radio, if that is the case. Could you just lay out some of the puts and takes? What we're kind of used to companies laying out, and I get it's more complicated for you, is you've got roaming as a negative, maybe some B2B pressures or whatever. And then you have churn as a positive or usage as a positive or any incremental cost cutting. Just a slightly better view of the puts and takes will be good to try and get a sense of at least current run rate on the impact? Thank you. I'll give you not the right answer and then I'll hand over to Doug Leads. I'll just give an example of the complexity. We are impacted by corona. The question is, as you say, on balance, how much. So in our shops, maybe the footfall is down 40%, some 30%. In some of the shops, still the sales is only down 10% to 15%. In some others, it's down 30%. In some of the places or brands or countries, it is compensated on the online or customer operation sales and in some not. So and this is where it's very early days for us to give a fair answer on how COVID-nineteen will impact us. But we feel fairly okay, as you say, with the churn number. But handing over to the bigger question to you, Douglas, that was just an example of how difficult it is. Yes. So I think, first of all, what you should recognize is that the impact from COVID in Q1 is negligible because it was only towards the back end of March that we started to see some of the impacts specifically around roaming. So that is something that you should recognize will have a different impact in Q2. But then when it comes to mitigation actions, we have launched a program to look into what we can do additionally to what we were already planning. And as I mentioned, we will look into calibrating I think in terms of potential, it's now about I think in terms of potential, it's now about monitoring the trends and seeing where we have the ability to do more things and where our products resonate. And clearly, we see an increase in our usage as Christian has mentioned. Now we should find a way how we can leverage off of that. Good. Okay. So I'm guessing sorry, can I just ask a quick follow-up? I get that you didn't start seeing the impact till the end of the quarter, the end of March. In the South of this year, yes. Yes, exactly. As of then and the run rate you're seeing so far, is that roaming impact being mitigated by other elements? I don't want to answer that. The roaming impact will be the one of the largest, clearest one going forward, and we will be able to talk more about it when we get to the next quarter. But let's leave it to see how and we all know that it will take time for traveling to come back. But there's other travel than just air travel as well. As I said, we may have a lot of workers in Lithuania or in Estonia working in Russia, and they just need to take the car over the border if life comes back to normal. So we have so many different aspects of this as how it will impact us. I'll come back on that. Thank you, Andrew. We have time for 2 more questions. So operator, please, next one. Okay. Our next question comes from the line of Terence Tsui. Your line is now open. Thank you. Good morning, everyone. Just a quick question on the TV content. Are you expecting to receive a refund from the canceled ice hockey season in Finland? And if so, when do you expect that refund to arrive? And what about some of the other sporting events that may be canceled in the future? I don't know what we can say here, Douglas. But in general, all these contracts are a little bit different. Some of them, we have a very clear path of how to be refunded. And some of these sports it's unclear, and we need to discuss and negotiate. And some of it is clear we may not get that much back. So but I don't know if you have we have said something on any of the rights. No, I think we won't comment on that. But clearly, we take those discussions and it is based on a contract by contract basis. Okay. Thank you. Thank you, Terence. Then we take the last question. And for those of you who haven't the time to ask question comes from the Okay. Our final question comes from the line of Siyi He. Your line is open. Hello. Hi. Thank you for taking the questions. I just have a quick one. And yesterday, Telefru seemed to suggest that the declining equipment sales also turns the EBITDA. And I was wondering whether you can comment on the equivalent margins. And if you don't mind, would you be able to clarify or maybe add Mikan deny about the report on your potentially getting the Champions Link right from next year onwards. I understand it's difficult to answer, but given that it's suggested to be KRW 1,000,000,000 across a year, it will be interesting to see to have a confirmation. Thank you. I will say questions? The first question was Tele2 said that they had declining equipment margin. How do we respond to or how is your how is our experience on that in the quarter? And then secondly, if we can make some clarification on rumors that we have bought Champions League. Okay. If you start, Oles, with equipment margin, if you want Gladly. Yes. So I think at this point in time, as Christian mentioned, if you look at the footfall into our stores, it has declined, but that doesn't necessarily mean that we've seen a decline in sales. And then our equipment margin is negligible, so it is not a huge impact. But again, it's too early to understand how this will impact. So at this point in time, we don't have any worrying signs, but it is something that we will monitor closely. And on Champions League, it's just rumors, as you say, and we don't comment on rumors. So unfortunately, I can't give you an answer on that. I can give you an answer on what I think about Champions League, and that's the best league in the world. So it's a very interesting asset for whoever gets it. Okay. By that, you have to dial into one of our competitors.