Earnings Call: Q2 2019

Jul 18, 2019

Thank you for standing by, and welcome to Q2 Interim Report Conference Call. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. This is Johan van Linde in Sonne, Stockholm, Sweden on our quarterly announcements, quarter 2 announcements. I'm here with Christian Lueger as well to take you through our views on the quarter and the rest of the year. So listen in and tune in. So we will then start with our key messages. We are moving in the right direction. As we laid out both in the C and D March and after our Q1, we said that we would see improving trends throughout the year, both on service revenue and EBITDA. We are seeing that even though we could and would have liked to see a slightly better trend and improvement on EBITDA, and we'll come back to that. But on service revenue, improving to minus 1.4 percent from 2.6 percent down in Q1. And on EBITDA, we're going from minus 4 percent to minus 2 And operational free cash flow, we are at the same level as last year. We are on track to reach our full year target of SEK 12,000,000,000 to SEK 12,500,000,000. And we'll come back and explain a little bit more about the composition later in the presentation. On the service revenue, we have improved in this quarter. It is a decline with 1.4% still compared to last quarter with 2.6% minus. We are taking the steps that we talked about, price increases in Sweden, primarily then on the fixed and broadband and TV. We have started to work on the mobile side as well, but not visible yet in this quarter number. In Norway as well, we see an uplift on the B2B side on mobile primarily, and there is a good trend then going forward. The main thing also in Norway is that it's the number of subs that is increasing. And on the B2B side, meanwhile, the B2C side is still a little bit weak but has a slight light in the tunnel where we are seeing at least not a further decline but a stabilization of the situation. Now you mentioned everything but Finland, who's actually not improving the service revenue trends for the border. What's happening there? Good point, Johan. In Finland, we have an accelerated decline in legacy. Meanwhile, we're now closing down all part of the copper network in Finland. And we have accelerated that, and that is pushing the service revenue. And it's also, come back to that, pushing the EBITDA. And that is not compensated with the good mobile growth even though we have a good mobile bill growth of 3% in Finland book from B2B and B2C. Now speaking of mobile, we had a pretty bad quarter last in quarter 1, as you know. We have seen the improvements that we were looking for in some of our key markets and segments, but not everywhere, we have to say. We're still searching for the right momentum in the B2C in Norway. We have improved our position and have enhanced further our propositions to consumers, but we're yet to see the full effect of that. And if you look into the rest of the year, why we believe that we will continue to see improvements on the mobile service revenue, we have a couple of areas where we already have implemented FX, as in Sweden with the new portfolio and also some price adjustments as well as in B2B in Finland and Norway, where we've had actually during the quarter quite a couple of large contract customer wins, which will generate positive impact into the second half. But there is also across Finland and Norway further price optimization opportunities that we are implementing, which will help us during the second half of the year. And on that topic, then Johan, also I would like to mention the if we see the B2B momentum here, we have a new portfolio in the market in Sweden, and we believe that will support the core ARPU growth in Sweden on the postpaid with at least a couple of percentage points in the second half. That's important to clarify. And talking about B2B, that actually is one of the highlights for us in the quarter where we have seen improvements in key markets around our B2B proposition. It's very much helped by our investments into convergence and ICT, but also through our early interest from 5 gs and our IoT business where we're getting some clear effects and spillover effects into our core business. So for example, a growth quarter in Sweden, I don't think we have had that. So I know we haven't had that since 6 years. It is better than it looks. There are some one offs in there. But even reducing the one offs, we are very close to 0 on Sweden B2B. So strong execution on core, helped by IoT Business and other transportation from Cellcom Business that we have had in there. But also Norway is significantly improving their B2B on the back of the Foneero and TDC integration. We are now on a very good path for growth and grabbing share from competitors. So all in all, we're almost flat on B2B service revenues across our markets. And if you look at some of the initiatives that we have had and have invested in through the years, as we talked about, we believe we are now in a situation where we start to see the yield and the spin offs from those investments. So quite positive quarter and remains optimistic for the next couple of quarters even if the growth in Sweden will not be repeated short term. Let me add 2 things. I was thinking about listening to you, 1. I think the one thing on the B2B Sweden is important. We have had a decline in the past, as you said, it's been down to 8%, 10% and it's 1% to 5%. And last year, it was close to 3%. And with the pace and what we see right now, it will go down for 2019 again another year. So the slow return of B2B in Sweden feels very good. Secondly, just on this picture and seeing what's happening, I met one of our key clients recently where we have a strong foothold in Finland, and we do a lot of good stuff for them on the convergence side in Finland. And it's very clear they're super happy about 5 gs. They're super happy about the innovation we bring and the convergence we bring. And they also have a Nordic Baltic footprint that we also can then take these products to and these solutions to and deliver conversions from the other countries now. Good point. And as a support to this Nordic Baltic Business and Enterprise, we have our global carrier with world class connectivity that is really starting to help as well in our proposition to large corporates. But on the note of 5 gs, Christian, we have talked about our approach to 5 gs before. I just want to make sure we enhance that and reiterate that. We are curious. We are early. We see the drive and the pull from our enterprise clients right now. We have said and we repeat that mass market will come later because of obvious reasons that we have also been talking about spectrum, handsets, set maturity and differentiation is not early visible to consumers, but it is very visible to our enterprise clients. And on that note, we have signed several large customers on early trials or contracts that they now go deep on trying to enhance. They will enhance their own core business and digitalize into the next era. And that's really exciting to see how 5 gs can change the business of our customers, where we are very well positioned to help out in driving their businesses. So encouraged by the response on 5 gs so far, but it's not a mass rollout. So just making sure that you are aware of that. And as you said, a very vital part of this journey is the spectrum and the spectrum auctions coming up. We have said that before that it's important that we get the spectrum in time so we can actually start to prepare and figure out how we build both the best network and also in a very efficient way. And we have been then investing SEK 2,500,000,000 over the last 2.5 years, primarily then in SEK 700,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000, which is actually then an important part. And now we look forward for, for example, Sweden, 3.5 gigahertz coming up. Then plan now for quarter 1 2020, which is also very important in this journey to help our customer. Thanks for clarifying that. And on the EBITDA side, Christian, how is it looking? Well, we are improving from 4% to 2% in the quarter in a decline still, and that journey is a little bit slower than we wanted it to be primarily on the service revenue or actually only on the service revenue, primarily then as a result of a somewhat slower B2C return in Norway and a slower B2B mix in and the legacy decline actually, the legacy decline of B2B and B2C in Finland, which is taking it a little bit slower pace. Sweden has improved its service revenue that has improved, not the cost. And in the second half, that will then shift to both service revenue and cost driving the EBITDA agenda. In Norway and Finland, we see a different position where Finland has the legacy decline, as I said, and it's not fast enough compensated on the cost side because the legacy is accelerating. And that is something we'll have to work with and improve that as well. So coming quarters will be impacted both by cost and service revenue. And you left a positive one to me, I guess. Norway is the only one improving their EBITDA year on year. And we there are a couple of reasons. Obviously, we have the synergies kicking in from the GETTC acquisition. I think there's around SEK 40,000,000 for the quarter and getting up to the run rate of SEK 400,000,000 for the year. But we also have an effect of the wholesale business. But also here, as I said initially, we are we had expected somewhat better EBITDA development in Norway for the quarter based on the B2C mobile side, but that is yet to come. So we will improve from here. And then we will move into a couple of messages on cost, Christian. Thank you. So let's focus a little bit first on Sweden. So looking into the Swedish development over the last three half years, and we can see that the last half year then H1 was 3%. You all know that Sweden had a 5% in quarter 2. The 5% was hit by plenty of 1 offs and that is some of the noncash impacted as well. The average for the first half year, if you take out 1 offs, is around just below 1%. And that should be then compared to the next step that we need to do in the second half, where we then need to move into 7%, 8% decline, which is a huge change. And it, of course, carries some risk, But we feel that we have a plan and that we also had in H1 'eighteen. So we can do it, and we have done it before. And we have the main activity in resources that will be taken out from this picture. And the biggest difference then on the resources is that in the first half, we have had we decided to take an increased cost on the service operations where we have increased pricing, and we have also then started the migration of the customers into a new platform. And that is a churn prevention, you could say. We want to make sure that these customers stay even though we increase pricing and change the portfolios. And that has had its effect because churn has not increased. We have been able to keep that. On the full year for the group, we have around 1% for the first half, and it's quite similar in quarter 1 and quarter 2. Here again, it's going to be resources primarily between the first and the second half year. And we also see that Finland here will contribute to the story I had in Sweden. And in Lithuania also, we have a cost that has increased in the first half on both marketing and resources. Both of them will be lower in the second half. And in Lithuania, we have rebranded ourselves and spent a lot of money on that. Good. And you also already mentioned, the synergies in Norway, they will be vital. They are increasing. The run rate is up to 200 already and will increase to over 400 by the end of the year. And then we have the new operating models that we're implementing. They will also start to have an effect. Implementing that will also start to have an effect. On the note that the operating model, as you know, we laid it out in Capital Markets Day. We have an ambition to, if you want to if you want to simplify things, to produce our services from one place rather from 6 different places in our markets, and that's being implemented step by step. Sweden was first out from Jan 1 this year. We're very encouraged by the early learnings and effects. So we are accelerating the onboarding for all rest of the countries within the next 12 months, and that will accelerate some of the cost savings and synergies that we laid out, EUR 600,000,000 to EUR 900,000,000 on the cost side and an additional EUR 500,000,000 on CapEx side, and that is then still committed and to come. We'll see some effects also from this in 2019, some early pooling effects when we produce and put people together in one place rather than in several places. So also that will contribute to some extent through the rest of the year, but mostly, of course, into 2021. So let us we have forgot to introduce Andreas, our sidekick. He is not on a holiday yet, and he really wanted to be part of this call. So we will need a few minutes for Andreas to walk us through some key markets. Welcome. Thank you, Johan. Sidekick or press and guest star or expert, whatever. A few notes on Sweden first that Johan and Christian hasn't covered. And that is, first of all, the fiber installation fee That for this quarter is down $37,000,000 to $125,000,000 It's down 23%. So it's as expected, but still want to highlight it. On mobile ARPU, we are flat for the quarter, but we increased the number of subscribers. The reported churn is quite low, 13% in this quarter, and that is related to seasonal effects from prepaid where we have had a very high activation of inactive users for this quarter. So we expect the churn to bounce back for the next quarters. And on postpaid, it's roughly the same as it has been. The price increases we have made in the fixed side has had its toll on the net intake, of course, but there is also a few one offs. On broadband, we have increased the pace in dismantling of the copper network. That is roughly half of the job for broadband. And on TV, we have a campaign on Play service where we had some offering for free and those subscribers have not then stayed with us, so we have churned them out from the numbers. So that is basically the highlight for Sweden on the details. If we move into Finland, we have a better pace in mobile. We are actually, for the end user, increasing our mobile service revenues by 3%, which is quite good in the market. That is driven by ARPU, which is up by even more. So a very good quarter for the mobile side. We are have had this trend for some time now with increasing ARPU. So that is good even though we are also strong in the B2B side, which then could have argued have a lower ARPU. But clearly, we are good in getting the prices up. The subscriber trend improves. The churn comes is flat versus last year. So it's a good market, but the churn is still relatively high from a Nordic perspective, especially compared to Sweden. And finally, on Norway, as Christian and Johan has mentioned, very good quarter on B2B where we have a strong subscriber intake while the B2C side is still somewhat weak. We have an ARPU that is flattish. The churn is coming down, and that is predominantly related to the strong intake on B2B. Excellent. We should say that GET is trading stable. Absolutely. And we are getting to know the GET team and the assets even better and feel very encouraged what we can achieve both standalone on the broadband side as well as on the convergence side. And on the Norden Norway, just reminding you what we have and are about to create in Norway, starting out as a small mobile player, subscale with low double digits, tens of margin, I think it was, 15% or so. We are now more than doubled EBITDA, and we have more to come as the synergies start to kick in, the full effect of the synergies that we upped in C and D to SEK 800,000,000 in total, both CapEx and OpEx, is well underway. And as Christian and I mentioned, SEK 200,000,000 in the quarter run rate, and we will get to the EUR 400,000,000 knock run rate for the full year when we exit into 20 20. So a strong story, well underway on the integration, and the only thing we really need to fix now on a high level is to get back on growth in the consumer mobile. So strong execution from the team in Norway. So ending with a few notes on cash flow, Christian. I think that's worth talking about for a few minutes. Yes. Thank you. The cash flow is stable now in the last two quarters. It's been SEK 2,800,000,000 and we've been on last year's level. It is to be then clear to everyone, from our perspective, where we started this year and we came to the Capital Markets Day and driving this, we expected a somewhat better improvement on the EBITDA faster. We see the turnaround. We see it coming, but a little bit faster turnaround in Norway related to the B2C side and also in Finland related to the legacy decline that is coming faster. We expect actually that to be a little bit slower. That has a slight impact on the competition, and we are seeing that the other drivers are compensating for that. So in total, there's no risk on the full year cash flow, but it will be a slight different composition. And so far, we've done a tremendous good job, continuous good job on the working capital, both on the vendor solutions and or supplier solutions and also consumer receivable solutions. And the CapEx is slightly higher, and that is 2 things. One thing is actually just a move between working capital and CapEx of around SEK 200,000,000, which is just an accounting issue, how you account for different kind of financing. And the other thing is that we now have guests on board, and we have had a quite full agenda on the other businesses also on the network capacity, and it will be a slightly different mix in the second half. So the full year growth of CapEx will not be as it is in the first half year. As we said at the Capital Markets Day, it will be in line with last year, even including GET. And then you have to have this SEK 200,000,000, of course, coming from handset financing. Leverage today is at SEK 2.65 billion in quarter 2, and we should remember we have another SEK 0.1 billion to gain when we bring in the IFRS 6 EBITDA on a full year run rate. So in essence, doing that, it would be SEK 10.55 at this point. And in total, the IFRS impact is SEK 0.3 on the net debt to EBITDA. Looking into the second half and our outlook, we reiterate that to EUR 12,000,000,000 to EUR 12,500,000,000. It is then in the first half year equal to last year. The weak first year half year in EBITDA will be compensated with a higher EBITDA in the second half, but we also will have somewhat more positive view on some of the other levers coming in driving the cash flow, a mixed composition of all of those. Thank you. If I should summarize before we open up for Q and A and you go back and do your normal job, I would say that even if we are meeting, broadly speaking, the expectations and consensus on EBITDA does not mean we are slightly better development in both Norway and Finland. As we have been pointing out, we have expected and hoped for slightly better development in both Norway and Finland. And that one, we are working hard to make sure that we come around. Also on Sweden, Anders and the team, they are sticking to their turnaround agenda, which will generate a break and turnaround of EBITDA 2020 as we laid out in C and D. We're sticking to that plan even if the costs look high in Q2 and therefore, the H2 come down on cost looks more stretched. We still believe that's doable. And sticking to our guidance on cost, 3% Sweden and around 2% on group, leaving us with the SEK 12,000,000,000 to SEK 12,500,000,000. But it's probably fair to say, Christian, it's going to be towards the lower end of the SEK 12,000,000 rather than the upper in that range. So we will end there. And then what we do now, Andreas, it's totally up to you. Yes. Thanks. You do the usual thing. Operator, we can open up for questions. We are ready. Thank you. Our first question Our first question comes from the line of Peter Nielsen. Your line is now open. You can ask your question. Thank you very much. A couple of questions, please. Firstly, on Sweden. As you highlighted, Johan, you've seen some encouraging developments on the large enterprise segment. 1 of your local competitors have talked about intense pricing pressures in this segment and have basically, by the sound of it, thrown in the towel here. Is there a risk that you have sort of acquired growth at the expense of margins in B2B? Or if you have any comments on that, that will be appreciated. And also staying on Sweden, please. As you highlighted here, the OpEx in Sweden and the reductions you're targeting does include both, obviously, employees, etcetera, but also marketing spend. Is there a risk that you may need to invest a bit more in the market in the second half related to FMC, etcetera? And if I could just finish off on Norway. You talked about the weaker development in B2C mobile in Norway even though we've seen an improvement versus Q1. What is from where you're sitting, Johan, what is the problem in Norway? I mean fundamentally, it's a good market. You've obviously lost some customer. Could you from your side, what is the problem on B2C mobile in Norway at the moment from where you're sitting? Thanks, Peter. So let me walk you through them 1 by 1. On the B2B side, a large public segment. We have always had a very strong position and a strong position on our core services. As we now add our new areas of services in IoT and the other services that we now produce in the Division X, they get a nice shield for pure price competition. As we always try to stay away from being the price leader. We have, I don't think, ever been price leader in that segment. We do carry a premium to many of these customers, which we work hard to serve and deliver on. And that has been the case also in the quarters. We have simply had a very strong sales quarter defending our customer base with the quality networks that we have again been awarded best network in Sweden and with a very strong push keeping these important customers. But it's a combination of those factors, strong execution, sales, customer intimacy, together with new services that we have invested in starting to yield. So think overall, a quite strong story. But I want to manage your expectations again on B2B Sweden going into Q3 and Q4. It will not be growth. It will come down, but it's still in a territory where we are much better off than we were a couple of years ago. On the OpEx side, we are we have factored in the market dynamics. We have factored in our needs to invest to maintain share of voice, to stay close to customers and to gain and enhance the relationship with them on the SOG side. And there's, of course, also some investment funds for acquisition. But all in all, we believe that's going to be more balanced in the second half in our countries, including Sweden. So it's mostly on the other parts that we mentioned, resource cost consultants, etcetera, that will come down on some of the initiatives that we already have implemented. Consumer Norway. So we have high ambitions, first of all, in Consumer Norway. We are not happy if we don't grow our base, if we don't grow our ARPU, if we don't grow our net promoter score and improve the services to our customers. So on some of these accounts, we're doing really well. We've been making our customers happier. They're staying with us longer. But we have not been able to grow the base as we wanted after our brand rationalization from many brands to fewer and focusing in on the Telia brand and has not been as strong and has not come as early as we wanted. And that's due to both competition and getting our proposition right. But we believe we have what it takes to regain It's taking slightly longer than we expected. That's helpful. Thank you. And also add maybe, P. K, that as Johan said, we had a very strong sales quarter in Sweden B2B, and a lot of those contract have been signed at unchanged prices from our ARPU numbers, both in Sweden and Finland, which is flat to growing despite that we have a good B2B growth. So I wouldn't say that we acquire growth on behalf of margin. Super. Thank you for that. Thank you, P. K. Next question please. Our next question comes from the line of Seiya He. You can now ask your question. Hello. Thank you for taking the questions. I have two questions, please. And first one is on Norway. To start with, I just want to clarify that the drivers of the ARPU and RGU improvement in Norway mobile, should we think that you're actually adding more premium B2B mobile customers into your base? And then on the broadband, you have very strong quarter of 23,000 ads. And you mentioned in your press release that it's from the new partnership. I was just thinking whether it implies that there is some changes on your thinking on network strategy of your preference between fiber partnership compared to your cable? And the final question is on Sweden. You started to dismantle your corporate network. I wonder if you can indicate any of the potential saving opportunities in OpEx and CapEx. Thank you very much. So let me take one and then I'll pass the other 2 to my friends. Broadband Norway and GETS, the partnerships, we had some early losses of partnerships when we after the acquisitions, which we now have regained with partnerships across the country, strong teamwork in reestablishing that, and we're seeing some effects from that. But it's nothing drastic. Nothing has really changed in the dynamics overall. It's a very competitive fibercable market. And as we've also seen from some of our competitors, it's a race to ensure that we get the right customers on board, and we are in that race. And we are a very competent, strong team to help us deliver. Do you want to take the copper, Christian? I can take the copper, and I'll leave the other one to you, Andreas. So the copper is something we have initiated in Sweden, but we're not in a heavy phase of taking down copper. So the cost savings and the materiality also on the revenue side is very low compared to in Finland where we have actually a very accelerated copper closure. So it's something we need to come back to later when we have a more bigger plan on how to do it faster. And on Norway and the B2B intake that we have taken, it's predominantly from large and public sectors. So I wouldn't phrase them as premium or nonpremium, but we are happy with the prices that we get. And that is the driver for ARPU as well or just yes, that was there, I guess the question, yes. Thank you. Okay. Thank you very much. Thank you. Our next question comes from the line of Lena Osterberg. I was wondering if you could just maybe elaborate on you'd say that the cash flow improvement in the second half will come from different levers than you thought initially. So maybe if you could just compare it to how you split it out initially at the CMB in terms of working capital taxes, EBITDA improvement. What is going to be different? And where will you see the main sort of improvement come? Because it's quite a large list that's needed in the second half. And that's true. And that's why we also said what we said, Lena, and you spot on there, that we are somewhat behind then in the EBITDA side on the Norwegian and Finnish results primarily then. And that leaves us a gap to where we actually on that EBITDA bar in the presentation you're looking at from the C and D. And that gap will be filled by the other elements, but not on CapEx because CapEx, we are actually doing what we intended to do, and we're going to do the investments that are needed. And we had a quite fairly good view on that 6 to 9 months in advance. The CapEx doesn't change that much. So it's on the other levers that there is a combination that would drive that. And I will not go into the details of those, but you know who which they are, and they will, in a combination, contribute to a better cash flow from that element. But can I just maybe a follow-up then? Do you see potential for greater EBITDA improvements in some other markets which can compensate? Or is it that the improvement will come from other things than EBITDA? It will come from other things than EBITDA. Okay. Thank you. But of course, I mean, there's always the balance of the group. But overall, we see a slightly lower EBITDA coming in than we expected from primarily the Norway and Finland, and that has to be compensated and will be compensated where we have better push right now in other drivers. But that just leaves tax working capital wise? Working capital, interest tax and it could be nonrecurring and pension. There's a lot of different levers in the package that could drive this in total. But there was no immediate and direct guidance that will give on that, but we know that, that portfolio will compensate. Okay. Thank you. Sorry, Elena, just let me be clarifying as well that, of course, we want to be very clear that we against our own expectations, we're not happy with the EBITDA where it ended up in Norway and Finland. And that is one of the reasons we are seeing a slightly different mix on the other parameters, which are doing better. Not like we're tweaking and then we have to fix other things. It's also some things that are growing better there that will compensate for that shortfall. But having said that also into the 2020 2021, to get that sustainable cash flow, of course, we need to come around on the EBITDA and the growth on the EBITDA that we talked about and Sweden in 2020 turning. Those have to be the core drivers for our long term cash flow growth. And the other leaders we have talked about are more nonrecurring in short term that Kristian has talked about before of our total, for instance, working capital potential that are now coming towards the tail end. So it needs to be compensated by the other factors, which we can surely go more into that later on, Lena. Okay. Thank you, Lena. Next question, please. Thank you. Our next question comes from the line of Andrew Lee. Your line is now open. You can now ask your question. Yes. Good morning, everyone. I have a few questions that Johan didn't ask. The first one was just on the or just to dive into the cost cutting a bit deeper. So your cost cutting has been lumpier than expected, certainly than we expected, I think, than you expected and also slower than expected for 2019. Is it harder than you thought to take out costs? And what does this mean for the scope for cost cutting into 2020 2021? Is the upside still as meaningful as you first thought? And then secondly, on the state of the Swedish competitive environment, we've seen mobile price rises from you guys, but more promotion on the extra SIMs, how confident are you that the Swedish mobile environment can become inflationary? And how confident are you on the competitive environment in Sweden more broadly as supportive of the growth over the medium term? Thanks, Andrew. Let me start on the competitive environment where I think we can only do our part and look at our business when driving through improvements. And we have really been focusing on getting better yield on our mobile portfolio if it was mobile for 1. That's why we did this decomposition of our mobile portfolio in Q2, which as Kristian alluded to in my in our conversation, that we will see the core ARPU uplift coming through in H2 from these changes. And we definitely have an ambition to go back to growth on our mobile across, also on their own consumer. And this should be seen in our life in an attempt to kind of drive people to higher buckets, drive people to be more usage and actually being prepared to pay a bit more for the quality that we offer. So we lead and try to do our part and make sure that we get better yield on the mobile side. Encouraged by the early signs, we should say, on the mobile portfolio. On the cost cutting side, you could say it's lumpier or slower, and I won't disagree with you. I can take 2 examples where we say it's not as expected. And I think the Swedish side on as Christian also made out, we did make a conscious decision to invest more into the customer interface and customer service in order to deal with all the questions and queries that came from customers from price changes and portfolio changes and from customers being migrated onto our new IT stack from the transformation. That all came towards the end of Q2, and we have to invest more to keep us about more than we expected. Those are of the one kind nature, and they should not be part of your long term top shape of the Swedish OpEx. And that's why we remain confident that OpEx Sweden will come down in the second half. And in Finland, as we pointed out several times now, we're not happy with the EBITDA development, partly through what Christian mentioned on the fixed legacy decline or removal of copper services. But we also have a higher cost in implementing the ICP proposition to our large corporates than we expected, I. E, the convergence B2B has higher OpEx COGS than we had anticipated in order to get the deals that we're getting. So on growth, fine. On cost to get that growth for ICT Finland, not okay, not happy. And we're doing things to recover that. And that's more medium term reshaping than the Swedish one. And I think then on the long term, you come back to what we've said before, Andrew, that the synergies in Norway need to continue, and we feel confident on that. The other thing is the synergies from the new operating model. And there, you have the immediate synergies with Zink IP put together in one box and all this. But you also have, from what exactly Johan talked about, we're putting up the product areas and product platforms where we do a product out of something like we do in Finland and get the cost down of delivering in the B2B area on these things. And so that is a very important journey for Telia in reaching that. And finally, we talked about the migration we talked about many years, and we are getting to the end. We're now migrating our customers in Sweden. When we get there, it will be less lumpy roads in Sweden, where we have actually, from my point of view, the biggest difference from our expectation on the lumpiness if we have a new IT stack where actually things are simpler. Thanks, Andrew. Can I just ask a quick follow-up? Yes, I just had a quick sorry. Just on the broader question on the Swedish competitive backdrop. Your friend, the CEO of Tele2 yesterday said that he felt that the that overall the Swedish market was a better platform for growth today than it was a year or 2 years ago. I just wondered if you have any comments around the kind of broader competitive backdrop. You gave a very detailed answer and clear answer on mobile, but just more broadly. But more broadly, we are in attractive markets, we believe, in the Nordic Baltic. It's stable. It's growing. No disruptiveness in that sense, I would say, on the short term horizon. We know what is risk in the market. We know there are definitely going to be pricing rationalities on some segments, but we also make sure that we stay focused on what we are good at and what our customers are asking us to do, not trying to be too distracted by all the things going on, but making sure that we're aware of what's going on. So nothing surprising, healthy markets overall, growing economies, which makes this a good place to be, we think, in the Nordic Baltic. Thank you. Drew, next question please. Thank you. Our next question comes from the line of Ulrich Rathe. I would like to come back to the free cash flow sort of slightly different composition question. So if you don't want to talk about the specific factors that would make the guidance attainable. Could you then reassure us that the that you retain the ability to sustain or grow the free cash flow in following years? And what I'm thinking about in particular is that sometimes these short term measures to sort of boost free cash flow, of course, effectively amount to borrowing from the future. Could you sort of explain to us that to what extent the measures you have in mind, whatever they are, are not simply taking forward things that would otherwise have come into 2020? That will be my first and main question. The second one is during the Q and A at the beginning, I wasn't entirely sure, but it sounded at some point if you said that there would be room for more price rises in the second half. I'm not entirely sure. Could you please clarify whether that is the case? I'll start with the easy one, Orest. The second one, we are always the Where and when, obviously, we will come back to it, but that will be part of our agenda. But we also said that we have implemented pricing measures in Q2 that will get its full effect into H2. You haven't seen the full effect of the price increases and re portfolio things that we have done. So that's part of the comfort that we're giving for H2, improving trends on service revenue and EBITDA. And on the cash flow, may I start and then Christian, please fill in. We have always said that to get to the sustained and increased cash flow over time, we need to get to EBITA growth to be the core driver for that going forward. But in the short and to some extent, the medium term we have had over the past year, we have been able to improve, for instance, working capital to be part of that cash flow growth in 2018 2019, also part of it. That, of course, will go away. We know that. So therefore, our expectations on EBITDA growth going forward is still there from our acquisitions as a key part of Synaggy Park, but also the turnaround in Sweden, which will be an important driver for our cash flow growth into the future. Then we will set also that we will continue to evaluate our need for investments depending on how the competitive environment goes, but also how the development around 5 gs goes. And our approach to 5 gs, you're well aware of. That does not imply a quick, broad rollout of 5 gs in our expectations for 2020, 2021. If that happens, then we will have to talk to you again about the different investments. But otherwise, nothing has changed. Yes. And I just want to add to the flavor there. Of course, the risk has increased when we have a lower run rate from Norway and Finland in the return of those EBITDAs. But it's too early to have a conversation on because there's also things that are going a little bit better that we see coming in the future, like the B2B agenda, etcetera. And we'll just have to update you as we go along on the risk and opportunity profile of this sustainability. Thank you, Julien Dumoulin. Thank you. Would you be willing sorry. Yes, Teruel. Sorry. And then specifically on the question whether the measures you have in mind are things that you're pulling forward that would come anyway and you're just timing them differently? Some are performing better, as Christian said, and we expect some of them to continue to perform better. And that's if you look at the cash flow portfolio of levers, some are worse, some are better. That's what we're saying. And the ones that are better are unfortunately the less quality ones, we are aware of that. And the core ones, the quality drivers are a little bit worse. But we remain with the same message for the long term of this company for when cash flow growth will come from the EBITDA growth. And again, as Johan said before, we compare where we stood in C and D and talk to you and not with your consensus numbers or something else, but with our numbers. Got it. Thanks very much. Thank you, Ulrich. Next question, please. Thank you. Our next question comes from the line of Stephane Dauphine. Yes. A couple of more detailed questions. First of all, you have started copper decommissioning in Finland and revenues fell faster than the fall in subscribers this quarter. Can you just give some information on how what we should expect going forward in the coming quarters relating to this? 2nd, on TV ARPU in Sweden. You made a 7% price increase on the lagom package, the most common TV package. And still, TBR2 was down 4% year over year and only up 1% quarter on quarter. What is the underlying what underlying development is explaining this development? And then thirdly, you acquired a company called Fellow in Sweden. What is the plan for this brand? Do you intend to compete directly with Hallon and Dimbla? Thank you. So I'll leave my friends thinking while I take the EasyONE Fellow. We were attracted by the proposition and the team, and we also had, obviously, their business on our network, our wholesale. So it was a Logic acquisition to derisk some of the wholesale revenue, but also to get the competent team in that are in some segments stronger than we are. And therefore, we can leverage that going forward. But nothing disruptive expected as of now. And I'll leave to Andrea to elaborate on the ARPU and the subscription on IPTV and OTT. And just on the Finnish, the run rate in Finland on our part of the copper now is so fast that we will have closed our copper pretty much by year end, but it will be a tail small tail into next year. And I think so that is the first message. And the second message is that we expect that that's probably to take a double time, so end of next year instead of end of this year. So it's been something that has accelerated, and we have accepted it accelerated, and we do it now fast. And on Rpus Stefan, I need to double check. But on top of my head, it's a mix difference that explains this because there is no other price changes that is made. So it should be a mix change. Okay. Thank you. Thank you, Stefan. Next question, please. Our next question comes from the line of Terence Tsui. Your line is now open. Thank you. Good morning, everyone. Please can we go back to the slide around the OpEx development in Sweden? I was just hoping maybe you can give us a couple of examples of where you're going to see the OpEx improvement, maybe provide a little bridge as to how OpEx is going to get much better in the second half of the year? That will be very useful. And then secondly, maybe you can also say a few words around the Bonnier transaction. It's obviously going through UC approval process. But I think in the past, you said that Bonnier Financials were getting better. Is that the case that you've seen so far in 2019? Thank you. I'll start with the cost in Sweden there. And then back to the first half, 3% on the first half, That is below 1% if you take out one offs. 1 offs are just to give a little bit clarity on that. There's some provisions that have been made in the past that has been changed, and there's nothing in cash or anything like that. And it also has to do a little bit with regulated pension that has been adjusted in the numbers. So those are one offs and one timers for real. And then we go into the second half from around 1% and down. And the primary reason on that is the resource cost, but there are, of course, many other levers as well. And Energy's cost is up this half year and will be up a little bit next half year as well, but less. So there's some things that will go up less or be less, but the resource cost is the main driver in this. Good. Bonnier, we are still very excited about the prospects of the deal. We took it out a year ago, believe it or not, and we said that it was going to be a long process and into H2 of 'nineteen, and that's where we now are. We're in a very intense and constructive dialogue with the commission. We explain and argue our case from the consumer angle, from the competitive angle and from the fact that we will be a long term investor in local regional content, which I think is an important part. And it will also strengthen our propositions to Swedish TV households and TV customers, and it will also help our business and create synergies to improve our cash flow, to help us grow that cash flow we talked about. So still very excited. Haven't changed my view on the prospects of getting it through. Moving into the second half now, it will be intense, and we will initiate the updates that we can as and when required. And just on the financials, we have no insight into the 2019 financials, unfortunately, but that's the way it is. Okay. Thank you. Thank you, Terence. Next question, please. I think we have 4 left, so we rush to fit all in. Our next question comes from the line of Frederic Ulitto. Your line is now open. You can now ask your question. Thank you. Two questions, if I may. Just a clarification on the accelerated enrollment of other countries some to your new operating model where you see effects coming earlier? Any additional sort of costs meanwhile you do that in a more quickly fashion? That's the first question. And the second one on Finland, again, on the business to business. You have won a number of larger deals. Are they all sort of onboarded? Or is that a process that will sort of support your growth opportunities in coming quarters as well? Can you just sort of elaborate a little bit on where we are with those new contracts that you have won? Thank you. Thanks, Fredrik. On the Finnish side and it goes also for some of the other markets. Of course, there are some deals that are won towards the end of the quarter, whereas that hasn't yet been implemented and you had some effect in support of that in Page 2. I don't want to exaggerate that because it's still a bigger large base and then you add smaller new deals. Even if they're big, they get small on the bigger picture. But yes, there are some supports to be expected from some of these new deals. On the operating model, we have, of course, onboarding costs, but they are not we're not guiding on them or changing the view on them, and they're managed within the other levers and cost buckets that we have talked about. So it is a overall, you should see this as a derisking and accelerating on the synergy estimate that we laid out on EUR 600,000,000 to EUR 900,000,000 full run rate. That should now be able to come earlier. We haven't said when, but definitely not later than we've said before. And we do also get those CapEx benefits of around EUR 500,000,000 on a run rate basis once fully implemented. So these are significant synergies to go for. It's like a big acquisition with the synergies of 10% to 15% when we do this. And we are very encouraged by the early effects of the Swedish onboarding and now rolling that out to the other countries as soon as we possibly can. So just on your on the risk profile, I mean, you could say, which is probably correct, that the management bandwidth will be affected by this during this process. But on the other hand, dragging it out is also a risk while people are waiting and wanted to get on board and we don't get the processes up running. And there is also a cost. So we have decided that the faster model is better, and it will make us reach the goals faster. Very clear. Thank you. Thank you, Frederic. Next question, please. Our next question comes from the line of Abhilash Mohapatra. It's Abhilash from Berenberg. I just wanted to sort of come back to your sort of a fair point around you wanting our growth to be the driver for free cash flow growth in the future. Just sort of wondering about that. In 2018, your EBITDA was up about 1% this year. Obviously, for the 1st 6 months, it's down 3% and you're targeting a recovery. You're doing a similar level of cost cutting as last year. You've implemented price rises in Swedish fixed and mobile and then the synergies from GET. But it sounds like full year EBITDA is probably not going to be up on a like for like basis for the group this year. I'm just wondering how sort of how confident are you about sort of growing group EBITDA sustainably in 2020 2021? And just sort of wondering about that, especially in the context of your leverage, which is sort of 2.5x and is set to go up with the Borneo transaction. So just trying to sort of gauge your confidence in the sort of near to midterm EBITDA growth profile, please. Thank you. Let me take the mid long term view, at least. And then, Christian, you may want to comment on the short term. We talked a lot about this in C and D and also mentioned it in Q1 report that the effects we're getting from GET, the effects we're getting from Bonye, touch wood, and the synergies from these deals are going to be a pro form a over SEK 4,000,000,000 of enhanced EBITDA when we're at full speed synergy out. That, of course, is the key part of our EBITDA growth over the years to come with also cash flow coming from that depending on how you which line you look at. But there's significant improvements on our cash flow ability and our cash flow story mid to long term. That should not be forgotten. Then on the more short, medium term, we have to turn the existing operations around to improve, and we're happy with what we've seen in Norway, Finland, as you said. I think we'll catch up some of that this year, but more into next year. But Sweden is the big one, of course. And we have Anders now laid out clearly that during 2020, we will turn that EBITDA around. We're very committed on that journey and that, of course, will be key contributor to the EBITDA growth. Yes. And as you know, we don't guide on this year's EBITDA, and it will be an improvement in the second half compared to the first half. And I think that the most important thing is that we see the trend shift and we see the journey going where we want it to. And that's based back to the rating situation. That is the most important thing for them as well. It's not the 1 quarter, 1 half year because then the world will be crazy from having changes all the time from the rating institutes. But and that's where we seek and we feel the comfort that, that journey is still the same and even though we have a little bit slower start of this year. Okay, Abhilas. That's right. Thank you very much. I'm afraid that's all we have time for. Time flies. Thank you a lot for listening in, viewing in. Thank you for trying out this new concept. We are happy to take feedback on this excellent tryout. And have a great summer, all of you out there. And let's catch up when the autumn starts, and we're all back. Thank you. Thank you. Bye bye. Thank you. That concludes our conference for today. Thank you all for participating. You may all disconnect.