I can tell you that it's sunny and warm outside here in Stockholm, and I think it's reflecting the mood inside our office in Solna, Stockholm. We do as usual, Johan Dennelind, our President and CEO, will start, followed by Christian Luiga, our CFO. Johan, not stealing any thunder this time. All yours.
No. There is so much to steal, Andreas. Why didn't you take the chance? Good morning, everyone. Good morning to you online. We are here for our Q1. It's very dark in here, but it's very bright outside. I think in the recent AGM, I gave you the hint that we feel like it's spring in the air also for Telia Company. Hopefully we can convince you in the presentation today that's how we feel, and that's also what's in the numbers. Let us try. Christian will come soon. Bear with me for a few minutes. The summary for the quarter is really in this slide for me. We have mobile growth in six out of our seven markets. That's not always the case.
This, of course, between consumer and enterprise shifts a bit, but it's a super important part for us to go back to growth in top line overall. This is good job, of course, on the back of a lot of new propositions and a new pricing. The number that sticks out probably for us as well for you is the 7.4% reported EBITDA improvement Q1 Q. Yes, there is a bit of FX in there, and I'll leave it for Christian to explain that. Also on the cash flow side, very strong start of the year, slightly stronger than last year's start. We feel very good about that cash flow, and we'll come back to that later on. In the quarter, we have continued our reshaping of the group from Eurasia to the Nordic Baltics and also from divesting non-core.
We got a dividend decision in Turkcell, which means about SEK 900 million coming to Telia Company in three installments through the rest of the year. Then we are through two more of the Eurasian assets in the quarter, and also divested Spotify before they went public, as you know. Maybe the biggest news today, I'm sure you've seen, is the announcement of a buyback program with the ambition to, over three years, buy back shares at the value of SEK 5 billion per year, totaling SEK 15 billion. Let's go to that straight away because that's probably where we will share some more color both here and afterwards. As you know, we got a mandate in our AGM a couple of weeks ago for max 10% buyback.
We aim to do SEK 5 billion up to next AGM. There is a new AGM that will have to approve another, hopefully, mandate for the years to come. If we get that through the next two AGMs, we will have a program running for three years with the SEK 15 billion ambition. This is, will be 9% of the outstanding shares of Telia Company in a total equivalent of around SEK 3.45 per share, per year SEK 1.15. All in all, the full program, when it is executed and if it is approved all the way, it will have an impact on our leverage of around 0.5. We believe this is the best way to address our too-strong balance sheet, maintaining capability and flexibility to continue to execute on our very important M&A agenda in the Nordic Baltics, that we have with this program.
A bit on the operations. This is on a group level. We have a changed, somewhat more stable revenue trend approaching the zero line if you take away the fiber installation fees. Our goal is, of course, to get above the zero line. As you know, there are many negative forces pushing our legacy revenue down. We are fairly good in compensating that with our mobile TV fiber offerings across our market. We will get there one day, and that will be a big day. On the EBITDA side, as you see the shape of the EBITDA improvements year-on-year for the last five quarters. Now if you remove the FX part, you are down to 4.2% improvement on EBITDA, that also very strong, stronger than in a long time.
It is of course, supported by our cost focus for the year, also some lessened pressure on some key revenue lines. All in all, we are pleased with the 4.2% EBITDA improvement for the year. Pleasing as well is that the mobile service revenues across the group are growing 1.5%. I think that is around SEK 160, SEK 127. Thank you for stealing the thunder. You got your chance. SEK 127 million in extra revenue on the mobile side. It is also a slight trend up, which we think also will be possible to continue with the right execution. More importantly here than seeing the underlying drivers for ARPU growth. Sweden 4%, Finland 5%, the Baltics 4%. Flat in Norway only due to some regulatory changes in Norway that have pushed out the special numbers.
From the market, that has quite a big effect in doing some quarters as we flush through those numbers. Otherwise, the Norwegian business is very healthy. I will come back to that. On the Swedish side, we are growing our postpaid base, not hugely so, as you see, more importantly, the ARPU growth is there. The ARPU growth in Sweden is now less of non-ARPU growth. It is still ARPU growth that are driven by VAS, those things in that, it is less of that and more of core ARPU growth. When I say core ARPU growth, it is the pricing of the bundles, or upping the bundles, taking bigger bundles. That is where you have the core ARPU growth that we are looking for, and that is more healthy this quarter in Sweden.
Finland, if you are waiting for the numbers, Christian is going to come to a lot of numbers, so bear with me. The convergence in Finland, it's a place where we really have taken our strategy into action and demonstrating that we can do this. On the enterprise side, if I start there, four important acquisitions in a year. Yeah, they're not on top-line groundbreaking, but they are small, medium acquisitions, SEK 1 billion and hundreds of millions acquisitions, that together have taken the Finnish B2B organizations and the way they go to market with the propositions needed by customers into a completely new level. We are so much more attractive to our business customers in Finland now than a year ago, and that will show.
We're already this quarter seeing a better stable uplift on the B2B, for instance, mobile, not because these companies have bought mobile, but because we can sell the full portfolio in a better way. That is convergence strategy where we talked about since 2014. On the left side, you have the consumer convergence that we've also been talking about for a long time. We have bought hockey rights, we believe strongly in the business case, and we're now launching. We just last week launched some of the bundles for the hockey fans in Finland to be out early, to know what it is, and our presale is already above our expectations on this pack. We haven't yet launched the most interesting package, which is coming very soon. Stay tuned for more hockey fantastic products in Finland over the coming days. Moving to Norway.
Norway Consumer, remember the one-off effects I talked about, the regulatory fees. Apart from that, the monthly fee, the revenue we get, our core ARPU is growing. It's growing healthy, 6%. Even if consumer looks soft, the underlying drivers for consumer in Norway is there. I'm sure we'll speak about the market dynamics later, but we have a new consumer value proposition in there, and we're very confident about the way we go to market and the right products that we have out now and doing this thing. More to look forward to also in the consumer space in Norway. More importantly for Norway this quarter is the effects of the acquisition of Phonero, which has also one acquisition that we're very pleased with the way we have executed it, the way we put it out to you.
We put out the synergy estimates, and we have delivered on it. That's how we have delivered on it, is just a few information added. The customer has been migrated carefully, taking care of them, making sure there's no disruption, and they will now in Q1, they're all migrated. The full run rate, SEK 400 million was the number we wanted you to remember, and is the number that you now fully have gotten, and it's about SEK 100 million in the quarter, I believe. On the cost side, last summer, we put out a clear ambition that we need to reduce our cost base before we get into post-transformation in key markets where we have further structural cost reduction potential. In this phase here now, we are addressing our cost base with SEK 1.1 billion net savings. Net savings.
Repeating that, because that's really the uniqueness of this program, is that these are numbers that you will see net coming through. Q1, we are on track. We're delivering our reduction of around SEK 200 million. Broken down, as you see, something is pure savings in the operations. We have sold and bought some companies, so we are adjusting for those. Not to keep it away from you, very transparently, this is how it looks, and it's SEK 200 million net reductions in Q1 versus Q1 last year. It's going to be SEK 1.1 billion through the year, so it is back-end heavy. We will do and have to do more through the rest of the year, but we have no reason to change our view that this will be delivered and completed by the end of the year. A few words on our integrated approach to sustainability.
We tend to update you now and then when things happen. This is more of a just remind you that this is part of the way we work. The framework and the targets, the way we have visualized, the way we work with this, with the SDGs, are very important statement of materiality that we, as a very early company in the world, put out to the market saying that sustainability, prerequisite for profitability and long-term shareholder value creation. Our board stands firmly behind that, we have gained and received a lot of positive feedback on that position. Hopefully we can get all investors to be sustainability investors. These are examples of some of the things we do. We have, I must say, a very transparent, good annual report, which is a combined annual and sustainability report. Please read it.
Let me end on a note for the rest of 2018. We are not changing our EBITDA guidance, but we are adjusting our free cash flow guidance. We have before said that we're going to be around SEK 9.7 billion. We're very confident that we will be above SEK 9.7 billion for the full year. Now, you have been waiting for him. Here he is, Christian Luiga.
Thank you very much. Good morning, everyone. I'd like to start with some general statements about this quarter report and the status of the company. I want to reiterate and talk about our strategy and our thinking, and I think this quarter really shows what we're trying to achieve. We have an organic and M&A-driven EBITDA. We have a development of our cash flow, which we have an ambition to strengthen over time. We have a strong balance sheet, and we are trying to find the right balance between M&A and shareholder return. That is, in essence, what we have the goal and what I think our quarter report proves that we are delivering on. If we start with the EBITDA development, 4.2% organic. The 4.2% stems from a growth in all countries, except for in Denmark, where it's flattish.
It is negative SEK 4 million. SEK 4 million is a very small number. I dare to say it's around flattish, to be a little bit positive. The part that is driving this most, of course, is the cost program. We have a decline of 0.9% organic revenue. We need to compensate for that. To grow EBITDA then, we need to work on our cost agenda. I'll come back to that in a second. On top of that, we have another two percentage points pretty much coming from M&A, and then another percentage point on the strong euro, primarily. That gives us 7.4% in the quarter. Good start. Cost program is something we all work with in this company. That started back in 2017 in the summer, where we increased our focus to also declare our ambition to all of you.
The 1.1 net saving is a program that is very clear for this year as a number, but it's also very clear internally that this is an ongoing thing for the rest of our life. We need to get the DNA to change, that cost becomes part of our DNA in this company. That is also a very important part of the cost journey. The biggest part of the cost program will come from resource costs and COGS. COGS, we see both the cross-border synergies we work with. We work on the vendor side, and we also work with the network and IT costs. On the resource cost side, it's a new way of working, and it is also how we are becoming more efficient in our operations. We have talked about nearshoring before. We talked about robotics.
For example, we're also reducing the number of calls in all our call centers, 10% in Sweden. That gives also a good impact on the resource cost. We are continuously reporting on reduction of our employee base. As you know, since before, we talk about resource cost because we both have resource consultants and our own employees, and we look at it in the total of how to drive the resources used for driving this operation. The program also includes an acquisition and disposal, as you can see, and that may be a little bit a question mark. We have said whatever we owned last year and how we looked like, we should include that. This quarter was a slight difference between the disposals, mainly then Sergel and the Nebula Phonero acquisitions. On full-year level, that will be pretty much flat.
That's how you should view that number. On Sweden, we have a service revenue growth in B2C, which Johan talked about, also driven by mobile, 5% up. Very promising. TV is also growing both on subscriber and the ARPU side. The fixed legacy is declining and somewhat less because of the price increases. We have the broadband side, where the XDSL is not compensated on the fiber side, so it is also declining somewhat. On the B2B side, we have a continuous small growth in the Telco SME segment. It's been ongoing now for two years, so it's becoming a status that we are familiar with. We continue to find new ways of working to drive customer excitement around our services.
The B2B Large is back on the 5% is negative in this quarter, that gives us a 2.5%, pretty much, decline in the B2B area. Large continue to be a segment where we work very hard towards both the change in services, but also the price pressure. Fiber revenue is down 40%. Here we have declared a 60%-90% decline as a guidance. I know that is a wide range, but it is still an uncertain area. Even if we have an ambition to deliver, we see uncertainties, and we see problems in the permit area. As this also may have an impact on EBITDA, it also has an impact on cash flow. The lower EBITDA we get, the better cash flow we get from lower CapEx. Finally, EBITDA growth is solid in this quarter.
We also know that the cost-saving programs in Sweden will actually be even better coming through in the next quarters. Even though we have some revenue challenges, we also have some good momentum in our cost programs. Finland, happy to see a flattish service revenue driven by a strong mobile side. B2B in Finland in comparison with Sweden is actually growing, where the mobile side is compensating more than enough than the fixed side. They have a slight growth. The mobile B2B is growing 3.2%, and in the consumer side, we're also growing, and total mobile development is therefore then 2.5%. The Finnish year-on-year EBITDA is somewhat helped by the rebranding we did in Q1 last year. I think you remember we talked about that. We had a cost of that in Q1.
Still, it's encouraging to see the development organically and without that, and to see a 9% growth in EBITDA. Johan talked briefly about Norway. Norway is proving that we grow organically 5%, single digit, and then double digit with our M&A agenda, 17%. FX has been a little bit against us in the Norwegian kroner, but not much. The special numbers, which is impacting the market, had an impact of SEK 30 million in the quarter and will be around SEK 100 million in the year. It's not exact numbers, but it's around those numbers. We are also working very hard on our cost structure in this country as well. We're doing that everywhere. We can see a more efficient customer operation, and we also see a digitalization that helps us driving the cost in Norway.
We also closed down the Chess brand in Norway, which will help the cost structure, but also give some turbulence then initially. I must say that it's been handled in a very good way, and the effect has been as we expected or better, and we feel good about that change. It's always painful to close down a brand. Baltics, solid. Starting with Denmark, as I said, it's down 7%, but it's DKK 4 million. The decline in revenue is compensated both on the COGS and in the OpEx side. They are driving a more efficient operation. Denmark also was cash flow positive in Q1, even if it was slight. It is no drama in that operation, and they are working hard to improve it. Very good to see that both fixed and mobile in Lithuania and in Estonia is growing. It's strong markets right now.
The combination of the revenue growth and the cost programs are delivering a high organic EBITDA growth. Cash CapEx continues to trend down as we have talked about. Since 2016, when we peaked, we have said that 2017 and 2018 should trend down in cash CapEx, both on the fiber side and on the other CapEx. We are continuing on that route, and I feel comfortable about our work we're doing here. I would like to remind us, it is our allocation process internally. It is our cross-border synergies, and it's how we work with vendor management that drives this down in this company. On top of that, we had a good starting point with a lot of CapEx spent on coverage that we are not doing right now. Net debt to EBITDA on a pretty much all-time low in the last 10 years. Strong balance sheet.
We have some pro forma items. We have the Turkcell dividend coming. We have the remaining part of the DOJ payment to be made before end of Q1 next year. We do not know when yet. Then we have some M&A proceeds that we have received in our joint company with Turkcell, but does not belong to us. We just illustrate that and take that out so you can have a better visibility on our cash. With that, around 1.3 in pro forma. Net working capital is important. I have said, and I reiterate that I believe we have a SEK 5 billion gap that we should be able to close to benchmark, and we have a program for that, and we have monthly follow-ups, and everyone also have this on their agenda. We did get a breakthrough last year and started this journey.
Here we illustrate on the days of payment outstanding that we have then moved six days each year from 2015 to 2016 and 2016 to 2017. These six days actually gives us approximately SEK 800 million, to give you a feeling. These are not insignificant improvements for us from a working capital perspective. As you can see on the trend line on the side, we are slowly moving downwards towards the peer and the peer group is chosen not selectively by me, but those are the ones that actually report numbers that we can follow. That is how we selected them. I guess you wonder why otherwise. We should be able to close part of that gap within the next years. Free cash flow trend, rolling 12 months right now, SEK 10 billion.
We have guided this year that the operational free cash flow related to EBITDA, net working capital and CapEx is that part that will go up, and we will have a decline in the tax, interest, and pensions. This is exactly what we see in quarter one, and this is what we will see for the year. We have a strong focus in the operation to drive the EBITDA, net working capital, and CapEx, and that is what we believe is the fundamentals of the company to make it strong over time. Finally, cash flow and leverage supports buybacks. We have launched a buyback program this morning. We have chosen this model because we think it is flexible, we think it is improving yield on a sustainable basis, and it gives us opportunity to continue on a very important M&A agenda.
The share buyback program details are in the press release. I ask you to come back to the investor relations department if you have any question on it, but you can see it is constructed to purchase back over the full year until the next AGM. We have the ambition and intention to cancel the shares at the next AGM. That's all for me. Thank you.
Thank you both. Let's open up for questions. We can start in the room, and then go to the conference call afterwards. Robert.
Yes.
Hang on, you need a microphone.
Thank you for taking the question. When it comes to the pressure on large corporates in Sweden, how far are we from a stabilization of that? It's still a pretty big negative number. Is it volumes that are going down that other players are taking contracts, or is it pricing pressure? I'm just thinking about the Danish situation where the prices have been going down for a long time, especially on the wireless side. Thank you very much.
Thank you, Robert. I just want to refresh our memories a bit from a few years back. We were in negative territory, 6%, 7%, 8% on the B2B side. We are now more in the range of 3%, 4%. This quarter, I think it's 2% negative. We have stabilized the negative trend. That's the first good news. On the other hand, the second good news is that we're not losing customers. We're actually maintaining and taking customers, maintaining our market share through these years. What is happening is a lot of partly new services and products that the companies and customers are buying and procuring, which comes with a different type of price and margins. There is also a strong price pressures on the core, and increasing so, of course, in a market like ours.
That is my final point, the reason for our strategy to protect ourselves stronger in the ICT space, not just to be a part of a price-pressured segment in the telco. I have to say, it's on track. It's according to expectations. We're working to pass also that line of zero over time.
Okay. Thank you, Robert. Do we have another question in the room? Crystal Clear. Lena.
Yeah. I was wondering a little bit about if you could say the business solutions, if you look at the growth underlying and take away the fiber decline, where are we there on that? Also, Phonero, as you said, you got the synergies through very fast. I was wondering, do you see more potential for synergies now that you've moved the traffic? In that case, how much? On your buybacks, back of the envelope, it seems given the net debt to EBITDA you have now, and the buyback, you would be in three years' time, maybe at 1.9 times. You will still have room to do M&A. I was wondering a little bit, because you've been in interviews saying that you're looking at those things across your footprint. What is your priority there?
If you take the first question, I'll take the two last ones. On the Phonero side, we committed SEK 400 million in synergies on Phonero acquisition. That is delivered. There may be some smaller synergies on top of that from
The recently acquired mobile base from NextGenTel, but it's not on the same level that we've been talking about and as big numbers. This is what we have. Now it's more operational improvements and efficiencies that we go for in the mobile value chain. It's a good segue over to the acquisition agenda. We think the design of the buyback program leaves us good flexibility to execute on the M&A strategy that we have in the Nordic Baltics. That's how it should be seen, and as I said, that we are looking at a few things across our markets to strengthen us in ICT, to strengthen us in fixed in Norway. There are also the partnership agenda that we've been talking about in media, see how we one way can solve that. We have now bought content rights in Finland.
That's one way to do it, we're exploring other ways to address the consumer demand for us to be more than just a distributor in TV. Those are the areas where we're zooming in, and on top of that, of course, we have Denmark, where we need to find a good solution. Final thing. Final thing on the M&A agenda. We are doing targeted smaller acquisitions in and around the IoT space to strengthen the step up that we need in order to succeed with our very ambitious and so far very good IoT play in Telia Company.
If I may step in on the business solution question, I guess you refer to business solutions in Sweden. You don't have any impact on fiber on that line. The reported growth levels is what you see, and it's impacted then by the price pressure that we see in the B2B side that we talked about in the earlier question. Tomas, please.
Thank you. 2 questions, if I may. Firstly, you mentioned Telia Denmark. You had that under sort of review for a while. What are the options there, and are you willing to give it more time awaiting what the incumbents might plan before you sort of set down the pistol what you do with that asset? Related to that, the assets in the Baltics where you have other dominant shareholders, what's the status there? I think it was moved to other, and then we haven't heard much about it. Lastly on, I think you press released trials in Finland for next generation emergency services over commercial networks with vendor partners. Whereas in Sweden, I believe the government is planning to waste taxpayers' money with their own network. Any update on Sweden there? Thank you.
I can't add so much more color to your last question than what you yourself did in your statement. Your question became a good statement. On the Baltics, you refer to Latvia, I presume, and Latvia is a place where we have 2 companies, one fixed, one mobile. We have seen the great benefits of convergence in all our countries, we of course would like to explore that as a proposition also in Latvia. That is not possible without engagement on a shareholder level. There we are talking with the Republic of Latvia in order to find a solution that's future-proof and takes care of the various parties' interests. It's a constructive dialogue nowadays, I'm hopeful that we will be able to take steps forward in the years to come. Nothing being solved today, though.
Which is another thing on the list that is not solved today, which is Telia Denmark. Telia Denmark is a longstanding item to find a formula that creates a financially sustainable future for that company. Telia Denmark is probably the fighting spirit of the group in many aspects, in a tough market. Morten and the team are really doing a lot of great things, even if you don't see it in the numbers. We need to focus our operations for the future. If it's a standalone operation, it's still tough. Even if we do really well or excellent in our standalone, we would not really move the needle on the value creation of Telia Company. Therefore, we said we're looking into options how to strengthen us through partnerships or acquisitions, there are a few options being explored still.
If we can't find a solution that we think is good for us and the shareholders, we said we also need to consider the exit path if that's needed. We're not there yet, we're still working on solutions to try to work out a stay solution.
Thank you, Tomas. Could we have some questions from the conference call, please?
Certainly. As a reminder to everyone on the call, if you'd like to ask a question today, please press star then one on your telephone. The first question we have today comes from the line of Peter Nielsen. Please go ahead.
Thank you very much. A couple of questions, please. First one on Norway. Johan, you've made no secret of the fact over the past few months, and I guess today as well, that getting access to a fixed business in Norway is high on your M&A agenda. The Broadnet sales process recently ended. Obviously, with Telia not acquiring Broadnet. How should we view the fact that you did not acquire Broadnet, at least in this round, and how do you view your prospects of getting access to a fixed business in Norway here? That would be much appreciated. Secondly, also, I guess, for you, Johan, you have recently taken, at least temporarily, control of the Swedish business. I guess you've had a lot of issues with the Swedish business over the past few years.
What is your assessment of the Swedish business today, and how long it will take you to get it where you want it to be after the progress you've made in Norway, Finland, et cetera? Do you think, considering the contribution from the pension fund this year, that reaching breakeven on EBITDA in Sweden for this year is realistic? If I may just sneak in a third one on Turkcell, I think your past cautious optimism on Turkcell progress has proven correct. How much significance should we put on the fact that you are now back on the board with the other owners of Turkcell in relation to talks between the three owners of finally exiting from finding a solution to Turkcell? Thank you very much.
Only three, Peter?
Yes.
Excellent. I'll take them one by one. Norway. Yeah, we are keen to come into the fixed value chain one way or another. The team there obviously working on the organic and the partnership side to build capacity and capabilities to go to customers with converged propositions. That happens with or without M&A. If we can find a good piece of fixed assets and customers and end-users that could complement that, of course, can move faster with that. That's why I've said we look at everything that moves in Norway in terms of fixed assets. You mentioned one that is not on the table. There are others that we're looking at and talking to.
Hopefully we will be speaking also more about this here, because I still say it's an important part of our strategy, and it's an important market in Norway, so it totally makes sense to follow our converged strategy also in Norway. No surprises, really. The Swedish side, yeah, it's great to have two jobs for a while, and really keen to get closer to the Swedish team, which is a great team. Already full engagement and the company is running well. It's running according to our plans for the transformation. We are flagging and we have been flagging that Sweden needs to go through transformation before you see the full potential of Sweden. That's the same statement, it's my statement before, it's my statement today. We'll see if there are other things that we can move in a different pace around some of the key priorities.
It's really about sticking to the agenda. It's my agenda before, it's my agenda now. We have great team engagement and things are fully under control, so it's full speed ahead. This year we have already told you, don't expect EBITDA to come up in Sweden this year. It's still under pressure. Turkcell, we're glad every time we get solutions on the table where we can make progress on dividends. Obviously the dividend here was fantastic. I think we saw a figure yesterday where it's SEK 8 billion of dividends over the last five years that we've managed to secure the side, and they don't come easy, as you know. This time we also had the opportunity to solve another outstanding item between the shareholders, which was the board representation. We're very glad that we're on the board.
We have appointed Ingrid Stenmark to be on the board on our behalf, and she's really fully full speed in the board and contributing, making sure that Turkcell becomes even better. With regards to the remaining outstanding issue then between the shareholders, it is a long-standing discussion and conflict, I don't think we should expect it to be an imminent solution, even if I feel that there are definitely windows also this year where we will be talking to each other and see if we can find a common path for that.
Your fourth question that was embedded there in your discussion, Peter, is that the timing and the impact was uncertain on the SEK 164 million impact of the special employer contribution tax. We do not believe it will be a quarter one effect, it will be a recurring effect in the Swedish operation.
Thank you.
PK, could we have the next question from the line, please?
Thank you very much. The next question today comes from the line of Roman Abasov. Please go ahead.
Thank you very much. It is Roman from JP Morgan. The first question is on the free cash flow. The SEK 700 million of the pension-related free cash flow, that is new, right? Just wanted to check this because when we were talking about your guidance and projections for free cash flow at the beginning of the year, when you guided to around about SEK 9.7 billion, presumably that was not part of the equation. Appreciate you probably don't want to guide on a very precise level, but broadly speaking, our free cash flow projections should therefore be higher by around about SEK 700 million. Is that right? Secondly, just wanted to check on the buybacks and M&A.
Do you still see potentially a scenario where you may end up with no M&A, no value-creating M&A, as you say, and therefore you will look to potentially increase the shareholder returns further? Is that still a potential scenario, or do you think there is some plans have essentially been the rest of the balance sheet has been earmarked essentially for M&A, which is reasonably probable? Thank you.
If it lasts until the end, I can take the first one. No, we think this is the right balance between a buyback over the years to come, the SEK 15 billion, leaving us with good room to execute on the M&A agenda that we have, which we strongly believe we will do, and which is needed to do in order to live up to our full strategy and to get to the full potential. The focus is very much on the M&A side in order to get that done. As we said on the cash flow guidance for this year, that the tax interest and pension should go down with around SEK 1 billion and the other part will go up with SEK 1 billion. In that number, the timing and impact was uncertain of the pension.
Now we have clarity, and we have then some of the positive impact from that.
Okay. It's more about just additional confidence from having one more quarter of good execution, and that's what's driving the cash flow upgrades, right? Which incremental? No.
Yes. It's the progress in the working capital and CapEx and the confidence, and it's the pension.
All right. Thank you very much.
Thank you, Roman. Could we have the next question, please?
Thank you. The next question comes from the line of Andrew Lee. Please go ahead.
Hi, good morning, everyone. Just had a question on cost-cutting and then one on M&A. On the cost-cutting side, could you give us some color as to what visibility you have on this? Can you see the execution already in place to deliver your 2018 targets? What does that suggest for 2019? I guess what I'm trying to think about is the sustainability of the cost-cutting here. As a kind of supplementary question, if you have any statistics on how the introduction of your chatbots have gone in Sweden, that'd be great. Then just secondly, on M&A. The number of questions on it and the buyback obviously is a limiting factor potentially for it.
If I could just ask the question that was previously asked in a different way, can you cancel the buyback if all the potential M&A opportunities arise that you're looking at? Does this rule out any interest in MTG? Given what the TDC share price reaction was to its attempted MTG acquisition, how does that make you think about things? Thank you.
You want to start?
I'll take the M&A one first then. I will give the same answer, but in a different way, since you gave the question in a different way. We believe that the program is designed to be for 3 years, SEK 5 billion per year. Of course, it needs to be approved. A mandate from the AGM needs to be approved every year, of course. We believe that's good prospects for that to be approved. We see no reasons as of now why that had to change, because we have enough strong cash flow and improving, and we have still a strong balance sheet even after the buyback. Hopefully through good value-creative, cash-accretive M&A, we'll be supporting that further. That's the general story. When you're looking at specific targets, I think I won't go into specific targets.
I highlighted to you our strategic roadmap, where we're zooming in on partnerships and/or acquisitions. I don't want you to be surprised when we do M&A. So far you have been all with us on the M&A, barring Spotify, I admit, but it went well anyway. We are sticking to our framework for how we do things. You should not be surprised when we come out with our M&A.
On that same topic, we have a clear leverage target that is between 1.5 and 2.5. We still have a strong balance sheet, and this is a 3-year program. I would like to just comment on the cost-cutting and the cost program. As I said, the cost program is bringing in a new culture and drive for how we measure and look at cost. We measure the initiatives, and we have follow-up on the initiatives, and we have both systems and meetings and programs for that. We have good clarity and clarity enough to feel comfort. In all cost programs, there are things that happen and things that don't happen, and then you find new things, and things go better and things go worse. Overall, we have a good visibility going into this year. This started already last summer.
I think I said clearly that we had a certain part, a smaller part in the beginning of last summer already identified, and we still work to add, and we have been adding initiatives to this program as we go along. For next year, the most important thing is to continue to drive cost where we should drive cost. Before we declare a guidance on what we think we can do next year, we also need to see how we're going to grow in ICT and other areas, because this is a net program on all cost. We will come back with that.
Good. Thank you, Andrew.
Thank you.
We have a couple of more questions on the line. Please, operator.
Thank you. The next question comes from the line of Kieran Clancy. Please go ahead.
Yeah. Thank you. Good morning. I just had a question on the fiber installation in Sweden. Given the delays in the grant of permits, also some uncertainty around the SDU regulation, does this make you feel potentially to scale back significantly the project, or scale down some of the targets? Just interested in your thoughts around that. Thank you.
Thanks, Kieran. You're onto an area where we have less certainty. We're in a situation where we still have problems, not to say big problems, to get the permits through the authorities. We're working very hard to make them understand the impact and the consequences of not getting the permits through, not just for Telia of course, but for the broader society. Not enough progress simply. It's a cry for help when you have a chance. Here is a chance, I want to ask for more help from our good Swedish authorities to get that going. That's also, Kieran, the reason why we have a bit of uncertainty on the delivery capacity for the rest of the year. As you know, OTC is important for the one-off effects on EBITDA and revenues for the Swedish operation.
We may even be further disappointed on the delivery pace for the rest of the year in Sweden.
Great. Thank you.
I think we are not seeing that as a hinder, rather the opposite.
Yeah. That's clear. Thank you.
Thank you, Kieran. Next question, please.
Thank you. The next question comes from the line of Irina Ponomareva. Please go ahead.
Thanks. Good morning. My question is also on the CD market in Sweden. Beyond permitting delays, what do you see in the competitive situation in FTTH fiber? As you push into more rural areas, do you find that you need to also discount installation fees more than previous areas perhaps? Do you have any updated thoughts on perhaps consolidating the Swedish fiber operators?
Yeah. Thanks, Irina. We're not in a steep discounting game on fiber. There's still a high demand. We're not able to deliver to all that demand, and therefore, I think the price levels are fairly intact. That's good. It's more a delivery game than anything else. On the competitive side, I think it hasn't changed in any significant way on the fiber space. Possibly the fact that we are getting into more open access networks, which is a positive for us. We're addressing more end users that were not in our space before. That's an important number to keep an eye on. On the more general retail market, the mobile consumer and fixed consumer, then I think it's pretty much the same, possibly a slight touch of increased competition in the low-end price segments of the Swedish mobile, where a lot of campaigning is going on.
On the main brands in the Swedish side, I think it's fairly intact, fairly stable, very rational. Thank you, Irina. Could we have the next question, please?
Thank you. The next question comes from the line of Henrik Herbst. Please go ahead.
Yeah. Thanks very much. It's quite an impressive rebound in mobile service revenue growth. You did explain it a little bit in terms of it being core bundle upgrades rather than VAS. Can you explain a little bit more, is it on Telia brand or the Halebop brand, or is there anything in particular that sort of triggered more upgrades, do you think? In terms of the broadband market as well, and the broadband adds, you've lost subscribers for a few quarters now. In terms of as you go into more open networks, do you think you can turn around that trend and start to grow broadband subscribers again? Also in terms of the pricing, it's not much of a gap down to the others now, if there is any actually on fiber pricing. Do you see scope to continue to put pricing up?
Thanks very much.
Yeah. Starting on the pricing, Henrik, we are always looking to right size pricing or optimize pricing, and that means both ways. There are maybe pockets where we are not optimally priced on the high side or on the contrary, on the low side. That's a constant thing that I want us as an organization to be extremely good at. There is more for us to do here. That's why I keep saying that we are not optimally priced. I see areas clearly where we are able to move pricing up, where customers are responding positively. We have done that over the years, and we'll continue to do that over the years. The general answer is, yes, there are more opportunities for price changes. On the broadband side, you're onto something important following my short answer on the OCN, the Open City Network.
Yes, that is a way to change the trend on getting broadband customers on Telia as a service provider, at least, even if we don't have the full fiber value chain that we've had in most other cases. Certainly, we expect those numbers to be able to improve and go up. Then it was the upgrades. I missed that one, I have to admit.
On the mobile service revenue side in Sweden. Is it Telia brand or Halebop brand?
Yeah. That's why I missed it, because we don't break it down on Halebop and Telia. Keeping them in different segments and different type of propositions, we're not really commenting on details between the two brands as such.
Thank you, Henrik.
All right.
Could we have the next question, please?
Thank you. The next question comes from the line of Maurice. Maurice, please go ahead.
Hi, guys, it's Maurice here. A couple of quick ones from me, please. First of all, on the state of Finland competition, we've seen elevated churn in the Finnish market over recent quarters, everyone seemed to blame you and higher subsidies, but your thoughts about Finland's SAC costs, marketing costs, competition over the coming quarters, especially in the context of your hockey rights, would be very helpful. Just a second question, very sort of strong ARPU growth on the mobile side driven by very strong data growth. Do you see any sort of rising congestion, network congestion issues in your markets? I'm just wondering your thoughts on the sort of core to mobile networks, given that strong growth in data. Thank you.
Maurice. Thank you. We have no congestion. We have a smart and well-disciplined investment process, looking very much at the data and the insight we get from our various data lakes when we plan and invest in CapEx. I think we're well ahead of congestions normally. We can, I'm sure, be better how we do that on every cell at every time. That's also part of our technology roadmap going forward into the virtualized world. Generally, no. On Finland's side, very intense consumer space. Very much driven by our competitors starting up, not us. Of course, we are quick to follow when need be, and we do so. We are campaigning when we have to, but we would like to stay rational and disciplined and focus on our existing customer base, getting them on the right plans, getting them happy, getting them to be promoters.
Of course, we also need to look at the intake of customers. I think our view is that we have a good position in the market. We have strengthened our brand, gone quickly up to the awareness of the new Telia brand in a very short space, going from awareness to liking and leading many indicators into being the loved brand in Finland. That is a great start leading into the hockey season, where, as I mentioned, the hockey package is coming out, standalone so far, but they will of course also be bundled into our core services as we approach summer and into the real hockey season. We have high hopes that that will be a good consumer proposition that will help us improve metrics across the consumer space.
Thank you.
We have time for one more short question from the line, please.
Thank you. Our last question comes from the line of Ulrich Rathe. Please go ahead.
Thanks very much. On the share buyback relating to the dividend, obviously the dividend coverage isn't very strong, and I think there are sort of investors out there who are looking at the dividend coverage and obviously when they screen things, you see the multiple coverage not being very high. The fact that we're starting a share buyback presumably sort of is a signal here also with regards to sustainability of the dividend. I was just wondering whether you're willing to sort of give a bit more confidence, specifically on the dividend sustainability from here at these levels to investors who are sort of looking at that. If I may just squeeze in one.
On the Swedish mobile situation, Johan, you mentioned on the margin, sort of I think on a question of fiber, that there's a bit more competition in the no-frills segment at the moment. What do you think is the motivation of the instigators of this? Where are they heading with this in your view, and what is the risk that this competition infects the main brands as well? Do you see any signs of that, or are you concerned about this could possibly happen during 2018? Thank you.
I'm not concerned that will happen short term, we're definitely concerned that if it continues and grows and the motives for this changes and it spreads into other segments, then of course it can have an impact. We're not there yet. It's quite isolated. If it stays that way, I'm not worried. Something we definitely will keep an eye on and have our responses to in the right way, in a rational way. I'm sure something we'll be speaking about through the year to monitor the Swedish mobile. Let me just cover then the dividend question as well. We're very comfortable with the outlook for our cash flow. We have told you that before, that it should, based on today's change guide, as we said, it's going to be the same this year as last year. Now it's going to be higher.
Before those statements, you know that we have said we have further cash flow improvement potential 2019, 2020, and onwards, and that still stays. As Christian pointed out, there are more room on working capital to be improved. Our CapEx is still at a level where it can come down further. We also will see EBITDA improvements in good time. There are more to come to cover the existing dividend policy, yes.
Can I just also add that the above 9.7 plus associates is what we guide on for the dividend base. That means around 9.7 plus a billion plus. That's up at SEK 11 billion. That is 90% dividend on the current base for dividends. I think we cover it quite well. That's us.
That's a good note to end on. Thank you both. We look forward to meet you all during the quarter, and if not before, in July at the Q2 presentation. Thank you.
Thank you very much.
Thank you very much. That does conclude the conference for today. Thank you for participating. You may all disconnect.