Earnings Call: Q1 2016

Apr 20, 2016

Okay. Good morning, everyone, and welcome to Telia Company's 1st Quarter Results Presentation. With me today to present, I have our CEO, Johan Denner Lind and also our CFO, Christian Louiga. And then we will have some time for questions after that. And we intend to close this within 1 hour. By that, I hand over to Johan, please. Thank you, Jesper, and welcome to the reception of Telia Company. We are about to move on, so this is the last presentation we have at this address, and the next one will be in our new office in Solna, Arena Staden. So we're looking forward to that. Let me take you through quarter 1, which has started off pretty good. If you look at the headline, which I'm sure you've already seen, we have a slight pressure on revenue growth from Q1, but a strong earnings growth on EBITDA, both in reported and organic. And that's pretty much across the board, with exception from Estonia and Denmark. And then we have a cash flow that is then less than last year Q1, mainly related to a tax in Sweden, which was positive last Q1 and a worse cash flow from discontinued operation, which we'll cover as well in the section of Christian. Before I head into the numbers, let me just say a few words on the shaping Telia Company, which is very much ongoing to the extent that even the fonts will not follow on this slide for you in the room. But on the web, it should be working fine. We are glad to say that we are delivering in the core operations in the Nordic Baltic, and we will go through that. And that's really important in times of transition and change to have solid earnings in the core markets. We have worked intensively with improving and enhancing our customer propositions in most of our markets. We have the Baltics where we're going converged both in Estonia and Lithuania. We're now sharpening those propositions. In Finland, we already have a full house, we call it, a converged proposition. In Norway, we have launched the new Telia brand during the quarter 1 with also a strong roaming proposition for Norwegian travelers. So that's very good. And then we have some recent changes in Sweden, which I'll come back to, also exciting customers in the Swedish market. We have an intensified business transformation, I call it. We have been in this now since 1.5 years. We have taken out a lot of the quick wins, if I may say. We're now into the more complicated and complex takeouts of costs and systems and products, which we will be focusing more on in the Capital Markets Day later this year, which I'll also come back to. We're progressing well in the Eurasian divestments. You saw that we closed Nepal a couple of weeks ago. We now have 6 remaining markets, where we believe still that we will be able to divest these 6 markets during the year. We have no reason to change that view. And I'll come back if there are any questions. But there's not much we can say on new things, of course, but except that it's progressing well, good competition in those processes. And then we have a strategic review of noncore. And we have 2 things in there, and you know them. We have press release in the last couple of weeks. One is an ongoing discussion exclusively in Spain, and one is a review of the Sergo business with Intellia company that we also look for alternatives around. So those are our kind of main headline updates before we head into the numbers, but pretty good in Q1 in covering our strategic direction. Then the numbers. We are if you start on the service revenue side, we have some pressure. We're in negative territory, which, of course, is not sustainable long term. But the main pressure here comes from the fixed telephony mainly. I think that's about SEK 200,000,000 plus only in Sweden decline in absolute terms from Q1 last year. We have the B2B segment, which is still pressuring our revenues, which we'll cover more in the Swedish update. But we have underlying strong growth in TV, in broadband, in fiber, in mobile consumer. And those are the future revenue streams, of course, that we need to build a new company on. Maybe a couple of things that both interconnect is actually a clear impact. Christian will cover that. As well as Carrier, a very low or no margin revenue disappearing in Q1, which also drags down the total service revenue. But on the positive side then, if you go to the right, you have Sweden improving around 10% on EBITDA. Yes, there were some easy comps versus Q1 last year, if you remember, but still a very strong underlying cost control, better investments in the market as well as fiber push continuing. In Europe, a strong 10% growth, driven, of course, a lot by Norway, which we'll cover. But as I said, all markets except Estonia and Denmark are improving the earnings. So all in all, a 10% plus growth on earnings, of course, is a very good start, which then will lead into a change actually, a slight change of our guidance for the year, which Christian will cover later on. If we go to Sweden then, you will recognize this shape of the revenue streams in Sweden. What may come as a negative is if we start on a negative is the slightly accelerated decline in B2B. If you break that down further, we have actually a continued pretty positive SMEsoho mobile business on the back of our personal adviser proposition in Sweden, which is working really well. But the pressure is really still on the large and public corporate, especially around fixed. And that's part of the SEK 200,000,000 plus, as I said, decline on absolute revenues in Sweden. The positive side, of course, is that B2C is still the consumer segments are still in growth. We have strong growth even if you take fiber in, it's almost 4% if you invest onetime charges. Without the onetime charge, it's still positive, around 1% to 1.5%. So still holding up on a very competitive market, which I'll cover shortly. Fiber push. Moving on. We have around 1,300,000 plus households now connected, another 27,000 homes passed in the quarter, where of 20,000 were connected. And out of those 20,000, it would be good to know that 7,000 are the SDUs onetime charge based, which is then the 2,000 euros plus connection fee, which you are aware of. Then exciting, the customers in Sweden. We have already strong propositions in the markets, which you were aware of. We have the data rollover. We have the family plans, which were first in the markets. We also introduced roaming for Nordic Baltics in late last year, early this year. And then we have been looking at other ways to value load our offers. And that has happened in the market. Some operators have gone seroating on certain content streams. Another operator has gone very large buckets. Our response has been to introduce what we call the social, teleasocial in the Swedish market, which then zero rates social media traffic within your bucket, I. E, you can use that as much as you want without eating out of your data buckets. At the same time, there are some adjustments on prices. And if you look at the proposition now, it's a very, very strong consumer proposition in the mobile field, which we are confident will improve customer loyalty and NPS, which is ultimately why we're here to please our customers. So we believe this will also be a good churn reducer as well as monetizing data, the next step. On the right, just to note the breakdown on the mobile, fixed broadband and TV. We had some price adjustments last year, which is also coming through. We have done recent price adjustments on TV and also on mobile. And we also adjusted broadband prices for new customers recently on DSL. So there, you have the formula on how to monetize the Sweden consumer side. And let's move east to Finland. And we are glad to see that Sonora is progressing further on the mobile space in the mobile space, maintaining service revenue growth and build revenue growth. And here, you see the gap is really the interconnect difference, which was introduced in December. We are not yet at where we want to be. The Finnish market is better than this, and we think we can do better than this. So we are just noting that we're stepping further in the right direction, but we're not done yet. But with strong cost control also in the Finnish operations, we're improving EBITDA and moving on. And also had a pretty rough quarter, which I actually mentioned to you last time in terms of some network outage just in Finland, which is now sold. And I think we're gaining back the confidence in the Finnish market. Norway, this is the last time. Last quarter, we will be speaking about the synergy and the half quarter of M and A effect. If you remember, we completed the Tele2 deal in the mid of Feb mid, early Feb last year, and that's why there has been a bit of calculations to get to the organic, non organic effect. But we now conclude that we have reached the EUR 1,000,000,000 synergy out of the acquisition run rate, and that should be seen then in the SEK 2.38 number, which is the increase in stable FX. Of course, FX has gone headwind, around 10%, but still a strong quarter. And then organically, I think we're around 30% EBITDA improvement organically. But this, of course, will not continue because now the comparables are and will be tougher going forward. Another highlight really, the first time, as long as I remember, all Baltic markets are in positive revenue service revenue growth. So that's a milestone. We'll see if we can maintain that. Estonia rebranded and were quite aggressive in the market, and that's seen in the profitability but also back to positive growth for Estonia, Telia Estonia, which is now the name, which is very encouraging. So hopefully, we can improve from here. We're merging the 2 companies in Lithuania, as you know, from January 1, and it's looking very positive both in terms of what we can offer to consumers and enterprise as well as the possible synergy takeouts for the year. Then let's move to a conclusion on where we are of the year before we move into Christian section, really focused on giving more to the customers in all our markets. We have, as you see from the numbers, still pressure on revenues, but maintaining a profitable growth profitability growth is really important during the times of transition. At the same time, we are delivering on what we say we will deliver on in terms of reshaping the company to Nordic Baltic. So a fairly good start of the year, And I would love to see you back here not no later than June 21 or not here actually in our new premises out in Solna where we will do a Capital Markets Day with focus on Sweden and Helene and her team on transformation, on fiber and of course, other strategic important updates to come. So with that, Christian, I will leave it to you to take us through the facts and the details. Thank you very much. Good morning, everyone. I will now walk you through the numbers. But before I start, I'd like to just say I'm very happy for the Q1. It was good growth in EBITDA, strong quarter from that point of view. But we have to remember, it is a quarter with very good comparables and that it also will look different for the rest of the year. And that's a little bit what I'm going to talk about now. Let's just see if I get the right foot in the bottom here. So let's start with some sales numbers. And if we look at the sales, we have a decline of 1.1% reported. Service revenues down 0.9% in local organic. 0.9% actually is explained by factors, but there's other pluses and minuses in that. One is that in international carrier, we have been very focused on our revenue to get EBITDA in and not just voice revenue. So that focus has actually decreased the voice revenue in quarter 1, and that is 0.5% on service revenue growth. That 0.5% came without a margin loss, both on carrier and on group. The other part Johan mentioned a little bit about was the interconnect. Both in Finland and in Norway, we have interconnect drops on mobile service revenue. That is about 0.4% on service revenue growth. So we are getting to a flattish service revenue growth on the group. That said, we know Sweden has a decline, and we know Finland and the Baltics is supporting a positive trend. So they are compensating each other a little bit in the rest of the portfolio. On the equipment sales, we can see a downturn and actually stems a little bit from the fall. In the fall, we didn't have a a huge iPhone launch. And when we usually have an iPhone launch, that spills over into quarter 1. So this year, we can see that both in Sweden and Europe that it is a little bit lower. In Europe, it's held up above the plus from Spain. EBITDA. 10%, 10.4% EBITDA growth in local organic. It's actually the same number in reported numbers as well. It is M and A effects in Norway that is bringing a positive to that. And there's FX effects both in the Norwegian krona and in Europe that is taking it back. So it ends up on 10.4%. Sweden and Norway are the prime reasons for the increase, and I'll talk about them separately. In Sweden, you may remember last year, quarter 1, we were standing here. We were quite unsatisfied about the situation when it came to equipment, SAC, and we also had a storm. We explained last year that we had an increased giveaway cost, SAC cost, and we were going to do something about that in quarter 2. Including the FX effect we had also on inventory last year, the comparables is around SEK 180,000,000. On top of that, we had a storm, which costed maintenance cost of SEK 40,000,000. That is one part of the explanation of the good comparables and why it will not look the same way the rest of the year. That said, we have worked on our cost. We have a good structure. But as we know, service revenue is challenged by B2B and the fixed in Sweden, and the B2B is the large one. And therefore, we will not maybe catch up on everything here. So this is a little bit about Sweden. In Norway, we are succeeding to get to our SEK 1,000,000,000, and this is according to what we expected. We have had good control of that all the way. Quarter 1 last year was February 15. In the first 45 days, pretty much nothing comes through. Now we have the full run rate. So this comes through half of it comes through on organic and half of nonorganic this year. And now when we go into quarter 2, as Johan said, we will not have anything that will help us on comparables any longer. So this is the 2 main factors with an underlying good EBITDA that actually brings it up a little bit extra this quarter. And therefore, we believe it will be tougher for the rest of the year. Good. Denmark. Denmark is a challenging market still. We see increased price levels in the B2C area, both on Viking brand, on our main brands and from several players. It is not bringing up the service revenue. And one reason is it's on low end bundles, and it's content filling up on low end bundles to increase price on those, and it's also only on new sales. So it will take some time. This is what we see. The market is heavily influenced also by telemarketing and other aggressive offerings. The service revenue for us in Denmark was minus 2.2%. The big, big difference is on ARPU. Year on year, we increased in customers. In the quarter, we dropped 4,000 customers. We have decided to focus on the higher segment, higher ARPU. And that may put some pressure on the customer intake but should be regained by ARPU in Denmark. This is what we try to achieve. Eurasia is reported as discontinued operations, as you know. We have a big impact from Kazakhstan, which is the biggest impact in the last three quarters in Eurasia. You may remember that the drop in Kazakhstan quarter 3 quarter 4 was a big challenge for us in reaching our numbers in 2015. The work has been to actually mitigate on the profitability in Kazakhstan. The drop comes from both customers in ARPU. And what has happened in the last quarter is we see small signals of price increases from our competitors. It's too early to say where it will bring us. But it's both the price increases and the reduced bundling content in Kazakhstan that may help us to come back slowly. But in quarter 3 was the big drop in Kazakhstan. And we can see on the picture, it's 37% down year on year. And that is the local organic number. On top of that, of course, the devaluation has brought a lower number into the Telesenera accounts from the devaluation as well. In Azerbaijan, we have a contracting market. We believe that we keep our market share with this slight decrease in revenue growth. This is what we believe the market is developing right now. We can see here as well as in Kazakhstan that it's the service revenue drop that is pushing down the EBITDA. In both markets, we are working well, and we do that in all markets on cost. And we do that with the push from the devaluation, which it has on the cost level. Not all costs are dependent, of course, of the foreign, but some. In Uzbekistan, we have a different situation. We gain market share. We gain customers, and you bring up ARPU. It's a good market. But the profitability doesn't come through. And one reason is that we have a revenue tax that has been increased. It's been doubled in 1 year, and that eats up most of our revenue growth. CapEx. We have a peak year in 2016. We are pushing both on the mobile and the network rollout in the Nordics and Baltics to be best in class, but we're also building a lot of fiber. Fiber in the Q1 is a little bit lower. Fiber in the Q1 is 36% of Swedish CapEx, but it will increase over the year. Meanwhile, we are pushing hard on network, both mobile and the back bone of getting the Internet to work in Sweden, and 44% of the Swedish CapEx goes there right now. Twothree of the European CapEx goes to mobile rollout and network at this point. Free cash flow. We have somewhat complicated maybe cash flow because when tax and interest net starts to move, then it becomes more complicated to explain. You know that because this is not really what we talk about all the time. But the finance net has an impact onetime impact of SEK 500,000,000 and it's some good interest rate swaps that we have done that will impact profitability over 4 years will give us a cash flow in this quarter. So it's nothing that we should see as a given for every quarter. On tax, we got a refund of SEK 900,000,000 in quarter 1 last year from the Swedish Tax Authority. And this year, we pay normal tax. And therefore, there's a big gap and difference between the years on that. But we only got a refund in the Q1 last year. So that will be the big difference for this year on tax. Working capital, both discontinued and continued operation, are supporting that number. And other than that, we can see that there's not much difference. I also want to just confirm again our tax guidance. We have said that we're going to have 19% income tax cost on continued operation and 80% paid tax on reported tax costs. We keep our stable net debt to EBITDA ratio at 1.53. We started the year with SEK 1.53, and we keep it now in Q1. We have paid out SEK 6,500,000,000 in dividend last week, and we will pay out another SEK 6,500,000,000 on the 28th October this year. We have divided the SEK 3 into 2 payments this year to better match our cash flow. The other part we now have just received is the cash from the divestment of EnCell. It's just below SEK 7,000,000,000. We talked about somewhat higher numbers year end, but it's the currencies that have actually gone down between then and now. So there's no difference in the dollar amount. That will have a slight positive impact from a pro form a point of view on the net debt to EBITDA, the Nepal divestment, if you calculate on the last 12 months EBITDA and the cash amount, just below SEK 0.1 in net debt. Earnings per share, positively impacted by both operations, associates and nonrecurring. Meanwhile, the FX and taxes came out negative. And I think we have gone through the rationale behind that during this presentation already. Finally, the update of the outlook. We had a good start of the year with 10.4 percent EBITDA. But we still remain firm on the EBITDA. We remain firm that it will be more challenging and weaker in the second and the fourth to the Q4 throughout the year. But with this good start, we still want to change our outlook from maintaining have an ambition to maintain last year's EBITDA to be at the same level or slightly above. So it is a slight increase of our ambition on the EBITDA. CapEx remains the same, SEK 14,000,000,000 to SEK 15,000,000,000. I've said before, the difference there mainly is coming from the fiber investment, how successful we are in Sweden rolling out. We are hopeful to have a higher number and also a better start of the next year and also have done more fast than later on in the fiber rollout. And dividend, we have 80% at least of free cash flow and asset floor for this year, SEK 2. Thank you very much. Christian, why don't you take the opportunity to just clarify some of the guidance there? There was some wording in the press release this morning that was some questions on Yes. In the Swedish version, primarily, I think, but it's said in that we are we talked about growth, and it could be the and it was in the CEO letter in the last paragraph. Talks about that the growth will be weaker for the rest of the year. And we talk about the growth of EBITDA, not the growth on service revenue. And I think we want to clarify so you don't misunderstand that last paragraph. And I think it's time to open up for some questions. We can start here. From to we have some other funds. Andreas Juppl from DNB. A follow-up on that growth slide then. Should we be concerned about the development on especially Sweden built revenues on the mobile side, which is declining and still data is growing? And what's the issue of monetizing on that data? And then maybe also on the price increases that you mentioned. Com Hem reported yesterday that they've also increased prices, and churn has been quite low. How has your customers responded to the price increases? And then finally, maybe could you say anything about the development in the Department of Justice process in relation to Uzbekistan? Yes. So let's start with the second one, the price increases. We have a of positive feedback on our new propositions in the market from consumers and enterprises. And we have, so far, no negative noise or news from customers around the adjustments we have done throughout the year. So hopefully, we are giving value for money to our consumers and enterprises. On the revenue growth side, well, worried or not, and that's for you to judge. We're just reporting Q1 and saying that the there's a slightly higher, tougher pressure on B2B large corporates and public, especially around fixed. And that one was the kind of unexpected one, I would say. But at the same time, we have the underlying growth on data, on fiber, on TV, on the back of the price increases, but also on the back of the demand that we see for these type of services. So I mean our ambition is, of course, to return to service revenue growth as soon as possible in all our segments, in all our markets, but some are clearly much, much tougher than others. So it will be quite a while before we if ever, on the fixed telephony side. And then we hope we'll see stabilization in the large corporate throughout the year. But we have said it every quarter, we don't see yet that it has turned, and that's the same statement we have to give today. But then reminding you that we actually 45% of the corporate market in Sweden is Soho and SME. And there, we are actually seeing quite a positive development on mobile and not as bad as on fixed as it is for large public. DOJ. Well, I refer to our discussions here with the RAS to Uzbekistan to the discussions we're having with many authorities. And we have talked about Sweden, Netherlands and the U. S. That's been going on for 3 years or so for the Swedish one and over 2 years, as far as we know, with the Americans and the Dutch. And those discussions are proceeding and are ongoing and have been so for a while. We're, of course, hopeful that we will be able to get to some type of resolution during the year. That is our ambition and hope and belief. And as soon as we do, then we will and we will have to come out and talk to you about those consequences. And I do point you to the some of the risk reports that we had in the annual report as well, saying that we cannot rule out or it's actually likely that we'll have some not insignificant economic impact from these discussions. So that is the statement that we still have there, but we're not able to quantify anything around that for obvious reasons. Thank you. Okay. No further questions. Could you stick to 1 or 2 questions? We'll send money on the line. Yes. A couple of questions. First, Norway. You state that you have reached the synergy target of SEK 1,000,000,000. Fairly quick that you've reached that target. Do you see more synergies to take out? Or have you reached the level that you see is doable in that market? Secondly, Denmark, really hard to see any positives in that market. Negative subscriber intake, increased ARPU pressure, EBITA margin pushed below 10%. What's your strategic thinking around the Danish market, also given the light of tougher regulatory environment in Europe? Yes. You're right. I mean, on the last one, we're definitely seeing challenges on consolidation proposals across the board. And we know that from our own experience in Denmark last year when we had our attempt. And you're right, Denmark is not producing any returns or creating any value for shareholders. And when we step back from the attempt last year, we said that we now need to look at other options. And we're still looking because this is not long term sustainable. And we don't think that the organic route to good returns is very likely or attractive. So we'll have to update you when we have more to say on the strategic side of Denmark. On the Norway, it's fair to say, Christian, that that's what we put out. We raised our expectations last year to SEK 1,000,000,000. And I think that is we're glad that we have reached SEK 1,000,000,000. If there is more to take out, let's see. As Christian hinted to, there's some back to normal kind of business in Norway. Now we need to make those improvements from operational efficiencies and good market efforts. Maybe you remember also, we were maybe all of us maybe not in Norway, but surprised that they came so fast, the synergies last year, into the numbers. And that was quite one reason why it's also ending fast. We actually reached up stepped up quite fast, and it was part of it was moving the traffic, and that gives us a big, big push on the profitability, which was expected from all of us. And Q2 then for Norway was very good last year on the synergy side. So there you have the worst comparables, if you want, for this coming Q2. Hello. Yes. Lien Osterberg from Carnegie. So two questions. First of all, on Uzbekistan, I think you mentioned in an interview recently that, that will be the most difficult market, you think, to dispose of. So I was wondering if you maybe could say something about the process in Uzbekistan, if it is a lack of buyers or if it's more that you have to have certain approvals and those are very difficult to take. And then also, you mentioned that the revenue tax had increased. I was just wondering how much was it and where did it go to? Yes. So you're right. On Uzbekistan, I said that. And it's probably still my belief that it is going to be the most difficult one. But there is a pretty good interest in the asset from all type of players. But of course, that's a quite complicated transaction in itself to conclude or to get to. So that's why I say it's probably the last one, but let's see. We're working hard to make it happen, and we still believe we can do it during the year. On the tax revenue tax cost, I don't have the EBITDA number right now, but I'll come back to you on that. But it went charging our COGS cost on one side and the tax authorities bank account on the other side. All right. Should we perhaps move to the conference call? Operator, can you open up the line, please? We already have quite a lot of questions on the line. The first one is coming from the line of Ulrich Ratte. Please ask your question. Yes, thank you very much. My first question would be on the situation in Swedish mobile, with social media, I could understand why this wouldn't have a huge impact on mobile data, but you use that when you talked about 0 rating the social media usage, you said this is a way to monetize data. And I was just wondering whether you could clarify how this would help actually monetizing data incrementally. On the guidance increase, I was wondering whether you could sort of talk a bit about where this is coming from, whether this is simply just the result in Sweden or whether you have you're seeing sort of improved trends compared to what you saw and thought 3 months ago in a number of assets and whether you could sort of just clarify a bit across the asset portfolio. And then maybe last, just a short clarification on the B2B trends, in particular in Sweden. You're talking here about tougher trends in the Q1. I'm just wondering, is this simply customer behavior and legacy business issues and these sorts of things which are really secular in nature? Or is there an element of competition in the Large Enterprise Public segment and B2B as well that has turned worse in the Q1? Thank you. Thanks, Orest. Christian will take you through the guidance. Let me comment on the other 2. On the B2C in Sweden, on the mobile side, as I said, there has been Sweden is very competitive when it comes to propositions out there. And throughout last year, there was a lot of experimenting with propositions from all players. Some, as I said, went the deteriorating on some content, other went the inflating buckets. And we were trying to move our way with the data rollover as we introduced last second half. And it's working to some extent, but we also need to take the next step in listening to our customers what they want. So when I say that we're using this for next steps, monetizing is really also looking at the price buckets that we had now, the new propositions out. That has some monetization in it as we're also including more by charging slightly more. So that's what I mean. And rather than going all out in the flat rates, which we don't believe in, we're trying to value load for our customers and offer them what we think is a value for money proposition. So that's the monetizing part. The B2B side, yes, it is the same recurring topic that we've been talking about. I think the bad news is in the large corporates where the competition is, of course, high and fierce. We are successful, I have to say, in maintaining customer relationships, maintaining market share in most of these areas, but it comes at a price. And the price is, of course, that you're doing repricing, but not just because of competition, but also because of new services and new offers that the customers want leading into the new digital era. And that comes with the repricing. That is not that's our industry. That is not just Sweden. We are, of course, very exposed to that since we are a very large player in the corporate space. Christian? Yes. And on the guidance, I just want to just come back to that. The Q1 from Norway and Sweden had very specific items that came through, and we don't see those coming through the rest of the year. And we have 2 weaker markets. You have mentioned one of them in the questions here, Denmark. And then we have had a tough start in Estonia. And then we are sort of quite stable in the other ones. So we have the challenges coming back to the B2B and the fixed decline in general. And then we also have a transformation ongoing. So therefore, we have been cautious in our planning, so we secure that we can deliver on what we need to deliver. Let me just follow-up on that, if I may, please. Your answer, Christian, sounds as if you just lowered guidance. I'm asking why you actually raised it, right? Within the 3 months between issuing this guidance in the 1st place and now raising it, what has really changed and where? Well, the first one big thing is actually that we now have the outcome of quarter 1 in our back, which is going to give us comfort. It gives us 10.4% to start with. We bring that with us the rest of the year. And then, of course, we have a better visibility on the rest of the 3 quarters. And we feel more comfortable based on that, on how we're going to deliver what we have now stated. And what I said now, if it sounded like we are trying to take down the guidance, it wasn't the purpose, it's actually explaining the new guidance because 10.4% is a good start. Thank you. Okay. Should we move on? Could we take next question and please stick to 1 to 2, please? Your next question is coming now from the line of Nick Liao from SocGen. Please ask your question. Yes, good morning. It's Nick at SocGen. Could I ask 2, please? Just on the Christian, if you take out the marketing costs and the storm costs from last year, it still looks like Swedish OpEx is down about 4%. So could you tell us roughly where that's come from? Is it the start of the transformation program? And would you expect that to be sustainable and possibly accelerate? And then secondly, on the Turkcell dividend, obviously, very disappointing on the lack of a Turkcell dividend. So is there any opportunity to get cash out of Turkcell for the 2015 year? And does that mean that talks on future dividends and also the governance stuff is now off as well? Thanks. Yes. Thanks, Nick. When it comes to Turkcell then, we were also disappointed, as we stated, that we couldn't get to a resolution. Just to clarify that we voted in favor of the dividend, but we couldn't get the other shareholders to do the same. And therefore, there was no decision on dividend. We haven't given up that, of course. There is work and discussions going on all the time on the matter. And if it was only a question of dividend, I think that would be easier. But of course, this is a bigger discussion relating to our shareholder issues and the other governance issues on the board. So we are disappointed, but we have definitely not given up dividends for 2015 or 2016 going forward. So we will have to come back when we have any more hopefully better news than the last update. On the Swedish side, yes, you're right. We are improving the cost side somewhat. And that is based on we talked about last year. We're working hard on smaller activities all over the place to improve the cost base. That will be needed, that space, both for actually bringing in new generation adjacencies, and that will cost in that startup but also the transformation. And that goes a little bit more in waves. But we will continue to drive cost on a case by case and department to department situation. The and yes, and I think I'll leave it there. Sorry, Christian. Just to check, you've sort of played down the transformation costs a bit for this year at the Q4. So is this the start of the delivery? Or is this just other sort of ongoing issues, but not really transformation costs coming through yet? Well, we are working hard on the transformation, but it's actually it may sound a little bit strange, but the transformation goes a little bit in waves when it comes to OpEx and when it comes to the CapEx side because CapEx is also something. And the CapEx drives also OpEx, and it does it in different phases. So it's not that easy to just say now there's a phase of transformation. We have an ongoing phase of high level of transformation work, but it hits COGS and OpEx a little bit different from when it hits also CapEx. And that's where it makes it a little bit difficult for you to follow on a percentage point, which could be actually quite small number in our world, but it brings an idea to your mind of additional cost savings or cost increases. Okay, great. Thank you. Okay. Next one, please. And your next question is coming now from the line of Roman Arbuthov from UBS. Please ask your question. Thank you for taking my question. The first one is on Sweden SME Mobile Market. So one of your competitors has been particularly cautious about that particular segment. So could you please just provide us more color in terms of what you're seeing on the ground competition wise? And then secondly, on Denmark, you've mentioned that you're happy giving out some customers and instead you will be compensating through higher ARPU. But if I look at your ARPU trends in Denmark, they're not the trends, they're not really improving. So I was just wondering what gives you the confidence in your strategy and what gives you some reasons to be optimistic? And do you see any improvements in the competitive environment in Denmark? And just as a quick follow-up on Denmark, do you also potentially think about raising prices for existing customers following the price increases on for new customers? Roman, thank you. SME Sweden, as I stated, is a very large chunk of our business in the B2B segment, about 45 ish percent. Fixed and Mobile, very strong position in Fortellia Sweden. And the competition is extremely high and fierce. And we, of course, do our best to be the best all the time, and it proves well right now on the mobile side. On the fixed side, we still have issues. And I think competition raises the bar all the time. So it's nothing more than usual, so to say. So I don't know what you're referring to and who you're referring to in your statement, by way. But that's the general statement that we have. On Denmark, no, we're not happy. We don't see the trends changing. But what Christian said that it's our ambition to try to get more out of our base, yield it higher, get price increases to go through not just new customers but the full base. And that is difficult for various reasons in Denmark, not just because contract the way they're set up, but also how they're sold and how promotions are made and above the line, below the line competition. So it's a very, very competitive, complicated market that we are still struggling with, and we're very open with that. And luckily or luckily is probably the wrong word, but we're not the only one struggling. And that shows the difficulty in the Danish market. In terms of the SME mobile, I was talking about Tele2 actually. So the message from them is that TDC in particular, but also Telenor being very aggressive in that market and that's dragging everybody down by in a double digit range. So that's something that you're not seeing. Obviously, we see competition every day. And you're right, they are very competitive. We will I think we have a good roadmap on SME in Sweden, and we're confident that we are giving the customers what they want right now. So we'll do our best to outcompete as well. Okay. Thank you very much. And your next question is coming now from the line Terence Tsui from Morgan Stanley. Please go ahead. Thanks. Good morning. I've just got a question on Swedish fiber. In the press release, you mentioned 20,000 homes connected, of which 7,000 relate to the SDU fiber campaigns. I'm just wondering where the rest of the fiber connections going to. And then second, just very quickly, just any updates on the Spanish sales process and when you expect to be able to formalize this, please? Thanks, Terence. On Spain, yes, we're in exclusive discussions, as we stated it. Doesn't mean we have concluded anything. Doesn't mean we have a solution. But of course, we will definitely update you when we have our views from that exclusive discussion. But really nothing new today at the moment. So let us come back to that. Jesper, fiber On the side, I mean, you can say that the rest is split between the MDU side and CTSIOS to come up and the commercial side. So that's where you find that. Great. Thank you. And your next question is now coming from the line of Andrew Lee from Goldman Sachs. Please ask your question. Yes. Good morning, everyone. A question just again on the consolidation potential in Denmark. I mean, you guys have had much more exposure to Digicom than us. Do you think there are any incremental learnings from what we can see in the U. K. That would make us less confident on Danish consolidation if other players were to be involved? What read across should we take from the U. K? And how confident will you be on consolidation in Denmark if other operators were involved? And then just secondly, and then not entirely unrelated question, could you just remind us of the aims of your M and A policy? And could you execute or announce any meaningful deals before the DOJ decision? Thanks, Andrew. Yes, Denmark, we learned a lot, of course. I we don't know the outcome of the UK situation, of course, and the Italy one going on. I think those are important for confidence and direction, what can and should happen in various markets. And when it relates to Denmark, I think we learned that every market is different. We learned that it is market by market assessment. And that, I think, is to keep in mind, so you don't take one decision or one event as a general conclusion for the entire European telco sector, I think that needs to be more sober, prudent nuanced view on that. And we're not giving up on our ambitions, of course. On M and A, we want to do value creative M and A, of course. We have done so in Norway. We think a very successful M and A case. And our balance sheet is strong, and we are clear on our ambition with the balance sheet being at A- BBB plus which is probably then around 2, plusminus 0.5 in the leverage sector. And that's where we aim to be. And if we can't produce value creative M and A or investments, of course, then we have to think about different things. But right now, that's further down the road. We have a huge divestment agenda for the year, which we're executing on. We have a huge investment program in the Nordic Baltics, which we're executing on. But with that said, there's still room for maneuvering. And if there are value creative M and A and business development activities, we will certainly look at that. Thank you. That's really clear. And there's other questions from the line? Yes. We do have a couple of more questions. The next one is coming from the line of Sunil Patel from Bank of America. Please go ahead. Hello, good morning. Thanks for taking the question. Just 2 on my side. 1 on Finland and your go to market proposition. I mean, I see in the on the website, you've offered now unlimited plans based on speed based pricing. But your results on the top line still somewhat lag, at least on the B2C side, if I'm correct, around your split of B2B, B2C. What do you think is holding you back in terms of catching up with the market leader there? And then the second thing is just really an update on the Fintur side. I mean, I think InterX has submitted a binding offer, but it's taken quite some time. What are the issues which are really holding up potential the completion and signing and completion of this deal? Right. Thanks, Sunil. We start with the Fintur side. We are in that process. I think it's not entirely strange that Turkcell was early out with confirming their interest and putting in a bid. They knew and they know this business since they're already minority in Fintur. But we've always said that we have a competitive process that we want to run structured, and that takes a bit of time. We're in discussions, of course. And as soon as we have something of interest and newsworthy, we'll definitely come back to you. But it's progressing, as I said earlier, according to our plan and confident that we will be able to do what we have said we should do. On Finland, well, you're right. We are not catching up yet. But as I said in my Finnish update, we are comforted by the stability and the improvement step by step. Would I like it to be faster? Absolutely. But you don't change some of these markets quickly. We've learned a lot from our own propositions, but also looking at competitors, what works. We haven't gone all out on flat rate and price base. We have done it in certain segments. And we're working a lot with our converged proposition full house in Finland to make it balanced enough. But let's see what we can do more to step up further, which is, of course, the ambition in Finland. Thank you. Okay. I think we have time for a couple of more questions. Next question is coming now from the line of Henrik Herbst from Credit Suisse. Please Henrik, ask your question. Great. Thanks very much. So I had firstly a question on Swedish fixed line, where you've put through, I think, 2 price increases now within less than a year, quite big ones on TV. But you have done very little in terms of broadband. I was just wondering how you think about the pricing power on those two services and why you think you've got so much better pricing power on TV and or maybe if you can do more on broadband prices as well? And then secondly, in terms of fiber, if you can give a little bit of an update what type of update you're seeing in areas where you roll out fiber? Also, how many of those customers that take fiber kind of stick to their voice connection as well? And I guess in the end, revenue per line, what are you seeing when a customer moves to fiber, not just what they do in terms of what your broadband ARPU does, but for a connected home, whether the monthly revenue goes up or not? Thanks very much. Thanks, Henrik. On the Swedish TV broadband price discussion, yes, you're right. We had a couple of increases last year. We realized that we were quite underpriced actually on TV, a very strong proposition on TV, which we have been able to take to the next level, both in terms of experience and content and consequently also in price. And we think we can continue that, which we recently announced. On the broadband side, you're right, not the same step up yet. We have, though, announced recently for new DSL customers on certain speed an increase, which we'll see how that works. And that's the way we get our work. And we said that wrong. We try to monetize and price up in the right pace because if you do it too fast, we, of course, need reactions. And if we do it too slowly, we need reactions from Christian on yields. So we'll work hard to get the right balance there on what we see fit. But keep an eye on the recent price changes announced in Sweden for both TB and fiber sorry, DSL. On the fiber question, I think that's a longer answer. Probably, you need a long session to go through that. Briefly speaking, the customer experience, of course, improves a lot migrating up to fiber. We see that people are prepared to pay over EUR 2,000 to get the fiber installed. Many customers keep or upgrade a number of services with positive effect. So that's something we can probably go a bit more into detail in the Capital Markets Day in June. Okay. I think we have time for one final question on the call. And your next and last question is coming now from the line of Usman Ghazi from Berenberg. Please, Usman, go ahead. Hello. Thank you for taking the question. I just have one please on Swedish EBITDA. It is more of a kind of a conceptual question. As these revenues from the fiber install, they will naturally moderate as the CapEx moderates. There will be a shortfall on the EBITDA, which needs to be offset by, I guess, growth in service revenues, and we're not seeing that. So how do you see kind of Swedish EBITDA, whether you see it sustainable over the midterm as these fiber install revenues kind of moderate going forward? Thanks. Well, you are right that the onetime charges are giving us a kick right now. But we are also getting an improvement from the service revenue part from these customers, and it will increase over time. And so I don't really agree with you that it we can't see it in the service revenue. And we see that B2C service revenue in Sweden still has a bit positive impact from this today. So sorry, I mean, my point was that the overall Swedish service revenues, B2C and B2B, I guess, need to come back into positive territory, right, to prevent your kind of EBITDA from contracting effectively if your one off revenues in B2C from 5 year installed come off? And that's a bigger question, of course, and that's part of our transformation journey. And that with SEK 1,300,000,000 in investment should bring SEK 1,300,000,000 to our bottom line in 2 years' time. So there's more to the fiber package. Okay. Thank you. Okay. I think we might have one final question here on the floor. Thank you. Thomas Heath here with Danske Bank. Just a follow-up on Sweden and mobile. You mentioned quite tough competition with different propositions during the past year. Can you say anything about sort of high end brands versus the discount brands and how you see Haile Bop and Telia on the mobile side and whether you're sort of happy with their positioning and how they're transgression. Thank you. I won't go into much detail on that. But broadly speaking, Telia and Hellbop have been converging over the last years. And we think going forward, it needs to diverge a little bit more. So keeping the premium brand Telia, which it clearly is, which you've seen on the propositions and the network and the safety in the brand and Hale Bopp fighting more on the turf with the likes of our competitors fighting brands. And we recently did a change on HAIL BOP actually on pricing entry level, which has been positive. So that's how we think about the dynamics. Good. Thank you. I think that calls normal. So thank you very much for listening in and being here. Thank you again. Thank you. That does conclude our conference for today. Thank you all for participating. You may all disconnect.