All right. Hi, everyone, and welcome to Telia Company's Capital Markets Day 2016. I'm Jesper Billgren, Head of Investor Relations. Really happy to see so many of you today, and I'm really happy also to be hosting you here in our new headquarters in Solna. A lot has happened since we met last time at the Capital Markets Day back in 2014, and today you will get an update on this journey and also have a special deep dive into the Swedish operations. Just before we kick off, a very short summary of today's agenda. We will start with a presentation by our CEO, Johan Dennelind, and to be followed by a financial section by Christian Luiga. After that, we will switch into a Swedish section, and you will meet several people from the Swedish management team during this session.
There will be a coffee break at 2:45 for half an hour, and then we'll resume again at 3:15. We intend to end this event at around 5:00 P.M. You are welcome to stay for some mingle with all of the management team here that is present here today. There will be Q&A sessions, short ones at the end of each presentation, but there will be a more extended one at the end, so you will be able to hopefully raise all your questions you have. When it comes to presentation material, it's on our web. There is Wi-Fi here in the room, so please connect and you can find that at teliacompany.com. That was all I had to say, so I would like to hand over to Johan, please.
Good afternoon, and you left with the clicker. I need that. Very welcome, all of you. Great to see you here. Thanks for traveling to Stockholm. For those of you coming outside Sweden, it's great to have you here in our new home. Very, very pleased to have you here, actually. It's been a project that's been lasting for the last three years, actually since I started, that we wanted to move in here. We moved in two weeks ago, which means this is pretty new. That means that it may not work all that perfect everywhere, but we'll find out. If it doesn't work perfectly, then you know why. It's great. You will be able to also have a look later in our customer and partners section of the house, where we also have a developers conference going on at the same time.
Some of you we meet regularly, quarterly actually, but some of you we don't see that often. It's great to have an opportunity to address all of you and also online of course. You have to bear with me and Christian for an hour or so before we'll get into the real topic of the day, of course, Sweden, the deep dive into Hélène and the management team, which is present here. Also the full group executive management team is here for mingle and chats in between. We are on a journey, which we have been talking about over the last few years. This is the same slide that we showed back in 2013, actually internally, but 2014 in the Capital Markets Day. We're still on this journey. We're still sticking to the story, and that is one of the key messages that we're taking out today.
We're on track on this journey, where this year, 2016, are expected to start to step up in our performance in order to move towards 2018, where we should be on a better potential. Not full potential, I presume, but definitely on a better potential than we have today. I'll show you some trends that we are actually delivering on already. Through this transformation and transition, building a new company, we are actually maintaining a fairly solid performance underneath in this continued operation, this is. For those of you following us in the last few years, we have had an ambition to maintain EBITDA through this period, and this year as well in continuing operations. We actually, based on Q1, already upgraded slightly our guidance in this. We are underlying doing what we said we would do on the EBITDA side.
Service revenue, of course, we're searching for growth. This is the industry challenge that we have, and that's why we need to go through this transformation into something new and more modern, which we'll also come back to. Fairly solid performance through transition is a key message. I will not spend a lot of time on this slide because it's very busy. This is the one-pager of Telia Company strategy, what we're doing and why we're doing it. Everything we talk about when we announce deals, when we announce partnerships, when we invest, is tied to this chart. It could be good to just refresh sometimes. If you don't understand what we're doing, it should be found here. Of course, two main pillars is that we're enhancing our core, investing a lot in connectivity across mobile and fixed.
We're bringing convergence into both consumer and enterprise across Nordic-Baltics, and we're creating more competitive operations and structurally changing our cost base. At the same time, we're exploring opportunities close to the core, not buying ice cream shops or anything else. It's too far away from core. We're buying and partnering close to the core to either protect and enhance the core business or to find new revenue streams in adjacencies. That's why we're investing. We're doing this based on a foundation, which is very much focusing on our culture and creating the best place to work. I'll also cover that a bit. In the last CMD, we said we want to accelerate investments in search for growth and to reduce cost. We said that we want to reverse market share trends and improve NPS because they were in decline.
14 out of our 16 BUs at the time had, over the past three years, lost market share. We are exploring opportunities close to the core. We talked about IoT, we talked about connected car. We said we would streamline and find a better balance in our portfolio, and prudent capital management and create a winning company. That was what we talked about last time we met. Let me go through these boxes one by one to give you some proof points. Invest to Save, the transformation program. We said we would invest SEK 2 billion over 2015 and 2016 to get in towards the end of 2017 with a full run rate of SEK 2 billion in savings. We are on track, and we will cover that both in Christian and Hélène's section.
We said that the reason we're doing this is not just structural cost changes, but also to create a more competitive company with a better customer experience. That should ultimately be seen in NPS and market share. We'll also show you that. Basically, on track on Invest to Save. Invest to Grow, important in our search for growth in our industry. We need, obviously, to invest a lot, but we need to invest smartly, and we need to do it differently in some areas. Starting to the left, fiber rollout, remembering our commitment to try to get to 1.9 million passed households in 2018. Investing a lot in fiber over the past two years, 2014 and 2015. We have invested almost SEK 5 billion. 2016 in itself will almost be SEK 4.5 billion, SEK 4.6 billion, which we'll cover.
This is in order to address, obviously, the pent-up demand that is still in fiber, but also future-proofing our business model leading into the future. We have seen the results of these investments. You are seeing the results quarterly of these investments, both in terms of the one-time charges, but also in the underlying service revenue that is increasing. All in all, a 40% increase in fiber-related services in 2014 and 2015. Invest in networks, needless to say, and spectrum, very important part of our core. Taking one example in Norway, after the acquisition of Tele2, we had the appetite and balance sheet and return on capital profile to invest more. Now sitting at around 98% of population, and recently, that's why you have that little symbol there, awarded the best network in Norway.
That's an achievement based on commitment and a new team and a great acquisition. We have also been investing and are still investing in turning trends in our B2B. This is a separate section with Lotta later in the Swedish part, where we're starting to see some positive trends. We're seeing it in Sweden. We talked about this in the Q1 numbers. SME SOHO is turning, and it's not a coincidence. It is hard work, investments, new propositions, better service offerings, and customers are getting more and more happy. That's the result we're seeing. In Finland, this is the trend we're seeing in billed revenues for B2B in mobile. Also there from investments, new offerings, better services through the value chain. That, of course, we're very glad to see. Moving on, a couple of words on the market share and the NPS.
We have, in all markets, either stabilized or reversed to positive the market share trend when it comes to revenue, which is an important measure in competitiveness. That is something we're proud of. Even more so on the NPS side. Almost all, and I'll come back to the red one, but the other ones are stabilized or positively increasing based on customer feedback objectively measured quarter by quarter. We're happy with that, and that's also a result of hard work and improved service components. Finland, unfortunately, we have had a bad six months, plus roughly, with network outages in Finland. We have been working hard with our partners to address that and are now on the right track. That shows what happens if you don't invest enough in core and in networks.
We have been through that, and I think we now have a good path out of this with our customers in Finland. Let me spend a couple of minutes on our opportunities close to the core. It's a wide range of initiatives that we do, small, medium. Some are resulting in successes like Telia Sense that we're launching. We have announced and we're launching in Q3, which is the connected car. We're connecting all dumb cars to be smart cars, connected with a platform of ecosystem with partners, making your car a pleasant ride and an economical ride. We're also now, today actually, announcing something called Telia Zone.
It's for the Swedish market to start off with, where we have 1.1 million households with fiber or DSL connections that are in the second half of the year immediately part of a platform where you can get much smarter services into your home. The connected home, our way of doing connected home is through Telia Zone. On Telia Zone, there will be services and partners coming on, and they are here today outside, developing services for Telia Zone. One of the first services we're launching is a world first with Spotify called Telia CoPlay. That's a result from our strategic partnership with Spotify that we announced a year ago, which we'll bring to market in the next couple of months, which completely changes your music experience at home or also on the go where you are together with friends or family.
We want to accelerate this. There are areas now within IoT health and cloud, notably, where we are carving out from our existing operations into a new unit, working name Telia New Business, with a CEO. The CEO is Brendan Ives from the Telia Carrier who will move in to take on this. More of an independent unit, accelerating some of our initiatives here in order to now build on the trends that we have, for instance, in connected car, but also make sure that we get into the growth territories of IoT. Very exciting, you will hear more about this going forward. Let's spend some time on our business development agenda, also part of our discussions at last CMD. Let me start with the map to the left, consolidating in the Nordic Baltics.
We are on a mission, as I said, to invest in fixed and mobile and create a converged offering in consumer and enterprise. We have done some successful initiatives, the one I mentioned in Norway, and also some smaller bolt-on acquisitions across. We have merged our two companies in Estonia into one. We have merged our two companies in Lithuania into one, who are now able to address the convergence trend in those markets. We have failed to solve Denmark. We haven't given up on fixing Denmark, which we, I'm sure, are coming back to on questions, but not much news there, of course. As I've said before, we will fix Denmark one way or another. In Finland, there is not a lot to do on the M&A side.
We are trying, as you may have seen today, to get into the discussions with Anvia Telecom, fourth fixed operator in the western part of Finland, where we have put in an indicative bid for the company and see if we can stir up and make an impact there and get the shareholders on our side with a more attractive bid than what's existing as we understand it. Moving to the middle, we are M&A-ing also in the convergence, both in B2B and B2C. We're also partnering. That's why it says business development here. It's not just M&A, it's also smart partnering. On the IT side, it is a recurring topic that we have on our conf calls quarterly. How do you fix the negative trends in B2B?
That's hard work, as I've talked about before, but it's also to broaden our propositions in B2B with ICT or IT services to complement our very strong communications part of the ICT. This you will hear more about from Lotta later, but really important area for us, strategic focus, where we are definitely looking for M&A to complement our existing portfolio. On the consumer side, we are looking how to become more relevant to the consumers that are ever so demanding and increasingly demanding on relevant services from us. We do that through a lot of partnering. You have seen that with the service providers. We'll continue to seek such partnerships.
A very important part is, of course, in media, that we're also looking how to leverage our very strong distribution footprint or TV base that we have both in Sweden and across the Nordic Baltics. A couple of words, of course, also on our ambition to reduce presence in Eurasia and to divest non-core businesses. First, let me talk about Eurasia. 17th of September, we announced that we are reducing our presence over time. In conjunction with our Q4, we actually put our assets up for discontinued operations, meaning that we believe we can divest these over the next 12 months. We did divest Ncell in Nepal, and we have six remaining assets to solve. No news on those six today. We still feel that this is doable this year. We have good progress in our discussions.
I think starting with the one that is probably the most difficult one and will probably come the last is Ucell, Uzbekistan. Maybe for obvious reasons for some of you that before we get full traction in such a process, we most likely have to solve the various jurisdictions and prosecutors that are talking to us about the preliminary investigations in Uzbekistan. We have updated you along the line about these, and there are notably three jurisdictions that are involved in this. It's the Swedish, the Dutch, and the American authorities. We are cooperating well with the authorities, and we are doing everything in our power to move that timeline, bring it forward as much as possible. We have, of course, full respect for the time needed from the authorities to close and come to conclusion on these investigations.
Nothing new there, except our comfort that we will be able to solve this during the year. You have an opportunity later, of course, to mingle with our chief legal and general counsel, Jonas Bengtsson is here, and happy to also chat to you about the status. He'll probably say the same, but with slightly different legalistic language. That's the main message that we have. The non-core businesses. We have said that we're looking at divesting non-core assets. We have looked at Spain, we have looked at Sergel, our credit collection company. This morning we announced that we are divesting Yoigo and Sergel. Sorry for bombarding you with press releases this morning, but it so happened.
Yoigo now is finally come to conclusion where MásMóvil has offered, and we have accepted, together with minorities, to sell Yoigo at a very reasonable price, actually above some expectations. Of course, that's for you to judge, but 8 times EBITDA in a fourth operator standalone is, in our view, a defendable and good valuation. Christian will take you through what it means on the balance sheet and the P&L. That's very good, subject to approval, of course, from the regulatory authorities in Spain, but that should not be a problem. Then we have also divested Sergel, our credit collection arm internal to a Swedish-based company, Marginalen. Christian will also take you through those details, which is also very much a deal that is defendable. Very good to tick those off and move on. Our associates.
You follow these associates a lot, I'm not going to spend time on the operational side of this. You know the value of these assets. You know how we view these, that MegaFon is something we treat as a financial asset, but we also act very much on the board, and we contribute to protect and create value in MegaFon. It's working well. Of course, Russia is the main problem in terms of macro and effects, but it's a good company that we enjoy being part of. Turkcell, completely different story. A long-lasting, difficult, complex, time-consuming adventure, where we have 38%, the 25 and 13 direct, 25 indirect, where we managed last year to create a situation among the shareholders where we got 2 dividend. This year we haven't done that yet, but our engagement is constant and very active in trying to get to resolutions.
Looking at the capital management side, Christian will take you through this more in detail, but around 1.5. You know our target of 2, you'll get the impacts of the deals to this as well. Over in the last 2 years, we have distributed SEK 26 billion to shareholders during the transition. We have spent a lot of time on the left side of this chart, creating a responsible and sustainable business, remedying from the past, building a solid governance and compliance program, also now taking that into responsible exit. Now we're shifting more and more also into creating value through our All-in platform, which targeted very much into areas where it's closely linked to our business, where we invest for the future.
This is something we'll see more about going forward, but the responsible business has been very much in focus over the last few years. Our company. We're creating a company, a winning company, and we're excited about this, and we love to speak about this also to you. We have our simple philosophy that it starts with our engaged employees turning to positive for the customers and eventually also into shareholders. We measure and reward on these as well. Our incentive programs, which is not the group executive management team because we don't have that, but throughout the managers in the company, we reward along the NPS and TSR measures. You First is our platform to bring this together in a new way of measuring and incentivizing and motivating our staff.
The 50/50 is how we reward 50% of what we deliver and 50% how we deliver it, tied to our values in creating a sustainable, competitive company. Critical and very important, and we love to speak about this to all our stakeholders, including the financial community. I'm going to end off with a couple of notes on the future. You know the global trends, and it doesn't really matter if it's 20 billion or 10 billion or 30 billion, you can pick any analyst firm, it's exploding. We want to be part of that. We see a lot of the enterprise side caring more about security and cloud. It is a fundament for the future. We have to be there, not just for our own business, but for our customers as well. Everything goes online and OTT, and we see that throughout our value chain.
We have our carrier business, which is number one or two, depending on how you measure in the world. We get a very good view on the internet traffic globally and locally. Based on that, we are more prepared to meet the demands of the future. Our region is the cradle of digitalization, and we are in the most advanced sectors in many aspects. We want to benefit from that and leverage that into our customers, and of course, ultimately to show results into shareholders as well. These are areas where we prioritize, and they're very much linked into our close to the core and our core in how we invest and how we prioritize. That brings me to my final slide before Q&A. We have solid performance throughout the last few years of shaping the new company.
We are on track on our Invest to Save. We're investing to grow. We're seeing growth in some areas kicking in. We have reverse trends in market share and seeing positive NPS developments. We are now ticking off some of the portfolio things that we've been talking about, Spain and Sergel, Ncell divested, more to come this year we expect, which gives us a good fundament for taking the step into the future, investing prudently into our strategic focus areas in the Nordic Baltics. With that, I want to leave you. I'm going to go back one and stay on this one and open up for some questions before we move on to Christian. Then if you have more questions, I'm coming back later, so you don't have to take it all now. I think we have time for a couple of questions and then before we move on.
Please raise your hands and hand over the microphones. We have Andrew over there.
Hey, thanks, and sorry for being late. It's Andrew from Goldman Sachs. You showed on your slides your desire to go for convergence and use M&A to get you there and partnering to get you there. I know that you're going to be focusing on Sweden during this presentation, but do you feel you've been too slow to push convergence in Sweden? Where's the next natural market within the Nordics that you feel is crying out for convergence?
That's a good question. I'll leave some of it, but my high-level answer, no, I don't think we've been too slow. We've been preparing for convergence in Sweden. I think there are more to do in Norway, obviously, where we are very one-legged so far with the mobile portfolio. We are prepared to go into broadband also in Norway at the right price at the right time. More importantly, creating that seamless experience to the customer is ultimately where you experience convergence or integrated services, and that's happening. It happened in Finland through our full house proposition. It's happening in Sweden, preparing for it, and Norway will come as well. Estonia and Lithuania are going that route as well now.
I don't think we're too slow, but we are in Sweden, notably and specifically careful not to go into a discounting game quickly and rock the market too much. We're doing it step by step.
You left out Denmark.
I left out Denmark. That's correct. We'll come back to Denmark, but we have no solution in sight right now.
Yes, go on.
Hi. Pontus from Erik Penser. I just wondered regarding Denmark, you saw a small press release about price rises there, 15% or so on the base package. That's good news to me. Does that mean you need to fix Denmark, as you say, really in terms of structurally? When things are going that way, it seems the structure is fine as it is. Is that something you see happening now when the EU Commission stop things in the tracks? Are people getting more prudent in terms of pricing in the environment? It's a big question.
Yeah. No. Thanks, Pontus. It's a little bit depending on how you define fix it. For us to fix Denmark, we need to get return on capital that is in line with our expectations, and we haven't been able to do that. How do we get there? Well, operationally, certainly you can get there, but a lot needs to happen. It's not enough with a 15% price change on one or two packages in the market. One, because it doesn't cover all of the market. Two, because it takes time to flush through the base. Three, not everybody's following. It is a market that still very much, in my view, is damaged, and it's very difficult to say how we will get out of that and create returns.
Therefore, we say we have to look at other options in Denmark, but there are not very many obvious options. I've said it a couple of times now, we don't rule out anything except to continue losing money in Denmark because we're investing and we get zero return, and that's not prudent capital management, back to my previous point. Yeah. We have one in the middle here. Henrik.
Thank you. It's Henrik Arps from Credit Suisse. I just wanted to follow up on convergence as well. I guess Denmark and Norway are quite obvious gaps. You've talked in the past about wholesale agreements. Is that a long-term solution, or is that a near-term fix? Basically, do you think longer term you need to own your own fixed infrastructure? Thanks.
Obviously, short term, a reseller or wholesale agreement can address the customer need if convergence takes off, and that we're prepared for. I don't think long term it necessarily creates the returns you want on such a market, and therefore, we look at the combination. We haven't decided, obviously, because we haven't been able to find something or defend something that is value creative over time. I think there's various options available. We don't exclude anything there.
Thank you.
I think we'll take one final question, we can take Andreas.
Andreas Joelsson, DNB. You mentioned a lot of new services that will drive growth, if you look at the legacy business, do you rule out growth there? If not, how do you going to turn that around and show growth in the legacy business?
You'll get a good example of that when Hélène comes to talk about the Swedish situation on legacy core and future services. I'll leave it for Hélène, actually, and then if you have any further questions on that, then we'll talk about it afterwards.
Good. I think we will stop there. Johan will be back later on, you will have much more time.
Thank you
questions for him. I think now it is time to put Johan's presentation into a financial perspective. I would like to hand over to Christian, please.
Thank you very much, welcome, and good afternoon. For those who don't know that, this last night was the shortest night this year, and that means that yesterday was the longest day. That was very good because we closed two deals, and we needed that time. I will come back to those two and explain them a little bit more in detail. Welcome to Sweden, and welcome to Midsummer. I will bring you through the numbers. I thought that I will start this discussion with a little bit recap on where we are. Johan talked about our service revenue, and we just had a question on it, where actually the fixed legacy, the fixed in Sweden, Finland, we have said, and we do say that it is decreasing.
We start a year with close to a minus SEK 1 billion in revenue and figure out how to compensate that. We do that primarily with mobile, broadband, and TV services, but also with new type of services coming in. That is the magic behind finding growth. It's been a mixed picture. The last quarter was very much affected both by interconnect in Norway and Finland and also by the carrier business voice revenue, very low margin revenue. EBITDA. We will talk about that because the EBITDA on this picture is driven a lot by the cost we're working with, and that is something I will come back to in the discussion. The biggest part also on the development of the EBITDA is Sweden in absolute numbers.
As we have seen from last year and what we talked about and said was that we will have a weaker start and a stronger end of the year in comparison, that this year will be a little bit a shift the other way around. The other part that has impacted is fiber OTC. We will hear Anders talk about that later today. The CapEx is now running at a peak level. We have talked about SEK 14 billion-SEK 15 billion this year. 2016 will be the peak year and SEK 15 billion is what we have set as a maximum, and we're running at SEK 14.8 billion, close to that peak. I will also talk a little bit more about the CapEx in a later page. The cash flow influenced by associate.
Last year, we succeeded to get a dividend of SEK 4.7 billion out of Turkcell, which helps us a lot. The underlying core is what will be driven by a lower CapEx, improved EBITDA, hopefully we will also get to some service revenue growth over time. This is our ambition, this is our target, this is what everyone in this company works with every day. If we look a little bit around, we will talk a lot about Sweden today, so I will leave that a little bit out and just mention the rest of the countries who have that with us going through this presentation. Norway, we had a acquisition of Tele2. We had a initial target of finding synergies of SEK 0.8 billion. We reached SEK 1 billion, and that came through in quarter one.
Going forward, we will not have the benefit of those synergies on our EBITDA. The revenue picture is more flat. We know that we are giving room for Ice to come in to make sure that the balance is correct. This is a strong player that will be a tough competitor, Telenor as well. This is good that we have a starting point with a good network, that will help us. Norwegian economy is also a little bit dampened and could put pressure. Denmark, we talked about price increases. Still not enough to be shown in the numbers yet. We will see. It's promising. As Johan said, challenging on the return. We will see. Baltics, after many years of weak development on revenue, it has turned around. Lithuania is a little bit of a crown jewel right now, driving both profitability and revenue growth.
Estonia is also an opportunity for synergies from the now merge between the fixed and mobile business. It's something I feel comfortable with for the rest of this year. It's going to be a good platform, and they're doing well in those markets. Finland, they have a strong pressure on the fixed side, compensating very well on the mobile side, both on B2B and B2C. Total mobile revenue growth is 4% in quarter one. The B2B area is just above zero, and the B2C is 6%. Also driving a transformation project, also driving a lot of efficiency improvements in cost. That comes through in the EBITDA growth. I will now spend a little bit of time on three elements that all should help us to maintain a solid balance sheet and deliver a competitive dividend over time.
Outside the service revenue growth, the cost, the CapEx, and the capital efficiency questions, I will try to spend a little bit of time on each of them. I will start with the Invest to Save. That is on track. Invest to Save is a program we started in 2014. It's in Sweden, Finland, and Group Common Functions were driving this. Those are together the majority of our cost base. They also share the same challenges when it comes to complexity and transformation need. We have so far a CapEx that was in last year SEK 0.7 billion, this year it will be SEK 1.3 billion. In total, we will have the SEK 2 billion in CapEx spent, that will be then enough to reach the SEK 2 billion savings coming run rate next year. The three components of the transformation is the transformation work itself.
The Invest to Save program is the transformation where IT, legacy, and the shift into a new online systems, et cetera, is a big part. That's the biggest part of the investment. Another important part is procurement efforts, they go across all functions, they are bringing a big part of the value. Then we have the general efficiencies. The SEK 2 billion investment will give us the return back on EBITDA of SEK 2 billion. In addition to this, we should expect that we will find similar initiatives going forward that will drive further efficiency. This is the peak year of CapEx in the transformation. Hélène will talk a little bit more about the proof points when it comes to the transformation. What does it mean? Where do we find these KPIs that tells us that what we're doing and why we are on track?
Hélène will talk more about that later on. On the total cost base then, what are we doing? The transformation is Sweden, Finland, and Group, in the whole group, we're working on cost efficiency. This picture tries to illustrate efficiency. This picture tries to illustrate the total change in cost. The total cost has gone down with 5% quarter one last year to quarter one this year. The different elements in this picture is cost-saving initiatives, which I will come back to. We have the second bar is the synergies in Norway, the third one is volume impacted. If the volume goes up, this cost will go up. The volume goes down, this cost will go down. The final one is the market and other impacts. Mainly that is salary increases.
Salary is an inflationary thing that is impacting our businesses, and the majority of that last part is salary increases. It's taken out from the cost savings because they are not part of our cost savings. What is the prime areas where we have had cost savings over these last 12 months and we have focused? One is reduced resource cost across all functions. Quarter four, we announced a reduction of 190 people. Quarter one, we announced 240 people going out, and we will announce a number also for quarter two when we come to that report. We have said, we're not doing the large cost-saving programs taking out thousands of people, but we every day, every month, go and find more efficiency in how we do things.
It could be competence shift, it could be bringing more efficiency, it could be insourcing or outsourcing, but in total, our resource cost should go down. That is a very important part. We have also said we can't afford to bring in large cost-saving initiatives on headcount. Meanwhile, we do such an important culture and transformation shift in this company. Another very important part is the reduced network and technical sites. Here you have site rental, line rental, you have energy, you have field maintenance, and here we see that procurement is a big part of the savings. Improved efficiency in sales and marketing is primarily the marketing agencies where we have better contracts for procurement. On improved handset margins, it is optimizing our use of the SAC.
For the same revenue, we make sure we use it in the best place, and also partly some procurement initiatives on the handsets. That is the prime reasons why the cost is going down year-on-year. We work very detailed on many programs, 100+ programs in the total group split on the countries that we follow up. We don't succeed on all of them, but we succeed on enough of them to make an impact enough to meet our commitment. The CapEx development is going up over these two years. We have said we will invest SEK 5 billion-SEK 6 billion more in 2015 and 2016, then the CapEx should go down. We have also, compared to 2014, increased the CapEx with that amount.
One of the prime reasons is the fiber. Others will come back and show the fiber development on CapEx and on other metrics. Fiber CapEx will go down, but we will not commit to a number today. Transformation CapEx will also go down, but we will not commit to a number today. In essence, we are not giving you a guidance for 2017, but we are giving you the guidance that we have done before, that 2016 is our peak year. The two main reasons for the peak is the transformation and the fiber. The CapEx is distributed today, Sweden 50%, Europe 30%, and then we have something called other 20%. The majority of this is common infra and IT. We could see a big part of that as Sweden or Europe.
Because of reasons of making it common, we actually do it cheaper. We have a group technology department that does this for all the regions. We also see potential, and we work on potential in other areas. We are not through on all of them. Working capital, we started actually several years ago, having, you can see on this picture, 2010, 2011, and 2012, we had a negative impact over SEK 1 billion every year from working capital. Every year we were losing out SEK 1 billion on working capital. The first thing was to stop that and make sure we find elements where we do not lose out on working capital. We have done that, but that is not good enough. There is a potential in this balance sheet to improve also the working capital.
The three elements we are working with, very structured, is vendor financing, handset financing, and billing cycle. We typically start with a country, like with vendor financing in Sweden, and then we figure out how we do it best, and then we roll it out to the other countries. Handset financing, we have a very good example from Finland, where we introduced that over a year ago. We can see that the result of that is that it is still in our balance sheet, but separating, unbundling the handset from the subscription has brought higher NPS and also a shorter payment term. When people get to choose themselves when they want to pay, they pay faster. Then we work with billing cycle amendments, and that we also have started with in Sweden primarily on broadband and other products.
Paying up front, even though it is sort of a fixed fee. We also have passive assets, and that includes technical sites, rooftops, masts, and offices. We still own part of our offices around the world, and we have sold off smaller parts of that last year, but not a big chunk, and we are reviewing these. When it comes to the towers, it is going to be very important that we challenge and understand the strategic consequence before we take a decision. That is a review we are doing. Net debt and leverage development. Let me stop here then for a second and talk a little bit about the two transactions that we announced this morning. Spain, I will start with Spain. Spain is a deal where we have a net cash equity value of SEK 3.6 billion.
The company had an EBITDA of SEK 720 million last year. We have written in our press release that we have a net debt impact of SEK 6 billion. I know that a lot of you wonder, how can it come that you get SEK 3.6 billion and you still take out SEK 6 billion from net debt? That is the complicated thing with IFRS. We own 76% of this company. We consolidate 100%. We consolidate also 100% of the debt. When we sell this, we get one cash part, cash in, but we also give away a company with debt to its minority and externals. That is the difference between the SEK 6 billion and the SEK 3.6 billion.
We get cash in, but we also get debt out of our balance sheet that we have reported as debt and have been included in our net debt calculation. And that's why we have tried to guide you that if you want to calculate now the net debt effect, you need to take out SEK 6 billion of net debt. The multiple, as Johan says, is around 8. The comparison market price is around 6%-7%. This is a business, a fourth player, where we have said that if we want to do something different out of this, we're going to have to invest heavily in Spain. And we were not prepared to invest heavily in Spain. Instead, we think we have got a fair price for this business at this time now. And there was, as you probably have seen, some competition on the asset.
When it comes to Sergel, this is a deal where we get SEK 1.9 billion in cash, enterprise value of SEK 2.1 billion. On our own EBITDA that we have reported to you, it's a multiple of 10. In the financial markets, you do some adjustments when you work on that EBITDA, and then the multiple is around 8. And I would say that the companies are trading around 8.5 in the market. This is a company, though, that have 70%, 75% even, one customer: Telia. So it's not to be compared to a normal business in the market either. I think we have done a fair deal, and here we also will continue to work with Marginalen, which is the buyer, to support us with services over time, as we are very dependent on Sergel today in the credit collection and some other services.
These two deals together gives a positive impact on the net debt to EBITDA around 0.2. In addition to this, of course, we have other impacts on our net debt to EBITDA this year. We have a potential exposure when it comes to sanctions from Sweden, Dutch, and U.S. authorities that we have to be prepared on. We have only sold one and have six left in Eurasia assets. That will also be counted in the end of the day. Nepal have been sold. The net debt to EBITDA effect there is somewhat below 0.1, positive to our net debt. And then we have declared a dividend, and the dividend paid out now in Q2, which was the first tranche, 1.5 SEK, half of the dividend we have decided on for this year gives a net debt to EBITDA effect of 0.2, negative as we pay it out.
That's what I'm going to say on net debt. And on our financial cost, we have around 70% of our debt that is longer than six years. With that said, I think we have a quite good price of 2.2% on our cost on our debt, and that is based on the balance sheet and the actually quite stable position that we have. If you look at the net interest rate, including cash, of course, it's higher and it's closer to 3%. Cash flow. The upper part of this graph is Eurasia, the middle part is dividends from associates, and the lower part is our core business. The associates are impacted by this SEK 4.7 billion from associates, Turkcell, last year. That will now come out as in Q3.
The only thing we know today is what MegaFon has announced on their homepage. They have proposed a dividend that would give us SEK 1.1 billion in quarter three. The shareholders' meeting is very soon, and it is supported by the two largest shareholders. On the lower part, this is where we should see now the impact of a lower CapEx and our work on cost, EBITDA. Also, of course, what we can do in the potential of capital efficiency going forward. We have announced a SEK 2 dividend for this year, paid out next year as a minimum. Of course, we will always commit on top of that to the minimum 80% of our free cash flow. Three elements of our statements is the net debt to EBITDA of 2.0, which we announced at year-end.
2.0 is a good level to keep a stability from a rating point of view, where we can have flexibility and borrow money to deliver on our strategy. We have a flexibility we have given here of 0.5 plus and 0.5 minus, meaning that if we are 0.5 minus, we will over time work us up to two, and if we are at 2.5, we will slowly work ourselves down. That will not be on the expense of our dividend policy. Then portfolio optimization. We have two good examples today that we have announced, and Johan has talked more about that agenda, so I will not talk about that, but it is something we would like to have flexibility to use also our balance sheet to achieve.
Our statement around our outlook remains unchanged since quarter one, where we upgraded our EBITDA statement to be in line or slightly above. As I said, we will have a somewhat different pattern of the EBITDA growth this year compared to last year. It will be the opposite. We have a CapEx that will be more likely on the higher end of the 14-15 than the lower end, and the 80% of free cash flow or at least SEK 2 in dividend. Summarizing full-year guidance, we keep that. The solid financial development in our core operations, we have seen that we are delivering in most places. Denmark is a challenge. Not the biggest operation, but a very important operation. We are delivering on the Invest to Save program. Hélène will talk more about the specific proof points. CapEx is in a peak 2016.
fiber is a very important part of that. Anders will talk about how we use that CapEx to reach the 1.9 million target SDU households. We have a solid balance sheet, but there is still some elements to work out before we know exactly how it is going to look like. We start on a very strong to solid position. Portfolio optimization will continue to be a very important part of our strategy. Thank you.
Thank you, Christian. I think we have time for a couple of questions at least for Christian, and he will also be here later on. We can start here in the middle here. You have it.
Yeah, afternoon. This is Nick Lyall from SocGen. Can I ask a couple please, Christian? Firstly, I think you gave us two of the three CapEx items that might fall. I think you mentioned the transformation plan and fiber. What's 4G CapEx then at the moment, just to give us that third one, if that's okay? The second one, a bit wider. Are you worried at all? I think you've guided to H2, to the second half, being a point at which you'll sort out the portfolio issues and fines. Are you starting to get concerned? We're at Midsummer's Day now, holidays are coming up. We're getting well into the second half by the time we come back. Is there a risk that Eurasian sales and fines drift past your second-half deadline?
Okay. Let me start with the last one and say that we still believe that, and this is what we have said, that both those items, the Eurasia and the sanctions, will be sorted out this year. That's our ambition, and we think that's likely. On the CapEx, you are right that a big portion than what is rest, actually, the majority is the network. On that network, a lot of it is mobile or mobile backhaul. The biggest chunk of that has been for capacity over the previous years. Now we're going into a situation where we will have to bring in capacity instead of coverage. The capacity need is still up for grabs. I think we have a good position with so much coverage we have done that shifting that into capacity would be good.
Exactly how much we will need, we will not talk about today.
Good. How about Ulrich in the middle?
Did I miss one question actually?
No.
No.
No, I thought.
Yeah. Maybe it's always harder, Jefferies. Also on CapEx, if you talk about this CapEx outlook for decreasing CapEx, it sounds a bit as if this is almost discretionary, right? You make this decision, you want to roll out fiber to 1.9 million homes. This is the CapEx budget, and here you go. After that, it drops. What stops you from saying, "This is such a brilliant project that we might want to expand it beyond 1.9 million"? Do you feel hostage to the indication you're giving to the market? How do you view the opportunities? Also, if you specifically talk about 2017, if you talk about the longer term, do you have a view where your normalized CapEx, let's say, is for the group might end up structurally?
Where you would start your budgeting process from a top-down perspective and then see what you can sort of do within that envelope. Do you have a view on that?
Well, I'll answer it in two ways. First, I'm going to leave some of the answers to Anders, because a lot of the questions you have will be answered in that presentation on there's a limit to how many people we are in Sweden, so you will not be able to build CapEx forever on fiber. That's a very broad and big statement, but that is one of the reasons. The other one is how much of the cake can you take and still be able to deliver with quality and with sales efforts and actually what is sensible in this market? That is also part of what Anders will come into. I think that is more reasons on CapEx, and how we have made this plan.
The cost actually for the last mile on the last parts of the population is also typically more expensive, and the business case is worse. There's many aspects into why we have decided for a certain target. On the second question, which is more delicate in a sense, but we have said in 2014 that that CapEx level around that number is something we view as something that could be more normalized over time. I think with the business changing also and with all the metrics changing, I think that we will be more and more focused, which we have been also on EBITDA on a CapEx number over time and not just on a percentage, like we are in our guidance.
When we come back and talk about that, we will talk about the number and not the %, which I always get, "How much is the % you're looking for?" Because it will depend on what kind of service revenue put in compared to others and what kind of CapEx is needed. I have said this, over longer term, I think we have to be prepared that the shift of what is CapEx and COGS will also change in the future environment with IT coming in. It may be that some of the CapEx with how we will deliver it in B2B and others will be shifting into COGS rather than CapEx. From a cash flow perspective, that's why it's very important to keep track of the numbers and make sure what is coming out in the bottom end.
I know you have a lot of questions here, we have to move on, and you can save them because Christian will be back.
I will also be back.
By that, I actually would like to hand over to the Swedish section, I would like to say welcome to Hélène.
Thank you, Jesper, Christian, and Johan. Good afternoon, everybody in the room, and good afternoon to everybody online, because I think we have quite a few people with us. It's great that you're here on a summer afternoon wanting to spend the time with us, because we're going to take you on a two-hour journey into the Swedish business. We created an agenda that we hope are going to answer most of your questions and where your curiosity is. We will focus on consumer, enterprise, the fiber rollout, which we know everybody's asking Anders about, and then finish off talking about the transformation. In there, I will also comment on the cost focus in the Swedish organization. You will see me tie back to a number of things that Johan and Christian have already talked about. Telia in Sweden, we are a 163-year-old company.
That's actually quite a number in the day of digitalization. What do we stand for, and what this company always has done is to work on communication and connection. Because of Televerket and Telia, I would say, Sweden is the most connected country in the world, which is really the foundation where we can also be one of the most digitalized countries in the world. Although, there is a lot of work to be done to be exactly that. When we talk about that we actually digitalize Sweden, and Johan mentioned this, as we are in the cradle of digitalization, we really talk about three things. The first thing is, of course, about our networks. It's about the infrastructure. Right now we're in this fiber fever, which we have been part of creating for Sweden. It's quite unique, and Anders will talk about that.
That infrastructure investment will continue. We then talk about working with our customers, with our B2B customers, and helping them to digitalize their operations. This may actually be the hardest thing for most countries to actually come across. This is a lot of work. This is one example where we work with Region Skåne. As you can hear, I'm from Skåne, which is the southern part of Sweden. We are on an IoT journey with this part of Sweden, where we actually already connecting all the local buses, all the local trains to do two things, to give the users a better experience of what they're doing, but also help them create more efficient processes to save money and to save actually on the environment. This is happening right now as we speak.
The third thing we're doing is to build brand-new ecosystems in Sweden where we can create new value streams. Johan talked about Telia Sense, which is really making dumb cars smarter. The most important thing on this slide is that that is being launched. It's an IoT service, the first IoT service to consumer we're launching this fall, and it's being launched in a brand-new ecosystem. This is actually teaming up with Folksam, which is one of our very key B2B customer, big Swedish insurance company. Teaming up with Bilia, which is a service chain for cars. Teaming up with Bilprovningen, the actual authorities inspecting, et cetera. Building brand-new revenue streams and value streams in those ecosystems. Really important. This is what digitalization of Sweden is about, and it's happening right now. It will happen for many years to come.
We have set our priorities, it's quite a broad agenda because we have a broad business in Sweden. I'm going to talk you through this, and we will talk to most of these points. Very important for us is to be a responsible market leader. Obviously, we are a large telco, and we want to take responsibility for that. Johan talked about a strategy about convergence. You will hear Jonas talk about how we're moving towards true convergence in B2C. He will also talk about that he's not slow, I think. We're doing this step by step according to strategy. We will talk about how we're executing on our ICT strategy in B2B, which is really about the convergence in the B2B sector. We will then, in the fiber section, hear about our target to reach 1.9 million households with fiber by 2018.
Anders will talk about that we're sticking to this target and how we're actually doing it. Then later on, I will talk about transforming the Telia New Business into the new Telia, transforming our business into the new Telia. This is all about the transformation. It's a target we all have in Telia. Wrapped in some of it, we will talk about some of the fundamentals for our change. We will not do deep dives in this because we could talk about this for a long time. We have a target to become the most customer-obsessed company in Sweden. We think this is a huge value creation, and even more important in the era of digitalization. We will drive the cultural journey and the competency to support all of these. These are our seven priorities, and I'm also glad that we have long days, Christian.
It really helps. For those of you who don't know the Swedish market as much, just to give you a little bit of sense where we are. At Telia in Sweden, we are present in all segments and all layers. This actually starts in the infrastructure business with a company called Skanova, which is 100% Telia-owned. This is where the copper infrastructure, as well as building new fiber and owning fiber. We have the operator and wholesale business, which Anders heads up, and he will speak about the fiber piece. We go into the consumer and enterprise business. As you know, we have four main operators in Sweden, and whereas it's quite stable, I would say, we can go into that discussion between us, there's a lot of competition. There's also a number of pretty aggressive challenger brands.
We also work with multiple brands. With the consumer section, we have both Telia and Halebop to be able to manage that, and Jonas can talk to you about that. For the enterprise business, we work both with Telia brand and the Cygate brand. Cygate, of course, has a lot of credibility and trust in the ICT business, so this is clearly helping us. This picture helps us to provide an end-to-end service and helps us to be that digitalization partner that is so important for our customers today. We are building on a strong foundation. We're of course proud to say that we are number one in most of the segments where we. Actually, we would say we're number one in all segments that we participate in.
We're number 3 in TV in total, but we were happy to see that we actually made it to number 1 in digital TV services just about 2 months ago or something, I believe it was. This is important for us, of course. We want to have leadership roles, we want to maintain that. We also are very focused on maintaining this side of the room, which is our EBITDA market share. Maintaining the EBITDA market share while we also maintain our market shares. That means our strategy is very much about value injection. We're really trying to protect our market and create value in the market with value injection. You will hear about this when Lotta and Jonas come up and speak here. Not always easy, but that is our preferred route to market. This has yielded us strong financial performances.
From a service revenue perspective overall in Sweden, we are quite stable. We've had some increases and then some slight dip in Q1, but it's pretty stable. On the EBITDA level, we have seen a strong improvement, as Christian was also talking about the group. This is mainly driven by our cost control, we will come back and talk about that more in detail towards the end, but very strong focus on that. If we take the service revenue evolution 1 level down into the segment, we have very different dynamics and characteristics of B2C and B2B. The top line, the purple line, is our B2C service revenue evolution, including OTCs, including the fiber installation. As you know and can be expected, this is very positive and part of that business case.
The B2C line, also without the OTCs, the pink line, is also quite positive and stable and positive, which we are of course very happy about in the competitive market. The B2B line looks quite different, this is mainly driven by very, very strong price pressure in the large enterprise segments. Lotta will come up here and talk to you about our different segments of the enterprise market and how that has developed differently, also our plan for how we look at that going forward. Finally, to give you some more context, we have obviously B2C and B2B, I talked about infrastructure and wholesale business. About 11% of our revenues is infrastructure and wholesale, B2C and B2B are, B2C is slightly larger, but 2 pretty big chunks in here. This is also important for our future.
This strengthen us as a digitalization partner when a lot of things are actually converging. That balance of our business is also important. Johan talked about the legacy services, there was a question about this. We tried to separate this to give a little bit more transparency into that. If you look at our legacy services, core services, and services close to the core, this is basically the picture. The legacy services will continue to decline. We have a decline about 15% year-over-year, which was about EUR 800 million, sorry. We used to work outside of Sweden. SEK 800 million in 2015. We estimate this to continue. We are not doing anything to of course accelerate it. We're protecting this. This is very good margin business for us, but it will decline. On the other hand, our core services, they increase slightly.
We talked about this. Very good margin business as well. You will see how it works in B2B and B2C. Then services close to the core, the increase in % is of course much higher. Johan talked about how we will increase our efforts to accelerate that further. This is a lower margin business. This is more or less how you will be able to follow us going forward. We will keep coming back to this picture because this is a very important part to what we do in transformation. It becomes very obvious then that transformation is about creating growth in the areas we're growing. It becomes a game about structurally take out cost, so we can have the profitability in the new business when we create the new Telia and the Next Gen Telco.
We are now going to go into the different deep dives. We will save the Q&As on this part until we have done that, because I know a lot of your questions will be answered by my colleagues. I'm going to hand over. We're going to start with our consumer business. I would like to hand over to Jonas Hasselberg on stage.
Thank you very much. Thank you very much, and thank you for being here. Thank you, Hélène. That works. That's me, I'm Jonas Hasselberg. I run the consumer business down in Sweden. I think, Johan, you spoke about the fact that we moved into this house about two weeks ago. That was also my fifth anniversary at Telia Company. I think I have, Hélène, about eight months into this role of running the consumer business. It's a pleasure to be able to walk you through what that business looks like. I'm going to talk about three things, very simply. I'm going to talk about the performance of our three core business areas, so product areas, in the consumer area since the past year. I am going to give you a view into what we mean by true convergence.
You've heard the word a few times maybe today, true convergence. What does that mean for the Swedish consumer market? We really want to drive this convergence story by building value, not pushing discounts to our customers. Then I'll give you a couple of examples, that will be the third piece, on what have we actually done on that convergence journey. It's not just PowerPoint. We actually do things on that journey. I give you a couple of concrete example what is taking us in that direction. I'll start here. It's kind of the first way of looking at our past performance. At our Capital Markets Day in 2014, we had market share. Revenue market share was under pressure. We were migrating from the old pay-as-you-go to our current data-centric mobile subscriptions. We've just started talk about convergence.
That was roughly the context we were in back then. We are very happy with the fact that being number 1 in all our markets, including then digital TV as the definition. We prefer to define it the way that benefits us a little bit. We have been able to stabilize or even grow our market share. We are stable in the mobile business at 34% of the market, and we are growing in both broadband and we are growing in TV. We are actually the, by far, fastest growing TV operator in Sweden. We are growing roughly twice as fast as our competition or our worst competitor in terms of growth. That is a very strong foundation for us as we move forward into the future. There is maybe 1 thing among several that is helping us on that journey, and it is happy customers.
We have been working very diligently on NPS and customer satisfaction for the past several years. Some of you may or may not know how hard it is to get that NPS number moved. NPS, Net Promoter Score, is the way we measure customer satisfaction. It is a very slow metric, and it takes a lot of effort. We have been working across all our touch points, every place where we meet our customers. We meet our customers in our channels. We meet our customers in our product user interfaces. We meet our customers when they need help and support. We meet our customers through our market communications or even in partner channels. Across all those touch points, we are really being very focused on where are the pain points, where can we get better, and fix it. Where are the pain points? Where do we need to get better?
Fix it. We see a lot of positive trends here. Moving NPS 12 points, for instance, is a non-trivial effort, and we are very proud of this, of course. In mobile, we are actually pretty high. We are in the 25 to 28 range of NPS. That is a pretty significant number. Telco business, unfortunately, tends to be known for being a negative or low NPS, at least this is a really good proof point that we can get up to those levels that a lot of the consumer brands are known for. In fact, our Halebop brand is even way higher in terms of their NPS than our Telia brand is on mobile. We know we can get there by being just very focused. That boils down to a couple of things when we talk about effectively the performance of the business then.
There is a couple of things I want to highlight. You saw already that our service revenue is growing at a modest rate, 1.3% year-over-year. It is pretty good being the market leader in a highly competitive market. The drive here is a couple of things. Our stock is growing. More importantly, we are moving our customers up in our product mix. We have a very clear focus on what we call high-value customers. We want to focus on the customers that are willing to pay for our higher quality services. We are really actively moving our customer up in our product mix. Thirdly, we have increased our prices recently over the past 12 months. Service revenue is growing. The ARPU levels are growing across the portfolio. TV is even up to 10 points or 10% in terms of ARPU growth. It is a very strong ability to move there.
We think this is partly or largely driven by the fact that we have improved customer satisfaction, which means there's actually willingness to pay for our services. More importantly, and very encouraging for us, we spent a lot of internal focus on how do we actually run our business? Where do we put our commercial focus? Here we've been able to save our sales and marketing costs by down to over 20%. By being more clever in how we put our offerings out in our different channels, by being smart in how we incentivize our channels. How we do much more targeted and precise retention activities has helped us improve our profitability significantly over this past year. A couple of really good things.
Continue to grow, we're able to move our customers up and increase our prices to strengthen ARPU. We're simply running our business in a more professional way than we did about a year ago. I'll just mention a couple of the price increase, because I know there's interest in them. We have increased prices across the board. We increased our DSL broadband prices this spring in the order of 6%-10%, depending on which speed limits. Our Hero product, the 30 megabit per second product, went from SEK 439 to SEK 479. We also increased our TV prices on the range from 13%-23%, again, depending on the channel package. Our large package went from SEK 299 to SEK 339. Then we introduced a new mobile portfolio a little bit more than a month and a half ago.
We increased prices across the board with SEK 10, with the exception of our entry-level 0.5 gigabyte product, which we increased a year ago from SEK 199 to SEK 229. Across the board, we've been able to increase prices pretty significantly. Again, we attribute this very much to the fact that we think our products are simply better. We're very humbled, by the way. Another way of looking at this is this picture. Here we're showing four different product categories. You've got mobile, you've got our two versions of broadband, fiber and DSL, and you get TV. The far left bar on each of these categories shows the mix across the different product components in the customer base. The middle one then shows what happened a year later. Far left is 2015, the middle one is 2016.
You see across the board, we're simply moving our base up to the higher ARPU products. Then the far right bar on each of the categories is showing the intake during quarter one of this year. The influx of new customers into pretty large customer bases. Story is pretty straightforward, pretty simple. We are successful in moving our customers up in the ARPU levels, so we're upping our product mix. Q1 is a good indication that that journey continues forward. From a customer perspective, this looks like this. This, I think is a pretty good example of how we design our portfolios to be able to get this ARPU uplift in our customer base. This is the mobile portfolio we introduced in the middle of April.
You'll see that we have the traditional bucket sizes as the defining parameter, we do value loading or value injection the higher up you go. The key part here is that we do this on very deep insights of what our customers' needs are and their behaviors, and very much driven by our brand aspirations. We want to be the hub to what matters to our customers. We need to be able to deliver them value of things that actually make sense. End of last year, we introduced what we call data rollover. Customers who don't use their data allowance for one month, it rolls over to the next month, and they can use it at some later stage. You can save it up for summer when you're away, and you can do a lot of browsing or whatever.
A very simple, very clear, and very relevant proposition to our customers. When we did this change in September, we introduced what we call free surf or free browsing in social media. Across the portfolio, our users can use social media for communication. The main reason is, no surprise, communication has moved from traditional fixed telephony via mobile phones to now actually happen on social media. People use social media not only to share their cat videos, but actually to stay in touch with their friends and family and keep track of their kids and so on. Communication is the core of what we deliver, so we want to make that an integral part of our product. It's just examples of how we now introduce value to our customers that are really relevant in meeting their needs on a daily basis. We did this.
We jacked up the prices by SEK 10, as I mentioned, and we see no negative impact on gross intake and no negative impact on churn. It's been a pretty successful, I think, introduction of this new portfolio. Similarly, our TV story continues to be moving forward. TV is a market in huge and very rapid change. It's moving from getting traditional TV on a box and a big screen in your living room to be very much on-demand driven and very much delivered on any device. We built our TV service on internet technologies from the start. That's why we call it IPTV. The whole platform that we built back in 2007-ish was all built on internet technology. We're ready for this shift and have been for a long while.
We've actually been able to introduce a number of market firsts in our TV platform just to meet the needs of our customers. On-demand, video-on-demand service, movie rental services. We even introduced Spotify as part of our TV platform so people can listen to music on their hi-fi system. It's been a platform that we've been preparing for a long while. Stock-wise, we're growing at a very rapid rate. We grew about 40,000, 50,000 customers 2014 to 2015. Again, that's about twice as fast as anybody else. Super encouraging is that in a fiber base or in a fiber universe, about 66% penetration or attach rate of TV. In the DSL copper base, it's much lower. We're able to actually move a lot of the value with us into the fiber universe and increase the average revenue per household In the fiber universe.
Roughly, if you compare a DSL customer and the equivalent fiber customer, they'll pay us about 25% more because we're able to drive these attach rates of TV into the fiber universe at a better level. Of course, TV continues to be something that adds a little bit of loyalty to our customers. The churn levels of customers with multiple services are lower. It's a classical telco play, one play, two play, triple play. It continues to be favorable. What's new since last time we met is that TV is now a profitable business for us. During 2015, it turned from being a non-profitable to a profitable business. That means that we now have a business that actually stands on its own legs as we move into the world of over-the-top delivery or where we disconnect the TV distribution from the traditional telco networks.
We're very well-positioned to be a telco or a TV operator in that shift. That takes us to maybe my busiest slide and perhaps the most important slide. This is trying to summarize our convergence story in one single slide, and I'll walk you through it a little bit carefully. There's a couple things that I want to kind of convey on this slide. There's three things, to be specific. Number one, we still have a very low overlay between our fixed broadband customers and our mobile customers. It's actually less than a quarter. If you take all our fixed broadband customers, all our mobile customers, less than a quarter are overlapping. From a pure upsell opportunity or a business potential, our own customer base is already ripe for this convergence from the more traditional telco sense, meaning selling both products to the same customer.
That's the opportunity for us. What we want to do, however, again, going back to our brand promise and really make sure that we do something that makes sense to our customers, and we've done a ton of insight studies. We really base this off of our brand promise. There's a couple things we know our customers want. Very simply, they don't care necessarily about the access method. They want to be able to get access to their products and services on their fiber when they're home, on mobile when they're out in a bar, or a Wi-Fi network when they're at the office, or whatever it is. Having a solid access platform, of course, is our core business and the basis that we're standing on top of. At the next layer, they want to get access to the best-of-breed services that they may want to have.
That could be Telia services, like our TV service or our broadband services, or maybe a partner service like Spotify. We would never be able to compete, of course, with Spotify on delivering music. We take our own services and partner services, and we really want to make them as good as possible, not just one by one, but better together. At the next layer, it's about best-of-breed services that are better together. Then on top of that, and maybe the area where we actually have the biggest opportunity, because in our studies, it clearly shows our customers' needs and pain points in their day-to-day life is not about the quality or the features of an individual service. It's about getting their whole digital life to fit together and get all these things to actually work together. Clearly, technology has enabling more and more and more.
At the same time, consumer just wants it to work. Technology more complex, consumers wants it to work. Our job will have to be to abstract that away across all their services. At the next layer, we talk a lot about how do we meet customers? What is our touch points going to look like? Here it's all about same experience, the same engagement. We should be able to see our customers in the same way. Our customers should be able to see Telia in the same, regardless of whether it's our traditional customer services, if they go into one of our stores. If they're in the TV UI, they should be able to buy a package or upgrade or downgrade a TV package or rent a movie or see their engagement. If they go into a partner store, they should be able to see the same thing.
At the top level, it's really about delivering a very unified omnichannel experience across all our touch points. That's our vision in terms of our convergence story. This is about delivering really more value to our customers and meet their needs. Third piece then, are we moving along these lines? Yes, I think we are. Anders will talk about the fiber rollout. Again, it's going to be a theme of today. We're digging more fiber than ever. We are rolling out 4G networks, and we just turned out 4G Plus, the LTE Advanced. The high-speed 4G networks are turned on. We have Wi-Fi and the best Wi-Fi solutions, both for people in their homes or when they're out about in train stations and hotels and whatnot. We're delivering that universal access to them. We do that already today.
On the service level, maybe our Play Plus service is the best example. We took our TV service, the traditional set-top box-based service, onto the web a couple of years ago. We have the exact same experience. You can watch traditional linear TV, you can watch on-demand TV, you can rent movies on any device on the Play Plus service. We take that whole experience across all your access methods, across all your screens, whether you want to be at the big honking display or TV in your living room or just your small smartphone. And then you've heard us today, we're launching Telia Zone. It enables Spotify to have a better user experience when you're a Telia customer. With Spotify, together with Telia Zone, you actually get a social music experience at people's home.
Here, that's a great example of how our services together with the partner service is integrated and therefore better. On the channel layer, we've done simple things like a couple of years ago, you had to call a separate support line for if you were a mobile customer and another one if you're a fixed customer. That's all solved. All our customer support agents are equally skilled handling any of our products. We got awarded Sweden's best online corporations recently, and we got a special award for our online support. We've done a ton of work in moving our whole presence in our online efforts. We're already running what we call next best action activities. We actually harvest our data in our internal systems, and we'll learn our customer behaviors, and we can give our customers very targeted recommendations. "Hey, you should downgrade.
You don't use your service the way you pay for. You actually have an opportunity to downgrade." Or, "Hey, did you know that you can use Telia Play+ when you're out and about?" Very personal and very precise in terms of meeting customer needs. These things that we're doing already. I think we're on a good way on our convergence story, and that convergence story is really about adding value and not discounting. Very quick summarizing, since 2014, we've done a couple of things. We have reversed the market shares. Our customers are happy. We're very proud of that. More fundamentally, we are monetizing the increasing demand for data, the increasing demand for speed, the increasing demand for content, and we have gained a ton of momentum in our TV business. That's what we have done. Moving forward, fiber is super crucial for us.
We are going to capitalize on that fiber rollout you're seeing. We are going to leverage our dual brand strategy. We haven't spoken so much about our Halebop brand, but the market is very competitive, and we're going to drive our growth through continued dual brand strategy, where Telia will focus on that convergence story, and Halebop will find the growth in the youth segments, and they're complementing each other very well there. Then more importantly and much more fundamentally, drive the convergence story and what's needed for the convergence story is our transformation. We do need to change our products. We do need to change our processes, the way we meet our customers. We need to change people, or at least our people's skills, and we need to change our IT system. The transformation is very much underlying all of these changes. Thank you very much.
All right. You stay. You're not letting me go?
No, I think we have time for some questions now. I think we have Terence here in the front.
Thanks. It's Terence here from Morgan Stanley. Just have a question on TV. What's your view about TV content? Do you see any value in owning exclusive TV content, for instance?
TV content we think is valuable. Without TV content, our TV service won't succeed, of course. Our strategy is very clear. We want to be a TV operator. We want to be that single point of contact where consumers get all the relevant content in one place. We want to present it in a way that's just fantastic in terms of discovery and searching and finding. We don't necessarily want to get into content, but we will do if we have to. So far, we've been able to work with our partners. We'll continue to do so, but clearly the market is moving, and we need to adapt to that if needed. It will be a, I won't call it a defensive move, but it'll be an if needed move. Does that make sense?
I'm just wondering whether you see exclusive content as giving yourself a differentiator versus other TV operators.
It may. You will understand, the risk with exclusive content is that you effectively start some sort of war on exclusive content. Sweden has been actually a bit in a decent place where that hasn't happened so much. There are other parts in Europe where actually, if you want to be able to watch all the content you're interested in, you have to be the subscriber of multiple TV operators. That's not true so much in Sweden. We prefer the way it works here. Premium content exclusive possibly, but not our preferred route.
I think we have Lena in the back is waving.
Hi, Lena Österberg, Carnegie. Just a question on Com Hem, which is preparing to launch on your Telia fiber network. How do you view that? Is that a sort of positive for you because you have two operators selling to the same street, or do you think it will increase competition?
Anders, do you want to take the question, or do I take it? This is mostly on the operator level. I'm sure you know this already. Com Hem
It increases competition.
It does increase competition, yes. I think in general, it shows that we're on the right track and we have the right priorities. The Telia market is incredibly important to us. I think we judge Com Hem's move as well as Telenor's move as a proof point that we've done the right thing just a couple of years ahead of them.
This side of the room, please.
Stefan, go ahead.
Hello. I have a related question to the first one. Seeing the shift in technology on the TV side where more and more content are moving OTT. In that sense, I think it becomes tricky to do price increases on the TV side, which you recently have done, or you've done twice within the last 12 months.
Correct.
How do you see that? Have that impacted churn? Do you agree that it may become more tricky to do price increases on the TV side? Is there a future to do packaging of other people's content?
There was a couple questions, I think in there. I'll try to answer them. The price increase that we have done, we've done very successfully, better than planned. Largely because what I spoke about, I think we have a TV service that is so competitive and so good. I don't think we showed it on any of our slides, but we also won the award of Sweden's best TV service. We have been doing a lot of good stuff in terms of just delivering a great experience to our customers that we're able to now monetize. That's one piece. The other piece, we're actually starting from a lower level than the competition. There was two things that drove our ability to increase prices to the level where we're at now. I'll get back to you next time I plan to move the TV price.
No plans so far. You had another question. OTT.
Yeah. How that shifts sort of your position. The content owners can have direct access to the consumer. In a way.
Yeah
their power are increasing.
At least the competition is increasing. It's not only increasing from content owners, it's also increasing from global competition, Netflix being a decent example. Yes, competition will increase, and you have to be an OTT player in order to compete, which is exactly why we're doing the things we are doing. We are building our TV products on IP technologies or internet technologies. We took a very early step into the OTT world with the Telia Play+ service, and that's where the majority of our investments go now in terms of product development. Yes, competition is increasing.
Okay. We have Thomas.
Thank you. Thomas Heath with Danske Bank. Two questions, if I may. Firstly, on Halebop and the positioning of Halebop. I think there have been comments previously about separating the brands a little clearer. What could that mean for Halebop? Do you see it going further into discounting, or is there anything else there in terms of repositioning Halebop? Secondly, back to content and TV. Do you see any benefit in owning TV content but not making it exclusive? Is there any other synergy, any other point that you'd see in owning it, but still perhaps letting the others in? Thank you.
On Halebop, I think the brand positioning is pretty clear. The Telia brand is very focused on a segment we typically call families with kids, an obvious kind of sweet spot for the incumbent operator. Halebop is very much focused on price-sensitive youngsters. In that regard, they're pretty well-positioned. The good news is that there's still some, let's call it some premium flavor to Halebop. When those young people grow up and become slightly less young than you guys are, for instance, we think that we can move them up into the Telia world, because they will be families with kids at some point. It's a tough balance. We don't want to separate them out too much, because then we'll lose that opportunity to, let's say, migrate them.
Yes, we want to be very clear when we acquire the customers, and I think we've done decently on that. Owning content, I think my answer is not hugely different than the answer I gave earlier, that there's no purpose in content itself if we can be a very successful TV operator and deliver that unified aggregated experience. If content needs to be part of that to be successful, we'll consider it. It's something we're looking into on occasion to evaluate the opportunities. We don't have any concrete plans.
Move over to left here a bit.
Sonal Patel.
Jonas has only got two questions.
Yeah.
How dare me.
You.
All right.
Sorry. Go ahead.
Thank you. It's Sonal Patel from Bank of America. You talked about your bundling strategy earlier in one of the slides. TV with the fiber product, I think makes a lot of intuitive sense in terms of it's a household purchasing decision. With mobile, what's your experience in cross-selling mobile and driving quad play? How have your trends been there? It seems like from a lot of what you've said is the convergence is already happening at the OTT level. Do you need to be with the same operator on the mobile side?
No, I think our story is largely built on that conclusion. Well, there's two conclusions. First, do what the customers, in a way that we add value and help our customer. The more the world moves to OTT, the more our value add needs to be at those upper layers in terms of where we meet the customers. That's why the way we engage with our customers, our only aspirations across the different touch points is super critical. Then the individual products needs to stand on their own legs, but we glue them together at that customer meeting.
Take one more then.
Hi, Simon Coles from Barclays. You're showing that you can upsell customers on mobile to higher bundles. Do you think that shift's going to continue gradually over the coming years, or will you see some acceleration? Then competitors such as Tele2 try to jump a few steps ahead. If you were to follow that with higher bundles, could your network cope with the increased data usage? Then on convergence, you said that a quarter of customers take fixed and mobile. Do you see appetite for convergence appearing now, or do you think we'll have to eventually discount convergent bundles to get uptake?
I'll start from the back end. Clearly, we do not want to discount, or at least not discount in an uncontrolled or in an unnecessary way. We work with discounts like everybody else, but I think we're much more careful than our competition in terms of discounting. No, the whole trick for us here is to find a way to add values across the network, which is the basics for us, relatively simple, integration of services, and then present them to our customers in a way that just makes sense seamless across the touch points. If we can do that, then we'll be able to deliver a better value to our customers at a better price. That's our whole bet. That's our convergence story. The overlap of about a quarter, I don't think is pretty impressive for someone like ourselves.
It's partly because we haven't had that added value. It's partly because we've been operating in the past as two different business units, a mobile business unit and a fixed business unit. We have never had a focus of doing that cross-sell and up-sell. We'll see that become better and more as long as we don't have to discount our way in there. It'll be a careful treading. Of course, we can do things without discounting. We can just be better at that next best action activity I spoke about, being able to recommend our customers cross-selling at the right time and with the right offering. That, we can do better still. There's opportunities to improve the overlays or the overlap, but the big shift will come when we've done our transformation and really executed on the convergence piece. I may have missed one question.
Then there was on the mobile, you're upselling customers to higher bundles.
Yes.
Do you see that gradually continuing, or will there be some acceleration? If you were to, say, follow Tele2's lead and move to much higher bundles, could your network cope with the increased data?
Yeah. I think Christian spoke a little bit to how we spend our CapEx dollars, we're now moving from coverage to capacity. On the capacity side, we're not concerned at this particular point. I think we'll continue to see that shift that I showed on the slide with a lot of bars. There's a prerequisite there, which is that we will have to continue to add value to our customers that is relevant. That whole value injection story continues, and I think with that approach, we'll be successful for a couple more years, yeah.
Thanks.
All right. Thank you, Jonas. I think it's now time for a leg stretcher. You have been very patient, all of you. I think we take some coffee and circulate and mingle outside, and we meet and resume here at 3:15 P.M.
Thank you very much.
Thank you. All right. Welcome back, everyone. Hope all of you are re-energized now. It's time to move on to the second part of this session, and it's time to move on to the B2B area. Therefore, I would like to welcome Charlotta Rehman up on stage.
Thanks. Hi, everyone. My name is Charlotta Rehman, and I'd like to give you a presentation of the enterprise segment and the enterprise journey we have in Sweden. I will talk about the small and medium-size achievements, but also the large one. Let's start and talk about the market. Maybe I will start to talk about the market. We meet customers on a daily basis. We talk about their problems and their needs, and how IT and communication can solve them. Regardless if you are a large corporation or a small business, every day is a struggle. It's a struggle to be more efficient, and it's a struggle to stay relevant to your customers. Those things we can solve with IT and communication. I guess that is also why Swedish companies and organizations state that they're ready to invest more into the ICT area.
One other observation that I have is also that customers tend to buy more services rather than products. We see a rapid increase when it comes to cloud-based services. This trend, of course, makes the demand for our high-performing network and secured network even bigger. These are opportunities for us going forward. On the other hand, we have a decline in our traditional telco market. What am I saying, actually? I'm saying that digitalization opens up a huge opportunity for the one player that has a high-performing network and can also combine and give the customers communication and IT. Let's look at Telia on this market. We are the market leader in traditional telco in all segments. We have a service revenue under pressure. It's driven by the price decline in the market.
For you to understand this market, I would like to describe the two different segments for you. SME, but also the large segment. Let's start with the large segment. For me, this is companies with 150 employees and upwards. They are dependent on IT and communication to be successful in their business. They often have IT departments that run their procurements. They like to have long contracts, and they also look for a strategic partner to drive them into their digitalization journey. They often have legacy systems, and therefore tend to need some kind of tailor-made solutions. Words like stability, trust, but also security are very important for them. Also innovation and partnerships going forward. We serve this segment with a combined offer of Telia and Cygate today. The second segment is the SOHO and SME segment.
This is a company from a wide range of one-man companies up to 150 employees. Most of these companies, a significant part actually, does not have an IT department. They like to just focus on their own business, their own value add, and like someone else to take care of the IT things in the business. They are fast-moving, truly mobile, and they definitely like to have standard solutions. They want to have someone that guides them into the tech jungles ahead. What I'd like to also stress here is that both of these segments are equally important for us in Telia. It's equally important that we serve them well. Another trend also, I can tell that both of these segments ask and have an increased demand for integrated solutions between IT and communication going forward. Okay. What is our ambition ahead?
Based on the customer needs, our opportunities in the market, but also our position, we have a clear ambition to become the number one ICT player in the market. In order to take this position, we need to gain the customer's trust. We need to therefore secure, strengthen our foundation, to launch value offerings within the ICT area close to our core, that we can be trustworthy. Also to deliver superior customer experience in order to have loyal customers and to differentiate ourselves in the service area. I would like to just spend a few minutes on the portfolio. We will offer a mixed combination of IT and communications. We will have a portfolio to include network services, professional services close to core, application, and also security. We see clearly that we will deliver this as a service in the cloud.
Bear in mind, maybe people think that this is a quite bold ambition, but actually we are the market leader in the communications area, and we have a strong position within IT through Cygate. This strong position in our customer base, that is the foundation of taking the next step and having a larger scope ahead. Actually, this is the strategy we have been executing on since 2015. Before moving on to SOHO SME, I would just like to give you some short background on the SOHO SME segment. We come from a situation one and a half year ago, where we actually struggled with all the financial KPIs in the SME SOHO segment. Bear in mind that 99% of Swedish, actually the whole enterprise market, is in SOHO SME.
We were actually struggling with the KPIs and the customers found us very hard to deal with. We lost customers. We decided to take this journey and to set this strategy based on customer insights, true customer insights, in order to return to growth and also to win back the customer's trust. How did that go for us? Well, we're very proud of these numbers. We have a positive trend in the SOHO SME segment. That goes for both fixed and mobile service revenue. In spite of the competition, we see that we have managed to grow in the mobile area. That is actually driven by two things, and this is important for you to know. The customer buys more services from us, but they also buy more capacity from us in order to use those services.
That you very clearly can see in this positive output trend that we actually deliver here. Another area that is really gratifying for us is of course that the customers find us more easy to deal with. They are more satisfied. We can see that in our increased NPS by 13 percentage points over the past two years. These KPIs are really, really important for us to monitor at all time because we like to widen the scope. A loyal customer base is the foundation of that going forward. The proof is in the pudding, what did we do? Yes, we did a lot, I can say. It was not a single bullet answer to this. We actually did strengthen the offering.
We increased and improved all the touch points in the end-to-end flow, every single thing in the touch points of the customers, redesigned the whole distribution. We started to strengthen the foundation to improve our processes and operations. I'm particularly proud of saying here today that we now offer all our SOHO customers a personal trusted advisor. That is included in the price. That is a dedicated person that can actually give you, as a customer, tips and ideas how you can improve your way forward into the digital journey and your ICT environment. Another thing is that we actually started to launch in line with our strategy, different products. A few things here is that we have the touch point, which is a cloud-based PBX.
We have App Market. You will soon hear about what we have done with fiber on the SOHO side together with Anders. It's also easier to get in touch with us. We have now 65 B2B shops, or, sorry, B2B corners in our Telia shops, where you easily can visit us and have guidance from our personal advisors. Or if you prefer, you can go into My Business, which is a self-service portal for all our customers. We have done many things, and we are very proud of all this stuff that has actually made us have this result you saw on the previous page. To sum the SOHO SME segment up, I would say, with a clear strategy based on customer insights and a firm execution, I'm now happy to say that it is possible to do a turnaround in an enterprise segment under pressure.
That brings us to the large segment. Here we really are under pressure. We are. We have service revenues that is declining. That goes both for the fixed and mobile side. We keep our customer, so this is driven by price pressure in the market. If we look at the price pressure, there is mainly two things that we see is driving the prices down. It is both that the competitors have chosen price to win customers. Secondly, our customers choose to split the full procurement into pieces and put competition on that different pieces. On the other hand, we see a totally contradictory trend in the market as well, which is quite positive.
We see that the large customers now tend to more and more focus on their own business, how they should create value in their own business, and searching for a strategic partner to guide them into the digitalization world. When I speak to the customers every day, they say to me, "We are looking for someone that can have a great network, that can offer me complete solution of IT and communication." They say that, "We need also a strong presence, that the financial muscles of the partner is important for innovation, for partnerships, and to keep on building up to that ICT position that we want to be part of." They are literally actually telling me and asking me to step forward and take a larger position in the market.
Our strategy here is to become the partner of our customer with a complete solution, with great service, and a great network. We are already executing on that strategy. We are leveraging Telia and the Cygate brand on the market, and here is a picture of how we are doing that. Let's make a few observation when we look at this slide. As we have talked about before, you can see that the traditional telco net sales is actually declining. What you also can see is that we today have a meaningful part of the net sales is actually IT related. You can also see that the IT side is actually increasing over time. Last but not least, we can observe that the IT business is actually compensating for the decline in traditional telco when it comes to net sales.
This is, of course, putting a pressure on our EBITDA and our margin. What we are actually doing here to mitigate this is three major things. We are expanding our IT offering further with M&A, with partnerships, and organically. We are offering the customer complete solutions with IT and communication in order to have a larger scope and add value to the customers and to become a premium brand for them. Also, we are, which is very important, simplifying and automating our processes within the transformation, and Hélène is going to talk a bit more about that later on, to reduce costs over time. Hey, guys, this is happening just now. This is the future. It's now and here. We are solving problems for our customers. This is just a few example of the large customers what we have accomplished the past quarters.
We are working with everything from very innovative projects, where we are actually digitalizing the mines, to having partnerships with customers, and in actually evaluate and develop a whole region in Sweden with communication. I'm happy to say and announce that today we have signed a deal with Kalmar, which is a nine-year-old deal, and that is partnership and a long-term partnership for me. If we should conclude the large segment, then yes, we are under pressure, but we have a strategy, and we are executing on that strategy here and now. We are leveraging the Cygate and Telia brand, and we have actually compensated the net sale decline in telco revenue with their increase in IT. To sum everything up, I'm very proud of what we have accomplished so far.
Moving ahead, my priorities are to expand the IT offering further with partners, with M&A, and organically. Furthermore, I like to integrate IT and communication offers to differentiate us in the market and to make sure that we are very relevant in order to stabilize prices over time. We will continue to invest to differentiate in service. We know that service is key to us in the future. We will simplify and automate processes and transform the business in order to reduce costs. Thanks. That's all.
Thank you. Thanks a lot, Charlotta. Good. We should open up for some questions here. I will start here with Peter Gunder.
Thank you. Peter Gunder, Nielsen APG. A couple of questions. You talked about the general pricing pressures in the market.
It seems something we've heard about from the Swedish operators over the past 12 months, and if you look at the trends you outlined, it seems to have started about 12 months ago. I guess this is sort of feeding through the base. How far have you come? Should we interpret it as if there's sort of another 1 to 2 years of this coming? Even if prices stabilize at these levels, I guess it's just feeding through the base. My second question would be, are there any major public sector contracts coming up for renewal in the near term? Lastly, you talked about the second trend about customers decoupling-
access services from ICT. That would not be to your advantage, would it?
Okay. Shall we start with the price question from the beginning? Yes, we have a pressure in the price, and when it comes to renegotiate the contracts, we have large contracts at all time renegotiate in the same period. They come and go. They do. When it comes to the What was the last bit?
There were large public contracts coming up.
Well, there is a lot of large public contract coming up all the time, it's even out during the year. Yeah.
These would presumably also be renegotiated at lower prices. Is some of these material to Telia in terms of numbers?
We don't give out the numbers on which contracts we are renegotiating. On the other hand, I can say that it's not always that the price pressure is down. We try to have larger contracts with other content in order to mitigate the price pressure.
Good. I think we can take one here in the front.
Thanks. Allan Nichols from Morningstar. With Tele2 announcing this morning that they're buying TDC Sweden, does that help you by removing a competitor, or does it make things more difficult by merging, making them a more complete competitor? Thanks.
We knew that they were for sale. It's news for us that it was Tele2 that have an ambition to buy them, yeah. I guess we will have a little bit of both. That is an honest answer to that. Moving forward, we would continue with our strategy to be able to merge the IT and the communication areas.
I think we have one there, Thomas.
Thank you. You showed a slide here with the mix shifting and mentioned that the new product lines have lower margin. I didn't quite understand how you're planning to offset that. Is it realistic to keep margins stable when you have that sort of a mix shift, given that you show top line quite stable, but the margin difference is quite big? Thank you.
The numbers I showed was the actual numbers, yeah? Going forward, we will have an increased mix of IT with the total net sales. Yeah, that's correct. If it's possible to maintain the margin, we need to do the three things I'm talking about. We need to reduce cost through transformation. We need to be able to offer a larger portfolio in order to take out the premium price on other things, and we need to also add things to the portfolio in order to have that full and complete solution. If we have steady portfolio and everything like that, no, that should be a problem for us.
We can take one final question. Johanna in the back.
Hi. Johanna Ahlquist from SEB. Just a question on when you talk about M&A in this area, could you give us some further flavor on what exactly you're thinking of? Is it going into security space or what type of M&A-
We-
do you consider, and is it more bolt-on acquisitions, or how do you picture it?
Yeah. We actually, of course, made an analysis what our gaps are in the portfolio, and we are looking for companies to fill those gap, and it's in the IT area, and that could actually made a positive part of our portfolio, so to say, yeah. It's in the IT area, I could say. It will be the things that is actually a strength in our core.
Good. I think it's time to move on. Thank you.
Okay.
Charlotta.
Thanks.
I would like to hand over to Anders to talk us through the fiber story. Please go ahead, Anders.
Thank you. Well, there's my name again. My name is Anders Lennert. I'm head of the Sweden operator business, which includes fiber, and I will talk specifically about fiber. I will start with doing a recap, where were we 2014 and where are we right now? I will talk a little bit about the future, and during those two things, I will talk about performance. How are we performing? I guess that is pretty interesting. Let's start off with, what did we say 2014? We said 1.9 million customers. We set an investment rate of SEK 9 billion, and we set further improvements in the operations going forward. Well, where are we? I'm a little bit warm. That's because there is a fiber fever in Sweden, and I will explain why there is and how those figures show up. We're on the track to reach the 1.9.
We're very confident with that figure. There has been a major shift from 2014 till now, and I will talk that shift through. That is going from com-op, are you guys not familiar with that? I will talk that during the break or afterwards, to villa fiber, SDUs, single-dwelling units. Capturing that market led to a higher spend in CapEx, which gives in return better installation fees and recurring revenues going ahead. I will show that a little bit more detailed than in bullet points as well. Before we start this, almost had evaluation, but before we start this journey, let us take a look at the market. As you can see, between the difference between 2014, 2015, and up to 2016, there's been a pace increase. The need for fiber is not about facts. It's more about, I want the fiber.
That is very good. You can also see that not only the pace has increased, but also there is a significant amount of customers left in the market without this super fine product. That's a shame. In the multi-dwelling, which is apartments market, you can see that is more fully penetrated. I will talk about opportunity for Telia Company going ahead in that arena as well. I think this is the foundation. This is what the market looks like right now. Great opportunities going ahead, and the pace is very high. I will show you from our perspective, the peak year is 2016, and that comes from customer demand. What have we done? Where are we right now? At the end of this year, we most certainly will reach 1.55 million customers.
2017, we will reach 1.78, and we will end the 2018 period with 1.9 million customers. That we said 2014. That's nothing new, more or less, except that we're on track. The change is two things. Peak year, this year, from a super strong demand in the villa or SDU environment. The other one. No, that's more it, what I would like to say. Why can we predict this? That's the last point here. 80% of the 2016 volumes are already signed. Hopefully you can see that. I'm pretty proud of that. That's pretty nice because you can predict the year pretty good. The shift. Let's talk about the shift in demand. When did it occur? What have they led to? 2014, in the fall, or actually during the summer, we had a lot of tests going out in the market looking for villas, talking to villa owners.
What about fiber? What will it solve? Will it get you anything more than you're used to? The response was tremendous. The customers told us, "Well, I'll tell you, it's time to pace up. It's time to increase. It's time to do something." That's what we did. During the fall, actually, almost the same when we had the Capital Markets Day 2014. A little bit after that, we're starting increasing the pace. That has led to more than 100,000 more SDUs than predicted in the last time we had the meeting, September 2014. I will talk a little bit what that gives. What has happened that equals up the numbers when we talk to reaching customers is that the com-op market, which we thought would explode during 2014, that has been a slower growth rate.
All different layers are still on pretty good growth rates, the SDU market is booming. What happens when an SDU market booms? A few things. The current fiber plan to your left, meaning that we're invested more, as Christian said, Johan said, and Hélène said during 2016. It's probably true. That what's happened. If you spend more, you're supposed to get more. We will get during this period more than 100,000 villas compared to 2014. We will also get a very good installation fee. Probably the most important thing is not only the installation fees, it's that the lifetime value of an SDU is completely different to what you get from a com-op customer.
If you have bought the fiber and put it in the ground, digging up your whole garden, put it into your house, drilled through the walls, put the white thing where the signals goes out, what is the incentive to change that? None. You will, as a customer, never change that. That is one of the beauties in this business model. Because whether we operate it or somebody else operates it will bring back installation fees and recurring revenues during a very long timeframe. That's the big beauty of investing and driving the SDU/villa market. Let's talk about operational performance. Pretty important. The first row to your left is showing the amount of SDUs delivered each year. I indicated that it was a record year. This is the record year. Driving from customer demand, these are the figures.
Hopefully you can see the proudness of me talking about this because we put on the leadership shirt 2014. Said, "Let's drive this market as a collective decision. Let's be part, take the leadership, and drive this market." Because no one really did back in those days, two years ago. This is the reward. What have we done? You have to perform and you have to improve all the time, of course. The installation fee we took from SEK 20,000 up to SEK 22,000. That improves the business case quite significantly. The other one, which is probably the most important one of all, is the penetration rate. That was from, I have to look at the figures, 41? 40? 41. 40. 40% to 51%, 2016 plan. That's a huge improvement. That's why I'm talking about the fiber fever in Sweden.
We're absolutely very proud, and we love to fulfill the customers' needs, because we're not only bringing back a good business model to the investment community. We are solving some real issues for the customers. That's the bandwidth war. I'll turn on that because I have to use that, et cetera. That's a big issue for a Swedish community that stays pretty much in the house during long periods of time because of weather and different other stuff. I shouldn't probably get into that. This brings us back to the payback time, which is so important. That has improved two years during CMD 2014 until now. That's a higher rate than before. Because the improvement rate before from 2011 to 2014, which is three years, was two years. Now it's one year going along each time.
I think that is very important since that shows how we are spending the money. To wrap up the looking back in the performance section, it had also given us market shares improvements. Market shares improvements can always be discussed because on the base you're using. The most important one when it comes to the fiber is the fiber network in itself. It's gained from 33% to 39%, which is a huge improvement. On a communication operator, it goes from 34% to 36%. There is still growth and there is still a lot of opportunities, even though compared to 2014, the pace is not the same as we said then. To me that is strength, showing that you can adjust very quickly as you run because this is a running business as you go along.
I'm very proud of all the companies involved, all the areas involved. The Telia Company is performing better on each 3 layers. Let me talk about the layers. Why are we present in all 3 layers? One single thing, to be able to provide an end-to-end responsibility, giving the customers credibility to invest with us. We can ensure that the services stay alive no matter what. That is super important going forward. They're able to guarantee the quality, the up times, the service levels all the way through from the application to the end customer as far as possible. All right. What about the future? Is this the end of it? No, it's definitely not. There are huge opportunities. I, together with the teams, will show a little bit more details going forward.
If we're looking at the SDU market, villa market, there are two main targets, objectives going ahead. First one is very national. That is capitalizing on done investments. That's the upsell portion of the total installation base because there is a huge difference between us and many others. When we have, for example, a villa area of 100 SDUs, we invest to all 100. We take the fiber and we lead the fiber through the different streets. The only parts missing is from the street into the house. All that investments is done, meaning that we will target the upsell potential. The customer who actually has the fiber outside the house, but for some very strange reason decided not to be a fiber customer. Of course, you guys see all this, and that's one of the major opportunities. Not only for us, for some others as well.
The beauty of the model is that if they use Telia's network, the money will be brought into Telia. It doesn't really matter who will operate the network. The other one is targeted at remaining non-fiber SDU. There's still 600,000 customers out there. We have two major things going forward. The first one is white spots in urban areas. When we have dug all the fiber in different areas, there's been white spots. Areas where we didn't, for some reason then, mainly because of agreements, ground and landlord agreements, that's now available, and that's what we call urban areas, white spots. The other one is the rural areas, which will be a major thing, probably not next year, but the years to come. To reach and to capsulate offers to that community. I will not go into more details because of competition issues in that area.
Those are the two main areas in targeting the remaining non-fiber SDU market. Let's talk about MDU for a while. We will address the total market. Let's be clear about that. The total market will be targeted. One specific thing, the white spots, which is 300,000, those MDUs, apartments, are mainly in areas where we have SDUs. That's a golden opportunity for us going forward. Did you all see that? Some of you guys are nodding, so I guess you are with me on that one. The other one is the MDU large. Huge different both commercial vendors and public sector vendors who are offering households to the Swedish community. We will go after that as well. I will not go into more details about that either. I will go into a little bit more details about another thing, and that's the last one.
fiber to SOHO SME. During the Q2, we introduced together with Lotta, we introduced an offer to the market to see how was the response. The response rate was super. We will increase that. It's very small numbers as we speak 2016, but have the potential to gain a lot of things. Supporting not only the fiber business as an isolated thing, but also giving a lot of possibilities for Lotta's customers, which I think is the way it should be. Tailored offering commercial properties. That one is something we started with at mid of last year, and that one is performing also very well. We will continue doing that. There is another twist to the commercial properties because that immediately goes not only to the fiber, but to the VAS services, like landlords, steering doors, key lockers, et cetera.
It's a great opportunity for other businesses around Telia and in Telia. All right. Let's try to summarize this. Accomplishments. Well, I said to Jesper and those guys, they probably shouldn't give that to me because I can talk forever about what we have done. I think we can improve, of course, but we have done a pretty good job. We're on the target to reach the 1.9 million homes. Let's clear that one. That's on track. We have continued market share gains. We're proud of that. We have improvements in the business case, as I tried to show you. I think there is another thing. There is a cultural thing in saying that we drive the market, that we take the opportunity and say, we're the leader. Let's be bold, let's be aggressive and go out there and start fighting.
For me, that's a cultural thing, driving the market as a market leader. We were awarded the best operator 2015. Thanks to the fiber thing mainly, but as Telia, as a whole company, because there are many different aspects of that, of course, and there's not only one part that is doing this. Ambitions forward. Continue to build on the momentum in the SDU market. Increase the MDU market share. I will not tell how much. We have an ambition, but I will not share that at this moment. Upsell within existing footprint. Increase focus on fiber to SOHO SME. Great response. Yeah, very good. Finally, 1 gig to all. This is not only about fiber as a piece of plastic. It's about bringing something totally different to the community. From clay roads to 28 super highway freeways, and the possibility that that brings.
That's what we're trying to share, not only a fiber as a piece of glass. A total different experience. That will change, at least in our world, change a lot of things in Sweden. Thanks a lot, Anders. I'm sure there are a lot of questions on this topic. We can start with Ulrich, perhaps.
Yeah. Ulrich Rathe, Jefferies. I have five questions. I'm going to ask only three.
Thank you.
The first one is just a clarification, really. When you talk about these payback periods, do you view that just from the point of view of the wholesale operation with the wholesale margin, or is that sort of a
No, that's a Telia perspective.
total Telia calculation. Okay. Thank you. The second one is, when you talked about that shift from the com-op plans towards the vertical bit slower is the SDU. What drives that? Is it because some of the com-ops are more aggressive than you thought, and they're sort of attacking you there, or is it market fragmentation, or what are ultimately the reasons for this?
My memory is a little bit short, can I answer that before you take the third one? The com-op, I think there's two major differences. A lot of com-op operations, the plans were supposed to support the rural area expansion. Because of government grant, not only, but one of the reasons, that didn't really happen. It was supposed to happen. It was delayed. The government's grant was delayed. The com-op in the rural areas didn't happen. The second one is that the municipalities built their own com-op solution, and that was not anticipated in 2014. We thought the municipalities were to probably build their own fiber network, but not operate the networks. That was a big difference.
More or less, many of them are actually operating the business as well, which is a little bit strange to us, because that is a total different business, because that takes 24/7 surveillance, that takes a governance structure to actually fulfill the SLAs to the customers. We thought that we're a little bit more suited to actually do that. We were wrong.
Okay, my last question is.
Yep
I mean, you're talking as if there's no regulation. Can you sort of describe the regulatory backdrop, in particular on that lowest level? When you talk about increasing market share, surely there is a point at which PTS will start to think about it. I'm not entirely sure I know how it is regulated today, even.
That's a very good question. It's a complicated question. Let me try to elaborate a little bit about that. The fiber network is regulated. That means when we build, and Skanova build, you have to provide that service to all. This is a true open network. Let the best man win. That's what I like about it. Let the best man win. The prices are regulated, and the reach is regulated. Was that answering your question? No.
There's no risk if you grab 70% of the market, there is no risk that PTS looks at this and says, "Well, let's go back to the old days of the regulation.
We have the regulations we have right now.
Isn't it a change in regulation by year-end as well?
There is a possible change in the regulation, yes.
That is on the pricing?
Price side.
Okay. Should we move on to Stefan?
Yes. You have improved the economics here. Stefan Gauffin, Nordea.
Hi there, Stefan.
Hi. You have improved the economics by increasing the installation fee.
Yeah.
That, of course, has attracted some competitors to also enter the market.
Yeah.
Telenor has announced the plans of seeing IP-Only roll out, Com Hem mainly doing it through Telia, but they've also said they will roll some fiber. Is there some pressure on the installation fees that you're seeing?
Yeah. I think there will be pressure, slight pressure on the installation fees. I think so.
Okay, thanks.
At least, I'm pretty certain that we can't continue raising the prices because of that. We meet competition all the time. Of course, let me elaborate a little bit about that to be honest, because when I entered this market two years ago, I thought price was the only thing. Let's be aggressive here. When talking to thousands of customers, the price is not actually that important. It is not. It's the trustworthiness of the guy who's presenting the offer. Are you going to be here for the next 20 years? Because I need this fiber. I'm investing in fiber not because I need all that capacity, because of convenience that I don't have to change. Whether the price is 17,000 SEK or 20,000 SEK, it's not a big issue. Of course, that's why I'm saying at least not improving.
If you have a big gap between different prices, of course, price is going to be an issue, of course. A very straightforward, honest answer is at least at the same level it is right now, probably slightly going down a little bit.
We have Andrew here in the front. Cheers.
Thank you. Yes, Andrew from Goldman Sachs. I just had a question around the kind of stats, the halo effect that comes with rolling out fiber, and if you could just put some stats around other benefits when you roll it out. For example, we've seen pretty aggressive fixed mobile substitution across Europe, but particularly in Sweden. Is that reversing or materially slowing when you roll out fiber? Could you give us some stats on what's going on in areas there? Broadband penetration. As you roll out fiber and it becomes obvious that these are companion products rather than cannibalistic products, fixed and mobile, are you seeing broadband penetration tick up when you roll out fiber?
Just lastly, I think kind of probably stat of the day for some of us was the quarter overlap between fixed and mobile customers in an earlier presentation, relatively low convergence. Is that number higher for fiber customers? Are you seeing a convergence acceleration when you roll out fiber?
Well, Jonas has to answer the convergence between the 4G and the fiber. I can't really answer that. I'm very sorry. Could you repeat the first question?
Yeah. Sorry, it's quite a lot.
Sorry. I'm very sorry.
One question, three parts.
Yeah
it was on fixed mobile substitution. Are you seeing that reverse?
Yeah.
The second was on broadband penetration. Are you seeing that accelerate? Then the third was on convergence.
Okay. The broadband penetration is going up. The fiber penetration in Sweden is, I don't remember exactly the figure. Somebody in the audience might help me. We're among the seven best countries in the world when it comes to high-speed broadband. Jonas, would you like to answer the convergence?
Would you like to answer?
I actually think you did a great job, Anders, of course. Effectively, we don't see a convergence or a substitution between fixed and mobile. Quite the opposite. The broadband penetration on fiber is looking very positive. I think rather we're seeing different use cases being solved by the different technologies, fiber being very much an at-home, multi-device, gaming, TV, multiple devices, iPads, mobile phones, streaming music, those kinds of things, and 4G being very much an away from home technology.
Yeah.
I think.
We're
We're in a good shape on both access methods.
You're seeing that the two technologies drag each other higher.
Yeah, probably
in terms of penetration.
Exactly. Not dragging each other down at least, but very much complementing each other.
We're out all the time talking to customers, of course, but not once I got the question from a customer, "Can I use something else than fiber?" We have passed that, to be honest.
Good. Thank you. I think it's time to move on, and you will still be here if there are any more questions for you later on.
Oh, yeah. Absolutely. Thank you very much.
I think it's time to round up the Swedish section, so we would like to invite Hélène again back to the stage.
Thank you. Thanks. Whoops. Okay. Let's skip that then. Thank you, team, and thank you for still being with us. The final wrap-up section, where I will focus mainly on the transformation and our journey ahead. Before I talk about that, though, I wanted to give you a snapshot of the financials, because that's really the platform, how and why we are doing the transformation. Starting at the service revenue, we have talked about the different types of revenues we have. Here you see the exact number going from 2014 to 2015, that the legacy telephony was about SEK 800 million decline in revenues. That is mitigated with growth in our other core services and close to the core services, including fiber OTC. That's how the service revenue is developing. As Anders has talked about, and Christian was mentioning, that of course, has driven increased CapEx in fiber.
2016 is our peak CapEx year for fiber. I think you've seen the case coming from Anders, which of course has impacted our cash flow. You see the development 2014 to 2015. In all of this, we have a very positive EBITDA development, especially the last few quarters. That is very much driven with our cost focus. We have a very strong cost focus, and it's an integrated cost focus. I wanted to stop on that as well before we go into the transformation, because this is so important. I want to confirm the commitment we have made about Invest to Save, SEK 1.3 billion for the Swedish part, and we are on track to deliver exactly on that. You can see the development from 2015.
We are going in a pretty steady state to go to the SEK 1.3 billion by next year. Exactly as Christian talked about this morning, there are three parts of our cost focus, and all of them are important, and all of them is our focus every day. It is transformation, I will talk more about that. It is procurement, and it is our general efficiencies. We look at all areas. When we look at procurement, for example, it ranges everything from our network services to our maintenance, to agency contracts. We don't leave any buckets actually in this. When it comes to general efficiencies, we've had tremendous focus over the last couple of quarters, which is how we work. How do we simplify processes? How do we do things in center of excellences?
How do we become simpler and leaner and smarter in what we do already now? All of those buckets are important. We have actually taken it to the extent that we're building it into our culture. I know that's not a number to that, but I think that's what make it sustainable. When Johan talked about You First and how we measure, cost is actually one of them. How do we actually treat the company's money? Extreme focus on cost, which of course is a nice bridge over to transformation because it is a part of it. However, this is the first time I'm talking to you about transformation, so I wanted to put some color to it, what we actually mean with it. Because sometimes we reduce it to being an IT project or to being a cost reduction exercise. It is not.
That's a part of it. The transformation is our journey ahead. When we wake up in the morning, everybody in this building, in all the buildings in Sweden, think about transformation and is passionate about transformation, because that's how we will make it happen. This is actually creating the new Telia together with improving the EBITDA for us. When it comes to creating the new Telia, it all starts with customer-obsessed operations. Everything we do in the operations comes from how we have defined our customers and what they actually want from us. Very important point. We drive actions every single day in the team, and I do not have time to talk about them now, but I'm happy to speak to anybody in the mingle, because I love this subject, about what we actually do to drive that mindset. Extremely important to us.
In the transformation, we have also identified and we drive what are the capabilities we need to become new generation telco. That's quite a shift, actually, and we need to develop our organization and have that kind of capability to drive that new way of working. Those are two extremely important things. Of course, at the heart of all of it, what you've heard my team members speak about, enabling convergence. Because enabling full convergence is not even possible with the way a current telco is built. We have to do this transformation to deliver on what you just heard from B2B and B2C.
On the improving EBITDA, this is extremely important and that's why simplification, IT renewal, taking out old systems, creating an architecture that is modern and cost efficient, reducing number of network platforms and sites, extremely important, and it goes right into the transformation. The keywords are really modernize and simplify. A key word is also that it's the leadership team, and you've seen some of them here today, that have the key responsibility. This is our number one agenda point. This team you see over here, they spend together several hours per week actually working on the transformation, and everybody in the Swedish organization has a target on transformation. It's not a project. This is what we do for a living, actually. Enabling convergence, as you've seen, this is absolutely fundamental to be able to deliver on Jonas' plans and Lotta's plans.
Again, it starts from the customer. On the consumer side, it's very much about the omni-channel experience. There is no consumer in a digital space that has any less experience on a telco in the future than they have on their best OTT service they can get today. If they have the best service on buying shoes on Zappos, that's the experience they expect from me. That's the benchmark we put when we go into creating an omni-channel experience for our consumer team. Extremely important. Likewise, when Lotta is saying we want to be the number one trusted ICT partner, we are going to be the best partner in the digital space that any of our customers work with. For that, we need to build this transformation. This is really about our growth areas.
Because of that, it affects all levels of business and all operations. One of the things we spent some time on, me and my team here, was to build an integrated transformation plan. Because when you go into this, you see that all areas are connected. If we build a new portfolio, that's excellent. If we simplify how we meet our customers, that's excellent. If we don't take out our old systems, it will never work, and it will never make business sense. All these areas, they hang together. It starts, again, with an omni-channel customer interaction, a simplified customer meeting, exactly how the customer wants it.
For that reason, we have to build a simplified product portfolio and simplified value propositions that are flexible and that actually correspond to what the customer wants in that very moment, whether it's our own services or our partner services. I think Jonas touched upon this, we're building big data capabilities so we can deliver on an individual basis what you want. It's not a mass market. It's not a mass market approach, one size fits all. All of these demands come together then change our system part. We take out systems, we build a new target architecture. We have new partners to be able to deliver on that. That takes us into the network area, we obviously are doing both renewals, optimizations, site closures, site cleanups, extremely important for efficiencies and costs.
My last bucket on this is actually about culture, governance, way of working, and simplification. We have a lead person working across our organization to deliver on that. Otherwise, this will not become a hands-on executable experience, actually. This map is really important, we wake up, we work on this, all of us, every single day. If somebody in my team says, "No," you need to tell me who these people are. We are on our way. It's a lot of hard work. I don't think in any telco with the kind of history and assets we have, this is a simple piece of work. It's a lot of work. We are on our way, and we track it. These are some examples of the KPIs we track.
We track both what's new, what are we building towards new, and what are we taking down. I'll give you some examples. We've closed 35 IT legacy systems since we started this. That's a good thing obviously, because we don't want the legacy systems, and we don't want to spend money on them, and it simplifies. It's a saving. We have reduced incoming calls in consumer services by 16%. That's actually a very high number. That takes out cost. It makes our customers happier. They don't want to call us for unnecessary reasons. We actually have our target mass market system up and running, i.e., the system that will deliver converged experience to our customers when we are done. It's up and running, and we're trying customers in it. That will enable growth. We track this over time, and we set new targets.
This is where we actually see the money coming in and tracking into our targets. With that, I'd like to leave you with a visualization of how I see this journey. I started out saying we are a 163-year-old company. There's a lot of assets in a 163-year-old company. Some of you will recognize some of these pictures. I have an orange car, which some of them you will remember was the Telia car that actually drove around and fixed when there were problems in the networks or whatever the problem was. We have an enormous amount of trust associated exactly to our brand for that reason, that we want to bring forward. We have 4.6 million mobile customers. That's the envy of any of our competitors, we know that.
That's an enormous amount of customers that we, as a true telco, have kind of treated as subscribers in the past. That's what we grew up to do. We have all the different access forms, fixed, mobile, et cetera, and they're all in our pipes because that's how we built a telco. This is a picture from our previous building in Farsta, where we had been for what, 55 years or something, we've been in that building. An enormous amount of telco competence inside the company and with our partners. We want to take the best of this forward, and we're taking this into a new generation telco. When you think of a car in Telia, you're not thinking of an orange car, you're thinking about a Tesla. Why would you think Tesla?
Tesla is one of our partners for three years, and we are driving our IoT journey together with companies like Tesla. We are a company that companies like Tesla want to be a partner of. That says a lot about a brand. This is a tweet which says, @TeliaSverige: "Loving it. When I got off the plane to Spain, I got a text from Telia telling me about free Wi-Fi spots, so I won't miss Sweden's next game. Euro 2016, #LoveTelia." That's how we want to treat our customers. Wherever you are, whatever you're doing, we want to be able to add value to you, not because you're my mobile customer or my fiber customer, because what you can do at that moment, we can give you. That's exactly how we want to treat our customers. We don't want our customers to worry which access form it is.
It's access dependent, and Jonas talked about that. You want to be able to watch our TV irrespective of where you are, as an example. We want to take that amazing telco competence with us and way of working and develop our new purple way of working. Moving into this building where you are today, only two weeks old, is maybe a stronger sign. This is purpose-built for collaboration and for very creative thinking and for partnerships. We have a lot of space for actually, as you see, we have developers coming in here today, we have all of you here. This move into new generation telco is extremely important to us, and it touches all those areas. When I look at this side, I look at that side saying, "That was a great telco, and it did a lot of great stuff for Sweden.
This is the company in the digital era that all partners want to partner with, that all customers want to be customers of, and all talented people want to work for." That's our whole purpose with the transformation. With that, I know we've touched a lot of areas. There are probably many thoughts and questions. I'd like to say a lot of huge thank you for spending so much time on the Swedish part and ask Johan to join me, I think.
Thank you, Hélène. I'll take care of that. Thank you, Hélène. Bear with me for a couple of more minutes, and we will open up for Q&As. Thanks for still being here, as Hélène said. I was going to do this traditional summary, but I realized that you know this by now. You have thought about this, and we will come back to this on the questions. Basically, what you should take away from this is we're on track. I'd rather do a little different summary, which will go through the speakers that we've had. Starting with Christian, who most of you already know, so there was no surprise to meet him. He is Mr. Discipline, and when he tells you to be comfortable with the guidance, you should be comfortable, and when he tells you we're on track with Invest to Save, you should be comfortable.
Just look him in the eyes and trust him. Hélène, our queen of passion and customers and culture. Don't be deceived, underneath. Ruthless on cost and transformation, and you have seen that. Also on track, actually, I would say in many cases ahead of our expectations. The new team, which you have seen today, moving in to the humble guy, Jonas. I did hear that once. Very credible and calm, with a market leader approach, responsible market leader. If you wonder why he was so passionate about TV, that's because he came from the TV business. He went with into Sweden and is bringing TV to the next level, not just in group, but now in Sweden, and bringing convergence in. Very good there. Charlotta is our force for change in turning B2B. She started in SME SOHO.
She is the face of a service advisor in the B2B space, now taking that into the larger companies. We have a plan, which I've been trying to convey in our quarterly results. Now you know we have a plan, much better explained than ever before. Mr. Tillander. You came in warm, you said, and you're keeping us cool, I know that. He's called the billion-dollar man to deliver 1.9 million homes passed. With the pace and confidence, I think you should trust him, even if he's the best sales guy. That's the short conclusion of our speakers. You have only seen part of my team. I'm really excited next time to show the rest of the executive management team, whom you can meet around in the mingle outside. Thanks for being here.
We are on track, we're excited about the future. Let's open up for Q&A. Then I will invite Christian as well. I will ask Christian and Jesper to join me for Q&A, then we probably have to bring up the experts if you get too technical on your questions. You want to start, or you want to
We can.
Yeah. Okay. The camera is, yeah, that's right. We need one more. Yeah. Jesper.
I think I can stand.
You can stand?
Yeah.
I think we start over there with Lena.
Yes, I have a question on the fiber rollouts. Every time you show us the payback times, they're shorter and shorter, and now you say that you peak in rollout and rollout CapEx in 2016. Why is that? Why do you decide to scale down if your payback times get shorter?
Okay, I can answer that. I think Anders was onto that is actually the demand. The demand came much faster and stronger, that's why in the original plan, we said in 2014 that we will build out for around SEK two and a half billion this year. We have peaked that up to SEK 4.6 billion. We are taking that long-term view, pushing it earlier with the same target. It's not that we are shifting it around missing something in the future. Did you understand how I meant?
Yeah. Also, if you look at the pace you have, it looks like you reached the target one year earlier.
Have the mic.
Looking at the pace, if we reach our target one year earlier. No, we're going to reach the target pretty much the same time, 1.9 million households.
I guess there's been a question here both early and now whether we are consciously saying, "Now we're slowing down, we don't want to do more." It's to face the demand, is exactly as you say, Christian. If we thought we could do more, we would go through that and then come back and tell you we want to do more. Right now, we don't think we have to do that. We have Jesper. Take Henrik here in the front.
Thanks. It's Henrik Arps from Credit Suisse again. Just follow up on fiber and how you think about the dynamics between retail and wholesale, I guess, as Com Hem looking to unbundle your fiber network. If you can maybe elaborate a little bit on the returns. Obviously, your revenue's lower on wholesale, but if you look at the return profile. I guess what I'm getting to is if Com Hem comes around, is the return profile that different that you feel you have to compete on price if that's what it takes to get retail share? Or are you quite happy to fill in the gap that you've left with wholesale revenues?
I'll give a general and you can fill in.
Yeah.
In our business case profile, we assume a certain percentage of the fiber households to connect, then a certain of them to have all our services, some of them to not have, or some of them to have wholesale only. Someone else will take them, actually. If that mix shifts, it will be somewhat worse business case. The more we can sell, we will have a better business case for the fiber, but we also get other benefits as we talked about in the B2C area. I'm not going to go in from competitive reasons actually exact how many percentage it is, but it's not to have 100% to get there. It's not actually, what I'll give you as a guidance, it's not a super huge difference actually, but it is a difference. It becomes worse.
Okay. Over there, Stefan.
I have a question relating to the Eurasian assets. Turkcell announced that they had given a final bid in February. Now we're into June. Can you say something about the process and some indication of timeline on the sale of the Fintur assets?
Not much more than I said, Stefan. We have a structured process with several interested parties, and it's good to hear and see and of course, engage with Turkcell as one of them. We also have to balance the timing, risk, and value of the process, and so far we haven't concluded with anyone. We are comfortable that we will do so before year-end, and that's where we still stand on our estimates for completion.
All right. Johanna?
Yes. Johanna Ahlquist from SEB. Two questions, if I may. Hopefully, the last one on fiber. When the fiber installation fees fade, since you are at the peak now in 2016, how do you expect to compensate for that on EBITDA? Then my second question relates to this convergent at 25%. What's the target? What is doable in terms of convergence between broadband and mobile? Thank you.
Let me start with the last one, and then you can answer the fiber one. As Jonas said, we're not setting a firm target because we don't want to push too hard. We'll take it step by step with the offer we have in consumer convergence. Of course, try to leverage the base, but we won't force it through the base. I think it will be a lot pool-based from the beginning, and then we will test proposition per proposition, and increase that. As Jonas also pointed out, it is low comparable to other incumbents with both fixed and mobile, and the history is the reason. We have been silo in fixed and mobile. We think it provides a great opportunity, but we don't want to set a target for cross-sell there in order not to force it too fast.
On your other question about the fiber OTC, which of course is in the plans that it will fade. It will not be a surprise for us. In the separation of the different revenue buckets, you had both core services and revenues close to the core. Growing our other services, of course, our core services, including the convergence in both B2B and B2C, is one of the focus areas to drive this. Also continue the transformation on the cost side to make sure we continue and take out cost and become more cost-efficient. Also it is about those revenues close to the core that Johan said in the beginning that we will be doing more in.
We are doing, we are delivering some of them, we will also see an increase in that's completely part of the new generation telco strategy that we have.
Well done.
Thanks. Yes, Russell from New Street. Just a quick clarification. You've left the guidance unchanged, obviously you sold two businesses. Should we make the assumption that the underlying assets, therefore, are doing a little bit better, both in terms of EBITDA and also going to be spending more CapEx? Because both those businesses presumably were positive contributions to EBITDA and CapEx. If that's right, whereabout should we assume the extra EBITDA and CapEx is coming from? Thanks.
Generally, the guidance we do is organic. We would then have to take away the non-organic pieces to the guidance. On the CapEx?
On the CapEx, Sergel did not have any sort of material amount to talk about. In Spain, I can just be open and say it's around SEK 200 million-SEK 250 million in CapEx we had last year. It's not material, but it will have an effect, of course. Part of that is spent already this year, and part will not be spent depending on closing. It's back to it's still an unknown matter. That's why we didn't bring it up.
Good. Stefan?
Stefan Billing, Kepler Cheuvreux. On the CapEx fiber, you had this SEK 9 billion plan earlier on, and I think you mentioned this is going to increase. What's your assumption for the new figure? Thanks.
Yeah. We already guided on that actually earlier. We said this year will be front-loaded from the previous plan. You're upping the CapEx to I think you mentioned the 4.6-
Yes
for the year, versus the SEK 4.5 billion that we spent for 2014 and 2015, that's front-loading a lot of that CapEx. That's based on what we talked about, the increased demand, and the ability to roll out, and the payback time coming, improving. That was a good case.
You won't have any CapEx, you mean, for 2017 and 2018, or?
Yes, we do. That's the-
It was in one of the charts. Okay, thanks.
Yeah. Yes. One in the front.
Can you go forward?
Allan Nichols from Morningstar. You haven't really said anything about 5G. What are your plans there? Can you do the CapEx for that within your basic plan, or will that cause another spike in CapEx? Thanks.
First of all, we haven't guided CapEx beyond 2018 or even 2017. What we're now doing on 5G, both with Ericsson and Huawei, and hopefully Nokia as well in the region. We're doing Tallinn and Stockholm with Ericsson, and we're going to be early out in commercial trials in 2018. Of course, that's going to happen a lot earlier as well. That's not CapEx heavy. CapEx is going to be part of our normal investment programs beyond 2018 when you go to market with 5G. That's a question more for the future, to be honest. It's more how we test it and deploy it now and prepare for it.
This is a question. This is Lovisa Gustafsson from Telebusiness. It's not about technology or money, it's about the human capital and this transformation, which undoubtedly is about cultural change. Can you, Johan and Hélène, give some concrete examples how you work with it internally, about the company culture change?
How much time do we have? Love to talk about that. I started to talk about creating a winning culture and changing this from the very top to everyone. We're on that journey. We do it through different types of initiatives, and right now we're very focused on bringing out You First. It's our new platform to perform and engage in the company, and to reward ultimately as well, around our purpose of bringing the world closer to our customers. That is not a short, quick fix. This is, as Hélène pointed out in Sweden, and it's in other countries as well, a long journey, an exciting journey, where we are, I think, making a lot of progress in using every opportunity to talk about those proof points and examples that we see. This move, for instance, is one of them.
The change of ways of working, leadership and how we engage with staff and externally is of course other proof points. That is what we do. It's hard to pick one example. That is what we do, and that's what we think ultimately is going to be a competitive advantage into the future. Hélène, please.
No, completely aligned. I think the answer there is exactly that. It is how you do things. It's not what you say, it's not the PowerPoint you write. It is actually how you do things and what you do. Bringing us together in this building, for those who are Stockholm-based, it's a significant change already. This is not just a very modern home. Johan doesn't like to say office, it's more like a home. It's also completely purpose-built for collaboration. There's nobody with a fixed desk. Not you, not me, not Christian, nobody. We're seen in the building. There are different collaboration spaces. I think this is one of the proof points. We work on it all the time. We have programs. It's also part of what we do with our customers.
You will see the leadership team out answering phones in customer channels, working in the stores, tweeting and emailing with the customers. That's cultural driving, because you're doing it. Culture is everything, really.
I feel completely, strongly to tell you also that this building is cheaper than Farsta.
We've got Christian on board as well.
Thank goodness we managed that, Christian.
Two completely different questions. First of all, on becoming the number one ICT player in Sweden.
Where are we?
I guess I'm over here.
Oh, over here.
The number one ICT player in Sweden. I guess that is a quite fragmented and competitive market as well. What is your real edge in that market? Secondly, on CapEx, the shift from coverage to capacity. Exactly what is it you are planning to do there? Is it densifying the network more or what should we expect?
I can start on the enterprise. Then Lotta can fill in. It's absolutely a competitive market, there is no doubt. It's not that fragmented. The fiber market is much more fragmented, actually, if you look at Sweden. Which in a way is surprising, but it's not that fragmented. It's competitive. Our edge is really, I would say, is that we work with all these customers today. There are probably few of these customers that we don't work with today. The second part is that we already have an ICT part with Cygate, which is a huge advantage for us as a starting point. The third part, I would say, is that we have started the digitalization journey internally and with customers. We showed some of the examples up here today, both Lotta and I, and I think that's one of the key points.
We're not saying we're not doing anything and we want to do it in two years. We're doing this today. We don't doing it as much as we want. Therefore, we need to add capability and we need to add more scale. We are actually doing it. We're not starting something new. I don't know if you want to add, Lotta.
Yeah. Yes, we are actually leveraging on the Telia and Cygate position, the communication part, and also the IT part in Cygate. In order to do that, we need to actually expand our offering in IT, and we will do that through the merger and M&A and partnerships. As you said, we have the customer base and we have also the cross-sales opportunity between both Cygate and Telia, and also find new customers within this space.
Andreas, you had a question also on the coverage and the CapEx profile going forward. Let's put it fairly generic and say that, yes, it's been a lot of coverage, 4G coverage build the last 18 months. Norway, Sweden, Finland, also the Baltics. It's fair to say that that coverage piece is not prominent going forward, but capacity and densification, modernization as well, will be increasing in importance for sure. Let's talk about that when we get into talking about 2017 and onwards.
Good. Have Ulrich.
Yeah. One clarification question, first of all. There's 25%. Is that the percentage of fixed customers taking mobile, the percentage of mobile customers also taking fixed, or is that some other number in the denominator? How is that actually calculated?
Now I had to
Jonas has already asked. He's not that smart.
It's pretty simple. You take all the mobile customers on the Telia brand, all the fixed broadband customers, you sum it up, and then it's the % of overlap.
Okay. Great. Thank you. Second question is on, Telia's obviously going to divest a lot. It has divested a lot already, so the balance sheet is starting to sort of look a bit slack. Now obviously there's a fine coming, hopefully not too high a fine, but there's more divestments coming through the door. I suppose a lot of investors are asking now at this point where management sort of prefers to go with this. Obviously there is a bit of an elephant in the room here. I'm not sure you want to sort of explicitly address that. To what extent can you sort of maybe in more general terms, describe where you see Telia emerging once the fine is out of the way, once the future sort of divestments are out of the way?
Is this going to be the leading pan-Nordic operator present credibly in fixed mobile in every single country in the Nordics? Or how do you sort of look at that?
Well, Ulrich, I think through the day we've been trying to position the strategic direction and reiterate our commitment in the Nordic Baltics to the convergence space. That is where we want to reallocate our focus, engagement, and also investments. As we free up capital, like we now have done with Yoigo in Spain, we will reallocate and invest in Nordic Baltics. If we find those value creative M&A. As you have heard from Lotta and from me and Christian, we believe there are value creative M&A objects and opportunities in the near future in these markets. If we, in a year or 18 months, have not been able to do that, and our balance sheet is even stronger, we'll have a different discussion.
I'm confident that we are going to be able to execute value creative M&A to support our strategy that we talked about all day today.
I just want to reiterate also, Ulrich, first time I heard that we have a slack balance sheet. Solid and strong and stable, but slack I have never heard about. I buy that kind of also explanation. What we're trying to do is to help you with a target of 2 times net debt to EBITDA. Also what we have said clearly is, let's now wait and see. We think it's likely to complete the Eurasian asset sale. Also we think it's likely that we will complete our discussions with authorities in the U.S. and Dutch, et cetera, this year. When we have passed that, let's look at the balance sheet together and also in conjunction with what we want.
About the Uzbekistan case, if we had news, we would of course bring it out. We would love to bring it out to close that and move on. As I mentioned in my opening remarks, we have nothing new. We are collaborating and cooperating to the full extent, and we expect it to be resolved during the year. That's where we stand.
Jesper, would you allow me one more, or do you want me to hand on?
You can have one follow-up, then we move on.
Okay, thank you. This is a question on Sweden specifically. You haven't talked at all about regulation. Is there anything in the works that you're currently discussing or that you're seeing sort of that PTS is thinking about that we should start thinking about as well here on our side of the fence?
I don't know what we should comment on the legal side, but there's work going on in PTS, which really follows the EU regulations, which is obviously what everybody knows, and that we follow closely and have conversations about. I'm looking at Jonas. Are there other-
The other Jonas.
Yeah, the other Jonas. No, other.
No. I think maybe we can certainly engage with Jonas in the mingle, but generally speaking, there are nothing imminent-
Imminent, no.
In the making. Example we talked about on the fiber side. There's a fiber regulation on pricing of wholesale that expires in December this year.
That's the only thing that kind of imminent this year, apart from the general regulation and legislation that's ongoing in EU.
Certainly more color from Jonas and the team outside.
Any further questions?
One more.
We have one more now in the back.
Hi, Simon from Barclays. You've been talking today about how you're positioning yourself to become a next generation telco for the future. What are the risks that could impede that strategy? Is it regulation or is it execution? Could you just elaborate on?
Well, it's a good maybe final question, I think we have most of it in our hands. It's about execution. It's about commitment to change the company and stay on course with the changes, which we have done. My first slide on the journey we're on, we're sticking to it. We believe in the change. We are absolutely certain that we have to go through the transformation in order to become the full potential on the new generation telco. What is happening out there, which I try to also talk about in my opening, the world is changing even faster. I think we also have to step up and be even faster on our execution and be bold about our moves, because it's happening.
If we don't succeed, we will fail in our strategy, we'll fall back to the default where all operators are going, which is becoming pure access. That is a different story. We'll speak about a different story some other day. We're committed and convinced that we are on the right track, and are upping our ambition now, as we've talked about today, to stay on course.
Thanks.
Good. Well, thank you all, please join us for the mingle and the drinks. If not, then we will see you soon. Thank you very much.
Thank you.