Earnings Call: Q4 2015

Jan 29, 2016

Okay. Welcome all, and good morning. I have the presentation today of TDAS Neera's Q4 results. I'm Jesper Vilgoth, Head of Investor Relations. And with me today to present, as usual, I have our CEO, Johan Dunlin and CFO, Christian Louiga. And after that, we will have some time for Q and A. And we intend to close this session within 1 hour. And by that, I hand over to Johan, please. Excellent. Thank you, Jesper, and good morning all here and also online. I'll take you through our quarterly results or full year results as it is, and then Christian will go into some more details. But first of all, let me just then look back quickly on 2015, which has been a hectic year indeed, but also, we believe, a quite successful year laying the foundation for the new TeliaSonera. As you know, we have announced the start of our leaving the region in Eurasia, which we also have started to execute on. We are in the middle of a business transformation in some core markets and operations, which is still ongoing and will be for another year or so. And then gladly, our core operations is performing or are performing pretty much across the board, which I'll come back to in much more detail. So we believe we're sticking to the plan that we had at CMD in September 16 months ago, with the exception then of us leaving Eurasia, which was not part of the CMD message. Let's look at Q4 and full year. We are pleased to deliver a Q4 above expectations to some extent, both on the reported and organic. We are 4% up on the reported service revenue growth and EBITDA 11% for the quarter. And remember, these are the continued or continuing operations. Christian will go deeper into the full picture and close the year with our guidance for 15. Also, the cash flow for Q4, 1.8, somewhat burdened by negative working capital and very high CapEx, which Christian will also go into more detail. Full year then also a positive slight positive EBITDA organic growth and also a flattish service revenue for the organic for the continuing operations. So the message here is really solid over year and very strong Q4 in the continuing operations. And please note that the cash flow for the continuing operations is close to the €13,000,000,000 we're also proposing for dividend later. Looking into the trends on revenue and EBITDA in our core operations. Very pleased to see Sweden on 2 0.5% service revenue growth, a strong team in place, now delivering on a very ambitious agenda for 'sixteen as well. Europe, still in negative service revenue territory, burdened a little bit by Estonia, Norway and Denmark. But otherwise, fairly positive trends in core operations there as well. EBITDA side, 10% year on year for the quarter in Sweden, the highest number we have seen in a long time, driven a lot by fiber, TV and mobile, which we'll dig deep into soon. Europe into positive territory on EBITDA growth as well. And then the total continuing operations on 9%, which then you think how can that be because the average of Sweden and Europe is now 9%. But in the other operations, you have both the new global services and operations, which include and are benefiting from some cost savings and transformation effects, but also TESIC, our carrier, and Sergil are improving year on year. So that leaves us in a good position heading into 'sixteen. Let's look at Sweden. We have talked a lot during the year about our converged propositions that we have but haven't really launched. They comprise, of course, of TV, fiber, mobile and all of them are improving ARPUs year on year. Mobile, 2.2% broadband, 5.2%, excluding OTC for fiber and TV is up almost 10%. And that's on the back of successful launches also in Sweden where we have our IPTV Play plus offer. We have our fiber propositions, which is also a key driver with 185,000 fiber homes passed during the year. It's a record number. We'll come back to that. And also, our new mobile proposition and the buckets are gaining traction, especially in postpaid for the higher ARPU customers. So I think with the recent launches like free roaming for our Swedish customers in the Nordic politics, we're It's a big thing in Q4, both on revenue and EBITDA. And here you can see it that 7.2% service revenue growth in consumer with the OTC onetime charges for fiber, excluding it's slightly lower than 2% but still positive, which is important. And on the absolute numbers, we're up now to almost 1,300,000 homes passed, increase of 185,000 approximately for the year and connecting around 150,000 households over the year, which is, someone told me, 17 per hour, 20 fourseven, 3 65. B2B has been a problem, you know that, all through the last 2 years. And it still is, to some extent, if you look at the gross numbers, we're still negative service revenue growth. But the positive sign is that in SME and Soho, where we have launched a couple of new things during the second half, partly the IP PBX SME or touch point, we call it, And our individual service concept to small enterprises has been successful. And we are actually in the growth territory for SME and SoHo, but still dragged down by the large corporate and public where it's very, very competitive, but where we're also keeping our share. So we're defending our share of customers and giving more to our corporates, which is laying that foundation for the next years to come. And another positive news, if we look east, into Finland, where we are now, for the first time, when we look to the right, mobile service revenue are in positive territory. And that's coming both in B2C and B2B. And that's the first time both B2C and B2B mobile is growing in Finland. Of course, we have fixed, which is weighing heavily. I think it's around 7%, 8% negative for the quarter. But all in all, then a positive development for mobile. Total service revenue clearly is still down, but improving EBITDA in spite of the pressure on revenues, mainly thanks to good cost control, lower resource costs in Finland and lower marketing spend. So pleased with Finland in the way we finished off the year. Before we leave Finland, I'd also like to say we know a lot of our customers have had a difficult time the last couple of months, and we have been out in Finland apologizing. We're also doing that here. It's about to be fixed. We have had some network problems there recently. Then our process to leave now, I left Norway behind. Now let's go back because Norway is too important to miss. We have had a great year in Norway with regards to integrating Tele2. Remember what we started out with, we said €700,000,000 synergies for the year and maybe up to higher into next year. During the year, we reguided the synergies to be at least €1,000,000,000 heading into 2016, and that's where we still are. If we look to the right here, we see the actual effect coming through from the integration, around SEK750 1,000,000 as an effect of the Tele2 acquisition. And if you look to the left, you see the organic performance in Q4 has been somewhat soft, some due to lower worse comparables but also due to some slowdown in roaming revenues. But all in all, a fantastic integration. We have invested heavily in the 4 gs network that now covers 98% of Norway, very much on par with the incumbent on competing not just in consumer but also in the enterprise space where we are looking to make more impact in 2016. So closing Norway on a high note as well. Then on our process leading Eurasia. We announced 17th September that we are over time reducing our presence. And just before Christmas, we announced the divestment of Nepal to Axiata, which is under progress. And the remaining 6 countries, of course, then are also under process to be evaluated and divested and progressing according to plan. And as you know, we now report on discontinued operations, which means that we anticipate that we will be able to divest these operations over the next 12 months or so. Since we don't report individual countries now in the press release and the Q4 report, Let me give you a quick snapshot of 3 markets in the region where starting with Kazakhstan, we have had a terrible year, you know that, partly driven by really bad macros, devaluations and currency, but also from our operations where we have not been able to adjust our propositions in a smooth way to meet the competition but had a big impact in Q3, which we're now regaining momentum from but still in, of course, in very negative territory, which is, by the way, the main reason we have not met the original guidance for the full year for the full group, which Christian will elaborate further on. Nepal has continued to deliver good numbers in spite of a rough year with earthquake and power outages and turmoil, Nepal is strong both on service revenue and EBITDA. Azerbaijan is surprisingly positive, I would say, given the circumstances that we also see in Azerbaijan, with another devaluation above 50%, currency restrictions, bad macros and consumer sentiment. So a 5% year on year drop in EBITDA is not too bad, I have to say. Then we keep coming back to a quick update on our transformation, which I said we're in the middle of that. We're still sticking to our CMD ambition of reducing our cost base heading into 2018 with SEK 2,000,000,000 and approximately investing SEK 2,000,000,000 to reach that. Year to date, approximately SEK 700,000,000 invested and some savings coming through already, net €200,000,000 coming into 2016. Not going to spend more time on that. More importantly, I know the focus have been on our dividend policy, our updated dividend policy to reflect the new company. So we see this now without Eurasia and are ready to distribute at least 80% of the free cash flow from the continuing operations, including associates. That's the change to dividend policy, where we say at least 80%. And for 'sixteen, we say at least DKK 2 to give some predictability there since we're a year and a change. We're also splitting up the payments into 2 tranches, Q2, Q4, for smoother cash flow for the group. And our leverage target is, to some extent, unchanged because we're still aiming for A- BBB plus as the rating. But we're a bit more precise on the leverage target, which we haven't had, as you know. Now we want to be 2%. That's where we're aiming. And then we can accept the deviation, plusminus0.5%. But if we deviate, we want to go back towards 2%. And that's the leverage we're aiming for. For the 15 dividend, we are proposing then to the AGM a DKK3 per share dividend, DKK13 billion, which is also what we said last year. So we're sticking to that and happy to deliver that also in 2 tranches for the year. That brings us to our outlook for 2016, reminding you that we are still in a transforming year, still in heavy investments and still with some legacy to deal with in revenue mix and margin mix, notably in Sweden and Finland. If you add the start tipping point in Sweden and Finland, we're somewhere north of SEK 1,000,000,000 negative already when we start the year on EBITDA due to fixed migration on PSTN and the negative trends we still have in B2B in the large corporate. So have to regain SEK1 billion before we're even flat. And that's why we say we're aiming to maintain the €15,000,000,000 level of EBITDA. The CapEx is going to be the peak year of our CapEx, between €14,000,000,000 €15,000,000,000 depending on the pace of rollout in Sweden fiber. Where we hope to beat €15,000,000,000 in rollout, And Helene is looking at me and smiling, and she's on top of that, which will again then be able to deliver at least 80% of our free cash flow in continuing operations and at least DKK 2 per share. That is the new Teleosimera. And we are heading into the future with confidence based on a great Q4. You have seen the numbers here. But if I could reflect the ambition and the motivation among staff, I think it will be even brighter. But we're very geared up to take TeliaSonera into the next phase, where Nordic Baltics are core, where we see great opportunities to invest and create value in both in all our markets actually, in both fixed and mobile and the converged propositions, both for B2C and B2B. So I'm looking forward to 2016. 60. And with that, Christian, I'd like to invite you up and go through the details a bit more on our numbers, which are somewhat complicated this quarter with continuing and discontinuing operations? As always, or no. I'll go with a traditional pointer. I'm still too conservative for the news technology. Good morning, everyone. Happy to see you here today. We have a lot to talk about, good progress in the core business. We have a solid cash flow that brings us to a solid net debt position and we have new guidance both on dividend and on the outlook for next year. So I'll try to pass through those items today with you. And starting with last year actually, so and the full picture. We started this year as a company including Eurasia in our numbers, and we end the year having it as discontinued. And I'm trying to take us back and go through how it looks if we would have had Eurasia in the number still at year end. We said in the beginning of the year that we would be on EBITDA level around 2014. We also was very clear, and I we said it many times, that the highest risk in our plan is in Eurasia. And unfortunately, that risk those risks in Eurasia successively actually materialized over the year. So instead of being around flat, we ended up 1.5 minuteus on the total business, including Eurasia. And as you remember, in the fall, we re guided also from flat to be slightly below. So we came in on that promise. The good thing is that in the continuing operation, we can see that we ended up 0.1% on EBITDA. So we could keep that part of our promise, and we have delivered according to what we expected. On the service revenue growth, we can also see that it's a similar pattern, even though in the Nordic and the Baltics, we have some countries that are still in negative territory on service revenue. In Europe, we have countries like Finland and Estonia and Denmark that is still struggling a little bit on negative service revenue. Some of them are coping better with it on the EBITDA and some less, like Denmark. In Sweden, it's very flat, slightly positive. And the discontinued operations are negative also on service revenue. And on the discontinued operations on Eurasia, we know that Kazakhstan is a big part of that negative development. In local organic terms, and you have seen maybe the report this morning, but in our local organic terms, it's over SEK800 1,000,000 in this year, drop from last year. And we were a little bit surprised by the competitors and our consumers in Kazakhstan's behavior. And we didn't act fast enough in K Cell. So and that is something we have talked about also in the previous quarters. So that is the full year picture. And let me take you then to the quarter improvement. As I said, we said that the highest risk would be in Eurasia. But if we look then on the continued operation, what we also talked about is, we got the question many times, if you're in negative territory in the beginning of the year, how are you going to succeed? And we said that we have certain things that we're working on that will help us in the second half and that we will have a step change when it comes to primarily Sweden. The biggest change will be in absolute numbers in Sweden. That's what we talked about, and that is what happened. And that stems from certain things like fiber, but also from the cost side. We talked in the spring about our SAC engine and our SAC that was not satisfactory from our side, giveaways and cost for equipment. And not only in Sweden, but primarily in Sweden, we have an improvement of the equipment margin. Also can see that in countries like Spain and in Finland. And in those countries, it's very much related to unbundling of the equipment in something we call consumer financing models. When the consumer unbundled it and they decide themselves how fast they want to pay for it, 36 months or 6 months, And therefore, it also helps us to give the right price on the equipment to the consumer. So we ended up well. And on the cost side, it's not only OpEx. As I said, it's also COGS. But we have done things on the COGS, as we talked also about our field maintenance in Sweden and other OpEx activities. I'd like to say also for the record that we had quite good comparisons in Finland as well this quarter. If we look at the CapEx side, let me start with that we have said in the Capital Markets Day, quite a long time ago now, reminds me that we should probably have one new soon, that we will increase our investments in 2015 2016. We intend to increase it with €5,000,000,000 to €6,000,000,000 invest to grow and invest to save, mainly mobile capacity and coverage in 4 gs, fiber and also the transformation in the InvestoSave package. And Johan mentioned SEK700 1,000,000 already this year. CapEx is €2,000,000,000 more this year on continued operations compared to last year, and it stems from any of these things that we talked about. In Norway and in Finland, we have increased CapEx. In Finland, with 40%, in Norway, with 75%, and it is mobile coverage and capacity mainly and 4 gs. We have guided next year to increase maybe further from 14.2 this year to between 14 15. And that, as Johan said, will be very much dependent on our fiber rollout. We have very good momentum right now, and we will try to deliver as much as we can within our required business case and deliver capacity because we have still a very strong demand. So this is a little bit on the CapEx side, And we will continue for another year with a high CapEx level, and that will be our peak year. Free cash flow, €16,600,000,000 divided into certain buckets. We have Eurasia, €4,000,000,000 and the remaining SEK12.6 billion belongs to the continued operation, whereby SEK4.7 billion comes from a very good development of how to release the dividend from Turkcell. We handle that negotiation in a good way, and we continue to have the same ambition going forward. Otherwise, we can see on the total free cash flow, the thing we talked about on the previous page that cash CapEx, the CapEx part of the cash flow has increased and therefore is taking down cash flow both in this year and next year. I like to also point out, which is not so visible on this page, is that we had a tax refund in Sweden this year. And therefore, I'd like to guide you on the tax for next year. And we see on the continued operation around 19% in tax rate and 80% payout of that in pay tax. The net debt is still counted in relation to the operation towards the EBITDA or the full operation. Net debt is, of course, something that will change when we divest the operations, but we can't talk about how much right now. We will see when we have sold the operations. The only thing we know right now is that we have an estimate of €7,500,000,000 for the sales of Nepal in cash effect. The €55,700,000,000 is affected by cash CapEx, as you see, but also AF Telecom. We had a loan to AF Telecom that resides from back in when we sold our shares to MegaPharm in MegaPharm to AF Telecom. And that loan was supposed to be paid in August next year, but we talked to them and negotiated. So we got them paid now already this year. So that is €2,300,000,000 and about €400,000,000 in interest, in total, €2,700,000,000 that came in before year end. That was supposed to be paid next year in quarter 3. Net debt to EBITDA, SEK1.53 billion, including Eurasia EBITDA, as I said. And it's a low level, but we have SEK13 billion that we are supposed to distribute, which is our proposal to the AGM this year. And we have we are remaining on our previous guidance on A- to BBB plus it's very important for us to have that guidance. And we are today within A- range and we try to stay there as long as we can until we need to step outside that for any bigger events that could come, and we have a strategy to deliver on. It's good to have a self solid credit rating within the A- and BBB plus Meanwhile, we deliver on a higher CapEx level, take us through that period, and also delivering on a strategy. We have then added something to the guidance on leverage to make sure it's better understood. And we believe that this A- and BBB plus rating is within the net debt to EBITDA of 2 plusminus0.5. It's to just give that guidance, and it also helps us together with you to have a discussion on what our aim is. The proposal for dividend next year, as I said, is SEK13 1,000,000,000. And due to the reason of our cash flow, to align that dividend more to our cash flow and also then take down the risk exposure on the liquidity and take down the liquidity per se, which we have quite high, we have now then proposed to pay that DKK3 per share out in 2 tranches next year, 1 in April and 1 in October. This year. This year, sorry, I'm still in the closing mode. So and that is very important. As you can understand, we are paying out pretty much 100% of our cash flow. And if that's going to come in one payment, it puts a burden on how to finance and the risk of liquidity and how you need to manage that. So it's good for the company, and therefore, it's good for the shareholders. Earnings per share is dramatically down this quarter, and it stems from 2 things that we reported 2 weeks ago. 1 is a write down in continued operation of SEK1.9 billion in Denmark. That is a result of our failure to complete a merger with Telenor. And we had to reset our business cases and business plans. And that then had a result in a write down. Secondly, we have a write down of the value in Uzbekistan and that is part of the change into discontinued operation. And that was €5,300,000,000 in total, €1.67 on the EPS. In summary, we had a solid performance in core operations. We have a good momentum. We have good momentum in mobile service revenue both in Sweden and in Finland. In Norway, more flattish. In Denmark, it is tough, but we are not worse than the competitors. Higher free cash flow and reduced net debt, good solid balance sheet going into the peak year of CapEx, feels very comfortable. We have an ambition to maintain the 20 16 'fifteen EBITDA level into 2016, and that leads me into then the outlook for 2016. And as Johan said, we're starting with a negative around SEK1 billion on the fixed voice and also the B2B challenges we have. So even with the good sentiment we have now in Sweden, we have taken that back. Finally, on the sawhosmea, the large and public segment is still a tough market. CapEx, SEK14 1,000,000,000 to SEK15 1,000,000,000 depending on the fiber and dividend, 80% of free cash flow in continued operation, at least DKK 2 for 2016. Good. Thank you, Christian. I think it's time for some questions. So please, yes. Let's start with Stefan Harren in the front. If you have a microphone. We have a microphone. Yes. Hello. Stefano Fain, Nordea. Three questions. First of all, a little bit of reasoning behind the new dividend policy and especially the floor on krona. Is that in order to reflect uncertainty around dividend payments from Turkcell and Megathon? Secondly, you guide for similar EBITDA level as in 2015 despite fairly easy comps in first half twenty despite easy comps in first half twenty sixteen, reasoning behind that. And then thirdly, there's huge demand for fiber, and you also plan to increase the rollout of fiber in 2016. Could you say anything about how you looked upon fiber rollout beyond 2016? Thank you, Stefan. Let's start with the dividend then. As you know, the free cash flow from continued operations do include the associates' dividends from Megaphone and Turkcell as well as then the cash flow from continued Baltics. We believe in this at least 80% free cash flow. But during 'sixteen, there is a transition year with a lot of movements in the portfolio. So we will give comfort that also to your point on dividend from the associates come and go and they're not very certain, we want to give that floor of SEK2 to investors. Also then stretching into 'seventeen where we're comfortable that our increased cash flow, free cash flow from continued operations will cover the levels that we're setting for 2016. And maybe just reiterate, Christian, that this is not a cut of dividend. This is a new dividend policy to reflect the new company and the cash generation that we see and setting now a floor to take it from here. On the EBITDA guidance, I do agree with you that the comparables may look easier in Q1, Q2, but tougher in Q3, Q4. So that if you look at our organic EBITDA for the year, it is flat in continued operations. So even if Q4 looks strong, year on year, it's flat. And then with the remarks I made on starting the year with about €1,000,000,000 negative EBITDA that we know more or less going to come through, working your way back to that €1,000,000,000 to get to flat is the first step. And that's our ambition. But we are comfortable with our guidance on maintaining EBITDA. And on fiber, Christian, beyond $16,000,000 we say this is the peak year of CapEx, doesn't mean necessarily it's a peak year for fiber, but it means it's the peak year CapEx for the group. It depends on how we face the fiber towards the end of the year, and that is everything from weather and wind and capacity. And we have a clear target, and that's why we said up to SEK 15,000,000,000 next year. If we succeed with that, it will definitely go down on a higher scale the year after. We have 260,000 homes passed right now that we haven't connected, and we will start then successively also over time to implement these. And that will take down CapEx, but continue to drive the connected homes. But we have a strong momentum right now, as I said before, and we want to keep that as long as we can do that within our business case and delivery capacity. Liana Stebay from Carnegie. Two questions. First of all, on CapEx. Once you pass this peak, what do you see as a sustainable level going forward? And also maybe on frequencies over the next 2 years, how much do you think you need to spend and set aside for that? There are some licenses coming up. And then also, I'm a little bit curious on this IT transformation and what is it that you actually do? What are you swapping? What is the next generation TeliaSonera going to look like? Because you talk about you will become a next generation telco. So what are you doing internally to become that new telco? You want to start? Yes, I have to start. We have already in the Capital Markets Day said that the year before, I. E. 'fourteen, was a good starting point for thinking where we should go back to. So we are increasing with €5,600,000,000 over these 2 years to go back to more that kind of level afterwards. Yes. And then if you remember, the SEK5.6 billion was primarily Sweden and Europe, but it was also an element of that into Eurasia. That was not the majority part of the money. The frequencies, you're correct. It's very hard to predict, but there is plans both in Sweden, I think in Spain, Lithuania and maybe in Norway as well. But this is very presentation that we shouldn't forget about that this can come and we should be prepared for those. And we will then at those times evaluate if we want to participate or not and it may be so. But that's not in the SEK14 1,000,000,000 to SEK15 1,000,000,000, just to say. No, that's not in the SEK14 1,000,000,000 to SEK15 1,000,000,000. And on transformation, we go back to our ambition that we set in CMD. We are cleaning up, if you want, the old system and legacy. We're setting the right platforms in place to be able to adapt to the new customer behaviors that we see in our markets, which is much more living the digital life and online than ever before. And we don't have those systems from the past. They were not set up to deal with today's consumer behaviors, both in B2C and B2B. And that requires investments in the factory to remove and reset. That's a high level description of what we're doing. A detailed description is much more complicated, and we can certainly speak about that more, but I think I'll stop there. It is really investing out of legacy and into future proof platform in Finland, Sweden and on group level, which supports the countries. Will you be done in 1 year? We are close. We're in the middle of it. And I don't think we can be done period everything in 1 year from now. But the main part of the transformation, the main investments will be done in a year or so. But it will probably be tail end of further cleanups. And remember, as long as we have the PSTN, the copper network out there, we're still in a legacy factory. And that will be maintained for some longer time than 'seventeen and probably remain for a few more years. But that's also what I talked about in the transformation effect that we are disconnecting a lot of PSTN with an EBITDA effect this year of SEK 800,000,000 EBITDA of copper PSTN closed on, volunteer and nonvolunteer, people disconnecting and we also disconnecting people to get them into future proof technology. And that takes time. But roughly a year from now, we should be through the main part of those CMD discussions with some tail end for the copper close down. I just we have a big investment here in 'sixteen, but we have said that the effects will come during 'seventeen. It gives us some room, but it also puts a limit to it. So I think that's a good way of looking at it. Andreas? Good morning. Ami Yazoo also on DNB. Two questions. First, you mentioned the macro environment in Eurasia. You could argue that the timing for disposals is not perfect. Is that something that you consider? And secondly, on mobile, you lost subscribers in, I think, all countries but 2, partly deliberately. But can you say something about your what you see and if that is a concern? Thanks, Andreas. Yes, macro is, to put it mildly, troublesome in many of our markets. And from that perspective, you could argue that the timing is wrong. But I also believe that the timing for us to focus our efforts and investments, management attention into the Nordic Baltics is more important. We have a responsibility to make sure that we have a exit responsibly, both in terms of value, risk and timing. So we're evaluating that in this process, which is underway, and we're not running away leaving the keys on the table. On the customer side, we're focusing on value a lot to make sure that we get the value customers, not forgetting that, of course, subscribers are important, but we're not going after subscriber market share in all our markets. This is about revenue market share where we have some positive trends in some markets. I think we're holding up fairly well in our core segments, but clearly not fully competitive yet. And that's also back to the transformation that we're doing. Some of that will have to come when we are through transformation because we know that we will be better to meet a lot more customers' expectations into 'seventeen and 'eighteen. I should also add that there were a couple of markets where we cleaned out inactive subscribers in both Norway and Spain, for example. Yes. Thank you. Yes. I think we should open up for the conference call and see if there are any questions. First question comes from James Britton. First question is around I guess around the CapEx outlook beyond 2016. How can you be so confident that you're not going to see a case for really interesting CapEx projects in 'seventeen and 'eighteen with great returns on investment? And then obviously, that has an impact on free cash flow and potentially the dividend capacity. And then secondly, perhaps I can just ask for an update on the Fintur situation. I mean, we know that Turkcell made an offer. Can we conclude that you've actually declined this offer? And can you give us any update at all on the level of interest in your Eurasian assets? Thanks, James. On the CapEx, we say it's a peak year of CapEx, SEK14,000,000,000 to SEK15,000,000,000 The range is very much related to the fiber rollout, which is dependent on timing and weather, as I said. And we believe that this when you look at CapEx profiles for our countries right now, it is a lot coming together in 1 year. 4 gs expansions, capacity expansions, fiber rollout and upgrade of a lot of our legacy systems. So we're comfortable to say it is the peak year. And of course, it doesn't mean we can reshuffle CapEx going forward between countries depending on what you mentioned opportunities coming up. But this is where we see the need as it stands now, 14% to 15% and being the peak. Fintur is part of what I mentioned, the divestment process, which is ongoing, progressing according to expectations. And we have noted the interest, of course, from Turkcell, which they made official. There are also other interested parties in that discussions. And we will have to come back when we have more to say. So short but short answer. Can I just ask just to clarify, you said that you should expect to finalize the divestment process in the next 12 months? Does that also include Uzbekistan? So we have made the assessment and judgment that we can do a divestment during the year to come, and that's why we have made them into discontinued operations. And that assessment we have to do every quarter basically now and see how we're progressing. But the call we made for the full year 'fifteen and ending end of December is that we can manage that within the next 12 months. Clearly, a challenge. Clearly, something we have to reevaluate if need be, but that's the call we have now. All right. Richard Laurent, could you take the next question? Please limit questions to 1 or 2, so we have many on the line. The next question is Peter Nielsen. Two questions, please. Firstly, if I can just return to Swedish fiber rollout. You've obviously given us some quite positive comments on the outlook for this year. And Christian mentioned the number of households passed, but not connected, etcetera. You gave us in the beginning of this year a target for fiber SDU connections to be reached in 2015 and you fully met that number. Are we to take it that the indications you've given us is that you will at least make meet that number for 2016 of 55,000? And are you potentially willing to give us a new target for households connected for this year? And can I just follow-up on your reply to the previous question, Johan, please? If you indeed meet your target or ambition of having the disposal process completed within this year, I. E, the next 12 months. Do you think that by the end of this year as well, you will be in a position to give us your thoughts on what you intend to do with the disposals, I. E, what I mean is, do you think you will have full knowledge by that of one proceeds, but on the other hand, side also any potential outflow in terms of penalties by the end of this year as well? Thank you very much. Thanks, Peter. Two short answers then, yes and yes. And if you want me to elaborate a bit, we intend to overachieve on last year's fiber rollout, and that's what you see in the upped CapEx guidance. And yes, we do expect to close our issues in Eurasia and would then be able to talk about the future in how we allocate capital going forward in the investment in the Nordic core and how we deal with the balance sheet. Next question Next question is from Roman Abuzov. Please ask your question. Thank you very much for taking the question. So firstly, on Sweden Mobile. You've mentioned that the SME seems to be can you just please talk about what's going on there and the overall competitive intensity in the market? And also secondly, perhaps on the dividend, you've given us the floor of SEK2 for this year. You talk about the dividend being covered and that is a comfort to investors, of course. But then thinking about 2017 without sort of being too precise on it, you're talking about CapEx coming down and your starting point is a covered dividend in 2016. So therefore, is it reasonable to assume that in your base case you're thinking about growing your dividend? Or should we be more focused on flattish in terms of expectations? Thank you. Mobile Sweden, our enterprise Sweden is still extremely competitive. And if we start from the top again, large corporates are under tremendous pressure both from competitors, not just telco competitors, but ICT, system integrators. Also heavy price pressure, as we've talked about, due to the old going into new services, not buying products or one offs, but into services in the cloud, etcetera. And we're part of that. And we'll take our customers into the future, but we'd also take a hit on the revenue while renegotiating. And that's still very much underway in the large corporate. And that's why it's so positive to see that what we have done in SME SoHo during the year with 2 really big launches in H2 has paid off. We're starting to pay off. And we're hopeful that, that can also spread into the larger segments. And roughly, I mean, SME SO is actually slightly bigger than the large corporate in terms of revenue. So that's a little hint. On the dividend side, well, we won't go further than saying at least 80% and at least SEK 2 for 'sixteen. But we also say that we see improved cash flow in 'seventeen and onwards, thanks to business improving, lower CapEx through transformation. And that then will hopefully give us some flexibility going forward. But we won't go further than that for now. Your next question is from Terence Suisse. Just two quick ones. Firstly, on Finland. Obviously, Q4 saw the margins improve quite nicely on a year on year basis as the cost transformation continues into 2016. How high do you think EBITDA margins in Finland could eventually reach? And then secondly, on Sweden, quick clarification on the fiber households passed in Q4. Just wondered if you can split out how many were SDU, how many were Zetius, how many were MDUs and how many were homes passed but not yet connected? Thank you. I'll leave it to my good friends here next door. Good. I will start with Finland. And as I said, it's not the biggest part, but we had good comps also between the quarters, quarter 4 this year and last year. We reported that we had high cost in customer operations, and we had to do some dramatic cost uplift there last year. But we have improved. We have improved over the year. We're working on cost. Service revenue on mobile and consumer has improved. But meanwhile, the enterprise segment in Finland is very tough. And there is tough in all parts of the segments. And that is something we will carry into next year as well. So quarter 4 was a little bit better than you should expect in so because of these reasons. And as we have been pointed out by one of our other analysts here today, the comps will be better in the beginning of the year than in the end of the year. Good. And on the fiber side, on the SDU side related to the campaigns that we had there, we added 23,000 in this quarter versus 16,000 in Q3, and that was 12,000 last year. And then we had SITU'S 14,000 MDUs then and some other being the reminder basically. Your next question comes from Nick Lane. It's Nick at SocGen. Just a couple of questions, please, as well. Could you remind us how quickly you expect the cost savings to come through in 2016, please, and whether that's going to be quite a big acceleration this year? I think you mentioned a €200,000,000 run rate, didn't you, by the end of 'fifteen? And then secondly, what's the better equipment margin contribution been this year? Is that something that would accelerate? Could you give us maybe a few bits of data around the contribution to EBITDA, but maybe number of subs that have taken it and whether it would speed up into next year as well? Okay. On the cost savings, just to clarify that again, the discussion we've had, the transformation is a little bit like a catch up effect in a sense. So we're working very hard over 2 years with big investments, big changes, and it will be slower improvements coming through. And also there will be costs for driving this and limitations driving this. And that's why one of the reasons we have said a long time, doing this large transformation in this group will have limitations on other things we want to do. And therefore, we don't run, for example, large cost programs on top of this. We do fine tuning. We take down resource costs where we can, and we negotiate our contracts where we can, but we're not going to be able to do any large other cost savings meanwhile we do this transformation. And that will be more of a ketchup type effect in that sense. And secondly, on the bed equipment margin, I think there's different elements of this. In Sweden, we were very clear in quarter 1 that we were not satisfied with the way we were handling that. And we have then changed that in the second half. That means that if we continue on this level now where we have found good way of handling that, we will have good comps in the first half, and we will be more on par in the second. On top of that, we are driving other activities on equipment sales like we do in Finland, where we try to unbundle. And when we unbundle, we actually find that we have a better opportunity to get paid for what it costs to buy in an equipment for us. And that will continue. We're looking into Denmark and other markets now to take that journey as well. Come back on that, Christian. Is it quite a large effect in terms of EBITDA for the second half of 'fifteen at all? I mean, is it material when you add together Sweden and Finland? Or is it a reasonably small benefit? I think when I have started to learn you guys now, so both for you and for me, everything that is small is material, I found. So all the small dots we have on our numbers, you are very curious to understand what's happening. And that is for us as well. So everything is important. And this is an important element of driving the right cost structure and also the right model going forward. So in absolute numbers, it's not the big tickets like we say when we have the negative push, but it's one of those items that helps us to compensate and close the gap. All right. Should we take the next one, please? Your next question comes from the line of Paul Richert. Please ask your question. Yes. Thanks very much. On Norway, could you sort of outline how you see the current market structure? Is there a strategic need for Telia in Norway to gain more market share? Or is what you have now a good basis to work from? 2nd question is maybe a bit sort of left field, but still there's obviously much talk about industry consolidation also from a cross border perspective in European Telecoms. Are there any interesting opportunities for you out there? Or would you simply say we lock down the portfolio? Obviously, we have this Eurasia thing going on. And unless there's an amazing deal coming across our desks, we wouldn't even sort of think about things like that at this point. And then maybe one last question really quick on Eurasia, the sales process. Can you I'm not sure you can, but can you confirm that you are actually talking to several potential buyers for each of the major operation? Or is it sort of in contrast to just talking to 1? Thank you. Thank you, Ulrich. Norway first. The market structure is, as you know, set through the last year with 2 large ones and then several smaller ones now. And I don't think we're our prime target is not to gain sub share. Our prime target is to get REV, stabilize the share and then also work on the EBITDA share in the market. But we are happy with the year of integration where we also during the integration invested heavily, as you have seen from the numbers, into a 4 gs network, which is now on par and capable to take on more competition in other segments than consumers. So if there's something we're aiming a little bit more for, it's the enterprise side. And consumer, I think we're probably in the right level of market structure. But we'll see. We also expect some more competition actually in Norway during next year from the smaller players. So that market will probably go through a bit of competitive test as well. On the consolidation, no right now, we're focused on divesting. We're And on the Eurasia, as I said, it's a process where we're progressing according to plan, and there are several parties in discussions across the board. That's all I can say. That's great. Thank you very much. Good. Should we move on to the next one, please? Next question is from the line of Sam Dhillon. Please ask your question. One quick question on Eurasia, would you believe? If you were to sell any other Sintor assets to someone other than Turkcell, could you confirm that, that policy would have to also offer to acquire Turkcell's stake in said assets at the same price, please? So we're taking this step by step. First of all, we're divesting the 7 countries. Let's deal with that first. And then we'll see where we are once we have divested that. And then we will deal with the Turkcell issue, which is a separate one for now, where we have as you know, we will talk about our progress there, where we have constructive dialogues across the board, both in Turkey and with our partners, and are aiming to achieve things also for 'sixteen like we achieved in 'fifteen. I think that's an important message that we're working hard on that. And the AGM for Turkcell is always a key event that we should expect in the Q1. Sorry, I think you misunderstood clearly my thoughts. What I was asking is if you sold Fintur assets to someone other than Turkcell, would that party have to buy out Turkcell's stake in those Fintur assets as well as a tag along? And the answer is no because we decoupled these two issues. As I said, we deal with the 7 markets separately from Turkcell. Your next question is from the line of Henrik Hebbz. Please ask your question. I had two questions on Swedish fixed. Just given the demand you seem to be seeing on fiber and pricing in general seem to be moving up a little bit on fixed line Sweden. You put through some TV price increases in 2015. I didn't see you put through any pricing on price increases on broadband. Do you think maybe just your view on pricing power on fixed line in general, maybe on fiber. Your fiber pricing doesn't seem too aggressive. If you can kind of put that up a little bit maybe. And then on the fixed line telephony side, how many of your PSTN lines are telephony only? And how many basically, how many houses take just telephony and on broadband or anything like that? And do you think you can put a pricing, I guess, on line rental? You didn't do that in 2015. Thanks very much. Thanks, Henrik. Jesper is looking up the numbers for PSTN. Pricing, fixed broadband and fiber, very interesting question. I think we are on a mission to optimize our pricing across segments, across products. And I'm sure we can find areas where we are not optimally priced. We have tried, I think, in 'fifteen, not on a large scale. And we continue to try to see if we hit some sweet spot on pricing where we can leverage further. I think we should dig into that and come back on that very specific questions. Let us come back to that afterwards. Your next question comes from the line of Maurice Patrick. Yes. Hi, guys. Yes, Maurice from Barclays. I mean, just a very quick question on the state of competitive intensity in the Swedish markets. It feels as though perhaps the competitive pressure has eased a bit in the second half. You've seen lower churn, lower subsidies, lower marketing for everyone. Is that what we are seeing? Because of course, earlier in the year, we were all concerned about these super large buckets and that damage in the future of data monetization. So thoughts on that would be greatly appreciated. I think it's fair to say that the year has been characterized by competition within our respective bases. We have repriced our base. We have upgraded our base. We have secured our base, except maybe for 1 player in the market, which is taking share. So I think we have a lot of that competitive dynamics within our own bases. And I think and I hope we stay rational into next year. We focus on value, focus on getting the right propositions into the right customer and the right segments in Sweden. And that has paid off during the year. We have a strong growth on consumer mobile postpaid, for instance. I think it's 5% in the quarter. So 5% postpaid service revenue growth, and it comes a lot from our existing base. So we're not in need of gross add taking share in order to drive revenue. And that has been the focus, and we'll see what the focus will be going forward. Great. Your next question comes from the line of Sunil Patel. Good morning. So just one question for myself. On Denmark, another disappointing revenue performance in the quarter. How do you think about your options for that market? And is this something that you're committed to in terms of staying in at all costs? Or do you think you could look to act that over the course of this year? Thank you. Yes, very competitive indeed. And also, as you say, disappointing trends. We have repriced in Denmark. Most players have repriced during Q4 with some of the lower buckets, 10%, 10 kroner or etcetera. That has not kicked through, as you see from also competitors reporting. And it takes time to reprice a base. So we haven't seen that effect yet. Even with that effect, I say that we don't think we will get to great returns on our Danish situation. And that's why I still say that Denmark is important for us. It's important for our customers to be in Denmark. But we have to make money in Denmark. And those two parameters we need to fix together. And that's where we stand right now in our view on Denmark. Good. Thank you. I think we have one final question. Your last question comes from the line of Jan Dorske. Just coming back to Eurasia, I just want to clarify in the balance sheet, the net assets of Eurasia is SEK 24,000,000,000 Is that your best assessment of the market value of those countries for 100% of those businesses, I. E, including the minorities? The short answer is that the SEK24 billion that is on Page 23, I think, in the quarter report is the book value of 100% as we consolidate 100% of the Eurasian entities, we need to also book the assets and liability to 100%. So that's the 100% of our book value, not our assessment of what we think we will get for those assets for our share. Okay. Thank you. Okay. Thank you. I think we conclude there. Thank you very much.