Earnings Call: Q3 2015

Oct 20, 2015

All right. Good morning, everyone, and welcome to Telias Neeras Q3 Presentation. I'm Jesper Gilgot, Head of Investor Relations. With me today to present, I have our CEO, Johan Den Lind and our CFO, Christian Louieger. And after that, there will be some time for questions. We intend to close this session within 1 hour. So by that, I would like to hand over to Johan, please. Thank you, Jesper, and good morning, everyone, here and online. Let's see which camera I'm in, that one. Excellent. I'll take you through the Q3 results today. But before I start, let me make a couple of comments on the recent developments and the recent noise that we have had regarding our accounting standards. We have issued a separate statement today clarifying some of those allegations that we would have some missed statements in our accounts. We do not. We have today gone through in more detail than on Thursday how we follow the IFRS and how we follow the Swedish accounting standards. So there are no material misstatements, and that's signed off by our auditor, Deloitte. I'd also like to point out that there are no, at this point in time, claims or indications of claims, as it's stated, of amounts from the American authorities or any other authorities relating to the investigations ongoing. And therefore, you cannot and we cannot under IFRS note that in our books. So those statements are made today, separate press release, so please have a look there. And of course, anyone is free to have a view on the evaluation of TeliaSonera. But when you go to the accounting principles and standards, then we have to make the facts correct and that we have done today. Now I hope we can speak about Q3, and I will take you through some highlights. First of all, on the reported side, we have an organic still negative 0.5 percent compared to last quarter. If you remember, it was about 1.3% negative. Of course, the reported numbers are stronger, thanks to both our M and A activities, mainly in Norway, but also to some extent supported by currency tailwind. Same on EBITDA side, just reminding you last quarter was minus 4% organic and we're getting close to the 0 mark on EBITDA. We have an issue in Kazakhstan, which I'll get back to, which, of course, weighs quite heavily on the group numbers at this time. EPS, supported by the associates, so a pretty strong EPS reported number for the quarter. Let me move then into some snapshots on the region. And for those of you following us closely, we have talked about improving trends in Europe and in Sweden, and we are showing that in Q3. Sweden up 3.2% from minus 5% last quarter and minus 10% in quarter 1. Europe also coming from minus 7.5% in Q2 and now up to 1.2% growth on EBITDA. So that is according to our expectation and which we have been talking about here previously in the year. What is not according to our expectations is the drop in Eurasia, and this is mainly driven by Kazakhstan, and I will speak about Kazakhstan separately. But all in all, core operations delivering in accordance with our expectations or slightly better. So let's have a look at Sweden, which shows strength. And it doesn't just show strength in one segment or one product area. It shows strength pretty much across the board. So let me speak about business to consumer. Our consumer side is strong, showing almost 5% growth. It is driven by TV, it is driven by mobile and it's driven by broadband. Of course, we have an all time high on our fiber deployment. We're passing 50,000 households in Q3 alone with about 60% upsell or connected rate on those past homes, which is also a very strong number. And it shows the data demand that we have out there, and we are delivering as much as we possibly can. We're also showing strength in the mobile segment on the consumer side, where we see the uptake on our bundles. We have priced up some of our packages from €199,000,000 to €229,000,000 And we've also seen a migration upwards on some of the mid buckets, which is very encouraging as we try to monetize our data. On the B2B side, I should caution that we don't see a trend shift, but we see improved comparables Q on Q. So it's a slight easening pressure. It doesn't mean we have come out of the issues that we have talked about on B2B in Sweden over the last year or so. But it's at least a breather for the quarter and helps the overall numbers as such. So another point on Sweden, just which is also seen in the EBITDA effect is that we have optimized our SAC further. And that has been a topic in these forums throughout the year that we are trying to optimize the way we invest in our channels and in our subsidies. And that is now more balanced than previously. So let me then move to Norway, which is another strong point in our report, not just M and A Tele2 integration, but also organically. We're showing strength in our deployment of the network. 4 gs now, I think, around 94%, 95% coverage, starting to build the brands of a strong second alternative or the alternative to Telenor and gaining traction also on the customer side now, which is encouraging. But then when you add, of course, the Tele2 acquisition, it looks really strong. And we have already, during the year, upped our synergy estimate the year, and we stand by that EUR 700,000,000 improvement synergy for the year. And leading into next year, about SEK 1,000,000,000 run rate on the effects of Tele2. So that is very encouraging, a strong team in place. Let me move then to Finland and Denmark briefly. Finland, I have to remind you, we are in the middle of transformation in Finland. It is too early to expect strong numbers out of Finland, even if we're, of course, trying to do everything we can. But it's somewhat muted quarter. We still have the interconnect effects in Finland, which we're working hard to mitigate. We know we haven't lived up to our ambition of gaining market share. We have lost out to at least 1 on the mobile side in the quarter, we think, but we're fighting hard to regain with the recent launch of a full house or a converged offer in the market in Finland. On Denmark, yes, we are back to square 1, you can say, where we are not proceeding with the planned joint venture with Telenor, which we pulled back here in the quarter, not being able to please the commission with enough remedies, which made sense for us and for Telenor. In the meantime, the Danish team has done well, pressure still on top line, compensating with strong focus on costs and encouraging now and at least hopeful that we can see some uplift going into Q4 with recent price stabilization or also price increases that we launched late last week on some key mobile buckets. So hopefully, we can see some improvements in Denmark going forward. Let's have a look at Baltics. We don't talk about Baltics in this forum very much, but when all three countries come out with positive trends, they make a difference. And that's also encouraging when we talk about Nordic Baltics in our core that we have markets that are improving and both from a growth perspective and from a profitability perspective. So that's encouraging. And we recently also announced a business combination in Lithuania, where we will be able to do even more in the converged space going forward. Then let me turn to Eurasia. We have a mixed bag, as we normally do over the last quarters. Some really good numbers, strong numbers, starting with Nepal. They have stood strong throughout the tough period after the earthquake. They've done tremendous work in stabilizing networks, working through with partners and customers, keeping networks up, but also growing the networks into rural areas and seeing a lot of traffic and customer increase per se. So that's encouraging with the growth we're getting out of Nepal. Let me move to the not so rosy picture in Kazakhstan. We have been speaking about the challenges in Kazakhstan here over the last year or so, where we have been losing market share quarter by quarter. Kcell in during the summer launched a new proposition called Hello Kazakhstan with a clear ambition to stop the bleeding on the customer side. They have done so, as you see, but it has come at a too high price or too high cost, which then impacts the numbers quite significantly. This, I would say, was underestimated in some parts of the dynamics, how much of net traffic did come with this new launch and how many customers actually migrated to lower buckets. That is being corrected towards the end of Q3, but it will carry on throughout Q4, not as bad as in Q3, but still worse than we want it to be. So Kcell is about now rebattling also the profitability, not just the customers, to look good into 2016. And it is due to Kazakhstan that we see the numbers weighing down quite heavily on the group as well. I think the numbers Christian will get into this, but I think it's about SEK 300,000,000 or so in Swedish kronor effect on the group. So let me also take a few words on what was announced 17th September with our ambition to reduce presence in Eurasia over time. We're doing so for a couple of reasons. Of course, we have issues and challenges that we've been working with over the last 2 years to resolve. We have resolved a lot of things operationally, stronger governance, stronger compliance. But there are a few things that we haven't been able to solve, which are still outstanding. Both partner relationships and repatriation of cash are prominent challenges. But we also have a focus ambition in the Nordic politics, where we want to refocus and build a new generation telco in the Nordic politics. And that requires a lot of investments and resources and focus, and that's also one reason we are going to reduce our presence in the region over time. That process has started recently, as you know, and I have no real updates on the progress. I will keep all of you posted as we proceed with this very delicate process. It's going to take some time. And during this time, we will be very responsible. We established a responsible exit program with an upgraded governance, an upgraded focus to make sure that we do responsible business during the exit, and we continue to invest and develop these markets as long as we are there. That's part of our obligation and responsibility, and that's something we're now upgrading to make sure we do this proper. I also like to highlight that Megaphone and Turkcell are not part of this scope to reduce presence over time. They're part of a separate scope, and we speak about those 2 companies separately. As you have seen from this quarter, they help on the EPS side, they help improve the numbers. Turkcell had a fairly strong Q2, which is delayed numbers into our quarterly three run numbers, of course. And Megaphone is fighting well in a rough Russian economy. On the megaphone side, we have very good relationships with the company, with the management and our partners, which is important in our in this financial holding as we have labeled it. On the Turkcell side, it's a bit more complicated, as you know. We have been speaking openly about our progress in Turkcell. We made a big step forward during the year with the dividend in the AGM in March. There are still very difficult discussion to resolve our outstanding issues, which is mainly on the legal side and mainly historical or all historical. I think we should set our eye on the next AGM, which is in March 2016, and see if we can build momentum again to resolving some of our issues. On the legal side, there, of course, going to be there are some milestones coming up with the damage awards towards Shukurova, and we'll be following that and updating if there are any material information. So let me, before I get to closing, also market a bit our sustainability update that we're also launching today. It is a first interim report that we are taking to the market because the interest in the way we deal with our sustainability matters across the board are of high importance and of high interest. So this is a way of encouraging further dialogue on these matters. And these are, for the first time, also signed off by Deloitte to make sure that we are reporting on our KPIs and following up the commitments we're undertaking. Some snapshots from the report, if you haven't read it already. We talk about our improved risk control. We talk about our responsible procurement, which started from a very low level, I have to admit, with the help of Ecovadis and due diligence procurement and vendor due diligence as we're doing that throughout our footprint, starting with the high risk suppliers throughout Eurasian footprints. We're also reporting for the first time with also audited by Deloitte, our law enforcement disclosure report, where we now have 9 countries part of this disclosure. Of course, we also speak about the SDGs, where we are activating them through our all in platform. So that's a good read, and I encourage you to do have a look at that and revert with your feedback. So to finish off my part, before I let Christian speak, it's very good to see that we have our core operations leading the way with Sweden and Norway, the outstanding markets this quarter together with the Baltics. It is Eurasia who is weighing down, especially Kazakhstan. We have a plan to recover, but it's going to take some time there. And then we'll keep you updated on our ambition to reduce presence, but nothing new for the moment. So with that, I will leave it to Christian to take you through a bit more detail on the numbers. Thank you. Thank you, Johan. Good morning, everyone, and welcome to the financial part of this presentation today. My highlights will be around the revenue growth that we have, and I'll also talk about the improved EBITDA trend we have, and this is very encouraging, of course. And then the cash flow, which is always important. We have a cash flow that is impacted both by the dividend from associates and CapEx. And I will spend a little bit around CapEx in this presentation for that reason. But let's start with the revenue side. We have a growth in the quarter. It's primarily a flattish service revenue trend that we see. The service revenue is organically then 0.5%. But if you look at Sweden and Europe together, based on that, we know that your ratio is down. Sweden and Europe together is a 2% growth on service revenue. On top of that, we have a very positive impact from the acquisition that we're very proud of in Norway of 2.9% and then FX of 1% going up. Not that much on FX and it may surprise some people to see, for example, Kazakhstan on this picture with a devaluation on the 20th August still only being minus 2.6%. But then we in this room need to remember the Swedish kroner hasn't been that strong over the last 12 months either. On the net sales growth, the impacts from different parts, the build revenues is flattish. Here as well, we can see growth in most market in Nordics and in Sweden. And Kazakhstan is the main negative impact on this number. Interconnect impacted primarily by Nordics, Finland and Norway and Denmark, all having quite dramatic negative impact from interconnect in this quarter. Finland should slow down in the next quarter. Equipment sales is growing. Equipment sales is primarily coming from Europe this quarter. Spain is a big contributor. We had sort of a break on equipment last year, so it's not that dramatic as it looks like. This is not coming with negative margin, the European equipment sales either. So the shift between Europe and Sweden is actually on a positive note in that sense. If we look at the earnings trend, as Johan said, Kazakhstan is the prime negative factor in this quarter, EUR 330,000,000 almost in negative EBITDA quarter on quarter. This will continue into quarter 4, but on a lower level. But that has a big impact on the organic trend. Europe and Sweden are growing, Sweden with 3.2%, and this is positive. On top of that, we have the M and A of 2.9% and FX is only 1% in this quarter. This earnings trend, something we've talked about and is very encouraging, of course, and will continue. Transformation. We have started a journey. This is a journey. We have to remember, it will take several years. At this moment, the cost for driving the transformation is outweighed by the savings. So we have savings coming through, but they are more balancing off right now. And the savings will start to materialize in a later stage that we have talked about before as well. Around EUR 500,000,000 CapEx so far into this program. Online, IT and some of the fixed parts are part of this transformation CapEx right now. The part that we can't see on this page, we see Sweden and Finland here, but we also have 2 programs on group level, and we have talked about them before. 1 is something we call DAISY, which is the server and the data center consolidation we do in Nordics. We are taking down all these data centers to just a few and we are consolidating. So if you go in and order a server today, you can't buy one single. So you just buy a space internally. So this is the transformation we do. And then we can work together in a more efficient way and get the cost down. The other program is within the surveillance and operations side of the networks, where we continue to build a scale business from one place. EPS is improved by 16%, and that is coming from associates a lot. We have associates in Turkey, as Johan said, that is improving quarter 2 over quarter 2. It's not a surprise. We have seen the numbers. They had a quite big impact in 2014 from one off items from their international business, which is less now. And on top of that, they're doing quite well in the Turkish market, both on the revenue side and the EBITDA side. We can also see that financials and taxes are netting off. Both are moving in this picture. The net financial is a proof of that we have money in dollars in our Eurasian countries. So when the currency moves and we have U. S. Dollar and Kazakhstan and we have a devaluation, we get a positive impact on the net financials. So that is just a proof of how we have handled that cash position. On the tax side, the tax has increased because the earnings have increased. So net income before taxes are higher, and therefore, taxes are higher. So a little bit about CapEx. We have a EUR 12,000,000,000 year to date group CapEx split as we can see on this picture. So we see Sweden, Europe and Eurasia, but we also have an other part. Other part is the group functions that we work with. As I talked about, we have a group technology that both work with some common products like TV platforms, but also the network side and the surveillance and operations side. And then Sweden, of this is SEK 4,000,000,000 and it will be around SEK 6,000,000,000 at year end. The majority is 50% in fiber and then and part of that fiber is also to support the backhaul of 4 gs and then we have 4 gs. The most interesting part of this picture, I think, is the fiber that is a large part and is making us grow in Sweden, both on MDUs and SDUs. I don't think there's any other company that is building out in the size we are doing it, 50,000 homes passed and 30,000 homes connected on SDU side so far this year. And we're doing that at a very good return on investment. We continue to roll out quite well now in quarter 4. And we have over 100,000 untouched homes passed that we have already built out to that we can come back to in later years. This picture will continue. We have said that we will invest SEK 6,000,000,000 to SEK 7,000,000,000 more over 2 years' time in 2015 2016. And SEK 2,000,000,000 is on transformation and SEK 4,000,000,000 to SEK 5,000,000,000 is on Invest TO Grow initiatives, primarily in Sweden and in Europe. And we are just half the way here. This impacts, of course, also cash flow. So during this period, we will have an impact on cash flow. And the SEK 2,000,000,000 we see here is cash CapEx from our higher investment. And the other part of the cash flow that is notable is the dividends received so far this year. We had SEK 4,700,000,000 in dividend from Turkcell and then we had a dividend from Megaphone in quarter 3, which was just one part of their dividend. They have an intention to also have a dividend in quarter 4, and this is something we support as a shareholders as well. Net debt is on the same level as last year, SEK 1.70. It's down from quarter 2, which is always a little bit higher due to the dividend we pay out. The cash CapEx here is also a little bit impacting in the quarter. And then the AF Telecom payment, it's the 2nd last payment. We got this payment now in quarter 3 of SEK 2,700,000,000. There's one more payment to get next year in the same period in August. This is a picture of the cash flow divided on Eurasia and the associates dividend and the core, the rest of the company. And the gray part is the Eurasian cash flow. And the green part is the dividends from associates. And the orange part is then the rest of TeliaSonera. It's about CHF 5,000,000,000 so far this year on the rest of the Telesooneira, and that is impacted by CapEx and will also continue to grow into next quarter. And the SEK 3,300,000,000 on Eurasia, onethree of that stems from Kazakhstan, which is the biggest driver still. It's still a huge entity with quite high profitability driving the cash flow in Eurasia. If we look at net debt, we have SEK 60,000,000,000 plus on net debt on the group side and SEK 9,400,000,000 net cash is located in Eurasia. Of that CHF 9,400,000,000, we have talked about the trapped cash, as we call it, in Uzbekistan and in Nepal, and that is around SEK 6,000,000,000 in total of the SEK 9,400,000,000 This gives you a picture of how our cash flow and the hard debt situation looks with and without Eurasia. I want to reinforce our priority on having a solid investment grade, A- and BBB plus The current rating is A- with Standard and Poor's, and I just want to make sure it's clear that this is our ambition. Finally, on the outlook. We have clearly said throughout this year that the biggest impact positive impact on our profitability will come from Sweden in amount and that the biggest risk remains in Eurasia. Unfortunately, this quarter, that was also a fact with Kazakhstan coming through in a worse way than we had expected. So we have to then reguide. I want to say that Sweden and Europe will continue the positive earnings trend into quarter 4, and it will improve, and we will still have issues around Eurasia. And therefore, our new guidance is instead of saying that we're going to be around last year, it's going to be slightly below last year on EBITDA level. On CapEx and dividend, it's unchanged. So we remain with a target of SEK 3 dividend for this year. That is all. Thank you. Good. Thanks a lot, Christian. And I think it's time to open up for some questions. And I think we start here in the room with the audience. Do we have any mics? Yes. We can take Andreas there. Andreas Ils on DNB. A question on the disposal of the Eurasian assets. Should you succeed in that? Do you see that you can remain with the stake you have in Turkcell and fully dispose the Eurasian assets? So let's take one step at a time. We are going to now move into this phase of reducing our presence in these 7 markets, which are in scope. The Turkcell situation is more complicated and not fully in our control, as you know. And when we are at a point where we do have options in Turkcell, we will speak about our options and what we want to do. Those are 2 separate things for the moment. Yes. Hello. Stefan Gossang, Nordea. A couple of questions. First, relating to Kazakhstan. If you can give some more flavor on the impact on the margins. What kind of impact did the interconnect that you're paying more interconnect cost? How much did that impact? And what kind of measures are you taking to improve the margins? Secondly, relating to the Danish market, there has been some price initiatives. Just if you can give some more comments on how you see that development developing and what kind of measures you are taking. And then thirdly, Norway, there was a really solid ARPU development on the mobile side this quarter. Just wondering what's driving that performance. Thank you. Thanks, Stefan. Let me take the 2 last ones, and then Kjellstrik Tharn, you can comment on the numbers there. On Norway, yes, it's been a solid development. We have organic growth as well as the M and A effects from Tele2. We're seeing some price stabilization from some of the players, which we are part of on our main brands. But I have to say also that on the fighting brands, as we call them, it's very fierce price competition where also the new entrants and the new entrant are very active. So I think it's a bit of a split market where we see some easening pressure or actually uplift in the higher segments, premium segments, but pressure still on the lower segments. In Denmark, we will see what this means. We have that TDC announced price changes, and we announced later also price changes on some parts of the mobile portfolio. We had DKK 10 increase on some of the buckets. We hope and think that will be accepted by our customers showing the first signs, and then we'll see how we can take it further. You know our view on the Danish market is very negative, partly for that reason that it is a price war that's been going on for very long. And I think you need to be we need to test segment by segment whether we can stabilize and increase returns step by step. Otherwise, we have further problems in Denmark. In Kazakhstan, Christian? Yes. On Kazakhstan, you are correct that the interconnect cost has a big impact on the profitability. And there's 2 factors and mainly two factors. It's the interconnect cost and the lower ARPU that has been driving the lower profitability because in the quarter, as you've seen, the customer base was starting to pick up again. So that is the biggest impact. Though on year on year, also the customer base has somewhat an impact, but much less. The interconnect is then related to that. We first of all, we increased the buckets quite dramatically. And secondly, there was also quite a high abuse. So what we have done is, 1st of all, to go in and actually correct all the abusers, which you can do. You have to just do a lot of work around that. And secondly, of course, we have had to change the offering somewhat. And we have done that in the end of the quarter, starting on the 8th October, I think, the new offering is coming in with a little bit lower buckets, therefore limiting both the average and the maximum off net minutes for our customers, which is still not lower than our competitors, but we have much higher buckets than our competitors. All right. We have one over here, Lena. Good morning. Lena Stebay from Carnegie. First of all, on disposal again, sorry, Eurasia. Would it be enough for you if you were selling to say Turkcell or Megaphone? Is that enough distance from you from SRI compliance point of view? 2nd, in Denmark, you pulled away before you had a decision from the EU authorities. If there is a different ruling, say, in Italy or the UK, if they take a more positive stance in those markets, would you reconsider your margin plans in Denmark? And finally, as well, if you can maybe say something about the fiber, how much you've sold into next year? What could we expect in terms of rollout speed for next year? Thanks, Lena. So on the disposals, I don't want to jump ahead. I want to take step by step and talk about the things we actually will do when we are there and then what the consequences are with the potential acquirers or buyers. So we'll leave that. And as I said, right now in Turkcell, we don't have the options that we would like to have. So that's a separate process where we're trying to provide and create options that we can decide upon, which is not the case today, as you know. We have a direct stake in Turkcell, and we have an indirect stake in Turkcell. The direct, of course, we control more. The indirect stake, we don't control in the same way. On Denmark, one thing that was very clear in our dialogues with or debates, I should call it, to be mild, with the commission is that every market is different, and that's something also that comes back clearly from them. This is not a precedent. 1st of all, because we pulled back, it's not a precedent for other markets. And the fact that also each market is different or each business combination proposal, each market dynamics are different. So I think country by country will be assessed. So if Italy or U. K. Is positive, it doesn't really change the view on the Danish market per se. That's the view from the commission, and that's how we also view our case. And for our case in our case, the case was not strong enough with the remedies that were demanded or looked for. And therefore, we had to pull back. And fiber, Christian? Fiber, yes. I can't I don't have the number on how much we sold into next year. But let me put it this way. We have an ambition to continue to grow. We have grown quite a lot this year compared to last year. The limitation is not sales at this point. The limitation is to keep a lot of vendors, quality vendors of delivering fiber, in the same time keeping a good customer experience. Because every day, you take on a new vendor to help us to dig and to go to the house, and we need to educate to make sure we get the customer experience. And that's the limitation. That's the battle we're having every day to be able to pick up even more next year. Okay. Next question on the next one. Can I now ask you to limit your questions to 1 or 2? There are a lot of people on the line. Good morning. It's Dan Schall with Swedbank. How committed are you really to the financial targets and the rating? What I mean is, I heard what you said, but it can targets can change. And I mean, you could argue that the country risk in Telesona goes down when you leave Eurasia and that you could carry higher leverage. Well, that's the question. Thank you. Well, if the country risk goes down and we can carry higher leverage, then maybe I can keep A- with a higher leverage, and then I will have a higher leverage. That will be my answer. But any follow-up or The rating that is currently close to the net debt. No, it's the rating. We have said that before. We want to have a solid rating that ensures us that we can borrow long term with high flexibility. And during this investment phase, when we are increasing our investments up to SEK 6,000,000,000 to SEK 7,000,000,000 extra, we and quite uncertain financial markets, we want to keep flexibility and possibility to borrow in the same length that we are actually investing in our CapEx. And that has been sort of the strategy around it. So if we can go up to 2.4% and keep an A- after Eurasia sold, well, that's positive. And 1 in the back, Johanna. Yes. Johanna Arklitz from SEB. It was actually connected to the previous question on the leverage post Eurasia. So my question is really, would you consider the proceeds you might get for Eurasia? Do you believe there is a possibility to pay them out to shareholders? Or do you believe you need to sort of hold them in the company to sort of have some safeguard against potential penalties or what have you and also the net debt to EBITDA discussion we just had? I think we've been having a statement before I would like to reiterate. And that's let's wait and see until we are there, and then we'll have that discussion. I think we'll take one final question here from the audience in the front, and then we move to the conference call. Keina Lundberg, Marco, Volkstra. I have a question connected to the news about sponsorship to a charity in Uzbekistan. How could you be sure of the status of the fund, Children's Sports Development, as a real charity fund? And that it is not just another way for the repressive regime to gain. Thanks for bringing that up since it's a topic in some part of the media today. And we have, since the last 2 years, worked very hard to improve our controls and governance around sponsorships and donation. And in this specific case, it has followed the new procedures, I. E, we know where the money is going. We know what the money is for, and we are following up that the money is used for the sake it is supposed to be used for. We also have our compliance officer here, Michael Alber, who you can speak to afterwards as well, who will guide you through that. And let me also say that 17th September, we announced that we are reducing our presence in Eurasia. But as long as we are in Eurasia, we are in Eurasia. And we are part of societies, and we are often the big and large companies in these markets where we have participate. But when we participate in various activities, we want to make sure it is conducted in the right and a proper way. And in this case, the documentation is there and the purpose is apparently and supposedly correct. Okay. So we'll take one for Wacken. Yes. It's a little bit on the same theme. And I'm just wondering when was the last time as you as a company hired a relative to a dictator to do your business? I don't understand the question. So maybe you can post that afterwards. No, I could rephrase it. When was the last time that you know that you hired a relative to dictate it to help you out with business in Eurasia? So we are doing our controls on our partners as we move along. And I'm not aware of any new ones that are strange. We do our controls on PEPs, as they're called. And if there are red flags, we go through the red flags. And if we don't like it, we don't do it. If they clear our red flag process, we do it. So that's the answer. Okay. So the next question online, please. I think we move on to the conference call. Could we have some questions from the conference call, please? Yes, sir. Your first question comes from the line of Terence Tsui. Please ask your question. Good morning, everyone. I'll just stick to one question. I had a question around the fiber rollout plan. You said that you've connected almost 30,000 new households during the quarter, but then you also say you've connected 16,000 single dwelling homes during the quarter. I was expecting perhaps some more of a focus towards multi dwelling units. Is there any particular noticeable change in strategy there? Or is it still in the end result you spent more multi 20 units to be connected? Thank you single 20 units connected, sorry. Yes. So the first answer is that we had a bit slow start on Q3 on single dwelling units. But the ambition is clear, as you say. That's where we have most of the virgin territory and new homes to be passed and connected, and that's where the focus is. We caught up towards the end of the quarter, and we'll see how we'll do in Q4. I mean we do have both a MDU and SDU rollout. And we just mentioned SDU numbers here. Okay. Thank you. Right. Next question, please. Your next question comes from the line of Georgios Irodiakou. Please ask your question. Hi. I'll limit mine to one question also. I just wanted to follow-up on your answer earlier on Denmark. You said every case is different. Is it the market is different? Or do you think this specific tie up was different? So do you think there's still possibilities in Denmark, it's just not with Telenor? Thank you. Thanks, Georgios. Now of course, there is also the proposed merger combination and the dynamics between the players and what position that would create. But it was very clear to us that we could not do this without establishing a 4th new network operator. And the remedies to do that were severe, and therefore, the case didn't work. If the combination would have been proposed differently, maybe it would have been looked upon differently as well from the commission. So again, back to square 1, we're there. We are fighting to provide better solutions for the customers. Now we see if we can do something on the price. But we have to continue to invest, and it's hard for me to see today how we will get to decent return on capital levels. And therefore, we have to look at further options going forward. Thank you. All right. Next question, please. Your next question comes from the line of Ulrich Raff. Please ask your question. Thanks very much. Also one question for me. You are saying that the audits have looked at the books of 14 and also the reports of 15 and nothing should have been done differently. But some of the suggestions in these allegations were also relating to 2013 accounts. I just wanted to see whether they had actually looked at the 13 accounts or whether for lack of time, they didn't have a chance to do so. What the reason is why you didn't mention 13 accounts here? The other question I have is, you mentioned when you commented on this, that there were no material misstatements. Have you found any misstatements as part of these reviews? And if so, what are the sort of the notable immaterial ones? Okay. Christian here. Let me start with the expression material misstatements. I think I can go into any company in any place of the world and I'll fight one small misstatement. And this is the language you use when you actually refer to any statements, even in Germany or in England or in the U. S. Or in Sweden. So that's no difference. The books for 2014 also have comparison numbers to 2013. The opening balance of 2014 needs to be correct to make sure you actually do an unqualified, unmodified statement of the 2014 numbers. So therefore, you need to know what's going in there is the right thing. Secondly, the auditors, when they do their analysis then and review of the quarter results, they go through all material matters that could have an impact for the shareholders. They are the shareholders' auditors, not the companies. And they review that and they see that, 1, IFRS is still valid and we are following IFRS correctly. Secondly, that everything that is material has been included in the numbers we report. That's the simple answer. That's very clear. Thank you very much. Okay. I think we move on. Next question is from Peter Nielsen. Please ask your question. Thank you. You have shown how that you've regained very good momentum in the Swedish business, particularly on the fiber side. And obviously, if we look at the numbers, you're close to breakeven on fixed line service revenues. Do you see any reason why your fixed line revenue should not turn positive going forward? And even just to add, how fine to the future do you think we need to look before we can expect a stabilization in the B2B market on mobile? Thank you. Hi, Peter. And we're still in a steep decline on the traditional old fix. Some quarters we weighed up with a new broadband and fiber, heavily supported now by onetime charges. So a lot of CapEx in fiber creates a lot of onetime charges on the installation. But underlying, we have to remember that we are still in a decline in the PSTN with about 200 per quarter, Christian? Like 1,000 customers a day. 1,000 customers a day. So don't forget that when you look at the trends, but it's encouraging to see that we some quarters are able to mitigate or also this quarter improve the trends. So that's on the fixed side, Peter. Did you have anything else? Just how far do you think we need to look into the future to for stabilization on the B2B market in Swedish mobile? Yes. That's a recurring topic and you keep reminding us. And we will we don't speak about trend shifts in this quarter either, as I said. There are some really positive signs in the SME side where we have launched a new product touch points, still picking up momentum. But those are the type of things we need to get into the market. And we'll start talking about when we see positive trends in the larger segments. We still have heavy pressure, a lot of repricing, a lot of competition. But the good thing, and I'll keep reminding you that we're keeping our share of the large corporates and publics, and they are with us and into the future. Okay. Very good. Thank you. Thank you. Okay. Next question please. Your next question comes from the line of Robin Arbusov. Please ask your question. Thank you for taking the question. Firstly, I wanted to ask on the dividends. Given your ambition to exit Eurasia longer term, I was just wondering what impact would that have on your dividend and how generally should we think about Telia Sinero's dividend going forward? What I'm after is just perhaps some of the key drivers and a framework for thinking about it. And as you show in your slides today, Eurasia clearly account for a significant part of your free cash flow. And then secondly, I just wanted to ask on Sweden Mobile. If we look at the postpaid ads, those were negative this quarter and also churn has picked up. So could you please comment on the latest competitive dynamics in Swedish mobile and whether you are happy with your current positioning? So on the dividend, we'll be very short. I mean, we'll come back to that when we report our Q4 as we normally do. And also, when it comes to reducing the presence in Eurasia, we have said it will take time. It's complicated. So once we get there, we will definitely start talking about the impacts of on the future dividend, etcetera. On the Swedish mobile side, I think the prepaid segments in Sweden are still under pressure, and that's where you have the heavy churn. On the postpaid side, it's stable. And as we've shown, it's picking up on the usage. And we have migration upwards on our data buckets, which is very positive. So I think now it's more on keeping the momentum and finding new ways of offering value added services around the buckets that we've been talking about in the past as well. In terms of share on the Swedish market and the dynamics, nothing major new in the quarter in terms of changing those dynamics that we have. We have optimized our SAC and investments, as you saw on the profitability side, which has been part of our plan, and we do that without impact right now on the market intake. So a fairly good situation there right now. Thank you very much. I think we move on to the next question, please. Next question is from Henrik Herbst. Please ask your question. Yes, thanks very much. I had two questions. Firstly, on the Swedish OpEx trends, quite impressive trends year over year. You have talked about optimization in SAC and investment. Maybe you can clarify what that actually means and also if there's anything else going on driving the improvement in year over year SAC or OpEx in Q3? And then also on the mobile side, it had quite good traction with your new bigger data bundles. I was just wondering if you can give any details on how many of your customers are still on kind of the entry level type bundles in Sweden? Thanks very much. Okay. Christian here. I'll start with the OpEx trend. Thank you for commenting on that. We have worked on SAC. We started to talk about that already during the spring where we were not so satisfied with our work on both giveaways and the way we used SAC compared to our competitors. We have worked quite extensively over the summer and engineering this and both on the giveaway products, they are much less today, and also on the SACTO optimization program that we have internally, which is a big impact actually on this quarter compared to last year and also compared to previous quarters. The other part we're working on in the cost side is improving and making ourselves leaner. And we had a total reduction in force this quarter of 400 people almost in the group. About 160 of those comes from the Swedish or group organization. And this is something I've said before. We will continue to try to fine tune both on consultants on IT cost and on other costs outside the transformation program. And we will have a similar kind of report coming back in quarter 4 with other things that we have done to improve OpEx every day as we go further. When it comes to the mobile and the entry package there, we can say that when you look at new sales and retention, the ones going to the entry package is more or less half from 20%, 25% down to 10% to 15% over the past year. Okay. But can you say anything about how much of the base is still on the lower end? We can come look into that. I'll come back to you. Okay. Thank you. Next question comes from the line of Nick Lyall. Please ask your question. Yes. Good morning. It's Nick from SocGen. Can I ask maybe one on Denmark, please? On the trends in Denmark, it looks as if the top line is still weak in local currency, but it's more of a more driven by savings in terms of that good margin for this quarter. So could you comment on whether that's just a reduction maybe in costs as you were going through the merger process? Or is it something a bit more sustainable? And then secondly, on the you keep on mentioning options in Denmark. What are the options in Denmark, please? Because it looks as if it's difficult to exit, as we know, because of the merger process collapsing and maybe just one buyer. So what do you have to think of? Do you have to think of acquisitions in fixed or maybe wholesale and cable? Could you talk us through what those options might be, please? Thank you. Thanks, Nick. On the trends on the operational side, yes, it's still pressure on top line. We're trying to do something about that now, as I talked about our price increases on some of the segments, some of the buckets. Otherwise, it's cost trimming and cost efficiency, and I think the Danish operation is very lean. We also have the effects from the joint network coming through to some extent also leading into next year. But there are no you mentioned costs for the merger process. Those are not in the results. Those are nonrecurring and outside the EBITDA line. When it comes to the options in Denmark, when I refer to options, we need now to see what options we have to improve our return on equity and return on capital in Denmark. We are struggling to get to decent levels, as you know. We're back to the drawing board on that, where one part is clearly the operational improvements that we'll have to do. And then we'll see if there are things we can do on our own or with someone else as well. But that's kind of not in priority right now. It's also to stabilize and grow the operations as they stand. Okay. Thanks. Just to check, sorry, Johan. What I meant was because of the merger process, was there any reduction in marketing spend in the quarter because of that? Or is this actually a sustainable saving because of the new network of the network JV rather? No, we have not held back on the Danish operations during this process. And that has been, I think, now a blessing that we have a team and a new CEO, by the way, up and running with high pace and speed and haven't lost momentum and haven't saved their way through the year leading into a potential merger. So it has been very much business as usual for the team in Denmark. Great. Thank you. Next question, please. Next question comes from the line of Sean Dillon. Please ask your question. Hey, Sam, Dillon, actually. Two very quick questions, if I may. Just on your TV price increases in August, I believe, in Sweden. Know it's early days, but what's the customer reaction been? Has it been good enough to embolden you to put continued price increases through in TV and broadband going forward? And on your goal of becoming convergent in your core Nordic markets post the Eurasian sale, I guess in Norway and Denmark, you essentially have either no or very limited fixed line presence. I mean, what's your path to convergent activities in those markets? Thanks. Thanks, Sam. The TV increases also came with an upgrade in the offering. So now the Swedish customers, TV customers also have the Telea Play, which is the OTT product part of the offering. But so far positive, we'll see. We'll continue to monitor. And path to convergence is something we will do where and when required. In Norway, I think right now it is very separated. We'll see what we need to do to bring something together. We'll provide you those updates as we move along, but nothing as of today to report. We have been very focused on the integration of Tele2. We said that we want to get that house in order first, and then we'll have a look at other options. In Denmark, as I said, there are also not a very converged market in that sense that if you don't have it, you'll lose out. So it's very mobile focused fixed TV incumbent that we fight upon separately with our small fixed base in Denmark as well. But we look for options to strengthen convergence across our footprints in the core Nordic Baltic. Great. Thank you very much guys. Thank you. Okay. I think we have time for a couple of more questions, operator. Next question comes from Sunil Patel. Please ask your question. Good morning. So I just have 2 questions. On Finland, I'm still a little bit lost about why your underperformance is so steep versus market leader lease. It feels like especially on the mobile side, the opportunity of customers going from 3 gs to 4 gs is not being monetized by yourself. And I'm lost of why that's happening and why you think pushing bundles is the answer rather than improving the sort of single play offering. And the other question I had is on Denmark again. I mean, your price hikes very much mirrored that of TDCs at the low end by kroner. Were you not tempted to be more bold and increases increased prices more at the mid and high end also in tandem? So why is it you only did what the competitor also did as well and nothing more? Yes. Thanks. Then without going into all the thinking and tactics around pricing, that is a very, of course, competitive advantage. I think we're testing the waters and see the reactions in segment by segment, and then we'll see if we can take it further. We will revert as and when we do that. In Finland, I agree with you that this is a bit frustrating to not have the formula working in gaining share and taking part of the data revenue growth in the most mature data market in the world, highest usage per customer with all you can eat plans. And you said that why not focus on the single play? We do. We are focusing on improving our single mobile proposition only, which is strong and is gaining somewhat momentum and tractions, but not to the level where we want it to be. But at the same time, we're also looking at the advantage we have of having a full house, as we call it, in Finland, offering all services to the customers that want it. We're confident that this is the way to go, but we need to find a better pace leading into next year in Finland. And there, I agree. Thank you. Okay. I think we have time for one more question from orchestral, and then we have to conclude. Next, that comes from the line of Alan Nichols. Please ask your question. Thanks for taking my question. I was wondering how much of your struggles in Tajikistan and Georgia due to increased competition like you've seen in Kazakhstan? And how much of it is from spillover effects from Russia? Thank you. I can take Tajikistan. It's probably the most competitive market out there with 4 players and 4 strong players, hit not just by macro, but also by some cost that Christian can explain. In Georgia, I think it's just a normal more normal market dynamics. And 1 quarter you win, 1 quarter you lose. And there's a bit unpredictable there. All right. Thank you. Good. I think that concludes the session. Thank you very much. Thank you.