Good morning, all, welcome to the presentation of TeliaSonera's third quarter results. I'm Jesper Billgren, Head of Investor Relations. We will follow the normal procedure today and have the presentation by our CEO, followed by our CFO, then a Q&A session. The intention is to close the event within one hour. With no further delays, I would like to hand over to Johan, please.
Thank you, Jesper, good morning all. All out there, I should say, not too many here. We will take you through the quarter three results then take your questions afterwards. Just reminding you first that it's just a few weeks ago since we had our Capital Markets Day, where we outlined TeliaSonera's path into 2018, shaping the new generation telco. A few highlights from that was we have the big changes hopefully behind us. We're in a phase where we stabilize and shape to step up to transform and perform. That's where we talked about two things. Two major outcome of the strategy is to Invest to Grow and Invest to Save. Invest to Grow is another SEK 4 billion-SEK 5 billion over the next two years in fiber, 4G, B2B solutions across our footprints.
Also a SEK 2 billion investment for the next two years to get to a point where we can save SEK 2 billion per year on our OpEx base, that's addressing the structural cost base that requires investments a bit of time. Importantly, a new dividend policy of SEK 3 per share, or at least SEK 3 per share over the next two years, whilst there will be some pressure on cash flow given the almost SEK 6 billion-SEK 7 billion extra of CapEx. That was the short recap of our capital market fresh in mind. Heading into our quarter three results, which we label as fairly steady. Steady can be boring, steady can also be fun. We choose to see this as a very interesting quarter where we have some positive developments. Let me highlight a few.
Organic revenues are fairly stable, very happy to see that the consumer business in Nordics, specifically Sweden and Finland, are key drivers right now for the group. Continued growth, obviously in Eurasia, somewhat lower pace, however. Still some challenges in the B2B side, which we'll get into a bit more. The earnings in Eurasia, still high, even though the slowing down revenue trend has come to around 3% on organic and 5% reported. Very positive development in Finland, as I'll show you later, the first time in many, many quarters into positive territory on the growth. Also some further effects, which we have announced already in the quarter of the upgrade of our corporate governance and control initiatives in Eurasia. Numbers. We are pretty much, as we say, flat, it's 2% down in local organic. On the reported side, it's up.
On the CapEx side, we are upping our CapEx slightly from last year, mainly driven by 4G and 5G investments in the Nordics, where we have a good pace now trying to meet the demand for our booming internet services. Margin 31.7%, which is high and stable. We'll get back to more details on this in the coming presentation. Taking a little bit deeper look at the service revenue growth broken down by region and broken down by segment. To the left, we have the revenue growth from Eurasia, then, as I said, coming down slightly. Looking at Europe, it's improving, mainly driven by Finland and some evening pressure in some other markets, where also then Sweden is fairly stable.
Breaking that down into B2B and B2C, you see the blue line, B2C in Sweden and Europe coming into positive territory for the first time in a long time. Whilst the B2B side is still weighing on the service revenue growth for the group, and it's the same numbers for Eurasia, obviously on the two sides. Sweden had a, as again, fairly stable quarter, somewhat impacted on the EBITDA side by weather, iPhone, and product mix. Christian will break it down for you later. It's been a fairly stable quarter also market-wise, and the competition-wise has been fairly rational as we judge it. CapEx steps up again related to the fiber and 4G, which is now the majority part of our investment plans in Sweden. Sweden is fairly stable, as I said.
Europe clearly helped by Finland, but also improved margins actually from Spain, who has a very good quarter on the profitability side, which is good to see in the fight against the big ones in Spain. Yoigo is doing really, really well operationally, which is good to see. Also here, CapEx are being stepped up in our Nordic footprint, mainly. In Finland then, as I said, into positive territory for the first time in many quarters. It's helped by a good execution from the team in Finland. They have, as you know, been through quite big changes the last few years. Now seeing the results of that, a very focused go-to-market approach, with somewhat also there more stable market conditions after some recent consolidations. Very strong propositions in the market and hoping to keep some of that underlying trend.
However, Q3 has a one percentage points help from the interconnect, which is then weighing only one month in the quarter three and will be three months in quarter four, so that's some headwind heading into Q4 based on the interconnect. Keep that in mind when you look at Q4. Eurasia margin still high, somewhat lower on the margin side, but still very high. 5% plus on the growth side on net sales, 3% on organic service revenue growth, which is then the lowest in a long time. A lot driven by Kazakhstan, which I'll come back to. CapEx somewhat lower than last year, but more focused and more controlled procurement and rollout in the Eurasian region.
If you remember, the last couple of quarters have been even lower, and we said it will pick up towards the end of the year, and that's what we're seeing, that it's picking up. Kazakhstan, if you look at the numbers, they're somewhat affected still by the devaluation that happened earlier in the year, but also by some commercial activities to regain market share in some of the regions where they have lost out. There's actually a big regional price change conducted in Q3, which is affecting service revenue, regaining share in those regions. Data revenues coming up, leveraging the 3G network and the 3G footprint in Kazakhstan. Very important messages in the quarter on Kazakhstan when it comes to corporate governance, continuing our upgrade both of our financial control, but also corporate governance in terms of going through company by company.
Kazakhstan announced a couple of both write-downs and also an investigation that is being conducted on what seems to be judged by the board improper conduct in the supplier side. That's an external investigation taking a deeper look at that. On the topic of corporate governance, we have conducted and completed the country institutional operational risk, which we will be sharing with some of our sustainability investors, the panel. You're free to see that, of course, as well, especially on the country risk assessment. We have a session with some of our investors shortly.
Repeating some of the messages that we have put out there, but very important messages that virtually all staff going through the training has been completed on anti-corruption, where we also signed up to the UN Global Compact Action Against Corruption as an important symbolic measure of the fundamental work that we're doing to fight corruption in all aspects. Implementation of our speak-up line is happening, and we're seeing an increased activity as it should when you start talking openly about what we need to improve. A month ago, we published our first transparency reporting, where we start with Sweden and Finland, but have the intention to publish transparency reporting in as many market as possible coming up early next year, where we talk about freedom of expression and impact on our customers in some of our difficult markets.
I am going to stop there and hand over to Christian, and then I'll come back for your questions later.
Thank you. Good morning, ladies and gentlemen. I'm very happy today to announce a stable report, stable service revenue, stable margin. I think it's very positive on the CapEx side, where we see the CapEx going more and more to fiber and 4G, and I'll come back to that. First, I would like to just recap a little bit on the first nine months, so we remember that and have that also in mind, not only the quarter. Revenue's down 1.7%. It's been a similar pattern throughout the year where Spain has the biggest impact on this. EBITDA in local organic is flattish. We have an unbroken margin at 35.8%. Cash CapEx has the biggest impact on the cash flow. This is also the same story we have in quarter three, and I will come back to that in a short moment.
Let's go back a little bit to sales, where Johan went through a little bit of the development. I'd like to highlight the quarter in numbers. We can see that we have a 2% drop in sales. 2.9% in Spain. It's coming from Spain. Spain has a handset sales that is going down SEK 635 million. That means 2.5% of the 2.9%. We put the increased handset sale we have in the Nordic and Baltics and also a little bit in Kazakhstan, which actually brings up the revenue with 1.1%. It's still a flat quarter if you put Spain and equipment together. That is what we call a service revenue. Excluding equipment sales. Just a point on interconnect. We have talked about that earlier in the year. It's impacting, excluding Spain, 0.4%. This quarter, as Johan mentioned, Finland is actually negative.
They had a change in the pricing in September. It impacted 0.9%, as Johan said, for Finland net sales in this quarter. Therefore, it will have a bigger impact in quarter four. We also had a change in July last year in Sweden, which was quite severe. That has now come out. They will sort of balance each other now going forward. We have a positive impact from Sweden. We have a negative impact from Finland. Other than that, we can see that the mobile bill revenue is positive. Together with the service revenue on fixed, they balance each other at a flattish level. They're a little bit similar from the previous quarters. A little bit less difference this time. We have a mixed EBITDA development between the regions. In Eurasia, we have a positive development.
In Europe, we also have a positive development. Here, we show the local organic development of the EBITDA in absolute numbers. The good thing is it's not only Spain in Europe. Finland is also helping us up here. It comes from their new trend in service revenue. Also work on cost. In Sweden, we have a couple of items that impact. 70% of the margin difference comes from equipment sales, where we have a negative margin. The thunderstorms this summer, which was SEK 65 million in the report. The last third comes from other parts. Two things I want to point out is the mix in the margin from the different sales we have today, a little bit more IP and TV and less of the traditional. Also we have higher marketing costs in quarter three this year than last year.
This is something we have mentioned before, that we will try to focus on the customer interface cost and drive that. Spain. In quarter one, we presented a negative number on EBITDA. We had had a quite aggressive winter campaign in quarter four and quarter one. We told you that we commit to changing that into profit. Now we have had two quarters. We will have delivered quarter-on-quarter profit, and we foresee the same pattern into quarter four. We have done that with a very clear goal to not lose market share, and we are increasing the subscriber base even though less than before and making sure that we have a stable market share when we drive the company. Equipment sales is down. I also want to point out it's down in Spain in general.
Not that as much as we have been down. It is an impact from lower equipment sales in Spain. We also have a new handset model, financing model, as you know. No one in the market has followed it yet, but we have 35% of our new gross adds is actually signing up on our consumer handset solution, which we think is positive for our cash flow as well. We continue to increase our investment in the internet experience. We have in Eurasia not so much changes. Coverage and capacity in 2G and 3G is the main reason for the CapEx there. It will be so until we shift over in next year within our new strategy to push more internet capacity there. The European CapEx has 50% today in fiber and 4G. In Sweden we have 70%.
In Sweden, we had just below 50% a year ago in this quarter. Now we're up at 70%. The bigger part is fiber. 4G is also a quite large part. In Sweden, we have said already one year ago that in 2015 we will have the best coverage and capacity in 4G in Sweden. We are on plan delivering that promise. Europe, one of the increases is in Finland. We also increase now fast in Norway. We have doubled our CapEx in the quarter in Norway year-on-year. I like to say that we try our best actually to push that throughout the year, but we don't have a exact timing understanding if it's going to come more in quarter four or quarter one.
We have a goal to be competitive on 4G and have a competitive 4G network compared to our competitors there. Free cash flow. Cash CapEx is the main item that is different from last year. Cash CapEx is down. In this quarter it's Spain that had a different payment pattern last year. Also Finland, where we have had a push in quarter two and quarter three on delivering 4G. That is the big differences from last year. On net debt, it has then gone down to net debt EBITDA to 1.68. It's SEK 8 billion down in net debt between the quarters, quarter two and quarter three. We have, as last year, two positive impacts from Russia. One is the MegaFon dividend, around SEK 2 billion. Also one is the repayment of the loan from AF Telecom of around SEK 2 billion.
There's still SEK 4.5 billion outstanding on that loan, which is also noted in our quarter report. EPS impacted by two things. We have our biggest office in the world in Farsta, and we are moving to new, also biggest office in Solna in two years' time. We have settled all our outstanding dealings with the old landlord, also when it comes to cleaning up and the remaining rent, et cetera, and that has been a one-time impact of SEK 247 million in the quarter. We have also continued to drive our agenda in Eurasia, and we had external firms in this quarter working through all the inventories, all the construction in progress, et cetera, in the region, in all countries, and that resulted in a non-cash impact of SEK 650 million on write-downs. Finally, our outlook.
We remain with the same outlook as in quarter two, with slightly below 2014 level in net sales. Equipment and Spain has had an impact and will continue to have an impact in quarter four. EBITDA margin around the same level and CapEx to sales rates to around 15%. What the round means is it's a little bit depending on what we succeed with in Norway. Good. Thank you.
All right. Thanks a lot, Christian. I think we should move on and open up for some questions. I think we start here on the floor. We could start with Andreas Joelsson then.
Andreas Joelsson, SEB. Two questions. One on the marketing side in Sweden. Where do you increase your efforts? Is it both mobile and broadband? Do you plan to expand that into other countries as well? Secondly, on that matter, if you compare prices in all of the Nordic countries, you are quite high in every country except for Finland, where you're quite aggressive at the moment. What's the reason behind that? What's the plan going forward?
I can take the last one.
Yeah, I can take the first one.
I don't think we're very aggressive in Finland. I think we are testing propositions in different segments. There is one campaign which has been out a month or so, which could be seen as aggressive. It's a temporary campaign, very limited. I don't think we're aggressive in Finland. Finland has stabilized, I would say. The market dynamics in Finland are better than in a long time. There have been three consolidations happening in Finland the last six months. I think that may add some stability to the market as well. On the marketing, it's a good question because actually, a big portion of the increase in marketing spend is actually we had a very weak marketing spend in quarter three last year. Both fiber and the campaigns with iPhone, et cetera, has been a little bit pushing the cost this quarter.
We're also preparing some for quarter four. That's also in this quarter. The biggest part is actually the lower marketing in quarter three last year.
Move on to Janne.
Yes. First of all, if you could say something about the cost-cutting effect. You just said the CMD that you were lagging and you wouldn't sort of reach the full target for the year. I was wondering if you could say something how much you implemented in Q3, something about the addressable cost base and what we could expect into the fourth quarter. Also you said that, Christian said that the equipment sales impact was negative on top line in this quarter, but you also expected that in the fourth quarter year-over-year. Given that you had such a short period of sales for the iPhone and still it had a big impact, do you actually expect that your equipment sales will be down in the fourth quarter year-over-year, or did I misinterpret that?
You misinterpreted that. Good question, because what I said was that actually the equipment sales is up, but the margin has been negatively impacted. For the fourth quarter, in Spain, the equipment sales has been down and will be down also in quarter four. Specifically on Spain, I said it was going to be down.
Okay, you expect a strong quarter.
On the cost side, I think I just want to repeat a little bit what I said at the CMD. We will not go out with an exact number right now, but we have said that we will not meet the target, and we have deliberately decided not to do that. One reason is exactly like in this quarter, we're not going to push marketing, customer operation, or other activities that help us to drive the service revenue and our investments now for growth going forward. That's been very important internally statement also for us to drive. That doesn't mean we're not going to take down cost and continue, but it's not going to be on those elements that we had in the plan from the beginning in the SEK 2 billion program. That means we will have a smaller gap between our original plan.
Can I just follow up with the gap? Was that sort of Q3, and you'll be back on cost cutting in Q4? Is this sort of what is that we see lower cost cutting?
Actually, you could say that we have partly released the old program but started new ones.
Now with the new operating model and the new organization, all managers, of course, have been given their cost targets, their targets for next year, and then had a little bit slide of the agenda based on the strategy that we have implemented. It doesn't mean we're not going to not take down cost, but it does mean maybe that we will take down a little bit different cost. Part of that is also that we have shifted some into bigger programs because we are getting closer and closer to the bone in some places where we need to take a step shift in this Invest to Save before we can take down further costs in certain processes.
All right. We'll go to Stefan.
Yes, good morning, Stefan Gauffin, Nordea. Going to Spain, you talked now regarding the development, saying a little bit more like that you wanted to maintain market share. Earlier years, you have been growing market share that has put pressure on the EBITA margin. Now, fairly flat development on subscriber intake, whereas we saw a big improvement in the margin side. This quarter, is this an indication on where you're aiming going forward, i.e., more stable on the market share side and trying to improve on the margin side?
The Spanish situation, as you know, there are three big players which are going converged with the announced acquisitions of two of the broadband players. Then you have MVNOs pushing from beneath. It's still the same trend, we believe, and we have seen at least in previous quarters, that we're gaining from the big ones, but also the MVNOs pushing from, also gaining somewhat from us. All in all, we have been gaining market share in the market. Stable probably now in Q3, that's our judgment. Very important to keep that balance between growth and profitability. It's not a Q4 2013 ambition that we're having in front of us. Remember also, we have shifted the model from the handset upfront cost to a handset financing scheme, which gives us a better view on what the cost is over time for the subscribers rolling out front.
I think that's a more transparent way of showing the profitability in Spain.
Will your ambition going forward be more in line with this quarter? I mean, rather focus on the margin than pushing for growth.
We are, as you know, in a strategic review of Spain, where we need to find the long-term answer to value creation in Spain. That is still out there for us to answer, where you have a different set of options, obviously. Right now, the focus is to deliver and keep a stable development over the next few quarters.
Thank you.
Right. Thomas.
Thank you. Thomas Heath with Handelsbanken. Question on Sweden. You have some margin pressure there, and you mentioned partly the mix shift or product shifts from fixed telephony to IP weighing a bit on margins. What sort of size, or how much is this of Q3, and what should we pencil in for 2015? Should we expect a structural pressure on Swedish margins for a long time as this shift happens? Second question on Kazakhstan, you mentioned price adjustments. If you could comment on general competitive landscape there, both the established three players and the newcomer also. Thank you.
Christian will take the cost question for Sweden. When it comes to Kazakhstan, the market dynamics have been over the last years, Kcell has been in a very strong position and gradually, quarter by quarter, slight drop because the competitors have been taking a challenge down, have been taking some share. Notably, one of the regions or a couple of the regions in Kazakhstan, we needed to push back, and that was what happened in Q3 with some regional pricing changes. I don't think it has changed the overall market dynamics as of now. Remember, it's a quite difficult macro environment in Kazakhstan as well, which is pushing the whole market. No major changes between the players. You have a fourth player with 4G, which is making some noise, but not to the extent where it impacts the big three.
On the cost side, let me go back to what I said before. 70% comes from thunderstorms and equipment. That means that there's 30% left, and that has partly been impacted by a weak marketing activity in quarter three last year. Marketing cost is part of that. The remaining part is the mix shift. That mix shift will continue, and that's something we have talked about. We are addressing that primarily with the new strategy, where we have also said that we're going to invest SEK 1.3 billion in Sweden to actually get down cost SEK 1.3 billion, which relates to these old traditional products. That will start to have an impact in 2016.
Very clear. Thank you.
Right. Move on to Sven.
Good morning. Sven Sköld from Swedbank. Not specifically on this quarter, but more on the cost side, which you discussed at the CMD. It sounds very good to invest SEK 2 billion and then gain SEK 2 billion in eternity. It's a fantastic business model. Will we ever see that on the upside? Isn't that a little bit naïve that we will see it on the upside? If you look at the historical
Cost programs. We have never seen it on the upside. They have been very successful in maintaining the margin, but we have never seen it on the upside. That's the question. Our commitment is that if you isolate this investment, it is to address a couple of structural cost issues that we will not be able to realize unless we invest. Once we've invested in system process and products in Sweden specifically, and in Finland as well, then we'll get to different cost base. We have taken out a lot. What that means for the overall margins as you point to, that remains to be seen. But if you isolate the investments of SEK 2 billion, they will save SEK 2 billion recurringly going from 2017. That's why we push costs.
That's why we have another program as well, calling Invest to Grow, that will bring costs and revenue, but that's easier to also balance over time and see how we will take that journey as we talked about at the CMD as well. All right. Should we open up for some questions from the telephone line? Operator, could you please open up?
Thank you. If you do wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your first question comes from the line of Peter Nielsen. Please ask your question.
Thank you, Peter Nielsen, CapMan. A couple of questions, please. Firstly, Johan, you mentioned again, or both of you highlighted the pressures on the enterprise market in Sweden. Just to be clear, we've obviously talked about this for the last six, nine, 12 months. Has this pressure intensified? Do you see any light at the end of the tunnel here, i.e., let's say when we come out of this year, will the year-over-year comps look easier? Do you expect these pressures to continue to burden your service revenue trends in Sweden for some time forward? Secondly, can I just return to the issue of the higher marketing cost? I know a lot of questions have been asked already, but just to be clear.
At the CMD, you obviously focused on the capital investments you're going to make, and which you just discussed, and the Invest to Save. Are we to understand that a strategic decision has been made whereby you will also increase your level of market investments, not just on this quarter basis, but on an ongoing basis, going forward? Thirdly, I would just ask, on the fiber momentum, which you're saying is very strong, particularly if I understand correctly, on the single household side. The uplift which you outlined to us at the Capital Markets Day, moving from 1.1 million-1.9 million fiber households. Are we to understand this will mainly be targeting the single households in Sweden? Thank you.
Hi, Peter. I'm starting from the top, the B2B question. I wouldn't say it has intensified, but we haven't seen any easing in pressure either. I keep saying what I said the last two quarters, that we can't say that we're out of it yet, i.e., we're heading into 2016 with similar trends. However, as we also highlighted, the Invest to Grow has components of B2B investments, which is upgrading our capabilities in our current setup. We're also prepared to make bolt-on acquisitions like the one we did in Sweden a couple of weeks ago with Ipeer, the cloud-based company, which is helping strengthening the position in a segment where we're very much exposed with too narrow a product offering.
This is a very good opportunity for us to broaden the product set in Sweden and Finland, which is one of the reasons we're ending up in price pressure against the current customers. Reminding you again as well, the ongoing shift from old product and pricing technology to the new net-centric, IP-based, recurring revenue-based service is happening, and we're glad to see that happening to help our customers into the future. It has the short-term impact, where you spread out the previous equipment sales into service revenues going forward. We're not out of it yet, Peter, but we'll keep you posted. On the higher marketing spend, look, we have an ambition to get to growth, but profitable growth. We have to balance all investments, including marketing investments, how to make that as a good total acceptable to us and to you.
When it comes to the cost program, again, as Christian said, we're not continuing with costs that we think are hurting the growth and the profitable growth. That's why we say some of the marketing investments are now being implemented in some of our footprints. On the fiber, it's mainly in our plans to roll out towards 1.9 million households, where SDU and MDU will be the composition. I don't remember the exact split, Christian, but I think it's mainly the SDU. Yes. Where the concentration is the lowest. That's where the largest upside is. We have, of course, ambition to roll out on the communication operator side as well. On that note, to just highlight the 3.5% consumer growth in Sweden Q on Q, of course, has a pretty important component of the fiber revenue.
Okay. Thank you.
All right. Should we take the next question, please?
Your next question comes from the line of Terence Tsui. Please ask your question.
A couple of questions, please. The first one is a follow-up on the fiber one. I know you made the remark that you're mainly focusing on the SDU market, but if you were to concentrate your efforts also on the MDU market, maybe you can give us a rough idea around the cost levels involved, maybe going from taking up an apartment from 100 meg speeds to 500 meg speeds. How much would that roughly cost TeliaSonera? Secondly, I just had a question on Denmark, please. Over the last couple of quarters, you've made remarks on the conference call that the performance is unsustainable. The performance in Q3 was again quite challenging. I'm just wondering how close you are to maybe initiating a strategic review, a bit like what you have in place for Spain. Thank you.
Denmark continues to be challenging indeed, Terence, we have to find ways to also answer the long-term questions there about the right level of return on capital. We have, as you know, a joint venture on the network side which hasn't brought yet the full potential. We'll evaluate that we'll see what else will be needed. We're staying very close to the Danish business, which is fighting in a very tough market where pricing is, I have to say, probably the most irrational, not just in our footprints, but in many markets across the telco space. Looking at some of the data allowance that you get there, it's quite frightening from at least an investor point of view. On the fiber, I don't have the exact numbers on MDU.
All I can say is that we're also looking at the MDU propositions, which actually has great potential because we have infrastructure in most MDUs where some of our competitors are operating, and they're not operating there alone forever, that I can say. Once we have fiber to the basements and the households, there is quite a lot of opportunities, as you say, to bring fiber also into the apartments in a very cost-efficient way with great speeds.
I can say that today, one-third approximately, of our connected households can get up to one gigabit already today.
Thanks.
All right. Next person, please.
The next question comes from the line of Allan Nichols. Please ask your question.
Hi. Thanks for taking my call. Your Uzbekistan business has performed very well since Mobile TeleSystems network was shut down. Now that they're returning to the market, what are your plans and expectations for that country? Thank you.
Very rightly so. We also hear that we're getting back our competitor that left us a few years ago. That I've been saying the last year, that we expect them to come back soon. Soon they're back, and we just have to make sure that we are competitive in the value chains and in the offerings. I think we have had quite a bit of time to prepare for that. I think our team is ready to take on also another competitor. We caution for Uzbekistan when it comes to margins that went down as well. A third player will change those dynamics. That should be part of your expectations going forward.
Thank you.
All right. Could be move on, please?
The next question comes from the line of Nick Lyall. Please ask your question.
Morning. It's Nick Lyall from Société Gén . Could I just ask back on Denmark, please? ARPU sequentially has been pretty stable for three, four quarters now. You've seen some more price aggression from Three and Oister or via the Oister packages in the fourth quarter. To your comments to the question a couple of questions ago, does that suggest that you again expect a big ARPU decline in the fourth quarter? Should we be expecting a more sort of stable outlook into the fourth quarter, which would be a big improvement in the performance? Can you just give us a bit of an update on how you expect trading to progress with these new pricing packages, please? Secondly, on Norway, you mentioned a big rise in CapEx for obvious reasons.
Could you just tell us really what you spent the CapEx on so far? Any update at all on the regulatory process or your chats with the regulator, particularly after the deals with Access and, Tele2's deals with Access? Thanks.
Norway, most of the CapEx there is going to extend the nationwide 4G and accelerate that obligation that we have in the license requirements. We're happily doing that to reach out to more Norwegians to get a real competitor to the big one. That's well on track, and also to cater for more data coming on our network. When it comes to the regulatory approval and the process, it's ongoing. Intense discussions and engagements where we are presenting our views and case, and we will keep you posted on the development there when we have something on that deal. In Denmark, pricing, as you say, very competitive. One knows for it, I'm not going to give you an ARPU prediction, but I can say once customers go into the data buckets and the data plans, the ARPU is fairly predictable.
They may get more data, which then has a cost implication and a CapEx implication. In terms of ARPU, it's getting more and more predictable as people move into the data buckets. Which is good in one way, but also of course creates a strategic challenge for a next phase of pricing in the all data era, where we need to be much more innovative on our packaging and propositions.
Thank you.
Okay. Thank you. Could I have next question, please?
The next question comes to the line of Bhavin Shah. Please ask your question.
Hi, good morning. It's Bhavin from Berenberg. Just three very quick questions really. The first is, can you tell us how many fiber adds in Sweden you added this quarter? Second question is on Swedish TV. It seems that your TV adds remain relatively robust. I was just wondering whether you could give some comments on whether Com Hem's launch of the TV box a few quarters ago is having any impact on your TV business, especially in the areas where you overlap. My last question is on the iPhone 6. I was just wondering, given that you have such a strong iPhone uptake in Sweden, whether there are any early indicators of what that is doing for data usage, and whether you're seeing a big ramp in data usage as an early indicator from those people that have taken the iPhone 6 so far. Thank you.
The short answers are 15, no, and yes. 15,000, I think.
On the ST side. Yeah, 16 even now.
16, sorry. 15 goes to 16 if you add all.
Yeah.
TV impact from our competitors, no. We have a great momentum on our TV, great brand, great experience we feel in most of our customer response. On the iPhone, we expect, and we see a data uplift on all people going to 4G and smartphones. It really drives data usage. That's also part of the reason why we have, for instance, a data volume increase in the Nordics of up to 80%.
Mm-hmm. Anything more specifically related to the iPhone 6, or would you say it's just more 4G in general?
4G in general, and it's too early to say for the iPhone.
Yeah. Okay, great. Appreciate it. Thank you.
Okay, we move on. Next question, please.
Your next question comes from the line of Ulrich Rathe. Please ask your question.
Yeah, thank you. I have two questions please. The first one would be on Finland. You're pointing out, I think, the return to service revenue growth there, with this caveat on the interconnect cost that you mentioned in your presentation. I was just wondering whether the underlying sort of improvement in return to growth now in the quarter is something that you think is showing the strategy there taking hold and really turning the corner, or whether there is a perspective here for Finland to sort of drop back into prior form, and we just had a good quarter for whatever reason. Just like to get a sense of how sustainable really this improvement over the last two quarters in revenue trends really is. The second question is on Spain. I understand this is the new handset model, sales model changes the way the revenues are coming through.
I was just wondering whether you could, either in terms of actual EUR impact or in terms of volumes, explain what is actually going on in the underlying year-on-year trends. Whether the underlying volumes are down and by how much, or to what extent the accounting change actually has driven that 70% equipment sales decline in EUR in the quarter. Just a bit more color on that underlying trend would be helpful. Thank you.
Okay. Finland. Just going back a year and a half or so, the Finnish team was early in combining the organizations fixed and mobile to be one organization towards the customer. They were ahead of our bigger group change to the new operating model. They were early out also on restructure and refocus. I think you're seeing some results of that coming through. I have to say, as I mentioned also in my presentation, that in Q3, there is an interconnect change, which only impacted one percentage points in the quarter three. Then going into quarter four, it has three months impact. It will be a challenge to keep the service revenue on the total above zero. That I can say.
On Spain, I don't have an exact number if there's any accounting impact, but the biggest impact is actually lower handsets going out and not an accounting effect. I will come back if there's something to think about when we have the shift in type of sales. It's not an accounting we have changed, it's the type of sales we have changed.
I understand that. Thank you. Could you then instead, maybe, just to give us a bit of visibility, simply tell us what the volumes did, the handset volumes did, just irrespective of how the revenues are accounted for under the two different models?
I think we have to come back with one more question and check that for you.
Thank you.
Okay. We can take next question, please.
The next question comes from the line of James Britton. Please ask your question.
Good morning. Thanks very much. I've got a question really around the enterprise weakness across the Nordic region. Can you just explain or clarify whether the enterprise weakness is more acute on the fixed line side of the business or on the mobile side? On the mobile side, is this really down to the competitors starting to penetrate the SME market with more success, or is there something a bit more structural as voice and messaging services gets cheaper on data networks? Finally, can you just also give us an idea as to whether this is a more serious issue in Sweden, or is it quite broad-based across the Nordic markets? Thanks.
I think we're seeing a similar challenge and trend in both Finland and Sweden, where B2B has a majority or a large part, rather. It is heavy on the fixed line, as you point out. Again, back to my explanation, shifting from buying boxes to buying services, which is good in one way, but it also has one-time impact. A lot of migration from old to new, and we're helping our customers into the future, but it has an impact, which we are obviously choosing to take. This is something we are part of migrating. It has a negative drag on the revenues, but it should create a better platform for the future.
On the SME side, it's mostly related to fierce competition, where we have been losing share in SME Sweden and Finland, but we are stabilizing that and looking better into 2015 on the SME segment with very strong new launches, which is happening as we speak in both countries. That's encouraging, and also, as I said, strengthening the propositions with the right type of acquisitions, and the capabilities in the system integration side towards the mid-market and upwards. On Sweden, there was one more question.
Was asking if it was Sweden only, or?
It's not Sweden only.
Yes. Perhaps if I can follow up, is there any way you can give us an idea of how enterprise mobile developed, particularly in Sweden in the quarter?
Also under pressure, but not as much as fixed.
Okay. Thank you.
Okay. I think we still have a couple of questions on the telephone line, so please move on.
Yep, you have four more questions. Your next question comes from the line of Andrew Lee. Please ask your question.
Good morning, everyone. Just a question on Swedish mobile. A couple of your competitors have mentioned that they're concerned at the threat to market pricing from your double bucket data promotions over the summer, and also your iPhone 6 pricing seems to be in the middle of the pack versus competitive pricing, despite your historical premium positioning. Could you just talk through your thoughts around this? Is this true? Are you deliberately being more competitive and going for market share in Sweden as part of your push for growth drive? Do you see a risk to the ability to upsell data in general in the market from this strategy? Thank you.
Thanks, Andrew. I think the competitive landscape in Sweden, depending segment by segment, is fairly and I don't go leading the pack in any of these propositions regarding price. We have a premium position in at least the main brand, and then we're challenging with the Halebop specifically in Sweden. Then there are some campaigns that could be questioned from whether aggressive or not, and that's part of testing what works in the old data era. Remember, we're still very early there. We only have half of our customer base into the new price plans. We still have half of the customers on the old way of charging, and that migration is ongoing, and we will be testing various propositions in various segments. I don't think you should be overly concerned about us being the price leader.
That hasn't been the case in the past, and it shouldn't be the case in the future.
Thank you.
I think that answered the question. There was only one.
Yeah, thanks.
Right. Next one please.
Your next question comes from the line of Johan Davidsson. Please ask your question.
Good morning. I have two, one on Spain, one on Denmark. On Spain, I'm sure you won't be able to give the absolute CapEx numbers, but if you can give an indication as to how close the business is to cash flow breakeven on whatever period you might choose to pick. On Denmark, you said that the network joint venture is still not at maturity. Do you have a timescale on when you expect to get there, please? Thank you.
Denmark network, I think it's right now fully there, but you haven't seen the full year effect. Also the uptake and the migration from 2G and 3G into the full 4G network. That's also the upside you have on the cost side and the efficiency side. On Spain? On Spain, I can just tell you from a cash flow point of view, we have not decreased or increased our CapEx compared to last year. We are continuing on our original plan and to build out 4G. 4G is still actually quite low in handset sales in Spain, so it also takes some time there, but we haven't changed our plan in any way.
Thank you.
Okay. Next one please. Do we have any further questions on the telephone line?
Yes, your next question comes on the line of Maurice Patrick. Please ask your question.
Hi, it's Maurice Patrick from Barclays. Quick question on the product mix statement you make in Sweden. I know you sort of touched on it before, but perhaps some more sort of details around explicitly what are the different margins on it and the different products would be very helpful. Just in Spain, I think you sort of alluded to the fact the Spanish market's perhaps slightly less aggressive at the moment than it was due to the consolidation that you've seen in the marketplace. There's some sort of thoughts on how you're seeing current competitive intensity in Spain will be helpful. Thank you.
I don't think I said it is less aggressive now, on the topic, I think we should expect it to be less aggressive if the big three get what they want in terms of the convergence and consolidation. That remains to be seen. I think we are not overly aggressive, and that was to one of the questions, that we're maintaining a balance between growth and profit there right now while evaluating our options. For product mix, maybe you.
I'm not going to go through the margins on the different products in Sweden right now, Maurice. Maybe we'll talk about that when we meet, I'm not going to reveal too much there either, I think, on the exact margins of the different products.
Not even directionally. You sort of call it out, perhaps something directionally would help.
Well, I think to mention on directional side was the old high-margin products are coming down, like fixed PSTN, whilst the new services on TV and other value-added services have had lower margins, and that's the shift we're doing. I think that's the guidance that we can give at this point in time.
Fine. Okay, thank you.
Thank you.
All right. I think we have one more final question on the conference call.
Our last question comes from the line of Paul Sidney. Please ask your question.
Hi, guys. Just a question on Kazakhstan. Are you already in discussion with the other operators regarding the glide path for MTRs beyond January 2015? Are you confident that you can all come to an agreement together without the minister having to step in? Thanks.
We are closely monitoring the situation in case when it comes to the interconnect. We are mainly talking with and engaging with the regulator. Our team there is mainly engaging with the regulator to find out the expectations. Then we have some of the issues need to be solved between the operators, correct. I don't have the details on those discussions as of this time.
Okay. Cheers, guys.
Thanks.
All right. Let's check if there is one final question from the floor. I think Eric has one here.
Thank you. Firstly, is there anything to report around the talks around Turkcell? Any progress there? Also, you had quite a big CapEx item on the frequency front this quarter. Could you explain, besides Moldova, which was press release, exactly what you bought there? Thank you.
On Turkcell, I wish we had something more to talk about. We don't. It's the same message as I gave at the CMD, really, that at least the parties are talking, which I think is a big step forward compared to a year ago. The fact that all parties are talking, I think we should see as a positive sign.
On the frequency, you're correct. In Moldova, as you had control of, it's one impact on the licenses. We also have a five-year payment plan in Nepal for the license, and that license is paid now in quarter three, one fifth of that they are paying every year, starting last year.
Thank you.
Almost running out. Is there one last?
Thank you. Just a last question. You mentioned possible innovative bundling. In Denmark, your largest competitor there has some bundling with premium TV services, newspapers, and so forth. Is that something that you could consider to emulate so that you get a broader digital package as part of your TeliaSonera subscription? Just on Sweden and handsets, you mentioned pressure from a lot of handsets in Q3. Are you talking about dilution of low margin or zero-margin handsets, or are you booking any handsets at negative margin? Thank you.
Let's start with the last one and just say we are booking with negative margin, yes. You can say it's a subsidy on the handsets in Sweden, and we sell, and we have had that for a long period.
Would you say that it's increasing if you compare year-over-year, or it's the same level?
The absolute number has increased, and that's why it has a margin impact. The margin % on equipment is actually improving slightly, but not much.
Thank you.
On the service package that we've seen in some markets, that is one way to do it. We'll see what works in our various footprints, I think that's the way the industry is heading, where the consumers are demanding different types of value-added services. Certainly something we are exploring in one way or another.
Good. I think that takes me on stellar.
Perfect. Thank you.
Thank you everyone.