Earnings Call: Q3 2014

Oct 17, 2014

Good morning all and welcome to the presentation of TDAS Neera's Third Quarter Results. I'm Nijs de Villegas, Head of Investor Relations. We will follow the normal procedure today and have a presentation by our CEO followed by our CFO and then a Q and A session. The intention is to close the event within 1 hour. And with no further delays, I would like to hand over to Johan. Please. Thank you, Jesper, and good morning all. All out there, I should say, not too many here. We will take you through the quarter three results and 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 TeliaSonra'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. And that's where we talked about 2 things. 2 major outcome of the strategy is to invest for growth and invest to save. Invest to grow is another SEK 4,000,000,000 to SEK 5,000,000,000 over the next 2 years in fiber, 4 gs, B2B solutions across our footprints. But also a SEK 2,000,000,000 investment for the next 2 years to get to a point where we can save SEK 2,000,000,000 per year on our OpEx base. And that's addressing the structural cost base that requires investments and a bit of time. And then importantly, so a new dividend policy of SEK 3 per share or at least SEK 3 per share over the next 2 years whilst there will be some pressure on cash flow given the almost SEK 6,000,000,000 to SEK 7,000,000,000 extra of CapEx. But that was the short recap of our Capital Market Fresh in mind. Then heading into our quarter 3 results, which we label as fairly steady. Steady can be boring, but steady can also be fun. We choose to see this as a very interesting quarter where we had some positive developments. Let me highlight a few. Organic revenues are fairly stable, but 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 the territory on the growth. And also some further effects, which we have announced already in the quarter, of the upgrade of our corporate governance and control initiatives in Eurasia. So numbers, we are pretty much, as we say, flat, but it's 2% down in local organic on the reported side. It's up. And on the CapEx side, we are upping our CapEx slightly from last year, mainly driven by 4 gs and fiber 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, and 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 segments. To the left, we have the revenue growth from Eurasia then, as I said, coming down slightly. But looking at Europe, it's improving, mainly driven by Finland and some easening 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. And Christian will break it down for you later. But it's been a fairly stable quarter also market wise, and the competition wise has been fairly rational as we judge it. CapEx stepped up again related to the fiber and 4 gs, which is now the majority part of our investment plans in Sweden. So Sweden is fairly stable, as I said. Europe, clearly helped by Finland, but also improved margins from 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. Joergal 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, many quarters, and it's helped by a good execution from the team in Finland. They have, as you know, been through quite a big change over the last few years. Now seeing the result 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 1 percentage points help sorry, help from the interconnect, which is then weighing only 1 month in the quarter 3 and will be 3 months in quarter 4. So that's some headwind heading in to Q4 based on the interconnect. So keep that in mind when you look at Q4. Eurasia margin is still high, somewhat lower on the margin side, but still very high. 5% plus on the growth side of net sales, 3% on organic service revenue growth, which is then the lowest in a long time, a lot driven by CapEx down, 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. And 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. So 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 3 gs network and the 3 gs footprint in Kazakhstan. Very important messages in the quarter on Kazakhstan when it comes to corporate governance, continuing our upgrade both of our control financial control, also corporate governance in terms of going through company by company. And Kazakhstan announced a couple of both write downs and also an investigation that is being conducted on some what seems to be judged by the Board in proper conduct in the supply side. So 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 we start talking openly about what we need to improve. And a month ago, we published our 1st transparency reporting, where we start with Sweden and Finland, but have the intention to publish transparency reporting in as many market as possible, ending 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. And also I think it's very positive on the CapEx side, where we see the CapEx going more and more to fiber and 4 gs, and I'll come back to that. First, I would like to just recap a little bit on the 1st 9 months, so we remember that and have that also in mind, not only the quarter. Revenue is down 1.7%. And it's been a similar pattern throughout the year where Spain has the biggest impact on this. EBITDA in local organic is flattish, and we have an unbroken margin at 35.8%. Cash CapEx has the biggest impact on the cash flow and this is also the same story we have in quarter 3 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, and I'd like to highlight the quarter in numbers. We can see that we have a 2% drop in sales, but 2.9% in Spain is coming from Spain. Spain has a handset sales that is going down SEK 635,000,000 and 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, and that is what we call 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 percent. This quarter, as Johan mentioned, Finland is actually negative. They had a change in the pricing in September and it impacted 0.9%, as Johan said, in for Finland net sales in this quarter. And therefore, it will have a bigger impact in quarter 4. But we also had a change in July last year in Sweden, which was quite severe and that has now come out and they will sort of balance each other now going forward. So we have a positive impact from Sweden and we have a negative impact from Finland. Other than that, we can see that the mobile build revenue is positive and together with the service revenue on fixed, they balance each other at the flattish level. They're a little bit similar from the previous quarters, but 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, but Finland is also helping us up here. And it comes from their new trend in service revenue, but 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 and the thunderstorms this summer, which was €65,000,000 in the report. The last third comes from other parts. And 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. But also, we have higher marketing costs in quarter 3 this year than last year. And this is something we have mentioned before that we will try to focus on the customer interface cost and drive that. Spain. In quarter 1, we presented a negative number on EBITDA. We have had a quite aggressive winter campaign in quarter 4 and quarter 1. We told you that we commit to changing that into profit. And now we have had 2 quarters. We will have delivered quarter on quarter profit, and we foresee the same pattern into quarter 4. 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, but I also want to point out it's down in Spain in general, not as much as we have been down, but 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 2 gs and 3 gs is the main reason for the CapEx there, and 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 4 gs. And in Sweden, we have 70%. In Sweden, we had just below 50% a year ago in this quarter and now we're up at 70%. The bigger part is fiber, but 4 gs is also a quite large part. In Sweden, we have said already 1 year ago that in 2015, we will have the best coverage and capacity in 4 gs in Sweden, and we are on plan delivering that promise. Europe, one of the increases is in Finland, but we also increased now fast in Norway. We have doubled our CapEx in the quarter in Norway year on year. And I like to say that we try our best actually to push that throughout the year, but we don't have an exact timing understanding if it's going to come more in quarter 4 or quarter 1. And we have a goal to be competitive on 4 gs and have a competitive 4 gs 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. And in this quarter, it's Spain that had a different payment pattern last year, but also Finland where we have had a push in quarter 2 and quarter 3 on delivering 4 gs. That is the big differences from last year. On net debt, it has then gone down to net debt EBITDA to SEK 1.68 billion. It's SEK 8,000,000,000 down in net debt between the quarters, quarter 2 and quarter 3. We have, as last year, 2 positive impacts from Russia. 1 is the megaphone dividend around SEK 2,000,000,000 and also one is the repayment of the loan from AF Telecom of around SEK 2,000,000,000 And there's still SEK 4,500,000,000 outstanding on that loan, which is also noted in our quarter report. EPS impacted by 2 things. We have our biggest office in the world in Forsta, and we are moving to new also biggest office in Solna in 2 years' time, and we have settled all our outstanding dealings with the old landlord and also when it comes to cleaning up and remaining rent, etcetera. And that has been a one time impact of EUR 247,000,000 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, etcetera, in the region in all countries and that resulted in a non cash impact of EUR 650,000,000 on write downs. Finally, our outlook, we remain with the same outlook as in quarter 2, with slightly below 2013 level in net sales. Equipment and sales equipment in Spain has had an impact and will continue to have an impact in quarter 4. EBITDA margin around the same level and CapEx to sales rates to around 15%. And what the round means is a little bit depending on what we succeed with in Norway. Good. Thank you. All right. Thanks a lot, Christian. And we should move on and open up for some questions. And I think we start here on the floor, and we could start with Andreas over there. Andreas, Georges on SAP. Two questions. 1 on the marketing side in Sweden. Where do you increase your efforts? Is it both mobile and broadband? And do you plan to expand that into other countries as well? And 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? And what's the plan going forward? I can take the last one. And 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. And if there is one campaign which has been up about a month or so, which could be seen as aggressive, but it's a temporary campaign, very limited. So 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 3 consolidations happening in Finland in the last 6 months, and I think that may have 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 3 last year. But both fiber and the campaigns with iPhone has been a little bit pushing the cost this quarter. And we're also preparing some for quarter 4 and that's also in this quarter. But the biggest part is actually the lower marketing in quarter 3 last year. Yes. First of all, if you could say something about cost cutting effect. You just said that the C and D that you were lagging and you wouldn't sort of reach a full target for the year. So 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 Q4? And then 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 Q4 year over year. And 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 Q4 year over year? Or did I misinterpret that? You misinterpret that. Good question. Because what I said was that actually the equipment sales is up, but the margin has been negatively impacted. And for the Q4, I don't expect and in Spain, the equipment sales has been down and will be down also in quarter 4. So specifically on Spain, I said it was going to be down. Okay. So expect a strong quarter in. I've said that. But on the cost side, I think I just want to repeat a little bit what I said at the C and 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. And 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 2,000,000,000 program. And that means we will have a gap, a smaller gap between our original plan. Can I just follow-up with the gap, was that sort of Q3 or and you'll be back on cost cutting in Q4 or is it sort of what is that we see lower cost? We don't have. We actually we you could say that we have partly released the old program, but started new ones because 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 slight agenda based on the strategy that we have implemented. So it doesn't mean we're going to take down not take down costs, but it does mean maybe that we will take down a little bit different costs. And 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 investor sale before we can take down further costs in certain processes. All right. Good morning, Stefan. Yes. Good morning. Stefan Gauffelin, Modena. Going to Steyn, you talked now regarding the development saying a little bit more like that you wanted to maintain market share. His early 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. Is this quarter, is this an indication on where you're aiming going forward, I. E, e, more stable on the market share side and trying to improve on the margin side? So the Spanish situation, as you know, there are 3 big players, which are going converged with the announced acquisitions of 2 of the broadband players. And 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 it are also gaining somewhat from us. So all in all, we have been gaining market share in the market, stable probably now in Q3. That's our judgment. It's very important to keep that balance between growth and profitability. So it's not a Q4 2013 ambition that we have 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 more up better view on what the cost is over time for the subscribers rolling up front. So I think that's a more transparent way of showing the profitability in Spain. But 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 matter to value creation in Spain. And that is still out there for us to answer where you have a different set of options, obviously. Right now, the focusing is to deliver and keep a stable development over the next few quarters. Thank you. Right, Thomas. Thank you. Thomas Keith with Handelsbanken. Question on Sweden. You have some margin pressure there and you mentioned partly the mix shift or product shifts from fixed to left, you need 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? And then second question on CapEx dam. You mentioned price adjustments. If you could comment on general competitive landscape there, both the established street players and the newcomer also? So Christian will take the cost question for Sweden. When it comes to Kazakhstan, the market dynamics have been over the last years. KSL has been in a very strong position and gradually quarter by quarter slight, slight drop because the competitors have been taking a challenge with them 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. But remember, it's a quite difficult macro environment in Castellanos as well, which is pushing the whole market. But no major changes between the players. You have a 4th player with 4 gs, 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 3 last year. So marketing cost is part of that. The remaining part is then 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 1,300,000,000 in Sweden to actually get down cost SEK 1,300,000,000, dollars which relates to these old traditional products. That will start to have an impact in 2016. Very clear. Thank you. Right. Moving to Sam. Good morning. Sam Schott from Sorbank. Just about not specifically on this quarter, but more on the cost side, which you discussed at the C and D. Isn't it? I mean, it sounds very good to invest SEK 2,000,000,000 and then gain SEK 2,000,000,000 in eternity. It's a fantastic business model. But I mean, will we ever see that on the upside? Isn't that a little bit naive that we will see it on the upside? Because 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. So that's the question. So we 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 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, remains to be seen. But if you isolate the investments of EUR 2,000,000,000 they will say EUR 2,000,000,000 recurringly going from 2017. And that's why we have another program as well calling Investo grow. And that will bring cost 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 C and D as well. All right. Should we open up for some questions from the telephone line? Operator, could you please open up? Thank you. Your first question comes from the line of Peter Nielsen. Please ask your question. Thank you, Peter Korn Nielsen, Kepler Cheuvreux. 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, has I mean, we've obviously talked about this for the last 6, 9, 12 months. Has this pressure intensified? And do you see any light at the end of the tunnel here I. E. Let's say when we come out of this year with the year on year year over year comps look easier? Or do you expect these pressures to continue to burden your service revenue trends in Sweden for some time forward? And secondly, can I just return to the issue of the higher marketing costs? A lot of questions have been asked already, but just to be clear, at the CMD, you're obviously focused on the capital investments you're going to make and which you just discussed and the investments in to save. I wish to understand that a strategic decision has been made whereby you will also sort of increase your level of market investments not just on this quarter basis, but on an ongoing basis going forward? And 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 1,100,000 to 1,900,000 fiber households, is that 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 easening pressure either. And I keep saying what I said in the last two quarters that we can't say that we're out of it yet, I. E, we're heading into 2016 with the 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. But we're also prepared to make bolt on acquisitions like the one we did in Sweden a couple of weeks ago with iPear, the cloud based company, which is helping strengthening the cost in a segment where we're very much exposed with a too narrow product offering. So 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. And reminding you again as well the ongoing shift from old product and pricing technology to the new net centric IP based recurring revenue based services happening. And we're glad to see that happening to help our customers into the future. But it has a short term impact where you spread out the previous equipment sales into service revenues going forward. So 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. So we have to be balance all investments, including marketing investments, how to make that as a group total acceptable to us and to you. And then when it comes to the cost program again, we are as Christian said, we're not continuing with costs that we think are hurting the growth and the profitable growth. And that's why we say some of the marketing investments are now being implemented in some of our footprints. And then on the fiber, it's mainly in our plans to roll out towards 1,900,000 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. I see the value of the inflation is enormous. So that's where the largest upside is. But we have of course ambition to roll out on the communication operator side as well. So, thanks. But on that note, to I'll 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 Fwey. 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 like a rough idea around the cost levels involved maybe going from taking up an apartment from 100 Mex views to 500 Mex views. How much will that roughly cost, Teddi Sinara? And then 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 to stay. Thank you. Denmark continues to be challenging indeed, Terence. And we have to find ways to also answer the question, 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. So we'll evaluate that and then we'll see what else will be needed. So 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 in 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. Then on the fiber, I don't have the exact numbers on MDU. All I can say 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. So 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 1 third approximately lower connected households can get up to 1 gigabit for the end of the day. Thanks. All right. Next question please. The next question comes from the line of Alan Nicholas. 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. And that I've been saying in the last year that we expect them to come back soon and soon they're back. And we just have to make sure that we are competitive in the value chains and in the offerings. And I think we have had quite a bit of time to prepare for that. So I think our team is ready to take on also another competitor. We caution for Uzbekistan when it comes to margins that we've done as well. SL player will change those dynamics. So that should be part of your expectations going forward. Thank you. All right. Could we move on please? The next question comes from the line of Nick Lyle. Please ask your question. Yes. Good morning. It's Nick Lyle from SocGen. Could I just ask back on Denmark please? On the ARPU sequentially has been pretty stable for 3, 4 quarters now. But you've seen some more price aggression from 3 and oyster or via the oyster packages in the Q4. So your comments to the question a couple of questions ago, does that suggest that you again expect to be ARPU decline in the 4th quarter? Or should we be expecting a more stable outlook into the 4th 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? And then secondly on Norway, you mentioned a big rise in CapEx for obvious reasons. But could you just tell us really what you spent the CapEx on so far? And any update at all on the regulatory process or your chance to the regulator, particularly after the deals with access and well Tele2's deals with access? Thanks. Right. So Norway, most of the CapEx there is going to extend the nationwide 4 gs and accelerate that obligation that we have in the license requirements. And we're doing that and we're happily doing that to reach out to more Norwegians to get a real competitor to the big one. So 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 in 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 note 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. Yes, they may get more data, which then has a cost implication and a CapEx implication. But 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 challenge, a strategic challenge for a next phase of pricing in the old data era where we need to be much more innovative on our packaging and propositions. Thank you. Okay. Thank you. Can I have next question please? The next question comes from the line of Barry Zattoni. Please ask your question. Hi, good morning. It's Barry 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? 2nd question is on Swedish TV. It seems that your TV ads 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? And 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 iPhone 6 so far? Thank you. The short answers are 15, no and yes. So 15,000, I think. On the FQ side. On the FQ side. On the FQ side. On the FQ side. On the FQ side, yes. On the FQ side, yes. On the FQ side, yes. On the FQ side, yes. On the FQ side, yes. On the FQ side, yes. On the FQ side, yes. Yes. On the FQ side, yes. Yes. 16, sorry. 15, goes to 16, if you add all. And TV impact from our competitors, you know, we have a great momentum on our TV, great brand, great experience we feel in most of our customer response. And on the iPhone, we expect and we see a data uplift on all people going to 4 gs and smartphones. It really drives data usage. So that's also part of the reason why we have, for instance, a data volume increase in the Nordics of up to 80%. And anything more specifically related to the iPhone 6? Or would you say more 4 gs in general? 4 gs in general and it's too early to say for the iPhone. Yes. Okay, great. Appreciate it. Thank you. Okay. We move on. Next question please. Your next question comes from the line of Ulrik Rathe. Please ask your question. Yes. 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 and 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 sort of drop back into prior form and we just had a good quarter for whatever reason. So just like to get your 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 euro impact or in terms of volumes explain what is actually going on in the underlying year on year trend? So 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 euros in the quarter? Just a bit more color on that underlying chunk would be helpful. Thank you. Okay. Finland, just going back a year and a half or so, the Finnish team was early in getting combining the organization fixed and mobile to be one organization towards the customers. So they were ahead of our bigger group change to the new operating model. And they were early out also on restructure and refocus. So I think you're seeing some results of that coming through. But I have to say, as I mentioned also in my presentation, that in Q3, there is an interconnect change, which only impacted 1 percentage points in the quarter 3. And then going into quarter 4, it has 3 months impact. So it will be a challenge to keep the service revenue on the total above 0, 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. So but 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. But could you then instead maybe just to give us a bit of visibility simply tell us what the volumes did the handset volumes did, irrespective of how the revenues are accounted for under the 2 different models? I think we have to come back with one question and check that for you. Yes. 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? And 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? And then 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. And it is heavy on the fixed side as you point out. And that's the big drag. And 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. So a lot of migration from old to new. And we're helping our customers into the future, but it has an impact which we're obviously choosing to take. This is something we are part of not migrating as a negative driver 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. So 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. And on Sweden, was there one question? It's not Sweden only. Yes. So 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. Yes. You have 4 more questions. Your next question comes from the line of Andrew Lee. Please ask your question. Yes, hi, good morning everyone. Just a question on Swedish mobile. A couple of your competitors have mentioned that they're concerned 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. Can you just talk through your thoughts around this? Is this true? Are you deliberately being more competitive in going for market share in Sweden? Is this part of your push for growth drive? And 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 low. And I don't believe in 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 Hale Bopp specifically in Sweden. And 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. And 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. So 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. And I think that answered the question. There was only one. Thanks. All right. Next one, please. Your next question comes from the line of John Davies. Please ask your question. Good morning. I have 2, 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? And on Denmark, you said that the network joint venture is still not at maturity. Do you have a time scale 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. So and also the uptake and the migration from 2 gs and 3 gs into the full 4 gs 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. So we are continuing on our original plan and to build out 4 gs. 4 gs 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. Okay. Next one, please. Do we have any further questions on the top line? Yes. Your first your next question comes from the line of Patrick Morris. Please ask your question. Yes. Hi. It's Patrick Morris from Barclays. So 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 and the different products would be very helpful. And then just in Spain, I think you sort of alluded to the fact that Spanish market is perhaps slightly less aggressive at the moment than it was due to the consolidation that you've seen in the marketplace? And some sort of thoughts on how you're seeing current competitive intensity in Spain would be helpful. Thank you. I don't think I said it is less aggressive now. But I 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. So that remains to be seen. I think we are not overly aggressive and that was one of the questions that we're maintaining a balance between growth and profit there right now while evaluating our options. But first of all, product mix maybe you Well, I'm not going to go through the margins on the different products in Sweden right now, Philip. I'll have maybe we'll talk about that when we meet. But I'm not going to reveal too much there either, I think, on the exact margins of the different products. Not even sort of directionally. I mean you sort of call it out. So perhaps any directionally would help? Well, I think I mentioned 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. So I think that's the guidance that we can give at this point of time. Fine. Okay. Thank you. Thank you. All right. I think we have one more final question on the conference call. Your last question comes from the line of Sanddylan. 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? And are you confident that you can all come to an agreement together with the minister having to step in? Thanks. So we are closely monitoring the situation in Queso 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. And then we have some of the issues needs to be solved between the operators, Greg. But 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? And also, you had quite a big CapEx item on the frequency front this quarter. Could you explain besides Moldova, which was press release, what you exactly what you bought there? Thank you. So on Turkcell, I wish we had something more to talk about. We don't. So 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. So the fact that all parties are talking, I think we should see as a positive sign. On the frequency, you're correct. The mobile device you had control of is one impact on the licenses. We also have a 5 year payment plan in Nepal for the license, and that license is paid now in quarter 3, onefive of that that we are paying every year starting last year. Thank you. Just last question. So 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 they get a broader digital package as part of your TeliaSonra subscription? And then just on Sweden and handsets, you mentioned pressure from a lot of handsets in Q3. Are you talking about dilution of low margin or 0 margin handsets? Or are you booking any handsets at negative margin? Thank you. I'll start with the last one and just say we are booking with negative margin, yes. So 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 is increasing if you compare year on year or is it still stable? The absolute number has increased and that was it has a margin impact, but the margin percent on equipment is actually improving slightly, but not much. Thank you. And 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. And I think that's the way the industry is heading, where the consumers are demanding different types of value added services. So certainly, it's something we are exploring in one way or another. And I think that makes sense. So perfect. Thank you