All right. Welcome all to the presentation of TeliaSonera's second quarter results. I'm Jesper Billgren, Head of Investor Relations. With me to present today, I have our CEO, Johan Dennelind, and our CFO, Christian Luiga. We'll take some questions after that. The intention is to close this event within an hour. With that, please go ahead, Johan.
Thank you, Jesper. Good morning, all. Not a full house here in Stockholm. I'll take it we're in the middle of the hectic reporting season rather than the middle of the holiday seasons. I'll take you briefly through the highlights of our second quarter, where I'm pleased, but not fully happy. It has a few components we would like to explain. Overall, a pretty okay quarter. Our group service revenues are flat. Net sales is negatively impacted by Spain, and we will go through that in more detail. Underlying EBITDA is stable in local currency. The margins are similar to last year, which is positive in spite of the revenue pressure.
We have continued growth in the Nordic mobile space, which is positive news backed on the internet demand that we are seeing across our footprint with our new bucket pricing on data having a good effect. However, the enterprise segments remain challenging both in Finland and Sweden. We're defending share, and that's the good news. Our Eurasian operations is showing strength both sequentially and year-on-year. We have almost 7% growth in organic terms. The margins are strengthening to very high levels. We continue to focus on our corporate governance and upgrade our respective frameworks in all our markets. We'll cover that in a bit more detail later on. As you know, we outlined our strategy in Q2, which we also showed a proof point on during quarter two, or after quarter two, actually, when we announced the acquisition of Tele2 in Norway.
Let's have a look at some of the numbers. Our local organic is -1.2, mainly related to Spain and equipment, which we'll also cover in a bit more detail. Our EBITDA margins, as I said, are flat, 35.3 in the quarter. CapEx to sales, slightly higher than the previous quarter last year, and mainly backed on good progress on our fiber and 4G investments across our footprints, actually. Moving to some of the key highlights on the service revenue, which is a core parameter for us, and a KPI. We're moving slightly away from the net sales and equipment and focusing more on the service revenue. It's positive to see that the trend in service revenue, as you can see on the left side, is positive. We have that from all our regions.
Our new regions in the new operating model are showing an improved trend on service revenue. We'll also cover that in a bit more detail. That's a positive side on the service revenue. Moving to Sweden. A new CEO in Sweden, Malin Frenning, and her team. First quarter as a combined entity. Strong focus on one customer, one brand, and very happy to see that the customers are also showing a positive response to this with the highest NPS, net promoter score, ever in the Swedish space. That's positive news and a good start for the Swedish team. They're also delivering a very solid set of numbers in the second quarter, with flat year-on-year growth organic, slightly up on the reported, and that's thanks to the acquisition of Zitius that is included in the later part of the quarter. EBITDA margin strengthened somewhat.
Good cost control, good focus on the efficiencies. As I said, a good start for the Swedish team. CapEx to sales, we'll get back into some of the more CapEx details. We are on track on our 4G investments, covering 99% of the population by the end of this year. The 4G network is really superb. Great feedback from the customers, great speeds, and good propositions out there. Good tick for Sweden, I would say. Looking at somewhat the breakdown on the Swedish side. It is mainly B2C that is helping Sweden. If you remove some one-offs and look at the underlying growth for consumer in Sweden, it's 2% over fixed and mobile. That's the first time the fixed is also helping the numbers on the consumer side, stabilizing the negative trend. On B2B, however, we are under pressure.
It's a decrease of 4.5%, 5% in the quarter. It's the heavy price pressure that we see on the larger corporates where we are defending share. It's also very fierce competition in the SME segments, where we are shaping up our propositions. As you can see on the bottom chart, the trend on the fixed side in Sweden is improving. The fiber business is supporting this. A good rollout of fiber, and also stabilizing trend on the old fixed PSTN and ADSL products. Moving to Region Europe. We see a stable margin. Net sales is, as I mentioned, impacted by Spain, both on equipment and build. It's supported, actually, Spain's decrease on net sales is helping the margin stabilization in the region, ironically. Good traction also on the investments in the European space on 4G rollout, both in Norway, Finland, and Denmark.
Let's have a look at Spain. A current topic. It is a very challenging market in Spain, as you know, we've talked about this many times. It's not getting any easier in Spain. The big threes, two of them are getting converged, i.e. they have fixed and mobile and pushing those propositions out in the market. We have the competition coming from below, from the MVNOs, adding to the very competitive landscape where we see in Spain. We are mobile only. We're around 7% market share, and we're struggling to see and find the path to sustainable profitable levels. I think the picture is pretty clear. We have stabilized the profitability on EBITDA, as we said we would in Q1. We said we would be back in positive territory, and we are.
We are slightly lower than on this market share gain, even if we are gaining against the big ones, net portings, we're losing a bit of share to the MVNOs. Spain is difficult, and we're also now, having looked at this for a few months, struggling to see that we can, on our own, get to a sustainable, profitable situation in Spain. Now we are exploring the alternatives for Spain over the coming months. Quick look at Finland and Denmark in the European region. We have a local organic negative trend that is somewhat stabilizing. Finland is good in the consumer space. The Tele Finland brand is very strong. Sonera is stabilizing, I would say, and also trying out the new price models in Finland. Not an easy market to come in with our new pricing model, where speed is still the dominant factor for the propositions.
We're trying to bring quota and volume into the market. Some traction on that, even if the main propositions are still on speed from the competitors. In Denmark, positive things are that we're gaining customers. We've improved the customer base over the last six months with 5%. However, there's a price pressure. It's a very fierce competition in Denmark. We have a strong proposition, and our 4G network is seen as the best in the country. I'm very glad to see that that is paying off. We are small in Denmark. We have not reached our scale in Denmark. We're hoping to see some of that coming out of the network joint venture with Telenor. The question is whether it's sustainable long-term, and that we're also exploring. Moving to Eurasia briefly. As I mentioned, strong growth in Eurasian region, 6.5, 7%. Strength in margin.
They look a little bit higher than they should, and Christian will explain why. 54.5% EBITDA margin is superb. You see a strong support from this from several markets, stabilizing negative trends in Azerbaijan and Georgia, and positive growth still high double digits for Nepal and Uzbekistan. Kazakhstan contributing on net sales with the launch of the iPhone, which is taking off in a nice way. Slightly behind on our plans for CapEx, but expecting to pick up to normalized level during the rest of the year. Quick look at Kazakhstan, where we have 3.5% approximately organic growth. Obviously, that disappears somewhat in the FX conversion to reported, and the margins are strengthened in the Kcell business.
Nepal, we're reaching 12 million customers in Nepal as we speak, and the EBITDA margins are now close to 60%, which is, may I remind you, an unusual situation with a two-player market where we expect competition to increase over the coming quarters. A couple of words also on our corporate governance upgrade and our sustainability. We have a new management in Eurasia on many levels. We are also new people in many of our companies. We have a new focus, and it's leading to an improved control and strengthening of our governance framework. It is also resulting in some of the one-off and the write-downs that we are doing in Q2, and Christian will cover them in more detail. Our anti-corruption and risk assessment is completed in the region Eurasia, and is now starting in the Europe and international carrier space.
The risk assessment, just to remind you, is where we go through the country risk, the operational risk, the company risks to make sure that we know in all aspects what the risks are. We continue to roll out our code of conduct, which is well above 90% participation in all our markets. In Azerbaijan, it's 99%. We've also conducted more than 5,000 face-to-face trainings on the anti-corruption policy. We're getting to a point now where at least people know what we expect and how we should operate in our respective markets. We're also implementing our freedom of expression policy in our respective markets, I take the opportunity when I meet with presidents and prime ministers and ministers across the footprint to express our view on this important dilemma.
I'm happy with the progress there, also reminding us and you that we have a long way to go. Closing off, I'd like to tie back to the acquisition that we announced last week of Tele2 in Norway. We have now started the discussions with the local authorities, competition authorities, in how this deal from our point of view makes sense, and why we think it should be approved. We expect that process, as we mentioned, to carry on for a few months, most likely getting the decision towards the end of the year or early next year. I'm not going to recap all the details of the deal. We're very happy that we were able to reach an agreement. Now very focused on getting the process and the approval, also preparing for a new start in Norway with two great companies coming together.
That's our focus. Before Christian takes over, let's just look briefly at the outlook, which we said in Q1 that we saw a higher risk for the equipment sales. We still believed at the time that we would be able to keep that on the same level as last year. We see now, mainly related to Spain, that that will not be the case. We are revising our outlook on net sales, mainly related or principally related to the equipment sales. Therefore, will be slightly below last year. Our EBITDA margin should remain the same as last year, CapEx to sales we don't change as well. As I said, a pretty okay quarter, with some unusual items that Christian will take you through right now. There you go.
Thank you. Good morning, everyone. I'd like to first just to make a little bit advertising for our new quarter report. We got some feedback this morning from some of you, positive feedback, whatever feedback it is, we like it, we like it, of course, that you think that the new report looks good. I thought I would start off a little bit with the first half year, the first half year is very similar to the quarter. It's a drop in net sales, primarily Spain and equipment sales in Spain. We have a stable EBITDA, growing slightly, there is a decrease in cash flow and EPS, which I will come back to more in detail. I'm quite happy about the stable first half year, it give us courage that we have a good balance sheet and a strong position going forward.
The net sales change is -1.2% in the quarter, as Johan said, it's mainly Spain and equipment sales included. That is the driver. 2.1 percentage points comes from Spain. If we deduct that, also if we deduct the positive change from the equipment sales in Nordics, there we can see it primarily in Sweden, Norway, and Denmark. We have a still net positive effect on the core business. This is something we like and continue to drive hard to reach every quarter. It's important to be able to grow EBITDA over time. The EBITDA margin is stable despite quite heavy FX effects in Eurasia. As you know, Eurasia is a high-margin contributor and is growing this quarter. If the FX effects are high, it will also impact the margin.
We do have a stabilized situation around a 35% margin, if we look at the right-hand side of this picture, we can see that the FX effects in Kazakhstan, primarily, where we had a devaluation in quarter one, is quite severe on the margin. So in local currency, the margin would have increased even a little bit. Otherwise, the main factors that have an impact on the EBITDA margin is our cost work. It's the equipment sales, of course, also the strong development in Eurasia. We have margin improvements in all regions. However, they are a little bit different. First of all, I would like to point out Sweden. Very strong. You will find some personnel non-recurring as well in our income statement, it's related to some cost reductions in quarter two in Sweden and Finland.
We have a strong focus on both bringing up the sales, and we have a 2% underlying B2C consumer sales in Sweden. In the same time, we are reducing cost, that brings a EBITDA change in actual absolute terms, which is positive. Secondly, if we look at Europe, it's a little bit mixed. Spain is dragging down the sales, of course. Also the cost. Excluding Spain, OpEx is also going down in Europe, which is important. The main contributors otherwise from an EBITDA point of view in local currency in Europe is Finland, excluding the non-recurring Spain and Latvia. In Latvia, we have found a positive trend finally, it's the first country that makes a little bit of breakthrough in Baltics for us, which is encouraging. Eurasia, very strong, positive growth.
Even if you would look at the EBITDA in reported currency, the growth in EBITDA would be positive, the cost is increasing slightly above what we maybe expected, most of it is from Kazakhstan, where we have a devaluation that pushed OpEx increases and price increases. In the same time, we have not been able to increase the price to our customers, the revenue side. EPS is impacted by the associated companies. It's currency effects in both MegaFon and in Turkcell. They are partly related to the environment we have with the sanctions, et cetera, that has put high pressure. It's both effects within the income statements of these two companies, it's also when consolidating these two companies into our books, we have a lower profitability, it's quite high between the quarters over the year.
Otherwise, also we have a negative slight effect on FX, even though the euro and the Danish krone is stronger, Norwegian krone is weaker, but in Eurasia, we have a fall both in Uzbekistan, Nepal, and in Kazakhstan on the currency. CapEx and CapEx to sales. We have a strong focus on expanding our 4G coverage and the fiber network. The picture lies a little bit, and I just want to tell you that we have now a group technology, a central unit, which is not part of this picture. In the transition of moving projects between the different entities, it may be that it will be on some part or percent, a little bit changes going forward. We have now our common platforms.
We try to drive a shared common investment platform for TV and other parts of the organization, that makes it a little bit complicated in the beginning how to sort that out. Overall, it gives a fair picture, and we have a weaker position in Eurasia. It's Nepal, Kazakhstan, and that is the biggest changes over year-over-year. Also a little bit in Uzbekistan. We think that it will normalize over the second half year, for that half year, and the main focus will be to build coverage in these countries. In Sweden, it is a very high demand on fiber right now. Fiber is much more expensive than the 4G. I think I said last quarter that 40% of the CapEx was fiber, and now it's over 50% of our CapEx in Sweden that goes to fiber.
On that topic, I wanted to give a little bit deep dive into fiber. This is the fiber in Sweden, we can see that we are increasing and having a quite good growth every quarter, which is very positive. It is not only a positive growth in fiber as total, it's also a growth in our connected services to these fibers. We have around one third of the market, and there's still a low penetration to work with out there. The broadband services we have on 52% on the fiber households, and the pace is increasing, and that's the most important thing. The broadband is the most important one as well, because that's where we have the highest margin. If you look at where Telia has a service, we have it on 67% on the households.
The other thing is that this is divided by multi-dwelling units, apartment buildings, and villas or single households. In the single households, there's around 2 million in Sweden, and around 25% of them have fiber today. Of them, we have 115,000, and it's growing. Of those 115,000, 90% have a Telia service, and you know this is open fiber, which is very positive. The final comment I want to make about this is that we have said that when we start to build more and more, it will also have an impact on the revenue. In this quarter, had a year-over-year impact of SEK 90 million, and this is when we start to develop and dig more and connect more households, it will have an impact. As long as we see a potential for growth, it will be positive.
Free cash flow is negative compared to last year. There's two elements, cash CapEx. As you may know, cash CapEx is just a result of when you pay your CapEx, so it will shift over time, and over time it should be even with our reported CapEx. It's a timing question. On the working capital, we have two or three main elements this quarter. One is actually related to interconnect payments in timing of interconnect payments in Eurasia. The other one is actually in Kazakhstan, where we're building up an inventory and a distribution now of the iPhone. We have started to sell handsets in Kazakhstan. Now in the first step, when we build that inventory, we have a one-time impact. I believe we have the level of inventory right now that is sufficient for the second half year. In Spain also, we have an opposite effect.
In Spain, we have had a distribution set up where we have a positive cash flow from increasing equipment sales, the opposite what you would think about. We have paid our vendors much slower than we have got paid from our customers or from the distributors. Now when the equipment sales is going down, it has a quite negative impact on the cash flow. That's also something that now comes here and stops as long as the equipment sale doesn't drop even further from this level we have today. In the same time, we also have paid some vendors off a little bit faster than maybe usually in Spain. The next page, dividend payment explains net debt increase. Quite simple picture. We have increased our net debt with SEK 14 billion.
We have paid out SEK 13 billion to our shareholders, and SEK 2 billion is also FX effects on our debt portfolio, and that comes from the euro increase. Johan, you want to summarize, or should I summarize?
Please summarize.
Well, I will summarize. I think it is an okay quarter. We have a very positive result with stable margin. It is very easy to understand the revenue change, and we have B2C growing, and we have customer growth in several markets in the Nordic, especially both Sweden and Denmark, and Norway is growing very nicely on the customer side. Eurasia has very high performance, and we look forward for seeing you in a quarter. Well, actually, not in a quarter. Actually, we look forward to seeing you actually at the Capital Markets Day, which is in September 30th.
Right.
That is when we look forward to see you.
Excellent. I think as usual, we open up for questions.
Yeah.
Jesper will facilitate.
Maybe we start here in the audience, and do we have some microphones too? You have. Let's hope. Andreas, perhaps.
Good morning. Andreas Olsson, SEB. Surprise. A question on Spain. What has changed in Spain since two years ago when it was quite apparent that it was for sale? How come you try this once again now? What has changed, and why do you think you can be more successful this time?
I think a couple of things are changing in Spain. One is the competition dynamics where convergence has really entered the stage in Spain. I think you cannot survive long-term on a profitable level without having an offering in this space, which is converged one way or another. We have tried that with a reseller agreement, which is not really working out for us. We are still hovering around the 7% market share. Last quarter, reminding you that I said we're looking at Spain from either we'd really need to get to a point where we see we can get above 10% to sustainable levels of profitability, or we need to find solutions for Spain, because right now we don't have the return on capital that we need to have in Spain.
We don't see that based on our analysis and strategic review right now, that there are good viable options to get to sustainable levels on our own. Therefore, we need to take the consequence of that and look at options. What has changed? Well, the convergence has changed, and we also have a different climate in Europe now in terms of consolidation opportunities, I would say.
All right.
Lena Österberg, Carnegie. To continue on the strategic reviews, you also mentioned Denmark, that you think that you're too small. I'm wondering, is a presence in Denmark key for you, so you consider buying rather than exiting the market? You also mentioned that you need further cost optimization, need a leaner organization. Where do you see opportunities for more efficiency measures going forward?
In Denmark or general?
In general.
Denmark first, yes, it's a small business, but it's doing well under the circumstances, and we expect to see further improvements with this network partnership with Telenor, which is already paying off, by the way, in the 4G space where we have the best network perception, and gaining share. Operationally, we're doing well in Denmark, even if we need to improve further. The question we have on Denmark is whether we can get to sustainable levels of profitability also in Denmark on our own. There remains a question mark, remains to be seen. Denmark is in the middle of our core Nordic-Baltic strategy, where we want to be strong, where we want to be sustainable profitability-wise over time. We're keen to look at options in Denmark. On the cost side, generally speaking, I think we can improve our efficiencies across the board.
We showed last year that we are able to take out costs and maintain focus. We have to do that in all corners of the shop. We don't have growth, then we need to be more efficient to produce EPS growth, obviously. That's the focus now, and I think we're going through each of these components. The one important aspect of that will be the transformation, where we are prepared to invest, to save, and that is in areas where we need to be more agile, we need to reduce complexity. That's a program that we are working on, and we'll talk more about in the CMD in September.
Right. Erik.
Erik Pers, Danske Bank. Question regarding the Swedish mobile market. You changed your bucket sizes and your prices recently. Can you speak in a bit of detail about what effects that have had on your business? Also you reported, I think end user service revenues about flat for this quarter. Your main competitor, Tele2, had a bit of growth. What do you read into that? Also if you can, could you split that number, that flat number into consumer and business? We can see the developments in each.
Absolutely. On the bucket pricing, still early days. I want to wait a bit before I draw any conclusions financially. I can tell you that the reception from our customers is very positive. We just need to translate that into positive for us as well. It's, as I said, early days, but I think we need to experiment a bit around data pricing, which is now the driver for our future growth, and we need to get it right. We'll get back on the details of the actual effects in Q3. On the consumer side in Sweden, first of all, the service revenue flatness, as we said, is across the group. In Sweden, in the consumer space, we're actually on a 2% growth if you normalize it across fixed and mobile. Then I can tell you that the mobile is growing faster than the fixed.
There you get probably into the same territory as are some of our competitors that have reported on the consumer side in Sweden.
Thanks. One question there in the back.
Hey, Sven Grundberg from The Wall Street Journal. I was just coming back to Spain a bit. Given that Spain is now a drag on your overall top line here, I was wondering whether you're less price-sensitive in terms of selling the unit to someone. That was one of the hurdles two years ago when you tried to sell it last.
Well, I don't know the exact hurdle the last time. There were many reasons for that, not just price. There were regulatory aspects in the game. As I said, I think there are less hurdles today in making a consolidation in Europe generally, given that some of the deals that we have been waiting for has just gone through. However, with some remedies, but they are through, and it's an acceptance in general terms for consolidation in Europe from four to three at least. On the price side, I'm not going to comment on any of those things at this moment. What we've said is that we're at this point now need to get some alternatives on the table when it comes to Spain as a whole. We have looked at it from an investment and going up in Spain.
We need to understand if there are viable options in leaving Spain or not.
Okay. Should we open up for some questions from the conference call? Operator, please.
Thank you. As a reminder, if you wish to ask a question, please press star followed by one on your telephone and be prepared to state your name when greeted by an operator. That's star one if you wish to ask a question or make a comment. If you wish to cancel your request, please press the hash key. Please stand by while we compile the Q&A queue. This will take a few moments. Your first question comes from the line of Peter Nielsen. Please ask your question.
Thank you. Just returning to Christian's very interesting comments and short presentation on Swedish fiber. Obviously, the improvement in service revenue trends in the consumer side is quite remarkable on the fixed side. Are you hopeful now that with the demand you're seeing, the uptick, the rollout you're seeing, that you can envisage the fixed business returning to sort of flat, stable revenues in Sweden on the back of this? Secondly, can I ask you, Johan, I know you're not directly involved in the current proceedings between Turkcell and Telia, of course, but in your sort of introductory meetings and dealings with Turkcell people, are you hopeful of establishing sort of a fruitful relationship with them once the ownership situation in Turkcell becomes sorted? Thirdly, if I can just return to the SEK 2 billion cost reduction program last year and this.
Are we to take it that this is almost completed now and the targets have been reached in terms of the cost savings? Thank you.
Thanks, Peter. On the fixed side, there is still a higher demand than we can supply, and that's a good thing. We need to make sure that we address all the people that need and want our internet services on fiber. Whether that will return into a flat, sustainable situation on fixed or not remains to be seen. We're very glad to see this quarter holding up, I would call it, rather than growing on the fixed side. It's positive. On the Turkcell situation, we're obviously very close to the situation. We have good dialogue with the partners, and we're keen to see the outcome of the ongoing process. We should be very close to at least knowing what happens end of July, then we'll talk about what that means for us going forward. Every day we're getting closer.
On the cost program, I'd just like to say that last year in beginning of, actually end of 2012, we initiated the cost program. It's been running, we are on track, we have a new organization, a new set. We foresee that we need to do continuous cost measures all the time, we are actually working on new programs, local programs. As you can see, we entered into a new operating model 1st of April, we still have a change in this quarter, we will continue to do that. We're on track, it's not sort of we're going to end this internally. We're just going to continue to work with programs, local programs all the time. It's a little bit maybe blurry answer, the real answer is we're on track, we are not stopping.
We are continuing.
Okay, very good. Thank you.
All right. Next question, please.
Your next question comes from the line of Barry Zeitoune. Please ask your question.
Hi, good morning. It's Barry Zeitoune from Berenberg. I've got a few questions. More of a general one. I was just hoping to get your general view rather than thinking about it in terms of your specific participation, but your general view on consolidation in Denmark and Sweden after the German and Irish remedies, and whether you think those remedies would be a threat to the potential of consolidation in the Scandi market or whether indeed it opens up more consolidation potential. My second question is on fiber. Com Hem, in their marketing, were highlighting that they have a speed advantage versus fiber over most of their footprint. Do you think cable speed advantage versus fiber over most of the cable footprint is sustainable, or do you think you can catch them up or even overtake them? My final question is on Norway.
You've mentioned that you started discussions with the competition authorities. I was just wondering whether you started any discussions with ICE on the potential sale of Tele2's network or any other spectrum assets as well. Thank you.
Thanks, Barry. Consolidation generally, you get 100 answers if you ask 100 people. I'm not sure mine will add much to your full picture there. Let's focus on our concrete example of Norway. We think we have good reasons and good arguments for this consolidation in Norway. There will still be three networks. There will still be plenty of brands. There will be good competition, and that's our argumentation that we now are using. I think on general terms, it's good to get clarity what the attempts have been in Europe, that the attempts that are out there have now clarity on what the remedies would be. You have to make up your mind whether you think that's good for the merging entities and the remaining entities.
I think that's the big debate now in Europe, whether they are acceptable to the remaining entities rather than just the merging entities. I think it's a good step that we know what is expected from the authorities when you go for consolidation. In that sense, one less hurdle. I commented on Norway. I'm not going to comment anything else. We're focusing on getting this deal through, and then we'll see what that means for the rest of the market and the rest of the players. On the fiber and Com Hem, I'm not going to really comment on their claims. I can just say that our proposition, our product, our fiber rollout, it's excellent speed, excellent quality once you get it. Again, it's a high supply, high demand, and we're struggling to supply through the value chain, and that we're working on.
There was one on Ice you didn't comment. Yeah. We are finished.
Yeah.
We didn't comment. Next question, please. No further questions.
Your next question comes from the line of Andrew Lee. Please ask your question.
Thank you. Good morning, everyone. Just a few more or a couple more questions on M&A. You stated that you'd be keen to take a proactive role in in-country consolidation, particularly in the Nordics. Now that Norway's done, do you actually see other opportunities presenting themselves in the next 12 months? Do you feel you have the financial and managerial capacity to do this in the near term? Secondly, on Denmark, you mentioned you're exploring options here. Do you feel you could fulfill your Nordic strategy overall by having just a wholesale arrangement in Denmark, or do you need to own assets there? Thank you.
Thanks, Andrew. I think on the first question on the deal and the execution capabilities, I think that is not the main problem, the execution capabilities. I think we still have a strong balance sheet to be part of consolidation in different ways in our home Nordic-Baltic markets, but also in the Eurasian space. That's also part of our core home markets, or our core markets rather. We'll see what availability there is and the viability of those opportunities we'll speak about when we have them at the table. On Denmark, I think that's obviously an option that you're mentioning that we can do a wholesale proposition based on wholesale. We're looking at that. We have fixed components already today in Denmark that we're using and actually growing. To take it to the full potential next level, we're looking at various options.
Yeah.
All right. Next question, please.
Your next question comes from the line of Georgios Ierodiaconou, please ask your question.
Hello, it's Georgios Ierodiaconou from Citi. A couple of questions from my side. The first one, a follow-up on your answers around Spain. I think a lot of the debate is around mobile consolidation, but that is perhaps less up to you. I was wondering whether if there is a convergence option for you to merge perhaps with a listed broadband provider and have a stake there, whether that would be an acceptable solution or whether an exit from Spain is primarily the objective here. Secondly, around the fixed performance in Sweden. You mentioned you increased prices on the access fee, in particular at the start of the year. It's quite encouraging, but I'm quite surprised by the fact that we haven't seen line losses increase on the telephony side.
I was wondering if you could give us an idea as to why that is happening, and whether that means you could push more price increases in the future. Thank you.
Thank you. On Spain, I don't have much more to say than I said, and let me repeat that. We are looking at our various options in Spain. We have looked at ways to get up in Spain, both organically and non-organically. We don't see that as a very viable option at the moment. We're focusing on delivering on our current business. Team is doing really well in very difficult markets. Now we also need to look at the other options for Spain, which will include a range of alternatives that we have to assess. That's why I say that is now the main focus, to assess what options actually we have, and then we'll have to make up our minds then in the end, what is best for our shareholders. The second one, you want to take that question?
The fixed line?
Yeah.
As you say, we have positive increases in the pricing, and still there is not a higher rate of losses in the fixed lines. We are positively surprised a little bit as well, and I think that shows that the behavior is more important than the pricing in this area. The shift from traditional to new, that kind of behavior change is a bigger driver than the pricing maybe, but it's too early to say and let's wait and see, and as long as it works this way, it's good for us.
Thank you.
Your next question comes from the line of Dominik Klarmann. Please ask your question.
Thank you. I'll spare you another consolidation question and ask you about the regulatory reform package. Just wondering if you are supporting the Connected Continent package at this stage, or do you rather still see too many negatives in there? Connected to then going forward, what's your expectation from Jean-Claude Juncker? Are there any further reform issues you would want to see picked up by the new commission? Then maybe on Sweden and you increasing the data allowances. I'm just wondering if it's not a very dangerous thing in terms of educating customers that more service costs more, when you now raise your data allowances again. What's the rationale behind that? Then maybe you can update us on the competitive situation in Uzbekistan. That's all. Thank you.
Let me go from the bottom to the top. Uzbekistan, no news really, but more speculations about the timing of the new entrant. We're still saying that it will happen. Now we probably can safely say that the full impact of the third entrance will not come this year. It will come into next year. On data pricing, if you look at Sweden versus the other Nordic countries, we have the lowest data per user. That's one of the reasons we're also trying to give more to our Swedish customers. That's been very positively received, as I said. Obviously, we need to find a way of monetizing this over time. We need to experiment. We need to also add to the simple pricing of just data. We need to add things to that, which we'll do as we go along.
It's a very important area, high focus, and we expect this to be an important growth driver, obviously, going forward. The last one on EU. Well, let's see what we have from the new commission. There is a handover agenda from Neelie Kroes into someone. We are monitoring this closely. We're working as an industry. The CEOs in the large telcos in Europe are talking and together with GSMA, together with regulators to see what we can do to drive the investment climate in Europe to the next level. We're keen to get clarity on a number of topics, including spectrum, including net neutrality, and also roaming. We're driving this very hard. We're taking steps already leading the way. I think there's never been as good dialogue as it is right now.
Great. Thank you.
Your next question comes from the line of Kevin Akeroyd. Please ask your question.
Morning, everyone. I've got two questions, if I may. First on Nepal, can you comment what's the state of the progress for the rollout of the new entrants, and when do you expect them to have a more meaningful impact on the market? Then secondly, on Norway, if I look at the billed service revenues, they're down 5% in the quarter, and local currency they're down 1% in the prior quarter. Can you just comment a little bit more about what explains that trend as well, please? Thank you.
Christian will cover Norway. Let me talk about Nepal. We have said earlier in these calls that we expect a new entrant to come in this year. Also in Nepal now we need to say that it probably won't have a big impact this year. We're probably moving into next year when the third entrant will have the full impact. Having said that, I'd like to take the opportunity to say that the competitor in Nepal has become very much more aggressive on the competing with our Ncell. That is good. We're getting good competition there now, and we're doing well, rolling out the network even broader and deeper in Nepal, and we're seeing the effect now. We're almost up to 12 million customers in Nepal.
On Norway, we have both the B2B and B2C has been tough for us in this quarter. It looks good on the surface when you look at the number of customers in Norway, and it is positive in the end, but we started actually the quarter in April and May with a decrease in number of subscribers. Only in June we went above the previous quarter. Therefore, the average for the quarter is actually, you could say, a fewer customers. We have successfully, with both price and packaging, moved a little bit positive than in June. It is still been tough from our competitors and we continue to try to do the best there, and in the B2B it's been similar.
That's great. Could I just follow up, when you mentioned your subscriber trends for April and May were weaker, do you think you're losing out to Telenor or Tele2 , in Norway in those two months?
We have seen the most aggressive offers in the market has been from the alternative player in the quarter, if you put it that way.
Sure. Okay. Thank you.
Your next question comes from the line of Alan Nichols. Please ask your question.
Hi, Alan Nichols from Morningstar. I was wondering if you could give us an update on international data roaming and how your decision to cut rates in 2012 is affecting usage and revenues. Thank you.
You want to take the data roaming? I don't know.
Maybe we need to come back on that. We know that we have had a positive impact on usage the first year and into this year, we are continuing to work with the roaming agreements externally with all the countries as well, primarily where we have high usage from our countries. I'm not sure.
We'll go into specific details on the data side. Maybe we can take that afterwards.
Yeah.
Thanks.
Your next question comes from the line of Thomas Heath. Please ask your question.
Thank you. Two questions, if I may. Firstly, back to cost cutting. You put quite a lot of non-recurring items in EBITDA this quarter. Is this part of this due to the reorganization into country structure, or is part of this more traditional cost cuts? Basically, should we assume that there is a sequential drop in cost in the operations where we're seeing the non-recurring charges? My second question on the bucket plans in Sweden, if you could say roughly how much of your subscriber base is on bucket plans now. Thank you.
Yeah. If you take the Nordic picture on the data pricing, it's varying from 5%-85% of the customer base being into the new buckets. I would say Sweden is somewhere in the middle there. Five being Finland and 85 being Norway. On the non-recurring costs, we have this quarter a couple of items there. Some are related to the new operating model, and related to Sweden. Some are more related to the new focus in governance and control that we have in Eurasia. I don't know if you want to add anything, Christian, to that.
No, I can just say around SEK 300 million this year is around the reorganization cost that we will continue also to try to find future measures on. As long as we do that, we will have cost on non-recurring personnel reductions. The rest comes from Eurasia non-cash items. Last year it was actually primarily 100% on personnel related.
Thank you. That's very clear. A quick follow-up, if I may. The change of head office, will this have a material impact? Thank you.
Change in head office costs?
No, I was just thinking the big rental, you're having more longer term projects, moving site-
Yeah, when we move in a couple of years, we will decrease cost on the group from this.
Thank you.
Your next question comes from the line of Jack Degerlin. Please ask your question.
I have three questions. The first one, could you comment why Other Operations has a negative EBITDA this quarter? Second question regarding consolidation. What is the book value of your Spanish subsidiary in your books? Third question, could you give us a flavor of what could be the impact in terms of EBITDA of having no more roaming in Europe, 2015? Thank you.
Let me just take the first question on the Other Operations where we have and Telefinans and also a head office and functions. We have a quite large cost on the reorganization, both consulting and communication, et cetera, that we have taken in this quarter. That is the major impact. You should not expect to have the same pace going forward. The other question was?
It was difficult to pick up your other questions. Could you please repeat them?
Sorry. The second question relates to the book value of your Spanish subsidiary. Third question relates to the impact of EU roaming regulation on a full year basis. Thank you.
I think.
On the EU regulation, I'm making a reference to the expected Connected Continent regulation.
We don't comment on the book value of Spain. The last question was around?
The roaming EU regulation. Which we'll come back to. There was a similar question before on the roaming impact. We'll cover that later. Jesper, we'll get back to you.
Thank you.
Your next question comes from the line of Ulrich Rathe. Please ask your question.
Thanks very much. Maybe three questions. The first one is, you talked about investing to save, and you will tell us more at the Capital Markets Day, and we're looking forward to that. I was wondering whether there is an element also maybe of incremental needs for commercial investments in some of your assets. If you look at your asset portfolio, do you feel there are assets where you really have in the past, maybe under-invested on non-commercial investments, and you feel that you would benefit in a return accretive way from really ramping up investments in a material way? That would be my first question. Second question is more clarification. You talked about some distortions in the divisional versus central allocation of CapEx, I believe it was. I was wondering whether there's anything similar going on with regards to EBITDA in the quarter.
i.e., whether there are sort of costs in the overhead, in the allocations that maybe would usually more logically belong into the countries or vice versa. My last question is with regard to the margin guidance. You essentially cut the revenue guidance and give the reason that it's lower handset sales, which obviously are very low margin. You're maintaining the EBITDA margin guidance. I'm just wondering, implicitly, you're sort of cutting the margin expectations with this, right? I was just wondering what would drive incremental margin pressure in the year that has caused this implicit cut. Thank you.
Can I start with two questions, Johan?
Yep.
Let me just answer the EBITDA question and the head office and allocations. We have allocated the group technology and group commercial units in the right way, so that will not have a change over time. The guidance questions, I just give a flavor that in the first half year, we have, as we said, an EBITDA margin that increased in local currency, we have currency impact on that, therefore, we have a stable margin for the first half year.
Ulrich, I'm getting back to your first question on this investment topic. There are a couple of things we're doing. We're investing, I spoke about invest to save, both short-term obviously, more importantly, to transform some of our operations into a more agile, lean operations. We need to take a longer-term view, that's the invest to save. We'll be more detailed on that. We're also investing, obviously, to grow. In some of the markets, you're right, there have been some under-investments, we're making that right. We're upgrading a lot of our 4G and fiber investments across the footprint where we have it. We're also more clear on our prioritization of growth, which comes under umbrella back to winning in some of our key markets. You will see both, we will explain more in detail in the CMD.
Great. That's very clear. Thank you.
Right. Any further questions? Yeah.
Your next question comes from the line of Manish Beria. Please ask your question.
Yeah. Hi there. I have a question on basically if you can give a more explicit breakup between B2B and B2C revenue, just on the mobile side in Sweden and Finland. Can you comment, the B2B decline is more kind of a structural decline rather than just a cyclical one? Any update, if you have seen any competition going up due to Altel launch in Kazakhstan?
Sorry, what was the last one? Competition in?
Yeah, competition in Kazakhstan because of Altel launch of commercial services there.
Right. Kazakhstan, we have normal competition, I would say. What you have also from the fourth player there with 4G licenses, that they're going a little bit more nationwide ambition. We'll see if they get any traction. We're working hard with the stakeholders in Kazakhstan to make sure we get 4G into all of the players, actually. I think it would be good for not just our customers, but also for Kazakhstan as a whole. On the structural question on B2B, and Christian, you can cover the details on the split. The structural reasons we have talked about, and let me remind you, there is a couple of things going on. First, you have a macro aspect in some of these markets where we have our enterprise, very exposed to the economic environment.
Secondly, you have a transition from old technologies into newer IP-based technologies, where we are taking our customers into the future platforms, and it comes with a one-off downgrade in revenue, so to say. You also have fierce competition in some of our core segments, where we're choosing to defend share in the larger corporates. That comes normally with a quite heavy price pressure. We're a bit under pressure in the SME segments, where we are strengthening our propositions in Sweden and Finland, mainly.
I can take the question on the B2B and B2C. On the total service revenues, it's a rather 50/50 split between B2B and B2C. Within mobile, it's a little bit of weight on the B2C side, you could say, in both countries.
Can you just give the split of revenue growth this quarter, just on the mobile side in Sweden and Finland, between B2B and B2C?
Yeah.
On the mobile side.
On the mobile side, yeah. In Sweden, on the mobile side, we saw 3.5% approximately on the B2C side and minus four approximately on the B2B side.
Thank you.
Question comes from the line of Maurice Patrick. Please ask your question.
Hi, it's Maurice from Barclays. I know you'll talk more about the investment plan at the Capital Markets Day, but I remember comments from previous management teams talking about some of the simplicity projects that have taken place or were due to take place inside TeliaSonera, specifically around the Swedish markets, the IT and billing systems. Perhaps some sort of comments in terms of if you do see this as a very much a Nordic plan in terms of spending to save or if it's a wider TeliaSonera issue and opportunity. Thank you.
Hi, Maurice. Yes, it's a wider issue than just Sweden. Actually, we have legacy and complexity that we want to get rid of in many of our markets. We need a bit of patience to get the full effect of that. We'll break that down for you in many more details, as I said, in the CMD.
If I can sort of go a bit further. Is it a multi-year investment or very much a sort of short, sharp thing, do you think?
Yeah, there are no easy quick wins when you are transforming legacy operations. We need a bit of patience to get the full effects, we have urgency of getting them started. We'll break it down for you, Maurice, when I see you in September.
Great. Thank you so much indeed.
All right. I think we have time for one final question.
There are no further questions on the telephone lines. Please continue.
Okay. Any questions on the floor? One over here, in the front.
Yeah. I have some questions about Eurasia, the write-downs there of SEK 412 million in the quarter. Do you see any more write-downs going forward as an effect of your valuation of assets there? Also, can you give us some more details about the write-downs related to the fiber agreement in Uzbekistan?
You want to take that, Christian?
Yeah. We have a focus on operational assets as we work both for better control and we also work with a new strategy. We have done a SEK 400 million write-down in this quarter. I think there's a risk that we will see more. Absolutely. That's what we're also saying in our report. It's not going to be any cash items, but it's going to be historical investments that need to be reviewed. Just to give you also a perspective, we have this generally in this industry when you have infrastructure. Typically you would find it in the infrastructure of broadband in Sweden, et cetera, copper networks taken down that maybe not always have been written down to the full extent. Now we have a bigger and higher focus in Eurasia, and therefore it will be bigger impact in the short term.
Okay. Thank you very much, and I'll hope to see you in September. Have a good summer.
Thank you.