Earnings Call: Q1 2014

Apr 23, 2014

With me today to present, we have our CEO, Johan Dandrynd and our CFO, Christian Louiga. After that, we hopefully will have plenty of time for questions. The intention is to close this session within 1 hour. So by that, Johan, please go ahead. Thank you, Jesper, and welcome to you here at Stereplan in Stockholm but also to you online. And for those of you who can't see the slides, I can tell you that we have a wonderful spring ish picture, which maybe should have been pink considering the cherry blossom that we're experiencing here in Stockholm. We are going to take you through the results quite rapidly so to give time for some questions afterwards. The Q1 was an okay quarter, I label it, but we, of course, can do much better. Top line remains a challenge, and you know why, but it is mainly related to the macroeconomics in many of our markets. It's also related to regulatory issues and interconnect effects, but also to changing consumer behaviors that we are trying to adapt to as fast as we can. But we are we're in for a tough ride on top line going forward. We have, though, some encouraging signs, mainly in the Nordic consumer business, both in mobility and broadband, and we'll come back to that a bit more in detail. While we, on the enterprise side, are seeing still some tougher environments, which we'll also explain a bit more in detail in the presentation. Gladly, the Eurasian operations are improving on profitability even if the organic revenue growth is down to 6% and also evaporated by FX effects when you report the top line numbers. On Spain, we have had a good quarter when it comes to market share and subscriber intake. Obviously, you've seen the results that Spain is also having quite a high marketing and acquisition costs for the quarter, which we'll also explain in more detail. But it is a situation where we have to defend and grow share in order to get to a sustainable position. We are live since April 1 with a new operating model, which we'll also go into a bit more detail in the presentation, where we have a country based model with clear accountability per country, supported by group functions and support in those key areas of commercial and technology. We're reiterating our full year outlook for the year, and we'll also be explaining that in a bit more detail. Looking at the net sales. We are reported down, also in organic terms, 1.8%. However, the margin is up, in organic terms, 0.7% and we reported 0.2 percent. OpEx and CapEx sorry, CapEx is slightly down but generally in line with what it should be in Q1, even if the mix is slightly different than expected, and we'll go into that. We see the CapEx around fiber and 4 gs being expanded as a balance of the CapEx in total. The trend in Nordic consumers, I mentioned, is improving, and that is a core message for today. It's driven, of course, by the huge demand in Internet services and data related services, and we're starting to capitalize and monetize on that growth. We have launched in all our markets in Nordics a data centric model, as we call it, where you pay for data while you enjoy free voice and text. It's gaining traction in each market and is now contributing positively to Arthur across the Nordic footprint. While on the broadband side, consumer, we still have the heavy pressure on the old fixed voice services, so to say. But gladly, I can also show you that we are compensating for that decline with new services and price adjustments. So all in all, the consumer broadband business in Sweden is flat, which is a strong message for the core operations. Enterprise, however, has seen the challenges over the last year and continues to do so. We are reporting a 2.3% decline in Mobility, which is an improved trend. But on the broadband side for Enterprise, it's still declining and even more rapidly so. And if you remember from last time, we're still facing a rapid change from fixed traditional services into more data Internet centric services. We're also seeing a shift from hardware PBX sales into net centric solutions, which is good for the future proofing of the business but has a one off effect on the equipment sales, which is lower on the enterprise side as well. Sweden, a solid performance, both in mobility and broadband. We are reporting a pretty flat on mobility and improved profitability on the broadband side, thanks to strong cost focus and efficiency measures. We continue to invest heavily in 4 gs and fiber and reaching over 90% now on our 4 gs population coverage. And fiber, we are doing as much as we can in improving our fiber footprint. And thanks to a fairly mild winter in Sweden, at least, we have continued to invest quite heavily in Q1. Finland is a very positive story. We're seeing improved trends, both on the mobility and broadband when it comes to profitability side. And we're very encouraged by the mobility pickup of almost 4 percentage points on the EBITDA. This is thanks to strong cost focus and measures but also improved positions in the mobility consumer space. Spain has had a, as I said, a good take in of customers related to the previous quarter's Christmas campaign spilling over into Q1 as the Spanish Christmas season says. While the acquisition cost was quite high, thanks to the market dynamics due to the market dynamics in Spain. But we have taken share in Spain, but it has been at a price tag which we think is too high. And therefore, we have also adjusted the value proposition in Spain during March with a handset financing scheme that Christian will cover in more detail. Eurasia, as I said, very strong on the profitability side, improved margins. The impact from the FX, mainly in the devaluation in Kazakhstan, is raising the 6% organic growth to negative reported growth, but the underlying strength is there from the operations. Some operations are struggling a bit, Azerbaijan and Georgia. While the others are doing fairly all right. Across the board, we're seeing strong take up of data services, which I'll cover soon, while you can see the CapEx has been fairly low in Q1, but it will be normalized over the year. And as I mentioned, the data story is very positive across the Eurasian footprint. Our challenge now is to make sure that we invest in the right way to cover for that demand that we see picking up across all the markets. But we're well positioned to do so in each and every market. We are continuing to strengthen our corporate governance and our sustainability agenda. As you know, we had our AGM just a couple of weeks ago where we concluded on the board's review of the Eurasian transactions. Based on that, we're, of course, continuing to work on improved governance in the region and also other regions for that matter. We have taken several measures since already September 1, as you know, in improving both the framework, the governance, but also the leadership and the values. And I think you will see us talking about this in various forums as we go along, but it's a core part of the focus in TeliaSonera today. When we talk about our strategy going forward, we are continuously improving and revising this. Right now, we're looking at a strengthened and more articulate strategy around a couple of points, which I'll mention here now. But we'll also have a deeper look at these areas in our Capital Markets Day coming up in Q3, and we'll be inviting you to that in due course. But basically, the new operating model that we have introduced since April 1 is a core part in how we will deliver this strategy, where we aim to strengthen and develop the core operations in Nordics, Baltics, while we aim to take Eurasia to the next level by monetizing and capitalizing on the data boom that we're seeing there. And we will also examine opportunities closely related to our industry, which we call the adjacencies. We're already active in this space, but we want to be even more active. What this means in the how terms is that we need to be even more focused on the network quality and future proofing the network quality for our customers across our footprints, but also adding the convergence of the services to our customers in our markets. And that's why we have gone country based. So we get one proposition to the consumers where we operate. We need to be even more competitive in our operations, I. E, a leaner, more simple and cost efficient way of working. And again, invest in selective adjacencies where we see opportunities supporting our core business or having opportunities to grow revenues and profits. That's, in a nutshell, our strategy going forward, which, of course, we will be deliberating much more on as we move forward. We are reiterating our outlook, as I mentioned. And if you have read the press release, we're saying with a slightly higher risk of the equipment sales being under pressure by our own will, so to say, and it's a low margin equipment sales that we're talking about. But we're still in our outlook around the same level for net sales EBITA margin and CapEx to sales around 15%. And with that, I will hand over to our permanent CFO, since a couple of weeks, Christian Louiga. I'm glad you're here. Thank you very much, and good morning, everyone. I'll leave it for you with this here. Good morning, and I'm going to talk a little bit about the numbers and hope it will be a also a crisp and short session before the Q and A. I'd like to start with just confirming that I think this is a very stable and good quarter from a profitability and cash flow point of view. I'll come back to the revenue in a second and discuss a little bit around that. The earnings per share was impacted by the currency effects but also a little bit from the associates, but those numbers you know because they are 1 quarter lag. On the revenue side, if we look at this picture, I think this is a good explanation of the revenue trend. We have 1.8 minuteus on the left hand side. And the equipment sales is 1.2. That means that we have a slight decrease in service revenue of 0.6 percent. Taking away the interconnect of 0.9 percent, we have a positive slight positive trend on the build revenues. And that is a combination of an increasing mobile build revenue compensating a little bit more than the negative side on the fixed line. Spain. Spain has been a tough journey over Christmas. We have had a high cost level and partly on SAC. SAC has increased per handset. The market, if we look at that, has been in short, we can see that the large three players have lost importing and the MVNOs and ourselves have gained, and we have gained more than our market share. It's been a high price. And we can also see on the equipment sales that has decreased. We believe it will pick up, again, a little bit in quarter 2. Based on that, the next season for a campaign is typically June in Spain. The profitability is back on Plus in March, and that is partly due to the new the offering model that we have introduced. And we foresee that we will continue with the profitability in Spain. In principle, that means with MVNOs pushing that there's an ARPU decline that is compensated by a higher number of subscribers on our side. The build revenue in mobility is positive, 0.7%. And I want to highlight that both Sweden and Finland, the big units here, are driving this growth. In Finland, we can see that the build revenue has increased over the year. We talked about last year, 10% minus, and now we're on a positive 0.9%. It's continued to be a good trend. It's actually a subscriber base that have increased with 5% year on year, 150,000 more subscribers this year than last year. So that's a positive trend. And we have now introduced a new offering in Finland, as you know, similar to the Swedish Diela. However, it hasn't had any impact yet. It's only a very small part of the total revenue. In Sweden, we can see that both the Hale BoP and the new Compllet offering is driving sales, and that's very positive. The currency headwind in Eurasia is still quite severe. You have heard that Kazakhstan had a devaluation of 20 percent in February. We have to remember it was in the middle of the quarter, so the impact is only half this quarter and will increase then for next quarter. Otherwise, it's Nepalese rupee that is very close to the Indian rupee that has fallen behind in this quarter. So the impact is actually going from a positive 6% on local organic growth to a negative reported. We continue to drive our cost initiatives as we have planned, and we can see that the cost decrease is now at 4%, excluding Spain, in this quarter. We have a balance between the revenue and the cost, which is positive. The cost initiatives have been, I would say, a mix of the salary part, the personnel part and marketing part, but also other costs. We will continue to focus on resources and also other costs. And resources, when we talk about that, we talk both on consultant side and the personnel side. We will also add some new initiatives that will drive the business, and these will be self financed. So it's very important to know that when we now add new initiatives, they should be self financed and they should not impact the EBITDA for the full year. I like this picture. It's very positive. We have stable or increasing margin in all business areas. In Mobility, the cost level in Mobility, excluding Spain, is actually positive, and it compensates for the negative trend in Spain as itself. In broadband, we have the first time since quarter 4 2011, if I remember right, an improvement in EBITDA margin, very much based on structural cost saving programs and a stabilized revenue trend. And in Eurasia, we have already mentioned, we have both an OpEx and revenue trend that is helping us. CapEx to sales. We have a continuous drive for building 4 gs. The increase in mobility is 4 gs in Sweden, but it's also 4 gs and 3 gs in Finland, both in our best connected program. And in broadband, we have increased the number of homes passed. We do not have so much revenue from new homes connected in quarter 1, but we have built quite a lot home passed, and that gives us a little bit leverage into the next coming quarters on Connecting Homes. The increase is 40% of the total broadband now in fiber compared to 25% last year. We are a little bit behind in Eurasia, but we will normalize over the year. And it will focus on now taking care of both capacity but also the data journey that we are starting. Free cash flow, stable from 2.4% to 2.6%, up 6%. We have some calendar effects on B2C payments in Sweden. We have some timing effects on VAT and interconnect payments. This will probably rebound in quarter 2, so we should be prepared for that. We also have some then cash CapEx that is negative that is compensating for this in this quarter. Net debt, therefore, is positive, going to SEK 1.49 billion. But on the 8th April, we paid out SEK 13,000,000,000 to our shareholders in dividend. And with that, we are back up to SEK 186,000,000, still within our range, and we feel quite comfortable with the balance sheet and liquidity position. EPS, I already mentioned, so I will skip that. I'd like to just remind ourselves, this is the last time we talk about our business areas and business unit in this format. We have a new operating model and new organization from 1st April, and we will then start to report from next quarter in the regions, Sweden, Europe and Eurasia. And the prime unit will be country. And just want to also let you know that you will get restated numbers before the next quarter report. Finally, I think this is a stable quarter. From the revenue side, also stable if we exclude equipment and interconnect. EBITDA, flat in local currencies. Free cash flow up to EUR 2,600,000,000 plus 6%. Good progress in the cost programs, and we continue to reiterate our outlook. That's all. Thank you. Okay. Thank you, Christian. I think it's now time to start with some questions, and I think we start here with the audience. And Sven, go ahead. Yes. Good morning. San Schall from Swedbank. I'd like to start on the broadband side. You wrote in the report that the consumer segment in the broadband side is now stable. That must be the first time in 12 years or so. But anyway, the other part seems to be falling still, the corporate side. What is the main problem? Is it market share? Or is it pricing? Or is it both maybe? Thanks. Yes. It's a good comment on the consumer broadband. And I think it's I don't know if it's the first time, but it certainly was a while ago that when we compensate for the fall in traditional fixed with the new services and also price adjustments for consumer. On the enterprise side, there are a couple of components that are affecting us. One is the shift from old technology to new technology and the changing trend also in the enterprise segments among users, whether using the Internet services rather than the traditional fixed services. But there's also, as I mentioned, the equipment sales that are less and less and more and more service based, which is affecting the one off equipment sales. But then when it comes to the segment, if you break it down on segments, we have said also before that in the larger corporate clients and public clients, we're keeping share, but we it's a lot of price erosion and renegotiations. So I think there, we're fairly okay on the market share level. On the SME side and the smaller enterprise smaller companies in Sweden, we are less competitive than we want to be and probably not taking our fair share for the moment. We're upgrading that with new services that are coming to market, launched both new touch point service, which is a net based PBX, and also new price plans for within enterprise. So hopefully, we can stabilize the trend. But it is a general trend as well in the market. Next question. So very Stefan. Yes. Stefan Uphang, Nordea. I'm a little bit puzzled by Spain and your comments regarding the balancing of the cost. Looking at the subscriber development, it seems like you hardly took in any subscribers in March and then you had an improvement in EBITDA. So what are your targets going forward? I mean it seems to be you have to choose between subscriber intake, growing market share, creating a sustainable business or to improve EBITDA? Well, yes, in a way, you're right. We are in a position where 7% market share is not sustainable over time. We need to come to a scale level in Spain. The only way to do so organically is to fight for market share, and we're doing well fighting for market share. What we have done well is intake of gross, but what we have not done so well is the churn side. We have lost way too many subscribers in Spain as well. So when we there are campaigns in the market where everybody goes to market, it drives the general subsidy levels, which are have been too high in Spain for everybody, but it's very noticeable for smaller players like ourselves. Therefore, we have changed the go to market approach in Spain in March, where we have now a handset financing, reducing the SAC upfront significantly. And that's now part of the March going forward proposition in Spain. So hopefully, what we say is a more balanced intake versus cost in Spain. But does that mean that we should expect a lower subscriber intake going forward? Not necessarily, but a lower SAC. Okay. Thank you. I just want to also add, Johan, that in the Christmas campaign and the seasonality, if you look back also, in the first 2 months in Spain, we have the marketing campaign around Christmas, and that impacts those quarters as well. It's not the biggest part, but it's also part of the cost there. Right. Thomas? Thomas? Thank you. Thomas Siegfried with Handelsbanken. A few questions, if I may. Very strong ARPU development in Sweden Mobile. Wondering, you talked in Q4 a lot about the corporate and consumer breakdown of Nordic Mobility. If we look specifically at Sweden, is it the same trends there? Is it Sweden outperforming tremendously in consumer? Or is corporate a little easier this quarter? So what drives the strong development in Sweden? And then secondly, on Norway, you have some MVNO, some roaming revenues from Tele2 that are up for renegotiation. Any comments there would be much appreciated. I think the short answer on the first question is the picture we show you on an overall level for corporate and consumer is the same for Sweden. On the Norway side, it's part of our ongoing business to make sure that we also do well in the wholesale side. And we won't comment on ongoing negotiations of any kind on the wholesale side. But of course, we target also to be part of a growing business in Norway. Okay. Thank you. Okay. Next one, Janard with you. Liana Stebay, Carnegie. It's comforting to hear that the fact is going to come down in Spain forward. But I was wondering if you look because when you started, Johan, you said that you wanted to focus on generating growth in the core Nordic areas and the Baltics. And now for 2 quarters in a row, there's a lot of money being spent in Spain, which maybe is not seen as core. Wouldn't it maybe be better to have a better bank for the back to build a long term presence in the Baltics and the Nordics spending the marketing money here instead? Yes. I think we need to spend the money in the Nordic, Baltics improving our positions regardless of Spain, so to say. But when it comes to Spain, we are in Spain, and we need to do well in Spain, and we need to create a sustainable position. And I've said that before, it's hard to see that at 7% market share, it's a sustainable position long term when you have the converging market where you have 3 big operators going fixed and mobile. We have a strategic challenge in Spain which we need to address. But short term, we need to defend market share or grow market share. That's, in our view, the best way to create value for Spain. Do you see a need in Spain to go converged for you as well and to have your own not just as a reseller, but to have your own fixed network? We'll see what it takes. We have started with the reseller agreement together with Telefonica. It is helping us to defend and keep some of our existing customers, but it doesn't give us a fully fledged proposition to address the broader base in Spain. Okay. Should we if there are any questions on the telephone line, please, operator, can you open up for questions? Your first question comes from the line of Barry Zeatuny. Please ask your question. Hi. I'd just like to ask three questions, please. The first is on Spain. We've seen you've mentioned SAP this quarter. And if I look at the fact that churn has reduced, it actually suggests that your gross adds are relatively stable versus recent quarters. So it has been a lot of retention spend as well as acquisition spend trying to defend your customer base. And it's also interesting that the fact that a lot of your ads were on prepaid rather than postpaid. Does that mean that the actual cost of retaining or acquiring a postpaid customer has increased significantly versus recent quarters? And second question on Spain is more general really, which is that in recent quarters, you've distanced yourself from the potential of selling the business. Would you could you potentially be an acquirer in Spain? And is this a potential way of resolving the strategic hole that you're in at the moment in Spain? And my final question is on Norway. Looking at Tele2 and the positioning in the market, there were some recent comments made about being open to acquiring in Norway. I was just wondering whether you've got any feel for the regulatory appetite to accept an acquisition and whether you think this is feasible? Well, I'll take the 2 last questions, and Christian will take the first one on Spain, SAC versus retention cost. On Norway, really, what I said is that we're looking at all our markets. We are part of we would like to be part of consolidation where it's possible, and that's being evaluated across our footprint. We recently made an acquisition in Finland and Denmark, and we're looking to that across our footprint. But we're not making any specific comments on that, obviously. When it comes to Spain, I've said that all along that a sustainable position for Spain is not where we are today. We need to find the path to a sustainable position. If that's not possible organically, then other measures needs to be taken. But long term, I think we need to see Spain as up or out. And then the final question then on the cycle retention cost. The simple answer is that compared to last year, the prepaid SAC is up somewhat and the postpaid is up quite much. And compared to quarter 4, it's quite stable. And on retention cost, it's less. Okay. Thank you. All right. Thank you, Mario. Next question, please. The next question comes from the line of Terence Tsui. Please ask your question. Good morning, everyone. I've got a couple of questions, please. Just firstly, I'm just interested in a little bit more detail on some of the cost cutting initiatives. You said that future ones will be self financing. Maybe you can give us a bit of color on what this can evolve. And maybe looking beyond that, whether rules out further headcount reductions in the foreseeable future? And then secondly, just interested in getting a bit more color on fiber. You mentioned that you had quite a mild winter. Maybe you can just update us on your fiber coverage across Sweden and what sort of speeds are available to the end customer? That would be really useful. Thank you. Christian, do you want to take the costs? I can take the cost initiatives. What we said was that we will we have a cost program that we started last year, and we will continue that during the year. But we will also start to bring in some initiatives, business initiatives. And they may incur some new costs, but they have to be self financed. So if they're going to drive some cost, they also have to drive some revenue. One good example that we're looking at is to improve our position in the M2M area, but that has to be then self financed and not impact EBITDA. Yes. And on fiber, what I can say, I guess, is in Q1, 40% of the broadband CapEx went into fiber. And we are, as I said, also initially doing everything we can to expand our fiber footprint, both organically and through acquisitions here in Sweden. And the speeds, obviously, when you come out with fiber propositions, you are going now I may be corrected by someone here, but you're going up to way beyond the 100 megabits per second to the homes where we operate, which is, of course, a great customer experience. And on our fiber footprint, I mean the home spa now in Sweden, around 770,000 and Connected 1, 758, tons, approximately. Thank you. All right. Should we take next question from the telephone line? The next question comes from the line of Andrew Lee. Please ask your question. Good morning, everyone. Just a couple of questions really kind of pushing on from previous questions really. Firstly, in Swedish mobile, as lots of people highlighted and you have self highlighted some good trends, particularly good turnaround in your Swedish mobile ARPU, basically from declines last year, I think, plus 3% on a blended basis this quarter. Can you tell us what's the specific driver of that ARPU improvement? And do you believe that sustainable through 2014? And then secondly, I know that you don't comment specifically on your intentions on end market consolidation in the Nordics. But I wonder if you could talk about where the opportunities might arise and how likely do you think that any consolidation could happen in the Nordics in the next year? And I think Barry asked about Norway and the regulators' proclivity to allowing consolidation? Do you have any insight into that? And also in Denmark, where we've all been hoping for consolidation for some time, Do you think in the coming year, there's a possibility that we could finally see a willing seller emerge there? Thank you. Let me take the second one and Kristian can take ARPU in Sweden. So let me be a bit general then on consolidation topic because I can't be specific, and we don't comment on anything specific, obviously. When I meet regulators and industry players across Europe, there is a completely different appetite and willingness to accept consolidation. I think the triggers people are waiting for, Ireland and Germany, are key to see what's happening there. But I think personally that we will see a lot of consolidation opportunities come up during the next year where regulators will be willing to accept that because in the history, it's been a lot around price decreases as a reason for regulation. Now it is a lot more around quality of service that needs to be ensured. And that's the topic the main topic of the data discussion in the regulatory arena. Okay. And on the Sweden trend, the positive side is, as I said, both our fighting brand, Helbop, and our new offering, Complet, is driving sales. We have 90,000 more customers this year than last year. But on the ARPA side, the main driver is our new offering, Complet, and that is both in the price model itself and also additional content that is coming. Thank you very much. Can I just follow-up on the comments in consolidation? I'm sorry to push. Just do you think there's any reason why the Nordic region should be less likely to see consolidation opportunities arise over the next year versus the rest of Europe, the regulators you've been meeting? No, not really for the European part of the Nordics. Thank you. All right. Thank you. Should we move on to the next question, please? The next question comes from the line of Ulrich Reiss. Please ask your question. Yes. Thanks very much. My first question is with regard to Spain. I mean, you commented when you described the Spanish sort of situation in the 4th and the first quarter, it sounded almost a bit as if the cost sort of ran ahead of where you were budgeting it. I was just trying to understand whether that's actually the case or whether this was really your game plan. And then what we're seeing here was sort of the way you thought it would pan out when you started to think about the Christmas campaign. That will be my first The second question is when you sort of hedged the full year outlook a bit by saying there's a possibility that low margin device sales would be lower. I was just wondering, does this really mean that sort of in the same vein, the EBITDA margin could actually be a bit higher? Or would you consider sort of a flat EBITDA margin to be the budget, if you will, and if revenues come a bit lower, then you would still talk about flat margins. And then finally, just a clarification really about the self financing initiatives. I still didn't entirely understand whether you're talking about incremental cost initiatives that need to be self financing or that this was a more general comment about any new business initiatives would have to be self financing. Thank you. Yes. On Spain then, 1st. The Christmas campaign was more successful in terms of gross adds than we expected. But having then the higher SAC together brought a higher total cost than we expected, but we gained market share as was the plan. When it comes to the outlook, just I mean, we say that we reiterate our outlook, but we're also saying then that the high margin sorry, the low margin equipment sales is where we see some risk, and the rest, we leave for you to analyze. And what I would say on the cost initiatives is really, in order to do drive new things into the market to positions, we're also taking other cost initiatives to make sure we can self fund those growth opportunities and initiatives that Christian is referring to. May I just follow-up on that last point? Why is this so important? If there is an NPV positive project, why is it so important in a given fiscal year that is self funding? Is this simply a question of being held hostage to guidance? Or what is the underlying rationale? No. I mean if we see there is a positive business case overall, we'll, of course, reevaluate. But the focus now when it comes to the OpEx side is to have it within the EBITDA for the year. But CapEx, of course, we have some flexibility right now. All right. Should we move back to the floor and see if there are some questions here? Andreas, back. Andreas Vuelsson, STB. Just a question on Eurasia and subscriber intake. Maybe you touched upon it before, but it was a little bit lower, of course, related to the non active subscribers in Kazakhstan. But besides that, also a little bit lower than usual. Is it higher competition? Or what do you see in Eurasia in terms of subscriber intake? No. I think that's partly a reason that we see, I mean, more mature markets as well over there. So yes, I think that's been a trend over some quarters, but it's been a bit lower. And we see, for example, in the call in this quarter, we can jumping back a bit to a bit stronger growth. We are not a rather slow Q4. Azerbaijan has been a tough market, as you've seen also in the numbers, and that has also impacted the subscriber growth. Two questions, in fact. The first is, could you give us any of your thoughts about the Ukrainian crisis and how that might impact on your European sorry, your Eurasian business? And the second, is there could you give us any updates on Large New Year by and whether there will be a legal process there? So let me start with the former CEO. As you know, the AGM refrained from the discharge of liability, and that means that the company has 1 year to make up its mind whether to press charges of any kind. Ultimately, that's the decision for the Board. The process has just been initiated, and the Chairman will make any comments on the matter. When it comes to Ukraine, of course, this is something we're watching very, very closely as we have operations in adjacent areas of the region. We're also through our associate companies present in both Ukraine and Russia, of course. So you can take a different view on this. If I take the financial view and look then and refraining from the more macro and political comments, I see, of course, that we have been impacted by the uncertainty, both in terms of our associates market caps as well as currency effects in the region. So we're watching it closely. We have the really good advisers working with us on the matters and keeping a close watch. Yes. Also a question on Eurasia. CapEx has been fairly high in Eurasia, not this quarter but last year. But growth is now around 6% and fading maybe. Do you see that CapEx will remain at this high level in 2015 2016 if growth remains around 5%. So we haven't guided obviously beyond this year. But what we can say more general here is that 40% growth in data year on year. We need to make sure that we have the right networks to deal and cope with the Internet explosion that we're starting to see in these countries. What that means in overall CapEx, we'll have to come back to for next year. But for this year, we're going to normalize Q1 over the year at least. I just want to add also, I think we will talk more and more about the country specific CapEx because they are a little bit different, these countries, and it's important not to focus on an average for Eurasia. And also one follow-up question on Eurasia. Is there any market where you cannot upstream cash to the holding company? I know you mentioned Uzbekistan before. But exact Uzbekistan, is there any other market where you cannot upstream cash? Well, we have had some administrative issues in Nepal, for instance, but we're optimistic about solving that, and it's not a big amount. But Uzbekistan is our big headache when it comes to repatriation of cash. And then Paul, it's regarding the dividend. So when we finance in and out and pay interest on loans, that's not a problem. Okay. We have one more here. Thank you. Thomas again. Just a brief one on Denmark. ARPU continues to slide, and we see a decline this Q1 even though there's much less of an interconnect cut this Q1 than it was last year. Is there anything that can be done to the commercial climate on your part? And separate from that, when do you expect to see cost synergies from the network share with Telenor? I may make a just general comment before Christian takes the more detailed answer. I think we are seeing a great effect of the network cooperation with Telenor in terms of customer perception in Denmark. They see Telenor Danmark as the best network for 4 gs, which is encouraging. We're also seeing the new pricing models having a good effect for our business. Of course, we want to translate that into the bottom line as well. But being slightly subscale in a very competitive market is also not easy. Just to continue on that, we I mean, we have an increased margin in that market. We wouldn't have that without the network sharing. So and we wouldn't have this kind of network without the network sharing at the same cost. So we already see an impact from that. We will dismantle more this year and therefore, take out more of the old cost and continue that. And that is it's last year and this year that is the big movements in that project. On the revenue side, it's actually the B2B that is the main decrease this quarter. And the B2C has not continued to increase and will flatten out, which is also something we need to work with in this market. Thank you. That's very helpful. Good. Should we move back to the conference call if we have any further questions? Thank you. Your next question comes from the line of James Britton. Please ask your question. Thanks and good morning. I've got two questions, please. Firstly, when you talk about an evolving convergence trend in your markets, can you just clarify what you're meaning by convergence? Are we talking about fixed and mobile services being sold or packaged together? And if so, in which market are you most advanced in developing this sort of proposition? And do you see scope for market share gains from this trend? And the second question is around it's a strategic question around adjacent markets. Which of these markets are likely to be most interesting for you in the fairly near term? And can you clarify where you are on mobile payments across your footprint? Thanks. Thank you. Convergence, yes, it we see it as an offer that gives the customers a seamless one stop shopping or fixed mobile TV services or other communication entertainment related services. And we see it across consumer and enterprise, not just consumer. The converged trend in enterprise is also quite strong, where they where we're not just looking for communication services but also IT and business critical support systems. Most advanced converged markets, I think, are in the Nordics, and Spain has come up as a very, very fast pace fast changing pace market when it comes to convergence. Also, Estonia, is converging where we have a good position. So most advanced in terms of developing these offers. I think we will look to Sweden to drive that and take the lead in that even if I think Estonia is quite far right now. When it comes to the adjacencies we're looking to and we are active in already, we are active in TV, as you know. We are active in financial services. We are active in the Internet of Things. So those 3, we will look for others that are making sense. When it comes to Financial Services, we're not very developed, I must say. I mean we don't have a strong footprint or hold grip of the mobile payment market, which is a great opportunity in unbanked regions like Eurasia, for instance. So that's something we will take a much closer look at going forward. Can I just have the one follow-up? Do you see Telia being quite well positioned for market share gains from the move towards convergence given your balance of fixed and mobile assets? I think that's what the customers are asking for. And if that's a good proxy for future market shares, I would say yes. And then it's up to us to make sure that we can deliver on that. Thank you. Should we move on to the next question, please? The next question comes from the line of Georgios Airedikoni. Please ask your question. Hello. I've got two questions, please. The first one is a follow-up to the previous questions from James around convergence. You are very well positioned in Sweden. You are fairly well positioned in Finland, especially if you continue making small acquisitions there in fixed, but not very well positioned in Denmark and Norway. How could that play into your strategy over the next few years? And would you be willing to double up in the mobile markets without having a fixed line proposition, which can compete with incumbent? And my second question is around fixed in Finland and Sweden. Can you give us an idea of where you are currently on the B2B side with regards to the repricing of the contracts that you've seen? Do you think we are past the worst and therefore we should be looking at the recovery later this year? Or is there a significant part of your base yet to be repriced? I'll start from the last one. And we are seeing the ongoing repricing in the fixed enterprise base across Finland and Sweden. As you saw, the quarter was actually worse than last quarters. So we can't say the worst is behind us there. Even if I think we have a better road map of services in this space. And I mentioned Touchpoint is one example of a new service. On the converged side, you likely note that we don't have those capabilities well developed in Denmark and Norway, even if we, in Denmark, have some capacity and capabilities in the fixed and can be in the converged space. I would say luckily, these markets are not very converged driven yet. It's very much still a kind of shopping on the various technologies. This will change is my conviction, and we need to have a good answer and a proposition to that as we move forward in these markets on our own through partnerships or otherwise. Thank you. Okay. Thank you. I think we still have a couple of questions on the line, so please go ahead. Thank you. The next question comes from the line of Stefan Vazian. Please ask your question. Thank you. My question has been asked already. Thank you very much. Next question comes from the line of Peter Nielsen. Please ask your question. Thank you very much. A couple of questions, please. First one, Finland, you've introduced new data centric models there. Your main competitor hasn't followed. How has the reception been for the new pricing model in Sweden sorry, in Finland, please? Secondly, as you alluded to, you're in the middle of a cost reduction program, SEK 2,000,000,000 with another SEK 1,000,000,000 to come in 2014. If we look at Swedish broadband, where I guess we have expected and seen some improvements, is the Q1 margin improvement here indicative of what we can expect for the full year? Or is there more to come as we can narrow to the full effect of the EUR 2,000,000,000 cost reductions? And thirdly, if I can just ask Johan, you mentioned earlier the board review of the transaction in Eurasia, etcetera, which obviously have had some internal consequences at TeliaSonier. Do you see or have any comments or thoughts on the risk of potential financial consequences for the company in this matter? Thank you. So I'll take the last one and maybe Christian will take the other 2. So concluded the Eurasian review was concluded in conjunction with the AGM. But I also mentioned in my speech in the AGM that this is not something that is terminated in that sense. We started this upgrade of our framework and our control system already during the summer and in September. We continue with that. And I think many of these markets are somewhat unpredictable when it comes to some of the regulatory areas, which will impact us regardless of this. So I don't think related to this review itself, we are seeing and doing any connections to the financial aspects at this point, Peter. But obviously, we have also flagged that some markets have a higher risk per se, and we keep reporting on that through our risk reporting. And the last one, in the Q4, we reported Uzbekistan as a On the Finland side, as I said earlier, our new together offering is doing well. It has about 15% to 20% of new sales, but it's still very small part, extremely small part, a couple of percentage points of the total. So it has no impact. But it's positive, and it has a positive reception. The margin development in Sweden, yes, we have made a good cost program last year and going into this year, and it's more structural cost, And that usually gives impact over time. But it's also another side of the coin, and that's the revenue trend, and I will not comment on that. But we see positive drive from the cost side in Sweden. Okay. Thank you. Good. I think we have time for 2 final questions here. Thank you. The next question comes from the line of Alan Nichols. Please ask your question. Hi, Alan Nichols at Morningstar. I was just wondering with the rapid growth you've had in Nepal and Uzbekistan, if there's risk to having to have a customer purge like you've just had in Kazakhstan? Well, I think the risk in Nepal and Uzbekistan is more related to the competition dynamics changing, where we today have 2 competitors, and we expect 3 competitors in both these markets, which will change the dynamics, obviously. But we don't foresee specific technical purging of customers at this point of time. Thank you. The next question comes from the line of James Britton. Please ask your question. Hi, there. I just had one follow-up on Spain. I was just interested to precisely understand why equipment sales has fallen so sharply this quarter when the net adds was substantially higher this quarter than last year? Obviously, it might be linked to gross adds. But if you could just clarify precisely why that's happened. Thank you. Okay. I'll do that. We actually have a little bit lag in our sales of handsets because we sell quite a lot to our distributors. So therefore, the quarter 4 number includes sales to distributors that were then sold in quarter 1. And we have slowed down that process, awaiting and seeing how the new model will work out. And I foresee, therefore, as I said in the presentation, that it will pick up in quarter 2 when we get into the June typically June sales period. Okay. Thanks very much. Right. I think that concludes