With me today to present, we have our CEO, Johan Dennelind, and our CFO, Christian Luiga. After that, we hopefully will have plenty of time for questions. The intention is to close this session within one hour. With that, Johan, please go ahead.
Thank you, Jesper, and welcome to you here at Stureplan in Stockholm, but also to you online. 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 first quarter 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.
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 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 cost for the quarter, which we'll also explain in more detail.
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 1st 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. 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, or in organic terms, 0.7%, and we reported 0.2%. CapEx is slightly down, but generally inline with what it should be in Q1, even if the mix is slightly different than expected. We'll go into that.
We see the CapEx around fiber and 4G being expanded as a balance of the CapEx in total. The trend in Nordic consumer, as 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 ARPU 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.
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. On the broadband side for enterprise, it's still declining and even more rapidly so. 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 4G and fiber and reaching over 90% now on our 4G population coverage. Fiber, we are doing as much as we can in improving our fiber footprint. 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 the profitability side. We're very encouraged by the mobility pickup of almost four 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, 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 seasons is. While the acquisition cost was quite high, thanks to the market dynamics, or due to the market dynamics in Spain. We have taken share in Spain, but it has been at a price tag which we think is too high. 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 are seeing strong take-up of data services, which I will cover soon. While you can see the CapEx has been fairly low in Q1, it will be normalized over the year. 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. We are 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 are 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 1st, as you know, in improving both the framework, the governance, but also the leadership and the values. I think you will see us talking about this in various forums as we go along, but it is 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 are looking at a strengthened and more articulate strategy around a couple of points, which I will mention here now. We will also have a deeper look at these areas in a Capital Markets Day coming up in Q3, and we will be inviting you to that in due course.
Basically, the new operating model that we have introduced since April 1st is a core part in how we will deliver the strategy, where we aim to strengthen and develop the core operations in Nordics and Baltics. While we aim to take Eurasia to the next level by monetizing and capitalizing on the data boom that we are seeing there. We will also examine opportunities closely related to our industry, which we call the adjacencies. We are 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.
Also adding the convergence of the services to our customers in our markets, and that is 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. Again, investing in selective adjacencies where we see opportunities supporting our core business or having opportunities to grow revenues and profits. That is 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. If you have read the press release, we are saying with a slightly higher risk of the equipment sales being under pressure by our own will, so to say, and it is a low-margin equipment sales that we are talking about.
We're still in our outlook around the same level for net sales EBITDA margin and CapEx to sales around 15%. With that, I will hand over to our permanent CFO since a couple of weeks, Christian Luiga. I'm glad you're here.
Thank you very much. Good morning, everyone. I'll leave this for you. Move this here. Good morning, I'm going to talk a little bit about the numbers, I hope it will be also a crisp and short session before the Q&As. I 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 one 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 minus on the left-hand side, the equipment sales is 1.2. That means that we have a slight decrease in service revenue of 0.6. Taking away the interconnect of 0.9, we have a slight positive trend on the billed revenues. That is a combination of an increasing mobile billed 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, in short, we can see that the large three players have lost porting and the MVNOs and ourselves have gained, we have gained more than our market share. It's been a high price, we can also see on the equipment sales that it has decreased.
We believe it will pick up again a little bit in quarter two based on that the next season for a campaign is typically June in Spain. The profitability is back on plus in March, that is partly due to the offering model that we have introduced, we foresee that we will continue with the profitability in Spain. In principle, that means with the MVNOs pushing that there's an ARPU decline that is compensated by a higher number of subscribers on our side. The billed revenue in mobility is positive 0.7%, I want to highlight that both Sweden and Finland, the big units here, are driving this growth. In Finland, we can see that the billed revenue has increased over the year. We talked about last year, 10% minus, 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. That's a positive trend, and we have now introduced a new offering in Finland, as you know, similar to the Swedish Telia. 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 Halebop and the new Komplett offering is driving sales, and that is very positive. The currency headwind in Eurasia is still quite severe. You have heard that Kazakhstan had a devaluation of 20% 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.
The impact is actually going from a positive 6% on a 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. 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 business, and these will be self-financed.
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 a 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 four 2011, if I remember right, an improvement in EBITDA margin, very much based on structural cost-saving programs and a stabilized revenue trend. Eurasia, we have already mentioned, we have both an OpEx and revenue trend that is helping us. CapEx for sales. We have a continuous drive for building 4G.
The increase in mobility is 4G in Sweden, but it's also 4G and 3G in Finland, both in our best-connected program. In broadband, we have increased the number of homes passed. We do not have so much revenue from new homes connected in quarter one, but we have built quite a lot home passed, and that gives us a little bit of leverage in for 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 SEK 2.4-SEK 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 two, so we should be prepared for that. We also have some cash CapEx that is negative that is compensating for this in this quarter. Net debt, therefore, is positive, going to SEK 1.49. On the 8th of April, we paid out SEK 13 billion to our shareholders in dividend, and with that, we are back up to SEK 186, 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 the 1st of April, we will then start to report from next quarter in the regions, Sweden, Europe, and Eurasia, the prime unit will be country. 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 SEK 2.6 billion, 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, I think we start here with the audience, Sven, go ahead.
Yes, good morning. Sven 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. 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. 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, where they're using the internet services rather than the traditional fixed services. It'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.
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 it's a lot of price erosion and renegotiations. I think there we're fairly okay on the market share level. On the SME side, on the smaller enterprise, smaller companies in Sweden, we are less competitive than we want to be, and are probably not taking our fair share for the moment. We're upgrading that with new services that are coming to market. Launched both a new Touchpoint service, which is a net-based PBX, and also new price plans within enterprise. Hopefully we can stabilize the trend. It is a general trend as well in the market. Next question from Stefan.
Yes. Hello, Stefan Lufang, 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. What are your targets going forward? 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 a 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've lost way too many subscribers in Spain as well. When there are campaigns in the market where everybody goes to market, it drives the general subsidy levels, which have been too high in Spain for everybody. It's very noticeable for smaller players like ourselves.
We have changed the go-to-market approach in Spain in March, where we have now a handset financing, reducing the SAC up front significantly, and that's now part of the March going forward proposition in Spain. Hopefully what we say is a more balanced intake versus cost in Spain.
Does that mean that we should expect a lower subscriber intake going forward?
Not necessarily, but a lower SAC.
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 two months in Spain, we have the marketing campaign around Christmas, that impacts those quarters as well. It's not the biggest part, it's also part of the cost there.
Right. Thomas?
Thank you. Thomas 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? What drives the strong development in Sweden? Then secondly, on Norway, you have some MVNO roaming revenues from Tele2 that are up for renegotiation. Any comments there would be much appreciated. Thanks.
I think the short answer on the first question is just 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. We won't comment on ongoing negotiations of any kind on the wholesale side. Of course, we target also to be part of a growing business in Norway.
Okay, thank you.
Okay, next one, Lena.
Lena Österberg, Carnegie. It's comforting to hear that the SAC is going to come down in Spain forward. 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. Now for two 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 bang for the buck to build a long-term presence in the Baltics and the Nordics, spending the marketing money here instead?
Yeah, I think we need to spend the money in the Nordic-Baltics in improving our positions regardless of Spain, so to say. 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. 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 a converging market, where you have three big operators going fixed and mobile. We have a strategic challenge in Spain which we need to address. 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, 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 Telefónica. It is helping us to defend and keep some of our existing customers, it doesn't give us a full-fledged proposition to address the broader base in Spain.
Okay. Should we see if there are any questions on the telephone line? Please, operator, can you open up for questions?
If you would like to ask a question, please press star and one on your telephone. Your first question comes from the line of Barry Zeitoune. Please ask your question.
Hi. Yeah, I'd just like to ask three questions, please. The first is on Spain. You've mentioned SAC 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. It has been a lot of retention spend as well as acquisition spend trying to defend your customer base. It's also interesting 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? A 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. Could you potentially be an acquirer in Spain?
Is this a potential way of resolving the strategic hole that you're in at the moment in Spain? 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. Thank you.
I'll take the two last questions, and Christian will take the first one on Spain SAC versus retention cost. On Norway, what I said is that we're looking at all our markets. 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. 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, other measures need to be taken. Long term, I think we need to see Spain as up or out. The final question on the SAC retention cost.
The simple answer is that compared to last year, the prepaid SAC is up somewhat, and the postpaid is up quite much. Compared to quarter four, it's quite stable, and on retention cost, it's less.
Okay. Thank you.
All right. Thank you, Barry. Next question, please.
The next question comes from the line of Terence Zhu. Please ask your question.
Yeah. Good morning, everyone. I've got a couple of questions, please. Just firstly, I'm just interested in a 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 involve, and maybe looking beyond that, whether this rules out further headcount reductions in the foreseeable future. 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, you want to take the costs?
I can take the cost initiative. What we said was that we have a cost program that we started last year, we will continue that during the year, we will also start to bring in some initiatives, business initiatives, they may incur some new costs, but they have to be self-financed. 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, that has to be then self-financed and not impact the EBITDA.
Yeah. On fiber, what I can say, I guess, is in Q1, 40% of the broadband CapEx went into fiber. We are, as I said, also initially doing everything we can to expand our fiber footprint, both organically and through acquisitions here in Sweden. The speeds, obviously, when you come out with fiber propositions, you're 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.
On our fiber footprint, the homes passed now in Sweden are around 770,000, and connected ones, 758,000 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.
Yeah, morning, everyone. Just a couple of questions really, kind of pushing on from previous questions, really. Firstly, in Swedish Mobile, as lots of people have highlighted and you yourself highlighted it, some good trends, particularly good turnaround in your Swedish mobile ARPU, basically from declines last year to, 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's sustainable through 2014? Secondly, I know that you don't want to comment specifically on your intentions in 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? I think Barry asked about Norway, the regulator's proclivity to allowing consolidation.
Do you have any insight into that? 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, Christian can take the ARPU in Sweden. Let me be the 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. 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 has been a lot around price decreases as a reason for regulation. It is a lot more around quality of service that needs to be ensured, and that's the main topic of debate and discussion in the regulatory arena.
Okay. On the Sweden trend, the positive side is, as I said, both our fighting brand Halebop and our new offering, Komplett, is driving sales. We have 90,000 more customers this year than last year. On the ARPU side, the main driver is our new offering, Komplett, and that is both in the price model itself and also additional content that is coming.
Thank you. Thank you very much. Can I just follow up on the comments in consolidation? 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 and 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 Rathe. Please ask your question.
Thanks very much. My first question is with regard to Spain. You commented when you describe the Spanish situation in the fourth and the first quarter, it sounded almost a bit as if the cost 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 what we're seeing here was the way you thought it would pan out when you started to think about the Christmas campaign. That would be my first question. The second question is, you 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, in the same vein, the EBITDA margin could actually be a bit higher, or would you consider a flat EBITDA margin to be the budget, if you will? If revenues come a bit lower, then you would still talk about flat margins. 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, first, the Christmas campaign was more successful in terms of gross adds than we expected. Having then the higher SAC, together brought a higher total cost than we expected. We gained market share, as was the plan. When it comes to the outlook, we say that we reiterate our outlook. We're also saying then that the low-margin equipment sales is where we see some risk, and the rest we leave for you to analyze. What I would say on the cost initiatives is really in order to drive new things into the market to strengthen our 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 then 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?
If we see there is a positive business case overall, we'll of course reevaluate. The focus now when it comes to the OpEx side is to have it within the EBITDA for the year. CapEx, of course, we have some flexibility right now.
Thank you.
Should we go back to the floor and see if there are some questions there? I see Andreas in the back.
Andreas Olsson, SEB. Just a question on Eurasia and subscriber intake. Maybe you touched upon it before, it was a little bit lower, of course, related to the non-active subscribers in Kazakhstan. 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?
I think it's partly a reason that we see more mature markets as well over there. Yes, I think that's been a trend over some quarters that it's been a bit lower. We see, for example, Nepal in this quarter jumping back a bit to a bit stronger growth again after 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.
I think we have one question over here.
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 Eurasian business? The second, could you give us any updates on Lars Nyberg and whether there will be a legal process there?
Let me start with the former CEO. As you know, the AGM refrained from the discharge of liability, that means that the company has one year to make up its mind whether to press charges of any kind. Ultimately, that's a decision for the board. The process has just been initiated, the chairman will make any comments on the matter. When it comes to Ukraine, of course, this is something we're watching 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. You can take a different view on this.
If I take the financial view and look then, refraining from the more macro and political comments, I see, of course, that we have been impacted by the uncertainties, both in terms of our associates' market caps as well as currency effects in the region. We're watching it closely. We have the really good advisors working with us on the matters and keeping a close watch. Okay, one more. Over here.
Yes. Also a question on Eurasia. CapEx has been fairly high in Eurasia, not this quarter, last year. Growth is now around 6%, Fading maybe. Do you see that CapEx will remain at this high level in 2015 and 2016 if growth remains around 5%?
We haven't guided, obviously, beyond this year. 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. 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.
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 except Uzbekistan, is there any other market where you cannot upstream cash?
Well, we had some administrative issues in Nepal, for instance, but we're optimistic about solving that, and it's not a big amount. Uzbekistan is our big headache when it comes to repatriation of cash.
In Nepal, it's regarding the dividends. When we finance in and out and pay interest on loans, that's not a problem.
Good clarification.
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? Separate from that, when do you expect to see cost synergies from the network share with Telenor? Thanks.
Well, may I 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 Telia Denmark as the best network for 4G, 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 have an increased margin in that market, we wouldn't have that without the network sharing. We wouldn't have this kind of network without the network sharing at the same cost. We already see an impact from that. We will dismantle more this year and therefore take out more of the old costs and continue that. 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. The B2C has not continued to increase, it more flattened 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? Do 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? 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? The second question is 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, we see it as an offer that gives the customers a seamless one-stop shopping of fixed mobile TV services or other communication entertainment-related services. We see it across consumer and enterprise, not just consumer. The converged trend in enterprise is also quite strong, 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 fast-changing pace market when it comes to convergence. Also Estonia is converging, where we have a good position. 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. Those three, we will look for others that are making sense. When it comes to financial services, we're not very developed, I must say. 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. 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. If that's a good proxy for future market shares, I would say yes. Then it's up to us to make sure that we can deliver on that.
Okay, thanks.
Thank you. Should we move on to the next question, please?
The next question comes from the line of George Economou. 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? Would you be willing to double up in the mobile markets without having a fixed line proposition, which can compete with the incumbent? 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 a repricing of the contracts that you've seen? Do you think we are past the worst, and therefore we should be looking at a recovery later this year?
Is there a significant part of your base yet to be repriced? Thank you.
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. We can't say the worst is behind us there, even if I think we have a better roadmap of services in this space. I mentioned Touchpoint as one example of a new service. On the convergence 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 Beyazian. Please ask your question.
Thank you. My question's 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 Finland, please? Secondly, as you alluded to, you're in the middle of a cost reduction program, SEK 2 billion with another SEK 1 billion 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 get nearer to the full effect of the SEK 2 billion cost reductions? Thirdly, if I can just ask you mentioned earlier the board review of the transaction in Eurasia, et cetera, which obviously have had some internal consequences at TeliaSonera.
Do you see or have any comments or thoughts on the risk of potential financial consequences for the company in this matter? Thank you.
I'll take the last one, and maybe Christian, you take the other two. The Eurasian review was concluded in conjunction with the AGM. 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. 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. I don't think related to this review itself, we are seeing and doing any connections to the financial aspects at this point, Peter. Obviously we have also flagged that some markets have a higher risk per se, and we keep reporting on that through our risk reporting.
The last one in the Q4, we reported Uzbekistan has a quite high exposure of SEK 7 billion.
On the Finland side, as I said earlier, our new Together offering is doing well. It has about 15%-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. 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. It's also another side of the coin, and that's the revenue trend, and I will not comment on that. We see positive drive from the cost side in Sweden.
Okay. Thank you.
Good. I think we have time for two final questions here.
Thank you. The next question comes from the line of Allan Nichols. Please ask your question.
Hi, Allan 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. Thank you.
Well, I think the risk in Nepal and Uzbekistan is more related to the competition dynamics changing, where we today have two competitors, and we expect three competitors in both these markets, which will change the dynamics, obviously. We don't foresee any 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. 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. Therefore, the quarter 4 number includes sales to distributors that were then sold in quarter 1. We have slowed down that process, awaiting and seeing how the new model will work out. I foresee therefore, as I said in the presentation, that it will pick up in quarter 2 when we get into the typically June sales period.
Okay. Thanks very much.
All right. I think that.