Right. Good morning, all. Welcome to the presentation of Telia Sonera's first quarter results. I'm Jesper Billgren, Head of Investor Relations, and I will try to guide you through this session. With me today to present, I have the CEO, Per-Arne Blomquist, and also the CFO, Christian Luiga. After that, we will have a Q&A session as normally. With no further delay, I would like to hand over to Per-Arne, please.
Thank you very much. As I said this morning when I was saying to you via the radio that you tend to forget something sometimes how time flies. The Q1 has been a very turbulent quarter for us. It started with the Mannheimer Swartling report. We had then the resignation of Lars Nyberg. Now we also got the new board. A lot of things have happened during this quarter, and that's why I am very proud of the result today. It's a solid result. I'm satisfied with it. We deliver improved margin, we deliver improved cash flow. You could see within the different entities, mobility doing pretty well despite the fact that they have pressure on top line. Eurasia continue to grow. They also protect and even improve their margins, which is good.
I have a certain concern about broadband, which I will come back to later. At the same time, we have also, after years of discussion, launched a new price model, which I will come back to later on, explain what that is. I think that's good. As one of the first operators in Europe, we have been able to do this. We continue, of course, to work at our efficiencies, which we have to do given the pressure on the top line. Last but not least, we have to continue to work with the sustainability issues that has been under discussion for quite a while, and I will come back to that later on and also comment upon this. If you look at the EBITDA margin development, I don't know if you remember this, we have had a slightly negative trend during the last four quarters.
This quarter now we managed actually to protect and even improve the margin. I think that shows that we have a solid result during the quarter despite sort of the top-line issues. For me, the top-line issues are very, very crucial right now. If you look at what I tend to look at when it comes to mobility, the billed revenue, you could see here that voice is under a tremendous pressure right now. No volume growth. We are declining with 13%. Messaging is going down with 10% volume-wise, 7% on the revenue. You could also see that mobile data is growing 80%. The problem for us is that we can't really monetize on this. I think when I look at this, I see two actually positive things. First of all, mobile data is growing.
That means that we are a growth company, if we manage to monetize the mobile growth. One of the answers that we have to this issue is the new offering that we launched in Sweden, the 25th of March, where we, after a couple of years' discussion, where we have said that we will probably have flat fee on voice and we will have to pay for data, actually produce an offering that gives this answer. You could see here that for a fixed price, you will have unlimited voice and text messages. You will pay for what you use on the mobile data. You could choose different buckets. Even better, you could add on different devices, up to seven different devices. You could add on also different mobile numbers. You could use it for your family, and you get everything on one invoice.
I think this is a very innovative way of taking care of the mobile data issue, we are, I believe, the first bigger operator in Europe that actually comes out with this kind of model. I think this might be the answer, I hope, to see a future growth when it comes to the mobile data income as well. This growth that we have today, with the 20%, one-third of the volumes are too low, and we need to raise that. Proud of being the first operator out in Europe to have launched this model. It is also important for us when we look at this to take this experience from the Northern Europe side into also Eurasia.
We now see that data growth is taking off also, mobile data growth is taking off in Eurasia, roughly one-third or even 40% of the growth, or the 40%, is today mobile data. Something is happening in Eurasia. We are now trying to use the experience that we have from the Nordics to put into this to avoid that we get unlimited usage and too low pricing. Also a good sign for the future when we talk about growth. The concern I have right now is also the transition we have in broadband services. We are leaving the old technology, the old PSTN voice, moving into IP-based services. What is very positive for us is that the fiber rollout starts to take off. I get a lot of positive comments about our fiber installations.
Finally, when we learned how to do this, it took a year and a half with, I would say, with a lousy rollout of fiber. Now that we have learned how to do this, I think that the demand is actually higher than what we can supply right now, which means that we have taken the right decision to go on and invest in fiber. This will over time offset the decline of the old technology, it will take time. What is also important here is the TV offering. The triple play, I say, is the trigger also for using not only the fiber as an access, but also to use us as a service provider. A concern that I have, but I expect changes to come during the coming quarter and year. We have talked about the cost issue, especially within broadband.
I think we have been pretty good over time to have a good balance between the top-line development and our cost development. We have seen now during the latter part of 2012 that we have had a shrinking range and gap between cost and also the net sales development. That is why we then implemented a new efficiency program, and we started with that already of the Q3. What we have said, and what we repeat to say, is that we will save net SEK 2 billion. If we exclude Spain, we will go down from SEK 27 billion to SEK 25 billion during 2013 and 2014. We are talking about this year, around 1,800 employees that have to leave the company. Christian Luiga will go through the details later on, what this actually means in numbers and also phasing.
Sustainability has been a big issue for us. I said at the AGM that this is not something that is a separate subject for us. This is something that should be a part of our day-to-day business. What we are focused on is privacy issue, freedom of speech, and also anti-corruption. We continue to work with our industry, which I think is essential for us to do. We have to work with industry. We cannot stand there alone. We do that within the industry dialogue and the Global Network Initiative, which is very important for us. What is perhaps even more important is the education that we are launching in April and May internally in the company, where we go through, via e-learning tool, the anti-corruption policy, et cetera. I have done it myself, and it is a very good tool.
I am optimistic that we will have a very ambitious but good launch of this the coming month. Summarizing the quarter, as I said, turbulent, but we managed to improve margin and cash flow. We had a stable margin in mobility despite the pressure on top line. Good performance, solid performance in Eurasia. Concerned about broadband. Proud of the initiative when it comes to launching new offerings within the mobile data and mobility. Focus on measurements, efficiency measurements, and we continue to work with our sustainability. Christian, please.
Thank you. Good morning, everyone. My name is Christian Luiga. I am the CFO. I would like to start with. There it is. I was looking for this. Start with saying I am satisfied with the performance in this quarter. We have a slight decline in revenue, but we have sustained our EBITDA. We have improved our margin. The EPS is flat despite quite heavy currency effects. Cash flow is positive. Let me first stop at the currency effects because they are quite severe. On both top line and EBITDA, they impact 3%. That means SEK 300 million on the EBITDA line and SEK 800 million on the revenue side. Without that, as I said, the EBITDA would have been flattish for the quarter. The revenue decline in quarter one is a little bit worse than it was in quarter four. That puts some question marks.
All three business areas are declining. On top of that, in the first quarter, we are impacted of 0.6% from Veikon Kone, a retail chain that we closed in July last year and that you tend to forget about. It's a Finnish electricity goods retail chain that we closed down. If we start with mobility services, the biggest impact comes from interconnect. It's SEK 500 million on the top line, and all countries contribute to this. If we compare to the fourth quarter, it's Estonia, Denmark, and Norway which have the biggest increase in decline. We are satisfied with 14% in Eurasia. Of this 14%, 4.5% of the growth is data revenue, that is very promising, and they come from the largest markets.
Kcell alone is increasing 40%. That is one reason why they can show a 4% growth in a very tough market right now. The data growth is also very visible in Azercell and in Ucell. In Azercell, which is the country we have the only negative growth, we have a 2% impact from interconnect. Broadband, finally. On the surface, it looks quite bad. We have challenges in broadband revenues. In the first quarter, it's much lower than it has been in the previous quarters. The biggest impact comes from international carrier, low margin voice business, and also interconnect. We also have an impact of the very cold weather. Actually, the soil has been very frozen in Sweden for the first quarter. Extreme, I would say. That has impacted the revenue side and the build-out.
Also, I don't want to blame the calendar, it has some impact, it's a little bit hypothetical, we will come back and see in quarter two how much it was on the leap day we had in 2012, the Easter that ended up in March this year, and it was in April last year. Leaving revenue and looking at gross margin, you may remember in 2011, we talked a lot about declining gross margin. In 2012, we stabilized it. This quarter it was also stable. This is important for the profitability, of course. The impact though, I would say to start with Eurasia is actually increasing its share of the income statement. That has a positive impact. In addition, we have reduced margins on equipment sales. Also, interconnect impacts positively. To summarize the business areas, Eurasia has done a fantastic job.
It's the highest EBITDA margin with 53% in five years. It's a combination of the revenue growth and cost control. It's very positive to see the execution on cost in mobility. That has had an impact on the profitability. Despite the decline in revenue, we can actually sustain the profitability level. The challenge remains in broadband with lower revenue and higher cost. That is one reason, not the only reason, why we had to initiate the cost program in 2012. In October we launched that we would save 2,000 net over two years. That would have a consequence on about 2,000 employees in the company. This year, we have a plan to reduce 1,800 employees. Up to today, in April, we have notified 1,000 employees.
The majority of those are actually notified in April. That's the reason you see a quite small restructuring cost in first quarter. The employees will leave, most of them, during quarter two. The biggest impact or the full impact will come from quarter three. We still believe and estimate that the full cost for the year will be SEK 1.7 billion. As I said, EPS is flat. SEK 0.05 comes from the currency effects, and we remain at SEK 0.95. Capex to sales is 10.7%. That is lower than our full-year forecast. We still believe we will reach to 14% at this point. One effect is in broadband in the first quarter, the same as I said before. The extreme cold weather has put a pressure on the build-out of fiber.
Other than that, I would say that over the recent year, we have been better in controlling how we spend our Capex. We can decide a little bit more ourselves now. You maybe remember we talked about autopilot in the past. We have control, and we still believe in 14%. Free cash flow. The biggest impact here is the same as I talked just about, is the Capex. With lower Capex, we have better free cash flow, and it has the biggest impact on the improved cash flow for the quarter. Net debt to EBITDA. We have a decrease from this 1.65 to 1.54, improving net debt to EBITDA based on operational cash flow.
If you consider also the dividend we just paid of SEK 12.3 billion, the net debt to EBITDA is 1.89 on the upper level of the range of 1.5 to 2.0 that we have guided on. Finally, considering the first quarter, what I've said about the revenue and also the Veikon Kone impact, we still believe on a flattish revenue for the year. We believe that we will continue to have an increased EBITDA, slightly increased EBITDA, a Capex to sales of 14%. Thank you.
Thank you a lot, Christian. I think we will start and open up for questions. Let us start with a number of questions here in the audience, and let's start with Stefan on the front. Please state your name and your company.
Yes. Stefan Gauffin, Nordea. Three questions, if I may. Starting with mobility services in the Nordic region, where sales development was weaker than consensus expected in all the markets. Can you give some information on how you see the competitive landscape, if you see that the competitive landscape has changed in any of these markets? The EBITDA margin in Uzbekistan improved quite dramatically from Q4 to Q1. Is this a new, more or less sustainable level? Just if you could give some indication on how the new subscription model has been accepted in the market.
Okay. If we start with the different markets in the Nordics, I think that we have had, I would say, a rather calm first quarter, but we have pressure especially on the voice side, and that was we can see. I think the toughest market right now seems to be Finland, where we have more price competition than I see in the other countries. I would say that the first quarter has been pretty calm. You talked about Uzbekistan. We have improved the margin due to the fact we actually changed management a year ago, and they have taken out quite a lot of costs. It went up dramatically. Whether we could keep the margin on this level remains to be seen, but I think at least we have come up to more so sort of average within the Eurasian business as we have not seen before.
The last question was?
It was on the new subscription, I can take that one.
Yeah.
We have had a quite good pickup ratio in roughly 20% of new sales since we launched in the consumer segment.
Even 23%. I checked.
Yeah.
I think it's taken up in a very positive way.
Thank you. Thomas Witthöft Handelsbanken. A few questions, if I may. On competitive pressure in Finland, it seems quite a lot of this is your own Tele Finland brand and also
Saunalahti. What's the sort of pricing strategy from TeliaSonera's point of view in Finland, given that it's just three players and the market is heating up? The first question. Second on the cost cuts in, or the lower cost in mobility, if you could shed some light on the components there. How much is staff? How much is lower handsets in Q1 and so forth? Thank you.
If we start with Finland, I think we have introduced a new offering called Sofia, which has been pretty successful. To some extent, it might have been a bit of even too aggressive on the price, we try to adjust that. Otherwise, Finland as such is a very competitive price market, I would say, and it has been for a couple of years. I think we need to find ways there to actually increase, especially the pricing for mobile data, therefore this kind of new model that we've introduced in Sweden, I hope we could also at some point in time introduce in Finland to have a better connection between consumption and also, what would you pay for that? We had the costs, Christian. Have you any ideas about that?
Well, actually, in mobility Sweden. Was it mobility Sweden or mobility group you talked about?
Group.
Most important. Well, it actually comes from both personnel expenses and marketing expenses and other expenses as well. It's a combination of all three areas. I would say it's no one that is bigger than the other one. We had the-
I think that was it.
That was it, yeah. Okay, Lena.
Lena Österberg, Carnegie. I was just wondering a little bit about Spain, since you decided to keep your Yoigo. The margins were weaker in the quarter. I was wondering how much of that is seasonality. Should we see that every year, or is there any other costs in the margin in the quarter?
Well, partly I would say it's seasonality, and we also have some offerings at the beginning of the quarter, it also cost us a bit. Otherwise, I don't know. What do you say about Spain, the margin?
Well, the margin improved year-on-year, we have our seasonality effects in quarter one with the marketing campaigns, or actually the Christmas campaigns are in January, not in December like here. You see that from last year as well.
Okay, one more here from the school.
Andreas Olsson, SEB. Follow-up on Spain. The subscriber intake was a little bit lower than usual and also churn higher. Is that also seasonal effects? Then on Turkcell, there is an AGM coming up 22nd of May. What are your plans for that when it comes to trying to get the dividend out of Turkcell? What is your strategy? What do you believe the others are up to?
If we start with Spain, I think it's important for us to make sure that we also get in the right quality customers. Sometimes we have taken in too much and churned out too much. That has been sort of one of the efforts that we have tried to do during the first quarter in Spain. We will see going forward whether we can increase the intake, or not. I think it has been also pretty aggressive on the price side in Spain. A lot of MVNOs have come out with new offerings, which also explains part of the churn. We should try to resist ourselves from just having a high intake and then a high churn. I would rather go for higher quality on the customer base than the high churn rate.
Just to add there, you can see the churn is coming from the prepaid side.
When it comes to Turkcell, it's difficult to comment upon this. I mean, we have an AGM on the 22nd of May, and it remains to be seen what will happen there. I mean, I award for it when it comes to dividends, so we would like to take out the dividends from 2010 and 2011. Whether that works or not, that's another issue.
All right. Should we open up for some questions from the conference call? Operator, please go ahead.
Of course, no problem. If you would like to ask a question on the phone lines, please press star and one on your telephone keypad. If you wish to cancel that request, please press the hash key. Your first question comes from the line of Ulrich Rathe. Please ask your question.
Thanks very much. I have two questions. One is in Norway. I am just wondering about general strategy. Tele2 yesterday reaffirmed its longstanding targets about really taking up the number 2 slot and gaining share really on an ongoing basis. Isn't this now a time for Telia to really hit back more aggressively, maybe even sacrificing some margin rather than following the Finland playbook and essentially giving up the number 2 position and then starting to fight back more aggressively? Just wondering what your thinking is in the big picture here. The second question I have is on Spain. It looks to me as if the service revenues, the ARPU driven revenues, have actually deteriorated in local currency terms quite significantly in terms of trends. Is there a particular reason why this is a lot weaker than it was in the fourth quarter?
Is it just general price competition, or what do you attribute that to? Thank you very much.
The first question was about Norway. First of all, it depends on also how you measure your market share. I am more for measuring revenue market share than SIM cards, because that will actually generate the intake for you. We will never be able to compete with Tele2 on price. They will always undercut us, that is not the strategy to go forward. We have to find other offerings that attract the customers in the Norwegian market. I think that what we have talked about now with this kind of family packet that we have in Sweden might be something that could be launched also in Norway. To try to compete with Tele2 on price, that will never work. We had Spain, the service revenue. What do you say?
Well, you want to answer?
Just if you look at the numbers, we can see that the bill revenues and service revenues growth is approximately similar in this quarter versus previous quarters. I don't know if you want to add something about.
We have seen the MVNOs coming in actually on the prepaid side and pushing the price down, but not so much on the postpaid side. That's coming back to the quality of the customers we're trying to attract. The minutes of use in Spain as a market is also declining.
I think we should also remember that the first quarter in Spain is also very weak after Christmas, that's a normal trend. I'm not surprised to see this.
Thank you.
Thank you. Next question, please.
Thank you. Your next question comes from the line of Barry Zeitoune. Please ask your question.
Three questions. The first is on Uzbekistan. Clearly, it's now quite a big component of any growth that you have in Eurasia. Historically, we've heard about issues getting money out. I was wondering if you could expand on how easy it is to get money out of Uzbekistan, and roughly how much it costs you to get money out in terms of how we should think about valuing that growth. My second question is on the business component of your Swedish mobile business. We've heard noises from TDC with their MVNO on Tele2 going for the SME segment in Sweden, and we've also heard a lot of noise from Tele2 themselves wanting to expand the business segment.
I was wondering whether you're seeing any evidence of that in terms of increased competition from them, whether you expect that to increase further going forward, or whether there are risks to your business segment. My final question is really on your new pricing models. I was just wondering what the expected ARPU effect is going to be in terms of when we saw new pricing models from Telenor in Norway, initially we saw some dilution from high-end customers, and then we started to see accretion as they moved more customers onto bundles. Are you expecting a similar kind of trend with the family packages in terms of increased subscriber take from the low end? Is it going to be more of an impact initially with dilution coming from the high end? Thank you.
Well, I think it's difficult to say. We have to judge now after a couple of weeks. Of course, there's always a risk that you might have some high ARPU customers coming into this kind of offering. At the same time, what we have seen is also that when you create this kind of family package, you take all your subscriptions into this, independent whether they are from Telia or whether they are from some other operator. I would expect this to actually be a creative subscription, perhaps from the very beginning. I might be a bit too optimistic, I strongly believe in that this will work. Let's see in a couple of weeks' time. We have Uzbekistan. Yes, it's a problem to actually convert dollars or sums into dollars, and I don't think there is a fixed price.
For the time being, it's very difficult overall to convert. I can't give you a price on that right now. The third question was?
Was the small business segment pricing in Sweden.
Yeah. No, I think that we have seen a rather stable situation. It's pretty tough overall in the business when it comes to price, but I don't see that the players have changed their attitude toward the different segments so far. It remains to be seen that if it comes up more than the second quarter, but so far, I have not really seen a big change that you mentioned.
Okay. Thank you.
Good. Can we move on, please?
Thank you. Your next question comes from the line of Peter Nielsen. Please ask your question.
Yes, good morning. Thank you. Couple of questions, please. First one, in Per-Arne's presentation about broadband services, one of the slides it says on fiber rollout, further extension of our footprint necessary. You didn't elaborate on it, Per-Arne, but could you perhaps tell us a bit more what you're thinking now on this further extension of footprint in Sweden, I presume? My second question-
Can you tell us whether you're involved in the license process in Myanmar? My third question relates to the working capital, the usual issue, I think, particularly at Q1. A huge negative working capital movement in this quarter, which obviously is seasonal, but could you elaborate a bit on why we are seeing this every year? Thank you very much.
No, we are not involved in the license dealings in Myanmar. The working capital?
The working capital, yes, you are correct. The seasonality is always big in quarter one, then it's better in quarter two. The difference between this year and last year actually very much relates to Spain, that's why we're also very careful balancing both profitability and cash flow and growth stats in Spain, with terminal financing driving a lot of it.
When it comes to the fiber, as I said here in my presentation, I'm very positive over the response that we have in the market for fiber. After a very, let me say, dull start, where we didn't really know how to roll this out, I think we have got this right, which means right now that we are prepared to expand our footprint. We are looking also to buy municipality networks, et cetera, if they are up for sale. That's what we are looking at. I think we have already started that process actually with the smaller acquisitions that have been made.
Okay. Thank you.
Okay, should we go back to the floor and see if there are any further questions on the floor? No.
One.
Okay, one in the front here.
Auli Moilanen from the Finnish business daily, Kauppalehti. I read this morning somewhere that the head of Huawei has said that it's getting to pick up in Europe, the demand. How do you feel up here?
You mean from-
From Huawei.
From our customers or from-
Well, that you are feeling more comfortable.
Use the mic, please.
Yeah, that you are feeling more comfortable, and so that they see it as well, companies like Huawei.
Well, I think that we have been very resistant when it comes to continue to invest, and we have not declined even during, I would say, really tough times during the financial crisis. I don't know if that's what he refers to, but of course we need to continue to invest. We need to expand for capacity. We need to expand in coverage. The good thing for us is that there is a price pressure, and we usually talk about Moore's law, that you could say that the capacity sort of doubles every 18 months for the same price. Which means that we need to continue to invest, and it might be that he is looking at. At the same time, which I think is important to say, is that if we are doing the things right with the pricing, we are a growth industry.
If you look at the data volume growing with 80%, for us, it's just a key question how to price this. If you do it in the right way, we will turn into growth again.
One more here. Thomas.
Thank you. Two more, if I may. On broadband services in Sweden, rolling out fiber, it seems a little bit from the numbers that part of the pressure on margins could be high growth margins on fixed telephony. Just see if you could comment on that, on the sort of margin impact of fixed telephony decreasing and fiber picking up, both sort of short-term and long-term. Secondly, if you could share with us roughly how much of your subscribers in Sweden and Norway are on some sort of bucket plan or committed payment plan. Thank you.
If I start from more sort of a generic perspective when it comes to the old technology and the new one, yes, of course, it's like that when you take the old PSTN voice business, we have much higher margins. That would be a margin contraction during this year until we sort of get up and running with a more sort of well-run operation when it comes to IP solutions. Of course, that will happen during the coming years, and that's why it's so important also for us to balance the cost side, to take out costs for the old technology, close down product, et cetera, which we have started to do. That is the key for us to keep up also the profitability within broadband.
On the bucket plan, I don't think we have that right now. We can come back on that.
Yeah
on that question. One more. In the front.
Yes. Stefan Gauffin, Nordea. Follow-up on broadband Sweden. The top line development has fluctuated quite a lot between the quarters. Looking at this quarter, I think it's slowed down on growth on broadband and also quite a pickup on decline on fixed telephony. You talked about the impact from slowdown on rollout of fiber, could you elaborate a little bit more on the development in the different segments, and what you expect going forward?
Which segments are we talking about?
On broadband services in Sweden.
Yeah
fixed telephony and IP-based services.
If I start with the fiber thing, that I'm sort of deeply involved in. The problem we have had, that we have had a severe winter here, we haven't been able to start to dig. We also, as I said, we had a problem with sort of the whole rollout process. What I expect to happen right now is that we should sort of produce as much as even less than the demand is. For us, it's just a question to get up to speed and perhaps even increase the production rollout of fiber, if that was your question. Or?
Yeah. Just why the growth has fluctuated so much between the quarters.
Yeah. Once again, saying that we have a winter where you can't even work, that means that the whole rollout for fiber has stood still due to weather conditions. That's also actually have an impact on our numbers, for sure. If you look at the PSTN, if we look at the, as I said, one thing which is hard to estimate is this calendar effects in quarter one. We know more about that when we get to quarter two. Finally, we know this, just on your general question, it's more price pressure on IP services than it is on traditional fixed. That's something we have known for many years. That's not a secret. That's on a general market point of view.
Okay, thank you.
Okay. Let's move back to the conference call and see if there are some more questions there.
Of course. As a reminder, if you'd like to ask a question, please press star and one on your telephone keypad. Your next question comes from the line of Dominic Klerhman. Please ask your question.
Oh, yeah. Thank you. Well, firstly, I'm just wondering if there is a strategic review ongoing currently as the new board is appointed, or whether that will only happen when the new CEO has been found. I'm especially thinking on your commitment to Eurasia as a region. On the good fiber uptake, you see your fiber demand, I'm wondering what it is, why you can't satisfy demand. What's the bottleneck? Is that, again, just the bad weather conditions, or is there anything in the value chain, in the operations that's holding you back? Maybe a third question on Denmark, just on your current thinking on the joint venture with Telenor, if you think, well, it makes potential consolidation actually more difficult to have that joint venture, or is that just not on the agenda at all at the moment? Thank you.
I think if I start with Denmark, I don't think that the joint venture as such has blocked anything there. I think it was good for us to do this. With being the number 3 player there, we needed to do something. You could always see that the number 1 player is well off in the market. If you are a number 3 or number 4 player, you have to do something else. I don't see in-market consolidation come up to speed, unfortunately, because I think we would need that within the industry. It's still a very much a regulatory question. It's still a question for local regulators. It's still a question for Brussels to decide upon that it might be okay to have two operators in a country like Denmark or perhaps two operators in a country like Sweden, because we are small countries.
We're talking about between five, 6 million, up to 9 million people. If you compare that, I usually take Denmark as big as greater Hamburg in Germany, and Sweden is as big as Bavaria. This is a problem, I would say, for the whole industry, that there is a lack of the willingness to consolidate, especially in the small markets that have in-market consolidation. That was one thing. We talked about the fiber. I think one of the restrictions we have is actually to find construction workers that actually could do this. It's not that easy. We have found a couple of companies that are good in this, and we have found companies that was less good in this, and that was not very good for our brand.
I think the restriction is actually to find construction workers that would help us to roll out this physically. What was the third question as well?
Well, strategic review.
Well, I think we had our first real board meeting yesterday. Of course, we will start to look at this. There's no change on the strategy right now. Eurasia remains as a very important part of our business. Then it's up to the board now to work with this. We have enormous strategic review that starts anyway at the beginning of June and will continue for a couple of months during the autumn. That will be done in the same way as before.
Right. Next question, please.
Thank you. Your next question comes from the line of Jakob Bluestone. Please ask your question.
You just mentioned you had the first board meeting yesterday. Could you maybe talk a little bit about the new board's priorities? We've obviously seen the announcement of the review of Eurasia. Presumably the appointment of a permanent CEO is fairly high up that list. Are there any other sort of strategic priorities from the new board that you'd like to flag to investors and ourselves? Secondly, on Spain, you've obviously decided to hold on to the asset. I was hoping you could maybe give a little bit of longer term guidance for where you think the business can head in terms of market share and margin. Maybe also just maybe talk a little bit about how you see the strategy for that business. Fusion's obviously doing extremely well. You've got Vodafone and Orange are rolling out, overspending EUR 1 billion on rolling out fiber.
There's price war on the low end of the market. Where do you see Yoigo fitting in with all that? What is sort of the market position that you believe this business can occupy? Thank you.
I think the first question was around the board's priorities. Well, I don't want to comment upon that, because we have the first meeting. Of course, very clear is that the first priority for the board and chairman is to find a new CEO. That's the main task for a board. That's what I have at the top of the agenda. That's not a secret. Then when it comes to other priorities, it's something that we do not really comment upon. That will come out later when they have done that. When it comes to Spain, we decided not to sell. I said this morning when I was interviewed, I think for Bloomberg, that we are not a forced seller. When we didn't get the right price, and we couldn't perhaps resolve the regulatory issues, we decided not to sell.
Then we will keep this asset. The ambition is still to be a growth, work for growth in Spain, but make sure that we also can improve margins and also that we can improve cash flow. I still think that we should expect to see growth from the Spanish operations, but also with higher profitability going forward.
If I can just ask two follow-ups on each of those points. On Spain, do you think you need a fixed line offering of some sort, or to align yourselves with a fixed operator? Secondly, on the search for or the appointment of a permanent CEO, what is the process at this point? How advanced is it? Can you comment on that at this point or?
No, I can't comment on that. That's a question for the board. They have to work with that. To be honest, when it comes to Spain, I don't really know whether you need to have a fixed combination there. I think we are a low price operator, and we are attracting a certain segment of the market, and I think that there's enough old customers there for us without going into the fixed network. I think we will stick to that for the time being.
That's great. Thank you.
Thank you. Next question, please.
Thank you. Your next question comes from the line of Barry Zeitoune. Please ask your question.
Hi, I just wanted to ask a follow-up to your comment on Spain and the regulatory issues that was one of the reasons that we didn't see a deal. On the surface, you were a willing seller, and we had statements from both Vodafone and FT suggesting they were both willing buyers. I was just wondering whether you can elaborate on what the regulatory issues were as you saw them and how that impacted the ability of you doing a deal in Spain. Thank you.
No, I think for me, basically it's a price issue. I don't want to go into the discussion we have had, but there are issues around commitments, et cetera, that you have connected to the licenses that are a bit complicated. I don't want to get more into the details around that. We just decided not to go on with the process.
Would you have expected similar remedies to the sort of remedies we saw in Austria?
Difficult to say, but I think that is one of the risks you take. When you looked at that and you tried to, yeah, what could happen in Spain, I think that makes this very tricky. That makes it tricky, as I said before, not only in Spain, but in all the markets in Europe, which I think is a pity for the whole telecom industry.
Yeah. Okay, understood. Thank you very much.
Thank you.
Thank you. Your next question comes from the line of Andrew Lee. Please ask your question.
Yeah. Good morning, everyone. Just firstly, a question on Turkcell and MegaFon and your relationship with them and your co-shareholders following Lars' departure. Could you just give us an update on your interactions with Turkcell and your involvement in that Per-Arne over and above the specifics surrounding the AGM? Also, who's the main contact between Telia and MegaFon now? Then just secondly, I guess we're seeing, and forgive me if this is overly harsh, we're seeing underperformance in Norway, Denmark and Finland at the moment. Does it make you rethink your pricing strategy, your attitude, and desire to consolidate? Could you give us any thoughts around that, please? Thank you.
We start with the connections with both Turkcell and also MegaFon, we have a group of people who are working within the boards, and we are a group of people here as well that have regular contacts with Turkcell. It's not just one person. Especially when it comes to Turkcell, we also have who is sort of heading the Eurasian business. A lot of people are involved in this, including Conny Karlsson, who's sitting at the board. When it comes to MegaFon, I think we have also broader contact area there. I met pretty recently both the board and also the management of MegaFon. We have a pretty close contact. It's not just depending on one person, if that's what your question indicates. It's a group of people working with these different outlets.
About the question on performance outside Sweden in the Nordic region.
You're right. It is an issue, we have said that. We have seen a weak performance in some of these countries, for me, this is not only a question about cutting costs. It's a combination of your offering, your customer offering, to make sure that we become the growth company that we should be, given the volume increases that we see. This is the issue for the whole industry. We are not alone here. Everyone is struggling with that. When you're doing this, you also have to keep the control of the cost side to make sure that you can maintain both cash flow and also profitability.
Just following up on that. You mentioned, I guess, around 9 to 12 months ago, looking into doing a cross-border efficiency drive across the Nordics. I think you mentioned a quarter or two ago that that was more difficult than you'd originally thought. Have you had any progress further to that? Thank you.
Yeah, I think that mobility is moving forward, they're doing it in a different way. Sometimes we can complicate things a bit too much, which I think we did. Now we try to simplify it a bit and go for the things that could be done on a more, sort of, we could say, regional basis, and try to focus on that. I think we did too much at the same time. That was the problem.
Thank you.
I just also would like to add that in Norway, we have saved cost in the first quarter, there is hard work on that, the decline is also related to Tele2 and interconnect
Situation. On the surface, it may look more dramatic than it is. In Denmark, billed revenue has actually improved for the first time in quite a long time compared on the negative growth side.
Just a reminder about what Christian said here before, that we have half a billion top line coming from interconnect in this quarter. If you add on that, then you're more or less back to more or less the growth we had in the previous quarter.
Thank you.
Right. Next question, please.
Thank you. Your next question comes from the line of Taru Ristimäki. Please ask your question.
Thanks. Had a very simple one that in Turkey, do you see that Turkcell Holding will be able to participate in the Turkcell AGM next week? Do you foresee that Turkcell Holding will be able to vote in the AGM, provided it actually does participate?
I don't want to comment upon this. This is work ongoing. I don't want to make any comments around that.
Despite being the principal shareholder of Turkcell Holding?
Yes.
Okay, thanks.
All right. Moving on.
Your next question comes from the line of Peter Nielsen. Please ask your question.
Thank you. Two follow-up, please. First one, thank you for answering my previous question, Per-Arne. May I just guess why you are not involved in this, in the Myanmar process? Given your commitment to Eurasia, it could be quite logical for Telia to be involved. Is this a political rather than an economic decision? Secondly, can I just ask about Norway? Obviously, the wholesale revenues continue to suffer as is, of course, expected for logical reasons. How do you see this progressing? Will the loss of wholesale revenues accelerate over the coming 12 months, or will it decelerate? Thank you.
Could you repeat your first question? I didn't fully get that.
I'm just asking why you would not be involved in this Myanmar license process. It would be quite natural for Telia to be involved here. My question is just, is this a political rather than an economic decision not to participate?
I would say, I don't think we were prepared actually to go into that at that point in time, and it was a certain timeline that we couldn't really follow.
Yeah.
That's how I think the honest and simple answer.
Okay.
The second question was?
Yeah, on Norway, what you can see when you look at the reported EBITDA number and revenues, that most of that comes from the Telenor, the drop we see year-over-year.
Yes.
We continue to have impact of that during the course of the year, and the agreement is valid until the second half of 2014.
Yeah. Okay. Thank you.
All right. We're moving on here. Next question, please.
Thank you. Your next question comes from the line of Terence Fu. Please ask your question.
Thanks very much. I wondered if you could give us a regulatory update on Uzbekistan, and how long do you expect the market to be characterized by lack of a third operator? My second question is just on a follow-up on Turkcell. Even if we were to get a positive outcome in May and maybe the resumption of dividends, does your view remain that special shareholder returns to TeliaSonera shareholders is out of the question of 2013 and the earliest you can think about it will be in 2014? Thank you.
If I start with Uzbekistan, I don't know so much what will happen on the regulatory side right now. We are still only two players there, and MTS is still out of the market, and I have not heard anything new around that. When it comes to shareholder returns in Turkcell, we will see what happens now at the 22nd of May, and let's come back after that. For me, it's very difficult to comment upon anything around this before this meeting has been done.
Okay. I think we have two more questions on the conference call, so please move on.
Your next question comes from the line of James Britten. Please ask your question.
Thanks. Good morning. Could I just ask how long do you think it will be before you're ready to push shared data plans into all your other Nordic markets? Perhaps you could just help us understand the different levels of data usage now across those Nordic geographies. Can you give us any statistics that highlight the differentiation? Thanks.
Yeah. When it comes to the differentiation, let's come back to that. We should do it market by market. If Jesper can answer that question later on to you, then we can go through that. When it comes to the pricing in the other Nordic markets, I hope we could do that as quick as possible. We will see. We will start also to evaluate how it works in Sweden, then I'm not really sure whether we will have exactly the same model in all countries. That remains to be seen. I think if it works here, of course we should try to duplicate this as quick as we can.
Do you think it's possible to introduce it elsewhere by the end of this year, or are there longer lead times?
Well, put like this. If it works, I would like to do it tomorrow, but we have a reality as well as we have to relate to. We will see. Let's look at this first and see how it works and not jump too quick into the water here. If we can do it during the year, it would be great.
Okay, thanks.
Good. I think we have one more final question on the call, so please.
Yes. Your next question comes from the line of Ulrich Rathe. Please ask your question.
Thanks very much. This is a follow-up as well. Two questions, please. The first one is, you mentioned the weather-related effects on the one hand and the Easter timing on the other as drivers of the top-line downside. Is there any way you could quantify either of the 2 or both, in particular vis-à-vis the impact on B2B? I'm just trying to extract the underlying trends there. The second question, again, it's a bit of a follow-up, is on these shared data plans
To what extent do you think this really allows TeliaSonera to differentiate? I remember Tele2 saying yesterday that they would be looking to launch this if they see Telia gaining traction with these plans. Obviously, with something like that, you're saying you're hoping it to be accretive. The issue is, of course, if it's not a differentiating factor for you, essentially it's something that's going to happen across the industry, and it's going to be ultimately not changing trends. I'm just wondering how you think about that question. Thank you.
I think if our competitors will follow us, we have done the right thing, and it's always good to be the number 1 in these areas. I think for us, it's good to be early out. We have been doing that when it comes to the iPhone, when it comes to Spotify, et cetera. That has always helped to be early out in these kinds of questions. If the competitors will cope with this, it's up to them, we have done something right.
On the calendar effect, if we have 1 more day last year compared to this quarter, that's 1% on the revenue side, and you have to calculate how much is fixed and how much is variable. On the Easter, typically, people, when they go to the ski slope or to their summer house, they don't call so much as they do in the office and when they are at home. That's the big difference.
We have discussed this, the leap days and all the Easter. It's because we're on a thin line when it comes to our decline, and 1% back means very much for us. I think you always have these kinds of issues. Let's see now what will happen in the second quarter. I think that's more important than trying to figure out one day or another. It's the general trends, underlying trend that are more important than the Easter.
Good. Operator, do we have any more questions for him?
We do have one last question from the line of Jack Durling. Please ask your question.
Thank you. I have two questions. The first one, could you explain why the ARPU in Estonia is dropping so sharply in the last quarter? Second question regarding 4G in Sweden. Could you give us a rough idea of what % of your customer base currently is 4G? Thank you.
On the first one, I can answer. It's mainly related to the big interconnection rate cut that we saw in Estonia in the quarter. On the 4G base, I do not know if we have the number right now. Let us come back on and check that one.
I think before we have a roughly what is 100,000 to 150,000 customers for 4G, something like that. I might be wrong here.
Let us check the share of the base.
Check the numbers
check the share of the base and come back to you. Good. Do we have any more questions on the floor here?
There don't appear to be any more questions at this time. Please continue.
Thanks very much.
Thank you.
See you next time on 17th of July, I think.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.