Good morning, everyone, and welcome to our analyst press call regarding the acquisition that we announced this morning on Get and TDC Norway. I am here with Christian Luiga, CFO, and we also have Abraham Foss in Oslo, and I am Johan Dennelind, the CEO. I will take you through a few introductions and leave it to Abraham to go through more of the asset that we have acquired. Christian will then give you some numbers and reaffirm our capital management ambitions going forward. Let us go straight at the summary on the first page. This, we believe, is very much a sweet spot on our strategy. First and foremost, this is an investment in our core region and in a very attractive Norwegian market. We are happy to allocate more capital into Norway.
It does also enable us to execute on our convergence strategy, both in consumers and enterprise, which has been a core part of our history in our Nordic-Baltic operations, combining assets across our footprint to be able to offer services to consumers and enterprise. It comes at a value of NOK 21 billion on a cash and debt-free basis. The EV/EBITDA multiple is around 12, but when you include the full run rate of synergies, which we will talk about, you are down to approximately 9x EBITDA based on the 2017 full-year numbers. We believe it is also a financially attractive effect of the acquisition of around NOK 700 million in synergies. I would say cash flow synergies. It is EBITDA and some CapEx synergies that we will take you through, NOK 600 million and NOK 700 million.
It is accretive straight off closing with 3% on the EPS and about 9% on the cash flow. The balance sheet impact is going to be funded on the cash on the balance sheet and the net debt pro forma, which we will go through later, is taking us to 1.9, which you then understand is still below the ambition of two. I will take you through more of that later. It is subject to approval from the Norwegian Competition Authority, and we expect this to be able to close in the second half of 2018. A bit more on the strategic and financial rationale on the next page. As I said, we have divested assets across our footprint both Russia, Turkey, and Eurasia. We have been clear that one of the reasons we are doing that is that we see better potential to create value in this region.
We have shown that in Norway over the years, the acquisitions of Tele2 and Phonero are yielding, and the Norwegian market is attractive in our view. We are happy to, as I said, allocate more of the capital into Norwegian markets. It does give us a position in the consumer side to give more to our customers across the services that we believe in, fixed mobile and TV. We create a leading operator challenging the incumbent over at Telenor. We definitely believe this also strengthens our capability in the enterprise space, where we have built a strong mobile position on the back of the Phonero acquisition, and this will take us into a more credible supplier to high-demanding customers across the Norwegian market in the enterprise space.
As I said, we have proven that we can create value from M&A, not just in Norway, but across our footprint, so we believe this will be no exception. We are acquiring what we think is a very strong standalone operation. It is, first of all, very little integrated with TDC. That is why I call it a standalone operation. We are impressed with the team that Gunnar has, and they are delivering a lot of good things to consumers and enterprises in the Norwegian market. About 1.8 million Norwegians are affected or using the services of Get TDC, with about half a million paying customers with very high loyalty based on a strong brand and excellent delivery. That is on the superior high-speed network that we have in Get.
They have a very strong operational track record in improving the operational parameters, and we expect them to be able to continue to do that. A very well-respected management team and employees, which we look forward to welcome into the Telia Company family later this year. As I said, it is accretive and it is attractive, we believe NOK 600 million in synergies on EBITDA and NOK 700 million in total with the CapEx and the EPS and the cash flow accreting, as I said, 3% and 9% respectively. Final words before I leave it to Abraham is that this comes, of course, as no surprise. It is a sweet spot in our strategy.
For those of you who followed us since 2013, 2014, we have a strategy which is about the Nordic-Baltics, it is about convergence and best network across platforms, and we are adding a very important part, not just to the Norwegian business per se, but also to the overall Telia Company in terms of competence, experience to further improve our company across our markets. Let me leave the word to Abraham in Oslo, if everything works, and to take you through three, four slides on what we have acquired and how synergies will be taken out.
Thank you, Johan. We are very enthusiastic about being able to join forces with a leading communication entertainment player in Norway. The company is running NOK 4 billion revenue in 2017, with a little above 43% margin, EBITDA margin, and cash generating. If you look at the revenue distribution, it is 23% business, and the remaining in the consumer, dominated by TV, but also a significant broadband revenue stream. When we look at the customer, we have more than half a million homes connected, and roughly a million RGUs. It is important to note that it is both in the business segment and in the consumer segment. The breakdown of the homes connected shows that this is a company very well-positioned in the MDU market, but also with a significant position in the SDU market. Roughly 16% of the homes connected are linked to roughly 25 partners.
If you look at the network, they have 14,000 km in Get across the whole country, very well-positioned in the metro and the big cities, and on the Get side, and on 6,000 km in the B2B segment, the three nines network, very well high speed network. If you move on to slide six, there are a couple of messages. TV position is very important here. If you look at the fundamentals in Norwegian market, we've seen the development the last eight years that this TV entertainment is very important for Norwegians. So 95% has a TV subscription. It also shows that Norwegians are willing to pay for that content. That's an important message.
Get has shown that they've been able to capitalize on a very strong TV position and move on to both being creative in terms of the package of products, but also develop it on a modern streaming platform so that we can move on to streaming services, content service on streaming. If we move on to slide seven, on the key value propositions in the market, in addition to beginning mobile position, which is not relevant to talk about here, since we contribute with that ourselves. There are four main areas. One is the entertainment provider position, which has been strengthened, and mentioned that link to the streaming platform, personalized TV package, and also how the content is packaged to meet customer demands. Secondly, the state-of-art network and the Wi-Fi, which complements our own position very well.
Both within. They're moving on to gigabit speeds in the second half this year, and also with the modern Wi-Fi solutions. Thirdly, the company is starting to become very well-positioned in the IoT segment. It is important in itself, but it's also important as a part of the value proposition in the MDU segment, and it complements our own IoT position. Fourthly, the multiple service network is very well-equipped and is addressing a lot of high-end customers throughout the Norwegian market. Moving on to how we should use this position and capitalize from this deal. The synergies are grouped into three pockets. One thing is the revenue synergies, which is very much linked to cross-sell opportunities, and also deep sell based on the family position that they have. That's roughly half the 300 million run rate when we get to full speed.
On the cost side, it's also roughly 300 million, and it consists of three pockets. One is the network IT. The second is the market operation, consists of both the sales and customer service, as well as marketing. The third one is the G&A expenses that we can benefit from joining forces over time. We're fairly comfortable with this level. In addition to this combination, we also look at from a cash synergies point of view, a CapEx synergy, so slightly below 100 million in terms of investment into networks and IT systems going forward. We do have some track record in Norway on securing and delivering on synergies, and we're fairly comfortable on delivering this year. Then I leave the word to Christian Luiga, I guess, to take us to the next slide.
Thank you, Abraham, and good morning, everyone. This is a transaction that we have seeked to do a long time. Completing our conversion agenda in Norway has been very important for us. This transaction comes with a step change in earnings and cash flow generation in Norway, but also in Telia group. I think that is very positive and important. If we look at the slides presented, we can see that Telia Norway today is both a profitable and cash generation unit, and that we will add to that, bring in a combined unit of the synergies, close to NOK 6 billion in EBITDA and with a good cash conversion at 70%. This is what we expect that can be done within a couple of years. The synergies will start to come through already the first year, but will take two years to be fully implemented.
As Abraham said, both in Tele2 and in the Phonero acquisitions, we have proven our track record on either meeting or succeeding our promises on these synergies, and we feel comfortable about reaching this synergy level as well over this time period. On group level, the EPS will increase directly with 3% from the Get TDC acquisition, and with synergies 8%. The EBITDA CapEx will increase with 9% on the running business and 16% with synergies. The ambition, as you know, is to grow the operational free cash flow in Telia. We had SEK 9.7 billion last year, and we have guided that it should be above that this year. In addition to that, we have the dividends from associates, which we already now know is going to be around SEK 1 billion for 2018. If we go to the next page.
First of all, I'd like to just restate the obvious that we report our quarter two on Friday, the 20th July. So we don't have here the quarter two net debt to EBITDA numbers, but we have done a pro forma on the net debt from quarter one, where we have added the dividends that we have paid out in the second quarter. We still have some payment to be made on the DOJ settlement, and we have tax on dividend, et cetera. To get the most appropriate picture to start with, we do with this transaction, excluding the synergies that will come, go to a net debt to EBITDA of 1.9x. That is still then below the target mid-range of 2.0, ± 0.5 in net debt to EBITDA.
This transaction, therefore, per se, does not change our guidance on our capital allocation or our intention on our capital allocation. We have a net debt to EBITDA target, 2.0, ± 0.5. We have a dividend policy of a minimum 80% of our operational free cash flow plus associates, and we have a buyback program that we are running right now, and this transaction makes no difference to those commitments. That is what I wanted to say, Johan.
Thank you, Abraham and Christian. Let me end with a bridge into what I think will be a lot of questions around. As Christian said, we are at a good space with the balance sheet still. We are very committed to what we have announced through the spring on the dividend and buybacks. That remains, and we do still have further flexibility to do other and more M&A within the current framework of the capital management laid out. This has no impact on the other ongoing discussions that we have confirmed, and they are still ongoing since we haven't said they are concluded. That's an open discussion that's ongoing. We have to come back to how that concludes, and I'm sure we'll get more opportunity to speak about that on Q&As on Friday as well. With that, I will leave it to Q&A.
If there are any things you want to clarify or go deeper into. Thank you very much.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, it's star one if you wish to ask a question. Your first question comes from the line of Peter Nielsen. Please ask your question.
Thank you very much. Congrats on succeeding with this acquisition. I appreciate that this call is about the acquisition in Norway, but as you just said, Johan, you are still in talks with Bonnier about potential content acquisition. Does this acquisition in Norway make an acquisition of content and Bonnier Broadcasting more pertinent? I'm thinking it obviously dramatically increases your exposure to the TV market. On the other hand, I guess if I understand correctly, Bonnier Broadcasting is mainly focused on Sweden. Would you need something perhaps a bit more pan-Nordic in terms of content in order to fully leverage on the new position in Norway? Can I ask, in relating to the synergies you've told us, TDC has long explained to us that they also have synergies in the Danish TV business because of owning Get in Norway content cost, et cetera.
Would you also see some spillover of synergies in addition to what you described related to your Swedish TV business from this, please? Johan, if I may squeeze in a third one. Get has a very strong track record in terms of growth. Growth has obviously leveled off lately, as it is in many TV businesses in Europe. Do you have any comments on how you see that developing going forward, please? Thank you.
Peter, we lost you on the first part of the question relating to the Bonnier discussion. Can you please repeat that briefly?
My question was just, does this acquisition in Norway make an acquisition of content in general, or more specifically Bonnier Broadcasting more pertinent, i.e., it dramatically increases your exposure to the TV market overall, but of course, Bonnier, to my understanding, is mainly Swedish focused. Perhaps you would need something more pan-Nordic to fully leverage on a content acquisition now that you have exposure to the TV market in Norway as well.
On the overall strategy for our TV and content, it doesn't change. I think we're getting a very competent TV business joining Telia Company, and we'll make sure that we leverage that not just in Norway, but across relating to your third question as well. How we deal with partnerships and content in the Norwegian space, we'll return to and discuss later. On the synergy side, I think that was the comment. Sorry, that was the comment where there is any synergies into Sweden, and I'm sure that in the competent side and in running TV businesses efficiently and excellently, I'm sure we can get best practices out of this in combination, and that's part of our integration focus when they have closed. On the growth side, I will leave it to Abraham to make a few comments on the standalone part of Get growing.
But as you said, there have been good, both growing and growing earnings in the past, and we will, of course, build on that track record as we move forward into the Norwegian space. Abraham, do you want to make any specific comments on the Get growth on TV?
First of all, Get is very well positioned to capitalize on the interesting market in Norway. They realized 15% growth in TV in 2017. What we see now is that they will see an opportunity to grow within the broadband business. We see a flat-ish development this year.
Okay. Thank you.
We should just add there the very loyal customer base that we see in Get and the very low industry churn that we are seeing and are impressed by, and of course, aiming to learn from that and also apply across our other markets.
Johan, you mentioned the well-respected management team in Get. Are they staying in the new company?
We hope we're an attractive employer, and we are definitely impressed with the team, so that we will come back to as we move closer to the completion of the deal.
Thank you.
Thank you. Your next question comes from the line of [audio distortion]. Please ask your question.
Thank you. I have got two questions and actually it follows on from the previous. Going back to Get growth, you mentioned the 7% EBITDA CAGR from 2015 to 2017. But I think if we strip out the TV one-offs, TDC's overall Norwegian EBITDA, I think was roughly flattish over the last three quarters. Can you perhaps give us the underlying EBITDA growth for the last few quarters for Get, and also within your assumptions when deciding on the purchase price, what were you assuming for the EBITDA growth of Get standalone? Secondly, when it comes to capital intensity, could you give us a view on how we should think about the CapEx levels for Get standalone going forward as well? Thank you.
Okay. Christian here. Thanks for the question. I am not going to comment on the EBITDA development for the last quarter. We, of course, reviewed the business, and if we look at just the core metrics, we can see that both the TV and the broadband business, when it comes to revenue and ARPU development, is good or improving. It is flattish or improving on all metrics, and that gives us comfort. As you say, there has been one-timers in especially quarter two last year, and we will come back to that when we have closed the deal and can reveal, but we do not feel worried about the development per se. On the CapEx side, Get has invested close to SEK 1 billion in the past year, and that has also included partly fiber.
We will continue to invest in core network, both in mobile and in the fixed side, and now we can do that in a converged manner also in Norway, which we think is going to be very good for our customers and propositions in future.
That is clear. Thank you very much.
Thank you. Your next question comes from the line of Henrik Herbst. Please ask your question.
Yeah. Thanks very much. I had a couple of questions. Firstly, in terms of how much of the Get coax network is overbuilt by fiber, and how do you think about the dynamics between fiber and coax? Telenor is saying that consumers want fiber, and they've started to overbuild their own coax network. Just your thoughts on that. If you're not very worried, it would be interesting to hear why you aren't worried. Secondly, just in terms of the cross-sell. Get's had a mobile offering which seemed quite cheap for a couple of years now with not very much uptake. Just your thoughts on how to drive convergence in Norway. Bundling overall hasn't been very big in similar way to in Sweden. That was it. Thanks so much.
Thanks, Henrik. We'll pass that straight over to Abraham for a couple of comments.
Get has, when they have invested the last years, they've built the fibers. They have significant portion of their network, in terms of fiber. Secondly, they have also expanded the fiber as a part of their hybrid network longer and longer out towards the different MDUs. They are now made it available to go from DOCSIS 3.0 to DOCSIS 3.1, which means in reality, that they can deliver gigabit speed on that network. So we're fairly comfortable that they have a very sufficient and good network going forward, and all new build this year being done on fiber directly, of course.
When it comes to the cross-sell part, we know that we have with their 1.8 million users daily, and we have 2.3 million mobile users, there's a great opportunity to both in terms of offering, but also in terms of segments, expand and build and grow based on the combination. We very much believe in these opportunities, but it's a long-term game also.
Great. Thanks. Can I just follow up on the first question? Are you now offering DOCSIS 3.1 in your whole coax footprint, and how much of the coax footprint, I guess, is overbuilt by other fiber provide and how big portion of the coax footprint is Get competing with fiber to the home? Thanks.
We will start to deliver the DOCSIS 3.1 from August and onwards, and that will be done successively. It's not the one time of the whole network process, and two, the answer to the second question, I don't have at hand here.
But is it, I think, about 40% of Norwegian cable is overbuilt by fiber. Is it probably the same for Get?
Based on my current at-hand information, I would not like to answer that directly because—
Okay.
Yes. Thanks, Henrik.
Thank you.
Thank you. Your next question comes from the line of Roman Arbuzov. Please ask your question.
Thank you very much for taking the questions. I had a couple. Firstly, on the financing of the transaction, Christian Luiga, can you please tell us how much, basically, are you funding this entirely through cash, and roughly what kind of interest are you currently getting on these cash balances? Then just a technical check, Get historically used to have some tax losses that they've utilized to lower their cash taxes paid. Is this something that remains the case, and is it something that you can leverage going forward? Then finally, I'll just give this another attempt in terms of the medium-term growth outlook. Is it fair to say that it's a low single-digit growth business in the medium term, or that's something that you'd prefer not to comment on? Thank you.
I'll start with the two first questions, and I'll leave the growth to Johan Dennelind to answer. But on the financing, we do have cash for or available liquidity at hand to pay for this transaction. Because of that, and because of the interest position in Europe and in Sweden, we are very close to zero on the interest that we get for this money at this point. That is not a problem and will be easy to handle. The second question was just the taxes part.
The tax in Norway.
Yes. We have not estimated any use of any tax losses, and if that would come, that is an upside.
I don't know why Christian left growth to me, but we are definitely keen to drive and invest further into growth. The one we have quantified now, of course, is the synergy side of the business. We haven't commented on beyond 2018 on any of our businesses on for that matter, on top line for any business. Just point out the track record that Get management team has in growing the business, both on top line and EBITDA, and we expect that we will together be able to get a very interesting proposition, which is the really prerequisite and fundamental for further growth. That should be our ambition and definitely our commit to ambition level at this point.
Okay, thank you.
Thank you. Your next question comes from the line of Ulrich Rathe. Please ask your question.
Thank you very much. From my side, the first question would be the accretion calculation on the slide. Could you confirm that you have not included sort of a cost for the NOK 21 billion on the basis that you have this cash sitting on your balance sheet? That's the way I understood your prior answer. I just wanted to confirm that. The second question then related to that would be, what would you consider your cost of financing. I mean, the fact that you're sitting on a large cash balance doesn't necessarily mean that this is free of capital cost to spend NOK 21 billion. So I'm just wondering, what would you consider a fair cost for the capital that we should put in when we do our creation analysis? Next question would be, okay, so you don't want to talk about the growth outlook for the acquired asset.
But it's very specific disclosure available from TDC on the one-off, and it looks as if Get has grown no more than 2% on an underlying basis in 2017. Could you comment on whether that was sort of a low ebb, or whether that is really where this business is, and you want to take it from the 2% to wherever you can get with synergies and other things? My last question is on the revenue synergies specifically. Is it right to say this is mainly convergence efforts or is that sort of oversimplifying the revenue synergies? Thank you.
I'll start with the cash and cost of capital. It is true that in the EPS we have calculated a smaller cost for capital as we have a liquidity base that is so large today. The cost of capital, the average borrowing rate that we have is around 3%, which we have said also earlier in our reporting. That is our funding cost gross on our gross debt. I hope that answers the first two questions. It was on growth.
Yeah, again, revenue synergies, as you said, is mostly related to convergence opportunity that we see, as Abraham Foss pointed out in the overlap of our base in combining and producing unique offerings and give more to our customers, which we think also is a rightly executed a possibility for growth, which we have seen in other markets where we have launched convergence. So it's a lot on reducing churn in the mobile side. It's definitely about creating new unique offerings, and that we are able to do together with Get, and that should be a good fundamental growth going forward as a combined entity. That is also something we'll speak more about as we are going to closing and onwards into 2019. So we don't give any outlook for Get standalone growth as of now.
There are some elements of what you said earlier on the historic growth on the one-off and the TV uprising. Let's come back to that as we go into closing.
All right. Thank you.
Okay. Thank you. Your next question comes from the line of Lena Österberg. Please ask your question.
Good morning. Yes, the question relates to your leverage target of 2.0, ± 0.5. You said in the call that you are still pursuing the potential acquisition of Bonnier Broadcasting. I would just like to hear your view on, based on the value that has been mentioned in Swedish newspapers on Bonnier Broadcasting, that transaction would take you above your leverage target. Would you consider short-term to go above and still keep your buyback and dividends, or how do you view that capital allocation with an acquisition?
Thank you for the question. I will not comment on a transaction that has not been published or is on the table or can be described in its metrics or anything. We do not buy companies just without profit and cash flow typically, and if we do, that is a special case. I can just reiterate that we have a net debt to EBITDA target. We have a capital allocation with a dividend policy and a buyback program. We do not see that this transaction puts us on our upper level and squeezes us to not do further acquisitions, whatever acquisitions that would be. We feel that we can continue to deliver on our strategy, which includes organic investments and M&A going forward without changing those commitments. I cannot really comment on the transaction per se. I am sorry for that.
But just to sum it up, you would not do a transaction which could jeopardize the dividend or the buyback policy.
We do not see that we have a problem in delivering on our strategy when it comes to M&A or organic growth with the capital allocation at hand right now.
We very clearly reconfirm and recommit the buyback program that we have announced. We have a dividend policy that we stick to. We have a net debt to EBITDA target that we have arranged to, we stick to. We have a rating ambition that we also stick to. So this question is saying it does not change any of that with this acquisition or potential future acquisitions that we will do. We are very disciplined around this.
Okay. Thank you.
Thank you. Your next question comes from the line of Stefan Gauffin. Please ask your question.
Yes, hello. A couple of questions. First of all, the B2B assets that you get through the TDC Norway, how does that impact your B2B position in the market? Does this make you better able to compete with Telenor on large contracts? Secondly, relating to competition authority, do you expect any remedies in order to get this transaction through? Thank you.
Let me start on the remedy side, and Abraham can take you through the enterprise positioning. We have had good experience with the authorities and getting deals approved in the past. Very constructive and transparent processes. This one we expect to be no exception. On top of that, it is very complementary in terms of fixed and mobile and very few, if any, overlaps. We expect that to be a fairly straightforward process from our side. Of course, don't want to jump to any conclusions and want to do the filing properly and wait for feedback. We will keep you posted. Our best guess and estimate now is second half of this year.
With regard to the B2B side, I can definitely confirm that this will enhance and improve our strategic position and position out in the market. We have been lacking this piece in the fully credible story in the B2B segment. They have 1,700 top-notch customers. That's a customer base in itself, but they also have the service portfolio and together with the efforts that we've been doing on the mobile side, we have a much better credible story to go out and value proposition out in the market. This is a very exciting part of the deal.
Okay. Thank you.
Thank you. Your next question comes from the line of Johanna Ahlqvist. Please ask your question.
Thank you. Two questions, if I may. First of all, I know you can't comment on the growth outlook for Get in particular, but can you share your view of the TV trends and TV outlook, and if you see a risk for cord-shaving within the TV part of Get? Second question relates to synergies really. You mentioned that in two years you will have full effect from the synergies, but how will that look the coming two years? Will it be a linear way towards those full effect in two years? Thank you.
Thanks, Johanna. On the synergy side, we will have a step-up shape of the synergies as we take them out. Someone has to mute their line.
Hey, Johanna. This is Johan as well. We'll have a step-up shape of the synergies leading into the full run rate in 2021. Let's come back to the exact amounts. It's going to be a fairly linear step up to the full run rate as we see it. We also have an integration cost estimated at NOK 200 million per year for two years. Back to the TV trends in Norway. Do you want to make a few comments on that, Abraham, or should I more be general about that?
Very quickly, they have a strong position, and we've seen that they have been able to also transform that position into streaming services of content, which is very interesting. We see also that the trend towards mobile is increasing. This gives the whole convergence position as a very strong value proposition going forward.
It's been resilient, and we expect to be able to follow customer behaviors and changes in demand in a balanced way into the next few years. That's part of our assumptions for Get standalone, and then we improve that through the convergence offerings that we'll be able to do. Thank you.
Thank you. Just if I may add, can you comment anything of how the subscriber base look like on TV? How many that have a skinny bundle and how many that have a premium or bundle, if you need to say so.
I think we have a difficult. What they have is they have 420,000 TV customers, they have 370,000 broadband customers. A lot of them have both. They have a pretty good uptake on the streaming platforms with the specific content. They also added mobile now, as you know. That of course will be strengthened with us, but that is as far as we can go in this call.
Okay. Thank you.
Thank you. Your next question comes from the line of Adam Fox. One moment please ask your question.
Thanks very much. I wondered if you could talk about the network assets behind the B2B business, and the extent to which you think Get's been able to leverage its cable infrastructure into B2B over the last few years, whether or not you are better placed to do that going forward. Secondly, around the time of the TDC acquisition of Get, I seem to remember that churn was unbelievably about 4%. Is that still the case? Is it still down at those very low levels? Thank you.
On the churn side, before I pass it over to Abraham, it is still a very low churn in the low single-digit numbers for the churn, which proves both the loyalty and the strength of the brand and the execution of the offerings and the servicing to the customer base. That is very impressive operation, as I said in my introduction. On the B2B side, it is of course, on the back of the old Song Networks, as you know, improved by the TDC business-to-business over the years, and has not been integrated in that sense over the last years. Abraham, have you further details on the current state there on the B2B network?
They have been through a pretty big change, which will take to go to a completion during the last half of this year. They have not been able to leverage fully historically, but we are very confident that this will be a good position going forward.
Thank you very much.
Thank you.
Okay.
Your next question comes from the line of Kartikey Kaushik. Please ask your question.
Hi. Thanks for taking the question. I would need some confirmation, some clarity on the net leverage numbers. If I look at the Q1 report, I am getting LTM EBITDA of close to SEK 25 billion, SEK 25.5 billion to be exact. Whereas based on the numbers I see on the report, I am getting a different number. As well as if you could give me the pro forma EBITDA number, that would be great.
Okay, thank you. In our net debt to, we report including the Eurasia assets until they are sold, and that we have been clear with. We have also said that the net debt to EBITDA ratio, we do not see any material change to that after the sale of Eurasia. So that is the difference you have in the numbers. You can take it offline with Andreas for more details on that or with Anders Nilsson here.
Sure. All right. My next question is, as part of financing the deal, are you going to tap the primary market? Is there a plan to tap the primary market, or the entire funding would be done through the cash which is sitting on the balance sheet right now?
I didn't really understand the question, sorry.
As part of financing this deal, are you going to tap the primary bond market, or is the entire financing going to be from the cash—
Okay.
—sitting on the balance sheet?
I'm sorry. We have cash and liquidity assets enough to pay for this transaction. We are around SEK 40 billion in liquidity or available assets to use for M&A at this point. We don't need to tap the bond market.
All right. One last question. You said during the call that you're committed to the ratings. Is there a rating target you guys have?
No, sorry. We have a commitment to 2.0 ± 0.5, is the range we try to be in, and we believe that will give us a rating of A- to BBB+. But of course, it's up to the rating institutes to set where they want the industry or the market to be, and therefore we left a rating target per se some years ago.
All right, perfect. Thank you.
Thank you. Your next question comes from the line of Usman Ghazi. Please ask your question.
Hello, gentlemen. I have got two questions, please. The first one was, I was hoping that you could give a bit more color on the revenue synergy. How much do you think is going to come from consumer versus enterprise, given how important the revenue synergy are to getting this multiple down from what looks quite high to more reasonable levels. The second question was just on the Get network. When you say homes passed are 800,000, could you give an indication of what the split is between MDUs and SDUs here? Thank you.
If we start with the revenue synergies, they will come from both B2B and B2C. We do not specify them, but you could say that a majority comes from the B2C side, even though B2B will be important. As we were told, we have not leveraged the network yet, and they fully get the opportunity out of that in the past in this company, and we see that we are quite strong in that element. I will ask Andreas here on the MDU, SDU side. Do you have a split comment there, or?
No. What we have given you is a split on the homes connected. We have not provided any information on the homes passed.
We will not do that today either. I am sorry to say that, but that is the way.
Okay. Just to follow up, on the B2C side, is the bulk expected to come from cross-selling mobile, or is it more share gains in SDU broadband or can you give any color on that?
We do not go into comments, but as we say, cross-sell opportunities, both B2C and B2B, is a big chunk of this synergy, and that is what we also say in our presentation. There will be other ways to drive converged revenue over time as well. That is the biggest part of it.
Your next question comes from the line of David Smith. Please ask your question.
Yeah. Hi. Thanks for taking the question. I just had a question regarding your TV service. Obviously, TDC has invested a lot in creating quite an innovative service, flexible TV offerings, et cetera, which they rolled out in Norway and then did the same in Denmark. First of all, is the IP for that owned by TDC? Is there any ongoing relationship with TDC, and do you intend to roll that service out across your other Nordic networks?
Abraham, you want to comment? I don't think we have so much to say here, but—
I think we have to leave that on to the Telia part, because that demands for a little bit more deep dive into the whole position.
Okay.
Okay, thanks.
Your next question comes from the line of David Strauch. Please ask your question.
Yes, thank you for taking my question. Just one. You would have now a strong convergent position in Sweden, Norway, Finland, but not in Denmark. Does it affect your view on your future in Denmark?
It hasn't changed our view on Denmark. We've said we are seeking an opportunity to change our dynamic there, where we have an investment that is not producing any capital today, and that will require something else than organic. We continue to evaluate and work on that assignment.
Okay, thank you.
Thank you. Your next question comes from the line of [audio distortion] . Please ask your question.
Thank you very much for taking my questions. I have two, please. The first question on Norway, I agree that buying Get makes perfect sense, but we cannot ignore the fact that Get only have 30% fixed footprint, versus you have 100% mobile coverage. I am just wondering, do you think the story of synergy extraction constrained in the 800,000 homes that Get currently have in the medium term, or it could be a more attractive option to invest into footprint expansion and enlarge your fixed base? The second question, going back on Denmark. I am just wondering, given that your ambition is to become a pan-Nordic player, and Denmark is one of the most important pay-TV markets in Nordic countries. I just wonder if you can comment, how do you see the value of Danish operations fitting into your long-term strategic plan? Thank you very much.
I will start with the first question on the footprint. Both TDC, as you say, is 30% footprint on the Get fiber and the infrastructure. But we are both so big, you can at least think about a proportional crossover of our opportunity here. No one is going to be 100% on fixed in any market, in my view. I think we have a good opportunity with a big base, both in Get and in Telia, to actually find opportunities.
Yeah, maybe just adding that in the short term, leading up to the full run rate synergies is mostly out of the existing footprint on TDC Norway. Whilst on the medium long term, of course, you have the opportunity to address synergies across other footprints as well. On the last question you had there on Denmark, again, what Christian said is what we are saying. We have to solve Denmark one way or another, and this doesn't change our view on the challenges in Denmark. That goes for the full business we have, including TV.
Thank you very much.
Thank you. Your next question comes from the line of Ulrich Rathe. Please ask your question.
Yeah, thanks for allowing a follow-up there. You are not too keen on talking about or committing to accelerating or re-accelerating growth at Get. On the other hand, the cum- synergy multiple is 9x , so that is 50% above where telco's trade at the moment. I am just wondering, during the negotiation process, was there some sense of urgency because of competitive bidders or operationally a sense that Telenor might just start to attack TDC's position with fixed mobile convergence very aggressively so that there was sort of incremental urgency to acquire Get specifically at this type of multiple? Alternatively, what sort of comparables did you look at when you considered 9x cum- synergy to be a fair value for this asset? Thank you.
Well, as I said before, Ulrich, there is no imminent or urgent need for convergence in Norway. So that has not been the factor for us paying what we think is a fair value for this asset. We think about this as going into deals where we know what we are prepared to pay to make the returns we need and require, and that one we have met with this one. We think 9x post synergies is all right. We think it is accretive enough, and it gives potential for further things to happen in Norway. I did not say that we are not looking for growth in Get or Telenor. I just said that we, at this point, do not comment on the growth profile of Get into 2019 and onwards.
I said we will come back to that as we move into closing and into 2019, as we always do.
Okay, thank you.
Thank you. Your next question comes from the line of Henrik Herbst. Please ask your question.
Yeah, thanks. I just had a very quick follow-up question. Just in terms of the homes passed, so the 800,000, how many of those are coax versus with partner networks? I think 16% of the homes connected are partner networks, but on the homes passed, please. Thanks.
The partner network, if I remember right, is around 15% of the total base.
16%.
Is that correct, Abraham?
That's homes connected. Yeah, that's homes connected, I think. Is it the same of homes passed?
We don't have that number here in hand at this point in time.
Okay.
We will come back to you.
All right. Thank you.
All right. That concludes the question session, and we appreciate your time, and we will speak to you again on Friday morning, I presume, at our quarterly results. Thank you very much.
Thank you. That does conclude our conference for today. Thank you for participating, and may all best remain.