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Hello, ladies and gentlemen, and welcome to BT's Q1 2019/'20 Trading Statement Conference Call for the first quarter ended 30th of June 2019. My name is Joanne, I'm events coordinator for today. [Operator Instructions] I'd like to advise all parties this conference is being recorded today. I'll now hand you over to Mark.
Thanks, and welcome, everyone. My name is Mark Smith from the BT Investor Relations team. Presenting on today's call is Philip Jansen, Chief Executive. Also on the call for Q&A are Simon Lowth, Chief Financial Officer; and members of our Executive Committee. Before we start, I'd like to draw your attention to the usual forward-looking statements on Slide 2 and our latest annual report, for example, to the factors which could cause actual results to differ from any forward-looking statements we may make. Both the slide and annual report can be found on our website. With that, I'll now hand over to Philip.
Thanks, Mark. Good morning, everyone. Thanks very much for joining the call. As Mark said, I've got Simon with me and I've got the whole team as well. So no sort of program, I'll talk for sort of 10 minutes or so and then hopefully, open up to questions that you may have.So when we announced our full year results in May, I underscored the need for BT to be bolder, smarter and faster, in order to ensure we remain successful and create a better BT for the future, while also delivering sustainable long-term value to our shareholders.We outlined the importance of improving our competitive position and driving further improvements in our efficiency and productivity. The first quarter of this financial year demonstrates that we're moving ahead in doing just that, and we will share a summary of our activities and performance over the quarter in a moment.But I first want to highlight some current key areas of focus on Slide 4. First, while we enjoy strong market positions, as I've said previously, we need to be even more competitive. We will continue to take decisive action to further strengthen our customer propositions and market position, both to respond to any short-term market pressures and to capitalize on the significant longer-term opportunities.We are working hard to strengthen the BT brand across every angle, including driving convergence-led propositions and further product innovation; delivering for customers and focusing on their loyalty; pursuing a step-change in customer service experience; and finally, ensuring we offer great value for money.Our sole focus is to drive sustainable, long-term value for customers and shareholders. Our strategy is to retain and deliver greater value to our current customers and to attract new customers by providing differentiated converged connectivity products and services and great customer experience at the right price.In that context, we are prepared to compete decisively to retain our customers, including where necessary on price, with a value for money, customer-led approach. We are already seeing the benefits of this focus. For example, we have had great success with converged products like BT Plus in consumer and 4G Assure in enterprise. These propositions give our customers better service while delivering value for money and maintaining a premium price.Our markets are competitive, and our customers are demanding, so we won't stand still. In the coming months, you will see this approach develop further through our marketing and communications, and you can expect to see our propositions beginning to change in the autumn.Second, Openreach is getting on with the job of building FTTP to 4 million premises by March 2021, where it is commercially viable, and is so doing in many locations at speed, at low-cost and with attractive wholesale pricing.Looking further ahead, we've previously shared our strong determination to roll out fiber to 15 million premises by the mid-2020s. As I have said many times, BT is very keen to accelerate the pace of our FTTP rollout right across the U.K., but we will only do so if we are confident that the right enablers are in place so that we are able to generate a fair return on our investment for our shareholders.In recent weeks, we have shared with you our submissions to Ofcom's consultation about regulatory enablers, and we continue to have positive discussions. The current public discussion about accelerating national ambitions gives us the opportunity to reach an industry-wide solution that works for all stakeholders. We welcome the government's ambition for full fiber broadband across the country, and we are confident we will see further steps to stimulate investment.We at BT are ready to play our part to accelerate the pace of rollout in a manner that will benefit both the country and our shareholders. I will talk later about the context and the requirements to do so.And third, while our cost transformation program remains on track, we're evaluating the potential for further transformation through simplification of our product portfolio, systems architecture and end-to-end processes to increase productivity and give us further capacity with which to deliver a step change in customer experience.So moving now to Quarter 1. Let me start on Slide 5, with the progress we've made against our core pillars during the quarter. First, our focus on delivering a differentiated customer experience continues to make our existing base happier, reflected by a 12th consecutive quarter of NPS improvement across our all businesses.Our 3 retail divisions have continued to launch in market converged propositions, and our Openreach teams deserve special mention for recording the lowest ever quarter of missed appointments, alongside the best ever quarter, not only for copper and fiber repair, but also for offering 99.9% of customers a first appointment within 12 days.We committed to Ofcom's consumer fairness principles, and we were named the U.K.'s major broadband universal service obligation provider by Ofcom, so that we can extend our national role of helping customers access better broadband and mobile services. This will require BT to invest tens of millions of pounds into rural communities.Our unique ability to play such a systemically important role for the country is based on our second core pillar of having the best converged network, which is why we continue to invest in mobile and fixed access alongside our core. Openreach continues to roll FTTP to around 20,000 premises per week, while retaining an industry-leading focus on quality and cost. And our EE brand was first to offer U.K. consumers the exciting benefits of 5G.Our third core pillar is our focus on becoming a simplified, lean and agile business so that we can do more with less. Our cost transformation program remains on track, with about a further 750 rolls removed during the quarter and savings from the program currently running at an annualized benefit of about GBP 1 billion, with an associated cost of GBP 457 million.Our Better Workplace Program will consolidate BT's footprint of more than 300 locations to around 30, containing modern, future fit buildings, including corporate offices, contact centers and specialist sites. It is the largest program of its type in the U.K.During the quarter, we announced the first 9 locations across the country to benefit, and as a further symbol of change, we also announced the sale of BT Center for GBP 210 million and signed a lease on our new London headquarters in Aldgate. Turning to Slide 6. Our quarter 1 financial performance was in line with our expectations for the quarter, and we are on track to meet our outlook for the full year. As you know, this is the first quarter we are reporting under IFRS 16 accounting. So to make our commentary as helpful as possible, the trends I will describe use our unaudited pro forma financial information as the prior year comparator.Revenue fell 1%, due primarily to the ongoing headwinds from regulation and legacy product declines, and EBITDA was down 1% from the fall in revenue and higher spectrum fees and content care costs, partly offset by reduced costs from our restructuring and transformation programs. CapEx was up 11% primarily due to network investment and customer-driven costs, while normalized free cash flow was down 36%, reflecting increased capital expenditure and higher interest and tax payments, partially offset by working capital phasing.Before I discuss each of our units, please remember that as well as IFRS 16, this is the first quarter we're reporting with the refined allocation of shared costs across our operating units and having transferred the emergency services network contract from consumer to enterprise, which are reflected in the prior year pro forma figures.Looking at our Consumer year on Slide 7, revenue fell 1%, reflecting known headwinds from international calling and mobile spend cap regulation, which contributed to the EBITDA fall of 5%, alongside the unit's allocation of increased spectrum license fees and content costs.Maintaining a consistent customer base is a critical focus for Mark and his teams. We were, therefore, pleased that ongoing improvements to customer experience saw fixed churn fall to 1.3%, while mobile churn remained low at 1.1%. In May, our EE brand was the first to launch 5G in the U.K., and we did so with a pricing premium to continue our more-for-more strategy with encouraging early results. In the same vein, we plan to launch 5G on our BT brand in the autumn.I'd also like to mention one of the first steps in our new BT brand and sponsorship strategy that reflects our commitment to making BT a true national champion. Alongside our existing sponsorship of Scottish Rugby, we recently signed a multiyear partnership with The FA to become the exclusive lead partner for all 28 England football teams. Through this, we will focus on connecting the nation with every level of the game, with an emphasis on grassroot support. Moving to Enterprise, on Slide 8. Revenue fell 5% as prevailing headwinds continued. The fall was mainly driven by fixed voice as well as lower-margin equipment sales. These challenges were partly offset by growth in IP and networking and in mobile, despite the tough market conditions.Despite the headwind of lower revenue, EBITDA was only down 3% as our ongoing restructuring program led to lower labor costs. Our product launches during the quarter included 2 U.K. market firsts. In May, we launched the U.K.'s first 5G services for businesses on our EE brand, with new 5G plans, the broadest range of 5G devices and the 5G network going live in 6 cities, enabling our customers to benefit from the improved speed, capacity and latency of 5G.We've seen good early interest and take-up, particularly amongst SMEs. Shortly after, we launched new fiber and digital phone line bundles that are based on open [ REITs ] all IP [ s g o k ] capability. The bundles come with our new digital phone lines, so businesses can make and take calls on their business number from anywhere, our award-winning 4G Assure solution, so their broadband connection never goes down, and all with a fixed price guarantee. Early signs have been very positive with the delivery of value for money and improved experience, generating good demand. Separately, we sold the marketing and operation rights to 220 of our towers for the next 20 years to Cellnex, including an upfront cash payment of around GBP 100 million. As previously stated, we're confident this is the right approach for these assets, and we believe that Cellnex will be best placed to grow the revenue streams over the coming years. In July, we extended our contract term with the home office for the emergency services network from December 2021 to December 2024.Moving to Global on Slide 9. The 5% revenue decline reflected a continuation of existing trends, driven by our strategic decision to reduce low-margin business, make noncore divestments and legacy portfolio declines, partially offset by growth in security. However, while EBITDA in the quarter benefited from certain one-offs, it was also the result of lower operating costs from the ongoing transformation and was up 18%. Global has continued to focus on its largest 800 accounts and on expanding its portfolio of cloud security and software-defined network solutions. As part of our push to invest in selected areas of growth, our security business thrives on customers looking to BT as their trusted partner. So we opened a new cybersecurity operations center in Paris during the quarter, and upgraded facilities at our existing centers in Madrid and Frankfurt.If you've not already done so then I'd encourage you to take a look at Global's new revenue disclosure within the KPIs document we published. The changes reflect its simplified commercial structure and aid a better understanding of the underlying drivers of business performance.Finally, looking at Openreach on Slide 10. 1% revenue growth was driven by higher fiber and Ethernet volumes, partly offset by price reductions and higher credits for auto compensation. EBITDA was flat compared to last year, as revenue growth and some one-off items were offset by higher operating costs. These were mainly the result of higher business rates and higher salary costs from pay inflation as we invest in more colleagues to deliver better service.Efficiency savings did, however, provide a partial offset. Openreach continues to be the largest infrastructure provider, rolling out FTTP at pace and scale, again adding about 20,000 premises per week to what is already the U.K.'s largest FTTP network. And at the lower end of the 300 to 400 per premises passed -- GBP 300 to GBP 400 per premise passed range, at which Openreach believes it could cover 50% of the U.K. In contrast, the [ costless ] 10% of premises are expected to require an outlay of around 4,000 each to pass.Earlier this week, Openreach announced 36 new locations where it will build FTTP over the next 12 months, and we expect to exit this financial year at a run rate of around 30,000 premises passed per week. This followed an announcement that it will reduce FTTP wholesale prices to encourage communication providers to upgrade their customers and attract new ones onto the network that's being rolled out.Looking further ahead, we continue to lay the groundwork to help the government achieve its target of FTTP across the entire U.K. One critical enabler of a large-scale network will be a quick, efficient way to switch over end customers from the existing copper network. Having spent a few months speaking to communications providers about how it can best support their customers in the big upgrade process, OpenReach recently proposed Salisbury and Mildenhall as 2 key trial locations for its national upgrade program. Work continues at pace, and we welcomed Ofcom's proposed changes in regulation to support the early stages of the planned full fiber migration trial in Salisbury.Staying with the development of our access networks on Slide 11. As I touched upon earlier, the recently renewed public debate about accelerating national FTTP admissions gives us the opportunity to reach an industry-wide solution that works for all stakeholders. This will enable us and others to support a major step change in the U.K.'s digital infrastructure over the next few years.As I said before, we are very keen to accelerate our FTTP rollout, but we'll only do so if we are confident that the right enablers are in place so that we are able to generate a fair return.We welcome Ofcom's recent statements and agree with many aspects of its remedy proposals. So that we can make the investment decisions necessary to meet heightened expectations for both full fiber and 5G availability, there are several elements of the current policy framework that need to be in place as soon as possible to meet our shared ambitions.To get the digital infrastructure the U.K. needs in a timely way, decisive action from government, Ofcom and industry will be required. There needs to be a determined acceleration towards a pro investment policy and regulatory regime. This requires the following enablers for the whole of the U.K.: a government-led campaign like that for digital TV to facilitate a complete switchover at real pace from old copper technology to the benefits of fiber. This could and should be done in a way that enables recovery of stranded copper costs across the country.Next, a genuinely level playing field that enables competition between infrastructure providers to benefit customers. This includes allowing Openreach to meet the competition that it faces, for example, from other network providers with its pricing to deliver benefits to downstream CPs and ultimately, to customers.Next, clarity about how regulation will enable investors in fiber infrastructure to make a fair return on our investment, i.e., on the terms of the fair bet. This is, of course, hugely important to us, but matters for all other players too as it provides some clarity on the environment within which they will operate.And finally, and very importantly, a redoubling of efforts on barrier busting, so that it is quick and easy and efficient for fiber providers to extend their footprints as well as political decisions on business rates and planning policy. Granting us the same access rights as the power and water industries would make a material difference and reflect the importance of digital infrastructure to our economy and society.Alongside these enablers across the country, public funding will probably be needed to bring FTTP to the hardest to reach 10% of the U.K. population and address enduring mobile not-spots. It is crucial that this public funding is used as efficiently and effectively as possible without undue bureaucracy and duplication, to make sure that the U.K. gets the maximum digital bang for its buck.We agree that full fiber can be the platform for the U.K.'s future prosperity, and we're determined to lead the way. No company is doing more. Peers at all levels of government, Ofcom and BT, continue to work on a more detailed analysis of all the options and possibilities, but we wanted to take this opportunity to reiterate our positive intent.The government has made clear the size of its ambition for full fiber broadband for the country, and we are confident it will now take further steps to stimulate investment. That would allow us to play our part and accelerate the pace of FTTP build right across the U.K.Our focus is on making BT a better business in the long term, fulfilling our role as a national champion and delivering sustainable long-term value to all stakeholders. But rest assured, as I've said many times before, top of our mind is ensuring that investors who provide the capital earn an adequate risk-adjusted return on the decisions we take.So to summarize on Slide 12. We've delivered results in line with our expectations for the first quarter. We are confident about the plans we have in place, and are executing them well. So we confirm that we are on track to meet our outlook for the full year. We enjoy strong positions in our consumer and enterprise markets and are prepared to take action to maintain our customer bases. While the main thrust of this approach is to focus on converged connectivity and services to ensure the loyalty of customers across our businesses, it could also include further pricing actions, having already introduced fairer and more predictable policies. This value for money, customer-led approach and our strong determination to roll out fiber are further demonstrations of how we can be bolder, smarter and faster to really ensure that we remain successful and create a better BT for the future.I'm really excited about the long-term prospects for this great company. So thank you for engaging with us today, and we look forward to answering your questions.So operator, could we please open the lines.
[Operator Instructions] And your first question comes from Carl Murdock-Smith from Berenberg.
I'm just wondering if you could provide a bit more color on how the talks with governments have changed in recent weeks since Boris Johnson has become Prime Minister. And in terms of how that has impacted your own thinking when thinking about full fiber rollout, specifically on the kind of enablers that you talk about. One of the key ones that you've been consistent on is wanting a longer business rate holiday for fiber from 5 years to 20 years. You've already successfully persuaded Scotland to increase it to 10 years. I was just wondering how optimistic you are with the new regime that you might be able to negotiate that increase?And then secondly, I just wanted to ask on the Sky Sports wholesale deal. The wholesale deal was meant to start in early 2019, and then got pushed back to mid-2019. We now sat here with the Premier League season kicking off a week today. I was just wondering if you could provide us with an update on what's been delayed? When we can expect it? And also what that means financially, given the fact that I would have assumed you'd have given it fairly hard commercial launch had you got it launched before the football season?
Sure, Carl. Thanks for that. I'll do the sort of fiber plan with the new sort of Prime Minister and sort of new folks in that. And then maybe I'll get Mark to talk about the TV stuff. Well, a couple of things. Firstly, I think it's fantastic that fiber rollout is now being fully recognized as a national mission. And we think it would be possible to massively step change the fiber build if the government and Ofcom take decisive action and the industry collaborate effectively. There is no question, or you can see in the -- all the communications from Boris Johnson himself, but also his advisers and his team members, that digital connectivity, digital infrastructure is a key part of what they want to deliver. So I think it's -- we're in discussions with them and Ofcom, the industry is talking together to try and find a way forward. I think I've been hopefully reasonably clear on the kind of things that we need as an industry to make a big difference.I mean just to give you some sense. I'm sure you know these numbers. But Carl, we're talking about more than GBP 30 billion worth of investment to get full fiber to everybody. There are 32 million homes. And actually, the other 30 is, we probably need an industry about 35,000 people to build this network over the next 5 years or so if that's what we end up trying to do. BT, openly, specifically, has 5,000 people doing that. We are ready to train, recruit, reprioritize our skilled labor into places that would help us build a pace that would meet Boris Johnson's ambition for a huge step change by 2025. The other thing I'd say just to -- and these things are really important. In addition to the enablers, which are sort of almost there, but we just need a decision on it, this switchover campaign, like Digital TV -- to move from analog to digital TV is the same for a move from copper to fiber, making a national campaign, the National Mission and a huge bill would be really helpful. But don't underestimate the importance of some of the requirements to change access and wayleaves and the ability to make these connections as quickly as possible and as efficient as possible in the lowest cost possible because everybody benefits from that.And the point I was making about power and water, for example, is they basically can do things much quicker than we can for reasons that are historical, but what we're arguing for is if we're going to build at this level, we need some real changes, and one of them should be prioritizing everybody getting behind a digital infrastructure bill that is going to have huge benefits for consumers, customers and ultimately, the whole country.The other, final thing I should just say -- someone just passed me a note -- very important, cumulo rates. I mean the irony is, of course, we are getting taxed as other people are as well, all the industry on building fiber. It's a bit of a nonsense. So that kind of thing needs to be changed as well in the overall [ spec ] scheme of things.Simon, anything to add on the ambition for fiber?
No, I'm [ cut for now ].
Mark Lidiard is going to talk a bit about football and its goal.
A few lines on that question. I think it's a good question, Carl. The first thing I'd say is that this is a very long-term deal between ourselves and Sky. So this is not a deal for a couple of quarters. And both brands are really focused on making sure that the customer experience is the best it can possibly be before we launch.And for us, it's a quite a complex integration into our TV service because there are a number of services and features that we're really excited about giving our customers that have taken us a little bit longer than we'd like. But in terms of impact on the financials, no material impact. We're just focused on getting the customer experience right. Expect to see it before the end of the year.
Your next question comes from Michael Bishop from Goldman Sachs.
Just two questions, please. Firstly, picking up on the fiber run rate question. You're running at about just over $1 million. And I think Clive had mentioned in the past that you could get to maybe $2.5 million, $3 million. So it's very clear the political ambition has changed. But what I'm keen to understand is whether you're thinking of the run rates annually achievable has changed? And clearly, that might play into the prior question around engineers as well, but any extra color would be great. And then secondly, just picking up on the slightly weaker consumer fixed line trends. It looks like the market was quite a bit softer in the second quarter and also limited ARPU growth. But I was just wondering whether you can see the market picking up and also your view on pricing as we go into the second half of the year?
Michael, thanks for the question. Michael, I'll make a couple of comments on fiber, and then ask Clive to add his perspective. And then on the weaker consumer stuff, I think maybe Simon can give us a comment on the results. And then maybe Mark, just in terms of the general market trends and what we're seeing out there and how we're dealing with it. Is that okay? I mean on the fiber run rate, you're dead right, by the way, we're building it sort of this year, exiting at the 30,000 rate per week. So that's 50% higher than we're doing today. So that steps that up. You are right that our original thinking is in the $2.5 million to $3 million. We are looking now, can we get past that? And what is the -- if things, given the ambition seems to have changed, and if that is real, then we need to respond to that and ask a different question is, if that's a target that the country is really going to go for, and everyone's going to get squarely behind it, it suddenly means that we're going to have to look at things in a different way.So we've got many, many people who work at BT. I'd be open minded about reprioritizing open [ these things ] to hire more people, reskill, all the things you could imagine, we are looking at now, assuming we get the enablers and assuming that decisive action I referred to before happens in Ofcom and government, I'm sure Clive will find a way of building at a rate which surprises everybody. Clive, do you want to make a comment? He's laughing, by the way, of course, as I say that.
Yes, hysterically. Yes. So look, it's a highly labor-intensive endeavor to build full fiber for the homes and businesses of the U.K. Over last year, on this, we will have hired about 6,000 new people. We will have built 12 fiber training centers in every major area of the U.K. So we are building a scale resource capability, and we are building a training and skilling capability that will make those people very effective. We continue to innovate on the componentry and the build processes for fiber to the premise. The combination of these factors gives us confidence that we could achieve a very significant uptick in our build run rate.So we are confident in the 4 million number by March '21, and we think we can continue to accelerate the annual rate of build thereafter.
Great. Thank you. Simon, you make a comment on the numbers on consumer?
I mean why don't I -- I'll just summarize at the overall level, and then I'm sure Mark can pick up some of the more detail on trading. I mean at the overall level, I think as you saw, revenue was down about $20 million.Actually, if you strip out some of the regulatory impacts in the quarter -- so we had international calling obviously and then the mobile spend cap regulation, we actually were pretty transparent in our release that if you strip that out, actually, revenue was flat. There were some puts and takes within that. So we did see some pressure in the fixed side, I'm sure Mark will pick that up. But equally good performance in TV and sport, for example.If we go down to the EBITDA line, saw the revenue flow through, but also I think, again, we called out in the release, an increase in spectrum license fees. You'll all understand and know about that, and a bit of a tick up in content costs. So that's the high-level trend.Mark, do you want to pick up on the trading?
Michael, just on the fixed side. The thing I think we've been pretty clear on is that we are overhauling the model for the BT brand in terms of propositions, pricing, service innovation. So I think it's important to remember, we are now lapping a price rise that we put in, in Jan '18, and of course, with our new move to CPI-based pricing, there's no price rise this year, but then the customers that will be on CPI contracts will be getting a price rise in line with CPI next year. So that's a pretty material change in the hydraulics in the customer base, which did drive previously low levels of satisfaction and spikes in churn when we did the price rises. So we're moving to a much more sustainable model, which is the right thing to do. But of course, that makes the top line comparators much harder this year as we've got no price rise. The thing I am pleased about though, with my team's focus on customer loyalty and churn and improving service, we've seen fixed line churn reduce again to 1.3%. And I look at a number of lead indicators that are telling me that our customers are getting happier and more satisfied with the service.We've seen the -- the recent Ofcom complaints on the BT brand, with BT brand hitting new lows in terms of record lows of complaints. And those trends look set to continue. So I'm pleased with the way the turnaround is progressing. More work to do and a lot of investment coming through in our numbers that we've talked about. The acceleration of call centers, all the way back to the U.K. and Ireland, and we're bringing that forward. That was originally planned for Christmas '20 that we're bringing that forward to -- as close to Christmas '19 as we can, migrating more customers from copper to fiber, investing and preparing our retail stores to be able to sell and serve to BT customers. And, of course, innovating, the key thing we've got to do is keep the innovation up on the convergence side. And we're launching the next chapter of BT Plus in the coming weeks, which we're very excited about. It's got some new features there on product innovation, network innovation and service innovation. You'll hear more on that in the autumn.
Michael, just wouldn't mind Gerry just making a comment on enterprise because it's a similar situation in terms of some really interesting competitive dynamics on mobile and various other places. But I think we're doing well on it. Gerry, do you just want to give a perspective on that?
I mean there's a number of different dynamics going on there. I think the -- in terms of everyone knows the sort of headwinds that we face. I think what we've tried to do over the last 6 months is make sure that we're -- and going into the market are trading strong. We've got the right products. What you saw in the quarter was launch of 5G, [ we're ] launch of software [ fine ] network solutions and also at the very end of the quarter, we launched the [ first agia ] product to the SME market, which is integrating digital voice and fiber. And the take-up of those have been very strong actually so far, both in terms of volume and in terms of the price points that we're getting there.So I think trading, you see the trading numbers, I think they're pretty good. I think that we can do more with the products that we're bringing in. I'm hopeful that, actually, that gives us a [ bit ] strength in the market. Where we're seeing the challenge in terms of, similar to Mark talking about broadband there, our acquisition is good at good value. We still got to address the copper base, which we have plans to do because that's the soft underbelly there. Probably the most important dynamic we have seen in the market at the moment is around the larger businesses, where mobile is very aggressively priced at the moment.You see the adds are -- they're reasonable. We [ are fighting ] that market. And we really do have refused to lose there. And we're going to step that up, but also really focusing on how we can shift our positions to tax it -- to attack some of the very aggressive pricing we've seen in that market. We're keeping our head above water on it, but it's a very aggressive position at the moment.
Great. Thanks, Gerry. Is that okay, Michael?
Yes.
Your next question comes from Sam McHugh from Exane.
A couple of questions, please. Just -- I think, churn in consumer is actually up year-on-year. I know it's down sequentially, but it's kind of very seasonal obviously which presumably means the non BT plus customers' churn must be picking up quite a lot.And then generally, if I look at the fixed consumer KPIs and the broadband growth and overreach, momentum does seem to be slowing a lot and you talked about investing in price. I just kind of wondered how you think about allocating budget towards market and investing in price versus allocating money to CapEx, for Clive, on how you balance those 2 things off against each other? And then just on the fiber, the 300 million to 400 million per home passed. I just wanted to clarify, where does this actually get you? Does it get you to the street outside the home? To the front of the house? Does it include in-home wiring and the equipment in the house? Just a bit more detail on kind of the cost breakdown of fiber would be super helpful.
I'll get Mark to talk about the specifics on churn. I think Simon give you a perspective on how we go through our sort of budgeting and prioritization on CapEx versus propositions and pricing stuff, and obviously I'll then chip in there. And then on the fiber point, I mean Clive do you want to do that first because it's pretty straightforward?
Yes. Okay. So what we're saying and what Philip has said to you is that we think we can build a large portion of the country at between GBP 300 and GBP 400. What does that mean? It means building to what we term a distribution point.So in the suburbs of the U.K., a distribution point might be at top of a pole or a box under the pavement. And from that distribution point, we serve perhaps 20, maybe 25 homes. So the build costs are all the way from the distribution point back to the exchange, back to the fiber headend in the exchange. So we talk about that is the build cost, and then we talk separately about a provision cost. So when a customer orders an FTTP-based service, imagine the pole in the street in suburbia, an engineer comes along, attaches -- and it's connectorized technology, there's no splice -- attaches a fiber cable to the block at the top of the pole, draws it across to the home, which might be 20, 30 meters away, attaches it into the eaves of the house, pulls it down the house front, drills through the wall and puts an ONT, which is a small white box with some optoelectronics on, that terminates the fiber service, runs a test, and that's the provision tech job done.So that's what build is and that's what provision is.
Great. Thanks, Clive. Mark, do you want to do churn?
I mean the market is, I would say, significantly more aggressive and competitive this year versus last year. So I think that the comparisons are not entirely like-for-like. And the focus really for us has been to improving every quarter customer satisfaction, improving churn, which we are seeing and the lead indicators on that are improving every day. So I'm pleased with the progress we're making in a very competitive market, getting churn down, whilst the aggression on pricing is going up I think, is a relative success for us.And you're right to say that the converged customers do churn lower, and they are -- they do have higher levels of satisfaction and higher levels of engagement in the BT brand. And that's why that's such an important focus for us, getting as many customers as possible on BT Plus and enjoying the benefits of converged broadband and mobile and content services.
Great. Okay.
A very quick follow-up.
No, Simon was going to talk about how we allocate decisions of budgets on capital and pricing and proposition. You want to do that?
Yes. And so you asked about sort of the trade-offs between the decisions we take in investment in our network versus those we take in our retail businesses. These 2 decisions are somewhat linked, but we do think about these as 2 quite different types of investment. I mean let me start -- firstly in network investment, these are long-term, longer payback investments, building high-quality assets that generate return over multiple years. We have a clear plan to do that. We have allocated the CapEx. As Philip described earlier, if we see that there is potential to extend that rollout and that investment for high-quality returns to reflect the risk, that is a decision we will take and we will consider the optimal long-term funding to do that.Moving then to investments in the retail businesses, these are more concentrated in our IT and in OpEx investments. To some extent, that is constrained by the total capacity for us to generate IT change through a year, and we allocate that capacity to individual projects into the retail units based essentially on the quality of payback and the speed of payback, and that tends to be over a 1- to 2- to 3-year period max. And that's how we go about the process.But I think as you'll have understood, we have prioritized investment in our product competitiveness in our service, Mark described some of those, because we are confident that, that's going to pay back in terms of better trading performance next year and beyond. Yes, sorry.
Sam, are you okay with that?
Yes, it's okay. I was just going to ask on the provisioning. And how expense -- I guess, provisioning is quite different by home. Do you have a rough estimate of kind of provisioning CapEx cost on fiber to the home?
We do. We have an estimate. Are we sharing that number?
Well, I mean Clive, in terms of provisioning on FTTP, what we've described is the initial towns and cities program. Do you want to comment on that Clive, and how it...
We know a lot more about the build cost right now because we've built to 1.5 million homes at the end of quarter 1. The provisioning number at the end of quarter 1 is about 350,000. So -- and those provisions were not a good reflection of the provisions going forward.So going forward, we're building an awful lot of fiber in urban areas and suburban areas, where the drop cable links are much shorter. So it's very early in the process to talk with confidence about the provisioning cost at this stage. We are working on processes for provisioning, looking at the componentry that we use, and it's the subject of a lot of optimization now in that program.
And the other thing to add to that, Clive, is that some of the -- I mean the enablers we discussed earlier about accelerated and coordinated approaches to switchover, will help on provisioning because you can tackle that in a much more organized fashion. So that's passive for them.
Yes. So what Simon is referring to is that today, we take orders one at the time. So they're in random places across a 1.5 million footprint. What we see in the future is a more organized approach to moving the country from copper to fiber. So we would roll down a road moving all or many of the houses, all in one go, and that will dramatically impact the provisioning cost.
So Sam -- I mean it's a really good question. I think what you -- hopefully, you get the sort of -- the message of what we're doing here. We've got a core plan. We've got some ambitions. Those are being relooked at with this changing political landscape. Clearly, by definition, this program is not without its risks. The risks go up, if you accelerate the bill significantly -- because remember, I'm not willing to build faster at a lower quality and a higher cost per home passed. So we're working very hard to try and understand that the vagaries of the detail across multiple households in different places with all different characteristics, as you can imagine. So what Clive is referring to is loads of examples of testing and trying to understand what are those characteristics? And how could we manage them better. The example Clive gave needs a lot of thought on care and collaboration, such that we are building in the most efficient way and connecting people. So by definition if your provisioning people in a disorganized fashion, where they're not, in any way, coordinated, that's going to raise the cost considerably, as opposed to a massive digital switchover equivalent for TV, copper to fiber is going to bring the cost down for everybody. And that's what we're trying to find a way of doing.
Your next question comes from Akhil Dattani from JPMorgan.
Just a couple of questions, please. A couple of clarifications and a couple of new points. So first, some of the clarifications. I guess, on fixed line KPIs. You've talked about the importance of stabilizing the customer base obviously churn and NPS scores are improving. But I guess you don't report net adds. But if we back them out, it looks like net adds have probably deteriorated this quarter. You've talked about competition being a bit stirred up. But I guess could you just talk us through what you're seeing happening? Obviously, it's very early days in terms of your intentions to improve things. But what are your plans? How long do you think it takes? And am I right that trends have got a bit worse here? The second one is just a clarification on mobile ARPU trends. Your mobile ARPU declined 4.5%, 4% this quarter. You've talked about regulatory drags, and you've talked about a lower RPI tailwind than the prior year. But I guess if I look at your peer numbers, we don't seem to see a similar trend change. So any sort of color around that would be useful as well.And then I guess the new point we just -- you talked about the tower deal you've done with Cellnex. Now if I understand, that's 220 towers. But I believe you have 3,000 towers outside of your network JV. So you do have further towers you could potentially transact with. So could you just help us understand why you chose that number, obviously you're trying to learn about how the process works? Clearly, tower deals have become very topical of late, you will see what Vodafone did the other week. So I guess just keen to understand. Firstly, could this be a move towards doing more? How do you think about that?And I guess the second bit to that is that, would you ever consider selling a stake in your network JV? Vodafone -- I know that you've talked about doing that, would that be something that would be interesting in terms of monetization?
Yes, sure. Okay. Well, look, I'll do the first one, and I'll ask Mark to talk about mobile ARPU trends, and Simon can give you an update on why we did the Cellnex deal and sort of answer your follow-up question on that.I mean Akhil, your analysis is correct. I mean at the end of the day, we are in the broadband fixed market, the pricing pressures have increased dramatically. So we need to make sure that we're doing the right thing in that particular market and focusing on our existing customers and protecting our base is crucial as well as attracting new customers, particularly into the kind of propositions that Mark talked about, the Plus converged type area where prices, frankly, are premium, NPS is extremely high, and churn is extremely low.So our sole focus is to drive sustainable long-term value for our customers and our shareholders by definition. And we need to find ways where our customers are willing to pay more for more. And so that hasn't changed.What we're saying is the market -- they're sort of price-conscious and is changing. And what we're seeing is many people sort of trying to attract customers with a sort of promise of better things in the future. And those things sort of don't seem to deliver.And so whilst we believe our propositions deliver great value for money, and it's a better service, best network quality, if it continues to be the case where pricing becomes too dominant a factor, we will have to react to that to make sure that the numbers you're referring to on our churn on KPIs don't dip against us. So do not anticipate BT fixed, losing market share anymore.On Mobile ARPU.
Yes, I can talk to that. Hello, Akhil. So we had a number of headwinds that -- we've talked to some of them today. So the first was an RPI last year was 4%, this year, 2.7%. So that was a one headwind against us. We continue to see more and more customers migrating to SIM only so that does dilute the post pay ARPU. And we've had 2 quite material impacts in terms of regulation this year, the spend caps introduction and the EU IDD. So they've all hit the mobile ARPU line.We've kept churn at 1.1% in a pretty aggressive market. And on the fixed side, just to reiterate some of the points that Philip's made there, we are overhauling the whole model for BT on the service and pricing, value for money and innovation side, that's not something that can be fixed in a quarter. But the lead indicators that we're seeing on lower churn quarter-on-quarter, improved satisfaction, lower complaints, that's a very solid base for us to build from. And then we've got to improve competitiveness and value for money and innovation on the proposition side, and you'll see more from us in terms of launches in the autumn in terms of what we're doing there.
Yes, Akhil just one other thing before I ask Simon to talk about Cellnex. The 5G market, which is just starting, is an interesting example of what I'm driving at. We believe that we want to do a great job on 5G for our customers. The benefits are obvious. We want to extend our coverage and invest in the network as best as we possibly can as quickly as possible. And therefore, the pricing returns, cash flow has to make that work. We launched with a premium price for 5G, about GBP 5 per month. And it looks as though the market may not be able to sustain that premium because it looks like other people are in the same position as we are. And that was my point about trying to attract our customers. We are the market leader. We think we have the -- we know we have the best network. We think we have the best products. We're going to do everything to make sure we maintain that leadership. And what I'm getting at is if need be, we have to be a bit sharper on pricing in certain cases, we'll have to do that. But our focus hasn't changed, which is delivering outstanding converged connectivity with great products with very much improving service and very much at the premium end of the market.Simon, Cellnex?
Sure, okay, okay. So firstly, on the Cellnex deal, this was quite specific around a small portfolio of high towers. Those towers generate some additional revenue streams today. We entered into an agreement with Cellnex, whereby we've essentially sold to them the market rights. They see opportunity to generate additional revenue. It is an unambiguous focus for them. It's not a core -- core activity for us, and therefore, there's a value upside for both parties. So a very clear deal there about generating additional value from further use on a very specific portfolio.Turn to our wider towers portfolio, as you know, all in the U.K. vast majority are within MBNL, and therefore already shared and indeed further demands on the sharing of those sites as we move from 4G to 5G and looking to deliver even high-quality, high-performance coverage from them.You're right, there are some actual sites that within BT. Do bear in mind, some of those actually are owned by other cell owners, and therefore opportunity is not a significant as you might have thought.But clearly, if we do see an opportunity for additional value generation through a combination of greater revenue share, potentially a financing opportunity, and we see that as outweighing the strategic benefit of tight control for us, those are decisions we'd look at, at the right point and at the right time, and do on a pretty regular basis.
Akhil, is that all right?
Yes, that's perfect.
Your next question comes from Polo Tang from UBS.
I've just got 3 quick questions. The first one is on consumer. You obviously outlined a very competitive environment in terms of both fixed and mobile. But can you give us some color in terms of which operators have been the most aggressive in your view? Second question is just a quick one in terms of Openreach. So within your FTTC subscriber base, can you give a rough sense of what the mix is between the different speeds here? So what percentage are on the 40 megabit per second product? The 55 megabit? And 80 megabit product? And can you also talk about the mix of speed tiers in terms of the FTTC gross adds? And my third question is really just around Huawei. Have you had any indication from the new government on how they're thinking about the Huawei situation? So will you have to swap out existing Huawei equipment? And how should we think about the potential quantum in terms of costs?
Sure. Polo, I'll get Mark to talk about our consumer market again. It's difficult for us to talk about other people in detail because we only know what we're doing and see what -- how the market operates. But Mark can give you a little bit more color on the kind of thing that we see in the marketplace that we need to react to. And I'll get Clive to comment on the speed tiers and the take-up and how we're doing it.I'm not so sure we can answer the gross adds on FTTC. Can we have a -- we probably, no. And then I'll do the Huawei question...
Don't [ touch that ].
...the Huawei question, if that's okay. So Mark, do you want to just give a little bit more color on what you're seeing...
A bit of color?
In the marketplace.
I won't pick out any particular names, but just to give some context. I mean on the 40 10 80 20 products, we've seen the market price for those products reduced between GBP 5 and GBP 9 per month. So that's been an average price dilution at a retail level of broadband. On the mobile side, there is an offer in the market right now of unlimited data for GBP 10 a month for the first 6 months.And we've seen 5G as Philip's outlined -- whilst we thought it was logical that with all the investment going into 5G, and the fact it's a faster, better network, we thought it would be logical to have a small premium for that service, others haven't seen that logic. So that's been another dynamic that's happened in the last few weeks. That's just a bit of flavor of some of the competitive headwinds that are going on.
Yes, and I'd add, Polo. I'm sure you've heard the joke before. But it's like if you look at the value for money we're offering, this connectivity -- broadband connectivity hugely important to everybody, as you -- I'm sure you well know, and that's why if things don't go well, we are -- we get called very, very quickly. So we know how important it is to people. But you can get a great product for GBP 25, GBP 30 a month. And the sort of standard industry joke is, that's sort of like 10, 12 coffees a month.So what we're saying is we know we provide great value for money. We're investing heavily to make sure those things keep moving. And therefore, we can get ready for future speed requirements that we all know will change over the next decade or so right? So whilst the demand at scale isn't there yet for very, very high speeds, it definitely will be there. We don't know exactly when. So we've got to build a network on that basis. So it's all linked as ever. So we just need to make sure that the market operates in the most balanced way. And we have obviously a big responsibility to lead that in the right way and get the cash flows into the business that can be reinvested into, as an example, the massive build on fixed fiber network, but also the 5G network I referred to earlier.So on the tiering, Clive, do you want to make a comment on that?
Yes. So it's progressing very nicely, actually. So I'm very pleased that the proportion of customers taking the higher tier products on VDSL, the fiber to the cabinet platform, is significantly up from this time last year. And we're sort of reaching the cutover point where half of the customers now are taking higher speed VDSL products rather than the anchor 40 10 product.So we see the mix improving year-on-year and by a decent proportion. And of course, the aim then is to move customers from superfast tiers to ultrafast tiers as more and more customers move to the new fiber to the premise and G.fast platforms.
Great. On Huawei, I mean again obviously it's a complex issue, right? And again, as you know, it's right that the time it's taken to work out exactly what the way forward should be. Things haven't changed at all, really, which is all the stuff, you know, and we've said many times before, is security is such an important part of what we do for our customers and for the country at large. We are in detailed ongoing dialogue with NCST, the government and all stakeholders.I think we have a clear policy of not using Huawei in the core, as you know, that will be maintained. And there is this -- the decision has been deferred, as people look at the more complex elements to the Huawei decision I referred to earlier on.So all I can tell you is, the good news is people are being calm, considered, and we welcome that fact-based approach to get the right decision and take as long it takes. So at the moment, we are carrying on with our plan, which is using them in the outer part of the network in mobile, the RAM and not in the core. And we are very much balancing our suppliers. They are by no means our only supplier.And for example, we got very fast adoption of Nokia now in FTTP. And Huawei will, if there's no direct complete band, for example, Huawei will be a supplier to us, but they will not, by any way, be the only supplier, and we'll have multiple suppliers, which we currently do today as well.
How difficult is it to do a swap out of Huawei equipment? Is it something that is very, very complicated?
Sorry, Polo, just say that again, how complicated?
How complicated would it be to do a swap out of Huawei equipment if you had to go to that extent? And could you give us an idea [ typically ] what it would cost?
Yes. I mean Polo, to be clear, if there was a complete ban on Huawei, that is a massive decision in terms of the implications thereof. It would take -- if that were the case, that would take years to execute. So -- and therefore, the cost implications depend on how many years.But I mean you would not physically be able to do it in under 5 years. So -- and that's why we say, why it's a complex, complicated issue. So whatever happens, under all circumstances, and this applies to most countries in Europe, Huawei will be in a network in some shape or form for many years in the foreseeable future. The question is, under what circumstances? And what exactly should we do? That's why again, I can only tell you that the discussions I'm having and we're having as a team with the government and the cybersecurity experts and all the stakeholders, is very sensible.
Your next question comes from Paul Sidney of Credit Suisse.
Just three quick questions, please, for me. Firstly, on the full fiber investment. You mentioned that borrowing, CapEx and dividend are potential sources of funding. But would you also consider cutting sports rights, content costs as well? I mean there's a huge amount in the presentation about fiber, but almost nothing about content. Just wondering how you're thinking about that?And secondly, Ofcom has been making some recent public comments about giving good visibility over 2 cycles, 2 regulatory cycles, which potentially could give you good visibility out to 2031. So I was just wondering in the context of the fair bet, is that period of time long enough? And then just a quick one, a quick third one. Are you still targeting higher EBITDA in March '21 versus March '20?
Okay. Well, let me do the last one first, and then I'll get Cathryn to do Ofcom regulatory cycles and fair bet. On EBITDA, of course we are. We're definitely targeting doing that.In terms of the full fiber versus content, the answer is simply no. We have a proposition in consumer, which is multifaceted. And an important part of that today is the BT Sport offering, which is extremely compelling. And we're making very good progress on amending it, so it continues to prosper, both for our consumers, but also from a financial point of view.Let me ask Cathryn to make a couple of comments on the question around Ofcom and the regulatory cycle.
Polo yes, you're quite right, Ofcom has talked about forbearing from regulating fiber prices beyond the anchor price for 2 control periods, which would give us some welcome certainty until 2031. But of course, as you know, there is -- there's more to it than that. And I think we are in discussion with Ofcom about some principles that we hope will endure beyond the 2021 review but possibly even beyond the 2026 review because, as we all know, investment in fiber is a long-term investment with long payback period. So 2 control periods of regulatory forbearance is great, but we do need to get clarity from them on those enduring principles as well.
Thanks, Polo. Simon just said to me he doesn't think I answered the question very well on full fiber versus sports. So let him have a go.
I -- it wasn't the quality, in fact, it was omitted. The -- I think the question was, do we think about not investing in sport in order to invest in FTTP? And the point, I think, needed to stress going back a little bit to the -- my response to an earlier question. When we look at investment in sport content, it is for typically a 3-year period. We are looking at the direct revenues and margins that flow from that investment. They are in the retail business, they are in our sport business through multiple distribution channels, they're in our broadband base. If we don't have the content, then typically, those revenues move down pretty swiftly because we know exactly what is attributable to the sport.So there isn't a solution whereby somehow one doesn't invest in sport, and all of that cash is suddenly available to invest in network. It would be the net left over after the loss of revenues associated with the sport, and that would be -- make a very small contribution. So it's really not a trade-off that we -- is a real one.
Polo, [ our team has ] a much better answer than mine. So I think we're sort of running out of time a little bit, but I'm [ conscious ] it seems like we've got more questions. So maybe we'll take a couple more.
So your next question comes from Maurice Patrick from Barclays.
I'll just stick to one, if that's all right. Philip, just on towers, thanks for your earlier clarifications. But just to understand how many towers you actually have. If I'm not wrong, there's 14,500 towers or so in MBNL, of which your economic state is 50% of the JV? And there are excess towers outside that, but you don't own any, or most of them? Just clarify how many towers in your economic exposure will be super helpful. Just also in context of just today seeming to [ want to ] create a telecom cells which includes a stake in the JV. That would be very helpful.
Sure. Simon, do you want just confirm how many towers we've go?
I mean I think the indication that was provided before, if we look at MBNL in total, well, if we look in total in the U.K., we've got high teens. So in the sort of 18 to 19 sort of range. The vast majority...
Thousands.
Sorry, thousands. Sorry, indeed, thousand. The vast majority of those are within MBNL. There are a set of actual sort of BT sites, they're a relatively small proportion of those. I think the number 3,000 was mentioned earlier, that's a shade low. It's probably another 1,500 or so up beyond that.So that's the current portfolio today.
Great. Thanks, Maurice. Have we got time for another question, maybe?
Your next question is from John Karidis from Numis.
I wonder, Philip, if you can spend a minute or 2 being a little bit more direct and explicit about looking after your shareholders, please. Because as you can see, BT still trades at a massive discount to a sector which is itself out of favor. And it seems like investors are simply not persuaded that cutting the dividend is a good idea, even if you do have the potential to earn a good return on extra fiber CapEx. Or some would say that you haven't got a choice, given all the announcements of the alternative operators and what they're planning to do. So what are your thoughts on this? And also you've given us and you keep giving us 4 potential sources of funds for this extra CapEx, but you haven't said which of these is more likely and which of these is less likely. Is it possible for you to do that now, please? And overall, what extra can you as a Chief Executive, as the Chairman, as a management team, can say or do to resuscitate the share price?
John, I really appreciate the question. I understand the sentiment behind them. So firstly, you say, look, what we are focused on is long-term, sustainable results and returns to shareholders. And that is what ultimately we're trying to do. And I recognize right now, there is a lot of uncertainty around BT and the kind of returns that we could be expected to make, and what kind of investments will be required. There are lots of moving parts, lots of uncertainty. And we've talked about most of them today, whether it be FTTP, for example, on one hand or Huawei, on the other hand, or indeed some more straightforward, more normal things like what kind of returns you're going to get on 5G and the implications of spectrum and all those things that are coming.So I recognize completely, for many shareholders there's a lot of uncertainty hanging over the company. What we are aiming to do is to try and sort through the uncertainty, wade through it and try and make some decisions and get help from other stakeholders who are crucial to us -- Ofcom government as an example -- such that we feel confident in what we decide to do when those factors are a bit clearer, makes economic sense and serves all stakeholders. And that, of course, at the top of the list, means shareholders. So that's -- all I can really say to you in terms of what we are aiming to do -- I know that might be slightly disappointing, but there is no other shortcut to give people confidence today in the very, very short-term decisions because there's too much uncertainty. So I'm really sorry, John. I know it's a difficult topic, I know it's very frustrating, it's frustrating for us too.Having said all that, do I see -- do I feel like it's possible that we could get these kind of uncertainties and decisions resolved in the foreseeable future? I absolutely do. And what you've got here, sitting around this table, is a team of people who are absolutely dedicated to delivering that, supported by the Board, and you've got 100,000 people out on the streets every single day, delivering for customers, in the end, to try and make a fair return for the overall company, which of course includes shareholders.So John, do you want to give a follow-up question to that because I know it may not be the answer you wanted to hear?
You're dead right, Philip, it wasn't. But thank you. I just wanted to say a couple of things. The first one is, do you really feel that you actually have a choice of -- to walk away if you don't get the enablers, given what all the other alternative operators are planning? So you present this as if you do have a choice. But I would suggest that the share price implies that you haven't. So that's the first point.The second point is please, based on your internal plans, do you think that a dividend cut is more likely and more probable versus for the other sources of funding that you've talked about? Try and give, if possible, some sort of probability on these 4 sources of extra funding that you've talked about.
Okay. John, I appreciate the follow-up question. I -- what I said there is you've always got choices. So we absolutely have choices. I think what's fair to say is, the best-case scenario, which I am shooting for, is a very ambitious plan, which is the converged network plan you know about, with a massively bold plan around FTTP and 5G and great converged products [ synched ] on there.If we go down that path, I'm absolutely certain that shareholders will do very nicely as a result of that. And so they should because we're taking the risk on investing.So the next option down, and then there's a whole variation to those, may be suboptimal, but they are still choices, and they still could be good. But of course, there are scenarios, and that's why we are where we are, where none of those things gets resolved so the choices become not that appealing. In those situations, we will take decisions, in the way I described, to get the best outcome for all stakeholders, particularly shareholders. And again, I can really appreciate -- I don't want you to think I'm dodging your question, and you say, please, help me on the dividend question. I can't help you today because there's so much uncertainty. All I can say to you is we've been very clear on the 4 places we could use and get money for, for any investment we may require.Think carefully -- we would only make the investment if we think the returns are appropriate and very, very attractive. If we're in the situation when we have that, I will have no hesitation in taking from all of those 4 buckets, including the dividend, and I know the Board will support us doing that. And so should good, long-term shareholders.So I hope that's a -- I hope it's given another chance, John, to try and give you a better flavor of what I'm thinking. Again, I apologize, it hasn't dealt with everything you want. I think we're going to have to close it off at that point. It's been 1 hour and 15 minutes. Thank you so much for your interest and questions. That's really helpful and look forward to engaging with you over the next few months.