Elisa Oyj
OMXH:ELISA
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
40.4
48.94
|
| Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Elisa Oyj
You don't have any saved screeners yet
Good morning, everyone, and welcome to Elisa's First Quarter 2021 Interim Report Conference Call. I'm Vesa Sahivirta, Head of Investor Relations. And here together with me is a very familiar team, CEO, Veli-Matti Mattila; and CFO, Jari Kinnunen. Also, the agenda of today is very familiar. We start with the presentation followed by Q&A. And in Q&A, we go straight to the conference call lines because we don't have any audience here due to this COVID situation. We are ready to start, so I give word to Veli-Matti, please.
Thank you, Vesa, and welcome to Elisa's First Quarter 2021 interim report on my behalf as well. We had a good quarter, the first quarter of this year according to our plans. And revenue was growing by 3%, while EBITDA was up 2%. Mobile service revenue increased by 0.9% year-on-year. We still have the full impact of lack of roaming, due to lack of traveling, impacting especially in the corporate side, but overall in the business. Our postpaid churn decreased a little bit to 18.3% from 19.8% in the fourth quarter. There was maybe a bit more restrictions for the quarter for people to move around, and we have a bit less traffic than normal in the retail channel. Postpaid mobile subscription base increased by 27,100, of which M2M and IoT subscriptions were 48,700. Fixed broadband subscription base decreased 31,400 this quarter, mainly due to the reporting change and also discontinuing of subscriptions in the rental local loop business. We had a good momentum in 5G to continue. And our network at the moment is covering approximately half of the Finns in over 80 towns and cities. Revenue growth was coming mostly from our acquisitions and cooperation activities and businesses having cooperation. And also, mobile services was growing as well as domestic digital services and equipment sales. Those were contributing positively. Mobile service revenue growth, of course, had impact from lack of roaming, but the upselling continues and also the product changes that we do time-to-time also contribute to the positive development. In EBITDA, revenue growth, of course, is positively impacted as well as the continuous improvement of our operations, quality first in mind, but productivity improvements bearing to efficiency and profitability improvements. The competitive intensity remains pretty much on the same level as we have seen in the market, a lot of campaigning time-to-time, also different kind of gift cards and things like that. Competition remains pretty much on the same level as set as previous quarters. In the Consumer Customer segment, revenue was growing by 4%. Elisa Viihde Viaplay cooperation as well as mobile service and equipment sales contributing positively, roaming and traditional fixed line services having negative impact. EBITDA was having a 7% growth. In the Corporate Customer segment, revenue was growing by 1%. Positive contributions from camLine acquisition, domestic digital services as well as from equipment sales and roaming, which impacted more the corporate segment than the consumer segment, having negative impact and also fixed and mobile services having slightly negative impact. EBITDA was minus 7% for Corporate Customer segment. We continue to execute our strategy, and we are inspired by our mission to create a sustainable future through digitalization. We have selected 6 of the 17 United Nations' Sustainable Development Goals as the areas where we can clearly contribute with our activities to create sustainable future. And of course, digitalization is the mean how we can contribute to this positive development. We focus on the 3 strategic focus areas, which all have great potential for improved and larger results. Upselling of mobile services, higher speeds, that continues. 91% of our customers for the first have now a smartphone in our customer base. The penetration of smartphones continues and now 7% of the smartphones are 5G capable. Not all the 5G capable devices, however, have 5G subscription. But that's, of course, one driver for the growth for 5G to have the equipment base for the -- for 5G subscriptions and services. We have now 79% of our customers in 4G or 5G speeds but in the lower level of 4G speed, the number of customers is decreasing, which is indicating the change of customers upwards in the speed tiers. So upselling to higher speed continues as it has done quite some time. We have now 2.5 million Finns under coverage of our 5G network. And our 5G network has the widest coverage in Finland of all the 5G networks. It is very clear now with the pandemic that remote working has become one of the main drivers for utilization of 5G, but we have several different applications and use cases driving 5G. Overall, the improved customer experience being, of course, the main one overall. We estimate that by 2023, 5G network usage will exceed 4G networks traffic. And 5G customers' Net Promoter Score is growing in both voice and mobile data subscriptions, and it is higher than the non-5G customers' Net Promoter Score, indicating clearly that we are creating additional value with the 5G upgrade to customers, which we can also benefit by having higher ARPU on average from 5G customers to -- compared to non-5G customers. In our digital service businesses, in the domestic side, our Elisa IPTV entertainment business is moving ahead in many ways. For example, we have launched 2 new original series. And also, we have got really good success and popularity for the series we have, for example, this Pohjolan laki, Laws of the Man -- of Man, became the most watched series in Elisa Viihde Viaplay, ever during the first quarter. We have also had our contents to be sold abroad. Overall, we have been selling now already to 50 countries, the original series and our content, but we also made several deals with several TV channels in Great Britain, for example, for the series of All the Sins, Room 301, Bullets and Shadow Lines. In the IT side, one area we have been focusing on and creating progress very well is that we have been developing Finnish natural language processing capability, which provides world-class accuracy. And we have launched a speech robot service, Elisa Puhebotti, for example, to help customers, for example, to automate their customer service. And this world-class capability is trainable by customers' industry-specific vocabulary, which is a unique feature that customers can even further improve the capability of this Finnish natural language processing capability. In international services, our virtual NOC automation service is selected by Transtema with a cloud-based solution. And Telefonica, for example, is testing automation solutions in its Global Transport SDN Network laboratory. In the industrial software side, we announced an acquisition of minority share of sedApta Group, which is specializing in digital supply chain and smart manufacturing, leading that to having 1,000 -- over 1,000 manufacturing industry customers for Elisa's AI/ML SmartFactory solutions. The uncertainty in the macroeconomic environment is still prevailing. Unfortunately, even if we see some light in the tunnel in regards to the pandemic development, the uncertainty still seems to take place quite much by -- especially in B2B customers -- in certain B2B customers. Competition in the Finnish telecommunication markets remain keen. We reiterate our guidance for this year. Revenue will be slightly higher than 2020 and comparable EBITDA at the same level or slightly higher than 2020 and our CapEx, maximum 12% of revenue. Now I ask Jari to continue, please.
Thank you. Let's first look at profit and loss. Q1 was a continuation of both revenue and earnings growth. Revenue growth, 2.9%, EUR 13.4 million. And inside that growth, there was a negative impact from interconnection and visitor roaming, minus EUR 2 million. Equipment sales was growing in both segments altogether, EUR 6 million. Services in Corporate Customer segment, adding everything together, minus EUR 1 million, and of course, outbound roaming impacted negatively to both customer segments. There was also a negative change in mobile and fixed services, positive change in both domestic and international digital services in corporate segment. Consumer Customer segment, mobile services growing as well as digital services and negative impact from traditional fixed voice. In expenses, materials and services growth is driven by equipment purchases, increasing as a result of equipment sales growing. In employee expenses, more than half of the increase is due to camLine consolidation. EBITDA growth was 2.4% to EUR 170 million. Depreciation is slightly higher than last year. EBIT, 3.1%, and EBIT margin, 21.2%. Financial expenses decreased by EUR 1 million, mainly due to refinancing of EUR 174 million bond in January. And all this translated to EPS growth of 4.7% to EUR 0.51 in Q1. Similar trends continued also in Estonia, both revenue and EBITDA improved and revenue was growing 2.3%, services and equipment sales growing. EBITDA growth was 4.9% as a result of revenue growth and cost savings. Mobile postpaid subscriptions continued to grow this quarter. Growth was 5,300. Prepaid subscriptions decreased almost the same number. And churn continued at relative low level at 10.5%. Then CapEx, reported CapEx was EUR 53 million, and excluding shares and lease agreements, EUR 48 million, which is same as a year ago. Consumer segment, EUR 32 million, and corporate segment, EUR 20 million. And main CapEx is, of course, 5G network rollout and coverage increases, some 4G investments and other network and IT investments. Then cash flow -- reported cash flow was EUR 50 million, and comparable cash flow, EUR 60 million. A year ago, it was EUR 73 million. There was negative impact from net working capital change, also paid taxes slightly higher and positive impact from higher EBITDA. In net working capital change, inventories were higher as a result of better availability of equipments of certain suppliers. In payables, lower payables, as a result of operating expenses lower and roaming as well lower. Also, end of last year, we had somewhat higher than normal receivables -- payables amount. So the comment was relating to payables and not receivables. Operating -- operative cash flow conversion from EBITDA continued to be high at 71%. Then capital structure and returns. Capital structure continues within target range, net debt to EBITDA, 1.7x, equity ratio of 41%. Return ratios continued at good level. Return on equity, 29.2%, and return on investments, 16.3%. And liquidity position is -- end of Q1 is strong, and cash and committed limits were EUR 574 million. In terms of financing, as mentioned, we did refinancing in January regarding EUR 174 million bond at lower interest. And as a result of that, there is approximately EUR 4 million positive impact at annual level in interest expenses. Also, we issued a new Schuldschein loan, EUR 100 million, 400 days short-term loan, and we managed to get that first time at negative interest rates. And currently, average interest expense as a result of these transactions is below 1% on interest-bearing debt. AGM earlier this month decided on dividend, EUR 1.95 per share. And total amount, EUR 312 million, that was paid yesterday, which is a payout ratio of 95% and represents a dividend yield of 4.3% against the share price end of last year. Also, AGM decided on EUR 5 million share buyback authorization to the Board of Directors. And now this is 7th consecutive year of growing distributions and underlying strong long-term commitment to competitive shareholder remuneration. And now I give word to Vesa, please.
Thank you, Jari. And now we move on to Q&A part, and we ask first question from the conference call lines please.
[Operator Instructions] And our first question comes from the line of Nick Lyall from SocGen.
It was a question on B2B, please, if that's okay. You're seeming quite downbeat or a little downbeat at least when you gave the guidance, but the B2B numbers seem to look a little bit better, certainly on the corporate subscribers in mobile, they still look strong. So has there been any change in the background on competition? And on ARPU, corporate ARPUs, they seem to have stabilized in Q1 as well. So it seems a little bit early to talk about the annualizing of the COVID impact. So is there an underlying improvement so far in the ARPUs, please, in corporate?
All right. Thank you for your question. In regards to B2B, yes, we have relatively good development there in B2B segment. In terms of the subscriber numbers, we think we have kept pretty much the market share. Have to remind that going forward, we have this one public sector deal that we lost last year, low ARPU customers.However, financial impact being quite small to us. So going forward, there will be some reduction in the number of subscriptions due to that during this year. But overall, we think that the subscription -- amount of subscriptions remains pretty stable, overall, pretty much going forward.In terms of the ARPU, yes, we see, of course, the impact from 5G and upselling also visible. But still, the uncertainty that exists in the market due to this pandemic development and when and how the exit of the -- from the pandemic will take place still creates uncertainty to quite a few customers, especially in B2B side, really. And going forward, that, of course, still pressure somewhat the kind of B2B business in terms of the timing of projects. There are delays from the projects, which also has some impact in the mobile side.But the underlying development with the upselling of higher speeds providing more value with 5G and its speeds as well is, of course, on good progress.
Our next question comes from the line of Peter Kurt Nielsen from ABG.
Sorry, I just needed to unmute. Just a question, please. The EBITDA growth is slightly below revenue growth. Anything you care to elaborate on that, Veli-Matti? Is it the new acquisitions, which has perhaps slightly diluted? And also, could you give us any indications on what uplift you anticipate in the coming quarters from the annualization of the roaming impact, so to speak? And whether the uplift you have seen or mentioned at the Capital Markets Day, 5G service is expected to increase mobile service revenues 1%, roughly this year? Whether you have seen a similar impact in Q1? Or I would anticipate, that will mainly come in the second half of the year. But any additional flavor on this would be appreciated.
All right. There are no specific things making EBITDA to grow a bit slower than the revenue this quarter. Of course, we have this Elisa Viihde entertainment cooperation with Nordic Entertainment Group, where we get some EUR 5 million of revenues per quarter, but the EBITDA impact is close to 0 from that.So that is, of course, one dilutive thing. But overall, quarters are a little bit different time to time, but there's no specific reason for the EBITDA to grow slightly less than the revenue. Just to remind that EPS had a 5% growth during this quarter, which, of course, is even more important than EBITDA.Uplifting things in regards to the roaming, still, we believe that traveling will not take place too much on second quarter neither in the third quarter. That's our estimate, even if there are already good exit plans and actions taking place in different countries. But still, we believe that the kind of increase of the roaming revenues from close to 0, what they are today, doesn't take place in second quarter and not so much on third quarter either remains to be seen. There is some uncertainty with that. Of course, when we look at the year-on-year comparison, second quarter already last year, we had a negative impact of roaming to come pretty much down. So that comparable is easier. However, we got also in the beginning of the pandemic a special, I would say, onetime revenue due to the usage increasing in the early days of pandemic in those subscriptions where we didn't have unlimited, it was usage-based. We saw some kind of peak -- some improvement there, an intermediate improvement, which, of course, helped last year's second quarter. But in terms of the roaming revenues, the comparable is now different than what we had this year.5G, we reiterate that we see approximately 1% impact this year for MSR. 5G is gradually building up the 5G business. And as I said, 7% of our mobile devices now -- right now in the network are 5G capable. Number is increasing. More than half of the devices we sell at the moment are 5G capable. So the base and an opportunity for selling and upselling 5G is getting larger for us, and we are moving according to the plan like we've said.
Our next question comes from the line of Artem Beletski from SEB.
I have actually 2 to be asked. So first of all, when it comes to digital services and growth of 12%, in Q1, taking out the impacts relating to NIM, as you mentioned, it was EUR 5 million and presumably some impacts relating to camLine, it seems to be that underlying growth has been roughly flattish. Is it a fair calculation? And has there been some lumpiness in the business that has been impacted, basically Q1? Then the second question is related to these reporting changes when it comes to subscriptions, so basically some shift from fixed to mobile. Did it have any impact on growth numbers what it comes to basically fixed networks revenues and mobile service revenues in Q1? Or we'll be seeing it basically going forward only?
All right. In regards to the digital services, We had a good development overall with the digital services. But we can say that in the B2B side, especially in some business areas like in the video conferencing, we see -- so even year-on-year, decline, due to the projects being delayed by customers.So we see still some customers in the B2B segment to delay projects, which has some impact to B2B numbers overall but also to the digital services numbers. But the overall development is good. We haven't really lost kind of market share or deals, but it is -- those delays that impact somewhat to the digital services development in B2B side.But overall, momentum is good. For the second question, I ask Jari to give some highlight on that.
Yes, regarding reporting change in subscription numbers in fixed broadband, the financial impact is very minor. So there is, in practice, no financial impact. But it is in -- well, correcting the subscription number reporting according how the right definition of fixed and mobile is. But as I said, financial impact, very minor.
Maybe just a quick follow-up on this latter question. Could you maybe provide some color what type of ARPU customers also have been basically in line with mobile postpaid? Or is it higher or lower?
Are you referring to which customers, sorry?
Basically, those customers which have been there from a reporting level, being shifted from fixed to mobile.
Yes. It's an average ARPU that in corporate segment customers do have. So -- but it is already calculated before this subscription base change so that the earnings -- sorry, the revenue is accounted in the mobile. So this change is not only correcting subscription number and the financial impact was already in line.
Our next question comes from the line of Terence Tsui from Morgan Stanley.
I just wanted to pick up on the earlier comments that you made around the corporate segments. In particular, can you just give us a bit more detail behind the EBITDA decline this quarter of 7%? You mentioned the decrease in roaming revenues. I'm just wondering whether you could quantify how much was roaming, how much was the delayed business activity that you've mentioned earlier on this call. And whether you think we should see some stabilization in corporate EBITDA, as the comps scale a bit easier for the rest of the year?And then my second question was just on Estonia. Just what's the latest there regarding the network and the use of Chinese vendors and whether you're progressing with the swap out of the network there?
All right. Thank you. In regards to the corporate segment EBITDA, yes, the roaming has still a negative impact to the corporate segment, especially, and driving the negative development for the most. Then like I said, in some digital services, we've seen postponing of projects, like in video conferencing, also impacting somewhat negatively to the EBITDA.In corporate side, we believe that as long as we get the pandemic situation to get improved, some point in time, there is, however, uncertainty how the timing really plays out. But we believe that these uncertainties in the projects of various kinds in B2B side will be resolved, and we will get more to the normal level.So in that way -- and also in regards to the roaming, we should start to see less negative impact from roaming going forward now in the corporate segment as well. In Estonia, the government has been very busy on handling the very difficult pandemic situation in the springtime. They are working on the 5G license conditions and -- terms and conditions there. It seems that there will be a kind of de facto ban for Chinese vendors. There's no decision yet, but what has been discussed that 5G equipments can be used until '25 and the 4G equipments of -- from, let's say, Chinese vendors can be used until 2030.And with these kind of guidelines, we, of course, need to do some changes some point in time, but the financial impacts are not anything major in the Elisa context, remembering that Estonia is less than 10% of our investments. And also, we can mitigate with the transferring period of this change out. Also, we have discussed ongoing since this is really a government decision to kind of ask us to take out some equipment that still have time to be used. That was the compensation the Estonian government can provide to us, that's also still under discussion.
Our next question comes from the line of Andrew Lee from Goldman Sachs.
Apologies. I have 3 questions, but hopefully, they're all quite brief. The first one was just on the international digital services business, where you mentioned in the telecom software part that Telefonica's testing automating -- automation solutions with you. Is that the same part of the business? Forgive me if I'm getting anything incorrect. Is that the same part of the business that you sold some services to T-Mobile to -- that you highlighted in your CMD and also to a Swedish operator? And if not, how is that efficiency or network efficiency services business going, any more contracts signed there?Second question was just on the corporate segment around competition. I know there's some -- a bit of low-end price competition from Telenor DNA there. And I just wondered how much traction that's getting and if we're seeing the full impact of that in this quarter's results or if that should hinder in -- hinder more in the second quarter? And then last question is just a clarification. So while 5G should continue to help accelerate revenue growth this year and you reiterated your percentage point boost comment earlier, did I understand correctly that you're saying that we may not see much of an acceleration in the second quarter because of tough comps from usage benefits from a year ago?
All right. Thank you for your questions. First, in regards to the ideas and this Telefonica thing, what we -- cooperation that we do with Telefonica, actually, it is a bit of different automation solution that we sold to T-Mobile and to the Swedish operator, it is a different part of the network. So it is an additional offering that we have developed. And Telefonica is one of the first to test that which is, of course, expanding our offering, let's say, organic offering that we've developed at Elisa in the IDS. So that's why it's also very remarkable that for another part of our offering, we get a world-class reference hopefully soon, really after their testing.The -- also in regards to the competitive situation in the Corporate segment, yes, we do have a quite fierce competition there, not only in the large customer segment, but also in SME side. Competition, of course, belongs to market economy. And so we see time to time quite fierce pricing, especially in the 4G domain.They are kind of not maybe list pricings, but they are time to time happening. And we see without mentioning -- without mentioning the names of competitors, but we see at least one competitor being quite active there, obviously, having pressure for their subscription numbers.And -- but we focus on providing good value, good quality to customer, additional customer perceived value that we could have customers to be selecting Elisa also going forward and also to be paying a bit more than for the competitors' services.However, saying that, of course, we cannot disregard the, let's say, pricing aggressions, so and so, from the competitors' time to time. We are matching that, that is something we have been doing over the years already now, but we do that competitiveness at the market.There hasn't been really change if you think about first quarter in this competitive activity, versus what we saw last year. But it is, of course, good to understand that this, of course, also pressuring the B2B segment always. In terms of the 5G, it is, of course, something that is growing and bringing additional growth for mobile service revenue growth numbers versus what we had second quarter last year. We had, of course, the roaming decline already have taken place in the second quarter last year, but these additional usage-based things, they helped especially the, let's say, the profit of second quarter.So we didn't get a hit to our profit and result in the second quarter, even if the roaming went down and impacted negatively. But there was some balancing revenues for second quarter last year. So that way, the comparable is different. But in terms of the mobile service revenue growth, the comparable is now for the second quarter, a bit different what it was for the first quarter.
Should that mean that we don't get to see -- is that a headwind that offsets any kind of tailwinds from 5G -- from great 5G take up? Should we expect to see some kind of acceleration in the second quarter? Or is it a second half thing that we need to wait for?
It remains to be seen how the 5G acceleration takes place. We think that we have a good momentum as we speak. But it's, of course, a function of many factors like how the coverage will be built out, how the devices can be sold and some other factors. But there is a good momentum of customers, more and more customers moving to 5G. And as said, the Net Promoter Score for 5G customers continues to be higher and developing positively. So there is clearly a better experience we provide with 5G to customers. And that is of value of money in the value capture side for us.
Our next question comes from the line of Stefan Gauffin from DNB.
Yes. A few short questions. First of all, could you just provide the number of broadband subscriptions that was moved to mobile? Secondly, last quarter, you provided that you had reached close to 200,000 5G subscribers in Finland. Could you provide us with an update on that number?And then thirdly, if you could provide a camLine contribution on the sales and EBITDA, so we can calculate organic growth.
For your first and second question, unfortunately, we do not disclose any further numbers, not to the number -- exact number, how many we move to mobile, neither what's the update for 5G. What we can say about the 5G is that we are getting more customers, but we are getting well-paying customers, more than EUR 3, more ARPU on average for 5G customer than for non-5G customer.And that's what we are really looking for rather than optimizing just the number of 5G customers. We could swap the customer base of 4G customers to 5G customers overnight if we like to, but we would not make any additional revenue. So you understand that our logic is more towards the revenue than -- revenue increase than to the number of 5G customer increase. But that's kind of the situation. In terms of the -- for your first question, still coming back to that, the majority of the 31,000 what we lost -- we lost in the fixed broadband.Majority of those customers were moving to mobile, but the exact number, we are not disclosing. In terms of the camLine sales, it's approximately EUR 20 million on annual level and EBITDA approximately EUR 5 million on annual level.
A small comment to camLine EBITDA. It's -- there's quite strong seasonality. So much of the approximately EUR 5 million EBITDA is in the second half.
Our next question comes from the line of Sami Sarkamies from Nordea Markets.
I would still have 2 questions. Firstly, are you seeing any impact from component shortages, thinking of your rollout plans? For example, it's been reported that both fixed and fixed wireless home routers are seeing very long delivery times at the moment.And then secondly, on sales mix, what drove high equipment sales in Q1? Was this just about the new iPhones becoming broadly available or something else?
Okay. We have seen, let's say, some indications of potential impacts due to these component shortages. We haven't really seen strict impacts as we speak. Now other than maybe some game consoles, delivery time being quite long at the moment.But there are some dark clouds that we may have, some impacts to certain, let's say, equipment that we need to have for our subscription products. No major impacts visible, but some impacts, especially in the second half of the year may take place -- remains to be seen. Your second question, can you repeat? I didn't quite capture what was the essence of that.
Yes. So just wondered what drove high equipment sales in Q1? Was that about the new iPhones?
Okay. Well, for the first, we have a good equipment sales, especially the device smartphone sales machine, if you will. We have very large sales channel to Finnish market, but there was no specific one thing influencing on the device sales up. Of course, we have, like I said, the iPhone now quite new still to the market impacting positively, but that was not the kind of only reason at all.
Our next question comes from the line of Siyi He from Citigroup.
Actually, just 2 small clarifications, please. And the first one is on your B2B. I think you said that the subscriber numbers is impacted by the fixed or mobile reporting shift. So if I took that majority of the fixed broadband decline is shift to mobile, that would imply that your B2B subscribers might have seen some decline this quarter.Should I think that the public contract losses have started to have an impact of your subscriber trends in B2B? That's my first question.And the second question, just a follow-up on the equipment sales growth. I was wondering whether you could give us some indications on what percentage of the customers are taking the 5G subscribers so that we can have an idea of how we should anticipate the impact of 5G going forward?
All right. Thank you for your questions. In regards to the B2B side, yes, we have seen -- if we take away this fixed mobile transfer, slight decline in the amount of subscriptions in 5G -- in B2B side. Going forward, we will -- as I said earlier, we will see maybe some impact because there was a quite big private -- public sector deal that we lost, which will take more place. It has already started, so we may have seen some losses from that in the first quarter, but it will be more during the rest of the year.But again, like I said, the financial impact of those losses are quite small. And we can mitigate that -- those by some -- with some other deals. We don't disclose really the percentage of past 5G device buyers, how many of those are taking the 5G subscription, but it is a good number. We are selling the bundled -- or not bundled, but at the same time, the 5G subscription as well as device at the same time with good percentages. But unfortunately, we are not disclosing the number. That number is going up also. And of course, it is valuable for us to have 5G device base where even if there is no 5G subscription yet because our, let's say, selling machine is, of course, meeting the customers in different ways to get them also the subscription in due time.
Our next question comes from the line of Abhilash Mohapatra from Berenberg.
Yes. I just wanted to come back to the sort of proposed change in the maximum contract length. I think that there was a proposal to reduce that from 24 months to 12 months last year. I just wanted to check if that's something that's actually been implemented. And if yes, what impacts you're seeing from that.
All right. Yes, that regulation has taken place. It's maybe a bit early days to say which kind of impacts that has had. But as said, that, that is improving the customer satisfaction overall to the industry because there was also not only this change of the maximum length, which is, of course, important, but the more important where these, let's say, practices that operators can have and should have while, let's say, acting with the customers when customer's contract period is ending.And if the customer is changing an operator, how this, let's say, locking of the customer is not done in a customer unfriendly ways. So those parts of the regulations are more important and remains to be seen how that impacts to the market.
That's helpful. And if I just recall correctly, it's obviously something that you don't expect to have, a sort of negative impact on your business because you don't have customers under fixed contracts.
We rather see that, that's a positive thing for Elisa. The quality and customer satisfaction has been the main driver of our business not to create unhealthy stickiness with the customer relationships, which then are spoiling the whole industry reputation. So that's why we like this regulatory change, and we believe that it fits very well to our strategy and should be neutral or slightly positive for us.
Our next question comes from the line of Adam Fox-Rumley from HSBC.
I wondered if I could ask you to make a comparison between the upselling of 4G and your expectations for 5G, please. So your presentation mentions that you think the majority of your traffic will be on 5G by 2023. Do you think that the EUR 3 price premium can be sustained until then? And I guess, did you see a realized ARPU premium for the first 3 years or so of 4G sales, for example?And then secondly, a question on working capital. I just -- I think you mentioned this in your presentation, Jari, but was Q1 an unwind of Q4 or partial unwind? Or do you expect more of an unwind of Q1 in Q2?
Okay. I'll take the first question, and then I'll ask Jari to respond to your second question. In regards to the upselling of 4G and versus 5G, the more than EUR 3 average difference and higher revenue we get from the customers with 5G, whether that will continue over time, that's, of course, our target, and our target, of course, is to even have higher difference. But of course, it is a function of many factors, one being very much of the competitive rationality in the market.We see that customers are getting more value based on the measurements that we do with the Net Promoter Score. So there's a rationale why customer would pay and why they are paying and willing to pay more for 5G than 4G. But then again, of course, the competitive situation is also a big factor in this.So target is yes, but when we -- it remains to be seen. Even if we are not reporting this continuously, the ARPU difference, we certainly will return to that in the later stages. One, we need to remember also that 5G is not just the one step forward or one stage from 4G to one level of 5G. There will be additional speed tiers in 5G, also additional quality improvements to the customers. We get to the stand-alone 5G where the delays can be much lower. We will have slicing and other features coming with 5G, helping customers to get benefit in different other ways. And the better we are to monetize those performance improvements that clearly come with 5G going forward comparing to 4G, the more ARPU and revenue uplift we can have. Sorry for a bit open-ended answer, but the target clearly for us is -- and the logic for improved customer value and also willingness to pay, but the future will tell where we will get.
Regarding working capital change, yes, there was some part in payables side, unwinding from high payables balance, end of last year. Also, lower operating expenses resulted to lower payables. And regarding Q2, there is not such an unwind impact expected. Of course, quarters are different and timing of invoices vary from month to month. And so there are some differences between quarters every now and then.
[Operator Instructions] And there are no further questions at this time. Please go ahead, speakers.
Thank you for all questions, and thank you for participating in this call. We wish you a very good reporting season and goodbye now.