Elisa Oyj
OMXH:ELISA
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.
Good morning, everyone, and welcome to Elisa's First Quarter 2022 Analyst Meeting and Conference Call. I'm Vesa Sahivirta, the Head of Investor Relations. And here is, again, a very familiar team, CEO, Veli-Matti Mattila; and CFO, Jari Kinnunen, as well some audience. We start this meeting with a presentation followed by Q&A. We take first questions from the audience and then from the lines. And I think we are now ready to start. So I give word to Veli-Matti, please.
Thank you, Vesa, and welcome to Elisa's interim report of the first quarter 2022 on my behalf as well.
Our revenue was growing by 6%, while the EBITDA grew by 4%. Mobile service revenues growing 6.8%. In Finland, we saw the churn to decrease fourth quarter. Intensive campaigning periods, of course, had a higher churn. We can say that the competitive intensity has not decreased or the competitive intensity is the same, except that those kind of campaign events that we saw very much in the fourth quarter, we didn't see in the first quarter. So churn was 17.2%. Postpaid subscriptions were increasing by 30,300, of which M2M and IoT were the majority.
Fixed broadband, so slight decrease of 6,800 and the good momentum with our 5G business continues. Network now covers 77% of Finnish population over -- in over 160 towns and cities.
We also start from this quarter new ESG key indicator reporting. And in our AGM, the decision was made to pay EUR 2.05 per share dividend from last year's results, meaning a payout ratio of 94%.
When we look at the revenue increased drivers, of course, we had a very good quarter of all businesses basically contributing to the growth. Mobile and fixed services, all of -- both of them as well as the digital services and equipment sales.
Mobile service revenue growth, of course, 5G momentum increasing and providing a contribution to the mobile service revenue growth as well as the product changes, including some price increases helping. And also, we saw maybe slightly more roaming revenue for this quarter now when the traveling is at least somewhat getting more in the Americas. But so far, still the roaming revenues are clearly below the levels of times before COVID.
EBITDA, of course, was improving due to the revenue growth but also our continuous productivity improvements.
Then if we take a look on the segments. Our consumer segment grew by 4%. The revenue growth drivers, as told previously. Interconnection price declines led to the situation that the interconnection and roaming, kind of, combined revenue line, as well as the traditional fixed line services were contributing negatively to the revenues, both in the consumer as well as in the Corporate Customer segment.
In the Corporate Customers segment, we saw revenue to grow 9% and EBITDA, 8%, where part of the contribution to the growth, of course, came from our international digital service businesses.
We continue to execute our strong strategy, and we see clear growth potential in each of the 3 focus areas to increase mobile and fixed service revenues as well as growing digital service businesses and key -- and really strategic for us is to improve the excellence at Elisa with our [ Elisians ] to create improved efficiency and quality.
In the mobile side, we continue to see customers moving to higher speeds. Some customers, the 5G; some customers to higher level of 4G subscriptions. And now 93% of customers having the smartphone -- new type of smartphone and 82% of customer base have better 4G or 5G speeds. So there are still some customers with smartphones not having even 4G subscription. But also, we see here that the lowest speed here in 5G has less and less customers in that. So we have a good upselling continuing not only in 5G, but also in the 4G.
We have the best coverage -- widest coverage in our network in Finland. There's independent Boftel, do -- has done again, a drive test throughout Finland. And the latest result shows that Elisa has the widest 5G coverage.
Our customers, of course, value 5G services. The 5G customers continue to be more satisfied than non-5G customers. And also, we see that the -- even the customers are increased in 5G features in terms of the devices. So leading to the fact that the average price of mobile phones sold has increased 10% since 2019.
Elisa, we joined forces together with Wind River to build Europe's first fully automated far edge cloud for 5G, which is providing even more -- better performance for certain B2B customer cases, for example. And also, there has been a recent report of Rewheel, which tells that Elisa has the highest mobile capacity potential, 8 terabyte per subscriber per month. Also, the report is telling that Elisa has the densest mobile site grid in the world. And these competitive kind of advantages are, of course, playing also in the future for us for building 5G business and being competitive in the market.
In our digital service businesses on the domestic side, our entertainment business, video business is moving ahead. Of course, the competitive landscape is very tough. There is a lot of competition in the -- especially in the streaming services, but the combined -- our set of features and offering that we have in the entertainment side -- entertainment video side is creating growth.
We have more and more international interest for our original series. We had 3 Elisa Viihde, the original series, selected for the MIPDrama, Cannes as among the 10 most interesting international series, Evilside, Summer of Sorrow and The Invisibles. Also, Elisa's original series, Mister8, which was last autumn's Cannes Series winner, now premiered on Canal+ in France.
In our IT services side, clearly, we see increasing demand, for example, for the IT hybrid cloud services. Also, Elisa has been recognized as the top 3 most recognized cybersecurity providers in Finland. And of course, now with these geopolitical situations and environment that we have now, the cyber service and security service demand, both for the corporate as well as in the consumer side, are on increase.
In international digital services, Elisa IndustrIQ has had a continued very strong growth in first quarter. Elisa Polystar, we made the acquisition of FRINX, which is a really excellent Slovak-based telecom network automation software supplier. Products and software complement very well Elisa Polystar's zero-touch automation and analytics offering. So really makes Elisa Polystar even stronger.
And Elisa Videra sees clearly that the market is moving towards the hybrid working and that creates demand for Elisa Videra type of video conferencing services. For example, in the first quarter, over 300 video meeting rooms were delivered globally by Elisa Videra.
In regards to our mission to provide a sustainable future through digitalization, we have now set clear sustainability targets. We are, of course, doing many activities in the 4 domains of sustainability that we have set: digital, social, environmental and economic. And this sustainability finance framework was established during the first quarter. Also, we have made a 10-year wind power agreement during the quarter. We have assured sustainability report from 2021, TCFD report. We also became industry winner for Sustainable Brand Index in 2022, third year in a row in Finland. And we have also joined with Women4Cyber in Finland to increase the employment of women in the Finnish cybersecurity industry.
In regards to the key ESG indicators, we have some of the indicators that we report on a half year basis, like the proportion of female supervisors, but we can say that the mobile network energy efficiency in Finland, that is also a measurement that we start to measure the efficiency comparing to the fourth quarter situation. And now we see that during the first quarter, we have a decrease of 8.8%. We, of course, see this as a very important responsibility for us to increase the coverage of over 100 megabit per second connections. And that coverage is increasing continuously, now being 77%. We are coming back next quarter to the proportion of female supervisors at Elisa. As a benchmark, we can say that we were on 27.4% in the fourth quarter '22 -- '21. And this is, of course, something that is a long-term commitment for us to develop continuously step by step forward.
For economic contribution, of course, very important part, contribution from Elisa is to innovate and the innovation we measure through patent portfolio. And as you see, the size of active patent portfolio has been increasing. And the number of first applications also were 6 during the quarter. Quarters, of course, differ from one quarter to another. But continuously, we are increasing the patent portfolio altogether, and that is something where we see that we can contribute to the sustainable future. There are many patents involved for creating really a sustainable solutions in different parts of the different industries.
And finally, in regards to our outlook and guidance for 2022. The growth in the Finnish economy is expected to continue. However, the outlook for GDP growth has deteriorated from the beginning of the year. There are increasing levels of uncertainty relating to Russia's war in Ukraine. And the uncertainties relate really to the inflation, energy prices, global supply chains and competition remains keen. We reiterate our guidance. Revenue will be at the same level or slightly higher than 2021. Our comparable EBITDA will be at the same level or slightly higher than 2021. And CapEx will be maximum 12% of revenue.
Now I leave the word for Jari, please.
Thank you. Q1 was a continuation of good developments, and both revenue and earnings growth, continuing. Revenue 6.2% growth, or EUR 30 million. And behind -- inside that EUR 30 million, we had interconnection and visitor roaming, negative impact, EUR 2 million. Equipment sales was growing EUR 4 million. Service revenues in Corporate Customers segment, up EUR 15 million driven by mobile and fixed services as well as digital, both domestic and international digital services.
In consumer segment, our service revenue growth was EUR 12 million. Mobile and digital services growing in both customer segments. Negative impact from traditional fixed voice.
EBITDA growth was EUR 7.5 million, or 4.4%, to EUR 177 million. EBIT growth, 9% to EUR 111 million. And EPS growth, 8% to EUR 0.55.
Also in Estonia, strong growth continuing and revenue growth was 8.1%, driven by equipment sales as well as mobile and fixed service revenue growth. EBITDA was growing 3%. And subscription side, mobile postpaid subscriptions continuing to grow, 3,500. Prepaid also growing, 1,100. Churn, slightly lower than in Q4 at 8.7%.
Also, CapEx continued in line with guidance. Reported CapEx of EUR 59 million. Excluding licenses, lease agreements and acquisitions, comparable EUR 50 million. And main CapEx, 5G network rollout continuing as well as other network and IT investments.
Then about cash flow and -- also a positive development. Reported cash flow EUR 53 million against EUR 50 million last year. Comparable cash flow was growing approximately 10% to EUR 66 million and positive impact from higher EBITDA, lower paid interest and lower license fees. Negative impact from net working capital change, higher taxes and CapEx. EBITDA operating cash flow conversion continued at high level, 72%.
Then about balance sheet and financial position. So solid position. Continuing cash and committed facilities were EUR 600 million, end of Q1. Capital structure, in line with targets. Net debt to EBITDA, EUR 1.6 million, target being between EUR 1.5 million to EUR 2 million. Equity ratio was 40.7%. Also, return ratios continued at good level and positive development. Return on equity, 30.7%, and return on investments, 17.5%. Debt maturities are well balanced. And average interest expense currently below 1%.
And in this month, we did pay a dividend from last year's results, EUR 2.05 per share. Dividend growth was 5.1%, and it was eighth consecutive growth year with the dividend payout ratio, 94%, distribution policy being 80% to 100% and continuing strong commitment to maintain 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 we have from the audience.
It's Felix Henriksson from Nordea. I have a couple of questions. Firstly, on the mobile service revenues, could you please break out the contribution of 5G upselling to mobile service revenue growth in Q1? And also, if you could confirm whether or not you still see mobile service revenues growing at around 4% in 2022?
Okay. Thank you for the question. The mobile service revenue growth of 5G contributed, of course, the momentum very well. We expect that our estimate that approximately 2 percentages of this 6.8% came from 5G. We had, like I said, a slightly more roaming revenue also contributing to the fact but also, of course, the continued new product features delivered to 4G customers and also some price increases altogether when customers moving also to higher speeds in the 4G domain.
And to your other question about the continuation MSR. Quarters are a bit different, but we assume again that approximately 4% is a good estimation of MSR development for the coming quarters.
And if I may, another one related to operating leverage, EBITDA growing at a slower pace than revenues this quarter again. So could you please describe the underlying reasons for the sort of lack of operating leverage this quarter and in the previous ones as well? And how do you see things playing out in the course of the year?
Well, operating leverage, if you will, has been improving continuously over the past quarters. We can say that the quarters are, of course, different. There are different situations and we are working for the long term.
In this quarter, we saw, of course, the exit from our Russian business, which from its revenue and profit point of view, was quite meaningful -- was not meaningful. But of course, this exit brought some cost -- extra cost for us. We also thanked our personnel for their great contribution and record results in 2021 by 2 extra holidays, which was an extra cost for this quarter, and there were some other extra cost.
But I'd also like to underline that we, Elisa, we are working for the long term, systematically, continuously improving our operation. We are not going after drastic restructurings by which we could say that we are now making abrupt changes. And that has led to the industry best continuous result improvement. Also, meaning that we have higher and higher quality and competitiveness towards the customers.
So we are -- in that way, we are keeping the development without any surprises to our customers or so. But of course, the operating leverage improvement is ongoing. And like I said, from the quarters last year, the revenue to EBITDA, for example, that ratio has been improving.
All right. Then we move on to conference call lines, and we ask first question from the telephone lines, please.
And the first question comes from the line of Peter Kurt Nielsen from ABG.
And well done on another good quarter. A couple of questions, please, if I may. Firstly, Veli-Matti, as you highlighted, you're seeing good impact from 5G and you're obviously one of the first sort of in a European scenario which are really pushing on with 5G. Can I ask, are you seeing any -- what are you seeing on the corporate side and on industrial side? Are any of your corporate customers starting to talk about sort of industrial private networks, et cetera, or really industrial use of 5G? Or is this still mainly on the consumer side you're seeing the OpEx? I'd be very interested in this.
And then can I just ask, it looks like digital services growth is coming down too in this quarter. I assume there can be some quarterly fluctuation. But my question is, are we coming down towards a more sort of 10% level, a more sustainable level after the 3 or 4 very high growth quarters in digital services? That would be my second question.
All right. Thank you, Peter Kurt. Yes, in 5G, let's say that the B2B segment has contributed to the 5G momentum in kind of a same way as consumer side, especially SME customers and also now more and more larger customers buying faster mobile data speeds.
To your question about the industrial private network developments, we have tens of customers with whom we are experimenting and we have a lot of applications in mines, in harbors, in hospitals, you name it. However, saying that, we are still in the initial phase of having commercial, let's say, more significant results out of that extra element in 5G revenue stream, if you will.
So we are still in the early days, but we have a lot of experimentation, a lot of projects. And I foresee that some point in time, there will be more significant business out of those kind of private solutions.
Then to the digital services business growth, yes, of kind of its nature, it is somewhat more volatile, if you will, between the quarters. The revenues may be for the software business itself. But what we can see is that we have a strong growth there, more than 10% now for the whole set of digital service businesses, of which the international digital services have clearly higher growth rate. And we see positive momentum in all of our, let's say, 5 domains of digital service businesses, where, of course, the kind of global market opportunity for the international digital service businesses is bigger. We just need to now prove and show the evidence that we can take the market share but that looks really positive momentum without -- unfortunately, without any more quantitative data to you.
Yes. Also, Peter, you mentioned previous year's quarters and then we had some acquisition contribution to the growth rates last year, which was not the case in this quarter.
And the next question comes from the line of Stefan Gauffin from DNB.
Yes. I would like to ask a bit on Estonia. Here, it seems like mobile ARPU is fairly flat and even declining quarter-on-quarter and especially a bit weaker on the corporate side. Just curious how you view this development given also a fairly high inflation rate in Estonia.
And then secondly, if you could just give some more information about the exit from Russia. What kind of revenues are we talking about? And what kind of cost did you take to close down that operation?
Okay. Thank you for your questions. In regards to Estonia, the ARPU, especially quarter-on-quarter, is we are not kind of worried about that kind of changes or that kind of decline -- slight decline. But we see that the mobile business in Estonia is contributing very well to the MSR development. We expect that to take place also. We are now entering to the 5G business some point in the future in Estonia as well. First, the auctions are now taking place and then the momentum for 5G would be available in Estonia as well. So we see overall positive development for the mobile business in Estonia.
In terms of the Russian business, we haven't disclosed the revenue nor profit numbers for that business, but it has been really, let's say, very low number. The purpose has been for us to be able to help our Finnish B2B customers, the large B2B customers who have had businesses in Russia and -- so that they -- their kind of services that they get from us in Finland and otherwise that they also can have good service levels in Russia.
We, of course, have not been a telecom operator in Russia. The operator services, connectivity services have been acquired from the Russian operators, but what we have provided, local area networks, cyber security, these kind of services, which don't have so high margin. But from the revenue point of view, have not been at any way significant to the Elisa.
Can I just ask, I mean, much of growth in Estonia or all the Baltic countries for the other operators has been driven by price increases. Is there a difference in terms of timing of price increases compared to, for example, Q1 last year? Could that be a reason to what we're seeing?
Well, the price increases, they take place on -- based on a bit different logic than a quarterly clockwise logic. So let's say that the answer is maybe yes to your question. But when we do price increases, we always want to offer something extra to the customers so that the customers are also getting value. And in order to provide relevant value, you need to develop it. And sometimes you have it for the quarter, sometimes you have for the next quarter. So these price increases are coming not so systematically, if you will.
Next question comes from the line of Andrew Lee from Goldman Sachs.
Yes. Just wanted to dig a bit deeper into the operating leverage, given that's, I guess, the thing that investors are struggling to understand. So if we look at the mobile revenue -- incremental revenues you've generated in the quarter, it's about EUR 14 million, whereas the incremental EBITDA generated for the whole group is about half of that. I know you've talked about the extra costs from personnel incentive plans and bonuses and also the cost of withdrawing from Russia. But could you help us give us a bit of a better insight into the scale of those kind of one-off costs?
And then can you help just allay -- or help us understand the mix of the incremental revenues so that we can try and disinter between the quality of growth of your underlying business versus margin dilutive, but obviously, useful incremental revenues in the form of digital services and Internet of Things?
And there's lots of things going on within Elisa at the moment and I know you -- there's an intention to improve disclosure, but just for the time being, that understanding is alluding most investors. So just any kind of further help you can give over and above your answer to the first question would be really helpful.
You're welcome. I will start to answer to this question, then I'll leave Jari to give a bit more details to this question. For the first, in terms of the operating leverage, we are improving. Also, operating revenue to EBITDA. But I also pinpoint that we are contributing more in the, let's say, EBIT growth or EPS growth line versus the revenue. And that's, of course, where our focus is. And you have to remember that we have a portfolio of different kind of businesses, not only mobile business in the total company.
So our kind of optimization is not totally focused on EBITDA, which also tells that -- or let's say that the result is that the end result, the EPS and EBIT is very important to grow and make the grow (sic) [growth]. And there are a bit differences if you take a look of companies, what their level of improvement in EBITDA is, if they focus really a lot to improve EBITDA versus what they really bring to the bottom line. So that -- but not to say that EBITDA wouldn't be important. It's our financial target, and we are improving, of course, that. But in terms of a bit more details for the quarter and so I'll let Jari to continue.
Yes. So it is, as said already earlier that quarters, of course, they are different and some costs vary and in this quarter, as said also earlier, we had expenses relating to exit from Russia business. We had expenses booked from 2 extra holidays from personnel. We had somewhat higher reserves, extra reserves, for credit losses. So these are examples of items that were impacting this quarter.
And over the past quarters also said already before is that relation of EBITDA growth and revenue growth has improved.
Obviously, greater disclosure just on the different aspects of the business will be helpful in the future, but I really appreciate that you're generating really high returns and there's a strong drop through to EPS. So I appreciate the color.
Next question comes from the line of Nick Lyall from SocGen.
Can I maybe ask on -- you made a few comments on energy prices and inflation again. And you seem quite relaxed over the last couple of months about staff negotiations and electricity. So could you maybe just give us an update on where you stand on any remaining negotiations, how they compare to the previous 1.8% or 1.9%? And whether there's any move on electricity prices or hedging that we should think about?
And then second, on the gross adds. Gross adds seemed a little weak in absolute numbers. Is that just a sort of reducing churn pool effect? Or is competition particularly difficult at the moment?
Well, in terms of inflation matters and now the negotiation of the salary and the contract with employees, we have -- part of the contracts negotiated, we have one on the table. And there has been pretty much the level of 2% or slightly below what we've seen in Finland. That's something that we expect to take place also with the remaining contract.
In terms of energy, like we said earlier, we have been pretty well prepared by securing fixed prices for most of our energy consumption. Of course, that is a kind of concern to the future in different ways. Directly to us also later on because this Russian war in Ukraine and its impacts to the energy prices overall. The negative impacts are not necessarily going away very quickly. So of course, that's, of course, a concern going forward for us as well. But for short term, we have been securing pretty well, that part of the kind of cost development.
In terms of the growth -- net growth adds of -- net adds in the -- I guess you referred to the mobile side. We -- our -- like we have said, we are not trying to grow our business by increasing the amount of customers. We have a very mature market. Our model is to increase the value of customers. We are not compromising our market share like you can see that we are pretty much keeping our market share, good market share. But what we try to do is to sell more value, very much now 5G services to our customers. And as we have said, we continue to get more than EUR 3 per customer when the customer is moving to 5G on average. So it's a really good incremental kind of increase there. And that's the way we try to operate our business.
So we are, of course, with the high rate of churn that we have in our industry, we are, of course, needing new customers. But the net add focus is to keep approximately the market share we have.
Next question comes from the line of Sami Sarkamies from Danske Bank.
I have 3 questions. Starting from the roaming impact. I think you lost 1.5% of service revenues in 2020 due to COVID-19 and limited travel. How much of that has come back in Q1?
Okay, one by one. Well, we can say that the additional -- we still are lacking quite much of the pre-COVID level of roaming. But if we think about in terms of MSR maybe, approximately, 0.5% contribution came from the increased roaming.
Okay. And then second question on digital services, where you had nice double-digit organic growth. Can you elaborate in a bit more detail where did that come from in Q1?
Well, we had growth in all of our 5 domains of digital service businesses. The domestic ones were growing. But clearly, the international digital service businesses, they have clearly higher growth rates in all of the 3 domains, Elisa Polystar, Elisa IndustrIQ, also Elisa Videra.
Okay. And then finally, regarding the balance sheet, would like to understand why you keep on hoarding cash with extremely conservative net debt to EBITDA ratio of 1.6. Are you looking at more sizable acquisitions? Or do you think you may have to upgrade shareholder remuneration going forward?
Well, the 1.6 is exactly on the kind of target range, 1.5 to 2x where we are. Traditionally, this time of the year, after first quarter, we are there. Now the distribution is lifting it up.
And of course, like you suggested, we are continuing to look at the acquisition opportunities, and that's a good -- we believe that we can make good contribution to shareholders by acquiring additional companies. Just underlining that there's no change on thinking about the telco side acquisitions, we don't plan any large telco acquisition outside our home countries. Kind of home country consolidation would be very, very interesting to us, but those opportunities are quite rare in Finland and Estonia. But then mostly what we are looking at and continue to look at are the bolt-on acquisitions in the digital service businesses.
And the next question comes from the line of Francesca Schild from BNP Paribas.
And I have 2, please. And just firstly, just quickly, how much of your growth in revenues was coming from Viaplay this quarter?
And then secondly, please, just on potential NATO membership, and firstly, would this require the full Huawei strip-out? And how much Huawei is in your run?
I'm sorry, there was something on the line so that I heard a bit badly both of your questions. You talked about the revenue in the first one. Can you repeat, please, the questions?
Yes, of course. Can you hear me better now?
I can hear you, but there was something -- yes, go ahead.
Okay. So firstly, how much of the growth in revenues came from Viaplay?
And also secondly, on NATO membership, what -- I'm getting a lot of feedback on the line. Can you hear me?
Yes. I heard the first one. Can you repeat the second one, please?
Yes. So on potential NATO membership, would this require a full Huawei strip-out? And how much Huawei is there in your run?
In terms of the first question, we are not reporting the kind of Elisa Viaplay revenues separately. We have Elisa Viihde, Elisa entertainment video service business, where the total business is growing. And we had -- part of that revenue stream is coming from the Elisa Viihde Viaplay and that has been continuing to grow positively. So -- but there are no one-off type growth that we saw last year with the Viaplay -- Elisa Viaplay, kind of, Nordic Entertainment Group cooperation for this year.
In terms of the NATO -- potential NATO application and potential NATO membership in Finland, of course, that's a big thing in many ways. What it would mean for using Huawei that I understood for your question remains to be seen. Just remembering that we have many NATO countries where Huawei can be used, some NATO countries have made a ban for Huawei. But in many countries, NATO countries, Huawei can be used.
So I think it is, first, we need to see how this NATO -- potential NATO membership development and process is moving ahead. And then the discussions will come after that in regards to the potential kind of thinking on Huawei usage.
And we have one more question from the line of Adam Fox-Rumley from HSBC.
I had a couple, please. Firstly, I was wondering if you could give us any indication of the ARPU of an IoT customer? Obviously, when we look at your subscriber trends within Finland, you're now pulling those 2 things apart and the growth there is still quite good. But it would be really interesting -- I mean I'm not expecting you to give us a kind of a euro figure, but if you could give us some kind of indication that will be helpful and interesting.
And then secondly, I wondered if you could talk about the way you charge for video meeting rooms because I just was trying to understand a little bit about the data point of 300 rooms that you were giving us. Is it a monthly charge? Is it usage related? Or you can just including those -- are using it as an illustration of how there is continued demand for that service and maybe large enterprise customers get those kind of capabilities included with the money they're paying you anyway?
Okay. Thank you. In regards to the IoT customer ARPU, it varies, of course. We may have some B2B customers who have quite, let's say, simple IoT subscriptions with high volumes, then the ARPU is really quite low. Then we have -- and we have, for example, in the consumer side, more higher value IoT kind of applications and IoT subscriptions then. For example, for pet owners or so, where the ARPU is, of course, clearly lower than our average ARPU but is somewhat higher than some of the cases in the corporate side.
Unfortunately, I cannot give you too much more highlight on the level of kind of the ARPU. But it is very -- we can say that it is a very low-ARPU business anyhow for the time being. The volumes are important to be gained to make that business to really generate significant revenues. But I'm expecting that there will be some good revenue streams to come from the increasing level of connectivity being spread to different things and devices and machines.
Also, what we see, if I continue a bit, is that some of the earlier IoT technologies are kind of struggling in the market. And there will be more room and more demand for that matter as well in addition to the market development itself to the cellular based, i.e. 5G or 4G-based IoT.
To the video conferencing, the Elisa Videra is, of course, the revenue streams are coming from quite a few different sources. One are the installation of video meeting rooms. And for example, now when many customers have been accustomed to use Microsoft Teams, they want to have Microsoft Teams rooms. And the -- of course, they can vary the price for the first may vary. And also our business model, how do we charge for that, it's also a bit customer and project dependent. So it's a bit arbitrary to give you any kind of average price or so for a meeting room.
But we are talking about, nevertheless, a significant amount for -- just for 1 quarter of spreading the usage of Microsoft Teams to the offices with the meeting rooms. And like I said, the Microsoft Teams room systems, to make them to really work with high quality, without interruptions and so forth, it is not a regular job for an IT department. You need to have monitoring software. You need to have the capability -- video-capable guys and so forth. That's where the value of Videra comes. And these meeting rooms, they are, of course, deliveries of some equipment, some software. But there are many other service elements as well as other software elements that we are having as revenue streams from this business.
So unfortunately, I cannot be in more detail, but hopefully, this gives some elaboration for you.
No, that's awesome detail.
And we have just one more question coming from Abhilash Mohapatra from Berenberg.
I had a question around EPS growth, please. As you mentioned earlier, you said that that's a key metric for you. And I appreciate the point given you obviously got different business mixes with different kind of capital intensity. And so as you said, EPS is the focus as opposed to, let's say, EBITDA growth. And you also mentioned that you'd sort of look to use the balance sheet to continue to make acquisitions of these sort of businesses, digital services business, which obviously goes on to boost your earnings growth.
So in that context, obviously, this is a key metric. What I just wanted to understand was if you think about your -- the guidance that you laid out at the Capital Markets Day, where you said you're targeting 2% and 3% revenue and EBITDA growth, respectively, just related to that, can you help us understand what's the kind of EPS growth we can expect if you deliver on those targets?
Okay. Thank you for your question. It would be really helpful, of course, I understand that we would give the target for EPS growth. I can say that we do have target that we are aiming for higher levels. Unfortunately, I cannot give you. We do not have any public target for earnings per share.
Yes, like you said, revenue growth target is 2% and EBITDA growth target is 3%, which we comply with. Sometimes it has been interpreted that our target is always to grow EBITDA growth more than revenue. But you have to remember that we have, for example, the equipment sales, but also these digital service businesses sometimes providing quite much EBITDA revenue before they provide -- and if they provide like EBITDA.
So -- but the main thing for us is that we are generating good levels of EBITDA with a good revenue growth. And then also, we are able to turn that to EPS growth. But sorry, we are not giving any guidance on EPS growth.
Appreciate that. Just a quick follow-up, if I may. If you just look at Q1, you delivered around 8% earnings growth and you're saying that operating leverage should continue to improve. So for this year, is that sort of Q1 level a sort of fair indication of what you might do Q1 or better than that?
Well, as we have guided, the -- our revenue to be at the same level or slightly higher EBITDA at the same level or slightly higher. That's our guidance for the year.
And as there are no further questions, I'll hand it back to the speakers.
Okay. Thank you for the questions. And now we check if we have anything from the audience. No, we don't have so we're done. Thank you very much. Have a nice rest of the day and coming weekend. Thank you.
Thank you very much.
Thank you.