Elisa Oyj

OMXH:ELISA

Earnings Call Transcript 2019-Q4

[Vesa Sahivirta, Director of Investor Relations]

Good morning, everyone, and welcome to Elisa's Fourth Quarter 2019 Analyst Meeting and Conference Call. I'm Vesa Sahivirta, the Head of Investor Relations. And here together with me is, again, a very familiar team, CEO, Veli-Matti Mattila; CFO, Jari Kinnunen, and then we have some audience.We start this meeting with a presentation followed by Q&A. And in Q&A, we take first questions from the floor and then from the conference call lines. Veli-Matti will go through the Q3 -- sorry, Q4 report, and then Jari will focus more on financials.Now we are ready to start. So I give word to Veli-Matti, please.

[Veli-Matti Johannes Mattila]

Thank you, Vesa, and welcome, everybody, to our fourth quarter results review on my behalf as well. The quarter was going according to our expectations pretty much. Revenue growing by 4% and our EBITDA was growing 6%. Mobile service revenue growth came to 1.5% year-on-year. We had growth also quarter-on-quarter with this mobile service revenue.Postpaid churn stayed pretty much on the same level as in the third quarter. Competitive situation remained pretty much on the same level overall. We increased postpaid subscription base by 36,800. In the fixed broadband base, the number was decreasing, 8,300, but actually, the number of paying customers was increasing by 4,700 since we cleaned up some non-revenue-generating customers of 13,000 altogether.5G services rollout is going very well. As the leader in 5G services, we have now expanded our network to 13 cities in Finland. And our Board has made the decision to propose the dividend of EUR 1.85 per share to the AGM.If you take a bit look of the full year, we had some revenue growth. As we told a year ago, the beginning of the year is a bit more challenging. But overall, we had 0.7% revenue growth, EBITDA growing with 4.4%. Of course, the IFRS also helping with that very much. Earnings per share came a bit down being EUR 1.93. We invested 12% of CapEx.Overall, the average mobile service revenue growth during the year was 1.9 percentages. And as we have said, the mobile service revenue growth has a positive sign in the number. So it was this time, plus 1.9% this year. Also, we saw subscription bases to grow a little bit, and the mobile data that we have in our traffic expanded with 21% being now 1,000 million gigabytes altogether.In the fourth quarter, revenue growth was coming from Polystar acquisition and equipment sales as well as from mobile services. Mobile service revenue growth with the continued upselling of higher speeds as well as some product changes that we have done with the pricing changes as well. EBITDA, of course, the accounting change is, helping us, but also our continued productivity improvement leading to efficiency improvements and profitability improvements also helped. In terms of the ARPU, of course, the lower interconnection prices have had impact but also the price pressure based on campaigning or other competitive activities. However, the ARPU being pretty much on the same level as it has been in the past quarters.Then if we take a look on our business segments, consumer side and corporate side, both segments saw revenue growth, we had 2% growth in the consumer side driven by mobile and digital services and equipment sales. And in the corporate side, we got the 6% growth partly by Polystar acquisition, but also with the mobile services and equipment sales helping to grow the business. In the EBITDA in both segments, so growth, EBITDA growing in consumer side with 5% and in the corporate side, 9%.We continue the execution of our strategy with 3 focus areas, where we see very good potential to create results in every and each of them. Looking at the development in the mobile data business, we have now the penetration of 4G customers. Our smartphone penetration has reached to 85%, continuing approximately 1 percentage point per quarter. The 4G speeds that we have in the customer base have reached 72%, of which 28% are in the lowest speed level. So we see that continuous and the customers are moving also to the higher speed tiers in the 4G. And now we, of course, have introduced the 5G, where we have already thousands of 5G customers.The proportion of data bundles also and fixed monthly fees customers instead of usage fee customers, that is growing, and now 76% have all-you-can-eat type of bundles of our customer base. As the leader in 5G introduction to Finland, we continue by having the services available already in 13 cities. We have 200,000 Finns already in the area of -- coverage area of our services in the capital area, that is one of the largest 5G coverage area in the whole Europe. And also, we have introduced the fixed wireless access service with the very interesting results from the customers, how it really enables the home Internet connection to be improved. And we are leading the 5G market also with the IoT customers and IoT applications. We have been piloting many new applications with 5G, for example, with 5G drone with the public broadcasting company together to provide direct TV broadcasting with the help of drones as well as some virtual reality applications we have been testing and so forth.We have also this Elisa 5G Co-Creation Challenge, where we, together with start-ups, have codeveloped various services that take the opportunity of the improved performance that 5G will bring. So there's a lot of activity in terms of providing just faster speed to customers with the help of 5G, but also to enable an experimental learn of the new applications that will benefit from the enlarged performances of 5G. So we are still in early days of the 5G, but this looks very interesting and good. And as the leader in 5G introduction, we continue the way with that.In our digital services, there's a lot of development there as well. For the domestic services, our Elisa Viihde entertainment service, the original series have been very well received, receiving, for example, 13 Venla awards, one could call them Finnish Oscars nominations, award nominations. And also the original -- several of the original series have been sold to 30 countries or so in other markets. So it shows the quality that we have with our co-production of original series. We also introduced the new Elisa Viihde Premium service and devices as well as smart TV application, and they have been also very well received by the customers.In the international digital service areas, our Smart Factory Management and Smart Supply Chain product lines have expanded with new customer wins, especially in pharma and electronics sectors. We have very solid growth with the Polystar business that we acquired in the middle of the year with double-digit growth, with new customers and the integration of Elisa Automate business together with Polystar is moving very well ahead. Also, Elisa Videra has won several new big international video service customers altogether.And then I continue to the outlook and the guidance. We see that the positive development of the macroeconomic environment in Finland continues to decelerate and competition in our brands remains challenging. Our revenue will be at the same level or slightly higher than 2019. Comparable EBITDA also at the same level or slightly higher than 2019, and our capital expenditures will be maximum 12% of revenues.Now I turn the word to Jari.

[Jari Kinnunen, CFO & Member of Executive Board]

Thank you. I'll start with profit and loss development, and first, top line growth, which accelerated and was -- the exact percentage is 3.5%, almost EUR 17 million growth. And main part of that, of course, Polystar acquisition, EUR 10 million, and another EUR 10 million from increased equipment sales. Negative impact coming from interconnection, and roaming and interconnection prices were lower than a year ago. Service revenues in corporate segment were EUR 4 million below last year. Consumer segment was EUR 3 million higher. And in both segments, mobile services growing, digital services in consumer segment growing and negative impact from traditional fixed line services.EBITDA was growing EUR 10 million, 6.3% and IFRS 16 impact was EUR 4.7 million. And exactly as we said in the beginning of the year that second half of the year is better. So that is exactly what happened here. EBITDA margin was 34.5%. EBIT was growing 1.7% to EUR 100 million. Depreciations included approximately EUR 1 million write-down, one-off type of write-down. Financial expenses reduced as a result of refinancing in Q4. And all that resulted to earnings per share growth of 4%.Estonia continued to grow both in terms of revenue and EBITDA. Revenue was increasing 7%; EBITDA, 2%. Both mobile and fixed services as well as equipment sales contributed to revenue growth. Mobile postpaid base increased by 1,000 subscriptions and churn was 10.4%.Total CapEx was EUR 83 million, and excluding IFRS 16 change, EUR 71 million and total CapEx by segments, consumer segment, EUR 54 million and corporate segment, EUR 29 million. For the whole year, EUR 227 million, in line with guidance, 12% of revenue and the same guidance is given for this year as well. So 12% from sales. Main CapEx relate to capacity and coverage increases and other network and IT investments.Cash flow was continuing solid level and Q4 cash flow was EUR 55 million, slightly down from last year, positive impact from higher EBITDA and including IFRS 16 impact, negative impact from net working capital change and higher CapEx and net working capital. In net working capital change, receivables were higher than a year ago as a result of higher equipment sales, which are sold partly with payment times, also some impact coming from postal office strike, which extended the payment dates from December to this year. Cash conversion in operating cash flow was at 58%.Also, capital structure KPIs are well in targets. Net debt to EBITDA decreased from Q3, 1.9 to 1.8x equity ratio at 41%. And we did repay EUR 180 million bond in Q4, which resulted to lower interest expenses. Difference against year ago was EUR 2 million. And return ratios remained at good level; return on equity, 27% and return on investments, 17.5%.And Board of Directors made a proposal to AGM regarding a dividend of EUR 1.85 per share, which is 6% growth against a year ago and continuing series of increasing dividends, now 6th consecutive year. Ex-dividend date is third of April, payment date 15th of April. Total amount to be paid is EUR 296 million. And this proposal represents payout ratio of 96% and dividend yield, approximately 4% against share price end of last year. Additionally, there was a proposal of 5 million shares buyback authorization. And all in all, continuation of strong commitment to competitive shareholder remuneration.And now I give word to Vesa, please.

[Vesa Sahivirta, Director of Investor Relations]

Thank you, Jari. And now we move on to Q&A part, and we start from the audience.

[Vesa Sahivirta, Director of Investor Relations]

So first question from the audience. Artem, please.

[Artem Beletski, Analyst]

Artem Beletski from SEB. A couple of questions from my side. So first, starting with your mobile intake in Finland and what comes to postpaid. So it seems to be the case that a lot of positive development has been seen on corporate side and apparently municipality deals, what you got in the past. Do you expect this kind of positive inflow to continue also in coming quarters from municipality agreements?

[Veli-Matti Johannes Mattila]

Well, we have -- you're right, we got -- the majority of that growth comes from this one deal that we had with municipalities. We will still have some growth from that in the first quarter of the year, but there will be a renewal of the contract sometime later this year. So we'll see then what goes on from that. But at least for the first quarter.

[Artem Beletski, Analyst]

Then maybe a quick one in terms of mobile service revenue growth and a bit of deceleration in Q4, but is your, so to say, overall message intact that you're expecting it basically to be positive or do you provide some further color on it?

[Veli-Matti Johannes Mattila]

Yes, we see opportunity to grow with mobile service revenues. Without giving any exact number, full year was 1.9% on average. We had now 1.5%. Probably, I guess, we were the only operator having a quarter-on-quarter growth in mobile service revenues. And with the tight competition with campaigns and pricing, quarters are a bit different from quarter to quarter, but we see positive opportunities going forward.

[Artem Beletski, Analyst]

And then maybe last one from my side. In terms of 5G intake and development on that front, could you provide further color how it has been developing and do you see sort of a bigger demand coming from your fixed wireless offering? Or is it basically driven by smartphone users basically?

[Veli-Matti Johannes Mattila]

Majority is, of course, from the smartphone user base, from consumer and corporate side. Fixed wireless access is one particular area where we can have also some growth. Now when we are expanding the coverage, we will start to get actually a bit earlier than expected, also more affordable smartphones, first half of the year already. I'm expecting a good continuation of the subscription intake with 5G. We have already now thousands of customers, both in consumer and corporate side. And the growth has really gone according to our expectations. That looks positive how it evolves.

[Vesa Sahivirta, Director of Investor Relations]

Then Sami, please.

[Sami Sarkamies, Senior Analyst of TMT]

Sami Sarkamies, Nordea Markets. I would first continue on the corporate segment. We talked about the customer inflows you had in Q4. Did you have any negative timing impacts? I mean looking at the ARPU dilution in the corporate segment, was that impacted by timing of these new customers? Or are we looking at sort of the underlying ARPU dilution due to sort of additional business from the municipal segment?

[Veli-Matti Johannes Mattila]

In terms of the ARPU dilution, there's, of course, the interconnection prices that is impacting on that. But also this -- the public sector customers, their ARPU is lower than the average in the corporate segment. And when we get a bunch of those, there's, of course, diluting.

[Sami Sarkamies, Senior Analyst of TMT]

Okay. Then moving into the security concerns related to your suppliers. There was a policy approved by the U.K. yesterday. Could you elaborate on potential implications in case Finland would adopt the exact same policy as done in the U.K. yesterday?

[Veli-Matti Johannes Mattila]

I'm not fully -- I have not fully analyzed what the U.K. policy would mean to us, but of course, so that U.K. also sees a bit more vendor agnostically, the opportunities is, of course, we believe, reasonable. And we are, of course, part of EU, which U.K. isn't anymore after this month. But EU has done its analysis, and there will be measures that EU will recommend to the member countries. And it's up to each member country to then deploy the recommendations and rules. I'm expecting us to have opportunity to use vendors from different geographies. But of course, the whole cybersecurity is and -- has been and is, of course, an important topic for us. We have a great capability and not the least because of probably the world's most automated operations as well as that we operate our networks ourselves. We are the only operator that doesn't buy any managed service for the mobile operations in Finland, so we have the most secure networks from that respect because then there are nobody coming into our network without us knowing it. And there's no 24/7 opportunity to operate by anybody else. So that kind of risk mitigation is a totally different level on our networks. And of course, we are selling that capability to many others who want to turn their managed service business to self-operate.

[Sami Sarkamies, Senior Analyst of TMT]

Okay. Then I have a question on your dividend policy. You're now raising the payout ratio from mid of the range to sort of closer to the upper end of the range. Should we regard the 80% to 100% range as like hard range? Or would you be sort of able to deviate from that range if needed?

[Veli-Matti Johannes Mattila]

Well, if needed, we, of course, have growth ambitions, both in the dividend and as our EPS. The policy is very much intact, remains to be seen how we are evolving. But of course, we have a growth in mind when it comes to our earnings per share.

[Sami Sarkamies, Senior Analyst of TMT]

Okay. And then on 2020 outlook, I would like to ask if you're planning any material cost measures during this year.

[Veli-Matti Johannes Mattila]

We have our quite unique way to improve productivity with the continuous improvement way, which we have been rewarded also with the Finnish Quality Award and the EFQM 5-star recognition that no other operators have got, for example, in Finland, but all the rest. So we have -- our way to improve productivity is quite unique. It's continuous, it's Elisa-wide, all the personnel is taking part of it. So that is the kind of mean for us and machine for us to continuously improve the productivity based on the quality improvements to customers.So as we have not seen in the past years, either, we don't see any major restructurings or major headcount reductions. Saying that, of course, we have automization spreading to Elisa to many parts of the manual work, we are a heavy user of robotic automization -- robotic process automization, we're heavy user of machine learning and artificial intelligence more and more. So of course, we utilize those, but we have also new things to do for our people. So in that respect, it's not about just slashing a lot of employees and make the improvements. It's more the continuous improvement by utilizing the technology and the digitalization, which we continue to do.

[Sami Sarkamies, Senior Analyst of TMT]

Okay. And finally, a question to Jari on Polystar, could you disclose the profit contribution from that part of your business in Q4 and then maybe some words on the outlook of that business for this year?

[Jari Kinnunen, CFO & Member of Executive Board]

Yes, as said, revenue was approximately EUR 10 million, EBITDA level of EUR 1 million and Polystar has some seasonality. So typically, beginning of the year is strong season for Polystar business.

[Vesa Sahivirta, Director of Investor Relations]

Okay. Any further questions at the moment from audience? No, there seems to be no questions here. So we ask first question from the conference call lines, please.

[Operator]

Our first question comes from the line of Andrew Lee of Goldman Sachs.

[Andrew J. Lee, Equity Analyst]

I just had a second -- I have a follow-up question on the mobile service revenue comments you made. ARPU is slightly lower year-on-year. And I know you're blaming lowering interconnect as well as competition. I just wanted to get your sense on the puts and takes going into 2020. Has competition got any worse in the fourth quarter that makes you more nervous about that? And do you expect it getting any worse through 2020? And then when should the interconnect headwinds let up and deliver an easier comp?

[Veli-Matti Johannes Mattila]

All right. We shouldn't have the interconnection price impacts anymore for the quarters this year. Maybe later on, there will be some changes to the prices. But this year, it should be the same as last year. In terms of competition, overall, we didn't see a major change in the quite competitive environment from third quarter to fourth quarter. Of course, there were some kind of business events and seasons in November and the Christmas and all that. But overall, in terms of the campaigns and pricing moves, we didn't see any major change from third quarter. Towards the future, of course, we cannot forecast what our competition is doing. We are quite confident on our competitiveness, how we have been developing it, our capabilities in terms of that. And of course, we are encouraged all the time with the demand that we see based on the continuation of the digitalization by people, the continuation of the demand for higher speeds and also further on to 5G.

[Operator]

Our next question comes from the line of Roman Arbuzov of JPMorgan.

[Roman Arbuzov, Analyst]

I had a question on the pace of net adds that you've been delivering throughout 2019, you've had a very strong year in terms of net adds. And looking at your competitors, you're way ahead, especially ahead of Telia. In that context, and Telia is also going through a period of management change. And as we all remember, periods where there are management changes for Telia are typically followed by relatively aggressive price competition periods. So my question is, do you think you may have actually pushed a little bit too hard? I mean you've taken a decent amount of market share on the postpaid net adds. And is that a sensible strategy do you think in light of the Telia management changes, in particular?

[Veli-Matti Johannes Mattila]

Well, I don't think that we have been the pusher of net adds. Why we have been increasing more than the others. One thing is that we got this big public deal. But before that public deal, we saw very aggressive behavior by our competition in the B2B segment. And we first started to lose, let's say, from 2 years ago and last -- early last year as well. So we have been responding, basically, but we were able to be competitive in one big deal. That's why the net result is a bit positive for our side. We are not going after market share in terms of the subscriptions. Because we see that we have bigger business opportunity by selling more to our customers. But as said many times before, we defend. If we will be attacked, we will defend, and that remains the same. But this was the kind of a net result from last year. In terms of our competition, changing the management and what -- which kind of strategy to create shareholder value the new management has, I don't know, so remains to be seen. But like I said earlier, we are very comfortable on how we have developed our competitiveness and how we know how we develop it further on.

[Roman Arbuzov, Analyst]

And can I just follow-up with one more? DNA has issued a press release earlier today, saying that they're gearing up to bolster their B2B muscles, they are looking to hire people and roll out new products. Have you seen any change in behavior in the corporate from DNA already? And have you seen any impact? And I don't know if you've had a chance to think about the things that they're gearing up to do. But can you comment on what you see in B2B now and going forward, please?

[Veli-Matti Johannes Mattila]

Well, time to time, we see our competition to have recruitment announcement in the magazines and everywhere. We are used to have different efforts from different competitors in the B2B segment to kind of increase or change their efforts, including DNA, we are used to that. And of course, we are not standing still. We have a firm competitive position, and we have a lot of capability developments ongoing, how we improve our competitiveness. So we are comfortable that we can face continuously increased competitive capabilities from the competition, if you will.

[Operator]

Our next question comes from the line of Terence Tsui of Morgan Stanley.

[Terence Mun-Sion Tsui]

A couple of quick questions, please. Just firstly, on 5G. Thanks for sharing the data that you have. Just wondered if you can provide us maybe with how many 5G active subscriptions you have today and what sort of ARPU uplift you're seeing compared to the 4G services. And then secondly, just around M&A. I just wondered if you're optimistic that there could be some more bolt-on opportunities available in 2020, maybe similar to Polystar or some of the other ones that you have done in the past.

[Veli-Matti Johannes Mattila]

All right. Thank you. In terms of the 5G number of subscriptions, we are maybe a bit early to tell exact numbers, but we have thousands of customers, and we are increasing with a very promising pace, if you will, both in the consumer segment as well as in corporate segment. And the ARPU level is higher for those on average than we have for the rest of the customer base. So it is really clearly valued by the customers, and it is providing more value to customers. In terms of bolt-on acquisitions, yes, we have a, let's say, quite exciting opportunity since we have not only the telco and IT M&A opportunities in Finnish and Estonia markets, where we focus with these businesses, but we have the international business domains, the Elisa Automate, our Smart Factory Management and even video conferencing. And in those 3 areas, there's a quite wide spate of potential acquisition targets. Of course, we need to work very, let's say, well to identify, analyze and to find really a kind of best deals, but the kind of opportunity space is quite large. So in a nutshell, I can say that, yes, it is possible that we continue the bolt-on acquisitions this year as well.

[Operator]

Our next question comes from the line of Peter-Kurt Nielsen of ABG Sundal Collier.

[Peter-Kurt Nielsen]

You've just spoken about actually related to my questions on international digital services. Your comments sort of -- your commentary over the last few quarters suggest that you're seeing quite good momentum in these operations. And are we seeing sort of a meaningful impact on revenues? And can I just ask, is the -- has Polystar provided your ultimate business with -- I mean are you successfully seeing cross-selling to their customers? Has it brought the benefits which you had hoped for? And again, are we seeing a meaningful impact now from the growth in the international digital services, please?

[Veli-Matti Johannes Mattila]

Thank you, Peter-Kurt. In terms of the revenue, we can say that, together with the Polystar acquisition and the growth, the international digital services and also including Smart Factory and Videra, they are reaching closer to EUR 100 million now, we are talking about that kind of annual run rate approximately in broad terms. So it is starting to become meaningful revenue. But for us, it's more important than exactly now get the revenue to show up that -- to find that we are on the right track on being with the new growing areas of businesses internationally with competitive capabilities. And that's something that we have been proven more and more, and I'm encouraged of that. In terms of Polystar acquisition, Polystar has been continuing its growth and it has been really executing well even if Elisa brought them and Elisa has brought some new ideas about the joint work with our Elisa Automate product lines and all that. And we are -- we have already the first customers for cross-selling Elisa Polystar customers, Elisa Automate. So all that looks good. But of course, I'm -- as the CEO, I'm impatient -- I'm not so patient to -- for the speed. But of course, when you are looking, both organic and M&A, there needs to be a certain patience to do the right things, not just to create revenues at once. But in a nutshell, as a summary, I believe that we have very interesting opportunities for years to come with these digital services internationally.

[Peter-Kurt Nielsen]

Veli-Matti, could I ask you to repeat the number you gave initially for the run rate? They didn't come through at my end.

[Veli-Matti Johannes Mattila]

Altogether, the international one could say around EUR 100 million -- towards EUR 100 million -- towards EUR 100 million.

[Peter-Kurt Nielsen]

What?

[Veli-Matti Johannes Mattila]

Towards. Not exact, but EUR 50 million to EUR 100 million, let's say, so then it's clearly -- because we -- since we are not reporting it, it's better that I'm not giving exact number because it's not EUR 100 million exactly.

[Operator]

Our next question comes from the line of Matti Riikonen of Carnegie.

[Matti Riikonen, Financial Analyst]

Three questions from my side. First of all, when you give the top line guidance and you say that mobile services growth is one of the contributing factors to higher top line growth in 2020, do you see that 5G would be any kind of meaningful contributor to that? Or is it still that 4G speed upgrades are doing the most of, let's say, the bulk of the growth?

[Veli-Matti Johannes Mattila]

All right, Matti, 5G potentially can be a good contributor. It depends on how it evolves, but we see that, overall, the speed upgrades are continuing. The demand for that is continuing. So overall, whether it's 4G speed upgrades or additionally, 5G, we see the mobile service revenue growth opportunity to contribute to the revenue growth in the year.

[Matti Riikonen, Financial Analyst]

All right. Then secondly, when we look at your mobile service revenue growth, the 1.5% and roughly 2% in 2019, you were growing, but your competition was growing faster. So what do you think makes this distinction that has enabled them to grow faster? Is it lower base that they're starting from or do you see some kind of other elements that might have an impact? And also, your thoughts about how it's going to continue. I know that you only say that it's -- you expect it to grow like this year of '19, but how do you think that the chances are?

[Veli-Matti Johannes Mattila]

Well, I guess, we have one competitor who has been growing a bit higher numbers and one a bit lower. So I don't know which one you want me to comment. But nevertheless, I don't know exactly the -- where the details of the contribution of any -- of different mobile service revenue elements to their numbers. So I cannot comment. I can only comment of our way forward, and we mainly have not been increasing the customer base as much as at least one of our competition. So we have not had a strategy for market share growth, even if we had some growth in the number of subscribers based on one larger deal that I explained. We are more focused on giving more value to customers and providing through the speed upgrades. We are, of course, the biggest also that the percentual numbers are telling then a lower story, a lower number story, but we are focusing on our own race for the most, to generate good reasons for our customers to pay more by getting more value, for example, by speed. But of course, also making sure that we are not a target for anybody who is willing to take market share, then we are responding.

[Jari Kinnunen, CFO & Member of Executive Board]

And maybe adding one thing. I think -- I believe we were the only one who had Q-on-Q growth in service revenue.

[Matti Riikonen, Financial Analyst]

Yes. I was looking at the year-over-year numbers in Q4. But anyway...

[Veli-Matti Johannes Mattila]

But if you look at -- but if you take a look on third quarter to fourth quarter change, we had -- we're the only one having positive number there.

[Matti Riikonen, Financial Analyst]

Yes, that's, of course, correct.

[Veli-Matti Johannes Mattila]

So there are some dynamics moving in different directions.

[Matti Riikonen, Financial Analyst]

Fair enough. Then the third question is a bit more broad. I was surprised to see that there was a Netradar study a couple of days ago in Finland, saying that the 4G speeds on average in the country were having declined versus a couple of years ago, and that was a little bit surprising. So do you think that it would mean that on average, in Finland, the network capacity utilization has increased more than capacity itself? Or is it just a deliberate decision from you and other operators to basically reduce speeds unless you get paid for that? So is it more tied to control of what the customers are actually getting? Or is the kind of survey kind of irrelevant in your view? How do you feel about that?

[Veli-Matti Johannes Mattila]

I don't know exactly the Netradar study in details. But you have to remember that some of our competition gives full speed, even though they may sell reduced speeds. So the -- how much they have followed our customers versus the others, I don't know, but there's -- but the fact, of course, is that we have more customers having more -- moving more traffic in the networks of 3 operators overall. So there may well be that in some parts of the operator network, some operators' networks, the capacity increase has not grown at the pace where the customer usage has grown. I doubt, at least from Elisa's point of view, I can say that we are not consciously decreasing the speeds for our customers. I would doubt that our competition do it even if I don't know, but it is about -- the main driver is that increased demand for the traffic. But then, of course, it is about which -- how and which way this whole study has been made. It is very important to take a look.We saw a bit similar kind of studies with similar kind of, let's say, results when we were starting to move from 3G to 4G, for 3G networks. So we may be in the situation of operators moving their investments more to 5G. And then for a certain period of time, the 4G investments are not following the, let's say, the -- altogether, the demand that has been growing in the 4G side. But I would say that I would need to -- we'd need to see a bit more in details how this study has been done. It is only one study.

[Operator]

Our next question comes from the line of Adam Fox-Rumley of HSBC.

[Adam M. Fox-Rumley]

I've got 2 questions, please. One of your competitors is planning to invest more in its fiber networks in the next year and is also planning on taking its -- taking out its copper network. I guess the first part is to what extent is that any form of competitive threat to you? And could you give us an update on your plans in that similar network investment?And then secondly, I'm just thinking about your domestic digital services. So we talked a bit about the international ones, but I wondered if you could say where we see that contribution in your financial statements from, say, selling a program to multiple territories. And if you're able to give similar indication of the scale of those domestic digital services, that would be very useful.

[Veli-Matti Johannes Mattila]

All right. In terms of the fiber, we are the largest fixed network operator in Finland, we have a lot of fiber. We know pretty well the demand for fiber solutions, both in the consumer side, fiber to the home or fiber to the curb as well as fiber to the -- for the B2B customers, and of course, in our infrastructure for mobile, there's a lot of usage of fiber. We, of course, have growth plans in -- we need more fiber, and we have growth plans. We are not detailing those, but we have growth plans according to the needs and the demand. One misunderstanding that exists when countries are looked at is when thinking about the demand for fiber usage. Finland is a very different country, just when looking at, for example, Sweden. We have the unlimited mobile broadband. Now 4G already giving a good service level throughout the country. 5G coming, it is a very, very competitive proposition for customers with a total cost of ownership versus the fiber in Finland. So we would wish that there would be more demand for fiber. But -- and we will, of course, be eager to take all of that demand that we can in the market, if you will. So I don't know exactly -- and again, I wouldn't comment on the competitors' activities. Our competitors have invested in fiber already for years and so have we and we will do. So that's all I can say about the fiber at the moment.Your questions regarding the international services, you're asking that where do we see -- we have digital services reported in our reports, both to consumer and corporate segment, depending on to whom we are selling. The IT, for example and for example, the Polystar, they belong to the B2B segment reporting and so does the entertainment to consumer side. Is there anything, Jari, you would add to that question?

[Jari Kinnunen, CFO & Member of Executive Board]

Yes. So exactly as Veli-Matti said, they are included in both customer segments. And then in the Excels that we give, they are included in fixed and others revenue lines.

[Operator]

[Operator Instructions] And there are no further questions at this time. Please go ahead, speakers.

[Vesa Sahivirta, Director of Investor Relations]

Thank you very much to the conference call lines. Any further question from audience? No. I hear silence. So we thank you participating this call and meeting, and wish you a nice day. Thank you. Bye.