Telenor ASA

OSE:TEL

Earnings Call Transcript 2017-Q4

[Marianne Moe]

Good morning, and welcome to the presentation of Telenor Group's results for the fourth quarter. My name is Marianne Moe, I'm Head of Investor Relations, and I have the pleasure of guiding you through the session here today.I hope you all have the presentation material available. Today, we will start with the Group CFO, Jørgen Rostrup taking us through the financial results followed by Group CEO, Sigve Brekke presenting, giving us update on the strategic priorities and our progress on digital transformation. There will, as usual, be a Q&A session after the presentations. Since the presentation deck is slightly longer than usual, I think the whole session will take approximately 1 hour and 15, 20 minutes.After that there will as usual also be a separate media session for media present here today.So without much further ado I leave the room to Jørgen Rostrup to take you through the financials.

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

Thank you, Marianne. Welcome everybody. It's good to be here. Performance in fourth quarter marked a solid end to what we regard in Telenor as a strong year.We continue to grow our core revenues and customer base, actually we grew by eight million new customers in 2017, that is a 5% increase in our customer base, two million additional customers in fourth quarter.We also see positive effects from our efficiency program, simplification agenda, we see this contributing to solid growth in EBITDA as well as in free cash flow both in Q4 and for the full year. And the good development on our efficiencies initiatives and our transformation program in 2017 also secures momentum into 2018, which is of course our complete focus right now.I'm pleased to see that we closed 2017 by delivering on all guiding parameters. As indicated in the Q3 presentation we ended up in the high end of the EBITDA margin range, actually also partly supported by relatively low handset sales in Q4 and then you see the implication of that on -- ending in the lower part of the revenue guidance, but still within all 3 parameters for '17.Some words about their operational performance in the quarters. Scandinavia, we are in a competitive environment, stable, but competitive environment. We see still healthy ARPU growth both within fixed and within mobile. Mobile increased by 2%, fixed internet by 5%, and also TV increased by 9% in the quarter.The number of fiber connections increased in Norway by 12,000 and in Sweden by 10,000 subscribers in the quarter. Fixed internet and TV revenues therefore increased by 7% in Norway and 5% in Sweden.In Denmark we have seen a temporary cost increase in the quarter. This has been planned for; it's related to some transformational tasks and business development. We expect to be back on track in our cost program for next quarter.Broadcast, also part of the larger Scandinavia setup. Good performance, revenues increasing 1% and stable EBITDA. We see a continued loss in DTH subscriptions in broadcast, but fortunately for us we keep it in a family, more than half of this loss is churn to Telenor Norway's fiber offering.Central Eastern Europe, Hungary continues the revenue and momentum that we saw in Q3, actually delivering a solid 5% organic growth in subscription and traffic revenues in the quarter.And then across the board in Central Eastern Europe we see clear results from reduction in cost, strong cost management and we see a decrease in Hungary in the quarter of 6%. We see 7% in Serbia and Montenegro, and we also see 7% in Bulgaria.Emerging Asia. We added 2.7 million subscribers this quarter that is 1.4 million in Bangladesh, 0.9 million in Pakistan, and 0.4 million in Myanmar. This is taking total customer base in that area to 126 million customers. 12% subscription and traffic growth in Bangladesh combined with a relentless focus on the cost is yielding result across Emerging Asia.In Myanmar we see increased price pressure. We believe it is due to that existing operators now are positioning themselves ahead of the launch of the new entrant with which we believe will happen during first half of '18.Then on the Emerging, on Developed Asia we see in the quarter Thailand moving back to growth again with 1% growth and the decline in Malaysia is significantly lower this quarter than what we have seen the previous few quarters.We also see that we are able to move more of our revenue stream from voice and SMS and into Internet data usage. And as you see on the slide, the average data uses, usage in developed Asia is high, 7.6 gigabyte, only Sweden is higher in our portfolio with 9 gigabyte.Subscription and traffic revenues from mobile, fixed and TV service are we believe our core revenues. This is the foundation for profitability and value creation in Telenor.It also reflect how we follow our performance in our group. As you know, we have earlier focused on mobile subscription and traffic revenues and then we see that fixed revenues and TV services also is an important integrated part of our core revenue base, in particular that revenue coming from Scandinavia. So therefore from now on when we talk about subs and traffic revenues we will include also these revenues in the definition.Going forward, this will also be our revenue guidance, I will get back to that, but this number we will put more emphasis on for the reason I'm mentioning.On this chart you can see the development of subscription and traffic revenues. It constitutes approximately 75% of total revenues for the company, but more than that 95% on gross profit, so it's by far the important part of our revenues.We had a growth in this of 2.5% in fourth quarter and 2% for the year. While subscription and traffic revenues that we just talk about increased 2.5% the revenues on total were flat in fourth quarter. This is due to less revenues from low margin handset sales and also decrease in prices and lower margins on our global wholesale activity.This has very little impact on our value creation further down on the profit and loss. Gross profit increased still by 2%, so this again underlines the importance for us to maintain a healthy development in subscription and traffic revenues.Gross margin was up -- was 73% in Q4, which is up 1 percentage points from Q4 2016. Cost efficiency has been high on the agenda in 2017, Sigve will refer to it later. For '18 it will remain high on the agenda.We started the year with an ambition to have a flat development to break the increasing trend of increasing or the trend of increasing OpEx year-on-year that we have seen for the last few years for the group, increasing by 3% every year. Halfway into 2017 supported by good traction on the cost program we introduced and NOK 1 billion cost reduction target. We were not too good at estimating that because we reached that already in Q3. What you can see here is that we have also achieved significant cost reduction in Q4 by NOK 0.6 billion for the fourth quarter. So in total on an operational basis taking out NOK 600 million approximately in currency effects we are at NOK 1.6 billion in lower OpEx for the year, which is 3%.Looking at OpEx reduction per business unit in 2017, it's good for us to see that we have achieved that in almost all of our markets. This was one of the ambitions we also had, everybody to participate and to build up a collective large effort in this area. Telenor Norway continues its cost-cutting efforts and delivered at 3% OpEx reductions. Initiatives has been implemented both in the fixed part of Telenor Norway's business as well in the mobile and we see several positive effects also from moving to digital channels for sales and for customer care. Going forward we will do more within the technology area in Norway.In emerging Asia, OpEx increased in both Bangladesh and Myanmar mainly due to network expansion and other growth-related costs. But also here this has been partly compensated by cost efficiency. Telenor Pakistan which delivered 8% subs and traffic revenues in 2017 is perhaps best in class in this, say, for this year. So they deliver this growth which is substantial. At the same time, they take out OpEx by 7%. There are always a lot of technical elements in those numbers, but the main issue is that they have really scrutinized all elements. It's a tremendous collective effort and it yields strong and rewarding results.So I've been to operating -- gross profit, OpEx development, just briefly mentioned EBITDA then, it increased by 11% in the quarter, 9% if you adjust for the VAT charges that we took in 2016 in Sweden in the case that we are not agreeing with the government on.For the full year organic revenue increased by 9%. Again we take it as a very good and encouraging signal that if you look at the graph, the reason for this growth is 50-50 revenue increase and cost efficiencies. So we have so far been able to avoid to have too heavy foot on one of the elements, it is in our view a balanced development that we see in our effort.The EBITDA ended for 2017 at NOK 49 billion which is an all-time high EBITDA for the Telenor Group. And the EBITDA margin improved by 3 percentage points both for the quarter and the year in full taking the full-year EBITDA margin to 39%.Again, the profitability or the EBITDA performance, if you like is solid across the group improving for 9 out of 11 markets, again important for us and very encouraging. Looking at this current market we see that we delivered, as I said, 9 to -- out of 11. And we see in Norway continued strong effort on performance partly from cost reductions, partly also from maintaining those important market positions and our ability to compensate fixed legacy revenues which are declining with growth in fiber and mobile upselling. We call it revenue renewal and that is part of our focus on growth. It is to increase that top line, but it's obviously also to replace the revenue streams that are declining for natural reasons.Thailand, EBITDA margin improved by 5 percentage points and we also see significant margin expansion both in Bangladesh and Pakistan. Then looking at the graph you can see that Denmark stands out with relatively low EBITDA margin that is according to the market conditions that we have talked about earlier. However it is encouraging for us to see improvement being made in Denmark in 2017.We have delivered and stabilized the business support system. We have in general significant cost savings and we also have significant simplifications in the way we do things in our product portfolio, et cetera. And all this has as a consequence that we have reversed a previous impairment made in 2015 by NOK 1.2 billion in this quarter.Capital intensity declined both in fourth quarter 2016 and for the year, the key reasons for this were the high network expansions done in 2016 in particular in Bangladesh and in Myanmar. We spent around NOK 18 billion in CapEx in 2017 implying a CapEx to sales ratio of 15% right on our guidance for the year.We believe that this CapEx level give ample room also for investments both to maintain market positions and to stimulate growth. If you look at the pie chart, 2017, we prioritized CapEx towards continued network rollout in emerging Asia that is a little bit more than 20% of the CapEx. Similar size went into network densification in Thailand. Then we have significant fiber rollout in Norway and Sweden. And our continuous work on 4G coverage in Norway creating one of the best network we have in the world.This is important both to capture growth and to maintain important market positions. All in all, these accounted for 60% of our CapEx. If we then in addition mention what we spend on [ ISIT ], then we have a picture, ISIT is also important for our transformation going forward.Net income statement, we have addressed revenues. We have talked about EBITDA. We have a charge of NOK 400 million in the quarter predominantly related to workforce reductions. We also have negative effects from impairments on Tapad. We have a write down, an impairment of NOK 1.7 billion in the quarter as a result of further weakening of Tapad's U.S. media advertising segment and lower than expected growth in the data segment. This is to a large degree offset by the reversal of NOK 1.2 billion of the impairment we made for the Danish telco operation.Apart from this, a clean set of results in this quarter for the full year, we reported a strong net income of NOK 12 billion which equals to an earning per share of NOK 8.11. Adjusted for FX related to the India exit and the VEON disposals, net income increased by NOK 4.7 billion compared to 2016, and the improvement primarily relates to improved operating result EBITDA.Free cash flow is important for us. 2017 was a strong year in that respect with free cash flow of NOK 25 billion. Of this NOK 25 billion, NOK 9 billion comes from proceeds from disposal. More important for us and more encouraging is that if could then go excluding these disposals we more than doubled cash flow compared to '16 from NOK 7.7 billion to NOK 16.2 billion in 2017.Some of this obviously due to timing or spectrum, it is due to the high investment level in '16, but it is also due to more efficient CapEx deployment and improved operational efficiency.Before we go into debt and dividend proposal for '17, quickly recap our priorities on capital allocation. We aim to maintain a strong balance sheet, we define that as keeping net debt to EBITDA below 2 times, that's a ceiling, it's not a target and we see no reason to change this.We also are very focused on delivering attractive shareholder remuneration. We are very committed to deliver, we are very committed to deliver a year-on-year growth in ordinary dividend, and this remains firm. In addition, we have said and we still say we will apply buybacks and/or special dividends to be considered in special cases.Then we need to make sure that we allocate sufficient funds to maintain and expand our networks, that is at the core of our investment program as well as ensuring that we have efficient -- strong but efficient spectrum portfolio. This is again important to support profitable growth and maintain key market positions. And then we are also open to look into inorganic opportunities within core business, within core geographical area, if and when that makes sense but right now we don't spend most of our time on that.Balance sheet continues to be strong as you see on the slide, net debt of around 1x EBITDA which has been the case for a while, this is the level we're comfortable with. Net debt in the quarter increased by NOK 6 billion, this is primarily explained by two elements, one the payout of around NOK 5 billion, the second tranche of the dividend to the shareholders in the quarter, and then a continued buyback program cashing out approximately NOK 1 billion in the quarter.Quickly then on our debt maturity profile, you will see we have a couple of maturities in 2018, we have an upcoming $500 million in May, we also had EUR 500 million that matured now in January, that one we repaid in full with excess liquidity. And then the cash position is still comfortable, and to what extent we are then refinancing the upcoming maturity in May remains to be seen, we are reviewing it as we speak.Solid performance, solid cash flow generation, strong balance sheet, we are pleased to then deliver a continued growth in dividend in line with our stated policy. 2017 the board proposed a dividend of NOK 8.10 per share, which represents a 4% growth compared to 2016 and a total payout of NOK 12 billion in 2018. The dividend will, as usual, be paid in 2 tranches in May and in November. We also plan to ask AGM in May for a new buyback mandate to secure that we have flexibility for potential addition on shareholder remuneration in 2018.The buyback program of up to 2% of shares announced last July is running and we have brought back approximately 11 million shares or 80% of the max target that we are going to buy in the market. The market part of the buyback program we expect to run it at least until end of February. Following then the AGM in May the proportionate amount of shares will then be bought from Norwegian state and all repurchased shares will be canceled mid-2018. It's the destiny of the CFO to look back and the privilege of CEO to look forward, so Sigve will take you through 2018.

[Sigve Brekke, Chief Executive Officer and President]

Yes, good morning to everyone, and thank you, Jørgen, for both strong numbers and solid shareholder return. As Jørgen said I will talk about the strategy, the strategic initiatives and also do a deep dive in what we do on our digital transformation. This is something we have promised you to come back with and then now it's time to go a little bit deeper on that. In fast moving, changing industry landscape we have picked three key beliefs that is guiding our strategy. The first one it's that internet access is our foundation as voice has been our foundation in the last several decades, and it's going to be even more important going forward to connect people to internet and the data of the world.That's why we are continuing to be very focused on building strong mobile networks and in Scandinavia also fixed networks, the other one is to take the data we get, the knowledge we get from our customers and personalized offers, that's where we see value can be created. And that's why we also then across the group -- and I will come back to that are building now advanced analytical tools and as you call it distribution and a digital data platform.The third one, it's that only the most fittest operators will survive in the dynamic future. So we are going to continue to make ourselves more and more efficient -- continuous efficiency program. But the efficiency for us which I also will come back to is not all about cost, it's also to create a flexibility, make sure you are competitive in the market and with that also capture growth opportunities.When we had our Capital Markets Day last year in February we showed you this picture, that the key focus areas were to continue to capture growth in the market where we operate it was efficiency and it was to simplify both the portfolio and also on business models. In addition to that focus on the 30,000 passionate team members we have and make sure that we do the business right way. The same focus areas as we started 2007 [sic] [ 2017 ] with we will continue with in 2018.Let me then start with the revenue part of that or the growth part of that. We continue, as Jørgen also said, to see growth in our core revenues, and we closed 2017 with a 2% increase in sub and traffic revenues. Emerging Asia has a very strong growth profile, and we expect that to continue. That is coming from an Emerging Asia, Pakistan, Bangladesh and Myanmar, that's coming from still millions of customers not even being connected to basic services.We estimate that in these three markets the real penetration if you adjust for the multiple number of SIM cards is around 55%. So there are still a lot of people out in the village, out in the rural areas that we want to connect. The growth is also coming from relatively low data usage, we estimate that around 45% of our customers in these three markets are using data. And out of that the medium data usage is only 30 to 40 megabyte. So it's a long way to go to get to the levels we see in Europe.And that again is very much caused by a low smartphone penetration. In this market Myanmar is little bit different, but in Pakistan and in Bangladesh smartphone penetration is only around 30%. And when a feature phone customer gets a smartphone we see that the data usage increases. In the more mature part or the developed part of our markets, the growth is to compensate for what we call legacy revenues that being voice or SMS type of revenues in Thailand and Malaysia and it being the corporate-based fixed services in Norway.So let's look at that -- and in Norway we see that we are now with the high-speed internet more than compensating for the decline in fixed telephony and in ADSL business. In addition to that we see healthy growth on the mobile side coming from good upselling, introduction of new services, and not least the position, the strong position we have on the B2B segment which we also now use as a platform to move into IOT type of services.In Thailand, which is the other example on the graph here, we see that this market is now turning more and more like the type of market construct we see in Europe. Also people are moving from prepaid, very price aggressive, into postpaid bundles and from voice to data. In Thailand now we are continuing and focusing on positioning our company for that and we have now around 50% of our revenues on postpaid and other one on prepaid. And when the customer merge -- comes from prepaid to postpaid we see a higher ARPU, we see a lower churn and we see a dramatic uptake of data, even more so than we see in Europe.Then on the efficiency side. As Jørgen also said, historically we have had an increased OpEx based year-over-year. It has increased around 2% to 3%. When 2017 started we said that we need to set a stop to that increase. And the plan when the year started was to level out the OpEx spending and then start reduction from 2018 and onwards.Fortunately we were able to do better in that. The reason for that I will say is that we started the year with aligning the troops so to speak. Aligning organization around the efficiency agenda, getting their mindset right, getting their commitments, align the KPIs and the targets so that we as a group could do something with this together.And I'm then quite satisfied that we delivered much better than the flat OpEx development in the year. And it's basically coming from three main areas, one is the limit, the low-hanging fruits and we have taken out lot of cost which we really don't think it will hamper our operation is coming from our digitalization agenda and from their transformative activities which I will come back to.And then seeing that we are closing the year with OpEx reduction of NOK 1.6 billion makes me very satisfied and at 3% reduction in OpEx. And even better, 60% of that as we estimated, almost 60% is structural reductions which we then can carry with us also into '18 and in the years to come.Even though we are ahead of the plan we got a good start, we are going to continue with the OpEx focus and we are going to remain the guiding we had that in the year this year and '19-'20 we plan to further reduce OpEx with 1% to 3%.Then on the simplification agenda. And the reason why we put that as a key strategic initiative a year ago was that we want a leaner and more agile Telenor. And we want to make sure that both the money is being spent when it can get the best return but also that the management's attention it's where the growth can be captured.So what we have done, as you know, we decided to exit India. That goes on plan. So during the first quarter this year we hope that we will be finally out of India. We've exited VEON. We reorganized our online classified ad portfolio selling out of South America, Latin America and then focusing on Asia.But the simplification agenda is more than that. It's also to simplify the way we work. That's why we implemented a cluster organization taking our cloud business unit into 4 very similar markets or clusters. That's why we also have been working on right-sizing to make our organization more efficient. That's also why we are constantly looking for reducing complexity and bureaucracy. So it's a lot of things going on in the organization and in the core business as well.And the third example here is from Sweden. Sweden was the first market out where we systematically looked at how can we simplify our business model and going through all the different offers that they had. And one example, as illustrated here, is that we took down the number of price plans in the Swedish operation from 335 down to 55. And with that getting rid of a lot of IT legacy. Now we do the same in Thailand and the plan is then to roll that out business unit for business unit.The strategic priorities we have then going into 2018 is to continue the focus we started 2017 with. So all the ambitions that we have communicated they will stay. We'll continue to digitalize our core business, continue to look at their entire customer journey and digitalize that and IT and networks. We will also, as Jørgen mentioned, see how can we be smarter in our CapEx deployment and also in the way we look at monetizing the spectrum investments.We'll continue to make sure we are monetizing the data investments we do in Asia and we will have special attention to two very important market for us. One is Norway to make sure we keep the market position and the profitability in the regional market and that we are coming through the regulatory situation in Thailand in a way where we are creating value.Then I'm going to take your through some of the main digital initiatives that we have in our transformation program starting with the transformation program at such. We started last year with putting up transformation program headed by a transformation executive which is a part of my executive management team.That program is done basically in six different areas. It's about digital sales and marketing, digital care, digital products, business model simplification, which I already mentioned, core IT platforms and scalable networks. This program is then put into projects, a project which then are monitored on a frequent basis. It's the group executive management that is the steering committee for those 6 programs making sure that we are creating the value out of it that we expect. This will also then be mirrored into the way the transformation setup is in the business units. So it's organized through cross-functional project teams and then having clear targets when it comes to timelines, value creation and also the project associated the way we want to get this to be efficient.We have in addition to that trained over 180 top leaders through an agile way of working to a more spring type of project through also trying to learn faster and implement that learning quicker. And the performance reviews are closely then monitored by Jørgen, the CFO, and by myself with not only the transformation programs but also each one of the business units to make sure that they are on task to deliver on these programs.The first part of that program was digital customer engagement and I want to show you some examples on how we do that in practice. The first example is from Norway, family bonus, in I think it was October-November where we launched a family bonus program which is basically that if you have more than 3 relationship to Telenor in the family or a group of friends, it can be a fixed line or fiber, it can be a mobile or it can be handsets program, then you get the bonus and then you can then allocate that bonus between the family members.After just some very few month the latest number I have is that 170,000 families took up this offer and 70% of them [ did in display ]. We never seen this type of popular customer offer before and never seen so many of our customers taking that up digitally. Then you can tie the 170,000 families with 2 or 3 people in -- per family. And this is just to show how we are then using the Telenor MyTelenor app to drive the introduction of new programs but also then to drive up sale and management of the data.The other example up to the right is WowBox in emerging Asia. Started in Bangladesh then we rolled it out to Pakistan then into Myanmar. It's basically a platform, internet platform which aggregate then local content that being music content, that being news or that being other type of relevant local content. And this is the entry that many of our new data customers are having into Internet. In addition to that you can also top-up your account in this platform. 50 million users, active users so far and this is growing very fast. So another example on how we can digitally engage with our customers.And the third one, it's from Thailand, Line Mobile in both Thailand with Line Mobile and in Sweden with Vimla we have introduced 2 digital-only operators to get backing on our own network and in a way being a destructor to the main operation we have. We do that to test out a digital-only concept and we do that also to see can we offer better digital services to the digital natives.The last example, down to the right, it's from our broadcast division. We launched I think it was today a new product together with Google Android because it won't place and this is a product where we are bundling what we already do on DTH and line -- then linear TV with a Google or an Android experience. And as far as I know this is the first, we are first one in the world to do that also bundling a DTH content and android an stable solution. Then to the sales part, the digital sales part, an important part sales and care, an important part of what we do is then to digitalize the customer journeys. Historically our competitive focus has been to build wide distributions channels and it is to have good customer care. But all that has been based on physical handling, physical answering of phones or the physical distribution.Now we are trying to take that into a digital growth and with digitalization you can both reduce the costs but you can also engage with the customer digitally and get more data which we again can use into personalized offers. At the same time as you can improve the customer experience. So one -- some examples of that, starting to the left from Malaysia, Digi. We see that in 1 year after we launched the MyTelenor app in Digi. And we have had a 63% uptake on active customers using it. At the same time you see that in the same year or the same period the number of calls to the call center in Malaysia has reduced 26%. So here you see an example on how customers are changing the way they interact with us on the care side.On the group level the number of calls, call reductions in the care centers is around 20% including in Norway. We also see around 20% reduction in number of calls going to the Norwegian call center.Example, in Norway we have rolled out, by the way, the MyTelenor app in all the markets and we see very similar developments. The example, say, in the mid here -- in the middle here it's from Bangladesh and this is example on how we are using the advanced analytics and trying to personalize the offers. We started to test this out in Thailand a year ago and this has competences and platforms we are getting from Tapad, our U.S. company. And with that platform we get better knowledge about our old customers' data but we also get third party data to enrich that offer and that knowledge even better. And this we then are rolling out in 6 markets already and then into the rest of the Telenor business units. So this example from Bangladesh is an example of how we are using that data to reengage silent customers and in this market where you have a competition such that people are using several operator SIM cards it's very important for us to rather waiting for a churn reenergize that customer. And this is an offer which is an example of that.The third example to the right, it's how we also now are digitalizing the sales part of the customer journey, to Scandinavia first, 35% of all the sale being acquisitions or being data upsell is now happening digitally. And I think in Norway this number is even higher, 40%, and from 1 year we increased in Norway, the Norwegian operation, we increased the digital sale from 17% to 40%. And then you see we do the same in the other markets. And there is a big potential in our three other clusters also to move then fiscal sale into digital using digital channels.Then what are we doing on our infrastructure side, the network and IT. And I will claim that here we are really at forefront of what we see other operators are doing. Our business model in the past has been based on a very decentralized model and very few platforms have been taken out across. So every company have had their own IT system and their own network basically. And we see that that has created a lot of legacy. And I use the example from Sweden, the number of price plans just keep on expanding and then with that more and more IT infrastructure complexity. And the key focus in our operation is both to digitalize this, to standardize it and also to see if we can share some of these resources with our -- with competitors.The one to the left here, it's showing one example of that on how to develop a common delivery center and that is basically to drive standardization and consolidation and create scale in the market where we operate. And with use then of [ automatization ] we will also then increase the customer's experience. The base here for, the base we can attack here is around 2.6 billion and we estimate that around 30% of that can be saved when we do this in all our markets.To the right it's showing the IT part of it and what we are trying to do on IT is to go from hardware into virtualization into cloud. And the reason why we are not able to go directly to cloud is that some of the services is not ready for being cloud based. So what I have done so far is to utilize around 65% of our IT infrastructure and around 30% to 35% of the core network functions. This year we are going to take that further to 75% and on the IT and also closure to 50% on the core network functions. And then the next step in 2020 is to take it from virtualization into cloud-based which gives an additional saving and also an additional efficiency and experience for the customers. So again the baseline here is around SEK 4.2 billion, and what we estimate is that around 40% of that can be saved through then that virtualization and digitalization journey.The digitalization also effects, have an effect on our virtuals, this is due then -- due to automatization but also as example I had with when few people are calling there are a need for fewer agents at the call center. And of course it's unfortunate that so many of our employees are being affected by that.In '17 we had a reduction of 2,600 employees or around 8% of our workforce. And as we see now, the digitalization effects going forward we estimate that will be around 2,000 FTEs that unfortunately will leave us in '18 and but also in '19 and '20. At the same time we need more competencies and new competencies, so we have introduced a program pointing to four areas where we see that we need to upskill and reskill our workforce too. It's applied analytics, it's design, product design, it's digital channels and it's product development. And we have made available courses, internet courses, online courses in these areas.We have also in end of last year challenged all our employees to use at least 40 hours during '18 to upskill themselves. And not to only put that as a challenge to our employees but we have also implemented that now in our employee dialogues, so it's a responsibility even for the leaders to make sure that the employees will have 40 hours time to go through this and prepare themselves for the future.Then on the OpEx reduction. As I said, we got a much better start in 2017 that we thought. And but we are going to uphold the ambition that we also talked about a year ago on 1% to 3% '18, '19, and '20. So the total OpEx base we have is around NOK 45 billion. We estimate that around 50% of that NOK 45 billion can be addressed through digitalization. And it is in the areas, as you see, of sales, customer management, marketing, IT and support. And I already talked about what we do on digital sale, I've talked about digital care, I talked about how we can use advanced analytics to improve market MarCom efficiency but also how we can use digitalization to automate and make processes more efficient.So this is the areas where we are going to attack. In addition to that, there are also some other structural initiatives we do which is not directly related to the digitalization part of it. One is to make sure that we are getting benefits out of the reduced regulatory costs in Thailand when the concession ends in September 2018. The other one is what I also mentioned, to reduce the network cost we are trying to build scale through our common delivery center and they have started with that in Asia. The third one is to continue the fixed value chain transformation in Norway. And the fourth one is just to set a cost mindset across the group, always asking can this be done cheaper and smarter.We will -- almost 60% structural OpEx reductions we had in 2017 we will of course carry with us into 2018. So a part of the 2018 plan it's on the structural part, also the rollover from '17 as you can see on the right-hand side there.Then we have several new structural initiatives in the pipeline. Some of them we have to invest before we can harvest and some of the harvest we will get in '18 based on the investment we did in '17. And then we will also continue to focus on non-structural costs. However it's also in our business portfolio such that some of the cost increases, so we have inflation, we have network expansions especially in our Emerging Asian markets, and we do not want to jeopardize the growth alternatives, also the growth opportunities.So we stay very close to the market to make sure that we are keeping our market shares and that we are competitive out there in reducing sales and marketing, yes, tools and money.So the balance of this, it's that some of it goes down and some of this go up, but overall we see that '18 we should be able to deliver on our ambitions of 1% to 3%. Then I want to close with just bringing us back to the main focus areas. And all-in-all I think we now have a good building block and a good strategy moving forward. We got a good momentum out of 2017 and we are happy of course that we are able then to honor the promise we had with paying back to our shareholders, but we also have a good momentum in the organization.But '18 is going to be hard. And of course the more and more you dig into more structural initiatives the harder it gets. But having said that, I think we have now a good united management team both on the group level but also in the business units that are ready to execute.And with that I hand over to Jørgen again that will give us some guidance.

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

Yes, we are just wrapping up with one more slide on this. First of all, I think Sigve confirmed that our midterm ambitions they remain. Low single-digit revenue growth or revenue growth low single digit, net OpEx reduction of 1% to 3% through the period. CapEx per year, CapEx to sales ratio of around 15%, that remains.If we then look into '18 we will do the same as we have done for previous years, we will guide on revenue, we will guide on EBITDA and we will guide on CapEx. But then we have adjusted the parameters slightly to keep the analyst awake and sharp, that was one reason, the other reason is that it is more aligned with our performance management and our focus on cash flow generation. So as already indicated, we will now give revenue guidance on organic growth in subs and traffic revenues which then include subs and traffic revenues from mobile as well as from fixed operations.Covering, as I said, 75% of the revenue base but more importantly almost all gross profit contribution. We expect these revenues to grow 1% to 2% in 2018. We have done taking due considerations to in particular 2 elements, several elements, but there are 2 elements I want to mention it is the new entrance in Myanmar but also the positive stabilization and development we see in Malaysia.When it then comes to EBITDA growth, keep in mind that we have then a few elements, things that are happening in 2018. We have loss of high margin mobile wholesale revenues in Norway and we have talked about that before predominantly for [Neto] contract. And we also expect payment related to the TOT agreement in Thailand as soon as we get it signed. So this amounts to 3 percentage points or whatever negative in itself on EBITDA growth.At the same time we will continue to reduce cost as Sigve described along with our mid-term ambition. All-in-all, this leads to an outlook of 1% to 3% organic growth in EBITDA in 2018. And also adjusted for those 2 elements that I mentioned this implies that underlying the mid-single-digit growth is what we see in EBITDA for next year.CapEx is expected to be around NOK 18 billion to NOK 19 billion in 2018 relatively stable from this year and with the same priorities as we went through. Then I think Marianne we are ready for Q&A session.

[Marianne Moe]

Absolutely Jørgen. Thank you Sigve and Jørgen we are now ready to take questions. And as usual we'll start with taking questions from the audience present here at Fornebu before we open up for the participants on the phone. Any questions? I can see at least one hand in air.

[Havard Nilsson, Analyst of Technology]

Havard for Carnegie. You pretty much addressed all my questions so far, but I was wondering if you perhaps could give us some pointers on pros and cons of keeping or divesting the Central European assets and also indication of timeline on the IT cost savings in Asia as well as you had on Slide 30 I think I think it was.

[Sigve Brekke, Chief Executive Officer and President]

Yes, when it comes to the CEO asset -- CE asset, I don't think I want to say more than what we issued and released on last week. We have got an inbound offer. We are assessing that offer now and that would probably take us a couple of months when that is done. We will then announce what we are going to do with that offer but more than that I don't want to comment. On the other question on the IT, I think the numbers that I showed you is in 2020 picture, also the reduction on the baselines but I don't want -- I am not able to break that down on a yearly basis.

[Marianne Moe]

Next question please. Okay. If there are no more questions from the participants here at Fornebu we will now open up for questions from the conference call participants. Please.

[Operator]

Our next question comes from Victor Höglund from SEB.

[Victor Höglund, Analyst]

Just as previous speaker said that most of the questions have been taken already but I was just wondering, you're highlight in price per megabyte ambition for parts of the group. Can you comment on how that can be applied across the group?

[Sigve Brekke, Chief Executive Officer and President]

Did you say price per megabyte?

[Victor Höglund, Analyst]

Yes, you showed in the cloud slides where you explained your view on the future on how you can drive down costs in the efficiency improvements in Asia? How that can -- I was just wondering if we can -- if you can do something similar in other parts.

[Sigve Brekke, Chief Executive Officer and President]

Yes. We are starting with this in Asia as I explained but we are also going to roll that out to Europe. We have picked a partner in Asia to help us with this. We are moving fast on both the virtualization and cloud base and now we are looking for a similar concept, similar approach in Europe. So in the 2020 picture you should include Europe as well, and that's why I talked about the 30% and 40% savings on the base. I cannot break it down further than that.

[Operator]

Our next question comes from Roman Arbuzov from JPMorgan.

[Roman Arbuzov, Analyst]

Thank you very much for taking my question. My question is around the management's incentive program. And this question should be viewed in the light of your very strong performance on OpEx in 2017 and you said you felt that you were somewhat surprised by the strong delivery. So in terms of the management's incentive program I was wondering if you could give us some color in which way the OpEx metrics enter the executive management KPIs. And in particular I was wondering how big is OpEx within the overall program, sort of how dominant is it and also whether it's potentially sort of front-loaded in terms of targets or is it backend loaded, sort of you have to deliver consistently in terms of performance or is it judged on a year-by-year basis?

[Sigve Brekke, Chief Executive Officer and President]

Yes, I can answer the first part and then Jørgen can take the second part. On the management's targets OpEx, it's definitely one of the targets, it's revenues, it's actual OpEx reduction and it's EBITDA growth. But I don't want to tell you exactly how these 3 elements are weighted. But that we had in '17 that we also have as the group executive management that going into '18.

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

Yes, if I understand the second question correct there is no bonus for neither front-loading nor backloading this program. It's yearly agreements and understandings between management and the Board of Directors and it is a balanced scorecard as Sigve is referring to.

[Roman Arbuzov, Analyst]

And...

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

And as an extra comment to that, obviously time matters. So we do in all aspects of what we are doing we do what we can. But we are not front-loading or back-loading, we are just working continuously through the agenda that we have, take it when it's appropriate.

[Roman Arbuzov, Analyst]

So performance is evaluated on a year-by-year basis, right, there is no sort of multi-year targets where you have to reach and sort of the final evaluation will come in 2020 say if digitally done on the year-by-year, is that right?

[Sigve Brekke, Chief Executive Officer and President]

Yes, it is a year-by-year. Of course the strategic plan and the financial plan, it's longer than the year but the actual target is based on a yearly basis.

[Marianne Moe]

Next question please.

[Operator]

Our next question comes from Maurice Patrick from Barclays.

[Maurice Patrick, Managing Director]

It's Maurice here. So I'll just, quick sort of thinking on Thailand spectrum. In your CapEx slide you indicated I think 20% of CapEx is coming in densification. You talked about your grid being well-placed for 2.1 gigahertz, 2.3 gigahertz, you bought the ToT Spectrum coming through. Perhaps talk a bit about you need for spectrum in the upcoming auction, do you see scope for the reserve price falling? And perhaps I mean you've flagged our the higher NOK 1 billion of spectrum payments in 2018. But I think there are some moving parts on them in terms of lower USO fee and expiry of concession this year. Thank you.

[Sigve Brekke, Chief Executive Officer and President]

Yes, I can comment on the spectrum situation in Thailand. We did 2.3, well, one step back, we have now got the approval from the regulator in Thailand and we are just waiting for the final approval from the attorney general. So I hope that it's not many days or weeks away from actually getting that spectrum and starting to roll out. And of course with that one in addition to the 2.1 we have in Thailand we will have a very good 4G network in the urban areas and also out in most of the rural centers. And then when the spectrum comes on the 1800 we will of course look at the conditions and make our decisions then. But so I don't want to comment on that other than saying that with the 2.3 we will be in a much better place.

[Marianne Moe]

And you are of course right, Maurice, that the concession related costs will continue to come down in 2018. Dtac was, in its Q4 presentation they show that regulatory cost is now around 11% of sales, that after concession expiry should be at 5% to 6%. Next question please.

[Operator]

Our next question comes from Peter Nielsen of ABG.

[Peter-Kurt Nielsen]

Question on Norway please. Has the positive response you have received on the family bonus scheme, has that given you more appetite for pushing convergence in Norway please? And if I may, a quick question on Sweden, you've had a very good fiber quarter in Sweden despite the sort of stagnating market at the moment. Could you comment a bit on how you have achieved this please? Thank you.

[Sigve Brekke, Chief Executive Officer and President]

Yes, on Norway first. We -- of course we want to see how we can utilize the different offers that we have in the market and family bonus is a good example of that where we are combining all the relationship you have with Telenor. And you may see that the Norwegian team is going to launch similar offers. However we are not going to lead any aggressive bundling when you think about that in a discounting type of picture as you have seen in some other European countries, we don't see a need for that. And we are then rather focusing on how to make this good offer for the customers, how to reduce to churn, how to do upsell of data and how to just make it convenient. Then the second question was on Sweden and the fiber rollout, was it?

[Peter-Kurt Nielsen]

Yes, please.

[Sigve Brekke, Chief Executive Officer and President]

Yes. We have the last couple of years rolled out fiber in Sweden and we continue to do that. The Swedish market as you know is a little bit different from the Norwegian. There is a longer lead time, but we see that we are very well placed with also our fixed position in Sweden and we continue to then capture the opportunities that we see there. But I don't want to go into any numbers or anything like that.

[Peter-Kurt Nielsen]

Has it mainly been achieved through own rollout in Sweden?

[Sigve Brekke, Chief Executive Officer and President]

No. It's a combination from both with the old rollouts and also participating in the open networks.

[Marianne Moe]

Can we have the next caller please?

[Operator]

The next caller is Terence Tsui from Morgan Stanley.

[Terence Mun-Sion Tsui]

I just had a broad question about how you balance the need for OpEx reductions versus top line growth. Obviously the cost reduction program has been going very well. I'm just wondering whether you see the need to reinvest some of the savings, improving the revenue environment in some of your markets and that's loaded then in Q4 like Myanmar and Thailand. So just some thoughts on cost reduction versus topline.

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

As I tried to illustrate in the presentation and discussion we had at least for 2017 we are very pleased with the numbers coming out showing a good balance, this is for '17 confirming what we have thought and also communicated the whole way. We still believe we will continue to do that. We believe there are ample rooms and it's of course very important for us to do a good balance in revenue, revenue renewal growth and cost and efficiency implications. But if you look to Myanmar you will see that they have had not insignificant cost increase for '17. We are obviously catering for this kind of development in those areas that are necessary and Myanmar was one. The other one was Bangladesh. With the significant growth we had there it is quite natural to fuel that. At the same time we see Bangladesh has been through a tremendous growth over many years. It's quite clear that there are also significant cost efficiency opportunities in such a business portfolio. So I think we have managed it good so far. We will do the same. We have a lot of attention to this and we are confident we will keep that balance.

[Sigve Brekke, Chief Executive Officer and President]

Yes, just want to add that Jorgen and also myself we are sitting very close on the development in different markets trying to understand market dynamics and making sure that we are not losing out of growth opportunities. And it would have been impossible to have the double-digit growth we had in Bangladesh and also close to double digit in Pakistan if we hadn't made sure that we also are aggressive in the marketplace.

[Marianne Moe]

Next question please.

[Operator]

The next question comes from Andrew Lee from Goldman Sachs.

[Andrew J. Lee, Equity Analyst]

Your presentation on digitalization was really clear. It was just great to delve into the headcount reduction a bit if that's the case. You are guiding per 6,000 cuts over the next 3 years. Can you give us any stats like you did for Bangladesh in the presentation that gives us confidence that customer perception in the Nordics is improving with this. What's been your MPS improvement or churn reduction or reductions in calls into the call center that gives you that added confidence that this cost cutting is sustainable? And I wonder if you could touch on what are the costs associated with the 6,000 headcount reduction.And then just lastly on Norwegian competition. Could you just give us an update on the compensative intensity in the market. Obviously you're having success with family plans. But could you comment on any further aggression from istep.net following its capital raise and what you're seeing in terms of ARPU uplift from fiber?

[Sigve Brekke, Chief Executive Officer and President]

Wow, that was a new presentation but let me try to make it short. The Norwegian market remains competitive, I don't see any change. We see Telenor being there, we see ICE being there and there is movement in the price-sensitive segment. But I think we are very happy with the position we have on the value segment of the postpaid customers and we see we are not losing any market share there. And we also see that the service we had, the customer service we have in Norway it's also on a positive trend. So I will say no change in the competitive landscape in Norway. Then to the question you had on customer, how happy the customers are when they are being digitalized. Generally we see that customer feedback goes up when they have a digital journey rather than a physical. So, and that's why we are putting so much effort on making their Telenor -- MyTelenor app, the functionality and the user friendliness on par with the very best services that is out there. So we don't see that digitalization and with that cost reduction it's hampering their customer satisfaction at all, it's actually the other way around and that's why I used customer experience as a word both when I talked about the care part of it, the sales part of it but even the IT and the network digitalization. It is to make a better customer experience. I think that was what you asked about.

[Marianne Moe]

I think also when you look at the reduction in incoming cost to customer service that also reflects that the customers have less reasons to call in. The networks are more stable, the product offerings are more intuitive.

[Sigve Brekke, Chief Executive Officer and President]

Yes, that's a very good point.

[Andrew J. Lee, Equity Analyst]

What is that number in Norway?

[Sigve Brekke, Chief Executive Officer and President]

Pardon?

[Andrew J. Lee, Equity Analyst]

What is the reduction in call center -- for call center you've seen in Norway?

[Sigve Brekke, Chief Executive Officer and President]

Close to 20% year-on-year.

[Andrew J. Lee, Equity Analyst]

Over the last year?

[Sigve Brekke, Chief Executive Officer and President]

Yes.

[Marianne Moe]

And in Asia we are around 30% to 40% reduction in a year.

[Andrew J. Lee, Equity Analyst]

And then just the cost of the headcount reduction. Sorry for the multiple questions.

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

Yes. The cost is obviously, it's hard to do an average number here because we have 11, 12 business units in very different geographies. And so I -- we are taking that on a running basis and I think you can apply some of the numbers that we have guided on and shown disclosed in 2017 as an indication of how that will be also going forward.

[Marianne Moe]

May we have the next question please?

[Operator]

The next question comes from Sunil Patel from Bank of America.

[Sunil Praful Patel, Vice President]

I have just 2 small questions if that's okay. One on Myanmar, I mean you've seen price pressure into the quarter head of the new entrant launch but can you maybe just share some local insights on when you expect the new launch to occur, any sort of insight into their strategy. I mean, I recall Telenor in the Myanmar segment is particularly strong in the data portion of the market. Is there a barrier to entries, your position they're protected by the investments you made in the network or do you -- should we expect I think price pressure to continue through 2018 onwards? And my second question is just on the balance sheet for Jørgen, I mean you talked about 2x being a ceiling not a target but is there a flow when you just look at the efficiency to drive down your WAG in the historic sort of low cost of debt. Does it not make sense to maybe rebalance more towards debt financing rather than equity?

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

Well, we are not -- it's not in our current thinking right now to kind of reengineer the balance sheet. It is strong today, it is significantly below the defiance ceiling, the max we have had but the max is not the target. It's being quite stable around 1, 1.2 for a long time, and kind of restructuring our balance sheet by paying out excess dividend in the short run is not according to our thinking right now.

[Sigve Brekke, Chief Executive Officer and President]

On Myanmar, we expect the fourth entrant to launch in the end of this quarter, at least that is what they are saying, or in Q2. And we have been preparing ourselves very well for that. We have a 40% SIM market share in Myanmar now. We have 8,000 sites out there covering 90% of the population and we have close to 100,000 point of sales. So we will have -- I will say that we are about to be #1 in this market with any way you measure it. And of course that is going to be our leverage where the new entrant comes in. We don't know what they will do. Most likely they are going to focus on data but relatively I think we are well positioned to defend our position. Then you ask about the price levels, yes, there is rough competition on voice, data is little bit better and especially net tariffs. And that's why you have seen that their revenue growth has been slowing down a bit.

[Marianne Moe]

Next question please.

[Operator]

The next question comes from Jakob Bluestone from Credit Suisse.

[Jakob Bluestone, Research Analyst]

I'll keep to 1 question on Denmark please. Just on the reevaluation that you've done looking at Note 4 in the report, you talked about an assumption for 3% compound annual growth in '18 and '19 of 3%. So can you maybe just talk us through how do you get to that assumption for Denmark growing 3% for the next few years, what's -- is that determined by fixed, mobile pricing subs, what's the rationale behind it. And then if you can maybe also just give us what is actually the value of your Danish business on the balance sheet after this latest reevaluation exercise?

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

Yes, it's 1.2 on top of the value, total value is, if you remember...

[Marianne Moe]

I think we'll have to get back to that.

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

Yes, we'll check it out.

[Marianne Moe]

Yes.

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

We have disclosed close as we are supposed to do the assumptions behind that. We have obviously run several scenarios. We have looked into the cost side, the business development side. Our portfolio is developing. And, all in all, that brings together these values and we have an accounting duty in a way to reverse an impairment like this when we see that, valuation is substantially higher than what was assumed in 2015. Things has changed both on the internal side. We also see the market leveling out a little bit, which is good. It is still not as profitable as it should be in order to fuel future investments the way we see it, but it is better than assumed in 2015, hence the reversal. When it comes to the full value, I have to get back to that, I don't have that number, or the full -- the valuation on the balance sheet.

[Marianne Moe]

Next question please.

[Operator]

The next question comes from Irina Idrissova from RBC Capital Markets.

[Irina Idrissova, Assistant Vice President]

I've got 2. First of all on Norway FX has been a year since the unbundling of TV and broadband rules came into effect, can you just talk about the impact you're seeing on behavior of your subscriber base specifically as a result of these changes and how does the turning back, for example, compare with the original expectations, any further impact into 2018. And second question, I understand you can't comment on the CEO -- East European asset specifically but can you just talk about your thinking around the portfolio as a whole, how do you think about which assets are core versus non-core and of beyond generally of course creating shareholder value can you give us some color on the key decision criteria when you think about whether to sell or keep the geography.

[Sigve Brekke, Chief Executive Officer and President]

Yes, the first one I didn't really get. Was it the unbundling of fixed and TV, was that the question? The first, your first...

[Irina Idrissova, Assistant Vice President]

Yes, correct.

[Sigve Brekke, Chief Executive Officer and President]

Yes, there you're thinking about unbundling then of fixed and our access and TV in the Norwegian market, if that's your question, it's that we haven't really seen any big effect of that. We haven't seen any neither big churn nor a big uptake of new customers, so I think it's -- yes, so far it hasn't been an effect. And I think that the customers are very satisfied with our TV solution and even more so now after we launched also our android component to it. So we stay on very competitive in digital. We have a very good growth in the TV business.

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

Yes, and then to our portfolio, what is core and what is not core and so on and so forth. We have said the whole time that our telco business is the core activity of Telenor. And telco business is the business units and businesses that are very closely related to that telco business. Then we have started on the portfolio simplification process as Sigve described in his presentation. We have no rush and urgency, but we have done it when we have thought we had good opportunities to do what was strategically and financially sound decisions. The VEON he mentioned, he also discussed India, we have no reason to believe that that was a bad decision to decide to exit India. We high-graded the values in online classified in Latin America, that was a cash valuation decision. And then we got an inbound, that is important for us, we got an inbound interest on CEE. And then it is our duty to reflect on that. Some reflections are quick, some reflections we spend more time on. This is one that we spend a little bit more time. We are eager to grow and develop Telenor, that's the whole purpose and that is what we're working on and at the same time make sure we are taking sound value-creating decisions on behalf of the shareholders. It is cash implications, it is valuation multiples, it is strategic evaluations of how markets are developing, et cetera, et cetera. Going forward we have said that down the road we might look at new opportunities in geographically closeness to where we are and in core businesses in telco businesses.

[Sigve Brekke, Chief Executive Officer and President]

Well said.

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

Do you agree?

[Sigve Brekke, Chief Executive Officer and President]

Yes.

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

You agree. So we agree on that.

[Marianne Moe]

Can we have the final question of the day, please?

[Operator]

Our next question so comes from Thomas Heath from Danske Bank.

[Thomas Heath, Analyst]

Thomas here with Danske Bank. Just one question if I may. You highlight the analytics and promotional activities in Thailand based on Tapad infrastructure, yet you take another quite large write-down of Tapad for the business now worth just NOK 400 million that you acquired for NOK 3 billion not very long ago, what's the sort of learning from an M&A point of view, how do you avoid making this type of costly mistake in the future and what didn't play out as planned?

[Sigve Brekke, Chief Executive Officer and President]

Yes, we of course we are not satisfied with the development of the Tapad business and especially not on the media side, and the development of online marketing in the U.S. market became much tougher than what we expected, basically the Googles and Facebooks are taking more and more share of that, so we are not happy with that and we have also a little bit less growth on the data side of the Tapad business, that's what we expected. But having said that, I must say that the benefits we now see from using their platforms, using their the voice graph system but also using their third-party data is starting to yield some results. We see that in Thailand. And as I said, we are rolling this out now in 5 new markets and then in the rest of Telenor Group. What it enable us to do is to organize our own data, is to get richer data from our own customers from the third party but it's also to get access to competitors' customers. So it helps us then to do a much more efficient digital sales, upsale, but also more personalized offers.

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

Is it fair to say that on a digital journey we need competence and knowledge?

[Sigve Brekke, Chief Executive Officer and President]

Yes, absolutely.

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

And we shouldn't pay more than necessary for it, but we need that.

[Sigve Brekke, Chief Executive Officer and President]

Yes.

[Thomas Heath, Analyst]

So should we think of this more as an internal tech unit within Telenor in years ahead rather than a standalone business?

[Jørgen C. Arentz Rostrup, Executive VP & CFO]

We will come back to that. Right now it is a standalone business. It has external business which is valuable for it and it has also good arm length businesses, rational businesses with Telenor and we'll get back to it.

[Marianne Moe]

Okay. And that was the final caller today and this ends the session here today. So for those of you not getting through with your questions or having follow-up questions, please contact the IR team. And as I said at the beginning of the session, there will also be now a separate media session for media present here at Fornebu. Sven and Meera will take you to that session. So thank you all for attending the session here today. Thank you.