Telia Company AB

STO:TELIA

Earnings Call Transcript 2019-Q1

[Andreas Joelsson, Head of Investor Relations]

Good morning, everyone, and welcome to the presentation of Telia's First Quarter Result 2019. It's a quite busy report day, so we will try to keep it as swift and efficient as possible. We will do a little bit different this time, given that there are some accounting changes in the world. So we will actually let our CFO, Christian Luiga, take the stage first and explain the changes that has been made, and then Johan Dennelind, our President and CEO, will come and talk about the quarter, and then hand back to Christian so that we all keep ourselves on our toes. Christian, welcome.

[Christian Luiga, Executive VP & CFO]

Thank you, Andreas. I have been looking forward to this day where I get to start, finally.Welcome to today's conference. And it's a sunny day in spring of Stockholm. And we have a report that came in very much in line with that what we announced at the capital markets day. And I'll give you the 2 highlight numbers to start with. One is the cash flow growing from SEK 4.2 billion to 4.4 billion, so SEK 200 million up in the operational free cash flow, which is also the basis for our guidance and where we also base that dividend on. The second one is the adjusted EBITDA growth, which is a negative 4%. That is the one I will explain a little bit now, how we have calculated that and why we have calculated it in the way we have done. In previous years, we have something called local organic, and now we have something called like-to-like. So looking at this picture, you will see on the left-hand side of this picture something called reported, and this is the official reported number from Telia. And here we can see growth of the EBITDA of 15%. The yellow bar represents what we did report actually in the report last year for 2018 in the first quarter. On top of that we have made acquisitions primarily the new -- you recognized the GET acquisition in Norway. And on top of that we also have currency effects. And in the purple line, we also have the famous IFRS 16 effect. So the 15% includes the M&A, the currency effects and also the IFRS impact, which we have in '19, but not in '18. Then we have created something called like-for-like to actually adjust for the acquisitions and for the FX effects. And that will be over time the prime number to follow how we do operationally. When IFRS 16 hits into '19 and '20, we go in and having comparable numbers over time, this will be where we search for the truth of how Telia is doing. But meanwhile, we're waiting for that. We need to do some adjustments. So then we have in the middle bar here, we have added the M&A, i.e., GET, how it looked in 2019 -- '18. That's the prime change then to this number. And if we add then GET last year and adjust for the FX effects, but we still have the IFRS impact on the numbers we are doing and EBITDA growth around 6%. But to make sure, we can then compare it during this year and understand the numbers we are adjusting also then in the final bar here, like-for-like growth, including IFRS 16, we are adding in IFRS 16 into 2018 to get a true like-for-like comparison. So then you can see the yellow bar is what we reported last year. We add the M&A, and then we add an estimated value of IFRS 16 in 2018, and then our growth is 4%. And we said when we left the 0CMD and when we came to the CMD that we thought that this quarter would be in line or worse than quarter 4, and we will explain that shortly. But I will first lead to Johan to guide us through. But this is just to understand how we're going to measure Telia. Thank you.

[Johan Eric Dennelind, President & CEO]

Crystal clear, Christian. I like the reported number this quarter better. We got a lot of feedback this morning from friends and family and analysts, and a lot of people saying, "Very good numbers, 15%." So now we have a chance to at least give our true story. Before we dive further into the quarter, last time we met, we were at the CMD. Thanks for being there. And engaging a quick recap of this is that we, of course, see that the main message that we took out was the cash flow for this year but, more importantly, going forward to sustain and growbeyond the SEK 12 billion to SEK 12.5 billion. We also took out our new daring goals to take on our way of helping out and fighting climate change but also doing good business around that. And a lot of good feedback coming through, of course, on that. We presented minus percent to the operating model. And the effects of that, I'll come back to that a bit later. And also for the year, the OpEx ambitions for the group of 2%; Sweden, 3%, and continuing into the next 2 years as well. Well, Andreas, for Sweden, clearly put out the trend shift in EBITDA for 2020 to come. And Norway, we upped our synergy estimates for the GET deal, which is now fully implemented as in Q1. And similarly, for Finland, we're very clear on the convergence road map and propositions to build further on the acquisitions we made in Finland. This were the highlights, and thank you for the feedback that we got when we reached out to you afterward. And just briefly, you thought we were very clear on cash flow and gave comfort on the cash flow. We sorted some upgrades on the cash flow for the year afterwards. You gave us feedback on the strategic red thread on the convergence champions integrated in all our markets and transparency on the financials. What you would have liked to see more of was some structural cost opportunities into the future. And I'll cover some of that later. Bonnier Broadcasting. Obviously, we would have loved to tell you a lot more about, but we can't because we're not the owner yet of the asset. Even if we showed you that it's trading better than we expected. But hopefully, we'll come back to that soon and integrate that in a way we talk to you. And then also, you wanted a bit more on the convergence upside and the strategic story in Norway, which we will definitely bring back now when we are fully on top of the asset and integrated fully into Telia Norway. That's 2 minutes on the CMD. So Christian covered the SEK 4.4 billion, 4% up on cash flow, operational free cash flow for the year-on-year. The negative 4%, which is better than we flagged, somewhat helped by one-off in Norway, we shall come back to. But the big negative, which we'll highlight in -- transparently is the 2.1% down on mobile service revenue as a group, and that's the worst we have seen in a while. And I'll come back to that and explain a little bit more. Nothing new really on theprocess in Brussels with the update on the acquisition of Bonnier Broadcasting. But we will, of course, come back to you as soon as we have news on that. We got approval of the AGM recently for our new buyback program for the year and started to execute on that, ordered the repurchase in shares in the second year program, and you have been paid SEK 1.18 of the SEK 2.36 dividend for the last year, which is the second tranche comes in October. Those are the highlights. And maybe not all of it is high lights, we have some low lights in the presentation. We are in a negative growth territory, pushed this time down by the mobile service revenue. But even removing the carrier zero-margin traffic, we are in a 2 negative space, and we have mitigating activities to turn those trends, I'll come back to. And then you saw the reported number and the adjusted number for EBITDA. So I'll skip that. Important slide. We see at first time that mobile service revenue is declining in this context this much and that we have had negative fixed service revenue through the years. But this is the first time that did mobile. And it's not just one market, and that's the news here then. We have it in Sweden, Finland and Norway for different reasons. So in Sweden, the good news is that we're growing base on the postpaid side. The negative thing is, of course, that we're dropping more than we want in prepaid and also in some of the enterprise segments. So that needs to turn to get back to stabilizing the trends. We have comfort that we will do that over time, but it's a market softness as well that we start to see. Finland. Actually, if you remove the interconnect impact the Finnish number, it is positive mobile service revenue growth. So that goes away, and it's pretty equally spread on B2C, B2B. Norway. We have improving trends in B2B, but we haven't been able to improve the trends in B2C. And that's something that Abraham and the team is working hard to do, and we have comfort that will also come around. All in all, then the 3 biggest countries are soft. It becomes a lot on the group level. Good news. This morning we took out the press release that P3 as you most likely knowhave done the study of serving in the Swedish market and we come out clearly #1 and, actually, rank #4 in the world as the best mobile network. So that is a great asset now when we're pushing new propositions into our customers and also building into the 5G era. So great job from the Swedish team and something we'll make sure the Swedish customers know about. So we told you that Q1 will be soft, and we'll be improving through the year. And this is the shape that we're showing. And speaking to revenue side, we have done quite a lot already in starting to mitigate the softness. We have invested, as you probably have seen a bit more in the marketing in Q1. We have done price changes as the 1st of April for fixed in Sweden. We have tweaked some propositions in other markets, and we're stepping this up through the quarters. So I feel good about the road map for stabilizing the service revenue trends, and you also get some easier comps into second half. On the OpEx side, similarly, we'll step down costs to meet the 2.2% down on OpEx. And that is many different activities, maybe the most important ones being the synergies from GET coming through in Norway. The new operating model that is in play already for Sweden will come through in Finland and Norway through the year. And then general G&A savings that we have in our various cost programs well on track, as you may have already picked up from the results. A few words on the operating model. We will come back to this. At this time, I would just want to remind you that in the last 3 years, in the old operating model, we had something called GSO, global services operations. We took out a lot of costs in the central functions around that, and that's to the left. And in the new common products and services unit, we're going then for more efficiencies, which at the full run rate, will be somewhere around SEK 600 million to SEK 900 million on a yearly basis. So beyond cost, it will give us speed and flexibility and standardization and world-class products taken out in 6 markets. So this is industry-benchmark-setting activity. Probably the first in the world, when we get there of having converged machinery for 6 markets. So just repeating that the acquisitions we're doing is -- or will be one important growth factor of Telia Company. GET is already in and can start to contribute. And the numbers we take in is SEK 1.8 billion, approximately, pro forma. And then you get to synergies that we upped of around NOK 800 million in cash flow. And similarly for Bonnier Broadcasting as they also traded better. We've upped that this -- the numbers they come in with. We haven't changed our synergy estimates yet. So all in all, you'll have a pro forma when all synergies up fully and running of SEK 4.2 billion. And EBITDA minus CapEx around SEK 3.3 billion, very important part of the cash flow story going forward. And ending then on our outlook, reiterating what is said in the CMD and in Q1 -- our Q4 report SEK 12 billion to SEK 12.5 billion, no reason to change that and also repeating our capital management activities around the balance sheet for the rating and the buyback and the dividends. So all in all, a solid capital management story to build on into the future. Now Christian, you're welcome back.

[Christian Luiga, Executive VP & CFO]

Thank you very much. Thank you, Johan. And let me go through some of the numbers, be careful of time, also make sure we get time for questions. Just starting with the overall picture, I think this picture illustrates maybe more than it looks first at a glance. But here you can see the service revenue and the EBITDA decline in our markets. And looking at this picture, it's clear that the service revenue decline in Sweden transports directly 100% into the EBITDA decline in Sweden. And the service revenue decline in Norway also results in a decline in Norway in EBITDA. Meanwhile, the flattish service revenue in Finland results in a decline in EBITDA. That means that something else has moved the EBITDA in Finland. And that's what I'm going to talk about in the next couple of slides about what the different 3 main markets have in their boxes. Before I get there though, I want to follow up on the cost agenda for the group. We have a target of 2% for the full year. We feel confident about that target. We have declared that will be mainly coming through the second half of the year. We have a lot of activities ongoing in the group, and we also have a quite tough comp in the start of this year. But the first few quarters started with a 1% up. That 1% is primarily driven of energy cost and high marketing in all 3 main markets. And that should, of course, result in something as well compared to last year. And the bad debt has also been slightly higher. There's no significant amounts on bad debt. It's just been a little bit more bad debts in certain markets, and they add up to actually be on a group level one component. Meanwhile, the resource cost is actually down in the first quarter. And we are working with a new operating model that will actually bring in cost reduction. During this year, we also have the other reductions that we're doing in resources in the different markets. I will mention some of them. And we have the overall cost program around robotics and the sourcing activities except for that you have mentioned. 2%, feel very confident about that. It will come during the coming quarters step by step. If we then look at the Swedish numbers, the service revenue's down. And the cost is quite flat. And the cost in Sweden is a little bit like the group energy. And marketing is up, and resource cost is down. And then the development of the cost will change like on the group over the year, and it will be a 3% decline, which we have as a target. And if we then look at the service revenue and just touch on that, what Johan talked about, we have a decline in the service revenue. And that service revenue is primarily the mobile that has changed. So legacy's continuing to decline in the same pace on an absolute number that we have had in the last 4 quarters on average. The mobile has decreased and, primarily, than on the prepaid side and ARPU side and going into negative. On top of that, we have a onetime charge effect of minus SEK 20 million, that also impacts the B2C number. And the onetime charge effect will continue during the year because we will have lower fiber rollout this year than we had previous years. And the effect will be bigger in the quarters that are typically higher buildout in. If we look at Norway, the Norwegian result is affected by service revenue. The mobile business is down. But in Norway, we see that the customer intake on B2B has flattened out from being at decline before. Now it's actually flat. It is primarily large in public accounts, which has then taken down the average ARPU for the B2B side. But it is revenue coming in, and it's good customers and good deals. And we're very happy about that change in shift. We continue to have the same loss on the B2C side though. But instead of -- and in the past being covering up that loss with a higher ARPU, it is now more flattish ARPU, which makes it challenging. And here we have activities, as Johan talked about, and we look forward to see how we will execute and deliver on those during the year. The other thing on result in Norway is SEK 100 million that we have brought in as a result of selling old -- bad -- old -- actually receivables. So typically what you do in a business like ours, you build up receivables to a customer. The customer pays. And those who don't pay, you sell them to a debt collection agency. Now when we have acquired companies, and we acquired GET. And we have then got that some old, already written down receivables, we have sold those, and they have resulted in a gain of SEK 100 million, which is true money and real money that we typically get in the normal business, but not as a one-timer. It's actually -- usually an ongoing monthly activity with debt collection agency, which is the clean up of the old base you could say. But that has helped us, both in the, of course, driving cash and the result. On the GET to the TDC side, it is very stable. The B2C broadband is growing around 5%, and that is both on the customer increase and ARPU. So solid performance on GET. TV is slightly down. But overall, a stable development and costs are in control. So the EBITDA from GET is where we want it to be and continue to be very stable. Finland had a very tough start of the year. It was a hard comparison quarter. And that's why I've been clear at the capital markets day that the quarterly result in Finland will improve even with the same result going forward during the year. It is a very hard comp. But on top of that, it was a mixed bag of different things. It was SEK 25 million in write-downs in inventory that we've done. It has been some bad debts in Finland. And we also had a lower margin on equipment sales, which we now see coming in and out. And when we have a lot of ICT sales that some quarters will be better and worse on the equipment side. But we feel confident, very confident, that the margin will increase. And this is an exceptional quarter in Finland during the year. And we have said that they will contribute to EBITDA growth for the year. Baltics is a good market, has been for a while. Denmark is a tough market in our lead portfolio. In Denmark, the market pressure continues. Both in fixed and mobile. The reason why we keep the EBITDA at the level we do, meanwhile, we have a decline in service revenue is super-good cost control and working with that, turning that upside down in different ways is the small business. In that way easy to work with, but it's also great work done on the cost side. I like to mention also Estonia where everything pretty much goes on rails. And it feels very comfortable. Both mobile, fixed growing and translates into growth in EBITDA. We are market leader, we do the right things. And it's a country that loves digitalization. And Lithuania, we are doing some reshaping in Lithuania. It looks like there's a negative trend on revenue. But in reality, mobile service revenue is actually increasing with 8%. But there's a lot of transit revenue that is declining. That is not gaining profitability. And therefore, we have a growth in profit; meanwhile, we have a decline in revenue. But it's not -- it's no margin on that transit revenue. We have somewhat higher picks in Lithuania, but we also announced in this quarter that we will release 285 people from the service in a reduction program that we are doing there. Then on CapEx. As you know, it's the cash CapEx that is the important thing. It's going to be even more important going forward. Now when we have IFRS 16, and we need to book everything that was in the EBITDA before, in the OpEx and the COGS as CapEx partly then. And that makes this line very difficult, the blue line, to look at. And that's where we're already last year and the year before started to talk about cash CapEx. That will be the important part of how you invest and the rolling 12 of that is the pace. It goes up a little bit in quarter 1. Two reasons: we have acquired GET, brought into the CapEx; secondly, we have pushed quite hard in the first quarter compared to the coming quarters in this year. And as we have said at the Capital Market Day we see on a rolling 12-month basis that this year will be slightly down on a year-over-year basis. Higher net debt. And here you see the effect of IFRS 16 again. The net to EBITDA is impacted by 0.5 based on the depth and one quarter of EBITDA. Net debt is the last 12-month EBITDA plus the debt side. And we only have one quarter with IFRS 16. So therefore, the net debt-to-EBITDA impact is 0.5. But we also have mentioned here that when the quarters come in, pro forma this it would have been 0.3 and not 0.5, the effect from the IFRS 16 impact. The overall level is where we expect. And we feel comfortable with this balance sheet. And that's why we also have a buyback program. And we can see that without the IFRS impact, it is quite flat. Finally, cash flow. In cash flow, our guidance is SEK 12 billion to SEK 12.5 billion. We reiterate that guidance. The first quarter is SEK 4.4 billion in operational free cash flow compared to SEK 4.2 billion last year. And that means that we are stepping up to SEK 11 billion in rolling 12. EBITDA will continue to grow, GET is the main reason for that. And then we have a net working capital that was strong in quarter 1. But we have said that for the year, it's more likely that it's slightly less than last year. And then we have a CapEx that should be a little bit in improvement and total operational free cash flow is then better. We have started from last year to compensate to make sure that the pension fund compensates for the natural payout we do to the pensioners that the pension fund is for. And last year, it was SEK 650 million; and this year -- it's SEK 675 million; and this year, it's SEK 850 million. So we are compensating for actually negative cash flow that is there. So this is why it's not a one-timer, it's actually just making sure we use the pension fund for what the purpose is of it. And that was everything I was going to say, Andreas. Thank you.

[Andreas Joelsson, Head of Investor Relations]

Very good. Swift and efficient, as promised. We open up for questions. We can start in the floor if anyone has any questions. If not, we go to the conference call. Operator, could we have the first question, please.

[Operator]

We'll now begin the question and answer session. [Operator Instructions]First question comes from the line of Peter Nielsen.

[Peter-Kurt Nielsen]

I have 2 questions. First one, I'm sort of interested in gauging a bit on how you view Q2. You made it clear that second half will improve versus the first half. All pace, we're up by 1% for the group for Q1. I know you don't give out those guidance on a quarterly basis, but could you give us any sort of indication on how you see to -- whether this is really skewed towards the second half, please? And just, secondly, on the mobile service revenues, which appeared somewhat concerning, particularly Sweden and Norway. You're telling us that B2B is broadly unchanged. So this is from the consumer market. Anything you can tell us? Elaborate a bit on this issue. Should we be concerned that we're entering a new downward cycle, so to speak, in the -- in mobile service revenue growth trends? And Christian talked about initiatives, anything you can do apart from price increases, if possible? That will be appreciated.

[Johan Eric Dennelind, President & CEO]

Thanks, Peter. Let me take the second one. And I think it's a fair question that we should all be concerned when we see softness in the growth engines, so to say.We -- it's too early to say whether this is going to be the new normal. I don't think so. I think there are, definitely, room for growth in mobile across some markets. And we have worked hard to be in a position to step this up. And if you take Norway as an example, then we have definitely, as you know in the past been accepting a customer loss, if you want, with the new dynamics that we have in the market, new entrants and so forth, that is natural. We said last year that we want to start to really work to turn those trends. We haven't done that yet, but what I see in the road map in Norway, with the brand consolidation and also now with the opportunities of convergence, I feel really good about the prospects of getting back to growth in Norway. Sweden, similarly. There I think we have just to find ways of -- be smart in the way we take propositions out. We have, as we showed you, the superior network, and that is going to be increasingly important as we move forward. And we have such a strong position as we need to be able to yield that. And I know Andreas and the team is really excited about those opportunities. So here we see definitely opportunity. Again, we spot a slight weakness in this total Swedish market, which I think we all are determined to try to turn around.

[Christian Luiga, Executive VP & CFO]

And on the OpEx, it's a good question. It will be a step change, but the step in quarter 2 will be smaller than it is in quarter 3 and quarter 4. So you will see a curve that is making a shift in quarter 2 but much more in quarter 3 and quarter 4. And a couple of things coming through here is that, as I said, I mentioned the Lithuanian case. The new operating model we have had a reduction program in Sweden and in the new CPS already now in quarter 1. But those people leave then during quarter 2. We have synergies coming out of the integration in Norway, which was only SEK 5 million in quarter 1, but it will be SEK 100 million plus for the year. And they will also come gladly through during the year. And finally, the comps in quarter 1 was, as I said, somewhat tougher. So those are the reasons why you will see that shift in cost over the year.

[Operator]

Next question comes from the line of Roman Arbuzov.

[Roman Arbuzov, Analyst]

I have 2. I just wanted to follow up on the mobile question. And perhaps you could elaborate a bit on Sweden and also Finland. So when it comes to Swedish mobile, your old competitor, Tele2, reported yesterday, I know we're talking about, particularly, tough trends in ARPU in a large corporate segment in the B2B side in Sweden. So -- and that is presumably one of the factors that is also impacting you. So when we look going forward in -- and think about Sweden mobile, where do you expect most improvement? Is it the B2B side, which sounds unlikely from what Tele2 saying? Or is it the B2B -- sorry, the B2C side, rather? And is it the network that we'll be driving that? So that's the first one. And just the second one on Finnish mobile as well. The performance there has been very volatile. So if you look over the last 3 quarters, you went from roughly plus 4% to probably on an organic basis, comfortably, into the negative territory. So can you maybe elaborate what's going on a little bit is it B2B, is it B2C that's driving that? And whether you feel positive about the Finnish-mobile momentum going forward as well?

[Johan Eric Dennelind, President & CEO]

Thank you, Roman. I'll try to be brief. Yes. There is tough price competition in some segments in Sweden, clearly. We have been good in defending our market share in the corporate segments, and we're not driving -- we're not the driving force for price erosion, to put it that way. We try to work with our various propositions and shields in protecting the revenues that we have. But again, we also want to make sure that we give -- keep our customers. And then some instances that results in lower pricing on the existing base. And that's what you see in our case when it comes to ARPU and revenue decrease in the B2B space. But it is -- at the same time, something we feel that the corporates are starting to appreciate more and more and starting to use data more and more. So there are certainly repricing and repackaging opportunities in the B2B segments, which, of course, we as a market leader will try to drive. Similarly, in the consumer space, we are -- we feel obligated to lead the way in our various activities to show what is possible, especially with the network that we now have, again, demonstrated that we carry. On the Finnish mobile, as you say, it's a bit volatile. I think we're a bit soft this quarter in comparison. We've been stronger in other quarters. It's similar actually trends in the B2B space that we do fight too often on price, rather on getting into the quality propositions that all operators actually do have in the Finnish market. Consumer. Yes. That is a different story. There you go a lot below-the-line competition. We try to stay as rational as possible. But we also need to defend and fight for the base that is up for grab. And I'm sure that will be an interesting game in the coming years with our new competitor in town.

[Operator]

The next question comes from the line of Maurice Patrick.

[Maurice Graham Patrick, Managing Director]

Maurice here. Just a couple of questions on Norway, please. So you flagged the, I guess deteriorating, slightly disappointing, serious revenue trend in the Norwegian market. I'm sure there's lots of moving parts, in terms of what's driving that. You do highlight, I guess, low ARPU from large contracts. But you know, you made a number of M&A movement in Norwegian markets. Is there a churn taking place there that is perhaps impacting the revenue line that is perhaps temporary. You've retired from the legacy brands, is that impacting? And perhaps you could share some thoughts around the high-end. My understanding is you've lost some high-ended share to Telenor, is that the case? Are you seeing [ eyes at ] the low end? Perhaps, some sort of more color on those trends, would be super helpful. I guess just to link to that, you flagged in Sweden a likely change in market share, but clear pricing pressure. Telenor clearly very dominant in the enterprise space in Norway. Do you see a similar kind of pricing dynamics on B2B in Norway or is it just very different?

[Johan Eric Dennelind, President & CEO]

Thanks, Maurice. Yes. We -- I agree with you there's some slight worrying trends.On the B2B side, though, we are stabilizing trends. And then linked to your second question, you don't have the same dynamics that you have in the Swedish and Finnish area. It is slightly more, I would say, predictable and rational on the pricing side. So there we are hopeful that we are about to turn those trends into positive territory. And then you were raising a couple of interesting points on the legacy brands. We did retire Chess, for instance. And yes, there was some churn from that, some expected, some more than expected, which then takes you into the second part of your question which is to high-end part, and we did lose too much there. That's why we launched hybrid flat rate high-end product in Q1. That is to actually mitigate some of the porting out to Telenor which actually has resulted in a better porting versus Telenor in the quarter. So there we think we're on the right path. And I think I've actually covered your 2 questions.

[Operator]

Next question comes from the line of Andrew Lee.

[Andrew J. Lee, Equity Analyst]

I just -- at the risk of flogging a dead horse, I have another question on Swedish mobile trends. I still don't fully understand what exactly went wrong in Q1 and Q4 last year versus the rest of 2018. Is it competition picked up? Is it just no price rises, and it continues and tougher comp? And then I think you hinted, just as a follow-up question to that, you hinted at the requirement yourselves to kind of lead the market to more rationality, and you've been doing that in fixed line with price rises. I'm wondering if you can talk about the potential for price rises in mobile and whether you think the competitive dynamics are supportive for this?

[Johan Eric Dennelind, President & CEO]

Yes. And what is happening in the Swedish mobile is that our core ARPU is not growing but the value added services part has been growing in '18. That is no longer helping out the way it did in the second half of '18. And we don't have any price increases in the last 6 months to compensate for that into '19.We believe, as I said before, generically speaking, that there are definitely room for better yield and better pricing optimization in the Swedish market in key segments. Of course, that's something we are working on, trying to find out where and how and when. And we will tell you once we do it.But absolutely that is something we believe in, maybe adding that there is also when you're in bucket -- that goes for Norway, it goes for Sweden -- when you're in bucket, people have found their right level of buckets, and therefore less top-ups and less upgrades is part of the slight softness in the ARPU development.And, yes, fixed line we did price increases. We're doing price increases; we'll continue to do price increases. And I think we've been better there and structurally doing it, than in the mobile side, and that's the learning we're taking through into the converged thinking, both in Sweden, Telia Life, and the other markets.

[Andreas Joelsson, Head of Investor Relations]

Any question from the floor? No? Then we continue with the conference call.

[Operator]

You can now ask your question, Terence Tsui.

[Terence Mun-Sion Tsui]

This is Terence from Morgan Stanley. Just following up on the previous question around your answer to Swedish mobile and from the challenges you faced towards up-selling.Given that the bucket sizes are -- in Sweden are already quite big, have you ever thought about moving more into unlimited and introducing unlimited tariffs like you do in Finland, as another point of differentiator and trying to encourage more up-sale in the future? Another then secondly, just on Finland, ice hockey season is almost over. Just wondering now how you start to judge the success of those investments and how we should start looking at whether you've been successful on those investments in ice hockey?

[Johan Eric Dennelind, President & CEO]

Thanks, Terence. Yes. We think a lot about how to change the way we price and the way we package and bundle. We continue to do that internally, and of course we'll -- if we change the way we are, strategically pricing in the Swedish market or any other markets, we'll tell you. But so far I'll stick to my statement that we certainly believe there are upsides in many segments still. And therefore back to my earlier comments in the call that there's reason to believe in uplift across our markets. Finland ice hockey, yes. We see it like this, we had a slow start. Now we're running fast, and then in the playoff season, we're actually surpassing our expectations on the subscriptions on the Liiga passes that we have. We have many different type of offers and passes and it's been really, really successful in the last couple of months. And we're still lagging a bit on the link in to access. But the access part was a slow start, and the access part has picked up. So if I should rate ourselves at this point, first season out of 6, I would give it a 4 out of 6. And the upside to 6 performance clearly would be better access uplift, and that's now the positive that we start to see. So moving into next season, we feel extremely good about first year learnings.

[Operator]

The next question comes from the line of Ulrich.

[Ulrich Rathe, Senior European Telecommunications Analyst]

I have 3 questions, 2 very short ones I think. The first one is on Norway. You said first simply compared to market expectations, Norway certainly was the outlier to the downside. And then of course you are describing a situation in mobile that is slightly unsatisfactory. But overall the scale of what happened in mobile doesn't seem to quite match what people had expected. So this leads to a question. Is GET really doing as you expected? It seems to me as if really expectations for GET growth in the quarter were maybe a bit higher and then since you now include that in the new like-for-like definition, I'm just wondering whether you could give some indication of how GET contributed or not. And what do you think about GET vis-a-vis the sort of unfolding quarters. The second question is on bad debt, Christian. You highlighted sort of bad debt issues I think across several markets. Could you sort of go into that in a bit more detail? Is this simply sort of just a volatility confluent thing, or is there something more sort of underlying going on, why this is sort of big enough to now highlight separately? And the last question is on the IFRS 16 impact on slide 26, you're sort of giving the impact, which I understand to be the first 1Q '19 impact, but on slide 3 you are highlighting that the impact, the way you look at it, is sort of added back in 1Q '18. And then you sort of characterize the underlying figure. I'm just wondering that the numbers on slide 26, are they actually 1Q '19 or 1Q '18 numbers?

[Christian Luiga, Executive VP & CFO]

So, I don't have the slides in front of me, but I think it's '18, all over when we talked about it, Andreas...

[Andreas Joelsson, Head of Investor Relations]

We don't have an issue. It should be fairly the same for both.

[Christian Luiga, Executive VP & CFO]

Yes, exactly, they're fairly the same, but it is the '18 numbers and they are fairly the same on IFRS 16. I am -- I'll come back to you on that if I -- when I look at the numbers of the slide later on. On the bad debts, they are -- and actually, I wish I had a much clearer answer, but they are a little bit all over the place. It's a small numbers in the total, but they add up. And we don't see any trend, per se. But of course something if the economies will change, we will keep an eye on, but at this time we don't see a change in our customer base on that. And then on Norway, GET is not negatively contributing on the EBITDA to the Norwegian business.As you say, service revenue is not explaining everything. We have 2 entities together now that has a synergy and cost program that is implemented as we now have integrated in February. And that will give a heavy takeout from quarter 2 and going forward. So that's the answer on that.

[Operator]

Our next question comes from the line of Nick Lyall.

[Nick Lyall, Equity Analyst]

Let's make it short. Can I just ask a couple, please. On -- just to go back to GET after Ulrich's question. Would it be possible to give us a like-for-like for Norway for last quarter as well, Christian? So just on sort of the same basis that GET was in for the 100%, the fourth quarter '17, fourth quarter '18 if that's possible. Just to get at a rough comparable versus the growth this quarter for the Norwegian business. And then on churn, you said at the CMD you were still happy with the churn so far, at least from Sweden. You've now got the price rises through. Could you just confirm that everything's looking okay, particular on the TV side. It seems like TV has not been great for Sweden this quarter. Is that more of a case of holding back to see what you can do with Bonnier later if it goes through, or is it maybe something else going on there in terms of TV numbers?

[Christian Luiga, Executive VP & CFO]

Let me start with the fourth quarter you wanted, that's fine. I can't give you that number, but we did say on the on the revenue side that, that it was very stable in the fourth quarter as well. I don't have that number with me, and I can't answer it, but it was stable yet on the year-on-year basis in fourth quarter.

[Johan Eric Dennelind, President & CEO]

And also, we're definitely not holding back, we're waiting for anything to happen on the acquisitions side with Bonnier. We are full steam ahead on our existing proposition that we have. Our statements on churn still stand in terms of the more people add on, the less churn we get, the more loyal they get, the better prospects of the higher ARPA we do have. And I mean, the quarter, yes, some softness on some TV KPIs, but nothing that we worry about on the overall trend line. So not to worry, Nick, on that.

[Operator]

Our next question comes from the line of Lena Osterberg.

[Lena Osterberg]

Yes, I was wondering if you could say something about the price increases that you implemented on the 1st of April, roughly how much you expect in financial impact from that?Then also going back to Sweden and mobile service revenue growth, if you could maybe give some indication of where your customers are today in terms of bucket utilization? And how many quarters do you expect it will take before we can start to see customers starting to top-up again, following last year's expansions?

[Johan Eric Dennelind, President & CEO]

Thank you, Lena. On the pricing question on the top-up, I think it's part of the analysis we're doing and the planning we're doing for the Swedish -- and other markets for that matter -- is to see if you need to change anything in the strategic pricing area, i.e change the logic of buckets, size of buckets, speed, unlimited or not. So all of that goes into analysis, and of course I won't tell you what we're planning to do, I can just say that we are still strong believers that our key segments that we have upsized on, when it comes to yielding on pricing on mobile. On the fixed side we did a quite big headline price increase on April 1. But some customers will actually get a lower bill because it's flat rate pricing now on fixed telephony, but most people will get an increase. So far so good. No acceleration of beyond the expected or the expected impacts that we have talked about is kicking in and as both Christian and I mentioned in our presentations, it is a key component of the stabilizing trends Q2 onwards for the Swedish business.

[Lena Osterberg]

Could I maybe just rephrase the bucket upgrade question? Because last year, we saw significant expansions of buckets from you and your competitors, starting with Three and you responded.And after that, you have had limited up-selling and that's one of the triggers for not having the mobile service revenue growth. How long do you think that effect will last?

[Johan Eric Dennelind, President & CEO]

The effect of not having upgrades, you mean, or what trend are you referring to?

[Lena Osterberg]

Customers have big enough buckets today. When do you think they will start to outgrow them again?

[Johan Eric Dennelind, President & CEO]

It goes a bit back to what I said. I mean the -- now when people are starting to get used to their usage, we need to bring the right product offering to them that still gives us an opportunity to upsell along the way. That's the whole logic of our pricing strategy. And I will not tell you here right now what that answer is, I can just say that it is definitely part of the analysis ongoing. Andreas will let you and us know as soon as we go out with something new.

[Operator]

Next question comes from the line of Henrik Herbst.

[Henrik Herbst, Research Analyst]

I have 2 questions. Firstly on, just trying to understand to make sure I got the math right. Norwegian EBITDA on sort of an underlying basis it seems, if you are -- if you adjust for the one-off, the organic EBITDA in Norway declined by about 10%, but if you can sort of talk about whether there's anything else going on other than the weaker service revenue trends to speak? So I got that right? And then secondly on Swedish fixed line, your broadband trends, your subscriber trends were pretty good given you put through quite a big price increase. Just wondering what's going on there, if you could talk a little bit about the churn impact from the price increase. I mean it seems like it was very well received. And then whether we can expect still some sort of churn from the price increase coming through in Q2.And then on the TV side, why your TV ARPUs were so bad -- it seems like the weakest subscriber additions were on the back of the price increase, but if you could just confirm that as well?

[Christian Luiga, Executive VP & CFO]

Thank you, Henrik. Spot on. If you take out the 100 million in Norway, the service revenue decline, it automatically goes into a loss in profitability, which is the main effect and cost is as I said, is going to be affected in the coming quarters more rapidly as the integration starts now to affect.

[Johan Eric Dennelind, President & CEO]

Yes. And Broadband Sweden is as you said, fairly stable. A couple things happening there. As you know, we have the decline in fixed DSL, broadband DSL. We have the decline in, i.e., lower OTC on fiber, but we are compensating with higher OCN , i.e., selling on other city networks. And that one is really important for our reach to Swedish households and that has been a good pick up from the Swedish team over the last quarters and now really an important part of the Telia Life story, the converge story, to reach more households. That's where you see the subscriber numbers being stable, thanks to the OCNs. The TV, I just repeat, we don't see any reason to change our view on the growth prospects for TV. We have some softness in some of the KPIs, but overall, we feel confident in the TV roadmap, even without Bonnier. But of course, it becomes stronger with that acquisition coming through second half of this year, hopefully.

[Henrik Herbst, Research Analyst]

Can I just follow up. Do you see a similar ARPU on the open networks as you do on your own infrastructure? And also do you think you have the same type of pricing power -- I guess competition is a little bit tougher in open networks?

[Johan Eric Dennelind, President & CEO]

So the ARPU is not the main differentiator or difference, really. And the proposition can be as strong to the consumers of the households, once you're on the OCNs. Of course, the margin picture looks different. And that's where you'll see a different add on the value creation in the short run. It's pressured on the COGS side.

[Christian Luiga, Executive VP & CFO]

And then on the OCN, it's is more MDU than SDU and the total TV includes an SDU and an MDU package.

[Operator]

Next question comes from the line of Keval Khiroya

[Keval Khiroya, Research Analyst]

I've got 2 questions. Just back on mobile service revenues; and secondly, on Norway. When you showed that chart on page number 5 showing that service revenue trends would improve during 2019, how are you thinking about that individually for Sweden and then Norway? Should we expect the mobile service revenue specifically to also be improving, or do you feel that visibility is too low for that at the moment? And secondly, when we look at Norway, the other mobile service revenues were down year-on-year in Q1. Obviously, they had been growing before. Is that due to Ice, and how should we think about the revenues from Ice going forward as [ once ] some of that is mostly in their hands, but [ from what ] you [ see in Q1, ] what are you basing it, going forward?

[Christian Luiga, Executive VP & CFO]

Yes. So on the mobile service revenue question, again. I think I will just try to summarize and repeat some of my previous messages that across the board, in the 3 countries, there are different reasons for the softness in Q1. And thus the mitigating activities and the paths and roadmaps are different from each country into the coming 3 quarters of the year. But they're all aiming, of course, to stabilize and improve the service revenue trends. And we have no reason to change our view there because we have strong [ clause ] and proposition in the making or just recently out. So we will -- Q2, we'll go deeper and explain how we're tracking on those trend shift activities. But the market is there for it. On the Ice in Norway, the wholesale, again, you want to pick up that question...

[Johan Eric Dennelind, President & CEO]

I'll pick it up. Thank you, Keval. So it's a -- it is a wholesale decline, which is coming through on the other side of mobile service revenue. And we don't see any further trend-shift in that during this year.

[Operator]

Your next question comes from the line Fredrik Lithell.

[Fredrik Lithell, Senior Analyst]

I have a few, if I may. Can you maybe comment a little bit on why you said you needed to offer some remedies to EU on the Bonnier deal, that would be great.And also and secondly, Telenor acquiring parts of DNA in Finland, how do you see that would play out, how do you prepare yourself on the B2B side, as they have alluded to being more active on that? And then I have also your ongoing closure of Sunab, how is that progressing and how is that impacting your sort of CapEx, your OpEx? And then finally on your rollout plans for the 700 megahertz spectrum that you acquired, what should we expect from that and what time frame?

[Johan Eric Dennelind, President & CEO]

We have time for 4 more questions, but let's take them quickly. I have nothing new really on the Bonnier Broadcasting deal. As I said, we are working hard to get that through. Discussing with the commission as and when required, so we'll keep you posted. I welcome Telenor to Finland, they're a good competitor. So that will be positive to see. And when it comes to Sunab, we are in discussions obviously, with our partner in Sunab to make sure that we get the best out of Sunab the last years as part of our agreement, and we'll update you further when and if we have something. And the 700 is something we really like in Sweden. Of course we got good spectrum bands for that to roll out in rural as and when required. And that's part of our overall improving the world-class network to be whatever is next -- universe class network, and 700 would be exceptionally important in our ambition to serve the Swedish households, companies and people on the move. Thank you very much for tuning in.

[Andreas Joelsson, Head of Investor Relations]

Thank you all for asking questions, and for coming here, and we'll meet you out there on the road and during the second quarter. And we'll see you all here in the summer when we report our Q2. Thank you.

[Johan Eric Dennelind, President & CEO]

Thank you.