Elisa Oyj Ord A

Good morning, everyone, and welcome to ELISA's first quarter 2025 interim report conference call and analyst meeting. I'm Vesa Sahivirta, head of investor relations, and here we have a very familiar team, CEO Topi Manner and CFO Jari Kinnonen, as well as some of my colleagues and audience. We start with the presentation, followed by Q&A. And in Q&A, we take first questions from the audience and then from the conference call lines. We are ready to start, so I give word to Topi. Please go ahead.

Thank you, Veisa. And good day, everybody here in the room, as well as those of you joining remotely. Welcome to ELISA's Q1 earnings call. Lately the Q&A part of these sessions has been taking quite a bit of time, so we have been shortening the presentations to give space for more Q&A this time around. And that is basically the reason of us taking the number of slides down a bit. So with that, let's get right down to business and look at the Q1 highlights. During the quarter, our revenue increased with 4%. That was very much driven by the international software services, especially SEDAPTA now being consolidated to the numbers, and also driven by the increase in mobile service revenue. The comparable EBITDA was up 4.6%, boosted by our continuous improvement measures in terms of efficiency. As they did, the mobile service revenue was up by 2.6%, and in the international software services, namely in ELISA Industriq, the growth amounted to 57%. The comparable organic growth for that part of the business was 2.1%. The churn on the market decreased to 18.6% from a little bit above 20% in Q4. The number of post-bait subscriptions decreased with some 17,000. Part of that was M2M and IoT subscriptions, roughly 6,000 of those. And then also majority of the decrease is coming from mobile broadband. subscriptions as customers move from mobile broadband to fiber and that move is visible in the market. That is not something that is only impacting ELISA and our numbers, that is very much visible for all players in the market as witnessed by the releases of various players on the market in Q4. With that, the fixed broadband subscription base increased with some 8,000, driven by the fiber connections. And then in our AGM a couple of weeks back, the dividend for the year was approved to euros 35 cents, and this indeed is the 11th consecutive year of increasing dividend in ELISA. So then, looking at the numbers a bit more closely, the revenue for the quarter landed at €556 million. I stated there was a 4% increase in that number. In addition to international software services and domestic digital services, mobile services, also roaming increased a bit. The revenue was weighed down by fixed services, especially copper PSTN revenue being on decrease a bit. EBITDA improved with 9 million euros and landed at 199 million euros altogether. The EBITDA margin, when we compared to the same quarter last year, improved with a couple of decimals to 35.8%. Mobile service revenue, as stated, 2.6%. The mobile service revenue, the increase was coming from the 5G upselling. That 5G upselling remains to be intact. Whenever we upgrade a customer from 4G to 5G, we get this average monthly billing increase of more than 3 euros. Going forward, we expect the mobile service revenue growth to increase. So when it comes to the full year, we expect mobile service revenue to increase mid-single digits. We have been doing a number of offering changes baking in digital security products to our mobile subscriptions such as mobile ID and DNS filter for consumers or denial of service attack protection for corporates and when we have been doing these offering changes for customers, we are creating new value for customers and we are pricing the new services accordingly, namely increasing the pricing. And that will be supportive of mobile service revenue going forward. And as stated, we have started that rollout already with the first cohort of customers. ARPU increased during the quarter with 5% and the GERN came down a bit to 18.6%. The majority of the competition we see in the 4G space. And then there's still some campaigning going on in that space. And as stated, we see some move from mobile broadband to fiber connections. So that will also be visible in the mobile journey number. This is the first quarter when we are reporting three segments, including the international software services, ELISA, industrial as a segment. This is done in accordance with our strategy to create better understanding for the three businesses and better transparency to the three businesses that we are having. If we are looking at consumer customers in Finland and in Estonia, the revenue increased with 1.9%. and EBITDA increased with 2.5%. EBITDA margin stayed on the same level as in the comparison quarter in Q1 last year at 41%. So it is a very profitable business that we are running with consumers. Related to corporate customers, the revenue increased with 0.3%. And that basically reflects the pretty challenging market that we have in Finland and Estonia for corporate services. If we look at the small companies and the micro companies, the number of bankruptcies in the market has been increasing a bit and that has been impacting our demand of services at the low end of the corporate customer base. And then when we go to the medium-sized companies, when we go to the large companies, these companies have been running cost efficiency measures, scrutinizing their service portfolios. So it has been a bit tough market, but on this market we have been faring well. So we are winning customers, we are winning business, we are winning market share, especially in the IT services and in the cyber security. So the growth of corporate is driven by mobile services, also by interconnection and roaming, including the domestic digital services where we have the IT services included. Fixed services, most notably PSTN, is weighing the revenue down. However, it is noteworthy that the corporate customer segment EBITDA increases with 4%, which is a good number. And that clearly tells the story that we have been streamlining the cost base in this segment. increasing the productivity of the business and with that improving the EBITDA quite notably. The EBITDA margin of this segment increased from 32% last year to 33% in this quarter. Then when we come to the international software services, as stated, the revenue picked up with 57% approximately driven by acquisitions, especially the consolidation of SEDAPTA. The comparable growth was 2%. We also saw quite a notable increase in recurring revenue. So the recurring revenue increased with 20% and basically tells the story that we are gradually taking steps toward a more SaaS based business model in the software business. The EBITDA for the quarter in ELISA industry was 2 million euros. So there was a 3 million euro improvement from last year. And this clearly underscores that for this year, we expect to be in positive territory in terms of EBITDA for the full year in this segment. As you would remember, we had our capital markets day at the beginning of March in London. There we communicated our new strategy, faster profitable growth. and communicated also our new mid-term targets. More than 4% growth in terms of revenue, more than 4% growth in terms of EBITDA. And now, especially when we zoom in to the EBITDA number, clearly you will see that during Q1 we are we are delivering according to these ambitions. So the implementation of the strategy has started out well and we are progressing in accordance with our plans, according to the path that we have been plotting for ourselves. The four spearheads of growth that we have are 5G and fiber, home-related digital services, corporate IT and cyber, and then the mentioned international software services, namely ELISA industry. Simplicity and productivity is a significant part of the strategy. The strategy is about faster, profitable growth, but it is enabled by simplification and productivity measures. And when you look at the Q1 numbers, the continuous improvement in terms of cost efficiency is visible in the numbers. And therefore, it is important to underline that this is indeed part of our plan as well. When we look at the 5G and fiber more closely, clearly the 5G upselling continues. When we look at the penetration of high speeds above 200 megabit speeds, that linear trend continues to be intact. And yet again, whenever we upgrade customers from 4G to 5G, we get the average monthly billing increase of more than 3 euros. As mentioned, we have now started to, we have made changes to our mobile product offering, embedding mobile ID and DNS filter for our customers. And that rollout has started with the first cohort of customers with very encouraging results. A notable development during the quarter was that as the first telco in the world, we introduced 5.5G for our customers. So as the first telco in the world introducing 5.5G for our customers in limited commercial deployment for consumers. This is yet again a showcase of us being a technology leader in this industry. We are also differentiating ourselves on the market by offering 5G standalone to our customers, what we call 5G plus to our customers. And now we start to have critical mass for the 5G customers. If we look at our total customer base of 5G customers, the 5G plus penetration out of all 5G customers is already above 20% and increasing quite fast because all of our new sales to customers is 5G plus. And an intriguing data point is that customers are clearly seeing the value in 5G plus They experience the faster speeds. They experience better quality network and more resilient network. They experience better energy consumption, which is visible to customers in the battery life of their phone. And with that, the customer satisfaction of 5G plus customers in comparison to non-standalone 5G customers is more than 10 points better measured with Net Promoter Score. So Net Promoter Score of 5G plus customers is 10 points better than the earlier generation of 5G customers. And this is an intriguing data point in terms of the customer value that we are creating. With that, we have now also decided to roll out 5G standalone, namely 5G+, to Estonia to have that differentiation for our customers also on the Estonian market. Quite many things are also happening on the fiber space. good steps being taken forward in that category of services. We, for example, introduced 10 giga fiber connections to our customers. And we also announced a regional collaboration with MPI Telecom, a joint venture with which we are accelerating the fiber belt in the country. We are expanding our footprint of the fiber market. And with that, we have now announced that we have started to built fiber on 200 regions, micro markets around the country. So a lot of activity in the fiber business as of now. Then moving into the digital and software services, in the home services, We have introduced a couple of new ELISA entertainment original series. One of them is Ivalo, the fourth season of the series. very well received by the customers. This is the blockbuster of our original series, as stated, the fourth season and the most viewed of our original series, both here in the home market as well as in international export market. Another new series, another new launch is a series called Sunset Grove. In the energy services, in energy solutions for homes, now we are talking about ELISA battery. namely Elisa Kotiakko. We have been increasing the footprint of that solution being available to customers, to Finnish houses, single dwelling units. And now we can offer that solution for half of the Finnish single dwelling units. This solution is creating quite a bit of traction on the market, very high customer interest. And for those early adopters who have been having the solution for a couple of months, we have very high net promoter scores, so very high customer satisfaction. So this is very encouraging for the subsequent steps of penetrating the market further. In corporate and IT, actually quite a bit of customer wins in the large segment, in the medium segment. Clearly, we are competitive with our IT service and cybersecurity solution. Here we have a couple of public references, but we have been winning also other customers whose name we cannot mention for confidentiality reasons. So good deal pipeline, good hit ratio for our IT services as well as cybersecurity services. Then when we come to the international software services and ELISA industry, the organic comparable growth for the quarter was 2%. There was some move of deals from Q1 to Q2, as would be relatively typical for this software business. Some of these deals were related to deliveries. So we have sold to customers already earlier, and now we're delivering the deals. And there was some delay in the deliveries, and therefore we can account for the revenue only in Q2. So move between quarters. Also some deals that were moved from Q1 to Q2 but already now in Q2 during the first 15 days we have been signing those deals and that's why we see this move between the quarters and the bottom line of this is that when we look at the full year and the full year revenue estimate, we see the growth continuing in double digit levels during the full year. And this is indeed backed up by strong order intake during Q1. So our Q1 order intake comparable growth on that one was 16%. Also some intriguing product development in this space. We launched a new AI powered virtual manager for production planning in ELISA industry. A virtual manager called Lumi that we will be offering to customers from here onwards. And then we come to the final page of the presentation, which is the outlook and guidance. Our outlook for the remainder of the year stays intact, so no changes in the guidance. With that, I will hand over to Jari.

All right. Thank you. And good morning from my side. Let's start from profit and loss and mainline lines. Good development in all earnings lines and development, although somewhat challenging environment, macro wise, and a lot of uncertainties in the marketplace. So 4% revenue growth or 21 million. And if we go in that 21 million interconnection and roaming and equipment sales both growing 1 million. In service revenues, international software services, 40 million increase acquisitions impacting there. Domestic digital services, 1 million growth. Corporate IT growing, small decline in consumer digital services. Fixed services, minus 2 million. Growth in consumer fixed services very much driven by fixed broadband growing. Fixed broadband subscription base growth was almost 8,000 in the quarter. Negative impact in traditional voice both in consumer and corporate customers. Mobile service revenue 6 million crore both consumer and corporate customers growing. Epida growth was higher than revenue at 4.6% service revenue growth contributing to that also the continuous productivity improvement and cost efficiency measures what we did also last year and continued in this quarter contributed to that. EBIT growth was 3.1% to 125.7 million and EBS growth 2.3% to 58 euro cents. Also in Estonia, positive development and revenue return to growth trend, 4% growth, mobile and fixed service revenue growing and that also contributes together with productivity improvement measures to EBITDA growth, which was 7%. We did some price increases in Estonia that had some impact in the subscription base. Postpaid was declining to 2,500 and prepaid 3,400. CAPEX was reported, CAPEX 72 million and guided CAPEX excluding licenses and IFRS 16 leases was 65 million. in line with the guidance 12% capex to sales main investments continue in 5G coverage increase in fixed fiber investments and IT investments. Comparable cash flow was 82 million. Slight decrease, 4% compared to a year ago. Positive impact from higher EBITDA, as well as positive net working capital change. Also paid taxes were were lower negative impact through higher capex and higher paid interest. And the both of these had some timing impacts. Comparison year capex was somewhat lower level than normally and The same with interest expenses or in paid interest, the comparison year had some loan interest, the interest for sorted and normal typical one year time period. So, these impacts are not repeating going forward. EBITDA operating cash flow conversion continued at high level 67%. Also capital structure and balance sheet position continues at solid solid way and in line with our medium term targets net debt to EBITDA 1.8 times and equity ratio 1.6%. The same with return ratios, return on equity 30.3% and return on investments 18.2%. 8%. In terms of interest-pairing debt, the average interest currently is 2.4%. Then about the dividend, two weeks ago AGM decision was 2.2 euros 30 35 cents per share dividend to payments. First payment was done last week, one euro 18 cents and the second payment will happen in 24th of October. And this represents dividend yield of 5.6% against the share price end of Last year growth 4.4% and 11 consecutive growth year. Underlying a strong commitment to competitive shareholder remuneration. And now Vesa will continue, please.

Thank you, Jari. And now we move on to Q&A part, and then the first question comes from here. Felix, please.

Hi, Felix Hendriksson, Nordea. Thanks for taking my questions. I have three. First of all, in ISS, organic growth of 2%, pretty solid order intake as you highlighted. But have you seen any sort of hesitancy from your industrial customer space in light of the heightened macro and geopolitical uncertainty against the tariffs and all that stuff?

so we cannot of course rule out that those wouldn't come later but as of now we haven't haven't seen those so so for example the moves from q1 to q2 they were not macro economy related they were not tariff related as stated they were sort of earlier sales that we were already delivering and there were delays in that. So we will be delivering those now during Q2 and we will be accounting for that revenue during Q2. And then some deals simply moved from Q1 to Q2 and I stated some of them we have already gotten during the first half of April.

Got it. And then you've now mentioned that you've seen some shift from consumer shifting from mobile broadband to fiber. So just curious on how we should think about your fixed service revenue. Should we expect that line item to return to growth this year against the backdrop of growth in fiber, but then, you know, the legacy pressures that you have in that area?

What is worthwhile to note that when a customer moves from mobile broadband to fiber-based internet connection in the SDU segment, then revenue-wise that trade is actually positive to us. You know, a bit positive to us. So that will need to be taken into consideration. Then when it comes to the fixed business more broadly, I stated that it's being weighed down by the PSTN and that is certainly impacting the measures. But we are building fibre, customers are taking more fibre, so over the medium term that will be supportive of the fibre revenue and the fixed business revenue.

Yeah, just continue. Of course, the fixed services overall includes, especially in the corporate side, larger service portfolio, so different types of services besides traditional voice or fixed broadband. Corporate networks is one thing, which is included there and currently the macroeconomy situation has impacted in this service, as Topi mentioned earlier, so number of bankruptcies in the small businesses, for example, has increased and some impact in that service is visible there. And once this situation improves, of course, the dilutive impact is becoming less.

Right. And then as a final sort of follow up to that, how have you seen the competitive intensity in the fibre market lately? I mean, we've seen some of your private equity backed competitors raise new funding lately. So just curious to see how you've seen the developments there, any movement one way or the other.

It is an active marketplace. As stated, quite a fragmented market in Finland. Altogether some 140 players out there in the market. Some of them are tiny municipality-based utilities effectively. Then there would be more regional companies, more private equity-backed players, and then us. And in terms of fiber availability, we have the most comprehensive network in the country. So we are market leader in that respect. And we are building more fiber than ever. And with the joint venture with MBI Telecom, we are increasing our footprint of the market. So clearly, we are one of the players that are making advances on the market.

Thanks. That's all from my side.

Yes, it's Kimmo from OP Markets. I guess the regular question on the competition. So as you mentioned, the churn came down from Q4 levels, but it's still quite elevated at 18.6. Do you see any roadmap to go back to like 15% levels or is the competition still this kind of heated that we should expect the churn to be like near 20% going forward also?

The competition situation on the market has been quite tight and now of course during the Q1 we saw a step toward right direction in terms of churn. And that is of course a good direction of travel in terms of churn. how it will play out going forward remains to be seen. It's a competitive marketplace out there. The competition is very much related to 4G and the campaigning. And then when you dive into the churn number, you will need to remember that this phenomenon of mobile broadband being replaced with fiber connections is relatively new in the market. It impacts all players, the whole market, not only ELISA, but it's visible in the mobile churn numbers of all players.

Okay, thank you.

Good afternoon, it's Matti Rikkonen Carnegie. A couple of questions. You had this slowing mobile service revenue growth now, which was clearly lower than what it has been in the past years. And you said that you expected to go back to the mid single digit levels. What are the kind of tasks that you need to achieve in order to get there? And was there something You explained that there was some like this trend shift from mobile broadband to fiber, but if that is still going to continue, and you said just that it's in early stages, what are the measures that you need to do in order to get back to the mid single digit growth in MSR?

Yes, we do expect to be in mid single digits in terms of mobile service revenue growth when we look at the full year. And that of course would be meaning that the MSR trend would turn going forward, turn upwards. And the single biggest lever for the MSR growth going forward will still be the 5G upsells. Continued 5G upsells. We have more than half of the opportunity still to be captured. And now we are writing new chapters to the 5G upsell story with 5G+, and then 5.5G. So that is a key part of the story. Then the mobile value-added services play a big role in terms of MSR growth going forward. As stated, customers have concerns around their digital security on the overall. They are willing to pay for those services. We have now already changed our offering to consumers, baking in mobile ID, baking in DNS filter to our mobile subscriptions. And with that, creating effectively a new package, new offering and pricing that in accordance with the value that we are creating for customers, increasing the price a bit. And this will be supportive of our mobile service revenue when we when we roll that out to new cohorts of customers. We have already started to do so and the results have been very encouraging. Then on corporate space we are doing similar things in terms of changing offering and we also see some scope of further price increases there.

All right, thank you. Then you have had many years without restructuring costs but now last year and this year you have had more than usual and you still want to kind of improve your efficiency and it seems that it triggers these one-off costs. Do you think that the similar level of one-off cost that you booked in Q1 would be representative for the full year? And if not, would you think that you could give an indication of where the one-off cost would be for 2025, for instance?

Yeah. One-off costs, they relate to personal reductions. So last year there was in Q1 and Q4 one of costs and 250 reduction, a bit more. And now also in the first quarter we continued with productivity improvement measures so we are doing constantly productivity improvement measures and some point of time there is also personal reductions and going forward this productivity improvement measures will be there and will continue and can be that also in some some point of time there will be reductions happening, but it is so that we are doing it very much with the focus to improve productivity rather than having a target to reduce employees. So it's a bit different approach compared to some other companies.

All right, thank you. Then finally, you have earlier announced the mobile data volume, but you didn't announce it this time. So should we assume that the negative trend in the data volume has continued?

No, no, you should not assume that.

All right. Thank you. That's all from me.

Any further questions from audience? Not at this point of time. So we'll ask the first question from conference call lines, please.

If you wish to ask a question, please dial 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial 6 on your telephone keypad. The next question comes from Andrew Lee from Goldman Sachs. Please go ahead.

Hi, everyone. Good afternoon. I had three questions, which are hopefully fairly quick. First one was just on the competition in the Finnish mobile market. An MVNO entrant has been registered in Finland this year. Just wondered if you have any update on or updated thoughts on the likely impact or the progress of that MVNO launch. Second question, just on ISS. Just wondered on your visibility now for full year 25, given I think you normally have high visibility on a six to nine month basis for this business, and just confirming that this growth, the double digit growth, and what you said at the CMD for the broader group, 4% EBITDA growth guide, those are organic numbers that you're talking about. And then finally, just on restructuring, just following up from the question preceding this one, could you just comment on the upside to margin and EBITDA growth, i.e., does your midterm EBITDA growth guide of 4% include those restructuring costs in it? Just clarifying on that one too. Thank you.

Yeah. If you, Jari, take the last one, I can at least start with the first two ones. So related to your question, Andrew, related to MVNO, do we have any updates? No, not really any further updates on that one. I mean, generally speaking, Finnish market is not... an easy one for an MVNO to enter because of the unlimited data offering that we have in the market. So it has been tried before. and not that successfully. So that is probably the sort of general perspective on that one. And then related to your second question that was about ISS and the visibility and the organic growth being embedded into our mid-term targets. So yes, the mid-term targets revenue growth of 4% and EBITDA growth of more than 4%, they are organic targets. And when we look at the Q1 results, when we zoom in to EBITDA, the organic EBITDA growth was above 4%, clearly. So in that sense, we have started to we have started to implement our strategy and we are progressing in accordance with our plans. And then when it comes to ISS, we do have visibility to the order book. The sales cycle is typically six to nine months, to your point. The order intake during Q1 was a good one, 16% increase in order intake. And that of course is an important data point. backing our view that during the year we will be seeing double-digit organic growth in the ELISA industrial business. So that is something that we are indeed going for. And we also expect that ISS will be EBITDA-wise profitable for the full calendar year of 2025.

I continue to the last one. So, medium-term targets, EPIDA growth more than 4%. It's comparable EPIDA. So, excluding one of charges. Okay. Thank you both.

The next question comes from Fredrik Lithell from Handelsbanken. Please go ahead.

Thank you. Thank you for taking my questions as well. I'm curious to hear if you could describe a little bit more on the mobile ID and the NF filter, how you sort of price that in. Is that sort of more for more thinking? So you add it and you increase the prices or is it some type of optionality in that? And secondly, a little bit discussion maybe on the potential for further 5G upselling if you think you will be able to keep the 3 euro positive effects or if it's a more difficult upsell that you're standing in front of the sort of second half of it all. Thank you.

Okay, so related to the offering changes that we are making with the mobile ID and the DNS filter, embedding them to mobile subscription. I guess it would be the more for more thinking that you are saying. So we are embedding those into the subscriptions. Customers are getting more services, more value, and with that we are increasing the price a bit. And as stated, this rollout of the new offering has started. when we sort of sub-segment our customer base, we have different kinds of mobile subscriptions. Some of them would be continuous, some of them would be fixed term and therefore just based on the terms and conditions, there would be varying degrees of possibility to roll out the offering. to customers. But we have started with the first cohort. Things are moving forward in terms of the rollout and the reception from the customers has been positive. And then the second question that was that, you know, will the second half of 5G upsells be somehow different than the first half, if I understood it correctly? So we don't see any significant difference in that sense. So clearly, the 5G up sales continues as a trend. And the value that we are creating for customers is very visible in our customer satisfaction numbers. So if we compare non-standalone 5G customers versus 4G customers, the non-standalone 5G customers are more satisfied than the 4G customers. There's a marked difference. And the 5G plus customers, namely the 5G standalone customers, are more satisfied, 10 points more satisfied than the 5G non-standalone customers. So clearly we are generating value for customers in terms of this offering. And that generation of customer value is in the heart of the up sales. And therefore these MPS data points are so important for the continued upsell story. And the introduction of new technologies with 5G plus and 5.5G are equally important for the continued 5G upsell story.

Can I have just a follow up on that? It sounds good and promising. How do you stand to your competition in this sense? I guess the other ones are trying to follow you a little bit, but is the distance quite steep for them to catch up on or?

We are differentiating ourselves with 5G offering from our competitors. So we are the one who is offering 5G+. And we are clearly the player who has the critical mass in Europe in terms of 5G+, in our customer base. And therefore, we are probably the first one who can show these kinds of data points to the market. And as stated with the 5.5G, we were the first one in the world with that deployment.

Okay. Thank you very much.

The next question comes from Terrence Suey from Morgan Stanley. Please go ahead.

Thank you very much. I've got several questions, please. The first one being a financial question around the EPS growth in Q1. which was less than the EBITDA growth and appears to be dragged by depreciation and financial expenses being a bit higher this quarter. At the Capital Markets Day, I thought these were meant to be tailwinds going forward. So maybe you can just make a few comments around why they were a bit higher in Q1 versus this time last year. The second question I had was around the customer experience on 5G+. So you mentioned improved battery life. improve latency just wondered if you can quantify that you know so how much better was the battery life how much lower is the latency that would be helpful and then if I can just sneak in a very quick final question on the follow-up on the migration from mobile broadband to fiber can you say a few words around retention so those customers that are migrating away from your mobile broadband How many of those are going to your competitors versus being retained by your fiber services? Thank you very much.

If you start with first. I start with the EPS. So indeed, as we said in the capital markets day, there will be in relative terms positive impact to cash flow regarding capex. and future depreciation as we changed or went back to 12% capex to sales for this year from 13% last year. So that will be more visible in year-on-year comparison in coming quarters. And depreciations, so that's for the depreciation. For the financial expenses, it's a bit similar thing that was regarding cash flow, that there is some timing timing impact now in this quarter that is not repeating similarly on coming quarters and in comparison year there was refinancing which make the difference in year-on-year comparison in interest expenses also in profit and loss and going forward it's more sort of stable and the differences in coming quarters year-on-year basis is smaller.

And then Terence related to your second question related to 5G+, the latency, lower latency and the battery life and that data. We are not disclosing that data as of now. But clearly, the difference is big enough for customers to experience it. So 10-point difference in terms of Net Promoter Score is a quite significant difference. And therefore, it all boils down to the customer experience, the perceived value by customers. And clearly, we are generating that with 5G Plus. And then your third question. related to mobile broadband and the move to fiber. So the majority of the mobile broadband customers who sort of terminate the subscription are going into fiber. And when we look at that transfer, what needs to be remembered is that the revenue for subscription in fiber is a tad higher than for mobile broadband. And then the fiber connection per se is, of course, very, very sticky business. So the journey in fiber is clearly lower than in mobile broadband on the on the overall. So that's where we are. This is a phenomenon for the entire market. And that needs to be kept in mind when we talk about this.

Thank you, Topi. Thank you, Jari. Have a good Easter.

Thank you. Likewise.

The next question comes from Andre Kabatsek from UBS. Please go ahead.

Hi, good morning, everyone. Thank you for the presentation. I had two questions, please, and I'll ask them one by one. So the first question just on churn levels. Obviously, we've seen them increase over the past year at least, but just taking a step back, it seems like we've had an extraordinarily low period of churn over 2022 and 2023 as a product of just the commercial looks that everyone in the country seems to be on in terms of just continuous price rises of very similar nature. So is this basically just going back to, in your view, levels that we saw prior to 2022 when it comes to churn? And if so, you know, I guess you touched upon this Sophie a bit, but is this a phenomenon that you think the whole market is seeing? and therefore maybe very little impact on, for example, subscriber acquisition or retention costs? Or is this something that you seem to be doing a bit more poorly in the market today and is something, therefore, that could limit the growth and profitability going forward? That's the first question, please.

So if I start on our performance on the market. So when we look at our performance on the market, I stated we are in mobile subscriptions, we are differentiating with our product with the 5G plus especially. When we look at our customer satisfaction measured by Net Promoter Score for consumers and corporates alike, we were at all time high levels at the end of the year. So our customer service is working. Customers are happy with it. Our brand stands strong on the market. So it is very much related to campaigning, the churn number. And to your point, I mean, if we take the long history of churn on the Finnish market, it has been fluctuating between say 15% at the low end to a bit more than 20% at the high end. I think that the highest number on quarterly churn during the past 10 years is something like 22%. So we are within that bracket. We are within that bracket. And going forward, it remains to be seen how competition will develop. But clearly, in Q1, we took a step toward the right direction in terms of the churn being lowered.

And then if I just Maybe ask a different way. So, the churn levels that you're seeing today, they obviously are accounted for in the guidance in terms of EBITDA and you don't expect any kind of material impact on your profitability from, say, higher churn today than we saw over 2022 and 2023?

Exactly. I mean, our guidance for the full year stays intact. When it comes to mobile service revenue, we reiterate our soft guidance that we expect to see mid-single digit MSR growth for the full year. We have these activities backing that number that will be supporting that number going forward and also our mid-term targets stay intact and as stated in terms of EBITDA we are delivering in terms of those mid-term targets during Q1.

Thank you, Tupi, and a follow-up on what you mentioned, just the mobile service revenue growth. You reported 2.6% this quarter. Obviously, that is a bit of a step down from the underlying 4%-ish last year, but the 2.6% is now, if I am not mistaken, entirely just driven by upsell. There is basically no pricing impact whatsoever this quarter. so um if you can confirm that and if that is true then uh you know the 2.6 number does seem to be actually a bit better as an underlying kind of upsell uh driver than in the past so again if that is true if you can maybe break down a bit obviously we know the the kind of premium that people pay for the 4g to 5g uh upsell but there seems to be already some kind of migration to higher tariffs on the 5G side. Is that the correct way to think about this?

Yeah, I would say broadly yes. So for all practical purposes, the Q1 MSR growth was driven by the 5G upsells. There was a bit of tail impact from earlier price changes, but for all practical purposes, it was very much driven by the upsells during Q1.

MSR, you just want to follow up? So obviously there's upsell from 4G to 5G, but are you already seeing an upsell within the 5G buckets?

Yes, yes. So generally we are seeing, I mean, not only within the 5G bucket, but also within the 4G bucket, we see upsells from lower speeds to higher speeds. And that is taking place.

Awesome. Thank you very much.

Thank you.

The next question comes from Ajay Soni from JP Morgan. Please go ahead.

Hi there. Thanks for taking my question. I've just got a couple. The first is around your mobile service revenues. So can you remind us the ARPU upside you get from selling the mobile ID and DNS filter? and what is the penetration of these amongst your customer base from the beginning of the year versus now just to get an idea of what the uptake is um second question is around the iss you said the recurring revenue increased by 20 year-over-year and i want to know what portion of the iss revenue do you consider recurring thank you

So when it comes to the offering changes related to mobile ID and DNS filter, now I'm sort of averaging things out a bit. But we are talking about something like two euros per subscription. So that's... That's the first one. And then could you please remind me of your second point?

Regarding revenue. I can take it. So regarding revenue includes licenses in SaaS form and services relating to licenses as well as maintenance fees.

Just on both of those, for the mobile ID, could you give us an idea of what the penetration was at the beginning of the year versus now? And then simply on the recurring revenue, what portion of the ISS revenue do you consider recurring? Thank you.

On the first one, I mean, you know, mobile... ID penetration at the start of the year is something that we are basically not disclosing. So, you will need to observe the revenue development on that one.

Regarding revenue series, approximately 60%.

Great, thank you very much.

The next question comes from Ulrich Rath from Bernstein. Please go ahead.

Thanks very much. I have more sort of cleanup questions, I suppose. First one would be on the fixed line customer additions you highlighted. The strength is driven by fiber. Could you maybe add a bit of color in what respect, if any, The result in the first quarter was unusual because of particular campaigning or particular acceleration effects. Maybe that would be temporary on the shift from mobile broadband. So what I'm trying to get at here is, do we expect significantly accelerating fixed line intake in 2025, or was the first quarter a bit of an outlier because of the timing of campaigns and other things? And in this respect also, could you just clarify one comment you made in the prepared remarks, which was these 200 micro markets. What's the size of a micro market? What defines a micro market for you? My second question would be on the ISS comments that you made about the late deliveries moving into the second quarter and also some projects delayed into the second quarter. Could you quantify that in very rough terms? Did you miss a percentage point or two percentage points roughly in the first quarter because of this, or was it a much larger or indeed a smaller effect? And also within ISS, I was interested whether you would be really following on Andrew's question. Would you say your confidence in that positive EBITDA contribution has increased since the capital markets day? I think at the capital markets day you used the qualifier minor EBITDA. Would you drop that qualifier today because you have more visibility and you're more confident on that? Or would you still say it's going to be minor? Thank you so much.

Good, very specific questions. When it comes to the ISS EBITDA, our soft guidance is and continues to be that we expect to see EBITDA on positive territory for the full year of 2025. And then in terms of the move from Q1 to Q2, we are not quantifying that. But let's say that it is noteworthy enough for us to give a verbal comment about it. So that's probably what we have to say about that part of your question. Then moving to your first point about the mobile broadband and the move to fiber. What you will need to remember in terms of mobile broadband is that there's some seasonality in that one. In our market, typically, During the summer period, customers are taking more mobile broadband because they are more on the move. They also spend quite a bit of time at their summer houses where they don't have fiber. So they need the mobile broadband more. So there's this kind of seasonality pattern in the mobile broadband. So that is something that is... good to know when you do your modeling.

Very helpful. And on these micro markets, what makes a micro market?

Yeah, I think that we are, generally speaking, I mean, we are not specifying that or we are not disclosing these sort of exact criteria of that one. But we are talking about, you know, certain areas of cities. We are talking about, you know, smaller towns and so forth.

Thank you very much.

Thank you.

The next question comes from Sami Sakamis from Danske Bank. Please go ahead.

Hi, I'd like to still revisit two topics that have been discussed. The first one is the MSR growth outlook for this year. Are you confident that the planned portfolio changes and price increases on the back of security features, is that going to be enough to bring MSR growth back to 46% range? Or are you planning additional measures in the second half of the year? And then second question would be on the fixed service revenue outlook. I understand that there are multiple factors playing in, but if we just focus on copper and fiber trends, are you already at the point where copper revenues are offsetting for declining in copper revenues?

Okay. Jari, if you take the second one, I can take the first. So, in terms of the mobile service revenue, yes, we are reiterating the soft guidance of mid-single-digit revenue growth for MSR during the course of this year. We have made these offering changes that we have discussed. We have started the rollout and the results are encouraging. Then of course we are also managing our business on ongoing basis. So from one month to another, from one quarter to another. And that of course is embedded in our soft guidance. So we are ready to take these measures as needed during the course of the year.

Yeah, the fibre and copper revenues. So, there has been long-term declining trend in copper revenues, and it is approaching end of life cycle. And at the same time, now we've been investing in the fibre, There's more customer demand also in fiber and we see growth in fiber connection fixed broadband subscriptions continuing and that impacting to obviously to fixed service revenue and currently these net net offsetting the copper decline.

So I guess you would anticipate growing fixed revenues going into next year as the weight of fiber revenues continues to grow?

We are planning to extend fiber and connect more customers and increase the revenue, and like discussed earlier, the question regarding fixed services, at the same time it includes also, especially in the corporate side, many other services, but we see that medium-term fixed services are developing positively.

Okay, thanks.

Thank you.

The next question comes from C.I. He from Citi. Please go ahead.

Thank you for the presentation. I just have one question and just one clarification, please. And the first question is on the event. I understand that you put out this $200 million budget back in 2023. And if you could update us how much has been spent and maybe some information on the budget that you expect to spend with the JV MPY. And if you could, what would be the ultimate coverage target for you on fiber in Finland? And the question is a clarification. I just want to check that the rollout of the value-added services, they are only applied to your front book rather than all of your back book as well. Thank you.

If I start with this 200 million, so we communicated that two years ago, summer 2023, that as we saw an increase in customer demand for fibre, investing in coming years, and we said 200 million in coming years, so it means several years without specifying exactly how many years. And now this JV that we announced a couple of weeks ago, that is part of that that investment plan, so we are now sort of accelerating the amount to a bit shorter period of time with this structure.

Yeah, related to the offering changes that we are doing on the mobile subscription side. It will partially include back book changes to customers, but that is something that you will need to understand that is actually quite a granular approach, because the terms and conditions of customers are allowing different types of changes to the offering. And then, therefore, we will be moving forward in terms of the rollout of the offering in batches. But it will not only be front book, it will be including a subset of back book changes.

Thank you very much.

The next question comes from Adam Fox-Rumley from HSBC. Please go ahead.

Thanks for having me on. Just had a bit of a follow-up to CE's question, please, on the economics of the joint venture you announced a few weeks ago, NPY Telecom. I don't think you're going to tell us how much you're investing explicitly, but can you talk to us about how we're going to see that through your financial statements? Is it going to be in your capex line? Does it end up being a contribution to a JV? And then operationally, will the customers be ELISA customers? And then do you have options to reconsolidate the joint venture in time? Hopefully some fairly standard questions about how these things work. Thanks very much.

All right, so this JVV is visible in... It's an associated company, so we are not fully consolidating it. The results will be in share of associated company results. So then the revenues and the customer... customer side it is so that customers are ELISA customers and we are showing the revenues like we are showing today and regarding then the connection to JV there is lease lease agreement, which is IFRS 16 lease agreement and visible in IFRS 16 leases. And IFRS 16 leases are going through profit and loss in depreciation and financial expenses line. And in the balance sheet, we have equity share of the JV in the associated company, in the assets. And there's no impact into CAPEX.

And do you have an option to consolidate the JV in time? And I suppose another related question is, is this infrastructure like vehicle where you would expect, you know, significant leverage to sit within the InfraCo to help with the financing?

Yes, there are certain arrangements and that enable us to consolidate at certain point of time.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Okay, thank you for the questions. Just to check if there are any questions from the audience. No, there seems to be no questions. So thank you for participating and we wish you a nice Eastern break.

Thank you very much. Thank you.