Elisa Oyj (ELISA) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Elisa's Virtual Capital Markets Day 2021. My name is Vesa Sahivirta, and I'm the Head of Investor Relations. This event is a live webcast, and today, we have 5 presentations. Recording of the webcast will be available after the event. Let's take a look on today's agenda. We start with the group presentation followed by consumer customers and corporate customers' presentations. Then we will have a 15-minute break before continuing with the international digital services and finance. After each presentation, we have approximately 10 minutes for Q&A. You can send your questions to the speaker, using the chat feature on the bottom of the page of the webcast platform. Please state your name and your question. The speakers will answer to as many questions as possible within the schedule. After the presentation, we will have a joint Q&A session with all speakers. At this point, we will open teleconference lines for questions. This part is also webcasted, but if you wish to ask questions, please join also at telco at this time. And finally, we have closing remarks from CEO and the estimated closing of the event is 3:15 p.m. Helsinki Time. But now let me welcome our first speaker, CEO, Veli-Matti Mattila. Veli-Matti?

Good morning, and welcome to Elisa's Capital Markets Day on my behalf as well. I'm very pleased to see you all virtually joining our event and we highly appreciate that you decided to spend your valuable time with us today. Even if we need to organize this time the Capital Markets Day, virtually, we are doing our everything to enable working discussions and dialogue. Elisa has Capital Markets Day approximately every second year, previous CMD was in November 2018, and now is the time for the next one. The purpose and objective is to provide you with a product overview of the development, opportunities and objectives of Elisa's strategy and also inside of the capabilities with which we believe we can successfully execute our strategy. We share information with you as openly as we can. But as many of you already know us, we have some limits to our disclosures. But I'm sure that the set of information we share today will help you to understand Elisa and our way forward better. We will follow the agenda like Vesa just explained, and I really welcome you to be active with your questions and comments. Welcome to Elisa's Capital Markets Day 2021. Let's have a productive event. I will start my presentation with our performance update since 2018. Then I will elaborate the markets we operate in; and thirdly, take a look seriously on our strategy, and conclude -- I will conclude with the medium-term target and CEO priorities. Let's get started with the performance review. Our unique strategy aims at creating sustainable value to all stakeholders. We believe that when we excel in providing great customer experience and positive contribution to society by engaging well our employees, we also generate unique financial results to shareholders in sustainable way. Net Promoter Score is our main metric for customer experience. We have had a positive trend with our NPS development, and our NPS is higher than competitors. This has been achieved by focusing on things that matter most to the customers. For example, reliability and quality of our networks and great customer service and care. However, we have tremendous potential for improvement. We have also had solid development of engaging our employees and Elisa belongs to the top 20% of organizations internationally with this metric. This has been achieved, for instance, by our coaching leadership practices and Elisa's culture of trust. We have positive contribution to the society in many ways. For example, our focus on CO2 emission reductions for more than 10 years has created results. And it is a result of persistent work, for example, with energy efficiency and other solutions. And Elisa was the first Nordic telecom operator to go carbon neutral 2020. And also to shareholders, our performance has been competitive, not only with the revenue growth or EBITDA earnings per share or dividend growth, but also with total shareholder return. 4 out of 5 of our medium-term targets are on track. EBITA development has been good even if the EPS positive digital services have somewhat diluted the development. Last year, EBITDA was 36.2%. This was all I intended to tell you about the performance. Let's take now a look on the market overview. In our domestic markets in Finland and Estonia, those markets are digitally advanced and attractive. According to EU Commission study, Finland is the most advanced digital society, having strength, especially in and with our unlimited mobile data business model, which has led to the situation that the fins are using 5x more mobile data than the average European. 93% of our plans are unlimited when the OECD average is 13%, 1-3. Business utilization and for example, proportion of female ICT specialists or total female employees are also strengths of Finland. And another important reason for being digitally advanced is our regulator, which, for example, is progressive in allocation of frequencies as early as possible. Estonia being at #7 in this commission study has strength, for example, being #1 in Europe in digital public services. Also, Finland and Estonia, have seen smaller than average COVID-19 impact. Apart from companies in industries like travel and hospitality, most of them are going forward, actively preparing to the post COVID time and developing future opportunities, which, of course, creates business opportunities for Elisa. The key risk is post cyclical nature of the Finnish macro economy. And the main uncertainty lies in how the world economy and European economy will develop when the COVID-related stimulus and recovery measures come to an end. Domestically, we expect 2% growth in the telecom market, mobile services and network security services, for example, being the growth drivers. Entertaining video market is anticipated to grow 6% where streaming services are drive growth when consumer spending is shifting from pay-TV to streaming services. And IT market, we assume to grow by 5%. Cloudification and Automation Solutions generating growth. And in markets for our international digital services, the growth rate will be 5% to 10%. And there are solid growth drivers in each of these 3 domains. For the first, for telecom software market, it grows because automation solutions are needed more than ever by telcos with their OpEx and CapEx pressures. Also, 5G deployment and evolution of network architectures are generating growth. Growth drivers for industrial software market is the need for mass production with connected supply as well as automation and efficiency demand, but also sustainability requirement, for example, in terms of better place reduction. And in visual communications market, vastly increased video conferencing will evolve with a post-COVID hybrid working when cloud-based video conferencing will then be combined with office video conferencing equipment, creating need for interoperability and service monitoring that Videra can very well provide. This was my review of the markets we operate in. And next, we will elaborate on how we will continue to generate sustainable profit and growth. Now we really focus on some of the core takeaways of my presentation. Our mission at Elisa is a sustainable future through digitalization. We have unique unchanged strategy that offers considerable opportunities to execute our mission. Our mission provides Elisa Oyj with a strong purpose, which inspires to excellent performance and greater wellbeing. Executing our strategy has provided competitive results to all stakeholders. However, we have attractive opportunities in each of these 3 strategic focus areas going forward. In the next couple of slides, I will open our thinking how sustainability will drive shareholder return. And then I will elaborate on our thinking of appealing potential of each of the 3 strategic focus areas. We believe that running business in a sustainable way and innovating solutions for a sustainable future will also create best long-term value for our shareholders. And this is not something that we at Elisa have invented in the past 2, 3 years when ESG has come more of a hot topic also in the financial market. We have had these targets to contribute positively to society more than 10 years. Running business in a sustainable way is creating value through top line growth, employee productivity, risk mitigation, cost reduction and investment optimization. For example, being the first Nordic telecom operator to go carbon neutral and having sustainability enhancing automation and smart factoring solutions differentiates us from competition and thus, drive revenue growth. Also, audit conducted in Elisa supply chain by ourselves, and audits, together with joint audit operations will drive improvements in our supply chain and reduce risks for Elisa. As one of the leader in sustainable development, in addition to the different ESG reporting that we do, we have also looked at which of the 17 United Nations Sustainable Development Goals, we can have impact to and to which to focus on. For example, U.N. SDG 13 Climate Action, both supporting our customers with their CO2 emission reduction and curbing our own emissions is contributing to the SDG 13. Also measures building digital trust through cybersecurity, promotes U.N. SDG 16, ensuring secure access information. We have also received many recognition on our sustainable -- sustainability development. For example, AA rating in MSCI and Leadership Category in CDP rating. Now let's continue with our first strategic focus area, increase mobile and fixed service revenues. The demand for faster, more reliable and high-quality connections is increasing. Video conferencing has dramatically increased with COVID-driven remote working and extensive virtual working is here to stay. Cloudification of applications continues, also streaming services and online gaming are more popular than ever. And while customers use these services, their requirements for service experience are growing. Human impatience is the killer application. Location independence and mobility requirements are also increasing due to working remotely and on the go. Handsets are more and more used for entertainment and working and mobility brings flexibility when the hybrid working starts. In our previous Capital Markets Day, we had an assumption that human impatience will be the first driver of 5G adoption. We are well on the way to prove that our assumption is valid. We can see increasing interest in 5G services, and the number of 5G customers is growing. Customers are getting value of improved experience that 5G can provide. And Net Promoter Score measurement, they also give evidence to support our assumption. Customers perceived to have better experience with 5G services than non-5G services, both in consumer and corporate business. Also, Elisa's 5G experience is perceived to be better than competition. And further proof to our assumption is customers' willingness to pay over EUR 3 more for 5G services than non-5G services. We believe that the impact of 5G to Elisa's mobile service revenue growth this year, 2021, will be more than 1 percentage point. 5G momentum has really started. Of course, we are just in the beginning of commercial success of 5G. Later on, for example, network slicing will bring guaranteed speeds and differentiation to enable different kind of new values to customers. Also, IoT tracking and remote monitoring will create opportunities. And in corporate customer segment, each industry will have thousands of use cases in order to take usage of the performance improvements that 5G will bring. Upgrading to 5G increasing mobile service revenue as we said. But upselling continues also below 5G speed peers as our data here shows at different speed peers, customers are moving upwards i.e. upselling continues with the majority of our customer base. Upselling below 5G speed continues to bring benefit. Of course, and obviously, part of that will be eaten by price competition and promotion. Fixed broadband bases also rapidly transform into 1 gigabit cable fiber and cable subscriptions and slower XDSL subscriptions are decreasing rapidly. In rental copper areas, we are moving customers to fast mobile to improve cost efficiency and customer satisfaction. Fixed service revenues will have negatively -- negative impact from the XDSL subscription declines and decrease termination of rental copper and decreasing PSTN base. But also, fixed service revenues will have growth potential, for instance, with speed upgrades in SDU and MDU fixed broadband market as well as the demand for software-defined networks and cybersecurity solutions are increasing. Let's now move on to digital service businesses, the second focus area of our strategy. Digital services have had more significant growth in our strategy than by other operators. And the role is increasing when we accelerate the growth of digital services. Elisa Viihde IPTV, the most popular entertaining video service in Finland, has had a growth of 3%, almost EUR 150 million. Watching is focusing on on-demand content where our unique cloud recording features also complement the service. Number of households having more than 1 streaming service are -- is increasing. An exclusive content is an important differentiator. We have released more than 20 original content series over the past several years. And our partnership with Nordic Entertainment Group increases the attractiveness and competitiveness of Elisa Viihde Viaplay service. In IT, we have seen 6% growth revenues being last year, EUR 115 million. We have unique integrated IT+C offering, which is increasingly appreciated by the customers. Intelligent Customer Experience Solutions are the fastest-growing component in our portfolio. And we are, of course, utilizing the experience and capabilities of our network automation solutions in our IT business as well. We are accelerating the growth also with significant global opportunities. With the organic and inorganic growth, the run rate of our international digital service is EUR 81 million, and we are determined with our international growth ambition. We focus on 3 domains, which have been selected through our strategic learning with internal start-ups, which we have had over the years. Domains are also very much based on over a decade experience of world-class automation that we've developed. So these businesses stem very much from the core capabilities of Elisa, which we continue to develop for the competitiveness of our telecom business. And in the last 2 years, we have also increased the growth with acquisitions and through partnerships. With acquired companies, we have clear industrial logic and also Elisa's proven practices for developing excellence is something we can utilize to further develop the companies. But of course, we are focusing on buying great companies, and we are very keen to obtaining the best practices these companies have to obtain them to Elisa. Now I want to tell you about our third strategic focus area. There are many things that makes Elisa one of a kind. But what makes us really different is the culture and the way to continuously improve and create productivity. We have been developing a unique way to improve quality and efficiency Elisa Way, eElisa, Excellent Elisa as we call it, over a decade. And actually, it is core of Elisa's culture. Objectives to contribute all -- we have objectives to contribute all stakeholders, including society, and that is in built to Elisa Way. Continuous improvement and learning is key in eElisa. We believe that the desire and ability to learn is the only lasting competitive advantage we can have. And examples of our capabilities in effective learning are for example, practice of quick experimentation and target-oriented development. Hundreds of trained data coaches -- we have hundreds of data -- trained data coaches and also our experimentation based innovation practice eElisa X has yielded great results. Our learning culture is also externally acknowledged. According to the STL Partners study, 100% of Elisians think that mistakes are a source of learning, whereas only 45% of employees of other telcos state the same. And then 24% of them think that the mistakes is something to be punished for. Recently, we received a high fixed data excellence recognition from European foundation for quality management as the first telecom operator in the world. We have been only, and we were also only publicly-listed organization to gain recognition in this global ESPN excellence competition. And we are, of course, very keen to develop together with our customers. For example, with the customer focus group like Elisa Perhe. Ten years ago, we had a high ambition to focus on quality and excellence development for our customer experience. At the same time, we also understood that the unlimited business model with 4G will generate huge traffic growth to our network. Those requirements really have pushed us to develop so that we have become pioneers for automation. We have great results from this development. For efficiency, even if the number of actions in operating networks has gone ramped fastly up due to increased traffic and increased amount of services in the portfolio. That has not been seen correspondingly in OpEx. In quality here, we can automatically prevent 96% of the network incidents, meaning 5,000 daily before customers can have any impact. We have had 0 critical major falls since 2016 when our competition together has reported 51 major falls to figure out the local authorities between 2016 and 2020. We have also significant further potential, for example, by artificial intelligence-driven automated network planning and capacity management and 0 touch access network deployment. And also, as you know, we are monetizing our capabilities with international digital services, which Henri will talk more about. Continuous development of customer service is something we also do in our service processes. And we have got solid results from that as well. For efficiency, 58% of back-office transactions have been automated 2020. Software robots completed 5.4 million task between 2018 and 2020, meaning EUR 8 million of cost reduction. In quality, our customer effort score has been improving almost 5 percentage points. And we have further potential here as well. We will continue to develop and increase end-to-end automation in customer service, 65,000 -- we have 65,000 customer service chats per month of which 10% bot can result today. Our target is to show all of those without human involvement. Now we have gone through the sustainable development for profit and growth, our strategy. And finally, I will introduce our medium-term target. We have updated our medium-term target and based on our strategy, we aim at generating sustainable profit and growth. For revenue, our target is more than 2% compound annual growth between 2020 and '23, and EBITDA growth for the same period is more than 3%. We have changed the target setting of revenue and EBITDA because we have even stronger growth ambition than before. But we continue to have also strong focus to improve our margins as well. For CapEx to sales and our capital structure targets, we will continue with the same max 12% of CapEx to sales, net debt to EBITDA, 1.5 to 2.0x, and equity ratio higher than 35%. And also, our distribution policy remains intact. As a summary, I would like to conclude that based on our unparalleled track record, attractive target markets, unique strategy and strong capabilities to execute the strategy, we will continue to generate sustainable profit and growth. Our unique strategy has potential in each of the 3 focus areas. Increasing mobile and fixed service revenues, growing digital service businesses and improving efficiency and quality. Thank you for your attention. I'm now ready for your questions and comments.

Thank you very much, Veli-Matti and now, we move on to Q&A. And here, we have the first question from [ Chad ]. In your medium-term guidance, you are anticipating any near-term weakening of your B2B business as government support schemes fade away?

We have seen, especially in these B2B industries that we have stronger foothold, but companies to being very active and moving forward. And so far, we have not seen negative impact from the COVID-related difficulties that some of the companies have seen. So we are confident that we can move very well ahead with our B2B business.

Okay. The next question is, could you provide any historic data with respect of those back office automation statistics, 58% in 2020 how rapidly is it improving?

We have done a couple of years of development with this software robots and having the back office automation to happen it is, of course, based on the continuous improvement that we do. And I don't have any more specific data that -- what was the percentage a couple 2 years ago or so. But for the less, I can say that within the past couple of years' time, we have really created this capability and automation. And certainly, there is -- in this area, but in the back office area, but also for other areas of our operations, we do see similar kinds of improvement.

And the next question is your new net sales growth target organic.

Yes. It is organic growth target. It doesn't include the acquisitions, but it includes the growth of the acquired company.

And the next question, I think you move from absolute EBITDA margin target to EBITDA growth target. It looks sensible. As the earlier target didn't exactly encourage investments in the new service businesses. Can you elaborate on timing? Was the change driven by mix shift as new service businesses gained share or was it driven by tougher prospects for legacy telecom services?

As I tried to convey, we are very excited about the developments in the telco side. We see 5G and also in the fixed telecom business side, growth opportunities which we really have high targets for ourselves. Additionally, we will, of course, accelerate the growth in digital service business, especially in the global market.

Okay. The next question is a bit close to previous ones or the early one. Your new financial targets seem to incorporate also bolt-on acquisitions. Can you elaborate on how close to the targets you can get on organic base.

This target doesn't include the acquisitions we do with the client by '21 to '23. So it is all organic, the growth target we have for our mix.

And the next question is could you give us an indication how much your midterm EBITDA growth is coming from further efficiency gains, such as back office function organization.

Well, we are driving profitability in various -- many different parts of our operations, both by generating revenue growth but also by decreasing -- increasing the productivity in different ways, like with the automation, using software bots, but also with the better practices to do processes in different parts of the operations. This continuous improvement that we do is quite unique feature of Elisa. It's an Elisa way to really develop the cost efficiency by really making the customers to get better experience, better quality and at the same time to streamline the processes also take all kinds of waste out of the way and so forth to increase the productivity. So that's -- they are all contributing, both the kind of productivity improvements continuously, such a kind of never-ending source for profitability improvements. But also, we are looking for the profitability improvement from our revenue growth.

And the next question is, how much has your international digital business is growing organically since the previous Capital Markets Day in 2018.

I leave this question to be more answered by Henri. But nevertheless, we, of course, as you know, we have done some acquisitions since the Capital Markets Day, Polystar and the camLine, for example, and also minority the acquisitions. But there is also organic growth well in the numbers. But of course, it is something that we think and believe that we can generate by having -- with a good industrial logic and with the capabilities from Elisa for building productivity to have those step-by-step also introduced to the acquired companies. That's the way we believe we can have a very good development on the revenue side. Then also organically as well as the profitability improvement is improving.

All right. The next question is you talked about the positive impact on mobile service revenue growth from 5G already this year. Will that mainly coming from consumer division or a consumer division and how do you see the potential and time frame for 5G as a driver for industrial and corporate?

Well, you will hear later on from Vesa-Pekka and Timo to address how the growth for 5G is in those segments. But I can briefly say that the growth is coming from both segments very well. And in regards to the industrial application at the corporate side, it is something that we believe there will be a very good potential for growth. However, at the same time, we acknowledge that it is a step-by-step development there when the companies, it's not only that they will get 5G networks in order to improve the some industrial applications or their site something, they need also applications there. And it will take some time. But as I said, there will be thousands of applications that -- and use cases that the different industry verticals will be developing going forward. So there is a great potential there. It It's not the immediate fixed potential to be captured, but it will be growing very well.

Okay. Can we just confirm if the target anticipate growth in fixed services.

Our target is to have also the fixed service revenues growing. But like I explained also in my presentation, we have maybe a bit more negative impact from some of the declining revenue streams like the BSP and/or the rental copper businesses. We have maybe a bit more of that in the fixed business side than in mobile. But we have, of course, a clear target to have these higher speeds to generate revenue as well as the software-defined network solutions that we can do more later on and the other.

And the next question is why only target about 2% growth. If the growth in most of the areas, Elisa operates are growing about fiber. The assumption on Elisa's growth versus the market you are in, silicon IT, digital?

Well, we thought that 2% in our industry is quite ambitious growth target. Overall, of course, we never softer the target. We, of course, want to go beyond the target. So it may well be that we also will reach higher than 2% in the revenue growth. But now, we are just repeating that we do not calculate the acquisitions or the revenues from the acquired companies, only the growth part of those. So that way, the acquisitions are not in this target.

And the next question is you said that use of automation and AI in network operations has delivered sustainable improvements. What have you done with Artificial Intelligence?

We have various parts of the operation. We have, for example, utilized it for energy saving solutions but I will also let Henri to elaborate a bit more where the real AI solutions take place. Quite often, many solutions that have something to do with data are called artificial intelligent solutions, but we really go for the deep learning-based AI solutions. Those are quite specific. We do have those in our portfolio. We have also a lot of machine learning base very, very important and productive solutions, which you may be, by definition, couldn't call AI, but we do have also those deep learning solutions and more of those going forward.

Okay. What are the impacts on EU ESG taxonomy for Elisa?

We think that it is a positive development that the focus will also an EU level be on there. And for us, we can very well let's say, comply with those requirements. And as one of the leaders in sustainable development overall and within our industry, we are very confident, and we are actually very excited how the sustainability development opens up business opportunity.

All right. The next question from a strategic perspective, what is the balance between revenue growth and profitability within different digital service domain moving forward.

We -- at the moment, we are not disclosing the kind of revenue growth or profitability numbers for the different proportions of digital service businesses other than what we gave now some onetime revenue numbers. We will, of course, continue to open up the disclosure for the digital services later on. We have done that in a step-by-step, systematic way. And in Jari's presentation, we will -- you will hear more about the next steps and future will include also further steps in the this quarter.

Then we have one more for the growth target question, just to clarify. Due to growth targets include the inorganic impact of the acquisitions made in 2020?

So the answer is no. For example, camLine. We do not take the camLine in -- as '21 revenue, but the growth of camLine, what it is doing, we include.

Very clear. IT services EBITDA margin was said to be around 5% lower than at previous Capital Markets Day. Why is the margin relatively low?

Well, in IT business, we said last -- previous Capital Markets Day that it will be between 5% to 10%. What we now said really what has taken place. So it is in the lower range of what we said 2 years ago. We are, of course, not satisfied to the level of 5%. We, of course, bringing more and more, let's say, scalable and more intelligent solutions to customers, whereas we believe that we can also step-by-step increase the margin of our IT business.

Okay. So what is the situation with Huawei at the moment in your local markets? And what is the effect?

Well, if we start from Estonia, there has been a change of government and their decision-making is still open in a way. We have an anticipation that there will be a Huawei ban, more or less the factor in Estonia. And of course, then we will also be needed to comply with that. Estonia is such a small proportion of our total infrastructure that we don't see any significant impact to us on those decisions in Estonia. In Finland, we have a new legislation, starting from this year-end of this year. And I can say that in Finland, we have had already before the new legislation, a very strict legislation stating that if there is any device in the network that is causing harm, those devices need to be replaced. So we have had an obligation already before the new legislation. But the new legislation is stating really that in the mobile network, in the critical parts of the network, there cannot be devices that are causing threat to national security. And we utilizing our critical parts of networks, Nokia and Ericsson.

Why don't you do any large acquisitions?

Well, we are a strong believer on continuous improvement. That really is also when you do acquisitions in, let's say, new domains that you continuously info you can think about the continuous improvement also being something that the improvements may mean to get also to larger acquisitions. We'll think about our telecom acquisitions where we are really in our home ground we can really make potentially, especially in the domestic markets where we have focused on the du telecom acquisitions. We can do larger investments and acquisitions in the telecom space. But when we are in the new digital service businesses, we believe that we continuously learn, first with the -- with, let's say, small- and medium-sized acquisitions, but it doesn't mean that we wouldn't ever do some large acquisitions. But we want to prove to ourselves and to the market that we can really fulfill the demands for industrial logic and our other ways to generate synergies with these acquisitions and building up the new businesses before jumping into any big bank event.

All right. The next question can be also for Jari, but let's see. A follow-up to the question on international digital services organic growth. You reported EUR 30 million net sales in 2018, you made acquisition bringing EUR 58 million run rate. You now report only EUR 81 million revenue run rate, which implies negative organic growth. Could you explain what is missing from this calculation?

Well, I'll let also Jari and maybe Henri to be more specific on those. But these numbers and the timings of the numbers, of course, are a bit different. And then the -- we also patch in the numbers of the last Capital Markets Day, some of the digital businesses, new businesses that we don't include anymore. So this EUR 30 million is part of that is not in our numbers of that EUR 81 million.

Right. How many towers do you own?

Unfortunately, that is something that we do not disclose, but we are very well capable also with our ownership and assets.

Then the next question is, when do you see meaningful revenue from 5G hours?

I believe we have started to see, and as I explained this year, we will have more than 1% contribution of 5G to the mobile service revenue.

Right. So running time, but let's see, there's one more. What is the 5G mobile service revenue impact and the mobile service revenue growth rate in 2021?

Well, the impact is more than 1% for 2021 and growing the total mobile service revenue growth for -- going forward. We do not have any outlook for that. We do not provide that. But of course, we believe that it will be positive going forward, as we said before.

All right. And then more first of all, 5G, how much of your 5G growth will come from fixed wireless access and broadband this year? Are customers replacing fixed broadband with 5G connections?

In Finland, we have already 36% of households, which are mobile-only. So we have this fixed to mobile migration, quite well underway, if you will. We do believe that 5G will increase that percentage to some extent. And we will, of course, upgrade also many of the 4G mobile broadband customers to 5G mobile broadband. For the fixed wireless access, it is a very good product, but it is also quite specific that it is, in a way, still quite much a niche market service. The volumes are limited. There are volume for that. But we believe that overall, the traditional mobile product band solutions as well as the, of course, 5G, together with the mobile handsets. Those are the largest, clearly largest drivers of 5G subscription growth.

All right, thank you for questions, and you can ask more questions from Veli-Matti at the teleconference. But now, we need to move on in the next presentation, which is Consumer Customers. Welcome, Executive Vice Vesa-Pekka Nikula.

Good afternoon, Helsinki time, ladies and gentlemen. I have been in charge of an Elisa's Consumer Customer business since November 2019. Prior to my current role, I headed Elisa's production and technology. I have been in Elisa's management team since 2014. I will start my presentation with our financial and operational results. I will then go through the strategy of our 2 main consumer customers' businesses, the telecom services and the entertainment video services business, which will lead to sustainable profit and growth generation. I will end up my presentation by summarizing my management team's priorities going forward. So let's start with our performance update. Understanding our customers' needs is the foundation of our business. We align our operations so that we meet customers' expectations and build the best customer perceived value. Consumers are more and more engaged in sustainability. We are meeting this growing customer need, for instance, by providing carbon neutral connectivity services and enable device circularity. Consumers are also increasingly concerned about data security. We offer a wide range of cybersecurity services and we are improving our own capabilities in securing customer privacy. This is supported by our engaged and skilled personnel who are contently trained to meet new requirements. In 2020, it was rated as the industry winner in the sustainable brand index and on Finnish consumers. All this results in improved customer satisfaction, customer recommendations and being the most desired choice for customers. Our approach has proven to be successful with solid financial performance. We are happy with the continued revenue growth of our Consumer Customers business. Our telecommunications service revenues have further increased despite the intensive competitive environment. We have also witnessed solid positive development in our entertaining video services business. And we see promising growth potential in both businesses. Our profitability performance continues to surpass our top line performance. We are particularly pleased to deliver continuous performance improvement. We have now improved our EBITDA for 30, 3-0, consecutive quarter. Of course, the pandemic has had some effect on our business. But by introducing adaptive measures, we have managed to minimize the impact on our performance. That's it for the performance update. I will now move on to review the profit and growth generation of our businesses. Our strategy execution priorities remain intact as we continue to implement Elisa level strategic priorities for Consumer Customers business. I'll start with the Telecommunications Services business. Our mobile business continues to be driven by strong demand for faster connectivity. Our unique speed service based business model remains well received and brings value both to our customers and to Elisa. Our mobile subscription base has transformed to faster speed tiers, and we still see upgrade potential the fastest within 4G subscriptions. Further, we are currently witnessing promising result when upgrading customers to 5G subscription. Our customers say, they want to work and study using high-quality connections at home and when on the move. They also say that they need high-quality connections for multiple simultaneously users for entertainment and social interactions with friends and family. 40% of Finnish people watch TV programs on mobile at least weekly; 43% play mobile games daily; and 45% use their mobile devices for saving files to the cloud. So our customers appreciate higher 5G speed and lower latents, and we are able to capture a significant value premium. We see similar demand and value capture development in fixed broadband subscription. Our fixed broadband customers appreciate higher speed as low. Our fixed broadband base is rapidly transforming towards fast fiber and cable subscription. This shift towards better technologies ensure satisfied customers and a loyal customer base. Our success with our unique speed tier based business model has helped our telecom services revenue to grow. Our mobile service revenue has grown on average 2.5% annually. We continue to see human inflation as a basic need for faster speed and lower latency. This means interesting growth potential, especially in 5G. We see a growing demand in cybersecurity, and we are focusing on value-added services to capture this potential as well. Well, that's it for the telecom services business. I will now move on to our second main Consumer Customer business, entertaining video services. The customer needs to watch content freely whenever and wherever they want is strong. Based on our latest studies, willingness to pay for entertainment video services have increased. More customers are willing to pay for 2 or more services. On average, these customers have 2.2 paid entertainment video services, and we still see potential for growth. We are also seeing an increasing amount of on-demand video using. We are witnessing the same growing trend among our own Elisa Viihde customers, and in a particular, watch and cloud-based TV recording is highly popular. We are well positioned in the market we are in the video services. Our new streaming video service, Elisa Viihde Viaplay, is gaining traction as well driven by Finnish content and Elisa's original series. We provide an extensive collection of Finnish movies and series, more than 120 in total and more than 20 original series, with more to come. We also provide a significant culture of footprint in Finland. Further, our original series are well received by audiences in more than 30 countries outside Finland. And we are very proud that our production, The Man in Room 301 was the very first series from Finland bought by the BBC. We are delighted to see that Elisa Viihde consumer recommendation is outpacing the global competition in app store. This results in strong growth in paying customers. In total, our entertaining video services customer base has surpassed 600,000 paying households. We see significant potential in scaling our entertaining video services business further. We will continue leveraging the largest selection of Finnish content and our unique original series to attract new customers. In the fast-growing streaming market, our strategic partnership will positively contribute to business performance as well. That's is for The Entertaining video business. And I will now move on to elaborate on our efficiency and quality improvement activity. Our customers value effortless online buying and customer service. This is reflected in our contact volume development. The number of online contact is increasing, while the number of human, one-to-one contact is slightly declining. That is our customers are getting easy and effortless service when and where it's relevant to them. Accordingly, as a number of human one-to-one contact declines, our cost efficiency continues to improve. We are continuing to automate our processes, also increase the quality experience by our customers and to improve our cost efficiency. One notable example of our continuous learning is the increasing automation of the service assurance and fault prevention process, which has led to significantly improved customer perfect quality. And this brings me to the end of my presentation. To summarize and conclude, our strategy execution priorities remain valid as we continue to implement Elisa level strategic priorities for consumer customers business. We are convinced that we have a strategy that will continue to deliver solid results. Thank you, ladies and gentlemen, for your attention. I will now gladly take questions you may have. Vesa, please?

Thank you, Vesa-Pekka. Now we move on questions, and we have some, let's say, 8 minutes for that. The first question is are you expecting to lose some mobile broadband customers to new fiber networks from competitors?

No. Simply, no, we are not. It's all starting with a customer and customer consumer needs. And many of the customers, they really do not care for the technology poses. What they want, they want a fast reliable connection independent of the technology and often it is more validity.

The next question is ARPU uplift of 30% plus. You presented from consumers moving to fixed line broadband, 100 megabits per second is attractive or more than 100 megabits per second. Is that also the case in multidwelling unit market where I thought competition was more intense? Should you push harder for higher fixed line net adds?

Yes, you are right, and thank you for the question. But the competition in MDU business, more digital unit business is intensive. And the -- that has led to a quite unhealthy price level in the market. But the same customer need is also in the MDU business. Customers do appreciate fastest speed, and we are active in upgrading MDU via subscriptions to the highest speeds as well.

All right. The next question is 5G ARPU lift of EUR 3 seem to be quite low compared to the list prices you have on 5G, about EUR 30 per month. And current ARPU around 19, 20. That's right?

Yes, yes, that is right. And the more than EUR 3 uplift in value capture in the 5G compared to the non-5G is an average of the past upgrade of our 4G customers and some free customers to the 5G. So that is an average, as we have seen and witnessed so far. So let's see how that will develop in the future. But that's kind of a look in a bit of a back mirror for the history.

Okay. Then the next question is, could you give a bit more color on NENT cooperation? What is the value for customers and Elisa? Is the deal in Estonia same as in Finland?

Yes. All here starts again with the customer and customer need. As I said in my presentation that we are differentiating our entertaining offering with a strong Finnish content, with a strong Finnish original series and movies. What that brings in is that they have an extensive content portfolio in Nordic more, Nordic content in general and also for the latest Hollywood content. So together with NENT, we are able to offer a very comprehensive and interesting set of content to our customers. When it comes to the Estonian cooperation that we talked announce, it's starting with a reselling cooperation. So we will start reselling NENT content in Estonia in the autumn/summer.

All right, let's check if we have any further questions? Yes, we have. Can you elaborate on competitive landscape within mobile. Churn levels were elevated pre-COVID-19. Should we assume a return to those levels? Or are you expecting a more rational market from now on?

Yes. The competition has been there always, and it always will be there. And of course, this last year of COVID has had some impact of, especially the channel structures where the customers are buying these services. But I don't see any reason why the intensive competitive situation would go away. And we are happy, and we are ready to go along with that.

All right. And the next question is, can you discuss development of Elisa, the 5G service more recently? Have you continued to gain customers and where you stand at the moment? I think you have disclosed customer numbers the previous Capital Markets Day.

Yes. What we say now is that we have 600-plus Finnish household vis-à-vis the customers. And that includes both on IPTV customers and in the Elisa Viihde Viaplay customers. And the customer uptake also in both of the areas. Also in Elisa Viihde IPTV service has grown quite positively up. So especially we are targeting for so-called convenient seekers. So we have customers who want to have a hub of different content for the whole family. And Elisa Viihde IPTV service is the perfect solution for that kind of a customer.

Okay. What do you see as the key differences in the Finnish and Estonian telecom market?

Of course, the first of them is the price, of course. In Finland, we have close to 6 million customer -- inhabitants and in Estonia, we have 1.5 million inhabitants. So the Finnish market is about 4x bigger than Estonia. Both have the free players, basically, in Estonia and Finland. The history there is a bit different. The -- so Finland, we are really -- the Finnish people are really the world champions in using mobile data, thanks to the unique speed to pricing the business model in Finland. In Estonia, this business model is not so much into the use. They also have quite a lot of history in kind of a pay-as-you-go model and the more you use the data, the more you pay. So there are differences, of course, between these 2 markets.

All right. Thank you, Mr. Vesa-Pekka. And now we need more one. And we will hear about the Corporate Customer segment from Executive Vice President, Timo Katajisto. Timo, please.

Good afternoon on my behalf as well. I've head of Corporate Customers business for 7 years, and I've been part of the Elisa executive team for 13 years. Now we will start the Corporate Customers business presentation. In my presentation, I will start with a quick recap of our past performance in business segment financials. Then go through the strategy of our 2 businesses, the telecom and IT businesses, which will lead to the sustainable profit and growth generation. I will finish with my management priority. Our 2.8% growth in revenue and flat EBITDA development is among the best in our peer group. The change in Corporate Customers business segment environment can still be seen in our development as some business areas such as roaming and service provider solutions, have been suffering from lower demand. Now let me assure you, we are not satisfied with not being able to mitigate the impact of COVID-19. Our continuous work to improve customer satisfaction has progressed well for many consecutive years, resulting in our customer investing being almost 10 points higher now compared to the CMD 2018. Our strategy remains intact. Elisa's strategic generates sustainable profit and growth through the 3 strategic focus areas. Next, I will elaborate on Elisa corporate customers' business in Finland and Estonia in more detail. All-in-all, we develop our services all our customers, together with ecosystem partners with the sustainability mindset, utilizing digitalization to benefit businesses and society. On the right-hand side, you can see our market-leading converged IT and communications service portfolio. We've been the pioneer in the Finnish market with the integrated offering and Gartner just acknowledged Elisa as one of the top communication service providers globally. From among the other differentiating strength, I could highlight our recognized expertise on the ground. This was it from the portfolio overview. I will next move to the Telecommunications business. Although we've seen a small decline in telecommunications revenue, we have a stable business with a great balance between mobile and fixed services. The underlying trend has been healthy, both in MSR and overall telecom revenue development. Now despite the current uncertainty with the virus impacting our customers, we see very promising trends, both in mobile and fixed, which I will explain further in next slide. We are expecting a good pace with the 5G upgrade opportunity. As we have the best 5G network coverage and the best 5G customer image. Our customers say that they value fast speed as they experience the difference in using digital services. For example, when sending large projects and video files from construction site to designers and technical suppliers or being able to smoothly use cloud-based accounting software from client size. And while demonstrating product features and conducting sales negotiations with a high quality video. Now all this is visible in our NPS. Therefore, customers are willing to pay a price premium or better experience throughout the different speed tiers, including 5G. Now when looking at our subscription base, it is clear that we have an upgrade potential of both 4G and 5G speeds. Now businesses in various industries are exploring and implementing use cases, where 5G offers a specific performance of capability. The high number of 5G-related service pilots and deals already concluded with our customers gives us a good confidence in the potential in this space. Our customers see value, for example, in the following use cases, controlling machines remotely in mines using the private mobile network or operating autonomous vehicles, in ports and factory in secure and reliable network environment. Order lag in this picture from the tractor manufacturer, which is part of the global agriculture machinery company, ATCO. They see a remote control factor with a 5G and a 360-degree camera as a way to add customer value because it makes it possible to take tractors in this hazardous situation. Almost half of our telecom revenue is generated from fixed services, where the top line development has been stable and 2020 year-on-year growth was plus 0.8%. We can see a cut mix in our service portfolio as close to half of our revenue is based on managed services. There is an ongoing transformation of business networks, where SDN offers a good opportunity to increase customer value and addressable markets, even within the international business network space. And the security services business has become one of the growth drivers for us, reaching up to 9% year-on-year growth in 2020. Now I'm finished with the telecom business side and I'll move on second -- to the second strategic focus area and look at our IT business in more detail. Our IT business is growing well, and growth accelerated to 10% year-on-year in 2020. The increasing use of cloud-based applications as well as needs to digitalize customer interactions is driving the need for our IT services. Already 74% of Finnish enterprises use paid cloud services. Our customers value high-quality flawless processes and cost efficiencies. We deliver this with our excellent capabilities in automation and AI. Here again, we have a balanced future-proof portfolio from many different service areas. Intelligent customer Experience Solutions is the biggest inside and the fastest growing component. 77% of companies believe customer operations will be positively affected by AI and robotics, the key elements among our capabilities. Our 2020 year-on-year growth was 13%. And in this business, we are helping our customers transforming their customer interaction channels from voice to digital. We even have better Finnish language processing capabilities than the global Internet giants. By using data, service design, and intelligent solutions, we help our customers take their own customer experience to a new level. And we have a unique position. On the left-hand side, you can see the question asking who is the most positive IT service provider. In that particular third-party question here, Elisa has been really the leader for years. On the right-hand side, you can see that integrating IT and communication services increases value. Customer profitability increases by 5 percentage points and customer satisfaction goes up by 7 points. For those customers who combine both IP and communication services from us. This is compared to customers who are either pure communication service customers or pure IT customers. This means that providing a broader range of services really increases both customer value and satisfaction as well as our profitability. Now I'll move on to the third area of our strategy, which is about how we improve efficiency and quality. The increasing use of both automation and AI-based intelligent automation can be seen on the left-hand side. This then leads to the process quality improvements you can see in the middle chart, has a reduced number of incidents. And finally, the result is improvement in productivity, which is evidenced here as operational cost reduction in production, customer service and sales. Our continuous world-leading improvement method in all these elements really unlock the value for our customers and us. We learn every day that opportunities are even greater than yesterday we get understood. I will now conclude my presentation with my management priorities. Our strategy is solid, and we have a clear focus in our priorities on generating sustainable profit and growth. In the telecommunications business, we are continuing to upgrade to 5G and fiber with a price premium. Secondly, to grow our digital services business, we are driving IT and communication service convergence for better profitability and customer satisfaction. Thirdly, to improve efficiency and quality, we are continuously improving performance with automation and AI. I have now reached the end of my presentation. I thank you for your attention, and I'm now happy to take your questions. Thank you.

Thank you, Timo, and let's move on the cat questions. And the first one is regarding the private networks. How does Elisa charge enterprise customers for private 4G or 5G networks? Is there a one-time charge covering the installation and top of that, a recurring development or maintenance? And what about the consultancy or other connectivity opportunities?

Well, that is exactly right in a way that there could be a kind of a project. That is basically a consultancy basis fee and then there is a kind of the overall kind of the hardware and the other parts of the project is kind of a one-time billing basis, but then there is a recurring revenue, and we are in service business. So we do it for the services business sake. So definitely, in no way, the recurring portion is large in the long term.

Okay. The next question is what COVID-19 impact besides roaming impact have you seen in the Corporate Customers Service?

The service provider solutions, like I said, there. It's one of the ones that still see here in Finland that we have a very good market share out of the transactional kind of collaboration that our customers are having with their customers. In some cases, SMS basis; in some cases, something else. So there, that billing was transactional and many smaller activities like dentists or taxi companies and others. We're kind of using those. So that was another one that was really impacted. On the other hand, we've seen a lot of potential here in the Finnish market as well as some companies clearly, who has the potential going forward and are looking the ambitious targets going forward. They want to invest into digitalization, into new areas, in 5G, they are very eager talking about these opportunities, how they kind of shift their business to a new level.

Right. Next question is corporate customers were lagging the consumer customers in the upgrade of 4G, are you seeing the same development now? If so, how much and to use corporate customers lagging?

Now it's clear that in a way, there is a different phases in between the kind of size of the companies or the company type with an industry where they operate. But we have been having a very good dialogue and very good active mechanisms, like I said in my presentation concerning the 5G in different use cases where 5G adds capabilities of performance that the bigger corporations are lacking. And those are really, like I said there in my presentation, it would be the kind of factories. It could be the mines, it could be the ports that we are talking about as we speak. So there is very active collaboration on that side. And we are really seeing that, that is moving ahead all the time as we see. And then on the other hand, the SME is very active. It's very much like kind of a consumer space in this regard. So there are, in a way, B2B is a kind of parts of different businesses, and there are differences in their kind of activities. But I wouldn't say that, that would be kind of lagging behind.

Okay. And the next question is, what drove the accelerated growth in the IT business in 2020?

The intelligent customer interaction services is really the kind of one that is a very good driver. But also the kind of basically cloud-based activities both being either own cloud solutions or being is kind of a public cloud solution as well as the kind of outsourcing deals altogether. Those were the kind of major ones providing the higher revenue.

Okay. The next question is corporate business has been tough due to various reasons, such as increasing competition and compromised demand as well as the ability to spend driven by COVID-19. Can you elaborate on the main reasons for weak EBITDA development?

Well, we clearly kind of see that there is probably had an impact to our business. But on the other hand, we can also see that there is a lot of potential, and we can kind of see that actually the underlying development in the telecommunications in B2B is solid and is healthy. So that is important to understand that the COVID had a big impact in our business, and that is really, really visible then in those figures as well.

All right. Next question is, should we expect a positive financial development within Corporate segment in 2021?

Definitely, we are looking at the kind of the same development than Elisa altogether is looking forward. And GDP development in Finland in 2020 was fairly okay compared to the many of the Western European countries. And I think that also '21 is looking relatively okay in that regard, despite the COVID. So definitely, COVID has an impact to some of the kind of areas, but there are so many new areas of opportunities beside that one, that definitely, we are very confident on our competitiveness and capabilities moving forward.

Okay. Maybe last question before we move on. How should we think about corporate mobile ARPU outlook? Lots of pressure through 2020 in part from COVID. But it was also falling 5% for the most in 2019.

Yes, there has been a pressure on that one definitely. But on the other hand, now we have the 5G uplift coming in, and that is a big difference compared to the '19 development that we saw. So I'm looking very confident this year in this regard on the corporate side. And definitely, in a way, we are very competitive in this business and in this market as well. So that makes me believe that this will be -- this has been a good deal.

All right. Thank you, Timo, and thank you for the questions. And next, we have a 15 minutes break. And please join us 13:45 Helsinki or 11:45 London time for international digital services presentation. [Break]

Welcome back to Elisa's Virtual Capital Markets Day. Next we have Executive Vice President, Henri Korpi, who will give approximately 20 minutes overview to Elisa's international digital services. Henri, please.

Good afternoon also on my behalf. I'm responsible for what we call international digital services at Elisa. I've been in this role and a member of Elisa's management team now for 3.5 years. So that's me. My presentation today consists of 3 parts. First, we take a look at our progress during the past 2 years and our plan to go forward. Then we dive a little bit deeper into our 3 businesses: telecom software, industrial software and Elisa Videra. And at the end, I will conclude my presentation with our priorities for the next few years. So let's start with our performance update and strategy. We have an ambitious plan to grow our revenues significantly from current level at around EUR 80 million. Our plan has been to invest in internal startups, working on opportunities arising out of the core business of Elisa. And our plan has been to scale the promising opportunities internationally by acquiring complementary businesses and injecting our startups into those businesses. We are quite happy with our progress. We now have a handful of opportunities that have proved that they have a product market fit. And we have successfully executed our first scaling acquisitions. Going forward, we believe that Elisa's automation development continues to create innovations, especially in data and artificial intelligence area. These innovations have created and continue to create significant value to Elisa. Through our startup work, we have proven that these innovations are applicable and creating value also to others. Our telecom automation startup, Elisa Automate has signed several new customers during the past months after the publication of our delivery of our Virtual Network Operating Center to T-Mobile. Our industrial software startup, Elisa Smart Factory, has as well continued to add customers, following the example of our lead customer, Procter & Gamble, which is rolling our solutions out to their factories globally. Furthermore, our innovations not only help to save OpEx and CapEx and increase competitiveness, but also help our customers to save natural resources and to contribute to United Nations Sustainable Development Goals. A good example of this is our AI-based Intelligent Energy Saver, which enables our telecom customers to save around 14% of their electricity consumption without compromising on end-user experience. This quite fresh addition to our commercial offering has, in a very short time, gained notable interest in the market, which has been no surprise to us, because electricity is the largest OpEx line in every single network's cost base. As our plan for scaling is based strongly on acquisitions, we need to develop a common language, a common operating system for these businesses. We have decided to take our unique business system for continuous improvement, eElisa, which has been developed during the past decade and very much defines what Elisa is today to be that common operating system. Adoption of eElisa practices will help our acquired businesses to accelerate their own continuous improvement and innovation. And as this is by no means a one-way street, enables these excellent companies to contribute to further development of eElisa and Elisa as a whole. This was the first part of my presentation on our progress and strategy. Now let's turn to our 3 growth businesses. Let's start with telecom software, where we help other telecoms to walk the same route towards self-driving networks as Elisa has done itself. Here, our offering consists of the software that has made it possible for Elisa to become a global benchmark of automated operations, like our flagship product Virtual Network Operating Center. Let's first take a look at the market we operate in, then our plan to address that market, and at the end, a glimpse of where we are today with our execution. Telecom software is a very large market, tens of billions of euros. Within that large market, there are significant pockets of high growth. Application of analytics, automation and artificial intelligence to network management processes is one of those pockets, and that is the market we operate in. Growth of this market is driven by 3 partly interrelated factors. First, 5G deployments are increasing complexity of networks. To efficiently cope with that complexity, automation is a must. Second, most telecoms are facing mounting OpEx and CapEx pressures as revenues are not growing and new network layers need to be added. Elisa has shown how these pressures can be tackled with automation. And third, unlimited pricing models that have served Elisa so well during the past decade are becoming more and more common in the other markets too. Unlimited models will lead to significant increase in usage. And so decoupling cost from usage is a must. Automation is the key to do it. We think that we are uniquely positioned to grasp this opportunity. We have over a decade of experience in developing software and algorithms for automation of network processes. We know this thing inside out. No one has more experience in building self-driving networks. Furthermore, our unique position as both a telecom software vendor and telco means that we have an unlimited access to live network data to develop, test and teach our software and algorithms on that data. That is truly unique. Based on our own experience, we know what problems are worth solving and what are not. We are not trying to sell our customers a total platform solution, as no customer has a total problem. Quite the opposite, they have practical problems that we can help to solve with field-tested and proven solutions. Having now integrated our Elisa Automate startup and Polystar, we now have the scale required for efficient go to market, especially in Europe. We have a direct access to over 100 telecom customers to sell our automation solutions to. And quite many of them have expressed their interest in our solutions, are already implementing them like T-Mobile. We have the capability and resources needed to develop, market, sell, deliver and support these solutions globally. We think that we have started very well on our exciting journey to become a global telecom software vendor and to make self-driving networks happen. This was it about our telecom software. Now let's turn to its very close relative, our industrial software business. We get quite often asked by people who are not familiar with our offering why are we in industrial software? How come a telco can successfully have anything to offer to this market? Long story short, we started a few years ago to show our telecom automation solutions to our corporate clients here in Finland in order to sell them corporate networks, to convince them that those networks will be of high quality because of these systems. They typically agreed. But many manufacturing customers noted that we have here solved in our telecom network a very similar problem that they have in their factories. They have data scattered around in different machines, equipment, automation systems, IT systems and even sensors. And that siloed data cannot be used in any meaningful way to draw insights, make better decisions and to automate decision-making. The question was, could we help them to build something similar in their factories that we've done in our own networks? We knew nothing about manufacturing, but decided to experiment with a few old customers here in Finland. We learned very fast that factories are not that different from telecom networks from the data point of view, only smaller in scale, and that we were able to create significant value to our manufacturing customers with the very same technologies and solutions we had previously applied to our telecom networks. That led us to create our Elisa Smart Factory startup a few years ago. Now let's take a look at the market. Our approach to the market and our state of execution as of today. Industrial manufacturing software market is even larger than telecom software. Within that very large market, we are concentrating in verticals that have the same data characteristics than telecom networks, where the amount of transactions and data is large. And hence, the problems are similar to those in telecom networks. Growth in these verticals is driven by 3 main factors. First, there is a growing need to connect data across the whole manufacturing value chain from supplier of materials to hard product manufacturer to end product manufacturer and to packaging and delivery. Second, these verticals are increasingly facing global competition. And to cope with that requires ever-increasing efficiency and automation. And third, 5G and digitalization in general. The upcoming private factory networks enable a lot of new data sources to be connected and data collected that enables increased generation of insights, making of better and even automated decisions with help of artificial intelligence and analytics. As we are not very known player in this market, our go-to-market is based on acquiring healthy, growing complementary businesses, operating in these verticals and on injecting our unique capabilities into offering of these acquired companies to help them grow faster. Here is an example of how we are injecting our Elisa Smart Factory Solutions into camLine that we acquired recently from Germany. We are injecting Elisa Smart Factory data visualization solutions to camLine's process integrity and monitoring and reporting products. Similarly, we are injecting Elisa Smart Factory advanced analytics and artificial intelligence solutions to camLine's market-leading quality assurance offering. These solutions are then offered to camLine's existing large customer base as value-creating add-ons that make camLine more competitive and more capable of capturing additional value. Customer feedback has been very promising. And we have already, after being together for only 2 months, already several sizable proposals out with customers. With camLine and sedApta, we now have a fairly good access to scale Elisa's Smart Factory Solutions to our selected verticals, especially in Europe. We have also acquired CalcuQuote that is a small, fast growing company from the United States that had developed something very similar we had innovated in our Elisa Smart Factory startup. Instead of competing with CalcuQuote, who was around 1 year ahead of us in development, we decided to join forces and acquired a majority stake in CalcuQuote. Now we are helping CalcuQuote to accelerate its growth in Europe and in parts of Asia with the help of especially camLine. We think that we are very well on our way to scale our Elisa Smart Factory innovations to our selected global verticals and to make smart manufacturing happen. This was it about our industrial software business. Now let's turn to our third business, Elisa Videra. Elisa Videra has been our spearhead to international markets and has teached (sic) [ taught ] us a lot how to run a truly global business with demanding global customers. Elisa Videra is in business of providing video collaboration to very large international organizations as a managed service. The customer problem we solve is interconnectivity across different silos of cloud services and devices. We see the need for these services growing, as hybrid working mode becomes the new normal in post-COVID world when some people are working from offices, some from home and others traveling again. Elisa Videra makes this hybrid working across these silos efficient and easy to its customer. We think that we are very well positioned through our partnerships with leading cloud service providers and our sales partners like Vodafone. And our proprietary, not surprisingly, automated production technologies make our own business operations highly scalable. So this was the walk-through of our 3 businesses: telecom software, industrial software and Elisa Videra. Now let's turn to our priorities. Going forward, we focus on 4 activities. First, we have acquired excellent, growing and profitable companies. We have to make sure that these companies continue to excel, continue to grow and continue to be profitable. Second, we accelerate the growth of these acquired businesses by injecting our unique assets, be it telecom automation software, be it Elisa Smart Factory Solutions or be it eElisa practices for continuous improvement to complement their business to make them better. Third, we look for opportunities to continue to acquire healthy, growing businesses operating in our selected markets that we could make better with our unique assets. And fourth, we also look for opportunities to acquire smaller, fast-growing businesses that we could help to grow even faster by joining forces with our other acquired businesses. CalcuQuote is a great example this. By successfully executing in these 4 areas, we believe that we can make Elisa's vision to become international in digital services a reality, and while doing so, also to deliver on our ambitious growth target. Thank you for your time and this opportunity to share our thinking. I'm ready to answer any questions. Vesa, please?

Thank you, Henri, and let's move on to chat questions. This is the first one. Can you please describe pricing of Automate services? What kind of revenue potential should we expect in deals like those announced with Deutsche Telekom?

Well, thank you for the question. We are not disclosing particulars of single deals. However, what I can say about the pricing is that we are applying to the models preferred by the customers. We have published deals that follow the traditional software logic of license project and then maintenance. And then we have published our first deal to automate the networks of a Swedish operator with the Software-as-a-Service model, where we are serving the software from cloud -- from -- actually from our cloud here in Helsinki and are also charging it on the Software-as-a-Service model. So the pricing models vary depending on the customer requirements.

All right. The next question is, have you declined or grown revenues in international digital services over the last 2 years? You had EUR 30 million revenues in the business at your 2018 Capital Markets Day and have since did Polystar and camLine, among others. Might we have expected you have more than EUR 81 million of revenues in this business by now?

Well, we agree that Jari would answer that question, but maybe I can add to what really Veli-Matti already rightfully answered that the EUR 30 million that we showed last time and the EUR 80 million that we are talking about this time, they are not apples and apples. We have, for example, divested from our fourth growth domain, the international entertaining domain and divested the businesses within that domain. So obviously, the revenue basis are not the same.

The next question is your market analysis suggests that the new service businesses are typically faced with 5% to 10% market growth. Would that be a good estimate on organic growth for your unit going forward? And how does that compare with the historical organic growth?

Well, we haven't disclosed the historicals and we are not, unfortunately, disclosing or commenting on our targets going forward. But obviously, as the markets are growing, we are also looking at the growth with the market.

Okay. Do you still see a need to make bolt-on acquisitions in order to accelerate growth? Could you see yourself making even larger bolt-on acquisitions going forward?

Well, as Veli-Matti said, it's all about continuous improvement also in acquisitions. As I said, our -- 2 of our focus areas going forward are on acquisitions. The first one on those larger bolt-on type of deals that could give us market access or some technologies and then smaller, concentrating more on the growth technologies. And I see a lot of opportunities of us being maybe able to conclude multiple in both directions.

The next question is how hard is it to integrate such acquired businesses to Elisa? What are the key challenges?

Of course, we have to be kind of honest to ourselves. Our experience in international businesses has been limited before these acquisitions and these startups that we have been running to Elisa Videra. We've learned a lot from these acquisitions that we made, and we already are better now with camLine, for example, than we were with Polystar. There are all kinds of difficulties and all kind of opportunities in that integration, although what makes it easier is that we are knowingly concentrating on acquiring very solid, healthy companies that are in a good position in the market and are winning market in where they operate. So the kind of a need to take changes in those companies is limited.

The next question is, can you compete against the Internet giants like Microsoft in the telecom software?

Well, we see ourselves complementing those giants. We are, in many ways, collaborating with them, not competing against them. Our solutions and software are concentrating more on the niche elements and especially in the telecom software in the management operations of network where Microsoft is not doing that much. Microsoft has been kind of collecting its universe around the core network software. And we are kind of complementing that. Somebody needs to manage those core networks, whether they are from Microsoft or Nokia or whoever.

Okay. The next question is does Elisa plan to migrate the open run in its Finland mobile network to support your part of the business?

I cannot comment that right now. We are constantly looking at different opportunities. And it obviously has been a competitive advantage for us that we have all the network generations from all major vendors in our production. And obviously, we are also looking at opportunities in open run and others.

All right. The next comes here. Very interesting presentation. Deutsche Telekom deal for Automate seems very significant. Can you talk more about the pipeline of opportunities here? Are the other limits in the sense of some telcos unwilling to hand over they --or running their networks?

Well, we are not -- we don't see those kind of limits, because we are not in any way or form trying to take away the control of the networks from the telcos. We are providing tools for them to take better control of it. Our solutions, all of them, they include an SDK, whereby our customers can also create their own use cases and develop the use cases that we've developed further against their needs. So that makes us a little bit of a different in the marketplace. That's a differentiator of ours that we are -- we really understand the logic to our customers, as we are telco ourselves. And we are, by no means, providing them black boxes, which they don't understand what they get, but we are with our customers very open and creating an ecosystem of customers that can all provide to each other.

And then the next one, could you please talk about margins of the international digital business? Back in 2018, this business is in investment phase. Is the business now generating positive EBITDA potential to reduce some of the investment OpEx going forward?

Unfortunately, again, we are not disclosing the exact figures. But the EBITDA, let's put it that way, the EBITDA burn has reduced all the time. And as you know, we have now executed a few quite sizable and quite profitable acquisitions. So that also helps. And since our plan is to keep those companies running, keep those companies growing and being profitable, we are quite positive on our progress on the profitability also.

All right. Let's see there. We have the next question. Do you see yourself growing faster, slower or in line with the market?

Well, we are in a very interesting position in both of our software businesses, and our targets are obviously geared towards beating the market. We have acquired companies who have been growing faster than the markets and our plan stage that we want to keep them going that far and we want to make them better with our own solutions. Hopefully, that will lead into outspeeding the market.

Okay. Telecom software sounds logic to you as well as Videra. But why do you think you can create shareholder value with industrial software?

Well, as our plan is very similar in both of those software businesses, we base our software to the very core competencies of Elisa that have been developed for our telecom network and our telecom business here in Finland and Estonia. We are now leveraging those capabilities that we have built ourselves for both of those businesses. And we are quite confident that we can make, in both segments, the companies that we've acquired a lot better with the competencies that we are now injecting to them, be them telecom or be them in manufacturing industries within these selected verticals. There is a clear logic on why we've selected these verticals. They remind, from the data point of view, very much that of telecom networks.

All right. How are the management targets for international digital services set, sales growth, profitability growth, customer growth?

Obviously, we are following very similar targets than the Elisa in general, but I don't want to go here deeply into details. We are interested in growth. We are interested in profitability. And obviously, we are interested in customer recommendation, as we are in all of our businesses.

All right. So let's see if we have further questions. Yes, we have here. To what extent you are planning to merge these recently acquired companies as a part of Elisa? And what is your approach with acquired companies?

Well, the kind of operative mergers, it's more like we are merging what we have, our startups, into these companies. A good example is what we did with Polystar. We merged our Elisa Automate startup into Polystar, which is continuing as a part of Elisa and is now taking use the eElisa practices for continuous improvement, and through that route, integrating itself to Elisa. So we are not forcing anything other than the financial controls and code of conduct and such that comes from us being the public company to these companies. But we want to help them become better by adopting the trade practices that we've developed here in Elisa.

Thank you, Henri. Now we are moving ahead. And according to our schedule, we'll now move on to our final presentation. Just to remind you, for further questions, please join the teleconference after this presentation. Now I invite CFO, Jari Kinnunen, to present the financials. Jari, please?

Good afternoon. My Elisa experience is a bit more than 20 years. And in the executive team, I've been with more than 15 years. I will now go through financial overview. First, I will talk about performance update since last Capital Markets Day; secondly, how our strategy brings sustainable revenue and earnings growth; third part is capital allocation; and the four, priorities and summary, a couple of reporting matters. Since last Capital Markets Day, solid financial performance has continued and also compared to peers. Revenue growth has been above industry average. And EBITDA, operating cash flow conversion is one of the best. And return on capital employed continues to be best in peer comparison. In profit and loss, there is also continuation of operating leverage. And EPS growth well exceeds revenue growth. There are several reasons, among the others, our very focused uncomplicated business model, efficient CapEx and value creation-oriented acquisition policy. Also, efficient funding costs and low effective tax rate contribute to bottom line growth. Same reasons also impact to EBITDA free cash flow conversion, which is clearly higher than peer group average. And also, as there are no minorities, EBITDA translates well into free cash flow. Long-term consistent strategy and its execution and results of that can be seen in financial midterm targets track record over the years. And this set has outlined our focus on revenue growth and profitability, focus on discipline, capital allocation and focus on solid, efficient capital structure and, obviously, also to strong distributions. And this is set to continue. Let's now move on to that. I now move to profit and growth generation section. And let's first look at the revenue. Currently, more than 3/4 of the revenue comes from growing mobile and digital services. And these are also 2 main drivers for future growth. In mobile, upgrading customers to higher speed continues, and 5G will be the interesting growth driver. Network population coverage is more than 40%. Equipment selection is good. And the number of customers is growing steadily. And we continue additionally time-to-time with product changes. And also, over the time, roaming revenue will be picking up and contribute to growth. Digital services are expected to grow faster than telecom services, driven by total market growth and market share growth. As heard in Henri's presentation, digital -- international digital services growth ambition is high, and it will be fueled also by possible acquisitions. Also, more mature domestic digital services target to continue to grow higher than telecom services. Fixed services as a total is expected to be quite stable with both increasing and decreasing parts. And traditional PSTN, which is only 2% from total, is approaching to end of its life cycle. There are also clear drivers for EBITDA growth, 3 main sources. First, telecom service revenue, driven by mobile, as just described. This is good margin revenue contributing well to earnings growth. Second is digital services. Increasing scale and leveraging existing and already invested assets and resources as well as synergies from recent acquisitions will contribute to EBITDA. Thirdly, continuous productivity improvement measures are significant area for earnings potential. Among the others, we will simplify IT architecture, reduce number of systems and ramp down all technologies. Automation and AI are important tools to drive productivity in many processes like network management, sales and customer care, customer delivery and other processes. And also, strict OpEx discipline is maintained. Now let's move to capital allocation section and CapEx first, where perspective is unchanged. Many years followed disciplined customer demand driven CapEx continues, and 12% CapEx to sales is reiterated in the new midterm targets. We have high spectrum capacity, and we have high network density, also in international comparison. And this makes solid bases to deal with future capacity demands, and the same is with rapidly growing gigabit speed coverage with extensive fiber backbone. CapEx to sales is long-term lower than industry average. In absolute euros, we are a leading investor in Finnish markets. Then, about acquisitions, we continue with our disciplined value-driving policy. And recently, focus has been in international digital services with few bolt-on acquisitions in the last 2 years. Going forward, we continue to scan opportunities in international digital services, also in domestic, IT and telecom. And we have clear criteria for acquisition, strategic fit and clear industrial logics are prerequisites. Operational criteria include, among the others, concrete value creation plan, with identified sources for competitiveness increases and synergies. And we continue to follow tight financial criteria. Acquisitions must be financially accretive. There must be earnings and cash flow contribution and return on investment. Solid balance sheet and credit ratings will be maintained and distributions will be intact or improved. Also many years followed capital structure targets were reiterated, net debt-to-EBITDA between 1.5:2, and equity ratio higher than 35%. These targets and capital allocation policies, they support our cost-efficient structure, capital structure and industry-leading returns. Also, they support growth targets. There is room and flexibility in the balance to possible acquisitions. In funding side, we target to continue improving funding costs future. Currently, average interest cost is approximately 1%. Average maturity between 4 and 5 years and funding sources and maturities are well diversified. Now all this leads to highly competitive profit distribution. Long time existing distribution policy was reiterated and payout ratio between 80% to 100% from net results. And we have a strong track record of 7 consecutive years of growing dividends, average growth, 6%, well above sector average. As there is ambition to continue grow earnings, we see competitive distributions continuing going forward. Then to my last part, which covers ESG reporting and few changes in our quarterly data excel. Regarding ESG, there is long-term consistent reporting since 2011 third-party verified annual report since 2013, and this report is also signed by the Board. From last year onwards, we also report nonfinancial information referring to SASB framework. Also, we are among the top Nordic companies in climate reporting, rated in the leadership category, A-, in CDP reporting. We keep on developing our reporting and make it more transparent. And from Q1 onwards, quarterly published data access will be changed so that fixed and digital service revenues will be split into fixed service revenue and digital service revenue lines. As said today, DTR services have higher than telecom services growth ambition, and this makes it visible and transparent. Second change is that number of machine-to-machine subscriptions will be reported separately. We think that this also makes postpaid subscriptions more transparent and comparable to ARPU reporting. And finally, priorities in 3 main strategic paths in telecom services path, focus on growth and continue with efficient CapEx and high earnings and cash flow conversion. In digital services, continuing with disciplined acquisitions, improving growth and profitability in efficiency and quality part, continuing with productivity and cost efficiency improvements and maintaining efficient capital structure. Now this is my presentation. We can take questions now.

Thank you, Jari, and let's move on again to chat questions. The first one was actually for consumers, but we didn't have time for that, and so let's take it now. Within consumer, it looks like fixed service revenues have declined over the 2018 to 2020. In the context of ambition to grow fixed service revenues at the group level, are you assuming that the fixed service revenues in consumer will also grow or maybe decline less than in the past.

Well, as I said, total fixed revenues, they are expected to be fairly stable. And inside fixed services, we have decreasing and increasing parts. And obviously, traditional PSTN is declining. There are also some declining revenue parts in corporate side like corporate numbers and service numbers. Fixed broadband, we expect to be fairly stable. Copper line based fixed broadband will decline, and we are upgrading customers to higher speeds in fixed broadband.

Okay, could you talk about your efficiency program? Has COVID-19 brought any areas of sustainable cost savings for Elisa?

Yes. We -- of course, we've been doing different scenarios and first of all, when pandemic started different scenarios, how it will impact and what our opportunities to do countermeasures in order to defend our earnings and cash flows. Also, we've been doing different scenarios how the changes post COVID and for example, in office environment and working environment, there could be changes so that smaller amounts of office space is needed as remote working is at least partly continuing. Traveling could be in the post-COVID world less than what it was before, as video conferencing services and other services are widely used. And it also provides opportunities in as especially in corporate segment, as customers are looking for different digital solutions.

Okay. Next question goes like this. EBITDA margin is basically flat for the last 3 years, excluding the boost from IFRS 16. You guidance implies 1% point of margin expansion over the next 3 years. So are you saying that we should expect a step-up in acceleration in operating cost efficiencies from here?

Well, we have a clear that where we have positive impacts to EBITDA, as said, in revenue side, especially mobile service revenue growing and contributing to EBITDA and digital services. We are still not in a matter of phase. So we have opportunity to scale on top of invested capabilities and improved margin, of course. Now the recent acquisitions, they help improve EBITDA situation. But organically, there is room to continue to scale on top of capabilities and assets that we have. And very important that is -- continues efficiency improvement, that and using increasing automation and AI. We are one of the leading or if not the leading telecom in many ways, but there is still a lot potential going forward using those skills and capabilities in different processes and different parts of the business.

All right. You continue to guide CapEx to sales of maximum 12% at the group level. New digital services are growing faster than telecom services and have likely lower CapEx intensity. Does your guidance imply your telecom CapEx intensity is increasing?

Well, 12% is something what we have had many years. And it's also going forward, a good figure for us. And we still have biggest part, of course, of the total business and total revenue in telecom side. And over the time, we are targeting to increase digital service portion of the total revenue and remains to be seen what is long term, the CapEx. But for this midterm, we are guiding 12% CapEx to sales.

Thank you, Jari. Thank you for the questions. Next on the agenda, we have a joint Q&A session where all speakers are available for questions. [Operator Instructions] We are now ready to start the Q&A. Moderator, please go ahead.

[Operator Instructions] Our first question comes from Andrew Lee from Goldman Sachs.

I had 2 questions, one on returns and one on international digital services. Just on returns, your returns are materially above any peer in the European sector. And so it's slightly uncharted territory for us. But they have been flat, as you showed in your chart, or down the last couple of years. The guidance you set out today implies they should rise again. I just wondered if you could share any thoughts on how high those returns can go by 2023 and maybe beyond? And any factors we should be aware of that would hinder that expansion? And then a second question on international digital services. Our question earlier that you asked on that, Vesa, and thanks for asking it. I was just kind of follow-up on that, really. It's a clear presentation on IDS and what the business is, but still struggling a little bit, just to understand how we should think about the growth opportunity. And if we add up -- I take the apples-to-apples comparison, but maybe we could have a bit more detail on that in terms of versus the Capital Markets Day revenues you gave us in 2019. So if we add it to that $30 million, the $40 million from Polystar, the $20 million from camLine and a couple of other deals, that gets us quite a bit above the revenues you're generating now. So is this a business that has been kind of shrinking and is about to grow? Is it a business that's been growing and is continuing to grow? Just any help on the kind of growth historicals and trajectory that you can give would be really helpful for us.

All right. If I continue and start with the -- your questions. For the first -- to the first question on returns, I ask Jari to give some more insight into that question. And in regards to the IDS revenue growth, like earlier said, we are not comparing, really, apples-to-apples. And I also ask Jari to elaborate a bit that the 30% that we gave last Capital Markets Day is not exactly the same revenue stream or set of revenue streams that we had in our 81 million now. So please, Jari, could you please give some more insights.

Sure. On returns, we don't give any guidance. But of course, we will continue with our disciplined CapEx policies, disciplined acquisition policies, which are a few of the reasons for good returns. And of course, we -- good return means that we get more out of the assets, what we have, and we like to continue, and we will continue with that emphasis also going forward. In end of '20, we had camLine acquisition, which was included in the figures in the balance sheet because the acquisition happened at the end of the year, we didn't have any positive impact in profit and loss. So it was dilutive in return point of view in that sense that the assets of camLine in the balance. But as it was included last day of December, no positive impact in profit and loss, so there will be positive contribution this year. Regarding revenues and organic revenue, so like already mentioned a couple of times here, it's not the same basis. And of course, where 2 years ago, early phase and making trials and developing digital service, international digital service business, besides Videra, which was more mature already, already 10, and there are some parts that we don't have any more in the revenues. And of course, since then, we made a couple of acquisitions, and it's quite correct that biggest part of the growth is through these acquisitions.

Our next question comes from Nick Lyall from SocGen.

Just again on IDS, if that's okay. I mean it's -- after all -- your talk of growth in 2018, it's still just 4% of revenues overall. So back to your point, and Jari just mentioned this again, you've been a bit conservative on growth. There must be lots of companies out there now that are struggling, given the crisis as a medium-sized IT company. So are you tempted to grow faster if the opportunities arise, do you think? And linked with that, Jari, you just mentioned again on the deal, but would you be prepared to move above your gearing targets if the right opportunities came up in IDS?

Okay. In regards to the international digital services, we are very open that we still have that business domain, let's say, work in the progress. And that's the reason also why we are step-by-step also increasing the reporting of it and disclosure of it. But there are, like you said in your question, there are clearly several opportunities for acquisitions, but we want to also continue with high-quality of our acquisitions. We have a lot of kind of good momentum building up, but it is about step-by-step development. Will there be some acceleration of kind of the business growth and revenue growth in some point in time? That's of course, something that we are kind of certainly looking for. But it is still something that is, of course, also partly of our control because it is a part of the new market that we are developing. But as in the presentation Henri was elaborating, we have really strong future-oriented capabilities. And together with the acquired great companies when we perform, we have really a high probability to make a stronger and larger sectors out of those. But clearly, the ambition level we have is, but we cannot provide you with any guidance on which kind of growth rates we will have in the future for that. And the latter part of the question, and maybe I ask Jari to comment on the latter part of the question, please.

Yes, I believe it was regarding acquisitions and well, as I said, we have this disciplined tight criterias for acquisitions. And most of all, it's about building and creating value and various ways. And that's the sort of key parameter in this criterias. And also, as said, we are step-by-step building this domain and international digital services, and we are compared to what the situation was 2 years ago, in the last Capital Markets Day, we have advanced clearly. And both organically, we know more and we learned more. And also, we've done several bolt-on acquisitions. And that's how we will continue learning and building step by step. And apart from the criterias that I mentioned in the presentation is, obviously, of course, that we are performing business-wise. And the figures are delivered and revenue and earnings figures are developing as we planned. So that's another prerequisite to continue, obviously.

Our next question comes from Artem Beletski from SEB.

Yes. This is Artem from SEB. Thank you for comprehensive presentations today. And I would like to ask further on digital services. And basically, whether you are looking at new domains on top of, so say, 3 international ones and 2 domestic ones, what you have right now or are you happy with current setup or basically platform for future growth? And maybe continue on the same topic. So you are providing quite clear message on looking also into M&A opportunities within international operations. How do we see, basically, domestic businesses like IT services and solutions? Do you see some scope for nonorganic growth on that front going forward?

Okay. In terms of the digital service businesses, we are quite happy for the business domains that we are running today, domestically, mostly for the entertaining video and IT. And then, internationally, we have the 3 domains. We believe that in each of these domains, we have very good growth opportunities in organic way but also in inorganic way. And for example, the international software businesses, these 2 domains. There are quite a few different, let's say, customer problems that we can start to solve companies. So which enough innovations. We also have learned when we have had a quite long history of developing digital services at Elisa, longer than most of the operators really on decisive way, that it is also very important to focus on. We cannot run everywhere to find growth. And in these growth markets that we have explained and we have selected, we see that there's a very good potential to find growth pockets and growth areas, even if we cannot be successful in all of the growth pockets in those domains. But we are -- in a nutshell, yes, we are quite happy to focus on and further develop those 5 business domains. To your last part of your question about inorganic developments in our domestic digital service businesses, it is clearly possible also to find growth in an inorganic way. And those businesses remains to be seen in the future how things are moving forward. But like I said, these targets that Jari was also explaining, we are following these targets and kind of thinkings that we have overall for our business and value creation objectives.

Our next question comes from Siyi He from Citi.

I have 2, please, and one is on 5G and one is outside. So on 5G, I think you reported that you already have 200,000 customers by end of '20, which is materially higher than the numbers indicated by your competitors. Maybe you could share with us your thoughts on why Elisa is growing much faster. And maybe if you can give us your assumptions of the percentage of customers taking 5G by end of '21 to reach your more than 1% mobile service revenue contribution target, that would be great. And the second question is on fiber. I think one of your competitors is partnering with infrastructure companies to roll out fiber in Finland. And just wondering, how do you think the potential impact on the competitive landscapes in fixed? And do you see Elisa itself to also pursuing similar fiber opportunities going forward?

All right, thank you very much for the questions. In regards to the 5G, I have understanding that our competitors have also taken new 5G customers in their base. And we haven't really seen what their numbers are. So I'm not quite sure that they would be so much behind us in terms of the new 5G customers. And as we have seen, Finland is all together with all the players, quite active 5G market, really. So I'm expecting the, let's say, intake of 5G customers on the same basis of value, how customers are pursing to get the value of 5G in Finland also to happen in our competitors' customer base. We are really looking forward for improving our mobile service revenue with the 5G deployment. And as we said that we will have at least one percentage points positive contribution from 5G this year. And this is still quite early days. And that's what we are looking for to generate more mobile service revenue growth during this year and years going forward. Still, 200,000 is quite a small number of the total customer base. So the more 5G customers we will have, the more, of course, also we can have revenues and the higher speeds, the customers will go with 5G, the more MSR positive impact we can have. We are not disclosing our targets also for this year's 5G customer numbers. We unfortunately do not plan to disclose the number of 5G customers going forward, at least now. Later on, we will probably come into that, but not now. In terms of fiber, yes, there are different kind of partnerships in the fiber layouts. We also have, with Lounea, a partnership, where we are experimenting how in -- outside our main fixed network areas, how we can with joint forces, get the demand of fiber access to be better than it is. And that's really the difference and also partly the challenge for selling fiber in Finland that with this Finnish mobile data model with the unlimited speed tiered model and with the high-quality of service that we provide with the mobile networks, there is much less demand for fiber solutions in Finland in proportion to the -- when we compare it to the other countries, like, for example, Sweden. So the question is not really that we would have a lack of supply in the fiber layout and fiber delivery and offering, it is more about the demand in fiber market. And we are definitely fulfilling with our own forces. And maybe if we need, we don't particularly see that in the near future, at least that we would need any partnerships to build fiber as much as there is a need for. So we will force, of course, with that demand level that there is in the marketplace, and we are confident that we can be competitive, and we can take our share of the fiber market, which we have in Finland.

Our next question comes from Sami Sarkamies from Nordea.

I have 2 questions. First one would be on the financial targets. You continue to maintain a rather conservative leverage ratio, given stability of your telecom business, why wouldn't you consider a higher leverage ratio in order to allow for more headroom for bolt-on acquisitions that support the international growth businesses.

Okay, if you want to go one by one. Thanks for your question. First question. Yes, we believe that this leverage ratio is very suitable for Elisa. But having 1.5x to 2.0x, it doesn't prevent us if we would just suddenly have quite a few very, let's say, qualified cases for acquisitions to go beyond 2. We can well also go been 2 without any challenge to covenants or so. And because we also know that with our good cash flow, we can come back and we will come back quite quickly. So we don't see any reason to have higher leverage target due to the acquisition outlook that we have. We may speculate that some point in time in the future, which is maybe a bit before next Capital Markets Day or a bit after or so, there might be a need for taking a look on this due to the, let's say, acquisitions after the continuous improvement in that front being larger. But we have a lot of room with this capital structure target to do -- go for even larger acquisitions as well.

And then the second question would be on the Huawei swap outs that you may be faced with in Estonia. Would you be able to provide us with an estimate on the cost and timing for that potential swap out?

Well, for the first, understanding that Estonia is less than 10% of our total business. That gives some framework that -- of the networks cost and CapEx as well there. And it is, of course, still early to say that what kind of swap out cost there will be. For the first, the government hasn't decided on the rules. There has been a speculation that there will be a few years' time for the transition of the equipment, which, of course, helps that the transition is not happening overnight at all. And also, there has been discussion at how this government is kind of compensating way or another. This force, quite abrupt force anyhow for equipment vendors with their legislation due to their national security thinking. And also, of course, the equipment market and our, let's say, attractiveness by the equipment vendors is high. The equipment market is kind of getting continuously more and more cost effective. So with these ingredients in mind, we don't see any, let's say, significant or material negative impact for the swap out once we need to do that probably step by step. But unfortunately, the timings and the -- all the other details are still quite open because the government changed in Estonia, the new government hasn't yet made any decisions.

Okay. I would just run a third question. You didn't want to disclose the number of power assets earlier in the discussion. Should we assume that you're not currently planning any infrastructure divestments unlike some of your peers?

Your interpretation is quite right. We really see that the infrastructure with towers is really core asset for us, and it is really good to keep them. And we don't have -- we are not squeezed by batch large acquisitions or something like that to be kind of improving our balance sheet with those kind of activities.

[Operator Instructions] Our next question comes from Peter Kurt Nielsen from ABG.

A couple of questions, please. Firstly, I believe very much that we have seen a recent increase in restrictions related to COVID in Finland. What are you assuming for post-COVID recovery? And more specifically, on roaming, the eventual return on roaming revenues will, of course, give a boost to revenue growth. But what have you assumed here, a gradual recovery in the second half? Or no recovery at all until next year? That will be sort of helpful to know. And secondly, if I may return to the returns question. I appreciate Jari doesn't want to elaborate further or give guidance. But judging from your comments, I read that you're certainly not anticipating lower returns in a 5G world than you are in a 4G environment. I guess, if Jari could confirm that. And related to that issue, you've discussed several times today the healthy premium tend ARPU uplift from 5G. Are you concerned that some of your competitors, you obviously can't speak for them, but are you concerned that competitors may compromise on the 5G premium, thus reducing the uplift that you are seeing eventually in order to catch up on 5G?

Okay, let me start from your COVID question and related to roaming. It is, of course, quite probable that even if the getting vaccines is moving ahead also in Europe. And hopefully, this second or third waves that we've seen are coming down sometime in the spring time towards the summer. It is quite likely that the traveling really and the business traveling doesn't get started hardly at all during this year. That's our assumption. And also the roaming revenue assumption is based on such that we don't really see high kind of increases for the roaming revenues for this year in our assumptions. We're happy if we are wrong and it goes smoother, but that's how we believe and that's how we have assumed in our plans. I leave the second question, really, to Jari, but in regards to the 5G question and the competition, we believe that the customers, our competitors also appreciating the 5G. We have the NPS measurements that we just showed to you. So we believe that there is clearly a potential for everybody in the market to make -- to have customers, to be so happy that they are willing to pay for the upgrade. What will really happen with the competition, it's, of course, something that we cannot control. We just work with our own kind of pricings, but we see that we can make money -- more money with the 5G increased customer experience compared to the non-5G. We are -- if and when there are competition, we, of course, believe also then our strengths in the competitive landscape of various kinds, which we continuously improve further. But Jari, please, you can continue with the second question of Peter Kurt.

Sure. So as I said, we will continue with our disciplined capital allocation policies and with acquisitions and CapEx. And in the midterm targets, we have a target to grow revenue more than 2% and EBITDA more than 3%. So that's -- even though we are not guiding returns, but the basic concept remains as it has been and the good returns as a result of that.

Our next question comes from Stefan Gauffin from DNB.

Yes, I would like to follow-up on the tower question. Can you just give some more information on why you see the need to own the towers? What are the pros and cons to own yourself versus partnering with the tower company, given that several of your peers are now talking more widely about selling out the towers? So just more information on how you view that asset.

Okay, thank you for your question, it's good to clarify a bit further on, certainly. I think it is about kind of perspective of the business. So if you are more short-term or if you are for the long-term in the business. Elisa, is in the -- for the long term, we are looking for continuous improvement for the long term. Of course, we could also benefit short-term by selling our assets and get some benefits out of that. But the reason -- the thing is that you will start to pay higher cost level for those assets later on. At some point in time, which will be negatively impacted to your results to the control of your whole mobile business and so forth. So those are the reasons that we don't prefer that. And like I said, we are not squeezed by any means with our balance sheet situation to do that desperately. So we are, for the long term, maybe other operators are thinking a bit differently.

Can I just follow-up? Are there also any operational issues? I think about longer term, when you start to densifying the network and having control of the tower operation in that perspective? Or is it mainly on the cost side that you see the benefit on it?

When we think about that the grid would be densifying for 5G, for the first, we have a very dense grid for 5G that is very, let's say, valid and dense for the business we are running with 5G. Now when there is a promise for industry type of applications with 5G, where you need to have a modern script, of course, they are more local campus-wide or, let's say, harbor-wide implementations. And there, of course, there's a need for more build-out, and there will be operationally different issues or opportunities. Those are separate. But even then, it is about kind of business cases together with those kind of customers. In general, we are not really a strong believer that quite soon, we might have a really public open 5G network with 5G base station in every light pulp overall around in Finland. We don't just believe on those kind of autonomous driving scenarios which would kind of depend on the 5G network. It will be something in the very, let's say, from our point of view, quite far in the future. So thinking that, we don't see also any drive for kind of getting out of the -- our infrastructure in mobile network.

Unfortunately, that's all the questions we have time for. So I'll now hand over back to the speakers for any closing remarks.

All right, thank you for the audience and the speakers for this very active Q&A session. We will, of course, continue our dialogue after the event, and we are available for any unanswered questions. On my behalf, thank you for your active participation on our Capital Markets Day. Thank you to all my colleagues here at Elisa, and special thanks to [ Katy ] who made this event working fluently. The recording and presentations will be available on elisa.com/cmd. Now we have a closing remarks before ending the event. So Veli-Matti, please.

Thank you, Vesa. I also first like to thank all of you for your attention and activeness in making questions. We would rather prefer to have you on-site and have face-to-face discussions. We will hopefully have that in the future when we continue the good dialogue we have together. We highly appreciate that you really took the time and you have spent in front of your screens, whole 3 and 3.5 hours. I'd also like to thank [ Katy ] and also our external partners to make this event working fluently virtually from the technology and other points of view. I would conclude our Capital Markets Day by just summarizing that the ambition that we set with our updated medium-term targets, we have a higher ambition to grow than before, and we also continue to have high ambition on our margin levels. With these words, I really like to thank you once again, and have a rest -- good rest of the day. Bye now.