Elisa Oyj (ELISA) Earnings Call Transcript & Summary

So good morning, everyone, and welcome to Elisa's 2023 Capital Markets Day. I'm Vesa Sahivirta, Head of Investor Relations. And today, also with me is Kati Norppa for Investor Relations and Group Treasurer, Juha Kervinen, and we are also available for discussions with you during the day. We have five presentations today. So let's take a look on the agenda. We start with the group presentation followed by consumer customers presentation. After a short break, we continue with corporate customers, international digital services and financial presentations. After each presentation, we have approximately 10 minutes for Q&A. And after all presentations, we spend more time with questions and answers. But now let me welcome our first speaker, CEO, Veli-Matti Mattila. Veli-Matti, please.

Good morning, everybody, and welcome to Elisa's Capital Markets Day on my behalf as well. I'm really pleased and happy to see you all here in our event and I highly appreciate that you have made the time investment to learn more about Elisa. The objective today is, first, to give you more information how Elisa has done during the past 2 years and also to share with you the great opportunities we have in our strategy. And I have with me strong, experienced, Elisa team to further elaborate these great strategic opportunities. I will start with the performance review followed by a review to the markets that we are operating in. And then we will take a look on the strategy by which we can continue to create sustainable profit and growth. And finally, I will walk you through with our updated medium-term targets, and then I will go also to my priorities. Let's now move to the first topic. I would like to start by explaining you the way that we are generating sustainable profit and growth. We have a comprehensive way to look how we create value for all of our important stakeholders. And if we can create value for our customers, engage Elisa employees, have positive impact to the society we believe that then we can also have the best way to create unique financial performance for shareholders. Why this approach is meaningful? Why it's important to point out because we believe strongly that this way of creating sustainable value is more competitive and more resilient to the shareholders. We have a strong track record of improving our customer satisfaction. We are measuring it with the Net Promoter Score Elisa level, brand level Net Promoter Score, which is combined from the consumer unit, business unit and B2B business unit results, revenue weightage, and we have had a good progress. In '21, we had a slight dip, but again, we are moving forward with continuous improvement, continuous development. We have also succeeded well with our employee engagement having the engagement in a high level. And also during the COVID period, which has been pressuring the engagement, we have been able to sustain that on a good level. And of course, our ambition is to improve further on to be -- belong to the top 10% of organizations in engagement going forward. Sustainability is a large broad topic. United Nations has listed 17 sustainable development goals with 169 targets. And we are, of course, according to our mission, a sustainable future through digitalization, we are making a lot of -- we are making choices. We are designing our products and services really to create a sustainable future. And we have also focused to create sustainable future in four areas: digital, social, environmental and economical. And we -- in order to really create impact, in addition to all of the activities that we do to push forward the sustainable development, we have also selected four distinct KPIs, which we started to report on a quarterly basis. And we have had also a very good track record and development on improving the safe, reliable digital environment by increasing the high-speed connectivity in Finland. We have had a very good process on improving the number of supervisors, female supervisors at Elisa to create more diverse workplace. And also, we have had good development on energy efficiency and innovations as well. Our financial performance has been very competitive. Our revenue has grown clearly above the industry average as well as our EBITDA and our EPS growing 7% more than our revenues has also made it possible to continue the industry most reliable dividend growth now already ninth year in a row. And we are well on track to meet all of our medium-term targets to the end of 2023. Revenue growth, our target has been more than 2%. Revenue growth has been 6%. For EBITDA, our target has been more than 3% and our 2020 through 2022 result has been 3.6%. And we have very well complied also to our CapEx to sales and capital structure targets. I am really proud of Elisa employees that they year after year, can deliver the results according to our targets, create growth, create great development for the future growth potential. That's it for the performance review. Let's now move to the markets. We are operating in a digitally advanced and attractive markets. In our domestic markets, Finland and Estonia, they are really well-digitizing, which creates, of course, great opportunities for our business. Also, our regulators are forward-looking, which makes it possible for us to optimize and balance with their demands on one hand and then also our business plans on the other hand. In the international software businesses, we have great demand drivers, great needs from the customer bases, whether it comes to the telecom software business or to the industrial software business. In our traditional markets, the telecom market and domestic and other digital services, we have great sizable markets and also good growth rates. And they are creating continuous good gradual growth opportunity for us, both in revenue and in profit. But even higher than that, we have growth in the international software markets, where our telecom software business growing by 6% the market and the industrial software market growing by 11% expected going forward. They are creating really exciting, significant further growth opportunity to Elisa. And this completes the part of the market overview in my presentation. Now we can move to the strategy. Elisians are getting and filling a lot of purpose with our mission, a sustainable future through digitization. And we are also very excited and inspired by our vision which is leading us to execute with high ambitions, that strategy, where we have three focus areas. Let's move to the first one where we can show and tell you that the up-selling model -- business model in mobile data continues to work, our unlimited speed tier-based pricing is working really well. We are providing customers higher speeds and better latency. And with that, customers are getting better user experience which makes them happy to move to the higher levels again and again and also paying a little bit more to us. So the upselling business model continues to work. We, of course, have done some price increases as well. But when comparing the prices in Finland in the mobile data, they are very affordable to the European level. And we are expecting mid-single-digit MSR growth in 2023, also good development for MSR that after. And the same thing, of course, continues the upselling model work continues in 5G. We clearly see that 5G customers are more satisfied than 4G customers, and that makes them willing to pay more than EUR 3 more on average per month when they move up. And also, we are increasing our addressable market by building wider coverage and the network coverage for 5G has doubled during the past 2 years. Also, we are selling more and more 5G devices to our customers. At the moment, the share of 5G devices in our customer base is reaching 40%. Many of you probably will remember approximately 5, a bit more than 5 years ago, when there was a lot of discussion about the business models and business opportunities for 5G. We were talking about human impatience at Elisa. We were having the view that customers are pleased for the faster speed that 5G can provide. And that way, customers are happy to pay for the better experience. There was also many other thoughts on 5G business models, but we were quite sure about this, and I'm happy that our assumptions for the business have been proven. So this is also the 5G momentum is making it possible for us to give you the guidance for this year for MSR growing mid-single digit for this year and also outlook for the future, it looks good. Fiber offering is also complementing our means to provide customers faster broadband connectivity. COVID time and remote working during COVID has somewhat increased the customers' appetite also to get fiber. And we are, of course, capitalizing that opportunity. We are building actually our network in -- mostly in urban areas and densely populated suburbs. And of course, the buildout that we are doing on top of our great fiber infrastructure is getting also competitiveness with the synergies when we are selling both to consumers and to the large B2B customer base of ours. We made a survey among Elisa's customers about the preference for fiber provider and 41% said that they are preferring Elisa to be their fiber service provider. 53%, 5-3, 53% of customers whether didn't know yet or they didn't yet have interest to the fiber. We believe that of that 53%, we can also have at least 41% to prefer Elisa, which means then that approximately 2/3 of the customer base are preferring Elisa as their fiber provider. So we have a very strong position when the fiber demand gradually is increasing. And we have also additional revenue streams on top of the fixed and mobile revenue. Especially in the areas of security and IoT, combined revenue for security and IoT services in B2B and consumer side is reaching EUR 70 million with a 20% growth rate with a very healthy EBITDA level. And of course, the uncertain geopolitical environment also the understanding of the importance of cybersecurity as well as the very good development in IoT ecosystems is further increasing the potential for us to grow these additional services. And why this EUR 70 million is important? It is evidence that there are additional revenue streams that operators can have on top of the broadband revenues that are, for example, in Elisa growing themselves well, as well. This is it for the first strategy focus area. Let's now move to the second strategy focus area of Elisa to digital services. We continue to have good growth in our domestic and other digital services, Elisa's entertaining video services have grown 10% to EUR 180 million approximately with EBITDA level, slightly having pressure because the market has at the moment in the video services, really intensive competition. Our strength lies in our high-quality in Finnish original, Estonian original content and also our broad capability to provide basically all kinds of contents to our customers. And of course, our aim is to have with a scaling impact to improve the profitability going forward for the entertaining video business. The IT services and solutions business has also grown 10%, approximately EUR 140 million still being around 5%, but also with our intelligent automation and AI capabilities and with the scale, we can also get the EBITDA to grow. And in visual communications, after the COVID period, when the -- basically only the cloud-based video conferencing services were growing. Now when the hybrid working has started and people are coming back to the offices, the types of multi-device, multi-technology integrated video conference solutions are much more in demand, which is exactly our Videra's competitive capability so Videra has also started to get back to growth with 8% growth to EUR 25 million approximately. So we have great growth opportunities in the traditional domestic and other digital services. But more excited we are about the international software business growth opportunities. We have carefully and determinedly step-by-step grown these two businesses, Elisa Polystar and Elisa IndustrIQ and they are reaching -- they have reached EUR 82 million in revenues. In 2 years, they have been growing 44%. Last year, we had 35% growth and organic growth last year was 22%, which is clearly more than the market growth. And among the revenues, we have a high share of growing recurring revenues and EBITDA is close to breakeven. With the scaling and also other developments, we are giving the profitability of these businesses. And according to our plan, the burden for Elisa level EBITDA is not any more negative around 2024, 2025. And we are really a technology leader based on our more than 10-year track record and capability we've developed in AI and analytics. That makes us different and competitive in these new markets, software markets for telecom and industrial sector. And we have high ambitions to grow with these businesses. We are really excited about the opportunities, and we aim to continue the strong double-digit growth, organic growth as well as we are planning to accelerate further the growth with M&A. And as we have discussed many times, that we -- and we have made the promise to increase the disclosure of these businesses. So today, we are giving you the revenue numbers for these businesses 2 years back quarter by quarter. And starting first quarter this year, we start to provide you the revenue numbers for these two businesses combined on a yearly basis. separately from the other digital service businesses. This is it for the digital services, and let's move now to our third focus area in our strategy. Elisa's results can be explained many ways by the right, good strategic choices we've done, but very much the explanation behind Elisa's success is the way -- the unique way we are operating and developing Elisa. This unique approach, which we call Elisa Business System has its bedrock on our culture and our values. We are truly customer-centric and we have long-term systems thinking in Elisa's culture. We are really looking at the situations from outside in from customers' point of view, whenever we are making decisions on any development of our processes and activities or in regards to our products and services development always from the customer point of view first and customer profit value point of view. And we are working for the long term. We try to avoid quick fixes. We want to create sustainable long-term solutions when we develop Elisa. Second important thing in Elisa's business system is the continuous improvement and innovation capabilities. We have more than 100 shared practices that we have been developing over 12 years' time. We have productized those practices so that they can be more easily shared and deployed throughout the organization, including the acquired new companies joining Elisa. And of course, the business system from the practices point of view also is continuously evolving, and we are able to take great practices from the acquired companies. The third important element in our business system is that we are investing in people and cultivation of leadership. Willingness and capability to learn is truly important at Elisa. Of course, taking courses is important, but we really talk about everyday learning. And everyday learning, we mean that we are learning every day from our work and our job. We are learning from mistakes and successes. We are learning through experimentation and reflections. And we also use systematic models to evaluate our -- and validate our learnings. Elisa leadership is very much about coaching style and it is about that leaders have responsibility to make it possible for Elisians to grow themselves to develop themselves, help them to improve their thinking as individuals or teams. Of course, Elisa business system includes many more common business management practices as well. Why this Elisa Business system is so important? As I said in the beginning, it's really one big reason why Elisa continues to do record results? Why Elisa continuously improves? It is about systematic long-term development with the customer orientation. It is also something which is a bedrock for our future development future success. And it is also quite unique so that it is quite difficult to copy for competitors. What can we achieve, for example, with Elisa Business System? What are the results? Here, we have some results what we achieve when we develop our activities and processes and ways of working in our network operations. We use also many times technologies to amplify the changes for our processes and practices. And here, we can see how automating our network operations, network planning and operations, we have been able to automate over 200,000 actions per day. That is a great increase in productivity leading to profitability improvement, 200,000 actions per day just with these developments. And there are many, many more things that we can do the way we -- with Elisa Business System develop our network operations. And this is -- this kind of developments, which I now gave one example. Of course, they are contributing, for example, to lower -- to better energy efficiency and also our capability to continue to take care of good development of our CapEx levels and OpEx levels. Also, another example is from the customer-facing part of our operations. For example, the chatbot, voicebots and predictive care, we have result in 2022 500,000 cases. 0.5 million cases sold with these capabilities. And there's, of course, a lot of potential left. Many times, companies who are driving productivity improvements or profitability improvement, they start from headcount reductions, big announcements of headcount reductions. And we have been discussing many times that that's not the approach Elisa has. Our approach is to develop with customer quality in mind our practices, ways of working, also utilizing technologies, leading to productivity improvement. And of course, in Elisa's business system, the focus is also in people. When we have need for less people in certain processes when we have done good development, we already have taken the best care where we can for our employees to be developed to new things, new works, new positions at Elisa or we do our utmost to find new positions for those Elisians somewhere else outside Elisa, if that's the case. So a very, very different approach to continuously year-after-year develop productivity. And of course, these continuous improvements, they are not only leading profitability improvement. They also are improving customer satisfaction. As you can see, our customer effort score, is clearly above the industry top quartile. This concludes my presentation in regards to the third focus area in Elisa's strategy. Finally, I can now tell you about the updated medium-term targets to the end of 2025, revenue growth target we have as before, more than 2% for EBITDA growth, compound annual growth target for 2022 through 2025, more than 3% CapEx to sale, maximum 12% and capital structure targets are also intact. Same thing with the profit distribution. Our profit distribution policy stays intact, 80% to 100% of net result. In summary, I can be very happy to share with you and also with elaboration with my colleagues, the great opportunities we have in our strategy with all the three areas of our strategy. With the MSR development with the development of fixed revenues as well as the additional revenues, also the great development on our domestic and other digital services and also the exciting opportunities, strong opportunities we have with the international software services as well as the Elisa business system, continuously developing, continuously improving, creating productivity but also improved customer satisfaction. They are really what I -- we are happy to more elaborate to you.

So thank you for your attention, and I'm more than happy to answer to your questions, please. Please, if you can take the mic, please.

Nick Lyall from SocGen. Some good numbers in there on digital domestic services, I had a question. The CAGR seem to be 2020 to '22. And I was just looking at the new split out. Thanks for the new split out in the excel sheet at the end. But it's the last couple of quarters, the growth in domestic digital services has been a lot lower than that. I think, 2% or 3% in the last quarter. So what's the sort of outlook for domestic digital services growth on the top line? And in terms of margins, is the scope for improving those margins if the scale isn't increasing? Or are those the sort of 5% to 15% margins we should expect for that business in the future as well?

Yes. Well, the growth expectations, we are really not giving you even soft guidance for the growth of the domestic digital services. But I can say that the entertaining video market, that's currently under very heavy competition also with the price competition. And we have seen that in the results of international players. So I'm expecting that we have some growth in the entertaining video market, but of course, great potential to improve the EBITDA. When we look at the IT market, there, we are not at all the biggest player in the market, and there's a lot of drive for companies for digitalization. We have differentiated automation-based, AI-based solutions. So I see slightly higher growth opportunity for that domain, including also then the profitability improvement. And for visual communications for the other services, we have great outlook now as well to grow step by step when the hybrid working is increasing. Sami, please.

Sami Sarkamies, Danske Bank. I have two questions. Firstly, on the IT Services and solutions. EBITDA margin is only 5%. Do you see ways to improve this going forward? Or is it more like a sales tool for corporate telecom services?

No. We have -- yes, we have a visibility for improving the margin. We can improve the margin. We see that by growing the business, it is scaling. Also, we have unique capabilities in automation and analytics using AI that is also helping our production to be even better. And what we noticed is also that the telecom customers who are also buying IT, they are more profitable for us.

And then maybe a second question on International Digital Services. You're reporting now healthy, more than 20% organic growth. I think in the previous events when you've been disclosing financials, organic growth hasn't been that strong for this unit. So what has changed? What are you doing differently now?

I'm not sure if we have disclosed the growth numbers, that much organic growth numbers, but maybe we have, but in a quite, let's say, in accurate way. But certainly, we have got traction with these businesses. We have great Elisa capabilities. We have developed more than 10 years in AI analytics that we, in Elisa also develop further on, they are fueling the good growth that we have also had in the acquired companies. And we have got good setup already by now in both businesses with the acquired companies. And there is, of course, a further opportunity to complement the offering with some acquisition and also have the demand. Also, of course, Henri will elaborate this more in his presentation. But of course, there is -- because we are very much also addressing the new developing markets of solutions to these segments when AI and analytics is more used. The customers are also getting more accustomed to those, and that also used there.

Yes. Can you hear me? Artem Beletski from. Two questions from my side. So the first one is relating to IoT and security business, some interesting numbers you showed to us today. How do you see sort growth opportunities in this business? And are there any means to also accelerate it going forward because the business is actually quite profitable?

We have grown now in the past 2 years, 20% without giving any soft guidance, we see good growth opportunity with these businesses going forward. And based on those demand drivers that I explained as well.

And then the second question is related to international digital services. And what is your sort of approach going forward? It looks like that over recent couple of years, you have been focusing on this type of smaller bolt-on acquisitions within this kind of two verticals, what you have there. What is your approach going forward? Is this still a way, so say, how you view acquisitions? Or are you prepared to do something bigger?

As I was saying that our aim is to continue strong double-digit organic growth. That's the idea for us that we are accelerating that with the right kind of acquisitions, whether they are bolt-on or a bit larger, the means to be seen. But the main thing, of course, is that we can complement very well the offerings that we have in these two businesses so that they have capabilities to continue strong organic growth. Henri will, of course, give more elaboration to this.

Siyi He from Citigroup. And just two questions on your guidance. And you guide for 2% growth in revenue and 3% growth in EBITDA. And it seems it's a reverse trend compared to what you have reported. You reported 6% down revenue growth and 4% on EBITDA. Just want to understand your thoughts about this improved operating leverage on your guidance? And second question is also about the guidance. You're still targeting a maximum 12% capex to sales. But I also said that the fiber seems -- is a very good business in Finland now. And I'm wondering why you think you should tap your CapEx. So because it seems like you could actually invest more in building out fiber to capture the revenue growth on that side, too?

Okay. Well, first, our EBITDA guidance is absolute EBITDA. Even if the margin, i.e., the operating leverage, if you will, is important, and we are following that. Our main target is to grow EBITDA and then EPS and profit. But saying that, we, of course, have our international digital service businesses scaling up, as I said, that we -- that IDS business is not giving negative impact to Elisa level EBITDA 24%, 25%. And also our businesses, we see that we can with the growth, continuous gradual growth, also gradually improve the margins in different businesses. To the CapEx in Finland, however, even if we see customers interested in fiber, there is no wild outbreak in the demand. There's slight increase in the demand due to the experiences at home when working during the COVID time and there are multiple people. So that, of course, is fueling somewhat the growth. Again, still in Finland, we have unlimited mobile data and 20% to 25% of the households are really happy for the mobile broadband, where we also have complementary great solutions to the fiber in terms of 5G broadband with the routers or even with the fixed wireless access when we use external antennas, which are, of course, a bit more cost effective for customers who want to choose that way.

It's Matti Riikonen from Carnegie. A couple of questions related to the IoT and security business. Could you just remind us what these services actually include? You said that there would be corporate and private customer services. So are they kind of third-party services that you are selling? Or is it something your own IP in it?

Vesa-Pekka and Timo will elaborate a bit more of these services. But yes, we have quite a few different services in both consumer side as well and in the corporate side. For example, there are more and more gadgets for pet owners to find out where their pets are moving. There are more and more cameras that people are using, for example. Then the security in general, the cybersecurity protection for consumers as well as for corporates that has increased. And there, we have, of course, partners, products as well and services, but a lot of Elisa content. And one of our really strong capability is that we can run managed services centrally with a very effective way and also with the use of our AI, machine learning capabilities.

Okay. And then the second question relates to -- was this IoT and security part of your digital services package of revenue when you had the previous CMD in 2021? So I'm just thinking that was it included in some other category at that time? Or is it a new one that you have added now?

No, it was more included in the telco side. I'm not 100% sure was it everything? Because there's, of course, more changes. But in the kind of major part, it was more telco side than digital services.

I have two questions. First one on 5G. There still seems to be a debate in the industry whether 5G will be a revenue driver earning a good return for your operators or not. You're arguably in a better position than most to answer that. And I think you've given us your positive version of the story. The 5G upselling you're seeing is still basic upselling to 5G, I guess, mainly for consumers. Your local networking partner is making a big push on enterprise, private networks and they're very upbeat on that. Do you share those sentiments? Do you think this will be a major driver for Elisa as well and for the industry going forward?

Yes. We hope it will be a major driver, but our assumption already 5 years back was that it's going to come quite slowly. When one company looks from the global view, then you can see some numbers to accumulate. But what we noticed that the mines and maybe harbors are the first B2B customers who can really appreciate the dedicated mobile network with 5G. Also, we have seen in some countries where the general coverage and service level of the operator's network in some, let's say, more rural areas where there are big utilities may be the service level is so low that they just need to have their own network to have any kind of service level. So a lot of the private cases also are based on that. But like I said, the applications and the technologies are developing. We have the stand-alone 5G coming where we can play a bit more from the functionalities from the network. That is, of course, creating better opportunities, also more cost-competitive solutions to run private network solutions. But our assumption, again, still is that it is coming gradually. We have many tens and tens of cases with our B2B customers where we have tested, and this is our kind of experience so far.

Okay. And my second question, I'm sure you could do without Veli-Matti, but I think it has to be asked. You've answered it before. It relates to your choice of network vendor. As you said, cybersecurity is becoming more important. The geopolitical situation is changing. Finland is about to become a member of NATO. You have chosen to go with what the EU Commission describes as a high risk vendor for a company like Elisa, which has historically prided itself in prudent risk management, et cetera. This choice does appear increasingly odd and perhaps unsustainable. What is your thinking? And what would be the implications if you either by law or by choice will have to make a change to that situation?

Well, for the first, maybe I would say that as an operator, we need to be very skeptical on any vendor's products and services. There are bad people, if you will, in general, in all societies and so forth. So we need to be careful on any vendor that we select that, of course, we are taking care of that there are no problems with the equipment. Then again, if we come to the -- this, let's say, more, let's say, vendors from the East thinking about Huawei, we do not have Huawei in Estonia, there we made a change because the government in Estonia was very firm that it's not possible to have. In Finland, we have the legislation that in the critical parts of the network, the -- for example, Chinese vendors cannot be really used, and we have only in radio network. And in the radio network, as we said, less than 15% of radio network is with Huawei equipment. We used Huawei in the first place because we wanted to be providing 5G to our customers and capabilities as early as possible. They were the only vendor to have. But let's say that, of course, we are managing the risk and we are complying whatever authorities and demands and regulations. And I believe that it's much more important that the operator has its AI, machine learning, analytics capabilities good and which kind of hardware they have, then they can really make the control.

Luis Sanchez-Lecaroz from Credit Suisse. I have two. The first one is around mobile. You are guiding for mid-single-digit growth for 2023. And you mentioned good growth afterwards. Can you give us more granularity around what you mean with good growth? Is it mid-single digits, single digit? And also talking a little bit about this upselling process that we are seeing. My understanding is that less than 50% of your B2C base have been upsell to these 5G tariffs and B2B has not kicked in yet. How are we doing that? And what are the expectations up to 2025? That would be the first question.

Okay. To your first question, unfortunately, I cannot give you any number to be more concrete on the MSR growth going forward. Why? So -- because the MSR can be influenced quite quickly with the competitive intensity changes. Also maybe with the uncertainties that we still have ahead when we have the war in Europe. So -- but we can have quite firm outlook until the end of the year, and that's why we say mid-single-digit. But based on the drivers and based on how we see customers being more satisfied with the speeds, higher speeds that we are providing, whether it's in the 4G high-speed tiers or then with 5G, based on that experience at customers, we have higher satisfaction. We believe that there is a strong momentum to continue even long after end of '23. Then about the number of customers, like you certainly understood that we continue to be shy about 5G customers, but we are very, very glad and happy about to share with you that we really have a strong revenue growth more than 3 years on average. And it's not only the consumers who have been adopting. Timo will explain a bit more about the developments in the B2B side. We have also the small, medium-sized companies being very active on 5G. And also now we see the larger companies to notice that there is really a difference for their employees, whether they have kind of 5G or not and the further speed.

And the second one is around the international digital services. You mentioned that you are close to EBITDA breakeven this year and that we should expect something positive for '24 and '25. Do you have margin target in mind for this business in terms of EBITDA margin over the next 3 to 4 -- 3 to 5 years?

We certainly have internal targets. Henri will elaborate a bit more about the ideas developments. But we are really excited about the strong growth opportunity we have in the addressable market and also our capability to take clearly larger share than the growth of the markets. And we have really high ambitions in terms of how this business can grow. Then secondly, of course, we are not growing the revenues just having the excitement of the growth just because of revenue growth. Of course, there needs to be profit. That's what we are aiming at. But we believe that it's very important for us to optimize the development of our revenue growth and sometimes maybe invest a bit more for certain activities with the cost of, let's say, fastest possible revenue EBITDA margin growth. But we foresee they are software businesses. Software businesses can even have higher margin levels than the telco side. So of course, we have those kind of ambitions and visions in mind when we are now developing these businesses. These businesses are certainly still in a quite early stage, but we have created momentum. We have a competitive position in those businesses.

Okay. Thank you, Veli-Matti. Thank you for questions. Now we need to move on. And the next presentation is consumer customers and Executive Vice President, Vesa-Pekka Nikula. Vesa-Pekka, hello, please.

Good morning, ladies and gentlemen. And from my behalf as well, I'm Vesa-Pekka Nikula, I'm heading the Elisa Consumer Customers business. Great to be here today. I will start my presentation with financial and operational results from the previous years. I will then go through the strategy of two main consumer customer businesses, telecom services and entertainment video services. I will end up my presentation by summarizing my priorities with this business going forward. Let me start with our performance update. We provide increasing customer perceived value, and we are able to capture our own share of it. Customer requirements for reliable and high-quality services are much higher in the post pandemic world. And we continue to meet this expectation by delivering the best customer experience in the industry. What I'm extremely proud of, we are now entering to the tenth consecutive year of growth in terms of both revenues and profits. We have further strengthened our #1 position in both of our businesses. We offer the best selection of telecom and entertainment video services, and we have developed the leading position in 5G. Our Home and Personal telecom services are effortless to use and they work as promised. We help our customers achieve peace of mind with the selection of digital security and IoT-based products and services. Our entertainment video services offer the easiest way to enjoy content from various sources and the diverse combination of the best stories from Finland and from the world. We witnessed significant value increases by combining two of more offerings of different businesses. Customers with both telecom and entertainment video services are more satisfied and less likely to leave. And this is for the performance update part. Our strategy execution priorities remain intact as we continue to implement our Elisa level strategic priorities. Let me now elaborate on each of these three Elisa's strategic focus areas in Consumer Customer business. And I'll start with the telecommunication services. Our mobile business continues to be driven by strong demand for faster connectivity. Our customers say they want to be entertained, work and study using high-quality connections at home and on the go. Customers also say that they need high-quality connection for multiple simultaneous users. Most Finnish people stream video content at least on a weekly basis and many play mobile online games weekly. We are also starting to see some augmented reality, virtual reality, usage slowly emerging as 4% of our customers use this service on a weekly basis. To meet these customer demands, we are continuing to upgrade our customers to higher-speed tiers and thus offering a better user experience, both in 4G and in 5G. Customer satisfaction growing along with the higher speeds is the clear proof of the success of our unique unlimited mobile data business model. And what is most important of all, we are able to monetize it. We are able to monetize it. When customers upgrade from 4G to 5G, average customer billing increases by more than EUR 3 per month in the consumer business. And our mobile customer base is transforming to 5G at a very satisfactory pace. In fixed broadband, we see the same customer need, human impatience, as the growth driver. The greater the speeds, the more satisfied the customers are. The increase in remote working has obviously created further demand for high-quality connections. We are able to keep our market leader position in fixed broadband revenues by systematically upgrading our networks to fiber best in customer demand. Our home broadband base continues to switch to both fiber and to 5G. As Veli-Matti mentioned in his presentation, the recent customer study shows that Elisa is by far the preferred fiber provider in urban and suburban areas within our own network. In these areas, our fiber availability is already more than 50%. According to the study, 41% of the customer base is willing to choose Elisa as their fiber provider, 53% still don't know yet or are not yet interested in fiber at all. What is important also is that customers value, fiber and 5G in the same way as high-quality home broadband solutions. Further, we are enjoying a strong profitable growth in additional services. We have already reached almost 1 million subscribers. The growth is especially strong in consumer IoT services and digital security. IoT services offer customers peace of mind. And they ensure that everything that is pressured to them is safe and secure. Consumers are also increasingly concerned about data security, and we offer a wide variety of services to meet these concerns. We also offer other additional services like cloud storage, device insurance and e-mail services. The success of our unique speed tier based business model has helped our telecom service revenues to grow. Our mobile service revenue have grown on average 5.5% annually, and we continue to see the human impatience as the basic customer need for faster space and lower latency. This means interesting growth potential both in 5G and fiber. We are also witnessing growing demand for digital security and IoT services. Well, that's it for the telecom business. Now I will move on to the second main consumer customer business, entertaining video services business. In the entertainment video services market, yes, we are witnessing fierce competition also in Finland. However, our entertainment video services business is well positioned in the market. And Elisa Viihde is the preferred domestic service in Finland. We continue to see growth potential in the market as well, as Finland is still lagging behind other Nordic countries in user-paid entertainment video service penetration as well as in household spend. To boost our entertaining video voice business, we have commissioned more than 30 original series, and they are becoming internationally recognized. Elisa Viihde, original series have already been sold to more than 70 countries. Our customers appreciate attractive content with great service with [indiscernible] increased value creation and a 10% yearly ARPU increase. In total, our entertainment video service customer base has surpassed 700,000 paying households. We are extremely delighted about the performance of our most recent original series All The Sins and its capability to travel all around the world. Let me now share the trailer of All The Sins, please. [Presentation]

It's unique. We see good potential in scaling our entertainment video service business further. We will continue leveraging the largest selection of Finnish content and our unique original series to attract customers. This is it for the entertainment video services. I will now move on to elaborate on our efficient and quality improvement activities in Consumer Customer business. We have built world-class customer service to ensure that we encounter our customers when and where they prefer. Our omnichannel customer-centric approach measured by customer effort score or CES is the best in the industry. Online customer service users continues to grow and customers increasingly prefer self-service. During 2022, we invested in a new sales channel and further reduced the use of third parties. We are witnessing better customer satisfaction when customers use our own channels. And this is verified for instance, by lower customer churn rates. We are continue to automate our processes, marketing, sales, customer service, service assurance, billing and delivery in accordance with the Elisa business system. This increases the quality experienced by our customers and improves our cost efficiency. By combining automation with human interactions we have taken the customer experience even to the new level. For instance, our incoming customer service costs are first answers by automated voicebot and then transferred to the best human expertise, if and when appropriate. And the service is highly appreciated by our customers. This brings me to the end of my presentation. To summarize my priorities with this business going forward, our strategy execution priorities remain valid as we continue to implement Elisa level strategic priorities for consumer customer business. Our approach has proven to be successful. And I'm convinced that we have a strategy that will continue to deliver solid results also in the future. Thank you very much, ladies and gentlemen, for your attention. I'm more than happy to take any questions you may have.

It's Keval Khiroya from Deutsche Bank. I've got 2 questions, please. So firstly, one theme in the sector is about price rises and obviously historically, you have raised some of the legacy tariffs and some of the third-party pricing has improved as well. Can you walk through given so much appetite to 5G, how you think about your room to raise prices in 2023 and beyond versus what you did last year? And then secondly, you helpfully showed the speed uptake for different 5G customers. And can you talk about how data consumption has also evolved as customers take higher speeds as well?

Okay. Thanks for the question. First, if I start with this data consumption. So the average data consumption or data usage in our network is about 30% more on the yearly level. So that is an average level of data that the customers are using more each year. And yes, we see the strong correlation that the higher the speed, the more data usage there is. So this is quite a remarkable gap in those speed tiers that they indeed the higher the speed, the more data the customers are using. So we see a clear and nice correlation there as well. So you are quite right on that. When it comes to the price rises yes, we have done during the past year, many price increases to the selective customer cohorts. And we will continue to do so, also in 4G as well as in the 5G in the future.

Ondrej Cabejšek from UBS. I have one or two questions around fiber to the home, which you mentioned is a big opportunity for you. So first, on the distribution or the rollout of the network. We've seen a lot of capital from private equity for example coming into the market, people land grabbing certain areas, et cetera. So what is your view on the model of Elisa distributing its retail product to the consumer going forward? Are you more kind of inclined to spend more CapEx maybe on engaging in this game of grabbing land share or are you may be happy to work with some of the alternative providers that have come front? And second question related to it is, what do you think of the future of the connection fees, because we've seen historically that customers have been paying between EUR 1,000 and EUR 2,000 out of their own pockets to have their homes connected. But with some of the old nuts coming in, there seems to be a change in that dynamic. So what do you think of that kind of pricing model going forward in Finland?

Okay. Thanks for the question. If I start with this kind of fiber available, as I said, we have more than 50% of fiber coverage in our own network. And the areas that we are focusing are our urban and suburban areas. So those are of a focus of our fiber activities. And yes, of course, as I said in Veli-Matti's presentation, that we are increasingly investing actually our fiber kind of a rollout. But I said, we have a good position already. And according to the study we just shared that the 41% of the customers are saying that they prefer Elisa as a fiber provider, for those customers who know that they want to have a fiber at this stage. Yes, there are some new competition in the market. We don't see too much of a net change in the market dynamics. However, that also kind of puts us in the position that we are most probably continue to -- with the business model in the fiber that we have today. And the last question that you had is about this kind of opening fees. Yes, the competition seems to be that in some areas, they are even offering free of charge. And we are just kind of seeing the situation area by area, region by region, time by time, village by village. And they are -- the approaches are different. They are not the same for Finland. We have the customers, we have the customership. So we are pretty much on top of that in what customer in each of the specific areas are preferring. So I believe that we start seeing kind of a varied the pricing model also depending that where the customer lives and works.

If I maybe, so I have one follow-up on this because the fiber penetration sitting today in Finland is quite low for the obvious reasons of having very good mobile networks. But in the same medium, longer term, do you see a situation of where the takeup in the homes pass or the home pass is accelerating and say low penetration rate is going to accelerate quite a bit from here? Or do you see that continued -- to continue to be a very steady, kind of slow process?

Yes. The Finland is a bit of a specific market with mobile market of the world, as we all know. And many customers prefer also the 5G and mobile broadband connection, as was shown in my presentation. As Veli-Matti was saying that 20%, 25% of our customers are using mobile broadband as their primary home broadband connections. And our customers are valuing the 5G and fiber pretty much on the same level that when it comes to the high-quality home broadband service. So I don't see too much of a changes when we go further. But having said that, yes, we have some new players in the market, and there's a bit more of kind of a hassle in rumors in accordingly.

It's Russell from New Street Research. Just a further question on fiber, please. So, is the 50% penetration across the whole network or just 50% in the suburban and urban areas?

In our own network, within our own network. And mainly, it is in suburban, urban areas.

Okay. Got it. Okay. And then could you talk about the cost to upgrade a home to fiber that it cost you in CapEx on pass and to connect and then the return that you think you get on that CapEx, so does ARPU go up, churn go down. So therefore some extra kind of EBITDA as well as to justify the extra CapEx that you're spending, what sort of return do you think you get on that CapEx?

Yes. Yes, I think that is something that -- It's quite a broad question, obviously. But as already Veli-Matti that we do have this, yes, this opportunity that it's not all the consumer customers are benefit the fiber. We have especially the big customers, the corporate customers who are often kind of represent in those same areas. We can combine those fiber offerings, say, yes, sort of in the both customer segments. So that helps us quite a bit in this when think of a total cost structure.

Okay. Thank you Vesa-Pekka and thank you for your questions. And as I said earlier, we have a well time after all presentations with questions and answers. So -- but now we have to move on the schedule, and we have actually a 10 minutes break. So we continue 20 past 10. [Break]

Okay. Welcome back. And now we have the corporate customers' presentations and Executive Vice President, Timo Katajisto. Timo, please go ahead.

Good morning, everyone. Well, I'm not going to talk about a somewhat rosy situation with the challenging -- somewhat positive choice with the rosy outlook by new services looking forward. I will do things different. In my presentation, you will hear why our performance has been good and why I believe that we will continue to be doing so. I will start with a quick recap of our past performance and take a look at the market. Then I'll go deeper into our businesses to look for sustainable profit and growth generation. And I will finish with my management priorities. So now to the past performance. The performance in B2B has been excellent. It's among the best in our peer group. We are well on our track to meet the medium-term target set in CMD '21 for both revenue and EBITDA growth. So please note that these financial consist of both domestic and international side of the business, and I will now move on with the domestic side of the business. The market is good. Market offers a great tailwind for growth. The market is also healthy despite its competitive nature. Professional skills, processes, features play a significant role in our market. So we are in a great position with telecom and we are a well-positioned challenger with the IT. And this provides an opportunities for growth. Our strategy remains intact. Elisa's unique strategy generates sustainable profit and growth through 3 strategic focus areas. Next, I will explain 4 factors: 4 factors: main factors behind our good performance. Now the first factor is the portfolio. 93% future proof, out of which 67% come from the transformation phase and already 26% with a handsome profitability from the growth phase. So only 7% of services are in the legacy, as we have made deliberate choices in the past for our customers' benefit. So I believe that we are in a very different position than many in our industry. This is a great platform to grow. Now the second factor, mobile. I mean this is unique in B2B. 4.9% growth out of which only 0.6 percentage points is coming as a return in roaming revenue. So our business model clearly works, plus, in fact, the upgrade value of EUR 4 that you are able to see in the middle, EUR 4 from 4G to 5G is actually EUR 1 up from the CMD '21. And as you are able to see on the right-hand side, there is a sizable further potential for upgrades. So this really makes me confident about the future. The third factor behind our success. Managed Services are driving the growth in our fixed business. Overall, the growth of 2% is really driven by the Managed Service that you are able to see in the pie chart in the middle is already consisting more than 2/3 of our revenue. On the Managed Service, 2/3 of our revenue in fixed. Two main factors in Managed Services are seen on the right. Growth level on the networks, 6%. Growth level in security more than 11% in Managed Services. And this is not a low-margin managed service. This is a telecom managed service, first of all. And second of all, like Veli-Matti pointed out our production model that is very centralized for all of the customers provides the capability together with the automation to provide high-margin managed service. So contrary to many, we see fixed as a growth area. Now the fourth factor, IT. IT business is healthy and heading to the right direction. Our strong 10% revenue growth is being driven by all different segments of the portfolio. All different segments that you are able to see in the middle and the pie chart. And out of that fact that all of these support our profitability, our profit going forward, then that is profit growth is even higher on the right-hand side than the revenue growth. So IT is a growth business and the increasing use of automation and AI will only make us more and more competitive moving forward. Besides being a good stand-alone business, IT adds great value. In fact, our IT and Telecom support each other. 25% of our fixed service customers have our IT as well, 25%. And if you look that particular group, that 25% on the right-hand side, it actually -- we see and witness 5 percentage points higher profitability for the Telecom part, i.e. the network service itself. So IT adds value to telecom, like Veli-Matti said earlier on. So we think the credit customer gets transparency, fast response and recovery, and effortless operations, and we get our share of that value. Now moving to the third strategic focus area, let's have a look how we improve efficiency and quality with practices in our business system. We have made achievements in all our main processes. Continuous improvement is really in our core, deep in our core. And as we learn, we see new opportunities. Here, you can see 3 examples. Three examples out of many with great results. The results on the left-hand side are telecom related. In the middle, they are IT related. And in the right-hand side, they are sales-related results. So we have achieved great results with AI and automation together with our business system, and we are excited about the new possibilities technology has to offer. Elisa's unique strategy generates sustainable profit and growth generation -- generates sustainable profit and growth through our 3 strategic focus areas. My management priorities are clear and they will move us forward strongly. Personally, I want to reiterate 4 factors behind our success. Portfolio, 93% future growth. Mobile, our long-lasting business model works. Fixed, Managed Services are driving the growth. And already, they are representing 2/3 of the revenue with a healthy margin. IT is a value-adding growth business for us. Now together with our highly skilled people, we will deliver in a great manner. Thank you very much and now ready for the questions.

This is [Simon] from [Berenberg]. Just a question on managed services revenue. I think when I look at the network services revenue, it may be declined from 2020 to 2021 and jumped up in 2022. Could you maybe just explain that trajectory and maybe what can we expect for the future there?

Well, there is always maybe seasonalities here and there, but overall trend is growing. It's clearly growing and that is what we see in the market, what we see and have experienced by ourselves, so that the relative portion of it is growing.

Peter Kurt Nielsen, ABG. It's not often we hear management saying that the B2B market is a good market, like Elisa. What do you think is behind that? I mean there were certainly concerns when DNA ownership changed that there would be increased competition in the B2B market. The way you talk about it, it is still a good market. Could you explain a bit what's driving that? And I'm just curious, the growth in Managed Services and high margin, again, not something we normally hear. Where is this growth coming from? Who are the customers? And how come you can generate healthy margins within this, which I think traditionally has been a low-margin business, not for Elisa, but for others?

Right. First -- with the first part of the question. Well, we feel very competitive on what is the offering what we offer. And that is also very topical for the needs of today's corporations. As they need to renew their platforms as they read to kind of look for better productivity levels, I think that there, we are very, very competitive. And then like I said, out of the market that it's rational that professional skills, processes, features play a role. Then this is local market. I mean, Telenor is playing with the local capabilities, what they have. And again, I think with these 3 elements, we feel very confident about the kind of current situation and competitive. And the Managed Service, really, it's rather the bigger and the medium-sized companies in our case, where the money is at but like I said that those companies are looking for the -- for somebody to take the ownership of the challenging area that they have. That it's very difficult for them to manage those areas. And the security is obviously and cybersecurity, to name the kind of the top 1 maybe is really on everybody's lips currently. So these are the kind of drivers there and it is still a kind of a telecom service. So it's not the kind of installation managed service per se.

Are you seeing demand for 5G or private networks? Or is it still too early [indiscernible].

It's always healthy to kind of agree with the CEO, but it's -- I obviously share the kind of idea what Veli-Matti put in place. There are certain elements in the global space, but definitely, there are coverage-related facts for the -- and Veli-Matti pointed out mines and harpers and potentially some others. But -- in a way that is one application. Then there is edge related applications for some industries to kind of have a look on it and so forth. So that there are certain use cases where the companies really need it and it adds value. And for those use cases we've been very competitive. We have had dozens of different pilots with the customers, but yet still the kind of big scale implementations maybe, in Finland, we don't see it. And if we are looking globally not that many either. It's coming. It's coming and we definitely hope that it will come, but more and more, but how much then that is a question.

Sami Sarkamies, Danske Bank. Could you please comment on the pricing environment, you're facing? Cost inflation, you need to raise prices. It seems to be happening on the consumer side. But how is it in the corporate business? Have you been able to push through price increases and what are sort of the competitors doing on that front?

Well, I'd rather not comment on the competitor side, but definitely in the -- in our own game, like in the consumer's side we have been doing. Definitely, we are kind of trying to add all the time more and more add value for our customers. And if we are able to kind of add more and more value, then definitely certain portion of that value is then coming back to us. But that is the kind of the main motivation to kind of go for it. Now obviously, in some smaller segments, in some cases, even bigger ones, we have been doing kind of just the price increase for the back book or front book related. But that is really not the one that we are after so much. Now this situation with the inflation has been obviously significant and we need to kind of work with it also with the cost effectiveness in mind.

Okay. So the main way to tackle inflation is to sell more, but it is a bit difficult to get paid more for the same value?

I didn't say maybe that one, but it is in our toolbox definitely. And in we have been doing it, yes.

I have two questions. The first one is coming back to the charge you were showing about the upselling opportunity in terms of speeds on mobile. Why do you think the corporate customers are not taking the higher speeds that we are seeing in consumer thus far? That's the first question.

Well, I think that like Veli-Matti said, the smaller companies have done it very much so, like in the consumer space. Then the bigger companies, they differ in their approach. They differ. There are companies that has -- bigger companies that had -- has fully kind of launched 5G service for their use and are happy with it. And those are very big companies as well and so forth. In a way, it's gradually coming, but it's coming a bit maybe with a lower pace with the bigger companies.

Are you seeing like a ramp-up in early 2023 in terms of adoption into higher speeds or they are not there yet?

Well, maybe not giving that kind of guidance that where are they at, but in overall.

And second one on the fixed business. If I were looking at the charts, both the Managed Services, which are 2/3 of the revenues growing, if you combine them on a blended basis, it's 7%, 8%. So high mid-single digit, but the overall business is growing at 2%. So I guess that the other party of 1/3 is declining at double digit. So can you give us a little bit more of color on how you are seeing those business is evolving going forward?

Well, I think that what I said there is the fact that is driving the growth still in a way that the blend is visible basically what I showed. There are definitely within the legacy portion also fixed related services. And we are not saying that those wouldn't kind of come down. PSTN is one, obviously.

It's Matti Riikonen, Carnegie. A couple of questions related to the IT services. We have experienced a boom in digital IT services in Finland, probably elsewhere in Europe as well. Now there are clear signs that the demand is slowing down. And you seem to be quite optimistic about your future potential. What makes you think that you would be in a position to outperform competition so well?

Well, I think that -- depending on the market that what we are talking about, consultative cases and development cases -- software development, they are a bit different compared to, for example, what we are strongest at that we are kind of looking where the -- where we are producing a kind of productivity gains for the companies for them to operate. So for that, at least, we see together with the kind of a Gartner and other analysts that behind our numbers are seeing healthy growth numbers. So clearly, in a way, I'm not saying that we are winning the market that much, but at least on a level of the market, if not more.

Okay. Good. Secondly, your margin in the business in IT services has been fairly low and Veli-Matti already said that you have, of course, ambitions to grow it. What would be the means? Or are you satisfied with fact that it is already a profitable business combined with the telecom offering. So combined they are a good value to you and is that enough?

No, I think that it was coming strongly through already in the previous presentations that we want to -- we have the tools and means and will improve also the profitability level of it. But it is a good addition now already that it adds profit levels, profit to the company in absolute terms very well.

Okay. And then finally, what kind of impact did COVID have on your -- this particular IT service business? Easier or more difficult?

For us, in the IT side, the telco was maybe the one that's seeing more of the COVID like I said, about the kind of roaming regions and such. IT didn't see that much. Yes.

Thank you, Timo.

Thank you.

Thank you, again, for the questions. And now we move on again. And the next presentation is International Digital Services and Executive Vice President, Henri Korpi. Henri, please.

All right. Good morning on my behalf as well. My name is Henri Korpi, and I'm responsible for something we call International Digital Services at Elisa. My presentation today consists of 5 parts. First, I will introduce you a little bit deeper into the business of ours and then share a few data points of our recent performance. Then we dive a bit deeper into the businesses themselves, to Elisa Polystar and Elisa IndustrIQ. And after that, I will share with you an interesting start-up, Distributed Energy Storage that we are running and that is gaining traction and is a good example of our continuous innovation based on our core capabilities. And at the end, I will conclude with my priorities going forward. So that's the plan for the next 10 minutes or so. We are in business of delivering value to our customers from the data that they have in their operating systems. We serve 2 distinct customer groups. Telecom operators as Elisa Polystar and industrial manufacturers in certain selected verticals as Elisa IndustrIQ. We help our customers to extract data from their operative systems, make sense of that data, draw insights based on the data and automate their processes and decision-making based on that data. Ultimately, we expose the data, create value to our customers and capture value for ourselves by selling and delivering software applications on top of our platform. As Veli-Matti pointed out, our revenues grew last year to EUR 82 million with annual growth of 22%. Even more important, roughly 2/3 of our revenues were of very high gross margin software product revenues, growing at the pace of 24% year-on-year. The rest, 1/3 came from services, meaning delivery services, third-party software and hardware and growing 7% year-on-year. The large share and the high growth of software revenues makes our business highly scalable. And we believe that our underlying profitability will continue to develop positively going forward. However, as Veli-Matti already pointed out, we are still in investment phase. We are planning to invest, if not all, but most of the increased profits back to the business to accelerate our growth even further, at least in the short term. Now let's dive a bit deeper into the businesses themselves, starting with Elisa Polystar, that is in business of making self-driving networks happen for our customers' telecom operators. Elisa Polystar serves a sizable and growing market for analytics and automation software for telecom operators. The growth of the market is driven by operators' investment and rollout of 5G cloud networks. And the simultaneous cloudification and automation of the surrounding operational support systems and processes. At the same time, most telcos faced significant cost pressures driven by inflation and the high energy cost. And that amplifies our opportunity as our solutions help our customers to reduce the cost of operating their networks and enhances the end user quality in those networks. Elisa Polystar revenues grew last year at the pace of 22% year-on-year and almost 70% of those revenues came from those high gross margin software products. Elisa Polystar employs currently a little bit more than 400 people in 11 countries and is also working with a significant partner network. Elisa Polystar offers to its customers a modular set of software applications or use cases on top of our platform that enable our customers to gradually move towards fully self-driving close to automated networks. That enables our customers significant cost savings in their network operations and at the same time, enhance the end user quality of those networks. Our customer base is steadily growing, and our customers are generally really happy with our solutions. A good example of what we, in practice do and enable for our customers is one of our largest customers, Vodafone, that we are helping across the European footprint of 11 markets to replace more than 100 legacy IT applications with our dataOps and analytics tools in performance management field, helping them to save in their cost of operation and enhancing the end-user quality. That's about Elisa Polystar. Let's then move to Elisa IndustrIQ. That is in a very similar or one could even say in the same business than Elisa Polystar, but for a different customer group, the industrial manufacturers in certain selected verticals that we help by making intelligent manufacturing happen for them. The addressable market for Elisa IndustrIQ is very large and growing rapidly. The manufacturers in our selected verticals face common challenges that are driving demand for advanced analytics and automation into the factory shop floors. In addition to those common challenges, the manufacturers in our most important and largest verticals, the high-tech and semiconductor manufacturing faced changes coming from the geopolitics, meaning the separation of the value chains in U.S., China and Europe, which means increased investment into production capacity in all continents in that vertical, which in turn means long-term added demand for software tools like always. Elisa IndustrIQ revenues grew as well, a little bit more than 20% last year year-on-year and 2/3 of this revenues were from the high margin software. Elisa IndustrIQ as well employs more than 400 people in 12 countries and is working with a fast-growing network of partners. Typically, as Elisa Polystar, Elisa IndustrIQ is offering its customers a modular set of AI-powered software applications, enabling increased efficiencies, reduced cost and higher quality in the customer manufacturing operations, enhancing our customers' competitiveness in their respective markets. Our customer base is rapidly growing. And typically, we work with our customers in a way that we start with 1 or 2 processes in 1 or 2 factories. And then we grow inside the customer to add new processes and new manufacturing facilities or factories across the customer manufacturing footprint. A good example of such a customer is Continental, one of our largest, who we help across the whole manufacturing footprint of theirs in over 50 factories in 4 continents across multiple processes. So that's Elisa IndustrIQ and Elisa Polystar. Now let's turn to one interesting internal startup, Distributed Energy Storage that is -- or the DES as we call it, that is gaining traction. It's a good example of our continuous innovation based on Elisa's core capabilities, at this time, on the capabilities of AI and optimization of very large distributed assets. It's also a good example of how we make Elisa's mission a sustainable future through digitalization a reality when developing our business. Distributed Energy Storage start-up is turning the reserve batteries located in our base stations into a very large, highly distributed AI-powered virtual power plant, providing flexibility to our own electricity buying by enabling us to charge the batteries when electricity is cheap and use it to run the base stations from the batteries when electricity is expensive, i.e., providing cost savings for Elisa. But even more important, we provide flexibility to the electricity grid system as a whole by participating in the extremely fast-growing electricity balancing markets and generating a totally new revenue stream for Elisa as well. We are doing this in our own networks in Finland and Estonia, and we have already signed the first deals with other telcos to help them to do the same in their respective markets and networks. One can say that there is genuine interest towards the solution among our peer telcos as it provides a clear financial benefits for telcos in form of cost savings and in form new revenues from participation into the fast-growing balancing markets. And at the same time, we are contributing to the whole society by providing much needed flexibility to the electricity grid system as a whole and enabling on our part, the green transition, the transition to increased use of wind and solar in electricity production. So my priorities going forward are three-fold. First of all, we continue to invest to accelerate the organic growth of our businesses. We see clear opportunities, clear positive demand drivers ahead of us. And in addition to that, we implement Elisa Business System to, in time, achieve efficiencies across the businesses that we have formed by combining our internal start-ups and the companies that we have acquired. Second, we continue to look for good, healthy growing companies to join Elisa Polystar and Elisa IndustrIQ to accelerate our growth even further. And we continue to innovate based on Elisa's core capabilities to seek new growth opportunities. By doing this, I believe that we have a good chance of contributing significantly to Elisa's ambition to grow in -- grow digital service businesses. So that's it. Thank you for this opportunity to share our progress and I'm ready to answer any questions you might have.

It's Felix Henriksson from Nordea. I have a couple of questions. Firstly, you mentioned that you're basically in the short-term planning to invest all your profit into growth. So I just wanted to touch on the topic that where are the biggest investment needs? Is this money going towards R&D or towards the sales and marketing push to required to gain market share?

Both of those and some others also. But I do believe that we have quite a solid offering. We will add more stuff into the offering with the resources that we already have and possibly with acquisitions. So from the kind of operative expensive point of view, the largest investment will be in sales.

And it sounds like you have an ambition to outgrow your underlying market. So could you perhaps give a bit more color on this? Is this sort of coming from the fact that the market is still fairly unpenetrated? Or are you sort of planning to capture share from these bigger competitors that you highlighted in the slides as well?

I guess that the main answer is in the core capabilities that we have combined to the businesses that we have acquired so -- and automation capabilities that have developed originally for Elisa. Now we have -- in a position that we have already combined them to the offering and enhanced the offering of the companies that we have acquired as our plan was. And now we are enjoying the momentum of that being a forerunner in the -- and being ahead of the competition in the areas because of those capabilities.

Titus Krahn here from Bank of America. Just a very quick question on Polystar, a bit following up maybe. When you talk to the oranges of the world, Vodafone, they are all quite established players. And for them, it's basically some decision on outsourcing, whether it's insourcing capabilities, which is quite an important part of the business. How are those discussions ongoing? And is there any part of the business which is maybe easier to sell to them, some part of the business where they're more reluctant to cooperate with you in the Polystar segment?

Well, we are quite focused with Polystar on the kind of network operations side. And there -- you are quite right that they are our kind of main competitor actually is the Managed Service provided by the big network equipment manufacturers or some other companies in the world. And many of the telcos who have outsourced their operations to those companies have done it a couple of rounds of those, and now they are faced with the fact that to get the cost lower and get quality higher, it is becoming more and more difficult. And now many of those large companies have decided or are contemplating of taking it back to them. And with kind of a help of the kind of tools that we are providing, we enable them to take the grasp of the operation to themselves again.

Artem Beletski from SEB. Two questions from my side. So first one is relating to Polystar. Could you maybe just like describe how much your sort of say, software stack has grown or increased over recent years? I guess, revenue potential per operator has increased quite significantly.

I can actually use the slide that I had briefly here to answer that question. Yes. Originally, when Elisa started approaching the area we were in the radio access network automation. That is the Elisa's original automation domain with the operations automation following. And through acquisitions of -- that we have made, Cardinality pretty much created as the dataOps offering, MLOps was internally built, analytics came from Polystar and Cardinality transport automation came from Frinx, network monitoring was capability of Polystar. So we've kind of created the whole spectrum of offering by combining the offerings of the companies and what's been developed inside Elisa. And we are quite happy with what we have today. And now we have -- what is not in the picture we have here in the kind of platform functionalities, making it possible for customers to buy stuff across the silos, if you wish.

Yes, this was very helpful. And the second one is related to Distributed Energy Storage business. And what are your thoughts there? So do you see potential eventually to go beyond operators, looking, for example, at automotive, Tesla and so on? And what this business would require? Do you see that you have enough of in-house resources? Or does it need also to some M&A activity?

First of all, we have to kind of start with the fact that it's start-up. So it's a fairly small team that is currently working with it, and it was very natural for us to start from the telco for many reasons. I don't go more deeper into those, but there are standardization, reasons there is to kind of we know the telcos, we can test it in our own production and stuff. But you're absolutely right. There are opportunities in other verticals as well and we are currently investigating them and have already set up small teams to make some experimentations on some other areas. Let's see.

A quick follow-up on that if it's possible. So it's quite clear. So what is the benefit for you and how you monitize there. But what comes to other operators, what are basically so say, pricing models of you are looking at?

Well, we are -- as I said, it's still a start-up. We are experimenting on that field as well. We have signed a couple of first deals and are now kind of deploying it to some of our peers. We'll have to see whether those models that we have deployed now are the right ones and the permanent ones. Other than that, I don't want to go deeper into kind of opening up for how the business model works yet.

Nick Lyall from Societe Generale. Can I just ask a couple of pretty naive questions to be fair? I mean the first one is how do you get to breakeven in your EBITDA number for '24? Is that more or less set in stone because of synergies already? Or are there any risks to get there? And the second one is the naive one. I'm a telco analyst. So all this growth stuff in software is pretty far fetched for me. But in terms of the margin, you end up ultimately with, given your split of businesses, what sort of margin is sensible for the business? I think in domestic, it's 5% EBITDA margin, which seems very low given the sort of things you're talking about here.

Yes. Let's start with the margin. Margin, I think that the -- as Veli-Matti pointed out, the expectation that we have here as these are highly scalable because of the kind of -- they are pretty similar to telco in that sense that there is a fixed cost of developing something and then you invest into selling it. And the fixed cost doesn't grow that much with the customer base. So it's highly scalable, and it's now -- now the question is how large we can grow it, and that dictates pretty much the margin. The largest enterprise software companies have at least similar type of margins as telcos, whether we will be able to achieve that in the long term, hopefully. But in the short term, your first question, the -- some of the companies that we have acquired lately are growth companies that are clearly in the investment phase, that are clearly kind of negative in terms EBITDA. The operation could already be EBITDA positive. But as I said, we are -- we have made a conscious decision to invest into growing our sales effort growing our sales channels, growing our partner channels in order to be able to scale it further because we see that there is the opportunity of getting good margins as we go forward and grow the business.

Ondrej Cabejšek from UBS. Just following up on a question on the margins because you showed total addressable markets, I think, for 2030. So what is it that by '25 mix, you think you're going to maybe stop reinvesting to some degree into scaling the business, why not take it all the way to, I guess, the end of the decade, where I think more and more of these applications will have their addressable markets?

Our current plan for that is that, as Veli-Matti said, is that it will turn positive during the next couple of years, but the -- it's a current plan. And we constantly ask is according to our general practices that we update our plans on an annual basis and even more frequently if needed. And we are flexible with that situation. But our current plan is that this will turn into positive because of the growth that is continuing.

Impressive. But maybe getting to margins that you kind of said would be similar to the core telecom business. Is that more of a, say, end of the decade situation? Or?

Absolutely. Yes.

Just in terms of headcount for both of these businesses, I mean, do you expect -- excluding any acquisitions that had slightly marginal growth in sales and marketing? Or in maybe 2, 3 years' time, do you need to sort of double the number of employees from 400 to 800 or something like that?

Well, we expect the headcount to continue to grow. But in an organic manner in a milder pace than the revenues. As we are -- I said we are investing more to the sales and developing our channels than the development itself. So that is where the scalability comes from, that we don't need to reinvent the veil for every customer, but the software business by nature is such that we sell the same stuff all over again to different customers. Obviously, there is the delivery services part, but we are utilizing more and more partner networks for that.

So all the R&D staff are largely already in the businesses that you need?

Well, obviously, we are growing also the development but not anywhere near to the base of our revenue growth.

Thank you for your questions, and we can continue after the last presentation, which is starting now, and it's financials and CFO, Jari Kinnunen, Jari, the stage is yours.

Good morning. My presentation agenda is follows: first, I will go through the performance update briefly. I will talk about achieving medium-term targets, then about capital allocation; and then about reporting, there are some changes coming in reporting; and finally, my priorities going forward. Let's start with the first section. Since last Capital Markets Day, strong financial performance has continued revenue growth, 6%, very much driven by mobile services, as heard in today's presentations, very good strong demand for 5G services, also digital services growing. And also going forward, we expect that growth continues. EBITDA operating cash flow conversion remains high at 65% level. And return ratios, high return on capital employed consistently best in comparison, 17.7%. Underlying good efficient usage of invested assets. Strong revenue growth also translates well into earnings and cash flow generation. Last year, had several negative or challenging changes in operating environment that also impacted OpEx. We had impact through high inflation, energy prices. Also, we did invest in the wholesales channels and reducing third-party channel. Also, there was a returning to the office work from remote work and expenses, office expenses and personnel expenses higher than a year before. Nevertheless, and although this challenging environment last year was a record year, best ever in terms of revenue and earnings, 6% -- more than 6% revenue growth translating to more than 7% EBIT and EPS growth. Our business model facilitates consistently good growth in earnings and cash flow generation that also are higher than peer group median. Our long-term strategy and strategic choices and performance, operational performance also are visible in financial KPIs and revenue growth, EBITDA growth target, 2% and 3%, more than exceed. Long-term CapEx to sales, 12% target also achieved long time capital structure, net debt to EBITDA between 1.5% to 2% and equity ratio, more 35% also achieved and retained a long time. That was the performance update section. I will now move to achieving medium-term targets, starting with revenue. Our business portfolio supports well our revenue target, more than 80% of the total revenue is in growing service revenues. Mobile, more than 40%. As heard today, strong customer drivers, customer demand for 5G services, continuing upselling, upgrading to higher speeds, continuing also product price changes, continuing to future growth and also additional services expected to grow, [indiscernible]. In digital services, domestic digital services, as heard also today entertaining -- both entertaining and IT services expected to grow mid-single digit or higher type of growth ambition and international digital services continuing with high ambition, clearly, a strong double-digit growth rate ambition going forward. And in fixed services in Corporate segment, Managed and Professional Services expected to grow whereas fixed traditional voice is only 2% from the total and is approaching end of life cycle. Also, EBITDA has clear growth drivers and all strategic focus areas contribute to EBITDA growth telecom service revenue, high quality revenue, high-margin revenue and high contribution to EBITDA growth. In digital services, domestic digital services, growth contributing to improving profitability. And as said today in international digital services growth acceleration is planned. And currently, there is negative impact as we are in investment phase negative impact to group EBITDA and through organic growth and bolt-on acquisitions, we expect growth coming from digital -- international digital services going forward to EBITDA as well. And we will continue with cost efficiency and productivity improvement measures with automation and AI, machine learning in different processes customer service processes, sales, improving productivity future. Also, we are continuing with the ramp down of all technologies, treaty, proper networks and reducing electricity expenses or maintenance expenses. Reducing a number of network systems and IT systems going forward is also providing benefits in expenses. And overall, we will continue with our strict OpEx disciplines going forward. A good example of Elisa business system and our systematic continuous improvement can be seen in how dealing with energy and electricity. Long time, there has been many developments for energy saving features, new technologies introduced in the network and own innovations for energy efficiency and very exciting innovation introduced in Henri's presentation, distributed energy storage as most recent ones. And all these contribute to clearly more efficient network, energy-efficient network environment compared to industry averages. Apart from operational improvements in the energy efficiency, there has been long-time hedging policy against electricity pricing fluctuations in place. And for this year, approximately 90% of on electricity usage is hedged. And in the second quarter, we will start with the new wind power 10-year purchase power agreement with prices that were agreed 2 years ago. And also this contributes to sustainable and renewable sourcing of energy future. Growing EBITDA and high cash conversion also contributed to cash flow growth as well as CapEx to sales at 2% level. Last year, cash flow was negatively impacted by net working capital change and license payments altogether, EUR 43 million. whereas year before these 2 were EUR 8 million, and we do not expect the same to be repeating going forward. So this is also contributing to expected cash flow growth. That was achieving medium-term target section -- and now I will go to capital allocation, starting with CapEx. New medium-term targets also include CapEx to sales target at 12%, which has been a long-time target and also achieved, which is clearly lower than sector average. There are many drivers behind that. One is right timing. We pay a lot of attention to customer demand and allocation of CapEx according to customer potential. So we have a multi-vendor strategy in order to maintain [treats] the best possible commercial conditions and many own innovations also contribute to this. And a very good example all these features can be seen in mobile network and dealing with high usage and capacity. We have one of the highest data usage in the mobile network per subscription and are dealing this with one of the lowest CapEx in the industry. 5G rollout is progressing. In Finland, we have more than 85% population coverage. In Estonia, we started second half last year and currently 70% population coverage. Although as a percentage from revenue, CapEx is low. However, in euro terms in Finland, CapEx is highest and the same is with EBIT. And efficient CapEx also contributes the return ratios and return on capital consistently better than comparison. We will also continue our acquisition policies and value creation-oriented focus and seeking opportunities in international digital services, domestic IT and telecom service domains. Looking ways to accelerate growth, increase competitiveness and -- of course, prerequisites are that there are clear value creation sources and opportunities. And we intend to retain distribution capabilities and capital structure and ratings unchanged. New midterm targets also include capital structure targets, net debt EBITDA between 1.5x to 2x. Equity ratio higher than 35%, which has been, again, followed a long time. And also, we aim to maintain solid investment grade credit ratings they've been also in place a long time, whereas industry has been in the down trend. In terms of financing in order to maintain maximum flexibility, use multiple financing sources as well as diversified maturity profile from the interest-bearing debt, approximately 80% is currently at fixed rates and the debt level 1.7x net debt to EBITDA clearly lower than comparison to a group median. And so is the case with interest expenses from the free cash flow currently at 3%. Distribution policy was announced today, no changes payout ratio continuing between 80% to 100% from earnings. And there is strong track record 9 consecutive years of growing distributions on average 5.7% growth. And not only is dividend growing, but can be viewed to be reliable because of low debt and high cash flow coverage and the same can be seen also in dividend per sales trends at the right-hand side of the slide. That was capital allocation section. Now I will move to reporting ESG long-time part of the culture and operations. And also reporting has been there and developed over time. Many recognitions and rewards received the climate reporting among the top Nordic companies and recently, CDP climate reporting rating was increased to A minus. Long time assured corporate responsibility reporting is in place more than 10 years. And next week, we will publish the [indiscernible] of 2022 report, including EU taxonomy, ESG KPIs results and apart from annual reporting last year, ESG indicators there included in quarterly reporting as well. And last, the latest loan agreement did include sustainability-linked KPIs. Also sustainability, finance framework was launched to be used in future arrangements. And make changes in quarterly reporting from Q1 onwards and start splitting digital service revenues into two international digital services containing software businesses, Elisa Polystar, Elisa IndustrIQ and secondly, domestic and other digital services, including entertaining video services, IT services and visual communication. And in this slide, we can see 2022 numbers with the new split. And international digital services growth varying between 30% and 50% and organic growth between 19% and 31% per quarter. And as heard a couple of times today, there is high ambition to continue growth in international digital services. And we really hope that this change and added transparency will help to follow the development and progress of this business. And finally, my priorities in three main strategic focus areas. Continue growth in telecom services with efficient CapEx, high earnings and cash flow conversion digital services, increasing scale with disciplined acquisitions and continuing cost efficiency and productivity. Improvements and efficient capital structure going forward. And now I'm ready to take questions.

It's Keval Khiroya from Deutsche Bank. Firstly, just in terms of the organic growth of your business, how should we think about the organic growth? Would you be still delivering at least 3% EBITDA growth without acquisitions? And secondly, I appreciate you can't be very specific on what acquisitions you may do. But can you talk about how we should think about the size of potential acquisitions made in the context of the EUR 120 million you spent over the prior 3, over '20 to '22 or maybe in the context of the size of the international revenue stream today?

Yes. 3% EBITDA target, we see based on organic growth and with efficiency measures, productivity improvement measures. So it doesn't include help from acquisitions. Acquisitions, this EUR 120 million in the past 2 years since last Capital Markets Day, they've been varying between a couple of millions to EUR 75 million. And really good acquisitions really contributed to the growth and the progress of digital service business. And as much heard today a couple of times, so we will continue to see such an opportunities to improve and progress with this domain.

Siyi He from Citigroup. Just I have a question on your return on capital employed. Obviously, you have the highest ROC in the industry, and clearly about your direct competitors -- and would you mind to elaborate why your ROC is much higher and it's still growing? And also, if you look out for like 3 or 5 years, do you think that Finland as a market is sufficient to have you with a higher ROC as well as your competitors is now aiming to improve the return of the capital employed as well?

Yes. It's about getting best out of the invested assets. And about CapEx levels and then getting the returns out of the invested money and invested CapEx, it's about acquisition policies and returns from acquisitions. And we've been very disciplined and value creation oriented with our acquisitions. And then, of course, constantly improving earnings, all these are contributing to that. And what was the second part?

The second question is about Finland as a market because you have a very high return on capital employed and your competitors is now trying to improve that as well. Do you think the market -- I mean, outlook is sufficient enough to allow both of you to have, let's say, high I mean, 15% of capital employed?

Yes, there is high competition in the marketplace. There is one of the highest data usage in the mobile network, high-quality networks, low prices in international comparison. So if you were referring to some, let's say, regulator views then I think regulator can be happy with the what customers are getting good quality services and affordable prices in international comparison.

Sami Sarkamies, Danskebank. I think you've been opening up the top line drivers in detail, but could you also comment on the OpEx outlook going forward in terms of the sort of key line items like salaries? And then maybe more specifically, when it comes to exit price, you're hedged for this year. How does the hedging price look relative to last year? And did you also say that you were fully hedged also for the coming few years as well?

Yes. But salaries in Finland, overall, the collective labor agreements that been done recently in different industries with different unions. Salary increase levels have been let's say, 3.5% to 4% in that range. And that is also our expectation for ourselves for this year. And the second one?

[indiscernible]

Electricity. Yes, hedging price. Compared to last year, it's -- for this year, it's about a bit less than what it was end of last year. Beginning of last year, of course, was still a bit lower than -- significantly lower than second half last year. So on average, a bit less than last year average.

It's Russell from New Street. I got a quick question on CapEx, please. So obviously, you've done a very good job of keeping it at 12%. But I mean with the 2% revenue CAGR, it is growing at 2%. So what are you spending more CapEx on? Is that capacity in mobile? Is that the upgrade in fixed? What proportion of your CapEx is being spent on the fixed upgrade, for example? And then going forward, could there be a time when CapEx falls? So when that fixed upgrade is over, can you generate revenue growth and CapEx comes down? Or do you need CapEx to be rising year-over-year or to generate the revenue growth?

Yes. Well, CapEx -- main CapEx goes to network and both mobile and fixed network, and IT systems, customer equipments, currently 5G rollout and fiber investments are something that been invested, let's say, a significant portion of the total -- and also going forward, we see that these are the main CapEx areas about future CapEx levels in new midterm targets. Midterm financial targets, we do have 12% as a target, so we expect that level to continue.

So looking at your 2023 guidance versus your midterm guidance, your 2023 guidance is perhaps more conservative than your midterm. Maybe you could just explain a bit sort of are you forecasting more growth in 2024, '25? Maybe you could just talk about that.

Yes, especially this year's first half, as we said in -- when we published Q4 numbers and gave the outlook. As we said, first half is growth is more challenging. Among the others, the electricity price being one of the reasons for that. And the growth, EBITDA growth drivers, I did go through relating to telecom service revenue expectation, digital service growth expectation and continuing with the cost efficiency, productivity improvements, especially with automation, like we've done in the past that will produce step-by-step improvements rather than big bang in one quarter. And that is the way that we will improve cost efficiency and also contribute to EBITDA growth target.

All right. Thank you, Jari. Sorry to interrupt, but now we actually start with a joint Q&A where all speakers are available for your question. Jari, as well. So if you have anything for Jari, specifically. But please start. All right. May we have the first question?

I just had one for Jari. I saw that the effective tax rate is lower than corporate tax rate. Are you getting some benefits from like innovative box? And is that to do with the start-up in digital services? What kind of benefits are you getting from that business?

Could you repeat?

Just in the presentation, you said effective tax rate will be lower. So just the reasons for that invest the digital services.

Yes. So corporate tax rate in Finland is 20%. And the effective tax rate has been below that, let's say, 18%, 19%. Some portion of that coming from Estonia profits and Estonian earnings, there's no corporate tax unless dividends are paid. That's one reason. And then there are some losses in some subsidiaries that we've been used against the tax profits.

Okay. So would it still change versus prior periods? Or is it same?

Well, it's 20% or below.

All right. Then next, Matti?

Matti Riikonen, Carnegie. I would like to go back to the consumer customers and the entertainment video services. You mentioned in the presentation that the revenue growth, excluding streaming cooperations was roughly 4%. And at the same time, the profitability of the service is a bit weaker than what you suggested 2 years ago. So is the kind of streaming cooperation, the decisive factor for the lower profitability? Or is it just the overall competition in the segment? Could you describe how it works, where the prices have been declining?

Yes. Thanks for the question. So indeed, it is that our competition is mainly in the streaming market. So we have a lot of new players in Disney and Netflix and HBOs in the market. So really, the competition is very high there, and that kind of limits a bit of our kind of maneuver portfolio, so to say. And the cooperation with Viaplay, I think we have disclosed before that we have increased the revenues. But on the EBITDA level, so it's pretty much a plus/minus zero. I think that's what we have been year saying before as well. So that's a situation.

Okay. And then going forward, -- what's the policy and then the process when you take new video services into the values of entertainment package, you have HBO, but you don't have HBO Max, and that's been a kind of anticipation that it would come. Otherwise, it's a bit cumbersome to use the service. So -- and of course, we have other candidates as well. So how do you try to implement those into the platform? Because naturally, it increases the usability of the platform and probably creates stickiness even though it wouldn't make much more profit. So how?

Again, it's a good question. Indeed, that we try to kind of incorporate as many as those services that operated by the customers into the service. And it's a bit of a cumbersome to kind of implement new service into our service or any service platform. So it takes a bit of a time. So that's kind of a reason why HBO Max is not implemented yet, but it will be implemented as part of our service. And as we move forward, so there will be kind of a more standardized APIs, interfaces towards content providers that it will be, in the future, much more smoother process to integrate a new content providers into our service. So it's kind of a move into the right direction.

Okay. That's helpful. And then another topic, which is the price discipline in mobile, in low-end 4G. That has been surprisingly resilient from the consumer's perspective, if you visit the stores and ask what is on offer. It seems to be holding at least for now. And it seems that all operators have basically gone to the system where a couple of euros more is the limit that you're getting at least when you're trying to get the new subscription as a new customer. Is that also part of your guidance for the MSR growth to be in the mid-single digits? So it's not just 5G driving the upper end forward, but it's also kind of more stable revenues or growing revenues in the low end.

Maybe I'll start and you can add up and [indiscernible] will continue. We have limited visibility always because competitors can do what they can. And especially for MSR quite quickly that things can change if there will be changes. But obviously, there has been quite high pressure for the electricity price increases, especially to our competitors, both making profit warnings last year, and the other one, 2x. So obviously, that has kind of given a pressure for them to be also trying to gain with increased prices for the customers. So that's how the kind of competitive situation in the market looks now. We have a high churn still and there's a lot of campaigns there are still free gift cards given, but there's somewhat more maybe rationality more rationality in the market. And that outlook is -- or that element is in our outlook when we give the understanding and -- of that, we aim to mid-single digit this year with MSR.

All right, the next question here, Andrew, please.

I have two questions, please. So one on B2B specifically, and going back to -- I think you showed the chart of Net Promoter Score improving quite a bit, and I think it was a big step up in 2021, if you could explain what happened there. And then with all of these services that you are adding on to your portfolio, going forward, do you think that the situation in the market because as we heard before, DNA especially has been kind of open about wanting to take market share in enterprise -- is the gap between the capabilities closing among the competitors? Or do you think with all of this that you've presented today and what you will be developing going forward, the Elisa kind of capabilities will actually be diverging from the pack? So that was one on B2B.

Well, thank you for the question. I think that the Net Promoter Score, how it was put there is really with the -- as a result of the kind of fact that we are looking what the customers are really kind of valuing. Second, we have our business system as a practice is, how do we do these activities to improve really the quality for our customers, really meaningful, that what are the root causes for the customer. And we are all the time working with those. And that, I think, has been the gladly seen by the customers as well. And then it's witnessed by the NPS historical growth that was there on the chart. The -- when it comes to the competitiveness, I would say still that reiterate that we are very -- feeling good about our competitiveness. So -- and like I outlined there, we see that as time goes by, the automation and AI becomes more and more relevant, we only become more and more competitive. So in this regard, I still feel very confident about the future, but not really kind of undermine any competition. They do their things and they run their races, so.

And the second question that I had was on the -- especially on the Network Services. So I think you mentioned that you're taking basically market share in terms of network management in a sense if I understood that correctly. And you mentioned, I think you alluded to pricing specifically that the vendor kind of services are maybe more expensive than yours. Is that -- is there a structural reason for that? Maybe bolting on these services onto your specific experience that you've developed over the say, past decade in terms of the network qualities that you're able to sell these at a cheaper rate? Or is it structurally now that you're kind of underpricing the competition in order to grow market share, i.e., what is the sustainability of the growth in terms of your market share specifically?

Yes, I guess that the question referred to the managed services as a competition in the, say, larger customers. Our tools take a totally different approach to that to make -- doing the tasks managing the network. So we are providing tools to automate it, get rid of the people as a whole. The managed service providers typically have transferred the workload to cheaper labor countries and that is coming to an end. So our competitiveness actually against that, not being able to transfer that anywhere from India anymore. It's actually very high that you compare the cost of running it in India, the cost of running it with no people. So we feel quite confident that our proposition for the telcos that want to really take their grasp on their own hands and to continue to develop their cost efficiencies is very good.

That if you look at a bit longer term, the network infrastructures and the technologies, especially the times when there was a lot of push for managed services, we have -- we were living quite different times. Now we have clarification already taking place and capabilities to utilize the data like Henri was explaining to create something that was not even thought earlier on.

Sami Sarkamies, Danske Bank. You've been quite critical to cross-border mergers. You are saying that there are no synergies in those cases. But if I think about what we have heard today on the Elisa business system, have you thought about expanding to other territories? I mean, could this be implemented in another market?

Well, it's a good point. We could elaborate that thinking. And clearly, with the managed business system, we could think that -- like we think that even with Henri's acquisitions, we have an opportunity to have additional synergies by utilizing the business system with the acquired companies, but also, of course, learning from them and increasing the business system to be even more powerful. There is another element for cross-border acquisitions of telco businesses that there's always quite many bidders and the price gets a bit high. So these other negative things. So at least for the time being, we haven't entertained the idea of really getting active on cross-border acquisitions in telco side. But again, like I said, in the other businesses we can do like this.

Thank you for the presentation. It was very useful. Thank you for the improved disclosure. One question for you, Veli-Matti then for Jari. It's been a positive story today basically all the presentation. And the outlook is a positive one, and you delivered on the positive outlook you gave us 2 years ago and 4 years ago. And I suspect it might be positive when we meet the next time. What are your main concerns? So if you disregard your sort of the Russians, what are your main concerns in terms of the business outlook that things could change for?

Always say, we think that the main concern is ourselves that we get complacent. It is something that we every day remind ourselves that, yes, we have done a great job and improved, but there's always opportunities. There's competition. There are changing environment to keep up the curiosity, the willingness to learn. And that's, of course, a concern that there is no slippages of that. And of course, we are human beings throughout Elisa. That's always a possibility. So that's -- I think all the other things, actually, I think that when we have the culture, the willingness and the attitude to go after the new things and learn even when some challenges are coming, all the other things we can solve, but it is about our attitude and culture and to be curious and learning.

Okay. And a question for Jari. Jari, on the CapEx sales, I know you -- I'm sorry to ask about CapEx there. But from a broader perspective, as you said, the CapEx sales ratio is very low. It's also remarkably stable. The chart you showed is basically a flat line, which is highly unusual, to be honest. How are you deliberately managing this to be at the peak at 12%, no more no less? And do you feel constrained by this promise you've given to the market going forward?

Yes, it's -- of course, we pay a lot of attention how to deal with that. And as I said, right timing is important and also to the allocations according customer demand, customer potential and I think that this, let's say, target has also helped in many on innovation. So we've been sort of partly posed to innovate new things. How -- for example, how to deal with high usage that we do have in the mobile network, one of the highest in the world and with capacity. And there, we have done lot of own innovation, dealing with capacity inside the network. And also these innovations are used in Henry's business in a services what we are providing to other telcos.

So there's nothing constraint. I hope he feels because...

That's part of the purpose that we have constraints -- and like Jari said that and everybody else had, we need -- that makes us to prioritize because in our business, I'm an [engineer], I can say that we invent always many things to new things to do. And in our industry, we have a bit of a habit that we tend to do too many things with [indiscernible] not necessary. Not necessary and not mature or not kind of moving the needle. So it is, of course, the border is giving us discipline and, of course, also a constraint to make the choices and also to innovate.

Okay. Any further questions? Yes, I think we are getting to the end of the event. And just to remind you that we appreciate the feedback. Please fill the feedback form. We appreciate that and also maybe to mention that we have a light lunch here next door. But maybe we are going to the closing remarks and Veli-Matti, please.

Well, for the first, I'd like to give you a big thank for investing the time to learn more about Elisa. I wish you have got some learnings, new learnings this Capital Markets Day events are never really places for great big news, very seldom. But I hope that you have got more understanding of the of the kind of opportunities we have ahead. We are excited about those opportunities in all of the three focus areas in our strategy going forward. So big thanks for you. Big thanks for you also for lively dialogue. Good questions, and we continue the good dialogue going forward. First, now with the line. So thank you very much, and let's close the event. Thank you.