Elisa Oyj (ELISA) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Elisa's Second Quarter 2023 Conference Call. I'm Vesa Sahivirta, Head of Investor Relations. And here together with me is very familiar team, again, CEO, Veli-Matti Mattila; and CFO, Jari Kinnunen. We start this call from presentations, followed by Q&A. And because we don't have audience here now today, we go straight to the conference call lines. But now we are ready to start, so I give word to Veli-Matti, please?

Thank you, Vesa, and welcome all to our second quarter interim report for 2023 on my behalf as well. We got a good quarter despite the anticipated challenges. Our revenue grew by 2.2% and comparable EBITDA was up by 1.8%. Mobile service revenue continued to increase well by 5.4%. And in the international digital services, the year-on-year revenue growth was slightly negative due the expected volatility in the business. But for the full year, we expect strong double-digit organic growth to continue for the full year. In Finland, postpaid churn decreased to 13.6% and postpaid subscription was growing more than 43,000, of which machine-to-machine and IoT subscriptions contributed almost 33,000. Fixed broadband subscription base continues to be quite flat, decreasing 2200 and very good momentum with 5G continues. Now our network is covering 90% of the Finnish population over 70 in -- for Estonia. And we are commercializing very well the 5G going forward. The revenue growth was contributed by mobile services and fixed services and EBITDA increase, of course, comes from the revenue growth but also our continuous improvements in excellence, improving our quality, productivity and efficiency. Mobile service revenue growth comes from the fact that the upselling works, upselling to 5G and otherwise, but also some of the product changes where we also have made some price increases contributed to the growth. And even if the churn now continues for the third quarter, the decreasing trend, we still have a very intensive competition in the market. There are still campaigning and some low prices also here and there. But overall, we can say, of course, that market has been somewhat more rational. When looking at the business segments, in the consumer side, the revenue growth was 2%. And contributors were mobile and fixed services in the consumer business side, we also saw some increase in the digital service businesses. Interconnection prices have been regulated down. That's why the revenue has come down for interconnection. Of course, our cost for interconnection has come down pretty much the same level. And then the traditional fixed line services revenue decrease continues. EBITDA percentage -- EBITDA was 4% higher for Consumer Customer business year-on-year. The corporate side also, the revenue was growing by 2%. The growth contributed by mobile and fixed services. The digital services were having some decline as we indicated for this volatility for the international digital service businesses. And the same thing for interconnection prices and revenues and traditional fixed line services decreasing somewhat. EBITDA was minus 4% for Corporate Customer segment due to the fact that the decrease year-on-year in the international digital service businesses were contributing negatively. We have a very good strategy at Elisa, which has paid the results also for this quarter despite some challenges and expected challenges, and we continue to see great potential in all of the 3 focus areas to provide value to our customers and shareholders as well. In the mobile side, the customers are moving to higher speeds. At the moment, we have 47% of customers now over 200 megabit per second speeds and below 200 megabit second speed customers are now 53% of the customer base. Smartphones are more and more 5G devices, 46% of the smartphones in our customer base are 5G capable, which, of course, paves the way for increased 5G subscriptions. Coverage is being built continuously, both in Finland and Estonia. And together with the increased 5G device space, it's really creating opportunities for further upselling to 5G. Average billing increase is clearly over EUR 3 per month per customer on average when we are doing 5G upgrades, and that is intact. And we are doing this first. Again, we were the first telco in Europe to deploy in-service software upgrade capability in the live production 5G stand-alone network showing that we are continuously also taking steps with the new technology, which is, of course, creating new benefits for our customers and for our productivity. We're also piloting and deploying private 5G network solutions with many customers. It's a market that is gradually picking up, as we have said earlier, not in a very speedy way but step by step. In Hamina Kotka -- Port of Hamina Kotka, we piloted automatic working machines with remote control, and there, we were using Elisa's 5G stand-alone network. And this remote driving clearly increases the safety and productivity in the harbor and also reduces emissions. That's what this pilot clearly proved. And we continue also our active investments in fiber network, and we also have announced EUR 200 million investments in the coming years to expand our FTTH connections in the market. Rollout, what we do is, of course, based on the customer demand, which is still very different from other markets since we have a very good 5G mobile broadband and 5G fixed wireless access products, but some customers also are willing to invest in fiber connectivity, and we are certainly making sure that customers who are very much valuing Elisa's reliability and it's improved pricing model are getting also the best possible fiber solution. The year-on-year revenue growth was slightly negative in IDS businesses, and that is due to the expected volatility of the business. We are still in that level of our size of the business, that large customer projects when they are not timed really exactly to all the quarters. That is, of course, creating this volatility that we have also highlighted earlier. So that was the reason for a slight decline in the IDS revenue. But we expect, based on our order backlog and the visibility for incoming orders that the full year growth will be on track, creating strong double-digit organic growth for the revenues. And for both businesses, we are also looking at accelerating the growth with further M&A. In Polystar, we recently received significant contracts for AI and analytics solutions with 2 large European operators. And in the industry, there has been a strong order intake in all industry verticals in Q2 despite the tough market conditions. And we continue to invest in sales, and we have recruited new salespeople in several regions for the business. In domestic and other digital services, in the entertaining video side, we have created a very attractive Elisa Viihde original series, 2 series, Renki and the season 3 of Sipoon herttua, the most popular comedy series in Elisa Viihde Viaplay streaming during the second quarter, for example. In the IP side, we are making growth. For example, Aktia Bank was choosing Elisa as the partner to provide IT services, and we also were acknowledged for our expertise in automation and artificial intelligence with the Microsoft Partner of the Year Award. In visual communications, there continues to be more demand for Videra Solutions because of the hybrid working getting increased in the -- after the COVID and Videra, for example, was successfully onboarding 1,400 government of Finland ICT centers, room systems to its managed service and a number of Videra Hummingbird monitored customer devices grew by 33% during the first half of achieving 85% proactive incident management. And we are creating a sustainable future through digitalization in various domains. We have 4 areas for sustainability where we have set targets. And when we are looking at the quarterly results for mobile network efficiency, energy efficiency in Finland, we are getting decrease according to our targets pretty much. And also, we are increasing the population coverage of more than 100 megabit per second connections. The penetration or availability is getting close to 90%. The proportion of female supervisors came not down. It is also a development that has sometimes steps back, but we are creating momentum for further increase of the share of female supervisors at Elisa. And we are making also continuously more and more patents, the patent portfolio and the new first applications are increasing. Elisa also was ranked on the Financial Times Europe's climate leaders for the third year in a row with highest total score of any Finnish company. Really, again, underlining our efforts for sustainable future. And we also showcased Finnish cyber security expertise at the RSA conference together with Traficom and Finnish National Bureau of Investigation. Finally, about the outlook and guidance for the rest of the year. The development of general economy includes many uncertainties. Growth in the Finnish economy is still expected to stall and in particular uncertainty related to Russia's war in Ukraine, such as inflation, energy prices and global supply chains will continue. Competition remains keen. And we reiterate our guidance, revenue will be at the same level or slightly higher than 2022, and comparable EBITDA will be at the same level or slightly higher than in 2022. And our capital expenditures will be maximum 12% of revenue. Now I ask Jari to continue, please.

Thank you, and good morning. Let's first start with profit and loss Q2 continued growth in revenue and EBITDA, pretty much as expected and said before, revenue grew 2.2% or EUR 11 million. And inside that interconnection and visitor roaming was reducing by EUR 3 million interconnection prices at a lower level. impacting to that. In equipment sales, development was flat in corporate segment services. Both mobile and fixed services were growing, whereas digital services, including IDS volatility had a negative impact to revenue growth. Consumer Customer segment, all service revenues, mobile, fixed and digital services were growing and in both segments, traditional fixed voice was reducing. In OpEx, materials and services expenses were lower than a year ago, lower growth in equipment sales impacting that also as interconnection prices reduced interconnection expenses were lower. Employee expenses growth was EUR 9 million. Most of that coming from number of employees increase also including acquisitions, also salary increases impacting and also this quarter included onetime payment that was agreed in the collective labor agreement earlier this year that impacted by EUR 2 million. Other operating expenses were growing by EUR 2.4 million. And more activities back to the office, more traveling and customer entertainment, employees training and so on, impacting after COVID a bit lower levels. Comparable EBITDA growth 1.8% to EUR 182.7 million, and margin was 34.3%. Comparable EBIT increased by 2% to EUR 115.7 million and EBIT margin was EUR 21.7 million. EPS was same level at EUR 0.56. And in financial expenses, there was a change by EUR 2.6 million increase in net financial expenses to EUR 5.7 million, and that was due to higher interest rates to those loans that had variable interest. In Estonia, strong growth, both in revenue and EBITDA revenue growth, 7.7%, both mobile and fixed services, growing the EBITDA, even though inflation is still high, it is decreasing, but still high and especially energy prices and rate increase is impacting but EBITDA increase at the same level, 7.8%. In subscription base, postpaid mobile base growth continues this quarter, 3,000 growth, prepaid reduced by 5,000 subscriptions. Churn slightly increasing from previous quarter to 10.8%. Then investments reported CapEx was EUR 70 million. EUR 45 million in consumer segment and EUR 24 million in corporate segment. Comparable CapEx, excluding licenses, lease agreements and acquisitions was EUR 64 million. And main investments relate to 5G coverage increase, fiber investments and other network investments and IT investments. Then cash flow, strong growth, cash flow -- comparable cash flow was EUR 108 million, EUR 27 million growth or 33% growth main impact from net working capital change, also higher EBITDA contributing positively as well as lower license payments. And negative impact from higher CapEx, taxes and interest payments. Net working capital change was positive, EUR 22 million. And behind that inventories reduced also positive changes in lower amount of receivables and higher payer costs. Operating cash flow conversion remained at good level, 65%. And then capital structure and balance sheet, solid balance sheet and financial position, continuing capital structure according target net debt to EBITDA 2x inside the target 1.5 to 2x and the equity ratio higher than target 35%. Average interest on interest-bearing debt is 1.9% return ratios also remain at a good level return on equity 31.2% and return on investments at 18.2%. And now I give to Vesa, please.

Thank you, Jari, and now we move on to Q&A part, and we ask first question from the conference call lines, please.

[Operator Instructions] The next question comes from Ondrej Cabejšek from UBS.

I had a couple on CapEx, please. So related to this announcement of you targeting roughly EUR 200 million investments into fiber over the next couple of years. I was going to ask, first of all, how does that change your current kind of CapEx profile if you break down the CapEx envelope today between 5G for example, mobile investments in general and fiber, how does the profile change going forward? Is it still the case that most people or most consumers that are asking for fiber to the home connections in Finland are actually paying for these. And just can you explain to us in terms of 90% population coverage today? Obviously, you're moving down to densification and geographical coverage, how does the profile of 5G investment in general look like going forward in terms of the various kind of stages of the population then the geography and then some kind of densification.

All right. Thank you for your questions. In regards to the fiber build-out, we are investing, as said, we have invested in fiber build-out in the past, and we continue to build. We make the announcement for a couple, several years that we will lay out at least EUR 200 million worth of fiber. We wanted to make that to ensure that our customers know that there will be also fiber alternatives. It's not going to change our 12% CapEx guidance. There are, of course, some changes in how we invest in different things. So fiber is having a bit more share of the total investments, but the total level of investments is the same 12% of revenues, understanding also that our revenue is increasing to some extent. So that is also giving absolute increase in the total investment. I didn't quite hear, but you may be asking that how many customers are paying for the installation fee or something like that? The second question was that it or?

Yes, please because I guess it's -- or has been at least and so recently quite normal, but then you had some of these smaller players come up with more aggressive approach, where people weren't actually required to pay for this. So this is something that is the assumption going forward that at least you as a big player, I guess one of the big players in the market will be asking for customers for the, say, EUR 1,000, EUR 2,000 connection fee or whether this is on CapEx without any revenues from the connections.

Well, this is a very regional business. Different regions have a bit different competitive situations and offerings. In some areas, there are offers that there is no installation fee, but there's also a lot of uncertainty or let's say, unclarity in the pricing models, which we have seen customers to be quite unsatisfied what we are offering. We are offering very clear, transparent pricing, which clearly customers seem to like and time to time, we are also depending on the competitive situation, we can also go forward without very low installation fees if that's needed. But this thing varies depending on the market areas and regions. In terms of the 5G customers going forward, we have a very strong demand for mobile broadband continuing also the 5G fixed wireless access business is going really well. So there are a lot of customers who take that alternative, and we are expecting that to continue when we are increasing the penetration from the 90% to the higher levels.

If I may have 1 quick follow-up. You mentioned the growing revenue base. Can you please remind us in terms of the international digital services in general, the growth there is obviously creating some headroom on the total revenues that then kind of allows CapEx into the telecom side to be higher. Can you remind us what the CapEx infancy roughly is on the digital side, please?

On the digital side, the CapEx level is clearly lower. I don't have that -- we have not kind of disclosed the number, but it is clearly lower than in the telecom side.

The next question comes from Nick Lyall from Societe Generale.

Just a quick question, if I could, on the costs, please. On the material and services costs, it seems like quite a big delta this quarter. I think it's down versus quite a big rise last quarter. It may be possible just to break down Jari, the change in interconnect costs in there and also equipment costs, because they only seem quite small and to tell us what else might have moved that line by so much fees. And also, when you're doing that, would it be possible to explain to us how the move in IDS revenue also affects EBITDA with respect to those costs as well?

Okay. Let me start from your latter part of your 2 questions. The IDS revenue, of course, is contributing to the EBITDA and of course, this negative revenue development year-on-year had also negative impact on EBITDA year-on-year to some extent. But as we have said earlier, the outlook and our view for the business remains. For the full year, we see strong double-digit revenue growth and we also see improving EBITDA overall. It is as this volatility that is created by the nature of software business between the quarters that has impacted to some extent. And in regards to your other question -- or first question regarding the cost in materials and services, I ask Jari to elaborate, please.

Of course, the whole materials and services, it has a lot of different items inside that are impacting and in many lines, there are also negative changes. And -- but now equipment sales in the past quarters, the equipment sales have been, let's say, both size of EUR 6 million quarterly. The -- I mean the equipment sales growth and now that it was flat this quarter, so approximately same impact in the expenses. Then regarding interconnection price change was reducing the interconnection expenses, but the impact is fairly low and much lower than equipment purchase cost change.

That's great. So that suggests because, as I said, last quarter, your costs were up about EUR 10 million or EUR 15 million rather. This quarter, they're down for material and services. So it suggest some other growth somewhere else has slowed sharply. I mean would that just be basic stuff like energy costs are already helping you? Or what are the other item? There must be a much more significant other items.

Energy costs are still higher than a year ago, but the difference is smaller than what it was in Q1 year-on-year comparison. As we said also in the beginning of the year that overall growth for first half is more challenging and in the second half, for example, comparison in energy is a bit easier and also the wind power SBA agreement that we made in the second quarter contributes in the second half.

The next question comes from Sofija Rakicevic from Goldman Sachs.

[indiscernible] are on digital services, so just going back. Firstly, you said the declines in 2Q are a result of normal business volatility. So I was wondering, is it only normal business volatility? Or there is some market volatility in the play as well? Secondly, can you explain is decline largely due to revenue recognition of certain contracts? And if so, is the corresponding OpEx of those operations recorded more consistently? And thirdly, if possible. Can you provide us with any color on expected digital services performance in 3Q or what are you witnessing so far in July?

All right. Yes. The volatility in the international digital service business is really based on the nature of how the -- how we are landing contracts to different quarters. And comparing to second quarter last year, there was not that level of contracts landing. But as we see from our kind of incoming orders and also the backlog overall, we are very comfortable about the second half of the year to contribute so that the full year will have strong double-digit revenue growth for the IDS. The OpEx side is running pretty much on the same level over the quarter. So the volatility is not that much moving with the revenue volatility. And I cannot give you any guidance further on for the third quarter for digital service businesses. But we as said -- we see for the full year a strong double-digit growth, which is, of course, giving you some indications at least for the second half of the year.

The next question comes from Siyi He from Citi.

I have 2, please. And the first one is actually a follow-up on the question on OpEx. It seems that you have added 100 staff on the employee base. And also -- and there's a great salary increases and a onetime bonus. But looking at the development of your employee cost, it seems it has actually come down quarter-on-quarter. Just wondering if you can give us some light on that? And second question is on mobile market. I wonder if you can talk about -- talk us through about mobile marketing dynamics. We've seen that the churn come down quite a lot and also the gross adds as well. And on top of that, you have seen equipment sales flat in this quarter. Just wondering what you see in the market? And do you see there's any changes in consumer confidence on that?

Okay. Again, I will start from your second question, and then I'll ask Jari to respond to the OpEx a bit more. In the mobile market, overall, like I explained earlier, the churn has come somewhat down, and the market has maybe got a bit more rational. The reason I assume is that there is a bit more focus on own customers due to inflation, especially and then, of course, we have made price increases that we have seen also competitors to do. So it's, of course, then important to focus on your customers also getting higher prices that they would also kind of get more value. So that -- what I assume one reason for the -- a bit more rational activity in the market. However, saying that, 13% plus is not a low percentage. It means that there is still competition and sometimes some campaigning still, some free gift cards also given in the consumer market. Also, time to time, we see some, I would maybe say, desperate efforts to put some low ball pricing sometimes to corporate customers, which is very easy to -- at least for us to respond. So we see that kind of activity. But like I said, our competitiveness is strong for consumer side, for the corporate side. So we are very comfortable on our performance in that respect. In regards to equipment sales, that has come somewhat down. If this inflation and macro environment has created any kind of slowliness, it seems to be that in the equipment sales side, both consumers and corporate side, there has been some slowliness, not dramatic, but some level that the equipment sales was not growing overall for us. Overall, for the market in terms of the macro environment, even if the uncertainty is higher than normal uncertainty strong negatives we have not seen in addition to what I mentioned. But Jari, please, if you can talk about the OpEx and the employee cost side.

Yes. So as I already said earlier, the EUR 9 million change in Q2 year-on-year, and there was impact in from the higher number of employees, which is the main contributor to change also as a result of acquisitions. Then salary increases, we agreed or the unions did agree earlier this year in the collective labor agreement, 3.5% salary increase. And additionally, there was accrete onetime payment, which happened now in Q2, and that was approximately EUR 2 million. And in comparison year, we had some impacts as a result of strike. So personnel expenses were slightly lower because of the strike a year ago.

If you don't mind, I just want to follow up on your comment on the employee cost, because I mean if I deduct all the one-offs, it feels like the employee cost is actually growing much slower compared to the level we see in Q1 this year. So I'm just wondering if we should expect some pickup in the employment cost increase for the second half to compensate the low growth in Q3? And how -- just it will be great, if you could just help us to think how should we think about employment costs for the rest of year?

Yes. Of course, that is impacted by development in a number of employees as well going forward. We will have this 3.5% impact in the second half. As I said, collective labor agreement, 3.5% compared to situation a year ago.

The next question comes from Sami Sarkamies from Danske Bank.

I have 2 questions. I will take those one by one. Starting from EBITDA growth. If we look at the EBITDA growth by segment, there's been quite a bit of volatility more recently. For example, at the corporate, EBITDA was down by 4% in Q2 after 9% growth in Q1. On the consumer side, growth picked up from 1% in Q1 to 4% in Q2. What explains this volatility during the first half of the year? I think we have probably talked about some of the items, but if you can try to pull it together, please?

Well, the percentages may feel like big from 1% to 4%. But then when you look at the kind of -- really the euros how many euros or million euros they are. They are still quite small things, which means that in our kind of size of business quite small things between the quarters that sometimes vary and are different from quarters to quarters, also create some kind of volatility, if you will. But the main thing then for corporate side is that we have the international digital services now, which we have said that will be more volatile from quarter-to-quarter at least to the situation when we are larger and when we have more SaaS-based business model, creating less volatility to the revenues. So that's kind of the main reason for the kind of corporate side volatility what we see.

Okay. And what about the consumer side? Is that related to energy cost or something else?

I would say that there is nothing -- one specific thing. Sometimes there are small things in different quarters than at the same time, and that is basically creating these changes time to time. There was nothing specific in the consumer side.

Okay. And then my second question would be about postpaid voice customer net adds, which were positive now in Q2. I think for the first time since Q2 last year. Can you please explain why this has been possible even though you've been continuing with your price hikes also in the second quarter.

Well, again, there -- in the customer base, there are different kinds of postpaid customers. And in the, let's say, past quarters, we have got still some, if you remember, a bit longer time before some second and third card sim cards and tablet sim cards that customers have left, which have been with quite low ARPU, but still in the numbers of postpaid. So that kind of -- those kind of changes are creating also sometimes or have dragged our numbers somewhat down, which they probably didn't for this quarter. In terms of kind of a market share wins, I don't think we have gained or even tried to gain per say any market share. I think it's quite flattish with these numbers. If you look at the kind of -- from the percentage point of view, the changes are not that big. So time to time, these changes happen, and now it was a positive for this time.

The next question comes from Peter Nielsen from ABG Sundal Collier.

Just a quick one and then a sort of a broader scale more one. Just returning -- sorry, really much to the international digital services. you've elaborated extensively on this. Just one question. I don't think you've mentioned macro-related factors impacting Q2 sales here. So it's not related to that also, I guess, if I listen to your comments about the full year guidance. And then just on a more broader scale, Elisa and Finland is, of course, one of the if not the first, the leading 5G markets in Europe, and I think your upselling, monetization and growth from 5G has been stellar. And I guess that will continue for a while longer. But can I ask you maybe, how do you see the next phase of 5G growth? What will drive that? Some of your main vendors -- equipment vendors speaking enthusiastically about supporting application developers developing new application interfaces for application to drive 5G traffic. And they seem quite -- they at least claim that the operators are also positive on this. What is your view on this, Veli-Matti? What -- how do you view this? And from your operator perspective, there is something you see interesting upside in more growth to 5G from?

Thank you, Peter. Good. In regards to the IDS development, you were quite trying interpreting what we have tried to communicate. There has not been so much macro kind of impact. Of course, the environment from the competition point of view and always customers are willing to cut cost and be very cost conscious. So that kind of situation, of course, takes place. But the volatility, for example, that we have was just that the business itself is a bit volatile how we are getting orders in and the deliveries, how they are timed between the quarters. For your second question, it's a very important question. And for the first, yes, we foresee 5G upselling with our speed-based unique pricing model to continue very well going forward. We are already -- of course, we have passed long time ago, the kind of early adopter segment and innovator segment. So we are in the early majority, and there is no kind of indication that the customers would not be willing to move forward with the higher speeds with higher prices. So that will continue, but it is very important which we also have done to explore and experiment other values that we can create with 5G new elements. We were talking here about this port case -- this harbor case where we have brought the stand-alone network -- 5G network to provide really capabilities for remote kind of controlling and so forth for vehicles in the harbor, creating clear benefits. So those kind of experimentations we've done. I know we have colleagues who have done as well. Also different kind of new applications are on the roll. We have Apple to bring there kind of virtual reality or augmented reality glasses to the market. Is that going to create kind of wave of new, especially augmented reality applications that really will take volume. The challenge with this -- all of these exercises or experimentations is that, it is always very difficult to find a very strong killer application, which is really prevailing through different customer segments. So it's yet to be found. We are eager and putting a lot of energy to work on those experimentations. We are following what the other operators and equipment vendors are doing. I'm quite positive that the new elements, especially the stand-alone improvements in performance, they will create enablers for relevant values for customers other than the speed upgrade what we're offering. But it may well be that then we need to have several of those different to create more volume segment by segment. Hopefully, this explains our thoughts.

The next question comes from Francesca Schild from BNPP Exane.

I've got a question on EBITDA evolution for the rest of the year. So in your release, I don't think you said again that the evolution is meant to sort of pick up for the second half of the year. But just to clarify, I think in the comments, you mentioned that, that is still the case. And then in terms of sort of looking at the EBITDA growth that's been achieved already this year, I mean I'd say that it seems like it's sort of already towards the top end of your full year EBITDA guidance. So just wondering what you see for the rest of the year? Whether we should expect an acceleration in EBITDA growth, whether that's purely energy costs or anything else and any other headwinds to look out for?

All right. Thank you for your questions. Basically, like we said, we reiterate our guidance for EBITDA to be same level or slightly higher than last year. We have been a bit higher than last year for the first half of the year. There's still uncertainties in the business environment, why we are a bit cautious here. But of course, we are working with all of our energy to make sure that we would be in the upper end of our guidance in the end of the year remains to be seen. There are -- like Jari explained some elements like the collective agreement, salary cost increasing 3.5%. Then we have got now -- comparing to the first half, we have got in the year-on-year comparison to maybe a bit more positive situation in the energy price increase kind of development. So there are positives and negatives. And we are working on to kind of get to the higher end of our guidance, but we didn't change the guidance because of the uncertainty still at the moment in the market and in the global economy.

But just to clarify then, so are you saying that the first half of the year was more challenged and you expect that to be an uptick? Or you're saying that puts and takes and you're not really reiterating that?

I'll ask Jari to elaborate a bit more, please.

Yes, we took that sentence a way that's more like a technical thing because the first half is already there and it's sort of technicality -- technical change to the outlook rather than a substantial change.

The next question comes from Adam Fox-Rumley from HSBC.

I had a couple of questions around fiber CapEx, please. I suppose I'm not expecting you to give us kind of really -- you don't normally give us a very detailed kind of insight into where your networks are. But for many years in your reports, you've spoken about high levels of competition in finished broadband and the pricing environment there. So I guess I'd be keen to see if you can reassure us about the returns that you think you can get on the fiber build. Whether or not the EUR 200 million of spend that you're calling out is really incremental allocation? Or is this an announcement of plans that were already in the pipe. I mean I fully understand why you would want to shout about the investments that you're making in the market. But is this incremental money flowing to that part of the market? And then a kind of related specific that you may not want to tackle, but are you able to talk to us about the average cost per home passed in Finland? Is EUR 1,000 really a reasonable approximation? Is it much lower, much higher than that, that would be very helpful, too.

The fiber CapEx and what we announced was, of course, an indication that we are increasing somewhat the investments to fiber. However, we are keeping the CapEx intact -- the CapEx guidance 12%. Of course, we have moved on with the 5G kind of investment cycle quite much, and there are some other ways how we can then have a bit more to the fiber. The returns, we are not speculating or giving any guidance is what kind of returns for different kind of businesses we have. We have our financial medium-term targets revenue growth for EBITDA, and it is the kind of combination of various of our businesses contributing to that. And adding a bit more investments to fiber is not changing our view of the capabilities of us to execute and perform according to our financial targets. The average cost per home passed, it varies very much in Finland. The -- it really varies from the kind of below EUR 1,000, but then to several thousands depending on. And it also varies, of course, based on how, let's say, capable you are in the business of fiber build-out overall. We, of course, are volume provider in Finland. We have a strong history of building fiber. We have a very capable organization and a strong network of partners. And of course, what helps us is that, based on our studies, customers are clearly preferring Finnish very transparent pricing fiber solutions from Elisa comparing to competitors. That also, of course, helps for the total cost of getting fiber customers and for the whole business case.

That's very helpful. If I could just ask a couple of follow-ups very briefly. Do you work on the basis of precommitments ahead of the build that you roll out? And then secondly, are you able to say anything about a kind of urban-rural ambition for the incremental network we're talking about within this envelope?

Well, for the first, the fiber market in Finland is not one fiber market. We have quite a different situation in different regions. And of course, as the biggest operator in Finland, we have capabilities to compete in the fiber market. But we are looking at also the market as the home broadband market because, like I said, in Finland, still the number of households without fiber is over 20%. And it will be increasing the amount of customers who are very happy with the mobile-based broadband with fixed wireless access or with 5G mobile broadband. So we are using all of our strengths in the offering very well, but also providing a different kind of solutions in the fiber market as well. I -- for competitive reasons already now I cannot elaborate even more, but we feel comfortable on playing this market where now we've seen a bit more activity in the fiber part.

The next question comes from Felix Henriksson from Nordea.

I only have one. Could you please remind us of the magnitude of the price increases that you've done more recently in both B2C and B2B and perhaps elaborate on to what extent have these contributed to your sort of 5% mobile service revenue growth in the first half of the year.

Okay. If we take about B2C price increases, of course, for the kind of front book pricing we have done for 4G prices already. The latest ones have been in October last year and January and now then April this year. So we have lifted the kind of mainstream 4G subscription price 3x. Our competitors have mainly followed those price increases. Then in the corporate side, there has been different kinds of price increases also depending on the customer segment, whether we talk about entrepreneurs, SME or large customers and there is price increase there. And of course, they have contributed somewhat all of those to the mobile service revenue growth. But of course, the just getting customers to move on to higher speed tiers themselves is contributing as well.

The next question comes from Saim Saeed from Berenberg.

Just 2 -- the first one is just on Finnish corporate pricing. So should we expect to see some benefit from inflation-linked contracts in H2 that wasn't present in H1. And the second one is just on Finnish fixed subscribers. You've given quite a bullish outlook on fiber, but I'm sure there's still a lot of DSL and cable still remaining in the base. So do you have a sense of when that broadband base stops declining on a quarter-over-quarter basis. Is that still a couple of years away? Or could it be maybe slightly nearer than what we're thinking at the moment?

Okay. Can you elaborate or repeat the second part of the question, I didn't quite capture your question. What was your question?

So just on the broadband subscriber base in Finland, given your sort of bullish by the outlook, could you maybe expect some quarter-over-quarter growth seen than what kind of expected.

Well, the -- we are not giving guidances on broadband customer bases themselves. If I understood your question right, what I can comment is that the market situation is quite flattish. There is a kind of change out from older technologies to new technologies like fiber and also fixed wireless access, mobile broadband, but the kind of the average number of the -- even the fixed broadband market, the number of customers pretty much remains the same. I believe yes, yes. And then the first question, Jari, please?

Yes. If I heard right, the question was regarding corporate customer contracts inflation linkages, if that was the question. Yes, there are a lot of different contracts with corporate customers. And some of those have some inflation linkages, but that is not the case with all contracts. So it really varies quite a lot.

The next question comes from Stefan Gauffin from DNB.

Yes. A couple of questions, please. First one, just get some flavor on the 5G development in Finland. First of all, if you could give some information on the 5G share of subscriber base? Or if you could give some information on 5G contribution to mobile service revenue growth. And then second question relates to Estonia, which I think had a good mobile ARPU development. Have you done some price increases? When were these done and the magnitude of those.

Okay. Like you certainly know from the past, we are not providing information about the number of 5G customers. We focus on providing the information about our MSR development. The contribution of 5G to MSR is good. We are not detailing that either. But it is, of course, while we move forward, it is -- the 5G customers are contributing more and more overall to the mobile service revenue. But for the growth, of course, that is one element of 5G upgrade. We still upgrade customers in other technologies as well, as well, we also have some price increases. So the MSR is a combination of those. In terms of Estonia, yes, we have done price increases during the past year. The inflation has been higher there. All the competitors have also done price increases. There has been, of course, several different events depending on the customer segment. And of course, that has also contributed to the ARPU increase. But also in Estonia, we are selling higher speeds and more valuable subscriptions to customers contributing to the fact. But of course, the price increases have had a clear role in the ARPU increase in Estonia.

Okay. Thank you. There are no further questions. So we thank you for the questions. I really appreciate. Thank you for speakers. And now we wish you all a very nice summer time. So -- and goodbye now.

Bye and thank you.