Elisa Oyj ($ELISA)

Good morning, everyone, and welcome to Elisa's First Quarter 2026 Conference Call. We start with a presentation given by CEO, Topi Manner; and CFO, Kristian Pullola and after that, we move on to Q&A. And I think we are ready to start, and I give word to Topi. Please go ahead.

Thank you, Vesa, and good day, everybody. Welcome to this Elisa Q1 earnings call. And let's get right down to business and briefly go through the Q1 highlights. During the quarter, our revenue decreased by 1.3%, and this was to a large extent driven by lower equipment sales, impacted especially by higher device prices due to the shortages of memory chips worldwide. Telecom service revenue increased by 0.5%, driven by fixed service revenue. The mobile service revenue declined by 0.1% as the full impact of intense campaigning in Q4 was visible in the MSR. International Software Services revenue increased by 6.9%. During the quarter, however, we sold a small software business in Brazil but adjusting for this, the comparable organic revenue growth was 7.7% in Elisa Industriq. Comparable EBITDA on group level increased by 2.2%, especially driven by our cost efficiency measures. Cash flow continued to develop strongly during the quarter and increased by 15.7%. What was notable during the quarter was that the churn decreased to 17.2% from 23% level of Q4. So this 6% decrease -- 6% unit decrease in churn is bigger decrease than the typical seasonality would be. Postpaid voice subscriptions decreased by 2,700 and in the fixed broadband subscription base, we experienced strong growth, 14,000 on the back of the strong customer demand that we are seeing on the market. The transformation program, where we are targeting EUR 40 million of cost savings during the calendar year '26 is progressing well according to the plan, and we will deliver the communicated savings during this year. So it was indeed a quarter of slower growth, as stated, driven by equipment sales. What impacted the revenue was a small divestment that we made Epic TV that impacted the revenue with EUR 3 million. However, it did not have any EBITDA impact as such. The biggest increases in revenue came from the international software services and from digital services. EBITDA during the quarter landed at EUR 203 million in accordance with our own expectations. EBITDA margin increased to 37% partially reflecting the a little bit different mix of revenue resulting from the decrease in equipment sales. In telecom service revenue, as stated, we grew with 0.5%. And there, we did see the full impact of the lower price levels in Q4. The upsells from 4G to 5G, however, continues intact. I will come back to this a little later. And then certainly, in the fiber broadband, we saw growth as described a moment ago. The churn during the quarter was 17.2%, and this is broadly in line with the long-term average churn on the Finnish market. And what is notable is that the churn also decreased to lower level than it was in Q1 2025. So then looking into the mobile KPIs in a little bit deeper fashion. It is good to note that our new sales prices in mobile subscriptions on the consumer side of the business returned to Q1 '25 levels in March. So in the upper right-hand corner in the graph, you are seeing the prices of new consumer mobile subscriptions. And what you also see there is that during the year '25, we saw gradual pressure to new sales margins culminating in the campaigning of Q4. And now we have been seeing the mentioned return to Q1 '25 levels. What is also noteworthy that going forward, there will be a bit of time lag in how the new sales prices turn into mobile service revenue as there are fixed-term contracts in the customer base of our competitors and when we acquire those customers to us, there typically is a time lag of some months before the new prices actually come into effect. Churn, we already discussed, in terms of sales and marketing costs. During the Q4 last year, we had EUR 5 million of more sales and marketing cost. And then those campaigning related costs were decreased during Q1, in line with the churn the churn development. However, the sales and marketing costs are still a tad higher than they were during Q1 '25. But all in all, these metrics are pointing to the right direction. Then briefly going through the business segment by segment. In consumer customers, the revenue continued to be weighed by the competitive situation and the mentioned equipment sales. However, the cost savings measures were effective and EBITDA improved with 1.4%. Broadly, the same story in corporate customers business. The equipment sales impacted the revenue negatively. So very much the same phenomenon related to equipment sales was seen also on the corporate side of the business. Our traditional fixed network, PSTN will be ramped down at the end of June altogether. And there we are seeing a decreasing number of customers, and that is weighing on revenue a bit. But as stated, the cost savings measures also on the corporate side of the business were successful, and the EBITDA grew with 2.1%, in line with the total Elisa number. International software services, the comparable organic revenue growth was the mentioned 8%. And we took a step forward in terms of profitability during the quarter. The EBITDA grew to EUR 3 million in this business from the EUR 2 million on the same period last year. So we are seeing gradual improvement in the Elisa Industriq profitability, and we expect to continue to see that when we go forward. However, in software business, you will need to remember that there is a little bit different type of seasonality. In Elisa Industriq Q1 and Q4 are typically the strongest whereas Q2 and Q3 are seasonally softer. In Estonia, our revenue increased by 3.4% and EBITDA increased by 2%, in line with the rest of Elisa. The churn number remained on the level of previous quarters in Estonia and is 11.7%. We are very focused on implementing our strategy. In the mobile part of the business, you saw the key metrics and the development during the Q1 as stated. There's a bit of time lag in the new sales prices turning into mobile service revenue. But during the latter half of this year, we expect to see improved momentum in mobile, in line with the guidance that we have been giving. In the fiber business, we see strong customer demand, and we are investing in FTTH as well as FTTB. And also the data center connectivity, fiber connectivity for data centers is a tangible business opportunity. And during the course of this year, we would expect to see some deals coming through in this customer category. In international software services, we are continuously improving the profitability, and we do see further potential in that one by accelerating the growth but also by integrating the multinational business and various business units better together and realizing synergies in the process. In terms of productivity, we are progressing with our transformation program. And as stated, we will be delivering the targeted cost savings during the course of this year. At the same time, we have taken note of the development of LLMs recently, and that's a clear indication that there's further productivity potential in AI, meaning that we will also continue the AI-driven transformation going forward during the coming years. So these 3 areas, 5G and fiber, international software services and productivity will be the main levers to take us toward the strategy targets that we have communicated. 5G penetration at the end of the year passed 15% -- 50% milestone. And that up sales trend continues to be intact. During the quarter, we reached 53% penetration. And we are especially seeing now big corporates on the corporate side of the business, increasing their 5G subscription take-up rate. The average billing increase when we upgrade customers from 4G to 5G continues to be intact. That monthly billing increase is EUR 3. And also, in terms of value-added services, we have continued to increase the penetration of security features in our mobile subs customer base by means of new sales. And now the hard bundled security features have been taken up by 700,000 of our consumer customers. During the quarter, we also launched a new value-added service called Who's Calling service, which enables customers to see the caller ID even if they don't have that recorded in their phone previously. And this has been very well received by our customers. We already by now have 130,000 paying customers for this service. What is also notable related to the Estonian market is that in Ookla SpeedTest Awards, we got the award for the best 5G network in Estonia, giving us competitive advantage. In the fiber business, in dimensioned way, the momentum is strong, and we continue to invest in fiber. In new -- in digital services related to home services, during the quarter, we published a fifth season of Ivalo which is the most popular of our Elisa Entertainment original series, getting good reviews from customers. On the corporate side of the business, we continue to win new customers. Earlier this week, we announced that we have been winning the cyber and network business of Valament, a global, large Finnish company, also clearly outlining that we have the capability to serve our large corporate clients globally in these areas. In International Software Services, we continue to have a record high backlog and the order intake, the bookings during the quarter were strong. We won a number of new customers, big, large global customers in these areas. Some of these are not public references, some of them are. Boygues Telecom in France is one, and then also for Gridle for our energy optimization business, we won Vantage Towers as a customer in Spain. Vantage Towers being the tower company of Vodafone, the biggest tower company in Europe. But it's also worthwhile to mention that in Elisa Industriq business, we saw some revenue delays from customers in Middle East due to the war in Iran. And that brings me to the outlook and guidance for this year. So the guidance remains unchanged with the range of EBITDA that we have been communicated previously, the CapEx guidance. And then the guidance-related assumptions, especially related to the telecom service revenue, where we are indicating a range of 1% to 3% growth during the course of the year. So with that, I will hand over to Kristian. Thank you.

Good. Thank you, Topi, and also welcome on my behalf. In Q1, we saw solid EBITDA performance despite lower revenues. This was helped by our transformation efforts coming through as well as good cost discipline in general. As Topi said, the temporary sales costs were lower on a sequential basis, however, still slightly up year-on-year. Some of the revenue decline that we saw in Q1 related to divestments and ramp-downs of older technologies. The EBITDA impact of this was limited. The same is true for the decline in the equipment sales, which was driven by increased uncertainty as well as higher device prices on the back of especially memory component shortages. One note here, Elisa has somewhat seasonal business when it comes to Q1 versus Q2, both are positive. Both of these 2 drivers are positive for Q1 and negative for Q2. As Topi said, in Industriq, we typically see strong licensing revenue in Q1 as a result of annual renewals and in that sense, there's a negative seasonality going into Q2. Also in tech ops, we do see higher network-related costs in the second quarter when the overall construction activity starts in spring. And for this year, spring has arrived early in Finland, so we will see somewhat more of this impact. Also then maybe a second reminder, just on the yearly dynamics. Last year was solid when it comes to the first half and weaker when it comes to the second half, especially Q4 was weak on the back of the competitive intensity. Thus, we will have a tougher compare in Q1 and Q2 and then kind of easier compares as we work into the second half and especially for Q4. Then when it comes to CapEx, our strict discipline continued. Our investments are focused on the areas of improving our technology leadership and which will enable us to continue to upsell both 5G and work on the -- work with the fiber momentum. In addition to this, our investment is going into us renewing our IT infrastructure so that we will be able to drive both simplification as well as productivity longer term. On the cash flow side, the first quarter was a continuation of our strong cash performance. We have now seen 5 consecutive positive quarters of positive development for net working capital. We will continue to drive improvements in cash flow as we move on. But of course, improvements in net working capital is going to be tougher and tougher to achieve when we have optimized the different items inventories are already at good levels. As I said last quarter, there's more work to be done on both receivables as well as on the payable side. But overall, a solid quarter from a cash flow development point of view. As a result of that, our capital structure continues to be solid. Our maturity profile is good. We did not have any material -- we did not have any material transactions during the quarter. And during the remainder of the year, we will start to focus on proactively refinancing the '27 maturities that we have. Then on capital returns, Elisa continues to have industry-leading capital returns. We saw a slight uptick as a result of having somewhat lower cash balances at the end of Q1 compared to the slightly elevated levels that we saw at the end of the year. And we do believe that with the cash flow focus and continued strict discipline on CapEx, we will continue to produce industry-leading returns also going forward. With that, Vesa, back to you, and let's start Q&A.

Thank you, Kristian. And now we move on to Q&A part. And we have many questions on the line. So we appreciate that we will keep them short. Thank you.

[Operator Instructions] The next question comes from Andrew Lee from Goldman Sachs.

I had 2 questions. Firstly, on your cost or sales and marketing costs, and then secondly, on your visibility on the mobile service revenue trends through the year. On the sales and marketing costs, you mentioned -- you highlighted they're still above where they were a year ago. Can you explain why that is, given churn's back to average levels and the pricing environments recovered? What's driving that heightened sales and marketing cost competition? And then secondly, just on the mobile service revenue trends, it sounds like the first quarter is the trough for mobile service revenue growth. But could you just help us understand how we should see that improvement come through in the second quarter and then into the second half? It sounds like it will be a more meaningful improvement into Q3 than in Q2. How that's going to be balanced between volume and ARPU and how much visibility you have on that given the lags that you mentioned?

So maybe if I start on the on the sales and marketing costs. You're right, the costs were still somewhat elevated compared to a year ago, but down sequentially. And I think the logic here is that you don't pull back your sales and marketing efforts before you see evidence of the market environment being such that it justifies lower spend. And we started to see the evidence during the quarter, and because of that, we took down the temporary costs during the quarter, and thus, they were still a bit up on a year-on-year basis.

And then, Andrew, related to your question about MSR. Starting with the metrics that we just went through, so the new sales prices during the quarter returned to Q1 levels in March. And the churn was notably lower than it was in Q4. And now the journey is in line with our long-term average. When you consider the mechanics of how the new sales prices turn into mobile service revenue, you will need to factor in a time delay of some months, approximately a quarter. This is because mobile operators in this market have fixed-term contracts in their portfolio. And when we win customers from our competitors, we do the deal now, but the mobile sub actually transforms into our customer base with the agreed pricing a little bit later when the fixed term contract with the competitor actually ends. So this is a mechanic that will need to be factored in. And then related to Q2, what is perhaps a useful reminder is that last year, in Q2, we started the rollout of the security features, the hard-bundled security features to our mobile subs supporting the MSR for that particular quarter. There is no similar initiative in the plans for this year. And thus, when you consider mobile service momentum, that momentum should be visible on the latter half of this year, increasing towards the end of the year. And all this boils down to our telecom service revenue guidance, where we are guiding a range of 1% to 3% during the course of the year where mobile service revenue is the main contributor.

Can I just follow up just on the sales and marketing cost. So it sounds like you're reducing those through Q1. As things stand today in late April, sales and marketing costs now to date where they were a year ago? Or are they still not back to normalized levels?

So I think we are here to discuss the first quarter. But as I said, we are responding to the market situation with our costs. And because of that, the cost started higher during Q1 and ended up lower during Q1.

The next question comes from Ajay Soni from JPMorgan.

My first is on the cost savings. You mentioned EUR 40 million. Just wondering what's been delivered in Q1 and how you expect that phasing to look for the remainder of the year? And then my next question was just around the MSR into Q2. You mentioned that you're not going to have the support of security features, which got launched this time last month or Q2 last year. But surely, you will still have a better improving effect because you're going to have more people moving on to security versus Q2 last year because you'd assume you ramped up that business. So isn't that still going to be a tailwind in Q2?

So maybe if I start with the cost savings. So as Topi mentioned, we are on plan on delivering the full EUR 40 million. And as we have -- as we have said earlier, the majority of the cost savings kicked in during the first quarter. Some of it is visible in our lower operating expenses and impacting positively the personnel costs because a large chunk of the savings that were implemented came from there. But of course, we also have driven activities outside of headcount reductions, which is visible. Some of it is also coming through the CapEx line item and thus coming through as depreciation -- lower depreciation at a later point. And so in that sense, there will not be much more acceleration of the impact as we move through the quarter because of the fact that the majority is already up and running as we speak.

And then related to your question about MSR and the security features, so if we look at MSR development in Q1 and we decompose that a bit, then clearly, the impact of intense campaigning and the lower prices in Q4 introduced a drag to mobile service revenue during Q1. And that drag was offsetted by the continued upsells from 4G to 5G and the value-added services where the security features are the most important element. And actually, when you look at the upsales isolated, and when you look at the value added services isolated, they continue to provide the consistent growth that we have been seeing in the past. Then in terms of security features and the mechanics of security features supporting the MSR during the course of this year, what you need to remember is that when we started the rollout of security features last year, we rolled that out to that part of our customer base, roughly 600,000 customers, where the customer contracts were of ongoing nature in force until further notice and the terms and conditions allowed us to change the offering, and with that change, the pricing of those customers. Now that back book rollout has largely been completed. And what we are now doing is that we are offering the security features to customers in new sales. And the 100,000 pickup that you saw during the quarter is a result of new sales.

The next question comes from Andreas Joelsson from DNB. Carnegie.

I was just a little bit curious, and I hope you can help us understand a little bit the experience that you have from the higher churn environment that you had in Q3 and Q4. If something similar would happen again, would you react the same way as you did last year? Or have you some new experiences that will make you change that action that you took at the end of last year?

No, I think that -- I mean, our market is competitive and every situation in the market is unique. And we continue to monitor the markets, and we continue -- and we focus on developing our own competitiveness, our own services in the market. And when you look at the things that we have been doing recently, as an example, we have been increasing the penetration of fixed-term contracts in our customer base as a churn prevention measure. And that measure has been bearing fruit in Q1, as you see in the churn number.

Perfect. Maybe a follow-up on the mobile postpaid subscriber base. It is continuing to decline. Can you explain or tell us a little bit more where that decline is? And then I talk about excluding machine to machine, of course.

I mean if you look at that number, what is what is important to remember is the market trend in mobile broadband. So mobile broadband subscriptions are declining for us, and they seem to be declining on the whole market when customers are transitioning partially to fiber connections. And we do see a pickup in fiber connections as witnessed by our numbers. So this is something that you will need to factor in. And then when we look at the postpaid voice subscriptions and the development of net adds in that number, then as stated, the churn decreased, notably during the quarter. Also, our intake of new customers decreased during the quarter. And this was because we did not respond to all of promotions that we saw on the market.

The next question comes from Fredrik Lithell from Handelsbanken.

Just a follow-up on your last comment that you described in Q1 that you did not respond all of the promotions you saw in the market. Is that the same to say that you have seen sort of more activity in terms of campaigning in Q1 compared to earlier -- not compared to Q4, but maybe compared to Q1 '25 i.e., they don't need to be more aggressive, but more of them in the market, is that a fair point?

The market continues to be competitive in Finland. But I think that here, I come back to the slide that we presented. So during the quarter, we saw the new prices -- new sales prices returned to Q1 levels in March, and we saw the sales and marketing cost decrease. We saw a significant drop in churn that is clearly more than the typical seasonal drop in Q1 would be.

Okay. That's perfect. My original question was really about the IFS, if I may. I mean you had 7% growth in the quarter, and you depict a few details around your situation there with the pipeline that seems to be growing and some delays in Middle East. How are these sort of contracts structured? They are not perpetual licenses. Are they a SaaS type of contracts with some variable components in them for revenue to grow with volume or how does it work in these contracts?

Absolutely. So as stated in Elisa Industriq business, the organic growth during the quarter was 8%. And we saw a step forward in terms of profitability, the way we would like to see in this business. And if we decompose the contract structure a bit, then part of the revenue is driven by licenses. Part of the revenue is driven by recurring revenue SaaS model and maintenance. At the end of last year, the share of recurring revenue was 50% and there's some quarterly fluctuation in that share based on how many licenses we have been selling on a given quarter. And then part of the revenue is also driven by implementation projects with customers. And here, in that category of revenue, the revenue recognition is dependent on how the implementation projects move forward with customers.

The next question comes from Derek Laliberte from ABG Sundal Collier.

So I wanted to come back on pricing. You mentioned the selective price increases in early Q1. Can you elaborate a bit on the scope and customer response of this? And during Q1 and into early Q2 now, are you still seeing improved rationality amongst the competitors or there're still pockets of sort of aggressive or increased aggressiveness on pricing?

Yes. I think that we will need to come back to the Q2 developments when we report during the summer. In terms of the market development in Q1, what I would just like to come back to is the slide that we presented that our new sales prices returned to Q1 '25 levels in March and then the decrease in sales and marketing costs and notably significantly lower churn. So looking at those numbers, I think that you get a good picture of the market development during Q1.

Okay. Great. And then strategically for you, I mean, has there been any change here given the current environment in terms of how you're prioritizing ARPU versus subscriber growth?

Yes. I mean our long-standing target on the market has been that we maintain our market share, and we will continue to do so going forward. That is part of our strategy. And what we have also communicated already in our Capital Markets Day a bit more than a year ago is that we focus on providing customer value. Up sales from 4G to 5G in mobile services is a big growth driver for us. And so is value-added services, namely security features. So we continue to focus on that strategy and we bring new value elements, new offerings to customers and to the market all the time. And then during this quarter, a good example is the Who's Calling service that already has 130,000 paying customers.

Okay. And finally, on the B2B trends, apologies if you mentioned this, but you have flagged some pressure there. So what did you see in Q1 in terms of, say, demand, pricing and the contract renewals?

Could you please repeat the question? So was it about broadband?

About the B2B corporate trends.

Yes. In B2B corporate if we talk about mobile services, it continues to be a competitive marketplace. Our offering in B2B mobile services is strong with the value-added services. And for example, with AI tools where we clearly differentiate from competition. And then if you look at the other product categories of B2B business, IT services, cybersecurity and these kinds of things, we continue to enjoy some momentum in that one. We are clearly competitive on a market that is tough. The market is characterized by sluggish macroeconomic situation in the Finnish market, impacting corporate customers' willingness to invest. And that, of course, impacts the competitive landscape on B2B business. But at the same time, we are clearly competitive and we are winning customers, both in IT and especially in cyber cybersecurity where our capabilities are really strong today.

The next question comes from Abhilash Mohapatra from BNP Paribas.

I just wanted to come back to the topic of cost cutting, please. Obviously, this year, you've got a big benefit from the EUR 40 million of savings. And you referred to earlier in the call, the idea of sort of using AI to drive further savings. As we look into next year, do you anticipate a similar size benefit from your cost measures? Or in other words, do you think you can continue to do a similarly sized sort of big headcount reduction? Or should we expect the cost-cutting benefits to normalize as we head into next year?

So again, we have nothing new to tell here, in addition to the EUR 40 million transformation program that we announced last year. And as I said earlier, which is now kind of up and running in our P&L as savings. The -- in the prepared remarks and in our report today, we do acknowledge that we live in a world where transformation will need to be on the agenda for now. And that's what we're going to do. Transformation related to AI means both improving your competitiveness and driving revenues through that as well as then driving productivity improvements on a structural as well as on a continuing basis. There is no new program or no new amounts to be announced here. We feel that we need to do this to be able to achieve our strategic targets that we have set for ourselves.

And generally speaking, related to the AI, we clearly see that our industry and Elisa in specific will be benefiting from AI. AI will be increasing our bread and butter business, namely mobile and fixed connectivity. And we have an opportunity to use AI for digital services growth and for software growth. And then in the areas of productivity or in the productivity-related areas, we are working continuously in improving the automization of our customer service. And where we do see possibilities is in the area of AI-assisted coding prompting to be exact improving the productivity of our software development.

The next question comes from Siyi He from Citi.

I have two, please. The first one is really your comments earlier about the interest in the market of taking on fiber products. Just wondering if you can share with us about your fiber investments, whether you think it could be a good opportunity to organically expand your fiber footprint? Or you could be looking at some infrastructure opportunities if some of the network is up for sale? And the second question I have is really on your comments earlier about the -- pushing the upgraded security features into your base. I think last year, when you talked about the rollout, I had impression that you would -- it's possible to roll out throughout the base within 18 to 24 months of the launch. But now I think you're commenting you are actually adding on new sales. Just wondering whether that could create a particular delay of this 18 to 24 months time frame? And if so, any reason behind that?

So maybe I'll take the fiber-related question first. So as I said in the prepared remarks, we do see momentum in fiber. Customers want reliable and fast connections for their homes, for their base and fiber is now from an affordability point of view, at the price point where consumers are responding well to it. We will -- on the back of this, we are investing in fiber, building additional fiber. As I said, a quarter ago, we are leveraging a joint venture structure that we announced last year for the majority of that build. And at the same time, we will be pragmatic and look at, are there more cost-efficient ways of doing that by also looking at the existing assets and if they are at sale at reasonable cost, then we'll evaluate that against building new fiber by ourselves.

And related to your question about the rollout of the security features, yes, the rollout schedule of security features has been prolonged. And the driver of this is that during the -- due to the competitive situation last fall as a churn prevention measure, we increased the share of our fixed-term contracts, notably. And now we have a larger share of those fixed-term contracts in our customer base. And for those contracts, we cannot do the back book changes in similar fashion, then we can do for those contracts that are in force until further notice. However, all of this is something that we have already factored in into our guidance. and the guidance assumptions where we are stating that the telecom service revenue is increasing during this year within the range of 1% to 3%. And their mobile service revenue is the main contributor.

The next question comes from Felix Henriksson from Nordea.

I have two. One is very simple, just to double check on MSR. Do you think that growth will further decelerate in Q2 versus Q1 before turning better in H2, given the time delay that you discussed as well as the tough comps? And then the second question is relating to the data center connectivity, which you have started to talk about. Could you expand a bit on the opportunity, what could the potential contract structures in this domain look like? And how large deals are we talking about?

Yes. So coming back to the mobile momentum and mobile service revenue, as mentioned earlier, in this call, when we look at the new sales prices and how they translate into mobile service revenue, it's good to understand the mechanic and the time delay. When we win customers from our competitors, a meaningful portion of those customers are having fixed-term contracts with their old providers. And that means that even though we do the deal today, those customers might be moving to our customers -- customer base 2 months from now, 3 months from now. And that delay needs to be understood. And then as stated in Q2 last year, we started the roll out of the security features which provided support for MSR for Q2 last year. Putting all of this together, we should be seeing improved mobile momentum during the latter half of this year, in line with the guidance that we have been giving on telecom service revenue. And then to your question related to data centers, I mean this market is about to take off in Finland. And we have been seeing data center operators reserving land, and quite a bit of that has taken place. We have been also seeing announcements for new data centers starting to come in during the course of this spring. So this leads us to expect that during the course of this year, we will be seeing sizable data center announcements on the market. And we do have a business opportunity in that. We are naturally advantaged in a sense that we have the most extensive backbone network, fiber network in the country, and it's shorter distance to connect to that backbone and then therefore, we feel that it's realistic for us to get a sizable chunk of that data center connectivity market going forward. It is an emerging market. During the course of this year, we will be seeing most likely deal announcements and then the revenue starts to come in, in '27 and onwards.

The next question comes from Paul Sidney from Berenberg.

Just two questions. Coming back to finished mobile and price rises on new offers in Q1. I was just wondering, was this a deliberate action from Elisa to raise prices? Or did pricing just follow the market? Just wondering, your previous comments that you did not respond to some promotions over the past few months. I'm just wondering, are you trying to lead the market as a rational incumbent? Or was it the M&A pulling back in the quarter? And then just secondly, on cash flow. Comparable cash flow is a clear focus for you, but we don't have cash flow guidance. So just 2 parts to this question. Can you clarify if free cash flow is expected to grow over the next couple of years? And secondly, how important is cash flow in assessing the success of the business? Is it as important to you as revenue growth, EBITDA, ROCE, all these other sort of financial KPIs?

Well, to your first question, we are the market leader in this market. And we certainly would like to think that we are rational in managing our business. So then looking at Q1, what you see in the mobile metrics is that we come back to Q1 levels in terms of new sales prices in March, and you see the churn decreasing significantly more than the seasonal drop typically would be and also the sales and marketing costs decreasing. So coming back to my earlier point, I think that, that gives quite a good picture of what happened on the market and for our business during Q1.

And again, on the cash question, cash is a critical KPI for us that we both drive as well as assess our success based on. You're correct that we haven't guided specifically on cash flow as of now, something for us to consider for the future. But clearly, it is a measure that we judge our performance based on and if anything, will be doing more of going forward rather than less.

The next question comes from Ulrich Rathe from Bernstein.

I have one clarification and a question. Clarification is you pointed out the mechanics of the customer sale versus the contribution. Can I just confirm that you're not including these customers that you have signed up in your customer base that you report before they actually start to contribute revenues? The second question or the real question is, if we look back at what happened there in autumn, how confident are you if you look at the market overall, about the sustainability of the current recovery away from this slump? In other words, how stable do you think the market environment is vis-a-vis the causes of what happened last autumn?

Yes, on the first question, so no, we count customers into our net adds once they move into our customer base and the revenue recognition starts. So that's it. And then in terms of the market dynamics, I think that, first of all, we just need to come back to this in the coming quarters when we report our Q2 and when we report our Q3. If you look at the long history of the market, you have been seeing previously also these kinds of periods of intense competition like we saw during the latter half of last year. Similar phase was going through during the years of '17 and '18.

The next question comes from Ondrej Cabejšek from UBS.

Two questions for me as well, please. The first one to. I may have missed it on your back. But I wanted to or on the back book numbers that you made, but I wanted to basically understand if now that the market seems to be stabilizing and the macro situation in some seems to be also improving. Are you again planning to kind of put in effect some kind of back book price rises the same way and the same kind of quantum that you did in 2Q '25, I believe it was around 400,000 customers that you raised prices for. Is there something similar plan for Q2 '26 because I believe that was the kind of assumption going forward? That's the first question. And second question, if I may. On the promotions that have been kind of dragging effective pricing down. Are we correct to assume that most of these people or subscribers are looked in for 12 months, and so as they come out of the heavily kind of promoted pricing, I guess, around 2H '25, the assumption would be that they get back to some kind of normal pricing levels? Or what do you expect there as they come out of contract?

Starting from your latter question. So yes, you would be correct to assume that those customers that we took in during Q4, to a large extent, were with fixed-term contracts for 12 months. And then that will be a factor that will be impacting the market, the mobile market at the latter end of this year. And then related to your first question about back book price increases and offering changes, the like of offering changes that we did in the spring of last year with the security features. As stated, we are introducing new individual services to the market all the time like we during Q1 did with the Who's Calling service that now has 130,000 paying customers. But we do not have bigger offering changes like the security features in the plants for Q2. On corporate side of the business, B2B side of the business, there might be some sort of inflationary price changes that will be conducted, which is part of the sort of normal cycle in the B2B business.

And apologies if I may because the line was a bit choppy. So last year, you mentioned that they were a part of the 2 prices where the hard bundles security features, and you do not plan to do something similar this year, but straight price rises is something that is kind of in the plan and also, yes, if you could please answer that just the straight price rises, I guess, is that something that the market is now allowing you to do, do you think?

No such plans.

the next question comes from Sami Sarkamies from Danske Bank Markets.

I have also two questions. I still wanted to get a bit more color on the situation at ISS. I think you mentioned some delivery headwinds from the geopolitical turmoil in Q1. Are you anticipating more headwinds going into Q2? And any comments from sort of order intake during the recent months? And then secondly, you booked EUR 4 million of one-off costs in Q1. Whether it's related to the EUR 40 million savings program do you still see more coming during later of this year?

Yes. Related to Industriq, we did see strong bookings in Q1, and then quite happy with that. And then related to the war in Iran and the Middle East situation, we saw some revenue delays in Q1, partially because for customers in the Middle East, some projects were delayed. And with that, the revenue recognition was delayed and then partially because the anticipated sales just was prolonged given the outburst of the war in Iran and the impact to places like Dubai. So those were the short-term impacts that we have seen. And then generally, the impact of war in Iran, as a business, I think that we are in a fortunate position that the direct impacts of war in Iran to our business are very, very limited. To Industriq, we will need to see what those impacts are. As stated so far, we have been only seeing limited impact to a handful of existing clients and prospective clients in the Middle East.

I think on the transformation costs, yes, we did book some in the quarter. And yes, they relate to the measures that we have taken. And yes, based on our prepared remarks, we do see that in the current environment, there is an opportunity to do a transformation on an ongoing basis. So I would expect that there would also be some such costs also in future quarters as we take the appropriate measures, however, not to the same extent as we had kind of higher costs in Q4.

The next question comes from Max Findlay from R & Company Redburn.

Apologies if the first question has already been answered while I was struggling with the line. So last year in ISS, there were some delivery delays in Q1, which saw revenue deferred into Q2. And in your preprepared comments, you mentioned that there was some revenue delay in this year's Q1. So I guess I'm trying to triangulate these comments with other comments you've made about 2Q and 3Q being weaker quarters generally. Should we expect these quarters to be lower than the 8% achieved this quarter? And then there's been a change in ISS' leadership. Can we expect any changes to strategy to accelerate growth to achieve your 10% organic growth target? And any comments on further acquisitions and disposals?

So indeed, Mikko Soirola has been appointed as the CEO of Elisa Industriq business. He is a very experienced software leader, having worked in international software space for 20 years. And the better part of last decade, he has been CEO of successful software businesses. So the job to be done for Mikko is to accelerate growth, to improve the profitability of Elisa Industriq, carry out bolt-on M&A and integrate the M&A and integrate the portfolio of businesses that we have today, better to achieve synergies. So it is a new strategic phase that we are entering into in Elisa Industriq. And then related to the first part of your question, what I was referring to is that the typical seasonality in Elisa Industriq business and in many of the other software businesses for that matter, is that Q2 and the Q3 are sort of seasonally softer than the start of the year and especially Q4. So that is something that is good to keep in mind when understanding the sort of dynamics of the Elisa Industriq business on a stand-alone basis and the impact to Elisa numbers.

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

Thank you, and thank you for participating in this conference call. Thank you, Topi. Thank you, Kristian, and we wish you a very great reporting seasons.

Thank you very much.

Thank you. Bye-bye.