Proximus PLC (PROX) Earnings Call Transcript & Summary

Ladies and gentlemen, good afternoon, and welcome to the Proximus Q2 2020 Results Conference Call. For your information, this conference is being recorded. At this time, I would like to turn the call over to Nancy Goossens, Director of group Investor Relations. Please go ahead.

Thank you. Welcome all. A bit different today from the usual approach as we had quite some messages to pass this time. We will start the call with some slides presented by the CEO, Guillaume Boutin. These slides have been published this morning, but you can also follow them on the website. We will hold a Q&A session after this introduction. So to this end, let me introduce you with the other participants. So next to Guillaume, we have Jim Casteele, running the Consumer segment; we have Geert Standaert, the CTO; Dirk Lybaert, [indiscernible] Corporate Affairs; and for 2 new faces or voices, rather, Katleen Vandeweyer, CFO, AI; and Anne-Sophie Lotgering, who recently joined as the chief of the Enterprise segment. The team will take your questions in a moment. But before that, we start with the introduction. Please go ahead.

Thank you, Nancy, and welcome, ladies and gentlemen. Thank you for joining us for this conference call on the Proximus Q2 results. I take it that everyone had the chance to go over the results we issued this morning. So I'll just run through some of the highlights of the quarter. So going to the next slide. And before getting into the financial and operational results, I want to highlight a few achievements that are key for the short and long-term success of the company. The first point is on the social climate in the company. We have reestablished a dialogue with our social partners and operate in a constructive climate. This was vital to ensure the success of the voluntary leave plan that we launched at the beginning of the year. Secondly, we, as all other companies, had to deal with the unprecedented sanitary crisis. We have put the safety of our employees and customers first and took early actions. Our networks has kept up very well in spite of the huge increase in traffic, emphasizing the importance of network investments. And third, amidst the turbulence of the COVID crisis, we have announced our #Inspire2022 strategy. We have been working hard on the execution and as I will further explained in the presentation, we have been making some very concrete progress. But before getting to that, a word on the operational results. So going to Slide 3. Considering that our shops were closed until mid-May due to COVID-19 restrictions, we have achieved good commercial results in the second quarter combined with a full catch up on the nearly 7,000 delayed installations of Q1 following our decision to limit customer installation operations. Due to COVID-19, there were as much less rotation of customers on the Belgian market during the second quarter, with very low churn levels due to customers' low appetite to change, and because of the temporary halt on customer disconnections for all operators. That said, we can be very pleased with the solid commercial traction since the beginning of the year, which shows the success of our think possible rebranding, our cemented and dual-brand approach with Scarlet and Proximus and of convergence focus. Going to the next slide, covering some of our key financials and -- I'm on the next slide now. On Slide 4. Our operations have shown sound resilience to the sanitary crisis. Yet, as you can see in the financial results, we are not fully immune. The trend change from the prior quarter is driven by COVID-19 related effects, while our normal business trends remained rather stable compared to Q1 with a continued growth in revenue from convergent customers. We have contained the negative direct margin impact of COVID-19 on the EBITDA level through a firm cost control, and we have also managed well our level of CapEx. I'm now switching to the next slide, giving a bit more color on the achieved cost control. And for the second quarter, the domestic expenses were down by 8.8%, bringing us over the first 6 months of this year to a total decrease by 6.8% or EUR 55 million down from last year. About half of this is to be viewed as a structural cost decrease. COVID-19 and other nonrecurring cost benefits account for about EUR 20 million. And the remainder of the cost decrease in H1 is rather timing, so we expect this part to occur in the second half of this year. Taking a closer look at the COVID impact on our next slide, Slide 6 now. On direct margin level, we estimate that COVID-19 has caused a negative effect for EUR 34 million. The biggest driver of this is coming from a decrease in roaming margin due to the travel bans, and this especially to non-EU destinations. Both our consumer and business segments were significantly affected by this. While our wholesale segment was impacted by lower visitor and instant roaming. And in addition, being exposed to the worldwide travel ban also carries a relatively high COVID-19 impact. On top of this, we carried a second quarter of the impact of the free usage given to customers during the lockdown, and there was a small impact also on the ICT business. We could contain part of the direct margin headwind by actively managing our expenses down. So including these cost benefits, the underlying group EBITDA for the first half of 2020 was negatively impacted by COVID by an estimated net amount of EUR 20 million. As we expected, a lower CapEx offset this negative EBITDA effect resulting in a limited positive outcome for EBITDA minus CapEx for the COVID impact. This brings me to our guidance for the year on Slide 7. So based on the results we achieved so far and while remaining cautious on the remainder of the year, I think the uncertainty of the sanitary crisis also in Belgium, we are confident we will meet the high end of our full year 2020 outlook. This was it on the financial part. Moving now to our achievements in terms of our announced strategy. So I'm on Slide 8. Just as a quick reminder, the 4 strategic pillars of the announced #Inspire2022 strategy on that slide, and over the past months, we have been progressing on our execution, and I'm very proud that the hard work has resulted in concrete steps around customer value propositions, partnerships and building gigabit networks. And now moving to Slide 9. So first, with our Flex offering that we launched the 1st of July under the Proximus brand. It's a new range of packs that can be customized to the needs of each member of the family. We launched Flex in a view of improving our competitive positioning with the family segment and further drive conversions and especially multi-mobile in our customer base. This will benefit also the average revenue per customer. Now turning to Page 10. Earlier this year, we also announced our strategic partnership with Belfius, which has allowed us to bring innovative solutions to our customers, and this in a fully asset-light approach, but also and more importantly, benefiting from the 4,000 sales agents of Belfius to sell Proximus products. We are also happy to announce to our customers, and I'm switch slide now. A few weeks ago that we reached a 5-year agreement for the distribution of the project channels of Eleven Sports, covering all live Belgium football matches. And what is more, Eleven Sports and Proximus Media House have closed a strategic partnership on the production over the next 5 seasons. Proximus Media House has built up a solid reputation over the past 15 years regarding the live broadcasting of football matches from Belgium football. And lastly, really thanks to our extensive optical fiber network also provides the connectivity between the 15 stadiums of the Jupiler Pro League. On Slide 12, a quick word on the integration of the Proximus' Pickx app with Apple TV that we launched on the 22nd of June. With that, we are offering customers a seamless 0 sign-on experience with Apple TV. It's a personalized content experience which is already available on every screen. Besides more than 80 channels, also access to a range of on-demand content options. We have also levered the 100 stack experience on TV with the launch of our new decoder, we are being the first -- one of the first operator in Europe to combine IPTV managed services with an Android-operated tier high platform. Digitization -- and I'm now on the next slide. Digitization is one of our key strategic pillars, and we have been making some progress in several domains, such as the adoption of the MyProximus application. What I wanted to highlight is the share of digital sales, which increased to 21% in the second quarter when we were at 18% at end 2019. So going in the right directions, likely helped, of course, by some side effects from COVID, but digital adoption is here to stay. So going to the next slide, Slide 14. For the mobile network, you know that we have a mobile access network sharing agreement with Orange. The joint venture MWingz is operational since the 1st of April. The vendor selections that is both for the RAN with MWingz and for the Proximus mobile core network are progressing well with a strong competitive process. The selection process started already some time ago, and will, of course, make sure that all EU and governmental requirements are taking into account. Important to note that we do not expect any additional cost versus our announced 6-year CapEx plan at the CMD. Moving now to Slide 15. In spite of a couple of weeks of delay because of COVID-19 restrictions, we have been progressing quite well on our rollout with our footprint end of June at 346,000 of homes and businesses passed. But we aim to go faster, broader and this at a lower cost. In the Capital Markets Day, we announced ambition to build the best gigabit network for Belgium, and this including 2 important elements. First one, that we say we are open for partnerships, not only for financial partnerships but for industrial partnerships. Second element. We wanted to build an open network so that to maximize the utilization rate so that the return of that network. I'm very proud on this major step taken in our strategy by having signed MOUs with 2 partners. This with intention to deploy and operate FTTH networks in Belgium, in addition to our own rollout. The main objective of the intended partnerships is to extend and accelerate the rollout of fiber in a cost-efficient way. We built an open network, ensuring access for all interested parties under nonexclusive and nondiscriminatory terms. As we will be extending the fiber footprint, we will also get the benefits of this to a larger area where we will improve our competitive position and can generate an attractive fiber ARPU. We will also actively look for new wholesale revenues. And as the last point, related to going broader, it's also an opportunity for us to accelerate the outphasing of our copper network when and where possible. This will significantly decrease our network operating costs as we know that operating a fiber network is significantly cheaper than with copper. We will also benefit from the industrial experience of our partners, which means we will not only go faster and broader, but it also means that we'll be rolling out fiber at a lower cost per home versus a stand-alone situation. As you can see on Slide 17, with an intended partnerships, we will significantly increase our targeted fiber deployment in Belgium. Our 2025 target goes up by about 30% and by end 2028, we aim to pass 4.2 million of homes and businesses, which represents approximately 70% of the Belgian homes. As indicated on the graph, the incremental volumes are largely contributed to the partnerships. Of course, the precise scope will be confirmed in the next phase of the negotiations. Now turning to Slide 18. As we said before, we were looking for strategic industrial partnerships. So we are very pleased we have signed MOUs with 2 leading and experienced investors in FTTH infrastructure. In Flanders, we are entering to execute negotiations with DELTA Fiber. And for Wallonia, this is with Eurofiber. I believe this is a unique opportunity for Proximus to cooperate with 2 experienced international partners in order to leverage the construction capacity and to materially reduce the deployment costs. The medium -- long term, we ambition to secure close to 70%, 80% of ownerships of the total fiber products that will be rolled out. So net-net, we'll be at the end of the construction phase, at around 70%, 80% of ownership of a fiber network that will cover 70% of the Belgian living units. On the next slide now, the substantial upscaling of our fiber project with these partnerships will generate long-term value accretion for the reasons I mentioned before. We expect the net effect on our cumulative free cash flow over the next 5 years to be neutral. As the indicated in the graph shows, we will have benefits on operating free cash flow, including lower rollout CapEx, which will be compensating the anticipated equity injections in the joint ventures. So no change to your 5 -- for the next 5-year cumulative free cash flow and hence, there will be no impact on our net debt level. So I'm very excited about these partnerships as I see a lot of benefits. They will help Proximus to lead the multi-gigabit infrastructures and bring Belgium to the forefront of digitalization in Europe. This concluded the presentation, and now we are open for your questions.

[Operator Instructions] We have a first question from Nicolas Cote-Colisson from HSBC.

I've got one question and potentially a follow-up one, please. So I mean back to fiber, you currently enjoy a nice return on invested capital. So I wonder how the fiber plans you announced play out in the long run, beyond the 5 years. Obviously, the joint ventures allows you to deconsolidate and lower the CapEx bill. But also will force you to share the value with partners in the longer run. So I guess the question is, how do you assess the long-term value of the deal, please? And also do you deconsolidate -- do you plan to deconsolidate the joint ventures and secure control back on the later stage?

So I have to open my mic. So as I said a few minutes ago, we want to roll out a fiber network that will cover 70% of the country, and we have secured 80% of ownership -- reaching 70% and 80% of ownership of that network. So in terms of long-term value creation, we will benefit from most of the rollout effort that will be done in the next 10 years. It means, as you said, it means that on the first phase of the rollout, we will not control or consolidate the joint ventures because they will be controlled by the partners. But at the end of the construction phase, we have secured that we will be able to take back the control at no cost. Thirdly, in terms of the impact compared to our announcement of the 6-year plan during the Capital Markets Day, as I said, there will be no impact at the net debt level for Proximus, despite the fact that we will be rollout fast -- rolling out faster the network and that we're going to have a broader footprint because we're going to have almost 850k more products in 2025 that we have in mind to when we had the Capital Market Day announcement. But again, I'm reaping myself, there will be no impact for Proximus on the net debt level. So if you take the combination of those 3 elements, I think we are, to the contrary, maximizing or even improving the level of return that will be generated by the fiber rollout. So that's exactly the objective of that deal, faster, broader, lower cost, also synergies in between what will be done in terms of JVs and what will be done by Proximus. I think there is a lot of synergies and it's not in the numbers, but we think with this that we can benefit from expertise sharing and speed of effect of some expertise in terms of controlling the cost to rollout a fiber network.

Okay. That makes sense. And just one additional question. Taking back control at the end of the first phase, does it mean in 5 years' time? Or is it at a later stage?

To be precise, when we're going to announce the final agreement. But you have to have in mind that it will be probably after the construction phase, but also it could occur sooner than that, but to be confirmed when we have the final agreement signed.

Okay. And if I may, my follow-up is very short. But how does this change? Or how do this change the opportunity for co-investment outside these footprints?

It's not for me to answer that question. I think you have to ask the other stakeholder of the Belgium ecosystem. But as we said, our network is going to be an open network. And we are open to welcome any other operator that would like to access that network. And it could be existing cable players or Orange, for example.

Next question from Paul Sidney from Crédit Suisse.

Yes. Just a couple of questions for me, again, sticking on fiber. And firstly, just on the JV fiber build. Can you just confirm that this will be subject to the same regulations, the access terms, the same prices as Proximus' own fiber build. I think from the slides, it seems it is, but maybe if you could just give us a clarification on that. And then just secondly, regarding regulation. What can we expect to see in the upcoming fiber review by the BIPT later this year in terms of the actual rates, in terms of the structure? Will we see speed tiering introduced like we've got on cable wholesale? And also just any indication on timing, more specifically?

So first, as a general comment. What we are doing with those deals, we are investing more, rolling out fiber more rapidly. And also developing a passive layer that will be accessible for all partners. It means that in terms of -- I don't want to talk for IBPT (sic) [ BIPT ], but this is not -- a thing that might be not well perceived by the regulator. So of course, in the next month, we will have to enter into discussions with IBPT, so the regulators. But also the competitive authority in order to make sure that those deals are fully approved by all body that needs to approve these kind of deals. But again, it's more investments, it's open networks. So I don't think -- or I do not expect that the regulator would see that not in a positive way.

So on your second question, so we were informed by the BIPT that the draft regulation on fiber is now expected in August, September time frame. And so previously, it was announced for June, but it's postponed until August, September. And we should have a final decision by the end of the year. For the moment, we have no indication that the existing commercial wholesale prices we have for the fibers are not -- would not be considered as fair pricing. On the contrary, we have the impression that the BIP (sic) [ BIPT ] looks at these prices as fair prices, which means that also the principle of tiering would be accepted.

And just to clarify, is that the EUR 23 and EUR 28 price points you're talking about?

Yes, indeed, that's EUR 23, EUR 28 price points, yes.

Next question from Polo Tang from UBS.

Just have 2 questions. The first one is really just on your guidance. Could you say more confident on your guidance of EBITDA minus CapEx of EUR 780 million to EUR 800 million. But is this confidence driven by the expectation that CapEx will be notably lower year-on-year? And could you clarify your expectations for the trajectory of EBITDA because you've obviously highlighted increased COVID-19 headwinds for EBITDA in H2? So should we expect to see a step down in EBITDA in H2 after stable performance in H1? And my second question is really just around Huawei. So just given new restrictions coming into effect that limits Huawei exposure in your radio access network to 35% by 2025, how much of an impact will it have in terms of your CapEx envelope?

Katleen speaking here. So in this, I think that our CapEx for our half 1 was very low, and this was impacted by COVID because we had about EUR 20 million lower CapEx in Q2 and over Q2 '20, some further lower CapEx due to COVID with a delay in roadworks and the delay in customer connections. So looking forward for half 2, we think that some of the delay that we've seen in half 1 will be catched up. And then on top of it, we see separately that half 2 CapEx is about EUR 100 million higher than in the first half of the year. As to the EBITDA, looking forward for the second half, we are expecting that there will be a further COVID impact. And so of course, it's very hard and very different in this uncertain times to give a guidance on what the COVID impact might be. But we think mainly that we will have further impact from roaming and especially to non-EU countries, which will continue going forward. And then on top of it, we think as well that the OpEx reductions, which were very strong in half 1, they will continue but they will be less important in the second half than they were in the first half.

With respect to your question on Huawei, it's as such that we are about to close the process of selecting a supplier for the renewal of our mobile access network and our core. But it is as such that there is no financial downside to be expected as it could be for other players because, in fact, the process, we planned it for a long time in advance has been well prepared. The timing of the vendor selection falls well with renewal cycles, but also where we can take into account recommendations, for example, on the European toolbox. So what we can say is that whatever the outcome is, there is no additional cost to be expected versus the plan from this RAN and core renewal.

Next question from Ulrich Rathe from Jefferies.

A couple of questions. The first one would be, in simple terms, if you were to have a choice only between, you say that fiber deals benefit and if you have a choice to sort of say that the benefit is only 1 of 2. And the 2 choices are, it's how much capital you commit versus what skills you bring in. Which one of these 2 is the predominant reason for doing these deals? The second question is, when you talk about costs and synergies from rolling out fiber with partners, I mean you could argue that rolling out networks is a core competence of a telecom. So what do the partners bring to the table that Proximus doesn't quite know how to do as an incumbent telecom operator? I'm not entirely clear about that. And my third question is, I'm still not entirely sure what you mean by take back control at low cost. And I mean, presumably, you would have to reimburse the partner for the capital they injected. So what exactly is this take back control at no cost element of that? And the last one, if I may, is more operational. The broadband intake you mentioned had this catch-up from the backlog in Q1. But even underlying, it was very strong intake, I think about 10,000 consumer, could you comment on what the underlying strength of the intake is because you had very strong gross adds or simply because you had low churn and the gross adds were simply from falling through to net adds more strongly this quarter?

So on your first question, why doing partnerships and why not rolling out ourselves? What we do is that we do both. I think we do roll out fiber in the more dense areas. And this is on a GPON technology where it's really important to use that in terms of cost efficiencies, and we will ourselves roll out fiber in the most dense areas. When it comes to more rural areas, then passive makes sense because you -- the [indiscernible] of the network, the cost to roll out, the topology is also different because we're going to use a point-to-point topology for those partnerships because that makes sense also in terms of efficiency in terms of rollout. And this expertise is expertise of our partners. We are more expertise in the point to multi-point architecture, and they're going to bring us expertise on the point-to-point architecture. But Geert will comment on that. So when you do the math, it makes a lot of sense to extend your coverage in fiber, using partnerships when you are talking about less dense areas. But again, at the end of the day, we'll be able to secure between 70% and 80% of the ownership of that fiber network for a coverage of 70% of Belgium homes. It means that it is going to be our key activity to be a network operator for the next 100 years because we're going to own 80% of that fiber network that will be there to stay on because we are building up interest for the next 100 years. So that's really important. And frankly, it was also different from what you can see in other countries. We -- as an incumbent, we have secured to cover 70% of Belgium securing in between 70% and 80% of the ownership of that network. When I say not cost, no cost in terms of we're taking back the control, it means that there will be no control premium to pay. So the fact that we will be coming a controlling partner will be achieved at no cost. And then that's what I meant by at no cost.

Maybe I can add a number of elements why choosing as well for partnerships. As Guillaume said, is that we -- our rollout that we're doing was doing that in high dense area. And how else we are going to go broader, it means that we will have to move to less dense areas. If you take a partner, for example, like Delta Fiber, it's just coming from the opposite direction. He came from the very rural and is now moving towards the dense. As you know, deploying a technology, also a certain topology, et cetera, it comes with learnings and what we want to do now by bringing our competence together is to avoid that learning phase and immediately go towards the most efficient way of rollout. Delta Fiber has been doing this for years. There is EQT behind. EQT is also behind Deutsche Glasfaser. They have demonstrated that throughout the years, they have become the most efficient partners to roll out fibers in lesser dense areas. So that's why we've chosen for that. That is one reason. The second reason is also about capacity. Of course, when we are going to boost our capacity, we're boosting our own production capacity, but also we will boost the capacity through the 2 JVs. So these parties will come as well with their construction partners. And we can, in fact, 1 plus 1 becomes 3. In fact, that is the thing we want to achieve. All parties are very committed to make this work. And yes, we strongly believe that now -- between now and end of the year, we have, of course, to turn that now in -- we have to put that in music, bring that into a definitive agreement. We've started interactions with the BIPT. By the way, we're going to do that further. So we have everything in place to get this JVs up and running by first quarter of next year.

And so on the last question, so this is Jim speaking, on the broadband intake. So as we announced during our Q1 results, we had an impact on our net adds of about 7,000 linked to the delay in installation. So indeed, we have been able to catch up on that in our Q2 numbers. So next to that, as you know, there's also a lower churn level linked to less commercial activity, but also due to the request of the regulator to halt the collection process for bad payers during COVID times, and this process has now stopped end of June. Now this argument on as commercial activity and collection process, of course, is true for all operators. So all in all, we are convinced that our commercial results of this quarter are at least as good as the second quarter of last year.

Next question from Nayab Amjad from Citigroup.

So it's a follow-up on the previous question. So obviously, Telenet is in inclusive talks with Fluvius, which was of interest during the past. In the event that there's a breakdown of talks between Telenet and Fluvius, would you still be interested in Fluvius in addition to the announcements you've made today? And then secondly, on consolidation in the Belgian market. VOO's acquisition by Providence has been blocked. What are your expectations going forward? And what impact do you expect from Proximus? And thirdly, on the network sharing deal between Orange Belgium and Proximus, Telenet complaint to the competition authority. Is there any update on that? Or what outcome are you expecting if there is any?

On the first question, on the Telenet discussions. Obviously, I don't want to comment on that. We have to see where it goes between Telenet and Fluvius. What I can say, though, that we are building, again, an open network as from day 1. So at some point, Telenet would like to join that network. They will be more than welcome to join the network. And you know that at some point, coax technology has to be fiberized. So we see -- if and when, but again, we are building a network very rapidly. That network will be open. So let's see how the discussion between Telenet and Fluvius goes, but I don't want to comment more because those discussions are currently happening, and we have no information whatsoever on the outcome of those discussions. On VOO, there is indeed a new process that will be started as from September. So after the summer break. Difficult to do some projections on that one. What is for sure is that the outcome of this process is delayed and the more delay there is, the more opportunities for Proximus, for sure, because it's not good for a company to be under this kind of process. But let's not -- what we do internally that we are preparing for all alternatives and possibilities. And that's what we have to do to concentrate on what we do on our brands, on our strategy, on our segmentation strategy on the conversion strategy. I think the Flex launch of this month shows good traction, and it's a way also to protect us accelerating conversions on any new activities from competition. So we are really focusing on our strategy, our execution, and we'll see how it goes for VOO.

So -- and then on your third question regarding the procedure before the Brazilian competition authority, the procedure initiated by Telenet on our sharing deal with Orange. You know there were 2 parts. You have the suspension procedure which they lost it. So we are allowed to go forward. And the procedure on the merits there, we received questions. We answered to the questions, and this procedure is ongoing. So that will still take some time before we have a final decision.

Next question from Ruben Devos from KBC Securities.

I had 2 questions actually, both on the enterprise division. Firstly, in the outlook. You touched upon accelerated digitization, driving demand for cloud and security. But you also expect delays and even cancellations for ICT projects. Would it possible to give some flavor on the development? How customers think about taking ICT services from Proximus at this stage? And more longer term, I guess, could you share your views on the accelerated digitalization and what that would mean for the enterprise business? Secondly, I understood that after another review, you've increased the bad debt provision this quarter. Could you maybe talk a bit about the development, how you're managing such risk and if possible, could you maybe quantify the revenue exposure to the SME sector?

So hello, this is Anne-Sophie Lotgering. So I'm the Chief Enterprise Market Officer for Proximus since July 13. So I will try to answer your first question on the enterprise outlook. So I think it's fair to say that the COVID-19 crisis has had different impacts on the enterprise business. Of course, a great impact on our telco business with the impact of the roaming activity and also on some ICT projects being delayed or canceled. However, we are continuing on ensuring that we stay relevant with our business customers who are looking more and more as a consequence of COVID-19 of accelerating their own digital transformation. They are looking at a provider such as Proximus to enable them to ensure having the right network for their customers an end-to-end secured providing on this network, the collaboration tools that their employees need to have in order to work from home, and we are ensuring that we are leveraging our very solid and loyal customer base to be able to offer those requirements and moving more into this convergent proper space. So very difficult to predict in terms of outlook. However, indeed, enterprises are accelerating digitalization and providers such as Proximus is very well geared towards ensuring that those services are made available to them through converged products, solutions and services.

Next question from...

Sorry. Yes. I'm sorry. I had one on the bad debt provision.

Yes, indeed. So, I'm sorry. So as to this question, we only see very limited delay in payments from our customers right now. So indeed, we increased our bad debt provision, but the amount is really very, very small such after the revenue exposure for the SME sectors, we do not disclose our exposures to the SME sectors. But what I do can say, looking forward, is that the main exposure that we see for half 2 coming from COVID is on roaming. And for roaming, especially in non-EU, we've had the Q2 impact. And what we're expecting is that going forward, we will see similar trends in Q3 and Q4 as we've had in Q2.