Tele Columbus AG (TC1) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the conference call of Tele Columbus AG regarding the presentation of the preliminary Q4 results 2020. At our customer's request, this conference will be recorded. [Operator Instructions] I now hand you over to Leonhard Bayer, the Director of Investor Relations, who will lead you through this conference.

Thanks, Sasha, for the introduction. Good morning, ladies and gentlemen. It's my pleasure to welcome you in the name of Tele Columbus management team to our today's conference call following the release of our preliminary fourth quarter and full year results for fiscal year 2020, which ended on December 31, 2020. This call is limited to 60 minutes. In case of any follow-up questions, Manuel and myself are available and happy to discuss. Today, we're with Daniel Ritz, our Chief Executive Officer; and Eike Walters, our Chief Financial Officer. Now I would like to remind you that if any lenders or rating agencies are on the call right now that this is a public conference call in which in only publicly available information will be discussed. I would therefore ask you to refrain from questions containing information not belong to the public domain. This conference call is intended for capital market participants only and not for press representatives. If any journalists are on the line right now, we would highly appreciate if you were leaving the conference call now. Press representatives are welcome to call my colleague, Sebastian Artymiak, to discuss any outstanding questions. Please be aware that there might be a delay between the slides and the webcast and the voice transmission. Moreover, due to the current situation, we are partially in different locations and therefore, need to coordinate ourselves in a different manner when it comes to Q&A later on than normally. Having said that, it's now my pleasure to hand over to you, Daniel. The floor is yours.

Thank you, Leo. Good morning, ladies and gentlemen. Warm welcome also from my side to our conference call this morning. I will kick it off as usual with key messages, followed by operations update and KPIs. I will hand over to Eike Walters, our CFO, financial performance. And I'll be back for outlook and guidance thereafter. I guess the way to summarize the fourth quarter is a solid end to a solid year. That's how I would summarize it in terms of operational highlights. Thankfully, we continue to remain largely unaffected by the pandemic so far. We hope that continues. On the positive side of things, we have seen significantly improved net add performance in the full year 2020 on Internet and telephony. However, we continue to face headwinds and challenges in CATV, in particular and to some lesser extent, also in premium TV where we have seen almost stable net adds, but not quite. We continue to operate positively in terms of NPS. It's an upward trajectory across the main touch points. However, as we will see later on, there's still more room for improvement and, therefore, more work to be done. Our B2B segment grew 10% year-over-year for the full year. However, in Q4, the revenues of the B2B segment were down 6% year-over-year due to a high comparable base, as we'll see later on in the slides. In Q4 2019, we did more than 1/3 of the full year revenue, so that explains the high comparable base, which led to a decline year-over-year in Q4 this year or this past year. On financials, happy to report that we delivered on the full year 2020 guidance on all metrics. Our Q4 revenues, excluding construction works were slightly down. This is explained by the fact that the positive contribution of growth, which is usually there from B2B, as just explained, was not there in Q4. That's why we slightly declined in Q4 on core revenues. However, happy to report that Q4 EBITDA reported is up 4% year-over-year. That means also we had a higher EBITDA margin in the fourth quarter. Q4 CapEx came in flat year-over-year at EUR 54 million with a slightly higher share of network investments compared to Q4 last year. Lastly, on financials, we have seen a noncash goodwill impairment on our TV segment, which weighs materially on our Q4 net income. I remind you, this is noncash, goodwill impairment and Eike will elaborate on that during financials. On the strategic side of things, you're well aware of the ongoing voluntary public takeover offer by Kublai, the Bidco, and the announcement to backstop the cash capital increase of EUR 470 million (sic) [ EUR 475 million ], subject to transaction closing. Also happy to report that 2 out of the 3 key closing conditions have already been met. That means Change-of-Control waiver, which was affected in February and the minimum tender level, which -- of 50%, which was achieved during the first tender period a couple of days ago. We're also happy to report that we're progressing on our wholesale strategy. We are implementing our partnerships with Telefonica Deutschland. And as you're aware, we have signed the binding precontract with 1&1, which is subject to transaction closing. Now moving on to operational update and KPIs on Page 6. On the upper hand of the chart, you can see Internet RGUs. I draw your attention to the like-for-like comparison year-over-year for the full year. So full year 2020, as mentioned, we have delivered 18,000 net adds, which is significantly above the net outperformance on a like-for-like basis corrected for the impact of acquisitions in 2019 of 7,000. This is the strongest full year result since the finalization of the integration back in 2018, and we have also now crossed the 600,000 mark of total IP RGUs. Of course, that's not where we want to be, but it's a very positive development on Internet RGUs that we have registered. On the back of that, Telephony RGUs have also developed positively 7,000 net adds in 2020 compared on a like-for-like basis, a decline of 9,000 RGUs in 2019. This is now the third consecutive quarter with positive net adds. As previously mentioned, we attribute that also to some extent to the ongoing pandemic where people rediscovered the value of the fixed line telephony. And also, we should clearly say that we are bundling this with Internet. So we're not charging extra for telephony. We're only charging for outbound usage. So there's a positive also effect from growing Internet RGUs. Moving on to the gross add split by bandwidth tiers. We continue to see the green portion of the stack bar grow, which means speeds in gross adds of 120 megabits and above, which is good. We're now at what is it, 76% share. I'll remind you, a year ago, the bar on the far left, that was more like 56%, so 20 points more. That's a good positive development. We continue to see a stubbornly high percentage of still around 18% of people who opt to go with 20 megabits or less. So this will take some more time until this becomes visible also really in the RGU base, Here, we talk about gross adds in the RGU base. Of course, the share of these high bandwidths is still materially less, but it's a positive development. Moving on to what I talked about in terms of headwinds, especially on CATV, again, on a like-for-like basis. For the full year, we had a negative net adds for an RGU base erosion of 81,000 in the full year of 2020. As usual, the first quarter is the worst hit because that's when most of the housing-associated contract terminations happen. But we continue to lose in so called, normal quarters, around 15,000 CATV RGUs, which obviously we're not happy about. And the reason for that is very simple, the TV offer that we have, as previously mentioned, is simply not competitive. We're working on fixing this. But until such time, we will continue to see negative net adds on CATV. Hopefully, we'll be able to limit the damage to some extent in '21, but clearly, it will still decline further in '21. On premium TV, we have now 2 consecutive quarters of slightly positive net adds, which means that for the full year, we came in at minus 2,000 which is, well, great, but materially less bad or better than the full year performance in 2019 of minus 15,000. Moving on to ARPU, where we have nothing new to report, but with that positive, we see stable ARPU trends continue both year-over-year and quarter-over-quarter of a bit more than EUR 24 on Internet and telephony and slightly less than EUR 9 on TV. I guess the good news here is, to the extent that we're able to grow RGUs through positive net adds with a stable ARPU that will positively impact revenue growth going forward. Moving on to NPS. So as I just mentioned, happy to see now green bars, i.e., positive NPS overall as well as on customer service and field service touch points. We have now reached positive territory in all of them. We will continue to improve. However, it is going to get more difficult to further improve and more challenging. Well, why is that? Because the NPS scale is a quite challenging one, maybe for those of you are not aware. Here, the bars are representing the percentage of those customers that rate us either 9 or 10 on a scale of 0 to 10, minus the percentage of those customers that rates us 0 to 6, and 7 and 8 are taken out. So this is a very tough scale, and we will continue to improve, but I don't expect any miracles. This is a lot of hard work that needs to be done, and that continues to be done by the organization. And here on B2B, as mentioned in my introductory remarks, for the full year, we have seen an increase of revenue of 10%. And we also see that the contribution margin, despite the 10% revenue increase year-over-year, remains pretty much stable. This is explained by the fact that, on the one hand, some of the revenue growth came in through project-related hardware sales that does have a very low contribution margin on the one hand. And secondly, we were also hit by some phasing effects with some of the stuff only coming through in '21. On the fourth quarter, the minus 6% that I had already explained, just again, by way of background, look at the EUR 12.5 million -- sorry, the EUR 19.3 million of revenue in Q4 2019 compared to full year EUR 56.1 million in full year 2019 that is what I just said. More than 1/3 of revenues in 2019 came in, in the fourth quarter. So that explains a very high comparable base, and therefore, the drop in the fourth quarter. Don't read any recurring trends into this. This is clearly a phasing effect. Because we also continue to see resilient demand driven by Internet and bandwidth products, and thankfully, as I just mentioned, we continue to be largely unaffected by the pandemic. That concludes the first part of my presentation. I now hand you over to Eike Walters.

Thank you, Daniel, and good morning also from my side. On Page #13, we show you the overview of the revenue development and the underlying trends per category. So the key message is that the recent trend continues. TV remains challenging, but the losses were almost compensated by broadband phone and B2B revenues. The light blue bars describe the reported numbers and the dark blue bars describe the development of our core revenues, which are the revenues excluding the construction work. So the reported revenue decreased by EUR 6.7 million, which is largely explained by the ramp down of the construction work again. And this is just to remind you, in line with our expectations and previous communications since the infrastructure project in Plön was finalized earlier last year. But our focus is on the core revenues, where we have a small decrease of 1% from EUR 122.7 million to EUR 121.5 million. The biggest loss factor is still the TV business, and this remains structurally challenging. By end of Q4 2020, we had roughly 80,000 less cable TV RGUs compared to year-end 2019, and this has, of course, a material negative impact on our revenues. We were able to stabilize the premium TV revenues within 2020, but it is clearly not enough to compensate the cable TV losses. So this amounts to EUR 2.6 million in Q4. On the other hand, we gained momentum in the IP and phone revenues. 18,000 more broadband customers than in Q4 2019 contributed to -- into 4.3% higher revenues. That means that the turnaround is real and we achieved a solid and sustainable customer growth in 2020. This is very good. At first glance, the B2B development in Q4 was a bit unusual. The team achieved an outstanding sequential increase of 19% from Q3 2020 to Q4 2020, but the very high comparable base of Q4 2019 cancels the very good development in the chart year to date. Before we move forward, let me quickly summarize the full year revenue ramp for you. So the total revenues are down by EUR 19.5 million from roughly EUR 500 million to EUR 480 million. But EUR 18.9 million out of this are related to construction work and were expected by us. TV in total, almost 5 percent points down, so EUR 11 million, which is a very hard one. Internet and telephony, an increase by EUR 3.6 million to EUR 146.3 million or 2.5%, which is very good compared also to the last couple of years, and B2B at double-digit revenue growth of EUR 5.7 million. And the other revenues, of course, a decrease, but this, as said, related to construction work. Coming now to the next page, the financial performance of the comparison with Q4 2019. So the reported EBITDA increases by approximately 4% from EUR 59.2 million to EUR 61.8 million. This increase includes and compensates already some costs for our strategic review, what you can see there, the EUR 1.3 million in Q4 2020. We experienced headwinds in revenues, as explained, and higher direct costs bear the burdens of the quarter while signal delivery costs and other overcompensate this negative effect. The other direct costs are running against a very low comparable cost base in Q4 2019, which included a couple of one-offs. So sequentially, these costs are in line with the run rate of previous quarters, but in the yearly comparison, quarter-on-quarter, it shows a bit negative here. So this decrease of the signal delivery fees for TV is due to capitalization effect with regard to fees for the use of foreign gridstone network lease in the context of new leasing contracts that were capitalized according to IFRS 16. We expect and this important 2020 cost level to be sustainable and have not assumed another significant decrease in our 2021 EBITDA outlook. So this is an OpEx/CapEx shift, which we have here. The lower construction costs are in line with the decline of construction revenues, and we spent a little bit more on marketing campaigns in Q4 2020. The other expenses are sequentially in line, but the very high comparable base in Q4 2019, again, make it look like a saving, which is actually not the case. I summarize the full year numbers at this point as well. So normalized EBITDA is up EUR 2.6 million or 1.1% from EUR 239.5 million to EUR 242.1 million. And the reported EBITDA excluded a highlight, which increased by EUR 15.3 million or 70.2% to EUR 229.5 million. So we reduced the non-recs by 50%, and this amounts by end 2020 to EUR 12.6 million. On Page #15, we presented the financial results. So the net income in the fourth quarter amount to a negative of EUR 153 million and this is mainly the result of a noncash impairment of the goodwill of the TV cash-generating units. So this is broadly equal to the TV segment, which itself amounted to EUR 150 million. So on the chart, you can see just a small bar, but just due to the scale. So this is a big portion, but very important to the noncash and it's really related to the history of the company. So the impairment of the TV segment, maybe to make it more clear, it takes into account the changes estimates of the management regarding the growth opportunities that can be achieved in the medium and long-term and is based, among other things, on the continuing decline in the number of customers in the TV business. So it's really our perspective from the management team. And yes, this is running against a very high expectation number from the past. Adjusted for this development, the net income in Q4 amounted to a negative of EUR 3 million compared to a positive EUR 4.3 million Q4 2019. The higher EBITDA in Q4 was eaten up by higher depreciation and amortization. The income taxes increased overwhelmingly due to the noncash accruals in Q4 2020. In a year-on-year comparison, the tax expenses are broadly stable, this is quite important. And it's also positively to mention that the cash taxes in Q4 were down by EUR 800,000 due to the consolidation of legal entities in the last 2 years. So the cash tax is really positive on a trajectory. Coming to the next page and the CapEx on Page #16. So what we can see is that the Q4 numbers are in line with the Q4 2019. So really no decrease or increase, EUR 54 million. What is important to note is that the network infrastructure CapEx of EUR 28.2 million includes also the capitalization effect, which as mentioned before for our lease lines and foreign infrastructure. If you look at the full year amount, we decreased the CapEx by 7% to EUR 150 million. This is the higher end of the guidance. But taking out the leasing and the capitalization effect, it would be at the lower end, but it's part of the network. What you can see is that 2/3 of the full CapEx in 2020 is related to network and growth CapEx. So the end customer-related CapEx in light blue and dark blue is the network CapEx. Maybe you remind -- to just remind you that we have finalized some backbone rings in Saxony and Saxony-Anhalt and this is very important for our customers in regards to the bandwidth capacity we can bring to the customers. The last page, the leverage and liquidity table. This table shows you the current debt structure by end of Q4 and the comparison to Q3 2020. What you can see is that we were able, again, to increase our cash on hand. And this is a clear highlight. We said at the beginning of the year that it's our aim to increase our cash position, and of course, also -- yes, against the COVID-19 perspective and the uncertainty, which we felt in the beginning of 2020. We saved some CapEx and investments into the business, but this results in more cash on hand of roughly EUR 25 million, and this is very, very positive to the company. With that we stopped the cash drain of the last couple of years. With that, I would like to hand over to Daniel again.

Thank you, Eike. I'll now take you to guidance and outlook. So as you can see, as I mentioned in the beginning, happy to report that we have achieved -- fully achieved our guidance on all the 3 metrics that we had outlined at the beginning of the year. Total revenues, as mentioned by Eike, is coming at EUR 480 million, which is slightly above the higher end of our guidance range. Reported EBITDA exactly at the higher end of our reported guidance range and CapEx, exactly at the higher end of our reported guidance range. However, if adjusted for the capitalization effect, we would be at the lower end of the guidance. So that's for 2020. On full year '21 guidance, we are guiding for EUR 465 million to EUR 475 million of revenues. You may wonder why we are going lower than the actual achievement in 2020, which is EUR 480 million. The simple reason for that is that we expect construction revenues, which have already declined in 2020 to further decline in 2021. These are noncore revenues, so that explains the guidance range here. On reported EBITDA, we are guiding for a slightly wider bracket of EUR 215 million to EUR 230 million. You may wonder why. This is explained by the fact that we don't have full certainty yet on transaction closings and on also the subsequent capital increase. However, it's becoming more and more likely. So therefore, we have included in our guidance range here, also one-off transaction costs at the lower end of the bracket, which we would face in case of the transaction and the capital increase going through. If that were not to be the case, we would be at the higher end of the guidance range. However, that would be only a short term victory because what we really need is indeed the capital raise. And therefore, we would be happy if that were to happen, and we would be, therefore, at the lower end guidance range for '21. As for CapEx, we're guiding for EUR 145 million to EUR 155 million. We would also like you to note that the previous midterm guidance will be updated in the second half of the year, post capital raise and once we've had the opportunity to then align with our supervisory board on the use of proceeds in terms of deleveraging and funding of the strategy. So we'll update that in the second half of the year. And the last slide is a quick transaction update. As mentioned at the beginning, we're making good progress. 2 out of 3 closing conditions have already been met. We are now in the second tender period, which will end, I think, it's 1st of April. And then we'll know the exact results of the shares that have been tendered. We're expecting the regulatory approvals, both from the EU commission and from the Ministry of Economic Affairs. These 2 regulatory approvals are expected probably during the month of April. We're very confident that they will be coming through, which will then allow for the publication of the prospectus for the EUR 475 million equity raise, which, as you are aware, is fully backstopped by the Bidco Kublai. That will then be followed by significant deleveraging in the second or probably the third quarter of '21. And still open and to be decided, the timing is so of the additional equity injection of up to EUR 75 million by Kublai. That's the transaction update, and that concludes our presentation. And we are now happy to take your questions.

[Operator Instructions] The first question is by [ Christoph Stefano ] [indiscernible]

I have 2 questions, if I may. I mean the first one, just sort of on your guidance. I mean, does that include any benefit from the O2 wholesale agreement. And I mean, if it does, I mean, could you quantify how much revenues you expect from that this year? And then the second question, just as a sort of reminder for me, like, how do contribution margins for TV and Internet/telephony compare? I mean I suspect that, I mean, TV, you have to pay like the broadcasters. So I guess there's a little bit of difference.

Thank you, Christoph. I'll take the first question, and then Eike will take the second one. So yes, of course, the guidance on revenue and therefore, on all other math does include wholesale revenues, and we are expecting to launch the O2, the Telefonica Deutschland wholesale partnership officially and operationally during the second half of 2021. So that's included there, but we're not disclosing specific revenues on that segment yet. It's too small at this stage. And at some later stage, when it becomes more material, of course, we will then split out wholesale revenues, but at this stage, it's too small.

Christoph, I'll take the second question regarding the contribution margin. So I think it's no secret that the TV margins are somewhat in an area of around 70%. And for IP, it's higher, around 90%. So it's really contribution margin without the CapEx investment. One thing is really important, on the TV, of course, we have the payments for the third signal fees to largely Vodafone where we pay on the homes connected base, not on a customer base. So the less customers we have, and we are not able to disconnect and negotiate the signal fees with Vodafone, the contribution margin, at least in the foreign signals supported areas, will decrease further.

Understand. Maybe just a quick follow-up. I mean, is it then possible for you -- I mean, as you sort of -- I mean, have some visibility maybe like where customers are cutting the cord that you then cut or renegotiate these signaling fee agreements with Vodafone?

No, I think it's not dependent on the customers and how they optimize. It's really a huge frame contract we have with Vodafone and the customers, what we are focused on is really at our own network. And of course, and historical movement, what we have that we would like to share -- to increase the share of own signal supplied customers from us.

The next question is by Titus Krahn of Barclays.

Just 2. And the first one, on your fiber investment, the fiber strategy. Could you maybe provide a bit more color on the ramping up of CapEx spending once the rights issue is completed and the takeover offers has went through? So will CapEx spending be H2 weighted this year? And when could we expect to reach the run rate of investments, which you quantified at about EUR 3 billion over the next 10 years? And the second question, just as a follow-up on your Internet wholesale agreement with TEFD. Given that it has taken some time, I'm just wondering, what would you -- did you experience as the main challenges in the process? And looking ahead, since the partnership should work as a blueprint for future cooperations, what are the key learnings you can take away for your announced agreement with 1&1? And even beyond that, how do you expect -- how long do you expect the agreement with 1&1 to take until this is implemented?

Yes, Titus. Thank you for your questions. On the first one on the fiber investments, look, so just to make sure that we are talking about the same numbers. The EUR 3 billion is total investment over the next 10 years. We have said that of the EUR 3 billion, EUR 2 billion would be into the network and slightly more than 50% in Level 3 and Level 4 network and the remainder in Level 2 and backbone, right? So look, this will not explode in the second half of the year. This will take time because we're not just going out there and fibering up everything under the sun. We're following basically the contract waterfall, at least to some extent. And they become renewable and therefore, linked to fiber investments one at a time, right? So therefore, you should expect a ramp-up over time. We're not giving more disclosure at this stage because, as I mentioned, while we have a plan as management, we still -- once the capital raise is done and we have decided on the use of proceeds, we still need to finalize with the Supervisory Board, the exact use of the proceeds, and therefore, also the trajectory and how quickly we will ramp up. So therefore, it would be preliminary to talk about that, but it does take time. I can say that with confidence that the peak will take a couple of years to reach. This is not going to be massively front-loaded, especially because we are following, to some extent, the contract waterfall. On your second question about the wholesale agreements. Look, so cable wholesale is not something that has been done before, right, HFC. So there is there's obviously a blueprint when it comes to DSL, but mind you, cable has some specifics. And therefore, when you ask about what has taken time, it's really specifying the processes and the lining with Telefonica Deutschland, in this case and later on also with 1&1, because they have their way of doing things and we have our way of doing things. And we need to agree on the common way of doing things, and that needs to be represented in the processes, on their end, on our end, and then eventually it also needs to be implemented in the IT landscape. And IT systems and landscapes have release cycles, right? So you need to make sure that you hit the right release cycles. And that's obviously a learning experience. And so that's what's taking time. We also want to make sure that when we launch, we're fully ready, right? We will also do some friendly testing before fully launching operationally because we're talking about customers here, in this case, going to be the retail customers of Telefonica Deutschland, and we want to make sure that we serve them to the best of our abilities, right? And the learnings, I think, for 1&1 are exactly related to what I just said. And again, they have their way of doing things. We have our way of doing things. And again, we will have to align on how we do things commonly, jointly. And at this stage, we have signed a preliminary -- sorry, a binding precontract, that's the way to phrase it correctly. And this is subject to transaction closing. Post-closing, we will finalize the long-form agreement, and then we will go into implementation. But also, that will not happen overnight, because of the long things that I just mentioned as far as processes and IT systems go.

That's very helpful. And yes, on CapEx, I meant it's EUR 3 billion in total investment and EUR 2 billion fiber. Just -- I was just wondering because your current guidance rather implies investments, which you are already doing in fiber as they have taken place in 2020 to continue in 2021, just at the midpoint being largely flat?

Correct. But as I mentioned, we first need to do some alignment on the use of proceeds, and therefore, you should not expect an explosion of CapEx in '21 at this stage. This will take time to ramp up. So that's why we are guiding for the amounts that we have guided.

The next question is by Bruno Read of PGIM.

I just had a few questions. Firstly, you mentioned about the TV being weakened, you guys are kind of looking at changing the strategy there. So could you just kind of talk about why it's weak and what sort of improvements you're looking to make and when we can expect those? And then a second question I had was just obviously, I know that Berlin is the area that you guys are targeting with FTTH, particularly because you already have such a strong presence there. And I'm also aware that Deutsche Telekom obviously announced that they're looking to build 1 million connections there. So can you just kind of talk about the competitive nature for that, that would be great.

Yes. Bruno, thank you for your questions. Look, so on TV. As you're aware, we have a product called advance TV, which is -- it's called advance TV, not really advanced. We have some feature challenges there and some stability challenges. So we're not actively marketing anymore. That means what we are up against at Deutsche Telekom, for instance with their MagentaTV, which is, I think, is fairly good product is our basic cable TV product. That's what we're actively marketing. And of course, in terms of feature set, when it comes to things like catch up TV and other things, and integration, and user experience and user interface, obviously, that doesn't compare, right? So therefore, no big surprise that we're not losing -- that we're not winning, that we're losing. So now the remedy for this is basically to come up with something that in terms of feature set, at least is at par and stability wise is also at par, and that's a development that we have planned. And we are going to do first before we go into full implementation we'll do a proof-of-concept to make sure that this time we get it right, and then it will get implemented. But that will take until next year, until we can bring it to market. I'm afraid that's not something you can do overnight. I'd love to have it rather today than tomorrow, but that will take some time. So therefore, you will continue to see a drag on TV RGUs and CATV RGUs in '21 and partially also in '22. We'll try to limit the damage. But of course, if you don't have feature parity or stability compared to your main competitor, then life is challenging. Now on Berlin, look, so I don't know which announcement you have read. The one that I read is that Deutsche Telekom is planning, I think, 600,000 fiberized homes until 2025 in Berlin. We, at this stage, have 500,000 customers in Berlin, of course, not all of them fibered. That would be great, but that's not where we are yet. That's what we have to do. And we take competition as a positive effect. I think everybody has discovered that Berlin is an interesting place to do business and to fiber up. And so we welcome that. As you are aware, those 500,000 that we have in Berlin are part of our housing association contracts that have a certain duration. So therefore, to some extent, as long as we are able to prolong those contracts and with fiber add as part of the upgrade, I think we know we'll be in a good position, right? But we take Deutsche Telekom and everyone else, including Eurofiber, that also has announced plans for Berlin very seriously.

Okay. That's really helpful. And I just -- another question I just wanted to have was just kind of, obviously, your reported CapEx runs significantly ahead of your cash CapEx. So I was just kind of wondering what your cash CapEx guidance was for this year? And then you also kind of spoke about the cash position that you try to look to elevate that this year. I was just wondering generally what position you're comfortable at running at going into the future? And where you kind of expect liquidity to be?

Yes. Maybe I'll take this, question. So the difference between the cash CapEx and the reported CapEx is just the leasing factors. Maybe you are aware that we don't have a nationwide backbone. So we are forced to rent and lease network from our partners, and these are long-term contracts and need to -- needs to be paid every year. But from a financial or from a reporting perspective, in regards to IFRS standards, we need to report the CapEx, including the whole leasing contract until it ends. So this is really the difference there. And regarding the CapEx of the future, I think that's -- yes, I think that what Daniel already said is what we are waiting now is to align with our new supervisory board and then looking forward to implement the fiber strategy. And yes, let's kick it off when we are ready there.

Okay. And just on the cash?

Maybe you can repeat your question because maybe I missed it.

Hi, I was just -- you kind of said that you've been building up your cash balance this year. So I was just kind of wondering, sort of going into the future just with what it's -- would be in the past, just kind of where you expect to have that liquidity position going forward?

So what we learned in the last year, especially in the negotiations with the rating agency is that we need to have sufficient CapEx on hand, and this is very important to them to get the right rating for us. But I think we will -- I really have to say we need to align with our supervisory board because what we will do and what we plan is that we will have a negative cash flow in the next coming years because we have a significant investment phase ahead of us, and we'll always have a significant amount of cash on hand. And our experience from the past is that it needs to be at least around EUR 50 million.

[Operator Instructions] The next question is by Lars Dueser of Deutsche Bank.

I think there was a very strong print in Q4. Nevertheless, a lot has been tackled on that front already during the Q&A. So I want to come back again to the guidance really. And but what I want to understand is, what does that guidance on the revenue line really tell you about core revenues? I heard Daniel, that you said that the drop is driven by low-margin construction revenues, but is that really all of it and your core revenues are expected to be flat year-over-year? Or what is the expectation there? I'm really focusing on the core revenue line here.

Lars, maybe I'll take this question. So it's really, as we said, the recent centric -- I'm making some background noise. Okay. I try it again. Yes. That's much better. So it's really what I said and also Daniel said the recent trends will continue. So what we see is that we will have headwinds in the TV area until we have a new product launch, and this is not done overnight. So this is really an area where we -- yes, we will have further decreases also on 2021. And we have the B2B business, which increases by always double-digit in the last couple of years. And now, IP and phone is again on track for the next year. And also for Q1 2021, we think that the recent trends will continue. And then we have some visibility already into this. Regarding your specific question on the revenues and the guidance there, it's really related that we have some construction revenues in the other costs in 2020. So we finalized the infrastructure project in the area of Plön. And this will be definitely finalized in mid of 2020. So these revenues are missing and we will -- don't have this cost and this revenue as part of our guidance. And this is a drop in the revenues compared to 2020.

Okay. Okay. So understood. So if I take the EUR 10 million drop at the midpoint of your guidance, you basically tell us that most of that will be driven by Plön and lower construction revenues, while the core revenue segment is around stable as we've seen in this?

Yes, exactly.

Okay. Okay. And then really on the reported EBITDA side, if I look there at the midpoint, and it's at EUR 222.5 million, call it, EUR 7.5 million below where you have printed this year, and I think also quite a tad below where the Street had you in terms of expectations, which I saw around, I think, EUR 235 million or more for this year. Now there are 3 factors I can think of. First of all, clearly, the higher non-recs and I think you mentioned that on the call, would be great, by the way, to get a bit of a quantification there. So how much higher transaction costs are we talking about? Is this EUR 5 million, EUR 10 million or EUR 15 million? The second factor, yes, there could be obviously also organic EBITDA decline on the back of, again, weaker revenues on the core side, and then whatever one-offs there might be, whether also there might be some reclassification of CapEx to OpEx. It would be just great to get, again, a bridge on the EBITDA guide as well. What is driving this decline? Is it just non-recs? Or is it something else?

Yes, Lars, Daniel here. Look, so I mean the easy way to answer the question is if there was no transaction. If we did not take that into consideration, I think the guidance range on reported EBITDA would be the same as we did for this year, so the EUR 225 million to EUR 230 million. Now you can do your own math. So meaning it comes from all that. No weakness in the operation of the business. That's my point.

That's what I wanted to know.

[Operator Instructions] Otherwise, there are no further questions. Currently, there are no further questions. Do you want to speak an outro?

Yes, Sasha. Thank you very much. I would like to hand over the word to Daniel for closing remarks, and I think that we can close the conference call.

Yes. Ladies and gentlemen, thank you very much for joining us on today's conference call. Much appreciate your time and your interest. As mentioned, I think, a good end to an overall solid year. We're happy for that, and we are now working diligently towards the transaction closing at the subsequent capital increase and this is really what will be driving the future of Tele Columbus, and we look forward to that. Thank you for your continuous interest, and have a nice day and then subsequently, a good weekend. Thank you.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.