Hello, everyone, and welcome to this very special Q4 2023 Interim Report Analyst Meeting and Conference Call. I'm Vesa Sahivirta, Head of Investor Relations.

And this is special because this is the last one of CEO, Veli-Matti Mattila, who has been heading Elisa more than 20 years and this is his 82nd interim report. Amazing, isn’t it?

I'll take an opportunity to go a little bit back to history and show you how we presented our strategy execution and its three focus areas when we started in 2003 with Veli-Matti and this strategy. Here on the right-hand side, you can see where we are now.

Integration of One Elisa meant very much efficiency improvements and getting profitability up. Nowadays, this includes also many quality improvement issues.

Strengthening market position in core markets meant a lot of domestic consolidation and improving our Telco business. Now, it's more like increased mobile and fixed services and as you know, our mobile service revenue growth is best-in-class in Europe.

New markets has had many different kind of phases and nowadays, it's focusing on growing our digital services and software businesses. This very successful strategy execution has generated, on average, 15% total shareholder return annually against industry average of minus 1%.

But now let's move on the Q4 report. CFO, Jari Kinnunen is here as well, and Jari will elaborate more on financials.

But let's go to the presentations and Veli-Matti once more. Please go ahead.

Thank you, Vesa for very interesting introductions. So, welcome and we're really glad that we got also a lot of people on site here.

We believe on hybrid working, including Elisa also people being physically together. So, it's also good to share now our Q4 results, really having people a lot of on site.

But let's start with the highlights from fourth quarter. Last year, our revenue was pretty much on last year's level.

We had some divestments that were impacting the revenue development, but also there was clearly some headwinds from the macro environment, especially in the B2B business. But overall, we were strong on our EBITDA growing 3.4%.

Mobile service revenue was also steadily moving ahead with 4.4% growth. In the international digital service business, the revenue declined 8%, resulting really from the customer delays in projects.

Projects that they already had ordered some projects, but also some orders got delayed to the months ahead. And the reason, of course, is this high interest rate and the whole macroeconomic situation.

In Finland, our postpaid churn increased slightly from Q3 to 15.4%, but still remaining at somewhat decent level comparing the previous years the level approximately has been. Postpaid subscription grew by 24,000 altogether machine-to-machine and IoT subscription really growing by 45,000.

The fixed broadband was relatively stable. The subscription base was increasing by 1,300 and the good momentum with 5G continues.

Our network covers now 92% of Finnish population and the geographical coverage build-out progress is progressing according to the plan. And our Board also has made the decision for proposals to the Annual General Meeting, among others, the dividend proposal, which is €2.25 per share, which is providing a good increase in the dividend.

Moving forward, when we look at the whole year, we -- 2023, we had 2% revenue growth. Of course, the telecom business, what is very much in our revenue portfolio is, of course, relatively defensive in this kind of macro changes, but we are not totally immune.

And as I said, mainly in the B2B side, we saw some headwind for the business. But still, we were able to carry 2% revenue growth, which is a good result in this industry and 3% EBITDA growth.

So, overall, the earnings per share also growing by 1%. For earnings per share, of course, the interest rates also impacted the development somewhat, but still we were able to make best-ever earnings per share and CapEx was growing to €284 million.

Altogether there was some growth. CapEx to sales was 13% for last year.

But if we take the average for 2022 and 2023, the CapEx per sales was maximum 12%. And our medium term target, needless to say, already -- now -- but I say it already now that the medium term target for CapEx per sales maximum 12% is intact.

Mobile service revenue, we got 4.7% growth, mid-single-digit growth that we were expecting and guiding -- soft guiding earlier last year had some mobile subscription growth also in the fixed broadband and the churn level was lower than we have seen earlier and there was also data growth. Then going to the fourth quarter and a little bit more in revenue.

The positive impacts, of course, came from the mobile services and fixed services, and we saw a decrease in -- due to these divestments and also IDS business as well as equipment sales was somewhat lower results. So, consumers to be saving a little bit in their equipment purchases for us from the profit point was doesn't create too much problems because it's a low-margin business, but it impacted, of course, a bit also to the revenue.

Mobile service revenue, of course, the continuous upselling of higher speeds, upselling to 5G and some product price changes have impacted positively to the mobile service revenue growth. And EBITDA, especially in the fourth quarter, really the productivity and efficiency improvements.

And of course, growth on higher-margin businesses like mobile service revenue that created a positive impact to the EBITDA. If we move forward then to the segments.

In the Consumer segment, we had 1% revenue growth. The domestic and other digital services were creating some negative impact, the change of our partner in the streaming services for Elisa original content during the year to Rotoplas owned by Sanoma [ph] is positive for us from the profit point of view, slightly positive, but the revenue kind of share in that contract is a little bit different.

So it created some revenue reduction. And as we have said, we have some €15 million to €20 million less revenue from the -- this route cooperation compared to Viaplay, but it is slightly better in terms of the EBITDA for 2024.

And we have got a good start with that cooperation. Also, there has been some interconnection price reductions by the regulator, impacting somewhat negatively to the revenue.

And new consumer segment, EBITDA was 7% positive, showing good strong productivity improvements in that business. Corporate customers as said, was hit a bit more by the macro environment and the revenue was slightly down, minus 1%.

Mobile and fixed services contributing positively, but then international digital services; domestic and other digital service also due to the Videra divestment and then also equipment sales and interconnection; and traditional fixed line services contributing negatively. EBITDA was minus 3% for corporate customers, but that segment one does say that except this macro impact, the segment is really making good progress forward.

We continue with this three strategic focus areas at Elisa. We have had great results from increasing the fixed and mobile service revenues also increasing the business in digital services and of course, improving quality and through that, improving our productivity and profitability, and we believe we have still a lot of potential in that.

And as you -- some of you may have noticed, our advertisement in the biggest newspaper of Finland today in the front base, we were also selected as the among the 100 top most sustainable companies in the world, and our mission to create sustainable future through utilization is paving results. In mobile, the migration to higher speeds continues.

We have now over 100 megabit per second speed, those kind of customers now surpassing 50% level. They are not all 5G customers, as you certainly know there are also 4G customers in that speed category.

But clearly, customers are appreciating the higher speed and also they are more satisfied. Our 5G base is growing in a constant base.

And also the smartphone penetration is going up 53% of all the devices are 5G devices in our base. Looking at the 5G, as said in Finland, the population coverage has reached 92% and continues to grow.

And in Estonia, we have 75% population coverage. And our capability to commercialize unique capability -- a unique way to commercialize 5G continues on average more than €3 per customer, what we are getting from 5G customer than from 4G customer that development continues.

We have also brought 5G standalone network technology available in the capital market area for consumers. There's clearly emergence of some applications taking advantage of the smaller delay, smaller latency and also some better capabilities to guarantee quality.

It is gradually coming. There is a bit of lack of still devices, customer devices, which comply with the standalone 5G capabilities.

But of course, that is also another kind of ingredient that is in 5G, providing us with the other earnings model possibilities in the future and now it is emerging in the networks. We also successfully completed the first calls in Europe over the cloud-based 5G network.

So, we are continuously also experimenting testing and piloting and then deploying later on the new network technologies, cloudifying, making more software capable of our networks, and we were first operator as well to shut down the 3G network. So, the 3G which was really the strong hit and kind of thing in year 2000 around that with -- everybody remembers those some of those auctions.

But as it was a strong hit, and it has been a good technology, but it came into its end of its life cycle, and we were the first operator to get that network shutdown. And it, of course, has provided us with cost savings and also released frequencies to be used more effectively in 4G and 5G.

Our fiber network also expanding based on the customer demand. We have seen a little bit more demand on the market for fiber, of course, created by a bit more activity in the market by more players.

We have now nearly 40 locations that we constructed during H2 last year. We acquired also in the year-end Elenia in Central Finland, , Tampere region and Northern Ostrobothnia, providing us a bit more fiber customer base.

And we have fiber construction announced over -- in over 450 new areas in the coming years. So, there's a good complementary broadband offering with fiber now coming more into play alongside with 5G.

As earlier said, this macro environment really had impact to IDS revenue growth. Unfortunately, the year-on-year growth didn't reach more than 2% due to the fact that especially H2 customers were delaying their projects as said.

However, when we went towards the year-end, we saw the activity to come back and we got the record order intake and also order backlog in Q4. And overall, we continue to say that our target is to really keep this double-digit organic growth.

The target remains. And the reasons for that is that we really are competitive we have a strong sales funnel.

We see strong interest by customers. And when we get hopefully a bit release from the macro side for the customers, we are sure that this market will be moving ahead.

The digitalization, automation with the help of machine learning AI capabilities that Elisa is providing they are needed in all areas of our customer bases. In Polystar, in particular, we also had the different Polystar companies more integrated together and with the product portfolio synergies, we have successfully got new customer wins during the quarter.

Two new automation customers and a major expansion with a European operator also we would be received during the quarter for Polystar. As an example, in industry, for example, we made a deal with Mitsubishi Logisnext Europe to modernize their company manufacturing operation.

It's forklift truck factory, one very good opening. And also, we had very solid recurring revenue growth in fourth quarter.

And in our distributed energy storage, new business venture, it has got a very good start for its first year. And we are extending its reach in Finland's electricity reserve market.

We were also approved by the grid operator Fingrid for the frequency containment reserve for disturbances market. In addition to the automatic frequency restoration reserve market where we already have been accepted.

So this new way how we are helping the renewable energy to be more effectively utilized by customers. This clearly has been successful, and we are growing our base of batteries and that way increasing our business with that technology.

And also, as you see, we got acceptance to be in other markets as well. So the business models are very interesting here.

And in this business, we aim at, of course, getting our technology to be implemented by other telecom operators. We have really good, strong discussions ongoing, but also this creates interesting opportunities for consumer market later on.

When we look at the domestic digital services, there has been solid performance, our entertaining video services. We launched a new platform for Elisa Oyj plus service and the end of October with new technology, and it has got a strong start.

There's an improved experience to discover and enjoy all movies, series and sports. So it's a really great user interface for all kinds of content.

And I said since October last year, Elisa via Original series, they have been available in Ruutu+ streaming service and all four new series that was released in Q4, they were among the most watched list in that service. So the cooperation with Ruutu+ has really got well off the ground.

And it is really so that our original series, they are really fitting well and they get good, let's say, marketing and so by Ruutu and Sanoma Corporation. Three Elisa Viihde Original Series are among the Golden Venla finalists in five different categories., this Golden Venla is similar as the Emmy Awards.

So that's in Finland, and we are proud that our original series and the quality of those are really recognized. In IT services and solutions, really strong development there.

First, demand for cyber security services has increased during the fourth quarter. For example, our experts have been successfully supporting multiple customers, large customers with major digital forensics and independent response cases during fourth quarter, really, really important, high-value activity also our detection and response-related cyber resilience services are still the most sought-after capabilities by customers.

And there has been also a very strong demand for Elisa's generative AI capabilities and other AI solutions. And we also have been acknowledged globally by Microsoft Ignite event and in Microsoft, we have been among the few companies that very quickly have been able to deploy with additional software elements, the Microsoft GenAI platform for customer benefit.

And we have really in production, many customer cases utilizing our applications in GenAI platform of Microsoft, really interesting growth opportunities towards the future. And underlying the core capability of artificial intelligence in Elisa, where we have 10-plus year track record.

We are building sustainable future through digitalization and here are the ESG key indicators and targets that we have set and the development in our mobile network, we are improving our network efficiency. Going forward, we are on track to target our population coverage with more than 100 megabit per second speed connections is also on track moving towards the target.

We have had some challenges in the balancing the genders and supervisors, but we are very determined to get the female part of the -- share of supervisors to grow up. And the patent portfolio is growing nicely at Elisa and our innovations in different software businesses utilizing AI are creating really strong development in patent portfolio as well.

And we have also got many recognitions for our work to create -- run the business and also create sustainable future, for example, MSCI rated now us to the highest level with AAA. We became to be the -- among the 100 most responsible companies in the world in the latest Corporate Knights Global 100 list.

We have been included in Sustainalytics’ 2024 ESG Top-Rated companies list and also Financial Times, European Diversity Leaders ranking has included -- we are included in that. So among other recognitions, this gives us and for Elisians, a lot of inspiration to work for sustainable future forward.

And we believe that the real activities and these recognitions, they really are also benefiting our business. They are benefiting also the shareholder return when we focus the right way and develop the right way the business towards a sustainable future.

And finally, about the outlook and guidance for 2024. The development in the general economy includes still many uncertainties.

The growth in Finnish economy is still expected to stall and in particular, the uncertainty relating not only to Russia’s war in Ukraine, but also the other conflicts. And then also as inflation, energy prices and global supply chain risk, they will continue and competition remains keen.

We have the expectation, our revenues to be same level or slightly higher than 2023 comparable EBITDA to be at the same level or slightly higher than in 2023 and CapEx will be 12% or 13% of revenue. We see that we may have with the 3G frequencies usage so much that we may have an opportunity to accelerate our investments to 5G a little bit.

That might be a really good commercial opportunity for us as well as this digital distributed energy storage, we may be willing to accelerate it for really good financial reasons. And those are the reasons why we say that €12 million to €13 million of revenue.

But like I said, the medium-term target of 12%, next 12% is intact. Now I give the word to Jari.

Right. Thank you.

Let's start with profit and loss and Q4 continued good positive developments and best ever Q4 as was the case with total financial year 2023. Revenue was quite flat in Q4, impacted by divestments of Videra as well as change in streaming cooperation agreement, excluding those effects, revenue growth would have been 1.5 -- approximately 1.5%.

Other changes in revenue interconnection and visitor roaming was minus €2 million. There was interconnection price change beginning of last year.

Also, equipment sales were lower than year before, minus €4 million. In corporate customer segment, service revenues growth was €1 million in mobile and fixed services growing negative impact in digital services in -- as well as traditional fixed voice.

In consumer segment, service revenue was increasing by €5 million. Mobile services growing and 5G developing positively and contributing to and driving the growth.

Digital services were impacting negatively as well as traditional fixed voice. EBITDA comparable EBITDA growth was 3.4% to €191 million.

Margin improved to 34%. Reported EBIT includes one-off depreciation, approximately €6 million relating to shutdown of 3G network.

And excluding that comparable EBIT growth was 3.7%, comparable EBIT margin improved to 21.9%. Financial expenses were €3.5 million higher as a result of higher interest rates and EPS, 2% growth to €0.61.

Some of these divestments, all this divestment items have the impact also this year compared to 2023 profit and loss, be there a divestment impact will be approximately €20 million streaming cooperation partner change impact between €15 million and €12 million. And both of these are in terms of EBITDA slightly positive compared to last year.

Then we have also a regulative change relating to corporate numbers, which will impact negatively to revenue between €5 million and €10 million. And EBITDA impact from this regulation change is slightly negative.

And we will continue our productivity improvement, continuous productivity improvement development and measures. And in the beginning of the year, we will have some accelerated productivity improvement projects ongoing.

And as a result of those projects, we will book approximately €5 million one-off expenses in Q1 EBITDA. In Estonia, good revenue growth continued 8.1%.

And equipment sales and mobile services growing. EBITDA was positively developing lower growth compared to revenue, 1.2% equipment sales growth with low margin impacting and also inflation impacts, especially higher salaries.

In mobile subscription base, there was a slight decrease, postpaid base 800 and prepaid 1200 decrease churn, mobile churn continued at low level 10.1%. Q4 reported CapEx was €109 million and excluding licenses, leases and acquisitions, €91 million.

Whole year, CapEx to sale was 13% and taking the average of past two years, 12%. Main CapEx related to 5G as well as fiber and other network investments and IT investments.

Cash flow, Q4 comparable cash flow was €73 million, 15% lower than year before. Net working capital change, although it was positive, but it was less positive compared to year before and higher CapEx impacted negatively, positive impact from higher EBITDA and lower CapEx.

Comparable cash flow for the whole year was a record high, 12% growth of €40 million increased to €361 million. Positive impact from net working capital change, higher EBITDA and lower CapEx, negative impact from higher CapEx and higher interest.

Operating EBITDA, operating cash flow conversion in Q4 was 53%, and for the whole year, 2023, 62% Solid balance sheet and financial position is continuing. Net debt-to-EBITDA was 1.7 times the target range, 1.5 to 2.

Equity ratio was 41.6%, well above target range 35%. The average interest for interest-bearing debt was at 2.2% level and return ratios continuing at a good level of return on equity 29.7%; and return on investments 18.7%.

Also with the distributions, there is a continuation of growth and board is proposing to AGM €2.25 per share dividend, which would mean €4.7 billion growth and the 10th consecutive year of dividend growth. And proposal includes two installments, €1.13 in April and €1.12 in October, proposal would mean payout ratio of 95% and dividend yield 5.4% against share price end of last year.

Additionally, there is a proposal for maximum 5 million sales buyback authorization. And again, showing long-term strong commitment to competitive shareholder remuneration.

Now I give word to Vesa, please.

Thank you, Jari, and now we move on Q&A. And we ask first question from the audience.

Sami, please?

Sami Sarkamies, Danske Bank. Congratulations, Veli-Matti.

I have three questions, taking this one by one. Firstly, on CapEx, can you elaborate what drove the CapEx to sales increase last year?

You've been managing this quite prudently over the years. So there must have been some sort of surprise.

And then why do you think it's going to be temporary as you're also guiding for the possibility for 13% CapEx to sales also this year?

Well, there was no surprises. It's such that we basically saw some commercially viable additional investments.

And when we look at that we keep our guidance for max 12% when we take a look of a bit less investments 2022, then we decided we go for it because it really was commercially viable. For this year, as explained, the 12% to 13% is really because we see -- again, there might be for the time being now for this year because we got these frequencies freed up from 3G.

We may be willing to accelerate a bit the 5G investments for good reasons. Same thing with the distributed energy storage, which is a really exciting opportunity now when we got also to the other reserve market.

And that's why we -- it is maybe commercially really viable to accelerate, and there we are doing investments to better raising in our own infrastructure. The business, when we are selling that artificial intelligence-based software to other telcos, there is no investments needed.

Okay. Thanks.

Then when it comes to macro outlook, I think, you sounded a bit more optimistic regarding IDS. What about the domestic B2B business?

Are you seeing any light at the end of the tunnel here?

Yes. Actually, in proportion, we can say that IDS was maybe a bit more impacted negatively.

So in the domestic side, we see -- so some -- and I'm as optimistic that the portfolio, what we have in the connectivity side, including the cybersecurity, also with our IT business and the innovations in AI deployment and utilization of AI, there is a strong demand for that. And -- but it needs a bit more released from the macro for customers to be really more active.

But yes, I'm positive that once that we have a bit release from the macro side. Also in domestic B2B, there will be really interesting happenings.

Okay. And then finally on IDS, is it safe to assume that given strong order intake in Q4, you will be able to reach that double-digit growth this year

It is our target. Yes.

Yes.

Okay. Thanks.

You're welcome.

Thank you, Sami and now next one, Artem, please.

Yes. Artem Beletski from SEB.

So first of all, I would like to thank you, Veli-Matti, for all the good interactions and discussions over not just years but decades and I guess Elisa has been really the role model for the entire industry under your lead? And maybe then I go into questions.

I would like to ask about in general about competition situation. So it looks like in Q4, the churn didn't really pickup that much.

We had this bigger campaign in a day, so to speak, behind us. Could you maybe talk a bit about that side?

Yeah. We had a little bit increase in the churn compared to third quarter.

And as you said, we had this campaign days, so that was, of course, impacting to the fact that there was a obvious additional market activity, but maybe not quite that we expect this, maybe not quite that much. So we can say that at least Q4 we can say, was quite much the same level of intensity overall in the competitive landscape.

And maybe the second question, what you mentioned about introducing 5G standalone features to consumers and so on. So, how big opportunity do you see it going forward?

And what interesting is enabled by it?

Over the years, I think that is a really strong improvement of capabilities in 5G, creating really true possibilities for operators to have different kind of quality of services, meaning also premium and different kind of pricing opportunities for customers. Next year, I don't think it has a really that much of an impact for this year, I mean, this 2024.

But going forward, it will certainly have its opportunity and there is, possibilities also with the help of standalone additions in 5G to test and hopefully also find other earnings models than just speed-based thing.

Okay. And maybe just the last one is the housekeeping question regarding buyback authorization.

I guess, the idea there is the same, so no real plan to use it.

No plan to use it. It's just to be available if we need it.

Great. Thank you.

You're welcome.

Thanks Artem and then Felix, please.

Felix Henriksson, Nordea. Veli-Matti, congrats for a great run.

I have three questions. I'll go so one-by-one.

Firstly, on MSR growth for 2024, can you give any sort of soft guidance on what you expect on that similar to past years?

We see the Mobile market is strong. And we are expecting a similar kind of mid-single-digit growth opportunity for this year as well.

And -- the -- how it looks, the market is evolving, it is very positive also a longer period than just 2024.

Great. Thank you.

Then on IDS, I'm curious how much visibility do you actually have on this order-to-sales conversion now that you mentioned that you did have a very good order intake in Q4. When is the timing of this translating into sales?

And as a follow-up to that, what should we assume in terms of the business's EBITDA contribution for 2024?

Yeah. Well, if I start from the EBITDA, they are still a bit negative contributors to the total Elisa.

But -- and then about the orders-to-revenue kind of transfer. We have a bit different situation in different customer contracts, how quickly that will take place but the outlook having the best order backlog and better that we had in the beginning of 2023, and the best ever order backlog, it is giving a good outlook for revenues, for ideas.

But like I said, there's still uncertainties and still there are still some customers who may delay even the ordered projects. So we have some lot of uncertainty for that.

But even looking and understanding these things, we are quite positive that even this year, we can reach the double-digit growth for ideas.

Thanks. And then my final one goes to Jari on interest cost development.

What should we expect for the coming quarters compared to the level seen in Q4, in light of the sort of exposure you have to fixed and floating range and also given the point of your bond is approaching maturity this year?

Yes. So we have -- in Q1, we have one maturity and repayment of €250 million.

After that, we expect increase approximately €2 million a quarter. And then going forward, next maturities year 2026.

Thank you. That's very helpful.

Thank you, Felix. Then next one, Kimmo, please.

Yes. It's Kimmo Stenvall from OP Markets.

May I also congratulate Veli-Matti Mattila great years and great numbers, great shareholder return. So then to the question on getting back to CapEx levels that you were raising a little bit.

So what kind of magnitude we are looking at in if we did -- that you end up in the higher part of the range. So do we talk about €10 million or €20 million or what kind of levels that this additional that you are maybe spending this year?

Maybe because there's uncertainty that can we have this viable opportunities to have commercially good investments a bit hard to give you a number, but we are not talking about so many millions of euros actually. But of course, there's somewhere in the order for max 12, and it may be that we are going over that, if we see a good chance with accelerating 5G investments due to the 3G frequencies or then the desk that we want to accelerate because it's really exciting market but also a new market for us.

Okay. Thank you.

You’re welcome.

Thank you, Kimmo. Any further questions from the audience at this point of time?

No, we don't have. So we ask first question from the conference call lines, please.

Hi. It’s Andrew Lee from Goldman here.

Just I wanted to echo all the comments Veli-Matti. Good luck for the future.

And thanks for your help over the years. Wish you all the best.

Just a couple of questions. I'm sorry, they're relatively mundane for the last -- for the last question we get to ask on the conference call, but just on the CapEx front, lots of questions because you've had the same kind of guidance rhetoric for so many years.

So, yet your comments that, I guess, what you're trying to hint at single-digit millions uplift versus what 12% max would have indicated for 2024. Just wanted to try and understand, how we should think about you retaining your 12% CapEx to sales medium-term target.

Should we therefore expect CapEx to sales to go back to the 12% max level in 2025? Or could it go even lower, so that your average CapEx to sales over the period of your medium-term guidance gets to that 12% level.

Any kind of color around trajectory into 2025 would be helpful. And then second question, just on IDS.

So, I guess you hesitated a little bit when I asked the question earlier about getting back to double-digit growth this year. Could you just talk to your confidence levels there?

I mean clearly, you've laid out you've got a great order book backlog, but clearly, the problem is -- and it seems like it's just the problem just postponements rather than cancellations of contracts. But how do you get that confidence that you can get to double-digit percent this year?

Thank you.

All right. Thank you, Andrew, for the questions and comments as well.

In terms of the CapEx, we -- as you may remember, there has been some years in the history when we also saw great commercial opportunity to lift up for 13%. We've done that and then return to 12%, so saying that and remembering that we have this medium-term target of max 12% intact.

That's what's going to continue. But this year, there might be another year now that we have commercially, financially viable extra opportunities to accelerate a bit versus what we had planned earlier.

Then to the ideas, the confidence level is basically stronger now for two reasons. One is that we have the record order book in the beginning of the year.

And secondly, we see in some of our customer segments that there is really kind of pent-up demand coming that there are certain customers who need to kind of invest to the -- certain of the solutions that we have in certain industries. So -- and overall, we believe that this interest that we see -- we have seen for our solutions, we thought which are helping customers to improve their productivity, profitability, safety and so forth, quality, among others, that we will get to the -- back to the track of double-digit organic growth.

Thank you. Just can I just ask a quick follow-up just on the CapEx side?

Is fiber build or the need for fiber build a meaningful pressure or contributor to your CapEx uplift.

Not really, we have, of course, proportionally done a bit more fiber investments now, but it's not the reason. It's really the additional potential opportunities that may make us to kind of increase over max 12 this year.

Thank you

Hi, thank you for the presentation and let me join everyone else by congratulating Veli-Matti on a very successful career at Elisa. I have two questions, please.

So, one -- a bit of a follow-up on CapEx, but more from the perspective of free cash flow overall. So, if there's a bit of an increase in CapEx going into next year.

Is there also a potential, for example, in terms of improving the run only working capital going into 2024, i.e., diminishing the impact of overall free cash flow expectations that we have for FY 2024? And then just a question on the operating leverage in the business.

So, clearly, you've seen, despite the weakness in IDS, which would have maybe indicated the opposite, you've seen an improving operating leverage momentum overall on EBITDA over the past couple of quarters. So, how should we think about 2024?

And then can you maybe explain in that regard the cost drivers related to IDS, for example, there's a big sales target or commissions component related to the sales where revenues haven't clearly been off in the past couple of quarters contribute to better profitability or where the kind of cost levers in IDS specifically? Thank you very much.

All right. Thank you, Andre, for comments and questions.

I let Jari to respond to your CapEx cash flow question. But in regards to the operating leverage, as we discussed, we haven't seen any problem in our operating leverage even if the kind of Elisa-level numbers might look like and indicating a bit for that.

The reason is that as we discussed that yes, we have a strong development in mobile service revenue growth, which is a higher-margin business. But again, we have also invested in new business creation for future, which, of course, on the OpEx side, has been kind of giving a bit more negative there.

And then if you look at that in the operating leverage point of view, at Elisa level, it has been somewhat negative. But then again, if you look at Q4, we have improved even in Elisa numbers, if you compare the growth of mobile service revenue and then EBITDA percentually there is some growth.

Then going forward, I'm very confident of Elisa's capability to be cost-conscious and cost-effective, but especially to improve productivity. We have a unique platform which we call Elisa Business System by which we contribute to the profitability with the longer term development of productivity with the process improvements, with the streamlining of processes, with the automation, with utilization of machine learning and AI.

We have that capability in all parts of the operations, which are contributing. So there's no doubt that our productivity wouldn't be improving going forward.

But when we also build and we want to build the future growth and in the beginning, if you think about the IDS business, it is kind of in an investment phase a little bit, but that's what we do, and we want to provide that growth in the future. And that looks actually good, as I have said about the order backlog, but still, that business is quite small that is not contributing to the operating leverage kind of criteria.

So well now -- but if we take a look, for example, the gross margin for this business ideas, it is really comparable to the industry software businesses. It is just that the selling G&A and those kind of things they are proportionately a bit too high at the moment.

And we need to invest a bit on that to take our good share of -- as a first mover in those AI-driven markets for operators and industrial buyers. But like I said, summarizing that we don't think we have a problem in operating leverage.

But if you take a look just the numbers outside, I think also there will be improvement in that at the Elisa level going forward. But Jari, please for the first question.

Yes. Yeah.

We definitely see a solid cash flow development continuing also this year, and you mentioned net working capital and we continue to work with more efficient new working capital as well this year. And now we have reduced inventories during last year as an example of the positive development and the measures that we've been doing that have been contributing to net working capital.

And if you take a whole year last year, there was quite good development. And there is still potential to improve there.

Thank you very much. Just one quick follow-up, similar to Andrew, so on fiber.

So you outlined all these areas where you'll be -- or have been upgrading fiber. Can I just ask from your perspective?

Is it still the case that customers for the most part, are paying for these connections? Or is there a bit more competition in the market that you're not kind of immediately recouping the CapEx into new areas because your ultimate competition is trying to do this for free currently?

Well, we have a bit different competitive situation in different regions in Finland and somewhere the competitive situation is such that the kind of the installation fees are lower. And in the other areas, it's a different thing.

And going forward, of course, once you have started with the business in some area, and then you get add-on customers, there's quite -- it is quite sure that then the later coming customers, they pay installation fees.

Thank you very much.

You're all welcome.

Hello. Good morning.

Thank you for taking my questions. And also I want to start with congratulations to Veli-Matti and hope you all the best of Elisa.

Thank you very much for your contributions over the years. And my -- I have two questions and one quick fact check.

And first question is, I wonder if you can talk about the competition you see in Finland, B2B market. And also, when I look at the ARPU development, I think B2B ARPU is flat year-on-year this quarter, and your competitors also reported like plus 1%.

And I just wanted to -- just to check what you see in the B2B market? And why is that the 5G monetization is not as strong as the consumer market?

And the second question -- sorry to go back on the IDS. I think in your Capital Markets Day, you mentioned that you expect IDS to be breakeven by 2024 and 2025.

And part of the reason is you think some of the investments that you made in the past can get lifted. I just wanted to check if that is still the case?

And how should we think about investments that you're going to make in IDS going forward? And finally, is for Jari, I think you mentioned that there could be some one-off impact of €5 million in Q1 EBITDA.

I just want to check if that's the case and what is related to? Thank you.

All right. Thank you for your comments and questions.

First about the competition in B2B. Yes, for, I guess, very well-known reasons for all of you.

We have one competitor who time-to-time is using price to win customers and that impacts, in some instances in the corporate market in terms of then for the ARPU. And like we have said earlier, we are not compromising our market share there.

We are also responding time-to-time to these situations, because it is the easiest thing for us to keep the customers. So we have other competitive factors, which make customers to stay or for great capability for us to win the customers among others, our higher quality clearly.

So there is sometimes a bit more headwind due to the price competition in the corporate side. But still, we have seen also a lot of rational behavior by competitors in that market.

But there is no big change. It is those known reasons why we have one competitor who place that every now and then.

IDS, yes, we see that the breakeven target is still to have until the end of 2025, the breakeven for IDS. And that's the kind of target in that, Jari, please?

Yes, the one-off in Q1 was €5 million approximately, and that is current estimate and relating to productivity improvement measures that we are doing. So also including reducing number of employees, costs relating to that.

Perfect. Thank you very much.

Thank you. Hi, all.

And thanks for taking my questions. Congratulations, Veli-Matti on a successful career.

I haven't covered you for too long, but I recognize the impressive work that you have achieved during your tenure. So just on the question, my question would be on the dividend and any potential comments on what the Board sees.

So just cash flow, including lease payments, not covering the dividend in 2023. So just how you think about the balance between dividend and deleverage going forward?

And if you're keen on keeping the sort of 5% dividend growth pace, even if lacking dividend coverage from free cash flow given the comfortable leverage? Thank you.

Okay. Thank you for your comments and questions.

I will just briefly start and then I'll let Jari to complement my response. For the first -- again, the distribution policy, 80% to 100% of net result is intact.

There's no question about that. Our distributable equity and all of that, we have no -- very comfortable on that.

And now giving the outlook of same level or slightly higher. And with the -- where we have been able to move forward with our result in the past years, that should kind of create quite the same outlook for the dividend the future as we have had earlier.

But Jari, if you want to elaborate a bit.

Sure. So on top of that, of course, we have low net debt currently in the middle of the range, target range, 1.5 to 2.

So a very solid balance sheet and -- and comparable cash flow from the last year is pretty much equal to dividend. So it's covered by cash flow

Perfect. Understood.

Thank you very much.

You’re welcome.

Hi, there. Thanks for taking my question.

I just wanted to ask a bit more around the CapEx bucket. Obviously, you’ve done -- you've got slightly high guidance range this year, and you're mentioning 5G and energy storage and it just feels like the latter would not be a one-year effect, so it feels like this continues for a few more years, if you've got any comments on that, that would be useful.

And then just a second one on the Finnish consumer. I think you kind of mentioned that the macro there is maybe a bit more negative and maybe the consumers are under pressure.

So do you think this impacts your ability to increase prices this year at all? Maybe we see a step down in your price increases relative to 2023?

Thank you very much

All right. Thank you.

Yes, for the CapEx, as discussed earlier, it is just for this year, when we see that there might be additional investment opportunity viably -- financially viably that interest us to go ahead, which would make us to go beyond 12%. And those are the acceleration in 5G due to the released 3G frequencies and the other opportunity might be in the distributed energy storage because that business is really starting has started really well.

So that's it. And the medium-term target of max 12% is intact.

For the Finnish consumer market and possibilities to do price increases, we have done, as we have said over the years, cohort-by-cohort basis, some price increases, of course, we have provided more value also at the same time, I believe that is kind of continuing. We are generating additional values to the customers, and then we are making some fine-tuning cohort-by-cohort basis.

The other price increases remains to be seen what takes place in the market.

That's great. Thanks very much.

Thank you.

Thanks for taking the questions. And if I can also echo the comments from others to Veli-Matti to say, thank you and congratulations for your service over the many years.

Just following up on the CapEx point. Just hoping you can maybe elaborate a little bit, how do you think about the payback from these investments?

Do you think it's something which could lead to an acceleration in either revenue or EBITDA growth for both within the next couple of years? Or should we more think about it as just sort of sustaining the current run rate?

Thank you.

Okay. Thank you for your comments and also the question.

Well, of course, when we think about the 5G investments, we have been succeeding with the mobile service revenue growth. So of course, we are looking at being able to accelerate that maybe with these investments.

Then the other thing is the distributed energy storage we have already sold energy from the batteries last year. And of course, by increasing the amount of batteries if we see that a kind of good from the timing point of view and many other aspects.

Are there if we see that, of course, then we can accelerate the increase of revenue from that source as well.

Thanks and best of luck.

Hi. Thank you very much for the opportunity.

I have got two questions, please. The first one was just on fiber.

We're having a little bit more from Global Connect where they are rolling out fiber a bit more aggressively in Finland now. And I was just wondering how you saw that development especially in light of the acquisition you've made as well -- in May 2023.

So that was the first question. The second question was just kind of going back on the CapEx for the distributed energy project.

Just want to clarify if this is -- if this project goes on into 2025, would that mean that your CapEx range stays at 12% to 13% for 2025 as well? Or are they compensating things in 2025 that we'll see CapEx go back to a maximum plus percent even if this project is running into 2025?

Thank you.

All right. It was a bit hard to hear exactly what you asked, but I tried to respond -- ask again if I didn't respond to your question.

In regards to fiber and some of our competitors, you mentioned one in the question – well the market is a bit lively, having a bit more competitors than we traditionally have. That's okay.

It's creating a bit buzz in the market, and it's also good for us. I have no comments on our competitors' activities.

We have our strong position as the biggest fiber infrastructure in Finland. Overall, we have been very well taking our share of the market for fiber.

We are focusing on our own fixed network regions where we have fixed network, and we have very strong customer preference to buy from Elisa. So we are kind of moving ahead with strong plans and the outcome, what we reached this year has been really good.

In terms of the CapEx and this, like I said, this is for 2024, and our CapEx guidance is intact for going forward, max 12%.

Yes. Sorry, just a follow-up.

I mean, the medium-term, obviously, that is clear that, that is a max 12%. I'm just wondering if this project on the extends into 2025, would that require the CapEx to be at 12% to 13% even in 2025 before it steps down or is that not going to be the case?

We don't see that taking place at the moment.

Okay. Thank you.

Thank you for the questions. Just to check if anyone from the audience has to one question.

No. Then I'll give Veli-Matti some closing words, please.

All right. In the end, I would like to thank all of you very much for the follow-up of Elisa.

It's important for us that we have strong follow-up for us and like you have done over the years. And of course, all of your analysis you are doing for us, it's really helpful, of course, for the investors and for the market.

But also, it is important for us and it is, of course, inspiring for us. And of course, we have had over the years, excellent dialogue with all of you.

So I'm really thankful for that. And I'm leaving Elisa now in a very good spirit and mood.

And -- because Elisa is in a good position. We have great people at Elisa and the very good results that we have got over the years is, of course, because we have very good people at Elisa.

We have great exciting opportunities to continue to grow the revenue. There are many exciting opportunities.

And our unique platform, which we call Elisa Business System, is really giving us opportunity and Elisa opportunity to continuously improve and also innovate years to come. So I'm leaving really good mood Elisa.

And once again, thank you all.