Elisa Stock

Hello, everyone, and welcome to Elisa's Q2 2026 analyst conference call. I'm Vesa Sahivirta, Head of Investor Relations. And here we have a very familiar team, CEO, Topi Manner; and CFO, Kristian Pullola.

We also follow the normal practice, and we start with the presentation followed by the Q&A. Topi will go through the highlights of the report and Kristian will elaborate more on financials. And now we are ready to start. So I give word to Topi. Please go ahead.

Thank you, Vesa, and welcome, everybody, to this Elisa Q2 earnings call. let's go right down to the main points of our Q2. During Q2, revenue was effectively flat and comparable EBITDA was up by 1.4%, especially driven by successful execution of cost measures.

We were still way down by last year's competition in terms of mobile service revenue, but that was partly offset by good progress in fixed service revenue, which grew 2.2%. The overall telecom service revenue decreased 0.7%. International Software Services, the comparable organic revenue increased by 0.6%. This was largely due to the fact that customers were cautious in proceeding in their projects, given the geopolitical uncertainties and higher energy prices.

And with that, we saw some license deals being postponed further to H2. What you should also note that in IndustrIQ, we sold earlier a small business in Brazil impacting the comparable numbers. In comparable cash flow, the comparison quarter was exceptionally strong. And during this quarter, the cash flow was solid at EUR 71 million, decreasing due to higher financial expenses and less favorable working capital development.

And we were happy to note that the postpaid churn normalized during the quarter, further decreasing from Q1 levels and landed at 16.7%, in line with our long-term average for Q2 churn. In mobile postpaid subscriptions, we increased with 21,000 of which 15,000 were -- 15,000 subs were related to IoT and M2M. With these numbers, our market share in terms of mobile subs remained stable during third quarter as we wanted it to be.

The fixed broadband subscription base is increasing nicely in this quarter with 3,500 subscriptions, and we do experience good demand, improving demand in terms of fiber business. As mentioned, our cost measures were successful during the quarter indicating also clearly that our transformation program is proceeding according to plan.

At the start of the year, we moved to quarterly dividend and following that, the Board of Directors now decided for the second installment of the dividend, namely EUR 0.60 and that will be paid to shareholders on the 29th of July. Looking into the revenue development, the revenue landed at EUR 551 million. As stated mobile services weighed down given the last year's competition also divestment of EpicTV is something to note in this one. And during the quarter, we also ramped down and discontinued our public switched telephone network impacting the revenue a bit.

Fixed services, as stated and equipment sales were supporting the revenue growth during the quarter. We're happy to note that EBITDA margin improved during the quarter to 36.5% and the whole EBITDA landed at EUR 201 million. This was driven by efficiency measures, the transformation program as stated and then in part also by reduced sales and marketing cost.

In terms of telecom service revenue, I already mentioned that we were weighed down by last year's completion in terms of mobile service revenue. It is important to note, though, that the mobile service revenue started to grow on quarterly basis comparing with Q1. It is also noteworthy that in Q2 last year, we started the rollout of the so-called security features, hard bundled with our mobile subs. And we started that rollout with a large cohort of back book price changes, and that was supporting the Q2 '25 comparison quarter in terms of mobile service revenue.

In line with the quarterly growth in the ARPU started to increase a bit during the quarter and landed at EUR 24. When we look at our mobile KPIs now, the key message is that they returned to normalized levels. In Q2 this year, the new sales prices actually continued to increase from Q1 and exceeded the level of Q2 last year. This was a positive development on the market. However, we need to note that on the market, the share of fixed-term mobile contracts has increased significantly, and that means that there is a longer time lag than previously in terms of the new sales prices moving to book.

This means that, for example, if we acquire today a customer from our competitor, that customer might be moving into our book with a delay of 3 to 4 months, depending on when the customer's fixed-term contract ends with the previous service provider. This also means that the new sales prices impact to service revenue will come in with a delay, and it will be more visible in Q4 in particular.

Churn, as stated, decreased from Q1 levels and landed at 16.7%, which is a tad below our 10-year average of churn, which is 16.9%. Also the mobile sales and marketing costs, including the voucher costs have been normalizing during the quarter, and there was a bit of a decrease from Q1 levels. So all in all, good to see normalized levels in the mobile business in the forward-looking indicators. And in the past, with these levels, we have been able to deliver solid growth.

And as stated, that growth will follow with the time lag, assuming that the market stays on these normalized levels. When we look at our business segment by segment, in consumer business, the revenue was impacted by the divestment and the mentioned phenomena in terms of mobile business, it was good to see support coming from fixed services and equipment sales.

And then the cost measures were successful in consumer business and the segment EBITDA improved with 2.1% EBITDA margin hitting 43%. In corporate customers, overall, a very solid quarter. Revenue weighed down a bit by equipment sales and also the discontinuation of the network supported by fixed services and in digital services and in particular, by high-margin hybrid cloud services and data services, which was encouraging to see.

The cost management was successful in this segment and EBITDA improved with a very solid 4.2% for that segment. In international software services, in turn, a more challenging quarter. Comparable revenue growth was 0.6%. And Here, we need to remember that Q2 is seasonally typically the weakest in Elisa industry business and overall in software industry. We did see some license deals being postponed to H2 during the quarter. However, it is important to note that we did not lose any deals. Nevertheless, with the new CEO, [indiscernible], we will be starting now specific measures to improve the profitability of Elisa IndustrIQ business, looking into sales, looking into boosting revenue as well as capturing synergies on the cost cost side of things.

In Estonia, in Estonian market, we saw solid progress, revenue increasing 3% on the back of mobile and fixed services also some support from equipment sales. EBITDA increased by 13%, driven by the mentioned service revenue growth and then also an accounting alignment internally in Elisa. So good work, solid progress in Estonia. We continue to be focused on implementing our strategy and now especially in terms of 5G and fiber as stated in 5G and mobile services, we see normalized mobile indicators, improving the outlook. And with fiber business, we are seeing good organic demand in fiber to the home as well as fiber to the building.

And then as a new category of fiber business the data center connectivity comes in offering longer-term revenue support. I will come back to that in a minute. In international software services, as stated, we will be starting specific measures to boost the revenue, take home synergies to boost profitability. In simplicity and productivity, the cost measures have been successful transformation program is proceeding according to the plan. So we will be staying focused to implementing our initiatives related to all of these focus areas. In mobile business, 5G penetration grew during this quarter, more than normally during the quarter. This was on the back of a focused sales activity. So we should not expect this 5G penetration to increase at this rate on quarters to come.

As stated, in fiber business, we are seeing some good momentum. The fiber subscription base continues to grow. At the beginning of July, we acquired in Lounea area, in Finland, a fiber network provider with some 8,000 customers, a bolt-on acquisition in that space. And then related to the fiber to the building, we announced a customer win, a partner win from DNA, the largest rental housing company, [ Lumia ] plc having 4,000 apartments in Finland chose us as their fiber to the building provider. So good to see that progress in the fiber business.

Related to the overall fixed services during the quarter, we ramped down successfully our PSTN network. That network has been serving as well for 140 years. And now customers have been moving to new technologies. For our fixed service business, this also means that now the drag of decreasing PSTN revenue will cease to exist. And with that, we will be having a clean sheet for fixed service revenue growth going forward. This quarter marks the start of our large-scale data center connectivity business.

During the quarter, we signed first large-scale data center connectivity deals. And when we talk about large-scale data centers, we talk about newly constructed above 100-megawatt data centers. On the overall, in Finland, the data center market is growing. We see more and more projects materializing and the ultimate size of the market will depend on many variables.

One of them is the overall AI super cycle development and the investments of especially the hyperscalers, electricity availability and electricity costs will be impacting the investment levels and so will the regulatory environment. But it is very clear that Finland is an attractive place for data center operators. We have an optimal climate seismically stable land.

One of the most reliable and best electricity grades in the world. low electricity prices and very developed telecom infrastructure. And we, as Elisa, we have clear coeditive advantages in this market. We have a strongest and widest backbone network in Finland and to and from Finland. We are the market leader with excellent capabilities to build fiber connections on time. And timely delivery is really important for the data center operators. And then, of course, we also have a strong track record in operating networks efficiently and reliably. So clear strengths on this category of business.

And then when we look at the data center connectivity business characteristics, the way that business is emerging, as stated, the market is emerging, but it holds significant future potential for us. At the same time, it is important to note that we are focusing on data center connectivity business, meaning the fiber connections to the data center, potentially supplemented by optics in some cases. And that means that, that connectivity bit is only a small part of the overall data center investments that the data center operators are looking at.

Based on the deals that we have now signed and based on the deals that we are now in discussions of, we see attractive capital returns. And importantly, we see attractive cash flow characteristics. We think that this will represent a notable positive EPS impact to Elisa over time. But it is important to understand that this is a long-term business. When we enter into a deal, the construction periods vary, smaller deals, might involve a construction period of some months, and the larger deals include a construction period up to 24 months. So we're a long-term business in nature.

The CapEx needs that will arise from these deals will be handled outside of our 12% CapEx to sales envelope. But let me reemphasize that what we see is that the cash flow characteristics of the business are attractive. Going forward, we do not plan to disclose individual deals in this category of business. But I stated in emerging business opportunity that has now reached an important milestone with first large-scale data center connectivity deals being signed during the quarter.

Looking into other aspects of our business. In Home Services, during the quarter, we reached a new agreement with MTV, a Finnish commercial TV company after lengthy negotiations, which also included a blackout period for our customers. Nevertheless, it's now good to see that this agreement is in place.

We will be deepening the collaboration with MTV over time, also developing our offering to customers together with MTV. When we go into the corporate space, we clearly see an increased need for security solutions. During the quarter, we entered into a pilot agreement with Finnish Potergard and a drone company called Sensor Fusion. So testing a drone monitoring and drone charming solution, which is an important and intriguing entry to mission-critical defense business related to drones.

As stated, in international software business in Elisa IndustrIQ, the revenue and profitability was below our expectations due to the delays that we saw on the market. It is important to note that the order intake developed positively. And the order backlog as such, was strengthened. In this part of the business going forward, during the -- this calendar year, we now expect to see revenue growth in the range of 5% to 10%.

And as mentioned, we will be doing these specific measures to improve profitability and secure improving profitability from last year's levels. We also had a good customer win during the quarter in Spain, [indiscernible], big telco chose our software solutions and then that demonstrates the quality and the competitiveness of the solutions that we are having in the telco space.

In terms of sustainability, Time Magazine and Statista once again selected us to the list of 100 most sustainable companies in the world. This time around, we ended up on the 61st place, and this was indeed third time in a row demonstrating our long-term commitment to sustainability work. And then when we go into outlook and guidance, our guidance for this year remains unchanged. So revenue, we expect to be at the same level or slightly higher than in '25. And comparable EBITDA, we expect to be within the range of EUR 815 million to EUR 845 million, the midpoint there being EUR 830 million.

In terms of assumptions related to the guidance, we now expect the telecom service revenue to grow within the range of 0% to 2%. And please note that this is related to the outlook for calendar year of EUR 26 million. We do see the mobile indicators normalizing. And with those indicators in the past, we have been delivering solid mobile service revenue growth but it comes in with a delay being especially visible in Q4. And the same postponement phenomenon is visible in Elisa IndustrIQ.

At the same time, the totality of this means that our cost measures are progressing well. And then what is noteworthy also is that the data center connectivity opportunity will offer long-term support for the telecom service revenue development.

So with that, I will hand over to Kristian to cover the rest of Q2. Thank you.

Thank you, Topi, and good day also from my behalf. In Q2, group revenue was essentially flat year-on-year at EUR 551 million. Within that, we saw expected mix effects. Mobile services, the EpicTV divestment, consumer digital services as well as the traditional fixed PSTN continue to weigh on the top line, while fixed services, equipment sales and energy spare services supported revenue. .

Despite the slightly grind in revenue, comparable EBIT increased by EUR 3 million to EUR 201 million and the EBITDA margin improved to 36.5% from the 35.8% in last year. The main driver here was really the operating cost savings, which came both from the ongoing transformation program as well as from disciplined cost controls more broadly.

Comparable EPS increased from EUR 0.59 -- to EUR 0.59 from EUR 0.57. And all in all, we delivered solid profitability and better EBITDA margins even with the slight revenue decline. When it comes to the second half development, we did see positive development in the global -- in the mobile indicators in Q2, as Topi discussed. However, as said, the financial impact will be coming in with a lag and will be especially visible only in Q4.

This will have an impact on the normal seasonality that we have seen over the years, where Q3 EBITDA has been stronger than Q4. This is not going to be expected this year. Q4 is expected to be stronger this year. CapEx for the quarter was EUR 72 million, down from EUR 76 million last year. the allocation was very consistent with our strategy, main investment areas, remaining 5G coverage expansion, fiber build-out and IT systems that support simplification, customer experience and productivity.

Some part of the fiber CapEx was implemented through the JV that we established last year. You might recall from Q1 that we emphasized strict CapEx discipline and focus on technology leadership. That approach continues. We are investing where we see a clear long-term value and attractive returns while avoiding discretionary and lower spend, especially lowering CapEx for older technologies and old systems.

All in all, we are maintaining disciplined investment levels while funding infrastructure and IT that underpin the future growth. Comparable cash flow in Q2 was solid at EUR 71 million, down from an exceptionally strong EUR 130 million in the prior year quarter, which represents a 37% decline. There are 3 main drivers behind this.

First, lower CapEx compared to last year was a positive for cash flow. Second, higher paid interest costs weighed on cash flow reflecting both higher interest rate environment as well as the fact that we, this year paid a larger portion of the whole year interest costs in Q2. And then thirdly, and most importantly, net working capital development was less favorable than in Q2 '25. And that quarter benefited from very strong positive net working capital movements, especially on payables.

In Q1, we highlighted that net working capital had developed positively for 5 consecutive quarters. In Q2, we saw flat development. We continue to focus on working capital efficiency and managing interest costs to support cash flow in the second half and beyond. All in all, solid cash conversion in a tougher comparison quarter with room to improve in working capital and a normalized cash interest cash interest impact going forward.

Our capital structure or our capital structure remains efficient and clearly within our target ranges. Net debt at the end of the quarter was slightly down from the year-end. Net debt to comparable EBITDA was at 1.8x, which is well inside our target range of 1.5 to 2x. Equity ratio was 39.1% above our minimum target of 35%. We have a balanced maturity profile with bonds, loans and undrawn revolving credit facilities.

As indicated earlier this year, we are focusing on proactively refinancing our 27 maturities to maintain cost-efficient and diversified funding. Both S&P and Moody's reconfirmed our strong investment grade ratings during Q2. Return ratios remain at good levels. Return on equity and return on invested capital are both running in the high teens, consistent with our ambition to deliver industry-leading returns through strict CapEx discipline and strong focus on cash flow.

All in all, Elisa's balance sheet is strong. Our leverage is comfortably within targets, and we are well positioned to continue investing in growth, paying dividends and maintaining solid returns to shareholders.

With that, I hand back the call to Vesa for Q&A.

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

I had 2 questions. Apologies. The first one is a little worthy, but just wanted to dig in on your telecom revenue growth visibility. So just check, it looks like it sounds like the downgrade on your guidance for telecom revenue growth this year. Is [indiscernible] seeing a greater degree of these 12-month fixed term contracts that were signed during the second half of 2025. That mean that first half '26 improvement in the market you're seeing just isn't translating to better growth until those fixed term contracts and towards the end of 2026. That's our understanding at least.

So the question is, why weren't you aware of the degree of importance of those 12-month contracts that have been sold during the second half of '25? And how confident are you now that you have a good enough grip on the market dynamics and tariff structures? And if you are now confident, can you tell us if that mobile service revenue growth could come in positively in the third quarter of '26? Or do we have to wait until the fourth quarter? So it's just a question around the visibility that you have on what's going on in the market and your confidence that we now guide to that improvement in the back end of the year.

And then the second question is shorter. It's just on the IFS growth. Are you totally sure that the lower revenue growth you're seeing is not at all structural in terms of headwinds? And is it all macro related? Just wondering if there's a risk here that you're just missing out on some AI-related revenues as your customers reallocate spend towards that, and that's just not being spent with you.

Thank you, Andrew. So if Kristian, can you start with the first one, then I follow with the second.

Yes. So on the TSR. So there has been a bigger lag impact from the competitive environment than what we anticipated and modeled that at the beginning of the year. And that is why we updated this year's outlook for revenue growth there. This is more going to be -- so the positive impact from the market stabilization and the price increases that we have seen will be more visible in Q4 and not as much visible in Q3.

Yes. And to add to that, I think that the market phenomenon in this one has been that on the whole market, all players include it, it seems that the share of fixed term contracts has been increasing quite a bit. And that share with competitors is something that they do not disclose and have not disclosed. So this has been sort of an unknown factor to all players on the market during the year.

And now the empirical evidence points to the share of the fixed-term contracts being clearly increased on the overall market increasing the time lag that we are seeing in this part of business. But eventually, with the normalized levels of mobile indicators, the revenue will follow.

Add to the industry part of the business, whether the revenue slowing down is structural. We are, of course, observing this very, very closely, and we are listening to our customers very, very closely in this one. And we do not see AI-related impacts in this one. We are dealing with mission-critical software for our customers. be that telecom software or be that industrial automation software.

And with that, we have a clear moat in our software business. The delays that we have now experienced with the license revenue clearly related to more practical matters like production customers, projects related to investing in new production facilities being postponed. We do not see deals being lost and that is important to note related to your question.

Can I just a quick follow-up on the kind of surprise on the amount of fixed term contracts, I understand that you don't see the contracts signed by your competitors. But surely, you saw the amount of fixed term contracts that you guys were signing in your commercial offices, et cetera, know what's going on in the market and where the competition is.

So I understand there was a change in market dynamics. But given that there's been some volatility in market dynamics, how confident are you that you have a grip on the tariff structures, et cetera, that are being signed by your competitors now given that so much of the price engagement in Finland is below the counter. Just trying to just gauge that degree of confidence that investors can have in that quarter improvement.

I think that if we go back and look at what has happened in the last 12 months since last summer in the Finnish mobile market, clearly the reman of the share of fixed-term contracts increasing significantly starting from summer last year, has been impacting the way revenue comes in for all players. So that is clear as such.

What we do see now is that the important indicators in mobile business are normalizing, as you saw from our presentation. And therefore, we do have a line of sight to clearly improving MSR going forward. Q4.

The next question comes from Paul Sidney from Berenberg.

I also have 2 questions, please. First one, really following up from Andrew's question on Finnish mobile. You made it clear in the past few quarters that it's not acceptable for you to lose market share. And I just wondered, have you seen competition the competition back off because of this stance over the past few quarters.

Is that why the market environment has improved because you've taken this stance and push back on promotional activity? And do you intend this stance from Elisa to continue going forward? Or would you consider giving the market a bit more room to breeze is the first question.

And then just secondly, I was intrigued by the fiber acquisition that you've in that land, it's obviously very small 8,000 customers. But are you seeing the regional fiber players starting to really struggle given that they really like scale. And if there are opportunities going forward to make more of these bolt-on acquisitions that are obviously very value creating.

Yes. If I start from the fiber part, I think that the fiber regional fiber players are open to discussions related to consolidation, and we see fiber assets at play on the market. We have strict conditions for value creation and for geographical location. But if we see assets on the market that are meeting our strict criteria, then we are willing to do similar bolt-on acquisitions that we did in Lapland in this case.

And then could you please repeat the mobile service question that I'm completely sure that what was your main point related to that.

Yes, sure. You've made it very clear that you're not prepared to lose market share and have back in the second half of last year on the competing that you faced. But I was just wondering, do you think that the improvement we're seeing is because you pushed back? And is that a stance you expect to continue going forward?

Yes. I think that -- I mean, of course, the overall market dynamic is an equation of all the actions that all players are taking on the market. I think that what is worthwhile to note in this regard is that we do not see the mobile virtual network operators having a big impact on the market. So the competitive dynamic has been especially a dynamic with -- between the 3 established players on the market. When it comes to market shares, when you look at the postpaid mobile subs during this quarter, consumer corporate included our market shares were stable. So we are keeping our market shares.

Clearly, the market has returned to normalized levels. At least in our case, we have not seen competitors disclosing their numbers of Q2 yet. But the bottom line is that when we look at our mobile indicators, no matter whether we look at new sales price, whether we look at churn or whether we look at sales and marketing cost, whether we look at the net adds we see normalized levels. And of course, that is very encouraging.

That's great. But can I just have a quick follow-up, please. You mentioned returns when you're talking about acquisitions and clearly, the data center projects are going to make an acceptor return. Have you disclosed or could you give us an idea about what the hurdle rate is for these projects and acquisitions?

So we will make sure that the capital returns are attractive, and cash flow profile is attractive. Nothing more to add there.

SP-4 The next question comes from Ondrej Cabejšek from UBS.

I have also got 2 questions, please, one also on the -- especially mobile service revenues were coming from, I guess, a bit of the opposite angle. So what we know is that last year, the competitive environment started deteriorating in the third quarter then was the worst in fourth quarter. What we also know is that a lot of the people who got on promotions at that time have these promotions for 12 months.

And after 12 months, they should be kind of rolling off of these discounts on to regular pricing. I think previously you expected something like a 3-month lag in terms of the kind of full pricing to ARPU translation due to these contractual issues that you pointed out. Now you seem to be more in line with the peers saying that's going to be a bit longer than that. And I think all of that is clear.

But at the same time, you're flagging that there is an expected improvement in 4Q '26, and this is why I struggle to understand the situation a bit because if the worst promotions were given in 4Q '25. And there is, as you say, something like a 4-month delay in terms of when you sign the contract up until when the pricing is actually effective then shouldn't it mean that 3Q '26 is when things deteriorate further, given the slag, then the impact of those 12-month promotions actually last for a year, and only mid-2027 is when ARPU start to really pick up again as people roll off of these promotions.

So I guess I'm just confused with kind of trying to put all of those pieces of information together, if you can help me, please?

Yes. If we decompose that a bit. First of all, if we look at the price levels of new sales as of now, we are significantly -- on significantly higher levels than we were during the most fierce campaigning in Q3 and Q last year. So there's a big difference. And that, of course, if that moves even partly to the price level of those fixed-term contracts being renewed during the fall of this year, then that will be very supportive of Q4 mobile service revenue.

So that is something that we need to keep in mind. I think that the time lag, especially comes from this onetime effect of our share of fixed term contracts as well as competitor share of fixed-term contracts rapidly increasing during the fall of last year. And that also means that the overall volume of number transfers between competitors on the Finnish market during the first half has been a little lower. And therefore, the weight is smaller in terms of impacting the MSR when it comes to new sales.

I guess what you're saying is that the step down from the promotional activity will be in the base kind of 3Q, but then the underlying trends, which are still the healthy kind of 4G to 5G upsell and so forth will eventually kind of be the higher impact and overall, a positive one, combining those 2 things together starting 4Q.

And then as we progress in 2027, potentially a best-case scenario, you continue to have the positive underlying trends. And as people roll off these kind of 12 months discounts with that for whatever months delayed, there should be a double positive starting kind of say it or like 2Q '27 or something mid-'27. So is that roughly the correct understanding?

Maybe rather than confirming your kind of thinking, maybe the way to think about this is that the lag on transfers is actually longer than the lag on renewals. And that's, in a way, maybe the dynamic to reflect here. And so when it comes to renewing the 1-year contracts that were entered into last year, there will be a similar lag there as there was when we had transfers to us some of which were fit transfers. So they didn't kick in at sales.

They only kicked in when those contracts ended. And that's what is creating this dynamic where we are feeling the headwind now, and there will be a tailwind then going into the second half, especially visible in Q4.

Okay. If I may, a second question. Just on the flow-through of the cost savings, I think on a net -- I think we're seeing that on a growth basis if I kind of break things out, obviously, like in the past 2 quarters, you had high single-digit million savings year-over-year in employee costs. And I guess some underlying cost savings in other areas, including the commercial cost. But the net translation to positive EBITDA growth on a stable supply and is still pretty limited.

So I was just trying to understand if that is primarily the responsibility of the top line in terms of the dilution of these efficiency gains. Or is there something else going on maybe under the hood in terms of reinvestment, et cetera, that we cannot really kind of appreciate from the outside?

Maybe a couple of dynamics. First of all, when we talked about EUR 40 million cost savings, that was across the board, kind of CapEx and OpEx. And clearly, the OpEx is more visible in the in the P&L. Yes, there is an element of reinvestment here also. And the flow-through to EBITDA from those cost savings is impacted by the headwinds that we are seeing from the from the revenue line. So it is, in a way, a mixture of all of the above that you listed. The program is on track.

Most of the savings are in and in that sense, that has been a great help when it comes to being able to grow EBITDA both in Q1 and Q2, even in this revenue environment.

The next question comes from Fredrik Lithell from Handelsbanken.

I have a few small detailed question. The PTSN that you're closing down, do you foresee any further costs relating to that in coming quarters or you have everything behind you now in terms of cost? Or do you have any write-offs or something to do on old equipment would be interesting to hear.

The second question on data centers and your investments. I appreciate you are careful on sort of the return metrics and all that stuff. But can you give us some time line on when you do your CapEx work and when you foresee your positive cash flow to contribute to the group. What's the time lag between those 2.

So on the PSTN, this is now kind of material behind us. So it will not be a drag to our revenue compare anymore in a similar way as it has during the ramp-up period and the material parts of the costs have been booked. And we are now against those kind of provisions, dismantle some of the air cables and so on. So I do think that don't expect us to refer a lot to that anymore as we go forward. When it comes to the data centers, I will not give you much more detail.

I will only repeat what we said earlier that the overall return -- capital returns and the cash flow profile from those deals is attractive. And again, when we say that, we look at both inflows and outflows. Then we made a separate statement that the outflows when it relates to CapEx will be done outside of the 12% CapEx envelope that we have. But the cash flow attractive comment refers to both inflows and outflows.

The next question comes from Artem Beletski from SEB.

I will actually ask one by one source? And maybe the first one, I just wanted to double check comment that was made actually by Kristian earlier at the call. So do you really expect that the EBITDA in Q4 will be higher compared to Q3 this year because I think looking at historical seasonality. So the difference has been opposite roughly by close to EUR 10 million. Q3 always been better. So is this year really so much Q4 loaded in terms of gross outlook.

Good remarks, that is what I said. So that was the intention of the communication. Q4 is, as we see it, given the dynamics this year going to be better than Q3. And in the past, it's been the other way around.

Okay. Very good. And maybe then the second question was relating to some nice first deals what you have done around data centers. And maybe in terms of business opportunity, could you provide could you somehow frame it? So you mentioned about dealers covering at least 100-megawatt capacity data center investments.

So how much of this type of projects could contribute to your revenues? Or what is the business opportunity maybe there are a general phenomenon, what we see on Finnish data center market is that many of these mega projects are actually built over a long period of time and in many phases. So how it works in terms of connectivity CapEx being done? Is everything done basically upfront or those investments also gradual over a longer time period in this big project.

If the overall sort of business dynamics and then Kristian, you can come in with the CapEx timing. So what we do need to acknowledge is that this market related to data centers is emerging. As stated, it holds significant future potential for us. The business is very, very long term of nature. We see long deals on the market up to 15 years of contracts after a construction period.

So the long-term nature of the business really needs to be acknowledged. And therefore, I mean, our bottom line in the communication is that when we frame it, we see attractive capital returns. We see attractive cash flow characteristics. And over time, we see notable EPS support for Elisa. And that is where we are in this one as we will have more deals when we learn more about the market, then suddenly we will be specifying our view in this one. This quarter marks the start of this large-scale contact center connectivity business for us with the first deals being signed.

And I think just on the CapEx profile of each deal, as Topi said, early days. I'm sure every deal will be somewhat different. So we actually don't have enough data points to be able to say what will this typically look like other than, as I said, we think these are deals that are attractive, both from capital returns and cash flow point of view. [Operator Instructions].

The next question comes from Felix Henriksson from Nordea.

I'll use my one question on cost efficiency matters. I think on top of the EUR 40 million savings program, you've also communicated that you see incremental opportunities to improve efficiency relating to AI. So can you sort of provide an update on how that progress is going? And how successfully have you been implementing AI into your operations and hence gain additional potential cost savings revenues.

Kristian can follow on the operations bit. I mean generally related to the AI, I would like to emphasize that the way we look at AI is that we see a growth opportunity. We can leverage AI in digital services, in software business, in connectivity business to generate growth, profitable growth. And then certainly, we will look into all the usual suspects related to improving productivity. Automating processes, looking into AI-assisted coding.

And then we are already a technology front runner globally in network automation, and we are moving forward towards autonomous networks, gradually with the help of sophisticated AI tools. So the long-term picture is that we do see upside in this one.

And I think when it comes to maturity, we are at different maturity levels in different parts of the organization. When it comes to leveraging AI for running the networks efficiently, we are very much mature when it comes to some process areas, it's early days, and we have put in fundamental building blocks to be able to leverage that going forward.

In that sense, I don't think it's that different from what you see in the market in general. I do see that this is a big opportunity that will give Elisa lever over the long term, and we are working on it in a focused manner.

The next question comes from Andreas Joelsson from DNB Carnegie.

Back to these fixed contracts. I would like to know what makes you confident that when these fixed contracts that was taken last year in the sort of competition bonanza, when they acquire how confident are you that, that will not trigger new increased competition and higher churn?

Just understanding because there is little room now for you to be able to reach the more long-term target of revenue growth above 4%. So just trying to understand how you model this going forward?

So as stated, the mobile indicators have normalized already. So when you look at the forward-looking indicators, they have in a notable range on the market already. And when we look at the new sales levels as of now in Q2 and compared to last fall, there is a big difference as one of our investor presentation slides indicates.

This competition [indiscernible], as you referred to last fall was a market phenomenon. So that means that all of the players on the market have a lot of fixed term contracts to renew. So everybody will be busy, first and foremost, taking care of their own customer base. And then I think that when we look at the market now, we see sort of a stable environment in terms of competition dynamics. So that is reassuring related to your question.

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

My question would be on the distributed with MTV. What financial impact should we assume from this? And I'm sort of thinking impacts on future revenues, costs and then customer churn.

The one-word answer would be neutral. So we are happy to have that renewed core with MTV as of now. We'll be deepening our collaboration with them. We will be coming forward with new offerings to customers over time. So that's where we are.

Currently, when you look at the financial impact during the course of this year, and beyond, it will be neutral. We did receive customer feedback during the blackout, I'm sure MTV did as well. But when we look at our churn numbers in our entertainment services and so forth, we do not see a big impact. Neutral is the answer.

The next question comes from Ajay Soni from JPMorgan.

Just a quick one on ISS EBITDA growth. I think as people have mentioned previously, maybe structurally, the double-digit growth is becoming more challenging. Does this make it more difficult to materially step up your EBITDA here when I look at H1 OpEx for ISS, it was up 6% and revenues are lagging this. So I just wanted to understand your outlook here for EBITDA growth in this business. .

What we will need to remember related to the software business that software business with the license income is inherently more volatile than our classic telco business. So that's 1 aspect to keep in mind. Another one is that Q2 typically in software business is seasonally the weakest. So we do see a way forward to improve our EBITDA gradually industry business. And on the back of the bolt-on acquisitions that we have been doing in the past, we do have synergies that we can capture cost synergies that we can capture in this part of the business. So as mentioned, we will be doing specific measures to boost the revenue in industry as well as take home synergies in terms of cost.

The next question comes from Ulrich Rathe from Bernstein.

I want to go back to the data center investments there. These are very big projects for the people building them. So I would assume that they are quite keen to get some help with the financing. Is there anything unusual in the contract structures that you're negotiating in terms of risk sharing, in terms of, I don't know, payment schedules or anything of that.

So that would make the connectivity business in the data center sort of fundamentally different to I don't know, connecting a big building, a new building or anything of that sort. Is there anything that you're faced with in these negotiations that is actually different from the normal connectivity business?

Yes. I would maybe say rather the opposite. And what I mean with that is that the data center investments for the investor and the operator are huge investments. And for those, I'm sure they are having financing discussions with the vendors that provide the majority of the CapEx going in.

The connectivity part is relatively small, but it's super critical for the -- for being able to operate the data center. And because of that, they want a vendor who is reliable who can deliver on time, and thus, our strengths actually come through there. And I think that is also then visible in the kind of asks that we have been seeing when it comes to contract terms and so on.

So I think we are in a good position here because they need us, they see our strengths, and this is still our portion out of the totality is a relatively small portion.

The next question comes from Abhilash Mohapatra from BNP Paribas.

Yes. I had a question around dividends and cash flows, please. I guess if we look at recent years and if you see your comparable cash flow and then sort of strip out positive working capital impact. You've not really covered your dividend payments in recent years.

And this year, again, in H1, you mentioned the working cap headwind. But again, ex working capital also cash flow is basically flat year-on-year if we compare H1 this year versus H1 last year. So cash flow hasn't really grown on an underlying basis. in this context, would just be interested to hear your thoughts on how you think about your dividend growth going forward?

Are you just sort of comfortable sort of not covering dividends with cash flow and continue to link it with earnings per share? Or do you think it's important to have the dividend sort of covered by underlying cash generation.

So again, I think we have a strong focus on driving cash flow. The reason why we have been able to pay somewhat higher dividends than what the earnings would have allowed for is because of the strong cash flow. And I don't see that there is any change in that dynamics. And that's how we continue to manage the business and also generate the ability to continue to pay dividends. So I'm not sure I fully understand where you're coming from with the question.

Just to reconfirm, I mean, our dividend policy is intact, and we see also levers in our disposal to positively impact cash flow.

Okay. And just to clarify, can you maybe give us any color around working capital, please? I mean, last year, it was quite a big positive boost, I think, around EUR 45 million for the full year. which was more than 10% of your final sort of cash flow for last year. This year, we've seen a reversal during Q2. How do you sort of see that evolving through the second half of the year, please, when it comes to working cap?

So first of all, we didn't see a reversal in net working capital during we saw a flat development in Q2. So we didn't get the exceptional benefit that we saw in Q2 last year, but development was still stable. I've talked about this now each quarter that we've done a lot of work on inventories. That's from where the majority of benefits have been coming from.

I do see further opportunities for us to improve on the on both the payables as well as on the receivables side. So in that sense, we'll continue to work on those levers when it comes to the operating cash flow. Then when it comes to releasing capital from the business, that's another story where we are also actively looking at all the levers that we have and that builds the tops answer that we have levers within our control that we can drive better cash and capital performance going forward. And that supports, in a way, the ability to pay dividends.

The next question comes from Max Findlay from Rothschild & Company.

The time today. I wonder my questions regarding ISS. I wonder whether M&A has contributed to the deterioration in organic performance. And if too much M&A has left the division a bit on Wild and on suitable? At the front of my mind are the acquisitions made in 2024, especially the large Sedabta acquisition. .

Any color you can provide on these on the performance of these businesses acquired in 2024 would be really useful as they were quite material to the growth of the division. And would you also be open to further disposals of noncore ISS assets. So I guess the non-telco operations by ISS.

So I mean, when we look at the M&A in general, in ISS and [indiscernible] acquisition in particular. We do not see causality between those deals and the current postponement of deals that is driven by geopolitical and economic uncertainties. So we are happy with the acquisitions, and we are well on our way in terms of integrating them. So that's where we are related to that question.

And then if you -- your latter part of your question was pointing to whether we would be open to bolt-on acquisitions in ISS space going forward, the answer would be. Yes, if we have a clear strategic fit and we see a value creation possibility then we are ready to allocate some capital to bolt-on acquisitions in ISS, but we are clearly in the [indiscernible] category in that space.

And maybe just tackling your question on are we kind of pruning the portfolio? I would say that, that is the mandate of Mikko to see that, okay, it's always optimal. There might be kind of certain elements that don't belong there, and there might be certain needs to do bolt-ons. So it kind of goes both ways, but the kind of the bulk is correct and something for us to leverage in a more synergistic manner going forward.

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

Yes. Thank you, and thank you for all your questions. Unfortunately, we couldn't take more questions during the Q&A session because of the time restrictions here. But now we wish you all a very, very nice some time and until the next event. Thank you. Bye-bye.

Thank you. Bye-bye.

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

Thank you, Vesa, and good day, everybody. Welcome to this Elisa Q1 earnings call. And let's get right down to business and briefly go through the Q1 highlights. During the quarter, our revenue decreased by 1.3%, and this was to a large extent driven by lower equipment sales impacted especially by higher device prices due to the shortages of memory chips worldwide. Telecom service revenue increased by 0.5%, driven by fixed service revenue. The mobile service revenue declined by 0.1% as the full impact of intense campaigning in Q4 was visible in the MSR. International software services revenue increased by 6.9%. During the quarter, however, we sold a small software business in Brazil. Adjusting for this, the comparable organic revenue growth was 7.7% in Elisa Industriq.

Comparable EBITDA on group level increased by 2.2%, especially driven by our cost efficiency measures. Cash flow continued to develop strongly during the quarter and increased by 15.7%. What was notable during the quarter was that the churn decreased to 17.2% from 23% level of Q4. So this 6% decrease -- 6% unit decrease in churn is a bigger decrease than the typical seasonality would be.

Post-paid voice subscriptions decreased by 2,700. And in the fixed broadband subscription base, we experienced strong growth, 14,000 on the back of the strong customer demand that we are seeing on the market. The transformation program, where we are targeting EUR 40 million of cost savings during the calendar year of '26 is progressing well according to the plan, and we will deliver the communicated savings during this year.

So it was indeed a quarter of slower growth, as stated, driven by equipment sales. What impacted the revenue was a small divestment that we made, EpicTV that impacted the revenue with EUR 3 million. However, it did not have any EBITDA impact as such. The biggest increases in revenue came from the international software services and from digital services. EBITDA during the quarter landed at EUR 203 million in accordance with our own expectations. EBITDA margin increased to 37%, partially reflecting the little bit different mix of revenue resulting from the decrease in equipment sales.

In telecom service revenue, as stated, we grew with 0.5%. And there, we did see the full impact of the lower price levels in Q4. The upsells from 4G to 5G, however, continues intact. I will come back to this a little later. And then certainly, in the fiber broadband, we saw growth as described a moment ago. The churn during the quarter was 17.2%, and this is broadly in line with the long-term average churn on the Finnish market. And what is notable is that the churn also decreased to a lower level than it was in Q1 2025.

So then looking into the mobile KPIs in a little bit deeper fashion. It is good to note that our new sales prices in mobile subscriptions on the consumer side of the business returned to Q1 '25 levels in March. So in the upper right-hand corner in the graph, you are seeing the prices of new consumer mobile subscriptions. And what you also see there is that during the year '25, we saw gradual pressure to new sales margins culminating in the campaigning of Q4.

And now we have been seeing the mentioned return to Q1 '25 levels. What is also noteworthy that going forward, there will be a bit of time lag in how the new sales prices turn into mobile service revenue as there are fixed term contracts in the customer base of our competitors. And when we acquire those customers to us, there typically is a time lag of some months before the new prices actually come into effect.

The churn we already discussed in terms of sales and marketing costs. During the Q4 last year, we had EUR 5 million of more sales and marketing costs. And then those campaigning-related costs were decreased during Q1 in line with the churn development. However, the sales and marketing costs are still a tad higher than they were during Q1 '25. But all in all, these metrics are pointing to the right direction. Then briefly going through the business segment by segment. In consumer customers, the revenue continued to be weighed by the competitive situation and the mentioned equipment sales. However, the cost savings measures were effective and EBITDA improved with 1.4%.

Broadly, the same story in corporate customers business. The equipment sales impacted the revenue negatively. So very much the same phenomenon related to equipment sales was seen also on the corporate side of the business. Our traditional fixed network, PSTN will be ramped down at the end of June altogether. And there we are seeing a decreasing number of customers, and that is weighing on revenue a bit. But as stated, the cost savings measures also on the corporate side of the business were successful and the EBITDA grew with 2.1%, in line with the total Elisa number.

International software services, the comparable organic revenue growth was the mentioned 8%. And we took a step forward in terms of profitability during the quarter. The EBITDA grew to EUR 3 million in this business from the EUR 2 million on the same period last year. So we are seeing gradual improvement in the Elisa Industriq profitability, and we expect to continue to see that when we go forward. However, in software business, you will need to remember that there is a little bit different type of seasonality in Elisa Industriq. Q1 and Q4 are typically the strongest, whereas Q2 and Q3 are seasonally softer.

In Estonia, our revenue increased by 3.4% and EBITDA increased by 2%, in line with the rest of Elisa. The churn number remained on the level of previous quarters in Estonia and is 11.7%. We are very focused on implementing our strategy. In the mobile part of the business, you saw the key metrics and the development during the Q1 as stated, there's a bit of time lag in the new sales prices turning into mobile service revenue. But during the latter half of this year, we expect to see improved momentum in mobile in line with the guidance that we have been giving.

In the fiber business, we see strong customer demand, and we are investing in FTTH as well as FTTB. And also the data center connectivity, fiber connectivity for data centers is a tangible business opportunity. And during the course of this year, we would expect to see some deals coming through in this customer category. In international software services, we are continuously improving the profitability, and we do see further potential in that one by accelerating the growth, but also by integrating the multinational business and various business units better together and realizing synergies in the process.

In terms of productivity, we are progressing with our transformation program. And as stated, we will be delivering the targeted cost savings during the course of this year. At the same time, we have taken note of the development of LLMs recently, and that's a clear indication that there is further productivity potential in AI, meaning that we will also continue the AI-driven transformation going forward during the coming years. So these 3 areas, 5G and fiber, international software services and productivity will be the main levers to take us toward the strategy targets that we have communicated.

5G penetration at the end of the year passed 15% -- 50% milestone. And that upsales trend continues to be intact. During the quarter, we reached 53% penetration. And we are especially seeing now big corporates on the corporate side of the business increasing their 5G subscription take-up rate. The average billing increase when we upgrade customers from 4G to 5G continues to be intact. That monthly billing increase is EUR 3. And also in terms of value-added services, we have continued to increase the penetration of security features in our mobile subs -- customer base, by means of new sales. And now the hard bundled security features have been taken up by 700,000 of our consumer customers.

During the quarter, we also launched a new value-added service called Who's Calling service, which enables customers to see the caller ID even if they don't have that recorded in their phone previously. And this has been very well received by our customers. We already by now have 130,000 paying customers for this service. What is also notable related to the Estonian market is that in Ookla Speedtest Awards, we got the award for the best 5G network in Estonia, giving us competitive advantage.

In the fiber business, in the mentioned way, the momentum is strong, and we continue to invest in fiber. In new -- in digital services related to home services, during the quarter, we published a fifth season of Ivalo, which is the most popular of our Elisa Entertainment original series, getting good reviews from customers. On the corporate side of the business, we continue to win new customers. Earlier this week, we announced that we have been winning the cyber and network business of Valmet, a global large Finnish company, also clearly outlining that we have the capability to serve our large corporate clients globally in these areas.

In International Software Services, we continue to have a record high backlog. And the order intake, the bookings during the quarter were strong. We won a number of new customers, big, large global customers in these areas. Some of these are not public references. Some of them are. Boygues Telecom in France is one. And then also for Gridle for our energy optimization business, we won Vantage Towers as a customer in Spain, Vantage Towers being the tower company of Vodafone, the biggest tower company in Europe.

What is also worthwhile to mention that in Elisa Industriq business, we saw some revenue delays from customers in Middle East due to the war in Iran. And that brings me to the outlook and guidance for this year. So the guidance remains unchanged with the range of EBITDA that we have been communicated previously, the CapEx guidance and then the guidance-related assumptions, especially related to the telecom service revenue, where we are indicating a range of 1% to 3% growth during the course of the year. So with that, I will hand over to Kristian. Thank you.

Good. Thank you, Topi, and also welcome on my behalf. In Q1, we saw solid EBITDA performance despite lower revenues. This was helped by our transformation efforts coming through as well as good cost discipline in general. As Topi said, the temporary sales costs were lower on a sequential basis, however, still slightly up year-on-year. Some of the revenue decline that we saw in Q1 related to divestments and ramp-downs of older technologies. The EBITDA impact of these was limited. The same is true for the decline in the equipment sales, which was driven by increased uncertainty as well as higher device prices on the back of especially memory component shortages. One note here, Elisa has somewhat seasonal business when it comes to Q1 versus Q2. Both are positive -- both of these 2 drivers are positive for Q1 and negative for Q2. As Topi said, in Industriq, we typically see strong licensing revenue in Q1 as a result of annual renewals. And in that sense, there's a negative seasonality going into Q2.

Also in TechOps, we do see higher network-related costs in the second quarter when the overall construction activity starts in spring. And for this year, spring has arrived early in Finland, so we will see somewhat more of this impact. Also then maybe a second reminder, just on the yearly dynamics. Last year was solid when it comes to the first half and weaker when it comes to the second half, especially Q4 was weak on the back of the competitive intensity. Thus, we will have a tougher compare in Q1 and Q2 and then kind of easier compares as we work into the second half and especially for Q4.

Then when it comes to CapEx, our strict disciplined continued. Our investments are focused on the areas of improving our technology leadership and which will enable us to continue to upsell both 5G and work on the -- work with the fiber momentum. In addition to this, our investment is going into us renewing our IT infrastructure so that we will be able to drive both simplification as well as productivity longer term. On the cash flow side, the first quarter was a continuation of our strong cash performance. We have now seen 5 consecutive positive quarters of positive development for net working capital. We will continue to drive improvements in cash flow as we move on. But of course, improvements in net working capital is going to be tougher and tougher to achieve when we have optimized the different items. Inventories are already at good levels. As I said last quarter, there's more work to be done on both receivables as well as on the payable side. But overall, a solid quarter from a cash flow development point of view.

As a result of that, our capital structure continues to be solid. Our maturity profile is good. We did not have any material -- we did not have any material transactions during the quarter. And during the remainder of the year, we will start to focus on proactively refinancing the '27 maturities that we have. Then on capital returns, Elisa continues to have industry-leading capital returns. We saw a slight uptick as a result of having somewhat lower cash balances at the end of Q1 compared to the slightly elevated levels that we saw at the end of the year. And we do believe that with cash flow focus and continued strict discipline on CapEx, we will continue to produce industry-leading returns also going forward. With that, Vesa, back to you, and let's start Q&A.

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

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

I had 2 questions. Firstly, on your cost or sales and marketing costs. And then secondly, on your visibility on the mobile service revenue trends through the year. On the sales and marketing costs, you mentioned -- you highlighted they're still above where they were a year ago. Can you explain why that is, given churn is back to average levels and the pricing environment recovered? What's driving that heightened sales and marketing cost competition?

And then secondly, just on the mobile service revenue trends, it sounds like the first quarter is the trough for mobile service revenue growth. But could you just help us understand how we should see that improvement come through in the second quarter and then into the second half? It sounds like it will be a more meaningful improvement into Q3 than into Q2. How that's going to be balanced between volume and ARPU? And how much visibility you have on that given the lags that you mentioned?

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

And then, Andrew, related to your question about MSR. So, starting with the metrics that we just went through. So the new sales prices during the quarter returned to Q1 levels in March. And the churn was notably lower than it was in Q4. And now the churn is in line with our long-term average. When you consider the mechanics of how the new sales prices turn into mobile service revenue, you will need to factor in a time delay of some months, approximately a quarter. This is because mobile operators in this market have fixed-term contracts in their portfolio. And when we win customers from our competitors, we do the deal now, but the mobile's subs actually transforms into our customer base with the agreed pricing a little bit later when the fixed-term contract with the competitor actually ends. So this is a mechanic that will need to be factored in.

And then related to Q2, what is perhaps a useful reminder is that last year, in Q2, we started the rollout of the security features, the hard bundled security features to our mobile subs, supporting the MSR for that particular quarter. There is no similar initiative in the plans for this year. And thus, when you consider mobile service momentum, that momentum should be visible on the latter half of this year, increasing towards the end of the year. And all this boils down to our telecom service revenue guidance where we are guiding a range of 1% to 3% during the course of the year where mobile service revenue is the main contributor.

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

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

The next question comes from Ajay Soni from JPMorgan.

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

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

And then related to your question about MSR and the security features, so if we look at MSR development in Q1 and we decompose that a bit, then clearly, the impact of intense campaigning and the lower prices in Q4 introduced a drag to mobile service revenue during Q1. And that drag was offsetted by the continued upsales from 4G to 5G and the value-added services where the security features are the most important element. And actually, when you look at the upsales isolated. And when you look at the value-added services isolated, they continue to provide the consistent growth that we have been seeing in the past.

Then in terms of security features and the mechanics of security features supporting the MSR during the course of this year. What you need to remember is that when we started the rollout of security features last year, we rolled that out to that part of our customer base, roughly 600,000 customers where the customer contracts were of ongoing nature in force until further notice and the terms and conditions allowed us to change the offering and with that, change the pricing of those customers. Now that back book rollout has largely been completed. And what we are now doing is that we are offering the security features to customers in new sales. And the 100,000 pickup that you saw during the quarter is a result of new sales.

The next question comes from Andreas Joelsson from DNB Carnegie.

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

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

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

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

The next question comes from Fredrik Lithell from Handelsbanken.

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

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

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

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

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

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

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

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

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

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

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

About B2B -- no B2B corporate trends.

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

The next question comes from Abhilash Mohapatra from BNP Paribas.

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

So again, we have nothing new to tell here in addition to the EUR 40 million transformation program that we announced last year. And as I said earlier, which is now kind of up and running in our P&L as savings. In the prepared remarks and in our report today, we do acknowledge that we live in a world where transformation will need to be on the agenda for now, and that's what we're going to do.

Transformation related to AI means both improving your competitiveness and driving revenues through that as well as then driving productivity improvements on a structural as well as on a continuing basis. There is no new program or no new amounts to be announced here. We feel that we need to do this to be able to achieve our strategic targets that we have set for ourselves.

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

The next question comes from Siyi He from Citi.

I have 2, please. The first one is really on your comments earlier about the interest in the market of taking on fiber products. I'm just wondering if you can share with us about your fiber investments, whether you think it could be a good opportunity to organically expand your fiber footprint or you could be looking at some infrastructure opportunities if some of the network is up for sale?

And the second question I have is really on your comments earlier about the -- pushing the upgraded security features into your base. I think last year, when you talk about the rollout I had an impression that you would -- it's possible to roll out throughout the base within 18 to 24 months of the launch. But now I think you're commenting on you are actually adding on new sales. Just wondering whether that could create a particular delay of this 18 to 24 months time frame? And if so, any reason behind that?

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

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

The next question comes from Felix Henriksson from Nordea.

I have 2. One is very simple, just to double check on MSR. Do you think that growth will further decelerate in Q2 versus Q1 before turning better in H2 given the time delay that you discussed as well as the tough comps? And then the second question is relating to the data center connectivity, which you have started to talk about. Could you expand a bit on the opportunity? What could the potential contract structures in this domain look like? And how large deals are we talking about?

Yes. So coming back to the mobile momentum and mobile service revenue. As mentioned earlier in this call, when we look at the new sales prices and how they translate into mobile service revenue, it's good to understand the mechanic and the time delay, when we win customers from our competitors, a meaningful portion of those customers are having fixed-term contracts with their old providers. And that means that even though we do the deal today, those customers might be moving to our customer base 2 months from now, 3 months from now. And that delay needs to be understood. And then as stated in Q2 last year, we started the rollout of the security features, which provided support for MSR for Q2 last year. Putting all of this together, we should be seeing improved mobile momentum during the latter half of this year, in line with the guidance that we have been giving on telecom service revenue.

And then to your question related to data centers, I mean, this market is about to take off in Finland, and we have been seeing data center operators reserving land and quite a bit of that has taken place. We have been also seeing announcements for new data centers starting to come in during the course of this spring. So this leads us to expect that during the course of this year, we will be seeing sizable data center announcements on the market. And we do have a business opportunity in that. We are naturally advantaged in a sense that we have the most extensive backbone network, fiber network in the country, and it's shorter distance to connect to that backbone. And then therefore, we feel that it's realistic for us to get a sizable chunk of that data center connectivity market going forward. It is an emerging market. During the course of this year, we will be seeing most likely deal announcements and then the revenue starts to come in, in '27 and onwards.

The next question comes from Paul Sidney from Berenberg.

Just 2 questions. Just coming back to Finnish mobile, price rises on new offers in Q1. I was just wondering, was this a deliberate action from Elisa to raise prices? Or did pricing just follow the market? Just wondering your previous comments that you did not respond to some promotions over the past few months. I'm just wondering, are you trying to lead the market as a rational incumbent? Or was it the MNO's pulling back in the quarter?

And then just secondly, on cash flow, comparable cash flow is a clear focus for you, but we don't have cash flow guidance. So just 2 parts to this question. Can you clarify if free cash flow is expected to grow over the next couple of years? And secondly, how important is cash flow in assessing the success of the business? Is it as important to you as revenue growth, EBITDA, ROCE, all these other sort of financial KPIs?

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

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

The next question comes from Ulrich Rathe from Bernstein.

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

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

The next question comes from Ondrej Cabejšek from UBS.

Two questions from me as well, please. The first one, apologies, I may have misheard on your back book, but I wanted to -- on the back book comments that you made, but I wanted to basically understand if now that the market seems to be stabilizing and the macro situation in Finland seems to be also improving. Are you again planning to kind of put in effect some kind of back book price rises the same way and the same kind of quantum on the -- that you did in 2Q '25, I believe it was around 400,000 customers that you raised prices for. Is there something similar plan for 2Q '26 because I believe that was the kind of assumption going forward? That's the first question.

And second question, if I may, on the promotions that have been kind of dragging effective pricing down, are we correct to assume that most of these people or subscribers are locked in for 12 months. And so as they come out of the heavily kind of promoted pricing, I guess, around 2H '25, the assumption would be that they get back to some kind of normal pricing levels? Or what do you expect there as they come out of contract?

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

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

No such plans.

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

I have also 2 questions. Still wanted to get a bit more color on the situation at ISS. I think you mentioned some delivery headwinds from the geopolitical turmoil in Q1. Are you anticipating more headwinds going into Q2? And any comments from sort of order intake during the recent months? And then secondly, you booked EUR 4 million of one-off costs in Q1, where this related to the EUR 40 million savings program? And do you still see more coming during later of this year?

Yes. Related to Industriq, we did see strong bookings in Q1 and then quite happy with that. And then related to the war in Iran and the Middle East situation, we saw some revenue delays in Q1, partially because for customers in the Middle East, some projects were delayed. And with that, the revenue recognition was delayed and then partially because the anticipated sales just was prolonged given the outburst of the war in Iran and the impact to places like Dubai. So those were the short-term impacts that we have seen.

And then generally, the impact of war in Iran, as a business, I think that we are in a fortunate position that the direct impacts of war in Iran to our business are very, very limited. To Industriq, we will need to see what those impacts are. As stated so far, we have been only seeing limited impact to a handful of existing clients and prospective clients in the Middle East.

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

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

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

Yes. So indeed, Mikko Soirola has been appointed as the CEO of Elisa Industriq business. He is a very experienced software leader, having worked in international software space for 20 years. And the better part of last decade, he has been a CEO of successful software businesses. So the job to be done for Mikko is to accelerate growth, to improve the profitability of Elisa Industriq, carry out bolt-on M&A and integrate the M&A and integrate the portfolio of businesses that we have today better to achieve synergies. So it is a new strategic phase that we are entering into in Elisa Industriq.

And then related to the first part of your question, what I was referring to is that the typical seasonality in Elisa Industriq business and in many of the other software businesses for that matter, is that Q2 and then Q3 are sort of seasonally softer than the start of the year and especially Q4. So that is something that is good to keep in mind when understanding the sort of dynamics of the Elisa Industriq business on a stand-alone basis and the impact to Elisa numbers.

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

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

Thank you very much.

Thank you. Bye-bye.

Good morning, everyone, and welcome to Elisa's Fourth Quarter 2025 Conference Call. I'm Vesa Sahivirta, Head of Investor Relations. This is now a purely conference call. We don't have audience today here. So we start with the presentations, and the team is here, CEO, Topi Manner; and now as first time, CFO, Kristian Pullola. And I think we are ready to start.

So I give the word to Topi. So please go ahead.

Thank you, Vesa, and good day, everybody. Welcome to this Q4 Elisa earnings call. And let's get right down to business and go through the Q4 highlights. During Q4, our revenue increased by 1.5%. That was predominantly driven by mobile service revenue growth but also related to growth of revenue in international software services.

Mobile service revenue growth amounted to 2.4% and the telecom service revenue, to 2.2%. And to telecom service revenue, we include both mobile service revenue as well as fixed service revenue. In international software services part of the business, the Q4 total revenue growth was 11.3%. The comparable organic revenue was flat, predominantly driven by projects being postponed to 2026. Importantly, in this part of the business, the full year EBITDA was positive, as we stated at the start of the year. So in that sense, we delivered according to our plans.

Looking at the total company, comparable EBITDA was at the previous year's level despite quite intense competition during Q4, leading to increased temporary sales cost. The amount of those sales costs was EUR 5 million to EUR 6 million during the quarter. Comparable cash flow was very strong during Q4, especially driven by net working capital efficiency. Comparable cash flow grew by 37.6%.

In Finland, postpaid churn was 23%, reflecting also Q4 being seasonally, typically, the highest in terms of churn. But then again, if you look at Q3, Q4 churn in total, that is a reflection of intense competition in mobile services on the market during those quarters. Postpaid subscriptions decreased by some 2,000, and then M2M and IoT subs grew by some 19,000 pieces.

The fixed broadband subscription base increased by 6,000. So we are seeing a gradual pickup in those subscriptions, which is positive. And then importantly, during the quarter, we maintained our market share in consumer postpaid subscriptions in Finland, as we stated in connection to our Q3 report. So in the intense competitive environment, we showed competitiveness by maintaining our market share.

The transformation program that we launched in connection to the Q3 report proceeded well during the remainder of the year. We have been conducting the first phase of that transformation program, leading to reducing 360 jobs in the company. And that means that majority of the cost savings that we are targeting has already come into force from 1st of January onwards. So we are well on our way of delivering according to the plan and realizing EUR 40 million of cost savings on the back of the transformation program during the course of 2026.

And then finally, our Board of Directors proposes a dividend of EUR 2.40. And assuming that the AGM so decides, this would be a 12th consecutive year of continuously increasing dividend in Elisa.

Looking into the numbers a little bit more deeply. As stated, revenue landed at EUR 588 million during the quarter, and we saw 1.5% increase in that one. On top of the international software services and mobile services, we also saw equipment sales picking up a bit.

In terms of EBITDA, the EBITDA for the quarter was impacted by the mentioned temporary sales cost. These costs would be related to the competitive situation in the sense that we have been having marketing costs like gift cards, related to our mobile services business, and also investing to promotional sales force, for example, in shopping malls, in fairs and these kinds of events -- also in telemarketing. And when you look at the EBITDA margin on a year-on-year basis, the impact of these temporary sales cost was approximately 1% unit, as stated, amounting to some EUR 5 million to EUR 6 million during the quarter.

Mobile service revenue, 2.4% up with continued 5G upselling. I will come back to that in a minute. And then when we look at the ARPU development, the ARPU grew 3% on a year-on-year basis, also driven by the upsells, but also the value-added services in the form of the security features that we have been introducing to the part of our customer base during the year.

Now when we look at what has happened on the market after Q4, we have seen, in January, some front-book price increases taking place on the market. We were the first mover on that as a market leader. And this leads us to think that our operating environment will gradually improve during the first half of '26.

Going into the segment-specific reporting. Consumer customer segment was impacted by the competition during the quarter. The temporary sales costs that I mentioned were impacting in full the consumer segment, and that is visible in the comparable EBITDA development for the segment as well as the EBITDA margin for the segment. The revenue growth for the segment was 1.9%.

In corporate customers, we saw some quarterly fluctuation in terms of revenue. But if we even that out and especially if we look into EBITDA development, corporate customer segment developed in a stable fashion and the EBITDA margin actually increased with 1% unit on a year-on-year basis to EUR 63 million.

In international software services, the profitability picked up during the quarter and landed at EUR 4 million in terms of EBITDA. On the back of that, as stated, the full year EBITDA for that segment was positive. And then the EBITDA margin for Q4 stand-alone was 9%, reflecting that we are taking steps gradually to improve the profitability of that business as the scale of the business grows.

Just shortly looking into Estonia. In Estonia, during the quarter, the revenue increased by 3%. In EBITDA, we also saw some quarterly fluctuation in EBITDA that was largely flat in Estonia, but then especially looking into the full year development, in Estonia, EBITDA increased by 5%, so above the company average of Elisa. And therefore, we can conclude that the market was performing well, and job well done in Estonia.

And at the same time, in connection to the Q4 results, we are wrapping up the full year of 2025, and it was a record year in terms of comparable EBITDA development and in terms of revenue as well as cash flow. I think that the high point was that we increased our cash flow during the year with 15%. Revenue increased 3%. Comparable EBITDA increased 3.2%. And in the intense competitive environment, we kept our base of mobile subs largely intact.

Postpaid churn during the year was 20.3%, increasing 3.5% in comparison to previous years. This is a reflection of a competitive situation. But at the same time, this is clearly something that we would want to improve for '26. And now as stated, in the first weeks of the year, we have been seeing positive signals on the market related to this.

Our strategy, Faster Profitable Growth, is on track, and we stay the course. We have our 4 growth pillars: 5G and fiber, telecom service revenue in effect; home services; corporate IT and cyber; international software services, enabled by simplicity and productivity, that we are especially tackling with the transformation program that we have been introducing.

When executing the strategy during the year, we will be putting more focus on customer centricity and AI-enabled growth as well as AI-enabled productivity. And steps are being taken on all of those fronts as we speak. So the bottom line being, we stay the course, we focus on implementing the strategy.

During the quarter and at the end of the year, we reached a milestone related to 5G penetration, now hitting the 50% mark in 5G penetration. And with that, we are now disclosing a bit new information to you in this presentation. Previously, we have been discussing about high-speed penetration of mobile services, namely above 200-megabit speeds, including all of our 5G subscriptions, but also some 4G subscriptions.

And now this graph is only about 5G subscriptions. As we can see, the 5G smartphone penetration in the market has been increasing to 74%. And as stated, our 5G subscription penetration now hit the 50% mark at the end of the year. And it is a nice, linear trend over the years from one quarter to another, that we also expect to continue from here onwards.

What is worthwhile to mention is that 5G stand-alone subscriptions are today already a significant part of all of our 5G subscriptions and the number of those subscriptions is growing steadily. We also have the highest customer NPS score for the 5G stand-alone users. And that is basically signifying that we are already quite well into taking next steps in terms of network technology, providing value to our customers and also being able to monetize that value.

In other part of telecom services, in the fiber business, the strong revenue growth continues and then clearly is picking up. We are also transforming to modern technologies in there and ramping down the ADSL technology.

Then just quickly taking a look at the domestic services a little bit from a customer and product perspective. In terms of home services, during the quarter, we launched Elisa Entertainment Sound, bringing home theater quality to our entertainment services. This has been well received by customers, and it is clearly boosting the sales of entertainment services.

Another development on the product front was that we launched licensed home security services, Elisa Kotiturva service, to customers. It is early days for this product, but clearly, the reception from customers has been upbeat.

In corporate IT and cyber part of the business, we launched a new feature to customers, Who's Calling feature. Basically, technologically, we were the first one to be able to crack the code and be able to deliver this information to customers without a separate app being used. So this is a nice feature that the customers seem to appreciate, and the penetration is growing as we speak.

On the same space, we also won European Crime Prevention Award for our scam call prevention solution. In Finland, this has effectively meant that on a yearly basis, we are preventing 3 million scam calls on the market, effectively erasing this category of fraud altogether in the market and protecting vulnerable groups, like elderly people. And this is a nice innovation, having societal significance, also something that -- where we have patents and where we can help other telcos in Europe to do similar kind of crime prevention in their respective markets.

In terms of international services -- software services, as I mentioned, some of our projects during the quarter were postponed to 2026. We did not lose any deals. We did not lose any customers. This is a timing issue. And therefore, at the end of the year, we had a record high backlog in international software services. The new sales was impacted during the year related to the tariff concerns, and that was very similar phenomenon that we have been seeing all across the software industry globally. During Q4, the order intake, however, picked up notably. And Q4 was a record quarter in terms of order intake for the software part of the business.

And on that note, we won a big deal from Ooredoo Group, a big Middle Eastern telco, also reflecting that our product offering and our product strategy is very competitive on the marketplace as we speak. And we have been winning new customers in that telco vertical during the course of '25, which will be supportive of our revenue during '26.

And this brings me to the outlook and guidance for '26. In terms of revenue, our guidance is that we see revenue being at the same level or slightly higher than in 2025. In terms of comparable EBITDA, we are introducing an EBITDA range from EUR 815 million to EUR 845 million, the midpoint there being EUR 830 million. CapEx, 12% of revenue.

And then related to our outlook and guidance, we introduced certain assumptions. And these assumptions are that we expect our economic and operating environment to gradually improve during the year. And then secondly, we expect telecom service revenue growth being in the bracket from 1% to 3%, where mobile service revenue growth is the main part and main driver of telecom service revenue growth. In International Software Services, we expect an organic revenue growth to be above 10%.

So I guess this covers my presentation, and now I will hand over to Kristian before we go to the Q&A.

Okay. Thank you, Topi. As Topi said, the intense competition did negatively impact both growth as well as EBITDA in the quarter. We did especially see temporary sales costs increased during the quarter, partly as a result of increased kickbacks in the form of vouchers, for example. This decreased EBITDA margin by approximately 1 point. I want to highlight that these costs are temporary in nature and can be avoided if the market situation changes. Also an additional note here. When it comes to the costs related to kickbacks, we have a conservative policy as we book these costs upfront, even if, in most cases, the costs relate to fixed-term contracts with a maturity of 1 year.

When it comes to CapEx, the strict discipline continued, and our investments were focused into areas that further improve our technology leadership and allow us to continue to upsell both 5G and fiber. We are also making investments into IT systems to drive simplification and productivity longer term. Our fiber investments did ramp up. And as discussed earlier, these mainly take place through the JV structure we established during the first half of '25. And thus, the investments are visible through the increased IFRS 16 liabilities.

Then into an area which is very important to me, cash flow. We continued strong cash flow momentum in Q4, delivering 38% growth compared to last year. For the full year, cash flow was up 15%, driven by good net working capital development, especially in inventories where the focus have been during the year. Also lower CapEx continued -- contributed positively, while this was also -- this was somewhat offset by higher cash outflows related to financial expenses. Going forward, we will further focus on cash and cash flow, and I do see possible areas of improvement in net working capital, especially in accounts receivable and accounts payable going forward.

Then a few words on capital structure and our returns. Elisa continues to have a solid capital structure, and in the quarter, we took proactive steps to refinance the maturities we have this year. Both the bond transaction as well as the increased loan from the Nordic Investment Bank further improves the maturity profile of our debt.

Elisa continues to have industry-leading returns, both on equity as well as on investments. The proactive financing that we did during Q4 resulted in us having somewhat higher cash balances at the end of the year, which temporarily negatively impacted the return on investments. With the cash flow focus and the continued strict CapEx discipline, we want to continue to produce industry-leading returns also in the future.

And then finally, to shareholder remuneration. The Board proposes to pay an increased dividend of EUR 2.4 for the financial year '25. The proposal is supported by the earnings development, the strong cash flow generation and the solid capital structure of Elisa. The dividend has been and continues to be our main distribution mechanism. By making payments quarterly going forward, we make the dividend even more continuous to our shareholders. Quarterly payments also give us the flexibility from a financing and a liquidity management point of view. We are committed on our dividend policy, and we will continue our competitive shareholder remuneration. And as I said earlier, strong cash flow focus is a key enabler for this also going forward.

With that, Vesa, over to you for Q&A.

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

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

I had just 2 questions. The first was on -- thanks for the great color you've given in the guidance for 2026 around the total service revenue growth. Could you just help us understand the contribution of mobile service revenue growth within that guide? Just you've given us some help on that in the past, especially on the midterm guidance. And maybe just give us a bit more of an insight into how important you see the price rises that you made followed by DNA and Telia last week. How important are they in getting the pricing environment back on track in Finland? Is it quite important or very meaningful? And how have you seen responses to that?

And then just second question, you've guided to medium-term EBITDA growth of 4% CAGR. You obviously fell a little bit short of that last year in 2025 and are guiding to be falling short of that again in 2026, so certainly in the midpoint. That puts a lot of pressure on 2027. What are you thinking about in terms of your ability to actually deliver to that midterm EBITDA growth?

Yes. Thank you, Andrew. If I start from the last one, related to the midterm targets, we are committed to our midterm targets, 4% revenue growth, 4% EBITDA growth. We are targeting that, and these targets are valid. Now in our guidance, we, of course, now need to take the prevailing economic environment and the operating environment into account. And that we have done. But as stated, we will be staying the course with the strategy and targeting the midterm targets by '27.

Then coming back to your first question that was around mobile service revenue. As stated in our guidance assumption, we now speak of telecom service revenue, including mobile service revenue and fixed service revenue. And the range for that is from 1% to 3%. And in that, we see that mobile service revenue will be a main contributor to the telecom service growth. And if you look at the development in Q4, the mobile service revenue development was 2.4% and telecom service revenue development, 2.2%. So they were basically going forward hand by hand.

And then, Andrew, there was a little bit of interruption on the line when you said something about price increases as part of your second question. So could you please repeat that?

What I was trying to understand was just there are some price rises last week, and it's difficult for us to get a sense of scale always in the Finnish market given promotions and below-the-counter pricing, et cetera, et cetera. So I just wondered your sense of how meaningful the price rises and DNA and Telia's response was last week in terms of the progress of the Finnish market, to trying to get back to some sort of rationality given the irrationality of Telia's pricing strategy over the last year or so?

Yes. Thank you for that. As stated, we have seen during the weeks of January positive signals on the market. And as the market leader, we increased some of our price -- front book prices a couple of -- 2 weeks back. And we have been seeing competitors following those moves. It's early days at this point of time. But when we look at the step-ups in 5G and 4G from the levels of experienced in Q4, those increases so far are noteworthy.

The next question comes from Max Findlay from Rothschild.

I just wanted to ask a couple of questions regarding your OpEx. So at Q3, you guided to EUR 20 million of restructuring costs to deliver 450 personnel reductions, but actually delivered EUR 26 million restructuring costs for only 360 personnel reductions. Can you help us understand why restructuring costs were higher than expected and positions reduced lower than expected?

And on that note, you suggest that savings not made up by headcount reductions, would include cost savings initiatives like reduced use of outsourced services and procurement efficiencies. Presumably, you need more savings from these reductions than initially expected given fewer headcount reductions. And I just wondered how you think about the net savings from such measures given you presumably will incur some costs by in-housing these services?

And then finally, can we just get some color on the EUR 12 million in network dismantling and repair costs, which were also excluded from adjusted EBITDA. Are these costs that you've not incurred before?

Yes. So thanks for the question. So first of all, I think when we set out to simplify and rationalize our organization, we had some estimates in mind both in terms of what could be the potential headcount and the related costs. In the end, after also a thorough kind of negotiation with the personnel, we ended up with somewhat different numbers. And it is a somewhat different mix than what we set out. Of course, you always have buffers in also the numbers, particularly on the headcount side. And then on the cost side, yes, they were a bit higher, but still in the same ballpark. So no drama there.

When it comes to the dismantling costs, this is really air cables, related to the copper business that we are now having to take down as the service will be ending and thus, costs that we haven't occurred in the past. And I don't see that we would have similar costs in the future either. And thus, we are dealing with them as a one-off item.

And just to continue on the transformation program. So we introduced it in connection to Q3. And now we are through the first phase of that transformation program, which included the headcount reductions. And we are proceeding well in accordance with our plan, meaning that with the headcount reduction, majority of the targeted cost savings for '26 has already come into force.

But we will continue with the transformation program. And like you mentioned, we will be looking into outsourced services, for example, in the area of IT consulting and software development. We have opportunities there. We will continue our initiative of taking a long and hard look on the procurement of the company, materializing cost savings from there. And then we will be continuously working with AI-driven productivity going forward. The bottom line of all of this being that we are well on our way on delivering on the EUR 40 million target.

The next question comes from Paul Sidney from Berenberg.

I had 2, please. Firstly, you've stated that Elisa wants to maintain your #1 position in Finnish mobile, maintain your postpaid market share. I was just wondering, is this still the plan over 2026 and beyond? And just wondering how you sort of balance that with protecting your back book ARPUs? And just wondering if this volume strategy is the right one, given we're seeing some of your European peers focus more on price increases and not be obsessed about volumes?

And then just as a second question on comparable cash flow. I think you generated EUR 411 million in the year. You've clearly got a very clear focus on free cash flow given your presentation remarks, but you have no targets for '26 and '27. So I was just wondering if you could help us in terms of the direction of free cash flow over the next couple of years? If you could give us a bit more detail around that?

Okay. Thank you. If I could take the first one and then Kristian will continue with the second one. So related to the mobile service business and our strategy on the Finnish market, we are a market leader. We want to maintain that position on the market. So we are committed to keep our market share, like we said in connection to the Q3 and like we delivered during Q4. At the same time, it is very important to note that we are a responsible market leader. We don't want to grow our market share, and we don't want to fuel irrational behavior in the market. And we have been striking that balance during the Q4.

Our strategy in mobile services is a value strategy. We want to provide customers with value. We are a technology leader. We have 50% penetration in 5G. We have a significant portion of our subscriptions already in 5G stand-alone network, and our competitors have not started on 5G stand-alone as of now. And then we have, during the year, brought value-added services to our customers in the form of the security features. And our plan in '25 was that we roll out the security features to some 600,000 customers, and that we did before Q4. And then to start with Q4 rollout, was not planned to play a big role in that.

We continue to do this during '26, building our ARPU, in our business. But the security features rollout, we will be pacing in accordance with the competitive situation on the market. But we definitely see possibilities to bring value to our customers with all the kind of innovations and features like Who's Calling service and others that we have innovated.

And on the cash flow question, you're right, we haven't provided any specific guidance or targets on cash flow. You need to give us a bit time to get back to that topic. But as I said, last year was strong. We had clear measures when it comes to inventories. I think inventories are now on a good level. We need to continue to maintain that level going forward.

We will now look at additional areas and see how much cash conversion can we drive from those net working capital areas. And as we have clarity on that and as -- and if it makes sense, we'll then get back to more clear targets around cash flow. But rest assured, this is an important area of focus for me and the team. This is the enabler for us also, continue to pay dividends to shareholders and thus, we are on it.

The next question comes from Ulrich Rathe from Bernstein.

I have 3 questions, please. The first one is, the guidance is framed around the expectations of an improving trading environment. And you highlighted the ability to raise prices despite intense competition at the beginning of the year. What other reasons do you have to expect an improving trading environment, in particular, vis-a-vis the behavior of the MVNOs, which I understand, are a big part of this intense competitive environment that you're currently experiencing.

My second question is, you highlighted postpaid subscriber momentum and also the business situation in postpaid with 5G. Now in your reporting, you always include M2M, machine-to-machine, as postpaid. Are the comments that you're making about the postpaid situation, including M2M as well, like in the reporting? Or are you looking at the sort of human subscriptions there? The reason I'm asking is that the subscriber base is actually shrinking, excluding M2M, and you're sort of pointing out KPIs there in the commentary that suggests the subscriber base is doing a lot better than that, also on Slide 8, when you're talking about 5G penetration?

And my last question is, the ISS organic growth is guided at 10% versus flat last year. You mentioned deferred projects, which probably give you some visibility into the growth, into -- reaccelerating quite materially. But what was the visibility overall to go from flat to 10% for the year?

If I start from the first one and related to the mobile competition and MVNOs and the operating environment at large, I think that what we need to acknowledge is that MVNOs, of course, have entered the market. There has been 2, Giga Mobiili and [ OMI ]. But the impact of MVNOs on the market has been marginal. They they have not introduced that disruptive price points. So the competition that has been experienced in the market during Q3 and Q4 has been driven by competition between the established players on the market, first and foremost and some of the competitors changing their strategy in that respect. So I think that, that is important to note in terms of the market dynamics.

And as a small nugget of information, what we have sort of observed on the market right now during the weeks of January is that Giga Mobiili, an MVNO that is a subsidiary of Gigantti Electric Stores, has actually clearly become more passive on the market. And Gigantti Stores are sort of reinitiating their collaboration with other players, established players, on the market. So clearly, things have not been easy for the MVNOs on the market so far, which is consistent with the historical evidence on the market when we go years back. So I think that, that is useful to say.

And then related to the economic environment and the operating environment on the overall -- I mean, if we look at our home market economies, the GDP and consumer confidence, in particular, has been sluggish during '25 in Finland and Estonia, driven by many factors, one of them being the geopolitical situation. Now the forecast is that there would be a small improvement in the overall economy during the course of 2026. And as stated, when it comes to the operating environment, otherwise, we have been seeing -- in the market dynamics, we have been seeing positive signals during the first weeks of January.

Then to your second question related to M2M subscriptions. I mean, when we say that our consumer postpaid subscriptions have been stable, and we have been keeping our market share during Q4, that is based on number portability statistics on the market. And M2M subscriptions are not included in that figure. So to use your terminology, this would be human [ postcriptions ] or people-based subscriptions.

And then finally, your question related to the ISS revenue momentum. If I remember correctly, then indeed, the backlog at the end of the year is record high, given some of the projects being postponed. And then during Q4, we saw a record intake and the intake clearly picking up -- the order intake clearly picking up during the quarter. We have a competitive product. We have been winning customer deals in a more sizable category than we have been winning in the past. Ooredoo is one of those examples. And then this makes us optimistic about the revenue prospects during '26.

That's very helpful. Can I just follow up really quick? I realize I'm stressing patience here with 3 questions. But on your first point, we're saying the MVNOs really didn't have an impact. But would you -- how would you frame this? I mean the MNOs have gone into this hyper-competition mode in 3Q and 4Q because the MVNOs came in, I would suspect, but correct me if I'm wrong in this, which then sort of leads to the MVNO impact being a bit muted simply because of this heavy competition of the MNOs. So to sort of simply say, oh, it's the MNOs, it's not the MVNOs that are driving the competition, seems to sort of -- seems to sort of ignore that dynamic a little bit. So I'm just wondering how I should look at that?

I mean, of course, competitive dynamics on the marketplace are driven by a number of factors. And certainly, the MVNOs entering the market sort of play into that equation as well. But our analysis of the situation is that, that has not been the main driver. The main driver has been competition between the established players and the balance between the established players being sort of -- or that equilibrium being rebalanced in the market.

The next question comes from Ajay Soni from JPMorgan.

Mine -- I've got a couple. One is on the EBITDA guidance. So I think comparable EBITDA for '25 is around EUR 810 million. And then if I just kind of take the building blocks of going into next year, you've got around EUR 40 million of cost savings. I think telecom revenue growth adds another EUR 10 million on EBITDA. You probably have some benefit from ISS as well. So that gets us to EUR 50 million to EUR 60 million higher, which is well above your guidance range.

So maybe a nice to ask it would be -- what would need to happen within the market for you to deliver at the low end of your guidance of EUR 815 million for 2026 because it feels like there's quite a few tailwinds which push you above your current guidance range for EBITDA.

And then the second one was just around, you mentioned accelerating fiber network construction. So do you still see this being within your current CapEx guidance of around 12%? Or do you see a need to maybe increase that in the short or medium term?

We'll start from the first one. The question about the lower end, what would need to happen? I think that we would need to see the kind of competition levels that were experienced during Q3 and Q4 to prevail during the course of '26 and even intensify. And then we would need to see in the B2B part of the business, both on the home market as well as in industry, the economic situation not picking up and then new kinds of geopolitical uncertainties materializing in the market, for example, impacting the software business and then on top of that, us not being able to move forward in cost efficiency-related measures in the planned way.

Maybe just an additional note there. So as we said after Q3, the EUR 40 million OpEx savings that we get from the restructuring and the savings that we have executed on, some of that will be invested back to growing the business. So that will not all be kind of visible as a net reduction of OpEx going forward. Some of that will be kind of reallocated to drive faster profitable growth going forward throughout the business. So that's also a good thing to keep in mind.

Then on the fiber investment. So first of all, we are committed to the 12% CapEx target that I stated, and that is part of the guidance also. But then as I said, some of our fiber investment that was ramping up during last year is done through the JV structure that we have established and in that sense, is a more kind of capital-efficient way to ramp up. That's part of the EUR 200 million investment program that we have also talked about in the past. So we'll be dealing with parts of the fiber investment in that sense outside of the 12% target.

The next question comes from Felix Henriksson from Nordea.

I have 2. One is on the dividend. You're now paying out more than 100% of your comparable EPS as opposed to your target of 80% to 100%. Is this something that you consider acceptable going forward? I know it's a Board decision, but any commentary around that would be great. And secondly, can you open up the dynamics in your fixed business for 2022 -- 2026, I mean, in particular, when it comes to the ramp down of the ADSL business and at the same time, growth in the fiber business? Overall, should we expect growth in fixed service revenues for 2026?

So when it comes to dividend, it is very important to note that our dividend policy stays intact. And when you look at the dividend proposal for the AGM now, EUR 2.40, our cash flow covers the dividend in full and more than that. So the focus on cash flow is and will be very important when it comes to the dividend considerations.

And then the second part, do you want to take that you want to take that on the fixed business?

Yes. Felix, could you please remind me, was that about ADSL? Or -- can you...

Yes. Just about the dynamics between ADSL ramp down and growth in fiber, should that overall lead to positive growth in the fixed service revenues for 2026?

Yes. I think that -- I mean, we are sort of seeing sort of a gradually changing momentum in the fixed service business. We are ramping down legacy technologies, PSTN, like we announced during the course of the year, other technologies, like ADSL as well. And at the same time, we are seeing fiber take-up -- picking up in terms of FTTH, FTTB and potentially going forward with new categories, like data center connectivity. So that is something that we are expecting in terms of future development.

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

I have 3 questions. We'll take this one by one. Firstly, coming back to dividend. You've been previously raising dividend by approximately 4% per annum. Now that's been cut to half. You still keep your medium-term targets, which should indicate sort of 4% EBITDA growth and sort of covered dividend even with sort of the earlier increases. So can you explain what's, call it, broken that you're cutting back on the dividend growth?

I think -- so first of all, I think it's fair to say, as Topi said, we are sticking to our targets of 4% plus 4%. Then as was visible during this year, some of the line items below EBITDA are, from a cost point of view, growing faster than EBITDA, which is then reducing the growth of EPS. And that is a dynamic that we need to take into account. Having said that, growing the dividend by EUR 0.05 on the back of strong cash flow is a good performance.

Okay. And then next question on campaigning. I think you said that the additional marketing and campaign costs can be avoided in the future. Why will it be different in the future than in Q4? So what are you thinking here?

So it is very much driven by the competitive situation, of course. So the temporary sales costs that were amounting to EUR 5 million to EUR 6 million during Q4 are related to, for example, gift cards that were used as kickbacks for fixed-term contracts. This is a market phenomenon. So again, we did not fuel that kind of competition on the market. We responded to competition to keep our market share. This is a variable cost that will -- it's basically a derivative of a competitive situation on the market.

And the same goes to additional promotional sales force. During the Q4, we spent money to promotional sales force in shopping malls, in fairs, in telemarketing and so forth. These are typically part-time employees, variable cost and therefore, easily adjustable and yet again, a derivative of a competitive situation.

Okay. And then lastly, I wanted to check what's been happening in January on the pricing front. So was it so that you did raise prices in January and then both competitors have been following these price increases?

By and large, so in big picture. And then as stated, as a market leader, we were the first mover in that one, and we have seen competitors following up. Different price points in different channels, but generally positive signals on the market.

The next question comes from Artem Beletski from SEB.

Topi and Kristian, so I still have 3 to be asked. And the first one is relating to ISS outlook for '26. So you do comment, what comes to revenue development and double-digit growth, what you're anticipating, is it fair to assume that we should see also some further improvement in terms of profitability? Could you provide some color on that front?

Then the second question is relating to PSTN network shutdown during this year. Could you maybe talk about net impact in terms of earnings? So you will be losing some customers, but of course, there should be some savings associated to it.

And the last one is maybe a bit more longer-term question. So how do you see business opportunities relating to data centers? So we have many projects being planned and ongoing in Finland. What is your business opportunity on that front? So those are my questions.

Thank you, Artem. So starting on the first one, related to the ISS business and especially the profitability outlook, on that one. I think that it's very important to note that during '25, amidst all kinds of tariff-related uncertainties that impacted our software customers business, we grew inorganic and organic growth. Together, we grew with more than 20% in terms of revenue. And we delivered on our soft guidance on profitability, so reaching positive EBITDA for the full year of '25. Then if you look at the Q4 ISS EBITDA margin, we reached 9% EBITDA margin. So we have been gradually improving the profitability as the scale of the business grows.

There will be seasonality in ISS business also going forward. Q1 is typically relatively good. Q2 and Q3 are seasonally calmer. And then Q4 is typically the strongest in that business. Adjusting for the seasonality, we expect to see gradually improving profitability in that part of the business as the scale of the business grows and as we get our sales machine humming better and better all the time.

Then if you take the PSTN...

I think on the PSTN, so yes, we still have some net sales headwind to work through. But as Topi said to the earlier question, we still see that, that will be more than offset by the growth that we can achieve in fiber. And then you're right, there will be kind of improvements on the cost side that will then also be coming through. So I think during next year, we'll start to move from a situation -- or during this year, we'll start to move from a situation where this is a headwind to one where we'll start to see benefits.

And then to your question related to the data centers, I think that -- now taking a longer-term perspective on this one. This is a longer-term business opportunity, 5 years onward, 10 years onward and more than that. Finland is a very attractive place for data centers. The cost of electricity is low. The electricity grid is probably of best quality in Europe at least. Climate is cool, stable earth and high-quality infrastructure in terms of telecommunications and other things. So it is clear that data centers -- more and more data centers will be placed in this country. And therefore, we see a longer-term opportunity in this one.

We think that we are -- our business in data centers is related to the data center connectivity in particular, the fiber connectivity from data centers to the world. And we think that we are naturally advantaged in that business because we have the best backbone network in the country, meaning that if you build a mammoth data center on a more rural part of the country, you simply need to build less fiber to connect it to our backbone. And this is certainly an opportunity that we are eyeing on over the long term.

The next question comes from Ondrej Cabejšek from UBS.

Thank you for the presentation, all of the additional color that you are providing today. I also have 3 questions, if I may, and I'll also go one by one, please. So first of all, on the cost-cutting program, the EUR 40 million. So you mentioned that obviously, this is now a bit of a different structure, fewer or less of an impact from the FTE reductions, more of an impact from other things. So is it fair to assume that the impact under this new kind of structure will be more kind of phased into 2027 than before? And is there any reason to believe that because, again, the structure of the -- or the nature of the cost cutting is a bit different that the net impact from this new structure could be less or more than the previous one?

So I think, first of all, maybe it was my unprecise comments that might have triggered your question. And if so, apologies for that. We are on plan when it comes to our EUR 40 million cost reduction program. When we set out and when you set out to do a program like this, you naturally kind of indicate a higher headcount than maybe where you will end up. Our headcount-related costs and the related reduction is on plan. And as a result of that, we are on plan both when it comes to where is it coming from and the pace at which it will come through our P&L. So in that sense, everything is in order there. We don't see that there are kind of mix shift here. And again, there will be no spillage into '27 or anything like that.

Having said that, of course, we then continue to work on other areas, areas that are non-headcount related, to find more efficiencies, to drive longer-term productivity. And that's business as usual, particularly in a market environment like the one that we are operating in currently.

Yes. I think that what Kristian is saying is very important to understand. Majority of the headcount reductions were related to Finland. And in Finland, there is a specific law that at the start of the so-called change negotiations, you need to announce the maximum amount of possible job reductions. That then will be negotiated with the unions. And that means that you cannot, under any circumstance, exceed that number, leading to companies typically announcing a bit higher number than in real life is in their plans. And that is really the case in this situation as well. So the bottom line is that there's no deviation in terms of mix from our plan, and we are well on our way on delivering on the targets of the transformation program.

That's clear. Maybe a clarification. So you mentioned EUR 40 million for this year, the calendar year '26 clear, but surely the run rate of the impact would kind of at least on the non-FTE costs impact positively 2027, right?

I think the impact and the run rate is relatively close to each other. So no need to worry there.

Okay. Okay. Cool. On Estonia, and apologies if you addressed this before and I missed it, but can you explain why EBITDA suddenly from like a -- usual decent growth rate is suddenly negative?

You mean on Q4?

Yes, exactly, yes.

Yes. There's some quarterly fluctuation in that one. I mean, if you look at the full year EBITDA growth on the Estonian market, that was plus 5%. And in Estonia, given the structure, especially of the mobile services, and given the structure of the market, many players on the market have conducted inflationary price increases during the course of the year. And they were a little bit sort of more front-loaded during the year -- conducted during the first part of the year. This dynamic most likely will play out in '26 as well, leading to some quarterly fluctuation in Estonia in terms of EBITDA.

So I think that in the case of EBITDA, instead of looking into -- in the case of Estonia, instead of looking into EBITDA development in Q4, it is more relevant to look at the longer-term development during the full year.

That is helpful color. And final question for me, if I may. You flagged the extra commercial costs in Finland this quarter to the tune of EUR 5 million to EUR 6 million. I was just curious, number one, I believe this is the first time you're flagging these or at least the severity of these. So I was wondering, is that really -- like did 4Q really get so bad that the amount is high enough for you to flag? Or is it just a case of, in the previous quarters, there were other efficiencies that were maybe mitigating this and there was no reason to flag, but these extra costs have been there all along? Or is 4Q -- or was 4Q really that bad?

Q4 was very competitive. I mean Q4 is always seasonally the most active in the market with all kinds of Black Friday campaigning and Christmas campaigning. And Black Friday is not 1 day. It's these days, it's basically the whole of November and then continued with Christmas. So there would be a bit of that sort of seasonal campaigning cost on every year. But what we did see is intense competition Q4 -- during Q4, more intense than we have been experiencing in this market in many, many years.

And just to be clear, when we talk about the EUR 5 million to EUR 6 million or the 1% of EBITDA, that is costs above and beyond what we normally see in the fourth quarter.

Correct.

The next question comes from Abhilash Mohapatra from BNP Paribas.

The first one was just around the dividends. There's some language in the outlook around sort of the use of the word maximum. So you say you'll pay EUR 0.60, and then the Board could pay up to a maximum of EUR 1.80. If you could just sort of clarify that, if there's anything there?

And then related to the dividend, you mentioned sort of improving working capital is a focus. It's going to be a key driver for dividends and sort of covering divids with cash flow. So when you say that, do you mean sort of covering dividends with cash flow, including net working capital contributions? Do you expect that to be a positive contribution going forward? And like would you be able to cover dividends without working capital, is my question.

And then secondly, just around the sort of cybersecurity products bundling, which is presumably a big driver of the service revenue growth. What do you need to see that will make you go ahead and sort of execute this or hold back? What do you need to see changing in the market? Because I suppose the MVNOs are sort of now here. They've been launched, and Telia also seem focused on, I suppose, improving the commercial performance in the market. So what do you need to see changing which will allow you to sort of go ahead and execute these price changes?

So maybe if I start on kind of dividend and cash flow. So first of all, dividend, this is now a quarterly dividend, which will total EUR 2.4, so EUR 0.60 a quarter. That -- it's a technicality that we talk about the EUR 0.60 separate from the EUR 1.80, which is then the 3 next quarterly payments because the AGM will make the decision on the first one, give a mandate to the Board, which will then decide on the 3 next quarterly ones. So for all kind of purposes, this is a EUR 2.4 dividend, which is a EUR 0.05 increase from last year.

Then when it comes to cash flow, will we be able to cover it without working capital improvements? I would say that we will drive strong cash flow overall and working capital is one lever that we have to being able to generate cash flow to continue to fund the dividend. So it's not the only lever. I'm just highlighting it because we do see that there are -- based on the learnings from this year, there are more opportunities for us to go after in other areas of working capital, and we will do that to continue to deliver strong cash flow going forward.

And on your last question related to the rollout of the security features and the progress of that, as stated, our original plan was to cover, during '25, those subscriptions where the terms and conditions allow us to make changes during the tenure, and those subscription types are of ongoing nature. And that part of the clientele has now been addressed. It was largely addressed already by the end of Q3. And now during the course of this year, we will be continuing and especially we'll be continuing with the fixed term contract base of our customers. And the terms and conditions of those contracts allow us to introduce the new offering when the term -- the fixed term for the customer expires. And that we will be doing. We will be basing our sales approach to the competitive dynamics on the market.

Related to your point about MVNOs, the MVNO pricing has not been disruptive. And that is important to note. The price points that they are using are higher, and that creates us some possibility to continue the security feature rollout. At the same time, we do see that on the prevailing economic woes on our home market, there is a price-sensitive end of the market, price-sensitive end of the customers. And certainly, we will need to take that into consideration when we move forward. The bottom line being that we will be pacing the security features rollout to the competitive dynamics, and we will be gradually moving forward with that during the course of '26.

The next question comes from Max Findlay from Rothschild.

I just had a question on mobile. So the midpoint of your mobile growth guidance is 2% despite delivering 3% this year. And as has been referenced several times in this call, your guidance assumes the economic and operating environment improves during the year. Does this imply that the first half of the year, we should expect growth below 2%? And are you factoring in better second half performance? And linked to that, I know we've just discussed facts, but it seems that your kind of value-added services strategy has been less supportive of growth than had hoped. And I was just wondering if this is a fair assessment.

So first of all, we are not giving assumptions related to the mobile service revenue. We -- related to our guidance, our assumption is that telecom service revenue, mobile service revenue and fixed service revenue together will grow in the range of 1% to 3%. So that is an important note. Having said that, we do expect mobile service revenue to be the main driver of telecom service revenue during the year.

And then when it comes to competitive dynamics impacting the security features rollout and the value-added services rollout, during '25, we proceeded according to our plans. And Q4 was planned to be a calm quarter in that respect in any case. Going forward, we will need to take the competitive dynamics into account. And as stated, we will be pacing the rollout in accordance with the competitive dynamics.

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

Thank you for participating in this conference call, and we wish you a nice weekend when it comes. Thank you now and bye-bye.

Thank you very much.

Thank you.

Bye-bye.

Good morning, everyone, and welcome to Elisa's Third Quarter 2025 Analyst Meeting and Conference Call. I'm Vesa Sahivirta, Head of Investor Relations. And here together with me is a very familiar team, CEO, Topi Manner; and now for the last time, CFO, Jari Kinnunen, who will leave us in the end of the year. We have also our incoming CFO, Kristian Pullola here, but now he is in the audience still. Next week, by the way, we are in a roadshow together with Kristian and Jari.

But now going through the agenda of the day and following the normal practice, we start the presentation followed by Q&A. And now I give word to Topi. Please go ahead.

Thank you, Vesa, and good day, everybody here in the room. And those of you who are joining remotely. Welcome to this earnings call also on my behalf. I understand that there are quite many quarterly reports today in the Nordics as well as throughout Europe. So let's jump right into business and try to be relatively condensed with the presentation so that there will be time for Q&A.

In terms of the highlights of the quarter, the revenue of Elisa increased with 4.6%. That was very much driven by the international software services as well as mobile service revenue. The mobile service revenue landed at 3.3%, that was supported very much by the 5G upselling and also the introduction of security features to our mobile plans. And then pointing to other direction was especially the competition in the 4G category of mobile subscriptions.

In international software services, our revenue increased with 53% roughly. The comparable organic growth was 3%, impacted by some project delays related to the tariff-related uncertainties in the global market. EBITDA was up with 3.7%, solid as such. What was very, very good to see is that the comparable cash flow grew with more than 12% from the Q2 level, which was already an all-time high level. This was on the back of the increasing EBITDA, strict CapEx discipline and also the net working capital management.

In Finland, the post-paid churn increased to 22% or a bit more than 22%, indicating that the competition was quite intense during the quarter. Post-paid subscriptions decreased by 20,000 a bit more. Of that, close to 6,000 were related to machine-to-machine and IoT subscriptions. There is some quarterly fluctuation in this one. In Q2, we won quite a bit of post-paid subscriptions, especially in the corporate side of the business. And therefore, it is useful to take a little bit longer perspective on this.

The fixed broadband subscription base increased by close to 5,000 and the fiber-related revenue starts gradually to pick up.

So if we look at our revenue in total, it was indeed supported by the international software services and mobile service revenue. What was also good to see is that the fixed service revenue turned to growth during the quarter. That was impacted by some customer wins in the corporate networks in that side of the business. And then as mentioned, also the fiber-related revenue is starting to pick up and then being visible this quarter.

EBITDA landed at EUR 214 million. Mobile service revenue, as mentioned, was 3.3% in terms of growth, supported by the introduction of the mentioned security features. And that particular change, that offering change has been well received by customers. We have now enrolled something like 600,000 customers to this offering, and that was supporting the MSR growth.

The churn number was especially, as mentioned, impacted by the competition in the 4G category, especially in the low-speed tiers of the 4G category. And we saw some campaigning basically throughout the quarter in this one.

So then looking into the various business areas that we are having. The Consumer business was impacted by the mentioned mobile competition. Revenue up 0.9%, EBITDA up 0.4%. Corporate business on its turn had a strong quarter, revenue increased with 5.6%, especially boosted by the price increases in the corporate side of the mobile business. The mentioned fixed service revenue contributed positively also interconnection and roaming. And EBITDA grew with 3.6% in the Corporate business. So a good quarter for that segment.

In International Software Services, our EBITDA during the quarter improved with EUR 5 million. And if we look at the first 9 months of the year, profitability-wise, we are now effectively in breakeven for the first 9 months in that business in terms of EBITDA. And that is ahead of the fourth quarter that typically is the strongest quarter in software business in terms of revenue and in terms of EBITDA.

Then this morning, we announced that we are introducing a transformation program to accelerate the implementation of our faster profitable growth strategy. So coming back to our strategy, the one that we communicated in our Capital Markets Day in March, simplicity and productivity is very much a fundamental of that strategy. Simplicity and productivity is enabling the growth in our 4 growth pillars, namely 5G & Fiber, Home Services, Corporate IT & Cyber and International Software Services.

We have been working with simplicity and productivity with continuous improvement measures in the past. And now we are accelerating the implementation of that. With the aim to simplify our operations, improve agility and speed of decision-making in the company and with that, enable growth. And at the same time, we are taking swift action to improve the cost competitiveness of our business in the current market environment.

With the transformation program, we are aiming for EUR 40 million of annual cost savings during the calendar year of '26. And with these measures, we ensure that we will achieve our midterm revenue and EBITDA targets, the ones that we set for ourselves in the CMD.

So when we look at that what the transformation program includes, it will be about organizational streamlining, delayering the organization. It will be very much about process simplification, process optimization, also cross-functionally within the organization. It will be also about scrutinizing our outsourced services, most notably the use of IT consultants in the organization, renewing our software development model. And then we are resetting our procurement effectively and finding efficiencies in the procurement space of the company.

In the organizational streamlining, in the changes related to the way of working, we will be utilizing more and more automation and AI, and that is an element that is embedded in the transformation program. But as stated, the bottom line is that this is in line with our communicated strategy, accelerating the implementation of the strategy.

When we look at the mobile business in a bit more detail, the 5G upselling continues with the trend that we have seen in the past. I mentioned upgrades related to security features are supportive of the mobile service revenue. As stated, we have now enrolled something like 600,000 customers, and that enrollment rollout process will continue in phases in cohorts during the course of this year but especially going into '26. We have been also launching new types of security features, scam call blocking for foreign numbers being one of the examples, and that has been now well received by customers. And the initial take-up rate is encouraging.

We also had a nice opening with private 5G standalone networks with slicing technology in one of the ports in Finland, where we are able to serve our customers with the kind of technology, standalone slicing technology that our local competitors do not have at this point of time. So a good reference case for similar opportunities in the future. When we look at the fiber business, as mentioned, we are starting to see strong revenue momentum in that part of the business. And our accelerated network construction is being continued as we speak, all within the 12% CapEx to sales envelope that we are having.

Then just quickly looking into the digital services. In the Home Services space, we introduced a new Elisa original service called Icebreaker and the international distribution actually for that one has started well in a number of European countries. In terms of Home Services, in energy solutions for households, our home battery solution now has a coverage of 70% in Finland. We are very -- in very initial stages of the rollout, but we have clearly proven the product market fit, and therefore, an encouraging outlook for this solution for '26 and onwards.

In Corporate IT & Cyber, we are clearly very competitive on the market in terms of our cyber offering. And one of the examples is that in cybersecurity, one of the biggest retailers in Nordics, Kesko chose us as their cybersecurity provider in Finland, Sweden, Denmark, Norway, the Baltic countries as well as Poland. So yet again, a good reference case for the future.

In International Software Services, in that side of the business, we -- our aim has been to grow more than 10% organically. There, the tariff-related concerns have resulted in some delays of customer projects that have been impacting especially the license and service revenue part of the business. And therefore, when we look into the Q4, when we look into the likely realization of the project, we expect for full year an organic comparable growth between 5% and 10% in this part of the business.

However, an important indicator in software business, of course, is the recurring revenue. And the recurring revenue during the quarter grew with 13%, double digits and the year-to-date number is 15%. The share of recurring revenue is increasing all the time in the total revenue of ISS.

An interesting individual reference point is in our energy flexibility solution called Gridle, previously called Distributed Energy Storage. And there, we signed a first grid scale battery solution with energy company City of Vantaa for 10 megawatts. So an interesting reference point opportunity to scale for the future.

And then finally, when we look at our outlook and guidance for this year, we will keep our guidance in terms of revenue and EBITDA intact. The bottom line being that with the transformation program, we will be accelerating the implementation of our strategy.

And with that, I will be handing over to Jari.

Thank you, Topi. Let's first look at the profit and loss. Q3 continued with good trends, growth trends, solid growth in revenue as well as in EBITDA. Revenue, EUR 25 million increase, 4.6% growth in Q3. If you look at behind the revenue growth levers, overall good development in service revenues, 5.8% growth in service revenues. Mobile services increasing with EUR 9 million, both Consumer and Corporate Customer segment growing 5G customer base increasing and changes in the service offering, security features and price changes in that change all contributing to that 3.3% mobile service revenue in Q3.

Fixed services growing EUR 3 million, fixed broadband, especially fiber broadband connections growing also in Corporate segment, corporate networks and related security services contributing to growth. Negative impact in traditional fixed voice services. Domestic digital increase was EUR 2 million. IT services in Corporate segment contributing slight decline in Consumer segment, digital services. International software services increased with EUR 12 million. Acquisitions and sedApta, first consolidation impacting approximately EUR 11 million to acquisitions impact and comparable growth at 3%. Equipment sales flat like was the interconnection and roaming and other.

All in all, organic growth totally was at 3%. EBITDA 3.7% growth to EUR 213.5 million. EBITDA margin was strong 38.1%, EBIT 1.9% growth to EUR 138.6 million. EBIT margin was 24.7%. EPS was growing 2.3% to EUR 0.64.

In Estonia, improvement both in revenue growth as well as in profitability and revenue was growing 2%. Mobile and fixed services developing positively and negative impact in equipment sales. EBITDA increase was strong 9%, driven by service revenue growth as well as cost efficiency measures. In mobile, post-paid subscriptions, slight decline 1,200, pre-paid base minus 200. Churn came slightly up from Q2, still relatively low at 9.4%.

Then CapEx, reported CapEx was EUR 81 million, excluding licenses, lease agreements and acquisitions, the guided CapEx at EUR 65 million and in line both Q3 and year-to-date guided CapEx in line with 12% from sales. Main investments continuing in 5G network as well as fiber network and IT investments.

In Q3, cash flow continued good development like has been in the previous quarters. Comparable cash flow was growing 12% as a result of higher EBITDA, lower CapEx as well as lower paid interest. Net working capital change was positive, however, slightly less positive than a year ago. Year-to-date cash flow -- comparable cash flow growth is at 10% through higher EBITDA, positive net working capital change and lower investments and negative impact through financial expenses.

Cash flow conversion was improving and EBITDA cash flow conversion at 70% in Q3. Then if you look at the balance sheet and capital structure in line with the medium-term targets, net debt to EBITDA decreased from Q2 to 1.7x. Equity ratio increased from Q2 to 35.7%, and return ratios continue to improve. Return on equity was at 30.7%. Return on investments improved to 18.6%. And in terms of financing, average interest for interest-bearing debt continues same level as was in the previous quarter at 2.5%.

And now I give word to Vesa, please.

Thank you, Jari. Now we move on to Q&A part. And first, we ask if there is any questions from the audience? No, we don't have. So we go to the conference call lines and ask first question from the lines, please.

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

I had 2 questions. The first one was just on your adjustments in guidance on the cost-cutting side of things. So 2 incremental things you said today is one that you're raising your cost-cutting expectations to offset mobile service revenue growth weakness and also macro uncertainty weakness. But at the same time, I think what you're saying is that you're seeing a macro improvement in your fixed business.

So with your cost savings to offset macro weakness, are you being conservative in your outlook on macro weakness, i.e., assuming it goes -- gets worse again or doesn't continue to improve? Or is there something else going on there? Just a little bit of help in terms of what's changing versus where you're adopting a conservative approach would be helpful.

And then second question is just on your mobile service revenue growth, which is, I guess, the big negative surprise today. Could you just give us a bit of a sense of the mobile service revenue growth trend in Q4, just so we can get a sense as to how badly things have deteriorated in terms of the competitive environment versus what you were saying by sticking to the guidance at Q2?

Thank you, Andrew. If I start on the first one, yes, the transformation program that we introduced aims to have EUR 40 million of annual savings during the calendar year of '26. And when we come back to the macro and especially the impact of macro to fixed service revenue. During the quarter in the Corporate business, we had a handful of very good customer wins that contributed to the fixed service revenue growth. And also the fiber pickup starts to be visible there. I think that these are more micro examples in a sense that they are telling about our competitiveness in terms of fixed service revenue.

If I look at the sort of near term for the next couple of quarters in fixed service revenue, I think that we will be seeing some quarterly fluctuations still. And I wouldn't yet say that there has been a macro trend change in this one. But when we look further to late '26 and 2027, we do see that in the fixed service business, there is a possibility for additional growth, revenue and profitability growth in terms of data center connectivity, data center fiber connectivity. So I just want to check whether that addresses at least part of your question? Or did you have something else on mind on that?

Yes. No. Thanks, Topi. That was great. Can I just -- just as a follow-up, can I just check that EUR 40 million, is that a net benefit that we can just add on to the EBITDA line? Or is that a gross benefit?

Yes. Related to the cost?

Exactly, yes.

So the bottom line with the transformation program and with the annual cost savings is that with this transformation program, given all the changes in our business, we aim to achieve our midterm targets, the ones that we communicated in CMD last March.

Okay. I thought you said that you're accelerating it earlier on in the call. Maybe I misunderstood that comment on the...

Yes. We aim to achieve the midterm targets, like I stated, we are accelerating the implementation of the strategy, accelerating the implementation of the enablers for [ growth ].

And then the second part of your question, I guess, was related to the mobile service revenue and the competitive landscape that we are seeing on the market. So on that one, the outlook that we have for mobile service revenue development as of now is that during this calendar year, it will be low to mid-single-digit MSR growth. And as stated, what we have seen now lately is intense competition, more intense competition in the -- especially in the 4G category of things.

At the same time, when we look at the total market, the 5G upselling continues. Our bundled offering related to security features has been well received on the market, and we will continue that rollout, and that will be supportive of mobile service revenue. So you need to look at both high end and the low end of the market in order to understand the full dynamic.

And how should that play out in Q4? Should we see any kind of material difference to the growth trend you saw in Q3 and Q4?

When -- I mean when we look at now the competitive situation, Q4 is a bit more challenging before the cost savings kick in at the start of the year from Q1 onwards.

The next question comes from Owen McGiveron from Bank of America.

It's Owen McGiveron from Bank of America here. On the elevated post-paid churn in Finland, could you just give us a few more details on the moving parts there? How much is hard bundling contributed to the churn? And is it all or the majority from this more competition in the 4G offerings?

Yes. I think that what we are seeing is that the market is more diverse than it has been in the past. So if we look at the high end of the market, 5G category of business and especially if we look at those cohorts of customers to whom we have been rolling out the new offering with the security features. I think that, that has proceeded well.

As stated, we have now rolled out 600,000 customers approximately to the new offering. And when we look at the churn of those customers isolated, that has met our expectations or actually has been a little bit below our expectations. So that means that we do see that customers understand the value and there's a possibility for us to continue expanding that offering. At the same time, at the other end of the market, where consumers are more price sensitive and more prone to be attracted by 4G offerings, then there we see price competition and campaigning. And that has been one of the drivers or the main driver behind the increased churn number from Q2.

Okay. That makes sense. And just a very quick one on the high bundling cohort rollout. In seasonally more competitive Q4, should we expect a slowdown in the rollout of your security offerings to customers? Or do you think you can continue at a steady pace?

I mean if we look at the rollout schedule for the remainder of the year, the original plan was already that Q4 will be calmer in terms of that rollout. So the rollout pace will pick up in '26.

The next question comes from Andreas Joelsson from DNB Carnegie.

Just 2 questions from my side as well. First of all, the delayed projects in the International Software business, how should we view that? Is it more cancellations of orders? Or do we expect that to come back in the near term? And secondly, the cost reduction program usually come with a cost. So what kind of restructuring costs should we expect from that and when?

Absolutely. So if I take the first one and Jari, you take the second one. So on the first one, in the International Software Services, this is really a delay. So no cancellation of projects. It is a timing issue as such. I mean, typically, in a customer project, when a project starts, there's a license element in terms of revenue, then there is a certain service revenue element related to installing the software, configuring the software. And then there's a significant recurring revenue element on this one. And we are proceeding according to plans in terms of the recurring revenue part in ISS, but the delay of some projects is impacting the license and especially the service revenue part of these projects.

And the program -- cost reduction program and restructuring charge question. So we -- at the moment, we estimate that there will be a restructuring charge, approximately EUR 20 million, and that will be booked in Q4.

The next question comes from Paul Sidney from Berenberg.

I have 2 questions as well, please. Firstly, on Finnish mobile, if we sort of take a step back and look what you said 3 months ago, you said that Q2 all price increases have landed well, customers have valued the offering of the new services. What's really happened in the past 2, 3 months to change the competitive dynamics so quickly? Just to get a better understanding for that, please?

And then secondly, given the competition is mainly at the bottom end, you mentioned 4G. Is there any measures you can take to accelerate the migration to 5G? And also, are you confident that this elevated competition level won't spill over into the 5G market as well?

Yes. So I mean, if we look at what we said about the introduction of the bundled offering with the security features, not that much has changed between Q2 and Q3 on that category of the offering. We have been moving forward with our original rollout schedule and customers understand the value. We see that the take-up rate of those individual security features is increasing among our clientele. And as stated, that whole initiative is supportive of our mobile service revenue growth at this point of time.

What we are seeing is in the market is that especially in the lower end of the market, speaking of predominantly 4G, 4G subscriptions. The competition has been tighter as the churn figure indicates during Q3, there has been campaigning ongoing. When we sort of slice and dice that a bit, one new mobile virtual network operator started during the quarter, Giga mobile in September. That individual player has not impacted the market that much.

So the competition in the 4G category is very much between the traditional 3 big players on the market. For us, our stance in this one is very, very clear. We will keep our market #1 position. We will keep our market share in mobile subscriptions. And with the transformation program, we are improving our cost competitiveness on the market.

That's great. Can I have a quick follow-up, Topi? Would you consider cutting price at any stage looking forward if the competition levels remain?

Sorry, Paul. Now I missed some of it. So could you please repeat?

Apologies. It was just a follow-up. Would you potentially consider cutting price looking forward? Or is that not an option? You want to continue to compete on quality?

Yes. We will be a responsible market leader. So we are not fueling the price competition on the market. So we will be a responsible market leader. At the same time, we will keep our market share. I repeat, we will keep our market share. So we will be responding to the price competition if needs be.

The next question comes from Ajay Soni from JPMorgan.

The first one is just around that this 4G low-speed area where you're seeing more competition. I was wondering if you could give us an indication of what portion of your customer base is within that. Obviously, you highlight within the slides, it's around 37%. I think that's for the market, which is below 200 megabits. But what about for you guys specifically within your customer base?

And the second question was just a quick clarification. The workforce reductions of -- or the EUR 40 million savings that you expect in '26, do you expect that full run rate to come from Q1 '26?

Good. So if -- Jari, you take the last one. So I mean, when we look at the various segments of the market, and now, of course, I'm simplifying quite a bit. But our -- we are not disclosing the number of 5G penetration. We are disclosing the number of high-speed penetration, more than 200-megabit penetration where we have all of our 5G customers and then we have some 4G customers.

But if we look at the high end of the market and we include all of the 5G subscriptions to that one, we are closing in on 50% of the market in that one. And then the sort of most price-sensitive customer group is not half of the customer base, it's less than that. We are probably talking about roughly 30% plus/minus of the client deal.

And regarding EUR 40 million cost savings, majority of that comes through personnel reductions. There are other parts, however, on that. And we estimate that from the beginning of the year in Q1, we have a majority of the savings already coming in.

And still coming back to the mobile competition and the overall dynamics of the market. I think that it is worthwhile to say that we have been seeing times of a bit more intense competition also in the past. If you look at the past 10 years, there have been quarters -- individual quarters when the churn has been on 22% level like now.

So the competition comes and goes as such and is of volatile nature. And I think that if we take sort of a mid- to long-term perspective to our market, this is an effectively a 3-player market in terms of mobile services. And we don't think that the underlying rational nature of the market has changed.

The next question comes from Abhilash Mohapatra from BNP Paribas.

Sorry to come back to the transformation program, please. But it's just interesting that you've put a very explicit number around the cost saving of EUR 40 million linked to the headcount reduction. Just trying to understand, is that -- I mean, is it -- should we be reading something into that, that -- that's the sort of headwind that you're expecting in your business elsewhere due to a combination of all those things you talked about, like sort of mobile competition, macro pressures, and that's why you're looking to do this? Or was this always a part of the Capital Markets Day sort of strategy and you've just now taken this moment to announce this program. How should we be thinking about that, please?

If I start on this one, and Jari will continue. So it's more the latter of what you have stated. So if you come back to our strategy in Capital Markets Day, simplicity and productivity has always been part of our plans. We have factored that into our midterm targets in terms of EBITDA. We have been working with simplicity and productivity for long with continuous improvement measures. If you look at what we did during '24, there were some productivity measures visible during the calendar year of '24.

Now since the Capital Markets Day, we have been working with issues like finding efficiencies from procurement. We have been looking into automation and AI possibilities, cross-functional synergies within our organization, possibilities to delayer in the organization. And now the time has come to accelerate the strategy implementation. And at the same time, there is an element of taking swift action to improve the cost competitiveness in the current market environment, but in this order.

Yes, I can literally repeat the -- the accelerated growth strategy that we presented besides the concrete growth levers for revenue, important part of that strategy is and also as we presented in the Capital Markets Day, is the productivity cost efficiency development. So it's an elemental part of that strategy. And we will continue also beyond this program to build productivity.

The next question comes from Artem Beletski from SEB.

So I joined the call a bit later. So maybe those have been answered but still coming back to competition situation and the increased intensity during Q3. Could you maybe comment on churn profile, what you have seen during this quarter? So has there been a gradual pickup? Or did it really increase during September months? And maybe how do you see the development in early part of Q4?

And the second question is relating to EUR 40 million program. So in the past, you have been doing this type of efficiency actions, but you haven't really been quantifying those ones. So could you maybe provide some color how this EUR 40 million program could be compared to what you have been doing over past years? And maybe just in terms of cost inflation. So could you maybe comment what you see on that front? Just trying to extract what could be the net figure in terms of these actions?

Okay. So if I quickly start on the churn profile. So looking into Q3, I think that we saw the 4G category competition to pick up in July and basically continue throughout the quarter. And then, of course, there was some campaigning also in September. So basically something that was across the quarter as such.

Now looking into Q4, typically, we see campaigning in Q4 during the Black Friday weeks of November and then a calmer period before that. So if we look at sort of very tactically the sort of short-term sort of patterns in terms of churn, I think that, that is playing out as of now. And then remains to be seen that what happens in November related to Black Friday weeks.

And to cost efficiency development plan and this program. Yes, it's true that we've been doing that also, of course, in the past, increasing productivity, cost efficiency. We did some reductions also last year in employee numbers. And in different times, these opportunities mature, and there are several levers below that automation, AI among the others. And like mentioned already, this is part of the -- a very central part of the strategy that we introduced earlier this year, and we will continue with the productivity development also going forward and beyond this.

And if you look at this transformation program, I guess that in the nature of things that we will be implementing, if we look at the things that we did during '24, we basically did continuous improvement within the verticals of the organization. In this transformation, there will be also horizontal end-to-end process optimizations and streamlining of those processes, also seeking synergies between business areas, business areas and the tech ops part of the organization.

And with that, there's a bit more transformational element to what we are doing right now to give you a bit of flavor of the nature of things.

The next question comes from Siyi He from Citi.

I have 2, please. The first one is following up your comments on the cost cutting earlier. I think looking at the past, it's probably one of the rare times we see that you announce a major staff reduction. Just wondering if you could comment on the current negotiation progress with the unions. And if you could -- in what areas if mobile, ISS, we see most of the staff reduction from your program?

And the second question is if you could talk about the market position in B2B. I think in mobile; you showed some decline in mobile ads in B2B. But I think last quarter, you mentioned that have won some contracts. Just wondering how should we square your comments from last quarter and this quarter's performance?

Okay. Thank you for that. So if I take the staff implications first and how they will be divided and distributed within the organization. I mean, the overall estimated number of job reductions within the company will be 450 of that, 400 will be associated with our businesses and functions in Finland, namely Consumer business, Corporate business, corporate functions and the tech ops part of the organization.

And then that also means that in Finland, the union dialogue is important that has been initiated. We have a good tradition for collaboration in that space, and then we will be proceeding with that when we implement these changes during the weeks to come during the remainder of this year.

And then coming back to your other question about the B2B and the customer wins. Yes, during Q2, we won significant new customers, especially for our IT business and sort of all-around customers in B2B in a sense that they would be having connectivity services like corporate networks, cybersecurity and IT services. And the sort of takeover of those services has partially commenced and will continue during Q4, but it is not in any material fashion impacting the Q3 numbers yet.

The next question comes from Terence Tsui from Morgan Stanley.

My question was just again on this cost-saving program. Just wondering why you haven't been a bit more ambitious. I think some of your Nordic peers have been a bit more aggressive in taking out their headcount. From my calculation, it's roughly about 7% of the headcount. So just wondering why didn't you see scope for maybe a bit more aggressive cost cutting, please?

I mean if you look back a bit and include the sort of continuous improvement measures that we did during the '24 -- calendar year of '24. During that year, we reduced some 300 people in terms of staff. And then when you calculate the impact of the transformation program now into it, then that total number is quite equivalent to what we have been seeing some of the other players doing.

Then I think that there's a difference in terms of how we have been doing it. We have been doing it predominantly with continuous improvement measures and now also figures of the cross-functional sense of this -- or cross-functional nature of these initiatives, introducing this transformation program to accelerate the implementation of the strategy. So we have been implementing it in and designing it in a little bit different way. And then, of course, there has been this strong culture of continuous improvement in the company for a long time. And therefore, we have been cost efficient previously as well.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you for your questions and participating in this call. And now I give the closing remarks to Topi, please.

Thank you for all of you for participating this earnings call. And before we close, I would just like to acknowledge Jari and his great contributions to the company during the 25 years that you have been serving as the CFO. So I don't know whether it's 100 quarters or even more than that, but many, many quarters. So your contribution has been invaluable. So thank you for that and all the best for the future.

Thank you, Topi, for kind words and small correction. Of course, CFO knows the numbers. So it's been 20 years as CFO.

Yes, 25 years in the company.

25 years in the company.

That's correct.

It's been -- yes, great journey and of course, a great development over the years. And I'm very privileged and grateful that I've been part of that journey and worked with great colleagues in the finance team, in the management team all over the Elisa and of course, with you, Topi, and before that long years with Veli-Matti. And with this audience as well, there has been great cooperation and interactions over the years and big thank you for all for that.

And I'm very please -- pleased that I can hand over this responsibility to Kristian going forward and the company is in a great position to continue value to customers and especially also to the shareholders going forward with the strategy in place, with the culture in place and great people in the company. So thank you very much.

Thank you for participation.

Thank you and until the next time. And next week, we are on the road with Jari and Kristian, so we'll meet you where we are. So until next week. Thank you.

Thank you.