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Edited Transcript of DNA.HE earnings conference call or presentation 22-Oct-19 10:00am GMT

Q3 2019 DNA Oyj Earnings Call

Helsinki Oct 23, 2019 (Thomson StreetEvents) -- Edited Transcript of DNA Oyj earnings conference call or presentation Tuesday, October 22, 2019 at 10:00:00am GMT

TEXT version of Transcript


Corporate Participants


* Jukka Leinonen

DNA Oyj - President & CEO

* Marja Mäkinen

DNA Oyj - Head of IR

* Timo Karppinen



Conference Call Participants


* Peter-Kurt Nielsen

ABG Sundal Collier Holding ASA, Research Division - Lead Analyst

* Siyi He

Citigroup Inc, Research Division - VP




Marja Mäkinen, DNA Oyj - Head of IR [1]


Good afternoon, everybody. This is Marja Mäkinen from DNA's Investor Relations. Welcome you all to this conference call regarding DNA's January-September 2019 interim results.

With me here are DNA's CEO, Jukka Leinonen; and CFO, Timo Karppinen. As earlier, Jukka and Timo will go through the results presentation. You can follow the presentation through the online audiocast and the presentation is available on our investor website also. And just to remind you, we will be making forward-looking statements during the presentation, and we have a disclaimer on the second page of the presentation set for that. Please note that you can also ask questions through the audiocast page, and you can send your questions all the way during the presentation and we will then take those in the Q&A session once we take the questions also from the telephone lines. But now we are ready to start. Please, Jukka.


Jukka Leinonen, DNA Oyj - President & CEO [2]


Okay. Thank you, Marja. So this is Jukka Leinonen, also good afternoon from my behalf to everybody online.

So let's start with the presentation. So I'm going to go through the business review highlights of the third quarter and start of the year, the operational KPIs, and some words about the targets and market outlook. And then Timo will continue with the financial review in more detail.

So when we look about the third quarter, I think that it was quite good from our perspective, so we had a very strong growth overall and especially the mobile service growth was excellent. The profitability was also increasing in line with the increasing revenues. So all in all, we can be very happy with the results.

The net sales was increasing 5% and mobile service revenue was up 8.1% from the reference period. That was mainly to do with the increases of subscription base and the average billing per user increasing from the last year. Also the mobile device sales was growing nicely, more than 10% from the reference period.

EBITDA in comparable terms was increasing almost 10%, 9.6% to be precise. We had in the quarter nonrecurring expenses worth of EUR 0.3 million, mainly relating to the expert services and the termination of share-based reward systems due to the Telenor acquisition.

Comparable operating result was improving 5.5%, and this is maybe the good indication of the increasing profitability from the operating perspective since the IFRS 16 changes are not affecting effectively to this number.

When we are looking about the other KPIs, the average revenue per subscriber was slightly up from just last year, EUR 18.9 compared to EUR 18.8. But we have to remember here that in last December we had the decline in interconnection rates, so the average billing per end user was up more than -- is EUR 1.00 per subscriber.

CHURN was increasing slightly from the last year and on the previous quarters, so the CHURN in Q3 was 16.4%, which is basically at about the, more or less kind of historical normal levels. But as said, slightly up from last year and quite significantly up from the Q2 where we had a very low CHURN.

When we look about the mobile subscription base, as a whole, we had the decline of a base of 35,000 subscribers. But this was mainly to do with the fact that we have been clearing the 0 revenue prepaid subscribers from the base. And when we look about the postpaid subscriptions, that was increasing by 59,000 subscribers.

So all in all, I think that we are pretty happy with the mobile subscription development. And when we look about the prepaid, even though we had the significant decline in numbers, we had the revenue at about the same level than in the previous quarters.

On fixed-network side, the total subscription base was growing 7,000 subscribers and especially important was that the fixed-broadband and cable TV subscribers were up 86,000. So this was very nice growth overall. Of course, a big part of this was coming from the Elmo acquisition we made in the early summer where we got 30,000 fixed-broadband subscribers and almost 25,000 new cable-TV customers, but we have to note that also the growth in organic way was especially strong in the fixed broadband. So this basically demonstrates the fact that there seems to be more and more demand for the high quality, high-speed fixed-broadband services as well as the mobile broadband services.

Then when we go next page, we basically can look into the longer-term range in the figures. So the overall revenue is growing steadily. As said, the growth of 5% in Q3 was slightly higher than what we have been seeing as an average during the last couple of years, and the mobile service revenue growth was increasing from the kind of early part of the year. So from that perspective, we are quite happy with the results.

Comparable EBITDA was increasing 9.6%. And as said, this is partly to do with the IFRS 16 impact, but also the organic EBITDA growth was almost 5%, so we are quite happy with the results there.

CapEx was slightly down compared to the previous year. This is to do with the, let's say, 5G coming into the play where we have been still having some negotiations and we have been kind of holding back some of the investments. On a full year level, we are expecting to have more similar CapEx levels than we had in 2018.

Due to the increasing EBITDA and low CapEx level, the operative free cash flow was at a good level and increasing significantly compared to the reference period.

When we look about the full year so far, 9 months, we can see that the net sales has been growing 3.7%. So the growth in Q3 was actually faster than what we have been seeing in the 9 months of the total year. Also the EBITDA was at a good level of 8.2% growth from January to September. Operative free cash flow, up more than 20%. Net debt-to-EBITDA, 1.8, despite the fact that we had a very significant dividends paid out in the spring, that means that we actually have a very good balance sheet situation overall. As said, the mobile subscribers came down 35,000, but the postpaid went up 59,000. Mobile service revenue has been basically increasing during the 9 months, 7.2%, which is very much in line in our kind of indications that we are targeting for the single-digit growth. So this is quite a good result compared to our original expectations for the 2019. Mobile CHURN, 15.8% as an average so far in this year, which is pretty close to the long-term historical levels.

Fixed-broadband and cable TV, up 86,000 subscribers, as said earlier. And this basically really demonstrates the fact that we have a significant potential in the future to kind of increase the revenues on this side also by upselling higher speeds. And we are clearly seeing that the rate of upselling is increasing as we go forward.

When we look about the mobile and subscriber situation in more detail, we can see a steady growth in the mobile postpaid, as said earlier. Fixed voice customers are declining at a steady rate, so nothing new there. And as said, in fixed broadband, significant growth of 57,000 subscriptions from the last year, 30,000 from this gain through the Elmo acquisition. But as said, almost half is organic growth, which is very good results and in line with our expectations.

Also on cable TV side, 29,000 new subscribers, main part of this was coming from the Elmo acquisition. We have not been aggressively expanding our cable-TV footprint, but we have been concentrating more into upselling the fixed broadband and especially the higher speed on fixed-broadband based on the cable network infrastructure.

Mobile data use is still increasing quite nicely. So from last year, the growth is almost 24%. We actually are seeing that even though the percentage-wise growth has been staying down, the absolute growth is still quite heavy. First half of this year, the average usage per subscriber was 23.5 gigabytes. In Q3, we were running already at 26 gigabytes per subscriber.

5G, we believe it will be accelerating again the use of mobile data further, so there is no reason to believe that we would not see higher data usage rates in the future. And we also believe that there will be potential for higher ARPUs also when we move customers from 4G to 5G in the coming years.

When we look about the DNA customers' mobile data in long-term basis, first half of this year, according to Tefficient consulting company, we were #1 in the world in terms of the data usage per subscriber, 23.5 gigabytes per second. And when we are looking about the growth of that, we can clearly see that the growth rate in DNA's network has been larger than with some other operators. And this actually demonstrates the good quality of the network and also it basically means that customers are utilizing better and better our great network capabilities when we go forward.

Of course, we are seeing that this will be continuing in the future. 5G will be increasing data usage. Also, are going to see that the different types of video services, YouTube, Netflix, et cetera, are moving into the higher quality format 4G -- 4K, et cetera, and that of course means that the data usage demand will keep growing in the coming years. And we believe that this is the basis for our ability to grow the average ARPU in the market on years to come.

When we look about the subscription turnover rate, CHURN, that was slightly up from the last year and significantly up from the last quarter. But still, I think that the 16.4% is quite close to the, let's say the normal historical levels. We can now see is that the demand for the 4G subscriptions is basically slowing down. It will still -- it is still growing slowing, but it's slowing down. But we actually believe that the 5G will be accelerating the upselling potential again when we are starting to see the number of new handsets coming to the market, especially during the second of -- first half of next year.

ARPU is increasing EUR 0.1 per subscriber. But as said earlier, we had this interconnection decline or interconnection rate decline in December last year. So effectively, the average billing per subscription has been increasing even further.

So all in all, what we can see from the increasing CHURN figures compared to the last quarter and compared to the last year is that the market situation, the competitive dynamics has been slightly tighter in Q3 compared to the first half of this year. But as we see from the figures, DNA has been performing quite nicely in this situation.

Telenor offer -- tender offer has been progressing. So as you know, they basically bought the shares of our 2 largest owners, Finda and PHP Holding in spring. After the closing, they basically came out with demand for a tender offer for the other shareholders. And after the MTO process, Telenor has been holding almost 98% of all shares in DNA.

Due to the fact that they have been exceeding 90% of the shares, they basically are now going forward with the squeeze out process to buy out the rest of the shares, and we are basically expecting that, that will be leading to the delisting of DNA in few months' time. This transaction has no impact on DNA's operations, our customer service. In long run, we believe that we have significant potential to benefit from Telenor ownership, especially in the corporate market, but also via the better terms and conditions in different areas of procurement, for example.

When we look about the main events during the Q3, first of all, we got the confirmation from the competition authorities that they will accept our kind of pre-deal to sell our antenna television pay-TV business to Digita. So this deal has been now closed and will happen effectively 1st of January 2020. After that, DNA will continue to resell DNA's -- Digita's pay-TV services to our existing customers, so there will be no loss of services from any customers, but the role of DNA will be a reseller instead of owning the business itself.

We also launched a new service called Wattinen during the third quarter. This is basically aimed for the housing companies and the residents, enabling them to save up to 30% on energy used in heating. This basically improves the quality of living in the flats, saves energy and saves costs, but it's also very good for the climate emissions and very important initiative for DNA to enter into the new business potential and, at the same time, create services which are good for the climate.

We also launched, after the review period, our intentions to go out with the 5G services. So DNA will basically launch commercial offering on the 5G starting December this year. We will start with the fixed 5G -- or fixed-wireless access, which enables superfast, low-latency data connections to many homes and properties, which are basically out of reach of fiber optic network or where the build out of fiber is too expensive. We of course will basically start this with the bigger cities. So firstly, it will be available in the capital region, in Turku and Tampere areas, but we will be spreading out the network quite fast after the change of the year. And we will be announcing later the new cities with this service.

We are also preparing for the launch of handset subscriptions, but we are currently waiting for the second-generation handsets to come available. At the moment, when we are looking into the different tests and reviews of the current 5G phones, I think that it seems to be so that there's no hurry to buy those services or those devices because of the high energy consumption, limited kind of uptime in terms of the battery life, for example. So this is our plans for the 5G at the moment.

When we are looking about our overall strategy and targets, we are still confident with our 4 key process from the company level. So we are targeting for the most satisfied customers, we want to be the excellent employer, we want to kind of grow faster than the market and we want to improve our profitability based on free cash flow with the higher base than our kind of competition comparable terms. And I think that in Q3, we basically reached very nicely all these targets, and we will continue to work for our customers and continuous growth.

When we're looking about the 2019, rest of the year, I think that we have been seeing that the Finnish economy is still growing, but the growth has passed its cyclical peak. We are getting more and more news from the kind of different customer segments that the customer confidence is bending down. This means that we are expecting mobile network service market growth still continuing, but at the lower rate. And overall, let's say growth outlook is slightly smaller compared to the last few years.

We can see also that the 4G subscription share is still growing, but at the lower rate, but then we are also expecting that, especially after the change of the year, the sales of 5G subscriptions will start to have significant impact and especially in the -- maybe the second quarter forward when we are starting to test the mid-price levels handsets to market, this starts to be a significant potential.

Traditional SMS and voice mobile network is declining. We are seeing that the usage of video services in higher quality is driving the demand for the fast broadband services in the future and especially the fixed 5G or fixed-wireless access will now enable us to kind of offer these high-speed fixed-data services to homes in significant numbers in coming years.

Traditional pay-TV is declining and we are seeing the video usage more and more coming from the different types of OTT services.

On the P2P side, the demand for the Industrial Internet solutions and Machine to Machine subscriptions is growing, but we are still seeing that the significant growth is waiting. There's a lot of piloting ongoing, but we have not seen yet the huge boost on the growth of the Machine to Machine.

Data security and the higher speeds on the corporate networks is increasing due to the fact that customers are moving more and more their applications into the cloud.

As said earlier, fixed wireless access has significant new potential on the mobile network, which we haven't seen in the 3G and 4G. That basically allows us to offer very high-speed connections for the consumers and corporate customers in those areas where we do not have ability to kind of deploy the fiber or the fiber is too expensive for the customers. The more advanced 5G services will be coming later and that, of course, will then bring also the different types of P2P solutions to the market.

As said earlier, when we talk about the 5G handsets and devices, we are currently seeing only the first-generation devices available. And according to the different reviews, consumers [are not ready to buy those], we believe that it's sensible to wait; that we have the second-generation devices with the better battery life cycle, for example, available and also when we have the better coverage on the 5G network level as such.

So this was basically the kind of the business review, and Timo will now continue with the financial review.


Timo Karppinen, DNA Oyj - CFO [3]


Good afternoon also from my part. So third quarter was again a kind of evident of the kind of strong development that we have had in terms of the service revenue sales and then which then contributing positively to the margin expansion. So if we then look more detailed on the key financials on Q3 and the year so far. So in terms of net sales, 5% growth over here for the quarter, almost 4% in the year.

Now I'll cover these details of the sales trend in the next slide.

Like said, the strong kind of sales development on the -- especially on the service revenue part, we have then a very strong kind of development on the EBITDA level. Now we should be looking at this comparable EBITDA where we had then 9.6% of growth in the quarter and 8% -- 8.2% in the year. Roughly speaking, a little less than 2/3 is coming from the IFRS 16 impact, but the rest really is the organic growth that we are now experiencing.

Operating result itself, EBIT on comparable terms growth was this 5.5%, really significant improvement in that quarter compared to what we had in whole year so far. And this is the trend that we are now seeing where the service revenue growth is now contributing strongly to the margins overall.

Then looking at the operative CapEx itself, we are behind on our CapEx plan and therefore, we were lower in CapEx spending in this quarter compared to what we had year ago as ending. When we look at the year-to-date number so far, we are behind on what we are doing a bit on last year. This all is coming from the fact that we are now finalizing the 5G readiness and the plans over there and we'll continue on a heavier spending in the third -- or fourth quarter when the 5G rollout actually will start. And then we'll see on the fourth quarter a higher spending in terms of CapEx. Overall for the year level, we should be landing somewhere roughly about the same levels that we did in 2018.

Due to the fact that EBITDA itself is growing and that the CapEx has been kind of behind on the previous year levels, we had a really strong operating free cash flow trend, more than 35% growth from year ago. And also, on the yearly level, we are more than -- or year-to-date level, more than 20% higher than year ago. Like said, the main thing here is the kind of reduction that we have in CapEx levels.

Net debt-to-EBITDA really kind of fast going down from the more than 2 levels that we had after the dividend payment in second quarter and the acquisition of Moi and the Elmo companies during the first half. And then the net debt-to-EBITDA levels are now, on the year-to-date basis, at 1.8.

Then on -- when we look at how the sales split is and the development of all key areas, really the mobile service revenue is the one that is now growing strongly, 8.1% for the quarter, more than 7% for the year so far. Really the key issues here is that actually, the -- an average billing per customer is growing very strongly. ARPU itself was somewhat higher than it was year ago, but the key here is to understand that this ARPU includes the interconnection revenue decline and also inclusion of the Moi customers into our base. So underlying service revenue per customer is really growing. And the key reason here is the continuous upselling that we have been able to do into our own base 4G migration continuation and the fact that we are gaining market share constantly in the market, which will then lead into the net subscriber growth that we have had.

Another good quarter and development we'll see here in the fixed nonvoice part, like we have been estimating and indicating all along that this fixed nonvoice revenue will turn into positive on the second half and this has now happened in Q3.

The pay-TV revenue side is the area that is in a constant small decline, but the fixed-broadband service revenues are growing now. They're both growing on organic-wise, but also through the acquisition that we have made. And we expect that this -- the fixed nonvoice revenue is now continuing on a positive territory also for the remaining of the year.

The mobile interconnection revenues, as said, declined by 14%. This is coming from the fact that the interconnection rates declined in Q4 last year and also the traffic on the interconnections are declining all the time. And this, like said, this doesn't have any margin impact to us.

Mobile equipment sales, really strong growth. Again, despite the fact that we had a strong quarter in Q3 last year, we still managed to increase that by 10.5%. And we see here clearly a stronger linkage to the subscriber sales and the fact that we are able to bring our customers into our own sales channels where we do the mobile equipment sales. Fixed voice, of course, is almost insignificant anymore, and we see there a slight decline compared to the year-ago levels.

And then looking at this, the business segments that we have. Consumer Business in Q3 is growing strongly. And as we do in the group level, here the sales growth of 6.3% driven by the mobile service revenue and the mobile equipment sales. Very healthy, strong growth on the service billing at the customer level. We don't see it here that ARPU, but like said, the service billing under the ARPU are growing, which is then leading to the fact that our comparable EBITDA was also on a healthy growth path. This is IFRS 16, like said, is taking roughly about 2/3 of this growth, but the rest are organic growth that we are having.

Really positive news on the Corporate Business side. Net sales was at the same level as we had a year ago, but here we had an -- like we have been estimating and indicating that in the second half of this year, we will see an improvement on the Corporate Business service revenue side. And here, the positive impact came from this mobile service revenue growth, which is also evident on the ARPU increase, which was quite strong despite the fact that the interconnections came down.

And also, the sales was positive despite the fact that these Moi revenues are now moved into consumer side and also the interconnection revenue declines was offset by the service revenue sales.

The service revenue sales improvement are now then contributing to the Corporate Business EBITDA. We've had this more than 17% growth. And again, here, most -- well, at least 1/3 of that is coming from the organic growth to the service revenue.

Then moving onto the CapEx. Like I explained earlier, the CapEx at the third quarter was low. And we are now kind of waiting and preparing for the Q4 when the 5G rollout will happen in a bigger scale. And like I said, we're expecting the operative CapEx will be around the same level as we were in whole of 2018.

The free cash flow and the free cash flow to equity, like I explained earlier, the free cash -- operative free cash flow was very strong with the help of the growth in EBITDA itself and the lower CapEx. Here, we didn't really see major movements in the items that are impacting the free cash flow to equity.

They -- now we -- and the free cash flow to equity is now at the EUR 89 million level, almost 13% of the sales. And if you looked at how that's developed in Q4 and at whole year level, the CapEx will grow but then that will be then offset by the decline in the network capital change. So we should be seeing that this free cash flow to equity will continue to grow in Q4 and should be reaching more than EUR 100 million for the whole year.

The capital structure, no major changes here, other than that we are continue to be able to decrease the kind of average cost that we have today in our debt levels. Now we are at 1.11%. And here, really, we've been able to utilize the lowering of the kind of interest levels overall, but also the fact that now we are part of the Telenor where we can utilize the strong backbone of the credit ratings of the Telenor. No major financing is needed during the rest of this year anymore.

Then finally looking at the kind of guidance for this year and kind of our targets. So we raised our guidance for 2019 to where we now are expecting the net sales to grow somewhat and EBITDA is expected to increase substantially, which is the same what we had earlier. Net sales was -- guidance was increased to the fact that we now realized strong growth in mobile service revenue in Q3 and also the fact that we're able to increase our subscriber base. No changes in the midterm financial targets and we are developing strongly and well in all of the targets that we have here.

Yes, and this is now all that we have for the finance part.


Marja Mäkinen, DNA Oyj - Head of IR [4]


Thank you, Jukka and Timo, for the presentation. Operator, we are now ready to take questions from the telephone audience.


Questions and Answers


Operator [1]


(Operator Instructions) Our first question comes from the line of Peter Nielsen from ABG.


Peter-Kurt Nielsen, ABG Sundal Collier Holding ASA, Research Division - Lead Analyst [2]


Just a couple of questions, please. Firstly, Timo, you talked about gaining market shares in the market and obviously your net add in postpaids are good. Could you elaborate a little on what is driving that, please?

And secondly, as you say, B2B has improved in Q3 also on the top line. Again, what is the main driver for this? We have heard in previous quarters about strong pricing pressures in B2B. If you can elaborate a little bit.

And just a quick, at the end, may I just ask, the onetime -- the nonrecurring items, are these restructuring charges and why do you have these kind of costs in Q3?


Jukka Leinonen, DNA Oyj - President & CEO [3]


Okay. When we are looking about the market share gains, I think that our view to our ability to kind of gain market share is really based on 2 kind of major things. First one is the network quality. I think that if you are looking into the different type of comparisons about the network speeds, but also as we went through today, the average usage per subscriber, these figures are really demonstrating that network quality is at very high level. Our customers are able to put through the network more and more data into high quality. So I think that this is the basis of our ability to increase the market share.

Secondly, we are very closely monitoring how do we operate with our customers in different customer interaction points, whether we talk about the kind of sales or upselling or cross-selling or customer service, et cetera. And we can clearly see that our Net Promoter Score or customer satisfaction figures have been performing quite nicely. So I think that the general customer satisfaction is in good level.

And then thirdly, I have to say that of course, we have been operating long time based on the strategy that our customers have always possibility to select the fixed-term contract or the open-ended contract. And we have somewhat more fixed-term contracts compared to our competition, which is partly safeguarding our customer base. But as said, I think that the network quality and the customer satisfaction are the key elements behind the market share gains.

Concerning the B2B profitability increase. There, I think that there are a few items. First of all, we were able to significantly grow our service revenues on the mobile. So we have been doing some price increases in the marketplace, but we have been also able to kind of get some uplift in the price level of the new sales. So these are contributing to the kind of revenue on the mobile service revenue side. Also I think that some of the declining elements in fixed nonvoice are, let's say, smaller, and we have been able to, for example, grow the B2B fixed broadband or fixed data subscription numbers. So that's basically these 2 elements, which are generating for the growth in B2B. And since we talk about the, mainly, service revenue elements that typically is a significant leverage to the profitability when we are growing those elements.

Timo will take the third one.


Timo Karppinen, DNA Oyj - CFO [4]


Yes. Third question you had about the restructure cost. So like presented here, the cost itself was EUR 4.2 million. It came from 2 front. One is that the Board did a fairness opinion regarding the Telenor acquisition, that was one part of it. And then second part come from the early closing and payment of this long-term incentive schemes that there were.

We will not see a similar type of cost anymore in Q4 or after that. There will be one part of this long-term incentive schemes will be paid in June 2020. But those, we will then make a smaller provision each month and will not have such a sizable cost itself that would come in any of the quarters in the near -- in the coming quarters. But it's really coming from these LT -- long-term incentive schemes, payments and the fairness opinion that we had in this EUR 4.2 million in Q3.


Operator [5]


And the next question comes from the line of Siyi He from Citigroup.


Siyi He, Citigroup Inc, Research Division - VP [6]


I have 2, please. The first one, I looked at your mobile CHURN, it went up a little bit. And I was wondering if you can comment on what you see in the mobile markets in Q3 and what has been -- has there been any changes as we move into the early part of Q4?

And my second question is on your fixed broadband. And I was hoping that you can give us some indication of what is kind of the ARPU that, say, you are upselling into compared to your base cable broadband ARPU? And I think in the past you've been focusing on growing the fixed broadband subscribers. Shall we start to think that now you could adopt a more balanced approach between the broadband ARPU growth and the subscriber growth?


Jukka Leinonen, DNA Oyj - President & CEO [7]


Okay. When we look about the kind of mobile market in Q3, I could say so that the competitive intensity was slightly up from the first half of this year. I think that when you are looking, for example, our CHURN figures in Q2 were coming around 13.5% and now we are basically about 16.5%. It was also up from the last year and that, basically, partly demonstrates that there was kind of higher activity by the competition towards our customer base. Also when we are looking about the number portability statistics, they were showing some increase in Q3. So all in all, we can say that the intensity was slightly higher compared to the first half of this year.

The positive thing is that we did not experience any, let's say, kind of significant kind of price lift campaigns in bigger quantities, which of course is positive because I think that at least from the DNA's perspective, our aim is to kind of grow the market share.

What comes in Q4, it's really hard to kind of say. As we all know, this is pretty much a campaign-driven market, especially in the consumer side. And therefore, it's quite hard to anticipate what is happening. If you remember the last couple of years -- 2 years ago, in Q4, there was a significant, very aggressive campaigns initiated by Telia. Last year, we did not have any such kind of level of campaigning. So it's really depending on the kind of competitor actions, what is going to happen in Q4. We are basically kind of continuing steadily to kind of go forward with our plans where we want to operate with the market prices, and we are not basically planning to initiate any aggressive campaigns on our behalf. But we will be responding if there will be something excessive on the market. So this is basically about the mobile market.

On fixed broadband, it is exactly as you said, we have been very much concentrating into gaining market share in the housing association business. We still see that there is a potential on that area, and that is to do with the fact that we have a lot of customers, which are basically the cable customers but who have not taken the fixed broadband. And we also see that there are, let's say, possibilities to add new buildings on the kind of classified areas of our existing network. So we will concentrate also in the future to kind of expand our customer base on the fixed broadband. But we already have been seeing for the last, I would say, 18 months an increasing level of customer interest to upgrade their housing association base speed into the, for example, 100-megabit or higher speed levels. And I think that one of the reasons why we are now seeing the fixed nonvoice revenue returning to growth is that we are having impact coming from the fixed-broadband upselling, which is starting to be sizable. So we are expecting that in the future, this trend will remain and even be stronger. So in the longer term, we are expecting to be able to generate from these upselling campaigns more kind of fixed broadband revenues compared what we have been seeing earlier. So we are quite positive about that development.


Operator [8]


(Operator Instructions) As there are no further questions, I will hand it back to the speakers.


Marja Mäkinen, DNA Oyj - Head of IR [9]


Okay. Thank you, everybody, for your participation and questions. Thank you, Jukka and Timo. This concludes our conference call today. Thank you once again and have a good day.