Tele2 AB (publ) (TEL2B) Earnings Call Transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Tele2 Q2 Interim Report 2020. [Operator Instructions] For your information, the conference is being recorded. Now I would like to hand the conference over to your speaker today, Anders Nilsson. Please go ahead, sir.

Thank you very much, Andrea. And good morning, everyone, and welcome to the Q2 2020 report call for Tele2. With me on this end, I have Mikael Larsson, our CFO; and Samuel Skott, who is the Chief Commercial Officer of Tele2. And today, we will talk about the results for the quarter and then address your questions at the end of the call. And now please turn to Slide 2 for a brief summary of the results and highlights for the quarter. We saw a full quarter of the COVID-19 impact. The impact was largely as expected, with the main headwinds being lower international roaming, declining equipment and mobile prepaid sales, and suspension of premium sports in TV. As a result, end-user service revenue declined by 2% on a group level. We estimate that the pandemic had a negative effect of SEK 135 million on underlying EBITDAaL on a group level in the quarter with SEK 95 million in Sweden and SEK 40 million in the Baltics. Thanks to our efforts to refocus the company to defend underlying EBITDAaL, Tele2 fared relatively well and managed to grow underlying EBITDAaL by 4%. This was done through short-term mitigation such as lowering sales and marketing spend compared to the original plan, and we were also helped by the cost synergies from last year as only a portion of them were visible in the Q2 2019 P&L. CapEx, excluding spectrum and leases, amounted to SEK 700 million for the quarter, tracking fairly low now so far this year ahead of the 5G rollout. We took a major step to assert our position as the leading telecommunications provider as we launched Sweden's first public 5G network in the quarter. And just like back in 2010 when Tele2 was the first to launch 4G in the Swedish market, we are now taking the leadership in 5G ahead of our competitors. In Sweden consumer, we continue to execute on the back-book price adjustments. The increases are sticking so far, and we are starting to see the effect on mobile postpaid and fixed broadband and expect the full effect in Q3 and Q4, including TV. We continue to make progress on the FMC strategy now with 242,000 customers on FMC benefits. Our rollout of Com Hem Play+ is progressing well, and the take-up is looking good as demand for streaming increases during the pandemic. In Sweden B2B, the market remains tough. While we are happy that bankruptcies have not materialized as of yet, we see lower order intake during the pandemic, and we see that it will be hard to get the kind of growth we expected within SME before the pandemic. The Baltics remained resilient despite being shut down for most of the quarter. We see the impact for roaming and lower equipment and prepaid sales, but mobile broadband is performing well, and we have gotten a good response to the TV service that we launched earlier this year. As we now have greater clarity on the impact of the pandemic and our ability to mitigate, the Board has decided to reinstate its proposal of an ordinary -- of an extraordinary dividend of SEK 3.5 per share. The Board will also call to an EGM in early September, and we expect to pay the extra dividend along with the second tranche of the ordinary dividend in October. We're also reinstating formal guidance for 2020, which you can see on the next slide. As we continue to focus on defending underlying EBITDAaL rather than revenue growth this year, we are not guiding on end-user service revenue, but focus on underlying EBITDAaL, which we expect to be roughly flat compared to 2019. This guidance is based on the assumption that the pandemic will result in a quarterly negative impact of SEK 100 million to SEK 120 million on underlying EBITDAaL throughout the rest of the year. We are reinstating our CapEx guidance of SEK 2.5 billion to SEK 3 billion for 2020 as we will ramp up investments into 5G and Remote PHY in the second half of the year. Our midterm guidance remains the same since our strategy beyond 2020 remains intact. From 2021 and onwards, we expect low single-digit growth in end-user service revenue, mid-single-digit growth in underlying EBITDAaL and annual CapEx, excluding spectrum and leases, of SEK 2.8 billion to SEK 3.3 billion. Now let's look at the performance of Sweden consumer on Slide 5. Mobile postpaid remained resilient with solid net intake of 18,000 RGUs and a 1% decline in ASPU despite a 3-percentage point headwind from roaming, supported by the initial effects from price adjustments. Fixed broadband also showed solid results in the quarter with net intake of 10,000 RGUs and slight ASPU growth supported by price adjustments. So far, we see roughly half of the total quarterly effect on -- of price adjustments, and we expect the full effect in Q3 and Q4, including on TV. The pandemic headwinds are more apparent when it comes to prepaid where we see a significant decline in net intake and on TV, where ASPU declines accelerated due to the lack of revenue from premium sports. We expect TV trends to come back toward normal levels during the second half of the year as sport return and we see effects from price adjustments. Total end-user service revenue went into decline this quarter as growth in postpaid and broadband was offset by declines in prepaid and TV. Now let's look at B2B on the next slide. Net intake turned negative in the quarter as we see lower contract activation during the pandemic. And while we do not see bankruptcies increasing materially, order intake is down compared to the previous periods. Still, the market remains tough with price pressure in addition to headwinds from roaming, which resulted in declining mobile ASPU. This, along with the continued decline in legacy fixed services, led to decline in total end-user service revenue. Please turn to Slide 7 for an overview of Sweden as a whole. End-user service revenue decline accelerated to negative 3%, mainly due to COVID-related headwinds in both B2C and B2B. Underlying EBITDAaL increased by 3% as the SEK 95 million impact from the pandemic was offset by mitigations and benefits from last year's cost synergies. We continue to see strong cash conversion of 72% as CapEx spend is relatively low now in between investment cycles. Let's look at the Baltics on Slide 9. Similar to Sweden, net intake was negatively affected by the pandemic headwinds on prepaid volumes. While we saw an impact on roaming revenue, ASPU growth continued, and we see strong performance, especially in Estonia and Lithuania where we have support from earlier price adjustments. Continued growth in ASPU in all 3 countries led to growth in end-user service revenue, which you can see on Slide 10. End-user service revenue increased by 6% organically, which drove an 8% increase in underlying EBITDAaL despite the SEK 40 million impact from the pandemic. We are pleased to see that Estonia continues to perform strongly across the board, continuing the turnaround even during the pandemic. Continued EBITDAaL growth and low capital intensity led to strong cash flow generation of 82% in the Baltics. And with that, I hand over to Mikael.

Thank you, Anders, and good morning, everyone. Please turn to Slide 12. As in previous quarter, we have, on this slide, reported revenue from international roaming on a separate line to show the underlying trend in each revenue bucket without the effect the pandemic is having on roaming. As we stated in Q1, international roaming represents roughly SEK 400 million in end-user service revenue and SEK 300 million in underlying EBITDAal after lease for the group on an annual basis. In Q2, roaming end-user service revenue did not come down to 0, but was at very low levels. And there is also a timing effect where roaming is usually slightly higher in Q3. On an underlying EBITDAaL level, we see roughly the full effect that was a SEK 75 million for this quarter and we expect a full impact during the pandemic. At the EU roaming, which is net negative for underlying EBITDAaL, it's declining slower and likely recovering faster than non-EU roaming, which is profitable. Sweden consumer revenue declined by 1.5% in the quarter as strong mobile postpaid growth of 6% and fixed broadband growth of 5% did not compensate for COVID-19 headwinds in mobile prepaid and digital TV and continued decline in fixed telephony and DSL as well as DTT TV. Within B2B, mobile end-user service revenue, excluding roaming, was flat year-on-year, while fixed and solution services declined. Baltics continued to show strong growth at 9%, excluding roaming, while our small legacy business in Germany continued to decline 11% in this quarter. For the group, this led to a slight decline of 25 -- SEK 27 million in end-user service revenue in the quarter, excluding roaming. Please turn to Slide 13. Underlying EBITDA increased 3% organically in the quarter as continued strong EBITDA development in Baltics, together with positive effects from 2019 synergies and further cost mitigating activities made in this quarter, outweighed both the negative impact from end-user service revenue decline in Sweden as well as the SEK 135 million of negative effects from the pandemic. Looking ahead into Q3 and Q4, we expect the effect from the pandemic to be approximately SEK 100 million to SEK 120 million per quarter throughout this year. Items affecting comparability relating to our business transformation program amounted to SEK 120 million in the second quarter, including costs for store closures in June. Operating profit increased by close to SEK 750 million compared to same quarter last year, of which SEK 452 million was explained by impairment related to Estonia in 2019 with the remainder, approximately SEK 300 million, explained by higher underlying operating profit this year. Please turn to Slide 14, cash flow. CapEx paid increased in the quarter due to higher network investments and timing of customer equipment CapEx. Change in working capital of negative SEK 90 million is mainly explained by elevated inventory levels as a precaution during the pandemic, partly offset by a positive effect from introduction of external handset financing in Lithuania. All in all, this led to stable equity free cash flow of close to SEK 1 billion for the second quarter. Over the last 12 months, our continuing operations has generated SEK 5.3 billion in equity free cash flow or SEK 7.7 per share. Please move to Slide 15. We closed the second quarter with leverage at 2.4x, slightly below our target range of 2.5 to 3, as we postponed the decision on extra dividend or proceeds from Croatia. Adjusted for the extra dividend, which is now being proposed to be paid out in October, leverage would have been 2.7 end of June. With better visibility on the effects from the pandemic than we had a quarter ago, we are today confident that we can remain within our guided leverage range by the end of 2020 while paying out the proposed extraordinary dividend and the second tranche of this year's ordinary dividend. And with that, I would like to hand back to you, Anders.

Thank you, Mikael. Now please turn to Slide 17 for our key priorities going forward. For the duration of the pandemic, the #1 priority is to monitor the impact and calibrate our mitigating actions to defend underlying EBITDAaL and cash flow. We will look at opportunities to fast-track part of our business transformation program. We will optimize our sales efforts to reduce cost and focus on sales channels where we can get the return in this environment. We will continue executing on the back-book price adjustments in Sweden B2C and expect to see the full effect in coming quarters. While we focus on defending underlying EBITDAaL for 2020, we will continue to execute on the long-term strategy so that we can pick up where we left off once the pandemic is over. We will continue driving FMC in Sweden and address the remaining overlapping mobile and fixed customer base while preparing to execute on the next phase in the FMC strategy to grow FMC organically. We will continue steering our B2B business towards more profitable segments such as the private large enterprise sector and SME. Our business transformation program is on track, and we will continue executing to deliver at least SEK 1 billion over 3 years. We will continue executing on our mobile-centric convergence strategy in the Baltics. And we will maintain our 5G leadership in Sweden and upgrade both our mobile and fixed networks to the next-generation technology. All this will lead to consistently growing cash flow, which we aim to distribute to shareholders. As you know, this is my last quarter as CEO of Tele2. It's been a true honor to lead this company. And I would like to thank all of my great colleagues who have worked hard to drive this company forward and will continue to do so. I would also like to thank everyone who is listening to this call and has followed us throughout this journey. I really appreciate your support for me and your continued support for Tele2 and Kjell Morten Johnsen when he steps in on September 15. With that, I hand over to Andrea for Q&A.

[Operator Instructions] We have a question on the line coming from the line of Ulrich Rathe from Jefferies.

I have 2 questions, 1 clarification, please. You mentioned again B2B price competition. Could you highlight what you see as the main drivers there in terms of which competitors, but also what you think is structurally -- is going on there? The second one would be, when you talk about your cost mitigation activities, could you highlight the major buckets and also how sustainable the actions are that you're currently taking specifically to address the virus revenue shortfalls? And my third point is just a clarification. When you talk about SEK 100 million to SEK 120 million impact throughout this year -- throughout this year, does it mean this is a quarterly average, including Q1? Are you just talking about the second half at SEK 100 million to SEK 120 million per quarter?

So Ulrich, thank you very much for your questions. I'll do the third one. The answer is that the SEK 100 million to SEK 120 million per quarter, it's a per quarter figure, and nothing else. That's not for the whole of the second half of the year. It's per quarter. Then when it comes to B2B, we'll go to Samuel.

Yes. Thank you. So on B2B, we continue to see price pressure in tenders for large enterprise, specifically in the public area, that we've seen before, and also across the board, I would say, when it comes to connectivity. It is a tough environment. And it's no major change, I would say, in regards to competitors. So it remains a tough environment, and we continue with the strategy we have to become even stronger in SME, but also to become even stronger in the private sector where the margins and the price levels are slightly better. So no major change.

And it's Mikael here. I will then answer the second question about cost mitigating activities. We divide this into 2 different groups: the short-term mitigation activities, which we have been executing on this quarter, and these are mainly related to sales, marketing activities which we cut back on in these times, and these are short term which we expect and hope to get back on the original plan whilst the pandemic is over. So these are short term. You see them in this quarter. You will see them continue during the pandemic but then will go back to normal levels. Then you come to the second bucket, and that is more long-term sustainable cost savings. And as we stated in the report, the -- we are now up at a run rate of SEK 100 million on an annual basis at the end of the second quarter, very limited impact in this quarter's numbers. But going forward, the annual run rate will be SEK 100 million -- is SEK 100 million. And this is related to the business transformation program, which we announced in Q4, the SEK 1-plus billion in OpEx savings to be realized over 3 years. And there, as one example, the largest item in this quarter is that we have closed approximately 1/3 of the stores in Sweden. And then we have other long-term savings in there as well. I hope that clarifies the situation.

Yes. Just again on that clarification. SEK 100 million to SEK 120 million throughout the year quarterly rather than -- is it throughout? Does that mean it's a quarterly average for the full year?

No. It means that it is SEK 100 million to SEK 120 million in Q3 and the same amount in Q4. So you should compare it to the SEK 135 million we had in Q2.

We are taking our next question from the line of Terence Tsui from Morgan Stanley.

And Anders, wishing you all the best for your future endeavors as well. I had a question on TV, please. I just wondered if you can remind everyone about your view of owning premium content. I know in the past, you've been very -- seem to emphasize that you're an aggregator of content, but I'm just interested in your thoughts around the changing dynamics now that Telia has the Champions League rights. And building on that, what would cause you to change your view around ownership of premium sports in the future?

Terence, thank you very much for your kind words. When it comes to our TV strategy and owning content, that has not changed. It's not something we're deliberating. We don't think there is money to be made by owning premium content, and I can't really see what should happen in order for us to reevaluate that standpoint. Nothing -- I mean, by our competitors owning Champions League, that is far from enough from coming to a different conclusion that I can tell you. We know that the part of the TV business where we historically have been strong and where we build our business is from basic and upwards. And if we look at our profitability, it comes basically from the basic services, which is underpinned now by the gross margin, for instance, in Com Hem. Even in Q2 where you see premium sports going -- revenues going down, we defend our gross profit and more. So you can clearly see where the profitability comes from in TV. So that's what I can tell you, Terence. There is no other thoughts at this point in time.

And just as a quick follow-up on the TV element. You mentioned that you're going to be increasing prices in TV as well. Can you talk about what you've been doing on the basic TV product to kind of justify these price increases for your customers?

Yes. So I mean, partly, one big thing we are doing is the Com Hem Play+ push where we're giving that to all our customer base for 12 months. I think that's one of the most loyalizing actions we have done ever, to be honest. And then on top of that, with the deal we concluded that we announced a couple of months ago, we also added some really good content to the basic TV packages. So those are a couple of examples of things that we're doing to support pricing.

We are taking our next question from the line of Stefan Gauffin from DNB.

Yes, some clarifications. Last quarter, you had some costs relating to the pandemic. And this quarter, you're talking about impact on EBITDA from the pandemic. But is this costs? Or is it only a loss of service revenues like roaming, et cetera? And then in terms of cost savings, you have already executed some long-term cost savings like the 18 stores in Sweden. Do you already have some plans to execute on in Q3? Any additional comments there would be helpful. And then finally, there are some new MVNOs entering in Sweden, and there's competition on the family offerings for the main brands. Can you just comment on what you're seeing on the consumer mobile side?

Thank you, Stefan. It's Mikael here. I will start answering the first 2 questions. The effects we talked about for the pandemic, the SEK 135 million in Q2, that's -- it's the effect of underlying EBITDA of the lease. And then it can be both that we lose out on revenue, like with roaming, for example, which is partially -- which is partly that effect, both operator revenue and end-user service revenue. And it can also be that be on the cost side. So it's the EBITDA effect. And then talking about cost savings, I will not comment specifically on what we intend to do in Q3 and onwards. We will continue to push the business transformation program, of course. And as we stated in last quarter, we'll continue to see if we can do things earlier rather than later given the situation. But we can't promise any or I will not guide specifically on what we intend to do in Q3 and Q4.

Okay. Stefan, Samuel here. On the consumer mobile market, one thing I can say, the introduction of MVNOs, we haven't seen anything based on that. I think that's way too small to have a big impact. Overall, I think there is no major changes. We have the no-frills brands, and they are competitive, but we have lived with that for quite a while. And then we have the family services that you could argue adds a little bit of volatility to the market. But it is the [ main ] brands driving it. And compared to 1 or 2 quarters ago, I would argue that the campaign, the price for those campaigns on family has actually gone up a bit. So competitive, but rational.

We are now taking our next question from the line of Maurice Patrick from Barclays.

This is Maurice here from Barclays. And also to Anders, from my side, good luck for the next part of the journey, and it has been great working with you. So the question really is on bad debt. So the first quarter, you took a provision on increased expectation of bad debt, and there's obviously lots of questions as to whether that was conservative or when you might write it back. What's your current thinking on bad debt? I mean is it increasing? Is there any change? What's your thinking in terms of whether that should be written back? Is it too conservative?

Maurice, first, thank you for your kind words. And I should probably not answer this question, and we have the expert of bad debt in the room. Mikael, so please.

I'm not an expert. We -- in Q2, we -- it's probably too early to say if we were too cautious or not. So far, we have seen the number of bankruptcies in Sweden go up somewhat, but it's not driving our bad debt provisions. So we are -- have not been that affected by this market data, I would say. But then also looking into the situation, it's probably -- if you go out of business or you lose out on revenue in March, April, it will take some time before you go out of business, and we see the bad debt effect in our books. So it's too early. We'll have to come back on it in Q3. And that goes for Sweden, and the situation is very much the same in the Baltics, but it's too early. But we are, generally speaking, somewhat more positive today than we were 1 quarter ago. But still too early to release any part of the provisions. And if they are to be released, the approximately SEK 35 million we provided in Q1, I don't think you should expect it to come in one big chunk in 1 quarter. Then it's something we will have to evaluate on a much more granular level and look at it, customer group by customer group.

That's super helpful. And just as a quick follow-up. I mean given what you said about pricing, i.e., you see half the impact this quarter, full impact next quarter, you did a strong EBITDA result this quarter. It feels like a flat EBITDA for the year looks pretty conservative, isn't it?

Might be, but you should consider -- I think you should more look back to the 2019 numbers and the comparables where we had easier comparable for Q2, where we -- you had cost savings in that quarter out of the synergy program we were running. But those ones were -- we also spent a lot of money on, call it, future investments and growth in Q2 last year. When you come into Q3 and Q4 last year, you saw the full effect on the synergy program. And therefore, the year-on-year comparison in terms of percentage growth will be much more difficult for us in Q3 and Q4 this year, everything else equal.

We are now taking our next question from the line of Lena Osterberg from Carnegie.

I have some questions on the TV side. First of all, the churn rate has been elevated for a couple of quarters now. And I was wondering if you could say how much of that is related to those premium sports packages and not having the sports content? And how much is related to, as you say, your more profitable basic services? And then on the revenue -- service revenue decline, could you also maybe give us some more detail on the fall in ASPU, how much is related to sports and the lower price on sports packages temporarily? And how much is related to not being able to implement price increases at the beginning of the year and having to postpone that? And then maybe also on restructuring charges, which were higher on the store closures this quarter, should we expect similar levels quarterly in Q2 -- sorry, in Q3 and Q4?

Lena, it's Samuel here. I will answer the 2 first question. I mean we know there is a structural change in the TV market, and we've been working for that quite a while and continue. One of the big things we're doing is, of course, to drive our Com Hem Play+, which is growing very nicely, and that's our ticket to the future. If we look at our traditional TV business, I wouldn't say that churn has actually been that impacted. We have some impact on that intake, but it's primarily to us putting down on sales as part of defending EBITDAaL. And when it comes to the service revenue decline and asset decline, that's truly a pandemic impact, and the vast majority of that is premium sports. And we expect to come back to more of the natural level in the business in Q3 and then fully in Q4 when sports are coming back now and when we are pricing. Pricing has come somewhat later on TV this year than on last year and if you look at total TV. So a fully dynamic impact, planning to come back to the normal, if you will, in Q3 and Q4.

Can I ask you then what do you view as normal because it's been fluctuating quite a lot? Is it last year's levels? Or is it the levels we saw before this drop? Where is the normal service revenue decline level for the TV business?

Let's see what the exact new normal is, but we know, of course, that there is a structural change happening in the market, and that's what we're working with. So from our perspective, we don't chase revenue in traditional pay TV. We're chasing great cash flow, and we see in this quarter that we're actually able to defend gross margin. We actually even improved on Com Hem TV due to great cost control, but we will continue to work with good content and pricing, but also cost control. So cash flow is the most important thing. And there, we're actually holding on very good.

Okay. But say, 6% to 7% decline, as you've seen during 2019, should that -- is that a more normal level compared to the 12% drop you saw now?

You're not going to get a number out of me, Lena. But Lena, let's remind you one thing, in '19, we didn't do as much pricing as we did in '18 or as we're going to do in '20. That's one factor.

Okay. So the price increase this fall will be bigger than the smaller one in '19?

Yes. And then the question is how much -- if there is more speed in the -- or in the migration from regular TV over to on-demand TV or spring TV, that remains to be seen. And as Samuel said, what we are trying to do here is that we both -- we run the current pay TV business for profit, and we're trying to get the growth in terms of subscribers going forward coming into the future-proof business, which is Com Hem Play+. And that's how we look at it. And at some point in time, we will have to stop looking at revenue as the guiding metric. I'd rather look at profitability and number of subscribers.

Your second question related to restructuring charges. They were, as we said, SEK 120 million in Q2. I would say this is on the higher side if we look over time, but I will not give you any specific guidance for Q3 or Q4 because that depends on the exact activities we'll do in that quarter. What drove the number up in this quarter was the store closure. On top of that, we also do the IT migration, which adds cost to restructuring, and that will continue in Q3 and Q4, of course. So this was on the higher side if we look at quarterly average over time over these 3 years.

We are now taking our next question from the line of Johanna Ahlqvist from SEB.

I thought we should switch to the Baltics, and just a question there. I mean it's been fantastic performance in the quarter despite any pandemic impact. So I'm just wondering how you look upon the Baltics going forward. Do you expect sort of this growth rate to continue? And I realized Lithuania showed a fantastic performance on EBITDAaL. Was there any sort of one-offs there? And then maybe if you can comment on the Baltics. You talked before about the potential to sort of fill the fixed gap and how you look upon that. Is there any progress in that thinking? And then my third question relates to the Dutch joint venture when -- I mean how things are running there and when you expect to get any dividend from the Netherlands?

Johanna, can you repeat your second question because I -- you disappeared there for a second.

Yes. My second question, basically related to the fact that you've stated before that you're looking to potentially fill the fixed footprint, gap, if you say so, in the Baltics. And I'm just wondering how your thinking is, as of now, on that.

Okay. Thanks, Johanna. I'll try the 2 first one, and then Mikael will do the last one on the Netherlands. So the Baltics, I mean, performed really, really well. I mean those markets are good. As we all know from figures from the top down, there are 3 player markets. We have very good position in Lithuania and we're #1; in Latvia, we're number #2 in Estonia, we have turned the business around in a -- or not we, the local team has turned the business around in a fantastic way, I have to say. So we have great momentum in these markets. And that's what you see, great companies performing well with great momentum. And that, I think, will continue. They do it very well. Despite that they had a proper shutdown in these markets, which we did not have in Sweden for a large part of the quarter. Hopefully, they will not be shut down again. And then I think we'll see a good run rate going forward there as well. So that's what I can tell you on the Baltics. When it comes to becoming a fixed player, we're running our mobile-centric convergence strategy, as you know. And that's performing well. We do believe that over time, we will have to fill the fixed gap, and it's something we are looking at. But it's not something we have to go and fix immediately. And we will basically take our time and do whatever we think is the right thing to do when opportunities are right there, which I hope they will do over time. So that's nothing changed in that strategy either. But I mean, just to summarize, the Baltics are performing really well across the board, and we believe that, that will continue.

And for the Netherlands, the company started with how they are performing. They are -- and this is the performance up until Q1. We have a time lag here since they have not published the numbers, and Deutsche Telekom has not published their report yet. It's the majority shareholder in the Netherlands. For Q1, they were growing, positive net adds in all 3 brands, both T-Mobile, Tele2 and the discount brand, Ben. I would say great commercial momentum, both top line and they're also realizing synergies as planned with -- from the merger with Tele2 last year. So no -- operationally performing very well. Coming to dividend, it's too early to tell if there will be a dividend for next year or not. And one important factor is the ongoing spectrum auction in the Netherlands, which is ongoing right now, which we cannot, of course, not comment upon. So we'll have to come back to that later. But as you know, there is a mechanism for this in the shareholders agreement. So if -- when leverage is down below a certain metric, then we will -- we are entitled to dividend, which we'll come back to.

We are now taking our next question from the line of Paul Sidney from Crédit Suisse.

Just a couple of questions, please. Firstly, just on the price increases that you've put through so far in the quarter, what has been the reaction from your customers? Have these price -- back-book price increases landed well? Just be interested to hear your thoughts on that. And then just secondly, just sort of big picture as we increasingly look through the short-term impacts of the pandemic. Just be interesting to hear your thoughts on how you think long-term behavior will change, both in the consumer and B2B segment and maybe mobile, wire line, just very big-picture thoughts on how you think longer-term behavior will change as a result of what we've seen over the past few months.

Paul, Samuel here. So I can start. On pricing, I think the reaction we've had so far is exactly reaction we anticipated. We see some churn. We see some just reactions that we're able to talk about and handle in a very good way, and we see some minor downspin effect. But this is all according to the plan. So, so far, everything are according to plan and according to our internal forecast of pricing.

Yes. And then when it comes to future behavior or long-term behavior, I mean that's an open question. But what we have seen so far is that, I mean, Tele2 has never ever been more important to society and our customers than during the pandemic. And that goes for all our services. And I think that going forward, this will strengthen our ability to -- and our relationship with our customers, basically. And I think if we are able to continue to do what we have done, namely to invest into the very best connectivity services and do the same thing on video, I think we have a very, very good future where we can not only find new customers, but also improve our products and services, so they are willing to pay more. That's my take. And I don't know, Samuel, if you have any additional thoughts on this one?

No, I think that's definitely true. We see customers -- the connectivity, the connection has just become way more important. I think it's become more important through all the hours of the day. But this is just great for us because that's on our strategy to build fantastic network and services and then add a more-for-more strategy on top. So fully agree.

And just a quick follow-up. Do you think it's too much to ask to see a sort of a better environment from governments in Europe as a whole regarding sort of spectrum, et cetera, and ability to consolidate?

That's a very interesting question. That would be great if that happens, but I don't think that will happen any time soon. Everything is regulated locally today. And I think it would be a pretty good -- big undertaking to issue spectrum across the EU, for instance. But it's a great idea, and maybe they will take it up one day.

We are now taking our next question from the line of Andrew Lee from Goldman Sachs.