Pekka Lundmark: Exact time frame is difficult to say. We commented that it seems to be happening a little bit slower than we thought earlier, at the same time when we commented that the fixed network seems to be recovering a bit faster. So, these two would, in a way, balance each other out. We had book-to-bill in optical networks that was above one in Q1, so it is contributing to the increasing order backlog of NI. We also have especially tough comparables in optical networks compared to Q1 ’23, when we especially in that business recovered from the supply chain bottlenecks. We had, if you remember, we had 45% growth in optical in Q1 last year. So, that’s the comparables that we are facing. On the product side, we are highly confident that we are in a good place.
Our new PSE-6 and 6S platforms continue to pick up momentum. We have several new customers there doing trials. We are delivering best-in-class performance. We have — you may have seen our recent announcement with SURFnet. So again, highly confident on the product side and clearly everything we are seeing in AI and cloud compute will drive investments into data centers, into data center fabric itself, which of course will benefit switching and then the data center interconnects, which will benefit the optical. And again, the big advantage that we have compared to, I would say, anyone else is that we have scale both in IP and optical. So, depending on, regardless of how operators want to play this architectural game that what you are doing in the network on the optical layer and what you are doing on the IP layer, we will have an answer to their needs.
Jakob Bluestone: Thanks for that. I just also want to ask a quick follow-up. I think you made a comment earlier that you expected that Q1 was the low point for North American mobile networks revenues as well as Indian. So, just make sure I got that right. So, even with AT&T maybe falling out later in the year, you still expect the roughly 400 million of mobile networks revenues in North America to be the low point for the year?
Pekka Lundmark: Yes, you are correct. That’s what we said. And the AT&T situation has been taken into account in that statement.
David Mulholland: Thanks, Jakob. We will take our next question from Felix Henriksson from Nordea. Felix, please go ahead.
Felix Henriksson: Hi, thanks for taking my question. I wanted to revisit the mobile network’s revenue growth guidance of minus 15% to minus 10% for the year and see whether or not you sort of use the minus 4% market growth rate by Dell’Oro, which are primarily geared towards optimistic in deriving this as a basis for market growth and sort of revisit what gives you confidence to call out the market bottom in the North America for Q1 given that you must be losing volumes from the AT&T customers. Thank you.
Marco Wiren: Well, obviously we are part of the same market with our Swedish friends who made that comment and I have really nothing to add that comment. I mean, we are seeing the same thing. We do expect that the whole market will remain weak this year. There seems to be slightly different dynamics, especially when it comes to India. We had a huge ramp-up in India in the first-half of the year, which gives us extremely tough comparables, which will then help us quite a lot in the year-over-year comparison for the second-half of the year. So that’s why, when we are combining that with the fact that we believe, and this we are seeing through our order backlog and the discussions with customers, that we believe that we saw the low point in deliveries now in Q1, both in North America and in India.
That then combined with the activities in the rest of the world, we are hopeful that in our case, our MN top line would pick up for the rest of the year the remaining quarters from the level in Q1. But that does not change the fact that the full-year will be weak for the whole of mobile networks. And when you talk about our top-line forecast compared to the Dell’Oro forecast, of course, what needs to be kept in mind there is really the India situation, where we have a very high market share in India. And when that market ramps up massively and then drops significantly back to kind of more normal levels in one year. Obviously, that is then to be reflected on our top line also when you are comparing our top line development to whatever the global market development will be.
David Mulholland: Do you have a quick follow-up?
Felix Henriksson: Yes, just quickly. Do you still expect to see continued free cash flow support from a decrease in receivables related to India in the coming quarters or has this sort of net working capital profile are related to India now normalized?
Pekka Lundmark: Yes, we started seeing the net working capital release already in the quarter four, if you remember that, and it continued now specifically in quarter one when it comes to accounts receivables. And then, of course, it always depends a little bit what is the geographical or customer mix as well. But I believe that there is still potential in the working capital to improve exactly how, what the timing is and it depends also throughout the Europe how the mix is between different geographies and regions, but also the timing of the revenues between different quarters. Because, of course, when you have a very heavy quarter four, then usually that ties up accounts receivables towards the end of the year and payments coming in quarter one.
But we started the year extremely well, and we believe that we are in a very solid track to that outlook that we have when it comes to free cash flow generation or conversion between 30% to 60%. And remember also that quarter two, we usually are impacted by the annual variable pay that always comes in quarter two.
David Mulholland: Thanks, Philips. We’ll take our final question this morning from Emil Immonen from Carnegie. Emil, please go ahead.
Emil Immonen: Hi and thank you for taking my questions. I just wanted to understand the cost savings program, was there something already visible from that in Q1? Or when should we expect that to start to show in your results?
