Erik Lindholm-Rojestal: All right, perfect. Thank you.
Daniel Morris: Thanks for the question, Erik. Turning to the next question, we have Felix Henriksson from Nordea.
Felix Henriksson: Felix Henriksson from Nordea. Thanks for taking my question. I wanted to ask about the free cash flow trajectory moving into the right direction during Q1. So just on the phasing for the rest of 2024, given the sort of working capital release that you expect to witness in India? And also given these additional restructuring charges that you’ve communicated, how should we think about the free cash flow trajectory for the rest of the year?
Lars Sandstrom: I think as I mentioned there before, the working capital buildup we had last year also came down at the end of Q4. So we will have some support on that also this year. We have part of it now and that — so there will not be a very big impact for — coming for the rest of the year from that part. Then, of course, we have a continuous focus on working capital for the rest of the year. And of course, as you know, the most important part of the cash flow is EBITDA and the result before working capital.
Felix Henriksson: Perfect, thank you. And as a quick follow-up, could you perhaps clarify that which market do you think that Tellaro is too optimistic about in the sort of minus 4% global RAN market forecast for this year? Thank you.
Lars Sandstrom: No, we don’t go into the different markets as such. What we say is that the total decline of 4% is a bit optimistic as we see it now.
Felix Henriksson: Got it, clear. Thank you.
Daniel Morris: Thanks for the question, Felix. Moving on to the next. We have Sami Sarkamies at Danske Bank. Sami, please go ahead.
Sami Sarkamies: Hi, thanks for taking my question. I would still like to dig a bit deeper into the new cost program. So could you provide some kind of split between COGS and OpEx, the total savings target and maybe mention a couple of areas where you’re able to find new savings on top of the measures that you implemented last year?
Lars Sandstrom: I think I cannot give you a split between COGS and OpEx there. We are identifying different areas, but it’s in both, for sure. And it is mainly — or to large extent it’s related to people costs, both employees, but also consultants that we have in the group. And then to some extent, there can be connected to real estate savings, et cetera. So those are sort of the key areas. But these are targeted structured plans that we are setting up and I think we are happy to come back as they progress and when we do the restructuring to share more on what we are doing there.
Sami Sarkamies: Thanks.
Borje Ekholm: And I think it’s one thing to add there, Sami is that, we like also to get into more of a habit of continuous improvements to actually take cost out continuously rather than think about this as programs. The problem, and you know that from different countries and primarily Europe, it becomes — when you consolidate it becomes a large number, and that’s why we felt it was appropriate to communicate the Swedish number not to avoid speculation. But in reality, this is going to be part of driving a continuous focus on efficiency. But we’re taking out some activities as well, which includes focusing the product portfolio a bit more and things like that.
Sami Sarkamies: Okay, thanks and welcome onboard, Lars.
Lars Sandstrom: Thank you.
Daniel Morris: Thanks for the question, Sami. So the final question today comes from Richard Kramer at Arete. Richard, your line is open. Please go ahead.
Richard Kramer: Okay, thanks very much. Borje, I guess just to wrap up, we’ve heard you talking for many years now about rising traffic and underinvestment by your large customers. specifically noted that in Europe, where we have a number of consolidations underway. What do you think unlocks that? I mean what are you looking for with your customers to say or to show that they’re going to be willing to spend more? Because right now, it just feels like the business is drifting without a catalyst for increased spending by those customers. Is there anything you can point to in the second half of the year or into 2025 that’s going to force the issue and raise those relatively low spending levels? Thanks.
Borje Ekholm: Thanks Richard. That’s the — you’re asking the right question. I mean the reality is we see the traffic growth in the networks continues. And you start to see in many markets, not singling out anyone specifically, but you’re starting to see congested networks, which means that when it’s crowded, you’re in the crowded space, you may actually get the signal, but you can’t really use it. You have simply no capacity left in the network. We’re starting to see those signs. We start to see signs that sites are congested. At the same time, the industry has a problem with return on investments. And that’s why I think personally we need to see in-market consolidation actually start to happening and start to get approved.
When that happens, we will get bigger scale. And it’s interesting, when you look at this from a global perspective, the average European operator is about 4.5 million subscribers, it’s 95, I believe, in the U.S., 300 in India, 400 in China. So the scale in Europe is simply too small. So there is consolidation needed. The second part that needs to happen, and that’s what we try to do with the global network platform for network APIs is actually to change the pricing model in the industry. So today, you have a pricing model on almost call it, a monthly subscription. And that monthly subscription is kind of decoupled from network traffic, network investments, et cetera putting actually a squeeze on the profitability in an operator. What we need to see happening to unlock investments is that you’re able to monetize the network features.
And that think about it as speed, latency, could be location, it could be different quality of service or differentiated experiences you can offer network slicing, for example. We need to define that new type of use cases that unlocks those revenue streams. Otherwise, the customers, our operators, they’re not going to see growing revenues. And if they don’t see growing revenues, they’re not going to invest. That’s the perfect rational decision. So I think we have that, call it opportunity or maybe responsibility to create those new type of revenues coming out of leverage in the 5G technology in a better way. That’s why you see our investments on the enterprise side being so important.
Richard Kramer: Okay. Super, thank you.
Daniel Morris: Super thanks, Richard. Thanks Borje, Lars. And this concludes the call for today. Thanks everyone for joining us.
