Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call operator. Welcome, and thank you for joining the Telefónica Deutschland Q1 2022 results conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Mr. Christian Kern. Please go ahead. Thank you, Maria. Good morning, and thank you for joining us today. On behalf of our management team, it is my pleasure to welcome you to the Q1 2022 results call of Telefónica Deutschland. Before proceeding with the management presentation, we would like to inform you that the financial information contained in this document has been prepared under IFRS. As usual, this presentation may contain announcements that constitute forward-looking statements, which are no guarantees for future business performance and involve risks as well as uncertainties. Also, certain results may materially differ from those in these forward-looking statements due to several factors. We invite you to read the full disclaimer on the slides, on the first slide of this presentation. Finally, today's presentation is also available for download on our IR website. With me today are Telefónica Deutschland CEO, Markus Haas, and CFO, Markus Rolle, who will take you through the presentation followed by a Q&A session. Markus Haas, without further ado, over to you. Thank you, Christian. Good morning, ladies and gentlemen, and a warm welcome to our Q1 2022 results conference call. We are delighted to present to you again a very strong set of results driven by sustained and profitable growth. Let me highlight the main KPIs which our CFO will explain in more detail in his following presentation. Revenue grew more than 5% year-over-year. OIBDA posted more than 7% growth on sustained profitable top-line growth. CapEx to sales stood at 13.6%, well on track for our targeted normalized CapEx to sales service by year-end. Mobile postpaid net additions were close to 300,000 this quarter, continuing our strong trading momentum, while the O2 postpaid churn rate temporarily came in slightly higher while still at low levels of 1.2%. Overall, we had a strong start to the year confirming our market momentum on the back of achieved network parity and sustained ESG leadership. This year is a year to celebrate the 20th birthday of our core brand, O2, in Germany. Since our launch of O2 20 years ago, we have made mobile access mass market ready and helped digitalization to make our breakthrough with society. Initially, starting as a new challenger in the German mobile market, O2 had to be more innovative than its competition. We delivered the innovations and impulses that developed and changed the German mobile communications market ongoing. For example, we launched the Kosten-Airbag, a mobile milestone with O2 Free's big bucket tariffs with surf guarantee, not to forget O2 Free's speed-tiered unlimited tariffs. As Telefónica Deutschland, we are now lighting up the next stage of digitalization on the occasion of our 20th anniversary, and we are offering with O2 Grow, Germany's first growing data tariff on a promotional basis. With the innovative O2 Grow, we are making mobile data even more accessible for our customers. Starting with 40 GB, our O2 Grow customers automatically receive an additional 10 GB free of charge every year, up to 240 GB. With the Connect option, customers can use the overall data volume across up to 10 mobile devices. This is another key contribution to democratize access to the sustainable digital future to create a better everyday life for everyone. Moving on to my next slide, sustainability has become a key success factor for our business. We are delighted to say that sustainability has been an integral part of Telefónica Deutschland's DNA already since 2005. This includes taking responsibility and focusing on our business impact on society and the environment. During our recent annual ESG roadshow, including our chairman, Peter Löscher, we have continued our highly constructive dialogue with ESG investors. This is always a great opportunity to showcase our leading ESG position among European telcos. Most importantly, it allows us to understand even better the constantly evolving investor demands with regards to this important topic. Thanks to our strong ESG performance, we are proud to be top-ranked in leading ESG ratings, as well as being included in the key ESG indices. We also encourage you to take a look at our just published annual corporate responsibility report, which summarizes well our achieved ESG milestones for the year 2021. Our ESG delivery is based on the successful execution of our responsible business plan 2025 with a key focus on three key pillars. Environment by building a greener future, second, social by helping society to thrive, and third, governance by leading by example. With regards to environment, our program Reduce, Repair, Recycle is an important building block for applying the principles of the circular economy and extends our commitment to a sustainable future. Conserving resources means above all, reducing the consumption of natural resources, keeping resources in use for as long as possible, and finally recycling them responsibly to reuse valuable raw materials. For example, we saved over 17 tons of plastic by delivering more than 8 million SIM cards in half SIM card format last year. By no later than 2025, Telefónica Deutschland plans to eliminate completely the use of non-recycled plastic in its own logistics. On social, we are focused on supporting society as communication is one of people's basic needs. In these unprecedented times, this is even more important, especially for people suffering from the war in the Ukraine. Therefore, Telefónica Deutschland is providing free roaming and calls, as well as free SIM cards for refugees from Ukraine. Furthermore, we are offering financial support and professional opportunities for interested refugees in Germany via the job platform UA Talents. Moving to governance. It is worth highlighting that we have further strengthened the independence of our supervisory board composition. As a result of these ESG initiatives, we are all well-recognized with top rankings by leading ESG rating agencies such as Sustainalytics and EcoVadis. On my next slide, I'm excited to highlight the strong execution focus of our investment for growth program and the excellent progress of our 5G rollout. Let me flag just a few key achievements. Our rapid 5G network expansion has reached another important milestone. We have already successfully passed 40% 5G pop coverage. Hence, we are well on track for the targeted 50% mark by the end of this year. Our passive and active network sharing agreements with the current MNOs enhance both network densification and CapEx efficiency. Finally, let me reiterate that Telefónica Deutschland has already passed its CapEx peak last year. We are well on track to achieve normalized CapEx to sales levels towards the end of this year. Before handing over to Markus to take you through our strong operational and financial performance in more detail, I like to reiterate our full year 2022 outlook and midterm guidance. Our full year 2022 outlook is fueled by our strong operational momentum. As management team, we remain focused on profitable top-line growth and continued cost efficiencies. We are confident to manage the increased inflationary cost pressures since the start of the war in the Ukraine within our full year 2022 outlook. Finally, we have announced a dividend proposal of EUR 0.18 per share for 2021 to our AGM on May 19th, which is in line with our strong commitment to an attractive shareholder remuneration. Markus, now over to you to take us through the Q1 results and highlights in more detail. Thank you, Markus. Also good morning, ladies and gentlemen, from my side. Let me now take you through our Q1 operational and financial performance in more detail. Our Q1 revenues continued to post strong growth and were up 5.2% year-over-year to EUR 1.946 billion. This growth momentum was mainly fueled by the sustained and profitable mobile service revenue growth and also strong handset sales. MSR increased 3.3% year-over-year in Q1 to EUR 1.351 billion. This positive trend is reflecting the continued good commercial traction of the O2 brand. In fact, O2 postpaid MSR is by far the biggest absolute driver of our year-over-year MSR growth. We had some support from the recovery of international roaming while the accelerated MTR glide path was a drag of -1.7% year-over-year. Handset revenues were supported by the good availability of devices and posted +13.2% year-over-year growth to EUR 392 million. Fixed revenues were -1.6% year-over-year to EUR 197 million in Q1, mainly as a result of the decline of the low margin international carrier voice business, driven by mainly the lower European termination rates. More importantly, our retail fixed broadband revenues continued their growth path and were up 1.8% year-over-year, reflecting the increasing share of high-value customers in our customer base. On my next slide, let's take a closer look at the trading performance. Mobile postpaid delivered strong growth with 287,000 of net additions in Q1 2022, which is an up of 30% year-over-year, driven by the well-received O2 Free portfolio and a solid contribution from our partner brands. Churn in the O2 brand was +0.2 percentage points year-over-year, mainly due to the anticipated temporary effects from the EECC. However, churn levels remain on low levels of 1.2%. O2 postpaid ARPU was broadly stable year-over-year on the back of a combination of the accelerated MTR glide path and some enhanced focus on customer loyalty. This included retention and bundle benefits, for example, for second SIM cards and friends and family offers. We continued to see strong ARPU uplift from first SIM cross-sell. MSR growth is also supported by second and third SIMs, which naturally contribute lower ARPUs. Ex-MTR impact, the O2 postpaid ARPU continued to grow +0.3% year-over-year. Ahead of the recent launch of our gigabit cable offers, the fixed broadband business registered -10K net disconnections, mainly driven by legacy ADSL and some anticipated temporarily higher churn on the back of the EECC introduction. Our technology-agnostic O2 my Home products remain popular with cable and fiber gaining traction as well as sustained demand for our fixed mobile substitution offers. Including FMS, net additions were positive in the first quarter. Fixed ARPU maintained its growth path with increasing share of high-value customers in the base and is up 2.8% year-over-year. Moving on to my next slide. OIBDA posted strong growth of 7.2% year-over-year to EUR 602 million as a result of further improved operational leverage in both fixed and mobile. The excellent OIBDA growth is reflecting own brand momentum, further efficiency gains, as well as some international roaming tailwinds, which are more than offsetting the drag from the MTR glide path. Our OIBDA margin improved to 30.9% in Q1, which is an up of 0.6 percentage points year-over-year. Within our Q1 cost breakdown, let me highlight the following key points. Supplies were flattish at 0.4% year-over-year as the positive effects from the MTR cut were more than offset by the volume driven higher hardware cost of sales. Underlying personnel costs were flattish at 0.9% year-over-year, with a lower FTE base, partly compensating for the general pay rise we did in December 2021, with 1.75%. Other OpEx were up 4.9% year-over-year, reflecting the technology transformation and the commercial activity, including an enhanced retention focus and a more normalized marketing spend versus a lockdown quarter in the previous year. On the right side of the slide, we show our free cash flow with its usual seasonality and our healthy financial leverage. Free cash flow amounted to EUR 222 million in Q1. As usual, we paid the bulk, typically more than 40% of our annual lease payments in Q1 amounting to EUR 275 million. This is only marginally over the last year. As a result, free cash flow after lease stood at -EUR 52 million for the first quarter. Working capital movements of -EUR 86 million in Q1 were on a similar level as the prior year and are mainly driven by the anticipated unwinding of the CapEx payables, -EUR 78 million, increased prepayments for -EUR 44 million, and other working capital movement of EUR 39 million included a reduction in trade and other payables of -EUR 194 million, which was outweighed by a movement in trade and other receivables of +EUR 278 million, mainly due to silent factoring. Our consolidated net financial debt amounted to EUR 3.213 billion as of March 31st, resulting in an unchanged healthy leverage ratio of 1.3x. On my final slide, we reiterate our full year 2022 outlook, fueled by the strong Q1 performance and the growth momentum carried over from the last year. As a management team, we are highly committed to deliver again strong operational and financial performance in 2022. Unchanged, we expect low single digit percentage growth for both revenues and OIBDA with further margin expansion while compensating regulatory headwinds and managing the increased inflationary cost pressure. Also unchanged, we expect the CapEx to sales ratio in the range of 14%-15%, approaching normalized CapEx to sales levels towards year-end. Finally, as mentioned by Markus, the dividend proposal of EUR 0.18 per share for 2021 is in line with our announced dividend floor for the financial year 2021 to 2023. Now we look forward to getting your questions. Operator, please go ahead and start the Q&A session. Thank you. Ladies and gentlemen, at this time we will begin the question-and-answer session. Anyone who wishes to ask a question may press star followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. We would kindly ask you to ask a maximum of two questions per participant. One moment for the first question, please. The first question is from the line of Georgios Ierodiaconou with Citi. Please go ahead. Yes, good morning, and thank you for taking my questions. I have two, please. The first one is around the cost phasing for the year. So clearly very strong margins this quarter. I believe, Markus, you have also a relatively easy comp in the fourth quarter, given the investments you've done commercially in 2021. Do you mind just perhaps giving us a bit of a color as to how we should think about the different cost drivers during the year. My second question is around the fixed line performance, more on the KPI side. I understand the revenues were impacted a bit on some low margin wholesale. You did have negative net additions this quarter. I just wanted to get your views on how the market is evolving, both in terms of growth and competitive intensity. Secondly, if you could perhaps address how you plan to reverse this trend in the coming quarters. Thank you. Good morning, Georgios Ierodiaconou. Markus Haas speaking. Many thanks for your questions. First of all, we clearly expect positive OIBDA growth in every quarter this year. We had a very good start into the year. We are clearly currently looking forward what is the overall situation from the market. Overall, as said, we are very confident to deliver our full year guidance, and let's see how the year is coming. We clearly expect growth in every quarter this year. On your second question, on fixed, we were in the process of renegotiating our fixed wholesale terms with the cable operators, and have been able to clearly improve the products and the conditions. For that, we clearly, as you have seen with our birthday campaign, relaunched cable on our network with a very attractive offer on competitive levels, but clearly now also been able to match the quality and the product features that competition had before. We were clearly now seeing or expect a strong uplift for the rest of the year on fixed trading, on wireline trading, on the back of renewed conditions on the cable networks. Insofar, we already knew in Q1 that this was coming, so we clearly now have with the acceleration seeing throughout the year. Georgios, let me add some more details. This is Markus Rolle speaking. For the cost phasing. Apart from the one-offs that we had in the previous year, we expect this year, of course, to be a much more linear cost phasing. Because in the previous year, we were still hit by the lockdowns and all the topics driven by COVID in the last year. In general, cost is expected to develop more linear. We will have somewhat less pronounced support from roaming, as you know, because travel activities restarted throughout the mid of last year again. We also expect some cost increases in line with our plan and the expectations. For example, the enhanced rollout will result into slight cost increases on the network side, but all anticipated in the guidance as well as also the inflationary topics. Thank you. The next question is from the line of Ulrich Rathe with Jefferies. Please go ahead. Yeah. Thank you very much. My first question would be on O2 Grow. That's obviously a time-limited offer. Just conceptually, I was wondering how you think about that. I mean, nobody knows whether what the price for 240 GB is gonna be in 20 years' time and the products that are framed around this and marketed around this this growth towards that endpoint. Is that a sustainable model that you can translate into other products, or is this simply a complete one-off and then not the model for tariff structures in future? Second question is on the comments that you made on the output dilution due to channel management in the first quarter. Could you give a bit more color what exactly you did sort of proactively there, and in what way that affected the output growth in the first quarter? Thank you very much. Many thanks, Ulrich, for your questions. On the first one, on the O2 Grow. O2 Grow is clearly an ARPU creative, a creative tariff for us. I think it comes with the EUR 30 price point. It's a time-limited offer, as you rightly said. From that point, it's clearly strengthening, again, loyalty. It's clearly also for existing customers who want to do an upsell from the packages they are currently on. It's a very attractive offer from our perspective. It's for us, clearly a test. What we currently see is we have no plans so far to increase it beyond the birthday campaign. Also clearly said, but from our perspective, every customer that comes with O2 Grow will increase our average ARPU in O2 postpaid. As again, it's strengthening our positioning, it's strengthening loyalty, in the base, and it's an innovation. It's an innovation tariff. It's a different concept to unlimited tariff. From that perspective, we clearly hope that many customers will go for the tariff, in order to clearly continue our growth momentum that we have already seen in the first quarter. Hey, Ulrich, and let me take your second question on the ARPU development. I think first of all, our underlying development, our operational development, is fully intact. O2 is by far the O2 postpaid, by far the biggest contribution to our MSR. However, in Q1, we were facing the MTR cut in our ARPU. Without the MTR cut, our growth would have been again at similar levels like you have seen in the previous quarters at around 0.3%. Let me explain you also the mechanics behind a little bit more. We are still very well performing from our perspective on the first SIM card. As Markus was mentioning, O2 Grow is also contributing to that one. We are still gaining customers far above the average ARPU that we have in our customer base. However, we are more and more on the retention side. Also, of course, gaining second SIM cards, third SIM cards, family and friends offers, et cetera. They come with a lower ARPU contribution, so they could dilute that ARPU core KPI, but they are also contributing nicely to the overall MSR growth. Of course, we know the customers they can also within good profitability into play. We should not just solely look at the ARPU KPI, which is still healthy from an underlying perspective. We should also look into the bigger picture where you have some effects that we have to take into consideration. All, I think, going into the right profitable direction. Right. The comment in the report on the ARPU sort of impact of the retention refer specifically to the second and third SIM cards from friends and family, and these are the effects that you've commented on before? Correct. Got it. Okay. No, nothing else going on. Okay. Thank you. Thank you. Thank you. The next question is from the line of Polo Tang with UBS. Please go ahead. Morning. Thanks for taking the questions. I have two. The first question is really just about your 1 Gb cable broadband offer. You're promoting it for EUR 30 per month. Can you comment about how much traction you're currently seeing with that product? And can you comment on what you're seeing thus far in Q2 in terms of both postpaid net adds and broadband net adds? My second question is really about free cash flow after leases. You've seen quite a negative working capital drag of -EUR 86 million in Q1. How should we think about working capital for the full year? If I look at your Q1 results, I can see scope for consensus, nudge EBITDA higher for the full year, but also deliver CapEx for the full year. Will this be offset by negative working capital movement over the course of the year? Thanks. Thanks, Paulo, for your question. On your first one, the 1 Gb birthday promotion offer on fixed based on the cable infrastructure has a price step up after 12 months. On average, over 24 months, including then the cost for the router, we are matching basically competition. Clearly, the first 12 months is an entry tariff that we give, but you already need to commit to the higher tariff after 12 months with a step-up in pricing. We clearly expect, by being able to sell this also actively in our customer base, in our mobile customer base, attractive take rates. We just launched a week ago, and we clearly see that the offer is getting traction. As you know, we are not communicating forward-looking statements on growth rates in mobile and fixed, but we clearly believe that we can underpin the current momentum going into Q3 and Q2, especially in both quarters to continue on the very healthy momentum you've seen on the first quarter, already kicking in from the very strong Q4 that we have delivered in 2021. It's a continuation of the momentum that we see, and all these offers will clearly support the current trends that we see. Hi, Paulo. Good morning. Let me also take the second question. First of all, I think from an operational cash flow perspective, we are on similar levels, like, in the previous year. We have roughly an up of EBITDA of EUR 40 million and also additional CapEx of EUR 40 million versus the prior year. Here we are marginally at the same level. The working capital movements that we see are nearly on prior year levels. Nothing unexpected is currently happening. We are seeing, of course, the prepayments that we're usually doing with roughly 40% for the full year amount in Q1 kicking in negatively into the working capital changes. Of course, the reduction in CapEx payables from the CapEx peak of last year. We have, as always, that back-end-loaded cash flow profile, and we expect that to normalize as it also has done in the last year. Nothing unexpected happening from a working capital perspective, Polo. Thanks. The next question is from the line of Andrew Lee with Goldman Sachs. Please go ahead. Good morning, everyone. I just had a question on the free cash flow generation. Thanks for your commentary just now, Markus, and slide 10. Just trying to understand, even with the kind of Q1 weighting of prepayments, your free cash flow of EUR 222 million, which you highlight on slide 10, compared to EUR 248 million a year ago. What are the incremental headwinds? Because as you said, you know, OIBDA minus CapEx is flat or, you know, very slightly up year-on-year. What's providing that kind of EUR 30 million headwind? And I think partly there's some silent factoring or handset financing in there. I wonder if you could explain just what exactly is going on there, just so we're better able to model through the year. That would be really helpful. What's the outlook for cash taxes for this year? Should they remain de minimis for 2022 and into 2023? Thank you. Yes, Andrew. Let me take both of your questions. I think we see minor movements on top in working capital from absolute numbers. You cannot really see an underlying trend of changes. For example, silent factoring tranches that you are doing can be on a higher level or a lower level on a quarterly basis. That depends also on the number of handsets being sold, et cetera. We expect no underlying trend changes, no headwinds that you were anticipating there, but just some movements that you have seasonality driven. On the cash tax, indeed, we are expecting to pay a minimum taxation level due to the big tax carry forward that we are having. However, we have to have in mind that the cash tax this year will be slightly higher due to also tax payouts of the previous years that have been not yet cash tax relevant, plus also anticipating then an amount for this year and a prepayment for last year and the prepayment for this year. You can currently calculate, and we are still not finalized about that, but roughly within a cash out of up to EUR 100 million for the full year. Okay, thanks. I still don't fully understand the EUR 30 million decline in free cash flow from EUR 250 million- EUR 220 million. I guess I think you're saying that's just some kind of different phasing of prepayments or? Correct. It's quarterly phasing that we see. We can also follow that up, Andrew, with you to get the modeling right with our IR team afterwards. It's nothing from a structural perspective that moves into the wrong direction. We will follow up after that call with you, with Chris and Marion. Okay? Thank you very much. The next question is from the line of Mathieu Robilliard with Barclays. Please go ahead. Yes. Good morning. I have two questions, please. First, with regards to the competitive environment in mobile, obviously with the change in law regarding customer lockup, I just wanted to understand if you're seeing any changes in dynamics in any of the segments. Second, I wanted to confirm that the share of wholesale revenues in postpaid MSR hasn't changed too much versus the previous quarters or years. Thank you. Good morning, Mathieu. It's Markus speaking. From our perspective, the EECC impact, I think is as expected. We saw the technical effects in the first quarter. Also having a look at the mobile number portability base, I think we have healthy rates, so we really have strong gains, so from that perspective. Clearly not all SIM cards, as we discussed in the last call, are coming back, so we had not used cards. We had cleanups in the base that you also have seen. Overall, as said, very slight increase of churn in the first quarter. Full normalization expected in the second half year. We saw this technical effect, but mainly no impact on the numbers on revenue and OIBDA. Overall, as said, technical effects, but no worry at all going forward. I'm sorry, if I can interrupt. No change in competitive behavior from other players around this? From that perspective, clearly we have implemented this in a compliant way. Not all competitors have done it in a first step. Clearly, the regulator now really reminded everyone to be compliant. From that level, we have here a clear, fair, level playing field. Also on that level, normal promotional season, rational market, no disruptions from that side. Now after everybody has implemented it in a compliant way, we also see a fair level playing field. Good morning, Mathieu. Let me take the second part of the question with regards to the wholesale revenues. We also see again a solid contribution to our MSR from our partner business, but a steady contribution. As said, by far the biggest growth comes from the O2 brand, also following our strategy. Here we are trailing in percentage of the postpaid MSR still in the mid- to high 20s%, as we have seen it also in previous quarters. Thank you very much. The next question is from the line of Joshua Mills with BNP Paribas Exane. Please go ahead. Hi, guys. Thanks. Just two questions from my side. The first one would just be on trying to break down the very strong EBITDA beat this quarter and get a sense of the operating leverage. I think in the past you've indicated that EBITDA contributions can come from all three of your revenue segments, so mobile service revenues, plus handsets, plus fixed. Has there been any change in how much handsets, which were up a lot this year, have contributed to the EBITDA? And going forward, if you can maintain this low single digit, as you call it, kind of 3%-4% MSR growth, do you think that a mid-single digit EBITDA growth profile is sustainable? The second question from me would just be on a comment you made earlier, Markus, around the ARPU inflow and the higher quality subscribers that you're seeing. I think our own data and what we see in results would suggest that you're capturing more and more customers from Vodafone. I just wanted to check that was the case, and if so, how do you think about their potential for a competitive response under the new management team? Thank you. Okay. Let me start with the first question, Josh, with regards to EBITDA contribution. Of course, what we said before, you have three areas of growth from an operational leverage perspective. Of course, by far, the biggest one is the mobile service revenue contribution. We see also improvements from the fixed performance that is also there. With regards to your last topic around handsets, of course, we are always having some margins on the handset business, but not significant margin contribution. We have good momentum now in Q1. We had good availability of handsets also, and we were able to bring that across. But as said, handset is always just a means to an end for us because we just do that in order to sell mobile or fixed line subscriptions to our customers with zero to very low margins that we can generate. With regards to the forecast, we feel comfortable with our outlook that we have given of low single-digit percentage growth. As always, Josh, we will monitor that throughout the year, and if we see room for updating the guidance, we would announce that at the appropriate moment. On your second question, Josh, the key to success is clearly network parity. In the first quarter, independent tests have reconfirmed again the same network quality between the other two players in the market. From that perspective, we see healthy inflow coming from all networks to our network. That clearly also allows us to have on an underlying basis also, taking into account the MTR cut, a growing postpaid ARPU on our own brand. We see clearly inflow from all ends of the market and key basis for that is network parity that has been reconfirmed and continuous, investment, and superb delivery also on 5G rollout in the first quarter. That's the basis, this clearly drives the financial performance. Great. Sorry, if I could just maybe come back again on the handset point and sorry to belabor it, but you know, higher handset revenues accounted for more than half of the revenue growth this year. I just want to understand, is there anything different about how you're selling the handsets or the terms for customers? Can you just give us an idea of whether this is a kind of low single digit margin or a 5%-10% EBITDA margin you generate on the handsets in this quarter specifically? No. Josh, we did not change the fundamentals. We are still building on our very favorable My Handy model that we offer to the customers. Of course, we always monitor the market development below. If we see opportunities to optimize the margins, we will do. If we need to be competitive, we will also do. We had a good availability, which was the main driver for that positive handset growth in Q1. Other than probably other participants in the market, especially Apple and Samsung, had with us a very, very good availability. That drove also then the revenues and as a result also some margin improvements that we have been able to do. No structural changes and we always depend here on the market development. Thanks very much. The next question is from the line of Pilar Vico with Credit Suisse. Please go ahead. Hi, good morning. Thank you for taking my questions. I have two on my side. The first one, after Markus just mentioned that the cash tax could be up to EUR 100 million for this year. This looks like a big step up, so I'm not sure if you could provide a bit of a breakdown here on what are the moving parts, and also what could we expect for 2023 guidance. Now moving back again, sorry for this, on the EBITDA guidance. It has been reported a 7% growth, which looks quite high, versus what was announced with the 2022 guidance. I don't know if you could provide a bit more light on the headwinds that we could expect towards the end of the year. Thank you. Thank you, Pilar, and let me take those questions. With regards to the cash tax, so you see an accumulation of the minimum taxes being paid. Basically, accounting for probably nearly three years of taxes that we need to pay. Therefore you come up to that higher amount of EUR 100 million. Afterwards, you see basically if you divide it by 3, in that range, a normalization, of course, that depends on the profitability levels that we see. We still expect that minimum tax to be viable for the next years as we discussed it, because of the big tax loss carry forward of nearly EUR 15 billion that we still have ahead of us. I think that's on the first question, and the second question was with regards to the good start into the year. Yes, we can confirm that good start into the year. We do not expect major headwinds apart from the moving parts that I was describing. Some less support from roaming due to the good seasonality that we have seen already in the prior year. Some cost increases as anticipated from the network roll out, the transformational activities, and also from inflation. Of course, we need to as always remain the flexibility to invest into the market. We want to take our fair share from the market and therefore we need to remain the flexibility. No headwinds expected, just trends that we also widely anticipated. As Markus said, we are expecting also EBITDA to grow in the next quarters. Thank you very much. The next question is from the line of Steve Malcolm with Redburn. Please go ahead. Yeah. Hi there. Thanks for taking my questions. Sorry, Markus Rolle. I wanna come back on the tax point. I missed some of the answer there. Just to clarify, I think you have about a EUR 70 million liability on the balance sheet for the towers sale from last year. Are you saying that the incremental P&L related taxes for this year are gonna be EUR 20 million-EUR 30 million? And is that roughly how we should think about it going forward, I guess? You know, you take 60% of your profits 'cause you can shield those and tax the rest. Is that kinda how to think about it going forward? Just on your lease exposure, can you help us understand how much of those leases are directly exposed to inflation and how much are sort of fixed escalators going forward? Thanks a lot. Steve, indeed, you did everything what you did was appropriate. Of course, then on the future you depend on the profitability that you will be able to generate. From a calculation perspective, you are from my perspective spot on. With regards to leases, yeah, well, it's a mixed bag. Something is inflation linked. Others have just graduated leases or even fixed rents. That really depends on the different contracts. As you know, we have yeah, nearly 30,000 different leases sites with different landlords, et cetera. Part of that have been now transferred to ATC as you know, but of course there are many contracts behind with many different structures. Even if you have lease compensation in it doesn't necessarily mean that it is drawn and also not drawn for the full amount of leases because only parts are applicable to leases. From an overall perspective, we do not expect a big amount for this year. We expect an amount in the low teens as we have anticipated already in the last call. That is leading then to the before described lease increases that we will see for this year. There's still that annualization of the ATC deal to come, which is starting in July. We will have the EUR 90 million increase run rate, which will increase us from the EUR 602 million that we had in 2021 a bit, plus then the low teens number that you can add. All in line with our expectations and as indicated in the last quarter. Okay. Thanks very much. The next question is from the line of David Wright with Bank of America. Please go ahead. Hi, guys. Yeah, I think everything's been covered reasonably well, but I might just extend a little on Josh's question, and the fact that you have got this very strong network momentum. We see the independent scores, obviously, parity mentioned. I think in 5G now, you're definitely starting to look ahead of Vodafone, and I think the second derivative of your momentum starts taking you past Vodafone, on pretty well all metrics, over the next 12 months. Would you sort of agree with that you feel like, you know, you are, at some point in 2022, you are the second-best network in Germany? Can we be that blunt? Thank you. That would be a great birthday present for the O2 brand this year. As said, I think we are making very good progress. We also feel comfortable with the reduced CapEx envelope compared to last year to achieve our network targets and set full momentum. I think we have all the sites, we have all the equipment that we need up to now, so we also do not currently see supply shortage on network equipment. Overall, the machine is running and we go full steam on the one side to deliver superb 5G network experience and also attract clearly B2B customers. It's both. I think our strategy on network parity was built on first getting rural market share, significantly growing B2B, and thirdly, achieve two or three product customers. All three revenue pools that we attract are working, and from that perspective, we are in a good position to continue at the momentum that we see. As said, we are pleased with the current progress of the network rollout, and let's see what the next independent tests will tell us. Clearly, as said, the variety of tests is so close now, and especially the Stiftung Warentest test that has been conducted in the first quarter shows that there is network parity. It depends also on the details of the test. As said, we will do everything to continue and to accelerate our network position, of course. We will not stop. Okay. Thank you very much. The next question is from James Ratzer with New Street Research. Please go ahead. Yes. Good morning, everybody. Thanks for taking the questions. I have two questions, please. I think surprisingly, we've got this far on the call without a question on inflation. I was just interested, any updated thoughts you might be able to give on your ability to pass through inflation directly to consumers. I think in the past you'd indicated that this was difficult. It's clearly not allowed in Germany under existing contracts. I was wondering if you'd had any updated thoughts around front book price rises to reflect the impact of increased inflation levels in Germany. The second question, please, I had was, if you could give an update on progress within UGG. How many homes have you now passed within that joint venture? How many customers have you signed up? You know, how many pre-committed customers have you got when you do start to deploy? Any update on that asset would be much appreciated. Thank you. Morning. Markus Haas speaking. On your first question, on inflationary environment. I think we remain focused on profitable growth, continued cost efficiencies, and clearly managed increased inflationary impacts. As said, our exposure to inflation is quite limited. We don't run a fixed network, so it's only on mobile basically, and all the cost levers are actively managed. There's no impact on guidance 2022 and going forward. We clearly see smart pricing initiatives. I mentioned on the last call that we have been able to reduce the number of pack days and allowance within prepaid from 30 days to 28 days three years ago. We clearly see opportunities in the B2B segments. We see upsell opportunities to bring customers in higher tariffs, and we clearly constantly monitor the market if there are also initiatives. For example, we sell 5G only at the price point of 30 EUR, as clearly as part of our killer product, the M, but we don't sell it in lower tariffs. There are certain opportunities to clearly increase willingness to pay in tariffs. From that perspective, we constantly monitor the market. From that perspective, we have all levers in our hand to clearly manage the situation, to commit our mid and also short-term guidance on inflationary pressure. As said, the best that we have delivered is growth, especially O2 growth in the first quarter, and we are clearly committed to deliver profitable growth going forward. At the same time, leveraging cost efficiencies and smart moves, especially on prices with upsell opportunities that we have executed and will execute in the future. On UGG. I think the business has been fully established. More and more customers are connected. We don't publish the detailed number, but already a five-digit number of customers we have been able to gain, just to give you a flavor, from the momentum that we see under O2 Fiber. We are the anchor customer of UGG based on the wholesale agreement being signed between Telefónica Deutschland and UGG. We make very good progress, especially in the rural areas. The machine is now up and running, and we constantly grow this business. We are still the anchor customer and continue to be so. From that perspective, the progress is from our perspective, going well. Thank you. Did you say how many homes you've passed as well within that asset? I think it's a JV, and currently the number is not published. Clearly, if we have a five-digit number of customers, not all customers are using it, you can assume that the number is higher. Great. Okay. Thank you, Markus. The next question is from the line of Adam Fox-Rumley with HSBC. Please go ahead. Thank you. Good morning, everyone. I had a question on ESG, actually. It was very clear in your presentation how important it is to the company, but I wondered if you could talk about it a bit more from the kind of outward business perspective. Is it an element that's either attracting customers today or one you think will attract customers in the future? I suppose one area, are your net zero commitments helping you to win business in corporates who are interested, you know, in their own scope three emissions in due course? Thanks. Many thanks for the questions. First of all, yes. I think, from our perspective, it is an essential part of our strategy. For example, governance and taking care about data is in Germany essential. Data protection, executing, in line with compliance is extremely important. From that perspective, clearly you could say it's housekeeping or is a hygiene factor because you have to comply with the rules anyhow. For example, that we give customers choice to use data or to, on a constant basis, to change their permission to data management. All these kind of things are relevant. Good governance is important for our customers, besides network quality and pricing of course. With regards to your second question, also the CO2 neutrality target. Clearly, we support in B2B, and it's an active part, also the climate balance sheet of our customers. If they use us, we can have a positive contribution to their climate targets. That's clearly more and more also becoming a decision criteria because we will be the greenest and the fastest greenest network in the German market in the coming years. If they use our services, they could clearly also positively contribute to their own climate target. It's becoming more and more also a relevant factor for business customers. Yes. Thanks very much. At this point in time, no further questions will be taken. I will now hand the call over to Mr. Markus Haas, CEO. Thank you. Closing remarks from you. Many thanks for joining our call this morning. We are delighted to have presented to you a really strong start of Telefónica Deutschland in the first quarter, and we are happy to follow up next Friday in person in London.