Good day, ladies and gentlemen, and welcome to KPN's first quarter 2023 earnings webcast and conference call. Please note that this event is being recorded. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today's prepared remarks. If you would like to ask a question, you might do so by pressing star one on your telephone keypad. I will now turn the call over to your host for today, Mr. Reinout van Ierschot, Head of Investor Relations. You may begin, sir. Thank you very much. Good afternoon, ladies and gentlemen. Thanks for joining us for today's call. Welcome to KPN's first quarter 2023 results webcast. With me today are Joost Farwerck, our CEO, and Chris Figee, our CFO. As usual, before turning to our presentation, I'd like to remind you of the safe harbor on page two of the slides, which also applies to any statements made during this presentation. In particular, today's presentation may include forward-looking statements, including KPN's expectations with respect to its outlook and ambitions, which were also included in the press release published this morning. All such statements are subject to the safe harbor. Let me now hand over to our CEO, Joost Farwerck. Yes. Thank you, Reinout, and welcome everyone. Thank you for calling in. Let me start with some highlights from the quarter. In the first quarter, our group service revenues continued to grow, and within the mix, our business service revenues grew for the fourth quarter in a row, and that's mainly driven by continued strong growth in the SME segments. Consumer fiber and mobile service revenues show continued growth, partially offsetting the competitive dynamics in the broadband markets. Together with our friends from the joint venture Glaspoort, we added 113,000 households to our fiber footprint. In the first quarter, customer satisfaction levels improved across the boards, and we once again received an award from umlaut, this time for having the best mobile and fixed network in the Netherlands. Moreover, KPN was also recognized as the best all-in-one provider of the Netherlands. The good news is both on fiber on the first place and copper, we come in on the second place, demonstrating that our investments in qualities of our customer service are working well. As expected, EBITDA declined somewhat due to the cost inflation, and the free cash flow was impacted by intra-year CapEx phasing. We expect our EBITDA and cash generation to improve throughout the year, the coming quarters, and therefore, we confidently reiterate our outlook. As usual, Chris will give you more details on our financials and walk you through the outlook of this year. First, I'll take you through the business details. Once again, we've made good progress with our accelerated growth strategy, we started more than two years ago. We continue to focus on the key pillars of our strategy. The first is to leverage and expand our superior networks. Second, grow and strengthen our customer base. Lastly, to continue to simplify and streamline our operating model. We intend to present a strategy update to the market at the Capital Markets Day later in the year. The fiber rollout is on track to cover approximately 80% of the Netherlands end of 2026. In the first quarter, we rolled out fiber to 85,000 households. I already mentioned Glaspoort. Together, we did 130,000 households, and we currently cover more than half of the Netherlands with fiber. We expect a gradual uplift in fiber rollout numbers in the coming quarters. Our continued fiber rollout and growing fiber footprint is delivering an improved penetration rate for retail and wholesale. Looking at the results of the first quarter, we currently generate almost EUR 1 billion of fiber service revenues per year, this year, in consumer markets. This number is growing strongly, driven by a growing base and an attractive ARPU. All in all, fiber is clearly at the heart of our strategy to create long-term value for all the stakeholders. Now let's move into the consumer segment. Adjusted consumer service revenues were nearly flat in the first quarter. On one hand, we see consistent mobile service revenue growth driven by base development and growing ARPU. On the other hand, our fixed service revenues were impacted by anticipated declines from KPN's legacy portfolio. Despite the rising cost of living, impacting general customer sentiment, I must say, KPN, we continued to lead the Dutch market in customer satisfaction. I'm happy to mention our investments in service and quality of our products and the support of all the colleagues working in that environment are really paying off. Net Promoter Score improved sequentially and remains one of our top priorities. Let's take a deeper look into our first quarter KPIs. Retail fiber base increased by 35,000 customers. Despite a solid subscriber info, our total broadband net has showed a small decline. In March, we observed a gradual improvement in our order intake. Going forward, this together with the new portfolio lineup and the customer focus should support an improvement of our Broadband base trend again. Fixed ARPU remained broadly stable at EUR 53, and combined our fixed service revenue decreased 1.7% year-on-year. Our postpaid base increased by 11,000, and the postpaid ARPU grew almost 1%. Combined, this led to a solid 3.4% growth in mobile service revenues. A look at the B2B segments. We saw continued service revenue growth in our business segments. The B2B adjusted service revenues grew more than 3% year-on-year in the first quarter, with growth across all segments. Business Net Promoter Score improved further despite the volatile economic environment. Also, B2B customers continued to value KPN for the stability, reliability, and quality of our network and services. SME is the main engine of B2B growth, driven by a solid commercial momentum, especially in OMO. We serve our customers via our cloud-based KPN EEN platform, the customer base is doing good. Also LCE continues to move in the right direction, showing growth for the second quarter. We are finalizing the migration of our customers from legacy portfolio to the new environment. We are confident we are on track here to create more growth in the LCE segments. Tailored Solutions continue to perform in line with expectations. As we communicated previously, this business remains subject to the timing of projects and related hardware sales. In wholesale, service revenues were broadly flat in the Q1, the growth trend leveled off compared to previous quarter due to the impact of several smaller one-offs in Q1 last year. Positive one-offs in last year. Looking forward, I'm confident that we get back to the growth trends in wholesale again. We added 25,000 postpaid SIMs in the first quarter, while our broadband base was stable. Before I hand over to Chris, I would like to mention that we increased our ESG disclosure in today's presentation. In the appendix, we include a slide with more insights and additional KPI regarding some of our non-financial ambitions in this respect. From today, and in line with our commitment to sustainability, you will be able to track our performance on carbon reduction, circularity, and diversity on a quarterly basis. Let me now hand off to Chris to give you more details on our financials. Thank you, Joost. Let me take you through some more financial numbers. Let me start by summarizing some key figures for the Q1. First, our adjusted revenues increased 1.9% year-on-year, mainly driven by growth in business and consumer mobile and higher non-service revenues. Second, adjusted EBITDA after leases decreased 1.6% year-on-year as sustainable top-line growth was offset by higher costs. In the first quarter and in line with our expectations, our cost base was affected by inflationary headwinds such as wage indexation, rising energy costs, and higher lease costs. This translated to EUR 12 million higher in direct OpEx. Actually, if we were to exclude our higher energy cost, adjusted EBITDA would have been in line with last year. While it's still early days, if the moderation in energy spot prices continues, there remains a scope for modest upside to our 2023 EBITDA guidance. In the meantime, we keep working hard to further reduce our energy consumption. Third, free cash flow decreased 20% compared to Q1 last year, mainly to higher CapEx as a result of inter-year phasing. We'll offer more detail on underlying cash developments later in this presentation. Group service revenues increased by 1.2% when compared to last year, underpinned by especially strong growth in our business segment. Business service revenues grew by 3.1%, mainly driven by continued strong performance in SME, while both LCE and Tailored Solutions also contributed to growth. SME again outperformed against our expectations with about 7% growth in service revenues versus last year. Wholesale service revenues were broadly flat year-on-year. We should resume positive growth in Q2 again. In consumer, the service revenue trend improved slightly compared to the previous quarter, but are still marginally negative. Mobile service revenues continued to grow. In fixed, we reported a decline as the growth in fiber was offset by declining legacy services, less voice traffic, and the accounting effects of content packages. For the remainder of 2023, we continue to expect some headwinds, but the year-on-year trend is expected to improve, supported by implemented price adjustments and commercial improvements. Moreover, the accounting effect that held back our reported broadband service revenue growth for the past 12 months will have lapsed when we meet again and we present our 2nd quarter numbers. At EUR 164 million, our free cash flow margin declined to 12% revenues. The delta in free cash flow is explained by different phasing of fiber-related CapEx. For 2023, we expect a more evenly distributed CapEx level throughout the quarters. For the other free cash flow items, the impact of higher cash taxes, working capital phasing and lower EBITDA were offset by lower interest expenses and restrained restructuring charges. All in all, and contrary to 2022, we had a relatively soft start to the year in terms of cash generation. As highlighted through our full year results, we expect this year's free cash flow to be somewhat back-end loaded, reflecting also the timing of EBITDA generation, CapEx phasing, and improvements related to working capital and other items such as cash taxes. Looking ahead, we expect gradual improvement in this free cash flow number throughout the year, and we remain confident to deliver on our free cash flow targets. Finally, we end the quarter with a strong cash position. We continue to have a strong and resilient balance sheet at the end of March, with a leverage ratio of 2.2 times comfortably below our self-imposed ceiling of 2.5 times. Also, our interest rate coverage ratio remains strong. Although the sequential increase is related to the phasing of interest payments expected to normalize in the remainder of the year. As a result of higher interest rates, floating debt, and other corporate actions, our average cost of senior debt increased by 146 basis points year and a year to 3.9%. In March, we redeemed the remaining outstanding principal amounts about $260 million of our US dollar hybrids. Our next bond redemption only takes place in 2024, which gives us plenty of time and flexibility in current volatile markets. Moreover, due to the current volatility, we re-swapped some of our floating debt back into fixed. As a result, our exposure to floating rates was reduced from 36%-70% of our debt. Total liquidity remains robust. It consists of EUR 1.5 billion in cash and short-term investments and our undrawn revolving credit facility. Overall, we're very much on track and confident to deliver on the 2023 outlook we gave to you in January. To summarize, KPN generated results in line with expectations, and we continue to make good progress with our accelerated growth strategy. We see sustainable growth in group service revenues with positive signs across all segments, especially gradually improving order balances in the retail segment. KPN continues to lead the Dutch market in consumer satisfaction, which is evidenced by the awards that Joost mentioned and our NPS improvements. Finally, as expected, I indicated earlier to you, we had a relatively slow start compared to the previous year in terms of EBITDA and cash generation. However, sustainable service revenue growth run rates and the measures we've put in place provide us with confidence in our ability to return to EBITDA growth this year, and therefore, we confidently reiterate our outlook. We expect the coming quarter Q2 to be around flat versus last year and in Q3 and Q4 to show solid positive EBITDA growth again. We observe and expect a similar pattern for our free cash flow. Thanks for listening. Now let's turn to your questions. Thanks, Chris. As usual, I'd like to remind you to please keep or limit your questions to two. Operator, over to you, please. Thank you very much. Ladies and gentlemen, we will start the question and answer session now. As a reminder, if you'd like to ask a question, you might do so by pressing star one on your telephone keypad. To withdraw your question, please press star two to withdraw your question. The first question comes from the line of Luigi Minerva, calling from HSBC. Please go ahead. Yes, good morning. Thanks for the presentation, and thanks for taking my questions. The first one is on the outlook for B2C service revenues, starting from Q2 onward. I'm wondering what are your expectations based on the phasing of promotions in the market, and, yeah, the competitive dynamics that you've observed in recent weeks. The second question is on just to get some more color about management change. Marieke Snoep is transitioning from head of B2B to head of B2C, and I'm wondering, you know, what kind of B2B lessons can be helpful for B2C. Particularly, I'm thinking about managing the transition away from legacy services, fixed services, products, which is basically what is keeping your fixed service revenue in B2C in negative territory. Thank you. Luigi, on the outlook for B2C service revenues. If you start with the underlying drivers, obviously we have some negative net adds in broadband in Q1 and slightly subdued postpaid net adds in Q1. On postpaid, we have some bringing forward this churn due to a number of technical measures that will revert in Q2. I'd expect in Q2 for the mobile net adds to go back to the or not as, but closer to the run rate we have on the average of last year. When you look at the underlying order balances on broadband, we've seen in the last few weeks since mid-March, and the market starts to normalize, they look a lot better. I'd expect also to see better and possibly positive net adds in broadband. If not, it will not be spectacular, but at least no longer the decline in broadband net adds if the market stays where it is. Which means that for, I think in Q2, you see mobile service growth to go up. Now at 3.4%, it will get closer to 4, I think. Fixed service revenues is bottoming out, will not be flat in Q2, but getting close to 0. That means the total consumer revenue should be positive in Q2. If you implement the price increases, it's my understanding or expectation that even fixed will cross the line in Q3 and become positive. Basically underlying gradual improvement in market circumstances, reversion of temporarily increased churn in mobile with, you know, better net adds, if not spectacular, but at least positive. That will support, as I said, improving service revenues in mobile and bottoming out in fixed. If you think through price increase possibilities. Barring of course, a market that goes berserk again, normally speaking, you'd expect also fixed to cross the zero line and start showing some positive, service revenue numbers as of 2023. Yeah, Luigi, on the management change. Good by the way you mention it. Yeah, not unexpected for me, Babak Fouladi decided after 4 years, 4.5 years in KPN to move back to the UK. He did a great job. Jean-Pascal van Overbeke decided to step down as a KPN board member for personal reasons. That then gives me, us the opportunity to do a bit of, yeah, strengthening the team and do a reset where needed. We decided to move Marieke Snoep from B2B to B2C. I think Marieke did a great job on B2B, by reorganizing the business in a more, yeah, logical way, splitting it up in three business segments and then motivating the teams to do the job. That is the real challenge in B2C. We have a plan. We know exactly what to do. It's of course based on fiber, but it's also about improvements we do in the customer environment. It's about a regional approach we installed in the Netherlands because we compete against players in different regions with different tactics. All in all, it's not on what we have to do, but on how we do it, and that is where Marieke comes in. I'm confident that she can really encourage the teams to go faster on the execution of our plans. I'm happy with the move from Marieke to B2C. On B2B, Chantal Vergouw moves in from a Dutch insurance company. She knows KPN because she was in the supervisory board for a year. She's super motivated and a high talent. She understands the Dutch market quite well. She's in the content of B2B, so she makes a flying start and already in touch with the different team members. In our technology and operations department, Wouter Stammeijer, who's already working in KPN for more than 12 years, did a great job on strategy and other projects. Last 6 months, he was in the heart of the end-to-end fiber steering to improve that part of our business. He's now moving into operations, and also he has the ambition to go faster on the execution of things. All in all, and then again, Chris here sitting beside me is still unchanged. It's still the same Chris. HR and myself didn't change. All in all, I'm happy with the new team. It's really working, and I'm looking forward to work together with the team. That's great. Thank you, Joost, for the explanation. Chris, if I may quickly follow up with regards to price increases in H2. I think Ziggo has announced they will apply inflation. In the past, KPN has kind of matched salary increases with the price increases. Should we expect same rationale? Chris mentioned the cost increases we faced Q1 and energy, labor costs pretty high up because we do an CLA increase of 6.5% this year. When we take the decision on price increases, especially in consumer internet, we always take a look at what we do on the CLA. It's pretty, I think your expectations work quite well that we will work a bit in that line. Of course, we have to take a final decision somewhere in coming months. It will be higher than last year. We also now follow a kind of a bit different strategy because last year we changed all contracts in consumer segments on broadband. We installed a clause that gives us the opportunity to do a price increase. We don't have to go out on a communication scheme 2 months in advance to inform the whole base. Of course, we will communicate to the base the price increase, but we'll be a bit less loud, louder than last year. Thank you so much. The next question comes from the line of Maurice Patrick calling from Barclays. Please go ahead. Yeah. Thanks for taking the question. Just without sort of talking pricing too much, I just wonder your thoughts in terms of how much of the price increases that you'll put through will flow through to ARPU. One of the big discussions seems to be amongst companies that net and gross price increase is offset by down spending some churn. I guess from your experiences, how much of the price increase that you'll put through and payers will put through will do you think flow into lower ARPU? Just a quick follow-up on the previous question, if I may. On the broadband add, did you say that you said it'll go back to growth in Q2 or should be broadly flat in Q2? I wasn't quite sure what you said on the broadband bit. Thank you. Well, broadband net adds, yeah, we plan for growth. It's always a bit tricky to predict what's going to happen in the coming two months. Looking at the current flows, we're in a better shape than Q1, let's put it that way. Let's wait and see. Of course, we aim for growth. At the end, that's why we do all the fiber installments. On pricing, yeah, you're right. I mean, that's a good question. There's a base. We do a price increase and one suspects or expect, sorry, that price increase to be reflected in service revenues. It depends a bit on the base and the backbook and the frontbook, et cetera. In mobile, we have a consumer-based postpaid, which is growing. There's two movements in that base. It's KPN moving customers more to unlimited, improving ARPU, and it's Simyo doing more the growth of the Simyo base. In Simyo, our strategy is to grow the base. In KPN, the strategy is to improve the ARPU, and the plan of that is reflected in ARPU improvements. Anything to add to that, Chris? No, look, on the broadband development. Look, the first month of the second quarter is not yet final, so it's kind of 30 days. As I said, if I look at order balances, they look increasingly positive. Of course, they will take some time to convert into net adds and there's always a cancellation risk. Q2 will not be spectacular, but put it this way, we've not given up hope on small positive broadband numbers. It is not spectacular, but certainly better than Q1 and an option, opportunity for some positive broadband numbers. ARPU, yes, you're right. On ARPU drop, there's a couple of things, right? There's always the secular decline in voice. Fixed voice is gradually fading out. That is a structural development. We've seen some migrations on backbook to frontbook. That slowed down a bit after we had the commercial action slowdown. That should also be supportive. We have some confidence that after the price increase, it will be slightly more sticky than last year, given the underlying developments that we see at this point. Again, it's something for us to also be very watchful when it comes to that point. Great. Thanks so much. The next question comes from the line of Usman Ghazi calling from Berenberg. Please go ahead. Hi, gentlemen. I just wanted to make sure you can hear me first. Yep. We can hear you. Great. Thank you. I just wanted to look at the fiber revenue growth trend versus the copper revenue growth trend in the consumer market or in the consumer segment. What I can observe is that, you know, the growth rate in the fiber service revenues, they used to be, you know, roughly 14% through most of last year. It's come down to roughly 10% in Q1. Meanwhile, the copper declines that were roughly, you know, 14% or above 14%. You know, if I kind of adjust for the various provisions that took place in Q1 last year, obviously reported, you're saying copper is down 11, but excluding these one-offs there, it seems to be down less than 10%. Given the accelerating kind of migration from copper to fiber, it seems somewhat counterintuitive that fiber revenue growth has come down and copper declines have come down as well. Could you perhaps provide more color if this is a function of, you know, more price promotions in fiber, or something else? That was the first question. The second question was just, on the, you know, if there's any update on the market analysis that the regulator is preparing, on the, on the broadband market. Thank you. Yeah. Well, on the question, indeed, we've seen, you know, normally fiber growth higher than copper growth. We have some net decline in fixed fixed revenues. Fiber growth came off a bit. Interestingly, when you look at the fiber numbers, it was still net add positive. If you take net adds fiber and if you exclude whatever copper migrations there were, growth net adds minus migrations from copper. There is underlying growth in fiber still is attracting net new customers to the KPN KPN network. Slightly less in the first quarter than we had last year, we relate that to the commercial intensity in the market. Actually, fiber gross sales were higher than ever in the last quarters, but also churn was higher. I think that's all to do with the severe price competition. My explanation is that, yes, you're right in your observation. Gross adds fiber very high, churn also a bit higher in fiber, but the net adds ex copper migrations were still positive, but a bit less than what we're used to. Although if you look in the quarter, you can see it moves from January to February to March, gradual improvement of the net adds in fiber. I'd expect this trend to be supportive. Thirdly, on the ARPU side, of course, we did see some more, you know, of course, some more discounts and customers who then went in for a full discount. That also showed up in some of the fiber numbers. To me, it's a function of the commercial intensity. I think the fiber growth relative to copper growth should normally stabilize in the rest of the rest of the year. When it comes to the ACM, honest answer is we don't know. I think they're working on a review of the market. I don't know exactly where it stands. We do not expect any surprises from them. Interesting, they pointed out in a press release some time ago that they were looking in parts of the cable market, of the coax market, in Amsterdam particularly. Also they said that there was no concern on the fiber market itself. Competition in the fiber market was safeguarded and safe. I don't know what their timing is, but I don't expect anything that's any surprises there. Yeah. The market analysis is something they have to do. On an annual basis. That's, yeah, not a surprise for us. We are pretty confident that our wholesale framework stands as supported by ACM recently. Great. Thank you. Just to follow up on the wholesale. I guess, I mean, the question is gonna come up anyways, but I guess the volume intake is a bit lower on wholesale. You mentioned obviously, I mean, cable being aggressive, so the alternative kind of providers struggling a bit. I mean, you know, are you considering maybe taking a tactical kind of approach to incentivizing wholesalers a bit, you know, given, you know, the, the cable strategy? In wholesale, we saw the same development, similar development as in KPN, affected by the commercial intensity of the market that has faded a bit during the quarter and normalized. You saw also a greatly improving wholesale order balance. What I find interesting, in wholesale, we of course, a large client and some other clients, we saw also the smaller clients recover. Summary answer is one, similar development as in consumer, affected in our view by the commercial intensity of the market. The good news is recovery during the quarter and a broadening base of wholesale customers in broadband. Now that you're not asking it, we're talking about wholesale. Just wanna make sure you guys will see. Had some lower growth in wholesale mobile, but that was very much a year-on-year effect. If you go back to Q1 last year, we saw a really big spike into service revenues mobile, which was driven by a one-off, that caused a year-on-year mobile growth to be negative. If you correct for that, and that was a one-off in service revenues last year, which was not even on margins, but a one-off in service revenues. If you correct for that, the underlying mobile growth in wholesale in mobile are still positive. Summary is encouraging trends in, if not spectacular, but encouraging trends in broadband wholesale in the quarter and similarly underlying growth in mobile better than what was reported due to this one-year-on-year comparison. That will also show up into improving wholesale service revenue growth in Q2. You get a full bonus question there, Usman. Thank you. Is it fair to say on the broadband market in general, the Netherlands, it's fair to say, okay, there was one broadband service provider introducing pretty aggressive discounts. We decided not to react on that because we're, like I said, differentiating ourselves on quality, on the quality of the customer service and products. Other players on our network didn't either. The good news is that it's not a market where we all follow the sharp discounts of one player. I think that the broadband market repaired a bit in March on them. Thank you. The next question comes from the line of Konrad Zomer calling from ABN AMRO ODDO BHF. Please go ahead. Hi, good afternoon. Thanks for taking my questions. The first question is on your free cash flow development related to a more smooth CapEx development throughout the year. Is it fair to say that you also think that your fiber rollout might be more evenly spread throughout the year, as in, we're likely to see more quarters with less than 100,000 homes passed from KPN than we might have seen in the past? My second question is on your price increase again. It seems that the main date that you might put that through will be the first of July. Why would you not bring that forward? Is there a contractual reason not to do it, or is that a commercial reason not to do it, given that your two competitors already put through significant price increases before you did? To start with the second one, I'll hand off to Chris. What we saw is that usually T-Mobile is doing the price increase beginning of the year, no change there. We saw an announcement of another player in the market early, not followed with the execution that will be done later. That was a bit of a fault. I like the idea of just following the pattern we usually do, which is always first of July. That's how we treat our customers. We do it first of July every year. It would be a bit of a rough move to gain the advantage of six or weeks or two months to it faster than that. It's also a process we play delicately to explain why we do it, how we do it. I just mentioned that we look at the CLA increase on our side, that means that this year could be much bigger than other years. Especially in B2B, we do higher than that. There we also follow our contracts. It is a process we play very carefully not to annoy our customers, to put it that way. Yeah. It's a commercial decision? Well, it's in the contracts that we do it annually. Probably we could do it a month earlier, but I think that is not the way we play this kind to our customers. I mean, they're used to the process. 1st of July is also good, easy, quiet moment in the year to do it. I like the idea of just following that and do it on the 1st of May or something like that. Then we gain 8 weeks. We're in the long-term value create, creating, business steering and that's why we stick to the plan. Okay. Free cash flow question, Konrad Zomer. It's really about timing of CapEx, not so much growth of fiber numbers. We had more CapEx in Q4 last year and also more CapEx in Q1 this year. Especially in fiber, the business is so that if you start a building stream, actually you start to pay, you know, up. You pay a little bit more cash in the beginning of the project and later less in the later phase of the project. Basically, the CapEx increase last year and the CapEx step of this year will have some negative cash implications year-over-year on Q1 and also to a tiny bit or a little bit in Q2. This is because you start up new fiber building seats. We started up more fiber new building streams, and that will come into CapEx. What does it mean for HP? Actually, I expect the amount of homes passed to gradually improve in a year as well. The CapEx cash out is not immediately linked to the amount of HP you provide during the quarter. It's actually the CapEx and then the cash out are linked to the starting of building streams that will deliver homes passed like in 6-9 months later. Two messages. One is free cash flow driven by CapEx increase last year and CapEx step up this year, which are a function of an increased number of building streams. That's a separate development that has some implications for the timing of our free cash flow during the year. Secondly, I would not be surprised if we could see some ramping up of the weekly and monthly delivery of FTTH homes passed numbers. Those are, you know, not immediately linked to one another, at least not in the same quarter. Okay, thanks for that. The next question comes from the line of Nawar Cristini, calling from Morgan Stanley. Please go ahead. Thank you very much for taking my questions. I've got two. Firstly, starting by B2B. Clearly your top line growth is trending nicely. I have a question on profitability precisely. Could you talk a bit about the profitability profile of the incremental growth in B2B? How does the new business compare to your current B2B margin? My second question is more of an industry related question on the fair share debate. A number of telcos are pushing really hard in here to get a CapEx recovery payment from big tech. Could you talk a bit about where you stand in this debate? The consultation is ongoing, and it would be helpful if you could share your views, latest thoughts and expectations here. Thank you. Yeah. Nawar, let me take the first question on the B2B business. When you look at the SME growth, that actually is quite high margin business because our SME business is, well, mobile business. There's cloud and workspace business in there, some broadband. On SME, I would say, new business has a similar margin to existing business, slightly diluted, possibly because we have a little bit more cloud and workspace, which is lower EBITDA margin than typical mobile or broadband. In general, broadly speaking, the SME new business is similar contribution margin as the old business. In the large corporate segment, it's slightly negative or so that it's still a positive margin business, but is slightly margin dilutive, but also cheaper to present to produce. What you see in the LCE business that the contribution margin of some of our new business is lower, but it's much cheaper to produce and we take out costs. You see cost savings in the TDO unit in the network. End to end, the margin is healthy and similar. It shows up less in B2B, but it shows up in the cost reduction in our TDO business because it's simpler, more standardized business so that leaves us opportunity to take out costs. In SME, you can look at it almost like an isolation in SME. In LCE, you have to also look at the cost improvement in our TDO business to look at the end-to-end opportunity and to show that some standardized lower contribution margin business also leads to lower costs upstream in KPN when it comes to the unit that produces products and you can cut out costs there. Yeah. On your point of the Europe ongoing on fair share. Yeah, on one hand, I should say we see more and more European telcos taking an acquisition in the debate. At KPN in general, we support that debate, and we follow it closely. There's a lot of growth rates of IP traffic coming from over the top layers that have big impact on our network. The whole discussion is on reasonable and efficient use of the network. Not on net neutrality. On the other hand, it's a bit of voice from the past, I must say personally. I understand where it comes from. It's the model we introduced long ago. You could also say it's mainly the end user paying for the usage of all the capacity. Balancing that out in a different way could be helpful. For me and for us, the main challenge is to approach these over the top layers and see them not as a threat, but more as a partner. We have built our strategic locations in the Netherlands, and together with our new network environments, the fiber network edge, we're rolling out around these locations. We think we have unique position in the Netherlands to support Microsoft or Netflix to make use of our strategic locations, our edge solutions, and be close to the customers. I would like to think more and more of these big players as future partners than as a threat doing all kind of IP traffic download, downloads dumps on our network. For me, I say we support the whole discussion. Okay, that's helpful. Thank you very much. The next question comes from the line of Steve Malcolm calling from Redburn. Please go ahead. Yeah, afternoon, guys. Just a few questions if that's okay. First on just coming back to SME. It continues to grow very healthily, 7.5% to 8% this quarter. Can you maybe just sort of help us get under the bonnet a little bit in terms of, you know, what the volume price mix, drivers behind that growth and the visibility you have over future growth? You know, you mentioned, I think the move to our unlimited mobile bundles, you know, maybe an idea of what the force in the base in the SME segment is on unlimited and what the script for further upselling for people would be really interesting. Then just back to fiber, just kind of hear your thoughts on the overbuilding. I guess, you know, what you're seeing in the market today, maybe versus what you were seeing 12 months ago. I think, you know, we all probably think that higher interest rates and inflation is a fairly major impediment to those business plans. Curious to know what you're seeing on the ground and whether the level of activity has changed materially over the last 12 months. Thank you. Yeah, Steve, on SME, it's actually less price, more volume. The price increases on SME were to, you know, have not been put through this year as well. It's more of a volume thing than a pricing thing. It's volume driven by increased number of triple play customers, the customers who have multiple products. We see an increase in mobile penetration and repeat buying of existing customers. There's still the employment development in the SME part of the Dutch economy. Our customers are still hiring new staff and hiring new staff need to be equipped with, you know, a workspace, a mobile phone subscription, et cetera. It's aligned with increase in mobile base and it's increasing cross sell with the amount of triple-play customers. We have subscription ARPU stabilizing, increasingly a share of unlimited in our SME base as well. Good, so good base growth. On broadband, I think we could do better. There is growth in the SME base. There's positive broadband growth in SME, also driven by our strategy to roll out fiber in business parks. I think we could do more. We're certainly not satisfied there. Then there's the decline in traditional voice and void being stable. Then I think it's more cloud. Chris, is that volume coming from competitive? I mean, how much is market, how much is share? Any color on that and how sustainable those trends are? I think a lot is market. I, in all reality, part of that's coming from competition, that also has to do that we cleaned up full base, moved it all to a cloud-based portfolio. During the migrations, we lost some customers over the last years. That part is coming back now because the KPN EEN solution is working perfectly fine in SME. We really see, especially on the connectivity part, customers coming back. Also I think Chris, SME market in general is growing on our side. Yes. The SME is growing, We do have a very large share in SME though. I think, without pumping our chest too much, but our KPN one platform with all products in there, increased security solutions is actually differentiating and distinguishable from others. There's a significant portion of market growth with, you know, SME customers employing more staffs. As Joost said, it's also increasing that our platform is in place. It's all cloud-based. It has no legacy products anymore. You do see that customers are bringing back business to us because we have a broader set to offer that shows also in the amount of, you know, triple play customers, which is now increasing. I think, you know, over 50% of our SME base is now double or triple play. That's a good sign of course. Okay. Do you think you can keep growing at sort of run rate in terms of growth? I mean, is that's credible? I think actually, personally, I would better do that probably Q2 looks a bit better than Q3. I think in the long run, 5% to 7% is probably where SME should be end for some, for quite some time now. Again, we've expected to flatten off. It hasn't, so it stayed on with a higher growth path than for longer. Especially, I wouldn't be surprised if you can see a small re-acceleration in Q2. Great. Great. Thanks. Next question comes from Georgios. Sorry. Please go ahead. Fiber as well. Level overbuild. The overbuild section, Joost. Oh, yeah. On overbuild, the Netherlands is until today doing quite good as you know. In the Netherlands we have our rollout program. There's one big player that obviously picks the regions we are not in, and there's another one that is mainly targeting the larger cities where we are as well. Either we come to a conclusion, or we are going for a bit of overbuild in the Netherlands. All in all, I must say that until today we really avoided overbuild in the Netherlands on a big scale. Great. Thank you. Next question comes from Georgios Ierodiaconou, calling from Citi. Please go ahead. Yes, good afternoon, and thank you for taking my questions. Firstly, a follow-up on some of the comments you made earlier around churn being a bit higher on the broadband base in the first quarter. I'm just curious whether that was mainly the result of promotions from the cable player. There was also, if I'm not mistaken, last year, some promotions from you around TV that maybe, you know, with the first anniversary of that, there is a bit of impact from this. I'm just curious as to how you are thinking about churn for the rest of the year, whether you remain confident. I know you commented a bit about the second quarter being better, but also in the second half with the price increases, whether you remain confident in stabilizing, maybe slightly growing the broadband base. If not, then maybe give us a bit of an indication as to how you expect to compensate that. The second question is around working capital. I think, Chris, you mentioned the fact that CapEx will be very linear this year. Normally, what we've seen from other telcos is when you have significantly higher CapEx in the second half in one year, in your case in 22, and then more linear the year after. There tends to be naturally some working capital outflow linked to the CapEx payments. So if I remember correctly, you expected working capital to be slightly positive for this year. Is that still the case? Do you mind just giving us a few pointers as to how you get there? Thank you. Yeah. Georgios, just to start on that churn point in broadband. In simple terms, it's pretty fair to say that the first quarter was impacted by promotions by others in the market. You're right that we did something on TV last year. I think for Chris and myself, it's very important to keep our sales teams disciplined on how to react, where we try to act as a market leader and not as a follower. That's the strategy we choose for Q1, we see things improving looking at the trend in March and further. I expect better trends on Q2, looking forward to today, I must say. The market is in a, in, it's competitive on one hand, on the other hand, in a good shape because the large service providers all introduced pretty large price increases. That was announced by T-Mobile and VodafoneZiggo, and we will communicate in May on that. That works quite well because we all do large investments in our infrastructure. I think that's needed in today. On the other hand, a bit of a strong competition, discounts, et cetera, we didn't follow. A bit of impact on the churn Q1, and now we see the improvements. Yeah. Georgios, on your working cap, you're completely right. If your working capital is more flatter from the pattern that you described, will lead to some working capital headwinds in the first half of the year. You saw some of that in Q1. Look, for example, our trade payables. The trade payables numbers made quite a big swing from Q4 last year to Q1 this year, or compared to Q1 last year. That actually has to do with the timing of fiber. New fiber building seems being put online, being put out, and your invoices go a bit faster. That's one. Secondly, we see an opportunity to improve working capital in the second half of the year. First of all, because of this timing effect. Secondly, there are still measures we can take, for example, in smarter invoicing, not even shorting payment terms, but just sending out the invoice earlier. We've identified areas with large corporate customers where we find that the time lag between finishing a product and then actually sending the invoice is somewhat uneconomical for us. That's where we can improve. We also talked to you about inventory management. We have quite a large stock of CPE, customer premises equipment, mostly in line with our Android TV launch. When we launched, we bought quite a new set of boxes for Android TV. Last year, we built a significant stock of CPE given potential supply chain issues. I think we're a bit overstocked in that area. Expect us to run down that inventory over time. We have some stock of materials for consumer support activities. It's a gradual rundown in inventory. It's smarter, continuous optimization of your working capital or of your invoice terms. Some of it on payment terms and more on the invoice terms, and then a gradual fading of working capital drag from the CapEx spike. Expect working capital to be also a little bit of a headwind in Q2 and then improve in the second half of the year. Just to clarify, you still expect it could be positive for the full year or around flat positive? It's slightly positive. It's not going to be a massive number, but it's slightly positive, I would think for you. Very clear. Thank you. The last question comes from Keval Khiroya calling from Deutsche Bank. Please go ahead. Thank you. I've got two questions in slightly longer term. You've talked about the scope for CapEx for post-2026. I appreciate this is a topic for the CMD, but at this stage, would you be able to share any thoughts on how we should think about longer-term CapEx? You've talked about non-FTTH CapEx sales running at less than 14%. Does this still make sense at the level after fiber? Secondly, as we think about you reaching the 80% fiber home coverage targets, what are your latest thoughts on what to do with the remaining 20%? It sounds like you want to avoid overbuild, so would you consider wholesaling off the alternatives or M&A at all? Thank you. Yeah, Keval. This is an important part of our strategy. We're building a fiber network. We think we have to cover 80% of the Netherlands, not because we don't want to serve 20% of the Netherlands, but we think it's pretty fair to assume that third-party players will cover the other 20%. That's what we're building. At the end of that program, our CapEx will go below EUR 1 billion, and our free cash flow will go above EUR 1 billion. Take that in mind, the number of EUR 1 billion. That's an important one on our Capital Markets Day, I would say. Yeah, wholesaling, that is our business. We're opening up our network for other players. We're not making use of other networks because in our vision, that would encourage other players to speed up their rollout because that will defeat the business case. We currently see third-party fiber struggling on getting the right penetrations to make the business case work. We take the decision in these areas to benefit from our upgraded copper network until we are there with our copper ourselves. At the end, when we're reaching the point of 70%-80%, that could be a moment to consider the usage of third-party networks, but not today. That would be a strategic mistake, I would say. Yeah, to the point, as Joost said, you will see a significant drop-off in CapEx after 2026. For now, we will continue. I guess there will always be some fiber CapEx after 2026 or 2027. You know, there's new builds, there's some connection, homes activated you need to do. There may be some final zip codes that you want to do above and beyond the 80%. Expect, you know, a certain portion of fiber CapEx and the rest is non-fiber CapEx, and we still stick to those number. Whether it's 26, 27, we need to see. It might be taking a few months longer in 27 to get there, but it will be around that zip code that we'll see that drop in CapEx. We're pretty confident in that. Given the fact we're molding KPN to run with, like, non-fiber CapEx at the current spend, by the time the company's used to that spending level, right? That's our job to make sure we get used to that level of spend on non-fiber CapEx. When the fiber drops, you keep this portion for new builds, for homes connect, for homes activated, and we stick with that. For Joost's point to the final 20%, there's no point at this point in being wholesaler on a competitor network. That would be a strategic mistake. We'll continue to build. We believe that overbuild, selective overbuild creates value, creates return over our cost of capital. We carefully look at that. If we're waiting 20%, you might do some wholesale there. We might also look at, because it's rural areas, right? We might look at a combination of fixed wireless and copper connectivity for a hybrid solution, so we have something to offer there as well. 5G? 5G is also. Again, your point on a significant fiber drop once we've reached the 80% fiber mark, that is absolutely still part and parcel of our strategy. That's very clear. Thank you both. Okay. Thank you, Joost and Chris. That concludes today's conference call. If you have any further questions, please contact the KPN investor relations team. Thank you very much. Thank you. Bye. Thank you for joining today's call. You may now disconnect.