Telefónica Deutschland surpasses expectations in FY ’23 By Investing.com

Telefónica Deutschland (O2D.DE) has delivered a robust financial performance for the full year of 2023, surpassing expectations with significant revenue growth and market share expansion in both mobile and fixed segments. The company reported a 4.7% increase in revenue year-over-year, driven by 1.3 million mobile postpaid net additions and 90,000 fixed net additions. With 5G coverage reaching 95%, the company is set to continue its positive trajectory into 2024, backed by a strategic focus on market share growth, network quality improvements, and accelerated transformation.

Key Takeaways

• Telefónica Deutschland’s revenue grew by 4.7% year-over-year.
• The company achieved 1.3 million mobile postpaid net adds and 90,000 fixed net adds.
• 5G coverage has been expanded to 95%.
• For the full year ’24, Telefónica Deutschland forecasts positive revenue growth and low to mid-single-digit EBITDA growth.
• The CapEx to sales ratio is projected to be between 13% to 14%.

Company Outlook

• Telefónica Deutschland expects positive revenue growth for the full year ’24.
• The company anticipates low to mid-single-digit EBITDA growth.
• A CapEx to sales ratio between 13% to 14% is projected for the upcoming year.

Bearish Highlights

• The company has not provided a dividend outlook for 2024.

Bullish Highlights

• Telefónica Deutschland experienced an increase in operational cash flow and a reduction in net financial debt in 2023.
• The investment for growth program was successful, and the company maintains a stable credit rating from Fitch.
• New family plans and promotions are expected to drive profitable growth.
• The company is focused on its ESG roadmap and is open to selling network capacity to other market players.

Misses

• There were no specific misses reported during the call.

Q&A Highlights

• High demand for capacity is anticipated for 2025.
• Discussions about potential dividend policy changes were mentioned.
• Growth in the B2B market and mobile service revenue is expected, with B2B representing a single-digit percentage of total revenue.
• No additional questions were raised during the call.

Telefónica Deutschland’s strong performance is further highlighted by the company’s strategic initiatives, including growing average revenue per user (ARPU) in mobile postpaid through pricing strategies and partnerships. The company is also engaging in discussions with Freenet regarding network capacity and remains open to selling capacity to market players to support its growth. Despite not providing a dividend outlook for 2024, the company’s management expressed confidence in maintaining business momentum and executing growth plans. The focus on the B2B market is expected to contribute to the overall revenue increase, as it currently represents a single-digit percentage of the company’s total revenue.

The fourth-quarter earnings call, led by CEO Markus Haas, underscored the growth in postpaid net adds, particularly in the high-value €30 customer segment. The company witnessed consistent momentum in both the fourth quarters of 2022 and 2023. Broadband net additions were primarily driven by cable, characterized by low churn and high profitability. With a confident outlook for continuous growth in 2024 and a reduced CapEx, Telefónica Deutschland is actively working on measures for 2025 and 2026 to bolster the company’s GPS strategy, ensuring long-term success and shareholder value.

Full transcript – Telefónica Deutschland (O2D.DE) Q4 2023:

Operator: Ladies and gentlemen, welcome, and thank you for joining the Q4 2023 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Christian Kern, Director, Investor Relations. Please go ahead.

Christian Kern: Thank you, operator. Good morning, and thank you for joining us today. On behalf of our management team, it is my pleasure to welcome you to the full year ’23 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 first slide of this presentation. Finally, the presentation is also available on our IR website. With me today are Telefónica Deutschland’s CEO, Markus Haas; and CFO, Markus Rolle, who will take you through the presentation followed by a Q&A session. Markus, without any further ado, over to you now.

Markus Haas: Thank you, Christian. Good morning, ladies and gentlemen, and welcome to our full year ’23 results call. Thank you for taking the time to join us. Today, we are delighted to report another strong set of full year results of Telefónica Deutschland. Throughout the year, Telefónica Deutschland consistently achieved growth across all segments driven by robust commercial traction and delivered sustained healthy financial performance. Hence, the company successfully overachieved its full year ’23 outlook. Our focused execution of strategic priorities is the main driver of this commercial financial success. Let me share with you the key operational and financial highlights for the past financial year, which are demonstrating strong business momentum. Telefónica Deutschland has continued to gain market share in both mobile and fixed in a dynamic yet rational market, leveraging its value over volume strategy. The company won more than 1.3 million mobile postpaid net adds and 90,000 fixed net adds. We have made further excellent progress with our 5G rollout and network modernization. 5G coverage reached 95% by year-end 2023, and again achieved a very good rating in the highly regarded connect network test. While continued transformation remains a key factor to accelerate digitalization across all our business units, it also drives operational agility and efficiencies contributing to our success. As a result, we are delighted to report revenue growth across all our segments. Total revenues grew by 4.7% year-over-year, driven by our growth engine mobile service revenues grew by 2.7% year-over-year, fixed broadband service revenues were up 5.3% year-on-year, handset sales reached another record level growing more than 13% year-over-year. OIBDA posted strong growth of 3.1% year-over-year, reflecting commercial success and stringent cost management. CapEx to sales stood at normalized levels of 13.2%, while we continue to focus on network quality. Overall, we have successfully extended our growth path by leveraging our robust business model and remain focused on gaining market share. My next slide highlights our leading ESG initiatives throughout the past year. During these unprecedented times, social engagement has moved into center stage, without reducing our commitment to the other areas of ESG. Telefónica Deutschland’s employee satisfaction rating improved even further now at an all-time high. The inflationary environment and cost pressures are also impacting our employees. Hence, we have supported our employees to ease these cost of living pressures. We have made excellent progress with our network modernization to also accommodate the steady growth of mobile data. At the same time, we are continuously driving green energy efficiencies to support climate neutrality. In the event of crisis, telecommunication services have become even more critical. Hence, Telefónica Deutschland is providing telecommunication support to customers in such crisis areas so that they can easier stay in touch with family and friends. Further supporting Germany’s digitalization agenda, Telefónica has developed various safety and security guidelines as well as education programs, which cover important areas such as artificial intelligence and cyber-mobbing. These important initiatives only further highlight our strong standing against hate and for an inclusive society. Over the next weeks, we will also publish our non-financial report, where you’ll find further details on the wide range of our sustainability activities. On my next slide, let me share with you the most recent macro outlook for Germany. Telefónica Deutschland single-country exposure to the overall solid German macro environment gives us further confidence to continue our growth path as we did last year when German economy slightly contracted. That reflects healthy trends of 2 key economic indicators. First, easing inflation. Telefónica Deutschland continues to manage the inflationary environment well with the latest forecast indicating easing inflationary pressures. GDP back to growth, expectations for the German economy indicate a return to slight growth for 2024. This positive macro backdrop for Germany, including a broadly stable low unemployment rate, also supports Telefónica Deutschland’s strategic framework going forward, which I will discuss with you on the next slide. Leveraging its proven track record for execution excellence, Telefónica Deutschland’s management team is now fully engaged in building an even more resilient business model based on its accelerated growth and efficiency plan. This plan is an integral part of Telefónica Group’s GPS strategy, which stands for growth, profitability and sustainability, as Telefónica Deutschland continues to pursue sustainable revenue and free cash flow growth. The strategic framework of our accelerated growth and efficiency plan is based on three key pillars: grow market share by rebalancing the revenue mix; further improve network quality to ensure strong network performance for customers; and finally, accelerate transformation to drive innovation and efficiencies. This strategic framework allows Telefónica Deutschland to explore new strategic options such as develop new business and efficiency opportunities, utilize freed up network capacity now deployable at commercial terms rather than on the remedies, accelerate business efficiencies and speed up transformation, dynamically [Audio Gap] opportunities and radical efficiencies. The entire team is fully committed to drive the continued growth story of Telefónica Deutschland and the company’s can-do spirit has only strengthened while formulating the next chapter of the company’s success story. Before handing over to Markus Rolle to take you through the Q4 performance in more detail, it is now my pleasure to share with you our confident full year 2024 growth outlook. This year, we anticipate to build the ongoing strong operational and financial growth momentum supported by our accelerated growth and efficiency plan. Based on current market dynamics, Telefónica Deutschland expects a robust pricing environment, both in the premium and the discount segment. We remain focused on capturing high-value pools to drive profitable growth across our entire sales funnel and expect for this financial year. First, revenues to grow slightly positive year-over-year; second, EBITDA to grow low to low mid-single-digit year-over-year; and finally, CapEx to sales ratio to be between 13% to 14%. Markus, it’s now over to you to lead us through the Q4 highlights of last year.

Markus Rolle: Thank you, Markus, and good morning, ladies and gentlemen, to all of you. It’s now my pleasure to discuss our Q4 2023 results in more detail. Telefónica Deutschland has delivered another quarter of robust commercial traction in both mobile and fixed. Mobile postpaid recorded 284,000 of net adds. This is driven by the continued O2 brand momentum and a solid contribution of our partner brands. The O2 postpaid churn confirmed a low rate of 1.1% on the back of the O2 brand appeal in combination with the enhanced network and service quality as well as the continued retention focus. The O2 postpaid ARPU growth of 1.9% year-over-year was similar to the prior quarter, reflecting the sustained customer demand for high-value tariffs and somewhat, of course, offset by the MTR reductions. The underlying O2 postpaid ARPU growth was even stronger at 2.5% year-over-year. Fixed broadband recorded 13,000 net adds. This is reflecting the success of Telefónica Deutschland’s technology-agnostic O2 my Home tariff portfolio and also low churn rates. Fixed churn improved by 0.2 percentage points year-over-year to 0.8%. Fixed broadband ARPU showed consistent growth, driven by the steady increase of high-value customers in the base and is up 2.2% year-over-year to €25.90. My next slide shows another quarter of good top line growth. Revenues posted a strong growth of 4.6% year-over-year to €2.291 billion in Q4 2023. This is driven by the ongoing mobile service revenue momentum and another record quarter of hardware sales. Mobile service revenue were down minus 1% year-over-year to €1.501 billion in Q4 2023, mainly as a result of a challenging year-over-year comparison due to a nonrecurring special factor in Q4 2020. On an underlying basis, MSR more than offset the negative impact from the MTR glidepath, posting 0.7% year-over-year growth, driven by the own brand momentum. However, underlying growth is still facing tough comps with a data-driven MSR-boost related to the football World Championship in Q4 2022. That resulted in total in 8.8% growth in Q4 2022. Consequently, our MSR momentum is fully intact. Handset sales recorded another quarter with record growth of 24.3% year-over-year to €574 million. This is driven by the combination of the continued customer demand for high-value devices supported by the O2 My Handy model and increased customer demand for accessories. Fixed revenue growth accelerated to 3.7% year-over-year and came in with €211 million, with fixed broadband revenues continuously reporting even stronger growth of 6.2% year-over-year. Let’s move to OIBDA and free cash flow on my next slide. OIBDA growth improved to 4.2% year-over-year and stood at €695 million in Q4 2023. This is reflecting the commercial success and a stringent cost management to counter some inflationary pressures. OIBDA margin was broadly stable at 30.3% in the quarter. With regards to the Q4 cost development, it’s worth highlighting the following: Supplies were up at €746 million in Q4 2023, with volume-related higher hardware cost of sales more than offsetting the positive effects from the MTR cuts. Connectivity-related cost of sales and hardware cost of sales accounted for 29% and 70% of the supplies. Personnel expenses were up 2.9% year-over-year to €176 million, mainly reflecting the higher base salaries on the back of the general pay rise in combination with a slightly higher FTE base. Other OpEx were slightly down, minus 2.3% year-over-year to €705 million due to the reduced noncommercial cost supported by lower IT and maintenance costs, while technology transformation continued. Turning to the full year free cash flow bridge on the right. CapEx was down minus 6.3% year-over-year to €1.133 billion, reflecting a reduced CapEx to sales ratio of 13.2%. As a result, operating cash flow rose by 11.7% year-over-year to €1.468 billion in full year 2023, as a result of both strong operating and financial performance and before mentioned CapEx normalization post the successful completion of the company’s investment for growth program. Working capital movement improved to minus €55 million. The well-flagged trend of the strong reduction in CapEx payables continued. CapEx payables were minus €43 million in full year 2023. Payables minus €169 million in full year 2022. Operational working capital movements were minus €12 million, driven by higher prepayments, which were largely offset by a combination of various operational working capital movements. Other cash items of minus €109 million are mainly driven by net interest payments and cash taxes. Cash taxes of minus €89 million are a combination of current taxes and the well-flagged remaining capital gain tax related to the [indiscernible] transactions. The free cash flow improved by close to 20% to €1.304 billion. Lease payments amounted to €747 million for the full year 2023, including some prepayments for the full year 2024. Hence, the free cash flow after lease was up 23% in full year 2023 to €557 million, covering more than our dividend proposal of €0.18, which we will propose to the AGM. Finally, consolidated net financial debt declined to €3.2 billion with a leverage ratio of 1.2x, which is well below our self-defined upper limit of 2.5x. In October 2023, Fitch affirmed Telefónica Deutschland’s BBB rating with a stable outlook. This rating is reflecting our solid position in the rational German telco market, well-invested network, low leverage and our conservative financial policy. Before we kick off the Q&A, let me summarize the key points of today’s presentation. Overall, we achieved strong top line growth translating that into enhanced cash conversion in full year 2023. For the full year 2024, we are giving a confident outlook on the back of the continued strong business momentum and our accelerated growth and efficiency plan. At the same time, we remain focused on our ambitious ESG road map. Now as always, we look forward to your questions. Operator, please go ahead with the Q&A.

Operator: [Operator Instructions] And the first question comes from Mathieu Robilliard from Barclays.

Mathieu Robilliard: I had a question on the service revenue trends in Q4. You did flag that there was a one-off in Q4 2022. You also mentioned MTR but also stronger data ARPU in Q4 2022. If we think of a trend without all these elements, where do you think the MSR trend sits in Q4? Because it does seem on the basis of what you said that there’s still a bit of a slowdown compared to Q3. So that’s the first question. The second question was about your recent tariff announcements. You announced some new family plans. And you also have implemented some promotion on your core brands, which seems to suggest a slightly more aggressive commercial stance. And I wanted to understand if you could give a bit of more color into that and what was the rationale behind these moves? Are you changing your stance? Or is it just a temporary initiative? And then lastly, on the leases, there’s a big increase in the Q4. And you do mention that there’s some level of prepayment in — compared to — for 2024. If you could maybe give us what is a normalized lease payment that you expect in 2024 and after that would be helpful?

Markus Rolle: Mathieu, Markus Rolle speaking. And let me take your questions 1 and 3 first and then hand over to Markus Haas. Service revenue, indeed, just as a reminder, I mentioned that also in my presentation, in Q4 last year, we had 8.8% of mobile service revenue growth. So if you now deduct all the topics that were mentioned, the one-offs and the nonrecurrent factors, et cetera, we are definitely sitting from an underlying basis north of 2%, which is at least with the market growth that we expect for the full market, and that is also reflected in the guidance that we have given for the full year 2024. With regards to the leases, yes, there had been some prepayments. I think the figure that you all had in the models before, which was around €700 million, is reflecting the underlying basis. So there was a mid-double-digit amount of prepayments, which is, from my perspective, normal working capital management that we have done. And you have seen it also with our strong free cash flow after lease that we have delivered, we have more than exceeded the expected dividend proposal that we have given. And then I hand over to Markus for second question.

Markus Haas: Thank you, Mathieu, for your question. I think regards to our family plan, I think we start the next wave of bundling. We clearly see that we can drive significantly more profitable growth with especially couples in the market with lower acquisition costs because you can sell 2 contracts with lower acquisition costs in total than if you only sell 1, but 2 stand-alone. So from that level, we are currently testing the waters, and we see clearly a great demand for these offers. So we’ll drive the next wave of revenue and also profitability growth to go more into the family segment because as a consumer champion, there’s a huge untapped potential on our side that will help us to clearly continue growth path.

Mathieu Robilliard: And in terms of some of the promotions you’ve introduced in your core brand, is there any specific reason? Or can you give a bit of color on what motivated that move? Because that kind of reversed some of the price increases, at least temporarily, the price increases that you did in 2023.

Markus Haas: From our perspective, we’ve clearly seen what are the sensitivities and what is clearly also the volume that you could drive with these promotional activities. So from our perspective, we have been a rational player always in the market. And what we clearly see is that with the dynamic trends we see that we are clearly — in a position now to clearly also to drive some volume based on the promotional activities that are timely limited.

Operator: And the next question comes from Keval Khiroya from Deutsche Bank U.K.

Keval Khiroya: Two questions, please. So firstly, just going back to the question on your family plan push. There is an advantage, as you say, if you’re able to sell multiple SIM cards, but are you seeing any ARPU dilutive impacts from customers who may have more than one subscription in a family today that can now bundle? And secondly, when you reported the Q3, it was quite early for you to have a view on how exactly you would compensate for the loss of the 1&1 traffic. Are you able to share any more thoughts on how we should think about 2025 and what steps you may have taken already so far to offset some of the 1&1 loss?

Markus Haas: Thank you. Let me start with your first question. But we clearly see what you have seen is with also the full year numbers 2023, I assume we are the only player over the growing mobile postpaid ARPU in its own customer base with roughly 2%, and we also continued the path because not all customers take this bundle benefit, first of all. And we’re clearly also very strong in the €30-plus segment. So overall, taking the average O2 ARPU that you are aware and that you have in your models, we clearly believe at least stable to slightly growing ARPU also going forward. On your second question, I think we have given a growth guidance on revenue and profitability for 2024. All measures that we need for this year are locked in. And so we are very confident on this outlook. And we already worked on the 2025 and the 2026 measures, where we are in very advanced talks in order to market the network capacity that will be gradually freed up, especially after June 2025. So on that level, we are very confident also to continue, and as part of the accelerated growth and efficiency plan also to market this network capacity to market conditions and not under regulated remedy terms. So on that level, 2024, we believe, it’s locked in on all the measures we need. On 2025 and 2026, we are in a very advanced stage also to market this capacity in the market.

Keval Khiroya: And sorry, may I just follow up. You said you’re at an advanced stage to reuse some of that freed up capacity, would you be able to comment at all whether you think retail is more of a tool to use that capacity or wholesale?

Markus Haas: It’s retail-centric because as part of the rebalancing of the revenue mix, leveraging on and existing channels and partners, it’s clearly retail-centric from our perspective because as part of the revamp of the revenue mix that we are going to implement now in order to build a more resilient and clearly significantly stronger Telefónica Deutschland business, it’s retail-centric.

Operator: And the next question comes from Ulrich Rathe from Societe Generale (OTC:).

Ulrich Rathe: Yes. On the tariff revisions, a quick sort of follow-up. I mean putting this into context with what you’re saying about the market expectations when you’re saying you expect a robust pricing environment, I suppose that is signaling as well your intent, which you expressed quite clearly on the current promotions being only temporary. But there is, of course, the risk that there’s sort of upset elsewhere in the market. So I was just wondering what your reasons are why you expect a robust pricing environment for the market beyond your own actions? Second question is you have not given any dividend outlook for 2024. I assume that is intentional. Could you comment on that? And the last one is sort of a follow-up to the last question. Could you comment at all about these conversations with Freenet. I think Freenet management has more or less openly said that there are talks with Telefónica. They also talked about their intent to — in particular, to have a longer period of cooperation. Could you comment on those talks? And then what your view is on the boundaries, if you will?

Markus Haas: Thank you, Ulrich. On your first question, I think the Telefónica pricing, especially in the free portfolio and now in the mobile portfolio, has always been rationale and we always had promotions in different variations, and this is the same what we do here. So from our perspective, I think the KPI that matters is ARPU on mobile postpaid. And as I said, we have a growing ARPU now 3 years in a row in postpaid, where the rest of the market has a decline in mobile postpaid ARPU. On your — and I will maybe first answer your third question. On wholesale partners on that level, I think the fill-up of the volume is, as I said, retail-centric, but I said, we see high demand for this capacity from more than one player. So on market levels, we are always open to sell this capacity into the market and clearly create valuable partnerships that clearly end up in a win-win. So on that level, there’s not more to comment on that point, but we are clearly — we see very high demand for this capacity mainly for 2025 because for 2024, we are already locked in. On your last question, I think as published in the context of the acquisition, Telefónica S.A. intends to promote a revision of Telefónica Deutschland’s dividend policy beyond the already confirmed full year 2023 dividend, with the ambition to allow Telefónica Deutschland to focus on its commitment to continue delivering sustainable growth and efficiency. So at that point in time, there’s no outlook for the 2024 dividend.

Operator: And the next question comes from James Ratzer from New Street Research.

James Ratzer: I’d have two, please. So just one kind of just a specific one on the guidance. Are you able to give any commentary on what you’re actually pricing in for the impact on 2024 numbers, just from the one-on-one contract migration, please? And secondly, just love to hear your thoughts about what you’re seeing actually in the B2B market. Vodafone (NASDAQ:) were actually sounding quite upbeat about future growth to come in B2B and IoT, specifically. So would really kind of value your comments on what you’re seeing in the B2B market, how much growth that’s providing for you at the moment in your outlook there?

Markus Rolle: James, let me take the first question. As always, our outlook is an all-in outlook considering all the various factors that we have to take into account. The one that you asked specifically on is 1&1. We have, of course, taken into account their contractual commitments that they have towards us, also our 5G agreement that we have closed with them. We have also considered, of course, that gradual switch from the MVNO model into that national roaming model, with the respective migrations that will take place. Just as a reminder, from that moment onwards, they will terminate themselves, both the national MTRs as also international roaming, that has some effects on the revenue side, not so much on the EBITDA side. And that is all factored in here into the guidance that we have given.

Markus Haas: On the B2B side, yes, it’s true that the B2B market is growing faster than the consumer market. So there’s an opportunity for everybody in the market to grow there, especially taking into account IoT, cloud, SD-WAN, the market is growing nearly double digit and we take a fair share of this growth now in order to catch up in the overall B2B segment. So we have won really prominent accounts last year, and we are underway and they have a fully filled sales funnel also for 2024. So it’s clearly an area of growth in mobile, but especially also in the fixed and the digital services.

James Ratzer: So on that, Markus, last year, your overall mobile service revenue growth was around 3%. I mean, are you able to kind of split that out between what you’re seeing in B2B versus consumer? I mean is B2B closer to 5% to 6% and consumer kind of closer to 0% to 1%?

Markus Haas: If I do the breakdown per segment, yes, B2B is stronger, even stronger than the 6% you mentioned. But clearly, from a significantly smaller starting base, of course. But yes, the growth is significantly higher than the B2C growth. But clearly, if you accounted for the size of the P&L marginally of the 3% is still a smaller part.

James Ratzer: Good. Could you just remind us, sorry, then one more, just what percentage B2B is of your total at the moment?

Markus Haas: It’s single digit in the mobile service revenue, single digit.

Operator: And the next question comes from Joshua Mills from BNP Paribas (OTC:) Exane.

Joshua Mills: I have two questions. The first one was just coming on the tariff points. I guess it does feel like a bit of a shift in message from purely they’re focused on value to the comments you just made about volume. So the question is, could you give us an idea maybe just directionally of how Q4 postpaid net adds on your retail business versus the retail postpaid net adds growth earlier in the year? It does look like it’s a bit slower, but I’m trying to understand whether the pricing move was positive more by what you were seeing on the volume side already or by the fact that there was some disappointment that your competitors haven’t followed you on the price hikes earlier in 2023? And then the second question would just be around the broadband net adds. So in the past, you’ve given some indication of what the net add growth has been like on cable versus the VDSL space. And then maybe also some comment on fiber-to-the-home in UGG would be helpful just to get a sense of what infrastructure this growth is coming from? And then also what that might mean for UGG going forward?

Markus Haas: Well, starting with your first question. I think we clearly see an opportunity while other players in the market are now more moving more into the discount segment with their premium brands to really — on the back of a very good mobile network to really gain high-value customers in the €30 space as far as a good opportunity now and to grab that market. This is why we test the family plans and we test the promotional activities to really achieve high value ARPU customers. I think we are now in a position to get that. And there’s a space now, as I said, while other premium brands now move into the discount space to really grab that part of the market. On VDSL split and cable split, I think we were cable-centric in the fourth quarter and the whole growth is nearly on a cable, with a very good service experience for the cable customers that we buy as a wholesale product, as you know, from the market. And it’s a very healthy inflow with extremely low churn on that level and is a very profitable business in order to fuel our fixed customer base to create more and more convergent customers.

Joshua Mills: Yes. So going back to the first question, I was more asking, can you give us direction or an indication of how your postpaid retail class over in Q4 versus the run rate in the first 3 quarters of the year?

Markus Haas: I think we had a similar momentum as in Q4 2022 in the mix roughly. And we had the normal mix. We haven’t seen any deviation between the 2 quarters, if you compare Q4 ’22 to Q4 ’23.

Operator: So it seems there are no further questions at this time. So I hand back to Markus Haas for closing comments.

Markus Haas: Thank you very much for joining our Q4 and full year 2023 results call this morning. And we are pleased to announce really a strong business that has momentum that goes with tailwinds into 2024. We feel confident with the guidance that we have given this morning that we will continue to grow profitable with a slightly reduced CapEx envelope, so on that level, all signs are for growth. The measures for 2024 locked in. We already work on the measures for 2025 and 2026 in order to continue the growth part and be a valuable contributor to Telefónica’s GPS strategy. Thank you very much.

Operator: Ladies and gentlemen, this conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.

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