Susanne Reindl   Head of Investor Relations Department

Yes. Thank you, operator. Good morning, everybody. Thanks for joining our results call for the first quarter in the first 9 months 2024. As usual, I am here with our Management Board, our CEO, Alejandro Plater and our Deputy CEO, Thomas Arnoldner. Our [indiscernible] CFO, Sonja Wallner couldn't join today.

So yes, as usual, we will start with the presentation, and we are happy to take your questions afterwards in the Q&A session. Thank you.

Alejandro Plater   Chairman of Management Board, CEO & COO

So we are converting EBITDA into free cash flow, a little bit less CapEx than last year, and that is helping as well. But also, we have some negative effects on free cash flow, like advanced payment in subsidies. So all in all, I think we are happy that free cash flow has a solid growth.

With that, I would like to hand over to Thomas to drive us through focus points and guidance. Thank you.

Thomas Arnoldner   Deputy CEO & Vice Chairman of Management Board

Thank you very much, Alejandro. We have 3 focus points. First of it being Serbia and our move into convergence in Serbia. Serbia has been the last market where we have not yet been convergent, but we are executing our convergence growth strategy also there.

We have recently announced another acquisition in Serbia, which will now allow us to offer convergent products for our customers as of next year. Our convergence strategy and service basically building on the 3 pillars, which you see on the left-hand side of the chart. Number one, the acquisition -- the recent acquisition of Conexio Metro, which is a Serbian fiber company. We have already acquired parts of Conexio infrastructure in 2023. Now we acquired more. We added another 300 kilometers of fiber, which takes us to 1,500 kilometers of fiber, which we have now in Serbia. We added 42,000 homes passed in [indiscernible].

Secondly, we are pursuing and pushing our own fiber rollout in Serbia. And [ certainly ], we have the wholesale contract for fiber lines with the [ incumbent], which is offering for us a quite attractive opportunity to increase our reach with our new fixed platform in Serbia. Having said this, for the record, the acquisition of Conexio, Serbia is subject to measure control clearance, but we don't expect any major surprises here.

Second topic is on a little bit of focus on what we're doing in the B2B digital service segment in SME. So you remember, we've been talking a lot about our midterm growth ambition. We have mentioned, I think it was 2 or 3 quarters ago, we have shown you the, I think, quite extraordinary growth, which we managed to have in the ICT segment or the B2B digital service segment as we call it. And we have made quite some advancements here. I remind you in '23, we posted 26% of growth in the ICT solutions area.

So as of today, much of that business is coming out of Austria and of Bulgaria, where we have also become #1, not only in the [ Telko ] segment, but also in the ICT segment. But we don't see why we shouldn't be able to replicate this in the other markets. And especially, we don't see why we shouldn't be able to replicate what we achieved with large enterprises also in the segment of small and medium enterprises. So far we had mostly large businesses in this area based on our strong capabilities, strong customer relationships, strong and big sales teams, a powerful brand, quite a broad product portfolio. However, the large enterprise segment is very much project driven, it is very much one-to-one driven.

And now what we want to do is to scale up and to standardize our portfolio in order to be able also to tap into SME segment, and we are very optimistic about that. And the SME segment, we are sure will prove to be a very significant source of growth for us in the future. So what we are working on at the moment, it's about setting up a dedicated SME product portfolio, which allows us to streamline our offerings to reach economies of scale. We are looking at smart bundling of our offerings with the core business. And we're also looking at having the right landscape of partners in order to be able to address the market according to its needs.

And of course, we're doing this for the entire group because in line with our strategy, we want to create synergies because all the markets by building on our large connectivity business, our sales force and our strong brands.

Thirdly, again, a little bit of focus on Austria. We addressed this also in the Q2 results call, and Alejandro already talked about that. I think if you look back in the past years, we did very well in Austria, but today, we are faced with the situation of high inflation, slowing economic growth and the entire market becoming more competitive and more challenging, both on the mobile side as well on the fixed side. And as we explained in the last quarter, we really aim at protecting that market with a very balanced approach, balancing -- protecting our base on the one hand side, but also increasing our share in new customers, with taking smart investments in the market in order again to protect our high market shares, which we have been able to sustain in the past years both on the market as well on the fixed side.

So we're taking these investments, partly you see it also in the Q3 results, just to think about the higher subsidies where the equipment margin was negative and was weighing on the EBITDA of Q3. A little bit, this is a tactical measure, but we think it's the right investment to take in the market. And also renders already positive results in the mobile core business. We have positive net adds again since June. Fixed is tougher. Again, here, we're coming from really high market shares. We have challenges, especially in areas where we are not able to provide high bandwidth, where we're only able to provide lower bandwidth. Hence, also our accelerated fiber push in the past years, but also we use all other available technologies like the cubes to address the low speed fixed areas. And we take a very regional approach to adapt to the local market requirements.

So in general, overall, we continue to see a market where we have to invest more. Again, we are trying to shift from indirect to direct costs in order to be able to take the right investments. We are, I think, taking a smart balanced approach. We see results already kicking in with revenue market shares up. But again, as Alejandro said earlier, the market is expected to remain competitive also in the near future.

With that, finally, we work on guidance 2024. As Alejandro said already in the intro slide, we reconfirm our guidance of 3% to 4% revenue growth and then there are around EUR 800 million of CapEx, excluding the spectrum, as you could imagine from the first 3 quarters, I don't expect it to be on the upper end, but rather on the lower end of the range, but we still believe we are on track to achieve that range. The bit softer revenue development in the first 3 quarters was to a large extent due to the lack of equipment sales and lack of the equipment sales are very volatile, as you know. So we believe we are able to catch up here.

If you look at the mix of the countries, as Alejandro also explained earlier, yes, we see a tough environment in Austria, but on a positive note, CEE is performing very well. And overall, most importantly, we believe we are well on track with our service revenue development.

With that, thank you very much for listening, and we are handing over to Susanne to moderate for the questions.

Susanne Reindl   Head of Investor Relations Department

Thanks a lot Alejandro and Thomas. So we are now ready to take your questions. Thank you.