Proximus Sa · EURONEXT:PROX
Proximus Sa — Belgacom — Q3 2007 Earnings Presentation
43 slides from Proximus Sa's earnings presentation, 2007
Slide 1: Interim results presentation 2007
Interim results presentation 2007 belgacom
Slide 2: Highlights on results
Highlights on results Excellent financial performance… Fixed revenue decreased by 0.5% yoy, EBITDA margin increased to 31.6% Growth in internet, TV and ICT services more than compensates for declining traditional voice Proximus limited its yoy revenue decrease to 3.8% Excluding regulatory impacts, r
Slide 3: Shareholder Return
Shareholder Return On 18 October 2007, the Belgacom Board of Directors decided to do an additional shareholder return of EUR 400 million Split into: Share buyback of EUR 230 million Start date: 12 November 2007 Interim dividend of EUR 170 million Dividend per share: about EUR 0.50 Payment foreseen o
Slide 4: Performance versus guidance
Performance versus guidance FY guidance Q107 Q207 Q307 YTD (updated in Aug 2007) 2007 FLS Total revenue decline around -1% +0.8% +0.2% -2.35% -0.5% Fairly stable EBITDA Margin 31.0% 32.0% 31.9% 31.6% Add Belgacom TV customers at +9,826 +41,857 +58,086 +109,769 higher pace than 2006 Belgacom TV ARPU
Slide 5: Fixed Line Services
Fixed Line Services belgacom
Slide 6: Traditional Voice Services
Traditional Voice Services Trend on line loss continues, however limited revenue decrease Y-o-Y Voice Access line loss impacted by: Launch VoIP offer for residential customers (I-Talk) Launch of ‘ADSL without Voice’: migrations and decrease in net adds ARPU Voice Access ARPU increases 2% thanks to p
Slide 7: Voice ARPU
Voice ARPU EUR/Month 26.7 25.8 27.2 26.7 Voice 12.5 11.2 Traffic 12.9 12.1 14.2 14.6 Access 14.3 14.6 Q306 Q307 YTD 06 YTD 07 Voice Access Traffic Volume Line loss (000) (mio min) -40 -56 -126 -157 6,840 6,463 2,143 1,919 Q306 Q307 YTD 06 YTD 07 Q306 Q307 YTD 06 YTD 07 Page 7
Slide 8: Broadband
Broadband Highly competitive market environment Volumes Belgacom added 74,005 new Broadband customers over the first nine months of 2007, leading to a total ADSL customer base of 1,201,853 end of September BGC Broadband retail market share in Belgium slightly decreased to 49.5% due to the highly com
Slide 9: Broadband Growth
Broadband Growth (‘000) 109 Broadband 74 29 26 Q306 Q307 YTD 06 YTD 07 Residential ADSL* Broadband lines EOP ARPU/month (EUR) (‘000) + 2.0% +116 31.6 32.3 34 Q3 ‘05 25 1,086 1,202 YTD 06 YTD 07 YTD 06 YTD 07 Average ADSL ARPU ADSL Light ARPU *: incl small business ADSL GO ARPU Page 9
Slide 10: ICT
ICT* Continued growth in ICT services ICT revenue (‘000) + 6.2% Product group contains all ICT-related + 4.2% 544 578 products and services offered by the Belgacom Group. 179 187 Q306 Q307 YTD 06 YTD 07 Revenue evolution YTD Sep’07 revenues increased 6.2% compared to same period last year Launch of
Slide 11: Belgacom TV
Belgacom TV Further acceleration of growth in Q3 2007 Accelerated growth: In number of subscribers: + 58,086 new TV subscribers during Q3 2007, reaching a total subscriber base of 249,434 end of September 2007 In ARPU: Boost of ARPU in Q3’07 to EUR 17.5 leading to a year to date ARPU of EUR 15.8 Sol
Slide 12: Belgacom TV
TV growth TV total EOP (‘000) (‘000) 249 Belgacom TV 103 58 29 Q306 Q307 YTD 06 YTD 07 Belgacom TV revenue Belgacom TV ARPU (‘000) (EUR) 29 17.5 15.8 12.4 11.6 12 10 4 Q306 Q307 YTD 06 YTD 07 Q306 Q307 YTD 06 YTD 07 Page 12
Slide 13: FLS revenue
FLS revenue Decrease in traditional voice more than offset by growth of Internet, ICT and Belgacom TV Total Revenue (EUR mio) -0.5% 2,704 2,692 2500 2000 10 29 544 578 1500 -2.4% 336 376 1000 890 869 TV 4 12 ICT 179 187 1,053 500 Internet 115 129 993 Voice 341 315 0 Q306 Q307 YTD 06 YTD 07 Q306 Q307
Slide 14: FLS costs
FLS costs Favorable evolution of costs thanks to positive effect MTR cuts Total Cost (EUR mio) - 1.5% Increased personnel expenses 1,868 1,840 2000 (+3.3% yoy) due to indexation and increase of wages, severance 396 392 payments. 1500 - 5.1% 701 724 1000 Higher personnel costs fully offset by 623 591
Slide 15: FLS EBITDA
FLS EBITDA YTD Sept EBITDA increases by 1.9% EBITDA (EUR mio) As a result of the favorable evolution of FLS costs and the slight decline in FLS +1.9% revenues, the overall EBITDA increased by 1.9% compared to the same period 2006. 550 852 836 +4.1% 350 267 278 150 -50 Q306 Q307 YTD 06 YTD 07 Total E
Slide 16: FLS EBITDA margin
FLS EBITDA margin Positive evolution EBITDA margin of 0.7pp compared to first nine months 2006 EBITDA Margin (%) +1.9 ppt +0.7ppt 30% 20% 30.0% 31.9% 30.9% 31.6% 10% 0% Q306 Q307 YTD 06 YTD 07 Page 16
Slide 17: Capital expenditures
Capital expenditures CAPEX (EUR mio) - % of revenue YoY FLS investments remained flat, reaching an amount of EUR 10.9%% 11%% 296 million, including: 0% Further roll-out of Broadway 250 project EUR 77 million 11.9% 11.3% Belgacom TV capex for EUR 200 64 million 150 -6.7% 296 296 100 50 105 98 0 Q306
Slide 18: Broadway investment
Broadway investment Continued step-by-step fiber roll-out Future proof roll-out of FTTSC (fiber to the street cabinet) ongoing Status end September 2007: National population coverage: 54% Remote Optical Platforms (ROP) installed: 12,239 Belgacom selected Alcatel-Lucent as Broadway invested capex (EU
Slide 19: Outlook
Outlook Based upon Q3 results and taking into account the expected impact of decreased Fixed-to-Mobile tariffs, Belgacom re-iterates its updated full-year guidance, estimating that: Outlook the revenue decline of 2007 compared to 2006 will be around -1% FY the EBITDA margin over 2007 will be fairly
Slide 20: Mobile Communications Services
Mobile Communications Services
Slide 21: Active penetration reached 95.9% in Belgium
Active penetration reached 95.9%(*) in Belgium In 9 months, active penetration increased 6.2ppt Total active customers in Belgian market: 10,175,582 +2.7ppt 95.9% 93.2% +3.5ppt 89.7% +4.0ppt +1.6ppt +1.3ppt 84.1% 85.7% +1.3ppt 82.8% 81.5% EOY'04 H1'05 EOY'05 H1'06 EOY'06 H1'07 Q3'07 (*) BMB estimate
Slide 22: Continued outstanding churn rate
Continued outstanding churn rate Churn rate decreasing trend continues and remains “best-in-class” Proximus maintains high brand loyalty index of 77.0 Customer churn % 16.7% 15.9% 15.8% 15.5% Q3'06 Q3'07 YTD SEP'06 YTD SEP'07 * Annualized blended churn rate of registered SIM cards Page 22
Slide 23: Proximus' strategy results in solid customer gain
Proximus’ strategy results in solid customer gain Yoy Proximus added 253,529 customers, leading to a total of 4,493,934 active customers 78,110 new active customers in Q3’07 (incl. 12,506 active MVNO customers) compared to a loss of 12,111 a year ago Quarterly customer Total customers EOP growth (‘0
Slide 24: Proximus' Value Share at 50.6%
Proximus’ Value Share at 50.6 %(*) For the second quarter this year, Proximus further strengthened its position on the market in terms of value share Evolution of Value Share* (%) 49.9% 49.4% 50.1% 50.6% Q3’06 Q3’07 Proximus Others (*) MCS estimates * Share of Mobile Net Service Revenue, including r
Slide 25: Proximus' Market Share at 44.2%
Proximus’ Market Share at 44.2%(*) Customer Base and Volume Share Evolution* (%) 47.3% 45.5% 45.0% 44.7% 44.2% 43% 46% 48% 49% 50% 57% 54% 52% 51% 50% H106 EOY06 Q107 H107 Q3'07 Prepaid Postpaid Market share * 3-month active subscribers (*) MCS estimates Page 25
Slide 26: Blended net ARPU
Blended net ARPU YTD Sep Net ARPU went down by 6.9%. Excluding the MTR impact, the net ARPU decrease would be limited to 2.6%, driven by the success of new bundled tariff plans Blended ARPU1 (EUR/month) (Excl MTR: -4.1%) (Excl MTR: -2.6%) 39.1 35.3 38.1 35.5 2.2 1.6 -9.7% -6.9% 41.9 40.0 41.1 39.8 -
Slide 27: Total revenue decrease driven by regulation
Total revenue decrease driven by regulation Total revenues decline of -3.8% is primarily driven by the regulation impact (MTR Nov.’06 and May’07 and Wholesale Roaming Sep.’07) Excluding the regulation, total revenue increased by 0.2%, primarily driven by an increased and improved customer base. Tota
Slide 28: Net Service Revenue evolution
Net Service Revenue evolution Net Service Revenues decreased 3.7%. Excluding the regulation impact, the revenue grew 0.5% Gross Data & Advanced Data Revenues increased 30%, partly compensating the decline in gross voice revenue The success of new pricing offers like “Freetime” and “bonus for life” c
Slide 29: Costs increase primarily linked to customer acquisition
Costs increase primarily linked to customer acquisition Lower termination cost is the main driver of the favorable cost evolution (-2.3%) in the third quarter YTD Sep higher cost in commissions, Leased Lines and content fees, as well as increased renting and utilities driven by network roll-out were
Slide 30: EBITDA overview
EBITDA overview The acquisition strategy and to a lesser extent the regulation impacts, are the main drivers of the EBITDA decline EBITDA (EUR Mio) & EBITDA Margin 47.1% 48.7% 46.2% 45.5% 787 718 258 236 Q3’06 Q3’07 YTD SEP’06 YTD SEP’07 Page 30
Slide 31: Capital expenditures
Capital expenditures Capex decline compared to YTD September 2006 mainly driven by phasing of projects and network deployment UMTS Coverage at the end of September is already far above legal obligations CAPEX – CAPEX as % of total revenue 8.8% 8.8% 6.7% 5.5% 141 105 48 28 Q3’06 Q3’07 YTD SEP’06 YTD
Slide 32: Outlook
Outlook MCS confirms its full year guidance 2007 Despite intense competition and regulatory pressure which will have an impact on revenues and margin, Outlook MCS expects: FY • the total revenue to decline to around -4% 2007 • the EBITDA margin to decline to around 44% Page 32
Slide 33: International Carrier Services
International Carrier Services Page 33
Slide 34: Operational Overview
Operational Overview Consolidation & insourcing to become ICS worldleader Post Merger Integration Swisscom & Belgacom carrier operations successfully completed – full network integration through deployment of NGN transmission network & switching platform Insourcing project with MTN Group extended to
Slide 35: Revenue & Direct Margin overview
Revenue & Direct Margin overview Revenue increase thanks to more Mobile terminated minutes & Middle East and Africa business Shift from Standard Quality to Premium Quality products (higher price & margin) Higher volumes on Direct Routing Growth in mobile data products (Signalling & SMS transit) Reve
Slide 36: Cost overview
Cost overview Overall OPEX reduction reflecting synergies of Swisscom integration Cost structure (EUR Mio) 46 43 -6.6% 9 11 19 17 18 15 YTD-09’06 YTD-09’07 HR related expenses Network expenses IT & General Admin. Page 36
Slide 37: Group Financials
Group Financials belgacom
Slide 38: Consolidated income statement
Consolidated income statement ( EUR Mio) YTD Sep 2006 YTD Sep 2007 Variance . Total Revenues 4,567 4,551 -0.3% Cost of goods sold -1,492 -1,497 0.3% HR expenses -824 -848 2.9% Other operating expenses -604 -599 -0.9% Total Operating Expenses -2,921 -2,944 0.8% EBITDA 1,646 1,607 % -2.4% Depreciation
Slide 39: Segment result
Segment result Revenues (EUR Mio) EBITDA (EUR Mio) 4,567* -0.3% 4,551* 1,646 -2.4% 1,607 548 561 23 38 1,616 1,554 787 718 2,704 2,692 836 852 YTD Sep06 YTD Sep07 YTD Sep06 YTD Sep07 Fixed Line Mobile International Carrier Non recurring item * Total revenues as reported post inter-segment eliminatio
Slide 40: Capex
Capex (EUR Mio) 444 408 7 7 141 105 296 296 YTD Sep06 YTD Sep07 Fixed Line Mobile International Carrier Page 40
Slide 41: Free cash flow
Free cash flow influenced by financial assets transactions Free cash flow (EUR Mio) Transactions on financial assets • 2006 : - acquisition of Telindus (EUR -584 mio) - disposal of Neuf Cegetel shares (EUR +187 mio) 989 • 2007 : - disposal of M* & Eutelsat (EUR +245 mio) - acquisition of ISIT (EUR -
Slide 42: Net financial position (EUR Mio)
Net financial position (EUR Mio) 1,161 1,636 534 989 19 Net Debt Dec 2006 FCF Dividends Other Net Debt Sep 2007 Page 42
Slide 43: Balance Sheet
Balance Sheet EUR Mio YTD Dec 2006 YTD Sep 2007 TOTAL ASSETS 7,300 7,362 Non-Current Assets 5,504 5,049 Goodwill 1,760 1,779 Intangible Fixed Assets 590 493 Property, Plant and Equipment 2,527 2,444 Associates and Other Participating Interests 234 1 Deferred Income Tax Assets 351 306 Pension and Oth