Proximus Sa · EURONEXT:PROX

Proximus Sa — Q1 2015 Earnings Presentation

50 slides from Proximus Sa's earnings presentation, 2015

  1. Slide 1: 2015 Q1 Company presentation

    2015 Q1 Company presentation

  2. Slide 2: Content

    Content Reporting changes as of 2015 Enterprise segment results 23 Key achievements Q1 2015 Technology & Wholesale 30 Group underlying revenue 5 Staff & Support 31 Core revenue performance drivers 6 Turnaround of Mobile services revenue trend 7 BICS 32 Good progress on convergence strategy 8 Other i

  3. Slide 3: Reporting changes

    Reporting changes Group reporting 2014 quarterly Group expenses and EBITDA were restated for IFRIC 21, applicable as from 1 January 2015 with retrospective effect. This new IFRS rule requires a tax liability to be recognized in the period during which the criteria triggering the tax are met. This ru

  4. Slide 4: Key Group Achievements Q1 2015

    Key Group Achievements Q1 2015 Slide 4

  5. Slide 5: Group underlying revenue of € 1,479 m, +5.5% YoY

    Belgacom Group generated in Q1’15 underlying revenue of € 1,479 m, + 5.5% YoY Core revenue up 3.3%: Consumer: +5.3% YoY • revenue increase for TV and Fixed Internet +5.5% underlying • Mobile services revenue up by 2.2% from the prior year • revenue from mobile device sales remained high. -9 43 7 Ent

  6. Slide 6: Core revenue performance driven by Fixed customer base, Internet and TV

    Core revenue performance driven by sustained rise in Fixed customer base, increasing Internet and TV market shares…. Broadband customer evolution 1,788 net adds 1,694 total 1,705 1,718 1,740 Market share  Market share up 1.2 pp to 45,4%  Scarlet successfully attracted 16,000 former Fixed +1.2pp Sn

  7. Slide 7: Turnaround of Mobile services revenue trend

    …..and turnaround of Mobile services revenue trend Group Mobile Services YoY variance positive in Q1’15 +55 +52 +26 +60 +19  Solid growth in Group mobile customer base. Better customer mix. 29% Prepaid 26% 71% 74% Postpaid Q1 2014 Q1 2015  Total market share @40.4%; -0,3pp YoY  Proximus Smartphon

  8. Slide 8: Good progress on convergence strategy

    Also benefiting from good progress on convergence strategy  41% of the Household/Small offices are 3 or 4 Play; generating 61% of  Mix further improved on continued growth the total HH/SO revenue. for 3- Play and 4-Play  Revenue from X-play HH/SO +4.5% YoY. 4-Play revenue +16% 61% 41% rev from HH

  9. Slide 9: Higher Q1'15 total operating expenses

    Total underlying operating expenses (€m) Higher Q1’15 Total operating expenses +6.5% mainly due to BICS Cost of Sales and Mobile handsets Q1’15 CoS up 11,5% YoY driven by higher costs within BICS and volume related Mobile devices costs. Underlying HR-expenses (€m) 500.0.. -4.1% -0.2% -2.5% -6.3% -1.

  10. Slide 10: Group underlying EBITDA +3.8% YoY

    Group underlying* EBITDA +3.8% YoY; Q1 benefiting from higher Gross margin mainly for CBU and BICS +3.8% • Higher Group’s Gross Margin, underlying strengthened by the growth in Fixed & Mobile within CBU and the growth in volumes and positive USD currency impact for BICS. • HR + Non-HR expenses +0.2%

  11. Slide 11: Investing in excelling customer experience (capex)

    Investing in excelling customer experience (amounts in € million) + € 47m • €227m Capex in Q1’15, the YoY increase is driven by:  Volume driven capex Q1 ’15  Accelerated investments in the LTE-network  Continued roll-out of Vectoring technology  Network Simplification program and more efficient

  12. Slide 12: Q1'15 FCF

    Q1’15 FCF of € 8 m € 8 m of FCF in Q1’15 Q1’15 (in million €) • Growing EBITDA contributed positively • FCF reduced by the higher cash paid for capex, including a carry- over impact from the high investment level in Q4’14, • higher working capital needs, in particular due to the rebuilding of invent

  13. Slide 13: We keep a sound financial position

    We keep a sound financial position • March ’15 net financial debt at € 1,778m, € 21m lower versus end 2014 (before April dividend payment) • The outstanding long term financial gross debt amounted to € 2.6Bio • Credit ratings: Standard & Poor’s A; Moody’s A1 – both stable outlook -1,778 -1,800 7 8 -

  14. Slide 14: Outlook for 2015 reiterated

    Outlook for 2015 reiterated  In the first-quarter 2015, good progress was made on the company’s ‘Fit for Growth’ strategy, with underlying trends well on track to deliver on the 2016 underlying revenue and EBITDA growth objective.  The first-quarter underlying EBITDA performance was solid, largely

  15. Slide 15: Consumer results Q1 2015

    Consumer • Within the “Fit-for-Growth” strategy, a more efficient organisation and overall simplification was implemented results • • This also entailed a new customer segmentation As of 2015, Small Offices are reported within our new Consumer Business Unit and no longer in our Q1 2015 Enterprise Bu

  16. Slide 16: Consumer - Underlying quarterly P&L

    Consumer - Underlying* quarterly P&L *Adjusted for incidentals (2014 excluding divested company’s) Q1’15 underlying revenue +5.3 % YoY , incl. € -4m (-0.6%) regulatory impact  Mobile services up by 2.2%: growing Mobile postpaid customer base and favorable ARPU trend.  Mobile devices revenue remain

  17. Slide 17: Consumer underlying revenue variance

    Consumer underlying* revenue variance (in EUR million) Q1’15 *Adjusted for incidentals, i.e. impact from divested companies. Total Q1 2015 CBU reported revenue of € 711 million was 4.6% up versus € 680 million reported revenue of Q1 2014 17

  18. Slide 18: Consumer - Fixed voice

    Consumer - Fixed voice + 14,000 Fixed Voice net adds, successfully attracted former Snow customers through Scarlet Q1’15 revenue from Fixed Voice totaled € 139 m, -3.5% YoY  YoY line erosion by -32,000  Increasing number of customers having Fixed Voice in PACK at discount Q1’15 Fixed line +14,000

  19. Slide 19: Consumer - Fixed Internet

    Consumer - Fixed Internet Fixed data revenue up 5.9%; Proximus and Scarlet adding +51,000 customers in Q1, the best quarterly customer gain in years Q1’15 Fixed Internet revenue of € 135m, i.e. +5.9% YoY  Mainly driven by the growing customer base, up by 99,000 or 6.4% in one year time  Slight ARP

  20. Slide 20: Proximus TV

    Proximus TV Nearly 15% revenue growth for Proximus TV, record net adds of 65,000 in the first quarter Q1’15 TV revenue grew by 14.8 % to €79m  Continued subscriber growth, with TV base up YoY by 163,000 customers or +9.4%  TV-options such as football subscriptions & TV-replay. +65,000 TV subscript

  21. Slide 21: Consumer – Mobile Service

    Consumer – Mobile Service Mobile service revenue variance turning positive, +2.2%, on growing Postpaid base and ARPU trend Mobile service revenue (EUR mio) & YoY variance Q1’15 revenue from Mobile services at € 248m, +2.2 % YoY, showing 300.0.. -6.3% -5.6% -1.1% 0.0% 2.2% further improvement from th

  22. Slide 22: Tango Luxembourg

    Tango Luxembourg Revenue up on growing customer base Tango Q1’15 revenue of € 31m, i.e. +9.5% YoY;  revenue increase coming from the growing postpaid, triple and quadruple-play customer base.  Revenue variance no longer negatively impacted by regulated MTR decrease, which annualized 1 February 201

  23. Slide 23: Enterprise results Q1 2015

    Enterprise • Within the “Fit-for-Growth” strategy, a more efficient organisation and overall simplification was implemented results • • This also entailed a new customer segmentation As of 2015, Small Offices are reported within our new Consumer Business Unit and no longer in our Q1 2015 Enterprise

  24. Slide 24: Enterprise – Underlying quarterly P&L

    Enterprise – Underlying* quarterly P&L *Adjusted for incidentals, mainly the effect from Telindus France and Telindus UK divestures EBU underlying revenue (EUR mio ) & YoY variance Underlying revenue continued to grow in Q1’15 to € 329 m , +2.1%; incl. 600.0.. -3.1% -0.6% 0.3% 5.0% 2.1% estimated re

  25. Slide 25: Enterprise underlying revenue variance

    Enterprise underlying* revenue variance (in EUR million) Q1’15 *Adjusted for incidentals, i.e. impact from divested companies 25

  26. Slide 26: Enterprise - Fixed Voice

    Enterprise - Fixed Voice* Continued Fixed Voice revenue decline on stable erosion of Fixed Voice customer base and traffic Fixed voiceFix revenue Q1’15 EBU Fixed Voice revenue of € 64m, -4.2% YoY Voice (EUR mio) (€m) Revenue & YoY variance  Key driver of the revenue decline is continued Fixed Voice

  27. Slide 27: Enterprise - Fixed Data

    Enterprise - Fixed Data Fixed Data revenue decline in first quarter 2015 limited to -2.0% Q1’15 Fixed Data, revenue of € 62m, - 2.0% YoY  continued migration from older technologies such as leased lines to the Proximus Explore platform, for which pricing is more favorable for customers.  Fixed Int

  28. Slide 28: Enterprise – underlying ICT

    Enterprise – underlying ICT* Underlying ICT revenue growth of 2.2 % EBU posted € 107 m underlying ICT revenue, in Q1’15, +2.2% YoY with Q1 ’15 benefiting from temporary extension from a large ICT contract. *Adjusted for incidentals, i.e. mainly the effect from the divesture of Telindus France (30 Ap

  29. Slide 29: Enterprise - Mobile Service

    Enterprise - Mobile Service Year-on-year growth on larger mobile customer base and better price-tiering Mobile service revenue (EUR mio) & YoY variance Mobile service revenue showed a growth of 3.4% YoY -4.6% -0.1% 3.8% -1.4% 3.4%  continuously growing mobile customer base,  improved customer pric

  30. Slide 30: Technology & Wholesale – P&L

    Technology & Wholesale – P&L TEC & W underlying revenue (EUR mio ) & YoY variance  Q1’15 revenue decline to € 55m, -13.8 % YoY -5.3% -9.8% -9.5% -10.2%  Negative impact from lowered Wholesale roaming tariffs, only partly compensated for by the roaming volume growth 100.0.. -13.8% Millions 90.0.. 8

  31. Slide 31: Staff & Support – P&L

    Staff & Support – P&L  For Q1’15, Staff and Support recorded revenue of € 8m.  Q1’15 HR expenses were 3.0% lower YoY as a result of a lower personnel base.  Q1’15 non-HR expenses totaled € 50 m, + 2.2 % YoY, and includes some higher renting costs related to the sale and lease back of some previou

  32. Slide 32: BICS – Underlying quarterly P&L

    BICS – Underlying quarterly P&L BICS underlying revenue (EUR mio ) & YoY variance BICS Q1’15 revenue totaled € 399m, +11.9 % or € 43m YoY, from a low 500.0.. +11.9% comparable base in 2014.  Positive impact from stronger USD, explaining > 50% of revenue increase Millions 450.0.. 400.0..  combined

  33. Slide 33: Additional information

    Additional information Slide 33

  34. Slide 34: Pricing converged Proximus PACKS

    Pricing converged Proximus PACKS - successful combinations 3-Play 4-Play € 62.95 / month € 66.95 / month € 75.95 / month TV TV • >80 channels; decoder rental TV • TV Everywhere • TV Replay Fixed Voice Free to FIX & to MOB ; Belgium and Fixed voice most EU countries during Off-Peak & Weekend Mobile –

  35. Slide 35: Pricing – TV options

    Pricing – TV options TV Everywhere for free In Comfort or € 4.95 / month Maxi - Pack Thanks to TV Everywhere, your smartphone, tablet or laptop becomes an additional TV screen! At home via your Proximus Wi-Fi connection. Everywhere else via a Wi-Fi Fon Spot or the Proximus 3G/4G network. TV Replay M

  36. Slide 36: Consumer Mobile Postpaid subscriptions

    Consumer Mobile Postpaid subscriptions Smart+ 15 Smart 25 Smart+ 35 Smart+ 50 Smart+ 65 € 15 € 25 € 35 € 50 € 65 € 13 in PACK € 20 in PACK € 30 in PACK € 40 in PACK € 55 in PACK Voice, sms & data 120 min 300 min 300min & Unlt voice Unlt voice (Smartphone users) Unlt SMS Unlt SMS Unlt SMS Unlt SMS (i

  37. Slide 37: Value-driving Joint-Offers

    Value-driving Joint-Offers Selectively combining Mobile Devices with mobile postpaid subscriptions has delivered positive results:  Supports customer acquisition  Driving smartphone penetration , and in particular 4G- penetration  Move customers to higher price-tiering  Improving customer sticki

  38. Slide 38: Pricing – Mobile Voice (Prepaid)

    Pricing – Mobile Voice (Prepaid) Reload bonus For each reload, with Pay&Go Easy you get : Focus on Pay & Go Easy • Bonus 1 (towards fix and Mobile): € 10 reload= 30min, € 15 reload= 60min, € 25 € 0.27/ min calls € 0.12 / SMS reload= 90min, € 50 reload= 200 min € 0.25 / MMS OR Bonus 2 (towards fix):

  39. Slide 39: Pricing – Mobile Data

    Pricing – Mobile Data Standard Pay & Surf € 0.5 / MB (prepaid ) Or € 4.99  50 MB € 0.85 / MB € 9.99  500 MB (postpaid) General Prepaid Only GSM Only Laptop & Tablet Only iPad Only Prepaid Only Prepaid Only Pay & Surf Daily Comfort Favorite Favorite for iPad Pay & Surf for iPad € 4.99 / month € 19.

  40. Slide 40: Pricing – Fixed products

    Pricing – Fixed products Classic Happy Time XL No Limit National Anytime Happy time international € 20.99 / month € 20.99 / month € 30.67 / month € 21.99 / month Note: Free to FIX & to MOB during Free to FIX ,to MOB & to Lower tariffs during peak OffPeak & Weekend Free to FIX Anytime most European c

  41. Slide 41: Scarlet: No frills brand

    No frills brand Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’ New pricing since 21/05/2015 Red Hot Chili Ketch Up €8 € 18 € 28 €8 € 15 150 min 500 min 1000 min Bonus : Bonus : 1000 SMS 2000 SMS 5000 SMS 20 min 100 min 50 MB 500 MB 1 GB 100 SMS 250 SMS € 0.1

  42. Slide 42: Shareholder return

    Shareholder return The Board of Directors has reaffirmed its intention to pay out a stable yearly dividend of EUR 1.50 per share (interim dividend of EUR 0.50 and ordinary dividend of EUR 1.00) for the next 2 years, provided the Group’s financial performance is in line with current expectations. Gen

  43. Slide 43: Fit for Growth Strategy

    Fit for Growth Strategy Generate Revenue & EBITDA Growth by 2016 Offer best-in- class customer Customer experience & centric leaner simplify to organisation structurally strengthened reduce costs by new brand Invest in networks and IT systems, Cloud, TV building the Replay, foundation of Netflix, Ju

  44. Slide 44: Divestures and natural attrition reducing headcount

    Divestures and natural attrition reducing headcount Estimated cash-out for termination benefits related to Telindus PTS -6,300 FTE past headcount reduction +2,600 FTE programs: BeST -4,160 FTE € million 2006-2012 2015 22 Tutorship & FMS -3,900 FTE 14,111 2016 6 2017 5 • 14,111 FTEs in Belgacom Group

  45. Slide 45: Spectrum: ownership & usage

    Spectrum: ownership & usage 800 MHz 900 MHz & 1800 MHz 2100 MHz 2600 MHz • Used for 2G, 3G and 4G • Used for 3G • Will be used for 4G • Used for 4G • Licenses granted in ‘95 • UMTS licenses granted in • Licenses granted in July ‘12 • Licenses granted in • 1st tacit extension (‘10-’15): 2001 • 15 yea

  46. Slide 46: Regulation- 1

    Regulation- 1 Estimated negative financial impact from regulatory price decreases Estimated impact Regulation impacts Q1 2015 FY 2015 (Decrease in EUR million) Revenue € 1m € 1m MTR EBITDA € 1m € 1m Revenue € 9m € 23m Roaming EBITDA € 9m € 23m Revenue €10 m €24 m Total EBITDA €10 m €24 m MTR -regula

  47. Slide 47: Regulation- 2

    Regulation- 2 Mobile voice and data-roaming: EU Roaming III Regulation regulation • The Roaming III Regulation will expire in principle on 30 June 2022. However, in the meantime, the EU Authorities (Commission, Council and Parliament) are discussing proposals that include an alignment of the domesti

  48. Slide 48: From reported to underlying – incidentals

    From reported to underlying – incidentals For Q1, the difference between Reported and Underlying revenue and EBITDA results from the impact of 2014 divestures and from a capital gain on the sale of buildings in 2015 GROUP - Revenue incidentals GROUP - EBITDA incidentals (EUR million) Q114 Q115 (EUR

  49. Slide 49: Macro economic environment

    Macro economic environment • After the temporary decline in 3Q14 linked to the drop in the building sector, the growth of the GDP increased again in 4Q14. • Belgium -0,4, Europe to -0,1. • Decrease caused by lower energy prices. • Unemployment rate at 8.5% in Belgium in February 2015 Source: Nationa

  50. Slide 50: Cautionary Statement

    Cautionary Statement “This communication might include some forward-looking statements, without limitation, regarding Belgacom’s financial or operational results, certain strategic plans or objectives, macro- economic trends, regulation, future market conditions and other risk factors. These forward

Proximus — Q1 2015 Earnings Presentation on 6ix