Proximus Sa · EURONEXT:PROX
Proximus Sa — Belgacom — Q1 2007 Earnings Presentation
35 slides from Proximus Sa's earnings presentation, May 16, 2007
Slide 1: Belgacom results presentation Q1 2007
Belgacom results presentation Q1 2007 - 16 May 2007 1
Slide 2: 1. Fixed Line Services
1. Fixed Line Services belgacom
Slide 3: Voice
Voice Traffic Volume VOICE VOLUMES (mio min) ‘Flat rate offer’ ongoing growth and international extension led to: • Line loss Q1’07 (42k) at same level 2,411 2,343 1 as previous year Q1 ‘06 Q1 ‘07 Voice ARPU * On own network VOICE PRICING EUR/Month • Voice access ARPU up 1.7% due to indexation incre
Slide 4: Broadband
Broadband Total Access Channels1 (000) 5,272 5,232 BROADBAND VOLUMES Fierce competition from cable and mobile led to: Q1 ‘06 Q1 ‘07 • lower growth, not fully offsetting voice access line loss BB growth BB lines EOP • launch of new products to support future volume growth (ADSL Only, 1,025 1,164 Bund
Slide 5: Data
Data FLS Business Connections EOP (‘000) 68 69 43 50 25 19 Q1 ‘06 Q1 ‘07 Leased Lines ADSL POP ADSL BILAN SDSL DATA VOLUMES DATA PRICING • Ongoing migration from • Connectivity revenue almost Leased Lines to DSL solutions flat as DSL solutions compensate lower Leased Lines • Total number of business
Slide 6: Belgacom TV
Belgacom TV TV growth TV total EOP (‘000) (‘000) TV customers EOP 149 42 9.6 9.8 Q1‘06 Q1’07 Q1‘06 Q1’07 FLS TV ARPU VOLUMES (EUR/month) Although net adds at same 13.4 11.9 level of previous year, clear impact of Try&Buy and related churn Q1‘06 Q1’07 6
Slide 7: FLS Revenue evolution
FLS Revenue evolution Total Revenue (EUR mio) Overall slight revenue increase of 0.8%: +0.8% 909 916 • Internet revenue growth (EUR +13 179 184 2 8 million) offsets the decline in 206 208 traditional voice revenue (EUR -12 million) 164 170 • Higher volume and ARPU pushed Belgacom TV revenue to EUR 8
Slide 8: FLS Cost evolution
FLS Cost evolution Flat operating expenses: Total Cost (EUR mio) • Lower charges to revenue (-5.9%) due to lower MTR since 1 Nov ’06 • Offset by 632 632 increased HR expenses (+4.7%) due to indexation and annual 127 133 increase of wages, increase in 236 247 termination benefits and profit distribut
Slide 9: EBITDA evolution
EBITDA evolution EBITDA (EUR mio) Total EBITDA increased +2.5% • Due to revenue growth +2.5% 277 284 • Flat operating expenses 256* Q1‘06 Q1’07 9
Slide 10: EBITDA MARGIN overview
EBITDA MARGIN overview EBITDA Margin (%) Stronger growth in EBITDA than in revenue leads to overall EBITDA margin increase. +0.5pp 30.5% 31.0% Q1‘06 Q1’07 10
Slide 11: CAPEX
CAPEX Capex as % of sales increases CAPEX (EUR mio) from 8.1% in Q1’06 to 9.6% in Q1‘07 • Timing difference in renewal IT systems 90 +22% 74 23 • Further roll-out Broadway used 18 Eur 23 million 21 19 • EUR 21 million Belgacom TV 46 capex 37 Q1‘06 Q1 ‘07 Other FLS Belgacom TV Broadway 11
Slide 12: Outlook 2007
Outlook 2007 FLS reiterates the full-year 2007 guidance • a total revenue decline between -1% and -2% • a fairly stable EBITDA margin compared to 2006 • to add Belgacom TV customers at the same pace as 2006 with an average monthly TV ARPU of EUR 15 12
Slide 13: 2. Mobile Communications Services
2. Mobile Communications Services 13
Slide 14: Active penetration reached 91.4%
Active penetration reached 91.4%(*) • In Q1 2007, active penetration increased 1.7 pp • Total active customers in Belgian market : 9,668,019 +1.7pp 91.4% +5.0pp 89.7% +0.6pp +2.6pp 84.1% 84.7% 81.5% +5.8pp 75.7% EOY '03 EOY '04 EOY'05 Q1 '06 EOY '06 Q1 '07 (*) BMB estimates 14
Slide 15: Blended churn rate kept at low level of 15.9%
Blended churn rate kept at low level of 15.9% • Proximus maintained a high brand loyalty index of 77 Blended Customer churn* (%) 15.6% 15.9% Q1 '06 Q1 '07 * Annualized blended churn rate of registered SIM cards 15
Slide 16: 4,346K Proximus customers at the end of Q1'07
4,346K Proximus customers* at the end of Q1’07 • Year-on-Year Proximus added 86,000 customers and further improved its customer portfolio with 266,000 additional postpaid customers. • During the first quarter, Proximus increased its customer base by 35,000 versus end 2006. Quarterly customer Total c
Slide 17: Proximus' Market Share at 45.0%
Proximus’ Market Share at 45.0%(*) • Proximus’ active Market Share went down by 0.5pp since end 2006. • Postpaid /prepaid ratio enhanced to 48/52. Customer Base and Market Share* (%) 45.5% 45.0% 54% 52% 46% 48% EOY '06 Q1 '07 Postpaid Prepaid Market share * 3-month active subscribers 17 (*) BMB esti
Slide 18: MCS keeps leadership in blended net ARPU
MCS keeps leadership in blended net ARPU Net ARPU went down 4.4%. Excluding the impact of MTR cut in Nov ‘06, net ARPU decrease would be 1.7%; driven by the success of new bundled tariff plans. Blended ARPU1 (EUR/month) 37.2 -4.4% 35.5 39.8 39.3 -2.6 -3.8 Q1 '06 Q1 '07 Gross ARPU Credits & Discounts
Slide 19: Total revenue evolution
Total revenue evolution • Total revenue decline is primarily driven by the decrease in MTR. • Excluding the MTR impact, total revenue decrease was 0.4%. • The positive impact of an increased and improved customer base was offset by the success of bundled and cheaper pricing offers. Total revenue (EU
Slide 20: Net Service Revenue evolution
Net Service Revenue evolution • Net service revenue decreased 2.4%. Excluding the MTR-cut impact, the revenue grows slightly with 0.2%. • Gross Data revenue increased 26%, partly compensating the decline in gross voice revenue. • The success of “Pay&Go generation” and “bonus for life” campaigns had
Slide 21: Costs increase primarily linked to customer acquisition
Costs increase primarily linked to customer acquisition. 3.8% increase of ‘Material and charges to revenues’ mainly driven by: • higher commissions cost linked to higher acquisition versus last year • increase in content fees for Network services (SMS voting, logo, ringtones,..) • higher interconnec
Slide 22: EBITDA overview
EBITDA overview • The cut in MTR and the acquisition strategy are the main drivers of the EBITDA decline. EBITDA (EUR Mio) & EBITDA Margin 50.0% 47.1% 264 241 Q1’06 Q1 '06 Q1’07 Q1 '07 22
Slide 23: Capex
Capex • Capex 32% below investments in Q1 2006, mainly driven by phasing of projects and slow down of 3G investments • UMTS Coverage EOY 2006 already far above legal obligations at 82% of the population. CAPEX – CAPEX as % of total revenue 8.7% 6.3% 46 32 Q1 '06 Q1 '07 23
Slide 24: Outlook 2007
Outlook 2007 Proximus re-iterates its guidance for 2007: • Fierce competition and an increased effort to maintain and support the Market share leadership program will cause revenues to decline between 1% and 3% • MTR decrease will have an additional negative revenue impact of 4% • MCS maintains assu
Slide 25: 3. International Carrier Services
3. International Carrier Services 25
Slide 26: Revenue & Direct Margin Overview
Revenue & Direct Margin Overview • Voice revenue and direct margin increase thanks to Mobile, Middle East and African business • Shift from Standard Quality to Premium Quality products (Higher price) • Growth in mobile data products (signalling & SMS transit) Revenues (EUR Mio) Direct Margin (EUR Mi
Slide 27: Other cost overview
Other cost overview • Overall OPEX reduction reflecting synergies of Swisscom integration Cost structure (EUR Mio) 16 -10% 14 4 3 6 6 6 5 2006 2007 HR related expenses Network expenses IT & General Admin. 1 HR related expenses includes Swiss Body Lease 27
Slide 28: Conclusion
Conclusion • Post Merger Integration completed successfully • Outsourcing deals being implemented • Overall positive performance for voice and strong growth in mobile data 28
Slide 29: 4. Group Financials
4. Group Financials belgacom
Slide 30: Consolidated income statement
Consolidated income statement EUR Mio Q1 2006 Q1 2007 % change . Total Revenues 1,507 1,515 +0.5% Cost of goods sold -493 -496 +0.6% HR expenses -275 -287 +4.3% Other operating expenses -193 -196 +1.5% Total Operating Expenses -961 -979 +1.8% EBITDA 545 536 -1.7% Depreciations -196 -189 -3.8% EBIT 3
Slide 31: Result Segments
Result Segments Revenues*(EUR Mio) EBITDA (EUR Mio) 1,515 1,507 +0.5% 545 -1.7% 536 172 183 5 11 527 512 264 241 909 916 277 284 Q1'06 Q1'07 Q1'06 Q1'07 FLS MCS ICS * Total revenues as reported post inter-segment eliminations 31
Slide 32: Capex
Capex (EUR Mio) 122 120 0 1 32 46 90 74 Q1'06 Q1'07 FLS MCS ICS 32
Slide 33: Free cash flow
Free cash flow influenced by financial assets transactions Free cash flow (EUR Mio) • Lower operational cash flow mainly due to earlier payments income tax • Transactions on financial assets • 2006 : acquisition of Telindus • 2007 : disposal of remaining 467 Mobistar & Eutelsat participation -213 Q1
Slide 34: Net financial position (EUR Mio)
Net financial position (EUR Mio) -1,165 -1,636 -4 467 Net Debt Dec 2006 FCF Other Net Debt Mar 2007 34
Slide 35: Balance Sheet
Balance Sheet EUR Mio YTD Dec 2006 YTD Mar 2007 TOTAL ASSETS 7,300 7,471 Non-Current Assets 5,504 5,181 Goodwill 1,760 1,760 Intangible Fixed Assets 590 556 Property, Plant and Equipment 2,527 2,489 Associates and Other Participating Interests 234 1 Deferred Income Tax Assets 351 338 Pension and Oth