Proximus Sa · EURONEXT:PROX
Proximus Sa — Belgacom — FY2010 Earnings Presentation
59 slides from Proximus Sa's earnings presentation, March 2011
Slide 1: Belgacom Road show presentation Full-year results 2010
Belgacom Road show presentation Full-year results 2010 Group Highlights 2010 Results per segment Popular discussion topics Financials - 2 Consumer - 15 Headcount - 34 Operationals - 8 Enterprise - 23 Regulation - 35 Strategic progress -10 SDE&W - 30 Legal - 39 Shareholder return -12 S&S - 31 Converg
Slide 2: Belgacom Group Financials
Belgacom Group Financials 2010 ended with solid financial results • Strong FY revenue of € 6,603m or +10.2% yoy • Slightly exceeding full-year guidance • Growth trend largely results from full consolidation BICS & additional MTN business • Like-for-like*, revenues -0.6% including €121m regulation (-
Slide 3: Belgacom Group Financials
Belgacom Group Financials Like-for- As reported (2) like VAR VAR VAR in mio € Q109 Q209 Q309 Q409 FY09 Q110 Q210 Q310 Q410 FY10 Q4/Q4 FY FY Revenues (1) 1,492 1,504 1,476 1,518 5,990 1,641 1,664 1,640 1,658 6,603 9.2% 10.2% -0.6% Total OPEX -1,000 -1,002 -982 -1,051 -4,035 -1,146 -1,161 -1,150 -1,16
Slide 4: Group - Investments
Group - Investments • Belgacom invested € 734m or 11.1% of its Group revenues • 2010 capex was € 137m higher than 2009 driven by: − Renewal 2G license for the period 2010-2015 (€ 74m) − Renewal content rights Belgacom TV − Switch from leasing to buying utility cars Furthermore, Belgacom continued to
Slide 5: Group - Free cash flow
Group - Free cash flow Sound FCF generation • Strong FCF of €980m, up by €183m from last year • Positive impact from higher EBITDA, one-offs & timing differences • One -off cash increase in 2010 from full consolidation BICS (€ 51m) ; 2009 impacted by payment of fine (€ 66m) • Lower income tax paymen
Slide 6: Group - Net financial position
Group - Net financial position • Belgacom continues to have a sound financial position with net debt/EBITDA at 0.7x − Net financial debt decreased by € 265m to € 1,451m − Outstanding gross financial debt at € 2.1 billion − Most of the debt maturing in 2011 and 2016 − In order to pre-finance the matu
Slide 7: 2010 performance versus guidance
2010 performance versus guidance Guidance met on all metrics • Guidance slightly exceeded on revenue; met on EBITDA-margin: − +10.2% revenue growth or slightly ahead of guided range of 9% -10% − 30% EBITDA margin or fully in line with the targeted margin for 2010 − FY capex fully complies with the g
Slide 8: Belgacom Group Operationals
Belgacom Group Operationals Active mobile customers1 Mobile data Cards2 evolution Broadband customers (in „000) (in „000) (in „000) 5,318 5,332 182 1.520 1.558 5,161 1.345 4,620 1.237 114 64 2007 2008 2009 2010 2007 2008 2009 2010 2007 2008 2009 2010 Fixed Voice customers TV base3 Number of Packs (i
Slide 9: Belgacom Group market shares
Belgacom Group market shares Mobile customer market share Mobile data cards1 market share 62% 57% 57% 43.3% 42.7% 41.3% 2008 2009 2010 2008 2009 2010 Broadband market share Digital TV market share 9 49.7% 48.5% 46.3% 30% 31% 31% 2008 2009 2010 2008 2009 2010 1 Mobile internet on laptop Slide 9
Slide 10: Strategic progress
Strategic progress Move 870k multi-play Packs, of which ~9% quadruple-play Growth customers Over 45% of consumers have at least 2 products via from single- In 2010 increased focus on Mobile in a Pack Cross sell play to Reinforcing convergence position in SME market through multi-play partner
Slide 11: Strategic progress
Strategic progress Increase Belgacom ICS merged with Swisscom ICS and MTN ICS value in BICS Belgacom owns 57.6% of enlarged entity, Swisscom 22.4% International Leading and MTN 20% Carrier Growth position In top 4 worldwide in terms of voice traffic volume in consolidation World leader in mo
Slide 12: Group – Shareholder return
Group – Shareholder return Committed to attractive shareholder return Over result 2010: • The BoD approved to propose to the AGM of 13 April, a Dividend per share Interim dividend Extra-ordinary dividend Normal dividend total dividend of € 2.18/share ; of which the normal dividend of € 1.68/share to
Slide 13: Group - 2011 Guidance
Group - 2011 Guidance In 2011 Belgacom‟s results will feel further pressure from regulatory measures. For the full-year, the negative impact on revenue is estimated to be about EUR 115 million, while on EBITDA-level the negative impact is estimated to be less than EUR 30 million. As a result, Belgac
Slide 14: Full-year 2010 results per business unit
Belgacom Company presentation Investor Relations Full-year 2010 results per business unit • Consumer Business Unit (CBU) – slide 15 • Enterprise Business Unit (EBU) – slide 23 • Service Delivery Engine &Wholesale (SDE&W) – slide 30 • Staff and Support (S&S) – slide 31 • Belgacom International Carrie
Slide 15: Consumer – Highlights
Consumer – Highlights Full-year 2010 ended with sound financial results • FY revenue of € 2,368m or flat on a comparable basis* • 2010 result impacted by regulation (€ -60m or -2.6%) • Underlying business growing 2.6% yoy driven by data, TV & Tango • Fixed line revenue impacted by regulation and lin
Slide 16: Consumer - P&L
Consumer - P&L CBU revenue (EUR mio) 2009 Reported • Q4 like-for-like* rev -1.0% due to regulation (€ -23m) 630 620 604 602 617 Like-for-like − MTR, Collecting model, Roaming − 610 591 Excl regulation, underlying business +2.7% 600 590 580 • FY like-for-like* revenue flat incl €60m regulation, 570 5
Slide 17: Consumer - Fixed voice
Consumer - Fixed voice Revenue impacted by regulation & line loss Fixed voice revenue (EUR mio) • Q4‟10 fixed voice revenue of € 124m (or -9.6% yoy) • FY ‟10 revenue of € 506m or -9.8% driven by: 150 145 140 144 141 135 138 138 − Line loss 130 125 120 133 125 124 124 − Regulation: Collecting model &
Slide 18: Consumer - Mobile Voice
Consumer - Mobile Voice FY like-for-like* revenue -3.3%; excl regulation revenues slightly up Mobile voice revenue (EUR mio) 2009 Reported • Q4 revenue -5.2% like for like, reported-9.3% 190 180 170 178 179 176 Like-for-like • FY revenue -3.3% like-for like, reported -7.2% 170 160 − 2009 included Fi
Slide 19: Consumer - Fixed Data
Consumer - Fixed Data FY revenue +4.4%; customer growth impacted by fierce competition Fixed data revenue (EUR mio) • Q4 revenue slightly down (-0.6%) to €83m 86 84 − Lower activation revenues fully offset impact slight 85 85 84 84 price increase of revamped offer 82 83 80 82 − 78 76 74 79 78 FY rev
Slide 20: Consumer - Mobile Data
Consumer - Mobile Data FY revenue +6.5% yoy impacted by regulation Mobile data revenue (EUR mio) • FY revenue +6.5% to € 322m, with Q4 +6.1% yoy 87 − Including change in allocation credits & discounts − 82 84 77 80 80 79 79 FY SMS revenue +11% 77 75 − Advanced data -9.4% YoY, impacted by financial 7
Slide 21: Belgacom TV
Belgacom TV Confirming its growth path: revenues +36% yoy, customers +30% TV revenue (EUR mio) • Q4 revenues +23.1% yoy ; FY revenues +35.9% 48 43 46 49 • Driven by customer growth 44 43 • TV remains one of the growth drivers for CBU 38 33 40 28 34 23 29 30 18 13 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q
Slide 22: Tango – Mobile activities in Luxembourg
Tango – Mobile activities in Luxembourg Tango revenue (EUR mio) 29 28 27 26 • FY revenue of €99m or +6.1% yoy 25 24 25 25 23 24 25 23 24 • Revenue growth driven by: 22 21 23 23 20 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 − Succesfull launch iPhone4 − Strong sales smartphones Tango mobile customers EO
Slide 23: Enterprise – Highlights
Enterprise – Highlights 2010 showing recovery from crisis • Crisis impact stabilized in 2010 • Revenue decline limited to 2.1%* , including regulation impact of € -39m or -1.6% • Underlying business only down by 0.5% YoY, while this was 3.1% for 2009 • ICT revenue growing 3.3% YoY, while down in 200
Slide 24: Enterprise - P&L
Enterprise - P&L EBU revenue (EUR mio) 2009 Reported • Q4 revenue : -3.2%*, incl. € 15m regulation impact 660 640 640 626 632 like-for-like • FY 2010 revenue of € 2,421 million; -2.1% YoY* 602 • FY regulation impact € -39m 620 600 • 2010 underlying revenue -0.5%, vs 2009 -3.1% (crisis) 580 560 633 6
Slide 25: Enterprise - Fixed Voice
Enterprise - Fixed Voice Fixed Voice line erosion contained, revenue impacted by regulation Fixed voice revenue (EUR mio) • FY 2010 revenue of € 539m, -6.1% YoY • Impacted by: 150 145 148 144 140 139 142 141 − lowered F2M-tariffs on 1 August 2010 (MTR-linked) 135 130 136 130 132 − 125 collecting mod
Slide 26: Enterprise - Mobile Voice
Enterprise - Mobile Voice Revenue impacted by regulation; usage further improved Mobile voice revenue (EUR mio) 2009 Reported • FY 2010 Mobile Voice revenue of €502m; -5% YoY* 150 145 140 146 144 135 135 like-for-like • Regulation impact increased over the quarters • Q4 2010 revenue -6.3% YoY, mainl
Slide 27: Enterprise - Fixed Data
Enterprise - Fixed Data Stable Broadband customer base in saturated, competitive market 110 Fixed data revenue (EUR mio) • FY 2010 revenue of € 392m, -2.3% YoY • SME and self-employed signing up for advantageous 105 CBU-Packs incl internet at discount 100 101 100 100 100 95 99 98 98 98 90 Q109 Q209
Slide 28: Enterprise - Mobile Data
Enterprise - Mobile Data SMS growth continued; price pressure on advanced mobile data Mobile data revenue (EUR mio) • FY 2010 revenue of € 185m, + 2.8% YoY* 51 49 − SMS revenue up by 4% to € 76m − 47 48 45 43 46 47 45 47 47 46 Advanced Data up by 2% to € 109m 43 41 39 37 35 Q109 Q209 Q309 Q409 Q110
Slide 29: Enterprise - ICT
Enterprise - ICT Full-year revenue up by 3.3% FY 2010 revenue of € 692m; + 3.3% YoY • Solid yoy growth for first three quarters; 2009 impacted by the crisis • Some recovery from crisis visible as of Q4 last year • Q4 2010 flat to 2009 • Good 2010 performance of Telindus International ICT revenue (EU
Slide 30: Service Delivery & Wholesale - P&L
Service Delivery & Wholesale - P&L SDE&W revenue (EUR mio) 2009 Reported • FY revenue of € 342m, or like-for-like* -1.7% yoy 100 − 120 98 94 94 Decline fully due to regulation (€ -22m) like-for-like 100 − 80 60 Excl regulation revenue+4.7% • Q4 like-for-like* -6.6% incl € 9m regulation 40 20 88 87 8
Slide 31: Staff & support - P&L
Staff & support - P&L S&S revenue (EUR mio) • FY revenues of € 35m, slightly up +4.6% yoy − 17 15 13 a.o. driven by slightly higher capital gains realised on sale of buildings 11 9 12 7 10 10 5 8 7 7 3 7 6 1 -1 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 S&S Personnel costs (EUR mio) • FY personnel cost
Slide 32: International Carrier Services P&L
International Carrier Services P&L ICS total revenue (EUR mio) • FY revenues of €1,610m; incl Q4‟10 of €402m 450 400 − Positive effect full consolidation & MTN ICS 350 300 250 378 414 415 402 contribution − Organic revenue +3.9%, including +4.7% in Q4‟10 200 150 100 217 227 228 221 50 0 Q109 Q209 Q3
Slide 33: Popular discussion topics
Belgacom Company presentation Investor Relations Ytd September Popular 2010 discussion results in detail topics • • Headcount Consumer – slide 34 Unit (CBU) Business • Network – slide 47 • • Regulation – slide Enterprise 35 Unit (EBU) Business • BICS – slide 51 • • Legal – slideDelivery Service 39 E
Slide 34: Group - Headcount
Group - Headcount Benefitting from headcount reduction programs • FY HR costs of € 1,107m, i.e. ~24% of Group costs & ~17% of Group revenue • HR costs -1.6% yoy, like-for-like1 driven by fewer headcount (-496 FTE‟s) − Ongoing headcount reduction programs (-571 FTE) & natural attrition (-241 FTE) − P
Slide 35: Regulation - 1
Regulation - 1 Mobile Termination Rates (MTR) • Glidepath in place since June 2010 leading to full MTR-Glidepath in €ct symmetry by 2013 • Any MTR decrease reflected in F2M tariffs of BGC Proximus Mobistar Base Big drop in asymmetry as • Mobistar & Base filed separate appeal against decision: 11.43
Slide 36: Regulation - 2
Regulation - 2 Mobile voice and data EU-roaming regulation Voice Roaming (€ct per minute) Retail Outgoing Retail Incoming Wholesale Outgoing Roaming regulation impact 2010 95 • 2010 was impacted Carry-over impact from lower rates on 1 July 2009 49 • Roaming rates voice further decreased on 1 July 20
Slide 37: Regulation - 3
Regulation - 3 National directive on Premium Rate Services • As from 1 April 2010, financial collecting model for Premium Rate Services • Following circulars issued end 2009 by Ministry of Finance concerning VAT on Premium Rate Services and Tax on chance games • Applicable for services where Belgaco
Slide 38: Regulation - 4
Regulation - 4 Other regulatory measures Impact 2011 from other regulatory measures • Some other regulatory measures will impact the 2011 financials: o.a. the new LLU1 and bitstream prices • Estimated impact on 2011 financials: − Revenue: ~ € -5m − EBITDA: ~ € -5m Zoom-in on new LLU & Bitstream pric
Slide 39: Legal – Damage claim Base/Mobistar
Legal – Damage claim Base/Mobistar Update on status On-net case: damage claim Base/Mobistar Belgacom introduced motion in respect of expert panel following 2nd preliminary report • Damage claim filed in 2003 by KPN Group Belgium (Base) & later also by Mobistar, claiming that BGC: − applied terminati
Slide 40: Group - Convergence
Group - Convergence Execution of consistent convergence strategy paying-off Packs evolution since launch ('000) Multiplay overview residential customers net adds total 1.000 Single double Triple Quadruple 250 870 900 741 800 200 700 > 45% of customers have ≥ 2 BGC 560 600 products 150 384 500 < 55%
Slide 41: Belgacom TV
Belgacom TV 31% Market overview DTV market share Competitive landscape • ~ 4.7 m households in Belgium • Digital TV penetration Belgium of ~57%* Flanders • Belgacom present in all regions Telenet-zone Brussels • Belgacom TV coverage ~90% Numéricable • Belgacom Digital TV market share of 31% − Share
Slide 42: Belgacom TV
Belgacom TV +30% TV customers An international recognized success story yoy Evolution TV base* since launch ('000 EOP) 975 1 .1 0 0 160 net adds Total 900 • Strong customer growth since launch in June „05 − 752 140 700 In 5 yrs time Belgacom gained 975k* TV 506 subscribers, representing 839k househo
Slide 43: Belgacom TV
Belgacom TV From TV towards entertainment Rich offer: 90 Soccer Bouquets VOD Advanced 3D TV channels, incl HD >1300 movies functionalities demo = A complete & competitive offer Basic pricing of “All Foot” Additional Movies on Pause TV, March‟10 live €18.5/month €19.95/month channels dema
Slide 44: Mobile data - 1
Mobile data - 1 Mobile data on Group level Mobile data ~30% of Mobile service revenue • BGC Group generated € 507m revenues from mobile data; or +5.1% yoy Advanced data ~35% of • Yoy variance has been impacted by regulatory Mobile data measures: revenue - EU-regulation on data roaming - Collecting m
Slide 45: Mobile data - 2
Mobile data - 2 Zoom-in “Internet on Laptop” & “Internet on Smartphone” Belgacom Mobile Internet customer base* * Total subscriptions for Belgacom Mobistar 182,000 internet on laptop 139,000 62% 114,000 87,000 64,000 49,000 38% +60% yoy Q208 Q408 Q209 Q409 Q210 Q410 For CBU: Comfort @ €14.99/month F
Slide 46: Mobile data - 3
Mobile data - 3 Belgacom well positioned to capture mobile data growth High-quality 3G-network & strategic option to offload data to sustain customer experience and keep investments under control • 55% of private mobile data WiFi Fix DSL Network is consumed at home • Opportunity to redirect data fro
Slide 47: Fixed Network -
Fixed Network - 1 Nation-wide, high-quality fixed network • ADSL : 99.85 % - world record • Strategic decision end 2003 to invest in FttC* (Broadway project) “Boost the • Enabler for organic growth and innovation, answering customer needs Copper strategy” Reconfirmed • Deploying high-quality & natio
Slide 48: Fixed Network - Move to all-IP program
Fixed Network - 2 Network Move to all-IP program simplification Objectives MaIP: ISDN VoD Video on Dedicated Dedicated Demand infrastructure • Replace legacy technologies Central Office ADSL TV TV infrastructure CPE Broadcasting per perservice service Access SDSL Internet Internet which become end-o
Slide 49: Network - Mobile
Network - Mobile Nation-wide, high-quality mobile network Spectrum efficiency 50-100Mbps • Leader in coverage A HSPA +: few 10Mbps − GSM sites covering HSDPA : 99.98% of Belgian A few Mbps population UMTS : 128 to 384 kbps EDGE Evolution: − 3G sites covering 97% GPRS : 10-14 Mbps of Belgian populati
Slide 50: Spectrum
Spectrum Belgian situation & upcoming spectrum auctions 2G spectrum 3G spectrum 4G spectrum Digital dividend 900 MHz & 1800 MHz 2100 MHz 2600 MHz 790 MHz – 862 MHz • Belgian operators allowed • Proximus, Mobistar & Base • To be assigned: auctions • Spectrum that is freed up to deploy UMTS in 900 eac
Slide 51: International Carrier Services
International Carrier Services BICS delivers best in class global solutions BICS ownership • Active in the international carrier market since 1997 • January „05: spin off of Belgacom ICS as an independent affiliate of Belgacom 20% • Since Dec „09 JV held by Belgacom, Swisscom & MTN 57.6% 22.4% • In
Slide 52: International Carrier Services
International Carrier Services Impact of MTN transaction on financials Until year-end 2009, BICS was jointly controlled & therefore proportionally consolidated • In Q4‟09 BGC booked a non-cash capital gain of € 74m; classified as non-recurring revenue = net result of MTN contribution at 57.6%, minus
Slide 53: International Carrier Services
International Carrier Services BICS grew significantly over the last 5 years Revenue growth (in mio €) Evolution EBITDA & EBITDA margin 140 EBITDA Margin 129 50,0% 45,0% 1,610 120 40,0% 100 35,0% 78 30,0% 80 64 2010 full- 53 25,0% 60 892 consolidation 20,0% 746 812 27 33 713 736 40 7.9% 8.7% 8.0% 15
Slide 54: Debt position Belgacom
Debt position Belgacom • Belgacom continues to have a sound financial position • Average interest on LT loans/debt for 2010: 4.77% • Most of the debt is maturing in 2011 & 2016 • In order to pre-finance the maturing bonds of November 2011, BGC issued on 31 January 2011: - 7 year senior unsubordinate
Slide 55: Shareholder structure
Shareholder structure Belgian state owns ~ 53.5% 338,025,135 shares, of which 321,482,641 Outstanding • Limited liability company under public law - Belgian state main shareholder: 53.5% Own shares - Legal obliged threshold: 50%+1 share 4.9% - Last elections June 2010, government formation ongoing -
Slide 56: Macro economic environment
Macro economic environment Belgium : Belgium & Euro area Budget deficit from 6% in ‟09 to 4.6% in‟10 2011 est. @~4.1%. Debt ~100% of GDP GDP growth (%)1 Unemployment rate (%)2 Belgium Euro area Belgium Euro area 2.0% 2.0% 2.0% 1.0% 10.1% 1.7% 1.6% 10.0% 9.6% 1.8% 9.5% 0.4% 1 2008 2 2009 3 2010 4 201
Slide 57: Become Belgian operator with best service
Customer Centricity Change Customer Experience Customer is King: act on 3 layers Improve operations + Be accessible + Simplify • Drastically reduce waiting • Simplify activation costs • Quality of execution times • New expert teams structure • Call centres open until 10pm • 1st reminder for free • E
Slide 58: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements “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 a
Slide 59: For further information: Belgacom Investor Relations
For further information: Belgacom Investor Relations e-mail: investor.relations@belgacom.be Tel: +32 2 202 82 41 http://www.belgacom.com Slide 59