Royal Kpn Nv · EURONEXT:KPN
Royal Kpn Nv — Koninklijke Kpn — Q4 2021 Earnings Presentation
36 slides from Royal Kpn Nv's earnings presentation, Jan 31, 2022
Slide 1: Q4 & FY 2021 results
Q4 & FY 2021 results 31 January 2022 kpn. The network of the Netherlands
Slide 2: Safe harbor
Safe harbor Alternative performance measures and management estimates This financial report contains a number of alternative performance measures (non-GAAP figures) to provide readers with additional financial information that is regularly reviewed by management, such as EBITDA and Free Cash Flow (‘
Slide 3: Highlights Q4 and FY 2021
Highlights Q4 and FY 2021 Solid progress ‘Accelerate to grow’ strategy Delivered on FY 2021 outlook and ambitions Sustainable mass-market service revenue growth Turnaround SME established, strong mobile and improving broadband trends at B2C FY adj. EBITDA AL +1.2% amid improving service revenues and
Slide 4: Delivered on 2021 outlook
Delivered on 2021 outlook Achievements Outlook FY 2021 FY 2021 Adjusted EBITDA AL € 2,347m ~€ 2,345m Capex € 1,216m € 1,200m Free Cash Flow € 784m ~€ 765m Regular DPS € 13.6 cents 1 € 13.6 cents 4 Q4 2021 Results 1. KPN will pay a final dividend of € 9.1ct per share on 13 April 2022, subject to AGM
Slide 5: Accelerate to grow supported by three key pillars
Accelerate to grow supported by three key pillars Three strategic pillars… …to support our ambition to 1. Leverage & expand superior networks • Covering the Netherlands through fiber • Low latency services via 5G and edge computing Connect the Netherlands to a sustainable future • Leading the Dutch
Slide 6: Expand Superior network
Expand Superior network
Slide 7: Expand superior network: Fiber rollout on track after record 2021
Expand superior network: Fiber rollout on track after record 2021 Continuously expanding fiber footprint1 Strong FttH activation rate Jointly covering ~80% of NL by end 2026 homes passed, k homes activated own roll out, k homes passed, % of households +433 +238 ~80% KPN footprint +319 3,217 +142 1,6
Slide 8: Expand superior network: Creating value through fiber investments
Expand superior network: Creating value through fiber investments Growing total network penetration over time (incl. Wholesale)1 Customers increasingly willing to pay for quality >60% 50-60% 5-10% 40-50% 5-10% ~75% € 65 € 72 ~50% +11% ~50% 15-35% 10-35% 45-55% >55% Inflow ≥100Mbps + Average VAS = B2
Slide 9: Expand superior network: Best mobile network and fastest 5G
Expand superior network: Best mobile network and fastest 5G #1 Excellent 5G position Ookla awards received Best mobile network in the Netherlands Differentiated 5G services H2 2020, H1 2021 and Leading H2 2021 Highest download speed 5G ecosystem Best mobile network Highest upload speed Leading in Se
Slide 10: Enhance Customer focus
Enhance Customer focus
Slide 11: Strong improvement of operational delivery
Strong improvement of operational delivery Strong uptake B2C customer satisfaction B2B NPS moved into positive territory Employee engagement remained at top-tier level throughout the pandemic +5 +6 16 -4 4 86 82 11 77 77 -2 Q4 2020 Q4 2021 Q4 2020 Q4 2021 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Key drivers
Slide 12: B2C: Preferred digital partner for households
B2C: Preferred digital partner for households Serving as a platform for household value growth Achievements in 2021 Best digital access Continued SuperWiFi campaign & Convergence, fiber, WiFi & 5G attractive 1Gbps proposition fueling base growth New 4K STB Best digital experience Improved MijnKPN ap
Slide 13: B2C: Continued growth in mobile and fixed improving
B2C: Continued growth in mobile and fixed improving Key take-aways Service revenue trend (€ m) • Ongoing growth in mobile service revenues, driven by solid 64k +0.2% +0.1% postpaid net adds LTM and growing ARPU -0.7% -1.5% • Underlying fixed service revenue trend gradually improving, with fiber serv
Slide 14: B2C: Ongoing momentum in mobile, broadband stabilizing
B2C: Ongoing momentum in mobile, broadband stabilizing Stabilizing broadband net adds (k)1 Higher fixed ARPU Fixed service revenues stabilizing (y-on-y growth)2 € 50 +3 +1 0 +0.2% -1 -0.1% -3 +0.9% y-on-y -1.7% -1.6% -1.4% Continued good postpaid net adds (k) Growing mobile ARPU Strong mobile servic
Slide 15: B2B: Moving in the right direction driven by successful SME turnaround
B2B: Moving in the right direction driven by successful SME turnaround Key take-aways Service revenue trend (€ m) • Business service revenues trend gradually improving -2.7% -2.5% • Continued growth in SME, supported by good broadband and mobile -4.7% base developments -7.2% • Lower revenues from Ac
Slide 16: B2B: Sustainable inflection in SME established
B2B: Sustainable inflection in SME established Financial turnaround in SME service revenues, due to… Solid base trends in KPN EEN (k) +2.9% +4.8% providing platform for up and cross-sell opportunities -3.1% -6.1% 1,304 1,338 1,188 1,238 135 133 136 138 142 1,113 967 1,027 Q4 2020 Q1 2021 Q2 2021 Q3
Slide 17: B2B: Targeting stabilizing service revenues end-2022
B2B: Targeting stabilizing service revenues end-2022 Segmented approach …to achieve Small & Medium Enterprises (SME) • Migrations nearly finalized • Sustainable turnaround established in Q3 2021 Large & Corporate Enterprises (LCE) • KPN Smart Combinations B2B service revenues • Drive cross & up-sell
Slide 18: Wholesale: Sustainable growth from open access model
Wholesale: Sustainable growth from open access model Key take-aways Service revenue trend (€ m) • Wholesale revenues increased, driven by Broadband and Mobile +8.9% +9.4% +6.4% • Added 21k broadband lines and 29k postpaid customers in Q4 +4.7% • Other service revenues impacted due to lower roaming,
Slide 19: ESG milestones and ambitions: Aiming for net zero emissions by 2040
ESG milestones and ambitions: Aiming for net zero emissions by 2040 Important milestones crossed… …and an ambitious agenda Carbon neutral >30% women All leased Climate 30% reduction Management for own in senior cars use non- neutral scope 3 incentivized operations management fossil fuel without offs
Slide 20: Deliver Financial ambitions
Deliver Financial ambitions
Slide 21: Robust Q4 and FY 2021 results
Robust Q4 and FY 2021 results Adjusted revenues Adj. net indirect opex savings Adjusted EBITDA AL Q4 adjusted revenues +0.3% y-on-y Q4 2021 FY 2021 Q4 2021 FY 2021 Q4 2021 FY 2021 • Growth in Consumer Mobile, SME and € 1,359m € 5,256m € 21m € 47m € 584m € 2,347m Wholesale was offset by lower revenue
Slide 22: Adjusted revenues: Wholesale growth, offset by decline in B2B
Adjusted revenues: Wholesale growth, offset by decline in B2B Adjusted revenues (€ m) Consumer revenues flattish as growth in mobile service revenues was offset by Legacy services Δ y-on-y -0.2% -4.3% +6.3% -0.3% 5,275 26 5,256 Business revenue decline driven by 40 LCE and Tailored Solutions, SME -6
Slide 23: Further sustainable mass-market service revenue growth
Further sustainable mass-market service revenue growth Encouraging trend in mass-market service revenues (€ m) Growth driven by Wholesale, SME and Consumer mobile (€ m) -0.1% -0.9% 1 +0.5% +2.2% +1.5% Δ y-on-y Q4 2020 946 946 928 942 964 960 159 162 172 166 Wholesale 7 +4.7% 160 135 133 136 138 142
Slide 24: EBITDA growth due to mass-market service revenues and lower cost base
EBITDA growth due to mass-market service revenues and lower cost base Adjusted EBITDA AL (€ m) Net indirect opex savings +1.2% of € 47m FY 2021 9 2,347 10 Cost savings 2021 12 Supported by: 2,320 29 − Less FTE − Simplification driving savings in IT/TI -19 -14 Partly offset by: − Re-investments to su
Slide 25: Making clear decisions: fiber rollout at full pace
Making clear decisions: fiber rollout at full pace Increasing fiber Capex (€ bn) Lower other Capex mainly driven by 1.1 1.1 1.2 1.2 rationalization and increased effectiveness in • Copper infrastructure Fiber € 127m € 295m € 407m ~€ 450m + • IT • Mobile access € 1.2bn 2022 - Fiber Capex ~€ 450m in O
Slide 26: Strong underlying cash generation
Strong underlying cash generation Δ contribution to FCF y-on-y (€ m) Adj. EBITDA AL 2,347 +27 Free Cash Flow of € 784m, 2.5% higher y-on-y FY 2021 − EBITDA growth Capex -1,216 -68 − More favorable working capital developments − Lower cash interest paid Operational FCF 1,131 -41 − Lower cash restru
Slide 27: Steadily improving Return on Capital
Steadily improving Return on Capital €m NOPLAT 199 167 178 Improving adjusted EBITDA AL ROCE3 Lower restructuring charges ROCE 1 11.0% 2019 2020 2021 10.1% 9.3% € bn Capital employed 7.2 7.2 7.2 2019 2020 2021 Slight increase due to spectrum licenses ~5% acquired in July 2020 ~30% ~15% ~50% 20
Slide 28: Robust liquidity position, committed to investment-grade credit profile
Robust liquidity position, committed to investment-grade credit profile 11.0x 11.0x 11.4x 11.2x Robust liquidity… 9.9x €m 1,000 2,093 2.3x 2.3x 2.2x 2.3x 2.3x 1,093 €m 6,197 5,835 5,221 5,996 6,017 5,293 6,400 5,332 5,201 5,307 Cash & short RCF Total liquidity term investments1 end Q4 2021 864 614 7
Slide 29: 2022 outlook and 2023 ambitions
2022 outlook and 2023 ambitions Achievements Outlook Ambitions FY 2021 FY 2022 FY 2023 Adjusted EBITDA AL € 2,347m ~€ 2,400m >€ 2,450m Capex € 1,216m € 1.2bn € 1.2bn Free Cash Flow € 784m >€ 825m >€ 870m € 14.3 cents Progressive dividend Regular DPS € 13.6 cents 1 +5.1% y-on-y +3-5% annual growth Sh
Slide 30: Disciplined financial framework aimed at long-term value creation
Disciplined financial framework aimed at long-term value creation +5.1% Successful strategy Disciplined, value Progressive regular execution creating reinvestment dividend per share 12.0 12.5 13.0 13.6 14.3 10.0 11.0 7.0 8.0 Capex: € 1.2bn • Targeting +3-5% 1 ) Creating long-term • Fiber ~€ 450m gro
Slide 31: Highlights Q4 and FY 2021
Highlights Q4 and FY 2021 Solid progress ‘Accelerate to grow’ strategy Delivered on FY 2021 outlook and ambitions Sustainable mass-market service revenue growth Turnaround SME established, strong mobile and improving broadband trends at B2C FY adj. EBITDA AL +1.2% amid improving service revenues and
Slide 32: Accelerate to grow
Accelerate to grow
Slide 33: Appendices
Appendices I Tax II Debt portfolio
Slide 34: I: Tax Q4 and FY 2021
I: Tax Q4 and FY 2021 P&L Cash flow P&L Cash flow Regions (€ m) Q4 2020 Q4 2021 Q4 2020 Q4 2021 FY 2020 FY 2021 FY 2020 FY 2021 The Netherlands 25 -29 - -38 -89 -344 - -77 Other - - - - 1 - - - Total reported tax 25 -29 - -38 -88 -344 - -77 Of which discontinued operations - - - - - - - - Reported t
Slide 35: II: Debt portfolio
II: Debt portfolio Nominal debt by type 1 Nominal debt by currency 1 Fixed vs. floating interest 1 Debt redemption profile (€ bn) 2 1.1 6% 1.0 13% 14% 23% 0.7 0.6 0.7 0.6 7% 21% 0.5 0.4 0.5 0.5 0.3 66% 73% 77% ’22 ’23 ’24 ’25 ’26 ’27 ’28 ’29 ’30 ’31 ’32 ’33 Eurobonds EUR Fixed Global bonds GBP Float
Slide 36: KPN Investor Relations
KPN Investor Relations ir.kpn.com