Proximus Sa · EURONEXT:PROX
Proximus Sa — Belgacom — Q1 2008 Earnings Presentation
50 slides from Proximus Sa's earnings presentation, 2008
Slide 1: Q1 2008 Results Presentation
Q1 2008 Results Presentation Slide 1
Slide 2: Content
Content • New reporting structure slide 3 - 5 • Group Highlights & Summary Results slide 6 - 9 • Consumer Business Unit CBU highlights & summary slide 11 - 12 Operationals slide 13 - 17 Financials slide 18 - 20 • Enterprise Business Unit EBU highlights & summary slide 22 - 23 Operationals slide 24 -
Slide 3: New organisation structure
New organisation structure From product-oriented to a customer-oriented organisation Belgacom Group Belgacom Group Fixed Mobile ICS Customer Business Units Service Staff & Customers Customers Consumer Enterprise Delivery ICS Support Residential Residential Engine Business Business Network Internal F
Slide 4: Revenue – New reporting segments
Revenue – New reporting segments Revenue follows the customer in new segmentation Belgacom TV, Directory Services and Mobile prepaid fully allocated to CBU CBU EBU SDE S&S Voice Access Voice Access Wholesale Other (catering, FLS Voice Traffic Voice Traffic Other capital gain on Internet Internet bui
Slide 5: Costs – New reporting segments
Costs – New reporting segments CBU EBU SDE S&S Costs of material & Costs of material & Costs of material & charges to revenue charges to revenue charges to revenue Operating Expenses Operating Expenses Operating Expenses Operating Expenses Customer care Customer care IT related costs Real estate (a.
Slide 6: Highlights Q1 2008
Highlights Q1 2008 belgacom
Slide 7: Group - Highlights Q1 2008
Group - Highlights Q1 2008 Results within Belgacom expectations and on track to deliver full year guidance MTR and Roaming regulation (impacting results significantly only as from second half of 2007) is largest driver of year-over-year variances year-over-year variance Inter- in milllion € Group CB
Slide 8: Group – Result summary
Group – Result summary Q1 '07 Q1 '08 var. € -46 million y-o-y revenue variance explained by: Key group financials Temporal high yoy effect as regulation impacts in € million revenue mainly starting from H2’07: € -35 million Revenue 1,515 1,469 -3.0% total regulation impact EBITDA 536 518 -3.3% Excep
Slide 9: Highlights - Performance versus guidance
Highlights - Performance versus guidance Results within Belgacom’s expectations. Guidance reiterated. FY guidance Q108 result Group revenue to decline up to 1% -3.0% Group EBITDA Margin: between 33% and 34% 35.3% Group Capex around 11% of total Group revenue 8.7% Belgacom TV net adds: add at least t
Slide 10: Consumer Business Unit (CBU)
Consumer Business Unit (CBU) Q1 2008 Results / CBU / CBU highlights / CBU voice / CBU Data / CBU TV / CBU Financials
Slide 11: CBU - Highlights Q1 2008
CBU - Highlights Q1 2008 Belgacom TV success story continues, growing its customer base to a level of 349,000 customers Exceptional growth for broadband in Q1 ’08 due to active migration from narrowband 65,000 mobile customers added, leading to total active customer base of 3,6 million At the end of
Slide 12: CBU - Summary operational & financial result
CBU - Summary operational & financial result Operational result Q1'07 Q1'08 Var. Net adds (´000) Fixed Voice Access lines -36 -54 -19 Mobile active customers 9 65 56 Broadband Lines 25 37 12 TV Subscribers 10 44 34 ARPU (EUR/month) Fixed Voice 22.5 21.5 -4.1% Blended net ARPU - Mobile 25.6 23.5 -8.2
Slide 13: CBU - Voice - Fixed
CBU - Voice - Fixed CBU Voice CBU Voice lines* net line loss* (000) EOP (000) Voice line loss -180 9 impacted by offers like 1 2 -36 ‘ADSL without voice’. -54 In Q1’08 9,000 VoIP -36 2,463 2,283 customers added. -46 Fixed Voice ARPU Q1'07 Q1'08 Q1'07 1 Q1'08 2 decline driven by flow 20062007 2006200
Slide 14: CBU - Voice – Mobile
CBU - Voice – Mobile Continued growth of the mobile customer base. CBU mobile customer CBU mobile customers Improved customer portfolio. Growth (000) EOP (000) (End of Q1 subscriber base includes 87K MVNO +252 customers) Mobile Voice ARPU 3,396 3,648 impacted by regulation and 65 pricing plan swaps.
Slide 15: CBU - Data - Fixed
CBU - Data - Fixed Solid operational performance for fixed data Broadband growth supported by success of ADSL budget, packs including ADSL and launch of ‘naked ADSL’ Exceptional growth for broadband in Q1 due to active migration from narrowband Residential broadband ARPU remained fairly flat at 29.8
Slide 16: CBU - Data - Mobile
CBU - Data - Mobile Total number of SMS/month/user increased 36.2% to 100.1 primarily driven by conversion to pricing plans including free SMS. Excluding the free usage, growth is 12.3 %. Data including advanced data represents over 26% of the total CBU Mobile revenues and is growing by 7.5% compare
Slide 17: CBU - Belgacom TV
CBU - Belgacom TV Continued strong growth in TV customer basis TV customer basis grew by 43,931 subscribers during Q1 2008. YoY 199,759 new customers have been added mainly due to the success of packs including Belgacom TV. Total TV customer base of 349,250 TV ARPU growth, impacted by Try&Buy promot
Slide 18: CBU - revenue
CBU - revenue Total revenue decline of 1.3% mainly driven by regulation impacts. Excluding regulation, CBU revenue increased 1% year-over-year Voice revenue decline (-8.2%) partly compensated by increase of Data (+8.3%) and TV Revenue from fixed slightly decreased by 0.4%: • Revenue decline mainly c
Slide 19: CBU - costs
CBU - costs Compared to Q1’07, CBU managed to improve its cost basis by 3.7% The decrease in cost of materials & charges to revenue of 2.6% mainly explained by favourable impact of regulation on roaming & termination costs Decline in other operating expenses of 9.2% result of timing of advertising C
Slide 20: CBU - EBITDA & EBITDA margin
CBU - EBITDA & EBITDA margin Positive evolution in costs leads to CBU EBITDA increase of 1.0% year-over-year to EUR 287 million Compared to Q1´07, the EBITDA margin increased 1.2% to reach a level of 52.3% CBU EBITDA Ebit da (EUR mio) CBU EBITDA Ebit da marmargin gin (%) +1.0% +1.2ppt 284 287 51.1%
Slide 21: Entreprise Business Unit (EBU)
Entreprise Business Unit (EBU) Q1 2008 Results / EBU / EBU highlights / EBU voice / EBU Data / EBU Financials
Slide 22: EBU - Highlights Q1 2008
EBU - Highlights Q1 2008 Traditional Voice access lines impacted by launch of Broadband without fixed line. Voice ARPU decline mainly caused by flow through of MTR y-o-y broadband growth stable (+11,000), slight increase in mobile net adds (+27,000) Total revenue decline by 2.5% mainly result of reg
Slide 23: EBU - Summary operational & financial result
EBU - Summary operational & financial result Operational result Q1'07 Q1'08 Var. Net adds (´000) Fixed Voice Access lines -6 -10 -4 Mobile active customers 26 27 1 Broadband Lines 11 11 0 ARPU (EUR/month) Fixed Voice 35.5 32.7 -7.9% Blended net ARPU - Mobile 70.9 62.6 -11.7% ARPU broadband - Fixed 4
Slide 24: EBU - Voice - Fixed
EBU - Voice - Fixed Voice access line loss continues but stabilized over last quarters. Increase EBU Voice EBU Voice lines* versus Q1’07 due to launch net line loss* (000) EOP (000) of DSL without voice. In 0 1 -37 Q1’08 1,000 VoIP lines 1 -6 2 added -10 -6 -9 1,606 Fixed Voice Traffic 1,568 impacte
Slide 25: EBU - Voice - Mobile
EBU - Voice - Mobile EBU mobile customer EBU mobile customers EBU Mobile customer Growth (000) EOP (000) base at 1,065,313 +115 customers Blended net Voice ARPU* decreased 17.6% 950 1,065 y-o-y • Large part driven by 26 27 Roaming & MTR Q1'07 1 2 Q1'08 Q1'07 1 Q1'08 2 regulation. Excluding 2006 2006
Slide 26: EBU - Data - Fixed
EBU - Data - Fixed • EBU broadband: • Year-over-year 32,000 Broadband customers added, stable customer growth in Q1 2008 with 11,000 • EBU Broadband ARPU impacted by promotions (e.g. end of year promotions including free months of usage) • Migration from legacy to IP based networks ongoing EBU Broad
Slide 27: EBU - Data - Mobile
EBU - Data - Mobile Growing number of SMS thanks to trend to include mobile subscription in remuneration package of employees and the “SMS-generation” entering the free profession market Strong growth in “Advanced” data thanks to increasing mobile internet customer base Growth of mobile internet car
Slide 28: EBU revenue
EBU revenue Total revenue decline of € 17 million or 2.5% mainly result of mobile regulation & flow through to F2M tariffs. Excluding total regulation impact, revenue flat y-o-y Revenue from fixed: -16 million or 3.2% • Data Revenue decline fully result of disposal of Satellite activities • Decline
Slide 29: EBU costs
EBU costs Y-o-Y EBU costs show a favorable evolution of 5.3% The decrease in EBU cost of materials & charges to revenue of 8.5% is mainly explained by • the favorable impact of the EBU Total Costs (EUR mio) regulation on roaming & termination costs 371 • Disposal of Satellites 352 business 38 40 102
Slide 30: EBU EBITDA & EBITDA margin
EBU EBITDA & EBITDA margin Y-o-Y EBU EBITDA increased 0.8% to EUR 324 million as the revenue decline is more than compensated by a favorable evolution in costs The Y-o-Y EBITDA margin increased 1.6ppt to reach a level of 47.9% EBU EBITDA Ebit da (EUR mio) EBU EBITDA margin Ebit da mar gin (%) +0.8%
Slide 31: Service Delivery Engine (SDE)
Service Delivery Engine (SDE) Q1 2008 Results / SDE / SDE highlights / SDE Financials
Slide 32: SDE - Highlights Q1 2008 & summary financials
SDE - Highlights Q1 2008 & summary financials Q1 2008 highlights YoY Revenue variance mainly due to: Reduction of intercompany transit traffic impacts SDE revenue but is neutralised on Group level Roaming-in regulation Summary financial result in million € Q1'07 Q1'08 Var. Total Revenue 142 110 -23%
Slide 33: SDE revenue
SDE revenue Main drivers of revenue decrease: SDE Revenues (EUR mio) Carrier Wholesale revenue: reduction of very low margin 142 transit traffic coming from 110 Proximus and thus eliminated 29 on Group level (€ 15 million) 20 113 impact of roaming-in regulation 90 of € 8 million Q1'07 Q1'08 Fro m Fi
Slide 34: SDE costs & EBITDA
SDE costs & EBITDA SDE Total Costs (EUR mio) Lower Cost of materials/charges to revenue mainly consequence of the decrease in intersegment transit 144 129 traffic, eliminated on Group level 39 46 Favourable evolution of personnel expenses result of lower headcount 57 54 Difference in Other operating
Slide 35: Staff & Support (S&S)
Staff & Support (S&S) Q1 2008 Results / S&S / S&S highlights & Financials
Slide 36: S&S - Highlights and summary financials
S&S - Highlights and summary financials Q1 2008 highlights • Revenue decrease fully results of the capital gain on sale of building for € 7 million booked in Q1’07 • Increase in other operating expenses: due to set-up of provision for renting charges. Proximus building gradually emptied before end o
Slide 37: International Carrier Services (ICS)
International Carrier Services (ICS) Q1 2008 Results / ICS / ICS Highlights / ICS Operationals / ICS Financials
Slide 38: ICS – Highlights Q1 2008
ICS – Highlights Q1 2008 Strong growth in Voice volume (+12%). Positive financial impact offset by decreased Mobile termination rates Growing data revenue (+26%) improves EBITDA margin Stable operational expenses despite strong volume growth *MTN Group is leading provider of cellular and communicati
Slide 39: ICS - Summary operational & financial result
ICS - Summary operational & financial result Operational result Q1'07 Q1'08 Var. Voice volumes (billion of minutes) 3.30 3.71 12.4% Total to fixed destinations 1.58 1.68 6.3% Total to mobile destinations 1.72 2.04 18.6% Financial result Q1'07 Q1'08 Var. Total Revenue 183 185 1% Costs of materials/ch
Slide 40: Operational Overview
Operational Overview Consolidation and outsourcing to increase leadership in carrier market Outsourcing projects with MTN Group and Omantel are successful and generate more volumes than expected Increase value with organic growth Re-engineering project for Service Delivery is on track – new tools an
Slide 41: Revenue & Direct Margin overview
Revenue & Direct Margin overview Voice revenue stable thanks to more Mobile terminated minutes & Middle East and Africa business, offset price declines in Europe (termination rate decreases) Shift from Standard Quality to Premium Quality voice products (higher price) Drop in unit margin due to marke
Slide 42: Cost overview
Cost* overview • Overall OPEX in line with last year Cost structure (EUR Mio) -1.6% 14.4 14.2 3 3 6 6 5 5 Q1’07 Q1’08 HR related expenses Network expenses IT & General Admin. * Other than Costs of materials and charges to revenue Slide 42 Q1 2008 Results / ICS / ICS Highlights / ICS Operationals / I
Slide 43: Group Financials
Group Financials belgacom
Slide 44: Consolidated income statement
Consolidated income statement ( EUR million) Q1 2007 Q1 2008 % Change Total Revenue 1,515 1,469 -3.0% Costs of materials and charges to revenue -496 -469 -5.4% Personnel expenses and pensions -287 -280 -2.6% Other operating expenses -196 -202 3.2% TOTAL OPERATING EXPENSES -979 -951 -2.9% EBITDA 536
Slide 45: Segment result
Segment result Revenues (€ Mio) EBITDA (€ Mio) -3.0% -3.3% 536 1 ,8 00 1,515 1,469 7 00 518 1 ,6 00 11 14 6 00 183 1 ,4 00 15 185 142 9 5 00 110 1 ,2 00 321 324 4 00 1 ,0 00 692 675 3 00 8 00 2 00 6 00 284 287 4 00 1 00 555 548 2 00 0 -2 -20 -78 0 -86 1 - 00 Q1'07 Q1'08 CBU EBU SDE S&S ICS 2 - 00 CB
Slide 46: FTE evolution per business unit
FTE evolution per business unit In Q1 2008 a total of 268 FTE’s left the company, including a natural attrition of 138 FTE’s. Year-over-year Quarterly evolution 17,942 17,565 17,833 17,565 204 228 221 228 2,449 2,323 2,417 2,323 3,711 3,545 3,600 3,545 5,901 5,939 5,951 5,939 5,677 5,530 5,644 5,530
Slide 47: Investments per Business Unit
Investments per Business Unit 9% 8% SDE YoY Capex increase fully 122 128 explained by further roll-out of 100% 1 1 10% 5 6 Broadway project. 90% (EUR 40 million spent in 80% 10% Q1’08, bringing total 70% population coverage to 61%) 60% 10% 96 105 Seasonality and timing of 50% investments result in a
Slide 48: Free cash flow (in million €)
Free cash flow (in million €) Decrease in FCF explained by the favourable impact on Q1 2007 FCF of the disposal of the remaining interest in Mobistar and Eutelsat for 467 EUR 242 million. 222 Q1 2007 Q1 2008 Slide 48
Slide 49: Net financial position (€ million)
Net financial position (€ million) ( 18 ) 222 ( 1,113 ) ( 1,16 7 ) ( 14 5 ) (5) N e t de bt E O P 2 0 0 7 FCF D iv ide nds N e t a c quis it io n o f O t he r N e t de bt Y T D 2 0 0 8 t re a s ury s ha re s Slide 49
Slide 50: Balance Sheet
Balance Sheet (EUR million) YTD Dec 2007 YTD March 2008 TOTAL ASSETS 7,325 7,362 Non-recurrent assets 5,072 5,001 Goodwill 1,777 1,777 Intangible assets with finite useful life 482 446 Property, plant and equipment 2,470 2,449 Other participating interests 1 1 Deferred income tax assets 312 297 Pens