Proximus Sa · EURONEXT:PROX
Proximus Sa — Belgacom — H1 2008 Earnings Presentation
48 slides from Proximus Sa's earnings presentation, Jul 25, 2008
Slide 1: Half-Year results 2008
Half-Year results 2008 25 July 2008 Slide 1
Slide 2: Content
Content • Group Highlights & Summary Results slide 3 - 8 • Consumer Business Unit ¾ CBU highlights & summary slide 10 - 11 ¾ Operationals slide 12 - 16 ¾ Financials slide 17 - 19 • Enterprise Business Unit ¾ EBU highlights & summary slide 21 - 22 ¾ Operationals slide 23 - 26 ¾ Financials slide 27 -
Slide 3: Highlights H1 2008
Highlights H1 2008 belgacom
Slide 4: Group financial and operational results H1 2008
Group financial and operational results H1 2008 Group revenue of € 2,962 mn (-2.5%* yoy or € -77 mn), including € 76 mn regulation impact year-over-year variance CBU EBU SDE S&S ICS Inter- Non- Group in milllion € segment recurring revenue Total revenue variance -17 -26 -65 -13 14 22 8 -77 Roaming
Slide 5: Group – Result summary
Group – Result summary H1 '07 H1 '08 var. Key group financials ¾ Yoy revenue variance of € -77 mn explained by: in € million Mobile regulation: € -76 mn due to timing of regulation Revenue 3,039 2,962 -2.5% of which non-recurring revenues 0 8 (MTR & Flow through to F2M traffic mainly impacting H2
Slide 6: Group 2008 full-year guidance
Group 2008 full-year guidance Belgacom has not been immune to the general economic pressure which is mainly reflected in its ICT performance. In spite of this Belgacom still expects to stay within the stated EBITDA margin range of 33%-34%. The weaker ICT performance and lower than expected roaming-o
Slide 7: Performance versus updated guidance
Performance versus updated guidance FY guidance Q108 Q208* H108* Result Result Result Group revenue decline of around 2% -3.0% -2.6% -2.8% Group EBITDA Margin: between 33% and 34% 35.3% 33.5% 34.4% 8.7% 9.2% 9.0% Group Capex around 11% of total Group revenue Belgacom TV net adds: add at leas
Slide 8: Shareholder return
Shareholder return Belgacom management strongly believes in its strategy and the potential of its business going forward. Therefore Belgacom will launch a buyback program for a total amount of € 200 million approved by the Board of Directors. Slide 8
Slide 9: Consumer Business Unit (CBU)
Consumer Business Unit (CBU) H1 2008 Results / CBU / CBU highlights / CBU voice / CBU Data / CBU TV / CBU Financials
Slide 10: CBU - Highlights H1 2008
CBU - Highlights H1 2008 Operational perfomance: Solid growth for Belgacom TV, adding 86,141 customers in H1’08. End of June,TV customer base reached 391,460. 78,000 packs sold in H1, leading to total of 230,559 end of June 2008 89,701 Mobile customers added in H1 Broadband growth of 42,15
Slide 11: CBU - Summary operational & financial result
CBU - Summary operational & financial result Operational result H1'07 H1'08 Var. Net adds (´000) Fixed Voice Access lines -82 -88 6 Mobile active customers 53 90 37 Broadband Lines 34 42 8 TV Subscribers 52 86 34 ARPU (EUR/month) Fixed Voice 22.2 21.4 -3.7% Blended net ARPU - Mobile 25.7 23.5 -8.7%
Slide 12: CBU - Voice - Fixed
CBU - Voice - Fixed CBU Voice CBU Voice lines* net line loss* (000) EOP (000) -176 2,417 Limited Fixed Voice line 2,241 1 2 1 erosion in Q2’08. Line loss -46 -42 21 partly compensated by new VoIP customers (+15,290 -36 -46 in H1). 2.416 2.219 Q1 -82 -88 Q2 VOIP Fixed Voice ARPU decrease mainly d
Slide 13: CBU - Voice – Mobile
CBU - Voice – Mobile CBU mobile customer CBU mobile customers 89.701 net adds acquired in Growth (000) EOP (000) H1’08, primarily in Q1. +232 Q2’08 marked by decrease in net +90 adds from MVNO activities (End Q2 June: 84,000 MVNO customers) Q1 +53 24 3,672 YoY retail* churn increased +63 3,440 6
Slide 14: CBU - Data - Fixed
CBU - Data - Fixed Broadband growth of 42,155 lines in H1’08 mainly driven by active migration from narrowband internet access, boosting the Q1 volume growth. Net additions in Q2 were impacted by seasonality effect lower flow-in from narrowband due to active migration in Q1 CBU Broadband A
Slide 15: CBU - Data - Mobile
CBU - Data - Mobile CBU Normalized SMS* Total number of SMS/month/user increased 33% units/month to 103.5 primarily driven by the introduction of offers including free SMS. Excluding the free usage, SMS traffic is growing by 11.3% +11.3% Data including advanced data – after credits & discounts -
Slide 16: CBU - Belgacom TV
CBU - Belgacom TV Continued strong TV customer growth TV customer basis grew by 86,141 subscribers in H1 2008. YoY 200,112 customers have been added driven by the success of packs including Belgacom TV. Total TV customer base at the end of H1 2008 of 391,460 TV ARPU growth is driven by an increa
Slide 17: CBU - revenue
CBU - revenue Total revenue decline of 1.5% driven by regulation impacts. Excluding regulation, CBU revenue increased 0.9% year-over-year. Growth in data (+7.9%) and TV partly compensates the decline in voice revenue (-8.2%) Revenue from fixed slightly decreased by 0.2% Continued pressure on v
Slide 18: CBU - costs
CBU - costs Compared to H1’07, CBU improved its cost basis by 2.3% CBU Total Costs (EUR mio) Cost of materials & charges to revenue -2.3% 552 declined by 4.5% driven by lower roaming 539 charges, despite retro-active change MTR 128 129 tariffs (of which part is still disputed) 161 159 Personnel
Slide 19: CBU - EBITDA & Contribution margin
CBU - EBITDA & Contribution margin CBU EBITDA declined by 0.7% mainly as a result of regulation. Compared to H1´07, the Contribution margin increased by 0.4 ppt to reach a level of 51.1%. CBU EBITDA (EUR mio) CBU Contribution margin (%) Ebit da Ebit da margin -0.7% +0.4ppt 566 562 50.6% 51.1% H1
Slide 20: Enterprise Business Unit (EBU)
Enterprise Business Unit (EBU) H1 2008 Results / EBU / EBU highlights / EBU voice / EBU Data / EBU Financials
Slide 21: EBU - Highlights H1 2008
EBU - Highlights H1 2008 Stable operational performance for EBU: Solid Broadband growth in H1’08 (+16,000) Continued Mobile customer growth (+55,000); slight increase compared to H1’07 Voice access line loss of 16,000 and slowing down in Q2 to -7,000 Total revenue decline of -1.8%, fully d
Slide 22: EBU - Summary operational & financial result
EBU - Summary operational & financial result Operational result H1'07 H1'08 Var. Net adds (´000) Fixed Voice Access lines -18 -16 2 Mobile active customers 52 55 3 Broadband Lines 15 16 1 ARPU (EUR/month) Fixed Voice 34.6 32.5 -6.2% Mobile net ARPU 70.4 62.8 -10.8% ARPU broadband - Fixed 42.0 40.8 -
Slide 23: EBU - Voice - Fixed
EBU - Voice - Fixed EBU Voice EBU Voice lines* net line loss* (000) EOP (000) -32 Stabilized voice access line 1,594 1,562 loss with a deceleration of 2 1 -7 2 line loss in Q2’08; -12 -9 EBU added 2,000 VoIP lines -6 1.594 1.559 in H1’08 -16 -18 Q1 VOIP Q2 PSTN Fixed Voice Traffic impacted H1'07
Slide 24: EBU - Voice - Mobile
EBU - Voice - Mobile Solid Mobile customer growth. EBU mobile customer EBU mobile customers EOP (000) End of June ’08 EBU Mobile Growth (000) customer base counted +118 Q2 Q1 1,093,327 customers +52 +55 976 1,093 Net Voice ARPU decreased 28 16.1% yoy: 25 27 27 Large part driven by H1'07 H1'07
Slide 25: EBU - Data - Fixed
EBU - Data - Fixed Stable broadband growth • Yoy EBU added 33,000 Broadband customers, of which 16,000 in the first half of 2008. • Broadband ARPU decrease due to promotions, mainly affecting Q1. EBU Broadband Growth EBU Broadband EBU Broadband ARPU (000) lines EOP (000) EUR/month Q3 ‘05 -2.8% Q2
Slide 26: EBU - Data - Mobile
EBU - Data - Mobile EBU SMS Growing number of SMS (+15.2%) driven by: (units) trend to include mobile subscription in remuneration package of employees +15.2% “SMS-generation” entering the free profession market Due to increasing mobile internet customer base, 45.9 52.9 “Advanced” data reven
Slide 27: EBU revenue
EBU revenue EBU revenue decline of 1.8% fully due to mobile regulation. Excluding regulation, revenue increased 0.9% yoy, driven by growth in mobile data • Yoy revenue variance improved in Q2’08 to -1.2% compared to -2.5% in Q1 • H1’08 revenue from fixed: € -26 million or -2.6% yoy, excluding regula
Slide 28: EBU costs
EBU costs YoY EBU costs show a favorable evolution of 2.4% The decrease in EBU cost of materials & EBU Total Costs (EUR mio) charges to revenue of -27 million or 6.0% is mainly explained by 740 -2.4% 722 the favorable impact of the 76 87 regulation on roaming & termination costs 205 204 • The di
Slide 29: EBU EBITDA & Contribution margin
EBU EBITDA & Contribution margin Positive evolution of Operating Expenses (€18 million) not fully compensates for the revenue decline (€ -26 million) and leads to a yoy EBU EBITDA decrease of -1.2% to EUR 643 million Compared to H1’07, the Contribution margin increased by 0.3ppt to reach a level
Slide 30: Service Delivery Engine (SDE)
Service Delivery Engine (SDE) H1 2008 Results / SDE / SDE highlights / SDE Financials
Slide 31: SDE – Summary financial result – revenue
SDE – Summary financial result – revenue Summary financial result in million € H1'07 H1'08 Var. Total Revenue 278 213 -23.4% Costs of materials/charges to revenue -85 -53 -38.5% Personnel expenses and pensions -112 -108 -3.9% Other operating expenses -80 -90 13.3% Total OPEX -277 -251 -9.6% Total re
Slide 32: SDE costs & EBITDA
SDE costs & EBITDA SDE Total Costs (EUR mio) Lower cost of materials/charges to revenue (yoy € -32 million) result from the 277 decline of Proximus transit traffic (mainly 251 eliminated on Group level) and lower 80 interconnect volumes (VAS traffic) 90 112 Favorable evolution of the personnel 1
Slide 33: Staff & Support (S&S)
Staff & Support (S&S) H1 2008 Results / S&S / S&S highlights & Financials
Slide 34: S&S - Highlights and summary financials
S&S - Highlights and summary financials H1 2008 highlights • Revenue evolution of € -13 million is due to one-time gains realized in first semester of 2007. • Increase in other operating expenses due to set-up of provision for renting charges as Proximus building is gradually emptied before end of c
Slide 35: International Carrier Services (ICS)
International Carrier Services (ICS) Q1 2008 Results / ICS / ICS Highlights / ICS Operationals / ICS Financials
Slide 36: ICS – Highlights H1 2008
ICS – Highlights H1 2008 Total ICS revenue increase of 3.8% compared to H1‘07 Strong growth in Voice volumes of 13.8%. However positive effect on voice revenue for great part offset by decrease in mobile termination rates & weak dollar. Growth in mobile data revenue of 36.6% driven by increase
Slide 37: ICS - Summary operational & financial result
ICS - Summary operational & financial result H1'07 H1'08 Var. Voice volumes (billion of minutes) 6,64 7,56 13,8% Total to fixed destinations 3,17 3,37 6,5% Total to mobile destinations 3,48 4,19 20,4% Total Revenue 361 375 3,8% Costs of materials/charges to revenue -309 -317 2,5% Personnel expenses
Slide 38: 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 Investment through Omantel in the deployment of the Europe India Gateway: the first direct, high ba
Slide 39: Revenue & Direct Margin overview
Revenue & Direct Margin overview Voice revenue* stable due 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 m
Slide 40: Cost overview
Cost* overview • HR related expenses show an increase reflecting the headcount increase required to sustain the mobile data growth Cost structure (EUR Mio) 5.1 28.6 29.7 6,4 6,7 12,3 12,6 9,8 10,3 YTD-June 07 YTD-June 08 HR related expenses Network expenses IT & General Admin. * Other than Costs of
Slide 41: Group Financials
Group Financials belgacom
Slide 42: Consolidated income statement
Consolidated income statement ( EUR million) H1'07 H1'08 % Change Total Revenue 3,039 2,962 -2.5% of which non-recurring revenues 0 8 Costs of materials and charges to revenue -991 -948 -4.3% Personnel expenses and pensions -572 -562 -1.8% Other operating expenses -397 -428 7.8% TOTAL OPERATING EXPE
Slide 43: Segment result
Segment result Revenues* (€ Mio) EBITDA* (€ Mio) -5.1% -2.5% 3,039 2,962 1,079 1,024 3 ,3 0 0 1 4 , 00 0 8 0 8 361 28 375 1 2 , 00 23 2 ,8 0 0 29 278 16 213 1 0 , 00 651 2 ,3 0 0 643 8 00 1 ,8 0 0 1,391 1,365 6 00 1 ,3 0 0 4 00 566 562 8 00 2 00 1,117 1,101 3 00 0 1 -38 -162 -180 -2 0 0 -2 0 0 H1'07
Slide 44: FTE evolution per business unit
FTE evolution per business unit Year-over-year a total of 510 FTE’s left the company, including a natural attrition of 353 FTE’s. In H1’08 405 FTE’s left the company of which 244 FTE through natural attrition Year-over-year Evolution first half 2008 17,938 -510 17,833 -405 17,428 17,428 214 231
Slide 45: Investments per Business Unit
Investments per Business Unit 12.5% SDE YoY Capex increase fully explained by further roll-out of 400 9.2% 370 3 Broadway project. 350 279 18 (EUR 59 million spent in H1’08, bringing total 300 5 population coverage to 250 14 213 62.5%) 200 150 224 CBU increase explained by 10 renewal of football
Slide 46: Free cash flow (in million €)
Free cash flow (in million €) Decrease in FCF is mainly due to the favorable impact in Q1 2007 of the disposal of the remaining interests in Mobistar and Eutelsat Communications which generated EUR 242 million 607 336 H1'07 H1'08 Slide 46
Slide 47: Net financial position (€ million)
Net financial position (€ million) - 8 3 1.7 0 5 3 - 8 3 1.7 0 5 3 - 1,3 9 9 .3 6 7 4 - 1,5 3 9 .9 8 14 336 ( 1,16 7 ) (568) ( 1,5 3 7 ) 3 ( 14 1) 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 47
Slide 48: Balance Sheet
Balance Sheet YTD Dec YTD June (EUR million) 2007 2008 TOTAL ASSETS 7,325 7,017 Non-recurrent assets 5,072 5,045 Goodwill 1,777 1,780 Intangible assets with finite useful life 482 525 Property, plant and equipment 2,470 2,422 Other participating interests 1 1 Deferred income tax assets 312 291 Pensi