Proximus Sa · EURONEXT:PROX
Proximus Sa — Belgacom — FY2008 Earnings Presentation
54 slides from Proximus Sa's earnings presentation, Mar 6, 2009
Slide 1: Annual results 2008
Annual results 2008 6 March 2009 Slide 1
Slide 2: Content
Content • Group Highlights & Summary Results slide 3-8 • Consumer Business Unit ¾ CBU highlights & summary slide 10-12 ¾ Operationals slide 13-17 ¾ Financials slide 18-20 • Enterprise Business Unit ¾ EBU highlights & summary slide 22-24 ¾ Operationals slide 25-30 ¾ Financials slide 31-33 • Service D
Slide 3: Highlights 2008
Highlights 2008 belgacom
Slide 4: Group financial highlights
Group financial highlights 2007 2008 var. FY guidance met on all key metrics: Key group financials ¾ Group revenue -1.4% YoY (in EUR million) Revenue before non recurring items 6,065 5,978 -1.4% ¾ EBITDA margin of 33.3% Revenue 6,065 5,986 -1.3% ¾ Capex excl. foot broadcasting EBITDA before non re
Slide 5: Group operational highlights
Group operational highlights 2007 2008 var. Key group operationals in '000 Voice Access Lines* 3,906 3,710 -196 Mobile Active customers 4,620 4,916 296 Broadband lines 1,237 1,345 108 TV subscribers 305 506 201 Packs 153 302 149 in % Mobile penetration 100.3% 106.3% +6.0pp Mobile value MS 50.1% 49.0
Slide 6: Regulation: Impact & Tariffs
Regulation: Impact & Tariffs 2008 regulation impact: MTR rates excl VAT and inflation as set by the BIPT on 29/04/08 Revenue:€ -138m €ct 1 Nov '06 1 May '07 1 Feb '08 1 May '08 1 Jul '08 EBITDA: € -81m Proximus 10.13 8.09 8.02 7.48 6.56 Mobistar 12.75 10.16 8.84 9.38 8.21 Base 15.81 12.76 10.3
Slide 7: 2009 guidance
2009 guidance 2009 is expected to be a challenging year with besides sharp competition and regulatory pressure an unfavorable economic climate of which the level of impact is difficult to predict. So far, the Consumer Business Unit experienced no significant impact from the slowing economy while the
Slide 8: Shareholder return
Shareholder return On 5 March 2009, the Belgacom Board of Directors decided to propose to the Annual Shareholder Meeting of 8 April 2009 an ordinary dividend of EUR 1.68 per share (or a total amount of EUR 544 million) on top of the EUR 0.50 interim dividend paid in December 2008. Slide 8
Slide 9: Consumer Business Unit
Consumer Business Unit (CBU) FY 2008 Results / CBU / CBU highlights / CBU voice / CBU Data / CBU TV / CBU Financials
Slide 10: CBU - Highlights
CBU - Highlights YoY CBU revenue increased 1.0% to EUR 2,253m, EBITDA declined 0.5% Total regulation impact for 2008 of € 55m. Excl. regulation revenue increased 3.4% Financial Impact Voice roaming regulation limited as of Q4’08 performance Growth in TV and data revenue and the acquisition of
Slide 11: CBU - Subsidiaries
CBU - Subsidiaries Belgacom further strengthened its position through non-organic growth Via Tango, the second mobile market player in Luxembourg, Belgacom will on the one hand maintain the residential mobile offer and on the other hand further penetrate the corporate segment by leveraging Telindu
Slide 12: CBU - Summary operational & financial result
CBU - Summary operational & financial result Operational result* 2007 2008 Var. Net adds (´000) 268 319 51 Fixed Voice Access lines -170 -162 8 Mobile active customers 195 195 0 Broadband Lines 77 85 8 TV Subscribers 166 201 35 ARPU (EUR/month) Fixed Voice 22.0 21.6 -1.7% Blended net ARPU - Mobile 2
Slide 13: CBU - Voice - Fixed
CBU - Voice - Fixed CBU Voice CBU Voice lines* net line loss* (000) EOP (000) Decelerating voice net -162k line loss due to the -36 -46 2,328 2,166 growing number of VoIP -45 6 -42 54 lines (+49k in 2008) -47 -39 -42 -36 2,322 2,111 Q4 Fixed Voice ARPU -1.7% Q3 Q2 -170 -162 VOIP due to regulatio
Slide 14: CBU - Voice – Mobile
CBU - Voice – Mobile YoY CBU added 195k mobile customers of which 72k in CBU mobile customer CBU mobile customers Q408. Total customer base* Growth (000) EOP (000) end 2008 at 3,777k, incl 111k +195 +195 +195k MVNO customers. 93 72 YoY retail** churn increased 33 from 17.7% to 19.5% as a 3,582 3
Slide 15: CBU - Data - Fixed
CBU - Data - Fixed CBU added 85k new broadband customers in 2008, an improvement compared to the 77k of 2007 In Q408 CBU added 26k new broadband customers End 2008, the total customer base* reached a level of 902k broadband customers Year-end promotions mainly on “TV+Internet” pack contribut
Slide 16: CBU - Data - Mobile
CBU - Data - Mobile Monthly SMS/user increased by 33% from 83.7 SMS to CBU Normalized SMS* units/month 111.4 SMS mainly driven by free SMS as part of the customers pricing offer. Excluding free SMS, SMS traffic still grows 10.2% +10.2% Data revenue including advanced data – after credits and dis
Slide 17: CBU - Belgacom TV
CBU - Belgacom TV 2008 target exceeded: 201k new TV users added vs. 166k in 2007 Peak in Q408 of +63k net adds due to success of year-end promotion on “TV+Internet” pack YoY net adds increased by +201k leading to a total customer base of 506k users end 2008, including 65k 2nd stream users. T
Slide 18: CBU - revenue
CBU - revenue Total revenue increased 1.0% driven by growth in TV & data revenue and contribution of acquisitions. Excluding negative impact of regulation, CBU revenue increased 3.4% Revenue from fixed +1.3% YoY Growth in TV and Data revenues more than offsets the decline in voice revenue Othe
Slide 19: CBU - costs
CBU - costs Overall cost increase of 2.4% driven by CBU Total Costs (EUR mio) the € 34m cost contribution of Tango 2.4% 1,160 and Scarlet 1,133 277 282 Costs of materials & charges to revenue increase 2.4% yoy due to the cost contribution 316 325 of Tango & Scarlet, partly compensated by lower Roa
Slide 20: CBU - EBITDA & Contribution margin
CBU - EBITDA & Contribution margin CBU EBITDA declined 0.5% to € 1,093m as the increase in operating expenses fully offsets the increase in revenue. For 2008, Tango and Scarlet contributed € 18m to the CBU EBITDA. CBU Contribution margin declined 0.7 ppt to 48.5% Q408 contribution margin at a
Slide 21: Enterprise Business Unit
Enterprise Business Unit (EBU) FY 2008 Results / EBU / EBU highlights / EBU voice / EBU Data / EBU Financials
Slide 22: EBU - Highlights
EBU - Highlights YoY EBU revenue decreased 2.8% to € 2,696m, EBITDA -1.9% € -73m regulation impact on 2008 revenue. Excluding regulation, revenue -0.2%, Financial including divestment program and sale of Satellite services performance Contribution margin slightly up to 47% Advanced mobile da
Slide 23: EBU – some 2008 success stories
EBU – some 2008 success stories ¾ Belgacom-EPT Luxemburg was granted multi-year contract by European Institutions for national and international voice traffic (€ 55m over 7 years) ¾ New international ROC ready to support Unified Communications solutions with advanced managed services ¾ Flemish gover
Slide 24: EBU - Summary operational & financial result
EBU - Summary operational & financial result Operational result 2007 2008 Var. Net adds (´000) Fixed Voice Access lines -35 -33 2 Mobile active customers 114 101 -13 Broadband Lines 32 22 -10 ARPU (EUR/month) Fixed Voice 33.6 31.7 -5.6% Mobile net ARPU 67.9 60.0 -11.6% ARPU broadband - Fixed 42.2 40
Slide 25: EBU - Voice - Fixed
EBU - Voice - Fixed EBU Voice Voice net line loss slowing EBU Voice lines* net line loss* (000) EOP (000) YoY due to growth VoIP -33k lines (+6k in 2008) -6 -9 1 2 1,578 1,544 -12 -7 1 7 -8 Fixed Voice Traffic decline -9 -10 due to line loss and -8 1,577 1,538 Q4 Q3 traditional voice partly Q2 -
Slide 26: EBU - Voice - Mobile
EBU - Voice - Mobile EBU added 101k mobile EBU mobile customer EBU mobile customers customers of which 23k in Growth (000) EOP (000) Q408. Total customer Q4 +101 Q3 base of 1,139,000 end of Q2 +114 Q1 +101 2008 34 23 1,038 1,139 29 23 25 28 Net Voice ARPU declined 27 27 16.1% incl. regulation 20
Slide 27: EBU - Data - Fixed
EBU - Data - Fixed EBU added 22k broadband customers leading to total customer base of 443k BB customer gain impacted by progressive saturation of the low-end fixed internet market Broadband ARPU of € 40.6, 3.8% lower than in 2007 driven by extensive promotions and a change in product mix . AR
Slide 28: EBU - Data - Mobile
EBU - Data - Mobile EBU SMS (units) Increasing number of SMS per user is partly driven by free SMS included in price packages. Excluding free +16.4% SMS the usage is still up by 10.2% “Advanced” data revenue growing 32.6% due to 55.4 success of mobile data solutions (mobile internet, 47.6 Blackb
Slide 29: EBU – ICT
EBU – ICT With €756m in 2008, ICT represents 12.6% of Belgacom 2008 Group revenue ; ~ 2% of Group EBITDA due to lower sector margin Growth areas: LAN, Datacenters, IPTEL, Managed WAN, Security, ICT Outsourcing Focus on Belgium and 5 core countries: Netherlands, Luxembourg, Spain, United Kingdo
Slide 30: EBU – ICT product scope narrowed
EBU – ICT product scope narrowed Network Centric ICT : communication based end-to-end solutions with a focus on managed services CONSULTING ICT Consulting APPLICATIONS System Application ICT Integration Outsourcing GENERIC ENTERPRISE SERVICES Communication centric Services Network SYSTEMS System Cen
Slide 31: EBU revenue
EBU revenue EBU revenue decline of 2.8% mainly due to mobile regulation. Excluding regulation, slight revenue decline of 0.2% YoY. • Revenue from fixed -3.5% YoY • Impact partly driven by regulation (lower fixed-to-mobile tariffs): € -22m • Despite slowdown in fixed line loss, this is still importan
Slide 32: EBU costs
EBU costs YoY total operating costs decreased 3.6% to € 1,430m EBU Total Costs (EUR mio) -3.6% 1,484 Cost of materials & charges to revenue 1,430 161 decreased 7.8% YoY due to lower 178 Roaming and MTR charges and sale of 407 408 Satellite business Flat personnel expenses and pensions. 916 844 H
Slide 33: EBU EBITDA & Contribution margin
EBU EBITDA & Contribution margin EBITDA* -1.9% YoY due to revenue impact of regulation The Contribution margin slightly up to 47% EBU EBITDA Ebit da (EUR mio) EBU Contribution Ebit da mar gin margin (%) -1.9% +0.5ppt 1,291 1,266 46.5% 47.0% 2007 YT D 2 0 0 7 2008 YT D 2 0 0 8 2007 YT D 2 0 0 7 2
Slide 34: Service Delivery Engine
Service Delivery Engine (SDE) FY 2008 Results / SDE / SDE highlights / SDE Financials / SDE Networks
Slide 35: SDE – Summary financial result – revenue
SDE – Summary financial result – revenue Summary financial result in million € 2007 2008 Var. YoY SDE revenue decreased 19.7% or Total Revenue 516 415 -19.7% €101m Costs of materials/charges to revenue -147 -93 -36.9% Personnel expenses and pensions -215 -209 -2.6% From fixed (€ -74m): Other operati
Slide 36: SDE costs & EBITDA
SDE costs & EBITDA Costs materials & charges to revenue SDE Total Costs (EUR mio) -36.9% YoY: 529 -8.9% decline low margin transit traffic (eliminated at 482 Group level) 166 lower interconnection traffic volumes from pay 179 services 215 209 Personnel expenses -2.6% YoY: 147 Lower headcou
Slide 37: SDE – Mobile & Fixed Networks
SDE – Mobile & Fixed Networks Over 66% VDSL coverage in four years time Belgium ranks highly in terms of Broadband penetration: 99.85% of households covered Broadway project* accomplishments in 4 years time: ¾ 13,337 km of fiber rolled out to the street cabinet ¾ 16,193 remote platforms connecte
Slide 38: Staff & Support
Staff & Support (S&S) FY 2008 Results / S&S / S&S highlights & Financials
Slide 39: S&S - Highlights and summary financials
S&S - Highlights and summary financials Highlights • Decrease in S&S revenue of 29.8% to EUR 34m is mainly due to one-time gains realized in 2007. • YoY decrease of personnel expenses to EUR 160m driven by lower headcount which has been partly offset by wage increase due to indexation • Flat YoY ope
Slide 40: International Carrier Services (ICS)
International Carrier Services (ICS) FY 2008 Results / ICS / ICS Highlights / ICS Operationals / ICS Financials
Slide 41: ICS – Highlights
ICS – Highlights Total ICS Revenue increased 8.9% YoY Strong growth Voice volumes (+17.3%) driven by continued growth in mobile segment (Africa & Asia) However, positive effect on voice revenue partly offset by decrease in mobile termination rates Growth mobile data revenue (+42.2%) driven by
Slide 42: ICS - Summary operational & financial result
ICS - Summary operational & financial result 2007 2008 Var. Voice volumes (billion of minutes) 13.84 16.23 17.3% Total to fixed destinations 6.46 6.88 6.6% Total to mobile destinations 7.38 9.35 26.7% Total Revenue 746 812 8.9% Costs of materials/charges to revenue -634 -685 8.1% Personnel expenses
Slide 43: 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 & added value than expected Investment through Omantel in the deployment of the Europe India Gateway: the first di
Slide 44: ICS - Revenue
ICS - Revenue ICS revenues increased 8.9% yoy to € 812m Revenue (EUR Mio) 746 +8.9% 812 Voice revenue* increase by 7.3% thanks to higher volumes offsetting price declines in Europe (termination rate decreases) Shift from Standard Quality to Premium Quality voice products (higher price) Growth
Slide 45: ICS - Costs
ICS - Costs* • Increase in HR related expenses reflecting the headcount increase required to sustain the mobile data growth • Network expenses slightly higher due to shift from European to more costly African & Asian voice business • Higher general administration costs due to increasing bad debt ris
Slide 46: Group Financials
Group Financials belgacom
Slide 47: Consolidated income statement
Consolidated income statement (EUR million) 2007 2008 % Change Total Revenue 6,065 5,986 -1.3% of which non-recurring revenues 0 8 Non-recurring expenses: ¾ € 53m restructuring programs Costs of materials and charges to revenue -2,015 -1,975 -2.0% Personnel expenses and pensions -1,120 -1,124 0.3% ¾
Slide 48: Segment result
Segment result Revenues* (EUR Mio) EBITDA* (EUR Mio) -1.3% -6.2% 6,065 5,986 7 0 , 00 2,031 1,905 3 ,0 0 0 0 8 6 0 , 00 746 812 2 5 , 00 49 53 64 516 34 5 0 , 00 415 2 ,0 0 0 1,291 1,266 4 0 , 00 1 5 , 00 2,775 2,696 3 0 , 00 1 ,0 0 0 2 0 , 00 5 00 1,098 1,093 1 0 , 00 2,231 2,253 0 -13 -67 -354 -36
Slide 49: FTE evolution per business unit
FTE evolution per business unit YoY Belgacom Group headcount decrease of 462 FTE’s driven by: - Restructuring programs (-267 FTE) - Natural attrition (-189 FTE) - Divestments (-425 FTE) – main impact within EBU - Acquisitions (+419 FTE) – main impact within CBU Year-over-year Quarterly evolution 17,
Slide 50: Investments per Business Unit
Investments per Business Unit SDE capex yoy flat, € 91m Broadway leading a total population coverage of 66.2% € 30m in 3G network for outdoor 12.8% coverage of 90.2% 10.3% 764 € 85m on TV platform & settop boxes 900 800 625 19 CBU capex increase due to: 700 54 renewal football broadcasting
Slide 51: Free cash flow (in million €)
Free cash flow (in million €) Decrease in FCF is mainly due to: Acquisition Tango & Scarlet for an aggregated amount of € 380m net of cash Increase in capex following the renewal of football broadcasting rights Favorable impact in Q1’07 of the disposal of remaining interests in Mobistar and Eu
Slide 52: Net financial position (EUR million)
Net financial position (EUR million) Belgacom continues to have a sound financial position with a net debt of EUR 1.8bn, corresponding to 0.9 times EBITDA (before non-recurring items). 409 ( 1,16 7 ) ( 7 11) ( 1,8 3 5 ) (340) (26) N e t de bt FCF D iv ide nds N e t a c quis it io n o f O t he r N e
Slide 53: Balance Sheet
Balance Sheet (EUR million) 2007 2008 TOTAL ASSETS 7,325 7,782 Goodwill increase of €334m Non-recurrent assets 5,072 5,564 driven by acquisitions Goodwill 1,777 2,111 Intangible assets with finite useful life 482 552 (Tango & Scarlet) Property, plant and equipment 2,470 2,501 Other participating int
Slide 54: Contact details Investor Relations
Contact details Investor Relations Belgacom Investor Relations e-mail: investor.relations@belgacom.be Tel: +32 2 202 82 41 http://www.belgacom.com Slide 54