Slide 1: Q3 2013 Roadshow Presentation
Q3 2013 Roadshow Presentation
Slide 2: Definitions
Definitions ARPU: Monthly average revenue per user is based MTR: Mobile Termination Rate is the per minute on a rolling 12 months average taking into charge paid by a telecommunications network consideration total Incoming & outgoing revenues operator when a customer makes a call to another voice, S
Slide 3: Cautionary Statement
Cautionary Statement This presentation contains forward-looking statements about Mobistar, in particular for 2013 and 2014. Although Mobistar believes these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, including mat
Slide 4: Agenda
Agenda • Key Highlights • Operating Results • Topics in the Spotlight • Financial Review • Outlook 2013 Siddy Jobe Jean Marc Harion Ludovic Pech Director Investor Relations Chief Executive Chief Financial & Corporate Finance Officer Officer 4
Slide 5: Key Quarterly Highlights
KEY QUARTERLY HIGHLIGHTS Economic Indicators Q3 Market Review Company Highlights Strategic priorities 5
Slide 6: Economic Indicators – Belgium
-0,5% 0,0% 0,5% 1,0% 0,0% 1,0% 2,0% 3,0% 4,0% 5,0% 1Q10 Jan-10 Mar-10 0,1% 2Q10 1,0% May-10 Jul-10 3Q10 Sep-10 Nov-10 4Q10 Jan-11 1Q11 0,5% 0,5% 0,8% Mar-11 May-11 2Q11 0,2% Jul-11 Sep-11 3Q11 0,0% Nov-11 Inflation, monthly data Jan-12 4Q11 -0,1% Mar-12 1Q12 0,2% May-12 Jul-12 2Q12 -0,5% Sep-12 Nov-
Slide 7: Mobistar reports financial results in line with its forecast and progresses in its transformation
Mobistar reports financial results in line with its forecast and progresses in its transformation Since the introduction of the telecom law/new entrant the market has shifted its focus from product/brand differentiation to pricing. pricing Mobile market prices have dropped by 20% 20% in 1 year. year
Slide 8: Market pricing has entered into a stabilisation phase
Based on the start of the second half of the year, it seems the market pricing has entered into a stabilisation phase Jan Feb Mar Apr May Jun Jul Aug Sept Animals boosted New ‘Animals’ New high end Segmented Phasing out TV with more data plans Animals subsidized offers Service Pruning of 40 plans &
Slide 9: In 2Q13, a lot of mobile value was destroyed in Belgium
In 2Q13, a lot of mobile value was destroyed in Belgium, due to aggressive competition and unfavorable regulation New Telecom Law impacts Fixed operators take a temporary mobile operators only advantage of the situation All operators massively repriced their In the meantime, Belgian triple -play bas
Slide 10: Price impact will not change the core of our strategy, launched mid-2012
Price impact may change the amplitude of our effort; it will not change the core of our strategy, launched mid-2012 2013: 2014: 2015: transform stabilize rebound = Consolidate Network cost improvement Best 3G and 4G networks Leadership in Mobile Mobile abundance Personal Mobile solutions Boost Fixed
Slide 11: We keep delivering our 2013-2015 transformation program
We keep delivering our 2013-2015 transformation program, on schedule with our flight plan 2013: transform = Consolidate 88.2% B2C postpaid customers migrated on an Animals plan Leadership in Mobile +17.1% network investments YTD “Go Europe” Boost Fixed-Mobile Usage: +313% Data, + 51% MBB, +4% SMS, +
Slide 12: New fixed regulations and 4G de-blocking confirm growth opportunities
New fixed regulations and 4G de blocking confirm growth opportunities for Mobistar as of 2015 Cable regulation effective 4G acceleration effective by end of 2013 by end of 2013 Qualitative aspects published in Brussels September government Quantitative aspect published in the committed coming weeks
Slide 13: Operational Update
Operational Update Market Dynamics Customers, Price & Traffic Evolution Mobile Data B2B: M2M Wholesale Business 13
Slide 14: Total market MNP is coming down at a slow pace
The total market MNP is coming down, but at a very slow Consolidate Leadership in Mobile Fixed-Mobile “à la carte” pace, still consolidating above historical levels. convergence Best-in-class Customer Experience Total Market Volumes Mobile Number Portability The number of MNP movements +111% in the
Slide 15: Strong growth of M2M and MVNO customer base
Consolidate Strong growth of M2M and MVNO customer base, Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience compensates net loss in post- and prepaid Market net adds split (k users) Mobistar net adds split (k users) and mobile penetration Total Net Adds 224
Slide 16: Mobistar has rounded the cape of 5,000,000 mobile cards
Consolidate Mobistar has rounded the cape of 5,000,000 mobile cards Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience connected on its network in Belgium Mobile cards connected on the Mobistar network (‘000) 4,523 4,599 4,690 4,840 4,900 4,990 5,028 68,1% 6
Slide 17: Mobistar has invested in customer retention and loyalty
Consolidate Mobistar has invested in customer retention and loyalty, Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience in line with its transformation strategy Leadership amongst mobile customer High commercial activity in Q2 2013, base is Mobistar’s #1 pri
Slide 18: 88% of residential postpaid customers migrated to an Animal plan
Consolidate Mobistar has proactively upgraded its residential postpaid Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience customers: 88 % of them have migrated to an Animal plan Mobistar customers (in k customers) * Offer Split Residential Postpaid Q4 2012 (
Slide 19: Animals Portfolio: reshuffling of Postpaid plans
Consolidate Animals Portfolio: reshuffling of Postpaid plans in April-May, Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience with special focus on high end unlimited Animals plans 10€>8€ 20€>16€ 56€>42€ PPM 0.20 SMS 0.10 Unlimited voice* 1H* 4H* 60 min EU K
Slide 20: Animals Portfolio: new prepaid plans
Consolidate Animals Portfolio: 3 new ‘Animal’ prepaid plans and unlimited Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience calls to all Mobistar customers for 25 euros reload minimum 10€ Reload 15€ 25€ & more 25€ et plus Unlimited voice PPM 0.25 24/24 Mobi
Slide 21: Regulator pricing survey shows Mobistar well positioned in postpaid
Consolidate 2nd pricing survey performed by Belgian regulator shows Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience Mobistar is especially well positioned in the postpaid segment Mobistar positions ranked in the top 3 places in every Postpaid segment, wit
Slide 22: Withdrawn 40 old tariff plans and upgraded 350,000 clients
Consolidate Mobistar has withdrawn 40 old tariff plans and proactively Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience upgraded 350,000 clients to a more attractive “Animal” plan From old to new plans: 2 examples of migrated tariff plans more for same or
Slide 23: Subsidized handsets are slowly gaining interest
Consolidate Subsidized handsets are slowly gaining interest; Mobistar Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience takes its fair share in this market without accelerating take-up Smartphone sales remain strong. In June Mobistar held a tactical subsidi
Slide 24: Mobistar launched Go Europe
Consolidate In June Mobistar launched Go Europe, which gives customer Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience more peace of mind when calling, texting and surfing abroad “Go Europe” concept What and why What Roaming EU only With Go Europe, you can
Slide 25: ARPU decline is accelerating
Consolidate ARPU1 decline is accelerating due to regulation, market Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience repricing and accelerated migration to attractive Animals TPs 12 month rolling ARPU (incl. visitor roaming) -8.0% -5.2% -3.8% 29.3 28.9 28.
Slide 26: Usage significantly increased Y-o-Y
Consolidate Usage significantly increased Y-o-Y: +313 % mobile data, Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience + 51% MBB, +8 % Voice and SMS +4 % Quarterly AUPU/month (in- & outgoing traffic) +313% +52% +4% +8% 400 338 335 343 350 321 327 314 302 30
Slide 27: Reference operator for smartphones and data
Consolidate Mobistar appears as the reference operator for smartphones Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience and data, which now account for 48% of mobile service revenues Mobile data revenues are increasing significantly due to higher smartphon
Slide 28: 35% YoY growth in M2M SIM cards
Consolidate 35 % YoY growth in M2M-sim cards and 23 % YoY growth in Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience M2M revenue M2M shows a steady increase in the number of activated cards M2M Leader in Belgium Orange Int’l M2M 642 (70% of market share )
Slide 29: Continued strong YoY MVNO revenue growth of 88% in Q3 2013
Consolidate Continued strong YoY MVNO revenue growth of 88% in Q3 Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience 2013 MVNO & wholesale related business 1.142 Q3 2013 Highlights 1.073 MVNO 974 • In August VOO has launched as MVNO. 890 • Lycamobile moved f
Slide 30: Topics in the Spotlight
TOPICS IN THE SPOTLIGHT ACE Distribution Network Spectrum MTR & Roaming Regulation 30
Slide 31: ACE program aims to redesign our direct cost structure
ACE* program aims to redesign our direct cost structure and Leading Industry Efficiency revisit our core processes to prepare our future ACE 1: Tactical savings ACE 2: Strategic optimization of focusing on indirect costs direct costs and processes redesign Launched in June 2012: continuation of Laun
Slide 32: ACE 1 program on track to achieve 60M€ gross savings
After “Odyssey”’s 147M€ in 2010-2012, “ACE 1” program is on Leading Industry Efficiency track to achieve its 60M€ gross savings target in 2012-2013 ACE 1 tactical savings: ACE 2 has now entered in its 51 M€ gross savings delivered so far execution phase for 2014 60,0 Cust. Loyalty -40 M€ direct cost
Slide 33: Smooth phase out of satellite TV service in Q3 2013
Consolidate Mobistar achieved a smooth phase out of its satellite TV service in Q3 Leadership in Mobile Fixed-Mobile “à la carte” 2013. This project is an important contributor to realize the ACE2 objective convergence Best-in-class Customer Experience Rationale of suspending 15 M€ expected Net savi
Slide 34: Distribution strategy builds close customer relationships
Consolidate Our distribution strategy has allowed Mobistar to build a very Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience close relationship with our customers Mobistar uses a balanced mix of distribution channels to address different segments of custome
Slide 35: Adapting channel mix to new market context
Consolidate We are adapting our channels mix to new market context, Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience improving profitability and building a future-proof distribution Current distribution cost can no Future-proof distribution requires longer
Slide 36: Reinforcing controlled distribution channels and online
Consolidate Mobistar is reinforcing its controlled distribution channels, Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience adapting to offer more services online and in the shops Customer experience to be enhanced through new concept stores, services in sh
Slide 37: Stepping up investments in network capex
Consolidate Mobistar is stepping up its investments in network capex Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience YTD Network capex increased by 17.1% Y-o-Y Mobistar confirms its position as main challenger in terms of network quality Capex (in Mio EUR
Slide 38: UMTS 900 MHz roll-out increased indoor 3G coverage
Consolidate The roll-out of UMTS in the 900 MHz band increased the indoor Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience coverage in 3G from 70 % to 84 % within a period of 9 months. 3G coverage evolution 2012-2013 Mobistar confirms its position as the m
Slide 39: Concluded upgrade of radio access network
Consolidate In Q3 2013, Mobistar concluded the upgrade of its radio access Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience network, with more modern and higher performance equipment 2G/3G swap evolution 2012-2013 2012 End Q1 2013 End Q2 2013 Swap Done Swa
Slide 40: Upgrading transmission network with microwave or fiber
Consolidate Mobistar continues upgrading its transmission network with Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience high speed network lines, either microwave or fiber Upgrade of transmission network Investments in microwave or fiber, will allow Mobist
Slide 41: Upcoming 800 MHz auction scheduled on November 12
Upcoming 800 MHz auction scheduled on November 12. Consolidate Leadership in Mobile Fixed-Mobile “à la carte” Mobistar will participate to the auction to obtain one block convergence Best-in-class Customer Experience Current spectrum allocation (MHz duplex): Mobistar Proximus 800 MHz 10 10 10 2033 K
Slide 42: The 800MHz auction will kick-off with three MNOs
Consolidate The 800MHz auction will kick-off with three MNOs for three Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience available spectrum blocks Subject: The 790-862MHz band (“800MHz band”) comprises 2×30MHz of available spectrum auction in three blocks o
Slide 43: MTR and roaming revenues continue to be impacted by regulation
Consolidate MTR and roaming revenues continue to be impacted by Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience regulation Belgian Mobile total turnover split (% of revenues) 346 352 347 1.445 343 316 301 Retail billed revenues Roaming voice M2M Roaming D
Slide 44: Regulation – MTR impact in line with full year forecast
Consolidate Leadership in Mobile Fixed-Mobile Regulation – MTR impact in line with full year forecast “à la carte” convergence Best-in-class Customer Experience 2010-2013 MTR glide path -87% End of Current 9,02 Glide Path 5,05 4,29 -58% 2,79 1,18 Base Mobistar Proximus 1/1/11 1/1/12 1/1/13 Final cut
Slide 45: Belgian voice MTRs amongst Top 3 lowest in Europe
Consolidate Leadership in Mobile Fixed-Mobile Belgian voice MTRs amongst Top 3 lowest in Europe “à la carte” convergence Best-in-class Customer Experience Average MTR per country – January 2013 Source: BEREC Termination Rates Benchmark Snapshot 45
Slide 46: Regulation – Roaming cut July 2013 less severe
Consolidate Leadership in Mobile Fixed-Mobile Regulation – Roaming cut July 2013 less severe as a year ago “à la carte” convergence Best-in-class Customer Experience 2011-2015 Roaming glide path Retail Price Caps (EURcent/min, Excl. VAT) -36% Data (per MB) 70 Voice-calls made (per minute) 45 Voice-c
Slide 47: Conducive market conditions expected in the fixed market
Consolidate Mobistar expects conducive market conditions that allow a Leadership in Mobile Fixed-Mobile “à la carte” convergence Best-in-class Customer Experience healthy and fair competition in the fixed market. Mobistar stays committed to make use of a cable regulated offer Nov. 12: Draft Feb. 13:
Slide 48: Financial Performance
FINANCIAL PERFORMANCE Detailed cash flow analysis 48
Slide 49: Decrease in group turnover from regulation and re-pricing
Regulation in combination with the market re-pricing, has caused a decrease in the group turnover Mobistar group total turnover evolution (in M€) 397,6 -9,5% -7,9 -5,7 384,0 -39,5 347,5 -0,8 5,3 1,1 -2,6 Q3 2012 Q3 2013 1.200,1 -4,4% -24,9 -19,8 1.155,4 -86,9 1.104,4 22,3 0,8 -6,2 19,1 9M 2012 MTR R
Slide 50: Service revenue decline with direct effect on EBITDA
Mobistar has seen its Service Revenues decline with a direct effect on the EBITDA Mobistar group EBITDA evolution (in M€) 119,7 -13,6 89,1 -37,6 1,2 -1,3 10,5 -2,2 11,4 1,1 Q3 2012 Q3 2013 369,4 -44,7 -73,3 33,8 -26,6 -5,7 -1,1 270,0 -4,2 22,3 9M 2012 MTR & Service Handset Inter- Inter- Costs of Ser
Slide 51: Consolidated income statement
The repricing actions introduced in Q2 2013 and the proactive migration of customers towards the Animals TPs continue impacting revenues and EBITDA. Consolidated income statement in Mio EUR Q3 2012 YTD 2012 FY12 Q3 2013 Y-o-Y YTD 2013 Y-o-Y Total Turnover 397.6 1,200.1 1,650.5 347.5 -12.6% 1,104.4 -
Slide 52: 9M 2013 EBITDA declined by 99.4 M€
The 9M 2013 EBITDA declined by 99.4 M€. Excluding one-offs and the regulatory effect the decline would have been 61.5 M€ euro Mobistar group EBITDA evolution (in M€) -10,4% -10,9% 1.081 1.074 963 963 34,2% 33,3% 369 369 28,0% 28,0% 369 357 33,8% 31,1% 270 270 125 115 reported recurrent reported recu
Slide 53: Segment results
Segment results Mobistar Mobile income statement in Mio EUR Q3 2012 YTD 2012 FY12 Q3 2013 Y-o-Y YTD 2013 Y-o-Y Total Turnover 347.1 1,045.8 1,445.0 301.0 -13.3% 960.1 -8.2% Total Service Revenues 308.0 923.9 1,240.0 262.8 -14.7% 818.5 -11.4% Direct Margin 202.9 597.8 790.5 167.9 -17.3% 512.2 -14.3%
Slide 54: Orange Luxembourg increased its 9M 2013 EBITDA by 28.5%
Orange Luxembourg increased its 9M 2013 EBITDA by 28.5 % Y-o-Y Orange Luxembourg income statement in Mio EUR Q3 2012 YTD 2012 FY12 Q3 2013 Y-o-Y YTD 2013 Y-o-Y Total Turnover 19.2 54.6 75.5 18.6 -3.1% 56.2 3.0% Total Service Revenues 16.4 48.7 65.5 15.6 -4.9% 49.5 1.6% Direct Margin 8.9 27.2 35.3 6.
Slide 55: Net financial debt amounted to 406.6 million euros
At the end of September the net financial debt amounted to 406.6 million euros Consolidated Balance Sheet No significant variances in non-current in Mio EUR Q3 2012 FY12 Q3 2013 assets Other Current assets decreased due to an: Non-current assets 1,026 1,046 1,025 An decrease in inventory due to lowe
Slide 56: Organic cash flow amounted to 94.4 M€
Considering a lower EBITDA and higher investments, the organic cash flow amounted to 94.4 M€ Consolidated cash flow The decrease in organic cash flow compared with the first nine in Mio EUR Q3 2012 YTD 2012 FY12 Q3 2013 YTD 2013 months of 2012 comes from a combination of several factors: EBITDA 119.
Slide 57: 2013 Outlook
2013 Outlook 57
Slide 58: 2013 Guidance
Picture at the end of 3Q 2013 - 2013 Guidance 2013 3 months 6 months 9 months Guidance 2013 2013 2013 Total Turnover Maximum -12% -1.6% -5.7% -8.0% Minimum EBITDA * 98.9 M€ 180.9 M€ 270.0 M€ 300 M€ Operational cash Minimum 67.5 M€ 112.0 M€ 154.3 M€ flow ** 100 M€ 2013 dividend Dividend suspended * E
Slide 59: Leadership in mobile
a, leadership in mobile = mobile very high broadband and abundance
Slide 60: Shareholder Structure & Trading Info
Shareholder Structure & Trading Info ISIN: BE0003735496 Orange sa (France) Share capital: EUR 131.7m 99.99% Market Capitalization: EUR 814m Number of voting rights: 60,014,414 100% - Orange Participations sa Total turnover 2012 EUR 1,15bn 1 share (France) Daily avg. turnover 2012: EUR 4,48m 1 share
Slide 61: FY13 Roadshow Calendar
FY13 Roadshow Calendar DATE LOCATION BROKER ROADSHOW / CONF. 7 November Paris Cheuvreux Management Roadshow 13-14 November Helsinki/Stockholm/Copenhagen Danske Bank Management Roadshow 20-21 November Barcelona Morgan Stanley TMT Conference 27 November New York Goldman Sachs Management Roadshow 28-29
Slide 62: For further questions please contact IR department
For further questions please contact IR department Investor Relations Siddy Jobe Email: Siddy.Jobe@mail.mobistar.be http://corporate.mobistar.be/go/en/financial_information.cfm Visit our websites: • www.mobistar.be • http://business.mobistar.be 62 • http://corporate.mobistar.be