Proximus Sa · EURONEXT:PROX
Proximus Sa — Investor Presentation (January 2021)
36 slides from Proximus Sa's investor presentation, Jan 13, 2021
Slide 1: Fiber update
Fiber update 13 January 2021 Fiber City Brussels Guillaume Boutin Geert Standaert Katleen Vandeweyer CEO CTO CFO a.i.
Slide 2: Proximus is pursuing a strategy of Network superiority
1 As part of #inspire2022, Proximus is pursuing a strategy of Network superiority Proximus mobile networks recognized as best-in-class With a clear plan to retain leadership: Build the best Moving to claim GIGABIT NETWORK Best experience for Belgium leadership on broadband with Fiber Most efficient
Slide 3: Fiber is the most future-proof technology for a sustainable and competitive Belgium
2 Fiber is the most future-proof technology, necessary to build a sustainable and competitive Belgium Supporting current & To build a sustainable and Best technology future customer needs competitive Belgium GHG emissions per Gigabit Unlimited speed New Digital ecosystem: (downlink and uplink) Conne
Slide 4: Proximus confirms ambition to cover at least 70% of homes and business with fiber by 2028
3 Proximus confirms ambition to cover at least 70% of homes and business with fiber by 2028 4.2M First mover advantage thanks to a rapid rollout, with a run-rate of around 10% coverage per year Homes and businesses passed by 2028 Open access and non-discriminatory fiber network for Belgium fostering
Slide 5: Fiber is securing long-lasting value for Proximus
4 Fiber is securing long-lasting value for Proximus Value accretive Attractive return on investments both in terms with IRR above WACC of revenues and costs Proximus retail market share gains, Average fiberhood across residential and enterprise customers (illustrative) Customers Proximus ARPC uplift
Slide 6: Stand-alone deployment focused on the most dense areas
5 Stand-alone deployment focused on the most dense areas 6M Premises in Belgium Dense areas 2.2M HP Proximus own rollout • IRR > WACC • Optimised capital re-allocation (optimizing debt levels at around ~2X S&P leverage, asset disposal and rebalancing capex)
Slide 7: Proximus has joined forces with industrial partners to expand the Fiber rollout
6 Next, Proximus has joined forces with 2 industrial partners to expand the Fiber rollout in less dense areas 6M Premises in Belgium Dense areas Medium dense areas Low dense areas 2.2M HP 1.5M HP 0.5M HP Combination of Fiber optionality (e.g. Proximus Proximus Proximus & subsidized) and alternative
Slide 8: Experienced industrial and financial partners with solid track record of FTTH deployment
7 Experienced industrial and financial partners with solid track record of FTTH deployment in Europe ▪ Leading independent FTTH platform in the ▪ Leading independent B2B Fiber operator the Netherlands with a focus on rural areas with more Benelux and France with more than 37,000km than 600k homes an
Slide 9: In the JV footprint, Proximus can proceed with financial consolidation when fully built
8 In the JV footprint, Proximus can proceed with financial consolidation when fully built. ▪ Proximus, as part of the agreements: Infrastructure ✓ will be able to proceed with financial 50.1% 49.9% 100% 49.9% 50.1% consolidation once the rollout of the network is completed at virtually no cost, by a
Slide 10: Proximus to own up to 80% of Belgium's FTTH network
9 Proximus to own up to 80% of Proximus to enjoy 100% ownership of the Belgium’s FTTH economic benefits of the active layer, to further reinforce competitive positioning in the retail and wholesale market network Footprint ownership Fiber rollout by 2028, M HP 0.5 4.2 50% 100% economic 1.5 50% 24% b
Slide 11: Four pillars of a value accretive fiber rollout
10 Four pillars of a value accretive fiber rollout Broader Faster Cost Open Rollout Rollout Efficiency Fiber City Malines
Slide 12: In 2020, Proximus reached its fiber rollout objectives
Broader Rollout Faster Rollout Cost Efficiency Open 11 In 2020, Proximus reached its fiber rollout objectives despite unforeseen and difficult circumstances Knokke Antwerpen Oostende Homes & Businesses Gent Sint-Niklaas Mechelen Passed (in K) Roeselare c. 460 Aalst Vilvoorde Kortrijk Hasselt Leuven
Slide 13: With partners, Proximus increases the fiber footprint from 2.8M to 4.2M HP by 2028
Broader Rollout Faster Rollout Cost Efficiency Open 12 With partners, Proximus increases the fiber footprint from 2.8M to 4.2M HP by 2028 reaching 70% Belgium premises Total Home & Business Passed (HP) in M 4.2 JV footprint 0.5M HP Proximus footprint (after offload) 3.2 Proximus & EuroFiber Medium d
Slide 14: Proximus will deploy at tremendous speed seizing the first mover advantage
Broader Rollout Faster Rollout Cost Efficiency Open 13 Proximus will deploy at tremendous speed seizing the first mover advantage Annual Homes & Business Passed 600k Scaling up to >600k HP/Yr Doubling our ~10% own rollout Coverage/Yr speed x2 x2 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Slide 15: We have secured the capacity on the market to deliver 1M Home passed
Broader Rollout Faster Rollout Cost Efficiency Open 14 We have secured the capacity on the market to deliver 1M Home passed in the coming 3 years (Proximus own rollout) In Q4 2020, we have Construction partners Engaged with all Internal Proximus been running 1,000+ committed to deliver regional empl
Slide 16: Strong deployment process parallelisation and automation to scale up
Broader Rollout Faster Rollout Cost Efficiency Open 15 We have setup strong deployment process parallelisation and automation to scale up In 2020, we run 80 We did set-up strong In 2021, we will run GPS based as-built parallel fiber building partnership and 150+ parallel fiber documentation and stre
Slide 17: Proximus is materially decreasing rollout costs in dense areas
Broader Rollout Faster Rollout Cost Efficiency Open 16 Proximus is materially decreasing rollout costs thanks to process and design optimization for dense areas ~2500 Proximus Footprint HP/km² Example: Savings on deployment cost by Unit Cost Brownfield adapting design and optimising facade rollout H
Slide 18: Proximus is leveraging Partners experiences for less dense areas
Broader Rollout Faster Rollout Cost Efficiency Open 17 Proximus is leveraging Partners experiences for less dense area’s JV Footprint ~800 HP/km² Rationale ▪ P2P is more adapted to lower density areas due to Unit Cost their intrinsic characteristics: HP (€) ▪ Less continuity of homes and more upfron
Slide 19: With enlarged Fiber footprint, Proximus accelerates copper phase out savings
Broader Rollout Faster Rollout Cost Efficiency Open 18 With enlarged Fiber footprint, Proximus accelerates copper phase out savings. Copper Switch off 60,300 km Deactivate one third of our legacy network infrastructure. Lower cost to operate >55% Savings on maintenance and repair, less trouble rate,
Slide 20: Creating an open, non-discriminatory network
Broader Rollout Faster Rollout Cost Efficiency Open 19 Creating an open, non-discriminatory network, delivering the best technology for everyone FTTH platform delivers seamless Belgian Wholesale Fixed Broadband Market digital experience Network innovations are available for all customers from the st
Slide 21: Proximus deploys seamless retail and wholesale multigigabits FTTH solutions
Broader Rollout Faster Rollout Cost Efficiency Open 20 Proximus deploys seamless retail and wholesale multigigabits FTTH solutions Transparent service management and digital experience throughout the entire fibre footprint (Proximus + JV’s) Proximus retail Proximus wholesale 3rd party retail service
Slide 22: Network superiority translates into commercial benefits
21 Network superiority translates into commercial benefits. Fiber City Ostend
Slide 23: Increasing need for reliable, fast, low-latency connectivity
22 Increasing need for reliable, fast, low-latency connectivity increase the value of Fiber for both consumer & enterprise Entertainment Ecosystems Home Office Blurring of home and home-office e-Education e-Health Cloud gaming/VR Multi cloud Adoption for enterprises Connected Digital bank objects Hi
Slide 24: Extra value thanks to speed tiering in our Fiber Flex offers
23 We generate extra value thanks to speed tiering in our Fiber Flex offers Flex Fiber The pack tailored to each family member speed tiering speed tiering 1 Gbps 500 Mbps +15€ 350 Mbps Fiber +11€ 50 Mbps +5€ 50 Mbps 100 Mbps Copper services tiering (current residential offer on the market)
Slide 25: Successful G2M execution resulting in higher Fiber take rates
24 Successful G2M execution resulting in higher Fiber take rates Strong commercial momentum Residential Enterprise at rollout 12-month network take rate: Digital marketing Digital marketing Audience-based approach Event-based approach 29%* thanks to winbacks Out-of-home Multi channel sales approach
Slide 26: Promising commercial benefits on the current Fiber footprint
25 Our approach is leading to some promising commercial benefits on the current Fiber footprint Residential Customer satisfaction… ARPC 1 Gross Gains 3 X2 +10% Fiber VDSL … leading to lower churn rate Enterprise Fixed Fiber migration ≥ -25% Data ARPU 2 rate 3 years after rollout VDSL Fiber +22% 70%
Slide 27: Substantial value creation while keeping a sound financial position and attractive dividend
Substantial value creation for Proximus 26 while keeping a sound financial position and attractive dividend return Fiber City Louvain 1 2 3 4 Efficient Clear Sustaining Fiber creating Fiber funding for CAPEX allocation attractive Dividend substantial value both Proximus and policy with positive NPV
Slide 28: Our overall Fiber plan drives attractive returns, creating long-term asset value
27 Our overall Fiber plan drives attractive returns, creating long-term asset value Improved Proximus Fiber NPV +€7 ARPU blended (Indicative graph) NPV Churn ≥ 25 % reduction NPV NPV ++ Wholesale opportunity 2.8M HP 4.2M HP 4.2M HP >55% Lower cost to operate/customer Pxs standalone Pxs standalone Px
Slide 29: With the Fiber JVs, Proximus' CAPEX reduces
With the Fiber JVs, Proximus’ CAPEX reduces, while 28 benefiting from increased Fiber footprint Total Group CAPEX accrued, excl. spectrum and football rights € c.500M lower capex € 1.3Bn Cumulative 2020-2025 € 1Bn FttH offload to JVs and lower Proximus Unit Cost New vendor RAN/Core Old Capex estimat
Slide 30: Clear Fiber rollout funding plan
29 Clear Fiber rollout funding plan Proximus’ own Fiber rollout JV Fiber funded by own debt CAPEX and Equity injections issuance and equity injections 20%-30% Equity injections 1 Investment needed 10-15% to pass 4.2M premises 1 Rebalance capex envelope 3 coming from Ebitda generation 2017-2028 paren
Slide 31: Financial mechanics of Fiber JV's on Proximus FCF generation
Financial mechanics of Fiber JV’s on Proximus FCF 30 generation Cumulative FCF impact Trend changes (2021E-2025E) Post rollout Delta versus standalone Fiber rollout plan. Consolidated in PROX Group 1 • Retail revenue • Proximus Wholesale revenue leveraging • More significant Wholesale 1 Revenue reve
Slide 32: A boosted Fiber plan while sustaining an attractive dividend policy
A boosted Fiber plan while sustaining an attractive 31 dividend policy Boosted Fiber plan with JVs preserving the No impact on short-term FCF generation. Proximus’ 3-year dividend policy Proximus’ estimated cumulative FCF over 2021- 2025 remains stable to its prior plan (CMD, March’20). €1.2/share 2
Slide 33: Conclusion
Conclusion 32 Fiber City Ghent
Slide 34: Closing remarks
33 Closing remarks We are building THE Fiber network of Belgium, reaching 4.2M homes by 2028, at least 70% Fiber footprint. We are creating an open and non-discriminatory network for all operators, upgrading the broadband services delivered to residential and professional customers. We are investing
Slide 35: Q&A Conference call
34 Q&A Conference call Dial-in UK +44 20 7194 3759 Dial-in USA +1 (646) 722 4916 Dial-in Europe +32 2 403 58 16 Code 37616326#
Slide 36: Cautionary statement
35 Cautionary statement This communication may include some forward-looking statements, without limitation, regarding Proximus’ financial or operational results, certain strategic plans or objectives, macro-economic trends, regulation, future market conditions and other risk factors. These forward-l