Proximus Sa · EURONEXT:PROX
Proximus Sa — Q3 2018 Earnings Presentation
58 slides from Proximus Sa's earnings presentation, November 2018
Slide 1: Proximus Group Results presentation Q3 2018
Proximus Group Results presentation Q3 2018 November 2018
Slide 2: Key achievements Q3
Key achievements Q3 GROUP 2 Increasing customer base in highly competitive market. +1.4% underlying Group EBITDA growth. +32,000 +38,000 +1.0% YoY +1.1% YoY Mobile postpaid Tuttimus & Bizz Domestic Domestic cards all-in Direct Margin EBITDA +8,000 +11,000 € 349m Fixed internet TV customers DM + 14.5
Slide 3: Supporting upselling strategy
Supporting upselling strategy GROUP 3 Average revenue per household slightly up on uptake of All-In offers Strong uptake of all-in offers. Solid increase in number of Average revenue per Household HH/SO taking 4 Plays (in 000’s) (incl. small offices) Tuttimus/Bizz All-in subscribers in ‘000 477 2,98
Slide 4: Growing Internet/TV customer base
GROUP Growing Internet/TV customer base 4 Adding customers in competitive market, supported by dual brand strategy and Back-to-School campaign Broadband 1,944 1,959 1,965 1,983 1,996 2 ,002 2 ,010 1,920 in ‘000 +45K 24 lines YoY 15 15 17 14 Net adds Park 7 6 8 +2.3% Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'
Slide 5: Mobile postpaid customer gain
Mobile postpaid customer gain GROUP 5 +32,000 Postpaid cards in competitive mobile market Mobile Cards Postpaid Smartphone Park (K) (excl. M2M) # Mobile cards: 4,842K end-Sep’18 penetration 4,918 4,897 4,900 4,825 4,838 4,831 4,838 4,842 +124K YoY Prepaid Net Adds Postpaid Net Adds 67 44 60 20 22 25
Slide 6: Maintaining solid market position
Maintaining solid market position GROUP 6 Market shares for Data, TV and Mobile (Proximus + Scarlet) Internet Mobile Total 46.5% 46.6% 46.6% 46.4% 46.4% 38.9% 38.9% 39.1% 39.5% 39.5% Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 TV Mobile Postpaid 43.1% 42.8% 42.7% 42.7% 42.6% 36.7% 36
Slide 7: Mobile Data traffic
Mobile Data traffic GROUP 7 Usage for National Data and Roaming Data continued to grow Though EU Roaming below company expectations National data usage Data/user Total Traffic (Gb/user/month) Total National X 1.5 X 1.4 Traffic Total National 1.9 Data Traffic 1.9 X 1.5 1.6 1.3 1.4 YoY Q3'17 Q4'17 Q1'
Slide 8: Group Revenue stable YoY
Group Revenue stable YoY GROUP 8 Consumer revenue decrease driven by low margin mobile terminal sales and other revenue By segment (M€) By quarter (M€ & YoY%) 1,441 -13 10 1,441 7 -3 -1 0.7% 2.6% -0.8% -0.9% -0.2% 0.1% -2.9% -3.2% Domestic: -0.9% +3.1% +0.8% 1,490 1,443 1,417 1,441 1,477 1,441 1,454
Slide 9: Domestic revenue by product
Domestic revenue by product GROUP 9 Q3 ICT 8 Fixed Data / Internet 8 (YoY evolution M€) Mobile Postpaid 4 • Customer growth driving Internet, TV and TV 3 Postpaid revenue increase Subsidiaries (Tango) 2 Advanced Business Services 2 • ICT benefitting from acquired companies -1 Other segment • Lower O
Slide 10: Group direct margin +2.1%
Group direct margin +2.1% GROUP 10 Both Domestic and BICS posting positive direct margin for Q3 Q3 (M€) • Domestic up on growing customer 10 920 4 7 -3 1 base and acquired ICT companies 901 • BICS direct margin up 14.5% P Domestic: +1.0% +14.5% including TeleSign contribution + Growing A2P volumes G
Slide 11: Group expenses
Group expenses GROUP 11 +2.8% in Q3’18, slightly down excl. acquisition impacts Q3 8 449 (M€) 437 4 • Domestic expenses +0.9%, chiefly attributable to acquired ICT subsidiaries (+ 226 FTE’s) +0.9% +25.8% • BICS expenses €+ 8m YoY, mainly reflecting +2.8% the acquisition of TeleSign (consolidated sin
Slide 12: Domestic EBITDA
Domestic EBITDA GROUP 12 +1.1% YoY for Q3 driven by higher direct margin partially offset by higher expenses Q3 YTD + 2.5% (M€) 8 -5 1 431 426 1,272 1,304 Underlying Direct Margin Workforce cost Non Workforce Underlying EBITDA Q3'17 cost EBITDA Q3'18 YTD'17 YTD'18 Q’s 8.8% 5.3% 5.5% 1.1% 0.8% 0.8% 1
Slide 13: Group EBITDA +1.4% YoY
Group EBITDA +1.4% YoY GROUP 13 Both Domestic operations and BICS showing progress from prior year Q3 YTD 5 2 470 (M€) 464 (M€) +2.9% +1.1% +4.8% 1,378 1,417 +1.4% Underlying Domestic BICS Underlying YTD'17 YTD'18 EBITDA Q3'17 EBITDA Q3'18 Q’s (M€) 5.5% 7.5% 0.4% -2.2% 1.0% 1.1% 6.1% 1.4% 464 464 45
Slide 14: Net income (Group share)
Net income (Group share) GROUP 14 € 135m Net Income in Q3 leading to a total of € 389m YTD’18 YTD (M€) ETR 26.6% vs 30.5% in YTD’17 40 -21 -46 385 29 -1 389 3 Net income Underlying Incidentals D&A Net Finance result Tax e xpense Others Net income YTD'17 EBITDA variance YTD'18
Slide 15: €697M capex YTD'18
€ 697M capex YTD’18 GROUP 15 On track for FY2018 estimate of around € 1bn Capex (M€) -1.4% 390 340 290 Capex more equally 240 385 314 190 140 221 281 221 238 238 707 697 205 spread over the year 90 40 -1 0 YTD'17 YTD'18 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 2017 Incl. Jupiler League footba
Slide 16: FCF
FCF GROUP 16 €349M YTD’18, or € 395M excl. acquired ICT subsidiaries YTD (M€) 40 -13 -2 -40 480 -7 -97 28 -25 -13 349 FCF Underlying Income Tax Interest Acq of ELP Cash Capex Accounts Building sales Other FCF YTD'17 EBITDA payments payments on subsidiaries beneficiaries Payable/ YTD'18 LT debt Recei
Slide 17: Sound financial position
Sound financial position GROUP 17 Proximus optimized it’s long term debt Net Debt (YTD, M€) Dividends to non- Net Debt DEC controlling Net Debt SEP 2017 FCF Dividends interests Other 2018 6.2 Yrs Average debt duration 349 -323 1.78% -28 Weighted average coupon 1 -2,088 -2,089 Credit ratings: Standar
Slide 18: Outlook
Outlook GROUP 18 FY’18 outlook raised for underlying Group EBITDA to growth of 2%-3% • Solid YTD 2018 results despite high FY2018 competitive intensity. So far delivering FY2 017 FY2018 Outlook 2 018 YTD Guida nce m etrics Act u al s Feb. 2018 achiev ement R evised Outlook underlying Group EBITDA ah
Slide 19: Consumer results
Consumer results
Slide 20: Consumer
Consumer CONSUMER 20 Value accretive customer mix, with ARPH increasing by +0.5% to €65.7 (M€ & YoY) -0.2% 1. 3 % 1. 9% 1. 7% -0. 1% -0. 5% 1. 5% -0. 2% -1. 8% Revenue 2,175 2,171 737 720 727 729 734 731 725 715 Consumer revenue €-13m YoY, Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 YTD'17 YTD'1
Slide 21: Consumer revenue
Consumer revenue CONSUMER 21 Consumer revenue down -1.8% driven by lower Terminals sales & new collection process Q3 4 -6 729 -8 7 3 2 -14 (M€) 715 + YoY growing Internet, TV and Mobile Postpaid -1.8% customer base + Price changes Jan’18 Q3'17 Fixed Fixed Data TV Mobile Mobile Tango Terminals Q3'18
Slide 22: Fixed data revenue +4.5%
Fixed data revenue +4.5% CONSUMER 22 Internet base up +9,000 in Q3’18; +48,000 YoY – ARPU up 1.9% on an annual basis +5. 0% +4.5% revenue from Internet 4. 9% 4. 0% 2 . 0% 3 . 7% 4. 1% 5. 4% 5. 0% 4. 5% subscriptions YoY, driven by Fixed data revenue (M€) & YoY 485 • higher base 151 153 154 156 157 1
Slide 23: TV revenue + 2.7%
TV revenue + 2.7% CONSUMER 23 TV customer base grew by 11,000 households in Q3’18; +52,000 YoY +3 . 8% 11. 2% 9. 2 % 8. 8% 6. 1% 4. 6% 4. 5% 4 . 0% 2 . 7% Millions 0 Millions TV revenue (M€) & 98 99 99 99 YoY variance 94 95 96 97 287 298 • TV revenues up 0 by 2.7% YoY Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q
Slide 24: Fixed voice
Fixed voice CONSUMER 24 Revenue decline YoY driven by continued line erosion and lower traffic -6. 3 % -3 . 1% -3 . 3% -5. 5% -4. 6% -4. 8% -5. 4% -6. 4% -5.5% Fixed voice revenue (M€) 381 128 130 126 124 122 124 119 116 360 & YoY variance Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 YTD'17 YTD'1
Slide 25: Mobile service revenue
Mobile service revenue CONSUMER 25 YoY variance improved to -0.9% Mobile service revenue (M€) & YoY variance Blended net mobile ARPU (€) & YoY variance Blended ARPU up on -0. 9% -1. 6% -2 . 6% -1. 6% -1. 3% -1. 2% -1. 7% -1. 4% -0. 1% -0. 7% 0. 6% 1. 8 % 2 . 5% 1. 7% 1. 4 % 0. 6% better customer mix
Slide 26: Postpaid and prepaid
Postpaid and prepaid CONSUMER 26 Actively migrating Prepaid to higher-value Postpaid offers 2 . 5% 2 . 3% 3 . 0% 2 . 6% 2 . 4% 1. 0% 1. 4% 1. 6% +1.4% Revenue (M€) & YoY 657 666 215 215 219 223 221 217 222 227 +2.7% YoY customer growth Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 YTD'17 YTD'18 -2
Slide 27: Tango Luxembourg
Tango Luxembourg CONSUMER 27 Consumer revenue +6.2% YoY in an aggressive competitive market Tango revenue (M€) & YoY variance Improved consumer revenue driven by : • Lower promo impact YoY 7. 7% 5. 6% 8. 3% 6. 2 % -1. 2% -1. 1% 1. 1% • Steady growth in mobile -4. 8% base +5.1% • Successful convergen
Slide 28: X-Play view
X-Play view (under IFRS 15) 28
Slide 29: Stable revenue from HH/SO
CONSUMER Stable revenue from HH/SO 29 Lower revenue from Mobile Prepaid and Terminal sales Incl. upselling to 4P Q3 16 -6 -4 -7 (M€) 730 -6 -11 1 0 714 • Proximus’ strategy to focus on multi-play offers HH/SO +0.0% resulting in continued Total Consumer -2.2% -2,088 uptiering to 4-Play, up 7.2% YoY i
Slide 30: Continued revenue shift to 4-Play
CONSUMER Continued revenue shift to 4-Play 30 4-Play revenue up 7.2% YoY, representing 34% of Total Consumer revenue 0. 8 % -0. 1% 0. 0% X-Play Ongoing expansion of 4-Play base, up 51,000 YoY, including revenue (M€) & YoY variance 10,000 in Q3’18 583 589 586 585 588 589 586 Q1'17 Q2'17 Q3'17 Q4'17 Q
Slide 31: Increasing number of customers on 4-Play
CONSUMER Increasing number of customers on 4-Play 31 Improving Customer Mix, average RGU per HH/SO up 2.5% to 2.76 4.87 Q3’18 RGU 24% 4P 1,172 1,168 1,153 1,139 1,132 1,130 1,111 (+2 pp) 683 697 711 72 1 1-Play 38% 1P 4-Play 63 6 658 670 22 growth & EOP growth & EOP (000) (000) 31 -4 -14 -7 22 -15 -
Slide 32: Overall ARPH up 0.5% YoY
Overall ARPH up 0.5% YoY CONSUMER 32 Progress to € 65.7, on improved customer mix 1 .3% 0 .8% 0 .5% X-Play ARPH (€) & YoY Variance More and more 4-Play HH/SO with ARPH of € 111.8 65.1 65.6 65.3 65.4 65.9 66.2 65.7 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 1 .3% 1 .1% 1 .0% -1 .5% -1 .7% -0 .6% 4-Pla
Slide 33: Annualized full churn rates
Annualized full churn rates CONSUMER 33 Overall annualized full churn rate fairly stable YoY (+0.2pp) X-Play Convergent HH/SO maintained very low churn rates, with Annualized full churn 13.6 % 11.5% 13.4% 13.1% 14.5% 11.9 % 13.6 % limited impact from the higher competitive intensity rate Q1'17 Q2'17
Slide 34: Enterprise results
Enterprise results
Slide 35: Enterprise
Enterprise ENTERPRISE 35 Enterprise revenue and direct margin benefitting from expanded ICT portfolio and growth for Mobile Services and Advanced Business Services 0. 9% 4. 8% -1. 7% 0. 5% 3 . 3% 0. 8 % 2 . 4% 2 . 2% +1.8% • ICT +6.8%, benefitting from its 1 ,1 00 1 ,0 50 expanded ICT portfolio Reve
Slide 36: Q3'18 revenue up by 2.2%
Q3’18 revenue up by 2.2% ENTERPRISE 36 Higher revenue from ICT, Mobile Services and Advanced Business Services more than compensated pressure on legacy telecom services 2 0 0 347 Q3 8 340 -4 0 1 M€ Operating in a competitive environment, Proximus’ Enterprise +2.2% segment achieved a 2.2% YoY revenue
Slide 37: Fixed Voice
Fixed Voice ENTERPRISE 37 Steady revenue decline on line erosion and lower usage -5. 5% -5. 6% -7. 7% -8. 7% -9. 7% -7. 1% -7. 3% -7. 2% • Ongoing rationalization by customers 0 -7.2% Millions on Fixed line connections, lower 0 Fixed voice revenue (M€) & YoY variance usage, technology migrations to
Slide 38: Fixed Data
Fixed Data ENTERPRISE 38 Ongoing migration of legacy data products to new solutions at more attractive pricing Stable Internet customer base of 133,000 lines in competitive market 0 -1. 0% -1. 6% -0. 9% -2 . 7% -1. 0% -0. 8% -0. 4% 0. 8 % -0. 2% • Somewhat higher revenue from Fixed data revenue (M€)
Slide 39: ICT
ICT ENTERPRISE 39 Successful strategy of expanding portfolio well beyond pure connectivity services Strengthened ICT portfolio, including acquisition of small-sized, highly specialized companies: ICT revenue (M€) & YoY • Codit, Belgium-headquartered market 2 . 1% 16. 1% -1. 3% 5. 3 % 9. 5% 1. 0% 6.
Slide 40: Advanced Business Services
Advanced Business Services ENTERPRISE 40 Solid revenue from Smart Mobility and convergent business solutions Advanced Business Services (M€) 7 6 6 7 9 7 7 9 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 +1 8.5% 25 .0 23 .0 21 .0 19 .0 17 .0 19 23 15 .0 13 .0 11 .0 9.0 7.0 YTD'17 YTD'18 Convergent
Slide 41: Mobile Service Revenue +0.9%
Mobile Service Revenue +0.9% ENTERPRISE 41 Benefit from customer growth partially offset by lower Postpaid ARPU Mobile service revenue (M€) & YoY variance Postpaid excl. M2M growth & EOP (000) • Mobile Voice park of 1,021,000 -0.3% 1 ,021 cards, +4.7% YoY -3 . 5% -4. 9% -1. 6% -0. 8% -0. 4% -2 . 6%
Slide 42: Wholesale
Wholesale WHOLESALE 42 Decline in revenue mainly due to lower roaming-in revenue. Wholesale direct margin unfavourably affected by wholesale roaming rate negotiations. Positive effect for Consumer and Business Margin Revenue (M€) & YoY -3.3% 8.0% -1.6% 9.5% 10.3% 4.0% -8.7% -4.9% -3.4% 156 151 46 52
Slide 43: BICS results
BICS BICSresults results
Slide 44: BICS segment result up by 4.8%
BICS segment result up by 4.8% 44 TeleSign contribution & synergies increasing DM to 23.0% of revenue +2.6% 8.9% 3.1% • YoY uplift mainly driven by the -5.6% -6.6% -6.6% -3.9% -12.9% -12.1% additional business from TeleSign, Revenue (M€) & YoY 981 1,006 consolidated since 1 November 2017 variance 36
Slide 45: Non-Voice Voice
Non-Voice Voice 45 Firm growth on SMS A2P volumes, DM supported by TeleSign authentication services benefitting from BICS –TeleSign combination BICS - Non Voice Revenue (M€) BICS - Voice Revenue (M€) -0.5% 40.8% -5.0% 32.0% 27.0% -8.4% -8.4% 25.3% -13.6% -16.2% -14.5% 7.6% 7.9% -17.4% 0.6% 0.1% 291
Slide 46: Appendix
APPENDIX Appendix 46 Pricing 47 Spectrum 51 Headcount 54 Shareholder 55 s structure Contact 57
Slide 47: Mobilus/Full Control portfolio
APPENDIX Mobilus/Full Control portfolio 47 Revamp 1st November’18 Prices incl. VAT Mobile only Update S M Update L NEW XL Unlimited Of old L 1.5 GB 5 GB 10 GB Unlt. data * Unlt. sms Unlt. sms Unlt. sms Unlt. sms 120 min. 300 min Unlt. min Unlt. min Unlt. min + Unlimited Mobile data for your favourit
Slide 48: Bizz Mobile portfolio
APPENDIX Bizz Mobile portfolio 48 Revamp 1st November’18 Prices excl. VAT Mobile only Update NEW NEW S M L XL Unlimited 1.5 GB 5 GB 7 GB Unlt. data * Unlt. sms Unlt. sms Unlt. sms Unlt. sms 100 min. + fix 250 min + fix Unlt. min Unlt. min Unlt. min + 600 min intl. + Unlimited Mobile data for your fa
Slide 49: Epic mobile offer for millennials
APPENDIX Epic mobile offer for millennials 49 Epic: worry-free connection anytime, anywhere Launched 25 June 2018
Slide 50: Positioning Scarlet as no frills brand
APPENDIX 50 Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’
Slide 51: Spectrum
APPENDIX Spectrum 51 Current ownership and new spectrum Expiry dates Proximus OBEL Telenet 29/11/33 800 MHz 2 x 10 2 x 10 2 x 10 Proximus OBEL Telenet 15/03/21 900 MHz 2 x 12.4 2 x 11.6 2 x 10.2 Renewal Proximus OBEL Telenet 15/03/21 1800 MHz 2 x 24.8 2 x 24.8 2 x 24.8 Proximus OBEL Telenet Unalloca
Slide 52: Spectrum auction
APPENDIX Spectrum auction 52 Reserved spectrum Frequency band Total capacity Spectrum cap Spectrum reserved For each existing For a new entrant operator 700 MHz 30 MHz duplex 10 MHz duplex - 5 MHz duplex Details of reserved spectrum as 900 MHz 35 MHz duplex 15 MHz duplex 5 MHz duplex 5 MHz duplex pu
Slide 53: Spectrum auction
APPENDIX Spectrum auction 53 Coverage obligations Frequency band Obligations for existing operators Obligation for new entrant - 70% population after 1 year - 30% population after 3 years - 99.5% population after 2 years - 70% population after 6 years 700 MHz - 99.8% population after 6 years - 99.8%
Slide 54: Headcount
APPENDIX Headcount 54 Domestic workforce cost benefitting from reduced headcount Early Leave Plan & M&A impact YoY natural retirements +226 FTE’s from ICT acquisitions leading to ~2,750 FTEs to leave End Q3’18, Proximus over civil servants @ 13,627 2016-2020 26% of Domestic 13,095 12,644 12,562 head
Slide 55: Shareholder structure
APPENDIX Shareholder structure 55 Total number of shares Free-float Belgian government Number of % shares % Voting % Dividend Number of Number of ~€ 7.3 Bn shares rights rights shares with shares with voting rights dividend rights Market Capitalisation* Belgian state 180,887,569 53.51% 56.04% 55.90%
Slide 56: Reporting remarks
Reporting remarks GROUP 56 • All financials in the presentation are provided under IAS 18. • 2018 figures under IFRS 15 are available as from Q1 2018 in the published quarterly reports and excel factbook. • The provided 2018 guidance is under the IAS 18 standard. • Exception has been made for the ho
Slide 57: For further information
For further information GROUP 57 Investor relations Nancy Goossens Sarah Franklin +32 2 202 82 41 +32 2 202 77 11 Director Investor Relations Investor Relations Manager E-mail: investor.relations@proximus.com Proximus investor relations website: www.proximus.com/en/investors
Slide 58: Cautionary Statement
Cautionary Statement “This communication might 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