Royal Kpn Nv · EURONEXT:KPN
Royal Kpn Nv — Koninklijke Kpn — Q2 2022 Earnings Presentation
28 slides from Royal Kpn Nv's earnings presentation, Jul 27, 2022
Slide 1: Q2 & H1 2022 results
Q2 & H1 2022 results 27 July 2022 kpn. The network of the Netherlands
Slide 2: Safe harbor
Safe harbor Alternativeperformancemeasuresand managementestimates This financial report contains a number of alternative performance measures (non-GAAP figures) to provide readers with additional financial information that is regularly reviewed by management, such as EBITDA and Free Cash Flow (‘FCF’
Slide 3: Highlights Q2: Business service revenues reach growth inflection point
Highlights Q2: Business service revenues reach growth inflection point Continued Group service revenue growth +1.4% y-on-y Inflection of B2B service revenues, solid mass-market service revenue growth Ongoing growth in Consumer mobile offset by lower revenues in Consumer fixed Solid progress fiber ro
Slide 4: Accelerate to grow supported by three key pillars
Accelerate to grow supported by three key pillars Three strategic pillars… …to support our ambition to 1. Leverage & expand superior networks • Covering the Netherlands through fiber • Low latency services via 5G and edge computing Connect the Netherlands to a sustainable future • Leading the Dutch
Slide 5: Expand Superior network
Expand Superior network
Slide 6: Expand superior network: solid progress fiber roll out
Expand superior network: solid progress fiber roll out Continuously expanding fiber footprint1 Leading position, jointly covering ~80% of NL by end 2026 homes passed, k homes passed, % of households +102 KPN footprint ~80% +75 +120 Glaspoort footprint +93 3,394 3,292 44% 3,217 34% 3,096 3,003 Q2 202
Slide 7: Expand superior network: Best mobile network for the 4th time in a row
Expand superior network: Best mobile network for the 4th time in a row #1 Excellent 5G position Ookla awards received Best mobile network in the Netherlands Differentiated 5G services H2 2020, H1 2021, Leading H2 2021 and H1 2022 Highest download speed 5G ecosystem Best mobile network Highest upload
Slide 8: Enhance Customer focus
Enhance Customer focus
Slide 9: B2C: Continued growth in mobile, offset by lower revenues in fixed
B2C: Continued growth in mobile, offset by lower revenues in fixed Key take-aways Service revenue trend (€ m) +0.6% +0.7% +0.3% • Growth in Fixed-Mobile service revenues driven by higher base, adding 8k households • Continued growth in mobile service revenues, driven by strong -0.6% -1.1% base trend
Slide 10: B2C: Ongoing momentum in mobile, competitive dynamics in fixed
B2C: Ongoing momentum in mobile, competitive dynamics in fixed Decline broadband net adds (k)1 Broadly stable fixed ARPU Lower fixed service revenues (y-on-y growth) 2 € 52 +7 +1 +3 0 +0.3% -0.1% -0.4% -3 -1.3% -0.5% y-on-y -2.2% Continued good postpaid net adds (k) Broadly stable mobile ARPU Solid
Slide 11: B2B: Service revenues inflected to growth ahead of schedule
B2B: Service revenues inflected to growth ahead of schedule Key take-aways Service revenue trend (€ m) +1.9% • Continued growth in SME, due to ongoing momentum in Mobile, Broadband and IT services, partly offset by lower Fixed Voice -0.4% • LCE trend gradually improving but still impacted by lower -
Slide 12: B2B: Service revenues per segment
B2B: Service revenues per segment +9.3% SME (€ m) +2.3% +5.3% +7.7% +0.6% 136 138 142 144 146 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Gradual turnaround in Business service revenues (€ m) +1.9% -0.4% LCE (€ m) -5.5% -4.1% -6.3% -6.0% -3.1% -2.7% -2.4% -4.9% 199 195 196 193 193 402 403 417 409 409 Q2 21 Q3 21
Slide 13: Wholesale: Sustainable growth from open access model
Wholesale: Sustainable growth from open access model Key take-aways Service revenue trend (€ m) • Wholesale service revenues increased, due to higher Mobile and +8.9% +9.4% +6.0% +7.0% Broadband service revenues +4.7% • Growing base, YTD adding 43k postpaid customers and 18k broadband lines 70 70 75
Slide 14: Deliver Financial ambitions
Deliver Financial ambitions
Slide 15: Financial performance: on track
Financial performance: on track Adjusted revenues Adj. net indirect opex savings Adjusted EBITDA AL Q2 adjusted revenues +1.4% y-on-y Q2 2022 H1 2022 Q2 2022 H1 2022 Q2 2022 H1 2022 • Growth in Wholesale, Business and € 1,314m € 2,624m € 13m € 21m € 595m € 1,189m Consumer Mobile +1.4% +1.5% +1.1% +2
Slide 16: Sustainable Group service revenue growth
Sustainable Group service revenue growth Encouraging trend in Group service revenues (€ m) Growth driven by Wholesale and Business (€ m) -0.7% 1 +1.0% 1 +0.7% 1 +1.1% 1 +1.4% Δ y-on-y Δ y-on-y Q2 2021 1,196 1,196 1,220 1,228 1,216 1,214 162 172 166 170 173 Wholesale +11 +7.0% 402 403 417 409 409 Bus
Slide 17: Adjusted EBITDA AL growth
Adjusted EBITDA AL growth 1 Higher direct costs y-on-y • Higher non-service revenues • Glaspoort access costs Adjusted EBITDA AL (€ m) • B2B service revenue mix +1.1% 2 Personnel expenses lower y-on-y +18 +4 20 +12 +2 595 589 -5 -9 -201 -25 -213 1 2 3 Q2 2021 # FTE & CLA Q2 2022 related costs Q2 202
Slide 18: Strong underlying cash generation
Strong underlying cash generation Contribution to Δ FCF y-on-y (€ m) 1,189 +32 Adj. EBITDA AL H1 2022 Free Cash Flow of € 408m; 35% higher y-on-y Capex -553 +73 − EBITDA growth − Phasing Capex Operational FCF 636 +105 − Less cash interest paid Cash restructuring -18 -1 Cash & short-term investment
Slide 19: Steadily improving Return on Capital
Steadily improving Return on Capital NOPLAT €m Improving adjusted EBITDA AL 214 173 187 Lower restructuring charges ROCE Lower depreciation for network ROCEequipment 1 12.0% Q2 2020 Q2 2021 Q2 2022 10.3% 9.8% (€ bn) Capital employed 7.3 H1 2020 H1 2021 H1 2022 D&A higher than Capex 7.1 7.0 H
Slide 20: Robust liquidity position, committed to investment-grade credit profile
Robust liquidity position, committed to investment-grade credit profile 11.4x 12.0x 12.1x 11.0x 11.2x Robust liquidity… €m 1,000 1,628 2.2x 2.3x 2.3x 2.2x 2.3x 628 €m 5,996 6,017 5,293 6,400 5,818 5,144 6,010 5,382 5,201 5,307 Cash & short RCF Total liquidity term investments end Q2 2022 795 724 1,0
Slide 21: FY 2022 outlook raised for adjusted EBITDA AL and Free Cash Flow
FY 2022 outlook raised for adjusted EBITDA AL and Free Cash Flow Achievements Outlook Ambitions H1 2022 FY 2022 FY 2023 Adjusted EBITDA AL € 1,189m >€ 2,400m >€ 2,450m Capex € 553m € 1.2bn € 1.2bn Free Cash Flow € 408m ~€ 850m >€ 870m € 4.8 cents € 14.3 cents Progressive dividend Regular DPS interim
Slide 22: Highlights Q2: Business service revenues reach growth inflection point
Highlights Q2: Business service revenues reach growth inflection point Continued Group service revenue growth +1.4% y-on-y Inflection of B2B service revenues, solid mass-market service revenue growth Ongoing growth in Consumer mobile offset by lower revenues in Consumer fixed Solid progress fiber ro
Slide 23: Accelerate to grow
Accelerate to grow
Slide 24: Appendices
Appendices I Tax II Debt portfolio III ESG milestones and ambitions
Slide 25: I: Tax Q2 2022 and H1 2022
I: Tax Q2 2022 and H1 2022 P&L Cash flow P&L Cash flow Regions (€ m) Q2 2021 Q2 2022 Q2 2021 Q2 2022 H1 2021 H1 2022 H1 2021 H1 2022 The Netherlands -235 -57 -14 -18 -275 -110 -24 -29 Other - - - - - - - - Total reported tax -235 -57 -14 -18 -275 -110 -24 -29 Of which discontinued operations - - - -
Slide 26: II: Debt portfolio
II: Debt portfolio Nominal debt by type 1 Nominal debt by currency 1 Fixed vs. floating interest 1 Debt redemption profile (€ bn) 2 1.1 9% 1.0 14% 15% 0.7 39% 0.6 0.7 23% 0.5 0.4 0.5 0.5 7% 63% 61% 0.3 69% ’22 ’23 ’24 ’25 ’26 ’27 ’28 ’29 ’30 ’31 ’32 ’33 Eurobonds EUR Fixed Global bonds GBP Floating
Slide 27: III: ESG milestones and ambitions: Aiming for net zero emissions by 2040
III: ESG milestones and ambitions: Aiming for net zero emissions by 2040 Important milestones crossed… …and an ambitious agenda Carbon neutral >30% women All leased 30% reduction Management for own in senior cars use non- scope 3 emissions incentivized operations management fossil fuel vs. 2014 2011
Slide 28: KPN Investor Relations
KPN Investor Relations ir.kpn.com