Slide 1: Q1 2014 Roadshow Presentation
Q1 2014 Roadshow Presentation 1
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains forward-looking statements about Mobistar, in particular for 2014. Although Mobistar believes these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, including matters not
Slide 3: Agenda
Agenda • Key Highlights • Operational Update • Financial Review • Financial Outlook 2014 Jean Marc Harion Ludovic Pech Chief Executive Officer Chief Financial Officer Siddy Jobe Director Investor Relations & Corporate Finance 3
Slide 4: Key Highlights
KEY HIGHLIGHTS Jean-Marc Harion, CEO 4
Slide 5: Executive summary on Q1 2014
Executive summary on Q1 2014 Mobistar’s results of the first quarter of 2014 Financial Mobistar reached a total turnover of 317.0 million euro Mobistar reached a restated EBITDA of 66.1 million euro performance Mobistar reached an operational cash-flow of 27.1 million euro Mobistar keeps its outlook
Slide 6: Economic indicators – Belgium
economic indicators – Belgium 1,0% GDP growth, quarter-on-quarter Unemployment rate, monthly data 1,0% 9,0% 0,8% 8,5% 8,5% 0,5%0,5% 0,5% 0,5% 0,3% 8,0% 0,2% 0,2% 0,2% 0,1% 0,0% 0,0% 0,0% 7,5% 7,3% 0,0% -0,1% -0,1% 7,1% 7,0% -0,5% -0,5% 6,5% Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan
Slide 7: Network – customers – innovation
network – customers - innovation Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Segmented Launch of Cable New ‘Animals’ New high end subsidized Launch of 4G Open TV in activation Sourcing Phasing out TV plans Animals offers Discovery Luxembourg fee paid Cable Service Pruning of 40 plans & upgrade
Slide 8: Market intensity is stabilizing since 2H13
market intensity is stabilizing since 2H13… …but market portability is structurally higher than before the telecom law On average 90k MNP/Month +111% -44% On average 60k MNP/Month Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- 11 12 12 12 12 13 13 13 13 14 MNP: mobile number portability allows mo
Slide 9: Mobistar undisputed 1st challenger in Belgium
Mobistar undisputed 1st challenger in Belgium with 5.2m SIM connected cards to its network •Mobistar Group 5,024 5,117 5,154 5,210 5,280 •Belgium, incl. MVNO 4,900 4,990 5,028 5,075 5,150 69,6% 70,1% 70,5% 7.000 68,6% 69,1% 126 134 130 6.500 124 127 6.000 5.500 974 1.073 1.142 1.210 1.311 5.000 4.50
Slide 10: Mobistar was able to defend its network share
Mobistar was able to defend its network share but reports negative net adds in a very active mobile market Network market net adds split Mobistar network net adds split (k users) and mobile penetration (k users) 112% 112% 112% 112% 111% 143 137 101 99 69 68 54 84 90 56 54 53 56 32 35 18 -26 -11 89 -
Slide 11: Only operator adapting postpaid tariff plans systematically
Mobistar is the only operator in Belgium to adapt systematically its Postpaid customers’ tariff plans Q1 2013 (EOP) Q1 2014 (EOP) Animals 40% Animals Animals 90% 60% 86% Old plans 10% Old plans Full compliance with the covenant signed with the government in anticipation of September 2014 deadline 11
Slide 12: Mobistar's Animals tariff plans
Mobistar’s Animals tariff plans based on clear principles and especially attractive for mobile data users Keep clear segmentation Competitive mobile prices No discrimination No engagement NEW Cloud Operator Billing on Android, Windows 8 International on Unlimited Unlimited Mobistar to Mobistar calls
Slide 13: Reinforcing controlled channels
reinforcing controlled channels to adapt to the new market conditions and improve profitability Direct: reinforced .be Mobistar is rebalancing Exclusive: distribution transformed channels to address different segments Multibrand: refocused 13
Slide 14: New Mobistar Centers and concept stores
new Mobistar Centers and concept stores first in Liège, with a focus on services and mobile data coaching 14
Slide 15: Mobile innovation at Mobistar
mobile innovation at Mobistar as a way to improve customer experience and develop new usage Mobile Cloud for Consumers Mobile Operator Billing • 1st in Belgium • On Android • Growing user • On Windows 8 Consumer base Enterprise Mobility 3.0 EM 3.0 Building Blocks • MDM • M2M Enterprise • MEAP • BYOD
Slide 16: Paving the way to best in class network quality
Paving invested Mobistar the way265M€ to bestinnetwork quality its network in 2013 completing the full renewal and the optimization of its mobile network End to end performance optim. 600+ parameters Network quality Highways/railways changes for quality & Dual carrier deployment Top voice performanc
Slide 17: Mobistar's fully renewed network
Paving the Mobistar’s fullyway to network renewed quality network… 3G refresh Fiber solutions U 900 Carrier Ethernet solutions Capacity upgrades DC Full IP Simplification of 4G roll out MW refresh Full swap architecture 4G Radio Data NW Access Data Core PS Backbone Backhaul 3G Radio VAS Access 2G Ra
Slide 18: Mobistar launched 4G in Belgium
Mobistar launched 4G in Belgium • Commercialization as from 31st March • 270 covered cities with homogeneous coverage (indoor & outdoor) • 800 cities with good outdoor coverage • 50% of Belgian population • 265 Millions € invested in 2013 • 4G at no extra costs 18
Slide 19: 2 independent sources
2 independent sources SPEEDTEST • Engineering organization • Independent network specialized in network performance measuring optimization tool • 6th Feb – 5th March • Based on individuals test • Driving tests - +- 5,000 km • Sample : 10.000 tests / • Representative and month certified. • Results un
Slide 20: CommSquare drive test route
CommSquare drive test route Covered cities: • 2G-3G: Antwerpen, Gent, Oostende, Brussels, Mechelen, Hasselt, Brugge, Mons, Liège, Leuven, Vilvoorde, Roeselare • 4G: Brussels, Oostende, Kortrijk, Antwerp, Gent, Mechelen, Leuven 20
Slide 21: Good call performance for Mobistar
Good call performance for Mobistar Establish the call: Maintain the call: Establish and The lower the The lower the maintain the call failures the better drops the better Call setup Failure Drop call rate Overall Call Success Rate 0.38% 0.22% 99.39% 1.14% 0.26% 98.60% 0.54% 0.12% 99.34%* Confidence
Slide 22: Mobistar has superior voice audio quality
Mobistar has superior voice audio quality Superior audio quality thanks to HD Voice 3.82 3.52 3.55 (POLQA scale from 1 to 5) 22
Slide 23: 2G coverage
2G coverage > Mobistar coverage at par with Proximus > Base behind mainly in towns 23
Slide 24: 3G Download & Upload speed
3G Download & Upload speed: Similar customer experience for all operators receiving a file. Mobistar and Base ahead in sending a file. Receiving a file Sending a file 3G 7.74 Mbps 3G 2.58 Mbps 3G 8.22 Mbps 3G 1.42 Mbps 3G 7.95 Mbps 3G 2.53 Mbps 24
Slide 25: Mobistar 3G speed catching up and leading
Mobistar 3G speed catching up and leading Receiving a file Sending a file 25
Slide 26: 3G Coverage
3G Coverage Deep Soft Indoor Indoor Outdoor Mobistar 3G indoor coverage ahead of competition 26
Slide 27: 3G Outdoor Coverage
3G Outdoor Coverage: Mobistar 3G outdoor coverage = 99,95 % of Belgium population All operators offer similar coverage 3G 99.95 % 3G 99.97% 3G 99.93% Signal: -101.5 dBm 27
Slide 28: 3G Indoor Coverage
3G Indoor Coverage: Mobistar outperforming Proximus and Base thanks to UMTS900 strategy 3G 98.48 % 3G 97.28 % 3G 95.24 % Signal: -87 dBm 28
Slide 29: 3G Deep Indoor Coverage
3G Deep Indoor Coverage: Mobistar outperforming Proximus and Base thanks to UMTS900 strategy 3G 89.77 % 3G 82.36 % 3G 74.03 % Signal: -77 dBm 29
Slide 30: 4G benchmark results: 1st in all KPIs
4G benchmark results: 1st in all KPIs 30
Slide 31: 4G Download speed
4G Download speed: Mobistar is the fastest of the market 31.3 Mbps 45 Mbps 4G 20.3 Mbps 29 Mbps 4G 15.5 Mbps 27 Mbps 31
Slide 32: Mobistar 4G Download speed remains higher over time
Mobistar 4G Download speed remains higher than competition over time Download speed 4G Average DL Speed Evolution faster than fixed 50. internet 45. 45 4G Average DL Speed (Mbps) 40. 35. 30. 29 27 Mobistar 25. Proximus 20. Base 1 GB Movie download 15. time: 10. • M*: 3 min 06 s. 5. • Px: 4 min 42 s.
Slide 33: 4G Upload speed
4G Upload speed: Mobistar is the fastest of the market and up to 44% faster than Proximus 21.6 Mbps 19 Mbps 4G 14.9 Mbps 14 Mbps 4G 13.3 Mbps 13 Mbps 33
Slide 34: Mobistar 4G Upload speed remains higher over time
Mobistar 4G Upload speed remains higher than competition over time 4G Average UL Speed Evolution 25. 20. 4G Average UL Speed (Mbps) 19 15. 14 Mobistar 13 Proximus 10. Base 5. 0. Dec-13 Jan-14 Feb-14 34
Slide 35: 4G Best Voice performance
4G Best Voice performance Relative Positioning Voice Summary OSSR CSFR DCR All Selected|| Voice quality UL POLQA Voice quality DL POLQA CST MOC CST MTC <> Mobistar ranks 1** in all KPIs <> Proximus and Base exhibit high failure rate En Our 4 transformation priorities ac leadership in mobile @. ial p
Slide 36: 4G outdoor population coverage
4G outdoor population coverage 50% 4G 53%* 4G 38%* *Proximus figures based on public data *Base % based on 4.2 million people covered (web) 36
Slide 37: Q1 2014 4G coverage – 50% population coverage
Q1 2014 4G coverage – 50% population coverage 37
Slide 38: Q4 2014 4G coverage – 84% population coverage
Q4 2014 4G coverage – 84% population coverage 38
Slide 39: Full 4G coverage in 2015
Full 4G coverage in 2015 Commitment on a 4G coverage equivalent to 2G by end 2015 39
Slide 40: Population Coverage Evolution
Population Coverage Evolution Soft Indoor population coverage per technology 100.00% 90.00% Soft Indoor population coverage 80.00% 70.00% 60.00% 2G 50.00% 3G 40.00% 4G 30.00% 20.00% 10.00% 0.00% End 2012 End 2013 End 2014 End 2015 40
Slide 41: Network improvements clearly perceived by customers
Network improvements clearly perceived by Mobistar’s customers The Fast Forward Mobile Trip Let our customers see for themselves 93% customers are satisfied or very satisfied of our network. Customers survey, February 2014 41
Slide 42: On track to be first to launch regulated cable offers
Mobistar is on track to be 1st to launch cable regulated offers in Belgium before the end of the year 6 month implementation period by cablecos 09/2013 12/2013 01/2014 07/2014 solution CRC decision CRC decision Payment of due by cable Technical Tariffs 1.2 M€ operators LOI to Telenet, regulation Tec
Slide 43: Cable regulation is an opportunity for consumers
cable regulation is an opportunity for consumers considering triple play very high prices Mobile prices amongst cheapest Fixed triple prices amongst most in Europe expensive in Europe Source: BIPT; January 2014 – Mobile and 3-play medium offers 43
Slide 44: Financial review
Financial review Ludovic Pech, CFO
Slide 45: Key financials
key financials in €m Q1’14 Q1’13 Var. insight Consolidated turnover 317.0 393.0 -19.3 % • -18.1% excluding regulatory • €6.2m regulatory impact Service revenues 278.1 332.0 -16.2 % • -14.6% excluding regulatory Restated EBITDA (a) 66.1 99.0 -33.2 % • €4.2m regulatory impact (in % of service revenues
Slide 46: Service revenues
service revenues -14.6% underlying service revenue erosion in Q1 2014 service revenues in million euros -47,7 332,0 ( -14,6%) 14,6%) 325,8 -6,2 -39,9 278.1 -10,7 2,8 Q1 2013 regulatory Q1 2013 Mobile Non Mobile MVNO Q1 2014 actuals impact with reg. excl. MNVO actuals 46
Slide 47: Blended ARPU evolution (Belgium)
blended ARPU evolution (Belgium) decreases in line with market repricing ARPU(a) evolution in euro per user -9.9% -18.2% -12.5% -11.6% 29.0 28.4 29.4 26.0 25.7 24.9 24.0 23.4 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 (a) Average Revenue Per User, excluding MVNOs and M2M cards.
Slide 48: Restated EBITDA evolution
restated EBITDA evolution EBITDA erosion mostly driven by revenues loss restated EBITDA excluding on-offs (a) in million euros -28,6 99,0 ( -30,2%) 30,2%) 4,2 94,8 50,9 66,1 22,3 1Q 2013 regulatory 2012A revenues net OPEX 1Q 2014 Actual impact with reg. impact reduction Actual (a) see appendix for E
Slide 49: Transforming our operating model
Transforming our operating model Simplifying our organization and processes headcount redundancy costs labor costs (a) (Active Team Member, Belgium) (in million euros, Belgium) (in million euros, Belgium) -148 ( -8,7%) 8,7%) +1,3 -6 ( -16%) 16%) 1.700 1,6 37 1.552 31 0,3 Q1’13 Q1’14 Q1’13 Q1’14 Q1’1
Slide 50: Capital expenses
Capital expenses Sustained investment in network to accelerate our 4G deployment total CAPEX (a) network CAPEX (a) (in million euros) (in million euros) +19,9% +24,0% 37,4 28,9 • from 75% to 77% of 31,2 23,3 total group CAPEX allocated to network • 4G ready network (radio, core and transmission) • a
Slide 51: Cash flow statement
Cash flow statement Net debt variation explained by operating cash flow and working capital in €m Q1’14 Q1’13 Var. insight Operating cash flow 28.7 67.8 -57.6% • reflecting the EBITDA erosion and sustained (restated EBITDA (a) - CAPEX) level of network investments License acquisition - - - Income ta
Slide 52: Financial outlook
Financial outlook Ludovic Pech, CFO
Slide 53: Outlook: regulatory impact
outlook: regulatory impact regulatory impact progressively fading out but still important 2011A 2012A Q1 2013A 2013A Q1 2014 2014E 15 7 2 4 29 8 24 23 6 15 Revenues 13 impact 60 30 34 36 59 58 74 EU Roaming MTR 5 1 3 4 17 16 20 4 EBITDA 9 38 7 impact 13 15 23 33 32 38 53
Slide 54: Outlook: taxes & fees (Belgium)
outlook: taxes & fees (Belgium) tax pressure reaching unprecedented levels 2011A 2012A 2013A 2014E 8 8 10 11 Pylon 9 9 New Tax Operating 12 Other Tax 24 x3 37 IBPT 6 8 Spectrum 9 Regulated 7 14 Fees 9 10 15 x 1.5 54
Slide 55: Transformation program (ACE2)
transformation program (ACE2) €50m net operational costs savings in 2014 • reinforcing controlled channels (on-going) DIRECT COSTS • roll-out of the @Mobistar concept (on-going) + • process & organization simplification (on-going) • IT outsourcing under 32bis procedure (2H14) LABOUR COSTS • network
Slide 56: 2014 outlook
2014 outlook still a challenging year ahead • price pressure to continue driving down mobile ARPU • convergent offers heavily discounting mobile while increasing fix rates • increase in market handset subsidization • regulatory impacts in Belgium and Luxembourg • unprecedented regional and local tax
Slide 57: 2014 guidance
2014 guidance price, regulatory and tax pressure will continue weighting on our results restated EBITDA (a) €250m to €280m full year in million euros restated EBITDA before cable 336 303 31 H1 31 (181) 280 250 H2 (155) new elements 2013 2014 2014 guidance actuals consensus Our 2014 guidance include:
Slide 58: Beyond 2014
beyond 2014 • transformation efforts to continue and intensify to adapt the company cost structure to evolving market conditions • sustained network investments to pave the way for mobile data growth • LTE network extension, increasing smartphone penetration and appetite for more abundant data plans
Slide 59: Appendix
Appendix
Slide 60: EBITDA restatements
EBITDA restatements from restated EBITDA to reported EBITDA in €m Q1’14 Q1’13 insights restated EBITDA 66.1 99.0 (as percentage of service revenues) (23.8%) (29.8%) labor related -1.6 -0.3 • labor contracts termination or redundancy costs non-labor related - - or restructuring costs reported EBITDA
Slide 61: Mobile data revenues are increasing significantly
Mobile data revenues are increasing significantly due to higher smartphones sales, data usage and smartphones plans (in M€) 190 180 46% 48% 48% 49% 51% 170 160 The number of smartphones connected 150 15% 18% 19% 18% 19% on the Mobistar network has increased by 140 65 % 129 131 127 130 4% 3% 4% 123 1
Slide 62: Belgian Mobile total turnover split
Belgian Mobile total turnover split (% of revenues) 343 1.283 280 Retail billed revenues Roaming voice M2M Roaming Data MVNO Visitor Roaming Handsets MTR Voice 50% 49% 48% Roaming SMS MTR SMS 1% 1% 2% 4% 5% 7% Strong handsets sales continued, driven by a higher 18% 16% 14% portion of (high-end) smar
Slide 63: Our transformation priorities
Our 4 transformation priorities RA leadership in mobile 44° 0 best 4G network in Belgium | : a. aes = nee bere heer © N° in B2C postpaid customers Ne N° vendor of 3.0 le cli 1 50 ME net cost savings in 2014
Slide 64: 1H 2014 Roadshow Schedule
1H 2014 Roadshow Schedule DATE LOCATION BROKER ROADSHOW / CONF. April 30 London Exane BNP Management Roadshow May 14 Luxembourg KBC Securities Management Roadshow May 15 Paris Nomura Management Roadshow May 20 New York KBC Securities/NYSE Belgian Conference May 21-23 Montreal / Toronto / Chicago Mac
Slide 65: Visit our websites
Visit our websites: • www.mobistar.be • http://business.mobistar.be • http://corporate.mobistar.be