Slide 1: Analyst presentation half year results 2009
•Analyst presentation •half year results 2009 •23 July 2009
Slide 2: Cautionary statement
Cautionary statement This presentation contains forward-looking statements about Mobistar, in particular for 2009. 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: Market approach
Market approach Benoit Scheen 3
Slide 4: Consistently implementing our unique Mobility Centric strategy since July 2007
Since July 2007, we have consistently further implemented our unique strategy Mobility Centric Residential: Business: Mobility Centric Substitution Mobility Centric Convergence Push full convergence strategy Accelerate fix-mobile substitution through launch of abundance offers (supported by ADSL) Fo
Slide 5: Clear segmented portfolio for the residential market
For the residential market this was translated into a clear segmented portfolio 5
Slide 6: Data product line addresses demand progressively
completed with a data product line which addresses the demand in a progressive way •Number of clients (‘000) 98 ADSL 29 IEW 38 69 22 16 H1 2008 H1 2009 6
Slide 7: Convergence strategy in the business segment
In the business segment, Mobistar continues to apply its convergence strategy • More than 130 000 mobile cards secured on the One Office Voice Pack offer • Since launch 1 year ago already 1000 companies connected on One Office Full Pack • Close to 140 000 active fix connections (essentially in the b
Slide 8: Vox: new phase with successful integration
With Vox, after 5 years of sustained growth new phase with successful integration Revenue evolution (Mio EUR) 30 33 27 19 18 7 2004 2005 2006 2007 2008 H1 2009 Customer base mix • Important growth in postpaid (up to 70% of the customer base) thanks to iPhone offers & good positioning in the business
Slide 9: Mobistar leads machine to machine segment since 2002
Within the machine to machine segment, Mobistar leads the way since 2002 •Market size M2M Belgium: ~230 k sim cards* (HY 09) •Mobistar M2M card evolution Telematics Point of sales Telemetry 140,000 120,000 116,866 100,000 80,000 60,000 40,000 20,000 0 2005 2006 2007 2008 Q2 2009 •* Based on company
Slide 10: Selected as France Telecom International M2M center
Mobistar’s leadership recently recognized by its selection as the France Telecom International M2M center New International M2M center Before : decentralized model (located within Mobistar) 1 SIM complex logistic and high costs Global SIM – hustle free solution 10
Slide 11: Ready for another exclusive success story
Ready for another exclusive success story 11/07/2008 26/06/2009
Slide 12: Business performance
Business performance Benoit Scheen 12
Slide 13: Net adds in line, underperforming MVNOs
With a continuous focus on value, Mobistar net adds in line, underperforming MVNO’s Net Adds (#In K) Active Penetration 300 120% 103.8% 105.7% 106.2% 100.7% 102.4% 250 100% 218 221 200 193 80% 173 150 60% 150 105 157 100 144 58 40% 37 41** 50 27 20% Competition 35 28* 3 Mobistar retail 41 50 11 19 2
Slide 14: Postpaid users passed the 2 million landmark
Postpaid users passed the 2 Mio land-mark Customers on Postpaid % of Mobistar network* retail base** 5.000.000 MVNO Laptop cards Postpaid % retail cust base 4.000.000 3.738.604 3.787.578 3.645.378 3.489.859 3.152.455 100% 3.000.000 2.912.806 80% Prepaid 55% 57% 58% 2.000.000 51% 54% 60% 44% 40% Post
Slide 15: Usage compensates pricing pressure excluding regulatory effect
Excl. regulatory effect, usage compensates pricing pressure driven by mobile data 34,5 •€ month 32,4 33,1 0,6 0,7 31,7 5,3 5,1 •-1.3€ •-0.2€ FY 2007 FY 2008 H1 2008 MTR Roaming Off Price Usage H1 2009 Decrease & on net 15
Slide 16: Mobile data continues to deliver growth
Commercial focus on mobile data continues to deliver growth € mio 200 +36% • Mobile data revenues up to 28% of mobile service revenues in H1 2009 (from 20% in H1 2008) 150 • Non-SMS mobile data represent 21% of total mobile data revenues (vs. 20% in H1 2008) • Supported by the successful uptake of 1
Slide 17: Efficiency at Mobistar
Efficiency at Mobistar Benoit Scheen 17
Slide 18: Odyssey 2011 company-wide transformation program
Launched in Sept 2008, Odyssey 2011 is the company-wide transformation program What is Odyssey 2011? Odyssey 2011 is a set of programs, projects, strategy implementations and new ways of working together designed to change our company and cope with external and internal challenges (e.g. Mobile Data,
Slide 19: Measures to improve postpaid gross margin
Measures to improve gross margin profitability in postpaid • Small adjustments to older tariff plans • slight increase in national tariffs of 1 cent per minute (including VAT) • change of tariff outside the bundle for some old price plans to 20 EURcent/min • On data packages, out of bundle prices ad
Slide 20: Measures to improve prepaid gross margin
Measures to improve gross margin profitability in prepaid SMS abundance threshold increased to min 15 EUR recharge Valorize instant messaging sessions in the prepaid offer 20
Slide 21: Mobistar needs to transform its IT
In order to stay competitive, Mobistar needs to transform its IT •IT cash-out ambition (capex-opex in Mio EUR/as % of revenues) ~6% • Improve time to market • Increase level of compliance ~4% +/- 80 • Increase customer experience • Reduce complexity • Reduce total cost of ownership 2008 2012 21
Slide 22: Odyssey program starts to deliver first results
Odyssey program starts to deliver first results 2009 EBITDA margin evolution Close to Initiatives launched 40% since Q1 2009 On gross margin : 39.0% Redesign of prepaid offers 38.3% Small tariff adaptations On opex/capex: IT Renewal: RFP launched Q1 H1 FY 2009 2009 2009 guidance Contingency plan acr
Slide 23: Regulatory Update
Regulatory Update Benoit Scheen 23
Slide 24: Several regulatory decisions are pending
Several regulatory decisions are pending Breakdown Mobistar Mobile service revenues 3% 3% 8% 8% 5% 9% 31% 34% Mobile termination rate 15% 14% 69% 66% 69% 66% Handset subsidy visitor roaming roaming off net GSM license extension incoming data incoming voice Emission rules Billed Revenues H1 2008 H1 2
Slide 25: Anticipating handset subsidy while securing business as usual
Mobistar is anticipating handset subsidy while securing business as usual Mobistar initiated internal program to analyze possible impact 23 APRIL 09: EU court decision DECEMBER 08 01 JUNE 09: 1st market launch EU Court of Justice states that the Belgian prohibition on joint offers is New Belgian law
Slide 26: Strategy to turn handset subsidy into value creation
Mobistar strategy to turn handset subsidy into a value creation VALUE OPTIMIZATION ACQUISITION LOYALTY & RETENTION CHANNEL 1. Redesign tariff portfolio 1. SRC in order to avoid churn 1. Balance commercial acts & washing machine effect from acquisition to 2. Contain SAC acquisition & contract 2. Deve
Slide 27: Status on national termination rates
Status on national termination •MTR evolution Mobistar positioning (EURcent/min, indexed MTR evolution prices) since July 2007 14.0 13.34 12.52 • MTR model should be cost oriented 11.43 10.63 • Suspension / annulment BIPT decision €c/min 9.94 10.0 9.02 imposing symmetric rates by Court 8.5 7.93 =>As
Slide 28: Update on other regulatory files
Update on other regulatory files • 2G license renewal • Mobistar 2G license expires on 27/11/2010 • Royal decree 17/07/2009 defines that • Each operator will pay 80819€/month/Mhz (non indexed) duplex till 2021 • Choice payment modalities left at the operator : one payment or 11 annual fees • Discrim
Slide 29: Financial performance
Financial performance Werner De Laet 29
Slide 30: Solid performance in challenging economic and regulatory landscape
In a challenging economic and regulatory landscape, solid performance Mobistar consolidated income statement Mio € H1 2008 H1 2009 % (*) 762.7 778.1 2.0% Total Statutory Revenues Total Turnover 745.5 761.6 2.2% Total Service Revenues 716.5 713.3 -0.4% Cash Expenses -462.7 -499.7 8.0% EBITDA 300.0 27
Slide 31: SMS abundance offers impacting incoming revenues
SMS abundance offers impacting incoming revenues, billed revenues under pressure •Mio € 5,1 -3,8 -3,1 0,5 21,8 -17,6 716,5 713,3 -7,5 1,3 H1 2008 National Customer Visitor Billed Vox H1 2009 Incoming roaming roaming revenues 31
Slide 32: Profitability of Belgian activities impacted by regulation and fix
Profitability of Belgian activities impacted by regulation and growing fix business Mobistar Mobile Income Statement Mio € H1 2008 H1 2009 % Total Statutory Revenues 703.5 713.0 1.4% Total Turnover 687.9 698.8 1.6% Total Service Revenues 660.8 651.7 -1.4% Cash Expenses -396.7 -425.2 7.2% EBITDA 306.
Slide 33: VOXmobile growing according to plan
VOXmobile activities are still growing according to plan and synergies start to materialize VOXMobile Income Statement Mio € H1 2008 H1 2009 % Total Turnover 18.3 21.8 19.4% Total Service Revenues 16.5 18.4 11.8% Cash Expenses -17.1 -19.5 14.3% EBITDA 1.2 2.3 91.7% In % of service revenues 7.3% 12.5
Slide 34: Odyssey program starts to deliver savings
Despite inflation and new lines of products, Odyssey program starts to deliver savings Total cash expenses VOX 499,7 Decrease thanks due to Group synergies on handsets purchasing 16,3 462,7 Vox 16,6 483,4 Headcount costs 446,1 Total Mobistar headcount Avg H1 2009 at 1377 (vs. 1448 FTE Avg H1 200
Slide 35: 3G network build out and IT renewal capex
3G network build out and IT renewal according to the investment plan Capex (in Mio EUR) Capex to service revenues ratio (in %) 11% 11% 10% 250 10% 9% 200 165 160 147 150 100 70 Vox 61 2 Network 4 49 50 33 IT 18 Sales and Other 15 7 3 0 CAPEX/service revenues 2006 2007 2008 H1 2008 H1 2009 * excludin
Slide 36: Balance sheet remains solid
Balance sheet remains solid Balance Sheet Mio € Dec-08 Jun-09 Non-current assets 898.0 877.5 Current Assets 295.5 279.2 Cash and Cash equivalents 6.8 6.8 TOTAL ASSETS 1,200.3 1,163.5 Net Equity 452.5 308.5 Provisions 15.1 14.6 Long Term Debt 75.0 50.0 Short Term Debt 243.3 222.3 Current Liabilities
Slide 37: Free cash flow generation in line with guidance
Free cash flow generation in line with guidance Free Cash Flow Generation Mio € H1 2008 H1 2009 % EBITDA 300.0 278.4 -7.2% Change in working capital -4.0 170.3 Net financial charges (incl other not withdrawn exp.) -0.3 -2.0 Corporate Taxes -68.7 -66.3 Net cash from operating activities 227.0 380.4 6
Slide 38: Concluding remarks
Concluding remarks Benoit Scheen
Slide 39: Full year guidance reconfirmed, capex/sales ratio adapted
Mobistar reconfirms full year guidance while adapting capex/sales ratio Total Turnover flat revenues confirmed Ebitda-margin close to 40% confirmed Net results 240-260 Mio EUR confirmed Capex/sales between 11% -12% around 10%
Slide 40: Q&A
Q&A 40