Proximus Sa · EURONEXT:PROX
Proximus Sa — Q3 2019 Earnings Presentation
61 slides from Proximus Sa's earnings presentation, October 2019
Slide 1: Proximus Group Results Q3 2019
Proximus Group Results Q3 2019
Slide 2: Cautionary Statement
2 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
Slide 3: Table of Content
3 Table of Content • Group P 4 • Consumer P 22 Notes • Enterprise P 30 • The financials results of Proximus Group are reported under the accounting standards IFRS 15 and, as of 2019, IFRS 16 (replacing • Wholesale P 38 IAS 17). • All figures included in this presentation are on ‘Underlying’ basis, •
Slide 4: Key figures Q3
4 Key figures Q3 Adding customers in competitive setting € 1,071M + 2.9% Domestic revenue -2% YoY Convergent revenue Rev DM + 23,000 postpaid -10M -6M YoY regulation effect +8,000 -22M -9M Tuttimus YoY regulation effect + 3,000 Minimus Strong cost control € 430M +4.4% -2.9 % underlying Domestic EBIT
Slide 5: Key figures YTD Sept’19
5 Key figures YTD Sept’19 € 4,235M YTD € 1,417M YTD € 688M YTD € 517M YTD Group Underlying Group Underlying Capex excl. spectrum Normalized Revenue EBITDA Free Cash Flow € 3,251M Domestic € 1,304M Domestic € 482M incl. acquisitions € 983M BICS € 113M BICS Domestic Revenue Nearly stable Significantly
Slide 6: Positive momentum maintained for Broadband and TV
6 Positive momentum maintained for Broadband and TV Net adds Park # Lines 2,025 2,032 2,041 2,057 2,065 2,071 2,079 +38K Growing base for Broadband YoY 15 17 Broadband and TV, in in ‘000 7 9 8 6 8 +1.9% spite of intense Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 competition, supported by 1,583 1,592
Slide 7: Continuing good growth in Postpaid base
7 Continuing good growth in Postpaid base 4,831 4,838 4,842 4,838 4,824 4,819 4,831 Postpaid Prepaid YoY YoY 25 45 32 32 25 25 23 -11 + 104 K - 116 K -32 -39 -27 -36 -39 -29 Postpaid net adds +2.6% -13.5% Prepaid net adds Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Mobile park excl. M2M Mobile cards S
Slide 8: Mobile Postpaid revenues Q3 impacted by international calling regulation
8 Mobile Postpaid revenues Q3 impacted by international calling regulation Mobile service revenue € 301M Q3’19 -1.8% € 15M • Growing base 5% Prepaid • Uptiering -22.5% • Data usage YoY 280 287 291 285 281 285 286 • International 95% calling/sms regulation Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 •
Slide 9: Increased convergent customer base resulting in a higher ARPH
9 Increased convergent customer base resulting in a higher ARPH +0.7% +1.9 p.p. HH/SO +1.7% Convergent ARPH Revenue park (M€) 586 590 77 +2.7% 80 -4.6% 42.2% 40.4% 169 161 Mobile only Non Convergence % Fixed only +2.9% Convergent Convergent Convergence % revenue 340 350 57.8% 59.6% 65.7 66.8 Q3'18 Q
Slide 10: Q3’19 Group Revenue
10 Q3’19 Group Revenue (M€ & YoY %) -2.3% -2.3% 4,332 4,235 1,440 1,452 1,440 1,475 1,415 1,413 1,407 -3.2% -2.2% 1,006 983 319 340 347 341 319 329 335 YoY YoY 1,121 1,112 1,134 3,327 3,251 1,094 1,096 1,084 1,071 -2.0% -2.3% YoY Domestic YoY Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 YTD '18 YTD '19
Slide 11: Domestic revenue by product nature, YoY evolution
11 Domestic revenue by product nature, YoY evolution Fixed Data / Internet ICT Q3 Q3’18: €1,094M TV YTD YTD Sep. ’18: €3,327M BICS 1 ICT 11 1 Advanced Business Services 7 Tango -1.5% -1 -5 -1.8% -5 Mobile Postpaid1 -6 YoY YoY 1 Others2 -9 excl. excl. Terminals -4 Mobile Prepaid -11 Terminals -4 Whol
Slide 12: Group direct margin -0.7%
12 Group direct margin -0.7% -1 Part of the revenue 917 -5 -4 4 911 pressure relates to -1 Q3 low-margin products. Domestic: -1.2% +4.4% (M€) Group : -0.7% DM Consumer Enterprise Wholesale Other BICS DM Underlying Underlying Q3 Domestic DM -1.2% Q3'18 Q3'19 incl. -6M regulation impact Consumer - 0.1
Slide 13: Lower expenses driven by solid cost reduction in Domestic operations
13 Lower expenses driven by solid cost reduction in Domestic operations. Q3 449 -12 3 441 -2.9 % YoY Domestic expenses. (M€) -2.9% +7.9% Solid cost control & -1.9% operational efficiencies. Q3'18 Domestic BICS Q3'19 462 439 449 466 463 440 441 1,351 1,343 FTEs: 42 41 44 123 129 41 40 42 44 +7.9% BIC
Slide 14: Positive Domestic EBITDA evolution
14 Positive Domestic EBITDA evolution 428 -10 3 430 8 Q3 Underlying Domestic EBITDA 0.4 (M€) + % YoY driven by good cost control Underlying Direct Workforce Non Underlying Ebitda Q3'18 Margin Costs Workforce Ebitda Q3'19 Costs +0.4% +0.6% Q’s (M€) 419 450 428 414 428 446 430 1,297 1,304 Q1'18 Q2'18
Slide 15: Group EBITDA +0.5% YoY
15 Group EBITDA +0.5% YoY 468 2 0 470 Positive Underlying Domestic EBITDA Q3 (M€) BICS less impacted than anticipated from progressive insourcing by MTN (timing) Underlying Domestic BICS Underlying Ebitda Q3'18 Ebitda Q3'19 +0.5% +0.5% Q’s (M€) 1,410 1,417 453 489 468 455 463 484 470 Q1'18 Q2'18 Q3'
Slide 16: Net income (Group share)
16 Net income (Group share) YTD +4.9% • Higher underlying (M€) EBITDA 26 -13 9 -13 2 402 • Lower impact from 383 7 incidentals • Lower net finance cost • Partially offset by higher D&A (higher investments & acquired companies), • and by higher tax expenses Net income Underlying Incidentals D&A* Net
Slide 17: €688 million capex YTD
17 € 688 million capex YTD Capex (M€) 322 238 238 247 221 219 222 697 688 YTD investments in line with FY Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 YTD '18 YTD '19 projections. High-quality TITAN Project Fiber build Copper upgrade New Digital Mobile network progressing well platforms 95% FttC, 89% v
Slide 18: From EBITDA to FCF
18 From EBITDA to FCF Solid FCF generation, € 517M YTD, acquisitions impact excluded. • Early leave plan refers to the ongoing voluntary early leave before retirement
Slide 19: Maintaining a solid FCF level
19 Maintaining a solid FCF level YoY YTD (M€) ION-IP Mainly non- timing Umbrio controlling Codit interest in Be- Mobile • Early leave plan refers to voluntary early leave before retirement • FCF includes the lease payments to stay comparable to 2018 FCF
Slide 20: Keeping a sound financial position
20 Keeping a sound financial position Net financial position Net financial position 5.7 Yr Average debt duration Dec. 2018 FCF Dividends** Other Sep. 2019 Adjusted Net Debt* 1.80% (YTD, M€) Weighted average coupon 482 -325 -22 Credit ratings: Standard & Poor’s A, Moody’s A1, both stable outlook -2,1
Slide 21: Guidance FY 2019
21 Guidance FY 2019 2019 expectations • FY19 variance for Domestic revenue excl. terminals to remain close to 1.5% YTD decrease, in spite of the intensifying competition. • Proximus expects a slight growth for its FY Domestic EBITDA with solid cost reduction realized so far, and obtaining cost benef
Slide 22: Consumer results
consumer 22 Consumer results • Main customer bases growing in spite of intensifying competition. • 59.6% convergent HH/SO, +1.9 p.p. YoY. • 4&3 Play growing. Driving +1.7% ARPH growth to EUR 66.8. • Revenue pressured by legacy Fixed Voice, regulation, Mobile inbound and Prepaid. • Stable Direct marg
Slide 23: Consumer financials
consumer 23 Consumer financials -2.5% Revenue variance -2.0% improved sequentially, in Revenue 2,168 2,113 spite of competitive (M€, YoY) 730 724 714 735 708 706 700 moves, and International calling taking full effect in Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 YTD '18 YTD '19 Q3. -9.7% -8.3% Cost
Slide 24: Revenue by product nature
consumer 24 Revenue by product nature Highlights €M -2.0% 714 700 Terminals YoY decrease limited in Q3. 53 -8.3% 49 Other revenue stable 24 25 29 29 Tango: stable revenue -3.9% 230 221 Mobile services: Lower Postpaid (inbound, international calling/sms EU regulation) and Prepaid revenue Fixed servic
Slide 25: Fixed Services
consumer 25 Fixed Services 1,861 1,868 1,877 1,894 1,901 1,908 1,912 Internet Broadband customers +36,000 YoY (000) 15 17 7 9 8 7 9 +1.9% Evolution Broadband and TV customer bases remaining positive, in increasingly Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Underlying net competitive setting. adds,
Slide 26: Mobile services
consumer 26 Mobile services Lower MSR driven by Mobile service revenue (M €) & YoY variance Blended mobile ARPU (€) • International calling/sms regulation -3.9% 22.5 23.0 23.3 23.3 22.5 23.1 23.0 • Lower inbound revenue -2.7% • Prepaid erosion 230 221 21.0 21.5 21.8 21.1 20.9 21.4 21.2 Q1'18 Q2'18 Q
Slide 27: Postpaid Prepaid
consumer 27 Postpaid Prepaid Customer growth offset by ARPU pressure Revenue erosion due lower park & lower usage Revenue (M€ & YoY) Revenue (M€ & YoY) -2.3% -22.5% 211 20 21 19 19 203 207 205 205 207 17 15 15 202 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 AR
Slide 28: Growing household revenue driven by favorable customer mix
consumer 28 Growing household revenue driven by favorable customer mix. + 2.8 % 84% 4P customer base Consumer revenue generated by HH/SO (in ‘000) Driven by X-Play HH/SO* 2,959 2,942 Tuttimus/Bizz All-in Subscribers (‘000) € 590M 4P 721 741 + 0.7% YoY 3P 736 732 +18.0% Consumer Revenue 2P € 700M 391
Slide 29: Upselling to 4P & convergent 3P, at higher ARPH
consumer 29 Upselling to 4P & convergent 3P, at higher ARPH Growing convergent Park (‘000) 1,068 91 1,104 94 59.6% 111€ 2.78 RGU 4.1% convergence rate 4P ARPH on average 4P full churn 255 269 2P Conv +1.0% YoY 2.78 RGU 3P Conv YoY +36,000 on average 721 741 4P convergent HH 103 € +1.0% YoY QoQ +7,00
Slide 30: Enterprise results
enterprise 30 Enterprise results • Fairly stable internet park in highly competitive market. • Flattish Mobile Services revenue. Growing base, managing churn, ARPU under pressure. • Stable ICT revenue with acquisitions fully lapping. • Strategic focus on higher-margin ICT services rather than low-ma
Slide 31: Enterprise
enterprise 31 Enterprise -0.2% -1.4% 1,049 Revenue: -1.4% YoY, Revenue 1,047 resulting from erosion of legacy 351 351 347 364 357 348 342 (M€, YoY) services. Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 YTD '18 YTD '19 -4.6% -0.4% Direct margin: -1.9% YoY Cost of lapping of the acquired ICT Sales 120 3
Slide 32: Revenue by product nature
enterprise 32 Revenue by product nature 40% YTD ’18 (M€) YTD’19 (M€) ICT/ABS in total Enterprise revenue 42 34 39 30 22 154 29 141 Fixed Voice Fixed Data Postpaid 184 185 ICT 375 ABS 386 Terminals Others (incl Tango) 236 238 ICT & ABS ICT & ABS representing representing 38% of total 40% of total rev
Slide 33: Fixed Voice
enterprise 33 Fixed Voice -8.7% Steady erosion in Fixed Voice Fixed voice revenue customer base (M€) & YoY variance 53 51 49 49 49 47 45 + (Limited) price indexation on 1 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 January 2019 - Erosion in Fixed Voice park 567 559 549 541 531 519 509 - Decrease in tr
Slide 34: Internet revenue drivers
enterprise 34 Fixed Data Slightly negative balance -2.2% between legacy and new data connectivity services. Fixed data* revenue 61 62 62 61 62 61 61 (M€) & YoY variance Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 + Growing P2P Fiber park - Ongoing outphasing/migration legacy products 134 133 133 131 1
Slide 35: Mobile Services
enterprise 35 Mobile Services Mobile service revenue kept fairly stable in competitive setting. Mobile service revenue (M€) & YoY variance Postpaid growth & EOP (000) Solid revenue growth from -0.3% 999 1,010 1,021 1,028 1,048 1,053 1,059 subscriptions, off-set by price pressure and lower out-of-bun
Slide 36: ICT Q3 revenue stable, 2018 acquisitions fully lapping
enterprise 36 ICT Q3 revenue stable, ICT revenue (M) & YoY 2018 acquisitions +0.3% fully lapping. 143 123 126 126 132 128 126 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 • Favorable evolution in high-value professional services. • Lower revenues from legacy infrastructure products, incl. softer Public
Slide 37: Advanced Business Services
enterprise 37 Advanced Business Services +9.9% 8 10 10 9 6 7 5 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Convergent Solutions
Slide 38: Wholesale
wholesale 38 Wholesale • Revenue and Direct margin impacted by reduced Fixed Termination Rates since 1 January 2019. • Wholesale roaming revenue up. -7.3% -9.2% Revenue 53 51 48 50 42 45 49 151 137 (M€, YoY) Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 YTD '18 YTD '19 -11.6% -8.6% Direct Margin (M€, Yo
Slide 39: BICS results
bics 39 BICS results • Overall volume of messages +32% for Q3 following strong TeleSign A2P volumes and high roaming volumes in the holiday season. • Progressive insourcing by MTN impacted margin to lesser extent than foreseen, due to shift in timing. • Q3 Direct margin +4.4% compared to the prior y
Slide 40: BICS segment result
bics 40 BICS segment result -3.2% -2.2% Impact from insourcing Revenue (M€) & YoY 319 340 347 341 319 329 335 1,006 983 by MTN slower than variance foreseen. Effect YTD Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 YTD '18 YTD '19 limited (timing). +4.4% +2.7% Higher WF expenses following additional hir
Slide 41: Non-Voice Voice
bics 41 Non-Voice Voice Benefitting from increasing messaging revenue, following Continued its eroding trend coming from lower unit strong TeleSign A2P volumes and high roaming volumes in revenue (lower termination rates, competition and less the holiday season. favorable destination mix). -17.0% +2
Slide 42: Doing business with a heart for sustainability
42 Doing business with a heart for sustainability • An ambition, inspired by our sense of purpose: Creating an inclusive, safe, sustainable & prosperous digital Belgium • Commitment to the UN Sustainable Development Goals
Slide 43: Our company sense of purpose, Our societal impact ambition
43 Our company sense of purpose Our societal impact ambition We open up a world of digital opportunities Creating an inclusive, safe, sustainable and so people live better and work smarter prosperous digital Belgium Enabling Caring for a better our Digital digital life infrastructure stakeholders Cu
Slide 44: We are committed to making a societal impact
44 We are committed to making a societal impact Improving fixed and Responsible mktg Founding partner of CO2 neutral mobile connectivity in parental control on TV Coding School 19 for own activities white zones and smartphones CO2 reduction Supporting local -75% vs 2007 innovation Upskilling effort
Slide 45: Appendix
45 Appendix • Regulation impacts P 46 • From reported to underlying P 47 • Tango Luxembourg P 48 • Mobile Network sharing P49 • Pricing information P 51 • Spectrum P 57 • Shareholder structure P 60 • Contact information P 61
Slide 46: Regulation impacts
appendix 46 Regulation impacts 3rd Quarter Year-to-date Fixed Termination Rates (FTR): (YoY variance in EUR million) 2019 2019 • Since 1 Jan 2019: 0.116€ct/min (from 0.709€ct for regional Revenue -9 -21 and 0.909€ct for national previously) • Based on a pure LRIC “Long Run Incremental Cost” model Fi
Slide 47: From reported to underlying figures
appendix 47 From reported to underlying figures GROUP GROUP GROUP GROUP Revenue EBITDA Revenue EBITDA (EUR million) Q3 '18 Q3 '19 Q3 '18 Q3 '19 YTD '18 YTD '19 YTD '18 YTD '19 Reported 1,441 1,407 454 477 4,335 4,239 1,352 1,452 Lease Depreciations nr 0 nr -21 nr 0 nr -64 Lease Interest nr 0 nr -1 n
Slide 48: Tango Luxembourg
appendix 48 Tango Luxembourg Enterprise 6M€ Tango Revenue 36 35 36 39 35 32 35 108 102 (M€) Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Consumer YTD '18 YTD '19 29M€ Postpaid Prepaid Q3’19 Park 258K 25K lines 34K lines 9K lines 35K lines lines YoY YoY YoY YoY YoY +5.5% -14.7% +10.4% +11.1% +7.9%
Slide 49: Proximus & Orange join forces to develop the mobile network of the future
appendix 49 Proximus & Orange join forces to develop the mobile network of the future In scope Term sheet signed with Orange Belgium on 11 July ’19 Passive and active sharing Benefits Better overall experience, meet Further improving deep-indoor and Allow faster and cost increasing customer demand f
Slide 50: Proximus & Orange mobile network (continued)
appendix 50 Proximus & Orange join forces to develop the mobile network of the future (continued) Proximus expects to generate a very good return on the outlined agreement 2019 2020 2021 2022 2023 2024 2025 … No meaningful Set up investment € 140M (gross) Annual cash flow benefit of financial impact
Slide 51: Mobilus/Tuttimus pricing
appendix 51 Mobilus/Tuttimus pricing Including Tuttimus price increase 1 January 2019 Prices incl. VAT Mobile only NE S M Update L W XL Unlimited 1.5 GB 5 GB 10 GB Unlt. data * Unlt. sms Unlt. sms Unlt. sms Unlt. sms 120 min. Unlt. min Unlt. min Unlt. min + Unlimited Mobile data for your favourite A
Slide 52: Bizz Mobile portfolio
appendix 52 Bizz Mobile portfolio NEW as of 3rd June Bizz Mobile Bizz Mobile Bizz Mobile S Bizz Mobile M Bizz Mobile L Unlimited International 1.5 GB 5 GB 10 GB Unlimited data* Unlimited data* 100 min + Unlimited min Unlimited min Unlimited min Unlimited min unlimited to fix Unlimited SMS Unlimited
Slide 53: Full-digital journey, Millennials & Gen Z segment
appendix 53 €19.99 €24.99 Full-digital journey Worry-free connection, anytime, anywhere Pioneering in the Millennials & Gen Z segment
Slide 54: €64.99 / month € 79.99 / month
appendix 54 A pack for the specific needs of millennials Unlimited zero rated apps (Social, music & video apps) TV everywhere via Pickx app and web 4GB extra mobile data for all the rest 4GB extra mobile data for all the rest 300 call minutes 300 call minutes Unlimited SMS Unlimited SMS € 64.99 / mo
Slide 55: Scarlet Fixed portfolio
appendix 55 Scarlet Fixed portfolio Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’
Slide 56: Scarlet Fixed portfolio
appendix 56 Scarlet Fixed portfolio New simplified offers as from 28th February 2019
Slide 57: Spectrum
appendix 57 Spectrum 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 1,800 Proximus OBEL Telenet 15/03/21 MHz 2 x 24.8 2 x 24.8 2 x 24.8 2,100 Proximus OBEL Telenet U
Slide 58: Spectrum auction – reserved spectrum
appendix 58 Spectrum auction – reserved spectrum The final legislations have not been approved yet. The whole spectrum auction process is on hold until after the formation of a new government. Therefor the timing and the final conditions of the auction remain uncertain. Frequency band Total capacity
Slide 59: Spectrum auction – coverage obligations
appendix 59 Spectrum auction –coverage obligations The final legislations have not been approved yet. The whole spectrum auction process is on hold until after the formation of a new government. Therefor the timing and the final conditions of the auction remain uncertain. Frequency band Obligations
Slide 60: Shareholder structure
appendix 60 Shareholder structure Total number of shares Free-float Belgian government 338,025,135 42% 54% Number of % shares % Voting % Dividend Number of Number of shares rights rights shares with shares with ~€ 8.8 Bn voting rights dividend rights Market Capitalisation* Belgian state 180,887,569
Slide 61: For further information
For further information Investor Relations Nancy Goossens Eline Bombeek Director Investor Relations Investor Relations Manager Call: +32 2 202 82 41 E-mail: investor.relations@proximus.com Proximus Investor Relations website: www.proximus.com/en/investors