Proximus Sa · EURONEXT:PROX
Proximus Sa — Q3 2015 Earnings Presentation
59 slides from Proximus Sa's earnings presentation, Oct 30, 2015
Slide 1: Q3 2015 Results Presentation
2015 O38 Results Presentation prosgimus
Slide 2: Agenda
Q3’15 Solid financial and operational trend confirmed 3 Consumer segment results 19 Key Group achievements Q3’15 4 Enterprise segment results 29 Group underlying revenue per segment 5 Technology & wholesale 38 Group underlying revenue per product group 6 Staff & Support 39 Core revenue 7 BICS 40 Mob
Slide 3: Solid financial and operational trend confirmed, EBITDA guidance revised
Solid financial and operational trend confirmed, EBITDA guidance revised to “4% to 5% growth” Group Group Quarterly Revenue* EBITDA* Capex Q3 FCF NET ADDS + 23.000 TV subscriptions to to €200m €306m + 15.000 Fixed Internet Lines €1.509m €447m + 41.000 Mobile Postpaid cards excl. M2M & Internet Every
Slide 4: Key Group Achievements Q3 2015
Key Group Achievements Q3 2015
Slide 5: Solid revenue growth from Core and BICS
Solid revenue growth from Core and BICS Q3’15 Core revenue up +2.4% Q3’15 in m€ 15 -5 10 1,509 1 Consumer: + 2.0% YoY 14 • Rising revenue from Fixed, & Mobile Services • Mobile service revenue, +2.7% YoY 1,472 • In part offset by lower revenue from Mobile terminals +2.4% • Firm 3- and 4-Play revenue
Slide 6: Fixed and Mobile services and BICS contributing to Group revenue
Both Fixed and Mobile services, and BICS contributing well to the Group revenue Q3’15 in m€ 9 -10 10 1 1,509 28 -5 3 • Solid revenue growth from Fixed (Internet, TV and ICT). • Mobile services progressed year-on-year by 2.7%. 1,472 • Partially offset by lower revenues from low margin Mobile terminal
Slide 7: Fixed internet, TV and Fixed Voice customer evolution
Fixed internet TV Fixed Voice TV evolution net adds total unique Broadband customer evolution 1,828 1,692 1,716 Fixed Voice customer evolution 1,813 1,657 net adds total net adds total 1,788 1,558 1,593 1,740 1,495 1,525 1,694 1,705 1,718 2,902 2,876 1,365 1,384 2,850 2,831 2,836 2,822 2,800 1,288 1
Slide 8: Mobile customer growth, ARPU recovery, smartphone penetration
Customer growth, and lower churn Mobile ARPU recovery market Rising smartphone penetration disruption Higher data usage Growing number of 4G Proximus Smartphone penetration: +9 pp YoY Data usage per user/month users YoY 50% 52% 54% 56% 39% 42% 44% 47% 3X 920 : 841 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15
Slide 9: Growing Group mobile customer base and market share
Growing Group mobile customer base Positive evolution for Mobile Mobile churn well under control Market Shares 5882 5,617 5,698 5,717 5736 5,484 5,539 5,591 30.7% CBU postpaid CBU blended 66 54 141 24.8% 24.3% 23.8% 24.2% 24.3% Total mobile market share +0.3 pp. 33 36 22.8% 22.6% 22.7% 21.9% 41 26 2
Slide 10: Convergence: households on 3- or 4-play
• 42 % of the Households/Small offices are 3-or 4-play, • Revenue from X-play HH/SO +3.4% YoY; 4-Play revenue and count for 62% of total HH/SO revenue +12.5% • Continued improvement of mix following growth for • ARPH up by 4.9% YoY to EUR 66.6, 4-Play ARPH at € 117.2 3-Play and 4-Play CBU Households
Slide 11: Direct Margin increase from Core business and BICS
Direct Margin increase from both Core business and Q3’15 in m€ 9 917 BICS. 5 -4 15 • Higher Core Direct Margin Fixed and Mobile services. Margin variance improved for a third consecutive 891 +2.1% quarter this year, with the third quarter Direct Margin up 2.1%. +2.9% Underlying Q3'14 CBU EBU TEC BIC
Slide 12: Underlying cost evolution: HR and non-HR
HR-related provisions update & timing impact Pylon Tax provision +2.4% +1.4% Q3’15 458 470 YTD Sept’15 1,383 1,402 in m€ 258 266 in m€ 771 771 HR HR 200 204 612 631 Non-HR Non-HR Q3'14 Q3'15 YTD Sep'14 YTD Sep'15 Group underlying HR costs (EUR mio ) & YoY Group underlying Underlying non-HR (EUR Othe
Slide 13: Q3'15 underlying Group EBITDA of €447m
Q3’15 in m€ Q3’15 underlying Group EBITDA totaled €447m, 5 -9 a €14m or 3.3% improvement YoY. 2 447 10 6 • Proximus’ Core business, up 3.1% YOY and 433 sequentially improving from the prior two quarters. +3.1% Higher Direct Margin posted in the Consumer and +3.3% Business segment, partly offset by h
Slide 14: YTD September 2015 net income
YTD September ’15 Net income (Group share) totaled € 343m. The decrease versus the same period of 2014 is for a large part explained by recorded incidentals in 2014 and 2015*, higher depreciation and amortization due to higher asset base and higher finance cost following a partial bond buyback. This
Slide 15: Capex and best mobile customer experience
Capex in €m 698 623 75 Best true mobile customer experience 198 200 as top priority 623 Spectrum Without Average download speed on 4G capable device (*) Spectrum Q3'14 Q3'15 YTD Sep '14 YTD Sep '15 Proximus 21.4 Mbps 25% - A fixed network fit for the right 40% customer purpose Mobistar 17.1 Mbps fas
Slide 16: From EBITDA to FCF
90 -76 The Year-on-Year positive 48 -72 629 -140 impact from the higher 42 522 underlying EBITDA and lower income tax payments (mainly a timing impact) were more than offset by less cash received FCF YTD-SEP '14 higher underlying income tax cash paid for cash used for disposals other FCF YTD-SEP '15
Slide 17: Financial position and debt maturity schedule
30 September 2015 1 October 2015 • Net financial debt at € 1,644m, €156m lower versus end 2014 • Proximus successfully issued € 500 m Senior Unsecured Notes due October 2025. The spread of this transaction was • Credit ratings: Standard & Poor’s A; Moody’s A1 - both stable set at 97 basis points ove
Slide 18: Guidance and outlook 2015
Outlook 2015 Revised Outlook 2015 Guidance metrics FY 2014 (31 July 2015) (30 October 2015) Through the good progress on its ‘Fit-for-Growth’ strategy, the Core underlying revenue 4,287 million Around 2% growth Around 2% growth company closed another quarter with solid financial results. Taking into
Slide 19: Consumer results Q3 2015
Consumer results Q3 2015
Slide 20: Good revenue progress from Fixed and Mobile service revenue
Good revenue progress from Fixed and Mobile service revenue CBU underlying revenue (EUR mio ) & YoY • Improved revenue trend from Fixed services, +5.3% YoY -2 . 9% -1. 4% 2 . 0% 3 . 8% 5. 3 % 3 . 9% 2 . 0% • Mobile Service revenue up 1.4% • Strong support from multi-play Packs 675 699 705 724 711 72
Slide 21: Fairly stable Q3'15 underlying HR costs
Fairly stable Q3’15 underlying HR Costs CBU underlying HR costs (EUR mio ) & YoY variance • Benefit from a lower personnel base following natural attrition -2.2% -3.2% -0.4% limited by the upward revision of HR-related provisions. T.B.A. YTD Sept‘15, HR expenses of € 299m, -1.9% YoY 102 102 102 95 9
Slide 22: Consumer revenue bridge Q3 and YTD
Q3’15 4 3 -11 10 CBU’s revenue growth resulted from sequentially 720 12 improving revenue increase from Fixed services, up by 705 -3 5.3% from the previous year. +2.0% The solid revenue increase in Internet and TV revenue more than offset the continued though contained Fixed Underlying Fixed Voice F
Slide 23: Contained line erosion, Fixed voice revenue
Contained line erosion, YoY revenue decline limited in Q3’15 Q3’15 revenue from Fixed voice totaled € 139m, Fixed voice revenue (EUR mio) & YoY - 2.5% YoY -4. 1% -4. 0% -3 . 5% -2 . 1% -3 . 5% -4. 0% -2 . 5% • Fixed line base 15,000 lower YoY or -0.7% 146 144 143 142 143 139 137 139 • Increasing num
Slide 24: Fixed Internet revenue growth improving to +9.1%
Fixed Internet revenue growth improving to +9.1% Sequentially improving revenue growth, up 9,1% for Q3’15 Fixed data revenue (EUR mio) & YoY • Driven by the growing customer base, up by 114,000 or 4. 3% 5. 9% 5. 8 % 9. 1% +7.2% in one year 2 . 3% 2 . 7% 1.9% • ARPU up by 1.7%. 127 127 130 130 132 13
Slide 25: TV base growing by 23,000 in the quarter
Proximus and Scarlet brand growing TV base by 23,000 in the quarter Q3’15 revenue from TV totaled € 83m, +14.0% YoY TV revenue (EUR mio) & YoY variance • Continued subscriber growth, with both the Proximus and 7. 9% 7. 8 % 11. 0% 12 . 4% 14. 8% 18. 1% 14. 0% Scarlet brand increasing their customer b
Slide 26: Mobile service revenue on growing Postpaid base
Higher YoY revenue on growing Postpaid base and higher ARPU Q3’15 revenue from Mobile services +1.4% YoY • Solid growth in YoY Postpaid base : + 193,000 or +7.1% Mobile service revenue (EUR mio) & YoY variance • Blended mobile ARPU up YoY by 2.2%. -1. 1% 0. 0% 2 . 2% 0. 9% 1. 4% -6. 3 % -5. 6% 252 2
Slide 27: Higher YoY ARPU and average mobile data usage
Higher YoY ARPU & Average Mobile data usage Blended Mobile ARPU up 2.2% YoY to € 22.8 • Better customer tiering, driven by high-end Joint-Offers, and Blended net mobile ARPU (EUR ) & YoY increased smartphone penetration • Q3’15 Postpaid ARPU of €30.0 +1.5% YoY -4.2% -3.9% 0.2% 1.3% 3.0% 1.8% 2.2% •
Slide 28: Tango double digit revenue growth
Double digit revenue growth continued on higher YoY customer base and ARPU Tango revenue (EUR mio) & YoY variance Tango Q3’15 revenue of € 33m, +9.9% YoY 9. 9% 9. 5% 11. 0% 9. 9% -3 . 5% -12 .6% -7. 4% -6. 4% • Revenue increase resulting from an improved Mobile customer mix with more Mobile postpaid
Slide 29: Enterprise results Q3 2015
Enterprise results Q3 2015
Slide 30: Q3'15 underlying revenue increasing 4.8% YoY
Q3’15 underlying revenue increasing 4.8% YoY EBU underlying revenue (EUR mio ) & YoY • Fixed up by 3.8% and Mobile services by 6.7% versus one year ago. -3 . 1% -0. 6% 0. 3 % 5. 0% 2 . 1% 0. 0% 4. 8% • ICT revenue +9.1% YoY on low-margin product revenue. YTD Sept’15 underlying revenue totaled € 987m
Slide 31: Underlying HR costs up 6.4% YoY
Underlying HR Costs up 6.4% YoY EBU underlying HR costs (EUR mio ) & YoY • Q3 increase mainly resulted from HR-related provision updates variance -0.4% -1. 1% 6.4% and, to a lesser extent, to some additional international ICT headcount. 69 67 68 72 67 65 67 YTD Sept‘15 HR expenses +1.6% YoY Q1'14 Q2
Slide 32: Enterprise revenue bridge Q3 and YTD
Q3’15 in m€ In Q3’15 both Fixed and Mobile contributed well to the 1 332 higher topline. 5 9 Firm increase in ICT revenue, up by 9.1% from the prior 317 -2 2 year, mainly coming from low-margin product revenue. +4.8% Improvement from Fixed data nearly covered for the loss in Fixed Voice. Underlying
Slide 33: Fixed Voice revenue decline on line erosion
Fixed Voice revenue decline on stable erosion of Fixed Voice customer base Q3’15 revenue from Fixed voice totaled € 61m, Fixed voice revenue (EUR mio) & YoY variance - 3.3% YoY 1 0 0 .0 .. -2.0% -3.0% -2.6% -2.9% -4.2% -5.7% -3.3% • Continued Fixed Voice line erosion triggered by companies rationali
Slide 34: Fixed data revenue up 2.6% YoY
Q3 revenue up 2.6% YoY, driven by continued growth from data connectivity services Q3’15 Fixed data revenue of € 63m, +2.6 % YoY Fixed data revenue (EUR mio) & YoY variance • Favorable revenue trend from Data Connectivity services -3.6% -4.9% -3.5% -2.7% -2.0% 0.7% 2.6% following roll-out of large c
Slide 35: ICT revenue up 9.1%
EBU generated in Q3’15 € 113 m revenue from ICT, 9.1% Underlying ICT revenue (EUR mio) & YoY above the same period of 2014 -3.3% 4.4% 1.8% 14.8% 2.2% -1.2% 9.1% • Mainly driven by a large one-off product contract which in the 2 0 0 .0 .. third quarter more than offset the impact from the Millions 1
Slide 36: Mobile services growth on customer base and data usage
YoY growth on larger customer base and higher data usage Q3’15 revenue from Mobile services totaled € 82m, +6.7% YoY • Growing mobile customer base, improved ARPU Mobile service revenue (EUR mio) & YoY variance • Regulated roaming rate cuts annualized on 1 July 2015 -4.6% -0.1% 3.8% -1.4% 3.4% 1.8%
Slide 37: Enterprise ARPU showed YoY growth
For 1st time in a long while the ARPU showed YoY growth on improved tiering and higher data usage Blended Mobile ARPU up 2%YoY Blended net mobile ARPU (EUR ) & YoY variance • Improved tiering and data consumption -10.9% -6.9% -3.2% -9.2% -2.6% -2.8% 2.0% • No additional roaming regulation impact. 31
Slide 38: Technology & Wholesale revenue totaled €55m
Q3’15 revenue totaled € 55m, -8.2% YoY TEC & W underlying revenue (EUR mio ) & YoY • Lower volumes from traditional wholesale business -5.3% -9. 8% -9. 5% -10.2% -13 .8% -2 . 4% -8 . 2% • Snow outphasing largely compensated through Scarlet retail offer 64 60 60 58 55 58 55 Q1'14 Q2'14 Q3'14 Q4'14 Q1
Slide 39: Staff & Support results
Q3’15 revenue totaled € 5m, in line with the prior quarter. S&S underlying revenue (EUR mio ) & YoY -6.3% 9.8% -4. 5% 67.7% 12.4% -30.3% -18 .7% 7 8 7 8 8 5 5 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q3’15 HR expenses € 34m, +2.9% YoY as a result of S&S underlying HR costs (EUR mio ) & YoY updated
Slide 40: BICS Direct Margin of €73m, +13.3% YoY
Firm Direct Margin of € 73m +13.3% YoY on favorable Voice market conditions & positive currency and volume effect for Mobile data Q3’15 revenue totaled € 420m, +2.5% YoY • Increase driven by continued solid growth in non-Voice BICS underlying revenue (EUR mio ) & YoY variance revenue, up 14.2% YoY.
Slide 41: BICS segment result up 5.7%
Segment result up 5.7% Q3’15 segment result of € 41m, up 5.7% • Q3’15 expenses up mainly on unfavorable YoY bad debt BICS underlying segment result (EUR mio ) & YoY impact and currency effects variance 32.4% 34.9% 5.7% • EBITDA margin of 9.7% 30 35 39 32 39 47 41 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15
Slide 42: Additional information
Additional information • Fit-for-Growth strategy • Pricing • Packs • Mobile • Fixed • Ranking in Netflix ISP speed index • Regulation • Spectrum: ownership & usage • Shareholder structure & remuneration • Divestures and natural attrition reducing headcount
Slide 43: Fit-for-Growth: generate revenue and EBITDA growth
Generate Revenue & EBITDA Growth by 2016 Customer Offer best-in- centric leaner class customer organization experience & strengthened by simplify to new brand structurally reduce costs Invest in networks and IT systems, building Cloud, TV Replay, the foundation of Netflix, Eleven Sports our next wav
Slide 44: Households on 3- or 4-play
43% of Proximus Households on 3 or 4-play 17% 19 % 44.4% 45.8% 23% 24% 4-play 17% 16 % 3-play 2-play 44% 42% 1-play Q3'14 Q3'15 Q3 2014 Q3 2015 Fix Internet Market share • More installations by technician, • New high-performing organization in increasing first time right implementation phase • Proac
Slide 45: Pack pricing: 3-Play and 4-Play
3-Play + 13 40 Mobile subscription @ Smart+ 15 Smart+ 45 Comfort Pack + Smart 15 discount 20 55 4-Play at € 75.95/month Smart+ 25 Smart+ 65 45
Slide 46: Mobile pricing in packs, old versus new
Prices are incl. VAT 13 20 30 40 55 Smart+ 15 Smart+ 25 Smart+ 35 Smart+ 50 Smart+ 65 OLD OLD 300 min Unltd min 120 min 300 min Unltd min Unltd sms Unltd sms Unlt P2P Unltd sms BE + Unltd sms Unltd sms roaming EU 1 GB 2 GB 3 GB 2GB 5GB Full customer No change Selling stopped migration 40 55 13 20 Sm
Slide 47: Business mobile pricing
Prices are excl. VAT OLD NEW Bizz Smart XL 8 15 35 50 70 €10 €20 €40 €60 €80 Unlt min 2 Fix + CUG 100’ 250’ Unl min Unl min Unl min 250sms Unl sms Unl sms Unl sms EU Unl sms EU 250MB 2 GB 4 GB 10GB 10GB PCAC QoS + Conf call + PCAC 1000’ in 240’ in EU EU 240 MB EU 1GB EU 240‘ to EU 1000‘ to EU 47 Sin
Slide 48: Prepaid Pay & Go offers
Pay & Go Max Pay & Go Smart € 0.30 / min € 0.50 / min Peak € 0.12 / SMS € 0.25 / min OffPeak € 0.25 / MMS € 0.12 / SMS Peak € 0.5/MB € 0.08 / SMS OffPeak € 0.25 / MMS € 0.5/MB For each reload, you get a bundle For each reload, with Pay&Go The bundle is valid for 31 days Smart you get: PG Max -re
Slide 49: Value increases when included in Pack
Value increases when included in Pack 49
Slide 50: TV decoder access and Eleven Sports Network
Easy access to via the Proximus TV decoder + TV Replay free in packs Attractive sports offering with national and foreign football competitions and international sports. Agreement with ELEVEN SPORTS NETWORK, adding 2 new sports channels Eleven and Eleven Sports including 50
Slide 51: Scarlet no frills brand pricing
Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’ Postpaid Prepaid Red Hot Chili Reload 8 Reload 15 €8 € 18 € 28 €8 € 15 150 min 500 min 1000 min Bonus : Bonus : 1000 SMS 2000 SMS 5000 SMS 100 min to Unlimited to Scarlet 50 MB 500 MB 1 GB Scarlet mobile Mobile
Slide 52: Ranking in Netflix ISP speed index
4.5 Prox 4.3 Voo Tnet 4.1 KPN Avg speed 3.9 Ziggo Mbps Orange 3.7 Bouyg Num (FR) 3.5 DT Kabel D 3.3 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 (source -http://ispspeedindex.netflix.com) The Netflix ISP Speed Index lists the average prime time bitrate for Netflix content streamed to Netflix mem
Slide 53: Regulation: MTR and roaming impact
As of Q3 2015 year-on-year variance no longer impacted by regulatory price decreases Estimated impact (Decrease in EUR million) Q1 2015 Q2 2015 FY 2015 Regulatory measures on Mobile Termination rates and especially MTR Revenue € 1m € 1m EBITDA € 1m € 1m Roaming rates negatively impacted Proximus’ re
Slide 54: Regulated roaming price decreases annualised
Regulated Roaming price decreases annualised in July 2015 • Estimated Impact on H1 2015 financials: − Revenue: ~ € -22m − EBITDA: ~ € -22m • As from 15 June 2017, provided that the legislative act on the wholesale roaming review is applicable on this date, ‘Roam-Like-At-Home’ will be implemented in
Slide 55: Spectrum: ownership and usage
800 MHz 900MHz & 1800 MHz 2100 MHz 2600 MHz • Used for 4G • Used for 2G, 3G and 4G • Used for 3G • Will be used for 4G • Licenses granted in ‘95 • Licenses granted in November • UMTS licenses granted in 2001 • 1st tacit extension (‘10-’15): Proximus • Licenses granted in July ‘12 ‘13 • 20 year-licen
Slide 56: Shareholder return policy and structure
Proximus intends to pay out a stable yearly dividend of EUR 1.50 per share (interim dividend of EUR 0.50 and ordinary dividend of EUR 1.00) over the year 2015 and 2016, provided the Group’s financial performance is in line with current expectations. Dividend per share (over the results of the year)
Slide 57: Headcount reduction and natural attrition
Estimated cash-out for termination benefits related to 25000 past headcount reduction Telindus programs: +2,600 FTE 20000 PTS -6,300 FTE € million 2006-2012 2015 22 15000 BeST -4,160 FTE Tutorship & FMS -3,900 FTE 13,964 2016 6 2017 5 • 13,964 FTEs in Proximus Group end September 2015 2018-2035 15*
Slide 58: Forward-looking statements
“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-looking statements rel
Slide 59: For further information
For further information Investor relations