Proximus Sa · EURONEXT:PROX
Proximus Sa — Belgacom — Q3 2013 Earnings Presentation
63 slides from Proximus Sa's earnings presentation, 2013
Slide 1: Belgacom Presentation Q3 2013 results
Belgacom Presentation Q3 2013 results Financial highlights Operational highlights Detailed segment results Executive summary – slide 3 Executive summary – slide 16 Consumer – slide 31 Enterprise – slide 38 Revenue – slide 5 Mobile – slide 17 SDE&W/S&S slide 44-45 Direct margin – slide 6 Service Reve
Slide 2: Cautionary Statement
Cautionary Statement “This communication might include some forward-looking statements, without limitation, regarding Belgacom’s financial or operational results, certain strategic plans or objectives, macro-economic trends, regulation, future market conditions and other risk factors. These forward-
Slide 3: Executive summary - financials Q3 2013
Executive summary- financials Q3 2013 Financial results - Group revenue: € 1,568m; -3.2% YoY Q3 on track to - Group ebitda: € 428m, -7.7% YoY meet FY - Group capex: € 176m, 11.2% of Group revenue guidance Well positioned - Pressure on Mobile revenue in line with H1 trend to face - Continued success
Slide 4: FY 2013 guidance reiterated
FY 2013 guidance reiterated FY 2013 Year-to-date Metrics outlook 2013 reported Group revenue Decline between -1.7% -1% and -2% Group EBITDA* Decline between -5.3% -4% and -6% Capex/Revenue Between 11.5% 13% and 14% * Compared to the restated 2012 EBITDA of € 1,801 m, following the retrospective appl
Slide 5: Q3 2013 and Ytd 2013 Group revenue
Q3 2013 Group revenue (mio €) -3.2% 1,620 -1 reported -7 Roaming -9 MTR -2.1% Underlying -16 -1 +13 1,568 -28 -18 -1 Pressure on the Mobile Market, Destination incidentals and lower mobile mix, data terminal sales within CBU growth Q3 2012 Net Impact Regulatory Underlying Underlying Underlying BICS
Slide 6: Q3 2013 and Ytd 2013 Group direct margin
Q3 2013 Group direct margin (mio €) -4.0% reported 9 71 +3 -7 Roaming -3.5% Underlying -7 -18 Pressure on Mobile +3 9 32 Direct margin, -17 -2 partially offset by cost containment Destination Wholesale Product Mix mix rev. slowing Q3 2012 Net Impact Regulatory Underlying Underlying Underlying BICS Q
Slide 7: Non-HR expenses
Non-HR expenses Continued cost containment Quarterly Non-HR expenses (€ million) 27 0 -0.6% - Q3’13 non-HR expenses of € 216m 25 0 256 - Company-wide cost containment 23 0 232 226 225 224 21 0 217 218 216 apart from small net positive impact 19 0 17 0 from provision reversals. 15 0 Q411 Q112 Q212 Q3
Slide 8: HR expenses
HR expenses - Driven by inflation-based wage indexation of January 2013 Quarterly HR-expenses (€ million) - Largely offset by year-over-year -0.8% headcount reduction (-248 FTEs) & more 29 0 290 290 27 0 283 281 283 288 278 278 capitalized manpower resulting from 25 0 23 0 network & IT simplificatio
Slide 9: Belgacom SA age pyramid
Belgacom SA age pyramid 44Yr average age • statutory 52 Yr • contractual 38 Yr Changed retirement regulation (option to leave at 58 no longer available) & past headcount programs causes gap in retirement level for 2013-2017. Estimation of nr FTEs retiring 800 700 600 500 400 Level of retirements 300
Slide 10: Q3 2013 and Ytd 2013 Group Ebitda
Q3 2013 Group Ebitda (mio €) -7.7% reported +8 464 -7 Roaming -7.4% Underlying -2 -7 Wholesale -14 Net impact provisions rev. slowing 428 +3 -19 Pressure on Mobile Direct margin, -3 -1 partially offset by cost Product Mix & higher containment HR-expenses Q3 2012 One-offs One-ofss Regulatory Underlyi
Slide 11: Continued investments in high-quality fixed & mobile network
Continued investments in high-quality fixed & mobile network to maintain leadership in convergence Accelerated network investments - maintain network superiority on Group Capex 13%-14% mobile speed and coverage, in € millio n / % of revenue - substantially increase the 12 .1% 900 bandwidth on fixed
Slide 12: Q3'13 Free Cash Flow of € 274 million
Q3’13 Free Cash Flow of € 274 million Q3 YtD 2 0 12 2 0 13 2 0 12 2 0 13 IAS IAS (in mio € ) Re s t a t e d var. Re s t a t e d var. Operating CF before working capital changes 397 361 -36 1,168 1,091 -77 CF for Working capital 34 87 53 -67 -148 -81 Net cash used in investing activities -183 -174 9
Slide 13: Sound financial position
Sound financial position - Net financial debt at € 1,751m, € 150m higher versus end 2012 - The outstanding long term financial gross debt amounted to € 2.1Bio - Credit ratings: Standard & Poor’s A; Moody’s A1 – both stable outlook 410 (539) (1,601) (38) 18 (2) (1,751) Net debt FCF Dividends Non cont
Slide 14: Belgacom consolidated balance sheet
Belgacom consolidated balance sheet 31-Dec 30-Sep (EUR million) 2012 2013 TOTAL ASSETS 8,243 8,124 Non-recurrent assets 6,192 6,079 Goodwill 2,339 2,339 Intangible assets with finite useful life 1,097 1,039 Property, plant and equipment 2,467 2,480 Investments in associates 1 1 Other participating i
Slide 15: Group – quarterly P&L
Group – quarterly P&L * The 2012 financial figures have been restated after the adoption of the IAS 19R revision VAR VAR in mio € Q112 Q212 Q312 Ytd '12 Q412 Q113 Q213 Q313 Ytd '13 Q3/Q3 Ytd Restated* Revenues (1) 1,5 8 8 1,6 11 1,6 20 4,8 18 1,6 44 1,5 8 6 1,5 8 3 1,5 6 8 4,736 -3.2% -1.7% Total OP
Slide 16: Solid third quarter operationals in spite of challenging market
Solid third quarter operationals in spite of challenging market - Total Group mobile customer base of 5,443,000 + 33,000 - Strong Mobile Postpaid net adds, growing Belgacom’s Mobile cards postpaid customer base to 3,656,000. +83,000 -50,000 - Prepaid customer base lower, in shrinking prepaid market,
Slide 17: Since Q1'13 mobile service revenue decline remained under control
Since Q1’13 mobile service revenue decline remained under control Contained Group Mobile Service Revenue decline -3.8% over 2013 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 -7.1% -5.0% -10.0% Reported -7.1% -13.1% On comparable basis -15.0% -12.9% -13.3% -14.0% CBU Mobile Service Revenue -1.8% Q3'12 Q4'12 Q1'13 Q
Slide 18: Consumer Postpaid ARPU showing some stabilisation after drop in Q1
Consumer Postpaid ARPU showing some stabilisation after drop in Q1 Consumer blended ARPU: Split Prepaid - Postpaid Since the Telco law came into force, the Consumer *28.9€ 28.9 € 27.3 € 26.6 € Postpaid ARPU decline clearly accelerated. Blended 0.0 € *28.2€ 24.1 € 24.4 € 23.5€ Postpaid Showing so
Slide 19: Mobile churn levels further reduced since October 2012 peak
Backed by a superior mobile network and attractive mobile pricing, Mobile churn levels further reduced since the peak seen in October 2012 Consumer Mobile Churn CBU postpaid CBU prepaid clear effect new telecom law Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Focus on mobile in through positioning of P
Slide 20: Strong Mobile net adds in seasonally calm third quarter
Strong Mobile net adds in seasonally calm third quarter - Belgacom Group added 33,000 mobile customers in Q3’13, with Postpaid growing by 83,000 150 Net adds Consumer Prepaid Net adds Consumer Postpaid 93 +Tango 100 Mobile customer evolution 2 37 50 17 26 net adds total 5,504 5,416 5,443 0 100 5,364
Slide 21: Consumer Mobile price plans became more abundant
Consumer Mobile price plans became more abundant. Some examples Q3-13 Q3-13 Q3-13 Nearly Most important price change in Dec’12; Mobile Data in bundles 70% increased significantly postpaid customers re- priced Slide 21
Slide 22: Reviewed Business Mobile price plans driven by spill-over effect
Reviewed Business* Mobile price plans driven by spill-over effect (* for SoHo & self employed customers) Low end Mid end High end Some Bizz Smart+ Bizz Bizz Bizz Smart+ Bizz Bizz Mob Bizz Mob+ Bizz Smart examples 20 Smart XL 20 Smart 30 30 Smart XL 30 All-in All-in XL All-in Q4-11 Dec’12 Q3-13 Q4-11
Slide 23: Push smartphone penetration through targeted year-end promotions
Push smartphone penetration through targeted year-end promotions CBU Smart 15€ Smart 25€ Smart 35€ Smart 65€ 120 min 180 min 300 min unlimited Unltd sms Unltd sms Unltd sms Unltd sms 500 MB 1 GB 2 GB 5 GB Subsidized offer Smart 20€ Smart 30€ Smart 45€ Smart 65€ Nov/Dec : upfront + monthly 120min 180
Slide 24: Solid performance of fixed products
Solid performance of fixed products Broadband customer evolution net adds total 28 1,647 1,652 1,660 1,637 1,700 Other 7% 23 1,626 Belgian Fixed internet market 1,600 Belgacom 18 1,500 44% still growing, but at slower pace 13 Internet penetration @ 78% 12 11 Belgacom market share erosion limit
Slide 25: Convergence strategy - key advantage in challenging market
Convergence strategy - key advantage in challenging market Nearly 1/4th of Packs evolution Packs net adds total 1,295,000 include Q3'12 Q3'13 1,259,000 1,278,000 1,237,000 1,300,000 80 1,214,000 Mobile 4-play 1,200,000 9% 4-play 14% 60 1,100,000 2-play 2-play 31% Continued uptake of multi- 1,000,0
Slide 26: Convergence strategy enabled by network quality
Convergence strategy enabled by network quality Fixed Network Mobile Network1 Wi-fi Hot Spots @ 99.85% DSL @ > 99% (among world leaders) 3G & 2G coverage @ 725,000 FON HD spots in Belgium @ > 87% VDSL @ > 44% ~ 93% TV 4G coverage coverage 4G peak 54 Mbps 4G avg. 22Mbps >12 million On aver
Slide 27: Fixed network
Fixed network Speed evolution in Mbps 2013 to >2018 download speed in Mbps As of 2014 Launched in Q1 2013 Launch of Dynamic Line Management Preparation for Vectoring roll-out Launched Planned Q1 2013 Q1 2014 DLM monitors line stability and dynamically applies max Vectoring cancels crosstalk in the c
Slide 28: Mobile network
Mobile network Steep Mobile data evolution increase in +60% mobile data in 1 o Mobile data usage still in early stages with usage year 250 smartphone penetration nearly 35%. o However, quickly emerging market need for 4G with 200 much higher mobile data usage each quarter 150 Strong increase in 100
Slide 29: Network simplification
Network simplification Leaner operations through a simplified all-IP-network SIMPLIFICATION SITUATION TODAY • Out phase 30 buildings • High network complexity, high • Out phase ATM network number of technologies • Out phase legacy telephony • High maintenance cost • High connectivity cost PSTN & ISD
Slide 30: Q3 2013 results per business unit
Belgacom Company presentation Investor Relations Q3 2013 results per business unit Consumer Business Unit (CBU) Enterprise Business Unit (EBU) Service Delivery Engine &Wholesale (SDE&W) Staff and Support (S&S) Belgacom International Carries Services (BICS) 30 30 Slide
Slide 31: Consumer - P&L
Consumer - P&L Decline in revenue partially offset by cost containment CBU revenue (EUR mio) 61 0 -6.5% Q3’13 Revenue -6.5% lower, reg. impact Q3 ’13 of €-7m (-1.2%) 59 0 – one-off accounting reclassification; less mobile terminals rev; 57 0 587 581 positive impact in Q3’12 change in bundle carry-
Slide 32: Consumer - Fixed voice
Consumer - Fixed voice Fixed Voice Fixed Voice line price adjustments erosion stable;resulted revenueindecline contained revenuetodecline continued persistand growing ARPU 14 0 Fixed voice revenue (EUR mio) Fixed Voice benefitted from price changes, bringing relief -2.2% 13 0 12 0 to the declining
Slide 33: Consumer – Mobile Voice
Consumer – Mobile Voice Controlled Mobile Voice revenue decline in a climate of ongoing repricing; continued Postpaid subscriber growth Mobile voice revenue (EUR mio) Q3 ‘12 incl the positive impact from change in bundle carry- 16 0 -25.8% 14 0 over . Excl this, revenue -23.7% yoy; vs -21.5% over
Slide 34: Consumer - Fixed Data
Consumer - Fixed Data Strong Fixed Internet revenue grew 5.6%, driven by price adjustments and larger customer base Fixed data revenue (EUR mio) +5.6% Revenue growth driven by growing customer base and 92 90 88 price changes of Feb and July ‘13. 90 89 86 84 82 85 85 85 87 Ytd Sept’13, CBU record
Slide 35: Consumer - Mobile Data
Consumer - Mobile Data Roaming regulation and the mobile customer evolution feeding the Mobile data revenue declineage Mobile data revenue (EUR mio) -3.9% Mobile Data revenue impacted by regulation, the yoy 12 0 SMS Adv Data 102 98 100 97 98 lower mobile customer base and more abundant offers. 93
Slide 36: Belgacom TV
Belgacom TV Solid TV revenue growth through larger TV customer base and higher ARPU TV revenue (EUR mio) +10.2% TV revenue +10.2% YoY driven by 64 66 67 – Continued growth of subscribers 61 62 55 57 – Price increase of rented settop box 53 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 TV growth & EOP (0
Slide 37: Tango Luxembourg
Tango Luxembourg Tango revenue (EUR mio) 28 +12.9% 32 32 Q3 2013, Tango’s revenue +12.9% YoY to € 32m. 30 29 28 27 28 28 – supported by the growing mobile subscriptions – success of the offers for Smartphones Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 – increased terminals sales Ytd Sept’13 € 94m r
Slide 38: Enterprise – quarterly P&L
Enterprise – quarterly P&L EBU revenue (EUR mio) 62 0 Revenue decline fairly in line with previous Q’s like-for-like* -4.7% – Regulation impact of € -9m (-1.6%) in Q3’13 591 57 0 579 576 579 – pressure on mobile revenue from more abundant offers 52 0 560 554 554 533 47 0 – rate of Mobile revenue d
Slide 39: Enterprise - Fixed Voice
Enterprise - Fixed Voice Ongoing relief from price changes, offset by impact from continued line erosion 14 0 Fixed voice revenue (EUR mio) Fixed voice revenue impacted by lowered Fixed-to-Mobile 13 0 -3.2% rates on 1 Jan ’13 and continued line erosion 12 0 122 124 120 118 119 118 Price increase
Slide 40: Enterprise - Mobile Voice
Enterprise -- Mobile Enterprise Mobile Voice Voice Pressure Solid on Mobile customer growth,Voice ARPU revenue in line under with due pressure previous quarters; to pricing customer and regulation base growing by 40,000 mobile cards 13 0 Mobile voice revenue (EUR mio) Revenue -16.7%; trend H1 cont
Slide 41: Enterprise - Fixed Data
Enterprise - Fixed Data Enterprise - impacted Fixed Data revenue Fixed byData migrations to Explore platform and Slightly uptakepositive revenue Packs of converged trend continued; Internet customer base fairly stable with internet 10 2 Fixed data revenue (EUR mio) Q3’13 Fixed Data revenue €94 m,
Slide 42: Enterprise – Mobile Data
Enterprise – Mobile Data Regulated price caps pressuring both SMS and advanced Mobile data revenue Mobile data revenue (EUR mio) Q3’13 Mobile Data revenue -5.8% YoY 80 70 SMS ADV Data -7.3% -5.8% – Q3’13 non-SMS Data revenue € 29m, -2.6%, improving 57 56 vs previous quarters driven by lower yoy re
Slide 43: Enterprise – ICT
Enterprise – ICT Enterprise ICT - ICT revenue up by 6.1% on like-for-like basis ICT revenue marginally down in challenging economic context Q3’13 ICT revenue -0.6% YoY to € 166m – Seasonally lower Q3 ICT revenue (EUR mio) – Impacted by difficult economic climate, with 22 0 21 0 20 0 -0.6% customer
Slide 44: Service Delivery Engine & Wholesale - P&L
Service livery & Delivery Wholesale& Wholesale - P&L – P&L 98 SDE&W revenue (EUR mio) -2.4% slowing wholesale revenue 93 88 – lower broadband volumes , partly offset by increased roaming revenue (volume growth offsetting price decreases) 83 78 80 78 73 76 75 76 75 68 63 58 74 73 Ytd ’13 revenue
Slide 45: Staff & Support - P&L
Staff & support - P&L Staff & Support – P&L S&S Revenue(EUR mio) • Q3’13 revenue of € 10m, including litigation settlement 30 +36.3% 25 20 • Ytd’13 revenue of € 35m, including a capital gain of € 11m in 15 18 Q1 resulting from the sale of a technical building as part of 10 5 8 9 7 7 11 7 10 Belgacom
Slide 46: International Carrier Services – P&L
International Carrier Services International Carrier Services – P&L P&L 46 0 BICS Revenue (EUR mio) +3.0 • Revenue Q3’13 up 3% from strong comparable base 44 0 – Reduced EU MTRs and slight negative dollar effect impacted 437 42 0 424 430 Voice revenue 417 40 0 38 0 401 409 413 36 0 34 0 382 – More t
Slide 47: Other topics
Belgacom Company presentation Investor Relations Work In Progress Ytd September Other Other topics topics 2010 results in detail • Consumer Business Unit (CBU) • •Shareholder Enterprise Business structure – slide 48Unit (EBU) • Pricing – slide 52 • • Service Delivery Engine &Wholesale (SDE&W) Shareh
Slide 48: Shareholder structure
Shareholder structure* Belgian state owns ~ 53.5% 338,025,135 shares, of which 318,963,121 Outstanding • Limited liability company under public law - Belgian state main shareholder: 53.5% - Legal obliged threshold: 50%+1 share Own Shares; • Free float 40.9% 5.6% • Treasury shares 5.6% Free Float; Be
Slide 49: Belgacom to return a EUR 0.5 interim dividend
Belgacom to return a EUR 0.5 interim dividend - On 24 October 2013, Belgacom’s Board of Directors approved to return to the shareholders a total gross interim dividend of EUR 0.50 per share: • Ex-dividend date 3 Dec ’13 • Record date 5 Dec ’13 • Payment date 6 Dec ‘13 Shareholder remuneration Divide
Slide 50: Spectrum: Belgian situation
Spectrum: Spectrum -The Belgian Belgian situation situation 900 MHz & 1800 MHz 2100 MHz 2600 MHz 800 MHz • 900 MHz & 1800 MHz • Used for 2G, 3G and 4G • Used for 3G • Will be used for 4G • Will be used for 4G • Belgian operators allowed • Proximus, Mobistar & Base • Out of 5 candidates, 4 • Out of 3
Slide 51: Price policy Belgacom - evolution
Price policy Belgacom - evolution 01/10: NEW FTC LAW OCT 01/10: revamp postpaid offer, launch Easy & Smart, data in all Generation 2012 NOV DEC 10/12: revamp postpaid offer: more datavolume & more calling minutes 01/01: price decrease for calls to mobile JAN 01/02: price indexation for fixed voice &
Slide 52: Pricing – Fixed products
Pricing – Fixed products Classic Happy Time XL No Limit National Anytime Happy time international € 19.99 / month € 19.99 / month € 29.67 / month € 20.99 / month Note: Free to FIX & to MOB during Free to FIX ,to MOB & to Lower tariffs during peak OffPeak & Weekend Free to FIX Anytime most European c
Slide 53: Pricing – Mobile Voice (Postpaid)
Pricing – Mobile Voice (Postpaid) Easy+ 10 Easy+ 15 Easy+ 25 Easy+ 45 € 10 / month € 15 / month € 25 / month € 45 / month For non- € 10 /month PACK € 20 /month PACK € 40 /month PACK 20 min + 150 min + Smartphone unlimited SMS unlimited SMS 240 min unlimited SMS Unlimited min unlimited SMS users € 0.
Slide 54: Pricing – Mobile Voice (Prepaid)
Pricing – Mobile Voice (Prepaid) Reload bonus For each reload within 31 days, with Pay&Go Easy you get : For non- Pay & Go Easy • Bonus 1 (towards fix and Mobile): € 10 reload= 30min, € 15 reload= 60min, € 25 € 0.27/ min Smartphone € 0.12 / SMS reload= 90min, € 50 reload= 200 min € 0.25 / MMS OR Bon
Slide 55: Pricing – Mobile Data
Pricing – Mobile Data Standard 4G Option Pay & Surf € 10 / month € 0.5 / MB (prepaid ) € 4.99 50 MB Or 1 GB incl. € 9.99 500 MB € 0.85 / MB (postpaid) €0.1/ MB General Post-paid Only Prepaid Only GSM Only Laptop & Tablet Only iPad Only Laptop Only Prepaid Only Prepaid Only Pay & Surf Daily Comfo
Slide 56: Pricing converged PACKS
Pricing converged PACKS - examples of possible combinations As from 1 Jul’13, the rates of Packs TV + Fix including internet went up: + € 2 for Start + € 3 for Comfort TV + Internet + € 1 for Maxi € 35.75 / month In exchange, customers Fix+ Internet € 53.95 / month get more volume, TV + TV + Fix + I
Slide 57: Scarlet pricing
Positioning Scarlet Scarlet pricing as no frills brand, with very attractive pricing for ‘price seekers’ €8 € 14 € 28 125 min + 180 min + 360 min + 200 SMS 300 SMS 1000 SMS +50 MB incl +200 MB incl +500 MB incl € 0.16 / min € 0.16 / min € 0.16 / min € 0.09 / SMS € 0.09 / SMS € 0.09 / SMS € 0.20 / MM
Slide 58: Regulation – 1
Regulation – 1 Overview financial impact Estimated Impact Actuals Regulation impacts FY 2013 Q1 2013 Q2 2013 Q3 2013 (Decrease in EUR million) MTR & Revenue ~ €38m €10m €10m €9m flow-through Fix-to-Mob EBITDA ~ €2m €1m €1m €0m Roaming Revenue ~ €47m €15m €19m €7m (i.e. Voice, SMS and Data) EBITDA ~
Slide 59: Regulation – 2
Regulation – 2 Mobile Termination Rates (MTR) – Glidepath in place since August 2010. Full symmetry effective MTR-Glidepath in €ct since 1 January 2013 11.43 – MTR decreases reflected in F2M tariffs of BGC 9.02 – Mobistar & Base filed separate appeal against decision: 7.2 • Suspension procedure: On
Slide 60: Regulation – 3
Regulation – 3 Mobile voice and data-roaming: EU Roaming III Regulation regulation • Roaming III Regulation entered into force on 1 July 2012. • This regulation covers a ten-year period until 30 June 2022. • It imposed a further lowering of the existing regulated price caps, and extended the roaming
Slide 61: Regulation – 4
Regulation – 4 Decision to open-up the Belgian Cable Network On 18 July 2011, the Belgian regulators published their final decision on broadband & broadcast regulation: – On the broadcast Market Each cable operator has ‘Significant Market Power’ (SMP) in its area a is submitted to the following obli
Slide 62: Macro economic environment
Macro economic environment Belgium & Euro area - prospects GDP growth forecast (%)1 Belgium Euro area Unemployment rate forecast (%)2 Belgium Euro area 12.2% 12.1% 1.9% 11.4% 1.2% 10.2% 1.4% -0.3% 0.0% 1.2% -0.6% -0.4% 8.7% 8.3% 7.2% 7.6% 2011 2012 2013 2014 2011 2012 2013 2014 Inflation forecast (%
Slide 63: For further information: Belgacom Investor Relations
For further information: Belgacom Investor Relations e-mail: investor.relations@belgacom.be Tel: +32 2 202 82 41 http://www.belgacom.com Slide 63