Slide 1: Orange Belgium Financial results 9M 2016
Orange Belgium Financial results 9M 2016 21/10/2016
Slide 2: Disclaimer
disclaimer This presentation might contain forward-looking statements about Orange Belgium in particular for 2016. Although we believe these statements are based on reasonable assumptions, they are subject to numerous risks and uncertainties, including matters not yet known to us or not currently co
Slide 3: Section one: Business review
Section one Business review
Slide 4: Snapshot of the 2015 Belgian telecom market
Snapshot of the 2015 Belgian telecom market Belgian Telecom value by segment in billion € Market 8.3 3.7 3.5 1.1 Mobile Fixed TV 2.0 1.0 0.7 1.8 1.4 1.1 1.1 0.3 0.0 B2C B2B Wholesale B2C B2B Wholesale B2C B2B Of which Of which 1.1bn 0.1bn 4 Source IBPT 9M 2016 results, 21st October 2016
Slide 5: The Belgian telecom market grew in 2015
The Belgian telecom market grew in 2015 Belgian Telecom after three years of decline Market value by segment in billion € 8.6 8.5 8.2 8.1 8.3 3.1 3.0 2.9 2.9 3.0 3.3 3.2 3.2 3.2 3.2 0.4 0.4 0.3 0.2 0.3 0.9 1.0 0.7 0.7 0.7 0.9 1.0 1.1 1.1 1.1 2011 2012 2013 2014 2015 Mobile retail Fixed wholesale TV
Slide 6: Hello this is Orange Belgium
Hello this is Orange Belgium 1,712 1.2 employees billion turnover (2015) B2 B >99% 3.1 Mio 5.9 Mio connected sim cards 4G coverage customers (excl. MVNO, M2M) 6 9M 2016 results, 21st October 2016
Slide 7: At the heart of connectivity
At the heart of connectivity Orange Belgium is one of the leading telecom operators 7
Slide 8: Fixed network evolution from mobile player to convergent actor
Orange Belgium fixed network evolution from mobile player to convergent actor • 4G coverage (Active in fixed B2B) • 3G coverage No Fixed Broadband Copper Copper Ultra-high speed Technologies (~30 Mbit/s) (~60 Mbit/s ) (>100 Mbit/s evolving to > 1Gbit/s) 8
Slide 9: Today Orange Belgium is active on different markets
Today Orange Belgium is active on different markets Residential Business Wholesale Orange is a convergent Orange is an integrated Orange is a wholesale operator proposing mobile, communications provider operator and provides its TV and Internet offers as offering a portfolio of partners with access
Slide 10: Customer quality indicators disclosed by the regulator
IBPT has published new Quality indicators Customer quality results are very positive for Orange. indicators Average helpdesk response time Percentage of problems solved at disclosed by the 129 (in sec.) first contact 93 103 Belgium 72 75 74 69 63 regulator 36 58 51 30 Orange Proximus Telenet VOO SFR
Slide 11: Dynamic first 9M 2016
Dynamic first 9M 2016 Orange Internet Orange Internet + TV Sports TV Roaming Orange Internet + TV controlled launch national launch channels Go Europe + TV campaign Big data Hello Orange UEFA EURO Summer Official sponsor monitoring 2016 festivals Belgium team 4G+ festivals 11 11 9M 2016 results, 21s
Slide 12: Q3 2016 commercial highlights
Q3 2016 commercial highlights +3.5 thousand +1.5 % y-o-y Postpaid net additions Postpaid ARPU in Q3 (Belgium) EUR 28.8 17.8 thousand 1.7x Orange Internet + TV Mobile data usage customers (y-o-y) 12 12 9M 2016 results, 21st October 2016
Slide 13: Key Growth Drivers
Key Growth Drivers Mobile Data Convergent Opportunity Opportunity Customer experience 13
Slide 14: Mobile data opportunity
Mobile data opportunity Premium network Rich device portfolio Attractive tariff plans & 360° services consistent portfolio 14 9M 2016 results, 21st October 2016
Slide 15: A proud 4G & 4G+ network leader
A proud 4G & 4G+ network leader Always developing new use cases, anytime, everywhere during the customer journey connected 4G Indoor 4G Outdoor 91.1% 99.8% National population coverage National population coverage 15 4G+ 4G+ Brussels 50.0% 98% National population coverage Population coverage 9M 2016
Slide 16: Network evolution 2020 technology roadmap
Orange Belgium network evolution Internet of Things 2020 foreseeable technology roadmap Data 10 Gbps Crossborder calls Data 300 Mbps Full IP 4G+ 5G HD Voice Standard Video Data 42 Mbps 4G 4K Video / Virtual Reality / 3.5G VoLTE / Data Augmented Reality / Connected HD Video VoWIFI cars / Data 1.2 Gbp
Slide 17: Smartphone penetration catching up with European average
Smartphone penetration is finally catching up with the European average Belgium was lagging due to the prohibition of subsidized offers until 2009 The launch of 4G provided the boost to develop smartphone penetration Data usage penetration is catching up Belgium is in the first release group of with
Slide 18: 75% of total data consumption is 4G traffic
75 % of total data consumption is 4G traffic More than 4 out of 10 Orange Belgium customers are actively using 4G 4G/4G+ users 1.3 million 4G & 4G+ 44 % Orange Belgium 4G launch Total traffic up 5 times 3G since 4G launch jan- feb- mrt- apr- mei- jun- jul- aug-sep- okt- nov-dec- jan- feb- mrt- apr-
Slide 19: Mobile data usage is growing exponentially
Mobile data usage is growing exponentially Mobile Data as customers fully embrace the benefits in their daily lives and work Usage 1 GB Browsing Streaming Down-/upload gaming 290 110 Messaging EoP 2013 EoP 2014 EoP 2015 EoP Q2 EoP Q3 Indicative 2016 2016 usage Total users base Mobile data users base
Slide 20: New simplified postpaid portfolio evolution
New simplified Animal portfolio Orange Belgium clear focus on customer experience, convergence and mobile data monetization postpaid portfolio evolution The following roaming-options can be added to the tariff plans: - Transborder (12.1€ for 250 min. roaming, 250 min. international, 250 SMS, 250 MB)
Slide 21: Qualitative ARPU growth will lead to sustainable revenue growth
Qualitative ARPU growth will lead to sustainable revenue growth illustrative graph Postpaid ARPU Billed ARPU should increase as 4G mobile data monetization and upgraded portfolio stimulate upsell towards mid- and high end tariff plans, effectively redistributing the customer mix 2016 2018 Incoming S
Slide 22: New prepaid portfolio evolution
3 simple prepaid offers “Tempo” New prepaid responding to the connectivity needs of each type of prepaid consumer portfolio Tempo Giga Tempo Touch Tempo Easy evolution Share everything More data Pay only All the time More fun what you use For the uber- For the discovering For the voice digitals data
Slide 23: Go Europe promotion has been a huge success
“Go Europe” promotion has been a huge success 260K customers activated the option with a 16-fold increase in usage +338.7% Tourism UE28 data roaming traffic Sports results Orientation Share photos Listen to music 3Q13 3Q14 3Q15 3Q16 Real-time road information Entertainment “The data usage of custome
Slide 24: Data top-ups evolution
Top-up increase linked to usage development Data top-ups Personal Check Up provides an upsell opportunity evolution 40% 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 Total data top-ups 24 9M 2016 results, 21st October 2016
Slide 25: Postpaid ARPU increased YoY in Q3 2016
4G and data usage are driving postpaid ARPU growth ability to monetize mobile data confirmed Postpaid ARPU increased YoY in Q3 2016 +1.5% ARPU growth of 1.5 % despite impact of roaming regulation Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Postpaid ARPU, annual rolling (i
Slide 26: Best customer experience
Best customer experience Digitization Loyalty 26 9M 2016 results, 21st October 2016
Slide 27: Digitization is enhancing the customer experience
The customer at the heart of our strategy Digitization is through digitizing the customer experience enhancing the customer Know Customer knowledge is key to getting a better view of the uses, needs and opinions of your customers. experience The interactions between customers and company are constan
Slide 28: Orange Thank You Program
Rewarding loyalty to reduce churn “Orange Thank and increase the overall customer experience You” - Program Targeted at prepaid and postpaid customers Personalized 1-2-1 communication at regular frequency Enter in contact with each specific segment 28 9M 2016 results, 21st October 2016
Slide 29: Orange Thank You Program: your experience our engagement
Your experience our engagement Orange Thank Sharing values beyond day to day relation You - Program Main sponsor of the Belgium basketball teams Inviting our customers to the IAAF Diamond league Mémorial Van Damme Partners gifts And much more Music events Cinema 9M 2016 results, 21st October 2016
Slide 30: Close to 100K 4G postpaid net additions each quarter
Close to 100K 4G postpaid net additions each quarter Sixth consecutive quarter in a row of postpaid growth 4G Postpaid quarterly net adds in Belgium (‘k) Postpaid net adds 28 18 4G Postpaid net adds 9 8 8 3 -5 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 Orange Belgium active customers ex
Slide 31: Convergence with Orange Internet + TV
Convergence with Orange Internet + TV 31 31
Slide 32: Attractive prices
The Orange Internet + TV offering provides an Attractive prices excellent quality at the most attractive market price 39€/month 49€/month Orange Orange Eagle & Eagle Hummingbird, Dolphin, Premium Koala & Panther Internet 100 Mbps Unlimited volume Internet 100 Mbps Unlimited volume 70 TV channels 70
Slide 33: Orange TV Contents
Provide our customers with what they need Orange TV more than 70 local and international channels Contents … and new premium sports & family contents 33 9M 2016 results, 21st October 2016
Slide 34: Distribution channel
New channels opened for convergence Distribution taking advantage of our direct distribution channel 23 45 Present with Orange Belgium sales people Focus on acquisition via presence in high traffic environment 34 9M 2016 results, 21st October 2016
Slide 35: Orange Internet + TV customer management cycle
Orange Internet + TV customer management cycle further completed All building blocks are getting into place to ramp up the go-to-market Online SOCIAL ADS CUSTOMER SATISFACTION NEWSLETTER PPC REVIEWS AFTER SALE COMMUNITY SOCIAL EMAIL BLOG CALL NETWORKS ONLINE ADS MEDIA WEBSITE FORUM BLOGS Awareness C
Slide 36: Convergence awareness campaign
First Orange Internet + TV advertising campaign Convergence Shifting gear from retention to retention & acquisition awareness Web campaign TV Billboard 36 9M 2016 results, 21st October 2016
Slide 37: Fixed Broadband net adds
Orange Belgium achieved a fairly solid footing Fixed gradually transitioning from a mobile-only to a convergent player Broadband net adds Fixed broadband net adds 1Q15 62 2Q15 -16 25 3Q15 16 11 4Q15 -56 28 1 1Q16 23 43 2Q16 13 7 5 20% Net adds shares 3Q16 7 Proximus Telenet Orange Belgium 37 Source:
Slide 38: B2B Convergence
B2B Convergence 38 9M 2016 results, 21st October 2016
Slide 39: Orange Belgium is a fully convergent operator
Orange Belgium is a fully convergent operator B2B addressing all segments of the B2B-market Convergence « Internet + TV » Fixed + Mobile SoHo Using cable regulation « Shape & Fix » edpnet DSL SME Mobiline « Trusted connectivity provider » Technology agnostic VDSL, Ethernet, Large Fiber optics and 4G
Slide 40: B2B Shape portfolio evolution
Reinforce data upsell path while addressing B2B Shape customers needs, confirming our value strategy portfolio Completing Shape portfolio with more evolution comfort Assure competitiveness with more flexibility Mobile Data offer for Heavy user Abundance also in roaming with new Shape Travell
Slide 41: B2B convergence awareness campaign
B2B convergence awareness campaign Fulfill the specific requirements of our business customers IP VPN + 4G Shape & Fix Shape & Fix Comfort 41 9M 2016 results, 21st October 2016
Slide 42: Section two: Financial results overview
Section two Financial results overview 42
Slide 43: 9M 2016 financial highlights
9M 2016 financial highlights +1.2 % y-o-y +4.0 % y-o-y Mobile service revenues Restated EBITDA EUR 762.0m EUR 237.1m -14.0 % y-o-y -31.0 % y-o-y CAPEX Net financial debt EUR 96.4m EUR 315.2m 43 43 9M 2016 results, 21st October 2016
Slide 44: Total service revenues excl. EU regulation up 2.6%
Total service revenues excl. EU reg. up 2.6% Service fueled by mobile data growth, compensating EU roaming impact and erosion of legacy fixed revenues revenues 2.6% 813.9 815.6 -7.4 -19.2 794.8 28.3 9M 2016 9M 2016 +0.2% Service revenues +€1.7m €815.6m YTD 2015 Regulatory Impact YTD 2015 comparable
Slide 45: Mobile service revenues excl. regulation
Increase of 5.2% y-o-y excl. regulation Mobile service in spite of EU roaming impact starting Q2 and contract mix revenues excl. regulation 5.2% 3.4% 2.9% 258 247 248 1.1% 253 254 250 258 0.5% 9M 2016 -0.6% 9M 2016 +1.2% -1.1% Mobile service +€9.1m revenues Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2
Slide 46: Restated EBITDA
Growth of 4.0 % y-o-y restated EBITDA Restated Driven by revenues increase and costs reduction EBITDA 13.5% 237.1 228.1 0.4 2.5 -0.8 -19.2 208.9 26.2 9M 2016 9M 2016 +4.0% Restated EBITDA +€9.0m €237.1m 9M 2015 Regulatory cb 9M impact 2015 Total turnover Direct costs* Labor costs* Indirect costs* 9M
Slide 47: Capex
Decrease of 14.0 % y-o-y Capex Capex investment normalization after 4G network roll-out 13.8% 11.8% -14.0% 112 96 9M 2016 9M 2016 Capex -14.0% -€15.7m €96.4m 9M 2015 9M 2016 11.8% of total service rev. Capex Capex to total service revenues ratio 47 9M 2016 results, 21st October 2016
Slide 48: Net financial debt
Solid EBITDA and mobile capex normalization Net financial result in strong cash flow generation debt Leverage: 2.1x (in million euros) Leverage 0.9x 538 519 500 457 407 418 370 315 2.1 2.0 1.9 1.7 9M 2016 1.3 1.4 1.1 0.9 9M 2016 Net -31.0% financial debt -€141.8m €315.2m Q4 2014 Q1 2015 Q2 2015 Q3 2
Slide 49: Orange Belgium key financials
Orange Belgium key financials improving financials with a growing customer base in €m Var. (%) Insight • Mobile service revenue growth despite €19.2m Total service revenues 815.6 813.9 0.2% roaming impact (+2.6% underlying growth) • Reflecting services revenues growth and higher Total turnover 919.8
Slide 50: Consolidated net income and financial debt
Orange Belgium consolidated net income and financial debt improving cash flow generation and debt profile in €m Var. (%) Insight EBITDA 237.2 224.6 5.6% EBIT 88.2 75.8 16.3% Financial results -4.9 -5.3 -8.0% Tax -35.4 -22.8 55.4% Net income 47.9 47.8 0.4% Earning per share 0.80 0.80 In light of the
Slide 51: Section three: 2016 guidance
Section three 2016 guidance 51
Slide 52: Orange Belgium revised its 2016 guidance
Orange Belgium revised its 2016 guidance investing in future growth while protecting EBITDA margin mobile price stabilization / market repair further development of data usage / monetization of 4G investment maximum gross roaming impact of 28.5M€ on revenues and EBITDA restated EBITDA includ
Slide 53: Section four: Q&A
Section four Q&A 53
Slide 54: Investor Relations
Investor Relations Siddy Jobe Director Investor Relations & Corporate Finance Siddy Jobe siddy.jobe@orange.com +32 2 745 80 92 @PressOrangeBE https://www.linkedin.com /company/orange-belgium https://corporate.orange.be 54