Slide 1: Investor & analyst presentation
Investor & analyst presentation 26 July, 2024 Guillaume Boutin Chief Executive Officer
Slide 2: Cautionary statement
Cautionary statement This presentation is a subset of the company’s results release. Please consult proximus.com/investors for the overall disclosed information. This communication may include some forward-looking statements, without limitation, regarding Proximus’ financial or operational results,
Slide 3: Agenda
Agenda • Closing H1 with strong results and achieved major strategic milestones • Heading for next strategic phase in efficient Fiber deployment • Q2’24 Financial & Operational performance • Q&A
Slide 4: Closing H1 with strong results and achieving major strategic milestones
Group Closing H1 with strong results and achieving major strategic milestones 4
Slide 5: Proximus delivers strong results and accomplished major strategic achievements
Proximus delivers strong results and accomplished major strategic achievements since the start of the year Q2’24 results Strategic progress Continued commercial momentum, Closed acquisition of Route Mobile +46k residential postpaid net adds; +40k strengthening our position in the global Fiber activa
Slide 6: Excellent Q2'24 performance with Group EBITDA +5.3%, guidance upgrade
Continuing an excellent performance in Q2’24 with Group EBITDA +5.3%, Securing a guidance upgrade on Domestic Revenue, EBITDA and Group EBITDA Domestic International Group +xx% 5.0% 5.3% Q2’24 EBITDA 7.0%* of 480M€, 1.4% Sustained a 4.2% 4.3% 3.5% 4.5% 4.6% Growing Direct up +5.3% -0.4% strong reven
Slide 7: Route Mobile acquisition completed, International growth engine delivering
With the acquisition of Route Mobile completed in May, our new International growth engine is already delivering significant profitable growth Analyst & investor webinar on Proximus International Our unique position in the market for Proximus international recognized as leading digital communication
Slide 8: Strategic partnership with Microsoft for cloud and digital communications
Signed strategic partnership with Microsoft for collaboration on cloud and digital communications CPaaS and DI collaboration Joining forces with Microsoft for a Enhanced Go-to-Market at scale enabling seamless strategic cloud transformation empowering Proximus to customer engagement for that will en
Slide 9: Proximus and partners deploying Fiber in 164 cities
Proximus and partners deploying Fiber in 164 cities 164 cities and municipalities with Fiber works ongoing Fastest internet in Further improving Belgium in-house experience "Speedtest The first operator in Verified" label Belgium to launch awarded by Wi-Fi 6E Proximus ✓ Ultra-reliable connection Fib
Slide 10: Almost 2M Fiber homes passed at end-Q2
Almost 2M Fiber HP at end-Q2 Fiber HP footprint of over 33%; and “Fiber in the street” reaching 38% +143k Fiber Homes & 1,983k Fiber Homes & 38% Fiber in the street, Businesses Passed in Q2 Businesses Passed end-Q2 Incl. JV funnel of 310k LU, total (in K, additions in the period) (in K, total base o
Slide 11: 481k activated Fiber lines by end-Q2
481k activated Fiber lines by end-Q2 continued strong customer demand for Fiber FIBER Increasing Fiber share Lower churn Total park & net adds (in K) in total acquisitions levels vs Copper +49% +7pp 481 441 397 ~30% 353 322 Q2’23 Q2’24 Maintaining high ARPC in € 44 44 40 migration rate 34 ~70% 31 +6
Slide 12: Major strategic steps in the deployment of Fiber in Flanders
Group Major strategic steps accomplished in the deployment of Fiber in Flanders 12
Slide 13: Executive Summary
Executive Summary Belgian regulators BIPT1 and BCA provided in Oct 2023 a unique window for network operator collaborations, encouraging infrastructure cooperation and fiber roll out acceleration Proximus signed an MoU2 on Fiber Collaboration with Wyre/Telenet that aims to maximize the utilization o
Slide 14: MoU to collaborate with Wyre/Telenet across ~2.0M fiber HP
Proximus has signed an MoU to collaborate with Wyre/Telenet across ~2.0M fiber HP and have access to Wyre's Coax network Intended collaboration structure as per announced MoU1 Outside MoU Collaboration zone in fiber deployment and network usage collaboration zone ~2.7M HP ~0.9M HP Dense: ~0.9M Mediu
Slide 15: Fiber Collaboration MoU optimizes network utilization and extends coverage
The Fiber Collaboration MoU provides a path to optimize network utilization, accelerate and extend fiber coverage across Flanders1 Microsoft Teams Reduced deployment CapEx. Fiberklaar footprint going from >1.5M to ~0.8M HP Accelerated & extended roll-out, achieving ~81% fiber coverage in Flanders, a
Slide 16: Proximus acquires 100% of Fiberklaar
Proximus acquires 100% of Fiberklaar to gain full network ownership and optimize rollout and value creation From 50% Microsoft Teamsto 100% of Fiberklaar for 246 M€ Full value capture of forecasted high network utilization Ensures capture of full value of Fiberklaar network with high utilization unl
Slide 17: Key value drivers for Proximus
The envisioned collaborative deal would be beneficial for the region, the industry and would deliver concrete benefits for Proximus Key value drivers for Proximus ✓ Fiber deployment CapEx reduction due to optimized footprint ✓ 100% Fiberklaar to bring operational and debt synergies, NPV up to 100 M€
Slide 18: Collaboration would secure growing medium term FCF
Successful implementation of collaboration agreement would secure growing medium term FCF, with increased divestment programs supporting Fiberklaar consolidation Divestment program supports FCF ‘25-’27 Impact of acquisitions on FY 2024 FCF Growing organic FCF from '28 onwards around current dividend
Slide 19: Key upcoming milestones
Key upcoming milestones Fiber Acquiring 100% collaboration in Fiberklaar MoU signed with Agreement signed Wyre/Telenet with EQT BCA1 formal investigation with the involvement of BIPT Long-form agreements Closing of with Wyre/Telenet acquisition expected Outcome expected end-2024 over coming days 1.
Slide 20: Results presentation Q2 2024
Results presentation Q2 2024 20
Slide 21: Domestic
Domestic
Slide 22: Sustained commercial performance with growth in Internet and Mobile
Domestic Sustained solid commercial performance with continued growth for Internet and Mobile Postpaid Internet base 2,291K; Postpaid base 5,018K; TV base 1,650K; Fixed Voice 1,574K; +51k YoY +143k YoY -44k YoY -153k YoY +2.3% YoY +2.9% YoY -2.6% YoY -8.9% YoY Net adds Group (‘000) -3 -8 -9 -12 -32
Slide 23: Q2 Residential revenue up 5.3% YoY
Residential Q2 Residential revenue up by +5.3% YoY, with Services revenue up +6.3%, supported by price effects and ongoing solid customer growth Residential revenue (M€, YoY ) 8.3% • Customer Services revenue +6.3% YoY 5.5% 5.9% • Strong Q2’24 customer growth 5.3% 4.2% 624 620 616 601 585 62 55 53 5
Slide 24: Growing Convergent base and higher ARPC
Residential Growing Convergent base and higher ARPC driving +6.3% Residential customer services revenue increase in Q2 Customer services revenue profile significantly improved: Customers (in K) Growing Convergent base: (M€) +6.2% YoY Customer satisfaction Network investments +1.1% Value management M
Slide 25: Outstanding Business revenue growth +4.8% YoY
Business Outstanding Business revenue growth +4.8% YoY Business Services up +2.2% YoY, Products up +19.0% Q2 revenue Business revenue (M€, YoY) 4.8% Services revenue +2.2%, 4.1% 2.9% 3.1% Solid growth in IT Services and Fixed Data outpacing Fixed Voice erosion -0.5% Products revenue +19.0%, 490 494
Slide 26: Continued B2B Services revenue growth
Business Continued B2B Services revenue growth IT Services and Fixed Data growth outpacing Fixed Voice erosion Business Services revenue (M€) +5.3% IT Services driven by growth in recurring services in Smart Network, Cloud, Security and Smart Mobility +2.2% 402 411 +5.8% Fixed Data +5.3% • Internet
Slide 27: Wholesale Services revenue +9.1%
Wholesale Wholesale Services revenue +9.1% continued decline in low margin interconnect revenue Wholesale revenue (M€, YoY) -4.1% -4.9% -4.9% -9.0% -8.3% Q2 Fixed & Mobile Services revenue +9.1% 67 66 63 64 59 • Driven by higher increasing roaming volumes 30 29 28 23 Interconnect revenue -22.3% 24 •
Slide 28: Sustained strong Domestic revenue growth +4.6% YoY
Domestic Sustained strong Domestic revenue growth, +4.6% YoY revenue from Services up by +4.6% YoY Revenue (underlying, M€) +4.6% 11 1,200 9 3 29 1,147 +4.6% Services revenue Q2’23 Residential Business Wholesale Non-Services Q2’24 Customer Services Services Revenue* Services *Aggregate of Residentia
Slide 29: Cost efficiency delivery more than offsets inflation
Domestic Continued cost efficiency delivery more than offsets inflation effect OpEx increase slowing OpEx (management view, underlying, M€) 3.8% Domestic OpEx (M€) 3.8% 463 8 463 9 446 446 Q2’23 WF Non-WF Q2’24 Domestic headcount (FTE) -92 416 10,369 10,277 -509 Q2’23 Lower Inflation Customer Transf
Slide 30: Domestic EBITDA +5.1%
Domestic Domestic EBITDA +5.1% Strong Direct Margin growth and cost efficiencies outpacing inflation impacts (M€) +5.1% -9 -8 437 38 416 Q2’23 Direct Margin Workforce costs Non-Workforce costs Q2’24 30
Slide 31: International
International
Slide 32: Unique APAC exposure and CPaaS traffic recapture
International Our unique exposure to APAC and ability to recapture CPaaS traffic is reflected in growing margin and EBITDA for Proximus International segment Key drivers Unique exposure to Enterprise CPaaS in fast growing APAC region Engage CPaaS Protect Strong ability to recapture CPaaS traffic tha
Slide 33: International EBITDA up +6.5% on pro forma
International International EBITDA up +6.5% on pro forma driven by Direct margin growth Revenue Direct margin EBITDA International (M€) International (M€) International (M€) On pro forma basis On pro forma basis On pro forma basis +7.0%* -5.3%* +6.5% 438 119 43 111 8 -5 415 40 30 163 31 147 303 81 8
Slide 34: Communications & Data Direct margin +9.5%
International Communications & Data* Direct margin grew by +9.5% on pro forma mainly driven by CPaaS and Mobility Revenue M€ On pro forma basis Largest firewall deal with Vodafone Idea -6.2% became live on April 1, 2024 • Revenue impacted by lower CPaaS SMS volumes in US; DM impact limited due to pa
Slide 35: P2P Voice & Messaging Direct margin down 1.8%
International P2P Voice & Messaging* Direct margin down -1.8% on pro forma fully driven by P2P Voice Revenue M€ On pro forma basis -9.8% • Keeping strategic strong position on profitable destinations in an inherently declining voice market. 163 147 • Revenue YoY down on: • VoLTE rollout in roaming,
Slide 36: Group
Group
Slide 37: Q2 Group EBITDA +5.3% on pro forma basis
Group Q2 Group EBITDA +5.3%, on pro forma basis growing Direct margin more than offsetting the moderating cost increase Revenue Direct margin 5.1% 2.0% 53 8 3 1,016 38 2 1,599 -23 966 1,567 +4.6% -5.3%* +4.5% +7.0%* Q2’23 Pro Domestic International Others** Q2’24 Q2’23 Pro Domestic International Oth
Slide 38: H1 2024 Group CapEx of 585M€
Group H1 2024 Group CapEx of 585M€ Group CapEx M€, excl. spectrum & football rights -4.3% 611 585 Other Customer related* Fiber build • Lower Proximus Fiber build volumes • Fiber customer termination and activation cost rising, supporting topline momentum. 29% • Other CapEx includes a.o IT investmen
Slide 39: Working capital timing impacted adjusted FCF
Group Timing effect of change in WC needs impacted adjusted FCF, more than offsetting benefit of higher EBITDA and low cash CapEx FCF ( YoY, M€) Operations Investing Route Mobile acquisition 55 costs -111 24 -99 4 -114 -124 43 11 -16 -613 -727 FCF Adjustments Adjusted FCF Underlying Change in Intere
Slide 40: FY24 Group EBITDA to grow up to 2.5% YoY
FY24 Group EBITDA to grow up to 2.5% YoY on pro-forma basis Capex reflects Fiberklaar consolidation Guidance Outlook FY2023 YTD24 Outlook FY 2024 FY 2024 metric 23 Feb 2024 comparable Actuals 26 July 2024 Underlying Domestic Growing Growing 4,665M€ +4.6% YoY revenue up to 1% up to 2.5% Underlying Do
Slide 41: Q&A
Q&A To ask a question, join the conference call → Register here for the Q&A to receive your dial-in details.
Slide 42: Appendix
Appendix
Slide 43: Q2 Group EBITDA +7.5% non pro forma
Group Q2 Group EBITDA +7.5% Including Route Mobile as of May 2024, non pro forma basis Revenue Direct margin 6.9% 6.8% 49 2 1,599 23 3 1,016 38 53 951 1,495 +4.6% +13.3%* +4.5% +24.5%* Q2’23 Domestic International Others** Q2’24 Q2’23 Domestic International Others** Q2’24 OpEx EBITDA 6.2% 7.5% 11 3
Slide 44: From reported to underlying – EBITDA adjustments
Group From reported to underlying – EBITDA adjustments Q2’23 Q2’24 (M€) (M€) 486 12 3 480 447 6 446 11 5 3 -24 -2 -19 -1 Reported Lease Lease Transformation Acquisitions, Litigation / Underlying Reported Lease Lease Transformation Acquisitions, Litigation / Underlying depreciations interest mergers
Slide 45: Higher Income Tax Paid and change in Working Capital
Group Higher Income Tax Paid and change in Working Capital, offsetting benefit of higher EBITDA and lower cash CapEx Q2 FCF Operations Investing ( YoY, M€) Route Mobile acquisition costs -22 34 10 -2 5 -21 12 -596 5 -20 -24 -598 FCF Adjustments Adjusted FCF Underlying Change in Interests paid Income
Slide 46: EBITDA conversion to FCF
Group EBITDA conversion to FCF YTD 2024 (M€) 951 934 -17 -239 -40 -75 5 -697 -114 -613 -727 Reported Adjustments Underlying Change in WC Interests paid Income Tax paid Cash Capex Cash Other FCF Q2’24 Adjustments FCF YTD ’24 Ebitda Ebitda and received Investing adjusted YTD ’24 YTD ’24 YTD ’24 46
Slide 47: Net income
Group Net income (Group share) (M€) +1.8% 55 4 -27 0 191 188 -27 -2 YTD 2023 Underlying Adjustments D&A Net Tax expense Others (*) YTD 2024 Ebitda finance result * Include Non-controlling interests and Share of loss from associates 47
Slide 48: Adjusted Net Financial Position
Group Adjusted Net Financial Position (excl. lease liabilities) YTD 2024 (M€) Net financial position Net financial position EOP 2023 Free Cash Flow Dividends Other* YTD 2024 -3,131 -727 -226 -79 -4,163 * Mainly remeasurement to fair value of cash flow hedge instrument for future LT debt, net of debt
Slide 49: Managing maturity and average coupon
Group Managing maturity and average coupon Long term debt weighted average coupon of 2.65% Debt maturity schedule (M€) ~25% in next 5yrs ~75% in ≥ 5yrs Credit ratings S&P BBB+ (stable outlook) Moody’s A2 (stable outlook) 2.7% green green bond bond Weighted average coupon 750 750 400 700 (long-term o
Slide 50: Shareholder structure
Shareholder structure Status 30/06/2024 Total number of shares Free-float Belgian Government Market Capitalization Gross Dividend yield 338,025,135 42% 54% ~€ 2.5Bn ~8% Number of shares Number of shares Number of shares % shares % Voting rights % Dividend rights with voting rights with dividend righ
Slide 51: Contact Investor Relations
Contact Investor Relations Nancy Goossens Adrien Peillon Investor Relations Lead Investor Relations manager Call: Proximus Investor E-mail: +32 2 202 82 41 Relations website: investor.relations@proximus.com +32 2 202 62 17 www.proximus.com/en/investors