Proximus Sa · EURONEXT:PROX

Proximus Sa — Belgacom — Q1 2013 Earnings Presentation

57 slides from Proximus Sa's earnings presentation, May 2013

  1. Slide 1: Belgacom Presentation Q1 2013 results

    Belgacom Presentation Q1 2013 results May 2013 Q1 2013 Group Q1 2013 Results Other topics Highlights per segment Guidance – slide 4 Consumer – slide 21 Shareholder structure – slide 38 Q1 2013 Revenue – slide 5 Enterprise – slide 28 Shareholder remuneration – slide 39 Cost of Sales – slide 6 Non-HR

  2. 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-

  3. Slide 3: Executive summary on Q1 2013

    Executive summary on Q1 2013 - Financials impacted by regulation & Mobile pressure Financial results - Group revenue fairly stable versus Q1 2012 Q1 within expectations - EBITDA -6.1% YoY - Full-year guidance reiterated Competitive – New Telecom law accelerated customer rotation as of Q4’12 dynamics

  4. Slide 4: FY 2013 guidance reiterated

    FY 2013 guidance reiterated FY 2013 Q1 2013 Metrics outlook reported Group revenue Decline between -0.1% -1% and -2% Group EBITDA* Decline between -6.1% -4% and -6% Capex/Revenue Between 12.2% 13% and 14% * Compared to the restated 2012 EBITDA of € 1,801 m, following the retrospective application of

  5. Slide 5: Q1 2013 Group revenue fairly stable

    Q1 2013 Group revenue fairly stable Revenue evolution – in million € +1.4% -0.1% Ex – reported Regulation Pressure on the Mobile 1,588 Market +6 1,586 -15 Roaming +35 +11 -10 MTR -24 -18 -9 -1 -2 Sale of Voice technical volumes, building as destination part of mix, data simplification growth project

  6. Slide 6: Q1 Cost of Sales up 3.7%, driven by BICS' growth

    Q1 Cost of Sales up 3.7%, driven by BICS’ growth Quarterly Cost of Sales ( € million) +3.7% Q1’13 Cost of Sales at € 637m, +3.7% YoY, driven 68 0 680 by the strong growth of BICS partly offset by 667 63 0 655 649 633 637 the strong decline in Consumer CoS, and 58 0 621 614 somewhat lower Enterpise C

  7. Slide 7: Lower non-HR expenses

    Lower non-HR expenses Quarterly Non-HR expenses ( € million) -3.7% 25 0 Q1’13 non-HR expenses of € 218m, explained by 24 0 23 0 256 cost containment and a favorable year-on- 22 0 232 226 224 21 0 217 218 year currency impact 20 0 213 196 19 0 18 0 17 0 16 0 15 0 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q1

  8. Slide 8: Q1'13 HR expenses impacted by double indexation

    Q1’13 HR expenses impacted by double indexation Quarterly HR-expenses (€ million) +4.3%  Inflation-based salary indexations (March 2012 29 0 and January 2013) main driver of higher HR 27 0 282 283 281 290 290 278 278 278 expenses 25 0  23 0 Only partly offset by a year-on-year 21 0 reduction in he

  9. Slide 9: Q1 2013 Group EBITDA pressured by regulation

    Q1 2013 Group ebitda pressured by regulation, lower Direct Margin and higher HR-expenses Ebitda evolution – in million € Rev. pressure -2.9% Wholesale rev. largely offset by EX - slowing & Solid Direct Regulation cost containment simplification Margin & in Q1 470 projects requiring somewhat +11 reso

  10. Slide 10: Invest in high-quality fixed & mobile network

    Invest in high-quality fixed & mobile network to maintain leadership in convergence Accelerated network investments Group Capex in € millio n / % of revenue 13%-14% - maintain network superiority on 12 .1% 900 11.1% 11.7% 800 mobile speed and coverage, 700- substantially increase the 600 bandwidth o

  11. Slide 11: Q1'13 Free Cash Flow of €89 million

    Q1’13 Free Cash Flow of € 89 million Q 1 2 0 12 Q 1 2 0 13 (in mio € ) Re s tate d variance CF from operating activities 386 271 -115 Capex -186 -193 -7 Lower FCF result of: CF from/used in other activities -21 11 32 Fre e Cas h Flo w 179 89 -90 - Higher income tax payments - Lower EBITDA - Higher c

  12. Slide 12: Sound financial position

    Sound financial position - Net financial debt at € 1,506 m, € 95m lower versus end 2012 - The outstanding long term financial gross debt amounted to € 2.0Bio - Credit ratings: Standard & Poor’s A; Moody’s A1 – both stable outlook ( 1 ,601) ( 1 ,506) 1 89 7 ( 2) Net debt FCF Dividends Net sale of Oth

  13. Slide 13: Belgacom consolidated balance sheet

    Belgacom consolidated balance sheet 31-Dec 31-Mar (EUR million) 2012 Restated* 2013 TOTAL ASSETS 8,245 8,505 Non-recurrent assets 6,194 6,173 Goodwill 2,339 2,339 • Intangible fixed assets and property, Intangible assets with finite useful life 1,097 1,095 plant and equipment are fairly stable Prope

  14. Slide 14: Group – quarterly P&L

    Group – quarterly P&L VAR in mio € Q112 Q212 Q312 Q412 FY 2012 Q113 Q1/Q1 Restated* Revenues (1) 1,5 8 8 1,6 11 1,6 20 1,6 44 6 ,46 2 1,5 8 6 -0.1% Total OPEX -1,118 -1,172 -1,156 -1,215 -4,661 -1,144 2.4% Costs of goods sold -614 -667 -649 -680 -2,611 -637 3.7% HR-costs -278 -281 -290 -278 -1,126 -

  15. Slide 15: Solid performance fixed products

    Solid performance fixed products Broadband customer evolution Fixed Internet market share net adds total 28 1,637 1,647  Belgian Fixed internet market 1,700 1,606 1,615 1,626 23 1,600 18 still growing, but at slower pace  Internet penetration @ 77% 1,500 13 15 12 11  Belgacom market share erosion

  16. Slide 16: Mobile Postpaid back to growth

    Mobile Postpaid back to growth Mobile market share 1 Mobile customer evolution 2  Postpaid: + 61,000 net adds 5,498 total 5,543 5,504  Prepaid: -113,000 100 80 5,416 5,364 5,600 5% 5,400 60  5,200 40 20 39 45 5,000 Mobile Postpaid back to 24% 0 4,800 growth backed by successful -20 -40 -39 -52 4,

  17. Slide 17: From Mobile retention (Q1) to acquisition (Q2)

    From Mobile retention (Q1) to acquisition (Q2) Q1: Focus on retention and repositioning  Supported by network campaign & strong retention actions Q2: Focus on acquisition  Supported by new mobile portfolio & campaigns More value including in Belgacom’s new mobile offers Slide 17

  18. Slide 18: Customer acquisition via convergent Packs

    Customer acquisition via convergent Packs – Mobile in Pack to become the new standard Packs evolution net adds total 1,214,000 1,237,000 1,259,000 1,300,000 1,177,000 1,143,000 80 1,200,000 +116k in YoY 1,100,000 60 40 54 1,000,000 4-Play 37 900,000 +53% 34 20 23 YoY 22 800,000 2-Play 1,259,000 +9%

  19. Slide 19: All assets in hands to cope with changing telecom market

    All assets in hands to cope with changing telecom market Belgacom has extensive service coverage and state of the art service platforms enabling true service convergence DSL 4G FON Largest WiFi 99.85% DSL First to launch in network in (among world leaders) November ‘12 Belgium 86% VDSL (2nd in Europ

  20. Slide 20: Q1 2013 results per business unit

    Belgacom Company presentation Investor Relations Q1 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) 20 20 Slide

  21. Slide 21: Consumer - P&L

    Consumer - P&L Pressure on Direct Margin partially offset by cost containment CBU revenue (EUR mio) 61 0  Revenue impacted by: -4.2% 59 0 – Regulation (€-7m or -1.1%); this excluded revenue -3.1% YoY 587 57 0 55 0 579 571 572 577 575 581 – Pressure on Mobile revenue , continued Fixed Voice erosion,

  22. Slide 22: Consumer - Fixed voice

    Consumer - Fixed voice Fixed Voice Fixed Voice line price increase erosion results stable; in fairlydecline revenue flat ARPU, line erosion continued largely to persist explaining revenue decline Fixed voice revenue (EUR mio) 14 0  Fixed Voice revenue erosion limited to -5% YoY -5.0% 13 0 12 0 – Yo

  23. Slide 23: Consumer – Mobile Voice

    Consumer – Mobile Voice Mobile Voice revenue under pressure; Postpaid customer base back to growth with 26,000 net adds Mobile voice revenue (EUR mio)  Q1’13 Mobile Voice revenue -23.2% YoY: – 16 0 14 0 -23.2% Driven by regulatory impacts & 147 143 136 133 – 12 0 10 0 130 123 120 especially by lowe

  24. Slide 24: Consumer - Fixed Data

    Consumer - Fixed Data Continued Fixed Internet revenue growth driven by price indexation and growing customer base Fixed data revenue (EUR mio) +2.2%  Q1’13 revenue up 2.2% YoY – 88 86 Positively impacted by price indexation Feb’13 84 87 82 83 85 84 85 85 – Continued YoY customer growth 82 82 80 78

  25. Slide 25: Consumer - Mobile Data

    Consumer - Mobile Data Mobile data revenue growth trend impacted by regulation and more abundant offers age Mobile data revenue (EUR mio) +0.1%  Mobile Data rev stable YoY 12 0 SMS Adv Data 102 98 100 97 – Revenue growth restrained by regulation 97 97 92 93 15 15 13 – SMS revenue was nearly flat (+

  26. Slide 26: Belgacom TV

    Belgacom TV Continued TV revenue growth through larger TV customer base and higher ARPU TV revenue (EUR mio) +16.9%  TV revenue +16.9% YoY driven by – Continued growth of subscribers 61 62 64 53 51 53 55 57 – Price increase of rented settop box Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 TV growth & EO

  27. Slide 27: Tango Luxembourg

    Tango Luxembourg Tango revenue (EUR mio) 28  +7.1% Q1 revenue +7.1% YoY 30 29 26 28 28 27 28 28 – Postpaid customer growth, including ongoing migration of prepaid towards postpaid offers. Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113  Tango acquired 3,000 new Mobile customers in the first Tango mobile c

  28. Slide 28: Enterprise – quarterly P&L

    Enterprise – quarterly P&L 64 0 EBU revenue (EUR mio)  Q1 YoY decline of 4.4% in context of unfavorable economy -4.4% 62 0 and stiff competition 60 0 58 0 593 591 – Regulation impact of € -17m (-2.9%) in Q1 579 579 56 0 54 0 572 576 560 554 – Q1 underlying revenue limited to -1.5% YoY : ICT growth

  29. Slide 29: Enterprise - Fixed Voice

    Enterprise - Fixed Voice Fixed Voice revenue first quarter 2013 impacted by regulation and line erosion Fixed voice revenue (EUR mio) 14 0 -4.8%  Q1 revenue decline of -4.8% YoY 13 0  Including negative regulation effect from lowered F2M 125 12 0 11 0 121 122 124 120 118 119 118 tariffs 1 January

  30. Slide 30: Enterprise - Mobile Voice

    Enterprise - Mobile Voice Enterprise - on Continued pressure Mobile Voice Mobile Voice revenue; growing Mobile customer Solid basecustomer growth, revenue under pressure due to pricing and regulation Mobile voice revenue (EUR mio) 13 0  Q1’13 Mobile voice revenue of € 88m, -16.7% YoY -16.7% 12 0 11

  31. Slide 31: 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)  Q1’13 Fixed Data revenue €96 m,

  32. Slide 32: Enterprise – Mobile Data

    Enterprise – Mobile Data Regulated price caps pressuring both SMS and advanced Mobile data revenue Mobile data revenue (EUR mio)  € 53m Mobile Data revenue, i.e. -5.9% YoY -5.9% – 80 70 SMS ADV Data Q1’13 non-SMS Data revenue € 28m, -7.2% YoY fully 57 56 58 54 53 due to negative regulated price eff

  33. Slide 33: Enterprise - ICT

    Enterprise Enterprise –- ICT ICT ICT revenue Solid up by 6.1% ICT revenue, on like-for-like showing basis in challenging 4.2% growth economic context  Q1’13 ICT revenue +4.2% YoY to €174m 22 0 ICT revenue (EUR mio) – Seasonally slower quarter , 21 0 20 0 +4.2% – 19 0 Growth somewhat contained due t

  34. Slide 34: Service Delivery & Wholesale – P&L

    Service livery & Delivery Wholesale& Wholesale - P&L – P&L 98 SDE&W revenue (EUR mio) -3.0%  Q1 revenue -3% YoY driven by slowing wholesale revenue 93 88 83 – Regulatory measures reduced the Q1 revenue by 1.3%. 78 80 80 – lower traffic volumes , decline in wholesale leased lines 78 73 77 76 75 76 7

  35. Slide 35: Staff & Support – P&L

    Staff & support - P&L Staff & Support – P&L S&S Revenue(EUR mio) • Q1’13 revenue of € 18m included a capital gain of € 11m 30 +109.0% 25 realised by Belgacom resulting from the sale of a technical 25 building as part of Belgacom’s ongoing network 20 18 15 10 11 simplification plan. 5 7 8 9 7 7 0 Q21

  36. Slide 36: International Carrier Services – P&L

    International Carrier Services International Carrier Services – P&L P&L 44 0 BICS Revenue (EUR mio) +9.1 • Solid revenue growth continued in Q1’13 42 0 430 – Voice revenue +7.7% YoY: strong increase in traffic to African 40 0 424 417 38 0 401 401 409 region and a temporary traffic increase to the As

  37. Slide 37: 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 38Unit (EBU) • Pricing – slide 46 • •Shareholder Serviceremuneration Delivery Engine -

  38. Slide 38: Shareholder structure

    Shareholder structure Belgian state owns ~ 53.5% 338,025,135 shares, of which 318,560,303 Outstanding • Limited liability company under public law - Belgian state main shareholder: 53.5% Own - Legal obliged threshold: 50%+1 share Shares; • Free float 40.7% 5.8% • Treasury shares 5.8% Free Float; Bel

  39. Slide 39: Belgacom intends to ensure its shareholders an attractive return

    Belgacom intends to ensure its shareholders an attractive return Shareholder remuneration Dividend per share & dividend yield 11.2% SBB Dividends % of FCF Interim dividend Extra dividend Normal dividend 9.0% 8.2% 8.7% Mio € Seri… Dividend Yield* 8.0% 1,000 150% 6.1% 6.5% 900 5.5% 5.7% 2.49 800 120%

  40. Slide 40: Global network strategy

    Global network strategy Value enablers for a convergent interconnected world Belgacom has all assets in hands to cope with a changing telecom ecosystem Mobile network Fixed network Network simplification • Mobile network innovation • Fixed network innovation • Network simplification driving driving

  41. Slide 41: Mobile network

    Mobile network Belgacom is determined to remain the best mobile operator for all type of customers. By mid Q2 the 3G+ upgrade be finalised, bringing 8 Mbps download & up-to-21 Mbps top speeds, 42 Mbps for dual carrier devices Best mobile 3G network Further boosting the experience with the 3G+ upgrad

  42. Slide 42: Mobile network - Spectrum: The Belgian situation

    Mobile network Spectrum - Belgian situation - Spectrum: The Belgian situation • 900 900MHz MHz& 1800 MHzMHz & 1800 2100 MHz 2600 MHz 800 MHz • 900 MHz & 1800 MHz • Used for 2G, 3G and 4G • Used for 3G • Will be used for 4G DRAFT conditions: • Belgian operators allowed • Proximus, Mobistar & Base • O

  43. Slide 43: Fixed network - Dynamic Line Management & Vectoring

    Fixed network - Dynamic Line Management & Vectoring Substantially increased bandwidth with Dynamic Line Management (DLM). Vectoring to be deployed Fast-track Dynamic Line Management Powerful vectoring technology 1• A speed profile is applied to a VDSL2 line in function of the 1• Crosstalk is interfe

  44. Slide 44: Fixed network - Speed acceleration in coming years

    Fixed network - Speed acceleration in coming years Belgacom will start with Fiber-To-The-Home (FTTH) deployment in new residential zonings in 2013. Future evolutions of speed acceleration is currently described by Pair Bonding and G.fast & Fiber evolution. Speed evolution in Mbps 2013 to >2018 FTTH

  45. Slide 45: Network simplification

    Network simplification Leaner operations through a simplified all-IP-network Program aims at simplifying our network and decreasing operational costs. In its ambition to be an agile company, Belgacom will also focus on substantially simplifying its IT and product portfolios Approach in simplifying o

  46. Slide 46: Pricing – Fixed products

    Pricing – Fixed products Classic Happy Time XL No Limit National Anytime Happy time international 19.99€ / month 19.99€ / month 20.99€ / month 29.67€ / month Note: Free to FIX & to MOB Free to FIX ,to MOB & to Lower tariffs during peak during OffPeak & Weekend Free to FIX Anytime most European count

  47. Slide 47: Pricing – Mobile Voice (Postpaid) in Q1'13

    Pricing – Mobile Voice (Postpaid) in Q1’13 Easy 10 Easy 15 Easy 25 10€ / month 15€ / month 25€ / month For Voice 10€/month PACK 20€/month PACK 50 min ATAN + 100 min ATAN + 100 min ATAN + Unlimited centric 50 SMS 100 SMS evening & we + 100 SMS customers € 0.20 / min ATAN € 0.20 / min ATAN € 0.25 / MM

  48. Slide 48: Pricing – Mobile Voice (Postpaid) as from Q2'13

    Pricing – Mobile Voice (Postpaid) as from Q2’13 Easy+ 10 Easy+ 15 Easy+ 25 Easy+ 55 10€ / month 15€ / month 25€ / month 55€ / month For non- 10€/month PACK 20€/month PACK 45€/month PACK 20 min ATAN + 150 min ATAN + Smartphone unlimited SMS unlimited SMS 240 min ATAN unlimited SMS Unlimited min ATAN

  49. Slide 49: Pricing – Mobile Voice (Prepaid) as from Q2'13

    Pricing – Mobile Voice (Prepaid) as from Q2’13 Reload bonus For Pay&Go Easy you get : For non- Pay & Go Easy • Bonus 1 (towards fix and Mobile 10€ reload= 20min, 15€ reload= 40min, 25€ € 0.27/ min ATAN Smartphone € 0.12 / SMS ATAN reload= 70min, 50€ reload= 200 min € 0.25 / MMS ATAN OR Bonus 2 (towa

  50. Slide 50: Pricing – Mobile Data

    Pricing – Mobile Data Internet on GSM Internet on GSM Blackberry service Standard Internet on GSM Start Pay & Surf Comfort Favorite 4.99€ / month 9.99€ / month 19.99€ / month 18.15€ / month 2.99€  25 MB 0.5€ / MB (prepaid ) 50 MB incl. 500 MB incl. 500 MB incl. 4.99€  50 MB Or 2 GB incl. 9.99€  2

  51. Slide 51: Pricing converged PACKS

    Pricing converged PACKS As from 1 Jul’13, the rates of Packs TV + Fix including internet go up: + € 2 for Start TV + Internet + € 3 for Comfort 35.75€ / month + € 1 for Maxi In exchange, customers TV comfort 50.95€ / month Fix+ Internet get more volume, + more speed & Classic (or Happy TV comfort 50

  52. Slide 52: Regulation – Overview financial impact

    Regulation – 1 Overview financial impact Estimated Impact Actuals Regulation impacts FY 2013 Q1 2013 (Decrease in EUR million) MTR & Revenue ~ €45m €10m flow-through Fix-to-Mob EBITDA ~ €5m €1m Roaming Revenue ~ €48m €15m (i.e. Voice, SMS and Data) EBITDA ~ €48m €15m Revenue ~ €93m €24m Total EBITDA

  53. Slide 53: Regulation – Mobile Termination Rates (MTR)

    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

  54. Slide 54: Regulation – EU Roaming III Regulation

    Regulation – 3 Mobile voice and data-roaming: EU Roaming III Regulation regulation • Roaming III Regulation entered into force on 1 July 2012. • This new regulation covers a ten-year period until 30 June 2022. • It imposes a further lowering of the existing regulated price caps, and extended the roa

  55. Slide 55: Regulation – Decision to open-up the Belgian Cable Network

    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’ in its area a is submitted to the following obligation

  56. Slide 56: Macro economic environment

    Macro economic environment Belgium & Euro area - prospects Unemployment rate forecast (%)2 Belgium Euro area 11.8% 11.0% 10.1% 8.1% 7.2% 7.5% 2011 2012 2013 Belgium: Budget deficit 3.9% end ‘12 2012 Gross public Debt 99.8% of GDP Source: National Bank 1 GDP – percentage change on preceding year 2 Nu

  57. Slide 57: 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 57

Belgacom — Q1 2013 Earnings Presentation on 6ix