Orange Belgium Sa · EURONEXT:OBEL
Orange Belgium Sa — Mobistar — FY2012 Earnings Presentation
59 slides from Orange Belgium Sa's earnings presentation, Feb 6, 2013
Slide 1: FY 2012 Analyst Presentation
FY 2012 ANALYST PRESENTATION 06 February 2013
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains forward-looking statements about Mobistar, in particular for 2013 and 2014. Although Mobistar believes these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, including mat
Slide 3: Definitions
Definitions ARPU: Monthly average revenue per user is MTR: Mobile Termination Rate is the per minute based on a rolling 12 months average charge paid by a telecommunications network taking into consideration total Incoming & operator when a customer makes a call to outgoing revenues voice, SMS a
Slide 4: Agenda
Agenda • Key Highlights • Operating Results • Topics in the Spotlight • Financial Review • Outlook 2013-2015 Siddy Jobe Werner De Laet Olivier Ysewijn Jean Marc Harion Cristina Zanchi Gabriel Flichy Director Investor Chief Financial Chief Strategy Chief Executive Chief Customer Chief Technology Rela
Slide 5: Key Highlights
KEY HIGHLIGHTS 2012 MARKET REVIEW 2012 COMPANY HIGHLIGHTS 4 STRATEGIC PRIORITIES 2012 GUIDANCE
Slide 6: A lot of things changed in 2012 in Belgium
A lot of things changed in 2012 in Belgium; but so far, regulation, technology and market changes have impacted mainly mobile. Mobile market under pressure MTR regulation Roaming regulation New Telecom Law Open competition: 45 MVNOs Fixed to mobile predatory tariffs Messaging apps cannib
Slide 7: 2012 was intense for Mobistar too
2012 was intense for Mobistar too Nov Dec Personal Checkup Oct Sep Aug IP VPN offer Jul Jun May Apr Mar Full MVNO with Telenet extended Feb Jan 7
Slide 8: Mobistar continued to deliver on its strategic priorities
Mobistar continued to deliver on its 4 strategic priorities Consolidate Animal plans reaching 43% of residential postpaid customers Leadership in Mobile MMM attach rate on contract base increased to 77.3% Differentiate First 4G pilots live in Antwerp and Luxembourg-City with services everywhere IRIS
Slide 9: Mobistar reached its 2012 objectives
Mobistar reached its 2012 objectives 2011 Actuals 2012 Guidance 2012 Results Total Turnover 1.658 M EUR 1.625 M EUR 1651 M EUR 9 EBITDA * 530 M EUR 460 - 500 M EUR 494 M EUR * 9 Capex/Service Revenue 12.2% ~12% 13% 9 Net profit 221 M EUR 157 - 182 M EUR 186 M EUR 9 Organic cash flow ** 242 M EUR 170
Slide 10: Operational Update
OPERATIONAL UPDATE MARKET DYNAMICS B2B: M2M & IRISNET CUSTOMERS, PRICE & TRAFFIC EVOLUTION WHOLESALE BUSINESS MOBILE DATA
Slide 11: Mobistar continued to grow organically by 3%
In a competitive & open mobile market, Mobistar continued to grow organically by 3% Mobistar group turnover evolution (In Mio EUR) 1.658 59 62 1.651 -30 10 2 +3% -29 50 1.600 11 Mobistar + Orange Lux. Orange Lux. Mobistar handsets Regulation MTR Regulation Roaming MVNO MTR and full MVNO impact* FY 2
Slide 12: Mobistar FY12 net adds are positive
Mobistar FY12 net adds are positive thanks to increasing Postpaid Customer base and MVNO Market net adds split (k users) Mobistar net adds split (k users) and mobile penetration 115% 117% 112% 112% 113% 114% 114% 203 119 162 161 148 118 53 68 120 108 44 38 55 13 71 78 25 55 36 22 28 22 20 17 56 86 2
Slide 13: Launch of Animals plans in a more competitive market
Due to the launch of our Animals, Mobistar was well equipped to address an even more competitive market • Animals segmented offers were launched in April 2012: Mobistar was first in Belgium to offer contracts without commitment • Unlimited elements in almost all the price plans (unlimited calls or t
Slide 14: Postpaid customer base increased in FY12
Postpaid Customer base increased in FY12 and reached 68.2% of Customer base Mobistar customers (in k customers) 66,3% 67,0% 68% 68,1% 68,2% 63,6% 63,9% 64,3% 65,0% 4.213 4.320 3.987 4.009 4.035 4.105 4.090 4.144 3.951 +8.340 subscribers Y-o-Y Postpaid Customer base FY10 Q1 2011 Q2 2011 Q3 2011 FY11
Slide 15: Service-oriented distribution remuneration scheme
Mobistar revised its service-oriented distribution remuneration scheme protects us in a volatile market Dealer remuneration based Arpu profile (My series) + on gross adds performance High Upfront, no airtime ARPU ARPU in out of promo promo + Service oriented and ARPU related Arpu profile (Animals) d
Slide 16: Mobile ARPU continued to grow thanks to data usage
Excluding regulation, the mobile ARPU continued to grow thanks to increased data usage ARPU/month EUR AUPU/month (in- & outgoing traffic) (incl. visitor ) roaming) 338 350 321 327 313 31,3 302 291 300 280 277 272 276 250 220 29,5 216 216 207 216 203 207 -0,8 28,7 200 161 154 155 154 155 156 155 146
Slide 17: Mobile multimedia adoption in Belgium is accelerating
Mobile multimedia adoption in Belgium is accelerating. 59% of persons that can, access mobile internet Source : Omnibus, 2009, 2010, 2011, 2012, GfK Significant 17
Slide 18: Mobile data revenues reached 41.4% of mobile service revenues
Mobile data revenues reached 41.4% of Mobistar mobile service revenues Mobile data uptake (in Mio EUR) • 2 x more tablets • +50 % more smartphones • Global Mobile Multimedia AUPU increased by 112% in one year time, especially in Q4 18
Slide 19: Enterprise Mobility 3.0 opportunity
Enterprise Mobility 3.0 is an opportunity to take the lead on the Fixed centric players 19
Slide 20: Mobistar B2B business continued to grow
Mobistar B2B business continued to grow M2M Leader in Belgium IRISnet 2: Next Generation Network (70% of market share ) 518 On May 11, 2012, Mobistar partners with the Brussels regional government for a 417 period of 10 years IRISnet 2 incorporated in July 2012 and operates the network as of Nov
Slide 21: Wholesale business supported by MVNO strategy
Wholesale business strongly supported by MVNO strategy MVNO Revenues & Customers 2012 highlights MVNO • Light & Full MVNO Customer base increased • Total MVNO performance impacted by MTR and Telenet shift from Light to Full MVNO Carrier Services Innovative Services (*) At the end of June 2011still 1
Slide 22: Topics in the Spotlight
TOPICS IN THE SPOTLIGHT HAPPY CUSTOMER SPECTRUM & COVERAGE REGULATION
Slide 23: Happy Customer vision translated into actions
The Happy Customer vision translated into a concrete 2012 and 2013 actions Mobistar Customer experience promise Proactive + Enhance Deliver CRM and Client Reactive Customer Multichannel Expert Culture Customer rel. Service service support within standards Mobistar Customer Mobistar centers Customer
Slide 24: Voice of the Customer: Listen, Act, Improve
Voice of the Customer: Listen, Act, Improve More than 40 processes improved Customer Test Center 2012 2012 2012 2012 Over 50 offers/products adjustments Increased First Call resolution to 93% implemented in the last 6 months 24
Slide 25: Mobistar enhanced its service standards
Mobistar enhanced its Service standards Stable & Accessible Customer Care Social Media: increase of users & posts Change for 2011 Today Customer 100 % •100 % Written answered •6x faster requests answered answer within 30 days within 5 days Calls •57% answered •70 % answered •25% less within 20 sec.
Slide 26: Multi-channel services
Mobistar focused on delivering multi-channel services Mobistar Centers: Webcare new Care Services Mystart : Expert assistance to get you started with your new smartphone Back-up: Customers data copied to new device Handset repair : shorten Turn Around Time Configuratie Back-up Herstelling Conf
Slide 27: Mobile network 60% swapped end 2012
Mobistar mobile network 60% swapped end 2012 Q3-2013 Q1-2013 Q2-2013 2011-2012 2G improvments New radio features 3G reoptimisation
Slide 28: Investments deliver significant 3G coverage
Mobistar investments on radio and backhaul deliver significant 3G coverage End 2011 End 2012 End 2013 UMTS Indoor Coverage UMTS Outdoor Coverage GSM Outdoor Coverage
Slide 29: 4G pilot in Antwerp
With the 4G pilot in the city of Antwerp, Mobistar is testing instant internet in real life condition interactive services streaming services OTT conversational file transfer ALWAYS-ON HD services services Web browsing, HTML5, TV, video, audio Upload, download (apps, gaming, maps, cloud & streaming
Slide 30: Initial 4G pilot results
Initial 4G Pilot results: Customer experience highlights that 4G is as fast as fixed internet Question: When you compare the speed of the 4G/LTE-network with the fixed Internet connection that you use, can you give the speed difference you have experienced when using that specific service? In genera
Slide 31: Spectrum portfolio is well diversified
Mobistar’s spectrum portfolio is well diversified to service the increasing market demand Current spectrum allocation (MHz duplex) 800 MHz Auction in 4Q13) 30 900 MHz** 10 6 6 6 6 1 1800 MHz 15 15 22 Mobistar 1800 MHz* 20 20 22 Proximus Base 2100 MHz 15 15 15 15 Telenet/Tecteo 2600 MHz 20 15 20 45 (
Slide 32: Spectrum – Synthesis Royal Draft Decree
Spectrum – Synthesis Royal Draft Decree Subject: The 790-862MHz band (“800MHz band”) comprises 2×30MHz of available spectrum auction in three blocks of 2×10MHz channels. License duration: 20 years from notification of granting Reserve Price: 25,000 euros per MHz per month (equivalent to EUR 12
Slide 33: Regulated revenue base decreased to 29% of mobile turnover
The regulated revenue base has decreased to 29% of the mobile turnover, excluding MTR SMS to only 14% Mobile turnover split (% of revenues) Strong handsets sales in H2 2012 MTR and roaming revenues impacted by regulation. Decreased from 20% of mobile turnover to 14%. Increase due to success of SMS a
Slide 34: Regulation – MTR
Regulation – MTR EU recommendation envision 1€cent MTRs without asymmetry as of mid 2013 to its member states. Luxembourg regulator is working on market analysis & remedies. 34
Slide 35: Regulation – Roaming
Regulation — Roaming Retail Price Caps (EURcent/min, Excl. VAT) — Data (per MB) 70 —— Voice-calls made (per minute) \ 45 — Voice-calls made (per minute) 35 SMS (per SMS) is = 24 20 19 ih 9 8 5 7/11 7/12 7/13 7/14 7N5 Wholesale tariffs (EURcent/min, Excl. VAT) 50 — Data (per MB) 25 —— Voice (per minu
Slide 36: Regulation – Cable Opening – Next Steps
Regulation – Cable Opening – Next Steps Current status Regulatory Calendar In the Draft reference course of offers 5/2/2013 : End 2014 : published for of the outcome comments in consultation on +/- Q2/2013 : Final of appeal November the reference reference offers on the 2012 offers. published merits
Slide 37: Financial Performance
FINANCIAL PERFORMANCE
Slide 38: Stable total turnover but EBITDA under pressure
Mobistar Group shows stable total turnover but EBITDA under pressure Consolidated income statement in Mio EUR H2 2011 FY11 H2 2012 FY12 Y-o-Y Total Turnover 837.6 1,657.6 848.0 1,650.5 -0.4% Total Service Revenues 755.7 1,505.8 728.3 1,450.0 -3.7% Cash Expenses -604.3 -1,169.5 -633.4 -1,208.4 3.3% E
Slide 39: Recurrent EBITDA margin declined in 2H
The recurrent EBITDA margin declined in 2H due to roaming regulation and increased competition Consolidated income statement 750 750 756 722 727 728 728 -3,6% -3,0% 36,1% 34,5% 34,3% 34,6% 32,7% 33,6% 32,2% -8,1% -9,6% 271 259 259 250 238 244 235 reported recurrent H2 2011 reported recurrent reporte
Slide 40: Mobile and Fixed EBITDA
Mobile EBITDA impacted by regulatory & competitive pressure, Fixed EBITDA slightly improved Mobistar Mobile income statement in Mio EUR H1 2011 FY11 H1 2012 FY12 Y-o-Y Total Turnover 712.7 1,442.7 698.7 1,445.0 0.2% Total Service Revenues 641.5 1,288.1 615.9 1,240.0 -3.7% Cash Expenses -435.7 -896.8
Slide 41: Orange Luxembourg delivers profitable growth
Fuelled by postpaid and B2B, Orange Luxembourg delivers profitable growth Orange Luxembourg income statement in Mio EUR H2 2011 FY11 H2 2012 FY12 % Total Turnover 34.1 65.7 40.1 75.5 14.9% Total Service Revenues 31.5 60.7 33.2 65.5 8.0% Cash Expenses -30.2 -57.3 -34.4 -64.0 11.8% EBITDA 4.0 8.5 5.8
Slide 42: Opex almost in line with last year
Opex almost in line with last year, despite increasing headcount cost Total cash expenses (in Mio EUR) Orange Luxembourg increase of salaries and indexation significant increase of selling fees on prepaid volumes. Higher cost of handsets sold is compensated by lower communication expenses MO
Slide 43: Capex driven by 3G and 4G pilot roll-out
Capex were driven by further 3G and 4G pilot roll- out and commercial phasing of fix activities Capex (in Mio EUR) Main Capex drivers Mobistar continued to roll-out its network renewal program in H1 2012. Close to 60% of the 2012 targeted sites ( # 1650) already swapped On its backhauling upgrad
Slide 44: Balance sheet remains strong
Balance sheet remains strong Balance Sheet in Mio EUR H1 2011 FY11 H1 2012 FY12 Non-current assets 1,070 1,070 1,032 1,046 Other Current assets 304 304 315 289 Taxes payable decreased in line Cash and cash equivalents 7 7 7 12 with the corporate tax payment of TOTAL ASSETS 1,382 1,382 1,354 1,347
Slide 45: Organic cash-flow decreased to 133.2 Mio EUR
The organic cash-flow decreased to 133.2 Mio EUR impacted by the paid taxes in December Detailed cash flow analysis in Mio EUR H1 2011 FY11 H1 2012 FY12 EBITDA 270.6 530.1 249.7 494.1 Financial result -4.4 -10.9 -5.9 -10.7 Other Non cash items 6.8 4.0 4.5 14.9 Change in working capital -1.2 -8.0 -14
Slide 46: Super Mobile Plan 2013-2015
SUPER MOBILE PLAN 2013-2015
Slide 47: A new cycle in our industry
Regulation, technology changes and market evolution are now impacting family services too, opening a new cycle in our industry 2012 2015 After many years of continuous organic growth in a competitive market, Mobistar wants to be ready to take advantage of a new industry cycle 47
Slide 48: Best positioned to capitalize on new social behaviors
Mobistar is best positioned to capitalize on new social behaviors and deliver the personal services of the future Social behaviors evolution Mobistar strong positioning People are connected anytime People use personal devices at work People use social networks at work People work at home P
Slide 49: Super Mobile strategy driven by 4 priorities
Your personal services anywhere with friends, @home, @work – Mobistar’ Super Mobile strategy is driven by 4 priorities: Consolidate Mobile VHBB Boost 3G and accelerate 4G Leadership in Voice and Data Mobile Abundance Abundant offers for all segments Differentiate “À la carte” vs. B2C: cloud and cabl
Slide 50: Consolidate Leadership in Mobile
Consolidate Leadership in Mobile: extend mobile leadership to 4G Broadband and offer Abundance to all segments Boost 3G and accelerate 4G Abundant offers for all segments 500 4G users in Antwerp and Animals = 43% postpaid end 2012 Luxembourg end 2012 Data = 41% mobile service revenues 65% 3G
Slide 51: Differentiate with Services Everywhere
Differentiate with Services Everywhere: develop services in the cloud for B2C and B2B and prepare future regulated cable offers B2C: cloud and cable services B2B: 3.0 mobile connectivity Fixed as an optional commodity to Mobistar B2B mobile lines: +4% YoY access cloud and OTT services: Smartph
Slide 52: Deliver Best in class Customer Service
Deliver Best in class Customer Service: a new deal with our Customers and a focus on service in every touch point with them Best loved telco in Belgium Service at core of our channels “Happy Customer” focus on 1st time A new operating model for our resolution & accessibility boost NPS: Mobistar
Slide 53: Lead Industry Efficiency: ACE program
Lead Industry Efficiency: ACE* program to redesign our cost structure and revisit our core processes to prepare our future Tactical ACE 1: cost savings Strategic ACE 2: processes redesign Launched in June 2012: continuation Launched in Nov. 2012: in-depth of the 2009-2011 Odyssey program analysi
Slide 54: New sustainable dividend policy: proposed 2012 dividend €1.80
Super Mobile aggressive investment plan implies a new sustainable dividend policy: proposed 2012 dividend is €1.80 Cash flow based Former 2005-2011 Dividend Policy was based upon: retained earnings important investment projects Guidance on the consolidated net result Mobistar s.a. was used b
Slide 55: Financial Outlook 2013
Financial Outlook 2013 2012 2013 Actuals Guidance Between Total Turnover 1651 M EUR -4% and -6% EBITDA 494 M EUR 380 - 420 M EUR Operating cash flow ** 306 M EUR 175 - 215 M EUR * FY12 EBITDA included EUR 17.5m reversal of provisions related to universal services and EUR 9.8m other income related to
Slide 56: FY13 Results Calendar
FY13 Results Calendar DATE EVENT 29 March 2013 Annual report 2012 available on the website 22 April 2013 Financial results Q1 2013 (7:00 am) – Press release 22 April 2013 Financial results Q1 2013 - Conference call 2 May 2013 General Meeting of Shareholders (11:00 am) 23 July 2013 Financial results
Slide 57: FY13 Roadshow and Conference Calendar
FY13 Results Calendar DATE LOCATION BROKER ROADSHOW / CONF. 12 February Paris Exane BNP Paribas Management Roadshow 5-6 March Boston / NY Nomura Management Roadshow 8 March Amsterdam Rabobank Made in Benelux TMT Conf. 12 March Brussels KBC Management Roadshow 15 March Frankfurt Deutsche Bank Managem
Slide 58: Q&A
Q&A Mobistar
Slide 59: Investor Relations contact
For further questions please contact IR department Investor Relations Siddy Jobe Email: Siddy.Jobe@mail.mobistar.be http://corporate.mobistar.be/go/en/financial_information.cfm Visit our websites: • www.mobistar.be • http://business.mobistar.be • http://corporate.mobistar.be