Proximus Sa · EURONEXT:PROX
Proximus Sa — Q2 2015 Earnings Presentation
61 slides from Proximus Sa's earnings presentation, Jul 31, 2015
Slide 1: Roadshow Presentation
2095 OZ Roadshow Presentation progsimuUs
Slide 2: Contents
Q2’15 confirming solid financial & operational trends 3 Consumer segment results 18 Key Group achievements Q2’15 4 Enterprise segment results 27 Group underlying revenue 5 Technology & wholesale 35 Core revenue 6 Staff & Support 36 Mobile service revenue 7 BICS 37 Convergence progress 9 Additional i
Slide 3: Continued revenue growth: Q2'15 Group underlying revenue +1.5% YoY
Continued revenue growth: Q2’15 Group underlying revenue + 1.5% YoY to € 1,505 m Underlying Core revenue +2.4% to € 1,094 m, on higher Fixed and Mobile revenues BICS revenue -0.8% YoY, vs. high comparable base Higher Direct margin: + 2.9% to € 915m for Q2’15 Core business and BICS contributing equal
Slide 4: Key Group Achievements Q2 2015
Key Group Achievements Q2 2015
Slide 5: Group underlying revenue
Q2 Q2 Jun YTD 2015 2015 2015 (in m€) (inm€) m€) (in 27 0 39 2,984 -1 -3 0 1,505 63 7 -10 0 2,885 1,483 +2.4% +2.8% +1.5% +3.4% Underlying CBU EBU TEC Intra-group BICS Underlying Underlying CBU EBU TEC Intra-group BICS Underlying Q2'14 eliminations & Q2'15 YTD June'14 eliminations & YTD June’15 S&S S
Slide 6: Core revenue: Fixed Internet and TV customer evolution
Broadband customer evolution Market share net adds total 1,788 1,813 • YoY growth of 1,740 1,694 1,705 1,718 +108,000 Fixed Internet customers; i.e. Fixed 44.2 % 45.7 % +6.3% Internet 48 25 • Proximus Group 22 16 12 13 showing continued Q2 2014 Q2 2015 good net customer Q1'14 Q2'14 Q3'14 Q4'14 Q1'15
Slide 7: Mobile service revenue
…. 2.5% 1.1% Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 -0.4% -4.5% 0.0% • Fluctuation on -6.0% roaming revenue -5.0% • Higher -7.1% Reported comparable base -11.6% -12.9% On comparable basis -13.3% -14.0% • Growing postpaid mobile customer base and market share • Growin
Slide 8: Growing Group mobile customer base and improving mix
5,698 5,717 5,736 5,617 • Growing Group mobile 5,539 5,591 5,366 5,422 5,445 5,698 customer base and improving mix: 127 124 89 98 96 82 72 • +144,000 Mobile cards 59 63 61 YoY; +2.6% • Customer mix improving incl. impact from to 74% Postpaid vs. Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15
Slide 9: Convergence progress: 3- and 4-play households
• 42 % of the Households/Small offices are 3-or 4-play, and count for 62% of total HH/SO revenue • Continued improvement of mix following growth for 3-Play and 4-Play • Revenue from X-play HH/SO +2.9% YoY; 4-Play revenue +13.7% • ARPH up by 4.9% YoY to EUR 65.1, 4-Play ARPH at € 116 CBU Households p
Slide 10: Group underlying direct margin
Q2 Q2 Jun YTD 2015 2015 2015 (in m€) (inm€) m€) (in 13 915 19 1,805 16 -2 33 -1 -10 -1 0 1 889 1,763 +1.6% +1.4% +2.9% +2.4% Underlying CBU EBU TEC Intra-group BICS Underlying Underlying CBU EBU TEC Intra-group BICS Underlying Q2'14 eliminations & Q2'15 YTD June ‘14 eliminations & YTD June ‘15 S&S S
Slide 11: Underlying cost evolution
+0.9% +1.6% 465 924 932 458 Q2 Ytd Jun 2015 258 254 2015 513 505 (in m€) (in m€) HR HR 201 212 412 428 Non-HR Non-HR Q2'14 Q2'15 YTD June '14 YTD June '15 Group underlying Underlying HR costs (EUR(€m) HR-expenses mio )& &var. YoYYoY variance Group underlying Underlying non-HR Other (EUR mio expenses
Slide 12: Group underlying EBITDA
Q2 Q2 Jun YTD 2015 2015 2015 (in m€) (inm€) m€) (in 22 873 28 2 -18 12 450 16 -1 -9 1 0 839 431 +1.6% +1.6% +4.3% +4.0% Underlying CBU EBU TEC Intra-group BICS Underlying Underlying CBU EBU TEC Intra-group BICS Underlying Q2'14 eliminations & Q2'15 YTD June '14 eliminations & YTD June ‘15 S&S S&S Q2
Slide 13: Net income
Q2 Jun YTD Q2 2015 2015 (inm€) m€) 2015 (in 34 -117 (in m€) 397 -29 -5 -7 2 274 Net income YTD underlying incidentals higher D&A higher net higher tax non controlling Net Income June 2014 EBITDA finance cost expense interest YTD June 2015 variance Ytd June ’15 Net income (Group share) totaled € 274m
Slide 14: Capex
272 245 75 Q2’14 : included capitalisation 245 € 272m Capex in Q2’15, Ytd 2015 at €499m. of 3-yr broadcasting Spectrum 197 rights of Jupiler Pro Without league football Spectrum • Renewal of the 900Mhz/1800Mhz spectrum (€ 75m) Q2'14 Q2'15 • Best in class mobile customer experience, progressing on 4G
Slide 15: Free cash flow
Ytd’15 (in million €) 81 -72 34 -83 391 -150 14 215 FCF YTD June higher income tax cash paid for cash used for disposals other FCF YTD June 2014 underlying payments Capex working capital 2015 EBITDA • The positive impact from the higher underlying EBITDA and lower income tax payments (partly timing)
Slide 16: Financial position: net financial debt at €1,931m
• June ‘15 net financial debt at € 1,931m, €131m higher versus end 2014 • The outstanding long term financial gross debt amounted to € 2,461m • Credit ratings: Standard & Poor’s A; Moody’s A - both stable outlook Net Debt Non Net sale of December controlling treasury Net Debt June 2014 FCF Dividends
Slide 17: Revised 2015 guidance
solid achievements of Q1’15 confirmed in Q2’15, H1’15 results better than expected. good progress made on the company’s ‘Fit-for-Growth’ strategy, some of the initiatives already translated in improved underlying trends Proximus’ management revises its full-year 2015 guidance upwards and believe
Slide 18: Consumer results Q2 2015
Consumer results Q2 2015
Slide 19: CBU underlying revenue and cost of sales
Q2’15 underlying revenue + 3.9% YoY on good revenue CBU underlying revenue (EUR mio ) & YoY variance progress from Fixed and Mobile 2.0% 3.8% 5.3% 3.9% 900.0.. - 2.9% - 1.4% • Revenue from Fixed products improved to a +4.1% YoY, driven by both Proximus and Scarlet. 800.0.. 700.0.. 600.0.. 500.0.. •
Slide 20: CBU underlying HR and non-HR costs
CBU underlying HR costs (EUR mio ) & YoY Q2’15 underlying HR Costs : -3.2% YoY on variance - 2.2% - 3.2% lower personnel base 300.0.. • Mainly result of lower personnel base following 250.0.. 200.0.. 150.0.. natural attrition 100.0.. 50.0.. 102 102 102 95 99 99 Ytd June ‘15, HR expenses of € 198m, -
Slide 21: CBU revenue bridge
Note In line with Proximus’ strategy, most products are sold through multi-play Packs. Therefore, the revenue and ARPU of standalone products as described hereafter, are largely the result of the allocation of revenue and discounts to the respective products included in the Packs, as required by IFR
Slide 22: Fixed voice revenue
Proximus line erosion limited and Scarlet gaining more former Snow customers Q2’15 revenue from Fixed voice totaled € 137m, Fixed voice Fix revenue Voice (EUR mio)(€ Revenue &m) YoY variance - 4% YoY 200.0.. - 4.1% - 4.0% - 3.5% - 2.1% - 3.5% - 4.0% • YoY line erosion by -18,000 or -0.8% • Increasin
Slide 23: Fixed internet revenue up 5.8%
Fixed internet revenue up 5.8%; Proximus and Scarlet adding +25,000 customers Fixed data revenue (EUR mio) & YoY variance Q2’15 Fixed data revenue of € 137 m, +5.8 % YoY 4.3% 5.9% 5.8% 2.7% 2.3% 1.9% • Driven by the growing customer base, up by 111,000 or 200.0.. +7.1% in one year 100.0.. 128 127 12
Slide 24: TV base growing by 35,000 in the quarter
Proximus and Scarlet brand growing TV base by 35,000 in the quarter Q2’15 revenue from TV totaled € 82m, +18.1% YoY Fixed TV revenue (EUR mio) & YoY variance 11.0% 12.4% 14.8% 18.1% 7.9% 7.8% 100.0.. • Continued subscriber growth, with both the Proximus and Scarlet brand increasing their customer ba
Slide 25: Mobile service revenue and postpaid base
Higher YoY revenue on growing Postpaid base and ARPU trend 600.0.. Mobile service revenue (EUR mio) & YoY variance Q2’15 revenue from Mobile services +0.9% YoY 500.0.. 2.2% 0.9% • Solid growth in Postpaid base : +192,000 or +7.2% - 1.1% 0.0% 400.0.. - 6.3% - 5.6% • Blended mobile ARPU up YoY by 1.8%
Slide 26: Tango revenue and customers
Double digit revenue growth on growing customer base and higher ARPU Tango revenue (EUR mio) & YoY variance Tango Q2’15 revenue of € 31m, +11% YoY 14.2% 60.0.. 11.0% 9.9% 9.5% • Revenue increase resulting from growing 20% 55.0.. customer base for Mobile postpaid as well as for 50.0.. 10% - 3.5% 45.0
Slide 27: Enterprise results Q2 2015
Enterprise results Q2 2015
Slide 28: EBU underlying revenue, cost of sales and direct margin
EBU underlying revenue (EUR mio ) & YoY variance Q2’15 underlying revenue stable YoY - 3.1% - 0.6% 0.3% 5.0% 2.1% 0.0% • Mobile and Road User charging setup fees offset decline in Fixed voice and ICT 600.0.. 500.0.. 400.0.. • Estimated € -8m (-2.4%) regulatory impact 300.0.. 200.0.. 316 329 322 327
Slide 29: EBU underlying HR and non-HR costs
EBU underlying HR costs (EUR mio ) & YoY variance - 0.4% - 1.1% Underlying HR Costs fairly stable • -1.1% YoY to € 68m, on lower personnel base 300.0.. 250.0.. 200.0.. 150.0.. 100.0.. Ytd June ‘15 HR expenses -0.8% lower versus the 50.0.. 67 69 67 65 67 68 previous year. .0.. Q1'14 Q2'14 Q3'14 Q4'14
Slide 30: EBU revenue bridge
Q2 YTD Jun 2015 2015 (in m€) (in m€) 327 -4 3 327 9 656 649 -6 4 0 -1 1 -1 1 +0% +1% Underlying Fixed Voice Fixed Data ICT Mobile Service Terminals & Underlying Underlying Fixed Voice Fixed Data ICT Mobile Service Terminals & Underlying Q2'14 Revenue others Q2'15 YTD June ‘14 Revenue others YTD June
Slide 31: EBU Fixed Voice revenue
Continued Fixed Voice revenue decline on stable erosion of Fixed Voice customer base and lower traffic Fixed voice revenue (EUR mio) & YoY variance Q2’15 revenue from Fixed voice totaled € 62m, - 5.7% YoY 100.0.. -2.0% -3.0% -2.6% -2.9% -4.2% -5.7% • Key driver is companies rationalisation on Fixed
Slide 32: Fairly stable Fixed Data revenue
Fairly stable Fixed Data revenue Q2’15 Fixed data revenue of € 62m, +0.7 % YoY Fixed data revenue (EUR mio) & YoY variance -3.6% -4.9% -3.5% -2.7% -2.0% 0.7% • Data Connectivity revenue increased YoY driven by roll- out of a number of large customer projects on the 100.0.. Proximus Explore platform.
Slide 33: Underlying ICT revenue
EBU generated in Q2’15 € 107 m revenue from ICT, 1.2% below the same period of ‘14, though a stable Underlying ICT revenue (EUR mio) & YoY variance amount versus Q1 2015. 14.8% -3.3% 4.4% 1.8% 2.2% -1.2% 200.0.. • Q2’15 shows an impact from the termination of some ICT contracts earlier this year, wh
Slide 34: EBU mobile service revenue
YoY growth on larger customer base and higher data usage Mobile service revenue (EUR mio) & YoY variance -4.6% -0.1% 3.8% -1.4% 3.4% 1.8% Q2’15 revenue from Mobile services totaled € 80m, +1.8% YoY 100.0.. • Solid continued growth in Postpaid base : 105,000 or 74 76 76 79 77 75 79 80 9.6% more mobil
Slide 35: Technology & wholesale results
TEC & W underlying revenue (EUR mio ) & YoY variance Q2’15 revenue totaled € 58m, -2.4% YoY - 5.3% - 2.4% 100.0.. 90.0.. - 9.8% - 9.5% - 10.2% - 13.8% • Lower volumes from traditional wholesale business 80.0.. 70.0.. • Snow outphasing largely compensated through Scarlet retail offer 60.0.. 50.0.. 40
Slide 36: Staff & Support results
Q2’15 revenue totaled € 5m, S&S underlying revenue (EUR mio ) & YoY variance -6.3% 9.8% -4.5% 67.7% 12.4% - 30.3% 13.0.. 11.0.. 9.0.. 7.0.. 5.0.. 7 7 8 7 8 8 3.0.. 5 5 1.0.. -1.0.. Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 S&S underlying HR costs (EUR mio ) & YoY variance Q2’15 HR expenses € 3
Slide 37: BICS: record direct margin
Record Direct Margin: Mobile data growth, positive volatility in Voice trading and USD effect BICS underlying revenue (EUR mio ) & YoY variance Q2’15 revenue totaled € 411m, -0.8% YoY from a high 11.9% comparable base 0.5% - 1.3% - 0.8% • solid ongoing growth in non-Voice revenue - 6 .1% - 14.3% • c
Slide 38: Additional information
Additional information • Fit for Growth strategy • Pricing • Packs • Mobile • Fixed • Regulation • Network & Spectrum • Shareholder remuneration & structure • Headcount
Slide 39: Fit for Growth strategy
Generate Revenue & EBITDA Growth by 2016 Offer best-in- class customer Customer experience & centric leaner simplify to organisation structurally strengthened reduce costs by new brand Invest in networks and Cloud, TV IT systems, Replay, building the Netflix, Eleven foundation of Sports our next wav
Slide 40: Access and IT & systems achievements
In what Latest achievements To build the foundation of our next wave of Outdoor coverage 4G of 96.5%, mainly on 1800 Mhz growth: Avg mobile data speed 20 to 40 % faster vs. competition for 4G device • Mobile leadership and further deploy 4G 3-yr vectoring roll out started and on track, already
Slide 41: Superior customer experience and cost simplification
In what Latest achievements • Product usage experience (TV Everywhere, Increased customer satisfaction following technical intervention Develop FON, …) New responsive website & MyProximus App superior • Touch points experience (call centers, Improved accessibility of our call centers (extended
Slide 42: Regain market share and leverage convergence
In what Latest achievements • Best Mobile customer experience across Mobile postpaid Broadband Digital TV technologies. High LTE coverage, best market share market share market share Regain average speed. Attractive mobile pricing +0.4 pp. +1.5 pp. +2.2 pp. and value creative Joint-Offers Market • I
Slide 43: Pricing: 3-Play and 4-Play packs
3-Play + 13 40 Smart+ 15 Smart+ 45 Comfort Pack + Smart Mobile subscription 20 55 4-Play 15 at € 75.95/month Smart+ 25 Smart+ 65 @ discount 43
Slide 44: Key changes for postpaid and prepaid mobile
KEY CHANGES Prices Prices FOR POSTPAID Residential VAT incl. Small Enterprises (SE) VAT excl. • Price decrease of Smart 50 to 45€ for • Launch of unlimited plan at 40€ standalone offers • Simplifying from 3 commercial • Smart 65: More data + roaming & ranges to 1 (Free calls between international ca
Slide 45: Mobile postpaid price plans
Prices are incl. VAT 13 20 30 40 55 Smart+ 15 Smart+ 25 Smart+ 35 Smart+ 50 Smart+ 65 OLD OLD 300 min Unltd min 120 min 300 min Unltd min Unlt P2P Unltd sms BE Unltd sms Unltd sms Unltd sms Unltd sms + roaming EU 1 GB 2 GB 3 GB 2GB 5GB Full customer No change Selling stopped migration 13 20 40 55 Sm
Slide 46: Business mobile price plans
Prices are excl. VAT OLD NEW OLD Bizz Smart XL 8 15 35 50 70 €10 €20 €40 €60 €80 Unlt min 2 Fix + CUG 100’ 250’ Unl min Unl min Unl min Unl sms Unl sms Unl sms EU Unl sms EU 250sms 250MB 2 GB 4 GB 10GB 10GB PCAC QoS + Conf call + PCAC 1000’ in 240’ in EU EU 240 MB EU 1GB EU 240‘ to EU 1000‘ to EU Se
Slide 47: Prepaid price plans
Pay & Go Max Pay & Go Smart € 0.30 / min € 0.50 / min Peak € 0.12 / SMS € 0.25 / min OffPeak € 0.25 / MMS € 0.12 / SMS Peak € 0.5/MB € 0.08 / SMS OffPeak € 0.25 / MMS € 0.5/MB For each reload, you get a bundle For each reload, with Pay&Go The bundle is valid for 31 days Smart you get: PG Max -re
Slide 48: Value increases when included in Pack
Value increases when included in Pack 48
Slide 49: Easy access to Eleven Sports via Proximus TV decoder
+ Easy access to via the Proximus TV decoder TV Replay free in packs Attractive sports offering with national and foreign football competitions and international sports. Agreement with ELEVEN SPORTS NETWORK, adding 2 new sports channels Eleven and Eleven Sports including 49
Slide 50: Swiping to the TV screen via smartphone or tablet
Launch 31/8/15 Swiping to the TV screen via smartphone or tablet Any TV brand, any device any Proximus decoder Much more than pictures and video’s Easy to install & fully integrated
Slide 51: Positioning Scarlet as no frills brand
Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’ New pricing since 21/05/2015 New pricing since 10/8/2015 Red Hot Chili Ketch Up €8 € 18 € 28 €8 € 15 150 min 500 min 1000 min Bonus : Bonus : 1000 SMS 2000 SMS 5000 SMS 100 min to Unlimited to Scarlet 50 MB 500
Slide 52: Netflix ISP Speed Index
Avg speed Mbps (source -http://ispspeedindex.netflix.com) The Netflix ISP Speed Index lists the average prime time bitrate for Netflix content streamed to Netflix members during a particular month. For 'prime time' we take the peak three hours of Netflix streaming on a daily basis per ISP. For 'spee
Slide 53: Estimated financial impact from regulatory price decreases
Estimated negative financial impact from regulatory price decreases Estimated impact (Decrease in EUR million) Q1 2015 Q2 2015 FY 2015 MTR Revenue € 1m € 1m EBITDA € 1m € 1m Roaming Revenue € 9m € 13m € 22m EBITDA € 9m € 13m € 22m Total Revenue € 10m € 13m € 23m EBITDA € 10m € 13m € 23m MTR -regulat
Slide 54: EU Roaming III Regulation
Mobile voice and data-roaming: EU Roaming III Regulation regulation • Estimated Impact on Q2 2015 financials: − Revenue: ~ € -13m − EBITDA: ~ € -13m • The Roaming III Regulation will expire in principle on 30 June 2022. However, in the meantime, the EU Authorities (Commission, Council and Parliament
Slide 55: Deliver a fixed network fit for purpose
Deliver a fixed network fit for the right customer purpose Vectoring technology on VDSL Vectoring technology enables • 3-year roll-out program on up-to-70 Mbps speeds on track since start in 2014 copper • All VDSL street cabinets will be covered FTTB in Industrial Zonings Presence of FTTB in industr
Slide 56: Best true customer experience as top priority
Best true customer experience as top priority Best Customer Experience… …when & where it matters… …across devices & networks Best experience to call, surf & Best experience to live better and Best experience cross devices via watch videos work smarter seamless switch mobile & WiFi Average download s
Slide 57: Spectrum licenses
800 MHz 900 MHz & 1800 MHz 2100 MHz 2600 MHz • Used for 2G, 3G and 4G • Used for 3G • Will be used for 4G • Used for 4G • Licenses granted in ‘95 • UMTS licenses granted in • Licenses granted in July ‘12 • Licenses granted in • 1st tacit extension (‘10-’15): 2001 • 15 year-license valid until Novemb
Slide 58: Shareholder return policy and ownership
The Board of Directors has reaffirmed its intention to pay out a stable yearly dividend of EUR 1.50 per share (interim dividend of EUR 0.50 and ordinary dividend of EUR 1.00) for the next 2 years, provided the Group’s financial performance is in line with current expectations. General Shareholder re
Slide 59: FTE reduction and natural attrition
25000 Estimated cash-out for termination benefits related to past headcount reduction Telindus programs: 20000 PTS -6,300 FTE +2,600 FTE € million BeST -4,160 FTE 13,983 2015 22 15000 2006-2012 Tutorship & FMS -3,900 FTE 2016 6 2017 5 • 13,983 FTEs in Proximus Group end June 2015 2018-2035 15* 10000
Slide 60: Forward-looking statements
“This communication might include some forward-looking statements, without limitation, regarding Proximus’ financial or operational results, certain strategic plans or objectives, macro-economic trends, regulation, future market conditions and other risk factors. These forward-looking statements rel
Slide 61: For further information
For further information Investor relations Nancy Goossens: +32 2 202 82 41 Sarah Franklin: +32 2 202 77 11 E-mail: investor.relations@proximus.com Proximus investor relations website : www.proximus.com/en/investors