Proximus Sa · EURONEXT:PROX
Proximus Sa — Belgacom — Q3 2009 Earnings Presentation
50 slides from Proximus Sa's earnings presentation, 2009
Slide 1: Third quarter 2009 results
Third quarter 2009 results belgacom
Slide 2: Content
Content • Group Highlights & Summary Results slide 4-7 • Consumer Business Unit CBU highlights & summary slide 9-10 Operationals slide 11-16 Financials slide 17-18 • Enterprise Business Unit EBU highlights & summary slide 20-21 Operationals slide 22-26 Financials slide 27-28 • Service De
Slide 3: Group Highlights
Group Highlights belgacom
Slide 4: Group highlights
Group highlights Ytd Ytd Solid Group revenue of €4,472m or +1% YoY million € Sep 08 Sep 09 Var. Key group financials Organic Group revenue +0.4% driven by ICS and CBU Revenue1 4,427 4,472 1.0% CoGS -1,435 -1,537 7.1% Group EBITDA of €1,488m or -2% YoY with margin at 33.3% HR costs -843 -831 -1
Slide 5: Group operational highlights
Group operational highlights Solid set of operational results for Q309: All-time high Belgacom TV net adds: +75k in Q309 New convergent offers lead to record number of packs sold: +70k in Q309 Fixed line loss improved in Q3 (-40k) driven by success of packs and continued success of flat rate o
Slide 6: 2009 guidance reaffirmed
2009 guidance reaffirmed So far, the residential segment of the Belgacom Group continued its resilient path, not experiencing any significant impact on its financial performance from the economic downturn. As expected, the enterprise business sees the impact mainly in the slowdown in mobile usage an
Slide 7: Shareholder return
Shareholder return The Belgacom Board of Directors approved the payment of an interim dividend of €0.4 per share (gross), or a total amount of €128m. This brings the total shareholder return of 2009 on cash basis at €666m, including the 2008 ordinary dividend paid in April 2009. Payment date: 4 De
Slide 8: Consumer Business Unit
Consumer Business Unit (CBU) Q3 2009 Results / CBU / CBU highlights / CBU voice / CBU Data / CBU TV / CBU Financials
Slide 9: CBU - Highlights
CBU - Highlights So far, resilient to economic crisis with no significant financial impact Reported revenue of €1,797m, +€137m or +8.2% €124m from Tango & Scarlet; in Q309 YoY impact Tango fading Organic revenue +0.8% with strong performance of Q309 (+2.6%) €22m regulation impact Underly
Slide 10: CBU - Highlights
CBU - Highlights Strong Q309 operational results : +75k TV customers; all-time high number of net adds Pick-up in Q309 ARPU (€20.6) driven by increased sales & higher on demand usage Lowest level of fixed line loss (-29k) Business YoY ARPU increase driven by price indexations of 2008 performance
Slide 11: CBU - Voice - Fixed
CBU - Voice - Fixed Net line loss* (000) Line loss positively impacted by: Success of packs including a fixed line 1 2 3 4 5 6 7 -36 -37 -29 -46 -42 -39 -43 Flat rate offers like Together and Happy Time products Q 10 8 Q208 Q308 Q408 Q 10 9 Q209 Q309 Voice lines EOP* (000) V OI P P ST N 2 ,2 8
Slide 12: CBU - Voice – Mobile
CBU - Voice – Mobile Mobile customer growth (000) MVNO Own cust +32k customers added via own brands in Q309 72 65 Total net adds impacted by loss in low value MVNO 27 customers 46 33 23 19 MVNO market very volatile with cards used as calling 24 cards leading to high churn rates 45 10 33 32 32
Slide 13: CBU - Data - Fixed
CBU - Data - Fixed Broadband Growth (000) +12k net adds in Q309 37 Pick-up since September driven by back to school 26 promo’s and packs 20 17 Impacted by small loss of Scarlet broadband 12 customers 5 3 Q 10 8 1 ( 1) Q 220 8 Q 330 8 Q 440 8 Q 10 5 9 Q2 6 09 Q 370 9 Broadband lines EOP (000)
Slide 14: CBU - Data - Mobile
CBU - Data - Mobile Normalized SMS* (units/month) Strong revenue performance +8.1% YoY driven by: 68.3 72.2 69.0 SMS revenue +7.5% YoY resulting from: 66.8 58.9 60.0 Increased inbound revenues resulting from pricing plans 54.9 including free SMS Substitution from voice towards SMS with payin
Slide 15: CBU - Belgacom TV
CBU - Belgacom TV TV Growth (000) +75k TV customers in Q309 or +220k in 1 year time 75 63 Customer growth stimulated by launch of FAIR; 44 42 52 49 Company wide program to address cable competition 33 “Free TV” offer is one of the FAIR initiatives Q 1018 Q 2 028 Q 3 038 Q 440 8 Q 10 59 Q 2 0
Slide 16: CBU – Tango
CBU – Tango Solid YTD September 2009 results: Total Tango revenue YTD September of €69m 252k mobile customers with a blended mobile net ARPU of €24.2 Nine months ended 30 September 2009 1 Revenue (in EUR mio) 69 Total active mobile customers (in '000) 252 Blended net ARPU (EUR/month) 24.2 (1) Re
Slide 17: CBU – Revenues
CBU – Revenues Ytd Ytd CBU resilient to crisis: (EUR million) Sep 08 Sep 09 Var Var % • Reported revenue +8.2% incl. Scarlet/Tango for €124m • Organic revenue +0.8% TOTAL CBU Revenue 1,660 1,797 137 8.2% • Regulation impact of € 22m • Underlying business +2.1% Voice 997 951 -46 -4.6% Fixed 449 423 -
Slide 18: CBU – Costs
CBU – Costs CBU operating expenses increased €168m or 20.3% €100m impact from Tango & Scarlet; YoY impact becoming less in Q309 as Tango consolidated as from August 2008 Organic costs up 8.3% driven by increase cost of sales – trend stable Cost of Goods Sold +33.3% or €130m €60m from Tango & S
Slide 19: Enterprise Business Unit
Enterprise Business Unit (EBU) Q3 2009 Results / EBU / EBU highlights / EBU voice / EBU Data / EBU Financials
Slide 20: EBU - Highlights
EBU - Highlights As expected, crisis impact on financial result continued in Mobile and ICT, but trend not accelerating Reported revenue of €1,868m or -7.3% YoY Organic revenue decline of 4% Regulation negatively impacting revenue by €23m fading negative MTR and F2M effect, but Financial
Slide 21: EBU - Highlights
EBU - Highlights Economic downturn impacts operational results but trends did not accelerate Improved Fixed line loss in Q3 versus previous quarters Mobile MoU trend for Q3 in line with previous year Business Paying MoU down 5% in Q3, whereas 8% in Q2 performance Mobile net adds +71k YTD Sep
Slide 22: EBU - Voice - Fixed
EBU - Voice - Fixed Net line loss* (000) Line loss improved in Q3 Line cancels of customers in search for cost savings -7 1 2 3 4 5 6 7 -8 -9 -10 -15 -14 -11 Cancels due to bankruptcy But trend somewhat improved in Q3 Q 10 8 Q208 Q308 Q408 Q 10 9 Q209 Q309 Voice lines EOP* (000) V OI P P ST
Slide 23: EBU - Voice - Mobile
EBU - Voice - Mobile Mobile customer growth (000) Mobile customer growth continued 1,190 1,211 71k net adds YTD Sept; 20k net adds in Q3 1,065 1,093 1,116 1,139 1,170 Successful promotions on calling packages for SME, 41 1,100 including free minutes/SMS 21 600 Churn reduced to 9% 27 28 23 23
Slide 24: EBU - Data - Fixed
EBU - Data - Fixed EBU Fixed data consists of: Internet products Data connectivity products Broadband growth & lines EOP (000) Internet: 431 436 439 443 445 443 442 500 400 Saturating and highly competitive enterprise 300 Broadband market 200 100 11 5 4 -2 -1 3 2 1 0 Q 10 8 Q208 Q308 Q408 Q 10
Slide 25: EBU - Data - Mobile
EBU - Data - Mobile Normalized SMS* (units/month) Solid mobile data revenue growth of 14.4% yoy 53.5 53.3 54.3 53.8 49.6 48.8 48.2 Advanced data revenue up 33.5% in Q309 Launch new concept ‘Bizz Deal’ New promotions mobile internet on laptop Q 10 8 Q208 Q308 Q408 Q 10 9 Q209 Q309 1 2 3 4 5 6
Slide 26: EBU – ICT
EBU – ICT ICT feels pressure from economic crisis, but within expectation On comparable basis, YTD revenue decrease of 2.1% Telindus Belgium remains fairly stable while Telindus International shows weakness to the crisis; although partially due to unfavorable exchange rate Revenue impact not w
Slide 27: EBU Financials - revenue
EBU Financials - revenue Crisis impacting results but within expectations Ytd Ytd (EUR million) Var Var % Reported revenue of €1,868 or -7.3% YoY Sep 08 Sep 09 Including €69m revenue loss from divestments TOTAL EBU Revenue 2,016 1,868 -148 -7.3% Organic revenue at €1,863m or -4% YoY Regulati
Slide 28: EBU Financials - costs
EBU Financials - costs Total operating costs decreased €111m driven by successful cost containment within EBU and realized divestments Cost of Goods sold -11.7% YoY Partially driven by Telindus divestments But organic cost of sales still down 4.4% driven by favorable impact on costs by regulat
Slide 29: Service Delivery Engine
Service Delivery Engine (SDE) Q3 2009 Results / SDE / SDE highlights / SDE Financials
Slide 30: SDE – Summary financial result – revenue
SDE – Summary financial result – revenue Summary financial result Financial result Q108 Q208 Q308 Ytd Sep Q408 Q109 Q209 Q309 Ytd Sep Var. Var. (in million €) 2008 2009 Q3/Q3 Ytd Total Revenue 110 103 102 315 99 98 94 94 286 -8.3% -9.2% Total Costs -129 -121 -113 -364 -118 -114 -112 -107 -333 -6.1%
Slide 31: SDE costs & EBITDA
SDE costs & EBITDA Total operating expenses -8.6% or -€31m driven by: Total Costs (EUR mio) Cost of sales -29.5% YoY due to : -8.6% 364 Decline in low-margin transit traffic 333 Lower interconnection volumes 131 Less Telindus wholesale revenues 133 YoY favorable impact fading as low-margin
Slide 32: Staff & Support
Staff & Support (S&S) Q3 2009 Results / S&S / S&S highlights & Financials
Slide 33: S&S - Highlights and summary financials
S&S - Highlights and summary financials Highlights YoY revenue +3.2% to €25m including a small gain on the disposal of a building Other operating costs 14% down to €143m : Lower renting costs and provisions as result of vacated Proximus building Company-wide cost reduction program Summary fi
Slide 34: International Carrier Services (ICS)
International Carrier Services (ICS) Slide 34 Q3 2009 Results / ICS / ICS Financials
Slide 35: Highlights
Highlights In view of the economic crisis ICS continued to deliver strong results YTD Revenue growth of 15.3%; EBITDA +26.8% Deceleration of voice growth in Q3 as anticipated Non-voice continues its growth path Financial result Q108 Q208 Q308 Ytd Sep Q408 Q109 Q209 Q309 Ytd Sep Var. Var. (in
Slide 36: Revenue & direct Margin
Revenue & direct Margin Revenue (mio EUR) Strong revenue increase of 15.3% YTD Sept 230 217 227 228 driven by growth in higher margin premium 185 190 207 19 17 19 21 products 18 15 17 128 126 125 92 96 107 120 Q309 Voice revenue growth decelerating as YoY impact fades 19 19 22 25 24 26 23 59 59
Slide 37: Cost structure
Cost structure* Increase in HR related expenses reflecting the headcount increase required to sustain the mobile data growth and the impact of the salary indexation at the beginning of the year Volume growth is explaining the increased network expenses Cost structure (EUR Mio) 45.1 +8.4 % 48.9 Y
Slide 38: Group Financials
Group Financials belgacom
Slide 39: Consolidated income statement
Consolidated income statement Ytd Ytd % var (EUR million) Sep 08 Sep 09 Total Revenue before non-recurring items 4.427 4.472 1,0% Costs of materials and charges to revenue -1.435 -1.537 7,1% Personnel expenses and pensions -843 -831 -1,3% Other operating expenses -630 -615 -2,5% TOTAL OPERATING EXPE
Slide 40: Operating expenses
Operating expenses SALES RELATED COSTS Ytd Sep Ytd Sep var. % Cost of sales +7.1% YoY in € million 2008 2009 • Increase due to changing revenue mix CBU & growing weight GROUP -1435 -1537 -102 7.1% ICS in Group revenue CBU -389 -519 -129 33.3% • Partly offset by decrease in cost of sales EBU & SDE EB
Slide 41: Investments per Business Unit
Investments per Business Unit €405m spent on Capex YTD September or 9% Capex Ytd September of Group revenue 11.4%* 9% €34m Broadway (VDSL & fibre to the street 506 cabinet) to reach a population coverage of 71% 405 €28m MaIP 6 27 €30m on further roll out 3G to reach a coverage of 11 > 91% 16
Slide 42: Free cash flow (in million €)
Free cash flow (in million €) FCF YTD September 2009 amounted to €681m or €224m higher than same period of 2008 due to: - FCF YTD’08 impacted by the acquisition of Tango for €207m net of cash - FCF YTD’09 impacted by payment of fine to Belgian Competition Authority (€66m) Normalized FCF (1) FCF 747
Slide 43: Net financial position (in million €)
Net financial position (in million €) Sound financial position Net debt level of €1.7 billion; i.e. ratio of 0.9 x EBITDA Lower debt mainly results from FCF exceeding dividend payment 681 11 ( 1.7 0 0 ) ( 1.8 3 5 ) (556) N e t de bt D e c e m be r FCF D iv ide nds O t he r N e t de bt S e p 2 0
Slide 44: Balance Sheet
Balance Sheet 31-Dec 30-Sep (EUR million) 2008 2009 TOTAL ASSETS 7,782 7,749 Non-recurrent assets 5,564 5,439 Goodwill 2,111 2,100 Intangible assets with finite useful life 552 561 Property, plant and equipment 2,501 2,408 Enterprises accounted for under the equity method 0 2 Other participating int
Slide 45: Annex
Annex Regulation Macro economic environment Belgacom Shareholder structure
Slide 46: Regulation: roaming
Regulation: roaming VOICE I Roaming I regulation Retail Retail Wholesale € cent (excl. VAT) Outgoing Incoming Outgoing June 2007: the European Commission introduced Before Regulation* 95 43 44 a regulation setting retail and wholesale caps on prices End Aug/Sept '07 49 24 30 of voice call roaming fo
Slide 47: Regulation: MTR and financial impact
Regulation: MTR MTR rates excl VAT and incl. inflation as set by the BIPT on 29/04/08 €ct 1 Nov '06 1 May '07 1 Feb '08 1 May '08 1 Jul '08 Proximus 10.59 8.46 8.54 7.93 7.20 Mobistar 13.33 10.63 9.42 9.94 9.02 Base 16.53 13.35 11.03 12.52 11.43 % Change Proximus -16.3% -20.1% 0.9% -7.2% -9.1% Mob
Slide 48: Macro economic environment
Macro economic environment GDP growth (%)* Unemployment rate (%)* 2.4% 1.9% 1.2% 0.4% 14.9% 15.2% 15.1% 13.2% 1 2 3 4 5 11.8% -3.1% 2008 2009 2010 2011 2012 2008 1 2009 2 2010 3 2011 4 2012 5 Inflation (%)* Evolution bankruptcies Sep'08-Sep'09 4.2% 36% 34% 26% 22% 20% 16 % 9% 11% 6% 7% 5% 1.5% 1.6%
Slide 49: Belgacom Shareholder structure
Belgacom Shareholder structure End of September 2009, the Belgian State owns 53.5% of total shares % total % voting % dividend Belgacom ownership Shares shares rights rights Belgian State 180,887,569 53.5% 56.4% 55.9% Belgacom treasury shares 17,419,617 5.2% 0.0% 1.0% Free float 139,717,949 41.3% 43
Slide 50: 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