Proximus Sa · EURONEXT:PROX
Proximus Sa — Belgacom — Q1 2012 Earnings Presentation
64 slides from Proximus Sa's earnings presentation, May 2012
Slide 1: Belgacom Company presentation May 2012
Belgacom Company presentation May 2012 Group Highlights Q1 2012 Results per segment Other topics Q1 2012 Financials – slide 2 Consumer – slide 12 Shareholder return – slide 33 Group Strategy– slide 35 P&L – slide 4 Enterprise – slide 21 Convergence - slide 37 Capex - slide 5 SDE&W – slide 28 Mobile
Slide 2: Group – Financial highlights
Group – Financial highlights Group revenues (EUR mio) • Q1 revenue +0.3% YoY to € 1,588m 1.6 80 +0.3% • Like-for-like revenue +0.1% (Excl M&A) 1.6 30 1.664 1.640 1.658 • Underlying revenue was +1.0% (Excl M&A and Regulation) 1.612 1.596 1.616 1.5 80 1.5 30 1.4 80 1.583 1.588 CBU: growth Mobile Dat
Slide 3: Group – Revenue evolution
Group – Revenue evolution Group revenue evolution Revenue as reported Like-for-Like Underlyi ng Group revenue showing improving trend 1.0% 0.3% 0.1% Underlying revenue up 1.0%, i.e. excluding impact from Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 M&A and regulation -0.4% -1.3% -0.9% -1.0% -2.0% -1.6% -3.5% -3.3%
Slide 4: Group – P&L
Group – P&L VAR in mio € Q111 Q211 Q311 Q411 FY11 Q112 Q1/Q1 Revenues (1) 1.583 1.6 12 1.5 9 6 1.6 16 6 .406 1.588 0,3% Total OPEX -1.103 -1.09 9 -1.123 -1.16 9 -4.49 4 -1.122 1,8% Cost of goods sold -609 -621 -633 -655 -2.517 -614 0,9% HR-costs -274 -282 -278 -283 -1.117 -282 2,6% Other expenses -2
Slide 5: Group - Investments
Group - Investments • In Q1 2012, Belgacom invested € 186m or 11.7% of its Group revenues • Up € 13m YoY, mainly because of: − Acquisition and renewal of broadcasting rights − Capitalization of modems 15% 1,200 12.8% 14% 2012 Capex 12.1% 11.7% 11.4% 11.1% 10.9% 13% 12% estimated in • 2008 incl. excl
Slide 6: Group - Free cash flow
Group - Free cash flow • FCF Q1 at €179m; €60m lower YoY: • Lower Cash Flow from Operating Activities Lower operating result Unfavourable YoY comparison for trade payables & inventory levels • Acquisition of the chain of The Phone House Belgium stores for € 22m • Higher net cash paid for capital
Slide 7: Group – Sound financial position
Group – Sound financial position • Belgacom continues to have a sound financial position – Net financial debt at EUR 1,296 m – The outstanding financial debt amounted to €1.9Bio • Credit ratings: Standard &Poor’s A; Moody’s A1 0 Net debt FY’11 at 0.8 times EBITDA (1,296) (1,479) (2) 4 2 179 Net debt
Slide 8: Group - 2012 guidance
Group - 2012 guidance Metrics Outlook FY’12 Reported Q1’12 Group revenue About -1% +0.3% Group ebitda Between “-5% to -6% “ -3.1% Capex/Revenue Upper end of “10% to 12%” 11.7% Full-year guidance does not take into account the accounting impact on revenue and EBITDA in case the Belgian Telecom law
Slide 9: Group - Operationals (in '000)
Group - Operationals (in ‘000) Further growing customer base for most products in Q1 2012 Mobile customer evolution¹ Mobile data card evolution² Broadband customer evolution net adds total 5,413 5,478 5,498 5,600 25 net adds total 232 250 net adds total 1,650 5,338 216 226 28 90 5,304 5,400 230 1,60
Slide 10: Market share evolution
Market share evolution Mobile customer market share Broadband market share 43.1% 42.7% 41.2% 40.3% 40.0% 49.4% 48.1% 46.2% 44.6% 44.5% Q4'08 Q4'09 Q4'10 Q4'11 Q1'12 Q4'08 Q4'09 Q4'10 Q4'11 Q1'12 Total TV market share Digital TV market share 31.4% 31.4% 31.7% 31.7% 22.5% 23.3% 29.8% 18.9% 14.9% 10.3%
Slide 11: Q1 2012 results per business unit
Belgacom Company presentation Investor Relations Q1 2012 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) 11 Slide 11
Slide 12: Consumer – Highlights Q1 2012
Consumer – Highlights Q1 2012 • Q1 revenue +2.1% YoY to € 577m: • Growth Mobile Data and TV, • Support from the January price indexation, • The Phone House contribution; • more than compensating regulation impact CBU revenue evolution Revenue as reported Like-for-Lik e Underlyi ng Like-for-like re
Slide 13: Consumer - P&L
Consumer - P&L 61 0 CBU revenue (EUR mio) Reported revenue of € 577m; i.e. +2.1% YoY +2.1% 59 0 600 Like-for-like revenue up 0.5% YoY (excl. acquisition The Phone 592 House, divesture Scarlet Curacao and re-segmentation effect) 57 0 585 579 571 572 577 55 0 53 0 565 Excl € 7m (-1.2%) reg impac
Slide 14: Consumer - Fixed voice
Consumer - Fixed voice Line erosion continues to improve, revenue declines at slower pace 14 0 Fixed voice revenue (EUR mio) Fixed Voice revenue -7.5% YoY, improvement of variance -7.5% 13 0 vs previous quarters 12 0 125 124 124 Support Price indexation Jan’12 , though more than offset by 11 0 1
Slide 15: Consumer – Mobile Voice
Consumer – Mobile Voice Price indexation partly offsetting regulation and continued price erosion 17 0 Mobile voice revenue (EUR mio) Mobile Voice revenue Q1 YoY-6.9%; declining trend 16 0 165 -6.9% improved 162 15 0 14 0 156 147 Indexation of some mobile price plans in Jan’12 13 0 140 143 136 1
Slide 16: Consumer - Fixed Data
Consumer - Fixed Data Growing customer base, Q1 revenue flat Fixed data revenue (EUR mio) 0.1% Q1’12 revenue from Fixed Data flat 86 84 85 85 85 Price indexation Jan’12 offsetting impact of 84 82 83 83 80 78 82 82 Discounts on multi-play packs 76 74 Changing customer mix 72 Q210 Q310 Q410 Q1
Slide 17: Consumer - Mobile Data
Consumer - Mobile Data Mobile Data Revenue growth of >11% Mobile data revenue (EUR mio) Mobile Data rev up YoY by 11.5% to € 97m 12 0 SMS Adv Data +11.5% SMS rev +10.5% to € 85m 97 97 82 82 88 87 92 93 Advanced Mobile Data rev +18.9% to € 12m: popularity of 90 11 14 13 12 9 10 10 Mobile Intern
Slide 18: Belgacom TV
Belgacom TV Revenue up 8.6%; customer base further expanding with 43k TV revenue (EUR mio) TV revenue +8.6% YoY +8.6% Driven by sound subscriber growth 49 51 53 51 53 55 tempered by free Football offer 43 46 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 TV growth & EOP (000) Solid net adds of 43k
Slide 19: Belgacom TV
Belgacom TV Market overview and Belgacom offer Total TV market share Digital TV market share • ~ 4.7m households in Belgium 3% 4% • Belgacom TV coverage >92% • Penetration digital TV at 71% 23% 32% 1% 64% A complete & competitive offer 72% Belgacom 90 channels, incl HD 1% Mobistar VOD >1200 movi
Slide 20: Tango – Mobile activities in Luxembourg
Tango – Mobile activities in Luxembourg Tango revenue (EUR mio) +10.4% 28 Q1 revenue +10.4% to € 27m 28 28 27 25 26 25 25 25 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Growth drivers stay: Success of mobile subscriptions for iPhone Tango mobile customers EOP (000) In addition, ongoing conversio
Slide 21: Enterprise – Highlights Q1 2012
Enterprise – Highlights Q1 2012 • Revenue growth Mobile data compensated for Voice decline ex-regulation, while ICT showed a limited revenue growth on a like-for-like basis, including some seasonality and phasing of IT projects. Reported revenue of € 579m; -2.2% versus the same EBU revenue evoluti
Slide 22: Enterprise - P&L
Enterprise - P&L EBU revenue (EUR mio) Reported revenue of € 579m; i.e. -2.2% YoY 64 0 -2.2% 62 0 Like-for-like* revenue limited to -1% YoY 60 0 610 606 606 Excl € -6m reg (-1%) impact, underlying revenue stable YoY 593 593 58 0 591 56 0 54 0 572 579 No noticeable effect from weak economy 52
Slide 23: Enterprise - Fixed Voice
Enterprise - Fixed Voice Price indexation partly offsetting impact from line erosion and regulation Fixed voice revenue (EUR mio) 14 0 -3.3% Fixed Voice revenue -3.3% YoY; significant improvement vs 13 0 136 previous quarters : 132 132 12 0 11 0 128 125 121 122 124 Support price indexation of 1
Slide 24: Enterprise - Mobile Voice
Enterprise - Mobile Voice Solid customer growth, revenue under pressure due to pricing and regulation Mobile voice revenue (EUR mio) 13 0 Mobile Voice revenue Q1 YoY-8.1% 12 0 130 -8.1% Indexation of some mobile price plans in Jan’12 11 0 119 119 115 115 110 and higher Mobile usage per custome
Slide 25: Enterprise - Fixed Data
Enterprise - Fixed Data Stable Fixed Data customer base , revenue slightly up year-on-year 10 2 Fixed data revenue (EUR mio) Q1’12 revenue from Fixed Data fairly stableYoY +1% 10 0 98 Continued migration from old technologies (ATM, Frame 98 99 Relay, Leased Lines) to the ‘Explore’ platform 96 98
Slide 26: Enterprise - Mobile Data
Enterprise - Mobile Data Continued revenue growth : Advanced Data up ~12%, SMS up ~14% Mobile data revenue (EUR mio) Mobile Data rev up YoY by 13% to € 56m 80 SMS Adv Data +13% SMS rev up 14% to € 26m 70 60 50 53 56 57 56 Advanced Mobile Data: rev up by 12% to € 30m: success 48 47 47 50 Mobile
Slide 27: Enterprise – ICT
Enterprise – ICT Limited organic revenue growth in ICT after strong fourth quarter Q1’12 revenue of €167 m, or 4.5% lower YoY ICT revenue (EUR mio) Negative impact from Telindus Spain divesture 22 0 21 0 ( June 2011) , partly compensated by the 20 0 19 0 -4.5% acquisition of Eudasys by Telindus
Slide 28: Service Delivery & Wholesale - P&L
Service Delivery & Wholesale - P&L SDE&W revenue (EUR mio) 98 -4.3% • Q1 revenue -4.3% 93 88 Regulation impact reducing revenue by 0.8% in Q1 83 78 85 83 Lower volume of leased lines and broadband 79 81 80 80 78 73 77 68 63 58 Volume increase of Roaming traffic partially offsetting 53 Roaming
Slide 29: Staff & support - P&L
Staff & support - P&L S&S Revenue(EUR mio) 30 • Q1 revenue 9.0% up YoY -9.0% 25 20 25 * 15 10 5 7 10 7 8 7 8 9 0 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 * Internal invoice; neutral on group level S&S Personnel costs (EUR mio) • Q1’12 HR-expenses down 3.6% YoY 48 46 44 -3.6% Lower headcount (-158 F
Slide 30: International Carrier Services P&L
International Carrier Services P&L BICS Revenue (EUR mio) • Q1 revenue 2.6% YoY +2.6% 42 0 41 0 40 0 414 415 Strong volume growth of both Voice and Non-Voice 39 0 402 401 401 Revenue Non-voice +21.7% YoY; Voice +0.7% 388 38 0 37 0 36 0 372 382 Positive currency effect in Q1 2012, vs negative i
Slide 31: International Carrier Services
International Carrier Services BICS delivers best in class global solutions BICS ownership • Active in the international carrier market since 1997 • January ‘05: spin off of Belgacom ICS as an independent affiliate of 20% Belgacom 22.4% 57.6% • Since Dec ‘09 JV held by Belgacom, Swisscom & MTN • In
Slide 32: Investor Relations: other topics
Belgacom Company presentation Investor Relations Ytd September Other topics 2010 results in detail • Customer Centricity – slide 44 • • Shareholder Consumerreturn – slide Business 33 (CBU) Unit • Network & Spectrum – slide 45 • • Shareholder Enterprisestructure Business – slide 34 Unit (EBU) • Prici
Slide 33: Group – Shareholder return
Group – Shareholder return Committed to attractive shareholder return Shareholder remuneration policy: - Belgacom commits to an attractive shareholder remuneration policy by returning, in principle, most of its annual free cash flow, to its shareholders. - The return of free cash flow, either throug
Slide 34: Shareholder structure
Shareholder structure Belgian state owns ~ 53.5% 338,025,135 shares, of which 317,799,914 Outstanding Own shares 6.0% • Limited liability company under public law - Belgian state main shareholder: 53.5% - Legal obliged threshold: 50%+1 share Free Float Belgian State 40.5% - 14 Board members, 50% sta
Slide 35: Taking our strategy a step further…
Taking our strategy a step further… Multi-play incl. mobile Move customers to multi- Differentiated internet value proposition (fixed, WIFI, mobile, content - 500K FON points activated in March 2012) Convergence play and differentiating Disruptive convergent offers (Packs Fix/Mob Internet + ta
Slide 36: … while keeping the focus on
… while keeping the focus on Uplift focus Special and stabilize service level Special focus on customer onFrom satisfaction to promotorship: e.g. postive impact customer Simple & satisfaction and user Tablet-offering ; significantly less complaints on fixed in 2011 satisfaction andTowards user
Slide 37: Convergence, key to long-term success
Convergence, key to long-term success From successful commercial convergence… Packs evolution ('000) Number of Services per residential customer net adds total 1,143 (including Mobile Postpaid) 1,089 1,200,000 180 1,024 977 160 927 870 1,000,000 Single 140 807 20% of residential 741 120 653 customer
Slide 38: Convergence, key to long-term success
Convergence, key to long-term success … to second wave of convergence. June 11 Dec 11 April 12 Internet Everywhere Convergent Pack with content & device & access to our 3 networks Unique combination More than 250k “Tv 500k of 3 networks everywhere” apps Wi-fi Fonspots downloaded 1 2 Tablet in renta
Slide 39: Internet Everywhere
Internet Everywhere A 100% convergent offer using all assets of our network Extra volumes when combining in a Pack Slide 39
Slide 40: Professional usage: Convergence led by cloud computing
Professional usage: Convergence led by cloud computing Thousands of devices Belgacom convergent networks Thousands of apps and datacenters Secure & reliable access to all applications on any device in one-stop-shop mode • ICT for professional market Cloud becomes the backbone of our industry, and Be
Slide 41: Mobile data
Mobile data Mobile data ~34% of mobile revenues (CBU+EBU) Mobile data on Group level Advanced data ~28% of mobile data revenues +12% • In Q1’12 BGC Group generated € 154m revenues from mobile data; or +12% YoY • Mobile data includes both SMS & non-SMS data: - SMS revenue Q1 was up ~11% YoY to € 111m
Slide 42: Mobile payment
Mobile payment Belgacom frontrunner in this new market In 2009 Belgacom launched an end-to-end mobile payment system branded PingPing: • e-wallet in the cloud • accessed by the end-user via: SMS, NFC* • In order to put the eco-system in place, Belgacom took the following participations: • (100%) • C
Slide 43: Improving our Way of Working
Improving our Way of Working • Results of the International Telecommunications Benchmarking have indicated improvement opportunities for Belgacom. • Belgacom needs to improve its time-to-market as well as its operational and financial performance to fuel growth. • To achieve these objectives, Belgac
Slide 44: Customer centricity
Customer centricity Some achievements from last year Slide 44
Slide 45: An all integrated network
An “all integrated network” thanks to early and continuing investments * Current fixed network • Belgacom among world leaders for >82% 79.2% VDSL fiber coverage • End March 2012 VDSL2 coverage of 82% 99.85% • 85% service coverage target by end ADSL 2013 • Quality of the DSL network driving 100% PSTN
Slide 46: Belgacom well positioned vs. Cable
Belgacom well positioned vs. Cable Theoretical speed comparison Cable / Belgacom when customers are surfing and watching TV (scenario 600 Mbps/node – evening) Cable 2015 500 homes Belgacom 2015 Assumptions * 500 homes 500 homes VDSL2 VDSL2 passed / node passed / node 30 Mbps 50 Mbps Market share 5
Slide 47: Copper has promising evolutionary path
Copper has promising evolutionary path, allowing for stepwise increase of bitrate Local Street cabinet Homes / businesses Non-shared bandwidth in Mbps exchange / & Remote Central Office optical platform 4) Phantom Mode 1) VBB ≥ 100 2) Vectoring ≥ 50 2) Vectoring 30 30 3) Pair bonding = copper = fibe
Slide 48: Zoom-in: vectoring to increase bandwidth availability
Zoom-in: vectoring to increase bandwidth availability • In September 2011, Belgacom announced its joint development program with Alcatel-Lucent to introduce vectoring in the network • Vectoring cancels crosstalk in the copper cables resulting in a significant increase of bitrates of the copper lines
Slide 49: Head start in mobile data thanks to network improvements
Head start in mobile data thanks to continued improvements in our mobile network Spectrum efficiency 50-100Mbps HSPA +: A few 10Mbps HSDPA : A few Mbps UMTS : EDGE Evolution: 128 to 384 kbps 10-14 Mbps GPRS : 30 to 50 kbps EDGE : Voice/Circuit 150 to 200 kb/s 1995 2005 2012 • Simplified, high capaci
Slide 50: Spectrum
Spectrum Belgian situation 2G spectrum 3G spectrum 4G spectrum Digital dividend 900 MHz & 1800 MHz 2100 MHz 2600 MHz 790 MHz – 862 MHz • Belgian operators allowed • Proximus, Mobistar & Base • Out of 5 candidates, 4 have • Spectrum that is freed up to deploy UMTS in 900 obtained spectrum in 2,6 GHz
Slide 51: Pricing – Fixed products
Pricing – Fixed products Classic Happy Time XL No Limit National Anytime Happy time international 19.65€ / month 19.65€ / month 29.33€ / month 20.65€ / month Note: Free FIX to FIX Anytime Free to most European Free FIX to FIX & MOB Lower tariffs during peak countries during OffPeak & Weekend compare
Slide 52: Pricing – Mobile Voice
Pricing – Mobile Voice Generation MTV 15 + Generation MTV 10 Generation MTV 15 Generation MTV 25 Generation XL 35 Generation XL 55 50MB 10€ / month 15€ / month 19.99€ / month 25€ / month 35€ / month 55€ / month 15 min ATAN + 60 min ATAN + 60 min ATAN + 120 min ATAN + 60 min ATAN 180 min ATAN Unlimit
Slide 53: Pricing – Mobile Data
Pricing – Mobile Data Internet on GSM Internet on GSM Blackberry service Standard Internet on GSM Start Pay & Surf Comfort Favourite 0,42€ / 5 min 4,99€ / month 9,99€ / month 19,99€ / month 9,99€ / month 3€ 25 MB Or 50 MB incl. 250 MB incl. 1 GB incl. 200 MB incl. 10€ 200 MB 0,5€ / 100 kb €0,1 /
Slide 54: Pricing converged PACKS
Pricing converged PACKS TV + Fix TV + Internet 34,75€ / month 50.95€ / month TV Fix+ Internet + TV Classic (or Happy 50.95€ / month + Time XL) TV + Fix + Internet Internet Comfort +Unlimited volume Classic (or Happy +Unlimited hotspot Time XL) 59.95€ / month access + Internet Comfort TV + Mobile + I
Slide 55: Group - Headcount
Group - Headcount Estimated cash out for termination benefits • End Q1 2012, headcount of 15,926 FTEs • Q1 HR-expenses +2.6% YoY due to salary indexations and a higher EUR million 2011 110 headcount (+ 192 FTEs). FTEs from The Phone House more than 2012 102 offsetting the number of employees leaving
Slide 56: Regulation – 1
Regulation – 1 Overview financial impact Estimated Impact Actuals Regulation impacts FY 2012 Q1 2012 (Decrease in EUR million) MTR & Revenue ~ €45m €10m flow-through Fix-to-Mob EBITDA ~ €7m €2m Revenue * max. €32m €2m Roaming EBITDA * max. €32m €2m Revenue ~ €8m €2m Other (a.o. new LLU & bitstream p
Slide 57: Regulation – 2
Regulation – 2 Mobile Termination Rates (MTR) • Glidepath in place since August 2010 leading to full MTR-Glidepath in €ct symmetry by 1 January 2013 11.43 Big drop in • Any MTR decrease reflected in F2M tariffs of BGC asymmetry as 9.02 from August • Mobistar & Base filed separate appeal against deci
Slide 58: Regulation – 3
Regulation – 3 Mobile voice and data EU-roaming regulation Roaming regulation impact Q1 2012 * • Carry-over impact from lower rates on 1 July 2011 • Voice and data roaming rates will further decrease on 1 July 2012 • In addition, 1 July 2010: measures taken to prevent bill shocks with financial limi
Slide 59: Regulation – 4
Regulation – 4 Decision to open-up the Belgian Cable Network Regulators target to open On 18 July 2011, the Belgian regulators published their final decision on Cable end broadband & broadcast regulation: Oct 2012 • On the broadcast Market Each cable operator has ‘Significant Market Power’ in its ar
Slide 60: Legal – Damage claim Base/Mobistar
Legal – Damage claim Base/Mobistar Update on status On-net case: damage claim Base/Mobistar • Damage claim filed in 2003 by KPN Group Belgium (Base) & later also by Mobistar, claiming that BGC: − applied termination charges that were not cost-oriented − abused its dominant position by applying too l
Slide 61: Belgacom consolidated balance sheet
Belgacom consolidated balance sheet 31-Dec 31-Mar (EUR million) 2011 2012 TOTAL ASSETS 8,312 8,533 Non-recurrent assets 6,217 6,200 Goodwill 2,323 2,339 • Goodwill of €2,339m , up in Q1 as a result of Intangible assets with finite useful life 1,155 1,167 Property, plant and equipment 2,401 2,397 the
Slide 62: Macro economic environment
Macro economic environment Belgium & Euro area - prospects GDP growth (%)1 Unemployment rate (%)2 Belgium Euro area Belgium Euro area 2.3% 1.9% 1.0% 10.1% 10.1% 10.1% 1.9% 9.5% 1.5% 0.4% -0.1% 2008 2009 2010 2011 2012 7.5% -0.3% 8.3% -2.8% 7.9% 7.7% 7.0% 7.2% Belgium likely to be above EU average 20
Slide 63: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements “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 a
Slide 64: 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 64