Orange Belgium Sa · EURONEXT:OBEL
Orange Belgium Sa — H1 2017 Earnings Presentation
43 slides from Orange Belgium Sa's earnings presentation, Dec 6, 2017
Slide 1: Orange Belgium Financial results H1 2017
Orange Belgium Financial results H1 2017 Analysts and Investors Roadshow presentation
Slide 2: Disclaimer
Disclaimer This presentation might contain forward-looking statements about Orange Belgium in particular for 2017. Although we believe these statements are based on reasonable assumptions, they are subject to numerous risks and uncertainties, including matters not yet known to us or not currently co
Slide 3: Section one: Business review
Section one Business review Michaël Trabbia Orange Belgium, CEO 3 Orange Belgium – H1 2017 Financial results
Slide 4: Key operational highlights in Belgium
Key operational highlights in Belgium 2,271.7 K (+1.7 % yoy) 64.3 K 105.8 K Postpaid customer Orange Love Mobile customers in a base customers convergent bundle 99.6 % 53% 1.7 GB 4G outdoor population 4G 4G smartphone Average mobile data coverage penetration usage per month 21.2 K 29.3 euros (+1.0 %
Slide 5: A quarter impacted by an exceptional amount of exogenous events
A quarter impacted by an exceptional amount of exogenous events Successfully managed thanks to Orange Belgium’s agile structure BIPT consultation of Roaming Prepaid MTR cut the broadband and television regulation identification broadcasting market Fixed B2C Easy Switch Continued OTT competition subs
Slide 6: Orange Belgium's key growth drivers
Orange Belgium’s key growth drivers 1 2 3 Convergence Mobile data Customer monetization experience 6 Orange Belgium – H1 2017 Financial results
Slide 7: Orange Love offer provides an excellent quality & customer experience
Orange Love offer provides an excellent quality & customer experience At the most attractive market price 39€/month 49€/month With Orange Eagle & With Orange Eagle Premium Hummingbird, Dolphin, Koala & Panther Internet 100 Mbps Unlimited volume Internet 100 Mbps Unlimited volume 70 TV channels 70 TV
Slide 8: Orange is increasingly recognized as a convergent brand in Belgium
Orange is increasingly recognized as a convergent brand in Belgium Love campaign has boosted Orange’s share of voice in the market Q1 2017 brand tracker Spontaneously aware of Orange convergent offer Q2 Q4 Q1 2016 2016 2017 32% 41% National commercial launch Question: Which operators offering combin
Slide 9: Third quarter in a row of net additions of close to 15 K
Third quarter in a row of net additions of close to 15 K Despite competitors’ promotional activity reacting to Orange Belgium’s convergent positioning and ahead of the implementation of Easy Switch Net Love additions since launch date Implementation Easy Switch +15 K 2Q16 3Q16 4Q16 1Q17 2Q17 Converg
Slide 10: Driving the value creation story: upsell path
Driving the value creation story: “upsell path” Stimulating upsell towards mid- and high- end tariff plans Orange Internet + TV Internet Speed: 100 Mbps download ≤ 15€/month 5 Mbps upload (Voo footprint) 6 Mbps upload (Telenet footprint) Mobile offer €49/m Boost: 200 Mbps +€10 North, 150Mbps +€15 So
Slide 11: Orange Belgium's convergent model drives mobile cross-selling
Orange Belgium’s convergent model drives mobile cross-selling Increased share of mobile convergent customers in total postpaid base LOVE customers Convergent mobile customers 64K >40% 50 (% of postpaid base) were new Orange customers 33 5.0% 4.5% 18 11 5 4.0% Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Slide 12: Ahead of the implementation of the Easy Switch law
…ahead of the implementation of the Easy Switch law A law making it much easier for consumers to switch fixed operator Choose your product Fill your data Orange will do the rest Avoiding periods of service interruption, double billing and unexpected costs for customers when switching to another fixe
Slide 13: Orange Belgium welcomes the regulator's intention to stimulate competition
Orange Belgium welcomes the regulator’s intention to stimulate competition in the fixed market and the move to a cost-plus approach The wholesale access fee level should significantly decrease and the implementation should be as soon as possible in customers’ interest Third party network access: “Th
Slide 14: Orange Belgium's key growth drivers
Orange Belgium’s key growth drivers 1 2 3 Convergence Mobile data Customer monetization experience 14 Orange Belgium – H1 2017 Financial results
Slide 15: 3 mobile operators covering the Belgium market
3 mobile operators covering the Belgium market But 2 different kinds of networks Territory 4G coverage rate 1 2 S2 2016 15 Orange Belgium – H1 2017 Financial results Source: BIPT
Slide 16: Orange Belgium strengthens its leading position as network operator
Orange Belgium strengthens its leading position as network operator 22 sites equipped with 4.5G technology adding capacity and speed June 2016 June 2017 and onwards Theoretical speed Theoretical speed 225 Mbps 375 Mbps = 150 = 150 150 75 75 800 1800 2600 4.5G 800 MHz 1800 4G+ MHz MHz MHz MHz LTE 4G+
Slide 17: Best quarter in terms of postpaid growth since the beginning of 2016
Best quarter in terms of postpaid growth since the beginning of 2016 Combined with ARPU growth and lower acquisition & retention costs Quarterly postpaid net adds in Belgium (‘k) 21 In spite of a significant reduction in the number of subsidized offers 18 9 € € 8 Subsidy Thanks to: Subsidy + Strong
Slide 18: Prepaid registration provided opportunity to connect with prepaid users
Prepaid registration provided opportunity to connect with prepaid users Driving pre- to postpaid migration 95% 78% Of active prepaid Mobile postpaid customers identified ratio 2.2 times 2.998 Postpaid customers use 2.2 times more data than prepaid customers. 2.272 Postpaid + Less churn with postpaid
Slide 19: Interest in smartphone instalment offer is progressively growing
Interest in smartphone instalment offer is progressively growing A smart way to address customers’ needs while reducing acquisition and retention costs Smartphone instalment offer Launch date: February 2017 New Samsung Galaxy S8|S8+ launched Internal sales team Financial partner Customer awareness o
Slide 20: 4G smartphone penetration increased to 53% of total customer base
4G smartphone penetration increased to 53 % of total customer base 4G+ enabled devices are ramping up as well, reaching 16 % Orange Belgium’s active smartphone penetration Smartphone penetration averages and forecasts 63% 70% % of active 56% Region 2016 2021 smartphone users 48% / total base North A
Slide 21: Total data traffic increased by 61% year on year in June 2017
Total data traffic increased by 61 % year on year in June 2017 84 % of total data consumption is 4G/4G+ traffic 84 % of 4G/4G+ data 4G/4G+ users 72 % of 4G/4G+ data +1.5 million 53 % 4G & 4G+ Orange Belgium 4G launch Total traffic up 6 times since 4G 3G launch Jan- Feb- Mar- Apr- May- Jun- Jul- Aug-
Slide 22: Mobile data usage continues to grow linearly
Mobile data usage continues to grow linearly As customers fully embrace the benefits in their daily lives and work Orange Belgium’s average mobile data usage per month 1.5 GB 1.670 1.530 1.330 1.140 1.020 860 880 550 510 250 290 110 EoP 2013 EoP 2014 EoP 2015 EoP 2016 EoP 1Q17 EoP 2Q17 Total users b
Slide 23: Qualitative ARPU growth leading to sustainable revenue growth
Qualitative ARPU growth leading to sustainable revenue growth Ability to monetize mobile data confirmed Postpaid ARPU increased YoY in Q2 2017 Underlying ARPU: +6.9% +1.0% +1% 29.0 29.3 29.3 29.0 Q2 2016 Q2 2017 Q2 2016 Incoming European Qualitative Underlying SMS impact roaming impact ARPU growth A
Slide 24: Orange Belgium removed EU roaming fees as of June 2017
Orange Belgium removed EU roaming fees as of June 2017 Attractive offers and network quality provide fertile ground for elasticity Belgians’ most favorite travel destinations Orange Belgium customers can use their 156% national bundle of calls, text messages and mobile data when travelling in the EU
Slide 25: Orange Belgium's key growth drivers
Orange Belgium’s key growth drivers 1 2 3 Convergence Mobile data Customer monetization experience 25 Orange Belgium – H1 2017 Financial results
Slide 26: Orange Thank You! loyalty program celebrates its 3rd anniversary
Happy birthday to the “Orange Thank You!” loyalty program 3 years of surprises for Orange Belgium customers celebrates its 3rd anniversary More than 180,000 cinema More than 20 exclusive 2.5 millions of gifts tickets offered events organized 26 Orange Belgium – H1 2017 Financial results
Slide 27: Consistent growth in core digital services
Consistent growth in core digital services Focus always on building a superior client satisfaction MY VR 2 092 K ORANGE ORANGE 90 K 2,741 2,482 2,236 1,944 1,635 CLOUD ORANGE 217 K ORANGE RADIO 12 K Q216 Q316 Q416 Q117 Q217 Total Core services TV Download (thousands) 76 K ORANGE ICOYOTE 254 K 27 Ora
Slide 28: Orange Belgium digital transformation
Orange Belgium digital transformation 6 digital markers to shape Orange Belgium digital DNA Use digital tools to minimize the Easy subscription effort for a convergent Convergence offer Communities Mobile first Community based services and Orange Belgium B2C/B2B SMA: Mobile device is first engagemen
Slide 29: Section two: Financial results overview
Section two Financial results overview Arnaud Castille Orange Belgium, CFO 29 Orange Belgium – H1 2017 Financial results
Slide 30: Total service revenues, Adjusted EBITDA, Capex, Net debt
Total service revenues Adjusted EBITDA € 553.5m € 157.2m +2.4% +8.4% Year-on-year Year-on-year (Comparable basis) Capex Net debt € 77.2m € 329.7m -8.0% -10.9% Year-on-year Year-on-year 30 Orange Belgium – H1 2017 Financial results (Core Capex)
Slide 31: Total service revenues growth of 2.4%
Total service revenues growth of 2.4% (+5.0% yoy excl. EU roaming) Driven by both mobile and fixed service revenues growth 5.0% 553.5 5.4 540.3 21.0 -13.2 527.1 H1 2017 Service revenues €553.5m +2.4% (yoy) +€13.2m (yoy) H1 2016 EU roaming H1 2016 Mobile service Fixed service H1 2017 impact comparabl
Slide 32: H1 2017 adjusted EBITDA growth of 8.4%
H1 2017 adjusted EBITDA growth of 8.4 % proves solid cost management Negative EU roaming impact balanced by anticipated MVNO revenues In million euros 8.4% 157.2 1.6 1.6 0.2 144.9 21.7 -12.9 132.1 H1 2017 Adjusted EBITDA €157.2m 28.4% of Total service rev. +8.4% (yoy) H1 2016 Regulatory H1 2016 Tota
Slide 33: Total capex increased by 24.3% yoy
Total capex increased by 24.3 % yoy, linked to lift off cable capex Network investment normalization after accelerated 4G roll-out 13.9% 11.5% +24.3% 77.2 62.1 H1 2017 26.0 6.5 -8.0% Capex €77.2m 55.6 51.2 13.9% of Total service revenues H1 2016 H1 2017 • Total capex : +24.3% (yoy) Cable capex incl.
Slide 34: Net financial debt: Solid EBITDA and mobile capex normalization
Net financial debt: Solid EBITDA and mobile capex normalization Result in strong cash flow generation Leverage: 2.1x (in million euros) 538 519 500 Leverage 1.0x 457 407 418 370 H1 2017 315 338 324 330 Net financial debt 2.1 2.0 1.9 1.7 €329.7m 1.3 1.4 1.1 0.9 1.1 1.0 1.0 -10.9% (yoy) - €40.2m (yoy)
Slide 35: Orange Belgium key financials
Orange Belgium key financials Improving financials with a growing customer base in €m Var. (%) Insight • Service revenues growth in spite of €13.2m roaming Total service revenues 553.5 540.3 2.4% impact (+5.0% underlying growth), lower incoming SMS revenues and supported by anticipated MVNO revenues
Slide 36: Orange Belgium consolidated net income and financial debt
Orange Belgium consolidated net income and financial debt Improving cash flow generation and debt profile in €m Var. (%) Insight Reported EBITDA 157.7 145.5 8.4% • Reflecting EBITDA evolution and increasing level of EBIT 45.8 47.4 -3.4% depreciation due to shorter useful life of some fixed assets Fi
Slide 37: Section three: 2017 guidance
Section three 2017 guidance 37 Orange Belgium – H1 2017 Financial results
Slide 38: 2017 financial guidance and outlook reiterated
2017 financial guidance and outlook reiterated Investing in future growth while protecting EBITDA margin 2017 in million euros Q1 2017 Q2 2017 H1 2017 guidance To grow vs. Total service revenues +0.6% +4.3% +2.4% 2016 Adjusted EBITDA 72.2 85.0 157.2 290-310 Core capex excl. cable 20.7 30.5 51.2 Stab
Slide 39: Section four: Q&A
Section four Q&A 39 Orange Belgium – H1 2017 Financial results
Slide 40: Appendix 1: Key financial figures
Appendix 1 Key financial figures Q2 Q1 Q4 Q3 Q2 Q1 2017 2017 2016 2016 2016 2016 ORANGE BELGIUM GROUP – Key financial figures Total service revenues in mio EUR 279.5 274.0 277.7 275.3 267.9 272.4 Mobile service revenues in mio EUR 258.9 253.4 258.5 257.6 250.1 254.3 Fixed service revenues in mio EUR
Slide 41: Appendix 2: Orange Belgium's figures
Appendix 2 Orange Belgium’s figures Q2 Q1 Q4 Q3 Q2 Q1 2017 2017 2016 2016 2016 2016 ORANGE BELGIUM Mobile services Mobile retail customers (excl. MVNO) in thousand 3,779.0 3,759.1 3,796.5 3,770.5 3,779.7 3 766.6 Mobile customers (excl. M2M) in thousand 2,920.3 2,927.1 2,970.8 2,991.8 3,023.4 3 029.7
Slide 42: Appendix 3: Orange Luxembourg's figures
Appendix 3 Orange Luxembourg’s figures Q2 Q1 Q4 Q3 Q2 Q1 2017 2017 2016 2016 2016 2016 ORANGE LUXEMBOURG Mobile services Mobile retail customers (excl. MVNO) in thousand 178.3 164.9 159.3 154.5 148.1 142.4 Mobile customers (excl. M2M) in thousand 109.7 106.0 105.4 104.1 102.7 102.1 Postpaid in thous
Slide 43: Investor Relations
Investor Relations Siddy JOBE Director siddy.jobe@orange.com Investor Relations & +32 2 745 80 92 Corporate Finance @PressOrangeBE https://www.linkedin.com /company/orange-belgium https://corporate.orange.be