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Proximus Sa — Belgacom — H1 2010 Earnings Presentation

52 slides from Proximus Sa's earnings presentation, 2010

  1. Slide 1: Roadshow - H1 2010

    Roadshow - H1 2010

  2. Slide 2: Group - Financial highlights H1 2010

    Group - Financial highlights H1 2010 Solid Group revenue of € 3,305m or + 10.3% yoy  Strong revenue growth persisted in Q2’10 (+10.7%)  Normalised for full-consolidation of BICS & contribution MTN ICS: -0.3% yoy  Underlying business is sound and growing  Business growth offset by negative impact

  3. Slide 3: Group - Financial highlights H1 2010

    Group - Financial highlights H1 2010 Yoy variance impacted by BICS Like-for- As reported like VAR VAR VAR Q109 Q209 YTD09 Q110 Q210 YTD10 Q2/Q2 YTD YTD Revenues* 1,492 1,504 2,996 1,641 1,664 3,305 10.7% 10.3% -0.3% Sales related costs -511 -511 -1,023 -662 -674 -1,336 31.9% 30.7% 3.8% HR-costs -281

  4. Slide 4: Consumer - Highlights

    Consumer - Highlights Organic revenue growth & managing costs down  H1 ‘10 revenue of € 1,182m, +1.2% on adjusted* basis  2010 result impacted by legal entity merger and regulation (€18m ytd June)  Underlying business CBU +2.8%  Solid business revenue thanks to growing customer base  Strong per

  5. Slide 5: Enterprise - Highlights

    Enterprise - Highlights Revenue trend further improving  H1’10 revenue of € 1,226m, -2.2% on adjusted* basis  Trend improving, Q2 -1.4% yoy  Total regulation impact of € 12m ytd June (-0.9%)  ICT continued its recovery from crisis, revenue +3% ytd June’10  Recovery started slowly with 1.8% in Q

  6. Slide 6: Group - 2010 Guidance

    Group - 2010 Guidance Based on the solid results so far & best estimate for the rest of the year, we expect:  FY revenue growth between 9% to 10% (excl non-recurring revenue)  Even though most of the additional revenue is coming from lower margin business unit ‘BICS’ we still target a FY EBITDA ma

  7. Slide 7: Group – Shareholder return

    Group – Shareholder return New policy as from February 2010  Belgacom commits to an attractive shareholder Shareholder remuneration remuneration policy by returning, in principle, SBB Dividends % of FCF most of its annual free cash flow1, to its Mio € shareholders 1,000 900 150% 800 120%  The retu

  8. Slide 8: Group - Regulation

    Group - Regulation Regulation and national directive impacting result MTR Roaming Premium Rate Services • End June 2010: Final decision BIPT • Carry-over impact from lower rates • As from 1 April 2010, collecting • First decrease as of 1 August 2010; on 1 July 2009 model for Premium Rate Services si

  9. Slide 9: Group - Regulation

    Group - Regulation MTR : Significant decrease of asymmetry as of August 2010 MTR-Glidepath in €ct  New MTR as of 1 August 2010, lowering Proximus Mobistar Base asymmetry with BASE and Mobistar 11,43 Big drop in  Cut in MTR impacts revenue of all mobile asymmetry 9,02 players. EBITDA impact very li

  10. Slide 10: Group - Regulation

    Group - Regulation Mobile Voice & Data roaming regulation Voice Roaming (€ct per minute) SMS Roaming (€ct per sms) Retail Outgoing Retail Incoming Wholesale Outgoing Retail Wholesale 95 39 44 49 46 43 39 35 43 30 28 26 21 22 18 11 24 22 19 15 11 4 Before End Aug'07 End Aug '08 July '09 July '10 July

  11. Slide 11: Group - Operational highlights H1 2010

    Group - Operational highlights H1 2010 Success of multi-play offers driving customer growth • ~44% customers have ≥ 2 Belgacom products; % quadruple-play increasing • +180k packs in H1'10; total of 741k packs on Group level Unique market position & regional approach for iDTV • Driving customer growt

  12. Slide 12: Group - Convergence

    Group - Convergence Execution of consistent convergence strategy paying-off Evolution Pack-customer base since launch Multiplay overview residential customers 741,000 560,000 ~ 44% of customers have ≥ 2 BGC products 384,000 302,000 231,000 153,000 56% single play Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10

  13. Slide 13: Belgacom TV market

    Group - Belgacom TV market Belgacom grows TV market share in all regions Digital TV market penetration in Belgium & market share Belgacom* Competitive landscape  ~ 4.7 m households in Belgium  Digital TV penetration Belgium of ~50%* Flanders  Belgacom present in all regions Telenet-zone Brussels

  14. Slide 14: Group - Belgacom TV success story

    Group - Belgacom TV success story Belgacom successfully increasing TV customer base Evolution TV customer base since launch 868,000 752,000  Strong customer growth since launch in June ‘05 506,000 305,000  In 5 yrs time Belgacom gained 868k TV subscribers 140,000  Compared to June’09, customer ba

  15. Slide 15: Belgacom TV - offer

    Group - Belgacom TV - offer Complete and competitive offer Rich basic offer around Soccer Bouquets VOD Advanced 90 channels, incl HD > 700 movies functionalities =  Basic pricing of  “All Foot”  Additional  Movies on  Pause TV, €18.5/month €19.95/month channels demand recording,  Incl. settop

  16. Slide 16: Group – Mobile data

    Group – Mobile data Growing mobile Data market  Mobile internet users growing strongly, for internet on Mobile data GSM as well as for Internet on laptop ~30% of Mobile  High potential for future growth: service revenue  current market penetration of Smartphone < 20% of Belgian population, but gr

  17. Slide 17: Group – Mobile data

    Group – Mobile data Belgacom well positioned to capture mobile data growth Educating Innovative and Simple and Best user Innovative customers, user friendly competitive experience: pre- Applications: increasing “internet on pricing and configuration, Skynet Mobile awareness and GSM”-devices converge

  18. Slide 18: Group – Network

    Group – Network Nation-wide, high-quality FIXED network  Strategic decision end 2003 to invest in FttC*  So far ~€ 530 m invested  Enabler for organic growth and innovation, answering customer needs  High-quality & nation-wide coverage:  >75% FTTC* coverage (June 2010)  VDSL : up to 30 Mbps Ho

  19. Slide 19: Group – Network

    Group – Network Nation-wide, high-quality MOBILE network  2003 – strategic decision to invest in 3G Spectrum efficiency 50-100Mbps HSPA +:  Leader in coverage A few 10Mbps HSDPA :  GSM sites covering 99.98% A few Mbps of Belgian population  3G sites covering 97% UMTS : 128 to 384 kbps EDGE Evolu

  20. Slide 20: Group – Network: our key beliefs

    Group – Network Our key beliefs Copper has still a promising Step by step fibre approach Copper & cable inherently evolutionary path different  Current bandwidth covers  Further roll-out of Broadway  Point-to-point versus shared foreseeable customer needs project to 80% VDSL2 coverage access netw

  21. Slide 21: Group – Network: our key beliefs

    Group – Network Our key beliefs Continued improvements Network off-load to anticipate Fixed and mobile networks mobile network mobile data explosion complementary to one another  Hybrid equipment for future  Competitive advantage of  Belgacom owning nation-wide readiness owning a nation-wide fixe

  22. Slide 22: International Carrier Services

    International Carrier Services BICS delivers best in class global solutions BICS ownership  Voice, data & capacity services to fixed & mobile operators and service providers worldwide  Active in the international carrier market since 1997 20% 57.6%  January ‘05: spin off of Belgacom ICS as an ind

  23. Slide 23: International Carrier Services: World-leading position

    International Carrier Services World-leading position Strong position both on the International Voice and Mobile Data markets thanks to:  Quality of customer base and product mix with leadership in Voice and Mobile Data, complemented with healthy capacity business  Focus on geographies with strong

  24. Slide 24: International Carrier Services

    International Carrier Services BICS grew significantly over the last 5 years Revenue* (in mio €) Evolution EBITDA* & EBITDA margin 99 10.0% 8.7% 892 89 7.9% 9.0% 79 7.2% 8.0% 812 69 78 7.0% 59 64 6.0% 746 4.5% 736 49 3.8% 53 5.0% 713 39 4.0% 29 3.0% 19 27 33 2.0% 9 1.0% -1 0.0% 2005 2006 2007 2008 2

  25. Slide 25: H1 2010 result in detail

    H1 2010 result in detail

  26. Slide 26: Consumer - Financials

    Consumer - Financials CBU revenue (EUR mio) 630 2009 Reported  H1’10 +1.2%* yoy to € 1,182m  €18m regulation impact (-1.6%): Roaming and 620 like-for-like 610 617 600 604 602 collecting model premium rate services 591 590  Underlying business YTD +2.8%, driven by TV & data 580 570 579 589 592 606

  27. Slide 27: Consumer - Fixed voice

    Consumer - Fixed voice Line loss improved, revenue impacted by collecting model & Packs Fixed voice revenue (EUR mio)  Fixed voice revenue -9.6% Ytd June  Impact from line loss 150 145 144 140 141  Discounts on packs 135 130 138 138 125 133 125 120 115 110  Collecting model Premium Rates Service

  28. Slide 28: Consumer - Mobile Voice

    Consumer - Mobile Voice Adjusted revenue -1.6%, customer & usage growth offset by regulation Mobile voice revenue (EUR mio) 2009 Reported  Ytd revenue-1.6% like-for-like; reported -5.7%  2009 included Fix-to-Mob intercompany revenue 185 like-for-like 180 178 179 176  2010 impacted by roaming & co

  29. Slide 29: Consumer - Fixed Data

    Consumer - Fixed Data Growing customer base & revamped offer driving revenue growth Fixed data revenue (EUR mio)  Internet revenue H1’10 +8.1% 86 84  Increased customer base 85 85 84  With yoy ARPU increase 82 80 82 78 76 79 78 74 Q109 Q209 Q309 Q409 Q110 Q210 Broadband growth & EOP (000)  +24k

  30. Slide 30: Consumer - Mobile Data

    Consumer - Mobile Data Mobile data revenue +7.9%; impacted by regulation Mobile data revenue (EUR mio)  Ytd revenue 7.9% YoY  SMS + 10.6% yoy, pricing plans incl free SMS 82 80 80 78 80 79  Advanced data: -2.4%, excl collecting model +12.4% 76 74 77 72 75 71  Growing mobile internet customer bas

  31. Slide 31: Belgacom TV - financials

    Belgacom TV - financials Revenue growth supported by strong net adds TV revenue (EUR mio)  TV revenue +46.7% yoy to €43m  Continued customer growth 50 45 40 44 43  Growth driver for CBU 35 30 40 25 34 20 15 29 30 10 5 0 Q109 Q209 Q309 Q409 Q110 Q210 TV growth & EOP (000)  Strong customer growth

  32. Slide 32: Consumer - Tango

    Consumer - Tango  Revenue +6.3% yoy to € 49m  Higher traffic  Success of iPhone  One-time impacts like ‘Ash-cloud’ impact  260k active mobile customers, i.e. +14k net adds compared to H1’09  ARPU up €1.3 YoY to €24.8 Six months ended 30 June Variance Variance % 2009 2010 2010/2009 2010/2009 Re

  33. Slide 33: Enterprise - Financial highlights

    Enterprise - Financial highlights EBU revenue (EUR mio) 2009 Reported  Revenue trend improving 650 640 640 626 632 like-for-like  Like-for-like -2.2% ytd, Q210 slowed to -1.4% yoy 630 602  Regulation impact of € 12m (-0.9%) 620 610 600 633 619 596 625 615 610  ICT recovering from crisis, mobile

  34. Slide 34: Enterprise - Fixed Voice

    Enterprise - Fixed Voice Continued downward revenue trend; line erosion improved Fixed voice revenue (EUR mio)  Fixed Voice Revenue H1 2010 -5.4% yoy 150 148  Mainly due to ongoing line erosion 146 148  Premium rate services impact as from Q2’10 144 144 142 140 138 142 141 136 134 139 136 132 130

  35. Slide 35: Enterprise - Mobile Voice

    Enterprise - Mobile Voice Downward revenue trend stabilized Mobile voice revenue (EUR mio) 2009 Reported  H1’10 revenue -5.7% yoy adjusted* 150 like-for-like  Slight improvement in Q2 (-4.8% yoy) 146 145 144  Roaming regulation & minor impact collecting model 140 135 135 135 130  Positive effect

  36. Slide 36: Enterprise - Fixed Data

    Enterprise - Fixed Data Stable customer base in saturated & competitive market 110 Fixed data revenue (EUR mio)  Yoy rev -2% to €197m 105  Ongoing migrations to 100 101 100 100 100 95 99 98 90 Explore platform Q109 Q209 Q309 Q409 Q110 Q210  Broadband stagnating Broadband growth & EOP (000) 445 44

  37. Slide 37: Enterprise - Mobile Data

    Enterprise - Mobile Data Like-for-like revenue +6.6% Mobile data revenue (EUR mio)  Mobile data +6.6% adjusted* basis 49 48  Advanced data YTD June + 11.4% adjusted 48  Mobile internet customer base growing solidly 47 46 45 47 47 44 46 45  Regulation impact 43 42 41 43 40 Q109 Q209 Q309 Q409 Q11

  38. Slide 38: Enterprise - ICT

    Enterprise - ICT Revenue growth accelerated in Q2’10; confirming turning point Revenue first half 2010 of € 346m, up 3% YoY  Revenue growth improved from +1.8% in Q1 to +4.2% in Q2  After weak 2009, metrics are pointing in the right direction again  Well-balanced sales of services & products ICT

  39. Slide 39: Enterprise - ICT: Widening ICT scope to SMEs

    Enterprise - ICT Widening ICT scope to SMEs  ICT becoming critical business driver for SMEs  Increasing need for external ICT manager  Need for Simplicity, Cost Efficiency, Proximity Multi-Channel for optimal proximity ICT “as-a-Service” (simple & cost efficient)  ‘ICT Agent’, new non-exclusive

  40. Slide 40: Service Delivery & Wholesale

    Service Delivery & Wholesale P&L 105 SDE&W revenue (EUR mio) 2009 Reported  H1'10 revenue-6.7% YoY to €179m  Like-for-like revenue slightly up like-for-like 100 95 98 100 90 94 94  Positive impact Scarlet migration 85 80 75 88 87 85 89 94 85  €7m impact from collecting model & roaming Q109 Q209

  41. Slide 41: Staff & support

    Staff & support Highlights S&S revenue (EUR mio)  H1'10 revenue -6.6% 14 12  Less capital gains on disposal of building in H1 2010 10 12 8 10 8 6 7 7 6 4 2 0 Q109 Q209 Q309 Q409 Q110 Q210 S&S Personnel costs (EUR mio)  H1'10 HR costs slightly up 2.7% YoY 44 43  Headcount decrease (-107 FTE’s) di

  42. Slide 42: International Carrier Services: Results for H1 2010

    International Carrier Services Results for H1 2010 ICS total revenue (EUR mio)  Revenue H1 ‘10 up to €792m 450 400  Organic revenue ytd growing by 3% 414 350 378  Especially strong Q2: +5.4% organically 300 250 200 150 100 217 227 228 221 50 0 Q109 Q209 Q309 Q409 Q110 Q210 6 0 ,0 Voice Non-Voice

  43. Slide 43: Group - Consolidated income statement

    Group - Consolidated income statement 2010 impacted by full-consolidation BICS H109 H110 % var (EUR million) REVENUE before non-recurring items 2,996 3,305 10.3% Like-for-like revenue -0.3% due to regulation Costs of materials and charges to revenue -1,023 -1,336 30.7% Personnel expenses and pension

  44. Slide 44: Group - Headcount

    Group - Headcount HR expenses benefit from headcount programs  H1 2010 HR costs positively impacted by ongoing headcount reduction programs  HR costs H1’10 -2.2% yoy; adjusted -3.6%  Decrease in headcount -703 FTE compared to June ‘09 Telindus PTS + 2,600 FTE 25000 - 6,300 FTE 2006-2012: - 3,900

  45. Slide 45: Group - Investments

    Group - Investments Belgacom invested 9.1 % of its H1 2010 revenues (excl capex for 2G renewal)  €376m invested incl €74m for renewal 2G license (period 2010-2015)  Further roll-out of business transformation project “Move-to-all-IP”  Since the launch in 2008 €70m invested  Investments allocated

  46. Slide 46: Group - Free cash flow

    Group - Free cash flow Free cash flow (in million €) FCF of € 598m, significant increase due to one-off items & timing differences  H1 2009 impacted by payment of fine (€66m)  Full consolidation BICS increasing cash H1 2010 by €51m  Lower income tax payments in H1 2010:  Timing differences  Ful

  47. Slide 47: Group - Net financial position

    Group - Net financial position Belgacom continues to have a sound financial position  Compared to end 2009 net debt decreased €32m to €1,684m  Outstanding financial debt of €2.2 billion  Most of the debt maturing in 2011 & 2016 598 (540) (1,716) (30) (1,684) 4 Net debt December FCF Dividends Non

  48. Slide 48: Group - Balance sheet

    Group - Balance sheet 31-Dec 30-Jun (EUR million) 2009 2010 TOTAL ASSETS 7,448 8,389 Non-recurrent assets 5,503 6,222 Goodwill up €245m due to acquisition of Goodwill 2,088 2,333 control BICS & purchase price allocation Intangible assets with finite useful life 623 1,223 Property, plant and equipmen

  49. Slide 49: Belgian macro economic environment

    Belgian macro economic environment GDP growth (%)1 Unemployment rate (%)2 1.4% 1.7% 1.0% 8.6% 8.8% 7.9% 1 2 3 4 7.0% -3.0% 2008 2009 2010 2011 2008 2009 2010 2011 1 2 3 4 Inflation (%)1 Evolution Bankruptcies (%) 4.2% 16% 12% 14% 6% 5% 5% 1.7% 7% -1% 1.5% 6% 5% Jun Jul Aug Sep Oct Nov Dec Jan -7% Fe

  50. Slide 50: Group - Belgacom Shareholder structure

    Group - Belgacom Shareholder structure End June 2010, 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% 56.3% 55.8% Belgacom treasury shares 16,714,177 4.9% 0.0% 0.9% Free float 140,423,389 41.5% 43

  51. Slide 51: 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

  52. Slide 52: 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 52

Belgacom — H1 2010 Earnings Presentation on 6ix