Slide 1: Mobistar Analyst Presentation: Full Year Results 2005
MOBISTAR ANALYST PRESENTATION Full Year Results 2005 8 February 2006 Bernard Moschéni - CEO Martine Verluyten - CFO
Slide 2: Agenda
Agenda > Company highlights > Business Review > Financial Review > Outlook and Conclusions 2
Slide 3: Company Highlights
Company Highlights Strong performance in 2005 • Market share maintained around 33% in a more competitive environment • Continued increase in average blended ARPU to more than 38€ • Important growth in value share from 31.5% to more than 33% • Service revenues up by 10%, as guided • Net profit increa
Slide 4: Company Highlights: Significant shareholders remuneration
Company Highlights Significant shareholders remuneration 4€/share, pay out of 93.7% (253 mio €), split between : • 2.4€ ordinary dividend • 1.6€ exceptional cash return through capital reduction 4
Slide 5: Agenda
Agenda > Company highlights > Business Review > Financial Review > Outlook and Conclusions 5
Slide 6: Slowdown in market penetration growth
Business review > Slowdown in market penetration growth (*) Mobile penetration in Belgium 25% 100% 85.0% 81.7% 20% 75.2% 80% 70.4% 15% 60% 10% 40% 5% 10.1% 20% 6.8% 4.0% 2.3% 0% 0% 2002 2003 2004 2005 Growth/year Active mobile penetration 6 (*) Company estimate for 2005
Slide 7: Market share maintained around 33%
Business review > Market share maintained around 33% (*) % MARKET SHARE ‘000 CUSTOMERS 40% 8,000 30% 6,000 20% 4,000 Mobistar 10% 2,913 2,000 Competition (est.) 2,600 2,845 2,164 2,305 Mobistar active marketshare (est.) 0% 0 2001 2002 2003 2004 2005 7 (*) Company estimate
Slide 8: Above market revenue growth results in strong value share increase
Business review > Above market revenue growth results in strong value share increase Mobile revenues (mio €) 5,000 circa 3%(*) 4,000 3,000 2,000 +10% 1,000 31.5% >33% 0 2004 2005 Mobistar Mobile competition (*) Company estimate for revenue evolution of mobile competition 8
Slide 9: Strong increase in postpaid customers
Business review > Strong increase in postpaid customers ‘000 customers +2.4% 2,913 3,000 2,845 Evolution of postpaid base 2,600 1,400 2,500 1,200 2,000 69% 65% 56% 1,000 1,500 800 +26.0% 600 1,000 400 44% 500 31% 35% 200 0 0 2003 2004 2005 2003 2004 2005 Postpaid Prepaid Business Residential • Postp
Slide 10: Further market share extension in Business market
Business review > further market share extension in Business market Business market share (*) • Overall business market share estimated 40% above 34.5% end 2005 (up from 32.5% end 2004) 35% • Success mainly continued in the SME market segment thanks to powerful indirect channels 30% • Successful pro
Slide 11: Sustained upward trend in average blended ARPU
Business review > Sustained upward trend in average blended ARPU(*) € / MONTH 40 +8% 39 usage 38.02 +3.8% 38 -3.7% rev/min 37 36.64 36 35 34.68 34 33.48 33 32 31 30 2002 2003 2004 2005 ARPU 11 (*) 12 months rolling ARPU
Slide 12: Zoom on average traffic evolution per quarter
Business review > Zoom on average traffic evolution per quarter (*) Average traffic/customer/month 160 Commercial initiatives 2005 supporting usage increase • My Life : 50’ for 5€ (bundles) 120 • Tempo Essential : 30’ free A v e r a g e u s a g e /m o n th • Promo of the month • Summer SMS promo • “
Slide 13: Postpaid ARPU impacted by strong rise in postpaid customers
Business review > Postpaid ARPU impacted by strong rise in postpaid customers € / MONTH 75 65.25 66.1 65 62.66 55 45 35 ARPU 03 25 ARPU 04 Min of Use 15 Rev/min 5 ARPU 05 -5 -1.3% -4% 2003 2004 2005 • Increasing Migrations from prepaid to postpaid • Price pressure in the business market • MTR reduct
Slide 14: Prepaid ARPU supported by usage increase
Business review > Prepaid ARPU supported by usage increase € / MONTH 20 18.0 17.5 17.54 15 10 +6% 5 ARPU 03 ARPU 04 0 Min of Use Rev/min -5 ARPU H1 05 -8% -10 2003 2004 2005 • Increase in usage predominantly in SMS (lower rev/unit than voice) • important ‘promo of the month’ actions • MTR reduction
Slide 15: First figures on ADSL
Business review > First figures on ADSL Evolution ADSL customers (cumulative) 6,000 30% 5,000 4,000 50% 3,000 2,000 20% 1,000 ADSL Connect ADSL ADSL Talk 0 Oct-05 Nov-05 Dec-05 Jan-06 • Half of Mobistar ADSL customers choose for ADSL Connect (cut the line with BGC) 15
Slide 16: Impact of important network investments
Business review > Impact of important network investments • State-of-the-art mono-vendor network • 1,445 Nortel BTS refreshed • 1,269 Motorola BTS swapped • Strong focus on deep indoor coverage Example : Brussels (% indoor coverage) 98 96 94 92 90 88 86 84 82 August September October November Decemb
Slide 17: Agenda
Agenda > Company highlights > Business Review > Financial Review > Outlook and Conclusions 17
Slide 18: Consolidated income statement
Financial review > Consolidated income statement : 10% service revenues growth and 11.2% net income growth Mio € 2005 2004 (*) % Total Statutory Revenues (**) 1,479.9 1,367.7 +8.2% Service Revenues 1,404.3 1,276.3 +10% Cash Expenses - 904.8 - 812.2 +11.4% EBITDA 575.1*** 555.5 +3.5% 533.3(****) +7.8
Slide 19: P&L per business line: Mobile
Financial review > P&L per business line : Mobile Mio € 2005 2004 (*) % Total Revenues (**) 1,360.9 1,245.3 +9.3% Service Revenues 1,314.1 1,180.5 +11.3% Cash Expenses - 818.8 - 752.4 +8.8% EBITDA 570.8 519.5 +9.9% 507.5*** +12.5% In % of service revenues 43.4% 44.0% 43.0% Depreciations and amortiza
Slide 20: P&L per business line: Fix
Financial review > P&L per business line : Fix Mio € 2005 2004 (*) % Total Revenues 90.2 100.6 -10.3% Service Revenues 90.2 100.6 -10.3% Cash Expenses 85.9 64.6 +33% EBITDA 4.3 36.0 -88% 26.0** -83.5% In % of service revenues 4.8% 35.8% 25.8% Depreciations and amortizations -7.6 -8.1 -6.2% EBIT -3.3
Slide 21: Breakdown Fix P&L between Broadband and other activities
Financial review > Breakdown Fix P&L between Broadband and other activities Broadband P&L includes all broadband activities (ADSL and Voice over SDSL) 2005 Mio € Broadband Other % of rev Total Revenues 5.1 85.1 Cash Expenses - 15.0 64.6 75.9% EBITDA -9.9 16.0 18.8% 2004 Mio € Broadband Other % of re
Slide 22: Details on evolution consolidated cash expenses
Financial Review > Details on evolution consolidated cash expenses Mio Euro 1000 > Interconnect costs rise from 22.5% of service 800 revenues to 23.5% 421.9 344.1 600 > Lower handset sales 79.5 52.8 400 > Increase of sales commissions (mix & 272.2 297.3 migrations effect) 200 116.4 130.9 > Replaceme
Slide 23: CAPEX evolution
Financial review > CAPEX evolution 250 20% 17% 198.6 200 3.7 % of service revenues 13.6% 14.1%15% 12.4% 46.7 150 mio € 10% 100 158 171 148.3 136 5% 50 0 0% 2002 2003 2004 2005 CAPEX/semester Network IT other CAPEX/service revenues 23
Slide 24: Cash Flow Statement
Financial review > Cash Flow Statement Mio € 2005 2004 (*) % EBITDA 575.1 555.5 + 3.5% CAPEX -198.6 -171.2 +16.0% Change in Working Capital 75.2 12.0 + 526% Capital increase 8.1 17.7 - 54.2% Purchase own stock -1.1 0.0 N/A Net financial charges -8.3 -15.4 -46.1% Corporate Taxes -124.5 -124.2 +0.3% F
Slide 25: Balance Sheet
Financial review > Balance Sheet Mio € 2005 2004 (*) Fixed Assets 841.5 815.5 Current Assets 223.9 203.3 Cash and Cash equivalents 54.6 106.8 TOTAL ASSETS 1,120.0 1,125.6 Net Equity 716.2 563.0 Provisions 11.0 9.3 Long Term Debt (**) 0.0 249.4 Short Term Debt 2.4 7.0 Current Liabilities 390.4 296.9
Slide 26: Remuneration to shareholders
Financial review > Remuneration to shareholders Proposal of the Board to Shareholders meeting : 4€ / share 253.2 mio € cash distribution Pay-out of 93.7% 2.4€ /share ordinary dividend (20% increase; 56.2% pay-out) 1.6€ /share exceptional cash return through capital reduction (37.5% pay-out)
Slide 27: Agenda
Agenda > Company highlights > Business Review > Financial Review > Outlook and Conclusions 27
Slide 28: Market environment
Outlook and Conclusions > Market environment - Demand - ► Voice commodization emergence of “free” bundles (already for fixed voice, coming for mobile voice) ► Delayed timing in take-up of new mobile multimedia services - Competition - - Technology - ► Proliferation of alternative ► Competitors ready
Slide 29: Key Strategic Axes
Outlook and Conclusions > Key Strategic Axes • Implement customer-centric approach through segmented offers • Pursue convergence as a way to position Mobistar as an integrated operator and as such differentiate from Proximus and Base • Use Edge as the stepstone for mobile multimedia to offer compara
Slide 30: Segmented approach to maximize revenues
Outlook and Conclusions > Segmented approach to maximize revenues… Mobile as % of Telecom Spend Increase market share HIGH S1 S2 Increase S3 Share of S4 wallet • Convergence LOW Increase • FLS Market share S5 & Share of wallet S6 LOW HIGH Market Share 30
Slide 31: Targeting specific segments
Outlook and Conclusions > …targeting specific segments Residential Customer Segmentation Individual Family Young Mainstream High Mobility Multi-line Individuals - Others Families Others 15 – 24 years old High Usage 37% (34% )** 66% (16%)* (35%)* (12%)* *: % of Belgian population 15+ **: (% of famili
Slide 32: Concrete realization: Portfolio revamp
Outlook and Conclusions > Concrete realization : Portfolio revamp YOUNG MAINSTREAM HIGH FAMILY MOB M* FamilyTalk 50€ month Tempo M*Free 60€ month (+ 1 pre) Tempo Music Essential M* Max 70€ month (+2 pre ) Free SMS M* BestDeal Free & exclusive Budget control The more calls and SMS Music content from
Slide 33: Campaigns on offer portfolio revamp
Outlook and Conclusions > Campaigns on offer portfolio revamp 33
Slide 34: Network objectives
Outlook and Conclusions > Network objectives • 30% of our Mobile data traffic is already on EDGE, with 6.5% EDGE handset penetration • Maximize 2G and 3G synergy • Sustain 2G capacity growth via AMR • 3G coverage: Open two new cities and regulatory obligation (40% population) • Introduction of HSDPA
Slide 35: Conclusions
Conclusions Continued strong performance in 2005 • Increased value share thanks to dominance in postpaid and further expansion in the business market • Sustained growth of average blended ARPU • 10.0% service revenue growth • 11.2% increase in net profit • Significant shareholders remuneration • Imp