Proximus Sa · EURONEXT:PROX
Proximus Sa — Q3 2015 Earnings Presentation
43 slides from Proximus Sa's earnings presentation, Oct 30, 2015
Slide 1: Q3 2015 Results Presentation
2015 O38 Results Presentation prosgimus
Slide 2: Agenda
Q3’15 Solid financial and operational trend confirmed 3 Consumer segment results 19 Key Group achievements Q3’15 4 Enterprise segment results 29 Group underlying revenue per segment 5 Technology & wholesale 38 Group underlying revenue per product group 6 Staff & Support 39 Core revenue 7 BICS 40 Mob
Slide 3: Solid financial and operational trend confirmed, EBITDA guidance revised
Solid financial and operational trend confirmed, EBITDA guidance revised to “4% to 5% growth” Group Group Quarterly Revenue* EBITDA* Capex Q3 FCF NET ADDS + 23.000 TV subscriptions to to €200m €306m + 15.000 Fixed Internet Lines €1.509m €447m + 41.000 Mobile Postpaid cards excl. M2M & Internet Every
Slide 4: Key Group Achievements Q3 2015
Key Group Achievements Q3 2015
Slide 5: Solid revenue growth from Core and BICS
Solid revenue growth from Core and BICS Q3’15 Core revenue up +2.4% Q3’15 in m€ 15 -5 10 1,509 1 Consumer: + 2.0% YoY 14 • Rising revenue from Fixed, & Mobile Services • Mobile service revenue, +2.7% YoY 1,472 • In part offset by lower revenue from Mobile terminals +2.4% • Firm 3- and 4-Play revenue
Slide 6: Fixed, Mobile services and BICS contributing to Group revenue
Both Fixed and Mobile services, and BICS contributing well to the Group revenue Q3’15 in m€ 9 -10 10 1 1,509 28 -5 3 • Solid revenue growth from Fixed (Internet, TV and ICT). • Mobile services progressed year-on-year by 2.7%. 1,472 • Partially offset by lower revenues from low margin Mobile terminal
Slide 7: Fixed internet, TV and Fixed Voice customer evolution
Fixed internet TV Fixed Voice TV evolution net adds total unique Broadband customer evolution 1,828 1,692 1,716 Fixed Voice customer evolution 1,813 1,657 net adds total net adds total 1,788 1,558 1,593 1,740 1,495 1,525 1,694 1,705 1,718 2,902 2,876 1,365 1,384 2,850 2,831 2,836 2,822 2,800 1,288 1
Slide 8: Smartphone penetration, data usage and mobile ARPU
2.5% 2.7% Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 1.1% Q3'15 -0.4% 0.0% -4.5% -6.0% On comparable basis -11.6% Growing number of 4G Proximus Smartphone penetration: +9 pp YoY Data usage per user/month users YoY 50% 52% 54% 56% 39% 42% 44% 47% 3X 920 : 841 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15
Slide 9: Growing Group mobile customer base
Growing Group mobile customer base Positive evolution for Mobile Mobile churn well under control Market Shares 5882 5,617 5,698 5,717 5736 5,484 5,539 5,591 30.7% CBU postpaid CBU blended 66 54 141 24.8% 24.3% 23.8% 24.2% 24.3% Total mobile market share +0.3 pp. 33 36 22.8% 22.6% 22.7% 21.9% 41 26 2
Slide 10: Convergence strategy progress: 3- and 4-play households
• 42 % of the Households/Small offices are 3-or 4-play, • Revenue from X-play HH/SO +3.4% YoY; 4-Play revenue and count for 62% of total HH/SO revenue +12.5% • Continued improvement of mix following growth for • ARPH up by 4.9% YoY to EUR 66.6, 4-Play ARPH at € 117.2 3-Play and 4-Play CBU Households
Slide 11: Group underlying direct margin
Direct Margin increase from both Core business and Q3’15 in m€ 9 917 BICS. 5 -4 15 • Higher Core Direct Margin Fixed and Mobile services. Margin variance improved for a third consecutive 891 quarter this year, with the third quarter Direct Margin up 2.1%. Underlying Q3'14 CBU EBU TEC BICS Underlying
Slide 12: Underlying cost evolution
HR-related provisions update & timing impact Pylon Tax provision +2.4% +1.4% Q3’15 458 470 YTD Sept’15 1,383 1,402 in m€ 258 266 in m€ 771 771 HR HR 200 204 612 631 Non-HR Non-HR Q3'14 Q3'15 YTD Sep'14 YTD Sep'15 Group underlying HR costs (EUR mio ) & YoY Group underlying Underlying non-HR (EUR Othe
Slide 13: Group underlying EBITDA
Q3’15 in m€ Q3’15 underlying Group EBITDA totaled €447m, a €14m or 3.3% improvement YoY. 5 -9 447 2 10 6 • Proximus’ Core business, up 3.1% YOY and 433 sequentially improving from the prior two quarters. Higher Direct Margin posted in the Consumer and +3.1% +3.3% Business segment, partly offset by h
Slide 14: Net income
YTD September ’15 Net income (Group share) totaled € 343m. The decrease versus the same period of 2014 is for a large part explained by recorded incidentals in 2014 and 2015*, higher depreciation and amortization due to higher asset base and higher finance cost following a partial bond buyback. This
Slide 15: Capex in Q3'15
€ 200m Capex in 4G-network Q3’15, YTD 2015 at € 698m. • 97.8% outdoor population coverage • 87.2% indoor coverage • Renewal of the 900Mhz/1800Mhz spectrum (€ 75m in Q2) • Average download speed of 21.4 Mbps on a 4G capable device • Investing in mobile network leadership, further extending (25% to 43
Slide 16: Free cash flow YTD September 2015
YTD Sept’ 2015 (in m€) 90 -76 48 -72 629 -140 42 522 FCF YTD Sep higher underlying income tax cash paid for cash used for disposals other FCF YTD Sep 2015 2014 EBITDA payments capex working capital (mainly non-cash (mainly timing EBITDA impacts) impact) The positive impact from the higher underlying
Slide 17: Financial position
30 September 2015 1 October 2015 • Net financial debt at € 1,644m, €156m lower versus end 2014 • Proximus successfully issued € 500 m Senior Unsecured Notes due October 2025. The spread of this transaction was • Credit ratings: Standard & Poor’s A; Moody’s A - both stable set at 97 basis points over
Slide 18: Guidance and interim dividend
Outlook 2015 Revised Outlook 2015 Guidance metrics FY 2014 (31 July 2015) (30 October 2015) Through the good progress on its ‘Fit-for-Growth’ strategy, the Core underlying revenue 4,287 million Around 2% growth Around 2% growth company closed another quarter with solid financial results. Taking into
Slide 19: Consumer results Q3 2015
Consumer results Q3 2015
Slide 20: CBU revenue, cost of sales and direct margin
Good revenue progress from Fixed and Mobile service revenue CBU underlying revenue (EUR mio ) & YoY • Improved revenue trend from Fixed services, +5.3% YoY -2 . 9% -1. 4% 2 . 0% 3 . 8% 5. 3 % 3 . 9% 2 . 0% • Mobile Service revenue up 1.4% • Strong support from multi-play Packs 675 699 705 724 711 72
Slide 21: CBU HR costs, non-HR costs and segment result
Fairly stable Q3’15 underlying HR Costs CBU underlying HR costs (EUR mio ) & YoY variance • Benefit from a lower personnel base following natural attrition -2.2% -3.2% -0.4% limited by the upward revision of HR-related provisions. T.B.A. YTD Sept‘15, HR expenses of € 299m, -1.9% YoY 102 102 102 95 9
Slide 22: CBU revenue bridge
Q3’15 4 3 -11 10 CBU’s revenue growth resulted from sequentially 720 12 improving revenue increase from Fixed services, up by 705 -3 5.3% from the previous year. +2.0% The solid revenue increase in Internet and TV revenue more than offset the continued though contained Fixed Underlying Fixed Voice F
Slide 23: Fixed voice revenue and line erosion
Contained line erosion, YoY revenue decline limited in Q3’15 Q3’15 revenue from Fixed voice totaled € 139m, Fixed voice revenue (EUR mio) & YoY - 2.5% YoY -4. 1% -4. 0% -3 . 5% -2 . 1% -3 . 5% -4. 0% -2 . 5% • Fixed line base 15,000 lower YoY or -0.7% 146 144 143 142 143 139 137 139 • Increasing num
Slide 24: Fixed Internet revenue growth improving
Fixed Internet revenue growth improving to +9.1% Sequentially improving revenue growth, up 9,1% for Q3’15 Fixed data revenue (EUR mio) & YoY • Driven by the growing customer base, up by 114,000 or 4. 3% 5. 9% 5. 8 % 9. 1% +7.2% in one year 2 . 3% 2 . 7% 1.9% • ARPU up by 1.7%. 127 127 130 130 132 13
Slide 25: TV base growth
Proximus and Scarlet brand growing TV base by 23,000 in the quarter Q3’15 revenue from TV totaled € 83m, +14.0% YoY TV revenue (EUR mio) & YoY variance • Continued subscriber growth, with both the Proximus and 7. 9% 7. 8 % 11. 0% 12 . 4% 14. 8% 18. 1% 14. 0% Scarlet brand increasing their customer b
Slide 26: Mobile services revenue and base
Higher YoY revenue on growing Postpaid base and higher ARPU Q3’15 revenue from Mobile services +1.4% YoY • Solid growth in YoY Postpaid base : + 193,000 or +7.1% Mobile service revenue (EUR mio) & YoY variance • Blended mobile ARPU up YoY by 2.2%. -1. 1% 0. 0% 2 . 2% 0. 9% 1. 4% -6. 3 % -5. 6% 252 2
Slide 27: Higher ARPU and mobile data usage
Higher YoY ARPU & Average Mobile data usage Blended Mobile ARPU up 2.2% YoY to € 22.8 • Better customer tiering, driven by high-end Joint-Offers, and Blended net mobile ARPU (EUR ) & YoY increased smartphone penetration • Q3’15 Postpaid ARPU of €30.0 +1.5% YoY -4.2% -3.9% 0.2% 1.3% 3.0% 1.8% 2.2% •
Slide 28: Tango revenue growth
Double digit revenue growth continued on higher YoY customer base and ARPU Tango revenue (EUR mio) & YoY variance Tango Q3’15 revenue of € 33m, +9.9% YoY 9. 9% 9. 5% 11. 0% 9. 9% -3 . 5% -12 .6% -7. 4% -6. 4% • Revenue increase resulting from an improved Mobile customer mix with more Mobile postpaid
Slide 29: Enterprise results Q3 2015
Enterprise results Q3 2015
Slide 30: EBU underlying revenue increasing 4.8%
Q3’15 underlying revenue increasing 4.8% YoY EBU underlying revenue (EUR mio ) & YoY • Fixed up by 3.8% and Mobile services by 6.7% versus one year ago. -3 . 1% -0. 6% 0. 3 % 5. 0% 2 . 1% 0. 0% 4. 8% • ICT revenue +9.1% YoY on low-margin product revenue. YTD Sept’15 underlying revenue totaled € 987m
Slide 31: EBU HR costs and segment result
Underlying HR Costs up 6.4% YoY EBU underlying HR costs (EUR mio ) & YoY • Q3 increase mainly resulted from HR-related provision updates variance -0.4% -1. 1% 6.4% and, to a lesser extent, to some additional international ICT headcount. 69 67 68 72 67 65 67 YTD Sept‘15 HR expenses +1.6% YoY Q1'14 Q2
Slide 32: EBU revenue bridge
Q3’15 in m€ In Q3’15 both Fixed and Mobile contributed well to the 1 332 higher topline. 5 9 Firm increase in ICT revenue, up by 9.1% from the prior 317 -2 2 year, mainly coming from low-margin product revenue. +4.8% Improvement from Fixed data nearly covered for the loss in Fixed Voice. Underlying
Slide 33: Fixed Voice revenue decline
Fixed Voice revenue decline on stable erosion of Fixed Voice customer base Q3’15 revenue from Fixed voice totaled € 61m, Fixed voice revenue (EUR mio) & YoY variance - 3.3% YoY 1 0 0 .0 .. -2.0% -3.0% -2.6% -2.9% -4.2% -5.7% -3.3% • Continued Fixed Voice line erosion triggered by companies rationali
Slide 34: Fixed data revenue up 2.6%
Q3 revenue up 2.6% YoY, driven by continued growth from data connectivity services Q3’15 Fixed data revenue of € 63m, +2.6 % YoY Fixed data revenue (EUR mio) & YoY variance • Favorable revenue trend from Data Connectivity services -3.6% -4.9% -3.5% -2.7% -2.0% 0.7% 2.6% following roll-out of large c
Slide 35: ICT revenue
EBU generated in Q3’15 € 113 m revenue from ICT, 9.1% Underlying ICT revenue (EUR mio) & YoY above the same period of 2014 -3.3% 4.4% 1.8% 14.8% 2.2% -1.2% 9.1% • Mainly driven by a large one-off product contract which in the 2 0 0 .0 .. third quarter more than offset the impact from the Millions 1
Slide 36: Mobile services revenue growth
YoY growth on larger customer base and higher data usage Q3’15 revenue from Mobile services totaled € 82m, +6.7% YoY • Growing mobile customer base, improved ARPU Mobile service revenue (EUR mio) & YoY variance • Regulated roaming rate cuts annualized on 1 July 2015 -4.6% -0.1% 3.8% -1.4% 3.4% 1.8%
Slide 37: Mobile ARPU growth and data usage
For 1st time in a long while the ARPU showed YoY growth on improved tiering a higher data usage Blended Mobile ARPU up 2%YoY Blended net mobile ARPU (EUR ) & YoY variance • Improved tiering and data consumption -10.9% -6.9% -3.2% -9.2% -2.6% -2.8% 2.0% • No additional roaming regulation impact. 31.0
Slide 38: Technology & Wholesale results
Q3’15 revenue totaled € 55m, -8.2% YoY TEC & W underlying revenue (EUR mio ) & YoY • Lower volumes from traditional wholesale business -5.3% -9. 8% -9. 5% -10.2% -13 .8% -2 . 4% -8 . 2% • Snow outphasing largely compensated through Scarlet retail offer 64 60 60 58 55 58 55 Q1'14 Q2'14 Q3'14 Q4'14 Q1
Slide 39: Staff & Support results
Q3’15 revenue totaled € 5m, in line with the prior quarter. S&S underlying revenue (EUR mio ) & YoY -6.3% 9.8% -4. 5% 67.7% 12.4% -30.3% -18 .7% 7 8 7 8 8 5 5 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q3’15 HR expenses € 34m, +2.9% YoY as a result of S&S underlying HR costs (EUR mio ) & YoY updated
Slide 40: BICS revenue and direct margin
Firm Direct Margin of € 73m +13.3% YoY on favorable Voice market conditions & positive currency and volume effect for Mobile data Q3’15 revenue totaled € 420m, +2.5% YoY • Increase driven by continued solid growth in non-Voice BICS underlying revenue (EUR mio ) & YoY variance revenue, up 14.2% YoY.
Slide 41: BICS segment result up 5.7%
Segment result up 5.7% Q3’15 segment result of € 41m, up 5.7% • Q3’15 expenses up mainly on unfavorable YoY bad debt BICS underlying segment result (EUR mio ) & YoY impact and currency effects variance 32.4% 34.9% 5.7% • EBITDA margin of 9.7% 30 35 39 32 39 47 41 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15
Slide 42: Forward-looking statements
“This communication might include some forward-looking statements, without limitation, regarding Proximus’ financial or operational results, certain strategic plans or objectives, macro-economic trends, regulation, future market conditions and other risk factors. These forward-looking statements rel
Slide 43: For further information
For further information Investor relations Nancy Goossens: +32 2 202 82 41 Sarah Franklin: +32 2 202 77 11 E-mail: investor.relations@proximus.com Proximus investor relations website : www.proximus.com/en/investors