Slide 1: Orange Belgium Financial results FY 2016
Orange Belgium Financial results FY 2016 Analysts and Investors Roadshow presentation 09 February 2017
Slide 2: Disclaimer
Disclamer 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 con
Slide 3: Section one: Business review
Section one Business review Michaël Trabbia Orange Belgium, CEO 3 Orange Belgium – FY 2016 Financial results
Slide 4: Orange Belgium reached the high end of its 2016 financial target
Total service revenues Adjusted EBITDA € 315.7m € 1 093m Orange Belgium reached the high (€ 300.2m excl. Walloon pylon tax) end of its 2016 financial target +0.7% +14.4% (+1.1% excl. Walloon pylon tax) Year-on-year Year-on-year 1) Adj. EBITDA: € 280-300m Capex • Excl. Walloon pylon tax: € 300.2m €
Slide 5: 2016 key events
2016 key events CRC finalized cable Festive rebranding into wholesale regulation Orange Belgium Board decision Orange Telenet MVNO Installation of a new Closing Walloon pylon Belgium rebranding termination agreement Executive team tax agreement Q1 2016 Q2 2016 Q3 2016 Q4 2016 Average mobile data IBP
Slide 6: Orange Belgium's key growth drivers starting to pay off
Orange Belgium’s key growth drivers starting to pay off 1 2 3 Mobile data Fixed convergence Customer monetization opportunity experience 6 Orange Belgium – FY 2016 Financial results
Slide 7: Leading 4G network, rich device portfolio, segmented mobile data portfolio
Leading 4G Rich device network portfolio Segmented 360° services mobile data portfolio 7 Orange Restricted
Slide 8: A proud 4G & 4G+ network leader
A proud 4G & 4G+ network leader developing new use cases, anytime, everywhere during the customer journey 99.6% 91.9% 99.9% 54% 4G Outdoor 4G Indoor 4G+ Brussels 4G+ National population National population Population coverage National population coverage coverage coverage 8 Orange Belgium – FY 2016
Slide 9: Orange Belgium spectrum portfolio
Orange Belgium spectrum portfolio Spectrum portfolio more than sufficient to cover anticipated data growth Ending Year Total 91.4 MHz 85 MHz 92.4 MHz 5G 700 MHz Attribution conditions to be decided… 4G 800 MHz 10 10 10 2033 2G & 3G 900 MHz 11.6 10.2 12.4 2021 2G & 4G 1800 MHz 25 25 25 2021 3G 2100 M
Slide 10: 5G in preparation at Orange Belgium
5G in preparation at Orange Belgium Focusing on capacity and preparation of core mobile network and backhauls Orange Belgium’s 5G Timeline: Investment path Peak 4G capex 2014-2015 Sufficient spectrum for 4G but extra spectrum needed for 5G 2G/3G/4G fully upgraded Spectrums network Investor Relations
Slide 11: Active smartphone users reached 2.000.000 at the end of 2016
Active smartphone users reached 2.000.000 at the end of 2016 4G, and increasingly 4G+, takes the highest sales share Orange Belgium’s active smartphone penetration is catching up with EU averages 4G 85% 70% 68% 61% 48% 55% 32% 16% 2014 2015 2016 EU average 2014 2015 2016 EU average % of active smart
Slide 12: Total data traffic increased by 68% in 2016
Total data traffic increased by 68% in 2016 80% of total data consumption is 4G/4G+ traffic 4G/4G+ users 1.4 million 4G & 4G+ 48% Orange Belgium 4G launch Total traffic up 5.5 times 3G since 4G launch jan- feb- mrt- apr- mei- jun- jul- aug- sep- okt- nov- dec- jan- feb- mrt- apr- mei- jun- jul- aug-
Slide 13: 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 1.5 GB Browsing 1 GB 1,330 Streaming 860 880 550 510 290 Gaming 250 Messaging 110 EoP 2013 EoP 2014 EoP 2015 EoP 2016 Indicative usage Total users base Mobile data users base • • 13 Ora
Slide 14: Belgian mobile prices remain among the most attractive
Belgian mobile prices remain among the most attractive according to the IBPT mobile price level benchmark Orange Belgium’s new portfolio leads the way for higher data users €/month 42€ 45 40 33€ 35 30 26€ 26€ IBPT benchmark, 24€ 25 21€ 22€ 22€ 21€ heavy user profile 18€ 20€ 6H voice, unlimited 20 17
Slide 15: New simplified Animal portfolio
New simplified Animal portfolio Clear focus on customer experience, convergence and mobile data monetization The following roaming-options can be added to the tariff plans: - Transborder (12.1€ for 250 min. roaming, 250 min. international, 250 SMS, 250 MB) 15 Orange Belgium – FY 2016 Financial resul
Slide 16: New postpaid portfolio is delivering on expectations
New postpaid portfolio is delivering on expectations Close to half of the new SIM-only customers opt for a tariff plan of minimum 25 euros to benefit from more data Launch date new Animal portfolio Postpaid SIM only gross adds 2017 New data centric portfolio October 2016 <25€ bundle gross adds >=25€
Slide 17: 4G and data usage are driving postpaid ARPU growth
4G and data usage are driving postpaid ARPU growth Ability to monetize mobile data confirmed Postpaid ARPU increased YoY in Q4 2016 +1.8% ARPU growth of 1.8 % despite impact of roaming regulation Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 17 Orange Belgium – FY 2016 Financial re
Slide 18: Close to 100K 4G postpaid net additions each quarter
Close to 100K 4G postpaid net additions each quarter Seventh consecutive quarter in a row of postpaid growth 4G Postpaid quarterly net adds in Belgium (‘k) 28 Postpaid net adds 18 4G Postpaid net adds 9 8 8 9 3 -5 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 18 Orange Belgium – FY
Slide 19: Orange Belgium's key growth drivers starting to pay off
Orange Belgium’s key growth drivers starting to pay off 1 2 3 Mobile data Fixed convergence Customer monetization opportunity experience 19 Orange Belgium – FY 2016 Financial results
Slide 20: 3-play prices further increased according to IBPT benchmark
3-play prices further increased according to IBPT price level benchmark Current Belgian prices rank among the highest in Europe Recently announced price 74€ 74€ increases not even included 75 70€ 71€ 70 66€ 65 59€ +1.99% IBPT benchmark, very 60 January 10th, 2017 high broadband >100 Mbps + TV + fixe
Slide 21: Belgium consumers are attracted by very high speed broadband
Belgium consumers are attracted by very high speed broadband Compared to EU averages Belgium consumers are leading the pack Fixed broadband subscriptions comparison 51% 70% 44% 63% 37% VS 22% 19% 26% 19% 21% 11% 15% 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 21 Orange Belgium – FY 2
Slide 22: Orange Internet + TV offering provides excellent quality at attractive price
The Orange Internet + TV offering provides an excellent quality at the most attractive market price and keeps on getting better 39€/month 49€/month Orange Orange Eagle & Eagle Hummingbird, Dolphin, Premium Koala & Panther Internet 100 Mbps Unlimited volume Internet 100 Mbps Unlimited volume 70 TV ch
Slide 23: Driving the value creation story: upsell cliff
Driving the value creation story: “upsell cliff” 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 24: Orange Belgium Internet + TV evolution and mid-term target
Orange Belgium Internet + TV evolution and mid-term target Already 33.4K customers seven months after the national launch Digital TV customers evolution 4Q15 2 1Q16 5 2Q16 11 3Q16 18 33 3-5 years 4Q16 5 quarters 20XX 175-200 20XX 350-400 Orange Internet + TV customers 24 Orange Belgium – FY 2016 Fin
Slide 25: 33.4K Orange Internet + TV customers
33.4 K 56.7 K Orange Internet + TV Orange Internet Associated Postpaid + TV customers SIM cards +15.8 K in Q4 2016 1.7 x More than double of Average contracts per previous quarter convergent household Customer ~30 % experience Orange Internet Installation + TV customers Broadband TV “Orange Belgium
Slide 26: Orange Belgium established itself as a full convergent player
Orange Belgium established itself as a full convergent player Orange Internet + TV net adds doubled in the fourth quarter of 2016 Fixed broadband net adds 1Q16 23 7 3 2Q16 13 9 5 19% Net adds shares 3Q16 14 8 7 25% Net adds shares 4Q16* 15 8 16 41% Net adds shares Proximus Telenet Orange Belgium 26
Slide 27: Orange Belgium is also a fully convergent operator in B2B
Orange Belgium is also a fully convergent operator Addressing all segments of the B2B-market 1 2 3 Soho SME Large accounts « Internet + TV » « Shape & Fix » « Trusted connectivity provider » 27 Orange Belgium – FY 2016 Financial results
Slide 28: Orange Belgium's key growth drivers starting to pay off
Orange Belgium’s key growth drivers starting to pay off 1 2 3 Mobile data Fixed convergence Customer monetization opportunity experience 28 Orange Belgium – FY 2016 Financial results
Slide 29: Orange brand is recognized by the market in Belgium
After only 6 months Orange brand is recognized by the market in Belgium Increasing awareness will provide opportunities in fixed and mobile Mobile Fixed operator operator Corporate Brand 3 out of 5 3 out of 5 1 out of 3 customer customer customer spontaneously aware spontaneously aware of spontaneou
Slide 30: Rewarding loyalty to reduce churn with Orange Thank You
Rewarding loyalty to reduce churn with Orange Thank You And increase the overall customer experience Targeted at prepaid and postpaid customers Personalized 1-2-1 communication at regular frequency Enter in contact with each specific segment 30 Orange Belgium – FY 2016 Financial results
Slide 31: The customer at the heart of our strategy
The customer at the heart of our strategy Digitizing the experience and increasing customer engagement and value Omnichannel Capture digital traffic Digitize retail operations Mobility Contact Center Self care Social CRM Help customers to Digitize simple acts of adopt digital supports & account Smar
Slide 32: Orange Belgium opens new business opportunities with 4G IOT
Orange Belgium opens new business opportunities with 4G IOT Connecting objects that were previously too remote or expensive to connect City-Of-Things (Antwerp) Innovate city & harbor Open ecosystem with 3GPP standardization National coverage from day 1 : Software update on existing LTE network
Slide 33: Crowd monitoring partnership with start-up Cropland
Orange Belgium’ crowd monitoring partnership with start-up Cropland Rewarded by the AGORIA 2016 Smartcities award Orange Belgium Strategic partnerships Tailor-made: customer support throughout the whole project life cycle Flux vision Flexible: partnership with field Mobile and Big data Network d
Slide 34: Section two: Financial results overview
Section two Financial results overview Arnaud Castille Orange Belgium, CFO 34 Orange Belgium – FY 2016 Financial results
Slide 35: Total service revenues +0.7%
Total service revenues +0.7% (+3.4% excluding EU roaming impact) Driven by solid mobile service revenues growth, reaching its highest level since 2014, and a return to fixed service revenues growth in 4Q16 3.4% -6.8 1093.3 1085.9 42.7 -28.4 1057.5 Cable Legacy FY 2016 Service revenues €1,093.3m +0.7
Slide 36: Mobile service revenues increased 1.4% y-o-y excl. regulation
Mobile service revenues increased 1.4% y-o-y excl. regulation Fueled by mobile data growth, compensating EU roaming impact and erosion of legacy fixed revenues 5.9% 5.2% 259 258 3.4% 258 254 2.9% 253 FY 2016 1.1% 250 Service revenues 247 0.5% 248 €1,020.5m -0.6% +1.4% (yoy) -1.1% +€14.3m (yoy) Q1 20
Slide 37: Pylon tax agreement puts an end to a period of uncertainty
Pylon tax agreement puts an end to a period of uncertainty The agreement had a positive adj. EBITDA impact of € 15.5m in 4Q16 16 16 48 16 32 -16 -16 -16 -16 -32 Solde 1Q16 2Q16 3Q16 4Q16 FY 16 FY 15 Walloon pylon tax provisions Settlement fee Walloon pylon tax agreement 37 Orange Belgium – FY 2016 F
Slide 38: Orange Belgium delivered strong results in 2016
Orange Belgium delivered strong results in 2016 In addition to the rebranding into Orange and the consolidation of its position as a customer oriented convergent operator 1.1% 3.2 315.7 14.0 -20.2 15.5 300.2 296.8 A strong result in the year the company 20.8 34.7 rebranded to Orange 276.0 -28.4 268.
Slide 39: Total capex decrease of 13.2% y-o-y
Total capex decrease of 13.2 % y-o-y, including lift off cable capex Network investment normalization after accelerated 4G roll-out Orange Belgium continues to invest -13.2% in its network by boosting 4G indoor 193 coverage, 4G+ deployment, rolling 8 out fiber backhauling and the launch 168 of Narro
Slide 40: Net financial debt: solid EBITDA and mobile capex normalization
Net financial debt: Solid EBITDA and mobile capex normalization Result in strong cash flow generation (including 52M€ spectrum fees) Leverage: 2.1x (in million euros) 538 519 Leverage 1.1x 500 457 407 418 370 315 338 FY 2016 2.1 2.0 1.9 Net financial debt 1.7 1.3 1.4 1.1 1.1 €338.0m 0.9 -17.1% (yoy)
Slide 41: Orange Belgium key financials
Orange Belgium key financials Improving financials with a growing customer base in €m Var. (%) Insight • Mobile service revenue growth in spite of €28m roaming Total service revenues 1,093.3 1,085.9 0.7% impact (+1.4% underlying growth) • Reflecting services revenues growth but less mobile Total tur
Slide 42: 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 317.1 321.3 -1.3% EBIT 107.2 119.1 -10.0% Financial results -6.5 -6.7 -3.4% Tax -24.1 -35.8 -32.6% Net income 76.6 76.6 0.0% Earning per share 1.28 1.28 •
Slide 43: Section three: 2017 guidance
Section three 2017 guidance 43 Orange Belgium – FY 2016 Financial results
Slide 44: 2017 financial guidance and outlook
2017 financial guidance and outlook Investing in future growth while protecting EBITDA margin in million euros 2017 guidance Total service revenues To grow vs. 2016 Adjusted EBITDA 290-310 Core capex excl. cable Stable vs. 2016 Outlook Further increase of the level of brand awareness Growing pos
Slide 45: Board proposes to reinitiate dividend
The Board of Directors of propose the AGM to reinitiate dividend Creating additional shareholder value in 2017 Orange Belgium aims to provide an appropriate cash returns to 0.50 equity holders while maintaining a balanced and sound financial position, thereby leaving sufficient leeway to continue
Slide 46: One last thing…
One last thing… 46 Orange Belgium – FY 2016 Financial results
Slide 47: Section four: Q&A
Section four Q&A 47 Orange Belgium – FY 2016 Financial results
Slide 48: Appendix 1: Key financial figures
Appendix 1 Key financial figures Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2016 2016 2016 2016 2015 2015 2015 2015 ORANGE BELGIUM GROUP – Key financial figures Total service revenues in mio EUR 277.7 275.3 267.9 272.4 271.9 276.8 268.9 268.2 Mobile service revenues in mio EUR 258.5 257.6 250.1 254.3 253.3 257.7 248.0
Slide 49: Appendix 2: Orange Belgium's figures
Appendix 2 Orange Belgium’s figures ORANGE BELGIUM Mobile services Mobile retail customers (excl. MVNO) in thousand 3,796.5 3,770.5 3,779.7 3 766.6 3 893.0 3 839.0 3 818.4 3 762.3 Mobile customers (excl. M2M) in thousand 2,970.8 2,991.8 3,023.4 3 029.7 3 037.8 3 030.7 3 032.8 3 022.5 Postpaid in tho
Slide 50: Appendix 3: Orange Luxembourg's figures
Appendix 3 Orange Luxembourg’s figures ORANGE LUXEMBOURG Mobile services Mobile retail customers (excl. MVNO) in thousand 159.3 154.5 148.1 142.4 139.9 134.5 131.6 128.4 Mobile customers (excl. M2M) in thousand 105.4 104.1 102.7 102.1 101.4 98.4 97.7 95.9 Postpaid in thousand 97.3 96.6 95.2 94.1 91.
Slide 51: 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