Slide 1: 2013 Analyst & Investor Presentation
2013 Analyst & Investor Presentation 1
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains forward-looking statements about Mobistar, in particular for 2014. Although Mobistar believes these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, including matters not
Slide 3: Agenda
Agenda • Key Highlights • Operational Update • Financial Review • Financial Outlook 2014 Jean Marc Harion Ludovic Pech Chief Executive Officer Chief Financial Officer Gabriel Flichy Siddy Jobe Chief Technology Officer Director Investor Relations & Corporate Finance 3
Slide 4: Key Highlights
KEY HIGHLIGHTS Jean-Marc Harion, CEO 4
Slide 5: Network – customers - innovation
network – customers - innovation Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Segmented Animals boosted New ‘Animals’ New high end subsidized Launch of 4G Launch of Open Phasing out TV with more data plans Animals offers Discovery TV in Luxembourg Service Pruning of 40 Feedback 4G plans & upgrad
Slide 6: Market intensity is stabilizing in 2H13
market intensity is stabilizing in 2H13… …but market portability is structurally higher than before the telecom law On average 100k MNP/Month +111% -30% On average 60k MNP/Month Nov-Dec-Jan-Feb-Mar-Apr-May-Jun- Jul-Aug-Sep-Oct-Nov-Dec-Jan-Feb-Mar-Apr-May-Jun- Jul-Aug-Sep-Oct-Nov-Dec- 11 11 12 12 12
Slide 7: Mobistar undisputed 1st challenger in Belgium
Mobistar undisputed 1st challenger in Belgium with 5.2 million connected SIM cards to its network Group 4,619 4,699 4,793 4946 5,006 5,095 5,130 5,177 Belgium, 4,523 4,599 4,690 4,840 4,900 4,990 5,028 5,075 incl. MVNO 68,6% 69,1% 69,6% 70,1% 67,0% 67.5% 68,1% 68,2% Belgium, 3.926 3.917 3.886 3.866
Slide 8: Mobistar was able to defend its network share
Mobistar was able to defend its network share but reports negative net adds in a very active mobile market Network market net adds split Mobistar network net adds split (k users) and mobile penetration (k users) 117% 115% 114% 112% 111% 112% 112% 224 143 148 86 54 56 189 150 18 48 13 86 76 91 89 69
Slide 9: Mobistar is the only operator to adapt postpaid tariff plans
Mobistar is the only operator in Belgium to adapt systematically its Postpaid customers’ tariff plans Q4 2012 (EOP) Q4 2013 (EOP) Animals Animals Animals 43% 89% 86% 57% 11% Old plans Old plans Full compliance with the covenant signed with the government in anticipation of September 2014 deadline 9
Slide 10: Mobistar's Animals tariff plans
Mobistar’s Animals tariff plans based on clear principles and especially attractive for mobile data users Keep clear segmentation Competitive mobile prices No discrimination No engagement NEW Cloud Operator Billing on Android, Windows 8 International on Unlimited Unlimited Mobistar to Mobistar calls
Slide 11: Usage significantly increased YoY
usage significantly increased YoY with mobile data usage on smartphones more than tripling AUPU/month ( in & out traffic) +257% +20% +1% +9% 400 338 335 343 342 350 302 314 300 330 307 287 250 276 268 207 200 166 170 155 162 159 147 150 100 66 40 49 50 18 18 12 0 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13
Slide 12: Reinforcing controlled channels
reinforcing controlled channels to adapt to the new market conditions and improve profitability Direct: reinforced .be Mobistar is rebalancing Exclusive: distribution transformed channels to address different segments Multibrand: refocused 12
Slide 13: New Mobistar Centers and concept stores
new Mobistar Centers and concept stores first in Liège, with a focus on services and mobile data coaching 13
Slide 14: Mobile innovation at Mobistar
mobile innovation at Mobistar as a way to improve customer experience and develop new usage Mobile Cloud for Consumers Mobile Operator Billing • 1st in Belgium • On Android • Growing user • On Windows 8 Consumer base Enterprise Mobility 3.0 EM 3.0 Building Blocks • MDM • M2M Enterprise • MEAP • BYOD
Slide 15: Paving the way to best network quality
Paving invested Mobistar the way265M€ to bestinnetwork quality its network in 2013 completing the full renewal and the optimization of its mobile network End to end performance optim. 600+ parameters Network quality Highways/railways changes for quality & Dual carrier deployment Top voice performanc
Slide 16: Mobistar's fully renewed network
Paving the Mobistar’s fullyway to network renewed quality network… 3G refresh Fiber solutions U 900 Carrier Ethernet solutions Capacity upgrades DC Full IP Simplification of 4G roll out MW refresh Full swap architecture 4G Radio Data NW Access Data Core PS Backbone Backhaul 3G Radio VAS Access 2G Ra
Slide 17: Our transformation priorities
Our 4 transformation priorities best customer experience best telco customer experience N°1 service channel amongst telcos 17
Slide 18: Our transformation priorities
Our 4 transformation priorities Chez quel operateur votre fiston n’a pas la voix de votre tonton ? Bij welke operator klinkt je zoon niet als je oom? HAPPY | best customer experience best telco customer experience N°1 service channel amongst telcos 18
Slide 19: Our transformation priorities
Our 4 transformation priorities Py Bij welke operator word je niet down van het downloaden? Chez quel opérateur vous teléchargez sans poireauter ? best telco customer experience hi N°1 service channel amongst telcos 19
Slide 20: Drastic improvement of 2G & 3G network quality
The … only source results of knowledge in a drastic is experience improvement of 2G & 3G Albert Einstein now very close or matching incumbent’s quality Market share 3G Web Access leadership Coverage improvement and voice quality Source: Commsquare, September 2013 20
Slide 21: Clearly perceived by Mobistar's customers
… clearly perceived by Mobistar’s customers The Fast Forward Mobile Trip Let our customers see for themselves 93% customers are satisfied or very satisfied of our network. Customers survey, February 2014 21
Slide 22: Mobistar has opened 4G for its customers
Mobistar has opened 4G for its customers in Q4 2013 and is preparing its commercial launch Mobistar, only operator to commit on a 4G coverage equivalent to 2G by end 2015 22
Slide 23: Mobistar is offering the best 4G in Belgium
Mobistar is offering the best 4G in Belgium matching customers’ expectations in speed and instantaneity Mobistar 4G discovery customers have a better surf experience : • 85% vs. 3G • 35% vs. their fixed internet connection 63% say they couldn’t give up 4G anymore “Mobistar 4G is one of the best perf
Slide 24: On track to be first to launch cable regulated offers
Mobistar is on track to be 1st to launch cable regulated offers in Belgium before the end of the year 6 month implementation period by cablecos 09/2013 12/2013 01/2014 07/2014 solution CRC decision CRC decision Payment of due by cable Technical Tariffs 1.2 M€ operators LOI to Telenet, regulation Tec
Slide 25: Cable regulation is an opportunity for consumers
cable regulation is an opportunity for consumers considering triple play very high prices Mobile prices amongst cheapest Fixed triple prices amongst most in Europe expensive in Europe Source: BIPT; January 2014 – Mobile and 3-play medium offers 25
Slide 26: Pylon tax will cost up to 24 M€ extra
pylon tax will cost up to 24 M€ extra to Mobistar in 2014 26
Slide 27: Financial review
Financial review Ludovic Pech, CFO
Slide 28: Key financials
key financials consistent with our full year guidance in €m FY13 FY12 Var. insight • consistent with full year guidance Consolidated turnover 1,461.3 1,650.5 -11.5 % • -8.0% excluding regulatory • €57.8m regulatory impact Service revenues 1,252.9 1,450.0 -13.6 % • -10.0% excluding regulatory • €31.8
Slide 29: Service revenues
service revenues -10.0% underlying service revenue erosion in 2013 service revenues in million euros -139,3 1.450,0 ( -10,0%) 10,0%) -57,8 1.392,2 -133,7 1.252,9 -29,0 23,4 2012 regulatory 2012 Mobile Non Mobile MVNO 2013 actuals impact with reg. excl. MNVO actuals 29
Slide 30: Blended ARPU evolution (Belgium)
blended ARPU evolution (Belgium) decreases in line with market repricing 12-month rolling ARPU(a) evolution in euro per user -12.4% -8.0% -5.2% -3.8% 29.3 28.9 28.8 28.7 28.2 27.4 26.5 25.1 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 (a) excluding Average Revenue Per User, exclud
Slide 31: Restated EBITDA evolution
restated EBITDA evolution EBITDA erosion mostly driven by revenues loss restated EBITDA excluding on-offs (a) in million euros -104,1 471.7 ( -23,7%) 23,7%) 31,8 439,8 131,4 335,7 27,3 2012A regulatory 2012A revenues net OPEX 2013A impact with reg. impact reduction (a) see appendix for EBITDA restat
Slide 32: Transforming our operating model
transforming our operating model simplifying our organization and processes headcount redundancy costs labour costs (a) (Full Time Equivalent, Belgium) (in million euros, Belgium) (in million euros, Belgium) -130 ( -7,6%) 7,6%) -4 +5,0 ( -3%) 3%) 1.717 9,8 142 137 1.587 4,8 2012A 2013A 2012A 2013A 2
Slide 33: Capital expenses
capital expenses sustained investment in network to consolidate our first challenger position total CAPEX (a) network CAPEX (a) (in million euros) (in million euros) +5,9% +22,8% • from 63% to 73% of 199 145 total group CAPEX 188 allocated to network 118 • fully refreshed radio network since 13Q3 •
Slide 34: Net income
net income net income impacted primarily by EBITDA decline in €m FY13 FY12 Var. insight Reported EBITDA 317.1 494.1 -35.8% • 2012 figures included additional and Dep. & Amort. -188.4 -217.2 -13.3% accelerated IT depreciations for €29m Operating income 128.7 276.9 -53.5% • 2013 figures influenced by
Slide 35: Cash flow statement
cash flow statement net debt variation explained by operating cash flow and license payment in €m FY13 FY12 Var. insight Operating cash flow 136.7 283.1 -51.5% • reflecting the EBITDA erosion and sustained (reported EBITDA (a) - CAPEX) level of network investments License acquisition -120.0 0.0 +100
Slide 36: Financial outlook
Financial outlook Ludovic Pech, CFO
Slide 37: Outlook: regulatory impact
outlook: regulatory impact regulatory impact progressively fading out but still important 2011A 2012A 2013A 2014E 15 24 23 29 Revenues 13 impact 60 30 34 36 59 58 74 EU Roaming MTR 20 17 16 EBITDA 38 7 impact 13 15 23 33 32 38
Slide 38: Outlook: taxes & fees (Belgium)
outlook: taxes & fees (Belgium) tax pressure reaching unprecedented levels 2011A 2012A 2013A 2014E 8 8 10 11 Pylon 9 9 New Tax Operating 12 Other Tax 24 x3 37 IBPT 6 8 Spectrum 9 Regulated 7 14 Fees 9 10 15 x 1.5 38
Slide 39: Transformation program (ACE2)
transformation program (ACE2) €50m net operational costs savings in 2014 • reinforcing controlled channels (on-going) DIRECT COSTS • roll-out of the @Mobistar concept (on-going) + • process & organization simplification (on-going) • IT outsourcing under 32bis procedure (2H14) LABOUR COSTS • network
Slide 40: 2014 outlook
2014 outlook still a challenging year ahead • price pressure to continue driving down mobile ARPU • convergent offers heavily discounting mobile while increasing fix rates • increase in market handset subsidization • regulatory impacts in Belgium and Luxembourg • unprecedented regional and local tax
Slide 41: 2014 guidance
2014 guidance price, regulatory and tax pressure will continue weighting on our results restated EBITDA (a) €250m to €280m full year in million euros restated EBITDA before cable 336 303 31 H1 31 (181) 280 250 H2 (155) new elements 2013 2014 2014 guidance actuals consensus Our 2014 guidance include:
Slide 42: Beyond 2014
beyond 2014 • transformation efforts to continue and intensify to adapt the company cost structure to evolving market conditions • sustained network investments to pave the way for mobile data growth • LTE network extension, increasing smartphone penetration and appetite for more abundant data plans
Slide 43: Appendix
Appendix
Slide 44: EBITDA restatements
EBITDA restatements from restated EBITDA to reported EBITDA in €m FY13 FY12 remarks restated EBITDA 335.7 499.0 • consistent with our full year guidance (as percentage of service revenues) (26.8%) (34.4%) labour related -9.8 -4.8 • labour contracts termination or redundancy costs non-labour related
Slide 45: EBITDA one-offs
EBITDA one-offs from restated EBITDA excluding one-offs to reported EBITDA in €m FY13 FY12 remarks restated EBITDA excluding one-offs 335.7 471.7 • provided for year-over-year comparison purposes (26.8%) (32.5%) • -5.7pp EBITDA margin (-3.5pp excl. regulatory) (as percentage of service revenues) uni
Slide 46: Consolidated income statement
Consolidated income statement key financials in Mio EUR Q4 2012 FY 2012 Q4 2013 Y-o-Y H2 2013 FY 2013 Y-o-Y Total Turnover 450.4 1,650.5 356.9 -20.8% 704.3 1,461.3 -11.5% Total Service Revenues 369.3 1,450.0 290.2 -21.4% 598.0 1,252.9 -13.6% Direct Margin 219.2 892.2 172.1 -21.5% 364.6 763.8 -14.4%
Slide 47: View per segment (Belgium only)
View per segment (Belgium only) key financials in Mio EUR Q4 2012 FY 2012 Q4 2013 Y-o-Y FY 2013 Y-o-Y Mobistar Mobile income statement Total Turnover 399.2 1,445.0 317.3 -20.5% 1,277.3 -11.6% Total Service Revenues 316.1 1,240.0 248.7 -21.3% 1,067.2 -13.9% Direct Margin 192.7 790.5 147.8 -23.3% 659.
Slide 48: Orange Luxembourg
Orange Luxembourg key financials in Mio EUR Q4 2012 FY 2012 Q4 2013 Y-o-Y FY 2013 Y-o-Y Total Turnover 41.5 160.3 33.0 -20.4% 144.7 -9.7% Total Service Revenues 41.5 160.3 33.0 -20.4% 144.7 -9.7% Direct Margin 19.8 73.0 21.7 9.8% 85.0 16.4% In % of service revenues 47.6% 45.5% 65.7% 18.07 pt 58.7% 1
Slide 49: Our transformation priorities
Our 4 transformation priorities (745 leadership in mobile — best indust pa O best 4G network in Belgium ACE 1. = 63 ME savings © N°1 in B2C postpaid customers a vendor ( onnectivity hae ‘50 ME net cost savings in 2014
Slide 50: Shareholder Structure & Trading Info
Shareholder Structure & Trading Info ISIN: BE0003735496 Orange sa (France) Share capital: EUR 131.7m 99.99% Market Capitalization: EUR 814m Number of voting rights: 60,014,414 100% - Orange Participations sa Total turnover 2013 EUR 1,15bn 1 share (France) Daily avg. turnover 2013: EUR 4,48m 1 share
Slide 51: 1H 2014 Roadshow Schedule
1H 2014 Roadshow Schedule DATE LOCATION BROKER ROADSHOW / CONF. March 12 Paris Raymond James Management Roadshow March 13 Brussels Bank Degroof Management Roadshow March 19 London Citigroup TMT Conference March 25-27 New York / Boston Barclays Management Roadshow April 30 London Exane BNP Management
Slide 52: Visit our websites
Visit our websites: • www.mobistar.be • http://business.mobistar.be • http://corporate.mobistar.be