Proximus Sa · EURONEXT:PROX
Proximus Sa — Q2 2019 Earnings Presentation
63 slides from Proximus Sa's earnings presentation, July 2019
Slide 1: Proximus Group Results Q2 2019
Proximus Group Results Q2 2019
Slide 2: Cautionary Statement
Cautionary Statement “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-l
Slide 3: Table of Content Note
3 Table of Content Note • Group P 4 • The financials results of Proximus Group are reported under the accounting • Consumer P 23 standards IFRS 15 and, as of 2019, IFRS 16 (replacing IAS 17). • Enterprise P 32 • All figures included in this presentation are on ‘Underlying’ basis, allowing for a • Wh
Slide 4: Key messages Q2
GROUP 4 Key messages Q2 Growing customer base Limited effect of revenue € 278M FCF H1’19 in competitive setting decline on Direct Margin acquisition impact excluded c.+0.4% 278 +25,000 Postpaid 180 +6,000 -0.6% +5,000 Actual YoY YoY excl c.8M (M€) Underlying one-off Q2’18 Domestic DM H1'18 H1'19 Sta
Slide 5: Proximus & Orange join forces to develop the mobile network of the future
GROUP Proximus & Orange join forces to develop the mobile 5 network of the future In scope Term sheet signed with Orange Belgium on 11 July ’19 Passive and active sharing Benefits Better overall experience, meet Further improving deep-indoor and Allow faster and cost increasing customer demand for o
Slide 6: Proximus & Orange join forces to develop the mobile network of the future (continued)
GROUP Proximus & Orange join forces to develop the mobile 6 network of the future (continued) Proximus expects to generate a very good return on the outlined agreement 2019 2020 2021 2022 2023 2024 2025 … No meaningful Set up investment € 140M (gross) Annual cash flow benefit of financial impact Inc
Slide 7: “Think possible” as new brand image
GROUP 7 “Think possible” as new brand image The new brand promise “Think possible” was launched on 13th June with new products and services that will change our customers’ media experience. With “Think possible”, we want to exploit the immense potential offered by the digital world. • Proximus Pickx
Slide 8: Positive momentum maintained for Broadband and TV
GROUP Positive momentum maintained for Broadband and TV 8 Net adds Park Customer Market base share 2,025 2,032 2,041 2,057 2,065 2,071 +39K YoY 46.2 Broadband 15 17 % Growing base for 7 9 8 6 Broadband and TV, in ‘000 +1.9% -0.3pp supported by dual Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 YoY brand strat
Slide 9: Growing Mobile Postpaid base
GROUP Growing Mobile Postpaid base 9 Mobile Market share 4,831 4,838 4,842 4,838 Postpaid 4,824 4,819 +114K YoY, i.e. 39.2 Mobile Cards % Park (‘000, excl. M2M) 25 45 32 32 25 25 +2.9% -0.5pp Postpaid net adds -32 -39 -27 -36 -29 YoY -39 Prepaid net adds Prepaid Mobile park excl. M2M • Back to norma
Slide 10: Increasingly convergent customer base in premium family segment
GROUP Increasingly convergent customer base 10 in premium family segment YoY +39,000 Convergent households thanks to Continued growth for …driving higher Tuttimus/Bizz All-in/Epic combo/Minimus; +13,000 in Q2 Tuttimus/Bizz All-in… 4P customer base Subscribers (‘000) HH/SO (in ‘000) 59.2% convergence
Slide 11: Q2’19 Group Revenue
GROUP 11 Q2’19 Group Revenue (M€ & YoY %) -2.7% -2.2% 1,440 1,452 1,440 1,475 1,415 1,413 2,892 2,828 -3.1% -1.7% 659 648 319 340 347 341 319 329 YoY YoY 1,121 1,112 1,094 1,134 1,096 1,084 -2.6% -2.4% 2,233 2,180 YoY Domestic YoY Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 YTD'18 YTD'19 -1.8% -1.4% excl. T
Slide 12: Domestic revenue by product nature, YoY evolution
GROUP 12 Domestic revenue by product nature, YoY evolution Fixed Data / Internet ICT Q2 Q2’18: €1,112M TV H1 YTD Q2’18: €2,233M BICS 3 Advanced Business Services 6 2 ICT 10 -2 Mobile Postpaid1 -1 -1.8% YoY -2 Mobile Prepaid -7 -1.4% YoY excl. Terminals -3 Tango -4 excl. Terminals -4 Others2 -11 -5 -
Slide 13: Group direct margin -0.5%
GROUP 13 Group direct margin -0.5% Revenue erosion having only limited impact on 928 -8 8 -5 0 1 924 direct margin. Q Domestic: -0.6% or c.+0.4% excl one offs +0.8% • Domestic DM -0.6%, incl. (M€) -4M regulation impact ( FTR, Group : -0.5% International calling/sms) Incl. c.8M€ one-off tailwinds in
Slide 14: Stable Group expenses despite growing ICT cost
GROUP 14 Stable Group expenses despite growing ICT cost 439 -1 1 440 Domestic expenses -0.3% YoY on low comparable base in 2018 Q2 -0.3% +3.2% BICS expenses up 3.1% YoY, (M€) driven by TeleSign workforce +0.0% expenses to support its growth and HR related provisions Q2'18 Domestic BICS Q2'19 462 449
Slide 15: Domestic EBITDA -0.8% on high comparable base
GROUP 15 Domestic EBITDA -0.8% on high comparable base 450 -5 2 -1 446 Underlying EBITDA decrease driven by lower direct margin Q2 Incl. c.8M€ due to 2018 one-off tailwinds. one-off (M€) tailwinds in ‘18 Slightly higher non workforce expenses are partially offset by lower workforce costs. Underlying
Slide 16: Group EBITDA -0.9% YoY
GROUP 16 Group EBITDA -0.9% YoY 16 489 -4 Underlying Group EBITDA on -1 484 high comparable base for Proximus’ Domestic operations. Q2 (M€) Underlying Domestic BICS Underlying EBITDA EBITDA Q2'18 Q2'19 -0.9% +0.5% Q’s (M€) 453 489 468 455 463 484 942 947 YTD'18 YTD'19 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q
Slide 17: Net income (Group share)
GROUP 17 Net income (Group share) • Higher underlying EBITDA • Lower impact from YTD incidentals (M€) +9.0% • Lower net finance cost on 28 -9 7 -11 high 2018 comparable 3 273 5 base* 250 • Partially offset by higher D&A (higher investments & acquired companies) • And by higher tax expenses 27.39% ET
Slide 18: €466 million capex in H1’19
GROUP 18 € 466 million capex in H1’19 +1.6% In line with its full- 322 year projections, 221 238 238 227 247 Proximus invested 459 466 Capex € 466M in H1’19 (M€) excl. spectrum Q1'18 Q2'18 Q3'18 Q4'18 Q1'19* Q2'19 YTD'18 YTD'19 * In Q1 ‘19: Following a law change and Proximus Luxembourg spectrum mee
Slide 19: From EBITDA to FCF
GROUP From EBITDA to FCF 19 Solid FCF generation, € 278M in H1 2019, acquisition impact excluded *Early leave plan refers to voluntary early leave before retirement
Slide 20: FCF YoY evolution
GROUP FCF YoY evolution 20 Better YTD FCF mainly only lower tax prepayments and lower cash for business working capital YTD (M€) ION-IP & Lower interest Mainly acquisition of Lower Partly timing Umbrio payments on non-controlling prepayments LT debt interest in Be-Mobile Group *Early leave plan refe
Slide 21: Maintaining a sound financial position
GROUP 21 Maintaining a sound financial position Net Debt DEC 2018 FCF Dividends Other Net Debt JUN 2019 5.5 Yr Average debt duration Adjusted Net Debt* 1.79% (YTD, M€) Weighted average coupon 241 -325 -22 Credit ratings: Standard & Poor’s -2,143 -2,248 A, Moody’s A1, both stable outlook Investment l
Slide 22: Guidance FY 2019 reiterated
GROUP 22 Guidance FY 2019 reiterated 2019 expectations In line with the announced 3-year FY'18 FY'19 FY'19 YTD commitment on 16 December 2016. Guidance metric Actuals Guidance Q1 Revised Guidance Actuals Stable gross dividend Domestic underlying revenue €4,460M nearly stable per share of Domestic un
Slide 23: Consumer results
Consumer results
Slide 24: Consumer
CONSUMER 24 Consumer -2.8% -2.5% Revenue Lower standalone mobile (M€, YoY) 730 724 714 735 1,454 1,413 device sales and decreasing 708 706 inbound weighing on Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 YTD'18 YTD'19 revenue, without Direct Margin impact. -10.3% -6.5% Cost of The 2018 one-offs Sales tailwin
Slide 25: Revenue split by nature
CONSUMER 25 Revenue split by nature €M Highlights 724 -2.5% 706 Terminals: Declining business of reselling standalone mobile devices at 59 -14.7% 50 low-margin 29 27 Others: incl. lower customer reminder fees (following law change mid-2018) 28 28 Tango: stable revenue -2.1% Mobile services: Postpaid
Slide 26: Fixed Services
CONSUMER 26 Fixed Services 1,861 1,868 1,877 1,894 1,901 1,908 Internet +40,000 customers (000) Broadband lines 15 17 7 9 8 7 +2.1% YoY Broadband and TV customer bases improving in competitive setting. Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Revenue supported by Internet and TV growth, and 1 January 201
Slide 27: Mobile service revenue
CONSUMER 27 Mobile service revenue Lower MSR driven by Mobile service revenue (M €) & YoY variance Blended mobile ARPU (€) & YoY variance • Lower inbound revenue 23.0 23.3 23.3 22.5 23.1 • International 22.5 -2.1% +0.8% calling/sms regulation YoY • Prepaid erosion 21.0 21.5 21.8 21.1 20.9 21.4 -0.5%
Slide 28: Postpaid Prepaid
CONSUMER 28 Postpaid Prepaid Customer growth offset by ARPU pressure Revenue erosion on lower base Incl. € -2M impact Revenue (M€ & YoY) from Revenue (M€ & YoY) international -1.2% calling/SMS -11.2% 203 207 211 205 202 205 20 21 19 17 19 15 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q1'18 Q2'18 Q3'18 Q4'1
Slide 29: X-Play view
X-Play view
Slide 30: Increased convergent revenue drives positive HH/SO revenue
CONSUMER 30 Increased convergent revenue drives positive HH/SO revenue 84% Consumer revenue +0.3% generated by HH/SO X-Play HH/SO revenue 589 591 € 591M 79 +0.7% 80 43% 41% 172 -5.2% 163 Mobile-only Non Consumer Fixed-only convergent Revenue Convergent Convergent € 706M 57% 59% 338 +3.0% 348 +1.9 p.
Slide 31: Upselling to 4P & convergent 3P, at higher ARPH
CONSUMER 31 Upselling to 4P & convergent 3P, at higher ARPH Convergent Park growing (000) 1,058 1,097 YoY +39,000 ARPH Low 4P 93 92 convergent HH, 256 264 +13,000 in Q2 4P at 111€, 2.78 RGU full-churn driven by Tuttimus/Bizz on average of 3P Convergent 711 740 All in/Epic combo & Minimus at 104€ +1.
Slide 32: Enterprise Results
Enterprise Results
Slide 33: Enterprise
ENTERPRISE 33 Enterprise +0.4% -0.8% Revenue: -0.8% YoY Revenue (M€, YoY) 702 705 Higher revenue from ICT, acquired 351 351 347 364 357 348 companied included, Advanced Business Services and Mobile Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 YTD'18 YTD'19 services not fully offsetting erosion in legacy serv
Slide 34: Revenue
ENTERPRISE 34 Revenue Q2’19 Enterprise revenue -0.8% YoY 351 -5 3 -3 + Mobile Services revenue up YoY on larger mobile customer 2 0 348 base, in spite of ARPU pressure. 1 + ICT benefitting from the contribution of acquired companies, partly offset by Q2 lower proceeds from ICT (M€) products and one-
Slide 35: Fixed Voice
ENTERPRISE 35 Fixed Voice Steady erosion -8.4% in Fixed Voice customer base Fixed voice revenue (M€) & YoY variance 53 51 49 49 49 47 + (Limited) price indexation on 1 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 January 2019 567 559 549 - Erosion in Fixed Voice park 541 531 519 Voice line loss/gain & - Decr
Slide 36: Internet revenue drivers
ENTERPRISE 36 Fixed Data Slightly negative balance between legacy and new data -0.8% connectivity services. Fixed data* revenue 61 62 62 61 62 61 + Increasing revenue from flagship (M€) & YoY variance VPN solution Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 + Growing P2P Fiber park - Ongoing outphasing/migr
Slide 37: Mobile Services
ENTERPRISE 37 Mobile Services + 0.8% Mobile service revenue Mobile service revenue (M€) & YoY variance Postpaid excl. M2M growth & EOP (000) Solid revenue growth from subscriptions +0.8% 1,010 1,021 1,028 1,048 1,053 +4.2% YoY 999 Postpaid cards 80 80 80 78 81 19 5 77 11 11 11 7 +5,000 Q1'18 Q2'18 Q
Slide 38: ICT
ENTERPRISE 38 ICT Successful strategy of expanding portfolio, moving the company Strengthened ICT portfolio, including from pure connectivity towards digital transformation solutions for acquisition of small-sized, highly specialized its professional customers. companies. Q2 revenue +1.4% (including
Slide 39: Advanced Business Services
ENTERPRISE Advanced 39 Business Services Strong increase following the acquisition of Mediamobile in November 2018 +36.7% 7 8 10 10 6 5 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 About Mediamobile Mediamobile specializes in providing real-time traffic information for car navigation systems. The acquisition
Slide 40: Wholesale
WHOLESALE 40 Wholesale • Revenue and Direct margin impacted by reduced Fixed Termination Rates since 1 January 2019. • Wholesale roaming revenue was up: higher traffic volumes offsetting impact from lowered roaming wholesale rates, negotiated in the Group’s interest. • Lower revenue from traditional
Slide 41: BICS Results
BICS Results
Slide 42: BICS segment result
BICS 42 BICS segment result -1.7% +8.9% +3.1% -3.9% +0.5% -0.1% -3.1% In line with the ongoing market trend, BICS’ 659 648 revenue mix moved further Revenue (M€) & YoY 340 347 341 329 319 319 variance from Voice to Data. Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 YTD'18 YTD'19 +18.8% +18.5% +14.5% +1.8% Di
Slide 43: Non-Voice and Voice BICS results
Non-Voice Voice BICS 43 Benefitting from increasing messaging revenue, Continued its eroding trend. Positive volume effect with especially Telesign realizing strong increase offset by lower unit revenue (lower termination rates, in SMS A2P volumes. competition and less favorable destination mix). +4
Slide 44: Appendix
Appendix • From reported to underlying P 45 • Regulation impacts P 46 • IFRS15 impacts on consumer mobile P 47 • Tango P 48 • Headcount P 49 • Pricing information P 50 • Spectrum P 56 • CSR/Sustainability information P 59 • Shareholder structure P 62 • Contact information P 63
Slide 45: From reported to underlying figures
APPENDIX 45 From reported to underlying figures GROUP GROUP GROUP GROUP Revenue EBITDA Revenue EBITDA (EUR million) Q2 '18 Q2 '19 Q2 '18 Q2 '19 YTD '18 YTD '19 YTD '18 YTD '19 Reported 1,452 1,415 456 498 2,893 2,832 898 975 Lease Depreciations nr 0 nr -22 nr 0 nr -43 Lease Interest nr 0 nr -1 nr 0
Slide 46: Regulation impacts
APPENDIX 46 Regulation impacts 2nd Quarter Year-to-date Fixed Termination Rates (FTR): (YoY variance in EUR million) 2019 2019 • Since 1 Jan 2019: 0.116€ct/min (from 0.709€ct for regional and 0.909€ct for national previously) Revenue -7 -12 • Based on a pure LRIC “Long Run Incremental Cost” model Fi
Slide 47: IFRS15 – Impact on revenue and ARPU
APPENDIX IFRS15 – Impact on revenue and ARPU 47 All reported figures are under the IFRS 15 standard Main impact in Q2 on the Consumer segment: • Shift from Services to Terminals Revenues in case of joint-offer • Timing impact: the relative standalone value of the joint offer devices is recognized wh
Slide 48: Tango Luxembourg
APPENDIX 48 Tango Luxembourg Incl. intercompany eliminations, now done within Tango. No impact on total Enterprise revenues Enterprise € 4M Tango Tango revenue (M €) & YoY variance Revenue 36 35 36 39 35 32 (M€) Consumer € 28M Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Postpaid Prepaid Q2’19 Park 255K 25K
Slide 49: Headcount
APPENDIX 49 Headcount Early Leave Plan & natural retirements leading to ~2,750 FTEs to leave Proximus over 2016- 2020 FTE evolution (gross outflow - not including hiring to cover business needs) 14,090 13,633 13,391 13,385 13,086 12,996 Proximus SA age pyramid 13,627 13,095 12,644 12,658 12,305 12,2
Slide 50: Mobilus/Tuttimus pricing
APPENDIX 50 Mobilus/Tuttimus pricing Including Tuttimus price increase 1 January 2019 Prices incl. VAT Mobile only NE S M Update L W XL Unlimited 1.5 GB 5 GB 10 GB Unlt. data * Unlt. sms Unlt. sms Unlt. sms Unlt. sms 120 min. Unlt. min Unlt. min Unlt. min + Unlimited Mobile data for your favourite A
Slide 51: Bizz Mobile portfolio
APPENDIX 51 Bizz Mobile portfolio NEW as of 3rd June Bizz Mobile Bizz Mobile Bizz Mobile S Bizz Mobile M Bizz Mobile L Unlimited International 1.5 GB 5 GB 10 GB Unlimited data* Unlimited data* 100 min Unlimited min Unlimited min Unlimited min Unlimited min Unlimited SMS Unlimited SMS Unlimited SMS U
Slide 52: Full-digital journey offer for Millennials & Gen Z
APPENDIX 52 €19.99 €24.99 Full-digital journey Worry-free connection, anytime, anywhere Pioneering in the Millennials & Gen Z segment
Slide 53: €64.99 / month pack for millennials
APPENDIX 53 A pack for the A pack for specific needs the specific of millennials needs of millennials € 64.99 / month Mobile, fixed Unlimited zero rated Mobile, fixed internet and TV apps (Social, music & internet and TV via Proximus video apps) via TVProximus App TV App Co-creation Co-creation with
Slide 54: Scarlet Fixed portfolio
APPENDIX 54 Scarlet Fixed portfolio Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’ Loco: from €35 to €32 since 31/05 New pricing as from 1 July 19 €40 /month
Slide 55: Scarlet Mobile portfolio
APPENDIX 55 Scarlet Mobile portfolio • New simplified offers as from 28th February 2019
Slide 56: Spectrum
APPENDIX 56 Spectrum Current ownership and new spectrum Expiry dates Proximus OBEL Telenet 29/11/33 800 MHz 2 x 10 2 x 10 2 x 10 Proximus OBEL Telenet 15/03/21 900 MHz 2 x 12.4 2 x 11.6 2 x 10.2 Renewal 1,800 Proximus OBEL Telenet 15/03/21 MHz 2 x 24.8 2 x 24.8 2 x 24.8 2,100 Proximus OBEL Telenet U
Slide 57: Spectrum auction – reserved spectrum
APPENDIX 57 Spectrum auction – reserved spectrum The final legislations have not been approved yet. The whole spectrum auction process is on hold until after the formation of a new government. Therefor the timing and the final conditions of the auctions remains uncertain. Frequency band Total capaci
Slide 58: Spectrum auction – coverage obligations
APPENDIX 58 Spectrum auction –coverage obligations The final legislations have not been approved yet. The whole spectrum auction process is on hold until after the formation of a new government. Therefor the timing and the final conditions of the auctions remains uncertain. Frequency band Obligation
Slide 59: An ambition, inspired by our sense of purpose
APPENDIX An ambition, 59 inspired by our sense of purpose Creating an inclusive, safe, sustainable & prosperous digital Belgium Commitment to the UN Sustainable Development Goals
Slide 60: An ambition inspired by our sense of purpose
APPENDIX 60 An ambition inspired by our sense or purpose Our company sense of purpose: Our societal impact ambition: We open up a world of digital opportunities so people live Creating an inclusive, safe, sustainable and prosperous better and work smarter digital Belgium Enabling Caring for Digital
Slide 61: We are committed to making a societal impact
APPENDIX 61 We are committed to making a societal impact Improving fixed and Responsible marketing Founding partner of • CO2 neutral for mobile connectivity in parental control on TV Coding School 19 own activities; white zones and smartphones • CO2 reduction -75% vs 2007 Supporting local Upskilling
Slide 62: Shareholder structure
APPENDIX 62 Shareholder structure Total number of shares Free-float Belgian government 338,025,135 42% 54% Number of % shares % Voting % Dividend Number of Number of shares rights rights shares with shares with ~€ 8.4 Bn voting rights dividend rights Market Capitalisation* Belgian state 180,887,569
Slide 63: For further information
63 For further information Investor Relations Nancy Goossens Eline Bombeek Director Investor Relations Investor Relations Manager Call: +32 2 202 82 41 E-mail: investor.relations@proximus.com Proximus Investor Relations website: www.proximus.com/en/investors