Proximus Sa · EURONEXT:PROX
Proximus Sa — Q3 2016 Earnings Presentation
65 slides from Proximus Sa's earnings presentation, 2016
Slide 1: Results Presentation
2ZOV6 O38 Results Presentation prosgimus
Slide 2: Contents
Q3’16 Group highlights 3 Financial position 16 Key Group achievements Q3’16 4 FY 2016 Outlook 17 Group underlying revenue per segment 5 Consumer segment results 18 Group underlying revenue by product group 6 Enterprise segment results 35 Fixed Internet and TV 7 Wholesale 43 Mobile services revenue 8
Slide 3: Q3'16 Group highlights
Underlying Group EBITDA progressed by 4.7%, driven by a solid 5.5% Domestic EBITDA growth Commercial Revenue* EBITDA* Capex FCF drivers €1,487m €474m €183m €300m Continued growth of customer base, in a -1.4% YoY +4.7% YoY more competitive market + 18,000 Underlying Domestic Domestic EBITDA of € Tota
Slide 4: Key Group Achievements Q3 2016
Key Group Achievements Q3 2016
Slide 5: Group underlying revenue
Domestic revenue +1.5% YoY, growth TV, Fix internet and device sales offsetting lower revenue from roaming. BICS revenue decreased YoY due to voice volatility Group underlying revenue (M€) & YoY variance 13 3 1 0 -38 2.2% 5.5% 1.5% 2.5% -0.3% -3.1% -3.0% -1.4% 1,509 1,506 1,479 1,505 1,509 1,502 1,4
Slide 6: Underlying revenue by product group
Q3 • Solid revenue growth from Fixed driven by Internet and TV. • Mobile services revenue impacted by 7 -6 12 1 4 -38 roaming regulation and unfavorable travel 1,509 1,487 destination mix. Domestic +1.5% • Higher Mobile devices sales Group -1.4% • Lower BICS revenue due to unfavorable voice destinat
Slide 7: Fixed internet, TV and Fixed Voice customer evolution
Fixed internet TV Fixed Voice Broadband customer evolution TV evolution Net adds Unique Total Fixed Voice customer evolution 1,879 1,892 1,906 Net adds Park Net adds Park 1,856 1,813 1,828 1,816 1,834 2,836 1,788 1,759 1,795 2,831 2,822 2,800 2,781 2,751 2,723 2,696 1,740 1,657 1,692 1,716 1,593 1,4
Slide 8: Mobile services revenue and mobile cards
Mobile services revenue : -1.8% YoY, on lowered roaming Growing base mobile cards rates since end-April ‘16 and changed travel destination mix Mobile excluding M2M and Internet Everywhere cards (in 000’s) 4,929 4,922 4,919 4,924 4,939 4,911 4,907 4,903 YoY: 2.5% 2.7% 2.1% 1.7% 1.1% • +131,000 Mobile
Slide 9: Convergence strategy progress
• Nearly 46 % of the Households/Small offices are 3-or 4-play, • Revenue from X-play HH/SO +2.3% YoY; 4-Play revenue and count for 65% of total HH/SO revenue +7.3% • Continued improvement of mix following growth for • ARPH up by 2.0% YoY to EUR 66.8, 4-Play ARPH at € 116.1 3-Play and 4-Play CBU Hous
Slide 10: Group underlying direct margin
Q3’16 Group direct margin +0.2% YoY Group underlying direct margin(M€) & YoY variance • Domestic direct margin was up by 0.2%, driven by 2.2% 5.5% 1.5% 2.5% 1.9% 1.4% -0.5% 0.2% Consumer. Domestic direct margin as percent of revenue was 76.5%. 879 890 915 917 896 902 911 918 • BICS posted a 0.1% dec
Slide 11: Underlying cost evolution
Group expenses (M€) Group underlying Underlying Other Opex by nature expenses (€m)(M€) & YoY & var. YoY workforce vs. non-workforce 3.4% 0.4% 1.2% 0.4% -3.9% -2.6% -4.2% 498 482 478 484 460 464 448 444 30 25 32 29 32 32 57 69 53 29 33 62 57 73 59 59 Domestic 203 180 161 153 190 189 155 156 164 146 1
Slide 12: Group underlying EBITDA
Q3’16 underlying Group EBITDA totaled €474m, up by Group underlying EBITDA (M€) & YoY variance 4.7% YoY 5.5% 9.5% 2.2% 1.5% 2.5% 2.5% 1.7% 4.7% • YoY EBITDA growth fully driven by Domestic, up 5.5% YoY to € 435m, including slightly higher direct margin 455 453 463 474 382 408 418 418 and especially
Slide 13: Net income (Group share)
• YTD September’16 net income (Group share) totaled € 398m, including € 160m for the third quarter. The increase versus the same period of 2015 is for a large part explained by higher Group EBITDA and lower finance costs, partially offset by higher depreciation and amortization. Ytd in m€ 22 -40 11
Slide 14: Capex and network
Capex in M € 4G outdoor 4G indoor Average speed 4G(+) device1 (Mbps) coverage 1 coverage 1 Mobile 4G+ Network 39% population 33 41 coverage2 75 98,8% 99,6% 93,4% 97,0% 17 Download Download Upload 623 635 End 2015 Q3’16 End 2015 Q3’16 national largest cities national YTD’15 YTD’16 High streaming qual
Slide 15: Free cash flow
YoY FCF (in M€) Transversal cash management 64 -22 -38 initiative launched mid-2015 11 -21 39 555 contributed to a strong 522 YTD ’16 Free Cash Flow of € 555m. FCF YTD Higher Less cash Higher Business Lower Other FCF YTD '15 underlying paid for income tax working disposals '16 EBITDA Capex payments
Slide 16: Financial position
Sep-16 Net Debt DEC Dividends to non-controlling Net sale of Net Debt SEP Net debt/EBITDA ratio @ 1 In M€ 2015 FCF Dividends interests treasury shares Other 2016 • Net financial debt at € 1,711M 555 -324 • Credit ratings: Standard & Poor’s A, 9 Moody’s A1 , both stable outlook. -26 -6 -1,711 -1,919
Slide 17: 2016 Outlook
Q3’16 YTD Sep’16 2016 Outlook Outlook 2016 Actuals Actuals Domestic* underlying 1.5% 0.7% Slight growth revenue Group underlying 4.7% 3.0% 3% to 4% growth EBITDA Capex (excl. €183m €635m Around €950m Spectrum) Proximus Board of Directors approved to return to the shareholders a total gross interim d
Slide 18: Consumer results Q3 2016
Consumer results Q3 2016
Slide 19: Consumer revenue +1.9% YoY
Q3’16 Consumer revenue +1.9% YoY Consumer underlying revenue (M€ ) & YoY • Revenue from Fixed data +5.5% and TV +10.8% 5. 3 % 3 . 9% 2 .0% 1. 1% -0. 3% -1. 2% 1. 9% • Pressure on Mobile Services revenue, -1.6%, due to lowered roaming rates in line with EU regulation and prepaid erosion. • Higher rev
Slide 20: Product view
Product view
Slide 21: Consumer revenue increase by product
Q3’16 +1.9% YoY revenue increase 8 734 3 • Fixed: revenue growth for Fixed Data and TV partially 9 -7 0 offset by Fixed Voice erosion 720 -7 8 • Mobile services revenue : revenue impacted by EU roaming regulation; stable decline vs prior quarter in +1.9% spite of full 3 month impact in Q3’16. • Term
Slide 22: Fixed data revenue increase
Growing internet customer base and ARPU leading to +5.5% revenue increase 5.5% Fixed Data revenue increase Fixed data revenue (M€) & YoY • Growing customer base 5. 9% 5. 8 % 9. 1% 8 . 5% 9.0% 10.0% 5. 5% • Q3’16 ARPU up by 0.7% YoY 132 135 137 142 144 147 151 150 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
Slide 23: TV revenue and subscriber growth
Continued subscriber growth for Proximus and Scarlet brands, +18,000 in Q3’16 Q3’16 revenue from TV totaled € 91m, +10.8% YoY TV revenue (M€) & YoY variance • Continued subscriber growth, with both the Proximus and 15. 0% 17. 9% 13 . 9% 11. 6% 10. 5% 7.6% 10.8% Scarlet brand increasing their custome
Slide 24: Fixed voice revenue and ARPU
Stable ARPU decline YoY due to pack migration Q3’16 revenue from Fixed Voice totaled € 131m, -5.1% YoY Fixed voice revenue (M€) & YoY variance -3 . 6% -4. 1% -2 . 5% -4. 0% -3 . 5% -4. 5% -5. 1% • Eroding Fixed Voice customer base • Lower ARPU, including Pack discount 143 139 137 138 137 134 131 131
Slide 25: Mobile service revenue
Roaming regulation reduced Mobile service revenue by -1.6%. Postpaid service revenue +1.4%. Q3’16 revenue from Mobile services down 1.6% YoY, Mobile service revenue (M€) & YoY variance • Postpaid revenue +1.4% following greater customer base, more than offsetting roaming regulation impact. 2 . 0% 0.
Slide 26: Mobile data usage and ARPU
Average Mobile data usage up by 45% YoY to 842Mb. Fairly stable blended Mobile ARPU at € 22.8 but increasing sequentially QoQ in 2016 Blended net mobile ARPU (EUR ) & YoY • EU roaming regulation lowered the blended ARPU. 1. 3 % 3 . 1% 1. 6% 2 . 1% -0. 1% 1. 3 % -0. 6% -0. 3% • Postpaid ARPU at € 29.
Slide 27: Tango results
Tango revenue (M€) & YoY variance Tango Q3’16 revenue of € 32m, -1.1% YoY 9. 5% 11. 0% 9. 9% 13 .8% 0.1% -3 . 7% -1.1% • End of anonymity on prepaid. • Lowered EU roaming pricing following the EU regulation. 31 31 31 33 35 31 30 32 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Tango mobiles custom
Slide 28: X-Play view
X-Play view
Slide 29: Growth of 3 & 4-Play revenue
Solid growth of 3 & 4-Play revenue offsetting prepaid decline 720 734 33 6 -3 33 -4 32 14 -7 7 734 33 36 43 42 35 720 HH/SO +2.3% Total Consumer +1.9% +2.3% Underlying Q3'15 4-Play 3-Play 2-Play 1-Play Prepaid Terminal sales Underlying Q3'16 577 590 Q3'15 Q3'16 Total Consumer revenue Q3’16 +1.9% YoY
Slide 30: 4-Play and 3-Play revenue growth drivers
4-Play revenue (M€) & YoY variance 3-Play revenue (M€) & YoY variance 10. 1% 8 . 2% 7. 3 % 6. 6% 4. 5% 3 . 5% 172 179 184 186 190 193 197 171 175 179 179 182 183 185 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 2-Play revenue (M€) & YoY variance 1-Play revenue
Slide 31: Households/Small offices by X-Play
End-Q3’16, Proximus serviced 2,945,000 HH/SO in total, with improving customer mix 4-Play growth & EOP (000) 3-Play growth & EOP (000) 52 1 53 1 547 555 564 571 510 72 2 73 8 744 755 768 771 775 22 16 11 10 8 9 7 27 16 13 4 4 7 10 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q1'15 Q2'15 Q3'15 Q4'15 Q1'
Slide 32: ARPU by X-Play
4-Play ARPU (EUR ) & YoY variance 3-Play ARPU (EUR ) & YoY variance -0.1% -0.4% -0.5% -1.3% -0.8% -0.9% 115.0 115.4 116.6 115.1 114.9 114.9 116.1 80.6 79.9 80.7 79.6 79.6 79.3 80.0 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 2-Play ARPU (EUR ) & YoY variance 1
Slide 33: X-Play annualized churn
Quarterly improvement for all X-Plays. Average churn X-Play at 12.7%, 0.6pp lower YoY 4-Play Annualized full churn rate 3-Play Annualized full churn rate 2 . 9% 2 . 5% 3 .0% 2 . 9% 2 . 8% 2 .7% 2 .4% 10. 6% 9. 6% 11. 8% 11. 2% 10.4% 9.6% 9.6% Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q1'15 Q2'15 Q3'
Slide 34: Prepaid revenue, ARPU and churn
Prepaid revenue (M€) & YoY variance Prepaid ARPU (EUR ) & YoY variance -8.6% -9.6% -7.6% -17.8% -19. 0% -16.8% 46 47 42 40 38 38 35 10.7 11.2 10.4 10.0 9.8 10.1 9.6 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Prepaid loss & EOP (000) Prepaid churn rate 1,402 1
Slide 35: Enterprise results Q3 2016
Enterprise results Q3 2016
Slide 36: Enterprise underlying revenue +0.9% YoY
Q3’16 underlying revenue +0.9% YoY Enterprise underlying revenue (M€) & YoY • Be-Mobile NV, a Smart Mobility Company created mid-March’16 2 .1% -0. 1% 4. 8% 1. 4% 0. 1% 5. 8% 0. 9% contributed to the growth • ICT grew by 1.1% in a seasonally slower quarter. • Roaming regulation, confirmed change in
Slide 37: Enterprise revenue by product
Q3’16 in M€ Q3’16 revenue of Enterprise up 0.9% YoY • Be-Mobile revenue contribution (included in ‘other’) 331 -3 1 1 6 334 -2 • Fixed data revenue up by 1.0%, on continued growth from data connectivity services. • Mobile services revenue, down 2.7% on a shift in destination mix and full 3-month roa
Slide 38: Enterprise Fixed Voice
Lower Fixed Voice revenue due to Fixed Voice customer base erosion, ARPU slightly up Q3’16 revenue from Fixed Voice totaled € 58m, - 4.9% YoY Fixed voice revenue (M€) & YoY variance • Continued Fixed Voice line erosion. 0 -4.2% -5.7% -3.3% -3.8% -4.4% -2.8% -4.9% • Technology migration to VoIP. • Co
Slide 39: Enterprise Fixed data
Q3’16 revenue up 1.0% YoY, driven by continued growth from data connectivity services Q3’16 Fixed data revenue of € 63m, +1.0% YoY Fixed data revenue (M€) & YoY variance • Favorable revenue trend from Data Connectivity services -2.0% 0.7% 2.6% 2.0% 1.1% 1.1% 1.0% • roll-out of large customer project
Slide 40: Enterprise ICT revenue
Enterprise generated in Q3’16 € 115m revenue from ICT, up Underlying ICT revenue (M€) & YoY 1.1% YoY 2.2% -1.2% 9.1% -0.3% 1.1% 14.2% 1.1% • Unlike Q2’16, ICT revenue in Q3 was not boosted by large 0 product deals. Millions 0 127 107 107 113 127 108 123 115 0 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'1
Slide 41: Enterprise Mobile services
Strong customer growth offset by roaming regulation, travel destination mix and competitive pressure Q3’16 revenue from Mobile services totaled € 80m, -2.7% YoY Mobile service revenue (M€) & YoY variance • Lowered EU roaming rates 3 months impact 3 . 4% 1. 8 % 6. 7% 10. 6% 5. 0% 0. 3 % • Less travel
Slide 42: M2M growth and mobile data usage
Continued strong M2M growth. Average monthly data users of 4G-users reaching 1,074Mb Q3’16 M2M growth M2M *growth & EOP (000) • M2M park growth of 64,000 in Q3’16, driven by the Road User 98 8 1,105 1,169 Charging project. 321 4 53 576 2 98 3 11 412 0 • Park end September 2016: 1,169,000 cards. Thou
Slide 43: Wholesale revenue and direct margin
Wholesale underlying revenue (M€) & YoY Wholesale underlying direct margin (M€) &YoY -14.1% -5. 5% -8.2% -12 .2% -4. 9% -7. 3% 1. 1% -15.3% -6. 1% -7. 8% -12 .0% -1. 7% -5. 4% 0. 4% 54 51 53 51 48 48 49 51 47 43 46 44 41 43 43 44 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'14 Q1'15 Q2'15 Q3'1
Slide 44: BICS revenue and direct margin
BICS Q3’16 Direct margin stable YoY in spite of competitive environment and high comparable base Q3’16 revenue totaled € 382m, -9.1% YoY BICS underlying revenue (M€) & YoY variance • Volatile Voice business, with less favorable destination mix leading to -12.6% Voice revenue 11.9% -1.3% -0.8% 2 . 5%
Slide 45: BICS segment result
Q3 underlying segment result -3.1% YoY, a significant improvement from prior 2 quarters Q3’16 segment result of €40m, down 3.1% YoY BICS underlying segment result (M€) & YoY variance • Stable direct margin. • Expenses slightly up, continued investments in new geographies 32.4% 34.9% 5.7% -3 . 1% and
Slide 46: Other topics
Other topics
Slide 47: Early Leave Plan
Description: Financial implications: • Employees as from 60 years can stop their active career • Last 2 yrs of active career, the work time is reduced to 80% • Cumulated over the period 2016-2019, Proximus will report € • Replacement income paid by Proximus until earliest retirement 255M in non-recu
Slide 48: Mobile S, M, L and Tuttimus packs
Mobile S Mobile M Mobile L Your own big pile 2GB 5GB 10GB of mobile data…. Unlim. SMS Unlim. SMS Unlim. SMS Unlimited calling 120 min Unlim. min Unlim. min as of Mobile M…. …and 100Mb/s Free access to over 1,3 million Wi-Fi Hotspots with unlimited Unlimited download Smart Wi-Fi and 20 million
Slide 49: Tuttimus pricing
Tuttimus Tuttimus Tuttimus Tuttimus Tuttimus Tuttimus 81,00 € 92 ,00 € 103 ,00 € 88,95 € 99,95 € 110,95 € 100 Mbps/15 Mbps 100 Mbps/15 Mbps 100 Mbps/15 Mbps 100 Mbps/15 Mbps 100 Mbps/15 Mbps 100 Mbps/15 Mbps unlimited volume unlimited volume unlimited volume unlimited volume unlimited volume unlimit
Slide 50: Mobilus offers
Mobilus S Mobilus M Mobilus L Optional on €15/ month €25/ month €40/ month Mobilus L Pick your favorite app (unlimited data volume) €20 Data & Travel + 5 GB national data +240 min in EU 1GB 3GB 8GB +240 min to EU 120 min 300 min Unlimited sms +Unlm SMS in EU Unlimited sms Unlimited sms Unlimited cal
Slide 51: Familus offers
Familus M Familus L €67 €74,95 Unlimited fast internet max. 100 Mbps download ; 15 Mbps upload ; unlimited Netflix 3 months for free 1 blockbuster for free/ month Pick your 1 favoriteTV-bundle of choice: favourite TV • Movie&Series Pass bundle and/or • Entertainment Channels 1 blockbuster for free /
Slide 52: Comparison vs. WIGO
Vs. WIGO with 1 mobile subscr. with 2 mobile subscr. 5GB 2GB + 2GB 2GB to share between 5GB to share between 2 cards 5 cards Superfast unlimited surf Superfast unlimited surf Superfast, limited surf (200GB) Superfast limited surf Free national mobile calls. 240 min national mobile calls/GSM. Always
Slide 53: Comparison vs. VOO
Vs. VOO Trio Pack Wahoo + Mobile Tatoo Everyone its own load of mobile data 2GB 3GB Unlimited surf for your favorite app 120min national calls from mobile to fix and mobile numbers. Fix to fix calls (nat. and internat.): 24/7 Fix to mobile calls : paying Free national and international calls from yo
Slide 54: Bizz All-in
Unlimited calls, fixed & mobile Personalize your Bizz All-in A maximum of internet, fixed & mobile Extra mobiles Call Connect 24/7 support for your business Your business in the cloud YES/NO Roaming Digital TV on all your screens 54
Slide 55: Bizz All-in offers M, L, XL
M L XL Mobile: 600 min to EU Unlimited fixed and mobile calls 600 min in EU Unl SMS in EU Unlimited calls from mobile or fixed line to all fix & mobiles in Belgium. Fix Take your fixed line with you on your smartphone thanks to Bizz Office Switch Unl. In EU A maximum of internet, fix and mobile 12 G
Slide 56: Bizz All-in pricing
S M L XL Bizz All-in + digital TV on With TV €87 €95 €115 all your screens Without TV €77 €85 €105 Extra mobile subscriptions for employees or €12 €18 €26 €46 family Flexible & professional call management : €20 for the 2 first licences Call Connect +€24 for additional licences Option Bizz Travel (f
Slide 57: Possible combinations
Always included Examples of possible combinations: Alone With 2 With 2 + Call Connect – 1 mobile subscription – 2 mobile subscriptions – 2 mobile subscriptions – 8 GB mobile data – Each 3 GB mobile data – Each 3 GB mobile data – TV included – TV included – Professional call management with Bizz Call
Slide 58: Bizz Mobile subscriptions
Bizz Mobile subscriptions for your business Mobile For employees Budget Unlimited Data & Roaming Unlimited calls to fixed lines & Bizz Mobile S Bizz Mobile M Bizz Mobile L Bizz Mobile XL colleagues €12 €21 €36 €56 Unlimited calls to fixed lines & colleagues in Belgium Fav app Fav app Fav app Fav app
Slide 59: Bizz Office
Bizz Unlimited calls & internet at the office Office Bizz Office €59 /month (excl. VAT) • Unlimited internet (Intense) 100 DOWN/20 UP Unlimited fast internet at the office • WiFi Hotspots Unlimited calls in Belgium • Unlimited calls to fixed lines & mobiles in Belgium Your documents safe in the cl
Slide 60: Scarlet positioning
Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’ Postpaid Prepaid Red Hot Chili Reload 8 Reload 15 €8 € 18 € 28 €8 € 15 150 min 500 min 1000 min Bonus : Bonus : 1000 SMS 2000 SMS 5000 SMS 100 min to Unlimited to Scarlet 500 MB 1 GB 4 GB Scarlet mobile Mobile 1
Slide 61: EU Roaming regulation
EU Roaming regulation 2016:Transitory period towards Roam-like-at Home - From 30 April ‘16 until 14 June ‘17. Estimated negative impact of regulatory pricing (as of May '16) • Operators are able to apply a surcharge up to the current regulated wholesale rates. Consumer & Q2'16 Q3'16 YTD'16 FY 2016 •
Slide 62: Spectrum ownership and usage
800 MHz 900MHz & 1800 MHz 2100 MHz 2600 MHz • Used for 2G, 3G and 4G • Used for 3G • Licenses granted in ‘95 • Used for 4G • UMTS licenses granted in 2001 • 1st tacit extension (‘10-’15): Proximus paid • Licenses granted in November ‘13 • 20 year-licenses valid until €74m (annual payments). • 20 yea
Slide 63: Dividend and shareholder structure
Dividend of 1.50/share Proximus Board of Directors approved to return General Shareholder to the shareholders a total gross interim dividend of EUR 0.50 per share: return policy: • Ex-coupon date: 7 December 2016 • Record date: 8 December 2016 We offer an attractive • Payment date: 9 December 2016 s
Slide 64: For further information
For further information Investor relations Nancy Goossens Sarah Franklin +32 2 202 82 41 +32 2 202 77 11 Director Investor Relations Investor Relations Manager E-mail: investor.relations@proximus.com Proximus investor relations website: www.proximus.com/en/investors
Slide 65: 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