Royal Kpn Nv · EURONEXT:KPN
Royal Kpn Nv — Koninklijke Kpn — Q3 2021 Earnings Presentation
24 slides from Royal Kpn Nv's earnings presentation, Oct 26, 2021
Slide 1: Q3 2021 results
Q3 2021 results 26 October 2021 kpn. The network of the Netherlands
Slide 2: Safe harbor
Safe harbor Alternative performance measures and management estimates This financial report contains a number of alternative performance measures (non-GAAP figures) to provide readers with additional financial information that is regularly reviewed by management, such as EBITDA and Free Cash Flow (‘
Slide 3: Highlights Q3: SME service revenue growth, on track to reach FY outlook
Highlights Q3: SME service revenue growth, on track to reach FY outlook Mass-market service revenues continue to grow, supported by all segments SME service revenues growing in Q3, delivering on commitment ahead of schedule Consumer and Business mobile base momentum strong (+67k postpaid net adds) C
Slide 4: Accelerate to grow supported by three key pillars
Accelerate to grow supported by three key pillars Three strategic pillars… …to support our ambition to 1. Leverage & expand superior networks • Covering the Netherlands through fiber • Low latency services via 5G and edge computing Connect the Netherlands to a sustainable future • Leading the Dutch
Slide 5: Expand superior network: fiber roll out on track
Expand superior network: fiber roll out on track Continuously expanding fiber footprint 1 1 Strong FttH activation rate Jointly covering ~80% of NL by end 2026 homes passed, k homes activated own roll out, k homes passed, % of households +93 +46 KPN footprint ~80% +106 +113 +56 3,096 +77 Glaspoort f
Slide 6: B2C: Continued growth in mobile service revenues
B2C: Continued growth in mobile service revenues Key take-aways Service revenue trend (€ m) • Mobile service revenues growing sequentially (+2.4% y-on-y), driven by 48k postpaid net adds LTM and growing ARPU 466 466 4572 457 464 • Growth in Fixed-Mobile revenues (+3.5% y-on-y) driven by higher base
Slide 7: B2C: Strong performance fiber and mobile portfolio
B2C: Strong performance fiber and mobile portfolio Continued growth fiber household net adds (k) Customers willing to pay for quality (Q3 2021, €) Fiber broadband SR offsetting copper decline (€ m) +25 +11% 47 471 36 72 466 464 27 65 -23 21 -4 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Copper ARPA Fibe
Slide 8: B2B: Revenue trend improving due to growth in SME
B2B: Revenue trend improving due to growth in SME Key take-aways Service revenue trend (€ m) • Inflection SME service revenues supported by continued good broadband and mobile base developments 414 428 411 402 403 • SME: growth Broadband & Networking and IT Services, stabilizing Mobile service reven
Slide 9: B2B: Attractive KPN EEN proposition driving turnaround in SME
B2B: Attractive KPN EEN proposition driving turnaround in SME Financial turnaround in SME service revenues, due to… Solid base trends in KPN EEN (k) providing platform for up and cross-sell opportunities +2.9% 138 1,238 1,304 134 135 136 1,188 133 1,113 967 1,027 886 Q3 2020 Q4 2020 Q1 2021 Q2 2021
Slide 10: Wholesale: Sustainable growth from open access model
Wholesale: Sustainable growth from open access model Key take-aways Service revenue trend (€ m) • Wholesale revenues increased, driven by Broadband and Mobile • Added 18k broadband lines and 33k postpaid customers 65 61 66 66 70 • Successful open wholesale policy, ensuring customers have 58 63 58 58
Slide 11: Deliver Financial ambitions
Deliver Financial ambitions
Slide 12: Financial performance: on track to reach full-year outlook
Financial performance: on track to reach full-year outlook Adjusted revenues Adj. net indirect opex savings Adjusted EBITDA AL Q3 adjusted revenues +1.0% y-on-y Q3 2021 YTD 2021 Q3 2021 YTD 2021 Q3 2021 YTD 2021 • Service revenue growth in all mass-market € 1,312m € 3,898m € -4m € 26m € 607m € 1,763
Slide 13: Further mass-market service revenue growth, supported by all segments
Further mass-market service revenue growth, supported by all segments Sequential mass-market service revenue growth since Q1 Growth driven by Wholesale, SME and Consumer mobile (€ m) (€ m) -1.9% -0.1% -0.9% 1 +0.5% +2.2% Δ y-on-y Q3 2020 943 943 946 928 942 964 157 159 162 172 Wholesale 15 +9.4% 160
Slide 14: Strong underlying cash generation
Strong underlying cash generation Δ contribution to FCF y-on-y (€ m) Adj. EBITDA AL 1,763 +5 Free Cash Flow of € 533m YTD 2021, 7.1% higher y-on-y YTD 2021 − More favorable working capital developments Capex -884 -25 − Lower cash interest paid − Lower cash restructuring Operational FCF 879 -21 Par
Slide 15: Robust liquidity position, committed to investment-grade credit profile
Robust liquidity position, committed to investment-grade credit profile 11.0x 11.0x 11.4x Robust liquidity… 9.2x 9.9x €m 1,000 1,724 2.4x 2.3x 2.3x 2.3x 2.2x 724 €m 6,376 6,197 5,835 5,221 5,996 6,017 5,293 5,584 5,332 5,201 Cash & short RCF Total liquidity term investments1 end Q3 2021 792 864 614
Slide 16: 2021 outlook and 2023 ambitions reiterated
2021 outlook and 2023 ambitions reiterated Achievements Outlook Ambitions YTD 2021 FY 2021 FY 2023 Adjusted EBITDA AL € 1,763m ~€ 2,345m >€ 2,450m Capex € 884m € 1,200m € 1.1-1.2bn Free Cash Flow € 533m ~€ 765m >€ 870m € 4.5 cents € 13.6 cents Progressive dividend Regular DPS interim dividend +4.6%
Slide 17: Highlights Q3: SME service revenue growth, on track to reach FY outlook
Highlights Q3: SME service revenue growth, on track to reach FY outlook Mass-market service revenues continue to grow, supported by all segments SME service revenues growing in Q3, delivering on commitment ahead of schedule Consumer and Business mobile base momentum strong (+67k postpaid net adds) C
Slide 18: Accelerate to grow
Accelerate to grow
Slide 19: Appendices
Appendices I Tax II Debt portfolio III Treatment of hybrid bonds IV Spectrum
Slide 20: I: Tax Q3 and YTD 2021
I: Tax Q3 and YTD 2021 P&L Cash flow P&L Cash flow Regions (€ m) Q3 2020 Q3 2021 Q3 2020 Q3 2021 YTD 2020 YTD 2021 YTD 2020 YTD 2021 The Netherlands -47 -39 - -15 -114 -315 - -39 Other 1 - - - 1 - - - Total reported tax -46 -39 - -15 -113 -315 - -39 Of which discontinued operations - - - - - - - - R
Slide 21: II: Debt portfolio
II: Debt portfolio Nominal debt by type 1 Nominal debt by currency 1 Fixed vs. floating interest 1 Debt redemption profile (€ bn) 2 1.1 7% 1.0 14% 15% 26% 0.6 0.6 0.7 7% 22% 0.5 0.4 0.5 0.5 64% 0.3 0.3 71% 74% ’21 ’22 ’23 ’24 ’25 ’26 ’27 ’28 ’29 ’30 ’31 ’32 Eurobonds EUR Fixed Global bonds GBP Float
Slide 22: III: Treatment of hybrid bonds
III: Treatment of hybrid bonds KPN & Credit rating agencies IFRS Rating agencies recognize hybrid bonds as EUR tranche is a perpetual instrument, accounted for as equity 50% equity Coupon payments treated as equity distribution (dividend), 50% debt hence not expensed through P&L, not included in F
Slide 23: IV: Spectrum in the Netherlands
IV: Spectrum in the Netherlands 700MHz VodZig KPN T-Mob 2 x 30 (Paired) 2 x 10 2 x 10 2 x 10 800MHz T-Mob VodZig KPN 2 x 30 (Paired) 2 x 10 2 x 10 2 x 10 900MHz VodZig KPN T-Mob 2 x 35 (Paired) 2 x 10 2 x 10 2 x 15 1.4GHz VodZig KPN T-Mob 1 x 40 (Unpaired) 3x5 3x5 2x5 1.8GHz KPN VodZig T-Mob 2 x 70
Slide 24: KPN Investor Relations
KPN Investor Relations ir.kpn.com