Proximus Sa · EURONEXT:PROX
Proximus Sa — Q1 2017 Earnings Presentation
62 slides from Proximus Sa's earnings presentation, 2017
Slide 1: Results Presentation 2017
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Slide 2: Contents
Q1’17 Group highlights 3 Financial position 17 Group underlying revenue per segment 4 FY 2017 outlook 18 Group underlying revenue by product group 5 Regulation 19 Group - Fixed operationals 6 Consumer segment results 20 Group -Mobile operationals 7 Enterprise segment results 35 Mobile data usage 8 W
Slide 3: Q1'17 Group highlights
Solid start of the year with strong commercial drivers and solid Domestic EBITDA growth Group Group Commercial drivers Revenue* EBITDA* Capex Q1 FCF €221m €173m Continued growth of €1,443m €449m customer base, in a more competitive +0.7% YoY +7.5% YoY market + 27,000 TV Households (unique Domestic r
Slide 4: Group underlying revenue per segment
Group revenue by quarter (M€ & YoY %) Group revenue by segment (M€) 1.5% 2.5% -0.3% -3.1% -3.0% -1.4% -0.8% 0.7% 15 4 1 -24 1,505 1,509 1,502 1,433 1,460 1,487 1,490 1,443 14 1,443 1,433 411 420 385 356 359 382 363 332 Domestic +3.2% 1,094 1,088 1,117 1,077 1,101 1,105 1,127 1,111 Group +0.7% Q2'15
Slide 5: Group underlying revenue by product group
• Continued sound revenue growth for Fixed: Data, TV and ICT. • Growing mobile postpaid customer base and improved tiering offsetting pressure from Roaming regulation. • Higher Advanced Business Services* revenue, driven by the contribution of BeMobile (created mid-March ‘16) • Accelerated erosion i
Slide 6: Group fixed operationals
Fixed internet TV (Households) Fixed Voice Broadband customer evolution 1,920 1,944 1,879 1,892 1,906 TV evolution net adds subscriptions Households 1,856 Fixed Voice customer evolution net adds Park 1,813 1,828 2,822 2,800 2,781 2,751 2,723 2,696 2,688 2,682 1,458 1,472 1,489 1,516 1,384 1,414 1,44
Slide 7: Group mobile operationals
Q1’17 Mobile services revenue : -3.1% YoY Mobile postpaid customer base up 5.8% YoY Postpaid Prepaid Total Mobile Services Revenue Mobile (ex- M2M in 000’s) 5.6% 6.9% 6.8% 4.9% 4,923 4,928 4,943 4,924 4,919 4,915 4,918 4,897 1.8% 0.8% 0.8% 0.3% YoY: 1.0% 2.4% 2.0% 1.7% • +206,000 Mobile Postpaid -1.
Slide 8: Mobile data usage
4G users all data users Total mobile traffic 69% Average monthly data usage (Mb) Average monthly data usage (Mb) 4G data 1,3GB 56% 1 GB 4G data 3G 4G 30% 4G data Q1'15 Q1'16 Q1'17 Q1'15 Q1'16 Q1'17 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Enterprise Consume
Slide 9: Multi-play overview
• Accelerated growth in 4-Play Households/Small offices (HH/SO) on traction of Tuttimus/ Bizz All in, increasing value and loyalty of the customer base. • 47% of are 3-or 4-play, and count for 66% of total HH/SO revenue. • Revenue from X-play HH/SO grew by 2.1% YoY; 4-Play revenue +14.1% YoY. • ARPH
Slide 10: Group underlying direct margin
Q1’17 Group direct margin -0.4% YoY • Domestic direct margin fairly flat, including negative Roaming-out impact. • Domestic direct margin as % of revenue at 75.0%. • BICS direct margin decreased by 3.5%. Group direct margin by quarter (M€ & YoY variance) Group direct margin by segment (M€) 2.9% 2.9%
Slide 11: Group underlying expenses
Group expenses (M€) Group underlying Underlying OtherOpex by nature expenses (M€) (€m) &&var. YoYYoY workforce vs. non-workforce -7.3% 0.4% 1.2% 0.4% -3.9% -2.6% -4.2% -4.6% -7.3% 464 478 484 460 448 444 456 449 32 32 32 29 29 33 31 31 62 57 53 73 51 59 59 65 161 153 190 189 Domestic 155 156 174 162
Slide 12: Group underlying EBITDA
Group underlying EBITDA (M€) & YoY variance Q1’17 underlying Group EBITDA totaled € 449m, up by 5.5% 4.7% 9.5% 2.5% 1.7% 4.7% 5.5% 7.5% 7.5% YoY, • Q1’16 included a higher provision related to regional 455 453 463 474 449 pylon taxes. 418 418 441 38 40 47 41 34 35 36 33 • Group EBITDA YoY up by 4.0%
Slide 13: Net income (Group share)
• Q1’17 net income (Group share) of €119m. • €7m year-on-year increase mainly explained by higher Group EBITDA and lower finance costs, partly offset by higher depreciation and amortization and tax expenses Q1’17 in M€ 31 -20 -8 10 -7 1 119 112 Net income Q1'16 Underlying EBITDA Incidentals (*) D&A
Slide 14: Investments
Mobile Network Capex in M € 4G outdoor 4G indoor Average speed 4G(+) device1 (Mbps) coverage 1 coverage 1 39.4 % 4G+ pop. 34.9 coverage2 99.6 99.8 96.9 98.2 % % % % 237 221 16.2 Download Upload Q1’16 Q1’17 Q1’16 Q1’17 national national Q1’16 Q1’17 Fixed 100 Mbps3 open to 50% of • Additional mobile s
Slide 15: Free cash flow
YoY FCF (in M€) 16 -18 10 173 Stronger Q1’17 Free Cash Flow of € 173m 31 133 on higher EBITDA, positive impact from Business working capital, less cash for capex and favorable timing impacts. . FCF Q1'2016 Higher Lower cash Accounts Pay able/ Income tax payments FCF Q1'2017 underlying paid for Capex
Slide 16: Financial position
Mar-17 M€ Net Debt DEC 2016 FCF Dividends Net sale of treasury shares Other Net Debt MAR 2017 Net debt/EBITDA ratio @ ~ 1 • Net financial debt at € 1,684m. • Credit ratings: Standard & Poor’s A, 173 -1 3 2 Moody’s A1 , both stable outlook. -1,684 Average debt duration 6 years -1,861 € 630m Investmen
Slide 17: FY 2017 outlook
Based on its first quarter results of 2017, and taking into account its best estimate for the remainder of the year, including the implementation of ‘Roam-Like-At-Home’ as of mid-June, Proximus confirms its 2017 full-year outlook. Therefore Proximus expects to close the year with nearly stable Domes
Slide 18: Regulation: Roaming-out impact
Roaming-Out impact • Transitory period towards Roam-like-at Home from 30 April ‘16 till 14 June ’17: surcharge up Defined as: Volumes of year-1 multiplied by the year- to the current regulated wholesale rates. on-year price decrease as set by the regulator. Q1'17 FY'17 • As from 15 June 2017, ‘Roam-
Slide 19: Consumer results
Consumer results
Slide 20: Consumer revenue and direct margin
Revenue up YoY on continued growth for Fixed, higher Mobile postpaid service revenue in spite of roaming regulation and higher revenue from mobile devices on a low comparable base. Partially offset by revenue erosion for Fixed voice and by mobile Prepaid in decreasing market which 5 -11 11 720 accel
Slide 21: Consumer revenue by product group
Consumer revenue by product group Note In line with Proximus’ strategy, most products are sold through multi-play bundles. Therefore, the revenue and ARPU of standalone products are largely the result of the allocation of revenue and discounts to the respective products included in the Packs, as req
Slide 22: Fixed data revenue
Solid customer growth in competitive market; Q1’17 revenue YoY +4.0% Fixed data revenue (M€) & YoY 9.1% 8.5% 9.0% 10.0% 5.8% 5.5% 4.9% 4.0% 4.0% Fixed Data revenue increase in Q1’17 • Growing customer base of 65,000 or 3.7% in 1 147 151 150 151 153 137 142 144 year. Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'
Slide 23: TV revenue and households
Growing customer base by +27,000 TV households in Q1, revenue up 9.2% YoY TV revenue (M€) & YoY variance Q1’17 revenue from TV totaled € 95m, +9.2% YoY 17.9% 13.9% 11.6% 10.5% 7.6% 10.8% 11.2% 9.2% • Continued subscriber growth, with both the Proximus and Scarlet brand increasing their Millions 85 8
Slide 24: Fixed voice revenue
Proximus and Scarlet positively impacting Fixed Voice park in Q1 Fixed voice revenue (M€) & YoY variance -2.5% -3.1% -4.1% -4.0% -3.5% -4.5% -5.1% -6.3% 137 138 137 134 131 131 128 130 Q1’17 revenue from Fixed Voice totaled Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 € 130m, -3.1% YoY • Lower Yo
Slide 25: Mobile service revenue
Mobile Postpaid revenue grew by 2.3% in spite of regulatory headwinds, while Prepaid erosion accelerated on authentication legislation Mobileservice revenue (M€) & YoY variance Mobile Net Adds (000's) 0.7% 1.2% -0.6% 0.7% -1.6% -1.6% -1.6% -2.6% 34 37 41 49 24 21 29 15 -40 -35 -34 -39 -34 -57 -59 -6
Slide 26: Postpaid and prepaid revenue
Postpaid revenue (M€) & YoY variance 4.9% 2.4% 2.1% 2.5% 2.3% • Postpaid mobile service revenue continued to 218 215 215 show growth, up by 2.3% for Q1’17. 213 210 210 213 208 • Benefit from a growing customer base more Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 than offset the lower Postpaid A
Slide 27: Tango Q1'17 revenue
Tango revenue (M€) & YoY variance Tango Q1’17 revenue of € 27m, +0.8% YoY • Tango Consumer revenue of EUR 27 million, or 0.8% above the 0.5% -0.1% 0.8% -3.0% -4.8% prior year: • larger customer base for mobile Postpaid, and for Fixed 27 28 31 27 26 28 29 27 services (Voice, Internet and TV) • partia
Slide 28: X-Play view
X-Play view
Slide 29: Total Consumer revenue Q1'17
27 -7 706 720 -4 29 -4 15 -2 31 720 27 -11 27 32 47 706 38 27 HH/SO +2.1% +2.1% Total Consumer +1.9% 578 590 Underlying 4-Play 3-Play 2-Play 1-Play Prepaid Terminal Other Underlying Q1'16 sales Q1'17 Q1'16 Q1'17 Revenues X-Play Prepaid Terminals sales Tango Other Total Consumer revenue Q1’17 +1.9% Y
Slide 30: 4-Play main revenue growth driver
-3.2% -3.1% -3.9% -4.3% -4.6% 9.4% 7.7% 7.2% 8.4% 14.1% 4-Play 2-Play revenue (M€) revenue (M€) & YoY variance & YoY variance 81 82 81 215 80 79 79 77 76 179 184 186 189 192 197 201 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 -1.7% -2.4% -2.8% -2.9
Slide 31: X-Play households and small offices
468 462 455 451 448 445 437 605 640 427 4-Play 521 531 547 555 564 574 2-Play growth & EOP growth & EOP -3 (000) 31 (000) -4 -7 -4 -3 35 -6 16 9 -9 -10 10 8 10 11 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 1,212 1,204 1,194 1,177 1,167 1,158 1,150
Slide 32: X-Play ARPH
The average ARPH increased year-on-year by 2.2% to 2.8% 2.1% 1.6% 1.6% 2.2% EUR 66.7, in spite of roaming regulation impact on Mobile X-Play ARPH (€) • 4-Play ARPH up 0.7% YoY, at € 115. & YoY Variance 64.1 65.5 65.0 65.3 65.5 66.6 66.0 66.7 • 3-Play ARPH down 2.4%, with Scarlet TRIO customers incre
Slide 33: X-Play annualized full-churn rate
X-Play Annualized full-churn rate on average of all Plays at 13.7% Annualized full churn 12.1% 13.3% 13.4% 13.4% 12.0% 12.6% 13.5% 13.7% • Churn levels improve significantly when customers move to multi-play rate offers Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 • 4-Play churn remaining stable
Slide 34: Enterprise results
Enterprise results
Slide 35: Enterprise underlying revenue
Q1’17 underlying revenue +4.7% YoY • ICT grew by 16.1%, further supported by Be-Mobile NV, a Smart Mobility Company created mid-March’16 (included in Advanced Business Services). • Roaming regulation and competitive pressure led to a 4.9% YoY decline in 17 -4 4 2 348 mobile service revenue. 333 -3 -
Slide 36: Enterprise fixed voice
Lower Fixed Voice revenue due to Fixed Voice customer base erosion, ARPU slightly up Fixed voice revenue (M€) & YoY variance -5.7% -3.3% -3.8% -4.4% -2.8% -4.9% -5.5% -5.6% Q1’17 revenue from Fixed Voice totaled € 57m, - 5.6% 0 YoY 62 61 61 61 60 58 58 57 • Continued Fixed Voice line erosion. 0 • Te
Slide 37: Enterprise fixed data
Impacted by legacy business and one-offs, structural growth for new products Fixed data revenue (M€) & YoY variance 0 0.7% 2.6% 2.0% 1.1% 1.1% 1.0% -1.0% -1.6% Q1’17 Fixed data revenue of € 62m, -1.6% YoY • Benefit from a growing data connectivity customer Millions 62 63 63 63 63 63 62 62 0 base, be
Slide 38: ICT and Advanced Business Services revenue
Underlying ICT revenue (M€) & YoY Enterprise generated in Q1’17 € 126m revenue from ICT, up 14.2% 16.1% 0 -1.2% 9.1% -0.3% 1.1% 1.1% 2.1% 16.1% YoY • Higher revenue principally resulting from Product Millions sales, though also growth posted for Cloud, 0 107 113 127 108 123 115 129 126 0 Q2'15 Q3'15
Slide 39: Enterprise mobile services
Q1’17 revenue from Mobile services totaled € 79m, -4.9% YoY • Impact from lowered EU roaming rates and competitive environment putting pressure on ARPU • Only partially offset by growing mobile customer base, up YoY by 5,4% to reach a total of 952,000 (excl M2M) • 12,000 Mobile Voice cards added in
Slide 40: Wholesale revenue and direct margin
Wholesale underlying revenue (M€) & YoY Q1’17 revenue totaled € 52m, +8.0% YoY. Direct -5.5% -8.2% -12.2% -4.9% -7.3% 1.1% -3.3% 8.0% margin € 45m, +5.6 % YoY • The quarter included a corrective impact following 53 51 48 48 49 51 46 52 the annulment by the Brussels Appeal Court of the Q2'15 Q3'15 Q4
Slide 41: BICS direct margin
BICS Q1’17 Direct margin -3.5% YoY resulting from a decrease in the non-voice direct margin BICS underlying revenue (M€) & YoY variance Q1’17 revenue totaled € 332m, -6.6% YoY • Less favorable destination mix led to an 8.4% -0.8% 2.5% -2.7% -9.1% -5.6% -6.6% decline in Voice revenue, i.e. a similar
Slide 42: BICS segment result
Q1 underlying segment result -6.4% YoY, stable segment contribution margin of 9.9% BICS underlying segment result (M€) & YoY variance Q1’17 segment result of €33m, down 6.4% YoY • Lower direct margin -3.5% YoY. 34.9% 5.7% 5.8% -10.0% -3.1% 8.0% -6.4% • Expenses stable YoY, with lower non-workforce -
Slide 43: Additional info
Additional info • BICS acquisition of TeleSign • Reporting changes • Group P&L - Incidentals • Headcount evolution • Pricing new portfolio • Fiber investment • Spectrum • Shareholder structure & remuneration • Contact details
Slide 44: Who is TeleSign?
Need to Bridge the Operator TeleSign’s Communications Who is TeleSign ? and the Internet Worlds platform • Global leader in Mobile Identity Operators need to monetize • Developer-friendly API’s & Verification and Assurance their assets SDK’s, combining data through SMS, Voice, … intelligence and mes
Slide 45: Rationale for BICS and TeleSign
For Bics For TeleSign • Acceleration of diversification strategy in 3 • Bics’ mobile and worldwide reach to >700 operators directions, while focusing on a leveraging the core • Improving sourcing of business • Direct SMS and Voice termination Improving TeleSign cost structure Bridging and gain new
Slide 46: Reporting changes
Following changes have been applied. There is no impact on total Group financials and any impact on Consumer or Enterprise financials remains very limited. There is no impact on Wholesale or BICS. Figures of 2016 and 2015 have been restated accordingly to allow a correct comparison. Before As of 201
Slide 47: Group P&L and incidentals
(in M €) Q116 Q117 % change UNDERLYING REVENUE 1,433 1,443 0.7% Direct margin 902 898 -0.4% Expenses -484 -449 -7.3% EBITDA 418 449 7.5% (in M €) Q116 Q117 INCIDENTALS -1 -21 INCIDENTALS -1 -21 Early Leave Plan & Collective -19 Agreement REPORTED M&A-related transaction costs -2 EBITDA 417 428 2.7%
Slide 48: Early leave plan and headcount evolution
What: • Employees as from 60 years can stop their active career, first wave on 1 July 2016 • Last 2 years of active career, the work time is reduced to 80% • Replacement income paid by Proximus until earliest retirement date Outcome : Financial implications: • 1.855 FTEs subscribed to the plan, leav
Slide 49: Tuttimus pricing portfolio
Tuttimus Tuttimus Tuttimus Tuttimus Tuttimus Tuttimus 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 unlimited volume 10 GB Cloud 10 GB Cloud 10 GB Cloud 10 GB
Slide 50: Tuttimus mobile and Wigo offers
Tuttimus S + 2nd mobile Tuttimus M Wigo 100 Wigo 120 with Mobilus S 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 Choose your favorite App : Choose your favorite App : F
Slide 51: Bizz All-in offers
S M L XL Mobile: 600 min to EU Unlimited fixed and mobile calls 600 min in EU Unlimited calls from mobile or fixed line to all fix & mobiles in Belgium. Unl SMS in EU 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
Slide 52: Familus M and L
Familus M Familus L €67 €74,95 Unlimited fast max. 100 Mbps download ; 15 Mbps upload ; unlimited internet 1 blockbuster for free/ month 1 Choose your favorite content: • Netflix Pick your • Belgian foot favourite TV 1 blockbuster for free / month • International Sport bundle and/or • All kids block
Slide 53: Mobilus increased value for customers
Mobilus S Mobilus M Mobilus L Optional on €15/ month €25/ month €40/ month Increased Mobilus L value for Pick your favorite app (unlimited data volume) €20 customers opting for Data & Travel Tuttimus: More data, + 5 GB national data more voice +240 min in EU 1GB 3GB 8GB +240 min to EU calling 120 mi
Slide 54: Bizz Mobile
Bizz Mobile For employees Budget Unlimited Data & Roaming Bizz Mobile S Bizz Mobile M Bizz Mobile L Bizz Mobile XL €12 €21 €36 €56 Unlimited calls to fixed lines & Unlimited calls to fixed lines & colleagues in Belgium colleagues Fav app Fav app Fav app Fav app Unlimited usage of your favorite app 1
Slide 55: Scarlet no-frills brand positioning
Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’ Postpaid Fixed Red Hot Chili € 23 / month Internet: 50 GB Extra € 3 per block of 50 GB €8 € 18 € 28 Down 30 Mbps Up 2 Mbps 150 min 500 min 1000 min 1000 SMS 2000 SMS 5000 SMS 500 MB 2 GB 4 GB € 35 / month € 0.16
Slide 56: Fiber investment: coverage ambition
Enterprise Residential Integrated • GPON to serve all businesses & living units Fiber-To-The-Home In dense & Business (FTTH&Bus) • Wall mounting & underground roll-out city areas • Switch-off existing copper in mid-long term to lower costs Fiber-To-The-Business (FTTBus) Fiber-To-The-Curb (FTTC) Outs
Slide 57: Fiber benefits: topline and cost
Churn below average Fiber ARPU above average 12 50 10 Average BB Market 8 40 30 Support share uplift in 6 20 topline Consumer Fiber 4 2 10 zones 0 0 no Fiber Fiber no Fiber Fiber Capitalize on roadwork synergies Lower maintenance Structural and pro-active Anticipate copper maintenance cost per c
Slide 58: FCF covering dividend
~10% Fiber: 3x ~30% Fiber Limited • Large part covered by rebalancing of Capex envelope incremental • Annual Capex estimated to stay around € 1Bn for 2017-2019 Other Ntw (Excl. annual • Weight of Fiber in Group Capex will triple by 2019 Fiber) Capex Other capex Underlying • Sound market position, wi
Slide 59: Spectrum licenses
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 60: Shareholder structure and remuneration
Interim Normal Dividend of 1.50/share General Shareholder In line with the announced three-year commitment on 16 December 2016, Proximus expects to return over return policy: 2017-2019 a stable gross dividend per share of €1.50. We offer an attractive 1.50 1.50 1.50 1.50 shareholder remuneration pol
Slide 61: 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 62: 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