Proximus Sa · EURONEXT:PROX
Proximus Sa — FY2015 Earnings Presentation
67 slides from Proximus Sa's earnings presentation, February 2016
Slide 1: 2015 Q4 Results Presentation
2015 O04 Results Presentation prosgimus
Slide 2: Agenda
Highlights 3 FY 2015 Performance versus outlook 19 Group Key Figures 4 FY 2016 Outlook 20 Group underlying revenue per segment 5 Consumer segment results 21 Group underlying revenue by product group 6 Enterprise segment results 31 Fixed Internet and TV 7 Technology & wholesale 40 Mobile service reve
Slide 3: Strong commercial and financial performance
Strong commercial and financial performance Q4 Group Q4 Group FY Capex FY FCF Q4’15 Revenue* EBITDA* NET ADDS €1.502m €414m €926m €408m + 44,000 TV subscriptions -0.3% YoY +8.4% YoY + 28,000 Fixed Internet Lines + 50,000 Underlying Core revenue Core EBITDA, up 8.7% Total Capex FY’15 of Q4’15 FCF imp
Slide 4: Group Key Figures
Group Key Figures 4
Slide 5: Core revenue up 0.5% YoY
Core revenue up 0.5% YoY, Fixed and Mobile growth mitigated by lower mobile devices and flat ICT both on high comparable base Q4’15 Core revenue up +0.5% Q4’15 in M€ Consumer: + 1.1% YoY • Rising revenue from Fixed Services, mainly on growing customer base. 5 -6 8 -1 -11 • Mobile service revenue -0.
Slide 6: Good growth of Fixed internet, TV and Mobile services
Good growth of Fixed internet, TV and Mobile services Q4’15 in M€ • Solid Fixed services revenue growth from Fixed Internet and TV. • Mobile services (CBU+EBU) progressed year-on-year by 2.1%. • Lower revenues from low margin Mobile terminals in Q4’15. -0.3% • BICS revenue -2.7%driven by the volatil
Slide 7: Fixed internet, TV and Fixed Voice customer evolution
Fixed internet TV Fixed Voice Broadband customer evolution net adds total net adds total unique Fixed Voice customer evolution 1,828 1,856 TV evolution net adds total 1,788 1,813 1,740 1,716 1,759 1,718 1,657 1,692 2,902 2,876 2,850 2,831 2,836 2,822 2,800 2,781 1,694 1,705 1,593 1,525 1,558 1,495 1
Slide 8: Growing Group mobile customer base
Growing Group mobile customer base Mobile services revenue : +2.1pp YoY Impact mobile market disruption Smartphone Data usage per user/month (Mb) penetration 58% + 8 pp YoY FY’15 •• +167,000 Mobile Postpaid cards ; +4.9% , +319,000 M2M and Internet Everywhere cards; +414% • -157,000 Prepaid cards; -
Slide 9: Convergence: 55.9% multi-play households
• 43 % 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 63% of total HH/SO revenue +9.6% • Continued improvement of mix following growth for • ARPH up by 3.1% YoY to EUR 66.0, 4-Play ARPH at € 115.3 3-Play and 4-Play CBU Households
Slide 10: Group underlying direct margin
Q4’15 in M€ 1.9% Direct Margin increase 3 -6 16 3 896 • Core business Direct Margin was up by 1.7%, driven by the increase of higher-margin Fixed and Mobile services revenue. The Core Direct margin as percent 879 +1.7% of revenue was 74.4%, i.e. slightly up from the prior +1.9% year. • In spite of a
Slide 11: Underlying cost evolution: HR and non-HR
-3.1% +0.2% Q4’15 498 482 FY'15 1,880 1,884 in M€ 243 241 in M€ 1,014 1,011 HR HR 255 242 867 873 Non-HR Non-HR Q4'14 Q4'15 YTD Dec'14 YTD Dec'15 Group underlying HR costs (EUR mio ) & YoY Group underlying Underlying non-HR (EUR Other expenses mio (€m) &) var. & YoYYoY variance -4.1%-0.2% -2.5% -1.6
Slide 12: Workforce expenses reduced
Core Workforce Group Workforce Expenses in M€ reduced by 4.4% Expenses in M€ reduced by 3.6% in 2 in 2 years years Proximus reducing internal and external 1,199 workforce expenses. 1,159 1,244 1,205 1,146 1,199 2013 2014 2015 2013 2014 2015 Ratio reduced by 2 p.p. in 2 years Ratio reduced by 1 p.p.
Slide 13: Ambition of ~260M gross opex savings by 2018
Ambition to realize ~260M gross Initiatives for Gross Opex Partly offset by… savings by 2018 savings Supported by early leave plan Agile organization • Increasing customer installed base Company-wide detailed cost • Optimize Sales channels • Capacity driven maintenance costs programs to accelerate O
Slide 14: Group underlying EBITDA
Q4’15 in M€ Q4’15 underlying Group EBITDA totaled €414m 2 414 • Majority of YoY EBITDA growth came from a 10 sequentially improvement for Proximus’ Core 6 business. 10 • Proximus core business posted € 380m EBITDA, up 382 8.7% from Q4’14. The favorable timing impact +8.7% +8.4% provisioned pylon tax
Slide 15: Net income (Group share) of €482m
YTD December’15 Net income (Group share) totaled € 482m. The decrease versus the same period of 2014 is for a large part explained by recorded incidentals in 2014 and 2015*, higher depreciation and amortization due to higher asset base and higher finance cost** following a partial bond buyback. This
Slide 16: Capex
• Investing in capacity and speed, both in Fixed and Mobile • Enriching content • Rebalancing Capex portfolio • Special focus on Fiber-to-the-Enterprise in 2016 (M€) 16 75 Rebalancing Capex to Fixed 978* 926 950 investments 2014 2015 2016E 2014 2015 2016E Mobile Fixed Capex excl. spectrum Spectrum *
Slide 17: EBITDA to FCF
FY’15 EBITDA to FCF 2015 FCF initiatives offset by in M€ • €120M settlement agreement on mobile tariff related litigation, • higher cash paid for Capex • less cash received from the sale of consolidated companies and Income CAPEX Working Acquisitions/ Settlement Other FCF Underlying EBITDA FIN resul
Slide 18: Financial Position
YTD Net debt/EBITDA ratio @ 1.1 DEC’15 in M€ • Net financial debt at € 1,919M • Credit ratings: Standard & Poor’s A, Moody’s A1 , both stable outlook. Average debt maturity DEBT extended MATURITY SCHEDULE • € 500M Senior Unsecured Notes in M€ issued (due Oct 2025) • Cash tender on two outstanding 20
Slide 19: FY 2015 performance versus outlook
Revised Outlook 2015 Guidance metrics 2015 Achievement (Oct 2015) Growth ambition achieved one year Core underlying revenue Around 2% growth + 2.1% earlier than initial BICS underlying revenue Slightly positive + 2.5% plan. Group underlying EBITDA 4% - 5% growth + 4.9% Capex (excl. spectrum About 90
Slide 20: 2016 Outlook
2016 Outlook We expect to end 2016 with slightly growing Core revenue and Group EBITDA, in spite of the high comparable basis for BICS and the additional challenges that 2016 is expected to bring: Core underlying revenue Slight growth • Proximus will operate in a new competitive landscape in Belgium
Slide 21: Consumer results Q4 2015
Consumer results Q4 2015
Slide 22: CBU revenue progress from Fixed and Tango
Q4’15 - Good revenue progress from Fixed revenue and Tango CBU underlying revenue (EUR mio ) & YoY • Revenue from Fixed services up YoY by 4.1%. -2 . 9% -1.4% 2 . 0% 3 . 8% 5. 3 % 3 . 9% 2 . 0% 1. 1% • 21% less Mobile device sales vs. high comparable base. • Mobile services revenue -0.4% YoY, driven
Slide 23: CBU HR costs and segment result
Lower Q4’15 underlying HR Costs CBU underlying HR costs (EUR mio ) & YoY • Mainly the result of the lower personnel base. -2 . 2% -3 . 2% -0. 4% -3 . 2% FY‘15, HR expenses of € 391m, -2.2% YoY. 102 102 102 95 99 99 101 92 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q4’15 underlying Non HR Costs
Slide 24: CBU revenue bridge
Q4’15 Q4’15 +1.1% YoY revenue increase 4 -10 • Fixed services, up by 4.1% YoY. 9 -1 • Less Mobile device sales, revenue -20.7% from high 732 11 comparable base. 724 -6 • Mobile services slightly lower (-0.4%) YoY, showing impact from lower Prepaid revenue. Postpaid growth +1.1% mitigated by mobile P
Slide 25: Fixed voice revenue and lines
Packs leading to contained line erosion, though lowering ARPU. Q4’15 revenue from Fixed voice totaled € 137m, Fixed voice revenue (EUR mio) & YoY variance -4.1% -4. 0% -3 . 5% -2 . 1% -3 . 5% -4. 0% -2 . 5% -3 . 9% - 3.9% YoY • Eroding Fixed Voice customer base • Lower ARPU including Packs discount
Slide 26: Fixed Internet revenue growth of +8.5%
Fixed Internet revenue growth of +8.5% Solid revenue growth, up 8.5% for Q4’15 Fixed data revenue (EUR mio) & YoY • Driven by the growing customer base, up by 120,000 or 4. 3% 5.9% 5. 8 % 9. 1% 8 . 5% +7.5% in one year 2 . 3% 2 . 7% 1.9% • Q4 ARPU up by 1.0% YoY 127 130 130 132 135 137 142 144 Q1'14
Slide 27: TV base growing by 44,000 in the quarter
Proximus and Scarlet brand growing TV base by 44,000 in the quarter Q4’15 revenue from TV totaled € 85m, +11.4% YoY TV revenue (EUR mio) & YoY variance • Continued subscriber growth, with both the Proximus and 7. 9% 7. 8 % 11. 0% 12 . 4% 14. 8% 18 . 1% 14. 0% 11.4% Scarlet brand increasing their cus
Slide 28: Mobile service revenue and Postpaid net adds
Solid 44,000 Postpaid net adds. Service revenue 0.4% lower driven by Prepaid Q4’15 revenue from Mobile services -0.4% YoY Mobile service revenue (EUR mio) & YoY variance • Solid growth in Postpaid revenue following greater customer base. -6. 3 % -5. 6% -1. 1% 0. 0% 2 . 2% 0. 9% 1. 4% -0. 4% • Lower
Slide 29: Blended ARPU stable; data usage up 58%
Blended ARPU stable YoY. Average Mobile data usage up by 58% YoY to 627Mb. Blended Mobile ARPU stable YoY at € 22.3 Blended net mobile ARPU (EUR ) & YoY • Revamped mobile pricing mid-August ’15 supports customer growth, but slightly lowered the Postpaid ARPU, down YoY by -4. 2% -3 . 9% 0. 2 % 1.3 %
Slide 30: Tango double digit revenue growth
Double digit revenue growth continued on higher YoY customer base and ARPU Tango revenue (EUR mio) & YoY variance Tango Q4’15 revenue of € 35m, +13.8% YoY 9. 5% 11. 0% 9. 9% 13 .8% -3 . 5% -12 .6% -7. 4% -6. 4% • Revenue increase resulting mainly from Mobile postpaid revenue, including offers dedica
Slide 31: Enterprise results Q4 2015
Enterprise results Q4 2015
Slide 32: EBU underlying revenue up 1.4% YoY
Q4’15 underlying revenue increasing 1,4% YoY EBU underlying revenue (EUR mio ) & YoY • Mobile services revenue +10.6% on low comparable basis -3 . 1% -0. 6% 0. 3 % 5. 0% 2 . 1% 0. 0% 4. 8% 1. 4% • Fixed Data +2.0% YoY. • Partly offset by erosion of Fixed Line revenue (-3.8%). • Fairly stable ICT rev
Slide 33: EBU HR costs, non-HR costs and segment result
EBU underlying HR costs (EUR mio ) & YoY Stable underlying HR Costs for Q4’15 -0.4% -1. 1% 6.4% 0. 2 % FY’15 HR expenses +1.3% YoY to € 272m due to higher personnel base for ICT International offset by lower FTE's for 67 69 67 65 67 68 72 65 national. Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15
Slide 34: EBU revenue bridge
Q4’15 in M€ Q4’15 underlying revenue of EBU improved by 1.4% YoY to € 350m 8 -1 350 • Strong quarter for Mobile Services, +10.6% from low comparable base, driven by a larger customer base and higher revenue from national and roaming data usage , 345 -2 1 0 while the yearly variance was no longer imp
Slide 35: EBU Fixed Voice revenue decline
Fixed Voice revenue decline on erosion of Fixed Voice customer base Q4’15 revenue from Fixed voice totaled € 61m, Fixed voice revenue (EUR mio) & YoY variance - 3.8% YoY -2.0% -3.0% -2.6% -2.9% -4.2% -5.7% -3.3% -3.8% • Continued Fixed Voice line erosion. • Technology migration to VoIP. 1 0 0 .0 ..
Slide 36: EBU Fixed data revenue up 2.0%
Q4 revenue up 2.0% YoY, driven by continued growth from data connectivity services Q4’15 Fixed data revenue of € 63m, +2.0 % YoY Fixed data revenue (EUR mio) & YoY variance • Favorable revenue trend from Data Connectivity services -3.6% -4.9% -3.5% -2.7% -2.0% 0.7% 2.6% 2.0% following roll-out of la
Slide 37: EBU ICT revenue
EBU generated in Q4’15 € 127 m revenue from ICT, stable to Underlying ICT revenue (EUR mio) & YoY the high comparable base of 2014. 2 0 0 .0 .. -3.3% 4.4% 1.8% 14.8% 2.2% -1.2% 9.1% -0.3% • Revenue remained fairly steady, though new orders in Millions 1 0 0 .0 .. Q4’15 shifted the revenue mix to mor
Slide 38: EBU Mobile service revenue growth
Service revenue growth on larger customer base … Q4’15 revenue from Mobile services totaled € 83m, +10.6% YoY Mobile service revenue (EUR mio) & YoY variance • Growing mobile customer base and solid ARPU increase. 6. 7% 10. 6% -4. 6% -0. 1% 3 . 8% -1. 4% 3 . 4% 1. 8% • Regulated roaming rate cuts an
Slide 39: Strong ARPU growth on data and roaming usage
and strong ARPU growth on higher data & roaming usage and improved tiering Blended net mobile ARPU (EUR ) & YoY variance Blended Mobile ARPU up 6.4%YoY 2.0% 6.4% • Improved tiering and data consumption. -10.9% -6.9% -3.2% -9.2% -2.6% -2.8% • Uptake of Roaming options. • While no additional roaming r
Slide 40: Technology & wholesale: revenue -11.0% YoY
Q4’15 revenue totaled € 52m, -11.0% YoY TEC & W underlying revenue (EUR mio ) & YoY • Lower volumes from traditional wholesale business. -5.3% -9. 8 % -9. 5% -10.2% -13 .8% -2 . 4% -8.2% -11.0% • Impact from the outphasing of SNOW customers following the decision of BASE to stop their Fixed triple-
Slide 41: Staff & Support results
Q4’15 revenue totaled € 7m. S&S underlying revenue (EUR mio ) & YoY -6.3% 9.8% -4.5% 67. 7% 12.4% -30.3% -18.7% -15.8% 7 8 7 8 8 5 5 7 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q4’15 HR expenses € 29m, -4.4% YoY as a result of S&S underlying HR costs (EUR mio ) & YoY lower YoY headcount and pr
Slide 42: BICS revenue and direct margin
Firm Direct Margin of € 65m +4.7% YoY on volume effect for Mobile data Q4’15 revenue totaled € 385, -2.7% YoY BICS underlying revenue (EUR mio ) & YoY variance • Decrease driven by less voice volumes, with Voice revenue 11.9% decreasing by 5.4% YoY, including a positive currency 0.5% -1. 3% -0.8% 2.
Slide 43: BICS segment result up 5.8%
Segment result up by 5.8% with margin rising 0.7pp to 8.7% Q4’15 segment result of €34m, up 5.8% BICS underlying segment result (EUR mio ) & YoY variance • Increase in Direct Margin in part offset by higher expenses. • Q4’15 expenses up mainly on HR expenses (FTE and results 32.4% 34.9% 5.7% 5. 8% d
Slide 44: Additional information
Additional information • Pricing • Packs • Mobile • Fixed • Regulation • Network & IT • Spectrum: ownership & usage • Shareholder structure & remuneration • Headcount evolution
Slide 45: Pack Internet + TV + Mobile pricing
PACK Internet +TV + Mobile (@ €15 and €45 price point) oo Monthly fee Activation Installation @ Scarlet Proximus Trio Internet 30 Mbps/4 Mbps unlimited volume Red + MI boost at 5€ 150 min 1.000 sms 1,05 GB 52.00 EUR 50.00 EUR 99.00 EUR off-peak Pack Start Internet Start 60 Mbps/4 Mbps 150 GB 10 GB P
Slide 46: 4-Play at €76.95/month
3-Play + 13 40 Mobile subscription @ Smart+ 15 Smart+ 45 Comfort Pack + Smart 15 discount 20 55 4-Play at € 76.95/month Smart+ 25 Smart+ 65 46
Slide 47: Smart+ mobile subscriptions
Prices are incl. VAT 40 55 13 20 Smart+ 15 Smart+ 25 Smart+ 45 Smart+ 65 120 min 300 min Unltd min Unltd min Unltd sms Unltd sms Unltd sms BE + Unltd sms 1 GB 2 GB roaming EU 4GB 10GB 240 min in EU Roaming Speed Tiering 240 MB in EU included 240 min to EU International VERY FAST calling SUPER FAST i
Slide 48: Bizz Smart mobile offers
Prices are excl. VAT Bizz Smart XL 8 15 35 50 70 €10 €20 €40 €60 €80 Unlt min 2 Fix + CUG 100’ 250’ Unl min Unl min Unl min 250sms Unl sms Unl sms Unl sms EU Unl sms EU 250MB 2 GB 4 GB 10GB 10GB PCAC QoS + Conf call + PCAC 240’ in EU 1000’ in EU 240 MB EU 1GB EU Speed Tiering 240‘ to EU 1000‘ to EU
Slide 49: Pay & Go prepaid offers
Pay & Go Max Pay & Go Smart Pay & Go Easy € 0.30 / min € 0.50 / min Peak € 0.27 / min € 0.12 / SMS € 0.25 / min OffPeak € 0.12 / SMS € 0.25 / MMS € 0.12 / SMS Peak € 0.25 / MMS € 0.5/MB € 0.08 / SMS OffPeak € 0.5/MB € 0.25 / MMS € 0.5/MB For each reload, you get a bundle For each reload you get: y
Slide 50: Higher speed and value when included in Pack
Higher speed when included in Pack Value increases when included in Pack 50
Slide 51: Easy access to TV via the Proximus decoder
Easy access to via the Proximus TV decoder + TV Replay free in packs Attractive sports offering with national and foreign football competitions and international sports. Agreement with ELEVEN SPORTS NETWORK, adding 2 new sports channels Eleven and Eleven Sports including 51
Slide 52: Positioning Scarlet as no frills brand
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 50 MB 500 MB 1 GB Scarlet mobile Mobile
Slide 53: Roaming and MTR regulation impact
2015 Estimated negative impact on YoY variance Regulated Roaming rates negatively impacted Proximus’ 2015 2015 2016 revenue and EBITDA year-on-year variance in the first semester of (First 6 months) (as of May'16) 2015. As these measures annualized, there was no additional impact as from July 2015 o
Slide 54: Regulated roaming price decreases annualised in July 2015
Regulated Roaming price decreases which annualised in July 2015 The last decrease of the roaming rates under the Roaming III Regulation of 2012 entered into force on 1 July 2014. Hence, these regulated roaming price cuts stopped impacting the year-over-year variance since July 2015. 54
Slide 55: Fixed network: short-term today
TODAY Successful Vectoring roll-out Strong average speed evolution High quality of streaming Vectoring national Average Netflix speed coverage VDSL speed index in evolution (Mbps) December (%) (Mbps) 43% 52 4.28 33 39 4.09 3.81 22% 0% 2013 2014 2015 2013 2014 2015 Proximus Voo Telenet 100 Mbps for 3
Slide 56: Fixed network: mid-term
MID-TERM Densify our FTTC network Enhance VDSL performance Use alternatives for distant areas Further extend our existing FTTC network Enhance performance with new Make use of alternative networks for by gradually shortening loops technologies and leverage mobile assets distant customers Build flexi
Slide 57: Enterprise fiber roll-out architecture
SHORT-TERM Enterprise fiber roll-out architecture Prepare for the future • Increasing need of Businesses for higher downstream capacity, • Maximally reuse existing FTTC assets to scale fast & efficient more symmetrical bandwidth and low-latency • Capture any opportunity to prepare next generation •
Slide 58: Proximus fiber assets
SHORT-TERM Proximus already has important fiber assets Maximum reuse of existing fiber assets One of the most dense FTTC networks in Europe, consisting of Existing FTTC assets (91% coverage), i.e. empty fiber ducts; will be 21.000 km of fiber across the country maximally reused to optimize costs and
Slide 59: Mobile coverage and experience today
TODAY Coverage as key driver for experience Voice & Data Experience • Ubiquitous 4G outdoor coverage and rapidly increasing 4G • Best voice experience with dropped calls below 0.5% indoor coverage (+35% in one year) • Best data experience with fastest 4G down- and upload speeds • Mobile Coverage Ext
Slide 60: Mobile network: short-term
SHORT-TERM Experience availability Experience tuning Experience enrichment Completion of nationwide ubiquitous 4G Further enhance experience through Further enrich existing calling and mobile indoor coverage similar to 2G network tuning from customer perspective broadband experience • Optimization o
Slide 61: Mobile data growth driven by 4G users
TODAY Proximus mobile data growth nearly doubled 4G users &usage drive strong mobile data growth • Higher customer appetite for smartphones (+8pp) resulting • More than 1,200,000 active 4G mobile data users end of 2015 in strong 4G mobile data growth (x3.6) • Mobile data consumption of a 4G active c
Slide 62: Mobile network: mid-term
MID-TERM Technology and … Spectrum and … Densification Fit more bandwidth and devices within the Refarm existing spectrum to more recent Gradually densify the network by bringing available existing spectrum technologies and add new spectrum smaller antennas closer to the customer • Higher order MIMO
Slide 63: Spectrum ownership and usage
800 MHz 900MHz & 1800 MHz 2100 MHz 2600 MHz • Used for 4G • Used for 2G, 3G and 4G • Used for 3G • Will be used for 4G • Licenses granted in ‘95 • Licenses granted in November • UMTS licenses granted in 2001 • 1st tacit extension (‘10-’15): Proximus • Licenses granted in July ‘12 ‘13 • 20 year-licen
Slide 64: Dividend of 1.50/share and shareholder structure
Dividend of 1.50/share 2015 General Shareholder return policy: normal dividend*: We offer an attractive - Payment 29 April 2016 shareholder remuneration policy - Ex-dividend 27 April 2016 by returning, in principle, most of our annual free cash flow. 2014 2015* 2016E status on This return of free ca
Slide 65: Headcount evolution: pension curve and age pyramid
Estimated cash-out for termination benefits related to 25000 past headcount reduction Telindus programs: +2,600 FTE 20000 PTS -6,300 FTE € million 2006-2012 2016 6 BeST -4,160 FTE Tutorship & FMS -3,900 FTE 2017 5 15000 14,090 2018-2035 15* (* Cumulative for full • 14,090 FTEs in Proximus Group end
Slide 66: 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: [email protected] Proximus investor relations website: www.proximus.com/en/investors
Slide 67: 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