Proximus Sa · EURONEXT:PROX
Proximus Sa — Q3 2014 Earnings Presentation
60 slides from Proximus Sa's earnings presentation, 2014
Slide 1: 2014 Q3 Company presentation
2014 Q3 Company presentation
Slide 2: Content
Content Group financials 3 Network 20 Q3 2014 confirming a solid business performance 4 Mobile 21 Group underlying revenue 5 Fixed 22 Mobile services revenue 6 Spectrum 23 Underlying cost evolution 7 Strategy: “Fit-for-Growth” 24 FTE- divestures and natural attrition reducing headcount 8 Group under
Slide 3: Group financials Q3 2014
Group financials Q3 2014 Slide 3
Slide 4: Q3 2014 confirming a solid business performance
Q3 2014 confirming a solid business performance • Underlying Group revenue of € 1,487m, i.e. -1.0% YoY. • Core revenue +1.1% YoY, Consumer and Business segment Revenue showing good improvement • Revenue from BICS down 6.1% on lower Voice volumes • Underlying EBITDA of € 431m, up 1.5% YoY • Continued
Slide 5: Group underlying revenue
Group underlying* revenue * Adjusted for incidentals -1.0% Q3 underlying 5 -6 • Consumer: sequential improvement 1,502 12 driven by good TV growth and strong Mobile revenue -27 • Enterprise: strong Mobile services 0 1,487 revenue, and growth in organic ICT revenue • Carrier Wholesale Services contin
Slide 6: Recovering Mobile Service revenue important driver of higher Core revenue
Recovering Mobile Service revenue important driver of higher Core revenue • Solid mobile customer growth +172,000 YoY for Group • Impact from customer re-pricing further faded 80% on new mobile tariff plans >44% Smartphone • Steep increase in data usage as Smartphone penetration goes up penetration;
Slide 7: 'Fit for Growth' strategy showing in positive underlying cost evolution
‘Fit for Growth’ strategy showing in positive underlying cost evolution Underlying Cost of Sales (€m) 70 0 -1.0% • Lower CoS due to BICS, -6.6% YoY • Partly offset by higher CoS from the Consumer Millions 65 0 60 0 55 0 50 0 600 609 598 605 610 592 segment, including a timing difference of tactical
Slide 8: Divestures and natural attrition reducing headcount
Divestures and natural attrition reducing headcount Estimated cash-out for termination benefits related to PTS -6,300 FTE Telindus past headcount reduction +2,600 FTE programs: BeST -4,160 FTE € million 2006-2012 2014 49 Tutorship & FMS -3,900 FTE 2015 22 14,342 2016 6 • 14,342 FTEs in Belgacom Grou
Slide 9: Group underlying EBITDA
Group underlying* EBITDA * Adjusted for incidentals +1.5% Q3 underlying 431 0 -0.3 1 425 9 -3 • Underlying Group EBITDA showing further enhancement from previous quarters • Strong segment result from the Enterprise business unit • BICS’ segment result too was up by 2.6% • Partly offset by a 1.2% dec
Slide 10: €623 million capex ytd'14
€ 623 million capex ytd’14 Investing in excelling customer experience Over first 9 months of 2014 Belgacom invested € 623m a.o. 623 in: 546 • Further improving the Fixed experience for customers through Vectoring, which offers dedicated speeds of 70 Mbps • Providing the best Mobile experience combin
Slide 11: Q3'14 FCF of €238m; ytd'14 FCF €629m
Q3’14 FCF of € 238m; bringing ytd’14 FCF to € 629m Belgacom generated € 629m of FCF ytd’14, or Ytd € +219m YoY. 2014 30 7 629 Main drivers for (in million €) 107 the FCF increase are 150 410 • higher cash received from the sale of consolidated companies and buildings • lower income tax payments, par
Slide 12: Shareholder remuneration & structure
Shareholder remuneration & structure On 23 October 2014, Belgacom’s Board of Directors approved to return to the shareholders a total gross interim dividend of EUR 0.50 per share. The Board of Directors also confirmed their Interim intention to pay a stable total gross dividend of €1.50 per share ov
Slide 13: Sound financial position
Sound financial position • Net financial debt at € 1,725m, € 90m lower versus end 2013 • The outstanding long term financial gross debt amounted to € 2.5Bio • Credit ratings: Standard & Poor’s A; Moody’s A1 – both stable outlook 629 ( 553) ( 1 ,815) 43 (4) ( 1 ,725) ( 33) Net debt FCF Dividends Non
Slide 14: Full-year EBITDA outlook raised to 'slightly positive'
Full-year EBITDA outlook raised to ‘slightly positive’ on Belgacom’s good business trends Metrics % Change Guidance FY 2014 New Guidance FY 2014 FY 2013 YtD 2013 YtD 2014 YtD (revised on 1 August 2014) (revised on 24 October 2014) Reported Group revenue 6,318 4,736 4,597 non-recurring 0 0 62 Telindu
Slide 15: Group Operationals Q3 2014
Group Operationals Q3 2014 Slide 15
Slide 16: Continued solid operational Mobile performance
Continued solid operational Mobile performance Mobile market shares (company estimation) Belgian Mobile market growing by 3.2% YoY to 12.6 million mobile cards Mobile penetration at 113% Belgacom market share at 40.3%, slightly down mainly due lower prepaid market share Mobile customer base gr
Slide 17: Good performance for Fixed products, especially Proximus TV
Good performance for Fixed products, especially for Proximus TV Broadband customer evolution net adds total 1,718 1,660 1,677 1,694 1,705 Belgian Fixed internet market still growing, but at slower pace 17 16 12 13 Internet penetration @ 79% 8 Belgacom market share stable Q3'13 Q4'13 Q1'14 Q2'1
Slide 18: Good progress in convergence strategy
Good progress in convergence strategy - Operational drivers x-play Household reporting CBU Households per x-play Q3'13: CBU Households per x-play Q3'14: Total of 2,378,000 Households Total of 2,312,000 Households • 55% of HH are multi-play , +2.7 4-Play: 4-Play: p.p. yoy 333 379 38% 14% 1-Play: 1,12
Slide 19: CBU revenue from households slightly up YoY
CBU revenue from households slightly up YoY - higher ARPH & RGUs CBU Revenues per x-play Q3'13: CBU Revenues per x-play Q3'14: Total x-play Revenues of € 375mio Total x-play Revenues of € 381mio • € 381m came from X-play households; +1.6% YoY 4-Play: 1-Play: 1-Play: 105 102 60% 4-Play: 97 • 75% from
Slide 20: High-quality & innovative networks
High-quality & innovative networks Slide 20
Slide 21: Mobile Network
Mobile Network - Best true customer experience as TOP priority Best Customer Experience… …where it matters… …across technologies Overall best speed experience in Best 4G experience in the cities & Best optimized experience cross Belgium to its customers at the coast (on 1800 Mhz band) 2G, 3G, 4G tec
Slide 22: Fixed Network
Fixed Network - Driving customer experience with new technologies Vectoring technology on up-to VDSL Mass roll-out well Technology evolution underway: in Q3 13% Dedicated video grade speed 1000 Mbps Through cancellation of of remote optical up-to crosstalk on a VDSL2 line, platforms made 100 Mbps Ve
Slide 23: Spectrum: ownership & usage
Spectrum: ownership & usage 800 MHz 900 MHz & 1800 MHz 2100 MHz 2600 MHz • Used for 2G, 3G and 4G • Used for 3G • Will be used for 4G • Used for 4G • Licenses granted in ‘95 • UMTS licenses granted in • Licenses granted in July ‘12 • Licenses granted in • 1st tacit extension (‘10-’15): 2001 • 15 yea
Slide 24: Fit for Growth strategy
Fit for Growth strategy Slide 24
Slide 25: Invest
Invest To build the foundation of our next wave of growth Access • Maintain mobile leadership and further deploy 4G • Push legacy copper network to max capabilities (vectoring, DLM) networks • Gradually introduce FTTH • Push digital (e-sales, e-services) IT and • Renew selling and ordering systems •
Slide 26: Transform
Transform • Product usage experience (TV Everywhere, FON, …) Develop superior customer • Touchpoints experience (call centers, technicians, …) experience • End-to-end process (first time right) • 360°customer communication quality • Products and services portfolio Simplify to structurally • Network
Slide 27: Grow
Grow • Exploit mobile leadership • Improved broadband experience Regain • Roll-out fiber in greenfield and gradually in brownfield to offer the ultimate market shares broadband experience • Superior customer experience (web, shops of the future, …) • Deliver solution-centricity to unlock value in EB
Slide 28: Consumer results Q3 2014
Consumer results Q3 2014 Slide 28
Slide 29: Consumer - Underlying quarterly P&L
Consumer - Underlying* quarterly P&L *Adjusted for incidentals CBU u nderlying revenue (EUR mio) Q3’14 underlying revenue +2.2% YoY +2.2% Strong TV revenue compensating for Fixed Voice revenue erosion 548 562 550 551 557 Recovering Mobile service revenue and higher terminal sales. 544 532 Regu
Slide 30: Consumer underlying revenue variance
Consumer underlying* revenue variance 557 15 544 -6 7 -4 -2 1 Q3’14 +2.2% adjusted underlying Q3'13 Fixed Voice Fixed Internet TV Mobile Service Subsidiaries Terminals & underlying Q3'14 Revenue Others 1,654 17 -14 1,639 -34 6 17 Ytd’14 -6 -0.9% adjusted underlying Ytd'13 Fixed Voice Fixed Internet
Slide 31: Consumer - Fixed voice
Consumer - Fixed voice Stable Fixed Voice ARPU; slowing of customer loss continued Fixedrevenue Fixed voice voice revenue (EUR mio) & YoY (EUR Variance mio) Fixed Voice revenue decline resulted mainly from the YoY line loss Ytd Sept’14 revenue from Fixed Voice totaled € 296m, -4.6% YoY. -1.9% -2
Slide 32: Consumer – Mobile Service
Consumer – Mobile Service Solid further recovery of Mobile service revenue; Postpaid customer base growing Mobil eMobile ServiceService revenuerevenue (EUR mio) & YoY (EUR Variance mio) Q3’14 revenue from Mobile services at € 187m, - 2.9% YoY In spite of the additional roaming price cut on 1 July
Slide 33: Consumer - Fixed Internet
Consumer - Fixed Internet Fixed Internet revenue up 1.4%; Proximus and Scarlet adding +13,000 customers in the quarter Fixed Internet Fixed Internet revenue revenue (EUR mio) & YoYmio) (EUR Variance Q3’14 Fixed Internet revenue of € 91m, i.e. +1.4% YoY, driven by the growing customer base. 6.0% 5.
Slide 34: Proximus TV
Proximus TV Double digit revenue growth for Proximus TV through larger customer base and uptake of TV-options TV revenue TV revenue & YoY (EUR mio)(EUR Variance mio) Q3’14 TV revenue grew by 10.5% to €74m continued subscriber growth, 25 .0% and TV-options such as football subscriptions and TV-repl
Slide 35: Tango Luxembourg
Tango Luxembourg Impacted by regulated MTR reduction Tango revenue TV revenue (EUR mio) (EUR& YoY mio) Variance Tango Q3’14 revenue of € 30m, i.e. -7.4% YoY; mainly caused by the regulated MTR decrease. 60 1 5 . 2% 1 4 . 2% The regulation impact was partly offset by the revenue growth coming 55
Slide 36: Enterprise results Q3 2014
Enterprise results Q3 2014 Slide 36
Slide 37: Enterprise – Underlying quarterly P&L
Enterprise – Underlying* quarterly P&L *Adjusted for incidentals, mainly effect from Telindus France divesture EBU underlying EBU revenuerevenue (EUR mio) (EUR mio) EBU’s underlying revenue turned to growth in Q3’14 60 0 Incl. estimated regulation impact of € -10m (-2.2%). 58 0 56 0 +1.2% 54 0
Slide 38: Enterprise underlying revenue
Enterprise underlying* revenue -1 479 6 474 -4 6 -2 Q3’14 +1.2% underlying underlying Fixed Voice Fixed Data ICT Mobile Service Terminals & underlying Q3'13 Revenue Others Q3'14 1,464 -2 -11 -2 1,456 13 -5 Ytd’14 -0.5% underlying underlying Fixed Voice Fixed Data ICT Mobile Service Terminals & under
Slide 39: Enterprise - Fixed Voice
Enterprise - Fixed Voice* Continued stable Fixed Voice revenue decline Fixed voice revenue (EUR mio) & YoY Variance Q3’14 EBU Fixed Voice revenue of € 110m Fairly stable decline of 3.2% YoY 18 0 -4.9% -2.9% -3.3% -4.5% -3.1% -3.2% -3.2% 0.0 % Key driver of the revenue decline is continued Fixed
Slide 40: Enterprise - Mobile Service
Enterprise - Mobile Service Mobile Service revenue showing 4.1% year-on-year growth on larger mobile customer base, better tiering and slowing ARPU decline Mobil e Service revenue (EUR mio) & YoY Variance Q3’14 Mobile service revenue trend again showed a significant improvement continuously growin
Slide 41: Enterprise - Fixed Data
Enterprise - Fixed Data Fixed Data revenue impacted by migrations to Explore platform, Fixed Internet revenue stable Fixed Data revenue (EUR mio) & YoY Variance Q3’14 revenue was -1.6% YoY to € 93m Fixed Data, revenue consists of Fixed Internet and data connectivity 18 0 10 .0% continued migrati
Slide 42: Enterprise – underlying ICT
Enterprise – underlying ICT* Underlying ICT revenue growth of 5.2% u nderlying ICT revenue (EUR mio) & YoY Variance EBU posted € 125 m underlying ICT revenue. This 5.1% 5.2% resulted from a solid revenue from the Belux ICT 0.3% 10 % 18 0 activities. 16 0 14 0 -10 % Ytd Sept’14 organic ICT revenu
Slide 43: Service Delivery & Wholesale – P&L
Service Delivery & Wholesale – P&L SD E&W revenue (EUR mio) 9.6% YoY revenue decline to € 60m, in line with the previous quarter 93 -9.6% eroding Carrier Wholesale Services revenue due to continued decline in wholesale broadband lines, leased lines and traffic volumes. 83 73 negative impact fr
Slide 44: Staff & Support – P&L
Staff & Support – P&L S&S Adjusted Revenue (EUR mio) For Q3’14, Staff and Support recorded revenue of € 7m. -5.8% 9 8 Ytd’14 revenue of € 22 million, on an underlying basis (i.e. excluding 7 7 7 6 7 7 8 7 proceeds from building sales) 5 4 5 3 2 1 0 Q113 Q213 Q313 Q4 13 Q114 Q214 Q314 S&S adjuste
Slide 45: BICS – Underlying quarterly P&L
BICS – Underlying quarterly P&L BICS underlying Revenue (EUR mio) BICS Q3’14 revenue totaled € 410m, -6.1% or € 27m YoY -6.1% lower Voice revenue, down 8.7% on lower Voice traffic, 50 0 45 0 40 0 437 417 413 415 410 not fully offset by continued growth in non-voice revenue, up by 11% in 35 0 401
Slide 46: Other information
belgacom Other Information
Slide 47: Group – quarterly P&L – as reported
Group – quarterly P&L – as reported YTD- YTD- VAR in mio € Q113 Q213 Q313 Sep Q413 Year Q114 Q214 Q314 Sep Q3/Q3 VAR YTD Total Revenues 1,5 8 6 1,5 8 3 1,5 6 8 4,736 1,5 8 2 6 ,318 1,48 0 1,6 31 1,48 6 4,5 9 7 -5 .2% -2.9 % Total OPEX -1,144 -1,15 3 -1,139 -3,436 -1,18 4 -4,619 -1,06 9 -1,074 -1,05
Slide 48: From reported to underlying – incidentals
From reported to underlying – incidentals GROUP - Revenue incidentals GROUP - EBITDA incidentals (EUR million) Q313 Q314 ytd13 ytd14 (EUR million) Q313 Q314 ytd13 ytd14 Reported 1,568 1,486 4,736 4,597 Reported 430 433 1,301 1,400 Underlying 1,502 1,487 4,531 4,408 Underlying 425 431 1,294 1,276 Inc
Slide 49: Belgacom consolidated balance sheet
Belgacom consolidated balance sheet As of 3 1 D ecem ber As of 3 0 Sept em ber (EUR m il l ion) 2 013 2 014 ASSETS NON-CURRENT ASSETS 6,2 54 6,2 12 Goodwill 2,320 2,294 Intangible assets with finite useful life (*) 1,185 1,121 Property, plant and equipment 2,558 2,600 Investments in associates 6 4 O
Slide 50: Pricing – Fixed products
Pricing – Fixed products Classic Happy Time XL No Limit National Anytime Happy time international € 20.99 / month € 20.99 / month € 30.67 / month € 21.99 / month Note: Free to FIX & to MOB during Free to FIX ,to MOB & to Lower tariffs during peak OffPeak & Weekend Free to FIX Anytime most European c
Slide 51: Pricing – TV options
Pricing – TV options TV Everywhere € 4.95 / month Note: Thanks to TV Overall, your smartphone, tablet or laptop TV Overall is free becomes an additional TV screen! You won’t miss any of for customers having your favourite programs anymore since your TV can a comfort or now follow you anywhere. You c
Slide 52: Consumer Mobile Postpaid subscriptions
Consumer Mobile Postpaid subscriptions On Oct 1st, Smart 25 and Smart 35 offers reviewed, increasing the competitiveness of Proximus mid-end offers, especially in Pack Easy+ 10 Easy+ 15 Easy+ 25 Easy+ 45 € 10 € 15 € 25 € 45 € 13 in PACK € 20 in PACK € 35 in PACK voice & sms only 20 min 150 min Unlt
Slide 53: Pricing – Mobile Voice (Prepaid)
Pricing – Mobile Voice (Prepaid) Reload bonus For each reload, with Pay&Go Easy you get : Focus on Pay & Go Easy • Bonus 1 (towards fix and Mobile): € 10 reload= 30min, € 15 reload= 60min, € 25 € 0.27/ min calls € 0.12 / SMS reload= 90min, € 50 reload= 200 min € 0.25 / MMS OR Bonus 2 (towards fix):
Slide 54: Pricing – Mobile Data
Pricing – Mobile Data Standard Pay & Surf € 0.5 / MB (prepaid ) Or € 4.99 50 MB included € 0.85 / MB € 9.99 500 MB (postpaid) General Prepaid Only GSM Only Laptop & Tablet Only iPad Only Prepaid Only Prepaid Only Pay & Surf Daily Comfort Favorite Favorite for iPad Pay & Surf for iPad € 4.99 / mo
Slide 55: Pricing converged Belgacom PACKS - successful combinations
Pricing converged Belgacom PACKS - successful combinations TV + Fix 2-Play 3-Play 4-Play TV + Internet € 35.75 / month Fix+ Internet € 53.95 / month TV & TV € 53.95 / month Fix + Internet + TV Fixed Voice (incl. TV Everywhere € 62.95 / month Fixed Voice (incl. Happy Time XL) + Happy Time XL and TV T
Slide 56: Positioning Scarlet as no frills brand
Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’ TV + Fix + Internet € 39 / month TV: ~30 channels + Fixed Voice line: Free calls to fix Off Peak + Internet: Unlimited volume Down 30 Mbps Up 3 Mbps Slide 56
Slide 57: Regulation- 1
Regulation- 1 Estimated negative financial impact from regulatory price decreases Outlook Estimated impact Regulation impacts FY 2014 Q1 2014 Q2 2014 Q3 2014 (Decrease in EUR million) Revenue ~ € 14m € 3m € 4m € 4m MTR EBITDA ~ € 7m € 1m € 2m € 2m Roaming Revenue ~ € 36m € 5m € 7m € 14m (i.e. Voice,
Slide 58: Regulation- 2
Regulation- 2 Mobile voice and data-roaming: EU Roaming III Regulation regulation • Roaming III Regulation entered into force on 1 July 2012. • This regulation covers a ten-year period until 30 June 2022. • It imposed a further lowering of the existing regulated price caps, and extended the roaming
Slide 59: Macro economic environment
Macro economic environment GDP Growth actuals and forecast 2,5% forecast 2,0% 1,5% 1,0% 0,5% 0,0% • Belgium decreases to 0,2, Europe to 0,3. -0,5% • After growth of the GDP during 4 consecutive • Decrease caused by lower energy prices. -1,0% quarters, the GDP slowed down again in 2Q14. The reason is
Slide 60: Cautionary Statement
Cautionary Statement “This communication might include some forward-looking statements, without limitation, regarding Belgacom’s financial or operational results, certain strategic plans or objectives, macro- economic trends, regulation, future market conditions and other risk factors. These forward