Proximus Sa · EURONEXT:PROX
Proximus Sa — Q4 2019 Earnings Presentation
57 slides from Proximus Sa's earnings presentation, February 2020
Slide 1: Proximus Group Results Q4 2019
Proximus Group Results Q4 2019
Slide 2: Cautionary Statement
2 Cautionary Statement “This communication may 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
Slide 3: Table of Content
3 Table of Content • Group P 4 Notes • Consumer P 22 • The financials results of Proximus Group are reported under • Enterprise P 30 the accounting standards IFRS 15 and, as of 2019, IFRS 16 (replacing IAS 17). • Wholesale P 38 • All figures included in this presentation are on ‘Underlying’ basis, a
Slide 4: Key figures Q4 2019
4 Key figures Q4 2019 €1,134 M €830 M Growing customer bases in challenging competitive market. Underlying Underlying Domestic revenue Domestic direct margin YoY stable -1.1% YoY +2.3 % €159 M Consumer ICT revenue (Group) Convergent HH revenue +5.8% YoY + 10,000 + 7,000 + 23,000 postpaid Strong cost
Slide 5: Key figures FY2019
5 Key figures FY2019 € 4,386M €1,718 M €1,027 M YTD €504 M YTD Underlying Domestic revenue Underlying Domestic EBITDA Capex excl. Spectrum Normalized Free Cash Flow significantly impacted by low- +0.4% YoY +0.8% YoY +0.6% YoY margin Terminals and Regulation. Nearly stable € 498M incl. acquisitions D
Slide 6: Group Underlying Revenue
6 Group Underlying Revenue (M€ & YoY %) -1.6% -2.1% 1,440 1,452 1,440 1,475 1,415 1,413 1,407 1,452 5,807 5,686 -7.0% -3.4% 319 340 347 341 319 329 335 317 YoY YoY 1,347 1,301 1,121 1,112 1,094 1,134 1,096 1,084 1,071 1,134 4,460 4,386 +0.1% -1.7% YoY Domestic YoY Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19
Slide 7: Underlying Domestic revenue by product nature, YoY evolution
7 Underlying Domestic revenue by product nature, YoY evolution Q4 2018: €1,134M YTD 2018: €4,460M 9 ICT 19 0.3 - % 6 Advanced Business Services 13 1.2 - % YoY excl. 0 Tango -5 YoY excl. Terminals 3 Others2 -6 Terminals -9 Mobile Postpaid1 -14 -3 Mobile Prepaid -14 -6 Wholesale3 -20 -4 Fixed Services
Slide 8: Positive momentum for Broadband
8 Positive momentum for Broadband Net adds Park Market Share and TV offset 2,025 2,032 2,041 2,057 2,065 2,071 2,079 2,089 # Lines by eroding + 31K Fixed Voice Broadband 15 17 YoY -0.5 p.p 7 9 8 8 10 .YoY Growing base for in ‘000 6 +1.5% Broadband and TV, in Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19
Slide 9: Continued growing Postpaid customer base partly offsetting revenue headwinds
Continued growing 9 Postpaid customer base # Lines Total Mobile partly offsetting revenue Postpaid market share headwinds. 4,831 4,838 4,842 4,838 4,824 4,819 4,831 4,828 YoY + 95K -0.7 p.p +2.4% .YoY 45 32 32 25 25 25 23 23 Prepaid -11 -26 YoY -32 -39 -27 -36 -39 -29 106K Postpaid net adds Prepaid
Slide 10: Higher convergent revenue on progressing convergence rate
Higher convergent revenue on 10 progressing convergence rate Flat +2.0 p.p. +0.7% HH/SO Convergence ARPH Revenue rate (€) 585 585 -0.9% 77 76 -4.4% 41.7% 39.7% 167 160 Mobile only Non Convergence % Fixed only +2.3% Convergent Convergent Convergence % revenue 341 348 58.3% 60.3% 65.8 66.2 Q4'18 Q4'19
Slide 11: Underlying Domestic direct margin
11 Underlying Domestic direct margin impact by regulation, for large part offset by margin from 921 -3 0 -5 1 customer subscriptions, ICT and -1 913 Advanced Business Services. Domestic: -1.1% +1.8% Q4 Group : -0.9% Underlying BICS direct margin (M€) mainly benefitted from growing DM Underlying Cons
Slide 12: Solid underlying cost reduction in Domestic operations
12 Solid underlying cost reduction in Domestic operations. Q4 466 -9 2 459 -2.1 % YoY Underlying Domestic expenses. (M€) -2.1% +5.7% Solid cost control & -1.4% operational efficiencies offset higher ICT related costs. Q4'18 Domestic BICS Q4'19 462 439 449 466 463 440 441 459 1,817 164 1,802 172 FTEs
Slide 13: Flattish Q4 Underlying Domestic EBITDA
Flattish Q4 Underlying Domestic EBITDA, 13 resulting in slightly growing FY Domestic EBITDA 414 -9 8 414 1 Q4 Underlying Domestic EBITDA (M€) -0.2% YoY Of which € -6M regulation impact Underlying Direct Workforce Non Underlying Ebitda Q4'18 Margin Costs Workforce Ebitda Q4'19 Costs -0.2% Q’s FY +0.4
Slide 14: FY'19 Underlying Group EBITDA +0.3%
With BICS included, FY’19 Underlying Group 14 EBITDA +0.3%, including slight decline for Q4 455 -1 -1 453 Q4 Underlying Domestic EBITDA Q4 -0.2 % YoY (M€) Q4 Underlying BICS EBITDA less impacted than anticipated from progressive insourcing by MTN (timing) Underlying Ebitda Domestic BICS Underlying E
Slide 15: 2019 Net income impacted by Fit for Purpose transformation cost
15 2019 Net income impacted by Fit for Purpose transformation cost YTD (€ M) ETR Incl. provision 22.8% in Fit for Purpose 2019 vs. transformation 26.4% in plan 2018 Net income Underlying EBITDA Incidentals D&A* Net Finance result** Tax expense Others Net income 2018 variance 2019 * Excluding Lease d
Slide 16: Proximus invested a total amount of €1,027M in 2019
16 Proximus invested a total amount of € 1,027M in 2019, vs. €1,019M for 2018 (excl. spectrum) Best Mobile TITAN Project Fiber build Copper upgrade New Digital network progressing well platforms 4G population coverage Proactively strengthening FttH/B 95% FttC, Migration to single mass • outdoor 100%
Slide 17: From EBITDA to FCF
17 From EBITDA to FCF Solid FCF generation, € 504M YTD, acquisitions excluded. (€ M) • Early leave plan refers to voluntary early leave before retirement
Slide 18: Normalized FCF level fairly stable YoY
18 Normalized FCF level fairly stable YoY € 504M FCF normalized for acquisitions (€ M) Including lower Business cash from Working Capital assets disposal (strong 2018 (buildings) comparable base) Mainly Codit ION-IP Earn-out Umbrio Codit • Early leave plan refers to voluntary early leave before reti
Slide 19: Keeping a sound financial position
19 Keeping a sound financial position 5.1 Yr Net financial position Dec. 2018 FCF Dividends Dividends Other Net financial position Average debt duration to NCI** Dec.. 2019 Adjusted Net Debt* 1.8 % (YTD, M€) Weighted average coupon * Excluding Lease liabilities ** Non controlling interests Credit ra
Slide 20: 2019 outlook achieved; Dividend over the result of 2019
20 2019 outlook achieved Guidance Actuals FY Guidance FY Actuals FY Dividend over the metrics 2018 2019 2019 result of 2019 Domestic The Board of Directors approved to underlying revenue excluding €4,153m Nearly stable -1.2% propose to the Annual General terminals Shareholder meeting of 15 April 202
Slide 21: Fit for Purpose transformation plan
Fit for Purpose transformation plan 21 288 Cash outflow impacts Costs & CFL 253M€ Net incidental cost* 2020 2021 2022 >2022 2019 -33 -26 -79 -151 For 2020: FTE’s • • Voluntary leaves: 1,347 FTEs Very limited involuntary leaves • On top of final wave of Early Leave Plan: ~ 375 FTEs Benefits • Decreas
Slide 22: Q4 Consumer results
consumer 22 Q4 Consumer results • Keeping positive customer momentum in highly competitive market. • 60.3% convergent HH/SO, +2.0 p.p. YoY. • 4&3 Play growing, driving +0.7% ARPH growth to EUR 66.2. • Mobile revenue impacted by International calling/texting regulation and inbound decrease, lowering
Slide 23: Consumer financials
consumer 23 Consumer financials -2.0% -0.4% Further sequential improvement in Q4’19: Revenue international calling/sms (M€, YoY) 730 724 735 732 2,903 2,845 714 708 706 700 EU regulation impact off- set by launch revenue Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 YTD '18 YTD '19 from high-end m
Slide 24: Q4 revenue by product nature
consumer 24 Q4 revenue by product nature Highlights €M -0.4% Terminals YoY increase on success of high-end devices 735 732 in year-end promo. 73 +3.2% 75 Other revenue includes a beneficial provision reversal 29 32 of prior customer loyalty program 31 32 Tango: stable revenue 222 Mobile services: Po
Slide 25: Fixed Services
consumer 25 Fixed Services 1,861 1,868 1,877 1,894 1,901 1,908 1,912 1,922 Broadband Internet customers +28,000 YoY 15 17 * (000) 7 9 8 7 9 +1.5% 5 Evolution Broadband and TV customer Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 bases remaining positive, in increasingly competitive setting. Reven
Slide 26: Mobile services
consumer 26 Mobile services Lower MSR driven by Mobile service revenue (M€) & YoY variance Blended mobile ARPU (€) • International calling/sms EU -4.1% 22.5 23.0 23.3 23.3 22.5 23.1 23.0 23.4 regulation -3.2% • Lower inbound revenue 222 213 21.0 21.5 21.8 21.1 20.9 21.4 21.2 20.5 • Prepaid erosion Q
Slide 27: Postpaid Prepaid
consumer 27 Postpaid Prepaid Customer growth offset by ARPU pressure Revenue erosion due to lower park & lower usage Revenue (M€ & YoY) Revenue (M€ & YoY) -2.9% -18.8% 203 207 211 205 202 205 207 199 20 21 19 17 15 19 15 14 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'18 Q2'18 Q3'18 Q4'18 Q1'1
Slide 28: Growing household revenue driven by favorable customer mix
consumer 28 Growing household revenue driven by favorable customer mix. + 1.6% 4P customer base 80% Consumer revenue HH/SO (in ‘000) generated by 2,956 Driven by X-Play HH/SO* 2,932 Tuttimus/Bizz All-in Subscribers (‘000) € 585M 4P 731 743 Stable YoY 733 3P 732 +12.2% Consumer 2P 387 374 Revenue € 7
Slide 29: Upselling to 4P & convergent 3P, at higher ARPH
consumer 29 Upselling to 4P & convergent 3P, at higher ARPH Growing convergent Park (‘000) 1,078 91 1,114 94 60.3% 110.2€ 2.79 RGU 4.6% convergence rate 4P ARPH on average 4P full churn 256 277 2P Conv +0.7% YoY 2.78 RGU 743 3P Conv YoY +36,000 convergent HH 101.9 € on average 731 3P Convergent ARPH
Slide 30: Q4 Enterprise results
enterprise 30 Q4 Enterprise results • Strong ICT quarter including higher revenue from ICT product deals, and a continued favorable revenue evolution from high-value professional services • Fairly stable internet park in highly competitive market. • Declining Mobile Services revenue: growing base no
Slide 31: Enterprise
enterprise 31 Enterprise +0.4% +2.3% 1,413 1,419 Revenue Q4: +2.3% YoY, Revenue 364 357 372 resulting from higher ICT & 351 351 347 348 342 (M€, YoY) Advanced Business Services Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 YTD '18 YTD '19 -1.6% +6.9% Cost of 454 447 Sales 120 128 115 113 106 110 1
Slide 32: Full-year revenue by product nature
enterprise 32 Full-year revenue by product nature 41% ICT/ABS in total YTD ‘18 (M€) YTD ‘19 (M€) Enterprise revenue 56 46 54 41 27 203 40 185 Fixed Voice Fixed Data Postpaid 245 246 ICT 519 ABS 537 Terminals Others (incl Tango) 316 316 ICT & ABS ICT & ABS representing representing 39% of total 41% o
Slide 33: Fixed Voice
enterprise 33 Fixed Voice -8.4% Steady erosion in Fixed Voice Fixed voice revenue customer base 53 51 49 49 49 47 45 45 (M€) & YoY variance Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 + (Limited) price indexation on 1 January 2019 - Erosion in Fixed Voice park 567 559 549 541 531 519 509 500 - D
Slide 34: Internet revenue drivers
enterprise 34 Fixed Data Slightly positive balance + 0.6% between legacy and new data connectivity services. 61 62 62 61 62 61 61 62 Fixed data* revenue + Growing Fiber park (M€) & YoY variance Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 - Ongoing outphasing/migration legacy products 134 133 133
Slide 35: Mobile Services
enterprise 35 Mobile Services The growth in the mobile base could no longer off-set the mobile pricing pressure. Mobile Services revenue (M€) & YoY variance Mobile postpaid growth & EOP (‘000) -3.2% 1,028 1,048 1,053 1,059 1,063 999 1,010 1,021 +3.4% YoY Postpaid postpaid cards 77 80 80 80 78 81 80
Slide 36: ICT 5.9% revenue increase
enterprise 36 ICT 5.9% revenue increase ICT revenue (M€) & YoY +5.9% 126 126 143 132 128 126 152 123 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 • Higher revenue from ICT product deals • Continued favorable revenue evolution from high-value professional services • Specialized ICT companies*, pro
Slide 37: Advanced Business Services
enterprise 37 Advanced Business Services Revenues were up on a low comparable base. ABS includes revenue from Be Mobile’s mobility services and Proximus convergent solutions. 8 * 10 10 9 11 6 7 5 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 * Negative IFRS15 one-off impact in Q4 2018
Slide 38: Wholesale
wholesale 38 Wholesale • Revenue and Direct margin impacted by reduced Fixed Termination Rates since 1 January 2019. • Increase in wholesale roaming traffic revenues offset by lower revenue from traditional wholesale services. -12.0% -9.9% Revenue 48 50 53 51 42 45 49 44 201 182 (M€, YoY) Q1'18 Q2'1
Slide 39: Q4 BICS results
bics 39 Q4 BICS results • Revenue mix continued to move from Voice to Data. • Voice volume down on general market evolution and gradual MTN insourcing. • Direct margin growth driven by a strong volume growth in A2P and roaming, and TeleSign’s mobile identity business. • EBITDA -2.0% YoY: increase in
Slide 40: BICS segment result
bics 40 BICS segment result -7.0% -3.4% Revenue mix moving further from Voice to Revenue (M€) 319 340 347 341 319 329 335 317 1,347 1,301 & YoY variance Data. Impact from insourcing Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 YTD '18 YTD '19 by MTN slower than foreseen. Higher WF expenses +1.8%
Slide 41: Non-Voice Voice
bics 41 Non-Voice Voice Benefitting from increasing messaging revenue, following Continued its eroding trend coming from lower unit strong TeleSign A2P volumes revenue (lower termination rates, competition and less favorable destination mix). +24.7% -21.5% Non Voice Voice Revenue 108 114 134 133 Rev
Slide 42: Doing business with a heart for sustainability
42 Doing business with a heart for sustainability • An ambition, inspired by our sense of purpose: Creating an inclusive, safe, sustainable & prosperous digital Belgium • Commitment to the UN Sustainable Development Goals
Slide 43: Our company sense of purpose, Our societal impact ambition
group 43 Our company sense of purpose Our societal impact ambition We open up a world of digital opportunities Creating an inclusive, safe, sustainable and so people live better and work smarter prosperous digital Belgium Digital Customers first infrastructure Caring for Digital innovation employees
Slide 44: We are committed to making a societal impact
44 We are committed to making a societal impact Enabling Caring Contributing Respecting a better for our to society our planet digital life stakeholders New partnership with coding CO2 neutral for own activities Improving fixed and mobile Parental control on TV school and incubator connectivity in w
Slide 45: Appendix
appendix 45 Appendix • Regulation impacts P 46 • Spectrum P 47 • From reported to underlying P 48 • Tango Luxembourg P 49 • Pricing information P 50 • Shareholder structure P 56 • Contact information P 57
Slide 46: Regulation impacts
appendix 46 Regulation impacts 4th Quarter Year-to-date Fixed Termination Rates (FTR): (YoY variance in EUR million) 2019 2019 • Since 1 Jan 2019: 0.116€ct/min (from 0.709€ct for regional and 0.909€ct for national previously) Revenue -9 -31 • Based on a pure LRIC “Long Run Incremental Cost” model Fi
Slide 47: Spectrum
appendix 47 Spectrum Current ownership and new spectrum Expiry dates Proximus OBEL Telenet 29/11/33 800 MHz 2 x 10 2 x 10 2 x 10 Proximus OBEL Telenet 15/03/21 900 MHz 2 x 12.4 2 x 11.6 2 x 10.2 Renewal 1,800 Proximus OBEL Telenet 15/03/21 MHz 2 x 24.8 2 x 24.8 2 x 24.8 2,100 Proximus OBEL Telenet U
Slide 48: From reported to underlying figures
appendix 48 From reported to underlying figures GROUP GROUP GROUP GROUP Rev enu e EBITDA Rev enu e EBITDA (EUR million) Q4 '18 Q4 '19 Q4 '18 Q4 '19 YTD '18 YTD '19 YTD '18 YTD '19 Report ed 1,494 1,458 442 224 5,82 9 5,697 1,794 1,676 Lease Depreciations nr 0 nr -18 nr 0 nr -82 Lease Interest nr 0 n
Slide 49: Tango Luxembourg
appendix 49 Tango Luxembourg Enterprise 7M€ Tango Revenue 36 35 36 39 35 32 35 39 146 141 (M€) Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Consumer YTD '18 YTD '19 32M€ Postpaid Prepaid Q4’19 Park 261K lines 24K lines 34K lines 10K lines 36K lines YoY YoY YoY YoY YoY +5.6% -14.5% +9.4% +16.0% +7
Slide 50: Mobilus/Tuttimus pricing
appendix 50 Mobilus/Tuttimus pricing Including Tuttimus price increase and data boost 1 January 2020 *FUP: BE: 30 GB at full speed, then 512 Kbps EU: 21 GB at full speed, then 0.0042€/MB S M L XL + Mobile only: Unlimited Mobilus 2 GB Unlt. sms 8 GB Unlt. sms 15 GB Unlt. sms Unlt. data* Unlt. sms Unl
Slide 51: Bizz Mobile portfolio
appendix 51 Bizz Mobile portfolio Including data boost 1 February 2020 *FUP: BE: 35 GB at full speed, then 512 Kbps EU: 25 GB at full speed, then 0.0035€/MB Bizz Mobile Bizz Mobile Bizz Mobile S Bizz Mobile M Bizz Mobile L Unlimited International 2 GB 10 GB 20 GB Unlimited data* Unlimited data* 100
Slide 52: Full-digital mobile offer for Millennials & Gen Z
appendix 52 *20GB at maximum speed in Belgium *20GB at maximum speed in Belgium + 12 GB without extra cost in the EU + 12 GB without extra cost in the EU € 19.99 € 24.99 • Full-digital journey • Worry-free connection, anytime, anywhere • Pioneering in the Millennials & Gen Z segment
Slide 53: Pack at home, Pack on the go
appendix 53 Pack at home Pack on the go Mobile subscription with Mobile subscription with endless data for social + endless data for social + music + video apps music + video apps Internet at home Internet at home TV everywhere via New: TV on all your screens Pickx app and web New: High performance
Slide 54: Fixed portfolio
appendix 54 fixed portfolio Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’
Slide 55: Mobile portfolio
appendix 55 mobile portfolio
Slide 56: Shareholder structure
appendix 56 Shareholder structure Total number of shares Free-float Belgian Government Market Capitalisation* Dividend yield* 338,025,135 42% 54% ~€ 8.2Bn ~5.9% Number of shares Number of shares Number of shares % shares % Voting rights % Dividend rights with voting rights with dividend rights Belgi
Slide 57: For further information…
appendix 57 For further information… Investor Relations Call: +32 2 202 82 41 E-mail: [email protected] Proximus Investor Relations website : www.proximus.com/en/investors Nancy Goossens Eline Bombeek Investor Relations Director Investor Relations Manager