Proximus Sa · EURONEXT:PROX
Proximus Sa — FY2023 Earnings Presentation
51 slides from Proximus Sa's earnings presentation, Feb 23, 2024
Slide 1: Proximus Group Results presentation Q4 & FY 2023
Proximus Group Results presentation Q4 & FY 2023 23 February 2024 Guillaume Boutin Chief Executive Officer
Slide 2: Cautionary statement
Cautionary statement This presentation is a subset of the company’s results release. Please consult proximus.com/investors for the overall disclosed information. This communication may include some forward-looking statements, without limitation, regarding Proximus’ financial or operational results,
Slide 3: Agenda
Agenda • Looking back o Highlights FY 2023 o Financial & Operational Q4/FY performance o Foundation year bold2025: key achievements • Looking forward Q&A
Slide 4: Looking back
« Looking back
Slide 5: Closing strong FY'23, both commercially & financially
Closing strong FY’23, both commercially & financially Robust Domestic revenue growth driving improvement in EBITDA YoY trend Excellent commercial Closing 2023 on a strong note Beating revised trend continued financially FY23 guidance Group Revenue Group Direct Margin ✓ Domestic revenue + % + K + K M
Slide 6: Achievements
Achievements
Slide 7: Closed the foundation year of bold2025 strategy
Closed the foundation year of bold2025 strategy Strong progress towards our 2025 strategic goals 2025 ambition Status (selection of key metrics) YE2023 • 100% 5G coverage • 40% 5G coverage Roll out #1 gigabit network for • 50% FttH coverage • 29% FttH coverage Belgium • Connecting >1M Homes • 397k A
Slide 8: Proximus and partners deploying Fiber in 147 cities
Proximus and partners deploying Fiber in 147 cities cities and municipalities with Fiber works ongoing Fiber coverage in Brussels Fiber cooperation agreement in Belgium ✓ BIPT confirmed it will assess any agreement between operators (communication 12 Oct’23) ✓ Discussions towards achieving a fiber P
Slide 9: 1.75M Fiber HP at end-2023, strong HP JVs' contribution in Q4
1.75M Fiber HP at end-2023, strong HP JVs’ contribution in Q4 Fiber HP footprint of nearly 30%; and “Fiber in the street” reaching 34% Fiber Homes & Fiber Homes & Fiber in the street, Businesses Passed in Q4 Businesses Passed end-2023 Incl. JV funnel of 300k LU, total (in K, additions in the period)
Slide 10: 397k activated Fiber lines by end-2023
397k activated Fiber lines by end-2023 Strong customer demand for Fiber further accelerated in Q4 FIBER Increasing Fiber share Lower churn Total park & net adds (in K) in total acquisitions levels vs Copper +6pp 397 353 322 288 252 Q4’22 Q4’23 120 115 44 110 105 Maintaining high ARPC in € 31 36 34 3
Slide 11: 5G coverage of >40% end-2023
5G coverage of >40% end-2023 General recognition for our mobile network quality • ~50% of active Proximus sites • >40% 5G indoor coverage end • Leveraging the largest Belgian moved to Nokia 2023; 100% in the 2025-2026 spectrum portfolio to deliver timeframe the best possible experience. • ~ 2100 sit
Slide 12: Company-wide AI initiatives launched
Company-wide AI initiatives launched and will deliver double-digit million of cost efficiencies • Proximus assistant powered by GenAI launched in January’24 to best tackle Proximus customers' needs • GitHub Copilot licenses to 100% • Chatbot containment rate of Proximus developers by end leveraging
Slide 13: Route Mobile transaction progressing well
13 Route Mobile transaction progressing well confirming at least ≥ 90M€ run-rate EBITDA synergy Deal rationale 3-Year ambition* • Expanding in Fast-growing CPaaS market • Critical scale and leading position in global CPaaS and DI markets ~2bn 13-15% 50-75% Revenue, $(1) EBITDA Margin Cash conversion
Slide 14: Q4/FY Performance
Q4/ FY Performance
Slide 15: Domestic
Domestic
Slide 16: Sustaining an excellent commercial performance
Domestic Sustaining an excellent commercial performance resulting in market share gains across all products Mitigating cord cutting effects and Fixed voice erosion Postpaid Internet base 2,267K; Postpaid base 4,973K; TV base 1,674K; Fixed Voice 1,651K; +51k YoY + 156k YoY - 36k YoY -159k YoY YoY YoY
Slide 17: Residential revenue Q4'23 up by +8.3% YoY
Residential Residential revenue Q4’23 up by +8.3% YoY Services revenue growth improved to +6.7% YoY 8.3% +6.0% 5.9% 5.5% 2,396 4.3% • Customer Services revenue +6.7% YoY 2,261 3.0% 237 0.7% 4.2% 247 • Strong Q4’23 customer growth 279 1.9% 231 624 601 576 585 585 562 570 62 553 59 62 59 58 60 65 61 6
Slide 18: Growing Convergent base and higher ARPC
Residential Growing Convergent base and higher ARPC driving Residential customer services revenue increase +6.7% Customer Customers (in K) +6.1% ARPC (overall, €) Growing Convergent base: Supported by price indexations , services revenue (in M€) Incl. +10.7% Convergent revenue + 6.2% YoY upsell to c
Slide 19: Successful value management supported by product superiority
Residential Successful value management supported by product superiority Strong ARPC, managed churn and accelerated customer growth Convergent Total (Convergent + Fixed only + Mobile only) Sustaining a Price rises having only While driving Empowering high positive customer trend limited churn effect
Slide 20: Business Services revenue +3.6% YoY
Business Business Services revenue +3.6% YoY Product revenue cycling against high Q4’22 3.1% Services revenue +3.6%, 6.2% 1,953 Solid growth in IT Services, Fixed Data and Mobile Services 1,894 outpacing Fixed Voice erosion 4.1% 4.1% 2.9% 299 272 Products revenue -18.7%, -0.5% driven by IT products,
Slide 21: Solid continued B2B Services revenue growth in Q4
Business Solid continued B2B Services revenue growth in Q4 IT Services, Fixed Data and Mobile growth outpacing Fixed Voice erosion +3.6% +2.2% 412 398 1,587 1,622 +7.1% IT Services driven by growth in Cloud & +7.1% +6.8% 110 417 Security, Smart Network, Smart Mobility and Advanced 103 391 Workplace
Slide 22: Wholesale Q4 Services revenue +2.3%
Wholesale Wholesale Q4 Services revenue +2.3% continued decline in interconnect revenue -8.0% -4.1% Q4 Fixed & Mobile Services revenue +2.3% -8.1% -9.0% -8.3% 280 -10.7% • Higher visitor roaming revenue 69 258 67 66 • Growing JVs services revenue 62 63 • Partly offset by negative impact from annuali
Slide 23: Sustained strong Domestic revenue growth, +3.5% YoY
Domestic Sustained strong Domestic revenue growth, +3.5% YoY revenue from Services up by +5.1% YoY 4.2% 4,665 Revenue 4,478 (underlying, M€) 1,022 968 3.5% +3.8% 14 1 1,196 30 -5 1,155 +5.1% Services revenue 3,510 3,643 Q4’22 Residential Business Wholesale Non-Services Q4’23 FY22 FY23 Customer Servi
Slide 24: Continued cost efficiency delivery moderates inflation effect
Domestic Continued cost efficiency delivery moderates inflation effect Customer OPEX increases driven by strong commercial momentum OPEX (management view, underlying, M€) 8% Domestic OPEX (M€) 486 8.9% 95 1,845 55 1,695 450 FY22 WF Non-WF FY23 Domestic headcount (FTE) -69 484 10,427 10,358 -553 Q4’2
Slide 25: Cost efficiencies on track with bold2025 ambition
Domestic Cost efficiencies on track with bold2025 ambition Inflationary costs moderating , customer opex reflecting commercial success Efficiencies 2023 Inflationary costs Customer OPEX 2023 +6% YoY, to support a double - 95M€ of cost efficiencies Moderating wage inflation impact digit acquisition g
Slide 26: Domestic EBITDA trend sequentially improved to +0.9%
Domestic Domestic EBITDA trend sequentially improved to +0.9% strong Direct Margin growth and mitigation of inflationary and volume impacts (M€) +0.9% -1.7% -13 1,665 1,636 39 -23 389 392 Q4’22 Direct Margin Workforce costs Non-Workforce Q4’23 FY22 FY23 costs 26
Slide 27: International
International
Slide 28: International revenue decline while growing Direct Margin
International International revenue decline while growing Direct Margin well-positioned to grasp value transition to omnichannel solutions (M€) -3.6% 1,605 1,548 -1.6% in CC transitioning to alternative channels, with a more meaningful impact on revenue than on direct margin. back to inherently decl
Slide 29: Telesign cycling against an elevated Q4'22
Telesign Telesign cycling against an elevated Q4’22 while Q4’23 sees customers optimizing their spend in view of macro trends Revenue (M€) 61.5% -11.6% in CC 19.5% 18.9% 5.2% -15.8% 140 128 132 • Strong growth, 120 118 at high margin, driven by new customers in the consumer Q4’22 Q1’23 Q2’23 Q3’23 Q
Slide 30: Telesign to continue its growth trajectory in 2024
Telesign Telesign to continue its growth trajectory in 2024 perfectly positioned to support customers in omnichannel transition Direct Margin (M€) Volumes Unit, for all channels >10% +8% +24% in CC +9.4% in CC 117 114 Q4 21 Q2 22 Q4 22 Q2 23 Q4 23 Sales bookings1 Average per Q, in K$ 2023: ~860K$ 20
Slide 31: BICS cycling against exceptionally strong Q4'22
BICS BICS cycling against exceptionally strong Q4’22 Revenue decrease with limited margin impact Revenue (M€) -15.5% in CC 20.4% 7.1% -1.1% Revenue (M€) -5.8% -13.3% revenue down on in CC 311 -17.7% -7.2% 267 266 lower Messaging volumes and 262 256 118 change in destination mix 1,132 1,051 Core -22.
Slide 32: Slide 32
Slide 33: Q4 Group EBITDA +1.4%, carried by Domestic and BICS
Group Q4 Group EBITDA +1.4%, carried by Domestic and BICS Growing Direct Margin offsetting cost pressure Revenue Direct Margin -1.6% 3.9% 40 39 0 971 1,558 0 -3 12 1,534 935 -55 -22 +3.5% -15.5%* +11.6%* +4.7% +0.9%* -0.1%* Q4’22 Domestic BICS Telesign Others** Q4’23 Q4’22 Domestic BICS Telesign Oth
Slide 34: FY'23 Group EBITDA decrease limited to -1.6%
Group FY’23 Group EBITDA decrease limited to -1.6% Strong Direct Margin growth for large part offsetting OPEX increase Revenue Direct Margin +2.2% +3.4% 187 24 3 6,042 121 5 3 3,849 -81 -2 3,722 5,909 Direct Margin +4.2% -5.8%* +8.5%* +3.6% +2.8%* +9.4%* FY22 Domestic BICS Telesign Others** FY23 FY2
Slide 35: FY2023 Group capex of 1,325M€
Group FY2023 Group capex of 1,325M€ Q4 capex driven by acceleration in Fiber deployment and customer equipment Group Capex M€, excl. spectrum & football rights • Proximus Fiber build volumes reducing +1.6% • Fiber customer termination and activation cost 1,325 rising 1,305 • Other capex includes a.o
Slide 36: FY23 adjusted FCF of 61M€ incl. +96M€ for Q4
Group FY23 adjusted FCF of 61M€ incl. +96M€ for Q4 Tax impacts, lower EBITDA and equity injections partially offset by favorable BWC LT Interests & (M€) Spectrum interest (o/w c. 1/3 non-structural) 181 167 13 -29 Incl. o/w -43M€ Immobel Income tax payment -63 -12 -45 -23 31 61 >50% related to a -43
Slide 37: Beating our revised 2023 revenue and EBITDA guidance
Group Beating our revised 2023 revenue and EBITDA guidance Outlook Achievements Guidance metrics FY2022 FY2023 FY 2023 FY 2023 Revised 27 Oct 2023 Between Dividend over 2023 result Underlying Domestic revenue 4,478M€ 4,665M€ +3.5% and 4% +4.2% YoY Proximus Board of Directors YoY approved the ordinar
Slide 38: Looking forward. 2024
»> a, Looking forward. : 2024
Slide 39: Key focus for this year
Key focus for this year Sustain a strong Continue significant Close Route Mobile commercial cost efficiencies transaction and momentum, driving supported by AI initiate synergies 2024 revenue growth Capitalizing on Readying for Executing network superiority evolution in the Belgian Asset sales progr
Slide 40: Capital allocation
Capital allocation Investing in growth, keeping sound balance sheet and returning attractive dividend Investing in growth, Attractive dividend Net debt ratio* kept within our in line with our 3YR while capex on comfort zone dividend policy normalization path 1,325 M€ 1,300 Over 2024 result, intentio
Slide 41: 2024 guidance
2024 guidance returning to EBITDA growth, despite evolution of market structure. Outlook Guidance metrics FY2023 FY 2024 Growing Underlying Domestic revenue 4,665M€ Up to 1% Growing Underlying Domestic EBITDA 1,636M€ Up to 1% Growing* Underlying Group EBITDA 1,757M€ Up to 1% Capex Around 1.325bn€ (e
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Slide 43: Appendix
Appendix
Slide 44: From reported to underlying – EBITDA adjustments
Group From reported to underlying – EBITDA adjustments Q4’22 Q4’23 (M€) 441 9 421 419 19 0 415 3 -24 -6 -1 -2 -22 -1 Reported Lease Lease Transformation Acquisitions, Litigation / Underlying Reported Lease Lease Transformation Acquisitions, Litigation / Underlying depreciations interest mergers and
Slide 45: EBITDA conversion to FCF
Group EBITDA conversion to FCF FY 2023 (M€) 1,786 1,757 -29 76 -98 -79 38 -1,453 61 -75 -45 18 -60 -43 Reported Adjustments Underlying Interest Tax payments BWC Cash CAPEX JV Equity Cash from Post- Other FCF Acquisitions FCF Ebitda Ebitda payments Injections divestment Employment YTD’23 2023 YTD’23
Slide 46: Q4'23 adjusted FCF of 96M€
Group Q4’23 adjusted FCF of 96M€ Including Immobel 30M€ payment (M€) 6 38 98 1 99 96 2 99 44 -7 -13 -41 -15 -14 FCF Acquisitions FCF Underlying Interest Tax BWC Cash JV Equity Cash from Other FCF Acquisitions FCF Q4’22 Q4’22 Q4’22 Ebitda payments payments CAPEX Injections divestments Q4’23 Q4’23 Q4’
Slide 47: Net income
Group Net income (Group share) -20.6% (M€) 450 -29 -11 -6 24 357 -10 -60 YTD’22 Underlying Adjustments D&A Net Tax expense Others (*) YTD’23 Ebitda finance result * Includes Non-controlling interests and Share of loss from associates 47
Slide 48: Adjusted Net Financial Position (excl. lease liabilities)
Group Adjusted Net Financial Position (excl. lease liabilities) Keeping a sound financial position, with net debt/EBITDA ratio within comfort zone (M€) Net financial position Net financial position EOP 2022 Free Cash Flow Dividends Other* EOP 2023 18 -2,758 -387 -5 -3,131 * Mainly remeasurement to f
Slide 49: Managing maturity and average coupon
Group Managing maturity and average coupon Successfully issued a new 10-year green bond for 750M€ at an effective interest rate of 2.45% thanks to pre-hedging instruments Debt maturity schedule (M€) Credit ratings ~30% in next 2yrs ~70% in ≥ 5yrs S&P BBB+ (stable outlook) Moody’s A2 (stable outlook
Slide 50: Shareholder structure
Shareholder structure Status 31/12/2023 Total number of shares Free-float Belgian Government Market Capitalization Dividend yield 338,025,135 42% 54% ~€ 2.9Bn ~14.1% Number of shares Number of shares Number of shares % shares % Voting rights % Dividend rights with voting rights with dividend rights
Slide 51: Investor Relations contacts
Nancy Goossens Adrien Peillon Investor Relations Lead Investor Relations manager Call: Proximus Investor E-mail: +32 2 202 82 41 Relations website: [email protected] +32 2 202 62 17 www.proximus.com/en/investors