Proximus Sa · EURONEXT:PROX
Proximus Sa — Q1 2018 Earnings Presentation
53 slides from Proximus Sa's earnings presentation, May 2018
Slide 1: Proximus Group Results presentation Q1 2018
Proximus Group Results presentation Q1 2018 May 2018
Slide 2: Reporting remarks
Reporting remarks • All financials in this presentation related to the Group and Segments are provided under IAS 18. The Q1 2018 figures under IFRS 15 are available in Q1 2018 report and excel factbook ( Proximus IVR website ). • The provided 2018 guidance is under the IAS 18 standard. • Exception h
Slide 3: 4-Play Households YoY
4-Play Households YoY RGU per HH Strong uptake of all-in offers, Solid increase in number of Average revenue increasing 4-Play HH/SO HH/SO taking 4 Plays (in 000’s) per Household* Tuttimus/Bizz All-in 2,947 2,935 subscribers in ‘000 + 4P 640 +9.5% 701 404 +1.3% 3P 750 743 192 Q1'17 Q1'18 2P 427 400
Slide 4: TV, Internet and Fixed Voice customers
+58K TV Supported by dualbrand (in ‘000) customers YoY +3.9% approach, Internet and TV customer base growing, and 1,472 1,489 1,516 1,533 1,543 1,560 1,575 36,9% solid market position 1,458 +0.7% YoY maintained. 18 14 17 27 17 9 18 14 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Market Share +52
Slide 5: Mobile customer base and market share
4,919 4,915 4,918 4,897 4,900 4,825 4,838 4,831 Postpaid Smartphone Penetration +126,000 YoY 61 67 60 i.e. +3.3% to 3,907k 34 44 20 22 25 Mobile Cards -39 -32 Prepaid +5.4 pp YoY -8 -65 -64 -64 -57 Park (K) (exc. M2M) -95 -193,000 YoY i.e. -17.3% Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 (incl
Slide 6: Group revenue by segment and quarter
Group revenue by segment (M€) Group revenue by quarter (M€ & YoY %) -3.0% -1.4% -0.8% 0.7% -2.9% -3.2% -0.9% -0.2% 11 3 -5 1 -13 1,443 1,441 1,460 1,487 1,490 1,443 1,417 1,441 1,477 1,441 Domestic +0.9% 359 382 363 332 312 336 339 319 Group -0.2% 1,101 1,105 1,127 1,111 1,105 1,105 1,137 1,121 Q2'1
Slide 7: Group revenue variance Q1'17 to Q1'18
( in M€ ) 2 1 3 -5 3 -13 2 -6 11 1,443 1,441 Fixed Voice -10 Fixed Data +8 Prepaid -6 Vs high Q1’17, TV +4 Postpaid stable which included correction FTR Domestic +0.9% Group -0.2% Q1'17 Fixed Mobile Mobile ICT Advanced Subsidiaries Wholesale Other BICS Q1'18 services services devices Business (Tango
Slide 8: Group direct margin
Domestic Q1 direct margin +0.8% to € 840m: • Higher direct margin for Consumer, up 1.8% • Nearly stable direct margin for Enterprise • Wholesale direct margin down from a high comparable base (Q1’17 correction of FTR) • Regulation caused net decrease in direct margin by €-15 m BICS Q1 direct margin
Slide 9: Group expenses
Group expenses (M€) Group expenses (M€) Domestic vs. BICS Domestic workforce vs non-workforce Q1 Q’s +3.0% 448 444 456 449 466 462 43 6 437 29 33 31 31 3 10 462 33 32 41 42 449 D 134 131 151 141 125 128 153 147 O +4.3% WF -3 M Incl. TeleSign Non WF +6 E 284 279 276 278 277 274 272 273 S T I -1.0% C
Slide 10: Group underlying EBITDA
Q1 Domestic Q1 EBITDA up 0.8% to € 420m on higher direct 6 -3 2 454 449 margin, in spite of € -15m net loss due to regulation (roaming + FTR). This loss aside, the Domestic EBITDA increased by 4.3% Domestic +0.8% YoY. Group +1.1% BICS Q1 EBITDA +5.1% YoY to € 35m, including TeleSign Underlying Q1'17
Slide 11: Capex on track for FY2018 estimate of around €1bn
Capex (M€ ) 390 340 290 On track for FY2018 estimate of 240 385 314 190 140 215 221 281 949 221 around € 1bn 90 183 205 40 (potential spectrum capex excluded) -1 0 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Continued investments lead to: High-quality Attractive Copper upgrade Fiber build IT Mob
Slide 12: Q1'18 net income
Q1’18 net income (Group share) of €124m, up €5m compared to 2017, on higher underlying EBITDA, lower finance costs and less tax expenses, only partly offset by higher depreciations and amortization. YoY Net income (Q1, M€) 10 -16 5 2 4 -1 124 119 Net income Underlying EBITDA Incidentals D&A Net Fina
Slide 13: Free cash flow YoY
YoY FCF (Q1, M€) Lower Free Cash Flow YoY mainly 9 -3 -6 driven by: 173 5 -3 -36 + Growth in underlying EBITDA -57 + Lower Income Tax payments * -4 78 - Higher cash paid for Capex (carry-over effect from 2017) - Higher working capital needs (mainly timing effect) FCF Higher Lower Income Interests Pa
Slide 14: Net debt and debt maturity schedule
Net Debt (Q1, M€) Net Debt DEC 2017 FCF Other Net Debt MAR 2018 78 7 -2,002 -2,088 Debt maturity schedule (Q1, M€) Commercial Paper Institutional Eurobonds Ұ private placement Bank facilities Proximus Average debt Weighted optimised duration average coupon it’s long 400 term debt 6 00 • Credit ratin
Slide 15: FY2018 guidance
FY2017 FY2018 Q1 YoY Guidance metrics Actuals Outlook achievement Domestic underlying revenue €4,458m Nearly stable +0.9% Group underlying EBITDA €1,823m Slight growth +1.1% Capex 1092m* Around €1Bn** 221m * Incl. renewal of 3-year football broadcasting licenses (Jupiler League, UEFA Champions leagu
Slide 16: Consumer Results
Consumer Results
Slide 17: Consumer underlying revenue, cost of sales and direct margin
Consumer underlying revenue (M€ ) & YoY -1. 1% 1. 9% 1. 3 % 1. 9% 1. 7% -0. 1% -0. 5% 1. 5% 715 730 737 720 727 729 734 731 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 • Revenue up, benefitting from growing customer base and improved mix, with more customers on 4-Play offers. Consumer underlying
Slide 18: 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 19: Consumer revenue variance
Q1 7 731 2 -6 4 2 720 -6 8 +1.5% Underlying Fixed Voice Fixed Data TV Mobile Mobile Tango Terminals Underlying Q1'17 Postpaid Prepaid & others Q1'18 • Enlarging customer base with continued revenue growth for TV (+4.5%) and Internet (+5.4%), partly offset by lower Fixed Voice revenue (-4.8%) • Mobil
Slide 20: Consumer fixed data revenue
In spite of the highly competitive market, the Consumer Fixed data revenue (M€) & YoY segment generated 5.4% more Fixed Data revenue 10. 0% 5.5% 4.9% 5.4% 4.1% 4.0% 2.0% 3.7% • +15,000 Internet lines in Q1’18 154 156 157 161 • +55,000 or +3.1% YoY to total 1,861,000 151 150 151 153 Q2'16 Q3'16 Q4'16
Slide 21: Increasing TV customer base
Increasing TV customer base for Proximus and Scarlet TV revenue (M€) & YoY variance • +58,000 TV households YoY, or +3.9%, including +14,000 TV 7. 6% 10. 8% 11. 2% 9. 2 % 8.8% 6. 1% 4 . 6% 4. 5% households in Q1’18 Millions • 1,575,000 unique TV households end Q1’18 91 94 95 96 97 98 99 88 • Q1’18 T
Slide 22: Consumer fixed voice
Total Fixed Voice customer base at 2,020,000, -2.2% YoY Fixed voice revenue (M€) & YoY variance -4. 8% -4. 5% -5. 1% -6. 3 % -3 . 1% -3 . 3% -5. 5% -4 . 6% • Fixed Voice net loss of 16,000 in Q1’18 • ARPU Q1’18 €20.4, reflecting the ongoing decline in the use of 131 131 128 130 126 124 122 124 Voice
Slide 23: Consumer mobile service revenue
Mobile service revenue (M€) & YoY variance Mobile Net Adds (000's) -1. 6% -1. 6% -1. 6% -2 . 6% -1. 6% -1. 3% -1. 2% -1. 7% 49 9 41 44 8 12 21 29 -34 -8 -31 -57 -59 -62 -59 -88 250 251 246 242 247 248 243 237 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q
Slide 24: Postpaid and prepaid revenue
Postpaid revenue (M€) & YoY variance 2 . 4% 2 . 1% 2 . 5% 2 . 3% 3 .0% 2 .6% 2 . 4% 1.0% Q1 Postpaid revenue increased by 1.0%, in spite of the Roam-Like-At-Home (RLAH) headwinds, driven by : 213 218 215 215 219 223 221 217 • Expanding Postpaid customer base Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17
Slide 25: Tango
Tango Q1’18 Consumer revenue up by 8.3% YoY, in spite of Tango revenue (M€) & YoY variance aggressive competitive market conditions and the application of the RLAH legislation 7. 7% 5. 6% 8 . 3% -3 . 0% -0. 1% -4 . 8% -1. 2% -1. 1% • Commercial success of the revamped Smart portfolio 28 29 27 29 28
Slide 26: X-Play view
X-Play view (under IFRS 15) 26
Slide 27: X-Play revenue variance
Revenue in M€ Q1 Including upselling to 4P 21 -6 -4 -6 5 730 -6 5 2 719 HH/SO +0.8% Total Consumer +1.5% Underlying 4-Play 3-Play 2-Play 1-Play Mobile Terminal Tango Other Underlying Q1'17 Prepaid sales Q1'18 IFRS 15 IFRS 15 FY (pro forma) Proximus’ strategy to focus on attractive multi-play offers,
Slide 28: Increasing 4-Play base is main revenue growth driver
Increasing 4-Play base is main revenue growth driver for Consumer Non Convergent Convergent • Tuttimus/Bizz All-in driving uptiering to 4-Play 0.8% X-Play revenue (M€) 24% 23% • Ongoing expansion of 4-Play base, +61,000 YoY incl. & YoY variance 583 589 586 585 588 55% 57% +14,000 HH/SO in Q1’18 Q1'1
Slide 29: RGU growth by play
4.87 640 662 673 687 701 RGU 2-Play 427 419 413 409 400 4-Play growth & EOP growth & EOP (000) (000) -8 -6 -4 -9 -10 35 22 11 14 14 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 1,130 1,127 1,111 1,098 1,091 750 748 744 743 743 3-Play 1-Play growth & EOP growth & EOP (000) -4 -14 -7 (0
Slide 30: ARPH continued to grow on improved customer mix
• The overall ARPH continued to grow on an improved 1.3% customer mix. X-Play ARPH (€) & • More and more 4-Play HH/SO, at higher ARPH YoY Variance 66.0 66.6 66.3 66.3 66.8 of€112.1. This more than offset the impact from: Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 • RLAH • Lower Fixed Voice traffic 1.3% -1.5% 4-P
Slide 31: Annualized full churn rate
• The annualized full-churn rate on average for all Plays was X-Play 14.7 %, up 1.0pp from the previous year Annualized 13.7% 13.5% 14.7% full churn 11.7% 13.3% rate • 4-Play churn remaining low at 3.6%. Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 4-Play 2-Play Annu alized full Annu alized full chu rn rate 3.6% c
Slide 32: Enterprise Results
Enterprise Results prog€imus
Slide 33: Enterprise underlying revenue and direct margin
Enterprise underlying revenue (M€) & YoY 5. 7% 0. 7% 0. 9% 4. 8 % -1. 7% 0. 5% 3 . 3% 0. 8% 349 338 357 349 343 340 369 351 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 • Q1‘18 revenue supported by the growth in ICT, Advanced Business Services, Tango and especially Mobile Terminals, Enterprise un
Slide 34: Enterprise revenue variance
Q1 351 349 -4 7 -1 -2 1 1 1 +0.8% Underlying Fixed Voice Fixed Data Mobile ICT Advanced Subsidiaries Terminals & Underlying Q1'17 Services Business others Q1'18 Services • Operating in a competitive environment, Proximus’ Enterprise segment achieved a 0.8% growth in Q1’18 revenue • ICT +1.0% with a
Slide 35: Enterprise fixed voice
Fixed voice revenue (M€) & YoY variance -2 . 8% -4. 9% -5.5% -5.6% -7.7% -8.7% -9. 7% -7.1% 0 • The Enterprise segment continues to face ongoing customers 60 58 58 57 55 53 52 53 rationalization of their Fixed line connections, lower usage, technology migrations to VoIP and competitive pressure. 0 Q
Slide 36: Enterprise fixed data
Fixed data revenue (M€) & YoY variance 1.1% 1.0% -1.0% -1.6% -0.9% -2.7% -1.0% -0.8% • Q1’18 revenue from Fixed Data, consisting of Fixed Internet and, 0 63 63 62 62 62 61 62 61 for a greater part, Data Connectivity, totaled € 61m, -0.8% YoY 0 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 • Contin
Slide 37: Enterprise ICT and Advanced Business Services
Underlying ICT revenue (M€) & YoY • One-shot Product-related ICT revenue was significantly below that of 14. 2% 16. 1% 9. 5% the comparable period in 2017 1. 1% 2 . 1% -1. 3% 5. 3 % 1. 0% • Higher revenue from Security, Advanced Workplace and Outsourcing 0 0 141 services, including growing recurring
Slide 38: Enterprise mobile service revenue
Q1’18 Mobile service revenue -2.6% YoY • Lower Postpaid ARPU, driven by some one-off commercial settlements, on top of regulatory price pressure from RLAH, decrease in Roaming options, and more flat fees rather than usage- based tariffs • Further growth of Mobile customer base, +11,000 Mobile voice
Slide 39: Wholesale
Wholesale underlying revenue (M€) & YoY • Q1’18 Financials of Wholesale segment compare to high Q1 -7.3% 1.1% -3.3% 8.0% -1.6% 9.5% 10.3% -8.7% 2017, that included the reversal of the former higher FTR rates following the annulment by the Brussels Appeal Court in March 2017 on procedural grounds. 49
Slide 40: BICS Results
BICS Results
Slide 41: BICS revenue and direct margin
BICS Underlying Revenue (M€) & YoY variance For Q1’18 BICS posted € 319m revenue. -9.1% -5.6% -6.6% -6.6% -3.9% • Ongoing transition, with usage moving from Voice to Data, putting pressure -12.7% -12.9% -12.1% on financials. • BICS’s revenue variance showed further sequential improvement, supported
Slide 42: BICS non-voice
BICS - Non Voice Revenue (M€) 32.0% 25.3% 10.4% 7.5% 7.6% 7.9% • 32.0% revenue growth for non-Voice, and margin up 0.6% 0.1% 21% on steep increase in SMS A2P volumes, nearly 79 85 90 93 +180% YOY. 71 72 70 71 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 • TeleSign accelerating BICS’ strategic amb
Slide 43: BICS voice
B ICS - Voice Revenue (M€) -8,4% -8,4% -12,6% -14,5% -13,6% -17,0% -16,2% -17,4% Voice revenue under pressure, though direct 288 303 291 262 241 25 1 249 226 margin up by 16,1%, including contribution Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 of TeleSign’s authentication services. BICS - Voice
Slide 44: Additional info
Additional info • Headcount • Financial position • IFRS 15 • Shareholder structure • Pricing • CSR • Regulation • Spectrum • Contact details
Slide 45: Early leave plan and retirements
Early leave plan and retirements expected to lead What: to total outflow of about • Employees as from 60 years could opt to voluntary stop their 2,750 FTEs by 2020 active career. • 1.855 FTEs subscribed to the plan, leaving in 2016-2020, with first employees left Proximus on 1 July 2016. Financial i
Slide 46: Estimated financial impact 2018 reporting (IFRS 15)
• Under IFRS 15, as of 1 January 2018, revenue arising from customer contracts, is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer Main implications for 2018 reporting Estimated Proximus ap
Slide 47: Mobile offer addresses steep increase in data consumption
Cannot get this title right… Our mobile offer addresses the steep increase in mobile data consumption Mobile only Mobilus S Mobilus M Mobilus L 120 min 300 min Unlt min Unlt sms €15.99 Unlt sms €26.99 Unlt sms €42.99 1.5 GB 5 GB 10 GB Fav. app Fav. app Fav. app 2X €90.94 * €101.94* €115.94* Mobile d
Slide 48: Positioning Scarlet as no frills brand
Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’ Postpaid Fixed Red Hot Chili HiFive € 23 / month Internet: 50 GB Extra € 3 per block of 50 GB €8 € 18 € 28 € 15 Down 30 Mbps Up 2 Mbps 150 min 500 min Unlt min 0 min Unlt SMS Unlt SMS Unlt SMS Unlt SMS 500 MB 2
Slide 49: Dual-brand strategy: convergent all-in offerings
— Convergent all-in offerings that have evolved No frills, no convergent standard offering, low priced from discount to product features and lean cost structure TV: ~80 linear channels TV Replay 4P @ 4P @ TV bundle of choice €101.94 @ €39 TV: ~30 channels €52 1 blockbuster/month + + Fixed Voice line
Slide 50: Regulation impact on YoY variance
(EUR million) Q1 2018 2018 Estimate Direct Direct Regulation impact on YoY variance Revenue Revenue Margin Margin Overall net impact on Roaming (price and volume impact of roaming-out & roaming-in) -10 -13 ˜ -39 ˜ -40 Among which regulated price impact on -13 -13 -26 -26 Roaming-Out Fixed Terminatio
Slide 51: Spectrum: new spectrum and renewal
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 Proximus OBEL Telenet 15/03/21 1800 MHz 2 x 24.8 2 x 24.8 2 x 24.8 Proximus OBEL Telenet Unallocated 15/03/21 2100 MHz 1 x 5.4 1x5 1x5 1x5 2 x 15 2 x 14.
Slide 52: Investor relations contacts
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 52
Slide 53: 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