Proximus Sa · EURONEXT:PROX
Proximus Sa — Q1 2020 Earnings Presentation
60 slides from Proximus Sa's earnings presentation, Oct 14, 2020
Slide 1: Proximus Group Results Q1 2020
Proximus Group Results Q1 2020
Slide 2: Cautionary statement
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-loo
Slide 3: Table of Content
3 Table of Content • Group P 4 • Consumer P 23 • Enterprise P 32 Notes • All figures included in this presentation are on • Wholesale P 40 ‘Underlying’ basis, allowing for a meaningful YOY comparison. • BICS P 41 • Figures are rounded. Variances are calculated from the source data before rounding, i
Slide 4: Supporting our stakeholders in difficult times
4 Supporting our stakeholders in difficult times Keeping Keeping Protecting Special focus people businesses our on critical connected connected employees sectors Free mobile to Fix & Fix2Fix Ensured business continuity by Supported video consultations constant network monitoring by partnering with D
Slide 5: COVID-19 impacting our business in several ways
5 Proximus High quality networks coping well with traffic boost COVID-19 holding strong in exceptional Majority of Proximus’ business showing good level of resilience impacting our circumstances Very sound financial position business in several ways… Internet & TV growth impacted by closed shops & l
Slide 6: Key figures Q1 2020
6 Key figures Q1 2020 €1,086 M €827 M Solid Mobile growth in Fixed net adds impacted by Underlying Underlying Domestic revenue Domestic direct margin challenging competitive COVID-19 measures. -1.0% YoY -2.4% YoY market. Data Boost +3.2 % €142 M Consumer ICT revenue (Group) Convergent Customer +1.6%
Slide 7: Adapting our consumer offers to our customer needs
7 Adapting our consumer offers to our customer needs, increasing mobile & convergent net adds and reducing postpaid churn rate Mobilus Minimus Mobile Data Boost Mobile Data Boost S: 2 GB (+33%) S: 5 GB (+67%) M: 8 GB (+33%) M: 15 GB (+50%) L: 15 GB (+50%) L: 30 GB (+50%) Postpaid Net adds Post
Slide 8: Group Underlying Revenue
8 Group Underlying Revenue (M€ & YoY %) -1.5% 1,415 1,413 1,407 1,452 1,393 317 308 -3.5% 319 329 335 YoY 1,096 1,084 1,071 1,134 1,086 -1.0% YoY Domestic Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Domestic Q1 revenue Consumer: +0.1% YoY Enterprise: -2.4% YoY Wholesale: -5.6% YoY BICS: -3.5% YoY + Growing Postpa
Slide 9: Underlying Domestic revenue by product nature
9 Underlying Domestic revenue by product nature YoY evolution Q1 2019: €1,096M 6 Terminals (Incl. Mobile Joint offers) 2 ICT 1 Fixed Services 0 Advanced Business Services - 1.0% -1 Tango -2 Mobile Prepaid -3 Others -5 Wholesale1 -9 Mobile Postpaid2 2020: €1,086M 1. Incl. mobile inbound revenues (rep
Slide 10: Fixed Services
10 Fixed Services 2,065 2,071 2,079 2,088 2,090 # Lines YoY Internet & TV base up, while Fixed Voice erodes. Broadband + 24K Growing base for 8 8 9 YoY in ‘000 6 1 Broadband and TV, in +1.2% Fixed spite of Services intense Q1 Revenue (M€) competition, Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 supported by 1,626
Slide 11: Solid Postpaid customer growth in Q1 2020
Solid Postpaid customer 11 growth in Q1 2020, supported by mobile offer # Mobile cards & net adds (in ‘000) Postpaid YoY revamp. 4,818 4,813 4,824 4,820 4,831 + 98K +2.4% 24 24 23 21 30 Prepaid -11 -26 -19 YoY Postpaid net adds -39 -29 Prepaid net adds Mobile park excl. M2M - 85 K Q1'19 Q2'19 Q3'19
Slide 12: Higher convergent revenue on progressing convergence rate
Higher convergent revenue on progressing 12 convergence rate Flat +2.4 p.p. Customer Convergence +1.1% Revenue rate ARPC (€) 552 552 71 -3.5% 69 177 -3.9% 170 44.2% 41.8% Mobile only Non Convergence % Fixed only +3.2% Convergent Convergent Convergence % revenue 303 312 55.8% 58.2% 58.1 58.7 Q1'19 Q1
Slide 13: Underlying Domestic direct margin, Underlying BICS
13 Underlying Domestic 926 -3 -10 -5 -3 0 906 Q1 direct margin, (M€) Domestic: -2.4% including a loss following regulated +0.5% international calling/texting rates Group : -2.1% and lower high-margin revenue at Enterprise. Both Consumer & Enterprise direct margin impacted by COVID-19 Q1'19 Consumer
Slide 14: Solid underlying cost reduction in Domestic operations
14 Solid underlying cost reduction in Domestic operations on lower headcount and ongoing efficiencies, on a high comparable base Q1 463 -20 -1 442 -4.9 % YoY Domestic expenses. (M€) -4.9% -1.2% Q1'19 Domestic -4.5% BICS Q1'20 -5.6 % YoY Indirect expenses 463 44 440 42 441 44 459 43 442 43 -1.2% YoY
Slide 15: Stable Q1 Underlying Domestic EBITDA
15 Stable Q1 Underlying Domestic EBITDA 428 -20 3 428 18 Q1 (M€) +0.1% YoY Underlying Domestic EBITDA Of which on strong cost reduction € -5M regulatory headwind Q1'19 Direct Workforce Non Workforce Q1'20 Margin Costs Costs Q’s +0.1% (M€) 39.4% 428 446 430 414 428 Underlying Domestic EBITDA margin i
Slide 16: Q1 Underlying Group EBITDA
16 Q1 Underlying Group EBITDA +0.3% +0.1% YoY 463 0 1 464 Q1 (M€) Underlying Domestic EBITDA +2.5% YoY Underlying BICS EBITDA Q1'19 Domestic BICS Q1'20 Q’s +0.3% (M€) 33.3% 463 484 470 453 464 Underlying GROUP EBITDA margin in Q1 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 2020 +0.6 p.p. YoY
Slide 17: Net income evolution
17 Net income evolution+0.3% YTD (€ M) Pylon Tax Effective tax provision rate = 23.75% update (re. past years) Q1 ‘19 Underlying EBITDA Incidentals D&A* Net Finance result** Tax expense Others Q1 ‘20 variance * Excluding Lease depreciations ** Excluding Lease interests
Slide 18: Proximus invested a total amount of €232M in Q1 2020
18 Proximus invested a Capex (M€) total amount of YoY increase on € 232M in Q1 2020 timing of some content contract renewals. (excl. spectrum) Best Mobile TITAN Project Fiber build Copper upgrade New Digital network platforms 4G population coverage Proactively strengthening FttH/B 96% FttC, Migratio
Slide 19: From EBITDA to FCF
19 From EBITDA to FCF (€ M) • Early leave plan refers to voluntary early leave before retirement and FFP plan to the Fit for Purpose transformation plan
Slide 20: Solid Q1 2020 FCF of €152M
20 Solid Q1 2020 FCF of € 152 M Q1’20 included about € 60M of the cash-out related to the Fit for Purpose plan, more than offset by less cash needed for Capex and a favorable YoY evolution in Business working capital. (€ M) Acquisition of non- controlling interest in Be- Mobile Group • Early leave p
Slide 21: Keeping a sound financial position
Keeping a sound financial position, with no short- 21 term dependency on debt capital market 5.2 Yr Net financial position Dec. 2019 FCF Dividends Other Net financial position Average debt duration Mar. 2020 Adjusted Net Debt* 1.8 % (YTD, M€) Weighted average coupon * Excluding Lease liabilities Cre
Slide 22: 2020 outlook reiterated
22 2020 outlook reiterated Including the company’s best estimate for the Covid-19 impact on its revenue and operations, with Impacts on the Group EBITDA expected to be compensated by Capex adjustments. Proximus reiterates its intention to return over the result of Guidance Actuals Guidance Actuals 2
Slide 23: Q1 Consumer highlights
consumer 23 Q1 Consumer highlights • Stable first quarter revenue, including early signs of COVID-19 • Convergent revenue up by 3.2%, driven by the uptake of EPIC Combo and Minimus. • Higher Fixed services revenue, supported by Internet and TV, including the benefit from e-Press and the 1 January 20
Slide 24: Consumer financials
consumer 24 Consumer financials +0.1% Revenue (M€, YoY) 664 661 657 689 665 Stable Q1’20 revenue Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 International calling/sms EU +2.3% regulation and some initial Cost of Sales COVID-19 impact, off-set by 150 151 150 185 154 (M€, YoY) Convergent revenue, ePress contributio
Slide 25: Q1 revenue by product nature
consumer 25 Q1 revenue by product nature Highlights Terminals continued sales of high-end Mobile Joint €M +0.1% Offers a.o. in extension of Proximus’ year-end YoY campaign 664 665 +11.5% Other revenue: lower reconnection, reminder & 54 60 26 23 installation fees and lower loyalty revenues 28 28 174
Slide 26: Fixed Services
consumer 26 Fixed Services 1,901 1,908 1,912 1,921 1,921 Broadband Higher YoY Internet & TV revenue, supported by e- Internet Press and limited 1 Jan’20 price increase, partially customers * +20,000 YoY 8 7 9 0 (‘000) 5 +1.1% off-set by eroding Fixed Voice revenues Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Grow
Slide 27: TV and Internet growth affected by closing of shops
TV and Internet growth affected by the closing consumer 27 of our shops and especially by the limited customer installations. As of mid-March Customer installations limited Covid-19 to urgent interventions only. impacts on Net-Adds Nearly 7,000 Internet customers could not be connected, leaving the
Slide 28: Mobile services
consumer 28 Mobile services Mobile service revenue (M€) & YoY variance Mobile park -5.2% MSR Driven by ARPU decrease: - 5.2% 19% • International calling/sms Prepaid (EU regulation) 3,465 K 174 165 Park* • lower out of bundle 81% (revamped offer + COVID-19 customer gift) Postpaid Q1'19 Q1'20 • Lower
Slide 29: Postpaid Prepaid
consumer 29 Postpaid Prepaid Customer growth offset by ARPU pressure Revenue erosion due to lower park & lower usage Revenue (M€ & YoY) Revenue (M€ & YoY) -4.5% -15.0% 162 164 167 160 155 15 12 11 11 10 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 ARPU (€ & YoY variance) ARPU (€ & YoY
Slide 30: Tuttimus, Minimus and EPIC combo drive convergent revenues
consumer 30 Tuttimus, Minimus and EPIC combo offers, driving convergent revenues up by 3.2% 83% Customers (in ‘000) Convergent Revenue up Consumer revenue Driven by Minimus/Epic Combo/Tuttimus/Bizz All in generated by X-Play Customers* 3,157 3,127 Tuttimus € 552M 710 Minimus 4P 713 Stable YoY 755 76
Slide 31: Convergent rate progressing to 58.2%
consumer 31 Convergent rate progressing to 58.2% Growing convergent Park (‘000) 58.2% 101.5€ 2.61 RGU 4.9% 1,037 1,079 convergence rate 4P ARPC on average 4P full churn 86 +0.8 p.p. YoY 81 2.78 RGU 94.7 246 280 2P Conv YoY +42,000 convergent customers € on average 3P Conv 3P Convergent ARPC +1.0% Yo
Slide 32: Q1 Enterprise highlights
enterprise 32 Q1 Enterprise highlights • Early signs of Covid-19 impact affecting Mobile & Fixed services • Highly competitive Enterprise market puts pressure on pricing. • Erosion in legacy Fixed Voice and Fixed Data connectivity. • Good growth in Mobile base, offset by pricing pressure & impact tr
Slide 33: Enterprise
enterprise 33 Enterprise -2.4% Revenue Revenue -2.4% YoY, 351 343 337 367 343 Fixed Voice erosion and Mobile (M€, YoY) pricing pressure more than offsetting ICT growth Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 +1.3% Cost of Direct Margin -4.1%, Sales following the loss of high- 110 102 106 128 112 margin revenu
Slide 34: Q1 revenue by product nature
enterprise 34 Q1 revenue by product nature Ongoing move from Telecom to ICT services Q1 2019: €351M Q1 2020: €343M 14 10 44 12 14 49 10 10 Fixed Voice Fixed Data 42% ICT/ABS Postpaid 60 in total 62 ICT Enterprise revenue 132 ABS 134 +2pp YoY Terminals Others (incl Tango) 73 71
Slide 35: Fixed Voice
enterprise 35 Fixed Voice -9.4% Ongoing erosion in Fixed Voice Fixed voice revenue customer base 49 47 45 45 44 (M€) & YoY variance Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 + (Limited) price indexation on 1 January 2020 - Erosion in Fixed Voice park 531 519 509 500 489 - Decrease in traffic per line Voice line
Slide 36: Fixed Data
enterprise 36 Fixed Data Revenue growth Fiber-based Data Connectivity, eroding legacy services. -2.3% + Growing Fiber park Fixed data* revenue - Ongoing legacy Data outphasing & more 62 61 61 62 60 attractive customer pricing in a (M€) & YoY variance competitive market Q1'19 Q2'19 Q3'19 Q4'19 Q1'20
Slide 37: Mobile Services
enterprise 37 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) -2.5% 1,053 1,059 1,063 1,072 +2.3% YoY 1,048 Postpaid cards 73 75 74 72 71 19 * 5 6 5 8 Q1'19 Q2'19 Q3'19
Slide 38: ICT
enterprise 38 ICT +1.8 % ICT revenue (M€) & YoY YoY revenue +1.8% 152 • Higher revenue from professional services such 132 128 126 134 as Security and hybrid Cloud solutions Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 • Specialized ICT companies, provide support by bringing digital transformation solutions for pr
Slide 39: Advanced Business Services
enterprise 39 Advanced Business Services Stable revenues. ABS includes revenue from Be-Mobile’s mobility services, for the first quarter fully organic, and Proximus convergent solutions. €M 11 10 10 10 9 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20
Slide 40: Wholesale
wholesale 40 Wholesale Revenues & Direct margin declining YoY, resulting from lower mobile inbound & wholesale roaming revenues, reinforced by COVID-19. Revenue trend improved from prior quarters following annualization of regulated decrease in Fixed Termination Rates. -5.6% Revenue 95 98 92 92 (M€,
Slide 41: Q1 BICS results
bics 41 Q1 BICS results • Strong volume increase in SMS A2P and roaming in the first quarter of 2020. • Impact from partial insourcing by MTN accelerated in Q1 2020. • Direct margin of EUR 79 million, up by 0.5% YoY. • Ebitda of EUR 36 million, up by 2.5% YoY. Ebitda margin progressed to a solid 11.
Slide 42: BICS P&L
bics 42 BICS P&L -3.5% Revenue mix moving further from Voice to Data. Revenue (M€) 319 329 335 317 308 Direct Margin impact from & YoY variance accelerated insourcing by Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 MTN off-set by strong performance at TeleSign, +0.5% reinforced by lower expenses. No negative COVID
Slide 43: Non-Voice Voice
bics 43 Non-Voice Voice Benefitting from increasing messaging volumes, following Continued its eroding trend coming mainly from strong TeleSign A2P* performance, especially in the volumes, accentuated by lower unit revenue (lower authentication business. termination rates, a less favorable destinati
Slide 44: Our societal impact @Proximus
44 Our societal impact @Proximus The COVID-19 pandemic has been a defining moment for the Telecom sector, underlining our societal responsibility and reinforcing our belief in Proximus’ sense of purpose to open up a world of digital opportunities so people live better and work smarter.
Slide 45: Doing business with a heart for sustainability
45 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 46: Our company sense of purpose, Our societal impact ambition
group 46 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 47: We are committed to making a societal impact
47 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 48: Appendix
appendix 48 Appendix • Tango Luxembourg P49 • Regulation impacts P 50 • Spectrum P 51 • From reported to underlying P 52 • Pricing information P 53 • Shareholder structure P 59 • Contact information P 60
Slide 49: Tango Luxembourg
appendix 49 Tango Luxembourg Telecom brand of Proximus Luxembourg SA Q1 2020: €34M Enterprise Consumer 6 Stable YoY, despite reduced Tango visitor roaming revenues. Revenue 35 32 35 39 34 Revenue performance secured (M€) through continued customer 28 growth in an intense Q1'19 Q2'19 Q3'19 Q4'19 Q1'2
Slide 50: Regulation impacts
appendix 50 Regulation impacts 1st Quarter (YoY variance in EUR million) 2020 International regulation: • Since 15 May 2019: 0.19€ct/min and 6€ct/SMS Revenue -5 • Outlook 2020: Est. FY’20 impact of international regulation: International calling -5 €-7M on revenue; €-7M Margin Direct Margin -5 Inter
Slide 51: Spectrum
appendix 51 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 Telen
Slide 52: From reported to underlying figures
appendix 52 From reported to underlying figures GROUP GROUP Revenue EBITDA (EUR million) Q1 '19 Q1 '20 Q1 '19 Q1 '20 Reported 1,417 1,393 477 495 Lease Depreciations 0 0 -21 -20 Lease Interest 0 0 0 -1 Incidentals -2 0 7 -11 Underlying 1,415 1,393 463 464 Incidentals -2 0 7 -11 Early Leave Plan and
Slide 53: Mobilus/Tuttimus pricing
appendix 53 Mobilus/Tuttimus pricing Data boost of 1 January 2020 NEW *FUP: BE: 30 GB at full speed, then 512 Kbps Mobilus 5G Unlimited of 1 April 2020 EU: 21 GB at full speed, then 0.0042€/MB **FUP: EU 50GB at full speed, then 0,0042€/MB S M L XL 5G + Mobile only: Unlimited Unlimited Mobilus 2 GB U
Slide 54: Bizz Mobile portfolio
Bizz Mobile portfolio appendix 54 Including data boost 1 February 2020 and new Bizz Mobile 5G International on 4 May 2020 *FUP: BE: 35 GB at full speed, then 512 Kbps EU: 25 GB at full speed, then 0.0035€/MB **FUP: EU: 50GB at full speed, then 0,0035€/MB Bizz Mobile Bizz Mobile 5G Bizz Mobile S Bizz
Slide 55: Mobile offer details
appendix 55 *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 56: Digital native, Full experience
appendix 56 Digital native Full experience 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 performan
Slide 57: Fixed portfolio
appendix 57 fixed portfolio Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’
Slide 58: Mobile portfolio
appendix 58 mobile portfolio Since 27 Feb: • Red has 300 min in bundle (iso 150 min) • Data option 5€ is now 1.5 GB (iso 1 GB)
Slide 59: Shareholder structure
appendix 59 Shareholder structure Total number of shares Free-float Belgian Government Market Capitalization* Dividend yield* 338,025,135 42% 54% ~€ 6.7Bn ~5.7% Number of shares Number of shares Number of shares % shares % Voting rights % Dividend rights with voting rights with dividend rights Belgi
Slide 60: For further information…
appendix 60 For further information… Investor Relations Call: +32 2 202 82 41 +32 2 202 62 17 E-mail: [email protected] Proximus Investor Relations website : www.proximus.com/en/investors Nancy Goossens Eline Bombeek Investor Relations Director Investor Relations Manager