Proximus Sa · EURONEXT:PROX
Proximus Sa — Q1 2019 Earnings Presentation
63 slides from Proximus Sa's earnings presentation, 2019
Slide 1: Proximus Group Results Q1 2019
Proximus Group Results Q1 2019
Slide 2: 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
Slide 3: Table of Content
3 Table of Content • Group P 4 • Appendix P 40 • Consumer P 19 • Reporting Changes • Pricing • Tango • Enterprise P 29 • Spectrum • Shareholder structure • Wholesale P 36 • Headcount • Contacts • BICS P 37 Note • The financials results of Proximus Group are reported under the accounting standards IF
Slide 4: Key figures Q1
GROUP 4 Key figures Q1 +25,000 +29,000 Domestic revenue +2.2% YoY Mobile Postpaid Tuttimus & Bizz -2.2% YoY Domestic cards All-in -0.9% YoY excl. Terminals EBITDA +8,000 +7,000 € 112m Fixed Internet TV customers DM + 2.8% YoY FCF YTD’19 customers EBITDA + 1.3% YoY (€ 143M excl. acquisitions)
Slide 5: Fixed customer base
GROUP Fixed customer base 5 5 Customer Market Net adds Park base share 2,025 2,032 2,041 2,057 2,065 +41K 46.3 Broadband 15 17 YoY 46.3 % Customer growth 7 9 8 % Broadband and TV in ‘000 +2.0% supported by dual -0.3pp Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 YoY brand strategy in highly competitive setting. 1,
Slide 6: Growing Mobile customer base
GROUP Growing Mobile customer base 6 Postpaid Market share 4,831 4,838 4,842 4,838 4,824 stable YoY +25k in Q1 Mobile Cards Park (‘000, excl. 45 32 32 +134K YoY, i.e. +3.4% M2M) 25 25 Postpaid net adds 39.2 -27 Prepaid net adds -32 -39 -36 -39 Prepaid % Mobile park excl. M2M -141K YoY, i.e. -15.3% Q
Slide 7: Increasingly convergent customer base in premium family segment
GROUP Increasingly convergent customer base 7 in premium family segment +134,000 YoY Continued growth for …driving higher Tuttimus/Bizz All-in subscribers Tuttimus/Bizz All-in… 4P customer base +40,000 YoY Subscribers (‘000) HH/SO (in ‘000) 4-Play households 2,977 2,948 +0.8€ YoY Average ARPH 4P 697
Slide 8: Q1'19 Group Revenue
GROUP 8 Q1’19 Group Revenue (M€ & YoY %) 1,440 1,452 1,440 1,475 1,415 319 340 347 341 319 -0.1% YoY 1,121 1,112 1,094 1,134 1,096 Domestic revenue -2.2% YoY; -0.9% excl. Terminal sales Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Domestic Consumer: -3.1% YoY Enterprise: 1.6% YoY Wholesale: -10.8% YoY + Value accr
Slide 9: Domestic revenue by product nature
GROUP 9 Domestic revenue by product nature Q1’18: €1,121M Fixed Data / Internet ICT 9 ICT TV 3 Advanced Business Services 1 Mobile Postpaid -0.9% YoY BICS -1 Tango Q1 excl. Terminals -5 Mobile Prepaid (YoY evolution) -5 Fixed Services -5 Wholesale (incl FTR impact) -7 Other & other segment (incl. im
Slide 10: Group direct margin +1.1%
GROUP 10 Group direct margin +1.1% • Domestic +0.9%, incl. 10 -6 2 2 926 916 2 € -2M impact from lowered Fixed Termination rates + Consumer +0.3% Q1 Domestic: +0.9% +2.8% (M€) + Enterprise +4.2% Group : +1.1% - Wholesale -14.8% DM Consumer Enterprise Wholesale Other BICS DM Underlying Underlying Q1'
Slide 11: Stable Group expenses
GROUP 11 Stable Group expenses Domestic non-workforce -2.3% 462 -1 2 463 • Lower commercial spend • Ongoing cost efficiencies Domestic workforce +0.9%, slightly Q1 -0.3% +4.1% down when excluding ICT (M€) acquisitions. +0.1% BICS expenses up 4.1% YoY, driven by TeleSign workforce expenses. Q1'18 Dom
Slide 12: Domestic EBITDA +2.2% YoY
GROUP 12 Domestic EBITDA +2.2% YoY 8 -2 3 428 419 Underlying EBITDA increase driven by higher direct margin Q1 and lower non workforce (M€) expenses, partially offset by higher workforce costs. Underlying Direct Workforce Non Underlying EBITDA Margin Costs Workforce EBITDA Q1'18 Costs Q1'19 +2.2% +2
Slide 13: Group EBITDA +2.1% YoY
GROUP 13 Group EBITDA + 2.1% YoY 13 9 0 463 453 Underlying Group EBITDA increase driven by Proximus’ Domestic operations. Q1 (M€) Underlying Domestic BICS Underlying EBITDA EBITDA Q1'18 Q1'19 +2.1% Q’s (M€) 453 489 468 455 463 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Slide 14: Net income (Group share)
GROUP 14 Net income (Group share) 14 € 134m net income in Q1’19, up by 8.6% YoY • Increase in underlying EBITDA main driver. YTD (M€) +8.6% • Lower net finance cost 3 -5 2 134 following bond 9 1 -1 124 replacement by € 400M EIB loan mid-March’18, at low interest. • Q1’19 Tax expenses at €52M, ETR of
Slide 15: Capex Q1'19 stable YoY
GROUP 15 Capex Q1’19 stable YoY 323 Proximus invested 238 238 227 221 € 219M in Q1’19, Spectrum* spectrum-related Capex 219 Capex excl. spectrum (M€) capex excluded. Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Spectrum Capex excl. Spectrum * Following a law change and Proximus Luxembourg spectrum meeting the cond
Slide 16: FCF
GROUP 16 FCF € 112 M Q1’19, or € 143M excluding cash-out related to acquired subsidiaries YTD 21 143 -30 (M€) 26 112 9 -8 11 -5 3 78 6 84 FCF YTD'18 Acquisitions FCF YTD'18 Underlying Income tax Interests payments ELP beneficiaries Cash AP/AR/Inventory Other FCF YTD'19 Acquisitions FCF YTD'19 2018 n
Slide 17: Sound financial position
GROUP 17 Sound financial position 6.2 Yrs Net Debt DEC Net Debt MAR Average debt duration 2018 FCF Dividends Other 2019 Net Debt (YTD, M€) 1.79% 112 -1 2 Weighted average coupon -2,030 -2,143 Credit ratings: Standard & Poor’s A, Moody’s A1, both stable outlook Investment loans Liquidity end Q1’19: •
Slide 18: Guidance 2019
GROUP 18 Guidance 2019 2019 expectations FY18 FY19 FY19 Q119 Nearly stable Domestic Guidance metric revenue excluding Actuals Guidance Revised Guidance Actuals terminals. Domestic underlying revenue €4,460m nearly stable Domestic underlying revenue excluding terminals €4,153m nearly stable -0.9% Sta
Slide 19: Consumer results
Consumer results
Slide 20: Consumer
CONSUMER 20 Consumer -3.1% Lower mobile device sales and decreasing inbound Revenue weighing on revenue, (M€, YoY) 730 724 714 735 708 without Direct Margin impact. Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 -13.9% Cost of Margin benefitting from Sales higher digital adoption in (M€, YoY) 174 161 163 185 150 the
Slide 21: Revenue split by nature
CONSUMER 21 Revenue split by nature €M Highlights 730 -3.1% 708 Terminals: lower sales in declining reselling business of 66 -18.4% standalone mobile devices 54 31 26 Others: incl. lower customer reminder fees (following law change mid-2018) 28 28 Tango: stable revenue 223 -2.4% 218 Mobile Services:
Slide 22: Fixed Services
CONSUMER 22 Fixed Services 1,861 1,868 1,877 1,894 1,901 Internet +40,000 customers Broadband and TV customer bases improving (000) Broadband lines 15 17 thanks to dual-brand strategy. 7 9 8 +2.1% YoY Stable Fixed Services revenue with Fixed Voice Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 erosion compensated by
Slide 23: Mobile service revenue
CONSUMER 23 Mobile service revenue Lower MSR driven by Mobile service revenue (M €) & YoY variance Blended mobile ARPU (€) & YoY variance • Prepaid erosion -2.4% 23.3 • Lower inbound revenue 22.5 23.0 23.3 22.5 Stable YoY 228 230 21.0 21.5 21.8 21.1 20.9 -0.7% 223 222 218 YoY +74,000 Q1'18 Q2'18 Q3'
Slide 24: Postpaid Prepaid
CONSUMER 24 Postpaid Prepaid Stable revenue on YoY growing customer base Revenue erosion on lower base and ARPU decrease Revenue (M€ & YoY) Revenue (M€ & YoY) -0.3% -23.4% 207 211 205 20 21 19 17 203 202 15 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 ARPU (€ & YoY variance) ARPU (€ &
Slide 25: X-Play view
X-Play view
Slide 26: Growing convergence revenue drives slightly higher HH/SO revenue
CONSUMER 26 Growing convergence revenue drives slightly higher HH/SO revenue 83% Consumer revenue +0.3% generated by HH/SO X-Play HH revenue 588 590 588 590 € 590M 77 79 113 117 167 72 68 176 1-Play Mobile-only Consumer Fixed-only 168 162 2-Play Revenue Convergent 3-Play € 708M 4-Play 334 +3.9% 347
Slide 27: Continued 4-Play upselling, at higher ARPU and low churn
CONSUMER 27 Continued 4-Play upselling, at higher ARPU and low churn +2.0% 711 721 731 737 YoY 697 4-Play RGUs 3 50 00 3 00 00 growth & 2 50 00 EOP (000) 10 10 2 00 00 5 1 50 00 14 13 2.78 on average 1 00 00 5 00 0 0 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Low 4P churn +1.2% of X-Play ARPH (€) 4.1% & YoY 65.9
Slide 28: Enterprise Results
Enterprise Results
Slide 29: Enterprise
ENTERPRISE 29 Enterprise +1.6% Revenue: +1.6% YoY Revenue (M€, YoY) Higher revenue from ICT, Advanced 351 351 347 364 357 Business Services and Mobile services more than offsetting erosion in legacy services. Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 -3.9% Cost of Sales (M€, YoY) 115 113 120 110 106 Direct marg
Slide 30: Revenue
ENTERPRISE 30 Revenue Q1’19 Enterprise revenue +1.6% YoY 3 -1 -2 + Solid mobile customer 8 357 growth drives +2.3% Mobile 351 -4 2 Service revenue + ICT benefitting from the contribution of acquired companies Q1 + Advanced Business Services (M€) - Pressure on legacy Fixed +1.6% Voice - Less low-marg
Slide 31: Fixed Voice
ENTERPRISE 31 Fixed Voice Steady erosion -9.1% in Fixed Voice customer base Fixed voice revenue (M€) & YoY variance 53 51 49 49 49 + (Limited) price indexation on 1 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 January 2019 567 559 549 541 531 - Erosion in Fixed Voice park Voice line loss/gain & - Decrease in traff
Slide 32: Fixed Data
ENTERPRISE 32 Fixed Data + 1.0% Fixed data revenue +1.0% Fixed data revenue + Increasing revenue from flagship (M€) & YoY variance 61 62 62 61 62 VPN solution + Growing P2P Fiber park for business Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 customers - Ongoing outphasing and migration 134 133 133 131 131 1 53 of
Slide 33: Mobile Services
ENTERPRISE 33 Mobile Services + 2.3% Mobile service revenue Mobile service revenue (M€) & YoY variance Postpaid excl. M2M growth & EOP (000) +2.3% 1,021 1,028 1,048 999 1,010 Solid revenue growth from subscriptions 77 80 80 80 78 11 11 11 19 +4.9%YoY 7 Postpaid cards Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q1
Slide 34: ICT
ENTERPRISE 34 ICT Successful strategy of expanding portfolio, moving the company Strengthened ICT portfolio, including from pure connectivity towards digital transformation solutions for acquisition of small-sized, highly specialized companies. its professional customers. Solid revenue driver: +6.7%
Slide 35: Advanced Business Services
ENTERPRISE Advanced 35 Business Services Strong increase following the acquisition of Mediamobile in November 2018 +50.2% 7 8 10 6 5 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 About Mediamobile Mediamobile specializes in providing real-time traffic information for car navigation systems. The acquisition strength
Slide 36: Wholesale
WHOLESALE 36 Wholesale Wholesale results reflect regulation impact, with lowered Fixed Termination Rates since 01/01/19. Furthermore, the margin was impacted by the revenue erosion of traditional wholesale services, and the effect from lowered Wholesale roaming rates. The lower FTR and downward-rene
Slide 37: BICS Results
BICS Results
Slide 38: BICS segment result
BICS 38 BICS segment result +8.9% +3.1% +0.5% -0.1% -3.9% Revenue nearly stable. Revenue (M€) & YoY In line with the ongoing market variance 319 340 347 341 319 trend, BICS’ revenue mix moved further from Voice to Data. Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 +18.8% +18.5% +14.5% +3.9% +2.8% 24.7% DM/Revenue
Slide 39: Non-Voice and Voice BICS results
Non-Voice Voice BICS 39 Higher SMS A2P volumes, supported by TeleSign Voice margin supported by the development of Cloud in this growing market numbers and TeleSign Mobile Identity services +40.8% -0.5% +32.0% +27.0% -5.0% -6.1% -5.3% +18.6% +12.4% -13.6% Non Voice Voice Revenue Revenue (M€) 93 100
Slide 40: Appendix
Appendix • Reporting Changes P 41 • Pricing P 51 • Tango P 57 • Spectrum P 58 • Headcount P 61 • Shareholder structure P 62 • Contacts P 63
Slide 41: Reporting changes 2019
Reporting changes 2019 proz€imus
Slide 42: Proximus Reporting 2019
APPENDIX 42 Proximus Reporting 2019 Changes versus the 2018 reporting: 1 2 3 IFRS 15 IFRS 16 Reporting structure • All figures of 2019 and the • Applying IFRS 16 as from • Simplified Consumer comparable base of 2018 2019, opting for the revenue structure reflecting are under IFRS 15. simplified tran
Slide 43: All reported figures are under the IFRS 15 standard
APPENDIX 43 All reported figures are under the IFRS 15 standard 1 Main impact on the Consumer segment: • Shift from Services to Terminals Revenues in case of joint-offer • Timing impact: the relative standalone value of the joint offer devices is recognized when the device is sold (contract inceptio
Slide 44: IFRS 16 standard on lease accounting
APPENDIX 44 IFRS 16 standard on lease accounting 2.1 Main changes for Proximus relate to lease-in1 (cars, buildings, network, shops, …) IAS 17 : 2 models From 1. Finance Lease: in balance sheet (Capex & lease liabilities) and cost in depreciation & interest 2. Operating Lease: not in balance sheet a
Slide 45: IFRS 16 impact on performance measures
APPENDIX 45 IFRS 16 impact on Proximus’ performance measures (PM) 2.2 No restatement of the prior year was done. However, to allow for a meaningful year-on-year comparison, and the consistency of performance measures, Proximus adjusted its performance measures. 2.3 2.4 Balance sheet P&L Financial Po
Slide 46: Balance sheet changes
APPENDIX 46 Balance sheet changes 2.3 Dec-18, IAS 17 OB 2019, IFRS 16 What changed? Assets 8,671 8,956 Goodwill 2,470 2,470 Intangible assets 1,154 1,154 Property, plant and equipment 3,054 3,054 Right of use assets - 285 Non-current assets (increasing) Contract costs 116 116 • Recognition of right
Slide 47: P&L changes
APPENDIX 47 P&L changes 2.4 2019Q1, IAS 17 2019Q1, IFRS 16 What changed? EBITDA (*) 455 477 Previous operating lease expenses D&A - 255 - 276 (mainly opex) replaced by lease- EBIT 200 201 depreciation and interest Net finance expense - 11 - 11 EBT 189 189 Neglectable impact on EBT Income taxes - 52
Slide 48: Net Financial position
APPENDIX 48 Net Financial position 2.5 Dec-18, IAS 17 OB 2019, IFRS 16 What changed? Investments, cash and cash equivalents 344 344 Derivatives 5 5 Assets 349 349 Non-current liabilities1 - 2,263 - 2,475 Current liabilities1 - 234 - 307 Liabilities - 2,497 - 2,782 Lease liability increase leading to
Slide 49: Cash flow changes
APPENDIX 49 Cash flow changes 2.6 Cash flow statement 2019Q1, IAS 17 2019Q1, IFRS 16 What changed? EBITDA underlying 463 463 Interest payments of LT debts - 12 - 12 Income tax payments - 5 - 5 Change in Business working capital (excl. AP Capex) - 36 - 36 Payments to ELP beneficiaries - 15 - 15 Other
Slide 50: Reporting structure changes
APPENDIX 50 Reporting structure changes 3 Consumer segment Before Before Now Now Total Consumer revenue Other Operating Income Fixed Net Revenue Fixed Services Of Which X-Play Revenue Voice Data (Internet & Data Connectivity) Service Revenue TV From Fixed Fixed Terminals (excl. TV) From Mobile Postp
Slide 51: Mobilus/Tuttimus pricing
APPENDIX 51 Mobilus/Tuttimus pricing Including Tuttimus price increase 1 January 2019 Prices incl. VAT Mobile only NE S M Update L W XL Unlimited 1.5 GB 5 GB 10 GB Unlt. data * Unlt. sms Unlt. sms Unlt. sms Unlt. sms 120 min. Unlt. min Unlt. min Unlt. min + Unlimited Mobile data for your favourite A
Slide 52: Bizz Mobile portfolio
APPENDIX 52 Bizz Mobile portfolio Prices excl. VAT NE S M Update L W XL Unlimited 1.5 GB 5 GB 7 GB Unlt. data * Unlt. sms Unlt. sms Unlt. sms Unlt. sms 100 min. + fix Unlt. min Unlt. min Unlt. min + 600 min intl. . + Unlimited Mobile data for your favourite App Standalone price € 13 € 23 € 32 € 49 M
Slide 53: Full-digital journey
APPENDIX 53 €19.99 €24.99 Full-digital journey Worry-free connection, anytime, anywhere Pioneering in the Millennials & Gen Z segment
Slide 54: €64.99 / month millennials pack
APPENDIX 54 A pack for the A pack for specific needs the specific of millennials needs of millennials € 64.99 / month Mobile, fixed Mobile, fixed internet and TV internet and TV via Proximus via TVProximus App TV App Co-creation Co-creation with with millennials millennials
Slide 55: Scarlet Fixed portfolio
APPENDIX 55 Scarlet Fixed portfolio Positioning Scarlet as no frills brand, with very attractive pricing for ‘price seekers’ New pricing as from 1 July 19 €40 /month
Slide 56: Scarlet Mobile portfolio
APPENDIX 56 Scarlet Mobile portfolio New simplified offers as from 28 February 2019 • New simplified offers as from 28th February 2019 2 GB 3GB NEW 5GB 10€ 5GB 10€ NEW 10GB 15€ 10GB 15€
Slide 57: Tango Luxembourg
APPENDIX 57 Tango Luxembourg -3.1% Enterprise € 7M • Solid increase in service revenue, driven by a steady growth in mobile Tango Tango revenue (M €) & YoY variance postpaid base and successful Revenue execution of Fiber strategy increasing (M€) 36 35 36 39 35 Consumer the broadband base, offset by
Slide 58: Spectrum
APPENDIX 58 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 59: Spectrum auction
APPENDIX 59 Spectrum auction Reserved spectrum The whole process is postponed until after the May elections and will be left to the future new Government. Therefore, the timing and the final conditions of the auctions remain uncertain. Frequency band Total capacity Spectrum cap Spectrum reserved For
Slide 60: Spectrum auction coverage obligations
APPENDIX 60 Spectrum auction Coverage obligations Frequency band Obligations for existing operators Obligation for new entrant - 30% population after 3 years - 70% population after 1 year - 70% population after 6 years - 99.5% population after 2 years - 99.8% population after 8 years - 99.8% populat
Slide 61: Headcount
APPENDIX 61 Headcount Early Leave Plan & natural retirements leading to ~2,750 FTEs to leave Proximus over 2016- 2020 FTE evolution (gross outflow - not including hiring to cover business needs) 14,090 13,633 13,391 13,385 13,086 463 538 747 727 781 Proximus SA age pyramid (excl. employees opting fo
Slide 62: Shareholder structure
APPENDIX 62 Shareholder structure Total number of shares Free-float Belgian government 338,025,135 42% 54% Number of % shares % Voting % Dividend Number of Number of ~€ 8.3 Bn shares rights rights shares with shares with voting rights dividend rights Market Capitalisation* Belgian state 180,887,569
Slide 63: For further information
63 For further information Investor relations 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