Royal KPN NV · EURONEXT:KPN
Royal KPN NV — KPN — Q1 2021 Earnings Presentation
28 slides from Royal KPN NV's earnings presentation, Apr 30, 2021
Slide 1: Q1 2021 results
Q1 2021 results 30 April 2021 kpn. The network of the Netherlands
Slide 2: Safe harbor
Safe harbor Alternative performance measures and management estimates This financial report contains a number of alternative performance measures (non-GAAP figures) to provide readers with additional financial information that is regularly reviewed by management, such as EBITDA and Free Cash Flow (‘
Slide 3: Highlights Q1 2021
Highlights Q1 2021 Mass-market segments seeing encouraging base and service revenue trends Business segment seeing improving revenue developments Fiber rollout well on track, announced JV with APG Mobile network recognized as best in the Netherlands 1 Adj. EBITDA AL flat on underlying basis 2 Cost s
Slide 4: Accelerate to grow supported by three key pillars
Accelerate to grow supported by three key pillars Three strategic pillars… …to support our ambition to 1. Leverage & expand superior networks • Covering the Netherlands through fiber • Low latency services via 5G and edge computing Connect the Netherlands to a sustainable future • Leading the Dutch
Slide 5: Expand superior network: Fiber rollout well on track
Expand superior network: Fiber rollout well on track Continuously expanding fiber footprint Strong FttH activation rate Successful copper phase out homes passed, k homes activated, k +106 +76 +73 +112 2.784 2.890 +32 +42 +46 +77 1.484 6 pilot areas 2.672 1.361 1.407 2.523 2.599 1.287 1.319 Q1 2020 Q
Slide 6: Joint venture with APG to further accelerate fiber rollout
Joint venture with APG to further accelerate fiber rollout 2.8m HP Ambition to jointly cover NL through fiber2 ~80% Scope KPN existing FttH footprint (FY 2020) ~75% ~55% 2.5m HP planned FttH rollout ~65% (2021-2025)1 >50% 31% 34% 2019 2020 2023 2025 2026 KPN FttH footprint Additional JV footprint ~6
Slide 7: B2C: Further improvements in base and underlying revenue trend
B2C: Further improvements in base and underlying revenue trend Key take-aways Service revenue trend (€ m) • Growth in Fixed-Mobile revenues driven by higher base and ARPA • Mobile service revenue trend improved markedly (-0.7% y-on-y), 465 463 466 466 457 2 decline fully driven by continued pressure
Slide 8: B2C: Successful strategy underpinned by encouraging KPI developments
B2C: Successful strategy underpinned by encouraging KPI developments Positive Fixed-Mobile net adds (k) Improving Fixed-Mobile ARPA y-on-y (€) Increasing service revenues 6 81 81 81 1 3 4 4 80 80 Fixed-mobile & 1 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 househo
Slide 9: B2B: Revenue pressure largely driven by migrations and COVID-19
B2B: Revenue pressure largely driven by migrations and COVID-19 Key take-aways Service revenue trend (€ m) • SME: growth in Broadband & Networking Services and IT Services offset by lower Mobile and Fixed Voice revenues 427 2 422 414 428 411 • LCE: lower revenues from Access & Connectivity and IT Se
Slide 10: B2B: On track to stabilize SME service revenues by end 2021
B2B: On track to stabilize SME service revenues by end 2021 Finalizing customer migrations1 and cross-sell opportunities… …fueling SME service revenue stabilization by end 2021 (€ m) 141 141 134 135 133 1 Q1 2020 82% 1 Q1 2021 89% Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 ~25% of KPN EEN base in tripl
Slide 11: Wholesale: Sustainable growth from open access model
Wholesale: Sustainable growth from open access model Key take-aways Service revenue trend (€ m) • Wholesale revenues increased, driven by broadband 65 61 66 55 62 55 60 58 63 58 • Added +22k broadband lines and +30k postpaid customers 35 34 36 33 36 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Broadband
Slide 12: ESG milestones and ambitions: aiming for net zero emissions by 2040
ESG milestones and ambitions: aiming for net zero emissions by 2040 Important milestones crossed… …and an ambitious agenda Carbon neutral >30% women in Carbon neutral for own operations senior management without offsets 2015 ü 2023 2030 2011 ü 2020 ü 2025 2040 100% >30% gender ~100% Net zero CO₂e em
Slide 13: Deliver Financial ambitions
Deliver Financial ambitions
Slide 14: Financial performance impacted by one-off correction
Financial performance impacted by one-off correction Adjusted revenues Adj. net indirect opex savings Adjusted EBITDA AL Key Q1figures for Q4 2019 adjusted and FY 2019-2.9% revenues are noty-on-y corrected for Q1 2021 Q1 2021 Q1 2021 impact of divestments (NLDC, International Network 1 • -1.2% excl.
Slide 15: On track to grow mass-market service revenues by end 2021
On track to grow mass-market service revenues by end 2021 Adjusted revenues (€ m) Δ y-on-y Mass-market service revenues moving in the right direction (€ excl. one off / divestment m) Δ y-on-y excl. one off Q1 2020 1,329 945 937 943 946 928 2 151 149 157 159 160 +6.4% Consumer -10 8 -0.3% 141 141 134
Slide 16: Cost savings run rate on track
Cost savings run rate on track Δ y-on-y Adjusted EBITDA AL (€ m) excl. one off / divestment New cost savings program Q1 2020 575 off to a solid start 1 Adj. Revenues -39 8 15 -1.2% € 21m Direct costs 0 -0.2% Personnel exp. 24 -9.7% IT/TI exp. 2 -2.5% cost savings 2 Other opex 3 -4.8% in Q1 2021 Leas
Slide 17: Reaping the benefits from rigorous working capital management
Reaping the benefits from rigorous working capital management Effect delta Working capital (€ m) Q4 2020 Q1 2021 working capital Higher prepayments and accrued Current assets income driven by payments related to Inventories 47 44 +3 product licenses and roaming in Wholesale Trade and other receivabl
Slide 18: Strong underlying cash generation
Strong underlying cash generation (€m) Q1 2020 Q1 2021 Δ y-on-y Adjusted EBITDA after leases 575 568 -1,3% As % of adj. revenues 43,3% 44,0% Capex -278 -321 15% Operational Free Cash Flow 297 247 -17% As % of adj. revenues 22,4% 19,1% Cash restructuring -22 -8 -62% 8 Lower Operational Free Cash Flow
Slide 19: Robust liquidity position, committed to investment-grade credit profile
Robust liquidity position, committed to investment-grade credit profile 11,0x 8,7x 9,3x 9.2x 9,9x Robust liquidity… €m 1.250 1.864 2.4x 2,2x 2,3x 2,3x 2,3x 614 €m 5.759 5.063 6.154 6.376 6.197 5.835 5.221 5.248 5.584 5.332 Cash & short RCF Total liquidity end term investments1 Q1 2021 696 907 792 86
Slide 20: 2021 outlook and 2023 ambitions reiterated
2021 outlook and 2023 ambitions reiterated Achievements Outlook Ambitions FY 2020 FY 2021 FY 2023 Adjusted EBITDA AL € 2,320m ~€ 2,345m >€ 2,450m Capex € 1,147m € 1,200m € 1.1-1.2bn Free Cash Flow € 765m ~€ 765m >€ 870m € 13.6 cents Progressive dividend Regular DPS € 13 cents +4.6% y-on-y +3-5% annu
Slide 21: Closing remarks & Q&A
Closing remarks & Q&A Mass-market segments seeing encouraging base and service revenue trends Business segment seeing improving revenue developments Fiber rollout well on track, announced JV with APG Mobile network recognized as best in the Netherlands Adj. EBITDA AL flat on underlying basis Cost sa
Slide 22: Accelerate to grow
Accelerate to grow
Slide 23: Appendices
Appendices I Tax II Debt portfolio III Treatment of hybrid bonds IV Spectrum
Slide 24: I: Tax Q1 2021
I: Tax Q1 2021 P&L Cash flow Regions (€ m) Q1 2020 Q1 2021 Q1 2020 Q1 2021 The Netherlands -30 -40 - -10 Other - - - - Total reported tax -30 -40 - -10 Of which discontinued operations - - - - Reported tax from continuing operations -30 -40 - -10 Effective tax rate continuing operations 21,1% 22,3%
Slide 25: II: Debt portfolio
II: Debt portfolio Nominal debt by type1 Nominal debt by currency1 Fixed vs. floating interest1 Debt redemption profile2 (€ bn) 1.1 6% 1,0 14% 15% 25% 0,6 0,6 0,7 7% 23% 0,5 0,4 0,5 0,5 63% 0,3 0,3 72% 75% ’21 ’22 ’23 ’24 ’25 ’26 ’27 ’28 ’29 ’30 ’31 ’32 Eurobonds EUR Fixed Global bonds GBP1 Floating
Slide 26: III: Treatment of hybrid bonds
III: Treatment of hybrid bonds KPN & Credit rating agencies IFRS Rating agencies recognize hybrid bonds as EUR tranche is a perpetual instrument, accounted for as equity 50% equity 8 Coupon payments treated as equity distribution (dividend), 50% debt hence not expensed through P&L, not included in F
Slide 27: IV: Spectrum in the Netherlands
IV: Spectrum in the Netherlands 700MHz VodZig KPN T-Mob 2 x 30 (Paired) 2 x 10 2 x 10 2 x 10 800MHz T-Mob VodZig KPN 2 x 30 (Paired) 2 x 10 2 x 10 2 x 10 900MHz VodZig KPN T-Mob 2 x 35 (Paired) 2 x 10 2 x 10 2 x 15 1.4GHz VodZig KPN T-Mob 1 x 40 (Unpaired) 3x 5 3x 5 2x 5 1.8GHz KPN VodZig T-Mob 2 x
Slide 28: KPN Investor Relations
KPN Investor Relations ir.kpn.com