Proximus Sa · EURONEXT:PROX
Proximus Sa — Q3 2023 Earnings Presentation
46 slides from Proximus Sa's earnings presentation, Oct 27, 2023
Slide 1: Proximus Group Results presentation Q3 2023
1 Proximus Group Results presentation Q3 2023 27 October 2023 Guillaume Boutin, CEO Follow the webcast here. To ask a question, register here for the Q&A.
Slide 2: Cautionary statement
2 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
3 Agenda • Highlights Q3 • Execution bold2025 • Financial & Operational performance • Outlook 2023 • Q&A
Slide 4: Highlights Q3
4 Highlights Q3
Slide 5: Guidance raise driven by outstanding commercial momentum
5 Guidance raise driven by outstanding commercial momentum driving strong Domestic revenue and faster positive inflection in EBITDA trend Revised Excellent Strong domestic revenue growth FY 2023 guidance commercial momentum driven by Services revenue ✓ Domestic revenue improved to ‘between +3.5% Rev
Slide 6: bold2025 foundation year fully on track
6 bold 2025 foundation year fully on track Strong execution, with the right strategy in place Domestic International strategy already building blocks for accelerated delivering growth in place Act for an inclusive society Roll out #1 gigabit & be sustainable network for Belgium in everything we do ✓
Slide 7: Increasing Fiber footprint to 26% in 133 cities
7 7 Increasing Fiber footprint to 26% as of end-September 2023 Proximus and partners deploying Fiber in 133 cities BIPT announces 6-month window to find collaboration in Fiber Proximus, strong believer in Fiber collaboration and co- investment framework in Belgium ✓ BIPT confirms it will assess any
Slide 8: Nearing 1.6M Homes and Businesses passed
8 Nearing 1.6M Homes and Businesses passed at end-September Filling rate increasing to 26% 1,579k Fiber Homes & +96k Fiber Homes & 26% Businesses Passed Businesses Passed in Q3 Network filling rate* (in K, total base) (in K, additions in the period) 41% 158 1,579 26% 11 1,483 4.2% 3.0% 1,373 1,282 2
Slide 9: 353k activated Fiber lines by close of Q3 2023
9 353k activated Fiber lines by the close of Q3 2023 Strong customer demand for Fiber, migration rate of 70% Total park & net adds1 (in K) 353 322 Increasing Fiber share Lower churn 288 in total acquisitions levels vs Copper 252 +7pp 220 36 34 27 31 31 >30% 2 Q3’22 Q3’23 70% 69% ARPC in €3 65% +€7 Q
Slide 10: Proximus recognized for mobile network quality
10 Proximus is recognized for its mobile network quality which is set to further improve ✓ RAN swap to Nokia & network consolidation reaching cruise speed, expecting >40% of 4600 Mobile sites swapped by year-end. ✓ Move of Core network to Ericsson ongoing, key enabler for future 5G standalone servic
Slide 11: National wholesale services agreement with new entrant
11 National wholesale services agreement with new entrant Proximus ensures best position to compete Exclusive 5-year agreement with Digi/Citymesh to offer Mobile wholesale access Technically, wholesale network to be ready mid-2024 Reinforces Proximus’ strong strategic position to compete, complement
Slide 12: Only operator in Belgium to offer Google Pixel
12 Only operator in Belgium to offer Google Pixel Pioneering device offering Can you keep a secret?
Slide 13: Clarence, disconnected sovereign cloud joint venture
13 Clarence, the joint venture of Proximus Luxembourg & LuxConnect, for a disconnected sovereign cloud ✓ State-of-the-art disconnected sovereign cloud solution, based on Google Cloud technology. ✓ Guaranteeing confidentiality and security of most sensitive information. ✓ Respecting highest ethical s
Slide 14: Route Mobile transaction progressing well
14 Route Mobile transaction progressing well Deal rationale Closure expected end Q1’24 Deal rationale Expanding in Fast-growing CPaaS market 3-Year ambition* Critical scale and leading position in global ~2bn 13-15% 50-75% CPaaS and DI markets Highly complementary product portfolios and geographical
Slide 15: Our purpose, at the heart of our ESG strategy
15 Our purpose, at the heart of our ESG strategy …a connected world… …that people trust… …so society blooms. Building the best Ensuring cybersecurity for Going all in in the gigabit network for Belgium our customers fight against global warming Developing digital solutions Supporting Europe in Inves
Slide 16: Financial & Operational performance
16 Financial & Operational performance
Slide 17: Domestic
17 Domestic
Slide 18: Outstanding commercial performance in Mobile and Fiber
18 Domestic 18 Outstanding commercial performance on combined success of Mobile and Fiber product superiority Postpaid Internet base 2,251K; TV base 1,682K; Postpaid base 4,935K; Fixed Voice 1,690K; +44k YoY - 36k YoY + 160k YoY -173k YoY +2.0% YoY -2.1% YoY +3.4% YoY -9.3% YoY Net adds; +27 +5 Grou
Slide 19: Residential revenue Q3'23 up by +5.5% YoY
Residential 19 Residential revenue Q3’23 up by +5.5% YoY Services revenue growth improving to +6.2% YoY Residential revenue (€M, YoY ) • Customer Services revenue +6.2% 5.9% 5.5% 3.0% 4.2% ✓ Excellent customer growth for 0.7% Mobile postpaid (Q3 +49,000) and 585 585 601 570 576 59 Internet (Q3 +10,0
Slide 20: Growing Convergent base and higher ARPC
Residential 20 Growing Convergent base and higher ARPC driving Residential customer services revenue increase +6.2% Customer Customers (in K) +6.1% ARPC (overall, €) Growing Convergent base: Supported by price indexations , services revenue (in €M) Incl. +10.0% Convergent revenue + 5.7% YoY upsell t
Slide 21: Successful value management supported by product superiority
Residential 21 Successful value management supported by product superiority Strong ARPC, managed churn and accelerated customer growth Convergent Convergent + Fixed only + Mobile only Sustaining a Price rises having While driving Empowering high positive customer only constrained meaningful ARPC pac
Slide 22: Business revenue grows +4.1% YoY
Business 22 Business revenue grows +4.1% YoY mainly driven by outstanding Services revenue growth Business revenue (€M, YoY ) Q3 revenue 6.2% 3.7% 4.1% 2.9% 4.1% Services revenue +3.4%, Solid growth in IT Services, Fixed Data and Mobile Services outpacing a moderating Fixed Voice erosion 497 487 482
Slide 23: Solid continued B2B Services revenue growth
Business 23 Solid continued B2B Services revenue growth in Q3 IT Services, Fixed Data and Mobile growth outpacing mitigated Fixed Voice erosion Business Services revenue (€M) Q3 +3.4% 394 408 +10.2% IT Services driven by growth in Cloud & +10.2% Security, Smart Network, Smart Mobility and Advanced 9
Slide 24: Wholesale Q3 Services revenue -1€M
Wholesale 24 Wholesale Q3 Services revenue – 1€M continued decline in interconnect revenue Wholesale revenue (€M, YoY ) • Q3 Fixed & Mobile Services revenue -0.7% -4.1% • -3.2%: 72 -8.1% -10.7% -9.0% > Annualization of a large contract 69 62 67 66 negatively impacting revenue > Higher visitor roamin
Slide 25: Sustained strong Domestic revenue growth
25 Domestic 25 Sustained strong Domestic revenue growth, +4.3% YoY revenue from Services up by +4.6% YoY Residential and Revenue Q3 (underlying, €M) Business Services 4.3% delivering strong revenue growth 8 1,173 14 28 -1 1,125 +4.6% Services revenue Q3’22 Residential Business Wholesale Non-Services
Slide 26: Continued cost efficiency delivery moderates inflation effect
Domestic 26 Continued cost efficiency delivery moderates inflation effect Customer opex increases driven by strong commercial momentum Q3 OPEX (management view, underlying, €M) 10.3% 461 418 Domestic Opex (€M) Q3 10.3% 33 461 11 418 Q3’22 WF Non-WF Q3’23 Q3’22 Lower Inflation Customer Transformation
Slide 27: Efficiencies on track with bold2025 ambition
Domestic 27 Efficiencies on track with bold2025 ambition Wage and energy inflation mitigating, growth related Opex increasing Efficiencies Inflationary costs Customer Opex delivered mitigating increasing Efficiencies have lowered Wage inflation impact YoY, €M the Q3 2023 Opex by >20€M # inflation-ba
Slide 28: Domestic EBITDA trend sequentially improved
28 Domestic 28 Domestic EBITDA trend sequentially improved strong Direct Margin growth and mitigation of inflationary and volume impacts EBITDA Q3 (underlying, €M) -0.7% 11 40 33 426 423 Q3’22 Direct Margin Workforce costs Non-Workforce costs Q3’23
Slide 29: International
29 International
Slide 30: BICS EBITDA remaining robust against high comparable base
30 BICS 30 BICS EBITDA remaining robust against high comparable base Revenue decrease had limited impact on Direct Margin Enterprise Telco 20.4% -10.1% 16.4% 7.1% revenue: revenue: Revenue (€M, YoY ) in CC -5.5% YoY -15.3% YoY -1.1% 307 311 -13.3% 307 High comparable base with 2022 267 262 266 63
Slide 31: Telesign Q3 revenue +5.2%, EBITDA turning positive
31 Telesign 31 Telesign Q3 revenue +5.2%, EBITDA turning positive Continued growth for both Digital Identity and Communication Revenue (€M, YoY ) +13.4% 61.5% in CC Digital identity growth driven by 44.0% 19.5% expansion of customer base outside 18.9% 5.2% the U.S. Communication positively impacte
Slide 32: Group
32 Group
Slide 33: Group EBITDA nearly stable (-0.4%)
33 Group 33 Group EBITDA nearly stable (-0.4%) Direct Margin growing, inflationary pressure starting to moderate Revenue Direct Margin 4.4% 1.1% 49 40 2 2 980 7 2 1,527 1,510 939 -3 -41 +4.3% -10.1%* +13.4%* +4.8% -1.4%* +25.3%* Q3’22 Domestic BICS Telesign Others** Q3’23 Q3’22 Domestic BICS Telesig
Slide 34: Investments tracking on plan to be around 1.3€bn
34 Group 34 Investments tracking on plan to be around 1.3€bn by year-end YTD-September Capex of 904€M Group Capex €M, excl. spectrum & football rights • Proximus Fiber build volumes reducing +7.5% • Fiber customer termination and activation cost 904 rising 841 • Other capex relates to IT , content t
Slide 35: Q3'23 adjusted FCF of +64€M
Group 35 Q3’23 adjusted FCF of +64€M, YTD September -35€M Tax impacts, lower EBITDA and equity injections partially offset by favorable BWC (€M) 13 82 69 -34 74 15 -35 -30 -120 -45 -80 -21 FCF Acquisitions FCF Underlying Interest on BWC Equity Other FCF Acquisitions FCF YTD’22 2022 YTD’22 Ebitda Tax
Slide 36: Managing successfully maturity and average coupon
Managing successfully maturity and average coupon Group 36 Hedges will allow to effectively refinance 2024 and 2025 maturities in line with current average finance cost of circa 2% Debt maturity schedule (€M) Credit ratings S&P BBB+ (stable outlook) ~35% in next 2yrs ~65% in ≥ 5yrs Moody’s A2 (stabl
Slide 37: Upward revision of 2023 guidance
Group 37 Upward revision of 2023 guidance Better than expected Domestic revenue growth, combined with cost control Outlook Guidance Outlook FY 2023 Dividend over Dividend over 2022 2023 result result FY2022 YTD 2023 FY 2023 metrics Revised 27 Oct 2023 Intention to pay annual gross dividend AGM appro
Slide 38: Conclusion
38 Conclusion Sustained outstanding commercial momentum, driving revenue growth Inflation impact moderates, and realizing significant cost efficiencies Well positioned for ambitioned Readying for Digi-launch & secured Wholesale revenue/ebitda growth track Strong execution, with the right strategy in
Slide 39: Q&A
39 Q&A To ask a question, join the conference call → Register here for the Q&A to receive your dial-in details.
Slide 40: Appendix
40 Appendix
Slide 41: From reported to underlying – EBITDA adjustments
41 Appendix 41 From reported to underlying – EBITDA adjustments Q3’22 Q3’23 469 460 458 -20 2 453 9 -21 24 -2 3 Reported Lease Lease Transformation Acquisitions, Litigation / Underlying Reported Lease Lease Transformation Acquisitions, Litigation / Underlying depreciations interest mergers and regul
Slide 42: EBITDA conversion to FCF YTD 23
Appendix 42 EBITDA conversion to FCF YTD 23 (€M) 1,345 1,336 -9 -75 -51 -1,099 -64 -22 -60 -35 -45 -80 Reported Adjustments Underlying BWC Cash Tax payments Interest Early Leave Equity FCF Acquisitions FCF Ebitda Ebitda Capex payments Plan/FFP Plan injections in YTD’23 2023 YTD’23 YTD’23 YTD’23 Fibe
Slide 43: Net income (Group share)
Appendix 43 Net income (Group share) (€M) -27.4% 369 -34 -28 -8 27 1 268 -59 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
Slide 44: Adjusted Net Financial Position (excl. lease liabilities)
Appendix 44 Adjusted Net Financial Position (excl. lease liabilities) (€M) YTD 23 Net financial Net financial position position EOP 2022 Free Cash Flow Dividends Other* YTD 2023 -2,758 -80 18 -226 -3,046 * Mainly remeasurement to fair value of cash flow hedge instrument for future LT debt, net of de
Slide 45: Shareholder structure
Appendix 45 Shareholder structure Status 30/09/2023 Total number of shares Free-float Belgian Government Market Capitalization Dividend yield 338,025,135 42% 54% ~€ 2.5Bn ~15.5% Number of shares Number of shares Number of shares % shares % Voting rights % Dividend rights with voting rights with divi
Slide 46: Contact Investor Relations
46 Contact Investor Relations Call: Proximus Investor +32 2 202 82 41 E-mail: Relations website: +32 2 202 62 17 [email protected] www.proximus.com/en/investors