Highlights on results

Transcription

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2 Highlights on results Excellent financial performance Fixed revenue decreased by 0.5% yoy, EBITDA margin increased to 31.6% Growth in internet, TV and ICT services more than compensates for declining traditional voice Proximus limited its yoy revenue decrease to 3.8% Excluding regulatory impacts, revenue increased slightly by 0.2% ICS revenue increased 2.3%, EBITDA increased by 62% to EUR 38 million Group Net Income increased 13% to EUR 796 million Free Cash-Flow end of September 2007 of EUR 989 million supported by operational successes 109,769 new Belgacom TV customers in first nine months of 2007 Total TV customer base of 249,434 end September 2007 Proximus added 182,498 active customers in the first nine months of 2007, of which 78,110 in Q3 Page 2

3 Shareholder Return On 18 October 2007, the Belgacom Board of Directors decided to do an additional shareholder return of EUR 400 million Split into: Share buyback of EUR 230 million Start date: 12 November 2007 Interim dividend of EUR 170 million Dividend per share: about EUR 0.50 Payment foreseen on 6 December 2007 Page 3

4 Performance versus guidance FY guidance (updated in Aug 2007) Q107 Q207 Q307 YTD 2007 FLS Total revenue decline around -1% +0.8% +0.2% -2.35% -0.5% Fairly stable EBITDA Margin 31.0% 32.0% 31.9% 31.6% Add Belgacom TV customers at higher pace than , , , ,769 Belgacom TV ARPU of at least MCS Total revenue decline to around -4% +1% Business performance -4% MTR impact ( -83 million) -1% Roaming impact (retail + wholesale) ( -23 million) -2.8% - 0.4% - 2.4% -3.4% +0.7% -4.1% -5.1% +0.1% -4.7% -0.6% -3.8% +0.2% -3.8% -0.2% EBITDA Margin of around 44% Ebitda impact MTR -33 million Ebitda impact Roaming -14 million 47.1% 46.0% 45.5% 46.2% Belgacom on track to meet full year guidance Page 4

5 Fixed Line Services

6 Traditional Voice Services Trend on line loss continues, however limited revenue decrease Y-o-Y Voice Access line loss impacted by: Launch VoIP offer for residential customers (I-Talk) Launch of ADSL without Voice : migrations and decrease in net adds ARPU Voice Access ARPU increases 2% thanks to price indexation on 1 January 2007 Voice traffic ARPU decreases -6.1% mainly because of lowered Fixed-to-Mobile retail tariffs and the impact of price packages (national & international flat rates) Voice services revenue decreases by -5.7% YTD 2007 versus -7% in 2006 Voice Access revenue decline limited to -1.7%, compared to -5.4% same period 2006 Voice Traffic revenue declines -10.3%, versus -8.7% same period last year Page 6

7 Voice ARPU EUR/Month Voice Traffic Access Q306 Q307 YTD 06 YTD 07 Voice Access Line loss (000) Traffic Volume (mio min) ,840 6,463 2,143 1,919 Q306 Q307 YTD 06 YTD 07 Q306 Q307 YTD 06 YTD 07 Page 7

8 Broadband Highly competitive market environment Volumes Belgacom added 74,005 new Broadband customers over the first nine months of 2007, leading to a total ADSL customer base of 1,201,853 end of September BGC Broadband retail market share in Belgium slightly decreased to 49.5% due to the highly competitive market conditions: alternative operators offer internet with voice -bundles and cheap internet access ARPU ADSL ARPU increased 2.0% compared to the same period last year, mainly because of price increase (1 Jan 2007) Launches To address the mobile market a Naked ADSL offer has been launched: Naked ADSL Go already launched in March Naked ADSL Light launched in July Aggressive acquisition promotions in August & September Page 8

9 Broadband Growth ( 000) Broadband Q306 Q307 YTD 06 YTD 07 Residential ADSL* ARPU/month (EUR) Broadband lines EOP ( 000) % Q ,086 1,202 YTD 06 YTD 07 YTD 06 YTD 07 Average ADSL ARPU ADSL Light ARPU ADSL GO ARPU *: incl small business Page 9

10 ICT * Continued growth in ICT services ICT revenue ( 000) Product group contains all ICT-related products and services offered by the Belgacom Group % % 578 Q306 Q307 YTD 06 YTD 07 Revenue evolution YTD Sep 07 revenues increased 6.2% compared to same period last year Launch of new solutions Winning significant contracts Contribution Dutch subsidiary ISIT * ICT revenue includes: Telindus Belgacom 'integration services Security & Applications Page 10

11 Belgacom TV Further acceleration of growth in Q Accelerated growth: In number of subscribers: + 58,086 new TV subscribers during Q3 2007, reaching a total subscriber base of 249,434 end of September 2007 In ARPU: Boost of ARPU in Q3 07 to EUR 17.5 leading to a year to date ARPU of EUR 15.8 Solid operational and financial YTD results thanks to: Success of bundles Improving quality of On-Demand catalogue Continuous marketing efforts on communication New product launches: Warner Movies (VoD window at the same time as DVD window), TV ordering Extension On-Demand catalogue (e.g. summer festivals) Coverage: About 80% of Belgian households (ADSL2+ and VDSL) of which 40% 2-streams coverage Continued investments in network roll-out & capacity Page 11

12 TV growth TV total EOP ( 000) ( 000) Belgacom TV Q306 Q307 YTD 06 YTD 07 Belgacom TV revenue ( 000) Belgacom TV ARPU (EUR) Q306 Q307 YTD 06 YTD 07 Q306 Q307 YTD 06 YTD 07 Page 12

13 FLS revenue Decrease in traditional voice more than offset by growth of Internet, ICT and Belgacom TV 2500 Total Revenue (EUR mio) -0.5% 2,704 2,692 TV ICT Internet Voice % , Q306 Q307 YTD 06 YTD 07 Q306 Q307 YTD 06 YTD 07 Page 13

14 FLS costs Favorable evolution of costs thanks to positive effect MTR cuts Total Cost (EUR mio) - 1.5% Increased personnel expenses (+3.3% yoy) due to indexation and increase of wages, severance payments. Higher personnel costs fully offset by the positive evolution of Materials and charges to revenue ( -6% compared to YTD Sept 06) mainly driven by reduced MTR charges % ,868 1, Q306 Q307 YTD 06 YTD 07 Mat. & Charges to Rev Remun. Other exp Page 14

15 FLS EBITDA YTD Sept EBITDA increases by 1.9% EBITDA (EUR mio) As a result of the favorable evolution of FLS costs and the slight decline in FLS revenues, the overall EBITDA increased by 1.9% compared to the same period % +1.9% Q306 Q307 YTD 06 YTD 07 Total EBITDA Page 15

16 FLS EBITDA margin Positive evolution EBITDA margin of 0.7pp compared to first nine months 2006 EBITDA Margin (%) +1.9 ppt +0.7ppt 30% 20% 10% 30.0% 31.9% 30.9% 31.6% 0% Q306 Q307 YTD 06 YTD 07 Page 16

17 Capital expenditures YoY FLS investments remained flat, reaching an amount of EUR 296 million, including: Further roll-out of Broadway project EUR 77 million Belgacom TV capex for EUR 64 million CAPEX (EUR mio) - % of revenue 10.9%% 11%% 11.9% 11.3% -6.7% 0% Q306 Q307 YTD 06 YTD 07 YTD 06 Page 17

18 Broadway investment Continued step-by-step fiber roll-out Future proof roll-out of FTTSC (fiber to the street cabinet) ongoing Status end September 2007: National population coverage: 54% Remote Optical Platforms (ROP) installed: 12,239 Belgacom selected Alcatel-Lucent as supplier for the roll-out of the FTTN* VDSL2 network: Broadway invested capex (EUR mio) including Fiber, ROP and VDSL Enable BGC to offer full triple play services and HDTV. Coverage: more than 60% of Belgian households by spring Q306 Q307 YTD 06 YTD 07 * Fibre-to-the-node Page 18

19 Outlook Outlook FY 2007 Based upon Q3 results and taking into account the expected impact of decreased Fixed-to-Mobile tariffs, Belgacom re-iterates its updated full-year guidance, estimating that: the revenue decline of 2007 compared to 2006 will be around -1% the EBITDA margin over 2007 will be fairly flat compared to 2006 For Belgacom TV, Belgacom expects: to add Belgacom TV customers at a higher pace than in 2006 with a Belgacom TV ARPU of at least 15 Page 19

20 Mobile Communications Services

21 Active penetration reached 95.9% (*) in Belgium In 9 months, active penetration increased 6.2ppt Total active customers in Belgian market: 10,175, ppt +1.3ppt 82.8% 81.5% +4.0ppt +1.6ppt 85.7% 84.1% +3.5ppt 89.7% +2.7ppt 95.9% 93.2% EOY'04 H1'05 EOY'05 H1'06 EOY'06 H1'07 Q3'07 (*) BMB estimates Page 21

22 Continued outstanding churn rate Churn rate decreasing trend continues and remains best-in-class Proximus maintains high brand loyalty index of 77.0 Customer churn % 16.7% 15.9% 15.8% 15.5% Q3'06 Q3'07 YTD SEP'06 YTD SEP'07 * Annualized blended churn rate of registered SIM cards Page 22

23 Proximus strategy results in solid customer gain Yoy Proximus added 253,529 customers, leading to a total of 4,493,934 active customers 78,110 new active customers in Q3 07 (incl. 12,506 active MVNO customers) compared to a loss of 12,111 a year ago Quarterly customer growth ( 000) Total customers EOP ( 000) ,240 4, Q3 06 Q3 07 YTD SEP 06 YTD SEP 07 * 3-month active subscribers Page 23

24 Proximus Value Share at 50.6 % (*) For the second quarter this year, Proximus further strengthened its position on the market in terms of value share Evolution of Value Share* (%) 49.9% 49.4% 50.1% 50.6% Q3 06 Q3 07 Proximus Others (*) MCS estimates * Share of Mobile Net Service Revenue, including regulation impact/excluding handsets & other revenues Page 24

25 Proximus Market Share at 44.2% (*) Customer Base and Volume Share Evolution* (%) 47.3% 45.5% 45.0% 44.7% 44.2% 43% 46% 48% 49% 50% 57% 54% 52% 51% 50% H106 EOY06 Q107 H107 Q3'07 Prepaid Postpaid Market share * 3-month active subscribers (*) MCS estimates Page 25

26 Blended net ARPU YTD Sep Net ARPU went down by 6.9%. Excluding the MTR impact, the net ARPU decrease would be limited to 2.6%, driven by the success of new bundled tariff plans Blended ARPU 1 (EUR/month) (Excl MTR: -4.1%) (Excl MTR: -2.6%) % % Q3'06 Q3'07 YTD SEP'06 YTD SEP'07 Gross ARPU Credits & Discounts MTR impact Net ARPU 1 Gross ARPU 3-month active subscribers, includes Machine-to-machine, excludes discounts & promotions Net ARPU : Gross ARPU including discounts & promotions Page 26

27 Total revenue decrease driven by regulation Total revenues decline of -3.8% is primarily driven by the regulation impact (MTR Nov. 06 and May 07 and Wholesale Roaming Sep. 07) Excluding the regulation, total revenue increased by 0.2%, primarily driven by an increased and improved customer base. Total revenue (EUR Mio) -5.1% , , % 1, Q3'06 Q3'07 YTD SEP'06 YTD SEP'07 Net Service Revenue Handsets Other Rev Page 27

28 Net Service Revenue evolution Net Service Revenues decreased 3.7%. Excluding the regulation impact, the revenue grew 0.5% Gross Data & Advanced Data Revenues increased 30%, partly compensating the decline in gross voice revenue The success of new pricing offers like Freetime and bonus for life campaigns had a significant effect on the level of credits & discounts Net service revenue (EUR Mio) -5.4% % 1,537 1, , , Q3 06 Q3 07 YTD SEP 06 YTD SEP 07 C&D Voice Other Data Page 28

29 Costs increase primarily linked to customer acquisition Lower termination cost is the main driver of the favorable cost evolution (-2.3%) in the third quarter YTD Sep higher cost in commissions, Leased Lines and content fees, as well as increased renting and utilities driven by network roll-out were partly compensated by the lower handset, termination and roaming costs Cost Structure (EUR Mio) +0.9% % Q3 06 Q3 07 YTD SEP 06 YTD SEP 07 Materials and charges to revenues Remuneration Other Operating Expenses Page 29

30 EBITDA overview The acquisition strategy and to a lesser extent the regulation impacts, are the main drivers of the EBITDA decline EBITDA (EUR Mio) & EBITDA Margin 47.1% 45.5% 48.7% 46.2% Q3 06 Q3 07 YTD SEP 06 YTD SEP 07 Page 30

31 Capital expenditures Capex decline compared to YTD September 2006 mainly driven by phasing of projects and network deployment UMTS Coverage at the end of September is already far above legal obligations CAPEX CAPEX as % of total revenue 8.8% 8.8% 6.7% 5.5% Q3 06 Q3 07 YTD SEP 06 YTD SEP 07 Page 31

32 Outlook MCS confirms its full year guidance 2007 Outlook FY 2007 Despite intense competition and regulatory pressure which will have an impact on revenues and margin, MCS expects: the total revenue to decline to around -4% the EBITDA margin to decline to around 44% Page 32

33 International Carrier Services Page 33

34 Operational Overview Consolidation & insourcing to become ICS worldleader Post Merger Integration Swisscom & Belgacom carrier operations successfully completed full network integration through deployment of NGN transmission network & switching platform Insourcing project with MTN Group extended to more affiliates - keeps contributing to strong mobile business growth Implementation of Insourcing project with Omantel well under way BICS reinforces presence in fast growing Middle East region Be IP-ready with infrastructure & services Good take-up with voice over broadband providers Re-engineering project for Service Delivery is on track new tools and processes to cope with growth Move up the mobile value chain Further extension of SMS footprint (new sizeable contracts) Continuous Exponential growth in international SMS/MMS transit traffic Page 34

35 Revenue & Direct Margin overview Revenue increase thanks to more Mobile terminated minutes & Middle East and Africa business Shift from Standard Quality to Premium Quality products (higher price & margin) Higher volumes on Direct Routing Growth in mobile data products (Signalling & SMS transit) Revenue (EUR Mio) Direct Margin (EUR Mio) % % YTD YTD YTD YTD Direct Routing (Inbound + outbound) Standard Products (Business Class) Premium products (First class, Quality Mobile, Outsourcing) Non-voice (mobile data, capacity) Page 35

36 Cost overview Overall OPEX reduction reflecting synergies of Swisscom integration Cost structure (EUR Mio) % YTD YTD HR related expenses Network expenses IT & General Admin. Page 36

37 Group Financials Page 37

38 Consolidated income statement ( EUR Mio) YTD Sep 2006 YTD Sep 2007 Variance. Total Revenues 4,567 4, % Cost of goods sold -1,492-1, % HR expenses % Other operating expenses % Total Operating Expenses -2,921-2, % EBITDA 1,646 1, % Depreciations % EBIT 1,048 1, % Financial Result Tax expense Net Income % Minority interests Net income (Group Share) % Basic earnings per share 2.06 EUR 2.38 EUR 15.4% Page 38

39 Segment result Revenues (EUR Mio) EBITDA (EUR Mio) 4,567* -0.3% 4,551* 1, % 1, ,616 1, ,704 2, YTD Sep06 YTD Sep07 YTD Sep06 YTD Sep07 Fixed Line Mobile International Carrier Non recurring item * Total revenues as reported post inter-segment eliminations Page 39

40 Capex (EUR Mio) YTD Sep06 YTD Sep07 Fixed Line Mobile International Carrier Page 40

41 Free cash flow influenced by financial assets transactions Free cash flow (EUR Mio) Transactions on financial assets : - acquisition of Telindus (EUR -584 mio) - disposal of Neuf Cegetel shares (EUR +187 mio) 2007 : - disposal of M* & Eutelsat (EUR +245 mio) - acquisition of ISIT (EUR -13 mio) 355 YTD Sep06 YTD Sep 07 Page 41

42 Net financial position (EUR Mio) 1,161 1, Net Debt Dec 2006 FCF Dividends Other Net Debt Sep 2007 Page 42

43 Balance Sheet EUR Mio TOTAL ASSETS Non-Current Assets Goodwill Intangible Fixed Assets Property, Plant and Equipment Associates and Other Participating Interests Deferred Income Tax Assets Pension and Other Non-Current Assets Current Assets Inventories Trade Receivables Current Income Tax & Other Current Assets Investments Cash and Cash Equivalents LIABILITIES AND SHAREHOLDERS EQUITY Equity Shareholders Equity Minority Interests Non-Current Liabilities Interest-Bearing Liabilities Pensions and Other Post Employment Benefits Provisions Deferred Tax Liabilities and Other Amounts Payable Current Liabilities Interest-Bearing Liabilities Trade Payables Income Tax Payable Other Current Payables YTD Dec ,300 5,504 1, , , , ,300 2,399 2, ,053 1, , , YTD Sep ,362 5,049 1, , , , ,362 2,606 2, ,959 1, , Page 43