Proximus Company Presentationca9fa731-f... · • Telenet high focus on Flanders, but national...
Transcript of Proximus Company Presentationca9fa731-f... · • Telenet high focus on Flanders, but national...
CompanyPresentationMay 2020
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“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-looking statements rely on a number of assumptions concerning future events and are subject to uncertainties and other factors, many of which are outside Proximus’ control. Therefore the actual future results may differ materially from those expressed in or implied by the statements. Readers are cautioned not to put undue reliance on forward-looking statements, which speak only of the date of this communication. Except as required by applicable law, Proximus disclaims any intention or obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise.
The information contained herein should be considered in conjunction with all the public information regarding the Proximus Group available, including, if any, other documents released by the company that may contain more detailed information. Information related to Alternative Performance Measures (APM) used in this presentation are included in the consolidated management report.”
Cautionary statement
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Content
Who we are, what we do
The markets we operate in
2019 achievements &
key figures
Strategy#inspire2022
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Who we are, what we do
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✓ Customer centric and digital company
• Aiming to deliver the best customer experience and to simplify the customer journey.
• Partner of citizens, businesses, and Belgian society in their digital evolution, offering adapted products.
✓ Future proof Networks
• Fixed and mobile networks offering access anywhere and anytime to digital services and data, as well as to a broad offering of multimedia content.
• Investing in future-proof networks and innovative solutions, creating the foundations for sustainable growth and becoming a truly customer-centric digital company.
✓ Contributing to society & respecting our planet
• Create an inclusive, safe, sustainable and prosperous digital Belgium.
• Climate-neutral for our own operations since 2016 and we are rapidly shifting towards a more circular economy, requiring fewer resources and producing less waste.
Who we are,what we doProximus is a provider of digital services andcommunication solutions operating in the Belgianand international markets.
✓ Valuable employees
• Our employees are a valuable asset.
• Creating a culture where employees can develop, make a difference, contribute to our results and be our best ambassadors.
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Our sense of purpose
“Opening up a world of digital opportunities so people live better and work smarter.”
We have a long history…7
New CEO:#Inspire 2022 strategyGuillaume Boutinappointedas CEO for asix-year term.
….and prepare for the future.8
2013
Launch 5G
2020
’17-’18: Acquisitionof small-sized, highly specializedIT companies
9Clear governance model
As a limited liability company under public law, governance is imposed by the Law of 21 March 1991 on the reform of certain autonomous economic public companies (“the 1991 Law”). For matters not explicitly regulated by the 1991 Law, Proximus is governed by the Belgian Code of Companies and Associations of 29 March 2019 ("the Belgian Code of Companies and Associations") and the Belgian Corporate Governance Code of 2020 ("the 2020 Corporate Governance Code").
Shareholders
Board of DirectorsGeneral policy, strategy, supervises operational management.
Governance structure
Audit & Compliance Committee
Nomination & Remuneration
Committee
Transformation & Innovation Committee
CEO & Executive CommitteeOperational management including, but not limited to, day-to-day management.
Organisation
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Number of shares % shares % Voting rights % Dividend rightsNumber of shareswith voting rights
Number of shareswith dividend rights
Belgian state 180,887,569 53.51% 56.04% 55.92% 180,887,569 180,887,569
Proximus own shares 15,257,928 4.51% 0.22% 700,775
Free-float 141,879,638 41.97% 43.96% 43.86% 141,879,638 141,879,638
Total 338,025,135 100.00% 100.00% 100.00% 322,767,207 323,467,982
*31/03/2020
Transparency declarations: According to Proximus’ bylaws, the thresholds as from which a shareholding needs to be disclosed have been set at 3% and 7.5%, in addition to the legal thresholds of 5% and each multiple of 5%.
The voting rights of all treasury shares are suspended by law. Proximus has 700,775 treasury shares that are entitled to dividend rights (to cover the dividends linked to the outstanding stock options granted to key management and senior management of the Group).
We are listed on Euronext Brussels & are part of the BEL20Proximus' main shareholder is the Belgian state, owning ~54% of the company’s shares(status end March 2020)
Board of Directors
Stefaan De Clerck (1)Chairmanuntil AGM 2022
Guillaume Boutin (1)Chief Executive Officer
(1) Appointed by the State(2) IndependentAGM: Annual General Meeting of shareholders
Karel De Gucht (1)Directoruntil 25/09/2021
Martin De Prycker (2)Directoruntil AGM 2023
Martine Durez (1)Directoruntil AGM 2022
Pierre Demuelenaere (2)Directoruntil AGM 2021
Catherine Rutten (2)Director until AGM 2023
Agnès Touraine (2)Directoruntil AGM 2022
Catherine Vandenborre (2)Director until AGM 2022
Isabelle Santens (1)Directoruntil AGM 2022
Luc Van den hove (2)Director until AGM 2024
Paul Van de Perre (1)Directoruntil AGM 2022
Joachim Sonne (2)Directoruntil AGM 2024
Board of directors
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• Max. of 14 members, incl. CEO• Candidates proposed by the Nomination and
Remuneration Committee • Members appointed at the AGM • Any shareholder holding ≥25% has the right to
nominate directors for appointment pro rata to his shareholding
Wholesale
Smart City
Proximus PLC under Belgian Public Law
Enterprise Business Unit
Consumer Business Unit
Customer Operations
Corporate Affairs
Finance HRStrategy & Transformation
Support units
Servicing units
Network Business Unit
Guillaume BoutinCEO
Jan Van AcoleyenChief Human Resources Officer
Geert StandaertChief Technology Officer
Sandrine Dufour* Chief Financial Officer
Dirk LybaertChief CorporateAffairs Officer
Bart Van Den Meersche*Chief EnterpriseMarket Officer
Renaud TilmansChief CustomerOperations Officer
Executive Committee
Jim CasteeleChief ConsumerMarket Officer
Executive committee12
Network unitNew
* Sandrine Dufour and Bart Van Den Meersche are leaving the company respectively on 1 June and 1 July 2020. Replacement selection process ongoing.
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The Markets we operate in
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The Consumer Market
Flanders (north)
Wallonia (south)
Brussels
• National player• Challenger for Fixed in North• Leader for Fixed in South except for dTV• National leader for Mobile
• No-frills provider owned by Proximus• National challenger for Fixed & Mobile
• Cable Competitor in South & 1/3 of Brussels• Challenger for Fixed voice, Fixed broadband & Mobile• Leader in South for dTV• In process of being sold by Nethys & Brutélé
• Cable competitor North & 2/3 of Brussels• Leader in North for Fixed• Acquired BASE mobile network
• National Mobile player• Challenger for Mobile• No fixed offer• Owned by Telenet
• +30 MVNOs• Challengers for Mobile
• National player• Mobile network operator• Offering Fixed services via Cable Wholesale
c.11.4 Minhabitants
c. 4.9 Mhouseholds
BelgiumPROXIMUS dual-brand strategy
15The Enterprise Market
• Maintains solid position in Telco market.• Market leader for fixed as well as mobile • Strong ICT offer supported by
partnerships & acquisitions(e.g. Telindus, Codit…)
• Challenger on fragmented IT market• N°1 M2M player
• Telenet high focus on Flanders, but national coverage via multiple access technology and partnerships
• Reinforced its position through take-over of IT integrator Nextel and cable operator SFR
• Mainly operating in the SME market
• Main challenger on the mobile enterprise market
• International M2M Competence Center of the Group is hosted by Orange Belgium
• WIN is sister of VOO ; the ICT B2B branch of Group Nethys. Focus on Wallonia & Brussels.
• VOO is mainly focusing on smaller enterprises, WIN on higher segment
• Own network and Wallonia Data Center Regional coverage (and national coverage via partners)
International playersNiche players
Main IT competitors (fragmented market)
Main telecom competitors:
Belgium
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The Wholesale Market
• National player• Maintains solid position in wholesale Telco
B2B market, mobile backhauling market, traditional voice interconnect (fix + mobile) and transit market
• Challenger for MVNO & Fixed B2C market
MVNOcompetitors:
Fixed B2C competitors:
Fixed B2B competitors:
• National MVNO player supported by take-over of BASE in 2015.
• Offers Fixed WS services to Orange• High focus on Flanders, but national coverage
via multiple access technology and partnerships
• Active on the MVNO market
• Main challenger on the wholesale fixed B2B market
• Mainly focusing on domestic & local operators active in Belgium
International operatorsDomestic operators
MVNO players
Backhauling operators
• Focus limited to Wallonia• Offers Fixed WS services to Orange
The InternationalCarrier Market
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One of the key global voice carriers and the leading provider of mobile data services worldwide.
BICS connects the world by creating reliable and secure mobile experiences anytime, anywhere.
Their solutions range from global mobile connectivity, to seamless roaming experiences, fraud prevention and security, and to global messaging and the Internet of Things.
Acquired TeleSign in 2017, and became world’s 1st end-to-end Communication Platform as a Service (CPaaS) provider.
Main competitors:
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Notes• The financials results of Proximus Group are reported under the accounting
standards IFRS 15 and IFRS 16 (replacing IAS 17 as of 2019).
• All figures included in this presentation are on ‘Underlying’ basis, allowing for a meaningful YOY comparison. See the published quarterly results for a comprehensive view on the company’s financials.
• Figures are restated for reporting changes applicable as of Q1 2020 and differ in this view from the figures published in the Annual Report. (mobile inbound revenues moved from consumer/enterprise to the wholesale segment; changes in X-play reporting, i.e. now on customer level)
• Figures are rounded. Variances are calculated from the source data before rounding, implying that some variances may not add up.
2019 achievements
& key figures3
2019 achievements & key figures: Proximus Group
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Proximus
Group
Domestic BICS
Consumer Enterprise Wholesale
20Domestic operations generate 77% of Group revenue, and 92% of EBITDA
92%
8%
€ 1,870M+0.3% YoY
BICS
Domestic
77%
23%
BICS
Domestic
€ 5,686M-2.1% YoY
61%
32%
9%
Consumer
Enterprise
Wholesale
Other
€ 4,386M
-1.7% YoY
All figures are on underlying basis.
FY19 Group revenue
FY19 Group EBITDA
DomesticRevenue:
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acquisitions in the ICT domain and hirings in
business-critical functions
Group operating expenses reduced in 2019 through solid domestic cost control
13,62712,658
12,143
463727
789
2015 2018 2019
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FTEs
>1,800 FTEs left in the Early leave plan ahead of retirement
FTEs
21
67%
Share of Workforce expenses on total (2019)
BICS
Domestic
Additional hiring at
TeleSign to support its
growth
Focus on efficient domestic cost structure
Group Operating expenses (M€) -0.8%
YoY
Voluntary early leave plan ahead of
retirement and natural outflow
FTEs
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Investing in high-quality networksand overall customer experience
Fiber buildTITAN ProjectBest Mobile network
Copper upgrade New Digitalplatforms
4G population coverage• outdoor 100% • indoor 99.6%
Best Mobile Internet recognised by Test-Achat/Test-Aankoop
5G launched since 01/04
Proactively strengthening our transport network
Backbone of all voice,data & TV traffic:data capacity
x10
FttH/Bin 13 cities
&
Nation-wide greenfield deployment
95% FttC,90% vectoring60% @ 100 Mbps
79 Mbps
Avg. VDSL Speed
Migration to single mass market order-to-cash IT chain finalised
Automation &AI boosting efficiency & customer experience
Digital tools & integrated cockpits
1,019 1,027
FY'18 FY'19
Accrued Capex* (M€)
*Excl spectrum & football
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2019 Net income impacted by Fit for Purpose transformation cost
Net income2018
Net income2019
Underlying EBITDA variance
Incidentals D&A* Net Finance result** Tax expense***
Others
ETR22.8% in 2019 vs.26.4% in
2018
* Excluding Lease depreciations
** Excluding Lease interests
YTD(M€)
Incl. provision Fit for Purpose transformation
plan
*** lower 2019 income tax base following the Fit for Purpose restructuring cost
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• Early leave plan refers to voluntary early leave before retirement
• FCF includes the lease payments to stay comparable to 2018 FCF
ION-IPUmbrio
Codit
Mainly CoditEarn-out
Normalized FCF level - fairly stable YoY
€ 504M FCF normalized for acquisitions
Including lower cash from
assets disposal (buildings)
Business Working Capital
(strong 2018 comparable
base)
(M€)
25Keeping a sound financial position
* Excluding Lease liabilities
** Non controlling interests
Net financial positionDec. 2018 FCF Dividends Other
Net financial positionDec. 2019
AdjustedNet Debt*
(YTD, M€)
156
500
100
600
500
150
10011
400
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Investment loans
¥ private placement
Institutional Eurobonds
Commercial Paper
Debt MaturitySchedule(M€)
Liquidity end 2019:
• €332m investments,cash & cash equivalents (incl. derivatives)
• EMTN Program €3,500m (€1,950m outstanding)
• CP Program €1,000m(€156m outstanding)
• Committed credit line (bilaterals/club/syndicate): €700m
Credit ratings:
Standard & Poor’s A (negative outlook)
Moody’s A1 (stable outlook)
(status 10/04/2020)
5.1 Yr
Average debt duration
1.8 %
Weighted average coupon
Dividends to NCI**
-2,143 -2,185
2019 achievements & key figures: Domestic operations
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Proximus
Group
Domestic BICS
Consumer Enterprise Wholesale
27Strong Domestic cost control, more than offset lower 2019 revenue.
YoY DOMESTIC Revenue evolution per product group
FY’18: 4,460M
FY’19: 4,386M
Domestic Revenue(M€)
Domestic EBITDA(M€)
Underlying Domestic revenuesignificantly impacted by low-margin Terminals andregulation.
4,460 4,386
2018 2019
1,711 1,718
2018 2019
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ICT
Mobile Postpaid
Advanced Business Services
Fixed Services
Others
Tango
Wholesale
Mobile Prepaid
Terminals
39.2% EBITDA margin
+0.8pp
-1.7%
+0.4%
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45.9%-0.5 p.p.
YoY
Supported by our dual-brand approach,we grew our Internet and TV customerbases and kept a solid market position
Broadband Park (in ‘000) TV Park (in ‘000) Fixed Voice Park (in ‘000)
2,057
2,088
End '18 End '19
1,620
1,640
End '18 End '19
2,550
2,401
End '18 End '19
Q4’19 vs. Q4’18
+ 31 K
Customers YoY
+ 1.5%
Market shareEnd ‘19
Q4’19 vs. Q4’18
+ 21K
Customers YoY
+ 1.3%
37.4%
+0.2 p.p.YoY
Q4’19 vs. Q4’18
- 149 K
Customers YoY
-5.8%
Market shareEnd ’19
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38.7%
-0.7 p.p. YoY
Total mobile
We gained Mobilepostpaid customers ina competitive setting
Mobile Park (excl. M2M) (in ‘000)
4,011
4,103
End '18 End '19
+ 92k YoY
i.e. + 2.3 %
Postpaid
822
717
End '18 End '19
- 106k YoY
i.e. - 12.8 %
Prepaid
Market Shares %
41.6%-1.0 p.p.
YoY
Postpaid
3.2GB
+27% YoY
National MobileData usage(average/consumer/month)
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Eroding prepaid in a shrinking market, partly driven bythe strategy to migrate customers to similarPostpaid pricing plans, at higher value.
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+3.9% Convergent
revenue
Consumer revenue was supported bythe progressing convergence rate
+1.9%
-4.9%
+2.3 p.p. Convergence
rate
+1.6%ARPC
(€)
Convergent stands for Customers subscribing to both Fixed and Mobile services.
+0.7%CustomerRevenue
Convergencerate
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Families:
Millennials: Price Seekers:
Bizz Online& Bizz All-infor SE customers
Small businesses:
Segmentation to meet the needs of Consumer & Small Business
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Tuttimus
Minimus + +
+ ++
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For our Enterprise customers, we diversified our portfolio over the past years to stay relevant & protect our Telco business.
An increasing share of the B2B revenue is generated by ICT
(ICT revenue on total Enterprise revenue)
38%
20192016
35%
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In a competitive market, our Enterprise segment kept a strong position in Mobile, and contained the erosion of legacy services by bringing customers to future proof technologies.
• High-quality mobile network
• Provide best E2E experience
• Managed mobile services
• Simplified offers
• Developing mobile applicationintegration competences
• Dynamically guide customersin their Voice & UC journey
• Convergent voice solutions
• Migrate customers to future proofFix data solutions: VDSL and FIBER
• Improve customer experience
• Achieve network simplification
1,0281,063
END '18 END '19
Mobile voice cards (000’s)
1,327
1,778
END '18 END '19
M2M (000’s)
541
500
END '18 END '19
Fixed Voice lines (000’s)
+3.4%
+34%
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2019 achievements & key figures: BICS
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Proximus
Group
Domestic BICS
Consumer Enterprise Wholesale
35BICS, operating inInternational Carrier market,faces an ongoing transition withusage moving fromVoice to Data
BICS Ebitda YoY (M€)
BICS Ebitda & Ebitda margin percentage
154 153
2018 2019
TeleSign contributing since November 2017
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11.4% 11.7%Margin %
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Solid increase innon-Voice volumes(in M messages,
incl. )
BICS benefitingfrom the boostingmobile data volumes at higher margins…
408
486
182 196
2018 2019
REV DM
10,174
12,992
2018 2019
13bnInternational SMS(P2P & A2P, 2019)
A2P
Growing Non-Voice revenue& Direct margin
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40%Direct Margin
37…while managingthe declinein legacy Voice
939
815
135 129
2018 2019
REV DM
24,46324,649
2018 2019
BICS maintaininga top-10 worldposition in aVoice marketunder pressure
Voice volumes
(in M minutes)
High cashgeneratorthanks to scale& operatingleverage
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Ongoing revenue erosion mainly from lower unit revenue following lower termination rates, competition and a less favorable destination mix, resulting in a direct margin decline. In 2019 the insourcing by MTN started, yet had only a very limited impact.
16%Direct Margin
381st end-to-end CPaaS providerthough the combination of BICS and TeleSign
Brings customers andplatforms
brings the mobile andworldwide reach
eCommerce
Social / Internet
Gaming
Communications
CloudConnectivity
Platforms& Expertise
Using BICS’ Worldwide network…
…to reach directly >700 mobile operatorsworldwide and improve sourcing of:
Direct SMS andVoice Terminations
MobileEnd-User Data
Voice APIs(e.g. Anonymous calling)
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Strategy
#inspire20224
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Train and attract best Belgian digital talents
2.4M gigabit homes enabled by Proximus by 2025
(iso 2030)
Undisputed mobile leadership with 5G
Top 1 or 2 telco NPS , driven by superior user
experience, by 2022
-40% in IT cost by 2025
with legacy-free IT
>2.1M internet lines(Consumer segment) by 2022
Sustainability and circularity embedded in
everything we do
Net positive CO2 impact and truly circular company
by 2030
Open networks to growwholesale revenues
>3M unique Proximus active monthly apps
users* by 2022
Support digital reskilling of 1000+ Belgian job
seekers yearly
>€ 100M additional revenues from new non-telco by 2022
*including web apps
Build the best GIGABIT NETWORK
for Belgium
Operate like a “DIGITAL native”
company
GROW PROFITABLY through partners
& ecosystems
Act for SUSTAINABILITY& digital inclusion
On 31 March 2020 we announced our new strategy: #inspire2022
Committed to bringing value for our shareholders
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A clear plan for gigabit connectivity for Belgium, generating an attractive return
Large-scale Proximus fiber plan
Strategic partnershipsto increase efficiency
Digital transformation for a scalable
Network-as-a-service
Complementarytechnologies
(e.g. FWA, 3rd party networks)
5G CAPEX optimization through network sharing
Proximus retail market share gains
Proximus wholesalemarket share opportunity
Future-proof CAPEX and copper CAPEX
avoidance
Network CAPEX optimisation…
…yielding a solid long term return on investment
Proximus ARPC uplift
Sustainably lower OPEX with decrease of
operational costs
BrusselsFlanders Wallonia
IRR above WACC in all regions
WACC
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HOME & BUSINESS PASSED
Q12020 2022 2025
We aim for 2.4M fiber Homes Passed by 2025
Scaling up to
>400k HP/Year
~7% Coverage/Year
13Cities
started
307k+
1.1M
2.4M
>2025
Solid commercial fiber results (in current fiber footprint, fiber vs VDSL)
CONSUMER MARKET ENTERPRISE MARKET
NPSvs. VDSL
> +7%
ARPC(greenfield / brownfield)
60%
Migration rate(within 2 years)
+26%
Fixed Data ARPU(mono-site)
VDSL
Fiberx2
Gross gains
-50%
Network cost to operate
( in fiber zone +5 yr)
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1 Gbps
100 Mbps
200…250 Mbps
FTTH Cable
10 Gbps
50 Mbps
Ultra Vectoring up to 250Mbps
complemented by Mobile
Bandwidth
Coverage
Leverage cable regulatory framework
VDSL@35MHz + Mobile
A multi-technology approach to complement fiber
Expected broadband coverage by 2025
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We can build at scale, with predictable costs…
Short & mid-term leversWe compensate for lower density
…through industrialisation and efficiency improvements
• Continuously optimize and simplify the processes
• Introduce new materials, design and deployment methods (aerial, more facade,…)
• New mechanism to allocate our deployments lotsgeographically to our construction partners
• Conduct termination activities of customers only after completion of sale
• Leveraging innovative multi-technology portfolio to optimise gigabit coverage
%
2019 2020 2021 2022
Unit Cost Home Passed €
Home Passed Facade/MDU%
75%
€ 850 today
€ 1000
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1
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We were the first to launch 5G in Belgium
5G
Full5G
4G
Up to 30%better experience
than 4.5G
First to commercially launch 5G on 1 April 2020
First taste of 5G benefits for our customers
Several cities across Belgium
Usage of Sub-3GHz spectrum make it possible without new spectrum allocation & new EMF norms
Once 5G dedicated spectrum becomes available, extension of network to deliver “gigabit” experience
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Leap forward in mobile network density thanks to sharing
End User Benefits
• Broad deep indoor coverage
• Higher speed
• Longer battery duration (reduced distance between mobile and antenna)
We closed a Radio Access Network Sharing partnership with clear benefits
Standalone 2020
Network Sharing as of 2024
3800sites
4600sites
+20%
Mobile sharing reduces TCO versus standalone
2020 as of 2024
35-40M€ per year savings
✓ Each operator bears 40% less sites while enjoying a greater grid.
✓ Common grid with higher radio quality and lower operating costs
✓ IRR is a multiple of WACC
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Relentless focus on simplified customer experience & offers
1 Towards 100% first-time right customer journeys
2 Intuitive and slick digital interfaces
3 Transformed Enterprise portfolio & go-to-market
NPS
OPEX
Transformational approach on internal processes & enablers
4 Extensive automation & AI in key processes
5 End-to-end simplification for strongly reduced IT cost
6 Comprehensive skills transformation
6 main transformation levers to grow our NPS, deliver -1%/-2% net indirect OPEX reductions p.a. by 2022 and bring higher efficiency beyond 2022:
A fundamental transformation of our operating model for structural efficiency gains and a better NPS
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2
Our Enterprise segment will undergo a massive multi-year transformation
Next gen go-to-market
Future-proof portfolio
Proximus Enterprise as a smart integrator a broad, segmented and modular next gen portfolio
Segment-specific: from 6 to 12 segments
Opti-channel with x2 indirect channel reach and strong digital presence
Increased focus on mid-market
Strong partnerships
Co-creation with customers
Modular & templated solutions
Convergence telco & ICT
Pro-active move to next gen connectivity (e.g. 60% top fixed data customers migrated to SD-x)
Top-tier in public and hybrid cloud
Top-tier in Cybersecurity
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Best devices
Leading digital platform
Best content through partners
Staying relevant and slowing down cord cutting
thanks to a simple and immersive multi-screen content experience
curationeditorialization
recommendation
Grow through partnerships, increasing our relevance for customers and open new sources of revenues
ePress win-win partnership with local publishers
Belgian Data Alliance (under construction) with local publishers, broadcasters & telcos
3
50
Evolution of revenue mix(Belgium, Enterprise segment)
Embracing the shift to next-gen ICT in Enterprise
To be the trusted partner in digital transformation
Grow our technology consultingcapabilities
Build public cloud & edge business and scale professional services on Microsoft Azure
Lead in the cyber security market
Develop new value streams leveraging 5G
20192025
Telco ICT
Shift to next-generation ICT to adapt to market value transfer to virtualized & cloud services
One of the first operators in the world to launch Azure Edge computing
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Doing business with a heart for sustainability
• Embedding sustainability at the core of our strategy
• An ambition, inspired by our sense of purpose:
Creating an inclusive, safe, sustainable & prosperous digital Belgium
• Commitment to the UN Sustainable Development Goals
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Respectingour planet
CO2 neutral for own activities
CO2 reduction-79% vs 2007-27% vs 2015
-50% energy consumptionof decoders in past 5 years
>31k GSMs recycled in 2019Smartphone collection campaign with Umicore to recycle 100k in 2020
Contributingto society
New partnership with coding school and incubator MolenGeek
10,300 kids trainedon safer internet use in 2019
Sponsor of theParalympic athletes
diggit
Caringfor ourstakeholders
Parental control on TVand smartphones
Mio active users on MyProximus end Dec’19
Training days/employee on average in 2019
1.6
4.7
100%
Enablinga betterdigital life
Improving fixed and mobile connectivity in white zones
Supporting local innovation ecosystems
Building trust in digital as founding partner of the Coalition
We are committed to making a societal impact
vendors contracts containing social, ethical and environmental standards
>336k modem and decoders refurbished in 2019
Partner, connecting sick children with their class - used by 1 in 4 schools
Reverse mentoring of seniors by kids, school projects, 5000+ seniors trained
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53Raising the bar for a greener future
• -30% carbon emissions by 2025• -10% indirect carbon emissions by 2025• Aiming for the first Belgian CO2 neutral supply chain• Towards 100% green energy and fossil fuel phase
out
Netpositive
• Become a zero waste company• Green network with 100% recycling rates• Circular data centers• Phone recycling as a new normal – ambition to
recycle min. 100,000 mobile phones in 2020
Trulycircular
Become a net positive & truly circular company by 2030
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Financial Strategy
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A path to turn the company back to growth, while ensuring a sustainable return for our shareholders
Covid-19 impacts aside, we expect over 2020-2021 some financial pressure, especially within Proximus Enterprise, which will undergo a massive transformation before returning to growth, with a strong strategic shift from Telco to ICT.
To support this, we increase IT investments in the short term, reducing strongly the full IT cost afterwards.
To extract benefits sooner, we accelerate our value-accretive network investments, with a pull-forward of fiber coverage and building the best 5G network.
At the same time we will realize strong cost reductions.
As a result, we expect to return to topline and EBITDA growth as of 2022 for our Domestic operations.
The expected significant step up in financing needs over 2020-2025, will be funded through efficient capital reallocation and exploring strategic partnerships to co-invest while securing fiber coverage.
We rebased our dividend to a sustainable level, creating a path to return to dividend coverage.
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DomesticRevenues
excl. terminals
Domestic EBITDA
Rebalance CAPEX
(Accrued CAPEX)
Increase debt
Drive Domestic EBITDA growth
2020
2021-2022
2023-2025
Domestic IndirectOPEX
Further indirect OPEX
decrease
Max of€ 1.3BN/year
incl. fiber & 5G
Asset disposals
Revenue & EBITDA on underlying basisCAPEX excluding spectrum & football rightsIndirect OPEX = excluding ICT billable workforce expenses
Reduce by -1% to -2% (3YR CAGR)
Extra debt capacity of up
to € 600M
Net debt/EBITDA
ratio just below 2.0x
(S&P leverage)
Up to € 700M
Grow as of 2022
Grow as of 2022
Optimize capital allocation
Maximum of€ 1.3Bn per year
incl. fiber & 5G
Committed to bringing value for our shareholders
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Driving Domestic EBITDA growth as of 2022
Strong efforts and new savings initiatives to decrease Domestic indirect costs
B2B transformation investments to drive
long-term growth
2022 -2025Back to growth
• Erosion in Consumer Terminal revenue (low margin) & Prepaid
• Ongoing Fixed Voice decline• Arrival RCS to replace SMS (no margin)
• Pro-active migration to next gen. solutions
• Higher direct costs following ICT growth strategy
Ongoing legacy trends
• NPS improvement benefits (Consumer & Enterprise)
• B2C market share gains and ARPC uplift from enlarged fiber
footprint
• Increased new revenue streams supported by eco-systems
• B2B gradually improving on strategic shift to ICT
• Wholesale access revenue to grow
2020-2021
Fiber network benefits, increasing new revenue streams and gradual recovery in Enterprise to compensate for contracting legacy erosion.
Strong ambitions in Consumer
segment
Offset by …
• Segmented B2C value proposals driving growth in digital households
• New B2C revenues (Pickx, e-press, advertising and SE ICT offers…)
In spite of …
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Structural efficiencies will lead to further indirect cost optimisation
-1% to -2% CAGR
Indirect* OPEX
Indirect OPEX
TotalOPEX
2019 2019 2022Wages Other net reduction
Other benefits net of additional hiring, training and other re-investments.
1,535M1,630M
*excluding ICT billable workforce expenses
Workforce cost reduction
-1,722 gross FTE (1,347 FFP voluntary
leaves, 375 ELP)
incl. inflation-based salary indexation
(on decreasing headcount)
We target an indirect OPEX reduction of 1%-2% CAGR over the next 3 years, while reinvesting to support growth
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* Total cost of termination benefits in the FFP transformation plan
** Net termination cost, before income taxes, booked as incidental. This excludes positive impacts on o.a. complementary pensions.
Costs & CFL
288
-151
-33 -26
-79
2019
2020 2021 2022 >2022
Cash outflow impacts
253M€Net
incidental cost**
For 2020:• Voluntary leaves: 1,347 FTEs (largely March 2020) • Very limited involuntary leaves• On top of final wave of Early Leave Plan ( ~ 375 FTEs)
A more efficient companythrough the Fit for Purpose(FFP) transformation plan
FFP plan approved by Trade Unions 12/2019
Plan ambitions to improve the company’s productivity, flexibility and agility on the market:
▪ Workforce reduction in the domains impacted by digitalization, automation & changing market conditions.
▪ Simplification of HR rules▪ New working conditions for
employees hired as of 1 January 2020▪ Increase of reskilling and upskilling
efforts
FTEs
Workforce reduction in the FFP framework
*
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2019 2020 2021 2022 av. 2023-2025
€ 1Bn
2.4M HP in fiber
Including potential partnershipsAmbitioning a wider fiber footprint, in an economical way.
CAPEX*:
*accrued, excl. spectrum and football rights
€ 1.3Bn
Accelerated fiber coverage, moving CAPEX forward5G investments (2021-2023)IT Transformation (2020-2022)
Investing substantially in the best networks in Belgium, while rebalancing the annual CAPEX envelope
Growing fiber CAPEX to 40% of total envelope by 2025
20192025 2022
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We have concrete financing means, while there is no
short-term dependency on
debt capital markets.
Optimized capital structure
Dispose of assets
Strategic partnerships
€ 1.4BnExtra funding needed
2020-2025
Keep a sound financial position through disciplined capital re-allocation
✓ Up to € 600M additional debt capacity✓ Keeping Net debt/EBITDA ratio just below 2.0X (S&P financial leverage)
✓ Up to € 700M proceeds identified✓ Multi-year divestment program✓ Covering part of our investment need✓ Redeploy capital to higher return assets✓ No short term dependency on debt capital market
62We are committed to an attractive shareholder return
€ 1.2expected gross dividend
per share
Proximus intends to return over the result of 2020, 2021 and 2022
an annual gross dividend of EUR 1.2 per share, to be considered as a
floor.
• € 0.50/share paid as interim Dividend in December of the same year
• € 0.70/share in April of the following year
On an annual basis, the proposed dividend will be reviewed and submitted to the Board of Directors, in order to keep strategic financial flexibility for future growth, organically or via selective M&A, with a clear focus on value creation. This also includes confirming appropriate levels of distributable reserves. The shareholder remuneration policy is based on a number of assumptions regarding future business and market evolutions and may be subject to change in case of unforeseen risks or events outside the company's control.
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2020 Outlook
Guidance metricsActuals FY 2019
Guidance FY 2020
EBITDA - CAPEX € 844M €780-800M
Group underlying EBITDA € 1,870M /
CAPEX (excl. spectrum & football rights)
€ 1,027M /
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 expects to end 2020 with Group underlying EBITDA minus CAPEX in the range of €780-800M.
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Contact
Call:
+32 2 202 82 41
+32 2 202 62 17
E-mail:
Proximus Investor Relations website :
www.proximus.com/en/investors
Nancy Goossens
Investor Relations Director
Eline Bombeek
Investor Relations Manager
Investor Relations
64To get a more comprehensive overview of Proximus, we invite you to read the following documents available on the Proximus website:
• Annual Report 2019: • #Inspire2022 - Capital Markets Day:• Sustainability brochure: