Q Roadshow Presentation

Transcription

1 Q Roadshow Presentation 1

2 Cautionary Statement This presentation contains forward-looking statements about Mobistar, in particular for Although Mobistar believes these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, including matters not yet known to us or not currently considered material by us, and there can be no assurance that anticipated events will occur or that the objectives set out will actually be achieved. Important factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements include, among others, the impact of the price adjustments on the customer base resulting from the competitive pressure, the evolution of the customer base, the economic situation in Belgium, the realization of the net savings of the cost base of Mobistar of 50 million euro net in 2014, the effectiveness of Mobistar convergent strategy including the success and market acceptance of the voice and data abundance plans, the Mobistar TV and broadband offers, the Mobistar brand and other strategic, operating and financial initiatives, Mobistar s ability to adapt to the ongoing transformation of the telecommunications industry, regulatory developments and constraints and the outcome of legal proceedings, risks and uncertainties related to business activity. 2

3 Agenda Key Highlights Operational Update Financial Review Financial Outlook 2014 Jean Marc Harion Chief Executive Officer Ludovic Pech Chief Financial Officer Siddy Jobe Director Investor Relations & Corporate Finance 3

4 KEY HIGHLIGHTS Jean-Marc Harion, CEO 4

5 Executive summary on Q Financial performance Strategic Progress Network Leadership Mobistar s results of the first quarter of 2014 Mobistar reached a total turnover of million euro Mobistar reached a restated EBITDA of 66.1 million euro Mobistar reached an operational cash-flow of 27.1 million euro Mobistar keeps its outlook unchanged for full year Mobistar is delivering on its transformation strategy Transformation 2G/3G network completed, 4G rollout ongoing Transformation of distribution network in full execution mode Transformation of its IT & organizational structure Commercial launch of cable regulation confirmed for the end of the year Mobistar reclaimed its leadership position in terms of network quality. Mobistar has superior voice audio quality 2G Mobistar coverage at par with Proximus ; Base behind mainly in towns Mobistar 3G indoor coverage ahead of competition Mobistar 4G is the fastest of the market 5

6 economic indicators Belgium GDP growth, quarter-on-quarter Unemployment rate, monthly data Inflation, monthly data Sectorial Surveys, Confidence Ind. 6 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 1,0% 1,0% 0,8% 9,0% 0,5% 0,1% 0,0% -0,5% 0,5% 0,5% 0,5% 0,3% 0,2% 0,2% 0,2% 0,0% -0,1% 0,0% 0,0% -0,1% -0,5% 8,5% 8,0% 7,5% 7,0% 6,5% 7,3% 7,1% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% Headline inflation Core inflation 1,60% 1,00% 2,5 2,0 1,5 1,0 0,5 0, ,5% Services Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 2,10% Sep-13 Dec-13 Mar-14 Industry Construction Retail trade Consumers

7 network customers - innovation Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar New Animals plans New high end Animals Segmented subsidized offers Phasing out TV Service Launch of 4G Discovery Launch of Open TV in Luxembourg Cable activation fee paid Sourcing Cable Pruning of 40 plans & upgrade benefiting to 350k customers B2C fixed suspended Go Europe launch Operator billing Google Play Launch of Mobile Cloud New Years eve: +220% mobile data Mobistar TP Best in class Tablet subsidy 4G smart- Phone subsidy 100,000 th cust. to benefit from tariff check-up MyMobistar n 1 on Be app store upgraded customer zone Network swap concluded Opening of first concept store Mobistar s Network Leadership recognized 4G launch in 270 cities 7

8 market intensity is stabilizing since 2H13 but market portability is structurally higher than before the telecom law On average 90k MNP/Month +111% -44% On average 60k MNP/Month Dec- 11 Mar- 12 Jun- 12 Sep- 12 Dec- 12 Mar- 13 Jun- 13 Sep- 13 Dec- 13 Mar- 14 MNP: mobile number portability allows mobile customers to keep their mobile numbers when they change operators. The donor operator deactivates the mobile number in its information system; the recipient operator actives the same mobile number in its own 8

9 Mobistar undisputed 1 st challenger in Belgium with 5.2m SIM connected cards to its network Mobistar Group 5,024 5,117 5,154 5,210 5,280 Belgium, incl. MVNO 4,900 4,990 5,028 5,075 5, ,6% 69,1% 69,6% 70,1% 70,5% ,926 3,916 3,886 3,866 3, Q Q Q Q Q OLU incl. MATMA MVNO Laptop cards Matma Prepaid Postpaid Mobistar Postpaid % retail cust base 9 9

10 Mobistar was able to defend its network share but reports negative net adds in a very active mobile market Network market net adds split (k users) and mobile penetration Mobistar network net adds split (k users) 111% 112% 112% 112% 112% Q Q Q3 13 Competition Net adds** Mobistar Net adds* Q4 13 Active Penetration** 75 Q1 14 (*) incl. MVNO customers, incl. IEW, incl. MATMA excl.: OLU customers (**) Source: Mobistar estimates based on Cy announcements and Plan Bureau Q1 13 Q2 13 Q3 13 Postpaid net adds Prepaid net adds MVNO net adds Q4 13 Q1 14 M2M net adds (*) incl. IEW, incl. MaTMa but excl. Orange Luxembourg customers 10

11 Mobistar is the only operator in Belgium to adapt systematically its Postpaid customers tariff plans Q (EOP) Q (EOP) 40% Animals 60% Old plans Animals Animals 90% 86% 10% Old plans Full compliance with the covenant signed with the government in anticipation of September 2014 deadline 11

12 Mobistar s Animals tariff plans based on clear principles and especially attractive for mobile data users Keep clear segmentation Competitive mobile prices No discrimination No engagement Cloud NEW Operator Billing on Android, Windows 8 International on Unlimited Unlimited Mobistar to Mobistar calls Multi data Source: BIPT,

13 reinforcing controlled channels to adapt to the new market conditions and improve profitability Mobistar is rebalancing distribution channels to address different segments Direct: reinforced Exclusive: transformed Multibrand: refocused.be 13

14 new Mobistar Centers and concept stores first in Liège, with a focus on services and mobile data coaching 14

15 mobile innovation at Mobistar as a way to improve customer experience and develop new usage Consumer Mobile Cloud for Consumers 1 st in Belgium Growing user base Mobile Operator Billing On Android On Windows 8 Enterprise Enterprise Mobility 3.0 MDM M2M MEAP BYOD Cloud computing EM 3.0 Building Blocks 15

16 Paving the way to best network quality Mobistar invested 265M in its network in 2013 completing the full renewal and the optimization of its mobile network Network quality & Customer perception End to end performance optim. Highways/railways Dual carrier deployment Capacity management 600+ parameters changes for quality Top voice performance X2 download speeds Footprint & Indoor coverage Catch-up 3G leveraging on U900 Transmission upgrades 50% more deep indoor coverage Future & 4G Core data network swap capacity increase 4G licence acquisition 4G initiation and optimization 4G readiness 10x core data capacity Scalability 16

17 Paving the way to network quality Mobistar s fully renewed network 3G refresh U 900 DC 4G roll out Fiber solutions Carrier Ethernet solutions Full IP MW refresh Full swap Capacity upgrades Simplification of architecture 4G Radio Access Data NW Data 3G Radio Access Backhaul Backbone Core PS VAS Voice 2G Radio Access Core CS Interco Completed by EoY 2013 Completed in 2014 RAN renewal Capacity upgrade Simplification of backbone New features Capacity upgrades 17

18 Mobistar launched 4G in Belgium Commercialization as from 31 st March 270 covered cities with homogeneous coverage (indoor & outdoor) 800 cities with good outdoor coverage 50% of Belgian population 265 Millions invested in G at no extra costs 18

19 2 independent sources SPEEDTEST Engineering organization specialized in network optimization 6 th Feb 5 th March Driving tests ,000 km Representative and certified. Commsquare contact and study available upon request Independent network performance measuring tool Based on individuals test Sample : tests / month Results until end February 19

20 CommSquare drive test route Covered cities: 2G-3G: Antwerpen, Gent, Oostende, Brussels, Mechelen, Hasselt, Brugge, Mons, Liège, Leuven, Vilvoorde, Roeselare 4G: Brussels, Oostende, Kortrijk, Antwerp, Gent, Mechelen, Leuven 20

21 Good call performance for Mobistar Establish the call: The lower the failures the better Call setup Failure Maintain the call: The lower the drops the better Drop call rate Establish and maintain the call Overall Call Success Rate 0.38% 0.22% 99.39% 1.14% 0.26% 98.60% 0.54% 0.12% 99.34%* Confidence interval= Estimation of error is around 0.4% for 8000 calls at 90% confidence. Note Proximus is below due to issues to establish calls. * all calls exclusively in 2G 21

22 Mobistar has superior voice audio quality Superior audio quality thanks to HD Voice (POLQA scale from 1 to 5) 22

23 2G coverage > Mobistar coverage at par with Proximus > Base behind mainly in towns 23

24 3G Download & Upload speed: Similar customer experience for all operators receiving a file. Mobistar and Base ahead in sending a file. Receiving a file Sending a file 3G 7.74 Mbps 3G 2.58 Mbps 3G 8.22 Mbps 3G 1.42 Mbps 3G 7.95 Mbps 3G 2.53 Mbps 24

25 Mobistar 3G speed catching up and leading Receiving a file Sending a file 25

26 3G Coverage Deep Indoor Soft Indoor Outdoor Mobistar 3G indoor coverage ahead of competition 26

27 3G Outdoor Coverage: Mobistar 3G outdoor coverage = 99,95 % of Belgium population All operators offer similar coverage 3G % 3G 99.97% 3G 99.93% Signal: dbm 27

28 3G Indoor Coverage: Mobistar outperforming Proximus and Base thanks to UMTS900 strategy 3G % 3G % 3G % Signal: -87 dbm 28

29 3G Deep Indoor Coverage: Mobistar outperforming Proximus and Base thanks to UMTS900 strategy 3G % 3G % 3G % Signal: -77 dbm 29

30 4G benchmark results: 1 st in all KPIs 30

31 4G Download speed: Mobistar is the fastest of the market 31.3 Mbps 45 Mbps 4G 20.3 Mbps 29 Mbps 4G 15.5 Mbps 27 Mbps 31

32 Mobistar 4G Download speed remains higher than competition over time 4G Average DL Speed (Mbps) G Average DL Speed Evolution Mobistar Proximus Base Download speed faster than fixed internet 1 GB Movie download time: M*: 3 min 06 s. Px: 4 min 42 s. Base: 5 min 15 s. Dec-13 Jan-14 Feb-14 32

33 4G Upload speed: Mobistar is the fastest of the market and up to 44% faster than Proximus 21.6 Mbps 19 Mbps 4G 14.9 Mbps 14 Mbps 4G 13.3 Mbps 13 Mbps 33

34 Mobistar 4G Upload speed remains higher than competition over time 25. 4G Average UL Speed Evolution 4G Average UL Speed (Mbps) Mobistar Proximus Base 0. Dec-13 Jan-14 Feb-14 34

35 4G Best Voice performance 35

36 4G outdoor population coverage 50% 4G 53%* 4G 38%* *Proximus figures based on public data *Base % based on 4.2 million people covered (web) 36

37 Q G coverage 50% population coverage 37

38 Q G coverage 84% population coverage 38

39 Full 4G coverage in 2015 Commitment on a 4G coverage equivalent to 2G by end

40 Population Coverage Evolution % Soft Indoor population coverage per technology 90.00% Soft Indoor population coverage 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 2G 3G 4G 0.00% End 2012 End 2013 End 2014 End

41 Network improvements clearly perceived by Mobistar s customers The Fast Forward Mobile Trip Let our customers see for themselves 93% customers are satisfied or very satisfied of our network. Customers survey, February

42 Mobistar is on track to be 1 st to launch cable regulated offers in Belgium before the end of the year 6 month implementation period by cablecos 09/2013 CRC decision Technical 12/2013 CRC decision Tariffs LOI to Telenet, Tecteo & Brutéle 01/2014 Payment of 1.2 M regulation activation fee 07/2014 solution due by cable operators 12/2013 Mobistar Project team in place 2/2014 Solution related choices made by Mobistar: Encryption: Viaccess (25/2) Boxes (31/3) Q4/2014 Mobistar commercial launch 42

43 cable regulation is an opportunity for consumers considering triple play very high prices Mobile prices amongst cheapest in Europe Fixed triple prices amongst most expensive in Europe Source: BIPT; January 2014 Mobile and 3-play medium offers 43

44 Financial review Ludovic Pech, CFO

45 key financials in m Q1 14 Q1 13 Var. insight Consolidated turnover % -18.1% excluding regulatory Service revenues % 6.2m regulatory impact -14.6% excluding regulatory Restated EBITDA (a) (in % of service revenues) 66.1 (23.8%) 99.0 (29.8%) % 4.2m regulatory impact -30.2% excluding regulatory EBITDA (in % of service revenues) 64.5 (23.2%) 98.7 (29.7%) -34.7% In line with outlook Net income % earning per share decrease from 0.58 to 0.15 CAPEX (in % of revenues) 37.4 (13.4%) 31.2 (9.4%) % Acceleration of 4G network investment as planned Operating cash flow (reported EBITDA (a) - CAPEX) % Reflecting EBITDA erosion and intensified effort on capex (a) see appendix for EBITDA restatements 45

46 service revenues -14.6% underlying service revenue erosion in Q service revenues in million euros 332,0-6,2 325,8-39,9-47,7 (-14,6% 14,6%) -10,7 2, Q actuals regulatory impact Q with reg. Mobile excl. MNVO Non Mobile MVNO Q actuals 46

47 blended ARPU evolution (Belgium) decreases in line with market repricing ARPU (a) evolution in euro per user -11.6% -12.5% -18.2% -9.9% Q Q Q Q Q Q Q Q (a) Average Revenue Per User, excluding MVNOs and M2M cards. 47

48 restated EBITDA evolution EBITDA erosion mostly driven by revenues loss restated EBITDA excluding on-offs (a) in million euros 99,0 4,2 94,8-28,6 (-30,2% 30,2%) 50,9 66,1 22,3 1Q 2013 Actual regulatory impact 2012A with reg. revenues impact net OPEX reduction 1Q 2014 Actual (a) see appendix for EBITDA restatements 48

49 Transforming our operating model Simplifying our organization and processes headcount (Active Team Member, Belgium) redundancy costs (in million euros, Belgium) labor costs (a) (in million euros, Belgium) -148 (-8,7% 8,7%) ,3 1, (-16% 16%) 31 0,3 Q1 13 Q1 14 Q1 13 Q1 14 Q1 13 Q1 14 (a) excluding redundancy 49 49

50 Capital expenses Sustained investment in network to accelerate our 4G deployment total CAPEX (a) (in million euros) network CAPEX (a) (in million euros) +19,9% +24,0% 31,2 37,4 23,3 28,9 from 75% to 77% of total group CAPEX allocated to network 4G ready network (radio, core and transmission) ambitious 4G roll-out plan in 2014/15 Q1 13 Q1 14 Q1 13 Q1 14 % as of Service Revenues 9.4% 13.5% 7.0% 10.4% 50

51 Cash flow statement Net debt variation explained by operating cash flow and working capital in m Q1 14 Q1 13 Var. insight Operating cash flow (restated EBITDA (a) - CAPEX) % reflecting the EBITDA erosion and sustained level of network investments License acquisition Income tax cash out Net interests cash out % Change in working capital % Other operational items Acquisition of subsidiaries - - lower payables and lower net cash used in investing activities Dividend paid Variation in net debt net debt variation explained by operating cash flow and working capital net debt (net debt / EBITDA) (1.9) (1.2) 38.5% (a) see appendix for EBITDA restatements 51

52 Financial outlook Ludovic Pech, CFO

53 outlook: regulatory impact regulatory impact progressively fading out but still important 2011A 2012A Q1 2013A 2013A Q E Revenues impact EU Roaming MTR EBITDA impact

54 outlook: taxes & fees (Belgium) tax pressure reaching unprecedented levels 2011A 2012A 2013A 2014E Operating Tax Pylon New Tax Other x 3 37 IBPT Regulated Fees Spectrum x

55 transformation program (ACE2) 50m net operational costs savings in 2014 reinforcing controlled channels (on-going) roll-out of concept (on-going) process & organization simplification (on-going) IT outsourcing under 32bis procedure (2H14) network operating center mutualization (2Q14) company digitalization (on-going) chasing non quality costs (continuous improvement) TV and DSL fixed service phasing-out (FY impact) network build & run contract renegotiation (1Q14) DIRECT COSTS + LABOUR COSTS + INDIRECT COSTS 55

56 2014 outlook still a challenging year ahead price pressure to continue driving down mobile ARPU convergent offers heavily discounting mobile while increasing fix rates increase in market handset subsidization regulatory impacts in Belgium and Luxembourg unprecedented regional and local tax increase in Belgium (e.g. new pylon tax in Wallonia) as anticipated, necessity to maintain high capex for 4G network rollout, transmission and backhaul upgrade cable regulation enforcement confirmed with commercial launch expected in Q

57 2014 guidance price, regulatory and tax pressure will continue weighting on our results restated EBITDA (a) in million euros 336 H1 (181) m to 280m full year restated EBITDA before cable H2 (155) new elements 2013 actuals 2014 consensus 2014 guidance Our 2014 guidance include: Up to 24m provision for pylon tax in Wallonia (Dec. 13) 7m additional MTR in Luxembourg (Jan. 14) 16m regulatory impact in Belgium new elements for 31m (a) see appendix for EBITDA restatements 57

58 beyond 2014 transformation efforts to continue and intensify to adapt the company cost structure to evolving market conditions sustained network investments to pave the way for mobile data growth LTE network extension, increasing smartphone penetration and appetite for more abundant data plans to refuel ARPU regulated cable offers to allow Mobistar to generate new revenues on TV and fix broadband while better protecting the mobile base Mobistar expertise and leadership in M2M are both an asset and an opportunity as internet of things develops fast 58

59 Appendix

60 EBITDA restatements from restated EBITDA to reported EBITDA in m Q1 14 Q1 13 insights restated EBITDA (as percentage of service revenues) 66.1 (23.8%) 99.0 (29.8%) labor related or redundancy costs non-labor related or restructuring costs labor contracts termination - - reported EBITDA (as percentage of service revenues) 64.5 (23.2%) 98.7 (29.7%) 60

61 Mobile data revenues are increasing significantly due to higher smartphones sales, data usage and smartphones plans (in M ) % 15% 129 4% 30% 66% Q % 18% 131 3% 33% 63% Q % 19% 127 4% 36% 60% Q % 18% 123 4% 33% 63% Q % 19% 122 4% 33% 62% Q The number of smartphones connected on the Mobistar network has increased by 65 % Mobile Multimedia AUPU increased by a factor 3.5 in one year time on active user base Mobile data traffic of Mobistar customers increased by a factor 4.2 in one year The number of mobile data sessions doubled in one year time. Portion of mobile data increased within integrated postpaid bundles Prepaid data usage still limited MATMA Mobile Data SMS Data as % mobile service rev Advanced data as % mobile service rev 61

62 Belgian Mobile total turnover split (% of revenues) % 49% 48% Retail billed revenues M2M MVNO Handsets Roaming SMS Roaming voice Roaming Data Visitor Roaming MTR Voice MTR SMS 1% 1% 2% 4% 5% 7% 18% 16% 14% Strong handsets sales continued, driven by a higher portion of (high-end) smartphones in the mix 30% 1% 2% 3% 3% 2% 1% 2% 3% 16% 17% Q % 2% 1% 3% 1% 3% 19% Q % MTR and roaming revenues impacted by regulation. Roaming revenues amounted to 10 % of mobile service revenues. MTR revenues voice revenues amounted to 3% of mobile service revenues, while MTR SMS revenues increase to 19% due to success of SMS abundance offers. Currently not subjected to regulation. EBITDA risk limited due to operator reciprocity in SMS 62 62

63 63 Q&A

64 1H 2014 Roadshow Schedule DATE LOCATION BROKER ROADSHOW / CONF. April 30 London Exane BNP Management Roadshow May 14 Luxembourg KBC Securities Management Roadshow May 15 Paris Nomura Management Roadshow May 20 New York KBC Securities/NYSE Belgian Conference May Montreal / Toronto / Chicago Macquarie Management Roadshow May 21 Amsterdam ABN AMRO TMT Conference May 27 Frankfurt New Street Management Roadshow June 3 Geneva Credit Suisse Management Roadshow June Nordics Goldman Sachs Management Roadshow 64 64

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