Mobistar Full Year Results 2010 Analyst presentation, February 9 th, 2011

Transcription

1 Mobistar Full Year Results Analyst presentation, February 9 th, 2011 Version 1 - November 2009

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 forwardlooking statements include, among others, the effectiveness of the mobility centric operator strategy including the success and market acceptance of the mobile voice and date abundance plans, 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 Mobistar s ability to grow 3

4 highlights Mobistar launches a new television experience Mobistar brings the iphone 4 to Belgium New platform for business customers: M Crystal clear calling with HD Voice technology Oct Sep Aug Jul Nov Jun May Dec Extension contract SNCB/NMBS Mobistar: partner for Antarctice CE Expedition MVNO contract concluded with Tellink Inauguration Sirius building M2M partnership with Touring: Automatic Assistance Acquisition of KPN Belgium Business completed 4 Jan Feb Mar Apr First LTE test completed successfully Travel Data Daily and Smart Data Traveller

5 With the launch of Starpack and the acquisition of MES, Mobistar reinforced its position as a full telecom player Residential Market Mobile Fix Business Market Voice Data TV (+6%) Res Postpaid customers 2/3 of our ADSL clients are fix voice customer as well More than Mobile broadband cards More than ADSL customers Oct :First to introduce a true fix & mobile TV convergence ~ Starpacks installed in 10 weeks Voice Data M2M/Internet Mobile (+5%) Bss Postpaid customers Close to mobile broadband cards Market Leader in M2M with 70% Market Share Fix More than One Office Voice Packs companies Close to One Office Full Pack companies April MES portfolio incorporated (Collocation, Corporate Internet, Hosting) 5

6 Mobistar performed in excess on all guided KPI s and will propose a dividend of 4.3 EUR/share to the General Assembly Guidance Realized Total Turnover around 5% increase + 6,2% ( Mio EUR ) Ebitda between Mio EUR 549 Mio EUR Capex/service revenues* around 10% 10,9% Net profit between Mio EUR 264 Mio EUR Organic cash flow** between Mio EUR 330 Mio EUR *Capex/ serv. rev. excluding the license costs linked to the 2G license renewal and additional 3G or 4G spectrum license fee, incl customer equipment 6 ** Organic cash flow defined as net cash flow from operations less acquisitions of tangible and intangible assets, excluding spectrum license fee and acquisition of subsidiary

7 Mobistar has been able to grow its (organic as well in total) turnover above market growth Total Turnover evolution (in Mio EUR) 1,5% (+6%) ,2% (+5%) ,2% (+6%) Orange Lux. M.E.S. Mobistar mobile and fix handsets Regulation Organic growth 2008 Regulation Organic growth 2009 Regulation Organic growth 7

8 Business update 8

9 Mobistar focus on value & innovative offers continues to attract Postpaid users Market net adds (k users) Mobistar net adds split (k users) Net Adds (k users) 106% % % % % % % Active Penetration % Postpaid net adds y-o-y * Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 competition Mobistar* Active Penetration** Postpaid Prepaid MVNO 9 (*) incl. MVNO and IEW, excl. MaTMa and Orange Luxembourg customers

10 Success in the business segment and the profitable Pre- to Postpaid migration resulting in 64% of our base under contract at EoY Mobistar Customers on the Mobistar network (k users) Customers on the Mobistar network* Postpaid % of retail base** % % % MVNO Laptop cards Prepaid Postpaid - BUS Postpaid - RES Postpaid % retail cust base (*) excl. MaTMa, Orange Luxembourg 10 (**) excluding MVNO cards

11 Mobile handset data (incl. SMS) and improved customer mix continues to drive ARPU increase (excluding regulation impact) Blended ARPU (incl. visitor roaming, excl Mobile broadband revenues) 12 months rolling ARPU (EUR/month) 31,5-0,8 31,3 31,5 31,9 32,0 31,8 31,3-0,5-2,6 3, MTR decrease Roaming regulation Price Usage Q Q1 Q2 Q3 Q4 11

12 Capitalizing on Orange s international footprint and brand, Orange Luxembourg continued to improve its customer mix Customers on the Orange Luxembourg network (k users) 73% 81 79% 89 mix Postpaid Postpaid Prepaid 2009 Blended ARPU (incl. visitor roaming) 12 months rolling ARPU (EUR/month) %

13 Focus on mobile data 13

14 Throughout the whole year, Mobistar remained the (smart)phone sales champion in Belgium Title Handset sales in Belgium (all channels)* K units Mio EUR K units Mio EUR K units Mio EUR K units Mio EUR % 72% 68% 67% 65% 57% 62% 56% 43% 38% 44% 28% 32% 33% 35% 24% Mobistar is the #1 handset vendor in Belgium fuelled by its 158 Mobistar centers More than handsets sold in representing 32% of all handsets sold across all channels For a value close to 150Mio EUR or 37% value share driven by strong market position in the Smartphone segment Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 14 (*) Source GFK, market study and Mobistar reporting Other Channels Mobistar

15 Strong demand for mobile data enabled handsets fuelled by attractively priced smartphones Sales mix by functionality (% of monthly sales) 40% 35% 30% 25% Push Wifi 3G smartphones Title Close to smartphones have been sold on the Belgian market in pushed by different attractive low priced devices on various operating systems This number could exceed 1,2 Mio units in Dec 2009 Dec 15 (*) Source GFK, market study and Mobistar reporting

16 Strong uptake in mobile data enabled phones resulted in strong network growth captured in increased mobile data revenues At the end of, Mobistar had more than active mobile data users on its network or 27% of the customer base Mobile data handset revenues (in Mio EUR) and traffic evolution (TB/month) % % Active customers have on average a data ARPU of 5 EUR/month (included in the subscription either separate bundle) Exponential growth in usage combined with attractive mobile data bundles increased the mobile data revenues on handsets to 62Mio EUR from 38 Mio EUR last year First signs of a gradual substitution from mobile broadband to mobile data on handset pushed by Smartphone penetration 16 Mobile data Traffic (TB/month) Mobile data handset revenues

17 On MATMA, Mobistar continued to sign contracts in various sectors, like remote monitoring, alert devices and tracking Smart metering Coverage: UK Intelligent electrical plugs Coverage: France Smart metering Coverage: UK Speed camera alert devices Coverage: Benelux >300,000 signed SIMs Tracking PDA Coverage: World outside USA Industrial security solutions Coverage: Europe & USA Remote monitoring Coverage: global Medical monitoring solutions Coverage: Europe & USA 17

18 Huge potential for speed alert devices and confirmation of its Belgian leadership Mobistar M2M card evolution (# k cards) Pre-activated Activated Belgian M2M market size estimated at cards resulting in a 70% market share and value share Recent deals/ Showcases Coyote uses GPS and and inbuilt GSM/GPRS with a Mobistar SIM card to instantly share camera locations, speed limits and traffic incidents. At the end of, Mobistar had more than (pre) activated cards in these devices

19 Commercial focus on data resulted in an accelerating growth of advanced data amounting to 115 Mio EUR (+36% Y-o-Y) Mobile data uptake (in Mio EUR) % + 28% % +13% + 36% % Mobile data revenues up to 32% of mobile service revenues in (from 29% in 2009) Non-SMS mobile data represent 9% of total mobile service revenues (vs. 6% in 2009) Supported by the successful uptake of Strong uptake in usage of Smartphone 150 SMS abundance offers % 6% 9% Strong take up Internet Everywhere (from 85 k to 112 k cards y-o-y) 0 FY 2008 MATMA FY 2009 FY SMS Person to Person Leader in MaTMa applications with close to 250,000 cards (incl preactivated) Mobile data handset and PC data as % mobile service rev SMS Premium adv data as % mobile service rev 19

20 Non mobile revenues reached almost 150 Mio EUR driven by continuous organic growth and consolidation of MES Total Non Mobile revenues (in Mio EUR) MES Wholesale Fix Business Fix Residential % % Driven by targeted promoted ADSL customer base grew from 38k to 55k clients On top of this, Mobistar ADSL network hosts more than ADSL wholesale broadband customers leveraging Mobistar investments in the fix network In the business segment, Mobistar activated close to Full Pack accounts (mobile, fix voice and data) after 1,5 year launch and close to Voice Packs (mobile, fix voice) Customer uptake in B2B of 2P/3P products 34% 35% > 40% Mobistar Enterprise Services S.A. (ex-kpn Belgium Business) recorded 63 Mio EUR revenues (Data, Voice, Carriers and ADSL Wholesale contract) over 9 months. Major Accounts Medium Accounts 36% 44% 39% 43% More than 1/3 of the accounts in the B2B segment have 2 or more lines of business at Mobistar. Ambition is to continue this trend in 2011 and beyond. 20 Small Offices 13% % 2011e

21 Starpack 21

22 Launched on Oct 8 th, the Starpack TV product was well received and was perceived to be at par with competition 22

23 The Starpack combines new USP (fix-mobile convergence) at an attractive price 23

24 10 weeks after launch, Mobistar reached close to 10,000 net adds. At the end of, 18% of the fix broadband base was triple play Number of Residential fix customers (EoY, K users) +45% Starpack fix broadband (+voice) 2009 Geographical distribution of Starpack deliveries (EoY ) Starpack enables Mobistar to attract new customers: 50% are known postpaid residential customers For existing Mobistar mobile customers: close to 10% take an additional Mobistar mobile service For non-existing Mobistar mobile customers: close to 15% take a Mobistar mobile service TV activations are spread nationwide 20%-30% take an option bundle 24

25 As announced at the launch, Mobistar TV platform will be enriched in the coming months with additional features Video on Demand (Q2 2011) Mobistar App on Android (Q1 2011) Best of Widgets (Q1 2011) 25

26 Putting the Q4 performance into perspective of competition, Mobistar ambitions gross adds in Quarterly net adds of IPTV services since launch (k units)* KPN IPTV NL (launched Q3 2007) Belgacom TV (Launched Q2 2005) 26 * Source: Mobistar estimates and company reports (for KPN excl. Digitenne customers, for Belgacom excluding second stream TV customers )

27 Regulatory update 27

28 On the Mobile, Mobistar appeals the MTR and license renewal decisions. Assesses different options re. spectrum allocations MTR Mobistar appeals the decision as it induces market distortion and as it is based on an inappropriate cost model Decision on suspension expected Q Decision on annulment might take several years 2G license renewal 4 th 3G license 4G license (LTE) Mobistar initial GSM-license included a tacit reconduction clause Government issued a new Law in March that would imply a new license fee of 15 Mio EUR per year starting from November. Mobistar decided to appeal as the Law is going against EU legal principles, against the non-retroactivity of laws and against the principles of legitimate expectations Auction in a first phase reserved for a new entrant for max 2x15MHz Auction announced for June 6 th 2011 In case no new entrant would bid, Mobistar could bid for max 2x5MHz (running until ) for an amount close to 25 Mio EUR Scope of the licenses is national and to provide 4G services in 2.6 GHz License period of 15 years + 5 years tacit renewal Spectrum blocks of 2x15 or 2x20 MHz No coverage obligation but requirement to use spectrum within 3 years Minimum price for auction close to 15 Mio EUR for 30 MHz for 15 years Auction announced for October

29 Mobistar welcomes the set of regulatory draft decisions to increase competition on the broadband and broadcast markets. Overview Broadcast & Broadband market analysis In general, Mobistar welcomes this set of draft decisions, which if unchanged will allow to bring true competition as it allows Mobistar to compose innovative and competitive bundled packages. 29 Source: BIPT Note: Market 4 : Unbundled access to the copper network (including sub loop) Market 5 : Bitstream access to the copper network (including sub loop) Resale of broadband : only as part of a package including television On Broadband Obligations for the incumbent Key performance indicators for retail Only bitstream VDSL offer is mandated, no unbundling. Multicast obligation is introduced Cost-orientation for VDSL2 offer (without markup) Next steps: Market consultation : until mid February Final decision (after Competition Authority & EC consultation) : around mid 2011 On Broadcast Implementation will be key ( access to the cable resources, correct retail-minus wholesale prices) Next steps : Market consultation : mid February Final decision (after Competition Authority & EC) : around mid Offer availability : around 1.5 year after final decision

30 FY Results 30

31 Mobistar consolidated P&L continues to show organic growth Mobistar consolidated income statement in Mio EUR 2009 % (excl MES) % Total Revenues 1,605 1, % 1, % Total Turnover 1,567 1, % 1, % Total Service Revenues 1,445 1, % 1, % Cash Expenses -1,038-1, % -1, % EBITDA % % In % of service revenues 39.2% 36.2% 37.1% Depreciations and amortizations % % Net finance income % % Tax expense % % Net profit % % Diluted earnings per share (in ) % % 31

32 SMS abundance, non-mobile revenues and MES/Orange Lux affiliates offsets voice price pressure and regulatory effects Mobistar group turnover evolution breakdown (in Mio EUR) Voice/SMS decreases more than compensated by mobile data uptake, MVNO and handset revenues Essentially driven by SMS abundance and increase in postpaid customer base Good elasticity to in SMS roaming decreases and strong mobile data roaming uptake Group Turnover National Incoming Customer Roaming Visitor Roaming Billed / HS Rev. Orange Lux MES Group Turnover 32 Price effect Volume effect

33 In Belgium, Mobile service revenue grew again (-0,5% last year) while in the fix segment impact of the Starpack launch Mobistar Mobile Income Statement in Mio EUR 2009 % Total Revenues 1,477 1, % Total Turnover 1,443 1, % Total Service Revenues 1,324 1, % Cash Expenses % EBITDA % In % of service revenues 43.7% 42.3% Mobistar FIX Income Statement (incl MES) 33 in Mio EUR 2009 % (excl MES) % Total Statutory Revenues % % Total Turnover % % Total Service Revenues % % Cash Expenses % % EBITDA % % In % of service revenues -19.0% -13.3% -35.0%

34 Orange Luxembourg continued to deliver the profitable growth Conditional debt waiver of 30 Mio EUR granted Orange Luxembourg Income Statement in Mio EUR 2009 % Total Revenues % Total Turnover % Total Service Revenues % Cash Expenses % EBITDA % In % of service revenues 11.6% 13.8% Depreciations and amortizations Net finance income Tax expense Net profit

35 The increase in cash expenses is mainly driven by handset sales, network roll-out and MES integration (53 M EUR) Total cash expenses Mio EUR Orange Lux Headcount Cost MES Orange Luxembourg Increase driven by handsets costs in correlation with the handsets sales, labor cost driven by more own shops, interconnect cost in line with revenue growth MES 9 month consolidation Headcount costs Increase driven by partial integration of MES FTE, increase non-mobile activities and owned shops. Partially compensated by negative indexation. Non- Headcount Cost Handset/ RT Costs Non-headcount cost Higher Dealer rem due to higher sales B2B (both mobile & non mobile). Increase in commercial exp. to support non-mobile activities Stable Network and IT expenses Increase in network property costs due to volume impact and Shop Rental & maintenance cost (as more shops in ) Compensated by less office rental & costs due to move to new building Handsets & RT costs In line with increase in handset sales, with a mix in favor of high-end devices / smart-phones Interconnect & Other Sales Costs FY FY Interconnect and other costs of sales Higher interconnect is driven by uplift in SMS usage due to SMS abundance offers (especially Prepaid), but almost totally offset by lower domestic voice & roaming costs both due to regulation. Customer access cost increase driven by non-mobile activities (Launch of M* TV in Q4 & increasing ADSL customer base - both consumer & business) compensated by less leased lines costs thanks to migration to Microwave and DSL solutions.

36 Odyssey transformation programs delivers according to the objectives set at the beginning of the year Gross saving objective realized gross saving (e.g. Mobile Data, Fix Program, revenue engineering and devices) More than 100 Mio EUR 31 Mio EUR 4 8 Main contributors are Mobistar-Orange Lux synergies, device transformation and network optimization (e.g. IT Renewal) 19 Ambition for 2011 target set +40 Mio EUR gross savings (e.g. Customer care, distribution and organization) * Transformation includes capex and opex, savings includes recurring cost reductions as well as cost avoidance

37 Capex driven by IT transformation, further 3G roll-out and commercial launch of Starpack Capex (in M EUR) Capex as % of service revenues 240 The Mobistar network had sites at the end of 75 In line with its backhauling upgrade plan, Mobistar deployed > 400 microwave links in 10% % Mobistar is currently executing its IT-renewal program. This program targets a fully new integrated customer care, service delivery and billing system in order to improve the total cost of ownership and time to market G license renewal Orange Lux MES Network IT Development and Operations Sales and real estate Devices CAPEX (excl lic)/service rev. Device cost driven by gross add realized in ADSL, Starpack and Business products Consolidation of MES for 9 months

38 Organic cash flow positively impacted by tax payment optimization and working capital improvements Free Cash Flow Generation MES Incl. (*) MES Excl. (**) Mio 2009 YoY evol. MES Incl. EBITDA Financial result Change in working capital Accrued Financial Interests / Expenses Tax paid YoY Evol MES Excl. Net cash from operating activities % 13.8% Purchase of intangible and tangible assets Debt associated to purchase of assets Proceeds from sale of equipment Net cash used in investing activities (180.7) (176.6) (146.1) 23.7% 20.9% Organic Cash Flow % 10.3% Partner financing activities Acquisition of subsidiary, net cash acquired Flows from long-term borrowings Short-term loan subsidiaries others Free cash flow before dividend payments and capital movements -0.1% 0.3% Dividend payments Equity transactions costs Available Cash Flow

39 Mobistar balance sheet remains sound and allows the company to pay-out 92% of the distributable reserves Balance Sheet in Mio EUR 2009 Non-current assets 875 1,018 Current assets Deferred tax assets 7 2 Cash and cash equivalents TOTAL ASSETS 1,153 1,303 Share capital Legal reserve Retained earnings Long-term borrowings Long-term provisions and trade payables Deferred Tax Liabilities 0 2 Short Term Debt Current Liabilities TOTAL EQUITY AND LIABILITIES 1,153 1,303 Net Debt / (Net Cash) Total distribution of 258.1Mio EUR or close to 9% of the market cap. This represents 92% of the amount available for distribution (at Mobistar S.A.) Dividend payment proposal (subject to General Assembly approval) Ordinary dividend (May 2011) 2.90 EUR/share or 174 Mio EUR Extraordinary div. (Aug 2011) 1.40 EUR/share or 84Mio EUR 39

40 2011 Guidance 40

41 Main elements supporting the 2011 guidance Revenue and EBITDA negatively impacted by regulation MTR regulation impacts revenue around 60 Mio EUR and EBITDA around 30 Mio EUR Roaming will have an additional revenue impact around 14 Mio EUR and EBITDA 8 Mio EUR Revenue and EBITDA positively driven by MES revenue & cost synergies Mobile data and fix residential/business revenue growth Transformation program EBITDA somehow impacted by commercial expenses for Starpack offerings 41

42 Main elements supporting the 2011 guidance Mobistar medium term ambition is to grow the revenues 2011 guidance Beyond 2011 Total Turnover + 6.2% ( Mio EUR ) In line with Ebitda 549 Mio EUR between M EUR Capex/service revenues* 10.9% Between 11%-12% Ambition to grow the revenues organically above market growth. Net profit 264 Mio EUR between M EUR Organic cash flow** 330 Mio EUR between M EUR 42 *Capex/ serv rev. excluding the license costs linked to the 2G license renewal and additional 3G or 4G spectrum license fee, incl. customer equipment ** Organic cash flow defined as net cash flow from operations less acquisitions of tangible and intangible assets, excluding spectrum license fee and acquisition of subsidiary

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