5 February Mobistar Full Year results 2008

Transcription

1 5 February 2009 Mobistar Full Year results 2008

2 Cautionary statement 2 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.

3 Agenda Business Review Mobistar s unique positioning Mobile data uptake Partnerships Regulatory update Financial figures FY 2008 Conclusions & Outlook FY

4 Business Review 4

5 In a challenging environment, Mobistar outperformed on all guided KPI s Guidance Realized Total Turnover Ebitda-margin between -2% & 0% minimum 40% +1.5 % 41 % EPS (based on # shares EOY period) between -4% & -2% +1.9 % Capex/sales around 10% 11 % 5

6 Mobistar highlights and commercial innovations Feb 2008: Extension of the Mobistar AtHome product portfolio to 3 formulas reaching Feb 2008: Board of Mobistar confirms Mobility Centric strategy and approves a total cash return of 600 Mio EUR June 2008: Mobistar launches One Office Full Pack, the first global telecom solution for the professional market May 2008: Mobistar announces an exclusive agreement with Apple regarding the distribution of the iphone3g on the Belgian market July 2008: Extension of the mobile data offer portfolio with (Mail&Surf, abudance offers for iphone, Mobistar Messenger by Windows Live) Nov 2008: Mobistar buys the remaining 10% of Vox Oct 2008: Mobistar starts selling mini PCs to liberalize the internet

7 Net Adds (#In K) ,3% 83,6% 75,2% Mobistar succeeded to add net subscribers on its network in ,3% 98,9% 98,9% 93,6% 95,7% 91,3% Active Penetration** 105,0% 103,8% (est) 102,4% 100,7% 120% 100% 80% 60% 400 Comp. 40% Mobistar* Q Q Q Q Q Q Q Q % 0% 7 (*) incl. MVNO customers (139k net adds full 2008), excl. MATMA and VOXmobile customers (**) Source: Mobistar estimates based on company announcements and population forecasts of Plan Bureau

8 In a postpaid driven market, Mobistar s postpaid share outperformed Prepaid market* Postpaid market ,1% ,9% ,7% 28,3% 28,0% ,0% 39,2% ,2% ,0% 37,9% ,9% 49,9% Mobistar Proximus Base EB 2007 EB Q EB 2007 EB Q * Market figures have been recalculated to have active net adds, based on announced activity rate figures

9 Postpaid as % of customer base keeps increasing, up to 57% of customer base Customers on Mobistar network* MVNO Laptop cards Postpaid % retail customer base Postpaid % of retail base** % 80% Prepaid 44% 51% 54% 57% 60% % 35% 40% Post BUS 20% Post RES % 9 (*) excl. MATMA and VOXmobile customers (**) excluding MVNO cards

10 Customer base management: churn evolution affected by competitive market Average Churn Rate 29,2% 27,7% 19,1% 20,7% 21,4%

11 Excluding regulatory effects, upselling strategy increases the blended ARPU 38,0 38, ,5 1,0 1,4 32,4 4,3 4,7 FY 2005 FY 2006 FY 2007 MTR Decrease Roaming Off & on net Price Usage FY

12 SMS abundance and stagnation migration from prepaid to postpaid leading to stable voice traffic evolution 180 Average traffic per customer per month -2% % Voice( min/month) SMS (/month) 0 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q Note: Traffic includes both traffic out and in

13 Mobistar s unique positioning 13

14 Competitive environment shows growing need for mobility: 2 responding strategies Consumer Business 37% Home centric Keep fixed Mobile only phone vs. Mobility centric Ready to give up fixed phone if 28% 35% At office Out of the office At desk Away from desk Desktop workers Office roamers Company centric vs. Teleworkers Mobility centric Workers on the road 14

15 Positioning Mobistar vs competition Fix centric Monolite Technology Digital & Convergence Incumbent positioning -Discount (keep value in fix) Monotone Family Rational Technology Innovation Budget Packs & Discounts Patronizing Valorize Mobility Individuals Personalization & Mobility Mobistar -(transfer value from fix) Sur mesure / choice Personal Emotional Relevant Innovation You choose 15 Source: Mobistar qualitative research via focus groups (August 2008)

16 Marketing strategy Mobility Centric Residential: Mobility Centric Substitution Accelerate fix-mobile substitution through launch of abundance offers (supported by ADSL) Increasing mobile data revenues (MOC Res, mobile TV, ) Leverage complementary partnerships For B2C market fix data and voice answer to certain consumer needs Business: Mobility Centric Convergence Push full convergence strategy Focus first on voice convergence ( One Office Voice Pack ), then on full convergence (voice + data) through Business Pack offers Integrate services into telecommunications solutions: from network to services 16

17 In order to respond to the mobility needs, fix solutions are needed as well Mobility Centric Mobile only Residential: Mobility Centric Substitution Business: Mobility Centric Convergence B2C needs 37% 35% Keep fixed phone Mobile only Ready to give up fixed phone if 28% In 1 year time fix voice market share went from 3% to 6%* 17 *Source : 12 th telecom survey 2008 with 302 telecom- en it-managers, of which 122 low SMA ( FTE), 113 high SMA ( FTE) and 67 CMA (+500 FTE).

18 Mobile data uptake 18

19 The mobile data key drivers are in place mobility coverage 99% EDGE 80% HSDPA immediacy fast set-up interactive bandwidth comprehensive & trustful pricing My30 for iphone 3hr/300 SMS MB My45 for iphone 6hr/600 SMS MB 19 devices

20 Move from a closed garden to an open mobile internet model increased the activity rate 8000 Postpaid Orange World customers # customers (3M active) Strong customer base uptake Probable strong increase of sub contract users Age repartition 9000 Prepaid Orange World customers 20 # customers (3M active) Strong customer base uptake Larger age range for teens Age repartition Same as postpaid, uptake of subaccounts

21 Strong growth in mobile data revenues confirmed in 2008 mio % Mobile data revenues up to 22% of mobile service revenues in 2008 (from 18% in 2007) Non-SMS mobile data represent 23% of total mobile data revenues (vs. 18% in 2007) Supported by the successful uptake of SMS abundance offers Strong take up Internet Everywhere Blackberry and Mobile Office Cards in the Business market Leader in MATMA applications with ~110,000 cards 50 MATMA Other SMS Premium 0 FY 2007 FY 2008 SMS Person to Person 21

22 Strong growth in laptop cards confirmed during full year Active Internet/Business Everywhere users (# k cards) % (+44) Q Q Q Q Q

23 23 Partnerships

24 Mobistar can execute best suited model for each of its partners with a state of the art network Radio Access Network Terminating Traffic Roaming Network Originating traffic Services Basic Advanced Marketing & Sales Distribution MNO MVNO Full MVNO models MVNO Light Enhanced Service Provider Co- Marketing Brand licensing Agent 24

25 Due to a targeted partnership approach, Mobistar is in a leading market position Estimated customer base in K SIM cards Total = 1937* 100% Transatel 60 Lycatel 40 UMM Telenet 20 Euphony 25 0 *Source: Mobistar company data and market info (figures including all partnerships types (not only MVNO) ) X-play Media Ethnic / Low cost Distribution Niche Mobistar Proximus Base

26 Regulatory update

27 Dependency towards regulated revenues continues to decrease while billed revenues increases Breakdown Mobistar Mobile service revenues 4% 4% 11% 20% 35% 9% 20% 33% Visitor roaming Customer Roaming 65% 65% 67% 67% National incoming Billed Revenues

28 Current regulatory challenges National mobile termination rates EU roaming regulation Regulation on emission rates 28

29 Status on national termination MTR evolution (EURcent/min, indexed prices) Mobistar positioning on MTR evolution c/min MTR model should be cost oriented Asymmetric still justified given later entrance of Mobistar Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 In case of symmetry, Mobistar is closer to 3rd operator in terms of customer base M*- new Px - new Base - new MTR cost modeling exercise ongoing by BIPT, first results expected by H

30 EU Roaming regulation Main elements roaming regulation Roaming Voice tariffs: extension of the current regulation till 2012 Roaming SMS tariffs capped as from 01/07/2009 Wholesale SMS roaming tariff (cap: 0.04 per SMS) Retail SMS roaming tariff (cap: 0.11 per SMS) Roaming data tariffs Wholesale charge cap = 1 /Mbit No retail regulation 0,5 0,4 0,3 0,2 0,1 0,43 0,26 0,19 EU Roaming tariffs (EURcent/min) 0,40 0,23 0,16 0,37 0,20 0,13 0,34 0,17 0,10 0,0 7/1/09 7/1/10 7/1/11 7/1/12 30 Wholesale charge Retail Calls made (excl. VAT) Retail Calls received (excl. VAT)

31 Update on regulation emission rates Current situation Flanders & Walloon region Proposal in Brussels region (as from 14/03/2009) Max 20,7 Volts/m (cumulated per location) (4 times stricter than WHO norm) Max 3 Volts/m (cumulated per location) Impacts Drastic coverage decrease Site sharing not possible anymore If applied: increase #sites up to 40% Mobistar positioning (in alignment with 3 operators) Call for realistic norms in light of WHO recommendation Alignment required between the 3 regions Accelerated procedure for building permit required 31

32 Financial figures Full Year

33 In a challenging economic and regulatory landscape, solid performance CONSOLIDATED Income Statement for the Group Mobistar Mio FY 2008 FY 2007 % Total Statutory Revenues (*) 1, , % Total Turnover 1, , % Total Service Revenues 1, , % Cash Expenses % EBITDA % In % of service revenues 41.0% 41.0% Depreciations and amortizations % EBIT % Net financial charges N.R. Corporate Taxes % Net income % EPS averaged % EPS outstanding shares % 33 (*) includes other revenues

34 2008 gross regulatory impact amounting to 91 Mio EUR almost fully compensated Mio -0,1% 1.445, ,7 21, , ,9-9,9-4 6,2 15, National Incoming Customer roaming Visitor roaming Billed revenues Vox 2008

35 Mobistar Belgium activities: maintaining a high level of profitability despite regulation and launch new fix product lines Mobistar BELGIUM Income Statement Mio FY 2008 FY 2007 % Total Statutory Revenues 1, , % Total Turnover 1, , % Total Service Revenues 1, , % Cash Expenses % EBITDA % In % of service revenues 41.8% 41.4% Depreciations and amortizations % EBIT % 35

36 VOXmobile activities: growth confirmed in a highly regulated market and return to operating profitability VOXMobile Income Statement Mio FY 2008 FY 2007* % Total Turnover % Total Service Revenues % Cash Expenses % EBITDA % In % of service revenues 7.2% -3.6% Depreciations and amortizations % EBIT % 36 * first 6 months 2007 Pro forma

37 Despite inflation and launch of new lines of products, increase of cash expenses under control Vox Headcount Cost Total cash expenses 975,2 947,7 33,4 18,4 929,3 941,8 132,7 126,6 VOXmobile has been acquired mid 07 Six months of activities in 2007 compared to a full year of operations in 2008 Mobistar headcount reduction of -6% due to outsourcing and efficiency gains compensated by increase in FTE in owned shops Non- Headcount Cost 308,2 287,8 Optimization of advertising / sales expenses and in property expenses Favorable evolution of Universal Service charges and other operating income Handset/ RT Costs 63,3 90,3 Cost of handsets sales in line with strong increase in handsets revenues (smart phone sales increase) Interconnect & Other Sales Costs 425,1 437,1 Transfer of activities to Outsourcing partner (Ericsson) previously done by Mobistar internal resources Increased number of ASP (Access Solutions Providers) partners for Customer Facing services and Corporate solutions Less interconnect cost: traffic uplift (mainly SMS) is more than offset by regulation (Roaming/MTR)

38 Acceleration of 3G network build out resulting in a higher network capex Capex (in Mio EUR)* Capex to service revenues ratio (in %) 12% 14% 14% % % % CAPEX/year Vox Network IT Sales and Other CAPEX/service revenues 38 * excluding the proceeds from sale of equipment related to the 3G equipment renewal

39 Focus on network outsourcing; savings are materializing in line with contract signed in 2006 Acquisition costs/site (K ) -54% Building costs/site (K ) -37% Operations costs/site (K ) -37% Before After Before After Before After 2007 savings (May-dec) -27% 2008 savings -35% CAPEX CAPEX 39 OPEX Baseline Actuals 2007 OPEX Baseline Actuals 2008

40 Balance sheet remains solid Consolidated Balance sheet Mio FY 2008 FY 2007 Fixed Assets Current Assets Cash and Cash equivalents TOTAL ASSETS 1, ,181.3 Net Equity Provisions Long Term Debt Short Term Debt Current Liabilities TOTAL EQUITY AND LIABILITIES 1, ,181.3 Net Debt / (Net Cash)

41 41 Free cash flow evolution confirmed Consolidated cash flow statement Mio FY 2008 FY 2007 % EBITDA % Change in Working Capital and not withdrawn expenses Net finance costs Corporate Taxes % Net cash from operating activities % Net cash used in investing activities % Proceeds from sale of equipment 14.7 Net cash used in investing activities % Operating cash flow % Acquisition of subsidiary, net cash acquired Repayment long-term interest-bearing loans and borrowings Proceeds long-term interest-bearing loans and borrowings 3.8 Proceeds from new short term borrowings Proceeds from new long term borrowings 75.0 Netcash before dividend payments and capital movements % Capital increase (decrease) Capital and share premium Net purchase of treasury shares Dividend paid Available Cash Flow %

42 Solid financial performance allows Mobistar to maintain a high level of shareholder return Summary of proposed pay-out * Ordinary dividend: 2,90 / share (+ 4% y-o-y) Extra ordinary dividend: 1,65/ share Total distribution: around 273M or 7.8% of market capitalization Ordinary DIVIDEND 2,90 EUR per share Extra ordinary DIVIDEND 1.65 EUR per share JAN FEB MARCH APRIL MAY JUNE JULY AUGUST SEPT OCT NOV DEC 42 (* to be approved by the General Assembly 6/05/2009)

43 Despite 600Mio exceptional distribution net debt/ebitda ratio still below Net debt/ebitda Net debt Mio EUR 0,53x 0,8 0, , ,01x 0,2 0,0-0, , ,6-0,8 43 Notes: Available credit capacity: 250M FT LT Revolving + 250M FT Current Account

44 Conclusions & Outlook FY

45 Underlying assumptions of 2009 guidance Deteriorating economic environment Belgian 2009 GDP-evolution expected between 0% and -1% (*) Wage indexation of 4.51% in Jan 2009 (once a year) Revenues Handset sales under pressure generating less traffic in the shops Regulatory impact estimated to 60 Mio EUR, equally divided between national termination and roaming impacts Tight cost control to free up resources to invest in network/it innovation and new product lines Exceptional capex investment foreseen to save opex in coming years Investment plan in transmission network Building of new Mobistar offices FOCUS #1 = Free cash flow generation 45 * source: consensus form the Federal Planning Bureau

46 Conclusions and updated guidance FY 2009 Strong ambition to further consolidate value share by increasing billed revenues and growth in new areas in a challenging competitive and regulatory environment Total Turnover flat revenues Ebitda-margin close to 40% Net results Mio EUR 46 Capex/sales between 11% -12%

47 Thank you!