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Detailed segment results Consumer – slide 31
Enterprise – slide 38
SDE&W/S&S slide 44-45
BICS – slide 46
Other topics Shareholder structure – slide 48
Shareholder remuneration – slide 49
Spectrum – slide 50
Pricing – slide 52
Regulation & Legal – slide 58
Macro – slide 62
Belgacom Presentation Q3 2013 results
Financial highlights
Executive summary – slide 3
Revenue – slide 5
Direct margin – slide 6
Non-HR expenses - slide 7
HR expenses – slide 8-9
EBITDA – slide 10
Capex – slide 11
FCF/FIN POS – slide 12-13
Balance sheet – slide 14
P&L – slide 15
Operational highlights
Executive summary – slide 16
Mobile – slide 17
Service Revenue – slide 17
Arpu – slide 18
Churn – slide 19
Net adds – slide 20
Repricing – slide 21-22
Fixed – slide 24
Convergence – slide 25
Network – slide 26
Cautionary Statement
Slide 2
“This communication might include some forward-looking statements, without limitation, regarding Belgacom’s 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 Belgacom’s 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.
Belgacom disclaims any intention or obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise.“
Executive summary- financials Q3 2013
Slide 3
- Group revenue: € 1,568m; -3.2% YoY
- Group ebitda: € 428m, -7.7% YoY
- Group capex: € 176m, 11.2% of Group revenue
- Pressure on Mobile revenue in line with H1 trend
- Continued success of mobile retention/acquisition actions
- Solid performance of Belgacom’s Fixed business
- Good cost containment
- Regulation impact on Group revenue estimated at € -16m
(-1%), EBITDA by € -7m (-1.6%), for larger part within EBU
due to data roaming price cap.
Financial results Q3 on track to
meet FY guidance
Well positioned to face
challenging market
dynamics
Regulatory measures impacting financials
FY 2013 guidance reiterated
Metrics FY 2013 outlook
Year-to-date 2013 reported
Group revenue
Decline between
-1% and -2%
-1.7%
Group EBITDA* Decline between -4% and -6%
-5.3%
Capex/Revenue Between 13% and 14%
11.5%
Slide 4
* Compared to the restated 2012 EBITDA of € 1,801 m, following the retrospective application of IAS19R
Ytd 2013 Group revenue (mio €)
Slide 5
Q3 2013 Group revenue (mio €)
1,620 -1
-16
-28
-18 -1
+13-1
Q3 2012 Net ImpactOne-offs
2013
Regulatoryimpact
UnderlyingCBU
UnderlyingEBU
UnderlyingSDE
BICS Intra-groupelimination
Q3 2013
1,568
4,818
+22
-56
-70
-30 -4 -2
+51+7
YtD 2012 Net ImpactOne-offs
Regulatoryimpact
UnderlyingCBU
UnderlyingEBU
UnderlyingSDE
UnderlyingS&S
BICS Intra-groupelimination
YtD 2013
4,736
Destination mix, data growth
Pressure on the Mobile Market, incidentals and lower mobile
terminal sales within CBU
-1.7% reported
-0.7% Underlying
-9 MTR -7 Roaming
-29 MTR
-41 Roaming
Pressure on the Mobile Market
Voice Volumes, destination mix,
data growth
-2.1% Underlying
-3.2% reported
Ytd 2013 Group direct margin (mio €)
Slide 6
Q3 2013 Group direct margin (mio €)
9 71 +3
-7
-18
-17 -2
+3
Q3 2012 Net ImpactOne-offs
Regulatoryimpact
UnderlyingCBU
UnderlyingEBU
UnderlyingSDE
BICS Q3 2013
9 32
2,888
2,818
+34+13
-43
-41
-36 -7 -2
+12
Ytd 2012 Acc adj Telcolaw
One-offs Regulatoryimpact
UnderlyingCBU
UnderlyingEBU
UnderlyingSDE
UnderlyingS&S
BICS Ytd 2013
-3.5% Underlying
-4.0% reported
-2.4% reported
-2.5% Underlying
-7 Roaming
-2 MTR
-41 Roaming
Destination mix Product Mix
Pressure on Mobile Direct margin,
partially offset by cost containment
Wholesale rev. slowing
Destination mix Product Mix
Pressure on Mobile Direct margin, partially offset by
cost containment
Wholesale rev. slowing
Net impact provisions &
sale of technical building
Non-HR expenses Continued cost containment
Consumer
Enterprise
Business Unit
Business Unit
Slide 7
SDE & W
- Q3’13 non-HR expenses of € 216m
- Company-wide cost containment
apart from small net positive impact
from provision reversals.
Q3’13 non-HR expenses of € 65m, down 15.7%; apart from the continued benefits of cost optimization, Q3 was backed by a positive year-over-year comparison linked to a litigation provision last year & its settlement this year
Q3’13 non-HR expenses of € 38m, 2.7% lower compared to the same period of 2012 showing effect from solid cost containment.
Non-HR to € 51 million, fairly in line with the previous quarters. The year-on-year increase was mainly due to a one-off provision reversal recorded in Q3’12.
232 226 224 217
256
218 225216
150
170
190
210
230
250
270
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Quarterly Non-HR expenses (€ million)
-0.6%
5000
10000
15000
20000
25000
YE96 YE98 YE00 YE02 YE04 YE06 YE08 YE10 YE12
Belgacom headcount in FTE
HR expenses
15,767 FTEs end September’13 (-248 FTE YoY) Civil Servants decreased to 33% of total headcount
Estimated cash-out for termination benefits
€ million
2013 77
2014 51
2015 21
2016 6
2017 6
2018-2033 21*
(* Cumulative for full period)
PTS -6,300 FTE
BeST -4,160 FTE
2006-2012 Tutorship & FMS -3,900
FTE
Jan ‘12 : The Phone House
+518 FTE*
Telindus +2,600 FTE
15,767
Slide 8 *As part of the agreement with the Competition Council, Belgacom sold some of the Phone House shops in Nov’12, which lowered the headcount accordingly.
Mach 2012 & Jan 2013:
2% inflation based salary
indexation
283 278 281290
278290 283 288
150
170
190
210
230
250
270
290
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Quarterly HR-expenses (€ million)
-0.8%
- Driven by inflation-based wage indexation
of January 2013
- Largely offset by year-over-year
headcount reduction (-248 FTEs) & more
capitalized manpower resulting from
network & IT simplification projects
Belgacom SA age pyramid
Slide 9
44Yr
average age • statutory 52 Yr • contractual 38 Yr
Changed retirement regulation (option to leave at 58 no longer available) & past headcount programs causes gap in retirement level for 2013-2017.
Level of retirements expected to increase as of 2018
0
100
200
300
400
500
600
700
800
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Estimation of nr FTEs retiring
Ytd 2013 Group Ebitda (mio €)
Slide 10
Q3 2013 Group Ebitda (mio €)
464
+3
428
-2
+8
-7
-14
-19-3
-1
Q3 2012 One-offs2012
One-ofss2013
Regulatoryimpact
UnderlyingCBU
UnderlyingEBU
UnderlyingSDE
UnderlyingS&S
BICS Q3 2013
1,372
+12 1,300
+33
-43
+18
-30
-44-14
-5
YtD 2012 One-offs 2012One-offs 2013 Regulatoryimpact
UnderlyingCBU
UnderlyingEBU
UnderlyingSDE
UnderlyingS&S
BICS YtD 2013
-7.4% Underlying
-7.7% reported
-5.3% reported
-2 MTR
-41 Roaming
-7 Roaming
Pressure on Mobile Direct margin, partially offset by cost
containment
Wholesale rev. slowing
Product Mix & higher HR-expenses
Pressure on Mobile partially offset by solid Fixed & cost containment
Wholesale rev. slowing & resources simplification
projects
-5.8% Underlying
Net impact provisions
Net impact provisions, acc. Change new Telco law, sale technical building
Product Mix & higher HR-expenses
Continued investments in high-quality fixed & mobile network to maintain leadership in convergence
Slide 11
734 777 753
11.1%12.1% 11.7%
0
100
200
300
400
500
600
700
800
900
0%
2%
4%
6%
8%
10%
12%
14%
2010 2011 2012 Outlook 2013
Group Capex in € million / % of revenue
13%-14%
*This does not include capex for a potential bidding in the 800 Mhz spectrum auction that is planned before year-end
Accelerated network investments - maintain network superiority on
mobile speed and coverage, - substantially increase the
bandwidth on fixed network via dlm and vectoring technology
- make operations leaner through a simplified network
160
176
9.9% 11.2%
Q3'12 Q3'13
520546
10.8%11.5%
-49,999,640
50,000,360
150,000,360
250,000,360
350,000,360
450,000,360
550,000,360
650,000,360
Ytd'12 Ytd'13
409
797
980
788691
248 274
537410
2008 2009 2010 2011 2012 Q3'12 Q3'13 YtdSep'12
YtdSep'13
Free Cash Flow (in mio € )
Q3’13 Free Cash Flow of € 274 million
Slide 12
Higher FCF result of: • a timing difference in income tax
payments • partly offset by lower EBITDA
(in mio € )
2012 IAS
Res ta ted
2013
var.
20 12 IAS
Res ta ted
2013
var.
Operating CF before working capital changes 397 361 -36 1,168 1,091 -77
CF for Working capital 34 87 53 -67 -148 -81
Net cash used in investing activities -183 -174 9 -563 -533 30
Free Cas h Flo w 248 274 26 537 410 -128
Q3 YtD
(1,601)
410 (539)
(38) 18 (2) (1,751)
Net debtDecember 2012
FCF Dividends Non controllinginterests
Net sale oftreasury shares
Other Net debtSeptember 2013
Sound financial position
Slide 13
- Net financial debt at € 1,751m, € 150m higher versus end 2012
- The outstanding long term financial gross debt amounted to € 2.1Bio
- Credit ratings: Standard & Poor’s A; Moody’s A1 – both stable outlook
Debt maturing
2013 € 127m
2015 € 145m
2016 € 950m
2018 € 500m
2023 € 100m
2028 € 150m
2026 € 73m
- Belgacom has an € 2,500m Bonds EMTN Program with an outstanding amount of € 1,825m.
31-Dec 30-Sep
(EUR million) 2012 2013
TOTAL ASSETS 8,243 8,124 Non-recurrent assets 6,192 6,079
Goodwill 2,339 2,339
Intangible assets with finite useful life 1,097 1,039
Property, plant and equipment 2,467 2,480
Investments in associates 1 1
Other participating interests 7 6
Deferred income tax assets 147 121
Pension and other non-current assets 134 93
Current assets 2,051 2,045
Inventories 133 161
Trade receivables 1,341 1,262
Current income tax assets & other current assets 292 328
Investments 83 61
Cash and cash equivalents 202 233
LIABILITIES AND EQUITY 8,243 8,124
Equity 3,093 3,030
Shareholders' equity 2,881 2,839
Minority interests 211 191
Non-current liabilities 2,678 2,812
Interest-bearing liabilities 1,761 1,966
Pensions and other post-employment benefits 570 509
Provisions 203 202
Deferred tax liabilities and other amounts payable 144 136
Current liabilities 2,472 2,282
Interest-bearing liabilities 215 129
Trade payables 1,310 1,210
Income tax payable 236 147
Other current payables 711 796
Belgacom consolidated balance sheet
• Shareholders’ equity decreased from € 2,881m end 2012 to € 2,839m in Sep‘13. This results from the 2012 dividend payment, exceeding the net income generated over the first nine months of the year.
Slide 14 * The 2012 financial figures have been restated after the adoption of the IAS 19R revision
Group – quarterly P&L
Slide 15
* The 2012 financial figures have been restated after the adoption of the IAS 19R revision
VAR VARQ3/Q3 Ytd
Revenues (1) 1,588 1,6 11 1,620 4,818 1,644 1,586 1,583 1,568 4,736 -3.2% -1.7%
Total OPEX -1,118 -1,172 -1,156 -3,446 -1,215 -1,144 -1,153 -1,140 -3,437 -1.4% -0.3%
Costs of materials and charges to revenues -614 -667 -649 -1,930 -680 -637 -645 -636 -1,918 -1.9% -0.6%
Personnel expenses and pensions -278 -281 -290 -848 -278 -290 -283 -288 -860 -0.8% 1.3%
Other operating expenses -226 -224 -217 -667 -256 -218 -225 -216 -659 -0.6% -1.2%
EBITDA (1) 470 438 464 1,372 429 441 430 428 1,300 -7.7% -5 .3%
EBITDA margin (1) 29.6% 27.2% 28.6% 28.5% 26.1% 27.8% 27.2% 27.3% 27.4%
Non recurring items 0 -10 -1 -11 -4 0 0 1 1 - -
Depreciation -181 -188 -185 -554 -194 -192 -200 -197 -589 6.4% 6.3%
EBIT (incl. NR) 289 240 278 807 231 250 230 232 712 -16 .3% -11.8%
Financial result -22 -26 -54 -102 -28 -20 -24 -27 -72 -50.0% -29.8%
Tax expense -65 -48 -34 -147 -30 -53 -44 -44 -141 26.6% -4.2%
Net income (Group) 199 16 1 184 544 168 171 155 156 482 -15 .3% -11.4%
Non-controlling interest 3 5 5 14 5 5 6 6 17 - -
Earnings/share in € 0.63 0.5 1 0.58 1.71 0.53 0.54 0.49 0.49 1.5 1 -15 .5% -11.6%
Earnings/share in € (excl. NR) 0.63 0.53 0.58 1.73 0.54 0.54 0.49 0.49 1.51 -15.5% -12.7%
Ytd '13Ytd '12Restated*
(1) before non-recurring items
in mio € Q112 Q212 Q312 Q412 Q113 Q213 Q313
Solid third quarter operationals in spite of challenging market
Slide 16
+19,000 TV + 8,000 Internet
+ 17,000 PACKS
+83,000 Postpaid
-50,000 Prepaid
- TV customer base grew by 19,000
in Q3, of which 14,000 HH, in line
with previous quarters. Total TV
customer base of 1,447,000
- BB customer base end Sep’13
at 1,660,000
- Packs continued to grow. Total end
Sep’13 at 1,295,000
- Total Group mobile customer base of 5,443,000 - Strong Mobile Postpaid net adds, growing Belgacom’s
postpaid customer base to 3,656,000.
- Prepaid customer base lower, in shrinking prepaid market,
reaching 1,787,000 prepaid cards end Sep’13
+ 33,000 Mobile cards
- 33,000 Fixed Voice
- Fixed voice customer base
end Sep’13 at 2,969,000
Since Q1’13 mobile service revenue decline remained under control
Slide 17 Slide 17
- Reported : i.e. the YoY variance between the sum of the
Mobile Voice and Mobile Data revenue (of both CBU and
EBU for Group) for the respective quarters.
- On comparable basis: i.e. the Reported YoY variance
corrected for incidentals, with the Telco Law in Q2'12 and
change in bundle carry-over in Q3'12 having the biggest
impact.
-3.8%
-7.1%
-13.1%
-10.0%
-15.0%
-5.0%-7.1%
-12.9% -13.3% -14.0%
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Group Mobile Service Revenue
Reported
On comparable basis
Contained decline
over 2013
-1.8%
-6.0%
-13.2%
-9.2%
-16.5%
-3.4%
-6.0%
-12.8%-14.0%
-15.1%
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
CBU Mobile Service Revenue
Reported
On comparable basis
-6.7% -8.9%
-12.9%-11.1%
-12.8%-7.3%-8.9%
-12.9% -12.2% -12.2%
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
EBU Mobile Service Revenue
Reported
On comparable basis
Since the Telco law came into force, the Consumer
Postpaid ARPU decline clearly accelerated.
Showing some stabilisation since drop in Q1 Initial loss high-value postpaid customers
Re-pricing effect ( Nearly 70% of the Postpaid
customer base has been re-priced to new tariffs)
Prepaid (lower ARPU) moving to Postpaid
Prepaid ARPU was not impacted by the new Telco
Law.
Consumer Postpaid ARPU showing some stabilisation after drop in Q1
The Enterprise Business experiences a more
general ARPU decline driven by:
Regulation
More abundant offers
Churn of high-usage customers in the last
quarter of ‘12
Slide 18
27.3 €28.9 €
26.6 €24.1 € 24.4 € 23.5€
14.2 € 13.6 € 14.4 € 13.3 € 14.0 €12.6€
0.0 €
0.0 €
0.0 €
0.0 €
0.0 €
Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Consumer blended ARPU: Split Prepaid - Postpaid
BlendedPostpaid
ARPU
BlendedPrepaid
ARPU
37.2 € 35.5 € 33.9 €31.5 € 30.8 €
28.8 €
0.0 €
0.0 €
0.0 €
0.0 €
0.0 €
0.0 €
0.0 €
0.0 €
Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Enterprise blended ARPU
*28.9€
*28.2€
*Q2’12 corrected for Telco law impact, Q3’12 corrected for change in bundle carry-over
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
CBUpostpaidCBU prepaid
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Backed by a superior mobile network and attractive mobile pricing, Mobile churn levels further reduced since the peak seen in October 2012
Slide 19
clear effect new
telecom law
effect in EBU much less
pronounced
Consumer Mobile Churn
Enterprise Mobile Churn
Focus on mobile in through positioning of Proximus network quality, proactive
retention and acquisition actions
41.3% 40.7% 40.5% 40.4% 40.6%
31.5% 31.1% 30.7% 30.5% 30.0%
24.5% 23.8% 23.7% 23.6% 23.5%
2.8%4.3% 5.2% 5.5% 5.8%
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Belgacom
Mobistar
Base
Telenet
Strong Mobile net adds in seasonally calm third quarter
Slide 20
- Belgacom Group added 33,000 mobile customers in Q3’13, with Postpaid growing by
83,000
Total Mobile market share₁ slightly up again in Q3 vs Q2
+Tango
1 Active mobile cards, Belgacom estimates 2 Mobile active customers including mobile customers Luxembourg, and including mobile data cards.
2116
3033
40
0
5
10
15
20
25
30
35
40
45
50
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
EBU Net Adds
-80 -68
-108-82
-49
17
-37
26
93
37
-150
-100
-50
0
50
100
150
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Net adds Consumer Prepaid
Net adds Consumer Postpaid
-39
-88
-52
46 33
5,504 5,416 5,364 5,410 5,443
4,000
4,200
4,400
4,600
4,800
5,000
5,200
5,400
5,600
-100
-80
-60
-40
-20
0
20
40
60
80
100
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Mobile customer evolution2
net adds total
Over the last 12 months,
EBU net adds are for ~40% driven by
data cards & M2M
Market share growth
driven by Postpaid
Slide 21
Consumer Mobile price plans became more abundant.
Most important price change in Dec’12; Mobile Data in bundles increased significantly
Nearly
70% postpaid
customers re-priced
Some examples
Q3-13 Q3-13 Q3-13
Slide 22
Reviewed Business* Mobile price plans driven by spill-over effect (* for SoHo & self employed customers)
+40 Min
+ Unlimited SMS
Data x2
Voice :
SMS :
Data : 500Mb
160 Min
OR
160 SMS
30€ (NA)
1Gb
200 Min
Unlimited
30€ (25€)
Q4-11 Dec’12
Bizz
Smart 30
Tariffs : stand-alone (in pack)
Q3-13
30€ (25€)
2Gb
300 Min
Unlimited
Bizz Smart+
30
Bizz
Smart XL 30
+100 Min
Data x2
-10 €
Data x 5+ (4G included)
Unlimited
Unlimited
80€ (NA)
Unlimited
Unlimited
70€ (50€)
Q4-11 Dec’12
Bizz Mob
All-in
Q3-13
60€ (50€)
Unlimited
Unlimited
Bizz Mob+
All-in
Bizz Smart
XL All-in
-10 €
Low end Mid end High end
1 Gb 5 Gb 5 Gb
Min x ~2
Unlimited SMS
Data x4
-20 €
Data x 5 + (4G included)
More minutes in Low End
Total revamp in
Mid End
Price decrease in High End
NA
NA
NA
NA
1Gb
75 Min
Unlimited
20€ (15€)
Q4-11 Dec’12 Q3-13
20€ (15€)
1Gb
150 Min
Unlimited
Bizz Smart+
20
Bizz
Smart XL 20
+75 Min
More value for money
Some examples
Nokia Lumia 625
Smart 45€
300 min Unltd sms
3 GB
300 min Unltd sms
2 GB
Smart 20€
120min Unltd sms
1 GB
29€
+
Smart 15€
120 min Unltd sms 500 MB
Smart 30€
180 min Unltd sms
1.5 GB
99 €
+
180 min Unltd sms
1 GB
1 69€ 199€
Samsung Galaxy
Trend Lite
€ 169,99
Nokia Lumia 520
€ 169,99
Samsung Galaxy ACE 3
€ 269,99 € 289,99
Samsung Galaxy S4 mini
€ 399,99
+
Smart 65€
unlimited Unltd sms
5 GB
Samsung Galaxy S4
€ 529,99
+
unlimited Unltd sms
5 GB
Push smartphone penetration through targeted year-end promotions
Smart 25€ Smart 35€ Smart 65€
Subsidized offer
Nov/Dec : upfront + monthly customer contribution for more mobile data+ smartphone
CBU
Slide 23
Belgacom44%
Cable 49%
Other 7%
Solid performance of fixed products
Belgian digital TV penetration @ 79%
Stable DTV market share of 32%
Growth households stable to H1’13 (+14k in Q3)
Total TV market** share of 26% ; +1pp YoY
Belgian Fixed internet market
still growing, but at slower pace
Internet penetration @ 78%
Belgacom market share erosion limited to -0.4% YoY
Stable market, Fixed Voice penetration @ 72%
Belgacom containing Fixed Voice line erosion
Fixed Voice line “upgraded” via:
Flat rate calling “Happy Time XL” and “Happy Time International”
Multi-play packaging
*Corresponds to the total settop boxes, including multi-stream ** Total TV market includes analog TV
Belgacom 32%
Cable 64%
Other 5%
Slide 24
12 11 10
58
1,626 1,637 1,647 1,652 1,660
1,200
1,300
1,400
1,500
1,600
1,700
-2
3
8
13
18
23
28
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Broadband customer evolution net adds total
-30 -33-44
-39-33
3,119 3,085 3,041 3,002 2,969
2,000
2,200
2,400
2,600
2,800
3,000
3,200
3,400
3,600
-50
-30
-10
10
30
50
70
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Fixed Voice customer evolution net adds total
3946
26
1619
1,340 1,386 1,412 1,428 1,447
400
600
800
1,000
1,200
1,400
1,600
0
20
40
60
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
TV Lines evolution* net adds total
37
23 22 19 17
1,214,000 1,237,000 1,259,000 1,278,000 1,295,000
700,000
800,000
900,000
1,000,000
1,100,000
1,200,000
1,300,000
0
20
40
60
80
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Packs evolution
net adds total
Convergence strategy - key advantage in challenging market
Continued uptake of multi-play packs
4-play gaining success
Nearly 1/4th of Packs
include Mobile
Sustain growth in convergence through more value from mobile components
Supported by tablet joint offer
All Packs contain 3G
mobile internet
volume
All mid-end Packs include
TV Everywhere (as of 1st July)
Up to 6 mobile
subscriptions in a
Pack
Supported by tablet joint offer On 3G, 4G and Wi-Fi More value
at least a € 5
reduction per
mobile
FON log-in
Slide 25
2-play33%
3-play50%
4-play9%
Q3'12
2-play31%
3-play49%
4-play14%
Q3'13
Convergence strategy enabled by network quality
Slide 26
99.85% DSL (among world leaders)
> 87% VDSL
~ 93% TV coverage
Fixed Network Wi-fi Hot Spots
725,000 FON spots in Belgium
>12 million worldwide (UK,
France, the Netherlands, Portugal …)
> 99% 3G & 2G coverage
> 44% 4G coverage
@ @
Mobile Network1
@
1 Source: As measured by independent agency CommSquare during Q3 2013 drive tests
On average, a customer gets
33 Mbps
@
@
3G avg.
3G peak
4G avg.
4G peak 54 Mbps
22Mbps
20 Mbps
6 Mbps
HD
• Start of Field Trial – Large technical field trial started to
prepare Vectoring for massive roll-out
• Strong regulatory framework was negotiated,
disentangling all blocking points
• To up-to-50 Mbps speeds – One third of our VDSL2 lines
already receives 50 Mbps speed
• 30% higher average speed experience – Thanks to DLM, the
avg speed experience increased with 30% for all VDSL2 lines
Preparation for Vectoring roll-out
Fixed network
Launch of Dynamic Line Management
DLM monitors line stability and dynamically applies max
possible speed when a line is sufficiently stable
Vectoring cancels crosstalk in the copper cables resulting
in a significant bit rate increase of copper lines
Launched Q1 2013
Planned Q1 2014
Speed evolution in Mbps 2013 to >2018
Next step: DLM on
Vectoring
download speed in Mbps
Launched in Q1 2013
As of 2014
Slide 27
Mobile data evolution
• Avg. 3G speed increase from ~3 Mbps to ~6 Mbps
• 70% increase of network capacity for data
• 83% of mobile sites have high-speed backhauling
• Belgacom was the first Belgian operator to offer 4G
• ~44% 4G outdoor coverage end Q3 2013
• 4G available in 217 Belgian cities
4G roll-out continued
Mobile network
3G+ mobile data experience acceleration
1
2
3
1
2
3
Belgacom outperforms competition
on mobile internet quality as shown in
an independent study by the largest
Belgian consumer organization
0
50
100
150
200
250
Strong
increase in
number of
users X 2.3 in 1 year
o Mobile data usage still in early stages with
smartphone penetration nearly 35%.
o However, quickly emerging market need for 4G with
much higher mobile data usage each quarter
Steep
increase in
mobile data
usage
+60% in 1 year
Slide 28
Network simplification
SIMPLIFICATION • Out phase 30 buildings • Out phase ATM network • Out phase legacy telephony
PSTN & ISDN
SITUATION TODAY • High network complexity, high
number of technologies • High maintenance cost • High connectivity cost
TO FROM
copper
fiber
street cabinet
remote optical platform
central technical office
Leaner operations through a simplified all-IP-network
• Estimated to
generate savings as
of year one, as
from 2018 growing
to € 35m recurrent
savings.
Major Milestones Three major components
Fixed voice consolidation – 3.800.000 PSTN equivalent
lines to migrate
Fixed data consolidation – 250.000 ATM customers to
migrate
Building outphasing – 263.000 m² floor space to
consolidate
• Total customer base of ATM customers on Ethernet
based alternatives by 2013
• No more SIEMENS EWSD switches
by 2015 (~40% of install base)
• No more ALCATEL LUCENT S12 PSTN switches
by 2018 (~60% of install base)
• 30 buildings freed up by 2020
with an average of 5 buildings/year
1
2
3
4
Already 400.000
lines migrated
Slide 29
30
Belgacom Company presentation Investor Relations
Consumer Business Unit (CBU)
Enterprise Business Unit (EBU)
Service Delivery Engine &Wholesale (SDE&W)
Staff and Support (S&S)
Belgacom International Carries Services (BICS)
Q3 2013 results per business unit
Slide 30
233
252
234
263243 248 243
258
40.8%43.7%
40.6%
44.7%41.8%
44.9% 42.8%46.9%
30.0%
35.0%
40.0%
45.0%
50.0%
180
200
220
240
260
280
300
320
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
CBU EBITDA (EUR mio) & margin
87 89 87 91 87 88 86 88
84 74 73 77 86 68 74 65
0
20
40
60
80
100
120
140
160
180
200
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Personnel Non-HR
CBU Personnel & Non-HR costs (EUR mio)
168 162
182
157166
149165
139
90
110
130
150
170
190
210
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
CBU Cost of Sales (EUR mio)
572 577 575587
581
553567
549
510
530
550
570
590
610
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
CBU revenue (EUR mio)
Consumer - P&L
-6.5%
-11.5%
-9.0%
-1.9%
Decline in revenue partially offset by cost containment
Slide 31
Q3’ 13 HR costs -3.4 % yoy: salary indexation (Jan ’13) more than offset by lower headcount (incl sold The Phone House stores), lower installation costs. Ytd Sep’13 HR exp -2% yoy to € 262m.
Q3’ 13 non-HR costs -15.7%: litigation provision last year, settlement this year, continued cost optimization. Ytd, non-HR expenses
decreased by 7.7% to € 206m.
Q3’13 segment result -1.9%. yoy. Like-for-like, the decline slightly improved vs Q2 driven by sound Fixed revenues and sustained value management. CBU segment result included € -2m impact from regulation.
Ytd Sept ’13 CBU’s segment result was € 749m, stable versus 2012.
Q3’13 Revenue -6.5% lower, reg. impact Q3 ’13 of €-7m (-1.2%)
– one-off accounting reclassification; less mobile terminals rev; positive impact in Q3’12 change in bundle carry-over.
– lower Mobile revenue and sale of some of The Phone stores, partly compensated for by firm performance Fixed and Tango.
Ytd Sept’ 13: € 1,669m revenue, -4.1% YoY
Q3’ 13 Cost of Sales -11.5% lower YoY
– Besides regulation, positive impact from (i) one-off accounting reclassification (ii) lower terminal sales, (iii) divestment of part of The Phone House stores and (iv) continued benefits from improved sales channel mix
– Ytd Sept’13: € 452m; -9.6% YoY
110 110105 105 105 104 103 102
80
90
100
110
120
130
140
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Fixed voice revenue (EUR mio)
1,036 1,0861,027
9651,060 1,086
988901
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Traffic (mio min)
19.8 20.2 19.7 19.7 20.0 20.1 20.2 20.3
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Fixed voice ARPU (EUR/month)
-21 -20 -22 -21 -18 -26 -19 -20
1,818 1,780 1,758 1,737 1,718 1,693 1,673 1,653
30
530
1,030
1,530
2,030
-50
-30
-10
10
30
50
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Voice line loss & EOP (000)
Consumer - Fixed voice Fixed Voice line erosion stable; revenue decline continued to persist
*Q1 2012 real line loss, differs from QoQ EOP difference due to re-segmentation exercise at start of 2012
-2.2%
+2.8%
-6.7%
Fixed Voice price adjustments resulted in contained revenue decline and growing ARPU
Slide 32
*
Q3’13 Fixed line erosion of -20,000 lines.
By end-Sept ‘13, the CBU Fixed Voice customer base totaled 1,653,000 lines, i.e. -4.8% yoy.
The total Fixed Voice traffic was down 6.7%, driven by lower national and fixed-to-mobile traffic.
Price increases reflected in the Fixed Voice ARPU, up 2.8%
Fixed Voice benefitted from price changes, bringing relief to the declining Voice revenue resulting from the yoy line loss.
Ytd Sep ‘13, revenue from Fixed Voice of € 310m, i.e. -3.0% vs last year.
136 130 123133 120
100 107 99
40
60
80
100
120
140
160
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Mobile voice revenue (EUR mio)
103.8 101.5104.7
100.5 101.7 102.2
109.4 108.1
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
MoU (min/month)
12.2 11.6 11.112.0
11.19.5 10.2 9.5
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Blended net voice ARPU (EUR/month)Blended net voice ARPU (EUR/month)
32 10 5
-62-105 -82
11
-12
3,805 3,805 3,811 3,7483,643 3,561 3,572 3,560
2,500
2,700
2,900
3,100
3,300
3,500
3,700
3,900
4,100
-180
-130
-80
-30
20
70
120
170
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Mobile growth & EOP (000)
Consumer – Mobile Voice Controlled Mobile Voice revenue decline in a climate of ongoing repricing; continued Postpaid subscriber growth
*
*i.e. Mobile net adds differ from QoQ EOP difference due to re-segmentation exercise at start of 2012
-25.8%
+7.5%
-21.5% 12.0
Slide 33
CBU’s total Mobile customer base end-Sept’13 numbered 3,560,000 cards
– Firm net addition of 37,000 postpaid cards in a commercially slower quarter.
– Mobile Prepaid decline slowed to -49,000 during Q3.
Q3 seasonally lower Voice ARPU
– Fairly similar to the ARPU of the previous two quarters
– Impacted by Postpaid repricing with more abundant tariff plans
MoU up YoY to 108 minutes/user/month
Q3 ‘12 incl the positive impact from change in bundle carry-over . Excl this, revenue -23.7% yoy; vs -21.5% over H1’13.
Besides regulation, largely the cumulative result of the lost Prepaid customers and continued Postpaid re-pricing, especially lower out-of-bundle usage.
Q3’12 inc pos impact change bundle carry-over
8285 84 85 85
8789 90
72
74
76
78
80
82
84
86
88
90
92
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Fixed data revenue (EUR mio)
26.1 26.9 26.4 26.5 26.1 26.3 26.7 26.9
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Broadband ARPU (EUR/month)
1815
10 13 1210
7 9
1,156 1,159 1,169 1,181 1,193 1,203 1,210 1,219
10
210
410
610
810
1,010
1,210
1
21
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Broadband growth & EOP (000)Broadband growth & EOP (000)Broadband growth & EOP (000)Broadband growth & EOP (000)
Consumer - Fixed Data Strong Fixed Internet revenue grew 5.6%, driven by price adjustments and larger customer base
*i.e. Fixed Internet net adds differ from QoQ EOP difference due to re-segmentation of customers
+5.6%
+1.7%
Slide 34
*
Revenue growth driven by growing customer base and price changes of Feb and July ‘13.
Ytd Sept’13, CBU recorded € 265m, up 4.4% vs same period last year.
Broadband customer base +9,000 in Q3’13
Total CBU Fixed Internet customer base of 1,219,000 end-Sept ‘13.
Broadband ARPU of EUR 26.9, up 1.7% versus the same period in 2012.
85 85 87 84 87 85 86 81
13 14 15 15 13 12 12 13
0
30
60
90
120
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
SMS Adv Data
Mobile data revenue (EUR mio)
9397 97 102 98 97 98100
273 280 291262
294 280 283249
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
SMS (units/month)
8.5 8.59.0 8.7 9.0 9.0 9.1 8.8
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Blended net data ARPU (EUR/month)
Consumer - Mobile Data
Roaming regulation and the mobile customer evolution feeding the Mobile data revenue declineage
-3.9%
-4.9%
+0.9%
Slide 35
Average monthly SMS usage was down 4.9% yoy to 249 text messages.
ARPU from Mobile Data increased slightly yoy by 0.9% to € 8.8 for Q3’13.
Mobile Data revenue impacted by regulation, the yoy lower mobile customer base and more abundant offers.
– SMS revenue -2.9% in Q3’13
– Advanced Mobile Data -9.6%, showing smaller decline vs previous quarter. Impacted by new reduced price cap on retail Data Roaming effective since July 2013, though to a lesser extent than before.
53 55 57 61 62 64 66 67
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
TV revenue (EUR mio)TV revenue (EUR mio)
17.5 17.6 17.6 18.1 18.2 18.3 18.6 18.7
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
TV ARPU (EUR/month)
Belgacom TV
Solid TV revenue growth through larger TV customer base and higher ARPU
+10.2%
+3.1%
Slide 36
7243 48 39 46
26 16 19
1,211 1,254 1,301 1,340 1,386 1,412 1,428 1,447
0
200
400
600
800
1,000
1,200
1,400
0
20
40
60
80
100
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
TV growth & EOP (000) Continued customer growth
– Total customer base of 1,447,000; +8% YoY
– Growth households stable to previous quarters
– +14,000 households added on Belgacom TV, 5,000 multiple streams
Q3 TV ARPU of € 18.7 , a 3.1% growth YoY
– Supported by the February ’13 price increase for rented settop boxes
TV revenue +10.2% YoY driven by
– Continued growth of subscribers
– Price increase of rented settop box
28 27 28 2830 29
32 32
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)Tango revenue (EUR mio)
28
29.1 28.4 29.2 29.5 30.7 30.1 31.1 30.9
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Blended mobile net ARPU (EUR/month)
Tango Luxembourg
+12.9%
+4.7%
Slide 37
264 266 268 270 271 273 274 278
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Tango mobile customers EOP (000)
Q3 2013, Tango’s revenue +12.9% YoY to € 32m.
– supported by the growing mobile subscriptions
– success of the offers for Smartphones
– increased terminals sales
Ytd Sept’13 € 94m revenue, up 12.3% YoY
Continued growth in mobile customer base
– good smartphone sales with Tango’s leading 4G subscriptions
– launch of new prepaid offers during the third quarter
– acquisition of several large accounts in the B2B market
96 99 102 102 100 107 105 104
36 40 39 39 41 38 37 38
0
20
40
60
80
100
120
140
160
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Personnel Non-HR
EBU Personnel & Non-HR costs (EUR mio)
164
149157
150
163
148 149 146120
130
140
150
160
170
180
190
200
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
EBU Cost of Sales (EUR mio)
591 579 576560
579554 554
533
420
470
520
570
620
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
EBU revenue (EUR mio)
Enterprise – quarterly P&L
-4.7%
-2.7%
+1.0%
-5.5%
Slide 38 *Like-for-like excludes the impact from the accounting adjustment recorded in Q2’13
296 291 278 268 276 260 263 245
50.0% 50.2% 48.3% 48.0% 47.6% 47.0% 47.5% 45.9%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
-5
45
95
145
195
245
295
345
395
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
EBU EBITDA (EUR mio) & margin
-8.9%
Cost of Sales down year-on-year
– positive effect from lower Mobile Termination Rates, less ICT-related costs, more than offsetting volume-driven commissions and SMS interconnection costs.
– Ytd Sept’13 € 444m, 2.8% lower yoy
Q3’13 segment result -8.9% YoY.
– remaining fairly in line with H1’13 decline of -9.3% (like-for-like)
– Regulatory measures: € 5m (-1.9%).
– Lower Direct margin resulting from the changing product mix.
Ytd’13 € 768m, -8.3% YoY
For Q3’13, € 38m non-HR expenses, -2.7% YoY, showing effect from solid cost containment. Ytd’13 -4.4% to € 113m.
HR expenses +2.4% to € 104m: higher personnel base, salary indexation of Jan’13. Ytd’13 €316 m HR expenses, up 4.4% YoY.
Revenue decline fairly in line with previous Q’s like-for-like*
– Regulation impact of € -9m (-1.6%) in Q3’13
– pressure on mobile revenue from more abundant offers
– rate of Mobile revenue decline, however, fairly stable in relation to the previous quarters, supported by solid customer growth
122 124 120 118 119 118 117 114
90
100
110
120
130
140
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Fixed voice revenue (EUR mio)
716 754699
636686 695
654592
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Traffic (mio min)
28.6 28.9 28.4 27.9 28.6 28.7 28.8 28.3
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Fixed voice ARPU (EUR/month)
-14 -18 -15-9
-14 -18 -19-13
1,385 1,394 1,379 1,370 1,356 1,338 1,318 1,305
-100
100
300
500
700
900
1,100
1,300
1,500
1,700
1,900
-20
0
20
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Voice line loss & EOP (000)
Enterprise - Fixed Voice Ongoing relief from price changes, offset by impact from continued line erosion
*
*Fixed line loss differ s from QoQ EOP difference due to re-segmentation exercise at start of 2012 and inclusion of business trunking
-3.2%
+1.4%
-7.0%
Slide 39
Fixed Line erosion in Q3 seasonally low
limited to -13,000 lines in spite of enterprises continuing to rationalize on their Fixed Voice lines.
End-Sept ’13, the EBU Fixed Voice customer base of 1,305,000 lines, -4.8% yoy
Q3 Fixed Voice traffic was 7% lower YoY driven by:
– fixed line erosion
– lower usage per line
Q3’13 ARPU up 1.4% YoY to € 28.3
– Negative effect from reduced F2M (Jan’13)
– offset by positive effect from price indexation (Feb’13)
Fixed voice revenue impacted by lowered Fixed-to-Mobile rates on 1 Jan ’13 and continued line erosion
Price increases gave some relief
Ytd Sept ‘13 Fixed Voice revenue -3.6% YoY
108 106 102 100 9688 88
83
40
50
60
70
80
90
100
110
120
130
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Mobile voice revenue (EUR mio)
322.8 327.8 326.6293.3
314.3 310.2 315.8290.9
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
MOU (min/month)
25.9 25.3 23.7 22.9 21.6 19.7 19.2 17.8
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Net voice ARPU (EUR/month)
29 22
36
21 16
3033 40
1,408 1,413 1,449 1,470 1,486 1,516 1,549 1,589
500
700
900
1,100
1,300
1,500
0
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Mobile growth & EOP (000)
Enterprise - Mobile Voice Solid customer growth, revenue under pressure due to pricing and regulation
*
*i.e. Mobile net adds differ from QoQ EOP difference due to re-segmentation exercise and cleaning in-active cards at start of 2012
-16.7%
-0.8%
-22.3%
Enterprise - Mobile Voice Pressure on Mobile Voice ARPU in line with previous quarters; customer base growing by 40,000 mobile cards
Slide 40
24.2
Solid Mobile customer growth in Q3’13
– Retention/acquisition efforts paying off
– 40,000 net mobile cards added, with especially Voice cards doing sequentially better
Rate of ARPU decline in line with the previous quarters
– erosion partly due to the inclusion of a growing number of M2M cards, with typically lower ARPU.
– Uptake of more abundant price plans
slightly lower usage YoY
Revenue -16.7%; trend H1 continued
– regulated MTR and Voice Roaming prices
– Repricing effect; general competitive mobile market.
– H1 trend continued: Q1 -16.7%; Q2 -15%
Ytd Sept ’13 Mobile revenue € 260m -15.5% YoY
9799 99
96 95 96 9694
90
92
94
96
98
100
102
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Fixed data revenue (EUR mio)
38.939.5 39.0 39.1 38.8 39.0 39.3 39.5
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Broadband ARPU (EUR/month)
0 0
-2 -1 -1
1
-2 -1
434 446 445 444 443 444 442 441
30
80
130
180
230
280
330
380
430
-10
11
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Broadband growth & EOP (000)
Enterprise - Fixed Data Slightly positive revenue trend continued; Internet customer base fairly stable
*i.e. Fixed Internet net adds differ from QoQ EOP difference due to re-segmentation of customers
-1.5%
+1.2%
Enterprise - Fixed Data Fixed Data revenue impacted by migrations to Explore platform and uptake of converged Packs with internet
Slide 41
*
Q3’13 Fixed Data revenue €94 m, -1.5% vs 2012
– Continued migration from older technologies to the Belgacom Explore platform, for which pricing is more favorable for customers
– Slightly smaller customer base
End Sept ’13 441,000 BB customers, -0.8% yoy
SME customers opting more and more for advantageous converged Packs including internet.
Q3’13 ARPU of €39.5 up 1.2%YoY, driven by price adjustments
96 107 112 105 118 118 119 113
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
SMS (units/month)
13.7 13.5 13.512.6 12.2 11.8 11.6 11.1
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Net data ARPU (EUR/month)
Enterprise – Mobile Data Regulated price caps pressuring both SMS and advanced Mobile data revenue
-7.3%
+8.0%
-12.1%
Slide 42
26 26 26 25 26 25 24 23
31 31 32 30 28 28 29 29
0
10
20
30
40
50
60
70
80
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
SMS ADV Data
Mobile data revenue (EUR mio)
57 56 58 55 54 53 53 52
-5.8%
Continued uptake in SMS usage, growing 8 % YoY to 113 text messages per user per month
– Success of pricing plans, including more and more unlimited SMS volumes.
Mobile Data ARPU down 12.1% YoY to €11.1
– Growth trend reversed since 1 July 2012 due to regulated price caps for Mobile Data roaming
– aggressive competitor moves on business market
Q3’13 Mobile Data revenue -5.8% YoY
– Q3’13 non-SMS Data revenue € 29m, -2.6%, improving vs previous quarters driven by lower yoy regulated price effect.
– Q3’13 SMS revenue -9.5%; including minor regulation impact, and especially effect of price bundles including unlimited SMS
Ytd’13 Mobile data revenue of € 158m, -6.3% YoY
182
167 172 167
186174 175
166
130
140
150
160
170
180
190
200
210
220
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
ICT revenue (EUR mio)
Enterprise – ICT ICT revenue up by 6.1% on like-for-like basis
-0.6%
Enterprise - ICT ICT revenue marginally down in challenging economic context
Slide 43
Q3’13 ICT revenue -0.6% YoY to € 166m
– Seasonally lower Q3
– Impacted by difficult economic climate, with customers delaying IT projects or opting for private Cloud-based solutions, which triggers a shift from one-shot revenue to monthly services fees.
– In Q3 ’13 this was especially showing in the UK market
Ytd Sept’13 ICT revenue +1.9% to € 516m
-21 -23 -26 -21 -25 -30 -31 -32
-60
-50
-40
-30
-20
-10
0
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
SDE&W EBITDA (EUR mio)
50 43 43 46 43 45 42 44
42 48 50 41 48 50 52 51
0
20
40
60
80
100
120
140
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Personnel Non-HR
SDE&W Personnel & Non-HR costs (EUR mio)
9 9 9 9 10 11 10 108
9
9
10
10
11
11
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
SDE&W Cost of Sales (EUR mio)SDE&W Cost of Sales (EUR mio)
80 78 76 75 76 75 74 73
53
58
63
68
73
78
83
88
93
98
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
SDE&W revenue (EUR mio)
livery & Wholesale - P&L
-2.4%
+10.0%
+9.8%
-54.2%
Service Delivery & Wholesale – P&L
Slide 44
CoS Q3’13 +10%
€ 44m HR expenses for Q3; -4.6% yoy. Salary indexation (Jan’13) offset by positive effect from lower headcount and network & IT-related capitalized manpower .
non-HR expenses of € 51m in line with previous quarters. Q3’12 was positively impacted by provision reversal
Q3 segment result YoY lower due to lower Direct margin. Yoy variance impacted by provision reversal in Q3’12
slowing wholesale revenue
– lower broadband volumes , partly offset by increased roaming revenue (volume growth offsetting price decreases)
Ytd ’13 revenue -3% YoY to € 222m
8 9 7 7 11
18
7 100
5
10
15
20
25
30
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
S&S Revenue(EUR mio)
40
3738
4038
4038
40
32
34
36
38
40
42
44
46
48
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
S&S Personnel costs (EUR mio)
6150 50 49
67
50 50 50
0
10
20
30
40
50
60
70
80
90
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
S&S Non-HR costs (EUR mio)
Staff & support - P&L
* Internal invoice; neutral on group level
+36.3%
-0.1%
+1.8%
Staff & Support – P&L
Slide 45
• Q3’13 revenue of € 10m, including litigation settlement
• Ytd’13 revenue of € 35m, including a capital gain of € 11m in Q1 resulting from the sale of a technical building as part of Belgacom’s ongoing network simplification plan.
• HR-expenses remained flattish YoY
• Inflation-based wage indexations ,partially offset by the benefit from lower headcount compared to end Sept 2012.
• Fairly stable YoY Non-HR expenses for Q3’13
33 28 34 35 32 35 37 38
8.3%7.3%
8.4% 8.3% 7.3% 8.3% 8.9% 8.6%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
0
10
20
30
40
50
60
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
BICS EBITDA (EUR mio) & margin
31 31 32 32 34 33 38 37
27 2530 31 29 28 27 30
0
20
40
60
80
100
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Non-Voice Voice
BICS Gross margin (EUR mio)
401382
409424 430
417 413437
300
320
340
360
380
400
420
440
460
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
BICS Revenue (EUR mio)
International Carrier Services P&L
+3.0
+5.1%
+7.3%
International Carrier Services – P&L
Slide 46
7,018 6,907 6,984 6,934
7,5567,267
6,701
7,287
315 323 361 428
445451
461
540
5,200
5,700
6,200
6,700
7,200
7,700
8,200
Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
SMS/MMS Minutes
BICS Volumes (in mio) • Voice volumes: Q3’13 up 5% to 7.3 billion minutes
• Non-Voice volumes Q3 up 26% to 540 million messages
• Consequently to solid Direct margin growth BICS’ segment result for Q3’13 was up by 7.3% and the EBITDA margin ended slightly higher at 8.6%.
• Ytd 2013, BICS reported a segment result of € 109m, up 12.1% YoY.
• Gross margin Q3’13 up 5.1% YoY
– Through favorable destination mix record Gross margin of € 67m.
• Ytd Sept 2013 the Gross margin totaled € 193 million, a 6.6% yoy increase.
• Revenue Q3’13 up 3% from strong comparable base
– Reduced EU MTRs and slight negative dollar effect impacted Voice revenue
– More than compensated for by solid Mobile data revenue
• Ytd’13 BICS revenue of € 1,266m, up by 4.2% YoY.
47
Belgacom Company presentation Investor Relations
Ytd September 2010 results in detail
• Consumer Business Unit (CBU) • Enterprise Business Unit (EBU) • Service Delivery Engine &Wholesale (SDE&W) • Staff and Support (S&S) • Belgacom International Carries Services (BICS)
Other topics
Slide 47
Work In Progress
• Shareholder structure – slide 48 • Shareholder remuneration - slide 49 • Spectrum – slide 50 • Price Policy – slide 51
Other topics
• Pricing – slide 52 • Regulation & legal – slide 58 • Belgian economy – slide 62
Shareholder structure*
Belgian state owns ~ 53.5%
Status 30 Jun 2013
Shares %
shares %
Voting %
Dividend
Belgian state 180,887,569 53.5% 56.7% 55.9%
Free float 138,075,552 40.9% 43.3% 42.7%
Own shares 19,062,014 5.6% - 1.4%
338,025,135 shares, of which 318,963,121 Outstanding • Limited liability company under public law
- Belgian state main shareholder: 53.5%
- Legal obliged threshold: 50%+1 share
• Free float 40.9%
• Treasury shares 5.6%
- Under Belgian law, companies prohibited from owning >20% of outstanding share capital
- Part of own shares held for personnel incentives
Slide 48 *situation at 30 September 2013
Belgian State; 53.5%
Free Float; 40.9%
Own Shares; 5.6%
Belgacom to return a EUR 0.5 interim dividend
Slide 49
0%
30%
60%
90%
120%
150%
0100200300400500600700800900
1,000
2004 2005 2006 2007 2008 2009 2010 2011 2012
SBB Dividends % of FCFShareholder remuneration
Mio €
0.29 0.50 0.50 0.40 0.50 0.50 0.50 0.55 0.31
1.38
1.52 1.60
1.68 1.68 1.68 1.68 1.68 1.68
2004 2005 2006 2007 2008 2009 2010 2011 2012*
Interim dividend Extra dividend Normal dividend
Dividend per share & dividend yield
1.93 1.52
1.89 2.18 2.18 2.18 2.08 2.18
2.49 6.1% 5.5% 5.7%
6.5% 8.0% 8.2% 8.7% 9.0%
11.2%
Seri…Dividend Yield*
*Dividend yield based on annual dividend & share price end of year
- On 24 October 2013, Belgacom’s Board of Directors approved to return to the shareholders a total gross interim dividend of EUR 0.50 per share:
• Ex-dividend date 3 Dec ’13 • Record date 5 Dec ’13 • Payment date 6 Dec ‘13
Spectrum - Belgian situation
Slide 50
Spectrum: The Belgian situation
Proximus 2 x 12
Mobistar 2 x 12
Base 2 x 10
Proximus 2 x 20,8
Mobistar 2 x 20,8
Base 2 x 22
Unallocated 2 x 11.4
Unallocated 2 x 15
900 MHz
1800 MHz
2100 MHz
2600 MHz
Proximus 2 x 15
Mobistar 2 x 15
Base 2 x 15
1x 5
1x5 1x5 Telenet / Voo
2 x 14.8 1x5
Proximus 2 x 20
Mobistar 2 x 20
Base 2 x 15
BUCD 1 x 45
• 900 MHz & 1800 MHz
• Used for 2G, 3G and 4G
• Belgian operators allowed
to deploy UMTS in 900
MHz spectrum (more
efficient in rural areas) & 4G
in 1800 MHz
• Tacit extension: BGC has to
pay €74m for ‘10-’15; via
annual payments. BGC
filed annulment procedure.
900 MHz & 1800 MHz
• Used for 3G
• Proximus, Mobistar & Base
each have a UMTS license
since 2001
• BGC paid € 150m
• 2 Aug ‘11, BIPT awarded 4th
license to Telenet/Voo for
an amount of € 71.5m (2X
14.8 MHz)
• all licenses expire in 2021
2100 MHz
• Will be used for 4G
• Out of 5 candidates, 4
have obtained spectrum in
2.6 GHz band
• Belgacom acquired 2x20
MHz for an amount of €
20.22 Mio.
• License is valid for 15 years
as from July 2012
2600 MHz
• Will be used for 4G
• Out of 3 candidates, all
have obtained spectrum in
800 MHz band
• Belgacom acquired 2x10
MHz for an amount of €
120 Mio.
• License is valid for 20
years
800 MHz
800 MHz
Proximus 2 x 10
Mobistar 2 x 10
Base 2 x 10
Price policy Belgacom - evolution
Slide 51
APR
MAY
JUN
JUL
AUG
SEP
2013 01/05: price increase for calls
01/02: price indexation for fixed voice & internet line
01/01: price decrease for calls to mobile
FEB
01/07: price increase packs
01/07: price decrease Easy+ 55 & Bizz Mobile
01/04: revamp postpaid offer, Easy => Easy +; Smart => Smart +
NOV
DEC
JAN
2012
OCT 01/10: revamp postpaid offer, launch Easy & Smart, data in all Generation
01/10: NEW FTC LAW
01/09: revamp prepaid offer, more bonus for prepaid Easy & Smart + launch P&G Max
10/12: revamp postpaid offer: more datavolume & more calling minutes
Pricing – Fixed products
€ 29.67 / month
Free to FIX Anytime
24/24
No Limit National Anytime
€ 19.99 / month
Free to FIX & to MOB during OffPeak & Weekend
Peak: 8-17h
Happy Time XL
€ 46.20 / month
Volume incl: Unlimited
Upload speed: 4 Mbps
3G: 250 MB
+ unlimited hotspot access
Internet Maxi
€ 35.95 / month
Volume incl: 150 GB Upload speed: 3 Mbps
3G: 100 MB
+ hotspot access
Internet Comfort
€ 24.95 / month
Volume incl: 100 GB
Upload speed: 2.5 Mbps
3G: 50 MB
+ hotspot access
Internet Start
€ 21.5 / month
>70 channels 3 TV
TV
€ 19.99 / month
Note: Lower tariffs during peak compared to Happy Time
Peak: 8-19h
Classic
€ 20.99 / month
Free to FIX ,to MOB & to most European countries
during OffPeak & Weekend
Peak: 8-17h
Happy time international
Note: Belgacom TV only
available in pack, not as stand alone service:
Internet Start+TV: € 43.95 Tel+TV: € 35.75
*The indicated speeds of a home connection
depend on such factors as the distance between the connection point and the telephone exchange, the computer system and the internal cabling. In order to attain these speeds, a customer must have a VDSL connection. 30 Mbps is the connection speed offered to the majority of new customers. Now, more than 1.2 million households and companies
can order a line offering a connection speed of 50 Mbps.
Download speed: 30 Mbps* 1.2 mio lines already get up-to-50 Mbps
Slide 52
€ 25 / month € 20 /month PACK
240 min unlimited SMS
€ 0.25 / min € 0.25 / MMS € 0.85 / MB
Easy+ 25
€ 15 / month € 10 /month PACK
150 min + unlimited SMS
€ 0.25 / min € 0.25 / MMS € 0.85 / MB
Easy+ 15
For non-Smartphone
users
€ 35 / month € 30 /month PACK
300 min + + Unlimited SMS
+ 2 GB incl
€ 0.25 / min € 0.25 / MMS € 0.10 / MB
Smart+ 35
€ 25 / month € 20 /month PACK
180 min + + Unlimited SMS
+ 1 GB incl
€ 0.25 / min € 0.25 / MMS € 0.10 / MB
Smart + 25
€ 15 / month € 10 /month PACK
120 min + Unlimited SMS
+0.5GB incl
€ 0.25 / min € 0.25 / MMS € 0.10 / MB
Smart+ 15
€ 65 / month € 55 /month PACK
Unlimited voice + Unlimited SMS +
5 GB incl.
Unlimited / min € 0.25 / MMS € 0.10 / MB
Smart+ 65
€ 10 / month
20 min + unlimited SMS
€ 0.25 / min € 0.25 / MMS € 0.85 / MB
Easy+ 10
For Smartphone
users
Slide 53
included
€ 45 / month € 40 /month PACK
Unlimited min unlimited SMS
Unlimited min € 0.25 / MMS € 0.85 / MB
Easy+ 45
Pricing – Mobile Voice (Postpaid)
Pricing – Mobile Voice (Prepaid)
Reload bonus For each reload within 31 days, with Pay&Go Easy you get :
• Bonus 1 (towards fix and Mobile): € 10 reload= 30min, € 15 reload= 60min, € 25 reload= 90min, € 50 reload= 200 min
OR Bonus 2 (towards fix): € 10 reload=150 min, € 15 reload=600 min, € 25 reload=unlimited min, € 50 reload=unlimited
€ 0.50 / min Peak € 0.25 / min OffPeak
€ 0.12 / SMS Peak € 0.08 / SMS OffPeak
€ 0.25 / MMS € 0.5/MB
Pay & Go Smart
€ 0.27/ min € 0.12 / SMS
€ 0.25 / MMS € 0.5 /MB
Pay & Go Easy
Slide 54
For non-Smartphone
users
For Smartphone
users
Reload bonus For each reload within 31 days, with Pay&Go Smart you get:
• Bonus € 10 Reload: unltd. SMS OffPeak + 10 MB Peak: 7 – 16h • Bonus € 15 Reload: unltd. SMS + 150 MB • Bonus € 25 Reload: unltd. SMS + 500 MB
Pay & Go Max
€ 0.30 / min € 0.12 / SMS € 0.25 / MMS
€ 0.5/MB
Reload bundles For Pay&Go Max reload you get:
• € 15 Reload: 90 min + unltd. SMS + 250 MB • € 25 Reload: 150 min + unltd. SMS + 500 MB • € 50 Reload: 360 min + unltd. SMS + 2 GB
For each reload, you get a bundle and no more credit The bundle has a validity of 31 days Out of bundle usage is possible with additional reloads
New Offer & Concept
as from 1 September ‘13
Pricing – Mobile Data
€ 4.99 50 MB € 9.99 500 MB
€ 0.5 / MB (prepaid ) Or
€ 0.85 / MB (postpaid)
€ 34.99 / month
4 GB incl.
€0.03 / MB
Favorite
€ 19.99 / month
2 GB incl.
€0.03 / MB
Comfort
€ 4.99 / month
+ € 1 /day of surf
1 GB incl.
€0.03 / MB
Daily
€ 10
500MB incl.
Pay & Surf for iPad
€ 24.99 / month
3 GB incl. (if you use more – usage
is free but at a lower speed)
Favorite for iPad
Laptop & Tablet Only
GSM Only
iPad Only
Post-paid Only General Prepaid Only
Laptop Only
€ 10 500 MB € 15 750 MB
€ 25 1250 MB € 50 2500 MB
Pay & Surf
€ 5 reduction if you are already a BGC fixed internet customer
Prepaid Only Prepaid Only
Reload € 10 > in 31d: +50% data volume
€ 10 / month
1 GB incl.
€0.1/ MB
4G Option Pay & Surf Standard
Slide 55
included included included
Pricing converged PACKS - examples of possible combinations
€ 53.95 / month
TV TV Everywhere
+ Internet Comfort
+Unlimited volume +Unlimited hotspot
access +500 MB 3G
TV + Internet
€ 53.95 / month
Classic (incl. Happy Time XL and Happy Time International)
+ Internet Comfort
+Unlimited volume +Unlimited hotspot
access +500 MB 3G
Fix+ Internet
€ 35.75 / month
TV +
Classic (incl. Happy Time XL)
TV + Fix
€ 62.95 / month
TV
TV Everywhere +
Classic (incl. Happy Time XL and Happy Time International)
+ Internet Comfort
+Unlimited volume +Unlimited hotspot
access +500 MB 3G
TV + Fix + Internet
€ 63.95 / month
TV TV Everywhere
+ Smart+/Easy+ 15
+ Internet Comfort
+Unlimited volume +Unlimited hotspot
access +500 MB 3G
TV + Mobile + Internet
€ 72.95 / month
TV TV Everywhere
+ Classic (incl. Happy Time XL and Happy Time International)
+ Smart+/Easy+ 15
+ Internet Comfort
+Unlimited volume +Unlimited hotspot
access +500 MB 3G
TV + Fix + Mobile + Internet
Slide 56
As from 1 Jul’13, the rates of Packs
including internet went up: + € 2 for Start
+ € 3 for Comfort + € 1 for Maxi
In exchange, customers get more volume,
more speed & more TV
At least € 5/month discount for each Proximus subscription (as of € 15 /month) added to your Pack
(maximum of 6 Proximus subscriptions per pack)
Slide 57
Scarlet pricing Positioning Scarlet as no frills brand,
with very attractive pricing for ‘price
seekers’
360 min + 1000 SMS
+500 MB incl
€ 0.16 / min € 0.09 / SMS € 0.20 / MMS
€ 0.15 / MB
€ 28
180 min + 300 SMS
+200 MB incl
€ 0.16 / min € 0.09 / SMS € 0.20 / MMS
€ 0.15 / MB
€ 14
125 min + 200 SMS
+50 MB incl
€ 0.16 / min € 0.09 / SMS € 0.20 / MMS
€ 0.15 / MB
€ 8
€ 39 / month TV:
~30 channels +
Fixed Voice line: Free calls to fix Off Peak
+ Internet:
Unlimited volume Down 30 Mbps
Up 2.5 Mbps
TV + Fix + Internet
• Over the third quarter of 2013, Belgacom’s revenues were negatively impacted for a total amount of € 16 million by regulation measures. On the EBITDA level, this came down to an impact of € 7 million.
• For the full year 2013, the estimated total impact of regulatory measures on revenues is expected to be € -85 million. This would result in an EBITDA impact of € -50 million.
Regulation – 1 Overview financial impact
Slide 58
Estimated Impact
Regulation impacts
(Decrease in EUR million)
Revenue ~ €38m €10m €10m €9m
EBITDA ~ €2m €1m €1m €0m
Revenue ~ €47m €15m €19m €7m
EBITDA ~ €47m €15m €19m €7m
Revenue ~ €85m €24m €30m €16m
EBITDA ~ €50m €15m €20m €7m
Actuals
MTR &
flow-through Fix-to-Mob
Roaming
(i.e. Voice, SMS and Data)
Q3 2013Q1 2013 Q2 2013
Total
FY 2013
7.2
4.623.83
2.62
9.02
11.43
1.08
Before* 01-Aug-10* 01-Jan-11 01-Jan-12 01-Jan-13
MTR-Glidepath in €ct
Proximus Mobistar Base
*excl VAT, including inflation
– Glidepath in place since August 2010. Full symmetry effective since 1 January 2013
– MTR decreases reflected in F2M tariffs of BGC
– Mobistar & Base filed separate appeal against decision:
• Suspension procedure: On 15 Feb 2011, Court rejected all the claims
• Annulment procedure: On 16 May 2012, Court rejected claims regarding the price setting but asked notification to the Community regulators. In the meantime, rates remain valid.
MTR regulation impact 2013 • 1 Jan 2013 MTR’s final reduction of glide path set in 2010
Actual impact on Q3 2013 financials: − Revenue: € -9m − EBITDA: € 0m
Regulation – 2
Mobile Termination Rates (MTR)
* *
Slide 59
MTR glide path Before* 01-Aug-10* 01-Jan-11* 01-Jan-12* 01-Jan-13*
In euro cent (excluding VAT)
Proximus 7.2 4.62 3.94 2.62 1.18
Mobistar 9.02 5.05 4.29 2.79 1.18
Base 11.43 5.81 4.90 3.11 1.18
% change
Proximus -36% -15% -34% -55%
Mobistar -44% -15% -35% -58%
Base -49% -16% -36% -62%
Asymmetry
Mobistar-Prox 25% 9% 9% 6% 0%
Base-Prox 59% 26% 24% 19% 0%
* * *
1.18
MTR regulation impact for 2013
Estimated impact on FY ’13 financials: − Revenue: ~ € -38m − EBITDA: ~ € -2m
2.62
3.94 4.62
• Roaming III Regulation entered into force on 1 July 2012.
• This regulation covers a ten-year period until 30 June 2022.
• It imposed a further lowering of the existing regulated price caps, and extended the roaming regulation to retail data as from July 2012. It also imposed transparency measure to avoid bill shocks and has extended the transparency measures to roaming outside EU since July 2012.
• Roaming III Regulation also foresees structural measures − Wholesale roaming access (1 July 2012) − Decoupling, i.e. separate selling of roaming services from
domestic mobile services(1 July 2014)
• Draft Kroes Strategic review of EU telecom regulation presented to EU Council end October 2013: proposes additional measures for roaming (no more incoming call charges as from mid-2014) and fixed and mobile international prices capped for intra-EU as from mid-2016
– Actual impact on Q3 2013 financials: − Revenue: ~ € -7m − EBITDA: ~ € -7m
– Estimated impact on FY 13 financials: − Revenue: ~ € -47m − EBITDA: ~ € -47m
Regulation – 3
Mobile voice and data-roaming: EU Roaming III Regulation regulation
Slide 60
Regulation – 4
Decision to open-up the Belgian Cable Network
On 18 July 2011, the Belgian regulators published their final decision on broadband & broadcast regulation:
– On the broadcast Market Each cable operator has ‘Significant Market Power’ (SMP) in its area a is submitted to the
following obligations: – resell analog TV – open up Digital TV platform – resell broadband
-> Belgacom can only obtain access to analogue TV
– On the broadband Market Based on the this decision, Belgacom is sole SMP (cable not included) and has to provide:
– bitstream access for television (multicast) - Belgacom reference offer approved by BIPT on 4 Oct. 2012 – pricing decision still pending. Multicast implemented since April 2013
– VDSL2 prices based on strict cost orientation The BIPT maintains a strong focus on operational excellence for wholesale services
Implementation of cable regulation: • Cable reference offers: published on 29 Oct. Start of implementation now possible (after advance
payment of EUR 600K/cable operator). Offers could be operational by Q2 2014 • Wholesale prices for access to cable networks: draft decisions notified to EC in Oct. (retail minus 20-23%
for dual-play). Final decision expected in Nov. • BGC has decided not to resale analogue TV (old technology & opening too late). Belgacom has requested a fundamental revision of the market analysis and a full level playing field
Slide 61
Source: National Bank, 15/10/2013 1 GDP – percentage change on preceding year 2 Number of unemployed as a percentage of total labour force 3 Index of consumer prices – percentage change on preceding year
Macro economic environment
Belgium & Euro area - prospects
Belgium:
Budget deficit 3.9% end ‘12
2012 Gross public Debt 99.8% of GDP
Slide 62
1.9%
-0.3% 0.0%
1.2%1.4%
-0.6% -0.4%
1.2%
2011 2012 2013 2014
Belgium Euro areaGDP growth forecast (%)1
7.2% 7.6%8.3% 8.7%
10.2%
11.4%12.2% 12.1%
2011 2012 2013 2014
Belgium Euro area
Unemployment rate forecast (%)2
3.4%
1.0%
1.6%2.7%
2.5%
1.6%
1.5%
2011 2012 2013 2014
Belgium Euro areaInflation forecast (%)3
For further information: Belgacom Investor Relations e-mail: [email protected] Tel: +32 2 202 82 41
http://www.belgacom.com
Slide 63
