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Version 2 - February 2010 Invest in growth Mobistar 2009 FY results

Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

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Page 1: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

Version 2 - February 2010

Invest in growthMobistar 2009 FY results

Page 2: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

Sept 2009: Mobistar launches Internet Everywhere Ticket, the first rechargeable SIM card for mobile internet.

Feb 2009: Mobistar and Telenet reconfirm their strategic partnership

May 2009: Mobistar selected as 'International M2M Center' for Machine-To-Machine applications within the France Telecom group

Sept 2009: Mobistar launches HD mobile television on iPhone 3G and 3GS and extends its mobile TV offering

Oct 2009: VOXmobile in Luxembourg becomes Orange

Nov 2009: Mobistar acquires the Belgian B2B and carrier activities from KPN Belgium

Oct 2009: Mobistar and KPN Group Belgiumcollaborate to expand network infrastructure

Expand the mobile Invest in new growth areas

June 2009: Mobistar starts selling the new iPhone 3GS in Belgium and first to launch One Click Voice Mail in Belgium

May 2009: Mobistar first operator to integrate social networks in its youth offer

During 2009, Mobistar reinforced its position on its core marketand expanded into new growth areas

Page 3: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

Fix voice (# active connections)

190 Mio EUR revenues in 2009*

* (fix voice/fix data, advanced mobile

voice and wholesale revenues)

>

Today, close to 15 % of our revenues are generated by non-mobile revenues (i.e. excl mobile voice and SMS)

Matma (# cards)

Mobile data (# cards)

ADSL (# subscribers)

38

23

+65%

Dec 09

Dec 08

+85%

handset solutions

PC solutions

Dec-09

159

76

83

Dec-08

86

39

47

130109

+20%

MATMA

Dec-09

Dec-08

150122

+23%

Dec-09

Dec-08

Page 4: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

4

In this challenging environment, Mobistar performed in line or in excess on all guided KPI’s

Total Turnover

EBITDA-margin

Net results

Capex/sales 10.1 %

260,3

39.2 %(567 Mio EUR)

+2.3 %

Realized

around 10 *

Between240 – 260Mio EUR

Close to 40 %

(563 – 577 MioEUR)

Flat revenues

Guidance

•* lowered during the year from between 11%-12%

Page 5: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

5

2009 Business performance

Page 6: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

6

Competition

Active Penetration

Competition

MVNO @ Mobistar

Mobistar retail

41 50

-32

150 105

144

157

41 104

98

-19-29

29 1819

106.9%106.2%105.7%103.8%102.4%100.7%

-150

-100

-50

0

50

100

150

200

250

300

350

-20%

0%

20%

40%

60%

80%

100%

120%

Q4 08

221

35

Q3 08

173

11

Q2 08

193

37

Q1 08

218

27

Q4 09

13

8 5

Q3 09

44

107.2%**

-22

Q2 09

107

22

Q1 09

58

28

Active PenetrationNet Adds (#In K)

(*) excl. MaTMa and Orange Luxembourg customers

(**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE inactivity)

-55-24

-106

139

-150

-100

-50

0

50

100

150

200

250

300

350

2009

8

Net Adds (#In K)

138

2008

249

164

prepaid

MVNO

postpaid

In a mature market and with a continuous focus on value, Mobistar acquired net adds in 3 out of 4 quarters

Page 7: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

7

MVNO

Laptop cards

Postpaid % retail cust base

3.152.455

2007

Post RES

Post BUS

Prepaid 51%

2005

57%54%

3.489.859

2.912.806

2006

44%

2009

61%

3.738.604

Postpaid % of retail base**

2008

3.746.515

Customers on Mobistar network*

(*) excl. MaTMa and Orange Luxembourg customers

(**) excluding MVNO cards

Postpaid % continues to rise to 61 % of customer baseMore than 70 % of our customers is under loyalty

Page 8: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

8

On ARPU, excluding regulatory effects, usage compensates pricingpressure driven by mobile data

Blended ARPU (incl. visitor roaming, excl mobile broadband)

Price

5,4

31,5

Usage FY 2009

5,3

Roaming Off & on net

0,7

MTR Decrease

0,2

FY 2008

32,4

FY 2007

34,5•€ month

-0.9 +0.1

Page 9: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

9

• Mobile data revenues up to 29 % of mobile service revenues in 2009 (from 22 % in 2008)

• Non-SMS mobile data represent 6.4 % of total mobile service revenues (vs. 4.9 % in 2008)

• Supported by the successful uptake of

• SMS abundance offers

• Strong take up Internet Everywhere (from 47 k to 83 k cards y-o-y)

• Uptake in usage of Smartphone both in the residential and business market

• Leader in MaTMa applications with more than 130,000 cards 0

50

100

150

200

250

300

350

400

FY 2009FY 2008FY 2007

+25%

SMS Person to Person

SMS Premium

Mobile data handset and PC

MaTMa

Mobile data uptake (in Mio EUR)

Strong commercial focus on mobile data continues to deliver growth

Page 10: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

10

• Number of 3G equipped customers doubled from 5 to 10 % of our customer base

• Close to 500 000 users on Orange World Portal

• ARPU iPhone tariff plan users have 2,5 times ARPU blended user

• Leader in Smartphone sales with a share in excess of 25 %*

•* Source: 2009 GFK mobile phone sales in Belgium

This growth has been fueled by a successful positioning in handset sales with the largest portfolio of smartphones

Page 11: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

11

• Attractive trade off between price & offer in times of crisis

• Launch of dual play Home&Awayoffer (adsl/mobile data) which really meets customer needs

• Improved customer experience reducing churn by 1/3

• Refocus commercial efforts on controlled channels (own shops and outsourced direct sales force)

Attractive dual, triple play offer contributed to sustained growth of residential fix broadband offer

•Mobistar ADSL retail subscribers (in K users) 38,0

10,7(46%)

4,5(20%)

5,9

23,1

Dec 09

3,6

18,4(48%)

Dec 08

12,0(32%)

MAX 6 + Voice

MAX 6

Business

Old TP

Page 12: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

12

New era coming up

• Mobistar strongly believes in continuous growth in the Luxembourgish market by means of a new brand, Orange

• Orange offers an additional dimension to better perform in a local market with an international character

• Orange in Luxembourg will capitalize on the additional benefits of an international brand: customer service, network, trust, inspirational brand, convergence

• Despite the international dimension of Orange, the company will continue to focus on the local market

Total revenues+ 28%

35.6 M EUR in ’07 to 45.6 M EUR in ‘09

Active customers+ 8.4 %

from 74,560 (2007) to 80,103 (2009)

ARPU+ 11 %

from 32,34 (2007) to 36,3 EUR/month (2009)

EBITDAfrom - to +

from -3.6 % (2007) to +11.6 % (2009)

Orange Luxembourg growth evolution since acquisition

In Luxembourg, after 5 years of sustained growth new era with rebranding to Orange

Page 13: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

13

Financialperformance

Page 14: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

14

Mobistar consolidated P&L

Mio € FY 2008 FY 2009 %

Total Statutory Revenues (*) 1,566.8 1,604.8 2.4%Total Turnover 1,532.7 1,567.2 2.3%Total Service Revenues 1,443.7 1,444.8 0.1%Cash Expenses -975.2 -1,037.8 6.4%EBITDA 591.6 567.0 -4.2%In % of service revenues 41.0% 39.2%Depreciations and amortizations -173.1 -164.3 -5.1%Net finance income -5.5 -4.7 -14.4%Tax expense -132.9 -137.7 3.6%Net profit 280.1 260.3 -7.1%Diluted earnings per share (in €) 4.54 4.34 -4.5%

Mobistar consolidated income statement

Page 15: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

15

Besides regulatory effects, SMS abundance and non-mobile revenues offsets voice price pressure

FY 2009Vox

3

Billed Rev.

25

1

Visitor Roaming

811

Customer Roaming

21

50

National Incoming

8

FY 2008

1.444 1.445

Orange Lux

Billed revenue Mobistar

Volume

Price

Total Serv. Rev. Consolidated

• Voice revenue decline (-10%) compensated by strong SMS growth (+20%) as well adv data (+41%) and fix revenues (+6%)

• essentially driven by SMS abundance and increase in customer base

Mobistar service revenue evolution breakdown (in Mio EUR)

Page 16: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

16

In Belgium, Mobistar continued to invest in fix activities whilepreserving the value creation in mobile

Mio € FY 2008 FY 2009 %Total Statutory Revenues 1,445.0 1,477.1 2.2%Total Turnover 1,413.8 1,442.9 2.1%Total Service Revenues 1,328.6 1,323.6 -0.4%Cash Expenses -840.8 -898.4 6.9%EBITDA 604.2 578.7 -4.2%In % of service revenues 45.5% 43.7%Depreciations and amortizations -162.4 -147.9 -8.9%EBIT 441.8 430.8 -2.5%

Mobistar Mobile Income Statement

Mio € FY 2008 FY 2009 %Total Statutory Revenues 86.1 89.7 4.2%Total Turnover 83.4 86.4 3.6%Total Service Revenues 83.1 86.3 3.9%Cash Expenses -100.9 -105.8 4.9%EBITDA -14.8 -16.1 9.2%In % of service revenues -17.7% -18.7%Depreciations and amortizations -2.8 -4.7 70.9%EBIT -17.5 -20.8 18.9%

Mobistar FIX Income Statement

Page 17: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

17

Orange Luxembourg income statement

Orange Luxembourg continued to deliver the growth according to plan

Mio € FY 2008 FY 2009 %Total Turnover 39.6 45.6 15.2%Total Service Revenues 33.3 37.8 13.5%Cash Expenses -37.5 -41.2 9.9%EBITDA 2.1 4.4 109.5%In % of service revenues 6.3% 11.6%Depreciations and amortizations -7.9 -11.7 48.1%EBIT -5.8 -7.3 25.9%

main KPI FY 2008 FY 2009 %Customer base ('000) 79.7 80.8 1.3%ARPU (€/month) 32.3 36.3 12.3%

Page 18: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

18

Total cash expenses

33,4

1.037,8

975,2 33,6

Orange Lux

Handset/RT Costs

458,2429,3Interconnect

& OtherSales Costs

98,1

126,6

287,8

941,8

FY 2008

130,5

127,9

287,6

1.004,2

FY 2009

HeadcountCost

Non-Headcount

Cost

Non-headcount cost• Higher Selling Fees (dealer rem) : airtime, postpay consumer volumes &

contract extensions • Increase in Bad Debts provision• Favorable sourcing impacts in domain of logistics, Billing and IT/Network

Maintenance• Optimization of costs following Mobistar’s transformation program launched in

2009

Orange Luxembourg• More costs to support the customer base increase (YoY postpaid customer base +

14.7%) and additional expenses related to the rebranding from VOXmobile to Orange Luxembourg occurred in Q4’09

Headcount costs• Total Mobistar headcount reduction of –3.5% due to further outsourcing and

efficiency gains throughout the company, partially compensated by increase in FTE in own shops & in the investment started in new line of businesses

• Salary indexation of 4.5% as of Jan 1, 2009

Interconnect and other costs of sales• More interconnect cost (YOY +9% versus more incoming revenue YOY growth

+16%), mainly driven by SMS abundance retail offers, partially offset by customer roaming regulation and less voice traffic.

• Higher site volumetry

• Growth in data applications (OW, BB) compensated by efficiency gains

Handsets & RT costs• In line with strong increase in handset sales, mainly driven by our Smartphone

range

Mobistar cash expenses increase driven by interconnection, network roll-out and handset sales

•* 2008 Handset/RT restated

Page 19: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

19

• Launched in September 2008, Transformation programs are key to offset regulation impacts

• Gross savings* in 2009 amounted to 30 Mio EUR

• Main achievements• Business program :

• optimization of device P&L

• Technical program:• Microwave deployment

• Supporting programs• Optimization dealer footprint

and associated SAC/SRC• Contingency plan• Customer care: push self care,

e-invoice

Odyssey transformation programs already delivered close to 30 Mio EUR in gross saving*

(e.g. Mobile Data, Fix Program, revenue engineering)

(e.g. IT Renewal)

(e.g. Customer care, distribution and organization)

•* Transformation includes capex and opex, savings includes recurring cost reductions as well as cost avoidance

2009

30 Mio EUR

Page 20: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

20

Capex driven by microwave deployment and further 3G roll-out (close to 350 sites) leading to a 87% 3G coverage

17

39

160147

165

0

50

100

150

200

250

9

82

2009

146

10%

2008

11%

2007

10%

2006

11%

CAPEX/service rev.

Sales and Other

IT

Network

Vox

CAPEX/year

Page 21: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

21

Organic cash flow amounts to 298 Mio EUR

Mio € FY 2008 FY 2009 %EBITDA 591.6 567.0 -4.2%Change in working capital -10.9 19.9Financial result -5.5 -4.7Corporate Taxes -132.9 -137.7

Net cash from operating activities 442.3 444.5 0.5%

Purchase of intangible and tangible assets -159.9 -146.1 -8.6%Proceeds from sale of equipment 14.7 0.0

Net cash used in investing activities (145.2) (146.1) 0.6%

Organic Cash Flow 297.1 298.4 0.4%

Partner financing activities -6.9 -2.9Acquisition of subsidiary, net cash acquired -6.7 0.0Proceeds/Repayment long-term interest - bearing loans and borrowings

75.0 -75.0

Current portion of amounts payable after more than one year falling due within one yearμ

50.0

Proceeds/Repayment from new short term interest-bearing loans and borrowings

237.2 4.7

Free cash flow before dividend payments and capital movements

595.7 275.2 -53.8%

Capital increase (decrease) -248.0 0.0Capital and share premium -0.8 -0.2Dividend payments (173.6) (273.1)Share buy-back (175.0) 0.0Share-based payment expenses 1.3 1.3Available Cash Flow (0.4) 3.2

Page 22: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

22

Sound balance sheet resulting in a net debt of 279,4 M EUR

Mio € Dec-08 Dec-09Non-current assets 898.0 882.5Current Assets 295.5 260.6Cash and Cash equivalents 6.8 10.0TOTAL ASSETS 1,200.3 1,153.1Net Equity 452.5 440.8Long-term provisions and trade payables 90.1 14.6Short Term Debt 243.3 298.0Current Liabilities 414.4 399.7TOTAL EQUITY AND LIABILITIES 1,200.3 1,153.1Net Debt / (Net Cash) -304.9 -279.4

Balance Sheet

Page 23: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

23

Solid financial performance allows Mobistar to maintain a high level of shareholder return for a total amount of 273 M EUR

Summary of proposed pay-out *Ordinary dividend: € 2,90 / share

Extra ordinary dividend: € 1,65/ share

Total distribution: around € 273M or 11% of market capitalization

JAN FEB MARCH APRIL MAY JUNE JULY AUGUST SEPT OCT NOV DEC

Ordinary DIVIDEND 2,90 EUR per share

Extra ordinary DIVIDEND 1.65 EUR per share

•(* to be approved by the General Assembly 05/05/2010)

Page 24: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

24

As a conclusion, 2009 results fully in line with initial guidance

Total Turnover

EBITDA-margin

Net results

Capex/sales 10.1 %

260,3

39.2 %(567 Mio EUR)

+2.3 %

Realized

around 10 *

Between240 – 260Mio EUR

Close to 40 %

(563 – 577 MioEUR)

Flat revenues

Guidance

•* lowered during the year from between 11%-12%

Page 25: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

Version 2 - February 2010

Invest in growth in 2010 and beyond

Page 26: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

26

Regulatoryupdate

Page 27: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

27

Impact analysis of current MTR proposal on revenue and EBITDA

0

2

4

6

8

10

12

4,10

1,07

1 Jan 2012

1 Jan 2013

2,42

4,86

1 Jul 2010*

9,02

2009 1 Jan 2011

Base

Mobistar

Proximus

•* Mobistar assumption

• BIPT adopted an LRIC+ model which goes far beyond Mobistar internal cost model

• Asymmetry still justified in the long run given dominant position of the incumbent

• Consultation runs till 12 March 2010

• 2010 regulatory impact at iso-volumes expected to amount to 40 Mio EUR revenues and 20 Mio EUR EBITDA

2012

~170

20132009 2010 2011

MTR Ebitda

MTR Revenues

In Mio EUR

New BIPT MTR glide path is amongst the lowest in Europe and is highly questionable

Draft proposal

Proposal MTR evolution (EURcent/min)

Page 28: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

28

Revenue impact of announced regulation

(in Mio EUR) • The next steps of roaming regulation have already been defined by the EU (as from 1/07/10)

• Retail voice OUT from 43 to 39€cents. Retail voice IN from 19 to 15€cents.

• Wholesale voice OUT from 26 to 22€cents. Voice in from 8 to 7€cents.

• Wholesale data tariff from 1 to 0.8€/MB.

• Expected decrease on 01/07/10 will have a gross impact of -27MEUR on revenue

Roaming regulation will continue to create some elasticity on the Mobistar customers calling abroad

21

2009 customer roaming

112

volume effect

11

price effect

2008 customer roaming

122

Page 29: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

29

2 x 12 Mhz

2 x 20,8 Mz

2 x 15 Mhz (FDD)2x5Mhz

(TDD)

> A total of 96 Mhz secured till March 2021

March 2021

March 2021Nov 2015Nov 2010

March 2001

150 MioEUR/20 YR

14.8 Mio EUR/YR* 14,8 MioEUR/YR

Current proposal for 2G license (900-1800 Mhz) renewal

Current 3G license (2,1 Ghz) runs till March 2021

* Mobistar continues to disagree given tacit renewal

Max 2 x 20 Mhz

Current proposal for 2,6 Ghz band

2010 (TBC) 2025

1.33 MioEUR/YR

900 Mhz

1800 Mhz

2100 Mhz

2600 Mhz

In order to guarantee future mobile data growth, Mobistar is close to securing about 100 Mhz spectrum till March 2021

Page 30: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

30

In view of a new commercial law, Mobistar will continue to apply its strategy to turn handset subsidy into a value creation

ACQUISITION LOYALTY & RETENTION CHANNEL

1. Redesign tariff portfolio

2. Contain SAC

1. SRC in order to avoid churn & washing machine effect

2. Develop sophisticatedcustomer value base mgmt capabilities

3. Drive customers to controlled channels for contract renewal

1. Balance commercial acts from acquisition to acquisition & contract extension

2. Reinforce controlled channels in overall mix

3. Develop web share in commercial acts

4. Contain open channels

VALUE OPTIMIZATION with Handset Subsidy

Page 31: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

31

Areas of growth in theBelgium telecom market

Page 32: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

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Belgian Market in 2009 amounted to 8,45 bn EUR revenues Growth areas 2008-2009

Source: Mobistar estimates, Company Reports, ,IDATE, Jupiter

* KPN Belgium Business acquired by Mobistar in Nov 2009

Main growth areas 2008-2009 were in mobile data, digital TV and SMS abundance

27%

Mobile RES

2.609

39%

16%

Fixed RES

1.879

27%

55%

33%

Fixed BUS

1.885

60%

TV

809

53%

30%2%11%

4%3%

Mobile BUS

34%

1.269

63%

34%

3%

6%*

Belgacom Group

Telenet

Mobistar

KPN Group

Others

FV

FD

Growing2008

8.369MD - SMS

MD - Adv.

TV

2009

8.450

Declining

MV

In bn EUR In bn EUR

180

211

32317

2012

9.133

Declining

211

Growing

895

105

262

2009

8.450

Growth areas 2009-2012

MV

TV MD - SMS

MD - Adv.

FV

FD

Page 33: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

33

Expanding in theresidential market

Page 34: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

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mobility

communitiesrelevant

innovation

Mobistar will enable mobility experiencesfor individuals, communities and companies

through relevant innovation

What’s the experience behind mobility?

Trends in the market confirm our mission

Page 35: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

35

Personal Growth &Accomplishment

Free Spirit &Open Minded

Freedom withoutRestrictions &

No Limits

Exploration, Discovery &Opportunities

Page 36: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

36

Market is ready to adopt new mobility experiences

• Trends in the market proof that mobility increases:

• Uptake of Smartphone, initiated by the iPhone

• Success of social networks on fix and mobile device

• Penetration of fix and mobile internet usage

• Explosion of mobile data traffic during last 3 years supported by relevant network investments

Page 37: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

37

Consumers show an appetite for new mobility experiences

• Anything, anyplace, anywhere, anyhow (on any device)

• Multisource content • Channels / internet / video on demand (VOD)• Success of user generated content

• Nomadic content • Multi-screen from PC to Mobile to TV screen

• Interactivity • User in charge, on the rhythm of his life (love, work, play)• Search & share & communicate

Page 38: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

38

•Electronic program guide (EPG)

• Classic broadcast

Digital TV 2.0.• Interactive services e.g. catch up TV and VOD

• Personal Video Recorder (PVR)

• Electronic program guide (EPG)

• Classic broadcast

Profiling and access to multisource content

• Remotely record, play and access to EPG and PVR

• Access to your content anytime, anywhere

Multi screen capabilities

Mobistar’s opportunity consists of introducing Mobility Experience 2.0 creating two new USPs: multisource content and mobile interactivity

Page 39: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

39

mobile consumer is ready for relevant innovation

Mobility experience 2.0

Page 40: Invest in growth - Orange Belgium · (*) excl. MaTMa and Orange Luxembourg customers (**) Source: Mobistar estimates based on company announcements incl MVNO (restatement for BASE

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Strategic rationale of acquisition of KPN B2B activities

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Strategic rationale for the acquisition of KPN B2B activities for an amount of 65 M EUR

Mobistar has a strategic positioning of convergent player on the B2B market. The acquisition of KPN Belgian B2B activities will help implementing and accelerate this convergence strategy.

• Critical mass with Economies of scale

• Time-to-Market

• Feasibility/Capacity

• New focus/new dynamics

• Expertise and high qualified staff in fix

• Products for the high-end of the market

• Fiber network with a national coverage (integration of both networks should result in costs optimization as Mobistar rents amajor part of its network) as well as 2 data centers

• The acquired customer base (9,000 B2B customers and 70 carrier customers) creates opportunities to cross-sell Mobistar mobile products.

• Leveraging commercial agreements with commercial channelsskilled in fix

•Note: Deal closing is expected to be finalized by end of March 2010

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The B2B and Wholesale business amounted to 45M€ revenues in 2008 and creating a up sell potential

B2B

64%

Wholesale36%

•2008 revenues (45 M€)Key Financials

16M€29M€

•Revenues split 2008 per customer segment •~70% of revenues come from the high-end

•Customer base split (# contracts)Corporate

21%Medium

8%

Small

53%

SOHO

18%

Small

23%

3%

SOHO

29%45%Corporate

Medium

Revenue synergies

• Cross-selling of Mobistar mobile on the KPN Business Belgium customer could lead to a 2% incremental market share on the mid & high-end of the B2B market

• Up-selling of KPN Business Belgium data products (Carrier) and residential VoIP (Reselling)

• Carrier activity: Up selling of Ethernet products on existing customer base

• Resellers’ activity: Up selling of VoIP on existing customer base

• Offering sound convergent offers will allow Mobistar to increase consolidated market share in the fixed market

• Mobistar will provide wholesale ADSL services to KPN Belgium est. up to 50 M EUR

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KPN B2B creates synergy potential with the acquisition of a modern fiber network with a virtually unlimited capacity

Cost synergies

• Network and IT synergies:

• Network synergies

• Migration of Mobistar transmission backbone to KPN Business Belgium’s fiber network removes rental costs for 700 Km fiber

• Migration of Mobistar backhauling traffic to KPN Business Belgium’s fiber network

• Network rationalization (DSLAM migration; re-in sourcing of some critical services; Service platform optimization; Network Operations Center)

• Supplier synergies : Limited and mainly on legacy equipment approaching end-of-life

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Efficiency atMobistar

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Transformation programs are on track to deliver above 100 Mio EUR in cumulated savings over the next 3 years

Main programs launched

• Business program :• Further improve device P&L

• Technical program:• Microwave deployment• Active site sharing• IT Renewal

• Supporting programs

• Optimization dealer footprint and associated SAC/SRC

• E-Sales (target > 15% online)• E-Care and E-Invoice (> 40% in B2C)• Further implement synergies with

Orange Lux and ex-KPN B2B Belgium

(e.g. Mobile Data, Fix Program, revenue engineering)

(e.g. IT Renewal)

(e.g. Customer care, distribution and organization) 2009

More than 100 Mio EUR

•* Transformation includes capex and opex, savings includes recurring cost reductions as well as cost avoidance

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Guidance

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• We performed well in 2009 and exceeded our expectations on turnover and organic cash flow

• 2010 is a year of major challenges on our core business but ongoing transformation programs are on track to mitigate impacts

Major challenges 2010

Revenue and EBITDA negatively impacted by regulation

Draft MTR proposal impacts revenue around 40 M EUR and EBITDA around 20 M EUR

Roaming will have an additional revenue impact around 27 M EUR

Revenue and EBITDA positively driven by

Integration of 9 months KPN B2B activities

Mobile data and fix revenues growth

Revenue and EBITDA somehow impacted by investment in growth initiatives

Continued investment in the value development of the mobile customer base

Launch of innovative interactive Quadruple-play offerings with an associated investment of 15 M EUR

Concluding remarks

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Total Turnover

Ebitda

Organic cash flow*

Net profit

Capex/sales

Growing organic cash flow

between 260 - 280 M EUR

297 M EUR

between 10% -11%

between 210 – 230 M EUR

between 500 – 520 M EUR

in line with 2009

2010 guidance

Growing total turnover

Beyond 2010

10.1 %

260 M EUR

567 M EUR

1 567 M EUR

2009realized

* Organic cash flow defined as net cash flow from operations less acquisitions of tangible and intangible assets (net of changes in accounts payable and spectrum license fee)

Mobistar guidance in 2010 and beyond

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Q&A