Belgacom Road show presentation Full-year results 2010
Group Highlights
2010 Results per segment
Popular discussion topics
Financials - 2
Consumer - 15
Headcount - 34
Operationals - 8
Enterprise - 23
Regulation - 35
Strategic progress -10
SDE&W - 30
Legal - 39
Shareholder return -12
S&S - 31
Convergence & TV - 40
Guidance - 13
BICS - 32
Mobile Data - 44
Network - 47 Other - 51
1
Belgacom Group Financials 2010 ended with solid financial results • Strong FY revenue of € 6,603m or +10.2% yoy • • • •
Slightly exceeding full-year guidance Growth trend largely results from full consolidation BICS & additional MTN business Like-for-like*, revenues -0.6% including €121m regulation (-2%) Underlying business +1.4% driven by sound CBU results & organic growth BICS
• Operating expenses of € 4,619m, up from last year driven by CoS BICS • • • •
FY like-for-like* CoS flat , including positive effect from regulatory measures FY HR costs -1.6% like-for-like* as a result of headcount decrease(-553 FTE‟s) Q410 down 1.1% in spite of 2% wage indexation in October FY non-HR costs up 1.1% like-for-like*
• FY EBITDA at € 1,984m (+1.5%) and margin of 30% • Like-for-like* EBITDA : € -26m or -1.3% YoY, including regulation impact of € -26m • Like-for-like* margin at 32.4% vs 32.6% the year before
* 2010 result adjusted for full consolidation BICS & contribution of MTN
Slide 2 2
Belgacom Group Financials
in mio €
Q109
Q209
Q309
Q409
FY09
Q110
Q210
Q310
Q410
FY10
VAR Q4/Q4
VAR FY
Like-for(2) like VAR FY
Revenues (1)
1,492
1,504
1,476
1,518
5,990
1,641
1,664
1,640
1,658
6,603
9.2%
10.2%
-0.6%
Total OPEX
-1,000
-1,002
-982
-1,051
-4,035
-1,146
-1,161
-1,150
-1,163
-4,619
10.6%
14.5%
-0.3%
Cost of goods sold
-511
-511
-515
-550
-2,087
-662
-674
-651
-655
-2,642
19.2%
26.6%
-0.1%
HR-costs
-281
-280
-271
-277
-1,108
-274
-275
-281
-278
-1,107
0.5%
-0.1%
-1.6%
Other expenses
-207
-211
-196
-225
-840
-210
-212
-218
-230
-870
2.2%
3.6%
1.1%
492
502
494
467
1,955
495
503
490
495
1,984
6.1%
1.5%
-1.3%
33.0%
33.4%
33.5%
30.8%
32.6%
30.2%
30.2%
29.9%
29.9%
30.0%
-0.9pp
-2.6pp
-0.2pp
As reported
EBITDA
(1)
EBITDA margin
(1)
Non-recurring items
0
-62
0
74
12
436
1
0
8
444
-
-
-174
-178
-169
-185
-706
-194
-206
-203
-206
-809
11.3%
14.6%
318
262
325
356
1,261
737
298
287
297
1,619
-16.4%
28.4%
Financial result
-37
-23
-30
-27
-117
-28
-26
-26
-22
-102
-18.1%
-12.7%
Tax expense
-69
-51
-79
-42
-241
-68
-64
-62
-39
-233
-7.2%
-3.0%
212
188
904
638
203
1,266
-20.0%
40.0%
0
0
-1
2
4
17
-
-
0.66
0.59
2.82
1.99
0.63
3.94
-20.3%
39.7%
Depreciation
EBIT
Net income (Group) Non-controlling interest
Earnings/share in € (1 )
before non-recurring items
(2)
217
287
0
0
0.68
0.90
195 4
0.61
230 7
0.71
2010 BICS results consolidated at 57.6%
Slide 3
Group - Investments • Belgacom invested € 734m or 11.1% of its Group revenues • 2010 capex was € 137m higher than 2009 driven by: − − −
Renewal 2G license for the period 2010-2015 (€ 74m) Renewal content rights Belgacom TV Switch from leasing to buying utility cars Furthermore, Belgacom continued to invest in: − Roll-out Move-to-all-IP (€ 50m) − Roll-out fibre-to-the-curb & installation VDSL2 (€ 32m) 12.8%
1.200
11.4% 800
11.1%
10.3%
1.000
676
10.0% 764
625
597
600
• 2008 incl. exclusive •
734
400
Broadcasting rights 200 Belgian soccer 2010 incl. renewal 2G- 0 license
2006
2007 Capex
2008 % of revenue
2009
15,0%2011 capex 14,0% estimated in 13,0% upper-end of 12,0% 11,0%10%-12% of 10,0% 9,0% revenue 8,0% 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0%
2010 Slide 4
Group - Free cash flow Sound FCF generation
• Strong FCF of €980m, up by €183m from last year • Positive impact from higher EBITDA, one-offs & timing differences • • •
One -off cash increase in 2010 from full consolidation BICS (€ 51m) ; 2009 impacted by payment of fine (€ 66m) Lower income tax payments: − Following legal entity merger, full use of Belgacom SA tax losses carried forward − Positive timing difference due to lower tax pre-payment ratio Partly offset by capex increase (incl 2G license of € 74m for which € 26m paid in 2010)
Free Cash Flow (in mio €) 1500
• 2006 acquisition remaining 25% of • •
Proximus for € 2bn , acquisition Telindus for € 584m 2007 disposal of remaining interest in Mobistar and Eutelsal for €242m 2008 acquisition Tango and Scarlet for aggregated amount of € 380m
1,210 797
1000
980
409
500
0
2006
2007
2008
2009
2010
-500
-1000
-1500
-1,313
Slide 5
Group - Net financial position • Belgacom continues to have a sound financial position with net debt/EBITDA at 0.7x − − − −
− −
Net financial debt decreased by € 265m to € 1,451m Outstanding gross financial debt at € 2.1 billion Most of the debt maturing in 2011 and 2016 In order to pre-finance the maturing bonds of 2011, Belgacom issued, in January 2011, a 7 year senior unsubordinated bond of € 500m with a fixed coupon at 3.875% In March 2011, BGC invited the holders of the outstanding 4.125% bonds due November 2011 to tender their notes for purchase against cash Credit ratings: Standard & Poor‟s A+ ; Moody‟s A1
980
(702)
FCF
Dividends
(30)
16
(1,451)
Dividends to non controlling interests
Other
Net debt December 2010
(1,716)
Net debt December 2009
(in million euro)
Slide 6
2010 performance versus guidance Guidance met on all metrics • Guidance slightly exceeded on revenue; met on EBITDA-margin: − − −
+10.2% revenue growth or slightly ahead of guided range of 9% -10% 30% EBITDA margin or fully in line with the targeted margin for 2010 FY capex fully complies with the guidance of „around 10% of Group revenue, excl renewal 2G license‟
• Reported results include following regulation impact: − −
Revenue: € -121m (vs guided impact of „about € -115m‟) EBITDA: € -26m (vs guided impact of „less than € -30m‟)
Outlook 20101
Q110
Q210
Q310
Q410
2010
Group revenue growth
Upper-end of range "9% - 10%"
10.0%
10.7%
11.1%
9.2%
10.2%
Group EBITDA margin
Targeting a margin of 30%
30.2%
30.2%
29.9%
29.9%
30.0%
Around 10%2
9.4%
8.9%
8.5%
13.2%
10.0%
Metrics
CAPEX/Revenue 1 2
√ √ √
Before non-recurring items Excl CAPEX for 2G-license renewal
Slide 7
Belgacom Group Operationals Active mobile customers1 (in „000) 5,161
5,318
Mobile data Cards2 evolution (in „000)
5,332
Broadband customers (in „000)
182
4,620
1.237
1.345
1.520
1.558
2009
2010
114 64
2007
2008
2009
2010
Fixed Voice customers (in „000) 3.906
3.710
3.519
2007
2008
2009
2010
TV base3 (in „000)
2007
2008
Number of Packs (in „000) 975
3.374
870
752
560
506 305
302 153
2007
2008
2009
2010
2007
2008
2009
2010
2007
2008
2009
2010
1
Including mobile customers Luxembourg as from 2008, and including mobile data cards Mobile internet on laptop; excluding internet on smartphone 3 Total number of settop-boxes 2
Slide 8 8
Belgacom Group market shares Mobile customer market share
43.3%
42.7%
41.3%
2008
2009
2010
Mobile data cards1 market share
Broadband market share
57%
57%
2008
2009
62%
2010
Digital TV market share 9
49.7%
2008
1 Mobile
internet on laptop
48.5%
2009
46.3%
2010
30%
31%
31%
2008
2009
2010
Slide 9
Strategic progress
Growth via Cross sell
Move customers from singleplay to multi-play
Operational excellence
High quality networks & platforms
Mobile data growth potential
Growth via M&A
Belgacom well positioned to capture growth potential Increase value in BICS Leading Disciplined & position consistent in consolidation approach
* Fiber to the street cabinet
870k multi-play Packs, of which ~9% quadruple-play Over 45% of consumers have at least 2 products In 2010 increased focus on Mobile in a Pack Reinforcing convergence position in SME market through partnerships (e.g. Belgacom Bridging ICT) >76% fiber* population coverage end 2010 Targeting 85% service coverage by end 2013 TV footprint of ~90%, ~73% in HD 3G outdoor coverage of ~97%, gearing up Radio Access Network with Huawei equipment to be ready for LTE Sharp increase in Smartphone penetration rate Attractive subscriptions launched leading to significant growth in number of internet on smartphone-users Leading position „Mobile internet on laptop‟;182k customers, up YoY nearly 60% Main focus on Belgian market Outside opportunities monitored in a disciplined way Strict valuation criteria, focus on shareholder value Since 2006, > € 3 billion on M&A: minority Proximus, Telindus, Tango, Scarlet,… Slide 10
Strategic progress
International Carrier Growth
Innovation
Sustainability
Increase value in BICS Leading position in consolidation
Strengthen leadership through selective partnerships
CSR embedded in all operation layers
Belgacom ICS merged with Swisscom ICS and MTN ICS Belgacom owns 57.6% of enlarged entity, Swisscom 22.4% and MTN 20% In top 4 worldwide in terms of voice traffic volume World leader in mobile data carrier services
Address changing needs of customers Complement our strength with exclusive partnerships giving access to specific expertise In 2010: strategic partnerships to further develop Belgacom Entertainment platform (OnLive, Jinni, Softkinetic & Blinkx)
Commitment on being socially responsible company Focus: “telecom access for all”, “health” & “climate change” Reduce Belgacom‟s CO² emissions & help our customers lower their environmental impact Belgacom included in Ethibel Excellence Investment Register
Special focus in 2010 on customer satisfaction led to significant improvements For 2011, customer satisfaction focus maintained & concentrate on simplification Slide 11
Group – Shareholder return Committed to attractive shareholder return Over result 2010: • The BoD approved to propose to the AGM of 13 April, a total dividend of € 2.18/share ; of which the normal dividend of € 1.68/share to be paid in April:
Dividend per share Interim dividend
Extra-ordinary dividend
1.93
−Ex-dividend date: 26 April 2011 −Record date: 28 April 2011 −Payment date: 29 April 2011
Normal dividend
2.18
2.18
2.08
2.18
2.18
1.68
1.68
1.68
1.68
1,68
0.29
0.50
0.50
0.40
0.50
0,50
2006
2007
2008
2009
2010
2011 Expected
1.89 1.52
1.38
1.60 1.52
• In addition, the board approved a share buyback of max. € 200m to be carried out during 2011- 2012
0.55 2004
2005
Over result 2011: • Expected to return annual dividend of € 2.18/share
-
Total shareholder remuneration SBB
Dividends
% of FCF
Mio € 1,000 900 800 700 600 500 400 300 200 100 0
150%
-
120% 90% 60% 30% 0% 2004
2005
2006
2007
2008
2009
2010
-
Shareholder remuneration policy confirmed: Belgacom commits to an attractive shareholder remuneration policy by returning, in principle, most of its annual free cash flow1, to its shareholders. The return of free cash flow, either through dividends or share buybacks, will be reviewed on an annual basis, in order to keep strategic financial flexibility for future growth, organically or via selective M&A, with a clear focus on value creation. This also includes confirming appropriate levels of distributable reserves. The shareholder remuneration policy is based on a number of assumptions regarding future business and market evolutions, and may be subject to change in case of unforeseen risks or events outside the company‟s control.
1
Belgacom defines free cash flow as cash flow generated by operating activities, minus capital expenditures and including other investing activities such as acquisitions or divestments.
Slide 12
Group - 2011 Guidance
In 2011 Belgacomâ€&#x;s results will feel further pressure from regulatory measures. For the full-year, the negative impact on revenue is estimated to be about EUR 115 million, while on EBITDA-level the negative impact is estimated to be less than EUR 30 million. As a result, Belgacom estimates its 2011 Group revenue to show a yearover-year decline of up to 1%, and its full-year EBITDA to decline up to 2% compared to last year.
Belgacom will invest in the further development of its fixed and mobile access network, and therefore expects its 2011 full-year capex-to-sales ratio to be in the upper-end of the range 10%-12%.
Slide 13
Belgacom Company presentation Investor Relations
Full-year 2010 results per business unit • • • • •
Consumer Business Unit (CBU) – slide 15 Enterprise Business Unit (EBU) – slide 23 Service Delivery Engine &Wholesale (SDE&W) – slide 30 Staff and Support (S&S) – slide 31 Belgacom International Carries Services (BICS) – slide 32 14 Slide 14
Consumer – Highlights Full-year 2010 ended with sound financial results • FY revenue of € 2,368m or flat on a comparable basis*
• •
2010 result impacted by regulation (€ -60m or -2.6%) Underlying business growing 2.6% yoy driven by data, TV & Tango
• Fixed line revenue impacted by regulation and line loss
• Mobile voice impacted by regulation, positive underlying trend with higher MoU • Fixed internet +4.4% yoy; customer growth impacted by fiercer competition • Non-SMS mobile data revenue +11.6% when excl regulation, driven by the success of mobile data solutions
• Belgacom TV confirming its growth path: FY revenues +36% and customer base +30%
• Operational results supported by the sale of Packs: 870k sold by end 2010 • Lower cost of sales driven by a.o. regulation & product profitability initiatives • Segment result* +1.1% incl. € -19m regulation impact; contribution margin of 45.3% *2009 result adjusted for intercompany items & changes in revenue
Slide 1515
Consumer - P&L •
CBU revenue (EUR mio) 2009 Reported
617
630 620
604
602
579
589
592
606
590
592
585
600
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
610 600
Like-for-like
591
590 580 570
560 550
2009 Reported
205 174
178
158
166
170
Q109
Q209
Q309
166
•
Q4 CoS -12.9% like-for-like, FY CoS -1.4% yoy
Like-for-like
160
140
120
195
180
171
158
169
Q409
Q110
Q210
Q310
Q410
100
•
CBU Personnel & non-HR costs (EUR mio) Non-HR
Personnel
180
− − − −
120
68
75
73
81
65
73
70
83
89
88
81
87
81
81
82
82
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
100
− −
80 60 40 20 0
45.4% 44.1% 44.8%
290
39.6%
44.7% 45.1% 47.1% 44.3%
Q4 non-HR +1.8% due to customer centricity program, FY non-HR -2.3%
•
FY segment result +1.1%* to € 1,073m, including € -19m regulation impact FY segment contribution margin of 45.3%
4 5 ,0 %
280 4 0 ,0 % 270
260 250
268
266
269
240 230
244
264
267
276
3 5 ,0 %
266
3 0 ,0 %
2 5 ,0 %
220
Decreasing headcount following ongoing programs & natural attrition (-510 FTE‟s vs end 2009) Fully offsetting wage indexation (Oct 2010)
•
CBU EBITDA (EUR mio) & Margin
300
YoY trend improved as from Q3 Positive regulation impact (MTR & Collecting model) Product profitability initiatives Positive one-time items
Q4 HR costs down 6.2%, FY HR costs -5.8% yoy
160 140
MTR, Collecting model, Roaming Excl regulation, underlying business +2.7%
FY like-for-like* revenue flat incl €60m regulation, underlying business +2.6%
200
180
− −
•
540
CBU Cost of Sales (EUR mio)
Q4 like-for-like* rev -1.0% due to regulation (€ -23m)
•
2 0 ,0 %
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
*2009 result adjusted for intercompany items & changes in revenue & cost allocations
Slide 16
Consumer - Fixed voice Revenue impacted by regulation & line loss • •
Fixed voice revenue (EUR mio) 150 145
140 135
144
130
141
138
138
125
133
120 115
125
124
124
Q210
Q310
Q410
110 105 100
Q109
Q209
Q309
Q409
Q110
Voice line loss & EOP (000) 2,123
2,086
2,057
2,028
2,029
1,999
1,970
• •
1,933
50 2 .0 3 0 30
1 .5 3 0 10
-1 0
-3 0
-43
-37
-29
-29
-33
-30
-30
-36
-5 0
1 .0 3 0
530
30
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q109
21.6
Q209
21.7
21.5
Q309
Q409
21.2
Q110
•
20.3
20.3
Q210
Q310
1,052
1,004
Q210
Q310
− − −
Line loss Regulation: Collecting model & decline F2M Discounts on Packs
Total line loss 2010 contained at -129k vs -138k in 2009 -36k lines in Q4; acceleration vs previous quarters driven by competition Total customer base at 1,933k (incl VoIP Scarlet)
Q410
Fixed voice ARPU (EUR/month) 21.7
•
Q4‟10 fixed voice revenue of € 124m (or -9.6% yoy) FY ‟10 revenue of € 506m or -9.8% driven by:
Q4 ARPU at € 20.9 (-3.9% yoy); FY at € 20.7 (-4.4% yoy)
− − −
20.9
Q410
Regulatory measures & recurring discounts on Packs Slightly tempered by price increases Q4 ARPU positively impacted by seasonality
Traffic (mio min) 1,230
Q109
1,124
Q209
1,060
Q309
1,181
Q409
1,178
Q110
1,140
Q410
•
Traffic for the FY at 4,374m minutes or -4.8% driven by line loss Quarterly evolution fairly stable • Traffic in Q4 higher due to seasonality As from Q2‟10, Slide 17
Consumer - Mobile Voice FY like-for-like* revenue -3.3%; excl regulation revenues slightly up • •
Mobile voice revenue (EUR mio) 2009 Reported 190
180
170
178
Like-for-like
179
176
170
160
150
140
164
171
175
170
161
168
165
160
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q4 revenue -5.2% like for like, reported-9.3% FY revenue -3.3% like-for like, reported -7.2%
− −
130
• •
Mobile growth & EOP (000) 3,787
3,809
3,829
3,824
3,739
3,745
3,773
3,769
95 75
55 35
10
23
19
22
Q109
Q209
Q309
Q409
15
7
-85
28 -3
-6 -2 6 -4 6
Q110
Q210
Q310
Q410
-6 6
-8 6
MOU (min/month) 2 0 0 9 rep ort ed
107.9
99.4
Q109
112.9
104.5
Q209
108.9
111.8
Like-for-like
100.9
103.2
104.0
Q309
Q409
Q110
109.8
Q210
104.8
106.0
Q310
Q410
Blended net voice ARPU (EUR/month) 2 0 0 9 rep ort ed
15.3 14.9
Q109
Like-for-like
15.9
15.9
15.7
15.4
15.5
15.2
Q209
Q309
Q409
14.5
Q110
15.2
Q210
* 2009 result adjusted for intercompany items
14.9
14.5
Q310
Q410
3 .8 0 3 .7 00 0 3 .6 3 .5 0 00 0 3 .4 0 0 3 .3 0 00 0 3 .2 3 .1 0 0 3 .0 0 00 0 2 .8 .9 2 0 0 2 .7 0 0 2 .5 .6 0 00 0 2 2 .4 0 0 2 .3 0 0 2 .2 0 00 0 2 .0 .1 2 0 0 1 .9 0 0 1 .7 .8 0 00 0 1 1 .6 0 0 1 .5 0 0 1 .3 .4 0 00 0 1 1 .2 0 1 00 0 19.1 .0 00 00 0 8 0 7 0 60 0 5 00 0 4 0 0 3 0 20 0 0 1 0 0 0 00 -1 -2 0 0 -3 0 0 -4 0 00 0 -5 -6 0 0 -7 0 0 -8 0 00 0 -9 -1 .0 0 00 0 -1 .1 -1 .3 .2 0 00 0 -1 -1 .4 0 0 -1 .6 .5 0 00 0 -1 -1 .7 0 0 -1 .9 .8 0 00 0 -1 -2 .0 0 0 -2 -2 .1 .2 0 00 0 -2 .3 0 0 -2 .4 0 0 -2 -2 .5 .6 0 00 0 -2 .7 0 0 -2 .8 0 0 -2 -3 .9 .0 0 00 0 -3 .1 0 0 -3 .2 0 0 -3 -3 .3 .4 0 00 0 -3 .5 0 0 -3 .6 0 0 -3 -3 .7 .8 0 00 0 -3 .9 0 0 -4 .0 0 0 -4 -4 .1 .2 0 00 0 -4 .3 0 0 -4 .4 0 0 -4 -4 .5 .6 0 00 0 -4 .7 0 0 -4 .8 0 0 -4 -5 .9 .0 0 00 0
2009 included Fix-to-Mob intercompany revenue Like-for-like down due to regulation (MTR, Roaming & Collecting model), underlying trend is positive
FY customer base at 3,769k or -54k yoy Q4 net adds -3k:
− − −
Focus on postpaid+31k , prepaid -30k, MVNO -5k Push of Mobile Packs Postpaid ratio increased to 42.6% (end 2009 at 40%)
• •
FY MoU of 106.1, i.e. +3.9% on a comparable basis Q4 MoU up by 2.8% YoY
• • •
Q4 ARPU at €14.5 or -4.4% on adjusted basis FY ARPU down 2.8% on an adjusted basis to € 14.8 Decline fully due to regulation Slide 18
Consumer - Fixed Data FY revenue +4.4%; customer growth impacted by fierce competition
•
Fixed data revenue (EUR mio) 86
84
82
82
80
84
85
85
84
83
−
78
76
79
78
Q109
Q209
74
72
Q309
Q409
Q110
Q210
Q310
Q410
Broadband growth & EOP (000) 1,042
1,044
1,057
1,075
1,091
1,099
1,107
1,113 1 .0 1 0
• •
810
23
610
20
3
12
18
16
Q309
Q409
Q110
8
8
6
Q310
Q410
3
410
210
10
Q109
Q209
Q210
Q4 revenue slightly down (-0.6%) to €83m
−
Lower activation revenues fully offset impact slight price increase of revamped offer FY revenue +4.4% to €337m driven by growing customer base & revamped offer
Q4 net adds (+6k) impacted by fierce competition FY net adds of +38k & total customer base of 1,113k
− −
Supported by Packs & new internet offer Impacted by increased competition
EOP customers including Belgian residential customers of Scarlet
Broadband ARPU (EUR/month) 28.6
Q109
28.1
Q209
29.1
Q309
29.0
Q409
28.7
Q110
28.5
Q210
28.1
Q310
27.6
Q410
• •
Q4 ARPU of € 27.6, -4.9% yoy FY ARPU of € 28.2 or -1.7% yoy
− −
More customers benefit from recurring discount on Packs Offsetting positive impact of revamped offer
Slide 19
Consumer - Mobile Data FY revenue +6.5% yoy impacted by regulation •
Mobile data revenue (EUR mio) 87
82
77
72
67
77
75
Q209
Q309
71
84
80
80
79
79
Q409
Q110
Q210
Q310
62
Q109
Q410
SMS (units/month)
156.0
Q109
201.8
178.7
167.8
Q209
Q309
Q409
215.2
226.5
Q110
Q210
240.5 203.5
Q310
6.8 6.3
Q109
Q209
6.7
Q309
7.0
7.1
Q110
Q210
7.5
FY SMS +25.5% to 221.6; Q4 volumes up 19.2% yoy Increase driven by pricing plans incl free sms
•
FY ARPU € 7.1 (+6%) driven by reply effect free SMS resulting in higher inbound revenues Q4 ARPU of € 7.5 up vs previous quarters due to seasonality effect
7.0
Q310
Including change in allocation credits & discounts FY SMS revenue +11% Advanced data -9.4% YoY, impacted by financial collecting model
• •
• Q409
− − −
Q410
Blended net data ARPU (EUR/month) 7.1
FY revenue +6.5% to € 322m, with Q4 +6.1% yoy
Q410
2009*
2010
VAR Adj
Mobile data revenue
302
322
6.5%
SMS Advanced data
235 67
261 61
11.0% -9.4%
• •
Advanced data impacted by Collecting model as from Q2 2010 Excl collecting model adv data revenue +11.6%
*2009 adjusted for the reallocation of credits & discounts
Slide 20
Belgacom TV Confirming its growth path: revenues +36% yoy, customers +30%
TV revenue (EUR mio) 48
43
38
33
28
23
29
30
Q109
Q209
34
40
44
43
Q110
Q210
46
49
• • •
Q4 revenues +23.1% yoy ; FY revenues +35.9% Driven by customer growth TV remains one of the growth drivers for CBU
• • • •
+223k new customer in 2010 (+30% vs end 2009) +55k new TV customers in Q4 Growth supported by Packs; in particular Free TV Pack FY customer base at 975k incl 135k 2nd streams
•
ARPU in Q4 at €19.7
18
13
Q309
Q409
Q310
Q410
920
975
TV growth & EOP (000) 131
111
91
555
589
663
71
75
51
31
49
11
Q109
752
868
1 .0 0 0
600
89
400
62
54
52
55
Q110
Q210
Q310
Q410
19.2
200
0
Q309
Q409
TV ARPU (EUR/month) 20.4
1 .2 0 0
800
33
Q209
814
20.6
21.3
20.7
19.1
19.3
19.7
− −
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
•
Down vs ‟09 as a result of lower one time revenues from activations & installation Up vs previous quarters due to seasonality
FY ARPU at €19.7 vs € 20.4 in 2009
Slide 21
Tango – Mobile activities in Luxembourg
Tango revenue (EUR mio) 29
28
27
26
•
FY revenue of €99m or +6.1% yoy
•
Revenue growth driven by:
25
25
24
24
23
22
21
23
23
23
24
25
25
20
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Tango mobile customers EOP (000)
245
246
252
Q109
Q209
Q309
259
262
260
260
Q110
Q210
Q310
Succesfull launch iPhone4 Strong sales smartphones Migration of customers from prepaid to postpaid
260
• Q409
− − −
FY ARPU up €2.1 (or +8.7%) to €26
Q410
Blended mobile net ARPU (EUR/month)
24.0
Q109
25.1
Q209
24.1
23.5
23.2
Q309
Q409
Q110
26.2
26.0
Q210
Q310
27.1
Q410
Slide 22
Enterprise – Highlights 2010 showing recovery from crisis
• Crisis impact stabilized in 2010 • • • •
Revenue decline limited to 2.1%* , including regulation impact of € -39m or -1.6% Underlying business only down by 0.5% YoY, while this was 3.1% for 2009 ICT revenue growing 3.3% YoY, while down in 2009 by 2.4% Mobile MoU for full-year 2010 -1.8%*, while in 2009 down by 5.9%
• Regulation impacting revenue by € -39m, but due to CoS decrease EBITDA impact limited to € -3m
• Fixed voice line erosion contained, revenue impacted by lowered F2M tariffs • Mobile Voice usage improving, revenue impacted by regulation • Stable Broadband customer base in highly competitive and saturated market
• Revenue growth in Non-SMS mobile data tempered by pricing, a.o. due to EU regulation on Data roaming, in spite of growing volumes
• Cost of Sales positively impacted by regulatory measures
• Contribution margin of 50%, slightly down on like-for-like basis *2009 result adjusted for intercompany items
23 Slide 23
Enterprise - P&L EBU revenue (EUR mio) 2009 Reported
640
660
640
like-for-like
632
626 602
620
600
580
560
633
619
596
625
615
610
590
606
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
540
EBU Cost of Sales (EUR mio) 2009 Reported like-for-like 200
198
190
184
180
170
192
• • • •
Q4 revenue : -3.2%*, incl. € 15m regulation impact FY 2010 revenue of € 2,421 million; -2.1% YoY* FY regulation impact € -39m 2010 underlying revenue -0.5%, vs 2009 -3.1% (crisis)
• •
FY 2010 CoS of € 685m; -1.6% vs last year* Positive effect regulation: MTR and Collecting model premium rate services
• • • •
HR-expenses FY 2010 of € 375m; -1.1% YoY Headcount end 2010: 5,263 FTEs, i.e. -65 FTEs YoY Non-HR expenses up by 5% to € 149m for FY 2010 Q4‟09 expenses included positive one-time effect
• • • •
Segment result of € 1,212m or -1.6% YoY Like-for-like, segment result -3.6% YoY FY impact regulation limited to € -3m FY contribution margin of 50% versus 50.8%*
174
160
150
183
173
161
180
183
175
163
164
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
140
EBU personnel & non-HR costs (EUR mio) Non-HR
Personnel
160 140 120 100 80
60
41
39
33
29
36
35
39
40
95
94
94
96
91
93
96
95
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
40 20 0
EBU EBITDA (EUR mio) & Margin 395
47.7% 49.4% 50.0% 49.7% 49.7% 50.4% 49.5% 50.6%
295
245 195
5 5 ,0 %
5 0 ,0 %
345
306
310
4 5 ,0 %
301
315
306
308
292
306
4 0 ,0 % 3 5 ,0 % 3 0 ,0 %
145 2 5 ,0 % 95
2 0 ,0 %
45
1 5 ,0 %
-5
1 0 ,0 %
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
− x * Like-for-like, i.e. compared to 2009 adjusted for intercompany items
Slide 24
Enterprise - Fixed Voice Fixed Voice line erosion contained, revenue impacted by regulation • •
Fixed voice revenue (EUR mio) 150
145
140
148
135
144
130
142
139
141
136
125
120
130
132
Q310
Q410
115
110
Q109
Q209
Q309
Q409
Q110
Q210
FY 2010 revenue of € 539m, -6.1% YoY Impacted by:
− − −
lowered F2M-tariffs on 1 August 2010 (MTR-linked) collecting model Premium Rate Services line erosion and lower usage
Voice line loss & EOP (000) 20
1,529
1,515
1,504
1,491
1,477
1,466
1,455
1,440
1 .9 0 0 1 .7 0 0 1 .5 0 0 1 .3 0 0 1 .1 0 0
0
-15
-14
-11
-13
-11
-14
900
-11
700
-14
500
• •
2010 line erosion of -51k vs -53k in 2009 Q4 2010 line loss of 14k driven by ao. delayed effect from bankruptcies
• • •
FY ARPU Fixed Voice of €30, i.e. -2.7% YoY Negative regulation impact: F2M & Collecting model Slightly offset by price indexation
• • •
FY 2010 Fixed Voice traffic of 3,145m min; -5.7% YoY Stable decline over the quarters Q4 traffic -5.7% YoY
300 100
-2 0
-1 0 0
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Fixed voice ARPU (EUR/month) 31.3
Q109
30.9
Q209
30.1
Q309
30.9
Q409
30.9
Q110
30.2
Q210
29.0
Q310
29.7
Q410
Traffic (mio min) 901
Q109
837
Q209
770
Q309
828
Q409
848
Q110
790
Q210
727
Q310
781
Q410
Slide 25
Enterprise - Mobile Voice Revenue impacted by regulation; usage further improved Mobile voice revenue (EUR mio) 2009 Reported 150
146
145
144
140 135
like-for-like
135
135
130 125 120
• • •
FY 2010 Mobile Voice revenue of €502m; -5% YoY* Regulation impact increased over the quarters Q4 2010 revenue -6.3% YoY, mainly due to MTR-cut
• •
75k mobile customers added in 2010 Strategic choice to focus on high-value SME customers
• • •
FY MoU of 319.2, -1.8% YoY * YoY variance improving over the quarters Solid MoU Q4: success of pricing packages/close user groups & some seasonality
• • •
FY 2010 Mobile Voice ARPU of € 33.1, -11.4% YoY* Regulation: MTR, Roaming and Premium rate numbers Success mobile voice price plans including free calling
115 110
105
138
137
127
128
129
130
124
120
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
1,286
1,303
100
Mobile growth & EOP (000)
40
1,170
1,190
1,235
1,211
1,252
1,271
1 .3 0 0 1 .2 0 0 1 .1 0 0
20
30
1 .0 0 0
21
24
20
25
900
19
800
14
17
Q310
Q410
0
700 600 500
Q109
Q209
Q309
Q409
Q110
Q210
MOU (min/month) 2 0 0 9 rep ort ed
355.4
354.5
Like-for-like
346.6 329.3
332.8
333.0
309.8
Q109
Q209
Q309
325.7
Q409
319.7
321.8
Q110
Q210
305.6
Q310
327.3
Q410
Blended Net voice net voice ARPU ARPU (EUR/month) (EUR/month) 42.1 40.2
Q109
2 0 0 9 rep ort ed
40.7
Like-for-like
37.6
37.2
35.6
35.1
38.9
Q209
Q309
Q409
34.8
Q110
34.5
Q210
32.4
30.9
Q310
Q410
* Like-for-like, i.e. compared to 2009 adjusted for intercompany revenue
Slide 26
Enterprise - Fixed Data Stable Broadband customer base in saturated, competitive market
Fixed data revenue (EUR mio)
110
105
• •
FY 2010 revenue of € 392m, -2.3% YoY SME and self-employed signing up for advantageous CBU-Packs incl internet at discount
•
Professional broadband customer base flat to last year:
100
101
100
100
100
95
99
98
98
98
Q110
Q210
Q310
Q410
90
Q109
Q209
Q309
Q409
Broadband growth & EOP (000) 445
443
442
446
445
446
446
445
− −
430
2
380
4 -2
330
0
-1
1
280
0
-1
230
Saturated market Highly competitive
180 130 80
-4
30
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
•
Broadband ARPU (EUR/month) 40.1
Q109
39.8
40.1
Q209
Q309
39.7
39.4
39.1
39.0
38.7
Q409
Q110
Q210
Q310
Q410
FY 2010 ARPU of € 39.1, -2.2% YoY
− −
-
Success of consumer Packs, incl internet at discount Partly offset by “Bizz Options”
Slide 27
Enterprise - Mobile Data SMS growth continued; price pressure on advanced mobile data •
Mobile data revenue (EUR mio) 51
49
47
48
45
43
41
39
43
47
46
45
47
47
46
Q210
Q310
Q410
FY 2010 revenue of € 185m, + 2.8% YoY*
− −
SMS revenue up by 4% to € 76m Advanced Data up by 2% to € 109m
37
35
Q109
Q209
Q309
Q409
Q110
SMS (units/month)
64.7
68.4
68.6
76.5
74.6
77.0
74.7
Q109
Q209
Q309
Q409
Q110
Q210
Q310
85.5
Q109
12.9
Q209
13.4
Q309
12.9
Q409
Continued increase in number SMS Seasonality effect in Q4
•
FY ARPU of € 12.2 or 5.7% lower than 2009
•
Advanced Data: revenue H2 2010 impacted by EU regulation to prevent bill shocks Increase in volumes offset by lower ARPU
Q410
Net data ARPU (EUR/month) 12.4
• •
12.1
12.5
12.3
Q110
Q210
Q310
11.9
Q410
2009*
2010
VAR Adj
Mobile data revenue
180
185
2.8%
SMS Advanced data
73 107
76 109
4.0% 2.0%
•
* SMS excluding free ofusage *2009 adjusted for reallocation credits & discounts and eliminated intercompany revenue
* Like-for-like, i.e. Compared to 2009 result adjusted for intercompany items
Slide 28
Enterprise - ICT Full-year revenue up by 3.3% FY 2010 revenue of € 692m; + 3.3% YoY • Solid yoy growth for first three quarters; 2009 impacted by the crisis • Some recovery from crisis visible as of Q4 last year • Q4 2010 flat to 2009 • Good 2010 performance of Telindus International
ICT revenue (EUR mio) 185 180
181
175 170 165 160
171
155
166
174
172
Q110
Q210
179 167
150
153
145 140 135
Q109
Q209
Q309
Q409
Q310
Q410
Slide 29
Service Delivery & Wholesale - P&L SDE&W revenue (EUR mio)
•
2009 Reported 120
100
98
94
94
100
88
87
85
89
94
85
79
83
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
FY revenue of € 342m, or like-for-like* -1.7% yoy
− −
like-for-like
80
60
40
20
0
Decline fully due to regulation (€ -22m) Excl regulation revenue+4.7%
•
Q4 like-for-like* -6.6% incl € 9m regulation
• •
Like-for-like CoS down 26.2% to € 46m Positive impact from financial collecting model
•
Q4 HR expenses +11.5%
SDE&W Cost of Sales (EUR mio) 2009 Reported 25
18
15
15
15
18
15
10
10
10
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
16
20
like-for-like
20
18
15
10
5
0
SDE&W personnel & non-HR costs (EUR mio) Non-HR
Personnel
− −
120
100
80
20
51
50
52
50
47
45
51
48
53
50
Q309
Q409
Q110
Q210
Q310
Q410
43
42
50
50
Q109
Q209
60
40
50
48
Wage indexation & net increase FTE (+73 FTEs) Q4‟09 low due to special tax reductions
•
Q4 Non-HR yoy variance no longer impacted by swap RAN to Huawei equipment as this started in Q4‟09
•
FY EBITDA at -€109m
0
SDE&W EBITDA (EUR mio) 0
0
-5
-1 0
-16
-1 5
-18
-13
-18
0
-23
-23
0
-27
-2 0
0
-2 5
-36
-3 0
0
0 -3 5
-4 0
0
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Quarterly evolution fairly stable
*2009 result adjusted for intercompany items & changes in revenue
Slide 30
Staff & support - P&L
•
S&S revenue (EUR mio) 17 15 13 11
12
9 7 5 3
7
6
8
10
7
10
FY revenues of € 35m, slightly up +4.6% yoy
−
a.o. driven by slightly higher capital gains realised on sale of buildings
7
1 -1
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
S&S Personnel costs (EUR mio)
•
FY personnel cost of € 165m or fairly stable vs 2009
•
Non-HR expenses of €192m or -6.1%, including effect of company-wide cost focus
45
44 43
43
42
41
41
41
Q109
Q209
40
39
42
42 41
41
40
Q310
Q410
38 37
36
Q309
Q409
Q110
Q210
S&S non-HR costs (EUR mio) 70
60
61
50
40
30
50
49
Q109
Q209
43
50
45
45
Q210
Q310
52
20
10
0
Q309
Q409
Q110
Q410
Slide 31
International Carrier Services P&L •
ICS total revenue (EUR mio) 450 400
378
414
Q110
Q210
350 300 250
415
100
217
227
228
221
Q109
Q209
Q309
Q409
−
402
−
200 150
FY revenues of €1,610m; incl Q4‟10 of €402m Positive effect full consolidation & MTN ICS contribution Organic revenue +3.9%, including +4.7% in Q4‟10
50 0
Q310
Q410
• •
ICS direct margin (EUR mio) 70
Voice
Non-Voice
60
19
23
28
24
33
33
32
34
Q110
Q210
Q310
Q410
50
40
12
17
15
14
20
24
20
21
Q109
Q209
Q309
Q409
8.7%
10.0%
30
20
10
•
0
•
ICS EBITDA (EUR mio) & Margin 48
7.4%
43
8.8%
7.4%
7.7%
8.1%
8.9%
•
Reported EBITDA of €129m positively impacted by full conso & contribution MTN Lower operating expenses largely offset pressure on gross margins FY EBITDA margin at 8%, slightly down to 2009
•
Volumes continued stable increase
1 0 ,0 %
38
8 ,0 % 33 28 23
18
19
13
8
23 17
20
Q309
Q409
28
32
34
36
6 ,0 %
4 ,0 %
•
2 ,0 %
3
-2
0 ,0 %
Q109
Q209
Q110
Q210
Q310
Q410
188
209
235
5,923
6,254
6,433
6,680
Q110
Q210
Q310
Q410
ICS volumes (in mio) Minutes
8 .0 0 0
SMS/MMS
7 .0 0 0
6 .0 0 0
5 .0 0 0
119
149
4,498
4,707
4,805
5,306
Q109
Q209
Q309
Q409
4 .0 0 0
3 .0 0 0
164
117
168
2 .0 0 0
1 .0 0 0
Reported FY gross margin +58.4% incl full conso effect Organically, Voice margin pressured by competition & exchange rate fluctuations Non-voice margins up, increased leadership in mobile data
− − −
Positive impact additional MTN business Voice volumes +31% Non-voice volumes +46%
0
Slide 32
Belgacom Company presentation Investor Relations
Ytd September 2010 results in detail Popular discussion topics • • • • • •
• – slide 34 Unit (CBU) • Headcount Consumer Business • – slide 35 Unit (EBU) • Regulation Enterprise Business – slideDelivery 39 • Legal Service Engine &Wholesale (SDE&W) • • – slide 40 • Convergence Staff and Support (S&S) TV International – slide 41 Carries Services (BICS) • • Belgacom Belgacom • Mobile Data – slide 44
Network – slide 47 BICS – slide 51 Debt position Belgacom – slide 54 Shareholder structure – slide 55 Belgian economy – slide 56 Customer centricity – slide 57 Slide 3333
Group - Headcount Benefitting from headcount reduction programs • FY HR costs of € 1,107m, i.e. ~24% of Group costs & ~17% of Group revenue • HR costs -1.6% yoy, like-for-like1 driven by fewer headcount (-496 FTE‟s) − Ongoing headcount reduction programs (-571 FTE) & natural attrition (-241 FTE) − Partly offset by increase (+316 FTE) due to acquisitions, full consolidation BICS & recruitment business-critical functions
• Q4‟10 HR costs impacted by 2% wage indexation (October 2010 – Belgacom SA) • 2011: January non-Belgacom SA +June2 Belgacom SA, additional 2% wage indexation • In 2011, Tutorship program will continue but some business critical hiring will be done •
Belgacom decreased its headcount considerably over the years
Telindus + 2,600 FTE
PTS - 6,300 FTE 25000
2006-2012: - 3,900 FTE BeST - 4,160 FTE
Tutorship
20000
•
About 40% of headcount has civil servant status, no new civil servant contracts since 1997
FMS
15000
End‟10 16,308 FTE
10000
Move to IP supporting lower headcount
5000
YE96
1 2
BICS consolidated at 57.6% Source: Federal planning Bureau
YE97
YE98
YE99
YE00
YE01
YE02
YE03
YE04
YE05
YE06
YE07
YE08
YE09
YE10
Slide 34
Regulation - 1 Mobile Termination Rates (MTR) •
Glidepath in place since June 2010 leading to full symmetry by 2013
• •
Any MTR decrease reflected in F2M tariffs of BGC
MTR-Glidepath in €ct Proximus
11.43 9.02
Mobistar
Base
Big drop in asymmetry as from August 2010
7.2 4.62
01-Aug-10*
01-Jan-11*
01-Jan-12
1.08
Before* 7.2 9.02 11.43
25% 59%
On 15 Feb 2011, Court took its decision in suspension procedure & rejected all the claims
•
Annulment procedure is still ongoing
01-Jan-13
MTR regulation impact 2010
• •
Cut 1 Aug 2010, lowering asymmetry with Base & Mob. MTR impacts revenue of all mobile players; EBITDA impact limited for BGC due to reduced asymmetry
•
Actual impact on 2010 financials: − Revenue: € -39m − EBITDA: € -3m
Final decision on MTR €ct Proximus Mobistar Base % change Proximus Mobistar Base Assymmetry Mobistar-Prox Base-Prox
•
3.94 2.46
Before*
Mobistar & Base filed separate appeal against decision:
01-Aug-10* 4.62 5.05 5.81
01-Jan-11* 3.94 4.29 4.90
01-Jan-12 2.46 2.62 2.92
01-Jan-13 1.08 1.08 1.08
-36% -44% -49%
-15% -15% -16%
-38% -39% -40%
-56% -59% -63%
9% 26%
9% 24%
7% 19%
0% 0%
*excl VAT, including inflation Rates 2012-2013 excl VAT, final rates will be corrected for inflation
MTR regulation impact 2011
• • •
Carry-over impact from cut 1 Aug 2010 1 Jan 2011 MTR‟s further reduced Estimated impact on 2011 financials: − Revenue: ~ € -80m − EBITDA: < € -15m
Slide 35
Regulation - 2 Mobile voice and data EU-roaming regulation Voice Roaming (€ct per minute) Retail Outgoing
Retail Incoming
Roaming regulation impact 2010
Wholesale Outgoing
95 44
49
46
43
30
28
Before regulation
43 26
24
22
End Aug'07
End Aug '08
19 July '09
39
35
22
18
11
15 July '10
2010 was impacted Carry-over impact from lower rates on 1 July 2009
• •
Roaming rates voice further decreased on 1 July 2010
•
Actual impact on 2010 financials: − Revenue: € -24m − EBITDA: € -22m In addition, revenue impacted by measures taken to prevent bill shocks: financial limit of €50/m (VAT excl.)
July'11
SMS Roaming (€ct per sms) Retail Wholesale
•
39
21
Data roaming rates regulated at wholesale level, prices went down on 1 July 2010
11
Roaming regulation impact 2011
4 Before regulation
1 July '09
Wholesale Data Roaming
(€ct per Mb)
100 80
50
1 July '09
•
1 July '10
1 July '11
Tariffs before regulation are indicative averages of European tariffs, mix of postpaid/prepaid and residential/business
• •
Carry-over impact from lower rates on 1 July 2010
•
Estimated impact on 2011 financials: − Revenue: ~€ -10m − EBITDA: ~€ -10m
Voice and data roaming rates will further decrease on 1 July 2011
Regulation expires on 30 June 2012. Rules to be Slide reviewed by 30 June 2011. Slide 36
36
Regulation - 3 National directive on Premium Rate Services • As from 1 April 2010, financial collecting model for Premium Rate Services • Following circulars issued end 2009 by Ministry of Finance concerning VAT on Premium Rate Services and Tax on chance games • Applicable for services where Belgacom collects on behalf of a third party content provider
Collecting model impact 2010
Collecting model for premium rate services
•
From April revenue no longer considered as full revenue of BGC & only margin booked as revenue
•
Actual impact on 2010 financials: − Revenue: € -56m − EBITDA: no impact
Collecting model impact 2011
• •
Carry-over impact in Q1 2011 Estimated impact on 2011 financials: − Revenue: ~ € -20m − EBITDA: no impact Slide 37
Regulation - 4 Other regulatory measures Impact 2011 from other regulatory measures
• •
Some other regulatory measures will impact the 2011 financials: o.a. the new LLU1 and bitstream prices
Estimated impact on 2011 financials: − Revenue: ~ € -5m − EBITDA: ~ € -5m
Zoom-in on new LLU & Bitstream prices New LLU and Bitstream prices
New LLU prices
•
BIPT decision of 2010 EUR Full unbundling Shared access ATM bitstream Ethernet bitstream VDSL2 bitstream
Before
2010
9.29 0.85 14.31 -
7.78 0.87 12.72 11.48 13.94
• •
In Aug‟102, the BIPT decided to: − Lower monthly price for full unbundling by ~20% − While keeping the price for shared access stable New price for LLU is at the low EU end BGC lodged annulment procedure against the decision
New Bitstream prices
• •
In Aug‟102,the BIPT also set new prices for ATM Bitstream, and took a final decision on Ethernet Bitstream & VDSL2 bitstream For VDSL2, a 15% mark-up is currently applied
1 LLU: 2
Local Loop Unbundling (BRUO) On 10 November 2010, the BIPT has communicated an erratum to its decision of Aug, setting with retroactive effect until 15 Aug the new monthly prices
Slide 38
Legal – Damage claim Base/Mobistar Update on status On-net case: damage claim Base/Mobistar Belgacom introduced motion in respect of expert panel following 2nd preliminary report
•
Damage claim filed in 2003 by KPN Group Belgium (Base) & later also by Mobistar, claiming that BGC: − applied termination charges that were too high − abused its dominant position by applying too low prices for on-net calls (Prox-to-Prox calls)
•
In May 2007, the court considered it was not in a position to make a decision on the alleged existence of a price squeeze & anti-competitive network effects. Two experts were appointed to examine: − whether such practices existed, − whether they produced anti-competitive effects and − what damages could have been caused to the claimants
•
The panel filed 2 preliminary reports (in Oct 2009 & Dec 2010) in which they considered: − Base & Mobistar underperformed as compared to the results and market shares they would have achieved in an efficient market (assumption: in a perfectly competitive market, market shares are symmetrical). − The 2nd report introduced new elements o.a. a constant profitability benchmark for the whole period based on the UK market (1999-2004) during which UK operators were in a different phase of development than the Belgian market − Alleged impact on Mobistar & Base could amount to € 1,840m.(2nd report)
•
BGC has submit its detailed observations and criticisms. In the 2nd report, the vast majority remained unanswered & Belgacom‟s own expert reports were largely disregarded
=> BGC introduced a motion with the court in respect of the expert panel, requesting their recusal/replacement. This motion is to be dealt with by the court in the near future Slide 39
Group - Convergence Execution of consistent convergence strategy paying-off Packs evolution since launch ('000) net adds
Multiplay overview residential customers
total
1.000
870
250
741
Single
double
Quadruple
900
800
200
> 45% of customers have ≥ 2 BGC products
700
560
600
150
302
100
400
231
106
153
92
51
26
27
44
Number of Quad-play customers growing steadily to 9%
300
88
70
50
33
< 55% single play
500
384
52
Growing proportion of mobile Packs
200
66
63 100
31
0
0
Q4'07
Q2'08
Q4'08
Q2'09
Q4'09
Q2'10
Q4'10
Example of triple-play Pack @ € 62.46/month1
Example of triple-play Pack @ € 72.46/month1
Fixed line with free “happy time” option – free calling to fixed lines after 5 pm & on weekends
Mobile subscription including 55 minutes Any Time Any Network
Internet Favorite – Download speed of 25Mbps, upload 3.5 Mbps, 100 GB volume
Internet Favorite – Download speed of 25Mbps, upload 3.5 Mbps, 100 GB volume
Belgacom TV Comfort, renting settop-box included
Belgacom TV favorite, renting settop-box included + 2 thematic bouquets
Customers save €18.5/month 1
Triple
New prices as from 1 January 2011; incl VAT
Customers save €27.5/month Slide 40
Belgacom TV Market overview Competitive landscape
31% DTV market share
Flanders Telenet-zone
Brussels
Belgacom - zone
Numéricable
Wallonia Voo-zone
• • • • •
•
~ 4.7 m households in Belgium Digital TV penetration Belgium of ~57%* Belgacom present in all regions Belgacom TV coverage ~90% Belgacom Digital TV market share of 31% − Share in total TV market: 19% − Belgacom 2nd player in DTV market Belgacom TV subscriber base of 975k (i.e. households + multiple streams) fairly evenly spread North/South
• Digital TV market penetration & market share
Belgian Total TV market - market shares
Belgacom:
Satelite 3%
Belgacom 19%
Cable 78%
* Source: Company figures & estimates, competitor press releases
Analoge 43%
31%
Digital 57%
Slide 41
Belgacom TV An international recognized success story Evolution TV base* since launch ('000 EOP) net adds
160
975
1 .1 0 0
Total
900
752 140
700
• Strong customer growth since launch in June „05 −
506
120
500 100
305 80 300
140 42
60
100
74
40
10
0
Q405
42
32 29 37
20
Q206
58 56
44 42 52
63
49
89 62 54 52 55
34
10
Q406
-1 0 0
-3 0 0
Q207
Q407
Q208
Q408
Q209
Q409
Q210
Q410
+30% TV customers yoy
− −
In 5 yrs time Belgacom gained 975k* TV subscribers, representing 839k households Customer gain supported by Packs incl.TV Unique market positioning with “Free TV” claim
• ~60% of CBU broadband customers have a TV subscription
Belgacom TV revenue evolution (in mio €)
182
86
−
43 2 2005
2006
2007
16.6
Q405
36% revenue increase yoy driven by the growing customer base TV now represents about 8% of CBU revenues
15 2008
2009
2010
• ARPU per household grew significantly since
Evolution TV ARPU since launch
11.9
• FY 2010 TV revenues amounted to €182m −
143
18.5
21.3
19.7
12.6
Q406
launch
− −
Q407
Q408
Q409
Growing customer base lowers impact of promotions Services (VoD,„bouquets‟, football...) adding to ARPU
Q410
* Corresponds to the number of Belgacom TV settop boxes
Slide 42
Belgacom TV From TV towards entertainment Rich offer: 90 channels, incl HD
Soccer
Bouquets
Advanced VOD >1300 movies functionalities
3D TV demo
= A complete & competitive offer
Basic pricing of €18.5/month Incl. settop box ( €6/month)
“All Foot” €19.95/month “My Club” €9.95/month Per match €5-€10
Additional channels as from €5/month
Movies on demand €2-€6.5 HD movies from €4-€7
Pause TV, March‟10 live transmission recording, Instant rewind football match Two 3D demo channels
Building a next generation TV experience, supported by selective partnerships Anticipate the Future
Enjoy Diversity
Create Openness
Belgacom Entertainment Share Emotions
Bring the Human Touch
Onlive: interactive entertainment, cloud computing & online gaming
in3Depth Systems (Softkinetic): expertise in 3G gesture recognition
Jinni: personalized search-and-recommendation engine blinkx: video search engine MUBI: Belgacom expanded its TV film catalog with 300 MUBI films (films for lovers of independent, foreign and classic films) Slide 43
Mobile data - 1 Mobile data on Group level Mobile data ~30% of Mobile service revenue
• •
Advanced data ~35% of Mobile data revenue
-
Mobile data Group revenue evolution (in mio €)
SMS
•
Non-SMS
482
507
174
170
268
308
337
2008
2009
440 172
BGC Group generated € 507m revenues from mobile data; or +5.1% yoy Yoy variance has been impacted by regulatory measures:
Mobile data includes both SMS & non-SMS data:
-
CBU
Mobile Data ARPU *
2010
EBU
13,4 12,9 12,4 12,3 12,5 12,5 12,4 12,9 12,1 12,5 12,3 11,9 6,5
6,3
6,1
6,4
6,3
6,8
6,7
7,1
7,0
7,1
7,0
7,5
•
EU-regulation on data roaming Collecting model for Premium Rate Services
SMS revenue increased 9.4% yoy to € 337m driven by success of pricing plans including free SMS Non-SMS (i.e. advanced data) showed a decline of 2.4% yoy to € 170m driven by regulatory measures. Excl regulation, revenues increased ~7% driven by the success of Mobile internet solutions
Reported FY Mobile data ARPU:
-
For CBU, increased 6% yoy to € 7.1 For EBU amounted to € 12.2 or -5.7% yoy
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 * Mix of SMS and advanced data
Slide 44
Mobile data - 2 Zoom-in “Internet on Laptop” & “Internet on Smartphone” Belgacom Mobile Internet customer base* Belgacom
Mobistar
182,000 139,000
62%
114,000 49,000
38%
Q208
64,000
87,000
Q408
For CBU: Comfort @ €14.99/month (incl VAT) - 1GB included - Extra usage: €0.03/MB (if no BGC internet subscription: €19.99)
Mobile Internet on Laptop
Special pricing plans for iPad
Mobile Internet on Smartphone Internet On GSM
Try it!
* Total subscriptions for internet on laptop
+60% yoy Q209
Q409
Q210
Q410
For EBU (SME): Comfort @ €10.32/month (ex VAT) - 15h included - Extra usage: €2.06/hour
iPad Anytime@ €24.99/month
Pay &Surf: iPad10€
incl 1.5GB
4 days; 500 MB
For CBU:
For EBU (SME):
Option on postpaid voice: Comfort @ €9.99/month (incl VAT) - 250MB included - Extra usage: €0.03/MB Pay&Surf for prepaid voice @ €3 - 25MB included
Internet and voice bundle: Bizz Smart 35 @ €35/month (ex VAT) - 400 MB included - Extra usage: €0.0248/MB -150 voice minutes / free to fixed lines Slide 45
Mobile data - 3 Belgacom well positioned to capture mobile data growth
High-quality 3G-network & strategic option to offload data to sustain customer experience and keep investments under control
â&#x20AC;˘ 55% of private mobile data is consumed at home â&#x20AC;˘ Opportunity to redirect data from Mobile network to fixed network
Fix DSL Network
WiFi 3G
Femto Macro
Mobile Network
DATA VOICE Slide 46
Fixed Network - 1 Nation-wide, high-quality fixed network • • • •
ADSL : 99.85 % - world record Strategic decision end 2003 to invest in FttC* (Broadway project) Enabler for organic growth and innovation, answering customer needs Deploying high-quality & nation-wide VDSL coverage:
−
−
• •
End 2010 >76% FTTC* population coverage ; further extended to reach 85% service coverage by end 2013 VDSL : up to 30 Mbps
Quality DSL network, driving TV coverage
− −
Belgacom TV ~89% HDTV service coverage: 73%
So far ~€ 550m invested in Broadway
* Fiber to the Curb
Homes / businesses
Street Local exchange / cabinet & Central Office Remote optical 2) VBB 1) 17 MHz platform 3) DSM 3) DSM
Further maximise network efficiencies: Access network toolkit & compression techniques
Compression
“Boost the Copper strategy” Reconfirmed
4) Pair bonding = copper = fiber
1. 2. 3. 4. 5.
5) FTTH
Increase spectrum Reduce copper distance Neutralize interference between copper pairs Use of several pairs Use of fiber end-to-end in the network Slide 47
Fixed Network - 2 Move to all-IP program ISDN
CPE
Access Network
SDSL ADSL2 + Leased Lines
From
Ethern. & SDH
Fibre VDSL2 UMTS HSDPA
•
• •
Aggregation Point
Access Network
•
VoD TV
TV Broadcasting
Internet PSTN ATM/SDH Mobile
ROP
CPE
To
Central Office
ADSL
Video on Demand
IP Ethernet DWDM
Internet
Dedicated Dedicated infrastructure infrastructure per perservice service Little Little convergence convergence capabilities capabilities
Voice Data / LL Mobile
IMS
VoIP
+
Mobile
SDP
Future Services
Video on Demand TV Broadcasting Internet
Network simplification
Future Futureproof proof fixed/mobile fixed/mobile integration integration Shared Shared infrastructure infrastructure for forall allservices services
Objectives MaIP: • Replace legacy technologies which become end-of-life by IP based alternatives • Transform our IT stack to improve efficiency and reduce waste by automation, 360° view on customer, avoiding rework and automated repair analysis • Transform the customer interaction model by more customer self management
Continued roll-out of MaIP project, a business transformation project entailing a full reengineering of the network, IT-systems & processes € 101m invested since launch in 2008, of which € 50m in 2010 Realizations 2010: improved monitoring & diagnostic services, launch of new sales support tool for residential market & new “from quote to cash” application implemented for ICT Belgium Enabler for long term headcount efficiencies Future out phasing of ~10% of local exchanges Slide 48
Network - Mobile Nation-wide, high-quality mobile network Spectrum efficiency
50-100Mbps
•
HSPA +: A few 10Mbps HSDPA : A few Mbps UMTS : 128 to 384 kbps GPRS : 30 to 50 kbps EDGE : Voice/Circuit 150 à 200 kb/s
1995
2005
EDGE Evolution: 10-14 Mbps
• 2010
Leader in coverage − GSM sites covering 99.98% of Belgian population − 3G sites covering 97% of Belgian population Leader in speed − Drive tests show best data transfer speed of 3 operators − Best in class in upload speed
•
2003 – strategic decision to invest in 3G
•
Current Radio access network (RAN) being replaced by state-of-the-art single RAN hybrid product providing a simplified, high capacity, high performance and future proof network − Keep network superiority − Lower the cost of adding extra transport technology Leader − Act swifter to strategic changes in coverage − Go for Long Term Evolution (LTE) reusing part of the equipment & speed Slide 49
Spectrum Belgian situation & upcoming spectrum auctions 2G spectrum
3G spectrum
4G spectrum
Digital dividend
900 MHz & 1800 MHz
2100 MHz
2600 MHz
790 MHz – 862 MHz
• Belgian operators allowed
• Proximus, Mobistar & Base • To be assigned: auctions
to deploy UMTS in 900 MHz spectrum (more efficient in rural areas)
• Tacit extension: BGC has to pay €74m for 20102015; via annual payments. BGC filed annulment procedure.
800 MHz 900 MHz
expected mid-October 2011
• 3 licenses expire in 2021 • Available spectrum: − 2 x 70 MHz paired • BGC paid € 150m spectrum • BIPT intends to auction 4th − 1 x 45 MHz unpaired license in June 2011; all reserved for 4th entrant; unless spectrum remains available
spectrum
by switching from analogue to digital terrestrial TV broadcast.
• Part of digital dividend could be used for telecom services
• No clarity on the digital dividend yet
72 Proximus Mobistar Base 2 x 12 2 x 12 2 x 10.8
1800 MHz
Proximus 2 x 15
2100 MHz
Proximus 2 x 15
2600 MHz
each have 1 UMTS license
• Spectrum that is freed up
Mobistar 2 x 15 1x 5
Mobistar 2 x 15
Base 2 x 22 1x5
2x 5.8
Base 2 x 15
Will be available 2 x 70
2x 5,8
1x5
Free 2 x 11.4 Free 2 x 15
1x5
1 x 45
International Carrier Services BICS delivers best in class global solutions BICS ownership 20% 57.6%
22.4%
• • • •
• • • • •
Active in the international carrier market since 1997 January „05: spin off of Belgacom ICS as an independent affiliate of Belgacom Since Dec „09 JV held by Belgacom, Swisscom & MTN In top 4 of largest operators worldwide in terms of voice traffic volume* World leader in mobile data carrier services (SMS, MMS, GPRS Roaming, Signalling…)
650 customers, incl. > 250 mobile operators > 99 points of presence (PoPs) in 47 cities and 33 countries, 9 Metropolitan area networks Participations in 75 submarine cables Offices in Brussels, Bern, Monaco, New York, Dubai and Singapore Sender
Receiver
Belgacom Swisscom MTN Fixed operators Mobile operators xSP‟s
*company estimates
Fixed operators Mobile operators xSP‟s
VOICE: collecting & terminating international voice traffic MESSAGING: ensuring interoperability for SMS & MMs ROAMING: full set of services to enable roaming traffic CONNECTIVITY: transport of Signalling, roaming GPRS, IPX and the provisioning of tailored, high-quality bandwidth solutions MOBILE FINANCIAL SERVICES Slide 51
International Carrier Services Impact of MTN transaction on financials Until year-end 2009, BICS was jointly controlled & therefore proportionally consolidated • In Q4‟09 BGC booked a non-cash capital gain of € 74m; classified as non-recurring revenue = net result of MTN contribution at 57.6%, minus dilution BICS book value (going from 72% to 57.6%)
As from 2010, Belgacom acquired control & BICS became fully consolidated • In Q1‟10 BGC booked a non-cash capital gain of € 436m; classified as non-recurring revenue = re-measurement of BICS at fair value through P&L • Financial results BICS booked at 100%: increasing Belgacom Group financials • Group net income corrected via minority interest
July 2005: JV with Swisscom in exchange for 28% of ownership and joint control.
February 2006: Outsourcing agreement with MTN regarding MTN‟s international Voice & Data traffic
November 2006: Partnership between BICS and Omantel for delivering high quality traffic
May 2008: Next step in partnership of BICS with Omantel, investing jointly in the Europe – India Gateway
December 2009: MTN contributes its international carrier services to BICS
Slide 52
International Carrier Services BICS grew significantly over the last 5 years Revenue growth (in mio €)
Evolution EBITDA & EBITDA margin EBITDA
140
1,610
129
Margin
45,0% 120 40,0%
100
35,0%
78 80
713
746
736
812
892
2010 fullconsolidation & MTN ICS
53
60
40
20
30,0%
64
25,0%
20,0%
33
27
7.2%
7.9%
8.7%
15,0%
8.0% 10,0%
4.5%
3.8%
5,0%
0
2005
2006
2007
2008
2009
2010
0,0%
2005
2006
2007
2008
2009
2010
*Proportionally consolidated until end 2009 @ 72%
Volume growth (in mio) 26,090 19,858 16,232 12,209
13,841
9,753
2005
2006
2007
*Total BICS volumes, i.e. @ 100%
2008
2009
2010
50,0%
• Strong revenue growth driven by successful partnerships, boosting volumes • Proportion of BICS revenue in Belgacom Group revenue grew from 13% in 2005 to 24% end 2010, impacting the Belgacom Group margin • 2010: Growth of BICS at typical lower margin continued and is impacting the Group margin in two ways: - As a result of the full-consolidation as of 1 Jan „10 - A growing organic business Slide 53
Debt position Belgacom • Belgacom continues to have a sound financial position • Average interest on LT loans/debt for 2010: 4.77% • Most of the debt is maturing in 2011 & 2016 • In order to pre-finance the maturing bonds of November 2011, BGC issued on 31 January 2011: - 7 year senior unsubordinated bond of €500m - with a fixed coupon of 3.875% - maturing 7 Feb 2018 • In March 2011, BGC invited the holders of the outstanding 4.125 per cent bonds due November 2011 to tender their notes for purchase against cash: BGC will pay a cash purchase price of €51,050 for each €50,000 in nominal amount Non-current unsubordinated debentures as of 31 December 2010 are summarised as follows: Carrying Nominal Maturity Interest rate Effective amount amount date payable interest rate Floating rate borrowings JPY (a) Fixed rate borrowings EUR EUR EUR JPY (a) JPY (a) Total unsubordinated debentures
(mio €)
(mio €)
(b)
85
73
Dec-96
Dec-26
1.21%
1.21%
745 174 125 85 92
750 200 125 73 72
Nov-06
Nov-16 Nov-16 Dec-13 Nov-15 Dec-15
4.38% 4.38% 6.00% 6.18% 6.21%
4.50% 7.16% 6.11% 6.18% 6.21%
1,306
1,292
Nov-95 Dec-95
(a) converted into a loan in EUR via currency interest rate swap (b) for floating rate borrowings, interest rate is the one prevailing at the last repricing date before 31 December 2010
Slide 54
Shareholder structure Belgian state owns ~ 53.5% 338,025,135 shares, of which 321,482,641 Outstanding
• Limited liability company under public law -
Own shares 4.9%
Free Float 41.6%
-
Belgian State 53.5%
Belgian state main shareholder: 53.5% Legal obliged threshold: 50%+1 share Last elections June 2010, government formation ongoing Minister of Public Companies: Inge Vervotte 14 Boardmembers, 50% state-appointed
• Free float 41.6% -
Main shareholders located in US, UK, Benelux, France & Germany
• Treasury shares 4.9% Shares
% shares
% Voting
% Dividend
Belgian state
180,887,569
53.5%
56.3%
55.8%
Free float
140,595,072
41.6%
43.7%
43.3%
Own shares
16,542,494
4.9%
-
0.9%
-
Under Belgian law, companies prohibited from owning >20% of outstanding share capital Part of own shares held for personnel incentives: Options and DSPP
Slide 55
Macro economic environment Belgium : Budget deficit from 6% in ‟09 to 4.6% in‟10 2011 est. @~4.1%. Debt ~100% of GDP
Belgium & Euro area GDP growth (%)1 Belgium
Unemployment rate (%)2
Euro area
Belgium
2.0% 1.0%
1.7%
0.4% 1 2008
2 2009
3 2010
2.0%
2.0%
1.6%
1.8%
4 2011
Euro area
9.5%
Inflation (%)3 Belgium
Euro area
7,9%
7.0%
• Belgian economy following Germany • Growth likely to remain above EU average
Projected inflation driven by increasing energy prices
10.0%
9.6%
8.4%
8.4%
8.7%
7.5%
20125
-2.8%
-4.1%
10.1%
1 2008
2 2009
3 2010
5 2012
Bankruptcies in Belgium (%) Jan 2010 - Jan 2011 13.5% 13.8%
4.2%
8.7%
6.4%
3.3% 2.1%
3,3%
1.9%
Jan
Feb
Mar
2 2009
1.7%
1.5% 3 2010
4 2011
5.2%
5.3%
Apr
May
-0.5%
2.2% 0.3% 1 2008
4 2011
5
2012
-7.2% -12.8%
Source: European Economic forecasts (Autumn 2010 & interim forecast 2011) & Federal Planning Bureau 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
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
-0.1% -4.9% -4.3% -11.6%
Slide 56
Customer Centricity Change Customer Experience
Customer is King: act on 3 layers Improve operations
• Quality of execution • New expert teams • Evening installations and repair • Predictive treatments
+
Be accessible
+
• Drastically reduce waiting times • Call centres open until 10pm for support • Personalized follow-up • Confirm appointments • New support site (EVA)
Become Belgian operator with best
Simplify
• Simplify activation costs structure • 1st reminder for free • Simplify product portfolio
service
Cautionary statement regarding forward-looking statements “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 forwardlooking statements, whether as a result of new information, future events or otherwise.“
Slide 58
For further information:
Belgacom Investor Relations e-mail: investor.relations@belgacom.be Tel: +32 2 202 82 41 http://www.belgacom.com
Slide 59