2013 Supplier Awards Event
WELCOME
Supplier Day
15/10
Guy De Poortere Vice President SCM
Agenda Subject
Speaker
Belgacom Intro
Ray Stewart CFO
Facts & figures
Ray Stewart CFO
Innovation as a driver for success
Laurent Claus VP Customer ICT Services
Partnership, a way to innovate
Dominique Leroy EVP CBU
Duality of innovation and sourcing in a global market
Bruno Chauvat EVP Strategy & Content
Innovation in Supply Chain Management
Guy De Poortere VP SCM
SEPTEMBER Friday
16
BELGACOM INTRO
Supplier Day
15/10
Ray Stewart Chief Financial Officer
How did Belgacom perform so far in 2013 FACTS AND FIGURES
Supplier Day
15/10
Ray Stewart Chief Financial Officer
Belgacom Performance over first half 2013 • Financial results H1 on track to meet FY guidance o o o
Revenue -0.9% YoY Ebitda -4.1% YoY Capex/revenue 11.7%
• Operating conditions very challenging o o
Stiff competition & New Telecom law led to Mobile disruption European regulation measures on Roaming significantly impacting revenue & ebitda
• Belgacom well positioned to face challenging market dynamics o o o
Successful mobile retention/acquisition actions Solid performance of Belgacom Fixed business Convergence strategy providing solid support
H1 2013 HR and Non-HR expenses • Cost evolution unbalanced versus revenue trend • Structural cost inflation turns costs management into a key challenge for Belgacom 1 ,2 00
Non-HR expenses ( € million)
0 .1 5 0 .1 4
1,200
HR expenses ( € million)
0.15 0.14 0.13
0 .1 3
0.12
0 .1 2
1,000
1 ,0 00 0 .1 1
-1.5%
8 00
0 .0 9
0 .0 7
450
443
0.1
800
0 .0 8 6 00
0.11
+2.4%
0 .1
600
0.09
559
572
0.08 0.07 0.06
0 .0 6
0.05
0 .0 5
400
4 00
0.04
0 .0 4
0.03
0 .0 3
200
2 00
0.02
0 .0 2
0.01
0 .0 1 0
0
Ytd June 2012
Ytd June 2013
0
0
Ytd June 2012
Ytd June 2013
H1 2013 Group Revenue (mio €)
H1 2013 Group direct margin (mio â‚Ź)
H1 2013 Group Ebidta (mio €)
Invest in high quality fixed and mobile network to maintain leadership in convergence Accelerated network investments in 2013 o o o
maintain network superiority on mobile speed and coverage, increase the bandwidth on fixed network via DLM and vectoring technology make operations leaner through a simplified network 15.0% 14.0%
1,200
11.2%
11.7%
13.0% 12.0%
1,000 11.0% 10.0% 800
9.0% 8.0% 7.0%
600
6.0%
400
360
370
5.0% 4.0% 3.0%
200
2.0% 1.0%
0
0.0%
Ytd June 2012
Ytd June 2013
H1’13 Free Cash Flow of € 136 million impacted by income tax payments and lower ebidta Lower FCF result of: Free Cash Flow
(in mio € )
980
797
788 691
•
•
a timing difference in income tax payments lower EBITDA
409 289 136 2008
2009
2010
2011
2012
Ytd June'12
Ytd June'13
Sound financial position with one of the lowest debt levels in European telecom sector • Net financial debt at € 2,027m • The outstanding long term financial gross debt amounted to € 2.1Bio • Credit ratings: Standard & Poor’s A; Moody’s A1 – both stable outlook
(1,601)
Net debt December 2012
136
FCF
(538)
Dividends
(38)
14
(1)
(2,027)
Non controlling interests
Net sale of treasury shares
Other
Net debt June 2013
Retention actions stabilised mobile churn Consumer Mobile Churn postpaid
prepaid
Clear effect New telecom law Q1'12
Focus on mobile in H1 through positioning of Proximus network quality, proactive retention and acquisition actions
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Enterprise Mobile Churn
> 60% postpaid customers on new mobile tariff plan
effect in EBU much less pronounced Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
H1’13 Focus on mobile: retention and aquisition Mobile customer evolution 2 net adds
1 00
5,543
total
5,504
Net adds Postpaid
5,416
80
5,364
5,410
128
1 30
89
5 ,4 00
46
0
61
80
5 ,2 00 40
45
Net adds Prepaid & MVNO
5 ,6 00
60
20
Supported by tactical joint offers & strong marketing actions
Split Postpaid - Prepaid
41
5 ,0 00 30
4 ,8 00
-39
- 20
-44
- 20
4 ,6 00
-52
- 40
-16 -80
4 ,4 00 - 60
- 70
-88
- 80
- 10 0
Q3'12
Q4'12
-82 -113
- 12 0
4 ,0 00
Q2'12
-72
4 ,2 00
Q1'13
Q2'12
Q2'13
1 50
Q3'12
Q4'12
Q1'13
Q2'13
Net adds Consumer Prepaid Net adds Consumer Postpaid
93
1 00
50 50
5.5%
26
17
- 50
23.6%
-37
-44
Mobile
+Tango
0
40.4%
-68
-80
- 10 0
-82
-108 - 15 0
Q2'12
market shareâ‚
Q3'12
Q4'12
Q1'13
Q2'13
EBU Net Adds 50
45
40
36 30
35
30.5%
33
30
21
25
16
20
15
10
5
0
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Mobile offers became more abundant and simplified
Clear Postpaid ARPU impact While Prepaid ARPU remains fairly stable Consumer blended ARPU: Split Prepaid - Postpaid 27.3 €
28.9 €
Blended Postpaid ARPU
26.6 €
.0 2 7 0 €
24.1 €
24.4 €
.0 2 2 0 €
Blended Prepaid ARPU .0 1 7 0 €
14.2 €
13.6 €
14.4 €
13.3 €
14.0 €
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Since the Telco law came into force, the Consumer Postpaid ARPU decline clearly accelerated.
.0 1 2 0 €
.0 0 7 0 €
Initial loss high-value postpaid customers Re-pricing effect ( ~60% of the Postpaid customer base has been re-priced to new tariffs) Prepaid (lower ARPU) moving to Postpaid
In contrary, the Prepaid ARPU was not impacted by the new Telco Law. Enterprise blended ARPU 0 .0 €
0 .0 €
37.2 €
35.5 €
0 .0 €
33.9 €
31.5 €
30.8 €
The Enterprise Business experiences a more general ARPU decline driven by:
0 .0 €
0 .0 €
0 .0 €
0 .0 €
0 .0 €
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Regulation More abundant offers Churn of high-usage customers in the last quarter of ‘12
Solid performance of fixed products
Convergence strategy: key advantage in challenging market
INNOVATION as a Driver for Success
Supplier Day
15/10
Laurent Claus Vice President Customer ICT Services
Innovation As Key Value Enabler What We Have Achieved In 2013 Innovation driving mobile leadership and fixed speed evolution while simplifying Mobile
Fixed
Simplification
— 3G+ network upgrade
— Dynamic Line Management
— Network simplification on track
— 4G network roll-out
— Preparation for Vectoring
— New IT foundations on track
— Activation FTTH test-customers
— Higher network & IT stability
Innovation as a Driver for Success Prepare for the Smart Operator Era Due to pressure on our revenues, cost efficiency programs are here to stay. Hence, we need to be smarter and work more together while still bringing better experiences. 1 SMART NETWORKS
SMART 2
SMART INNOVATION
3 SMART OPERATIONS
Innovation As A Driver For Success Smart Networks Smarter network investment through increased intelligence & better alignment with future Be smarter in Mobile
Be smarter in Fixed
Exponential mobile data growth demands for increased network intelligence to control required high investments in capacity
+60% in 6 months APR 2012
JUN 2013
users X 2 in 1 year
Further extension of our high-speed network footprint through maximal alignment with our envisioned future target destination
More non-linear demand AUG 2011
AUG 2013
+80% in 2 years
Innovation As A Driver For Success Smart Innovation In Services Smart differentiation through new convergent innovative services on top of our networks Be smarter in new services innovation
Be smarter in Partnerships for innovation
New convergent services with a differentiating customer experience through smart combination of our networks & technologies
New type of strategic partnerships to bring innovations faster to the market
MOBILE
+
FIXED
+
ICT
SHARED RISK
SHARED VALUE
Innovation As A Driver For Success Smarter Operations Simplify for more lean operations while converging to an omni-channel experience Towards more smarter operations
Smarter optimization of operational costs
Network simplification to decrease operational costs and new IT to bring a more efficient omni-channel customer experience
Optimization of operational maintenance, support and workforce costs in line with industry reality of declining revenues
LEAN SEAMLESS SEAMLESS + = Operations Platforms experience
MAINTENANCE COST
WORKFORCE COST
Innovation As A Driver For Success Summary SMARTER through more collaborative partnerships
The Supply Chain Awards SUSTAINABILITY
PARTNERSHIP A way to innovate
Supplier Day
15/10
Dominique Leroy Executive Vice President CBU
CBU strategy: 4 pillars to reach our ambitions LEADER IN MOBILE VIA •
Proximus brand Revamp
THE BEST CONVERGENCE EXPERIENCE THROUGH
•
Best network strategy
•
Convergent devices
•
Grow and monetization of data
•
Convergent network
•
Scarlet to address price seekers
•
Convergent content
•
Boost the customer experience
INNOVATION THROUGH PARTNERSHIPS
•
Reduce our cost
•
Find new revenues sources
•
Increase loyalty
SIMPLIFICATION TO
CBU strategy : innovation pillar Device, network and application – gradual evolution to partnership allowing : • Belgacom to benefit from global player expertise • The customers to benefit from best convergent experience
Better customer experience
Simple & agile company
More efficient
Evolution from pure vendor management to partnership
Faster Arrow 1
Customer context: Device partnership All devices - fix & mobile - are key enablers for our new services
Partnership efficiency in organization - Collaboration process -
Music
Photos Calendar
Contacts Mail & social network
Partnership expertise in portfolio - Selection of innovative products -
‌
Implement CPFR tools (Collaborative Planning, Forecasting and Replenishment)
Partnership expertise in marketing - Synergies in communication -
Growing importance of devices as enablers of our access & enabler of our convergence Benefit from global player expertise
Customer context: Network & partnership
•
Co-development Partnership on VDSL2 System Level Vectoring technology
•
Belgacom will likely to be the first to deploy it at large scale, as from early 2014
•
Boost the customer experience of Belgacom Internet and TV products
•
Thanks to the partnership with FON, Belgacom was the first in Belgium and among the first TelCo in the world, to offer free global WiFi network sharing
•
Every Belgacom broadband customer gets unlimited free access to all Belgacom 700k Fonspots in Belgium, and to 12 Mio FONspots around the world
Partnership to improve time to market & to increase reach
Innovator in application & content Search new revenues sources and increase loyalty Protection
Entertainment
Develop a new umbrella to better protect and assist our customers starting with: • Device insurance • PC Security • Home Control
Maintain & develop ARPU in an increasing OTT context through : • TV content • TV Everywhere • Music • VOD & SVOD
Example of successful partnership : Norton They went beyond their expected role & supported us in the sales & marketing domain (training, incentive & participation in the outbound calls campaigns)
Example of marketing/communication Win-win collaboration Clear support to our Network Superiority claim
A tram as less “conventional� and cost efficient medium ( with local impact)
Brand visibility for both parties
Call Center Partners Customer Care and Customer Help Center
Inbound Calls Administration Outbound Campaigns
Inbound Calls Outbound Campaigns E-mail services
Inbound Calls Outbound Campaigns
Inbound Calls Outbound Campaigns
Inbound Calls Administration Outbound Campaigns Chat services E-mail services
Belgacom’s Call Center partners need to provide the necessary flexibility to reduce waiting times for customers requiring service or help, even at peak moments. • Avoids customers calling back • Improves customer satisfaction: fast response to customer demand
Numerous success so far allowing to embody and drive convergence in the Belgian market
“STRONGER TOGETHER “
Partnerships are about : • Long term vision, instead of succession of tactical actions • Growth generation • Global vision, all product lines • Innovation
The Supply Chain Awards
QUALITY AND SECURITY OF SUPPLY
Duality of innovation and sourcing in a global market
Supplier Day
15/10
Bruno Chauvat Executive Vice President Strategy & Content
Renewal is the 21st century model of sustainable development In 2012, we said : Future is unpredictable…but we can anticipate it
Who knew Lady Gaga before 2008 ?
Renewal is the 21st century model of sustainable development
2013
2009 2013 : but it is always more unpredictable‌
Hanna Montana @Disney
Miley Cyrus @VMA
Renewal is the 21st century model of sustainable development
2013
2009 2013 : but it is always more unpredictable‌
Hanna Montana @Disney
Miley Cyrus @VMA
Early enough to lead or too late to survive ?
Innovation is the competitive advantage to survive in our industry
Innovation is the competitive advantage to grow even faster...
Early enough to lead or too late to survive ?
Innovating under different angles
- Business model discontinuity
- Innovation across the value chain and category killers - Bring scale to reach everyone everywhere
Innovation should manage the legacy - Simplification - Smooth migration - Backward compatibility - Upward compatibility
Together we shape the future
Conclusion
The Supply Chain Awards
INNOVATION
INNOVATION in Supply Chain Management
Supplier Day
15/10
Guy De Poortere Vice President SCM
Strategic Priorities For 2013 Our strategy is to be the leader in convergence Will increase focus and speed up investments in our priorities:
1 Customer Experience
2 Simplification
3 New Services
Enabled by our people and our suppliers Time To market
Value chain
Quality Performance
Innovation
CSR
Risk Mgt
Belgacom SCM Growth Path 2012-2013 What did we deliver and how to meet & exceed BU challenges & expectations? From Price to Cost focus 1
2
From TCO to Value focus
3
Transactionally integrated
4
5
Internally integrated
6 Externally integrated
Transaction towards value & innovation Availability Transaction orientation
Price
Synergy
XF Sourcing
Integration
Value
Commercial orientation
Purchasing coordination
Process orientation
Supply chain orientation
Value chain orientation
Contribution to competitive advantage
Time
Observations / Expectations
Observations SCM has a pivotal role in... Controlling costs & assets
Suppliers are key in innovation
Value creation & innovation
Four Rings Of Innovation
Business model
Product & services
Process
Technology
First Ring Of Innovation Technology Innovation
WHAT? Launched by M.D.I. this worlds 1 st car to run on air with an air engine fixed on its back
Technology Innovation Belgacom Vectoring
100 Mhz
50 Mhz
Second Ring Of Innovation Process Innovation Example Fashion Retailer ZARA Zara can design, produce & deliver in 15 days flat
Collects 85% of full price versus 65% competition
5 fingers touching the factory & 5 touching the customer
Process Innovation Belgacom One Warehouse • Serial number tracking of devices throughout the E2E Supply Chain • A formal handover is tracked when changing responsibility • A central management system to view at all times the status of a device
Third Ring Of Innovation Product & Service Innovation
Product & Service Innovation Belgacom Easy Access
Fourth Ring Of Innovation Business Model Innovation
Business Model Innovation Belgacom 11
Business partnering model
Joint business platforms
Beyond traditional operating models
Four Key Dimensions Of Successful Supplier Interaction
Customer of choice
Exchange Quality of Communication
Cross functional SRM
Pro-activity roadmaps
We invite you‌