Mobistar Full Year results 2008 · Mobistar outperformed on all guided KPI’s. June 2008: Mobistar launches One Office Full Pack, the first global telecom solution for the ... Mobistar

5 February 2009

Mobistar Full Year results 2008

2

This presentation contains forward-looking statements about Mobistar, in particular for 2009. Although Mobistar believes these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, including matters not yet known to us or not currently considered material by us, and there can be no assurance that anticipated events will occur or that the objectives set out will actually be achieved. Important factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements include, among others, the effectiveness of the mobility centric operator strategy including the success and market acceptance of the mobile voice and date abundance plans, the Mobistar brand and other strategic, operating and financial initiatives, Mobistar’s ability to adapt to the ongoing transformation of the telecommunications industry, regulatory developments and constraints and the outcome of legal proceedings, risks and uncertainties related to business activity.

Cautionary statement

3

• Business Review

• Mobistar’s unique positioning

• Mobile data uptake

• Partnerships

• Regulatory update

• Financial figures FY 2008

• Conclusions & Outlook FY 2009

Agenda

4

Business Review

5

Total Turnover

Ebitda-margin

EPS (based on # shares EOY period)

Capex/sales around 10%

between-4% & -2%

minimum 40%

between -2% & 0%

Guidance

41 %

11 %

+1.9 %

+1.5 %

Realized

In a challenging environment, Mobistar outperformed on all guided KPI’s

June 2008: Mobistar launches One Office Full Pack, the first global telecom solution for the professional market

Mobistar highlights and commercial innovations

Feb 2008: Board of Mobistar confirms Mobility Centric strategy and approves a total cash return of 600 Mio EUR

May 2008: Mobistar announces an exclusive agreement with Apple regarding the distribution of the iPhone3G on the Belgian market

Feb 2008: Extension of the Mobistar AtHomeproduct portfolio to 3 formulas reaching

July 2008: Extension of the mobile data offer portfolio with (Mail&Surf, abudanceoffers for iPhone, Mobistar Messenger by Windows Live)

Oct 2008: Mobistar starts selling mini PCs to liberalize the internetNov 2008: Mobistar buys the remaining 10% of Vox

7

Mobistar succeeded to add 250 000 net subscribers on its network in 2008

64

249

0%

20%

40%

60%

80%

100%

120%

93,6%

Q2 2007

95

95,7%

Q3 2007

158

98,9%

Q4 2007

68

100,7%

Q12008

88

102,4%

Q22008

30

103,8%

Q3 2008

105,0%(est)

Q42008

0

1.000

200

400

600

800

Net Adds (#In K) Active Penetration**

Comp.

Mobistar*

75,2%

2003

81,3%

2004 Q1 2007

2005

240

90,3%

2006

340

83,6%

2007 2008

41

91,3%

47

98,9%

(*) incl. MVNO customers (139k net adds full 2008), excl. MATMA and VOXmobile customers

(**) Source: Mobistar estimates based on company announcements and population forecasts of Plan Bureau

8

In a postpaid driven market, Mobistar’spostpaid share outperformed

162

5.861

EB 2007

4525

232 6.093

EB Q3 20085.200

5.400

5.600

5.800

6.000

6.200

176

4.675

EB 2007

36

140

352 5.028

EB Q3 20084.200

4.400

4.600

4.800

5.000

5.200

•Prepaid market* •Postpaid market

32,7%

28,3%

39,0%

34,1%

28,0%

37,9%

11,0%

39,2%

49,9%

10,9%

39,2%

49,9%

•* Market figures have been recalculated to have active net adds, based on announced activity rate figures

Proximus

Base

Mobistar

9

Postpaid as % of customer base keeps increasing, up to 57% of customer base

Post RES

31%

2.600.181

2003

35%

2.845.762

2004

44%

2.912.806

2005

51%

2006

54%

3.489.859

2007

3.152.455

3.738.604

2008

MVNO

Prepaid

57%

Laptop cards

Postpaid % retail customer base

0

1.000.000

2.000.000

Post BUS

4.000.000

Customers on Mobistar network*

0%

100%

3.000.000

40%

60%

80%

Postpaid % of retail base**

20%

(*) excl. MATMA and VOXmobile customers

(**) excluding MVNO cards

10

Customer base management: churn evolution affected by competitive market

19,1%

27,7%29,2%

20,7%

2007

Average Churn Rate

2006

21,4%

2005 20082004

11

Excluding regulatory effects, upsellingstrategy increases the blended ARPU

FY 2005

38,8

FY 2006

34,5

FY 2007

1,0

MTR Decrease

1,4

Roaming Off & on net

4,3

Price

4,7

Usage

32,4

FY 2008

38,0•-2.4€ •+0.3€

12 Note: Traffic includes both traffic out and in

60

80

180

Q1 04

Q2 04

Q3 04

Q4 04

Q1 05

Q4 07

Q1 08

Q2 08

Voice( min/month)

SMS (/month)

-2%

Q2 05

0

100

120

140

160

Q3 08

Q3 07

Q2 07

Q1 07

Q4 06

Q3 06

Q2 06

Q1 06

Q4 08

Q4 05

Q3 05

+56%

•Average traffic per customer per month

SMS abundance and stagnation migration from prepaid to postpaid leading to stable voice traffic evolution

13

Mobistar’s unique positioning

14

Competitive environment shows growing need for mobility: 2 responding strategies

35%

28%

37%

Mobile only

Ready to give upfixed phone if…

Keep fixed phone

•Business•Consumer

At o

ffice

Out

of t

heof

fice

At desk

Desktop workers

Teleworkers

Away from desk

Office roamers

Workers on the road

Home centricvs.

Mobility centric

Company centricvs.

Mobility centric

15

Positioning Mobistar vs competition

Technology

Budget

Individuals

Digital & Convergence

Packs &Discounts

Personalization & Mobility

Incumbent positioning

Mobistar

“Fix centric Monolite”-Discount (keep value in fix)

“Monotone”

“Family”

“Rational “

“Technology Innovation”

“Patronizing”

“Valorize Mobility “-(transfer value from fix)

“Sur mesure / choice”

“Personal”

“Emotional”

“Relevant Innovation”

“You choose”

•Source: Mobistar qualitative research via focus groups (August 2008)

16

Marketing strategy

• Accelerate fix-mobile substitutionthrough launch of abundance offers (supported by ADSL)

• Increasing mobile data revenues(MOC Res, mobile TV, …)

• Leverage complementary partnerships

• For B2C market fix data and voice answer to certain consumer needs

• Push full convergence strategy

• Focus first on voice convergence (“One Office Voice Pack”), then on full

convergence (voice + data) through Business Pack offers

• Integrate services into telecommunications solutions: from network to services

Mobility Centric

Residential:Mobility Centric Substitution

Business:Mobility Centric Convergence

17

In order to respond to the mobility needs,fix solutions are needed as well

Mobility Centric ≠ Mobile only

Residential:Mobility Centric Substitution

Business:Mobility Centric Convergence

35%

28%

37%

Mobile only

Ready to give upfixed phone if…

Keep fixed phone

•B2C needs

*Source : www..datanews.be 12th telecom survey 2008 with 302 telecom- en it-managers, of which 122 low SMA (100-200 FTE), 113 high SMA (200-500 FTE) and 67 CMA (+500 FTE).

In 1 year time fix voice market share went from 3% to 6%*

18

Mobile data uptake

19

The mobile data key drivers are in place

immediacy

coveragemobility

fast set-up

interactive

bandwidth

comprehensive & trustful pricing

devices

99% EDGE 80% HSDPA

My30 for iPhone3hr/300 SMS + 200 MB

My45 for iPhone•6hr/600 SMS + 500 MB

20

Postpaid Orange World customers

0

1000

2000

3000

4000

5000

6000

7000

8000

19 22 25 28 31 34 37 40 43 46 49

Age repartition

# c

usto

mer

s (3

M a

ctiv

e)

20082007

Prepaid Orange World customers

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

1 5 9 13 17 21 25 29 33 37 41 45 49

Age repartition

# c

ust

om

ers

(3M

act

ive) 2008

2007

Move from a closed garden to an open mobile internet model increased the activity rate

Strongcustomer base

uptake

Strong customer

base uptake

Larger agerange for

teens

•Same as postpaid, uptakeof subaccounts

Probable strong increase of subcontract users

21

Strong growth in mobile data revenues confirmed in 2008

• Mobile data revenues up to 22% of mobile service revenues in 2008 (from 18% in 2007)

• Non-SMS mobile data represent 23% of total mobile data revenues (vs. 18% in 2007)

• Supported by the successful uptake of • SMS abundance offers• Strong take up Internet Everywhere• Blackberry and Mobile Office Cards in the

Business market• Leader in MATMA applications with

~110,000 cards

0

50

100

150

200

250

300+19%

MATMA

FY 2008FY 2007

Other

SMS Premium

€ mio

SMS Person to Person

22

47

38

26

17

3

Q4 2007 Q1 2008 Q2 2008

+1.518%(+44)

Q3 2008 Q4 2008

Active Internet/Business Everywhere users (# k cards)

Strong growth in laptop cards confirmed during full year

23

Partnerships

24

Mobistar can execute best suited model for each of its partners with a state of the art network

RadioAccess

NetworkOriginating

traffic

Services Marketing &

SalesDistribution

Enhanced Service Provider

NetworkTerminating

TrafficRoaming

Basic Advanced

MNO

“MVNO Full”

Co- Marketing

Brand licensing

Agent

“MVNO Light”MVNOmodels

25

Due to a targeted partnership approach, Mobistar is in a leading market position

*Source: Mobistar company data and market info (figures including all partnerships types (not only MVNO) )

Estimated customer base in K SIM cards

Mobistar

Proximus

Base

X-play

UMM

Lycatel

Euphony

Tele

net

•Transatel

•Media •Ethnic / Low cost •Distribution •Niche

•975 •545 •285 •93

•Total = 1937*

•0

•20

•40

•60

•80

•100%

Regulatory update

27

Dependency towards regulated revenues continues to decrease while billed revenues increases

67%

2007

20%

11%

65%

2008

20%

Visitor roaming

4%

9%

Customer Roaming

National incoming

Billed Revenues

4%

Breakdown Mobistar Mobile service revenues

33%

67%

35%

65%

28

Current regulatory challenges

• National mobile termination rates

• EU roaming regulation

• Regulation on emission rates

29

10.63

9.028.5

7.2

13.34

11.43

6.0

8.0

10.0

12.0

14.0

Jan-

08

Mar

-08

May

-08

Jul-

08

Sep

-08

Nov

-08

€c/

min

M*- new Px - new Base - new

•2008 MTR evolution (EURcent/min, indexed prices)

Status on national termination

Mobistar positioning on MTR evolution

• MTR model should be cost oriented

• Asymmetric still justified given later entrance of Mobistar

• In case of symmetry, Mobistar is closer to 3rd operator in terms of customer base

MTR cost modeling exercise ongoing by BIPT, first results expected by H2 2009

30

EU Roaming regulation

Roaming Voice tariffs: extension of the current regulation till 2012

Roaming SMS tariffs capped as from 01/07/2009• Wholesale SMS roaming tariff (cap: 0.04€ per SMS)

• Retail SMS roaming tariff (cap: 0.11€ per SMS)

• Roaming data tariffs• Wholesale charge cap = 1€/Mbit

• No retail regulation

0,430,40

0,340,37

0,260,23

0,200,17

7/1/09 7/1/10 7/1/11 7/1/12

Wholesale charge

Retail Calls made (excl. VAT)

Retail Calls received (excl. VAT)

0,0

0,1

0,190,2

0,5

0,3

0,16

0,100,13

0,4

•EU Roaming tariffs (EURcent/min)

•Main elements roaming regulation

31

Update on regulation emission rates

• Impacts • Drastic coverage decrease • Site sharing not possible anymore

• Mobistar positioning (in alignment with 3 operators)• Call for realistic norms in light of WHO recommendation• Alignment required between the 3 regions• Accelerated procedure for building permit required

• Current situation Flanders & Walloon region

Proposal in Brussels region (as from 14/03/2009)

Max 20,7 Volts/m (cumulated per location)

(4 times stricter than WHO norm)

Max 3 Volts/m (cumulated per location)

If applied: increase #sites up to 40%

32

Financial figuresFull Year 2008

33

In a challenging economic and regulatory landscape, solid performance

(*) includes other revenues

Mio € FY 2008 FY 2007 %Total Statutory Revenues (*) 1,566.8 1,539.9 1.7%Total Turnover 1,532.7 1,509.6 1.5%Total Service Revenues 1,443.7 1,445.3 -0.1%Cash Expenses -975.2 -947.7 2.9%EBITDA 591.6 592.2 -0.1%In % of service revenues 41.0% 41.0%Depreciations and amortizations 173.1 164.3 5.4%EBIT 418.5 427.9 -2.2%Net financial charges -5.5 -0.1 N.R.Corporate Taxes -132.9 -137.9 -3.6%Net income 280.1 289.9 -3.4%EPS averaged 4.54 4.58 -0.9%EPS outstanding shares 4.67 4.58 1.9%

CONSOLIDATED Income Statement for the Group Mobistar

34National Incoming

29,8

1.445,3

-43

Customer roaming

16,9-9,9

Visitor roaming

6,2

15,3

Billed revenues

Vox

1.443,7

2008

21,1

2007

-38

-0,1%

-9

-26

-4

2008 gross regulatory impact amounting to 91 Mio EUR almost fully compensated

•Mio €

35

Mobistar Belgium activities: maintaining a high level of profitability despite regulation and launch new fix product lines

Mio € FY 2008 FY 2007 %Total Statutory Revenues 1,531.2 1,521.9 0.6%Total Turnover 1,497.2 1,491.7 0.4%Total Service Revenues 1,411.7 1,431.0 -1.3%Cash Expenses -941.8 -929.3 1.3%EBITDA 589.4 592.6 -0.5%In % of service revenues 41.8% 41.4%Depreciations and amortizations -165.1 -160.5 2.9%EBIT 424.3 432.1 -1.8%

Mobistar BELGIUM Income Statement

36

VOXmobile activities: growth confirmed in a highly regulated market and return to operating profitability

•* first 6 months 2007 Pro forma

Mio € FY 2008 FY 2007* %Total Turnover 39.6 35.6 11.2%Total Service Revenues 33.3 30.3 9.9%Cash Expenses -37.2 -36.7 1.4%EBITDA 2.4 -1.1 -319.3%In % of service revenues 7.2% -3.6%Depreciations and amortizations -8.2 -8.3 -1.2%EBIT -5.8 -9.4 -38.1%

VOXMobile Income Statement

37

Despite inflation and launch of new lines of products, increase of cash expenses under control

Total cash expenses

Handset/RT Costs

437,1425,1Interconnect

& OtherSales Costs

63,3

132,7

308,2

929,3

2007

90,3

126,6

287,8

941,8

2008

HeadcountCost

Non-Headcount

Cost

18,4

975,2947,733,4Vox

Optimization of advertising / sales expenses and in property expenses

Favorable evolution of Universal Service charges and other operating income

Mobistar headcount reduction of -6% due to outsourcing and efficiency gains compensated by increase in FTE in owned shops

Cost of handsets sales in line with strong increase in handsets revenues (smart phone sales increase)

VOXmobile has been acquired mid’07

Six months of activities in 2007 compared to a full year of operations in 2008

Transfer of activities to Outsourcing partner (Ericsson) previously done by Mobistar internal resources

Increased number of ASP (Access Solutions Providers) partners for Customer Facing services and Corporate solutions

Less interconnect cost: traffic uplift (mainly SMS) is more thanoffset by regulation (Roaming/MTR)

38

Acceleration of 3G network build out resulting in a higher network capex

Capex (in Mio EUR)*Capex to service revenues ratio (in %)

* excluding the proceeds from sale of equipment related to the 3G equipment renewal

165

199

171

136

0

50

100

150

200

25014%

2004

14%

2005

11%

2006

4

99

359

12%

147

2007

7

102

40

11

11%

160

2008

CAPEX/year

Vox

Network

IT

Sales and Other

CAPEX/service revenues

2003

10%

39

Focus on network outsourcing; savings are materializing in line with contract signed in 2006

Baseline Actuals 2007

CAPEX

OPEX

-27%

Actuals 2008

OPEX

-35%

CAPEX

Baseline

Before After

-54%

Before After

-37%

Before

-37%

After

•Acquisition costs/site (K€) •Building costs/site (K€) •Operations costs/site (K€)

2007 savings (May-dec)

2008 savings

40

Mio € FY 2008 FY 2007Fixed Assets 898.0 924.2Current Assets 295.5 249.9Cash and Cash equivalents 6.8 7.2TOTAL ASSETS 1,200.3 1,181.3Net Equity 452.5 768.0Provisions 15.1 13.7Long Term Debt 75.0 0.9Short Term Debt 243.3 6.1Current Liabilities 414.4 392.6TOTAL EQUITY AND LIABILITIES 1,200.3 1,181.3Net Debt / (Net Cash) -311.8 1.1

Balance sheet remains solid

•Consolidated Balance sheet

41

Free cash flow evolution confirmed

•Consolidated cash flow statementMio € FY 2008 FY 2007 %EBITDA 591.6 592.2 -0.10%Change in Working Capital and not withdrawn expenses -16.5 12.1Net finance costs -5.5 0.0Corporate Taxes -132.9 -137.9 -3.63%Net cash from operating activities 436.7 466.4 -6.4%Net cash used in investing activities -159.9 -146.8 8.89%Proceeds from sale of equipment 14.7Net cash used in investing activities -145.2 -146.8 -1.1%Operating cash flow 291.5 319.5 -8.8%Acquisition of subsidiary, net cash acquired -6.7 -80.4Repayment long-term interest-bearing loans and borrowings -19.0Proceeds long-term interest-bearing loans and borrowings 3.8Proceeds from new short term borrowings 237.2Proceeds from new long term borrowings 75.0Netcash before dividend payments and capital movements 597.0 223.9 166.6%Capital increase (decrease) -248.0 0Capital and share premium -0.8 -0.8Net purchase of treasury shares -175.0 0Dividend paid -173.6 -284.9Available Cash Flow -0.4 -61.8 -99.3%

42

Summary of proposed pay-out *Ordinary dividend: € 2,90 / share (+ 4% y-o-y)

Extra ordinary dividend: € 1,65/ share

Total distribution: around € 273M or 7.8% of market capitalization

Solid financial performance allows Mobistar to maintain a high level of shareholder return

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 6/05/2009)

43

Despite € 600Mio exceptional distribution net debt/EBITDA ratio still below 1

Notes: Available credit capacity: € 250M FT LT Revolving + € 250M FT Current Account

-311

6

-400

-300

-200

-100

0

100

200

300

400

0,2

0,4

-0,2

0,0

0,8

-0,8

-0,6

0,6

-0,4

-0,01x

2007

0,53x

2008

Net debt/EBITDA

Net debt Mio EUR

44

Conclusions & Outlook FY 2009

45

Underlying assumptions of 2009 guidance

• Deteriorating economic environment • Belgian 2009 GDP-evolution expected between 0% and -1% (*)• Wage indexation of 4.51% in Jan 2009 (once a year)

• Revenues• Handset sales under pressure generating less traffic in the shops• Regulatory impact estimated to 60 Mio EUR, equally divided between national

termination and roaming impacts

• Tight cost control to free up resources to invest in network/IT innovation and new product lines

• Exceptional capex investment foreseen to save opex in coming years• Investment plan in transmission network• Building of new Mobistar offices

FOCUS #1 = Free cash flow generation

•* source: consensus form the Federal Planning Bureau

46

Conclusions and updated guidance FY 2009

• Strong ambition to further consolidate value share by increasing billed revenues

and growth in new areas in a challenging competitive and regulatory environment

Total Turnover flat revenues

Ebitda-margin close to 40%

Net results 240-260 Mio EUR

Capex/sales between 11% -12%

Thank you!