Roadshow presentation Q1 2012
Roadshow presentationQ1 2012
2
This presentation contains forward-looking statements about Mobistar, inparticular for 2012. Although Mobistar believes these statements are based onreasonable assumptions, these forward-looking statements are subject tonumerous risks and uncertainties, including matters not yet known to us or notcurrently considered material by us, and there can be no assurance thatanticipated events will occur or that the objectives set out will actually beachieved. Important factors that could cause actual results to differ materiallyfrom the results anticipated in the forward-looking statements include, amongothers, the effectiveness of Mobistar convergent strategy including the successand market acceptance of the voice and date abundance plans, the Mobistar TVoffers, the Mobistar brand and other strategic, operating and financial initiatives,Mobistar’s ability to adapt to the on-going transformation of thetelecommunications industry, regulatory developments and constraints and theoutcome of legal proceedings, risks and uncertainties related to business activity.
Cautionary Statement
Version 1 - November 2009
Key Operational Highlights
4
Excl. regulatory effects, Mobistar (excl. MES) continued to grow above market fuelled by Orange Luxembourg and handsets sales
•Mobistar group turnover evolution (in Mio EUR)
1.665
+6%+6%+6%+6%
1.658
+3%+3%+3%+3%
2011Organic growth
+49
Regulatory impact
-74
-14
-60
2010Organic growth
+93
Regulatory impact
-58
-26
-32
2009
1.567
Regulation Roaming
Regulation MTR
handsets
Mobistar growth
Orange Lux. growth
Mobistar + Orange Lux.
M.E.S. (9M 2010, 12M 2011)
Q1 2012Organic growth
+11
Regulatory impact
-12
-3
-8
Q1 2011
401 399
+3%+3%+3%+3%
5
Mobistar confirms its position as a full telecom player
Mobile
+ 29.000 Res Postpaidcustomers
Close to 100.000 Mobile broadband
cards
Voice Data TV
Fix
Voice Data M2M/Internet
•Residential Market
•Business Market
2/3 of our ADSL clients are fix voice customer as well
More than 82.000ADSL customers
35.000Mobistar Digital TV
customers
Mobile
+ 37.000Bss Postpaidcustomers
Close to 54.000 mobile broadband
cards
M2M market leader with 70%
share (433k cards)
Fix
More than 32.000 One Office Voice Packs companies
More than 8.000 One Office Full Pack companies
•Q1 2011- Q1 2012 evolution/ Q1 2012 customer base
6
*Capex/ serv rev. excluding the license costs linked to the 2G license renewal and additional 3G or 4G spectrum license fee, incl. customer equipment
** Organic cash flow defined as net cash flow from operations less acquisitions of tangible and intangible assets, excluding spectrum license fee and acquisition of subsidiary
During 2011, Mobistar performed in line on all guided KPI’s and will pay-out a dividend totaling 222 Mio EUR or 3,7 EUR/share
Total Turnover
Ebitda
Capex/service revenues*
Net profit
Organic cash flow**
2011
guidance
2011
results
In line
with 2010
Small contraction by -0,4% �
between
520 - 535 M EUR
(from 505-535 M EUR)
530,1 M EUR �Between
11%-12% of service revenues
Slightly above with 12,2%* ≈
between 220 – 230 M EUR
(from 210 – 230 M EUR)
221 M EUR �between
220 - 230 M EUR (from 210 – 230 M EUR)
259 M EUR** �
7
Mobile Activity – Negative Net Adds Q1 2012, due to underperforming prepaid segment and correction in MVNO base
(*) incl. MVNO customers, excl. MATMA, Internet Everywhere and OLU customers, impact correction MVNO customer base =-35 K sim cards
(**) Source: Mobistar estimates based on company announcements and population forecasts of Plan Bureau
Mobistar net adds split (k users)
* incl . IEW, excl. MaTMa and Orange Luxembourg customers
5652
-15-19
118
183
120
73
27
115%114%113%112%112%112%111%108%109%
Q2 11
ActivePenetration %
Net Adds (k users)
Q1 12
58
Q4 11
105
53
Q3 11
162
42
78
22
Q1 11
17
36
Q4 10
150
32
Q3 10
271
88
Q2 10
-74
-128
27
Q1 10
49
57-8
Active Penetration**
Mobistar Net adds*
Competition Net adds**
Market net adds (k users)
-25
-47
39 2220
28
38
-18-16 -10
19
-16
Q3 11
44
Q2 11
22
Q1 11
36
-5
Q4 10
32
Q4 11
53
Q1 12
Prepaid Net adds
MVNO Net adds
Postpaid Net adds
8
Mobile activity- Postpaid share as % of customer base further increases (active ending base) to 67%
0
600000
1200000
1800000
2400000
3000000
3600000
2007 2008 2009 2010 2011 Q1 2012
Mo
bis
tar
Cu
sto
mer
s
Postpaid Postpaid RES Postpaid BUS Prepaid MVNO
54%54%54%54%
3,489,8593,738,603
61%61%61%61%57%57%57%57%
3,746,515 3,950,521
64%64%64%64%
* (incl. MVNO excl. OLU and incl. Full MVNO)
66%66%66%66%
4,105,423
67%67%67%67%
4,089,532
Mobile activity - Blended ARPU -12 month rolling for Q1 2012 -excl. MVNO (visitor roaming incl.)
9
* Mb = data usage (per unique mobile multimedia user) * number of unique mobile multimedia users / active ending base total market (MVNO excl) mobile offers
Version 1 - November 2009
Mobistar Key Priorities
11
• 58% Europeans need to be connected anytime
• 84% French people use personal devices at work
• 27% French people use social networks at work
• 30% Netherlanders work at home
• 37% Europeans prepare their shopping online
• 63% French people travel at least once a week
• 15-24 years value web and mobile 4.5 more than TV
• 1 M objects are connected in Belgium
The evolution of social and telecommunications individualistic behaviors are feeding Mobistar’s vision for the future
Revenue growth above market
growth
3G/4G networks + Voice& Data
Abundance
“À la carte” vs. “All you can eat”
convergence
A new deal with Customers
(shops & phone)
Mobistar has defined 3 priorities to enable its vision of the future
12
Differentiatewith services everywhere
Consolidate Leadership in
Mobile
DeliverBest in class
Customer Service
12
• The new Mobistar subscriptions are named after animals: Squirrel, Kangaroo, Dolphin and Panther.
• This concept of differentiation by animal names has been proven to work in other countries.
• The differentiation by animal names enables customers to much more easily find the price plan that best suits their needs and to get more for their money.
• As from now, customers can choose a contract without commitment.
• No more limited time only promos; from now on, the advantages are valid for life.
• No more mobile Internet usage bill shocks possible anymore
• There are unlimited elements in almost all the price plans, whether that be unlimited calls, unlimited texts, unlimited access to social networks or unlimited surfing.
13
New innovative postpaid animal portfolio give Belgians the control of their mobile consumption
Launched in April 2012, Mobistar is the first to anticipate the new Telecommunications Law
100,000+ tests completed online in 1 month
14
15
Market trends
• Almost 1out 5 Belgians has a smartphone
• In 2011, close to 1 out of 3 new handsets sold was a smartphone
• Sales of tablets was multiplied by a factor 7 to 350 k in 2011 and should reach 485k units sold in 2012
Mobistar answer
• Secure monetization of mobile traffic increase
• Further segmentation (2 new bundles both for mobile multimedia and ~broadband)
• iPad users get a 1YR free digital subscription to one local newspapers
• Deep indoor coverage enhancement with 3G/WIFI modem included in the offer
On data, Mobistar continues to commercially innovate to capture increasingly equipped consumer
+15%+15%+15%+15%
Dec-11Dec-10Dec-09
+35%+35%+35%+35%
Dec-11
114
Dec-10
89
Dec-09
62
data roamingMobile BroadbandMobile Multimedia
Mobile Multimedia line-up
Yearly traffic evolution Advanced data revenue (Mio EUR)
Within the MATMA segment, Mobistar passed the 1,5 Mio signed cards milestone in a variety of sectors
16
Smart metering
Gaming
Mobile Points-of-Sale & Vending machines
10% of the Belgian market
5% of the Belgian market
10% of the Belgian market
Fleet
Connected devices
Cars
40% of the Belgian market
30% of the Belgian market
5% of the Belgian market
M2M Leader in Belgium (70% of market share )
Market categorized in 6 segments
Orange International M2M Center of
competence
• At the end of 2011, the total number of activated cards amounted to 417 000 units
• In 2011, Mobistar signed more than 10 Contracts in US and Europe for a total commitment of 1.5 Mio cards.
• Sprint agreed recently to partner with Orange to extend its global M2M through the Mobistar center of competence
• Mobistar reconfirmed as expertise center and will continue to invest in M2M platform in the coming 2 years
Matma results (in Mio EUR and ‘000 cards)
13
108
417
2009
+33%+33%+33%+33%
2010 2011
130
+17%+17%+17%+17%
193
Rev. (Mio EUR)
Cards (’000)
17
• Mobile data revenues up to 42% of mobile service revenues in Q1 2012 (from 37% in Q1 2011)
• Non-SMS mobile data represent 12% of total mobile service revenues (vs. 11% in Q1 2011)
• Supported by the successful uptake of
• Strong uptake in usage of Smartphone
• SMS abundance offers
• Strong take up Internet Everywhere (from 116k to 154k cards y-o-y)
• Leader in MaTMa applications with more than 434 k cards activated
Insight
Further segmentation of mobile data offers leading to a sustained growth of the advanced data revenues
42%
37%
0
50
100
150
200
250
300
350
400
450
500
Q1 2012
126
27%
Q1 2011
116
77%
FY 2011
476
3%
FY 2010
428
71%
3%
21%
26%2%
37%
73%
32%
24%
70%
2%
Mobile data uptake (in Mio EUR)
data as % mobile service rev
SMS
Mobile Data
MATMA
17
20
6610
1800 MHz*
22
20
6
22
Potentially for sale)
900 MHz**
1800 MHz
6
800 MHz
15
15
30
1
15
152100 MHz
15
15
2600 MHz 20 45 (TDD unpaired spectrum)
15
20
Proximus
Mobistar
Base
Current spectrum allocation (MHz duplex)
Telenet/Tecteo
Mobistar has secured close to 2 x 70 MHz till 2015
Mobistar has secured the necessary spectrum to cope with a 50% yearly mobile traffic increase
BUCD
* As from July 2012, following a decision by the BIPT, Mobistar will be entitled to use the full allocated spectrum band in the 1800MHz (included in the 2G renewal fee )
** Telenet/Tecteo consortium has exercised its option to acquire and potentially roil-out a 4,8 MHz duplex in 900 MHz and 10 MHz duplex in 1800 MHz band as from Nov 201518
• Coverage mainly for mobile data• UMTS in 900 MHz combined with
network swap Nortel to Huawei
• Densification UMTS 2100MHz
• Capacity & quality for voice & mobile data
• Increase backhauling speed with continuous fiber & microwave deployment
• Additional spectrum capacity in dense areas
• Innovation & differentiation with competition
• LTE pilots live in Luxembourg
• Maximal re-use of 1800MHz spectrum for LTE
1) Full upgrade of the 2G equipment1) Full upgrade of the 2G equipment1) Full upgrade of the 2G equipment1) Full upgrade of the 2G equipment
2) Further extension of the UMTS 2100 2) Further extension of the UMTS 2100 2) Further extension of the UMTS 2100 2) Further extension of the UMTS 2100 layerlayerlayerlayer
� First LTE test highlights to huge potential both in terms of downlink ~ (100Mbps peak) , upload-speed and latency
3) Exploit the LTE opportunity3) Exploit the LTE opportunity3) Exploit the LTE opportunity3) Exploit the LTE opportunity
� 2300 refreshed GSM sites to hybrid equipment of which 1600 upgraded with UMTS 900
Mobistar main radio transformation initiatives have already started in 2011
Main network roll-out programs Customer benefit
Short term 3G target coverage
Short term 4G target coverage
� Continued investment in the HSPA+layer
19
Moreover, new Tier 1 partnerships and MVNO deals enables Mobistar to constantly address new segments
20
MVNO segment
813
50
42
26
572
475
590
456
322
201120102009 Q1 2011 Q1 2012
Rev. (Mio EUR)
Cards (’000)
Co-Marketing segment
Improved and extended Full-MVNO agreement with Telenet and extension of the IRISnet contract
21
• Mobistar and Telenet have renewed their 2009 Full-MVNO agreement in April 2012, extended by 5 years to 2017
• The Walloon cable operator Tecteo (VOO) will also launch mobile services in the future thanks to a step-in agreement through Telenet
• Hence, the Full-MVNO agreement will cover the whole of Belgium• New agreement will cover both 3G and 4G services and will solidify Mobistar’s
competitive positioning
• On May 11, 2012, Brussels Region government announced that they will partner up with Mobistar for a period of 10 years
• Mobistar will have the full responsibility to manage the operation of the Next Generation Telecom Network for the Brussels Capital Region
Plug Mobile (co-marketing with RTL Belgium) will enable Mobistar to address young terget group
22
• Mobistar and RTL joined forces to launch and energize the Plug Mobile offer
• This highly mobile offer is designed especially for the younger generation
• Via the Plug Mobile brand, Mobistar reaching a younger, more feminine target group and further strengthens its position in the highly competitive prepaid cards segment.
Mobistar ambitions to provide every individual with “à la carte” ubiquitousand and trusted telecoms services
Medium term evolution
Telcos now work on shorter time cycles
Mobistar “Anywhere @home, @work, with friends”
• Unlimited, seamless 3G+-4G
broadband services.
• Tactical broadband fix TV + Internet
substitution
• Multiscreen experience: laptops, tablets,
smartphones and connected TVs.
• No minimum contract duration but
reward of customers’ loyalty.
• Preferred-in-Belgium personalized
service: on the phone, in Mobistar
“service” Centers, online and in social
networks.
23
Mobistar TV (V2)Mobistar on demand
Average of of 2.5 VoDrentals/month per active
user
Already more than 35000 downloads
� TV Guide (14 days)
� Schedule PVR recordings, set reminders
� Browse the VOD catalog, order preload
� Manage your accounts
� Social networks integration
www.mobistar.tv34% of online TV users have used Mobistar+ widgets
� TV Oost, TV Limburg
� M* Mobile TV promotion
� Customer experience improvements
New TV widgets New TV Web Portal
24
In line with our vision we continued to further develop the service layer of our convergent proposition
25
•Control your TV decoder with iOS/Android apps for tablets
•New TV channels
Moreover, update of Mobistar TV app for tabletsand new HD/SD channels launched in 2012
26
To date, in a increasingly competitive market, Mobistar activated 35 000 digital TV subscribers
73
4532 42 49 43
-66
40
7
Q4 2010
40
-87
44
10
Q1 2012
183
45
-73
Q4 2011
51
-64
58
8
Q3 2011
25
-62
38
6
Q2 2011
30
-52
46
3
Q1 2011
26
Telenet analogue
Telenet digital
Belgacom
Mobistar
Television quarterly net adds (k users)*
*no public figures available for Voo and Numericable26
27
Mobistar has developed a comprehensive range of services to help during their lifetime
“Comfort services for my (smart)phone”“I manage my usage status and activate mobile data bundles anytime, anywhere”
Mobistar made important investment in its customer care assets
Verbatim of Happy Customer (FEB 2012)
+100 Team Members in
the customer care in 2011
28
29
•100 % gets answer within 5 days - 80 % treated within 5 days
Written requests
Calls
Easy access
Today
•80 % answered within 20 sec.
•Calls/Letter/Webform/Shop/Facebook/Twitter
Written confirmation
•Confirmation of each contractual/financial verbal agreement
Call back option•Call back option after 2.5 min for all calls
•6x faster answer
Change for Customer
•1/3 less waiting time
•Customer can easily find how to contact us and can choose
the channel
•Clear confirmation of actions taken -> No surprises on
invoice
No long waiting times for customers - If occasional long waiting time callback possible
This increased focus on Customer Service leading to tangible results
29
Version 1 - November 2009
Regulation
111
59
50
60
70
80
90
100
110
120
After the end of the regulatory gliding path for mobile in 2013, a similar level of competition is now expected for the fixed in 2014
mobile voice
fixed line subscription
• Mobile minute price -41% in 4 years
• To be compared with Fixed line subscription:
+11% in same period:
1/1/121/1/111/1/101/1/091/1/081/1/071/1/06
mobile voice
fix voice
*Source: FOD Economie - SPF Economie – Statbel http://statbel.fgov.be and Belgacom
• July 2011: regulation decisions for
triple play services (TV and
Internet) published by IBPT
• Feb/Mar 2012: 1st offers regulated
submitted by Cablecos &
Belgacom
• Eo2012: definitive offers published
Pricing environment in Belgium Regulatory opportunities for Mobistar
31
On mobile regulation recent roaming proposal is more aggressive than the initial glide path
• Regulated revenues in Mobistar’s mobile turnover decreased with 10% to 395 Mio EUR in 2011 (27% of mobile turnover)
• New roaming glide path (recently approved by EU parliament & Council) in line with previous years decreases but including retail mobile data regulation.
• From 1 July 2014, customer will be able, if they wish, to sign up for a cheaper mobile roaming contract, whilst using the same phone number.
Defenitive EU retail mobile price caps* (EURcent/min)
1924
2935
5711
8
20
45
70
01. Jul 201401. Jul 201301. Jul 2012
Retail SMS (per SMS)
Retail data (per MB)
Retail voice out (per min)
Mobistar Mobile Turnover split (% of revenues)
11% 7%
2%5%
2010
1.476
73%
2011
12%10%
2%
1.443
5%----2%2%2%2%1%
70%
1%
Visitor Roaming
MTR Voice
Roaming voice
Roaming SMS
MTR SMS
Billed Revenues
Possible EU Commission proposal impact
32*Source www.europarl.europa.eu press release 10 05 2012
MTR evolution (EURcent/min)
0
2
4
6
8
10
12
1,19
1 Jan 2013
2,79
1 Jan 20121 Jan 20112009
Proximus
Mobistar
Base
4,29
5,05
BroadbandBroadband
BGC SMP
Market 4
BGC SMP
Market 4
LLULLU
BGC SMP
Market 5
BGC SMP
Market 5
Bitstream
incl. Multicast
Bitstream
incl. Multicast
BroadcastBroadcast
Cable SMP
on analog & digital
Cable SMP
on analog & digital
Resale analogResale analog
Digital TV transmissionDigital TV
transmissionResale
broadbandResale
broadband
Overview Broadcast & Broadband market analysis
History• On July 18th 2011, the CRC (the Conference of
Regulators incl BIPT) published their decisions that cover triple play services (TV and Internet)
Status Broadband decision (VDSL bitstream inclMulticast)• On 6/01 CRC allowed Belgacom to submit an
alternative IPTV Multicast wholesale offer within 2 months
• First cost elements are priced out-of-market
• Could improve Mobistar time to market
• Enables Mobistar to continue to differentiate on the service level
On Broadcast decision (Cable SMP on analog and digital)
• Cable companies have submitted their first regulated offer to CRC on 1st February 2012
• Following this regulated offer consultation phase will start
• Planning is still to have regulated offer by October 2012 with an indication of implementation period
Source: BIPT
Mobistar expects a similar level of competition in the fixed through the implementation of regulated broadband and TV offers
34
ACQUISITION LOYALTY & RETENTION CHANNEL
1. Redesign tariff portfolio
2. Contain Subscriber Acquisition Costs
1. Subscriber Retention Costs in order to avoid churn & washing machine effect
2. Develop customer value base management capabilities to reward loyaltyreward loyaltyreward loyaltyreward loyalty
3. Drive customers to controlled channels for contract renewal and upselling
1. Balance commercial acts from acquisition to acquisition & contract extension
2. Reinforce controlled channels in overall mix
3. Develop web share in commercial acts
4. Manage open channels
Mobistar continues its value approach
� EU directive foresees that member states offer users the possibility to subscribe contract with maximum duration of 12 months
� Translation into national law is currently being discussed at the government level
Mobistar prepared to face further regulatory decisions that could impact Mobistar billed revenues
Version 1 - November 2009
Financials
Consolidated income statement
36
in Mio EUR 2010 (9m MES)
2011 % 2010 (excl MES)
2011 (excl MES)
%
Total Turnover Total Turnover Total Turnover Total Turnover 1,6651,6651,6651,665 1,6581,6581,6581,658 -0.4%-0.4%-0.4%-0.4% 1,6021,6021,6021,602 1,5851,5851,5851,585 -1.1%-1.1%-1.1%-1.1%
Total Service Revenues 1,524 1,506 -1.2% 1,461 1,433 -1.9%
Cash Expenses -1,116-1,116-1,116-1,116 -1,127-1,127-1,127-1,127 1.0% -1,063-1,063-1,063-1,063 -1,069-1,069-1,069-1,069 0.6%
EBITDA EBITDA EBITDA EBITDA 549549549549 530530530530 -3.4% 539539539539 515515515515 -4.4%
In % of service revenues 36.0%36.0%36.0%36.0% 35.2%35.2%35.2%35.2% 36.9%36.9%36.9%36.9% 36.0%36.0%36.0%36.0%
Depreciations and amortizations -171-171-171-171 -190-190-190-190 11.5% -160-160-160-160 -175-175-175-175 9.7%
Net finance income -5-5-5-5 -11-11-11-11 141.6% -5-5-5-5 -11-11-11-11 144.5%
Tax expense -110-110-110-110 -108-108-108-108 -1.9% -110-110-110-110 -108-108-108-108 -1.7%
Net profitNet profitNet profitNet profit 264264264264 221221221221 -16.2% 265265265265 221221221221 -16.6%
Diluted earnings per share (in €) 4.44.44.44.4 3.73.73.73.7 -16.2% 4.44.44.44.4 3.73.73.73.7 -16.6%
Mobistar consolidated income statement
Consolidated income statement Q1 2011-Q1 2012 evolution
37
in Mio EUR Q1 2011 Q1 2012 %
Total Revenues 409 411 0.4%
Total Turnover Total Turnover Total Turnover Total Turnover 401401401401 399399399399 -0.4%-0.4%-0.4%-0.4%
Total Service Revenues 370 358 -3%
Cash Expenses -284-284-284-284 -298-298-298-298 5%
EBITDA EBITDA EBITDA EBITDA 125125125125 113113113113 -10%
In % of service revenues 33.9%33.9%33.9%33.9% 31.5%31.5%31.5%31.5%
Depreciations and amortizations -44-44-44-44 -53-53-53-53 20%
Net finance income -2-2-2-2 -2-2-2-2 20%
Tax expense -26-26-26-26 -20-20-20-20 -24%
Net profitNet profitNet profitNet profit 53535353 38383838 -28%
Diluted earnings per share (in €) 0.90.90.90.9 0.60.60.60.6 -28%
Mobistar consolidated income statement
38
SMS abundance, non-mobile revenues and MES/Orange Lux affiliates offsets voice price pressure and regulatory effects
42
6
Mobistar group turnover evolution breakdown (in Mio EUR)
Volume effectPrice effect
67
8
60
2011 Group
Turnover
1.658
MES
19
Orange Lux
10
Billed / HS Rev.
5
Visitor Roaming
1
Customer Roaming
26
National Incoming
2010 Group
Turnover
1.665
Good elasticity in SMS roaming offset by mobile voice regulation
Essentially driven by SMS abundance
Voice/SMS decreases more than compensated by mobile data uptake, non-mobile, MVNO and handset revenues
In Belgium, convergence strategy in both segments and mobile data focus allows Mobistar to preserve mobile margin
39
in Mio EUR 2010 (9m MES)
2011 % 2010 (excl MES)
2011 (excl MES)
%
Total Turnover 144.6 168.3 16% 83.5 88.4 6%
Total Service RevenuesTotal Service RevenuesTotal Service RevenuesTotal Service Revenues 144.6144.6144.6144.6 168.3168.3168.3168.3 16% 83.583.583.583.5 88.488.488.488.4 6%
Cash Expenses -159.8-159.8-159.8-159.8 -192.7-192.7-192.7-192.7 21% -108.3-108.3-108.3-108.3 -127.5-127.5-127.5-127.5 18%
EBITDA EBITDA EBITDA EBITDA -15.2-15.2-15.2-15.2 -24.4-24.4-24.4-24.4 60% -24.8-24.8-24.8-24.8 -39.1-39.1-39.1-39.1 58%
In % of service revenues -10.5%-10.5%-10.5%-10.5% -14.5%-14.5%-14.5%-14.5% -29.7%-29.7%-29.7%-29.7% -44.2%-44.2%-44.2%-44.2%
Mobistar FIX Income Statement
in Mio EUR 2010 2011 %
Total Turnover 1,476 1,443 -2%
Total Service RevenuesTotal Service RevenuesTotal Service RevenuesTotal Service Revenues 1,3321,3321,3321,332 1,2881,2881,2881,288 -3%
Cash Expenses -918-918-918-918 -897-897-897-897 -2%
EBITDA EBITDA EBITDA EBITDA 558558558558 546546546546 -2%
In % of service revenues 41.9%41.9%41.9%41.9% 42.4%42.4%42.4%42.4%
Mobistar Mobile Income Statement
Orange Luxembourg continued to deliver growth, with an increasing mix in postpaid subscribers in the B2B segment
40
in Mio EUR 2010 2011 %
Total Turnover Total Turnover Total Turnover Total Turnover 55.455.455.455.4 65.765.765.765.7 19%19%19%19%
Total Service Revenues 50.6 60.7 20%
Cash Expenses -49.5 -57.3 16%
EBITDA EBITDA EBITDA EBITDA 5.95.95.95.9 8.58.58.58.5 43%43%43%43%
In % of service revenues 11.7% 14.0%
Orange Communications Luxembourg
Income Statement
Q1 2011 Q1 2012
Prepaid
Postpaid
49.09 49.01----0.2%0.2%0.2%0.2%
Q12012Q1 2011
Customers on the Orange Luxembourg network (k users)
Blended ARPU (incl. visitor roaming)12 months rolling ARPU (EUR/month)
91 96
41
Orange LuxembourgOrange LuxembourgOrange LuxembourgOrange Luxembourg
• Increase driven by handsets costs in correlation with the handsets sales , interconnect cost in line with revenue growth, IT renewal implementation and headcount evolution (from 129 to 141 FTE, mainly in shops)
NonNonNonNon----headcount costheadcount costheadcount costheadcount cost
• Higher Dealer rem due to higher sales B2C (both mobile & non mobile).
• Increase in commercial exp. to support non-mobile activities
• Network increase in line with network roll-out and IT expenses
• Increase in network property costs due to site volume impact , compensated by less office rental & costs due to move to new building
• Decrease of provisions related to the universal service based on new regulation evolution
Interconnect and other costs of sales (after intercompany elimination)Interconnect and other costs of sales (after intercompany elimination)Interconnect and other costs of sales (after intercompany elimination)Interconnect and other costs of sales (after intercompany elimination)
• Higher interconnect is driven by uplift in SMS usage due to SMS abundance offers (especially Prepaid), but almost totally offset by lower domestic voice & roaming costs both due to regulation.
• Customer access cost increase driven by non-mobile activities (both internet and TV commercial activity both consumer & business) compensated by less leased lines costs thanks to migration to Microwave, fiber and DSL solutions.
FY 2010 FY 2011
MES
Orange Lux
1.169
1.047
65
571.149
1.046
53
50
458 432
131 138
Handset/RT Costs
Non-Headcount
Cost
HeadcountCost
FY 2011
1.047
167
310
FY 2010
1.046
148
309
Total cash expenses Mio EUR
Interconnect & Other Sales
Costs
Cash expenses driven by MES consolidation, increase in FTE and handset sales costs compensated by lower MTR and efficiency
MES MES MES MES
• 9 month consolidation in 2010 only, integration with Mobistar B2B and network activities being implemented
Handsets & RT costsHandsets & RT costsHandsets & RT costsHandsets & RT costs
• In line with increase in handset sales, with a mix in favor of high-end devices / smart-phones and EoY voucher promo
Headcount costsHeadcount costsHeadcount costsHeadcount costs
• Increase driven by increased focus on customer experience (+164 FTE integrated from MES, customer care and sales department). 2,49% wage indexation
42
Odyssey transformation programs already delivered 80 Mio EUR of gross saving over a period of 2 years
(e.g. Mobile Data, Fix Program, revenue engineering and devices)
(e.g. Network optimization)
(e.g. Customer care, distribution and organization)
* Transformation includes capex and opex savings, includes recurring cost reductions as well as cost avoidance
Gross saving objective Gross saving realized and projected
(Mio EUR)
2010-2012
More than 100 Mio EUR
8 36
48
8
4
5
19
31
2010 2011
• Main contributors are Mobistar OLU synergies, device transformation and network optimization (MW)
• Cumulated over 2010-2011 already 79 MIO EUR gross savings realized vs 2009 cost base
• Transformation program will continue beyond 2012
43
Capex driven by technical transformation, further 3G roll-out and commercial launch of Starpack
Capex (in M EUR) Capex as % of service revenues
• The Mobistar network had 5483 2G/3G sites at the end of 2011
• In line with its backhauling upgrade plan, Mobistar deployed over 1100 microwave deployed (vs 669 EoY 2010)
• First phase of IT-renewal program implemented in Luxembourg. This program targets a fully new integrated customer care, service delivery and billing system in order to improve the total cost of ownership and time to market
• Customer Equipment cost driven by gross add realized in ADSL, Starpack and Fix Business products
• Consolidation of MES capex (incl in Network) for 12 months in 2011, vs 9 months in 2010
• 2x 20 MHz license acquisition in the 2,6GHz band for the reserve price of 20.02Mio EUR payable as from July 2012
60 63
10,9%
12,2%
183
2010 2011
8879
166
Main Capex drivers
Sales and real estate
Customer Equipment
CAPEX (excl lic)/service rev.
Network
MES
OLU
IT (legacy and renewal)
20
74
4G license acquisition
2G license renewal
Balance sheet
44
Free cash flow (consolidated)
45
Version 1 - November 2009
Guidance
47
Main elements supporting the 2012 guidance
• Revenue and EBITDA negatively impacted by regulation for a total amount of 58 Mio EUR on revenues and 32 Mio EUR on EBITDA*
• MTR regulation impacts revenue around 30 Mio EUR and EBITDA around 13 Mio EUR• Current roaming decision (revised vs. initial assumption) is expected to have a revenue
impact of around 28 Mio EUR and EBITDA 19 Mio EUR
• Revenue and EBITDA positively driven by
• Strong mobile data growth • Further revenue growth both in the fix residential and fix business segment• Ongoing transformation program
• Mobistar is convinced that the new portfolio of mobile offers, based on simplicity and more adapted to the consumers’ needs, will generate positive results in the next quarters
• The guidance is based on the current figures on the evolution of the Belgian economy and take into account a more intense competition on the telecom market
*(vs 51Mio EUR an d 22 MIO EUR initially forecasted) at FY 2011 announcement
48
*Capex/ serv rev. excluding the license costs linked to the 2G license renewal and additional 3G or 4G spectrum license fee, incl. customer equipment
** Organic cash flow defined as net cash flow from operations less acquisitions of tangible and intangible assets, excluding spectrum license fee and acquisition of subsidiary
Mobistar guidance takes into account a very challenging macro-economic and rapidly evolving industry context
Total Turnover
Ebitda
Capex/service revenues*
Net profit
Organic cash flow**
2011 2012
guidance
1657,6 M EURDecrease limited to
maximum 2%
530,1 Mio EURbetween
460 - 500 M EUR
12.2 of service revenues
Around 12% of service revenues
221 Mio EURbetween
170-195 M EUR
242,2 Mio EURbetween
170 - 195 M EUR
49
*Capex/ serv rev. excluding the license costs linked to the 2G license renewal and additional 3G or 4G spectrum license fee, incl. customer equipment
** Organic cash flow defined as net cash flow from operations less acquisitions of tangible and intangible assets, excluding spectrum license fee and acquisition of subsidiary
Mobistar guidance takes into account a very challenging macro-economic and rapidly eroding industry context
Total Turnover
Ebitda
Capex/service revenues*
Net profit
Organic cash flow**
2011 2012
guidance
1657,6 M EURDecrease limited to
maximum 2%
530,1 Mio EURbetween
460 - 500 M EUR
12.2 of service revenues
Around 12% of service revenues
221 Mio EURbetween
170-195 M EUR
242,2 Mio EURbetween
170 - 195 M EUR
Visit our websites:• www.mobistar.be
• http://business.mobistar.be
• http://corporate.mobistar.be