Orange Belgium Q2 2019 Financial Results July 24, 2019 Disclaimer - PowerPoint PPT Presentation

Orange Belgium Q2 2019 Financial Results July 24, 2019

Disclaimer This presentation might contain forward-looking statements about Orange Belgium in particular for 2019. Although we believe these statements are based on reasonable assumptions, they 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 from the results anticipated in the forward-looking statements include, among others: the economic situation in Europe and more specifically in Belgium, the impact of price adjustments on the customer base resulting from competitive pressure, the evolution of the customer base, the effectiveness of Orange Belgium’s convergent strategy including the success and market acceptance of the voice and data abundance plans in the business segment and of the Orange Internet & TV offers, of the Orange Belgium brand and other strategic, operating and financial initiatives, Orange Belgium’s ability to adapt to the on-going transformation of the telecommunications industry, regulatory developments and constraints and the outcome of legal proceedings, risks and uncertainties related to business activity. 2

Building strong brand perception July May September June Google June Chromecast is now available to May Love customers April 1 st operator to offer VoWiFi Fixed Phone and VoLTE for February for Love deep indoor coverage customers 3 Orange Restricted 2018 2019 3

Orange Belgium is breaking telco conventions We promise… We deliver… Not to increase prices in 2019 More at no extra costs:   Eagle customers have unlimited voice and  data in the EU Residential customers can send MMS in  Belgium and from the EU Orange customers will continue to have  roaming services in the UK regardless of Brexit Indoor coverage guaranteed with VoWiFi and Excellent indoor coverage   VoLTE technologies Love Duo (2P offer) launched To launch an unlimited broadband – only   offer to meet the needs of online content watchers 4

Orange Belgium launched Love Duo, the first 2P offer in the country 5

Section one Q2 2019 Highlights 6

Q2 2019 Orange Belgium key achievements Mobile contract excl. M2M Convergent customers Net additions 13.6% 2.5 m 216 k Mobile + 26 k of total postpaid mobile contract excl. +6.8% yoy base is convergent +58.8% yoy M2M + 16 k Convergent customer Belgium Belgium Belgium Belgium Retail service revenues EBITDAaL eCapex Revenues € 207.0 m € 78.9 m € 318.9 m € 42.9 m +9.6% yoy +18.2% * yoy -5.6% * yoy +1.9% yoy *based on 2018 comparable figures 7

Section two Operational Results 8

Convergence: Love reached 216k customers, confirming its attractiveness 25 21 19 19 20 18 16 Love (‘000) 15 14 216 200 180 155 136 122 Love customer net adds, 103 +16k 82 64 +10.9% yoy Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Love customers yoy Convergent mobile 58.8% variation 41 36 33 33 30 27 25 22 20 (‘000) SIM cards per convergent 1.6 342 customer 317 283 243 207 186 156 of total mobile base is 123 13.6% 96 convergent (Q2’18: 8.8%) Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Customers Net adds 9

Mobile postpaid: Commercial momentum remains solid in Q2’19 +6.8% Customer base (‘000) 2,516 2,490 2,469 2,408 2,355 294 244 272 210 180 2,225 2,218 2,222 2,175 2,197 Contract customers / 82% total base (Q2’18: 80%) Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Smartphone penetration 78% 61 53 (Q2’18: 79%) Net adds (‘000) 34 31 21 26 26 17 22 29 27 22 9 4 -7 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 B2C mobile convergent Mobile only + B2B mobile convergent 10

Mobile prepaid: Orange Belgium maintains a good performance in a declining segment -3.2% +2 Customer base (‘000) + 2 Net adds (‘000) -4 -6 -6 575 577 567 561 557 -10 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 11

Mobile: Unlimited plans catalyst for data usage growth in Belgium +56% +79% Average mobile data usage (GB) Average mobile data +35% 4.1 GB 4.1 usage (smartphone), +55% 3.2 3.3 +56% yoy +57% +120% 2.6 2.5 2.1 1.8 0.9 1.3 1.3 0.3 0.9 Mobile data active 0.6 2.4m 0.5 0.3 0.1 users, +6% yoy EoP 2013 EoP 2014 EoP 2015 EoP 2016 EoP 2017 EoP 2018 EoP 2Q18 EoP 2Q19 On total users base On smartphone user base 4G users/Total base 69% +66% (Q2’18: 65%) traffic evolution (Gb) Total mobile data % 4G in total traffic 95% (Q2’18: 91%) Total mobile data +66% traffic yoy increase Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 14 14 14 15 15 15 15 16 16 16 14 16 17 17 17 17 18 18 18 18 19 19 4G 3G 12

B2C convergent ARPO continued to grow while mobile-only postpaid ARPO contracted Quarterly B2C convergent ARPO ( € ) Quarterly mobile only ARPO ( € ) + 0.2% + 7.7% + 7.0% -0.6% -0.9% + -1.1% 5.4% -1.8% 4.1% + -3.2% 71.9 21.8 21.3 21.1 20.8 20.8 20.6 77.4 76.7 76.8 75.5 71.8 73.7 7.4 7.5 7.0 7.1 7.1 6.6 7.4 7.5 7.0 7.1 7.1 6.6 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2018 Q2 2019 Mobile only postpaid excl. M2M Mobile only prepaid yoy Convergent yoy 13

Regulatory update Cable Regulation Spectrum and 5G auction Implementation of 2018 decisions ongoing  The Royal Decrees regarding the allocation of the 700, 1400 and 3400-3800 MHz band and the  Single installer started in Q3’19 renewal/reallocation conditions of the 900, 1800 and 2100 MHz bands were not finalised  Broadband only ready in July 2019  The BIPT launched a consultation regarding the 26 GHz Cost model – Wholesale pricing: band and regarding various other (minor) spectrum  Consultation draft published on July 5 and ends on related matters September 6  Low probability that an auction for any of the before-  Final decision: expected year-end mentioned spectrum will be organised in the next 12 months  Orange Belgium’s preliminary comments:  The new Brussels government indicated that new 1.The Company is pleased that the regulators have developments on 5G will be done with respect for the confirmed their intention to establish true and fair precautionary principles. However, it is unclear if this competition in Broadband and TV markets. The implies they will approve the earlier agreement to regulators have applied the “Cost +” methodology increase the EMF limits to 14.5 V/m which should lead to wholesale prices more in line with the real infrastructure costs; 2. Orange Belgium’s response will focus on avoiding unjustified annual wholesale price increases and ensuring that the cost base for some cable operators is not overestimated. 14

Mobile Network sharing agreement with Proximus  Meet the increasing demand for mobile network quality  Allow a faster and more Plan, built and operate the shared comprehensive 5G roll-out in mobile access network. Each Belgium company will retain ownership of  Bring relevant benefits for end- their network assets users 1 2  Roll-out a faster and more comprehensive 5G in Belgium Mission Objectives Joint-Venture Differentiation Competitive guaranteed environment Both companies will: Proximus and Orange 4 3 i) continue to have full control Belgium will continue to over their own spectrum market their products and assets, and services independently ii) operate their core networks and compete at retail, independently to ensure a enterprise and wholesale service and customer levels experience differentiation 15

Mobile Network sharing agreement with Proximus 1 2 3 € 300 m € 130 m >3x WACC Savings over 10 years Initial set-up costs IRR over 10 years  Opex: BTS rental costs as  Initial set-up costs well as energy, repair and related to de- maintenance, transmission commissioning and costs enablements  Capex: 5G network roll-out 16

Orange Belgium announced the acquisition of BKM to strengthen its B2B activity Value Opportunities Status  Extend B2B offering EV: € 52.4m  July 2: Belgian  Meet B2B customers Competition growing demand for a Authority cleared the for Upsize NV and its single connectivity and transaction subsidiaries: BKM NV and ICT provider CC@PS  End July: finalization of the transaction 17

Section three Financial Results 18

Mobile only service revenues: remains strong despite convergence growth Mobile only service revenues ( € m) + 3.0% + 1.5% + 0.7% + 0.1% -0.8% 158.8 154.4 154.4 153.1 153.3 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Mobile only service revenues yoy 19

Convergent service revenues: sustained growth + 129.9% + 112.3% Convergent service revenues ( € m) + 94.6% 83.4% + + 69.9% 41.0 38.1 32.7 28.7 24.1 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Convergent service revenues yoy 20