Orange Belgium Family Financial results Q1 2017 Analysts and Investors Roadshow presentation
Disclaimer This presentation might contain forward-looking statements about Orange Belgium in particular for 2017. 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 Orange Belgium – Q1 2017 Financial results
Snapshot of the 2015 Belgian telecom market Value by segment in billion € 8.3 1.1 3.7 3.5 Mobile Fixed TV 0.7 1.0 1.4 0.3 1.1 1.1 0.0 2.0 1.8 B2C B2B Wholesale B2B Wholesale B2C B2B B2C Of which Of which 1.1bn 0.1bn Source BIPT 3 Orange Belgium – Q1 2017 Financial results
Section one Business review Michaël Trabbia Orange Belgium, CEO 4 Orange Belgium – Q1 2017 Financial results
Adjusted EBITDA Total service revenues € 72.2m € 274m +3.6% +0.6% Year-on-year Year-on-year (Comparable basis) Capex Net debt € 32.2m € 323.7m -2.9% -22.6% Year-on-year Year-on-year 5 Orange Belgium – Q1 2017 Financial results (Core Capex)
Latest key events Milestone of 50.000 LOVE customers Closing Walloon pylon Launch of LOVE Festive rebranding into tax agreement campaign Orange Belgium Telenet MVNO Installation of a new Prepaid registration termination agreement Executive team own shops + Famoco Q2 2016 Q3 2016 Q4 2016 Q1 2017 Accelerated uptake of Launch of Hybrid offer IBPT confirms Orange UEFA EURO 2016 Orange Internet + TV ZEN quality of service Launch new prepaid National launch Orange Launch new postpaid Launch of installment “Tempo” portfolio Internet + TV offer “Animals” portfolio program 4G coverage in Brussels metro 6 Orange Belgium – Q1 2017 Financial results
Orange Belgium’s key growth drivers starting to pay off 1 2 3 Mobile data Fixed convergence Customer monetization opportunity experience 7 Orange Belgium – Q1 2017 Financial results
A proud 4G & 4G+ network leader Developing new use cases, anytime, everywhere during the customer journey 99.6% 92.3% 99.9% 54.7% 4G Outdoor 4G Indoor 4G+ Brussels 4G+ National population National population Population coverage National population coverage coverage coverage 8 Orange Belgium – Q1 2017 Financial results
Continuous network investments with extra focus on indoor coverage Securing a fast & reliable 4G-connection in the entire Brussels metro Public transport coverage Where it really matters.. 99 .6% 4G coverage Cell level: increasing capacity by software updates and activation of new frequencies Core network level: extended software and hardware capacities, technology upgrade Backhaul network level: ongoing network optimization work in particular via fiber installations 9 Orange Belgium – Q1 2017 Financial results
4G smartphone penetration now represents more than 50% of the base 4G devices, and increasingly 4G+ devices, take the highest sales share Orange Belgium’s active smartphone penetration 4G 85% 70% 68% 61% 50% 55% 46% 35% 19% 0% EU average EU average EoP 1Q14 EoP 1Q15 EoP 1Q16 EoP 1Q17 EoP 1Q14 EoP 1Q15 EoP 1Q16 EoP 1Q17 % of active smartphone users / total base % of active 4G smartphone users / total base 10 Orange Belgium – Q1 2017 Financial results
Total data traffic increased by 60% in the first quarter of 2017 83% of total data consumption is 4G/4G+ traffic 83% of of 4G data 4G/4G+ users ~1.5 million 68% of of 4G data 50% 4G & 4G+ Orange Belgium 4G launch Total traffic up 5.5 times since 4G launch 3G 3G apr- mei- jun- jul- aug- sep- okt- nov- dec- jan- feb- mrt- apr- mei- jun- jul- aug- sep- okt- nov- dec- jan- feb- mrt- apr- mei- jun- Jul- Aug- Sep- jan- feb- mrt- Oct- Nov- Dec- Jan- Feb- Mar- 14 14 14 14 14 14 14 14 14 15 15 15 15 15 15 15 15 15 15 15 15 16 16 16 16 16 16 16 16 16 14 14 14 16 16 16 17 17 17 11 Orange Belgium – Q1 2017 Financial results
Browsing Streaming Gaming Messaging Mobile data usage continues to grow linearly As customers fully embrace the benefits in their daily lives and work 1.5 GB 1 GB 1,530 1,330 1,020 880 860 550 510 290 250 110 Indicative EoP 2013 EoP 2014 EoP 2015 EoP 2016 EoP 1Q17 usage Total users base Mobile data users base • • 12 Orange Belgium – Q1 2017 Financial results
Belgian mobile prices among the most attractive according to the BIPT Orange Belgium’s new portfolio leads the way for higher data users € /mo mont nth 42 € 45 40 33 € 35 30 26 € 26 € 24 € BIPT T bench chma mark, k, 25 22 € 22 € 21 € 21 € heav avy user er profile ofile 20 € 18 € 20 6H voice, unlimited 17 € SMS, 1GB 15 10 = 5 0 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 UK BE LU FR NL DE 13 Orange Belgium – Q1 2017 Financial results * BIPT prices benchmark report - December 2015 and 2016
Animal portfolio continues to be a value driver Focus on customer experience, convergence & mobile data monetization The following roaming options can be added to the tariff plans: - Transborder (12.1 € for 250 min. roaming, 250 min. international, 250 SMS, 250 MB) 14 Orange Belgium – Q1 2017 Financial results - EU Traveler (24.2 € for 500 min. roaming, 500 min. international, 500 SMS, 500 MB)
2017 New postpaid portfolio is delivering on expectations Close to 50% of the new SIM-only customers opt for a >25 € tariff plan Launch date new Animal portfolio Postpaid SIM-only gross adds New data centric portfolio October 2016 March 2017 <25 € bundle gross adds >=25 € bundle gross adds 15 Orange Belgium – Q1 2017 Financial results
4G mobile data usage is driving sustained postpaid ARPU growth Ability to monetize mobile data confirmed Postpaid ARPU increased YoY in Q1 2017 +1.1% ARPU growth of 1.1% despite 3.8M € impact of EU roaming regulation Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q4 Q1 2016 2016 2015 2015 2015 2015 2016 2016 2017 16 Orange Belgium – Q1 2017 Financial results Postpaid ARPU, three months average (incl. visitor roaming)
Newly launched installment plan will reduce customer acquisition cost Switching from structural subsidy to consumer credit Open telec lecom law Proli liferat ratio ion of 4G Reducing contract period from Orange Belgium 2016 2017 24m to 6m without subsidies. supports 4G data usage acceleration Boost sting SIMO O & 2012 Inst stall llmen ent program 2017 2009 2014 Conve vergence with Launch of 4G LOVE Introduction of structural Aiming to reduce mobile subsidies to boost loyalty churn and customer and start of 4G mobile Subsid sidies ies allo lowe wed acquisition costs data usage. (24 months By law as of 2009 subsidy contracts) 17 Orange Belgium – Q1 2017 Financial results
Significant 4G postpaid net additions each quarter Eighth consecutive quarter in a row of postpaid growth 4G Postpaid quarterly net adds in Belgium (‘k) 28 Postpaid net adds 18 4G Postpaid net adds 9 9 8 8 3 3 -5 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 18 Orange Belgium – Q1 2017 Financial results Orange Belgium active customers excl. IoT/M2M & MVNO
Widespread implementation of prepaid identification process Driving seamless customer journey and postpaid migration Own channel els Orange shops Customers will be Orange Existing deactivated after the shops deadline but can be Before prepaid reactivated when registered June 7, 2017 customer Registration Online with e-ID ID Hybrid or New Third parties es postpaid migration At prepaid subscription customer Shops 19 Orange Belgium – Q1 2017 Financial results
Orange Belgium’s key growth drivers starting to pay off 1 2 3 Mobile data Fixed convergence Customer monetization opportunity experience 20 Orange Belgium – Q1 2017 Financial results
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