Solid Q1 EBITDAaL growth Updated dividend in the COVID-19 context
23 Avril 2020 - 8:57AM
Solid Q1 EBITDAaL growth Updated dividend in the COVID-19 context
Press releaseEmbargo until 23 April 2020 at 7:00
amRegulated information
Financial information for the first quarter of 2020
Solid Q1 EBITDAaL growth
Updated dividend in the COVID-19
context
- Mobile postpaid customer base +3.9% yoy on quarterly
net-adds of 9k
- Convergence customer base +40.0% yoy on quarterly net-adds
of 21k
- Q1 Revenues1 +1.9% yoy / Retail service
revenues1: +4.6% yoy
- Q1 EBITDAaL1 +7.6% yoy
COVID-19 impact
- Lockdown impacted commercial and operational dynamic.
Temporary closure of shops has impacted the acquisition of new
customers for mobile and convergence, as well as handset sales.
However, churn has improved. Additionally, roaming and SMS traffic
as well as ICT projects have decreased, whereas voice traffic has
increased.
- Uncertainty remains in regards to the COVID-19 measures
and the impact on the Belgian economy.
- Currently, Orange Belgium expects the COVID-19 context to
have a negative moderate impact on 2020 revenues, and a more
limited impact on 2020 EBITDAaL thanks to low EBITDAaL impact
of handset, SMS and roaming revenues, as well as cost control.
The 2020 eCapex should moderately decrease due to some
limitations during the lockdown period.
- Orange Belgium will consider an update of its 2020 financial
guidance after the Q2 period, with more visibility on the COVID-19
context.
- Taking into account the current context and uncertainty, the
Board of Directors recommends to the AGM not to increase the
2019 dividend to €0.60 per share as initially foreseen and to
adopt an unchanged dividend of €0.50 per share.
Q1’20 Belgium operating highlights
- Strong convergence net-adds confirm attractiveness of the
Love Duo/Trio offers. Orange Belgium added 21k subscribers
(+8.1% yoy) and reached 280k Love customers (+40% yoy). Love Duo
still represents one third of the gross adds. The convergent mobile
subscriber base represents 17.4% of mobile postpaid customers, up
470 bp vs Q1’19. Due to the delay in installation time, the
COVID-19 impact on Q1 March sales will materialise mainly in
Q2.
- Mobile postpaid customer base grew despite
competitive environment and COVID19 impact. The mobile postpaid
customer base grew by 9k to 2.6m subscribers (+3.9% yoy). The
launch of the new GO mobile portfolio in March, introducing the
first family mobile offer in Belgium, has been impacted by COVID-19
lockdown measures.
- B2C convergent ARPO decreased slightly by 1.9% yoy to
€75.9 as the result of the growing Love Duo customer base with
a lower price point, which already represents 14% of Love
customers.
- Mobile-only postpaid ARPO declined slightly by 2.5% yoy to
€20.3, as a result of lower out-of-bundle revenues due to EU
regulation for international calls, as well as COVID-19 effects on
SMS and roaming, partly offset by migration to higher tariff
plans.
Orange Belgium: key operating figures
|
Q1 2019 |
Q1 2020 |
change |
Mobile
postpaid customer base (in ‘000) |
2,490 |
2,588 |
3.9% |
Net adds (in
‘000) |
21 |
9 |
-58.3% |
Mobile only
postpaid ARPO (€ per month) |
20.8 |
20.3 |
-2.5% |
Convergent
customer base (in ‘000) |
200 |
280 |
40.0% |
Net adds (in
‘000) |
20 |
21 |
8.1% |
B2C convergent
ARPO (€ per month) |
77.4 |
75.9 |
-1.9% |
Convergent
mobile customer as % mobile contract customer base |
12.7% |
17.4% |
470 bp |
|
|
|
|
Q1’20 consolidated financial highlights
- Revenues increased by 1.9% yoy1 to €333.9m
mainly driven by improved retail service revenues (+4.6% yoy1)
supported by higher convergence services (+35.8% yoy), compensating
lower wholesale revenues (-2.1% yoy). Wholesale revenues decreased
mainly due to lower incoming SMS revenues (-€4.8m) which have no
impact on EBITDAaL, partially compensated by higher MVNO
revenues.
- EBITDAaL increased by 7.6% yoy1 to €62.2m,
mainly thanks to increasing retail service revenues, improved cable
operations and cost efficiencies as a result of our Bold Inside
transformation plan. Cable operations’ EBITDAaL had a positive
result of €2.5m this quarter vs a €1.1m loss in Q1’19, but negative
cash flow of -€6.3m (vs -€13.4m in Q1’19).
Orange Belgium Group: key financial figures
|
reported |
comparable1 |
|
comparable |
reported |
in
€m |
Q1 2019 |
Q1 2019 |
Q1 2020 |
change |
change |
Revenues |
318.2 |
327.7 |
333.9 |
1.9% |
4.9% |
Retail service
revenues |
205.7 |
214.9 |
224.8 |
4.6% |
9.3% |
EBITDAaL |
58.0 |
57.8 |
62.2 |
7.6% |
7.1% |
margin as % of
revenues |
18.2% |
17.6% |
18.6% |
100 bp |
38 bp |
eCapex |
-36.9 |
-36.9 |
-35.1 |
-4.8% |
-4.8% |
Operating
cash flow2 |
21.1 |
20.9 |
27.0 |
29.6% |
27.9% |
Net financial
debt |
252.1 |
|
229.0 |
|
-9.2% |
|
|
|
|
|
|
- Comparable base includes BKM 2019 before acquisition
- Operating cash flow defined as EBITDAaL – eCapex
Michaël Trabbia, Chief Executive Officer,
commented:
Everybody has been profoundly affected by the
COVID-19 pandemic. In this global crisis context, our main priority
is the protection of our employees, our customers, suppliers and
subcontractors, as we comply fully with the decisions and
recommendations of the competent authorities. In addition, we
concentrated our efforts on ensuring service continuity as
connectivity is more than ever critical for Belgian consumers,
businesses, hospitals and administration. Finally, we believe we
have an important societal role to support the country in this
difficult time. We proactively promoted the “StayHome” message, we
supported our customers with a dedicated platform and additional
data, and we helped the government monitor mobility via anonymised
data. We also provided concrete and meaningful support to hospitals
and nursing homes, with masks, cyber-security and communication
solutions. Orange Belgium together with the members of its
Executive Committee in their personal capacity made a joint
donation to finance a COVID-19 middle care unit.
On 9 March, we launched GO, our revamped mobile
portfolio, introducing exclusive mobile family discounts, and
confirming once again our Bold Challenger position. Our Love Duo
and Trio convergent offers continued to attract many new
customers.
However, the lockdown measures have impacted our
sales, with the temporary closure of the shops, only partially
mitigated by the increase of other channels, mainly digital and
telesales. We are preparing to reopen our shops when it becomes
possible, with all the necessary protection equipment and sanitary
measures.
In April, the regulator submitted its draft
decision on the wholesale cable tariffs to the European Commission,
including amongst others, a major change in the methodology of cost
recovery compared to the last draft decision that would be
massively detrimental for customers. This major change in the final
steps of the process would mean significantly over-compensating
cable owners’ actual costs. In addition, the assumptions made lead
to a far excessive and unjustified increase of the wholesale
tariffs by up to 25% over time. As such, the draft decision would
necessarily lead to significant price increases year after year in
the Belgian broadband market, although it is already amongst the
most expensive broadband markets in Europe. In the interest of
Belgium customers, we urge the European Commission and the
regulators to materially improve the draft decision, based on the
reality of the costs and avoiding any overcompensation.
Arnaud Castille, Chief Financial Officer,
stated:
The measures taken following the pandemic crisis
will impact on the company’s financial performance. The first
quarter of this year was impacted for a period of about two weeks,
so it is too early to say how this will impact the rest of the
year. But we can imagine an impact on revenue, caused by lower
gross adds in mobile and convergence partially offset by a
reduction in churn. The decrease in handset sales will have an
impact on the topline but may also see a rebound after the crisis.
Therefore, we managed to adjust our costs, which were also reduced
through the decrease of the customer acquisition cost. Hence, we
only expect a limited impact on EBITDAaL over the year. We will
re-evaluate the COVID-19 impact and the potential change to our
guidance after the second quarter. Additionally, Orange Belgium has
a robust balance sheet with a leverage of 0.8.
The launch of our new mobile portfolio will not
only lead to simplicity for our customers, but will also help to
streamline our processes aiming at lowering the costs for managing
those portfolios.
In the light of the Bold Inside programme we
have continued to make the necessary efforts to control our costs,
which provided its results with stable costs versus last year in a
revenue growth context.
The confirmation of the competition authorities
that no additional interim measures are needed anymore for the
execution of the mobile network access sharing agreement with
Proximus has enabled us to transfer employees to the newly created
joint venture, MWingz and to start the implementation of our
agreement.