2017, an exciting year
2017, an exciting year
Proximus’ Fit for Growth strategy, firstly launched in 2014, sees the company grow further in 2017, now already for the 3th year in a row. Last year CEO Dominique Leroy and chairman Stefaan De Clerck focused on the acceleration of Proximus’ Fit for Growth Strategy while strengthening Proximus’ ambition to become a Digital Service Provider. We invited them to look back at what was achieved and to look forward to Proximus’ ambitions for the coming years.
Looking back on the past 3 years, Proximus has demonstrated growth in an intensely competitive and regulated market. Can you comment on 2017 performance specifically?
Dominique Leroy: " Our financial results are fully in line with our promise to the market and this growth is the result of consistently delivering our Fit for Growth strategy to become a more customer oriented, agile and efficient organization.
We grew our Domestic revenue by 1.1% mainly driven by the ongoing expansion of our TV, Internet and Mobile Postpaid customer base and a solid revenue increase from ICT in spite of a more competitive international and Belgian landscape and significant regulatory headwinds. Driven by our efforts to simplify and deliver structural cost reductions, we posted a solid Group EBITDA growth of 1.5%. At the same time, we invested € 1092 million in the benefit of the overall customer experience.
Customer experience has always been at the heart of the Fit for Growth strategy. What did 2017 bring?
Dominique Leroy: "It’s always been our ultimate objective to deliver a superior customer experience. This is why we continued to invest in our high-quality integrated network, easy-to-use and innovative solutions, best accessibility & local reach, and proactive servicing. In 2017 we further enhanced both our Mobile and Fixed networks. We started the roll-out of optical fiber in different cities around the country being the first to bring Fiber directly into the homes of our customers and we also have been first to launch 4.5G. We continued to improve the In-Home experience of our customers with the Happy House visits and the launch of the In Home Optimizer app and we offered them new innovative services for their smartphone with the smartphone omnium, clear coat and the smartphone replacement. For our business customers, we have launched ‘Invoice Insights’, ensuring they can manage their mobiles invoices through an easy-to-use app interface."
Looking at your strategy we can clearly see that the transformation of Proximus will be a key enabler in the success of the strategy. How is this transformation executed inside your company?
Dominique Leroy: "To execute our Fit for Growth strategy, we have launched several transformation programs over the past years. These programs are key to provide a better customer experience and to drastically reduce our costs. We focus our transformation efforts around 3 axes: simplification, digitalisation and our organisation. In 2017 we further simplified our infrastructure with the large-scale transition of customers from legacy networks such as PSTN and ATM to IP-based technology. Year by year, we are moving towards a more simplified portfolio of products and solutions, by the end of 2017, 99.7% of our customers ,enjoying our convergent offers, were on the 2 most recent generations of packs. The further digitalisation of our company helps us to reach these simplification objectives. For example, to support our decisions related to fixed and mobile network investments, we have developed an internal data analytics project to help us prioritize our investments and track their return. And of course to adapt to the changing market conditions we need a change in the way we work. This is all about having the right culture and ensuring we have the right attitude and skills, and the best organization to be successful and resilient. For the past three years, we have worked on the cultural transformation of our company ‘From Good to Gold’, and in 2017, rolled out ‘Good to Gold’ teams across the entire company. All those transformation initiatives contributed to a more efficient cost structure,, with our underlying domestic expenses decreasing by 3.2% ."
To execute our Fit for Growth strategy, we have launched several transformation programs over the past years, these programs are key to provide a better customer experience and to drastically reduce our costs.
Cultural change clearly is one of the important transformation ambitions. How have you ensured that this is being translated into behaviours?
Dominique Leroy: "We are pursuing our Good to Gold journey which is key for the successful realization of our strategy. We want to ensure lasting adoption of the Good to Gold principles by reinforcing our Good to Gold training tracks and fostering role models at every level of the organization. In 2017, we also launched the first projects in full design-thinking mode as we work towards true customer centricity and First Time Right delivery. We are fundamentally changing the way we work and the local self-steering teams we’ve put in place for the Fiber roll-out are a good example of this. Working with dedicated, co-located, regional and cross-functional teams is the best way to achieve our ambitions. These teams are empowered and have the right tools to take decisions autonomously to optimize the roll-out of Fiber in function of the local context. People really make our company and we continuously give them the opportunity to move internally and acquire new experiences. Each Proximus employee received an average of 19 hours of courses last year and in 2017, 1177 employees changed jobs internally. We also launched our Newtone digital platform thanks to which people can find temporary projects to work on alongside their regular jobs."
Beside your transformation objectives, you also announced last year that you wanted to keep enriching your content offer. What were the highlights of 2017?
Dominique Leroy: "We took the Proximus TV experience to the next level with our new TV interface and our enriched content offer. Football fans enjoy all Belgian professional football and all matches of the UEFA Champions League. We’ve also signed an exclusive deal with Studio 100. In Flanders Studio 100 TV is now exclusively available in the basic offer. Furthermore our partnership was expanded with Studio 100 GO, a completely revamped digital platform, and Studio 100 HITS, a brand-new music channel.
With this we now have a particularly attractive offer for child and family."
What other efforts were done to further grow Proximus’ core business of telco and ICT solutions?
Dominique Leroy: "For our residential customers, we had reinvented our commercial offer at the end of 2016 with the launch of our new all-in offers Tuttimus and Bizz All-in. More than 360,000 customers already signed up to these offers. To better respond to customers’ expectations in 2017, we increased the volume of mobile data included for both new and existing customers. Scarlet, our no-frills brand, attracted a lot of customers in 2017 thanks to new attractive offers such as Poco &Loco and Hi-Five, our millennial offer with data only. For our enterprise customers, we have further fortified our collaboration and ICT portfolio with the launch of new solutions like Call Connect, allowing businesses to have their PABX in the cloud without having to invest in expensive hardware. The Office 365 Voice connect plugin also allows customers to call any mobile or fixed number via Skype for Business. We are also proud to confirm our market leadership for connected objects in Belgium by connecting close to 1.3 million things to our IoT networks through LoRaWAN and cellular networks."
Stefaan De Clerck: "We believe it’s important to launch meaningful innovations on the market, transforming technologies like the Internet of Things (IoT), Big Data, Cloud and Security into solutions with positive impact on people and society, such as smart advertising, smart home, smart mobility or smart city. In addition, Proximus wants to remain at the cutting edge of technological innovation, for itself and its customers, especially with regard to Blockchain, Big Data, Artificial Intelligence, etc"
In the growing digital economy, a company’s success is increasingly founded on its ability to build strong partnership & ecosystems. Would you say this also applies for Proximus?
Dominique Leroy: "We acknowledge that we, as a telecommunication and ICT operator, can’t be successful alone. It’s important to build strong partnerships to be able to move up the value chain and create end-to-end solutions with true impact on people’s life and work. The following strategic initiatives are testament to the commitment Proximus is making in this domain: the recent acquisitions of companies such as TeleSign, Davinsi Labs and Unbrace; the co-creation initiatives with other companies and local start-ups to set up new ecosystems such as Co.Station and B-Hive; as well as our tradition of collaborating with universities. We also gave developers and companies access to Proximus and its partners’ technologies so they can create solutions and applications in a fully digital way via The Proximus Enabling Company (EnCo) platform."
We have talked about the products & services you offer, but as a major company in Belgium I imagine your contribution to society goes beyond this?
Dominique Leroy: "Being a digital service provider means, for us, helping customers reap the benefits of digital transformation. We want to make this world of new possibilities accessible to all, with solutions to answer real needs. Proximus wants to play a positive role in the digitalization of all aspects of life, work and public services, for a more prosperous digital Belgium."
Stefaan De Clerck: "As one of Belgium’s largest employers and biggest investors, we play an important role in building and boosting our country’s digital economy. It’s why we are investing in the infrastructure of the future with the accelerated roll-out of optical fiber. In 2016 we announced Fiber for Belgium, an investment plan of EUR 3 billion over 10 years to bring people & businesses connectivity at the speed of light. The long-term ambition is to cover more than 85% of businesses and the centers in all our cities and communes. In 2017 we started the roll out in cities such as Antwerp, Brussels, Charleroi, Ghent, Hasselt, Liège and Namur and recently signed an agreement with the city of Roeselare to deploy our Fiber network over there as well.
At the same time, we are committed to addressing key society issues by structurally embedding CSR in everything we do, so that we can all live in a more sustainable, more inclusive and safer world. For example, our continued support for the Bednet program meant more than 600 children have been able to attend school virtually. We have also given jobseekers, through our Digitalent program, the chance to increase their digital skills and be better equipped for the digital jobs of the future. Our Safer Internet initiative has also seen 150 Proximus staff visit primary schools to inform children about the safe and responsible use of Internet, another major challenge for society. Not forgetting, the company became climate neutral in 2017 and received the CDP climate leadership award for the 5th year in a row. We are proud that Proximus continues to play an active role in society and build a more prosperous and digital Belgium."
We are committed to addressing key society issues by structurally embedding CSR in everything we do, so that we can all live in a more sustainable, more inclusive and safer space.
Proximus achieved great things in 2017. How do you see 2018?
Stefaan De Clerck: "In 2017, Easy Switch and the ID registration of all prepaid cards were introduced. From a regulation perspective, 2018 will be another important year with the outcome of the BIPT broadband market analysis as it relates to fiber and of the review of the full EU telecom package. These key decisions as well as the upcoming spectrum auctions will be key to assure a competitive landscape that secures investments and instigates digital innovation towards a Gigabit society. We’re also gearing up for the new General Data Protection Regulation (GDPR) that will come into effect in May 2018. People will get the control of their personal data and we aim to turn the changes needed for GDPR compliance into real competitive differentiators as a data-centric approach can result in a number of key benefits for us at an enterprise level in the areas of data security, customer centricity, data localization and indexing, and data storage."
Dominique Leroy: "We operate in a fast changing competitive market where the customers’ needs are in constant evolution, both in the residential and enterprise markets. Connectivity has become essential in people’s private and professional lives as well as in their interactions with public institutions. Smartphones have become a lifeline and a gateway to information, music and video streaming, communication, gaming, e-commerce, and payments. And this is a great opportunity. Even though it’s estimated that traditional Telco revenue worldwide will have very limited growth through 2020 as for telecom operators the pressure on the top line is high because of regulation, I’m confident we are well equipped to face the challenges of the future with the further implementation of our Fit for Growth Strategy and as we continue our transformation to being a Digital Service Provider delivering superior customer experience. We are simplifying and optimizing costs without compromising on the customer experience. We will further grow our core business by offering integrated solutions and build our future by continuing to roll-out fiber and other useful innovations. All this will be fuelled by a further transformation of the way we work, powered by our Good to Gold culture. I’m confident we have the right people and the right strategy to face what “is coming at us” in the future. 2018 promises to be another exciting year. We know the context is challenging, but I expect our Domestic revenue to remain quasi stable, while our EBITDA should grow slightly. At the same time, we’ll pursue our investments of around EUR 1 billion during the year and still return a stable dividend to our shareholders."