Proximus Group financial results – Second quarter 2021

Proximus Group delivers strong commercial trends with a return to top line growth in the second quarter and confirms its full year guidance

  • Sustained solid subscriber growth in Q2 ‘21: +48,000 Mobile postpaid, +10,000 Internet, +12,000 TV.
  • Accelerating growth in Fiber consumer base to +14,000 in Q2, total base of 90,000 end June.
  • Fast-tracking Fiber roll-out: +89,000 premises passed, totaling 621,000. Footprint crossing 10% of total Belgian premises.
  • Underlying Domestic revenue of EUR 1,080 million, +2.4% year-on-year.
  • TeleSign continued double-digit revenue growth, +22.5% for Q2 on constant currency.
  • BICS sees quarterly trend noticeably improving on annualizing Covid-19 headwind, Q2 revenue +2.5%.
  • Underlying Group EBITDA totaled EUR 459 million, -3.7% compared to the year before.
  • Solid six months normalized FCF of EUR 262 million.
  • Mobile Vikings has been integrated in the Proximus Group since June.
  • Full-year 2021 guidance confirmed.

Highlights Q2 2021

 

"With continued solid customer growth, we are well on track to deliver on our outlook for the year.

I would like to open this quarter’s result looking back to the recent devastating floods in Belgium. My thoughts go to all the victims and their families in the affected regions. At the same time, over the past 2 weeks, I have been astonished by the commitment of many Proximus colleagues. These events have unveiled, once again, the important societal role we play, firstly through our infrastructure and the connectivity it provides, but also more broadly as a key part of the Belgian economic fabric of society. The last two weeks have also sent us a vivid reminder of our climate vulnerability and the relevance of our sustainability ambition as part of our #inspire2022 strategy.

Looking back at the second quarter, we saw strong continued commercial traction for our products and services. In a highly competitive setting, we delivered another consecutive quarter of customer growth for our main telecom customer bases. This is especially true for the premium segments of the market, as demonstrated by the nice increase in our TV base by +12,000 subscriptions. We also closed another strong quarter for Mobile, growing the Postpaid base by 48,000 subscriptions. These results demonstrate solid mobile growth on the Enterprise segment as well as the continued success of our Flex range, reaching 619,000 subscriptions. Our Consumer convergence base grew by 18,000 over the quarter, with customers generating a higher-than-average ARPC.

With the green light received from the Belgian Competition Authority, I am delighted to welcome Mobile Vikings to the Proximus family, the leading brand for the Belgian digital lovers and perfectly complementing our Scarlet and Proximus offers.

Our Fiber acceleration is delivering according to plan. During the second quarter, we brought the average weekly deployment up to 7,400 homes and business passed, leading to an additional 89,000 premises passed with Fiber and bringing our coverage to just over 10%. The superiority of Fiber was clearly demonstrated in June with a 25Gbps world-record in Antwerp, and this is also materializing in our customer numbers. Over the second quarter of 2021, we recorded 14,000 Fiber net adds, totaling 90,000 customers on our Consumer Fiber offers at end June 2021.

As announced yesterday, I’m happy that our Fiber partnership for the southern part of Belgium with Eurofiber has been cleared by the European authorities. The newly created joint-venture Unifiber will pass at least 500,000 premises with Fiber by 2028. With our two Fiber partnerships now being operational, and the ramp up of our own Fiber deployment, we are well on track to realize our ambition to pass a total of 4.2 million premises in Belgium by 2028.

As for our Enterprise segment, the ongoing transformation is being well-managed, with its effects offset by continued strong results for Telecom services. Specifically, for ICT, the increased digital adoption is bringing structural opportunities with a particular focus on cloud, security, IoT and collaboration. In that context, our converged Telco-ICT solutions and our emerging end-to-end servicing offers are leading to an increasing share of higher margin ICT Service revenues.

Beyond our domestic operations, TeleSign continued to show strong revenue growth, up by 22.5% on a constant currency basis, driven by both Programmable Communications and Digital Identity services. The second quarter ended with a strong sales pipeline, which will support a continued double-digit revenue trajectory in the second half of the year.

With the Covid-19-effect on worldwide travel annualized, our segment BICS showed a noticeable trend improvement from previous quarters. Especially revenue from BICS’ core services showed a strong increase compared to the previous year, driven by the solid growth in Application-to-Person messaging and Cloud Communications, both in the Telecom and Digital enterprise market.

Overall, we are very pleased with our strategic progress and the financial results achieved so far in 2021. For the remainder of the year, there is still some uncertainty on the speed of recovery from Covid-19 restrictions. Despite this uncertainty we are confident to meet our full-year guidance, expecting for 2021 on an organic basis an Underlying Domestic revenue close the level of 2020, an Underlying Group EBITDA between EUR 1750-1775 million and Capex, excluding spectrum and football rights, close to EUR 1.2 billion. The level of Net debt/EBITDA is expected to remain below 1.6X."

Key Figures

Operationals, in thousands

    Net adds in the quarter Park at end of quarter
    2020 2021 % 2020 2021 %
Fiber Home Passed   39 89   346 621 79.6 %
Consumer customers Convergent 12 18   1,091 1,163 6.6 %
Fiber (activated) 5 14   49 90 84.7 %
Group (subscriptions/SIM cards) Internet 19 10   2,108 2,158 2.4 %
TV 11 12   1,652 1,702 3.0 %
Fixed Voice -22 -49   2,327 2,099 -9.8 %
Mobile Postpaid (excl. M2M) 45 48   4,178 4,553 9.0 %
M2M 175 507   2,085 3,033 45.5 %
Prepaid -36 -11   655 728 11.3 %

Financials (EUR million)

  2nd Quarter Year-to-date
    2020 2021 % Change 2020 2021 % Change
Revenue
(underlying)
Group 1,330 1,370 3.0 % 2,723 2,737 0.5 %
Domestic 1,054 1,080 2.4 % 2,158 2,164 0.3 %
BICS 236 242 2.5 % 493 477 -3.3 %
TeleSign 68 77 12.8 % 126 154 21.4 %
Direct Margin
(underlying)
Group 880 890 1.1 % 1.786 1.784 -0.2 %
Domestic 808 819 1.4% 1,636 1,644 0.5 %
BICS 56 55 -1.3 % 117 109 -7.0 %
TeleSign 20 18 -11.1 % 39 37 -7.0 %
Expenses
(underlying)
Group -403 -430 6.7 % -845 -878 3.9 %
Domestic -366 -390 6.4 % -766 -797 4.0 %
BICS -31 -30 -4.5 % -64 -60 -5.3 %
TeleSign -10 -15 39.9 % -21 -27 28.2 %
Ebitda
(underlying)
Group 477 459 -3.7 % 941 905 -3.8 %
as % of revenue 35.9 % 33.5 % -2.3 p.p. 34.6 % 33.1 % -1.5 p.p.
Domestic 442 430 -2.7 % 870 848 -2.6 %
BICS 25 26 2.6 % 53 48 -9.1 %
TeleSign 10 4 -63.8 % 18 9 -48.1 %
Group Ebitda
(reported)
  501 476 -5.0 % 996 936 -6.0 %
Net income   150 118 -21.4 % 308 241 -21.8 %
Accrued capex
(excl. spectrum
& football rights)
  187 272 45.6 % 418 497 18.9 %
Free Cash Flow
(normalized)
  102 119 17.1 % 254 262 3.1 %
Net Debt
(end of period)
  n.r. n.r.   -2,289 -2,673 -16.8 %

Notes

  • Group revenue, Direct margin, Operating Expenses and EBITDA include intersegment eliminations.
  • Normalized FCF excludes M&A impacts but includes Fiber equity injections.
  • Mobile Vikings has been included in the Proximus Group consolidated financial statements as a fully consolidated subsidiary since 1 June 2021. This transaction affects the comparability of the figures for the current period with the prior-year figures. Where relevant, the comments in the report refer to the organic variance.
  • The mobile park includes customers acquired on 1 June 2021 related to the acquisition of Mobile Vikings, raising the Mobile Postpaid base by 191,000 and the Prepaid base by 144,000.

Outlook 2021 and shareholder return

Based on the results for the first six months and taking into account its best estimate for the remainder of the year, with ongoing uncertainty around Covid-19, Proximus reiterates its 2021 expectations on organic basis, i.e. excluding the contribution of Mobile Vikings.

Guidance metric FY20
Actuals
FY21
Guidance
Q2'21
YTD Actuals
(excl. Mobile Vikings)
Underlying Domestic revenue  € 4,356M Close to the 2020 level € 2,160M
Underlying Group EBITDA  € 1,836M € 1,750-1,775M € 904M
Capex (excluding Spectrum & football rights)  € 1Bn Close to € 1.2Bn € 497M
Net debt / EBITDA 1.28X < 1.6X nr

Notes

  • Following the reporting changes (see full report, section 9.1), the full-year 2020 underlying Domestic revenue was adjusted accordingly. The full-year 2021 guidance remains unchanged.

Proximus reiterates its intention to return over the result of 2021 and 2022 an annual gross dividend of EUR 1.2 per share, to be considered as a floor.

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