Proximus Group financial results – Fourth quarter and full-year 2021

Following a strong commercial fourth quarter, Proximus posts full-year results in line with guidance and reconfirms growth ambitions for 2022

  • Strong commercial quarter: +53,000 Mobile Postpaid, +15,000 Internet, and +14,000 TV subscriptions.
  • Closing 2021 with nearly 14% Fiber footprint, i.e. a total of 813,000 homes and businesses passed.
  • Underlying Domestic revenue of EUR 1,132 million, +2.4% year-on-year.
  • Internationally, TeleSign and BICS posted revenue growth of +15.1% and 9.0% respectively.
  • Underlying Group EBITDA totaled EUR 409 million, -3.8% compared to the year before.
  • Solid full-year 2021 normalized FCF of EUR 376 million, including significant Fiber investments.
  • 2021 guidance achieved on all metrics.
  • For 2022, underlying Domestic revenue excl. Terminals and EBITDA to grow up to 1%, Group EBITDA around -1%.
  • Board proposes gross dividend of EUR 1.20 per share, of which EUR 0.70 to be paid in April 2022.

Highlights Q4 2021

  • Proximus Group closed the year 2021 with a strong commercial quarter, adding a total of +53,000 Mobile postpaid cards, +15,000 Internet subscriptions and +14,000 TV subscriptions. Within the Consumer segment, the traction for higher-value offers continued, growing the convergent base by +18,000 customers to a total of 1,192,000, +6.1% compared to 12 months ago. On an enlarging footprint, Fiber offers gained further traction, adding +19,000 Consumer customers, bringing the total up to 123,000. Over the fourth quarter, +93,000 customers opted for a Flex offer, bringing the total Flex subscriptions to 832,000. Reflecting changing customer needs, the steady erosion in the Consumer base for Fixed Voice lines continued, with -36,000 over the last three months of 2021.
  • Proximus grew its Domestic underlying revenue by +2.4% to EUR 1,132 million. Excluding the revenue contribution from Mobile Vikings, the organic Domestic revenue was up by 1.0%. The Consumer unit grew its revenue +2.7%, with convergent revenue further growing, while the customer trend to forego Fixed voice line continued. The Enterprise unit grew revenue by +1.9%, mainly as a result of higher Mobile and ICT services revenue.
  • The fourth quarter 2021 Domestic EBITDA totaled EUR 382 million, -3.9% on the previous year. The increase in Direct margin (+0.4%) was more than offset by higher expenses. The Domestic EUR 400 million gross cost program 2019-2025 remains on track, compensating partly for higher costs related to inflation, transformation, rising customer activations, a phasing impact of employee benefits and program setup costs.
  • TeleSign posted EUR 87 million of revenue over the last quarter of 2021, i.e. +15.1% year on year (+10.3% on a constant currency basis), driven by high single-digit growth in Programmable Communications (CPaaS), and a mid-double-digit growth for Digital Identity Services. TeleSign's ongoing investments it its growth strategy were reflected in its EBITDA, which totaled EUR 2 million for the fourth quarter of 2021.
  • For the fourth quarter of 2021, BICS posted revenues of EUR 259 million, an increase of 9.0% from the comparable period in 2020, supported by its three product groups Growth, Legacy and especially Core services. BICS' EBITDA totaled EUR 25 million for the last quarter of 2021, a 6.8% year-on-year increase.
  • In aggregate, the underlying Group Revenue was up by +3.8% to EUR 1,441 million. The Group underlying EBITDA for the fourth quarter of 2021 totaled EUR 409 million, down by -3.8% compared to the year before, or –4.7% on an organic basis.
  • Excluding spectrum and football broadcasting rights, Proximus Group's CapEx over the fourth quarter 2021 totalled EUR 467 million, bringing the total over 2021 to EUR 1,203 million. The year-on-year increase was in large part driven by Proximus' investments in its Gigabit networks. Fiber related investments accounted for 31% of the total CapEx. An additional 126,000 premises were passed with Fiber over the last three months of the year, bringing the Fiber footprint to 813,000 premises. This represents a Fiber coverage of nearly 14%.
  • Proximus' FCF over the year 2021 totaled EUR 237 million, or EUR 376 million on a normalized basis. This is an increase of +6.4% or EUR 23 million compared to the 2020 normalized FCF of EUR 354 million.
  • The 2021 guidance achieved, with an organic Domestic revenue of EUR 4,347 million, or -0.2% year on year. The full-year organic underlying Group EBITDA totaled EUR 1,763 million, i.e. in the mid-guidance range of EUR 1,750 - 1,775 million. Accrued CapEx totaled EUR 1,203 million excl. spectrum and football rights, i.e. close to EUR 1.2 billion. The 2021 net debt-to-EBITDA ratio reached 1.55X on an underlying basis.

We have made great progress with our #Inspire 2022 strategy and reiterate our intention to return to Domestic growth in 2022.

The past year has once more been severely marked by the COVID pandemic, which continued to impact our lives. I am very proud of the work our employees have managed to do in such difficult times. Indeed, even in these tough circumstances, we reached major milestones in our #inspire2022 strategy. First, we were able to engage in completely new areas such as improving access to healthcare through our teleconsultation solution Doktr, better protecting our customers in an ever-digitized world by developing expertise in cybersecurity, and helping consumers and enterprises to achieve carbon reductions through different applications and services we propose.

At the same time, we have also continued to play a societal role during the crises faced by our country the past year: from quickly restoring the mobile network after July's devastating floods in Wallonia, to providing technological support for the setting-up of COVID centers. We also launched several programs to decrease the digital divide, focusing on accessibility and education. Furthermore, climate change has remained a key concern: while we aim to embed green ideas into every decision-making process, we have taken specific actions to reduce our own carbon footprint and are pleased to announce further progress on this front. In 2021, we managed to reduce our carbon emissions by 4.4k tons, avoided a total of 502k tons of carbon at our business customers and recycled 89% of our waste.

As a prosperous digital society is built on future-proof networks, I am particularly proud of how our Gigabit strategy is developing. Over the last three months of 2021 we managed to step up our Fiber roll-out significantly, passing an additional 126,000 homes and businesses. This brought our footprint to 813,000 homes and businesses, or almost 14% of all Belgian premises – by the end of 2021. Looking to the near future, we are ready to further accelerate our build capacity with the aim of increasing our footprint by 10% each year from end 2022 onwards. Our goal is to be the undisputed network leader in Belgium, so we are also investing in the rolling out of 5G networks with the aim of covering 99% of Belgium by 2024.

On the commercial side, I am also happy to announce a strong momentum on all fronts over the fourth quarter, starting with solid traction for Fiber - we attracted 19,000 new customers to one of our Fiber offers. Our convergent customer base grew by 18,000 over the last three months of 2021, boosted by the strong performance of our Flex packs. This also led to a significant uptake of our Internet base by 15,000 and TV by 14,000. Including good momentum in the Enterprise segment, we grew the Group mobile postpaid base by 53,000 cards, which represents the strongest growth in 10 years.

Our Enterprise segment is showing good progress towards its transformation translating into sequential growth in revenue from ICT services, including a strong performance in Advanced Workplace, Security services, Application & Data Integration and Cloud services.

On the international front, I am also delighted with the great progress we made in 2021. TeleSign continues its strong growth and is on its way to becoming the global leader in Digital Identity. In December, we announced our agreement with NAAC, and we are intending to list the company in the second quarter of 2022. Turning to BICS, our second international platform, I am really pleased with the revenue and growth in EBITDA, which resulted from a strong A2P messaging and cloud communication performance.

After having met our guidance in 2021, we are entering the final year of our #inspire2022 strategic cycle on a solid trajectory, even though this year will bring fresh challenges – starting with inflation at rates not seen in decades. Nonetheless, we have stated high ambitions for 2022: We will continue to focus on our domestic growth, for which we expect both revenues, excluding terminals, and underlying EBITDA, to grow by up to 1%, compared with 2021. Including TeleSign and BICS, we anticipate the underlying Group EBITDA to be down by around -1%. In line with the announced Fiber roll-out strategy, our Group CAPEX for 2022 is expected to rise to close to EUR 1.3 billion, and our debt ratio to be around 1.6X EBITDA.

To conclude, our Board of Directors approved to propose to the Annual General Shareholders' Meeting, to return a gross dividend of EUR 1.20 per share over the result of 2021. We remain committed to an attractive shareholder return, with the aim of paying an annual gross dividend of EUR 1.20 per share for the 2022 result as well, which is in line with our announced 3-year dividend policy over the 2020-2022 period.

Key Figures

Operationals, in thousands

    Net adds in the quarter Park at end of quarter
    2020 2021 % 2020 2021 %
Fiber Home Passed   69 126 84.3% 460 813 76.7%
Consumer customers Convergent 17 18   1,124 1,192 6.1%
Fiber (activated) 8 19   65 123 89.6%
Group (subscriptions/SIM cards) Internet 15 15   2,137 2,178 1.9 %
TV 14 14   1,677 1,721 2.6 %
Fixed Voice -60 -45   2,213 2,004 -9.4 %
Mobile Postpaid (excl. M2M) 43 53   4,264 4,651 9.1 %
M2M 162 154   2,367 3,365 42.2 %
Prepaid -22 -20   617 689 11.6 %

Financials (EUR million)

  4nd Quarter Year-to-date
    2020 2021 % Change 2020 2021 % Change
Revenue
(underlying)
Group 1,389 1,441 3.8 % 5,479 5,578 1.8 %
Domestic 1,105 1,132 2.4 % 4,356 4,381 0.6 %
BICS 237 259 9.0 % 964 999 3.6 %
TeleSign 75 87 15.1 % 273 327 19.9 %
Direct Margin
(underlying)
Group 890 900 1.2 % 3,576 3,579 0.1 %
Domestic 820 823 0.4% 3,283 3,286 0.1 %
BICS 54 58 7.6 % 227 227 0.0 %
TeleSign 20 23 15.7 % 78 79 1.6 %
Expenses
(underlying)
Group -464 -491 5.7 % -1,740 -1,807 3.9 %
Domestic -422 -441 4.5 % -1,578 -1,633 3.5 %
BICS -31 -33 8.2 % -126 -126 -0.5 %
TeleSign -15 -20 38.0 % -48 -63 29.6 %
Ebitda
(underlying)
Group 426 409 -3.8 % 1,836 1,772 -3.5 %
as % of revenue 30.7 % 28.4 % -2.3 p.p. 33.5 % 31.8 % -1.7 p.p.
Domestic 397 382 -3.9 % 1,706 1,654 -3.0 %
BICS 24 25 6.8 % 101 102 0.6 %
TeleSign 5 2 -50.5 % 30 17 -44.0 %
Group Ebitda
(reported)
  435 425 -2.3 % 1,922 1,828 -4.9 %
Net income   113 87 -23.3 % 582 445 -23.6 %
Investments
(Capex, excl. spectrum
& football rights)
  372 467 25.6 % 1,000 1,203 20.3 %
Free Cash Flow
(normalized)
  -153 -32 79.1 % 354 376 6.4 %
Adjusted Net Debt
(excl. lease liabilities)
  n.r. n.r.   -2,356 -2,740 -16.3 %

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 achieved

Proximus kept its organic Domestic revenue close to that of 2020, posting for 2021 a revenue of EUR 4,347 million excluding the contribution of mobile Vikings, or -0.2% year-on-year. The full-year organic underlying Group EBITDA totaled EUR 1.763 million, landing in the mid-guidance range of EUR 1,750-1,775 million.

With the Fiber rollout progressing well, Proximus ended 2021 with CapEx of EUR 1.203 million excl. spectrum and football rights, i.e. close to EUR 1.2 billion. The 2021 net debt-to-EBITDA ratio reached 1.55X on an underlying basis.

Guidance metrics
Guidance metric FY20
Actuals
FY21
Guidance
FY21
Actuals
(excl. Mobile Vikings)
Underlying Domestic revenue € 4,356 m Close to the 2020
level
€ 4,347 m
Underlying Group EBITDA  € 1,836 m € 1,750-1,775 m € 1,763 m
Capex (excluding Spectrum & football rights) € 1 bn Close to € 1.2 bn € 1,203 m
Net debt / EBITDA 1.28X <1.6X 1.55X

 

Dividend for 2021

On 17 February 2022, the Board of Directors approved the decision to propose to the Annual General Shareholders' Meeting of 20 April 2022 to return, based on the result of 2021 a gross dividend of EUR 1.20 per share, of which EUR 0.50 interim dividend per share was paid in December 2021.

After approval by the Annual Shareholders' Meeting, the normal dividend of EUR 0.70 per share will be paid on 29 April 2022, with record date on 28 April 2022 and ex-dividend date on 27 April 2022.

 

Coupon 33:
Gross normal dividend: EUR 0.xx/share
Net dividend (xx% withholding tax assumed): EUR 0.xx/share

  • Ex-coupon date: xx April 2022
  • Record date: xx April 2022
  • Payment date: xx April 2022

Outlook 2022

In line with the announced #inspire2022 strategy, Proximus expects its underlying Domestic revenue excluding Terminals to grow up to 1% from the preceding year. The return to revenue growth, supported by the Consumer unit's commercial momentum including the migration of Mobile Viking customers on to the Proximus network, are expected to drive higher Domestic Direct Margin.

Through its ongoing cost efficiency program, Proximus aims to partially offset projected additional customer growth costs, IT transformation expenses and headwinds from inflation driven costs increases. Nonetheless, supported by the anticipated growth of the Direct Margin, Proximus expects to grow its underlying Domestic EBITDA up to 1% in 2022.

For BICS, the 2022 EBITDA will be comparing to a high 2021, which benefitted from a favorable exceptional destination mix. This mix effect aside, BICS expects its Direct Margin to continue to benefit from positive underlying trends whereby its Growth and Core segments are expected to compensate for the erosion in Legacy voice at lower margin. BICS, as well, will face inflationary cost headwinds and will invest in the acceleration of its Growth segment.

As part of TeleSigns' listing process, announced 16 December 2021, the company disclosed a multi-year strategy and financial projection in its investor presentation: www.telesign.com/investors. This includes an estimated EBITDA of USD -23 million for 2022 (USGAAP). Proximus reports TeleSign figures in EUR, under IFRS, and with the underlying EBITDA adjusted for TeleSign's share based remuneration. For 2022 the difference between TeleSign's view and Proximus' underlying EBITDA is estimated to add up to a positive of about USD 7-8 million.

In aggregate, Proximus expects its 2022 Group underlying EBITDA to be down around -1.0% from 2021.

In line with Proximus' announced accelerated Fiber deployment strategy, the Group CapEx for 2022 is expected to go up to close to EUR 1.3 billion. The debt ratio for 2022 is expected to be around 1.6X underlying EBITDA.

Guidance metrics
Guidance metric FY21
Actuals
FY22
Guidance
Underlying Domestic revenue (excluding terminals) € 4,072 m Growing up to 1% YoY
Domestic underlying EBITDA € 1,654 m Growing up to 1% YoY
Underlying Group EBITDA  € 1,772 m Around -1%
Capex (excluding Spectrum & football rights) € 1,203 m Close to € 1.3 bn
Net debt / EBITDA 1.55X Around 1.6X

Dividend for 2022

Proximus remains committed to an attractive remuneration for its shareholders and intends to return, based on the result of 2022 an annual gross dividend of € 1.2 per share, in line with Proximus' announced 3-year dividend policy over the period 2020-2022.

The proposed dividend is reviewed and submitted to the Board of Directors on an annual basis, in order to keep strategic financial flexibility for future growth, organically or via selective M&A, with a clear focus on value creation. This also includes confirming appropriate levels of distributable reserves.

The shareholder remuneration policy is based on a number of assumptions regarding future business and market evolutions and may be subject to change in case of unforeseen risks or events outside the company's control.

Q4 financial results

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