Proximus Group financial results – First quarter 2024
Proximus maintained a strong commercial momentum in the first quarter 2024 and achieved an excellent 5% Group EBITDA increase.
- Strong Domestic commercial performance sustained in Q1: Mobile postpaid +21,000, Internet +12,000 and convergent customers +17,000.
- Fiber further scaling: 36% coverage in the street, +44,000 activated Fiber lines in Q1, total of 441,000 end-March 2024.
- Q1’24 Domestic revenue +4.5% to EUR 1,201 million, Services revenue of Residential up +6.5% and Business +2.7%.
- Domestic EBITDA of EUR 424 million in Q1’24, +4.7% YoY driven by strong +5.4% growth in Direct margin.
- International EBITDA +8.6% to EUR 30 million, driven by Communications & Data Direct margin growth of +0.9% and lower costs.
- Proximus Group Q1’24 underlying revenue of EUR 1,504 million, +1.2% YoY, underlying EBITDA of EUR 454 million, +5.0%.
- Q1’24 Capex at EUR 294 million and adjusted FCF at EUR -112 million, impacted by timing of working capital.
- Full confidence in reiterating guidance for full-year 2024.
Highlights Q1 2024
- Proximus’ Domestic segment closed the first quarter of 2024 with continued strong growth in Mobile Postpaid, +21,000 net adds, supported by Proximus’ attractive brands portfolio and a superior mobile network. Proximus’ Fiber footprint reaches meaningful coverage levels of 1,841,000 homes and businesses passed by end-March 2024, supporting a strong growth for its Internet base (+12,000). Residential convergent offers grew by +17,000 customers to a total of 1,130,000, a +6.5% year-on-year increase. End-March 2024, the number of active Residential and Business Fiber lines totalled 441,000, of which +44,000 were added in the first quarter. The decrease of the TV customer base was contained to -15,000, Fixed Voice was down by -43,000 subscriptions.
- Proximus’ first quarter 2024 Domestic underlying revenue was up by +4.5% to EUR 1,201 million. The Residential unit posted a +5.9% revenue increase, including a strong +6.5% growth in Customer Services revenue, and revenue from Terminals year-on-year higher by EUR 9 million. Convergent revenue was up +10.9%, driven by further customer growth and the inflation-based price increases. The Business unit revenue was up by+3.1% year-on-year, supported by a continued growth trend from Business Services up +2.7% year-on-year. This was driven by IT Services (+7.8%), Fixed Data (+5.5%) and Mobile Services (+0.3%), outpacing the ongoing Fixed Voice erosion (-5.6%). Revenue from Products was up by + EUR 4 million compared to the same period last year. For Wholesale Proximus posted an overall -4.9% revenue decrease resulting from the loss of low margin interconnect revenue (EUR -6 million), while Wholesale Services revenue grew +10.2% benefiting from Services to its Joint-Ventures.
- The first-quarter 2024 Domestic EBITDA totaled EUR 424 million, a +4.7% increase from the same period in 2023. The sequential improvement from the previous quarter (+0.9%) reflects the higher direct margin, up by +5.4%, ongoing company-wide cost efficiencies and as year-on-year OpEx starts to moderate having passed the inflationary peak.
- The Proximus International segment, through its two brands BICS and Telesign, posted EUR 94 million Direct Margin, up +0.6% year-on-year (+0.7% at constant currency), in spite of a -10.3% revenue decrease (-10.2% at constant currency) to EUR 316 million. For the product group Communications & Data services revenue of EUR 197 million was posted over the first quarter 2024 (-9.9%), while its direct margin increased year-on-year by +0.9%. This resulted from growth in Digital Identity, Mobility and Omnichannel CPaaS services, in part offset by the impact of lower SMS volumes. The product group P2P Voice & Messaging services posted EUR 138 million revenue (-15.5%), with stable Direct Margin. With a sound costs management and a growing Direct Margin, the International segment posted an EBITDA of EUR 30 million, up by +8.6% from the prior year.
- In aggregate, the Proximus Group underlying revenue totaled EUR 1,504 million for the first quarter of 2024, up +1.2% driven by a strong increase in Domestic revenue. The underlying Group EBITDA totaled EUR 454 million, a year-on-year increase by +5.0%.
- The Proximus Group CapEx for the first quarter of 2024 totaled EUR 294 million, EUR 17 million below the comparable period in 2023. This mainly reflects the lower CapEx needs for Proximus’ own fiber build, while the CapEx to connect and activate customers increases. Furthermore, Proximus continued to invest in the ongoing Mobile network (RAN) consolidation and in IT& Digital customer experience.
- At end-March 2024, the FCF adjusted for M&A related cash-out stood at EUR -112 million (EUR -128 million, on reported basis). This mainly reflects quarterly timing effects on business working capital (Account Receivables, Payables, and Inventory) and the cash-out to support the Capex investment program.
Guillaume BoutinCEO of the Proximus GroupThe first quarter marks an excellent start to the year for our Domestic operations, while we are preparing to welcome Route Mobile as the next step in the development of our international growth plans.
We proudly present the results of the first 3 months of the year. In an evolving competitive environment, our Domestic operations continued to deliver strong commercial traction supported by our product superiority and multi-brand strategy. The combination with sound value management has led to an excellent year-on-year Domestic revenue growth of +4.5%. We are particularly pleased with our core Domestic Services, up by +4.9%. This combined with our continued cost efficiencies efforts resulted in a +4.7% Domestic EBITDA growth, confirming the return to EBITDA growth since Q4 2023. Our excellent start into the year is ahead of our initial expectations. While we remain cautious at this point of the year, this set of results gives me great confidence in achieving our objectives set for 2024.
Our network superiority in both Fixed and Mobile remains a key support of our commercial achievements. For Fixed, the further deployment of our Fiber network remains therefore a high priority. We closed the first quarter of 2024 with over 1.8 million homes and businesses across 159 cities passed with Fiber. This continuously swift deployment is also supported by our fiber joint ventures, Fiberklaar and Unifiber, supporting us in consolidating our first mover position. By end-March 2024 we brought “Fiber in the street” to 36% of Belgian Homes and Businesses. While our fiber deployment journey continues, we are also progressing in our discussions to achieve fiber cooperation, in line with previous communications of BIPT and the Belgian Competition Authority.
For Mobile, I am very pleased to see our Mobile Network has been continuously recognized for its premium quality. After Ookla and Test Achats, the BIPT published the results of its annual testing campaign. Proximus’ network, once again, clearly comes on top with unparalleled download speed for both 4G and 5G.
The first months of the year have also been productive in terms of innovative product launches. First, we launched our brand-new compact TV Box made of recycled plastic. The new box is significantly smaller than its predecessors, guarantees an even better user experience, includes new features such as Wi-Fi 6 technology and consumes up to 40% less energy. We also released our new Proximus+ app, providing to users a wide range of high-end innovative services to easily organize their daily digital life.
Regarding our International activities, we are paving the way to build a global digital communications champion. With all clearances obtained, we are nearing the final stages in the Route Mobile acquisition, with the transaction expected to close in May 2024. The financing of the transaction is secured with the successful issuance of a EUR 700 million bond, carrying a coupon of 3.75% for a 10-year maturity.
In view of our integrated International ambitions, we aligned our International segment reporting with focus on the nature of delivered services. This sets the path to integrate Route Mobile within our International segment and being in the best possible position to realize the expected EBITDA synergies of at least EUR 90 million at run rate. Over the first quarter of 2024, the International segment posted a +0.6% increase in direct margin, or + 0.7% in constant currency. Direct margin of “Communications & Data” grew by +0.9%, including a mid-single digit direct margin growth for the CPaaS and DI platform. “P2P Voice & Messaging” direct margin remained stable year-on-year.
In response to the escalating threat of cyber fraud and rising SMS costs, Telesign launched Verify API, a new omnichannel API which integrates the leading user verification channels (SMS, Silent Verification, Email, OTT ...) into a unified API. This future-proofed technology marks a significant milestone in the fight against fraudulent activities, while providing businesses with a predictive and cost-effective solution.
To conclude, we started the second year of bold2025 strongly, continuing the positive EBITDA trend we initiated in the previous quarter, and step up to a strong 5% Group EBITDA growth for the first quarter. We delivered a strong Domestic commercial momentum, while we are on a clear path for our International ambition and the value creation that comes with that. As mentioned at the start, it’s with great confidence we can reiterate the guidance we set for 2024, in spite of the anticipated changes in market structure.
Key Figures
Operationals, in thousands
| Net adds in the quarter | Park at end of quarter | |||||
|---|---|---|---|---|---|---|
| 2023 | 2024 | 2023 | 2024 | % | ||
| Fiber | Homes Passed | 91 | 92 | 1,373 | 1,841 | 34.1% |
| Activated retail lines | 36 | 44 | 288 | 441 | 53.1% | |
| Residential customers | Convergent | 14 | 17 | 1,061 | 1,130 | 6.5% |
| Group (subscriptions/SIM cards) | Internet | 11 | 12 | 2,227 | 2,279 | 2.3% |
| TV | -12 | -15 | 1,697 | 1,659 | -2.3% | |
| Fixed Voice | -51 | -43 | 1,759 | 1,608 | -8.6% | |
| Mobile Postpaid (excl. M2M) |
10 | 21 | 4,827 | 4,994 | 3.4% | |
| M2M | 92 | 26 | 4,069 | 4,273 | 5.0% | |
| Prepaid | -16 | -28 | 606 | 520 | -14.1% | |
Financials (EUR million)
| 1st Quarter | ||||
|---|---|---|---|---|
| 2023 | 2024 | % Change | ||
| Revenue (underlying) |
Group | 1,486 | 1,504 | 1.2% |
| Domestic | 1,149 | 1,201 | 4.5% | |
| International | 353 | 316 | -10.3% | |
| Direct margin (underlying) |
Group | 947 | 994 | 5.0% |
| Domestic | 857 | 903 | 5.4% | |
| International | 94 | 94 | 0.6% | |
| Group Expenses (underlying) |
Group | -515 | -541 | 5.1% |
| Domestic | -452 | -479 | 6.0% | |
| International | -66 | -64 | -2.8% | |
| Group EBITDA (underlying) |
Group | 432 | 454 | 5.0% |
| as % of revenue | 29.1% | 30.2% | 1.1 p.p. | |
| Domestic | 405 | 424 | 4.7% | |
| International | 28 | 30 | 8.6% | |
| Group EBITDA (reported) |
445 | 465 | 4.4% | |
| Net income | 94 | 101 | 6.5% | |
| Accrued CapEx (excl. spectrum and football rights) |
311 | 294 | -5.5% | |
| FCF (adjusted) |
-79 | -112 | -41.3% | |
| Adjusted net fin position (excl. lease liabilities) |
-2,870 | -3,263 | -13.7% | |
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Notes
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Reiterating 2024 full-year guidance
Closing a strong first quarter 2024, Proximus Group reiterates with full confidence its full-year guidance 2024, keeping some caution ahead of the anticipated changes in the Belgian competitive landscape.
- Proximus is deploying its multi-brand strategy, continued convergent leadership and value management to capture revenue growth, with 2024 Domestic revenue to grow up to 1%.
- With unwinding inflation effects on energy and workforce, and Proximus revenue growth ambition, Domestic EBITDA is expected to grow up to 1%.
- At Proximus Group level, the EBITDA is also expected to grow up to 1%. This guidance will be updated post-closing of the Route Mobile acquisition.
- The CapEx (accrued, excluding Spectrum and football rights) is expected to be around EUR 1.2 billion.
- Upon closing of the Route Mobile acquisition, the Net Debt / EBITDA guidance (as per S&P definition) will be updated as well.
| Guidance metric | FY23 Actuals |
YTD24 Actuals |
FY24 Outlook |
|---|---|---|---|
| Underlying Domestic revenue | € 4,665M | +4.5% YoY | Growing up to 1% |
| Domestic underlying EBITDA | € 1,636M | +4.7% YoY | Growing up to 1% |
| Underlying Group EBITDA | € 1,757M | +5.0% YoY | Growing up to 1%* |
| CapEx (excluding Spectrum & football rights) |
€ 1,325M | € 294M | Around € 1.2Bn |
| Net debt / EBITDA (As per S&P definition) |
2.6x | NR | Around 2.7X* |
| *After closure of Route Mobile acquisition, these metrics will be updated to reflect the full parameters of that acquisition | |||
Shareholder return
The Annual Shareholders’ meeting of 17 April 2024 approved the return to the Proximus shareholders a dividend of EUR 1.20 gross per share. The normal dividend of EUR 0.70 per share is payable on 26 April 2024 and completes the interim dividend of EUR 0.50 gross per share which was paid on 8 December 2023.
This brings the total declared dividend over the 2023 result to EUR 387 million.
In line with the Capital Markets Day announcement in January 2023, Proximus will rebase its dividend level to EUR 0.60 per share for the years 2024 and 2025. The rebased dividend level incorporates all currently known macro and inflationary headwinds, as well as expected changes in market structure. 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 dividend of EUR 0.60 per share over the result of 2024 is expected to be returned in two tranches, with a gross interim dividend of EUR 0.50 per share payable in December 2024 and the remaining normal gross dividend of EUR 0.10 per share in April 2025.
