Continuous dynamic in retail service revenues f...

Press release
Embargo until February 6, 2020 at 7:00 am
Regulated information

Financial information for the fourth quarter and full year 2019

Continuous dynamic in retail service revenues fuelling solid EBITDAaL growth  

• Mobile postpaid customer base +4.5% yoy on quarterly net-adds of 31k
• Convergence customer base +43.5% yoy on quarterly net-adds of 25k
• Q4 Revenues¹: +4.8% yoy / Retail service revenues¹: +6.5% yoy
• Q4 EBITDAaL¹ +5.5% yoy
• Results of 2019 within the upper range of guidance
• Proposed dividend increase by €0.10 to €0.60 per share

Belgium Q4’19 operating highlights

• Bold challenger positioning drives operating and financial performance. Orange Belgium has been delivering consistent messages around improving value proposition, offering simple and generous tariffs, with no bad surprises and no price increase (which will continue in 2020).
• Mobile postpaidcustomer base continues its steady growth up to 2.6m (+4.5% yoy) with net-adds of 31k subscribers during the quarter despite sustained competition.
• Record convergent net-adds since the launch of Love (+25k). Gross adds increased thanks to Love Duo already representing 10% of the customer base. At the end of the quarter, convergent mobile subscribers represented 15.9% of mobile postpaid customers (Q4’18: 11.5%).
• Mobile-only postpaid ARPO decreased slightly by 1.6% yoy as a result of lower out-of-bundle revenues due to regulation on intra-EU calls.  Increase in access revenues continues to mitigate remaining decrease in out-of-bundle revenues as a result of migration towards simple abundant tariff plans.
• B2C convergentARPO increased slightly by 1.6% yoy, despite growing share of Love Duo with a lower retail price.

Orange Belgium: key operating figures

	Q4 2018	Q4 2019	change
Mobile postpaid customer base (in ‘000)	2,469	2,579	4.5%
Net adds (in ‘000)	61	31	-49.8%
Mobile only postpaid ARPO (€ per month)	20.8	20.4	-1.6%
Convergent customer base (in ‘000)	180	258	43.5%
Net adds (in ‘000)	25	25	1.6%
B2C convergent ARPO (€ per month)	75.5	76.7	1.6%
Convergent mobile customer as % mobile contract customer base	11.5%	15.9%	445 bp

Q4’19 consolidated financial highlights

• Revenues reached €369.5m, +4.8% yoy¹ mainly driven by higher retail service revenues (+6.5% yoy¹) and equipment sales (+32.9% yoy), despite lower MVNO revenues (-€6.0m). Retail service revenues increase is supported by growing convergent service revenues (+47.7% yoy) and equipment sales growth as a result of successful end-of-year offers driving customer loyalty.
• EBITDAaL increasedby5.5% yoy¹ to €79.6m despite -€14.0m yoy effects (MVNO revenues, EU regulation, and brand fees). This strong performance was driven by higher retail service revenues, continuous improvements in the cable operations and cost efficiencies. The full-year EBITDAaL reached the upper range of the 2019 guidance at €300.1m with a margin improvement of 38bp. Orange Belgium started to benefit from its transformation plan, initiated in 2019 to improve its operational model.
• Orange Belgium continues to improve its cable financials. The business generated a positive EBITDAaL of €3.3m in Q4’19. The FY 2019 cable operating cash flow improved by €28.4m yoy but remains negative at -€31.7m.
• FY 2019 eCapex remained stable at €180.2m.  
• FY 2019 Operating cash flow increased by 13.2% yoy, reducing net financial debt by €36.4m reaching €234.3m at 0.8x reported EBITDAaL.  

Orange Belgium Group: key financial figures

	reported	comparable1		comparable	reported	reported	comparable		comparable	reported
in €m	Q4 2018	Q4 2018	Q4 2019	change	change	FY 2018	FY 2018	FY 2019	change	change
Revenues	342.2	352.5	369.5	4.8%	8.0%	1,279.8	1,298.1	1,340.8	3.3%	4.8%
Retail service revenues	199.3	209.2	222.8	6.5%	11.8%	768.4	786.3	857.3	9.0%	11.6%
EBITDAaL		75.5	79.6	5.5%			285.6	300.1	5.1%
margin as % of revenues		21.4%	21.5%	14 bp			22.0%	22.4%	38 bp
eCapex		-69.2	-61.1	-11.7%			-179.7	-180.2	0.3%
Operating cash flow2		6.3	18.6	194.2%			106.0	120.0	13.2%
Net financial debt	264.3	270.7	234.3	-13.5%	-11.4%	264.3	270.7	234.3	-13.5%	-11.4%

1. Comparable base includes the impact from IFRS 16 implementation and BKM consolidation
2. Operating cash flow defined as EBITDAaL – eCapex
   

Michaël Trabbia, Chief Executive Officer, commented:

In 2019 we further built upon our Bold challenger positioning initiated in 2018, based on simple, generous and worry-free tariffs. We remained true to our promises towards our customers with no price increases, no bad surprises and no need to pay for unneeded services.

In the second quarter, we extended our unlimited data tariff plans for use throughout the EU and made MMS free of charge. In the third quarter we launched our Love Duo offer. Lastly, in the fourth quarter we boosted the data allowance of our Cheetah offer from 8GB to 15GB for the same price, and we reached an exclusive partnership for the launch of Google Nest in Belgium.

This positioning contributed to solid commercial results in 2019, despite more active competition in the second half of the year. Our convergent customer base increased by 43% yoy and now exceeds 250,000. Love Duo proved to meet a real customer expectation and was a key contributor to this success, as it already accounts for 10% of our convergent customer base, a few months after launch.

2019 saw other major structural achievements. The mobile access network sharing agreement with Proximus will allow us to improve customer experience, to decrease energy consumption and to be ready to accelerate 5G roll out, when the spectrum is allocated. We expect the joint venture to be put in place in the course of 2020, after the decision from the Belgian Competition Authority.

On the B2B market, the acquisition of BKM, a recognized UC&C Belgium player, will be a key asset to enable us to extend our offers and better meet to enterprises demand.

With those achievements and no more major headwinds ahead, we are confident in our ability to further drive substantial EBITDAaL growth in 2020.

Arnaud Castille, Chief Financial Officer, stated:

The realisations of the last quarter of 2019 have enabled us to achieve our ambitions both from a commercial and financial perspective.

From a financial perspective, both revenues and EBITDAaL continued to grow during this quarter. Despite headwinds, we were able to improve our EBITDAaL both in absolute and in relative terms in comparison to 2018 and to deliver an EBITDAaL in the upper range of our guidance for 2019. This is a result of our efforts to continuously improve our internal processes and increase efficiency. In addition to that, we have improved our cost generation in optimizing our working capital with a significant growth of our free cash flow. A year ago, we launched “Bold Inside”, our transformation plan, to simplify our offers and the way we work, to digitalize our customer journey and processes and to empower our people. This plan started to bear its fruits in 2019 and will continue in 2020.

In addition, our convergence activities have been EBITDAaL positive for the third consecutive quarter, with a positive result for the whole year for the first time since the launch of Love. We will keep working internally to drive operating efficiency as we strive to improve our cash flow for this business.

2019 dividend

The Board of Directors will propose an increase of the dividend to €0.60 per share for the 2019 financial year at the Annual General Meeting.

2020 outlook

Orange Belgium expects low-single digit revenue growth in 2020. The Company targets EBITDAaL of between €310m and €330m. Total eCapex is expected to remain stable excluding the RAN sharing agreement which will have a limited impact in 2020.

Attachment

• ENG Financial results Q4 2019 FV