Regained commercial momentum and efficient cost reduction boosting EBITDAaL

October 23, 2020

Press release
Embargo until 23 October 2020 at 7:00 am
Regulated information – Inside information

Financial information for the third quarter of 2020 and first nine months of 2020

Regained commercial momentum and efficient cost reduction boosting EBITDAaL

Mobile postpaid customer base +2.6% yoy / Convergence customer base +30.8% yoy
Q3 Revenues¹ -0.6% yoy / Q3 Retail service revenues¹ +2.6% yoy
Q3 EBITDAaL¹+7.2% yoy
Guidance 2020 confirmed

Operational Highlights

As from the second half of the quarter, Orange Belgium delivered upbeat commercial performance leading to outstanding financial results in spite of continuing COVID-19 measures, e.g. shops were allowed to re-open but with limited capacity. As seen in Q2’20, COVID-19 measures continued to directly impact the wholesale revenues as SMS traffic and roaming decreased.
Orange Belgium continued to increase its mobile customer base supported by the success of the multicard Go portfolio, despite a highly competitive environment. Mid-quarter, data increased on the Go Plus offer, creating new commercial momentum. During the quarter, 21k new mobile postpaid customers were added, reaching 2.6m subscribers (+2.6% yoy).
Convergence net adds returned to strong levels with +17k new Love subscribers. The introduction of the Go Plus discount in combination with the Love option, together with the successful new Belgian football option created positive momentum for convergent offers. Once again Love Duo proves its worth attracting one third of the gross adds. Convergent mobile subscribers now represent 19.1% of mobile postpaid customers, up 454 bp vs Q3’19.
B2C convergent ARPO decreased by 3.0% yoy to €75.4, explained by the growing Love Duo customer base with a lower price point (18% of the total convergent customer base) and the decrease in out-of-bundle revenues from roaming. This is partly compensated by the increasing number of options (e.g. Football option).
Mobile only postpaid ARPO declined by 3.0% yoy to €20.5, due to the decrease in out-of-bundle revenues from roaming, partly offset by migrating customers to higher tariff plans in the new Go portfolio.

Orange Belgium: key operating figures
	Q3 2019	Q3 2020	change
Mobile postpaid customer base (in ‘000)	2 548	2 615	2.6%
Net adds (in ‘000)	32	21	-34.3%
Mobile only postpaid ARPO (€ per month)	21.2	20.5	-3.0%
Convergent customer base (in ‘000)	233	305	30.8%
Net adds (in ‘000)	17	17	-3.7%
B2C convergent ARPO (€ per month)	77.7	75.4	-3.0%
Convergent mobile customer as % mobile contract customer base	14.6%	19.1%	454 bp

Financial Highlights

Revenues reached €335.3m, a slight decrease of 0.6% yoy¹. Retail service revenues continued their growth trajectory (+2.6% yoy¹) mainly supported by higher convergence services (+27.6% yoy). COVID-19 impacted the wholesale revenues (-12.7% yoy) due to lower incoming SMS revenues (-€9.1m) and declining roaming (compensated by lower roaming costs). The decrease of SMS revenues has no impact on EBITDAaL.
EBITDAaL grew by 7.2% yoy¹ to €89.4m, driven by higher retail service revenues, as well as lower costs (-3.1% yoy¹ - mainly SMS, roaming cost and labour). Orange Belgium continues with the Bold Inside transformation plan resulting in structural cost efficiencies. The cable EBITDAaL had a positive result of €5.3m (+€3.1m yoy).
eCapex increased by 6.8% yoy to €47.5m, partly explained by the increased installation of cable customers in comparison to last year.

Orange Belgium Group: key financial figures

	reported	comparable¹		comparable	reported	reported	comparable		comparable	reported
in €m	Q3 2019	Q3 2019	Q3 2020	change	change	9M 2019	9M 2019	9M 2020	change	change
Revenues	334.3	337.2	335.3	-0.6%	0.3%	971.4	993.6	971.9	-2.2%	0.1%
Retail service revenues	221.8	224.7	230.6	2.6%	4.0%	634.5	656.0	676.4	3.1%	6.6%

EBITDAaL	83.6	83.4	89.4	7.2%	6.9%	220.5	219.6	237.6	8.2%	7.7%
margin as % of revenues	25.0%	24.7%	26.7%	193 bp	165 bp	22.7%	22.1%	24.4%	235 bp	174 bp
eCapex	-39.3	-39.3	-41.9	6.8%	6.8%	-119.1	-119.1	-106.8	-10.3%	-10.3%
Operating cash flow²	44.3	44.1	47.5	7.5%	7.0%	101.4	100.4	130.7	30.1%	28.9%

Net financial debt	248.4		135.3			248.4		135.3

Comparable base includes Upsize N.V. 2019 before acquisition
Operating cash flow defined as EBITDAaL – eCapex

Xavier Pichon, Chief Executive Officer, commented:
I am pleased to report a quarter of excellent commercial and financial performance. Despite increased competition, we regained commercial momentum and we were able to continue our growth in mobile and convergence. Our bold positioning has enabled us to reach the milestone of 300k customers only 4 years after the introduction of the first cable customer.

The COVID-19 measures still partially impacted our operations, limiting the full capacity of our shops and salespeople. We continue to do our utmost to ensure the safety and health of our customers, our team members and all our stakeholders.

We also confirm our 2020 guidance for this year, with slight decrease in revenues, EBITDAaL of €310m-€330m, and slight decrease in eCapex.

Arnaud Castille, Chief Financial Officer, stated:
Once again, we have been able to provide strong financial results over the last quarter. Our retail service revenues increased despite the impact of the health crisis. As a result of this growth in retail service revenues along with our Bold Inside transformation program, we were able to achieve strong EBITDAaL in the third quarter. This transformation program continues to deliver a structural decrease in our costs.

We have recently announced our choice of a new supplier of our mobile infrastructure. Not only will we be able to build a top-quality network, but we will also achieve important cost savings for building and maintaining this network in the future. The estimated financials of the network sharing agreement disclosed at the announcement remain valid: cash savings of €300m over 10 years and initial set-up costs of €130m over the next 3 years.

Attachment

ENG OBEL_ER_2020 Q3 FV

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