Orange Belgium Financial results 9M 2016 21/10/2016
disclaimer This presentation might contain forward-looking statements about Orange Belgium in particular for 2016. Although we believe these statements are based on reasonable assumptions, they are subject to numerous risks and uncertainties, including matters not yet known to us or not currently considered material by us, and there can be no assurance that anticipated events will occur or that the objectives set out will actually be achieved. Important factors that could cause actual results to differ from the results anticipated in the forward- looking statements include, among others: the economic situation in Europe and more specifically in Belgium, the impact of price adjustments on the customer base resulting from competitive pressure, the evolution of the customer base, the effectiveness of Orange Belgium’s convergent strategy including the success and market acceptance of the voice and data abundance plans in the business segment and of the Orange Internet & TV offers, of the Orange Belgium brand and other strategic, operating and financial initiatives, Orange Belgium’s ability to adapt to the on-going transformation of the telecommunications industry, regulatory developments and constraints and the outcome of legal proceedings, risks and uncertainties related to business activity. . 2 2 9M 2016 results, 21 st October 2016
Section one Business review
Snapshot of the 2015 Belgian telecom market Belgian Telecom value by segment in billion € Market 8.3 3.7 3.5 1.1 Mobile Fixed TV 1.0 0.7 1.1 0.0 1.4 0.3 1.1 2.0 1.8 B2B Wholesale B2B Wholesale B2C B2B B2C B2C Of which h Of which h 1.1b 1bn n 0.1b 1bn n 4 Source IBPT 9M 2016 results, 21 st October 2016
The Belgian telecom market grew in 2015 Belgian Telecom after three years of decline Market value by segment in billion € 8.6 8.5 8.3 8.2 8.1 3.1 3.0 3.0 2.9 2.9 3.3 3.2 3.2 3.2 3.2 0.4 0.4 0.3 0.3 0.2 1.0 0.7 0.9 0.7 0.7 1.1 1.1 1.0 1.1 0.9 2011 2012 2013 2014 2015 Mobile retail Fixed wholesale TV Fixed retail Mobile wholesale 5 9M 2016 results, 21 st October 2016 Source IBPT
Hello this is Orange Belgium 1,712 1.2 empl ploy oyees billi lion on turnove over r (2015) B2 B >99% 3.1 Mio 5.9 Mio connected sim cards customers 4G cov 4G overa rage ge (excl. MVNO, M2M) 6 9M 2016 results, 21 st October 2016
At the heart of connectivity Orange Belgium is one of the leading telecom operators 7
Orange Belgium fixed network evolution from mobile player to convergent actor • 4G coverag age (Active in fixed B2B) • 3G coverag rage Ultra-hi high gh speed Technol nolog ogies Copper Copper No Fixed Broad oadband nd (>100 00 Mbit/ t/s s evolvi ving ng to > 1Gbit/ t/s) s) (~30 0 Mbit/ t/s) s) (~60 0 Mbit/ t/s s ) 8
Today Orange Belgium is active on different markets Residen identia ial Busin ines ess Whol olesale ale Orange is a convergent Orange is an integrated Orange is a wholesale operator proposing mobile, communications provider operator and provides its TV and Internet offers as offering a portfolio of partners with access to its well as innovative services mobility and connectivity infrastructure and service to residential customers. services. capabilities. 9 9 9M 2016 results, 21 st October 2016
IBPT has published new Quality indicators Customer quality results are very positive for Orange. indicators disclosed by the Average helpdesk response time Percentage of problems solved at 129 (in sec.) first contact 93 103 Belgium 75 74 69 63 72 regulator 58 51 36 30 Orange Proximus Telenet VOO SFR Scarlet Orange Proximus VOO Telenet Scarlet SFR Belgium Belgium Complaints about invoicing Coverage rate of 4G networks (% of bills) % of the territory 1.3 97.9 96.9 58.2 0.4 0.3 0.1 0.1 Proximus Orange Telenet Orange Telenet VOO Proximus SFR Belgium Belgium 10 Source IBPT – October 13 th , 2016
11 Dynamic first 9M 2016 Sports TV Roaming Orange Internet Orange Internet Orange Internet + TV channels + TV campaign Go Europe + TV controlled launch national launch Big data Summer Official sponsor Hello Orange UEFA EURO monitoring festivals Belgium team 2016 4G+ festivals 11 9M 2016 results, 21 st October 2016
12 Q3 2016 commercial highlights +3.5 thousand +1.5 % y-o-y Postpaid net additions Postpaid ARPU in Q3 (Belgium) EUR 28.8 1.7x 17.8 thousand Orange Internet + TV Mobile data usage customers (y-o-y) 12 9M 2016 results, 21 st October 2016
Key Growth Drivers Mobile bile Data a Conver nvergent ent Oppor portun unit ity Oppor portun unit ity Customer stomer exper perience ience 13
Premium network Attractive tariff plans & Mobile data opportunity Rich device portfolio 360 ° services consistent portfolio 14 9M 2016 results, 21 st October 2016
A proud 4G & 4G+ network leader Always developing new use cases, anytime, everywhere during the customer journey connected 4G Indoor 4G Outdoor 91.1% 99.8% National population coverage National population coverage 15 4G+ 4G+ Brussels 50.0% 98% National population Population coverage coverage 9M 2016 results, 21 st October 2016
Orange Belgium network evolution Internet of Things 2020 foreseeable technology roadmap Data 10 Gbps Crossb sborder er calls ls Data 300 Mbps 5G Full IP 4G+ HD Voice Standard 4G Video Data 42 Mbps 4K Video / Virtual Reality / VoLTE / 3.5G Augmented Reality / Connected Data VoWIFI HD Video cars / Data 1.2 Gbps 3G Data 150 Mbps Data 100 Kbps 2.5G Data 2 Mbps 400 Mbit/s Digital 250 Mbit/s 2G 100 Mbit/s Cable ( docs 3.0 ) Analog Voice SMS 4G+ Vector toring Data 9.6 kbps 1G 1996 2000 2004 2006 2014 2016 2017 2020 16 9M 2016 results, 21 st October 2016
Smartphone penetration is finally catching up with the European average Belgium was lagging due to the prohibition of subsidized offers until 2009 The launch of 4G provided the boost to develop smartphone penetration Data usage penetration is catching up Belgium is in the first release group of within Orange Belgium’s customer iPhone 7 base 4G 4G 85% 70% 65% 61% 55% 44% 32% 16% 2014 2015 9M 2016 EU 2014 2015 9M 2016 EU average average % of data ta users ers / total al base % of 4G data ta users rs / total base 17 9M 2016 results, 21 st October 2016
75 % of total data consumption is 4G traffic More than 4 out of 10 Orange Belgium customers are actively using 4G 4G/4G+ G+ users 1.3 million 44 % 4G & 4G+ Orange Belgium 4G launch Total traffic up 5 times since 4G 3G 3G launch jan- feb- mrt- apr- mei- jun- jul- aug- sep- okt- nov- dec- jan- feb- mrt- apr- mei- jun- jul- aug- sep- okt- nov- dec- jan- feb- mrt- apr- mei- jun- Jul- Aug- Sep- 14 14 14 14 14 14 14 14 14 14 14 14 15 15 15 15 15 15 15 15 15 15 15 15 16 16 16 16 16 16 16 16 16 18 9M 2016 results, 21 st October 2016
Streaming Browsing gaming Down-/upload Messaging Mobile data usage is growing exponentially Mobile Data as customers fully embrace the benefits in their daily lives and work Usage 1 GB 290 110 Indicative EoP 2013 EoP 2014 EoP 2015 EoP Q2 EoP Q3 usage 2016 2016 Total users base Mobile data users base • • Average data consumption per month in MB - Orange Belgium prepaid & postpaid data users base excl. M2M & MVNO / End of period 19 9M 2016 results, 21 st October 2016
New simplified Animal portfolio Orange Belgium clear focus on customer experience, convergence and mobile data monetization postpaid portfolio evolution The following roaming-options can be added to the tariff plans: - Transborder (12.1 € for 250 min. roaming, 250 min. international, 250 SMS, 250 MB) - EU Traveler (24.2 € for 500 min. roaming, 500 min. international, 500 SMS, 500 MB) 20 9M 2016 results, 21 st October 2016
Qualitative ARPU growth will lead to sustainable revenue growth illustrative graph Postpaid ARPU Billed ARPU should increase as 4G mobile data monetization and upgraded portfolio stimulate upsell towards mid- and high end tariff plans, effectively redistributing the customer mix 2016 2018 Incoming SMS MTR’s still high in Belgium relative to EU, though given high reciprocity EBITDA-margin close to 0% Voice MTR’s will further decline Roaming will further decline. Billed ARPU Incoming voice Visitor roaming Incoming SMS Customer roaming ARPU Bar chart is not an actual representation of the postpaid ARPU, and only serves for illustration purposes 21 9M 2016 results, 21 st October 2016
3 simple prepaid offers “Tempo” New prepaid responding to the connectivity needs of each type of prepaid consumer portfolio Tempo Easy Tempo Giga Tempo Touch evolution Pay only Share everything More data what you use All the time More fun For the voice For the uber- For the discovering users digitals data users 15 € = 60 minutes 15 € = 50 minutes 10 ct /min Bonus Bonus + 1 GB /sms + 4 GB + 500 MB /MB + 4000 SMS + Unl. SMS 22 9M 2016 results, 21 st October 2016
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