Orange Belgium continues on its growth trajectory

Press release
Embargo until October 23, 2019 at 7:00 am
Regulated information

Financial information for the third quarter of 2019 and first nine months of 2019

Orange Belgium continues on its growth trajectory

• Mobile postpaid customer base grew 5.8% yoy on quarterly net-adds of 32k
• Convergence customer base increased 50.3% yoy on quarterly net-adds of 17k
• Revenues¹: +2.5% yoy for the quarter / Retail service revenues¹: +7.1% yoy for the quarter
• EBITDAaL¹ +1.1% yoy for the quarter

Belgium Q3'19 operating highlights

• Orange Belgium anchors its Bold challenger positioning with the successful launch of Love Duo in July. While Love Duo had a marginal impact on the quarter's convergent net-adds due to time-to-installation, the order book demonstrates strong consumer appetite for cord-cutting offers. Concurrently, the single-installer process was progressively implemented. Most cable installations are now completed in a single intervention, thus improving customer experience and reducing installation costs.
• Orange Belgium continues to attract mobile postpaid customers in spite of competition's increased promotional activity. During the quarter, Orange Belgium added 32k mobile postpaid subscribers and ended with a customer base of 2.5m (+5.8% yoy).
• Convergent net-adds (+17k) remained solid. This is a strong performance in the context of the transition to single-installer which had a temporary impact on customer connections. At the end of the quarter, convergent mobile subscribers represent 14.6% of mobile postpaid customers (Q3'18: 10.1%).
• Mobile-only postpaid ARPO decreased 2.6% yoy mainly due to the regulation on intra-EU calls. The company continued to benefit from the migration towards simple abundant tariff plans which reduces out-of-bundle revenues while increasing access revenues. B2C convergentARPO increased 1.3% yoy as all new customers are now billed set-up fees.

Orange Belgium: key operating figures

	Q3 2018	Q3 2019	change
Mobile postpaid customer base (in '000)	2,408	2,548	5.8%
Net adds (in '000)	53	32	-39.6%
Mobile only postpaid ARPO (€ per month)	21.8	21.2	-2.6%
Convergent customer base (in '000)	155	233	50.3%
Net adds (in '000)	19	17	-9.7%
B2C convergent ARPO (€ per month)	76.7	77.7	1.3%
Convergent mobile customer as % mobile contract customer base	10.1%	14.6%	451 bp

Q3'19 consolidated financial highlights

• Revenues reached €334.3m, grew 2.5% yoy¹despite lower MVNO revenues. Retail service revenues increased 7.1%¹, representing another quarter of solid growth.
• EBITDAaL increasedby1.1% yoy¹ to €83.6m despite headwinds of €12.9m (MVNO revenues, brand fees and EU regulation effect). This performance was driven by higher retail service revenues, sustained efficiencies as well as continuous improvements in the cable operations.
• Orange Belgium continues to drive efficiencies in its cable operations. The business generated a positive EBITDAaL of €2.2m in Q3'19. The 9M19 cable operating cash flow improved by €19.6m yoy but remains negative at -€26.7m.
• BKM's acquisition was finalized on 31 July. The ICT player contributed an EBITDAaL of €0.8m on revenues of €7.9m.
• eCapex amounted to €39.3m. Some Network and IT spend was brought forward to Q3'19 but will have no impact on full-year eCapex.
• Operating cash flow amounted to €44.3m. Net financial debt amounted to €248.4m due to the acquisition of BKM.
• 2019 guidance confirmed. Orange Belgium Group expects slight revenue growth, EBITDAaL of €285m-€305m and stable eCapex.

Orange Belgium Group: key financial figures

	reported	comparable1		comparable	reported	reported	comparable1		comparable	reported
in €m	Q3 2018	Q3 2018	Q3 2019	change	change	9M 2018	9M 2018	9M 2019	change	change
Revenues	318.0	326.0	334.3	2.5%	5.1%	937.6	945.6	971.4	2.7%	3.6%
Retail service revenues	199.1	207.0	221.8	7.1%	11.4%	569.1	577.1	634.5	9.9%	11.5%
EBITDAaL		82.7	83.6	1.1%			210.2	220.5	4.9%
margin		25.4%	25.0%	-35 bp			22.2%	22.7%	47 bp
eCapex		-33.2	-39.3	18.2%			-110.5	-119.1	7.8%
Operating cash flow2		49.5	44.3	-10.3%			99.7	101.4	1.7%
Adjusted EBITDA	81.4					208.7
margin	25.6%					22.3%
Capex	-33.1					-110.4
Operating cash flow3	48.3					98.3
Net financial debt	254.0	265.5	248.4			254.0	265.5	248.4

1. Comparable base includes the impact from IFRS 16 implementation and BKM consolidation
2. Operating cash flow defined as EBITDAaL - eCapex
3. Operating cash flow defined as Adjusted EBITDA -Capex
   

Michaël Trabbia, Chief Executive Officer, commented:

I am pleased to report another quarter of sustained commercial and financial performance. In spite of increased promotional activities from competitors, our mobile and convergence operations continue to grow thanks to our Bold challenger positioning.

In July, we further delivered on our ambition to break telco conventions. We launched Love Duo because we believe customers shouldn't pay for services they don't need. Belgian consumers have embraced this broadband + mobile offer designed for cord-cutters: we are seeing a significant increase in our order book, which looks quite promising for the future.

At the same time, following the new regulation, we successfully implemented the single-installer process for our cable customers. The Orange technician can now deal with most installations by himself in a single intervention, improving both customer experience and costs.

Arnaud Castille, Chief Financial Officer, stated:

This quarter proves yet again our commercial focus is on the right track. Retail service revenues as well as the mobile and convergent customer base continue to grow.

From a financial perspective, the strength of our core business growth, as well as our continued efficiency efforts, allowed us to maintain a growing EBITDAaL despite the significant headwinds that impact us in 2019. For the 9 months ended September, we improved the cable operations' operating cash flow by €19.6m. We remain focused on driving efficiencies in all aspects of our internal processes which will further expand Orange Belgium's EBITDAaL margin.

During the quarter, we welcomed BKM into the fold. We expect this acquisition to enhance our B2B offering and expand our presence in the ICT and connectivity markets. Work on the mobile access network sharing agreement with Proximus is progressing according to plan. We expect to finalize the agreement by year-end.

We confirm our 2019 guidance. We expect slight revenue growth, EBITDAaL of €285m-€305m and a stable eCapex.

Attachment

• OBEL_ER_2019 Q3 VF_ ENG (https://ml-eu.globenewswire.com/Resource/Download/e350da21-01ad-4ee1-8e4d-61ea8358acb6)