21/04/17

Financial news

Orange Belgium delivers growth in both total service revenues and EBITDA and reaches a key milestone of 50k convergent customers supported by its LOVE offer

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Brussels, 21 April 2017– Today, the Orange Belgium Group (Euronext Brussels: OBEL) published its results for the first quarter of 2017. In the period ended 31 March 2017, Orange Belgium’s customers have continued to convert towards more data rich plans, driving value creation further with a positive effect on the postpaid ARPU. Orange Belgium is transitioning from a mobile-only operator into a high quality convergent operator with associated cross-sell opportunities and a balanced value and acquisition strategy.

  • Solid commercial momentum for Orange Belgium’s convergent LOVE offer with 16 thousand net additions The introduction of Orange Belgium’s convergent “LOVE” offer mid-February is an important booster for the company’s overall brand awareness, and in particular for its convergent offer. At the end of the first quarter of 2017, Orange Belgium registered 50 thousand LOVE customers with 78 thousand attached mobile contracts, an increase of 16 and 21 thousand quarter-on-quarter respectively. In addition to the steady marketing effort of the LOVE offer, the ‘easy switch’-campaign of the government in the second half of 2017 will further contribute to raising the level of awareness among the Belgian population. The success of convergence as an acquisition tool is confirmed in the first quarter of 2017 as the rate of newly acquired customers has increased compared to 2016.
  • Orange Belgium successfully stood by its customers in their increasing mobile data usage The demand fundamentals of the Belgian mobile market remained unchanged, underpinned by the continued increase in 4G smartphone penetration and mobile data usage. On the supply side, the market is very competitive with an increase in promotional activity in the first quarter of 2017. Orange Belgium remained focused on value creation with its strategy to monetise mobile data. The company developed its 4G smartphone penetration rates to above 50 %. The average monthly mobile data consumption of Orange Belgium’s smartphone customer base has further stepped up in March 2017 to 1.5 GB, contributing to a 60 % year-on-year increase in total data traffic of which 4G now represents 83 %. As a result, the postpaid ARPU[1] has increased to 28.9 euros from 28.6 euros a year ago, despite the adverse EU roaming impact.
  • The Orange Belgium Group reached a total turnover of 307.2 million euros in the first quarter of 2017. Total services revenues came out at 274.0 million euros, up +0.6 % year-on-year with mobile service revenues -0.4 % (+1.7 % excl. EU roaming impact) and fixed service revenues progressing well with a performance of +14.3 % year-on-year. The mobile services revenues in the first quarter of 2017 saw an accelerated decline in interconnection SMS revenues compared to the previous quarters.
  • Orange Belgium Group’s adjusted EBITDA was 72.2 million euros in the first quarter of 2017, an increase of 3.6 % year-on-year on a comparable basis, i.e. excluding the 2016 Walloon pylon tax provision of 15.8 million euros booked in the first quarter of 2016. This result was achieved despite the EU roaming impact.
  • The Orange Belgium Group invested 32.2 million euros, including 11.4 million euros dedicated to cable, and generated an operational cash flow of 39.8 million euros in the first quarter of 2017. The net financial debt stood at 323.7 million euros at the end of the first quarter of 2017, resulting in a net financial debt/reported EBITDA ratio of 1.0x.
  • Based on the results of the first quarter of 2017, the Orange Belgium Group reiterates its guidance for the financial year 2017: growth in total service revenues and an adjusted EBITDA between 290 and 310 million euros in 2017. This guidance shows a strong ambition especially taking into account the EU roaming regulation impact of 31.9 million euros in 2017. The Orange Belgium Group expects total capex excl. investments linked to the successful uptake of the Orange Internet + TV offer to remain fairly stable compared to 2016.

Michaël Trabbia, Orange Belgium’s Chief Executive Officer, commented:

“The first quarter of 2017 was a significant milestone in the roll-out of our high-quality convergent services, as we reached 50.000 customers and we launched our LOVE proposition. The growing number of LOVE customers is confirming the quality of our offer and we are eager to expand our LOVE family as we aim to double that number of LOVE customers to 100.000 by the end of the year. In the medium term, we are confident that we can reach our ambition of 10 % broadband market share. Despite a competitive environment, we are pursuing our focus on value and our efforts on mobile data monetization. Customer experience is an additional key priority for our company. That is why we have started a comprehensive digital transformation plan, which will enable us to simplify our processes and improve our interactions with our customers.”

Arnaud Castille, Chief Financial Officer added:

“We are transitioning from a mobile-only operator into a high quality convergent operator. This is why we started in the first quarter of 2017 by reducing the amount we invested in subsidised offers. We believe convergence will allow us to achieve considerable savings in terms of mobile customer acquisition and retention costs going forward by more effectively reaching out to new convergent customers and reducing our mobile churn. Progressively, we see this double upshot impacting our overall mobile business model positively. In addition, our digital transformation will help us drive a sustainable top line growth while further strengthening our cost structure.”

https://corporate.orange.be/sites/default/files/Orange%20Belgium%20Q1%202017%20results%20-%20UK-1170787472.pdf

[1] See page 12 for change in ARPU definition.