Brussels, 26 July 2017 – Today, the Orange Belgium Group (Euronext Brussels: OBEL) publishes its results for the second quarter and first half of 2017. In the second quarter of 2017, the Orange Belgium Group demonstrated sound operational execution, driving positive momentum in postpaid subscriber additions and ARPU growth further, while establishing itself as a convergent operator. At the same time, costs were kept well under control.
Orange Belgium’s mobile postpaid net additions reaccelerated in the second quarter of 2017
Orange Belgium succeeded to reaccelerate its postpaid net additions growth in the second quarter of 2017 (+21 thousand) after a softer first quarter (+3 thousand). This performance was realized thanks to 1/ a solid acquisition of new customers, enticed by the convincing postpaid offers, the recently launched Smartphone Instalment offer, intensified pre-to-postpaid migration and the support of the convergent customer base uptake; and 2/ improved churn management. Moreover, this growth was realized despite a significant reduction in subsidised offers and was as a result mainly driven by SIM-only offers.
Orange Belgium added close to 15 thousand convergent net additions in the second quarter of 2017
For the third quarter in a row, Orange Belgium increased its convergent customer base by 15 thousand in the second quarter of 2017 compared to the previous quarter to reach a total of 64 thousand Internet and TV convergent customers at the end of June, well on track to reach the target of 100 thousand Love customers by the end of the year. This result was achieved despite substantial promotional activity from the key players in the fixed residential market and before the implementation of Easy Switch, underlining the firmness of Orange Belgium as a convergent operator. Orange Belgium’s convergent mobile customer base exceeded 100 thousand at the end of June 2017.
Orange Belgium’s postpaid ARPU increased by 1.0 % year-on-year thanks to mobile data growth
Total data traffic progressed by 61 % year-on-year, driven by an increase in both smartphone penetration and average data usage. The postpaid ARPU increased to 29.3 euros from 29.0 euros a year ago, despite the impact of lower EU roaming tariffs and the accelerating decline in EBITDA-neutral SMS traffic.
Orange Belgium Group realized a total turnover of 617.2 million euros in the first half of 2017, an increase of 1.4 % year-on-year (+3.7 % underlying growth, once adjusted for the 13.2 million euros related to EU roaming). The solid performance over the period was driven by the rapid development of Orange Belgium’s convergence offer and the sound mobile service revenues growth supported by the advanced seasonality in MVNO revenues in the second quarter of 2017 compared to the same period in 2016.
Orange Belgium Group’s adjusted EBITDA increased 8.4 % in the first half of 2017 to 157.2 million euros, compared to 144.9 million euros a year ago. This result was realized thanks to the increase in total turnover, a sound cost management and despite increased expenses related to the cable activities and the impact of EU roaming regulation. This result was achieved in parallel with a solid commercial performance.
Orange Belgium Group invested 77.2 million euros in the first half of 2017, of which 26.0 million euros was related to the cable activities. Despite these growth related investments, an operational cash flow of 80.5 million euros was generated in the first half of 2017. At the end of June 2017, the net financial debt stood at 329.7 million euros, as a result the net financial debt/reported EBITDA ratio amounted to 1.0x.
Based on the results of the first half of 2017, the Orange Belgium Group reiterates its guidance for the financial year 2017: growth in total service revenues, an adjusted EBITDA between 290 and 310 million euros and total capex excl. investments linked to the uptake of the Orange Internet + TV offer to remain stable compared to 2016.
Orange Belgium invites the regulators to pursue their work to stimulate the competition on the fixed internet and TV market. The telecom and media regulators published their draft analysis on the updated TV and broadband market for consultation by the market. The consultation will run until September 2017, after which the Belgian Competition Authorities and the European Commission will be notified. A final decision is expected in the beginning of 2018. Orange Belgium welcomes the intention of the regulators to strengthen the competition on the fixed market, but also calls upon the regulators to further develop and improve the draft decision as soon as possible in the utmost interest of the consumers.
Michaël Trabbia, Orange Belgium’s Chief Executive Officer, commented:
“The second quarter of 2017 proved to be a dynamic quarter. First, we delivered a sound performance across all postpaid and convergent customer segments. Notwithstanding the very high level of promotional activities in the fixed market in the second quarter of 2017, we managed to keep a solid level of Internet and TV net additions for the third quarter in a row. Moreover in mobile, we succeeded in better addressing our customer’s needs resulting in a reacceleration of the postpaid net additions. Second, our recognized 4G network leadership allowed us to better serve the rapidly growing customer demand for mobile data. Supported by our proactive commercial approach, the average mobile data consumption of our 4G smartphone customers increased by 51 % year-on-year, which translated in a monthly mobile data usage of 1.7 GB per customer in June 2017.
As for the launch of the public consultation on the updated TV and broadband market analysis, we welcome the regulator’s intentions to stimulate competition in the Belgian fixed market and move to a cost-plus approach. It is now in the utmost interest of the Belgian consumers to significantly lower the level of the wholesale access fee and implement it as soon as possible. Orange Belgium also welcomes the BIPT consultation on the regulatory framework for the fiber network (FttH) roll-out in Belgium. We consider that fair co-investment models will actually lead to a wider and quicker fiber network deployment to the benefit of the Belgian economy in the long term, as it has been the case in other European countries. Therefore, we are willing to consider them, subject to acceptable financial and operational conditions.”
Arnaud Castille, Chief Financial Officer, added:
“Orange Belgium demonstrated in the second quarter of 2017 its effective combination of sound operational execution and financial efficiency. As indicated last quarter, we reduced our subsidized offers and achieved considerable savings in acquisition and retention costs. In contrast with the first quarter of 2017, postpaid net additions advanced significantly in the second quarter of 2017, driven by a solid momentum in customer acquisition and an improved churn management thanks to the use of big data analytics. Finally, our solid performance in the first half of 2017 gives us the confidence to confirm our full year target, despite the highly competitive environment in the current year.”