Solid commercial performance confirms the relevance of Orange Belgium’s convergent and mobile data strategy
9M 2017: Total service revenues + 2.4 % yoy, adjusted EBITDA +1.3 % yoy at group level,
Q3 2017: + 15k postpaid net adds, +2.7 % yoy postpaid ARPU growth, +18k convergent Orange LOVE net adds in Belgium
Brussels, 23 October 2017 – Today, the Orange Belgium Group (Euronext Brussels: OBEL) publishes its results for the third quarter and first nine months of 2017. The third quarter of 2017 was marked by a strong commercial dynamism and a good performance of Orange Belgium’s growth drivers: convergence, mobile data monetization and customer experience. The development of its convergent customer base progressed well, reaching 82 thousand convergent LOVE customers in Belgium with 129 thousand attached SIM cards. The mobile performance in Belgium was good in the third quarter of 2017 with +15 thousand postpaid net subscribers’ additions in combination with a postpaid ARPU growth of +2.7 % yoy. This demonstrates the success of the company’s value strategy in accelerating the market shift to higher data usage.
Orange Belgium’s data monetization strategy leverages the shift to higher data usage
Orange Belgium’s postpaid net additions amounted to 15 thousand in the third quarter of 2017, reaching a total of 2.29 million postpaid customers. As a result of increased 4G smartphone penetration – up from 44 % a year ago to 56 % at the end of the third quarter of 2017 – and growing demand for music and video streaming – lifting average smartphone usage to 1.7 GB from 1.2 GB a year ago – Orange Belgium’s postpaid ARPU increased to 30.0 euros, a year-on-year growth of 2.7 %. This increase is achieved thanks to a higher data usage.
Orange Belgium starts a new phase as a convergent operator
The convergent LOVE customer base increased by 18 thousand in the third quarter of 2017 to 82 thousand, while the company’s mobile LOVE customer base increased by 23 thousand to 129 thousand, representing almost 6 % of the total postpaid customer base. Since the launch of its convergent offer, Orange Belgium introduced new TV channels, the Orange TV app and a new double data offer for its LOVE customers. With the milestone of 100 thousand convergent LOVE customers in sight by the end of the year, Orange Belgium is entering a new phase as a convergent operator, aiming at deploying always more efficient and customer oriented marketing, sales, provisioning, installation and loyalty programs. This is taking place in parallel with the proliferation of Easy Switch and ahead of the expected implementation of a fairer and cost-oriented wholesale model with more detailed service level agreements for the cable operators.
Orange Belgium invites regulators to rule in favor of competition in the fixed market
The Belgian regulators’ consultation on the draft market analysis of the TV and broadband market ran until the end of September 2017. The Belgian Competition Authority and the European Commission should be notified in the fourth quarter of 2017 once observations have been reviewed. A final decision is expected in the first half of 2018. Orange Belgium has called on the regulators to rapidly come to a final proposition and to improve substantially the financial conditions for cable wholesale access, in order to obtain a sustainable margin of the standalone cable business.
Orange Belgium delivered a good financial performance in the first nine months of 2017, against a roaming headwind. The group achieved a total turnover of 933.7 million euros in the first nine months of 2017, an increase of 1.5 % year-on-year (+4.7 % underlying growth after adjustment for the 28.0 million euros related to EU roaming). Despite the decrease of the adjusted EBITDA in the third quarter of 2017 mainly due to lower MVNO revenues, Orange Belgium Group’s adjusted EBITDA increased 1.3 % in the first nine months of 2017 to 240.3 million euros, compared to 237.1 million euros a year ago. This result was achieved despite the negative EBITDA contribution of the standalone cable business of 14.9 million euros in the first nine months of 2017. Orange Belgium Group invested 114.6 million euros in the first nine months of 2017, of which 35.5 million euros was related to cable activities. Despite these growth related investments, an operational cash flow of 137.4 million euros was generated in the first nine months of 2017. At the end of September 2017, the net financial debt stood at 288.3 million euros. As a result, the net financial debt/reported EBITDA ratio stood at 0.9x.
The Orange Belgium Group confirms its guidance for the financial year 2017: growth in total service revenues, an adjusted EBITDA between 290 and 310 million euros and total capex excluding investments linked to the uptake of the Orange Internet + TV offer to remain stable compared to 2016.
Michaël Trabbia, Orange Belgium’s Chief Executive Officer, commented:
“We engaged the Orange Belgium Group in an ambitious digital transformation to reshape Orange Belgium and deliver agility, efficiency and enhanced customer experience. Our value oriented approach to mobile data growth and the acquisition of convergent customers have progressed well.
In the second half of 2017, we are preparing the next phase of our convergent story. First, we have stepped up the commercial appeal of our convergent offer by doubling the mobile data volume for all convergent LOVE customers thereby incentivising our existing customers to include all their SIM-cards in the package. We will continue to enhance our services in the coming months. Second, the on-going regulatory market review is a key requirement in setting the correct framework for the coming years and Orange Belgium invites the regulators to substantially improve the current financial and operational conditions for cable wholesale access. Advances in both of these components are required to ensure fair and true competition in the fixed market in Belgium.”
Arnaud Castille, Chief Financial Officer, stated:
“Orange Belgium achieved solid commercial results in the third quarter of 2017. We succeeded in increasing our postpaid and convergent customer base, as well as our postpaid ARPU, and we achieved compelling underlying revenue growth despite the impact of the EU roaming regulation and the lower wholesale MVNO revenues. We achieved this notwithstanding the tactical promotional activity of our competitors. We are also very happy with the successful acquisitions of two important distribution partners in the Brussels area which will further strengthen our market reach and rapidly generate synergies. In addition, we have lowered our net debt position in the third quarter of 2017 and consolidated our very solid balance sheet structure.”