Proximus Group financial results – First quarter 2021

Highlights Q1 2021

• Proximus closed the first quarter of 2021 with a strong commercial performance for its core Telecom services, adding for the Group: +37,000 Mobile postpaid cards, +12,000 Internet and +13,000 TV subscriptions. Within the Consumer segment the traction for higher value offers continued, growing the convergent base by +21,000 customers to a total of 1,145,000, +6.1% compared to 12 months ago. An additional 12,000 customers signed up for a Fiber product, bringing the total to 77,000. Over the first three months, 160,000 customers opted for a Flex offer, bringing the total Flex subscriber base to 477,000. Reflecting changing customer needs, the Fixed Voice line base erosion accelerated to a net loss of -53,000 in the first quarter of 2021.
• Proximus posted underlying Domestic revenue of EUR 1,084 million, down -1.7%, chiefly reflecting the residual Covid-19 related headwinds impacting all customer segments. Consumer revenue was up by 0.8% and the Enterprise segment moderated its decline to -1.2%. Wholesale revenue was down by ‑22.0%, facing next to roaming pressure an ongoing erosion in interconnect revenue from SMS traffic (margin neutral).
• Proximus' Domestic EBITDA totaled EUR 418 million for the first quarter of 2021, -2.4% below the year before, resulting from lower direct margin and higher expenses, and includes a net adverse effect related to Covid-19.
• Telesign continued a strong revenue trajectory, posting revenue of EUR 77 million, +31.6% or +43.5% on constant currency. In view of its growth ambitions, additional skilled headcount was recruited which is reflected in its EBITDA.
• BICS, still impacted by the temporary effects of Covid-19 and MTN insourcing, posted EUR 235 million revenue, -8.7% and sequentially improving. The revenue progress in Core and Growth services partly offset the eroding legacy services. BICS' EBITDA for the first quarter of 2021 totaled EUR 22 million. The sanitary crisis effects aside, BICS showed good resilience in a competitive market.
• In aggregate, the underlying Group EBITDA for the first quarter of 2021 totaled EUR 446 million, -3.9% or EUR -18 million compared to the year before, including some remaining Covid-19 headwinds. The underlying Group EBITDA margin for the first quarter 2021 was 32.6%.
• Proximus invested EUR 225 million, excluding spectrum and football broadcasting rights, with the -2.7% year-on-year decrease due to the timing of content contract renewals. The capex related to the company transformation, IT developments and especially capex related to Fiber increased, with the latter representing 28% of the total capex. Over the first quarter, Proximus deployed Fiber for an additional 73,000 premises, which brought its Fiber footprint to 533,000 homes and businesses, representing a coverage of close to 9% of premises.
• Solid normalized first quarter 2021 FCF of EUR 143 million resulting from a favorable evolution in Business Working Capital and lower year-on-year cash out for ongoing transformation plans, partly offset by a decrease in underlying EBITDA, more cash-out related to capex and a EUR 30 million equity injection in Fiberklaar, the new entity created together with EQT infrastructure to deploy fiber in the Flanders region.

Guillaume BoutinCEO Proximus Group

"We kept a strong pace in executing our #inspire2022 strategy: fastmoving on our Fiber rollout, keeping up a good commercial performance while managing the transformation in our Enterprise segment.

It's been over a year since the first lock-down measures were introduced in Belgium, and I'm very proud that Proximus has managed to contribute and play an important role in the Belgian society through each step of this difficult journey. While we are still continuing our targeted Covid-19 easing initiatives towards customers and society, during this quarter, we specifically focused on the set up of an effective vaccination campaign. At Proximus, we had the privilege to be on the front line, providing the vaccination centers with connectivity, IT support, as well as advanced IoT solutions to monitor the temperature of the vaccines. With the vaccination campaign steadily accelerating, we are now looking forward to a gradual return to a new normal.

Looking back on the first quarter, we continue to see strong commercial traction for our products and services. In a highly competitive setting, we delivered solid customer growth for our main telecom customer bases and have seen especially good traction for our higher value offers. Firstly, we continued to grow our TV customer base with +13,000 TV subscriptions over the first 3 months of the year. Secondly, our convergent customer base increased by +21,000 to a total of 1,145,000, with these customers characterized by a higher-than-average ARPC and lower churn. These results demonstrate the success of our Flex range (+160,000 subscriptions in the first quarter of 2021), compensating the Fixed Voice decline by other value-adding services. Finally, Fiber is becoming an increasingly relevant selling point, also attracting higher value customers. The number of consumer customers that signed up for one of our Fiber offers increased by +12,000 over the first 3 months of the year.

We are well underway with regards to our ambition to build the best gigabit network for Belgium. We added +73,000 Fiber homes passed (HP) during the first quarter of 2021, doubling the volume of last year, to reach 533,000 HP end-March 2021. With the creation of Fiberklaar, a new company jointly owned by EQT infrastructure and Proximus, we are fully on track to realize our ambition to pass 4.2 million homes and businesses with Fiber throughout Belgium by 2028.

As for our Enterprise segment, the Fixed and Mobile telecom business continues to be managed carefully. By balancing volume and pricing, we have moderated the structural headwinds from legacy services. The move to convergent Telecom-ICT services progressed on plan and we grew our managed and consultative services over the first quarter of 2021. Besides, we are pursuing our B2B transformation efforts aiming at becoming the preferred partner for Enterprises' digital transformation. Specifically, Proximus launched a dedicated 5G co-creation platform to support professional customers in exploring the full potential of this technology through specific use cases, in a secure, innovative and cost-efficient way.

Our domestic consumer and enterprise services revenues grew if we exclude Roaming-out revenue, which is still affected by Covid-19 related headwinds. Beyond domestic operations, Telesign continued its explosive growth trajectory, with a +43.5% revenue growth rate on constant currency.

Overall, our Domestic revenue, Group EBITDA and Capex are on track to meet our expectations, and we are therefore comfortable in reiterating our 2021 full-year guidance."

Q1 key figures

Operationals, in thousands

Financials, in million EUR

2021 Outlook

Based on the first quarter 2021 results and taking into account its best estimate for the remainder of the year, Proximus reiterates its 2021 full-year guidance.

Proximus reiterates its intention to return over the result of 2021 and 2022 an annual gross dividend of EUR 1.2 per share, to be considered as a floor.