Proximus releases bold2025, a 3-year strategy to deliver growth and long term value creation

Successful execution of #inspire2022, guidance 2022 reiterated

It's now 3 years since Proximus Group embarked on its #inspire2022 strategy. Domestic activities have delivered sustained commercial momentum, driven by the accelerated fiber roll-out and considerable enhancements in product superiority and customer experience. Internationally, BICS and Telesign have captured significant market growth, resulting in accelerating revenue and Direct Margin growth. In conjunction with Group topline growth, the focus on operating costs will result in EBITDA growth for the Group for 2022.

With #inspire2022, Proximus will have returned close to EUR 1.2 billion in dividends to its shareholders over the three-year period 2020-2022, while delivering on its growth commitments made in 2020. Ahead of its full-year results announcement on 17th of February 2023, Proximus reconfirms all of its guidance metrics, including its expectation to end the year 2022 with Domestic revenue excluding terminals to grow around 2%; and the underlying Group EBITDA to be at the upper range of growing 'up to 1%'.

bold2025 is a growth strategy creating long term value

The bold2025 strategy is built on a foundation of unique domestic and international assets that are truly positioned in their markets to capture growth and provide long term sustainable value for all its stakeholders.

The strategy is set out in 6 connected pillars:

• Roll out #1 Gigabit network for Belgium
  Be the reference in gigabit networks, offering Fiber to 50% of Belgium households by 2025 and 95% by 2032, as well as 100% 5G deployment by 2025.
• Engineer technology assets to enable digital ecosystems
  Modernize and innovate IT platforms to enable ecosystems of the future, while structurally lowering cost of IT operations.
• Foster an engaging culture & empowering ways of working
  Strengthen #thinkpossible culture enabled by an agile operating model to reinforce customer-centricity and to reduce time-to-market.
• Act for an inclusive society & be sustainable in everything we do
  Aim to reach net zero CO₂ emissions across the value chain by 2040 and commit to being truly circular by 2030. Act as digital catalyst by nurturing digital trust and by combatting digital divide.
• Delight customers with an unrivalled experience
  Be #1 in customer experience across all segments by 2025 supported by product superiority, a digital-first mindset and by leveraging innovative B2C digital platforms, such as Pickx & Proximus+, a new, soon to be launched app regrouping services in telco, fintech, mobility, ehealth and energy.
• Grow profitably locally & globally through strong brands
  Grow in the domestic market thanks to fiber commercialization, B2C multi-brand strategy/convergent offers and sustained ICT growth in the Business market. Grow internationally in rapid-scaling domains, Digital Communications & Digital Identity, thanks to BICS & Telesign.

Proximus' financial ambition and dividend policy over the next 3 years

Over the coming 3 years, Domestically Proximus will deploy its multi-brand strategy, continued convergent leadership and value management to capture revenue growth across all 3 business units, Residential, Business and Wholesale, and this despite the anticipated challenging market landscape. For 2023 specifically, Domestic revenue is expected to grow by 1% to 3%. Proximus will activate its second wave of cost savings, with EUR 220 million over the next 3 years, mitigating the effects of the inflationary pressure on OPEX. As a result, Domestic underlying EBITDA is expected to go back to growth as of 2024, following a temporary decline of around -3% in 2023 when the inflation impact is assumed to be at its peak. By 2025, Domestic underlying EBITDA is expected to return to the 2022-level.

Next to this, the International activities provide a unique growth pathway for Proximus, allowing it to take leadership positions in double-digit growth markets. Proximus expects its International segments BICS and Telesign to deliver a combined revenue exceeding EUR 1.8 billion by 2025 and Direct Margin growing at high single digit CAGR over the 2022 to 2025 period, including a high-single digit Direct Margin growth for 2023.

In aggregate, bold2025 is expected to lead to the 2025 Group underlying EBITDA to be slightly above the 2022 level, with an initial inflation-driven year-over-year decline of around -3% in 2023, followed by growth as of 2024.

Proximus expects its Group CAPEX to return to normalized levels after reaching a peak of around EUR 1.3 billion in 2023. The expected reduction beyond 2023 is driven primarily by a CAPEX decrease related to Proximus' own fiber deployment, the finalization of the mobile network consolidation and 5G roll-out by 2025, and a reduction in IT-related CAPEX. Continued CAPEX optimization and efficiency programs will allow inflation impacts to be offset.

Furthermore, Proximus ambitions over EUR 400 million divestments over the next three years, including EUR 143 million through the binding agreement Proximus reached with Immobel with respect to the redevelopment of the Proximus' headquarters. With CAPEX returning to normalized levels and the ambitioned asset sales, Free Cash Flow is expected to grow as of 2024.

bold2025 sets out an ambitious path for future growth and value creation for the Proximus Group, continued investment in the #1 Gigabit network for Belgium, enhanced customer experience, next generation products and services, and further international development, whilst balancing the need to keep a sound financial position leads to a rebasing of the dividend policy.

Over the result of 2023, Proximus intends to return a stable gross dividend of EUR 1.20 per share, provided a financial performance delivery in line with the strategic plan.  Over the result of 2024 and 2025, Proximus will rebase its dividend level to EUR 0.60 per share. The rebased sustainable dividend level incorporates all currently known macro and inflationary headwinds, as well as expected changes in market structure.

The shareholder return policy in combination with the assets disposal program will support a Net Debt/EBITDA ratio between 2.5X and 3.0X (S&P definition) over the next 3 years. For 2023, this ratio is expected to be around 2.6X.

This allows for sustained solid investment-grade credit ratings, resulting in continued access to credit markets and near-term refinancing at low interest rates.