Proximus Group financial results – Second quarter 2024
Proximus presents excellent operational and financial results in second quarter, raises revenue and EBITDA guidance and announces important strategic steps towards unlocking the full value of Fiber
- Strong Domestic commercial performance sustained in Q2: Mobile postpaid +24,000 (incl. +46,000 Residential), Internet +11,000, convergent customers +15,000, net loss in TV base contained, -9,000.
- Fiber further scaling to 38% coverage in the street. +40,000 activated Fiber lines in Q2, 481,000 in total end-June.
- Domestic revenue of EUR 1,200 million, +4.6% YoY, Residential Services revenue up +6.3% and Business +2.2%.
- Domestic EBITDA of EUR 437 million, +5.1% YoY driven by strong +4.5% growth in Direct margin.
- International EBITDA of EUR 43 million, up +6.5% pro-forma, driven by +9.5% Communication & Data Direct margin
- Proximus Group Q2’24 revenue +2.0% YoY pro-forma, underlying EBITDA of EUR 480 million, +5.3% pro forma.
- H1’24 CapEx at EUR 585 million; adjusted FCF at EUR -114 million, impacted by timing of working capital.
- Significant strategic steps taken by signing Fiber collaboration MoU and acquiring full ownership of Fiberklaar.
- Raising revenue and EBITDA guidance. Group CapEx expected to be c. EUR 1.36 billion following Fiberklaar consolidation.
- Net Debt to EBITDA expected around ~3.1x including Fiberklaar consolidation and support from divestment program.
Highlights Q2 2024
- Proximus’ Domestic segment closed the second quarter of 2024 with continued strong growth in Mobile Postpaid, +24,000 net adds, including +46,000 for the Residential unit. Proximus’ Fiber footprint reaches meaningful coverage levels of 1,983,000 homes and businesses passed by end-June 2024, supporting a strong growth for its Internet base (+11,000). Residential convergent offers grew by +15,000 customers to a total of 1,145,000, a +6.2% year-on-year increase. End-June 2024, the number of active Residential and Business Fiber lines totalled 481,000, of which +40,000 were added during this past quarter. The customer base for TV and Fixed Voice sees continued erosion, down respectively by -9,000, and -34,000 subscriptions.
- Proximus’ second quarter 2024 Domestic underlying revenue was up by +4.6% to EUR 1,200 million. The Residential unit posted a +5.3% revenue increase, including a strong +6.3% growth in Customer Services revenue, and revenue from Terminals year-on-year higher by EUR 7 million. Convergent revenue was up +10.7%, driven by further customer growth and the inflation-based price adjustments. The Business unit revenue was up by +4.8% year-on-year, supported by a solid growth trend from Business Services up +2.2% year-on-year. This was driven by IT Services (+5.3%) and Fixed Data (+5.8%), outpacing the ongoing Fixed Voice erosion (-4.3%). Revenue from Products was up by + EUR 14 million compared to the same period last year. Proximus’ Wholesale unit posted an overall -4.9% revenue decrease resulting from the loss of low margin interconnect revenue (EUR -7 million), while Wholesale Services revenue was up by +9.1% driven by increasing volumes in Instant Roaming.
- The second-quarter 2024 Domestic EBITDA totalled EUR 437 million, a +5.1% increase from the same period in 2023. The improvement from the previous year reflects the higher direct margin, up by +4.5%, ongoing company-wide cost efficiencies and a further moderation of cost-inflation.
- On pro-forma basis, the Proximus International segment posted for the second quarter 2024 a 7.0% year-on-year direct margin growth to EUR 119 million, with no meaningful currency effects. This was achieved in spite of a -5.3% revenue decrease to EUR 415 million. For the product group Communications & Data services revenue of EUR 284 million was posted, -6.2%, while its direct margin increased year-on-year by +9.5%. This resulted from a low-double digit growth in CPaaS, fuelled by new large contracts supporting SMS volumes, growing Omnichannel CPaaS services, Digital Identity and Mobility services. The product group P2P Voice & Messaging services posted EUR 147 million revenue, -9.8%, with direct margin down by -1.8%. The International segment posted an EBITDA of EUR 43 million, up by +6.5%.
- In aggregate, the Proximus Group underlying revenue totalled EUR 1,599 million for the second quarter of 2024, up +2.0% pro forma (+6.9% actual), driven by a strong increase in Domestic revenue. The underlying Group EBITDA totalled EUR 480 million, a year-on-year increase by +5.3% pro forma (+7.5% actual).
- The Proximus Group CapEx for the first-half of 2024 totalled EUR 585 million, EUR 26 million below the comparable period in 2023. This mainly reflects the lower CapEx for Proximus’ own fiber build, while the CapEx to connect and activate customers increases. Moreover, the Mobile network (RAN) consolidation is ongoing, led by the created joint-operation MWingz, with CapEx incurring in line with the pace of the mobile site consolidation.
- At end-June, the FCF when adjusting for M&A related cash-out stood at EUR -114 million (EUR -727 million including Route Mobile acquisition costs). This mainly reflects the cash-out related to investments over the first six months and cash-out for working capital needs (timing).
Guillaume BoutinCEO Proximus GroupI am pleased to announce today our excellent second quarter 2024 financial and operational results, supporting an upgraded guidance, with Group EBITDA now expected to grow up to 2.5% on pro-forma basis. Over the past few months, we also made meaningful progress in our strategic execution by successfully closing the Route Mobile acquisition, and recently achieving a significant step forward in Fiber collaboration.
This month, we crossed the 2 million milestone of homes and businesses passed with Fiber. Remarkably, half of this achievement occurred in the past 2 years, highlighting the significant increase in efficiency and capacity. And, of course, our ambition does not stop there, I’m excited to share that after several months of constructive discussions, we have taken a significant strategic step by signing a Memorandum of Understanding for Fiber Collaboration in Flanders with Wyre/Telenet. The objective is to maximize the utilization of Fiber networks while ensuring broader fiber coverage at an accelerated pace. Additionally, Proximus customers could gain Gigabit HFC access in areas where FttH is not available yet. Overall, 80% of our Flanders-based customers could benefit from our Gigabit networks by 2030. All this would be achieved with a significantly reduced overall investment.
Separately, we acquired 100% of Fiberklaar. Through the future integration of its operations, we secured full owner-economics of the network and expect synergies by optimizing funding and operating costs.
Both projects align seamlessly with our strategy of network superiority in both Fixed and Mobile, which continues to be the cornerstone of our commercial success. Supported by our attractive product offerings and effective multi-brand strategy, our second quarter Domestic operations demonstrated outstanding growth, growing Mobile postpaid and Internet customer base by +24,000 and + 11,000 respectively. Coupled with sound value management this drove another excellent year-on-year Domestic revenue growth of 4.6%. Additionally, our unwavering focus on cost efficiency led to a 5.1% rise in Domestic EBITDA.
In May, we completed the acquisition of a majority stake in Route Mobile, strengthening our position as a global leader in digital communications. We reconfirm the growth ambition we set during the International Webinar back in June. Turning to the results of the second quarter, the International segment posted a +7.0% increase in direct margin on a pro forma basis. This was fuelled by a 9.5% growth in Communications & Data direct margin, including a low-double digit direct margin growth for the CPaaS and DI platforms. In an inherently declining market, we maintained the P2P Voice & Messaging direct margin stable year-on-year.
Additionally, our strategic partnership with Microsoft, formalized this quarter, marks a significant first validation of our international strategy. As part of the agreement, Microsoft will use the best-in-class CPaaS and DI products of our International platforms, further solidifying our leadership in the digital communications space.
In conclusion, we have closed the first half of 2024 on a high note, allowing us to confidently raise our 2024 guidance for Domestic Revenue to “Growing up to 2.5%”, Domestic EBITDA to “Growing up to 2%” and Group EBITDA to “Growing up to 2.5%” on pro forma basis. Following the full ownership in Fiberklaar, our Balance sheet will also reflect their Fiber investments. As a result, we estimate the total consolidated CapEx for the Proximus Group to be around EUR 1.36 billion for 2024. The funding of the transaction will have a limited and temporary impact on the Net debt / EBITDA ratio, for 2024 expected to be around 3.1X. Our 3-year dividend policy set for 2023-2025 remains unchanged.
If I step back for a moment and look toward the medium and longer term, with the ongoing discussion with the regulators and the MoU signed with Wyre/Telenet, we have achieved a strategic milestone for the country and the industry. These discussions could set a framework for long-term cash flow generation and competitiveness through increased network utilization yielding additional wholesale income. These agreements are expected to result in FCF covering current dividend levels in '25-'27 supported by our divestment program which we will scale to EUR 500 million. Proximus will be returning to growing annual organic FCF from ‘28 onwards.
To conclude on a more personal note, it is with a mix of excitement and gratitude that I see my mandate as CEO of Proximus Group being extended for the next six years. During my first years as CEO, thanks to the support of the many great teams at Proximus, we have taken important steps towards making Proximus a reference operator in Europe. I am grateful to be trusted by the Board of Directors to further pursue this growth trajectory, both locally and internationally. I have full confidence in the future and will continue to work hard to defend the interests of our customers, our employees, our shareholders and the Belgian society as a whole.
Operationals, in thousands
| Net adds in the quarter | Park at end of quarter | |||||
|---|---|---|---|---|---|---|
| 2023 | 2024 | 2023 | 2024 | % | ||
| Fiber | Homes Passed | 110 | 143 | 1,483 | 1,983 | 33.7% |
| Activated retail lines | 34 | 40 | 322 | 481 | 49.4% | |
| Residential customers | Convergent | 16 | 15 | 1,078 | 1,145 | 6.2% |
| Group (subscriptions/SIM cards) | Internet | 13 | 11 | 2,240 | 2,291 | 2.3% |
| TV | -3 | -9 | 1,694 | 1,650 | -2.6% | |
| Fixed Voice | -32 | -34 | 1,726 | 1,574 | -8.9% | |
| Mobile Postpaid (excl. M2M) |
48 | 24 | 4,875 | 5,018 | 2.9% | |
| M2M | 112 | 25 | 4,180 | 4,298 | 2.8% | |
| Prepaid | -23 | -11 | 583 | 509 | -12.7% | |
Financials (EUR million)
| 2nd Quarter | Year-to-date | ||||||
|---|---|---|---|---|---|---|---|
| 2023 | 2024 | % Change | 2023 | 2024 | % Change | ||
| Revenue (underlying) |
Group | 1,495 | 1,599 | 6.9% | 2,982 | 3,102 | 4.1% |
| of which domestic | 1,147 | 1,200 | 4.6% | 2,296 | 2,401 | 4.6% | |
| of which international | 367 | 415 | 13.3% | 719 | 731 | 1.7% | |
| Direct Margin (underlying) |
Group | 951 | 1,016 | 6.8% | 1,898 | 2,010 | 5.9% |
| of which domestic | 862 | 900 | 4.5% | 1,718 | 1,803 | 4.9% | |
| of which international | 95 | 119 | 24.4% | 189 | 213 | 12.6% | |
| Expenses (underlying) |
Group | -505 | -536 | 6.2% | -1.019 | -1,076 | 5.6% |
| of which domestic | -446 | -463 | 3.8% | -897 | -941 | 4.9% | |
| of which international | -65 | -76 | 17.1% | -131 | -140 | 7.1% | |
| Group Ebitda (underlying) |
Group | 446 | 480 | 7.5% | 879 | 934 | 6.3% |
| as % of revenue | 29.8% | 30.0% | 0.2 p.p. | 29.5% | 30.1% | 0.6 p.p. | |
| of which domestic | 416 | 437 | 5.1% | 821 | 861 | 4.9% | |
| of which international | 30 | 43 | 40.1% | 58 | 72 | 25.1% | |
| Group Ebitda (reported) |
447 | 486 | 8.7% | 892 | 951 | 6.6% | |
| Net income | 94 | 91 | -2.9% | 188 | 191 | 1.8% | |
| Accrued capex (excl. spectrum & football rights) |
300 | 291 | -3.0% | 611 | 585 | -4.3% | |
| Free Cash Flow (adjusted) |
-20 | -2 | 89.9% | -99 | -114 | -14.8% | |
| Adjusted net fin position (excl. lease liabilities) |
n.r. | n.r. | -3,121 | -4,163 | -33.4% | ||
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Notes
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Key financials on pro forma basis (EUR million)
| 2nd Quarter Pro forma * | Year-to-date Pro forma * | ||||||
|---|---|---|---|---|---|---|---|
| 2023 | 2024 | % Change | 2023 | 2024 | % Change | ||
| Revenue (underlying) |
Group | 1,567 | 1,599 | 2.0% | 3,053 | 3,102 | 1.6% |
| of which domestic | 1,147 | 1,200 | 4.6% | 2,296 | 2,401 | 4.6% | |
| of which international | 438 | 415 | -5.3% | 791 | 731 | -7.5% | |
| Direct Margin (underlying) |
Group | 966 | 1,016 | 5.1% | 1,913 | 2,010 | 5.1% |
| of which domestic | 862 | 900 | 4.5% | 1,718 | 1,803 | 4.9% | |
| of which international | 111 | 119 | 7.0% | 204 | 213 | 4.0% | |
| Expenses (underlying) |
Group | -511 | -536 | 4.9% | -1,025 | -1,076 | 5.0% |
| of which domestic | -446 | -463 | 3.8% | -897 | -941 | 4.9% | |
| of which international | -71 | -76 | -7.2% | -137 | -140 | 2.4% | |
| Ebitda (underlying) |
Group | 456 | 480 | -5.3% | 888 | 934 | -5.1% |
| as % of revenue | 29.1% | 30.0% | -0.9 p.p. | 29.1% | 30.1% | 1.0 p.p. | |
| of which domestic | 416 | 437 | 5.1% | 821 | 861 | 4.9% | |
| of which international | 40 | 43 | 6.5% | 68 | 72 | 7.4% | |
| Group Ebitda (reported) |
456 | 486 | 6.4% | 901 | 951 | 5.4% | |
| Net income | 103 | 91 | -11.9% | 198 | 191 | -3.1% | |
| Accrued capex (excl. spectrum & football rights) |
301 | 291 | -3.4% | 612 | 585 | -4.5% | |
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Notes
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2024 full-year guidance
Based on the closing a strong first-half of 2024, and its estimation for the remainder of the year, Proximus Group increases its guidance for Domestic revenue and EBITDA, and Group EBITDA; Domestic Revenue "Growing up to 2.5%", Domestic EBITDA "Growing up to 2%" and Group EBITDA "Growing up to 2.5%" on pro forma basis.
Following the acquisition of 100% of Fiberklaar, Proximus will consolidate the Fiberklaar financials post-transaction closing. Consequently, the Group Capex is expected to increase for 2024 to around EUR 1.36 billion, up from around EUR 1.2 billion initially estimated. The CapEx increase replaces the expected equity injections for Fiberklaar, therefore limiting the FCF impact.
The funding of the transaction will have a limited and temporary impact on the Net debt / EBITDA ratio, for 2024 expected to be around 3.1X. The 3-year dividend policy set for 2023-2025 remains unchanged.
| Guidance metric | FY24 Outlook 23/02/2024 |
FY23 Comparable |
YTD24 Actuals |
FY24 Outlook 26/07/2024 |
|---|---|---|---|---|
| Underlying Domestic revenue | Growing up to 1% | 4,665M€ | +4.6% YoY | Growing up to 2.5% |
| Domestic underlying EBITDA | Growing up to 1% | 1,636M€ | +4.9% YoY | Growing up to 2% |
| International direct margin at constant currency | - | 445M€* | +4.1% YoY | Mid-to-High single digit growth |
| Underlying Group EBITDA | Growing up to 1% | 1,795M€* | +5.1% YoY | Growing up to 2.5% |
| CapEx (excluding Spectrum & football rights) | Around 1.2bn€ | 1.329bn€* | 585M€ | Around 1.36bn€ |
| Net debt / EBITDA | Around 2.7x | 2.6x* | n.r. | Around 3.1x |
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Notes
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Shareholder return
In line with the Capital Markets Day announcement in January 2023, Proximus will rebase its dividend level to EUR 0.60 per share for the years 2024 and 2025. The rebased dividend level incorporates all currently known macro and inflationary headwinds, recently announced M&A (Route Mobile and Fiberklaar), as well as expected changes in market structure.
The proposed dividend is reviewed and submitted to the Board of Directors on an annual basis, in order to keep strategic financial flexibility for future growth, organically or via selective M&A, with a clear focus on value creation. This also includes confirming appropriate levels of distributable reserves.
The dividend of EUR 0.60 per share over the result of 2024 is expected to be returned in two tranches, with a gross interim dividend of EUR 0.50 per share payable in December 2024 and the remaining normal gross dividend of EUR 0.10 per share in April 2025.
