Strong commercial and financial results despite COVID-19 crisis; 2020 guidance achieved

 Press release
Embargo until 5 February 2021 at 7:00 am
 Regulated information – Inside information

Financial information for the fourth quarter and full year 2020

Strong commercial and financial results despite COVID-19 crisis
2020 guidance achieved

• Mobile postpaid customer base +2.4% yoy / Cable customer base +26.3% yoy
• Q4 Revenues -7.2% yoy / Q4 Retail service revenues +3.0% yoy
• Q4 EBITDAaL+7.9% yoy
• Proposed stable dividend at €0.50 per share

Q4 Operational Highlights

Orange Belgium delivered positive commercial results despite the continued COVID-19 measures (shops opened with limited capacity) and aggressive subsidy campaigns by the competition. GO portfolio continued to be successful despite a highly competitive environment. During the quarter, 26k new mobile postpaid customers were added, reaching 2.6m subscribers (+2.4% yoy). Cable net adds were strong with 22k new customers, back to pre-lockdown levels. The naked broadband offer introduced at the beginning of the quarter showed positive results and Love Duo continues to represent one third of gross adds. Convergent mobile subscribers now represent 20.3% of mobile postpaid customers, up 435 bp vs Q4’19. B2C convergent ARPO decreased by 4.0% yoy to €73.6, due to the growing Love Duo customer base with a lower price point, which already represents more than 20% of the customer base, as well as discounts on mobile tariff plans in convergence. Mobile only postpaid ARPO declined by 3.1% yoy to €19.8, due to the decrease in out-of-bundle revenues from roaming and mobile data, partly offset by customers migrating to higher tariff plans in the new GO portfolio.

Orange Belgium: key operating figures
	Q4 2019	Q4 2020	change
Mobile postpaid customer base (in ‘000)	2,579	2,641	2.4%
Net adds (in ‘000)	31	26	-16.4%
Mobile only postpaid ARPO (€ per month)	20.4	19.8	-3.1%
Cable customer base (in ‘000)	258	326	26.3%
Net adds (in ‘000)	25	22	-14.9%
B2C convergent ARPO (€ per month)	76.7	73.6	-4.0%
Convergent mobile customer as % mobile contract customer base	15.9%	20.3%	435 bp

Q4 Financial Highlights

Revenues reached €343.0m, down 7.2% yoy. Retail service revenues continued to grow by 3.0%, mainly thanks to higher convergence services (+20.0% yoy). As in former quarters, COVID-19 impacted wholesale revenues (-17.3% yoy) mainly due to lower incoming SMS revenues (-€13.8m, offset by lower SMS costs). EBITDAaL grew 7.9% yoyto €85.9m, driven by higher retail service revenues, but also due to lower costs (-11.3% yoy –mainly SMS, roaming, labour and equipment costs). The BoldInside transformation plan has produced structural cost efficiencies again with a 2.5% reduction in indirect costs. Cable EBITDAaL was positive at €7.0m (+€3.7m yoy). eCapex increased 16.1% yoy to €70.9m, mainly explained by a catch-up from previous quarters. Debt closed at €144.9m with gearing at 0.5x.

Orange Belgium Group: key financial figures

	reported	comparable1		comparable	reported	reported	comparable		comparable	reported
in €m	Q4 2019	Q4 2019	Q4 2020	change	change	FY 2019	FY 2019	FY 2020	change	change
Revenues	369.5	369.5	343.0	-7.2%	-7.2%	1,340.8	1,363.1	1,314.9	-3.5%	-1.9%
Retail service revenues	222.8	222.8	229.5	3.0%	3.0%	857.3	878.7	905.9	3.1%	5.7%
EBITDAaL	79.6	79.6	85.9	7.9%	7.9%	300.1	299.2	323.5	8.1%	7.8%
margin as % of revenues	21.5%	21.5%	25.1%	350 bp	350 bp	22.4%	21.9%	24.6%	266 bp	222 bp
eCapex	-61.1	-61.1	-70.9	16.1%	16.1%	-180.2	-180.2	-177.7	-1.4%	-1.4%
Operating cash flow2	18.6	18.6	15.0	-19.0%	-19.0%	120.0	119.0	145.8	22.5%	21.5%
Net financial debt	234.3		144.9			234.3		144.9

1. Comparable base includes Upsize N.V. 2019 before acquisition
2. Operating cash flow defined as EBITDAaL – eCapex
   

Xavier Pichon, Chief Executive Officer, commented:

2020 has been a challenging year.

The world has been confronted with an unprecedented crisis impacting people’s every-day life, as well as forcing companies to completely review their way of doing business. Over the year Orange Belgium has been in the forefront, playing an active role by helping society to deal with this crisis. We have always put the safety and health of our customers, team members and suppliers first. We managed to upgrade our network in an extremely short timeframe to cope with the increased demand for capacity which arose with the different lockdowns.

Notwithstanding these headwinds, 2020 has also been an important year, thus building the future. We created MWingz, the joint venture with Proximus, which will start implementing our mobile radio access network sharing with Nokia, enabling better network coverage, faster roll-out of the 5G network, and a structural reduction in costs. We also continued to stimulate the market by introducing our GO portfolio, being the first operator in the country to provide a mobile family offer. This has proven successful and we intend to continue migrating our customers to this new portfolio. Throughout the crisis Orange Belgium has shown strong resilience. Despite all the challenges we faced, we were able to provide our customers with the services they expected and delivered excellent commercial results, and the consequential financial outcome.

Arnaud Castille, Chief Financial Officer, stated:

Despite the challenges we were faced with during 2020, we were able to increase our retail service revenues over the year, which are the foundations of our business. In addition, through our Bold Inside transformation programme we were able to reduce our costs over the year, which will also impact the following years. We continue to simplify our processes and our offers, which will be beneficial both to our customers and cost control.

Resuming commercial activities after the lockdown enabled us to achieve our ambitions from a commercial and financial perspective. In line with our guidance, revenues over the year have decreased slightly, but this is mainly due to the decrease in low- to zero-margin activities, such as SMS interconnection revenues and handset sales. The (high-margin) retail revenues have increased more than 3% on a comparable basis.

Our results were in line with the guidance we had foreseen for 2020. Our EBITDAaL is within the mid-range of our guidance at €323.5m up 8.1%, which is a combination of increased retail service revenue and cost efficiency, thanks to our Bold Inside transformation programme. We expected a slight decrease in revenues and eCapex, which resulted in a 3.5% decrease in revenues and 1.4% reduction in eCapex.

2020 dividend

The Board of Directors will propose a stable dividend of €0.50 per share for the 2020 financial year at the Annual General Meeting.

2021 outlook

Orange Belgium expects low single-digit revenue growth in 2021. The Company targets EBITDAaL of between €320m and €340m. Total eCapex in 2021 is expected to be between €200m and €220m.

Attachment

• ENG Q4 2020 FV2