Orange Belgium’s confirms its commercial success as a Bold Challenger
2018 guidance reiterated - New and strong forward-looking fundamentals (cable regulation, new MVNO)
Growth in mobile contract customer additions has accelerated (+26k net adds in Q2), spurred by improved offers
Orange Belgium recorded a total of 2.36 million mobile contract customers at the end of the first half of 2018 thanks to an acceleration in customer net additions to 26 thousand in the second quarter of 2018, compared to 21 thousand in the second quarter of 2017. This solid performance was driven by Orange Belgium’s bold and innovative offers, led by its unmatched Eagle Unlimited and convergent LOVE offers. Prepaid segment reached its best performance in the past 11 quarters (-6 thousand).
In the second quarter of 2018, Orange Belgium’s mobile only contract ARPO stood at 21.3 euros, a slight decrease of 0.9 % year-on-year, explained by the last impact of the Roam-Like-at-Home regulation, partly mitigated by an increase of the underlying ARPO supported by a better customer mix. Orange Belgium continued to drive a positive rebalancing of its customer portfolio towards more mid- and high-end tariff plans. The launch of Orange Belgium’s Eagle Unlimited offer and abundant data tariff plans drove an acceleration of the average mobile data usage per smartphone user in the first half of 2018, reaching 2.6 GB/month, increasing by 46 % year-to-date, almost double than in June last year.
Continuing growth in convergent customer base (+14k net adds in 2Q 2018)
Orange Belgium added 14 thousand new convergent customers in the second quarter of 2018, compared to 15 thousand in the second quarter of 2017, bringing the total at 136 thousand. This performance has been achieved without promotions. Orange Belgium continued to lower its cable churn rate thanks to an improvement of its processes. Orange Belgium’s convergent mobile customer base increased to 207 thousand at the end of June 2018, implying 1.5 SIM cards per cable household, and now represents 9 % of the mobile contract customer base. The B2C convergent ARPO increased by 2.4 % year-on-year to 73.7 euros in the second quarter of 2018 from 72.0 euros in the second quarter of 2017.
Revenue growth (+3,1% in 2Q 2018) is further picking up, mainly thanks to the increase of retail service revenues
Revenues in the first half of 2018 reached 619.6 million euros from 607.4 million euros the previous year, despite MVNO revenues decreasing and the impact of EU roaming regulation. Revenue growth accelerated in the second quarter of 2018 to 3.1 % year-on-year (Q1 2018: +0.9 % yoy), thanks to a strong increase in retail service revenues, up 7.2 % year-on-year in the second quarter of 2018.
Orange Belgium Group’s adjusted EBITDA amounted to 66.7 and 127.3 million euros in the second quarter and first half of 2018, compared to the 78.1 and 146.5 million euros in the second quarter and first half of 2017 respectively. Growth in retail service revenues and efficient cost management were mitigated by the expected decline in MVNO (H1 2018: -22.6 million euros yoy) and EU-roaming revenues (H1 2018: -16.6 million euros). These headwinds should ease in the second half of 2018. The cable related EBITDA improved on a unitary basis in the first half of 2018, thanks to the implementation of several efficiency initiatives, and ahead of the improved regulatory wholesale conditions, though negative (H1 2018: -10.8 million euros vs.H1 2017: -9.8 million).
Finalization of Broadband and TV distribution market analysis decision after approval of the European Commission
After a public consultation on the analysis of the broadband and TV distribution market in 2017, the CRC submitted its draft decision to the Belgian Competition Authority and subsequently to the European Commission early May 2018. One month later, the European Commission issued its comments letter and cleared the proposed wholesale regulation in Belgium. End of June 2018, the Belgian regulators finalized their decision, while taking the EC comments into account.
Orange Belgium reiterates its financial guidance for the financial year 2018
Michaël Trabbia, Orange Belgium’s Chief Executive Officer, commented:
“In the first half of 2018, in line with our Bold Challenger positioning, we demonstrated our ability to shake off the market’s status quo to the benefit of our customers. The recent introduction of our Koala tariff plan, aimed at offering unlimited calls as well as a decent bucket of mobile data to most of the customers, and the earlier launch of the first fully unlimited mobile offer in Belgium, both supported by our leading 4G network, convinced more and more customers to choose Orange. Thanks to these disruptive offers we are strongly accelerating the data usage growth of our customers.
Regarding convergence, we continued to improve our processes efficiency, and our “Love” offers, with the introduction of Mobile Live TV at no extra cost and of a Fixed Phone option. Moreover, the recent final decision of the regulators regarding the Broadband and TV market analysis marked an important step towards a sustainable internet and TV offer with an improved quality of service and installation process. It will also allow us over time to address the untapped market for Internet-only offers.
Finally, we entered into a very promising partnership with Medialaan, the leading Flemish broadcaster, which includes a full MVNO agreement starting as from spring 2019.”
Arnaud Castille, Chief Financial Officer, stated:
“Our commercial results and underlying financial results mark a strong first half of the year 2018. This demonstrates our focus on increasing our mobile contract and convergent customer base. It is also proof that we are capable of improving efficiency of our cable business, while driving innovation, digitalization and enhancing the overall customer experience. Nevertheless, this semester’s year-on-year comparison was still impacted by the EU Roam-Like-at-Home regulation and the decline of MVNO revenues. In the second half of the year our underlying growth should be more visible as the gross EU roaming impact will be very limited and could even be compensated by the price-volume elasticity. In addition, the year-on-year evolution of the MVNO revenues should be relatively flat in the second semester of 2018.
We achieved two other important milestones: firstly we signed a 5-year wholesale partnership with Medialaan, the leading Flemish commercial broadcaster. As from spring 2019, Medialaan will transfer approximately 365,000 customers, currently hosted on the Base network, to our leading 4G network. Secondly, the Belgian regulator’s decision for the TV and broadband market should allow us to benefit from more sustainable wholesale conditions. This should improve cable profitability and decrease churn even further. Since inception, cable churn rate reached its lowest level in the second quarter of 2018.”