Progressive stabilization of service revenues supports restated EBITDA growth of 5.6 % Full year guidance confirmed

Brussels, 23 April 2015 – Today, Mobistar (Euronext Brussels: MOBB) publishes its results for the first quarter of 2015.

Mobistar’s strategy to create levers for growth continued in the first quarter of 2015, while the company is also increasing its focus on value management. This strategic direction is in particular reinforced by the monetisation of data usage driven by the solid uptake of 4G smartphones across all markets:

• Mobistar’s leading position in terms of 4G coverage has once again been confirmed by a Commsquare study in the first quarter of 2015
• Mobistar’s 4G postpaid customer base grew 19 % in the first quarter versus the end of 2014, reaching 1 out of 4 postpaid customers

Mobistar’s blended ARPU in Belgium increased for the second time in a row, to 23.9 euros in the first quarter of 2015 compared to 23.4 euros a year ago, an increase of 2.0 %. The postpaid ARPU even grew by 3.8 % year-on-year versus +1.8 % in the previous quarter, which is the result of Mobistar’s focus on value management.

Mobistar will launch its own very high speed broadband internet & digital TV cable services in Belgium after the regulators have published the consultation document governing an acceptable application of the retail-minus pricing mechanism.

 The solid results of the first quarter of 2015 enable Mobistar to keep its outlook unchanged for the full year 2015. Mobistar achieved in the first quarter:

• Service revenues of 270 million euros, -2.8 % yoy, (-0.6 % excl. reg.);
• A restated EBITDA of 70 million euros, +5.6 % yoy (+12.4 % excl. reg.);
• An operational cash flow of 42 million euros, +55.3 % yoy (+75.6 % excl. reg.).

Mobistar’s Chief Executive Officer Jean Marc Harion commented: ‘I am pleased to announce that Mobistar’s first set of results in 2015 confirms our strategy is working. We are building growth levers alongside mobile data monetisation, thanks to our clear 4G leadership, an aggressive network rollout and innovative and attractive offers across all market segments. We are ready to initiate, in a disciplined manner, the commercial rollout of our very high speed broadband internet & digital TV cable services. Mobistar expects the regulators to publish market conform wholesale tariffs to finally open the fixed market and benefit all Belgian consumers.’

Ludovic Pech Mobistar’s Chief Financial Officer added: ‘From a financial perspective we just closed an encouraging quarter with a restated EBITDA and cash flow on the rise versus the first quarter of 2014. This year, we will increasingly reap the benefits from our improved efficiency, especially given the progressive stabilisation of our revenues. We will also continue to scrutinize our cost basis from all angles. In the first quarter we progressed with the transversal optimization of our organisational structure by integrating our B2C and sales and distribution divisions into one department and we expect synergy savings to materialise throughout the year.’

1. Key financial and operational highlights

• Prepaid net adds further improved, while postpaid is stabilising

1/ Following the solid performance in the second half of 2014, the residential postpaid net adds stabilised quarter on quarter. This despite Mobistar’s decision to tone down its marketing presence in the beginning of the quarter following the intense end of year campaign. In the same time postpaid net adds in the enterprise segment were encouraging as they continued their improving trend. 2/ Prepaid net adds further improved versus the end of 2014 and achieved the best performance in 15 quarters. This is a consequence of the strengthening of the product portfolio last year. 3/ M2M/IoT net adds stood at -133,797 versus the previous quarter and were affected by the termination of a contract involving approximately 150,000 low ARPU SIM-cards. Excluding the loss of this contract the underlying growing trend remained sound, evidenced by the signing of 2 big deals with an automotive manufacturer and a multinational conglomerate. As a result Mobistar’s retail customer base in Belgium totalled 3,762,301 at the end of the first quarter of 2015.

• Mobistar continues to host the largest number of MVNO customers

Mobistar increased its wholesale customer base in the course of the first quarter of 2015 with 152,722 new MVNO customers, mostly driven by the ethnic segment. Mobistar continues to host the largest number of MVNO customers.

• Mobistar’s superior 4G network coverage has been confirmed for over a year

A recent study by the independent survey bureau Commsquare confirmed Mobistar’s superior 4G network coverage. Mobistar’s 4G network offers the best coverage, both outside (92 %) and inside (72 %) buildings. At the end of March 2015, nearly 1 out of every 5 Mobistar customers is already registered as a 4G customer. The associated 4G traffic jumped up to represent over 40 % of total mobile data traffic. Total mobile data traffic increased 153 % year-on-year in the first quarter of 2015.

• The positive trend in ARPU growth continued in Q1 2015

Mobistar’s blended ARPU increased to 23.9 euros in the first quarter of 2015 compared to 23.4 euros in the first quarter of 2014. It is the second quarter in a row that the ARPU shows an increase, and as such confirms the stabilizing trend despite the adverse effect of roaming regulation and the lower volumes, and hence revenues derived from SMS termination rates. The postpaid ARPU even grew by 3.8 % year-on-year, versus +1.8 % in the previous quarter. Mobistar’s 4G network coverage leads to prompt growth in customers data usages. The segmented and tiered pricing strategy introduced by Mobistar two years ago have clearly improved data monetization.

• Mobile service revenues are stabilizing

Mobistar’s service revenues amounted to 270.3 million euros, compared to 278.1 million euros a year earlier. This still represents a decline of 2.8 %, but also extends the improving trend quarter after quarter. Excluding the regulatory impact, revenues would have largely stabilized.

• Mobistar’s restated EBITDA increased for the first time in 15 quarters

In the first quarter of 2015, Mobistar realized for the first time in 15 quarters a year-on-year increase in the restated EBITDA of 5.6 %, reaching 69.9 million euros, compared to 66.1 million euros in the first quarter of 2014. The restated EBITDA, excluding the regulatory impact even increased by 12.4 %.

• Operational cash flow on the rise in Q1 2015

At the end of the first quarter of 2015 the operational cash flow amounted to 42.1 million euros, compared to 27.1 million euros one year before. The organic cash flow amounted to 14.5 million euros in the first quarter of 2015, up from 11.6 million euros in the same period last year, an increase of 2.9 million euros. The net investments amounted to 26.8 million euros in the first quarter of 2015, compared to 37.4 million euros in the same period last year, which was a peak quarter in terms of investments related to the launch of 4G.

2. Key facts

In 2015 Mobistar enters the final phase of its transformation plan. While the first two years were mainly rooted to fixing the fundamentals, the focus is progressively directed towards value management and creating levers for future growth. In the first quarter of 2015, Mobistar continued progressing with its four strategic priorities:

Leadership in Mobile:

• Mobistar remains the most innovative mobile operator in Belgium with a clear leadership in 4G coverage.
• 92 % of Mobistar customers now enjoy the advantages of the latest-generation mobile network. In the course of the second half of 2015, Mobistar will provide 99 % outdoor and 84 % indoor 4G coverage.
• The further expansion of Mobistar’s high-speed 4G/LTE network is being driven forward, as Mobistar is already planning a new technological leap with the deployment of 4G+. Once implemented it will benefit Mobistar customers as it allows for a more efficient usage of the different spectrum bands.
• At the end of March 2015, nearly 1 out of every 5 Mobistar customers was already registered as a 4G customer. The associated 4G traffic jumped up to represent over 40 % of total mobile data traffic.
• The use of mobile data while abroad is also continuing to grow, thanks to Mobistar’s 4G roaming agreements and diminishing roaming prices.

Pioneer in Disruptive Convergence:

• Since Mobistar launched the operational testing of its very high speed broadband internet & digital TV services on cable at the end of 2014, it has progressively increased the test population and area. Thanks to these testers, Mobistar can further optimize the quality of its services on a daily basis and it also triggered spontaneous web leads from potential new test customers.
• The Belgian Competition Authority has launched a formal investigation into the pricing policies of TV broadcasters towards new entrants. The purpose of this investigation is to assure that new players are treated in a fair, reasonable and non-discriminatory manner.
• The Belgian telecom regulator BIPT published a summary report on March 25 with recommendations to make it easier to switch fixed operators (fixed telephony, Internet, television included in a bundle). It proposes, amongst others, to authorize the "recipient" operator to quickly take on behalf of his new client all the necessary steps linked to the change of operator.

Best Customer Experience:

• Mobistar is increasingly prioritizing its investments based on customer experience impact – allocating its capital expenditure on the network where customers need it the most. A good example is Mobistar’s presence alongside important transportation lines, such as highways and train rail.
• Rather than only positioning itself on price, Mobistar is increasingly showcasing the excellence of its services. Mobistar customers with mid-end tariff plans are able to call unlimited to other Mobistar customers. A large part of Mobistar’s customers also have unlimited access to Facebook and Twitter without their data plan being debited. This kind of services allows Mobistar to differentiate itself and at the same time encourage the development of new usages, thereby more quickly securing growth in the mobile data segment.
• Mobistar’s loyalty program “Have a Nice Day” has been further extended with the goal to increase customer engagement and tenure. Mobistar is offering its customers cinema tickets on an annual, half yearly, quarterly, monthly or weekly basis depending on whether they have been customers for 3 months or 1, 2, 3 or 5 years respectively.

Best Industry Efficiency:

• The ACE2 plan continued to render savings in the first quarter of 2015. At the same time Mobistar has continued to pursue its efforts to reallocate resources from legacy operations to growth businesses.
• The outsourcing of Mobistar’s IT development and operations is proceeding smoothly. This strategic decision, which is rendering both opex and capex savings, puts Mobistar’s IT at the heart of its customer personalisation strategies.
• In the course of the first quarter of 2015, Mobistar proceeded with the integration of its consumer business unit and its sales & distribution division into a single department. This will lead to synergy savings while at the same time ensure a fully comprehensive end-to-end customer and digital experience.