Everybody has been profoundly affected by the COVID-19 pandemic. In this global crisis context, our main priority is the protection of our employees, our customers, suppliers and subcontractors, as we comply fully with the decisions and recommendations of the competent authorities. In addition, we concentrated our efforts on ensuring service continuity as connectivity is more than ever critical for Belgian consumers, businesses, hospitals and administration. Finally, we believe we have an important societal role to support the country in this difficult time. We proactively promoted the “StayHome” message, we supported our customers with a dedicated platform and additional data, and we helped the government monitor mobility via anonymised data. We also provided concrete and meaningful support to hospitals and nursing homes, with masks, cyber-security and communication solutions. Orange Belgium together with the members of its Executive Committee in their personal capacity made a joint donation to finance a COVID-19 middle care unit.
On 9 March, we launched GO, our revamped mobile portfolio, introducing exclusive mobile family discounts, and confirming once again our Bold Challenger position. Our Love Duo and Trio convergent offers continued to attract many new customers.
However, the lockdown measures have impacted our sales, with the temporary closure of the shops, only partially mitigated by the increase of other channels, mainly digital and telesales. We are preparing to reopen our shops when it becomes possible, with all the necessary protection equipment and sanitary measures.
In April, the regulator submitted its draft decision on the wholesale cable tariffs to the European Commission, including amongst others, a major change in the methodology of cost recovery compared to the last draft decision that would be massively detrimental for customers. This major change in the final steps of the process would mean significantly over-compensating cable owners’ actual costs. In addition, the assumptions made lead to a far excessive and unjustified increase of the wholesale tariffs by up to 25% over time. As such, the draft decision would necessarily lead to significant price increases year after year in the Belgian broadband market, although it is already amongst the most expensive broadband markets in Europe. In the interest of Belgium customers, we urge the European Commission and the regulators to materially improve the draft decision, based on the reality of the costs and avoiding any overcompensation.
The measures taken following the pandemic crisis will impact on the company’s financial performance. The first quarter of this year was impacted for a period of about two weeks, so it is too early to say how this will impact the rest of the year. But we can imagine an impact on revenue, caused by lower gross adds in mobile and convergence partially offset by a reduction in churn. The decrease in handset sales will have an impact on the topline but may also see a rebound after the crisis. Therefore, we managed to adjust our costs, which were also reduced through the decrease of the customer acquisition cost. Hence, we only expect a limited impact on EBITDAaL over the year. We will re-evaluate the COVID-19 impact and the potential change to our guidance after the second quarter. Additionally, Orange Belgium has a robust balance sheet with a leverage of 0.8.
The launch of our new mobile portfolio will not only lead to simplicity for our customers, but will also help to streamline our processes aiming at lowering the costs for managing those portfolios.
In the light of the Bold Inside programme we have continued to make the necessary efforts to control our costs, which provided its results with stable costs versus last year in a revenue growth context.
The confirmation of the competition authorities that no additional interim measures are needed anymore for the execution of the mobile network access sharing agreement with Proximus has enabled us to transfer employees to the newly created joint venture, MWingz and to start the implementation of our agreement.