Solid commercial momentum drives strong growth in retail service revenues

• Mobile postpaid net-adds: + 21k / +53.6% yoy
• Convergence net-adds: +20k / +5.8% yoy
• Revenues: +3.8% yoy / Retail service revenues:+13.5% yoy
• EBITDAaL -3.8% yoy (+14% excluding impact of MVNO revenues)

Q1’19 Belgium operating highlights

• Commercial momentum in mobile postpaid remains solid. The mobile postpaid customer base grew by 21k (+6.9% yoy) to 2.5m subscribers. New customers are increasingly opting for higher tariff plans.
• Convergence net-adds confirms attractiveness of offering. The Love offer remains the best value broadband and TV package in the market. Orange Belgium added 20k subscribers and reached a milestone of 200k Love customers (+64.4% yoy). The convergent mobile subscriber base represents 12.7% of mobile postpaid customers.
• B2C convergent ARPO continued to grow strongly while mobile-only ARPO contracted slightly. B2C convergent ARPO increased 7.7% yoy to €77.4 thanks to the absence of price promotions, revenue from connection fees and the take-up of the fixed line option. Mobile-only postpaid ARPO was 1.1% lighter yoy as growing access revenues did not fully compensate decreasing out-of-bundle revenues.

Q1’19 consolidated financial highlights

• Revenues increased 3.8% yoy to €318.2m. Retail service revenues continued its growth trajectory (+13.5% yoy). Convergence services (+83.4% yoy) and mobile only services (+3.0% yoy) were again the main growth drivers. The loss in MVNO revenues represents €12.1m. 
• EBITDAaL was impacted by the loss of Telenet MVNO revenues. EBITDAaL decreased 3.8% yoy against Q1’18 to €58m. Excluding the MVNO impact, EBITDAaL would have increased 14% yoy due to higher revenues and control of direct costs. Once again, Orange Belgium narrowed the cable operations’ EBITDA loss to €1.1m this quarter against a €5.9m loss in Q1’18.
• 2019 financial guidance confirmed. Orange Belgium expects slight revenue growth, EBITDAaL of €285m-€305m and stable eCapex.

Michaël Trabbia, Chief Executive Officer, commented:

At Orange Belgium, we aim to break telco conventions. We disrupted the fixed market duopoly with our Love offers. We were the first to launch full unlimited mobile and convergent offers in Belgium. For the third year in a row we committed not to increase the price of mobile and convergent services.

Our Bold Challenger positioning led to strong commercial growth in 2018. In the first quarter of 2019, in an active competitive environment, we continued to take benefit from this positioning. We experienced solid commercial growth in mobile and convergence, and generated increasing customer satisfaction. We reached the milestone of 200,000 Love customers, and grew our mobile postpaid customer base by nearly 7% yoy. We also launched new initiatives. We extended our unlimited mobile offers to business customers, and guaranteed indoor mobile coverage to our customers. Looking forward, we are preparing the launch of our unlimited Internet-only offer to further address customers’ unmet needs.

Arnaud Castille, Chief Financial Officer, stated:

Our revenues continued to show the steady increase seen since the beginning of 2018, mainly driven by the growth of our retail service revenues, which went up 13.5%, a record figure. It is also worth highlighting that Q1’19 marks the third consecutive quarter of mobile-only revenue growth amidst continued growth in convergence revenues. This is strong evidence that our bold positioning is entrenched in the telecom market.

The termination of MVNO contracts led to a 3.8% contraction of EBITDAaL during the quarter. The impact was €12m on profits which was only partially compensated by a strong growth in retail service revenues.

We confirm our guidance for 2019. We are committed to deliver excellent customer service in order to maintain the commercial momentum. We remain focused on extracting operational efficiencies.

Outlook

Based on Q1’19 results, Orange Belgium reiterates the financial outlook provided in February. Orange Belgium expects slight growth in revenues in 2019 taking into account further uptake on its postpaid and convergent customer base.

For 2019, the Company expects an EBITDAaL (under IFRS16) between €285m and €305m. This range takes into account headwinds such as the decrease in MVNO revenues, the international call impact due to the new regulation and the payment of the Orange branding fee as from May. As a reminder, the Company expects cable operations to achieve EBITDAaL breakeven by year-end. Lastly, total eCapex is expected to remain stable.