Trends

Telenet Group Holding NV (TLGHF) Q4 2022 Earnings Call Transcript

Trending 1 year ago
beritaja.com

Telenet Group Holding NV (OTC:TLGHF) Q4 2022 Earnings Conference Call February 16, 2023 9:00 AM ET

Company Participants

John Porter - CEO

Erik Van den Enden - CFO

Rob Goyens - VP, Treasury and IR

Conference Call Participants

Roshan Ranjit - Deutsche Bank

Joshua Mills - BNP Paribas Exane

James Ratzer - New Street Research

Yemi Falana - Goldman Sachs

Konrad Zomer - ABN AMRO ODDO BHF

Operator

Hello, and invited to nan Full Year Results 2022 Telenet Investor Call. My sanction is Jess, and I'll beryllium your coordinator for today's event. [Operator Instructions]

On nan telephone today, we person John Porter, CEO; Erik Van den Enden, CFO; and Rob Goyens, VP, Treasury and Investor Relations.

And I will now manus complete to Rob Goyens to statesman today's call. Thank you.

Rob Goyens

Thanks, operator; and welcome, everyone, to our 4th fourth net webcast and convention call. As always, each net materials, including this presentation, tin beryllium recovered successful nan Results conception of our Investor website. And, aft this call, we will besides supply nan replay and transcript for those that whitethorn person missed this call.

Before we start, however, I would for illustration to punctual you that definite statements successful this net position are forward-looking statements. More accusation connected these statements tin beryllium recovered successful nan Safe Harbor disclaimer astatine nan opening of nan presentation.

Also statement that we've put retired rebased full-year 2022 number this greeting alongside our reports full-year results. And this is successful bid to bespeak nan effect of some nan Eltrona and Caviar acquisitions, but besides nan waste of our mobile building infrastructure successful June past year. Our 2023 guidance that we will coming is based disconnected these rebased numbers, truthful please return a infinitesimal to familiarize yourself pinch these numbers. For much information, I mention you to nan Toolkit connected our Investor Relations website.

Let maine now quickly present today's speakers to you. As always, we will commencement pinch our CEO, John Porter. John will supply immoderate insights connected nan 4th and elaborate connected immoderate of nan strategical initiatives we person taken precocious that will group america up for sustainable, profitable maturation successful 2023 and beyond. Next, our CFO, Erik Van den Enden, will locomotion you done our operational and financial highlights. And, afterwards, we will unfastened it up for Q&A. And we induce you to limit yourself to 2 questions each.

With that, fto maine now manus complete to John for nan presentation. John, nan level is yours.

John Porter

Thanks, Rob, and bully day aliases greeting to each of you. I admit you each taking nan clip coming to subordinate this call.

I'm very pleased pinch our achievements complete nan past year. I'll fto Erik guideline you done our financial results later on, but arsenic you spot here, we again nicely ticked each of our financial objectives for nan past year, contempt inflationary headwinds chiefly connected our power and unit related expenses.

We managed to turn our topline for nan 2nd consecutive twelvemonth aliases for nan 3rd clip successful a row, if you exclude our different revenues, which were heavy impacted by nan world COVID pandemic successful 2020.

As a reminder, our different revenues see categories for illustration interconnect, our media franchise, our regulated and commercialized wholesale businesses, arsenic good arsenic debased separator hardware sales. And arsenic Erik will explicate later on, we are good group up to turn our topline again successful 2023.

Our operations proved resilient, contempt an intensely competitory environment. Our relentless attraction connected our fixed mobile convergence strategy maintained its momentum. We added astir 74,000 nett FMC customers successful 2022, of which 19,000 were added successful Q4 and reaching an FMC customer guidelines of complete 823,000. As a consequence, our mobile postpaid subscriber guidelines increased. With conscionable complete 45,000 nett integrated subscriber additions successful 2022 to almost 2.7 million.

We besides further expanded our broadband customer guidelines connected nan backmost of our successful FMC offers and starring web position offering information download speeds of 1 gigabit per 2nd crossed our full footprint. Our nett adds capacity was adversely impacted by a cleanup of 4,000 TADAAM customers successful nan 2nd half of nan year.

We besides managed to somewhat turn nan fixed ARPU per customer relationship, which was up 1% for nan afloat twelvemonth and 2% successful nan 4th quarter. And I'm besides proud of nan truth that we were precocious recognized for nan champion nationwide mobile sum by nan independent user organization, Testaankoop, and that we achieved nan highest mobile information download velocity based connected BIPT thrust tests successful September and October of past year.

We person delivered connected our guidance, while astatine nan aforesaid clip laying nan foundations for early growth. In June past year, we successfully closed nan waste of our mobile building infrastructure business to DigitalBridge for a full information of €745 million, balanced to a aggregate of 25 times EV to EBITDAaL. We will reinvest those proceeds and nan upgrade of our fixed web to fibre arsenic mentioned astatine erstwhile occasions.

In July, past year, we announced nan agelong awaited NetCo transaction pinch Fluvius, which is pending EC regulatory approval, expected by summer. I judge NetCo is uniquely positioned, fixed its marketplace starring web penetration of astir 60% pinch astatine slightest 2 beardown tenants being Telenet and Orange Belgium.

Just a fewer weeks ago, we signed 2 commercialized agreements pinch Orange, providing entree to each other's fixed web complete a 15-year play and which are taxable to Orange Belgium closing nan VOO transaction. For us, this now provides a clear way to Wallonia. The truth that Orange will usage our FTTH web successful nan early will greatly fortify NetCo's attractiveness to further strategical and/or financial partners.

On nan customer front, we made important advancement successful nan upgrade of our IT stack and integer CRM platform, allowing america to accelerate connected nan travel to customer centricity. We besides expanded our activities some successful media pinch nan step-up acquisition of Caviar and connectivity pinch nan acquisition of nan remaining liking successful nan Luxembourg based cablegram operator, Eltrona. Both increasing companies will lend for nan afloat 12 months to our financial results successful 2023.

Last month, we signed 2 important commercialized agreements pinch Orange Belgium, providing entree to each other's fixed web for a 15-year period. Both agreements are conditional upon nan acquisition of VOO by Orange Belgium, which is pending EC regulatory approval.

Through nan agreements, we now person a clear way to wholesale entree successful nan South of Belgium, complementing our existing fixed footprint successful Flanders, parts of Brussels and nan footwear of Hainaut successful Wallonia, successful summation to our nationwide mobile web coverage. This will alteration america to turn into a nationwide FMC subordinate and supply much prime for our customers. Our commercialized and go-to-market strategy, acknowledgment to our asset-light attack to nan South, we will materially heighten our maturation floor plan astatine profitable margins.

I americium arsenic excited astir nan extended business pinch Orange Belgium successful our footprint, which covers some our existent HFC and early Fiber-to-the-Home network. We invited Orange Belgium arsenic a wholesale customer connected our early FTTH network, further expanding our web penetration and improving nan return connected finance and semipermanent profitability of our precocious announced fibre investments.

On nan adjacent slide, you get a consciousness of nan opportunity astatine manus arsenic we're talking astir a 1.8 cardinal homes passed region that is afloat adjacent to our fixed web and covered only by our nationwide mobile web today, which is good supported by our unit operations. For galore years, nan Walloon residential telco marketplace has been dominated by nan incumbent operator, arsenic you tin spot connected nan marketplace stock stats connected nan right.

As I conscionable mentioned, we person precocious ambitions for this market, targeting a location disconnected footprint fixed marketplace stock of astir 10%. This will materially heighten our maturation profile, and truthful we spot Wallonia arsenic an charismatic avenue of incremental maturation for our company.

This challenger position successful Wallonia goes manus successful manus pinch our incumbent marketplace position successful Flanders, arsenic you tin spot present connected nan slide. We will truthful go a nationwide FMC usability pinch a multi-brand strategy, providing much prime for our customers, approval, which we expect by summer.

Here you tin spot immoderate of nan cardinal attributes of our early NetCo, successful which we will clasp a 67% stake. Combining Telenet's and Fluvius's existent HFC networks successful nan full of Flanders and two-thirds of Brussels, NetCo will supply web entree connected a non-discriminatory ground to each operators successful nan market. This not conscionable includes Telenet, but besides Orange Belgium, who has agreed to go a tenant connected our early fibre network.

As a result, our marketplace starring web penetration of adjacent to 60% is good covered, while it besides improves nan returns connected our precocious announced fibre investments. As a reminder, NetCo intends to walk up to €2 cardinal to scope 78% Fiber-to-the-Home sum by 2038 and astir 70% by nan extremity of this decade. We judge location is upside to nan scheme arsenic we look for synergies and partners.

Our NetCo scheme is afloat funded utilizing nan proceeds from our building sale. Therefore, we are not limited connected outer financing. Having conscionable signed up Orange Belgium arsenic a wholesale customer for nan adjacent 15 years, we not only amended nan ROI connected our fibre investments but besides fortify NetCo's attractiveness to strategical and/or financial partners. This optionality for a partial NetCo waste successful nan early could supply scope for incremental shareholder returns, arsenic I mentioned during our CMD.

I'm besides proud of nan outer nickname we've received for our efforts connected nan ESG front. Sustainability has been agelong clip rooted successful our DNA and we person been a front-runner successful helping to adjacent nan integer disagreement successful our marketplace amongst others.

For nan 12th consecutive year, we maintained our spot successful some nan Dow Jones Sustainability Europe and World Indices and reconfirmed our Platinum standing successful nan yearly EcoVadis assessment. And conscionable precocious we were besides admitted to nan Bloomberg Gender Equality Index arsenic good arsenic nan recently created BEL ESG Index from Euronext successful Belgium, which was launched yesterday.

This brings maine to my past slide, which summarizes nan worth creation levers we person crossed some of our infrastructure business arsenic good arsenic our consumer, B2B and intermezo activities. It is our semipermanent ambition to thrust some gross and adjusted EBITDA maturation crossed each of our assets.

We besides expect a substantially reduced superior strength station nan fibre build astatine nan extremity of this decade and past much mean CapEx to income ratio for nan Telenet business overall. This should reignite early adjusted free rate travel maturation and lead to an upgraded shareholder remuneration argumentation from 2030 onwards, arsenic communicated before.

With that, fto maine now manus it complete to Erik, who will elaborate connected our operational and financial results.

Erik Van den Enden

Thanks, John; and welcome, everyone, to this call.

Thanks to nan relentless attraction connected our fixed mobile convergence strategy, we maintained our affirmative commercialized momentum wrong nan 4th quarter, adding 19,000 caller FMC subscribers and reaching a customer guidelines of complete 823,000 customers.

Our mobile postpaid subscriber guidelines accrued pinch conscionable complete 10,000 nett adds to scope almost 2.7 cardinal customers. We besides further expanded our broad-based customer guidelines connected nan backmost of our successful FMC offers and our starring web position, offering information download speeds of 1 gigabit per 2nd crossed our full footprint. In position of broadband, we added 1,700 nett adds wrong nan quarter, contempt nan cleanup of 2,000 TADAAM customers arsenic was nan lawsuit successful nan 3rd quarter.

With respect to our monthly fixed ARPU per customer, we reached conscionable complete €60 per customer, which was up astir 2% year-on-year, driven by nan value summation that we did successful nan mediate of June. Thanks to nan beardown financial capacity successful nan past 4th of nan year, we were capable to present connected our afloat twelvemonth guidance. Our rebased revenue, taking into relationship changes owed to nan Caviar acquisition successful October of past year, was up astir 2% and ended up conscionable complete 1% for nan afloat year, successful statement pinch our outlook.

And acknowledgment to our smart pricing strategy, we managed to afloat sorb nan effect of higher ostentation connected some our unit related expenses and our costs related to outsourced explanation and master services, arsenic good arsenic a 70% summation successful our power walk pursuing higher power prices from nan warfare successful Ukraine. As a result, our afloat twelvemonth rebased adjusted EBITDA was almost up 1% and 5% wrong nan past quarter.

Let's now zoom successful connected our topline performance. Our afloat twelvemonth rebased gross accrued 1.3% to scope €2.6 billion, achieving our guidance of astir 1% which we group successful nan opening of past year. Our subscription revenue, which represents nan sum of our cablegram and mobile subscription revenue, was up a akin 1% compared to 2021 connected some reported and rebased basis. Around 74% of our gross was generated from monthly recurring subscriptions and astir 60% of our gross benefited from nan complaint adjustments that we implemented successful nan mediate of past year.

Growth successful our broadband and mobile telephony gross of 3% and 6% much than offset nan declines successful our fixed-line telephony and video revenue. The betterment successful our gross maturation trend, which started successful nan 3rd quarter, continued going towards nan year-end. In Q4, our operations yielded almost €713 cardinal of revenue. This represents a 7% year-on-year summation arsenic a consequence of nan Caviar acquisition. Excluding this impact, our rebased gross maturation came successful astatine astir 2%.

As already mentioned successful erstwhile net calls, our costs guidelines was negatively impacted by nan effect of some higher power costs and wide ostentation connected our unit related expenses. On a rebased basis, our operating expenses were up 2% versus past year. And isolated from for our nonstop costs, each costs buckets showed an upward trend.

Our full power costs accrued by €21 cardinal successful 2022 to scope €51 cardinal arsenic a consequence of nan globally higher power prices. 90% of our expected power depletion for 2023 is now covered by fixed value agreements arsenic we benefited from nan downward trends successful nan marketplace successful Q4 to summation nan hedge proportionality from astir 45% astatine nan clip of our Capital Markets Day to 90% now.

Staff related expenses for nan afloat twelvemonth were up 6% versus past year. This reflects nan effect of nan 3.6% mandatory costs indexation astatine nan opening of 2022 and besides a higher mean headcount. For adjacent year, we expect our unit related expenses to beryllium materially impacted by nan 11% mandatory costs indexation arsenic of nan opening of this year, which is afloat embedded successful our afloat twelvemonth outlook. On a rebased basis, our operating expenses successful nan 4th fourth of 2022 modestly decreased by 1%, driven by little web operating expenses and wide tight costs control.

Turning to nan adjacent slide. Our adjusted EBITDA for nan afloat twelvemonth accrued 0.7% year-on-year and includes €2.6 cardinal of alleged costs to seizure to hole nan go-live of our NetCo business pinch Fluvius.

As you whitethorn remind, these costs person been excluded from our 2022 guidance and, pinch that, we person delivered connected our outlook of astir 1%. Within nan 4th fourth specifically, adjusted EBITDA was up astir 5% year-on-year arsenic a consequence of nan value accommodation and continued tight costs control.

In June of past year, we concluded nan waste of our mobile building business to DigitalBridge. At that moment, we entered into a 15-year maestro lease statement and, successful nan meantime, we person started to make lease related building payments to DigitalBridge. Following this transaction, we person started to see adjusted EBITDA aft lease costs aliases adjusted EBITDAaL arsenic a cardinal financial metric, which includes depreciation expenses and liking expenses connected leases. And, arsenic of this year, we will modulation to adjusted EBITDAaL arsenic our cardinal guidance metric arsenic opposed to adjusted EBITDA previously.

On a rebased basis, our adjusted EBITDAaL for nan twelvemonth was up 1% compared to 2021. And, again, wrong nan 4th quarter, we delivered beardown capacity pinch an summation of 5% versus nan 4th fourth of past year.

Let's now person a look astatine our CapEx. Our accrued superior expenditures were €656 cardinal for nan afloat year, excluding nan nickname of definite shot broadcasting rights, mobile spectrum licenses and definite lease related superior additions arsenic per our guidance. Our CapEx was balanced to astir 25% of nan gross recorded complete nan periods.

The 21% summation successful CapEx versus past twelvemonth was owed to higher network-related investments successful 5G and method fibre related investments connected nan 1 manus and set-top container and modem switch programs, successful summation to nan continued rollout of our in-home connectivity devices astatine nan different hand. Approximately, 62% complete full-year CapEx was scalable and/or subscriber maturation related arsenic you tin spot successful nan pastry charts connected nan slide.

We achieved an adjusted EBITDA, little spot and instrumentality additions antecedently referred to arsenic operational free rate flow, of almost €718 cardinal successful 2022. The 13% year-on-year alteration was chiefly driven by higher accrued superior expenditures. In nan 4th quarter, specifically, adjusted EBITDA, little spot and instrumentality additions, was €148 million, representing an 18% year-on-year decrease.

We generated €409 cardinal of adjusted free rate travel successful 2022 compared to €405 cardinal past year. This accomplishment was successful statement pinch our afloat twelvemonth guidance of unchangeable adjusted free rate flow. Our adjusted free rate travel reflected astir €9 cardinal higher nonstop acquisition costs, offsetting €9 cardinal little rate taxes paid wrong nan year, while our vendor financing programme remained unchangeable compared to past year. We besides enjoyed beardown rate travel procreation wrong nan 4th quarter, which was up 14% year-on-year to scope €118 million.

Telenet continues to use from a beardown indebtedness maturity profile. We look nary indebtedness maturities anterior to March 2028. The mean clip to maturity of our indebtedness is 5.5 years, and nan mean weighted costs of our indebtedness is 3.2%. Moreover, our liking complaint vulnerability is afloat hedged. Including afloat entree to a revolving in installments installation was €555 million, our full liquidity now exceeds €1.6 cardinal fixed nan robust rate equilibrium of conscionable complete €1 cardinal astatine nan extremity of nan year. And fixed nan summation successful short-term liking rates, our rate has besides started to output affirmative returns.

Following nan building disposal and nan move to adjusted EBITDAaL, we person changed nan measurement we are calculating our nett full leverage. Net full leverage is now calculated utilizing nett indebtedness excluding leases, divided by nan past 2 quarters' annualized adjusted EBITDAaL. On this metric, our nett full leverage arsenic astatine nan extremity of nan twelvemonth reached 3.4 times.

The humble betterment quarter-on-quarter was driven by nan maturation successful our rate equilibrium and EBITDA maturation successful nan 4th quarter. Under nan erstwhile nett full leverage definition, utilizing nett indebtedness including leases divided by nan past 2 quarters' annualized adjusted EBITDA, our nett full leverage was 3.9 times astatine nan extremity of nan year.

Looking up into 2023, we proceed to look headwinds connected nan costs side, particularly erstwhile it comes to power and unit related expenses. With respect to energy, our expected walk for 2023 is now 90% hedged astatine a costs of astir €200 per megawatt hour. In position of unit related expenses, arsenic you know, an 11% mandatory costs summation has been implemented successful January of this year.

This will person a antagonistic effect connected our costs guidelines and adjusted EBITDA of astir €30 million. We are though good positioned to mitigate these costs headwinds by respective measures, including tight costs control, nan upside from integer efficiencies and applying smart pricing strategy. As such, we target a broadly unchangeable adjusted EBITDA and adjusted EBITDAaL for nan afloat year.

This brings maine to nan remainder of our afloat twelvemonth outlook. Following nan caller closing of nan Caviar and Eltrona acquisitions, and nan waste of our mobile towers successful June of past year, we person rebased our afloat twelvemonth 2022 results, arsenic Rob mentioned earlier. Our ambitions for 2023 person been group against that rebased basis.

Heading into 2023, we will tightly show our costs guidelines successful ray of nan 11% mandatory costs indexation and successful ray of nan effect of higher power costs connected our wide expenses. We intend to sorb these inflationary pressures done continued integer savings, tight costs power and targeted complaint increases to offset nan aforementioned impacts. With that, we expect a topline maturation betwixt 1% and 2% for 2023 connected a rebased basis, while we target broadly unchangeable rebased adjusted EBITDAaL complete nan aforesaid periods, which would beryllium akin for adjusted EBITDA.

For 2023, and excluding nan effects of nan NetCo transaction, we expect our CapEx to gross ratio to beryllium astir 26% arsenic we proceed to spot higher spending connected amongst others, nan 5G rollouts, opportunistic standalone fibre deployments and trench sharing opportunities, and definite investments successful IT and merchandise developments to hole for nan marketplace introduction into Wallonia successful 2024, pursuing nan commercialized wholesale statement pinch Orange Belgium.

This translates into little adjusted free rate travel arsenic compared to past year. For 2023, we target an adjusted free rate travel of astir €250 million. With that, our dividend level of €1 per stock aliases €108.6 cardinal successful aggregates remains good covered.

In July 2022, arsenic portion of nan announcement of nan NetCo transaction, which is pending regulatory approval, nan Board of Directors decided to reset nan company's shareholder remuneration argumentation successful bid to support a consolidated nett full leverage of astir 4.0 times passim nan CapEx aggravated fibre build periods. The Board decided upon an yearly dividend level of €1 per stock to beryllium paid annually successful early May pursuing shareholder support astatine nan statutory AGM successful April.

After nan web build period, CapEx strength is expected to materially alteration and return to much normalized humanities levels, starring to important adjusted free rate travel maturation and providing scope for importantly higher shareholder disbursements. At that constituent successful time, nan shareholder remuneration scheme will beryllium reevaluated by nan Board.

The Board has now decided to propose to nan Annual General Shareholders' gathering successful April to o.k. nan costs of a gross dividend of €1 per share, which amounts to €108.6 cardinal successful total. The projected dividend will beryllium paid utilizing existing rate and rate equivalents and is successful statement pinch nan company's dividend floor. If approved by nan shareholders, nan dividend will beryllium paid successful early May.

This brings america astatine nan extremity of nan guidance presentation. Let maine now manus backmost to nan usability to mean nan Q&A session.

Question-and-Answer Session

Operator

[Operator Instructions] And nan first mobility comes from nan statement of Roshan Ranjit from Deutsche Bank. Please spell ahead.

Roshan Ranjit

Great. Afternoon, everyone. Thank you for nan questions. First mobility is astir CapEx. And if I look astatine your guidance for this year, I deliberation it implies €740 cardinal CapEx astatine nan midpoint. I deliberation you've antecedently aliases a mates of weeks agone you highlighted astir €20 cardinal to €30 cardinal of investments successful Wallonia, and looking astatine wherever you ended 2022, that suggests benignant of astir €50 cardinal - €60 cardinal for nan RAN and strategical fibre investments. So nan mobility is, is that - what was nan balanced number for that successful 2022? And are we now benignant of finishing that 5G RAN investment, because I deliberation you antecedently said that was a 2 to three-year finance period?

And, secondly, conscionable backmost to nan operational side, you saw a beardown pickup successful residential broadband adds and that's contempt nan 2,000 TADAAM cleanup, what has driven that? Because volumes person been reasonably constricted this year, truthful is this thing which you've seen a pickup arsenic a consequence of immoderate promotions aliases much receptiveness to your products. Any specifications there? And whether we should expect that to proceed into 2023? Thank you.

John Porter

I'll do nan 2nd mobility arsenic Erik shape his thoughts connected nan CapEx version. Yeah, connected nan broadband pickup, 2 factors successful Q4. One is that we did person a very successful run there. The different operators and ourselves tally - usually tally hardware run starring up to Christmas and past for a fewer weeks after. You ne'er cognize precisely what nan correct operation of strategies are going to be, but successful our case, I think, we've made a batch of bully decisions astir that and we're beautiful happy pinch nan capacity of nan campaign.

But I will besides opportunity that, arsenic nan twelvemonth progressed, we had assumed possibly a small spot much churn owed to much preponderance of fibre and much competitory offers successful nan fibre areas and we didn't spot that assistance successful churn. We saw churn unchangeable to down crossed nan business. In fact, voluntary churn. In different words, churn is not related to moving retired of nan area for financial non-pace is it really astatine all-time lows.

So nan offers that we person successful nan marketplace aliases CVP is astir 1 gig and our FMC are really proving to beryllium rather resilient successful nan market, truthful churn was decidedly beneath our expectations successful Q4, and acquisition was somewhat higher. So, Erik.

Erik Van den Enden

Yes. Awesome. So connected nan CapEx, and, first of all, I would opportunity that our wide CapEx letter cover is somewhat increasing. We ended this twelvemonth astatine 24.6%. We are targeting astatine astir 26% of income for adjacent twelvemonth and besides income is, of course, somewhat higher, truthful that astir apt gives america astir €35 cardinal to €40 cardinal nominal CapEx into 2023.

So, specifically, to nan - to infrastructure investments aliases web investments pinch 5G and pinch nan method fibre investments, some are planned to spell up. So, erstwhile you look astatine 5G, it is simply a multiyear program. And so, practically, that intends that - while nan walk this twelvemonth will spell by and ample €30 million, but nan highest will really travel successful 2024, but past it goes down rather rapidly. So, it's different 2 years of investments connected nan 5G broadside and past reducing strongly.

On nan fibre side, truthful location we are besides readying an acceleration versus past year. As we person discussed successful erstwhile net calls, 1 of nan main activities that we're doing location is simply a alleged trench sharing, wherever we grasp nan opportunity whenever personification successful Flanders aliases Brussels unfastened up nan curbstone that we besides subordinate that opportunity and put our infrastructure there.

So that activity, together pinch different fibre activities, is expected to spell up and we are compensating portion of that summation pinch nan reductions successful nan different parts of our CapEx spend. Especially connected nan IT side, we person stopped again for a mates of years now astir nan truth that we are upgrading our CRM stack and location has been a programme that I deliberation has been going connected for much aliases little 4 years, but wherever we are now really successful nan past phase.

Last year, we already migrated our guidelines customers towards nan caller strategy and we are besides now successful nan process to migrate nan Telenet customers. That process is ongoing, not yet afloat deployed, but nan strength of that programme and truthful nan associated superior will spell down and that is really we travel to nan wide equation. So, stepping up 5G and fibre investments offsetting by - successful portion nan IT investments.

Roshan Ranjit

Okay. Thank you.

John Porter

Okay.

Operator

The adjacent mobility comes from nan statement of Joshua Mills from BNP Paribas Exane. Please spell ahead.

Joshua Mills

Hi, guys. A mates of questions from my side. The first would conscionable beryllium a spot much colour astir your thoughts astir nan backmost book value increases and what you could do this year. I mean, we saw immoderate rather fierce value hikes successful Orange Belgium and past week they said that that hasn't needfully impacted them negatively connected nan churn side. So, I guess, twofold question. One, do you deliberation you tin spell for much of a value emergence this twelvemonth than previously? And then, secondly, really do you consciousness astir bringing nan timeline of that value summation guardant aliases possibly moreover introducing aggregate value rises during 2023 arsenic immoderate of your competitors do? And truthful that would beryllium nan first question.

And then, secondly, conscionable connected nan projected VOO deal, I'd beryllium willing to cognize if there's immoderate alteration to your existent wholesale position offered to Orange Belgium arsenic portion of that, fixed its reciprocal agreements? And past I'd for illustration to perceive your thoughts connected really you get astatine nan 10% target, which you're looking for successful Wallonia and nan different puts and takes astir that, wherever you tin beryllium much successful, wherever you mightiness spot challenges? Thanks.

John Porter

Okay. Let maine return a changeable astatine that, Josh. On nan value summation benignant of fronts, we're ever doing - we don't conscionable benignant of prime a number retired of nan year, there's a batch of things that spell into deciding what our smart caller strategy is going to be. We've been moving very difficult connected really knowing nan market, wherever nan constituent of diminishing returns, because it's really each astir nan nett impact. If you overreach and a bunch of customers telephone you up, and they're frustrated, and they want to cognize really they tin prevention money, there's a batch of ways successful a multi-product situation wherever they tin past prevention their costs than you really person it move forward.

So, we person done a batch of investigation already and we deliberation we person a beautiful bully thought of wherever that constituent of diminishing returns is. Quite clearly, I don't deliberation immoderate subscription-based supplier is going to beryllium capable to get done 2023 without doing nan champion they tin connected smart pricing, because of embedded costs impacts, peculiarly successful our lawsuit from labour indexation and energy, but different things - different ostentation related things arsenic well.

So, I'm not a instrumentality of aggregate complaint increases, I think, our acquisition and my acquisition successful 4 decades of doing this is that, erstwhile is capable and we will warrant it to our customers done our connection strategy and by continuing to amended their experience. So that it shouldn't beryllium overly disruptive, but it's much a lawsuit of, if you overreach customers, it's not that they're going to spell and spell to a different usability aliases anything, it's conscionable that they're going to shave their costs to a tolerable level.

So, we deliberation we cognize wherever that level is. We deliberation we cognize what nan effect of having thing little than a 12-month rhythm is. We person done that successful nan past. I can't opportunity whether we will do that this twelvemonth aliases not without forecasting what nan Board will beryllium saying astir it and they haven't said thing astir it yet. But - so, that's benignant of arsenic transparent arsenic I tin beryllium astir pricing strategies.

And connected nan wholesale arrangements pinch VOO entree and nan Orange agreement, that's a confidential agreement, which we really can't remark on. I can't remark connected what we deliberation astir nan marketplace and really we consciousness for illustration we tin person an effect there. Generically, without giving you circumstantial specifications of our go-to-market strategy, which will travel to unrecorded successful 2nd half of nan year, obviously, arsenic we activity towards launching.

But nan 10% is intelligibly - we person nan illustration of Orange's introduction into that market. I think, fundamentally, nan measurement - what's happened location is that you're going to hypothetically from 3 to two, and I deliberation astir apt from a regulatory standpoint that's not very attractive.

So, they are rather keen to person different usability switch nan positioning of Orange successful nan marketplace and we cognize that complete 7 years that they've gotten to precocious azygous digits aliases possibly moreover to 10% and we don't spot immoderate logic why pinch nan magnitude of assets that we person astatine our disposal, nan acquisition that we person building worth successful in-home connectivity, entertainment, et cetera, which is intelligibly nan USP of Telenet successful our existent footprint, while we can't bring immoderate of those things to carnivore and perchance execute astatine slightest nan numbers of Orange complete nan mean term.

So, we person - location is simply a way grounds of being successful that segment, successful nan market, successful nan South of nan country. We besides person two-thirds of Brussels correct now and nan one-third that we will beryllium accessing nan VOO web connected is rather a - I don't cognize really to opportunity this without being derogatory, but it's rather an able conception of Brussels. So I respect our brands will do good there.

So, we besides person - we'll besides - erstwhile we do launch, we'll deed nan crushed running, because we person a web of retail, we person - pinch our BASE shops, we besides person rather a spot of acquisition transactionally successful nan Brussels market. So, we're not going from a opinionated start. So that's different logic why we person rather a spot of assurance successful our expertise to turn marketplace stock successful nan South.

I mean, we cognize a batch astir nan VOO network, obviously, because we were competing to get it, and it's not a bad network. There are parts of it wherever 1 gig is possible, but location are different parts of it that request to beryllium upgraded and we person a batch of assurance that arsenic Orange put superior successful that web aliases should they take to build fibre aggressively that will besides beryllium a existent use to america to amended nan penetration pursuing their superior investment, superior allocation astir nan market. Okay?

Joshua Mills

Okay, great. Thanks very much.

Operator

The adjacent mobility comes from nan statement of James Ratzer from New Street Research. Please spell ahead.

James Ratzer

Yes. Good afternoon, John and Erik. Thank you. I person 2 questions, please. So nan first 1 is conscionable really conscionable to get your latest reasoning connected nan adjacent steps astir nan NetCo. I mean, arsenic you're waiting for nan EC approval, are you astatine this shape besides moving a simultaneous process to look astatine a liking waste aliases does that only travel erstwhile nan support has been given? And tin you springiness immoderate denotation astatine this shape connected what your target ownership of that plus mightiness be?

And, astatine this stage, you besides said your guidance doesn't see nan effect of nan NetCo formation, but connected 1 of your earlier answers you were talking astir stepping up fibre walk wrong your existent CapEx estimate. So conscionable it would beryllium awesome to understand if, let's say, nan NetCo had been up and moving from nan 1st of January, what would beryllium nan effect connected nan guidance that you gave?

If I thought benignant of abstracted mobility conscionable connected nan gross growth, conscionable intrigued why wide it isn't a small bolder connected pricing, you did astir 1% past twelvemonth and nan guidance for this twelvemonth is 1%, but yet nan benignant of delayed effect of ostentation is going to beryllium felt overmuch much successful your costs guidelines this year. So I'm conscionable intrigued why you didn't consciousness much assured about, let's say, pushing nan gross maturation for this twelvemonth a small higher to offset immoderate of those inflationary drags? Thank you.

John Porter

For nan first portion of your first question, I'll answer, because it's rather simple. We can't - owed to weapon jumping, we can't really beryllium acting connected behalf of nan venture, nan hypothetical task astatine this point. So we can't opportunity - we can't tally a process, we can't really talk about, we can't really springiness immoderate guidance to wherever nan hypothetical task that would impact different statement would do. So we can't really remark connected that. So nan reply to your mobility is, erstwhile nan task is formed and arsenic - consequent to regulatory approval, past we will, pinch our partners, springiness information to what nan superior strategy is for nan company.

The adjacent mobility connected nan fibre is, I think, we've said - what we've said is that, yes, we've been spending and, I think, Erik alluded to nan numbers besides successful his presentation, connected trench synergies and pushing immoderate Fiber-to-the-Home, arsenic you know, we already person fibre beautiful heavy successful nan network, truthful we person several, benignant of, operational deployments that are benignant of successful a beta phase, correct now, crossed our network, but we - pinch aliases without this associated venture, fibre is very overmuch a portion of our strategy.

So, we'll - we are stepping up nan - those activities, truthful nan trench synergies, but besides successful truth building fibre to nan premise connected destruction infrastructure, but besides aerial and starting to flex our muscles connected that should nan task yet travel to fruition, which we're very, very assured that it will, past these assets will rotation into nan venture. Now nan differential successful CapEx betwixt what we're doing connected behalf of Telenet, which is surely much than what we did past twelvemonth and what we would do if a task came to fruition, I don't cognize what we tin opportunity astir that.

Erik Van den Enden

Yeah. Maybe conscionable to clarify, truthful nan guidance's we person issued is assuming that nan NetCo will spell unrecorded successful nan mediate of nan year. So, location has been an presumption made connected that one. Obviously, location are important changes successful nan consciousness that nan superior leases and nan effect will autumn distant and of people nan ownership NetCo will besides person nan two-thirds for Telenet and one-thirds of Fluvius. So those changes person been taken into relationship successful this portion of nan guidance arsenic it stands.

John Porter

I think, connected nan gross side, I mean, our guidance is upgraded versus past year. You're right. We did 3.9% summation successful - during nan past year.

Rob Goyens

4.7%

John Porter

Oh, sorry. 3.9% was inflation. 4.7% summation and that's starting to rotation done successful nan revenue. There are offsets, location are headwinds successful video, though they are substantially little than what you spot successful nan Anglo-Saxon markets, but we do - we are losing integer TV subs and you person customers connected nan backmost of these complaint increases, arsenic I alluded to before, that they, you could say, are rightsizing their packages and truthful you besides have, of course, fixed voice, which is benignant of dropping substantially and you person usage which has fundamentally faded distant successful nan era of unlimited offers, which, to immoderate extent, we've done it connected intent to ourselves pinch nan motorboat of nan 1 - successful 1 of our products. So, location are respective chopped headwinds successful our portfolio, but location are besides results that offset, to immoderate degree, nan upside of nan complaint increase.

At nan aforesaid time, we're looking astatine adjacent and halfway adjacent and halfway services specified arsenic TADAAM, specified arsenic Safespot, specified arsenic Streamz, things that are besides group opt successful for that move nan needle successful a affirmative direction. So there's batch of puts and takes. It's not conscionable for illustration a fixed value and past we do a complaint summation and spot wherever we go, but - truthful location are tons of puts and takes successful nan portfolio.

The 1 point we want is, P times Q will beryllium taken up and we will person much customers and we want to person those customers - each nan customers paying america a small spot more, because they take to, and not because we jam excessively higher complaint increases there.

James Ratzer

That's really helpful. One very follow-up Erik, support an oculus arsenic NetCo going unrecorded successful nan mediate of nan year. Does that mean that nan EBITDAaL guidance you've fixed is unchangeable includes six months of astatine slightest coming to nan guidance, which would beryllium astir a €25 cardinal uplift?

Erik Van den Enden

Yes, that's correct. So, we are assuming that nan lease is location for six months and that it will not beryllium location for different six months.

James Ratzer

Got it. Thank you very much.

Operator

The adjacent mobility comes from nan statement of Halima Elyas from Goldman Sachs. Please spell ahead.

Yemi Falana

Good afternoon, everyone. You've really sewage Yemi Falana from Goldman, but acknowledgment for taking my question. Firstly, connected pricing, not to labour nan point, but we've seen beardown driblet done of pricing successful nan look of nett 5% value accommodation this year, you've talked astir churn remaining unchangeable to somewhat down. So, is it adjacent to opportunity you're expecting akin pricing driblet done this twelvemonth aliases should that mean slightly?

And, secondly, conscionable connected nan measurement side, erstwhile I deliberation backmost to your Capital Markets Day, you laid retired a reasonably assured roadmap successful really you're going to turn nan customer guidelines leveraging content. Could you possibly talk astir benignant of erstwhile you'd beryllium expecting KPIs to improve? Is that attached to benignant of nan NetCo starting to build retired connected nan fibre side? Thirdly, connected leasing. Could you conscionable punctual america really nonstop nan ostentation walk done mechanisms are connected your MLA pinch DigitalBridge?

Erik Van den Enden

And then, finally, connected CapEx, it would beryllium awesome if you could break retired nan publication of NetCo CapEx wrong that wide CapEx guidance successful nan backmost half of this year? Thank you.

John Porter

I'll return first two, and Erik tin return 2nd two.

Erik Van den Enden

Yeah.

John Porter

I mean, nan value driblet through, I would say, we're cautiously optimistic about. As I mentioned before, we're very assured that we're not going to spot a tick up successful customers leaving to spell to different operator. I mean, each operators and each subscription services, specified arsenic energy, earthy gas, electricity, different services from government, et cetera, everybody has had their - raised their prices successful nan discourse of nan inflationary environment, successful nan world disruption that we're each experiencing.

So - but, for illustration I person said, customers will look to optimize their packages and that will person an effect connected ARPU successful a definite magnitude of customers. Now, nan immense mostly of customers will beryllium wholly stable, but location will beryllium immoderate that will look for optimization of their packages, which will offset immoderate of nan increase.

But, I would say, we've done much activity this twelvemonth to understand that constituent of diminishing returns than we ever person successful nan past. We've done a batch of conjoint analysis. We've done a batch of, benignant of, testing orders and truthful we person really a batch of assurance that we will maximize nan value driblet done erstwhile we do instrumentality nan value increase, which will - isn't excessively acold away.

And connected nan benignant of nan spot of nan KPIs, look, I think, we person to admit that location is simply a "fiber threat" and we person to do a batch of activity to beryllium resilient against that threat. And though location is nary important alteration successful nan customer acquisition from a velocity and capacity standpoint, whether it's 1 gig HFC aliases a 1 gig fiber, truthful it's not an existential threat astatine this point, it's conscionable - it tin person an effect connected our full nett adds.

But arsenic we cogwheel up and arsenic group know, if they are Telenet customers that Telenet fibers coming successful their measurement that, I think, we tin do amended and we do person a batch of - I think, it boils down to our strategy, which is - which I deliberation is nan correct strategy. Networks are not nan USP anymore. Networks are getting progressively commoditized. Anybody pinch capable money tin build fiber, anybody pinch capable money tin build 5G.

So, what we're doing is, yes, we're doing that and we're doing that successful a value way, but we are - for us, it's each astir customer centricity, it's each astir nan customer journey, it's each astir ensuring that if you do want fibre that your expertise to modulation to fibre pinch america is location and past it's a very soft and that successful truth nan committedness of that merchandise is simply a important measurement guardant from - arsenic to what you would expect.

In-home connectivity is much important to customers than what benignant of commodity is successful nan trench extracurricular their home. So, we're investing very heavy and person been for immoderate clip successful nan in-home connectivity experience. Having an tremendous magnitude of information connected our CRM level real-time astir really customers are experiencing our products successful nan location to guarantee that they - if they request boosters aliases they request a smart WiFi mesh capabilities that we're delivering that.

So, I think, there's batch of things astatine play, I deliberation we're doing nan correct point by moving to a customer-centric strategy, focusing connected integer beforehand doorway and blase and frictionless customer journeys crossed each of our business and I think, if we do that, we tin turn faster connected nan backmost of little churn and higher sales.

So, you gave maine an opportunity to springiness my customer centricity speech. So, convey you very much. But I deliberation that is astir apt not nan reply you're looking for, but it is, I think, what we're staking our early on.

Erik Van den Enden

And past possibly nan past 2 questions. The first 1 was connected nan statement pinch DigitalBridge. I think, we talked astir - successful erstwhile net calls already astir nan truth that we person a fixed escalator successful these contracts, which was for america a cardinal characteristic of nan transaction and it besides intends that nan escalator is fixed and truthful besides kept. We are so partially protected from nan very precocious ostentation that we're seeing astatine this very moment.

Secondly, nan mobility astir nan NetCo CapEx versus what we sometimes telephone internally ServCo, but I would opportunity nan commercialized portion of nan business. So, successful nan Capital Markets Day past year, we gave suggestive splits connected a pro forma ground for 2022 and if you commencement from location without really splitting it retired to nan item for 2023, I think, location is simply a bully starting ground arsenic we mentioned successful nan erstwhile answers.

We are stepping up nan fibre investments and immoderate of it, of course, you know, we afloat power successful nan consciousness that if we are doing immoderate targeted Fiber-to-the-Home rollouts arsenic we person been doing for a agelong time, particularly successful nan B2B area, that we person a defined plan, but astatine nan aforesaid clip this trench synergy opportunities is thing that, successful a way, little predictable, because it really depends connected nan opportunities that arise.

And, again, these are opportunities that were introduced by either inferior companies aliases different telecoms companies. So, agelong communicative short, we can't springiness you nan nonstop number, but if you commencement from nan pro forma and you benignant of facet successful an acceleration connected nan fibre piece, you will get beautiful close.

Operator

The past mobility comes from nan statement of Konrad Zomer from ABN AMRO ODDO BHF. Please spell ahead.

Konrad Zomer

Hi. Good afternoon. Thanks for taking my question. Given that some Proximus and Orange Belgium already accrued their prices reasonably recently, is location thing that prevents you from conscionable bringing that value summation guardant to opportunity March alternatively of June, July?

John Porter

There is not thing that that would prohibit america from doing that. We did that past twelvemonth by a month, I think, of past year? Yeah. So, it's not unprecedented. But, of course, it's thing we person to fig retired successful nan full mix. We besides person an IT implementation. We are way breaking it connected 2 platforms correct now. So, we person migrated 100% of our guidelines customers and 1 cardinal of our Telenet customers connected to our new, benignant of, state-of-the-art CRM platform. We've sewage astir different 1 cardinal to spell and we request to get everybody connected 1 level earlier we tin commencement implementing immoderate changes to nan merchandise portfolio. So, location is simply a fewer operational issues, but it's not thing that we would norm out.

Konrad Zomer

Yeah. Given that you sound very assured astir nan driblet done and nan truth that churn is improbable to spell up arsenic a result, I mean everybody would understand, and it is - it will thief you a batch successful achieving your guidance for 2023.

Erik Van den Enden

Yeah.

John Porter

Yeah. We're beautiful assured we're going to execute our guidance successful 2023 correct now from wherever we're sitting. So, we person - we wouldn't beryllium giving it. I've been present 10 years and I haven't missed guidance yet. So, it's not going to beryllium - this is going to beryllium nan first twelvemonth if that happens. So, yeah, you're right, it is worldly and tempting. But, for illustration I said, we do person immoderate different drivers to consider.

Konrad Zomer

Yeah. Understood. Thank you very much.

John Porter

Yeah.

Operator

There are nary further questions successful nan queue, truthful I'll now manus nan telephone backmost to your big for immoderate closing remarks.

Rob Goyens

Okay. So, we want to convey everybody successful - participating successful this telephone and for each nan absorbing questions. As always, you tin find each nan applicable accusation connected our Investor Relations webpage, including nan transcript of this telephone which will beryllium uploaded beautiful soon successful 1 of nan coming hours. So, pinch that, convey you very overmuch for your attention, and person a bully time and evening.

Operator

Thank you for joining today's call. You whitethorn now disconnect your lines.

Editor: Naga



Read other contents from Beritaja.com at
More Source
close