Belgian market Q1: Orange growth in fixed leads to first organic revenue fall at Telenet

Wednesday 17 May 2017 | 13:59 CET | Background

The top three operators in Belgium booked a 4.9 percent annual increase in their combined sales in the first quarter, to EUR 2.034 billion. The growth was flattered by Telenet's acquisition of Base midway through Q1 2016. Proximus recorded revenue growth of 3.2 percent, and Telenet grew 11.5 percent (pro forma for Base -1.8%), while Orange BE posted a drop of 0.6 percent. 


The figures are based on Proximus Domestic, which includes its Luxembourg activities but not the wholesale unit BICS, and also include Orange's Luxembourg operations. We exclude SFR BeLux as Altice no longer reports its figures pending the sale to Telenet. Post Luxembourg has not reported figures since 2015, and we also leave out TV Vlaanderen/TeleSat (part of M7), Voo and EDPnet.

Top 3: margins improve

EBITDA of the top three rose to EUR 773 million, pushing the margin to 38.0 percent from 35.9 a year ago. Capex fell sharply, to EUR 376 million, and as a result free cash flow (EBITDA minus capex) roughly doubled to EUR 397 million, or a nice 19.5 percent of revenue. In terms of customers, the big operators are losing mobile clients, with a drop to 10.2 million at the end of March from 10.6 million a year ago. They are growing in fixed, to 5.85 million customers from 5.51 million in March 2016. 

Proximus: also growing in fixed telephony

Proximus Domestic showed growth in the fixed market, largely compensating for the decline in mobile. At the Consumer division, the company was growing in most areas, also mobile, thanks to handset sales. The EBITDA margin remained high in the 30s, rising to 37.4 percent from 35.6 a year ago. In Consumer Fixed, Proximus is notably growing not only in broadband and TV, but also more recently in voice. 

Telenet: first organic revenue fall

This was the last quarter in which Telenet's results were flattered by the Base takeover (consolidated from 11 February 2016). On a pro forma basis, revenues were down 1.8 percent year-on-year, the first organic revenue fall. This was due to a big drop in customers, at a record 15,000. The company did grow on the important broadband market. The EBITDA margin recovered somewhat compared to the previous quarter, and at 47.0 percent was not much below its historical level. Free cash flow, at 26 percent of revenue, was also relatively high. 

Orange BE: growing in fixed

Orange has doubled the number of fixed customers in the past two quarters to 66,300, thanks to its launch on cable networks. Despite the costs of growth, the EBITDA margin was at a healthy 23.5 percent. Capex was lower than at Proximus and Telenet as Orange only has a mobile network, no fixed. Free cash flow is volatile and recovered after a dip in Q4 2016.

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