Belgian operator Proximus has unveiled its new strategic plan #inspire2022 at its Capital Markets Day. The new CEO Guillaume Boutin plans to focus on increased capital investment in order to accelerate growth. The company is launching 5G services using existing spectrum, plans to add up to 1 million more fibre premises passed to its targets and is seeking a greater presence in the wholesale and business markets. The extra investment will result in a lower dividend in the year to come, while the aim is to return the company to profitable revenue and EBITDA growth in its domestic operations by 2022.
Under the new plan, the company's main target will be operating cash flow, or EBITDA minus capex. EBITDA this year will be negatively impacted by the Covid-9 outbreak, but Proximus said this should be offset by lower capex, leading to cash flow of EUR 780-800 million. The dividend will fall to EUR 1.20 per share, from EUR 1.50 last year, and EUR 1.20 will serve as the floor for the pay-out in the years ahead.
Increased capex, debt
Capex is expected to increase to as much as EUR 1.3 billion per year in the period to 2025 on the accelerated fibre roll-out, compared to around EUR 1 billion annually in recent years. This will be financed by an increase in debt of up to EUR 600 million, the disposal of various assets (eg. real estate) with total proceeds of up to EUR 700 million and exploring strategic partnerships to co-invest in the fibre roll out.
Proximus will also continue its cost-cutting, targeting an average annual reduction in indirect opex of 1-2 percent CAGR from 2020 to 2022 and further structural efficiency gains beyond 2023. This will be achieved through extensive automation, advanced data analytics and end-to-end simplification of internal processes. The company said it plans a complete exit of legacy IT and customer systems by 2025, supported by three new divisions reporting to the CEO: Digital, IT solutions and Architecture & Data. This will be accompanied by a push to improve its Net Promoter Score, in order to achieve the number 1 or 2 spot in all customer segments by 2022.
5G launch from April
On the networks front, Proximus will be the first to launch 5G in Belgium, from 01 April covering more than 30 municipalities with around 5 percent of the population. The company is using existing spectrum holdings in the 2.1 GHz band, deployed on existing antennas and within current EMF norms, as Belgium has yet to auction 5G spectrum or update its regulations for the new networks.
The launch is accompanied by the new plan Mobilus 5G unlimited, its first unlimited data plan, priced at EUR 49.99 per month, along with enterprise and wholesale offers. The Oppo Find X2 pro will be the first 5G device on the market.
Gigabit broadband for EUR 15
Proximus also is introducing its first gigabit home broadband plan in April, starting at EUR 15 per month. The company has updated its 'Fiber for Belgium' programme started in 2017, saying it wants to accelerate the roll-out after achieving positive results both in terms of revenues and costs from the initial roll-out. The company plans to cover 800,000 more homes by 2025 and up to 1 million additional premises by 2026 compared to the initial plan. Talks are already underway with potential strategic partners that could help accelerate the roll-out speed, while also further reducing the costs of the deployment.
The aim is to ramp up the roll-out to 400,000 new homes, or another 7 percent of households, passed per year. This means the FTTP network should reach a footprint of 2.4 million homes passed by 2025, instead of the earlier target of 2030, as well as be ready to offer speeds of 10 Gbps. The aim is to active around a third of homes passed as subscribers. Proximus currently has over 300,000 homes passed and expects to reach 1.1 million in 2022.
The plan is to phase out the copper network within five years of deploying fibre in a new area. Proximus said it would also explore using wholesale cable access and new fixed-wireless technologies to expand its potential footprint further.
Proximus signaled it's ready to open its network further to others, saying it "actively welcomes wholesale partners, whether they are existing operators or even new types of partners". This follows positive feedback from the regulator on its proposed wholesale fibre rates, said CFO Sandrine Dufour in a presentation. A draft version of the new wholesale rates is expected from regulator BIPT in Q2 and the final regulatory decision in Q4.
Proximus is creating a new Network Business Unit, led by CTO Geert Standaert, "to focus on creating the necessary ecosystem to bring high-speed internet to the whole of Belgium", the company added. CEO Boutin said this was a new approach to the wholesale market for Proximus, positioning it as a stronger alternative to coax rival Telenet, boosting network utilisation and growing wholesale revenues.
Profitable growth from 2022
Proximus said it aims to get back to profitable growth from 2022 thanks to the network and systems investments and focus on customers. The enterprise business will go through a "transformational transition period" in the coming three years, as it reorients to becoming a full-service ICT provider. This is needed to offset the expected continued pressure on legacy service revenues, which may be exacerbated by the Covid-19 crisis.
To grow in the B2B segment, the company said it wants to become the local partner of choice for global hyperscalers and expand in new markets such as edge computing and software-defined networking. It also announced a new partnership with Microsoft to become one of the first operators in the world to integrate directly Azure Edge computing functionalities directly into its core network. This will help expand its offering of cloud, security and workplace services to the Belgian and Luxembourg markets.
In addition, a MoU was signed with Flemish public broadcaster VRT to explore opportunities for 5G technology in broadcasting and a contract was agreed with Brussels Airport to support its digital transformation and adoption of IoT and 5G services.
In the consumer market, the company targets over 2.1 million internet lines by 2022, compared to 1.9 million in 2019, supported by its fibre and 5G plans, as well as at least EUR 100 million in additional revenues from new non-telco services. The latter includes monetising its data more, for example from the recently introduced TV platform Pickx, which is expected to have over 3 million users in 2022.
Apple TV box for Epic customers
New consumer initiatives include plans to launch the Apple TV 4K box with its Epic Combo offer aimed at young people. Available by the end of the first half of this year, the new Epic Combo Full offer with Apple TV 4K will also include Apple TV+ free for a year.
In addition, the company is looking to connect more with customers over the MyProximus app, in order to both improve service and reduce operating costs and its shop footprint. The aim is to grow active monthly app users from 1.2 million now to over 2 million in 2022 and increase the share of sales through digital channels to 30 percent from 18 percent over the same period.
New on the app is the free service Family Life, allowing families to plan together thanks to shared calendar, to-do and shopping lists and a private communication space in the app. Customers also can control and optimize their in-home Wi-Fi with the Smart WiFi service, while MySmartphone helps them with the initial set-up of their device or to check its residual value.
