Proximus continues to count COVID-19 cost in Q1

News Analysis Anne Morris, Contributing Editor, Light Reading 4/30/2021

Belgian operator Proximus put a positive spin on its business performance in the first three months of 2021, but there is no hiding the fact that the coronavirus pandemic is continuing to take its toll.

While pointing out that it was able to increase its customer base in the first quarter, overall group revenue and core earnings were adversely affected by "residual COVID-19 related headwinds impacting all customer segments," with loss of roaming revenue a particular factor here.

Under the circumstances, the overall year-on-year decline of 1.9%, to €1.36 billion (US$1.64 billion), does not appear too severe. However, a closer look reveals that growth at authentication and digital identity services businesses TeleSign almost compensated for a heavier revenue decline at wholesale provider BICS.

Finding the way: The coronavirus pandemic has left Proximus looking for a better way out.
(Source: Tamar Gogua on Unsplash)

In fact, while domestic revenue fell by 1.7% and BICS suffered an 8.7% decline, TeleSign reported a 31.6% increase in revenue.

EBITDA development, on the other hand, looks less impressive: Underlying group EBITDA fell 3.9% to €446 million ($540 million), with TeleSign contributing a 28.7% decline and BICS 19.7%. The fall in domestic EBITDA by 2.4% appears modest by comparison.

Proximus explained that TeleSign earnings were affected by its higher cost base, "following the anticipated headcount investments to support its growth development."

Although sustained growth remains elusive, Guillaume Boutin, CEO of Proximus, emphasized that domestic revenue, group EBITDA and capex "are on track to meet our expectations, and we are therefore comfortable in reiterating our 2021 full-year guidance."

Guidance is for revenue that is "close to the 2020 level" of €4.35 billion ($5.26 billion), while the EBITDA range is €1.75 billion–€1.775 billion ($2.11 billion–$2.14 billion). Capex is expected to be close to €1.2 billion ($1.45 billion).

Boutin has previously said that he anticipates a return to profitable growth domestically from 2022.

Added fiber with Fiberklaar JV

Proximus is focusing on boosting its higher-value customer base, with a particular emphasis on fixed and mobile packages and fiber services.

In Q1 2020, Boutin said the convergent customer base increased by 21,000 to a total of 1,145,000, "with these customers characterized by a higher-than-average ARPC and lower churn." Postpaid mobile subscriptions also rose strongly by 37,000 to over 4.3 million.

The number of fiber customers increased by 12,000 over the first three months of the year, reaching 77,000 by the end of the quarter. Proximus also passed a further 73,000 homes with its fiber network, to reach a total of 533,000.

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"We are fully on track to realize our ambition to pass 4.2 million homes and businesses with fiber throughout Belgium by 2028," Boutin added.

The operator also recently established a joint fiber network provider, Fiberklaar, with EQT infrastructure. The new company aims to build and maintain a fiber-to-the-home (FTTH) network that will be open to all operators.

Fiberklaar's plan is to cover 1.5 million homes by 2028, for a total investment of more than €2.5 billion. Deployment will take place exclusively in Flanders and focus on the suburban areas of the region.

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— Anne Morris, contributing editor, special to Light Reading