Belgian telco Proximus unveiled its four-pillar transformation strategy at its Capital Markets Day, which will partly be funded by a 20% cut to dividend payments.
The four-point plan will focus on accelerating connectivity products and services, digital transformation initiatives to improve Net Promoter Score (NPS), achieving profitable growth by 2022 and embedding sustainability and digital inclusion throughout the organisation. The plan is ambitious, and to meet the financials promises to investors, the 5G and enterprise revenue streams will have to deliver.
“The experience of the Covid-19 pandemic we are going through, reinforces our belief that Proximus is a key component of a prosperous digital Belgium,” said CEO Guillaume Boutin.
“Especially in these unseen times, we are aware of our responsibility towards our employees, customers and the Belgian society at large to offer access to high-quality networks and delightful services and experiences, every day, without failing.
“In the next couple of years, we will massively invest to roll out the next generation of networks at an industrial pace, structurally transform our operating model and accelerate the pace of customer innovation. This strategy will lead to increased customer satisfaction, engaged employees and partners, as well as a sound financial trajectory towards growth.”
Although investors will be encouraged by the ambition of the team, some might not be completed satisfied with the way it will be paid for. Alongside an increase in debt and divestment in up-to €700 million worth of assets, shareholders will also have to swallow a 20% cut in dividend payments.
Over 2020, 2021 and 2022, Proximus will offer an annual gross dividend of €1.20 per share, down from €1.50 which has been consistent since 2014. Prior to that it was up to €2.49, though these were the days prior to the OTT invasion and competition forcing a race to the bottom on pricing.
The first pillar for the strategy will focus on the networks. Proximus aims to connect 2.4 million homes to fibre by 2025 and will also be launching a commercial 5G service tomorrow (April 1, 2020) priced at €49.99 for unlimited data. A new Network Business Unit will also be created which will focus on the wholesale ecosystem.
The second pillar is focused on digital transformation, with the team hoping to yield an average yearly net indirect OPEX reduction of between 1% to 2% from 2020 to 2022. The hope is this will enable Proximus to operate like a ‘digital native’ company, removing all legacy IT systems by 2025, which should have an impact on customer retention and experience.
The third pillar is all about developing ecosystems and partnerships. The team is hoping to improve the commercial prospects by leaning on the expertise of the internet giants. A partnership with Microsoft, to embed Azure Edge computing functionalities directly into the core network, is an example of these tie-ups.
Finally, the fourth pillar will address how Proximus can embed sustainability and digital inclusion into the DNA of the organisation.
Every telco is scrapping and scraping to ensure operations are up-to-scratch to meet the demands of the digital economy, but it remains to be seen how satisfied shareholders will be with the plan considering it will be shaving down annual dividend payments.