Orange, Proximus and KPN feature in a tsunami of financial results

Today has seen an avalanche of financials fall on the industry, as Orange, Proximus, Millicom, Ooredoo, Swisscom, Telenet and KPN all release earnings statements.

Orange Group quarterly financials (to March 31, 2020) – Euro, millions
Metric Quarterly total Year-on-year growth
Revenue 10,394 +1%
Operating profit 2,602 +0.5%
CAPEX 1,580 -3.1%

“During this first quarter, the final weeks of which were struck by an unprecedented crisis linked to the Covid-19 pandemic, the Group continued its growth momentum in terms of revenues (+1.0%) and EBITDaL (+0.5%),” said Orange Group CEO Stéphane Richard.

“This growth has been underpinned by strong performances in our Africa & Middle East business, progress in the Enterprise market, in France and in Europe.

“The importance of telecoms in this crisis in ensuring the continued functioning of the economy and of our societies confirms the strategic nature of our activities and provides further confirmation for our strategy in very high-speed networks.”

Proximus Group quarterly financials (to March 31, 2020) – Euro, millions
Metric Quarterly total Year-on-year growth
Revenue 1,393 -1.5%
Operating profit 464 +0.3%
CAPEX 232 +5.9%

“With most of Proximus’ business showing a good level of resilience in these exceptional circumstances, along with our strong cost management, we realized stable EBITDA,” said Guillaume Boutin, CEO of the Proximus Group.

“It’s clear we are not fully immune to the ongoing COVID crisis, and we expect the impact to become more apparent over the next quarter. The economic recovery remains uncertain and especially Roaming and ICT projects are exposed to further negative effects.

“While it’s very difficult to have a clear view of what the overall impact will be, so far, there are no signs the financial effect would be worse than what we have anticipated, with the EBITDA effect largely being offset by a lower capex. We therefore reiterate our 2020 full-year guidance of Group EBITDA Capex of EUR 780-800 million.”

Millicom quarterly financials (to March 31, 2020) – Euro, millions
Metric Quarterly total Year-on-year growth
Revenue 1,088 +5.1%
Operating profit 134 -17.1
CAPEX 174 +3.4%

“In light of the severe impact that COVID-19 is having on the global economy and in many of our markets, we have already implemented significant measures to help us navigate through these challenging times, which we anticipate will impact our revenue at least through the remainder of 2020,” said Millicom CEO Mauricio Ramos.

“These measures include a reduction in capex made possible by focusing largely on adding network capacity while deferring other investment plans, and the implementation of new cost savings initiatives.”

Ooredoo Group quarterly financials (to March 31, 2020) – QAR, millions
Metric Quarterly total Year-on-year growth
Revenue 7,295 +1%
Operating profit 3,023 -5%
CAPEX

“In Q1 2020 Ooredoo Group has increased our revenue and we have delivered good results Growth was driven by strong performances in most of our markets, and in particular in Indonesia and Tunisia where revenues grew 7% and 16% respectively, supported by Indosat Ooredoo’s refreshed strategy and the implementation of Ooredoo Tunisia’s value creation plan,” said Group CEO Sheikh Saud bin Nasser Al Thani.

“Business in Myanmar has been growing as well. Ooredoo Qatar continues to be our highest revenue generator, reporting QAR 1.8 billion in total revenues for Q1 2020.

“The implementation of nationwide lockdowns across many of our geographies impacted EBITDA as margins came under pressure due to changing customer behaviour. EBITDA for Q1 2020 was QAR 3.0 billion compared to QAR 3.2 billion for the same period last year. We continue to implement strong cost optimisation programmes across all our OpCos to manage some of the impact from the pandemic and weakening economic activity.”

Swisscom quarterly financials (to March 31, 2020) – CHF, millions
Metric Quarterly total Year-on-year growth
Revenue 2,737 -4.3%
Operating profit 1,111 -0.7%
CAPEX 516 -0.4%

“The market environment is challenging. But Swisscom’s results are sound, given the circumstances. The demand for our bundled offerings continues. Our network is the foundation of our success. This is evident in the current COVID-19 crisis,” said CEO Urs Schaeppi.

“Meetings via video conference in the home office, distance learning in the children’s room and contact with friends via telephone and FaceTime are now part of everyday life – with corresponding effects on the infrastructure.

“We recorded 70% more mobile phone calls in March than in the previous month. And in the fixed network, we reach peak levels every evening at prime time with TV and streaming services. Before the crisis, this only happened on Sunday evenings. Swisscom’s networks are continuing to hold their own, even at this time.”

Telenet Group quarterly financials (to March 31, 2020) – Euro, millions
Metric Quarterly total Year-on-year growth
Revenue 653 +4%
Operating profit 153 +2%
CAPEX 172 0%

“Against the backdrop of these current exceptional circumstances, I’m pleased with the solid underlying operational performance in Q1, continuing the improved momentum we’ve seen since the second half of last year,” said Telenet CEO, John Porter.

“While gross sales have clearly decreased since the closure of our retail stores as of mid-March, this effect was more or less compensated by lower annualized churn. We had a particularly strong quarter in broadband, adding 8,100 net new subscribers and marking our best quarterly performance since Q2 2016.”

KPN quarterly financials (to March 31, 2020) – Euro, millions
Metric Quarterly total Year-on-year growth
Revenue 1,329 -2.4%
Operating profit 216 +14%
CAPEX 278 +6.3%

“From a business perspective, COVID-19 has had a limited impact on our operational KPIs and financial results in the first quarter,” said KPN CEO, Joost Farwerck. “We continued with the execution of our strategic plan and saw continued intense competition in the Dutch market, resulting in a lower customer base in Consumer.

“Mobile postpaid ARPU in consumer stayed at € 17 for the fifth consecutive quarter. In Business, we made again solid progress with customer migrations towards our KPN EEN portfolio; 82% of our SME and 62% of our LE customers migrated from traditional fixed voice or legacy broadband services.

“We continued to digitalize and simplify our organization, which led to strong cost savings in the quarter. In Wholesale, the announced assessments of regulated tariffs were discontinued by regulator ACM following the CBb court ruling on wholesale fixed access regulation

Belgian watchdog puts the brakes on Orange and Proximus JV

The proposed network sharing joint venture between Orange and Proximus has been slowed as the Belgian Competition Authority (BCA) launches an investigation.

At the request of Telenor and Telenet, the Belgian authorities have placed temporary measures on Orange and Proximus to halt a network sharing joint venture while it investigates the potential impact on competition in the market. The original agreement was between the two parties was concluded in November and will remain stagnant until at least March 16.

Both Orange and Proximus have noted the complaint but rejected the basis of the opposition from Telenet.

“The sharing agreement for the mobile access network will have positive effects for the customers and for the Belgian society as a whole, in particular a faster and more extensive deployment of 5G, a significant reduction in total energy consumption and an improvement of the global mobile service experience, while maintaining a strong differentiation between the parties on services and customer experience,” the pair said in a joint statement.

As part of the joint venture, the pair have said the rollout of a joint radio access network would allow the number of mobile sites to be 20% higher compared to each operator’s current stand-alone radio access network. This improved coverage is claimed to increase the footprint to more than 10,000 households across the country.

Each party would retain full control over their own spectrum assets and operate their core networks independently to drive differentiation. The network sharing agreement would span across 2G, 3G, 4G and 5G.

While this does sound positive for the consumers of Belgium, a complaint from the third-largest operator should not be a monumental surprise.

Telco Subscriptions Market share
Orange 4,895,631 35%
Proximus 6,310,403 45.1%
Telenet 2,801,759 19.9%

Statistics curtesy of Ovum World Information Series (WIS)

Telenet’s has suggested the joint-venture would create a quasi-monopoly, as the number of infrastructure players in the market would be reduced from three to two. The telco also suggests BEREC guidelines would prevent such a joint-venture from materialising as it would undermine intense infrastructure competition.

Telenet is also pointing towards a similar agreement in the Czech Republic between O2 and T-Mobile. Despite this agreement was far less wide-ranging (it did not span across 2G, 3G, 4G or 5G), the European Commission opposed the tie-up with the suspicion it would have a detrimental impact on competition in the country.

With the drive towards 5G and full-fibre broadband straining CAPEX budgets throughout the industry, the impact is perhaps felt more in countries such as Belgium where populations prevent scale. Network sharing agreements are not uncommon as a means to more efficiently invest, though these are usually focused on specific geographies or limited to 5G expenditure. Other initiatives are usually in countries where the base-level of competition is higher than what is currently in play in Belgium.

While this investigation is underway, Orange and Proximus are able to begin the groundwork for the joint-venture, sending out RFPs (Request for Proposal) or select staff to be transferred for example, though Telenet has presented an interesting case. European regulators are incredibly sensitive to competition, especially in markets where there are only three telcos.

Liberty Global makes another big European R&D investment

The Telenet Innovation Center in Brussels joins and equivalent R&D hub in Amsterdam as Liberty Global tries to get ahead of emerging tech trends.

Belgian operator Telenet is owned by Liberty Global and has b identified by its parent company as a good place to mull over the challenges and opportunities presented by emerging tech megatrends such as 5G and IoT. It joins Liberty Global’s Tech Campus near Amsterdam and the two will also investigate other tech opportunities for the group.

“The opening of the Telenet Innovation Center is an important milestone for Liberty Global,” said Balan Nair, Liberty Global Chief Technology and Innovation Officer. “The cutting-edge infrastructure and Telenet’s fully owned mobile network provide the perfect conditions for us to test the products and services that can pave the way towards the GIGAWorld. I’m already excited about the opportunities and inspiration that await us.”

“With the Telenet Innovation Center, we want to be ambitious and bring our own innovations to a higher level, but also help shape external innovation projects,” said John Porter, CEO of Telenet. “I believe in the absolute strength of partnerships, so I am convinced that with our model of collaborative innovation and with the help of partners like ZTE, we can bring the best broadband and media technology to Belgium for thorough testing, experimentation and successful launch in our market.”

Paolo Pescatore of CCS Insight popped over for the grand opening. “For Liberty Global, this is a huge investment,” he said. “It shows a strong commitment to grow its presence in the rapidly changing and converging European landscape.

“Consumers’ insatiable appetite for connectivity and content is showing no signs of easing up. Cable and telecom providers’ are under huge pressure to stay at the forefront of innovation. They need to move at lightning speed as online giants are pushing boundaries even further. The increasing demand for IoT solutions and the arrival of 5G, opens up a wealth of opportunities and it is important that the networks are equipped to deal with the explosion of data traffic and to serve the emergence of new use cases.”

Among the stuff showcased on the day was a special demo room for ZTE, which as we heard is a close partner of Telenet. There was also the good old AI robot, which as you can see from Pescatore’s tweet below, managed to get a crucial question right.