Proximus Sa De Droit Pub

Hello and welcome to the Proximus Q1 Results 2026. My name is Laura and I will be your coordinator for today's event. Please note this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing pound key 5 on your telephone keypad to register your question at any time. If you wish to withdraw your question, please press pound key six on your telephone keypad. I will now hand you over to your host, Nancy Goossens, Investor Relations Lead, to begin today's conference. Thank you.

Thank you, Laura, and so welcome from my side as well to the Proximus Q1 results webcast. We will start with a brief presentation followed by a Q&A session. Joining me today are the CEO, Stephen Dynans, the interim CFO, Nicolas Gartner, the global CEO, Sashkin Arikam, and Jim Castille, the head of B2C and AI. So let's begin today with today's highlights and over to Stephen.

Also welcome from my side to our presentation of the 2026 first quarter results. As we have seen in our published report this morning, Proximus has a good start of the year, and I will take you through the main points, starting with our key financials. I will keep it short as Nicolas will take you through in a bit more detail later on. So starting from the left on the slide for the domestic segment, we closed the first quarter with stable services revenues despite the intense competition and lower revenue from sports content. As a result of lower OPEX, the domestic EBITDA grew by 1.9% for the first quarter. For the global segment, we managed to stabilize current margin for the first quarter in a row, while year-on-year comparison remained still tough for the first quarter. Overall, this resulted in an EBITDA for global of $33 million. pretty much in line with what we anticipated. The lower global EBITDA leads to lower group EBITDA down for the first quarter by 1.9%. Of CAPEX for the first quarter was 261 million euro and for free cash flow we ended the first quarter with 32 million euro in total. Excluding the proceeds from asset sales, the organic free cash flow was 90 million euro a strong improvement year-on-year. Let's have a look now at the operational results. Despite the intense competition, the operational performance remained worst, with mobile post-tape adding 17,000 casts and our internet subscriber base growing by 10,000 line. Our conversion customer base continued its steady growth by adding 42,000 14,000 residential customers in the first three months. With our new amplified strategy now in full execution, we are listing here some concrete and recent examples. In the B2B space, we managed for Proximus Next to be selected alongside other suppliers as sovereign cloud providers for the European institutions. In addition, we signed partnerships to support SMEs making artificial intelligence accessible and immediately applicable for entrepreneurs. As for our network, we proudly launched 5G Standalone as first one on a commercial scale in Belgium. And we, of course, also continued our fiber rollout and I'll discuss this on the next slide. Regarding the intended network collaboration, In Flanders, as you have seen in our recent press announcement, we signed now the full cooperation agreement with WIRE and Telenet. I'm convinced we now have a fair and balanced distribution of the value it will create for the operators, the citizens, and society at large. The implementation of these agreements remains subject to final regulatory approval. Commercially, we launched our new mobile kits offering, reinforcing our role as a digital partner for families. In addition, we increased the data volume to close our mobile subscriptions to address customers' needs and to stay competitive in the market. As a final point, I'm happy that after intense negotiations, we can announce an agreement with DAZN regarding the distribution of Belgian and international football. So turning to the fiber deployment, because Belgium, we had end of March a total of nearly 2.7 million fiber homes, meaning population coverage of just over 42%. The fiber network filling rate progressed well to 34%, up from 32% one year back. In terms of active Fiverr customers, we grew the base with another 45,000 over the first three months. As such, we are reaching 776,000 active Fiverr customers in total. So this covers my introduction on the domestic part. Before we go into the financial, I'll hand over to Sechkin, our CEO Global, to comment on Dr. Global.

Thank you, Stan. At the Capital Market Day, we elaborated on the strategy of global, so let me give you some insights, what concrete steps we are taking to transform the business of global. I would like to focus on three areas today. The first one is implementing a new operating model. We have created two business units and simplified organizational structure. On one side, we have connect business unit, and the other side, we are combining engage and protect. Creating different business units will allow us to support the different characteristics of these businesses. It will allow us to go faster in execution and create more focus and value for our customers. We are also taking the opportunity to bring on board additional experienced leaders in engage and protect area. Secondly, we are improving our go-to market with a couple of specific actions. We have redone our customer segmentations, making sure that we spend more time with our larger customers while we manage the long-tail customers more efficiently. We are busy defining our geographic priorities. It means which countries we plan to invest and grow and which countries we are going to reduce our investment. U.S. is an important market for us, and we are putting together an acceleration plan for U.S. business. Lastly, we recently created mission-based teams to speed up the transformation of different activities, including AI, which we believe that is going to fuel our growth in the coming years. And finally, we are executing on our network API strategy, and we are very proud. We onboarded our first customer, Arkash Educational Services, on our newly-launched platform. We also recently received MEPHI Mobile Revaluation Award. Now, I will pass it on to Nicolas to take you through financial results.

Thank you, Seçkin. So, let me start with domestic revenue. Services revenue remained broadly stable on a pro forma basis driven by continued solid growth of residential services revenue. Non-services revenue, however, was down by 22 million euros due to lower IT hardware sales year-on-year with little impact on DM. This explains why the total domestic revenue was down by 1.7% for the first quarter. Now, looking at component parts, I'll start with B2C. Total B2C revenue was up plus 1.5% year-on-year, driven by the continued growth of customer services revenue despite the intense competitive landscapes. Revenue from terminals was broadly stable year-on-year. B2C customer services revenue grew by 2.3% year-on-year, including a plus 4.2% growth for convergent revenue. The RPAC continued to show a positive evolution, growing 0.9% year-on-year, including the January price indexation effect and the benefit of a continued increase in convergent customers and fiber upsellings. Turning now to B2B. The decrease in IT hardware revenue mentioned earlier is fully included in the B2B units and was driven by an exceptionally high comparable base in Q1 of last year. This revenue is by nature more volatile but also less impactful on the margin. This decline had a material impact on the quarterly results for B2B. The business services revenue showed a broadly stable downward trend, down minus 2.3% year-on-year, so a little better than the minus 2.7% from the previous quarter. I'll take a closer look at that. IT services revenue were broadly stable in Q1. As indicated last quarter, we see some temporary business slowdown here, awaiting the implementation of some major contracts, which we won in 2025. On fixed data, B2B recorded a limited decrease of minus 1%. This resulted from the decline in traditional data connectivity services, partly offset by continued strong revenue growth from internet services. As for mobile services, despite the competitive intensity, the B2B unit maintains a very solid mobile base, only slightly down over the first quarter. The mobile revenue decline of minus 2.4% is mainly reflecting lower out-of-bundle revenue. And lastly, fixed voice is continuing its steady erosion in line with a declining customer base. In the meantime, value is managed through price adjustments on these products, resulting in a sustained positive output trend. Turning now to wholesale. We posted a revenue decline of minus 7.7% year-on-year, mainly due to the ongoing erosion of interconnect revenue with no margin impact. Wholesale services revenue was down minus 2.7%, related to lower roaming traffic and lower revenue from our fiber JVs, in particular unifiber. Moving to domestic EBITDA. With OPEX lower year-on-year in a stable direct margin, the domestic EBITDA was up by 1.9% for the first quarter. OPEX showed a favorable year-on-year evolution, down by minus 1.7%. This was driven by continued headcount declines, but also the benefit of lower real estate tax provisions, mainly related to the HQ divestiture completed last year. This closes the domestic part, turning now to global. Global's comparable base from 2025 remained challenging, as much of the market headwinds only took effect in a gradual way as of Q2 of last year. This is reflected in the year-on-year decrease for DM, down by 10.9% on constant currency. That being said, we managed to stabilize direct margin for the third quarter in a row. Proxima's global OPEX landed at 70 million euros in Q1, down from the previous year, but increasing quarter on quarter. This increase is partly driven by some initial investments in targeted growth initiatives to support the turnaround of global. These investments are expected to further increase over the coming quarters. Turning to the group CapEx. Q1 CapEx amounted to 261 million euros, down minus 3.2% year on year. The decline is primarily due to lower fiber bill capex on our own build in the dense areas and mobile capex as the network sharing deployment is coming to an end. And this brings me to the free cash flow for the first quarter of the year. Illustrated on the graph, the organic free cash flow was 19 million euros, strongly improving year-on-year in Q1, driven by lower cash capex, lower working capital needs, and lower interest payments. So to conclude, we had a good start to the year, and we are reiterating our guidance on all metrics. And with that, let me hand it over back to the operator to open the line for your questions.

Thank you. As a reminder, if you would like to ask a question or make a contribution on today's call, please press pound key 5 on your telephone keypad. To withdraw your question, please press pound key 6. You will be advised when to ask your question. We have a question from Juha Shah from UBS. Please go ahead.

Thanks very much for taking the question. I have three, please. First is just on the residential side of things and competitive dynamics. Domestic KPIs remain solid here, so can you just walk us through the competitive landscape and what you're seeing in both fixed and mobile? Second is on B2B. You called out a few things. So you're still seeing legacy voice declines. You called out the tough competition in the mobile B2B market, but also you've spoken about the new contract as a sovereign cloud provider. So can you talk us through specifically what's happening in the mobile market and why ARPUs are under pressure? Who's driving the competition? But also if you could talk us through the further upside you see in areas like cloud. And then the final question I have is on fiber. I won't ask about the cooperation with Telenet as I'm assuming there's no new news there. But on the pace of fiber rollout, it's almost halved quarter on quarter. So my understanding is that there's typically some seasonality where Q1 is slower than Q4. But I think with Unify, but they were also awaiting new funding. So I understand that you've issued them a loan or a convertible, but is there a chance you could consolidate Unifiber like you did with FiberClar and take more control of the fiber rollout in Wallonia. Thank you very much.

So I'm going to take the first question. Jim speaking here on competitive dynamics in residential. So if I start with mobile, I would say that it's a very intensive competitive environment especially On the low end of the market, we have seen end of last year and in Q1 this year, very intense activities on the B brand, proposing sometimes lifetime promotions on already assertive offerings, so quite intense. I'm happy to see that we've been able to continue to grow with 19,000 net ads on mobile with our three brands in such an intense environment. I would say on internet and tax also intense but a bit more mitigated. I think you've seen also the recent announcements of and base where you see that entry price points are being pushed up a little bit probably to support also inflation elements in the base. But so I think there what we have done also on our side is making sure that the entry price points stay high enough to keep value in the market and that we execute this well with our three brands as well. As you might have known, we have also done in January, again, a price increase on the Proximus brand, which has landed well, again, this year as well. So that continues to show that the brand has pricing power and that we're able to valorize the premiumness that we bring in the market. So I would say the market stays very intense competition-wise. on the Internet and Pax, it's the standard competition, no increase, but the sales are very tense as well. So that's, I would say, the takeaway from the residential market.

Okay, thank you, Jim. Stijn here. I'll take the other questions. Regarding B2B at the capital markets, we explained that the transformation of B2B is a It's one of the jobs to be done here at Proximate Domestic because of still we need to digest some traditional telco business like voice, but also mobile art pool. We see a more competitive landscape now also in B2B, but that's... anticipated in the forecast. Of course, we see opportunities on cloud. There is increased interest around sovereign cloud, given the geopolitical instability, I would say, and we're focusing on that. We have our first winds. But, of course, from order intake to revenue recognition, it will take some time, but we do believe we're on the right path that can be the trusted digital infrastructure platform in Belgium. Of course, there are also growth opportunities within governmental institutions. Regarding the fiber, there's no news on pillinet wires, so we're awaiting regulatory approval, hopefully soon. And regarding the fiber build, Q1 is typically a lower quarter in terms of homes past. Actually, Q4 is always the best quarter because everybody wants to read their KPIs at the build side. And the decrease in Q1 compared to Q1 2025 is also partly due to the fact that our rollout in the dense area is coming down. We're almost done at the dense area. So that also explains it apart from a kind of seasonality. in the build. And then your final question around Unifiber. Of course, Unifiber, we started the venture in 21 when interest rates were different and appetite by banks was different. So we see that there's higher interest rates in the business plan going forward and that appetite from banks to fiber and as a result, there's a higher equity need. That's why we also temporarily gave a convertible bond. And as a result of the equity need that we anticipated in the plan, we presented at the Capital Markets Day. We are having discussions with our JV partners going forward regarding consolidation. As you know, the consolidation is in any case foreseen to happen in 2031. Should there be a good opportunity that presents itself before? Of course, we will obviously devaluate this in terms of value creation for Proximus. Thank you.

Thank you very much.

We have a question from David Wegman from ING. Please go ahead.

Hello, good afternoon everyone. Three questions from my side. So first, and sorry to come back on the cooperation agreement process, so you've now signed this long-form agreement, and at the VCA said it took note. What does it practically mean? What has happened, if you can comment? So did you change something in the long form compared to the memorandum of understanding or compared to the market test, you know, what was published then, that is leading to a breakthrough or You didn't change anything, so that's my first question. Then secondly, if it's possible to give us a form of timeline for Wallonia, also for the Fiber Cooperation Agreement. And then my third question is on the rollout of DG. They've been pushing to access the fiber duct of Proximus. Do you see them using your fiber duct for their own fiber rollout in the high dense areas? What is your view here? Thank you.

First, on the long form, as the name says, it's a long form. It's a big document, and having the multi-party complex discussions a lot of items to discuss also value out and so a lot of the process we've continued interaction between the operators the competition authorities back and forth to create a fair distribution of the values. So the fact that we signed the long form end of April was that we feel comfortable and also the other side that we've now find the final distribution of value. It's very complex on a lot of terms. It has to do with timing. It has to do with commitments. It has to do with customer connects. There are a lot of customer workflows that need, customer onboarding workflows that need to be discussed. So in our opinion, we're finally there. The timeline typically, Wallonia is three months behind the north, so we keep on that timeline. timeline to do that. Regarding book access there are specific regulations and the regulator and we're of course in discussion with the regulator on the terms of access going forward. It's one element in the complex negotiations. There is specific regulations and of course that once everything is finalized, we will also disclose these terms.

Thank you. Okay. Thank you. And a very quick follow-up on this. You're saying there is a regulation, so do you expect the regulation to be enough, or do you expect some changes to be needed?

Well, there is European regulation, and you have on the one hand the telecom regulator, but on the other hand the competition authority regulator. And of course, as part of the whole fiber collaboration, we will get to a final regulation. There's still interpretation possible. So compare it a little bit as what happened in the Netherlands, that finally the competition authority created legal stability by making a decision. So it's very complex, these regulations, but one of the outcomes of competition a regulatory approval would be a clear framework on duct access.

Thank you very much.

We have a question from from KBC Securities. Please go ahead.

Yes, hi, and thanks for taking my questions. My first one would be on the domestic EBITDA growth of plus 1.9%, which was quite strong. I understand that this was, of course, partially driven by a lower tax provision for the HQ. I'm just wondering if you could give us some sense or quantify what the impact of this was and what elements we should take into account for the next quarters and the phasing of the growth. given that you guide for a stable EPTA for the full year. So that would imply a decline for the other quarters. Just wondering what we should take into account there. And then my second question would be also on the B2B. So you mentioned a tough competition. Of course, IT is a bit slower now, stable. I recall from the Capital Markets Day you expect this B2B segment also to grow around 1% over time. I assume this will predominantly be driven by the IT segment. Just wondering, you highlighted some of the big contracts that were signed last year, but when should we expect to see a bit of conversion of that, or how long is the timeline for that approximately? Is that still something to be expected by the end of this year, or will that be more in So, any call on that would be helpful.

So, Mikhail, thank you for the questions. Let me take both. So, on the first one, on your question on domestic EBITDA, indeed, we landed Q1 with 1.9% growth of our domestic EBITDA. DM, as you have seen, was broadly stable year-on-year, and so a lot of that growth indeed came from OPEX being under control. So, a couple things on OPEX. The first thing is, you know, our efficiency program continues to deliver, you know, strong OPEX savings. If you look at our workforce in particular, you know, we took our internal workforce down by 2% over the quarter, year on year, which is very much in line with some of the plans we shared at the CMD. Now, on top of that, you rightly pointed out that we did get some tailwinds for real estate tax provision. Maybe to say a few words about that, they're linked to the sale of our HQ last year. And so as we do every year in Q1 of last year, we provisioned for the full year for the tax, the real estate taxes related to these buildings. We then sold them, as you know, in Q2. And so we had to reverse part of that provision in Q2. So what you should expect this year is obviously a pretty mature tailwind in Q1. as we no longer have to book this, right? We have a genuine safe going forward from this. But we should expect a bit of a head-winning Q2 as we reverse some of that provision, because again, we own the buildings for four months last year, right? So that's a little bit the nature of that reversal. In terms of scale, our OPEX, as you saw, was down by about 8 million year-on-year. So had it not been for this tailwind, we would have been broadly stable year-on-year. So, you know, that's broadly aligned with what we've shown in other quarters. In terms of the second part of your question, how should we think about the rest of the year, especially in light of our guidance being broadly stable for EBITDA? So, as I mentioned, one, you should expect a reversal of part of that provision in Q2, so that's going to be a bit of a headwind for us in Q2. And you'll also see that based on some of the Bureau du Plan forecast in Belgium here, we expect another round of salary indexations in September. So that's probably going to be another bit of a headwind for us in the second half of the year. So, you know, I wouldn't think about this minus 1.7% OPEX as being the new normal. We do expect a bit of a few reversals in the coming quarters. But overall, obviously, we're confident with our guidance of broadly stable at the for the year. Hopefully that answers your first question. On the second one, the B2B and when we should start seeing the impact of some of those larger deals come online. To some extent in Q2, but the bulk of the start of revenue generation from both of these material deals will come in the second half of the year. So at that point, we should expect to start seeing some changes to our IT services trajectory. So hopefully that answers your questions.

Yes, thank you very much.

As a reminder, if you would like to ask a question or make a contribution on today's call, please press pound key 5 on your telephone keypad. To withdraw your question, please press pound key 6. You will be advised when to ask your question. We have a question from Roshan Ramjit from Dutch Bank. Please go ahead.

Good afternoon, everyone. I actually have just one question, please, and it's around the consumer business. So we saw a pickup in the residential custom service growth. You mentioned the price increase. My question is this morning's announcement where we will see the return of the Jupiter, the Jupiter leak, sorry, from August. How much of a boost do you think that will be to your ARPU? You cited the non-renewal as being a bit of a drag. So, what uplift could we see in the second half of the year to those consumer trends? Thank you.

So, Roshan, thank you for the question. So, indeed, very happy that we have been able to sign the deal with for the Belgian football. Since July last year, we were giving customers a discount on a sports package to compensate the fact that they were not having access to the Jupyter Pro League. I would say on the overall customer service revenue of Proxima, this is all of the B2C activities. This is, I would say, a minor improvement a minor impact on the revenues. It's anyway already foreseen in our forecast for the coming years, so we assumed that we would have spores back in summer, which is actually the case. So if you look at the guidance that we gave on domestic revenues and EBITDA, I can assume that it's already embedded in that guidance because we took the assumption that we were going to be able to sign that contract and the conditions at which we've been able to sign are exactly the ones that we have in mind. And so we're really happy that we now can offer the pro league football without losing money in the sports activity.

Okay, great. Thank you.

I hope that answers your question.

Yeah, that's very good. I mean, if I may just close for a while, sorry. You said that you embedded it into your kind of expectations at the time, I think, with CMD. I mean, I guess the negotiations went accordingly. I mean, any scenes that Dazan was pushing hard on the renewal and on the fee, was it just a case of meeting somewhere in the middle on the negotiations or anything else that you could say there? Thanks.

No, I think my feeling is that, of course, at the end of the The current season approach, I think everybody wanted to give visibility to their customers for the next season. And so I think that's what has been a bit of a catalyst to be able to close the deals. But as I said, and we have been saying that from the start, we really wanted to have a deal that was commercially viable on our side. And I'm really happy that we have been able to find a common ground on that. But indeed, as of now, we can sell a thousand footballs without losing money. So that has been the ambition from the start, and I'm happy that we've been able to get there.

Perfect. Thank you.

As a reminder, if you would like to ask a question or make a contribution on today's call, please press pound key 5 on your telephone keypad. To withdraw your question, please press pound key 6. You will be advised when to ask your question. There are no further questions, so I will hand back to your host to conclude today's conference.

Thank you all for joining us today, and thank you for your questions. As usual, if there would be any follow-up questions, you can reach out to the Investor Relations team. Thank you again, and have a nice afternoon.

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