Koninklijke Kpn Nv

Good day, ladies and gentlemen, and welcome to KPM's second quarter 2023 earnings webcast and conference call. Please note that this event is being recorded. At this time, all participants are in listen-only mode. We will be facilitating a question and answer session towards the end of today's prepared remarks. If you would like to ask a question, you might do so by pressing star 1 on your telephone keypad. I will now turn the call over to your host for today, Mr. Renaud van Eerskout, Head of Investor Relations. You may begin.

Good afternoon, ladies and gentlemen. Thank you for joining us today. Welcome to KPN's second quarter and H1 2023 results webcast. With me today are Joost Farwerk, our CEO, and Chris Vigée, our CFO. As usual, before turning to our presentation, I would like to remind you of the safe harbor on page two of the slides, which also applies to any statements made during this presentation. In particular, today's presentation may include forward-looking statements, including KPN's expectations with respect to its outlook and ambitions, which were also included in the press release published this morning. All such statements are subject to the safe harbor. Let me now hand over to our CEO, Joost Vaarwerk.

Thank you, Reinout, and welcome, everyone. Our Accelerate to Grow strategy was launched in November 2020, and we're now on the final leg of our ambitious three-year plan, and today's results show the continued progress on that strategy. Our group service revenues are growing sustainably, with growth visible across all segments. We continue to see positive developments in business, with SME again making a strong contribution. Consumer service revenues inflected to growth, driven by higher mobile service revenues and improving trends in fixed. And wholesale made a solid contribution again, thanks to our open wholesale policy. We saw good commercial momentum across the board, especially in consumer, driven by ongoing commercial improvements and the strong execution of the teams. In June, we announced the acquisitions of Primevest and Ufone. Primevest strengthens our fibre footprint in larger cities, and the households will be added in the third quarter this year. And the intended acquisition of Ufone will reinforce our position in the no-frills mobile segment. Together with our joint venture, Glassport, we added 184,000 households to our fibre footprint. And whilst our cost base was impacted by inflation, we were still able to deliver flat or slight adjusted EBITDA growth compared to last year. Free cash flow in the first half of 2023 was mainly impacted by intra-year CapEx phasing. A return on capital employed continues to move in the right direction. Looking ahead, our EBITDA and cash flow generation are expected to improve further in the second half of the year, and therefore we reiterate our 2023 outlook with confidence. As usual, Chris will give you more details on our financials and walk you through our outlook for this year. First, I'll take you through the business details. We are now nearly halfway through our ambitious fiber build plan. And as we have almost reached the end of the current strategic period, we look forward to providing a strategy update where we will focus on the key pillars of our strategy for the next period. We will host our capital... In the second quarter, we rolled out fiber to 125,000 households, and together with Glassport, we now cover 53% of the Netherlands with fiber. Our fiber business case is centered around market share gains, RPU uplift, and lower maintenance costs of fiber. And as we continue to roll out fiber, our growing footprint results in an improved penetration rate for both retail and wholesale. And all this is visible in our financials. Looking at our second quarter results, we currently generate 1 billion euros of annualized fiber service revenues in B2C, and this number is growing strongly, driven by a growing base and an attractive ARPU. All in all, fiber is at the heart of our strategy to create long-term value for all stakeholders, In Q2, we announced the acquisition of Primevest Fiber Network, and this consists of an additional 127,000 homes passed in The Hague, Rotterdam, and Eindhoven. And this acquisition is a welcome addition to our existing fiber footprint. The deal was closed early July, so therefore not included in our second quarter results, but visible in the footprint as of Q3. Let's now move to mobile. We are proud that Ookla for the sixth time in a row recognized our mobile networks as the best in the Netherlands. And with this recognition, we retain our leading position with the highest up and download speeds, best coverage, and the fastest 5G in the Netherlands. Let's now move to the second pillar of our strategy, consumer service revenues. Consumer service revenues inflected to growth and increased by 1.3% in total year-on-year. We see consistent mobile service revenue growth driven by good post-paid inflow and an improving ARPU. And as expected, our fixed service revenues continue to be impacted by declines from our legacy portfolio. However, the trend is gradually improving, driven by continued fiber broadband service revenue growth. Customer satisfaction remains one of our top priorities, and it has been pleasing to see that KPN continues to lead the Dutch market as reflected in our Net Promoter Score. Next to this, we announced the acquisition of Uphone's Dutch Activities. With this, we strengthened our positioning in the faster-growing no-frills mobile segment. This enables us to play a more effective base management strategy by positioning the Uphone brand as a flanker brand of our main brand, KPM, next to Simyo and Access Role. The transition is subject to regulatory approval, which we are confident to obtain. Now let's take a deeper look into our second quarter KPIs. On the back of active base management and strong commercial execution, we managed to turn the tide in our broadband base. And this led to 14,000 broadband net adds, a good improvement compared to previous quarters. Our fixed RPU grew slightly and combined with a somewhat lower base than a year ago, our fixed service revenues decreased 0.4% year-on-year. With the crisis increases implemented as of the 1st of July, we expect fixed service revenues to improve further in the second half. Our post-paid base increased by 31,000 and post-paid RPU grew 3%. Combined, this led to a solid 5.3% growth in the mobile service revenues Let's now move to the B2B segments. We saw continued strong service revenue growth in our business segments. B2B adjusted service revenues grew by 4.5% year-on-year in the second quarter, with growth seen across all segments. Business net promoter score improved compared to previous year. We remain the Dutch market leader as customers continue to value KPM for stability, reliability and the quality of our networks and services. SME is the main engine of B2B growth, driven by solid commercial momentum, especially in mobile. We serve our customers via our cloud-based KPM1 platform, and the customer base is doing well on KPM1. Also, LCE continues to move in the right direction, showing slight growth for the third quarter in a row. And tailored solutions continue to perform in line with expectations. This business remains subject to the timing of projects and related hardware sales, but the performance is moving to a more profitable level. In wholesale, service revenues increased 3.8% in the second quarter. We added 17,000 postpaid SIMs and broadband lines grew again by 10,000 after two quarters with a stable base. As promised and in line with our commitment to sustainability, you will be able to track our performance on carbon reduction, circularity and diversity on a quarterly basis. Over the past decade, we made a conscious choice to be a frontrunner in sustainability, and we've achieved some important milestones in this regard. By working more energy efficiently and implementing circular operations and services, we have been able to significantly reduce our carbon footprint. And looking ahead, we want to be almost 100% circular by 2025, whilst being net zero in the whole value chain by 2040. We also attach great importance to diversity in our workforce, and we aim to have at least 35% of women across our senior management by 25, from the current 29%. And with this, KPM will not only deliver financial results, which enables us to continue our progressive dividend policy, we will also connect the Netherlands to a sustainable future. Let me now hand over to Chris to give you more details on our financials.