Orange Belgium : Financial information for the fourth quarter and full year 2017

Strong commercial end of year performance demonstrates the relevance of Orange Belgium's convergent and mobile data strategy

Orange Belgium Group delivered on all its 2017 targets. Dividend proposal of 0.50 euro.

FY 2017: Total service revenues + 1.5 % yoy with an adjusted EBITDA slightly up 0.7 % yoy on a like-for-like basis at group level,

Q4 2017: + 28k postpaid net adds, +3.2 % yoy postpaid ARPU growth, +21k convergent Orange LOVE net adds in Belgium

Brussels, 7 February 2018 - Today, the Orange Belgium Group (Euronext Brussels: OBEL) publishes its results for the fourth quarter and full year 2017. The Orange Belgium Group ended the year 2017 with strong commercial results, demonstrating the success of the company's commercial strategy and execution. The company delivered on all its financial and commercial targets for 2017, while directing resources towards the company's future growth by investing in its convergent positioning.

• With the support of the launch of the LOVE-concept early 2017, the convergent customer base increased to 103 thousand customers at the end of 2017, surpassing the milestone of 100 thousand LOVE customers, adding 21 and 69 thousand LOVE customers, in the fourth quarter and full year 2017 respectively. The associated mobile customer base opting for a LOVE bundle has increased to 163 thousand active mobile customers, an increase of 34 and 106 thousand, in the fourth quarter and full year 2017 respectively. In 2017, close to 50 % of all Orange LOVE customers were new customers for Orange Belgium.

• Orange Belgium's postpaid net additions reached 28 thousand in the fourth quarter of 2017, the highest result since 2011. Additionally, the fourth quarter postpaid ARPU growth accelerated thanks to the growing 4G data usage. Orange Belgium ended the year 2017 with 2.32 million postpaid customers, adding 67.6 thousand customers over the year, underlining the growing nature of its core mobile business. This was achieved thanks to Orange Belgium's customer oriented 4G product portfolio and an active commercial fourth quarter, animated by a successful end-of-year campaign, the continued success of the 'Orange Thank You' loyalty program and the launch of Double Data for convergent customers. In December 2017, total traffic increased by 43 % year-on-year and 4G traffic represented 88 % of this total, compared to 80 % a year ago. The average mobile data usage of the smartphone user base amounted to 1.8 GB in December 2017 from 1.3 GB a year ago. This triggered a progressive shift towards offers with a higher data allowance, leading to a 3.2 % year-on-year increase of Orange Belgium's postpaid ARPU to 30 euros.

• Orange Belgium Group realized a total turnover of 317.5 and 1,251.2 million euros in the fourth quarter and full year 2017, respectively -1.3% and +0.8 % year-on-year. The full year 2017 performance was the result of 1/ a 0.1 % increase in mobile service revenues despite a 9.1 million euro decrease in MVNO revenues and a 36.4 million euro gross adverse impact from EU roaming regulation; 2/ a 21.8 % increase in fixed service revenues driven by the increase of Internet + TV LOVE customers and 3/ a 4.9 % decrease in mobile equipment sales and other revenues. The fourth quarter of 2017, in particular, was impacted by a 15.3 million euro year-on-year decrease in MVNO revenues following the strong decline in MVNO customers hosted on the Orange Belgium network.

• The adjusted EBITDA of the Orange Belgium Group amounted to 61.9 and 302.2 million euros in the fourth quarter and full year 2017. The adjusted EBITDA in the fourth quarter and full year 2016 benefited from a 15.5 million euro one-off related to the December 2016 Walloon pylon tax agreement. Excluding this effect the adjusted EBITDA year-on-year evolution was -1.8 % in the fourth quarter of 2017 and +0.7 % in full year 2017. This result was achieved thanks to a sound value management (higher postpaid customer base and ARPU) combined with rigorous cost control, mitigating the decrease in high-margin MVNO and EU roaming revenues. Moreover the full year 2017 EBITDA contribution of the standalone cable business of -18.5 million euros continued to weigh down on the overall performance of the Orange Belgium Group.

• Orange Belgium Group invested 73.8 and 188.4 million euros in the fourth quarter and full year 2017 (+3.5 % and +12.4 % year-on-year), of which 11.3 and 46.8 million euros were related to the cable activities. As a result, the core capex amounted to 141.6 million euros in full year 2017, a decrease of 4.8 % year-on-year, still implying a 13.9 % core capex/mobile service revenues ratio, underlining the continued investments in the network. The organic cash flow amounted to 65.9 million euros in full year 2017. The net financial debt at the end of 2017 stood at 312.8 million euros, implying a net financial debt/reported EBITDA ratio of 1.0x, illustrating the sound balance sheet position of the Orange Belgium Group.

• The Orange Belgium Group expects its total service revenues to grow in 2018 for the third year in a row and aims at an adjusted EBITDA between 280 and 300 million euros in 2018. This takes into account that the 2018 financial performance will be strongly affected by the loss of close to 30 million euros of MVNO revenues and the final adverse gross revenue and EBITDA impact of EU roaming regulation of 26 and 17 million euro respectively. This adjusted EBITDA target highlights that the Orange Belgium Group's retail business is expected to grow substantially thanks to the ongoing monetization of its mobile network and the sustained focus on operational efficiency. In addition, Orange Belgium Group expects its 2018 core investment (i.e. total investments excluding all cable related investments) to remain fairly stable compared to 2017.

• In line with the communication of last year, the Orange Belgium Group aims to balance the appropriate cash returns to equity holders with the requirement of maintaining a balanced and sound financial position, while leaving sufficient leeway to continue to invest in its convergent strategy and to build out its network. Considering the performance of 2017 and the mid-term outlook, the Board of Directors of the Orange Belgium Group has decided to propose to the Annual General Meeting of Shareholder of May 2, 2018 to pay an ordinary gross dividend for the financial year 2017 of 0.50 euro per share.

Michaël Trabbia, Orange Belgium's Chief Executive Officer, commented:

'The past quarter, and by extension the full year 2017, demonstrated a very good commercial momentum. We achieved a multi-year peak growth of our postpaid customer base, combined with growing mobile data usage and ARPU. We also exceeded our target of 100,000 LOVE customers. These performances are the result of our consistent investment in customer experience, our leading 4G network, as well as the strong commitment of our employees.

To support our ambition, we adopt a bold challenger positioning, focusing on what's essential for our customers. As a first simple and disruptive move, we proudly announce the launch of the first mobile unlimited offer in Belgium.

Convergence remains a strategic focus, and we reiterate our mid-term target of 10 % broadband market share. Furthermore, to aim at turning our cable business break-even in the coming years, we are actively working on improving our efficiency, and at the same time we appeal to the regulators to substantially and quickly improve the financial and operational conditions for cable wholesale access. Strong regulatory improvements are required to ensure sustainable competition in Belgium.

Arnaud Castille, Chief Financial Officer, stated:

'Orange Belgium met its 2017 financial targets, providing growth in total service revenues, landing within its provided adjusted EBITDA guidance range and slightly lowering its core capex. All this was realized while fuelling both the growth of our postpaid and convergent base and in spite of the adverse factors. Apart from the expected improvement in customer experience, the key reasons for us to transform our digital operations are to make us even more competitive, to reduce the time-to-market for new services, to recoup network investment and to improve operational efficiency. Finally, I am happy to share with the Board of Directors our confidence in the mid-term outlook, and as such the Board of Directors proposes to pay out a gross dividend for the financial year 2017 of 0.50 euro per share.'

https://corporate.orange.be/sites/default/files/Orange%20Belgium%20Q4%202017%20results%20-%20Final%20version%20EN-1889224887.pdf