Proximus SA — Earnings Release 2023

Oct 27, 2023

Brussels, 27 October 2023, 7.00 CET – Regulated information

Proximus Group financial results – Third quarter 2023

Proximus raises its 2023 guidance of Domestic revenue and Domestic & Group EBITDA after outstanding commercial momentum in the third quarter

• Domestic revenue +4.3%to EUR 1,173 million in Q3, with Residential revenue up +5.5% and Business revenue +4.1%.
• Fiber strategy further scaling: 26% population coverage and 353,000 activated Fiber lines end-September 2023.
• Sustained excellent commercial performance on all product lines: Mobile Postpaid growing by +60,000, Internet by +11,000 and convergent customers by +16,000, net loss in TV customer base remains contained (-12,000).
• Underlying Domestic EBITDA trend sequentially improved to -0.7% year-on-year.
• EBITDA for International segments BICS at EUR 33 million and Telesign at EUR 2 million, returning to positive EBITDA sooner than expected.
• Proximus Group Q3 underlying revenue +1.1% YoY, underlying EBITDA -0.4% YoY.
• Year-to-Date Capex at EUR 904 million, on track for full-year outlook. Nine-month adjusted FCF at EUR -35 million.
• Raising FY'23 Domestic revenue guidance and EBITDA guidance for both Domestic and Group, while moderating expectations for International Direct margin growth.
• Board of Directors approved interim dividend of EUR 0.50 per share, payable on 8 December 2023.

Read the full Q3 Financial Report here

Highlights Q3 2023

• Proximus' Domestic segment closed the third quarter of 2023 with further excellent growth in Mobile Postpaid, +60,000 net adds, with ongoing traction for its new Mobile Portfolios. As Proximus' Fiber footprint enlarges, it sustained a strong growth forits Internet base (+11,000), in a slowly growing market. Residential convergent offers grew by +16,000 customers to a total of 1,094,000, a +5.7% year-on-year increase. End-September 2023, the number of active Residential and Business Fiber lines totaled 353,000, of which +31,000 were added in the third quarter 2023. Over the past quarter, the overall churn remained broadly in line with the 2022 comparable base, which also converted into a well contained net erosion for both TV subscriptions, limited to -12,000, and Fixed Voice subscriptions (-37,000).
• Proximus' third-quarter 2023 Domestic underlying revenue was up by +4.3% to EUR 1,173 million. The Residential unit posted a +5.5% revenue increase, with its Customer Services revenue sequentially improving to a +6.2% growth (a EUR 28 million increase) and revenue from Terminals higher by EUR 10 million. Convergent revenue was up +10.0%, driven by further customer growth and the inflation-based price adjustments. The Business unit grew revenue by +4.1% year-on-year, including a +3.4% increase in Business Services revenue, driven by a +10.2% increase in Business IT services and +5.6% in Fixed Data. Revenue from products was up by EUR 7 million. Proximus' Wholesale unit posted an overall -9.0% revenue decrease, mainly driven by low margin interconnect revenue (EUR -5 million), while Wholesale Services revenue was down by EUR -1 million, or -3.2%.
• The third-quarter 2023 Domestic EBITDA totaled EUR 423 million, a -0.7% decrease from the same period in 2022. The sequential improvement from the previous two quarters reflects the higher direct margin, up by +4.8%, ongoing company-wide cost efficiencies and inflationary effects on wages that are gradually softening.
• Telesign closed the third quarter with revenue growing +5.2% to EUR 132 million and direct margin +7.9% to EUR 30 million, including adverse currency effects. On constant currency basis, this was +13.4% and +25.3% respectively. Growth is continuing for the Digital Identity segment, driven by the expansion of the customers base outside the US, and the Communication segment, supported by a strong increase of omnichannel volumes. With

material investments in Telesign's growth strategy beyond their peak, year-on-year the OPEX was -4.1% lower and the EBITDA turned positive in the third quarter 2023 to a total of EUR 2 million.

• For the third quarter of 2023, BICS posted revenue of EUR 266 million, a -13.3% decrease from an exceptionally strong 2022. This reflects a USD currency headwind (-10.1% at constant currency), lower messaging volumes and legacy Voice services returning to their inherently declining trend. This was reinforced by a change in destination mix, though with neglectable margin impact. BICS' Direct Margin stood at EUR 68 million, down -4.1% from a high base (-1.4% at constant currency). BICS' EBITDA totaled EUR 33 million, -6.2% from the same period in 2022 and stable to the previous quarter.
• In aggregate, the Proximus Group underlying revenue totaled EUR 1,527 million for the third quarter of 2023, up +1.1%. The underlying Group EBITDA totaled EUR 458 million, down by -0.4%.
• The Proximus Group Capex for the first nine months of 2023 totaled EUR 904 million, compared to EUR 841 million one year back, excluding spectrum and football rights. Capex remains on track for the full-year 2023 estimate of around EUR 1.3 billion, with this year's investments less back-end loaded. Fiber related investments accounted for 28% of the total Capex, with capex for Proximus' own fiber build coming down from its peak in 2022, while the capex to connect and activate customers increases. Moreover, the Mobile network (RAN) consolidation is ongoing, and Proximus increased its investments in digitalization.
• Year-to-date 2023, the FCF stood at EUR -80 million, or EUR -35 million when adjusting for M&A related cashout. This includes adjusted FCF of EUR 64 million for the third quarter 2023. On adjusted basis, the year-to-date 2023 FCF decreased by EUR 117 million compared to 2022. This was mainly the result of higher payments in 2023 related to taxes, equity injections in the Fiber JVs and spectrum, in addition to the lower Group EBITDA. This was in part offset by lower Business Working Capital needs.

Guillaume Boutin, CEO of the Proximus Group:

"Proximus's Domestic segment sustained an outstanding commercial momentum in Q3, driving an upward revision of the 2023 guidance for Domestic revenue as well as for Domestic and Group EBITDA, whilst moderating expectations for International Direct margin growth."

We are delighted to report an excellent domestic performance for the third quarter 2023, marked by 31,000 new active Fiber customers and 60,000 new Mobile Postpaid customers. Our continued commercial momentum is driven by our multi-brand strategy and our network and product superiority. These elements, along with our well-calibrated pricing strategy, contributed to a notable 4.3% rise in Domestic revenue.

Our Gigabit Fiber network is making good progress and now covers 26% of the Belgian population, connecting nearly 1.6 million homes and businesses in 133 cities to our Fiber network at the end of September. We also welcome BIPT's recent announcement, stating it is ready to evaluate fiber cooperation between the different operators in Belgium. A more efficient fiber rollout, making fiber accessible to all citizens and businesses would be beneficial for all stakeholders and for the competitiveness of Belgian society.

As a last pointfor our Domestic operations, we were pleased to announce the signing of a mobile wholesale agreement with the new market entrant. This agreement, in conjunction with our preparation across our multi-brand offerings and our product superiority, positions us well for the evolving market structure in Belgium.

Looking at our international activities, currency effects aside, Telesign's business performance remains strong, achieving double digit revenue and direct margin growth. BICS is now cycling against strong

performances in the same quarter last year, with in particular legacy voice revenue being affected by a change in destination mix linked to one specific country, yet with limited impact on margin.

With the announcement to buy a majority stake in Route Mobile, we have laid solid foundations to accelerate the company's global growth. Since signing, preparation activities for closing confirm estimated synergies of at least EUR 90 million on an annual runrate basis. In a 3-year timeframe we estimate that the combination of Telesign and Route Mobile should generate a total annual revenue of around USD 2 billion and align the EBITDA margin to best-in-class peers, i.e. 13-15% and cash conversion in the 50%- 75% range. Subject to obtaining all regulatory clearances and MTO completion, we reasonably expect the closing of the transaction to happen by the end of the first quarter of 2024.

Reflecting on the first 9 months, thanks to our ability to manage both revenue growth and cost mitigation, we are confident of raising our Domestic and Group guidance. For the full-year 2023, we expect our Domestic revenue to be up between +3.5% and +4% while the Domestic EBITDA decline will be limited to around -2%. For the Group EBITDA, we are also improving the 2023 outlook to a year-on-year decline of around -2%. For our international segments BICS and Telesign, we are mitigating our Direct Margin expectations for the year 2023 to a growth between 4% and 5% for the two companies combined, excluding currency effects. This is primarily due to voice and messaging traffic at BICS where we experienced elevated volume levels in 2022 on certain volatile destinations which did not reach the expected levels for 2023. At the same time, Telesign is beyond its peak of OPEX investments in its growth strategy and turning to positive EBITDA sooner than expected.

As a final point, I'm pleased to announce that the Proximus Board of Directors has approved the payment of the interim dividend over the result of 2023 for an amount of EUR 0.50 per share, in line with our 3-year remuneration policy."

Key figures

Operationals ('000)	Net adds in the quarter		Park at end of quarter
	2022	2023	%	2022	2023	%
Fiber
Homes Passed	93	96		1,124	1,579	40.5%
Activated retail lines	27	31		220	353	60.4%
Residential customers
Convergent	12	16		1,035	1,094	5.7%
Group (subscriptions/SIM cards)
Internet	6	11		2,207	2,251	2.0%
TV	-13	-12		1,718	1,682	-2.1%
Fixed Voice	-42	-37		1,863	1,690	-9.3%
Mobile Postpaid (excl. M2M)	33	60		4,775	4,935	3.4%
M2M	212	40		3,913	4,221	7.9%
Prepaid	-22	-14		640	568	-11.2%

Financials (EUR million)	3rd Quarter			Year-to-date
	2022	2023	% Change	2022	2023	% Change
Group Revenue (underlying)	1,510	1,527	1.1%	4,351	4,508	3.6%
of which Domestic	1,125	1,173	4.3%	3,322	3,469	4.4%
of which BICS	307	266	-13.3%	821	795	-3.2%
of which Telesign	126	132	5.2%	333	380	13.9%
Group Direct Margin (underlying)	939	980	4.4%	2,787	2,878	3.3%
of which Domestic	844	885	4.8%	2,521	2,603	3.2%
of which BICS	71	68	-4.1%	198	203	2.7%
of which Telesign	28	30	7.9%	80	86	8.2%
Group Expenses (underlying)	-479	-522	9.0%	-1,416	-1,541	8.8%
of which Domestic	-418	-461	10.3%	-1,245	-1,359	9.2%
of which BICS	-36	-35	-2.1%	-104	-106	2.5%
of which Telesign	-29	-28	-4.1%	-79	-90	14.3%
Group EBITDA (underlying)	460	458	-0.4%	1,371	1,336	-2.5%
as% of revenue	30.4%	30.0%	-0.4 p.p.	31.5%	29.6%	-1.9 p.p.
of which Domestic	426	423	-0.7%	1,276	1,244	-2.5%
of which BICS	35	33	-6.2%	94	97	2.9%
of which Telesign	-1	2	nr	1	-4	nr
Group EBITDA (reported)	469	453	-3.4%	1,407	1,345	-4.4%
Net income	126	79	-37.2%	369	267	-27.5%
Accrued capex (excl. spectrum & football rights)	283	293	3.3%	841	904	7.5%
FCF (adjusted)	85	64	-24.2%	82	-35	nr
Adjusted net fin position (excl. lease liabilities)	n.r.	n.r.		-2,710	-3,046	-12.4%

• Group revenue, Direct margin, Operating Expenses and EBITDA include intersegment eliminations • Adjusted FCF excludes M&A impacts but includes Fiber equity injections.

Revising 2023 full-year guidance

Based on the strong financial result over the first nine months of 2023 and the company's best estimate for the remainder of the year, the guidance for the full-year 2023 is being adjusted upwards for the Domestic revenue, with the full-year 2023 growth expected to land in the range of "+3.5% to +4%". Following better than anticipated Domestic revenue growth, Proximus expects the decline in underlying Domestic EBITDA to be limited to around -2%. Proximus' cost savings program remains on track and successfully mitigates inflationary cost effects.

Proximus lowers its direct margin expectations for its International segments with BICS and Telesign to deliver combined a direct margin growth of 4% to 5% for 2023 excluding currency headwinds. At BICS this is lowered primarily due to voice and messaging traffic where the company experienced elevated volume levels in 2022 on certain volatile destinations which did not reach the expected levels for 2023. In addition, for Telesign, messaging and digital identity experienced some slightly lower demand levels related to the current macro-economic environment. At the same time, Telesign is beyond its peak of OPEX investments in its growth strategy and turning to positive EBITDA sooner than expected.

In aggregate, Proximus expects to end the year 2023 with a decline in Group underlying EBITDAof around -2%, improving from its earlier expectation of around -3%.

Guidance metric	FY22 Actuals	YTD23 Actuals	FY23 Outlook	FY23 Outlook revised 27 Oct 2023
Underlying Domestic revenue	€ 4,478M	+4.4% YoY	Upper end of +1% to +3% YoY	Between +3.5% and +4% YoY
Domestic underlying EBITDA	€ 1,665M	-2.5%YoY	Around -3% YoY	Around -2% YoY
International Direct Margin	€ 377M	+6.3% YoY (at constant currency)	High single digit growth	Between +4% and +5% YoY
Underlying Group EBITDA	€ 1,786M	-2.5%YoY	Around -3% YoY	Around -2% YoY
Capex (excluding Spectrum & footballrights)	€ 1,3Bn	€904M	Peak at around € 1.3Bn	Peak at around € 1.3Bn
Net debt / EBITDA	1.5x (Proximus) 2.3X (S&P)	NR	Around 2.6X (S&P)	Around 2.6X (S&P)

Proximus year-to-date Capex is in line with its expectations and reiterates it will reach its peak of around EUR 1.3 billion in 2023. The Net Debt/EBITDA ratio for 2023 is expected to be around 2.6X.

Shareholderreturn

In line with the bold2025 strategy and deriving shareholder return policy, Proximus intends to return over the result of 2023 a stable gross dividend of EUR 1.2 per share, provided a financial performance delivery in line with its strategic plan.

As was announced in January 2023, over the result of 2024 and 2025, Proximus will rebase its dividend level to EUR 0.60 per share. The rebased sustainable dividend level incorporates all currently known macro and inflationary headwinds, as well as expected changes in market structure. The proposed dividend is reviewed and submitted to the Board of Directors on an annual basis, in order to keep strategic financial flexibility for future growth, organically or via selective M&A, with a clear focus on value creation. This also includes confirming appropriate levels of distributable reserves.

The Proximus Board of Directors approved on 25 October 2023 to pay the interim dividend over the 2023 accounting year, EUR 0.50 gross per share, on 8 December 2023.

More information on www.proximus.com/press

Press Relations department: +32 2 202 44 44

Haroun Fenaux +32 476 60 03 33

Fabrice Gansbeke

Investor Relations: +32 2 202 82 41

investor.relations@proximus.com

About Proximus

Proximus Group (Euronext Brussels: PROX) is a provider of digital services, communication and ICT solutions operating in the Belgian and international markets. Our purpose, 'Boldly building a connected world that people trust so society blooms', is our guiding star in delivering delightful communication and entertainment experiences for residential consumers and in enabling next generation digital innovations tailored to businesses.

Proximus aims to build the #1 gigabit network for Belgium, combined with technology assets that enable digital ecosystems, while fostering an engaging culture and empowering ways of working. These exceptional strengths pave the way to deliver long-term value for stakeholders; they allow Proximus to contribute to an inclusive and sustainable digital society, delight customers with an unrivalled experience and achieve profitable growth both locally and internationally.

In Belgium, Proximus' core products and services are offered under the Proximus, Mobile Vikings and Scarlet brands. The Group is also active in Luxembourg, under the brand names Tango and Telindus Luxembourg, and in the Netherlands through Telindus Netherlands. The Group's international carrier activities are managed by BICS, a leading international communications enabler, one of the key global voice carriers and the leading provider of mobile data services worldwide. With Telesign, the Group also encompasses a fast-growing leader in authentication and digital identity services, serving the world's largest internet brands, digital champions and cloud native businesses.

With 11,634 employees, imbued with Proximus' think possible mindset and all engaged to offer a superior customer experience, the Group realized an underlying Group revenue of EUR 5,909 million end-2022.

For more information, visit www.proximus.com & www.proximus.be.