Faced with the evolution of the mobile market, Mobistar adjusts its forecasts for 2013 and adopts an offensive position

Brussels – Today, Mobistar (Euronext Brussels: MOBB) publishes its results for the first half year of 2013. It was primarily during the course of the second quarter that the results were penalised by the decrease in prices on the mobile telephony market. The implementation of the new telecom law and the duopolistic situation of the fixed operators led to an accelerated price decrease of 20 % of the market price for mobile telephony during the last 12 months (Study BIPT).

At the end of the 1st semester of 2013:

• The total number of customers on the Mobistar network increased by 6.2 %, largely due to the success of the MVNO strategy.
• The regulations on mobile termination and roaming rates had a negative impact of 31.1 million euros on the group´s total consolidated turnover.
• The Mobistar group recorded a total consolidated turnover of 757 million euros, a decline of 5.7 % compared to the previous year. Without regulatory impact the total consolidated turnover would have recorded 788 million euros, or a decline of 1.8 %.
• The usage of mobile data has tripled in one year. The part of the mobile data in the service revenues amounted 46.9 %.
• The EBITDA worsened by 68.8 million euros, declining 27.6 %. Without the regulatory and non-recurrent effects the EBITDA would have diminished by 32.3 million euros over the same period, a decline of 13.9 %.
• The efficiency programme ACE1, launched in 2012, made it possible to attenuate the EBITDA decrease by 14 million euros in the first semester 2013.
• The investments made amounted to 68.9 million euros for the first six months of 2013, an increase of 10.1 % compared to the previous year.

The reduction in profitability during the course of the second quarter of 2013 and the negative forecasts for the second half of 2013 have compelled Mobistar to revise its forecasts for the 2013 financial year downward as follows:

• a decrease in total turnover of maximum 12 %;
• an EBITDA of minimum 300 million euros;
• an operational cash-flow of minimum 100 million euros.

As a result of this revision, the Board of Directors will propose its shareholders to suspend the dividend payment for the 2013 financial year. Mobistar took this decision in order to protect the investments in the quality of its network and the customer service in conformity with the transformation plan 2013-2015. In the actual market context and with the support of the future expected results of the structural savings programme ACE2, Mobistar aims to stabilize his EBITDA in 2014.

1- Key facts

In a telecom market where a price war is currently raging and which increased in the second quarter of 2013, the Mobistar group reaffirms its commitment to its four strategic programmes: reinforcing its leadership on the mobile market, developing services that are accessible everywhere and at all times, offering the best customer experience on the market and managing the company costs in the most efficient way.

Reinforcing its leadership on the mobile market:

• In April 2013, Mobistar simplified and enriched a number of postpaid tariff plans, extended its ´Animals´ tariff plans to the segment of prepaid cards and launched a very competitive Dolphin offer, including 500 MB of data for 12 euros per month. The operator also decided to eliminate 40 older and less advantageous tariff plans and to adapt 4 others to the new conditions of the ‘Animals’ tariff plans by enriching their content. The 350,000 customers concerned received a tariff plan that not only better corresponds to the evolution of their needs but is also more advantageous. Finally, Mobistar also lowered the price of the Panther and Kangaroo Unlimited subscriptions in June 2013 and continued to offer its personalised tariff recommendations. By the end of June 2013, 85.6 % of the residential postpaid customers had opted for a transparent and advantageous ´Animal´ tariff plan.

• According to the national comparison of tariffs for telecommunication services in Belgium conducted by the BIPT at the request of Minister for Consumer Affairs Johan Vande Lanotte, Mobistar has one of the best mobile offers on the Belgian market for all of the consumption profiles analysed, and particularly for smartphone offers.

• At the end of June 2013, the Mobistar group recorded a turnover from the sale of terminals amounting to 102 million euros, compared to 80.8 million euros a year earlier, an increase of 26.2 %. In May 2013, Mobistar launched iWant, the year´s first handset subsidized sales campaign. This action applied to a limited number of smartphones.

Developing services that are accessible everywhere and at all times:

• Mobistar positions itself as the reference in the domain of smartphones. More and more consumers are using smartphones and tablets, and are opting for a tariff plan that includes mobile data. The Mobistar offers contain a large volume of mobile data, are very competitive in price, and according the study of the BIPT correspond most closely to the needs of smartphone users. Mobistar reinforces hereby his position most important smartphone seller in Belgium. The use of mobile data on the Mobistar network has tripled in one year, and the share of mobile data in service revenues amounted to 46.9 % at the end of June 2013.

• Mobistar denounces the increasing unbalance between fixed and mobile operators in Belgium. According to the studies of the BIPT conducted by the Ministry of Economics, the mobile prices declined by 20 % in one year in Belgium and feature within the lowest in Europe; but the prices of fixed triple play offers are the highest compared to the neighbour countries and continue to increase year after year. The duopolistic situation between the historic operator and the cable operators is not only detrimental to the consumer but enables also these actors to use these high prices to subsidize the price of the mobile services.

• Mobistar welcomes on the other hand the recent evolutions in the regulator´s position with regard to opening up cable. The public consultations on the implementation measures have now been concluded. The CRC (Conference of the Regulators of the electronic Communications sector) informed those active in the sector that the definitive conclusions on the adoption of the qualitative decisions could be expected at the end of September 2013, and those on the adoption of the quantitative decisions at the end of October 2013. Mobistar looks forward with confidence to the results of the cable regulation and the elaboration by the regulators of feasible specifications that will enable Mobistar to enter the broadband market once again, today closed for competition and characterized by prices higher than in the neighbour countries. Mobistar hopes to make immediate use of the cable regulation once it is available.

Offering the best customer experience on the market:

• During the second quarter of 2013, Mobistar launched new initiatives within the framework of its ´happy customer´ programme. The accessibility of the customer service has been further improved, while the service itself has also progressed favourably. The entire customer relationship process (purchase, customer service, payment) was revised in order to improve the confidence of the customers in their operator. These efforts have produced a significant increase in the customer satisfaction indicators.

• In April 2013 Mobistar launched the free application MyMobistar, which is accessible both in Belgium and abroad. At the end of June 2013, with 120,000 downloads, MyMobistar was the most popular application in the Belgian App Store. Via their smartphone or tablet, Mobistar customers can check their usage and easily manage their account at any time. The app is available under iOS, Android and Windows Phone.

• In June 2013, Mobistar was recognised for the second time by Socialbakers as one of the most active Facebook brands in Belgium. Thanks to active monitoring of the social media, Mobistar can respond more quickly to the demands of its customers.

Managing the company costs in the most efficient way:

• The continuation of the efficiency programme ACE1 generated gross savings of 14 million euros during the first half of 2013. The total savings realised within the framework of ACE1 since it was launched in July 2012 amounts to 42 million euros. The efficiency programme ACE1 is striving to achieve total gross savings of 60 million euros by the end of 2013. Mobistar reconfirms its commitment to reducing its cost structure by 50 million euros per year as of 2014, thanks to its efficiency programme ACE2 and to the systematic improvement of all company processes. The suspension of the sales of fixed residential offers fits within the achievement of this objective, and all on its own should generate net savings of 15 million euros in 2014.

• Other areas of savings in which ACE2 will intervene include distribution, the networks and IT operations, invoicing and overhead expenses. These savings aims to stabilize the EBITDA in 2014 by adapting the cost structure of the company to the evolution of the revenues, in order to safeguard the future investments.