Earnings call transcript: Proximus Q2 2025 shows modest EBITDA growth

Proximus Group reported its second-quarter 2025 earnings, highlighting a slight increase in EBITDA and continued growth in domestic services. The company reported a Q2 EBITDA of €491 million, a 1.2% year-over-year increase. Despite intense market competition, Proximus maintained its network leadership and expanded its fiber and 5G coverage. The company’s stock remained stable post-announcement, reflecting investor confidence in its strategic initiatives. With a market capitalization of €2.83 billion and an impressive year-to-date return of 49.41%, Proximus has demonstrated strong momentum in 2025.

Key Takeaways

• Proximus reported a Q2 2025 EBITDA of €491 million, up 1.2% year-over-year.
• Domestic service revenue grew by 1.6%, with domestic EBITDA increasing by 1.9%.
• Fiber and 5G coverage expanded significantly, with fiber now reaching over 45% of Belgian homes.
• Proximus signed a memorandum of understanding with Orange Belgium for fiber deployment.

Company Performance

Proximus demonstrated resilience in a competitive market by reporting a modest increase in EBITDA for Q2 2025. The company’s domestic service revenue saw a 1.6% rise, indicating strong performance in its core market. The expansion of fiber and 5G networks continues to be a significant focus, with fiber coverage now exceeding 45% of Belgian homes. The company added 30,000 new fiber customers in the quarter.

Financial Highlights

• Revenue: Not specified in the earnings call summary
• EBITDA: €491 million, up 1.2% year-over-year
• Domestic service revenue: Increased by 1.6%
• Organic free cash flow: Negative €5 million, showing improvement from the previous year

Outlook & Guidance

Proximus raised its domestic EBITDA growth guidance to up to 2% for the full year. However, the global segment EBITDA is expected to decline by 5-10%, reflecting challenges in the international market. The company remains committed to expanding its fiber network and has increased its asset disposal program to €600 million by 2027. A new CEO, Stan Dennett, will join the company on September 1st, bringing fresh leadership to the strategic initiatives.

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Executive Commentary

• "Network leadership is at the core of our strategy," stated Jan Van Acoleyen, CEO ad interim, emphasizing the company’s focus on maintaining its competitive edge.
• Jim Casteele, Executive, noted, "We continue to balance volume and value in our market approach," highlighting the company’s strategic focus.
• Mark Reid, CFO, added, "We are working night and day to get these [fiber] deals done," underscoring the importance of fiber network expansion.

Risks and Challenges

• Intense competition in the mobile market may pressure margins.
• The global segment faces challenges, particularly in the SMS market.
• Softening in the low-end market segment could impact revenue growth.
• Continued investment in fiber and 5G networks requires significant capital expenditure.
• Market dynamics and pricing strategies remain critical to maintaining competitive positioning.

Proximus’s strategic focus on expanding its fiber and 5G networks, alongside its commitment to maintaining network leadership, positions the company well for future growth. With an EV/EBITDA ratio of 4.39x and strong cash flow metrics, the company appears well-positioned to fund its expansion plans. However, challenges in the global segment and intense market competition will require careful management to sustain its positive trajectory.

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Full transcript - Proximus NV (PROX) Q2 2025:

George, Conference Coordinator: Hello and welcome to the Proximus Q2 2025 analyst conference call. My name is George. I’ll be the coordinator of today’s event. Please note that this conference is being recorded and for the duration of the call your lines will be in the listen only mode. However, you have the opportunity to ask questions towards the end of the presentation and this will be done by pressing star 1 on your double keypad to answer your question. If you do find that your question has been answered, you may remove yourself from the queue by pressing star 2. If you require any assistance at any point, please press star 0 and you define operator. I’d like to turn the call over to your host today, Ms. Nancy Goossens, Investor Relations Lead, to his conference. Please go ahead. Thank you. Welcome everyone. Thank you for joining this Proximus Visuals webcast.

We will start with our presentation and as usual we will address all your questions after that. The presenters of today are the CEO ad interim Jan Van Acoleyen, Proximus Group, CFO Mark Reid, and for the Q&A we are joined by the eventual lead Jim Casteele, by Renaud Tilmans for the PTP Telco part, and by the Corporate Affairs Lead Ben Appel. They will be taking your questions in a moment, but first hand it over to Jan to take you through the highlights for today. Jan, please go ahead. Thank you Nancy. Good day everybody. Thank you for joining us today. Stan Dennett, the new Proximus Group CEO, will be joining us as of September 1st and will be your host for the next round.

For today I’ll be taking you through the main takeaways from the second quarter, after which Mark will take over for a deeper dive. As you have all seen in our published report this morning, Proximus continued its robust domestic performance despite the intense competition. This is reflected in another strong financial quarter with both domestic service revenue and EBITDA growing year over year. Network leadership remains a key pillar of our strategy, with 5G coverage now above 80% and fiber in the street covering more than 45% of the Belgian homes and businesses. Regarding the fiber negotiations, we’re pleased to announce that we have signed an MOU with Orange Belgium offering a collaboration on fiber in Wallonia and the use of the HFC network in rural zones for frontrunners. Significant progress was made during the second quarter bringing us closer to the next step.

Regarding our Global segment, the part of our business faced accelerated headwinds in the CPaaS market. Besides integration challenges that are impacting the go to market, this was only partially compensated by a successful delivery of OpEx synergies. As a last point, thanks to the expected proceeds of the sale of Be-Mobile, we will have achieved our original divestment plan target of €500 million by 2027 already this year and have increased our ambition up to €600 million over the 2023-2027 period. Now handing over to Mark for a closer look and starting with the announced update of our full year guidance. Thank you Jan. So indeed, before diving into the drivers, let me walk you through the updated guidance we have given this morning for the full year of 2025.

First on the domestic segment, we have raised full year 2025 domestic EBITDA guidance from broadly stable to 2024 to an increase by up to 2%. This results from a combination of an improved revenue mix with higher service revenue offsetting lower revenue from terminals and from cost improvement. This is why from a total domestic revenue perspective we expect to remain broadly stable compared to the previous year. No change there. Regarding Proximus Global, the headwinds signaled in the first quarter continued and even accelerated with results over the second quarter and our estimate for the remainder of the year. We reviewed our EBITDA expectations downwards to a year over year decline by 5% to 10% in comparison to a 20% growth before despite the successful implementation of cost synergies.

I’ll get into more detail in a few minutes to explain what the main drivers are and what our course of action is going to be. The domestic upgrade combined with a lowered expectation for Global brings us to an expected growth of up to 1% for the Proximus Group. This compares to around 2% previously. The Group CapEx and organic free cash flow expectations for the year remain unchanged. Moving to our key financial results for the domestic segment, we closed the second quarter with a solid 1.6% increase in service revenue offset by lower terminal revenues. This more favorable revenue mix drove higher margin, which more than offset the increase in OpEx. As such, we closed Q2 with domestic EBITDA growing by 1.9%. For the Global segment, the direct margin was down 10.8% caused by the headwinds previously mentioned.

This resulted in the EBITDA decline of 5.4% despite strong cost control and synergy realization. This brings our group EBITDA to €491 million for the second quarter, an increase of 1.2%. Our capex for the first half was €542 million and free cash flow. We ended the first half with €266 million in total. Excluding the proceeds from asset sales, the organic free cash flow was negative €5 million, a solid improvement year on year. Let’s have a look now at the operational results. The second quarter operational performance was again robust with very strong results for mobile postpaid, adding 38,000 cards despite intense competition. The solid commercial performance was supported by the portfolio changes of the Proximus brand and attractive mobile joint offers.

Following the early changes for the B brand Scarlet and Mobile Vikings and the ongoing convergence strategy, our convergent base continued to grow, adding 11,000 residential customers in the second quarter. The resilience of our residential unit in this evolved market structure is underpinned by the multi-brand strategy. Our brands Scarlet and Mobile Vikings deliver a first line of defense against the fourth entrant and other low-end offers in the market. At the same time, we drive value by positioning the Proximus brand in the premium segment. Thanks to the launch of our fiber-centric Flex plus offers back in the first quarter and the mobile data boost for stand-alone mobile offers in April, we managed to drive further commercial momentum.

Network leadership is at the core of our strategy, and we are very proud that we again got the recognition for it, winning the OCLASH speed test for the fastest Internet for the first half of this year. In mobile, we crossed another important milestone and now have over 80% indoor 5G coverage across Belgium. We now have a total of 2.4 million fiber homes, meaning a coverage of over 40%, and including fiber on the street, we’re even above 45%. Our network filling rate was stable compared to the previous quarter at 33%. At the end of June, we had activated 646,000 fiber customers, adding another 30,000 in the second quarter. As Jan already mentioned earlier on, we made significant progress regarding the fiber negotiations in Flanders.

We have strongly progressed to reach an agreement in principle on the terms of a future collaboration to accelerate the deployment of fiber networks across Flanders. We are working closely with the BCA and BIPT in view of starting a market test in September. What is more is that we have signed last night an MOU with Orange Belgium to expand the deployment of fiber and the access to multi-gig networks in Wallonia. The MOU covers nearly 1.4 million homes in the Wallonia region of Belgium. What is excluded from the MOU is the dense areas, about 450,000 homes. We will continue to deploy fiber in standalone, which is already partly done. Regarding the mid-dense areas, our JV Unifiber will continue to deploy the early announced 600,000 fiber homes, so no change in deployment. Orange Belgium will onboard its customers on this network.

In addition, Proximus and Orange Belgium will deploy 200,000 fiber homes split amongst the both of us in low-dense areas, and we will be onboarding our customers on each other’s fiber networks. Note that from a financing perspective for Proximus, we are looking into different options with the aim to keep this investment off balance sheet for the remainder of the rural areas, so another 600,000 homes. The MOU foresees the usage of HFC with an option to use superior technology should that become available. This brings a number of clear benefits as listed here on the slide. It will allow for much more efficient capex deployment, especially for the rural areas. It will enhance the fiber coverage versus our standalone plan and will bring fiber to around 70% of the Wallonia region. Broader fiber means that we will also have the commercial benefits on a larger scale.

Clearly, with symmetrical commitments to onboard customers on the fiber networks, we’re looking at very high utilization rates. We will also have a solution for the most rural areas of this part of the country whereby we are able to offer gigabit access to our customers. This will also enable copper decommissioning at a faster pace. With this MOU, we have clearly taken a significant step towards a more efficient network deployment. We will keep you informed on further developments as we move into the next phases of this process. As a final topic for domestic and this time in the business domain, one deal that I would want to spend a little time on is a really strategic win for ProximusNext. It’s a major contract we won together with Thales for NATO.

It’s a great achievement of the team, putting ProximusNext on the map as a key player for the digital transformation of defense, offering resilience and secure infrastructure. Let’s zoom now in on our Proximus Global segment. Despite the good progress that we have made in realizing cost synergies thanks to a more optimal workforce and cost of sale benefits from optimized routing, we clearly also faced some headwinds. The initial slowdown indications we witnessed in the first quarter, more precisely in the CPaaS market, have accelerated and affected some segments strongly. We’ve especially experienced weakness in the SMS CPaaS market with international one-time password affected the most. This, in combination with some operational integration headwinds that are impeding our margin synergy delivery, caused a downward revision of the EBITDA outlook for Global. To enhance Global’s performance, we have identified some key areas of focus going forward.

For starters, to mitigate the impact of decreasing markets, we will accelerate the development of our growth products. Omnichannel is on the rise but today too limited to offset the headwinds. We are intensifying efforts to overcome integration challenges and accelerate our transformation to omnichannel with a particular focus on market communications through RCS. In addition, we are going to maximize the cross-sell potential we have across Global entities and refocus on more profitable customers and growing markets. Finally, we want to leverage signed partnerships with Global to drive more value. In this view, we have also managed organizational changes at Lu Mobile with Mr. Rajdee Gupta, Founder and Managing Director, reappointed as CEO. In addition, a new Global CEO will be appointed soon. Let’s now review the Q2 results. Assuming you have seen the earnings release, I will proceed quickly from this part starting on domestic revenue.

As illustrated on the chart, services revenue grew by 1.1%. When including revenue from terminals and IT hardware, the total revenue showed a slight decline of -0.7%. The second quarter growth was mainly driven by sustained strong increase in services revenue of the residential unit. This thanks to the January 2025 price indexation and the ongoing convergent customer growth. The growth was partially offset by a decrease in revenues from terminals resulting from lower joint offer volumes. The most valued part of the residential revenue, customer service revenue, is growing by 2.5% with convergent revenue up by 5.4%. Year on year, the ARPAC continued to show a positive evolution, growing 1.8% including price indexation and the benefit from a continued increase in convergent customers and fiber upselling.

Turning to the business unit for B2B, the total revenue declined by 4.4% essentially due to a decrease in low margin products revenues post a very strong first quarter. Remind that we had a record high level of IT product revenues in the previous quarter, which illustrates the high volatility of this part of the revenue. Yet remember, this is with limited impact on the direct margin. Taking a closer look at the B2B revenue from services, the second quarter included sound growth from IT services growing 1.7% year over year driven by growth in smart mobility services and workplace fixed data. Revenue remained rather stable with a mix, a growing revenue from fixed Internet offset by lower revenue from traditional data connectivity.

Despite the competitive intensity, the B2B unit maintained a solid mobile base and sees its mobile revenue decline sequentially moderating following the annualization effects from large customer loss in 2024 including value management actions. Fixed voice continues a steady decline due to a lower customer base while the ARPU benefit from indexed pricing. In the wholesale business, we have achieved a sustained growth in fixed and mobile services, up by 6% from the second quarter. This partially offset the decline from low margin interconnect revenue. The year on year revenue declines reflect the further continued volume erosion in traditional messaging. For the domestic OpEx, we report for the second quarter of 2025 an increase of 1.3% which is a further slowdown compared to the previous quarters. This year on year increase was mainly impacted by wage indexations and other inflationary effects, higher customer rated OpEx and strategic transformation issues.

This is partially offset by cost efficiency. This brings me to the domestic EBITDA which grew for the second quarter by 1.9% as you can see on the chart, resulting from a good growth in direct margin partially offset by higher workforce OpEx. Turning now to Proximus Global for which we closed the second quarter with a revenue decline of 18.8%. With the revenue pressure largely on low margin business, the direct margin was down 10.8% or 8% decline on a constant currency basis. For the product group, communications and data, direct margin was down 14.8% year on year on a pro forma basis. As explained before, this was due to increasing headwinds in the CPaaS SMS market facing significant volume erosion and price competition.

Despite the lower revenue in P2P voice and messaging, the direct margin was up by 1.7% year over year, driven by an overall optimization of the direct margin mix. Successful realization of the cost synergies drove global OpEx down 14.1% year over year on a pro forma basis, which has partially offset the direct pressure with pressure from direct margin. The resulting global EBITDA decreased by 5.4% year over year on a pro forma basis, which represents a decline of 3.2% at a constant currency basis. Regarding the group CapEx, we closed the first half of the year with €542 million, and we remain well on track for the outlook we have given for the year at about €1.3 billion. Compared to the same period last year, CapEx was lower mainly due to cyclicity of TV content contract renewals.

Fiber-related expenditures increased year over year, driven by the consolidation of Fiberklaar, while investments related to connecting and activating customers have decreased. This brings me to free cash flow for the first half of the year. As illustrated on the chart, organic free cash flow for the first half of 2025 was negative €5 million, strongly improving from one year back thanks to the growing EBITDA, favorable year over year impact from working capital, and lower cash CapEx. Our quarter free cash flow increased the proceeds from sale of our data center business and Luxembourg mobile tariff. This brings me to the next topic as a last point before turning to your questions. The disposal program of non-core assets, which we launched to support our free cash flow throughout the high investment period, is progressing very well.

In the second quarter, Proximus Group completed the sale of Luxembourg Towers for a final purchase price of €111 million, and we announced the agreement to sell Be-Mobile at the enterprise value of €170 million. As such, we achieved our ambition to divest €500 million of non-core assets by 2027, more than two years earlier than planned. As we now also have initiated the sales of a range of real estate income, amongst other technical buildings we no longer need, we raised the total expected proceeds. Our total asset disposal program is now expected to bring €600 million by the end of 2027. This closes my presentation. I will now turn the line open to your questions. Thank you very much, sir.

Ladies and gentlemen, once again, if you have any questions, please press Star one on your coupled keypad and just make sure that your line is unmuted to allow your signal to reach your equipment. I believe the first question today is coming from Michael Dickleric, KBC Securities. Please go ahead. Yes, hi, thanks for taking my question. The first question would be on the global business. Quite a big surprise of course in the outlook as this would imply a further decrease in the EBITDA and the decrease in the EBITDA in the second half this year. I’m just wondering, can you give a bit more color on why this sudden shift or this acceleration towards SMS has happened and do you see this as a structural thing or do you think it will further accelerate going forward?

If you could maybe also comment on how much SMS is now of the total compared to other OTT services that you’re providing. A second question would be on the residential mobile again, strong quarter. It looks like you fully offset the impact from DIGI in the first quarter. Just wondering, now that they launched a new commercial offering the 1st of June, do you maybe see an impact of that again looking in the month of June specifically? Those would be my questions. Michael, thank you for the question. Let me take the first one. I think we started to see some of these effects on the SMS market which were effectively some of the big kind of OTP players, big enterprise customers were starting to move some of their traffic, their engagement traffic to other channels.

We started to feel that accelerated in Q2 and effectively is one of the major impacts in terms of our shift in guidance. When we look at it in terms of the rest of the year, those structural elements and some of the integration challenges that we put are fully now reflected in our guidance at the end of 2025. Where we think about this in the structure of Proximus Global, we always were aware that this was happening. Although it’s happened a little faster than we expected, Proximus Global has the assets, the products and portfolios to manage this transition away from traditional OTP SMS to omnichannel RCS, WhatsApp, email, the likes and I think we’re well positioned to do that. The scale of the business we haven’t disclosed, but as you can imagine it’s slightly bigger on the SMS side than the omnichannel part of our business.

We’re fully focused on capturing the growth of the RCS email, the WhatsApp channel, and we have the products and portfolios to do that. That’s fully part of the Proximus Global strategy and we’re taking swift action to be able to capture that. I think that’s the way I would think about it. As I said, we’ve reflected the latest trends in our outlook for the year and we’re confident in the guidance we’ve given, but we understand that it was a swift change of direction. Part of that was this rapid change in SMS. That’s where we are on that first question. Jim, you want to take the Michiel, thank you for the question. Jim answering here.

The impact of the new offer of DIGI launched 1 June, the €3 offer, is extremely limited on our commercial performance and we will closely monitor the market as we always do, but we haven’t seen an impact of that new offer on the market. Thank you for the answers. Thank you much, sir. We will now move to David Vagman of ING. Please go ahead. Yes, good afternoon everyone and thanks for taking my question. First one on Proximus Global. I estimate the new guidance implies a 20% drop in EBITDA. Can you say whether the 2026 targets for Global are basically at risk during the month timeline or basically a cut in the guidance because of this faster shift to SMS mediation difficulty on the integration side and is there risks of a goodwill right now? That’s my first question.

Secondly, could you clarify the organic free cash flow message beyond 2025 as communicated in your Q2 2024, you know the average 2025, 2027 and then 2028 to 2030. It seems you’re thinking the consensus has been overestimating free cash flow in the medium term. Maybe you can give more granularity on capex or other elements that are not properly numbered. Maybe as a follow up to that, how do you do the MOU signed with Orange Belgium and then the change impact, the free cash flow guidance. Thank you David. Let me take the first one in terms of 2026. As I said, the first Q2 results have been slightly disappointment. We have been very swift in taking action in terms of the refocus of the team to accelerate what was already in plan in terms of recapturing some of that shift from SMS to RCS.

The teams are very rapidly continuing the progress of that platform and the sales into that channel. I think in that sense we’re going to pivot fairly quickly on there in terms of some of the integration challenges. We can get into that if needed. Again, we’ve taken some actions in terms of the overall organization and some of the other integration challenges. Certainly on the top line we are very, very focused and have implemented some turnaround plans there. That’s in terms of what we’ve done in terms of how you see that going into 2026. We believe that the ambitions that we set continue to be achievable. We’re going to appoint a new Proximus Global CEO and that person, he or she, will come in in very short order and we expect them to be able to give you a better view of that in due course.

That’s where we are on Proximus Global in terms of organic free cash flow dividend. I think last year we gave a very clear disclosure in terms of our free cash flow, what we said, and you can go back and look at that. We haven’t updated it since then. We also said at that time the fiber deals are incredibly important components of that free cash flow and clearly we’re still very much in the discussions. We made a significant step forward today. I hope you agree in terms of realizing those fiber collaboration deals and effectively from our perspective, take a look at those free cash flow disclosures from last year and then as we get to the point where we can disclose the fiber deals are finished, we’ll be able to exactly give you better guidance as we’ve been saying certainly for the last couple of quarters.

That’s where we are. I don’t think we’ve changed our position at all. I think it’s very clear if you look at our free cash flow disclosure from last July, on the basis of that point in time, that’s where we were. I think consensus can look at those and do the maths on our free cash flow over those periods of time. That’s that one and then last one was MOU. Again, on MOU and Orange Belgium today, I think as we said it’s a significant step forward in the south. We’re still at an MOU stage and we still have to discuss extensively with the regulator. I’m sorry but we’re not going to be able to disclose an awful lot more than what is in the earnings release today on the MOUs and certainly not the impact on free cash flow.

We will absolutely, as we’ve promised, come back once those deals are signed and I hope you understand the commercial sensitivity of that. We have to get them in full and final legal form and get the regulatory approval before we can give you the full detail on the impacts on free cash flow. Hope you understand. Thank you very much. We’ll now move to Dhruva Shah of UBS. Please go ahead. Morning. Yes, it’s Dhruva Shah from UBS. Thanks very much for taking the questions and congratulations on the MOU and look forward to seeing the update with market test in September. Appreciate you’re not going to give too much more color there. I have one question on Global and then another on the domestic market.

Just starting off with Global, any more color you can give us in terms of what the integration challenges you’re facing in the go to market strategy would be great there. In terms of the direct margin synergy delivery, what’s kind of holding you back there? That’d be great. Just to clarify, are you still confident on the $100 million synergy target then? That’s on Global and then separately on domestic. There’s been a number of press reports suggesting that DIGI have expanded their fiber rollout outside of Brussels and are exploring the fiber rollout in other regions. Just keen to get your take on how quickly DIGI really are rolling out fiber and how meaningfully they’re expanding their footprint throughout the rest of Belgium. Thank you very much. Thank you for the question. On Global, let me give you a little flavor on the integration challenges that we’ve seen.

Clearly we’re aware of some of the management changes that went on in Q1 and as you know, when that happens, that itself has some integration. It takes some time to get that momentum of certainly some of the material management changes we saw in Q1. In terms of some other ones, it goes back to your synergy in terms of the cross sell synergies. We put three very successful organizations together in December and when you do that, we obviously had a significant ambition on cross sell and when you put those three organizations together, we’ve seen some delay in ability and execution of effectively getting at the cross sell. That’s another example in terms of our vision. We clearly believe those cross sell synergies continue to be realizable, but it’s just going to take a little bit more time.

Again, as we get the Proximus Global CEO in place, I’m sure he or she will clearly start to articulate when we could see those synergies and maybe the last one operation. You saw us sign some very nice deals for a partnership across Proximus Group, but also Proximus Global. I think that’s another example where these are fantastic deals, they’re progressing, but the ramp up on some of these partnership deals does take a little longer. I think that’s three examples where we’ve seen some integration challenges, but frankly they’re all inevitably fixable. As we’ve been going through Q2 and seen some of the headwinds, we are refocusing, double down our efforts in terms of certainly recapturing the synergy value, the ramping up, the partnerships. We’ve clearly seen us take some action on management to give ourselves some very clear leadership in that direction.

I think that’s where we are on those questions. Jim, do you want to take the DIGI? Dhruva, thank you for the question. When it comes to the commercially available fiber footprint of DIGI, it’s extremely limited. As you know, we’ve been deploying fiber for several years now. For us, it’s really important that the same conditions apply to everybody when you deploy fiber. Next to that, our strategy has always been to make sure that we migrate our customers as soon as possible to that best technology, which means that we can drive customer satisfaction and we see that very much in our NPS scores for customers on fiber. This is really, really working. All our three brands, Proximus, Scarlett and Mobile Vikings are activated on our fiber network, of course with a different value strategy behind it.

That’s where we are DIGI in terms of commercially available footprint, very limited. Important that the same rules apply to everybody and our fiber strategy is really delivering great results. Thank you guys very much. Thanks so much sir. We’ll now move to Roshan Ranjit of Deutsche Bank. Please go ahead. Three lines open. Afternoon everyone. I have three questions please. Firstly, on the domestic side, Mark, you said that there was a good quarter. Given the backdrop, I think over the last week we’ve seen more confidence from your peers in Belgium. Do you think there could be scope for bit more of a price increase in the market given the kind of step back we have taken over the last 12 months to kind of prepare for the new entry launch? It seems they maybe haven’t got as much traction as previously thought.

I know you guys don’t spit out the segmentation but have you seen a mix shift within your three brands? Secondly, on the FTTH build we saw a bit of a step up this quarter. Is this to do with the fiber car kind of integration now and what kind of run rate should we be thinking of in the coming years for the fiber build? Lastly, just going back to the free cash flow. You previously cited working capital as a bit of a drag near term. This quarter saw, I guess, the H1 2025 run rate better, more positive than or less negative than what we saw in H1 2024. Has anything changed around the working cap or is it still the same message? Thank you. Roshan, thank you for the question. I will start with the first one.

Indeed, I think we have seen in Q2 a bit softer market environment on the low end of the market. If you see what we have been doing on the Proximus brand, where we in April only touched the mid end of the portfolio, so the €25 and the €30 products, where we increased value for money only on those products, which is a bit in line with your comment that indeed we try to push value in the market. It has always been the strategy of the Proximus Group from the start to try to keep as much value in the market as possible. We continue to work on that strategy and are happy to see that other competitors are aiming for the same approach in terms of price increases. I think we typically do that in January.

We have seen our competitors moving again in June and July as well. There, I think on the A brands, you continue to see a healthy movement to continue to drive value in the market as well. That would be a bit where I am in terms of value management in the market. When it comes to the segmentation mix within the brand, we have a bit the same approach as we had in Q1, so we didn’t really see a big increase in churn or in movement in the market. That has remained relatively stable. What we do see in acquisition is that indeed people tend to choose a bit more the B brands than the A brands before, but it’s not creating a fundamental shift within our customer base.

That would be a bit where I am in terms of the value of the mobile market post launch of the fourth entrant. Let me take you on the free cash flows first. We had some inventory, cash collection kind of upside, so I think I wouldn’t take Q2 as a change of direction on working capital. I think our previous comments continue to stay on fiber build. We did have a nice quarter. I think the way I would go for the rest of the year is more look towards a Q1 number on average between each of the quarters for the next couple of years. That gives you the help that you want. That’s how I think about it. Does that help? Yeah, that’s great. Thank you. Thank you much sir. We’ll now move to Paul Sydney calling from Berenberg. Please go ahead.

Yes, thank you very much for taking the questions. I’ll take two please. Firstly, on global, I know we’ve talked about this a lot already, just maybe phrasing the question in a slightly different way. The visibility for investors and analysts on the outlook for the global business has historically been pretty low and we’ve tended to rely on your guidance for that business. How can you really give investors confidence that Proximus now has the necessary visibility and the outlook won’t get any worse than the upgraded guidance you’ve given today? What level of prudence have you taken in the updated guidance, please? Just secondly, on Belgium, you’ve now signed MOUs with your largest competitors rolling up fiber and potentially hopefully getting access to HFC infrastructure. In your opinion, does this signal a shift in thinking from the Belgian operators?

They’re finally cooperating in terms of focusing on value, not trying to hit targets or obsess over market share in postpaid mobile. Just be very interested to get your thoughts on those two areas. Paul, let me think on global. I think we’ve been trying over the last quarter to give more visibility and I think we’ve given certain stats in terms of cash flow of what our business generates. I think we got a significant movement on this SMS market. We started to feel in Q1 and it accelerated in Q2 and certainly set specific segments of that SMS market on international and one-time password. I think it was a pretty rapid change. I think what we’ve captured in our guidance is a level of confidence that we’ve got for the rest of the year. We’re confident we’re going to get there.

As I said, we have got a product portfolio that can capture the shift. I think we’re doing everything we can to be able to have that product portfolio suite in the growth areas such as RCS, in terms of IoT, in terms of the Protect products we’ve got available globally to capture that share shift needed by the kind of big OTT players. I think there we continue to completely believe in this business. As I said it is a business that is going through as you would expect. Putting this business together does have integration problems. We’ve very quickly pivoted in terms of what we’re doing to rectify those integration problems. As I said we’ve taken the management changes in terms of cross sell, upsell. The sales folks are completely working towards sharing leads and accelerating that.

On partnerships, it’s not that we don’t have partnership deals signed, they’re signed, it’s the ramping of them. There is a much more close focus on getting those to ramp. I think we’re confident we’re going to get to that guidance to the end of the year and clearly we do have the product portfolio to capture where this market is going. The SMS ATP business and certainly international one-time password maybe moved a little quicker than we thought, but it’s not that we didn’t realize this was happening and we’re very much strategically placed to capture where the movement of this business is going. That’s where we think on global and Jim’s going to take the yes. Paul, thank you for the question.

I think when it comes to the collaboration, I think it’s more a signal that the different operators in Belgium, we understand that to deploy fiber in less dense areas, collaboration is the only way to make this a financially viable approach. I would more link it to that. It has nothing to do with our commercial strategies. Now of course when it comes to the commercial strategy, I can only talk for the commercial strategy of the Proximus Group. If you look at that, we have always balanced volume and value in the way we approach the market. It’s also very visible in the way we have executed our multi-brand strategy since the launch of the fourth entrant on the Belgian market. We will continue to do that going forward. I can only speak for myself, of course. I appreciate that. Thank you. Thank you. Webster.

Next question will be coming from Joshua Mills, coming from BFP Patty B. Please go ahead. Hi guys. Thanks for questions. I got two please. I understand the first one is probably better to be asked to the incoming CEO, but in his absence, I’d just love if you could explain to us why the global segment is important to Proximus going forward. Are there actually any synergies between owning these kind of businesses and the traditional telecom business model you’re running? The reason I ask is the previous CEO so involved in mobile, you at one point talked about doing the telephone spacious group to exit. I note that in the press release which you published in June when some of these issues would have been known, the board of Proximus was fairly vocal about the fact that they wanted to keep improving the international segment.

In light of these results and the uncertainty which has been delivered, do you think that there’s scope for a reconsideration of the process as well on that front? That would be very helpful. The second question just goes back to the MOU signed with Orange Belgium today and in particular the decision to build and co-invest in 200,000 homes. Mark, I think at the beginning you were saying that you would look at off balance sheet financing for 100,000 homes that you built. Why is that the preferred strategy now rather than building on balance sheets? What’s a relatively small part of the network? Thinking back to the fiber cloud joint venture which we set up with EQT only lasted a few years. We then bought them out at a significant premium. Why not just consolidate that network, build onto in balance sheets. Thanks very much.

Let me take the first word. The board in terms of the global strategy, the board continues to be incredibly supportive of that strategy. Why? I think it gives us a growth pocket. If you look back at what we, you know, the history of Proximus Global, you know we had BICS and Telesigners as majority shareholders. We took them fully owned at a very nice multiple. Even if you do the multiples today, that is incredible value creation. We continue to not believe is being our share price, I think. We think we did a very good deal with mobile in terms of the cash paid and the reinvestment from the owners. When we put all those businesses together, do they have synergies? Completely.

If you look at that business from a free cash flow contribution business which we shared with you, I think back in Q1 or maybe Q4, that business continues to throw off very meaningful cash. Especially in a moment when we’re spending, we continue to spend significant amounts of capex and fiber. That continues to be the thesis in terms of, again, we haven’t changed our view and obviously I can’t speak for the new CEO. We haven’t changed our view that we would look for monetizing this at an appropriate point in terms of when we get the synergies through. I think value creation there is significant. There are multiple options in terms of what that could look like, but that hasn’t changed either. I think the last trend, the last quarter results have been difficult for sure.

As I said earlier, the rapid change on the SMS market, international one-time password messaging, it’s been difficult, but it’s not something we didn’t know about and something that’s always been our strategy in terms of being able to move to the other elements where these large enterprise customers are using to engage with our customers. We have those platforms, we have those services, and we fully intend to be able to capture that growth as the traffic moves there. I think, yes, difficult results in Q2, but absolutely continued belief in the strategy and it’s a very nice business adjacency for Proximus Group and the longer-term value creation continues. Now, I can’t speak for Stan and he will undoubtedly have his own views, but we’ll see when he arrives in September.

In terms of the Orange Belgium on balance sheet, off balance sheet, as said, we said many times in terms of Fiberklaar, there was quite a significant motivation on Fiberklaar in terms of being able to get to a fiber collaboration deal with Liberty that would have been significantly difficult with another party around the table. We have made incredible steps to get close to a deal. Having another party in this negotiation would have made it, in our view, and we said that many times, would have made it very, very difficult. On top of that, clearly there’s benefits of Fiberklaar and we’ve talked about that, I think, in the last call in terms of the synergy benefits, the financing benefits, operational benefits, and those are coming through in our numbers today as I said in Q1.

Fiberklaar was a different reasoning and different thesis and that for us was the right decision because we are very close now to this deal with Liberty and getting towards a market test as we said in the release in September. In terms of in the south again, we said that multiple times, we didn’t intend to take this on balance sheet and that continues to be our view. Smaller amount obviously, but still that’s still a view that we will finance that off balance sheet once this deal is finalized. That’s basically the answer to your question so far. Thank you. Maybe if I can take one follow up, I think at the beginning, I know you’re not going to give detail numbers on this, but you mentioned that the majority of the messaging business at the moment is then on the legacy channels, i.e.

SMS files and WhatsApp, et cetera. Just for helping us think about that in the model, if I look at slide number 20, the slide showing the split of revenues between your international business and break it down between communication and data and P2P voice and messaging. Are we practically saying that the communication data section, which includes the SMS levels, yes, and more than half of that $251 million direct margin is coming from SMS at the moment? I said the majority. A significant portion of that communication data is the ATPs announcement. Thank you. Thank you very much. Administer Knowles, ladies and gentlemen. As a reminder, if you have any questions or follow up questions, please press Star one at this time. We’ll now move to Kris Kippers of Degroof Petercam. Please go ahead. Yes, good afternoon. Thank you for taking my question.

First, one still coming back on the item that was not really mentioned in detail in the press release is mainly still the absence of any deal in the north of the country. Could you share with us more granularity on why it is taking again so much time and if that you don’t provide a clear timing now on this one? A second question would be again, I would say on something where I think there’s still potential going forward. If you look at the number of people that were retired, we’ve now seen four quarters of about, let’s say, between 450 and 400 people leaving the company. However, if you see the rehirings there, it seems that there is a trend downwards, going from, let’s say, 360 people in Q3 last year towards now 217. Is that a trend we can expect to continue going forward?

Hence, some cost synergies could come increasingly from that. That will be my second question and I’ve got perhaps a follow up on first these two ones. Thank you. Sure. Thank you, Kris. In the north, again, if you read into the statement. Actually, maybe. Why is it taking so long? Again, this is a, as I just alluded to in terms of having another party around the table, I think it would have been even more complex. This is a large, complex deal and clearly Liberty, ourselves, we’ve had very good collaborative negotiations and as I said, we’re very close to that and we provided guidance that we are, we’ve got a view to start a market test in September. I think there is a date there. We’re negotiating a substantial deal. There are a lot of facets to that deal.

I said we’re close, but we obviously need to get to a point where we both believe that we’ve got the deal that works for us and that’s what you would expect us to do. That’s kind of where we’re at. I’ll leave you on the question on timing to read the statement. Sorry, Mark. Just to put it clear now, negotiations are of course going towards a deal. Final closing with Orange would imply also then that we would have a kind of situation whereby both could actually almost coincide in the end, let’s say somewhere towards year end or early next year. Chris, Chris, there’s guidance, right? Clearly given where we are on the south and given where we are in the north. These deals continue to be commercially negotiated. I’m not going to give anything more than what we said in our press release.

I think it’s clear what we said. Just so you are very clear, we are working night and day to get these things done because we realize the importance of them. You can trust us that we will get this done as quickly as human. On the retiree question, I think, again, I don’t know, Jan, do you want to take that or you want to, I can take it very briefly. Thank you, Chris, for the question. I think you see indeed that trend reflected in the numbers. I think we take every opportunity to look at workforce efficiencies, meaning that every hiring decision is a considerate decision. Indeed, we see in the coming years an outflow related to retirement and we take to the maximum benefit without risking the customer satisfaction and the quality of our operations. All right, thank you very much. Thank you, Kippers.

As we have no further questions at this time, I’ll turn the call back over to Nancy Goossens for any additional or closing remarks. Thank you. Thank you. Thank you for joining. Thank you for your questions. Should there be any follow up questions, you can obviously reach out to the investor relations team. Have a nice week and all. Bye. Thank you, ladies and gentlemen. That will conclude today’s conference. We thank you for your attendance. You may now disconnect. Have a good day and goodbye.

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