Orange Belgium S.A. (OBEL) Earnings Call Transcript & Summary

Good day, and welcome to today's Orange H1 2026 Results Conference Call. [Operator Instructions] And now I hand the call over to Koen Van Mol. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and welcome to the presentation of Orange Belgium's financial results for the first half year 2026. I'm pleased to have with us today, Xavier Pichon, our CEO. And for the first time, we have Matthieu Bouchery, our CFO, appointed since the 1st of July. They will share with us the strategic progress, performance highlights and the outlook for the coming months. Xavier will begin by providing an overview of our new strategy, Trust the Future as well as the main highlights of the first semester of 2026. Matthieu will take us through the commercial results. After their presentations, we will open the floor for questions. Without further delay, I'll now pass the word to Xavier. Xavier, floor is yours.

Thanks, Koen. Hello. Good morning, everyone. We hope you are well. Thank you for joining us today as we present Orange Belgium's financial results for the first half of 2026. Today, we're pleased to share our strategic vision for Orange Belgium as we aim to become the preferred digital partner by leveraging trust and innovation. Our journey is guided by clear ambitions and priorities that will shape our growth and impact over the coming years. With our new strategy, Trust the Future, we are leveraging trust to establish ourselves as a preferred digital partner. This involves strengthening our reputation through consistent delivery of reliable services and innovative solutions. We emphasize our technology innovation leadership. We are investing in advanced network technologies such as 5G and fiber to maintain our competitive edge and meet future connectivity demands. In terms of customer experience, we lead the market by focusing on providing high-quality, seamless services. This includes expanding our entertainment offerings and improving customer support. We are also transforming our enterprise model to be more agile and collaborative, fostering partnerships and leveraging shared resources within the Orange Group to enhance our service offerings. Finally, we remain committed to our societal and environmental responsibilities, supporting community initiatives and sustainability goals that align with our long-term vision. Now move to Slide 6. Moving to our technological innovation leadership, we are proud that Ookla has recognized our 5G network as the fastest in Belgium. We are affirming our position at the forefront of mobile technology. We are also innovating in entertainment and digital safety. Our new TV Box not only enhances user experience but also aligns with our sustainability goals by reducing energy consumption. Furthermore, our Last Mile program is bringing ultrafast reliable connectivity to households in Wallonia, including the digital divide and reinforcing our leadership in high-speed broadband. For our FTTP rollout, we are introducing innovative robotized, street cabinet fostering innovation and efficiency. Slide 7. Our focus on customer experience has been recognized with the Brand of the Year 26 award, which has attributed to hey! a historic achievement in our category. Testaankoop also awarded hey! with the double Best of the Test label, which emphasizes the strength of our brand and our customer-centric approach. In addition, we expanded our entertainment portfolio by partnering with Disney+, offering our customers access to premium content. We have reintroduced Belgian football for our customers, bringing the excitement of local sports back to our network. All these initiatives are designed to enhance customer satisfaction, deep loyalty and differentiators in a competitive market. Slide 8. We are transforming our enterprise model to be more agile and collaborative. This includes mutualization and platforming within the Orange Group, which will enable us to share resources and expertise more effectively. We are upgrading our optical network with Nokia to ensure 5G leadership as well as to meet the demands of quantum-resilient Security and AI scale computing. These investments are crucial for maintaining our technological edge. Additionally, we are exploring innovative AI use cases to enhance operational efficiency and customer service. Our employees of WBCC have also approved the new social agreement, reinforcing our commitment to a positive and inclusive workplace culture. Slide 9, our commitment extends beyond technology and business. We are also committed to people, society and environment. Orange Belgium has become the main sponsor of Royale Union Saint Gilloise, a partnership rooted in shared values and a love for football promoting community engagement. We are also raising awareness about digital safety, especially in esports to protect young users from digital abuse. Moreover, we are fostering innovation through initiatives like the Orange Fab program, which crowns 6 AI innovators this year. These efforts demonstrate our dedication to societal impact, digital safety and fostering innovation. Now I'd like to hand over the floor to Matthieu Bouchery, who joined us as the new CFO on July 1 this year. Matthieu will now walk us through our commercial and financial results as well as the outlook for the coming period. Matthieu, the floor is yours.

Thank you, Xavier, and good morning, everyone. I'm pleased to be here today as the new CFO of Orange Belgium, having joined the team very recently on the first of July. I look forward to sharing with you a detailed overview of our financial performance for the first half of 2026 as well as our outlook for the months ahead. Over the past few weeks, I have been closely involved in analyzing our results, value growth drivers and meeting the teams. I'm fully confident that together, we are well positioned to continue delivering value for our customers and stakeholders. So let me walk you through the main drivers behind our performance and our key financial highlights. Let's start by some of our key achievements for the first half of 2026. Commercially, we've maintained growth despite a challenging market environment. Our mobile postpaid customer base increased by 41,000 net adds, reaching 3.59 million, which is a 2.2% increase year-on-year. On the fixed side, our cable customer base grew by 8,000, totaling over 1 million customers, a 1.3% increase this semester. Financially, revenues reached EUR 966.5 million, a slight increase of 0.4% driven by balanced volume and value management. EBITDAaL grew significantly by 10.5%, reaching EUR 292.5 million, mainly due to synergies, cost efficiency and also some one-off impact, including football rights. Our investments in network infrastructure, particularly in mobile and fixed networks continue to support our growth ambitions with eCapEx at EUR 184.8 million. So now let's look more closely at our commercial performance. On the fixed side, our cable customer base growth of 8,000 reaching over 1 million is supported by our high-speed gigabit network. These results highlight the continued success of our convergent offers and our focus on delivering high-quality connectivity. Our mobile postpaid customer base increased by 41,000 driven by improved customer management and attractive offers, bringing us to 3.59 million subscribers. This demonstrates our ability to retain and attract customers in a challenging market. Turning to our financial results. We generated EUR 966.5 million in revenues, a modest increase of 0.4%. Major part of this growth is thanks to the service revenue being up 0.7%. This reflects our balanced approach to volume and value management, even amidst some short-term headwinds, like the decline in interconnection revenues, and the temporary impact of the absence of football rights. Our EBITDAaL grew by 10.5%, reaching EUR 292 million driven by synergies from recent acquisitions and ongoing cost management efforts and supported by some one-off impacts. We maintained our investments in network infrastructure at a stable level compared to last year, with eCapEx totaling EUR 184.8 million. This was primarily driven by mobile network consolidation and initiatives in fixed deployments. Looking ahead, we are confident in our trajectory. We have upgraded our guidance for 2026, expecting EBITDAaL to grow by more than 5% in comparison to 2025 and maintaining our eCapEx around EUR 360 million. These targets reflect our commitment to sustainable growth and technological leadership. With that, I would like to conclude our presentation.

Thank you. We will now have a Q&A session where you will have the opportunity to ask questions regarding the results. So operator, may I ask you to open the floor for questions.

[Operator Instructions] We'll now take the first question. Please go ahead.

David Vagman here from ING. So the first one is on the financial guidance for this year. Could you please quantify the full year one-off for 2026? And could you update us on the different building blocks of the EBITDAaL growth this year, so including the VOO synergies tailwinds? So that's my first question. Second question is on revenue growth. How do you see your revenue and ARPU developed in the second half compared to H1? Do you expect some further improvement on convergent revenues and mobile only, so these 2 specifically? And then last question is on the Orange NetCo. What's your view on the expected timing for the approval in Wallonia?

David, this is Matthieu. Thank you for your questions. I will take the first 2 questions and Xavier will answer your third question. Will not be that specific. But if you look at the effect of one-offs for the first half on how this will develop for second half. So they are. First of all, it's the EBITDAaL performance is a combination of operational execution on nonrecurring items with some seasonality. So the 2 temporary factors impact positively first half of EBITDAaL. First, as we highlighted, the agreement with [ Disney ] during the -- was just signed and no content costs related to these rights were recognized in H1, and this was partially offset by a lower contribution to revenue during the period. And secondly, we have a change in our accounting policy for the tax treatment of pylons that will create a favorable year-on-year comparison in the first half. We will not disclose more in detail the impact of these individual items. But if you look ahead, that we expect that our underlying operational drivers, revenue growth and value management strategy, together with the continued synergies and cost efficiency will continue to fuel our EBITDAaL growth and more importantly, in the second half. The temporary benefits that you'll see in H1, including the absence of football content costs will reverse in H2. So all in all, in the overall performance of H2, you will have a stronger contribution from efficiency revenue growth, somehow linked to seasonality, you have a reverse effect of one-off. And overall, the growth for the full year will be mainly driven by operational drivers. With regard to revenue growth in H2, without being too specific, we continue to expect service growth to [indiscernible] retail in the H2. So you will see overall growth of this line for the full year, probably to a lower extent than the H1.

Okay. And the lower contribution, let's say, the lower growth in H2 is due to some specific factors?

No, no, it's just seasonality.

All right. I think we've not answered your third question, David, if I may. So you -- the question, well, on the Orange NetCo, expecting timing for the approval. So it's true to say that we've been in close relationship with the watchdog, the ABC and the BIPT in H1. I would say late H1, we've just sent through the ABC BIPT, most of the document, most of the long form that have been, of course, established with Proximus. And then we aim to get the approval, I would say, we hope that by the end of the year or maybe much more in Q1 2027. And of course, we will work hand in glove with the watchdog in this H2 to be the most, of course, efficient and reliable to get it. So by the end of the year and/or Q1 2027, we must be in this kind of timing in terms of clearance.

[Operator Instructions] It appears there are currently no further questions at this time. I'd like to hand the call back over to our hosts. Apologies. We have a question, we have a pop-up question over the phone. Please go ahead, your line is open. .

I didn't dare to ask 4 questions in a row. So I'll ask my last question. On the commercial momentum and zooming on broadband net adds, could you give us a rough idea of the different dynamic in the north and in the south of the country? So are you, for instance, taking share in Flanders still in broadband while losing a bit in Wallonia? And as a follow-up to that, do you expect your HFC network investment in Wallonia to help with net adds in the coming semester or years?

So David, I will take this one. So you're right to say that we do have different markets. You know that by heart now in Belgium. In the south of the country, we are co-leading the market with Proximus. Then of course, it's much more something like an anti-churn market, while in the North, it's clearly and purely a floor of acquisition for us, conquest market share at that time. So we are leveraging, I would say, the 2 go-to-market system using the 2 brands as well. And it's clear that it's maybe a bit different in the South than in the north, while we are migrating the VOO customers from the VOO Brand to Orange at the same time. So we are closely monitoring these markets and the growth is clearly driven by the north of the country in terms of our market share -- in terms of conquest market share.