Proximus : Kwartaalverslag

Quarterly Report

2021 Q1

	Table of contents
1	Highlights Q1 2021 ..........................................................................................................	3
2	Proximus Group financial review .................................................................................	6
2.1	Group financials...........................................................................................................................................................	6
2.2	Regulation ....................................................................................................................................................................	12
2.3	ESG update ..................................................................................................................................................................	13
2.4	Outlook 2021 and Shareholder return..........................................................................................................	14
3	Consumer .........................................................................................................................	15
4	Enterprise .........................................................................................................................	19
5	Wholesale.........................................................................................................................	21
6	TeleSign ............................................................................................................................	22
7	BICS (International Carrier Services).........................................................................	23
8	Consolidated Financial Statements...........................................................................	25
8.1	Accounting policies .................................................................................................................................................	25
8.2	Judgements and estimates.................................................................................................................................	25
8.3	Significant events or transactions in 2021...................................................................................................	25
8.4	Consolidated income statement ......................................................................................................................	26
8.5	Consolidated statements of other comprehensive income.................................................................	27
8.6	Consolidated balance sheet ...............................................................................................................................	28
8.7	Consolidated cash flow statement .................................................................................................................	29
8.8	Consolidated statements of changes in equity .........................................................................................	30
8.9	Segment reporting..................................................................................................................................................	30
8.10	Disaggregation of revenue...................................................................................................................................	31
8.11	Group financing activities related to interest-bearing liabilities.........................................................	31
8.12	Financial instruments..............................................................................................................................................	32
8.13	Contingent liabilities................................................................................................................................................	35
8.14	Post balance sheet events ..................................................................................................................................	35
8.15	Others............................................................................................................................................................................	35
9	Additional information ..................................................................................................	36
9.1	Reporting changes and rounding of numbers...........................................................................................	36
9.2	From Reported to Underlying............................................................................................................................	36
9.3	Definitions.....................................................................................................................................................................	37
9.4	Management statement.......................................................................................................................................	39
9.5	Financial calendar....................................................................................................................................................	39
9.6	Contact details...........................................................................................................................................................	40
9.7	Investor and Analyst Conference Call ...........................................................................................................	40

Q1 2021 Report - page 2

Brussels, 30 April 2021, 7.00 am (CET)

Regulated Information

• • Sustained strong customer growth, especially attracting high-value customers: +37,000 Mobile postpaid cards, +12,000 Internet and +13,000 TV subscriptions.
  • Increasing Fiber Consumer customer base by +12,000, reaching 77,000 by end-March 2021.
  • Fast-trackingFiber rollout with +73,000 homes passed, Fiber footprint nearing 9% of premises.
  • Underlying Domestic revenue -1.7%year-on-year, largely due to residual Covid-19 effects.
  • Underlying Group EBITDA totaled EUR 446 million, -3.9% compared to the year before.
  • Solid normalized FCF of EUR 143 million, incl. Fiber investments and equity injection in Fiberklaar.
  • Proximus reiterates its full-year 2021 guidance.

  1 Highlights Q1 2021

• Proximus closed the first quarter of 2021 with a strong commercial performance for its core Telecom services, adding for the Group: +37,000 Mobile postpaid cards, +12,000 Internet and +13,000 TV subscriptions. Within the Consumer segment, the traction for higher value offers continued, growing the convergent base by +21,000 customers to a total of 1,145,000, + 6.1% compared to 12 months ago. An additional 12,000 customers signed up for a Fiber product, bringing the total to 77,000. Over the first three months, 160,000 customers opted for a Flex offer, bringing the total Flex subscriber base to 477,000. Reflecting changing customer needs, the Fixed Voice line base erosion accelerated to a net loss of -53,000in the first quarter of 2021.
• Proximus posted underlying Domestic revenue of EUR 1,084 million, down -1.7%,chiefly reflecting the residual Covid-19related headwinds impacting all customer segments. Consumer revenue was up by 0.8% and the Enterprise segment moderated its decline to -1.2%.Wholesale revenue was down by -22.0%,facing next to roaming pressure an ongoing erosion in interconnect revenue from SMS traffic (margin neutral).
• Proximus' Domestic EBITDA totaled EUR 418 million for the first quarter of 2021, -2.4% below the year before, resulting from lower direct margin and higher expenses, and includes a net adverse effect related to Covid- 19.
• TeleSign continued a strong revenue trajectory, posting revenue of EUR 77 million, + 31.6% or +43.5% on constant currency. In view of its growth ambitions, additional skilled headcount was recruited, which is reflected in its EBITDA.
• BICS, still impacted by the temporary effects of Covid-19 and MTN insourcing, posted EUR 235 million revenue, -8.7%and sequentially improving. The revenue progress in Core and Growth services partly offset the eroding legacy services. BICS' EBITDA for the first quarter of 2021 totaled EUR 22 million. The sanitary crisis effects aside, BICS showed good resilience in a competitive market.
• In aggregate, the underlying Group EBITDA for the first quarter of 2021 totaled EUR 446 million, -3.9% or EUR -18 million compared to the year before, including some remaining Covid-19headwinds. The underlying Group EBITDA margin for the first quarter 2021 was 32.6%.
• Proximus invested EUR 225 million, excluding spectrum and football broadcasting rights, with the -2.7%year-on- year decrease due to the timing of content contract renewals. The capex related to the company transformation, IT developments and especially capex related to Fiber increased, with the latter representing 28% of the total capex. Over the first quarter, Proximus deployed Fiber for an additional 73,000 premises, which brought its Fiber footprint to 533,000 homes and businesses, representing a coverage of close to 9% of premises.
• Solid normalized first quarter 2021 FCF of EUR 143 million resulting from a favorable evolution in Business Working Capital and lower year-on-year cash out for ongoing transformation plans, partly offset by a decrease in underlying EBITDA, more cash-out related to capex and a EUR 30 million equity injection in Fiberklaar, the new entity created together with EQT infrastructure to deploy fiber in the Flanders region.

Q1 2021 Report - page 3

Guillaume Boutin, CEO

Market situation

Q1 2021, Covid-19 still continued to limit traveling, especially non-EU and hence related roaming traffic. Soft- lockdown effects led to some new easing measures for customers, yet in a more limited way. Overall, the telco market moved closer to a back-to-normal situation. The Consumer market continued to benefit from solid fixed Internet market growth. Belgium remains a convergent market, with offers addressing all customer segments, from fully-fledged convergent offers including multi-mobile cards and entertainment propositions over skinny bundles to stand-alone offers. Mobile data allowances remain on the rise, and temporary aggressive promotional offers were put on the market, while there is a tendency to keep headline pricing stable. The Enterprise market remains very competitive, translated into continued pricing pressure. While legacy Fixed Telecom and IT Infrastructure services face an ongoing erosion, Fiber connectivity and Professional IT services represent opportunities.

"We kept a strong pace in executing our #inspire2022 strategy: fastmoving on our Fiber rollout, keeping up a good commercial performance while managing the transformation in our Enterprise segment.

It's been over a year since the first lock-down measures were introduced in Belgium, and I'm very proud that Proximus has managed to contribute and play an important role in the Belgian society through each step of this difficult journey. While we are still continuing our targeted Covid-19 easing

initiatives towards customers and society, during this quarter, we specifically focused on the set up of an effective vaccination campaign. At Proximus, we had the privilege to be on the front line, providing the vaccination centers with connectivity, IT support, as well as advanced IoT solutions to monitor the temperature of the vaccines. With the vaccination campaign steadily accelerating, we are now looking forward to a gradual return to a new normal.

Looking back on the first quarter, we continue to see strong commercial traction for our products and services. In a highly competitive setting, we delivered solid customer growth for our main telecom customer bases and have seen especially good traction for our higher value offers. Firstly, we continued to grow our TV customer base with +13,000 TV subscriptions over the first 3 months of the year. Secondly, our convergent customer base increased by +21,000 to a total of 1,145,000, with these customers characterized by a higher-than-average ARPC and lower churn. These results demonstrate the success of our Flex range (+160,000 subscriptions in the first quarter of 2021), compensating the Fixed Voice decline by other value-adding services. Finally, Fiber is becoming an increasingly relevant selling point, also attracting higher value customers. The number of consumer customers that signed up for one of our Fiber offers increased by +12,000 over the first 3 months of the year.

We are well underway with regards to our ambition to build the best gigabit network for Belgium. We added +73,000 Fiber homes passed (HP) during the first quarter of 2021, doubling the volume of last year, to reach 533,000 HP end-March 2021. With the creation of Fiberklaar, a new company jointly owned by EQT infrastructure and Proximus, we are fully on track to realize our ambition to pass 4.2 million homes and businesses with Fiber throughout Belgium by 2028.

As for our Enterprise segment, the Fixed and Mobile telecom business continues to be managed carefully. By balancing volume and pricing, we have moderated the structural headwinds from legacy services. The move to convergent Telecom-ICT services progressed on plan and we grew our managed and consultative services over the first quarter of 2021. Besides, we are pursuing our B2B transformation efforts aiming at becoming the preferred partner for Enterprises' digital transformation. Specifically, Proximus launched a dedicated 5G co-creation platform to support professional customers in exploring the full potential of this technology through specific use cases, in a secure, innovative and cost-efficient way.

Our domestic consumer and enterprise services revenues grew if we exclude Roaming-out revenue, which is still affected by Covid-19 related headwinds. Beyond domestic operations, TeleSign continued its explosive growth trajectory, with a +43.5% revenue growth rate on constant currency.

Overall, our Domestic revenue, Group EBITDA and Capex are on track to meet our expectations, and we are

therefore comfortable in reiterating our 2021 full-year guidance."

Q1 2021 Report - page 4

Table 1:

Key figures

Operationals ('000)	Net adds in the quarter		Park at end of quarter
	2020	2021	%	2020	2021	%
Fiber Home Passed	35	73		307	533	73.3%
Consumer customers
Convergent	12	21		1,079	1,145	6.1%
Fiber (activated)	5	12		44	77	75.1%
Group ( subscriptions/SIM cards)
Internet	1	12		2,090	2,148	2.8%
TV	1	13		1,641	1,690	2.9%
Fixed Voice	-52	-65		2,349	2,148	-8.6%
Mobile Postpaid (excl. M2M)	30	37		4,133	4,314	4.4%
M2M	123	173		1,910	2,527	32.3%
Prepaid	-19	-22		691	596	-13.7%

Financials (EUR million)

Group Revenue (underlying)

of which Domestic

of which BICS

of which TeleSign

Group Direct Margin (underlying)

of which Domestic

of which BICS

of which TeleSign

Group Expenses (underlying)

of which Domestic

of which BICS

of which TeleSign

Group EBITDA (underlying)

as % of revenue

of which Domestic

of which BICS

of which TeleSign

1st Quarter

2020	2021	% Change
1,393	1,367	-1.9%
1,103	1,084	-1.7%
257	235	-8.7%
58	77	31.6%

906	894	-1.3%
828	825	-0.4%
61	53	-12.3%
19	18	-2.7%

-442	-448	1.4%
-400	-407	1.8%
-33	-31	-6.1%
-11	-13	17.0%

464	446	-3.9%
33.3%	32.6%	-0.7 p.p.
428	418	-2.4%
28	22	-19.7%
8	6	-28.7%

Group EBITDA (reported)	495	460	-7.0%
Net income	158	123	-22.1%
Accrued capex (excl. spectrum & football rights)	232	225	-2.7%
FCF (normalized)	152	143	-6.2%
Net Debt (end of period)	-2,038	-2,431	-19.3%

Notes:

Group revenue, Direct margin, Operating Expenses and EBITDA include intersegment eliminations.

Normalised FCF excludes M&A impacts but includes Fiber equity injections.

Group operationals cover Consumer, Enterprise, Scarlet, Luxembourg Telco and Wholesale.

Q1 2021 Report - page 5