ORANGE BELGIUM (OBEL) Q2 2026 Earnings Call Transcript

Good day and welcome to today's Orange H1 2026 results conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. And now I'll hand the call over to Cohen van Moult. 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 of 2026. I am pleased to have with us today Xavier Pichon, our CEO, and for the first time we have Mathieu 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. Mathieu will take us through the commercial and financial results. After their presentations, we will open the floor for questions. Without further delay, I now pass the word to Xavier. Xavier, the floor is yours.

Hello, good morning, everyone. We hope you're 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 preferred digital partner. This involves straightening 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 age 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 R&G 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 six. Moving to our technological innovation leadership, we are proud that Ookla has recognized our 5G network as the fastest in Belgium. We are firming 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 ultra-fast, reliable connectivity to households in Wallonia, including the digital divide and reinforcing our leadership in high-speed broadband. For our FETP 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 Hay, an historic achievement in our category. TestAchat also awarded Hay 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 Belgium football for our customers, bringing the excitement of local sports back to our network. All these initiatives are designed to enhance customer satisfaction, deepen loyalty and differentiate us in a competitive market. slide eight we are transforming our enterprise model to be more agile and collaborative this includes virtualization 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 age. Additionally, we are exploring innovative AI use cases to enhance operational efficiency and customer service. Our employees of WBCC have also approved a new social agreement reinforcing our commitment to a positive and inclusive workplace culture. Slide 9. Our commitment extends beyond technology and business. Yes, we are also committed to people, society, and environment. Orange Belgium has become the main sponsor of Royal Union Saint-Giloise, a partnership rooted in shared values and a love for football promoting community engagement. We are also raising awareness about digital safety, especially in sports, to protect young users from digital abuse. Moreover, we are fostering innovation through initiatives like the OrangeFab Programme, which crowned fixed 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 Mathieu Boucherie, who joined us as the new CFO on July 1st this year. Mathieu will now walk us through our commercial and financial results as well as the outlook for the coming period. Mathieu, the floor is yours.

Thank you, Xavier, and good morning, everyone. I'm pleased to be here today as a new CFO of Orange Belgium, having joined the team very recently on the 1st 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've 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 ads, reaching 3,59 million, which is a 2,2% increase year-over-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 966.5 million euros, a slight increase of 0.4%, driven by balanced volume and value management. EBITDA grew significantly by 10.5%, reaching 292.5 million euros, mainly due to synergies, cost efficiency, and also some one-off impacts, including football rights. Our investments in network infrastructure, particularly in mobile and fixed networks, continue to support our growth ambitions, with e-CAPEX at 184.8 million euros. 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 966 million point five 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 amid some short-term headwinds, like the decline in interconnection revenues and the temporary impact of the absence of football rights. Our EBITDA grew by 10.5%, reaching 292 million, driven by synergies from recent acquisition 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 e-CAPEX totaling 184.8 million euros. This was primarily driven by mobile network consolidation and initiatives in fixed deployment. Looking ahead, we are confident in our trajectory. We have upgraded our guidance for 2026, expecting EBITDA to grow by more than 5% in comparison to 2025 and maintaining our e-CAPEX around 360 million euros. 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?

Thank you. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star 1 on your telephone keypad. The voice prompt on your phone line will indicate when your line is open to ask a question. Please state your name and your affiliation before posing your question. Again, it is star one to ask a question. We'll now take our first question. Please go ahead.

Hello. Hi. Good morning, everyone. David Wegman here from ING. Thanks for taking my question. 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 EBITDA 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 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 two specifically? And the last question is on the Orange Netco. What's your view on the expected timing for the approval in Wallonia?

Hello, David. This is Mathieu. Thank you for your questions. I will take the first two questions and Xavier will answer your third question. It will not be that specific, but if you look at the effect of one-offs for the first half and how this will develop for the second half. So they are, first of all, the EBITDA performance is a combination of operational execution on non-recurring items with some seasonality. So the two temporary factors impact positively first half of EBITDALE. First, as we highlighted, the agreement with DAISEN 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 would 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, 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 EBITDA growth, and more importantly, in the second half. The temporary benefits that you'll see in H1, including the absence of football content cost, 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 reversed 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 co-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.

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

No, no, it's just seasonality. Okay.

Thank you. As a reminder, to ask a question, please signal by pressing star 1. We will pause for a moment to allow you to signal.

Sorry. I think we have not answered your third question, David, if I may. So, the question was on the OrangeNetCo, 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 and BIPT most of the document, most of the long form that have been, of course, established with Proximus. and then we 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 and to glove with the with the watchdogs 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.

Thank you. And as a reminder, to ask a question, please signal by pressing star 1. We will pause for just a moment to allow you to signal. It appears there are currently no further questions at this time. At this time, I'd like to hand the call back over to our hosts.

So we still have...

Apologies. We have a pop-up question over the phone. So, please, go ahead. Your line is open.

Hello, again. I didn't dare to ask my last question. On the commercial momentum and zooming on broadband net ads, could you give us a rough idea of the different dynamics in the north and in the south of the country? So are you, for instance, taking share in slander, 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 NetAds in the coming semester or years. Thank you.

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 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 the two go-to-market system using the two brands as well and it's clear that it's maybe a bit different in the in the south that in the north while we are migrating the VU customers from from from the VU 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 market share in terms of conquest market share in any view whether the hfc investment you've been making could could help in the south actually actually it helps i think you you you've seen that our conversions revenues are growing so this is of course leveraged by the continuous investment and modernization we've made on the hfc in the south we are also of course emphasizing the the speed as well so we have more and more customers that have been put on the one gig offers and it helps also on the RPU you must have seen that the RPU is growing on the on the broadband as well so this of course helps us on the purpose thank you there are currently no other questions over the phone okay we still have some questions which are have been raised online so they are coming from Paul Cindy from Berenberg first question is what impact are you seeing across your mobile footprint from Digi actually we we continue to see several impact on the on the mobile only it's it's a mobile only market it's not coming only from digi it's coming also from telenet and proximus that are levering either their a or b brands to tackle this this market as said by mathieu it's a very animated market we see a lot of promotions across the footprints discounts on the a brands and of course the b brands so we are leveraging all our tools on the mobile or brands depending on the market and dg is one of i would say the the peer who are scrutinizing but of course not only

The second question is, please, could you update us on the expected progress from here on the fiber GV with Proximus, including any key milestones, dates going forward?

Thank you, Paul. So it's just to further, I would say, the sake of clarity. It's not a GV we're having with Proximus. it's it's a deal that has been proposed as I said to the watchdog a few weeks ago I said to David so we are expecting to get the clearance by the end of the year or at the latest Q1 2027. And of course, it indicates, as I said, hand to glove work with the watchdogs, but also with Proximus in the coming months to make sure that we will get the clearance as soon as we can.

And then a last question from Paul. Over time, does Orange Ballium plan to resell the Flanders fiber of Proximus Telenet.

We've signed this agreement with Telenet Wire in the past to get either access to HFC but also to fiber they will build so of course as soon as we can we will develop our commercial offer within the north within the wire Telenet footprint of course. okay there are no further questions so we would like to thank you for your participation and if you would have any more further follow-up questions please don't hesitate to contact the IR team thank you very much please conclude today's conference call thank you for your participation ladies

and gentlemen you may now