Good afternoon, ladies and gentlemen, and welcome to the Proximus Q1 2019 Results Conference Call. For your information, this conference is being recorded. At this time, I will now hand over to Madam Nancy Goossens, Director of Group Investor Relations. Madam, please go ahead.
Thank you. Good afternoon, ladies and gentlemen, and thank you for calling in. I hope you all received the documents that we released this morning, and that you had some time to go through the results. For this round, we will use most of the time to answer your questions, so we will get to that in a minute. I have here with me the CEO, Dominique Leroy, and CFO, Sandrine Dufour, as well as other members of the executive committee. They will take your questions in a moment. But before we get to that part, we will start with an introduction of the CEO. Please go ahead.
Yes, thank you, Nancy. Welcome to our first quarter conference call. As announced this morning, over the first three months of the year, we further attracted additional customers to our main products, growing our customer base for fixed internet, TV, and mobile postpaid. We also realized further progress in our four-play customer base, especially driven by enticing an increasing number of families to our Tuttimus and Bizz All-in offers. As a result, we saw the average revenue per household continue to grow to EUR 66.7. At the same time, we maintained the positioning of our Scarlet brand towards the lower end of the market, addressing especially customers looking for the lowest price, and where Scarlet's no-frills offer fulfills their requirements. Besides challenging market conditions, we also face the changing behavior of customers. These are using more and more communication apps instead of traditional voice and SMS.
This results in lower inbound revenue, which is reflected in the consumer mobile service revenue. However, with no real impact on our margin. We also see increasing promotional activities and competitive moves in the consumer mobile market, putting pressure on acquisitions. On the enterprise side, where competition is also very present, we realized another sound quarter with firm mobile customer growth. The acquisition that we have done over the past year has been delivering in line with our expectations. The highly specialized companies provide the necessary expertise to offer meaningful solutions for the digital transformation of our enterprise customers. Thanks to these acquired companies, we posted a further increase in ICT revenues in the first quarter. In advanced business services, we posted an increased revenue for Be-Mobile, our subsidiary active in the field of smart mobility.
Be-Mobile also benefited from the contribution of Mediamobile, a company acquired in November last year, and allowing Be-Mobile to increase its traffic management services to countries such as France, Germany, and the Nordics. With positive commercial drivers in both the consumer and enterprise segments, and revenue pressure partly on low-margin income, we kept a sound underlying domestic direct margin, growing the first quarter by 0.9%, which in turn drove a 2.2% increase in underlying domestic EBITDA. The BICS segment posted a 1.3% increase in EBITDA, including the support of TeleSign new services. All in all, this leads to an underlying group EBITDA increase by 2.1% for the first quarter 2019. Based on recent trends and our expectations for the remainder of the year, we have decided to exclude the revenue from terminals from our revenue guidance. Revenue from terminals is largely generated through reselling of standalone mobile devices.
This is creating top-line pressure while being margin neutral. We have refined our revenue metrics for the full year 2019 outlook to domestic revenue excluding terminals. This way, we take out volatility linked to these sales, and it keeps focus on where the real value is. For the underlying group EBITDA, we reiterate our stable outlook, including a slight underlying EBITDA growth for our domestic operations, in spite of the expected EUR 20 million regulation impact, and a decline on BICS results in the remaining quarters due to a progressive insourcing by MTN of their Africa and Middle East operations. Our CapEx outlook for the year remains unchanged as well. We expect to end 2019 with CapEx stable to the previous year, excluding spectrum-related CapEx. As you know, we are spending an increasing part of our CapEx envelope for the rollout of fiber in Belgium.
Today, we are rolling out fiber in 10 cities, bringing a super-fast, future-proof network to our customers. As a last point, we also reiterate the intention to return over the year 2019, a dividend of EUR 1.50 per share. With this, I have covered my introduction and propose we now start with your questions. Thank you.
Ladies and gentlemen, if you wish to ask a question, you may press 01 on your telephone keypad. We have one first question from Mr. David Vagman from ING. Sir, go ahead.
Hi. Good afternoon. Thanks for taking my question. I've got three. First, could you explain to us what is the momentum of Epic Combo so far, and roughly indicate us what is the profitability of this offer, let's say, compared to a Tuttimus? Do you see any risk of downtrading by Proximus customer or Scarlet customer moving to Epic Combo? That's my first question. Secondly, if you could clarify the direct margin increase in consumer, if you could possibly quantify the impact of the different drivers. You mentioned the better revenue mix, the lower commission paid, but also increased digital sales. Lastly, on regulation, can you give us your view on the regulatory change asked by the BIPT regarding high-quality networks? What could the passive access by your competitors mean business-wise in B2B, down the road?
How much does this activity represent in terms of sales? The one affected by the regulatory change. Thank you.
Hi, this is Guillaume speaking. For the first question regarding Epic Combo, of course, it's way too soon to see if it's going to be a hit on the market, but we are quite happy with the first results that are in line with our expectations. On the risk on downgraded, we don't see a risk of downgrade as we are in a strategy to segment our value proposition. As you see in the communication, in the channel mix that we are shooting for Epic, we are really targeting people that are end customers that are really different from the Tuttimus or the Minimus of this world. So far, this is really what we are achieving when looking at the first results.
In terms of margin contribution of these new offers, Epic Combo is, I would say, a no-frills offer in some respects, with not a lot of additional cost on top of the connectivity and access to the mobile network. It means that for us, it's a very good drivers of margin contribution if we really manage to make this Epic Combo a success for the group. In terms of direct margin increase at the consumer level, of course, as you saw in the presentation, the positive drivers around broadband, digital TV, mobile postpaid are partly offset by the twist in prepaid and fixed voice. You have some other items that are more non-core elements around reminder fee that you know is impacting our direct margin since May last year.
In terms of the control of our cost and direct margin cost, here I will maybe take some minutes to explain the benefits of the current digital adoption that we see at Proximus. I'm going to give you some examples that are favorably impacting the commercial cost and the servicing cost of Proximus. For example, the eShare of channel increased by 35% year-over-year. The MyProximus users, so the users that are using MyProximus app, are increased by 38% year-over-year, and we passed the bar of the 1 million monthly active users at MyProximus this month. At the same time, the volumes of call that are arriving at our call centers are decreasing by double digits year-over-year. All this digital adoption is impacting, in a positive way, the cost to serve and the cost to sell our products at the consumer level.
Okay, good.
Concerning your third question on the regulatory change on high-quality access, yeah, it's true that there is a draft consultation from the BIPT about the fact that we would have to give access on dark fiber and also ducts. That's, I think, a normal evolution, and we already have a dark fiber offer in the B2B, which are already given today as a commercial offer. I don't think that would have a major impact on our wholesale activity, neither our enterprise competition activities.
You're already offering passive access, actually?
We already offer passive access to enterprise customers, yes.
Okay.
To operators active in the enterprise business. To all those, yeah.
If I may, a very quick follow-up on Epic Combo. Do you plan to complement the Epic Combo with other offer, let's say, with more flexibility on the mobile side? Do you see Epic Combo as a family? That's the sense of my question.
I will not comment on the evolution of future offers.
Okay.
I've got already three different product at Epic. Everything is possible at that front, I will not comment on evolution of my current portfolio.
Okay. Thank you.
Thank you, sir. We have another question from Mr. Ulrich Rathe from Jefferies. Sir, please go ahead.
Yeah, thank you. My first question would be, in EBU, you're sort of highlighting the acquisition impact in the Be-Mobile bit. Could you quantify to what extent the M&A impact in EBU has stepped up? On the year-on-year trends in the first quarter compared to the year-on-year trends in prior quarters, is this sort of a material change? My first question. Second question, it sounds a bit as if you stepped back in the first quarter from promotional activity by competitors. I'm wondering, would you be able to quantify roughly what impact that might have had on your EBITDA trend? The fact that you might have sort of stepped back a bit in a way that one would assume you sort of get back into it once the market quietens down a bit.
I was wondering of that element of the EBITDA growth. The last question is on the terminal sales, you're highlighting that it's down a lot, you're changing the guidance, then you're saying it's low margin, so it doesn't really matter. I'm just wondering, is there any adjacent relevance of this terminal sales business to the third party? Sure, there's a particular, is this a question of sort of binding these people closer to Proximus, or is this really a completely standalone business that you can simply cut it without any material impact on the core business? Thank you.
It's Sandrine speaking. I'll take your first question regarding the M&A contribution in our Q1 numbers. If I measure this relative to our total revenue group, contribution of M&A is south of 1%. If I take it in terms of EBITDA, it's lower because bear in mind that these are ICT activities with more people intensive structure. In terms of OpEx, it's clearly more than 1%. Net contribution of EBITDA, it's lower than revenue.
On the promotional activity, I would say that traditionally Q1 mobile postpaid and commission means are not the most intense quarter of the year for Proximus. We used to have a very strong marketing and commercial Christmas period, we usually try to be more disciplined during the first part of the year. We are not going to give some precise impact at the EBITDA level. As I said previously, what we see, however, is a good positive impact on the digital adoption linked to e-servicing and eShare of channel for all the Proximus servicing and sales activities.
On the terminal sales, I think it's more a historical business we have had where a new device provider came to the country very often. They ask Proximus to sell the device to be able to gain quickly distribution. I think today the terminal sales market is more mature, they want also to take part of their business themselves. To be honest, for us, it's a business with a low margin, I would say no margin. There is no real advantage today to continue to have that business on a standalone. What we of course continue to do very intensively is to sell devices when we have joint offer, because there the devices are linked with connectivity and that makes sense for us. That part will certainly keep.
The rest will probably gradually decrease and that's also one of the reasons why we wanted to give guidance without the terminal sales in a market context today where there is lower terminal sales evolution, I think overall, in Europe.
Very helpful. Can I follow up, please, on the second question? I understand there are seasonal effects, but that's not the core of what I'm interested in. I'm really wondering, is there in the first quarter, an effect that you saw competitive activity that made you decide to step back a bit? That was my understanding from the report, and I'm not entirely sure whether you're saying that's simply not the case. Thank you.
No, it's not because of competition that we decided to step back. It's more traditionally, as I said, a period where we are less active on the market, and we are more concentrating our efforts to value customers and to master and control the churn rates. This is why we put in that period more effort on conversions products, more effort on value customers, and more effort on churn rates. As you see also in our performance, the broadband performance is quite okay. If I look at mobile drivers, if you look at the mobile churn rate, it decreased year-over-year. We really focused on churn control, value customers, and developing our broadband customer base, which is key for the future of our strategy.
Great. Thank you very much for your time. Thank you.
Thank you, sir. We have another question from Mr. Matthijs van Leeuwenhorst from Kempen. Sir, please go ahead.
Yes, good afternoon. First question is on the EBITDA. If I look at the EBITDA growth for domestic, 2% up year-on-year. You still keep your guidance on flat EBITDA. Could you shed some light on the development of the EBITDA for the remainder of the year? The second question is, could you tell us how the discussions with the unions
Our ability.
Okay. Sandrine speaking, I'll take your first question on EBITDA. I think what's important to probably highlight is the specific seasonality of our EBITDA over the year. While sticking to our guidance of a slight growth at the level of domestic and stable at the level of the group for EBITDA. I think it's important to remind everyone the fact that last year, our Q2 EBITDA growth was more than 6% at group level, more than 5% at domestic level. This was based on a strong direct margin growth. We, at the time, highlighted the fact that it included positive settlements with suppliers. That was clearly a one-off that will not repeat. Also highlight the fact that in Q2 last year, our OpEx base was the lowest of all quarters, both domestic and group level. For domestic, it was lower than EUR 400 million.
We do not expect to see growth in Q2. We expect to have a decrease of our EBITDA in Q2. I prefer to be very clear. That's clearly a seasonality effect. Clearly, as I said, no impact on the fact that we guide stable EBITDA for full year and slight growth for the domestic perimeter.
A quick follow-up. Could you remind us, obviously, you are still targeting these EUR 250 million in indirect cost savings by the end of this year. What is the current run rate? How many savings can we still expect? How much?
We are in line with the expectations of the yearly guidance we gave on cost savings. I think the comment that Guillaume made specifically on the digital drivers behind delivering on efficiency proved to be effective in Q1, and we are tracking well on plan there. On your second questions, discussions with the unions. We started indeed a discussion with the union mid-January with 13 full days of discussions with them, where we informed about all the plans we have for the coming three years. We, after that, had a small break where the unions asked for a break so that they could come themselves with some proposals. This phase is being finalized, where we have received some suggestions from the unions.
We have responded to those suggestions last week. Normally now by having both our wishes and the wishes of the union, we should be able to start a negotiation in the coming weeks by bringing the two sets of elements together. I would say it is a long process, and I know it brings quite a lot of uncertainties in the company, but I think so far it is quite a normal process of information consultations, and I really hope that in the coming weeks, we will be able to go into the real negotiation phase so that we can really then discuss about an outcome for the next year. A new HR framework and also an important cost reduction linked to a decrease of tasks in the company.
Okay. Thank you.
Thank you, sir. We have another question from Mr. Nicolas Cote-Colisson from HSBC. Sir, please go ahead.
Thank you. Hi, I'll start with CBU. Can you come back on the dynamics around your unlimited data packs? Do you see more migrations or more acquisitions in your net add mix? My second question is on EBU. I can see the churn has picked up in Q1 compared to Q1 last year. Should we read this as a sign of a growing competition, or is it linked to a specific contract? My third and last question would be following up your comments, Dominique, on the negotiations in the coming week. How much of a government do you need to get into negotiations and eventually a final decision? Do you have to wait for the general elections and eventually a government to be formed?
On the first question, Nicolas, the only thing I can say to you, I can disclose that the share of high-end products is increasing year-over-year and quarter-after-quarter. We have a nice impact in terms of value mix of this unlimited data pack. It's more improving our value mix than other things. With a nice improvement of the eShare pack within the total and the total sales of Proximus.
On your second question, EBU churn, I assume you're referring to mobile.
Yes.
Indeed, there is a slight increase. In Q1 of 2018, we had 9.7, now we have 10.8. I think it's still very reasonable, but indeed, there is a slight increase, and indeed, this is linked to growing competition. Competition is getting more aggressive, and so that is linked to competition.
On your third questions, the union discussions. Everything what we have proposed in terms of, let's say, wish list and intentions together with the unions are elements we can implement without any intervention from the government. I think the whole plan we have put forward is not dependent from election or from having a new government or from any new law. I think that it really shows that we can implement everything by ourselves, I would say, as soon as we have an agreement with the social partners.
I see. That's clear. Thank you.
Thank you, sir. We have another question from Mr. Michael Bishop from Goldman Sachs. Sir, go ahead.
Yes, thanks. Just two questions from me, please. Firstly, on B2B, I was wondering, following on slightly from the earlier question, whether you could comment on what the B2B growth would be, excluding the M&A. As a follow-up on B2B, generally, we're seeing trends deteriorate or be very weak at other incumbent operators, and Proximus has held up very well for quite a number of years now. Clearly, some are more proactively migrating to all IP. Do you see any material differences between your B2B strategy that mean that your current levels of growth are more sustainable than peers that we should factor in? Just as a quick follow-up on the mobile side, have you thought at all about potential tower sharing in Belgium?
We're seeing a number of tower sharing deals being announced across the rest of Europe, clearly we've had a bit of a surge in terms of independent tower ownership, we haven't seen anything in Belgium, it'd be interesting to get your thoughts. Thanks.
Okay, on your first question, the impact of M&A and excluding M&A, Sandrine already answered by stating that the M&A has only a 1% impact on the total group. In terms of EBU, we have now a growth of 1.6%. It would bring it slightly, a little bit down against year-over-year, it's almost flat. That's the impact. How is Proximus holding up in B2B? As I stated before, it's not a one reason, it's not a single silver bullet. There is a lot of hard work behind that. The main element is that we are fulfilling our ambition of becoming the trusted partner of our customers in the digital transformation. Go beyond connectivity in bringing value to our customers.
That is also the reason why we did the acquisitions in the past two years, to bring up our relevance to our customers, be it in security, be it in data integration, be it in moving into the cloud, and the different elements. That is clearly valued by our customers, that we are partnering with them in the digital transformation, which makes that we sustain our business in that environment.
Just as a follow-up, tying those two things together, do you think that that would've been a lot tougher without the M&A you've done? Because I guess other incumbents potentially haven't done as much M&A to particularly bolt on the security and the cloud aspect.
I'm convinced it is, because as I said, we have done this M&A. These were not companies that were for sale. We have been screening the market, looking for specific capability skills that we believe are important to fulfill our ambition of being that trusted partner in digital transformation. They are indeed key in growing that relevance and so being that partner of trust to our customers.
Okay. Regarding your questions on tower sharing in Belgium. In Belgium, there is already a regulation that requires that all operators can have access to the towers of the others. Today already, we are hosting our competitors on some of our towers, and we are also looking at opportunities to be hosted on towers where a new tower is being built by our competitors. That's currently the structure, which has been effective for quite some years now.
Thanks. Can you update us on how many towers you have and whether you see them as strategic longer term? Thank you.
We've not disclosed the number of towers we have, so it's a few thousands. It's proportionate to the size of Belgium. We've not considered the disposal of our towers so far. Remember that I tend to look at this with the cost of financing, and any deals in this respect is attached to a cost of financing, which is way above the level of debt that we're currently paying with our current net debt to EBITDA.
Thanks. Those are all really useful answers.
Thank you, sir. We have another question from Mr. Ruben Devos from KBC Securities. Sir, please go ahead.
Yes, good afternoon. Thank you. I got one on IT. Following some of the M&A activity of your peers, on the IT side and the dynamic that we've seen in the enterprise segment for Proximus, I was curious whether you could give some color on the value of providing IT services next to connectivity to B2B customers, and maybe how you've seen the overall take-up within the various segments such as solo, SME, and then the larger enterprise segments. The second one is related to 5G. We've got a delay on the 5G auction, potentially. We got the uncertainty following the elections. Maybe we're gonna have an auction late into 2020. I was wondering, how would all of that affect your roadmap, in deploying 5G?
Given the requirements to densify the mobile network. Could you give a rough indication of what needs to happen basically in terms of emission standards and building permits in Belgium to be able to deploy next generation mobile technology? Thank you.
On your first question, as I said in the earlier question, the value of the acquisitions is for me, when I say the most important value for me is that it increases our relevance to our customers. It increases our relevance in terms of being their trusted partner in their digital transformation. For instance, the investment that we have been doing in security, and also with the acquisition of Davinsi Labs, has reinforced our security offerings and services so that, for instance, in Belgium, we have been able to win the most important security deal with FPS Finance and FPS Justice, which we would not have been able to do without them, and they would not have been able to do it without us. That's why I'm saying this relevance is very important.
Next to, of course, the value in terms of value for us, ICT has become a very important business for us. Last year, we did more than half a billion EUR in ICT. It's also a growth source for us. At the same time, as I said, it's also a differentiation and a value creation for our customers.
Okay. On your question of 5G, yes, indeed, the spectrum auction has been delayed. It will have to be taken care of by the new government. We think at the earliest, we could have auction indeed in 2020, and most probably second half of 2020. Does it affect our roadmap? I think partially, yes. What we also need to say is that today we have test spectrum and that we can already do some tests on 5G. In that sense, we think if the new government can make diligence of the new spectrum auction, once they are formed, the delay is very much manageable. I think what will be probably a bigger handicap on the 5G will be the radiation norm of Brussels, where we had hoped to have a change in law before the election, and that has not been able to happen.
I think, probably on the roadmap, my bigger worry is probably the radiation norm in Brussels versus the spectrum auction, because there we can still do tests and we do some work with various suppliers to move on the 5G. Concerning what you say, densifying our network. In the roadmap we currently have, we do not foresee to do small cells on 5G in the coming years. The most deployment we have foreseen is mainly on the macro sites. To that extent, we do not depend so much on new permits. There, I think as well, we will be able, as soon as spectrum will be available, to deploy most of our 5G roadmaps on the macro site we currently have. That's not so much affecting the rollout what concerns Proximus.
Okay. Thank you.
Thank you, sir. We have another question from Mr. David Wright from Bank of America. Sir, go ahead.
Hello, guys. Just to get a little better understanding on the sort of revenue dynamic. You've guided for the nearly stable revenues excluding the terminals. I think you're running a little bit below that. This quarter, I think it's around about 0.9% or so down. My understanding is you've obviously got some regulatory headwinds, the international calling, that strips some service revenue away from Q2 onwards. Obviously, the commercial momentum in Q1 has possibly been a little bit softer than, well, maybe than we expected, perhaps not yourselves. Given you've had the softer start commercially, given that you've got more headwinds coming from regulation, how do you turn the sort of 1% decline in Q1 around? What are the sort of major drivers of a stronger revenue outlook, please?
I just remind that the guidance for the revenue is for the domestic parameter, nearly stable. In that sense, with the current dynamics and with the expectation that we have, the fact that we still have some growth in our volume base and some elements that will disappear. I think Guillaume was mentioning the reminder fee as of May, this is disappearing. As you said, the international calls will replace this, but it's not coming on top. There are a couple of elements which gives us the comfort to maintain the nearly stable revenue guidance for the balance of the year.
That's useful. I get maybe my semantic understanding of nearly stable, I guess, is up for negotiation. Thank you very much.
Thank you, sir. We have another question from Mr. Stéphane Genoud from Deutsche Bank. Sir, please go ahead.
Yes, good afternoon. Two questions. A follow-up on ICT. Underlying growth is more or less, or revenues are more or less stable. Could you give more color on the underlying dynamics within ICT? Which activity is growing, which other activity is declining? That's one. On the fiber rollout, you indicate that you are in 10 cities currently. Could you indicate what CapEx is related to that? How do you see the step up in the coming quarters? What, for example, is given the workforce requirement you need, what would be your maximum quarterly or yearly run rate? Thank you.
On your first question. First of all, for us, of course, as I said, we have been investing in ICT in different areas, where we focus on those areas that bring the highest added value. I want to say it very often, they are also the ones that have the fastest growth. If I take again security. Security in the digitized world becomes more and more important. It is clear that is an underlying growth that is quite important. We have also, if I take application integration and application moving to the cloud, is another one that is quite important. If I take the one that is around, so it would be in terms of business analytics and network and IT operations. There are different ones.
The ones that are less growing are, of course, the on-site infrastructure ones, because a lot of companies are moving into the cloud, and that is also why we are offering a hybrid cloud offering with as well on premise or in our data center or in the public data centers being Azure, AWS, or Google Cloud. I would say the more traditional ones are replaced by the more digitized ones.
Is it possible to give an indication about the breakdown in what we could call more traditional business of ICT and then the more new growing technologies?
No, we don't give that breakdown. By the way, it's not so easy neither to make that breakdown, we're not disclosing that one.
Okay.
On your question concerning fiber, I think the figures we have given on CapEx was a longer term, one third of our CapEx would be invested into fiber. We are not at that level yet, that's still the guidance we give. We currently follow the plan. We have, I think, in terms of manpower, as you mentioned, we have secured the manpower for this year, we have said that we would most probably come back at the end of the year with a further view on the plan. I think today it's a bit too early because we first want to make sure that we have a full view on the regulation, which is foreseen by second half of the year.
Anything around potential acceleration of the fiber plan will be decided in the second half of this year will, of course, be communicated at that time to the market.
Okay. Thank you.
Thank you, sir. We have another question from Mr. Paul Sidney from Credit Suisse. Sir, please go ahead.
Thank you very much. I just had three questions, which I think mostly follow on from questions we've had before. Firstly, just on the consumer line loss comment. You said they were exceptionally high in Q1 2019. By describing it as exceptionally high, does that mean that you expect it to improve in the next few quarters? Secondly, just on the consumer subs growth slowing in the quarter, you mentioning stepping back from promotion activity in Q1. Does this suggest that Proximus' priority is shifting to focus more on profitability rather than pure subscriber growth? Lastly on fiber regulation. With the wholesale rates moving to a cost-based model, do you think that's likely to stimulate any new interest in reselling your fiber?
Indeed, have you been actually approached by any resellers looking to resell your fiber products? Thank you.
On the first question regarding fixed voice line loss during this quarter. I think there are mainly two elements. First, we saw the continuous erosion of the fixed voice standalone customer base, and this is something that will continue in the coming quarters. In this quarter, we witnessed the combination of elements that we do not expect to be repeated in the coming quarters around an accelerated migration from legacy to cloud-based voice solution in the SME market, as we say, also a strong performance on multi-play offers without fixed voice, which has no impact on margin contribution, as you know. We do not expect those trends to be continued in the coming quarters. We indeed do not expect the weak one performance to be repeated in the coming quarters regarding fixed voice losses. On your second question on consumer operations.
We are not shifting from a strategy at all. We have our long-term view in shifting all our business operations to more digital ways and to bring more services on top of connectivity for the consumer business unit. This strategy will remain and will continue to be executed. As I said, Q1 is not our best quarter traditionally, and this happened that year again. We have a number of initiatives that are currently ongoing. I would mention the revamped prepaid portfolio that we launched in March.
As usual, in Q2, we're going to be more present after the Proximus marketing in the market. As you saw in Q1, it's going to be continuing in Q2, Q3. Our focus on churn, I think it's a clear priority. With all that, we expect to improve our commercial momentum in Q2, Q3 as we usually do every year in Q2, Q3 compared to Q1.
Okay. Concerning your fiber, I think so far the first indication we have on the cost model is very much in line with the commercial price we currently have for the fiber to the home part. Today, we have already 15 players that are leasing, that are buying our fiber. Most of the people active on the Belgian market that's leasing are buying fiber at Proximus. On the fiber to the home business, I probably think the only one who is not currently buying fiber from Proximus is Orange, and we are of course, very open to sell them our fiber if they would be interested.
Thank you. Can I just have a quick follow-up? I'm not sure if I've just missed this, have you actually given an absolute figure for the number of homes passed, that you've passed with fiber now? You've obviously been building for a couple of years. Just wondering if you can give us an absolute figure or even a percentage figure.
No, I don't think we have given figures. I think what we have said is that we want to double the number of installed lines in 2019. We have an acceleration of the home passed, but I think so far we haven't given a number. They are still quite small, to be honest. I think we will see that as from this year, we will really accelerate. You know that our fiber plan was first focused very much on the enterprise market, and we have covered around 50% of all the industrial zonings by the end of last year, and we are continuing to do that. The focus is still more on that. On the fiber to the home, we will double the installation this year and we will continue to accelerate it as from next year, but we haven't given any absolute numbers so far.
Understood. Thank you very much.
Thank you, sir. We have another question from Mr. Emmanuel Carlier from Kempen. Sir, go ahead.
Hi, good afternoon. Two questions. One on the wholesale rates, which are under review. So far, there is not really a tiering based on data usage. Is that something that you believe that will be picked up by the regulator? Then secondly, on fiber. The question has actually already been answered, but I think three years ago you mentioned that you could not roll out fiber quicker than in your current plans. Has that changed? If so, how long would it take to go to 100% fiber to the home penetration in Belgium? Thanks.
Just on your first question, for me, it is not clear your question. You are talking about tiering on data usage?
The cable wholesale rate actually, but also the fiber wholesale rate. I think, so far, you have a pricing for broadband separately, broadband plus TV, and then it depends on the speed. If you sell a broadband standalone product, I think a kind of wholesale rate depending on the data usage would also make a lot of sense. Do you believe that this will be included in the decision of the regulator?
No, to be honest, I think so far the only thing we have seen is there is a price tiering, which is based on speeds. Of course, you have two components on the regulation of the fiber. You have a cost model where you have indeed a small difference based on speeds. Then you have the whole concept of fair margin, which will be applied on top of the cost model, where the first time that we have heard from the regulatory that will enable to have tiering on the cost-based model. I think the element of cost model plus fair margin will enable us to continue to do tiering, but so far the tiering that is foreseen is mainly on speeds and not on data usage as for what I know.
On the fiber rollout, I think I just indeed answered the questions that a quicker rollout will be decided in the second half of this year when we will have more clarity mainly on the regulation. We still need to assess how fast we can go. To be honest, the main constraints we will have in terms of if we want to go faster, will be the capabilities and the manpower, which will be available in the country, and that is still to be assessed once we would take the decision.
Okay. Any recent data you could share on the uptake of customers in a fiber to the home footprint? Or is the sample still way too small?
No, I think what we can say is that currently the uptake is roughly in line with our expectations. We have a longer history of take-up rate in the zone where we call greenfield, so where we build new houses and we come with fiber. There we have a very good uptake. The uptake is a bit lower in what we call the brownfield, because there, of course, it's all go on migration and win back, and that's taking a bit longer, but it was also foreseen in the plan that in zones where you replace copper by fiber, the uptake will be longer term in line with what we have in greenfield, but that will take a bit more time to get there as we don't force migration.
I would say so far in line with the expectation, but no very precise figures that we can give already today.
Yeah. Okay. Maybe coming back on my first question as well, don't you believe there should be a tiering based on data usage? Because if you can have access at, I don't know, EUR 20 and everything is going via the data network, then that could be quite disruptive for Proximus and Telenet for the network owners. Are you not scared by such a potential move?
I think so far the offers you have on the market, on internet, most of them are unlimited offers with a FUP, with a fair use policy. It's only the very low-end internet offers that are limited. I think so far there is not, even in the consumer price, and I'm referring to that as a way to benchmark the wholesale. There is not so much tiering on data usage on the internet side. It's only the real entry offers where you have a limitation to 100 GB or 150 GB, and for the rest it's more unlimited, with FUP. I think it's a good idea, but I think it's difficult to replicate, as in the retail part, we don't have these data usage so far.
Yeah. Okay. Thanks a lot.
Thank you, sir. We have another question from Mr. Ulrich Rathe from Jefferies. Sir, go ahead.
Yeah. Thanks very much. I don't want to entirely labor the point. I would just like to come back to the earlier question on sort of the consumer commercial spending and market activity compared to the competitor sort of activity and the result. It looks to me, if I look at the slides summarizing your volume KPIs in consumer separately, that on a year-on-year basis, the internet intake has halved, the TV intake has halved. I think it was discussed earlier that the fixed voice intake in consumer separately was also very weak. Now in the mobile net adds we have only 1,000 instead of 12,000 mobile net adds. On all the major volume KPIs, the year-on-year trend is actually down a lot.
On the other hand, we're seeing this commentary here about direct margin benefiting from lower commission spending and when asked about this, you seem to say that it wasn't really you stepping back. I'm wondering how does this fit together? How does it fit together that all the volume KPIs sort of have this dip on a year-on-year basis that you're not suggesting you step back, and on the other hand, the margin's up. I'm still not entirely sure I get the picture there. Thank you.
Perhaps I can try to give another light on the Q1 results. I think, first of all, we had very strong net adds and activities in Q4, and I think as well our operational activities in Q4 were very much well run. We didn't have a lot of our Q4 customers that had to be installed in Q1. I think that's explaining a bit of it, where most of the sales on Q4 were strong sales and were also installed in Q4, where in the past year we sometimes had some spillover from Q4 to Q1. For the rest, I think Q1 has been indeed a quarter where we have not so much focus on promotional activities.
The other competitors has focused way more on promotional activities, also a lot of internet promotion that's probably less visible for you as analysts, but there has been quite some aggressive promotional activities in the digital space from competition. We decided not to react on that. For instance, there has been quite a lot of promotion, for instance, on mobile, at EUR 0 on Wigo of Telenet. I don't think we should follow acquisition at EUR 0. There has been very aggressive promotional activities from Orange on their unlimited and also on BASE, on their unlimited at half price, which are extremely value destructive promotions, and we decided at Proximus not to follow that route and indeed to be resilient on what happens on the market.
Therefore, indeed, you have some lower KPI on the first quarter, but I think competition cannot continue to have acquisition at half price or at EUR 0. We have a quite normal promotional activity plans, which is foreseen on Q2, Q3, Q4. That's why we are quite confident here to maintain our guidance and to say Q1 has been indeed a bit weak versus high competition activities, high competitive activities, but we still think that on Q2, Q3, Q4, we'll be able to post our normal KPIs as we have done in the previous year. We can turn it in a lot of different elements. I just think the reality is Q1 indeed weakened figures, but due to very aggressive offer of competition and I think strong Q4 net adds of 2018.
We think Q2, Q3, Q4 will be way more balanced because we also have our plans, and I don't think competition can continue to give aggressive promotion half price or at EUR 0.
Okay. Now that makes perfect sense to me. Thank you very much. Thank you.
Thank you, sir. We have no other question. I give you back the floor.
Thank you all for calling in, and thank you all for your questions. Should you have any follow-up questions, you can contact the investor relations team. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.