Good afternoon, ladies and gentlemen. Welcome to the Proximus web conference. I will now hand the call over to Nancy Goossens, Director, Investor Relations. Please go ahead.
Thank you. Good afternoon, ladies and gentlemen. Welcome to all of you. Before we get started, let me please remind you that for this session, we are holding a webcast in addition to the audio conference. I hope you have all received the link so that you can follow the slides that will be presented. Note that we will present a different set of slides than the ones that you received this morning. The link to the webcast and the results release can be found on the investor relations website, and this in the section of the financial results. The presentation will cover a view on the 2018 achievements and the strategy over the next three years, presented by the CEO, Dominique Leroy, and CFO, Sandrine Dufour. We have other members of the executive committee around the table.
They joined us for the Q&A session that will start right after the presentation. With this, I think we can get started. Dominique, the floor is yours.
Yes, thank you, Nancy. Good afternoon, everybody, and welcome to this 2018 results presentation of Proximus. Let me start with a first look at what we have achieved in 2018. I think the first message, which is one of the most important for me, is that although the market has been quite competitive, we have been able to keep a very strong position, and we have been able to increase our number of customers on most of our strategic products, which is fixed Internet by 43,000 net adds over the year, 50,000 net adds in digital TV, and 134,000 new mobile postpaid. We see decline in prepaid and, of course, also decline in fixed voice. If you look at the number underneath of the slide, you see that we have passed the two million fixed Internet, having 46.4% market share.
We are around 1.6 million TV customers, 37.3% market share. We are above the 4 million postpaid customers with a global mobile market share of 39.3%, with 4.8 million postpaid and prepaid customer. If we were able to achieve these results, it is mainly thanks to our strategy linked to market segmentation. Our objective is really to bring different offers for different segments in the market. Of course, with our main brand, Proximus, and the family offer, which is a convergent offer, which is the Tuttimus offer, which still continues to get good traction, but also to a different segmenting where Epic plays an important role towards Millennials.
You will have seen that next to the two Epic products that we have already launched, Epic Stories and Epic Beats, we have just announced the launch of Epic Combo, but also Scarlet in the no-frills segment for people wanting telecom products without a lot of additional services. Also in the business, the small enterprises, where next to the Bizz All-In, we have recently launched Bizz Online to help companies be present on the web. If we have a bit of a deeper look in the segment, we see here on the family segment with Tuttimus, still strong acquisition, where we have reached 508,000 customers on the Tuttimus Bizz All-In in 2018, which is driving good customer value and, of course, a decreasing churn.
You see on the right side of the slide that we have been able to increase significantly the number of 4G customers with 7%, up to 731,000 customers. If we look at Scarlet, we have been able to really massively increase the brand awareness of Scarlet, reaching now around 80% brand awareness. Although prices are the lowest on the market, you need to understand that behind that, there is also a very low-cost business model with simple offer, digital sales, where we have there low acquisition cost, low servicing cost, and low fixed cost structure. Despite low price, the profitability of Scarlet is positive. On Epic, you see here the product that are currently on the market, which is Epic Stories, where Millennials can have unlimited access to various apps, and on top of it, have 3 gigabytes of mobile data, unlimited SMS, and some call minutes.
You have an Epic Beats version, which is the same, but also with free access to music app. I will come back on Epic Combo, which is a new product, which will give free access to app, to music, but also to video. If we look at our mobile, we have followed a bit the evolution of the market and launched in November of 2018 our unlimited offer. Of course, unlimited reduced a bit the out of bundle, but next to that, you see that it has had a very positive effect in terms of high-tier acquisition. I mean, we can give here figures where we have doubled our high-tier acquisition. We have also since then been able to substantially diminish the churn level on our mobile postpaid.
I think it was a positive move, but it's of course for us also a rational move where with the Mobile Unlimited, we are a bit above competition, and we are not starting this type of offer. We, of course, are a fast follower because we want to make sure that we keep our customer happy and that we keep our churn under control. If we look at enterprise business, there we can see that we have invested in acquisition of very specific ICT capabilities, with some recent acquisitions like Davinsi Labs, like Codit, ION-IP, also on our Be-Mobile portfolio, which is a company specialized in traffic management and smart mobility. We have recently acquired a similar company in France, which was called Mediamobile, whereby the Be-Mobile offer can be extended from the Benelux towards France, Germany, and Scandinavian countries.
If you look at the evolution of ICT into our EBU portfolio, you see that we have a strong increase in revenue, but even a stronger increase in EBITDA, where we have been able to improve EBITDA margin by 2.5 points, thanks to this strategy and the various value accretive acquisition. With those acquisition, we are able, within our B2B environment, to really help company to do their digital transformation. We have enlarged our product offer, our service offer with different elements. You see some of here, will not mention them all, but it's mainly on the security, on the integration of business application, and also on advanced workplace or unified communication and the managed services.
On our investments, we are continuously further developing our investments in network and service platform, with a highlight on the further enhancement of fiber, of our mobile network, but also the transport network, which is an important component, and we are further working on virtualization of network, renewed IT system, but also on our TV platforms and content. I think it would be good now to give a bit more color on our investments of the fiber. I think we wanted to give you some more information. Here you see that in our fiber to the home rollout, we have already started the rollout of fiber in nine cities in 2018, and that we foresee to add seven new cities in 2019. We have announced the launch of our fiber project end of 2016.
You see that 2017 was a bit a year where we learned a lot, but we have been able to really scale up fiber investment in 2018. You see volumes has tripled over the year, and our objective is to double our fiber footprint in the next year, so it means in 2019. I think there, good traction and good operationalization of our fiber deployment model over 2018. If we look at the results of fiber, at least the results we can show today because it's still early days, but we wanted to give you some color of our first fiber results. We see first from a customer perspective, that where we have deployed fiber, we really have a significantly higher customer satisfaction versus the one we have on copper, but also versus the one that is currently available on the cable network.
We also see higher ARPU on our fiber to the home customers. I think importantly, we see that we are able to gain market share because in the brownfields, so it means in place where we replace our copper with a fiber to the home, we have around 30% of the activated fiber customers which are new internet customer to Proximus. In the greenfields, so it means in new development zones where we built new buildings, we are able to have more than 50% of our activated fiber customers that are new internet customer to Proximus.
Next to that, if you look at the cost aspects, we have been able to decrease our cost by 24% between the start and the end of 2018, and we have the ambition to further decrease the cost over the next two, three years to be able to reach our EUR 1,000 per household. Bear in mind that those costs are not only the cost for home passed, but are the cost for home connected, so including the active equipment, the connection, and the termination cost. Because sometimes, we know that some other figures that are given are only home passed. Here we talk about home connected. The last element I want to highlight is that we have started to outphase copper.
Of course, it's very early day, but at least with that, we think we will be able to learn, and we will be able to industrialize our copper outphasing over 2019 and mainly 2020. If we look at fiber for the enterprise business, we see there that on the mono site, so for the smaller professional customers, we really see very good traction. Customers are willing to take fiber. We have ARPU uplift, and so far we have been able to deploy our GPON on 48% of the industrial zonings. Of course, we have started with the biggest industrial zoning. If you look at the multi-sites, of course, this is quite a more complex operation.
There we have a big change of approach where we are more going into reducing pre-investments and development deployment of the fiber more on demand, if we see that we have traction from the customers. By doing that, we also have less cannibalization or very low cannibalization between the point-to-point fiber development and the fiber GPON development, because we can then do that much more complementary. Last element there is that today you see that a bit more than a quarter of our revenue are already coming from fiber connectivity on the enterprise segment. So far for fiber. One word on mobile before I will give the floor to our CFO to highlight a bit more the financials. I think on mobile, what is important to mention is that we really want to focus on some elements that are really driving mobile experience.
You see here the three key criteria that we are really looking at in terms of our mobile experience. The first one is coverage. By coverage, it's of course, not only outdoor coverage where most of operators currently are reaching full coverage for 4G, but it's very much a focus on indoor, and mainly deep indoor, where there is still a significant difference between the high deep indoor coverage of Proximus at 92.4% versus the rest of the market. Another big focus for us is the voice quality, and it's about ultra HD voice, and it's also about fastest call set up, and that's through HD voice on 3G, but mainly VoLTE on 4G. That really gives a much better voice quality than you would have without those new features.
The last one is on the video, where for us it's extremely important as usage of video is increasing, to provide the best video experience to our customers. There you can see the results of OpenSignal that were done in the end of 2018 and where the Proximus results are very good and one of the best in Europe. Next to the experience, you also see that we continue to invest in mobile to cope with the very high increase of internet traffic. You see an increase of internet mobile traffic of around 70% per year, and you see an average per use increase of 50% yearly coming to an average use of 2.2 gigabytes at the end of 2018. I will now hand over to Sandrine for the financials of the full year 2018.
Thank you, Dominique. Good afternoon, everyone. Let me start with the financials on zooming on our domestic revenue for 2018. We've closed the year with a stable revenue, which is in line with the guidance that we had given for 2018. If you look at the right part of the chart, you see the biggest building blocks where we had stable revenues for the fixed services, where you see that we've grown the revenue from the internet and TV, supported by the growing customer base. This is offset by the ongoing erosion in the fixed voice. We had an increase in the ICT revenue that are including the acquisition that we've done to strengthen the enterprise portfolio. The revenue from mobile postpaid was positive in 2018, which was as well driven by the net customer growth that we achieved.
This is despite the negative impact that we suffered in the first half of the year with Roam Like at Home. The prepaid revenue, however, were down year-over-year, partly because as well, we actively encouraged our customers to migrate from prepaid to the postpaid offer. Looking at our domestic OpEx, those were stable in 2018. What we want to explain here is that our OpEx are increasingly including expenses which are related to what we call billable headcount in the ICT business. It's a bit of a different dynamic. These are costs which are linked to the employees that are performing the ICT services for the enterprise customers, and that we are invoicing with a margin. Since we've been expanding our ICT business with acquisition, but also with our strategy to grow the ICT business, mechanically, this type of billable ICT OpEx, is growing.
For the sake of clarity, we've put on the chart, we've broken down for you on the chart the OpEx in two categories. The purple bar is showing to you the OpEx evolution when we exclude the billable ICT OpEx. On this part, we've been able to decrease over the years through the company-wide efficiency program. In three years, we decreased this level by nearly EUR 150 million net OpEx reduction. Part of this has been offset by the ICT direct OpEx, so that's what we call the billable OpEx. I should highlight as well the thin green color, which is on top of the 2018 bar, which is linked with the perimeter impact.
As you know, we've made some acquisition, and with this acquisition that has added as well extra cost in the tune of 1% of our total cost in 2018. Net-net, our net reduction of our OpEx over the last three years has been EUR 115 million. Looking at the domestic EBITDA. We've improved the domestic EBITDA since 2015, as is shown on the chart on the left side. We now have an EBITDA margin of 38.4%, which is an improvement of 2.5 percentage points compared to 2015. In 2018, the domestic EBITDA was up 1.9%. As you can see on the right part of the chart, this was driven by the good result in direct margin and with the OpEx being flattish for the year, again, including the impact of acquisition. Moving to the BICS results, our subsidiary, our international carrier service subsidiary.
The result in 2018 was an EBITDA of EUR 154 million. This is a growth of 7.7% versus 2017, which is largely driven by the integration of TeleSign. Remember, we made the acquisition in November 2017. On the right chart, you can see that BICS growing segment result is coming from a higher direct margin, largely explained by TeleSign, which is partly offset by higher expenses, which is including as well the OpEx of TeleSign. We can say that the integration of TeleSign has been successful. We've been able to deliver the synergies that we were expecting. We've seen a significant increase in the volumes of the, what we call the A2P, so the application-to-person businesses. We've grown as well in the mobile identity, and we were able as well to integrate between BICS and TeleSign, and improve the messaging unit margin through the reduction of the COGS.
This is visible and reflected in the higher non-voice direct margin on the chart. This is compensating the pressure that we see on the more traditional segments such as voice and traditional messaging. Again, here, in terms of as a percentage of revenue, you see that we grew in 2018 up to 11.4%, which is an improvement over the previous two years. Looking at the group EBITDA, it's up for the year by 2.4%, which is within the guidance, which was between 2%-3%. You can see that it's fueled by the improvement of the domestic business as well as BICS on margin. EBITDA margin progressed as well to 32.3%, which is an improvement of 3.3 percentage points versus 2015 when we launched our cost reduction program. One zoom on our CapEx for the full year 2018.
We invested a bit more than around EUR 1 billion, EUR 1 billion 90 million, which includes the investment that you see are listed on the right. I think to highlight the fact that, of course, fiber is taking a larger portion in our annual CapEx envelope, but we of course continue as well to invest in mobile, in the IT, in content. We've just highlighted as well the fact that we've seen in 2018 an uplift in the CapEx, which are dedicated to the roadworks. This is a level which was higher than usual and that we explained by a period of election year, which have triggered quite more roadworks than usual. On free cash flow, when we compare 2017 and 2018, we have the impact of M&A, of acquisition.
That's why we've excluded for both years the impact of the M&A so as to compare a more normalized free cash flow level. You see that for 2018, this normalized free cash flow level amounts to EUR 501 million, which compares to EUR 517 million for 2017. With the waterfall, you see the main moving parts. The biggest one is the cash paid for CapEx. Here, I think it's worth explaining that in 2017, our CapEx program was very much back end loaded, which means that we had a big impact in Q1 this year of cash related to accrued CapEx in 2017. While in 2018, the CapEx was much more linear. We had to carry both the impact of end of 2017 and the 2018 cash impact for CapEx.
That is explaining the big EUR 111 million that you see here, that we were able to mostly compensate with the growth of EBITDA as well as a very active management of our working cap. What's not visible on this chart is that we also carried out approximately the same amount of building disposals in 2018 versus 2017. That takes me to the delivery of the guidance where we can say that we've achieved our guidance in all dimensions of the underlying revenue where we are flat. The group underlying EBITDA, we guided between 2% and 3% and ended at 2.4%, and CapEx around EUR 1 billion. We are, with the cash flow generation, in a position to confirm the coverage of our dividend of EUR 1.5 per share for 2018. With this, let me give back the floor to our CEO.
Thank you, Sandrine. I think now let me take you quickly through a highlight of our Strategy 2019-2021. While we have used our Fit for Growth strategy over the last five years, that I think has delivered good results with four consecutive years of revenue and mainly EBITDA growth. We want now to really become a fully customer-centric digital company, we have given ourselves three years to really become that. I will try to highlight a bit what we mean by a truly customer-centric digital company. First, for the residential customers, our will is really to come on the first screen of every smartphone in the country. By that, we really want to be relevant for our customers, and that people really actively choose Proximus for what we offer.
The main element to create that relevancy is that we want to become the gateway to people's digital content and passion. The purpose is to bring a new TV app that you can use on all your devices. So it will be a multi-screen approach. It will be through the app, but also through tablets, and you will have an equivalent on your PC, and to a certain extent, reflect the new interfaces on your TV screen with the purpose to have a gateway to various content, so a really integrated content platform. To have that with personalized and contextualized experience, and to be able to sustain and highlight way more targeted advertising, so that we can also try to be more pertinent for our customer, more relevant for our customers, and also tap partially in the targeted advertising revenue pool.
Linked to that, I will give a bit more information on our latest news of Epic Combo. Epic Combo will be launched as third variance of the Epic segment on the 2nd of April. The purpose of Epic Combo is to really target millennials that want to have internet permanently, internet out of home, so through mobile subscription, but also internet in-home through a fixed internet availability. Through that internet, having the opportunity to go into their apps, to go into their music, and to go into their content, where one of the content gateway, next to the Netflix and the YouTube, will be TV everywhere through the Proximus TV app. I think we have there a proposition that is very relevant for millennials.
Next to all the internet and the free access to app, you will also have some extra gigabytes and some extra voice minutes so that people can still call, of course. The main purpose is to have something very specific, and you know that we currently have an Epic stories, which is access to app, Epic beats, which is access to music, and Epic Combo that will offer you access to all your passion, being conversation, music, and videos. For our small enterprises, I think there as well, we want to go further than pure connectivity, the recent launch of Bizz Online is a reflect of that, where we really want to be different from other operators by offering business continuity, premium servicing with a big number of specialized Bizz experts at the service of our customers, and also some specialized third-party ICT and telecom agents.
To make sure that small enterprise, where in Belgium, they still have quite a lot of difficulty to be present online, that we offer them presence, but not only presence, also active referencing and active presence with a whole search engine and activation engine behind offer by the services of Proximus. In the bigger enterprise, so the enterprise customers, we have built a lot of building blocks through our acquisition. The purpose now is really to bring all those building blocks into smart solutions that offer seamless digital experience to some segments of the enterprise business. You see here 6 segments that for us are our priority segments, being the Smart Industry, Smart Retail, Smart Energy, Smart Logistics, Smart Building, and Smart City. Also on the digitalization, the Shift to Digital needs to bring us to another level.
We want our call center agents becoming more and more digital coaches of our customers and really increase the digital adoption both internally as well as externally. We are building full digital servicing journey on the MyProximus app. Our stores need to become more experience stores, where people can discover all the new content worlds of Proximus, and less a store where you can buy connectivity. As I said, for enterprises, it's not only bringing new solutions, but also making sure that all enterprise customer can activate them through seamless and digital portal and digital experience. Internally, there is a lot of work going into hiring and reskilling, mainly of a workforce, so that the digital adoption is not only by your customers, but also very much by your own employee.
Of course, on the network, we have started, and we are in line with bringing virtualization and softwarization of our network, and we have now several application already running on the telco cloud. If we look at also our ambition next to the digitalization, the ambition of transformation is also to reduce cost. And we have highlighted an ambition to reduce our cost by EUR 240 million gross savings, gross OpEx savings in the next 3 years. You can see here a few highlights on what are the means we will put forward to reduce, of course, workload first and workload that should be translated into workforce. I think that's something you can see in a lot of company, but it's about simplification, it's about digitalization, it's about automation, but it's also looking for supply efficiency and call deflation, which will be the main drivers of our cost reduction.
I want to give a bit more highlights on the gross to net, because I know that's a question that is living a lot in the market. So the EUR 240 million are gross OpEx savings. Of course, they will not come back to net because you always immerse with inflation, and more particularly index wage inflation every year. But you also have high energy price and energy inflation, which is a part that will eat part of the gross savings. Another part is that we still plan for volume improvements and mainly also more network, both the fiber and the mobile network that will drive some extra costs. Of course, we are also decommissioning and simplifying, but the rhythm of both is not always in parallel, which will lead us to a certain amount of net savings.
That net savings, as Sandrine has explained, will also potentially, partially be reinvested in ICT growth, being the billable part of ICT that we will continue, hopefully, to expand in the coming years. Part of it mechanically through the acquisition, but also part of it through the growth of those new businesses. That brings me to the final message, which is our guidance 2019, where we issue a guidance which is nearly stable for our domestic underlying revenue, stable in the group underlying EBITDA.
There we have said that we will see normally a slight growth for the domestic EBITDA, but it will be compensated by a negative growth on BICS, mainly driven by the renegotiation of the MTN commercial agreement that has an impact on BICS and that's mainly linked to the fact that MTN is wanting to do the wholesale part of some regional routes, mainly in Africa and in EMEA themselves. CapEx is foreseen to remain stable. Of course, we will continue to develop our fiber to the home, but within a stable envelope. One element that we also want to mention, potentially more on the revenue and profit side, is that we still are having regulatory measures in 2019 that will impact both our revenue and margin by another EUR 20 million, mainly linked to fixed termination rate reduction and linked to international calls, which is the biggest part.
We guide also on the dividend, and I think we are happy to say that we expect to return EUR 1.5 per share in line with the guidance of three years that we have announced in December 2016. All those numbers are under IFRS 15, which will, of course, as you know, change a bit the references, the new accounting system that we have restated all the 2018 figures towards IFRS 15. I think for Proximus, the changes are relatively small, but still the figures here are fully under IFRS 15. With that, I think I hand over to the Q&A session and to the operator for the Q&A. Thank you.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press the code zero one on your telephone keypad and you will enter the queue. After you are announced, please ask your question. We kindly ask you not to use microphones or headsets when asking your question. We have a first question from Emmanuel Caldi from Kempen. Please go ahead.
Hello, good afternoon. This is Willem Hoefnagels, speaking on behalf of Emmanuel Caldi. My first question is, since more and more consumers no longer need the fixed line telephone or TV product, do you expect unbundling? The second question is, where do you expect cable and fiber wholesale rates to settle? Thank you.
Perhaps start with your second questions. On the price, the wholesale price of fiber and cable. There has been a first view on the cost model that has been issued by the regulator, and we have been able to introduce our remarks on that for mid of February. We have done that. Our expectation is that the BIPT will now work through all those remarks and will, at the earliest, come up with a new proposal in the second half of 2019. There is still some time to go before we can have a definite wholesale price for cable and fiber.
On the first question, this is Guillaume Boutin speaking. The question was regarding the fixed line and TV product, and if you were interested of getting rid of the fixed line and getting rid of the set-top box and TV product. First element of answer is that today we already are offering the wide range of the product, being from 1P to 4P. This is one. Second, we are already, as Dominique explained, fully engaged in our segmented strategy, where we have specific offers for specific segments, and we do believe that we are well-armed with our Tuttimus offers for families, our Proximus business offer for small enterprise segments, our Epic offers for Generation Z and Millennials, and our Scarlet offers for the smart shopper segment, that we could answer to all the different needs of the market.
This multi-brand strategy gives us an edge compared to other players on the market.
Question, please.
Our next question is from Nicolas Cote-Colisson from HSBC. Please go ahead.
Hi, thank you. Regarding the three-year plan and the consultations you are currently running, I was wondering how much of the EUR 240 million savings is predicated on job cuts. What is the government position at present, and can actually a final plan be put together now and still be future-proof given the elections in May? My second question may be to Dominique, sorry if it's a bit of a direct question, do you intend to go for another term next year? Reason for asking is putting together a three-year plan. I would be pretty helpful if you were there to look after the plan over the next three years. Thank you.
I thought you also asked some splits on the EUR 240 million savings. I think the splits between workforce and non-workforce is relatively in line with the current splits of our OpEx. I think about a bit more than half is on our internal workforce and a bit less than half is on external workforce and non-workforce costs. I think the efforts is coming both from our own workforce costs, also from what we buy externally. Where are we in the negotiation with the social partners? I think so far we are still in the information and consultation phase. We have had 10 full days meeting with the unions. I think all in all, the discussions are constructive. It's of course a lot of information because what we bring forward is twofold.
It's of course a plan to reduce workload and hence workforce, it's also a plan to change our social framework and adapt some of the HR rules where we are still confronted with rules that date back from the time we were a fully public company. There is, of course, a phase where the unions can ask a lot of questions. I think so far we have received around 500 questions from them that we answer. I think with great care and great transparency. I think so far we are not yet in the negotiation phase. We hope that we will be able to get there in the coming weeks or months. Input from government or others in the process, I would say none. I think in the beginning, there has been a lot of news also in the press on the announcements.
To be honest, it has been the case because there has been a leak and we have not been able to properly manage the communication. At that moment, there has been a lot of questions from government to say, "What are you doing? Why are you doing it?" They have been asking questions to the management, but also questions to the social partners. I think we've been able to explain why we do this, that it's a transformation plan where we really want the company to shift to new era, to be able to answer the demand of the customers and be able to really adopt the digital shift that we see happening in the market. Next to certain people that will leave the company, we will also hire new talents and have some substantial reskilling and retraining availability for our workforce.
I think for the time being, the discussion stays within social partners and management, and it is planned to continue like that. I don't think there will be further input or intervention from government, and not even in the context of election, because what you need to know is everything we want to do in this plan is something we can do into the current law or the current rules from the government. What we want to change when we talk about changing social framework and HR rules are things that are rules that have been set within the company, and can be changed within the company without any intervention of government. The fact that we are in election period should normally not impact the dialogue as it is independent from any law changes that would be needed to implement it. Concerning your questions on my mandate.
I think it's true that my official mandate of six years comes to an end in January 2020. I think we have indeed engaged on a new strategy, which is called Shift to Digital, with a lot of transformation. My intention is indeed to try to lend that transformation strategy and to see some of the results of that strategy. I'm not saying that I will take another six years, but I think I will indeed want to prolong for a few years my mandate to be able to finalize the transformation and see the results of it. Of course, I am not the only one to decide. It will depend on our board of directors and our general assembly.
Excellent. Thank you.
We have a next question from Ruben Devos from KBC Securities, please.
Yes, good afternoon. I got two. Basically, the first one on the mobile ARPU evolution and the somewhat weakening trend versus that of the first nine months. Would it be possible to provide some color on that? We have seen the launch of unlimited offers in November and promotion at year-end. To what degree has that impacted that trend? Is there reason to believe that along, as you stimulate up-tiering with the unlimited offers, that development could steadily outweigh the lower out-of-bundle revenues you are seeing? Secondly, on 5G, I guess in the past few weeks, there have been a lot of news flow around the delay of 5G, new players announcing their interest to participate in the auction, and then a potential decoupling between the renewal of existing licenses and 5G.
It would be great if you could share your thoughts on these developments and maybe what sort of risks you see, given that the 5G marketplace seems to become quite crowded. Thank you.
Guillaume on the mobile postpaid ARPU. It is true that compared to the fourth quarter of 2017, postpaid mobile ARPU has been decreasing, and this can be explained by the following. First, we have seen a material erosion of the inbound traffic following further usage of OTT applications. This, as you know, has very limited impact on margin. Second, we saw as well an erosion of roaming value, mainly due to a 2017 positive one-off and also a change of consumption patterns of data for countries out of Europe and also international calls. What is very important to note is that out-of-bundle consumption, following the adaptation of offers portfolio, to stay competitive in that market, has been nearly completely compensated by a structural value increase on recurring subscription, including the joint offer effect. This is for the last quarter of this year.
If you look into 2019, if you look at comparable basis, so under IAS 18, if we exclude the impact of regulation on international calls, if you also include the continued trends in inbound revenues, as I said, with no impact on margin. As we speak, we are confident that we could stabilize our postpaid ARPU versus what you saw in Q4 2018. For sure, when you will go into IFRS 15, you will see an improvement of the total value related to the mobile business. With a shift to device revenues linked to the increase of the joint offers. This is what I think we can say on mobile ARPU. On the 5G. I think it's all linked to the spectrum auction. I think the spectrum auction, just as a refresh, has three main components.
You have a new band on the 700 MHz that should be auctioned, a renewal of the existing 900, 1,800, and 2,100 MHz spectrum bands, and a new 3.x as we say, or 3.5 bands, which is mainly that one that we are looking for 5G. Currently, the discussions at the government side are blocked. There is still one potential consultation between the federal and the regions at the end of March. Either there is an agreement there and it can move forward, and then we can hope that we can still have some more visibility in the year 2019. If it's not the case, the auction will come on the plate of the new government. There we will be probably late in 2020, before we can have the new auction. You said it's crowded. I think there are two elements.
There is on the 700 and the renewal still the pre-auction for a new mobile entrant, which is of course still on the table and where together with all operators, we are really not happy of. That's currently still on the table, and that's where you see the risk of a potential fourth entrant coming, mainly in the current 4G, potentially 5G space. On the 3.5, you have no pre-auction, that's a new band, 400 MHz that will be auctioned, where logically you will have the three current operators that will all go for a part of it. If we are more than three, it is capped at 100 MHz.
There you see that there is still indeed the opportunity for potential other players, take part in the auction without a pre-auction, to take part in the auction to get a piece of the last 100 MHz available. I think you see today that there are already today some players having some extra spectrum, then more on the 2.6 and some on the 3.5. I think those players are very often smaller players that use it either on regional basis or on a specific basis for some usage more in the industry. I think that will still remain there, and I think it will not be that much different from what we have now. What we say and what we try to suggest is to try to auction the 3.5 if everything is blocked.
If we can indeed already auction the 3.5 earlier, because from an enterprise perspective, I think it's not true on the consumer side, but from an enterprise perspective, there are some enterprises that are asking us to start implementing, testing the 5G for specific use cases. The position of Proximus being quite a strong player in the B2B segment is probably a bit different from the other operators, where for us, we think it's important that we can move forward with 5G, mainly in the 3.6 band, so that we can further help our enterprise customers in their digital transformation alongside our strategy by providing them some specific use case on the 5G. The chance that that happens still this year, I think is relatively limited as there is currently no agreement between the federal and the region, mainly on the split of the spectrum auction proceeds.
There is also some questions on the impact of a potential fourth entrant on white circles and on emission in Brussels.
Okay, that's very clear. Thank you.
Our next question is from Matthijs van Leijenhorst from Kepler Cheuvreux. Please go ahead.
Yes. Good afternoon. A couple of questions on my side. First, on CapEx, you presented your three-year targets until 2021. You haven't said anything regarding CapEx. Could you give some color on how your CapEx profile is going to look like, taking into account the fiber deployment? That's the first question. The second question is how would you describe the competitive environment? You are about to launch this millennial proposition called Epic Combo. Telenet recently launched the same proposition called YUGO, Orange Belgium is about to launch a proposition focused on millennials. How would you describe the competitive environment and how big is the market you want to address? On top of that, last but not least, just a more general question.
The 5G spectrum will be delayed, most likely, in the long-term view, what kind of CapEx do you expect to see related to the 5G rollout? Those are my questions.
Okay. It's Sandrine speaking. Let me answer to your question on CapEx for the three-year plan. In the current status, we don't expect to see a difference. It should be in line with what we've done for the future year. Unless we've said this, I think, consistently over the past quarters, unless we would decide to potentially accelerate the rollout of fiber. What we have always said, if we were to decide on that, is that we would fund this acceleration with the balance sheet. We have very low leverage, we can fund a potential acceleration with increasing further our level of debt. So far, it's not something which is decided. In that respect, CapEx in the future is in sync with what we've done in 2018.
On competition for the consumer market, we do foresee a market that will remain competitive in 2019. Especially on the broadband market. When you 1P or 2P have been announced or will be announced by competition. We do believe that we are well-armed, as I said, we could again show good resilience thanks to our segmented and multi-brand strategy. We think that segmenting the market helps safeguarding a lot of value for the most valuable segment that are today within our customer portfolio.
Sorry to interrupt, how big is this market, this millennial market, in terms of households?
For the Epic customers, the millennials, they represent 25% of the total population, much less in terms of households. We see, this is between those numbers, less than 15% of the household probably.
In terms of pricing, YUGO is launched.
We are not going to disclose the pricing of our Epic combo today because it's going to be launched the 2nd of April. We would like to wait a little bit before announcing pricing to the market.
Okay.
Perhaps on 5G on the high level, if you have more questions we can over to our CTO. I think on the next three years, we see 5G pretty much as an additional layer on the microcell. In that sense, we don't expect massive increase of our CapEx amount compared to what we currently spent on the mobile. It's more an evolution within our mobile envelope, where we will shift some investments that we do today on the 4G towards the 5G. I said we will mainly have a deployment on microcell in the coming three years. There should not be an important impact on the CapEx, and we should stay around the envelope that Sandrine mentioned earlier.
Just one final question. This fiber rollout plan, you launched it late December or announced it. At the time, you provided also your rollout ambition. 85% coverage within B2B within 10 years and 50% for the B2C market within 15 years. Are you still committed to these percentages and targets?
Broadly, I think we stick to these numbers for the time being. We want to cover, we said 50% of fiber to the home. We also say all the cities and commune centers, because that's sometimes a bit sensitive in the country. We want to go through all the communes and city centers, and by that we will cover around 50% of the population because we will not go to all the outskirts where it doesn't make sense economically. For enterprise, we have changed a bit the approach as we expressed on the multi-sites. The purpose will be that we will still be available for 85% of the eligible enterprise. Depending on the demand, we will not do pre-investments everywhere, but we will be available. If we get demand, we will deploy fiber towards 85% of the enterprises.
That's the small nuance I would put because we've seen that for multi-site, doing all the pre-investments is too costly. The objective is still to be able to cover 85% of the enterprises.
Thank you very much.
Our next question is from Ulrich Rathe from Jefferies. Please go ahead.
Yeah, thanks very much. I have several questions. The first one is, could you comment a bit more on the potential size of that MTN impact, order of magnitude or scenarios or however you want to go about that? The second question is on the out of bundle issue you mentioned there. Could you give us a sense of how much out of bundle is still left within the revenue mix? Third question is actually residential fiber offered outside of the Proximus brand, or is that restricted to the Proximus brand? The last question is on the 5G auction. You highlighted the scenarios. Could you put likelihoods on this?
How likely do you think is it that we will get the split of the 3.5 gig auction or that the whole thing is going to kick down the road and you're just going to have to wait for a new government? Thank you.
On your first question on the impact of the renewal of the commercial agreement with MTN, the implementation has not started yet. There's still a bit of uncertainty as to the progress and rhythm by which this is being deployed by MTN. Ballpark, what we see is that we could, at the level of the EBITDA of BICS, go back to the level of 2017. That's the order of magnitude.
On the second question regarding out of bundle, I think we will not disclose the proportion of out of bundle within our mobile postpaid ARPU. As I said, the small decrease in out of bundle ARPU has been totally compensated by the increase of the subscription ARPU over the last month.
On fiber. Fiber today is already around 14-15 wholesale agreements. Fiber, as we deploy it, is certainly not reserved for Proximus brand. Fiber is for Proximus, but also for wholesale customers. In that sense, we want to monetize fiber on our own portfolio, but also on portfolio of wholesale. Fiber is open, and the only thing that will still need to be decided in line with the first question is that the price will be verified by the BIPT based on their current cost plus model that they are developing, most probably in the second half of 2018, 2019, sorry. On the likelihood of the 5G auction still this year, I think it is low to be completely honest.
I think we're still trying to see if there is an opportunity, but I think the chance that it will be auctioned this year is low, seeing the current political context and the very little time that we still have a government in current affairs.
That's helpful. Can I just follow up? When asked about availability of fiber outside of the Proximus brand, I meant within your own brand portfolio.
Yeah, I think that's too early to say. We will see as we move, how we combine that. For the time being, the Scarlet brand is on copper, and it stays on copper for the time being.
Thank you very much. Thank you.
Our next question is from Michael Bishop from Goldman Sachs. Please go ahead.
Yes, thanks. Good afternoon. Just two questions from me. Firstly, it looks like quad play isn't resonating as well as it used to in terms of the year-on-year growth you had on one of your slides. I just wanted to ask as a bigger picture question, given the lengthy discussions already around the addressable market for the Millennial and Gen Z tariffs. Is the quad play dreams dying a bit from here? Ultimately one of the main benefits of quad play was that it could materially lower churn, and obviously that would be good for margins. I was just wondering if you could comment from a bigger picture perspective about how we should think about quad play growth, churn, in relation also to the Millennial opportunity.
Secondly, a lot of telcos, including yourself, seem to be beefing up your B2B businesses with lots of small bolt-on acquisitions, and clearly that often means that the dividend isn't covered in any one year, like this year, or fully covered. I was just wondering, how much more or how many more acquisitions do you think you need to do in B2B to get the necessary scale and I guess, sort of unique selling points? Thanks. Bye.
To first, your question on 4P. What we saw over the last quarter, in Q4, we haven't noticed any kind of slowdown in the trends of new gross gains within our hero pack, being Tuttimus and Bizz Online. We still see a very nice traction for 4P offers for a large segment of the population in Belgium, which is still very good. For sure, in terms of net additions, the growth is a little bit slowing down because of the size of the customer base, but the traction is still there for 4P offers. On the Millennials questions. For us, we see our Proximus Epic portfolio as an opportunity to regain shares on a segment where Proximus used to be a little bit less good in terms of penetration.
The objective of the Epic range is to get back to the fair share in terms of penetration of Proximus within this segment. We see that as an opportunity to grow.
Could I just follow up there? Because if we look across at the good Orange Belgium results, they clearly had very strong post-paid mobile net adds, well in excess of the contribution that they would be getting just from the fact that they're adding converged customers. Is that the segment you're referring to? Is that the sort of dynamic, given we're in pretty much a fully penetrated market?
I will not comment too much on the Orange performance of last quarter. What we see is that Orange and Proximus are gaining customers and, sorry, Scarlet and Proximus are gaining shares on the market. Orange is also gaining shares, but other players are obviously not having the same dynamics.
Okay. If we just follow up on the churn, because if this quad play growth is really slowing, presumably your expectation would be that the churn of a quad play customer would be a lot lower than the churn of a skinnier bundle. Do you think these skinny bundles can have a similar churn profile to all singing, all dancing quad play? Thanks.
As you saw in the number that we disclosed, the 4P churn is still very low compared to 3P, 2P, and 1P, which is fully in line with what we want to achieve. Of course, when we're going to have 1P and 2P offers, the churn rate for those customers is going to be a little bit higher. That's not worrying. It's just a segment of customers that will have a higher churn, as we do have today for some segment of customers. We have to cope with the different segments and the behaviors that are different from different segments of population. As you saw, our mobile postpaid churn is also decreasing, despite the fact that Orange on mobile postpaid had a good quarter.
Okay, on your second question regarding B2B acquisition. We are not currently examining any potential new acquisition, but we do not exclude to seize tactical opportunities. We view this acquisition as a way to enrich our portfolio solution in the enterprise and the ICT domain. We are focusing on value-enhancing acquisition, but also to enlarge the defense of our connectivity business. In terms of dividend coverage, our policy is to cover our dividend with the free cash flow, excluding the impact of acquisition. I want to emphasize the fact that we have a balance sheet which gives us the opportunity to fund this acquisition without having a big impact on the solidity and the strength of the balance sheet.
Great. That's all really helpful. Thank you.
Our last question is from David Vagman from ING. Please go ahead.
Yes. Good afternoon, everyone. Thanks for taking my question. First, on BICS, could you come back on the MTN insourcing and explain a bit the dynamic here? Is it something that might happen with other clients or not at all? Is it just a one-off? Then about promotional activity, would you think that your promotion spending will be higher this year than last year, given the more competitive dynamic in the Belgian market? Thank you.
Hi. Good afternoon. This is Daniel Kurgan. For question one, no, we don't think this is something, a new trend in the market. I would say it's more the opposite. We see more and more outsourcing initiatives. Here, the background is that MTN has invested a lot in terrestrial and submarine cable infrastructure across Middle East and Africa, where they have their corporations, and that they want to leverage on these significant investment to manage now things themselves that were outsourced to us. We certainly don't see this as a market trend.
Thank you.
On the market, as you saw in 2018, the market has been already extremely competitive. We do not foresee any change in 2019. It means that for our marketing spends and promotional activity is going to be similar that what you saw and that we did in 2018.
No change in spending on promotion, basically, compared to last year?
I'm not going to disclose everything we're going to do in terms of promotional activity. We do not foresee any major changes.
Maybe a last follow-up on commercial dynamic. Do you expect the, let's say, the slightly better commercial dynamic on mobile to continue into Q1 and the rest of the year? On mobile postpaid, I mean.
I think it's the same answer that I just gave on the global market.
Okay. Thank you.
If there are no further questions, I think we can end the call. Thank you very much all for your participation. Should you have follow-up questions, you can obviously contact the investor relations team. Thank you for your participation, and a good weekend.
Thank you. Ladies and gentlemen, this concludes today's web conference. Thank you all for your participation. You may now disconnect.