Good afternoon, ladies and gentlemen. Welcome to today's Proximus 2018 Q2 results conference call. For your information, this conference is being recorded. At this time, I would like to turn the call over to Nancy Goossens, Director of Group Investor Relations. Please go ahead.
Thank you. Good afternoon, ladies and gentlemen. Thank you for calling in. We have published all documentation on the results this morning, I take it that everybody has well received these or found them back on the website. We trust you have seen the published numbers by now. For this call, we will reserve maximum of the available time to answer your questions. On our side, we have here present 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. Before we get to that part, we will start with an introduction of the CEO. Please, Dominique, go ahead.
Thank you, Nancy. Welcome to everyone to our second quarter conference call. I will start by saying that I am, and we are all proud of the results we announced this morning. They show a continued growth of our customer base for our main products. While we operate in a competitive environment, we achieved to further attract customers on our internet offers and our TV platform, supported by a continued good traction for Scarlet and for the Proximus-branded All-in offers. By end June, we totaled 439,000 Tuttimus and Bizz All-in customers, and were able to further growth our 4-play customer base at a higher revenue per household and having lower churn levels. We are especially happy about the growth realized for mobile postpaid, adding in total 45,000 cards over the second quarter. This mainly reflects a successful marketing campaign around the World Cup and the Red Devils team.
It also reflects another good quarter for enterprise segment, which gained 11,000 mobile cards, underlying its solid position in the market. This was also visible in our strong ICT growth, supported by the investments made to strengthen our ICT portfolio, offering services that go well beyond pure connectivity. On top of the solid organic ICT progress, we also benefit from the acquired small but highly specialized companies that are especially helping us in deploying meaningful solutions and in accompanying our business customers in their digital transformation. These sound commercial achievements have led to a positive revenue evolution for our domestic operations, up by 0.8%. Through upselling services to customers and targeted price increases, we successfully more than offset the headwind, such as the Roam like at home pricing and the ongoing erosion in fixed voice usage.
At the same time, we continued to manage our direct and operational costs, leading to a strong domestic EBITDA performance growing by 5.5% for the second quarter, including a net loss in roaming direct margin of EUR 13 million. Our international carrier business, BICS, closed a firm second quarter too, with its direct margin growing by 18.5% and EBITDA by 12.7%. This was strongly supported by the consolidation of TeleSign. This combination visibly boosts BICS' strategic ambitions in the growing application to platform markets, while meaningful synergies are being delivered. As a result of the good EBITDA progress in domestic and BICS, the underlying EBITDA of the Proximus Group for the second quarter ended 6.1% above the comparable period of 2017. This is slightly ahead of our expectations, with some one-off tailwinds included in the consumer direct margin.
Based on our estimates for the remainder of the year, we reiterate our full-year guidance of slight EBITDA growth for the group and nearly stable domestic revenue. We also reconfirm that the CapEx for 2018 is estimated to be around EUR 1 billion, and that we intend to return over the results of 2018, a gross dividend per share of EUR 1.5. As a final point, and I think you have all picked us up in the press, and even yesterday evening on the BIPT site, the federal government has decided to open the upcoming spectrum auctions to a fourth mobile operator. With this decision, we will anticipate the outcome and work on different scenarios that we will take into account for our new three-year strategic plan. With this, I have covered my introduction and propose now we start with your questions. Thank you.
Ladies and gentlemen, we will now begin our Q&A session. If you wish to ask a question, please press zero and 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 microphone or headset when asking a question. We have a first question from Mr. Ulrich, Jefferies. Sir, please go ahead.
Thanks very much. It's Ulrich, Jefferies here. I have two questions, if that's all right. The first one would be regarding the cost trends in the second half. Obviously, your H1 performance is now fairly solid, and you raised your guidance. Could you maybe highlight what effects might come in the second half that prevent you from turning a bit more positive on the full year? The second question, if I may, is on the sort of regulatory efforts at the moment to reserve spectrum and create a case for a new entrant. I'm just wondering, with everything we know now, and that's not complete knowledge as I understand it, how realistic do you think is it that somebody actually takes capital in hand and takes up the offer?
Do you think that is essentially, we are just discussing the conditions under which this will happen, or is there still a realistic scenario that there won't be a new entrant after all? I'm not talking about sort of normative, whether it's the right or the wrong thing to do, just your feeling of how likely it ultimately is given everything we know now. Thank you.
Okay, on the first question, this is Sandrine speaking. On the cost trend in the second half, I think I just want to highlight the fact that we are still operating in the framework of our global guidance regarding the cost reduction, which is a guidance we gave for multi-year, decreasing the total OpEx by EUR 150 million between 2016, 2019, that we've delivered a strong portion of that over the first two years in the first half, and that we continue on delivering this guidance, including on the second half of the year. Regarding your other included question on the guidance, maybe it's worth that I highlight a couple of differences between H1 and H2, which are not just related to the cost aspect.
As you know, in the first half, there were some one-offs that I'm sure you've picked up in the Q2 numbers that we've disclosed that won't be repeated. Beyond this, we had a price increase last year, a bit small in July, but also the more for more strategy, which started in August, and these two will annualize. That's, I think, one element that you should not forget when you look at H2. There's another element that we've also highlighted in our reports, which has to do with the roaming. There is no more price impact expected in H2 related to the roaming because the new Roam like at home has annualized actually in June. What we see is that we will continue to observe the cancellation of some options from our enterprise customer in the roaming.
We also see that the traffic growth pattern for data for roaming out is accelerating faster than the traffic pattern for the roaming in. This traffic growth in the roaming out creates no extra revenue while it creates extra cost of goods sold. We've highlighted that this impact is also potentially a higher impact in the second half of the year versus the first half. Maybe last, more on the cost aspect. You should have in mind that we are expecting an indexation that should happen before year-end. That comes as well with negative impact, and there are a couple of other, I would say, external elements to have in mind as well. We still expect the fixed termination rates to potentially come and all these elements explain potentially the trend between H1 and H2.
Okay.
Dominique speaking. First, just one compliment on the guidance. I think our guidance is relatively broad, and I think when I look at the consensus which has been put forward, I think the main message I can give is that we are indeed providing higher figures in Q2 than what was expected, and what we would say that the Q2 better figures are in the bank, as we sometimes say, so that you can, of course, relook at your full year consensus, including the better results of Q2. Just to highlight a bit the good performance and also say that this performance will indeed translate in the year results, despite the fact that what Sandrine said on a lot of elements, which indeed has to temper a bit our enthusiasm after the Q2 results. That's for your first question.
On the second one, regulatory efforts for a new entrant. To be honest, for us, it's extremely difficult to answer that question. I think we are rather happy that you have been able to see the conditions that have been decided thanks to the publication that the BIPT disclosed yesterday. It makes it more transparent for all of us. I think you see in these conditions that there is quite some spectrum reserved for a new entrant, and I think that's indeed something that is not trivial, and certainly that also some spectrum which is currently fully used by the MNO is reallocated to a new entrant, and that will have an impact on our network and will enable a new entrant to come in with some good spectrum.
On the other side, it's true that the coverage obligation, although slower and lower in the first phase, come to the same level of obligation coverage after eight years. That's new because in the previous Elements we received, it was 10 years, that has been reviewed in the last negotiation round, and that makes it indeed for a new entrant, a more difficult task to achieve and will ask a new entrant to put a bit more money on the table to build a network on an eight years period. Apart from that, I think Belgium is a relatively small market. We have already three MNOs, to be honest, thinking of such a size of a market with four networks and four operators, I think it's something that is not sustainable.
I think in the long run, I don't believe that this market can support four operators. The question is, what could be the strategy of a potential fourth entrant to enter and then to exit or to partner with someone else? To be honest, I am not in a position to give any answer on that. That's more probably up to you to ask other potential entrants that question.
That's great. Thank you very much.
Thank you. Next question from Mr. Nicolas Cote-Colisson from HSBC. Sir, please go ahead.
Thank you. Hi. My first question is on the broadband market with the weak net adds for the quarter. I was wondering if you could share how much of gross adds is achieved with Scarlet, and if you think it is still an efficient tool to fight back competition in your view. My second question is on TeleSign. The time for the purchase price allocation is not yet completed. Why is that? I was just wondering if you had any positive or negative surprise after the acquisition. Thank you.
This is Guillaume speaking. On the first question. As you say, the broadband market in Q2 has been very soft. Not a lot of volumes on the market, not a lot of growth gains, not a lot of churn. This is what characterized the market in Q2. That said, we achieved a nice customer growth on broadband internet, again, we truly think that using these two brand strategy with Proximus and Scarlet is a right strategy. As you can see, we are still able to grow on our average revenue per home. Which is a good sign that this strategy is value accretive for the group.
Okay.
Nicolas, this is Dominique. On your question on purchase price allocation of TeleSign. As you know, we have 12 months to finalize the work, which is largely done. The only reason why we've not closed the exercise is that because we're still waiting till Q4, which with the time that we have, to look at the tax losses carried forward. That's it.
Okay, cool. Thank you very much. Maybe if you don't mind, just to follow up. In terms of timing for the fourth entrant, at some point, every operator will have to register for the auction. Do you have any idea when it could be? Is that January, February next year?
The timing has shifted because indeed today there is a proposal that has been ratified by the Council of Ministers. As Belgium is a special country with federal and region, this proposal needs also to be validated by the regional regulators. Needs also to go into the parliament, and only after all that can be really transferred into an official royal decree, and then only can the BIPT publish the execution modalities for a new entrant. We expect that a new entrant should potentially have to register by June, July next year, and that the auction would've taken place at the earliest by October 2019. We unfortunately will need to live in uncertainty until June, July next year before we will know if there is a fourth entrant and who that fourth or the various fourth entrant would be.
That's the timing, which is currently, we think the most realistic one is mid-next year for the application and October next year for the auction.
Okay. Thank you. Very interesting. Thank you very much, Dominique.
Thank you. Next question from Alexandre Roncier from Exane. Sir, please go ahead.
Thank you very much for taking the question. I was just wondering if you could maybe give a little bit of color in particular to your commercial performance in Q2. As you already mentioned, broadband was a little bit soft, but we saw mobile being still quite strong and resilient. I was just wondering if there was any particular impact from the World Cup and maybe your partnership with the Red Devils. Secondly, about fiber. We've had a lot of press speculation regarding fiber networks being deployed. You recently just passed like a new agreement with Flanders, for Network of the Future. I was wondering if there was anything in the pipe for Wallonia as well, given that, we've heard and there's been a report about Nethys and local utilities also being interested in digging up fiber in Wallonia. Thank you very much.
Guillaume speaking. On the mobile postpaid performance. As you mentioned, I think we did a great job on the Red Devils campaign
I think it's been greatly executed during the 45 days of the World Cup. It's not only the traction of our commercial offers, but it's also improving trends on churn rates that helped us also achieve this nice postpaid customer growth.
This is Mark speaking for the enterprise. Also there, we have a very good performance in mobile. Actually, in this quarter, we're growing again in mobile services, which is quite remarkable. Thanks to a number of elements. Of course, there's still the growing park. We added 11,000 new customers, and we're crossing the 1 million milestone of mobile parks in enterprise. At the same time, we have a growth in data usage, mobile data usage, and a low churn, which again confirms the quality of our network and our services. Those elements together make that we also have in enterprise a very good mobile performance.
Dominique speaking. Concerning your question around fiber and the new agreement with Flanders. Perhaps I can just highlight a bit what has been agreed. You probably have read that there were some questions from the Flemish government to see if they would themselves put some money in financially helping a potential third network, which is, of course, something where we had a lot of question marks, knowing that for the time being, there are already two fixed network in Flanders, one on the coax with Telenet and ourselves with Proximus, with fiber up to the street cabinets, and the recent announcement of bringing fiber to every homes and enterprises, I mean, to the level of what we have committed to.
I think this agreement reflects mainly, I think the constructive and good discussions we have had with the region, while we are highlighting what is really our plan, that our network is open, that our network is open at commercial conditions, which are currently having a good takeup from wholesale. We have, I think today, already agreement with around eight wholesale suppliers for our fiber network. By being able to explain more in detail our coverage plan for all city and commune center, our coverage plan for enterprise, and the openness of our network with some already made commercial price agreement, I think we have been able to convince Flanders. Telenet has done the same at their side, that there was no need to put more public money or to put public money in building another fiber infrastructure.
I think it's a very good outcome. I think it comes mainly from a constructive and good discussion. There has never been, on the Walloon side, any questions on the same subject. I think in Wallonia, people understand that there are two networks, the one of Nethys, the one of Proximus, and that we are deploying the Network of the Future in Wallonia. There at that side, there will be no question on should there be extra public funds to finance a third network. I think there is no need in doing any agreement with the Walloon region because that question is not on the table, and we haven't heard of any initiative in that sense.
That's very helpful. Thank you.
Thank you. Next question from Mr. Ruben Devos from KBC Securities. Sir, please go ahead.
Yes. Good afternoon. Thanks. Two quick questions. Two, basically. The first one on the fourth operator, possibly. I understood that they need to achieve 30% population coverage within three years. I was wondering, what does that mean in terms of roaming agreements with the existing operators, and will those agreements be on a commercial or regulated basis? Secondly, on the memorandum of understanding with Minister Muyters of Flanders. Just for clarification, should we understand then that this does not affect your Fiber for Belgium rollout plan? Thank you.
Could you repeat your second question, please? Just was not clear.
Regarding the memorandum of understanding with Minister Muyters for Flanders rollout. The question you just answered, I just want to clarify whether that does not have a material effect, let's say, on your Fiber for Belgium rollout plans. Because there were some headlines that download speeds would increase to one gigabyte per second by 2020, that sort of thing. I'm just wondering how that affects your CapEx envelope.
Okay. Thank you. Concerning the fourth entrance, I think in the draft resolution, there is no specification for commercial agreement on roaming. I think this will be up to the new entrant and the current MNO to see if they want to sign any commercial roaming agreement. The only condition there is, obligation there is that as soon as the new entrant has reached coverage of 20%, if there is no spontaneous commercial agreement, then the BIPT could impose to provide a national roaming to one of the operator at a condition which is a retail-minus.
I would say it's a stick behind the door that if there are no roaming agreements on a commercial basis, there is a possibility for the regulator to impose a national roaming to one of the operator as soon as the new entrant has reached 20% coverage in the country. Concerning the MoU with Flanders, so far we haven't changed the rollout plan for the fiber. Our current plan is still aiming at covering all the city and commune centers of the country and also of Flanders. There has been no change with the minister. Of course, our plan currently is foreseen for the next 10, 15 years, and we will then see afterwards if there are new technologies or whatever to go further, but for the time being, our commitment is in line with what we have said to the market.
Thank you. Next question from Mr. David Vagman from ING. Sir, please go on.
Yes, thank you. Good afternoon, everyone. Thanks for taking my question. I've got two. First, on the BIPT and the mobile auction requirements. I just wanted to ask you basically whether you think that respecting the new national coverage obligation of 99.8% versus 98% today, I think, will force you to increase your CapEx plan for the coming years. My second question is rather on the guidance, if you could give us more clarity on the slight EBITDA growth guidance, in particular the thresholds that you have in mind, whether this is low single-digit growth or mid-single-digit growth. Thank you.
Concerning the coverage obligation for the existing operators, I think, indeed currently the obligation is 98%. I think if you look at the current 4G coverage, we are already providing 99.8% coverage outdoor, so that do not change. The question is indeed more relevant for the 700 MHz, where indeed there is well reaching coverage of 99.8% after I think two years. Indeed, we are looking at it currently, and it will also depend very much how it will be measured. That's not so clear because it's a new spectrum band. We need there to have some discussions with the BIPT on how the measurements of this 99.8% coverage will be done. In function of how the measurements will be done, it could have a small impact on our foreseen rollout plan.
But that's mainly for new bands, while on the existing we are already at 99.8% on outdoor coverage. Concerning the guidance, I don't think I can say anything else than I've said before, which I think was rather precise, saying that if you look at the consensus that has been provided by the analysts, you need to take into account the better results of Q2 to come to a renewed annual guidance. I think that's the more precise guidance I can give on what we think a slight EBITDA growth means.
Thank you. That's very clear. Thank you.
Thank you. Next question from Roshan Ranjit from Deutsche Bank. Please go on.
Hi. Good afternoon. Thanks for the questions. Just go back to the Flemish agreement. Is it possible to understand if there are any differences specifically to the Flemish region, to the commitments made to the wider Belgium coverage? Did you or are you considering some form of co-investment in the Flanders region? Secondly, just on TeleSign quickly. Is it possible to get the contribution of TeleSign in the quarter? I think you had previously said, I think at the end of 2017, you had a mid-teens type revenue contribution in that. Thank you.
To come back on the Flanders memorandum of understanding, there is no specific commitment to any coverage. What we have agreed is that we would indeed cover, as foreseen, all the city centers and the commune centers in Flanders. There is also no elements concerning co-investments at this stage. I think the memorandum of understanding still opens up any change possibilities. What we committed for is in line with the plan we have revealed to the market last year. I think if you look at both the coverage that will be provided by Coax and by fiber on Proximus, I think Flanders will have very decent fiber and coax networks for covering the usage in Flanders. I think that was the main concern of the Flanders region, is that they would have a region where the Digital Flanders would be possible.
I think with the two current infrastructures and the foreseen enhancement of those, I think they have been reassured that it is the case. I don't think there is any new or extra commitment that needs to be taken.
Just on that front, sorry. You highlight that you're guaranteeing the speed of a network and fair pricing. That guarantee of speed is applicable to nationwide, I guess?
There is no guarantee of speed. I think the question of the minister was that, if on the longer term, what is needed is, for instance, 2.5 Gbps, are the investments we are doing currently unable to bring that 2.5 Gbps speeds? That's indeed the case. I think the fiber we are deploying currently, we deploy it with currently a 1 Gbps speed, but there is absolutely no big issue to boost that fiber investments to 2.5, and that was indeed one of the reassurances that the minister wanted. That's something we could commit to, and that doesn't trigger any extra investments versus what is foreseen in the next coming years for Proximus.
Good afternoon, this is Daniel, here for BICS. When it comes to TeleSign, we don't provide separate information for the simple reason that, first of all, they are using our network to deliver the voice and message authentication transaction. Depending on where you put the value, it's only the total that counts. The other reason is that we have moves from some customers and transfer from customers from and to TeleSign and BICS, and at the end, we look at it as one entity. The good news is that it's been growing steadily over Q2 like in Q1. We don't disclose more separate information.
Okay. That's helpful. Thank you.
Thank you. Next question from Michael Bishop from Goldman Sachs. Sir, please go ahead.
Yes, good afternoon. Thanks for the question. Two connected questions, please. I am a little bit confused on the coverage obligations for the new operator, because I had also heard the 20% number, but in the BIPT document, it looks like it is 30% coverage after 3 years. Is your understanding that the 20% or 30% is the point at which the new operator has to cover before there is potential or need for a roaming agreement, and which of the two is it? Secondly, have you thought about what the potential invested capital might need to be for a new operator? Because it seems like the regulator has also highlighted that coverage in Belgium is quite difficult to achieve, and that a new entrant would clearly have to build a number of sites, which I think the regulators said on average might be around 150,000.
If you add that to the fact that spectrum's being sold, presumably you would have to assume that a new entrant would at least have to deploy a couple of hundred million EUR upfront before any roaming agreement. Is that your understanding? Thanks very much.
Concerning your first question, I think there are two complete different things. I think there is an obligation related to coverage, which is in the law, which is indeed 30% after three years. I think 70% after six years. These are coverage obligations. There is something which is indeed not disclosed by the BIPT, but according to us, there is what I said in terms of national roaming. There is, of course, free agreement that can be made by a new entrant with the current operator as from day one. If there is a willingness of the new entrant to oblige an operator to provide national roaming, then the BIPT, as foreseen in the new spectrum, that as from 20% coverage, it could impose a national roaming agreement to one of the existing operators at a retail-minus condition. They are very different element.
One is linked to coverage obligation linked to the spectrum. The other one is a roaming obligation imposed by the BIPT as from 20% coverage. It could well be that as in other countries, that there is a commercial agreement before that or at that moment, and that stick is not needed to be used by the BIPT.
If I could just follow up, that's really helpful in terms of the clarification. Is it not an issue of discrimination if the regulator is trying to pick one network? It'd just be interesting to get your views on whether you've looked already at whether that sits within the European framework, a policy like that. Thanks very much.
Yeah, to be honest, I have no more information than I gave you. I think they have indeed, put that in the publication to make sure that there would be an agreement. I don't think there is a big change that there will be an imposition. I think, it is there more as a stick. To be honest, I don't know how it will be allocated and on what basis. That's not clear, and that still needs to be discussed with the BIPT once we will go into the more executional modality. I can't answer that question. Concerning the level of investments, to be honest, we haven't done any calculation so far.
I think all these figures are very recent, and we have indeed to see, and we will do, and I'm sure you will do some scenario planning on how much a new operator would need to invest to have the 30% or 70% coverage. I can't give any answer because we haven't done the calculation as of today, because that's all very new and that has changed still the last moment of publication.
Thanks. That's all very helpful.
Thank you. Next question from Paul Sidney, from Credit Suisse. Sir, please go ahead.
Thank you very much. Good afternoon. I just had three relatively short questions, again, on the fourth entrance. I'm sorry to continue on that theme, given its importance. Firstly, can I just get some clarification on what you mean by looking at your three-year plan in the context of this decision? Should we assume that you may look at your investment plans and may actually look to invest less following this decision? Secondly, could you and the other network operators actually choose not to bid in the auction? I think that would be a way to send a very strong message to the Belgian government if you basically weren't going to hand them a couple hundred million EUR for your part of the spectrum. Just lastly, I'm sorry, just follow up on Michael's question.
Did I understand right that you said you hadn't really done any work into whether you could legally challenge the mandated roaming point? Sorry, I just didn't get the answer to that question. Thank you.
Okay. I'll try to clarify all that.
Yeah, please.
On the first one, we will indeed review our three-year plan. For the years 2019, 2021, I think like every normal company, when there is such a change in the regulation, we will do some scenario planning, and we will see what we will need to do depending on who could be a fourth entrant, if there would be a fourth entrant. These are very commercially sensitive information, and I think it's way too early to give any indication on that. The only thing which I can say will have to be done anyhow is that we will need to accelerate our transformation towards a more simple, lean and mean and digital company, because most probably, the rhythm of change in the market will accelerate from what we have seen over the last year. That's in line with the plan we have.
We will most probably just need to accelerate the transformation that we are going through. For the rest, if that would have an impact on our offers or on investments or whatsoever, it is way too early to give any indication on that. No bid at the auction. I know that there has been some rumor in Italy that that would be one of the scenario. To be honest, I don't know. I think spectrum is a scarce resource, and spectrum is badly needed, and we have now an auction for at least 20 years. I'm not sure that would be a right decision. For the time being, we are more looking at how to bid at the auction, but not to bid at the auction. On the legal challenging, I didn't say anything on the legal challenging.
I think the question was more on the obligation to offer a national roaming as from 20% coverage, and that decision would be imposed by the BIPT on one operator and who that operator will be picked up. To be honest, I said, I don't know how it will be done because we don't have more precision on that. Challenging this decision, I think that's as well too early. We will have to see after the process is finalized what we can do if we do anything. There, I think we reserved all our rights to look at that.
That's very clear. Thank you very much.
Thank you. Next question from Ulrich Rathe from Jefferies. Please go ahead.
Yeah, thanks for allowing a follow-up. A couple of questions, actually. The first one is, you mentioned in one of the early answers, resellers you gained in Flanders on this fiber network. Could you describe what sort of operators these are? Are these operators that exist already in broadband, or are they actually active nationwide or at least Flanders-wide, or are they very local? Just any color on what sort of potential incremental competition comes from such resellers. Second question is, the authorities have said they're actually talking to an interested party, right? They presumably are not drafting all these rules just into outer space. They're sort of talking to the other party.
Is it your impression from the way the discussions that you are having with the authorities are going back and forth, is it your impression they're actually designing these rules according to what they hear from an interested party, or do you think they are really putting it out there and sort of see what happens? The last question is, just looking at this sort of spectrum table that BIPT has put out, one could argue that spectrum is actually becoming quite scarce for the existing three operators. In particular, because the spectrum caps seem to allow two players per band if they bid for the full allowance, the way it looks. Which effectively could make for a very contentious auction in the remaining bands. Is that the right way of looking at it?
Will people essentially just zero in particular bands, and then you are going to bid up? I mean, is this a very difficult setup that's sort of emerging here for the existing operators or not? Thank you.
On your first question, when I talk about resellers, I mean, they are national resellers. They are companies that are currently reselling our copper network, most of the case. These are existing players where we have extended or reselling agreements that we currently have on copper to fiber. There are no new players in there, and they are not specifically players for Flanders. They are national players. I think that's the best proof that the conditions we have offered on the fiber and the way we manage the opening of the fiber is in line with the market expectations. We have done agreement on different tiering. I mean, the two that have been published on the market review, but also some others with some higher specificities and higher price.
I think for us, it's important that we can keep our fiber network open, but with the right conditions and with the right price tiering. In that sense, I think the fact that we have been able to reach agreement with around eight resellers on the different price points is an important element for us and give us confidence that we can continue to roll out fiber also with good return on investment on the wholesale side. On your next question, it's very difficult for me to answer. It's true that the government and the BIPT has said that they have received interest from a specific party. Am I cautioning that? To be honest, I don't know.
I think it's most probably true because initially, when you looked at the first rules for auction that was put in the market forward in May last year, there was nothing foreseen for a fourth entrant. The fact that that has been changed relatively recently in the process is indeed something where probably being adapted in function of a specific interest of a party. If that party is still interested, are the conditions in line with what the party has in mind? To be honest, I don't know. There has been quite a lot of discussions also within the government on the conditions, and so I don't know if they are still in line and if the party is still interested. That's something you should indeed ask the regulator or wait till June next year to see if that's the case.
The last question you said about the spectrum scarcity. That's something we have put forward as one of the most negative element of the auction is that in the existing bands and mainly the 900 MHz and the 1,800 MHz, we are currently using the full spectrum with the three MNOs. If there is a fourth entrant, the spectrum that will be available for the three current MNOs will be lower as a total than the one we are using. That will have indeed an impact on the quality of the network, and that is indeed providing some issues because you will need to use new spectrum bands to offer the same quality for your customer. On the other end, there is some spectrum reservation for the existing operator.
It is not that we will end up with no spectrum, but we will end up with a different set of spectrum bands, and that will indeed need to some investments in refarming of the band and in building a new RAN equipment for the new spectrum band. That's probably the most negative element of this new auction is that, and I think it's a unique case in Europe where some spectrum that is currently fully used by current operator is taken away and reserved for a new entrant.
Thanks. If I can just follow up on that really quick. It just looks, if 900 MHz, 1,800 MHz, and I think also 2 GHz. If you subtract the new entrant reservation, what's left, divided by the spectrum cap in each band, essentially allows two operators to bid for the full cap. That sort of structure could make for a very contentious auction because there's possibility potentially to push someone out entirely, out of particular band at least. I was more interested in that element of it, the sort of the overall structure there in the remaining relatively limited band with fairly high spectrum caps. Is this a problem, or would you particularly push for lower spectrum caps, or is this fine because the three remaining operators will sort of manage this between themselves in your view?
This will be part of the auction strategy. I can't give any answer on that because that is very sensitive. I think the only thing that I can say is that indeed, for instance, on all the spectrum bands, there is a reserved part of the spectrum for the new entrants. It is not possible that it's only going to two operators. I mean, the three will have some spectrum, but it's true that for the part we'll be auctioning, there could be some more discussions on who takes the one that is put in the auction. That it will all be about the auction strategy that the various operator will do. For me, it's very difficult to give any comment on that. We will see in the auction strategy how all these things turns out.
That's fair enough. Thank you. Thanks very much.
Thank you. Next question from Nicolas Didio from Berenberg. Please go ahead.
Hi, good afternoon. First is regarding the network rollout for potential new entrants. I'm curious to see, is there any way where the government could change the rules of the game or a law that would enable an easier rollout for a new entrant? Can you remind us the kind of experience you have on the ground between the moment you decide to apply for a permit for a new site and the moment you can activate, and how long does it take, roughly speaking? The second question is regarding the banking. Maybe you had a question in the past, but Orange had a decent traction so far in France. We don't have all the numbers, but it seems to be an interesting thing to do for big, I mean, telco with good reputation.
They're going to launch in Spain and likely in Belgium. Is it something you looked at and you concluded it's not interesting or something that is still out there and you have not done any experiment on that? Thank you.
Okay. On the rules for permits, something like that, it's true that in Belgium, we're a complicated country again. We have three different regions, Flanders, Brussels, and Wallonia, with three sets of different rules for permits, and also for emission norms. I mean, those two elements are indeed a constraint for us as existing operators, but also certainly for a new operator. I think the region which is currently the most complex one to potentially cover is Brussels, because there you have two issues. You have an emission norms which is extremely restrictive and that even doesn't permit us today to roll out 5G, and that's why you have probably seen that we have signed a letter of intent, as a sector, with the Brussels region to try to make of Brussels the first city where we deploy 5G in Belgium.
With the help of the region, to then change some of the constraints that there are currently and mainly concerning emission rules. If that change, that would allow us to roll out 5G, but also allow a new entrant to roll out 5G on the basis of new emission, that will anyhow still remain quite constrained. I don't think there is any willingness from the region to go to a full liberation of emission norms. Concerning the permit, it's a bit the same in Brussels. You very often need up to 400 days to be able to get a new permit. That's indeed something that will make the rollout of a network for a new entrant a big constraint. Concerning your second questions, in the bank, we are very aware about what Orange is doing in other countries.
I think we have no plan in that sense in Belgium. I think if you look at the bank market in Belgium, a lot of banks are already very advanced on their digital front. We think there is not so much opportunity in this market to come up and beat the bank with a digital application. That's one argument. A second argument is that we are one of the main providers for banks in terms of connectivity and digital solutions. The banks are one of our biggest customers. We don't see any interest in entering into a competition with our own customers. No plan for us to enter the banking sector. Merci.
Okay, next question, I guess. Okay, next question from Guy Peddy from Macquarie. Please go ahead.
Hello. Just a very quick question, please. As you're in your next three-year view, you'll come up with your next dividend policy. In the past, you have had a dividend policy based on paying an absolute level of dividend. Given you're going to have to set this dividend policy before you really know what is going to happen with the next spectrum auction, do you have the flexibility to make your dividend policy proportionate, i.e. proportion of cash flow, proportion of earnings, et cetera? Do you actually have that flexibility within your government relationships to establish such a thing, or are you committed to having more of a fixed dividend target? Thank you.
Currently we have a dividend policy which is indeed that we distribute most of our free cash flow. When we give a guidance on the dividend, it is always based on our best estimates of our plans and of the cash flow delivery of our plans. In that sense it is dependent on the cash flow. That's why we have reconfirmed the dividend for this year in our quarterly results, because with the results we have so far, we are quite confident that we can cover the EUR 1.5 dividend with our operational cash flow of this year. Cash flow is outside acquisitions, and it's the operational cash flow that meets the dividend. For the coming years, normally, even with the current dividend policy, and today there is no discussion on changing that, the dividend policy should remain in line with the free cash flow.
The big question, of course, is how will a fourth entrant affect the market value and hence the free cash flow generation of Proximus. That's today too early to make any guidance on that. We'll come back to you with a better view with our year-end results and guidance we will give in February next year.
Can I just come back on that? What's going to happen between now and February for you to get confidence that you're going to know what's going to happen?
It's true that at that time, we will not know if a fourth entrance has applied or not, because as I said in the beginning, the application is foreseen currently for June, July. We will indeed make our best possible assumptions in the three-year plan exercise to see what we think is achievable in 2019 as a company. Based on that, and after discussions with our board, we will come with a guidance in February, and we'll try to give you an as precise guidance as possible.
Great. Thank you.
Thank you. We don't have any more questions for the moment. Ladies and gentlemen, if you wish to ask a question, please press zero and one on your telephone keypad. We don't have any more questions. Back to you for the conclusion.
Thank you very much. That leaves me just to thank you all for participating in this call, and I wish you all a great weekend. Should you have follow-up questions, you can obviously 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.