Ladies and gentlemen, welcome to the Proximus Q3 2021 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, Group Investor Relations. Madam, please go ahead.
Thank you and welcome, everyone. Thank you for joining us. We will start the session as usual by an introduction by the CEO, Guillaume Boutin. After this, we will turn to your questions. For the Q&A session, we are also joined by the CFO, Mark Reid, Jim Casteele, the Chief of the Consumer Unit, Anne-Sophie Lotgering, Chief of the Enterprise Unit, the CTO, Geert Standaert, Dirk Lybaert, the Chief Corporate Affairs, and the CEO of BICS, Matteo Gatta. They will happily take your questions in a moment, but first, Guillaume will take you through the highlights of today. Guillaume, please go ahead.
Thank you, Nancy. Good afternoon to all of you, and welcome to this conference call on the Proximus third quarter results. Is it working? I hope so because I'm receiving a sound, but okay. Before getting into the financial and operational overview of the past quarter, I'd like to spend a few minutes on the progress we've made in our Inspire 2022 strategy. As a quick reminder, we have four key strategic pillars as shown on the slide. We are in full execution mode and have been making progress on all fronts. I won't elaborate on all of them, but let me highlight just a couple of notable steps that we achieved in our strategy execution. An essential part of our strategy is about building the best gigabit network for Belgium and about bringing the superior network experience to our customers.
Both 5G and Fiber are crucial, and this is a combination of the two that will be a game changer to the industry and bring undisputed product superiority to Proximus. The great work of our Fiber teams has been acknowledged by the Broadband World Forum, and we proudly received the award of Fiber Operator of the Year worldwide. We are indeed progressing very well with our Fiber rollout with a simultaneous active deployment in 18 cities for Proximus standard footprint. In addition, our two JVs, Fiberklaar and Unifiber, kicked off construction in six cities. This is only just a start as our Fiber rollout is picking up pace, and we have already announced deployment in many more cities and municipalities. With that, we are remaining well on track for our ambition to cover at least 70% of Belgium by 2028.
Specifically in the last quarter, we have kept a strong pace even over the summer holiday period with another 65,000 additional Home P assed. This brought us to a total of 686,000 Home P assed and at end of September, or just over 11% of all of the Belgian premises. As for mobile, we want to build the most efficient and future-proof network to offer the best customer experience. Already today, the Proximus network is recognized as being a superior quality. As you know, 5G spectrum auctions have not yet taken place in Belgium. Things are moving with the auction plan now mid-2022. Although we will have to wait for the agreement between the federal government and the regions to confirm that timeline.
In the meantime, Proximus remains the only operator in the country with a live commercial 5G offer using the refarming of the 2000 MHz 3G spectrum. Plus on the B2B side, our 5G innovation platform is gaining a lot of traction, allowing customers across the country to test the full potential of 5G in a collaborative way. Our growth strategy is articulated around product superiority through our networks, as I said, but as well as on innovation. During this quarter, we have launched Banx, the 100% digital banking experience imagined by Proximus and powered by Belfius. This app is a combination of technology, know-how and sustainability, thanks to the unique CO2 dashboard developed in partnership with Doconomy. This way, customers can evaluate their spending not only in euro but also in CO2 and adopt more sustainable habits.
Still with Belfius, we also officialized the launch of Beats, the offer combining banking offers and telecom services. As such, Proximus services will now be sold in thousands of touch points of Belfius. On the B2B side, we have launched Aug∙e, that stands for Augmented Energy. This smart building application platform is a collaboration between Proximus, BESIX, and i.Leco. It connects a physical building to a series of useful digital applications that allow us to optimize energy consumption and to reduce your carbon footprint. Still in B2B, about one month back, we have announced our agreement with HCL. This IT infrastructure agreement will bring us economies of scale, best practices, experience, and expertise in the cloud domain.
It will not only allow us to assure the development of the best customer offer, but it will make also sure that we are able to retain strong strategic influence in the cloud domain. Moreover, the agreement brings financial benefits thanks to a lower cost of ownership, which we estimate to go down by around 20%. Last but not least, we continue our efforts to support a green and digital Belgium with a few new initiatives. The first one is DigitAll, a Digital Inclusion alliance sponsored by Proximus and BNP Paribas Fortis, together with about 30 other companies, public bodies, and social organizations. Its mission is to narrow the digital divide in Belgium. Another point to highlight is the support Proximus provided to the Walloon region after the severe floods of mid-July.
I'm proud of our field engineering and support teams who have been working day and night in very challenging conditions to restore our infrastructure in the impacted areas, ensuring that customers could reconnect with family and friends. Turning now to the second part of my introduction. I'm sure you have looked at our results already closely, so let me just focus on some of the key achievements, starting with the commercial momentum. Over the past quarter, we once more posted growth for all our main customer bases, with strong mobile growth adding 58,000 mobile cards. For both Internet and TV, we grew our respective customer bases by 5,000 subscriptions each. The slower pace compared to prior quarters broadly resulted from less customer rotation and the severe floods, while our overall customer initiative churn was down from the previous year.
We continued to do well in the higher-value consumer segments, as demonstrated by the growing number of Fiber subscriptions. By end September, we had 104,000 households enjoying the advantages of Fiber. We expect this to build up going forward as our Fiber rollout continues to accelerate. Convergence is core to our strategy, and we see our Flex offers providing continued support to drive an increasing number of multi-mobile customers in our base. This benefits to the overall RGUs and consequently drives the ARPC up. With the convergence ARPC significantly above the overall average, the ongoing move to convergences is value creative.
As a result of the growing importance of conversions in our revenues and customer base, we see indeed a growing ARPC up by 0.6% year-over-year from a high comparable base in 2020, as last year we benefited from an exceptional high usage, mainly on Fixed Voice traffic. Now turning to our B2B unit, which is holding quite well despite the ongoing intense competitive dynamics in the market. Let's first have a look at the ICT domain. Within the mix of our ICT revenues, we achieved a 4.3% growth in IT services, demonstrating that our B2B transformation is being well managed. The recent trends in digital adoption are bringing structural opportunities. In this context, our converged Telco and ICT solutions and our emerging end-to-end servicing offers are gaining traction. In contrast, revenues for low-margin ICT products declined.
This mainly resulted from shortages in chipset supplies, which implied that some of our hardware products could not be delivered to our customers. Within the B2B Telco domain, we maintain a good revenue momentum for Internet and especially Mobile Services, which was up by 2.9%, thanks to a growing volume, while the ARPU decline remained mitigated. The Fixed Voice part continued to erode, even though the ARPU evolution was kept positive, supported by the price increases and the rather non-structural traffic related to the vaccination centers. For Wholesale, you see on this chart in the middle that we turned around a historical declining trend in our Wholesale, Broadband park, supported by our Fiber rollout. Wholesale revenues from fixed and Mobile Services are now stabilizing. Overall, this part of our domestic business is still very limited today, which means that it's a significant growth opportunity for the future.
This brings me to the total domestic revenues for the third quarter. 0.8% down, supported by the ongoing sound operational performance and the contribution of our Mobile Vikings. As demonstrated on the slide, the decline for a large part resulted from low-margin revenues from Interconnect and ICT hardware. Furthermore, as expected, Fixed Voice usage has come back from its unusual high levels in 2020. Now turning to the international activities, starting with Telesign. Telesign is positioned at the unique intersection between Digital Identity and communication, two booming markets. This combination makes it the only one-stop shop for fraud management, authentication, and access management and secure CPaaS, which is essential to enable the trust that is required in all our digital lives of today. Telesign ended the third quarter with a strong performance on new signed contract.
You can see some of the names on the page. Telesign is attracting all major Internet players like TikTok or Viber. In addition, Telesign continued its geographical expansion, bringing its Digital Identity solutions in both Europe and Asia. The financial results show another strong sales quarter, with revenue up by more than 20%. The newly signed contracts will continue to support the double-digit revenue growth for the remainder of the year. As we communicated before, we expect Telesign to end the year with around 20% of revenue growth and direct margin of around 10% on constant currency. The significant investments in the acceleration of this growth profile are ongoing. Nonetheless, Telesign keeps a positive EBITDA. Q3 was clearly a strong quarter for BICS.
The core services posted a material revenue increase, thanks to a combination of high A2P messaging volumes and a favorable destination mix, reflecting the trading nature of this part of BICS's business. We also saw international travel picking up, in particular within Europe, and a strong traction for cloud communication services. At the same time, BICS continued its firm cost control, all in all leading to a 15.8% increase in EBITDA for the quarter. Moving now to the operating costs of the group. Here, I just want to highlight that our domestic OpEx remains well under control, with an increase limited for the quarter to 0.4% on an organic basis, and this thanks to our ongoing cost efficiency program.
This brings me to the EBITDA for the group, totaling for the third quarter EUR 457 million, a decrease from last year by 2.6% or -4% on organic level, and moderating in line with our expectations. As for our CapEx level, the acceleration of the Fiber product is raising the total investments for the first nine months of 2021, all according to our plan. Fiber is now representing one-third of our total group CapEx envelope. Besides Fiber, we also stepped up investment in the area of digitization and IT transformation, and we also have some more CapEx coming from the increased customer installation, mainly linked to the Fiber migrations.
The free cash flow generation remains strong over the quarter with EUR 146 million on adjusted basis, bringing the total normalized free cash flow to EUR 408 million. In conclusion, I'm very pleased with where we stand today in terms of our results and progress on our strategy. Our organic underlying domestic revenues remains broadly on track while we kept strong momentum on our international businesses. We continue to monitor the global supply chain shortages that can have an impact on low margin and asset revenues.
In addition, we keep a high focus on our company-wide cost program, and we remain on target to achieve EUR 400 million of cost savings by end 2025. Overall, very confident that for our organic underlying group EBITDA, we land in the mid to upper part of our guidance range. With the Fiber rollout progressing very well, we reiterate our full-year outlook on CapEx, close to EUR 1.2 billion, excluding spectrum and football rights. With this, I've come to an end of my introduction, and we can now go to your questions.
Question, please press zero one on your telephone keypad, and you will enter the queue. After you are announced, please ask your question. We have the first question from David Vagman from ING. Sir, please go ahead.
Yes, good afternoon, everyone, and thanks for taking my question. First, on your Fiber rollout in Flanders, what is your reaction to the incoming Fluvius and Telenet deal, with a network which is supposed to be fully open, looking for partnership and strategic investor? Does it make you rethink your strategic option, so in Flanders? Would this push you to be more open to strategic partnerships, say, with Orange Belgium to get them on your network? That's my first question.
Secondly, on your FTTH rollout costs, how do you think you will compare to this JV, let's say, Fluvius and Telenet? It seems Telenet is inclined to believe that they can achieve materially lower costs. I'm curious about that. Last question from my side, what is now the state of affairs on the mobile spectrum auction? Has the Council of State validated the reservation of spectrum? What is your view on the recent changed decision by the federal government on the reservation? Thank you.
I'll start with your first question on Telenet and Fluvius. First, I think this is really an announcement that does confirm that we have the right strategy around Fiber. I think the fact that we sped up and accelerated the rollout of Fiber throughout Belgium was really the right thing to do for Proximus. There is only one future-proof technology going forward, which is Fiber. Currently, it's a little bit too early to make a lot of, you know, different comment on the announcements. Of course, it did not come as a surprise, as you may imagine. A few points around that.
First, we always said that we wanted to build an open Fiber network. We are equally open for discussion when the time would be appropriate. Telenet says they will be open, which we see as a positive. It will take time, of course. It will take some more time, of course, on their end to get to a functioning network. You know, that they need first to finalize the MOU, and then they're gonna have to get the regulatory approval. It could take some time. You know, we're not going to adapt our strategy for the time being. We will continue the acceleration.
You know, we're gonna build 300,000 new Fiber plugs this year. We shared with you we're gonna be close to 600,000 new plugs next year, and we're gonna, you know, meet that objective and continue to accelerate on that Fiber rollout. That, you know, not impacting the way we're gonna continue accelerating our Fiber rollout. Yeah, so that is a bit where we stand. We want to build an open network. We are open for discussions. They said they wanted to build an open network and also be open for discussion. Let's see where it goes.
You know, for the short -term, you know, really acceleration of the rollout is clearly what we have to do. You know, building this rollout machine and scaling it is very difficult to do. It takes time. I think we have a clear advantage today, a time advantage. You know, the faster we go, the better it is for Proximus shareholders. So it's a race. As you know, you know, when you are the first to plant the Fiber flag, but then in a given region or cities or municipalities, I think you're creating a very important advantage. That's a little bit of what I wanted to say on the previous Telenet deal. You had also the question on the cost to roll out, and Geert can answer to that question.
What I would say is that I think we're very well positioned with respect to fiber to the home costs. I would dare to say that we will be the best ones on deploying this Fiber in a cost-efficient way, and there are a number of reasons to that. First of all, there is our topology. You know that we work with two type of topologies, a point-to-multipoint and point-to-point, that is extremely tuned to the situation that we're in. In high-density, we go to point-to-multipoint, which allows us to do a Fiber rollout with minimal trenching. In areas beyond the high-density, we do that through point-to-point. We have been working with our partners that are trusted partners now since years. Our learning years, they're fully over.
I hope that you might have noticed that even while we scale Fiber rollout, we're even further reducing the unit costs. Each year we're doing better. For the footprint, now, we came from above 1,000 or around 1,000, we're now at 940 to deploy our standalone footprint. The other thing is that with the JVs, we signed those JVs up with partners that came as well with experience and expertise. We see now that, because those JVs are now launched, that indeed the best practices that we have from both parties, we blend these together. It's not only about the topology, the engineering, the partnership and the trusted relationships, the capacities that you've built, 2,500 people now active on this program.
We go very far. For example, on everything which is process. With processes, we use AI, we use process mining. In all the aspects of this topology, I think we are pretty leading. Now if I talk as well with some of the consultants that see Fiber roll-outs happening elsewhere, et cetera, they see that we absolutely should not be shy about the way we do that now. That's why I'm pretty confident and I think that yeah, we're ahead of competition.
David, on your third question related to the spectrum auction. In fact, two questions in that part. First, our takeaway on the current texts that were indeed approved at the level of the federal government, if we look at the latest version of this text and we compare it with the initial proposal, in fact, what we see is that on the reservations for a new entrant, the correction that was made by the government is minimal. We had 2 × 35 MHz in the first proposal. We now have 2 × 30 MHz. It is only 5 MHz in the 2,100 band that they took away.
For the rest, the amount of reserved spectrum for a potential fourth entrant is still very material. It allows both a B2C or a B2B entrant to the market. That's a first remark. Second remark that they introduced indeed in the new text, a kind of waterfall approach. They offer the possibility for new entrants to take the full pack, and if there is someone who is ready to take the full pack of the spectrum, other candidates do not get anything. If there's no one taking the full pack, operators can do cherry picking.
That is a bit written, I would say, to the measure of a Cegeka, Citymesh, where they are interested in having only the 700 MHz. That is well possible with the new text. Still we still have to see and wait who is candidate for that spectrum. Now, on the procedure, it's correct, your statement to say that there was a negative advice of the Council of State. It's correct. The Council of State indeed made the remark that the government does not sufficiently demonstrate the necessity to have a fourth entrant. The famous Article 52 we're always talking about.
The Council of State says that the motivation of the government is insufficient on that element. We know that the government has sent new texts to the Council of State, has asked the Council of State to review those new texts in an urgent way, so within 30 days. Latest news we have is that the Council of State has informed the government that they're not capable to answer within that short delay, and that they would go for the normal delay, which would bring us to the end of year to have that advice of the Council of State. We had a discussion with the minister.
He said that even if the advice comes by the end of the year, she still believes that the auction can take place in the months May, June next year. If indeed it's end of the year, it will rather be June than May. You know that there's still one important step to take for the government. That is a consultation committee between the region and the federal state. That consultation committee is planned on November 24. A bit before, they will now have the final advice of the Council of State, so I'm not sure how the government will deal with that.
Yes, no, exactly. If I may, a quick follow-up indeed. How can it be that they basically decide with the coordination committee if they don't have the advice of the Council of State? I don't really get. That seems like the sequence is a bit illogical.
Yeah. I think that probably, yeah, because they were quite public to say that this consultation committee would take place on November 24. I think with the latest news, probably they will also postpone that consultation committee. I find it hard to take a decision at that level without an approval of the final texts.
Okay. Thanks very much. Thanks, everyone.
Thank you. Next question from Nicolas Cote-Colisson from HSBC. Sir, please go ahead.
Thank you. I've got a couple of questions. Just first, a follow-up. Guillaume, you said about Fiber, it's a race. So my question is, do you think there is room for the joint venture to accelerate further, especially in Flanders, in a way to cut the opportunity for Telenet to convince other tenants in the future? Maybe more generally around Fiber, would you mind sharing your view about vertical integration? Because you've stated in the past that you would own 70%-80% of your Fiber network. So do you still think that the control of the infrastructure is preferable compared to a situation where you could save further CapEx? I may have a follow-up on Telesign as well.
All right. First on the Fiber rollout. What we always say that we want to be, you know, as fast as possible. It's true for our Proximus rollout, but it's also true for the JV rollout. The plan is just to go at max speed. If we can, you know, do faster also with the JV, we're gonna, you know, try to roll out that network even faster. We know what it takes to scale the machinery of rolling out Fiber.
It's really what we have in our plan that we share with you at the beginning of the year during the Investor Day is really a very, very ambitious plan in terms of speed to roll out. But if we can build that would be more than a piece, especially if it's achieved through our partners and the JVs. That's you know probably the first answer to your question. On the integration between the network and the services, this is quite important. Really I'm convinced that you know telco is still for a long period of time is going to be a game of product superiority.
When you know that you have the superior product, especially in, you know, in mobile and fixed and Wi-Fi 6 Internet, low latency, when you can combine that product superiority and prove that product superiority on a daily basis, you have a competitive edge, which is really important. I'm a true believer that there is value in keeping network and services very close to one another. That's you know that's really what I think. You know others could have you know a different opinion.
This is not mine. That's why, as I joined as a CEO, I always said I wanted to come back to the DNA of Proximus, and the DNA of Proximus is building networks. That's why we launched this amazing, ambitious program on reaching 70% of Fiber rollout in less than eight years. That's, you know, why I do believe that integration between services and network is so important. It does not mean that we can be open. Open to accept other operators to participate and to be also using our network. But that's a different story. I think integration, I think t he competitive edge that integration between services and network is giving to you was the history of telecom and will continue to be the future success of operators going forward.
That's perfect. Thank you very much. Just a quick one on Telesign. Looking at the gross margin, there's a kind of a constant erosion quarter -after -quarter. Can you tell us a bit more about the revenue mix and when and how all the recruitments you're making and the investment in new products you're making could invert the direction of travel on the at the gross margin level? Thanks.
Yeah. I think we, as I said during the presentation, we are keeping our 20/10, so 20% growth for the full year on revenues and 10% growth on direct margin on constant currency basis. I think the variation you can see quarter-over-quarter is not significant. In the long run, what is important to see that the bookings, the new customers that are being acquired since Q1, you know, is just increasing. This is going to fuel the revenue trends and the direct margin of next year.
We are very confident that Telesign is going to be on a growing trajectory for the years to come, both in terms of revenues and direct margin. They are on the booming market intersection of Digital Identity and CPaaS. Those markets are buoyant, really, growing very fast and gonna be one, you know, the leader of those markets. We are very confident that we can, you know, grow even faster than the market trends, both at revenues and direct margin levels. Of course, we are reinvesting in the go-to-market at the moment, and also in the product because we want to scale the workforce.
Today, 80% of the revenues of Telesign are made in the U.S., 20% elsewhere. I think there is a huge opportunity to grow geographically, also in terms of segment. Today, it's only the biggest platforms of the Internet that are customers of Telesign. We could expand that to the more low-end of the market, you know, using APIs to use as a CPaaS. It's a fantastic core platform of Telesign also for smaller sites and apps.
I know the value chain, you know, progression is also a way to further develop the activity of the company. We can expand geographically. We can move up the value chain, and we can address different segments, going to the smaller size customers. You know, there is only but opportunities to continue to develop Telesign on a profitable manner. Also with the mix of our Digital Identity products being more and more important going forward.
Thank you very much, Guillaume.
Thank you. Next question from Roshan Ranjit from Deutsche Bank. Sir, please go ahead.
Good afternoon, everyone. Thanks for the questions. I've got three, please. Very quick ones. Firstly, just to follow up on the Fiber and I guess, you know, Proximus and Telenet aside, you've got two JVs which are gonna be ramping up their rollout, I guess imminently or one this quarter. Would you be open to having further JVs with other financial investors? Clearly cognizant of, you know, the discussions around overlap and exclusivity, but is that an option, if there is, you know, we're seeing obviously good interest and good demand from the infrastructure side. Secondly, on the CapEx Guillaume, you said that, you know, you're really accelerating the rollout on the Fiber front.
I saw CapEx came in, you know, a bit lower this quarter than expectations. Again, I'm aware that you are reiterating your full-year guidance. Is there anything to read into the slight slowdown this quarter on the CapEx front, or is that just some form of seasonality? Lastly, just on the cost side, you have maintained, you know, a very tight control on the non-workforce expenses on the domestic side. Can you remind me, is there any benefit from the Mobile Vikings integration? Is there any synergies there or is that just underlying tight cost control on the non-workforce side? Thank you.
First on the JVs, we said when we announced the creation of the two JVs that at some point we wanted to get back the ownership of the network. That's also really important. On the long run, we want to be the owner also of the Fiber network of JVs. That's the way we have constructed the two JVs. At the moment, what we also said that we were open to welcome industry partners in the JVs.
I don't think we need at that moment other financial partners. Of course, if, as I said, strategic partners, this is something we said as from the start, you know, we welcome discussions with every strategic partner that would be willing to discuss with us. As I said before, I think this is just the same message that Telenet conveyed yesterday. We see where it goes at the end. On the CapEx, I will, Mark.
Guillaume, thank you. Thank you. Let me take the CapEx question. Maybe start off with Q3. It was exactly in line with our expectations. There is a bit of seasonality during the summer, specifically in the Fiber build, as the construction industry tends to take a period of that off. Then as you start to see the sequential rise in Q4, again, in a normalized year, you know, we would normally see that as transformation projects effectively start to come out of the kinda maturation phase to be fully capitalized. We also have some timing on content rights that would normally come in Q4 over Q3.
That's nuanced this year, on top of that, effectively, as you're well aware, the ramp up to get to our targets for Fiber increases in Q4. That effectively flows through in terms of the sequencing that you should think of. Probably the last point is the mobile consolidation point. Again, the ramp up there is progressing, and we'll start to see kinda bigger numbers in CapEx related to that in Q4. That really kind of is how you bridge the sequential piece. If I then touch on Mobile Vikings, in terms of OpEx, there's not a you know material synergies on the operating OpEx side. I think there's a you know a lot of learning and cross-pollination across the bands, which we really value. On the COGS side, obviously, the MNO side will be a large synergy, as and when we move off that.
That's great. That's helpful. Thank you.
Thank you. Next question from Ulrich Rathe from Jefferies. Sir, please go ahead.
Yeah, thank you. I have two, please. The first one is at the Telenet conference call yesterday, management suggested that your Fiber rollout is mostly GPON as they understand it, and that this sort of gives them the ability to not push too hard because they have 1 Gbps on DOCSIS 3.1 anyway. Essentially, they sort of argued that if you were to go to XGS-PON, that would put potential pressure on them. Implicitly, they said that. You know, a Proximus GPON wouldn't. Could you comment on that technology question, please? The second one is a more general one. I mean, open networks are of course a sort of a hint to the regulator.
At the end of the day, if everybody works together, it's a remodularization of the network. In particular, in Belgium, I think much of the regulatory approach over the last 20 years has been informed by the fact that there are two competing infrastructures across the whole country, and the regulator's approach has been driven by that. If that changes because everybody starts to work together, that potentially could change the regulator's approach. Do you see it that way? Do you see there is a benefit also from a regulatory point of view, from your point of view, of course, to two networks? Do you think these are not concerns of the regulator and ultimately the industrial policy of just getting, you know, the whole country fibered up as quickly as possible is the overriding concern here? Thank you.
Okay, this is Geert. I'll take your first question. On GPON. GPON in fact is a technology that we're currently offering to our customers, and there is a commercial proposal indeed that is today up to 1 Gb. The technology itself is able to support up to 2.5 Gb. Now, besides that, what I wanna say is that all the physical equipment that we're installing in the streets, on the facades, in the trenching up to the houses, supports more than a GPON technology.
There are different versions that are already there in other countries, like the XGS-PON, which goes up to 10 Gb, and even we were front running at world level to show in Antwerp this year that we could run already 25 Gb on a Fiber line in, on our production network. I would say is that Fiber is really the technology that is capable to deliver multi-gig speeds, where up to 10 Gb is already in other countries, a kind of the new standard. It is even capable to go further than that. I was very pleased as well to see that there we were world premiere in Belgium to even show that on our live production network, that if we want to, we can go up to the 25 Gb.
Again, nothing of the costs that we've made and for all the deployments in the streets has to be changed for that. The only thing that needs to happen is that you need to upgrade some cards at your technical buildings and of course, the equipment that you're installing at the customer premise, which is of course, as you can imagine, a minor type of part of the investment.
It goes back also to your second question. We want to differentiate ourselves based on product superiority, and this is, you know, what, you know, the thing I'm repeating for quite a while now. We want to be perceived as and to deliver the best product experience, Internet experience for all Belgium premises. You know, we are rolling out a network today which can support the latest technologies. I think you stay tuned. You're gonna see much more, you know, further evolution of our commercial offers in the coming quarters. We also want to have a sufficient footprint coverage before also accelerating the marketing communications. So far we are really targeted and really using a local approach to communication. It could, you know, evolve as we continue to roll out the network. You're gonna see that probably happening next year. That's one.
Second, I think in all the discussion we have had with the regulator, I think they always been pushing for a framework that would encourage the rollout of the gigabit Fiber network as fast as possible, but also as far as possible. That's really the aim of the regulator. It is, it's creating a framework that will encourage the players to reach 100% gigabit coverage as soon as possible for the country. That's really, I think the main driver that dictates the regulatory strategy of Belgium. That's one.
Second, it might be that in some areas we see two networks. Some overbuild, especially in the most dense part of the country. We'll see what would be the strategy of the NetCo of the networks. We are not against having a form of competition on infrastructure on the dense area. I think this is good and healthy for the market. I think the less dense areas, it probably does not make a lot of sense to have too many infrastructure competing for the same volumes of data. This is a little bit where I stand. I think to come back to your first question, the main priority for the regulator, which is good because it's also our main priority, is to cover as fast as possible the Belgian homes with gigabit technologies.
That's very helpful. Can I just follow up on that last point? In the less dense areas, i n Belgium, the situation would go, you know, prospectively from today, two networks to, in the long- term, one network in your vision. How would that affect the regulatory environment in your view?
I think first, we are not yet there. This is for the moment, there is only one Fiber network being rolled out in Belgium, which is the one of Proximus. It's a bit too soon to comment on what would be the position of the regulator. I think if we can show that we have a vision to go fast and to cover the maximum of homes of Belgium, I think we can have a very constructive discussion with the regulator.
That's helpful. Thank you very much.
Thank you. Next question from Joshua Mills from Exane. Sir, please go ahead.
Hi, guys. Thank you for the question. A few from me. The first was following up on a comment that Telenet made yesterday during the conference call, which is that whenever someone in the Belgian market digs a trench, all operators have the right to come and lay a duct. I just wanted to check that that's your understanding of the situation and whether you are already allowing the cable operators to kinda gain access when you do those kind of works. Following up, as part of this, on the comment you made about the P2P and point-to-multipoint networks, how many of the homes in Belgium do you think you're going to have to dig trenches to when you do the Fiber build-out?
That's kind of a couple of questions together, I guess. The second thing, just regarding the announcement and confirmation that Telenet is launching a strategic review of their tower assets, you know, how do you think that could potentially impact the market, the potential for a fourth entrant? You know, can you just give us an update on your own thinking around your own mobile infrastructure? Thank you.
This is Geert . I'll take your first two questions. Indeed, in Belgium, when you're doing trenching, in fact, you need to make this public in advance to all other infrastructure players that are out there, not only telecom players, but also energy players. Then they can decide, in fact, to join those trenches. We see that sometimes happening. Of course, the speed that we are now working and doing deployments everywhere in that many cities, sometimes we see that other parties go with us, but it's not like, I would say, a kind of the normal that is happening. Now, of course, we can do the same.
When we see energy providers, for example, open up trenches, and we're interested there as well because it fits into our design, we can as well participate in that. That is a common way of working in Belgium. With respect to the trenching and how much trenching you need to do, that is, of course, highly dependent on which topology you are. You know, when we were in high density, we could, with our designs, limit that really to a few single digit 2, 3 m per Home Passed or at level of trenching. Now, of course, as you go towards the more lower density, then of course there you will see higher numbers like that.
What we have done in our topology, and that is different than what we have understood yesterday as well, is that in fact we combine point-to-multipoint and point-to-point. A point-to-multipoint is tuned in high density in such a way that you can do the maximum on façade. We have become really good, I can say, really good in that to reduce the trenching and the meters of trenching in this domain. When you go more beyond the high density, of course there. Also in high density, you have to know, for example, 60% of the living units are in MDUs. But when you go to beyond higher density, there, of course, people living in MDUs is less, so you have more what I would call isolated houses.
There, of course, the mix is a bit different. Now, the topology that we are making is a topology that allows us very easily to decide, okay, where do we trench, where do we put on façade, and also, where can we do things on poles? And we can very smoothly and frictionless kind of make a combination of these three methodologies, which makes that I could say, with respect to trenching, I really believe there that we have minimized that optimally.
On the tower sales of Telenet, I think this is more, you know, a question for Telenet. I don't see that tower sales impacting the way a fourth entrant could consider entering into Belgium. You know, there is a regulatory framework to access the towers. It's known. It's something that is, you know, publicly published on the BIPT website. So I don't know why the enhancement of yesterday could favor the probability or enhance the probability of having a fourth entrant looking at the Belgian market.
Great. Thank you.
Thank you. Next question from Martin Hammerschmidt from Citi. Sir, please go ahead.
Yeah. Thank you very much. I just have a couple as well. On the Broadband targets that you sort of announced on the last CMD of 2.1 million by the end of next year, in order to get there, you would need to accelerate the net adds quite a bit. I know you've just talked about sort of new commercial. Also launching soon.
Are you planning to increase your commercial activity beyond just launching the office also maybe in terms of pricing and to reach that goal or are you willing to step back a little bit from that target? And then on the second question is on the last CMD, you also announced a couple of almost EUR 700 million in terms of possible disposals. We haven't seen so much at the moment, as far as I can remember. If you could give us an update on that one, please. Thank you.
Thank you, Martin. This is Jim speaking. Indeed, on the target for the 2.1 million, it's true that today we have a minor delay on that. At the same time, we are confident that we're gonna be able to reach that target or to stay very close to that target by the end of 2022. As you know and as you have seen, we are continuously accelerating the deployment of Fiber and Fiber deployment is really an important driver to get to that target.
And to the point of Geert as well, and the questions linked to performance of Fiber versus the coax technology. We will be able, as of somewhere next year, to really start making a technological difference between both, to the point, Guillaume, to really show that we have a product superiority from a technological perspective, versus cable. That's what we continue to work and to aim for. Voilà, that's the plan.
Hey, Martin. Yeah, on your second question, I think we've you know we continue to you know look at our balance sheet. I think you're very clear that we have a very strong balance sheet and for telcos. You know, we look at our asset portfolio on a regular basis, as you'd expect us to do. In terms of the mix of debt and asset sales, that's not something that we're currently you know we're disclosing at that level. As we would always be looking at is to optimize that as we go forward. That's where we are on that overall item.
Thank you. If I could just sneak in a third one, on the cost side. We've seen sort of inflation in, possibly salaries and also energy costs. To what extent do you think you can sort of offset them, with price increases and at the same time when you want to win market share? If you could confirm what the, how high the indexation of wages will be from next year. Thank you.
Just on overall inflation, again, I think we've, you know, we're quite well hedged in many respects in terms of kind of long-term contracts on various domains. I think on energy, we're hedged through the full part of 2022 and partially into 2023, so we have no worries there. I think we've talked on a couple of calls now in terms of our overall program of EUR 400 million gross cost savings through 2025. That program continues to be a focus for the management team and really kind of one of the main levers for mitigating our hedge against inflationary costs.
We continue to progress there, and it's going very well so far. In terms of pricing, and maybe Jim, you can jump in here, but you know, again, we continue to look at that very carefully as you would expect us to do. You know, we'll expect to, you know, pass pricing at levels that have been, you know, we've been trending at in the past. I think that's basically where we are.
Thank you very much.
Thank you. There are no more questions for the moment. Ladies and gentlemen, let me remind you that if you wish to ask a question, please press zero one on your telephone keypad. We have a new question from Ulrich Rathe. Please go ahead.
Yeah, thanks. If there's still time, I'd like to come back to the spectrum auction, please. When you discuss the nitty-gritty of where the process is and where it's confusing, if you take a step back and look at where these proposals, what these proposals would boil down to today, how concerned are you that you would have to deal with a new entrant in two years' time?
It's difficult to say something which, you know, which is a belief or not based on facts. I think there is still tension between the regions and the federal government on the matter. I think when you read the press in Belgium after the announcement of last week, you had Citymesh, happy, and you had some other player that were less happy. You know, we just know that this economic space for fourth entrant is quite limited today compared to where the market was, you know, four or five years ago. That's one.
Second, it doesn't make a lot of sense, you know, from a societal point of view, to create overcapacity, to create a new network where there is no need in terms of traffic or data. So you're creating overcapacity in those ways and those worlds, and it's a question mark for me. That's, you know, and I guess that, you know, today Citymesh and Cegeka, they're already acting on our network using network of Proximus to service B2B customers. They will probably continue to do it, whether they get some spectrum or just MVNO access to the Proximus network.
I think the competition is already there, so we can, you know, really, manage that probably if they buy also spectrum. You know, I'm not that worried. I think they see some lot of discussions to be happening the coming weeks. I think we are and never been so close to get some more clarity, but I think we still have to wait a little bit to get some full clarity on how it will be organized.
Thanks for the call. Thank you.
Thank you. We have a new question from Nicolas Cote-Colisson. Please go ahead.
Yeah, thank you. It's gonna be a short one. Obviously, you spoke about the performance for the quarter. The Broadband net adds were a bit weak while mobile was very strong. Can you give us an indication on the progress so far in the current quarter? Thank you.
This is Jim again. Indeed, from a commercial perspective, the third quarter is always a rather slow quarter because of the holiday season, especially on the Broadband side, and then typically picks up with the back-to-school promotions. We continue to grow in the premium segment of the market, which is visible on the combination of Internet and TV. As you said, also a very good performance on mobile, which is again driven as well by continued migrations of our Flex portfolio on our existing customer base.
On the Internet part itself, what we have seen there is that, of course, in July, we had quite severe flooding in the Walloon part of the region, which has impacted our performance. On the one hand, a little bit more churn because unfortunately some people lost their homes. At the same time, we also had to reorient quite some capacity to repair in that environment to make sure that our customers got back to service as soon as possible. Of course, this impacts your installation capacity to connect new customers. In that area, we had a bit of additional delay on connecting new customers. We also saw a somewhat softer commercial performance at the lower end of the market.
This is what has driven a bit on the Internet performance. The mobile performance is of course not impacted by the flooding because you don't have any physical installations to be done. We continue to see good traction of Flex, both on migration new customers and the joint offers in the back-to-school campaign also continue to function very well. That explains a bit indeed the different views on Postpaid versus the Broadband part.
Yep. Thank you.
Thank you. Last question from Martin Hammerschmidt. Please go ahead.
Yeah. Thank you. A very quick one from me. On Citymesh, I think they wanted to launch MVNO services by the end of September on your network. I haven't seen anything since. Maybe if you could just quickly update on the latest there. Thank you.
Yeah. They launched already on our network and but it's very small operations. For the moment, there is no visible effect, you know, on the market. They are really, you know, still is very small user for the moment. They can scale and they can further develop, but for the moment, there is no impact on the markets whatsoever.
Thank you.
Thank you. There are no more questions in the queue. We will therefore hand over the call to Nancy Goossens, Director of Group Investor Relations for closing comments.
Thank you all for your participation. I wish you a lovely weekend. Should you have any follow-up questions, you can reach out to me. Thank you. Bye.
Thank you, ladies and gentlemen. This concludes today's conference call. Thank you all for your participation. You may now disconnect.