Belgian incumbent Proximus has big dreams for 2025, but first it will have to navigate a difficult 2023.

The operator this week shared its latest three-year plan, which it calls ‘bold2025’. What it would like everyone to focus on is its ambitious target to reach 100% 5G coverage and pass 50% of Belgian households with FTTH by 2025, increasing to 95% by 2032. It’s also wants to modernise its IT platforms, achieve a market-leading net promoter score, and, by 2040, reach net zero carbon emissions.

Unfortunately for Proximus, what stands out in Monday’s announcement as much, if not more than the operational objectives, is its somewhat gloomy earnings guidance for 2023 and its plan to halve dividend payments from 2024.

Proximus expects 2023 group EBITDA to fall by 3% compared to last year, despite an expected 2% uptick in domestic revenue. This is due to economic headwinds caused primarily by inflation, it said. In 2024 it expects to return to earnings growth, but EBITDA isn’t expected to exceed 2022 levels until 2025.

To mitigate the impact of the deteriorating economy, Proximus aims to save an extra €220 million over the next three years, which is no mean feat given capex is expected to peak this year at €1.3 billion as it ploughs on with its fibre deployment.

What that means then – unfortunately for employees – is that around 40% of the savings are expected to come from headcount reduction. Modernising its IT and customer management systems, including rolling out paperless invoicing and sales, and implementing self-install, is expected to account for 30% of the savings total. The remaining 30% is expected to come from reducing energy consumption, decommissioning older networks, and cutting other discretionary spending.

In addition, Proximus also plans to make €400 million worth of divestments during the course of bold2025. Top of the list is its Brussels headquarters, which it agreed to sell to Belgian real estate developer Immobel last March for around €143 million. The site will be redeveloped, and Proximus will lease back part of the renovated building. It will also sell certain other infrastructure and property, but that doesn’t include its towers or any of its international segments, Proximus said.

Any investors hoping their patience will be rewarded in the form of a nice dividend will be disappointed. Proximus plans to pay €1.20 per share in 2023, the same as last year. But for 2024 and 2025, it will be slashed to €0.60 per share.

“The rebased sustainable dividend level incorporates all currently known macro and inflationary headwinds, as well as expected changes in market structure,” Proximus said in a statement.

Proximus had a good year last year. Revenue and EBITDA for the first nine months of 2022 were up 5.2% and 0.6% respectively on 2021. Full-year figures are due to be published on February 17^th. And yet despite being in good shape, investors are being warned to brace for a bumpy year ahead. As the industry gears up for Q4 reporting season, we will soon find out how many other operators are in a similar situation.

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