Orange Belgium SA

XBRU:OBEL

Earnings Call Transcript 2019-Q1

[Operator]

Ladies and gentlemen, welcome to the Orange Belgium Q1 2019 Financial Results. [Operator Instructions]I will now hand over to Mr. Eric Chang, Investor Relations Director. Sir, please go ahead.

[Eric Chang, Director of Investor Relations]

Good morning, everyone. Eric here. So welcome to our Q1 2019 earnings call. Here with me are Michaël Trabbia, my CEO; and Arnaud Castille, my CFO.As usual, you should have received all the financial communication this morning. It's available on our website. We'll have a introductory comment from Michaël and then Arnaud. And that will follow a Q&A session. I will now leave the floor up to Michaël.

[Michaël Trabbia, CEO & Executive Director]

Thank you, Eric. Good morning, ladies and gentlemen. I will like to start by highlighting some of our key achievements for the first quarter of 2019. As you know, our Bold Challenger positioning led to strong commercial growth in 2018. In the first quarter of 2019, we continue to benefit from a solid commercial performance and increased customer satisfaction despite more active competitive environment. We also launched new initiatives. We extended our unlimited mobile offers to business customers and guaranteed indoor mobile coverage to our customers.In mobile, our mobile postpaid customer base continued to grow steadily during this quarter, reaching 2.5 million customers, an increase of 21,000 during the quarter and nearly 7% year-over-year. In convergence, we steadily continued to achieve very solid commercial performance, with 20,000 net adds during the first quarter of 2019, allowing us to reach the milestones of 200,000 Love customers, an increase of 64% year-on-year. Now 30% of our postpaid customers are convergent customers. This continued performance both in mobile and convergence led to strong increase of our retail service revenues by 13.5% year-on-year. Looking forward, we are preparing the launch of our unlimited Internet-only offer to further address customers' unmet needs. We welcome the work that is being made by the regulators in the cable regulation to implement the cost model that should lead to a sustainable competition on fixed and convergent markets. As you know, we called upon to reassess some structuring assumptions used in the cost model that was submitted to consultation between December 2018 and February 2019. Those assumptions led, in our opinion, to significantly overestimated costs to deliver service of our cable network. We now expect a tough decision on wholesale-regulated tariffs in Q2 and the final decision in Q4 2019.And now, I would like to hand over to Arnaud for this quarter's financial review.

[Arnaud Marie Julien Castille, Chief Finance Officer]

Thank you, Michaël. So Orange Belgium financial results reflect strong commercial success. Q1 '19 revenues grew by 3.8% to EUR 318 million despite the known decrease in MVNO revenues. Retail service revenues continued their growth trajectory, reaching EUR 205.7 million, an increase of 13.5%. I would like to highlight that both our convergent revenues and our mobile-only service revenues continued to increase by 93.4% (sic) [ 83.4% ] and 3%, repetitively. EBITDA for the quarter was EUR 58 million, representing a slight decrease of 3.8%. Excluding the effect of the MVNO revenues, the underlying EBITDA will have shown an improvement of 14%. We keep working on improving our convergent profitability. I would like to remind you that we expect to achieve EBITDA breakeven by the end of 2019.For Q1 this year, we reduced the EBITDA loss of the business from EUR 5.9 million in the Q1 2018 to EUR 1.1 million this quarter. We achieved that despite the growing convergent's subscriber base. The improvement was achieved due to better wholesale price, low auction and better industrialization. We confirm our financial guidance for the full year 2019. We remain confident we will reach the target announced at the end of year 2018. With this, I conclude the presentation. Michaël, Eric and I are ready for your questions. Operator, may I ask you to now open the call for Q&A?

[Operator]

[Operator Instructions] We have one first question from Mr. Nicolas Cote-Colisson from HSBC.

[Nicolas Cote-Colisson]

Can I have some clarifications on costs because your labor cost are up EUR 3 million quarter-on-quarter. I cannot foresee a big surge in indirect costs. So can you tell us a bit more about the trends there? And my second question is about your Internet-only plans. When do you plan to launch? Do you need to wait for the final decision from tariffs -- wholesale tariffs, or can you do it earlier? And very last is your guidance of cable EBITDA breakeven target by year-end? Is it really gated on the new tariffs to be out in Q4 or not?

[Michaël Trabbia, CEO & Executive Director]

Arnaud, will tell you on the cost. I will then tell you on the launch of the broadband-only offer. So maybe to start with this one, and Arnaud will answer on the cost. So we expect to launch this summer. This launch is not dependent on the decision that is expected on wholesale tariffs. By the way this decision, as I mentioned earlier, is rather expected now in Q4 2019. We will expect to have a draft decision in Q2, but the final decision is expected in Q4. So it's only the implementation of the decision that has been taken last year. Obviously, we will benefit from improved wholesale tariffs once the decision -- the final decision on tariffs will be done. But we have decided not to wait for this decision in tariffs to launch our offer. Arnaud, on the cost side?

[Arnaud Marie Julien Castille, Chief Finance Officer]

On the cost, so the labor cost -- Nicolas, as you know on labor cost, we internalize in 2018, and we are going to continue to internalize in 2019 of our distribution partners. So that had an impact on our labor cost. And -- but on the contrary, you can see our direct cost stay stable, and we see the stabilization for the full year for direct cost despite the increase of our revenues, as you can see. We see a stabilization of our direct cost, and one reason is the internalization of our distribution network partner. For the indirect cost, yes, there is an increase, and it's explained by 2 parameters accounting both half, half. So first one is the increase of energy, property, spectrum, directly linked with the indexation and the usage of our network. The second one -- and which is the same trend for the full year. The second one is -- for the half of this increase is stricter interpretation of the accounting guidance IFRIC 21 with a provision of all the operating taxes at the beginning of the year. So this last explanation is only a seasonality effect. On a full year basis, we forecast a stable operating tax. Okay? So to summarize this, the only increase comes from energy, property and spectrum usage. For the cable. Yes, we disclosed a breakeven at the end of the year and despite, as you -- may be, you read in our press release, despite maybe not a new price on wholesale, we think we'll be -- we will still be breakeven on cable at the end of the year with the same wholesale price as now.

[Michaël Trabbia, CEO & Executive Director]

Cable EBITDAaL, to be clear?

[Arnaud Marie Julien Castille, Chief Finance Officer]

EBITDAaL, of course.

[Operator]

We have another question from Mr. Michael Bishop from Goldman Sachs.

[Michael Bishop, Equity Analyst]

Just 2 related questions, please. Firstly, if you look at the increase in the B2C convergent ARPU, it's quite impressive, that 7%, so I was just wondering if you could talk us through the dynamics of that. And in particular, as a follow-up, are you continuing to see a nice tailwind of customers spending up on the mobile side? And if so, could you just give us a bit more detail of which tariffs you're seeing mobile customers spin up from and to? Are they spending all the way up to unlimited Love tariffs too?

[Michaël Trabbia, CEO & Executive Director]

So on the convergent ARPU, the increase and the strong increase that you see is the result of mainly 3 elements. The first one is that, as you know, we stopped since the beginning of last year providing discounts that we used in the -- at the launch obviously to increase the awareness and to boost the penetration at the beginning. So we still add in the first quarter of 2018, in our customer base, some customers that were benefiting from this -- from the discounts. It's not anymore the case. The second element is that we introduced, in the last year, a new option, that is voice telephony. And that is growing, even if we -- if it's not something that is embedded in the offer, it's an option, and obviously, the increase of adoption of this option support the ARPU. And then, the last element is that we are more and more billing some entry fees for our customers. We are currently billing entry fees for customers coming outside of the cable network, meaning, mainly for our Proximus customers. And that's another explanation of the increase of the ARPU. On the mobile ARPU evolution, as you see, we have mixed effect. We managed to increase the bundle price point, the bundle tariff point thanks to the up selling for customers to higher tariff plans. And on the other end, it is mitigated, and today, it is more than mitigated by the decrease of the out of bundle of those customers. So on this, our expectation is rather to stabilize the ARPU. And we believe that we are able to create value in the mobile. And that's -- I think our evolution in the retail service revenues demonstrate that we manage to create the value of increasing data usage, not by increasing prices but by putting customers on better design, higher tariff plan that is lower out of bundle for the contribution.

[Michael Bishop, Equity Analyst]

And the out of bundle, is that mainly SMS still? Or is that also bundle of data, which is dropping through to EBITDA?

[Michaël Trabbia, CEO & Executive Director]

So on mobile, you mean?

[Michael Bishop, Equity Analyst]

Yes, exactly. On the mobile, out of bundle.

[Michaël Trabbia, CEO & Executive Director]

Yes, on the mobile, no, it's linked to the fact that our offer are more generous. So the out of bundle is less than before clearly. And that's the strategic decision that we took. And this leads by the way to what I mentioned in the -- in my introductory speech to increase customer satisfaction and to lower churn. So this comes with very important benefits in our opinion. So we are happy that this out of bundle is decreasing.

[Operator]

We have another question from Paul Sidney from Crédit Suisse.

[Paul Sidney, Research Analyst]

I sort of have 3 questions, please. Firstly, on the loss of the B2B contract, which impacted your postpaid mobile adds in the quarter. Was there any detail on that contract as in particularly, why you lost it? Or why you think you lost it? And just confirm, will the key to loss of further customers -- will that be the end of the impact in 2019? And then secondly, you added 20,000 converged customers, again, you state in your release, without any promotional activity. I was just wondering is that a conscious decision to keep the run rate at around that sort of 20,000 level? And is there any ambition or scope you need push a bit harder and accelerate the run rate? And then just very quickly on -- thirdly, any updates on the latest timing of the spectrum auction and any thoughts around that you have as well, please?

[Michaël Trabbia, CEO & Executive Director]

So on your first question on the B2B contract, we lost indeed last year this contract with Vlaamse overheid, which is the Flemish government. It's obviously a very big contract in terms of number of sim cards. It's not this -- the ARPU of this -- of those cards are obviously lower also in terms of revenues. It's not the -- as big, I would say, if you take only the proportion of sim card, but this impacted indeed our performance, our commercial performance in Q1 by 11,000 cards, which is obviously important. And we expect the same level of impact in Q2. Then, we expect that this migration should be over. Now why did we lose this customer? Obviously, it's a very big customer, so it's kind of exceptional. We don't have other customer at this level of magnitude. It's -- I mean, it's the business life, I would say. This customer was with us -- has been with us since very long time. They decided to leave. This was an ISP. It's a public tender. So I mean, it's the business life, I would say. We have to cope with it. Once again, the impact is in Q1 and Q2, but the impact in revenues is not as important, I would say, as the proportion of the impact of -- in sim cards. On the convergence run rate, we are happy with the current run rate. I would mention that when you look over time, this run rate has increased a little bit, because in 2017 -- and when you look back in 2017, we were rather around 15,000, and we increased that progressively. Now we are more around this 20,000. We are happy with this -- with the run rate. First, we believe that it's important to have more or less stable installation figures, because this comes with the factory that we need to feed. And it's important to be able to make some forecast and have the -- all the channels -- the end-to-end channel ready to be able to deliver and sell our customers. Second, it's important to understand also that there are some limitation in the market, I would say, rotation. So we cannot grow this without limit. Then having said that, we believe that there might be opportunities to further increase the industry's run rate later on, especially from 2020 when we will have, I would say, improved condition on the wholesale tariff and with the update for broadband-only offer, which is -- we believe, has the capacity and the ability to target new customer segments.And your third question on spectrum auction. Well, as you probably have seen, the government, the federal government managed to reach agreement with the region to launch these auction. So now, I would say the -- this year, will be handed over to the next government after the election, the 26th of May. Meaning that it is now, I would say very likely that the auction will not take place before 2020, and we expect it following in the second half of 2020. And having said that, this will be handled by the new government. It also means that all the conditions of this auction will have to be reassessed and decided by the new government, including the provision on favoring potential new entrant in the market.

[Operator]

We have another question from Mr. Emmanuel Carlier from Kempen.

[Emmanuel Carlier, Research Analyst]

First one is on the MVNO revenue line, so the EUR 10 million loss of Telenet was expected, the additional EUR 2 million, not really. So could you please clarify that a little bit? Then, secondly, on your postpaid sets so you lost an important client there. On the other hand, you have -- you offer now unlimited offers. So could you, maybe, give a little bit more color on what that does with your growth since you have changed the tariff plans? And then another question is on the cable growth. So is there any change in the customers you're running from cable operators versus Proximus in the last quarter? Or is that the kind of status quo?

[Michaël Trabbia, CEO & Executive Director]

So Arnaud will answer you on the MVNO EUR 12 million. And I will take the 2 other ones. Arnaud?

[Arnaud Marie Julien Castille, Chief Finance Officer]

The EUR 12 million, it's a EUR 2 million -- with the EUR 10 million from Telenet, and EUR 2-other-million, EUR 12 million MVNO revenue last year, we don't have this year. But we disclosed only the impact of Telenet on our revenues, and the impact for the full year 2019 is EUR 40 million, and it's EUR 10 million per quarter. So -- and we disclosed 3 months ago the full impact will be net impact of about EUR 20 million, because we will have new MVNO revenues. And the new MVNO revenues will come from Q2 with the new MEDIALAAN MVNO contract. So the negative impact of EUR 12 million is explained by EUR 10 million from Telenet and EUR 2-other-million from another MVNO. It was the end of the Lyca MVNO contract. But for the next quarter, we will have also the revenues coming from MEDIALAAN. And the full impact would be EUR 20 million over the year.

[Michaël Trabbia, CEO & Executive Director]

On your two other questions on postpaid subscriber. Yes, what I mentioned is 11,000 impact of this big customers in the Q1 figure, and the same level is expected in Q2. Our new unlimited offer in B2B is -- has been launched in the course of the quarters, so it's not yet impacted significantly the figures. So this will be rather expected, I would say, in the course of the year. On cable, it's fair to say that we target more Telenet and VOO customers than Proximus customers for, I would say, obvious reasons. It is easier from installation perspective and the cost perspective, because they are already, I would say, equipped and to -- so it's easier for us on this customer, and we don't benefit anymore, of any incentive, I would say, to target more non-Telenet customers, for instance. So that's why, it is true that we target more. It doesn't mean we don't welcome, obviously, a Proximus customer. We offer everybody. But it's true that we target more Telenet and VOO customers.

[Emmanuel Carlier, Research Analyst]

And have you seen a change in the customer additions on cable in Q1? Or is that status quo versus previous quarters?

[Michaël Trabbia, CEO & Executive Director]

We -- it's something that we -- obviously, we follow, but we don't give figures on this. I can only tell -- reiterate what I mentioned about the targets that we have.

[Operator]

We have another question from Mr. Roshan Ranjit from Deutsche Bank.

[Roshan Vijay Ranjit, Research Analyst]

Two quick ones please. Just on the MEDIALAAN MVNO contract. Can I check are you still expecting, I think it was around 370,000 some migration across by the end of Q2. And certainly, can you, please, provide an update on how any potential discussions, if there is an update, regarding a potential co-investment with Proximus. I think back end of last year, there was talk about there being an opportunity. And I think, Michaël, you mentioned that you've been very upfront in saying that it'd be something you'll be keen on. Can you just provide an update for us there?

[Michaël Trabbia, CEO & Executive Director]

On the -- on MEDIALAAN, Arnaud, maybe you want to...

[Arnaud Marie Julien Castille, Chief Finance Officer]

On MEDIALAAN, we started the migration of MEDIALAAN, beginning of April. It's a little bit later than we expected. And the number of customers of MEDIALAAN is about the number you said.

[Michaël Trabbia, CEO & Executive Director]

And your question on co-investment on fiber. We had discussion at that time that was mentioned when the regulator was working on its draft decision, so it's a bit more than 1 year ago. But as we mentioned, the decision has not been successful. But now what we have today that we signed an agreement, as you know with Fluvius for a proof of concept. So it's limited, for instance rollouts, so we will open our fiber offer for a few thousand of -- on past in the very short tail of time now.

[Roshan Vijay Ranjit, Research Analyst]

And just a follow-up on that Fluvius proof of concept, as you say. Is there a scope to increase numbers there? Should we think of -- this as a trial? Or is there scaling-up opportunities?

[Michaël Trabbia, CEO & Executive Director]

So it's -- I mean, both. It's, obviously a decision that has been taken by Fluvius, so Fluvius is owned by the local municipalities in Flanders, and its objective is to roll out fiber to the network in Flanders. The objective is to go obviously beyond and to have a real rollout in Flanders. Now they start with this proof of concept to check the business case and check the commercialization and the [ addition ] of customers, so we are happy to participate to this. And it is too early to say whether they will decide to. Indeed, if it is successful, their intention is to extend this rollout, but it is too early to comment from this -- for the moment.

[Operator]

We have another question from Mr. David Vagman from ING.

[David Vagman, Research Analyst]

First, maybe on the single installer you gave us on the -- let's say, on the negotiation with Telenet and VOO on the commercial agreements that you might fully sign, let's say, in the coming weeks or months, if it is going okay.And then maybe if you can give us your view on the high-quality access market review for more on the B2B side? Is it potentially going to lead to you building up your own ISP networks, making investments in this sector? And what -- yes.[Technical Difficulty]

[Michaël Trabbia, CEO & Executive Director]

We can 't hear David.

[David Vagman, Research Analyst]

Yes, can you hear me? Hello? Did you hear my question?

[Michaël Trabbia, CEO & Executive Director]

No. No.

[Arnaud Marie Julien Castille, Chief Finance Officer]

Okay, Yes. So I had the first question on the single installer. Is it going to be launched anytime soon? And on second question, on the regulatory news flow regarding the high-quality access market review. Can you give us your view on the market review from the BIPT on this? And whether it's going to lead you to invest more in high-quality networks?

[Michaël Trabbia, CEO & Executive Director]

So on the single installer, I don't know if the sound is good, but on the single installer, the launch is expected also this summer. So it is something that will come very soon. I would say, as for -- it's quite similar, and there are some common points with the broadband only from the technical perspective. And on those one -- on this one also, we suffered from delayed for -- from cable operators but now, we believe that we should be able to implement this single installer in the same timeline and calendar, as the broadband-only offer in this summer. On the high-quality market review, so this review will be useful for the B2B market and will offer us opportunities to sell fiber -- offer to B2B customers. Obviously, this is -- this will be an important step to further improve our offer to fixed offer to our B2B customers. But it's not -- it is -- we don't expect that this come with additional investment. It's rather regulated offers, dedicated for B2B, and that will be -- that should be proposed. So it's not a co-investment scheme that is expected.

[David Vagman, Research Analyst]

But would you, for instance invest [indiscernible] does that make you [indiscernible] to bid up your [indiscernible]?

[Michaël Trabbia, CEO & Executive Director]

I'm sorry, but the sound is very bad here.

[David Vagman, Research Analyst]

We're going to [indiscernible] B2B and fiber, it's not -- so it's not of the nature of the -- this new regulation, it's not of the nature to change your investment in fiber?

[Michaël Trabbia, CEO & Executive Director]

I know, it's different. This regulation will allow us to -- then to leverage Proximus fiber rollout for the B2B, which as you know, is different, not the same pace as for our B2C. Clearly, Proximus is accelerating in the B2B area. So it's really different landscape. And obviously, when you invest in fiber to the home, you can also address B2B customers with your rollout. But for the moment, there is only limited rollout from the Fluvius, as I mentioned earlier. And when you -- and Proximus is target -- when Proximus is targeting B2B, it allows to have a broader -- it should allow to have broader coverage and broader availability of this offer, specifically for B2B.

[Operator]

We have another question from Mr. Ruben Devos from KBC Securities.

[Ruben Devos, Senior Financial Analyst]

Yes, the first one. Just on the B2C convergent ARPU. So aside from fast promotions, the connections piece, was wondering what other elements have led to an improvement of that ARPU? Are we still looking at a good traction of the mobile subscription attached to cable or had there other -- been general trend up selling of the postpaid portfolio? Just very curious whether you could provide us sort of split between the mobile component in terms of ARPU and the fixed. I believe, at some point we were thinking of 36-36 I'm not sure how that's changed. And the second question, and related to the results release, we have seen quite some news flow in the last couple months on VOO, including articles that suggests Nethys' intention to acquire Brutélé commented by [indiscernible] officials in Nordea to consider its sale of its stake in the commercial assets. So considering, yes, interest you have shown in the past, was wondering whether you could share some of your thoughts on the developments?

[Michaël Trabbia, CEO & Executive Director]

Arnaud, you want to answer on the convergent ARPU?

[Arnaud Marie Julien Castille, Chief Finance Officer]

The ARPU for convergent. The main explanation of -- for the ARPU convergent are the absence of price promotion. So second one is the connection fee? Yes, we started to bill the connection fees to our customer. So it accounts into the ARPU. So third one, it's the fixed option, accounting for about EUR 1 ARPU compared to 2018. So all in all, it's mainly those reasons. The mobile ARPU, for convergent mobile, it follows the about the same trend as the other mobile customers. But of course the mobile ARPU convergence is higher in absolute value, but the trend is about the same, a slight decrease of this ARPU due to, as Michaël explained, the unlimited tariff plan, we offered to our customers.

[Michaël Trabbia, CEO & Executive Director]

On your question on VOO and Nethys, so what are being mentioned by Nethys, as you know, is that they were considering selling majority stake of their asset in the competitive environment, and VOO is one of them, to be clear. For the moment, what they mentioned is that they were willing to sell. So what we understand is a 51% stake for the moment. There has not been any formal process that has been opened. So we are in a standby position on this, knowing that elections are coming, as I mentioned, next month.

[Operator]

So we have another question from Mr. Stefaan Genoe from Degroof Petercam.

[Stefaan Genoe, Head of Equity Research]

Following up on the entry fee you charge now for customers coming from Proximus. Could you remind us the amount of this entry fee? And have you seen a change in customer attraction from Proximus since you started doing this? And related to this is possibly a tactic that could change once that you have the improved pricing on the broadband only to get also more -- to be able to win more broadband-only customers from Proximus later on? And then the second question, you mentioned also at the beginning of the presentation, increased competitive pressure. Could you highlight a bit where you've seen most changes in competitive positioning in the last couple of months?

[Michaël Trabbia, CEO & Executive Director]

So the entry fee that will be for noncable customer -- on nonexisting cable customers is EUR 49. So it's a fee that is reasonable, and we don't want to forbid and to make it very difficult for customers to join us. So once again, it is not designed to prevent Proximus customers to join us, not at all. But it is designed to take into account the difference of cost, I would say, easiness for us to install cable customers. And then this can evolve over time, obviously, depending on the cable elements. It is our commercial decision depending of -- number of factors. On the mix coming from Proximus and Telenet, this will be seen, I would say, over time, but once again, our target is clear, as I mentioned. Your second question was on...

[Stefaan Genoe, Head of Equity Research]

Yes, you mentioned on the competitive pressure in the...

[Michaël Trabbia, CEO & Executive Director]

Yes, the competitive pressure. So competitive pressure, I mean, it's -- I would say, it's competitive. It was -- the competition was active, and that's what I mentioned. They were active both on the mobile side. As you know, back last year, Proximus reacted to a unlimited offer by launching their own unlimited offer. And Telenet, in the beginning of the year, also launched their own unlimited offer. So that was one element. The other element is that both of our competitors launched a new offers, new patch with OTT -- with OTT TV. So that were not available before, so this is clearly new offer that have been launched by our competitor likely in the anticipation of our launch of broadband only, which is a different product. So clearly, we remain focused on our strategy. And we believe that this is a different offer that we will launch to the market addition.

[Stefaan Genoe, Head of Equity Research]

And perhaps the final question on the MEDIALAAN revenues. How do you see the ramp-up of the EUR 20 million in -- over the coming 3 quarters?

[Michaël Trabbia, CEO & Executive Director]

Arnaud?

[Arnaud Marie Julien Castille, Chief Finance Officer]

Maybe it's a little bit too soon to have the clear vision of the consumption of the MEDIALAAN customers, because as I explained, they have just started their migration to our network beginning of this year -- this month. So we need to know the -- their data consumption, their voice consumption to be sure of the revenues coming from MEDIALAAN. At this stage, our forecast is [ ramp up ] step-by-step, but maybe all the customers of MEDIALAAN will be on our network at the end of Q2.

[Operator]

We have another question from Mr. Matthijs Van Leijenhorst from Kepler Cheuvreux.

[Matthijs Van Leijenhorst, Analyst]

The first one, on this B2B conflicts you've lost, why is that? Is that because of pricing? And secondly, to whom did you lose this, this contract? And could you describe a bit the competitive environment in B2B mobile? And secondly, if I look at the subscriber trends in convergence, 20,000 this quarter, but obviously, you benefited from the migration in the SFR footprint. So given the fact that the migration has come to an end, I believe, in late March, could you give some color on the current run rates in terms of convergent net adds? Is it -- do we see a slowdown because of the end of the migration? Or do you still see the same run rate like we've seen in Q1 and Q4 last year?

[Michaël Trabbia, CEO & Executive Director]

So on your question on B2B. First, it's important to remind that there are several segments in the B2B business. We have the SOHO, we have the small and medium enterprise, and we have the big -- the corporate segment. And that's where we are talking about and the competition is not the same. The offers are not the same. Depending on the segment we are talking about, the distribution network is also not the same. Obviously, for the corporate segment, it's a matter of ISP, it's a matter of a big contract and specific negotiation and specific provision for each customer. So it's really a different business segment. And you cannot compare this segment to the small and medium enterprise or even to the small office, home office market. So on the very big customers, the corporate segment, the main competitor is Proximus, to be clear, which is obvious. It's Proximus have the incumbents, so it's the main, I would say, player in B2B and specifically in this corporate segment. So that's what I can mention. And I mean, the reason why, once again, it cannot done, it's IFP, and it's a public tender where there are several criteria that has been taken into account. And you -- it's a formal process. It's not, I would say, a negotiation, or it's not a negotiation that you can handle. You submit an offer and then they are compared to the criteria that had been set by the customer. And then you have no change to improve your offer. So obviously, it might happen. And once again, it was the customer that has been with us a long time. So then they can also from time to time they decide to change. That's what happened there. It was not a big difference in the evaluation. We -- it happened like that. It could have been the other way around. But that's the way it is for this customer.

[Matthijs Van Leijenhorst, Analyst]

Okay. And then in terms of pricing, do you -- if you look at the general trends, of course, you'd be -- you should see more pressure perhaps or...

[Arnaud Marie Julien Castille, Chief Finance Officer]

On -- so on this corporate segment, obviously, we always monitor our competitor pricing. And well, for sure, Proximus has won this customer. They have done a good pricing. Now we are not, I mean, we have, obviously, similar pricing because at the end of the day, you have several ISP, and this is a market that is -- we need to react to competition and that's what we do. So that's the comment I can make on prices. We have no big difference on pricing, and it's really customer per customer. It's not, I would say, our -- the offer that we have on the shelf, and Proximus has offer on the shelf. It's really pricing that you need to specifically design for the customer on this specific segment. So once again, this segment is -- and a very different fee than the other ones where you have rather off-the-shelf offer that you push through a distribution channel. On your second question, on the convergent run rate and SFR impact. It is clear that there are several elements that are taken into account. SFR is one of them obviously. And we have been benefited from this for sure in the past months. So this is -- as I said, this will be less the case obviously from now on. Now I cannot comment on the net adds figures for Q2 and the rest of the year. What I can say is that globally speaking, we don't expect a slowdown on a yearly perspective now on net adds on convergence.

[Operator]

[Operator Instructions] Mr. Chang, we have no questions.

[Eric Chang, Director of Investor Relations]

Thank you, everyone. And I now remain at your disposal. Please feel free to call, and we'll do our best to answer your questions. Thank you very much, everyone. Have a great.

[Operator]

Ladies and gentlemen, this concludes the conference call. Thank you for your participation. You may now disconnect.