Orange Belgium SA

XBRU:OBEL

Earnings Call Transcript 2021-Q2

[Operator]

[Operator Instructions] I will now hand over to Mr. Koen Van Mol, Head of IR. Sir, please go ahead.

[Koen Van Mol, Investor Relations Officer]

Thank you, operator. Good afternoon, everyone. My name is Koen Van Mol, Head of Investor Relations at Orange Belgium. I would like to welcome you to our Q2 2021 Earnings Call, and I hope you're all well. And here with me are Xavier Pichon, our CEO; and Antoine Chouc, our CFO. As usual, you should have received our financial communication this morning. In any case, you can also find all the relevant information on our corporate website as usual.A Q&A session will follow right after Xavier's and Antoine's introductory statements, and I will now leave the floor to Xavier.

[Xavier Pichon, CEO & Director]

Thanks, Koen. Hi, there, hope you're well. So we'll start with a short intro, then following the financial results Q2 2021 presentation.So first, I would like to express my thoughts towards all the people that have been impacted by the floods here in Belgium, in Wallonia, in certain parts of the country. You've seen that. But together with our technical partners, of course, we've put all our efforts in order to reestablish and to maintain the connectivity in the concerned region, even more important in such moment of crisis, for including this weekend, of course, because we had here 2 episode at least.We also transformed our shops into collection points, permitting and allowing people to bring relief supplies to be donated to people who have lost their homes and their household effects. I would like to express that together with Telenet and Proximus, our peers, we bundled our forces to support the initiatives of the Red Cross here in Belgium, enabling financial gift via text SMS. I would like to thank our team members who were excited to use paid voluntary day to join an association as well and go help those in need.Now let's take a look at our results for the second quarter of 2021. Again, we can look back at a quarter with solid results and good commercial performance. Once more, we were able to prove that our offers remain attractive as competition was also very active during this quarter. We were able to achieve solid net adds, as you can see, both on mobile and in convergence. Of course, not only we've been delivering good results, we have been working on our future evolution as well. This is shown in the section of the [indiscernible]. We have announced to do a pilot in fiber to the premises in the Brussels area where we will deploy 15,000 home passed.You can see on this Page #5 that, okay, we are intending to benefit from Orange Group high level of skills and experience to provide a next-generation open fiber network, which will be accessible at passive level to any interested telecom service operator to connect and rely on their own active network equipment.Orange Belgium intends to leverage synergies with local assets and partners to contribute to the region's economic and digital ambitions of fiber-to-the-premise network, allows an optimal experience for residents and businesses with multi-gigabit symmetrical speed and bandwidth, having the way for future applications. And doing so, we intend to gain local experience and understanding of the complete deployment rollout of FTTH, which help us to design the architecture of our fiber access towards the future.On Slide #6, you can see that our GO portfolio has again shown its competitive positioning during the quarter. As a consequence, we were able to provide positive net adds, both on our mobile and convergence offers. To sustain this competitive position, we have improved our Go Plus offer by increasing the data bundle from 8 to 10 gigabyte. The data bundle increase boosted the number of net additions during the quarter.Slide 7. We are strongly committed to supporting entrepreneurship and we, therefore, decided to go forward with Orange Fab. Its acceleration program for startups launched in 2017. This year, despite the context made particularly complex by the COVID-19 pandemic and the current teleworking obligations, we have received no fewer than 45 application for the fourth season of the Orange Fab program. The theme of this addition was 5G and how the startups in Orange Belgium could coinnovate on relevant application on this technology for consumer and businesses.The following 3 projects were chosen; Iristick, OTIV and MyPitch. You do have the details within the slide. And then the Orange Fab program has already supported a number of significant success stories, such as a smart parking solution provider, CommuniThings, now a trusted partner of Orange Belgium, which has launched its innovative service not only in many Belgium cities, but also Bruges. Creating partnerships with startups and a win-win relationship has proven to be the right way to accomplish this as shown by previous success stories, and we are convinced that these new partners will follow the same path.On Slide #8, VisitWallonia and Orange are deploying an innovative tool that enables everyone to get real-time information on the crowds in Wallonia's various tourist zones. After the first phase of test, the goal is to permit citizens and tourists to benefit from Walloon tourist sites without concern. The tool will be made available free of charge during the summer season, so people can optimally plan their visits and trip by profiting from less frequented zones.Based on its experience in measuring crowds and population densities, notably during events like the South Fair in Brussels or -- and after launching a first free app at the end of 2020, we concluded an agreement with the Walloon authorities to introduce an innovative solution that will enable everyone to access real-time information on the size of crowds and population density in the main Walloon tourist zone.Slide #9. In terms of key achievements of the quarter, and of course, Antoine will come back on this. We noted that the quarter has been less impacted by the COVID-19 measures in comparison to last year. We had 17,000 convergent net adds in the quarter, achieving a customer base of 366,000 customers, an increase of 27% year-on-year.On the mobile side, we also had 17 net adds -- 17,000 net adds reaching 2.7 million customers, an increase of 3.4 percentage in comparison to last year. Antoine, as I said, will detail more the financial results. But from an overall perspective, we can put forward very positive results. Our revenue is back to growth and have increased by 7.5% to EUR 325 million following the increase in retail services revenue and the return of SMS, text and roaming traffic.Although our handset sales have increased importantly as shops were mainly closed last year. Because of the increase in service revenue and continuous cost control, we were able to increase our EBITDAaL with 5 point -- roughly 6% growth to EUR 91 million. Our eCapEx has increased by 52% to EUR 45 million as last year, there have been a lower number of cable installation and slowdown of our network deployment.Antoine, the floor is yours.Sorry, sorry. So Slide #13. So if we jump directly to Slide #13, we have a view of our ARPOs. Our convergent ARPO has decreased by 2.7% to EUR 75.6 (sic) [ 73.6 ]. The decrease is mainly a consequence of the discounts we are providing in our GO offers in combination with convergence. Our mobile-only ARPO has decreased slightly by 0.6% to EUR 19.6. The decrease in domestic out of bundled traffic is the main reason for that.Slide #14, a quick heads up on the regulatory. First on slide -- you can see that the regulatory highlights. During the quarter, the CRC has approved the decision on the onetime fees for the cable networks, which overall means a price decrease in comparison to the former tariff.Parliament has voted the law, which set the reserve price for the spectrum. This price in -- if he want -- if they want to be paid for the reserve spectrum and defy the minimum price of the non-reserve spectrum. The royal decrees are at Council of State for advice and then go for the -- go to the consultation committee for a final decision. This is expected for after the summer.With this, I would like to hand over to Antoine to go deeper into the financial results of this quarter. Antoine, the floor is yours.

[Antoine Chouc]

Thank you, Xavier, and good afternoon, everyone. So let's go to Slide 16. As you can see, our total revenue has been increasing in comparison to last year's quarter. In Q2 of 2020, we had indeed impacted COVID-19 measures that affected our activity. Today's shops are open and people are starting to travel again. That -- this effect in combination with a growing core business generated an increase of 7.5% year-on-year to EUR 325 million.On Slide 17, our retail service revenues continue to grow even with a higher pace in comparison to former quarters. We had an important increase of almost 5% in comparison to last year, while our mobile only service decreased slightly by 0.8%. It has been largely compensated by an increase in convergent service revenues, which increased by more than 15%. Also, our fixed-only services increased partly explained by the addition of our broadband only offer home launched last year.The increase of our revenues and especially our retail service revenues supported the improvement of our EBITDAaL. Our labor costs increased in comparison to last year. As in Q2 2020, we had specific measures on labor following the lockdown. We were able to control our indirect costs, which resulted in a slight improvement in comparison to last year. All these elements resulted into an increase of the EBITDAaL of almost 6%, reaching EUR 91 million.I'm on Slide 21. In terms of eCapEx, we had an important increase since, as Xavier said, cable installation and the network deployment were strongly reduced because of the lockdown. As a consequence, we had an increase of eCapEx by more than 50% in comparison to last year, reaching EUR 45 million for the quarter. And our net debt has decreased to EUR 124 million.And let's turn to Slide 23 for guidance, which is the last slide. With these results, we are, let's say, cautiously optimistic for the year 2021. And we confirm that we will reach our guidance as we initiated the [Technical Difficulty]. We'll have low single-digit growth versus 2020, an EBITDA between EUR 320 million and EUR 340 million and an eCapEx between EUR 200 million and EUR 220 million. And even, I would say, for the EBITDAaL, we expect to be within the high range of this guidance.With this, I conclude this presentation, and we are now ready for your questions. Operator, may I ask you to now open the call for the Q&A session.

[Operator]

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

[Nicolas Cote-Colisson]

My first question is on your fiber strategy. Obviously, as you said, you are testing the fiber in Brussels. And although it's quite small, it seems that there's an overlap with Proximus. So can you update us on the options you are now considering for fiber? And how is the VOO acquisition fitting into that?

[Xavier Pichon, CEO & Director]

Nicolas, thanks for asking these 2 questions. Maybe the first, yes, of course, you're right to say that the numbers we are targeting are quite, I would say, small. Of course, we're talking about 15,000 of home passed. But nevertheless, okay, what I said is we are testing. It's a test and trial because, of course, we've never rolled out any fixed network in Belgium.So we are going to test our ability to roll out some FTTH or FTTX network. You know that we've done that elsewhere within the group -- Orange Group in Europe geography, so we know how to do that, but we've never done that -- this in Belgium. So we'll test that. We'll try to implement maybe the latest generation of equipment as well, including robots, automation and so on, and then we'll see.And just to come back on your question, of course, as we said, we think that all the options are on the table, still on the table, okay, we've not, I would say, made a decision on that. And doing so, this test and trial, we'll see if it could be, I would say, an option in some areas or if we are intending to remain a whole buyer as we do for now with the cable network, and we'll see. So no decision has been made yet, and we'll try, as I said, to see if it could be an option or not.

[Nicolas Cote-Colisson]

And on VOO acquisition, how do you articulate that with this project?

[Xavier Pichon, CEO & Director]

Actually, this is something, okay, we are doing, I would say, on a stand-alone basis. There is no increase in VOO at all. And so it's a completely different story, okay, for Brussels. So we'll see.

[Nicolas Cote-Colisson]

Oh, yes, sorry. Sorry Xavier, maybe to precise my question is, obviously, you're going to have to take a very clear-cut decision regarding VOO in the coming months at the time when you may not be completely ready to define your long-term fiber investments. So how do you hedge your bets buying the cable eventually while being forced maybe a few years down the road building fiber. So how do you reconcile these timing elements?

[Xavier Pichon, CEO & Director]

But that's why I said that it's a completely different story, okay? Because actually, today, we can't connect the dots because, of course, there is no clear option on VOO related to the market, related to people that could be involved in the sales. So right now, okay, we are willing to test our ability to roll out to see if we are able to do so, and then we'll see for the future.

[Operator]

Next question is from Mr. David Vagman from ING.

[David Vagman, Research Analyst]

Yes. First question on the guidance. I think you're keeping the guidance range. Also you say you will arrive at the end of the range, let's say. If I do quickly the math though, and simply adding the second half of the EBITDAaL 2020 to your EBITDAaL of H1, I already get extremely close to EUR 340 million. And then if I take into account the Board insight plan with some growth in cable, mobile clients, recovery in roaming, I think you can easily get to EUR 350 million. So are there some elements here that I'm really missing? So that's my first question.And then secondly, could you describe the competitive environment right now? And how you would expect this environment to develop in H2? So do you feel the need to be bolder commercially in terms of pricing or in terms of data or maybe bundle? So it seems commercially, the momentum is slowing down a bit for Orange Belgium, if you were not to move. So if I look at Proximus and now Telenet, they're quite aggressive on multi-SIM pack, but also on Internet with mobile. So I would like to have your thought on that.

[Xavier Pichon, CEO & Director]

Thanks, David. I think your question is with a huge scope at the end. So maybe we'll need the afternoon to make sure that we will answer it properly. So maybe I will start with your second question because I think the dots -- another way to see that, but the dots might be connected.First, we -- since back-to-school last year, okay, we are observing a kind of straining competitive environment, something related to promotions, change of portfolio offers and then now subsidies. It has been already the case in Q2 with the euro, the soccer euro competition and so on.So at the end, we don't know what will be the term 3 context, maybe either the sanitary one, but also the commercial and the competition environment for the term 3. We don't know, okay? Maybe we'll have a kind of, I would say, more quiet or peaceful environment or this is maybe something we do have in mind a kind of continuum of maybe, yes, a bunch of promotion and back to school.We know that back-to-school time -- back-to-school period in Belgium is maybe the most important commercial time. So because we are cautiously optimistic, okay, we think that this market will evolve like this with the back-to-school, I would say, tensing. And of course, from back-to-school to Christmas, this is not a long distance. So we see the market evolving like this, this year.But we also see the market and the context with the pandemic evolving maybe not in a good shape. We don't know. But we can see, we can observe, everybody can observe that the situation is not really fixed everywhere, particularly in Europe, but maybe elsewhere in the world as well.So because we are cautiously optimistic, as it has been said by Antoine, that's why we have preferred maintaining the guidance and the brackets and what has been said by Antoine, to me is not so far than the figure you were expressing, okay? But we are not done, okay? Maybe we'll have another lockdown coming up, maybe we'll have some tensing environment in the commercial, as I said.So we prefer -- we're preferring keeping, I would say, our optimism, but being cautious on that side. That's why we are reiterating our guidance. And we say today that we could land or we must land in the highest range of the bracket, and that's it.

[David Vagman, Research Analyst]

And does it -- or could you give us an idea of how you think, let's say, in this tradeoff between achieving the best possible EBITDAaL and then maintaining or even improving your commercial momentum? Do you feel, since the launch of the Flex offer by Proximus and then now ONE and ONE(up) from Telenet, do you feel the need to come back with a new offer or simply improve the current offer to accelerate or, let's say, to kickstart again your commercial traction? Are you ready with this traction or you're rather fine-tuning your EBITDAaL? Would like to get a sense of your view on that.

[Xavier Pichon, CEO & Director]

Of course, I can't comment on that. I can't answer honestly probably your question because that's related to internal matters. But at the end, you know that we are, like others, like everyone, we must, I would say, do everything, okay, while preserving the value, but also being competitive and because we know that you're looking at our results deeply, our commercial results, but also the cost, as you said. So our job is to, yes, be right there on this -- all these elements, all these races in a way.What we observed during this Q2 that we are in a good shape, okay, with having maybe not the best subsidy policy, but we've been able to be there at the right moment, okay? We've been able to increase, as we said, the data within our portfolio. And then -- okay, so we'll see, we'll see. We do have plans, of course, but we will try to be ready for, I would say, delivering every single goal we do have, so financial, of course, and commercial goal at the same time.What we know is that we are not 100% sure, that we'll get back to normal conditions for this semester. Observing what happens in terms of COVID-19 everywhere in Europe, okay, we are preparing ourselves to maybe have some other lockdown or tougher times and to be ready for that before the end of the year.

[Operator]

Next question is from Mr. Emmanuel Carlier from Kempen.

[Emmanuel Carlier, Research Analyst]

My first question is on EBITDA as well, but more on the bridge moving from 2021 towards 2022. So the question is, if you could provide us the key delta year-over-year? So I think we have the Mobile Vikings contract coming in. On the other hand, you will most likely continue to grow the service revenues. And we should also expect more cost savings. So I would like to hear a little bit more financials on these 3 topics. And also if there are other important elements that I'm missing.Then the second question is on the mobile entrance risk. So we'd just like to hear your last thoughts on this topic. And then last but not least, on the ARPO trends on mobile only. How much percent of the mobile only revenues are still coming from out of bundle?

[Xavier Pichon, CEO & Director]

Maybe Antoine, you will take the first and the third one, and I will keep the question number 2.

[Antoine Chouc]

Okay. Sure. Thanks, Xavier. Emmanuel, so let's give some answers to your first question. Clearly, the main impact in terms of EBITDAaL in 2022 will be the loss of Mobile Viking that will be, let's say, unavoidable and which is expected in S1, which is regarding the contractual obligation of Mobile Viking, which will be the main negative impact for 2022, yes, 2021.But we expect the service revenues to keep on growing more or less at the same pace at the one we had in 2021. And clearly, we also have very strong ambitions on cost management. We've had, over the past few years, comprehensive plan of cost management, and we delivered significant results. But as you know, in 2021, Bold Inside comes to an end, and we prepare a new program of cost management as part of our new transformation plan, which is Orange Ahead.And clearly, we will reiterate what we achieved in terms of cost management with Bold Inside. With this new program, we'll increase, the digitization of our sales, digitization of our processes. There is a deep ongoing IT transformation that will make a significant saving possible starting 2022. We will also increase our digital sales, and it will enable streamlining of our distribution network, which will also be a driver to reduce our A&P spending. So it will be less costly to have A&P online.The RAN sharing deal with Proximus will also maybe not -- it will start in 2022 to have some effect in 2021 in terms of cost savings in order the main impact will start in 2023. You know that at the end, we target by 2025, thanks to this deal, a net distribution of 20% of our network OpEx compared to '21, actually if you take the current situation. So yes, the main impact will be Mobile Viking, but we'll try to make the most of service revenue growth and cost management to offset this negative impact on our EBITDAaL.And your last...

[Emmanuel Carlier, Research Analyst]

Can I interrupt? Is there any financial number that you could communicate on the cost savings that you expect next year?

[Antoine Chouc]

Yes, yes. Sure. On the cost savings, I think it's too early for us to give you a clear guidance for 2022, but we'll come back in the Q3 presentation with more insight on this issue. So we'll come back in '20 -- and we'll present with a little more detailed plan on the cost management with the -- on the cost management -- on our cost management program for the coming years.And your third question -- I will exactly answer your second question regarding the possible fourth entrant, but I'll try to answer to your third question, which was about the mobile only ARPO. And your question, if I remember well is the percentage of our ARPO coming from out of bundle. So clearly, the ARPO, the out of bundle is decreasing because people in if Q2 compared with, let's say, a pre-COVID year, there is much less domestic data -- out of bundle data consumption where people rely more and more on their WiFi connection at home. There is also less roaming as -- even if it's increasing your -- people are traveling less.So it's only -- so it's clearly decreasing compared with -- on the long run. And it's still -- but we -- it's more partially offset if you take the long term by an increase -- small increase of our bundle ARPO. So at the end, it enabled us to have year-on-year a quite stable mobile only ARPO. I don't know if this answer to your question, but you know we don't disclose exactly the figures of our out of bundle ARPO.

[Emmanuel Carlier, Research Analyst]

Yes. No, that answers the question. It's mainly to check if you believe that the current trends we have seen in mobile-only ARPO, if that is the kind of trend that would stabilize from here on after many quarters of slight losses.

[Antoine Chouc]

I think we have some room for improvement. Clearly, the roaming revenues are not at the level there used to be in the pre-COVID era, but it will also depend on, yes, the [Technical Difficulty]. So we have some room to increase our out of bundle revenues. But as I said, it clearly depends on what will happen next in terms of variants and in terms of the semester situation.

[Xavier Pichon, CEO & Director]

Thank you, Antoine. Yes, Emmanuel, as it has been said by Antoine, it's a little bit premature. Of course, we would like to be in this position. But so far, okay, we need to remain cautious as we said. Actually, so on the fourth entrant, so you know, of course, this topic. This is not something we do have in our hands. Of course, it's related to what has been promoted and what has been designed by the federal government. So we know that now the royal decrees have been improved -- approved, sorry. And then now it's under review of the Council of State.We might have an answer coming up in next September, I guess. And we will say that we've said that maybe sometimes, but of course, we will closely monitor that all conditions won't be considered as discriminatory conditions. Of course, we'll have a deep review on that, and then we will act accordingly if this is -- or if we think this is the case.Commercially speaking, as I said, so we can see this market evolving. We do have in a way quite fourth entrant on air commercially, which is called Youfone, the MVNO that has, I think, announced some pretty fresh offers. And that's it. We'll see in the coming months. This is also something we do have in mind, and that's why, in a way, we are cautiously optimistic for this term 3 and, of course, 2022 because we know, and we have already observed in other markets, but we know that, of course, this kind of evolution could be something, I would say, we need to cope with including some tensing environment in the coming months.On top of that, I would say, we think that there is no room for -- or no real economic space for potential fourth entrant. And that's it, okay? Could be the case or not, we'll see that in the coming weeks.

[Operator]

[Operator Instructions] Next question is from Mr. Ulrich Rathe from Jefferies.

[Ulrich Rathe, Senior European Telecommunications Analyst]

I have 3 questions, please. The first one is on cost in Q2. Could you sort of describe how you would characterize the commercial investments in the second quarter? Have you held back anyway due to the situation or do you feel like you have put the money in that you had originally budgeted at the beginning of the year? Could you just give us a bit of a frame how you look at the number that came out here in the second quarter?Second question is on handset sales, which was pretty strong in the second quarter. What is driving that? And obviously, the last year was low because of lockdowns. But even then it looked pretty strong. So how is that coming about? Is that -- what sort of contracts are you selling that in? Are you pushing this particularly because of sort of promotional deals? Or how do you look at the handset sales number? And my last question is, you talked very quickly and very shortly about sort of VOO and its relation to the fiber strategy. But could you maybe just summarize the VOO situation as it stands right now because it's not always easy outside -- from outside Belgium to follow the news flow exactly of where this process currently is. So if you could just describe where it is and what you have done and can confirm at this point, that would be helpful.

[Xavier Pichon, CEO & Director]

Thank you, Ulrich. Maybe, Antoine, I will start with maybe the question number 1, and then question number 3. So maybe for the question -- for your question number 1, it's not obvious to say if we were able to, I would say, being part of the whole dynamic within this Q2. But of course, we observed some maybe good and bad or good and less good times related to the level of subsidies and A&P. You know that we've managed from Q1 to Q2, our A&P positioning because we thought that it was maybe less effective in this Q1 than the Q2.I think maybe we were right to do so because as you can see, okay, we had some very interesting and good commercial and strong commercial results. I think within the quarter, as I said, we had pretty good and pretty less good time. So the market has evolved a lot during this Q2 related to the lockdown and some ease here in Belgium started early June.So it's hard to know if we've been able to be, I would say, efficient and effective. But at the end, we'll try maybe to play the Q3 and Q4 like this, to try to be well positioned within all the mixed marketing, I guess A&P subsidized -- subsidies and then, of course, promotions at the right time. As I said, to me, term 3 will be very, very active because we will have 2x, which are very important in Belgium. The first one will be back to school, maybe the most important one in terms of opportunities, commercial opportunity, and then Christmas. So we'll see what will be the, I would say, dynamic, the market dynamic, but we'll try to replicate the Q2 to the term 3 if we can do so, of course.Maybe straight on your question number 3, hard maybe to see that from outside of Belgium, but in a way, we can't make any comment on that, okay? It's not something related to, I would say, our company. So we'll see. As I said, to Nicolas previously, we are monitoring all the options we might have on the table for the future, region per region. Of course, the sale of VOO will impact some of the sales, but it's not, I would say, everything, okay. It's a very, very important topic, but it's not everything.We need, of course, to think although in Flanders and Brussels as well. So we'll see, we'll see. We can't answer your question because we don't know at the end. So we'll see that in the coming months. It's maybe a topic that would be important for the market and for Orange Belgium as well, but we can't say anything so far. And Antoine, on the question number 2? Antoine?

[Antoine Chouc]

I can take it. So regarding your question on handsets, I think it's -- as you said, but it's very important to point it out. Last year, handset sales reached an all-time low because most of the quarters had our shops were simply closed, and we are not used to sell many handsets directly online.So clearly, it's quite normal to have a significant increase in our handset sales year-on-year. There is also, I would say, demand impact because there is a clear and strong appetite for our clients to renew there handsets maybe because it's becoming even more important in their day-to-day life. So clearly, there is a huge demand for handsets from our customers in shops.And the third effect is probably that we've built, and we leveraged some significant -- some very key partnerships with device manufacturers, especially some Chinese manufacturers, and it enabled us to have very attractive offers. And that subsidized offers is a powerful tool to build customer loyalty, to attract new customers and we -- as Xavier said, we decided to be quite present on this -- on the market on the subsidized offer versus -- especially at the end of the second quarter.So all this effect explains why we reached such an increase in our handset sales, but it's quite a good news because we -- it creates, as I said, customer loyalty and it enabled us to attract a lot of new customers.

[Operator]

We have 1 last question from Mr. Ruben Devos from KBC Securities.

[Ruben Devos, Senior Financial Analyst]

I've got 1 question related to the update by the CRC. A few weeks ago, they published new onetime cable tariffs for activation, installation and for other more exceptional items. I think it looks like these tariffs were lower versus the prior tariffs. So curious whether you could share your thoughts on the update? And how this could affect cable economics going forward? That's the first question.And then the second one actually relates to 5G. Curious whether you could share your thoughts on the importance of a 5G commercial launch in Belgium? I mean we've had temporary 5G licenses. They have been in place for some time now. Next year, we have the auctions. And it also appears the smartphone manufacturers are ramping up quickly to unload 5G-enabled handsets after the summer. So yes, curious what would sort of need to happen, let's say, or what makes it interesting to go ahead with the launch of 5G in the consumer market?

[Antoine Chouc]

Thank you, Ruben. I'll take the first -- your first question. So as a reminder, these tariffs, the onetime fees are tariffs that we have to pay only once to the cable operator in addition to monthly and recurring fees. This onetime piece covers kind of the activation, the installation of new customers, some repairs or the addition of a new TV channel.And as you said, following a decision of the CRC at the end of June, one-off -- these one-off charges are decreasing. But clearly, they were abnormally and, I would say, even abusively high before. So I would say that the situation, it's not -- it's just normal and the real point is that we used to pay far too much in the past. And I would say that it could even be a bit better as it will be challenged during the consultation process and some of the costs that the regulator took it.But at the end, it's only more or less 3% of the total wholesale costs. So it's not, in fact, that significant. And there is -- I remember you that we are still quite unhappy with the 2020 recurring fees. And so globally, even if -- of course, it's still a good news, but the wholesale equation remains not really satisfactory for us.So I thank -- we thank the regulator for the work on the one-time fees and its new -- its adaptation of the regulation that we think that there is still a lot to be done to get some improvement and more relevant conditions on the wholesale regulation. And maybe Xavier about the 5G question.

[Xavier Pichon, CEO & Director]

Yes. Thanks, Antoine. So 5G, we know that we are lagging behind here in Belgium related to 5G. But anyway, I would say it's moving forward, steps -- step after step. We've had good news, I think, late last week, where we had some EMF emission rule that has been settled for the Brussels region, which is good. The 14.5 volts per meter that's fine. And then, of course, I get that maybe the Wallonia region will work on this and then maybe we'll be able to announce some decision-making on that side on back-to-school time.And then, of course, we'll have the auction. Maybe that would be delayed slightly from Q4 to Q1 or Q2 2022. But I would say anyway, we remain, of course, very, very involved and keen to launch our 5G, I would say, offers on both sides, either B2C and B2B. You know that we've put some very interesting clues on the B2B market with our of Port of Antwerp POC last year, which is now slightly fruitful because we've had some contact with other companies.So that's it. So we are preparing ourselves to make sure that the right moment will be a key moment for Orange Belgium with 5G, but we'll have maybe to wait a little bit more for that.

[Ruben Devos, Senior Financial Analyst]

Okay. And just quickly following up with my first question. Typically, in each call, you sort of take us through the unitary cable economics in that quarter, talking about the stand-alone ARPO about EUR 40, the OpEx evolution, the recurring wholesale fee is about 20%, I believe, and then cable-related CapEx. So I was curious whether you could talk about these as well in this call?

[Antoine Chouc]

Yes. But as you may have noticed, we've slightly adapted the content of our financial communication, and we especially decided to no longer disclose detailed figures on the profitability of our cable operation. I think it's -- it made sense in the very first year of the projects, but now that our cable business is more, I would say, mature, and given the sensibility of all this information from a competition perspective, we decided to start disclosing such info. The only overview, I can give you is that we improved year-on-year and compared with the last quarter, the EBITDAaL margin of our cable operations. That's what I can tell you.

[Operator]

We have 1 last question from Mr. Nicolas Cote-Colisson from HSBC.

[Nicolas Cote-Colisson]

Sorry about that. Yes, it's going to be a short one. On the floods. Can you explain how the insurances work eventually? Because I was just wondering the kind of incremental costs you should -- we should expect in terms of OpEx and CapEx, so I understand you are cautiously optimistic on the guidance. At least, can you say that the guidance can still deal with this, and we won't get bad surprises just on the back of the floods in the next quarter?

[Xavier Pichon, CEO & Director]

Antoine?

[Antoine Chouc]

I think it's too early to give you a complete overview of the detail assessment of the financial impact of the floods. And the commitment I can take is that it will not have an impact on our guidance. And we assure you, especially for the shops, we have a rather good insurance policy. And we think that most of the damages at least for the shops will be covered.

[Operator]

Thank you. We have no other questions.

[Xavier Pichon, CEO & Director]

Thank you, guys. See you next time to talk soon, and have a relaxing summer leave. Bye-bye. Cheers.