Proximus Group
| Company type | Autonomous public-sector company |
|---|---|
| Industry | telecommunications operator |
| Founded | 1930 |
| Headquarters | Brussels, Belgium |
Key people | Didier Bellens, President and CEO, Theo Dilissen, Chairman of the Board of Directors |
| Revenue | € 5.458 billion (2005) |
| Website | [[1]] |
Group structure
The Belgacom Group, composed of Belgacom SA and its subsidiaries, is the leading telecommunications company in Belgium.
The Group is divided into three main fields of activity:
- Fixed-Line Services (FLS)
- Mobile Communications Services (MCS)
- International Carrier Services (ICS)
Fixed-Line Services (FLS)
These activities are mainly provided by Belgacom SA. They are part of a full range of voice, data transmission and Internet services over the fixed line for both residential and professional customers.
Belgacom SA is the main provider of connectivity services in Belgium, offering a range of services to companies and private individuals.
In May 2005, Belgacom SA ventured into the world of television with the launch of Belgacom TV, the first digital television offer in Belgium. This launch enabled the Belgacom Group to become a fully-fledged “quadruple play” operator (fixed telephony, Internet, mobile telephony and television).
Mobile Communications Services (MCS)
These activities are provided by the subsidiary Belgacom Mobile, better known as Proximus. This subsidiary, of which 75% is owned by the Belgacom Group, and 25% by Vodafone, is one of the world’s largest mobile operators.
Proximus offers a wide range of mobile communications services to residential and professional customers in Belgium.
In 2005, Proximus became the first mobile operator in Belgium to introduce UMTS (3G) services for the general public.
International Carrier Services (ICS)
These activities of the Belgacom Group are provided by its subsidiary Belgacom International Carrier Services. 72% of the company is owned by belgacom SA and 28% by Swisscom Fixnet.
The company provides voice and data capacity and connectivity services to telecommunications operators around the world.
It is now the world’s eighth-largest voice-traffic operator, and the world leader in the field of signaling services for mobile operators.
Background
The start of telephony in Belgium
In 1879, the Belgian telegraph service installed a telephone line at the Parliament. That same year, several private contractors submitted requests to operate the telephone networks in various Belgian cities.
The lack of legislation during the first few years of operation reduced the telephone network’s chances of developing. It also forced the Belgian authorities to develop a legislative framework to regulate the operation of telephony in Belgium.
In 1896, the whole telephony sector passed into the hands of a public company.
In 1913, a large portion of Belgium was accessible by telephone. Although the number of subscribers was still small, the majority of railway stations, post offices and telegraphs were equipped with public telephone booths.
After World War I: the shift to an autonomous public-sector company
World War I had caused a complete and utter suspension of telecommunications in Belgium.
One of the reasons for this was the financial dependency of the public company. The damage caused during the war and the dismantling of parts of the networks meant that colossal investments were needed to manage the telegraphs and telephones.
The national telegraph and telephone company (RTT) was set up on 19 July 1930. The public-sector company thus became autonomous: it was no longer dependent on annual State budgets and was authorized to carry out its own management.
Inclusion of the RTT in the State industrial policy
When the RTT was created, huge sums were invested in the Belgian telephone network. More and more sectors of society now had access to telephony.
At the same time, another development was unfolding that would quickly entail a major expense for the company. During the economic crisis of the 1930s, the State would involve the RTT in its industrial and employment policy. In an attempt to reduce the high unemployment rate in the sector the State forced the entire Belgian telephone network to become automated.
This development strongly restricted the autonomy of the RTT. Although the law of 1930 explicitly stated that the company could draw up and implement an investment plan in an autonomous manner, by imposing its employment policy, the State was going against the basic principle of the law. After the war, this would soon become a structural problem for the RTT.
From a leading-edge company to crisis: the RTT in the post-war period
After World War II, the RTT was faced with considerable damage and the dismantling of part of its networks. To give a quick boost to the sector, the State decided to intervene financially.
During this period, the demand for telecommunication services increased at an alarming rate. The number of subscribers quickly rose from approximately 350,000 in 1946 to 522,000 in 1951 and 1,049,000 in 1965. This growth in the customer base led to a very high rate of investment. Thanks to this, towards the end of the 1960s, the RTT found itself at the forefront of social and technological development.
But this expansionist approach had a negative side. From the late 1960s, the losses began to accumulate. And the global economic crisis in 1973 did not help matters: the company’s financial situation only worsened. This situation would lead the RTT to carry out major reorganization programs during the mid 1970s.
During the 1980s, it became clear that the telecommunications sector would become one of the key development poles at the end of the 20th century. Thus, in 1981, the RTT management began a major reorganization to solve certain structural problems within the company.
During that period, another player entered the scene. In 1987, the European Commission published its Green Paper on telecommunications, which focused on liberalization.
The 1990s: the Belgacom law and the evolution of the sector under European influence
The Green Paper of 1987 was incorporated into the Belgian law of 21 March 1991, which created a new type of public-sector company with greater management autonomy. The Belgian telecommunications sector was thus reorganized and saw the creation of Belgacom, an autonomous public-sector company.
This law aims to create an environment that is favorable to the competitive development of the telecommunications market in Belgium. From now on, a management contract had to define the prerogatives of the company and the public authorities in order to guarantee the offer of a certain number of general utility public services and a wider management autonomy than that provided for in the law of 1930.
In 1994, the European convergence process began to accelerate. In a new Green Paper, the European Commission declared that the operation of the networks and telephony must also be open to competition. 1994 was also the year in which Belgacom founded Proximus, Belgium’s first mobile network. On 1 July 1994, this activity, as well as the old analog Mob2 system, was transferred to a subsidiary, Belgacom Mobile, with the following shareholding: 75% Belgacom – 25% Air Touch, then Vodafone in 1999.
At the same time, Belgacom faced competition by forming partnerships with Ameritech, Tele Danmark and Singapore Telecom. Various Belgian financial institutions responded by forming a consortium, which was called ADSB. The Belgian State holds 50.1% of the shares and therefore remains the main shareholder.
The BeST plan, which was mainly aimed at restructuring the company and dividing it into four “business units,” was implemented in 2001. Belgacom also disposed of certain activities such as Belgacom France, Ben, its security activities as well as the French activities of Infosources.
The human dimension of the BeST plan was implemented in the course of 2002. The company, which employed too many staff at the time, had many reasons for adopting this plan: voluntary offers for departure, part-time work and reconversion were proposed to a large portion of the staff.
In an increasingly open market, in which competition is more aggressive by the day, Belgacom decided to bet on the future by radically changing its image in 2003. A change of logo, colors and the promise to be closer to its customers were the bases on which the former RTT began to work.
These radical changes in the company’s philosophy were followed by the operator’s initial public offering. On 22 March 2004, Belgacom was listed for the first time on the Euronext stock market. The Belgian State remains the majority shareholder with 50% + 1 of all shares, while the ADSB consortium sold all its shares.
This enabled the Belgian incumbent operator to free considerable sums to finance its objectives. Indeed, the time has come for broadband, and the funding of the Broadway project (to cover the whole Belgian territory with fiber optic cables) requires huge investments.
2004 was also the year in which the incumbent operator carried out its first digital TV tests with a view to finding new sources of income in an increasingly competitive market.
2005 : Belgacom TV and the takeover bid on Telindus
2005 was marked by two important events for Belgacom: the launch of Belgacom TV and the takeover bid on Telindus.
The first signs of digital TV in Belgium appeared in 2004, when Belgacom started its first digital TV tests in a few hundred homes.
In May 2005, the Belgian operator took the market by surprise when it acquired the rights to broadcast professional Belgian football (D1 & D2) for the next three seasons through its subsidiary Skynet iMotions Activities.
This step anticipated the imminent launch of Belgacom TV in June 2005. This digital TV offer via ADSL was the first of its kind in Belgium and transformed Belgacom into a quadruple player, offering fixed telephony, mobile telephony, high-speed Internet as well as television. It also enabled the Belgian company to secure new sources of income, given that the profit margins on its traditional activities are becoming increasingly reduced.
2005 was also the year of the takeover bid on Telindus, a leader in the network integration sector. An initial bid, considered “hostile” by the Telindus management, was made in September. This marked the start of a stock-market saga that would go on for almost four months. Tensions were high between the two companies, and the different stakeholders fought it out in the press.
After a counter bid launched by France Telecom, Belgacom eventually carried the day, arriving at a conditional partnership agreement with Telindus in late December.
As expected, Belgacom had responded by increasing its bid to Telindus, which enabled the conditional partnership agreement to be reached.