Altice SA — Q2 2015 Earnings Presentation
40 slides from Altice SA's earnings presentation, Jul 29, 2015
Slide 1: Q2 2015 Results
Q2 2015 Results July 29, 2015 1
Slide 2: Disclaimer
DISCLAIMER NOT AN OFFER TO SELL OR SOLICITATION OF AN OFFER FINANCIAL MEASURES TO PURCHASE SECURITIES This presentation contains measures and ratios (the “Non-IFRS Measures”), including This presentation does not constitute or form part of, and should not be construed as, EBITDA and Operating Free C
Slide 3: Speakers
SPEAKERS ALTICE & NUMERICABLE-SFR Dexter Goei, Dennis Okhuijsen, Eric Denoyer, Thierry Lemaitre, CEO Altice CFO Altice CEO Numericable-SFR CFO Numericable-SFR 3
Slide 4: Altice SA Q2 2015 Results - Highlights
ALTICE SA Q2 2015 RESULTS - HIGHLIGHTS Pro forma Financials1 Recent Strategic Initiatives Liquidity & Capital YoY Revenue down 2.0% to €3,906m Closed acquisition of Vivendi’s 20% Suddenlink transaction fully financed in • France down 2.5% stake in Numericable-SFR in May May through $6.8bn financing
Slide 5: Key Operational Highlights
ALTICE SA KEY OPERATIONAL HIGHLIGHTS Major Operations France Israel • Revenue trend improving with revenue down 2.5% YoY and up • Good growth in triple play and high speed broadband 1.4% QoQ • UMTS mobile service revenue up 10% with now over 1.1 million • Growth in both Fixed and Mobile ARPUs in B2C
Slide 6: Favourable Revenue Trends Across the Footprint
ALTICE SA FAVOURABLE REVENUE TRENDS ACROSS THE FOOTPRINT Sequential Revenue Growth in local currency in 4 largest operations 2872 2875 639 2850 635 8772 2839 632 8721 626 1021 2775 1019 8648 8665 1016 8637 2737 1013 593 8589 590 999 997 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3
Slide 7: Operational Review
GROUPE numericable:.. Operational Review 8 Big BUSINESS TEAM ®We telindus
Slide 8: France Q2 2015 Highlights
FRANCE Q2 2015 HIGHLIGHTS Synergies delivery ahead of plan with accelerating DSL to Fiber migrations Strong Sales momentum in June in Mobile Postpaid Growth in both Fixed and Mobile ARPUs in B2C Revenue trend improving both in YoY (-2.4%) and QoQ (+1.5%) Strong adjusted EBITDA growth in bo
Slide 9: Synergies Implementation Effort Continues
FRANCE SYNERGIES IMPLEMENTATION EFFORT CONTINUES Synergies Comments Key items Q2 Results Simplify range of offers and brand strategy Reorganisation of B2C a a c Increase usage of fiber network distribution and branding a a c B2C strategy under review by Optimise client relationship management a a c
Slide 10: Fixed: DSL to Fiber Migrations Ramping Up
FIXED : DSL TO FIBER MIGRATIONS RAMPING UP 2015 YTD DSL TO FIBER MIGRATIONS (in 000’s) Focusing on accelerating migration from DSL to Fiber June migrations 5x higher than in January 10
Slide 11: Postpaid Mobile Momentum
POSPAID MOBILE MOMENTUM STRONG GROSS ADDS DYNAMICS IN JUNE POSTPAID MOBILE GROSS ADDS YTD (in 000’s) Mobile Postpaid Gross Adds up more than 40% in June vs average since February 11
Slide 12: France Positive ARPU Dynamics
FRANCE POSITIVE ARPU DYNAMICS Postpaid Mobile Fixed +2,4% ARPU INCREASE +3% ARPU INCREASE 20.1€ 30.4€ 20.1€ ARPU ARPU 29.5€ ARPU ARPU Total(1) Total Total Total 0 0 25.5€ 26.1€ 34.3€ 35.3€ 20.0€ 30.8€ 19.9€ 33.1€ Q1-15 Q2-15 Q1-15 Q2-15 Customer Base Subscription ARPU Gross Adds Subscription ARPU (1
Slide 13: France B2C Mobile - Growth in ARPU
FRANCE B2C MOBILE – GROWTH IN ARPU Mobile Customers in 000’s ARPU in € 16,619 15,816 (8.3%) 7.3 6.9 7.4 1.3% 15,241 3,480 2,956 2,695 (23%) 26.8 25.5 26.1 (2.5%) 13,139 12,860 12,546 (4.5%) 22.6 21.8 22.7 0.4% Q2-14 Q1-15 Q2-15 YoY Q2-14 Q1-15 Q2-15 YoY Prepaid Postpaid Total Base Prepaid Postpaid B
Slide 14: France B2C Fixed - Solid Growth in ARPU
FRANCE B2C FIXED – SOLID GROWTH IN ARPU Fixed Customers in 000’s ARPU in € 32.5 32.5 33.6 3.5% (3.4%) 6,624 6,520 6,401 41.4 41.1 41.1 (0.7%) 1,510 1,595 1,665 10% 27.8 34.2 35.2 27% 5,114 4,925 4,736 (7.4%) 34.0 34.3 35.3 3.8% Q2-14 Q1-15 Q2-15 YoY Q2-14 Q1-15 Q2-15 YoY Fiber ADSL Total ADSL FTTB F
Slide 15: France B2B Mobile Trends
FRANCE B2B MOBILE TRENDS B2B Mobile subscribers in 000’s B2B Mobile ARPU in € 2.8% 24.1 6,678 6,654 23.8 6,473 23.4 (3.1%) 3,924 4,357 4,394 12% Q2-14 Q1-15 Q2-15 YoY Q2-14 Q1-15 Q2-15 YoY M2M Total Growth in B2B Mobile thanks to strong M2M Sales Mobile ARPU in slight decline sequentially 15
Slide 16: Leading National Infrastructure: Fiber & 4G Roll-out
FRANCE OUR LEADING NATIONAL INFRASTRUCTURE : +100 MEGA TO 1 GIGA FIBER & 4G ROLL-OUT MOMENTUM FROM N°1 TO N°1 FROM N°3 TO N°1 N°1 N°1 +0.6m in H1-15 +8% in >95% 15m H1 15 90% 12m N°3 65%- N°1 70% 7.7m 58% 7.0m Q2-15 2015 2017 2020 Q2-15 2015 2017 2020 Clear leader in fiber with ambitious targets Run
Slide 17: Financial Review
GROUPE Financial Review 8 Big BUSINESS TEAM ®We telindus
Slide 18: France Key Financials
FRANCE KEY FINANCIALS Revenue Adjusted EBITDA 1 EBITDA (€m) B2C B2B Wholesale Margin 38.0% +6.8pts (€m) 2 850 (2.4%) 31.2% 2 781 337 19% 336 555 533 1 056 1958 1912 890 Q2-14 Q2-15 Q2-14 Q2-15 Capex as % of Revenue EBITDA - Capex (€m) 16.0% 14.7% (€m) 49% 647 456 409 434 Q2-14 Q2-15 Q2-14 Q2-15 1 Ad
Slide 19: France Revenue Split
FRANCE REVENUE SPLIT Revenue by segment (€m) 2 850 2 740 2 781 QoQ YoY 555 558 533 3.1% 337 328 (2.3%) (4.5%) 336 (3.9%) 2.4% 1 958 1 854 1 912 (0.3%) 1.5% (2.4%) Q2-14 Q1-15 Q2-15 B2C B2B Wholesale TOTAL QoQ YoY B2C revenue up 3.1% QoQ due to improving ARPU B2C Fixed revenue down 1.5% YoY due t
Slide 20: Continuous Deleveraging Despite Vivendi Buy Back
FRANCE CONTINUOUS DELEVERAGING DESPITE VIVENDI BUY BACK Debt and leverage Outstand. Outstand. € Million Instrument Ccy Yield Euros Yield (inc. Hedging) (Inst. Ccy) (Closing €) Cash 250 250 Debt USD Notes 5,7% 4,9% 7 775 5 623 EUR Notes 5,5% 5,5% 2 250 2 250 USD Term Loans L3M+3.75% E3M+4.21% 2 587 1
Slide 21: Altice International Operational Review
Altice International Operational Review 21
Slide 22: PT Portugal - B2C KPIs
PT PORTUGAL – B2C KPIS FIXED ARPU GROWTH OFFSETTING MOBILE ARPU DECLINE Fixed Customer Base (000’s) Monthly ARPU in € (€) (4.1%) 1,793 1,720 370 5.4% 390 4.0% 266 (3.8%) 256 B2C 33.0 Fixed 31.7 1 157 (7.2%) 1 074 Q2-14 Q2-15 Q2-14 Q2-15 Fiber DTH DSL Mobile Customer Base (000’s) Monthly ARPU in € (€
Slide 23: PT Portugal - KPIs
PT PORTUGAL – KPIS CONVERGENCE UNDERPINS CONSUMER BASE TRANSFORMATION Convergent 4P/5P Customers B2C Fixed B2C Mobile (‘000s) Penetration of 3P/4P/5P (%) Postpaid RGU’s (%) 13.5% 23.9% 8.8 pts 12.3 pts 16.9% 34.2% 57.6% 41.6% 48.9% 29.3% Q2-14 Q2-15 Q2-14 Q2-15 94% Subscription Revenue (%) Subscript
Slide 24: PT Portugal - Financials
PT PORTUGAL – FINANCIALS FOCUS IS OPERATING FREE CASH FLOW GROWTH Revenue EBITDA1 & EBITDA margin 635 (6.6%) (€m) 593 (€m) 124 (15%) 106 EBITDA 38.5% 38.3% Margin 183 (8.1%) 168 (7.0%) 328 (2.7%) 319 244 227 Q2-14 Q2-15 Wholesale & Other B2B B2C Q2-14 Q2-15 Operating Cash Flow Improving OpCF (€m)
Slide 25: Israel - Cable
ISRAEL – CABLE IMPROVING MIX AND CUSTOMER SERVICE QUALITY Customer losses back to H1 2014 levels Improving broadband mix Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Broadband subs: <30Mb -8 -9 -11 80% -20 -24 65% 46% Broadband subs: 30Mb+ (‘000s) Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Triple-play growth
Slide 26: Israel - Mobile
ISRAEL – MOBILE UMTS SERVICE REVENUE UP 10% Mobile subscriber growth Mobile revenue growth 1 101 213 6.6% 227 (‘000s) 24% (NISm) 889 126 10% 138 37% 950 693 (32%) 40 (23%) 58 196 151 22 103% 45 Q2-14 Q2-15 Q2-14 Q2-15 iDEN UMTS Handset iDEN service UMTS service Other Mobile ARPU under pressure Compe
Slide 27: Israel - Financials
ISRAEL – FINANCIALS INVESTING FOR FUTURE FREE CASH FLOW GROWTH Revenue EBITDA & EBITDA margin (NISm) Cable Mobile 49.3% (NISm) 46.2% 47.5% 1 016 998 999 -1.8% -3.9% EBITDA 812 780 781 Margin 501 461 474 (-5.5%) 204 218 217 6.5% Q2-14 Q1-15 Q2-15 YoY Q2-14 Q1-15 Q2-15 YoY Capex as % of Revenue Improv
Slide 28: Dominican Republic - Operations
DOMINICAN REPUBLIC – OPERATIONS STRONG POSTPAID AND CABLE SUBSCRIBER GROWTH Mobile postpaid sub growth 3P sub growth & 3P penetration (‘000s) 3 768 3 786 (‘000s) 11% 20% 686 10% 752 Postpaid 116% Including subs 26 3 082 base clean up 3 034 Prepaid of 500k 12 Q2-14 Q2-15 Q2-14 Q2-15 Cable ARPU growth
Slide 29: Dominican Republic - Financials
DOMINICAN REPUBLIC – FINANCIALS STRONG EBITDA GROWTH THROUGH COMMERCIAL PERFORMANCE & COST STREAMLINING Revenue growth Strong EBITDA and margin growth (DOPm) 8 637 1.6% 8 772 1 (DOPm) 51.5% 7.4% B2B 46.0% +5.5pts 1 167 1 253 1 317 2.4% 1 348 Cable EBITDA Margin Mobile 4 512 3 975 14% 6 153 0.3% 6 17
Slide 30: Altice SA Financial Review
Altice SA Financial Review 30
Slide 31: Pro Forma Consolidated Financials
ALTICE SA PRO FORMA CONSOLIDATED FINANCIALS YoY Constant QoQ Reported Currency Reported €m Q2-14 Q2-15 Growth Growth Q1-15 Growth International 1 137 1 131 (0.6%) (5.0%) 1 120 1.0% Revenue France 1 2 847 2 775 (2.5%) - 2 737 1.4% Total 3 984 3 906 (2.0%) (3.2%) 3 857 1.3% International 474 491 3.6%
Slide 32: Pro Forma Consolidated Revenue
ALTICE SA PRO FORMA CONSOLIDATED REVENUE YoY Reported YoY Constant QoQ Reported €m Q2-14 Q2-15 Growth Currency Growth Q1-15 Growth France 2 847 2 775 (2.5%) - 2 737 1.4% Portugal 1 635 590 (7.1%) - 593 (0.5%) Israel 214 233 8.9% (1.9%) 225 3.6% Dominican Republic 147 173 18% (0.8%) 169 2.4% Other 14
Slide 33: Pro Forma Consolidated EBITDA
ALTICE SA PRO FORMA CONSOLIDATED EBITDA YoY Reported YoY Constant QoQ Reported €m Q2-14 Q2-15 Growth Currency Growth Q1-15 Growth France 897 1 063 18% - 930 14% Portugal 244 225 (7.7%) - 229 (1.7%) Israel 105 111 5.8% (4.7%) 104 6.7% Dominican Republic 66 91 39% 17% 89 2.2% Other 59 64 8.5% - 61 4.9
Slide 34: Pro Forma Consolidated Capex
ALTICE SA PRO FORMA CONSOLIDATED CAPEX €m Q2-14 Q2-15 % Capex to Sales France 456 406 15% Portugal 82 102 17% Israel 49 74 32% Dominican Republic 13 28 16% Other 31 28 21% Total 631 638 16% • Group capex driven by continued investment in fixed and mobile infrastructure and customer-driven capex • Fr
Slide 35: Group Liquidity and Net Debt
GROUP LIQUIDITY AND NET DEBT Q2-15 Actual (inc. Suddenlink €1.5bn restricted cash) PF for New TLs (and inc. all Suddenlink debt1) ASA Cons. ASA Cons. Gross Debt €28,363m Gross Debt €32,902m Cash €2,255m Cash €716m Net Debt €26,108m Net Debt €32,186m Un. RCF €1,486m Un. RCF €2,722m ASA ASA Gross Debt
Slide 36: MCS pumericab
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Slide 37: Appendix
Appendix 37
Slide 38: Altice SA Proforma Net Leverage Reconciliation
ALTICE SA PROFORMA NET LEVERAGE RECONCILIATION L2QA (EURm) Actual Net Debt ASA Consolidated 26,108 L2QA EBITDA ASA Consolidated 5,909 Synergies PT 100 Synergies SFR 210 L2QA EBITDA inc. Synergies 6,219 Net Leverage (L2QA exc. Syn.) 4,4x Net Leverage (L2QA inc. Syn.) 4,2x 38
Slide 39: Clear Market Leader in Fiber
CLEAR MARKET LEADER IN FIBER CONNECTABLE FIBER HOMES & FIBER CUSTOMERS Largest Fiber footprint (1) Largest Fiber customer base Fiber Homes Passed at end Q2 2015 (millions) Fiber Customer Base at end of Q2 2015 (000’s) 7.0 1665 4.3 720 378 1.5 0.8 110 (1) Source: Q1 2015 estimates for Free, Q1 2015 p
Slide 40: PT Portugal: Leading Infrastructure & Market Shares
PT PORTUGAL LEADING INFRASTRUCTURE & MARKET SHARES Unique Infrastructure Leading Market Share Positions 4G Coverage Subscriber Market Share Q1-151 (%) (% Population) 2% 5% 19% 93% 48% 32% 53% 32% 10% Q2-15 Mobile Fixed Voice Fiber Infrastructure2 6% 6% (million households) 42% 35% 48% 44% 2.0 11% 8%