Altice SA — Q2 2016 Earnings Presentation
36 slides from Altice SA's earnings presentation, Aug 9, 2016
Slide 1: Q2 2016 Results
Q2 2016 Results August 9, 2016 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: Group Highlights
Group Highlights Saltice
Slide 4: Q2 2016 Key Takeaways
Q2 2016 KEY TAKEAWAYS 1 Successful group transformation with closing of Cablevision (Optimum 1) and media acquisitions 2 France: improving churn and revenue trends in difficult market environment 3 Portugal: improving revenue trends with sustained margin expansion 4 Altice USA: unique combinatio
Slide 5: Transformation into Leading Transatlantic Operator
TRANSFORMATION INTO LEADING TRANSATLANTIC OPERATOR BALANCED FOOTPRINT IN EUROPE AND THE US Operating Cash Flow Contribution by Segment H1 2016 Operating FCF Contribution1 + Critical global scale + Enhanced diversification (47% of revenue) + US c.40% of portfolio and growing 39% 41% + c.70% fixed / c
Slide 6: Fixed Operational Momentum by Main Markets
FIXED OPERATIONAL MOMENTUM BY MAIN MARKETS INTEGRATED FIBER / CABLE CONVERGENCE STRATEGY Last Twelve Months (ending June 2016) B2C Net Adds ('000) 1 Fixed Customers Fixed Customers Fixed Customer Fixed Customer Fixed Customer Relationships Relationships Relationships Relationships Relationships -167
Slide 7: Europe Business Dynamics
EUROPE BUSINESS DYNAMICS IMPROVING REVENUE TRAJECTORY IN FRANCE, PORTUGAL AND ISRAEL Revenue YoY (%)1 Revenue YoY (%)1 Revenue YoY (%)1,3 1,5% (3,0%) (0,3%) (3,5%) (2,4%) (2,1%) (1,9%) (2,0%) (2,7%) (3,5%) (3,4%) 2 (5,4%) (4,3%) (6,6%) (4,6%) (4.6%) (8,6%) (8,7%) FY 2015: (3.5%) (6,1%) FY 2015
Slide 8: US Business Dynamics
US BUSINESS DYNAMICS STRONG UNDERLYING GROWTH Revenue YoY (%)1 Revenue YoY (%)1,3 6,7% 4 FY 2015: 3.6%2 5.7% FY 2015: 0.6%2 4,5% 2,6% 2 5.2% 4.2% 2.0% 4 3,6% 1,9% 2 2,2% 0.7% 1.1% (0,1%) (0,7%) Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 15 15 15 15 16 16 15 15 15 15 16 16 Impact from excluding PPV even
Slide 9: Margins by Main Markets
MARGINS BY MAIN MARKETS MEO / SUDDENLINK BEST-IN-CLASS MARGINS, MATERIAL UPSIDE IN SFR / OPTIMUM 2 Q2-16 EBITDA (6.8%) 22.5% 18.5% 11.1% 3.7% Growth YoY1 Q2-16 EBITDA 35.9% 48.4% 45.6% 32.9% 38.9% Margin YoY Q2-16 EBITDA -1.0 pp +10.1 pp +5.1 pp +2.9 pp +2.0 pp margin Q2-16 OpFCF 15.4% 32.8% 32.9%
Slide 10: Business Review
Business Review Saltice
Slide 11: Business Dynamics and Outlook
BUSINESS DYNAMICS AND OUTLOOK SOLID PERFORMANCE IN CHALLENGING MARKET Revenue (€m) (4.3%) / (4.6%) ex media assets Outlook + Content bundling and pricing initiatives improving ARPU Other 123 126 3.0% + Reducing churn in B2C and B2B Wholesale 337 333 (1.2%) + SFR RadioTV double-digit revenue growth B
Slide 12: B2C Fixed Line Business
B2C FIXED LINE BUSINESS FOCUS ON CHURN REDUCTION AND RE-ACCELERATING FIBER GROWTH Fiber vs. DSL Net Adds1 Fiber ARPU (€/Month) 40.1 40.3 40.3 39.3 38.7 40.8 70 72 78 66 48 44 Fiber ('000) Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Total Subscriber Net Adds (57) (119) (42) (5) (61) (58) (Fiber + DSL) DSL ('
Slide 13: B2C Mobile Business
B2C MOBILE BUSINESS ARPU STABILIZATION AND REDUCED NET LOSSES YoY Postpaid Net Adds / (Losses) ('000) 140 (28) (82) (144) (199) (314) Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Postpaid ARPU 25.5 26.1 26.5 25.3 24.6 25.0 (€/Month) ARPU stabilised from content bundling and pricing initiatives, reduced chu
Slide 14: B2B Transformation in a Declining Market
B2B TRANSFORMATION IN A DECLINING MARKET B2B Fixed Trends (c. 50% of B2B)1 B2B Mobile Trends (c. 30% of B2B)2 B2B Action Plan Data + Voice Revenue (€m)1 Net Losses ('000) Network quality of service improvements reducing churn (e.g. (3.1%) mobile revenue now flat QoQ) (41) (46) Fixed delivery bac
Slide 15: Top Operational Priorities
TOP OPERATIONAL PRIORITIES ACTION PLAN FOR NEXT PHASE OF SFR TURNAROUND 1 Achieve 2017 network targets: #1 fiber and 4G+ network 2 Monetize content investments: SFR NEWS, SFR SPORT, SFR PLAY and SFR PRESS bundles 3 Transfer best customer service practices from MEO / HOT to reduce churn 4 Improve
Slide 16: Accelerated Network Investments
ACCELERATED NETWORK INVESTMENTS LEADING FIBER OPERATOR AND FASTEST 4G MOBILE COVERAGE EXPANSION Fastest Fiber Network Buildout On Track of Building Leading 4G Network # fiber homes passed N°1 Fiber coverage H1-16 4G 2022 target 22m +419k sites roll-out +2,241 +640 +1202 +935 Fiber coverage 8,5m H1-1
Slide 17: Improved Mobile Network Quality
IMPROVED MOBILE NETWORK QUALITY INVESTMENTS PAYING OFF: SFR NOW #2 ON VOICE AND INTERNET BROWSING ARCEP July 2016 Results Usage Quality Study, Including All Areas + SFR is #2 operator on average, across all dense / less dense / rural areas, on highways, and on the TGV + In dense areas, +4% improveme
Slide 18: Strategic Content and Convergence Initiatives
STRATEGIC CONTENT AND CONVERGENCE INITIATIVES REDUCE CHURN, INCREASE ARPU AND REVENUE GROWTH SFR RadioTV very strong growth NEWS BFMTV #1 news channel1 c.28m RMC Decouverte monthly viewers SPORT Launch of BFM sport in June Premier League launches 13 August PRESSE 3.2m app downloads c.4
Slide 19: Business Dynamics and Outlook
BUSINESS DYNAMICS AND OUTLOOK STRONG B2C BUSINESS AND RECOVERING B2B SEGMENT Revenue (€m) Outlook (3.0%) / (2.1%) excl. termination fee impact1 + Underlying decline of -2.1% excluding impact from voice and SMS termination fee + B2C focus on reducing customer losses: Wholesale & Other 106 Fiber gro
Slide 20: Accelerated Network Investments
ACCELERATED NETWORK INVESTMENTS RAPID FIBER NETWORK EXPANSION TO SUPPORT CONVERGENT GROWTH Fiber Homes Passed B2C Mobile Customers Net Adds x8 (‘000) #1 (‘000) (‘000) +346k +44 +18 +42k 64 52 49 35 [VALUE] Avg. per semester 1 (31) (36) 1 H1-16 (8) in 2015 (22) Fiber Net Adds (144) (140) (‘000) Fiber
Slide 21: Business Dynamics and Outlook
BUSINESS DYNAMICS AND OUTLOOK STRONG GROWTH Revenue (€m) +5.2% cc / +3.0% (Reported)1 Outlook cc + Strong underlying growth +5.7% cc ex-PPV event in Q2-15 Wholesale 44 (0.7%) & Other 45 + Industry leading cash flow growth 75 +10.4% + Customer base growth supported by unlimited offers B2B 69 + Levera
Slide 22: B2C Fixed Line Business
B2C FIXED LINE BUSINESS POSITIVE CUSTOMER AND ARPU TRENDS Residential Customer Relationships (‘000) (‘000) +2.9% Q2 seasonality (net losses 5k lower YoY) 1 489 1 481 1 467 1 452 1 454 1 439 3P Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 ARPU ($) per unique residential 114.0 116.5 customer +2.2% Total revenu
Slide 23: Business Dynamics and Outlook
BUSINESS DYNAMICS AND OUTLOOK FOCUS ON DRIVING CUSTOMER RELATIONSHIPS WITH NEW BUNDLES Revenue (€m)1 +1.1% cc / Outlook (1.0%) (Reported)2 + Accelerating growth: +2.0% cc ex-PPV event in Q2-15 cc Wholesale & Other 73 74 3.5% + Untapped customer growth headroom B2B 178 184 +5.6% + Deliver best broadb
Slide 24: Fixed Line Business
FIXED LINE BUSINESS STRONGEST OPERATIONAL PERFORMANCE SINCE 2012 Customer Relationships (‘000) (‘000) +1.0% 3 112 3 117 3 107 3 120 3 129 3 148 3P Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 ARPU ($) per unique customer 159.5 159.9 0.3% Total revenue growth1: 2.0% YoY (cc) 1 Including wholesale and other re
Slide 25: Altice USA Top Operational Priorities
ALTICE USA TOP OPERATIONAL PRIORITIES ACTION PLAN FOR GROWTH AND EFFICIENCIES 1 New management team 2 Next phase of integration between Suddenlink and Optimum 3 Focus on accelerating growth with better services and bundling strategy 4 Acceleration of Suddenlink’s Project Gigaspeed; upgrading Opt
Slide 26: Financial Review
Financial Review Saltice
Slide 27: Altice N.V. Pro Forma Consolidated Financials
ALTICE N.V. PRO FORMA CONSOLIDATED FINANCIALS1 YoY Reported YoY Constant €m Q2-15 Q2-16 Growth Currency Growth France (SFR) 2,904 2,781 (4.3%) (4.3%) Altice International 1,092 1,104 1.1% 2.0% US (Optimum) 1,447 1,432 (1.0%) 1.1% Revenue US (Suddenlink) 550 566 3.0% 5.2% 2 Intersegment Adjustments (
Slide 28: Overview of Altice Group Debt
OVERVIEW OF ALTICE GROUP DEBT DIVERSIFIED SILOS Altice Europe Altice Group Target Leverage Available Liquidity (Consolidated) (Consolidated) • Altice Europe: c. 4.0x • Altice Group1: €5.1 bn Gross Debt 29,708 50,546 Net Debt 28,984 49,035 • Altice US: c. 5.0-5.5x LTM EBITDA 4 5,782 8,460 PF Cash Int
Slide 29: Overview of Altice Group Maturity Profile
OVERVIEW OF ALTICE GROUP MATURITY PROFILE Altice Maturity Profile (€m) Debt maturity summary: 14,210 Altice Group WAL life of 6.7 years (including RCF drawn) WACD of 6.3% 115 1,020 1,701 1,969 2,573 2,527 4 172 8,280 4,192 5,659 7,927 2 678 4 194 4 405 3 819 1 621 3 156 2 702 7 773 935 2 990 2 058 -
Slide 30: Saltice
Saltice
Slide 31: Appendix
Appendix Saltice
Slide 32: Fixed and Mobile Businesses
FIXED AND MOBILE BUSINESSES TOTAL REVENUE BACK TO GROWTH AS FIXED BASE HAS STABLISED B2C and B2B Fixed Net Adds / (Losses) ('000) Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 (4) (2) (2) (11) (13) Fixed ARPU 232 234 (ILS/Month) 0.9% B2C fixed revenue growth: (3.1%) YoY (cc) /+0.8% QoQ (cc) B2C Mobile (UMTS) Net Ad
Slide 33: Dominican Republic
DOMINICAN REPUBLIC CONTINUED STRONG GROWTH IN MOBILE AND FIXED Fiber Migration and Increasing 3P Penetration Fiber Unique Subscribers Fiber ARPU Net Adds (‘000) YoY +21 YoY Growth +1.3% 3P as a % of Fiber Subscribers 39% DSL Unique Subscribers DSL ARPU Net Adds (‘000) YoY -10 YoY Growth +20.8% B2C f
Slide 34: Pro Forma Consolidated Revenue
ALTICE N.V. PRO FORMA CONSOLIDATED REVENUE1 YoY Reported YoY Constant €m Q2-15 Q2-16 Growth Currency Growth France 2,904 2,781 (4.3%) (4.3%) o/w NextRadioTV 58 65 12.6% 12.6% US (Optimum) 1,447 1,432 (1.0%) 1.1% US (Suddenlink) 550 566 3.0% 5.2% Portugal 593 575 (3.0%) (3.0%) Israel 233 235 0.8% 1.5
Slide 35: Pro Forma Consolidated EBITDA
ALTICE N.V. PRO FORMA CONSOLIDATED EBITDA1 YoY Reported YoY Constant €m Q2-15 Q2-16 Growth Currency Growth France 1,071 999 (6.8%) (6.8%) o/w NextRadioTV 16 21 27.0% 27.0% US (Optimum) 433 471 8.7% 11.1% US (Suddenlink) 223 258 16.0% 18.5% Portugal 227 279 22.5% 22.5% Israel 111 111 (0.1%) 0.5% Domi
Slide 36: Pro Forma Consolidated Capex
ALTICE N.V. PRO FORMA CONSOLIDATED CAPEX1 Q2-16 €m Q2-15 Q2-16 % Capex to Sales France 406 572 20.6% o/w NextRadioTV - 7 11.4% US (Optimum) 219 173 12.1% US (Suddenlink) 104 72 12.7% Portugal 102 90 15.6% Israel 74 1122 47.7% Dominican Republic 28 34 19.5% French Overseas Territories 9 14 25.6% Othe