Altice SA — Q3 2017 Earnings Presentation
45 slides from Altice SA's earnings presentation, Nov 3, 2017
Slide 1: Q3 2017 Results
Q3 2017 Results 3 November 2017
Slide 2: Disclaimer
Disclaimer FORWARD-LOOKING STATEMENTS Certain statements in this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, all statements other than statements of hi
Slide 3: Group Highlights
Group Highlights 3
Slide 4: Q3 2017 Key Takeaways
Q3 2017 Key Takeaways Focus on execution 1 Clear long-term strategy: #1 infrastructure, #1 convergence, #1 financials 2 Revenue growth and margin expansion driven by strong Altice USA performance 3 Substantial headroom for further improvement across all operations 4 Intensifying operational focus to
Slide 5: Main Markets Revenue Performance
Main Markets Revenue Performance Focus on continued USA growth and returning Europe to growth Q3-17 Q3-17 YTD Acceleration of transformation, nationwide fiber -1.3% -0.4% deployment, media and content investment expected to return business to growth Further improvements in products and customer
Slide 6: Q3 2017 Altice Group Margin Performance
Q3 2017 Altice Group Margin Performance Continued margin progression driven by strong Altice USA performance Altice group 1 Adj. EBITDA2 margin (%) 41.0% 39.8% 37.9% 35.7% 19.8% 23.5% 24.5% 16.8% 18.9% 18.1% 16.2% 16.5% FY-15 FY-16 YTD 2017 Q3-17 Capex % of sales Operating free cash flow 3 margin 1.
Slide 7: Fastest FTTH Rollout Planned in Europe / U.S.
Fastest FTTH Rollout Planned in Europe / U.S. Global fiber deployments across Altice Group Targeting run-rate of c.4+ million fiber (FTTH) homes passed p.a. Nationwide FTTB / FTTH rollout Altice Labs: Global R&D center Pre-Altice End-2017 2025 FTTB / FTTH Pioneering fiber GPON technology 2006 target
Slide 8: Altice and Teads
Altice and Teads Combining unique data assets with digital advertising solutions Building the future of cross-screen advertising Marrying the power of premium context with the Leveraging data from Altice’s telecoms businesses to deliver anonymous power of data to reach the people-based targeting r
Slide 9: Business Review
Business Review O altice
Slide 10: Altice France Business Strategy
Altice France Business Strategy Investment in networks and content, simplification and better customer service 1 Continue to build on mobile network quality improvements 2 Deliver rapid fiber (FTTH) network expansion 3 Monetize content investments 4 Improve and streamline operational processes follo
Slide 11: Altice France Significant Mobile Network Investments
Altice France Significant Mobile Network Investments Leading mobile network quality Higher quality and faster connections SFR #1 for download speeds as others slow Mobile data usage 3Q17 nPerf average quality score in nPoints 1 Mbps GB per customer (ex-M2M) Rank #1 Rank #1 3.0 20,969 Q3-16 Q3-17 >14
Slide 12: Altice France B2C Mobile Business
Altice France B2C Mobile Business Sustained return to growth following significant investment and quality of service improvement B2C mobile postpaid trends B2C mobile service revenue growth (%) Mobile postpaid net adds (‘000) 1.7% 1.7% 68 1.5% 33 34 16 (0.3%) (2.0%) Delayed rate (73) event compariso
Slide 13: Altice France Nationwide Fiber Roll-out Plan
Altice France Nationwide Fiber Roll-out Plan Accelerated build-up to support fixed business Fiber (FTTB / FTTH) homes passed (m) +96k +80k +175k +217k +224k FTTH roll-out accelerating 11.0 10.4 Expanding addressable market for high- 10.0 9.6 speed broadband services 9.3 8.9 Commitment to suppo
Slide 14: Altice France B2C Fixed Line Business
Altice France B2C Fixed Line Business Focus on churn reduction, network expansion and content investment Fiber vs. DSL net adds 1 44 54 45 44 Fiber ('000) 35 Q3-17 subscriber performance in line with Q3-16 Total net adds (Fiber + DSL) (75) (61) (35) (16) (75) Market still characterized by aggres
Slide 15: Altice France Customer Service and Operations Overview
Altice France Customer Service and Operations Overview Customer service improvements to reduce churn and reduce costs Contact center improvement 1 Mobile CSR Fixed CSR (Calls per customer) (Calls per customer) 0.0% Q3-16 Q3-17 Q3-16 Q3-17 Mobile TSR Fixed TSR (Calls per customer) (Calls per customer
Slide 16: Altice France and NextRadioTV
Altice France and NextRadioTV Combining unique FTA, pay TV, radio and press assets Key figures 1,600 Employees Q3 best quarter ever for BFMTV with > 1,000 Journalists record revenue growth +17% YoY YTD and + 65% EBITDA growth YTD driven by record audience share 13 TV Channels (3 FTA | 10 Pay) La
Slide 17: Altice France Monetising Content Investment
Altice France Monetising Content Investment Convergence of Telecom, Media and Data Content bundles support higher PRESSE SPORT telecoms NEWS PLAY ARPU • Churn reduction for customers taking content bundles Improved brand • Customers valuing content more and more when choosing their plan perception a
Slide 18: Altice Portugal Business Strategy
Altice Portugal Business Strategy Investment in networks and innovation, content accessibility, and better customer service 1 Fiber investment leadership: nationwide FTTH coverage by 2020 2 Mobile investment leadership: next generation network upgrades 3 Innovation leadership: Altice Labs 4 Media st
Slide 19: Altice Portugal Fiber and Mobile Network Leadership
Altice Portugal Fiber and Mobile Network Leadership Nationwide fiber deployment to support fixed growth and mobile network upgrades Fiber (FTTH) homes passed1 Mobile network evolution (m) Current Future 5.3 Single-RAN: improve network Multi-RAN quality of service and simplify 3.9 network operations
Slide 20: Altice Portugal B2C Fixed Line and Mobile Businesses
Altice Portugal B2C Fixed Line and Mobile Businesses Focus on churn reduction following fiber network expansion and mobile network upgrades Fiber (FTTH) vs. DSL / DTH net adds 1 B2C mobile postpaid net adds (m) (‘000) 61 29 31 33 35 Fiber ('000) 21 Total net adds 15 (13) (25) (28) (12) (11) 9 (Fiber
Slide 21: Altice Portugal Industrial Project for Media Capital
Altice Portugal Industrial Project for Media Capital Commitment to strengthen Media Capital Building on successful track record in bringing communication and content together in France Safeguard media plurality - Preserve editorial independence and maintain open platforms Open platforms - Maintain b
Slide 22: Altice USA Business Strategy
Altice USA Business Strategy Investment in networks and video product, simplification and better customer service 1 Positive revenue momentum 2 Solid customer dynamics 3 Industry leading EBITDA and cash flow margins with continued non-programming opex savings 4 Introduction of Altice One home entert
Slide 23: Altice USA B2C Fixed Line Business Trends
Altice USA B2C Fixed Line Business Trends Robust underlying RGU trends B2C pay TV net adds B2C broadband net adds B2C telephony net adds (‘000) (‘000) (‘000) Q3-16 Q3-17 17 16 3 (33) (27) (40) Q3-16 Q3-17 Q3-16 Q3-17 • Focus on growing B2C ARPU through higher broadband speed tiers (+2.6% YoY in Q3-1
Slide 24: Altice USA B2C Fixed Line Business
Altice USA B2C Fixed Line Business Continued positive customer and ARPU trends B2C customer relationships ARPU per unique customer B2C customer relationships ARPU per unique customer ('000) ($) ('000) ($) +0.5% +2.8% +0.4% +2.3% 2,887 156.9 110.6 2,873 152.6 1,642 1,636 108.2 Q3-16 Q3-17 Q3-16 Q3-17
Slide 25: Altice USA B2C Broadband Speeds
Altice USA B2C Broadband Speeds Focus on high speed broadband growth % of customers ≥ 100 Mbps broadband speeds 1,2 44 56 106 Suddenlink Acquisition Optimum Acquisition 88% 79% 66% 61% 48% 30% 22% 46% 39% 15% 9% 21% 26% 10% 12% 16% 6% 9% Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Average
Slide 26: Altice USA Margin Progression
Altice USA Margin Progression Substantially improved margins and cash flow Altice USA 1 Adj. EBITDA margin 42.7% 44.1% 38.3% 40.3% 40.8% Improved margins 36.1% 32.1% 33.5% 31.0% 26.4% 32.9% 31.6% Dynamic and simplified organization 14.8% 16.6% 24.0% 28.7% 33.8% 23.3% More optimization potentia
Slide 27: Altice USA New Home Communications Hub
Altice USA New Home Communications Hub Enhanced video and connectivity experience available across entire footprint early 2018 Altice One Current Set-Top Boxes Altice One All-in-one triple play box Voice search & control 4K Picture-in-picture Intuitive user interface St
Slide 28: Altice USA Fiber Rollout Schedule
Altice USA Fiber Rollout Schedule Progress from design stages to implementation of FTTH rollout Long-term rollout c.1m FTTH homes designed by end of 2017 c.1m FTTH homes passed by end of 2018 c.150k FTTH homes passed currently 1st FTTH homes commercialized by early 2018 • First Optical Line Transmit
Slide 29: Altice USA Customer Service and Operations Overview
Altice USA Customer Service and Operations Overview Customer service improvements to reduce churn and reduce costs Contact center improvement 1 CSR (Calls per customer) Q3-16 Q3-17 TSR (Calls per customer) Q3-16 Q3-17 1. Including B2C calls for both Optimum and Suddenlink 29
Slide 30: Altice USA B2B Q3 Update
Altice USA B2B Q3 Update Long-term structural growth opportunity Combining three business units Significant market opportunity 262k Customers ~$6.4bn 8.5k+ Lit buildings $1.3bn (YTD growth 5.7% YoY) 107k Customers 2017 YTD annualized B2B Addressable revenue market Performance highlights Q3 new produ
Slide 31: Altice USA Efficiency Savings
Altice USA Efficiency Savings Non-programming opex savings more than offsetting programming inflation Non-programming expenses Programming expenses ($m) ($m) (10.2%) 3,602 3,236 +4.1% (14.8%) 2,466 2,451 +2.9% 2,101 2,354 1,845 1,898 FY-15 FY-16 YTD - 16 YTD - 17 FY-15 FY-16 YTD - 16 YTD - 17 >$900m
Slide 32: Financial Review
32 Financial Review O altice
Slide 33: Altice N.V. Pro forma consolidated financials
Altice N.V. Pro forma consolidated financials 1 YoY Reported YoY Constant €m Q3-16 Q3-17 Growth Currency Growth France (SFR) 2,792 2,757 (1.3%) (1.3%) Altice USA 2,020 1,970 (2.5%) 3.2% Portugal 584 566 (3.1%) (3.1%) Israel 241 251 4.4% 3.1% Revenue Dominican Republic 176 170 (3.6%) 5.2% French Over
Slide 34: Overview of Altice Group Debt Pro-Forma
Overview of Altice Group Debt Pro-Forma 1 Diversified silos Altice Europe Altice Group (Consolidated) (Consolidated) Target Leverage Available Liquidity Gross Debt 30,623 51,245 Altice Europe: c. 4.0x Altice Group 2: €5.1 bn Net Debt 3 29,857 49,581 Altice US: c. 5.0-5.5x LTM Adj. EBITDA 4 5,8
Slide 35: Altice USA Leverage Evolution
Altice USA Leverage Evolution Rapid de-leveraging to within target range Net debt / L2QA Adj. EBITDA 1 6.7x 6.5x 2 2 Target 5.6x 5.3x 5.3x 5.1x 5.1x 5.0 – 5.5x Q3-15 Q3-16 Q3-17 Suddenlink Optimum 1. Net debt and Adj. EBITDA figures as per Altice reported financials in euros on an IFRS basis. L2QA A
Slide 36: Overview of Altice Group Maturity Profile
Overview of Altice Group Maturity Profile 1 Retain long-dated maturities following pro-active refinancing activity Altice maturity profile (€m) 103 1,619 557 1,664 4,976 8,857 5,179 3,255 11,503 11,437 1,110 675 Debt maturity summary: Altice Group WAL life of 6.3 years (including RCF drawn and CP is
Slide 37: Overview of Altice Group Maturity Profile Extension
Overview of Altice Group Maturity Profile Extension Limited near term maturities following very successful refinancing activity Altice maturity profile Altice cumulative % of debt matured (€m) (%) €19Bn of Debt Pushed to 82% 2025 & Beyond 44% 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 20
Slide 38: Q&A
38 Q&A altice
Slide 39: Appendix
39 Appendix altice
Slide 40: Altice USA, Inc. Numbers
Altice USA, Inc. Numbers Pro forma USD financials 1 YoY constant $m Q3-16 Q3-17 currency growth Revenue 2,255 2,327 3.2% YoY growth (%) 3.8% 3.2% Adjusted EBITDA 863 1,027 18.9% Margin (%) 38.3% 44.1% Capital expenditures 217 290 34.0% Capex to sales (%) 9.6% 12.5% 1. “Optimum” financials exclude Ne
Slide 41: Altice N.V. Pro forma net leverage reconciliation
Altice N.V. Pro forma net leverage reconciliation as of September 30, 2017 €m Altice Group Reconciliation to Swap Adjusted Debt Actual Pro Forma Total Debenture and Loans from Financial Institutions 50,364 50,364 Value of Debenture and Loans from Financial Institutions in Foreign Currency converted
Slide 42: Reconciliation of non-GAAP performance measures to operating profit
Altice N.V. Reconciliation of non-GAAP performance measures to operating profit for the three and nine months period ended September 30, 2017 €m Three Months ended Nine Months ended Adjusted EBITDA September 30, 2017 September 30, 2017 As reported in press release 2,358 7,001 Pro forma adjustments 1
Slide 43: Altice N.V. Pro forma consolidated revenue
Altice N.V. Pro forma consolidated revenue 1 YoY reported YoY constant €m Q3-16 Q3-17 growth currency growth France 2,792 2,757 (1.3%) (1.3%) Altice USA 2,020 1,970 (2.5%) 3.2% Portugal 584 566 (3.1%) (3.1%) Israel 241 251 4.4% 3.1% Dominican Republic 176 170 (3.6%) 5.2% French Overseas Territories
Slide 44: Altice N.V. Pro Forma consolidated Adj. EBITDA
Altice N.V. (cont’d) Pro Forma consolidated Adj. EBITDA YoY reported YoY constant €m Q3-16 Q3-17 growth currency growth France 1,043 1,009 (3.2%) (3.2%) Margin (%) 37.3% 36.6% Altice USA 784 885 12.8% 18.9% Margin (%) 38.8% 44.9% Portugal 268 265 (1.3%) (1.3%) Margin (%) 45.9% 46.8% Israel 107 116 8
Slide 45: Altice N.V. Pro forma consolidated capex
Altice N.V. (cont’d) Pro forma consolidated capex Q3-17 €m Q3-16 Q3-17 % capex to sales France 536 538 19.5% Altice USA 198 256 13.0% Portugal 100 107 18.9% Israel 60 65 26.0% Dominican Republic 36 24 14.1% French Overseas Territories 10 11 22.0% Others and eliminations 1 5 (54) nm Total Altice N.V.