Altice SA — Q3 2016 Earnings Presentation
37 slides from Altice SA's earnings presentation, Nov 10, 2016
Slide 1: Q3 2016 Results
Q3 2016 Results November 10, 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: Q3 2016 Key Takeaways
Q3 2016 KEY TAKEAWAYS BEST GROUP MOMENTUM SINCE IPO 1 Strong momentum: execution focus, investments in networks and convergence are paying off 2 Altice Group: return to revenue growth, expanding margins, growing cash conversion 3 France: continued revenue improvement and return to EBITDA growth
Slide 5: Strong Group KPIs
STRONG GROUP KPIS ALL MAJOR MARKETS CONTRIBUTING TO REVENUE IMPROVEMENT Revenue Growth Group EBITDA Margin (%) Q3-15 Q3-16 39.5% (2.4)% Q3-16 (3.5)% 36.5% +2.7% (0.7%) Q3-15 +6.7% Group Leverage +3.6% Net Debt / L2QA EBITDA 6.0x1 (0.0%) (8.6%) Q1-16 +2.4% 5.4x (2.0%) Q3-16 Note: Segments presented o
Slide 6: Positive Margin Evolution by Main Markets
POSITIVE MARGIN EVOLUTION BY MAIN MARKETS MEO / SUDDENLINK BEST-IN-CLASS MARGINS, MATERIAL UPSIDE IN SFR / OPTIMUM 2 Q3-16 EBITDA +8.5% +0.6% +33.1% +20.8% +0.9% Growth YoY1 Q3-16 EBITDA 39.5% 37.1% 35.8% 46.4% 45.9% Margin YoY Q3-16 EBITDA +3.0 pp +1.1 pp +8.2 pp +5.4 pp +0.4 pp margin Q3-16 OpFC
Slide 7: Significant Progress Towards Efficiency Targets
SIGNIFICANT PROGRESS TOWARDS EFFICIENCY TARGETS STRONG MARGIN EXPANSION SINCE ACQUISITIONS WITH FURTHER UPSIDE POTENTIAL EBITDA Margin (%) Pre-Altice1 Q3-16 TARGET 52.5% ACHIEVED Q1-14 40.6% Dominican 37.1% Republic All Altice Group Q3-14 31.2% 45.9% Medium Term Efficiency Targets Q1-15 38.3% On Tra
Slide 8: Powerful Altice Business Model Is Delivering
POWERFUL ALTICE BUSINESS MODEL IS DELIVERING EFFICIENCIES FUEL INVESTMENT WHICH DRIVES GROWTH AND FURTHER INVESTMENT Improve Efficiency and Profitability + Key centralized functions and scale benefits: • Customer experience • Network / technology Re-invest in Drive Growth Infrastructure and • Media
Slide 9: Customer Journey Transformation Focus Across Altice Group
CUSTOMER JOURNEY TRANSFORMATION FOCUS ACROSS ALTICE GROUP ISRAEL SUCCESSFUL IMPLEMENTATION NOW BEING REPLICATED IN FRANCE AND US Aligning organisational structure, processes and systems end-to-end for improving customer experience and operational / financial KPIs as well as lowering costs (e.g. inso
Slide 10: Leading Transatlantic Converged Communications Group
LEADING TRANSATLANTIC CONVERGED COMMUNICATIONS GROUP BALANCED FOOTPRINT WITH POWERFUL VALUE CREATION POTENTIAL Operating Cash Flow Contribution by Segment YTD 2016 Operating FCF Contribution1 (47% of revenue) 38% 41% (34% of revenue) Rest of the World2 7% 13% (9% of revenue) (10% of revenue) Altic
Slide 11: Business Review
Business Review Saltice
Slide 12: France Business Dynamics and Outlook
ALTICE FRANCE BUSINESS DYNAMICS AND OUTLOOK ON TRACK TO RETURN TO REVENUE GROWTH Revenue YoY (%)1 Outlook + Underlying decline in Q3 of (2.0%) excluding impact from regulation2 + Content bundling and pricing initiatives improving ARPU + Focus on reducing churn in B2C and B2B further (2.0%) + Impro
Slide 13: France B2C Revenue Trends
ALTICE FRANCE B2C REVENUE TRENDS FIXED RETURN TO GROWTH AND MOBILE STABILISING B2C Revenue YoY (%)1 1.3% (0.5%) (1.7%) (1.5%) (2.0%) (2.9%) (2.3%) (2.3%) (2.2%) (3.2%) (2.8%) (3.3%) (3.3%) (4.9%) (4.2%) (5.2%) (6.1%) (4.8%) (5.2%) (7.1%) (8.7%) Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Fixed Mobil
Slide 14: France B2C Fixed Line Business
ALTICE FRANCE B2C FIXED LINE BUSINESS FOCUS ON CHURN REDUCTION AND RE-ACCELERATING FIBER GROWTH Fiber vs. DSL Net Adds1 Fiber ARPU (€/Month) 40.3 40.3 39.3 38.7 40.8 41.2 70 72 78 66 44 44 Fiber ('000) Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Total Subscriber Net Adds (119) (42) (5) (61) (58) (75) (Fiber
Slide 15: France B2C Mobile Business
ALTICE FRANCE B2C MOBILE BUSINESS BOTH ARPU AND CUSTOMER BASE STABILISING B2C Mobile Postpaid Net Adds ('000) 140 (28) (82) (73) (144) (199) (314) Postpaid ARPU (€/Month) 25.5 26.1 26.5 25.3 24.6 25.0 26.1 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 15
Slide 16: France B2B Revenue Trends
ALTICE FRANCE B2B REVENUE TRENDS IMPROVING TRENDS B2B B2B Mobile Postpaid Net Adds2 Revenue YoY (%)1 ('000) (1.5%) (2.3%) (1.7%) (2.4%) (3.0%) (2.5%) (3.4%) (3.3%) (3.9%) (4.0%) (4.5%) (21) (7.1%) (7.6%) (41) (51) (46) (7.4%) (59) (59) (7.8%) (6.5%) (6.8%) (8.4%) (155) (4.6%) (13.9%) ARPU (€) per
Slide 17: France Accelerated Network Investments
ALTICE FRANCE ACCELERATED NETWORK INVESTMENTS LEADING FIBER OPERATOR AND FASTEST 4G MOBILE COVERAGE EXPANSION Fastest Fiber Network Buildout On Track Building Leading 4G Network # Fiber Homes Passed N°1 4G Population Coverage (%) SFR 4G coverage 2017 target Fiber coverage 2022 target 22m 90% 90% +38
Slide 18: France Content and Convergence Initiatives
ALTICE FRANCE CONTENT AND CONVERGENCE INITIATIVES REDUCE CHURN, INCREASE ARPU AND REVENUE GROWTH New share record for RMC Decouverte NEWS BFM Paris launched 7 November SFR Sport 1: #1 sports channel for SFR subscribers1 SPORT Premier League launched 13 August Exclusive agreement signed wit
Slide 19: France Top Operational Priorities
ALTICE FRANCE TOP OPERATIONAL PRIORITIES ACTION PLAN FOR NEXT PHASE OF SFR TURNAROUND 1 Achieve network targets: #1 fiber and 4G+ network 2 Monetize content investments: SFR NEWS, SFR SPORT, SFR PLAY and SFR PRESS 3 Transfer best customer experience practices from MEO / HOT to reduce churn 4 Imp
Slide 20: USA Operating Areas
ALTICE USA OPERATING AREAS 4TH LARGEST US CABLE OPERATOR 3.1m customers + New York + New Jersey + Connecticut + New York + New Jersey + Connecticut 1.5m customers + Arizona + Nevada + Arkansas + New Mexico + California + North Carolina + Idaho + Ohio + Kansas + Oklahoma + Kentucky + Texas + Louisian
Slide 21: USA Business Dynamics
ALTICE USA BUSINESS DYNAMICS STRONGER SUSTAINABLE GROWTH Revenue YoY (%)1,3 Q3-16 OpFCF Revenue YoY (%)1 Q3-16 OpFCF +135.1% +57.0% Growth YoY in cc Growth YoY in cc 6.7% 6.7% FY 2015: 0.6%2 FY 2015: 3.6%2 2.7% 4 2.6% 5.7% 1.9% 2.0%4 2 4.5% 5.2% 4.2% 2 0.7% 3.6% 1.1% 2.2% (0.1%) (0.7%) Q1 Q2 Q3
Slide 22: USA Fixed Line Business
ALTICE USA FIXED LINE BUSINESS POSITIVE CUSTOMER AND ARPU TRENDS Customer Relationships (‘000) B2C Customer Relationships (‘000) (‘000) (‘000) +1.0% +2.5% 3,148 1,489 1,491 3,139 1,481 3,129 1,467 3,117 3,120 3,112 1,452 1,454 3,107 1,439 3P 3P Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q1-15 Q2-15 Q
Slide 23: USA Accelerated Network Investments
ALTICE USA ACCELERATED NETWORK INVESTMENTS BROADBAND SPEED UPGRADE DRIVING GROWTH Optimum Network Suddenlink Network Q3-16 Q3-14 Q3-15 Q3-16 Fully upgraded network Project GigaSpeed upgrades 70% % Digitalization 100% 46% % Digitalization 17% 29% % Encrypted 8% >90% % Encrypted 0% 46% % Upgraded for
Slide 24: USA B2C Broadband
ALTICE USA B2C BROADBAND FOCUS ON HIGH SPEED BROADBAND GROWTH Optimum Broadband1 Suddenlink B2C Broadband 38 40 44 19 53 82 Altice Altice 56% Ownership 40% Ownership 52% 34% 34% 32% 26% 20% 20% 12% 13% 16% 8% 7% 8% 10% 7% 6% 6% 6% 6% 8% 6% 1% 2% 5% 2% 2% 2% 2% 2% 2% 0% 3% 1% 1% Q3 14 Q4 14 Q1 15 Q2
Slide 25: USA Top Operational Priorities
ALTICE USA TOP OPERATIONAL PRIORITIES ACTION PLAN FOR GROWTH AND EFFICIENCIES WORKING 1 Integration between Suddenlink and Optimum progressing well: Single management team with one commercial strategy Suddenlink industry leading margins; Optimum material margin upside potential 2 Significant n
Slide 26: Portugal Business Dynamics and Outlook
ALTICE PORTUGAL BUSINESS DYNAMICS AND OUTLOOK B2C BUSINESS BACK TO GROWTH AND RECOVERING B2B SEGMENT Revenue YoY (%)1 Outlook + Underlying growth in Q3 of +1.2% excluding impact from regulation2 +1.2% + B2C focus on reducing customer losses: (0.0%) Fiber growth accelerating with network build ou
Slide 27: Portugal Accelerated Network Investments
ALTICE PORTUGAL ACCELERATED NETWORK INVESTMENTS RAPID FIBER NETWORK EXPANSION TO SUPPORT CONVERGENT GROWTH Fiber Network Buildout B2C Mobile Customers Net Adds # Additional Fiber Homes Passed1 (‘000) (‘000) (‘000) +203k +180k +166k +77 +44 +18 +66k 68 52 49 35 +6k 14 9 (8) (31) (36) Q3-15 Q4-15 Q1-1
Slide 28: Financial Review
Financial Review Saltice
Slide 29: Pro Forma Consolidated Financials
ALTICE N.V. PRO FORMA CONSOLIDATED FINANCIALS1 YoY Reported YoY Constant €m Q3-15 Q3-16 Growth Currency Growth France (SFR) 2,870 2,802 (2.4%) (2.4%) Altice International 1,081 1,069 (1.1%) (0.9%) US (Optimum) 1,411 1,442 2.2% 2.7% Revenue US (Suddenlink) 544 578 6.2% 6.7% 2 Intersegment Adjustments
Slide 30: 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: €5.2 bn Gross Debt 29,687 50,484 Net Debt 28,995 49,282 • Altice US: c. 5.0-5.5x LTM EBITDA 4 5,811 8,636 PF Cash Int
Slide 31: USA Leverage Evolution
ALTICE USA LEVERAGE EVOLUTION RAPID DE-LEVERAGING TOWARDS TARGET Net Debt / L2QA EBITDA1 7.6x 7.5x 7.2x 7.0x 7.2x 6.9x 6.9x 6.7x 6.6x 6.5x 6.2x 6.0x 6.0x 5.8x 5.8x 5.6x Target 5.0-5.5x Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Suddenlink Optimum x Net debt / LTM EBITDA 1 Net debt and EBITDA figures as per
Slide 32: Overview of Altice Group Maturity Profile
OVERVIEW OF ALTICE GROUP MATURITY PROFILE €21BN REFINANCED DURING 2016 YTD Altice Maturity Profile – PF for Refi (€m) Debt maturity summary: Altice Group (PF for refinancing) 9,850 WAL life of 6.8 years (including RCF drawn) WACD of 6.2% 22 1,023 1,687 1,959 2,599 2,105 6,712 6,323 8,433 7,915 1,174
Slide 33: Saltice
Saltice
Slide 34: Appendix
Appendix Lattice
Slide 35: Pro Forma Consolidated Revenue
ALTICE N.V. PRO FORMA CONSOLIDATED REVENUE1 YoY Reported YoY Constant €m Q3-15 Q3-16 Growth Currency Growth France 2,870 2,802 (2.4%) (2.4%) US (Optimum) 1,411 1,442 2.2% 2.7% US (Suddenlink) 544 578 6.2% 6.7% Portugal 584 584 (0.0%) (0.0%) Israel 234 241 3.1% 2.4% Dominican Republic 175 176 0.7% 3.
Slide 36: Pro Forma Consolidated EBITDA
ALTICE N.V. PRO FORMA CONSOLIDATED EBITDA1 YoY Reported YoY Constant €m Q3-15 Q3-16 Growth Currency Growth France 1,034 1,041 0.6% 0.6% US (Optimum) 390 516 32.5% 33.1% US (Suddenlink) 223 268 20.2% 20.8% Portugal 266 268 0.9% 0.9% Israel 107 107 (0.3%) (1.0%) Dominican Republic 88 92 5.4% 7.7% Fren
Slide 37: Pro Forma Consolidated Capex
ALTICE N.V. PRO FORMA CONSOLIDATED CAPEX1 Q3-16 €m Q3-15 Q3-16 % Capex to Sales France 417 536 19.1% US (Optimum) 221 122 8.5% US (Suddenlink) 100 75 13.1% Portugal 68 100 17.1% Israel 66 60 25.0% Dominican Republic 37 36 20.5% French Overseas Territories 13 10 20.5% Others2 14 8 51.3% Total Altice