Altice SA — Merger or Acquisition (May 2015)
18 slides from Altice SA's merger presentation, May 20, 2015
Slide 1: Altice enters US market with acquisition of Suddenlink
Altice enters US market with acquisition of Suddenlink May 20, 2015 1
Slide 2: Disclaimer
DISCLAIMER NOT AN OFFER TO SELL OR SOLICITATION OF AN OFFER or any other generally accepted accounting standards. We present Non-IFRS or any other TO PURCHASE SECURITIES generally accepted accounting standards. We present Non-IFRS measures because we This presentation does not constitute or form par
Slide 3: Transaction Overview
TRANSACTION OVERVIEW First move into the US market with 70% acquisition of Suddenlink Existing shareholders BC Partners and CPPIB to retain 30% stake Acquisition values Suddenlink at 7.6x synergy-adjusted1 EBITDA (7.3x based on tax-adjusted EV) Suddenlink to become unrestricted subsidiary of Altice
Slide 4: Acquisition Rationale for Altice
ACQUISITION RATIONALE FOR ALTICE Entry into the large and attractive US cable market High quality cable asset with strong in-footprint competitive positioning Significant growth momentum: market share gains, bundling, penetration upside, B2B Substantial cost savings and synergies with Altice
Slide 5: Highly Attractive Suddenlink Business
HIGHLY ATTRACTIVE SUDDENLINK BUSINESS 2014 Revenues: $2,331m 2014 EBITDA: $905m (38.8% margin) 2014 Capex: $417m (17.9% of sales) Video Broadband Fixed Telephony Total 2014 Revenue / % of $1,164m / 50% $749m / 32% $205m / 9% $2,331m total1 2012-2014 Revenue 1.8% 15.5% 4.0% 6.5% CAGR PSUs2 1,132k Bas
Slide 6: Leader in Markets with Favourable Competitive Dynamics
LEADER IN MARKETS WITH FAVOURABLE COMPETITIVE DYNAMICS Suddenlink footprint OH CA WV MO NC OK Franchise Area AZ AR Top 10 States LA TX Unique cable footprint Fiber overbuild (%HP) Telecoms competition Verizon FiOS 0.0% AT&T 62% AT&T U-Verse 5.7% Centurylink 16% Other 3.9% Frontier 14% Fiber Overbuil
Slide 7: High Quality Network with Unique Competitive Position
HIGH QUALITY NETWORK WITH UNIQUE COMPETITIVE POSITION Suddenlink: leading next generation network in its footprint No competition Overlap¹ 8% 37% 45% 46% 70% 92% 41pp % of footprint delta Median: 63% 51% 55% 54% 30% Charter Comcast TWC Cablevision • Significant network investments over the last few
Slide 8: Suddenlink - Growth Platform
SUDDENLINK - GROWTH PLATFORM Residential PSU growth Revenue growth 8.5% 5.7% 5.3% 3,1% 8,1% 2,4% 1,6% 6,3% 6,8% 2012 2013 2014 Commercial PSU growth 2012 2013 2014 16,0% 17,2% 16,4% EBITDA growth 2012 2013 2014 8,8% ARPU growth 7,1% 6,1% 9,8% 9,8% 9,0% 2012 2013 2014 2012 2013 2014 x.x% Broadband su
Slide 9: Growing Business Supported by a Number of Growth Pillars
GROWING BUSINESS SUPPORTED BY A NUMBER OF GROWTH PILLARS Bundling upside1 Churn Reduction Upside 57,5% 33,6% 33,3% 27,7% 11,4% 3 4 4 US peers EU peers EU peers Broadband penetration upside - unique competitive Nascent B2B business positioning2 B2B revenue growth 15,3% 44,2% 12,5% 37,3% 9,9% 11,0% 4
Slide 10: Strong Cash Flow Generation with Substantial Upside
STRONG CASH FLOW GENERATION WITH SUBSTANTIAL UPSIDE Historical EBITDA ($m) EBITDA CAGR (2012-14) vs. peers 6,5% $853 $905 $797 2012 2013 2014 4,3% 4,2% Historical OCF (Adj. EBITDA – capex) ($m) $448 $482 $488 $470 $490 $534 2012 2013 2014 Suddenlink US peers 1 EU peers 2 • Suddenlink current NOLs st
Slide 11: Strong Potential to Improve Cost Structure at Suddenlink
STRONG POTENTIAL TO IMPROVE COST STRUCTURE AT SUDDENLINK… Stable margins over time… … with further improvement potential 50% 38% 39% 39% 36% 2012A 2013A 2014A US peers1 2014 median EU peers2 2014 median Source: Company Filings 1 Includes Comcast, TWC, Charter, Suddenlink, Cablevision 2 Includes Tele
Slide 12: Best-in-Class Altice Expertise to Drive Margin Expansion
BEST-IN-CLASS ALTICE EXPERTISE TO DRIVE MARGIN EXPANSION EBITDA Margin (%) +7pp +7pp +16pp +20pp +10pp 7pp margin 72% expansion in only 1 quarter of 62% ownership in France 53% 46% 39% 37% 34% 34% 27% 14% Q1 Q1 2011 Q1 2013 Q1 2011 Q1 2011² Q1 2014 2015 2015 2015 2015¹ 2015 Dominican Republic Portug
Slide 13: Suddenlink: Strategic Asset in a Consolidating US Market
SUDDENLINK: STRATEGIC ASSET IN A CONSOLIDATING US MARKET as of 4Q 2014 (‘000s) Overlap¹ Basic Video Subscribers 22 383 10 789 4 160 4 111 2 681 2 020 1 138 890 635 451 309 225 210 2014 EBITDA $23,436 $8,410 $3,190 $3,600 $1,834 N/A $905 $636 N/A N/A N/A N/A N/A ($m) Source: Company filings, Company
Slide 14: Altice Portfolio Diversification Strategy
ALTICE PORTFOLIO DIVERSIFICATION STRATEGY 2014 revenue mix PF PT 2014 Revenue mix PF Suddenlink Other Other Israel 5% 5% US 6% 12% Israel 5% Portugal 16% Portugal France France 14% 64% 73% Source: Company filings Notes: Does not add up to 100% due to rounding 14
Slide 15: Transaction Financing
TRANSACTION FINANCING Transaction financing includes: − Existing debt: $5,063m − New debt issued: $1,755m − Equity: $1,687m o/w BC Partners / CPPIB vendor loan note of $500m o/w Altice cash investment of $1,187m Total leverage including full synergies of 6.1x 2014 EBITDA1 1 Based on run-rate
Slide 16: Appendix
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Slide 17: Key Financials (1/2)
KEY FINANCIALS (1/2) Historical revenue ($m) Historical EBITDA ($m) 38.8% 39.1% $2 331 38.8% $905 38.5% $853 $2 183 $797 $732 $2 055 $1 901 2011 2012 2013 2014 2011 2012 2013 2014 Note: EBITDA before 1x x.x% EBITDA margin 17
Slide 18: Key Financials (2/2)
KEY FINANCIALS (2/2) Capital expenditures ($m) EBITDA–Capex ($m) 22.1% 20.9% 21.8% $488 17.9% $482 17.0% $448 19.4% 17.0% $417 19.2% $368 $371 $364 $349 $302 $327 $363 $371 2011 2012 2013 2014 2011 2012 2013 2014 Note: Capex is not pro forma for acquisitions or divestitures; EBITDA before 1x x.x% %