Optimum Communications, Inc. · NYSE:OPTU
Optimum Communications — Altice USA — IPO Roadshow (February 2018)
22 slides from Optimum Communications's IPO roadshow presentation, Feb 28, 2018
Slide 1: 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 2: FY 2017 Key Takeaways
Altice USA FY 2017 Key Takeaways Growth, strong cash generation, investment, and better customer service 3.2% revenue growth and 25.8% growth in Operating FCF 1 in FY 2017 2.9% B2C revenue growth supported by customer relationship and ARPU trends Solid 5.5% B2B revenue growth driven by superior SMB
Slide 3: Spin-Off Key Capital Markets Considerations
Altice USA Spin-Off Key Capital Markets Considerations Increased free float, independent and new shareholder returns policy Special cash dividend of $1.5bn Authorized share repurchase program of $2.0bn Free float of Altice USA A-shares to increase from c.10% to c.42%1 Leverage target reduced to 4.5x
Slide 4: Revenue Growth
Altice USA Revenue Growth Strong revenue growth across B2C, B2B, and Advertising Components of revenue growth ($m) +3.2% Total Altice USA: +3.2% in FY 2017 (+2.6% in Q4-17) 9,327 9,039 33 Other Advertising 42 1,299 Residential (B2C): +2.9% in FY 2017 (+1.8% in Q4-17) 1,231 B2B +2.6% Business Service
Slide 5: Residential (B2C)
Altice USA Residential (B2C) Continued positive customer and ARPU trends 2017 vs. 2016 Q4-17 vs. Q4-16 B2C customer relationships ARPU per unique customer B2C customer relationships ARPU per unique customer (‘000) ($) (‘000) ($) +0.1% +0.1% +1.5% +2.2% 4,535 4,535 140 4,528 140 4,528 138 137 Q4-16 Q
Slide 6: Residential: Strong underlying RGU trends
Altice USA Residential Strong underlying RGU trends B2C pay TV net adds (B2C) B2C broadband net adds ('000) ('000) Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 40 36 25 16 2 (21) (25) (33) (35) (37) Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 7 • Altice One entertainment platform to support growth: • All in one box including TV
Slide 7: Business Services (B2B)
Altice USA Business Strong growth in SMB revenue Altice USA Business Services revenue growth Services (B2B) B2B highlights ($m) • SMB revenue growth +7.5% in FY 2017 (+6.0% in Q4-17) +5.5% • SMB c.63% of total B2B revenue 1,299 • Optimum 263k SMB customers 1,231 • Suddenlink 109k SMB customers 474 E
Slide 8: Advertising
Altice USA Advertising Well positioned for growth in 2018 Altice USA Advertising revenue growth 2017 accomplishments ($m) • Acquired Audience Partners and Place Media to enable multiscreen addressable and national targeted advertising capabilities: +3.8% • Reach all US internet households with targe
Slide 9: Broadband Speed Availability
Altice USA Broadband Speed Availability Meeting customer demand for higher broadband speeds following network upgrades % of Homes Passed by available speed (equal to or greater than threshold shown) 1 Gbps: 16% 23% 29% 400 Mbps 16% 23% 86% 300 Mbps 16% 83% 89% 100 Mbps 96% 96% 96% Dec-15 Dec-16 Dec-
Slide 10: Growth Investment in Innovative Services
Altice USA Growth Investment in Innovative Services Enhancements to video product and network upgrades for next-generation services “The Grand Central of Entertainment” FTTH rollout Full MVNO agreement Core network development in 2018 Commercial launch by 2019 Acceleration of build planned in 2018 F
Slide 11: Margin Progression
Altice USA Margin Progression Substantially improved margins and cash flow Altice USA Adj. EBITDA margin 1 (%) 44.1% Improved margins 42.9% 40.3% 37.1% 32.1% 31.8% Dynamic and simplified organization 32.3% 34.5% 29.6% 26.5% 17.3% 18.5% Re-investments 14.5% 13.5% 10.7% 10.6% 10.6% 9.6% 2015 2016 2017
Slide 12: Capex Profile
Altice USA Capex Profile Significant investment in infrastructure and new customer premise equipment Altice USA cash capex (pro forma 1) Major capital projects for 2017 to continue into 2018 ($m) • Increase in network infrastructure capex related to commencing fiber (FTTH) rollout 991 956 • Increase
Slide 13: Free Cash Flow Generation
Altice USA Free Cash Flow Generation Strong FCF generation further supported by tax reform 2017 Free Cash Flow (FCF) and net change in cash bridge 2017 dividends and other cash items ($m) • Other operating cash flows includes $138m of cash restructuring costs Other investing activities includes M&A
Slide 14: Leverage, Maturity and Liquidity Analysis
1 Altice USA Leverage, Maturity and Liquidity Analysis Rapid de-leveraging with strong liquidity position Long-dated maturity profile & strong liquidity position Rapid de-leveraging supporting shareholder returns Net Debt / LTM EBITDA • • WAL life of 6.3 years and WACD of 6.2% 7.7x No material matur
Slide 15: Altice USA Debt Maturity Profile
1 Altice USA Debt Maturity Profile Long-dated maturities following pro-active refinancing activity Altice USA maturity profile ($bn) 0.6 0.6 1.6 2.8 0.7 3.0 0.8 12.5 2018 2019 2020 2021 2022 2023 2024 >22002255 (1) Adjusted for $1.5bn special cash dividend and pro-forma for refinancing of $750m 7.75
Slide 16: FY 2018 and Medium-Term Outlook
Altice USA FY 2018 and Medium-Term Outlook Continued revenue growth, margin expansion and cash flow growth 2018 Revenue Growth (YOY) 2018 Annual Capex Altice USA reiterates plan to expand its Adjusted EBITDA and cash flow margins over the medium-to long-term 17 • ~$1.3bn • c.2.5-3.0%
Slide 17: FY 2018 and Medium-Term Outlook
comm Altice USA FY 2018 and Medium-Term Outlook & Siaddendiinke Continued revenue growth, margin expansion and cash flow growth 2018 Revenue Growth + 6.2.5:3.0% 2018 Annual Capex » ~$1.3bn Altice USA reiterates plan to expand its Adjusted EBITDA and cash flow margins over the medium- to long-term 17
Slide 18: Q&A
Q&A 18 altice
Slide 19: Key Numbers: Pro forma US GAAP financials
Altice USA, Inc. Numbers Pro forma US GAAP financials (USD) 1 (1) Revenue and capex are prepared in accordance with U.S. GAAP. Adjusted EBITDA is a non-GAAP measure. For a reconciliation of Adjusted EBITDA to net income, please see the Q4-17 Altice USA earnings release posted to the Altice USA websi
Slide 20: Altice USA Debt Capital Structure
1 Altice USA Debt Capital Structure Per Q4 2017 as adjusted for Altice USA special cash dividend Cablevision (Optimum) 1 Cequel (Suddenlink) (1) Adjusted for $1.5bn special cash dividend and pro-forma for refinancing of $750m 7.750% Senior Notes due 2018 and $300m 7.875% Senior Notes due 2018 at Opt
Slide 21: Separation Overview
Altice USA Separation Overview Altice USA to be structurally separated from Altice NV; both controlled by Patrick Drahi effective following completion of the separation (both approved by independent members of Altice USA Board) (1) The distribution will exclude shares indirectly owned by Altice NV t
Slide 22: Registration statement legend
Altice USA has filed a registration statement with the Securities and Exchange Commission (SEC) for the offering to which this communication relates. You should read the preliminary prospectus in that registration statement and other documents Altice USA has filed with the SEC for more complete info