Altice SA — FY2015 Earnings Presentation
36 slides from Altice SA's earnings presentation, Mar 15, 2016
Slide 1: 2015 Results
2015 Results March 15, 2016 1
Slide 2: Disclaimer
DISCLAIMER NOT AN OFFER TO SELL OR SOLICITATION OF AN OFFER FINANCIAL MEASURES TO PURCHASE SECURITIES This presentation c ontains meas ur es and r ati os (the “Non-IFR S M eas ures”), i ncl udi ng This pres entati on does not c onstitute or form part of, and s hould not be c ons trued as , EBITD A a
Slide 3: Highlights & Strategy Update
Highlights & Strategy Update 3
Slide 4: 2015 Key Takeaways
2015 KEY TAKEAWAYS §1 Strong financial performance: double digit Adjusted EBITDA and Operating FCF growth §2 Positive operational momentum: best quarterly Group KPIs since IPO §3 Improving underlying revenue trends: France, Portugal, US §4 Continued efficiency progress: best-in-class margins with mo
Slide 5: Strong Financial Performance
STRONG FINANCIAL PERFORMANCE DOUBLE DIGIT PROFITABILITY AND CASH FLOW GROWTH Altice International €bn(1) €3.86 bn €1.93 bn €0.89 bn €6.67 bn Adjusted EBITDA +20.2% +3.2% cc +8.0% cc +13.8% cc +8.9% cc Q4 YoY OpFCF (2) €2.00 bn €1.15 bn €0.46 bn €3.55 bn +51.9% +6.0% cc +4.0% cc +29.4% cc +74.5% cc Q
Slide 6: Positive Operational Momentum
POSITIVE OPERATIONAL MOMENTUM BEST QUARTERLY GROUP KPIS SINCE IPO Q4’15 B2C Net Adds ('000) Mobile Mobile Customers Mobile Postpaid Postpaid Relationships Postpaid +140 +49 +13 +270 Fiber Fixed 4P/5P Fiber Fiber Broadband Customers Broadband Broadband +78 +19 +21 +130 6
Slide 7: Improving Underlying Revenue Trends
IMPROVING UNDERLYING REVENUE TRENDS POSITIVE OUTLOOK r Revenue YoY (%) r Revenue YoY (%) r Revenue YoY (%) SFR Transaction Closing Viacom FY 2015 YoY Termination B2C (3.6%) 7.3% B2B 6.7% 6.6% (7.5%) 6.4% Wholesale (4.8%) & Other 4.8% (2.6%) (5.4%) 4.5% (17.1%) 3.7% (3.4%) (6.6%) (3.7%) 2.3% (8.6%) (
Slide 8: Efficiency Progress
EFFICIENCY PROGRESS BEST-IN-CLASS MARGINS WITH FURTHER UPSIDE Average Average Average France (1) Euro PTO (2) US Cable (3) FY15 FY15 FY15 EBITDA 35.0% 29.1% EBITDA 41.2% 38.3% EBITDA 40.7% 35.0% Margin Margin Margin r YoY Q415 r YoY Q415 r YoY Q415 EBITDA +7.6 pp +0.5 pp EBITDA +9.3 pp -0.7 pp EBITD
Slide 9: Accelerated Re-investments
ACCELERATED RE-INVESTMENTS FIBER BROADBAND, MOBILE - COMPLEMENTED BY CONTENT Fiber Build-Out Acceleration National Fiber Build-out Operation GigaSpeed • 22 m homes by 2022 • 100% coverage: 5.3 m homes by 2020 • >60% 1 Gbps availability end of 2016 • #1 fiber broadband coverage • 90% 1 Gbps availabil
Slide 10: Operational Review
Operational Review Saltice
Slide 11: France: Accelerating Fiber Network Investments
FRANCE: ACCELERATING FIBER NETWORK INVESTMENTS LEADING FIBER OPERATOR Fiber Network Buildout Fiber Strategy # fiber homes passed § Commitment to retain coverage leadership FROM N°1 TO N°1 N°1 • 1.3 m homes upgraded in 2015 • Build-out to accelerate to c. 2.0 m homes p.a. 22.0m § Total fiber homes pa
Slide 12: France: Accelerating Mobile Network Investments
FRANCE: ACCELERATING MOBILE NETWORK INVESTMENTS REDUCE CHURN, INCREASE HIGH-END SALES AND GROWTH Accelerated Roll-Out of 4G sites in Q4 Network and Investment Strategy Q4 4G sites § Focus in 2015 and H1 2016 to fix all 3G issues roll-out +1,080 +446 +388 +988 § 4G sites deployment acceleration in Q4
Slide 13: France: Strategic Content and Convergence Initiatives
FRANCE: STRATEGIC CONTENT AND CONVERGENCE INITIATIVES REDUCE CHURN, INCREASE ARPU AND GROWTH News Access + Content Strategy to offer Sports differentiated converged communication services VoD 13
Slide 14: France: B2C Fixed Line Business
FRANCE: B2C FIXED LINE BUSINESS CONTINUOUSLY IMPROVING KPIS Fiber vs. DSL Net Adds (1) Fiber ARPU 39.0 39.3 (€/Month) 72 78 70 48 27 Fiber ('000) 11 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total Subscriber Net Adds (21) (26) (57) (119) (42) (6) (Fiber + DSL) DSL ('000) (32) (52) (83) (105) (
Slide 15: France: B2C Mobile Business
FRANCE: B2C MOBILE BUSINESS BEST KPIS SINCE 2013 Postpaid Net Adds / (Losses) ('000) 140 55 85 18 34 Full Service (35) (29) Offer (1) (28) (90) (53) (148) (63) (178) (71) (82) Other (2) (144) (166) (314) Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Full Service Offer 29.2 28.4 ARPU (€/Month) Othe
Slide 16: France: B2B
FRANCE: B2B IMPROVING UNDERLYING TRENDS B2B Fixed Trends (c. 50% of B2B) (1) B2B Mobile Trends (c. 30% of B2B) B2B ICT Trends (c. 20% of B2B) Data + Voice Revenue (€m) (1) Net Losses ('000) +2% (41) 254.0 257.8 (53) (59) (59) 126.5 +10% 130.5 (154) 123.5 131.3 § Growth opportunities: housing and hos
Slide 17: France: Efficiency Progress
FRANCE: EFFICIENCY PROGRESS WORK PLAN FOR FURTHER IMPROVEMENTS Defined Work Plan to Further Address Efficiency Realization on Track Cost Structure: e.g. Cost of Goods Sold (€m) Savings to Date (€m) 908 Customer Service ~55 Sales and Marketing ~230 Network Operations & Maintenance ~235 3/4 ULL / last
Slide 18: Portugal: Accelerating Network Investments
PORTUGAL: ACCELERATING NETWORK INVESTMENTS STRATEGIC NATIONAL FIBER NETWORK National Fiber Plan 3P/4P/5P Penetration(1) Coverage (m) B2C (Q4 2015) 5.3 90.3% 3.5 +39.1 pp 2.2 51.2% Non-Fiber Fiber Customer Customer 2015 2017 2020 § Ramp-up started in Q4 2015 § c. 150k (avg.) per quarter in 2016/17 1
Slide 19: Portugal: B2C
PORTUGAL: B2C CONVERGENCE AND POSTPAID TO PREPAID MIGRATION Convergent Fixed Subscribers Mobile Customers Net Adds (4P/5P Customers) (‘000) % of Unique 32.3% 34.2% 35.8% 37.4% Subscribers (‘000) 628 +44 609 588 262 563 +44 +18 119 64 52 49 (8) (31) (144) (218) (229) (80) (110) Q1-15 Q2-15 Q3-15 Q4-1
Slide 20: Portugal: B2B
PORTUGAL: B2B CHALLENGING ENVIRONMENT BUT POSITIVE MOMENTUM Corporate Revenues § 2015 total B2B revenue down 7.5% YoY (11.2%) Top 10 • No key account losses after taking ownership (H2 2015) (YoY) Top 10 • Decline peaked in Q2 2015 (29.1%) • Prior corporate account losses still impacting H1 2016 § Fi
Slide 21: Portugal: Efficiency Progress
PORTUGAL: EFFICIENCY PROGRESS WORK PLAN FOR FURTHER IMPROVEMENTS Efficiency Targets Realized Defined Cost Structure Work Plan (€m) Savings to Date (€m) ~€800 m Customer Service ~13 Sales and Marketing ~25 Personnel and G&A ~50% Network Operations & Maintenance ~42 Personnel ~29 ~20% Network Operatio
Slide 22: Suddenlink: US Growth Platform
SUDDENLINK: US GROWTH PLATFORM RETURNING TO HISTORICAL GROWTH RATES Revenue Progression Growth Platform % Revenue YoY (1) § Phase-out of Viacom impact on revenue § B2C penetration upside +6.0% § Operational improvements: churn reduction +5.9% FY YoY Viacom impact § Footprint / network build-out 4.5%
Slide 23: Suddenlink: Favourable Customer Trends
SUDDENLINK: FAVOURABLE CUSTOMER TRENDS GROWING BOTH CUSTOMER BASE AND ARPU Residential Customer Relationships (‘000) (‘000) +2.8% 1,467 1,451 1,454 1,439 1,427 3P Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 ARPU ($) per unique residential 110.8 113.5 customer +2.4% 23
Slide 24: Suddenlink: Favourable Product Trends
SUDDENLINK: FAVOURABLE PRODUCT TRENDS ALL PRODUCT TRENDS IMPROVING Residential Net Gains/(Losses) (‘000) Δ: +31.3 Δ: +7.1 Δ: +15.6 Δ: +54.0 +34.6 +20.7 +13.6 +15.2 (1.3) (0.4) 3P (19.4) Viacom impact (32.6) Q4-14 Q4-15 Q4-14 Q4-15 Q4-14 Q4-15 Q4-14 Q4-15 PSU Video Broadband Voice (Primary Service Un
Slide 25: Israel
ISRAEL BEST KPIS SINCE IPO B2C Fixed Net Adds / (Losses) Key Highlights ('000) § Lowest customer losses since IPO (- Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 4k) (4) § Reduced churn from better customer (8) (10) (14) service and retention tools (20) (21) • Churn down 5 pp YoY § Nominal cable ARPU growth
Slide 26: Dominican Republic
DOMINICAN REPUBLIC CONTINUED STRONG GROWTH IN MOBILE AND FIXED Expanding Mobile Coverage and Accelerating Growth Key Highlights % 3G Coverage 77% 88% § Further 3G and 4G network % 4G Coverage 5 0 30% 44% coverage expansion 4 5 4 0 3 5 42 • 90% 3G population 3 0 2 5 coverage achieved in Mobile 2 0 1
Slide 27: Financial Review
Financial Review Saltice
Slide 28: Altice NV Pro Forma Consolidated Financials
ALTICE NV PRO FORMA CONSOLIDATED FINANCIALS (1) YoY Reported YoY Constant €m FY-14 FY-15 Growth Currency Growth France 11,436 11,038 (3.5%) (3.5%) International 4,339 4,324 (0.4%) (4.2%) US (Suddenlink) 1,756 2,181 24.2% 3.7% Revenue Corporate 3 20 - - (20) Intersegment Adjustments (68) - - Total Gr
Slide 29: Overview of Altice Group Debt
OVERVIEW OF ALTICE GROUP DEBT DIVERSIFIED SILOS Altice Group Altice Europe Target Leverage Available Liquidity (Consolidated) (Consolidated) – Exc. CVC(1) • Altice Europe: c. 4.0x • Altice Group Exc. CVC(1): €2.9 bn Gross Debt 29,094 36,398 Net Debt 28,468 35,562 • Altice US: c. 5.0-5.5x LTM EBITDA
Slide 30: Overview of Altice Group Maturity Profile
OVERVIEW OF ALTICE GROUP MATURITY PROFILE INCREASED INTEREST RATE HEDGING AND MATURITY DURING Q1 2016 Altice Maturity Profile (€m) Post balance sheet events: Debt maturity summary: 31,611 Altice Europe (Alt Int, France, Alt Lux) Altice Group Exc. CVC France: €4 bn floating rate debt hedged at -12bps
Slide 31: Guidance 2016
GUIDANCE 2016 (1) ALTICE GROUP INCLUDING SUDDENLINK Revenue • Improving trend Adjusted EBITDA • Mid-single digit growth Operating FCF • Flat to slightly down reflecting accelerated investments 1 Current Group perimeter at constant currency (assumes 1.1 USD/EUR) 31
Slide 32: Saltice
Saltice
Slide 33: Appendix
Appendix 33
Slide 34: Altice NV Pro Forma Consolidated Revenue
ALTICE NV PRO FORMA CONSOLIDATED REVENUE (1) YoY Reported YoY Constant €m FY-14 FY-15 Growth Currency Growth France 11,436 11,038 (3.5%) (3.5%) Portugal 2,533 2,347 (7.3%) (7.3%) US (Suddenlink) 1,756 2,181 24.2% 3.7% Israel 857 923 7.7% (2.1%) Dominican Republic 607 695 14.4% 2.1% French Overseas T
Slide 35: Altice NV Pro Forma Consolidated EBITDA
ALTICE NV PRO FORMA CONSOLIDATED EBITDA (1) YoY Reported YoY Constant Currency €m FY-14 FY-15 Growth Growth France 3,212 3,860 20.2% 20.2% Portugal 934 968 3.6% 3.6% US (Suddenlink) 688 889 29.3% 8.0% Israel 412 431 4.5% (5.0%) Dominican Republic 283 360 27.2% 13.5% French Overseas Territories 82 87
Slide 36: Altice NV Pro Forma Consolidated Capex
ALTICE NV PRO FORMA CONSOLIDATED CAPEX(1) €m FY-14 FY-15 % Capex to Sales France 1,894 1,857 17% Portugal 398 331 14% US (Suddenlink) 321 432 20% Israel 225 285 31% Dominican Republic 69 124 18% French Overseas Territories 47 51 26% Others 56 41 25% Total Group Consolidated 3,009 3,121 18% 1 The fig