Altice SA — Merger or Acquisition (September 2015)
23 slides from Altice SA's merger presentation, Sep 17, 2015
Slide 1: Acquisition of Cablevision
Acquisition of Cablevision September 17, 2015 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”), This presentation does not constitute or form part of, and should not be construed as, an offer or including EBITDA, Adjuste
Slide 3: Transaction Overview
TRANSACTION OVERVIEW Continued expansion in the U.S.: Cablevision and Suddenlink strong #4 cable operation Acquisition at $34.90 per share: 6.1x synergy-adjusted AOCF multiple1 (8.8x headline) Independent capital structure from Suddenlink - jointly managed Cablevision unrestricted subsidiary of Alti
Slide 4: Key Transaction Terms
KEY TRANSACTION TERMS Altice to acquire Cablevision for $34.90 per share in all cash merger Offer equates to Cablevision enterprise value of $17.7bn $10.0bn equity valuation + $7.7bn net debt 6.1x synergy-adjusted AOCF multiple1 (8.8x headline) Cablevision shareholder approval by written c
Slide 5: Acquisition Rationale
ACQUISITION RATIONALE Expansion into highly affluent, attractive metropolitan NY region High-quality, well-invested cable business with proven competitive track record Strong operational momentum with further upside Significant synergy and efficiency opportunities Enhanced basis for furthe
Slide 6: Cablevision at a Glance
CABLEVISION AT A GLANCE Cable + Lightpath Media2 Total3 LTM Net Revenue / $6,206m / 95% $358m / 5% $6,525m % of total 2012-2014 Revenue 2.8% (1.1%) 2.6% CAGR LTM AOCF1 $2,005m ($147m) $1,858m % LTM AOCF1 32.3% nm 28.5% margin Source: Company filings as of Q2 2015 1 AOCF is Adjusted Operating Cash Fl
Slide 7: Cablevision Operates in the Most Attractive U.S. Market
CABLEVISION OPERATES IN THE MOST ATTRACTIVE U.S. MARKET NY-NJ-PA Nationwide Cablevision footprint Metro $66K Highly affluent $52K market Hartford Median income New Haven 2,8% Bridgeport Strong market Paterson growth 0,8% Newark New York Population growth rate 2 1 Multichannel Video System High 849
Slide 8: Market Leadership
MARKET LEADERSHIP Cable service network penetration1 Market leadership Market position #1 #1 #1 Leading service provider: 3.1m customers 52,0% 54,9% Leading 3P provider: 65% of customers 43,6% Industry leading PSU/Sub: 2.5x Market leading churn: ~1.8% per month Video Broadband VoIP Growing
Slide 9: Strong Momentum in Cable
STRONG MOMENTUM IN CABLE Stabilizing customer base (000s) Growing cable revenue base ($m) +5K in Q2 2015 Y/Y growth 1.8% 3.7% 3 230 3 188 3 118 3 117 $5 846 $5 785 2012 2013 2014 Q2 2015 $5 576 Growing revenue per customer $5 479 $159 $155 $147 $138 2012 2013 2014 Q2 2015 2012 2013 2014 LTM Source:
Slide 10: Competing Successfully with FiOS
COMPETING SUCCESSFULLY WITH F iOS High quality, easily upgradable Successful track record next generation HFC network Highly competitive, premium Strong network penetration in FiOS area service offering Higher 3P customer penetration in FiOS area Stabilized overbuild dynamics High-qualit
Slide 11: Well-Invested, Future Proof Network
WELL-INVESTED, FUTURE PROOF NETWORK Single network across footprint: 5.1m homes passed + 100% digital (no analog services) + Highly competitive network 100% video, broadband and VoIP availability + Significant capacity headroom The most robust 1.3m WiFi hotspot network + 100% ≥ 750MHz; 100% DOCS
Slide 12: Lightpath: Complementary Enterprise B2B Business
LIGHTPATH: COMPLEMENTARY ENTERPRISE B2B BUSINESS Revenue ($m) Attractive B2B business Y/Y 4.1% 2.7% 6.1% growth Enterprise level B2B business 353 360 333 324 6,100 route mile fiber optic network Highly diversified customer base 2012 2013 2014 LTM Adjusted Operating Cash Flow1 ($m) Room to gr
Slide 13: Leading Regional Media Businesses
LEADING REGIONAL MEDIA BUSINESSES Largest regional news service in the nation Delivers local news to 3.7m+ homes in the New York tri-state area Includes 7 television channels providing local news coverage Newsday: Pulitzer Prize-winning newspaper in the Long Island and NY metro area AM New
Slide 14: Scope to Achieve Significant Synergies and Efficiencies
SCOPE TO ACHIEVE SIGNIFICANT SYNERGIES AND EFFICIENCIES 2014A AOCF/EBITDA margins ~48% ~50%+ Synergy and efficiency ~39% potential ~36% 28% 1 2 3 US peers Today Synergized European peers Source: Company filings 1 Includes 2014 EBITDA median of Comcast, TWC, Charter, CableOne 2 Assumes run-rate EBITD
Slide 15: Translating Best-in-Class ARPU into Best-in-Class Profitability
TRANSLATING BEST-IN-CLASS ARPU INTO BEST-IN-CLASS PROFITABILITY Cable cost breakdown (2014) Opex rationalization opportunity Review of programming Opex per customer / month $49 costs Program- ming $32 $155 $46 Other COGS $25 $10 Opex $16 $15 $14 $14 $49 RPC1 / month Cost per customer / month As-is S
Slide 16: Sources of Synergies and Efficiencies Across the Entire Cost Structure
SOURCES OF SYNERGIES AND EFFICIENCIES ACROSS THE ENTIRE COST STRUCTURE Description % of total Further improvement of customer experience Customer Reduction of operational complexity ~15% operations Upgrade of legacy systems Implementation of best-practices Network & Modernization of networ
Slide 17: Best-in-Class Altice Expertise to Drive Margin Expansion
BEST-IN-CLASS ALTICE EXPERTISE TO DRIVE MARGIN EXPANSION WHILE REINVESTING CASH FLOWS EBITDA margin EBITDA margin improvement +11pp +9pp +15pp +10pp 11pp margin expansion in only 2 quarters 72% of ownership in France 62% 52% 48% 38% 39% 37% 27% Q3 2014 Q2 2015 2011 Q2 2015 2013 Q2 2015 2011 Q2 2015
Slide 18: Sources and Uses and Pro-Forma Capital Structure
SOURCES AND USES AND PRO-FORMA CAPITAL STRUCTURE Sources and uses1 Key highlights Sources ($bn) Uses ($bn) $8.6bn new debt issued to be Roll Existing Notes $5.9 Purchase equity $10.0 New Debt 8.6 Existing debt 8.4 raised through term loans and Cash 0.9 Fees 0.2 Equity 3.3 Minimum cash 0.1 high yie
Slide 19: U.S. Cable Landscape
U.S. CABLE LANDSCAPE as of Q2 2015 (‘000s) Column12 Basic video subscribers 22 306 17 211 3 901 3 740 2 637 1 103 856 567 385 306 223 141 2014 EBITDA 18,1121 12,918 3,677 2,896 1,991 905 636 N/A 301 N/A N/A N/A ($m) Source: Company filings, Company press releases, rating agency reports, SNL Kagan, N
Slide 20: Altice Diversified Business Portfolio
ALTICE DIVERSIFIED BUSINESS PORTFOLIO Altice Group Key Statistics1,2 Revenues: €22bn Homes Passed: 25m Mobile Subscribers 27m Fixed Subscribers 17m Altice Group PF for Cablevision and Suddenlink3 Other Israel Other 5% 4% 4% Israel 6% Portugal 11% Portugal 16% France 51% France US 73% 30% 1 Financial
Slide 21: Appendix
Faltice | . Appendix
Slide 22: Key Financials (1/2)
KEY FINANCIALS (1/2) Historical revenue ($m) Historical AOCF1 ($m) 35.0% 28.3% 27.0% 28.4% Consolidated $6 163 $6 132 $6 232 $6 461 $2 155 $1 737 $1 834 $1 685 2011 2012 2013 2014 2011 2012 2013 2014 40.3% 33.3% 31.9% 32.4% Cable + Lightpath $5 828 $5 803 $5 909 $6 138 $2 350 $1 933 $1 886 $1 991 No
Slide 23: Key Financials (2/2)
KEY FINANCIALS (2/2) Historical capital expenditures ($m) Historical AOCF1–Capex ($m) % of revenues % conversion 11.8% 16.2% 15.3% 13.8% 66.3% 42.9% 43.5% 51.4% Consolidated $1 429 $992 $952 $892 $943 $726 $745 $733 2011 2012 2013 2014 2011 2012 2013 2014 % of revenues % conversion 11.6% 16.3% 15.5%