Altice SA

Altice SA — Q3 2015 Earnings Presentation

45 slides from Altice SA's earnings presentation, Oct 28, 2015

  1. Slide 1: Q3 2015 Results

    Q3 2015 Results October 28, 2015 1

  2. 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

  3. Slide 3: Speakers

    SPEAKERS Dexter Goei, Michel Combes, Dennis Okhuijsen, CEO Altice CEO Altice COO COO – Chairman Altice Altice CFO Altice CFO Altice Numericable-SFR Chairman Numericable-SFR 3

  4. Slide 4: Q3 Highlights & Strategy Update

    Q3 Highlights & Strategy Update Dexter Goei, Group CEO 4

  5. Slide 5: Highlights

    HIGHLIGHTS • Revenue at €3,844m (-0.4% QoQ, -2.9% YoY): stabilized topline Financials1 • EBITDA up 13% YoY at €1,532m (39.8% margin): continued margin progression • OpFCF2 up 34% YoY at €923m (24.0% margin): robust investment levels • Announced acquisition of Cablevision following Suddenlink transac

  6. Slide 6: Key Q3 2015 Takeaways

    KEY Q3 2015 TAKEAWAYS  Stabilized top-line: Focus on high quality subscribers; best KPIs since acquisition  Successful back-to-school campaign: positive mobile and fixed net adds in September  Sequential B2C growth as a result of higher quality customer base and ARPU  Results to date exceeding o

  7. Slide 7: Top-line stabilization across footprint

    TOP-LINE STABILIZATION ACROSS FOOTPRINT Sequential Revenue in Local Currency in 4 Largest Operations (LCm) Altice Ownership Altice Ownership Altice Ownership Altice Ownership 2 875 639 632 8 959 2 839 593 590 579 2 775 2 768 8 772 1 019 1 013 2 737 8 721 999 997 999 8 665 8 648 Q3 Q4 Q1 Q2 Q3 Q3 Q4

  8. Slide 8: Update on Suddenlink and Cablevision

    UPDATE ON SUDDENLINK AND CABLEVISION Key highlights  Regulatory process well underway for Suddenlink and initiated for Cablevision  Suddenlink management team to be announced at closing  Advanced internal operational preparation for taking ownership of Suddenlink this year  Funding for both tran

  9. Slide 9: High quality diversified business portfolio as a result of strategic activity

    HIGH QUALITY DIVERSIFIED BUSINESS PORTFOLIO AS A RESULT OF STRATEGIC ACTIVITY Diversified Revenue Base1,2 Other 7% Portugal 11%  #1 or #2 operator in each major market France  Leading next-generation infrastructure 48%  Quadruple-play in each market (except US) US 34%  Significant scope for best

  10. Slide 10: Fully funded balance sheet

    FULLY FUNDED BALANCE SHEET Suddenlink: Purchase price $9,340m (incl fees and cash left on B/S) Sources: Status Existing debt $5,063m Existing debt stays in place New debt $1,720m Debt raised in May and in escrow Vendor Note $500m Secured Partner equity $723m Secured Altice equity $1,187m Secured Pro

  11. Slide 11: Altice business model focused on long-term value creation

    ALTICE BUSINESS MODEL FOCUSED ON LONG-TERM VALUE CREATION 1 2 3 Technology 4 Profitable, Optimization Stabilization and Best Cash and and Re- Practise Generating Simplification investment Sharing Growth Q3 15 EBITDA margin 37.6%     Target Adjusted EBITDA margin >45%     Q3 1

  12. Slide 12: Operations are #1 priority for Altice

    OPERATIONS ARE #1 PRIORITY FOR ALTICE  Network investments:  B2C growth  Customer care and  SL management team fiber, 4G services to be announced at • TV penetration closing  Enhance B2C  Network investments distribution • Pre-to-postpaid  Change of control mobile migration planning  DSL to

  13. Slide 13: Operational Review

    Operational Review Michel Combes, Group COO 13

  14. Slide 14: Focus on operations – key first steps

    FOCUS ON OPERATIONS – KEY FIRST STEPS •1 Organizational re-alignment and enhanced operational management team •2 Launch of Altice procurement company •3 Implementation of Altice best industrial practices across group •4 Creation of Altice Labs for innovation, group product research and development O

  15. Slide 15: France Q3 2015 highlights

    FRANCE Q3 2015 HIGHLIGHTS  Strong market position and financial strength form basis for long-term success  Continued execution on industrial plan with significantly more upside  Focus on profitable growth, subscriber stabilization (churn reduction) and ARPU growth  Successful back-to-school camp

  16. Slide 16: France: platform for long-term success

    FRANCE PLATFORM FOR LONG-TERM SUCCESS 1 2 Market Leadership Financial Strength Product Position Market Share Financial Performance B2C Mobile #2 32%1 Stabilized Revenues -0.3% QoQ #2 LTM revenues of €11.1bn B2C Fixed #2 26%1 Highest EBITDA margin among the French operators #1 Q3 15: 37.6% Pay-TV #2

  17. Slide 17: France: industrial plan ahead of expectations

    FRANCE INDUSTRIAL PLAN AHEAD OF EXPECTATIONS Already c. 65% of OpFCF synergy target delivered €1,1bn 1  Efficiency gains ahead of original plan 2 €0,7bn  Significant optimization headroom  Robust top-line  Next phase of capex acceleration  Medium-term 45% Adj. EBITDA margin target 2017 OpFCF 20

  18. Slide 18: France: B2C fixed line business

    FRANCE B2C FIXED LINE BUSINESS Fixed Customers in 000’s  Successful back-to-school €35.8 campaign €34.3 €35.3 • 39k net adds in September (of which 36k in fiber) 6 603 6 401 6 358 (3.7%) (0.7%)  Acceleration of migration of customers to fiber 5 082 4 736 4 622 (9.1%) (2.4%)  -42k net adds in Q3 v

  19. Slide 19: France: B2C mobile

    FRANCE B2C MOBILE Mobile Customers in 000’s  Successful back-to-school campaign €22.8 €22.7 €23.2 • 23k net adds in mobile postpaid in September 16 433  Rebalancing of mobile 15 241 15 083 customers towards postpaid (8.2%) (1.0%) 3 358  -158k net adds in Q3 vs - 2 695 2 619 (22.0%) (2.8%) 575k in

  20. Slide 20: France: B2B mobile and white label

    FRANCE B2B MOBILE AND WHITE LABEL B2B Mobile subscribers in 000’s White Label fixed customers in 000’s 6 654 6 724 1 009 6 630 927 865 1.1% (6.7)% 4 393 4 503 4 102 362 385 373 2.5% (3.1)% Q3-14 Q2-15 Q3-15 QoQ Q3-14 Q2-15 Q3-15 QoQ M2M Total Fiber Total Growth in B2B mobile thanks to strong M2M sal

  21. Slide 21: France: mobile catch-up investments and fiber buildout

    FRANCE FOCUS ON MOBILE CATCH-UP INVESTMENTS AND FIBER NETWORK BUILDOUT FROM N°1 TO N°1 FROM N°3 TO N°1 N°1 N°1 +1m +10% pts >95% YTD 15m YTD 90% 12m N°3 ~65% N°1 7.7m 60% 7.4m Q3-15 2015 2017 2020 Q3-15 2015 2017 2020 Strong investment in next-generation fixed and mobile networks: Acceleration of in

  22. Slide 22: France: topline stabilizing and strong profitability improvement

    FRANCE TOPLINE STABILIZING AND STRONG PROFITABILITY IMPROVEMENT Revenue EBITDA (€m) (€m) Incremental Sales & Marketing costs by 150bps QoQ 14% (2)% 2 736 2 775 2 768 (0.3)% 324 340 335 (1.5)% 1 063 1 039 558 533 501 930 (6.0)% 38,3% 37,6% 1 854 1 903 1 932 - +1.5% 34,0% Q1-15 Q2-15 Q3-15 QoQ growth

  23. Slide 23: Altice International Q3 2015 highlights

    ALTICE INTERNATIONAL Q3 2015 HIGHLIGHTS  Initial process optimization and simplification well underway with very strong results  EBITDA margin expansion by 7.2% pts & OpFCF margin expansion by 12.7% pts  Robust B2C performance with top-line growth QoQ ; competitive B2B market pressures  Solid ca

  24. Slide 24: PT Portugal – B2C KPIs

    PT PORTUGAL – B2C KPIs GROWING FIBER AND MOBILE BASE Fixed Customer Base (000’s) Monthly ARPU in € (€) 1 779 1 720 1 700 (4.4%) (1.2%) 377 390 396 5.1% 1.5% 266 256 252 (5.1%) (1.6%) B2C 33,0 32,8 Fixed 1 136 1 074 (7.5%) (2.1%) 31,7 1 052 Q3-14 Q2-15 Q3-15 YoY QoQ Q3-14 Q2-15 Q3-15 DSL DTH Fiber Mo

  25. Slide 25: PT Portugal – KPIs

    PT PORTUGAL – KPIS MULTIPLAY AND CONVERGENCE UNDERPINNING CUSTOMER BASE TRANSFORMATION Penetration of 3P/4P/5P (%) Convergent 4P/5P Customers 1 (‘000s) 17.5% 23.9% 23.3% 35.8% +7.8 pts 59,1% 609 51,3% +47% 415 Q3-14 Q3-15 Q3-14 Q3-15 Convergent Mobile Subscribers Convergent Fixed Subscribers 1 The 4

  26. Slide 26: PT Portugal – Financials

    PT PORTUGAL – FINANCIALS Revenue1 Key highlights (€m)  Severe pre-closing revenue decline 639 593 584 (8.6%) (1.5%) 125 106  B2C fixed and mobile growth QoQ 98 (21.6)% (7.5)% 176 168 161 (8.9)% (4.4%)  B2B decline due to fixed segment 337 319 326 (3.4)% 2.0%  EBITDA margins up 7.2pts QoQ  OpFCF

  27. Slide 27: Israel – Operations

    ISRAEL – OPERATIONS FIXED AND MOBILE TRENDS Fixed Customer losses back to H1 2014 levels Key highlights Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 -9  Increased customer service -11 -13 investments -20 -24  Positive signs of improved efficiency of customer service (‘000s)  New senior management  Decline in c

  28. Slide 28: Israel – Financials

    ISRAEL – FINANCIALS STRONG FIXED PERFORMANCE MITIGATED BY HIGHLY COMPETITIVE MOBILE MARKET Revenue1 Improving Cost Base (NISm) 1 019  Stable revenue due to mobile 999 998 -2.1% -0.1%  Margin deterioration due to mobile  High capex levels 803 781 771 -4.0% -1.3%  Major differences in Altice and H

  29. Slide 29: Dominican Republic – Operations

    DOMINICAN REPUBLIC – OPERATIONS INCREASING MOBILE AND FIXED SUBSCRIBER GROWTH WITH DOUBLING OF 3P PENETRATION Fixed Customer Base (000’s) Monthly ARPU in DOP (DOP) 268 270 273 1.9% 1.2% B2C 149 141 137 (8.1%) (2.7%) 1 812 1 839 1 722 Fixed 119 129 136 14.4% 5.4% Q3-14 Q2-15 Q3-15 YoY QoQ Q3-14 Q2-15

  30. Slide 30: Dominican Republic – Financials

    DOMINICAN REPUBLIC – FINANCIALS EBITDA GROWTH DRIVEN BY TOP LINE PERFORMANCE Revenue 1 Key highlights (DOPm) 8 681 8 772 8 958 3.2% 2.1% 1 234 1 253 1 334 8.1% 6.5%  Successful back to school campaign 1 304 1 348 1 306 0.2% -3.1%  Higher sales and marketing spending 6 143 6 170 6 318  Accelerated

  31. Slide 31: Financial Review

    Financial Review Dennis Okhuijsen, Group CFO 31

  32. Slide 32: Altice NV pro forma consolidated financials

    ALTICE NV PRO FORMA CONSOLIDATED FINANCIALS 1 YoY Constant QoQ Reported Currency Reported €m Q3-14 Q3-15 Growth Growth Q2-15 Growth International 1,083 1,077 -0.6% -4.0% 1,084 -0.7% Revenue France 2,875 2,768 -3.7% - 2,775 -0.3% Total 3,958 3,844 -2.9% -3.8% 3,859 -0.4% International 460 500 8.7% 4.

  33. Slide 33: Key balance sheet takeaways

    KEY BALANCE SHEET TAKEAWAYS • Fully funded for all announced acquisitions • Distinct credit silos in Europe and the US • Attractive average cost of debt of 5.7% in Europe and 6.7% in US • Very limited near term maturities and significant liquidity in available revolving credit facilities • 67% fixed

  34. Slide 34: Overview of Altice Group debt

    OVERVIEW OF ALTICE GROUP DEBT Altice NV Altice Europe (Consolidated) Altice US Altice Corporate Financing S.A Net debt: €28.4bn Committed Undrawn Facility5 €1.5bn L2QA EBITDA: €6.1bn Net leverage: 4.6x Available RCF 2 €2,207m c.78% c.100% 70% 70% NC/SFR Post Dividend Altice International Suddenlink

  35. Slide 35: Overview of Altice Group maturity profile

    OVERVIEW OF ALTICE GROUP MATURITY PROFILE Altice Maturity Profile (€m) Altice EU Maturity Profile (Alt Int, SFR-NC, 20 327 Altice Corporate Financing S.A. Alt Lux): Av. Life: 1.6 yrs Av. Life: 6.4 yrs 2,207m WACD: 5.1% WACD: 5.7% 6 230 % Fixed Rate Debt: 0% % Fixed Rate Debt: 68% Altice US Maturity

  36. Slide 36: Business deleveraging profile

    BUSINESS DELEVERAGING PROFILE European Business Q2&Q3 15 Q3 15 @ guided EBITDA margin EBITDA1 4,204 • Rapid deleveraging EBITDA margin 45% NC/SFR EBITDA margin 38% since 2014 Leverage 3.0x Leverage 3.5x • Further deleveraging to EBITDA1 1,939 come: mid-term EBITDA margin 50% guidance on EBITDA Alt I

  37. Slide 37: 2015 guidance and mid-term targets

    2015 GUIDANCE AND MID-TERM TARGETS 2015 Guidance for Numericable-SFR 2015 Guidance for Altice International including negative impact from:  2015 Adj EBITDA ≥ €3.85bn    2015 Adj EBITDA ≥ €1.925bn   PT Pension accounting adjustment €25m  PT lower EBITDA starting point at  2015 EBITDA – Capex

  38. Slide 38: Q&A

    Q&A 38

  39. Slide 39: Appendix

    2 So = @ °. oY <x

  40. Slide 40: Altice NV pro forma consolidated revenue

    ALTICE NV PRO FORMA CONSOLIDATED REVENUE YoY Reported YoY Constant QoQ Reported €m Q3-14 Q3-15 Growth Currency Growth Q2-15 Growth France 2,875 2,768 -3.7% - 2,775 -0.3% Portugal 639 579 -9.4% - 590 -1.9% Israel 219 234 6.6% -2.0% 233 0.3% Dominican Republic 146 175 19.6% 6.6% 173 1.1% Other 79 89 1

  41. Slide 41: Altice NV pro forma consolidated EBITDA

    ALTICE NV PRO FORMA CONSOLIDATED EBITDA YoY Reported YoY Constant QoQ Reported €m Q3-14 Q3-15 Growth Currency Growth Q2-15 Growth France 898 1,039 16% - 1,063 -2.2% Portugal 235 262 12% - 225 16% Israel 108 108 0.1% -8.0% 112 -3.4% Dominican Republic 77 88 14% 1.9% 91 -3.8% Other 40 42 6% - 42 1.9%

  42. Slide 42: Altice NV pro forma consolidated capex

    ALTICE NV PRO FORMA CONSOLIDATED CAPEX €m Q3-14 Q3-15 % Capex to Sales France 491 417 15% Portugal 67 68 12% Israel 61 65 28% Dominican Republic 19 37 21% Other 26 21 23% Total 664 608 16% 42

  43. Slide 43: Other operating free cash flow items

    OTHER OPERATING FREE CASH FLOW ITEMS 1 Items excluded from consolidated adjusted EBITDA Cash income tax YTD 9m YTD 9m 2015 2015 • Income tax paid 1• Equity based compensation €21m - Non cash item 1. NSFR € 123m 2. Altice International € 50m 2• French business tax € 62m - French business tax that is

  44. Slide 44: Altice Group simplified structure chart (Oct-15) (1/2)

    ALTICE GROUP SIMPLIFIED STRUCTURE CHART(OCT-15) (1/2) Publicly Listed Entity Note: % ownership only shown when materially below 100% (1) Will be sold to Altice France SA upon receipt Altice N.V. Equity of NC-SFR dividend (Netherlands) Altice Luxembourg Altice Luxembourg S.A. Restricted group Debt (L

  45. Slide 45: Altice Group simplified structure chart (Oct-15) (2/2)

    ALTICE GROUP SIMPLIFIED STRUCTURE CHART(OCT-15) (2/2) Publicly Listed Entity Altice N.V. Equity (Netherlands) **Structure at time of closing. Altice Luxembourg S.A. Suddenlink acquisition entities (Luxembourg borrower, Altice are currently still held by Altice former Altice S.A.) Corporate Luxembour

Altice — Q3 2015 Earnings Presentation on 6ix