Altice SA — FY2016 Earnings Presentation
42 slides from Altice SA's earnings presentation, Mar 9, 2017
Slide 1: 2016 Results
2016 Results March 9, 2017 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”), including This presentation does not constitute or form part of, and should not be construed as, EBITDA and Operating Free C
Slide 3: Group Highlights
Group Highlights Saltice
Slide 4: 2016 Successful Year of Execution
2016 SUCCESSFUL YEAR OF EXECUTION ALL BUILDING BLOCKS IN PLACE FOR CONTINUED PROFITABLE GROWTH 1 Successful integration of US businesses and transformation into leading transatlantic operator 2 Validation of Altice Model: advanced turnaround in Europe, stronger US performance 3 Clear strategy: best
Slide 5: Q4 2016 Key Takeaways
Q4 2016 KEY TAKEAWAYS ACCELERATING MOMENTUM – ALL MAJOR MARKETS DRIVING GROWTH 1 Altice Group: accelerating revenue growth +2.7% YoY1, expanding margins and cash conversion 2 France: return to revenue growth, market leading investment in 4G+ / fiber networks and content 3 Altice USA: acceleration
Slide 6: All Major Markets Back to Growth
ALL MAJOR MARKETS BACK TO GROWTH ALTICE MODEL VALIDATED Group Adj. EBITDA Revenue Growth (YoY) Margin (%) Q4-15 Q4-16 37.6% +0.6% Q4-16 -3.3% 33.3% +5.1% Q4-15 +1.2% Group Leverage +0.5% Net Debt / L2QA Adj. EBITDA 5.9x1 -8.7% Q4-15 +4.1% 5.4x -2.7% Q4-16 Note: Segments presented on a standalone rep
Slide 7: Positive Margin Evolution by Main Markets
POSITIVE MARGIN EVOLUTION BY MAIN MARKETS DRIVING MARGINS HIGHER ACROSS THE GROUP 2 Q4-16 Adj. EBITDA +15.1% +12.1% +32.0% +7.8% Growth YoY1 Q4-16 Adj. EBITDA 37.6% 33.0% 40.7% 45.6% Margin YoY Q4-16 Adj. EBITDA +4.2 pp +3.4 pp +8.3 pp +3.1 pp margin Q4-16 OpFCF 15.9% 6.2% 26.7% 23.8% Margin Conti
Slide 8: Leading Transatlantic Converged Communications Group
LEADING TRANSATLANTIC CONVERGED COMMUNICATIONS GROUP POWERFUL VALUE CREATION POTENTIAL Balanced Footprint Full Year 2016 Operating FCF Contribution1 (47% of revenue) 34% 44% (35% of revenue) Rest of the World2 7% 14% (8% of revenue) (10% of revenue) c.70% fixed / cable revenue3 1 Based on pro forma
Slide 9: Leading Global Commitment to Fiber
LEADING GLOBAL COMMITMENT TO FIBER SIGNIFICANT AND RAPID FIBER DEPLOYMENTS ACROSS ALTICE GROUP c.9 million homes upgraded across Altice Group in 2016 Fiber (FTTB / FTTH) homes Altice Labs: Global R&D Center Pre-Altice 2022 FTTB/FTTH Q4-16 2006 target Pioneering fiber GPON technology including state-
Slide 10: Global Targeted Content and Media Investments
GLOBAL TARGETED CONTENT AND MEDIA INVESTMENTS SCALE BENEFITS IN DRIVING GROUP CONVERGENT STRATEGY ACCESS + Very high speed fiber broadband + Altice Labs producing state-of-the-art fixed / mobile technologies and CPE + Multi-screen addressable market Improve Best Connectivity Differentiate Brand Offe
Slide 11: Group Customer Journey Transformation
GROUP CUSTOMER JOURNEY TRANSFORMATION CUSTOMER SERVICE IMPROVEMENTS TO REDUCE CHURN # Total Calls (m)1 # Total Calls (m)3 # Total Calls for Fixed Subscribers (m)5 (6%) 15.0 14.1 27% 27.4 11.3 (19%) (46%) 21.6 9.2 7.6 2012 2014 2016 H2-15 H2-16 2014 2016 # Service Visits (m)2 # Service Visits (m)4 #
Slide 12: Business Review
Business Review Zaltice
Slide 13: France Business Dynamics
ALTICE FRANCE BUSINESS DYNAMICS SFR RETURN TO GROWTH Revenue YoY (%)1 3 0.8% + Organic revenue stabilization in 2017 0.6% + Mobile customer base stabilized + Focus on reducing churn and improving customer experience + Expansion of fiber footprint to support acceleration (2.4%) (2.3%) in fiber cust
Slide 14: France B2C Revenue Trends
ALTICE FRANCE B2C REVENUE TRENDS SUSTAINED FIXED GROWTH AND IMPROVING MOBILE TRENDS B2C Revenue YoY (%)1 1.3% 1.3% (0.5%) (0.5%) (1.7%) (1.5%) (2.0%) (2.9%) (2.2%) (2.3%) (2.3%) (3.2%) (1.5%) (2.8%) (3.3%) (3.3%) (4.9%) (5.2%) (6.1%) (4.2%) (4.8%) (5.2%) (7.1%) (8.7%) Q1-15 Q2-15 Q3-15 Q4-15 Q1-16
Slide 15: France B2C Fixed Line Business
ALTICE FRANCE B2C FIXED LINE BUSINESS FOCUS ON CHURN REDUCTION AND RE-ACCELERATING FIBER GROWTH Fiber vs. DSL Net Adds1 Fiber ARPU (€/Month) 40.3 39.3 38.7 40.8 41.2 40.0 72 78 66 2 54 44 44 Fiber ('000) Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Total Subscriber Net Adds (42) (5) (61) (58) (75) (61) (Fibe
Slide 16: France B2C Mobile Business
ALTICE FRANCE B2C MOBILE BUSINESS MOBILE CUSTOMER BASE STABILISATION B2C Mobile Postpaid Net Adds ('000) 140 33 (28) (82) (73) (144) (199) (314) Postpaid ARPU (€/Month) 25.5 26.1 26.5 25.3 24.6 25.0 26.1 25.8 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Stable mobile customer base supporting reve
Slide 17: France B2B Revenue Trends
ALTICE FRANCE B2B REVENUE TRENDS IMPROVING TRENDS INCLUDING MOBILE BASE STABILIZATION B2B B2B Mobile Postpaid Net Adds2 Revenue YoY (%)1 ('000) (1.5%) (2.3%) (1.5%) (2.4%) (2.2%) (3.0%) (2.5%) (3.4%) (3.3%) (3.9%) (3.8%) (3.3%) (4.5%) (21) (1) (7.1%) (7.6%) (41) (51) (46) (7.6%) (59) (59) (5.6%) (
Slide 18: France Accelerated Network Investments
ALTICE FRANCE ACCELERATED NETWORK INVESTMENTS FASTEST 4G MOBILE COVERAGE EXPANSION AND FASTEST 4G+ NETWORK On Track Fastest Building Fiber Network LeadingBuildout 4G Network Mobile Data Speeds Increasing 4G Population # Fiber HomesCoverage Passed (%) SFR 4G coverage 30 Average Download Speeds in Mb/
Slide 19: France Accelerated Network Investments: Leading Fiber Operator
ALTICE FRANCE ACCELERATED NETWORK INVESTMENTS LEADING FIBER OPERATOR Fastest Fiber Network Buildout Fastest Fixed Broadband Speeds # Fiber Homes Passed N°1 Fiber coverage 2022 target 22m + Fastest fiber speeds1 +381k Up to 1 Gbps download speeds FTTH / FTTB +386k 9.3m +419k 8.9m + Fastest DSL spee
Slide 20: Building Blocks to Achieve Our Strategic Plan
BUILDING BLOCKS TO ACHIEVE OUR STRATEGIC PLAN EXECUTING ON NEXT PHASE OF SFR TURNAROUND 1 Market leading fiber and 4G+ network deployments 2 Market leading content investments reducing churn and supporting ARPU: “more for more” 3 Digitalisation of customer experience and insourcing of customer ca
Slide 21: Portugal Business Dynamics
ALTICE PORTUGAL BUSINESS DYNAMICS RETURN TO GROWTH Revenue YoY (%)1 + B2C – Focus on reducing customer losses: 1.3% +0.5% Fiber growth still accelerating and fixed churn reducing as a result of faster network build out (0.0%) Content bundling supporting ARPU (3.0%) Saturation of 4P and postp
Slide 22: Portugal Accelerated Network Investments
ALTICE PORTUGAL ACCELERATED NETWORK INVESTMENTS RAPID FIBER NETWORK EXPANSION TO STABILISE FIXED CUSTOMER BASE Fiber Network Buildout B2C Mobile Customers Net Adds # Fiber Homes Passed1 N°1 (‘000) (‘000) Fiber coverage 5.3m 2020 target >900k +714k +77 c.4.0m +85k 3.0m +18 2.2m 68 48 35 14 9 (31) (12
Slide 23: USA Business Dynamics
ALTICE USA BUSINESS DYNAMICS ACCELERATED REVENUE GROWTH SINCE ALTICE CONTROL Revenue YoY (%)1 FY 2016: 3.6%3 + Revenue and subscriber growth ahead of expectations 5.1% + Increase in broadband speeds driving upselling + Substantially improved margins and cash flow 3.8% + Significantly improved cust
Slide 24: USA Business Dynamics: Stronger Growth
ALTICE USA BUSINESS DYNAMICS STRONGER GROWTH Revenue YoY (%)1,2 Q4-16 OpFCF Revenue YoY (%)1 Q4-16 OpFCF 93.8% 29.6% Growth YoY in cc Growth YoY in cc FY 2016: 2.5%5 FY 2016: 6.3%5 4.4% 6.7% 6.7% 6.7% FY 2015: 0.8%5 4 2.7% FY 2015: 3.7%5 5.7% 2.6% 3 1.8% 1.9% 4.7% 4.5% 5.2% 1.6% 3.6% 3 1.1% 0.7%
Slide 25: USA B2C Fixed Line Business
ALTICE USA B2C FIXED LINE BUSINESS POSITIVE CUSTOMER AND ARPU TRENDS B2C Customer Relationships (‘000)1 B2C Customer Relationships (‘000) (‘000) (‘000) +0.8% +2.6% 1,505 2,882 1,489 1,491 2,879 1,481 2,873 2,866 1,467 2,855 2,858 2,858 2,846 1,452 1,454 1,439 3P 3P Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-1
Slide 26: USA B2C Broadband
ALTICE USA B2C BROADBAND FOCUS ON HIGH SPEED BROADBAND GROWTH Optimum B2C Broadband Suddenlink B2C Broadband 39 40 51 33 60 90 Altice 62% Altice Ownership 59% Ownership 56% 52% 42% 37% 34% 34% 32% 26% 20% 13% 16% 20% 13% 12% 8% 10% 8% 7% 6% 6% 6% 5% 6% 2% 5% 5% 3% 1% 1% 2% 1% 1% 1% 1% Q4 14 Q1 15 Q2
Slide 27: USA Margin Progression
ALTICE USA MARGIN PROGRESSION SUBSTANTIALLY IMPROVED MARGINS AND CASH FLOW Opex Rationalization Opportunity Expanded Cash Flow Generation Opex ex-programming costs per customer / month 1 40.7% 38.8% Altice USA Adj. EBITDA Margin 36.5% $79 33.9% 32.9% Synergies between Optimum 31.7% 32.4% 31.3% and S
Slide 28: USA Customer Journey Transformation
ALTICE USA CUSTOMER JOURNEY TRANSFORMATION SIGNIFICANT CUSTOMER SERVICE IMPROVEMENTS # Total Calls (m) 1 # Total Calls (m) 2 7.8 (20%) (15%) 3.5 6.2 3.0 H2-15 H2-16 H2-15 H2-16 # Service Visits (m) 1 # Service Visits (m) 2 (24%) (19%) 0.3 0.3 0.2 0.2 H2-15 H2-16 H2-15 H2-16 New management implementi
Slide 29: Financial Review
Financial Review Sattice
Slide 30: Pro Forma Consolidated Financials
ALTICE N.V. PRO FORMA CONSOLIDATED FINANCIALS1 YoY Reported YoY Constant €m FY 15 FY 16 Growth Currency Growth France (SFR) 11,503 11,170 (2.9%) (2.9%) Altice International 4,254 4,405 3.5% 3.6% US (Optimum) 5,686 5,842 2.7% 2.5% Revenue US (Suddenlink) 2,181 2,325 6.6% 6.3% 2 Intersegment Adjustmen
Slide 31: Overview of Altice Group Debt
OVERVIEW OF ALTICE GROUP DEBT DIVERSIFIED SILOS Altice Europe Altice Group Target Leverage Available Liquidity (Consolidated) (Consolidated) • Altice Europe: c. 4.0x • Altice Group1: €5.4 bn Gross Debt 29,929 51,677 Net Debt 29,189 50,365 • Altice US: c. 5.0-5.5x LTM Adj. EBITDA 4 5,928 8,947 PF Cas
Slide 32: USA Leverage Evolution
ALTICE USA LEVERAGE EVOLUTION RAPID DE-LEVERAGING TOWARDS TARGET Net Debt / L2QA Adj. EBITDA1 7.1x 7.0x 6.6x 6.7x 6.5x 6.2x 6.0x 5.8x 5.6x 2 5.3x Target 5.0-5.5x Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Suddenlink Optimum 1 Net debt and Adj. EBITDA figures as per Altice reported financials in euros
Slide 33: Overview of Altice Group Maturity Profile
OVERVIEW OF ALTICE GROUP MATURITY PROFILE €21BN REFINANCED DURING 2016 Altice Maturity Profile (€m) Debt maturity summary: Altice Group 9,906 WAL life of 6.6 years (including RCF drawn) WACD of 6.2% 1,049 1,782 1,985 2,393 2,708 6,803 6,502 8,751 8,043 1,243 4,172 4,194 3,920 1,031 2,058 2,846 1,731
Slide 34: Group 2017 Guidance
ALTICE GROUP 2017 GUIDANCE 1 Revenue • Growth including revenue stabilization in France2 Adjusted EBITDA • High-single digit growth2 Capex • c.€4 billion3 1 Current Group perimeter at constant currency 2 Pro forma growth including Optimum (Cablevision) and Media assets in France (i.e. NextRadioTV an
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Slide 36: Appendix
Appendix 36
Slide 37: Pro Forma Consolidated Revenue (Q4)
ALTICE N.V. PRO FORMA CONSOLIDATED REVENUE1 YoY Reported YoY Constant €m Q4-15 Q4-16 Growth Currency Growth France 2,875 2,892 0.6% 0.6% US (Optimum) 1,439 1,522 5.8% 4.4% US (Suddenlink) 565 611 8.1% 6.7% Portugal 577 580 0.5% 0.5% Israel 232 248 7.0% 4.1% Dominican Republic 178 189 6.0% 6.8% Frenc
Slide 38: Pro Forma Consolidated Adjusted EBITDA (Q4)
ALTICE N.V. PRO FORMA CONSOLIDATED ADJUSTED EBITDA YoY Reported YoY Constant €m Q4-15 Q4-16 Growth Currency Growth France 851 954 12.1% 12.1% US (Optimum) 406 579 42.5% 40.6% US (Suddenlink) 243 289 19.0% 17.4% Portugal 245 265 7.8% 7.8% Israel 107 108 0.8% (1.9%) Dominican Republic 93 97 4.4% 5.2%
Slide 39: Pro Forma Consolidated Capex (Q4)
ALTICE N.V. PRO FORMA CONSOLIDATED CAPEX Q4-16 €m Q4-15 Q4-16 % Capex to Sales France1 633 775 26.8% US (Optimum) 209 191 12.5% US (Suddenlink) 105 108 17.7% Portugal 97 126 21.8% Israel 64 79 32.0% Dominican Republic 36 28 14.8% French Overseas Territories 19 17 29.6% Others and eliminations2 8 (7)
Slide 40: Pro Forma Consolidated Revenue (FY)
ALTICE N.V. PRO FORMA CONSOLIDATED REVENUE YoY Reported YoY Constant €m FY 15 FY 16 Growth Currency Growth France 11,503 11,170 (2.9%) (2.9%) US (Optimum) 5,686 5,842 2.7% 2.5% US (Suddenlink) 2,181 2,325 6.6% 6.3% Portugal 2,347 2,312 (1.5%) (1.5%) Israel 923 955 3.5% 2.0% Dominican Republic 695 71
Slide 41: Pro Forma Consolidated Adjusted EBITDA (FY)
ALTICE N.V. PRO FORMA CONSOLIDATED ADJUSTED EBITDA YoY Reported YoY Constant €m FY 15 FY 16 Growth Currency Growth France 3,895 3,857 (1.0%) (1.0%) US (Optimum) 1,636 2,005 22.5% 22.2% US (Suddenlink) 889 1,058 19.0% 18.7% Portugal 968 1,089 12.5% 12.5% Israel 431 431 0.1% (1.4%) Dominican Republic
Slide 42: Pro Forma Consolidated Capex (FY)
ALTICE N.V. PRO FORMA CONSOLIDATED CAPEX FY 16 €m FY 15 FY 16 % Capex to Sales France1 1,857 2,324 20.8% US (Optimum) 784 627 10.7% US (Suddenlink) 431 323 13.9% Portugal 331 399 17.3% Israel 285 314 32.9% Dominican Republic 124 123 17.2% French Overseas Territories 51 57 26.4% Others and eliminatio