Altice NV: Third Quarter 2017 Pro Forma Results
2 November 2017
Altice N.V. - Q3 2017 Pro Forma Results
· Altice continued to focus on executing on its strategy to create the best customer experience, the best infrastructure and the best content during the third quarter of 2017.
· Revenue growth and margin expansion driven by strong Altice USA performance with substantial headroom for further improvement across all operations:
o Altice N.V. Group revenue growth of +0.3% growth YoY on a constant currency (CC) basis in Q3 2017;
o Altice USA revenue growth of +3.2% YoY on a CC basis, and growth in Israel of +3.1% YoY on a CC basis, offset by slight revenue decline in France of -1.3% YoY and revenue decline in Portugal of -3.1% YoY due to mismanagement of rate events.
· Altice Group Adjusted EBITDA grew +4.2% on a CC basis driven by the strong growth of Altice USA +18.9% YoY on a CC basis under IFRS:
o Altice Group Adjusted EBITDA margin increased by +1.5 percentage points YoY to 41.0%;
o Altice USA reached an Adjusted EBITDA margin of 44.9% in Q3 (+6.1% pts YoY vs. 38.8% in Q3 2016), France margin decreased by -0.7% pts to 36.6% and Portugal margin increased +0.9% pts to 46.8%.
· Altice Group Operating Free Cash Flow grew +6.2% on a CC basis in Q3 driven by the strong growth of Altice USA +13.8% on a CC basis under IFRS.
· Progressing with fastest deployment of state-of-the-art fiber (FTTH) technology planned across Europe / U.S., targeting a global run-rate of c.4+ million FTTH homes passed p.a. by 2018:
o Leading fiber operator in France reaching over 10 million homes passed at the end of Q3 (+433k QoQ including FTTH acceleration), targeting nationwide coverage by 2025;
o Altice USA's fiber-to-the-home (FTTH) deployment is on track to reach one million homes constructed by year end 2018 (one million homes to be designed by year end 2017);
o Leading fiber (FTTH) operator in Portugal reaching 4 million homes passed at the end of Q3 (+177k QoQ), targeting nationwide coverage by 2020.
· Significant progress expanding into the media and advertising space; integrating NextRadioTV into Altice Media Group, combining Teads and Audience Partners with Altice's telecoms businesses (building the future of cross-screen advertising) and pending Media Capital acquisition.
· Altice One launch - new home entertainment hub to support significantly improved video, broadband and phone experience for Altice USA customers.
· Further strengthening and simplification of diversified capital structure, including taking SFR private and significant refinancing across Altice's SFR and Altice International credit silos. Agreement for SFR Group to acquire French Overseas Territory telecom business from Altice International.
Michel Combes, Chief Executive Officer of Altice N.V., said: "Our priority is execution on our clear long-term strategy: to be the number one operator for the quality of our wholly-owned telecoms infrastructure and the number one convergence player, providing the best customer experience with best-in-class financial performance.
Revenue growth and margin expansion for Altice Group are currently being driven by the strong performance of Altice USA. The launch of Altice One is just the beginning of a new, better and simple experience for our customers as we look to become the connected home provider of choice. And as we invest more in our fiber project and digitalisation we will continue to improve service metrics, further reduce churn and see additional efficiency savings.
In Europe, we are intensifying the operational focus to improve customer experience and return France and Portugal to growth. To support the turnaround here we are expanding our fiber FTTH coverage at an accelerated pace as well as continuing to invest in improving our mobile network quality and providing differentiated content bundles.
Lastly, we are also quickly expanding into the media and advertising space which are our fastest growing businesses in the Group today."
November 2, 2017: Altice N.V. (Euronext: ATC NA and ATCB NA), today announces financial and operating results for the quarter ended September 30, 2017.
Key financial figures in Q3
· Altice Group Revenue €5,755m, increase of +0.3% YoY on a constant currency (CC) basis; down -1.8% YoY on a reported basis:
o €2,757m France (SFR) Revenue, down -1.3%;
o €1,970m Altice USA Revenue, increase of +3.2% on a CC basis to $2,327m in local currency; down -2.5% on a reported basis;
o €566m Portugal Revenue, down -3.1%.
· Altice Group Adjusted EBITDA €2,358m, increase of +4.2% on a CC basis; up +1.8% YoY on a reported basis:
o €1,009m France (SFR) Adjusted EBITDA, down -3.2%.
o €885m Altice USA Adjusted EBITDA, increase of +18.9% on a CC basis to $1,042m in local currency; up +12.8% on a reported basis;
o €265m Portugal Adjusted EBITDA, down -1.3%.
· Altice Group Adjusted EBITDA margin expanded by +1.5% pts YoY to 41.0%:
o France (SFR) margin decreased by -0.7% pts to 36.6%.
o Altice USA margin increased +6.1% pts to 44.9% under IFRS (44.1% under GAAP reporting standard);
- US Optimum margin increased by +7.9% pts to 43.7% under IFRS (42.9% under GAAP);
- US Suddenlink margin increased by +1.4% pts to 47.8% under IFRS (47.1% under GAAP).
o Portugal margin increased by +0.9% pts to 46.8%.
· Altice Group Operating Free Cash Flow of €1,411m, increase of +6.2% on a CC basis; up +2.9% YoY on a reported basis.
For 2017, Altice Group revenue is expected to grow on a pro forma organic basis. Group Adjusted EBITDA is expected to grow at the low end of the guidance range for high-single digit growth (consistent with year-to-date EBITDA growth of c.6% YoY on a CC basis). Group capex is expected to be c.€4bn.
Other Significant Events
· On November 2, 2017, Altice Caribbean entered into a term sheet agreement with SFR Group to acquire 100% of the share capital of Altice Blue Two (holding company of the telecom business in the French Overseas Territory). The implementation of this transaction is subject to technical conditions precedent, including the approval of the relevant corporate bodies at the level of Altice Caribbean and SFR Group. The closing of this transaction is expected to occur before the end of Q1 2018 with the transfer of the French Overseas Territory assets from the Altice International restricted group to the SFR restricted group.
· On October 9, 2017, Altice N.V. announced the successful refinancing of a portion of the existing debt of its SFR and Altice International credit pools. SFR and Altice International priced €4bn of new Term Loans, and Altice International also priced €675m of Senior Unsecured Notes with a coupon of 4.75%, now the lowest coupon in the Altice Group.
· On August 28, 2017, Altice N.V. announced the start of a programme to repurchase shares with an aggregate market value equivalent of up to €1bn, and that would end no later than August 31, 2018. As part of this programme, Altice intends to purchase up to €1bn of Altice common shares A and Altice common shares B on Euronext Amsterdam, which it intends to cancel upon repurchase and/or hold in treasury. On October 16, 2017, Altice N.V. announced that this share repurchase programme had been suspended and that a new programme to repurchase shares also in closed periods commenced and would continue until today, November 2, 2017 (inclusive). This share repurchase programme has been conducted within the parameters prescribed by the Market Abuse Regulation 596/2014 and the safe harbour parameters prescribed by the Commission Delegated Regulation 2016/1052 for buyback programmes. On November 3, 2017, Altice will resume its discretionary share repurchase activity. During the third quarter, Altice purchased approximately 7.7m shares of Altice common shares A and 0.5m of common shares B for a total of €147.0m. Up until the end of October 2017, Altice purchased a cumulative amount of approximately 16.4m shares of Altice common shares A and 1.1m of common shares B for a total of €307m. These share repurchase programmes form part of Altice's strategy to create superior, long-term value for all of its shareholders.
· On August 10, 2017, Altice N.V. announced the crossing of the 95% ownership threshold in SFR Group, increasing its stake to 95.9% having entered into several agreements relating to the acquisition of SFR Group shares through exchanges against Altice N.V. common shares A. Altice also announced on this date its intention to file with the French financial market authority (AMF) a buyout offer followed by a squeeze-out for the remaining SFR Group shares for a price of €34.50 per share (filed subsequently on September 4, 2017). On September 19, 2017, Altice announced the AMF had granted its clearance decision. On October 9, 2017, Altice announced the implementation of the squeeze-out of the SFR Group shares at the price of the buyout offer, i.e. a cash payment of €34.50 per SFR Group share, net of all costs. The SFR Group shares have therefore been delisted from Euronext Paris.
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Founded in 2001 by entrepreneur Patrick Drahi, Altice is a convergent global leader in telecoms, content, media, entertainment and advertising. Altice delivers innovative, customer-centric products and solutions that connect and unlock the limitless potential of its over 50 million customers over fiber networks and mobile broadband. The company enables millions of people to live out their passions by providing original content, high-quality and compelling TV shows, and international, national and local news channels. Altice delivers live broadcast premium sports events and enables millions of customers to enjoy the most well-known media and entertainment. Altice innovates with technology in its Altice Labs across the world. Altice links leading brands to audiences through premium advertising solutions. Altice is also a global provider of enterprise digital solutions to millions of business customers. Altice is present in 10 territories from New York to Paris, from Tel Aviv to Lisbon, from Santo Domingo to Geneva, from Amsterdam to Dallas. Altice (ATC & ATCB) is listed on Euronext Amsterdam. For more information, visit www.altice.net