EARNINGS RELEASE August 9, 2016 1 ALTICE N.V. – SECOND QUARTER 2016 PRO FORMA 1 RESULTS • Successful conclusion of group transformation with closing of Cablevision (Optimum 2 ) and media acquisitions in France: o Enhanced diversification of assets with balanced global scale and growth opportunities; § Altice USA gives group c.41% exposure 3 to large, growing US market; strong underlying revenue growth and further margin expansion potential. o Broadened fiber / cable / mobile access and content convergence platform with additional growth opportunities from advertising. • Operational momentum increases confidence in expectation for continued improvement in revenue trends throughout 2016: o France (SFR Group) – Solid execution in challenging market environment. Focus on improving network quality, customer experience, retention processes and content enriched service bundles, which combined with improving market dynamics is expected to drive significant improvement in revenue trend; § FY 2016 revenue trend still expected to be better than FY 2015 (-3.5% YoY), a significant improvement from Q1 2016 (revenue ex-media assets 4 -6.1% YoY) and Q2 2016 (-4.6% 4 ). Revenue 1 Financials shown in these bullet points are pro forma defined here as results of the Altice N.V. Group as if all acquisitions had occurred on 1/1/15, including PT Portugal (MEO), Suddenlink, Cablevision (Optimum), NextRadioTV and Altice Media Group France (and excluding Newsday Media Group, Cabovisao, ONI, La Reunion and Mayotte mobile activities as if the disposals occurred on 1/1/15). Segments shown on a standalone reporting basis, Group figures shown on a consolidated basis. 2 “Optimum” financials shown in this release refer to total company earnings from the business previously known as Cablevision Systems Corporation (e.g. including Lightpath), not just from the “Cable” segment, excluding Newsday Media Group (75% stake disposed on 7 July, 2016) 3 Altice USA Operating Free Cash Flow, defined as EBITDA less capex, as a proportion of total Operating FCF in H1 2016 (Altice USA represented c.35% of Altice N.V. Group revenue in H1 2016). 4 Excluding acquired media assets for comparability (i.e. NextRadioTV and Altice Media Group France).
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ALTICE N.V. – SECOND QUARTER 2016 PRO FORMA RESULTS · 2016-08-09 · § FY 2016 revenue trend still expected to be better than FY 2015 (-3.5% YoY), a significant improvement from
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o France (SFR Group) – Solid execution in challenging marketenvironment. Focus on improving network quality, customerexperience, retention processes and content enriched servicebundles, which combined with improving market dynamics isexpectedtodrivesignificantimprovementinrevenuetrend;
§ FY2016revenuetrendstillexpectedtobebetterthanFY2015(-3.5%YoY),asignificantimprovementfromQ12016(revenueex-media assets4 -6.1% YoY) and Q2 2016 (-4.6%4). Revenue
declined 4.3% YoY in Q2 2016 pro forma for recentacquisitions of media assets, including double-digit growth(+12.6%YoY)atNextRadioTV,rebrandedSFRRadioTV5;
§ Continued fiber customer net additions (+44k), albeit slowerthanrecentquarters,andreducedmobilepostpaidchurnYoY(B2C net losses of -199k in Q2 2016 vs. -314k in Q2 2015);seeing early benefits of accelerated network upgrades andcontentinitiatives,asSFRistheclearfiberleaderandnumber2mobileoperatornowintermsofvoicequality6.
o Portugal (MEO) – Revenue trend continues to improve despiteheadwindfromterminationfeesreduction;
§ Fiber growth accelerating (+16k net additions in Q2) asexpanding network rapidly with continued B2C postpaidmobilesubscribergrowth(+14k).
o US(Suddenlink)–Strongunderlyinggrowthinrevenueof5.7%YoYonaconstantcurrency(CC)basisinQ22016excludingPPV7eventinQ22015(5.2%YoYactualgrowthonaCCbasis);
§ Seasonaldecline inuniqueresidentialcustomerrelationships(8k net losses in Q2), including broadband (-2k) and videocustomers (-23k), whichwas better than last year (losses of13k,3kand29kinQ22015respectively);
o US(Optimum)–2.0%underlyingrevenuegrowthYoYonaCCbasisin Q2 2016 pro forma for Newsday disposal (+0.3% impact) andexcluding PPV event in Q2 2015 (1.1% YoY actual growth on a CCbasis)8;
§ 26k additional broadband RGUs and -2k video RGUs, bestvideoperformanceforfouryears.
o Israel (HOT) –Return to revenuegrowth inQ2+1.5%YoYonaCCbasis,+0.8%onareportedbasis);
§ Cable customer base remains stable (-2k) with recentimprovementsinchurnandqualityofservicesustained;
§ Best practice in improving customer experience here to beadoptedinFranceandAlticeUSA.
o DominicanRepublic(AlticeHispaniola)–ContinuedstronggrowthinrevenueinQ2(+5.1%onaCCbasis,+0.7%onareportedbasis);
§ Both postpaid mobile subscriber growth (+1k) and fibercustomernetadditions(+3k).
• RobustfinancialperformancedespitetemporaryweaknessinFrancewithcontinued record results at MEO and Suddenlink and stronger thanexpectedresultsfromOptimum:
§ Strong growth in Portugal (Adjusted EBITDA +22.5% YoY),Suddenlink(+18.5%onaCCbasis),Optimum(+11.1%onaCCbasis)andDominicanRepublic(+4.5%onaCCbasis)offsettingweaknessinFranceincludingmediaassets(-6.8%)10.
o AlticeN.V.OperatingFreeCashFlowdeclined6.6%onaCCbasisinQ2 reflecting accelerated investments (excluding one-off paymentrelated to the network sharing JV in Israel of €61m in Q2 2016,OperatingFreeCashFlowdeclined1.8%YoY);
§ Very strong growth inQ2 inMEO, Suddenlink andOptimumOperating Free Cash flow, +50.7%, +60.7% and +41.8% YoYrespectively.
• Accelerated re-investments into fiber/mobile networks and selectivemediaandcontent:
o France (SFR) – Accelerated fiber broadband coverage expansion(+419khomespassedinQ2tototal8.5millionasoftheendofJune2016,ontrackfor22millionhomespassedby2022);
§ Media and content acquisitions advancing “access pluscontent”strategy.
o Portugal (MEO)–Accelerated fiberbroadband coverageexpansion(+180khomespassedinQ2tototal2.6millionhomespassedasoftheendofJune2016);
§ Ontrackfor5.3millionhomespassedby2020.
o US (Suddenlink) – Continuing to deliver next-generation 1Gbpsbroadbandservicesacrossthefootprint.
o US(Optimum)–Ontracktodeliver300Mbpsbroadbandspeedstoentirefootprintby2017.
• ReiteratedFY2016AlticeN.V.Groupguidance, includingourexpectationofanimprovingtrendinAlticeGrouprevenueonaconsolidatedbasis(asgiven on 15 March 2016 under the prior Group perimeter excludingOptimumandacquired content andmedia assets, at constant currency).On this basis, we also still expect mid-single digit growth in GroupAdjusted EBITDA and Operating Free Cash Flow growth flat to slightlydownreflectingacceleratedinvestments.ThisincludesourexpectationofgrowthintheAdjustedEBITDAcontributionfromFranceYoY.
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August9,2016:AlticeN.V.(Euronext:ATCNAandATCBNA),todayannouncesfinancial and operating results for the quarter and half year ended June 30,2016.
o €1,432mUS(Optimum)Revenue15,down1.0%onareportedbasis;increaseof1.1%onaCCbasisto$1,618minlocalcurrency(2.0%underlyinggrowthexcludingrevenuefromPPVeventinQ22015).
§ AlticeN.V.:On20June2016,Alticeannouncedthereorganizationofitsgroupmanagementstructuretoreflecttheglobalpresenceofthegroupcentered around Europe and the US. Dexter Goei is now President ofAltice N.V. and Chairman& CEO of Altice USA.Michel Combes is nowCEOofAlticeN.V.andChairman&CEOofSFRGroup.PatrickDrahihassteppeddownfromhispositionasPresidentofAlticeN.V.andnowleadsthe newly formed Altice Group Advisory Council (setting the strategic,operationalandtechnologicalagendaforthegroup).
§ Altice N.V.: On 21 July 2016, Altice announced its international mediaand content organization, led by Alain Weill as CEO, continuing thestrengtheningofAltice’scorporateandorganizationalstructure.
§ AlticeUSA:On21 June2016,AlticeN.V. announced the completionofthe acquisition of Cablevision Systems Corporation, the leadingcommunications services provider in the New York metropolitan area.Cablevision together with Suddenlink form Altice USA, the #4 cableoperator in theU.S.which servesmore than 4.6millionOptimum andSuddenlinkcustomersacross20states.
§ Altice USA: On 7 July 2016, Patrick Dolan along with Altice USAannouncedthatanentityledbyMrDolanhasacquired75%ofNewsdayMediaGroup.Alticeretainsa25%interestinthecompany.
19DefinedasEBITDAlessCapitalExpenditure.
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§ France (SFR Group): The minority voting stake in NextRadioTV(rebrandedSFRRadioTV)wastransferredfromAlticeInternationaltoSFRasof12May2016.On25May2016,SFRannouncedthecompletionoftheacquisitionofAlticeMediaGroupFrance.Thesecontentacquisitionsarepartof a converged strategy to strengthenSFR’sproductofferings,aiming to reduce reduce churn, increase ARPU and revenue growth(including new advertising revenue). To complement existing TVchannelsbeingacquired, SFRhas leveraged theNextRadioTVandAMGplatformstolaunchtwonewnewschannels,BFMParisandBFMSport,as well as five new SFR Sports Channels all live from 13 August 2016.SFR’snewopen-platformdigitalnewsstandapplication(SFRPresse)hassignificantlyexpandedit’sofferingtoover40titlesandithasnowbeendownloadedby3.2millioncustomers.
§ France (SFR Group): On August 4, 2016, an agreement was signedbetween the management and trade unions representing SFR Group’sTelecomdivision, to enable the company to adaptmorequickly to therequirements of the French telecoms market by establishing a morecompetitiveandefficientorganization.Thisagreementreiteratesthejobretention commitments taken until 1 July 2017 and defines internalaccompanyingguaranteesandtheprocessofvoluntaryretirement.
§ Portugal (MEO): On 26 July 2016, NOS, Vodafone Portugal, Cabovisão,Altice Pictures, PT Portugal and MEO announced the signing of anagreementforreciprocalsharingof:(1)sportseventbroadcastingrights,and;(2)distributionandbroadcastingrightsofsportsandclubchannels,whicharecurrentlyownedorcometobeownedbythesignatories,whowill share the current and future costs of the aforementioned sportscontent. In addition, on 4 August 2016, PT Portugal /MEO announcedthat it had signed a memorandum of understanding (MOU) with theobjectiveofenteringthesharecapitalofSportTV.
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MichelCombes,ChiefExecutiveOfficerofAltice,said:“ThisquartersawAlticetransform into a leading transatlantic, converged telecoms and mediacompany.
Havingsuccessfullyclosed theCablevisionacquisition,AlticeUSAhasbecomethe4thlargestcableoperatorintheattractiveandcompetitiveUSmarket.WeareveryexcitedaboutthecurrentperformanceandfutureprospectsforbothSuddenlink and Optimum. We are looking forward, with Dexter Goei, tosuccessfully entering a new era for our businesses across the US which areclearlygoingtobeahugepartofAltice'snewgrowthstory.
IthasbeenanothercommerciallychallengingquarterforSFRinFrancebutweareconfidenttherevenueandAdjustedEBITDAtrendswillcontinuetoimprovewith our fiber expansion and accelerated 4G/4G+ network investmentprogram,ledbyMichelPaulin,alreadyseeingmeasurablebenefitsintermsofbetterqualityofserviceandcommercialperformance.Wearemovingforwardwith our innovative strategy based on the convergence of telecoms, media,content and advertising, enabling us to offer more and more value to ourcustomers.Wehavealsonowagreedwithlabourunionsonthenextphaseofthetransformationofthecompany.
MEOinPortugalagainisshowingverystronggrowthyearoveryearinAdjustedEBITDAfromourearlyefficiencymeasures,withtherevenuetrendexpectedtoimprovefurtherfortherestof2016.WearealsoextremelypleasedtoseeHOTin Israel return to revenuegrowthasourbusiness in theDominicanRepubliccontinuestoshowstronggrowth.
Overall we remain very focused on improving the operational and financialperformance of the businesses we’ve acquired and achieving the efficiencysavingswe’vetargeted,strengtheningthemanagementteaminrecentmonthsaccordingly.”
AlticeN.V.(AlticeN.V.,the“Company”,orthe“Successorentity”)wascreatedasaresultofacross-bordermergerwithAlticeS.A.asperaboardresolutiondatedAugust9,2015.AlticeN.V.’ssharesstartedtradingonEuronextAmsterdamfromAugust10,2015onwards.AlticeN.V.isconsideredtobe the successor entity of Altice S.A. and thus inherits the continuity of Altice S.A’s consolidatedbusiness.AlticeN.V.anditssubsidiarieshaveoperatedforseveralyearsandhavefromtimetotimemade significant equity investments in a number of cable and telecommunication businesses invarious jurisdictions.Therefore, inorder to facilitateanunderstandingof theCompany’s resultsofoperations,wehavepresentedanddiscussedtheproformaconsolidatedfinancialinformationoftheCompany–givingeffecttoeachsuchsignificantacquisitionanddisposalasifsuchacquisitionsanddisposalshadoccurredbyJanuary1,2015includingthefinancialsofCablevisionSystemsCorporation(CSC) LLC (Optimum), PT-Portugal SGPS, Cequel Corporation (Suddenlink), NextRadioTV and AlticeMedia Group France; excluding NewsdayMedia Group, Cabovisao, ONI, La Reunion andMayottemobileactivitiesforthequartersandsixmonthsendedJune30,2015andJune30,2016(the“ProFormaFinancialInformation”).
This press release contains measures and ratios (the “Non-IFRS Measures”), including AdjustedEBITDAandOperating FreeCash Flow, that arenot requiredby, or presented in accordancewith,IFRSoranyothergenerallyacceptedaccountingstandards.WepresentNon-IFRSmeasuresbecausewebelievethattheyareofinterestfortheinvestorsandsimilarmeasuresarewidelyusedbycertaininvestors,securitiesanalystsandotherinterestedpartiesassupplementalmeasuresofperformanceand liquidity.TheNon-IFRSmeasuresmaynotbecomparable to similarly titledmeasuresofothercompanies, have limitations as analytical tools and should not be considered in isolation or as asubstituteforanalysisofour,oranyofoursubsidiaries’,operatingresultsasreportedunderIFRSorother generally accepted accounting standards. Non-IFRS measures such as Adjusted EBITDA andOperatingFreeCashFlowarenotmeasurementsofour,oranyofoursubsidiaries’,performanceorliquidityunder IFRSoranyothergenerallyacceptedaccountingprinciples. Inparticular,youshouldnotconsiderEBITDAasanalternativeto(a)operatingprofitorprofitfortheperiod(asdeterminedinaccordancewithIFRS)asameasureofour,oranyofouroperatingentities’,operatingperformance,(b)cash flows fromoperating, investingand financingactivitiesasameasureofour,oranyofoursubsidiaries’,abilitytomeetitscashneedsor(c)anyothermeasuresofperformanceunderIFRSorothergenerallyacceptedaccountingstandards.Inaddition,thesemeasuresmayalsobedefinedandcalculateddifferentlythanthecorrespondingorsimilartermsunderthetermsgoverningourexistingdebt.
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Financialandstatisticalinformationandcomparisons
FinancialandstatisticalinformationisatandforthequarterendedJune30,2016,unlessotherwisestated.Where financialorstatistical information isgiven for thequarterended June30,2015,anyyearoveryearcomparisonsaretothequarterendedJune,2014,unlessotherwisestated.
(1) Portugal isMEO / PT Portugal only for the pro forma financial information shown in the tables above, excluding Cabovisao andONI (disposalscompletedJanuary19,2016).
(3) “Others” segmentwithin Altice International includes Altice’s cable business in Belgium& Luxembourg, the B2B telecommunications solutionsbusinessanddatacentreoperationsinSwitzerland(GreenandGreenDatacenter),ourdatacentreoperationsinFrance(Auberimmo),ourcontentproductionanddistributionbusinessinFrance(MaChaîneSportandSportv).
(1) TotalhomespassedinFranceincludesunbundledDSLhomesoutsideofSFR’sfiber/cable(FTTH/FTTB)footprint.PortugaltotalhomespassedincludesDSLhomesenabled for IPTVoutsideofMEO’s fiber footprint.DominicanRepublic totalhomespassed includesDSLhomesoutsideofAlticeHispaniola’s fiber footprint. In Israel, thetotalnumberofhomespassed isequaltothetotalnumberof Israelihomes.ForOptimum,thetotalhomespassedincludesboththeresidentialandcommercialunits.
(2) Fiber/cableuniquecustomersrepresentsthenumberof individualenduserswhohavesubscribedforoneormoreofourfiber/cablebasedservices(includingpaytelevision,broadbandortelephony),withoutregardtohowmanyservicestowhichtheendusersubscribed.Itiscalculatedonauniquepremisesbasis.Thetotalnumberoffiber/cablecustomersdoesnotincludesubscriberstoeitherourmobileorISPservices.Fiber/cablecustomersforFranceexcludeswhite-labelwholesalesubscribers.ForSuddenlinkitreferstothetotalnumberofuniqueresidentialcustomerrelationships. For Optimum it refers to the total number of unique customer relationships, including both residential and commercial to beconsistentwithpriordisclosureforthisbusiness.
(3) RGUs,orRevenueGeneratingUnits,relatetosourcesofrevenue,whichmaynotalwaysbethesameascustomerrelationships.Forexample,oneperson may subscribe for two different services, thereby accounting for only one subscriber, but two RGUs. RGUs for pay television andbroadband are counted on a per service basis and RGUs for telephony are counted on a per line basis. For Suddenlink andOptimum this isequivalenttoPSUs,orPrimaryServiceUnits.
Q2-15[3months]
Dominican Belgiumand FrenchOverseasFrance Portugal Suddenlink Optimum Israel Republic Luxembourg Territories Total
(5) ARPUisanaveragemonthlymeasurethatweusetoevaluatehoweffectivelywearerealizingrevenuefromsubscribers.ARPUiscalculatedbydividingtherevenuefortheserviceprovidedaftercertaindeductionsfornon-customerrelatedrevenue(suchashostingfeespaidbychannels)fortherespectiveperiodbytheaveragenumberofcustomerrelationshipsforthatperiodandfurtherbythenumberofmonthsintheperiod.Theaveragenumberofcustomerrelationshipsiscalculatedasthenumberofcustomerrelationshipsonthefirstdayintherespectiveperiodplusthenumberofcustomerrelationshipsonthe lastdayoftherespectiveperiod,dividedbytwo.ForSuddenlinkandOptimum,IsraelandDominicanRepublic,ARPUhasbeencalculatedbyusing the followingexchange rates: average rate forQ2-16,€1.00=$1.130,€1.00= ILS4.309,€1.00=51.733DOP.
consolidatedbasisinQ22016(adecreaseof1.7%onaconstantcurrencybasis) as growth in Altice USA, Israel, Dominican Republic and FrenchOverseasTerritorieswasoffsetbydeclinesinFranceandPortugal.
o Total Group Adjusted EBITDA increased by 2.7% YoY on a reportedconsolidated basis to €2,265m due to the strong growth in Portugal(+22.5%onastandalonebasis),OptimuminUS(+8.7%)andSuddenlinkin US (+16.0%) offsetting weakness in France (-6.8%)20. On a constantcurrency basis Group Adjusted EBITDA was up 3.7%. Group AdjustedEBITDAmarginexpanded2.0%ptsYoYto38.9%.InQ12016themarginimprovementYoYwas10.1%ptsinPortugal,5.1%ptsinSuddenlinkand2.9%ptsinOptimum.Francemargincontractedby1.0%ptsYoYduetosubscriberlossesandpromotionalactivity.AlticeInternational’sAdjustedEBITDAgrowthwas15.8%YoYinQ22016atconstantcurrencydrivenbystronggrowthinPortugalandDominicanRepublic(+4.5%onaCCbasis).
o Total GroupOperating Free Cash Flow decreased 7.6% to €1,157m, or6.6%onaconstantcurrencybasis,withsignificantgrowthinAlticeUSAoffsetbythedecline inFrance. Excludingaone-offpaymentrelatedtothe network sharing JV in Israel of €61m, Group OpFCF decreased by1.8%onaCCbasisinQ22016.
o Total revenue in France of €2,781m decreased by 4.3% YoY on astandalone basis in Q2 2016, including acquired content and mediaassets21, mostly due to subscriber losses across the B2C, B2B andWholesale divisions. Adjusted EBITDAwas also impacted by subscriberlosses and promotional activity, declining 6.8% YoY to €999m22 withmargins contracting by 1.0% pts YoY to 35.9%. The revenue trend isexpected to continue to improve in 2016 based on recent operationalperformancetrends:
§ B2Cfixedrevenuewasdown2.0%YoYinQ2asaresultofthedeclineintheDSLcustomerbase.Contentbundlingandrecentprice initiatives are supporting improvements in fixed ARPU,bothQoQandYoY(blendedfiber/DSLARPUincreasedto€35.6inQ22016from€33.9inQ12016and€35.3inQ22015).SFRis also seeing continued fiber customer additions and DSLmigrations(+44kuniquefibercustomeradditionsinQ2),albeitslower than recent quarters. Total fiber and DSL customerlossesimprovedslightly(-58kvs.-61k)astheDSLboxshortagewas resolved inAprilwithnormal service resumed fromMay.SFR is improving sales, installation and IT processes toaccelerate DSL to fiber migrations and will be launchingenhanced“backschool”offersforQ3;
§ B2Cmobile revenuewas down 7.1% in Q2 as a result of thedecline in the mobile customer base and to a lesser extentlowerARPUYoY.Contentbundlingandrecentpricinginitiativeshave resulted in a stabilization of mobile ARPU, as well (e.g.B2C postpaid ARPU €25.0 in Q2 2016 vs. €24.6 in Q1 2016).Mobile postpaid churn has also reduced YoY in Q2 2016
reflectingtheearlybenefitsofSFR’snetwork investmentsandfocus on improving customer service (B2C mobile postpaidlossesimprovedfrom314kinQ22015to199kinQ22016);
§ B2B revenue was down 4.5% YoY in Q2. We are currentlyundergoingatransformationofSFR’sB2BbusinessbuttheB2Bmarket in France is in decline. Network quality of serviceimprovements is reducingchurn, including inmobile (e.g.B2Bpostpaid losses improved from 59k in Q2 2015 to 46k in Q22016). However, there is a delivery backlog in the B2B fixedbusiness. The focus for this business segment is to reducecomplexityandharmonizethesalesapproach,especiallygivenmultiple legacy B2B acquisitions which have yet to be fullyintegrated.SFRalsohasanewproductpipelineintheB2BICTsegmentwhichshouldbeapositiveoffsetinthenearterm;
§ Wholesale revenue declined 1.2% YoY with the migration ofBouyguesDSLcustomersawayfromSFR’snetworknowlargelycomplete.Otherrevenueincreased3.0%YoY,includingdouble-digitgrowth(+12.6%)atNextRadioTV.
o Acceleratedre-investingofsavingstoreignitegrowth:§ Highestnumberof4G/4G+sitesrolledoutinthemarketagaininQ2
o CompletionoftheacquisitionsofNextRadioTVstakeandAlticeMediaGroupFrancetocomplementexclusivesportsrightsincludingEnglishPremierLeague,addingdifferentiatedcontenttoourconvergedcommunicationsservices:
Portugal(MEO)Integration continues to be on track, including the original acquisition opexsaving target23,with the recent significant improvement in the revenue trendandmarginssustainedintoQ2:
o VerystrongAdjustedEBITDAgrowthof22.5%YoYinQ2withmarginsat48.4%,up10.1%pts;
o Totalrevenuedeclined3.0%YoY,another improvementvs. -3.5%inQ12016and-7.3%inFY2015;expectrevenuetrendtocontinuetoimprovein2016;§ B2C revenue declined 2.5% YoY, negatively impacted by a 30%
reduction in thevoice termination fee (September2015)anda35%reductionintheSMSterminationfee(April2016)andthedecisiontorespondmoreproactivelytocompetitor3Ppromotions.Excludingtheimpactoftheterminationfeereductions,B2Crevenuedeclined1.0%inQ22016;
§ B2B revenuedeclinedby6.0%YoYdue to large corporate customerlossesfromlastyearbeforeAlticetookcontrolofthebusinessinQ32015. Excluding the impact of the termination fee reductions, B2Brevenuedeclined5.2%inQ22016;
o FibergrowthisacceleratingwithMEO’sacceleratednetworkexpansion,improvingMEO’scompetitivenessinareaswhereitcouldonlypreviouslysellDSLbroadbandbundles;
o Newmonetizationmodel for sports rightswith sharing agreement andsigningofMOUwithobjectiveofenteringthesharecapitalofSportTV,meaningallcontentwillbeavailabletoallconsumersinPortugalwithnoexclusivity;
o Continued convergent 4P/5P upselling, although the growth of theconvergentmarkethasstartedtoslow.
o ThefocusforSuddenlinkisonoptimizingcustomerservice/experience,improvingcustomerretention,reducingchurn,andupgradingthenetworktoenhancebroadbandbundles(includingthelaunchofanewhomehub);
o 2.9%growthYoYinuniqueresidentialcustomerrelationshipswithARPUgrowthof2.2%onaCCbasis;seasonalQ22015netlossesof8k(reducedfromnetlossesof13kinQ22015);
o ContinuingOperationGigaSpeed,deliveringnext-generation1Gbpsbroadbandservicesacrossthefootprint;
o VerystrongEBITDAgrowthof18.5%onaCCbasiswithbest-in-classmarginsof45.6%(up5.1%ptsYoY)andverystrongOperatingFCFgrowth(up60.7%YoYonaCCbasis).
US(Optimum)
Strong underlying revenue growth of 2.0% YoY on a CC basis in Q2 2016,adjusting forone-offPPVevent revenue inQ22015 (actualgrowthwas1.1%YoY on a CC basis, or a decline of 1.0% on a reported basis due to anunfavourablemoveinexchangerate),remainingcomfortablyabovelastyear’srateofgrowth(FY2015revenuegrew+0.8%YoY):
o Operationally this was the best quarter for Optimum since 2012 withuniquecustomeradditions24of19kandvideocustomerlossesofjust2k;
o The base of unique customer relationships grew 1.0% YoY with ARPUgrowingat0.3%YoY;
o ThefocusforOptimumisonoperationalimprovementsdrivenbyoptimizingcustomerservice/experience,improvingcustomerretentionandupgradingthenetworktoenhancebroadbandbundles(includingthelaunchofanewhomehub)–Ontracktodeliver300Mbpsbroadbandspeedstoentirefootprintby2017;
o Optimumiscommittedtosignificantlyincreasingbroadbandspeedsthroughextensiveinvestmentsinthenetwork,aswellintroducingalow-incomebroadbandoffering.ThecompanyisalsoinvestingmoreintoitsWiFinetwork,whichwillfurtherextendthereachofitsbroadbandofferings;
o StrongEBITDAgrowthof11.1%onaCCbasiswithmarginsof32.9%(up2.9%ptsYoY)andverystrongOperatingFCFgrowth(up41.8%YoYonaCCbasis).
o FixedchurnimprovementsseeninQ42015sustainedfrombettercustomerserviceandretentiontoolswithcablecustomerlossesremainingathistoricallylowlevelsinQ22016(-2kvs.-2kinQ12016);
o FixedB2Crevenueincreased0.8%QoQonaCCbasisasthecustomerbaseisstabilizing,althoughrevenuedeclined3.1%YoYmainlyduetocustomerlossesinpriorquarters;
o Competitioninthemobilemarketremainstoughbutgrowthinthemobilecustomerbase(postpaidcustomergrowthof+26k,+23kB2CUMTS)isoffsettingthedeclineARPU,suchthatB2Cmobilerevenuegrew18.8%inconstantcurrencyinQ22016;
o AdjustedEBITDAgrew0.5%YoYonaCCbasisbutwasdown0.1%onreportedbasisduetoanunfavourablemoveintheexchangerate.
Thispressreleasedoesnotconstituteorformpartof,andshouldnotbeconstruedas,anofferorinvitationtosellsecuritiesofAlticeN.V.oranyofitsaffiliates(collectivelythe“AlticeGroup”)orthesolicitationofanoffertosubscribefororpurchasesecuritiesoftheAlticeGroup,andnothingcontainedhereinshallformthebasisofor be relied on in connectionwith any contract or commitmentwhatsoever. Any decision to purchase anysecurities of the Altice Group should bemade solely on the basis of the final terms and conditions of thesecuritiesandtheinformationtobecontainedintheofferingmemorandumproducedinconnectionwiththeofferingof such securities. Prospective investors are required tomake theirown independent investigationsand appraisals of the business and financial condition of the Altice Group and the nature of the securitiesbefore taking any investment decision with respect to securities of the Altice Group. Any such offeringmemorandummaycontaininformationdifferentfromtheinformationcontainedherein
FORWARD-LOOKINGSTATEMENTS
Certain statements in this press release constitute forward-looking statements within the meaning of thePrivateSecuritiesLitigationReformActof1995.Theseforward-lookingstatementsinclude,butarenotlimitedto,all statementsother than statementsofhistorical facts contained in thispresentation, including,withoutlimitation,thoseregardingourintentions,beliefsorcurrentexpectationsconcerning,amongotherthings:ourfuturefinancialconditionsandperformance,resultsofoperationsandliquidity;ourstrategy,plans,objectives,prospects,growth,goalsandtargets;andfuturedevelopments inthemarkets inwhichweparticipateorareseeking to participate. These forward-looking statements can be identified by the use of forward-lookingterminology,includingtheterms“believe”,“could”,“estimate”,“expect”,“forecast”,“intend”,“may”,“plan”,“project”or“will”or, ineachcase, theirnegative,orothervariationsorcomparable terminology.Where, inany forward-looking statement, we express an expectation or belief as to future results or events, suchexpectationorbelief isexpressedingoodfaithandbelievedtohaveareasonablebasis,buttherecanbenoassurance that the expectation or belief will result or be achieved or accomplished. To the extent thatstatements in this press release are not recitations of historical fact, such statements constitute forward-lookingstatements,which,bydefinition,involverisksanduncertaintiesthatcouldcauseactualresultstodiffermateriallyfromthoseexpressedorimpliedbysuchstatements.
FINANCIALMEASURES
Thispress release containsmeasuresand ratios (the “Non-IFRSMeasures”), includingEBITDAandOperatingFreeCashFlowthatarenotrequiredby,orpresentedinaccordancewith,IFRSoranyothergenerallyacceptedaccounting standards.We present Non-IFRSmeasures becausewe believe that they are of interest for theinvestorsand similarmeasuresarewidelyusedby certain investors, securitiesanalystsandother interestedparties as supplemental measures of performance and liquidity. The Non-IFRS measures may not becomparabletosimilarlytitledmeasuresofothercompanies,havelimitationsasanalyticaltoolsandshouldnotbeconsideredinisolationorasasubstituteforanalysisofour,oranyofoursubsidiaries’,operatingresultsasreportedunderIFRSorothergenerallyacceptedaccountingstandards.Non-IFRSmeasuressuchasEBITDAandOperatingFreeCashFlowarenotmeasurementsofour,oranyofoursubsidiaries’,performanceor liquidityunder IFRS or any other generally accepted accounting principles. In particular, you should not considerEBITDAasanalternativeto(a)operatingprofitorprofitfortheperiod(asdeterminedinaccordancewithIFRS)asameasureofour,oranyofouroperatingentities’,operatingperformance,(b)cashflowsfromoperating,investingandfinancingactivitiesasameasureofour,oranyofoursubsidiaries’,abilitytomeetitscashneedsor (c) anyothermeasuresof performanceunder IFRSor other generally accepted accounting standards. Inaddition, these measures may also be defined and calculated differently than the corresponding or similartermsunderthetermsgoverningourexistingdebt.
EBITDA,OperatingFreeCashFlowandsimilarmeasuresareusedbydifferentcompaniesfordifferingpurposesand are often calculated in ways that reflect the circumstances of those companies. You should exercise
EARNINGSRELEASEAugust9,2016
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caution incomparingEBITDAandOperatingFreeCashFlowasreportedbyustoEBITDAandOperatingFreeCash Flow of other companies. EBITDA as presented herein differs from the definition of “ConsolidatedCombinedEBITDA”forpurposesofanyoftheindebtednessofanAlticeIssuer.TheinformationpresentedasEBITDAisunaudited.Inaddition,thepresentationofthesemeasuresisnotintendedtoanddoesnotcomplywith thereporting requirementsof theU.S.SecuritiesandExchangeCommission (the“SEC”)andwillnotbesubject to review by the SEC; compliance with its requirements would require us to make changes to thepresentationofthisinformation.