Altice NV: Second Quarter 2016 Pro Forma Results
August 09 2016 - 01:00AM
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:
-
Enhanced diversification of
assets with balanced global scale and growth
opportunities;
-
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:
-
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
declined 4.3% YoY in Q2 2016 pro forma for recent acquisitions of
media assets, including double-digit growth (+12.6% YoY) at
NextRadioTV, rebranded SFR RadioTV[5];
-
Continued fiber customer net
additions (+44k), albeit slower than recent quarters, and reduced
mobile postpaid churn YoY (B2C net losses of -199k in Q2 2016 vs.
-314k in Q2 2015); seeing early benefits of accelerated network
upgrades and content initiatives, as SFR is the clear fiber leader
and number 2 mobile operator now in terms of voice
quality[6].
-
Portugal (MEO) - Revenue trend
continues to improve despite headwind from termination fees
reduction;
-
Revenue decline of 3.0% YoY in
Q2 2016 (vs. -3.5% in Q1 2016 and -7.3% in FY 2015) driven by
stabilizing B2C trend and large corporate customer base stable for
last 9 months since Altice took ownership;
-
Fiber growth accelerating (+16k
net additions in Q2) as expanding network rapidly with continued
B2C postpaid mobile subscriber growth (+14k).
-
US (Suddenlink) - Strong
underlying growth in revenue of 5.7% YoY on a constant currency
(CC) basis in Q2 2016 excluding PPV[7] event in Q2
2015 (5.2% YoY actual growth on a CC basis);
-
Sustaining growth comfortably
above FY 2015 level (+3.7%);
-
Seasonal decline in unique
residential customer relationships (8k net losses in Q2), including
broadband (-2k) and video customers (-23k), which was better than
last year (losses of 13k, 3k and 29k in Q2 2015
respectively);
-
Focus for Suddenlink is on
customer retention and improving churn.
-
US (Optimum) - 2.0% underlying
revenue growth YoY on a CC basis in Q2 2016 pro forma for Newsday
disposal (+0.3% impact) and excluding PPV event in Q2 2015 (1.1%
YoY actual growth on a CC basis)[8];
-
Strongest operational
performance[9] in Q2 since
2012 with 19k net unique customer relationship additions;
-
26k additional broadband RGUs
and -2k video RGUs, best video performance for four
years.
-
Israel (HOT) - Return to
revenue growth in Q2 +1.5% YoY on a CC basis, +0.8% on a reported
basis);
-
Dominican Republic (Altice
Hispaniola) - Continued strong growth in revenue in Q2 (+5.1% on a
CC basis, +0.7% on a reported basis);
-
Robust financial performance
despite temporary weakness in France with continued record results
at MEO and Suddenlink and stronger than expected results from
Optimum:
-
Altice N.V. Group EBITDA grew
3.7% YoY on a CC basis driven by the growth in Portugal and Altice
USA, partly offset by France:
-
Altice N.V. Group Adjusted
EBITDA margin expanded by 2.0% pts YoY to 38.9% in Q2 as efficiency
measures continue;
-
Strong growth in Portugal
(Adjusted EBITDA +22.5% YoY), Suddenlink (+18.5% on a CC basis),
Optimum (+11.1% on a CC basis) and Dominican Republic (+4.5% on a
CC basis) offsetting weakness in France including media assets
(-6.8%)[10].
-
Altice N.V. Operating Free Cash
Flow declined 6.6% on a CC basis in Q2 reflecting accelerated
investments (excluding one-off payment related to the network
sharing JV in Israel of €61m in Q2 2016, Operating Free Cash Flow
declined 1.8% YoY);
-
Very strong growth in Q2 in
MEO, Suddenlink and Optimum Operating Free Cash flow, +50.7%,
+60.7% and +41.8% YoY respectively.
-
Robust, diversified and
long-term capital structure (including Cablevision):
-
Group weighted average debt
maturity 6.7 years;
-
Group weighted average cost of
6.3%;
-
No major maturities at SFR or
Altice International until 2022, and none at Suddenlink until 2020,
following €10bn refinancing in April 2016;
-
Available liquidity of
€5.1bn[11].
-
Accelerated re-investments into
fiber/mobile networks and selective media and content:
-
France (SFR) - Accelerated
fiber broadband coverage expansion (+419k homes passed in Q2 to
total 8.5 million as of the end of June 2016, on track for 22
million homes passed by 2022);
-
#1 fiber coverage in
France;
-
Leading 4G / 4G+ mobile site
build out in France again in Q2 2016 (+1,256 sites, significantly
more than peers);
-
Media and content acquisitions
advancing "access plus content" strategy.
-
Portugal (MEO) - Accelerated
fiber broadband coverage expansion (+180k homes passed in Q2 to
total 2.6 million homes passed as of the end of June
2016);
-
US (Suddenlink) - Continuing to
deliver next-generation 1Gbps broadband services across the
footprint.
-
US (Optimum) - On track to
deliver 300Mbps broadband speeds to entire footprint by
2017.
-
Reiterated FY 2016 Altice N.V.
Group guidance, including our expectation of an improving trend in
Altice Group revenue on a consolidated basis (as given on 15 March
2016 under the prior Group perimeter excluding Optimum and acquired
content and media assets, at constant currency). On this basis, we
also still expect mid-single digit growth in Group Adjusted EBITDA
and Operating Free Cash Flow growth flat to slightly down
reflecting accelerated investments. This includes our expectation
of growth in the Adjusted EBITDA contribution from France
YoY.
August 9, 2016: Altice N.V.
(Euronext: ATC NA and ATCB NA), today announces financial and
operating results for the quarter and half year ended June 30,
2016.
Strong pro forma
Adjusted EBITDA growth in Altice USA and Portugal in Q2
-
Altice N.V. Group Revenue €5,828m, down 2.6%
YoY[12]:
-
€2,781m France (SFR) Revenue[13],
down 4.3%.
-
€1,104m Altice International Revenue, up
1.1%[14].
-
€566m US (Suddenlink) Revenue, up 3.0% on a
reported basis; increase of 5.2% on a CC basis to $640m in local
currency (5.7% underlying growth excluding revenue from PPV event
in Q2 2015)
-
€1,432m US (Optimum) Revenue[15],
down 1.0% on a reported basis; increase of 1.1% on a CC basis to
$1,618m in local currency (2.0% underlying growth excluding revenue
from PPV event in Q2 2015).
-
Altice N.V. Group Adjusted EBITDA €2,265m, up
2.7% YoY[16]:
-
€999m France (SFR) Adjusted EBITDA[17], down
6.8%.
-
€545m Altice International Adjusted EBITDA, up
14.8%[18]; Portugal
(MEO) Adjusted EBITDA up 22.5%.
-
€258m US (Suddenlink) Adjusted EBITDA, up 16.0%
on a reported basis; increase of 18.5% on a CC basis to $292m in
local currency.
-
€471m US (Optimum) Adjusted EBITDA, up 8.7% on a
reported basis; increase of 11.1% on a CC basis to $532m in local
currency.
-
Altice N.V. Group Adjusted EBITDA margin
expanded by 2.0% pts YoY to 38.9%:
-
France (SFR) margin contracted by 1.0% pts to
35.9% due to subscriber losses and heavy promotional
activity.
-
Altice International margin expanded by 5.9% pts
to 49.3%; Portugal (MEO) margin expanded by 10.1% pts to
48.4%.
-
US (Suddenlink) margin expanded by 5.1% pts to
45.6%.
-
US (Optimum) margin expanded by 2.9% pts to
32.9%.
-
Altice N.V. Group Operating Free Cash
Flow[19] of
€1,157m, down 7.6% YoY reflecting accelerated investments and
one-off payment related to the network sharing JV in Israel; down
6.6% on a CC basis (down 1.8% excluding one-off).
Key Strategic
Update
-
Altice N.V.: On 20 June 2016, Altice announced
the reorganization of its group management structure to reflect the
global presence of the group centered around Europe and the US.
Dexter Goei is now President of Altice N.V. and Chairman & CEO
of Altice USA. Michel Combes is now CEO of Altice N.V. and Chairman
& CEO of SFR Group. Patrick Drahi has stepped down from his
position as President of Altice N.V. and now leads the newly formed
Altice Group Advisory Council (setting the strategic, operational
and technological agenda for the group).
-
Altice N.V.: On 21 July 2016, Altice announced
its international media and content organization, led by Alain
Weill as CEO, continuing the strengthening of Altice's corporate
and organizational structure.
-
Altice USA: On 21 June 2016, Altice N.V.
announced the completion of the acquisition of Cablevision Systems
Corporation, the leading communications services provider in the
New York metropolitan area. Cablevision together with Suddenlink
form Altice USA, the #4 cable operator in the U.S. which serves
more than 4.6 million Optimum and Suddenlink customers across 20
states.
-
Altice USA: On 7 July 2016, Patrick Dolan along
with Altice USA announced that an entity led by Mr Dolan has
acquired 75% of Newsday Media Group. Altice retains a 25% interest
in the company.
-
France (SFR Group): The minority voting stake in
NextRadioTV (rebranded SFR RadioTV) was transferred from Altice
International to SFR as of 12 May 2016. On 25 May 2016, SFR
announced the completion of the acquisition of Altice Media Group
France. These content acquisitions are part of a converged strategy
to strengthen SFR's product offerings, aiming to reduce reduce
churn, increase ARPU and revenue growth (including new advertising
revenue). To complement existing TV channels being acquired, SFR
has leveraged the NextRadioTV and AMG platforms to launch two new
news channels, BFM Paris and BFM Sport, as well as five new SFR
Sports Channels all live from 13 August 2016. SFR's new
open-platform digital newsstand application (SFR Presse) has
significantly expanded it's offering to over 40 titles and it has
now been downloaded by 3.2 million customers.
-
France (SFR Group): On August 4, 2016, an
agreement was signed between the management and trade unions
representing SFR Group's Telecom division, to enable the company to
adapt more quickly to the requirements of the French telecoms
market by establishing a more competitive and efficient
organization. This agreement reiterates the job retention
commitments taken until 1 July 2017 and defines internal
accompanying guarantees and the process of voluntary
retirement.
-
Portugal (MEO): On 26 July 2016, NOS, Vodafone
Portugal, Cabovisão, Altice Pictures, PT Portugal and MEO announced
the signing of an agreement for reciprocal sharing of: (1) sports
event broadcasting rights, and; (2) distribution and broadcasting
rights of sports and club channels, which are currently owned or
come to be owned by the signatories, who will share the current and
future costs of the aforementioned sports content. In addition, on
4 August 2016, PT Portugal / MEO announced that it had signed a
memorandum of understanding (MOU) with the objective of entering
the share capital of Sport TV.
Michel Combes,
Chief Executive Officer of Altice, said: "This quarter saw
Altice transform into a leading transatlantic, converged telecoms
and media company.
Having successfully closed the
Cablevision acquisition, Altice USA has become the 4th largest
cable operator in the attractive and competitive US market. We are
very excited about the current performance and future prospects for
both Suddenlink and Optimum. We are looking forward, with Dexter
Goei, to successfully entering a new era for our businesses across
the US which are clearly going to be a huge part of Altice's new
growth story.
It has been another commercially
challenging quarter for SFR in France but we are confident the
revenue and Adjusted EBITDA trends will continue to improve with
our fiber expansion and accelerated 4G/4G+ network investment
program, led by Michel Paulin, already seeing measurable benefits
in terms of better quality of service and commercial performance.
We are moving forward with our innovative strategy based on the
convergence of telecoms, media, content and advertising, enabling
us to offer more and more value to our customers. We have also now
agreed with labour unions on the next phase of the transformation
of the company.
MEO in Portugal again is showing
very strong growth year over year in Adjusted EBITDA from our early
efficiency measures, with the revenue trend expected to improve
further for the rest of 2016. We are also extremely pleased to see
HOT in Israel return to revenue growth as our business in the
Dominican Republic continues to show strong growth.
Overall we remain very focused on
improving the operational and financial performance of the
businesses we've acquired and achieving the efficiency savings
we've targeted, strengthening the management team in recent months
accordingly."
Contacts
Chief Investor Relations
Officer
Nick Brown: +41 79 720 1503 /
nick.brown@altice.net
Chief Communications
Officer
Arthur Dreyfuss: +41 79 946 4931 /
arthur.dreyfuss@altice.net
Conference call details
The company will host a conference
call and webcast to discuss the results at 2:30pm CET (1:30pm UK
time, 8:30am EDT today).
Webcast live:
http://edge.media-server.com/m/p/veh9q9a7
Dial-in Access telephone
numbers:
France: +33 1 76 77 22 30
UK: +44 20 3427 1905
USA: +1 212 444 0896
Confirmation
Code: 7700540
[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 content and media assets for comparability (i.e.
NextRadioTV and Altice Media Group France).
[5] SFR owns
49% voting stake of NextRadioTV / SFR RadioTV.
[6] Arcep 2016
mobile service quality audit data.
[7] Pay Per
View Mayweather Jr. vs. Pacquiao boxing event in Q2 2015.
[8] 0.8% growth
YoY on a reported CC basis including Newsday contribution to
figures in both years (i.e. assuming no disposal and no pro forma
adjustment) and including Pay Per View (PPV) Mayweather Jr. vs.
Pacquiao boxing event revenue in Q2 2015. 1.1% growth on a reported
CC basis excluding Newsday pro forma and including PPV event
revenue. Decline of 1.0% YoY on a pro forma reported basis in Euro
terms due to the move in FX rate (USD / EUR FX rate 1.130 vs. 1.106
in Q2 2016 and 2015 respectively).
[9] Optimum
KPIs include both residential and commercial segments.
[10] France
EBITDA declined 7.6% YoY on a standalone basis excluding acquired
content and media assets (i.e. NextRadioTV and Altice Media Group
France).
[11] Total
group cash of €1,511m (including €188m of cash at ANV/ACF) and
total undrawn RCF of €3,665m (total RCF of €4,488m net of €134m
LOCs and €688m RCF drawn), net of €61m of restricted cash at
CVC.
[12] Group
Revenue declined 1.7% on a constant currency (CC) basis.
[13] Includes
content and media assets (i.e. NextRadioTV and Altice Media Group
France).
[14]
International Revenue increased 2.0% on a CC basis.
[15] Excluding
Newsday following disposal of 75% stake completed in July 2016.
[16] Group
Adjusted EBITDA increased 3.7% on a CC basis.
[17] Includes
content and media assets (i.e. NextRadioTV and Altice Media Group
France).
[18]
International Adjusted EBITDA increased 15.8% on a CC basis.
[19] Defined as
EBITDA less Capital Expenditure.
Altice NV Q2 2016 Pro Forma
Results
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Altice NV via Globenewswire
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