ALTICE N.V. - FULL YEAR AND Q4 2016 PRO FORMA [1] RESULTS
- Successful year of execution in FY 2016 including rapid integration of US businesses and transformation into leading transatlantic, converged telecoms and media operator.
- Accelerating momentum across Altice Group - all businesses with positive revenue growth, best quarterly performance in Q4 since Altice IPO:
- Group revenue growth accelerated to +2.7% YoY [2] in Q4 2016 with further expansion in margins and growing cash flow conversion;
- Return to revenue growth in France in Q4 (+0.6% YoY [3] ) after 24 quarters of decline, of which only 7 after Altice control. Revenues expected to stabilize in FY 2017 supported by stabilization of B2C and B2B mobile customer base in Q4 2016 following significant improvements in network quality and services;
- Significant acceleration in Altice USA revenue growth to +5.1% YoY in Q4 on a constant currency (CC) basis (vs. +1.2% YoY in Q4 2015 before Altice took control of the businesses);
- Optimum revenue growth accelerated in Q4 to +4.4% YoY on a CC basis; continued strong revenue growth at Suddenlink (+6.7% YoY on a CC basis);
- Significant improvement in customer service metrics [4] ;
- US accounts for 44% of Group Operating FCF [5]
- Return to revenue growth in Portugal in Q4 (+0.5% YoY [6] ) after 32 quarters of decline, of which only 4 after Altice control;
- Further acceleration in revenue growth in Israel in Q4 to +4.1% YoY on a CC basis.
- Altice Model and strategy validated with advanced turnaround in Europe and stronger US performance:
- All 2016 financial guidance achieved;
- Completed internal reorganization to leverage scale, expertise and innovation;
- Reinvesting growing cash flows and attracting the best talent to provide the best customer experience, the best infrastructure, and the best content across the Group;
- Rapid de-leveraging (reduction in net debt / Adjusted EBITDA of 0.5x YoY [7] ) to facilitate further investments in accelerating growth platform.
- Leading global commitment to rapidly build state-of-the-art fiber networks:
- c.9 million homes upgraded for higher speed broadband services across Altice Group in 2016;
- Leading fiber [8] operator in France reaching 9.3 million homes passed at the end of 2016 (+1.6 million additional homes YoY), targeting 11 million homes passed by end-2017 and 22 million by 2022. Delivering the fastest fiber (up to 1 Gbps) and DSL speeds with the most reliable connections [9] ;
- Announced substantial 5-year upgrade of Altice USA network from fiber HFC to FTTH to deliver 10 Gbps broadband speeds ("Generation GigaSpeed");
- Whole Optimum network already offering 300/350Mbps broadband speeds [10] ), increased from 101 Mbps pre-Altice;
- 58% of Suddenlink network now offering 1 Gbps speeds, from 20% pre-Altice;
- Accelerated fiber rollout in Portugal reaching 3.0 homes passed at the end of 2016 (+714k additional homes passed YoY), increased from 1.8 million pre-Altice. Well on track to reach target of 5.3 million fiber homes passed by 2020, with more than 900k homes passed expected to be rolled out in 2017 to become the market leader for fiber.
- Altice Group Adjusted EBITDA grew +15.7% YoY (+15.1% on a CC basis) in Q4 driven by the strong growth of Altice USA (Optimum Adjusted EBITDA +40.6% YoY, Suddenlink +17.4% YoY on a CC basis) and strong growth in France +12.1%. Altice USA reached an Adjusted EBITDA margin of 40.7% on a combined basis in Q4 (+8.3 % pts YoY vs. 32.4% in Q4 2015).
- Altice Group Operating Free Cash Flow grew +20.4% YoY (+19.5% on a CC basis) in Q4 [11] driven by the strong growth of Altice USA (Optimum and Suddenlink grew +93.8% and +29.6% YoY on a CC basis, respectively, having simultaneously accelerated revenue growth and significantly expanded operating cash flow margins during 2016).
- Robust, diversified and long-term capital structure: during 2016, Altice refinanced over EUR 21 billion equivalent of its debt, extending the weighted average life of the Group's debt by 18 months (6.6 years end-2016) while keeping the average cost of debt constant.
Guidance 2017 [12]
For 2017 we expect growth YoY in Altice Group revenue, including revenue stabilization in France on a pro forma organic basis. We expect high-single digit growth in Group Adjusted EBITDA YoY and Group capex of c.€4 billion.
Michel Combes, Chief Executive Officer of Altice, said : "2016 was a pivotal year for Altice as we successfully transformed the Group into a leading, transatlantic converged communications player. Our business is stronger than ever and we have put all the building blocks in place for continued profitable growth.
Our 2016 performance has validated the Altice Model as we've been very focused on execution, seeing an advanced turnaround in Europe and stronger US performance. Indeed, since Altice took control of the major businesses it has acquired, France and Portugal have returned to revenue growth for the first time in many years, and growth in the US has significantly accelerated. This growth has been driven by our clear strategy:
Attract the best talent to create and provide the best customer experience, the best infrastructure and the best content.
We continue to invest in these areas to differentiate our offers, expand our capabilities and expertise, and add new revenue sources to the Group.
We are proud of our global network commitments - during 2016 we upgraded over 9 million homes for higher speed broadband services and more than doubled the number of 4G mobile sites in France. We have a leading commitment to fiber with rapid deployments across the Group and technological innovation well in advance of our peers. All of this investment is being facilitated by driving significant efficiency savings across every one of our businesses, supported by completing our internal reorganization to leverage our new scale. The combination of growth and margin expansion confirms our original investment thesis when we entered all of the markets where we now have operations. We firmly believe this strategy will continue to support our growth well into the future."
March 8, 2017: Altice N.V. (Euronext: ATC NA and ATCB NA), today announces financial and operating results for the quarter and year ended December, 2016.
All major markets drove profitable growth in Q4
- Altice Group Revenue €6,087m, up 2.7% YoY [13] :
- €2,892m France (SFR) Revenue [14] , up 0.6%.
- €1,522m US Optimum Revenue [15] , up 5.8% on a reported basis; increase of 4.4% on a CC basis to $1,645m in local currency.
- €611m US Suddenlink Revenue, up 8.1% on a reported basis; increase of 6.7% on a CC basis to $660m in local currency.
- €580m Portugal Revenue, up 0.5%.
- Altice Group Adjusted EBITDA €2,286m, up 15.7% YoY [16] :
- €954m France (SFR) Adjusted EBITDA [17] , up 12.1%.
- €579m US Optimum Adjusted EBITDA, up 42.5% on a reported basis; increase of 40.6% on a CC basis to $626m in local currency.
- €289m US Suddenlink Adjusted EBITDA, up 19.0% on a reported basis; increase of 17.4% on a CC basis to $313m in local currency.
- €265m Portugal Adjusted EBITDA, up 7.8%.
- Altice Group Adjusted EBITDA margin expanded by 4.2% pts YoY to 37.6%:
- France (SFR) margin increased by 3.4% pts to 33.0%.
- US Optimum margin expanded by 9.8% pts to 38.0%.
- US Suddenlink margin expanded by 4.3% pts to 47.3%.
- Portugal margin increased by 3.1% pts to 45.6%;
- Altice Group Operating Free Cash Flow [18] of €968m, up 20.4% YoY; up 19.5% on a CC basis.
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 tomorrow, March 9, 2017, to discuss the results at 2:00pm CET (1:00pm UK time, 8:00am ET)
Webcast live: http://edge.media-server.com/m/p/c4gw23nr
Dial-in access telephone numbers:
France: +33 1 76 77 22 74
UK: +44 330 336 9105
USA: +1 719 457 2086
Confirmation Code: 4389172
[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 Belgium and Luxembourg, Newsday Media Group, Cabovisao, ONI, La Reunion and Mayotte mobile activities as if the disposals occurred on 1/1/15). Segments shown on a pro forma standalone reporting basis, Group figures shown on a pro forma consolidated basis. Financials include only one month of contribution from the insourcing of Parilis and no impact from the insourcing of Intelcia, as the impacts were not material.
[2] In constant currency, Altice N.V. Group revenue grew 2.2% YoY in Q4.
[3] Altice France revenue grew 0.8% YoY excluding retail roaming EU tariffs impacts in May 2016.
[4] 19% YoY reduction in total calls and 21% YoY reduction in technical service visits in H2 2016 vs. H2 2015 at Altice USA.
[5] Based on FY 2016 pro forma consolidated Operating FCF (defined as Adjusted EBITDA less Capex) contribution, excluding group corporate segment (€-88.1m), €44.0m of capitalised exclusive content costs in Portugal for multi-year contracts and €413.8m of capex related to the acquisition of multi-year major sport rights at Altice International.
[6] Altice Portugal revenue grew 1.3% YoY excluding regulatory impacts.
[7] Altice Group leverage as measured by net debt / Adjusted EBITDA on a L2QA basis reduced to 5.4x in Q4 2016 from 5.9x in Q4 2015.
[8] FTTB and FTTH homes passed.
[9] Fastest fiber speeds delivered on average according to ISP Speed Index as of December 2016. Fastest DSL speeds according to data from nPerf as of Q4 2016. Most reliable connections for fiber and DSL according to ARCEP Quality of access to fixed services as of November 2016.
[10] 300Mbps for B2C (residential) customers and 350Mbps for B2B (commercial) customers.
[11] Excluding spectrum capex of €477m in France in Q4 2015.
[12] 2017 guidance applies to current Group perimeter in this earnings release at constant currency. Refers to pro forma revenue and EBITDA growth including Optimum (Cablevision) and Media assets in France (i.e. NextRadioTV and Altice Media Group France), and excluding Belgium and Luxembourg, for 12 months in 2016. Capex guidance excludes net impact of handset securitisation.
[13] Group Revenue grew 2.2% on a constant currency (CC) basis.
[14] Includes media assets (i.e. NextRadioTV and Altice Media Group France).
[15] Excluding Newsday following disposal of 75% stake completed in July 2016.
[16] Group Adjusted EBITDA increased 15.1% on a CC basis.
[17] Includes media assets (i.e. NextRadioTV and Altice Media Group France).
[18] Defined as Adjusted EBITDA less Capital Expenditure, excluding spectrum capex of €477m in France in Q4 2015.
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