Altice France, Portugal and International growth accelerates

Altice Europe Revenue +6.9%, EBITDA +8.8% and OpFCF +11%²

FY 2019 Guidance Reiterated

AMSTERDAM–(BUSINESS WIRE)–Regulatory News:

Altice Europe N.V. (AEX:ATC) (AEX:ATCB), today announces financial and operating results for the quarter ended September 30, 2019.

Patrick Drahi, Altice Europe founder: “Q3 2019 results show another acceleration in revenue growth for Altice France, Altice International and Altice Europe overall. In Altice France, our strong results were supported by all segments growing, including residential revenue growth year over year for the second successive quarter. This strong financial performance has been underpinned by the successful operational turnaround achieved by the new management teams, put in place 24 months ago. Group EBITDA growth remains very strong this quarter, paving the way for organic deleveraging. We reiterate all FY 2019 guidance. We continue to invest in our proprietary best-in-class infrastructure, commensurate with Altice Europe’s leading position in each market. In France and Portugal in particular, we have significantly expanded our proprietary fibre infrastructures again this quarter. We continue to optimize our capital structure and recently extended the average maturity of the capital structure through a refinancing of €2.5 billion. As part of this refinancing we priced the lowest coupon debt ever raised by Altice France under both Altice Europe’s and previous shareholder’s ownership. This refinancing demonstrates the significant opportunity ahead on which we are focused today, to materially reduce our annual cash interest costs through both average cost and debt reduction.”

Altice Europe Q3 2019 Key Financial Highlights

• Revenue grew by +6.9% YoY (+6.3% YoY on a constant currency (CC) basis) vs. +3.8% YoY in Q2 2019.
• Adjusted EBITDAgrew by +8.8% YoY (+8.2% YoY on a CC basis) vs. +9.8% YoY in Q2 2019. Adjusted EBITDA margin was 38.4% in Q3 2019 (+0.7pts YoY).
• Total accrued capital expenditure for Altice Europe was €722 million in Q3 2019, relatively stable YoY.
• Consequently, Operating Free Cash Flow grew +11.0% YoY² in Q3 2019.

Altice Europe Q3 2019 Key Operational Highlights

• Altice France reported an improved revenue trend in Q3 2019, with revenue growth in all segments (residential, business services and media). This strong financial performance was underpinned by Altice France maintaining very healthy commercial momentum in the third quarter, continuing to reduce churn in both fixed and mobile.
  • The residential fixed base grew by +41k customers, with +59k fibre customers, with 44% of the total fixed subscriber base being on fibre. The residential mobile postpaid base grew by +234k customers.
  • Altice France reported revenue growth of +7.2% YoY in Q3 2019 (vs. +4.0% YoY in Q2 2019) and Adjusted EBITDA growth in Q3 2019 of +9.0% YoY (vs. +10.1% YoY in Q2 2019).
• In Portugal, the Group reported another quarter of solid level of customer acquisition, driving sustained revenue growth in the third quarter.
  • The residential fixed base grew by +5k customers, with fixed and mobile churn maintained at the lowest levels ever. Fibre customer net additions were +38k, continuing to be supported by the expansion of fibre coverage. Mobile postpaid net additions were +41k.
  • MEO reported an improved revenue trend in Q3 2019 with +2.1% YoY (vs. +1.1% in Q2 2019) and an Adjusted EBITDA decline of -1.7% YoY in Q3 2019 (vs. +0.4% YoY in Q2 2019).
• Altice International revenue growth accelerated to +5.5% YoY in Q3 2019 (vs. +3.6% in Q2 2019), with a strong contribution once again from Teads which grew by +34.1% YoY in Q3 2019 (vs. +39.8% in Q2 2019).

Capital Structure Key Highlights

• Total consolidated Altice Europe net debt was €30.6 billion at the end of Q3 2019.
• On September 16, 2019, Altice Europe announced that it had successfully priced and allocated €2.55 billion (equivalent) of new Senior Secured Notes at Altice France, upsized from the original offering of €1.5 billion following significant excess demand as Altice Europe received strong support from the debt capital markets. This consisted of €2.0 billion (equivalent) of 8.25-year euro and dollar Senior Secured Notes maturing in January 2028 with a weighted average cost on a fully euro swapped basis of 3.375% and €550 million of 5.25-year euro Senior Secured Notes maturing in January 2025 with a cost of 2.50%. These Senior Secured Notes are the lowest coupon debt ever raised by Altice France under both Altice Europe’s and previous shareholder’s ownership. The proceeds from this transaction were used by Altice France to redeem in full its existing €750 million and $815 million 2024 Senior Secured Notes and by Altice Luxembourg to redeem in full its existing €445 million and $636 million 2022 Senior Notes. Following this, there are now no maturities at Altice France and Altice Luxembourg before 2025. This latest refinancing demonstrates Altice Europe’s commitment to proactively manage its liabilities across its capital structure, significantly improve its maturity schedule, reduce its gross leverage and move closer to its leverage target while reducing its annual cash interest cost.

FY 2019 Guidance Reiterated

• For the full year 2019, Altice Europe expects:
  • Operating free cash flow growth in the area of 15% YoY, excluding the Altice TV segment.
  • Altice France revenue growth within a range of 5% to 6%.
  • Altice France Adjusted EBITDA within a range of €4.1 billion to €4.2 billion.
• Altice Europe targets a leverage of 4.25x net debt to Adjusted EBITDA for the telecom perimeter (Altice Luxembourg), as announced on March 28, 2019.

Other Significant Events

• On June 27, 2019, the General Meeting of Altice Europe granted the authority to the Board to cancel any shares in the share capital of the company held or to be held by the company. On September 23, 2019, the Board of Altice Europe resolved to cancel 200,000,000 common shares A held by the company. The cancellation of such shares will become effective after (i) the amendment of Altice Europe’s articles of association as adopted by the General Meeting held on November 6, 2019 and (ii) lapse of the two-month creditor opposition period in accordance with the provisions of Dutch law.

• On July 30, 2019, Altice Europe closed the sale of 51% of Groupe L’Express to Alain Weill.

Conference call details

The company will host a conference call and webcast today, Wednesday 13^th of November 2019 at 6:00pm CET (5:00pm GMT, 12:00pm EST).

Dial-in Access telephone numbers:

Participant Toll Free Dial-In Number: +1 (844) 648-0890

Participant International Dial-In Number: +1 (647) 253-8653

Conference ID: 3435445

A live webcast of the presentation will be available on the following website:

https://event.on24.com/wcc/r/2082125/06B6DA1983E36D8A45ACA2CAEC07BBDD

The presentation for the conference call will be made available prior to the call on our investor relations website:

http://altice.net/investor-relations

About Altice Europe

Altice Europe (ATC & ATCB), listed on Euronext Amsterdam, is a convergent 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 30 million customers over fibre networks and mobile broadband. Altice is also a provider of enterprise digital solutions to millions of business customers. Altice innovates with technology, research and development and enables 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 its customers to enjoy the most well-known media and entertainment.

Financial Presentation

Altice Europe and its subsidiaries have operated for several years and have from time to time made significant equity investments in a number of cable and telecommunication businesses in various jurisdictions. Therefore, in order to facilitate an understanding of Altice Europe’s results of operations, we have presented and discussed the pro-forma consolidated financial information of Altice Europe – giving effect to each such significant acquisition and disposal as if such acquisitions and disposals had occurred by January 1, 2018. Therefore financials for Altice Europe for the quarters ended September 30, 2018 and September 30, 2019 (i) exclude the international wholesale voice business (following closing announced on September 13, 2018) and press magazines disposed (following closing of Point de Vue on July 2, 2018 and Groupe L’Express on July 30, 2019) (ii) are pro forma for the tower transaction in Portugal (following closing announced on September 4, 2018) and the tower transaction in the Dominican Republic (following closing announced on October 3, 2018) from January 1, 2018 (iii) are pro forma as if the spin-off of Altice USA had occurred on January 1, 2018 (the “Pro Forma Financial Information”).

This press release contains measures and ratios (the “Non-GAAP measures”), including Adjusted EBITDA, Capital Expenditure (“Capex”) and Operating Free Cash Flow, that are not required by, or presented in accordance with, IFRS or any other generally accepted accounting standards. We present Non-GAAP measures because we believe that they are of interest to the investors and similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. The Non-GAAP measures may not be comparable to similarly titled measures of other companies or have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our, or any of our subsidiaries’, operating results as reported under IFRS or other generally accepted accounting standards. Non-GAAP measures such as Adjusted EBITDA are not measurements of our, or any of our subsidiaries’, performance or liquidity under IFRS or any other generally accepted accounting principles, including U.S. GAAP. In particular, you should not consider Adjusted EBITDA as an alternative to (a) operating profit or profit for the period (as determined in accordance with IFRS) as a measure of our, or any of our operating entities’, operating performance, (b) cash flows from operating, investing and financing activities as a measure of our, or any of our subsidiaries’, ability to meet its cash needs or (c) any other measures of performance under IFRS or other generally accepted accounting standards. In addition, these measures may also be defined and calculated differently than the corresponding or similar terms under the terms governing our existing debt.

For 2019 Adjusted EBITDA is defined as operating income before depreciation and amortization, other expenses and income (capital gains, non-recurring litigation, restructuring costs) and share-based expenses and after operating lease expenses. This may not be comparable to similarly titled measures used by other entities. Further, this measure should not be considered as an alternative for operating income as the effects of depreciation, amortization and impairment excluded from this measure do ultimately affect the operating results, which is also presented within the annual consolidated financial statements in accordance with IAS 1 – Presentation of Financial Statements.

Capital expenditure (Capex), while measured in accordance with IFRS principles, is not a term that is defined in IFRS nor is it presented separately in the financial statements. However, Altice Europe’s management believe it is an important indicator for the Group as the profile varies greatly between activities:

• The fixed business has fixed Capex requirements that are mainly discretionary (network, platforms, general), and variable capex requirements related to the connection of new customers and the purchase of Customer Premise Equipment (TV decoder, modem, etc.).
• Mobile Capex is mainly driven by investment in new mobile sites, upgrade to new mobile technology and licenses to operate; once engaged and operational, there are limited further Capex requirements.
• Other Capex: Mainly related to costs incurred in acquiring content rights.

Operating free cash flow (OpFCF) is defined as Adjusted EBITDA less Capex. This may not be comparable to similarly titled measures used by other entities. Further, this measure should not be considered as an alternative for operating cash flow as presented in the consolidated statement of cash flows in accordance with IAS 1 – Presentation of Financial Statements. It is simply a calculation of the two above mentioned non-GAAP measures.

Adjusted EBITDA and similar measures are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing Adjusted EBITDA as reported by us to Adjusted EBITDA of other companies. Adjusted EBITDA as presented herein differs from the definition of “Consolidated Combined Adjusted EBITDA” for purposes of any of the indebtedness of the Group. The financial information presented in this press release including but not limited to the quarterly financial information, pro forma financial information as well as Adjusted EBITDA and OpFCF is unaudited. In addition, the presentation of these measures is not intended to and does not comply with the reporting requirements of the U.S. Securities and Exchange Commission (the “SEC”) and will not be subject to review by the SEC; compliance with its requirements would require us to make changes to the presentation of this information.

Financial and Statistical Information and Comparisons

Financial and statistical information is for the quarter ended September 30, 2019, unless otherwise stated, and any year over year comparisons are for the quarter ended September 30, 2018.

Regulated Information

This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

Altice Europe Summary Financials Information

 Notes to Summary Financials

1. Segments are shown on a pro forma standalone reporting basis and Group figures are shown on a pro forma consolidated basis. In addition, financials for Altice Europe exclude the international wholesale voice business (following closing announced on September 13, 2018) and press magazines disposed (following closing of Point de Vue on July 2, 2018 and Groupe L’Express on July 30, 2019) from 1/1/18. Financials shown are pro forma for the tower transaction in Portugal (following closing announced on September 4, 2018) and the tower transaction in the Dominican Republic (following closing announced on October 3, 2018) from 1/1/18. Q3-18 Altice TV accrued Capex excludes €1,013m related to the acquisition of multi-year major sports rights in France (Champions League)
2. “Other” segment within Altice International includes datacentre operations in France (Auberimmo)
3. For 2019 Adjusted EBITDA is defined as operating income before depreciation and amortization, other expenses and income (capital gains, non-recurring litigation, restructuring costs) and share-based expenses and after operating lease expenses
4. Teads gross revenue is presented before discounts (net revenue after discounts is recognised in the financial statements)

Altice Europe KPIs

Notes to KPIs tables

1. Portugal fibre homes passed figures include homes where MEO has access through wholesale fibre operators (c.0.5 million in Q3 2019)
2. Fibre / cable unique customers represents the number of individual end users who have subscribed for one or more of our fibre / cable based services (including pay television, broadband or telephony), without regard to how many services to which the end user subscribed. It is calculated on a unique premise basis. Fibre / cable customers for France excludes white-label wholesale customers. For Israel, it refers to the total number of unique customer relationships, including both B2C and B2B
3. Mobile subscribers are equal to the net number of lines or SIM cards that have been activated on the Group’s mobile networks and excludes M2M. In Israel, the split between iDEN and UMTS (B2C only, including prepaid) services is as follows: 4k iDEN and 1,345k UMTS as of September 30, 2019, and 6k iDEN and 1,286k UMTS as of September 30, 2018

Altice Europe Financial and Operational Review by Segment⁴

For the quarter ended September 30, 2019 compared to the quarter ended September 30, 2018

France (Altice France including SFR)

Altice France has continued to strengthen the quality of its mobile network and has accelerated its deployment of fibre this quarter. SFR remains the number one high-speed broadband infrastructure in France⁵, with more than 14.0 million homes passed⁶ at the end of Q3 2019. This is a significant increase compared to Q2 2019, with more than 700k new fibre homes passed in France in the third quarter, of which 225k are from SFR FTTH. On July 11, 2019, SFR FTTH, the largest alternative FTTH infrastructure wholesale operator in France, signed the regional and departmental agreements for the deployment of more than 300,000 new homes by 2022, in nearly 400 municipalities in the Southern Region. SFR FTTH, has now more than 5.4 million secured homes to be passed with scope for more homes to be franchised or acquired: c. 0.5 million homes have been awarded for exclusive FTTH deployments since the beginning of 2019.

On the mobile side, SFR covered 98.7% of the population with 4G at the end of Q3 2019, with 41,934⁷ 4G mobile antennas in service in France. In the quarter, 1,321 new 4G antennas were installed, 4G was brought to 212 new municipalities and 4G+ to 1,131, of which 4G+ of up to 300 Mbit/s to 390 of those and 4G+ of up to 500 Mbit/s to four of them. The Group has also conducted a new 5G experiment in Toulouse, one of its three pilot areas, the other two being Nantes and Paris Ile-de-France.

In July 2019, SFR unveiled its latest set-top box, the SFR Box 8, the first and only box on the market with the latest-generation WiFi, WiFi 6. The SFR Box 8 has a voice assistant and offers a new experience with cinema-quality picture and sound. The box has been marketed since August 20, 2019 at a price of €5 including VAT per month.

In August 2019, RED, the digital brand of SFR, launched the first single mobile plan on the market. At the end of August, SFR became the first telecom company in France, and the first subsidiary of Altice Europe to announce a partnership with Amazon Prime Video. In addition, at the beginning of September 2019, a change was introduced to RMC Sport subscriptions, with the introduction of price plans involving a one-year commitment as well as plans requiring no customer commitment. RMC Sport channels remain available with a reduced rate for SFR customers.

Altice France’s media business DTT channels hit new historical records in August, with 6.1% of national audience share⁸. Altice France has consolidated its position as the third largest private broadcasting group in France. In early September, the Group launched its second regional news channel: after the success of BFM Paris, it is BFM Lyon’s turn to broadcast to the two million inhabitants of Lyon and the surrounding municipalities.

Contacts

Altice Europe

Head of Investor Relations Altice Europe
Sam Wood: +41 79 538 66 82 / sam.wood@altice.net

Head of Communications Altice Europe
Arthur Dreyfuss: +41 79 946 4931 / arthur.dreyfuss@altice.net

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