Acceleration of residential service revenue growth

Total revenue +3.6%, EBITDA +1.0% and OpFCF +12%

€4.2 billion of available liquidity²

AMSTERDAM–(BUSINESS WIRE)–Regulatory News:

Altice Europe N.V. (Euronext: ATC and ATCB) today announces financial and operating results for the quarter ended March 31, 2020.

Patrick Drahi, Altice Europe founder: “The Group delivered a solid performance in the first quarter, against this challenging backdrop. In both Altice France and Altice International we achieved an acceleration in residential service revenue growth supported by strong subscriber net gains in all geographies and all segments. We continue to carefully assess the potential impacts of the pandemic but currently see no need to change our 2020 guidance. The Group continues to significantly invest in and expand its proprietary best-in-class infrastructure, commensurate with Altice Europe’s leading position in each market. We closed important partnerships which resulted in €1.8 billion of cash proceeds and achieved €4.9 billion of refinancing at record low rates for the Group. As well as locking in significant interest savings, almost €500 million of the €700 million target announced 8 months ago, we also achieved the long-standing objective of simplifying the Group capital structure through the removal of Altice Luxembourg HoldCo. The Group’s diversified capital structure has no material maturity before 2025 and available liquidity of €4.2 billion. Overall, we have achieved a solid start to 2020 and we expect to build on this over the rest of 2020.”

Altice Europe Q1 2020 Key Financial Highlights

• Revenue grew by +3.6% YoY (+3.1% YoY on a CC basis). Residential service revenue grew by +2.5% YoY (+2.0% YoY on a CC basis).
• EBITDA grew by +1.0% YoY (+0.7% YoY on a CC basis), EBITDA margin was 36.2% in Q1 2020.
• Total accrued capital expenditure for Altice Europe was €722 million in Q1 2020.
• Consequently, Operating Free Cash Flow amounted to €592 million in Q1 2020, growth of +11.6% YoY.

Altice Europe Q1 2020 Key Operational Highlights

• Altice France achieved a solid financial performance in Q1 2020, with revenue growth in both the residential and business services segments:
  • The residential fixed base grew by +8k customers, with +64k fibre customers and 46% of the total fixed subscriber base on fibre. The residential mobile postpaid base grew by +79k customers.
  • Altice France reported revenue growth of +3.6% YoY in Q1 2020 and EBITDA growth of +1.6% YoY in Q1 2020. Residential service revenue growth accelerated to +2.3% YoY in Q1 2020 (vs. +0.8% in Q4 2019).
• In Portugal, the Group achieved solid customer acquisition in Q1 2020, supporting an acceleration in revenue growth:
  • The residential fixed base grew by +5k customers, with fixed and mobile churn maintained at a low level once again. Fibre customer net additions were +34k, continuing to be supported by the ongoing expansion of fibre coverage. Mobile postpaid net additions were +35k.
  • MEO reported an improved revenue trend of +2.6% YoY and EBITDA grew +1.8% YoY in Q1 2020.
• Altice International revenue grew +3.1% YoY in Q1 2020. Residential service revenue grew +3.2% YoY in Q1 2020 (vs. +2.4% in Q4 2019).

Capital Structure Key Highlights – including subsequent events

• Total consolidated Altice Europe net debt was €31.2 billion (€28.6billion pro forma) at the end of Q1 2020. Following significant refinancing activity in January 2020 and the partial repayment of the Altice Corporate Financing facility, the Group has already achieved €470 million annual savings out of the previously stated target of €700 million annual savings, pro forma for the previously announced refinancing transactions.
• On January 2, 2020, Altice Europe announced that its subsidiary MEO has sold its 25% equity interest in the tower company OMTEL to Cellnex. Total cash proceeds of €201 million were received in Q1 2020 (€79 million at closing and €122 million end of Q1 2020).
• On January 9, 2020, Altice Europe announced that it had successfully priced and allocated €2.8 billion (equivalent) of new Senior Secured Notes at Altice International following significant excess demand. This consisted of €2.2 billion (equivalent) of 8-year euro and dollar Senior Secured Notes maturing in January 2028 with a weighted average cost on a fully euro swapped basis of 3.06% and €600 million of 5-year euro Senior Secured Notes maturing in January 2025 with a cost of 2.25%. These Senior Secured Notes are the lowest coupon ever raised by Altice International. The proceeds from this transaction were used by Altice International to refinance in full its €500 million and $2,060 million 2023 Senior Secured Notes and $400 million 2024 Senior Notes. In December 2019, Altice International also called the €250 million 9.0% 2023 Senior Notes which were redeemed on January 13, 2020 using cash on balance sheet.
• On January 24, 2020, Altice Europe announced that it would significantly simplify the Group capital structure through the removal of Altice Luxembourg HoldCo, a long-standing objective for the Group. This results in a Group capital structure with direct access to cashflows from two distinct, diversified funding pools: Altice France and Altice International. As part of this transaction, Altice Europe successfully priced and allocated €2.1 billion (equivalent) of new Senior Notes at Altice France following significant excess demand. This consisted of €1.6 billion (equivalent) of 8-year euro and dollar Senior Notes maturing in January 2028 with a weighted average cost on a fully euro swapped basis of 4.0% and €500 million of 5-year euro Senior Secured Notes maturing in January 2025 with a coupon of 2.1%. The proceeds from this transaction, along with cash on balance sheet, were used to partially refinance the €750 million and $1,480 million Altice Luxembourg 2025 Senior Notes, reducing the weighted average cost of debt of the Altice Europe complex and substantially extending maturities. Additionally, the remaining €500 million (equivalent) of outstanding Altice Luxembourg 2025 Senior Notes were redeemed on March 7, 2020 using €40 million cash on balance sheet and a €500 million short term facility from BNP Paribas, which was repaid with disposal proceeds from the Fastfiber transaction. Altice Europe has exchanged the €1,400 million and $1,600 Altice Luxembourg 2027 Senior Notes into Senior Notes at a subsidiary of Altice France. Following the successful issuance and exchange the new Senior Notes have moved to Altice France Holding.
• On April 20, 2020, Altice Europe announced the creation of Fastfiber (formerly known as Altice Portugal FTTH). Fastfiber is by far the largest FTTH wholesaler in Portugal and comprises of all MEO’s fibre assets including FTTH and dark fibre. Fastfiber is the result of a partnership that follows the successful completion of the transaction announced in December 2019 of Morgan Stanley Infrastructure Partners’ acquisition of a 49.99% stake in Fastfiber. Fastfiber will sell wholesale services to all operators at the same financial terms and MEO will sell technical services to Fastfiber for the construction, maintenance and subscriber connection to the fibre network. The transaction valued Fastfiber at €4.6 billion on a 100% basis representing an EBITDA multiple of 20x. The final cash consideration received at closing was €1,573 million for the sale of 49.99% in Fastfiber with further payments as follows, on a 49.99% basis: €375 million in December 2021 and €375 million in December 2026 subject to some performance ratchets.
• On May 14, 2020, Altice France announced that it would transfer Libération, the daily newspaper, to a non-profit foundation. Altice France would provide this foundation with the financial means to repay Liberation’s debts and finance its future operations, thus ensuring its editorial, economic and financial independence in the long term.
• On May 19, 2020, Altice Europe announced the extension of the maturity and a partial repayment of the Altice Corporate Financing facility (“ACF”). Altice Europe will repay €668 million of the ACF facility with cash available on balance sheet. After this repayment, the ACF facility will be reduced from €1,728 million to €1,060 million. The coupon has been reduced from 6.85% to 6.625%.
• On May 19, 2020, NextRadioTV announced the launch of a restructuring plan to take into account the changing media environment and the impact of the pandemic on the advertising market. This plan, based on voluntary adherence in the first stage, aims at reducing the employee workforce and notably by 50% the use of occasional workers, freelancers and consultants.

Guidance

• Following a solid start to the year, the Group sees no current need to change the 2020 guidance.
• For the full year 2020, the Group expects to:
  • Accelerate residential service revenue growth in its key geographies
  • Grow Altice Europe revenue and EBITDA
  • Further delever the Telecom Perimeter, target leverage of 4.0x to 4.5x net debt to EBITDA
• In the mid-term, the Group targets organic free cash flow³ of more than €1 billion.
• The Group continues to assess the potential impacts of the pandemic carefully.
  • Main negative financial impacts include: delays in FTTH construction during lockdown which the Group expects to catch-up; sale of equipment while shops are closed, expected to come back at the end of Q2 2020; roaming; advertising severely affected.
  • The guidance assumes lock-downs are lifted during Q2 2020 and a gradual economic recovery thereafter.

Conference call details

The company will host a conference call and webcast today, May 20, 2020 at 6:00pm CET (5:00pm BST, 12:00pm EDT).

Dial-in Access telephone numbers:

Participant Toll Free Dial-In Number: +1 (833) 968-2322

Participant International Dial-In Number: +1 (778) 560-2842

Conference ID: 9783909

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

https://event.on24.com/wcc/r/2157343/1F13CE30384086B0E9F8F5FDAF36BED7

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 Europe 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 Europe 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, 2019. Therefore financials for Altice Europe for the quarters ended March 31, 2019 and March 31, 2020 exclude the press magazine Groupe L’Express (following disposal on July 30, 2019).

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, IFRS⁴ 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.

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. 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 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 March 31, 2020, unless otherwise stated, and any year over year comparisons are for the quarter ended March 31, 2019.

Regulated Information

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

Altice Europe Summary Financial 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. Financials for Altice Europe exclude the press magazine Groupe L’Express (following disposal on July 30, 2019) from 1/1/19
2. 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
3. Teads gross revenue is presented before discounts (net revenue after discounts is recognised in the consolidated 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 Q1 2020)
2. Fibre 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 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.

Altice Europe Financial and Operational Review by Segment⁵

For the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019

France (Altice France including SFR)

Altice France reported an acceleration in residential service revenue growth in Q1 2020. This performance was underpinned by benefits from a sustained operational focus and significant investments in proprietary infrastructure.

SFR continued to invest in its proprietary infrastructure to further improve customer satisfaction and enhance its position in the growing fibre wholesale market. At the end of Q1 2020, SFR had more than 16.2 million homes passed (FTTH/FTTB), an increase of more than a million homes passed compared to Q4 2019. Altice France has 4,918 fibre municipalities at the end of Q1 2020.

On the mobile network side, SFR remains No. 1 in 4G + coverage in 2019 according to the nPerf barometer, for the second consecutive year.

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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