Altice Europe N.V. FY 2018 and Fourth Quarter 2018 Pro Forma(1) Results

FY 2018 guidance achieved, back to revenue, Adjusted EBITDA and
Operating Free Cash Flow
(2) growth in FY 2019


  • Altice Europe N.V. (“Altice Europe”) (AEX:ATC) (AEX:ATCB) continues to
    deliver on its three-pillar strategy: improve customer experience to
    drive better KPIs, invest in and own best-in-class proprietary fixed
    and mobile infrastructure and leverage its unique content assets.
    Altice Europe achieved all its FY 2018 guidance in a transformational
    year, paving the way for a return to growth in FY 2019 supported by
    churn reduction (-30% YoY in Q4 2018) and improved NPS (+13pts YoY in
    Q4 2018) in the group’s largest asset, Altice France.
  • Altice Europe sees the benefits of renewed management with intensified
    operational focus and accelerated momentum in volumes in Q4 2018,
    reporting an improving revenue trend YoY (-1.7% YoY in Q4 2018 vs.
    -6.3% YoY in Q3 2018 on a reported basis). In 2018, the group’s
    operational turnaround has driven significant improvements in the
    group’s key geographies, with sustained positive subscriber momentum
    in both France and Portugal. This was confirmed again in the fourth
  • Altice France achieved a strong level of customer acquisition in the
    fourth quarter, marking the fourth consecutive quarter of being the
    market leader in B2C3 customer acquisition. Altice France
    won back more than 1.3m customers in 2018, more than the number of
    customers lost over the last 3 years4 since the acquisition
    of SFR. In Q4 2018, churn continued to reduce materially (-30% YoY in
    Q4 2018), driven by consistent improvements in customer service (call
    rates declined -20% YoY in Q4 2018) and an improvement in network
    quality metrics (client satisfaction increased +20% YoY in Q4 2018).
    Management will continue to focus on operational processes in 2019,
    decreasing churn to a lower level and reducing associated operating
    expense such as marketing and sales, customer care and retention costs.

    • B2C fixed base grew for the fourth consecutive quarter with +83k
      net additions (vs. -45k net losses in Q4 2017). Fibre net
      additions were +67k in Q4 2018, in line with Q4 2017 with the
      highest proportion of fibre subscribers within the total fixed
      customer base in France (41% of fixed customers on fibre);
    • B2C mobile postpaid base grew by +187k net additions (vs. +76k in
      Q4 2017), supported by the positive impact of premium content
      (Champions League), a better network (downtime decreased -30% YoY
      in Q4 2018 and dropped calls down -15% YoY in Q4 2018) and a
      massive reduction in complaints (-35% YoY in Q4 2018).
  • In Portugal, the group achieved a solid level of customer acquisition
    in the fourth quarter. Altice Portugal gained market share against
    peers in every segment in 2018, with a positive inflection in
    subscriber trends compared to 2017: +167k net adds in B2C fixed
    broadband and mobile postpaid combined in 2018 (3 times the level of

    • The B2C fixed base grew sequentially for the fifth consecutive
      quarter with unique customer net additions in Q4 2018 of +8k (vs.
      +6k in Q4 2017), while fixed and mobile churn has stabilized at
      the lowest level ever, alongside ARPU stabilization. Fibre
      customer net additions were +44k in Q4 2018 (vs. +43k in Q4 2017),
      supported by the rapid expansion of fibre coverage. Mobile
      postpaid net additions were +32k (vs. +33k in Q4 2017). MEO’s
      continued network investments and successful convergent strategy
      is driving an inflection in revenue growth; residential revenues
      (B2C fixed and B2C mobile) and business services (B2B and
      wholesale) revenues combined grew +0.7% YoY in Q4 2018.
  • Altice Europe revenue on a constant currency (CC) basis was -1.8% YoY
    ex-VAT benefit5 or -2.9% reported YoY in FY 2018 (flat YoY
    ex-VAT benefit or -1.6% reported YoY in Q4 2018).
  • Altice Europe Adjusted EBITDA6 on a CC basis declined -5.9%
    YoY ex-VAT benefit or -8.9% reported YoY in FY 2018, a margin of
    36.1%in FY 2018 (-1.6% pts YoY vs. 37.7% in FY 2017).
  • Altice Europe made significant investments in networks, customer
    premise equipment and innovative new services, with total accrued
    capital expenditure for Altice Europe of €3,040 million in FY 2018
    (vs. €3,239m in FY 2017) excluding €1,013 million for the Champions
    League rights in France:

    • Leading fibre operator in France increasing its footprint by 3
      million fiber homes in 2018 only including 1.7 million additional
      proprietary homes to be built. Altice France is on track to reach
      its target of 22 million homes passed by 2022 which will include
      14 million proprietary homes which will deliver full network
      returns. In addition, Altice France achieved major fibre contract
      wins in the fourth quarter, reaching almost 700k new homes to be
      passed in the low dense areas, a demonstration of the trust that
      local authorities have in the group, through the award of new
      public service contracts. In mobile, Altice France achieved 98.7%
      4G mobile population coverage in Q4 2018, in line with its target
      of 99% (+3.1k new sites in FY 2018). Altice France also extended
      the 4G+ and 4G+++ mobile network, putting in place the path to 5G.
      Thanks to the expertise acquired, SFR launched on 20 November 2018
      the first 4G+ Box on the market in France. On 9 October 2018,
      Altice France launched 5G in Paris in parallel with the
      inauguration of the Altice Campus, its innovative telecoms-media
      headquarters in France;
    • Leading fibre operator in Portugal reaching 4.5 million fibre
      homes passed in FY 2018 (+463 thousand homes added in FY 2018) and
      98.6% 4G mobile population coverage (74.8% 4G+ mobile population
  • Altice Europe achieved all of its FY 2018 guidance, reporting
    operating free cash flow7 of €2.36 billion on a
    like-for-like basis8 vs. guidance of between €2.3 billion
    to €2.5 billion, excluding the Altice TV segment. Altice France
    reported operating free cash flow of €1.52 billion vs. guidance for
    the low end of the €1.5 billion to €1.6 billion guidance range.
  • Altice Europe announced multiple partnerships in 2018 in order to
    optimize infrastructure economics and infrastructure returns whilst
    further strengthening its capital structure. In Q4 2018, Altice Europe
    and KKR jointly announced the creation of Hivory, the largest
    independent telecoms tower company in France with more than 10,000
    sites (around half of SFR sites in France). On 30 November 2018,
    Altice Europe announced that its subsidiary Altice France had entered
    into an exclusivity agreement with a consortium controlled by OMERS
    Infrastructure with AXAI IM and Allianz as co-investors regarding the
    sale of a minority equity stake of 49.99% in SFR FTTH. SFR FTTH is the
    largest alternative FTTH infrastructure wholesale operator in France,
    with 5 million homes to be passed (including 1 million homes built by
    year-end 2018) and more to be franchised or acquired. Altice France
    will sell technical services to SFR FTTH for the construction, the
    subscriber connection and the maintenance of its FTTH network. SFR
    FTTH will deploy fibre massively in the next 4 years, which will
    contribute to new sources of revenue for SFR in France. The
    transaction closed on March 27, 2019.

Patrick Drahi, founder of Altice, said: “In 2018, we have
completed the reorganization and simplification of Altice Europe’s
structure, with the separation of Altice USA from Altice N.V. effective
on June 8 and a drastic management change. Altice Europe has achieved
all of its FY 2018 guidance, with the successful operational turnaround
leading to very strong subscriber trends. The significant and continued
investments in both fixed and mobile networks, as well as the consistent
improvements in customer care, led to a material reduction in complaints
from customers and significantly lower churn rates on all technologies.
We already see a tangible inflection in Portugal and France, paving the
way for growth in 2019, underpinned by our strategy in infrastructure
and content. Our confidence in our turn-around is reflected in our 2019
guidance, highlighting significant improvements in operating free cash
flow. On top of this commercial momentum, we continue to genuinely
strengthen our long-term balance sheet position while partly
crystallizing the underlying value of Altice Europe, notably its
infrastructure. With the transformational SFR FTTH transaction, and the
various tower deals and long-term partnerships announced in 2018, Altice
Europe has been able to crystallize €8 billion of infrastructure value
and obtain cash proceeds of more than €4 billion
We continue to explore similar deals in our footprint. These
transactions are creating huge value for our group, providing more fibre
to our customers, more revenues and more returns for the group. We
expect to continue to optimize our capital structure in 2019, after a
successful €5 billion refinancing at Altice France during 2018,
extending maturities. Altice Europe has significant hidden value with in
a number of assets from strategic fixed and mobile infrastructure assets
in France, Portugal, Israel and the Dominican Republic to other high
value stakes such as the very fast-growing digital advertising business
of Teads.”

March 28, 2019: Altice Europe N.V. (Euronext: ATC and ATCB), today
announces financial and operating results for the quarter ended December
31, 2018.

FY 2019 Guidance

Under IFRS 15, Altice Europe is expected to generate Operating free cash
flow growth in the area of 10% year over year in FY 2019, excluding the
Altice TV segment.

In FY 2019, Altice France is expected to deliver revenue growth of
between 3% and 5% year over year with an Adjusted EBITDA of between €4.0
billion to €4.1 billion.

Target leverage of 4.25x net debt to Adjusted EBITDA within 24 months
for the telecom perimeter (Altice Luxembourg).

Altice Europe reiterates its plan to further delever its balance sheet
and bring financial leverage in line with its stated target of 4x net
debt to Adjusted EBITDA.

Altice France will benefit from the operational turnaround achieved in
2018. Progress made during 2018 in infrastructure quality and customer
service (detailed in the France section below) allows for further churn
reduction (still down 30% YoY in Q4 2018) and NPS (Net Promoter Score up
13pts YoY in Q4 2018), leading to an inflection in revenue growth and
costs decrease in the coming quarters: 1/ less churn means less costs
(e.g. marketing and sales, call centers and customer acquisition and
retention effort) and increasing customer lifetime; 2/ more addressable
fibre market (+3m fibre homes passed10. in
France in 2018 and more to come with SFR FTTH transaction) means more
fibre net adds driving higher ARPU and lower churn ; 3/ more convergence
(from content bundles to fixed-mobile bundles) leads to lower churn.
Altice France will also benefit from significant new streams of revenues
from SFR FTTH for construction and maintenance activities.

Other Significant Events

  • On March 27, 2019, Altice France and a consortium controlled by OMERS
    Infrastructure with AXAI IM and Allianz as co-investors closed the
    sale of a minority equity stake of 49.99% in SFR FTTH announced in
    November 2018. The final proceeds amounted to €1.7 billion, based on
    an equity value at closing of €3.4 billion. With 5 million homes to be
    passed in the medium and low dense areas (including 1 million homes
    built as of December 31, 2018) and more to be franchised or acquired,
    SFR FTTH is the largest alternative FTTH infrastructure wholesale
    operator in France. SFR FTTH will sell wholesale services to all
    operators at the same terms and conditions including SFR as customer
    with no minimum volume commitments. Altice France will sell technical
    services to SFR FTTH for the construction, the subscriber connection
    and the maintenance of its FTTH network.
  • On February 7, 2019, Jean-Jacques Lasserre, President of the
    Departmental Council of Pyrénées-Atlantiques, and Alain Weill Chief
    Executive Officer of Altice Europe in the presence of Patrick Drahi,
    Founding President of Altice have officially signed the Delegation of
    Public Service (with a duration of 25 years) for the implementation of
    a very high speed network in the Pyrénées-Atlantiques and allowing
    access to very high speed fibre network throughout the departmental
    territory. This signing allows the creation of the project company
    “THD64” whose role is to ensure the design, financing, construction,
    marketing, operation and maintenance of the very high-speed network of
    Pyrénées-Atlantiques territory. SFR will be the sole shareholder of
    THD64. Over the next five years, more than 226 thousand FTTH homes
    will be built throughout the Pyrénées-Atlantiques territory and 68
    optical nodes to enable their connection.
  • On December 18, 2018, Altice Europe and KKR jointly announced the
    creation of Hivory, the largest independent telecoms tower company in
    France and third largest European tower company. The creation of
    Hivory followed the successful completion of the transaction announced
    in June 2018, of KKR’s acquisition of a 49.99% stake in a portfolio of
    more than 10,000 of Altice’s French towers. Hivory is a high-quality
    telecoms infrastructure provider with a nationwide presence,
    benefiting from more than 10,000 strategically located sites with a
    diversified portfolio of ground-based towers and rooftops. Through
    Hivory, Altice and KKR will proactively seek to partner with all
    mobile operators to develop their coverage and densification
    objectives in France, through the build-to-suit of new towers and
    facilitating colocation needs in the French mobile market. The company
    will seek to contribute to the development of French technology
    infrastructure and innovation, supporting telecom players on the eve
    of the ‘New Deal’ for French mobile and 5G roll out.

Conference call details

The company will host a conference call and webcast today, Thursday
28th of March 2019 at 6:30pm CET (5:30pm GMT, 1:30pm EDT)

Dial-in Access telephone numbers:

Participant Toll Free Dial-In Number: +1 (866) 393-4306

Participant International Dial-In Number: +1 (734) 385-2616

Conference ID: 3262958

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

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

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 N.V. (Altice Europe N.V., the “Company”) was created as a
result of a cross-border merger with Altice S.A. as per a board
resolution dated August 9, 2015. Altice Europe N.V.’s shares started
trading on Euronext Amsterdam from August 10, 2015 onwards. Altice
Europe N.V. is considered to be the successor entity of Altice S.A. and
thus inherits the continuity of Altice S.A.’s consolidated business.
Altice Europe N.V. 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 the
Company’s results of operations, we have presented and discussed the
pro-forma consolidated financial information of the Company – giving
effect to each such significant acquisition and disposal as if such
acquisitions and disposals had occurred by January 1, 2017; as if the
spin-off of Altice USA had occurred on January 1, 2017, and excluding
press titles within the AMG France business sold in April and October
2017, for the quarters ended December 31, 2017 and December 31, 2018
(the “Pro Forma Financial Information”). Financials include the
contribution from Teads from Q3 2017 onwards. In addition, financials
for Altice Europe exclude the international wholesale voice business
(following closing announced on September 13, 2018) and AG and
Green Datacenter AG in Switzerland (following closing announced on
February 12, 2018) for the quarters ended December 31, 2017 and December
31, 2018.

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.

Adjusted EBITDA is defined as operating income before depreciation and
amortization, non-recurring items (capital gains, non-recurring
litigation, restructuring costs) and share-based 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’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

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 December
31, 2018, unless otherwise stated, and any year over year comparisons
are for the quarter ended December 31, 2017.

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 Pro Forma Information

Altice Europe – Quarter ended December 31, 2018
In EUR million Altice
  Portugal   Israel  


  Teads   Others   Altice
& Other

Altice Europe

Fixed – B2C   642.7 154.5 137.9 25.4 960.6
Mobile – B2C 1,060.9 143.8 60.1 91.5 1,356.3
B2B 445.1 148.3 28.7 21.1 643.0
Wholesale 292.9 41.7 5.4 340.0
Other 203.4 38.0 0.1 -0.1 129.2 0.2 49.6 0.4 415.2
Standalone Revenue 2,645.0 526.3 226.8 143.2 129.2 0.2 49.6 0.4 3,720.7
Eliminations -39.5 -6.9 -0.1 -0.1 -1.7 -28.3 -0.3 -76.9
Consolidated Revenue 2,605.5 519.4 226.7 143.1 127.5 0.2 21.3 0.1 3,643.8
Adjusted EBITDA 934.7 198.8 93.6 65.0 33.3 -0.1 -53.4 -12.0 0.8 1,260.7
Margin (%) 35.3% 37.8% 41.2% 45.4% 25.8% nm nm nm nm 34.6%
Capex 592.2 120.0 63.7 31.3 1.4 -7.1 -1.9 799.6
Adjusted EBITDA

– Accrued Capex

342.4 78.8 29.9 33.7 32.0 -0.1 -46.3 -12.0 2.8 461.1
Altice Europe – Quarter ended December 31, 2017
In EUR million Altice
Portugal Israel Dominican
Teads Others Altice
& Other
Eliminations Altice Europe Consolidated
Fixed – B2C 697.9 158.3 157.7 26.7 1,040.6
Mobile – B2C 1,152.0 141.0 65.9 103.2 1,462.1
B2B 442.8 143.9 33.0 22.3 642.1
Wholesale 244.0 41.7 -3.9 281.8
Other 160.8 41.9 0.6 -0.6 98.1 12.0 12.9 325.9
Standalone Revenue 2,697.7 526.8 257.2 147.7 98.1 12.0 12.9 3,752.4
Eliminations -9.2 -17.4 -0.3 -9.4 -0.0 -6.9 -2.6 -45.8
Consolidated Revenue 2,688.6 509.4 256.9 138.4 98.1 5.1 10.2 3,706.6
Adjusted EBITDA 1,108.1 230.6 119.7 79.2 27.3 -56.9 -30.6 -4.7 1,472.7
Margin (%) 41.1% 43.8% 46.5% 53.6% nm nm nm nm 39.7%
Capex 717.1 132.9 62.4 38.6 16.2 3.3 -5.6 964.8
Adjusted EBITDA

– Accrued Capex

391.0 97.7 57.3 40.7 27.3 -73.1 -33.8 0.9 507.9
Altice Europe – Twelve months ended December 31, 2018
In EUR million Altice
  Portugal   Israel   Dominican
  Teads   Others   Altice
& Other

Altice Europe

Fixed – B2C   2,545.3 618.4 580.6 100.7 3,845.1
Mobile – B2C 4,146.4 561.7 243.3 354.1 5,305.5
B2B 1,772.1 585.7 117.0 82.5 2,557.4
Wholesale 1,075.7 171.6 15.8 1,263.1
Other 700.5 137.0 0.3 0.4 364.7 0.8 119.4 4.3 1,327.4
Standalone Revenue 10,239.9 2,074.5 941.2 553.5 364.7 0.8 119.4 4.3 14,298.4
Eliminations -79.4 -43.8 -0.6 -0.8 -2.8 -80.8 0.4 -207.8
Consolidated Revenue 10,160.5 2,030.7 940.6 552.7 361.9 0.8 38.6 4.7 14,090.7
Adjusted EBITDA 3,785.3 840.1 405.7 286.2 60.2 -0.2 -227.3 -41.3 -8.1 5,100.7
Margin (%) 37.0% 40.5% 43.1% 51.7% 16.5% nm nm nm nm 36.2%
Capex 2,269.6 423.3 234.1 115.2 1.4 1.4 -4.7 3,040.3
Adjusted EBITDA

– Accrued Capex

1,515.6 416.8 171.6 171.0 58.9 -0.2 -228.7 -41.3 -3.4 2,060.4


Altice Europe
Head of Investor Relations Altice Europe
Maulay: +33 6 16 77 70 67 /

Head of Communications Altice Europe
Arthur Dreyfuss: +41 79
946 4931 /

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