Altice France, Portugal and International growth accelerates

Altice Europe Revenue +11.2%, EBITDA +14.8% and OpFCF +20.8%²

FY 2019 Guidance exceeded

€4.9 billion of available liquidity³

AMSTERDAM–(BUSINESS WIRE)–Regulatory News:

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

Patrick Drahi, Altice Europe founder: “During this challenging period where we all face the implications of the pandemia, I want to personally thank each of our employees, many of whom remain active on the ground as well as those who are working from home, to provide our customers with key services of connectivity and information. We are placing the utmost focus at Altice Europe on the protection and safety of all our employees and those of our subcontractors too. We have taken several steps to ensure that the residential and business customers that we serve continue to have reliable access to critically important connectivity services as well as quality real time news and information during this period. In 2019 we achieved an acceleration in revenue growth in all of our geographies. In Altice France, our strong Q4 results were supported by growth across all segments, including residential revenue growth year over year for the third successive quarter which is now significantly accelerating in the first months of 2020. The strong financial performance in Q4 and FY 2019 has been underpinned by the successful operational turnaround achieved by the new management teams, put in place 2 years ago. We exceeded our FY 2019 guidance and will continue to focus on deleveraging Altice Europe through growing revenue and EBITDA in FY 2020. We have continued to invest and expand our proprietary best-in-class infrastructure, commensurate with Altice Europe’s leading position in each market. Over the last months, we have signed important partnerships which will bring €1.8 billion of cash proceeds in the first half of 2020. Over the last six months, we have also closed €4.9 billion of refinancing, at record low rates for the Group, locking in significant interest savings as well as achieving the simplification of the Group capital structure through the removal of Altice Luxembourg HoldCo, a long-standing objective for the Group. The Group’s diversified capital structure has no material maturity before 2025 and available liquidity of nearly €5 billion. We have entered FY 2020 with a strong performance so far this year, and we are very confident that we are going to build on the improved financial performance of FY 2019 while prevailing from an unprecedented crisis.”

Altice Europe Q4 2019 Key Financial Highlights

• Revenue grew by +11.2% YoY (+10.7% YoY on a constant currency (CC) basis) vs. +6.9% YoY in Q3 2019.
• EBITDAgrew by +14.8% YoY (+14.3% YoY on a CC basis) vs. +8.8% YoY in Q3 2019. EBITDA margin was 35.8% in Q4 2019 (+1.1pts YoY).
• Total accrued capital expenditure for Altice Europe was €900⁴ million in Q42019.
• Consequently, Operating Free Cash Flow in 2019 grew with +20.8% YoY³ in Q4 2019.

Altice Europe Q4 2019 Key Operational Highlights

• Altice France reported an improved revenue trend in Q4 2019, with revenue growth in all segments (residential, business services and media). This strong financial performance was underpinned by another quarter of solid commercial momentum.
  • The residential fixed base grew by +44k customers, with +78k fibre customers and 45% of the total fixed subscriber base on fibre. The residential mobile postpaid base grew by +196k customers.
  • Altice France reported revenue growth of +13.3% YoY in Q4 2019 (vs. +7.2% YoY in Q3 2019) and EBITDA growth in Q4 2019 of +19.6% YoY (vs. +9.0% YoY in Q3 2019).
• In Portugal, the Group achieved robust customer acquisition in Q4 2019, driving an acceleration in revenue growth in the fourth quarter.
  • The residential fixed base grew by +2k customers, with fixed and mobile churn maintained at the lowest levels ever. Fibre customer net additions were +35k, continuing to be supported by the ongoing expansion of fibre coverage. Mobile postpaid net additions were +42k (or +17k after the negative impact of the cleaning of 25k non-paying mobile broadband subscribers).
  • MEO reported an improved revenue trend in Q4 2019 of +3.3% YoY (vs. +2.1% in Q3 2019) and an EBITDA decline of -1.1% YoY in Q4 2019 (vs. -1.7% YoY in Q3 2019).
• Notably, Altice International revenue growth accelerated to +6.9% YoY in Q4 2019 (vs. +5.5% in Q3 2019), supported by Teads which grew strongly again by +25.7% YoY in Q4 2019 (vs. +34.1% in Q3 2019).

Capital Structure Key Highlights – including subsequent events

• Total consolidated Altice Europe net debt was €30.5 billion (€28.5 billion pro forma ¹⁶ ) at the end of Q4 2019. Following significant refinancing activity in January 2020, the Group has already achieved €422 million annual savings out of the previously stated target of €700 million annual savings, pro forma for the previously announced refinancing transactions.
• On December 13, 2019, Altice Europe announced that its subsidiary MEO has signed an agreement with Morgan Stanley Infrastructure Partners to create a nationwide fibre wholesaler in Portugal. MEO has sold a minority equity stake of 49.99% in Altice Portugal FTTH based on an enterprise value of €4.63 billion (or 20x 2019 EBITDA). Altice Portugal FTTH will sell wholesale services to all operators at the same financial terms. MEO will sell technical services to Altice Portugal FTTH for the construction, the subscriber connection and the maintenance of its fibre network. This transaction creates the only truly nationwide fibre wholesaler in Europe. Payment terms are as follows, on a 49.99% basis: €1,565 million in 2020; €375 million in December 2021 and €375 million in December 2026 subject to some performance ratchets.
• On January 2, 2020, Altice Europe announced that its subsidiary MEO has sold its 25% equity interest in the tower company OMTEL to Cellnex for total cash proceeds of up to €200 million (of which €79 million were received on January 2, 2020, €96 million were received on March 13, 2020 and the remaining proceeds are to be received by March 31, 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. Total annual interest savings pro forma for this transaction are €187 million, through both average cost and debt reduction⁵.
• On January 24, 2020, Altice Europe announced 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 using €40 million cash on balance sheet and a €500 million short term facility from BNP Paribas, which will be repaid with disposal proceeds from the Altice Portugal FTTH transaction. Altice Europe offered to exchange 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 Ypso France Bis and will be moved to the immediate parent company of Altice France shortly. Total annual interest savings pro forma for this transaction are €36 million, through average cost reduction.

Guidance

• For the full year 2020, the Group expects to:
  • Accelerate residential 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

The Group continues to review and optimize its current portfolio of assets. This includes Israel, where the Group submitted an offer to acquire Partner Communications, as well as the potential divestiture of Teads, the fast-growing digital advertising business. It is yet uncertain that any such transactions will be concluded and under which terms. If and when there is any reason to do so, further announcements to the market will be made. Any strategic activity will be consistent with the leverage policy and target as well as maintaining a very strong liquidity profile at all times. Excess capital in the future is expected to be used for stock buy-back, once again consistent with both the Group’s leverage and liquidity targets.

Other Significant Events

Altice Europe is taking steps to respond to the known and currently anticipated impacts of the COVID-19 coronavirus outbreak on the business, customers and employees. The Group continues to assess conditions in order to adapt to the business and social environment in which it operates. The management teams, across the Group, are focused on monitoring the situation. The Group has convened dedicated taskforce and crisis management teams across all geographies, composed of local CEOs, heads of business functions, CTOs and corporate departments that meet to ensure the Group is identifying, elevating and addressing enterprise needs and risks. The Group’s priority is to ensure the protection and safety of all employees. The Group is focused on maintaining its high quality of service, ensuring customers have reliable access to critically important connectivity services, as well as real time news and information. Given the industry in which Altice Europe operates, the Group expects its cashflows to remain resilient throughout the crisis. Examples of the impacts observed within the Group so far include store closures, resulting in reduced sales and reduced churn, and reduced marketing expense. The Group continues to maintain fibre-roll out where possible.

On November 25, 2019, Altice Europe announced that SFR FTTH, alongside its consortium of financial investors (led by OMERS Infrastructure and including Allianz Capital Partners and AXA Investment Managers – Real Assets, acting on behalf of its clients), entered into an exclusivity agreement with Cube Infrastructure Fund and Partners Group (acting on behalf of its clients) regarding the acquisition of 100% of Covage for a total cash consideration of €1.0 billion. The acquisition will be financed with €0.5 billion by Altice France and €0.5 billion from the consortium of financial investors. The roll-out of additional homes is fully financed by a committed Capex facility. Covage will become part of SFR FTTH, resulting in a total of around 8 million secured homes to be passed. With this acquisition SFR FTTH continues to execute on its strategy to meaningfully expand its footprint, with more households still yet to be awarded as well as selective opportunities for consolidation.

Conference call details

The company will host a conference call and webcast today, Tuesday March 24, 2020 at 6:00pm CET (5:00pm GMT, 1:00pm EDT).

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: 8629119

A live webcast of the presentation will be available on the following website: https://event.on24.com/wcc/r/2154068/75015B5DAD826CD2D2AFF300CB0EC584

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, 2018. Therefore financials for Altice Europe for the quarters ended December 31, 2018 and December 31, 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 and (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, IFRS⁶ 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 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, 2019, unless otherwise stated, and any year over year comparisons are for the quarter ended December 31, 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 Financial Information

Altice Europe Summary Financial Information

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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