Communiqué de presse groupe Numericable-SFR

Press release
Saint-Denis, May 12th 2015
Financial results Q1 2015
Numericable-SFR returns to growth, EBITDA up by 21%
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Clear market leader in Fiber with investment plan to accelerate the Fiber and 4G deployments
Marketing now focused on high end customers and Quadruple Play convergence
Growing Fixed ARPU and Stabilization of Mobile Postpaid ARPU
Synergies achieved larger than announced
Strong growth in EBITDA (+21%) and Operating Free Cash Flow (+17%)
EBITDA margin mid-term target 45%
Significant 20% deleveraging from EBITDA growth
 A massive investment plan to accelerate the Fiber and 4G deployments in 2015
With the largest optical Fiber network in France today and its 6.7 million Fiber connections (100Mbit/s up to
1Gbit/s), Numericable-SFR is the clear market leader and convinced that 2015 will be a year of strong
momentum in Fiber take-up.
According to the nPerf barometer on fixed Internet connections in France for Q1 2015, Numericable and SFR
are ranked number one for high speed and very high speed broadband connections.
With a massive investment plan, which will allow to connect 7.7 million Fiber homes by the end of 2015, 12
million by end 2017 and 15 million by end 2020, Numericable-SFR intends to remain the market leader in Fiber
and to contribute to the success of the French Government’s very high speed broadband plan. NumericableSFR will continue to drive the market and promote the migration of both residential and business customers
from DSL to Fiber.
Concerning the 4G network, Numericable-SFR will cover 70% of the population by the end of 2015, 90% by end
2017 and 99% by end 2020.
Improving service quality on the mobile network remains a priority for the Group. Our customers’ global
satisfaction in renovated areas (4G and 3G in 900MHz) has improved since the end of 2014 according to the
Group’s surveys. In Paris, the mobile network, renovated since March 2015 brings again the best performances
on voice services.
 Marketing now focused on high end customers and 4P convergence
In Q1 2015, Numericable-SFR Group has focused on ARPU growth and value generation rather than volume
growth in order to be in the best possible position to refocus its sales dynamics in the coming months. Fixed
ARPU has remained high and was up 0.9% over the last twelve months. But more importantly, the gross adds
ARPU is now significantly above the customer base ARPU. Also, and for the first time, mobile ARPU is on path
towards stabilization, reversing the trend of previous years. Mobile postpaid customer ARPU is almost flat in
Q1 2015 compared to Q4 2014. A clear strategic priority has been given on ARPU and value generation.
 Fixed Customer Base up in very high speed broadband and ARPU up on Fixed
On March 31st 2015, the Group’s Fixed-line subscriber pool amounted to 6,520,000 customers. The very high
speed broadband subscriber pool (30Mbit/s or more) grew by 6.7% reaching 1,595,000 customers. The ADSL
subscriber base decreased by 4% reaching 4,925,000 customers on March 31st 2015. The ADSL customer base
will continue to recede in 2015, as customers migrate to the Group’s THD network. Fixed-line ARPU amounted
to €34.3, up by 0.9% as compared to the Q1 2014.
 Mobile customer base and ARPU down slightly in mobile, but stabilization in mobile postpaid ARPU
On March 31st 2015, the Group’s mobile base amounted to 22,494,000 customers, down slightly by 2.5%
compared to Q1 2014. In a highly competitive mobile market, the residential mobile base amounted to
15,816,000 down by 5.7%. This decrease can mainly be attributed to the prepaid segment, down by 19%. The
postpaid mobile base amounted to 12,860,000 customers, down by 2.1%. On a sequential basis, mobile
postpaid ARPU has now stabilized with an ARPU of €25.5 in Q1-15 versus €25.9 in Q4-14 if you adjust for the
traditionally weaker level of consumption and services in Q1. Besides, the gross adds mobile ARPU is now at
par with the mobile ARPU of the customer base.
 Synergies larger than previously announced
The Group’s expected synergies have been implemented quickly during the first quarter 2015. With a strong
contribution from non-industrial synergies, the implementation of this program is ahead of initial targets. The
objective to achieve €1.1 billion annual gross synergies by the end of 2017 should be exceeded.
 Strong growth in EBITDA and Operating Free Cash Flow
After four years of decline at SFR, and thanks to a strong start in the synergies realization plan, EBITDA is up by
21% compared to Q1 2014 and Operating Free Cash Flow (or EBITDA-CAPEX) is up 17%.
 Commercial performance on Fiber confirmed
Since December 2014, Fiber net adds have been four times higher than in the same period of the previous year
with 58,000 Fiber. During the first quarter of 2015, we have gained 48,000 fiber net adds, which compares
positively to the 68,000 fiber customers added during the whole of 2014.
After having launched Fiber for all its brands and customers (Box TV Fibre by SFR at the end of 2014, SFR Access
Max for small businesses in January 2015, RED Fibre in April 2015), the Group has experienced a good start in
migrations from DSL to Fiber.
Q1 2015 key figures
 Revenue and adjusted EBITDA
For Q1 2015, Numericable-SFR posted revenue of €2.74 billion, down by 4.6% compared to Q1 2014. This
decrease was due in large part to the erosion in mobile revenue, in both the residential and B2B segments.
Adjusted EBITDA, which amounted to €930 million, up by 21%, compared to Q1 2014. The Group’s EBITDA
margin amounted to 34%, up by 7.2% basis points compared to Q1 2014.
 CAPEX
Total CAPEX spent by the Group on Q1 2015 amounted to €400 million, up by 27% compared to Q1 2014. This
investment campaign in Fixed and Mobile networks will be continued in 2015. As a % of Sales, our CAPEX has
gone up from 11.0% to 14.6%.
 Net income
Net income amounted to €816 million, due to two non-recurring positive effects, a financial income of €643.5
million and a tax income of €40.5 million, as a result of the recent agreement signed with Vivendi. Excluding
these non-recurring elements, the Group’s net income amounted to €132 million.
 Net debt
Group’s net debt amounted to €10.772 billion at the end of Q1 2015. Thanks to EBITDA’s strong growth, the
Group’s net leverage has decreased by 20% from 3.6x by the end of December 2014 to 3.3x by the end of
March 2015 and below 3.0x using last quarter EBITDA annualized and before taking into account payment to
Vivendi which will take place in Q2 2015.
Guidance
 Adjusted EBITDA and Operating Free Cash Flow
For 2015, Numericable-SFR aims to achieve above 20% growth in adjusted EBITDA (1) and generate and EBITDACAPEX between €1.9bn and €2.0bn.
Numericable-SFR also raises its medium-term EBITDA margin target to above 45%.
(1) Based on Proforma 2014 reported Adjusted EBITDA of €3.1bn
Post Balance Sheet Events
 Acquisition of 20% stake in Numericable-SFR from Vivendi
On May 6, Altice S.A and Numericable-SFR S.A. each acquired a 10% stake in Numericable-SFR. Upon this
transaction, Altice's stake in the share capital and voting rights of Numericable-SFR Group will increase from
60% to 78%.
Key financial indicators for Q1 2014 and 2015
In millions of euros
Revenue
- B2C
- B2B
31-03-2015
31-03-2014
Change (in %)
2,740
1,854
558
2,872
1,974
577
(4.6%)
(6.1%)
(3.3%)
- Wholesale
328
321
2.2%
adjusted EBITDA
CAPEX
EBITDA - CAPEX
930
400
530
770
316
454
21%
27%
17%
Leverage ratio
3.3x
-
Appendix 1: Consolidated P&L
(in millions of euros)
Revenue
Purchases and subcontracting services
Staff costs and employee benefits expense
Taxes and duties
Provisions
Other operating income
Other operating expense
Operating income before depreciation and
amortization (EBITDA)
Depreciation and amortization
Operating income
Financial income
Interest relative to gross financial debt
Other financial expense
Finance costs, net
Income tax expense (income)
Share in net income (loss) of associates
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Net income (loss)
- Attributable to owners of the entity
- Attributable to non-controlling interests
Three months ended
March 31,
March 31,
2015
2014
2,740
328
(1,489)
(151)
(281)
(38)
(136)
(7)
(9)
(2)
61
19
(14)
872
149
(499)
374
665
(150)
(20)
495
(54)
1
816
816
814
2
(75)
75
(37)
(3)
(40)
35
35
35
-
Appendix 2: Consolidated balance sheet
(in millions of euros)
ASSETS
Goodwill
Other intangible assets
Property, plant and equipment
Investments in associates
Other non-current financial assets
Deferred tax assets
Non-current assets
Inventories
Trade receivables and other receivables
Other current financial assets
Income tax receivable
Cash and cash equivalents
Assets classified as held for sale
Current assets
TOTAL ASSETS
(in millions of euros)
EQUITY AND LIABILITIES
Share capital
Additional paid-in capital
Reserves
Net invested equity attributable to owners of the
parent
Non-controlling interests
Total invested equity
Non-current financial liabilities
Non-current provisions
Deferred tax liabilities
Other non-current liabilities
Non-current liabilities
Current financial liabilities
Current provisions
Trade payables and other current liabilities
Current income tax liabilities
Liabilities classified as held for sale
Current liabilities
TOTAL EQUITY AND LIABILITIES
1
March 31,
2015
12,815
4,181
5,767
131
2,267
481
25,641
227
2,597
125
298
1,050
4,297
29,939
March 31,
2015
December 31,
2014
restated1
12,815
4,196
5,897
130
1,049
634
24,720
256
2,812
128
252
546
3,994
28,714
December 31,
2014
Restated1
487
9,748
(3,304)
487
9,748
(2,270)
6,930
7,965
14
6,944
13,800
314
2
540
14,656
2,142
323
5,656
217
8,338
29,939
10
7,975
13 349
327
43
583
14,302
283
317
5,621
217
6,438
28,714
The statement of financial position as at December 31, 2014 has been restated to reflect the price adjustement on the
acquisition of SFR as described in Note 1.1 (decrease of the caption « Goodwill » and increase of the caption « Other
current financial assets » of 120 million euros).
Appendix 3: Bridge between EBITDA and adjusted EBITDA (consolidated and proforma)
The following table presents the change from the proforma EBITDA as published in the proforma result
condensed, consolidated to the adjusted proforma EBITDA. Adjusted EBITDA is a financial indicator, not
defined by IFRS, which excludes certain non-recurring or non-cash items.
(in millions of euros)
EBITDA
Restructuring costs (a)
Costs relating to stock-options
plans (b)
Disposal of assets
CVAE (Cotisation sur la Valeur
Ajoutée des Entreprises) (c)
Other income /expenses (d)
Adjusted EBITDA
March 31,
2015
872
6
March 31,
2014
proforma
752
7
March 31,
2014
published
149
-
2
3
1
4
(7)
-
22
17
3
23
930
(1)
770
154
(a) These restructuring costs include transactional indemnities and other costs relating to workforce planning
(Gestion Prévisionnelle de l’Emploi et des Compétences/GPEC)
(b) Expenses relating to IFRS 2.
(c) The business value added contribution (Cotisation sur la Valeur Ajoutée des Entreprises/CVAE) is restated
to the extent that some of the Group's competitors classify this tax, assessed on value added, as an income
tax in the sense of IAS 12.
(d) Mainly reflects the impact, on the peri od, of the cost savings that have already be negociated as if those
savings had been implemented as at January 1, 2015.
Appendix 4: Consolidated cash flows table
(in millions of euros)
Net income (loss) from continuing operations
Non-cash items
Share in net income (loss) of associates
Depreciation and amortization
Gains and losses on disposals
Income tax expense (income)
Cost of gross financial debt
Foreign currency differences, net
Other non-cash items*
Change in working capital and other payments
Change in working capital
Income tax paid
Net cash provided (used) by operating activities
Purchases of property, plant and equipment and intangible assets
Proceeds from disposals of property, plant and equipment and
intangible assets
Decrease (increase) in loans and other non-current financial assets
Investments in companies included in the scope of consolidation,
net of cash acquired
Investment subsidies and grants received
Net cash provided (used) by investing activities
Capital increases of the parent company
Issuance of debt
Repayment of debt
Interest paid
Net cash provided (used) by financing activities
Net cash flow from continuing operations
Cash and cash equivalents – opening balance
Cash and cash equivalents – closing balance
1
Three months ended
March 31, March 31,
2015
2014
816
35
(1)
495
4
54
150
(20)
(622)
66
37
2
212
(51)
1,037
(400)
(37)
103
(75)
3
-
1
3
(1)
-
(397)
70
(9)
(253)
(192)
448
5831
1,031
(72)
2
(6)
(36)
(41)
(10)
101
92
The opening balance has been restated by 37 million euros in order to take into account (i) a change in the presentation
of cash and cash equivalents so that the position of cash and cash equivalentsdisclosed in the above statement of cash
flows is net of overdrafts and (ii) a reclassification in the opening balance of notes receivable.
About Numericable-SFR Group - www.numericable-sfr.com
Born from the combination of Numericable Group and SFR, Numericable-SFR Group wishes to create the nation's new
leading player in the convergence between broadband and mobile, building from the existing top-tier fibre optics network
and a leading mobile network. The sole owner of its infrastructures, the Group pairs two powerful networks and, thanks to
its investments, Numericable-SFR aims to rapidly extend its fibre THD and 4G coverage into the farthest reaches of the
nation and offer optimal service quality. A global operator, Numericable-SFR holds prime positions on all of France's
telecommunications market segments, from consumer to B-to-B, local authorities and wholesale. Building from a core of
well-matched brands, the Group offers a comprehensive range of Internet-access, fixed-line, mobile and audiovisual
services. The Group serves nearly 23 million Mobile customers and 6.6 million households subscribing to broadband
services. On the Consumer segment, the Group operates under the Numericable, SFR, Red and Virgin Mobile brands. On the
B-to-B segment, it operates under the SFR Business Team, Completel and Telindus brands, serving over 190,000 companies.
Numericable-SFR Group employs a total of 11,800 men and women, posting proforma turnover of €11.4 billion.
Numericable-SFR Group is 78% owned by Altice and is listed on Euronext Paris (Euronext NUM).
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Press contact: +33 1 85 06 05 50
Nicolas CHATIN - [email protected]
Investor contact: +33 1 85 06 10 75
Olivier GERNANDT - [email protected]