Altice “proves its resilience” in Q3
November 20, 2020
Altice Europe has reported group revenue grew by 3.2 per cent year-on-year in Q3 2020.
Telecom revenue excluding equipment and roaming grew by 4.4 per cent and residential service revenue excluding roaming grew by 1.9 per cent. Total accrued capital expenditure was €818 million in Q3. Consequently, Operating Free Cash Flow amounted to €663 million.
Patrick Drahi, Altice Europe founder, commented: “In line with the performance since the beginning of the year, the Group proved its resilience during the third quarter. In France, we have maintained growth in our core telecom business, supported by residential service revenue growth. The Altice Corporate Financing facility was repaid during the third quarter, following the issuance of €900 million equivalent of new 8.25-year Senior Secured Notes at Altice France. Including these transactions, the Group has repaid €1.4 billion of debt since April 2020. The Group’s diversified and simplified capital structure has no material maturities before 2025 and €3.5 billion of available liquidity. We maintain our FY 2020 guidance to grow revenue and EBITDA, and continue to focus on deleveraging the Group through growing revenue, EBITDA and cash flow.”
Altice Europe Q3 2020 Key Operational Highlights
- Altice France achieved a solid financial performance in Q3 2020, with revenue growth in the residential service and business services segments supporting total revenue growth of +4 per cent YoY:
- The residential fixed base grew by +21k net additions, with +113k fibre net additions and 50 per cent of the total fixed subscriber base on fibre. The residential mobile postpaid base grew by +25k net additions.
- Altice France reported revenue growth of +4 per cent YoY and EBITDA growth of +2.8 per cent YoY in Q3 2020. Residential service revenue, excluding roaming out, grew by +3.2 per cent YoY in Q3 2020.
- Altice International Telecom revenue, excluding low margin equipment revenue and roaming revenue, declined by -0.3 per cent YoY in Q3 2020. Altice International residential service revenue, excluding roaming, declined by -1.6 per cent YoY.
- The residential fixed base grew by +17k net additions, with +50k fibre net additions. The residential mobile postpaid base grew by +27k net additions.
Capital Structure Key Highlights – including subsequent events
- Total consolidated Altice Europe net debt was €28.9 billion at the end of Q3 2020 (€28.5billion pro forma for the €375 million earn-out due in December 2021 related to the FastFiber partnership).
- On September 15, 2020, Altice Europe announced that it had issued €900 million (equivalent) 8.25-year Senior Secured Notes at Altice France following significant excess demand. The weighted average cost on a fully euro swapped basis is 4.125 per cent. This consists of €500 million of 8.25-year Senior Secured Notes with a coupon of 4.125 per cent and $475 million of 8.25-year Senior Secured Notes with a coupon of 5.125%. The proceeds from this transaction have been used to repay the then outstanding amount under the Altice France revolving credit facility of €150 million, and the remaining proceeds of €750 million have been used to repay the Altice Corporate Financing facility. The remainder of this facility has been repaid with cash on balance sheet at Altice International. Total annual interest savings pro forma for this transaction are €33 million, through a reduction of the average cost of debt.
- On September 11th 2020, Altice Europe and Next Private B.V. announced that a conditional agreement has been reached on a recommended public offer to be made by Next Private B.V., for all common shares A and all common shares B in the capital of Altice Europe, for €4.11 in cash per share (cum dividend). Altice Europe and Next Private continue to make good progress on the preparation for the offer and expect to be able to make a public announcement on the offer soon.
- On July 27, 2020, Altice Europe announced two agreements with Mediapro. Firstly, for the season 2020/21, Altice Europe will resell the UEFA rights to Mediapro in exchange for Altice Europe’s right to resell Mediapro’s Telefoot channel (including the main football matches for French Ligue 1 and Ligue 2). This will allow Mediapro to broadcast the UEFA Champions League and Europa League. Both the RMC Sport channel and Mediapro’s Telefoot channel will broadcast the two competitions from October 2020. SFR will offer all of the football to its customers with RMC Sport, Telefoot, Canal+ and beIN Sports. Secondly, for the seasons 2021/22, 2022/23 and 2023/24, Altice Europe entered into a distribution agreement with Mediapro to resell the Telefoot channel (including the main football matches for French Ligue 1 and Ligue 2) with a revenue share mechanism. This is expected to generate additional revenues for the Altice France residential segment. With this agreement, Altice Europe maintains the commitment to improve Altice TV cash flow trends, approaching break-even, while SFR customers will continue to benefit from the best football offer in France.
- On July 22, 2020, Altice International repaid $385 million (€342 million equivalent) 7.625 per cent 2025 notes. In addition to this, the Group has bought back €105 million of debt at Altice International in Q3 2020, or €244 million of debt at Altice International since April 2020. In combination with the Altice Corporate Financing (“ACF”) facility repayment, the Group has repaid €1.4 billion of debt since April 2020.
- On July 2, 2020, the transfer of approximately 9 per cent of the share capital of Altice France S.A. from Altice Europe to Altice France Holding S.A. was completed, in-line with the previously stated objective as part of the January 2020 Altice France refinancing.
- For the full year 2020, the Group expects to:
- Accelerate residential revenue growth in its key geographies;
- Grow Altice Europe revenue;
- Grow Altice Europe EBITDA.
- In the mid-term, the Group targets organic free cash flow3 of more than €1 billion.
- Further delever the Group, target leverage of 4x to 4.5x net debt to EBITDA
- The Group continues to assess the potential impacts of the Covid-19 pandemic carefully, especially the impacts on roaming and advertising.