First Nine Months 2018 Results

First Nine Months 2018 Results

The enclosed information constitutes regulated information as defined in the Royal Decree of 14 November 2007 regarding the duties of issuers of financial instruments which have been admitted for trading on a regulated market

  • Accelerated synergies and continued disciplined cost control drove a robust 7% Adjusted EBITDA increase on a rebased(1) basis to €991.0 million with net profit of €206.5 million.
  • Marked improvement in our rebased Adjusted EBITDA margin of 410 basis points yoy to 52.4%, our best result in three year's time despite larger weight of lower-margin mobile revenue in our mix.
  • FY 2018 outlook partially upgraded, targeting improved rebased Adjusted EBITDA(a) growth of 8.0-8.5% and seeing Adjusted Free Cash Flow(b) at the upper end of the €400-420.0 million range.

Brussels, October 31, 2018 – Telenet Group Holding NV (“Telenet” or the “Company”) (Euronext Brussels: TNET) announces its unaudited consolidated results under International Financial Reporting Standards as adopted by the European Union (“EU IFRS”) for the nine months ended September 30, 2018.

HIGHLIGHTS

  • Continued commercial traction for our quad-play "WIGO" bundles, including net additions of 10,300 subscribers in Q3 2018 to reach 361,400 "WIGO" subscribers at September 30, 2018.
  • Modest growth in our mobile postpaid subscriber base in Q3 2018 (+9,500 net postpaid subscribers) reflected a challenging competitive environment and absence of meaningful fixed-term promotions and campaigns.
  • Commercial performance in the quarter was impacted by higher churn in the acquired SFR footprint following our accelerated customer migration strategy, skewing the underlying trend.
  • 9M 2018 revenue of €1,892.5 million (Q3 2018: €641.6 million), +1% yoy and reflecting certain inorganic movements. On a rebased basis, our top line slightly contracted amidst (i) €9.2 million lower handset sales, (ii) continued competitive and regulatory headwinds and (iii) lower usage-related revenue following the success of our flat-fee bundles. These headwinds were largely offset by (i) a substantially larger contribution from our regulated and commercial wholesale businesses, (ii) the favorable impact of the July 2018 price adjustments and (iii) continued growth in the small business segment.
  • Net profit of €206.5 million for 9M 2018 versus €105.1 million for 9M last year. Net profit for 9M 2018 was driven by (i) the increase in Adjusted EBITDA, as discussed below,  (ii) a €64.8 million non-cash gain on our derivatives and (iii) a €10.8 million gain on the disposal of assets to joint venture related to the transfer of our network field services, which were partially offset by a €78.5 million non-cash foreign exchange loss on our USD-denominated debt and a €24.6 million loss on the extinguishment of debt following certain refinancings.
  • Adjusted EBITDA(2) of €991.0 million for 9M 2018, +9% yoy on a reported basis and +7% yoy on a rebased basis. Our rebased Adjusted EBITDA growth was primarily driven by substantially reduced MVNO-related costs as a result of the accelerated onboarding of our Full MVNO customers and tight cost control. Our Adjusted EBITDA margin improved by 410 basis points yoy on a rebased basis to 52.4%. Adjusted EBITDA of €345.5 million in Q3 2018, up 8% yoy on a rebased basis, resulting in a 480 basis points rebased margin improvement yoy to 53.8%, which represented our best quarterly result in three year's time.
  • Accrued capital expenditures(3) of €484.7 million for 9M 2018 (Q3 2018: €183.0 million), -9% yoy as 9M 2017 reflected the recognition of the Belgian football broadcasting rights. Our accrued capital expenditures for 9M 2018 were impacted by the extension of the 2G mobile spectrum license. Excluding these impacts, our underlying accrued capital expenditures increased 5% yoy and represented approximately 24% of revenue for 9M 2018.
  • Net cash from operating activities, net cash used in investing activities and net cash used in financing activities of €822.8 million, €376.6 million and €401.5 million, respectively, for 9M 2018. Adjusted Free Cash Flow(4) of €321.9 million for 9M 2018.
  • Net total leverage ratio further decreased to 3.6x at September 30, 2018. If adjusted to reflect the October 2018 €600.0 million extraordinary gross dividend payment and related borrowings, our net total leverage ratio would have reached 4.0x at the Q3 2018 quarter-end, representing the mid-point of our net total leverage framework.
  • Full year 2018 outlook partially upgraded following strong financial performance over 9M 2018. Accelerated synergies and continued disciplined cost control will propel rebased Adjusted EBITDA(a) growth to 8.0-8.5% for the full year (versus 7-8% initially). Adjusted Free Cash Flow(b) outlook now seen at the upper end of the €400.0-420.0 million range despite certain anticipated payments on our mobile spectrum licenses.