First Quarter 2016 Results

Thursday, April 28, 2016 —

Strong net triple-play subscriber growth and continued traction for our entertainment propositions drove a 5% yoy increase in ARPU per customer relationship to €52.3;

- Rebased(1) revenue and Adjusted EBITDA growth of 5% and 2%, respectively, to €552.5 million and €262.1 million, including BASE Company NV ("BASE") since February 12, 2016;

- Including BASE, we anticipate 5-7% Adjusted EBITDA growth over the next three years(*) while rebased Adjusted EBITDA in the pivotal year 2016 is expected to remain stable versus 2015.

Telenet Group Holding NV ("Telenet" or the "Company") (Euronext Brussels: TNET) announces its unaudited condensed consolidated results under International Financial Reporting Standards as adopted by the European Union ("EU IFRS") for the three months ending March 31, 2016.

HIGHLIGHTS

  • Strong triple-play net subscriber growth leading to 1,109,000 triple-play subscribers at March 31, 2016 (+6% yoy), driven by continued traction for our leading "Whop" and "Whoppa" bundles and attractive promotions;
  • Secured long-term mobile access through BASE acquisition, boosting our active mobile subscriber base to just over 3.0 million at March 31, 2016. Solid intake of 21,600 net mobile postpaid subscribers in Q1 2016 driven by our "Family Deal" offers and improved momentum in BASE's subscriber trends due to attractive handset offers;
  • Revenue(2) of €552.5 million, +5% yoy on a rebased basis, driven by (i) higher revenue from our advanced fixed services, including the benefit from the mid-February 2016 price adjustments, (ii) higher business services and mobile revenue, and (iii) higher revenue related to our "Choose Your Device" programs launched mid-2015;
  • Adjusted EBITDA(3) of €262.1 million, +2% yoy on a rebased basis, as a positive contribution from our connectivity business and continued focus on cost excellence were partially offset by €7.0 million higher sales and marketing expenses due to timing variances in some of our campaigns and €3.4 million costs related to the BASE integration. Excluding these integration costs, rebased growth in our Adjusted EBITDA would have been higher;
  • Accrued capital expenditures(4) of €188.4 million, reflecting (i) the recognition of the Belgian football broadcasting rights for the 2016-2017 season, (ii) the extension of the exclusive UK Premier League broadcasting rights for the next three seasons, (iii) higher network-related investments as part of our 1 GHz HFC upgrade project, and (iv) the effects of the BASE acquisition. Excluding the impacts related to broadcasting rights, our accrued capital expenditures represented around 17% of our revenue;
  • Free Cash Flow(5) of €(69.1) million compared to €24.6 million in Q1 2015, negatively impacted by a nonrecurring €23.5 million cash outflow following a favorable contract renegotiation and the payment of €18.7 million ticking fees linked to the BASE acquisition. In addition, our Free Cash Flow in Q1 2016 was impacted by (i) a negative impact on our working capital following the BASE consolidation, (ii) €15.2 million higher cash interest expenses following our increased indebtedness, and (iii) €9.4 million higher cash taxes paid compared to last year;
  • Net loss of €8.6 million in Q1 2016 impacted by a €59.3 million loss on derivative financial instruments;
  • Plan to accelerate investments in BASE's mobile network, including site upgrades/extensions and increased fiber backhaul. Our ambition will lead to total integration costs of €300.0 million as compared to €240.0 million previously estimated, of which €250.0 million will be earmarked for network-related investments. As a result, we now target annual run-rate synergies of €220.0 million by 2020, as compared to €150.0 million previously estimated, with around 70% driven by MVNO-related synergies;
  • For 2016, we anticipate rebased revenue growth of up to 2% with solid growth in our fixed connectivity and B2B businesses partially offset by the impacts of increased competition, adverse regulatory impacts from amongst other items cable wholesale and declines in roaming rates,and lower mobile-only revenue. Rebased Adjusted EBITDA to remain stable in 2016 as compared to 2015, impacted by BASE integration costs and the aforementioned adverse regulatory impacts. As a result of investments in both our fixed and mobile infrastructures, our accrued capital expenditures, excluding the recognition of football broadcasting rights, are expected to represent around 23% of revenue with Free Cash Flow between €175.0 and €200.0 million;
  • The execution of our 2020 Vision, including the synergies related to the BASE acquisition, will enable us to secure profitable growth, targeting a 5-7% Adjusted EBITDA CAGR over the 2015-2018 period.

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