Tuesday, March 13, 2018

Iliad 17Q4: targets maintained, to bid for 5G spectrum in Italy

Most targets were reiterated.


  • div 2017 68c
  • acquired 50% stake in Sepia (housing Telecom Reunion Mayotte) in 2017
Targets fixed
  • LT 25% market share BB
  • grow FTTH subs 300-500k/yr from 2018
  • 9m FTTH HP YE 2018, 20m FTTH HP YE 2022
Targets mobile
  • add 2k sites in 2018
  • 3G coverage 95% & 4G (all incl 1800 band) 90% YE 2018
  • LT 25% market share mobile
Group targets
  • EBITDA margin up in 2018, EBITDA margin FR 40% by 2020
  • capex FR 2018 EUR 1.4-1.5b (excl. spectrum & new Freebox launch)
  • FCF (EBITDA - capex) FR >EUR 1b from 2020 from lower national roaming charges (2G & 3G with Orange, expires YE 2020), improved mobile subs mix, nationwide mobile network by 2020
"Almost ready for launch in Italy"
  • in place: infra (10k km backbone) & interconnections, offers & mkt plan, distr. network, full team, testing for QoS
  • launch summer 2018
  • to bid in 5G auction 2018 (700 & 3600/3800 bands)
  • investments Italy 2017: € 314m (o/w 50 for spectrum from Wind Tre, 220 for 1800 licenses renewal until 2029)
  • target: EBITDA break-even at <10 market="" share="" span="">
FTTH strategy
  • virtuous model, first benefits from 18H1
  • medium dense areas (co-finance model) capex < 1000 EUR/home
  • French corporate tax rate (33%) to 28% in 2020, 25% in 2022

Wednesday, February 07, 2018

Orange BE 17Q4 highlights: Luxembourg impairment, underlying high growth

  • Impairment Orange LU 17.9m
  • MSR -3.3% (+2.9% excl MVNO impact, +6.7% excl MVNO & RLAH impact)
  • Adj EBITDA -21% (-1.8% excl Wallon pylon deal; +11% excl Wallon deal & RLAH impact)
  • Opex related to BB+TV 13.4m (~x2)
  • Rev MVNO-loss impact (Telenet) 2017 on rev -9.1m (17Q4 -15.3m), RLAH impact -36.4m (o/w -8.4m in 17Q4)
  • EBITDA impact MVNO-loss -7.5m, impact RLAH -7.3m
  • Cable business 2017 EBITDA impact -18.5m
  • NB-IoT & LTE-M nationwide
  • Launches unlimited mobile data/voice/SMS plan 180212 (a first in BE)
  • Targets 2018
    • adj EBITDA 280-300m (incl MVNO loss impact -30m on rev [also lost Lycamobile, will lose VOOmobile]
    • RLAH impact on rev -26m & on EBITDA -17m
    • capex (excl cable) flat
    • focus on oper efficiency
    • mid-term BB market share target 10%
    • div 2017 50c
    • started using network data (dropped calls) to identify & target eligible residential customers for a femtocell
    • Big Data for targeted network investments, churn mgt, rev assurance/fraud detection
    • plans one-stop shop (fixed & mobile) for businesses, coop with Orange Business Services

Thursday, February 01, 2018

KPN Q4: FTTH to migrate to PON technology after 2018

Details from the main release

  • Outlook 2018
    • Adj EBITDA flat, capex 1.1b, FCF up (excl TEF DE div), div 12 c/share; Telefonica DE stake 8.6%
  • IFRS 15
    • recognition & measurement of revenues
    • different timing of revenue recognition for handset transactions via direct & indirect channels, and a higher threshold probability in revenue related disputes
    • revenues for handsets sold via direct channels are recognized in the P&L as nonservice revenues at date of the transaction, matching the associated handset costs. Revenues (nonservice) and fees (SAC) for handsets sold via indirect channels are no longer recognized in the P&L, but reported in the balance sheet. The threshold in revenue related disputes (variable consideration) is raised, meaning that revenues are only recognized when highly probable (>75%), up from >50% under IAS 18)
    • impact (from 180101): adj rev -130m, adj EBITDA -100m, FCF unchanged, equity (at 170101) +285m
  • Q&A
    • RLAH more favorable than expected (wholesale costs, VR income, data usage grew multiple (>3x)), effect 2018 comparable (shorter yoy effect but expanded usage)
    • Expects Business Market stabilisation in 1-3 yr
    • 3.5 GHz band crucial for 5G
  • Technology update
    • Fiber reduces latency to 6 ms (DSL 14 ms, LTE 20-26 ms)
    • FTTH reaches 2.3m HH, new build FTTH only, AON in 2018, thereafter migration to PON (not for existing lines), plans access on 3rd party FTTH
    • Stepped up FTTO (after regulation ended)
    • FTTS reaches 80%
    • Bonded V Plus roll-out from 18Q2 (>400 Mb/s), cabinets suitable for VDSL & FTTH, local loop typically 150 meters
    • Hybrid DSL/LTE has 1400 subs (Nijkerk trial), average download 6 to 73 Mb/s (note: DSL is needed for IPTV & fixed IP address, LTE for peaks & streaming)
    • LTE-M nationwide by 18Q2
    • Plans 4 5G pilots: urban, rural, transport & logistics, automotive ("4G connects people, 5G connects society")
    • Plans VoWiFi
    • Network integration
      • Access
        • 1. Combine (hybrid access): FTTC/FTTH & DSL/LTE
        • 2. Massify (facilitate massive device comms)IoT over LoRa, LTE-M and 4G M2M
        • 3. Verticalise (5G for verticals): eMBB (broadband), mMTC (massive), URLLC (latency)
      • Core
        • 4. Rationalise (simplification): all-IP
        • 5. Virtualize (increase scalability, reduce time-to-market): NFV (generic cloud hardware, faster time-to-market) & SDN (smart routing)
        • 6. Decentralise (content closer to consumer): CDN at 161 metro locations (for content caching, core-network offloading, improves experience), edge computing (for 5G, improves latency for automotive, e-health, smart industry)
    • Simplification: phase 3 of simplification will follow (savings 1 & 2 relative to 2016: 570m EUR/yr)
    • IT simplification: originally for 80k subs, invisible for customers, focus on a single My KPN app, focus on open source, added 150 developers in 2017 (total 30 nationalities), time-to-market (halved to 7 days) to be halved again

Wednesday, January 10, 2018

Tele2 acquires Com Hem: target 'untapped customer demand'

Merger announcement & presentation:
  • Acquires Com Hem
    • HH coverage 60%, 1100 employees
    • Results TTM: rev SEK 7.1b, adj EBITDA SEK 2.9b, OFC SEK 1.8b)
    • Merger, Tele2 absorbs Com Hem.
    • Cash (per share: SEK 37.02 SEK) + stock (per share: 1.0374 B-shares) = SEK 6.6b + 26.9% of Enlarged Tele2 = 146 SEK/share (11.8% premium over 180109 closing price, 15.9% premium over -30 trading days)
    • To issue 184.8m new B-shares, total 687.6m shares (o/w 22.8m A, 664.8m B); Kinnevik (to own 27.3% & 41.9% of votes) supports (lock-up 6 mo after completion).
    • To close 18H2 (latest 190331).
    • Refers to EC, prepared to effect pro-competitive measures if required to complete the merger.
  • Total synergies
    • 50/50 from costs (mostly opex) & rev (complementary, cross-selling)
    • Total 900m SEK/annum in yr 5 (65% in yr 3, 80% in yr 4)
    • Integration costs SEK 600m
    • Rentention bonus 12-24 mo base salary for mgt & key employees
    • Accreditive to FCF from yr 1.
  • Management
    • Anders Nilsson (Com Hem) to replace Allison Kirkby as CEO.
    • New Board to be chaired by Georgi Ganev (Tele2), >= 2 Com Hem members (incl Andrew Barron).
  • Targets
    • Increase shareholder remuneration.
    • Target leverage remains 2.0-2.5 (at closing net debt/EBITDA TTM 2.8).
  • Rationale
    • Untapped customer demand
    • Value accreditive
    • Complementary, complete proposition to improve customer satisfaction & loyalty
    • Greater scale & diversification
    • Unlock synergies
    • Revenue & CF diversification
  • 2017
    • Dividend 2017E: 4 SEK/share for Tele2, 6 SEK/share for Com Hem.
    • Combined results TTM: rev SEK 31.8b, adj EBITDA SEK 9.2b, OCF SEK 6.1b.
    • Sweden 72% of revenues & 78% of EBITDA (TTM).
    • Market shares in Sweden pro forma: 28% mobile, 22% FBB, 39% DTV.

Tuesday, January 09, 2018

Altice strategy update: USA spin-off, Europe disposals, both deleveraging

  • To spin-off Altice USA (incl Altice Technical Services US; 67.2%; excl Netune stake) by end 18Q2; 0.4163 Altice USA shares (A (1 vote) or B (25 votes)) for 1 Altice share, CEO Dexter Goei. Altice USA free float from 10.3 to max 42.4% (voting from 0.6 to 47.2%), Next to hold 51.2% of votes.
  • Altice Europe to reorg into France (incl FOT; bought from Int for EUR 550m o/w 300m cash), International (Meo, HOT, DomRep, Teads), Pay TV (content, sports rights, other premium content: Discovery, NBCU), Dennis Okhuijsen CEO
  • Separate mgt teams, Patrick Drahi control of both (President Europe, Chairman USA) via Next.
  • Altice USA plans $1.5b cash dividend prior to spin-off from Optimum facilities o/w EUR 900m for Altice Europe (o/w 625m for debt, to retain 275m).
  • Altice USA plans $2b SBB after spin-off.
  • Altice Europe strategy: turnaround in FR, PT; optimising performance, invest in infra, monetising content (various pay TV models & ads); non-core asset disposals (towers; DomRep; Switzerland; int wholesale voice to be sold).
  • Altice France 17Q4prel: revenue declines in B2B, wholesale, equipment, FY 2017 rev -2%, target opFCF 2018 EUR 1.6-1.7b (incl 300m pay TV content expenses & 200m drag from French VAT changes); Altice Europe net debt pro forma at 170930 EUR 31.0b (5.4x EBITDA TTM), targets 4x leverage.
  • Altice USA strategy: investments in networks & video product, simplification, improved customer service, improve rev growth, complete opex synergies, Altice One (platform), FTTH & MVNO (on Sprint) completion.
  • Altice USA 17Q3 pro forma incl planned div: net debt $22.7b, leverage 5.8x EBITDA TTM, target leverage 4.5-5.0x (reduced from 5.0-5.5).