Telenet Capital Markets Day: focus remains on Flanders

CMD From Connectivity to Customer Centricity, 2023-2025

Strategic focus:

• Telenet growth with simple & personalised offerings:
• Residential (FMC, In-Home Connectivity, entertainment)
• E&M (Content, prodco, VR)
• B2B (Private 5G, ICT, Managed services, security; growth organic & via acquisitions)
• NetCo (with Fluvius)
• Transform operating model (based on DigitalBridge and Fluvius transactions)
• Invest to create value longterm (NetCo EUR 2b, platforms 200m, 5G 300m)
• ESG a part of all

Confirms outlook 2022:

• Rev EUR 2.6b
• expenses 1.7b, capex 0.5b (excl NetCo), opex excl personnel & energy -5% = EUR 20m
• leverage lower end of 3.5-4.5x range
• dividend fixed 1 EUR/yr (rising midterm from selling NetCo stake or optimising FTTH, rising longterm from lower capex intensity post FTTH)

To expand outside core into Digital Home, Business & Life:

• Tadaam (FWA)
• june (energy)
• Safespot
• The Park (VR)
• Unit-T
• its me
• doccle (digital document platform)

Raises Caviar (prodco) stake:

• from 49 to 70%; management remaining 30%
• Consolidation from 221001
• 2021: rev EUR 126m, EBITDA 8.8m

NetCo:

• target 70% coverage in Flanders by 2029
• fiber reduces maintenance 40%, power consumption 80%
• target peak run-rate 430k premises/annum (2025-27)
• 2022E KPIs: 2.1-2.2m subs (penetration ~60%), blended ARPU ~EUR 22, EBITDA margin longterm ~80%, maintenenance capex longterm <10% of rev
• 2022E: rev EUR 0.6b, capex 0.1b, leverage 4.9x (longterm 6.0x)

NetCo original announcement (220719):

• Establish 66.8/33.2 JV NetCo with Fluvius System Operator
• to migrate from HFC to 'network of the future' (incl FTTH, target coverage 78% by 2038; plans Docsis upgrade in remaining areas, Docsis 4.0 from 2024), target 10 Gb/s
• total capex EUR 2.0b (most 2023-2029; 650 EUR/home (excl capex for connection) for FTTH for >50% of homes)
• fully financed (incl towers proceeds EUR 745m), leverage target 5.0x (ie net debt EUR 2.4b)
• both to contribute current HFC & fiber assets, Telenet to contribute 170 employees (to hire 50 more), Fluvius to contribute lease to Telenet until 2046 (covers 1/3 of Flanders), to end on closing of JV early 2023
• to be fully consolidated
• open for additional investors, to provide non-discriminatory open access wholesale
• to launch with near 60% occupancy
• net debt Telenet to be reduced by EUR 500m (0.4x) on ending Fluvius lease, to maintain leverage at 4.0x
• lowers div pay-out floor to 1.00 EUR/yr for 2023-29 (payable in May after AGM) from currently 2.75 EUR/yr
• capex to drop strongly after 2029
• plans CMD end Sep 2022
• current data usage on fixed average 239 GB/mo