Dutch 3.5 GHz band auction - main specs

The ministry launched its draft auction plan and consultation (until 11 May). Licenses valid from Dec. 1, so the auction is planned sometime between these dates.

The main specs:

• Two phases, phase 1a (60 MHz licenses) simple multiple-round clock-auction with exit bids, phase 1b (10 Mhz licenses) same, phase 2 assignment (combinatory second price closed bid single round
• Total reserve price EUR 176.1-257.1m (depending on number of 10 MHz licenses) + dues for assignment round; 3 licenses for 60 MHz each (reserve price EUR 40.7m), 12 (max 30) licenses for 10 MHz each (reserve price EUR 4.5m)
• Valid until 401231 (17 yr + 1 mo from start at 231201)
• Coverage obligations (from date of Inmarsat's vacation), 60 MHz licenses: 324 km^2 after 2 yr, 3216 km^2 after 5 yr, 10 MHz licenses: 54 km^2 after 2 yr, 536 km^2 after 5 yr
• Caps: 40% ot total spectrum in all bands; 120 Mhz in 3.5 GHz band (50 MHz for bidders in round 1b only).

Spectrum holdings and caps in the Netherlands

Spectrum holdings in the Netherlands, with caps for future auctions in 2020 (700, 1400, 2100) and 2022 (3500).

		Available	Cap		Current holdings					Maximum biddable
			40%		KPN	VZ	T-Mobile	Total		KPN	VZ	T-Mobile
700	paired	60						0
800	paired	60			20	20	20	60
900	paired	70			20	20	30	70
Total		190	76		40	40	50	130		36	36	26
1400	unpaired	40						0
1800	paired	140			40	40	60	140
2100	paired	120			40	40	40	120
2600	unpaired	60			30	0	30	60
2600	paired	130			20	60	50	130
Total		490			130	140	180	450		66	56	16
3500		290						0
Total		290	116		0	0	0	0		116	116	116
TOTAL		970	388		170	180	230	580		218	208	158

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

Most targets were reiterated.

17Q4

• 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

Macro

• French corporate tax rate (33%) to 28% in 2020, 25% in 2022