Belgian operator Telenet has increased its free cash flow growth target for 2015-2018 and set a new goal for 2018-2021. The statements were made during the operator’s Capital Markets Day. Telenet also warned results for next year would come under pressure from the loss of Medialaan as a MVNO customer and from regulations.
The original target for free cash flow for 2015-2018 amounted to a CAGR (average growth per year) of 5-7 percent. This has now been increased to 6-7 percent. For 2018-2021, Telenet is targeting a CAGR of 6.5-8.0 percent.
Sustainable profitable growth
Telenet is looking to achieve 'sustainable profit growth'. The company said this will come from a number of sources:
- Investments in the mobile network brought speeds up to 1 Gbps and can now be reduced.
- The acquisitions of SFR and Nextel are good for the business market. Certain value-added services in ICT will be added.
- In the consumer market, the company is striving for a higher penetration in the SFR area. Data will be used to personalise the service.
- Simplification of IT and customer contact will lead to savings on these costs of 15 percent.
Targets 2018-2021
The financial targets for 2018-2021 are as follows:
- A ratio of investments to revenue of 20 percent;
- Net debt to EBITDA (leverage) at 3.5-4.0, with Telenet aiming for 4.0;
- A dividend pay-out ratio of 50-70 percent from last year’s free cash flow. The rest will be distributed through share buybacks, an extraordinary dividend, and lower leverage and acquisitions.
At the company’s annual meeting of April 2019, Telenet will propose a new share buyback programme for up to 20 percent of its shares, over a period of five years. The company’s current programme is worth EUR 116 million. Telenet will pay an interim dividend in the fourth quarter of next year.
