Altice Europe posted fourth-quarter results ahead of market expectations after revenue and EBITDA growth accelerated in its core market of France. The group met its full-year free cash flow objective, as EBITDA from the French operations slightly exceeded 2019 guidance. For 2020, it expects to generate higher revenues and EBITDA, targeting faster residential revenue growth in its key geographies.
In France, Altice generated revenues of EUR 2.99 billion in the fourth quarter, up 13.3 percent year-on-year (+7.2% in Q3). The main growth driver remained the division grouping B2B and wholesale activities, which saw revenues rise 43.0 percent to EUR 1.10 billion (+23.9% in Q3). This business line continued to benefit from the construction contract secured with the SFR FTTH joint venture, as it deployed fibre services to another 273,000 premises in the three months to December.
The consumer business line achieved positive revenue growth for a third consecutive quarter (+0.8% from 0.2% in Q3). This trend was supported by continued improvement in the residential fixed segment (+0.7% from -0.6% in Q3) and a steady progression in the mobile segment, where revenues rose 0.9 percent to EUR 1.10 billion (+0.7% in Q3). Growth in residential revenues has significantly accelerated in the first months of 2020, said the company.
Altice France posted adjusted EBITDA of EUR 1.12 billion in the quarter, up 19.6 percent year-on-year, of which EUR 1.08 billion was generated by SFR's telecom operations (+20.2%). The EBITDA margin improved to 37.5 percent, an increase of 2 percentage points from Q4 2018.
SFR's consumer business continued to gain customers in the fixed and mobile segments. Across France and the overseas territories, mobile connections rose 3.4 percent year-on-year to 15.85 million. Quarterly net additions for the postpaid mobile base eased slightly to 196,000, from 234,000 in the previous quarter, while remaining broadly stable from the year-earlier period (+194,000).
The residential fixed base increased 2.3 percent year-on-year to 6.36 million, adding 44,000 net connections since September (+41,000 in Q3 and +51,000 a year earlier). Out of this total, fibre-based subscriptions rose by 78,000 in the quarter to reach 2.84 million, representing 44.7 percent of overall broadband connections. The fixed and mobile segments benefited from the ongoing downward trend in customer churn, which was down 15 percent from Q4 2018 across all B2C products.
Altice International posts higher revenues, considers sale of Teads
The four subsidiaries within Altice International generated revenues of EUR 1.10 billion, up 6.9 percent year-on-year (+5.5% in Q3). Video ad subsidiary Teads remained the fastest growing business line (+25.7%), generating revenues of EUR 162 million. The company could be put up for sale in the future, as the group continues to review its current portfolio of assets. In Portugal, Meo's revenues rose 3.3 percent to EUR 543 million (+2.1% in Q3), while the operations in Israel and the Dominican Republic both posted positive growth at constant currency (+0.7% and +1.1% respectively).
Altice International’s adjusted EBITDA stood at EUR 395 million, up 1.2 percent on a reported basis but down by 0.3 percent at constant currency.
Parent Altice Europe, which combines France, International and Altice TV, reported a 14.8 percent rise in adjusted EBITDA (+8.8% in Q3). Excluding Altice TV, operating free cash flow increased by 20.8 percent to EUR 616 million (+11% in Q3). The group highlighted that it had EUR 4.9 billion worth of liquidity at end-2019, including EUR 2.7 billion of cash mainly generated from asset sales.
Total consolidated net debt was EUR 30.5 billion at end-December, broadly stable from the previous quarter. The company confirmed its goal to deleverage the balance sheet, targeting 4.0x to 4.5x net debt to EBITDA for its telecom operations by the end of 2020.
