Paris, September 1, 2017
FIRST-HALF 2017 RESULTS
SIGNIFICANT EVENTS IN FIRST-HALF 2017
Just five years after it entered the mobile market, the Group has become one of the leading telecommunications operators in France, with 19.6 million subscribers, of which over 13 million mobile subscribers and some 6.5 million Broadband and Ultra-Fast Broadband subscribers. At June 30, 2017, it had market shares of 24% for Broadband and Ultra-Fast Broadband and 18.5% [2] for mobile. During the first half of 2017, the Group continued its profitable growth trajectory, generating close to €2.5 billion in revenues - up 7.3% on first-half 2016.
The most significant events of first-half 2017 were as follows:
Operational information
Landline business: the Group confirmed its position as France's leading alternative landline Broadband and Ultra-Fast Broadband operator, with some 6.5 million subscribers at June 30, 2017. The number of new subscribers during the period (net of cancellations) came to 83,000 , representing a net add market share of 27%. The contraction in the Group's net adds compared with the first half of 2016 was due to fierce competition during the period, with numerous promotions launched by competitors, as well as the maturity of the market.
Continued FTTH rollouts and connections. The Group continued the FTTH rollout drive during the first six months of 2017, with (i) 900,000 new connectible sockets installed, bringing the total to 5.3 million at June 30, 2017, and (ii) some 110,000 additional subscribers connected to fiber during the period, i.e., as many as for the whole of 2016. This means that the Group's FTTH subscriber base increased by 35% in the space of six months and at June 30, 2017 it stood at almost 420,000.
Mobile business: the Group was France's leading recruiter of mobile subscribers for the 22 nd quarter in a row, notching up 200,000 net adds in the second quarter of 2017. Thanks to its strategy of continually enriching its offers for the same price, the Group has been France's net add market leader ever since it launched its Mobile business. At June 30, 2017, the Group had over 13 million mobile subscribers, giving it a market share of 18.5% 2 .
A further improvement in the Mobile business's subscriber mix, with new subscribers signing up for the €19.99 per month offer (€15.99 per month for Freebox subscribers). Following on from 2016, when a large proportion of the Group's net adds took up this offer, in the first half of 2017, all of its new subscribers signed up for it.
Ongoing success of 4G. At June 30, 2017, the Group had 6.8 million 4G subscribers (more than half of its mobile subscriber base). This figure reflects the quality of the Group's 4G network, which, in the second quarter of 2017, obtained the best score for 4G connections in France in the nPerf mobile connections performance survey for the ninth consecutive quarter. In addition, average monthly data usage per 4G subscriber rose sharply once again, reaching 6.6 GB.
Italy's fourth mobile network operator: the Group made significant progress in preparing for the launch of its mobile offerings. Since late 2016 and during the first half of 2017, the Group has (i) secured a backhaul network of some 10,000 kilometers of fibre and deployed its core network, (ii) set up roaming solutions, (iii) negotiated interconnection contracts, and (iv) recruited an Italy-based team to manage the new subsidiary's operations.
Operating performance indicators
Subscriber numbers | June 30, 2017 | June 30, 2016 | June 30, 2015 |
Total mobile subscribers | 13,140,000 | 12,080,000 | 10,925,000 |
| 6,800,000 | 4,700,000 | 2,400,000 |
Total Broadband and Ultra-Fast Broadband subscribers | 6,468,000 | 6,261,000 | 5,991,000 |
| 419,000 | 250,000 | - |
Total number of subscribers | 19,608,000 | 18,341,000 | 16,916,000 |
Other indicators | Six months to June 30, 2017 | Six months to June 30, 2016 | June 30, 2015 |
Broadband and Ultra-Fast Broadband
ARPU (in €) | 34.00 | 33.90 | 34.50 |
Freebox Revolution ARPU* (in €) | >38.00 | >38.00 | >38.00 |
Number of connectible FTTH sockets | 5.3m | 3.1m | - |
Average 4G data usage (in GB per month per subscriber) | 6.6 GB | 3.9 GB | 2.2 GB |
* Excluding promotions
Financial performance indicators
In € millions | Six months to June 30, 2017 | Six months to June 30, 2016 | % change | |
Consolidated revenues | 2,464.0 | 2,296.9 | 7.3% | |
- Landline | 1,393.5 | 1,329.1 | 4.8% | |
- Mobile | 1,075.4 | 973.4 | 10.5% | |
- Intra-group sales | (4.9) | (5.6) | 12.5% | |
Consolidated EBITDA | 874.6 | 808.5 | 8.2% | |
Profit from ordinary activities | 430.1 | 360.2 | 19.4% | |
Profit for the period | 232.6 | 190.4 | 22.1% | |
Leverage ratio | 1.0x | 0.9x | 10.1% |
GROUP OBJECTIVES
CONSOLIDATED INCOME STATEMENT
Revenues
Consolidated revenues for the first six months of 2017 rose by more than 7% year on year, or almost €170 million, coming in at just under €2.5 billion. Despite persistently fierce competition, the Group recorded an almost 5% increase in Landline revenues (which totaled €1,393 million) and double-digit growth for Mobile revenues (up 10.5% to €1,075 million).
The table below shows the breakdown of revenues by category for first-half 2017 and first-half 2016 as well as the percentage change between the two periods.
In € millions | Six months to June 30, 2017 | Six months to June 30, 2016 | % change | |
Landline | 1,393.5 | 1,329.1 | 4.8% | |
Mobile | 1,075.4 | 973.4 | 10.5% | |
Intra-group sales | (4.9) | (5.6) | 12.5% | |
Total consolidated revenues | 2,464.0 | 2,296.9 | 7.3% |
Landline revenues
Against a backdrop of persistently fierce competition, revenues for the Landline business rose 4.8% (compared with 3.4% in first-half 2016) and totaled €1,393 million in the first six months of 2017. The main factors that drove this performance were as follows:
Mobile revenues
First-half 2017 was another period of robust growth for the Mobile business, with revenues advancing more than 10% year on year to €1,075 million. The number of net adds during the period was 440,000, reflecting the success of Free's commercial offerings. The main factors that drove the Mobile business's performance in the first half of 2017 were as follows:
Intra-group sales
Intra-group sales correspond to sales between companies from the Group's two different businesses and mainly consist of billings of interconnection operations. They are eliminated in consolidation.
Gross profit
At €1,307 million, consolidated gross profit was almost €150 million higher than in first-half 2016, representing a year-on-year increase of over 12%.
As a percentage of revenues, gross profit climbed 2.4 percentage points to 53.0%, driven by the sharp increase in profitability for the Mobile business which was achieved thanks to the improvement in the subscriber mix and an increase in traffic volumes carried directly on the Group's own network. Conversely, profitability for the Landline business contracted during the period, due to higher unbundling fees and the six-month impact of the TV by CANAL Panorama package.
EBITDA
Consolidated EBITDA advanced by 8.2% year on year to €875 million in first-half 2017 and the EBITDA margin widened by 0.3 of a point to 35.5%.
The main factors (both positive and negative) affecting EBITDA in the first half of 2017 were as follows:
Profit from ordinary activities totaled €430 million, up by nearly 20% on the first-half 2016 figure, partly due to the above-described rise in EBITDA.
Depreciation/amortization expense was stable year on year, coming in at €444 million in the first half of 2017.
Profit for the period
Profit for the period advanced 22% to €233 million from €190 million in the first half of 2016.
Cash flows and capital expenditure
In € millions | Six months to June 30, 2017 | Six months to June 30, 2016 | % change | |
Consolidated cash flows from operations | 864.5 | 792.5 | 9.1% | |
Change in working capital requirement | (46.9) | 23.9 | - | |
Operating Free Cash Flow | 817.6 | 816.4 | 0.1% | |
Capital expenditure - France | (722.6) | (858.9) | -15.9% | |
Income tax paid | (103.1) | (115.2) | -10.5% | |
Other [5] | (16.1) | (32.9) | -50.8% | |
Consolidated Free Cash Flow (excluding payments for 700 MHz frequencies, capex in Italy, financing activities and dividends) | (24.2) | 46.1 | - | |
Capital expenditure - Italy (including frequency purchases) | (57.8) | - | - | |
Consolidated Free Cash Flow (excluding financing activities and dividends) | (82.0) | (190.6) | 56.7% | |
Dividends | (25.9) | (24.1) | 7.5% | |
Cash and cash equivalents at year-end | 84.4 | 318.4 | -73.5% |
Consolidated Free Cash Flow
The Group kept up the brisk pace of its landline and mobile network rollouts during the first half of 2017, which pushed up its capital expenditure in France (excluding purchases of frequencies) by 16%, or more than €100 million, to €723 million.
The year-on-year change in consolidated Free Cash Flow mainly reflects the following:
BALANCE SHEET
The Group is not subject to any liquidity risk as a result of acceleration clauses contained in loan agreements entered into by Group companies or as a result of any breaches of financial covenants (ratios, targets, etc.).
At June 30, 2017, the Group had gross debt of €1,923 million and net debt of €1,769 million. It maintained its solid financial structure during the period and its leverage ratio was 1.0x at June 30, 2017. At the same time, it also had a very strong liquidity position.
The Group ended the first half of 2017 with €84 million in available cash and cash equivalents.
GLOSSARY
Alternative operator: An operator that entered the market subsequent to the incumbent State operator losing its monopoly.
Broadband and Ultra-Fast Broadband ARPU (Average Revenue Per Broadband and Ultra-Fast Broadband User): Includes revenues from the flat-rate package and value-added services but excludes one-time revenues (e.g., fees for migration from one offer to another or subscription and cancellation fees), divided by the total number of Broadband and Ultra-Fast Broadband subscribers invoiced for the period.
Broadband and Ultra-Fast Broadband subscribers: Subscribers who have signed up for the Group's ADSL, VDSL or FTTH offerings.
EBITDA: Profit from ordinary activities before share-based payment expense, depreciation, amortization and provisions for impairment of non-current assets.
Freebox Revolution ARPU (Average Revenue Per Freebox Revolution Subscriber, excluding promotions): Includes revenues from the flat-rate package and value-added services but excludes one-time revenues (e.g., fees for migration from one offer to another or subscription and cancellation fees), divided by the total number of Freebox Revolution subscribers invoiced for the period.
FTTH (fiber-to-the-home): Data delivery technology that directly connects subscribers' homes to an optical node (ON).
Gross profit: Corresponds to revenues less purchases used in production.
Leverage ratio: Represents the ratio between net debt (short- and long-term financial liabilities less cash and cash equivalents) and EBITDA.
M2M: Machine to machine communications.
Mobile services revenues: Mobile revenues excluding handset-related revenues (sales and rental).
Net adds: Represents the difference between total subscribers at the end of two different periods.
Services revenues: Total consolidated revenues excluding handset-related revenues (from handset sales and rental).
Total Broadband and Ultra-Fast Broadband subscribers: Represents, at the end of a period, the total number of subscribers, identified by their telephone lines, who have signed up for a Free or Alice Broadband or Ultra-Fast Broadband offering, excluding those recorded as having requested the termination of their subscription.
Total mobile subscribers: Represents, at the end of a period, the total number of subscribers, identified by their telephone lines, who have subscribed to a Free mobile offering, excluding those recorded as having requested the termination of their subscription.
Unbundled subscribers: Subscribers who have signed up for the Group's ADSL, VDSL or FTTH offerings through a telephone exchange unbundled by Free.
About Iliad
Iliad is the parent company of Free, the inventor of the Freebox, the first multiservice box on ADSL. Free is behind numerous innovations in the Broadband and Ultra-Fast Broadband access segment (VoIP, IPTV, flat-rate calling plans to multiple destinations, etc.). Free provides straightforward and innovative offerings at the best prices. The Freebox Revolution, the 6th generation of Freebox units, notably includes an NAS and a Blu-Ray TM drive. Free also offers the Freebox mini 4K, the first Android TV TM and 4K box on the French market. Free was the first operator to include calls from landlines to mobile phones in its offerings and also calls to French overseas departments (DOM). Since January 2012, Free has brought mobile phone usage within everyone's reach with straightforward, no-commitment offerings at very attractive prices. At just €15.99 per month for Freebox subscribers, the Free Mobile Plan includes roaming communications all year round from more than 35 countries (unlimited calls, texts and MMS as well as 25GB/month of 3G mobile Internet from these destinations) as well as unlimited 4G in Metropolitan France. As at June 30, 2017, Free had 19.6 million subscribers (6.5 million Broadband and Ultra-Fast Broadband subscribers and 13.1 million mobile subscribers).
Exchange: Euronext Paris | Market place: Eurolist A of Euronext Paris (SRD) |
Ticker symbol: ILD | ISIN Code: FR0004035913 |
FTSE classification: 974 Internet | Member of Euro Stoxx, SBF 120, CAC Next 20, CAC Mid 100 |
[1] Metropolitan France excluding M2M.
[2] Metropolitan France excluding M2M.
[3] Excluding promotions.
[4] Metropolitan France excluding M2M.
[5] Including interest paid.
This press release and all the financial documents of the 1H 2017 Results are available (PDF) on our website
www.iliad.fr/en
- Press Release,
- Management discussion and analysis,
- Consolidated accounts,
- Slideshow.