Optimum Communications, Inc. (OPTU) Q1 2018 Earnings Report, Transcript and Summary

Good morning. My name is Jodi and I will be your conference operator today. At this time, I would like to welcome everyone to the Altice NV Q4 2017 Results Conference Call. [Operator Instructions] Thank you. Mr. Nick Brown, Head of Investor Relations. You may begin your conference.

Hello, everyone, and welcome to Altice’s Q4 2017 earnings call. In a moment, I’ll hand over to Dexter and Charlie, who would take you through the presentation. As today’s presentation may contain forward-looking statements, please read the disclaimer on Page 2 of the presentation. The slides are available on the website and a replay of this call will be available for the next month. And with that, it’s my pleasure to hand over to Altice’s President, Dexter Goei.

Thanks Nick. Good morning or good afternoon everyone. Maybe if we just jump into slide three, where there’s the key takeaways for 2017. After several years of acquisitions, 2017 was the year of integration and execution for Altice. In terms of financial for the Altice NV Group, revenue growth and margin expansion have been driven by the strong performance of Altice USA. We are in a turnaround face in Europe, having completed a substantial restructuring in France in 2017 at particular. And we ended the year better than we thought we would in France with better subscriber of KPIs and revenues down about 5% in Q4, rather than 7% decline that we guided to in January. We have made a significant investment in our infrastructure include expanding our fiber to the home and 4G mobile coverage and the accelerated pace in Europe and starting a fiber rollout in the U.S. We’ve prepared and launched innovative new entertainment platforms to improve our service offerings in the U.S. the Altice One and in Portugal with Sophia. We’re rapidly growing in the media and advertising space which is our fastest growing businesses in the group today. We’ve implemented a new management structure. And finally in the last year, we have further strengthened our capital structure with a substantial amount of refinancing activity, as well as simplifying the group by listing Altice USA in taking our ownership at SFR and France to 100%. On slide four, just as a reminder of the additional steps we’ve taken to further simplify the group with the proposed separation of Altice USA from Altice NV, which will result in two independent groups. For the full details, please refer to the presentation we gave back an announcement in January, some of which we’ve also included in the appendix of this presentation. But to summarize the two groups post-split, Altice Europe which represents about 65% of Altice’s revenues before the split will include essentially all of the operations outside of the U.S. including Altice France, Altice International and then newly formed subsidiarity Altice TV. Altice USA is just the separately listed company that exist today with a split ensuring that U.S. capital structure and capital allocation decisions are independent of any Europe related consideration. We’re still on track with the original timeframe and expect the split to become effective in the second quarter following regulatory and Altice NV shareholder approvals. Altice USA already reported in its fourth quarter and full year results which I’ll briefly summarize in a few minutes. But first, I’ll hand it over to Dennis to go through Altice Europe’s strategy and recent results.

Thanks Dexter. Slide six sets out our plan for Altice in Europe, and the operational and financial turnarounds in France and Portugal under the leadership of the new local management teams is at the core of our strategy. We have empowered new management teams to implement the Altice model with the upper side of Altice founder Patrick Drahi, these teams in France and Portugal are very energized and very motivated based on the changes that they have already been able to effectuate since November. We have intensified our focus on improving customer service to drive better subscriber KPIs. And we are already seeing progress here. We will continue to invest in best-in-class infrastructure in line with Altice’s Europe position as number one or number two operator in each market. And we plan to monetize our content investments through various PayTV models and grow advertising revenue further. And lastly, we have a clear plan to further strengthen our long-term balance sheet position in 2018, as we execute on our non-core asset disposal, which are on track. Moving to slide seven, you can see Altice NV financials pre and post-split of Altice USA. As you can see for Altice NV pre-split, cash flow growth in 2017 has been driven by strong Altice USA performance. If you recall, after the split, Altice Europe will be structured in three distinct operating units with new parameters consistent with what we presented in January, increasing accountability and further transparency. Details of these new reporting parameters compared to the old parameters are in the appendix of this presentation, but to summarize the three units in Europe are Altice France, that now includes SFR Telecom, SFR Media, French Overseas Territories and the support services units. Altice International now includes Mayo in Portugal, Hope in Israel, Dominican Republic Teach and the associated support service units integrated in their respective markets. And lastly, Altice TV includes the Altice content division, major sports rights and other premium content rights. And lastly, the new parameters exclude the international wholesale business, which we are selling, and the disposed asset Green in Switzerland. In terms of financials, for Europe post-split, for the full year in 2017 revenue of €14.7 billion and operating free cash flow of €2.5 billion were relatively stable prior to 2016 as we sustained investments in infrastructure and contents to drive further growth. On slide eight, we set out our strategy for France. We are very clear on what we need to be done to return Altice France to growth with a new management team tasked to fully implement the Altice model. Core to the strategy is reducing churn, which will allow us to grow our customer base as we do not have any issue though volume of sales we have in France. Instead of more than price increases which aggravated churn previously, we are now monetizing content by upselling premium subscribers with new bundled structures that we have introduced. We are already seeing a decent success of our gross additions paying more for this premium content bundles. And we will maintain our investments into the best network quality and coverage for fixed and mobile services. Following greater operational focus, we have already started seeing substantial improvements to key customer metrics that we track, some of which we have summarized on the right side of this slide. For example, we have significantly taken down our pre-insulation churn by more than 10 percentage points by improving various processes including enforcing SLAs on our support surface suppliers more strictly. We’ve also made significant progress in terms of incident monitory, also maintaining our detection processes allowing us to fix any issues much faster, notifying our customers where appropriate. As a result, churn has come down from a peak of mid 20s in both fixed and mobile, but we have scope to do much better. This will result in better KPI trends, starting already in the first quarter. Moving to slide nine and the financials on the new parameter for France. Revenue declined slightly to €10.8 billion in 2017 and I will go through the components of this in a moment. EBITDA grew just over 2% to €4.2 billion with margins expanding almost three percentage points reflecting cost savings being realized from the voluntarily plan, which is now complete. Operating free cash flow reached €1.9 billion in 2017 with 7% year-over-year with CapEx at peak levels at €2.4 billion. This amount of cash flow makes Altice the strong second largest player in France allowing the company to sustain higher investments in upgrading networks and providing premium content services than the smaller players in the market. After the term, reorganization and the creation of the new separate Altice TV subsidiary, about €300 million of pay-TV concert expense will remain in France in 2018, including the minimum content payment being made to Altice TV. Slide 10 breaks down the components of Altice France revenue trends. On the new parameter, total Altice France revenue declined minus 1.6% year-over-year in 2017 and minus 4.5% in Q4. On the old parameter as Dexter said, the 5.4% decline in Q4 is better than the 7% we guided in early January, mostly with better momentum on the subscriber side and better wholesale revenue expected, as we close the quarter. I will go through some more of the details for each segment in the following slides, but on a high level, Q4 was impacted by drags on B2B and low margin wholesale and equipment revenue declines. B2B revenue declined 10.5% in Q4 2017. Impact is buyback book price reductions in the first half of 2017. But following changes to the B2B management team and pricing strategy, the underlying order book now has improved, which is expected to support and improve B2B revenue trend later in 2018. Slide 11 shows Altice is leading the market in terms of network upgrades, which is being consistently recognized by independent third-parties. SFR now covers 95% of the population with 4G services. And for the second year in a row, the ANFR confirmed SFR was the operator activating the largest number of new 4G sites, as you can see on the left. On the right, you can see SFR reinforced its leadership for high-speed broadband services in France, reaching nearly 11 million fiber homes passed at the end of 2017 with 550,000 additional homes passed in Q4, including 302,000 new FTTH homes passed, which is the fastest ever quarterly deployment of FTTH. Slide 12 focuses on our B2C mobile postpaid trends. The left-hand side of this slide shows we added 80,000 new postpaid customers in Q4, which is the best quarterly performance in two years and the fifth straight quarter of growth. This is a significant improvement compared to the 33,000 net additions in the same quarter last year, supported by our network improvements. Our postpaid ARPU decreased slightly year-over-year to €25.3. Mobile B2C service revenue slightly declined in Q4 minus 1% with our improved customer trends, partly offsetting the decline in ARPU. Total mobile B2C revenue declined minus 2.9%, which as I mentioned before was negatively impacted by the decline in load margin equipment’s revenue. On slide 13, we show SFR’s B2C fixed business trends. We had the best fiber net adds in two years, thanks to improved processes, more attractive offers, and our new retention policies reaching 69,000 net adds in Q4. The DSL trend is in line with prior quarters. As I said before, our churn is still too high for both our fiber and DSL customer bases in Q4. But as we are going to each issue one by one with much greater attention to detail, we are already seeing significant improvements. Our ARPU slightly declined year-over-year to €36.5, but remember our fiber product is being sold at a premium to our DSL product, by increasing our fiber base, we are both saving on unbundling fees and supporting ARPU growth. And finally, we are now upselling new customers through our new premium content packages is another support for ARPU. Slide 14 illustrates how NextRadioTV has had a record year in terms of financials, growing revenue 25% and EBITDA almost 50% in 2017. This growth has been supported by the highest audience share growth in free to air in France, supporting higher exercising revenue. This includes record audience share for the top TV shows on BFMTV, including the first round Presidential election debates, which had 28% national audience share, making it the number one watch channel at this time. You can see in the chart our three main channels have grown their combined market share on an annual basis to 6% in 2017, compared to about 2% five years ago. Over the same period, our largest peers have been losing market share. NextRadioTV has been a great acquisition for the company, and we remain excited about the prospects to increase audience share and revenue further. On slide 15, we show our newly formed Altice TV division. This is division separate from the rest of Altice Europe where we bring all our premium content rights and businesses into one group with its own P&L. The main purpose is to maximize on the decision of these content rights through flexible models. Altice France has transfers contracts and assets through Altice TV, and is now a new wholesale customer of Altice TV entering into a revenue sharing contract with a minimum guarantee payment, which is significantly lower if Altice France has to continue to pay a 100% of the cost of the rights by itself. Altice France is still distributing premium TV content to its customers, including SFR Sports and Altice studio channels, but these are now being upsold to new customers rather than build, build automatically into triple-play offers. Remember, as part of the new wholesale contract, Altice France will pay €300 million break fee in 2018 to Altice TV. And in addition, the business is funded by a €275 million of proceeds from the Altice USA cash dividend. So this division is properly capitalized even without any further wholesale contracts. There is a large existing pool of revenue and gross margin in the French market for premium TV, and we have not got anything near our fair market share of this yet considering the rights we will have online from this year onward. This will include an extension of OTT distribution of our channels as well. Moving to Portugal, on slide 16, our strategy here is clear and very consistent with France. The new management team focuses on driving rapid operational improvements. We are the leading fiber operator in Portugal, and well on track for our target to extend FTTH coverage nationwide. Our competitors are having to follow us now by widening fiber coverage as this is really the best technology. We also have the number one mobile network and we are making further investments here to improve the quality of our service. Altice Labs continues to support new innovations, including the launch of new entertainment platform called Sofia and Media Capital will support our expansion into the media segments in a very similar way to NextRadioTV in France and we remain committed to go through the regulatory process here. Slide 17 breaks down the components of Altice Portugal revenue trend, on the new perimeter total Altice Portugal revenue declined minus 1% year-over-year in 2017 and minus 1.8% in Q4. On the old perimeter, revenue declined minus 2.7% in 2017 and minus 5.2% in Q4. So you can see selling the international wholesale business will reduce some of the volatility in revenue performance here. Total B2C revenue declined 5.9% in Q4 due to the prior fixed customer losses and because we did not repeat the rate event which has happened in Q4 2016. Given the churn we saw from this last rate event, we are being much more cautious with our pricing strategy focusing right now more on reducing churn and improving our subscriber momentum. As we speak, our renewed operational focus is delivering lower churn and better KPI momentum already. B2B revenues returned to growth in the fourth quarter plus 0.7% since we continue to retain top corporate customers go in SMB and SOHO segments and seeing strong growth in ICT and cloud services, although this is at the lower margin lower margin than some of the legacy fixed revenue we are losing. And lastly, growth in the Other segments is driven by Altice Labs, offsetting decline in wholesale revenue. Slide 18, you can see how our mobile network investments is supporting growth in our mobile postpaid customer base with 33,000 net additions in Q4 2017 compared to losses last year. We continued to expand our 4G coverage as well investing into Single-RAN and two carrier aggregation technology to further improve network quality. On slide 19, on the right side, you can see we continue to roll-out fiber at an accelerated pace, now reaching over 4 million homes passed. As we have extended our addressable market here, we saw the highest number of fiber net additions ever in the fourth quarter 43,000. This was helped by the launch of the 1 gigabit broadband speed in September. As we are now no longer have a competitive disadvantage in any area we have been able to reduce churn to the lowest levels ever by the end of 2017 and the churn is now well below 10%. This has supported the return to fixed customer growth with 6,000 unique customer adds in the fourth quarter, which is the best performance in the last five years. And finally, this has also allowed MEO to capture over 60% of the total TV market net additions, establishing leadership here again for the first time in four years. Slide 20 is a brief overview of our latest innovation in Portugal, a new entertainment platform called Sofia launched earlier this week. This month, we are upgrading all existing customer video experience with a new user interface organized by content rather than channels. This includes seemingless integration of linear and non-linear content, where the personalized recommendation engine, which is using a highly sophisticated artificial intelligence and self-learning unit. We are branding this device, Sofia as it is associated with an AI powered humanoid Sofia, who is also supporting our marketing campaign. We’ve also introduced a new state-of-the-art wireless video set-top box for all fiber customers. This has a cloud-based DVR, Port A and since its wireless connecting over Wi-Fi to the customers broadband routers installation is much easier and cost effective. Lastly, we are deploying a new digital customer experience, including self-care capabilities for customers to manage their own service offerings. This includes easy to use all applications that should mean customers don’t need to contact call centers as much going forward. On slide 21, I just wanted to give a quick update on the excellent performance of our latest acquisition, Teads, a leading digital video advertising business. This is the fastest growing asset in Altice, sitting in Altice International with revenues of 50% and EBITDA doubling in 2017. Recall, the company can now leverage data from Altice telecom businesses to deliver people-based targeting, including set-top viewing, data information, enriched by customer data, allowing us to track buying behavior. This allows Teads to charge premium prices and generate premium prices and generate higher advertising revenues. So this is another great acquisition for the group and we remain very excited about the opportunity to grow this business further. Now I will hand back to Dexter to run over a summary of Altice USA performance.

Thanks Dennis. Just turn to Page 23 for the Altice USA 2017 key takeaways. In 2017, revenue grew 3.2% with 25.8% growth in operating free cash flow. This was underpinned by growth in residential revenue as we grew both customer relationships and ARPU. We saw solid growth of business services revenue up 5.5% with SMB growing above this level. Growth of our advertising business is being supported by investment in multi-screen targeted audience capabilities, and as we continue to realize efficiency savings, we’re seeing strong free cash flow generation and deleveraging which will be further supported by tax reform. Lastly, we have made significant investments in our customer experience as well as strategic decisions to improve our products and services. This includes expanding the availability of ultrafast broadband speed, launching our new integrated entertainment platform Altice One expanding our content lineup starting to roll out of state-of-the-art fiber network and signing a full MVNO agreement to be able to launch mobile services for our customers. On slide 24, this breaks down the components of our total revenue growth, which was up 2.6% in Q4. A residential business which is just over 80% of total revenue grew 1.8% in Q4. Business services’ is growing mid-single digits although if you just look at SMB, it’s growing faster than that at 7.5%. And our advertising business is performing really well, mainly driven by our investment in targeted advertising capabilities and strong market position and data analytics. Advertising grew 3.8% in 2017 with an acceleration in growth in Q4 to 9.9%, as we start to lend some much larger contracts here. On Page 25, Altice USA margin progression, we summarize what’s driving our free cash flow growth. We’ve reported at 44.1% adjusted EBITDA margin in Q4 with an operating free cash flow margin at 34.5%. If you look at full year 2017 figures on the left, our reported earnings of operating free cash flow margin of 32.3% is substantially higher than where we were when we started in 2015 at 17.3% on a pro forma basis. We have simplified the organization and of more we can do here to take margins even higher, while maintaining investments in all the new growth areas. And with that, I’ll hand this back to Dennis to take up the financial review.

Thanks Dexter. Slide 27 shows the pro-forma consolidated financials based on the new parameter, post-split for Altice Europe as we went through previously. In the appendix, we have given the financials for Altice NV based on the old parameter pre-split, where you can also see that we achieved our 2017 guidance for group revenue, EBITDA and CapEx. If you compare the slides, you can see under the new parameter, the amounts within the other corporate and elimination lines have reduced substantially as part of our goal with the reorganization to improve transparency and accountability. This has also included a substantial reduction in intercompany transactions. Others now is only very minor, we’ve broken out each separately, and overall corporate costs will be lower for 2018. Slide 28 provides an overview of the European pro forma capital structure, including the separate Altice France and Altice International debt silos, the Altice with core debt, Altice Corporate Financing and the new separate Altice TV silo. Pro forma for the proposed split and the special cash dividends received from Altice USA, the reorganization and signed M&A transactions, Altice N.V. net debt position was reported at nearly €30.8 billion as of Q4 2017 with a pro forma net leverage of 5.3 times on the last 12 months EBITDA. Recall, Altice Europe will use €625 million of its €900 million proceeds from the Altice USA cash dividend to prepay the Altice Corporate Finance facility, and the other €275 million will retain on balance sheet to support the capitalization of the Altice TV provision. Post-split, Altice N.V. will also retain a stake of 3.4% in Altice USA. Slide 29, the total maturity profile for Altice Europe’s pro forma capital structure post-split. There are no major maturities at SFR until 2022, and no major maturities at Altice International until 2023. And now, the Altice Corporate facility that is reduced, matures in 2021. In addition, our available liquidity is €3.6 billion, our weighted average life is over six years at an average cost of 5.5%, and more than 80% of our debt is fixed interest rate. On slide 30, I just want to give you an update on our non-core asset disposal program. We closed the sale of our Swiss business Green and we just agreed the sale of our International wholesale voice business, which has been a nice clean up trade. The sale process for our DR business and both the French and Portuguese towers are well advanced and in full execution. All these three assets are of the highest quality and have raised significant interest. Altice DR is the major independent telecoms operation in the region with a very strong market share, growth prospects and cash flow generation. Both tower portfolios in Portugal and France presents truly special investment opportunities. We are looking to sell a 100% of our Portuguese towers and we are planning to sell 40% to 60% stake in our French tower portfolio. These tower deals in Portugal and France together will raise proceeds in excess of €2 billion. We are targeting signing all of these three transactions in the first half of 2018 with a view to closing as early as Q3, depending on specific process. And finally on slide 31, we have outlined our guidance for 2018 for the full year 2018 Altice Europe post-split on the new parameter is expected to generate an operating free cash flow of €2.4 billion to €2.6 billion, excluding the Altice TV segment. As previously announced, Altice France is expected to generate operating free cash flow of €1.6 billion to €1.7 billion, which includes approximately €300 million of annual pay-TV content expenses and with plus €200 million of revenue drag related to the changes to the VAT law in France. On a like-for-like basis, in 2017 Altice Europe, excluding Altice TV generated €2.8 billion of operating free cash flow and Altice France on the new parameter generated operating free cash flow of €1.9 billion in 2017. This implies about a €200 million to €300 million of the variation we are expecting in 2018 versus 2017, for Altice Europe in our guidance range can be explained just by France, which would take you to the midpoint of our range of €2.5 billion, keeping everything else equal. For Altice USA, we expect total revenue growth of around 2.5% to 3% compared to 2017, and likely to be more second half weighted as we have mentioned a couple of weeks ago during our earnings call. We expect our annual CapEx to be around €1.3 billion in 2018, including all of the new growth projects we have outlined. Over the medium to long term, we are confident we can further expand both Altice Europe and Altice USA adjusted EBITDA and cash flow margins. And with that, operator, we are very happy to take questions.

[Operator Instructions] Your first question comes from the line of Dimitri Kallianiotis of Redburn. Your line is open.

Regarding the slide 13, you show an improvement in terms of net additions and you say that you were close to breakeven in December. I just wanted to ask you regarding Q1 2018, should we should we expect net addition in terms of the broadband base to be flat in France. And what sort of impact potentially on ARPU? And then regarding CapEx in France, as you mentioned it was record high last year at €2.4 billion. Should we expect that level to stay - to remain constant as you accelerated the fiber rollouts. And if you could tell us what sort of fiber - how many homes you expect to add in 2018? Thank you.

I think on the - like I said we are very confident that we are driving a better KPI performance in the first quarter. I think we ended the year very strongly by only starting to adjust our processes and operating the Altice model in November. So we continue to see strong benefits in the first quarter. So you can see that the KPIs will improve. I think we can also say that churn level has already come down to below 20%. So we are making very rapid improvements to the operating underlying dynamics as we laid-out. We said some of these things don’t take a long time to fix and you know vast majority has been fixed, there’s still a lot to be fixed, but you will see a very strong Q1 performance also on the fixed side in France. I think on your CapEx, I think we are having a lower CapEx in 2018 versus 2017. So CapEx is still trending down, we clearly no longer have the mobile upgrade CapEx, which was kind of always a special item, I think in 2016 and 2017 in the CapEx numbers in France, which is not an item we have in 2018. So CapEx is lower than the €2.4 billion in France for 2018. And on the fiber, I don’t think we’re going to be disclosing how many we are planning to add specifically, but it’s very key for us that we continue to be the fiber leader in France, and we will clearly make investments and progress in our fiber build out to continue to have leadership there.

Your next question comes from the line of Robert Grindle of Deutsche Bank. Your line is open.

Good to hear of the progress on your asset disposal plans. My first question is, why sell all of Portugal and just I think you said 40% to 60% in France, is that about the size of the French business versus Portugal, or is there something about France you wouldn’t necessarily want to lose control over? And then just on the Dominican Republic business, it seems like there are a couple of obvious telecoms interested parties, but are you seeing interest from sort of non-telcos, either local conglomerates or private equity? Thank you.

I think on the tower side, it’s clear that the size of Portugal makes it amenable both for strategic and finance buyers at 100%. And as you correctly noted, the size of France does create issues in terms of if you were to sell 100% in their tax considerations as well. So I think the structuring of France is not fully complete as to what we’re going to end up doing, but it’s clear that it’s unlikely for us to be selling a 100% of the French Tower business. On the Dominican Republic yes, financial buyers are interested, local groups interested as well, which probably don’t have the size to do the entire transaction, but team up with strategics or with financials.

Your next question comes from the line of Andrew Lee of Goldman Sachs. Your line is open.

I just had a couple of questions. Firstly, just your thoughts on taking Altice NV private after the U.S. spin-you’re your share price implies the market cap in Europe is very low and therefore likely volatile, and you’ve stated you have no major M&A plans in the medium-term, so your thoughts around that. Secondly, can you had an update on digitalization progress in Portugal, honestly, it gives the same like France in terms of penetration, when you’re trying to launch Chatbot and if you could give us the stats you can give us calls coming to the call center? And then just the third one, if it’s okay, on Portugal. Why when the subscriber mix of fiber is so positive is the ARPU falling, what’s the - is there a pricing issue there and any kind of color that will be great? Thank you.

So I’ll take the first one, I’ll hand the other two to Dennis. On the NV side, I don’t think we have any view on taking Altice NV private, that’s clearly not in our radar screen today. I think we’re very much focused, as you’ve seen both in the U.S. and in Europe on the operational matrices of the businesses and making sure that the businesses are properly capitalized and now in the right growth trends. I think you know the market will take care of itself in terms of what, what Altice Europe and Altice U.S. there worth and then at that point in time at some point you know maybe that’s a relevant question, but that’s not today on the radar screen.

I think on, on Portugal Andrew, I think you know we are seeing, I think the classic development and rollout, I think of the Altice model where we invest in fiber infrastructure whereby we are reducing churn as our fiber churn in Portugal is well below the 10% today which I think is also good. So we’re no longer planning to take the price increase in Portugal and we’re no longer disrupting our subscriber base as a result. So that is clearly you know supporting the lower churn. I think that also is impacting I guess our ARPU comparison versus last year as we, we no longer have done a rate event in the fourth quarter as we would normally would, would have planned. But this is also the first time we’re fixed positive and that is clearly a momentum that we like to see as we’re no longer losing market share but we are winning market share and we’re winning it with the right technology that has lower churn. So it has a lot of less operating cost associated with it because lower churn is lower operating cost and also managing a larger cyber footprint will also drive operational cost down vis-à-vis some of the legacy infrastructure that we still have. So I think that is the investment case that is planning out in Portugal and one of the elements of churn coming down is clearly that we’re no longer taking rates. But we’ve also clearly optimized processes as you’ve seen in the presentation on the slides on France, a similar model we are deploying in Portugal. So, we also see the number of calls in Portugal coming down significantly compared to earlier in the year and during the summer.

Your next question comes from the line of Vivek Khanna of Deutsche Bank London. Your line is open.

Just a couple of questions, if I may. First of all, on SFR. I was just wondering when you said that December fiber - December as opposed to breakeven. I’m just wondering what was the real driver for that? And again, going forward looking into next year, what sort of price pressure do you think you could - you could envisage on your base on fiber in order to improve the KPI trends? The second thing with regard to France itself, I mean, would it not be fair to assume an acceleration in fiber net adds going forward in the course of 2018, largely as you benefit from the built, which you’re pursuing as we speak? And then just finally just on the corporate facility, which is now very much at least a part of it $1.7 billion gross is part of Europe. I’m just wondering if you could provide us a little bit of indication as to what your plans are with tackling that over the next going forward? Thank you very much.

I think on the fiber ARPU and the dynamics, I think, most of the improvements in the commercial KPIs here is the reduction of churn that is one of the fitting net additions on the fiber side that will become better for sure in the first quarter and onwards. As I know, the churn is already coming down significantly, which translates right down to the net adds line. So I think we feel extremely confident around the trend. I think if you look at our fixed ARPU, you rethink our fixed ARPU is in line on the base towards the end of the year with our main competitor in the French markets. So we do not feel that we carry a base ARPU which is higher than our main competitor here. So I think we feel pretty good about the fiber business model and it’s clear that building out more fiber, you have more fiber to sell. But for us, it’s also - most of the growth probably sits in the churn reduction and we think that you see that we have a churn on the fiber in Portugal below 10%. That is clearly the longer term target for France, I think more intermediate I think we’re targeting mid-teens in terms of churn. So we can still see significant momentum by achieving that in the short run and then there’s further upside longer term to the churn, now adding more fiber footprint we’ll further accelerate this dynamic. I think on the corporate facility it’s clearly, it’s being reduced right now to €1.6 billion, it’s a maturity of 2021, so we have clearly a number of years before this has to be repaid, so there’s no immediate repayments needed. So, I think we have time on our hands to deal with that and focus really on improving the operations here.

So, again, a quick follow-up, I mean you’ve got a €130 million of cash sitting out there, and plus another €200 million of cash sitting at the NV facility. So, clearly from a liquidity perspective, you can comfortably cover the interest on the facility until that gets refinanced. Just a quick follow-up question. If I remember correctly, you do like Altice here and NV does have a small remaining stake in Altice USA. I was just wondering has that been pledged or is there a collateral to something else or for options or whatever or is that sort of unencumbered asset, which you could in theory monetize whenever you choose to do so?

If it’s not pledged this stake where we don’t feel the need, that it needs to be monetized either, but it’s just an asset that was less practical to dividend out as part of this big dividend out of the U.S. business as this stake supported the carry unit plan of the U.S., so that’s why it remains with us, but it’s not pledged and it’s an asset for the group that we carry.

Your next question comes from the line of Nicolas Cote-Colisson of HSBC. Your line is open.

On the towers disposals, what are you expecting in terms of what are you expecting in terms of EBITDA impact from this impacted towers, if you can take us through the math that leads you to service towers that would be great? And of course it is a question, a simple one actually on Altice TV owned content. So, how much do you think you can recoup from your initial investments in sports rights? Or another way to ask the question, do you think you have the ability to get your money back?

I think on tower site, it’s really too premature to calculate, I guess what the impact on EBITDA would be, that clearly would also depends I think what the commercial offer is that we get on both tower sites. It’s clearly a highly competitive process, so we expect to get a very good agreement. And as a result, more modest impacts on the EBITDA. I think it’s also fair to say that on France, as Dexter said, we are evaluating, selling between 40% and 60% of the tower portfolio that we have in France, but selling only 40% would clearly have no impact on consolidated EBITDA and selling a majority stake clearly would have. So we will be able to play this out when we are closer to agreeing these deals. But it’s clear that no matter how you look at it, it’s going to be deleveraging the group as we are planning to do.

And then on the TV side and the content there, we feel that we - with the content rights that we have, we feel that we can capture gross margin that is associated with these rights that is already in existence in the French market and it’s more a question how those revenues can be transferred into Altice TV, and we’re looking at various ways how that can be achieved that we’re fully confident that this is something that we can do and that we will actually make money on this business now if you start up this business, you will never make money in the first year. But we think the French market is used to pay for premium TV. There is premium TV revenue and gross margin available in the market, so we are confident, we’re going to be making money on this side of the house and will probably take you closer to the summer as we are finalizing our go-to-market strategies with respect to the content that we have in more detail.

Can I ask just a very quick follow-up. You mentioned as an answer to a previous question that your broadband ARPU was in line with the rest of the market. How do you account for promotions, is it in cost or is that netted from the revenue?

That would be method netted from the revenue. And remember I didn’t say - I did say that our broadband ARPU is in line with our main with the largest competitor in the market because clearly people have different ARPUs I guess, but we are more at the premium end of the market together with the largest competitor I guess.

Your next question comes from the line of Frederic Boulan of Bank of America/Merrill Lynch. Your line is open.

If I could come back on the questions around free cash flows, so if you could took about your expectations for free cash flow in 2018 and maybe beyond the lower free cash flow guidance that you provide, in particular on the TV piece that was announced from a median negative EBITDA minus CapEx or some other cash highlights below that line? I don’t think you have reported full free cash flow yet for 2017, but if could get a sense on other items working cap, interest, taxes in 2017 and dynamics into the next year? And overall, do you expect to have positive free cash flow generation for Altice Europe in 2018? Thank you.

I think on the TV side of Altice TV, I don’t think we give specific guidance at today’s call with respect to 2018. If you look back to our January presentation, I think you see a commitment schedule of all the content that we own in that unit, which is about 1.8 billion of content commitments that expire over the next five to six years. So that gives I guess an indication of what the cash out or the cost we carry in the unit and we’re going to be giving you more revenue guidance on this unit as we get closer to the summer. I think we can be a bit more explicit, how the monetization strategies are unfolding in that unit. I think on the other below operating free cash items for 2018, we clearly have to pay at the France level €500 million of restructuring cost out to at the employees that accepted the voluntarily relief program. This is predominantly in the first six months of the year. Another item that we still have is the last spectrum payment of around €170 million in France in the fourth quarter of 2018 is in over below the line item. I think on Europe, we see cash taxes around $300 million to $350 million for 2018. And then, I think that we have still a pension amortization in Portugal, which is probably around $120 million or so as in special cash item. And as you see, I think we have given the average cost of the interest in the presentation, which is around 5.5% for Europe, so you can calculate our interest bill from there.

So I mean we’ll - I guess we’ll run the numbers, but it is leading to a positive number or I guess this year will be a year of deleveraging, I mean that we still need to do the math obviously?

They are unique. I think on France, you will see - there is no positive cash in France this year because of all the one-off items. I think Altice International clearly remains cash flow positive.

Your next question comes from the line of Jon Dann of Royal Bank of Canada. Your line is open.

It’s two questions. The first one on the broadband figure for the first quarter, are we based on the commentary, are we to expect, I mean it’s already the 16 of March, are we to expect a, a sort of positive figure for, for the first three months? And then secondly it’s sort of going back to the guidance of you get toward four times net debt EBITDA. I mean is that something that can be achieved by end 2019? And if you could provide, I think you know it was useful for the cash flow bridge, but could you just give us a rough bridge to net debt at the end of 2018 including that ballpark disposals, ballpark cash outflows, I mean I think you mentioned pensions on the call?

I don’t think we want to guide I think what the impact is of the disposal program and the numbers as you can imagine these are competitive processes that we are running. But I don’t think we want to prerelease some numbers which might be conservative vis-à-vis the numbers we will be able to achieve. So I think we’ve guided I guess that we’re going to be getting at least €2 billion for the towers, people can put a multiple I guess on the DR business that has a strong free cash flow growth profile and then you can do the math. We clearly feel that we would like to de-lever with these disposal programs around half a churn, I would say because there’s a meaningful reduction for the leverage of the group. I don’t think I can give you guidance when we will achieving the four times net debt, as we’re only giving guidance, I guess on operating free cash flow and we’ve just given you a broad outline of the other components. It’s clear that it will not likely be in 2019. And I think on the broadband ads, I don’t think we want to prerelease our Q1 numbers, but you can see from the tone of the call that we are extremely confident that we see our model working. It’s also good to see the energy and the motivation of both management teams that are being put in place in France that is step change difference from 12 months ago, where in France we were managing a big employee restructuring. Now they see their commercial and operating momentum is back in the organization. They feel fairly more proud of what they are achieving. So you can probably guess from my tone that we are looking forward to report our Q1 numbers for France.

And this concludes today’s Q&A portion of the call. On behalf of Altice, I would like to thank you for joining. And this concludes today’s conference call. You may now disconnect.