Altice Europe steers steady course in Q3 2020

French operations see return to EBITDA growth in the third quarter after Q2 decline.

Anne Morris, Contributing Editor, Light Reading

November 20, 2020

4 Min Read
Altice Europe steers steady course in Q3 2020

Altice Europe, owner of SFR in France and MEO in Portugal, was able to report a reasonably solid performance in the third quarter as it continues to navigate its way through a difficult 2020.

Group revenue grew 3.2% year-on-year on a reported basis, reaching €3.77 billion (US$4.47 billion). In its biggest market, France, revenue rose 4% to €2.74 billion ($3.25 billion), while in Portugal it rose 0.9% to €541 million ($641.5 million).

Total adjusted group EBITDA rose 5.1% to €1.48 billion ($1.75 billion). Notably, EBITDA in France rose 2.8% to just over €1 billion ($1.18 billion) after falling 1% in the second quarter of the year. MEO in Portugal also returned to revenue and EBITDA growth in Q3 2020.

Figure 1: Staying the course: Altice's billionaire founder Patrick Drahi is pushing ahead with plans to take the company private. (Source: Ecole polytechnique on Flickr CC 2.0) Staying the course: Altice's billionaire founder Patrick Drahi is pushing ahead with plans to take the company private. (Source: Ecole polytechnique on Flickr CC 2.0)

Group capex amounted to €818.4 million ($970 million) while consolidated net debt at Altice Europe was still a hefty €28.9 billion ($34.27 billion) at the end of September.

Patrick Drahi, the billionaire founder of Altice, described Q3 as a "good quarter" with robust performance and net gains in fixed and mobile in "most of our geographies" although "in France, it was a bit weaker than our competitors," he said during a conference call.

Malo Corbin, Chief Financial Officer, explained that SFR had not followed some of the more aggressive pricing tactics of rivals in August and September, preferring to stay "focused on value."

What about 5G?

The number of mobile subscribers in France stood at 15.85 million by the end of the quarter, rising by only 25,000 net new users during the July-September period.

This was down on the 99,000 added in Q2 2020 and 234,000 added in Q3 2019. At the end of Q3 2020, Altice France had passed 18.8 million homes with its fiber network, up by 1.8 million compared to the second quarter.

In the full year 2020, the group expects to accelerate residential revenue growth in its key geographies and grow group revenue and EBITDA.

In the mid-term, the group is targeting organic free cash flow of more than €1 billion. It also aims to reduce debt, with a target leverage of 4.0x to 4.5x net debt to EBITDA.

Altice Europe did not reveal a launch date for 5G services in France, merely noting that it recently acquired 80MHz as part of the allocation of 5G frequencies in the 3.4-3.8GHz band.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

It said SFR would "be able to offer an optimal 5G experience to its customers," and pointed to its 5G trials in Toulouse, Nantes and Velizy (Paris).

In Portugal, regulator ANACOM currently expects the 5G auction to start on November 21, 2020, with the allocation of spectrum rights scheduled for Q1 2021.

In Israel, meanwhile, Hot acquired a 5G license in Q3 2020 and said it has now deployed 250 5G-capable sites.

Drahi buyout still in progress

Drahi is currently in the process of taking Altice Europe private, offering €2.5 billion ($3 billion) to buy out minority shareholders of the telecoms company.

The group said only that Altice Europe and Drahi-controlled Next Private "continue to make good progress on the preparation for the offer and expect to be able to make a public announcement on the offer soon."

In October, hedge fund Lucerne Capital Management said the offer is opportunistic and significantly undervalues the telecoms company.

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— Anne Morris, contributing editor, special to Light Reading

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About the Author(s)

Anne Morris

Contributing Editor, Light Reading

Anne Morris is a freelance journalist, editor and translator. She has been working in the telecommunications sector since 1996, when she joined the London-based team of Communications Week International as copy editor. Over the years she held the editor position at Total Telecom Online and Total Tele-com Magazine, eventually leaving to go freelance in 2010. Now living in France, she writes for a number of titles and also provides research work for analyst companies.

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