Also in today's EMEA regional roundup: Three UK takes earnings hit; Veon battered by currency headwinds; Vodafone bags Liberty assets.
Altice Europe hailed a "turnaround" in France as results for its second quarter showed 3.8% growth in revenues, to about €3.6 billion (US$4 billion), compared with the year-earlier period, and a 9.8% increase in adjusted EBITDA (earnings before interest, tax, depreciation and amortization), to about €1.4 billion ($1.6 billion). Costs appeared to fall thanks to a renewed focus on customer service at the French business, with the volume of calls made to customer call centers dropping 15% in the second quarter, compared with the year-earlier period. In a statement, company founder Patrick Drahi said the improvements would help the business to reduce net debts, which at €30.1 billion ($33.3 billion) -- and about 5.3 times annual EBITDA -- remain a source of concern to investors. Drahi is now guiding for a 15% increase in full-year operating free cash flow, up from 10% previously, and for revenue growth at Altice France of 5-6%, compared with earlier guidance of 3-5%. The operator's share price leapt more than 23% to €4.16 during morning trading in Amsterdam.
First-half sales and earnings fell at Three UK, the smallest of the UK's four mobile network operators, despite growth in the customer base. A subsidiary of Hong Kong's CK Hutchison, the company flagged a 2% drop in revenues, to about £1.17 billion ($1.42 billion), and an 8% fall in EBITDA, to £334 million ($405 million), compared with the year-earlier half. Three's customer base grew 1% over that period, to around 10.2 million "active" subscribers, the operator's earnings update shows. Higher operating expenses look responsible for the earnings slippage: Three is preparing to launch a 5G service across 25 cities and towns by the end of the year and has also been overhauling its IT systems and investing in a new cloud-based core network developed by Finland's Nokia. Earlier this year, CEO Dave Dyson told reporters and analysts that he expects costs to fall as Three moves customers onto new IT systems and shuts down its older ones -- a move that will claim between 700 and 800 jobs at Three's technology and operations departments. Three currently employs around 5,400 people. (See Three UK to cut two thirds of tech jobs in digital makeover.)
Veon, the emerging-markets operator that generates most of its revenues in Russia, made further progress on reducing costs as it reported a 0.4% dip in sales for the second quarter, to around $2.26 billion, compared with the year-earlier period. Results were battered by currency headwinds, with Veon insisting that revenues grew 7.5% on a purely "organic" basis thanks to a particularly strong operating performance in the markets of Ukraine, Pakistan and Bangladesh. Tight cost management fueled a 16.1% increase in EBITDA, to $994 million. Veon is making cuts at the "corporate" level after abandoning efforts to develop a single digital platform that customers of all its subsidiaries would use. It also benefited from a $175 million payment by Swedish equipment vendor Ericsson, which was forced to compensate Veon after a major IT project went belly-up. Ericsson was replaced by Amdocs in Russia but continues to work with Veon in other markets. (See VEON Dumped Ericsson for Amdocs in Russia.)
Just days after securing regulatory approval, Vodafone said it had completed its takeover of Liberty Global assets in Europe. The controversial move, which Germany's Deutsche Telekom had fought on competition grounds, turns Vodafone into Europe's biggest "converged" operator, it has claimed, with 54 million "on net" cable and fiber households and an overall next-generation network reach of 124 million homes and businesses. CEO Nick Read is planning an assault on Deutsche Telekom's broadband business, saying Vodafone will be able to market gigabit-speed services to 25 million German homes by the end of 2022. He expects his German rival's all-fiber network to cover only 8 million homes by the same date.
Elsewhere in Liberty's shrinking cable empire, its Telenet subsidiary in Belgium managed a 1% year-on-year increase in first-half sales, to €1.26 billion ($1.39 billion), after it was boosted by takeover activity including the acquisitions of the Nextel and De Vijver Media businesses. Net profit tumbled 48%, to €56 million ($62 million), because of a non-cash loss on interest rate derivatives, said the company.
— Iain Morris, International Editor, Light Reading