The Euskaltel group posts a net profit of Euros 28.8 million for the first six months of the year, up 36.6%

The Group builds on its growth in households and companies across all our business areas -fixed-line and mobile phone services, broadband and TV-.

  • The Group's revenue is up 25% to Euros 349.3 million in the first six months of the year.
  • Ebitda increased 22.4% to over Euros 168.8 million in the first six months of the year, with a revenue margin of 48.3%.
  • Operating cash flow rises to Euros 100.8 million, up 10% compared to the prior year, with a 28.9% revenue margin, which would rise to 31.3% if the Group's expansion plan was not taken into consideration.
  • The Euskaltel Group's net profit in the first half of the year is therefore Euros 28.8 million, up 36.6% compared to the first six months of 2017.
  • Euskaltel, R and Telecable customers have contracts for over 2.381 million products, representing 32,000 new contracts in the last quarter.
  • The fixed-line phone segment continues to record net growth in customer registrations for the second consecutive quarter, with the addition of 2,500 new users. This backs up the positive trend seen in the prior quarter with over 578,500 customers.
  • Business segment performance confirms this year's positive trend with revenue growth of 1.3%, hitting Euros 97.2 million.
  • The portfolio of high added-value customers on 3P and 4P contracts continues to grow to the industry's highest levels and now stands at 69.3% of all customers compared to 68.6% in the previous quarter. Each customer has a contract for an average of 3.6 products.
  • Record penetration rates for all products across the customer base: broadband -85.7%, an increase of 33 basis points-, mobile phones? 80.1%, an increase of 123 basis points-, pay TV- 70.6%, an increase of 123 basis points-, compared to the first quarter of 2018.
  • The Group's customer loyalty is up, reducing churn across all markets to the lowest level seen in the last 18 months. It stood at 14.9% at the end of June, which is 70 basis points below the figure for the previous quarter.
  • 18,500 new mobile phone lines in the second quarter, growing to 951,000 lines.
  • There are 9,000 new pay TV customers in the quarter, exceeding 408,000 users, thanks to the new 4K Android decoder. The Group expects the number of TV customers to continue to grow with the introduction of the exclusive Netflix button on TV remote controls.
  • Over 4,000 contracts for broadband products have been taken on in the first quarter, increasing to 496,000 users.
  • The operator now has over 1,000 customers in Navarre, where a second sales point has opened. The Group expects to forge ahead with its expansion plan in the second half of the year, with new sales points in Navarre and over 4,000 new customers in this region by the end of the year.

Bilbao, 27 July 2018. The Euskaltel Group has this morning presented its results for the first half of 2018, which show revenue growth of 25%, increasing turnover to Euros 349.3 million with a net profit of Euros 28.8 million, which is 36.6% higher than in the first six months of 2017.

Ebitda stands at Euros 168.8 million, up 22.4% and with a 48.3% revenue margin. Operating cash flow (the difference between Ebidta and investments) hit Euros 100.8 million, up 10% compared to the prior year with a 28.9% revenue margin, which would have risen to 31.3% if the Group's expansion plan had not been taken into consideration.

The Euskaltel Group's CEO, Francisco Arteche, stressed to investors that these results reflect the way the operator has fulfilled all its commitments to the market: "We have met the objectives we announced to the market, building on the growth seen in the first quarter and becoming one of the few operators to achieve better results in the second quarter than in the first quarter of the year".

The balance sheet for these first six months of the year highlights the increase in contracts for products and services by customers across all business areas, with 32,000 new contract registrations -in the first quarter there were 25,000-, backing up the positive trend that started in 2017. Euskaltel, R and Telecable customers currently have contracts for over 2.381 million products. As the CEO of the Euskaltel Group stated, "Strong performance in the take-up of products by customers during the first six months of the year backs up our strategy of convergent bundles of high added-value products, which are viewed by our customers as a differentiating offer".

It is important to note how we have built on the net growth in customer registrations for fixed-line products for the second consecutive quarter, confirming the trend seen in the previous quarter with the addition of 2,500 new users, taking us beyond 578,500 customers.

This growth in net customer registrations has been seen across each of our local markets in the Basque Country, Galicia and Asturias and also through the marketing of advanced products and services in Navarre, where Euskaltel has opened its second sales point and has over 1,000 new customers. In the second half of the year, the Group hopes to forge ahead with its expansion plan, opening new sales points in Navarre where it expects to welcome an additional 4,000 new customers by the end of the year.

In terms of the business segment, it is important to note the performance posted in these first six months of 2018, which confirms the improvement seen at the end of last year, leading to three consecutive quarters of growth, with a rise of 1.3% and revenues of Euros 97.2 million.

As a result of the company's convergent strategy, the number of high-value customers with 3P and 4P contracts continues to grow and now stands at 69.3% of all customers, representing an average of 3.6 products per customer.

The increase in contracts for services and products in the residential segment has led to record penetration rates among the customer base: 85.7% have broadband (up 33 basis points on the previous period), 80.1% have a contract for mobile phone services (an increase of 123 basis points) and 70.6% have pay TV (a rise of 123 basis points).

The Group's customer loyalty is up, reducing churn across all markets to the lowest level seen in the last 18 months. It stood at 14.9% at the end of June, which is 70 basis points below the figure for the previous quarter (15.6%).

More customers across all business areas

The growth seen in the first six months is based on the strong performance of all business segments and areas. The mobile phone segment has built on its dominant position with 18,500 new lines, taking the total to over 951,000 lines. In the second quarter of the year, the Euskaltel Group has once again exceeded the market growth forecast, just as it did in the first quarter, hitting annualized growth of around 8%.

In terms of pay TV, there are over 9,000 new customers this quarter, proving the success of initiatives and products such as the new 4K Android decoder. Over 408,000 users currently enjoy the additional services on offer from Euskaltel Group TV, including an exclusive button on the TV remote giving access to Netflix content.

Contracts for over 4,000 new broadband products were signed in the first three months of 2018, taking the figure to 496,000 users, which represents an annualized rate of above 3%.

In the first six months of the year, the Euskaltel Group has continued to modernise the quality and capacity of its network. This work began in 2017 and mainly involves upgrading the network from Docsis 3.0 to Docsis 3.1. This change will ensure customers in the Basque Country, Galicia and Asturias have better speeds and more products and services.

Strong cash generation and debt reduction

The Euskaltel Group continues to stand out for its leading profitability margins in the industry, holding on to its dominant position in Europe in terms of the cash conversion ratio with a high revenue margin of 28.9% ?this figure would be 31.3% if the Group's expansion plan wasn't taken into consideration?. This high cash flow conversion is mainly due to the Group having its own next generation fibre optic network and to the operator's business strategy, which allows it to concentrate its capital investments on maintenance and customer acquisition.

This significant cash generation capacity has enabled the Euskaltel Group to distribute a dividend of Euros 49.6 million to its shareholders ?Euros 0.278 per share? against 2017 profit. This dividend reflects a 3.8% return on the weighted share price for the first six months of 2018 and amounts to a 100% payout of consolidated net profit.

The Euskaltel Group's CEO expects the dividend per share distributed in 2019 against 2018 profits to grow on a double-digit basis.

Euskaltel - Communication Department
94-4011229
comunicacion@euskaltel.com