The Euskaltel Group posts a net profit of Euros 19 million for the third quarter, 7.4% higher than the same quarter last year
o 3,600 new postpaid mobile lines, now exceeding the 1.15 million figure.
o 3,100 new broadband services, up to over 590,000.
o 1,500 new Pay TV services, now exceeding 466,000 and representing over 70% of the customer base.
Bilbao, 29 October 2019. The Euskaltel Group -comprising the Euskaltel, R and Telecable brands-, this afternoon released the figures for the third quarter of 2019. This is the first full quarter following the implementation of the company?s new roadmap proposed by the Group?s CEO, José Miguel García, and confirms the good results achieved thanks to the measures implemented and efficient management.
The third quarter of the year shows a rise in the number of customers and in profitability, confirming the upturn in the trend noted in the previous quarter, with increases in both profitability and customer base, EBITDA up by 2.8% and cash flow up by 8.1%, as well as an increase in high-value private and corporate Broadband, Pay TV and Mobile phone customers.
These results are particularly positive, taking into account that Q3 is traditionally a season of the year that shows decline. Contrary to previous years, the Euskaltel Group is presenting a growth scenario in all business and profitability measures, going from a negative balance of almost 6,000 customers lost in Q3 2018 to a base of fixed service customers on the mass market of almost one thousand in Q3 2019. This result has been possible thanks to excellent sales performance in the month of September, when the Euskaltel Group recorded a growth of 5,900 new customers, compared to less than one thousand last year.
Thanks to efficient management and the measures implemented, the company?s profitability has been boosted to a net profit of Euros 19 million in Q3, which is 7.4% higher than the same quarter last year, and 73% up on Q2 2019.
The Group's income is back on the path of growth in Q3, up 0.1% on the previous quarter, to reach Euros 171.1 million driven by growth in the mass market, and showing a clear upturn in the trend of total income growth.
EBITDA is up 2.8% on the previous quarter to Euros 86.8 million, with a 50.7% revenue margin, growing 134 basis points in the quarter.
Operating cash flow (the difference between EBITDA and investments) came to Euros 49.8 million in the second quarter - up by 8.1%-, which gave a revenue margin of 29.1% - 210 basis points above the previous quarter - positioning the Euskaltel Group as a clear leader in the industry.
The number of customers subscribed with the three Euskaltel Group brands -Euskaltel, R and Telecable - has continued to grow throughout Q3. The Group's customers now have over 2.83 million products and services contracted, which means an increase of 6,000 new contracts in the last quarter, a period that is generally marked by a drop in the number of contracts.
The portfolio of high added-value customers on 3P and 4P contracts continues to grow to the Spanish industry's highest levels, with an average record figure of 3.67 products per user.
This steady growth is based on Group customers contracting convergent services and products of high added value in all segments and businesses. During Q3, the Group had over 1.15 million postpaid mobile phone line contracts, with 3,600 new lines. Similarly, at 30 September 2019, the Euskaltel Group has recorded over 590,000 Broadband service contracts, adding 3,100 new services. During this quarter, 1,500 new Pay TV services were added, now exceeding 466,000 and representing over 70% of the customer base.
In the corporate client market, the positive growth trend has strengthened, growing by 0.5% during the quarter, to reach a figure of 15,208 large accounts and SMEs. This growth is based on launching new advanced FTTH network products and services and simplifying and unifying the sales model.
As a result, this growth in the number of high added value customers has led to an increase in mass market income during Q3 of 0.1% compared to the previous quarter, reaching Euros 137.1 million, a revenue figure which consolidates the upturn in trend with respect to previous quarters.
It is also notable that RACCtel+, the RACC operator whose services are managed by the Euskaltel Group, began its expansion throughout Catalonia in September, widening its offering to the 2.4 million homes with fibre optic access in Catalonia, who can now access the convergent broadband, digital TV and mobile phone services offered by RACCtel+.
Hence, the Euskaltel Group has broadened the footprint of homes with access to their services, which now reach over 5.3 million homes, adding over 3 million new homes in the last year of its expansion, bringing new growth opportunities for the Group's customer base. This expansion in the number of homes shows the company?s major capacity to widen its catchment area quickly and with limited resources.
The data for Q3 2019, the first full quarter since the introduction of the new roadmap presented by the Group's CEO, José Miguel García, which was unanimously approved by the Board of Directors, are beginning to show the results of the actions implemented during this period.
In these first three months, the Group's management team has been focused on rolling out the strategic roadmap approved by the Board of Directors in June. This roadmap outlines three priority milestones:
1) Strengthening the brands - R, Telecable and Euskaltel - in our traditional territories and doing pilot expansions, such as Navarra. Integrating the operating divisions of the three companies - R, Telecable and Euskaltel -, into a single functional structure with five main operating areas (Mass, Corporate, Technology Factory, Finance and HR).
2) Securing operating efficiencies and effectiveness as a sole operating unit, with an end-to-end customer-focused process model.
3) Studying and preparing a business expansion plan into the rest of the national territory and presenting it to the Board of Directors.
By strengthening the Group in its local markets and implementing the single operating model across the three brands, and on the basis of the value offerings for customers that have led the Group's brands to build on their leading positions in their regions and successfully tackle the start of the expansion process into the regions close to their local markets, the Euskaltel Group will approach national expansion, meaning access to a market that covers 85% of the territory it is not yet present in and which represents an excellent opportunity for growth and profitability.
The measures implemented after putting the company?s new roadmap in place are already reaping results in the third quarter:
- Growth in number of customers and revenue during what is usually a low season.
- Significant cost savings thanks to efficient management.
- Improved EBITDA and Capex management have secured sound cash flow generation.
- As a result of significant cash generation, net debt continues to drop.
The results achieved through the roadmap point towards a positive outlook for Q4. In this regard, the Group expects to end the year with positive growth in income in Q4, and an increase in EBITDA similar to Q3.
As a result of this solid cash generation capacity and in accordance with the company's commitment to maintain a sustained and growing shareholder remuneration policy, the Euskaltel Group's Board of Directors has approved the distribution of an interim dividend against 2019 results for a gross amount of Euros 0.14 per share. The payment date will be February 2020.
The final dividend to be paid against 2019 results will be determined at the General Shareholders? Meeting to be held in 2020.
Euskaltel - Communication
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comunicacion@euskaltel.com