2020/03/10

The Euskaltel Group expects to double revenue and customers through its national expansion plan

Euskaltel has today presented its 2020-2025 Business Plan, which it expects will multiply its main operational and financial indicators

The Euskaltel Group expects to double revenue and customers through its national expansion plan

  • The Group's revenue will hit Euros 1,300 million, compared to Euros 685 million at 2019 year-end.
  • From the current Euros 345 million, the Group's EBITDA will grow an average 6% a year to around Euros 500 million.
  • Operating cash flow is expected to reach Euros 240-280 million by 2025, representing 60% growth compared to 2019, thanks to national expansion and cost efficiencies.
  • The Group expects its fixed telecommunications customer base to multiply by 2.3, exceeding 1.5 million customers.
  • Mobile services under contract will exceed 3 million by 2025, compared to one million today, therefore tripling the current customer base.

Bilbao, 10 March 2020. The Euskaltel Group's CEO, José Miguel García, will today present the key takeaways from the Group's 2020-2025 Business Plan to investors and analysts. The Group expects the main financial and business indicators to grow sustainably over the next few years, based primarily on the national expansion plan.

The Euskaltel Group will kick this expansion plan off in the second quarter of 2020 from its solid base in the local Basque Country, Galicia and Asturias markets where it operates its three brands -Euskaltel, R and Telecable-. The aim is to reach the 85% of the national market that it did not have access to up until now so as to provide services to a total of 18.4 million homes.

This expansion plan will enable the Group to access new profitable growth opportunities on which it can base the company's positive growth in customers and profitability.

The Group expects the move to expand nationally will more than double the current customer base both in terms of fixed and mobile services. The Group therefore expects to multiply its current fixed telecommunications customer base by 2.3, exceeding 1.5 million customers and integrating around 800,000 new fixed-line customers to the base from the markets subject to expansion. In five years time, 50% of the Group's customer base will come from its current markets and 50% from the remaining 85% of the market where it hasn't operated up until now.

Contracts for mobile services are expected to exceed 3 million in 2025, compared to the current 1 million, almost tripling the current number of mobile services provided to users.

As a result of both mobile and fixed-line customer base growth, revenue will virtually double in the next five years with average annual growth of 11%. Income generated by the Group will come to Euros 1,300 million, compared to 685 million at 2019 year-end.

This growth in revenue will be chiefly based on the execution of the plan for national expansion. By 2025 it is expected that 40% of the Group's total revenue comes from the business generated by expanding to the rest of Spain.

The Group's EBITDA will grow on average by 6% a year until it reaches around Euros 470-520 million from its current Euros 345 million. This will represent 45% growth compared to current levels. This growth will be based on the outcome of the move towards national expansion, on expanding the current markets' footprints and the efficiency measures put in place.

By 2025 operating cash flow is expected to reach Euros 240-280 million, representing 60% growth compared to 2019.

One of the expansion plan's outstanding features is that the investment required is almost entirely linked to customer base growth, so that the total investment in national expansion will be less than 20% of revenue in the long-term.

The business plan will be entirely funded by the Group's strong cash position, which will enable the company to maintain a stable leverage ratio of around 4 times EBITDA. As the national expansion plan progresses, the company's leverage will quickly drop until debt is around 3 times EBITDA in 2025.

National expansion with the Virgin brand

The Euskaltel Group currently has market shares of over 30% in its local markets -the Basque Country, Galicia and Asturias-, where its brands, Euskaltel, R and Telecable, are its key strength, standing for proximity, honesty, identity and empathy, characteristics that have positioned the brands as leaders in customer service.

The Euskaltel Group will expand nationally with the Virgin brand, which is recognised globally and has a brand recognition rate of 75% on the Spanish market. The international, modern, experienced and innovative Virgin brand is backed by success in global telecommunications markets, as Virgin's telecommunications companies have over 15 million customers worldwide.

The Virgin brand's strength, together with Euskaltel's market expertise, quality service and high-value products will ensure that the Virgin brand's positioning in the Spanish market is a value proposal, combining great customer service and competitive prices, aimed at providing value to customers.

The offerings will be clear, straightforward and flexible and will be based on excellence in service quality. The products marketed under the Virgin brand will be high-speed broadband, mobile telecommunications with ample data allowances and a solid TV offering.

Euskaltel - Comunicación
94-4011229
comunicacion@euskaltel.com