Telenet.be
 
 
 
 

Investment Proposition

 
 

Outlook

Outlook

We delivered a solid financial performance in the first half of 2020 relative to our revised full year 2020 outlook as presented at the end of April. For the first six months of the year, our revenue was up 1% year-on-year and included the impacts of our acquisition of De Vijver Media (fully consolidated since June 3, 2019) and our divestiture of our former Luxembourg cable business (deconsolidated as of April 1, 2020). Excluding these inorganic impacts, our revenue decreased nearly 3% over the first six months of the year on a rebased basis. As detailed in our revenue section, the decline was primarily attributable to our other revenue line, which includes (i) interconnect revenue, (ii) revenue related to the sale of handsets and (iii) advertising and production revenue from our media company De Vijver Media NV. Excluding our other revenue, which is most impacted by the COVID-19 pandemic, our revenue was stable on both a reported and rebased basis, which is in line with our current forecast. Despite a sharp reduction in cable wholesale rates as of July 1, 2020, we expect our other revenue to gradually recover in the second half of the year. Hence, we continue to see an overall revenue decline of around 2% on a rebased basis for the full year.

Year-to-date, we delivered a healthy 5% growth in our Adjusted EBITDA, which included the aforementioned inorganic effects. Excluding these impacts, our rebased Adjusted EBITDA increased nearly 2% in H1 2020, driven by (i) lower sales and marketing expenses due to the impact of the COVID-19 pandemic and last year's impact of the SFR customer migration and (ii) continued tight cost control. Given a tougher headline comparison base relative to the third quarter of last year and the aforementioned regulatory headwinds, we expect a softer Adjusted EBITDA performance in the second half, leading to an expected decrease of around 1% for the full year on a rebased basis.

Given the robust nature of both our fixed and mobile infrastructure and our demonstrated track record of carefully balancing our future investments, we still expect our Operating Free Cash Flow to grow, more specifically between 1 and 2% on a rebased basis with Operating Free Cash Flow up 5% year-on-year for the first six months of the year. Finally, we continue to target Adjusted Free Cash Flow of €415.0 - €435.0 million, skewed however towards the lower end of this range. We are well on track given achieved Adjusted Free Cash Flow of €263.9 million for in the first half of 2020.

Finally, we reconfirm our intention to maintain net total leverage around the 4.0x mid-point, while continuing to deliver on our shareholder remuneration strategy as presented during the December 2018 Capital Markets Day. Following the payment of both an intermediate and final dividend in December 2019 and May 2020 over 2019's Adjusted Free Cash Flow, respectively, we intend to distribute another intermediate dividend in December this year and a final dividend in May next year, both subject to board and shareholder approval. As part of our capital allocation framework, we aim to distribute between 50% and 70% of the prior year Adjusted Free Cash Flow to shareholders through intermediate and final dividends. Within the boundaries of the aforementioned net total leverage framework and in absence of any of the above factors, the remaining part of our Adjusted Free Cash Flow may be considered for incremental share buy-backs, extraordinary dividends, deleveraging, accretive acquisitions or a combination thereof.

For more information regarding our FY 2020 outlook, we refer to our Q2 2020 earnings release.

 

OUTLOOK FY 2020 FY 2019 (rebased) (a) As presented on Feb 12, 2020 As amended on April 30, 2020
Revenue (rebased) € 2,626.0 million Broadly stable Around -2%
Revenue, excluding Other revenue (rebased) (b) € 2,089.4 million - Broadly stable
Adjusted EBITDA growth (rebased) (c) € 1,394.2 million Around 1% Around -1%
Operating Free Cash Flow growth (rebased) (d, e) € 838.0 million Around 2% 1-2%
Adjusted Free Cash Flow (f, g) - € 415.0 - 435.0 million Lower end of the € 415.0 - 435.0 million range

(a)Including the pre acquisition revenue and Adjusted EBITDA of De Vijver Media (fully consolidated since June 3, 2019) and excluding the revenue and Adjusted EBITDA of Coditel S.à r.l . (deconsolidated as od April 1, 2020). ( Other revenue primarily includes ( i ) interconnection revenue from both our fixed line and mobile telephony customers, (ii) advertising and production revenue from De Vijver Media NV, which we fully consolidated as of June 3, 2019, (iii) mobile handset sales, including the revenue earned under our "Choose Your Device“ programs, (iv) wholesale revenue generated through both ou r c ommercial and regulated wholesale businesses, (v) product activation and installation fees and (vi) set top box sales revenue. ( A reconciliation of our Adjusted EBITDA guidance for 2020 to a EU IFRS measure is not provided as not all elements of the reconciliation are projected as part of our forecasting pro cess, as certain items may vary significantly from one period to another. (d) Excluding the recognition of football broadcasting rights and mobile spectrum licenses and excluding the impact from IFRS 16 on our accrued capital expenditures. ( A reconciliation of our Operating Free Cash Flow guidance for 2020 to a EU IFRS measure is not provided as not all elements of the reconciliation are projected as part of our forecasting process, as certain items may vary signifi can tly from one period to another. ( A reconciliation of our Adjusted Free Cash Flow guidance for 2020 to a EU IFRS measure is not provided as not all elements of t he reconciliation are projected as part of our forecasting process, as certain items may vary significantly from one period to another. ( Assuming certain payments are made on our current 2G and 3G mobile spectrum licenses in Q4 2020 and the tax payment on our 2019 tax return will not occur until early 2021.