36
FY 2019 RESULTS March 17, 2020
FY 2019 RESULTS
March 17, 2020
▪ This document has been prepared by Iliad S.A. (the "Company”) and is being furnished to you solely for your information and personal use.
▪ This presentation includes only summary information and does not purport to be comprehensive.
▪ The information contained in this presentation has not been subject to independent verification.
No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy,
completeness or correctness of the information or opinions contained herein.
▪ None of Iliad S.A., its affiliates or its advisors, nor any representatives of such persons, shall have any liability whatsoever (in negligence or
otherwise) for any loss arising from any use of this document or its contents or otherwise arising in connection with this document or any other
information or material discussed.
▪ This presentation contains forward-looking statements relating to the business, financial performance and results of Iliad S.A. These statements are
based on current beliefs, expectations or assumptions and involve unknown risks and uncertainties that could cause actual results, performance or
events to differ materially from those described in such statements. Factors that could cause such differences in actual results, performance or
events include changes in demand and technology, as well as the ability of Iliad S.A. to effectively implement its strategy.
▪ Any forward-looking statements contained in this presentation speak only as of the date of this presentation. Iliad S.A. expressly disclaims any
obligation or undertaking to update or revise any forward-looking statements contained in this presentation to reflect any change in events,
conditions, assumptions or circumstances on which any such statements are based unless so required by applicable law
2
DISCLAIMER
2019 REVIEWTHOMAS REYNAUD – GROUP CEO
4
FY 2019 HIGHLIGHTS
TRANSFORMATION PLAN IS DELIVERING
▪ Iliad net adds leader for Fibre in 2019
▪ Commercial recovery in Broadband and Mobile
▪ Acceleration of French mobile revenue trend
▪ Improved network quality with extensive rollouts and 700MHz upgrade
▪ France revenue rebound: +3% in 2019, +6.0% in Q4
STRONG PERFORMANCE IN ITALY
▪ Sustained commercial momentum: >2.4 million net adds in 2019, 5.3 million subscribers at end-2019
▪ Fast network rollout: >4,000 equipped sites at end-2019
▪ Preferred telecom brand in Italy (1
ADAPTING THE GROUPE STRUCTURE
▪ Entering the B2B market via the acquisition of Jaguar Network
▪ Tower deal with Cellnex in France and Italy: €2bn gross proceeds
▪ Acceleration of FTTH rollout thanks to our partnership with Infravia
▪ Stronger balance sheet
1
2
3
(1) PHD Tracking, étude commandée par Iliad
Our CMD in May 2019 showcased our growth plan, the quality of our assets, how we have adapted our business.
Our 2019 results are a testimony to the hard work and team effort put in.
LEARNINGS FROM THE 2019 CMD
5
FRANCE
FIBER MARKETED TO NEARLY HALF OF FRENCH HOUSEHOLDS
7
▪ Contracts signed with 23 PINs, 1.2 million connectable sockets in low dense areas
▪ 15 million threshold reached in early March 2020
FIBER CONNECTIBLE SOCKETS (000s)
3,700
5,700
8,9002,500
3,900
5,000
20192017 2018
Very dense areas
Medium and low dense areas
6,200
9,600
13,900
+3,400
+4,300
FIBER:
8
OUR FTTH NETWORK IS MAKING A DIFFERENCE
OrangeSFR
3.3/5
Bouygues Telecom
Free
3.4/5
2.7/5
3.2/5
FreeSFR
7.6/10
OrangeBouygues Telecom
7.0/107.5/10 7.7/10
Source: ARCEP
Source: ARCEP
3001500 50 350100 200 250 400 450 500
Free
SFR
Orange
Bouygues Telecom
460.2 Mb/s
404.4 Mb/s
371.4 Mb/s
368.3 Mb/s
SFR
Free
251.3 Mb/s
289.3 Mb/s
Orange 263.8 Mb/s
266.5 Mb/sBouygues Telecom
Average download bitrate
Average upload bitrate
FTTH: ILIAD BEST PERFORMER IN UP/DOWN SPEED (1)
(1) nPerf 2019 – January 1, 2019 -> December 31, 2019(2) ARCEP’s annual scorecard from its platform « J’alerte l’ARCEP », published on February 4, 2020
CUSTOMER CARE SCORES IN BROADBAND (2)
CUSTOMER SATISFACTION SCORES IN BROADBAND (2)
▪ Our target of > 500k FTTH net adds for 2019 was reached as early as Q3 19
▪ The majority of our FTTH gross adds in 2019 are new customers
FIBER:
9
OUR FTTH STRATEGY IS DELIVERING ON ITS PROMISE
FTTH NET ADDITIONS FTTH PENETRATION RATE
8.5%
15.3%
27.2%
20182017 2019
+7 points
+12 points
777,000745,000
427,000
313,000
Bouygues TelecomFree Orange SFR & Others
▪ The 2 million FTTH subscribers target will be reached in a few weeks
▪ We are well on track to reach our 2024 target
FIBER:
10
ON TRACK TO REACH OUR 2024 TARGET
FTTH CUSTOMER BASE (000s)
200310
556
983
1,760
20172015 20182016 2019 2024
4,500
+110
+246
+427
+777
▪ Second consecutive quarter of positive net adds thanks to FTTH momentum
▪ FTTH churn 4 points lower than xDSL
▪ Clear improvement in NPS
BROADBAND:
11
COMMERCIAL RECOVERY IS CONFIRMED
BROADBAND NET ADDS NPS IMPROVEMENT IN BROADBAND (1)
(1) IFOP survey commissioned by Iliad - February 2020
-19
-28
-14
-32
-16 -15
32 32
Q2 19Q2 18Q1 18 Q3 18 Q4 18 Q1 19 Q3 19 Q4 19
-1
9
February 2020March 2019
▪ Our 2019 mobile rollout exceeded our initial plans, 2.5k new sites vs. 2.0k targeted
▪ Coverage of c.98% of the population in 3G and c.96% in 4G - a great achievement in only 8 years
MOBILE:
12
FULL STEAM AHEAD ON NETWORK ROLLOUT
MOBILE NETWORK ROLL-OUT (1)NUMBER OF NEW ACTIVE MOBILE SITES
(ALL TECHNOLOGIES) (2)
(1) ANFR(2) Iliad estimate, based on Open Data figures provided by ANFR
8,497
12,157
14,511
17,046
2016 20182017 2019
2,535
Free Telco A Telco CTelco B
~ 1,500
~ 850
~ 400
▪ Upgrading our Mobile Network: >12k sites lit on 700MHz compared with the 10k guidance given at the CMD
▪ Full release of 700MHz frequencies across France during 2019, enabling deeper coverage in densely-populated areas and a wider coverage in rural areas
▪ Higher on-net usage is a key enabler for ARPU growth and churn reduction
MOBILE:
13
ADDING QUALITY TO THE EXTENDED NETWORK
MOBILE NETWORK ROLLOUT (1)
12,157
14,511
17,046
940
3,252
12,012
2017 2018 2019
Total sites (metropolitan France) with 700 MHz
(1) ANFR
▪ Free N°1 alternative mobile operator for 4G download speed
▪ Quality of the service recognized in ARCEP’s latest consumer survey, N°1 alternative mobile operator for customer satisfaction
▪ Iliad to benefit between 2021 & 2024 from additional spectrum in the 900MHz band (coverage) and the 2.1 GHz band (capacity)
MOBILE:
14
HIGH QUALITY NETWORK WITH GOOD CUSTOMER SATISFACTION
CUSTOMER CARE SCORES - MOBILE (2)
(1) nPerf 2019 – January 1, 2019 -> December 31, 2019(2) ARCEP’s annual scorecard from its platform « J’alerte l’ARCEP », published on February 4, 2020(3) IFOP survey commissioned by Iliad - February 2020
500 5 10 15 20 25 30 4035 45 55
50.3 Mb/s
SFR
Orange
Free
Bouygues Telecom
43.9 Mb/s
35.8 Mb/s
33.0 Mb/s
MOBILE NPS (3)ROLLOUT AND 700MHZ UPGRADES ARE DRIVING UP MOBILE QUALITY (1)
3.2/5
SFR Bouygues Telecom
Orange Free
3.1/5
2.7/5
3.1/5
Source: ARCEP
14
25
March 2019 February 2020
▪ Good level of 4G net adds in Q4 which are traditionally lower than in Q3 due to seasonality on handset subsidies
▪ Return to positive mobile net adds although our focus remains on 4G offers
▪ Extended distribution network with more shops in towns with over 100k inhabitants cities is helping improving visibility
▪ Improved momentum in Broadband / Fiber helping meet demand for convergence
15
MOBILE NET ADDITIONS
IMPROVED COMMERCIAL MOMENTUM IN MOBILE
-18
17
-50
-77
-90
Q2 18 Q3 18 Q1 19Q4 18 Q2 19 Q3 19 Q4 19
-200
-94
ENABLERS OF FUTURE GROWTH
16
STRATEGIC PARTNERSHIP WITH
CELLNEX
▪ Strategic partnership with Cellnex covering 5,700 sites in France and 2,200 sites in Italy
▪ Total consideration of €2bn
▪ 30% stake retained in the French TowerCo business, to benefit from future value creation
▪ Leveraging Cellnex know-how for maintaining sites and increasing tenancy ratio
STRATEGIC PARTNERSHIP WITH
INFRAVIA
▪ Partnership in France with Infravia
▪ Creation of a JV ("IFT") at 49% Iliad / 51% InfraVia with a 100% EV of €600m
▪ IFT will acquire Iliad’s existing co-financing agreements (around 1 million existing co-financed sockets) and will co-finance the creation of new sockets and take up new co-financing tranches
B2B LAUNCH
▪ Leveraging our network infrastructure: 22 million FTTH premises by 2022, 25k mobile sites by 2024
▪ Complete range of solutions based on our DNA: Simplicity, Innovation, Affordability
▪ Proprietary cloud and hosting infrastructure (Scaleway Top 10 cloud provider in Europe)
▪ Low capex intensity: mainly success-based capex leveraging our existing infrastructure
ITALY
▪ Excellent momentum in Q4 despite very aggressive and targeted winback offers from the 2 leading competitors
ITALY:SOLID MOMENTUM DEMONSTRATING BRAND ADOPTION
MOBILE NET ADDITIONS (000s) MOBILE SUBSCRIBER BASE (000s) (1)
18(1) Market shares calculated using AGCOM Quarterly Report / Humans SIMs only / Q4 19 based on Q3 numbers for the market
635 607
472532
700740
Q2 18 Q1 19Q3 18 Q4 18 Q2 19 Q3 19 Q4 19
1,595
ITALY:ILIAD ALREADY A STRONG BRAND
19
▪ ~18 months after the launch, Iliad’s brand is getting tremendous support from its customers
▪ Good spontaneous awareness, close to TRE brand which has been active since 2003 (2)
▪ Iliad ranked N°1 in terms of Intention to Subscribe (2)
NPS MOBILE B2C (1) BRAND ADVOCACY (2)
22
42
Average 2018 Average 2019
(1) Customer experience, independent third party(2) PHD Tracking, average May 2019 - December 2019
36%
31%29%
22%
10%
Telco 2Iliad Telco 4Telco 3Telco 1
ITALY:STRONG YEAR FOR OUR NETWORK ROLLOUT
20
▪ Acceleration of our mobile rollout in Q4
▪ Ambitious 2020e target of having around 5,000 active sites by the year-end
▪ Well on track to reach our target of 10,000-12,000 active sites by 2024
ACTIVE MOBILE SITES
13414
838
2,062
Dec-18 Mar-19 Dec-19Sep-19Jun-19 2020e 2024e
0
around 5,000
10,000 – 12,000
GOVERNANCE AND CAPITAL STRUCTURE UPDATE
21
◼ BOARD CHANGES
▪ Xavier Niel appointed Chairman
▪ Maxime Lombardini to become Vice-Chairman
2 new independent Directors:
▪ Céline Lazorthes (Founder & CEO Leetchi)
▪ Jacques Veyrat (President Impala SAS)
◼ MANAGEMENT CHANGE
▪ Shahrzad Sharvan appointed Group's Corporate Secretary
◼ CAPITAL STRUCTURE
Post the combined operation share buyback + capital increase, Xavier Niel’s stake has moved up from 52% to 71%.
The backing of Iliad’s founder is a strong message of confidence in our Odyssée 2024 growth plan
FINANCIAL REVIEWNICOLAS JAEGER – GROUP CFO
FY 2019 GROUP - REVENUES
23
▪ Group revenues / services revenues up 9% (8% excl. Jaguar Network) with Italy contributing for 12 months vs. 7 months in 2018
▪ France back to growth in 2019, driven by the acceleration in Mobile (billed) and a return to organic growth in Fixed in Q4
▪ Italy’s strong sales momentum driving growth acceleration in H2 19
REVENUES (€M) QUARTERLY REVENUES (€M)
4,768 4,912
427
-6
Italy
2018
125
-2
2019
France
Intragroup
4,891
5,332
+3.0%
+9.0%
1,201
1,213 1,194 1,219 1,190 1,229 1,183 1,251
81 96 10970
1401,336
Q2 18
-1 -1Intragroup
Q2 19
46
1,314
Q3 18
1,389
-2
1,251
-2
Q4 18
1,236
-2
France
9
Q4 19
Italy
Q1 18 Q3 19
1,2931,203
Q1 19
+7.7% +9.2% +8.1%+11.0%
▪ France EBITDAaL up 5.5%
▪ 2019 profit inflated by disposal gains on the tower deals
▪ Capex up 9%, mainly due to the acceleration of the rollout in Italy
FY 2019 GROUP - PROFITABILITY
24
PROFIT (€M) CAPEX (€M)EBITDAaL (€M)
1,807 1,907
-253
France
-52
2018 2019
Italy
1,7551,654
+5.5%
-5.8%
1,555 1,607
261369
France
Italy
2018 2019
1,816
1,976
+3.3%
330
1,726
2018 2019
FY 2019 REVENUES
25
▪ Mobile billed to subscribers are the main growth driver in 2019 thanks to our 4G net adds and customer upgrades
▪ Fixed services revenues (excl. Jaguar) improving quarter after quarter
▪ Equipment revenues up slightly with sales of the Delta Player offsetting the decline for mobile handsets
MAIN DRIVERS OF FRANCE REVENUES (€M) QUARTERLY YOY GROWTH
43
138
20(26)
2018
2
Other mobile service
(34)
Fixed ex Jaguar
Jaguar Networks
Mobile billed to
subscribers
Equipment Elims 2019
4,768
4,912
FACTORS DRIVING UP ARPU
26
▪ Better customer mix in both Mobile & Broadband
▪ Initial effects of front book price increases (post 1st year) for both Broadband and Mobile
▪ Non-recurring VAT impact
BROADBAND ARPU MOBILE ARPU (BILLED TO SUBSCRIBERS)
8.8
9.5
9.0
10.1
9.5
10.6
9.3
10.6
Q4 19Q4 18Q1 18 Q3 18Q1 19 Q2 18 Q2 19 Q3 19
+8.0%
+12.2%
+11.6% +14.0%
32.9
32.5
32.8
32.5
32.1
32.5
31.8
32.6
Q4 18Q1 19Q1 18 Q2 18 Q4 19Q3 18Q2 19 Q3 19
-1.2%-0.9%
+1.2%+2.5%
EBITDAaL
27
▪ Main positive impacts: operating leverage in Mobile, lower unbundling fees and non-recurring VAT impact
▪ Main negative impacts: higher external charges related to network expansion in Fixed and Mobile, revenue decline in Fixed, higher content costs
FRANCE EBITDAaL ACCELERATION IN H2 19
37.9%EBITDAaL Margin 38.8%
1,8071,907
2018 2019
+5.5% (1)
894910 913
997
H1 19H1 18 H2 18 H2 19
+1.7%
+9.1%
▪ 2019 capex only slightly higher than in 2018 (+3%) despite very significant commercial and network rollouts
CAPEX ECONOMICS ARE IMPROVING
28
FTTH CONNECTION CAPEX (€M) CAPEX SPENT ON FREEBOXES (€M)4G SITES UPGRADED TO 700MHZ
20192018
+61%
+2,300
+8,800
2018 2019 2018 2019
+12%
ITALY IN INVESTMENT PHASE
REVENUES (€M) EBITDAaL (€m) Capex (€m)
▪ Quarter-on-quarter acceleration in Q4 driven by strong commercial momentum
▪ Negative EBITDAaL reflecting strong commercial momentum in the ramp-up phase
▪ Strong increase in capex reflecting our mobile rollout (2,500 newly equipped sites in 2019)
29
6980
97109
140124
2019Q1 19 Q3 19Q2 19Q4 18
427
Q4 19 2018
+16%
+21%
+12%
+28%
-28 -24
-108
-144
-52
H1 19H2 18H1 18 2019H2 19 2018
-253
261
369
2018 2019
EQUITY FCF BRIDGE
EFCF bridge (€m)
France OCF up €47m YoY with EBITDAaL up €99m and Capex up €52mA
B
C
D
Negative working capital contribution due to Italian VAT timing
Cash taxes higher than P&L tax (€m) due to Italian losses
Net proceeds from the tower deal, cash out from Jaguar Network acquisition and share buybacks
30
1,907
299
(323)
682
430
Taxes
(340)
(369)
WCRFrance OCF Group OCF
(69)
1,520
Other (incl. Cellnex
proceeds)
FCF pre spectrum
FCF post spectrum
(252)
Italy EBITDAaL Spectrum (Fr + It)
(106)
France Capex
(1,607)
(253)
France EBITDAaL
Italy Capex Net interest (incl. leases)
A
B
D
C
COMFORTABLE MATURITY PROFILE AND LEVERAGE UNDER CONTROL
Group net debt (€m) and leverage (xEBITDAaL) Group debt maturity profile at end-2019 (€m)
▪ Solid balance sheet - 2.2x leverage post Cellnex deal
▪ Ample liquidity to meet upcoming maturities, debt repayments post Cellnex closing
▪ Infravia closing announced on February 28
▪ Average maturity > 4 years
31
709 709
12475 59 55 50
90
Liquidity 2020 2023
562
20222021 2024 2025 20272026 2028 2029 2030 > 2030
€3.4 bn
67
696
998
Repaid in early Jan/Feb 2020
OUTLOOKNICOLAS JAEGER – GROUP CFO
GUIDANCE FOR FRANCE & ITALY
France
FIXED• Achieve a 25% share of the Broadband and Ultra-Fast Broadband market in the long term• 2m FTTH subscribers in 2020, 4.5m in 2024• Have 22m connectible Fiber sockets by end-2022 and around 30m by end-2024
MOBILE• Have more than 80% of the subscriber base signed up to the Free Mobile Unlimited 4G
Plan by 2024• Have over 25,000 sites by 2024• Achieve a 25% share of the mobile market in the long term
B2B• Obtain a B2B market share of around 4% to 5% share by 2024• Generate B2B revenues of between €400 million and €500 million by 2024
FINANCIALS• Generate EBITDAaL margin in France (excluding B2B and equipment sales) of over 40% in
2020• Achieve an EBITDAaL less Capex figure (excluding B2B activities) of more than €800 million
in 2020 and around €1 billion in 2021
Italy
MOBILE• Have around 5,000 activated mobile sites by end-2020• Have rolled out between 10,000 and 12,000 mobile sites by end-2024
FINANCIALS• Based on having around 5,000 activated mobile sites at end-2020, we expect lower
EBITDAaL losses in 2020 than in 2019• Achieve EBITDAaL break-even with a market share of less than 10%• Generate €1.5bn in revenues in Italy in the long term
33
In addition to the human impact, the current coronavirus epidemic will generate an economic slowdown in certain regions. The social and financial impacts for the iliadGroup are currently limited. Nevertheless, the epidemic could impact the iliad Group and its objectives, as is the case for all companies in the telecommunications sector. Possible impacts include the shortage of certain electronic components and a slower rollout of Fixed and Mobile networks.
APPENDIX
€m 2018 2019
Q1 Q2 H1 Q3 9M Q4 H2 FY Q1 Q2 H1 Q3 9M Q4 H2 FY
France 1,201 1,194 2,395 1,190 3,585 1,183 2,373 4,768 1,213 1,219 2,432 1,229 3,661 1,251 2,485 4,917
Fixed services 672 660 1,332 654 1,986 644 1,298 2,630 654 658 1,312 661 1,973 666 1,327 2,640
Mobile services 476 486 962 492 1,454 482 974 1,936 487 510 997 524 1,521 527 1,057 2,054
o.w. invoiced to subscribers 365 373 738 385 1,123 375 760 1,498 384 405 789 423 1,212 425 848 1,636
Equipment 56 50 106 46 152 50 96 202 73 53 126 45 171 59 104 229
Intra-group sales France (2) (3) (5) (2) (7) (2) (4) (8) (2) (1) (3) (1) (4) (1) (3) (6)
Italy - 9 9 46 55 70 116 125 81 96 177 109 286 140 250 427
Intra-group - - - - - - - - (1) (1) (2) (2) (4) (2) (4) (6)
Group revenues 1,201 1,203 2,404 1,236 3,640 1,251 2,487 4,891 1,293 1,314 2,607 1,336 3,943 1,389 2,725 5,332
o.w. services revenues 1,148 1,156 2,303 1,192 3,495 1,197 2,389 4,692 1,223 1,264 2,486 1,295 3,781 1,334 2,629 5,115
GROUP REVENUES
35
36
2018 2019
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
FRANCE
Mobile subscribers 13,825 13,625 13,535 13,441 13,391 13,314 13,296 13,313
o.w. 4G plans 7,369 7,555 7,744 7,783 7,858 7,928 8,075 8,177
o.w. voice plan 6,456 6,070 5,791 5,658 5,533 5,386 5,221 5,136
Mobile data usage (GB per month per subs) 9.2 9.6 9.9 10.9 11.6 11.9 12.8 13.9
Broadband subscribers 6,501 6,473 6,459 6,427 6,411 6,396 6,428 6,460
o.w. FTTH 646 734 835 983 1,133 1,305 1,515 1,760
% FTTH penetration 9.9% 11.3% 12.9% 15.3% 17.7% 20.4% 23.6% 27.2%
Total subscribers base 20,326 20,098 19,994 19,868 19,802 19,710 19,724 19,773
Broadband & Ultra Fast Broadband ARPU (€ per month) 32.9 32.8 32.1 31.8 32.5 32.5 32.5 32.6
Mobile ARPU (€ per month) 8.8 9.0 9.4 9.3 9.5 10.1 10.6 10.6
FTTH connectable plugs 6,800 7,900 8,400 9,600 10,500 11,500 12,000 13,900
ITALY
Mobile subscribers - 635 2,230 2,837 3,309 3,841 4,541 5,281
GROUP KPIs
