Iliad : [Press Release] Iliad :1H 2013 Results
Paris, August 30, 2013
1H 2013 Results
*Over 12 million subscribers to Free offerings (landline or mobile), up by
almost 2 million in first-half 2013
*Sustained Group revenue growth, up 27%
*40% rise in EBITDA and 78% jump in consolidated profit
*A strengthened financial structure: positive consolidated Free Cash Flow
and excellent leverage ratios
*Ongoing investment in our future: €448 million in capital expenditure and
more than 450 new jobs created in France during the six-month period
Significant events in first-half 2013
In the first half of 2013, the Group saw continued growth for both its
landline and mobile businesses as well as higher profitability. The main
drivers of this performance were:
*Numerous innovations during the period. The first half of 2013 was
particularly dynamic for Free in terms of innovation, with the launch of
the Freebox OS and Femtocells, the opening up of VDSL2 technology to
subscribers and the introduction of a new offer for France's large
*Another period of strong growth for the landline business.The first six
months of 2013 saw strong growth of over 9% for the landline business,
enabling Iliad to cement its position as France's leading alternative
landline operator and to notch up the largest number of net adds in the
market for the sixth quarter in a row. In parallel, the landline
business's profitability continued to rise, with EBITDA up by more than
15%, thanks to the Group's ongoing focus on unbundling and optimizing its
fixed cost base.
*Continued commercial success for the mobile business. Net adds for the
Group's mobile business came to over 1.5 million in the first half of 2013
bringing the total number of mobile subscribers to nearly 6.8 million,
which represents a market share of 10.3%. Revenues generated by the mobile
business were up 88% on first-half 2012, topping the €600 million mark.
*Solid financial performance. At €586 million, consolidated EBITDA was 40%
higher than in first-half 2012, propelled by the rise in profitability
achieved by the landline business and the €54million contribution from
the mobile business. This increase in EBITDA fueled a 78% jump in profit
for the period.
*A strengthened financial structure. Free Cash Flow from ADSL operations
climbed 27% to €291 million. This robust performance from the Group's
traditional business enabled it to generate €47 million in Free Cash Flow
for first-half 2013, compared with a negative €130million in the first
six months of 2012. This positive cash generation combined with the higher
profitability achieved during the period strengthened the Group's
financial structure, with the leverage ratio coming in below 1x at June
30, 2013, at 0.95x.
Operating performance indicators
June 30, 2013 June 30, 2012 June 30, 2011
Total mobile subscribers 6,795,000 3,600,000 -
Total broadband subscribers 5,518,000 5,147,000 4,717,000
- Free 5,388,000 4,885,000 4,245,000
of which migrations from Alice to 45,000 90,000 44,000
- Alice 130,000 262,000 472,000
Percentage of unbundled 94.40% 93.60% 90.80%
June30,2013 June 30, 2012 June 30, 2011
Enf of period End of period
End of period
Broadband ARPU 35.9 35.5 35.5
Freebox Revolution ARPU >38 >38 >38
Financial performance indicators
In € millions Six months to Six months to % change
June 30, 2013 June 30, 2012
Consolidated revenues 1,829.4 1,444.3 +26.7%
- Landline 1,234.6 1,130.4 +9.2%
- Mobile 600.8 319.5 +88.0%
- Intra-group sales (6.0) (5.6) +7.1%
Consolidated EBITDA 585.8 417.3 +40.4%
- Landline 531.6 461.6 +15.2%
- Mobile 54.2 (44.3) -
Profit from ordinary activities 276.6 178.5 +55.0%
Profit for the period 141.8 79.6 +78.1%
Free Cash Flow from ADSL 291.4 229.4 +27.0%
Leverage ratio 0.95x 1.35x -
*Achieve a 25% share of the landline broadband market in the long term;
*Pursue horizontal FTTH rollouts and co-financing arrangements;
*Grow revenues by more than 5% in 2013.
*Continue and intensify site rollouts;
*Reach the obligatory coverage rate of 75% of the French population by
*Achieve a 15% market share in the medium term with a long-term goal of
*Generate revenues of over €4 billion by 2015.
Consolidated income statement
Consolidated revenues for the six months ended June 30, 2013 topped €1.8
billion, up by almost 27% on first-half 2012. This strong year-on-year
increase was primarily driven by the sustained rapid business development
reported by both landline and mobile operations.
The table below shows the breakdown of revenues by business and category for
first-half 2013 and first-half 2012 as well as the percentage change between
the two periods.
In € millions Six months to June Six months to June % change
30, 2013 30, 2012
Landline 1,234.6 1,130.4 +9.2%
Mobile 600.8 319.5 +88.0%
Telecom services 535.4 264.2 -
Terminals 65.3 55.3 +18.1%
Intra-group sales (6.0) (5.6) +7.1%
Total consolidated 1,829.4 1,444.3 +26.7%
Landline revenues advanced from €1,130 million in first-half 2012 to €1,235
million in the first six months of 2013, representing growth of more than 9%.
The year-on-year rise primarily reflects the impacts of the following:
*Another robust sales performance in first-half 2013. The Group's landline
business delivered an excellent showing in the first six months of 2013,
with more than 154,000 new subscribers during the period (net of
terminations and excluding migrations from Alice) and a market share of
net adds at 41%. This achievement demonstrates the strong reputation of
the Free brand and its dynamic technological and commercial innovations,
as well as the appeal of the Freebox Revolution offerings and the
significant revenue synergies leveraged between our landline and mobile
businesses. At June 30, 2013, the Group had a total of 5,518,000 broadband
*Success of the migration and retention program for Alice subscribers. In
2011, the Group launched a program offering Alice subscribers the
possibility of migrating to Free's offers (including the Freebox
Revolution). Some 45,000 Alice subscribers took up this option during the
first half of 2013.
*Broadband ARPU of €35.9 at end-June 2013, close to its record high and up
slightly on first-half 2012.
The Group's share of the French mobile market topped 10% in first-half 2013,
with 6,795,000 total subscribers at June 30, 2013. Revenues generated by this
business during the period came to over €600 million, reflecting the
*Continued commercial success for the innovative mobile offerings proposed
by Free, which enabled the Group to attract 1,590,000 new subscribers
during the period. Since December 2012, when Free enhanced its €2/month
mobile plan, the Group has accelerated its adds of users who make only
moderate use of their mobiles and who are therefore attracted by the €2
*A modest rise in revenues from sales of terminals to €65 million,
reflecting unfavorable seasonal effects.
Intra-group sales correspond to sales between companies from the Group's two
different businesses and mainly consist of billings of interconnection
operations. They are eliminated in consolidation.
At €852 million, consolidated gross profit was €177 million higher than in
first-half 2012, representing a year-on-year increase of 26%. The main factors
affecting gross profit during the period were:
*The positive effects of lower operating costs and a rise in the unbundling
rate. During the first six months of 2013, the Group continued its drive
to extend its ADSL network, increasing its unbundling rate to over 94%
thanks to its 4,804 unbundled connection nodes. This was achieved despite
the fact that certain regulated prices rose during the period,
particularly unbundling costs, which increased from €8.80 to €8.90 per
month and per subscriber.
*Higher gross profit for the mobile business due to a significant increase
in traffic carried on Free Mobile's network. The increase in gross profit
for the mobile business was primarily due to the use of 900MHz frequencies
in densely populated areas and the extended coverage of the Free Mobile
network. However, it should be noted that the Group was still permitted to
apply asymmetric mobile call termination charges during the period. This
will no longer be possible as from July 1, 2013, which will have an
adverse effect on profitability.
*Synergies leveraged between the landline and mobile businesses. The
ongoing rapid development of the Group's mobile offerings has enabled it
to increase the synergies between its two businesses, especially
concerning interconnection charges and intra-group calls.
Consolidated EBITDA rose by more than 40% year on year to almost €586 million.
EBITDA margin widened by nearly 3 points, coming in at 32%.
The Group continued to boost the profitability of its landline business by
pursuing its focus on unbundling and optimizing the fixed cost base. As a
result, EBITDA for that business was up by more than 15% year on year.
The mobile business contributed €54 million to consolidated EBITDA in the
first six months of 2013 compared with a negative €44 million in the same
period of 2012, and its EBITDA margin stood at 9%. This positive swing was
attributable to (i) the business reaching the critical mass necessary to
absorb its fixed cost base, and (ii) the increase in traffic carried on the
Free Mobile network, primarily due to the use of 900MHz frequencies in densely
populated areas and the extended coverage of the Free Mobile network. However,
it should be noted that the Group was still permitted to apply asymmetric
mobile call termination charges in the first half of 2013.
Profit from ordinary activities
Profit from ordinary activities amounted to €277 million in first-half 2013,
up 55% year on year. The increase was primarily due to the mobile business's
Depreciation/amortization expense came to €305 million, remaining relatively
stable at 16.7% of revenues
Profit for the period
In view of the above-described achievements, profit for the period surged 78%
year on year to €142million from just under €80 million in the first half of
Cash flows and capital expenditure
In € millions Six months to June Six months to % change
30, 2013 June 30, 2012
Consolidated cash flow 599.3 422.2 +41.9%
Change in working capital 8.8 78.7 -88.8%
Operating Free Cash Flow 608.1 500.9 +21.4%
Net cash used in investing (448.3) (479.0) -6.4%
Income tax paid (70.7) (115.5) -38.8%
Other (41.9) (36.0) +16.4%
Consolidated Free Cash Flow
(excluding financing activities and 47.2 (129.6) -
Free Cash Flow from ADSL operations 291.4 229.4 +27.0%
Dividends (21.4) (21.2) +0.9%
Cash and cash equivalents at 306.9 395.8 -22.5%
Consolidated Free Cash Flow
Consolidated Free Cash Flow totaled a positive €47 million versus a negative
€130 million in the first half of 2012. This year-on-year change mainly
reflects the following:
*a 21% rise in operating Free Cash Flow to almost €610 million;
*total capital outlay of €448 million during the period due to an ongoing
proactive capital expenditure policy;
*a 27% jump in Free Cash Flow from ADSL operations to €291 million;
*payment of €71 million in tax.
At June 30, 2013, the Group had gross debt of €1,353 million and net debt of
€1,039 million. The Group strengthened its financial structure during the
period and its leverage ratio at June 30, 2013 returned to below the 1x mark
at 0.95x. This enabled Iliad to retain its position as one of the European
telecom operators with the least amount of debt.
The Group ended the first half of 2013 with €307 million in available cash and
cash equivalents. Excluding the operating items presented above, the main
changes in cash and cash equivalents during the period related to:
*the repayment of €200 million worth of the Group's €1,400 million
syndicated credit facility;
*thedrawdown of the last €100 million tranche of the second loan granted
to the Group by the EIB;
*payment of the 2012 dividend amounting to €21 million.
Broadband ARPU (Average Revenue Per User): Includes revenues from the
flat-rate package and value-added services but excludes one-time revenues
(e.g., fees for migration from one offer to another or subscription and
cancellation fees), divided by the total number of broadband subscribers
invoiced for the period.
Broadband subscribers: Subscribers who have signed up for the Group's ADSL or
Free cash flow from ADSL operations: Represents EBITDA plus or minus changes
in working capital and minus investments made in connection with property,
plant and equipment and intangible assets acquired for the Group's ADSL
FTTH (fiber-to-the-home): Data delivery technology that directly connects
subscribers' homes to an optical node (ON).
Gross profit: Corresponds to revenues less purchases used in production.
Leverage ratio: Represents the ratio between net debt (short- and long-term
financial liabilities less cash and cash equivalents) and EBITDA.
Net adds: Represents the difference between total broadband subscribers at the
end of two different periods.
Total broadband subscribers: Represents, at the end of a period, the total
number of subscribers identified by their telephone lines who have signed up
for Free's or Alice's broadband service, excluding those recorded as having
requested the termination of their subscription.
Total mobile subscribers: Represents, at the end of a period, the total number
of subscribers, identified by their telephone lines, who have subscribed to a
Free mobile offering, excluding those recorded as having requested the
termination of their subscription.
Unbundled subscribers: Subscribers who have signed up for the Group's ADSL or
FTTH offerings through a telephone exchange unbundled by Free.
Iliad is the parent company of Free, the inventor of the Freebox, the first
multiservice box on ADSL broadband. Free is behind several innovations in the
high-speed access segment (VoIP, IPTV, flat-rate calling plans to multiple
destinations, etc.). Free provides straightforward and innovative offerings at
the best prices. At the end of 2010, Free introduced the Freebox Revolution,
the 6th generation of Freebox units that notably includes an NAS and a
Blu-Ray^TM drive. Free was the first operator to include calls from landlines
to mobile phones as well as calls to French overseas departments (départements
d'outre-mer - DOM). Beginning from January 2012, Free has made mobile phones
affordable for everyone' through a generous, straightforward, no-contract
offerings at a very attractive price. Free has over 5.5 million broadband
subscribers and 6.8 million mobile subscribers (as at June 30, 2013).
Exchange:Euronext Paris Market place: Eurolist A of Euronext Paris
Ticker symbol:ILD ISIN Code:FR0004035913
FTSE classification:974 Internet Member of Euro Stoxx, SBF 120, CAC Next 20,
CAC Mid 100
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Source: Iliad via Thomson Reuters ONE
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