Iliad : [Press Release] Iliad :1H 2013 Results

                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
    Portuguese community.

  *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.

Key indicators

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
               Free
- Alice                            130,000        262,000        472,000
Percentage of unbundled                   94.40%         93.60%         90.80%
subscribers
                                                             
                                   June30,2013  June 30, 2012  June 30, 2011
In €                               
                                                 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%
operations
Leverage ratio                            0.95x         1.35x       -

Group objectives

  *Landline business:

   *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.

  *Mobile business:

   *Continue and intensify site rollouts;
   *Reach the obligatory coverage rate of 75% of the French population by
     end-2014;
   *Achieve a 15% market share in the medium term with a long-term goal of
     25%.

  *Group:

       *Generate revenues of over €4 billion by 2015.

Consolidated income statement

Revenues
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%
revenues

Landline revenues

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
    subscribers.

  *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.

Mobile revenues

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
following:

  *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
    plan.

  *A modest rise in revenues from sales of terminals to €65 million,
    reflecting unfavorable seasonal effects.

Intra-group sales

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.

Gross profit

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.

EBITDA

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
wider margins.

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
2012.

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%
requirement
                                                                    
Operating Free Cash Flow                          608.1         500.9   +21.4%
                                                                    
Net cash used in investing                      (448.3)       (479.0)    -6.4%
activities
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)        -
dividends)
                                                                    
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%
period-end



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.

Balance sheet

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.

Glossary

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
FTTH offerings.

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
operations.

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.

About Iliad
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
                                 (SRD)
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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