Zegona Communications PLC TELECABLE - Q3 2016 RESULTS (6521P)

TIDMZEG

RNS Number : 6521P

Zegona Communications PLC

21 November 2016

TELECABLE - Q3 2016 RESULTS

CONTINUED GROWTH AT TELECABLE AND INNOVATIVE NEW MOBILE ACCESS CONTRACT WITH TELEFONICA

21(st) November 2016

Zegona Communications plc (LSE: ZEG) announces Telecable results for the quarter ending 30 September 2016

 
 Telecable Q3 2016(1) 
                  EUR34.2 
 Revenue           million 
                  EUR16.0 
 EBITDA(2)         million 
                   EUR9.2 
 Cash Flow(3)      million 
 

Solid business performance in quarter

-- Revenue up 1.5% versus strong Q3 2015 performance to EUR34.2 million (up 3.4% YTD), with consumer ARPU up 3.6% to EUR60

-- EBITDA reflects incremental investment in football offer, helping grow residential football customers in Asturias by 12%

-- Cash Flow up 5.1% to EUR9.2 million versus Q3 2015 (15% improvement before incremental football offer investment)

Significant steps taken to accelerate growth

-- New mobile access contract with Telefonica delivers 4G data and much improved data pricing on a sustainable basis

-- Mobile penetration and quad-play customers continue to grow - new Telefonica contract will reinforce mobile expansion

-- Football investment enhances Telecable's premium channel offer, delivering more higher quality customers

   --       Robust business segment performance with revenues up 8% versus Q3 2015 
   --       On track to deliver full year revenue growth of 3-4% and Cash Flow growth of 10% 

Attractive cash returns to shareholders

-- Initial 2.25 pence dividend paid in October with further 2.25 pence expected to be paid in March 2017

   --       Progressive dividend policy confirmed, supported by strong Cash Flow growth 

-- Debt refinancing discussions well advanced with opportunity to materially reduce interest costs

Eamonn O'Hare, Zegona's Chairman and CEO commented: "Telecable is succeeding in investing for the future at the same time as it fundamentally improves cash returns. Our new mobile access agreement with Telefonica enables us to offer our customers a market-leading mobile service, including high speed 4G data, and we believe this will help accelerate growth in highly valuable convergence customers next year and beyond. The strong Spanish economy and further evidence of price repair in the communications sector, allied with Telecable's excellent market positioning, gives us confidence that we will continue to deliver strong performance across our key financial metrics for full year 2016 and into 2017."

"Beyond Spain, we continue to see a number of attractive new investment opportunities as we look out across the European TMT landscape. We will evaluate those transactions which can be executed efficiently, enhance shareholder returns, and which satisfy our disciplined financial criteria."

(1) Unaudited management accounts results for Telecable for three months ended 30 September 2016

(2) EBITDA defined as operating profit/loss before interest, taxes, depreciation, amortization expenses and other non-recurring project and M&A costs

(3) Cash Flow is defined as EBITDA minus capital expenditure on an accruals basis

Enquiries

Tavistock (Public Relations adviser)

Tel: [phone]

Matt Ridsdale - [e-mail]

Lulu Bridges - [e-mail]

Mike Bartlett - [e-mail]

Notes to Editors:

About Zegona

Zegona was established in 2015 with the objective of acquiring businesses in the European TMT sector with a 'Buy-Fix-Sell' strategy to deliver attractive shareholder returns. Zegona is listed on the standard segment of the London Stock Exchange's Main Market and is led by former Virgin Media executives Eamonn O'Hare and Robert Samuelson.

Zegona's first acquisition was the EUR640 million purchase of Telecable, the leading quad-play cable telecommunications operator in the Asturias region of Spain, which completed in August 2015. Zegona believes Telecable represents a compelling investment because of its market leading position in Asturias and strong cash generation, coupled with attractive dynamics in the Spanish telecoms market and Spanish economy. In 2015, Telecable delivered revenues of EUR134.4 million, EBITDA of EUR65.0 million and Cash Flow of EUR36.1 million.

Forward-looking Statements

Certain statements in this Announcement are forward-looking statements that are based on Zegona's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, Zegona undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The information contained in this Announcement is subject to change without notice and Zegona does not assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

This announcement includes inside information.

Zegona Contact:

Robert Samuelson

Chief Operating Officer

Zegona Communications plc

20 Buckingham Street

London

WC2N 6EF

APPIX 1

Telecable Summary Financial Results (Unaudited)

 
                              Q3                      YTD 
                                                       Q3 
                     2015   2016   Change    2015    2016   Change 
                    -----  -----  -------  ------  ------  ------- 
 Figures in 
  EUR million 
 
 Consumer Revenue    24.9   24.8    -0.6%    73.9    75.2     1.7% 
 Business Revenue     8.8    9.5     7.6%    26.1    28.3     8.4% 
 Total Revenue(1)    33.7   34.2     1.5%   100.0   103.5     3.4% 
 EBITDA              16.2   16.0    -1.3%    48.8    49.3     0.9% 
 Capex                7.4    6.7    -8.9%    21.6    19.6    -9.2% 
 Cash Flow            8.8    9.2     5.1%    27.2    29.6     8.8% 
 
 
                       Q3     Q4     Q1     Q2     Q3 
                     2015   2015   2016   2016   2016 
                    -----  -----  -----  -----  ----- 
 Figures in 
  EUR million 
 
 Consumer Revenue    24.9   25.1   25.3   25.1   24.8 
 Business Revenue     8.8    9.3    9.7    9.2    9.5 
 Total Revenue(1)    33.7   34.4   34.9   34.3   34.2 
 EBITDA              16.2   16.2   16.6   16.7   16.0 
 Capex                7.4    7.3    7.8    5.1    6.7 
 Cash Flow            8.8    8.9    8.8   11.6    9.2 
 
 
 Notes 
 Consumer includes Consumer Fixed and Consumer Mobile 
 Business includes SoHo, Enterprise and Other Revenue 
 EBITDA defined as operating profit/loss before interest, 
  taxes, depreciation, amortisation expenses and other 
  non-recurring project and M&A costs 
 Capex defined as accrued capital expenditure 
 Cash Flow defined as EBITDA minus Capex 
 
     (1) Total revenues are based on unaudited consolidated 
     management accounts of the Telecable Group prepared 
     in accordance with IFRS. For information purposes, 
     the material presentational differences between 
     these and Zegona's consolidated financial statements 
     are as follows: 
      *    The Telecable Group results net off interconnection 
           and portability revenues against an equivalent level 
           of costs, whereas such revenues and costs are 
           included gross in Zegona's consolidated financial 
           statements 
 
 
      *    Other revenues relating to film investment and 
           marketing campaigns are included in the Telecable 
           Group results, but are not included in revenue in 
           Zegona's consolidated financial statements (but are 
           recorded before operating profit) 
 
 
     Telecable Group ("Telecable") consolidates Telecable 
     Capital Holding SAU, Telecable de Asturias SAU and 
     Parselaya SL 
 

APPIX 2

Progress on Telecable's Strategic Initiative Priorities

Grow Consumer Revenues:

-- Higher value triple-play/quad-play customers now over 70% of total residential customer base

   --      Quad-play customers increased by over 5% versus Q3 2015 
   --      Asturias premium football customers grew by 12% versus Q3 2015 
   --      Set-top box penetration at 37% of residential customers (up from 31% in Q3 2015) 
   --      Strong ARPU growth, now at EUR60, up 3.6% from Q3 2015 
   --      Consumer churn reduced to 14% from 16% in Q3 2015 despite high levels of market promotions 

Enhance Mobile Experience:

-- Innovative new mobile access agreement signed with Telefonica, giving much improved data pricing on a sustainable basis and access to high speed 4G data services

-- Mobile penetration at 55% of residential customer base, up from 49% in Q3 2015, with further strong growth expected supported by new mobile agreement

   --      Customer data allowances doubled.  Further increases and introduction of 4G in H1 2017 

-- Continued WiFi hotspot rollout with 53% increase in mobile lines connected to the Wifisfera service

   --      Consumer postpaid mobile lines up 14% from Q3 2015 

Strong focus on business clients:

   --      Product changes and investment in management / sales force 

-- Leveraging Telecable's network and range of premium sports content to win share in bars/restaurants

   --      B2B revenues up 8% over Q3 2015 

Improve Capex productivity and deliver fundamental cash flow improvements:

   --      Increased efficiency in sales distribution, network maintenance and customer installations 

-- Savings reinvested into revenue growth opportunities (e.g., football/content, more set-top boxes, B2B)

   --      EBITDA-Capex conversion increased to 58% from 54% in Q3 2015 
   --      Capex as a proportion of revenues reduced to 19% YTD 2016 from 22% in 2015 

-- Debt refinancing discussions well advanced with opportunity to materially reduce interest costs

This information is provided by RNS

The company news service from the London Stock Exchange

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November 21, 2016 02:00 ET (07:00 GMT)