Telenet.be
 
 
 
 

Investment Proposition

 
 

Reasons to invest

Reasons to invest

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Leading HFC and 4G+ converged network infrastructure, underpinned by a targeted and well-balanced investment strategy

Our cable network consists of a dense fiber backbone with local loop coaxial cable connections and spectrum of up to 1.2 GHz. Through both EuroDocsis 3.0 and 3.1 technologies, we offer data download speeds of up to 1 gigabit per second ("Gbps") across our entire footprint. In October 2021, we entered into a non-binding term sheet with Fluvius to create Flanders' "data network of the future", including Fiber to the Home ("FttH") technology. The network of the future will be fully open, ultra-performant, accessible to businesses and families, both in urban and rural areas, and built at the lowest societal cost. To this end, we will create together a new self-funding independent infrastructure company (“NetCo”) that will run an open access network, contributing both existing HFC and fiber assets as well as developing new build fiber assets in the future. NetCo intends to operate an open access network and is expected to enjoy a high network utilization rate from the start driven by Telenet’s customer relationships and the incremental traffic generated by wholesale partners. It is intended to be a multiparty partnership, i.e. open to further partnering with strategic and/or financial parties to develop this ambitious “data network of the future”. Final legal agreements are anticipated by the time we report our H1 2022 results.

At the end of Q1 2022, we entered into a binding agreement with DigitalBridge Group, Inc. regarding the full sale of our mobile telecommunications tower business, which owns all of our passive infrastructure assets. We expect this transaction to close in Q2 2022. Our mobile network is one of the best performing according to BIPT data from October 2021, with average download speeds of nearly 93.5 Mbps.

Proven ability to drive ARPU through strong brand equity and FMC-led growth

The ARPU per customer relationship, which excludes our mobile telephony revenue and certain other types of revenue, is one of our core operating statistics as we seek to obtain a larger share of our customers' telecommunication and entertainment spending. For the three months ended March 31, 2022, the monthly fixed ARPU per customer relationship reached €58.7, representing a decrease of nearly 2% compared to the prior year period when our video revenue included certain one-offs, favorably impacting our reported fixed ARPU per customer relationship at the time, and also reflecting the impact of the reallocation of "ONE" FMC bundle revenues from fixed to mobile telephony. As we launched our "ONE" and "ONEup" bundles in April last year, we anticipate this effect to annualize as of Q2 2022.

Disciplined cost control and continued focus on generating operating leverage through digital transformation

Our operating expenses, which include our (i) network operating expenses, (ii) direct costs, (iii) staff-related expenses, (iv) sales and marketing expenses, (v) outsourced labor and professional services and (vi) other indirect expenses, increased 1% in Q1 2022 compared to the prior year period. This was mainly driven by increases in our staff-related and network operating expenses impacted by the mandatory wage indexation in January 2022 and higher energy costs.

Targeting 1% revenue and EBITDA growth for FY 2022

Having completed the first three months of the year, we reconfirm our full year 2022 outlook as presented mid-February. Relative to the first quarter, we expect an improved trend in both our revenue and Adjusted EBITDA performance in the second half of the year, driven by certain price adjustments coming into effect as of mid-June 2022 as announced yesterday, as well as a continued focus on our operating expenses and tight cost control.

reason

 

Strong liquidity and long-term debt maturity profile of 6.3 years

At March 31, 2022, we carried a total debt balance (including accrued interest) of €5,529.9 million, of which €1,442.4 million principal amount is related to the € and USD-denominated Senior Secured Fixed Rate Notes due March 2028 and €3,180.9 million principal amount is owed under our 2020 Amended Senior Credit Facility with maturities ranging from April 2028 through April 2029. Our total debt balance at March 31, 2022 also included a principal amount of €338.9 million related to our vendor financing program, while the remainder primarily represents lease obligations associated with the Interkabel Acquisition and other leases.

At March 31, 2022, we carried €338.9 million of short-term debt related to our vendor financing program, all of which is maturing within less than twelve months and which carries a margin of 195 basis points over EURIBOR (floored at 0%). This represented a decline of €7.1 million versus December 31, 2021, reflecting seasonality in some of our scheduled vendor financing payments and negatively impacting our Adjusted Free Cash Flow by the same amount in Q1 2022. For the full year 2022, we anticipate a broadly stable evolution from December 31 2021, as embedded in our FY 2022 Adjusted Free Cash Flow outlook, yet with a certain seasonality in some of our payments from quarter to quarter.

All of our floating interest rate risk and foreign exchange currency risk have been hedged until the maturity of such debt instruments through a series of derivatives, improving the visibility on our future Adjusted Free Cash Flow. Excluding short-term liabilities related to our vendor financing program, we face no debt maturities prior to March 2028 with a weighted average maturity of approximately 6.3 years at March 31, 2022. In addition, we also had full access to €555.0 million of undrawn commitments under our revolving credit facilities at March 31, 2022, with certain availabilities up to September 2026.

Committed to drive attractive shareholder value in 2022 and beyond, enabled through robust Adjusted Free Cash Flow conversion

Building on the shareholder remuneration policy as initially introduced at our December 2018 Capital Markets Day and as tightened at the end of October 2020, we paid a gross intermediate dividend of €1.375 per share in early December 2021 (€150.2 million in aggregate), which represented 50% of the fixed dividend floor of €2.75 per share (gross). In line with our policy, the board of directors proposed to yesterday's Annual Shareholders' Meeting to approve the payment of a gross final dividend of €1.375 per share (€149.0 million in total, based on the number of dividend-entitled shares outstanding at the date of this release).

The board of directors remains highly committed to deliver on the Company's shareholder remuneration policy, as detailed during the December 2018 Capital Markets Day and as tightened in October 2020 as mentioned above. In the absence of any material acquisitions and/or significant changes in our business or regulatory environment, we intended to maintain Net Total Debt to Consolidated Annualized Adjusted EBITDA ("net total leverage") around the 4.0x mid-point through an attractive and sustainable level of shareholder disbursements. This includes a fixed dividend per share floor of €2.75 (gross). The remainder of our Adjusted Free Cash Flow may still be considered for accretive acquisitions, extraordinary dividends, incremental share buy-backs, deleveraging or a combination thereof.