Iliad : Présentation des résultats (en)

FY 2019 RESULTS

March 17, 2020

DISCLAIMER

▪ 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-lookingstatements 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-lookingstatements 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-lookingstatements 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

2019 REVIEW

THOMAS REYNAUD - GROUP CEO

FY 2019 HIGHLIGHTS

1		DELIVERINGTRANSFORMATION PLAN IS

2		ITALYSTRONG PERFORMANCE IN

3		ADAPTING THE GROUPE STRUCTURE

• 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
• 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
• 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) PHD Tracking, étude commandée par Iliad

4

LEARNINGS FROM THE 2019 CMD

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.

5

FRANCE

FIBER MARKETED TO NEARLY HALF OF FRENCH HOUSEHOLDS

FIBER CONNECTIBLE SOCKETS (000s)

+4,300

13,900

+3,400

5,000

Very dense areas

9,600

3,900

6,200

2,500

8,900 Medium and low dense areas

5,700

3,700

2017

2018

2019

• Contracts signed with 23 PINs, 1.2 million connectable sockets in low dense areas
• 15 million threshold reached in early March 2020

7

FIBER:

OUR FTTH NETWORK IS MAKING A DIFFERENCE

FTTH: ILIAD BEST PERFORMER IN UP/DOWN SPEED (1)				CUSTOMER CARE SCORES IN BROADBAND (2)
0	50	100 150Average200download250 bitrate300 350	400 450	500

			3.3/5	3.4/5
		3.2/5
Free	460.2 Mb/s
	2.7/5
SFR	404.4 Mb/s
Orange	371.4 Mb/s
	SFR	Bouygues	Orange	Free
		Telecom
Bouygues Telecom	368.3 Mb/s			Source: ARCEP

Average upload bitrate	CUSTOMER SATISFACTION SCORES IN BROADBAND (2)

Free	289.3 Mb/s		7.5/10	7.6/10	7.7/10
7.0/10
Bouygues Telecom	266.5 Mb/s
Orange	263.8 Mb/s
SFR	251.3 Mb/s	SFR	Bouygues	Free	Orange
			Telecom
					Source: ARCEP

(1)	nPerf 2019 - January 1, 2019 -> December 31, 2019	8
(2)	ARCEP's annual scorecard from its platform « J'alerte l'ARCEP », published on February 4, 2020

FIBER:

OUR FTTH STRATEGY IS DELIVERING ON ITS PROMISE

FTTH NET ADDITIONS

777,000

745,000

427,000

313,000

Free

Orange

Bouygues Telecom

SFR & Others

• 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

FTTH PENETRATION RATE

+12 points

27.2%

+7 points

15.3%

8.5%

2017

2018

2019

9

FIBER:

ON TRACK TO REACH OUR 2024 TARGET

FTTH CUSTOMER BASE (000s)

4,500

			+777
			1,760
			+427
		+246	983
	+110		556
200		310

2015

2016

2017

2018

2019

2024

• The 2 million FTTH subscribers target will be reached in a few weeks
• We are well on track to reach our 2024 target

10

BROADBAND:

COMMERCIAL RECOVERY IS CONFIRMED

BROADBAND NET ADDS

32 32

		-14		-16	-15
-19
	-28
			-32
Q1 18	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19	Q3 19	Q4 19

NPS IMPROVEMENT IN BROADBAND (1)

9

-1
March 2019	February 2020

• Second consecutive quarter of positive net adds thanks to FTTH momentum
• FTTH churn 4 points lower than xDSL
• Clear improvement in NPS

(1) IFOP survey commissioned by Iliad - February 2020	11

MOBILE:

FULL STEAM AHEAD ON NETWORK ROLLOUT

MOBILE NETWORK ROLL-OUT(1)

17,046

14,511

12,157

8,497

2016

2017

2018

2019

NUMBER OF NEW ACTIVE MOBILE SITES

(ALL TECHNOLOGIES) (2)

2,535

~ 1,500

~ 850

~ 400

Free

Telco A

Telco B

Telco C

• 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

(1)	ANFR	12
(2)	Iliad estimate, based on Open Data figures provided by ANFR

MOBILE:

ADDING QUALITY TO THE EXTENDED NETWORK

MOBILE NETWORK ROLLOUT (1)

17,046

14,511

12,157

12,012

3,252

940

2017	2018	2019
	Total sites (metropolitan France)		with 700 MHz

• 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

(1) ANFR	13

MOBILE:

HIGH QUALITY NETWORK WITH GOOD CUSTOMER SATISFACTION

ROLLOUT AND 700MHZ UPGRADES ARE DRIVING UP MOBILE
	CUSTOMER CARE SCORES - MOBILE (2)		MOBILE NPS (3)
QUALITY (1)

0	5	10	15	20	25	30	35	40	45	50	55	3.1/5	3.1/5	3.2/5
Orange											50.3 Mb/s
											2.7/5
Free									43.9 Mb/s
SFR								35.8 Mb/s
Bouygues Telecom							33.0 Mb/s
											SFR	Bouygues	Orange	Free
												Telecom		Source: ARCEP

	25
14
March 2019	February 2020

1. • 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)
2. 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

14

1. IFOP survey commissioned by Iliad - February 2020

IMPROVED COMMERCIAL MOMENTUM IN MOBILE

MOBILE NET ADDITIONS

17

					-18
			-50
				-77
	-90	-94
-200
Q2 18	Q3 18	Q4 18	Q1 19	Q2 19	Q3 19	Q4 19

• 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

ENABLERS OF FUTURE GROWTH

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-howfor 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-basedcapex leveraging our existing infrastructure

16

ITALY

ITALY:

SOLID MOMENTUM DEMONSTRATING BRAND ADOPTION

MOBILE NET ADDITIONS (000s)

MOBILE SUBSCRIBER BASE (000s) (1)

1,595

700

635607

532

472

740

Q2 18

Q3 18

Q4 18

Q1 19

Q2 19

Q3 19

Q4 19

• Excellent momentum in Q4 despite very aggressive and targeted winback offers from the 2 leading competitors

(1) Market shares calculated using AGCOM Quarterly Report / Humans SIMs only / Q4 19 based on Q3 numbers for the market	18

ITALY:

ILIAD ALREADY A STRONG BRAND

NPS MOBILE B2C (1)		BRAND ADVOCACY (2)

		36%
	42
			31%
				29%
					22%
22
						10%
Average 2018	Average 2019	Iliad	Telco 1	Telco 2	Telco 3	Telco 4

• ~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)

(1)	Customer experience, independent third party	19
(2)	PHD Tracking, average May 2019 - December 2019

ITALY:

STRONG YEAR FOR OUR NETWORK ROLLOUT

ACTIVE MOBILE SITES

						10,000 - 12,000
					around 5,000
				2,062
		414	838
0	13
Dec-18	Mar-19	Jun-19	Sep-19	Dec-19	2020e	2024e

• 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

20

GOVERNANCE AND CAPITAL STRUCTURE UPDATE

• 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

21

FINANCIAL REVIEW

NICOLAS JAEGER - GROUP CFO

FY 2019 GROUP - REVENUES

REVENUES (€M)		QUARTERLY REVENUES (€M)

		+9.0%			+9.2%
			+7.7%
		5,332
	4,891	427	+3.0%	1,293		1,314
Italy	125		1,203
	81	96
			1,201
			Italy		9
France	4,768	4,912	France	1,213	1,194	1,219
Intragroup			Intragroup
	-2	-6		-1		-1
	2018	2019	Q1 18	Q1 19	Q2 18	Q2 19

+8.1%

1,336

1,236 109

46

1,190 1,229

		-2
Q3 18	Q3 19

+11.0%

1,389

1,251 140

70

1,183 1,251

	-2			-2
Q4 18	Q4 19

• 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

23

FY 2019 GROUP - PROFITABILITY

EBITDAaL (€M)		PROFIT (€M)		CAPEX (€M)

		-5.8%		1,726		1,976
		1,654			1,816
	1,755				369
		+5.5%
		Italy	261
						+3.3%
France	1,807	1,907	330	France	1,555	1,607
Italy	-52		2018	2019	2018	2019
	-253
	2018	2019

• 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

24

FY 2019 REVENUES

MAIN DRIVERS OF FRANCE REVENUES (€M)		QUARTERLY YOY GROWTH

						2	4,912
				(26)	20
			138
4,768
	(34)	43
2018	Fixed ex	Jaguar	Mobile	Other mobile	Equipment	Elims	2019
	Jaguar	Networks	billed to	service
			subscribers

• 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

25

FACTORS DRIVING UP ARPU

BROADBAND ARPU

-1.2%	-0.9%			+2.5%
		+1.2%
32.9
	32.8
	32.5		32.5		32.5		32.6
				32.1
						31.8
Q1 18	Q1 19	Q2 18	Q2 19	Q3 18	Q3 19	Q4 18	Q4 19

MOBILE ARPU (BILLED TO SUBSCRIBERS)

				+11.6%	+14.0%
		+12.2%		10.6		10.6
+8.0%		10.1
	9.5			9.5
						9.3
		9.0
8.8
Q1 18	Q1 19	Q2 18	Q2 19	Q3 18	Q3 19	Q4 18	Q4 19

• Better customer mix in both Mobile & Broadband
• Initial effects of front book price increases (post 1st year) for both Broadband and Mobile
• Non-recurringVAT impact

26

EBITDAaL

FRANCE EBITDAaL		ACCELERATION IN H2 19

EBITDAaL Margin	37.9%	38.8%
		+5.5% (1)
	1,807	1,907
	2018	2019

		+9.1%
			997
+1.7%
894	910	913
H1 18	H1 19	H2 18	H2 19

• 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

27

CAPEX ECONOMICS ARE IMPROVING

FTTH CONNECTION CAPEX (€M)

	+61%
2018	2019

4G SITES UPGRADED TO 700MHZ

	+8,800
+2,300
2018	2019

CAPEX SPENT ON FREEBOXES (€M)

	+12%
2018	2019

• 2019 capex only slightly higher than in 2018 (+3%) despite very significant commercial and network rollouts

28

ITALY IN INVESTMENT PHASE

REVENUES (€M)		EBITDAaL (€m)

427	-28	-24
		-52

+28%

	+12%	-108
	+21%
		-144
+16%		140
	124

Capex (€m)

369

261

69

97

80

109

-253

H1 18

H2 18

H1 19

H2 19

2018

2019

2018

2019

Q4 18 Q1 19 Q2 19 Q3 19 Q4 19

2018

2019

• Quarter-on-quarteracceleration 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

EQUITY FCF BRIDGE

EFCF bridge (€m)

1,907

(1,607)

A

299

(253)

D

(369)	B	1,520

682
(252)	430

C

(323) (106) (69)

(340)

France	France Capex France OCF Italy EBITDAaL Italy Capex	Group OCF	WCR	Net interest	Taxes	Other (incl.	FCF pre	Spectrum	FCF post
EBITDAaL				(incl. leases)		Cellnex	spectrum	(Fr + It)	spectrum
						proceeds)

1. France OCF up €47m YoY with EBITDAaL up €99m and Capex up €52m
2. Negative working capital contribution due to Italian VAT timing

1. Cash taxes higher than P&L tax (€m) due to Italian losses

1. Net proceeds from the tower deal, cash out from Jaguar Network acquisition and share buybacks

30

COMFORTABLE MATURITY PROFILE AND LEVERAGE UNDER CONTROL

Group net debt (€m) and leverage (xEBITDAaL)			Group debt maturity profile at end-2019 (€m)
	€3.4 bn	Repaid in early Jan/Feb 2020

							998
						696		709	709
					562
				67						124	75	59	55	50	90
Liquidity	2020	2021	2022	2023	2024	2025	2026	2027	2028	2029	2030	>
															2030

• 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

OUTLOOK

NICOLAS JAEGER - GROUP CFO

GUIDANCE FOR FRANCE & ITALY

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 iliad Group 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.

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

APPENDIX

GROUP REVENUES

€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

35

GROUP KPIs

			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

36