Euskaltel S A : PRIVILEGED INFORMATION Euskaltel presents its Business Plan for the period 2020-2025.

NATIONAL

EXPANSION

ACCELERATES VALUE CREATION

2020 - 2025 Business Plan

March 10 th, 2020

DISCLAIMER

This presentation (the "Presentation") has been prepared and is issued by, and is the sole responsibility of Euskaltel, S.A. ("Euskaltel" or "the Company"). For the purposes hereof, the Presentation shall mean and include the slides that follow, any prospective oral presentations of such slides by the Company, as well as any question-and-answer session that may follow that oral presentation and any materials distributed at, or in connection with, any of the above.

The information contained in the Presentation has not been independently veried and some of the information is in summary form. No representation or warranty, express or implied, is made by the Euskaltel Group (including Euskaltel, S.A. and R Cable y Telecable Telecomunicaciones, S.A.U., nor by their directors, ocers, employees, representatives or agents as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions expressed herein. None of Euskaltel Group, nor their respective directors, ocers, employees, representatives or agents shall have any liability whatsoever (in negligence or otherwise) for any direct or consequential loss, damages, costs or prejudices whatsoever arising from the use of the Presentation or its contents or otherwise arising in connection with the Presentation, save with respect to any liability for fraud, and expressly disclaim any and all liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in connection with the accuracy or completeness of the information or for any of the opinions contained herein or for any errors, omissions or misstatements contained in the Presentation.

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Market and competitive position data in the Presentation have generally been obtained from industry publications and surveys or studies conducted by third-party sources. There are limitations with respect to the availability, accuracy, completeness and comparability of such data. Euskaltel has not independently veried such data and can provide no assurance of its accuracy or completeness. Certain statements in the Presentation regarding the market and competitive position data are based on the internal analyses of Euskaltel, which involve certain assumptions and estimates. These internal analyses have not been veried by any independent source and there can be no assurance that the assumptions or estimates are accurate. Accordingly, no undue reliance should be placed on any of the industry, market or Euskaltel's competitive position data contained in the Presentation.

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Business Plan presentation

02

Euskaltel'ssolid existing business, network assets and protable national expansion drive shareholder value creation

Existing business delivers					Best-in-class owned
industry-leading returns					network assets

>30%	2.8m	76%	2.3m
Market share	Telecom services	Owned network	Homes passed
50%	€190m	coverage100%
EBITDA margin	FY19 OpCF	Docsis 3.1 technology
	4%

Dividend yield

National expansion

accelerates shareholder value creation

Building blocks for national expansion now all in place

Growth on an integrated platform delivers operational leverage

100% success-based model delivers quick return-on-investment

Business Plan presentation

03

AGENDA

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Business Plan presentation

04

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Euskaltel's brand and service leadership drives market success

Brand attributesmarket leadership…

Closeness

Honesty

Identity

Trust

Empathy

… andcustomer care leadership…

... drivemarket success

Market share(1)%

33% 24% 43%

FBB

Mobile

Pay TV

Source: Company estimates based on CNMC data.

(1): Estimated market share in the Basque Country, Galicia and Asturias in Q3 2019

Source: GFK Q4 2019 brand study (for existing regions only)

Business Plan presentation

05

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Euskaltel's solid B2B businessprovides advanced services to leading customers

>50%				€110m
			FY19 B2B revenue	(2)
Market share(1)
	>20
>15k										years
Customers										Experience
Digital Services										Cybersecurity
Hybrid Cloud										Advanced
										Telecom Services

The B2B business continued to experience customer and revenue growth in 2019

(1): Existing regions only (2): B2B revenue grew c.3% in Q4 2019 vs Q4 2018
Business Plan presentation	06

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Euskaltel's best-in-classowned networkis a valuable asset

Owned network coverage

(% of households)

Customers connected

(thousands)

81%71%77%

320k215k115k

2.3m	100%
owned households	Docsis 3.1 technology

Business Plan presentation

07

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Single ecient integrated organization drives operational leverage

One business, four brands

CEO

FinanceHR

Sales

Marketing

B2B

Network

Operations & IT

Mass Market

B2B

The Factory

One integrated organization reduces complexity and delivers increased synergies

A single network and operations hub (The Factory) creates eciencies and drives operational leverage

The existing structure designed to support national expansioncreates further operational leverage

Business Plan presentation

08

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Change in sales channel mixincreases gross adds and reduces costs

Sales channel mix

67%52%

Shops &

direct salesforce

Non face-to-face channels are 50% less costlythan shops and direct salesforce

		48%	Inbound,
33%		outbound
		& online sales
H2 18	H2 19

Business Plan presentation

09

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Euskaltel'swholesale FTTH agreements result in a signicant footprint expansion in existing regions

	Existing network
	coverage
	81%
	71%
	77%
5 EXPANSION PILOTS	55%
(Navarra, Cataluña, León,

Cantabria, La Rioja)

Addressable footprint in existing regions

In million homes passed

	5.8m	~0.5m	6.3m
					Expansion pilots
	3.5m(2)	VULA & NEBA	3.5m(2)
	deployment				Basque Country,
							Asturias and Galicia
			2.8m(1)
	(1)
	2019		2020e

(1): Owned households

(2): Total addressable households including those accessible through wholesale and mutualization agreements

Business Plan presentation

10

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Existing business isback to growth and highly cash generative

Revenue & EBITDA growth %

+7.7%(1)

+0.7%

					Q4 19
Q4 18			Revenue		EBITDA

SG&A savings -6%(2)

Industry leading cash generation

FY 2019 OpCF % revenue

				Existing business is back to revenue
EKT	28%
and EBITDA growth
TEF
				Operational eciencies progressing
ORA
		and delivering results

VOD

MAS

Cash generationis industry-leading

(1): Q4 19 EBITDA includes €6.9 million of positive one-os mainly from the renewal of the Orange wholesale agreement

(2): Excluding IFRS 16 positive impact from Q4 19 gures

Business Plan presentation

11

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Footprint expansion and continuing eciency will drive growth in the existing business

Revenue growth

1 - 2 % 2020 - 2025 revenue CAGR

Customer growth from footprint expansion and neighbouring regions

EBITDA growth

Further cost reduction and eciency gains

Larger scale results in operational leverage

Operating cash-ow growth

Sales mix improved

Focus on capex eciency

Business Plan presentation

12

AGENDA

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Business Plan presentation

13

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Spain's FBB and TV markets represent a growth opportunity

Spanish FBB Market -FBB lines	Spanish FBB Market - Opportunity to grow
In million lines	In million lines

			15.2	15.6		Market growth		Market churners
		14.7		3.5	3.7	3.8	3.8	3.9
	14.1
13.5
					3.0	3.1	3.2	3.3	3,5
					0.5	0.6	0.6	0.5	0,4
2015	2016	2017	2018	2019e	2015	2016	2017	2018	2019e

Spanish Pay TV Market - Evolution of subscribers	Spanish Pay TV Market - Penetration over FBB
In million subscribers

			6.9	7.1	In % over FBB lines
	6.1	6.7
					45%	45%	45%
5.8
					43%	44%
2015	2016	2017	2018	2019e	2015	2016	2017	2018	2019e

Source: CNMC, company estimates

Business Plan presentation

14

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

National expansion multipliesthe company's addressable market

Existing regions

Households	2.3M(1)	X 8	18.4M
Population	5.8M	addressable	47.1M
	1.9M	market	15.6M
Broadband accesses

Source: CNMC, INE; existing regions includes data for the Basque Country, Galicia and Asturias

(1): Owned households

A larger addressable market combined with operational leverage will drive protable growth

Business Plan presentation

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EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

A large and ecient FTTH market allows national footprint access at competitive prices

Spain's Next Generation Networks deployed	Euskaltel's addressable footprint
In million households	In million households

						18M
TEF				23.1
ORA			14.9			12M
EKT		2.3		75%
VOD			10.4
	(1)				5.8M (2)
OTHERS		1-2		FTTH coverage
			2019	Q2 20e
		Spain isthe most active wholesale	Addressable footprint multiplies through
			market in Europe		access to Orange and Telefonica's networks

Source: Companies' data , Xataka (1): Owned households

(2): Total addressable households 2019 including those accessible through wholesale and mutualization agreements

Business Plan presentation

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EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Virgin brand is a powerful accelerator for national expansion

Brand recognition

75%

		Brand attributes
International										47
Modern									32
Experienced								26
Innovative								26
Reputation							24
Solid company						23
Quality
				15
Reliability			13
Socially engaged		7

Source: Research Now Ltd market research	Source: Virgin brand perception study, GfK, 2019
Business Plan presentation	17

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Euskaltel's Virgin oer has a clear value positioning

Product / Service

Illustrative

Value

High price

Low cost

Price

Euskaltel'sgreat service,

competitive pricing, andVirgin brand attributes equalsvalue

Virgin product attributes will includehigh speed FBB, data rich mobile and a strong TV oer

Source: internal analysis

Business Plan presentation

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EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Euskaltel's existing high-quality TV oering is an opportunity for growth

High-quality content oering

Open platform

Advanced hardware

4K UHD			Network PVR
Catch-up TV			Start-over
Video-on-Demand			Time shi

All our customers will have access to high qualitymulti-functionalTV services

Business Plan presentation

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EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Amulti-channelsales strategydrives ecient customer acquisition

Inbound / Outbound

Online

Ecient

sales mix

Strong focus on direct sales and non face-to-face channels allows

formaximum eciency

Stands Below-the-line(1)

(1): Below-the-line channels include member-get-member, friends & family and other

Business Plan presentation

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EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Success-based"pay-as-you-go" growth model delivers anattractive payback

National expansion convergent customer economics
			€300/350	almost
				Expansion investment
			Per add subscriber acquisition cost (1)	100% success-based
			~40%	Wholesale costs
			Margin	100% variable
			<2years	Highly attractive
			return-on-investment
ARPU	Customer costs	Margin	Payback
		National expansion costs are 90% variable
	as growth leverages on Euskaltel's existing platform

1. : SAC includes commercial costs, installation and customer equipment (router andset-top-box) for a convergent customer

Business Plan presentation

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AGENDA

EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Business Plan presentation

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EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

National expansion willdouble the size of the customer base

					Fixed subscribers (Mass market)									Mobile services
						EoP in k - % breakdown										RGUs in k - % breakdown
						> x2			1,500 - 1,600									> x2		3,100 - 3,200
											50%															50%
					700 - 730													1,300 - 1,350
670						1,167
						50%								50%
						95%															95%
2019		2020e				2025e	2019			2020e			2025e
					Existing Business		National expansion							Existing Business		National expansion

National expansion customer growth requires around 5% of the market's FBB gross addsin the business plan period

Business Plan presentation

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EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Revenue will increase by more than 80% in the business plan period

Revenue - €m
	CAGR +11%	1,200 - 1,300
			38%
685	700 - 710
			62%
2019	2020e		2025e
	Existing Business	National expansion

Revenue growth mainly driven by national expansion

Protable growthwith healthy customer economics

Existing business contributing positively mainly through footprint expansion

Business Plan presentation

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EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

EBITDA grows at 6% CAGR in the2020-2025period

EBITDA - €m
		CAGR +6%	470 - 520
		Existing Business	National expansion
	345	340 - 350
		350 -360
	2019	(10) - (20)		2025e
	2020e
%
50%	49%		~40%
revenue

Reaching >25% run-rate EBITDA margin on national expansion

EBITDA growth driven by national expansion, existing footprint expansion and eciency improvements

Continued focus onimproving processes and operations

Business Plan presentation

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EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Leverage in existing platforms allows for 90%success-basednational expansion investments

National expansion investments - €m

	80 -90
	10%
	90%	50 -60
15 -20
2020e	2025e total	2025e ex-growth(1)

%		SAC		Other (2)
<20%	~10%
revenue

(1): Investments ex-growth calculated as national expansion investments with zero net adds

(2): Other capex includes network maintenance and IT systems

National expansion investments 90% customer growth related

Ex-growthnational expansion investments c. 10% revenue

National expansion investments with continuing growth <20% revenue

Business Plan presentation

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EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

Operating cashow grows rapidlyonce national expansion gains scale

OpCF - €m

Existing Business		National expansion

			280 -320
		240 -280
190	170 -180
	200-210
	(25) - (35)
2019	2020e	2025e total	2025e ex-growth(1)

2020e OpCF impacted by customer growth investmentsin national expansion

Operational cash ow growth driven by national expansion and cost eciencies

Once growth stabilises operational cashow grows rapidly

1. : OpCFex-growth calculated as OpFC of the company with zero net adds

Business Plan presentation

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EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

The company delevers quicklyaer the initial years of national expansion

Net debt/EBITDA - times

4.2x	4.1x
		3.0x
2019	2020e	2025e

Delivery of operational eciencies allows to maintain leverage stable during the initial launch of national expansion

Once national expansion EBITDA grows the company delevers quickly

No changes to capital structure nor shareholder remuneration needed to execute the business plan

Business Plan presentation

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EXISTING BUSINESS

NATIONAL EXPANSION

FINANCIAL PROJECTIONS

National expansiontransforms the company into a growth business

Fixed Subscribers (mass market) (k)

Mobile Services (mass market) (k)

Revenue

€m

EBITDA

€m

2019		2025e	CAGR '19 - '25
		1,500 - 1,600	+15%
670	x2.3
			+18%
1,167	x2.7	3,100 - 3,200
			+11%
€685m	x1.8	€1,200 - 1,300m
		€470 - 520m	+6%
€345m	x1.4

Business Plan presentation

29

Conclusions

Euskaltel oers aunique combination of assets

Asolid cash-generating and growing existing business

Abest-in-class owned valuable network

Aprotable national expansion strategy

for the delivery ofgrowth and shareholder value creation

Business Plan presentation

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EUSKALTEL, S.A. Investor Relations Oce Tel: [phone] [e-mail] www.euskaltel.com