Euskaltel : publishes first quarter 2019 results presentation.

1Q2019 Results

May 7th, 2019

1Q2019 Results

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2

1Q2019 Results

Situation of our strategic plan |1Q2019. Positive progress in all our pillars

Leading operator in NPS in our markets

Reinforced leadership in Customer Satisfaction, specially in customer service and technical support

Sensible positive impact of the

4K STB in satisfaction and loyalty

R Cable close to end migration of the CRM and call center systems

Single system platform and new CRM still in process

Impact in efficiencies will be relevant by year end 2019

Best customer	Back to
experience	profitable
while	growth in B2B
maintaining
our leadership
in residential

Simplification,
Platform
integration	Targeted
and	expansion to
digitalisation	boost growth

+0.8% total B2B revenue yoy

+4.7% SMEs + LA revenue yoy

Growing number of customers in SMEs and LA for fifth quarter in a row

Both number of SOHO customers and SOHO ARPU stabilized after years of declining

In line to meet target of 30k+ customers by year end 2019

In line to meet target of c. €10m revenue by year end 2019

3

1Q2019 Results

Highlight |Expansion plan to boost growth

CUSTOMER GAIN

▪In line to meet target of 30k customers by year end 2019

ARPU EVOLUTION

▪ARPU in new areas evolving better than initially expected ▪ARPU after entry promotions to reach €60 per month

REVENUE EVOLUTION (€m)

▪In line to meet target of c.€10m expansion revenue by year end 2019

c.30.0

			c.10.0
0.0	0.8	0.9
YTD March18	YTD Dec18	YTD March19	YTD Dec19	YTD Dec20

4

1Q2019 Results

Operating review

5

1Q2019 Results

B2C |Positive net adds in the quarter prove the strength of our brands

Fixed residential subscribers growth ('000)

Growth per quarter

Growth per month

+1.4

																		576.8									+0.2		+0.6			576.8
																							+0.3
										+1.1				575.7
		575.4	+0.3				575.7

EOP 4Q17	Net Adds FY18	EOP 4Q18	Net Adds 1Q19	EOP 1Q19	EOP 4Q18	Net Adds	Net Adds	Net Adds	EOP 1Q19
						JAN19	FEB19	MAR19

6

1Q2019 Results

B2C |Becoming more and more convergent

RGUs growth ('000)

+84.3

Fixed telephony penetration

falling progressively in Spain

(CNMC data: penetration of

40.9% in Jan19 vs 41.4% in

+12.2

2,408.9

Dec17)

+7.2

2,388.0

+3.3

3.7

RGU/sub

+63.3

3.6

(1.8)

RGU/sub

2,324.6

3.5

RGU/sub

70.3%

89.2%

86.8%

73.5%

82.2%

3P/4P

Fixed telephony

Broadband

Pay TV

Mobile

penetration3

penetration1

penetration1

penetration1

penetration2

(-192bps yoy)

(+139bps yoy)

(+415bps yoy)

(+325bps yoy)

(+162bps yoy)

RGUs 4 7

RGUs adds

RGUs 4Q18

Fixed telephony

Broadband

Pay TV

Postpaid mobile

RGUs 1Q19

RGUs adds FY18

EOP 4Q17

FY18

EOP 4Q18

EOP 1Q19

Note: 1.

RGUs as % of total fixed customers

2.

Residential mobile subscribers (excluding mobile only) as % of total fixed customers

7

3.

Residential subs as % of total subscribers

1Q2019 Results

B2B | Trends improving steadily

Large Accounts SMEs

SOHO

SOHO revenue

Large Accounts revenue

(EURm)

(EURm)

(4.7%) yoy

+4.7% yoy

19.7

20.9

40%

1Q19

42%

B2B REVENUES:

1Q18 2Q18 3Q18 4Q18 1Q19

SOHO KPIs

	Subscribers ('000)		ARPU (€/month)
100	100	99	97	97	68,3	68,1			68,2
								67,9	67,8

EUR49.7m

(+0.8% yoy)

18%

1Q18 2Q18 3Q18 4Q18 1Q19

SMEs revenue
(EURm)	+4.7% yoy
	9.1

1Q18

2Q18

3Q18

4Q18

1Q19

1Q18

2Q18

3Q18

4Q18

1Q19

1Q18

2Q18

3Q18

4Q18

1Q19

8

1Q2019 Results

Financial review

9

1Q2019 Results

Top line yoy performance

Total revenue (€m)

(2.8%)

▪Less 'wholesale&other' revenue explained by one-offs:

176.6

▪Tougher comparison base because of IFRS15 application in 1Q18

171.7

▪Sale of subsidiary CINFO

11.0

7.8

49.3

49.7

▪

Growth in B2B revenue thanks to the success of the new strategy in SMEs and L.A.

•Stability in the residential

Residential revenue evolution yoy (%)

customer base

•

Revenue coming from

expansion

1Q18

2Q18

3Q18

4Q18

1Q19

116.3

-1.8%

114.1

not relevant yet (less than €1M in

-2.4%

the quarter)

-3.1%

-3.3%

-3.6%

•

Competitive pressure

impacted

residential ARPU evolution

1Q18

1Q19

Residential Business

Wholesale & others

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1Q2019 Results

Top line and EBITDA quarterly performance

Total revenue (€m)				EBITDA (€m) and EBITDA margin (% over revenue)
176.6			47.7%		47.3%
170.5	171.7	84.2	83.6
11.0	81.1
	7.8
9.2
49.3	46.5	49.7

116.3

114.8

114.1

1Q18

2Q18

3Q18

4Q18

1Q19

1Q18

2Q18

3Q18

4Q18

1Q19

Residential

B2B

Wholesale &others

11

1Q2019 Results

CAPEX and OpCF1overview

CAPEX breakdown (€m) and CAPEX over revenue (%)

19.2%20.2%

33.934.6

4.8 2.8%

6.93.9%

OpCF (€m) and OpCF over revenue (%)

70,0	32.4%
	ex -	29.9%
	expansion&
60,0	integration	ex -
expansion&

integration

50,0

40,0

30,0

27.0

29.8

50.3	50.5	48.0	46.5
20,0
		34.2
10,0

17.4%

15.3%

	1Q18		1Q19
	Capex ex - expansion&integration		Expansion&integration

0,0
1Q18	2Q18	3Q18	4Q18	1Q19

Net Debt(at 31 March 2019)

Average Cost of Debt

€1,567m2.58%

Note: 1. OpCF defined as EBITDA-Capex

12

Q&A

1Q2019 Results

Appendix

Euskaltel Group 1Q 2019 consolidated results and KPIs

15

1Q2019 Results

Euskaltel Group consolidated - KPIs (i/ii)

Residential			Annual				Quarterly
KPIs	Unit		2017PF	2018		1Q18	2Q18	3Q18	4Q18	1Q19
Homes passed	#		2,166,001	2,357,323		2,222,026	2,230,073	2,306,030	2,357,323	2,910,747
Household coverage	%		70%	71%		70%	70%	70%	71%	-
Residential subs	#		660,946	658,172		660,758	662,501	657,909	658,172	657,364
o/w fixed services	#		575,354	575,664		575,970	578,503	573,648	575,664	576,756
as % of homes passed	%		26.6%	26.4%		25.9%	26.7%	26.4%	26.4%	26.3%
o/w mobile only subs	#		85,592	82,508		84,788	83,998	84,261	82,508	80,608
o/w 1P (%)	%		19.5%	18.6%		19.2%	18.7%	19.1%	18.6%	18.2%
o/w 2P (%)	%		12.5%	11.7%		12.2%	12.0%	11.9%	11.7%	11.5%
o/w 3P (%)	%		26.3%	22.9%		25.5%	24.8%	24.0%	22.9%	22.1%
o/w 4P (%)	%		41.7%	46.8%		43.2%	44.5%	45.0%	46.8%	48.2%
Total RGUs	#		2,324,640	2,387,989		2,349,101	2,381,419	2,363,292	2,387,989	2,408,908
RGUs / sub	#		3.5	3.6		3.6	3.6	3.6	3.6	3.7
Residential churn fixed customers	%		17.5%	17.0%		15.6%	14.9%	16.6%	17.0%	17.0%
Global ARPU fixed customers	€/month		60.69	59.93		60.36	60.02	60.13	59.93	59.18
Fixed Voice RGU's	#		527,908	516,169		524,758	525,459	516,453	516,169	514,387
as% fixed customers	%		91.8%	89.7%		91.1%	90.8%	90.0%	89.7%	89.2%
BB RGU's	#		488,708	497,135		491,786	496,045	492,732	497,135	500,448
as% fixed customers	%		84.9%	86.4%		85.4%	85.7%	85.9%	86.4%	86.8%
TV RGU's	#		393,356	416,718		399,381	408,252	406,911	416,718	423,871
as% fixed customers	%		68.4%	72.4%		69.3%	70.6%	70.9%	72.4%	73.5%
Postpaid lines	#		914,668	957,967		933,176	951,663	947,196	957,967	970,202
Postpaid customers	#		529,459	549,955		539,305	547,636	544,575	549,955	554,485
as% fixed customers (only mobile excluded)	%		77.1%	81.2%		78.9%	80.1%	80.2%	81.2%	82.2%
Mobile lines / customer	#		1.7	1.7		1.7	1.7	1.7	1.7	1.7

SOHO			Annual				Quarterly
KPIs	Unit		2017PF	2018		1Q18	2Q18	3Q18	4Q18	1Q19
Subs	#		101,378	97,002		100,038	99,667	98,754	97,002	96,524
o/w 1P (%)	%		26.7%	25.7%		26.3%	25.7%	25.8%	25.7%	25.1%
o/w 2P (%)	%		14.7%	12.6%		14.2%	13.4%	13.1%	12.6%	12.3%
o/w 3P (%)	%		39.3%	37.9%		38.8%	38.6%	38.4%	37.9%	37.4%
o/w 4P (%)	%		19.4%	23.8%		20.7%	22.2%	22.7%	23.8%	25.2%
Total RGUs	#		353,641	349,028		352,206	355,535	352,723	349,028	350,579
RGUs / sub	#		3.5	3.6		3.5	3.6	3.6	3.6	3.6
Soho churn fixed customers	%		22.3%	20.4%		22.1%	20.7%	20.1%	20.4%	21.4%
Global ARPU Fixed customers	€/month		69.12	67.84		68.32	68.06	67.90	67.84	68.18
SMEs and Large Accounts			Annual				Quarterly
KPIs	Unit		2017PF	2018		1Q18	2Q18	3Q18	4Q18	1Q19	16
Customers	#		14,670	14,827		14,728	14,785	14,801	14,827	14,960

1Q2019 Results

Euskaltel Group consolidated - Consolidated financials (ii/ii)

Selected financial information			Annual				Quarterly
	Unit		2017PF	2018		1Q18	2Q18	3Q18	4Q18	1Q19
Total revenue	€m		707.0	691.6		176.6	172.7	171.9	170.5	171.7
Y-o-y change	%		-1.1%	-2.2%		0.4%	-2.0%	-2.7%	-4.3%	-2.8%
o/w residential	€m		478.3	463.4		116.3	115.8	116.5	114.8	114.1
Y-o-y change	%		0.4%	-3.1%		-2.4%	-3.1%	-3.3%	-3.6%	-1.8%
o/w Business	€m		191.8	189.9		49.3	47.9	46.2	46.5	49.7
Y-o-y change	%		-5.1%	-1.0%		2.5%	0.0%	-1.7%	-4.7%	0.8%
o/w Wholesale and Other	€m		37.0	38.4		11.0	8.9	9.2	9.2	7.8
Y-o-y change	%		0.2%	3.8%		26.5%	1.0%	0.8%	-10.4%	-29.0%
Adjusted EBITDA	€m		341.0	336.4		84.2	84.5	84.1	83.6	81.1
Y-o-y change	%		-1.3%	-1.3%		0.3%	-0.8%	0.0%	-4.6%	-3.7%
Margin	%		48.2%	48.6%		47.7%	49.0%	48.9%	49.0%	47.3%
Capital expenditures	€m		(124.9)	(153.5)		(33.9)	(34.0)	(36.1)	(49.4)	(34.6)
Y-o-y change	%		3.1%	22.9%		10.1%	17.4%	34.8%	28.7%	2.0%
% total revenues	%		-17.7%	-22.2%		-19.2%	-19.7%	-21.0%	-29.0%	-20.2%
Operating Free Cash Flow	€m		216.1	182.9		50.3	50.5	48.0	34.2	46.5
Y-o-y change	%		-3.6%	-15.3%		-5.4%	-10.3%	-16.3%	-30.6%	-7.5%
% total revenues	%		30.6%	26.4%		28.5%	29.3%	27.9%	20.0%	27.1%

17