COMMUNICATION OF A RELEVANT FACT

MASMOVIL GROUP

30th October 2019

The following Relevant Fact is provided regarding the company MASMOVIL IBERCOM, S.A. (hereinafter either the "MASMOVIL Group" or "MASMOVIL" or "Group") in accordance with what is laid down in article 17 of Regulation (UE) nº 596/2014 on market abuse and article 228 of the revised text of the Securities Market Act passed by Legislative Royal Decree 4/2015 of 23rd October and subsequent dispositions.

Earnings Report 9M 2019

In Madrid on 30th October 2019

Meinrad Spenger

CEO

MASMOVIL IBERCOM, S.A.

1

Earnings Report 9M 2019

Index

Key Highlights 9M19

3

9M19 Financial Highlights

5

Operational & Financial Review

7

Consolidated Profit and Loss Statement

10

Consolidated Balance Sheet

13

Cash Flow Statement

16

Relevant Issues Following the Closing of the Period

18

Disclaimer

19

Information also available on www.grupomasmovil.comunder section "shareholders and investors"

2

Key Highlights 9M19

  • Strong Service Revenues & Subscriber Growth Remains o Service Revenue growth of +23% YoY in 9M19
    o Postpaid net additions of 373k (131k broadband & 242k mobile) in 3Q19
  • Increased Profitability
  1. Adjusted EBITDA 9M19 of €337M (+40% YoY)
    1. EBITDA margin increased from 23% in 9M18 to 28% in 9M19 (+5pp)
    1. Adjusted Net Income 9M19 of €84M
  • Network Development Progressing in Line with Plan
    1. MASMOVIL's own FTTH footprint increased to 7.8M Building Units ("BUs") or 13.0M BUs pro-forma for: i) the Orange deal announced on October 1st 2019, which will add 5.2M by YE19 and, ii) the sale of c.1M BUs to an infrastructure fund (expected to close before year end)
    1. Fixed Network Development Capex of €195M (incl. 2.7M new BUs deployed in 9M19)
    1. Total FTTH coverage increased to 22.0M BUs (including wholesale access)
  • Operational Milestones & Initiatives During the Period
    1. Integration of Netflix streaming service within Agile TV in addition to existing services such as Amazon Prime TV, SKY and Rakuten among others
  1. Promotional activity at low level, reduced in line with overall market dynamics o Retail channel reinforced through MASLife multibrand shop launch
  1. According to a nPerf research study, Grupo MASMOVIL ranked once more as #1 broadband network in Spain in terms of speed (up-/download) and latency1
  1. Launch of MAS Fijo, a voice product that allows users to replicate a fixed line product (i.e. keeping their fixed telephone number) without incurring any monthly cost for a fixed line as the service is based on a mobile SIM card
  1. Connected car initiative - Caser and Renault partnership - commercially launched

1 nPerf study from July 17th 2019 with 814k users

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  • MASMOVIL to sell c.1M FTTH BUs for €217.5M to an International Infrastructure Fund (expected to close before year end)
  • MASMOVIL signed on September 30th, 2019 comprehensive agreements with Orange Espagne S.A.U. that cover all future 5G needs, significantly increase the size and cost efficiency of our FTTH network, and generate €40M of run- rate Opex savings
  1. MASMOVIL reaches the end of its fixed & mobile network investment phase - the FTTH network will cover cost efficiently c.14.2M BUs by the end of 2020 or 2/3 of all current Spanish FTTH BUs with no need for significant additional investments in its mobile network. Therefore, future annual Capex will decline significantly and OpFCF is forecasted to reach €415-445M by 2021
  1. The agreements with Orange are beneficial to MASMOVIL due to the following reasons:
  1. Mobile cost stability: mobile roaming contract renegotiation risk is eliminated with contract extension until 2028-2033; the extension includes 5G, attractive economics and the change of the NRA to a future proof and sustainable network capacity-based model
  1. Nationwide 5G coverage: solves in a single transaction all future 5G needs across the entire country with sufficient flexibility to accommodate MASMOVIL's growth
  1. FTTH network improvement: fiber network increases from 8M to >13M BUs in 2019 (+62%) in a single transaction (and to >14M BUs by 2020); the transaction ensures a quick time to market and improves the cost efficiency of our FTTH footprint, all while payments are spread over 4 years through a vendor financing scheme
    1. Capex visibility: required future 5G & FTTH investment will be very limited and materially below any standalone deployment solution, at the same time MASMOVIL significantly increases its infrastructure in terms of access to mobile sites, spectrum and FTTH network
  • MASMOVIL is launching today the repricing of its €1.45Bn Term Loan B (TLB), which was successfully placed in May
  • MASMOVIL reiterates its recently increased 2019-2021 guidance:
  1. 2019 Service Revenues €1,465M; Adjusted EBITDA €465M; Net Capex €457M o 2020 Adjusted EBITDA €570-600M; Margin 30-32%; Net Capex €295M
    o 2021 Adjusted EBITDA €670-700M; Margin 32-34%; Net Capex €255M

4

9M19 Financial Highlights

  1. MASMOVIL generated Service Revenues of €1,058M (+23% YoY), and Total Revenues of €1,219M (+17% YoY)
  1. Adjusted EBITDA of €337M (+40% YoY), reaching an EBITDA margin of 28% (+5pp)
  1. Reported Net Income of -€21M vs. €57M in 9M18 due to the one-offnon-cash impact from the Providence convertible bond repurchase. Reported Net Income to turn positive once the pending sale of the FTTH BUs will be completed before year end
  1. Total Net Capex of €390M including €118M of Commercial Capex (€81M in relation to customer growth and €37M to churn replacement), and €195M in relation to new FTTH deployments (2.7M BUs in 9M19)
  1. Growth Capex of €292M (75% of Total Net Capex) reflecting MASMOVIL's continued strong operating momentum
  1. MASMOVIL's own/usage rights FTTH network coverage increased to 13M BUs (vs. 4.8M BUs in 3Q18), representing c.60% of MASMOVIL's total FTTH footprint of 22.0M BUs in 3Q19
  1. These 13M BUs mentioned above are pro-forma including usage rights over 5.2M BUs from our new Orange deal, which was announced on Oct 1st 2019 and it also includes the sale of c.1M BUs to an infrastructure fund, which is expected to close before year end
  1. Net Debt of €1,802M equivalent to a pro-forma leverage of around 3.8x based on 2019 EBITDA guidance of €465M. The net debt level reflects the purchase of the Providence convertible with leverage broadly in line with the guidance provided at the time of the announcement of the new Orange agreement on October 1st, 2019
    1. Cash Flow from Operations remained positive for the second quarter in a row, which allowed to reduce the -€165M OpFCF reported in 1Q19 to -€120M for the 9M19, therefore 2019 OpFCF guidance remains on track
  • Subscribers
    1. MASMOVIL achieved +131k fixed broadband net adds (in excess of 100k for eight consecutive quarters) and +242k postpaid mobile net adds in 3Q19 (in excess of 190k for nine consecutive quarters)
  1. As of 3Q19 MASMOVIL reached 5.4M mobile postpaid lines (+19% YoY) and 1.4M broadband lines (+60% YoY)

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Masmovil Ibercom SA published this content on 30 October 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 October 2019 07:41:06 UTC