4q19 earnings presentation · 4q19 earnings presentation b2b: continued growth of data and it...

4Q19 Earnings Presentation

4Q19 Earnings Presentation 2

Highlights 4Q19

+1.1%Telco Revenues

+1.3%Consolidated Revenues

+2.8%Telco EBITDA

+2.4%EBITDA

+78.1%Operating CF1

+5.7%Total CAPEX1

• Good RGU growth in 4Q19, with particularly strong performance in mobile and robust Pay TV net adds;

• Solid Consolidated Revenue performance, with consistent revenue growth of 1.1% in Telcos and 1.8%

in Cinemas & Audiovisuals;

• EBITDA continues to grow above revenues driving margin expansion of 0.3pp in 4Q19;

• Technological investments on track with expansion of FttH network and mobile network upgrade

complete.

1. Including Leasings.


I. Solid operating performance

II. Positive financial performance in a mature market context

Agenda


10

1416

14

3

7

13 12

24

6

9

-3

0

2

6

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

3023

39

6

-18

20

40 42

-22

-7

0

-22

-34

-1

19

-5

52

30

38

28

1621 21

47

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

-2

2

5

2

-7

0

14

7

3

7

1112

23

18

9

-5 -5 -6

-10-8

-3 -3-1

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

3023

39

6

-18

20

40

-22

-7

0

-22

-34

-1

19

52

3038

28

1621 21

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19

Mobile Pre-Paid Post-Paid

10

1416

14

3

7

13

24

69

-30

2

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19

Fixed Broadband Fixed Voice

-2

25

2

-7

0

14

3

7

11 12

23

18

-5 -5 -6

-10-8

-3 -3

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19

Total Pay TV Fixed Access DTH

Good performance in Fixed Pay TV, fewer disconnections in DTH and strong growth in Mobile

Solid operating performance

4

Mobile Net Adds [Thousands]Fixed Access Pay TV - Net Adds [Thousands] Fixed BB and Fixed Voice Net Adds [Thousands]


10091

8076808687

747873

8896

84807478

89797573

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

2Q

18

3Q

18

4Q

18

1Q19

2Q

19

3Q

19

4Q

19

5

Pay TV growth led by increase in addressable households and continued decline in churn

14-12

9

73 6775 76

57

33

68

40

238 15

269*

38

15

66

103

150

5543

-14-17

-60

710

1517

1410 11

1511

6 5 4 37

11

12

2 3

-3 0

-2 0

-1 0

0

1 0

2 0

3 0

-4 0

-2 0

0

2 0

4 0

6 0

8 0

1 0 0

1 20

1 4 0

1 60

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

2Q

18

3Q

18

4Q

18

1Q

19

2Q

19

New HH Passed Fixed Access Pay TV

Fixed Residential Churn [Rebased, 1Q15 = 100]NOS network expansion / Fixed Pay TV Net Adds [Thousands]

150

5548

79

37

12

2 3

18

9

-3 0

-2 0

-1 0

0

1 0

2 0

3 0

0

2 0

4 0

6 0

8 0

1 0 0

1 20

1 4 0

1 60

4Q18 1Q19 2Q19 3Q19 4Q19



Convergent+Integrated Subscribers, RGUs per Sub [Thousands, Unit]

6

Momentum for more flexible, made to measure tariff plans continues to drive integrated subscriptions, supporting residential ARPU and offsetting international call cap pressure

Convergent+Integrated Penetration of Fixed Access Subscribers [%]

Fixed Residential ARPU [Euros]

43.9 44.1 44.2 44.1 44.0

4Q18 1Q19 2Q19 3Q19 4Q19

57.9%

58.5%

59.2% 59.1%

59.8%

4Q18 1Q19 2Q19 3Q19 4Q19

889.8 896.1 907.1 914.8 930.7

5.0 5.0 5.0 5.1 5.1

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10. 0

500.0

550.0

600.0

650.0

700.0

750.0

800.0

850.0

900.0

950.0

1,000.0

4Q18 1Q19 2Q19 3Q19 4Q19



Mobile Subscribers [Thousands]

7

Growth in post-paid subs and yoy decline of pre-paid net losses driving higher mobile net adds

Mobile Net Adds [Thousands]

2,051 2,051 2,029 1,995 1,994

2,672 2,710 2,738 2,754 2,775

4,723 4,761 4,768 4,750 4,769

2Q18 3Q18 4Q18 1Q19 2Q19

Pre-Paid Post-Paid

2,029 1,995 1,994 2,013 2,008

2,738 2,754 2,775 2,796 2,843

4,768 4,750 4,769 4,809 4,851

4Q18 1Q19 2Q19 3Q19 4Q19


6

-18

20

40 42

4Q18 1Q19 2Q19 3Q19 4Q19


Innovative commercial launches in 4Q19

8


Matosinhos is the first NOS 5G city

Our 5G network pilot is 100% operationalin Matosinhos, positioning NOS as a

leader in the rollout of this technology

New ScreenX Concept(270-degree screen)

NOS Cinemas once more pioneered newformats for the Portuguese cinema fans

Product of the Year 2020 AwardsConsumers have again elected

products and services as Product of the Year

Nova rede móvel

5G ready

ExperiênciaTV

Gestão contaApp NOS

App NOSCinema


B2B: Continued growth of data and IT revenues, offsetting drag from more traditional telecom services

Corporate IT Revenues [Rebased, 1Q15 = 100]

IT services are driving a shift in revenue mix in the Corporate Segment, already

representing 20% of revenues

9


NOS was presented with the award, recognizing its

positioning and strategy in delivering private cloud services to Corporate customers, combining HPE technology and

and service management

B2B Total RGUs [Rebased, 1Q15 = 100]

The B2B segment overall has shown continued growth

0

50

100

150

200

250

300

1Q1

5

2Q

15

3Q

15

4Q

15

1Q1

6

2Q

16

3Q

16

4Q

16

1Q1

7

2Q

17

3Q

17

4Q

17

1Q1

8

2Q

18

3Q

18

4Q

18

1Q1

9

2Q

19

3Q

19

4Q

19

100

105

110

115

120

125

130

135

140

1Q1

5

2Q

15

3Q

15

4Q

15

1Q1

6

2Q

16

3Q

16

4Q

16

1Q1

7

2Q

17

3Q

17

4Q

17

1Q1

8

2Q

18

3Q

18

4Q

18

1Q1

9

2Q

19

3Q

19

4Q

19

CloudCibersecurity

MobilityPlan

IoT

Office 365 Analytics


3.26 3.23 3.21 3.17 3.14

0.12 0.15 0.18 0.22 0.25

1.05 1.11 1.15 1.22 1.25

4.43 4.48 4.53 4.61 4.65

4Q18 1Q19 2Q19 3Q19 4Q19

Total network coverage [%] Mobile Single RAN Upgrade

10

Technological investments: FttH rollout on track; Mobile Single RAN upgrade complete

Modernization complete (≈ 100% sites)

FttH32%


On 4 February 2020 NOS announced it had signed a Letter of Intent with Vodafone framing the negotiation principles for a mobile network sharingagreement:

• Sharing of mobile network assets that are currently held or will be held, maintaining strategic control of network;

• The purpose of the agreement is to enhance investment efficiency, drive broader and faster nationwide coverage, and reinforce servicesproviding more benefits for customers.

3.4 3.4 3.4 3.3 3.3

0.1 0.1 0.15 0.18 0.220.7 0.7 0.7 0.8 0.9

4.1 4.1 4.1 4.2 4.3

3Q17 4Q17 1Q18 2Q18 3Q18

HFC HFC and FttH FttH


2,542.2

1,847.2

2,249.7

2,764.0

2,408.5

4Q18 1Q19 2Q19 3Q19 4Q19

NOS Audiovisuais distributed 7 out of theTOP 10 movies in 4Q19

11

Slowdown in Cinema ticket sales but pickup in Distribution market share

NOS Cinema Tickets Sold [Millions]

Note: Portuguese Operations.

-5.3%

Attendance 4Q19 yoy

-2.1%

Gross Box Office Revs 4Q19 yoy

NOS Audiovisuais Main Films Distributed in 4Q19NOS Cinema YoY Growth [%]

60%Attendance Market Share in 4Q19

61%GBO Market Share in 4Q19



I. Solid operating performance

II. Positive financial performance in a mature market context

Agenda


389.8

369.8377.8 380.4

394.3 394.9

2.3%

1.1%1.0% 1.1% 1.1% 1.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

200.0

250.0

300.0

350.0

400.0

4Q18 1Q19 2Q19 3Q19 4Q19 4Q19*

13

Consistent performance in Telco revenues, deceleration in Consolidated Revenues due to slowdown of AV & Cinema in the quarter

Positive financial performance in a mature market context

Consolidated Revenues and YoY Change [Millions of Euros, %] Telco Revenues and YoY Change [Millions of Euros, %] AV & Cinema Revenues and YoY Change [Millions of Euros, %]

* Revenues adjusted for the regulatory imposition of international call caps within Europe.

408.9

385.3396.4 403.4

414.0 414.7

2.5%

0.6%

1.8%2.1%

1.3% 1.4%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

200.0

250.0

300.0

350.0

400.0

450.0

4Q18 1Q19 2Q19 3Q19 4Q19 4Q19*

29.8

25.829.1

33.630.3

0.4%

-5.0%

14.0%15.6%

1.8%

-10.0%

-5.0%

0.0%

5.0%

10. 0%

15. 0%

20. 0%

25. 0%

30. 0%

35. 0%

0.0

5.0

10. 0

15. 0

20. 0

25. 0

30. 0

35. 0

40. 0

4Q18 1Q19 2Q19 3Q19 4Q19


245.5 241.1 242.0 247.3 250.6

127.6112.7 112.8 115.3

129.3

4Q18 1Q19 2Q19 3Q19 4Q19

2.3%

1.1%1.0%

1.1% 1.1%

2.9%

1.9%1.8%

1.4% 1.3%

4Q18 1Q19 2Q19 3Q19 4Q19

2.9%

0.9%

1.8% 0.9%

2.3%

3.5%

0.9%

1.7%

1.5%

2.5%

4Q17 1Q18 2Q18 3Q18 4Q18

Not Adjusted Adjusted*

242 240 241 246 245

118 109 114 109128

4Q17 1Q18 2Q18 3Q18 4Q18

Consumer Business & Wholesale

14

Improved performance in the Consumer segment and continued growth in B2B, mitigating drag from EU international call caps

Telco Revenue Growth [%]


Adjusted* Consumer and B&W Revenues and YoY Change [Millions of Euros, %]

2.5% 2.1%1.3% 1.3%8.0% 1.3%3.9% -0.6%

* Revenues adjusted for the regulatory imposition of international call caps within Europe.

0.7% 5.8%


132.6

160.7171.2 173.4

135.7

32.4%

41.7%43.2% 43.0%

32.8%

0.0%

10. 0%

20. 0%

30. 0%

40. 0%

50. 0%

60. 0%

70. 0%

80. 0%

90. 0%

100.0%

50. 0

70. 0

90. 0

110.0

130.0

150.0

170.0

190.0

4Q18 1Q19 2Q19 3Q19 4Q19

15

Consolidated EBITDA growth driven by consistent Telco EBITDA performance

Consolidated EBITDA, EBITDA Margin [Millions of Euros, %] Telco EBITDA, EBITDA Margin [Millions of Euros, %]

+2.4%yoy

+2.8%yoy


AV & Cinema EBITDA, EBITDA Margin [Millions of Euros, %]

-1.5%yoy

118.3

147.4

158.2 157.7

121.7

30.4%

39.9%41.9% 41.5%

30.9%

20. 0%

25. 0%

30. 0%

35. 0%

40. 0%

45. 0%

50. 0%

55. 0%

60. 0%

50. 0

70. 0

90. 0

110.0

130.0

150.0

170.0

4Q18 1Q19 2Q19 3Q19 4Q19

14.313.3 13.0

15.7

14.0

47.8%51.6%

44.8% 46.7% 46.3%

0.0%

10. 0%

20. 0%

30. 0%

40. 0%

50. 0%

60. 0%

70. 0%

80. 0%

90. 0%

100.0%

0.0

2.0

4.0

6.0

8.0

10. 0

12. 0

14. 0

16. 0

18. 0

4Q18 1Q19 2Q19 3Q19 4Q19



Operating Costs [Millions of Euros]

130.8 152.7 129.4 136.2 133.4

96.4

123.6

95.2 89.0 96.6

227.3

276.3

224.6 225.2 230.0

3Q18 4Q18 1Q19 2Q19 3Q19

Direct Costs Non-Direct Costs

Revenues & EBITDA yoy growth [%]

152.7129.4 136.2 133.4

159.8

123.6

95.2 89.0 96.6

118.5

276.3

224.6 225.2 230.0

278.3

4Q18 1Q19 2Q19 3Q19 4Q19

EBITDA continues to outgrow revenues due to cost discipline and operational transformation

0.6%

1.8%2.1%

1.3%

-0.5%

1.1% 1.2%

0.7%

2.1%

2.8%

3.4%

2.4%

1Q19 2Q19 3Q19 4Q19

0.6%

1.8%2.1%

1.3%

-0.5%

1.1% 1.2%0.7%

2.1%

2.8%

3.4%

2.4%

1Q19 2Q19 3Q19 4Q19

Revenues OPEX EBITDA


(2.0)

(101.6)

(5.1) (6.6) (4.5)(3.3)

(123.3)

(3.9) (5.6)

5.8

(140.0)

(120.0)

(100.0)

(80.0)

(60.0)

(40.0)

(20.0)

0.0

20.0

Share of JV

results

D&A Other

expenses

Net Fin.

Expenses

Income

Taxes

Net Income lower yoy due to impairment led D&A increase in the quarter

Consolidated Net Income [Millions of Euros] Cost breakdown below EBITDA [Millions of Euros]

17


-57.3%yoy

2

(102)

(5) (7) (5)

0 0 0 0 0

(120.0)

(100.0)

(80.0)

(60.0)

(40.0)

(20.0)

0.0

20.0

Share of JV

results

D&A Other

expenses

Net Fin.

Expenses

Income

Taxes

4Q18 4Q19

12.7

42.5

47.7 47.9

5.4

4Q18 1Q19 2Q19 3Q19 4Q19


Total, Telco and AV & Cinema CAPEX Excl. Leasing Contracts[Millions of Euros]

Technical CAPEX, % of Telco Revenues [Millions of Euros, %] Customer CAPEX, % of Telco Revenues [Millions of Euros, %]

Higher CAPEX in 4Q19 reflects phasing of telco projects and cinema refurbishment

18

12.5% 13.4%12.5%15.4%12.1%


80.8 85.4 92.5 87.0 81.7

6.8 6.37.7

7.35.5

87.6 91.7100.2

94.387.3

1Q18 2Q18 3Q18 4Q18 1Q19

Telco AV & Cinema

27.8 31.6 30.4 35.626.6

19.4

36.1

18.216.0

23.9

47.1

67.7

48.6 51.7 50.6

3Q17 4Q17 1Q18 2Q18 3Q18

Baseline NW Exp, Subst, Integration & Others

87.0 81.7 89.5 83.6 89.7

7.35.5

5.68.7

10.094.3

87.395.2 92.2

99.7

4Q18 1Q19 2Q19 3Q19 4Q19

26.132.8

38.530.6 34.2

22.6 12.1

19.6

16.918.4

48.744.9

58.1

47.552.6

4Q18 1Q19 2Q19 3Q19 4Q19

38.3 36.8

31.4

36.1 37.0

9.8% 10.0%8.3% 9.5% 9.4%

0.0%

5.0%

10. 0%

15. 0%

20. 0%

25. 0%

30. 0%

35. 0%

40. 0%

0.0

5.0

10. 0

15. 0

20. 0

25. 0

30. 0

35. 0

40. 0

45. 0

4Q18 1Q19 2Q19 3Q19 4Q19


FCF improves yoy to 2.4 million euros due to positive working capital seasonality

19

EBITDA- Total CAPEX Total Excl. Leasings [Millions of Euros] Free Cash Flow [Millions of Euros]

+78.1%yoy

Operating Cash Flow* [Millions of Euros]

-6.0%yoy

* After lease payments.


0.3

42.9

57.1

44.4

2.4

0.0

10. 0

20. 0

30. 0

40. 0

50. 0

60. 0

4Q18 1Q19 2Q19 3Q19 4Q19

38.3

73.5 76.181.2

36.0

0.0

10. 0

20. 0

30. 0

40. 0

50. 0

60. 0

70. 0

80. 0

90. 0

4Q18 1Q19 2Q19 3Q19 4Q19

11.4

49.1

65.2

57.9

20.4

0.0

10. 0

20. 0

30. 0

40. 0

50. 0

60. 0

70. 0

4Q18 1Q19 2Q19 3Q19 4Q19


1,347 million EurosNet Debt Including Leases

3.1 yearsTotal Average Maturity

1.3%

1.9xNet Financial Debt / EBITDA After Leases

214.8 million EurosCash and Liquidity Position*

Net Financial Debt, Net Financial Debt/EBITDA After Leases [Millions of Euros, X]

Average Cost of Debt [%]

Leverage ratio steady, with cost of debt reducing further yoy and qoq

20* Includes non-issued financing lines.

1,094 million EurosNet Financial Debt


1.6% 1.7%1.5%

1.4%1.3%

4Q18 1Q19 2Q19 3Q19 4Q19

1,042.9 1,003.4

1,130.3 1,089.3 1,093.6

1.9x 1.8x2.0x 1.9x 1.9x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

175.0

375.0

575.0

775.0

975.0

1,175.0

1,375.0

4Q18 1Q19 2Q19 3Q19 4Q19


115%

247%

190%

116%100% 98%

2014 2015 2016 2017 2018 2019

Proposal

14.016.0

20.0

30.0

35.0

27.8

2014 2015 2016 2017 2018 2019

Proposal

97% 100%

114%125% 127%

100%

2014 2014 2015 2016 2017 2018

Dividend proposal of 100% EPS

Dividend Per Share [Euro Cents]

21


27.8 euro cent dividend proposal, corresponding to 100% of Net Income, 98% of FCF and to a 6.2% Dividend Yield

Payout as % of Net Income [%] Payout as % of FCF [%]

4q19 earnings presentation · 4q19 earnings presentation b2b: continued growth of data and it...

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