Altice results for 2014 are out, and it shows acute revenue erosion at SFR, where it has lost almost 800,000 customers, largely to Iliad’s Free, since this time last year.
Altice seems to be buying up everything in sight, currently it is completing transactions to buy out Vivendi’s 20% stake in its French SFR-Numericable business, and also to purchase Portugal Telecom. It’s all very well buying assets, but how does it make them profitable?
The company reported revenues of €13.5 billion, with €11.5 billion of that in France and €2 billion in international revenues, resting heavily on business in Israel, the Dominican Republic and various French held overseas territories, where it holds cable and other telecoms assets.
But revenue is off 5% in France and 4.5% globally, and while it does not release net income, its EBITDA for France which contains SFR-Numericable, showed a margin of just 27.1% at €3.1 billion, surely not enough for a genuine profit, compared to a more typical telecoms margin of 46.2% in its international operations. The French EBITDA fell 11% on the year.
Across the French business landscape most of its numbers were flat. Cable pay TV customers rose 4,000 to 1.14 million; broadband over cable in France was up by 68,000 to 1.12 million. Its broadband and telephone numbers over Fiber and ADSL, a business inherited from SFR, once sold under the Neuf Cegetel brand, is dead flat at 5 million. And ARPU at these two businesses was static – €34 per month across all fixed lines, €41.3 over the cable part of it.
Naturally broadband is its shining light, given that 60% of the homes are upgraded to DOCSIS 3.0 and only fiber in France has anything like that speed in broadband.
But its performance in the mobile SFR business was terrible during 2014. It ended 2013 with 17 million up 44,000, which was a strong holding against Iliad’s Free, with its crazily low pricing, but it ended 2014 down 799,000 customers at 16.24 million, with monthly ARPU falling around a Euro over the year to €22 . Stopping this freefall is vital for the continued success of the business. All of which shows just how tough it is to do business in a market that has been price disrupted by a WiFi offload innovator.
The company said that it was on track to find synergies between Numericable and SFR, and it has strong operational momentum in fiber and an ambitious fiber and 4G roll-out plan
Dexter Goei, Chief Executive Officer of Altice, said: “Today’s set of results show that we are delivering on our fixed and mobile convergence strategy and on the implementation of best practices and efficiencies across all of our operations. These best practices continue to drive margin expansion and cashflow growth, particularly in our international division. In France, our project is now well under way with a highly efficient and hands on management team in place fully dedicated to implementing our long-term industrial strategy of best-in-class technology, attractive services and efficiency harmonization across all of its divisions.”
Well we have to argue with the CEO – what these numbers show is that nothing positive has yet to come from the merger of SFR with Numericable and we would not have expected it – but if this is still the case in another year, then time will be running out.