Earnings Release • Jul 28, 2015
Earnings Release
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| able I. | |||||
|---|---|---|---|---|---|
| 2Q15 Highlights | 2Q14 | 1Q15 | 2Q15 | 2Q15 / 2Q14 | 2Q15 / 1Q15 |
| Operational Highlights | |||||
| Total RGUs (Net Adds) | 80.3 | 151.3 | 248.4 | 209.2% | 64.2% |
| Convergent RGUs (Net Adds) | 451.9 | 341.3 | 248.7 | (45.0%) | (27.1%) |
| Mobile (Net Adds) | 108.7 | 87.2 | 130.8 | 20.4% | 50.0% |
| Pay TV (Net Adds) | (19.0) | 11.9 | 13.9 | n.a. | 16.8% |
| IRIS Subscribers (Net Adds) | 62.7 | 49.0 | 41.6 | (33.7%) | (15.3%) |
| Convergent RGUs | 1,007.7 | 2,194.5 | 2,443.2 | 142.5% | 11.3% |
| Convergent Customers | 201.7 | 456.8 | 509.8 | 152.8% | 11.6% |
| Convergent Customers as % of Fixed Access Customers | 16.5% | 34.0% | 37.5% | 21.0pp | 3.5 pp |
| Residential ARPU / Unique Subscriber With Fixed Access (Euros) | 37.7 | 41.5 | 42.3 | 12.2% | 1.8% |
| Financial Highlights | |||||
| Operating Revenues | 345.0 | 344.1 | 355.9 | 3.2% | 3.4% |
| Telco Revenues | 330.2 | 327.7 | 338.3 | 2.5% | 3.3% |
| EBITDA | 133.6 | 127.9 | 138.5 | 3.6% | 8.3% |
| EBITDA Margin | 38.7% | 37.2% | 38.9% | 0.2 pp | 1.7 PP |
| Net Income | 18.4 | 23.2 | 24.1 | 30.7% | 3.5% |
Residential ARPU per unique subscriber with fixed access posted another quarter of strong yoy growth of 12.2% to 42.3 euros;
The number of B2B RGUs increased by 13.7% yoy to 1.17 million reflecting growth in all services due to the large Corporate accounts won over the past quarters and the continued growth in market presence and services within the SoHo and SME segment;
For the first time since 4Q12, the Pay TV base posted growth year-on-year, reversing a long-term trend of market share decline. In 2Q15, Pay TV subscribers were 1.9% higher than at the end of 2Q14, reflecting the continued strength of NOS' convergent value proposition and successful network expansion.
The positive trends of the past quarters in Pay TV have become even more pronounced with net adds of 13.9 thousand in 2Q15, accelerating from 11.9 thousand in 1Q15 and 7.1 thousand in 4Q14. Growth occurred in both the fixed access and DTH customer base, with fixed access recording net adds of 9.6 thousand.
Behind the very positive development of the subscriber base are the strong commercial activity and value proposition in addition to the increased focus and effectiveness of a much more proactive retention activity which in turn is driving materially lower levels of churn and higher levels of customer loyalty with over 70% of the fixed residential customer base within two year loyalty plans.
In 2Q15, NOS recorded positive net adds in all core telecom services: Pay TV, fixed and DTH, Fixed Broadband and Voice and Mobile, pre-paid and post-paid. The main driver of the positive performance continues to be the convergent value proposition. By the end of 2Q15, NOS had 509.8 thousand customers subscribing to convergent bundles, 2.5x more than at the end of 2Q14 and already representing 34% of the total Pay TV base and of NOS' fixed access customers, 37% were convergent. Total convergent RGUs grew by 142.5% yoy to 2.44 million RGUs representing an average of 4.8 RGUs per unique customer. Growth in convergent services remains strong quarter on quarter albeit at a gradually slower pace than in the previous year due to the already high level of penetration of the base.
Over the past months, NOS has launched a number of more segmented convergent offers ranging from a low end Pay TV and mobile double play offer, NOS Dois, up to a high-end five service offer, NOS Cinco, that offers high-end Pay TV (156 channels), Broadband (100 Mbps), Mobile 4G Broadband (5GB), Fixed Voice and Mobile Voice and Data (standard 500 MB per SIM card). Results are proving very encouraging with a good proportion of mobile data sensitive customers subscribing to the higher-end NOS Quatro offer for 54.99 euros in order to benefit from the 500MB/1 GB data allowances per SIM card.
Fixed broadband and voice customers also posted material growth in 2Q15 of 39.5 thousand and 59.6 thousand respectively, significantly higher than in previous quarters, led by the strong performance of the pay TV base, cross selling activity and convergent take-up, over both the fixed and satellite networks and growth in the Corporate segment.
NOS' cutting edge TV interface "IRIS" continued to post very strong take-up with an additional 41.6 thousand customers in 2Q15, taking penetration of the fixed 3,4&5 play base up to almost 87%. With its client server architecture, IRIS provides a multidevice NOS ecosystem that also allows for more agile and flexible platform developments and upgrades than other solutions in the market. Being at the forefront of innovation in Pay TV is a core priority for NOS, in that it provides a strong competitive differentiator upon which to leverage growth in other core fixed and mobile telco services.
The strong pace of growth in the mobile base continued throughout 2Q15, not only in the mostly convergent postpaid base but also in pre-paid subscribers which recorded positive net adds for the first time in 2 years.
Total mobile subscribers grew yoy by 13.7% to 3.86 million subscribers, with total net adds of 130.8 thousand in 2Q15, of which 125.7 thousand were post-paid and the remaining 5.1 thousand pre-paid subscribers. The growth in post paid subs related mostly to the continued take up of convergent bundles and growth in the business segment. The positive quarterly performance in the pre-paid segment resulted from a combination of lower migration to convergent products from within the NOS mobile customer base and due to the success of offers targeting niche segments of the stand-alone mobile market, namely the youth brand WTF which has been showing encouraging growth trends over the past quarters.
Overall, post-paid customers now represent 47% of the mobile customer base, up from just 38% at the end of 2Q14.
Revenues from large Corporate accounts showed continued strong growth with the ramp-up in revenues for new accounts won over the past year. Successful installation and delivery was particularly noteworthy given the simultaneous scheduling and execution work required for most of these very technically sophisticated and demanding new institutional clients. Additional growth drivers are also materializing in the ICT segment, in areas such as datacentre management, information system outsourcing, cloud based services and application management. NOS' SoHo and SME segment is posting material growth in RGUs, consolidating a reversal in long term trends and is now also starting to grow in terms of number of unique accounts however yoy trends in revenues are still negative due to the still very challenging pricing environment in this segment which were not yet offset by the strong growth in volume.
Total RGUs in the Business segment continued to perform well, up by 13.7% yoy to 1.171 million, led by growth in Pay TV services of 29.1% to 98.0 thousand, of 24.2% in Fixed Broadband and Data services to 123.6 thousand, of 24.4% in fixed voice services to 246.3 thousand and of 7.1% in mobile services to 702.6 thousand, led by intense commercial effort and increased distribution capabilities.
The continued growth in convergent bundles and cross-selling of services to the residential customer base, driving the increased average number of RGUs per household, are the primary drivers of the continued strength in ARPU for this segment which increased by 12.2% to 42.3 euros.
ARPU per RGU in the business segment continued to post a negative trend yoy due to the continued impact of backbook repricing in the SoHo and SME segment.
| Operating Indicators ('000) | 2Q14 | 1Q15 | 2Q15 | 2Q15 / 2Q14 | 2Q15 / 1Q15 | 1H14 | 1H15 | 1H15 / 1H14 |
|---|---|---|---|---|---|---|---|---|
| Telco (1) | ||||||||
| Aggregate Indicators | ||||||||
| Homes Passed | 3,243.2 | 3,393.0 | 3,468.0 | 6.9% | 2.2% | 3,243.2 | 3,468.0 | 6.9% |
| Total RGUs | 7,295.6 | 7,761.8 | 8,010.2 | 9.8% | 3.2% | 7,295.6 | 8,010.2 | 9.8% |
| Mobile | 3,397.1 | 3,730.4 | 3,861.2 | 13.7% | 3.5% | 3,397.1 | 3,861.2 | 13.7% |
| Pre-Paid | 2,109.2 | 2,025.0 | 2,030.1 | (3.7%) | 0.3% | 2,109.2 | 2,030.1 | (3.7%) |
| Post-Paid | 1,287.9 | 1,705.4 | 1,831.1 | 42.2% | 7.4% | 1,287.9 | 1,831.1 | 42.2% |
| ARPU / Mobile Subscriber (Euros) | 9.2 | 8.8 | 9.2 | 0.2% | 4.6% | 9.1 | 9.0 | (0.9% |
| Pay TV | 1,474.3 | 1,488.6 | 1,502.5 | 1.9% | 0.9% | 1,474.3 | 1,502.5 | 1.9% |
| Fixed Access (2) | 1,172.3 | 1,174.0 | 1,183.6 | 1.0% | 0.8% | 1,172.3 | 1,183.6 | 1.0% |
| DTH | 302.1 | 314.6 | 318.9 | 5.6% | 1.4% | 302.1 | 318.9 | 5.6% |
| Fixed Voice | 1,472.5 | 1,493.4 | 1,553.0 | 5.5% | 4.0% | 1,472.5 | 1,553.0 | 5.5% |
| Broadband | 934.5 | 1,027.3 | 1,066.9 | 14.2% | 3.8% | 934.5 | 1,066.9 | 14.2% |
| Others and Data | 17.2 | 22.0 | 26.6 | 55.0% | 21.0% | 17.2 | 26.6 | 55.0% |
| 3,4&5P Subscribers (Fixed Access) | 810.6 | 878.1 | 904.9 | 11.6% | 3.0% | 810.6 | 904.9 | 11.6% |
| % 3,4&5P (Fixed Access) | 69.1% | 74.8% | 76.5% | 7.3 pp | 1.7 pp | 69.1% | 76.5% | 7.3 pp |
| Convergent RGUs | 1,007.7 | 2,194.5 | 2,443.2 | 142.5% | 11.3% | 1,007.7 | 2,443.2 | 142.5% |
| Convergent Customers | 201.7 | 456.8 | 509.8 | 152.8% | 11.6% | 201.7 | 509.8 | 152.8% |
| Fixed Convergent Customers as % of Fixed Access Customers | 16.5% | 34.0% | 37.5% | 21.0pp | 3.5 pp | 16.5% | 37.5% | 21.0pp |
| % Convergent Customers | 13.7% | 30.7% | 33.9% | 20.3pp | 3.2 pp | 13.7% | 33.9% | 20.3pp |
| IRIS Subscribers | 561.3 | 742.6 | 784.2 | 39.7% | 5.6% | 561.3 | 784.2 | 39.7% |
| IRIS as % of 3,4&5P Subscribers (Fixed Access) | 69.2% | 84.6% | 86.7% | 17.4pp | 2.1 pp | 69.2% | 86.7% | 17.4pp |
| Net Adds | ||||||||
| Homes Passed | (12.3) | 67.3 | 75.0 | n.a. | 11.5% | 1.4 | 142.3 | n.a. |
| Total RGUs | 80.3 | 151.3 | 248.4 | 209.2% | 64.2% | 82.5 | 399.7 | n.a. |
| Mobile | 108.7 | 87.2 | 130.8 | 20.4% | 50.0% | 153.7 | 218.0 | 41.8% |
| Pre-Paid | (45.8) | (36.2) | 5.1 | n.a. | $(114.0\%)$ | (141.8) | (31.1) | (78.1%) |
| Post-Paid | 154.5 | 123.4 | 125.7 | (18.6%) | 1.9% | 295.5 | 249.1 | (15.7%) |
| Pay TV | (19.0) | 11.9 | 13.9 | n.a. | 16.8% | (43.7) | 25.7 | n.a. |
| Fixed Access (2) | (17.1) | 7.4 | 9.6 | n.a. | 29.2% | (31.5) | 17.0 | n.a. |
| DTH | (1.9) | 4.5 | 4.3 | n.a. | $(3.8\%)$ | (12.2) | 8.7 | n.a. |
| Fixed Voice | (18.8) | 15.8 | 59.6 | n.a. | 276.6% | (42.5) | 75.4 | n.a. |
| Broadband | 7.5 | 34.4 | 39.5 | n.a. | 15.1% | 12.4 | 73.9 | n.a. |
| Others and Data | 1.9 | 2.0 | 4.6 | 138.7% | 126.1% | 2.6 | 6.7 | 155.1% |
| 3,4&5P Subscribers (Fixed Access) | 1.8 | 26.4 | 26.8 | n.a. | 1.2% | 3.6 | 53.2 | n.a. |
| Convergent RGUs | 451.9 | 341.3 | 248.7 | $(45.0\%)$ | (27.1%) | 795.3 | 589.9 | $(25.8\%)$ |
| Convergent Customers | 86.3 | 72.2 | 53.0 | (38.6%) | (26.6%) | 156.4 | 125.2 | $(20.0\%)$ |
| IRIS Subscribers | 62.7 | 49.0 | 41.6 | (33.7%) | $(15.3\%)$ | 123.7 | 90.6 | (26.7%) |
| Operating Indicators ('000) | 2Q14 | 1Q15 | 2Q15 | 2Q15 / 2Q14 | 2Q15 / 1Q15 | 1H14 | 1H15 | 1H15 / 1H14 |
|---|---|---|---|---|---|---|---|---|
| Telco (1) | ||||||||
| Indicators per Segment | ||||||||
| Consumer | ||||||||
| Total RGUs | 6,266.0 | 6,671.8 | 6,839.7 | 9.2% | 2.5% | 6,266.0 | 6,839.7 | 9.2% |
| Unique Subscribers With Fixed Access (2) | 1,120.8 | 1,108.7 | 1,114.2 | (0.6% ) | 0.5% | 1,120.8 | 1,114.2 | (0.6% ) |
| Pay TV | 1,398.4 | 1,396.0 | 1,404.5 | 0.4% | 0.6% | 1,398.4 | 1,404.5 | 0.4% |
| Fixed Access | 1,112.1 | 1,105.2 | 1,110.6 | $(0.1\%)$ | 0.5% | 1,112.1 | 1,110.6 | $(0.1\%)$ |
| DTH | 286.3 | 290.9 | 293.9 | 2.7% | 1.0% | 286.3 | 293.9 | 2.7% |
| IRIS Subscribers | 543.0 | 715.0 | 753.7 | 38.8% | 5.4% | 543.0 | 753.7 | 38.8% |
| Broadband | 852.2 | 935.5 | 969.9 | 13.8% | 3.7% | 852.2 | 969.9 | 13.8% |
| Fixed Voice | 1,274.5 | 1,290.4 | 1,306.7 | 2.5% | 1.3% | 1,274.5 | 1,306.7 | 2.5% |
| Mobile | 2,741.0 | 3,050.0 | 3,158.6 | 15.2% | 3.6% | 2,741.0 | 3,158.6 | 15.2% |
| % 1P (Fixed Access) | 13.4% | 10.2% | 9.2% | (4.2pp) | (1.0 PP ) | 13.4% | 9.2% | (4.2pp) |
| % 2P (Fixed Access) | 17.9% | 15.8% | 15.1% | (2.8 pp ) | (0.6 pp ) | 17.9% | 15.1% | (2.8 PP ) |
| % 3,4&5P (Fixed Access) | 68.7% | 74.1% | 75.7% | 7.0pp | 1.6pp | 68.7% | 75.7% | 7.0pp |
| ARPU / Unique Subscriber With Fixed Access (Euros) | 37.7 | 41.5 | 42.3 | 12.2% | 1.8% | 37.4 | 42.0 | 12.2% |
| Net Adds | ||||||||
| Total RGUs | 58.8 | 125.9 | 167.9 | 185.5% | 33.4% | 34.8 | 293.7 | n.a. |
| Unique Subscribers With Fixed Access | (32.8) | 2.1 | 5.5 | n.a. | 161.1% | (57.5) | 7.6 | n.a. |
| Pay TV | (23.9) | 4.7 | 8.5 | n.a. | 80.5% | (50.7) | 13.2 | n.a. |
| Fixed Access | (20.5) | 2.6 | 5.5 | n.a. | 113.7% | (37.2) | 8.0 | n.a. |
| DTH | (3.4) | 2.1 | 3.0 | n.a. | 40.6% | (13.6) | 5.1 | n.a. |
| IRIS Subscribers | 59.4 | 46.6 | 38.7 | (34.8%) | $(16.9\%)$ | 118.0 | 85.3 | (27.7%) |
| Broadband | 3.5 | 31.7 | 34.4 | n.a. | 8.6% | 6.6 | 66.1 | n.a. |
| Fixed Voice | (19.7) | 13.8 | 16.3 | n.a. | 18.7% | (45.3) | 30.1 | n.a. |
| Mobile | 98.9 | 75.7 | 108.6 | 9.8% | 43.5% | 124.3 | 184.3 | 48.3% |
| Business | ||||||||
| Total RGUs | 1,029.5 | 1,090.0 | 1,170.5 | 13.7% | 7.4% | 1,029.5 | 1,170.5 | 13.7% |
| Pay TV | 75.9 | 92.6 | 98.0 | 29.1% | 5.8% | 75.9 | 98.0 | 29.1% |
| IRIS Subscribers | 18.3 | 27.7 | 30.5 | 66.5% | 10.2% | 18.3 | 30.5 | 66.5% |
| Broadband | 99.5 | 113.9 | 123.6 | 24.2% | 8.5% | 99.5 | 123.6 | 24.2% |
| Fixed Voice | 198.0 | 203.1 | 246.3 | 24.4% | 21.3% | 198.0 | 246.3 | 24.4% |
| Mobile | 656.1 | 680.4 | 702.6 | 7.1% | 3.3% | 656.1 | 702.6 | 7.1% |
| ARPU per RGU (Euros) | 20.0 | 19.1 | 18.6 | $(6.6\%)$ | $(2.4\%)$ | 20.3 | 18.8 | $(7.1\%)$ |
| Net Adds | ||||||||
| Total RGUs | 21.6 | 25.4 | 80.5 | 273.6% | 216.7% | 47.7 | 106.0 | 122.2% |
| Pay TV | 4.9 | 7.2 | 5.4 | 9.0% | (24.9%) | 7.0 | 12.5 | 78.1% |
| IRIS Subscribers | 3.3 | 2.4 | 2.8 | (14.5%) | 16.0% | 5.6 | 5.3 | (6.6%) |
| Broadband | 5.9 | 4.7 | 9.7 | 63.9% | 106.7% | 8.4 | 14.4 | 73.0% |
| Fixed Voice | 0.9 | 2.1 | 43.2 | n.a. | n.a. | 2.9 | 45.3 | n.a. |
| Mobile | 9.8 | 11.5 | 22.2 | 127.0% | 93.1% | 29.4 | 33.7 | 14.4% |
| Table 4. | ||||||||
|---|---|---|---|---|---|---|---|---|
| Operating Indicators ('000) | 2Q14 | 1Q15 | 2015 | 2015 / 2014 | 2015 / 1015 | 1H14 | 1H15 | 1H15 / 1H14 |
| Cinema (1) | ||||||||
| Revenue per Ticket (Euros) | 4.7 | 4.6 | 4.7 | $(1.1\%)$ | 0.6% | 4.7 | 4.6 | $(0.9\%)$ |
| Tickets Sold | 676.6. | 1,981.4 | 2,003.6 | 19.5% | 1.1% | 3,272.3 | 3,984.9 | 21.8% |
| Screens (units) $\mathbf{u} \cdot \mathbf{v}$ |
209 | 214 | 215 | 2.9% | 0.5% | 209 | 215 | 2.9% |
In 2Q15, NOS' Cinema ticket sales posted an increase of 19.5% to 2.004 million tickets, which represents a similar performance to the total market's ticket sales1 .
The most successful films shown in 2Q15 were "Furious 7", "Avengers: Age of Ultron", "Jurassic World", "Inside Out" and "Mad Max: Fury Road".
NOS opened the first IMAX® DMR - Digital 3D screen in Lisbon in June 2013, with a second screen opening in Oporto in April 2015. Having now completed 2 years of operation, this premium cinema experience continues to prove very successful.
Average revenue per ticket sold posted a marginal yoy decline of 1.1% to 4.7 euros in 2Q15.
NOS' gross box-office revenues increased by 18.0% in 2Q15, and NOS continues to maintain its leading market position, with a market share of 62.8% in terms of gross revenues in 2Q15. Total Cinema Exhibition revenues improved by 13.0% yoy in 2Q15 to 12.9 million euros.
Revenues in the Audiovisuals division improved by 26.7% yoy, to 18 million euros in 2Q15. Revenues were driven primarily by the improved performance in Cinema Distribution and premium TV content, which more than offset the structural decline of the Homevideo market. Of the top 10 cinema box-office hits in 2Q15, NOS distributed 8 (including the top 5 movies), "Furious 7", "Avengers: Age of Ultron", "Jurassic World", "Inside Out", "Mad Max: Fury Road", "Tomorrowland", "The Water Diviner" and "Asterix and Obelix: Mansion of the Gods", therefore maintaining its leading position.
1 Source: ICA – Portuguese Institute For Cinema and Audiovisuals
ZAP has become a reference operator in Angola and Mozambique, with continued success of its commercial operations. ZAP maintains its focus on continuing to expand its sales channels, increasing its presence in these territories. Therefore, in 2Q15 it has opened two new stores in Angola ("Benfica" and "Samba", both in Luanda) and one in Mozambique ("Alberto Lituly" in Maputo). In Mozambique ZAP is also expanding its commercial coverage through the "van selling" sales channel, which can reach the most distant regions.
Following the launch of "ZAP Fibra", a TV and internet bundle based on an FTTH solution, in the first quarter of this year, ZAP is now engaged in increasing the footprint of its FTTH network in Luanda, already covering some important areas of the city, namely Talatona, Nova Vida, Centralidade do Kilamba and Morro Bento.
ZAP continues to differentiate from its competition in these countries by improving its content line-up, in order to meet its customers' highest expectations. During this quarter, ZAP increased the coverage of Angolan sports events, broadcasting local matches of the Football, Handball and Basketball Leagues as well as an international swimming competition hosted in Luanda. ZAP also added TV Sucesso to its packages, a new generalist Mozambican channel that presents some of the most recognized Mozambican TV Stars, and a new feed of AXN, aimed at the Angolan and Mozambican markets with some of its content dubbed in Portuguese.
During this quarter ZAP also launched a strong marketing campaign preparing the introduction of the Globo channels in its packages, at the beginning of July 2015. Globo is one of the leading channels in terms of audience and will be distributed on an exclusive basis by ZAP.
The consolidated accounts for 1H15 were subject to limited review.
| Table 5. | ||||||||
|---|---|---|---|---|---|---|---|---|
| Profit and Loss Statement | 2Q14 | 1Q15 | 2Q15 | 2Q15 / 2Q14 | 2Q15 / 1Q15 | 1H14 | 1H15 | 1H15 / 1H14 |
| (Millions of Euros) | ||||||||
| Operating Revenues | 345.0 | 344.1 | 355.9 | 3.2% | 3.4% | 682.3 | 699.9 | 2.6% |
| Telco | 330.2 | 327.7 | 338.3 | 2.5% | 3.3% | 653.7 | 666.0 | 1.9% |
| Consumer Revenues | 203.7 | 210.2 | 213.3 | 4.7% | 1.5% | 410.9 | 423.4 | 3.1% |
| Business and Wholesale Revenues | 97.8 | 92.3 | 102.4 | 4.7% | 11.0% | 195.1 | 194.7 | (0.2% |
| Equipment Sales | 9.0 | 8.3 | 9.8 | 8.6% | 17.5% | 17.2 | 18.1 | 5.6% |
| Others and Eliminations | 19.7 | 16.9 | 12.9 | (34.7%) | (23.7%) | 30.5 | 29.8 | (2.4%) |
| Audiovisuals | 14.2 | 16.7 | 18.0 | 26.7% | 8.3% | 28.4 | 34.7 | 22.2% |
| Cinema (1) | 11.4 | 13.8 | 12.9 | 13.0% | $(6.1\%)$ | 22.2 | 26.7 | 20.5% |
| Others and Eliminations | (10.9) | (14.0) | (13.5) | 23.4% | (4.2%) | (21.9) | (27.5) | 25.3% |
| Operating Costs Excluding D&A | (211.3) | (216.2) | (217.4) | 2.9% | 0.6% | (418.8) | (433.5) | 3.5% |
| W&S | (18.7) | (21.6) | (20.3) | 8.4% | $(6.0\%)$ | (39.8) | (41.9) | 5.4% |
| Direct Costs | (100.5) | (101.2) | (110.7) | 10.2% | 9.3% | (197.2) | (211.9) | 7.5% |
| Commercial Costs (2) | (21.8) | (21.2) | (19.2) | $(12.0\%)$ | (9.7%) | (44.5) | (40.4) | $(9.3\%)$ |
| Other Operating Costs | (70.4) | (72.1) | (67.2) | (4.5%) | (6.8%) | (137.3) | (139.3) | 1.4% |
| EBITDA | 133.6 | 127.9 | 138.5 | 3.6% | 8.3% | 263.5 | 266.4 | 1.1% |
| EBITDA Margin | 38.7% | 37.2% | 38.9% | 0.2 pp | 1.7 pp | 38.6% | 38.1% | (0.6 pp ) |
| Telco | 124.9 | 116.9 | 129.0 | 3.3% | 10.3% | 245.3 | 245.8 | 0.2% |
| EBITDA Margin | 37.8% | 35.7% | 38.1% | 0.3 pp | 2.4 pp | 37.5% | 36.9% | (0.6pp) |
| Cinema Exhibition and Audiovisuals | 8.8 | 11.0 | 9.5 | 8.6% | (13.7%) | 18.3 | 20.6 | 12.6% |
| EBITDA Margin | 37.4% | 40.4% | 35.3% | (2.1pp) | (5.2pp) | 39.8% | 37.9% | (1.9 pp ) |
| Share of results of associates and joint ventures | 2.7 | 7.3 | 0.5 | $(80.0\%)$ | (92.6%) | 7.6 | 7.9 | 3.6% |
| EBITDA including results of associates and joint ventures | 136.3 | 135.3 | 139.0 | 2.0% | 2.8% | 271.1 | 274.3 | 1.2% |
| Depreciation and Amortization | (86.2) | (87.7) | (90.7) | 5.2% | 3.4% | (170.1) | (178.4) | 4.9% |
| (Other Expenses) / Income | (12.6) | (6.1) | (5.4) | (57.5%) | $(11.9\%)$ | (15.5) | (11.5) | $(25.9\%)$ |
| Operating Profit (EBIT) (3) | 37.5 | 41.5 | 43.0 | 14.6% | 3.6% | 85.6 | 84.4 | (1.3%) |
| (Financial Expenses) / Income | (14.2) | (11.8) | (10.8) | (23.7%) | (8.3%) | (29.4) | (22.6) | $(23.0\%)$ |
| Income Before Income Taxes | 23.3 | 29.7 | 32.2 | 37.9% | 8.3% | 56.2 | 61.8 | 10.0% |
| Income Taxes | (4.8) | (6.5) | (8.2) | 71.2% | 27.1% | (12.1) | (14.7) | 20.9% |
| Income From Continued Operations | 18.5 | 23.2 | 23.9 | 29.3% | 3.1% | 44.1 | 47.2 | 7.0% |
| o.w. Attributable to Non-Controlling Interests | (0.1) | 0.0 | 0.1 | n.a. | n.a. | (0.4) | 0.1 | n.a. |
| Net Income | 18.4 | 23.2 | 24.1 | 30.7% | 3.5% | 43.7 | 47.3 | 8.3% |
Consolidated Operating Revenues in 2Q15 posted a material sequential improvement in yoy trend with growth of 3.2%, accelerating from 2% in 1Q15 and negative 0.7% in 4Q14. Core Telco revenues posted a similar trend with yoy growth in 2Q15 of 2.5% up from negative 0.5% in 4Q14 and positive growth of 1.3% in 1Q15.
The growth in volume of RGUs, the yoy increase in the residential customer base and the continued growth in the Corporate segment are the main drivers of this strength, helping to offset the still negative yoy trends, in the personal and the SoHo and SME segment.
Within telecom revenues, Consumer revenues recorded a 4.7% increase yoy to 213.3 million euros reflecting the combination of very positive yoy growth in residential revenues of 7% which more than offset the negative yoy trend in personal revenues. Stand-alone personal services posted a negative revenue trend yoy due to the lower subscriber base with the migration to convergent bundles and to the higher proportion of lower monthly bill pre-paid subscribers in the personal segment mix.
In the Business segment, large Corporate accounts acquired over the past quarters started to make an important contribution to yoy customer revenue growth (+11% yoy) helping to compensate for the yoy negative revenue trends in the SoHo and SME market (-10% yoy) which is still impacted by the market repricing. Wholesale revenues contributed with yoy revenue growth (+7% yoy), less impacted than in the previous quarter by the volume decline in mass calling services.
The Audiovisuals and Cinema business continue to benefit from the very positive momentum felt in the industry worldwide due to the very strong line up of movies coming to the box-office. In 2Q15, Cinema exhibition revenues grew yoy by 13.0% and Audiovisuals grew by 26.7% yoy, also reflecting NOS' leading market position in this business.
Revenues from the Angolan Pay TV joint venture continued to grow significantly, with NOS' 30% stake in revenues posting a 23% yoy increase to 18 million euros.
Consolidated EBITDA moved into positive yoy territory in 2Q15 with growth yoy of 3.6% to 138.5 million euros compared with negative 1.5% in 1Q15, negative 4% in 4Q14 and negative 4.8% in 2Q14. Consolidated EBITDA margin, as a percentage of Revenues, was 38.9%, up 0.2 pp versus 2Q14 and an increase of 1.7pp from 1Q15.
In turn, Telco EBITDA also posted positive yoy growth of 3.3% to 129.0 million euros compared with negative 2.9% in 1Q15 and negative 5.0% in 2Q14. EBITDA from the Audiovisuals and Cinema operations posted a yoy increase of 8.6% to 9.5 million euros representing a 35.3% margin as a percentage of Revenues. The EBITDA of NOS' 30% stake in ZAP grew by 21.5% to 6.5 million euros, representing 36% as a margin of Revenues.
Consolidated Operating Costs grew by 2.9% yoy to 217.4 million euros still impacted by the intense activity related costs due to the strong commercial operations and focus on growth. Integration projects are being implemented according to expectations and delivering important savings in key areas of operations. The most material projects currently underway are related to more complex, longer-term execution projects that are tied in directly with systems development and integration or that are dependent on systems and technical process implementation.
Wages and Salaries posted an 8.4% increase yoy to 20.3 million euros in 2Q15 due primarily to a yoy increase in headcount as a result of the acquisition of NOS Sistemas (previously Mainroad).
Direct Costs recorded a 10.2% increase to 110.7 million euros, an increase driven mostly by the very strong growth of almost 19% in activity based and wholesale traffic costs which represent close to 50% of this cost aggregate. The significant increase of the past quarters in mobile customers who are subscribing to all-net mobile tariffs included in convergent tariff plans, is driving higher termination costs from increased volume of calls made to other operator networks.
Commercial Costs declined by 12% yoy to 19.2 million euros due to a decline in the volume of non-customer acquisition and retention related commissions, on the back of lower levels of churn, and due to a yoy reduction in advertising and publicity related costs which in 2Q14 were impacted by the intense marketing activity surrounding the NOS merger and increased commercial and non brand launch related marketing push last year. A seasonal pick up in regular commercial advertising and publicity costs is to be expected in the latter half of the year.
Other Operating Costs fell by 4.5% yoy to 67.2 million euros and by 6.8% in comparison with the previous quarter. The main cost items in this aggregate, support services and supplies and external services posted similar levels to previous quarters with cost items like customer care and maintenance and repairs being affected by a larger customer base, and other items like energy costs being affected by the deployment of the cable/FTTH network. The main variation in this aggregate is explained by a reduction in the level of provisions in the quarter due to better performance metrics achieved on bad debt recovery.
Net Income was 24.1 million euros in 2Q15, compared with 18.4 million euros in 2Q14 and with 23.2 million euros in 1Q15 representing a material improvement in comparison with last year.
NOS' Share of Associates and Joint Ventures declined significantly to 0.5 million euros in 2Q15 (2.7 million euros in 2Q14 and 7.3 million euros in 1Q15) as a result primarily of the devaluation of the kwanza vs USD which negatively impacted ZAP's operating results due to costs contracted in USD and generated a negative financial charge below EBITDA due to the foreign exchange impact on USD trade accounts, in the amount of negative 2.8 million euros in 2Q15.
Depreciation and Amortization increased by 5.2% yoy to 90.7 million euros as a result of the higher level of investment in both network assets and customer related costs.
Other Expenses* of 5.4 million euros in 2Q15 relate to non-recurrent costs, with merger related integration costs representing 4.6 million euros of this amount.
Net Financial Expenses fell by 23.7% to 10.8 million euros in 2Q15 compared with 14.2 million euros in 2Q14 as a result of the lower average cost of the new debt contracted in previous quarters. The section ahead on capital structure provides details of the significant savings arising from lower funding costs due to new facilities being contracted that are replacing lines contracted in previous years at significantly higher costs within the context of a less favourable macroeconomic environment. Net interest charges and other financial costs in 2Q15 were 7.5 million euros compared with 8.9 million euros in 2Q14.
Income Tax provision amounted to 8.2 million euros in 2Q15 representing 25.5% as a percentage of Income before Income Taxes, the higher rate being explained primarily due to the lower contribution of associate companies to net results.
* In accordance with IAS 1, the caption "Other expenses" reflects material and unusual expenses that should be disclosed separately from usual line items, to avoid distortion of the financial information from regular operations, namely restructuring costs resulting from the merger (including curtailment costs) as well as one-off non-cash items that result from alignment of estimates between the two companies.
| Table 6. | ||||||||
|---|---|---|---|---|---|---|---|---|
| CAPEX (Millions of Euros) | 2Q14 | 1Q15 | 2Q15 | 2015 / 2014 | 2015 / 1015 | 1H14 | 1H15 | 1H15 / 1H14 |
| Telco | 63.4 | 59.3 | 62.6 | $(1.4\%)$ | 5.6% | 108.5 | 121.8 | 12.2% |
| Infrastructure | 27.8 | 22.5 | 29.5 | 6.1% | 31.4% | 40.4 | 52.0 | 28.6% |
| Customer Related CAPEX | 34.8 | 36.1 | 30.7 | (11.8%) | $(14.9\%)$ | 64.0 | 66.8 | 4.4% |
| Other | 0.8 | 0.7 | 2.4 | 196.5% | 229.3% | 4.2 | 3.1 | (26.5%) |
| Audiovisuals and Cinema Exhibition | 8.4 | 9.0 | 9.8 | 16.2% | 8.9% | 16.0 | 18.7 | 16.8% |
| Recurrent CAPEX | 71.8 | 68.2 | 72.3 | 0.7% | $6.0\%$ | 124.6 | 140.5 | 12.8% |
| Non-Recurrent CAPEX | 16.8 | 26.1 | 30.0 | 78.9% | 15.1% | 20.7 | 56.1 | 171.3% |
| Total CAPEX | 88.6 | 94.3 | 102.4 | 15.5% | 8.5% | 145.3 | 196.7 | 35.4% |
Total CAPEX increased yoy by 15.5% to 102.4 million euros and by 8.5% in comparison with the previous quarter. Recurrent CAPEX remained broadly stable in comparison with 2Q14, with a marginal yoy increase of 0.7%. The increase in non-recurrent CAPEX to 30.0 million euros is a result of the network coverage expansion programme underway, with an additional 75 thousand households covered in 2Q15 and of increased commercial investment.
Audiovisuals and Cinema CAPEX of 9.8 million euros is related mostly with the capitalization of certain movie rights in the Audiovisuals division.
As a percentage of revenues, total CAPEX amounted to 28.8% in 2Q15 and Telco recurrent CAPEX represented 18.5% of Telco Revenues.
| Table 7. | ||||||||
|---|---|---|---|---|---|---|---|---|
| Cash Flow (Millions of Euros) | 2Q14 | 1Q15 | 2Q15 | 2Q15 / 2Q14 | 2Q15 / 1Q15 | 1H14 | 1H15 | 1H15 / 1H14 |
| EBITDA | 133.6 | 127.9 | 138.5 | 3.6% | 8.3% | 263.5 | 266.4 | 1.1% |
| Recurrent CAPEX | (71.8) | (68.2) | (72.3) | 0.7% | 6.0% | (124.6) | (140.5) | 12.8% |
| EBITDA - Recurrent CAPEX | 61.8 | 59.7 | 66.2 | 7.0% | 10.8% | 138.9 | 125.9 | $(9.4\%)$ |
| Non-Cash Items Included in EBITDA - Recurrent CAPEX (1) and Change in Working Capital |
(10.1) | (26.9) | (38.5) | n.a. | 43.1% | (45.8) | (65.3) | 42.5% |
| Operating Cash Flow After Investment | 51.7 | 32.8 | 27.7 | $(46.4\%)$ | (15.7%) | 93.1 | 60.5 | $(35.0\%)$ |
| Long Term Contracts | (4.2) | (4.1) | (4.3) | 2.1% | 3.2% | (8.1) | (8.4) | 3.2% |
| Net Interest Paid and Other Financial Charges | (15.4) | (5.3) | (10.4) | (32.7%) | 94.5% | (29.2) | (15.7) | (46.2%) |
| Income Taxes Paid | (0.3) | (1.3) | (0.6) | 85.3% | $(55.0\%)$ | (1.4) | (1.8) | 26.6% |
| Other Cash Movements | 0.5 | 0.2 | 0.3 | (53.1%) | 13.9% | 0.6 | 0.5 | (23.7%) |
| Recurrent Free Cash-Flow | 32.3 | 22.3 | 12.7 | (60.5%) | $(42.9\%)$ | 54.9 | 35.1 | $(36.1\%)$ |
| Taxes Paid | 0.0 | (0.6) | (1.2) | n.a. | 103.0% | 0.0 | (1.9) | n.a. |
| Non-Recurrent CAPEX | (16.8) | (24.1) | (24.2) | 44.5% | 0.4% | (17.2) | (48.4) | 181.5% |
| Cash Restructuring Payments | (3.9) | (6.1) | (4.0) | 3.5% | (34.5%) | (11.8) | (10.1) | (14.3%) |
| Other | 0.0 | 0.0 | 0.0 | n.a. | n.a. | 0.0 | 0.0 | n.a. |
| Free Cash Flow Before Dividends & Financial Acquisitions | 11.6 | (8.6) | (16.8) | n.a. | 96.0% | 25.9 | (25.3) | n.a. |
| Foreign Currency Debt Exchange Effect | 0.0 | (0.0) | 0.0 | $(100.0\%)$ | $(100.0\%)$ | 0.0 | (0.0) | n.a. |
| Dividends | (62.0) | 0.0 | (72.2) | 16.4% | n.a. | (62.0) | (72.2) | 16.4% |
| Total Free Cash Flow | (50.4) | (8.6) | (89.0) | 76.6% | n.a. | (36.1) | (97.5) | 170.1% |
| Debt Variation Through Accruals & Deferrals & Others | 4.7 | (7.2) | (3.9) | n.a. | $(45.9\%)$ | 6.6 | (11.1) | n.a. |
| Change in Net Financial Debt | (45.7) | (15.8) | (92.9) | 103.1% | n.a. | (29.5) | (108.7) | 268.5% |
Operating Cash Flow after Investment was 27.7 million euros in 2Q15 posting a decline yoy on the back of the aforementioned slight increase in recurrent CAPEX and to higher levels of working capital investment led by the increased commercial activity in comparison with 2Q14. The increase in the negative cash-flow impact of non-cash items included in EBITDA-Recurrent CAPEX and Change in Working Capital is almost entirely explained by the increase in working capital requirements led by the much higher operational activity and investment driving increased trade balances, which is to be partially reverted during 2H15.
Recurrent FCF declined in 2Q15 to 12.7 million euros due to the aforementioned increase in working capital which was partially offset by the lower level of interest paid and other financial charges which fell by 32.7% as a result of the lower average cost of debt due to the more favourable refinancing deals closed over the past quarters.
Non-recurrent cash impacts on CAPEX and OPEX in 2Q15 amounted to 24.2 million euros and 4.0 million euros, respectively, and were mainly related with cash payments within the context of the cable/FTTH network deployment and additional commercial activity as explained in the section on CAPEX and to integration related CAPEX and OPEX from the restructuring/merger process.
Free Cash Flow before Dividends and Financial Acquisitions was negative by 16.8 million euros in the quarter. Adjusted for interest accruals and deferrals on debt variations, net financial debt increased by 92.9 million euros in 2Q15. Most of this impact relates to the dividend payment of 72.2 million euros relating to 2014 results.
| Table 8. | ||
|---|---|---|
| Balance Sheet (Millions of Euros) | 2014 | 1H15 |
| Current Assets | 468.0 | 514.4 |
| Cash and Equivalents | 21.1 | 8.9 |
| Accounts Receivable, Net | 359.2 | 380.7 |
| Inventories, Net | 33.0 | 40.4 |
| Taxes Receivable | 5.0 | 7.9 |
| Prepaid Expenses and Other Current Assets | 49.7 | 76.5 |
| Non-current Assets | 2,488.0 | 2,501.0 |
| Investments in Group Companies | 31.5 | 34.6 |
| Intangible Assets, Net | 1,164.2 | 1,184.4 |
| Fixed Assets, Net | 1,141.8 | 1,138.1 |
| Deferred Taxes | 141.1 | 128.7 |
| Other Non-current Assets | 9.3 | 15.2 |
| Total Assets | 2,955.9 | 3,015.4 |
| Current Liabilities | 1,102.0 | 757.4 |
| Short Term Debt | 503.5 | 172.5 |
| Accounts Payable | 391.7 | 386.3 |
| Accrued Expenses | 163.2 | 149.1 |
| Deferred Income | 29.1 | 30.7 |
| Taxes Payable | 14.6 | 18.6 |
| Current Provisions and Other Liabilities | 0.0 | 0.2 |
| Non-current Liabilities | 793.8 | 1,222.5 |
| Medium and Long Term Debt | 616.5 | 1,042.7 |
| Non-current Provisions and Other Liabilities | 177.3 | 179.9 |
| Total Liabilities | 1,895.8 | 1,980.0 |
| Equity Before Non-Controlling Interests | 1,050.3 | 1,025.9 |
| Share Capital | 5.2 | 5.2 |
| Issue Premium | 854.2 | 854.2 |
| Own Shares | (11.8) | (2.9) |
| Reserves, Retained Earnings and Other | 128.0 | 122.2 |
| Net Income | 74.7 | 47.3 |
| Non-Controlling Interests | 9.8 | 9.5 |
| Total Shareholders' Equity | 1,060.1 | 1,035.4 |
| Total Liabilities and Shareholders' Equity | 2,955.9 | 3,015.4 |
At the end of 2Q15, Net Financial Debt stood at 1,092.1 million euros.
Total financial debt at the end of 2Q15 amounted to 1,109.6 million euros, which was offset with a cash and shortterm investment position on the balance sheet of 17.5 million euros. At the end of 2Q15, NOS also had 135 million euros of non-issued commercial paper programs. The all-in average cost of NOS' Net Financial Debt posted a decline to 3.41% in 2Q15 (3.54% for 1H15), comparing with 3.70% in 1Q15, 4.19% in 4Q14 and with 4.83% in FY14.
In line with its global funding strategy to extend maturities, diversify debt sources and reduce cost of debt, during 1H15, NOS announced a series of deals that contributed very favorably to the funding strategy:
The new financing deals, together with the reimbursement of the 200M Euros Retail Bond in June (which was paying a 6.85% coupon), are expected to continue to materialize additional savings over the coming quarters.
Net Financial Gearing was 51.3% at the end of 2Q15 and Net Financial Debt / EBITDA (last 4 quarters) now stands at 2.1x. The average maturity of NOS' Net Financial Debt at the end of 2Q15 was 3.8 years, compared with 3.3 years at the end of 1Q15.
Taking into account the loans issued at a fixed rate and the interest rate hedging operations in place the proportion of NOS' issued debt that is protected against variations in interest rates is approximately 41%.
| Table 9. | |||
|---|---|---|---|
| Net Financial Debt (Millions of Euros) | 2014 | 1H15 | 1H15 / 2014 |
| Short Term | 483.9 | 157.0 | (67.6%) |
| Bank and Other Loans | 468.6 | 136.1 | $(71.0\%)$ |
| Financial Leases | 15.2 | 20.9 | 36.7% |
| Medium and Long Term | 522.7 | 952.7 | 82.3% |
| Bank and Other Loans | 493.8 | 926.7 | 87.7% |
| Financial Leases | 28.9 | 26.0 | $(10.3\%)$ |
| Total Debt | 1,006.6 | 1,109.6 | 10.2% |
| Cash, Short Term Investments and Intercompany Loans | 23.1 | 17.5 | $(24.4\%)$ |
| Net Financial Debt | 983.5 | 1,092.1 | 11.1% |
| Net Financial Gearing (1) | 48.1% | 51.3% | 3.2 pp |
| Net Financial Debt / EBITDA | 1.9x | 2.1x | n.a. |
| Table 10. | ||||||
|---|---|---|---|---|---|---|
| Operating Indicators ('000) | 1Q14 | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 |
| Telco (1) | ||||||
| Aggregate Indicators | ||||||
| Homes Passed | 3,255.5 | 3,243.2 | 3,252.4 | 3,325.7 | 3,393.0 | 3,468.0 |
| Total RGUs | 7,215.2 | 7,295.6 | 7,445.2 | 7,610.5 | 7,761.8 | 8,010.2 |
| Mobile | 3,288.4 | 3,397.1 | 3,535.8 | 3,643.2 | 3,730.4 | 3,861.2 |
| Pre-Paid | 2,155.0 | 2,109.2 | 2,085.2 | 2,061.2 | 2,025.0 | 2,030.1 |
| Post-Paid | 1,133.4 | 1,287.9 | 1,450.5 | 1,582.0 | 1,705.4 | 1,831.1 |
| ARPU / Mobile Subscriber (Euros) | 9.0 | 9.2 | 9.7 | 9.1 | 8.8 | 9.2 |
| Pay TV | 1,493.3 | 1,474.3 | 1,469.6 | 1,476.8 | 1,488.6 | 1,502.5 |
| Fixed Access (2) | 1,189.4 | 1,172.3 | 1,166.1 | 1,166.6 | 1,174.0 | 1,183.6 |
| DTH | 303.9 | 302.1 | 303.5 | 310.2 | 314.6 | 318.9 |
| Fixed Voice | 1,491.3 | 1,472.5 | 1,464.6 | 1,477.6 | 1,493.4 | 1,553.0 |
| Broadband | 927.0 | 934.5 | 957.3 | 993.0 | 1,027.3 | 1,066.9 |
| Others and Data | 15.2 | 17.2 | 17.9 | 20.0 | 22.0 | 26.6 |
| 3,4&5P Subscribers (Fixed Access) | 808.8 | 810.6 | 829.6 | 851.6 | 878.1 | 904.9 |
| % 3,4&5P (Fixed Access) | 68.0% | 69.1% | 71.1% | 73.0% | 74.8% | 76.5% |
| Convergent RGUs | 555.8 | 1,007.7 | 1,487.7 | 1,853.3 | 2,194.5 | 2,443.2 |
| Convergent Customers | 115.4 | 201.7 | 303.3 | 384.6 | 456.8 | 509.8 |
| Fixed Convergent Customers as % of Fixed Access Customers | 9.7% | 16.5% | 23.8% | 29.2% | 34.0% | 37.5% |
| % Convergent Customers | 7.7% | 13.7% | 20.6% | 26.0% | 30.7% | 33.9% |
| IRIS Subscribers | 498.6 | 561.3 | 633.2 | 693.6 | 742.6 | 784.2 |
| IRIS as % of 3,4&5P Subscribers (Fixed Access) | 61.6% | 69.2% | 76.3% | 81.4% | 84.6% | 86.7% |
| Net Adds | ||||||
| Homes Passed | 13.7 | (12.3) | 9.1 | 73.4 | 67.3 | 75.0 |
| Total RGUs | 2.2 | 80.3 | 149.6 | 165.3 | 151.3 | 248.4 |
| Mobile | 45.0 | 108.7 | 138.7 | 107.4 | 87.2 | 130.8 |
| Pre-Paid | (96.0) | (45.8) | (24.0) | (24.0) | (36.2) | 5.1 |
| Post-Paid | 141.0 | 154.5 | 162.6 | 131.5 | 123.4 | 125.7 |
| Pay TV | (24.7) | (19.0) | (4.7) | 7.1 | 11.9 | 13.9 |
| Fixed Access | (14.4) | (17.1) | (6.1) | 0.4 | 7.4 | 9.6 |
| DTH | (10.3) | (1.9) | 1.4 | 6.7 | 4.5 | 4.3 |
| Fixed Voice | (23.7) | (18.8) | (7.9) | 13.1 | 15.8 | 59.6 |
| Broadband | 4.9 | 7.5 | 22.8 | 35.6 | 34.4 | 39.5 |
| Others and Data | 0.7 | 1.9 | 0.8 | 2.0 | 2.0 | 4.6 |
| 3,4&5P Subscribers (Fixed Access) | 1.8 | 1.8 | 19.0 | 22.0 | 26.4 | 26.8 |
| Convergent RGUs | 343.4 | 451.9 | 480.0 | 365.5 | 341.3 | 248.7 |
| Convergent Customers | 70.1 | 86.3 | 101.6 | 81.3 | 72.2 | 53.0 |
| IRIS Subscribers | 61.0 | 62.7 | 71.9 | 60.4 | 49.0 | 41.6 |
| Operating Indicators ('000) | 1Q14 | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 |
|---|---|---|---|---|---|---|
| Telco (1) | ||||||
| Indicators per Segment | ||||||
| Consumer | ||||||
| Total RGUs | 6,207.2 | 6,266.0 | 6,400.6 | 6,546.0 | 6,671.8 | 6,839.7 |
| Unique Subscribers With Fixed Access (2) | 1,153.6 | 1,120.8 | 1,107.3 | 1,106.6 | 1,108.7 | 1,114.2 |
| Pay TV | 1,422.3 | 1,398.4 | 1,387.6 | 1,391.3 | 1,396.0 | 1,404.5 |
| Fixed Access | 1,132.6 | 1,112.1 | 1,102.3 | 1,102.6 | 1,105.2 | 1,110.6 |
| DTH | 289.7 | 286.3 | 285.2 | 288.7 | 290.9 | 293.9 |
| # IRIS Subscribers | 483.6 | 543.0 | 611.1 | 668.4 | 715.0 | 753.7 |
| Broadband | 848.7 | 852.2 | 870.5 | 903.8 | 935.5 | 969.9 |
| Fixed Voice | 1,294.1 | 1,274.5 | 1,265.6 | 1,276.6 | 1,290.4 | 1,306.7 |
| Mobile | 2,642.1 | 2,741.0 | 2,876.8 | 2,974.3 | 3,050.0 | 3,158.6 |
| % 1P (Fixed Access) | 14.2% | 13.4% | 12.5% | 11.4% | 10.2% | 9.2% |
| % 2P (Fixed Access) | 18.2% | 17.9% | 17.1% | 16.3% | 15.8% | 15.1% |
| % 3,4&5P (Fixed Access) | 67.6% | 68.7% | 70.4% | 72.3% | 74.1% | 75.7% |
| ARPU / Unique Subscriber With Fixed Access (Euros) | 37.1 | 37.7 | 38.4 | 39.8 | 41.5 | 42.3 |
| Net Adds | ||||||
| Total RGUs | (24.0) | 58.8 | 134.5 | 145.4 | 125.9 | 167.9 |
| Unique Subscribers With Fixed Access | (24.7) | (32.8) | (13.5) | (0.7) | 2.1 | 5.5 |
| Pay TV | (26.8) | (23.9) | (10.8) | 3.7 | 4.7 | 8.5 |
| Fixed Access | (16.7) | (20.5) | (9.8) | 0.2 | 2.6 | 5.5 |
| DTH | (10.2) | (3.4) | (1.0) | 3.5 | 2.1 | 3.0 |
| IRIS Subscribers | 58.6 | 59.4 | 68.2 | 57.3 | 46.6 | 38.7 |
| Broadband | 3.2 | 3.5 | 18.3 | 33.2 | 31.7 | 34.4 |
| Fixed Voice | (25.6) | (19.7) | (8.8) | 11.0 | 13.8 | 16.3 |
| Mobile | 25.4 | 98.9 | 135.9 | 97.4 | 75.7 | 108.6 |
| Business | ||||||
| Total RGUs | 1,008.0 | 1,029.5 | 1,044.7 | 1,064.5 | 1,090.0 | 1,170.5 |
| Pay TV | 71.0 | 75.9 | 82.0 | 85.4 | 92.6 | 98.0 |
| IRIS Subscribers | 15.0 | 18.3 | 22.1 | 25.2 | 27.7 | 30.5 |
| Broadband | 93.6 | 99.5 | 104.8 | 109.2 | 113.9 | 123.6 |
| Fixed Voice | 197.1 | 198.0 | 198.9 | 201.0 | 203.1 | 246.3 |
| Mobile | 646.4 | 656.1 | 658.9 | 668.9 | 680.4 | 702.6 |
| ARPU per RGU (Euros) | 20.5 | 20.0 | 19.0 | 19.1 | 19.1 | 18.6 |
| Net Adds | ||||||
| Total RGUs | 26.1 | 21.6 | 15.1 | 19.9 | 25.4 | 80.5 |
| Pay TV | 2.1 | 4.9 | 6.1 | 3.4 | 7.2 | 5.4 |
| IRIS Subscribers | 2.3 | 3.3 | 3.8 | 3.2 | 2.4 | 2.8 |
| Broadband | 2.4 | 5.9 | 5.3 | 4.4 | 4.7 | 9.7 |
| Fixed Voice | 2.0 | 0.9 | 0.9 | 2.1 | 2.1 | 43.2 |
| Mobile | 19.7 | 9.8 | 2.8 | 10.0 | 11.5 | 22.2 |
| Cinema (1) | ||||||
| Revenue per Ticket (Euros) | 4.7 | 4.7 | 4.7 | 4.7 | 4.6 | 4.7 |
| Tickets Sold | 1,595.7 | 1,676.6 | 1,924.4 | 2,080.8 | 1,981.4 | 2,003.6 |
| Screens (units) | 209 | 209 | 214 | 214 | 214 | 215 |
| Table 12. | |||||||
|---|---|---|---|---|---|---|---|
| Profit and Loss Statement (Millions of Euros) |
1Q14 | 2Q14 | 3Q14 | 4Q14 | 2014 | 1Q15 344.1 327.7 210.2 92.3 8.3 16.9 16.7 13.8 (14.0) (216.2) (21.6) (101.2) (21.2) (72.1) 127.9 37.2% 116.9 35.7% 11.0 40.4% 7.3 135.3 (87.7) (6.1) 41.5 (11.8) 29.7 (6.5) 23.2 0.0 23.2 (68.2) (94.3) 59.7 (26.9) 32.8 |
2Q15 |
| Operating Revenues | 337.3 | 345.0 | 347.8 | 353.8 | 1,383.9 | 355.9 | |
| Telco | 323.5 | 330.2 | 332.3 | 335.8 | 1,321.8 | 338.3 | |
| Consumer Revenues | 207.2 | 203.7 | 204.0 | 205.2 | 820.0 | 213.3 | |
| Business and Wholesale Revenues | 97.3 | 97.8 | 99.1 | 99.6 | 393.8 | 102.4 | |
| Equipment Sales | 8.2 | 9.0 | 12.3 | 12.4 | 41.9 | 9.8 | |
| Others and Eliminations | 10.8 | 19.7 | 17.0 | 18.6 | 66.0 | 12.9 | |
| Audiovisuals | 14.2 | 14.2 | 14.0 | 16.1 | 58.5 | 18.0 | |
| Cinema (1) | 10.7 | 11.4 | 12.8 | 14.0 | 49.0 | 12.9 | |
| Others and Eliminations | (11.0) | (10.9) | (11.3) | (12.0) | (45.3) | (13.5) | |
| Operating Costs Excluding D&A | (207.5) | (211.3) | (214.4) | (240.3) | (873.5) | (217.4) | |
| W&S | (21.0) | (18.7) | (21.4) | (24.1) | (85.3) | (20.3) | |
| Direct Costs | (96.7) | (100.5) | (99.7) | (110.7) | (407.6) | (110.7) | |
| Commercial Costs (2) | (22.7) | (21.8) | (31.7) | (29.9) | (106.1) | (19.2) | |
| Other Operating Costs | (67.0) | (70.4) | (61.6) | (75.6) | (274.5) | (67.2) | |
| EBITDA | 129.9 | 133.6 | 133.4 | 113.5 | 510.5 | 138.5 | |
| EBITDA Margin | 38.5% | 38.7% | 38.4% | 32.1% | 36.9% | 38.9% | |
| Telco | 120.4 | 124.9 | 123.8 | 103.4 | 472.5 | 129.0 | |
| EBITDA Margin | 37.2% | 37.8% | 37.3% | 30.8% | 35.7% | 38.1% | |
| Cinema Exhibition and Audiovisuals | 9.5 | 8.8 | 9.6 | 10.1 | 37.9 | 9.5 | |
| 42.4% | 39.5% | 36.5% | 38.8% | 35.3% | |||
| EBITDA Margin | 4.9 | 37.4% 2.7 |
4.0 | 2.3 | 13.9 | 0.5 | |
| Share of results of associates and joint ventures | 139.0 | ||||||
| EBITDA including results of associates and joint ventures | 134.8 | 136.3 | 137.5 | 115.8 | 524.4 | ||
| Depreciation and Amortization | (83.9) | (86.2) | (81.5) | (87.7) | (339.3) | (90.7) | |
| (Other Expenses) / Income Operating Profit (EBIT) (3) |
(2.8) | (12.6) | (18.3) | (3.9) | (37.6) | (5.4) | |
| 48.1 | 37.5 | 37.6 | 24.3 | 147.5 | 43.0 | ||
| (Financial Expenses) / Income | (15.2) | (14.2) | (14.9) | (11.0) | (55.2) | (10.8) | |
| Income Before Income Taxes | 32.9 | 23.3 | 22.8 | 13.3 | 92.3 | 32.2 | |
| Income Taxes | (7.3) | (4.8) | (4.0) | (1.1) | (17.2) | (8.2) | |
| Income From Continued Operations | 25.6 | 18.5 | 18.8 | 12.2 | 75.1 | 23.9 | |
| o.w. Attributable to Non-Controlling Interests | (0.3) | (0.1) | 0.0 | 0.0 | (0.4) | 0.1 | |
| Net Income | 25.3 | 18.4 | 18.8 | 12.3 | 74.7 | 24.1 | |
| Recurrent CAPEX | (52.7) | (71.8) | (68.0) | (83.2) | (275.8) | (72.3) | |
| Total CAPEX | (56.7) | (88.6) | (86.6) | (142.5) | (374.4) | (102.4) | |
| EBITDA - Recurrent CAPEX | 77.1 | 61.8 | 65.4 | 30.3 | 234.7 | 66.2 | |
| Non-Cash Items Included in EBITDA - Recurrent CAPEX (4) and Change in Working Capital |
(35.7) | (10.1) | (7.6) | 22.0 | (31.4) | (38.5) | |
| Operating Cash Flow After Investment | 41.4 | 51.7 | 57.9 | 52.3 | 203.3 | 27.7 | |
| Long Term Contracts | (3.9) | (4.2) | (3.5) | (6.8) | (18.4) | (4.1) | (4.3) |
| Net Interest Paid and Other Financial Charges | (13.8) | (15.4) | (6.7) | (10.6) | (46.6) | (5.3) | (10.4) |
| Income Taxes Paid | (1.1) | (0.3) | 10.8 | (1.1) | 8.2 | (1.3) | (0.6) |
| Other Cash Movements | 0.1 | 0.5 | 0.3 | 0.3 | 1.2 | 0.2 | 0.3 |
| Recurrent Free Cash Flow | 22.6 | 32.3 | 58.8 | 34.1 | 147.7 | 22.3 | 12.7 |
| Net Financial Debt | 923.4 | 969.2 | 956.8 | 983.5 | 983.5 | 999.2 | 1.092.1 |
This presentation contains forward looking information, including statements which constitute forward looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and assumptions of our management and on information available to management only as of the date such statements were made. Forward-looking statements include: (a) information concerning strategy, possible or assumed future results of our operations, earnings, industry conditions, demand and pricing for our products and other aspects of our business, possible or future payment of dividends and share buyback program; and (b) statements that are preceded by, followed by or include the words "believes", "expects", "anticipates", "intends", "is confident", "plans", "estimates", "may", "might", "could", "would", and the negatives of such terms or similar expressions. These statements are not guarantees of future performance and are subject to factors, risks and uncertainties that could cause the assumptions and beliefs upon which the forwarding looking statements were based to substantially differ from the expectation predicted herein. These factors, risks and uncertainties include, but are not limited to, changes in demand for the company's services, technological changes, the effects of competition, telecommunications sector conditions, changes in regulation and economic conditions. Further, certain forward looking statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from the plans, strategy, objectives, expectations, estimates and intentions expressed or implied in such forward-looking statements. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to provide reasons why actual results may differ. You are cautioned not to place undue reliance on any forward-looking statements. NOS is exempt from filing periodic reports with the United States Securities and Exchange Commission ("SEC") pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934, as amended. Under this exemption, NOS is required to post on its website English language translations of certain information that it has made or is required to make public in Portugal, has filed or is required to file with the regulated market Eurolist by Euronext Lisbon or has distributed or is required to distribute to its security holders. This document is not an offer to sell or a solicitation of an offer to buy any securities.
Chief Financial Officer: José Pedro Pereira da Costa Phone: (+351) 21 799 88 19
Analysts/Investors: Maria João Carrapato Phone: (+351) 21 782 47 25 / E-mail: [email protected]
Press: Isabel Borgas / Irene Luis Phone: (+351) 21 782 48 07 / E-mail: [email protected]
Conference call scheduled for 12.00 (GMT) on 29 July 2015
Conference ID: 84747214 Portugal Dial-in: +351 800 812 040 Standard International Dial-In: +44 (0) 1452 555 566 UK Dial-in: +44 (0) 800 694 02 57 US Dial-in: +1 866 966 94 39
Encore Replay Access #: 84747214 International Encore Dial In: +44 1452 550 000
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