8-K: Telenet Reports Preliminary Q4 2024 Results, Meeting Full Year Outlook

Telenet announces preliminary Q4 2024 results, highlighting broadband net additions growth and meeting its full-year financial outlook, while planning strategic investments for future growth.

Summary

• Telenet Group Holding NV announced its unaudited consolidated results for Q4 and FY 2024, reporting improved commercial performance despite a competitive environment.
• Broadband net additions saw growth after two years of decline, with 3,200 new subscribers in Q4.
• FMC households increased by 12,200 to reach 861,000, marking the best quarterly performance in two years.
• However, the mobile postpaid subscriber base contracted slightly by 1,800 due to lower gross sales and challenging market dynamics.
• FY 2024 revenue remained broadly stable at 2,851.4 million, a slight decrease of 0.1% YoY.
• Adjusted EBITDAaL for FY 2024 was flat at 1,279.9 million, a 2.1% YoY decrease on a rebased basis.
• P&E Additions, excluding football broadcasting rights and certain leases, accounted for 31.1% of revenue for FY 2024, totaling 885.8 million.
• Adjusted FCF reached 102.8 million, surpassing FY 2024 guidance.
• Looking ahead to 2025, Telenet plans to accelerate investments in 5G, its next-gen video platform, and digital capabilities.
• Wyre, the NetCo partnership with Fluvius, aims to build an additional 375,000 homes passed by year-end 2025 and secured a standalone 500 million capex facility.
• For FY 2025, Telenet anticipates broadly stable revenue and a low to mid-single digit Adjusted EBITDAaL decline.
• P&E Additions are expected to reach around 38% of revenue for FY 2025.
• Adjusted FCF is projected to be between -180.0 to -150.0 million for FY 2025.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While Telenet met its FY 2024 outlook and saw growth in broadband and FMC, the projected decline in Adjusted EBITDAaL and negative Adjusted FCF for FY 2025 temper the positive aspects.

Positives

• Broadband net additions returned to growth, with 3,200 new subscribers in Q4 2024.
• FMC households saw strong growth, increasing by 12,200 in Q4 2024.
• FY 2024 revenue remained broadly stable at 2,851.4 million.
• Adjusted FCF for FY 2024 surpassed guidance, reaching 102.8 million.
• Wyre secured a 500 million capex facility to fund its fiber optic network expansion.
• BASE exceeded its target of 25,000 subscriptions sold by the end of 2024.

Negatives

• Mobile postpaid subscriber base contracted slightly by 1,800 in Q4 2024.
• Adjusted EBITDAaL for FY 2024 decreased by 2.1% on a rebased basis.
• B2B revenue declined 3.1% YoY in Q4 2024.
• Adjusted FCF is projected to be negative for FY 2025, between -180.0 to -150.0 million.
• Net income of 55.8 million for FY 2024 compared to 280.3 million in the prior year.

Risks

• Intense competition in the mobile market is impacting subscriber growth.
• Increased capital expenditure for 5G and FTTH network upgrades may pressure short-term free cash flow.
• A mandatory 3.6% wage indexation in January 2025 will impact Adjusted EBITDAaL.
• The loss of the VOO MVNO contract is negatively impacting B2B revenue.
• The company faces potential adverse competitive, economic or regulatory developments.

Future Outlook

Telenet anticipates broadly stable revenue and a low to mid-single digit Adjusted EBITDAaL decline for FY 2025, with increased capital expenditure for 5G and FTTH network upgrades. Adjusted FCF is projected to be negative between -180.0 to -150.0 million.

Management Comments

• John Porter, CEO of Telenet, commented: 'Our commercial performance continued to improve during the quarter despite an intense competitive environment.'
• John Porter stated that broadband net additions returned to growth and FMC growth was the highest since Q4 2022.
• John Porter mentioned plans to accelerate investments in 5G, the next-gen video platform, and digital capabilities in 2025.
• John Porter noted that Wyre remains on track to achieve 70% FTTH penetration by 2030 and Telenet remains committed to invest up to 2 billion in the data network of the future by the end of this decade.

Industry Context

The announcement reflects the ongoing competition in the telecommunications sector, particularly in the mobile market. Telenet's strategic investments in 5G and FTTH align with industry trends towards higher bandwidth and converged services. The Wyre partnership and fiber optic network expansion are consistent with the broader industry push for next-generation infrastructure.

Comparison to Industry Standards

• Comparing Telenet's performance to peers like VodafoneZiggo (Netherlands) and Virgin Media O2 (UK), also under the Liberty Global umbrella, reveals similar trends in fixed-mobile convergence and infrastructure investments.
• Telenet's Adjusted EBITDA margins are within the range of other European telecom operators, but the projected decline in Adjusted FCF for 2025 is a concern compared to companies with more stable cash flow profiles.
• The 500 million capex facility for Wyre is a significant investment, comparable to other fiber optic network projects in Europe, such as Deutsche Telekom's fiber rollout in Germany.
• Telenet's FTTH penetration target of 70% by 2030 is ambitious but aligns with the long-term goals of many European telecom operators.

Stakeholder Impact

• Shareholders may be concerned about the projected decline in Adjusted EBITDAaL and negative Adjusted FCF for FY 2025.
• Employees may be affected by the mandatory wage indexation and potential restructuring efforts.
• Customers can expect improved broadband and mobile services due to the planned investments in 5G and FTTH.
• Suppliers may benefit from increased capital expenditure on network upgrades.

Next Steps

• Telenet plans to accelerate investments in 5G, its next-gen video platform, and digital capabilities in 2025.
• Wyre aims to build an additional 375,000 homes passed by year-end 2025.
• The company will continue to monitor the competitive landscape and adjust its strategies accordingly.

Key Dates