Full Year 2015 Results 8 March 2016 Confidential Disclaimer This - - PowerPoint PPT Presentation

Full Year 2015 Results

8 March 2016

Confidential

This Presentation has been prepared by Zegona Communications plc (the “Company”) in connection with the financial performance of the Company for the year ended 31 December 2015. The estimated financial information contained herein was prepared expressly for use herein and is based on certain assumptions and management’s analysis of information available at the time that this presentation was prepared. No reliance may be placed, for any purposes whatsoever, on the information contained in this Presentation or on its completeness. While the information provided herein is believed to be accurate, no representation or warranty, express or implied, is given by or on behalf of the Company, or any of its directors, partners, officers, employees, advisers or any other persons as to the accuracy, fairness or sufficiency of the information or opinions contained in this presentation and (to the extent permitted by law) no responsibility is accepted by any of them for the accuracy or completeness of such information or for omissions from the presentation or for any

• ther written or oral information transmitted or made available. Accordingly, save in the case of fraud, no liability is accepted

for any errors, omissions or inaccuracies in such information or opinions. The information and opinions provided in this Presentation are provided as of the date of this Presentation and are subject to

• change. Certain statements in this Presentation are forward-looking statements.

The forward-looking statements include statements typically containing the words “intends”, “expects”, “anticipates”, “targets”, “plans”, “estimates” and words of similar import. These forward-looking statements speak only as at the date of this

• Presentation. These statements are based on current expectations and beliefs and, by their nature, are subject to a number of

known and unknown risks, uncertainties and assumptions that could cause actual results, performances and achievements of the Company and its subsidiaries to differ. The forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and environments in which the Company may operate in the future and such assumptions may or may not prove to be correct. No statement in this Presentation is intended, nor may it be construed, as a profit forecast. No one undertakes to update or revise such forward-looking statements.

Disclaimer

Summary Zegona strategy Telecable 2015 results Telecable 2016 outlook Shareholder returns

Agenda

1 2 3 4 1 5

Zegona continues to see many attractive investment opportunities in European TMT Telecable acquisition performing well, with strong finish to 2015

• Results fully in line with Zegona pre-acquisition expectations
• Good progress on pre-identified strategic initiatives

Accelerating growth expected in 2016

• Nearly 2x 2015 revenue growth rate
• Double digit cash flow growth

Strong cash returns to shareholders

• 4.5p dividend policy for 2016 confirmed
• Incremental capital return potential

Significant shareholder value upside potential

Summary

Robust 2015 performance with accelerating growth momentum into 2016 2 2 3 4 5 1

Zegona Strategy

 Significant sector expertise  Extensive real world senior operational and public company

management experience

 Executive leadership over last 10 years in businesses that have

created $25bn of shareholder value

Experienced Team with Proven Track Record

 Compelling, investor friendly Buy-Fix-Sell strategy  Focus on businesses that require active change and fundamental

improvement to realise full value

 Target significant long term growth in shareholder value

Differentiated Buy-Fix-Sell Strategy

Attractive Market Opportunity

 Changing market dynamics in telecommunications and media

industry create multiple investment opportunities

 Driven by consumer consumption, industry consolidation and

convergence

 Over 60 European companies of desired scale identified  Targeting acquisitions in £1-3bn EV range  Target size in sweet spot between PE and major strategic buyers  Management reputation and active change strategy drives deal flow  Very disciplined approach as shareholder value No 1 priority

Well Positioned to Access Attractive Deals

Zegona acquired Telecable in August 2015 for €640m and continues to see many attractive investment opportunities in European TMT

3 1 4 3 2

Attractive Spanish Market Dynamics

 Macro economic rebound  Favourable industry structure  Early stages of market price repair  Telecable well positioned for future consolidation

Telecable - Introduction

 Leading quad-play telecommunications provider in Asturias  High profile local brand  Advanced HFC network updated to latest DOCSIS 3.0 standard,

delivering market-leading speeds

 Extensive network covering 73% of households in region  Strong, experienced local management team

Telecable is a Strong Regional Champion Spanish Cable Operators by Region

450k homes passed 142k Consumer customers 21k Business customers

Market Share Market Position

Pay TV 70% Broadband 41% Fixed Line 32% Mobile 16% Asturias Region No Cable Operator 1 1 2 4

Zegona Improvement Actions

 Revenue upsides (pricing, mobile, B2B, premium football)  Service enhancements (Network PVR, BB speeds, mobile data)  Productivity gains (capex, procurement)

4

Euskaltel / R Cable ONO

Leading quad play operator in Asturias, North West Spain

€m Growth €m Growth Revenue 34.4 5.0% 134.4 2.7% EBITDA 16.2 3.3% 65.0 3.3%

% Revenue 47% 48%

Capex 7.3 3.2% 28.9 4.5%

% Revenue 21% 22%

Cash flow* 8.9 3.3% 36.1 2.4%

% Revenue 26% 27%

Telecable 2015 Financial Results

Q4 Full Year

5

Note: Telecable results are unaudited and pro forma for the period from 1 January 2014 to 31 December 2015. A reconciliation between Telecable’s unaudited 2015 Pro Forma results and Zegona’s 2015 consolidated financial statements is provided in Appendix C of Zegona’s Earnings Release. * Cash flow is EBITDA minus Capex

Fully in line with pre-acquisition expectations, with continuing growth in Revenue, EBITDA and Cash flow

Telecable 2015 Operational Results

Product and service enhancements driving KPI improvements

2014 2015 Growth Consumer*

Revenue (€m) 97.7 99.0 1.3% Customers (AOP K) 143 144 0.2% RGUs (K) 454 456 0.4% ARPU (€/mth) 56.8 57.4 1.1%

Consumer Mobile

Revenue (€m) 22.3 26.1 17.0% Post paid lines (AOP k) 87.5 101.6 16.1% Postpaid ARPU (€/mth) 20.9 21.2 1.6%

Business**

Revenue (€m) 32.8 35.1 7.0% Customers (AOP K) 19.1 20.1 5.3% RGUs (K) 82.9 91.5 10.3% ARPU (€/mth) 143 145 1.6%  Stable, high value customer base  Continuing growth in RGUs  ARPU growing & will accelerate in 2016 with recent price increase  Double digit growth with further upside given low market share  Converged customers have lower churn/higher value  Impressive Business customer and revenue growth  Growing RGUs per customer  Significant further potential given low market share Note: Telecable results are unaudited and pro forma for the period from 1 January 2014 to 31 December 2015 * Includes Consumer Mobile ** Includes Business Mobile

6

Improving Industry and Economic Trends

 Industry price repair underway .… all major industry players increased prices during 2015 and have announced additional 2016 price rises  Further recovery of Spanish economy .… 2.7% GDP growth forecast vs 1.8% Euro area average***

Significant Progress on Key Strategic Initiatives

Enhance Mobile Experience

 Doubled mobile data allowances  Continued Wifisfera rollout, 60% traffic increase in 2015  20K contract mobile line net additions (+18%)**  Mobile penetration increased to 51%  Quadplay penetration now at record 35%

Improve Capex Productivity

 Focus on sales distribution, network maintenance and home install  Reinvest savings into revenue growth initiatives, e.g. STBs  Flat €m’s Capex, but % revenue expected to decline from 22%

Grow Consumer Revenues

 Doubled minimum BB speed to 200Mbps, launched 500Mbps  4% Q4 YoY ARPU growth, now at record high of €59/mth  Football customers increased by 19K to 31K  STB penetration now at record 33%* and growing rapidly  Increased consumer prices by €2/mth in January

Renewed Focus on Business Clients

 7% revenue growth in 2015  Customers and ARPU both grew 5% YoY in Q4. Record highs  Comprehensive management and product changes

7 2 1 3 4

* STB penetration is defined as the number of Consumer customers with Telecable’s TV Set-Top Box divided by the total Consumer customer base ** Includes Consumer and Business mobile lines. Consumer mobile lines grew 16k (+17%) *** European Commission GDP growth forecasts for 2016

2015 2016 2015 2016

Telecable 2016 Outlook - Accelerating Growth Expected

Revenue growing circa twice as fast as 2015 with double digit cash flow growth

 Strong finish to 2015  Significant progress on key

strategic initiatives

 Industry price repair

underway

 Further recovery of Spanish

economy

 Moody’s recent B1 rating

8

Accelerating Revenue Growth

Targeting mid single digit revenue growth in 2016

Strong Cash Flow Generation

Targeting double digit cash flow* growth in 2016

Backdrop

2.7% Mid single digit 2.4% Double digit

Note: Telecable 2016 Outlook based on Telecable’s Pro Forma results * Cash flow is EBITDA minus Capex

Zegona Shareholder Returns

Attractive dividend and additional capital return potential



4.5p per share dividend policy for 2016 confirmed



Full year payment of £8.8m expected



Expected dividend yield of 3.9%*



Intention to grow dividend on progressive basis

Annual Dividend Policy Confirmed



Telecable will generate significant excess cash in 2016



This cash is over and above our regular annual dividend



We continue to evaluate a number of attractive new investment opportunities



To the extent this excess cash is not required for new

• pportunities, we intend to distribute it to shareholders



We are putting in place the necessary mechanisms for a capital returns programme and we will seek formal shareholder approval at next AGM

Significant Additional Capital Return Potential

9

* Assumes share price of £1.15

2 1

Zegona Valuation Perspectives

10

* Using Zegona share price of £1.15, FX rate 0.7882 £/€ as at 26 Feb 2016. Euskaltel valuation multiple source: company information as at 26 Feb 2016

Valuation multiple:

 Zegona 2015 EBITDA valuation multiple of only 8.5x vs Euskaltel at 10.8x*  Circa 50% shareholder value upside compared to Euskaltel rating*

Growth:

 Telecable revenue growing faster than peers in 2015 - growth of 2.7% with acceleration to mid

single digit expected in 2016

Cashflow:

 Telecable generating strong cash flow. €11 million cash to Zegona Group in only 4.5 months  Telecable cash flow growth expected to accelerate to double digit in 2016

Shareholder returns:

 Zegona dividend policy of 4.5p provides attractive yield  Additional capital return potential

Forex gain:

 €/£ rate has tightened from 1.40 at acquisition to 1.27, a gain of c.10% for Zegona shareholders*

2 3 4 1 5

Many attractive investment opportunities for Zegona in European TMT Robust 2015 Telecable performance Accelerating Telecable growth expected in 2016 4.5p dividend plus additional capital return capacity Shareholder value upside potential

Conclusions

11 2 3 4 5 1