Telenet Group Holding N.V.

For the first half of 2023, Telenet reported revenue of $1.4 billion, up 9% year over year, helped by Caviar and Eltrona; excluding those acquisitions, rebased revenue growth was almost 2%. Adjusted EBITDA was €677 million in H1, up 1% reported and broadly stable rebased; second-quarter adjusted EBITDA was up 4% reported and rebased. Adjusted EBITDAaL was €619 million in H1, up 1% reported and 3% rebased. Accrued CapEx was €342 million in H1, up 16% year over year, and adjusted free cash flow was €103 million, down 39%. Management said full-year adjusted free cash flow should be around €250 million, and it remains on track for full-year financial objectives; net total leverage was 3.5x under the new definition and 4.0x under the old definition.

John Porter said the IT migration issues are substantially behind the company, with call volumes and customer contacts back near 2022 levels and the business returning to “business as usual.” He emphasized that most customers were unaffected, that churn impacts were limited, and that marketing is back above the line, so he expects a subscriber recovery in the second half. He also framed Wyre as a strategic foundation for long-term network leadership and said the company is open to future network-sharing or partnership opportunities, but only on terms that create value.

Erik Van den Enden described Q2 as operationally soft but said the company is trending well against full-year EBITDA guidance. He highlighted the one-time €10 million benefit in H1, the impact of the 11% wage indexation, higher energy costs, and that 2023 energy spend is covered by fixed-price contracts, with about 42% of 2024 exposure hedged. He also noted €342 million of accrued CapEx in H1, higher cash CapEx and working-capital seasonality driving the €103 million adjusted free cash flow, but said cash balance was more than €1 billion at June-end, undrawn revolver capacity lifted to €600 million, and liquidity totaled nearly €1.7 billion.

Analysts focused on the IT issues, competition, Wallonia network strategy, B2B growth, Wyre funding, and whether share sales or M&A would change capital allocation. Management said the IT problems are mostly in edge cases and fulfillment/activation workflows, not the core business, and that churn and subscriber recovery should improve in H2. On competition, it said the environment is fierce but not structurally different, while on Wallonia and network-sharing it argued a mix of coax and fiber is the best wholesale proposition and that broader sharing discussions will depend on the BIPT review, likely playing out in 2024.