Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nos Sgps SA (ZONNF, Financial) reported a 4.7% revenue growth and a 4.8% EBITDA growth for the quarter.
- The company's underlying net income increased by 9.3%, and underlying free cash flow grew by approximately 18%.
- Nos Sgps SA (ZONNF) achieved a 2.2-percentage-point increase in return on capital employed, reaching 12.7%.
- The company saw a significant reduction in CapEx by 5.1%, with a notable 40% decrease in expansionary telco CapEx.
- Nos Sgps SA (ZONNF) has a strong balance sheet with a net financial debt to EBITDA after leases ratio of 1.71, well below their strategic funding target of 2 times.
Negative Points
- The audiovisuals and cinema business delivered slower-than-expected numbers, with a 35% decrease in the number of tickets sold and a 30% revenue decline.
- Energy costs rose during the quarter due to increased unit costs and regulated tariffs, impacting operational expenses.
- Lease costs increased by approximately 10%, driven by a higher number of units and a slight increase in unit prices.
- The company faces inflationary pressures on CapEx, particularly in IT and network operations.
- Nos Sgps SA (ZONNF) continues to experience challenges in the satellite business, affecting pay TV and broadband segments.
Q & A Highlights
Q: What drives the strong performance in post-paid net adds for mobile, and do you have a significant advantage in terms of 5G speed and reliability?
A: Definitely, we have the strongest 5G network in Portugal, which is perceived by clients as increased quality. This creates good momentum, especially when we push our convergent offers, leading to more customers bundling up and moving to post-paid.
Q: Can you clarify the impact of the network sharing agreement with Vodafone on the FttH rollout and future CapEx?
A: The first deal with Vodafone is already in place, and the second one will start in the second half of the year. This will likely accelerate the FttH rollout. By 2025, we expect around 90% of homes passed to be FttH.
Q: What are the expectations for performance in the second half of the year, and are there any caveats that could undermine it?
A: We expect to maintain the momentum from the first half. Energy costs might be lower, and we are always looking for cost reduction opportunities, especially in the cinema business. Overall, we expect similar performance in the second half.
Q: What are the plans for the cash from the sale of the Cellnex towers, and will there be an extraordinary dividend in 2025?
A: We are committed to a sustainable dividend policy, but this is a Board decision. We don't have specific comments at this point regarding an extraordinary dividend.
Q: How do you see lease costs evolving into 2025, and are there inflationary pressures on the remaining CapEx base?
A: Lease costs have increased due to more sites and a small increase in unit price, capped at 2%. On the CapEx side, we see some inflationary pressures, mainly in IT and network operations, but we are mitigating these through our transformation program.
Q: What is driving the growth in the B2B segment, and what are the expectations going forward?
A: Growth in the B2B segment is driven by increasing share of wallet in large corporates and market share in mid-market and SMEs. We expect this trend to continue and even strengthen as we fine-tune our growth efforts in both tech and telco.
Q: Are you prioritizing new clients on the FttH network in areas with overlap between cable and fiber?
A: We are increasingly installing new clients on the FttH network, especially in areas where we are expanding our presence. However, we are not explicitly migrating clients from HFC to FttH as HFC still delivers good performance.
Q: How has Nowo behaved in the market since the Vodafone deal was blocked, and do you expect any changes?
A: Nowo has been quite dormant in terms of competitive dynamics and continues to lose market share. We haven't seen any significant changes since the deal was blocked.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
