Numericable-SFR slows customer losses with 'back to school' campaign

Numericable-SFR said it was able to stabilise its mobile and fixed customer bases in the third quarter of 2015 following strong promotional activity in the "back to school" period.

At the end of September, the French fixed and mobile operator had 21.8 million mobile customers, down 5 per cent on a year ago and 0.5 per cent lower compared to the previous quarter.

"The marketing strategy aimed at generating ARPU growth and value through a clear focus on high end customers and quadruple play is clearly bearing fruit in both fixed and mobile," the company said.

Revenue fell by 3.5 per cent year on year in the third quarter to reach €2.7 billion ($2.9 billion). On a sequential basis, revenue was down by just 0.2 per cent. Adjusted EBITDA increased by 15 per cent to €1.03 billion, which the company attributed to "the continued good progress of the synergies implementation plan."

"As a result, the adjusted EBITDA margin was up 6.1 percentage points at 37.3 per cent. This stellar EBITDA margin growth was delivered despite a c.150 bps [basis point] increase in sales and marketing costs due to [the] back to school campaign. We remain confident in achieving our medium term target of 45 per cent adjusted EBITDA margin," the company said.

Numericable-SFR is expected to achieve adjusted EBITDA of at least €3.85 billion for the 2015 financial year and adjusted EBITDA minus capex of €2 billion.

Analysts from Jefferies International recently highlighted the heavy promotional activity in France, noting that Numericable-SFR was "visibly more active in mobile" and described the company's promotions as "relentless" during the third quarter with strong discounts particularly on the SFR Red smartphone plans.

"Repairing commercial momentum is a priority for Numericable-SFR, which saw its postpaid base shrink 7 per cent in 1H15 yet aims to stabilise revenue in 2016," the analysts said.

Parent company Altice described the momentum in France as good, with improving revenue and customer base trends and the "best KPIs since the acquisition of SFR."

"We remain confident that our strategy based on accelerating investments in both fibre and 4G+ infrastructure and higher value generation through focus on quadruple play and use of our clear fibre advantage will continue to deliver results," said Altice CEO Dexter Goei.

Goei added that following a period of "significant M&A activity", the group's primary focus is now on "delivering on our operational plans and integrating our new U.S. businesses."

For more:
- see the SFR results

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