Tele Columbus (TC1) Q3 2024 earnings summary

Executive summary

• Q3 2024 was a foundational quarter with a focus on future IP growth, operational transformation, and major organizational changes, including the NetCo/ServCo split and reduction of subsidiaries from 35 to 15.

• Achieved strong IP sales, with 113% YoY net adds and 19% revenue growth in Q3 and 9M 2024, and over 50% of gross adds choosing 500 Mbit/s or more.

• TV customer base declined due to regulatory bulk migrations, with retention expected at 49-55% by year-end 2025.

• Customer base fell from 1.95m to 1.33m, mainly due to contract terminations and regulatory changes affecting collective collection.

• Major refinancing completed in March 2024, extending loan and bond maturities to 2029 and securing €300m in shareholder loans.

Financial highlights

• Revenue declined to €325.0m for 9M 2024, mainly due to a 19% drop in TV revenues from bulk migrations, partially offset by 11.4% growth in Internet & Telephony revenues.

• Reported EBITDA dropped to €105.4m, significantly impacted by non-recurring items; normalized EBITDA stable YoY at €141.6m (margin up to 47.5%).

• CapEx excluding leasing increased 19% YoY to €146.1m, driven by network and customer growth investments.

• Operating cash flow improved to €124.3m, and liquidity at €58.4m as of September 2024, with an undrawn €105m shareholder loan.

• Net loss widened to €144.4m, and equity fell to €148.3m due to the net loss.

Outlook and guidance

• Full-year 2024 guidance for revenue and EBITDA revised downward due to lower conversion in migration campaigns and higher one-off expenses from faster group separation.

• Targeting 50-55% retained TV customers by end of 2025, with further one-off costs expected in 2025 but at a smaller scale.

• Liquidity expected to develop better than planned, supported by working capital and investment optimization.