May 9, 2019 / 7:00 PM / 4 months ago

UPDATE 1-Altice Europe hails strong French market, says turnaround materialising

* Best quarterly EBITDA in France since acquisition of SFR

* Core profit up in France on better sales, lower costs (Adds details, background, founder quote)

By Mathieu Rosemain and Gwénaëlle Barzic

PARIS, May 9 (Reuters) - Altice Europe founder Patrick Drahi said on Thursday that lower costs, a rise in profit and growth in new customers in key market France signalled the turnaround of his telecoms and cable group was underway, just 18 months after the stock slumped 60 percent.

The Franco-Israeli billionaire, who owns a majority of the company’s shares, has shifted his focus from cost-cutting towards gaining clients while selling infrastructure assets to reassure investors, after making heavy investments in broadcasting rights.

His number one asset, SFR, France’s second-biggest telecoms operator, showed signs of recovery in the first quarter, as it managed to mitigate a fall in revenues while at the same time increasing core profit, in a context of heavy promotions.

The Amsterdam-based group added 117,000 mobile customers in France over the period, as well as about 88,000 broadband customers.

“The turnaround of Altice Europe, which we started around 18 months ago with a new management team is therefore materializing,” Drahi told analysts during a call.

“I’m super happy. This is the moment where the shuttle is really taking off.”

CUSTOMER SATISFACTION First-quarter adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 4 percent from a year earlier to 1.30 billion euros ($1.46 billion), helped by the best quarterly core profit generated by Altice’s French unit SFR since its acquisition in 2014.

The group cited lower operating costs stemming from better customer satisfaction and fewer subscriber losses, to explain the improved profitability.

Drahi also said the restructuring phase that the group went through, marked notably by layoffs equivalent to 30 percent of SFR’s workforce, was definitely over.

With debt of 30.1 billion euros at the end of March, more than twice its yearly revenues, Altice Europe’s share price had been under pressure since 2017 due to questions over its performance in France, which represents two-thirds of its sales.

Shares have gained 56 percent since the start of the year, valuing the company at 3.1 billion euros.

Altice Europe, whose telecoms activities span from Israel to the Dominican Republic and Portugal, saw its quarterly sales decrease slightly by 0.4 percent to 3.52 billion euros.

It confirmed its full-year targets, including French revenue growth in the range of 3 to 5 percent and an operating free cash flow growth around 10 percent from a year earlier, excluding its TV activities. ($1 = 0.8910 euros) (Reporting by Mathieu Rosemain and Gwenaelle Barzic Editing by Geert De Clercq and Alexandra Hudson)

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