NETGEM (EPA:ALNTG) - 2019 turnover and net revenue - Netgem completes its transformation into an operator of services for the connected home and ultra-broadband access

Transparency directive : regulatory news

23/01/2020 07:30

Press release
2019 turnover and net revenue

   Netgem completes its transformation into an operator of services for the
                  connected home and ultra-broadband access.

Paris-La Défense, January 23, 2020,

Turnover and net revenues

(in EUR m,                Q4     Q3     Q4      Var.    Var.
unaudited)        2019   2019   2018  T4 / T3  Q4 / Q4  2019  2018  variation
Netgem (excluding Vitis):
IFRS turnover      6.4    5.7   10.8   + 12%    -41%    25.3  41.8    -39%
Net revenue (*)    3.6    3.2    4.7   + 12%    -23%    13.5  19.7    -31%
Vitis (not consolidated):
Net revenue (*)    4.0    3.7    3.3    + 8%   + 21%    14.5  10,2    + 42%

(*) net revenue = turnover minus the cost of equipment sold. Excluding the
platform activity transferred to Vitis beginning of 2019, Netgem's net revenue
amounted to 4.3 EURm in Q4 2018 (vs 4,7 EURm).

Highlights

Netgem's 4th quarter turnover reflects a stabilization of its activity thanks
to a now preponderant services component, its increase resulting from
exceptional end-of-year adjustments with certain customers. The 4th quarter
marks the successful launch in Finland with its partner Elisa of its installed
base management service offer for 4K and ultra broadband, and in Great Britain
with the first alternative fiber operators. In France, with Vitis, the Group
continues to experience sustained growth of its alternative regional Fiber
operator activity, ending the year with 42% growth.

Following inter alia the evolution of the rules of governance between Netgem
and its partner within Vitis, due to take place on the new financing, Vitis
would be exclusively controlled by Netgem, and as such should be fully
consolidated.

Outlook for 2020

Continuing deployment of fiber access in local rural markets driven by strong
political ambitions

Many European countries make fiber an essential vector for bridging the digital
divide and for the development of rural areas. Thus, in France and in Great
Britain, the market that the Group can address, are where more than 20 million
households will have access to fiber thanks to "open access" networks (ie
accessible by alternative ISPs and financed by operators of infrastructure)
over the period 2020-2025.

Over this same period, the large incumbent operators have committed to building
fiber and 5G networks in dense areas, open to strong competition but offering
them better prospects of return on their investment.

On the French market, Caisse des Dépôts, the leading fiber investor in French
regions, has just confirmed its intention to continue supporting the
development of Vitis alongside the Group by providing EUR 2.4 million in
additional financing, enabling Vitis to consolidate its position as leader of
independent operators of 100% ultra-broadband services in rural territories.

The British model favors the emergence of dozens of alternative operators,
which have access to financing to build local fiber networks, more particularly
in cities of medium or small size. In a few months, 12 of these operators have
chosen to redistribute the NetgemTV service to their customers.

Growth of new consumption modes, "streaming for all", and the services made
possible by ultra-broadband access

In support of this infrastructure market, the Netgem Group is therefore
resolutely positioned in terms of connected home services. The provision of
very high speed access with stable and powerful WiFi, allowing access to
streaming television, video and music on several screens and in several rooms
simultaneously is today the new universal service expected by all households
and on which the development of the subscriber base will be built.

The Netgem Group has total technological mastery in this area of a unique
unified experience on television, mobile and voice control. The respectful use
of usage data from these digital applications used on a daily basis will
encourage the expected adoption of new uses and services for the connected home
and opens up a medium-term prospect of additional revenues leading to the
loyalty of households and to an increase in the revenue per subscriber.

Completion of the transformation of the Netgem Group to a recurring economic
model

In 2020, the Group's net revenues will be made up by more than 75% of service
revenues from tacit renewal subscriptions or consumption of on-demand services.
This change in the financial profile of the Netgem Group is now in place in the
different countries addressed: France, UK and also in Finland with the operator
Elisa.

As such, in 2020, the Group considers that comparisons of consecutive quarters
will be a more faithful reflection of the evolution of its activity than
comparisons with a year apart.

The Group monitors its cash consumption during this growth phase. The marketing
acquisition costs of direct B2C and indirect B2B2C customers are borne by the
Netgem Group or its operator-distributor partners. The infrastructure costs
linked to the physical construction of the fiber networks are not financed by
the Group.

The supply of equipment (box, connected sound bars, etc.) is now an option in
the service offerings, justifying the use of net revenue (excluding hardware)
as an indicator.

Focus on the strengths of the Netgem Group, in a unique position to succeed

The Netgem Group has unique strengths to succeed in this market:

1) An experienced management team that has been able to drive the
   transformation of the model by controlling costs and protecting know-how
   and talents.
2) Proven technological assets at the forefront of the market.
3) The choice of two priority markets, France and Great Britain, offering very
   solid prospects for development given their relative delay in fiber
   deployment and their strong political commitment to regional development.
4) A business model mixing B2C and B2B2C allowing the management of growth and
   cash flow.
5) A healthy balance sheet, with a largely positive net cash position.
6) Long-term shareholders, keen to see Netgem contribute to the development of
   ultra-broadband access for all.

For Mathias Hautefort, CEO, "The Netgem Group is now in working order to
participate in the development of ultra-broadband access for all and we will
see the favorable consequences this year with a growth of the subscriber base
for our services. The new round of financing for Vitis demonstrates in this
respect the confidence of our partners in terms of growth prospects, in
particular in France."

Financial communications calendar

* Results 2019                         March 20, 2020, before market
* Turnover and net revenue Q1 2020     May 14, 2020, before market
* Annual General Meeting               May 14, 2020
* Results H1 2020                      July 31, 2020, before market
* Turnover and net revenue Q3 2020     October 21, 2020, before market

Contacts

Investor and Analyst Relations
Bertrand Soleil
bertrand.soleil@double-digit.com
Tel: +33 (0) 6.23.31.06.53

Press Relations
Patricia Ouaki
patricia.ouaki@forcemedia.fr
Tel: +33 (0) 1.44.40.24.01

About Netgem

Netgem is an independent provider of ultra-broadband services. The Group
provides its services mainly in France and in Great Britain in rural areas by
supporting infrastructure investments supported by the public authorities to
reduce the digital divide and improve regional development. Netgem provides its
services B2C (direct consumers) and B2B2C (via other partner operators). The
Group differentiates itself with its end-to-end technological expertise in
digital TV, video and music streaming with a unified and unique experience on
TV, mobile and voice control, including the biggest brands in global and local
contentl.

Netgem is listed on Euronext Paris Compartment C
(ISIN: FR0004154060, Reuters: ETGM.PA, Bloomberg: NTG: FP) www.netgem.com

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NETGEM (EPA:ALNTG) - 2019 turnover and net revenue - Netgem completes its transformation into an operator of services for the connected home and ultra-broadband access

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