Iliad is upbeat about its progress in Italy, but nonetheless is delaying the launch of its planned fixed-line service in the market.
The French telco group presented its first quarter numbers on Tuesday. Amid all the back-slapping on customer acquisitions and double-digit revenue growth in Italy, it would have been easy to miss the news that it is not only pushing back the fixed service launch, but is also working towards an even more nebulous target launch date. Slipped in at the end of its Q1 report, the operator said it will “launch the fixed business after the summer of 2021,” having previously been shooting for a “by summer 2021” introduction.
To be clear, Iliad itself noted the change in wording, albeit a subtle one, in its target. It provided no further details as to the reason for the delay.
Its other revised target for Italy was a positive one. It expects to achieve positive EBITDAaL at its Italian business for full-year 2021, a step up from its previous goal of positive earnings in the second half of the year. Further, it expects to post positive EBITDAaL in the current quarter on the back of an increase in traffic carried on its own network, rather than those of its competitors.
Iliad Italia generated revenues of €188 million in the three months to the end of March, an increase of 25% year-on-year, and added 305,000 new mobile customers, taking its total base to 7.5 million and its market share to close to 10%, it claims.
Naturally, the bulk of the group’s revenue is still generated in its home market. France contributed €1.26 billion to the group total of €1.85 billion in Q1, but growth was much flatter at 2.4%. At group level turnover was up by a third on-year, driven both by growth in Italy and the inclusion of Poland’s Play – which Iliad agreed to buy for €2.2 billion last year – for the first time.
Iliad’s goal in France is to speed up its 5G build-out, but that’s going to be costly.
As such, the telco has decided to sell off its remaining 30% stake in mobile towers business On Tower France to fund the acceleration of its 5G capex programme; On Tower France was created at the back end of 2019 when Iliad sold a 70% stake in its towers business to passive infrastructure specialist Cellnex, which still holds that stake. Iliad did not give further details of the planned sale of the remainder of the business in its results announcement, but Dow Jones Newswires quoted Nicolas Jaeger, Iliad’s CFO, as describing Cellnex as “the perfect buyer.” He also said that ILiad aims to raise at least €600 million from the sale.
Iliad said it will allocate “a portion of the future proceeds” of the sale to 5G capex. But that will have a knock-on effect elsewhere. Iliad has put under review its full-year target of generating €900 million in operating cash flow for France, excluding B2B.
“We will announce a revised objective in September which will take into account the accelerated 5G capex program and, to a lesser extent, measures taken to secure inventories of electronic components and devices amid the ongoing supply shortages,” Iliad said.
We will watch and wait.