The fiber and convergence leader in Northern Spain June 2017

Transcription

1 The fiber and convergence leader in Northern Spain June

2 The regional integrated telecommunication Champion 1 Leading fiber and convergence operator in the Basque Country and Galicia 6 Consolidator of the regional cable in the North of Spain through the acquisition of 2 Supportive macro dynamics in relevant regions and rebounding telecom dynamics 5 Superior best in class cash-flow conversion underpinned by a prudent financial policy 3 State-of-the-art fiber network fully invested, providing best-in-class service and acting as an entry barrier 4 Growth momentum underway focused on the lifetime value of the client and fully on track to meet the targets announced at IPO 1

3 1 The leading fiber and convergence operator in complementary regions Galicia Key consolidated metrics Basque Country FY2015 FY2016 Change + Market position: #1 in footprint Addressable market (population in millions): c.5.0 Residential RGUs ( 000 s): 1,900 RGUs/subscriber: 3.5x 3P/4P Penetration: 66% ARPU ( /month): 58.4 Fixed penetration (3) : 28% Mobile penetration over fixed customer (4) : 77% Revenue breakdown Revenue ( m): 566 (1) % Adj. EBITDA ( m): 267 (2) % (49.0% of sales) Operating cash flow ( m): % (32.2% of sales) Net debt/ebitda: 5.1x 4.2x Business 29% Wholesale & Other 6% 2016A: 573m Residential 65% Complementary fit with no market overlap and benefiting from increased size and scale Note: FY16 figures. (1) Revenues excluding elimination of profit neutral activities. (2) 2015 EBITDA adjusted to exclude costs related to the IPO process, debt cancellation and acquisition of R Cable (c. 15.4m) (3) Measured as residential fixed subscribers over homes passed. (4) Measured as residential fixed subscriber with mobile (excluding mobile only) over total fixed subscribers. 2

4 2 Macro tailwinds with further penetration upside Wealthy, fast growing regions and lower unemployment than the Spanish average Spanish GDP sustained growth expected on the back of increasing private consumption and upturn in investment Rebounding dynamics of the Spanish telecommunication market, with convergence and market consolidation driving market repair Broadband and Pay TV penetration significantly below European average Significant room for further market development on the back of economic recovery to reach penetration levels in line with other mature European cable markets 3

5 3 State-of-the-art fiber network fully invested Coverage (%HH) 87% 55% 35% 39% 61% 36% (1) 81% 47% % of EuroDOCSIS % 100% c.50% 92% 100% c.96% 100% (2) 100% Access capacity (MHz) (3) Households per node (avg.) c.500 c.280 n.a. c.580 c.580 c.450 n.a. c.500 Fully-owned backbone network (4) 4G license via SFR via BASE via Optimus via Vodafone Future-proof network supports success-based capex and 15% capex over revenues as medium term target Source: Company filings. (1) In Core regions (as defined by Telecolumbus). (2) EuroDOCSIS NGN. (3) In August 2014, announced upgrade to 1 GHz in Flanders by (4) Part of the backbone is rented under irrevocable use rights of use until 2025 with an annual cost of 2.9m, of which 2.4m relate to optic fiber. 4

6 4 Best-in-class service proposition for the residential segment Unrivalled coverage with the fastest broadband offering The speed leader with the only ultra-fast broadband offering across the entire region (DOCSIS 3.0 network) Superior fiber coverage in the Basque Country and Galicia (1.7m homes passed) Wide offering of commercial speeds, ranging from 30Mbps to 350Mbps Competitive prices offering best value for money and superior service to competitors Highly attractive and competitive mobility proposition Full-service, leading MVNO Competitive and innovative tariffs to address real customer needs Largest WiFi network in the Basque Country and Galicia with more than 240k hotspots allowing for data for clients The most complete and innovative TV proposition High-quality and comprehensive content offering covering different customer groups needs with possibility of adding premium channels Enhanced offering providing a superior and differentiated user experience (PVR, VoD, TV Everywhere) Increased penetration of superior quality services (HD, catch-up TV, VOD, network PVR, start over, time shift...) Anticipating the future: Euskaltel will launch the first hybrid 4K/UHD set top box in Spain FY2016 RGUs: 395k FY2016 RGUs: 764k (77.2% penetration over fixed customers) Internet in the STB: Smart TV connection FY2016 RGUs: 270k Convergent offer with a leading value proposition focused on the lifetime value of the client in Basque Country and Galicia 5

7 4 Visible and consistent strategy focused on customer long term value Bundling strategy (3P/4P) 1 Mobile convergence strategy Residential RGU/Subs (x) 3.2x 3.3x 3.5x Mobile penetration % 77.2% +4.9% 65.8% 71.7% 63.3% 60.9% 66.6% 3 3 IPO Jul-15 4Q15 4Q16 IPO Jul-15 4Q15 4Q16 Successful upselling strategy delivering sustained growth in RGU/subs reaching 3.5x, and 3P/4P penetration of c.66%. Leading convergent strategy which has resulted in capturing c.61k new mobile lines in 2016 (+8.6% YoY) whilst managing host and access costs Notes: 1. Residential subs as % of total subscribers 2. Residential mobile subscribers (excluding mobile only) as % of total fixed customers 3. IPO data pro forma to include R Cable 6

8 4 Successful response to aggressive competition Coverage and competition Commercial response adapted to FTTH deployment Product intake Broadband Broadband RGUs Euskaltel +R Cable fiber coverage as of IPO and 2Q16) 70% 27% Competitors fiber coverage in 1Q k Q15 4Q16 Pay-TV offering Pay-TV RGUs +20.1k 57% Competitors fiber coverage in 2Q Q15 4Q16 Our network quality remains a competitive strength, but FTTH deployment has narrowed the gap Market share preserved despite aggressive price competition, particularly in the last quarter Our speed offering and TV functionalities delivering strong customer satisfaction Source: Report of Secretaría de Estado de Telecomunicaciones y para la Sociedad de la Información 7

9 5 Strict cost and capex management yielding record-high cash flow metrics Direct cost management Capex and cash flow management Direct network costs ( m) Mobile data traffic Capex ( m) Operating Cash flow 2 ( m) ( 2.0m) / (2.3%) +74% ( 7.2m) / (7.0%) 20.8m / 12.7% 17.9% % 14.9% % % % As % of revenue As % of revenue As a % of revenue Proven ability to contain mobile cost despite significant increase in the # of lines and traffic per line Efforts focused on converging R Cable capex level with those of Euskaltel. Overall capex reduction below 17% of revenue in line with guidance Operating cash flow margin growth of +374bps in the period Notes: 1. Data pro forma to include R Cable 2. Operating Cash Flow calculated as EBITDA-capex 8

10 6 Consolidator of the regional cable in the North of Spain + Geographical complementarity Addressable market (inhabitants) c.5.0m c.1.0m c.6.0m Subs (1) : 157k Market position in respective 1 1 region in respective region 1 in respective region Subs (1) : 297k Population (2) : 2.7m Population (2) : 1.0m Total K+T: 803k subs Subs (1) : 350k Population (2) : 2.2m Residential RGUs ('000)s 1, ,343 RGUs / subscriber (3) 3.5x 3.5x 3.5x 3P/4P Penetration 66% 71% 67% ARPU ( /month) (3) c.59.1 Churn (3) 15.1% 15.5% c.15.2% Mobile penetration over fixed customer (4) 77% 56% c.73% Complementary fit with no market overlap and benefiting from increased size and scale Note: Dec-2016 figures; INE (1) Total subscribers figure as of Dec-16 (2) 2015 data from INE (3) Based on residential fixed subscribers (excl. mobile only) (4) Measured as residential fixed subscriber with mobile (excluding mobile only) over total fixed subscribers 9

11 6 Strong financials with positive prospects and FCF per share accretive PF figures (1) Guidance Revenue ( m) 711m Revenue to grow by 1% to 2% in 2017 in line with Euskaltel guidance +24% growth vs. Euskaltel standalone Adjusted EBITDA ( m) (2) 346m 48.6% margin 2016 PF adjusted EBITDA margin at 48.6% vs. 49.0% for Euskaltel pre-transaction Medium term target of 50% Capex ( m) 121m 17.1% of revenue 2016 PF capex as a % of revenue at 17.1% vs. 16.7% for Euskaltel stand alone Capex to remain around 17% of revenue in the mid-term, in line with Euskaltel announced targets OpFCF ( m) 224m 31.5% of revenue OpFCF growth expected to grow by over 5% for the year 2017 EqFCF accretion >6-7% EqFCF accretive deal since year 1 pro forma fully-phased synergies Leverage c.4.5x Leverage post transaction not to exceed 4.5x (3) Double digit dividend growth (4) (1) Unaudited preliminary 2016 pro-forma financial statements of Euskaltel post-acquisition of Telecable (2) Unaudited figures. Adjusted for management fees, M&A expenses, transaction bonuses and other extraordinary items (+ 2.8m in 2016) (3) Including fully-phased synergies and proforma to include dividends to be paid in Jul-17 (4) Subject to Euskaltel s Board of Directors and General Shareholders Meeting approval 10

12 Transaction summary Key terms Euskaltel has reached a definitive agreement to acquire 100% of Telecable, the largest cable operator in Asturias, from Zegona Enterprise value of 686m Purchase price represents a 10.5x EV/EBITDA 2016 pre-synergies, or c.8.5x adjusted for synergies The consideration will be paid through a combination of new shares of Euskaltel (representing a 15% stake post-capital increase) and 431m in cash (including 245m of estimated net debt as of 30 June 2017 and 186m payable in cash) Zegona will be entitled to an additional contingent payment of 35% of realized tax assets resulting from the transaction, if any, and subject to a cap of 15m Zegona has committed to customary standstill and lock-up undertakings in order to maintain its shareholding in Euskaltel within the agreed levels for a period of time Consideration and financing Total consideration to be financed with: 255m capital increase fully subscribed by Zegona (26.8m new ordinary shares of Euskaltel issued at 9.5 per share) 186m of cash, of which 163m will be funded through cash on hand and the remaining through additional debt, including refinancing of 245m of Telecable s estimated net debt Euskaltel s leverage to increase from current 4.2x to c.4.5x post-closing and expected to decrease close to 4.0x by the end of 2018 (1) Euskaltel expects to maintain its shareholders remuneration in the terms previously announced to the market (2) Recommended transaction The transaction has been approved unanimously by the Board of Directors of Euskaltel and Zegona, respectively Irrevocable commitment from Kutxabank to vote in favour of the transaction at Euskaltel s General Shareholders Meeting Zegona to become a new shareholder with presence in Euskaltel s Governance bodies and fully aligned with the Company s long term objectives Key dates Euskaltel Shareholders approval required at Euskaltel s General Shareholders Meeting in June 2017 Transaction expected to close in 3Q 2017, following clearance from antitrust authorities (1) Including fully-phased synergies. Leverage post-closing proforma to include dividends to be paid in Jul-17 (2) Subject to Euskaltel s Board of Directors and General Shareholders Meeting approval 11

13 Telecable: resilient financial performance Revenue ( m) Adjusted EBITDA (1) ( m) Adjusted EBITDA Margin (%) 48.1% 48.4% 47.0% Residential Business Other Capex ( m) OpFCF (2) ( m) As % of revenue 21.2% 21.5% 18.5% As % of revenue 26.9% 26.8% 28.6% Ordinary capex Client equipment capex Expansion capex (1) Unaudited figures. Adjusted for management fees, M&A expenses, transaction bonuses and other extraordinary items (2) OpFCF defined as adjusted EBITDA minus capex 12

14 Zegona to provide increased international sector experience and reinforce current governance structure Pro Forma Shareholder structure 1 Reinforcement of current Corporate Governance structure with the appointment of two new Board Members 21% Kutxabank 2 Creation of a new consultative Strategy Committee with 7 members (including 3 representatives of Kutxabank, Zegona and Alba, and 4 independent Board members) 55% 9% 15% Zegona CF Alba Free-float 3 4 Increase of the maximum number of members of both the Audit and Control and Appointments and Remuneration Commissions Zegona s involvement to bring increased international cable experience and attract other international investors Board of Directors (1) VP & Lead Director Chairman CEO Proprietary director Executive director Independent director Note: New corporate governance structure subject to approval by Euskaltel s General Shareholders Meeting (1) Proprietary directors in the Board of Directors representing Kutxabank (2), Zegona (1) and Corporación Financiera Alba (1) 13

15 Balance sheet optimization through an efficient mix of shares/cash payment Total transaction consideration to be financed with: Proforma capital structure 255m capital increase fully subscribed by Zegona (26.8m new ordinary shares of Euskaltel issued at 9.5 per share) 163m of cash on balance sheet 268m of additional debt, including refinancing of 245m of Telecable s estimated net debt as of 30 June 2017 Euskaltel s leverage to increase from current 4.2x to c.4.5x post-closing and expected to decrease close to 4.0x by the end of 2018 (1) New debt expected to be included within current existing facilities and to be implemented based on market conditions at closing Approach to leverage as per IPO guidance Prudent and clear financial policy Targeted leverage of 3.0x-4.0x ND/EBITDA Shareholders remuneration to be maintained in the terms previously announced to the market (2) (1) Including fully-phased synergies. Leverage post-closing proforma to include dividends to be paid in Jul-17 (2) Subject to Euskaltel s Board of Directors and General Shareholders Meeting approval 14

16 Key transaction dates Milestones Date Status 1 Due-Diligence process 1Q Execution of legal documentation May Euskaltel s General Shareholders Meeting June Spanish antitrust clearance 3Q Approval of the Prospectus by the CNMV 3Q Financing 3Q Expected closing 3Q

17 Update on Q Operational and financial overview 16

18 A snapshot of 1Q17 reported financial results Revenue EBITDA and EBITDA margin Cash Flow and Cash Conversion EBITDA margin (%) Op Cash Flow over sales (%) m (1.6%) m m (2.1%) 48.7% 49.8% 48.8% 33.5% 29.9% 32.1% Q Q Q Q Q Q Q Q Q 2017 Residential Business Wholesale Notes: 1. OpCF defined as EBITDA-capex 17

19 Constituents of revenue and EBITDA YoY growth in 1Q 2017 Revenue evolution ( m) EBITDA evolution ( m) (1.6%) (1.5%) % (3.4) (8.1%) % % % +0.1% 48.8% (1.6%) YoY growth (%) YoY growth (%) 1Q 2016 Residential Business Wholesales 1Q Q 2016 Revenue Direct costs Commercial and fixed 1Q 2017 Direct cost management contributing 1.3m to EBITDA Revenue growth driven by the residential segment (+1.2% YoY) offset by the evolution of the business segment Fixed costs offsetting increase in commercial costs One-off commercial costs of 1m devoted to retention efforts during the host migration program 18

20 Mobile and bundle penetration driving residential ARPU growth Residential mobile RGUs ( 000) Increased 3P/4P penetration (as % of total subscribers) Consistent ARPU 2 improvement ( /month) Residential mobile penetration 1 (%) 73.7% k serv. +7.4% 77.2% k serv. +1.4% 78.6% Record High BB subs as % of total subs 84.1% 83.0% TV subs as % of total subs 57.6% 54.4% 65.8% 84.5% Record High 58.5% 66.5% % % % 1Q16 4Q16 1Q17 1Q16 4Q16 1Q17 1Q16 4Q16 1Q17 Record-high for Mobile penetration (78.6%), BB subscriber penetration (84.5%) and TV subscriber penetration (58.5%) Positive TV subscribers evolution over the last quarter with +4.1k net adds Residential ARPU record at (+ 1.0 YoY ) on the back of continued upselling (66.5% 3P&4P bundles in 1Q17 vs. 64.3% in 1Q16) and certain price repair Notes: 1. Residential subscribers with mobile (excluding mobile-only subscribers) as percentage of total fixed subscribers 2. Global ARPU based on fixed customers 19

21 SOHO and Business segment performance SoHo Revenue evolution ( m) Business revenue evolution ( m) + 0.2m /+1.0% (0.2m)/(0.9%) 42 ( 3.4m) / (8.1%) (0.7m) / (1.7%) Q Q Q Q Q Q 2017 Subs (000 ) evolution 4P/3P SoHo subs penetration 55.3% 53.9% 49.9% New initiatives in the quarter Above sector average capture of new SME business Expected revenue crystallisation in the coming quarters Working on adapting the data centre offering Several ongoing projects to integrate Azure and AWS 1Q16 4Q16 1Q17 Sustained growth of SOHO revenue (+1.0% YoY) driven by both increase in customers and ARPU Increased number of subscribers and 3P/4P penetration (55.3% in 1Q17) 20

22 Initiatives in place to boost the business segment Objective Initiatives to be implemented Evolve from telecom product to global solution Platform to drive companies to the cloud services Development of platform providing TIC solutions: Advanced data solutions, voice IP, data centre, Cybersecurity, SAAS, NOC and SOC services, customer care, Wi-Fi solutions, big data, analytics Strategic partnerships Value proposition based on vertical solutions Global coverage Integrating other accesses (NEBA, VULA, Wireless, Satellite, ) Evolution from connecting to a solution engineering Platform for transition to digital economy Active presence in strategic projects Implementation and development of the 4.0 policy Smart cities E-Health Energetic efficiency Organizational focus on corporate segment 21

23 Efficient cost management despite intensive growth in mobile data traffic Cost structure ( m) Mobile data traffic (1.8%) Residential mobile RGUs ( 000) % % % % % 27.4% % % 1Q Q Q Q Q 2017 As % of revenue Trading & overheads Direct costs Successful management of data traffic growth (direct costs down by 3.7% vs last year with mobile lines growing by 9% and traffic per line increasing by 53% 22

24 Capex according to plan driving superior cash flow conversion Capex and OpCF 1 evolution Consolidated capex ( m) Consolidated OpCF ( m) and OpCF conversion (%) Capex as % of revenue (%) OpCF / Sales 33.5% 29.9% 32.1% 15.2% 19.9% 16.7% OpCF / EBITDA 68.7% 60.0% 65.8% Q Q Q Q Q Q 2017 Consolidated capex progressively converging to mid-term target levels on an annual basis Company working towards minimising seasonality impact and that partly explains growth vs last year Cash-conversion rate at sector notch reaching 32.1% OpCF over revenue and 65.8% over EBITDA Capex investments in DOCSIS 3.1 technology enabling coverage of 14% of client base as of 1Q17 with the target to double the coverage in the short term Notes: 1. OpCF defined as EBITDA capex 23

25 Net debt evolution Net debt ( m) Key cash flow items Leverage evolution 1 (ND / LTM EBITDA) YTD OpCF generation of 45m (32.1% conversion over revenues) 4.8x 4.2x 4.2x 1,353 1, ,218 Free Cash Flow of 28.6m in 1Q 2017 vs. 19.5m YoY YTD net interest payments of 10.5m (22.8) Payment of interim dividend of 0.15 per share ( 22.8m) Complementary dividend distribution 1Q16 4Q16 FCF Dividend 1Q17 Complementary dividend of 0.21 per share (also against 2016 results), to be communicated upon approval by the AGM of the 2016 accounts (in 1H 2017), and in accordance to the dividend policy announced to the market Notes: 1. PF leverage including fully phased synergies 24

26 Appendix I - Euskaltel Q consolidated results and KPIs 25

27 Euskaltel consolidated - KPIs (i/ii) Residential Annual Quarterly KPIs Unit Q16 2Q16 3Q16 4Q16 1Q17 Homes passed # 869,900 1,699,073 1,707,558 1,700,847 1,703,361 1,703,941 1,707,558 1,708,468 Household coverage % 85% 65% 65% 65% 65% 65% 65% 65% Residential subs # 296, , , , , , , ,351 o/w fixed services # 279, , , , , , , ,944 as % of homes passed % 32.1% 27.8% 27.5% 27.7% 27.6% 27.7% 27.5% 27.4% o/w mobile only subs # 16,811 73,838 76,378 75,172 77,174 77,482 76,378 75,407 o/w 1P (%) % 17.8% 21.9% 21.7% 21.7% 21.6% 21.9% 21.7% 21.2% o/w 2P (%) % 26.9% 14.8% 12.5% 14.0% 13.3% 12.9% 12.5% 12.3% o/w 3P (%) % 35.0% 29.6% 26.4% 29.0% 27.8% 27.0% 26.4% 26.0% o/w 4P (%) % 20.3% 33.7% 39.4% 35.3% 37.3% 38.2% 39.4% 40.6% Total RGUs # 896,077 1,809,720 1,891,653 1,836,291 1,868,347 1,881,701 1,891,653 1,904,783 RGUs / sub # Residential churn fixed customers % 14.8% 14.8% 15.1% 13.5% 14.1% 14.9% 15.1% 16.1% Global ARPU fixed customers /month Fixed Voice RGU's # 279, , , , , , , ,968 as% fixed customers % 100.2% 99.0% 98.5% 99.0% 99.2% 98.7% 98.5% 98.1% BB RGU's # 217, , , , , , , ,310 as% fixed customers % 78.0% 82.6% 84.1% 83.0% 83.4% 83.7% 84.1% 84.5% TV RGU's # 124, , , , , , , ,408 as% fixed customers % 44.7% 53.0% 57.6% 54.4% 56.3% 56.7% 57.6% 58.5% Postpaid lines # 273, , , , , , , ,097 Postpaid customers # 153, , , , , , , ,892 as% fixed customers (only mobile excluded) % 49.1% 71.7% 77.2% 73.7% 75.7% 76.2% 77.2% 78.6% Mobile lines / customer # SOHO Annual Quarterly KPIs Unit Q16 2Q16 3Q16 4Q16 1Q17 Subs # 47,038 88,163 89,322 88,301 89,014 89,076 89,322 88,945 o/w 1P (%) % 32.7% 28.5% 29.7% 31.7% 30.8% 30.4% 29.7% 28.7% o/w 2P (%) % 26.1% 27.0% 16.4% 18.4% 17.5% 16.9% 16.4% 15.9% o/w 3P (%) % 31.1% 33.9% 39.7% 38.1% 38.9% 39.3% 39.7% 40.1% o/w 4P (%) % 10.2% 10.6% 14.2% 11.8% 12.8% 13.3% 14.2% 15.2% Total RGUs # 143, , , , , , , ,168 RGUs / sub # ARPU Global clientes red fija % 20.3% 21.3% 20.3% 22.3% 21.5% 20.5% 20.3% 24.1% Global ARPU Fixed customers /month SMEs and Large Accounts Annual Quarterly KPIs Unit Q16 2Q16 3Q16 4Q16 1Q17 Customers # 5,094 11,518 11,193 11,315 11,262 11,224 11,193 11,084 26

28 Euskaltel consolidated - KPIs (ii/ii) Selected financial information Annual Quarterly Unit Q16 2Q16 3Q16 4Q16 1Q17 Total revenue m Y-o-y change % -4.1% 8.8% 164.0% 78.2% 75.7% 74.6% 35.7% -1.6% o/w residential m Y-o-y change % 0.4% 10.2% 173.0% 86.3% 84.5% 83.7% 45.1% 1.2% o/w Business m Y-o-y change % -7.7% 6.3% 167.7% 86.3% 82.5% 83.1% 30.8% -8.1% o/w Wholesale and Other m Y-o-y change % -1.7% 0.8% 130.6% 44.3% 39.1% 24.8% 19.6% 0.1% o/w Other Profit Neutral Revenues m Y-o-y change % -20.1% 29.5% Adjusted EBITDA m Y-o-y change % 0.5% 7.1% 168.0% 83.2% 83.4% 72.7% 41.0% -1.5% Margin % 48.5% 47.8% 49.0% 48.7% 48.7% 48.6% 49.8% 48.8% Capital expenditures m (42.2) (53.1) (95.9) (21.7) (24.0) (21.8) (28.4) (23.2) Y-o-y change % 1.7% 25.9% 180.5% 137.8% 161.2% 111.8% 15.8% 7.2% % total revenues % -13.1% -15.2% -16.7% -15.2% -16.7% -15.1% -20.0% -16.7% Operating Free Cash Flow m Y-o-y change % 0.1% 0.2% 162.1% 65.9% 58.7% 59.5% 65.0% -5.5% % EBITDA % 72.9% 68.2% 65.8% 68.7% 65.7% 69.0% 60.0% 65.8% Net profit m n/a

29 Disclaimer This presentation (the "Presentation") has been prepared and is issued by, and is the sole responsibility of Euskaltel, S.A. ("Euskaltel" or "the Company"). For the purposes hereof, the Presentation shall mean and include the slides that follow, any prospective oral presentations of such slides by the Company, as well as any question-and-answer session that may follow that oral presentation and any materials distributed at, or in connection with, any of the above. The information contained in the Presentation has not been independently verified and some of the information is in summary form. No representation or warranty, express or implied, is made by Euskaltel or its affiliate R Cable and Telecommunications Galicia, S.A. 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This Presentation contains financial information derived from Euskaltel s audited consolidated financial statements for the twelve-month period ended 31 December 2016; Euskaltel s unconsolidated audited financial statements for the twelve-month period ended 31 December 2016 and 31 December 2015; R Cable s individual audited financial statements for the twelve-month period ended 31 December 2016 and 31 December Financial information by business areas is presented according to internal Euskaltel s criteria as a result of which each division reflects the true nature of its business. In addition, the Presentation contains Euskaltel s unaudited quarterly financial information for 2015 and 2016 by business areas prepared according to internal Euskaltel s criteria. These criteria do not follow any particular regulation and can include internal estimates and subjective valuations which could be subject to substantial change should a different methodology be applied. 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