The fiber and convergence leader in the North of Spain
February 2018 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 the Euskaltel Group (including Euskaltel, S.A., R Cable y Telecomunicaciones Galicia, S.A.U. and Parselaya, S.L.U. and its subsidiaries (Telecable Capital Holding, S.A.U. and Telecable de Asturias S.A.U.), nor by their directors, officers, employees, representatives or agents as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions expressed herein. 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The words "believe", " expect", " anticipate", "intends", " estimate", "forecast", " project", "will", "may", "should" and similar expressions identify forward-looking statements. Other forward-looking statements can be identified from the context in which they are made. While these forward looking statements represent our judgment and future expectations concerning the development of our business, a certain number of risks, uncertainties and other important factors, including those published in our past and future filings and reports, including those with the Spanish Securities and Exchange Commission (“CNMV”) and available to the public both in Euskaltel’s website (www.euskaltel.com) and in the CNMV’s website (www.cnmv.es), as well as other risk factors currently unknown or not foreseeable, which may be beyond Euskaltel’s control, could adversely affect our business and financial performance and cause actual developments and results to differ materially from those implied in the forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. 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2 The leading platform in the north of Spain
Geographical complementarity Key metrics
Subs1: 153k Homes Subs1: 284k Addressable Population2: 1.0m 1 passed Subscribers Wi-Fi spots Population2: 2.7m Subs : 350k market Population2: 2.2m (inhabitants) (000’) ~ 790k > 400k ~ 6m ~ 2,200
39% 65% 68% 39% 79% 42% 1 Market position (in respective regions) 31% 42% 83% Total group: c.790k subs
Mobile penetration Broadband mkt Pay TV mkt Key achievements (2017) share (2015) share (2015) From a single region company Consistently leading market position in our regions to a multi-region platform
Shareholder Value-accretive remuneration M&A delivered 2010 2 1 1 43 initiated
Sector-top 4 Financial Now 2 1 1 3 operating and discipline financial metrics preserved Source INE, CNMC, Company internal estimates maintained Notes: 1. Total subscribers (Residential + business) figures as of Dec-17 2. 2016 data from INE 3 3. 3rd operator in the Basque country 4. 4th operator in Asturias Strategic milestones
Initial Public Offering Acquisition of R Cable Platform creation Jul-15 Nov-15 Dec-15 / Today
Transformational transaction in Euskaltel Successful IPO of the first Spanish 1 Acquisition of the remaining 1 cable company1 in history history 1 independent regional cable business
Fully consistent with consolidation 2 strategy
Highly value accretive with cash flow 3 Largest independent convergent cable Support of highly reputed institutional impact over 20% 2 investors 2 platform in Spain
Synergies delivered on time and revised 4 upwards
Support from institutional equity and debt Governance support with the Strong after market performance of 5 investors (€255m equity raising and incorporation of Zegona’s and John 3 the stock 3 €900m debt raising) James’ international expertise
Note 4 1. On a Spanish stock exchange We have built a 2x larger business since IPO…
Subscribers (‘000) EBITDA1 (€m) OpCF2 (€m)
Mobile penetration (%) EBITDA margin (%) As % of revenue (%)
53% 77% 49% 48% 35% 31%
>2x >2x ~2x
216 777 341
113 348 156
IPO 2017 IPO 2017 IPO 2017
Notes 1. EBITDA adjusted for management fees, M&A expenses, transaction bonuses and other extraordinary items 2. Throughout the presentation, OpCF defined as (EBITDA – capex) 5 Strong operational and financial profile while doubling size
IPO Statutory figures FY2015 FY2016 FY2017 (Mar-15)
3P / 4P (%) 57.6% 63.3% 65.8% 68.0%
KPIs Mobility (%)1 53.3% 71.7% 77.2% 77.1%
ARPU (€)2 €55.7 €56.0 €58.4 €60.0
EBITDA (€m) €156m €167m €281m €307m
EBITDA Margin (%) 48.7% 47.8% 49.0% 49.3%
OpCF (€m) €113m €114m €185m €198m Financial OpCF margin (%) 35.1% 32.6% 32.2% 31.8% statements Net income3 (€m) €37m €7m €62m €50m
EPS3 (€) €0.29 €0.13 €0.72 €0.28
Eq. CF per share3 (€) €0.694 €0.23 €0.87 €0.56
Notes: 1. Mobile penetration as a percentage of fixed-line customers 2. For the residential segment 3. Statutory figures including extraordinary and non-recurrent elements 4. EqCF per share at IPO calculated as of 31-Dec-2014 6 The regional integrated telecommunication champion
1 2 Undisputed leading fiber and Supportive macro dynamics across convergence operator in the Basque regional footprint with broader Country, Galicia and Asturias improvement in telecom dynamics
7 3 Strong and experienced Benefitting from strong emotional management team supported by attachment and high-quality client anchor shareholder base base
6 4 State-of-the-art fiber Best-in-class margins and cash flow network fully invested, providing generation underpinned by a prudent financial policy best-in-class service and acting as an entry barrier
5
Growth momentum underway focused on the lifetime value of the client
7 1 Undisputed leading operator
Basque Country Galicia Asturias
Market Share Market Share(1) Market Share
2 1 1 2 1 1 1 1 2 1 1 4
68% 46% 36% 38% 39% 39% 28% 29% 30% 31%
Residential 20% 16%
Market Share Market Share(1) Market Share(1)
2 2 2 2 2 1 4 56%
35% 33% 35%
23% 27% Business 12%
(1) SoHo SMEs & Large Accounts Fixed
Source: Company estimates and CNMC data. Market share in their respective footprints. (1) Ranking based on market share over cabled areas (2) 2016 data for all segments and region, except B2B Telecable which accounts for 2015 8 1 …on the back of a fully convergent offering
Residential Segment
Successful migration towards 3P/4P… … driving an increase in value per customer
RGUs ARPU (€) (proforma for Telecable acquisition) 3.04x /Sub 3.29x 3.43x 3.52x
60.7 68% 65% 67% 59.4 59%
28% 26% 31% 56.9 36% 55.3
42% 34% 39% 24%
2014 2015 2016 2017 2014 2015 2016 2017 4P 3P
9 2 Supportive macro dynamics
Price war bringing down ARPUs … leading to a rapid shift …driving market consolidation, …and resulting in tariff below EU average towards convergence … content investments and capex inflation and sector recovery
Spanish Telecom market(1) historical revenue growth (%YoY)
High end 4P bundles pricing improved 19% for Orange, Vodafone acquires 35% for Telefonica and 47% Introduction of heavily Orange acquires Ono for €7.2bn for Vodafone since Q2-14 discounted “Movistar Jazztel for €3.3bn Fusión” bundles
1.8% A C A C 0.5% 0.0% (0.5%) (0.9%) (1.6%)
(3.0%) (3.3%) (4.8%) (5.3%) (6.2%) (6.0%) (5.1%)
(7.3%) (7.5%)
(8.8%) (9.8%)
4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
Proportion of 3P / 4P bundles almost Three main national operators initiated triples from 24% in 2012A to 67% c.€3.3bn football rights and c.€9.2bn network upgrade investment plans
Sources: CNMC, IMF and Company Filings. Notes: (1) Spanish TMT market includes the following segment as defined by CNMC: fixed telephony, broadband, Pay TV, Business communications, Wholesale, Mobile, TV advertising, Other TV and other revenues. A = Announcement; C = Closing 10 2 Market context : data and TV driven market with increased competition
Contribution to growth Spanish telecom sector1,2
CAGR 11A-21E 04.0%
4.0% 2.1% (0.8%) 02.0% 1.4% 0.6% 1.2% 0.5% 2.0% 1.1% 1.1% 1.3% 1.3% 1.2% 0.6% - 0.5% 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E (0.1%) 1.9% - (2.0%) (3.8%) (2.8%) (2.3%) (4.0%) (2.0%) (3.0%) (0.9%) (3.4%) (6.0%) (4.8%) (4.0%) Mobile data (6.9%) (5.5%) (8.0%) Fixed broadband (6.0%) Pay-TV Mobile voice & messaging (10.0%) (8.9%) Fixed telefony (9.5%) Total revenue growth (8.0%) (12.0%) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Data and TV driving moderate industry growth Moderate growth expected for the coming years
Source Arthur D. Little (2015), CNMC Notes: 1. Revenue growth over the 2011A - 2019E period calculated as the evolution of the aggregated revenues of the 5 main Spanish competitors (Euskaltel, Movistar, Vodafone, Orange, MásMovil). The series has been adjusted for Ono and Jazztel acquisitions by Vodafone and Orange. Estimates for 2017E-2019E based on a selection of broker projections for each of the above mentioned companies. 2. 2016 growth excluding Euskaltel, Masmovil and Orange growth. 2017 growth excludes Masmovil 11 3 High valuable, longstanding customer base and best-in-class brand perception
120 Distribution of our customer base within Average seniority of the Brand recognition2 our ARPU bands1 group’s client base
12.00 100
10.00 55% 45% Approachable 80 and close Group average 8.6 years 8.00 Op.1 Op.2 Op.3 Op.4
60 Best quality 6.00 of service
ARPU: Op.1 Op.2 Op.3 Op.4 40 1 €59.6 4.00
20 2.00
I trust more than others 0 - < 10 10 - 20 - 30 - 40 - 50 - 60 - 70 - 80 - 90 - > Op.1 Op.2 Op.3 Op.4 20 30 40 50 60 70 80 90 100 100
€/month The one I like most ARPU ARPU Highly valuable customer base Op.1 Op.2 Op.3 Op.4 Note 1. ARPU as of 3Q 2017 of the combined entity (Euskaltel + R Cable + Telecable) 12 2. Kantar media independent study (period of study 1H17) 4 Fully invested network - Best-in-class fiber network
Coverage (6) 87% 55% 72% 35% 39% 61% 36%(1) 81% 47% (%HH)
% of EuroDOCSIS 3.0 100% 100% 100% c.50% 92% 100% c.96% 100%(2) 100%
Access capacity 862 862 862 862 862 600(3) 862 750 862 (MHz)
Households c.500 c.280 c.585 n.a. c.580 c.580 c.450 n.a. c.500 per node (avg.)
Fully-owned backbone (4) (5) network ✓
4G license ✓ ✓ ✓ via SFR via BASE via Optimus via Vodafone
Future-proofed network supports success-based capex and 17% 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 2019. 13 4 Fully invested network - Euskaltel network vs. FTTH challenge
Symmetry not a threat and… … our network is highly recognised by independent third parties
Broadband traffic evolution since Jan-15 (Upload vs Download) September 2017 ranking
90 Growth (%) 1
Gbps 80 100% 3.9 3 4 3.9 3.8 70 3.7 3.7 3.7 3.7 3.7 3.7 60 91% 50 3.5
40 3.3
30 3.1 20 14% (13%) 2.9 10
- 2.7 2.7 Jan-15 Sep-15 May-16 Jan-17 Oct-17 2.5 Weekly average download Weekly average upload Previous year - Weekly average download Previous year - Weekly average upload Source: Netflix ISP Speed Index
14 5 Lifetime value of customers | Residential segment
Unrivalled coverage with the Highly attractive and competitive The most complete and innovative fastest broadband offering mobility proposition TV proposition High-quality and comprehensive content The speed leader with the only ultra-fast Full-service, leading MVNO broadband offering across the entire region offering covering different customer groups’ (100% DOCSIS 3.0 network) needs with possibility of adding premium channels Competitive and innovative tariffs to address Ongoing upgrade to DOCSIS 3.1 real customer needs
Superior fiber coverage in the Basque OTT platform offered by Telecable: Country, Galicia and Asturias (2.1m homes Largest WiFi network in the Basque Country, - live coverage of Champions League passed) Galicia and Asturias with more than 400k and Europa League football matches hotspots allowing for data for clients Wide offering of commercial speeds, ranging First hybrid 4K/UHD set top box in Spain from 50Mbps to 350Mbps
Competitive prices offering best value for money and superior service to competitors 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...) FY 2017 RGUs: 915k (1) FY 2017 RGUs: 489k (1) FY 2017 RGUs: 393k (1) (77.1% penetration over fixed customers)
Convergent offer with a leading value proposition focused on the lifetime value of the client
(1) Pro-forma for Telecable acquisition 15 5 Leading business segment providing diversification
Diversified through significant B2B(1) presence… … based on strong and unique positioning pillars
Business revenues as a % of total revenues (2)
PF1 27% Strong and local brand
2 27% High technical capabilities in their respective footprint
3 21% Fully oriented offering based on addressing specific customer needs by sector and client
4 12%
Tailor made and complex solutions
5 6%
Dedicated sales force and customer care to deliver
6 5% best results and services
Clear strategy to leverage superior infrastructure, brand and customer service to win in Business
Sources: Company filings. (1) % of B2B revenues over total revenues as of 1H-17 LTM revenues (2) Pro-forma for Telecable acquisition 16 6 Resilient top line across business segments
Proforma revenue evolution Revenue outlook
Stable - Low single digit revenue growth (€3.5m) / (0.5%) ✓
€9.3m +€5.9m / +0.8% growth Residential revenue without margin1 Stable net subscriber evolution preserving current market share 715.2 710.5 707.0 Target churn below 14% amid implementation of specific measures in Galicia and Asturias 44.4 36.9 37.0 ARPU growth linked to attractive value proposals Increase 3P&4P penetration in existing customer base 202.2 191.8 206.0 New services will include Mainly due to loss of Increase mobile offering and penetration in Asturias Basque Improved TV functionalities and 4K Deco country government New products penetration: Home connectivity, on-street contract Wi-Fi… Revenue of new regions to amount for 5% of total revenue by 2022 Around 10-15% subscriber penetration over targeted new regions 460.0 476.1 478.3
Business
SoHo will mirror similar trends than residential
Renewed commercial push in SMEs and LA targeting to drive superior 2015 2016 2017 growth rates than residential over the medium term
Residential Business Wholesale and other Penetration of hybrid-cloud, security, big data and alliances
Adjusted for revenue without margin Growth YoY (%) Targeted commercial offering in new expansion areas
Source Company information Note: 17 1. Change of accounting method in 2016: revenue without margin no longer accounted for (2015 revenue without margin included in €713m revenue at €9.3m) 6 Stable gross margin and strong focus on efficiencies to improve cost structure
Proforma gross margin (€m) Proforma EBITDA (€m)
Gross margin as a % of sales (%) EBITDA margin (%)
48.3% 48.2% 74.7% 74.5% 46.7% 72.8% 47.3% 517.3 533.9 526.5 345.3 331.7 341.0
2015 2016 2017 2015 2016 2017 EBITDA margin Adjusted for revenue without margin
✓ Efficient management of Content and ITX costs driving gross Integration synergies and structure optimisation driving EBITDA margin over 75% in the medium term ✓ margin c.50% in the medium term
✓ Renewed commercial effort in brand equity and expansion ✓ TV strategy focused on functionality and customer experience with disciplined approach to new content investment ✓ Unified organisation leading to leaner and more flexible operations Sufficient data allowances under current host agreements to Systems integration, network management and talent management ✓ mitigate ITX costs growth ✓ driving structure optimization 18 6 Stable capex with future spending linked to commercial success and expansion plan
Proforma capex Capex breakdown and outlook
Capex (as a % of sales)
Business as usual 18.5% capex < 17% revenue 16.9% 17.7%
131.7 121.1 124.9
Business integration €20m - €25m and strategic (2018 - 2019 accum.) projects investments
Footprint expansion €20m (excluding SAC) investments (2018 – 2019 accum.)
2015 2016 2017
Recurrent capex to remain in the 16-17% revenue range once Business as usual capex expected to remain below 17% of ✓ platform integration has concluded ✓ revenue
Additional extraordinary capex to be incurred in 2018-2019 ✓ period corresponding to business integration, strategic projects Source Company information and footprint expansion investments 19 6 Rapid deleveraging, supported by best in class EBITDA and cash conversion
Strong EBITDA performance with remaining future upside… + Historical Operational FCF generation
EBITDA margin (%)(1)
48% 48% 48% 46% As % of EBITDA 59% 67% 64% 66% 63% 37% 34% As % of Sales 28% 33% 32% 33% 31% 106 94 82 91 92
K + R + T Liberty Global Com Hem Telenet Nos Numericable
PF 2H 15 1H 16 2H 16 1H 17 2H 17
…driving superior cash flow conversion Historical Net Debt and Net Debt/EBITDA(3)
OpFCF conversion(2) and as % of Sales(1)
31% 30% 22% 18% 12% 13%
4.8x 64% 63% 4.2x c.4.5x 48% 37% 35% 35% 1,606 1,385 1,307 2.6x 1,223 1,185
417 1 2 3 4 5 6 PF 1H 15 2015 1H 16 2016 1H 17 2017
Note: Company data (1) 1H-17 LTM numbers 20 (2) OpFCF = EBITDA-CAPEX (3) Leverage shown including synergies. Excluding synergies, leverage equal to 5.1x and 4.7x at R Cable and Telecable closing respectively 6 Strong support from debt and equity capital markets
R Cable Repricing of IPO + acquisition the Commercial Acquisition Debt Pre-IPO Debt + Debt institutional paper1 of Telecable refinancing refinancing refinancing tranche
Up to Total debt €500m €900m €437m €835m (€m) €200m
Total equity €840m €255m €250m placed (€m) 4.6x 4.6x 4.6x4.5x 5.5% 4.4x 4.3x
3.5% 3.5% 3.2% 3.1% 3.0% 2.8% 1.5x 2.7x
Dec-14 Jun-15 Nov-15 Sep-16 Jun-17 Jul-17 Current
Average cost of debt Leverage
BB- Oct-15
Aug-17 B1
Source Company information Note: 21 1. Commercial paper issued as of Mar-17 7 Anchor shareholder base
Shareholder structure
21% Kutxabank Zegona 55% 15% CF Alba Free-float 9% 10%
Board of Directors(1)
VP & Lead Director
Chairman CEO
Proprietary director Executive director Independent director
(1) Proprietary directors in the Board of Directors representing Kutxabank (2), Zegona (1) and Corporación Financiera Alba (1) 22 Conclusion
1 Euskaltel has delivered its ambitious organic and inorganic targets in record-time since the IPO
2 Euskaltel has become a real multi-region platform, deeply rooted in its core markets, but fully prepared to grow and enter new markets
3 We are competing in an evolving scenario that offers new challenges, but also great opportunities
4 We have defined a clear and comprehensive strategy focused on value generation through customer experience, growth and efficiencies, to which the entire organisation is committed
5 The results of the implementation will offer sustained mid/long-term value creation potential to our shareholders
23 Thank you