Euskaltel – Third Quarter 2015 Results

28 October 2015 Executive summary (i/iv)

241 247 118 173 Main figures for the business for the periods ended September 30th, 2015 and 2014 28 119 Key financials for the 9-month period ended September 30th, 2015 and 2014

177 132 177 143 177 159 3Q15 adjusted vs

0 41 3Q15 3Q15 Adjusted (**) 3Q14 3Q14 % 3Q14 102 184 Total Revenue 244.4 244.4 239.0 5.4 2.3% 153 255 Residential 151.5 151.5 146.1 5.4 3.7% 123 178 151 199 Business 69.0 69.0 70.4 (1.4) -2.0% 73 139 Wholesale & Other 17.3 17.3 17.3 0.0 0.1% 194 218 Others (*) 6.6 6.6 5.2 1.4 27.3% 172 205 141 187 Ebitda 103.9 116.7 112.3 4.4 3.9%

206 Ebitda Margin 42.5% 47.7% 47.0% 0.8 pp 52 OpFCF 75.3 88.1 86.3 1.8 2.0% 3 conversion rate 72.5% 75.5% 76.9% -1.4 pp Net Income (3.3) 36.0 25.6 10.4 40.7% Net Financial Debt 449.8 266.6 183.2 68.7% Net Debt / Ebitda 2.8x 1.7x 1.1x

(*) Profit neutral operations

(**) Excluded costs related to the IPO process, debt cancellation and the acquisition of R Cable.

1 Executive summary (ii/iv)

Business: Inflexion point in revenue 241 247 118 173 28 119 • Total revenue for the period ended September 30th, 2015, have been €244.4mn vs €239.0mn, +€5.4mn (+2.3% YoY). 177 132 177 143 This represents an increase in revenue for the first time since 2012, consolidating the positive revenue performance in 177 159 the third quarter of 2015 compared to 2014. 0 41 102 184 • Residential revenue continues with the positive trend of the previous months and amounted to €151.5mn showing a 153 255 +3.7% YoY growth on the 9-month period ended September 2015. This growth has been mainly driven by (i) a lower 123 178 151 199 73 139 churn ratio (churn fell to 13.9% from 14.3% in 2014), (ii) an improved GARPU (Global ARPU grew by €2.18 YoY up to

194 218 €55.75) and (iii) an ongoing increase in mobile customer penetration rate. In terms of fixed customers in 2015, both the 172 205 141 187 number of customers and the number of RGUs per customer have slightly increased vs. 2014 (from 279,212 to 279,353

206 and 2.23 to 2.25 respectively). With regards to mobile postpaid customers in 2015, the number of customers increased 52 3 by 40,987 (+26.6%) while the number of RGUs per customers also grew from 1.78 to 1.81. • The business segment has shown total revenue in September 2015 YTD of €69.0mn, -2.0% YoY. This trend is stabilizing quarter after quarter, namely: -4.8% in the first quarter, -0.5% in the second quarter and -0.5% in the third quarter, mainly driven by an accelerated revenue growth in SoHo and the stabilization in SMEs and Large Accounts segments. • Other Revenue is in line with 2014 levels, despite the negative evolution of Wholesale revenues on the back of regulatory changes in the last quarter of 2014.

2 Executive summary (iii/iv)

Margins and Profitability: strong performance in operating results 241 247 118 173 28 119 • EBITDA for the 9-month period ended September 2015 amounted to €103.9mn. This result includes expenses related to 177 132 177 143 the IPO process and the acquisition of R Cable. Excluding these expenses, adjusted EBITDA amounted to €116.7mn, 177 159 +3.9% YoY, being the adjusted EBITDA margin 47.7%, +70bps YoY. This margin increase is mainly driven by the 0 41 102 184 successful management of operating costs and, in particular, interconnection costs despite the increase in data traffic. 153 255

123 178 • Financial result was negative amounting to €50.3mn, compared to €17.6mn for the same period of the previous year. The 151 199 73 139 negative amount as of September 2015 includes the extraordinary costs associated with the IPO process, debt

194 218 refinancing and the acquisition of R Cable. 172 205 141 187 • Net income for the first nine months was negative of €3.3mn, again as a result of the extraordinary costs. Excluding these 206 extraordinary items, the adjusted net income for the period would have been +€36.0mn, compared with +€25.6mn for the 52 3 nine months ended September 30th, 2014.

3 Executive summary (iv/iv)

Cash Flow and net debt: Strong cash flow conversion and capital structure optimization 241 247 118 173 28 119

177 132 • We generated adjusted FCF of €57.2mn during the period 177 143 177 159 • Capex for the 9-month ended September 2015 was €28.6mn, equivalent to 12.0% of revenue, in line with the same 0 41 102 184 period of the previous year. 153 255 • Adjusted OFCF (adjusted EBITDA - Capex) amounted to €88.1mn, representing a conversion rate of 75.5% on the 123 178 151 199 adjusted Ebitda. 73 139 194 218 • Net financial debt at the end of the third quarter amounted to €449.8mn, representing a leverage ratio of 2.8 times the 172 205 141 187 adjusted LTM EBITDA, significantly below to the average of our European peers. 206 52 3

4 Top-line inflexion point led by Residential segment

Growth in revenues after inflexion point reached in 1Q15 Accelerating growth momentum driven by Residential segment 241 247 118 173 28 119 (€m) 1 177 132 Quarterly Total Revenue growth (YoY) y-o-y growth (2.3%) (4.1%) y-o-y growth 2.3% 177 143 4.0% 177 159 343 335 2.7% 0 41 10 321 244 102 184 9 239 29 7 153 255 +2.7% 30 (16.6%) 25 5 7 123 178 0.1% 17 (1.6%) 17 0.0% 151 199 (7.7%) 103 73 139 101 (2.0%) 93 1Q15 2Q15 3Q15 69 194 218 70 172 205 141 187 (2.9%) +0.4% 206 +3.7% Quarterly Residential revenue growth (YoY)1 52 3 4.4% 4.5% 201 195 196 146 152

2.1%

2012 2013 2014 3Q14 3Q15 Residential Business WS & Other² Others³ 1Q15 2Q15 3Q15

Notes: 1. In accordance with management accounts prepared under Spanish GAAP 2. Mainly includes RACC, services to Telecable, other corporate revenue and Other income and Work performed by the entity and capitalized 3. Profit neutral operations

5 Residential: Continuous growth momentum in 3Q15

Inflexion point in Residential subs Low and stable churn Significant ARPU rebound 241 247 118 173 28 119 Residential subs¹ (‘000) Annual churn (%) Residential client ARPU (€/month) 3P & 4P % of total subs 2 RGU / Sub3 177 132 Mobile penetration 177 143 177 159 32.3% 41.2% 53.8% 63.1% 30.1% 39.3% 49.1% 63.0% 2.4x 2.7x 3.1x 3.3x

0 41 102 184 17.2% 153 255 (90bps) 123 178 14.8% 14.8% 151 199 13.9% 73 139 55.8

194 218 172 205 306 141 187 +c.4% 206 54.3 52 3 53.8 298 298 53.3 296

2012 2013 2014 3Q 15 2012 2013 2014 3Q 15 2012 2013 2014 3Q 15

Notes: (1) Includes mobile-only subscribers (2) Residential fixed customers with mobile (excl. mobile-only) as percentage of total residential fixed subscriber (3) RGU/sub calculated excluding mobile-only customers

6 Top-line stabilization point on Business segment

Accelerating growth momentum in SoHo and recovery in SME´s and LA’s 241 247 118 173 28 119 Quarterly SoHo revenue growth (YoY) 177 132 177 143 177 159 6.7% 0 41 5.6% 102 184 153 255

123 178 151 199 73 139 0.0% 194 218 172 205 1Q15 2Q15 3Q15 141 187

206 Quarterly Total Business revenue (€m) and YoY growth 52 3 22.8 23.4 22.7 (0,5%) (0,5%) (0.5%) (0.5%)

(4.8%) (4,8%)

1Q15 2Q15 3Q15

7 Strong Adjusted EBITDA performance

241 247 118 173 Adj. EBITDA (€m) Quarterly adjusted Ebitda growth (YoY)2 28 119

177 132 177 143 Adj. 177 159 EBITDA 42.7% 46.3% 48.5% 47.0% 47.7%

0 41 margin 102 184 153 255

123 178 151 199 (1) 155 156 73 139 146 (2) 194 218 112 117 172 205 141 187

206 7.6% 52 3

3.2%

1.2%

2012 2013 2014 3Q 14 3Q 15 1Q15 2Q15 3Q15

Notes: 1. Adjusted EBITDA in FY2012 adjusted (to be like-for-like with 2013 and 2014) for €11.6m of capitalised SAC which were expensed. Adjusted EBITDA in 2012 was €135m 2. Adjusted EBITDA in 2015 adjusted for the costs related to the IPO process and the acquisition of R Cable.

8 Capex largely linked to commercial success

241 247 As % of revenue 118 173 28 119 18% 12% 13% 11% 12% 177 132 177 143 177 159

0 41 1 102 184 Capex (€m) 153 255

123 178 63 151 199 73 139 12 194 218 172 205 42 42 141 187 7 7 206 29 52 42 26 3 5 4 27 30

18 20

8 8 6 5 2 2012 2013 2014 3Q14 3Q15

Maintenance Success-based Network Deployment/New Projects

Note: 1. FY2012 adjusted (to be like-for-like with 2013 and 2014) for €11.6m of capitalised SAC which were expensed; excluding €68m one-off payment for acquisition of leased backbone. Capex in 2012 was €119m

9 Strong cash flow conversion

241 247 1 118 173 Adjusted OpFCF (%) Quarterly adjusted OpFCF evolution (€m) 28 119

177 132 177 143 OpFCF conversion1(%) 177 159

0 41 102 184 57% 73% 73% 77% 76% 153 255

123 178 151 199 114 114 73 139

194 218 (2) 86 88 172 205 84 (2) 141 187 (2) 32 30 29 29 29 206 26 52 3

2012 2013 2014 3Q 14 3Q 15 1Q 14 1Q 152Q 14 2Q 15 3Q 14 3Q 15

Notes: 1. OpFCF defined as Adjusted EBITDA–Capex and OpFCF conversion defined as (Adjusted EBITDA-Capex)/Adjusted EBITDA 2. Adjusted EBITDA in 2015 adjusted for the costs related to the IPO process and the acquisition of R Cable.

10 Capital structure optimization before IPO

Net debt evolution (€m) Capital structure at IPO 241 247

118 173 ND/Adjusted EBITDA1 28 119 Releverage at 2.8x Net Debt/Adj. EBITDA 2.8x 2.1x 1.5x 2.8x 177 132 177 143 Total new financial facilities: €470m 177 159 450 50/50 split TLA and TLB 0 41 412 WACD: 1.8% (vs. 5.5% until June)2 102 184 153 255 Flexibility provided through €60m RCF 123 178 Financial covenant: 4.5x Net Debt/Adj. 151 199 326 73 139 EBITDA with flexibility to increase to 5.5x if M&A 194 218 172 205 Illustrative impact on annual interest 141 187 237 costs (€m) ~13 206 52 3

5.5% ~8 WACD 1.8% WACD

At IPO Post IPO 2012 2013 2014 3Q15 (@1.4x ND/Adj. EBITDA) (@3.0x ND/Adj. EBITDA)

Source: Company filings Notes: 1. Adjusted EBITDA in FY2012 adjusted (to be like-for-like with 2013 and 2014) for €11.6m of capitalised SAC which were expensed. Adjusted EBITDA in 2012 was €135m 2 WACD at 3.0x Net Debt/Adj. EBITDA. Existing margin step-up mechanism of 25bps for every 0.5x step upwards or downwards

11 241 247 118 173 28 119

177 132 177 143 177 159

0 41 102 184 153 255

123 178 151 199 73 139

194 218 172 205 141 187

206 52 3 Additional information

12 Key performance indicators – KPIs (i/ii)

Residential 241 247 KPI Unit 2012 2013 2014 1Q14 2Q14 3Q14 1Q15 2Q15 3Q15 118 173 Homes passed # 863,461 866,716 869,900 867,532 868,217 868,908 872,053 873,254 876,937 28 119 Household coverage % 84% 84% 85% 84% 85% 85% 85% 85% 85% Residential subs # 305,761 298,495 296,023 298,178 299,375 297,713 295,360 300,751 298,419 177 132 177 143 o/w fixed services # 287,457 284,105 279,212 283,507 283,812 281,362 278,051 282,890 279,353 177 159 as % of homes passed % 33.3% 32.8% 32.1% 31.9% 32.7% 32.4% 31.9% 32.4% 31.9% o/w mobile only subs # 18,304 14,390 16,811 14,671 15,563 16,351 17,309 17,861 19,066 0 41 o/w 1P (%) % 26.5% 23.1% 17.8% 22.4% 17.8% 17.9% 17.6% 17.3% 17.5% 102 184 153 255 o/w 2P (%) % 41.2% 35.8% 26.9% 34.2% 29.6% 28.3% 24.8% 21.5% 19.3% o/w 3P (%) % 26.4% 31.8% 35.0% 32.6% 33.9% 34.6% 35.5% 36.6% 36.6% 123 178 o/w 4P (%) % 6.0% 9.4% 20.3% 10.8% 18.7% 19.2% 22.1% 24.6% 26.5% 151 199 Total RGUs # 719,033 769,036 896,077 784,713 870,852 884,226 918,120 968,023 982,290 73 139 RGUs / sub # 2.4 2.6 3.0 2.6 2.9 3.0 3.1 3.2 3.3 194 218 Residential churn fixed customers % 17.2% 14.8% 14.8% 16.2% 14.5% 14.3% 14.8% 12.2% 13.9% 172 205 Global ARPU fixed customers €/month 54.28 53.25 53.80 53.23 53.28 53.57 55.15 55.50 55.75 141 187

206 SOHO 52 KPI Unit 2012 2013 2014 1Q14 2Q14 3Q14 1Q15 2Q15 3Q15 3 Subs # 45,637 46,317 47,038 46,474 46,993 46,907 47,136 47,932 47,775 o/w 1P (%) % 37.8% 35.0% 32.7% 34.7% 33.7% 33.4% 32.1% 30.3% 29.7% o/w 2P (%) % 31.0% 29.9% 26.1% 29.1% 26.7% 26.9% 23.9% 21.9% 20.4% o/w 3P (%) % 27.2% 30.0% 31.1% 30.6% 29.6% 29.9% 32.9% 35.2% 36.9% o/w 4P (%) % 3.9% 5.1% 10.2% 5.6% 10.0% 9.9% 11.1% 12.6% 13.0% Total RGUs # 125,772 133,079 143,472 134,317 140,675 140,807 147,585 155,881 158,589 RGUs / sub # 2.8 2.9 3.1 2.9 3.0 3.0 3.1 3.3 3.3 Global ARPU Fixed customers €/month 72.0 68.2 64.8 66.3 65.7 65.2 64.4 65.1 65.4

SMEs and Large Accounts KPI Unit 2012 2013 2014 1Q14 2Q14 3Q14 1Q15 2Q15 3Q15 Clientes # 5,291 5,251 5,094 5,198 5,162 5,134 5,041 5,072 5,053

13 Key performance indicators – KPIs (ii/ii)

Selected financial data Quarter YTD Unit 2012 2013 2014 1Q14 2Q14 3Q14 1Q15 2Q15 3Q15 3Q 2014 3Q 2015 241 247 Total revenues €m 342.8 334.9 321.2 79.6 79.9 79.5 79.6 82.1 82.7 238.9 244.4 118 173 Y-o-y change % -2.3% -4.1% 0.0% 2.8% 4.0% 2.3% 28 119 o/w residential €m 201.3 195.4 196.2 48.0 48.6 49.5 49.0 50.8 51.7 146.1 151.5 177 132 Y-o-y change % -2.9% 0.4% 2.1% 4.4% 4.5% 3.7% 177 143 o/w Business €m 102.8 101.2 93.4 23.9 23.6 22.9 22.8 23.4 22.8 70.3 69.0 177 159 Y-o-y change % -1.6% -7.7% -4.8% -0.5% -0.5% -1.9% o/w Wholesale and Other €m 28.9 29.7 24.7 6.1 5.7 5.5 5.6 5.6 6.2 17.3 17.3 0 41 Y-o-y change % 2.8% -1.7% -8.2% -2.9% 12.5% 0.1% 102 184 o/w Other Profit Neutral Revenues €m 9.8 8.6 6.9 1.6 1.9 1.6 2.2 2.3 2.0 5.2 6.6 153 255 Y-o-y change % -12.3% -20.1% 38.5% 19.1% 24.5% 26.8% 123 178 Adjusted EBITDA €m 134.7 155.1 155.9 37.3 35.6 39.4 37.7 38.3 40.6 112.3 116.7 151 199 Y-o-y change % 15.2% 0.5% 1.2% 7.6% 3.2% 3.9% 73 139 Margin % 39.3% 46.3% 48.5% 46.8% 44.6% 49.5% 47.4% 46.7% 49.2% 47.0% 47.7% Capital expenditures €m (119.2) (41.5) (42.2) (7.9) (10.3) (7.8) (9.1) (9.2) (10.3) (26.0) (28.6) 194 218 Y-o-y change % -65.2% 1.7% 14.5% -10.4% 32.0% 10.0% 172 205 % total revenues % -34.8% -12.4% -13.1% -9.9% -12.9% -9.8% -11.4% -11.2% -12.4% -10.9% -11.7% 141 187 Operational Free Cash Flow €m 15.5 113.6 113.7 29.4 25.3 31.6 28.6 29.1 30.4 86.3 88.1 206 Y-o-y change % 632.9% 0.1% -2.4% 14.9% -3.8% 2.1% 52 % EBITDA % 11.5% 73.2% 72.9% 78.8% 71.1% 80.2% 75.9% 76.0% 74.7% 76.9% 75.5% 3

14 Events of the period

Events of the period 241 247 118 173 28 119 • On July 1st, 2015, Euskaltel was successfully listed on the Spanish Stock Exchange through the sale of shares representing 63.5% of the share capital (69.9% of the share capital following the exercise of the greenshoe by the Joint 177 132 177 143 Global Coordinators on July 7th, 2015). 177 159 • On July 23th, 2015 Euskaltel and R Cable y Telecomunicaciones Galicia, S.A. (R Cable) announced they had signed a 0 41 102 184 preliminary agreement for the integration of both companies. Following the completion of this transaction, the new 153 255 Euskaltel Group would have pro forma revenue of approximately €570mn and EBITDA of €265mn. 123 178 151 199 Share price performance in the Jun-Sep quarter: 73 139 • 12.0 194 218

Máx.: 11,68 172 205 ) 141 187

p.s. € 206 11.0 +12. 52 4% 3 8.4% 10.0

share price ( price share Min.: 9,92

9.0

(7.9%) Euskaltel’s

(12.4%)

8.0 Euskaltel Announcement IPO of MoU

Rebased to Rebased 1 July 2015 23 July 2015

7.0 01-Jul-15 16-Jul-15 31-Jul-15 15-Aug-15 30-Aug-15 14-Sep-15 3029-Sep-15-Sep-15 (1) Euskaltel Spain IBEX 35 Cable Comps Source: FactSet as of September 30, 2015. Note: (1) Includes: Liberty Global, Com Hem, NOS, Tele Columbus and Telenet. 15 Events after the reporting period (i/ii)

Events after the reporting period 241 247 118 173 28 119 • Euskaltel and the shareholders of R Cable entered on 5th October 2015 into a sale and purchase agreement in respect of 177 132 177 143 all the shares of R Cable. The final price of the Transaction was fixed at €1,190mn, including approximately €300mn of 177 159 estimated net debt of R Cable as of September, 30th 2015 (which will be refinanced by Euskaltel), with the consideration 0 41 102 184 being fully payable in cash. This consideration will be financed by Euskaltel through the extension of the existing financial 153 255 facilities by €600mn, the raising of an institutional debt tranche of €300mn underwritten by four banks, the issuance of 123 178 151 199 new shares and with cash on hand. 73 139 The effectiveness of the Transaction, which is binding on R Cable’s shareholders, is subject to the approval by the 194 218 172 205 Extraordinary General Shareholders Meeting of Euskaltel and the authorization by the Spanish Competition Authority 141 187

206 (CNMC). 52 3 • On October 9th, 2015, Euskaltel’s Management and Employee’s Legal Representatives have signed a Collective Bargaining Agreement that will rule Euskaltel’s labor conditions until 2018, guarantying sufficient stability for the next years.

16 Events after the reporting period (ii/ii)

Events after the reporting period (Cont´d) 241 247 118 173 28 119 • On October 23th, 2015 Standard & Poor’s and Moody’s, the ratings agencies, assigned Euskaltel a credit rating of “BB-” 177 132 177 143 and “B1” respectively, with stable outlook in both cases. 177 159 Standard & Poor’s has assigned Euskaltel a credit rating of "BB-", in line with other peers, such as Liberty Global and 0 41 102 184 Com Hem, and a notch above other European peers, such as Telenet, Numericable and TeleColumbus (“B+”). 153 255 Moody’s has assigned Euskaltel a long-term credit rating of "B1", in line with other European peers, such as Telenet, 123 178 151 199 Numericable and Com Hem, and a step above Tele Columbus (“B2”). 73 139

194 218 Both agencies have pointed Euskaltel’s large capacity for generating cash flow, a stable market situation and the good 172 205 141 187 growth perspective of the company, which are supported by a solid business plan sustainable in the forthcoming years, as 206 the Company’s main strengths. 52 3

17