Euskaltel outlines ambitious revenue and EBITDA growth plan

Spanish regional cable operator Euskaltel has outlined plans to grow its revenue to €800 million, with EBITDA of €400 million, by 2022, with its expansion into new markets accounting for 8% of revenues by that date.

The ambitious turnover target would imply growth of 28.6% on the company’s figure for 2017, with the EBITDA figure 30.3% up on the 2017 number.

Francisco Arteche

Unveiling the targets at an investors day presentation in Madrid, Euskaltel management said an EBITDA margin of 30% of sales would be sustainable by 2022, enabling double-digit growth in dividends across the timespan of its strategic plan. The company predicts that net financial debt will fall below 3.5x EBITDA by 2022.

Euskaltel has appointed Charo Lacal to head up a recently created operations and transformation division bringing together customer service and management into a single unit. Lacal will be tasked with ensuring that the group’s different functional areas adapt to new market scenarios.

CEO Francisco Arteche said that the group would focus on improving customer experience, a return to growth in the B2B segment, digital transformation, strategic alliances and an increased reach.

Euskaltel has also identified cost savings of €40-45 million as it streamlines its operations and increases efficiency.

“Thanks to its management capacity, the Group estimates a very significant increase in revenues in the markets we are expanding into over the next few years, reaching 8% of total revenues by the end of 2022,” said Arteche.

Euskaltel’s presentation comes as 15% shareholder Zegona Communications completes a capital increase to finance the acquisition of Euskaltel shares.

Zegona – the former owner of Asturias operator Telecable that was acquired by Euskaltel – has said it wants to see Euskaltel expand its reach within its core markets of the Basque Country, Asturias and Galicia as well as extending its reach to other regional markets. The company has been in talks with former Jazztel CEO José Miguel García, who participated in its placing, about taking a role with the company and also wants to facilitate a deal to bring the Virgin brand to Spain as a vehicle for Euskaltel’s national expansion.

Zegona has identified a similar level of cost savings to that outlined by Euskaltel’s management through the creation of a single operating platform for the group’s three reginal brands and other measures.