NOS SGPS S A : 11-11-22 - NOS informs on 9M22 Consolidated Management Report

C O N S O L I D A T E D

M A N A G E M E N T R E P O R T

A N D A C C O U N T S

9 M 2 2

MANAGEMENT	CONSOLIDATED
REPORT	FINANCIAL STATEMENTS
(Page. 03)	(Page 11)

MANAGEMENT

REPORT

HIGHLIGHTS 9M22

Technological leadership and service quality recognized in customer preference and satisfaction levels, driving healthy operational growth and efficiency, with lowest ever levels of churn.

Financial performance supported by strength of operational success in core telco business and continued improvement in cinema activity

Table 1.
9M22 Highlights ('000)		9M21	9M22	9M22 / 9M21
Operating Highlights
Homes Passed		5,052.8	5,216.6	3.2%
% FttH		49.8%	59.0%	9.2pp
Total RGUs		10,146.1	10,665.2	5.1%
Fixed Pay TV RGUs		1,381.6	1,424.1	3.1%
Convergent + Integrated Customers		1,005.8	1,071.2	6.5%
Fixed Convergent + Integrated Customers as % of Fixed Access		63.9%	66.5%	2.7pp
Customers
Mobile RGUs		5,209.9	5,642.3	8.3%
Residential ARPU / Unique Subscriber With Fixed Access (Euros)	(1)	47.1	47.8	1.6%
Financial Highlights (Millions of Euros)
Consolidated Revenues		1,044.9	1,123.5	7.5%
Consolidated EBITDA		477.7	500.1	4.7%
Consolidated EBITDA Margin		45.7%	44.5%	(1.2pp)
Consolidated EBITDA - Consolidated CAPEX Excluding Leasings,	167.7	135.9	(19.0%)
Spectrum License & Other Contractual Rights
Telco Revenues		1,029.2	1,089.0	5.8%
Telco EBITDA		447.6	468.2	4.6%
Telco EBITDA Margin		43.5%	43.0%	(0.5pp)
Telco EBITDA - Telco CAPEX Excluding Leasings, Spectrum License &	147.6	120.8	(18.1%)
Other Contractual Rights
(1) Fixed residential ARPU reestated from 1Q19 to include Revenues of SIM cards integrated in residential bills

• During 9M22 total RGU growth recorded net adds of 359.7 thousand, taking total RGUs to 10.665 million, an additional +5.1% yoy.
• The key driver of RGU growth remains mobile, with an additional 292.4 thousand subscribers in 9M22, up by 44.7% compared with last year. The core contributor of this growth in mobile subscribers, 248.6 thousand, has been post-paid contract subscribers, demonstrating our continued focus on promoting the high value proposition of convergent solutions.

•50.4 thousand in 9M22 to 1,071.2 thousand customers, representing 5,538.7 thousand converged RGUs, an average of 5.17 services per customer, evidence that consumers in Portugal prefer to take their communication and entertainment services in convergent bundles 67% of NOS residential customers subscribe to converged fixed and mobile bundles with Gigabit next generation speeds, unlimited data allowances, over 150 high quality channels with

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limitless live and on-demand content, a seamless experience over a multiple device user interface integrating all relevant OTT platforms.

• As a result of this strong growth in mobile, NOS had 5.642 million mobile subscribers by the end of 9M22,
  up by 8.3% yoy and of which 63% were post- mobile market share stood at 28.0%, representing an increase of 1.3% from last year.
• Our strategic decision to lead in 5G and deploy the most advanced and widespread network as fast as possible is driving results. In addition to independent recognition as the fastest network in Portugal in
  operator in Portugal by the leading Portuguese consumer association Deco Proteste. Nationwide user tests were conducted over the QualRede platform analysing various indicators to evaluate upload and download speeds, internet navigation experience and quality of content streaming and on all fronts, NOS received the best results of all operators. This recognition is a major achievement attesting to the success
  and a key enabler of nationwide digital transformation and economic development.
• Momentum is also improving in our Cinema operation with the number of spectators growing yoy, although still not yet to pre-pandemic levels. NOS sold 4.370 million tickets in 9M22, an additional 140.2% compared with last year and in fact higher than growth in the market which increased by 133.3% to 6.731 million tickets. Our Audiovisuals division is also reflecting yoy recovery in distribution of movies to cinema exhibitors, a segment in which NOS also has an important market position.

Telco operating strength driving quality financial performance, together with ongoing recovery in cinema activity

• Consolidated revenues grew 7.5% yoy to 1,123.5 million euros in 9M22 driving EBITDA growth of 4.7% to
• 1. million euros.
• Telco revenues increased 5.8% to 1,089.0 million euros and EBITDA by 4.6% to 468.2 million euros, representing an EBITDA margin of 43.0%, down from 43.5% in 9M21, in a context where inflation is already impacting the cost base.
• Audiovisuals and Cinema revenues were higher by 48.3% yoy at 62.5 million euros maintain the strong pace of yoy recovery post pandemic. EBITDA reached 31.9 million euros, representing an increase from 9M21 of 6.0%.
• Net Income amounted 191.3 million euros for the first 9 months of 2022. Net Income in the third quarter includes an approximate 75 million capital euros gain from the sale of a portfolio of towers to Cellnex under the long term partnership announced in April 2020, and further detailed in the additional tower sale announcement in April 2022 (link).
• Total CAPEX excluding leasing contracts, spectrum license & other contractual rights increased 17.5% to
• 1. million euros, impacted by our 5G deployment programme which is reaching conclusion in the coming quarters with around 80% population already covered by the end of 9M22.
• Total Free Cash-Flow Before Dividends, Financial Investments and Own Shares Acquisition in 9M22 amounted to 183.5 million euros.

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