Thursday, 13 March 2008

Free announces stellar numbers, but why is FTTH capex so high?

Iliad, the mother company of the French ISP posted its financial results this morning. Based on these numbers you can only say: Man, there is a load of money in providing internet access. Free's business model is quite simple. You pay €30 and you get 28mbit/s unlimited access, with free calling to fixed lines in 70 countries, and HDTV and 70 tv-channels, and a personal tv-channel, Digital TV Recorder, remote access to stuff you recorded on your home DVR etc etc.

Ok, here are the numbers.
KPI 2005 2006 2007
ADSL Subscribers 1,595,000 2,278,000 2,904,000
Unbundling Ratio 70.2% 75.9% 81.5%
ARPU (at year end) €32.2 €34.5 €36.3
Churn = 1% / month less than 1%
much less than 1%

Column1 2006 2007 difference
Revenues 935.1 1 212,4 +29.7%
EBITDA 328.5 443.6 +35.0%
EBITDA Margin 35.1% 36.6%
EBIT 180.5 213.8 +20.4%
EBIT Margin 19.5% 17.6%
Net Income 120.6 150.2 +24.4%
Proposed Dividend €0.27 €0.31 +14.8%

626,000 ADSL net adds in 2007 and 24% of all net adds in France.
€33.3 M of FTTH CapEx in 2007
€21.4 M of FTTH equipments & NROs under leasing agreements at year end
€1,500 CapEx per existing subscribers confirmed in Paris
2008 / 2009 CapEx between €300M - €400M

This last one surprises me a bit. The Capex per sub in Paris seems to be rather high. I have no clue where that comes from as it seemed that Paris would be cheaper than €500 per sub because of not having to dig.


  1. Rudolf,

    Iliad has a weird way of looking at it. It's 1500 EUR per existing customer if you connect all homes in a given area where Free has 15% penetration or more.

    Hence around 225 EUR per home.

  2. Great! Thanks! Let them please keep stuff simple for us. Though on the other hand it is clear that their investment per sub will be at 1500, since the majority of their investment is the same whether 15% connect or 100% connect. Yet another reason to do infrastructure sharing between telco's