Zon Optimus SGPS : 20-07-17 - NOS strengthens growth in the 2nd quarter

PRESS RELEASE

20 / 07 / 2017

During the second quarter of the year, NOS posted growth in all business segments, both in terms of revenues and in number of customers, when compared to the same period of 2016.

According to Miguel Almeida, CEO of NOS, "The heavy investment that we have been making in innovation, in improving the quality of the services that we offer and in increasing the number of families covered by our latest generation networks, continues to contribute towards a significant growth in our customer base. This commercial success has once again resulted in a very positive trend in the company's financial indicators in the quarter, despite a fall in revenue per RGU.

We have responded to the confidence that the market, households and companies have placed in NOS with our renewed commitment to continue to ensure that our customers get the very best value proposals".

• Operating revenues grew by 4.2% to 388.4 million euros, with telecommunications revenues growing by 3.1%, driven by growth of 5.8% in the number of RGUs.

• Consolidated EBITDA increased by 5.4% to 156.7 million euros, with the EBITDA margin reaching 40.4%, up 0.5 pp on 2T16.

• Net Profit increased to 40.4 million euros.

• Free Cash Flow totalled 43.9 million euros.

• Capital Expenditure (total CAPEX) was 85.7 million euros.

  Operational Highlights

• The number of RGUs increased by 5.8% to 9,254 million, with net additions of 99.1 thousand.

• The number of mobile subscribers totalled 4,549 million, with net additions of 62 thousand new customers in the period.

• Pay TV customers increased by 2.5% to 1.6 million, with net additions of 4.9 thousand.

  Direção de Comunicação Corporativa & Sustentabilidade

  Edifício Campo Grande,

  Rua Ator António Silva, 9, Piso 6, Lisboa

  T 217 824 700 | comunicação.corporativa@nos.pt | www.nos.pt

• The positive trend continued in fixed broadband and fixed voice RGUs, with growth of 8.4% and 5.2% to 1,308 and 1,751 million, respectively.

• The number of business services increased by 8% in the second quarter, compared to the same period of last year, reaching a total of 1,453 million RGUs.

• NOS strengthened its next generation fixed network coverage, increasing the number of homes passed by around 14.9 thousand in 2T17. The number of households covered now totals 3,787 million.

• In the Cinema and Audiovisuals business, the number of tickets sold was 2,446 million, an increase of 42.6% compared to 2016.

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Direção de Comunicação Corporativa & Sustentabilidade

Edifício Campo Grande,

Rua Ator António Silva, 9, Piso 6, Lisboa

T 217 824 700 | comunicação.corporativa@nos.pt | www.nos.pt

In the second quarter, NOS' Net Profit was 40.4 million euros, an increase of 13.9 million euros compared to the same period of last year. Once again, the improvement in financial performance reflects the good operational performance that the company has demonstrated, as well as the positive contribution from associated companies.

Operating Revenues posted growth of 4.2% to 388.4 million euros. Revenues from the telecommunications business also increased by 3.1%, to 368.8 million euros.

The Cinema business performed strongly with revenues increasing by 38.6% compared to the second quarter of 2016 to 16.2 million euros. Audivisuals revenues increased by 13.1% to 19.2 million euros in the quarter as a result of good performance in cinema distribution.

Consolidated EBITDA once again showed robust growth in the quarter, up 5.4% to 156.7 million euros, with a consolidated EBITDA margin of 40.4%, an increase of 0.5pp. In the telecommunications business, growth in EBITDA was also positive with an increase of 4.9% to 144.4 million euros and an EBITDA margin of 39.1%, up 0.7pp.

At the same time, NOS remained totally committed to bringing its new generation networks to the entire country, reflected in its capital expenditure (Total Capex) of 85.7 million euros in the quarter.

At the end of the quarter, net financial debt totalled 1,114 million euros, equal to 2x EBITDA, a conservative ratio compared to our peers in the sector.

In the second quarter of 2017, NOS continued to increase its customer base and the number of RGUs, which grew by 5.8% compared to the same period of 2016, to a total of 9,254 million at the end of the second quarter of 2017, due to net additions of 99.1 thousand in the period.

The company also posted an increase in the number of Pay TV customers of 2.5% to 1,613 million. In mobile RGUs, growth was 6.5% compared to the same period of last year, or 62.0 thousand new RGUs in the second quarter, to 4,549 million. In fixed broadband internet and in fixed voice services, there was also growth of 8.4% and of 5.2%, respectively. The number of fixed broadband services was 1,308 million while the number of fixed voice services totalled 1,751 million.

The number of convergent customers increased by 10.4%, when compared to the second quarter of 2016, to 710.8 thousand at the end of June 2017, equal to 47.1% of the fixed access customer base and higher than the 44.4% posted at the end of June 2016.

In business services, NOS continued to win highly important customers in the corporate segment, both in the private and public sectors. The number of business services totalled 1,453 million, or in other words, an increase of 22.6 thousand services during the second quarter of this year.

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Direção de Comunicação Corporativa & Sustentabilidade

Edifício Campo Grande,

Rua Ator António Silva, 9, Piso 6, Lisboa

T 217 824 700 | comunicação.corporativa@nos.pt | www.nos.pt

Latest generation services are being made available to more and more Portuguese people, as a result of the investment that NOS continues to make in its network infrastructure. Fixed network coverage had reached another 14.9 thousand households by the end of the second quarter of 2017. The number of households covered now totals 3,787 million.

The NOS cinema business performed very well with the number of tickets sold increasing 42.6% compared to the same period of last year. In the second quarter, NOS sold 2,446 million tickets for its cinemas.

It should be pointed out that in the second quarter of this year, NOS was the distributor of the majority of box office successes, including "The Fate of the Furious", "Pirates of the Caribbean: Dead Men Tell no Tales" "Beauty and the Beast"," Guardians of the Galaxy Vol. 2", "The Mummy", "Wonder Woman", "King Arthur - Legend of the Sword", among others.

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Direção de Comunicação Corporativa & Sustentabilidade

Edifício Campo Grande,

Rua Ator António Silva, 9, Piso 6, Lisboa

T 217 824 700 | comunicação.corporativa@nos.pt | www.nos.pt