Excellent nine month results for Arqiva

Arqiva, the UK's largest independent towers company and communications infrastructure group, announces continuing strong revenue and EBITDA growth for the nine months to 31 March 2017[1].

Revenue growth of 11% from continuing operations (excluding disposals, principally WiFi and Secure Solutions), Reported revenue growth of 8%

Revenue in Terrestrial Broadcast up 8%

Revenue in Telecoms and M2M up 11%

Satellite and Media revenues up 3%

EBITDA up 12% at £351 million

EBITDA margin improved at 50%

Operating cash flow after investing activities £326m, an increase of £155m on the prior year period

Arqiva provides the communications infrastructure used by mobile telecoms network operators, TV and radio broadcasters, and satellite TV broadcasters. Arqiva has taken a leading role in the deployment of machine-to-machine connectivity devices, such as smart meters for energy and water. It is a 5G pioneer and is operating the first European fixed wireless access (FWA) trial in London this summer in partnership with Samsung.

Simon Beresford-Wylie, CEO, commenting on the results said:

Arqiva's strong financial results are driven by excellent operating performances in terrestrial broadcast, telecoms and M2M.

The visibility of revenues with a contracted order book of close to £6 billion, inflation-linked pricing, and the opportunity to increase utilisation of our infrastructure, places Arqiva in a very strong position to continue to deliver stable profitable growth. Our ongoing and significant investment in digital broadcast infrastructure; 4G, 5G, in-building solutions and small cells underlines Arqiva's commitment to ensuring that the UK truly has a vibrant and globally competitive economy.

Alongside our growth strategy, our transformation programme, FutureFit , is lowering our cost base; aligning the way we work to better reflect market developments and the needs of our customers; and strengthening our ability to deliver complex projects.

Shareholder strategic review Arqiva's shareholders are jointly undertaking a strategic review of their investment which may lead to a transaction involving their interests in Arqiva. There is no certainty that the strategic review will result in any transaction. A further announcement will be made as and when appropriate.

Arqiva reports in three divisions: Terrestrial Broadcast; Telecoms & M2M; and Satellite and Media.

Revenue in Terrestrial Broadcast up 8% The growth was driven by multiple factors: recurring revenues from new channels on the Digital terrestrial television (DTT) multiplexes; additional new video streams on our main multiplexes, radio contracts resulting from the Digital Audio Broadcasting (DAB) rollout, the continuing clearance of the 700 MHz spectrum, and RPI linked increases on broadcast contracts.

In March 2017 Freeview announced that sales of Freeview Play TVs and set-top boxes surpassed the one million mark. This is a strong indication of the attractiveness of hybrid DTT / IP TV services in the UK where DTT is the underlying delivery mechanism that has a core free-to-air linear content base with a variety of OTT services on-top.

As at 31 March 2017 Arqiva's two main DVB-T Multiplexes had 31 videostreams, all of which are utilised. Ongoing high levels of Multiplex utilisation demonstrates the on-going attractiveness to broadcasters of the Freeview DTT platform.

The Group is delivering the DAB rollout programme for the BBC. By 31 March 2017, Arqiva had built 161 new transmitters for the BBC since rollout began to reach the targeted UK national DAB network coverage of more than 97% of the population. The final 2 sites of the 163 required to deliver the current phase of the programme are expected to be complete by June 2017.

Arqiva is progressing with the delivery of Commercial local DAB. The programme is part of an initiative to meet the local DAB coverage threshold of 90% set by the UK Government and achieved in September 2016 with the completion of 185 new sites. Arqiva is delivering new transmitters or upgrades at 221 sites and by 31 March 2017 had completed 208 sites. The final sites for this phase will be completed during summer 2017 taking local DAB coverage to over 91%.

Arqiva's DAB Multiplexes have continued to show high utilisation levels due to strong demand for radio services and radio listening in the UK.

The 700 MHz clearance programme has been a strong driver of revenue growth in the Terrestrial Broadcast business during this financial year. Arqiva is responsible for the spectrum planning, network design, programme management, infrastructure changes, service continuity, asset replacement and retuning of broadcast transmitters to enable broadcasters to move to a lower frequency.

Telecoms and M2M revenues increased by 11% Growth was driven by the Group's core telecoms towers and increased site numbers and associated activities; Installation Services activities to help MNOs in meeting coverage requirements; and the M2M business. The rise in M2M revenues resulted from recurring network availability charges on the smart energy metering contract, together with additional revenues from meter sales in relation to its smart metering contracts with Thames Water and Anglian Water.

In March 2017, the UK Government released A 5G Strategy for the UK supporting the views of the National Infrastructure Commission report. The strategy lays out the ambition and actions required to create an environment that positions the UK as a global leader in the next generation of mobile technologies and digital communications . The report states that to deliver the high speed, high capacity capabilities of 5G will likely require a significant number of small cells to be deployed.

In February 2017 Arqiva announced a partnership deal with Samsung to run the first UK 5G field trials using fixed wireless acces

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