Eircom Holdings (Ireland) Limited

Eircom Holdings (Ireland) Limited

eircom Holdings (Ireland) Limited Third quarter and nine months Unaudited Results 31 March 2018

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7 eircom Holdings (Ireland) Limited Unaudited third quarter and nine months results to 31 March 2018 Table of contents Page(s) Trading highlights for the third quarter ended 31 March 2018 8 KPIs for the third quarter ended 31 March 2018 9 Reconciliation of statutory financial statements to the results presented in the 10 management discussion and analysis section within this quarterly document Reconciliation of EBITDA to operating profit for the quarter and nine months ended 31 March 2018 11 Consolidated income statement for the quarter ended 31 March 2018 12 Consolidated income statement for the nine months ended 31 March 2018 13 Group statement of comprehensive income for the nine months ended 31 March 2018 13 Consolidated balance sheet as at 31 March 2018 14 Consolidated cash flow statement for the quarter ended 31 March 2018 15 Consolidated cash flow statement for the nine months ended 31 March 2018 16 Consolidated statement of changes in shareholders’ equity for the nine months ended 31 March 2018 17 Selected notes to the condensed interim financial information for the period ended 31 March 2018 18-24 Commentary on results of operations for the quarter ended 31 March 2018 25-32 Commentary on results of operations for the nine months ended 31 March 2018 33-41

8 eircom Holdings (Ireland) Limited Trading highlights for the third quarter ended 31 March 2018*  Revenue of €317 million decreased by €2 million or 1% compared to the corresponding prior year quarter; growth in mobile, bundling and TV revenues, was offset by a reduction in low margin eir business revenue and a decrease in retail voice traffic usage.  Group adjusted EBITDA3 of €137 million was €6 million or 4% higher than the corresponding prior year quarter driven by operating cost savings.

 Reported fixed line revenue, before intra-company eliminations, of €243 million decreased by 2% or €3 million compared to the corresponding prior year period.

Bundling and TV growth was offset by lower retail traffic usage coupled with reductions in low margin eir business revenue.  Fixed line adjusted EBITDA, of €109 million was €2 million or 2% lower when compared to the corresponding prior year quarter due to changes in the gross margin mix.  The group broadband customer base4 at 31 March 2018 was 919,000, an increase of 29,000 compared to the corresponding prior year period. The retail customer base remained stable while the wholesale base increased by 29,000 compared to the corresponding prior year period. At 31 March 2018, there were 620,000 customers availing of fibre based high speed broadband services, an increase of 90,000 compared to the corresponding prior year period.

 Group fixed access paths decreased by 22,000 compared to the prior year; growth in standalone broadband of 10,000 was partially offset by a reduction in fixed line access net losses of 32,0005 . The rate of fixed access line losses continues to reduce; fixed line access net losses for the twelve months ended 31 March 2017 were 38,000.  Reported mobile revenue of €82 million increased by €1 million or 2% year on year and mobile EBITDA of €28 million increased by €8 million when compared to the corresponding prior year quarter.  Total mobile customers at the end of the quarter were 1,053,0006 including 534,000 postpay customers and 519,000 prepay customers.

The postpay customer base increased by 20,000 year on year bringing the number of customers on postpay contracts to 51%. The prepay base reduced by 32,000 year on year mainly due to continued migrations to postpay as well as increased competition in the market.

 Group operating costs7 of €118 million, reduced by €5 million or 4% compared to the corresponding prior year quarter.  Total Full Time Equivalent (FTE) staff at the end of March were 3,145, a reduction of 151 FTE or 5% compared to the corresponding prior year quarter.  Despite continued high levels of capital investment, the Group maintains strong liquidity with cash on hand of €128 million at 31 March 2018. *The figures presented above include amounts relating to the Groups 56% share in Tetra Ireland Communication Limited (“Tetra”). Following the adoption of IFRS 11, Joint Arrangements, Tetra is reported in the financial statements under the equity method as opposed to proportionate consolidation.

The management discussion and analysis section of this quarterly report presents results on a management accounting basis and therefore includes the results of the Group’s joint ventures on a proportionate basis, reflected in Group revenue, operating costs and EBITDA. 3 Adjusted EBITDA is earnings before interest, taxation, amortisation, depreciation, non-cash lease fair value credits, and non-cash pension charges, profit on disposal of Property, Plant and Equipment and exceptional items.

4 Combined retail and wholesale excluding LLU and line share, including SABB 5 Combined retail and wholesale access line losses including LLU 6 Mobile base is a combination of handset subscriptions, machine to machine and mobile broadband subscriptions 7 Operating costs are pay and non-pay costs before non-cash pension charge and lease fair value credits

9 eircom Holdings (Ireland) Limited KPIs for the third quarter ended 31 March 2018 (unaudited) As at andfor quarter ended As at andfor quarter ended 31 Mar 2017 31 Mar 2018 Better/ (Worse) % N1 Access Paths Base ('000) Retail Access Lines 686 655 (5%) Retail SABB* 36 34 (4%) Wholesale Access lines 497 501 1% Wholesale SABB* 143 155 8% Wholesale LLU** 9 4 (51%) Total 1,371 1,349 (2% ) Retail Voice traffic (minutes in quarter) 367 328 (11%) BroadbandLines ('000) Retail 444 444 - Wholesale 446 475 7% Total 890 919 3% Net Growth in quarter 10 9 Mobile Customers ('000) Prepaid handsets 544 510 (6%) Prepaid MBB 7 9 33% Total prepaid base 551 519 (6%) Postpaid handsets (including M2M) 476 498 4% Postpaid MBB 38 36 (4%) Total postpaid base 514 534 4% Total 1,065 1,053 (1% ) ARPU'S € N2 & N3 Consumer Blended ARPU 48.1 50.0 4% WLR PSTN ARPU 16.2 16.5 2% BitstreamARPU (including SABB) 15.7 15.8 1% Prepaid ARPU (including MBB) 13.8 15.0 9% Postpaid ARPU (including MBB/M2M) 33.2 33.1 0% Closing Headcount 3,296 3,145 5% *SABB - Standalone Broadband **LLU - Local Loop Unbundled

10 eircom Holdings (Ireland) Limited Basis of preparation This financial information has been prepared to make available certain unaudited condensed consolidated financial information to the holders of the group's Senior Secured Notes. Accordingly, the group has not prepared this financial information in accordance with IAS 34 – “Interim Financial Information” and has not carried out an impairment review of the carrying value of goodwill and other non-current assets as at 31 March 2018.

This condensed interim financial information has been prepared on the going concern basis, which assumes that eircom Holdings (Ireland) Limited will continue in operational existence for the foreseeable future.

The financial information, as at and for the period ended 31 March 2018, in respect of the group has been prepared using the same accounting policies as applied for the year ended 30 June 2017. For a more complete discussion of our significant accounting policies and other information, including our critical accounting judgements and estimates, this report should be read in conjunction with the financial statements of EHIL for the year ended 30 June 2017.

Reconciliation of statutory financial statements(1) to the results presented in the management discussion and analysis section within this quarterly document In the quarter ended 31 March 2017 In the quarter ended 31 March 2018 Reported Adjusted Statutory Reported Adjusted Statutory €m €m €m €m €m €m Revenue 319 (4) 315 317 (5) 312 Operating costs excluding non-cash pension charge and fair value lease credits (188) 1 (187) (180) 3 (177) Adjusted EBITDA 131 (3) 128 137 (2) 135 Closing Cash 100 (4) 96 128 (8) 120 In the nine months ended 31 March 2017 In the nine months ended 31 March 2018 Reported Adjusted Statutory Reported Adjusted Statutory €m €m €m €m €m €m Revenue 976 (12) 964 955 (13) 942 Operating costs excluding non-cash pension charge and fair value lease credits (602) 4 (598) (571) 6 (565) Adjusted EBITDA 374 (8) 366 384 (7) 377 Closing Cash 100 (4) 96 128 (8) 120 (1) The statutory financial statements are prepared in accordance with IFRS accounting principles and include the results of the group’s joint ventures using the equity accounting basis rather than on a proportionate consolidation basis.

The management discussion and analysis section of this quarterly report presents results on a management accounting basis and therefore includes the results of the group’s joint ventures on a proportionate basis, reflected in group revenue, operating costs and EBITDA.

11 eircom Holdings (Ireland) Limited Reconciliation of earnings before interest, taxation, amortisation, depreciation, non-cash lease fair value credits, non-cash pension charges, exceptional items and profit on disposal of property, plant and equipment to operating profit Third quarter ended March 2017 Third quarter ended March 2018 Nine months ended March 2017 Nine months ended March 2018 €m €m €m €m Operating profit 12 27 23 58 Profit on disposal of property, plant and equipment ("PPE ( 2) - Exceptional items 17 5 56 23 Non-cash pension charge 4 4 13 11 Operating profit before non-cash pension charges, exceptional items and profit on disposal of property, plant and equipment 33 36 90 92 Depreciation 68 75 201 215 Amortisation 28 25 80 75 EBITDA before non-cash pension charges, exceptional items and profit on disposal of property, plant and equipment 129 136 371 382 IFRS 3 unfavourable lease fair value adjustment (1) (1) (5) (5) Adjusted EBITDA before non-cash lease fair value credits, non-cash pension charges, exceptional items and profit on disposal of property, plant and equipment 128 135 366 377 EBITDA of joint ventures using proportionate consolidation 3 2 8 7 Reported EBITDA* before non-cash lease fair value credits, non-cash pension charges, exceptional items and profit on disposal of property, plant and equipment 131 137 374 384 Reported EBITDA* before non-cash lease fair value credits, non-cash pension charges, exceptional items and profit on disposal of property, plant and equipment is split as follows: Fixed line 111 109 329 329 Mobile 20 28 45 55 131 137 374 384 * Reported EBITDA includes the results of the group’s joint ventures on a proportionate basis.

The statutory basis includes the results of the group’s joint ventures using the equity accounting basis rather than on a proportionate consolidation basis.