Canal+ SA (CAN) Earnings Call Transcript & Summary

Welcome to the Canal+ 9 Months 2026 Revenue Conference Call. [Operator Instructions] Now I will hand the conference over to Maxime Saada, Canal+ CEO. Please go ahead.

Good morning, everyone, and thank you for taking the time to join us. I am Maxime Saada, CEO of Canal+, and I'm joined by Amandine Ferre, Chief Financial Officer and Chief ESG Officer.

Good morning, everyone.

We have delivered a solid performance over the first 9 months of the year with revenue of more than EUR 6.4 billion. That is a 37.5% increase on a reported basis, reflecting our increased scale following the MultiChoice acquisition and a 1.0% increase on a restated basis. Like-for-like, on a constant scope and currency basis, group revenue was down 0.3% and up 0.8%, excluding MultiChoice. More importantly, as you know, our focus is on profitability and cash generation, and we remain well on track to deliver our 2026 guidance. Now I will hand you over to Amandine to provide more detail.

Let's start with the 9-month revenue bridge. As Maxime mentioned, group revenue was up 1% year-on-year on a restated basis, including MultiChoice. On a like-for-like basis, revenue was broadly flat with 0.8% growth in CANAL+ historical perimeter, offsetting the 3.0% decline at MultiChoice. We also recorded a positive EUR 56 million FX impact over the first 9 months, essentially coming from Q3, driven by the movement of the South African rand yield. Finally, the positive scope effect mainly reflects the acquisition of Lucky Red, Italian producer and distributor that we acquired earlier this year. Now let's turn on our 3 segments, starting with Europe. Revenue was down 1% to EUR 3.4 billion and down 1.5% like-for-like. In France, excluding the C8 closure, revenue was broadly stable. Poland delivered slight growth supported by OTT and advertising. In other European markets, what we are calling BCE, Benelux Central Europe, the decline mainly reflects the disposal of a loss-making DTH subscriber base in Hungary in '25 as previously mentioned in our former communication. Now turning to Africa & Asia. Revenue increased by 3% to EUR 2.6 billion, benefiting from the positive currency impact in Q3 that I mentioned earlier. On a like-for-like basis, revenue was up 0.7%. Excluding MultiChoice, the segment delivered strong growth of 10% (sic) [ 10.2% ] 0riven by Pay-TV in French-speaking Africa. And as we said also in our previous communication, the double-digit growth at Canal+ Telecom Africa, we used to call that GVA and now it's Telecom Africa. MultiChoice revenue was down 3.0% like-for-like, mainly due to the lower subscription revenue. However, we saw an improvement in Q3 with the decline narrowing to 2.0% from 3.4% in H1. And finally, the last segment, Content Production, Distribution and Other. Revenue was up 9.3% to EUR 530 million, driven by the strong performance at STUDIOCANAL, including the continued box office success of Pressure and the third Shaun the Sheep movie as well as the international sales. Revenue also benefited from the acquisition of Lucky Red. At Dailymotion Q3 revenue was lower, reflecting a challenging advertising market. And with that, Maxime and I are happy to take the questions.

[Operator Instructions] The next question comes from Nicolas Langlet from BNP Paribas.

So I've got 3 questions, please. First on Europe, can you come back on the driver for the 1.6% like-for-like decline in Q3? And how should we think about the factors going into Q4? Secondly, on the full year '26 adjusted EBIT guidance. So if we exclude the EUR 120 million cost synergies, it means gross H2 headwind will be around EUR 160 million, EUR 170 million. How does that split between the content cost phasing, African boost and the start-up costs you have in Europe? And finally, on the VAT. So if the measure was to be implemented as it is in the budget draft, how long it would take for you to fully offset the negative impact on adjusted EBIT, including the price adjustment, the reduction in French cinema investment and other restructuring?

I can start with the 2 first questions. The first one was regarding the decline in Europe. We have different factors explaining that. I mentioned in the presentation, the fact that we get rid of DTH subscriber base in Hungary last year. So when you are comparing '25 to '26, we have this. Secondly, and I know that some of you are also following other companies like TF1 and M6, we can see a challenging advertising market, especially in France. And so we have lower advertising revenue in Q3 '26 compared to what we have in '25. And this is, I think, really the market trend. Besides that what we've been facing in this Q3. If some of you are soccer fans, you might have seen that we had a soccer break for 3 weeks end of September. And so we had lower sales during September and so a bit less traction. But the good news is that the championships are back, and so we can already see the benefits of that in the beginning of October. So this was the first question. Second question was on the EBIT impact between African boost and content. We said during our H1 communication that we only spent a small part of the EUR 100 million that we expect to spend in full year 2026 in H1. And this part of it should be spent in H2. Actually, when you are looking at the African market, a big bulk of the new sales are done in December. This is the festive season in Africa. People are with the family, they are subscribing to television, et cetera. So we expect to have an important volume of sales. We will, of course, adjust the spending depending on how the market is reacting. Maxime said our ambition is not to grow revenue at all cost. Our ambition is to create profitability. So we will spend the booster if we believe that it's creating value for the group in '27.

On VAT, a few things. First, we're still fighting the proposal, as you know. And so far, we have been successful. You may have forgotten that '24 amendments were deposed at the parliament to suppress the proposal from the government. It was voted in the first stage positively. And this was coming from 9 out of the 11 parties in France. So this was really a French partisan measure and support. So that's really strong. Now we're going to the full parliament voting, which will happen in the next few days. Then there will be the Senate. So we are really focused on getting the parliament to support our stance and suppress this proposal from the government. But at the same time, of course, we have to prepare the company should it happen. And so we are devising with Amandine and the teams an action plan to mitigate the impact. We already -- as you may have seen, we have already sent some -- informed our subscribers from October, November and December that we -- they will bear, should it happen, the full impact in terms of price increase of this measure, which is approximately 7.5% to 8% on average increase because the VAT rate CANAL+ is currently paying subject to is closer to 12% than to 10% because, of course, we are already paying 20% on the SVOD part of our offers. We are also devising a number of cost-cutting measures that we are preparing. To answer very specifically your question, I expect -- we expect -- we are aiming to mitigate all of it as soon as possible. Maybe not all of it by '27, but in '28, we should be mitigating all of it. That's the plan. And hence, we have no reason at this stage to change our medium-term guidance.

Can you hear me?

Yes.

I didn't get the intro from the compare. Three questions from my side, please. So first question, just to come back on your comments on the VAT, Maxime, increase was fully covered by '28. Can we have a sense in that -- roughly what proportion of your subscriber base in 2027 will be on 2-year contracts, would not be able to have the price adjusted until the following year? The first question. Then second question on MultiChoice. I think you said, Amandine, just to confirm on a like-for-like basis was down 2.0% in Q3 versus 3.4% in the first half. If you could just confirm that and maybe give a little bit of color in terms of the initial reaction in the market to the new offerings in [ Czechia ], which I think were launched in mid-September. And then the third question, just on the African business, the existing footprint in -- outside of MultiChoice. So this 10.2% like-for-like growth that you achieved again, I think, in Q3, similar to the first half. How sustainable is that? I mean, I think some of it is to do with the cycling of sports events, but it seems that your growth remained very strong in Q3 even post the FIFA World Cup and so on. So just what kind of growth you're thinking moving forward?

On the first one, approximately 25% of our customer base in France is on a 2-year commitment. This is why we won't have full impact of the price increase before '28 and even '29. And then there is our strong hypothesis on the impact assumptions on the impact of the price increase. And this, we have a pretty good experience. But in the end, we don't know the specific number of people how they will react, how many will churn, how many will downgrade, how many will stick to the offers. We have, again, strong assumptions, but a small percentage of variation could have a big impact. We are conservative in our estimate, I would say, on this because I want the mitigation to be as certain as possible. This is why -- we focused first on price increase because this is we -- for legal reasons, we had to do it ASAP. We even sent it before the measure was official by a few hours because we didn't want to miss the October subscribers, just so you know, because we don't want to miss that impact. But we really focused on the price -- the cost reductions. And this we will be certain. And this, we will announce a number of measures as soon as the VAT thing is concerned, is confirmed, if it is.

And on the 2 other questions, first one was against MultiChoice. So yes, I can confirm that we are decreasing the decrease of MultiChoice. If I'm going into the quarter, we were on Q1 at minus 3.6% like-for-like. Q2 we were at minus 3.3%. And on Q3, we are at minus 2.0%. There is different things here. We have an improvement in some countries already at MultiChoice, not all of them, but in some of them, we can really see real improvement of the base and the success of the back to growth, and it's the case in some of English-speaking countries outside South Africa and Nigeria. And we also had a boost in advertising revenue at the FIFA World Cup end with also some more local championship like the Greatest Rivalry, which was very powerful in South Africa. Coming to the new offer we launched second half of September, it's a bit too early to really have a clear view on the reason. But to take a step back, the ambition of this new offer was really to change the strategy that MultiChoice had. MultiChoice used to have the strategy to really focus on [ premium ] sales and increase the prices. Our strategy is very different. Our objective is really to be a mass market offer and to have powerful content even in lower offers. To give you one example, in the new offer, the [indiscernible] of the local soccer is on the [ very ] packaging because we think that it's really creating value and attracting new subscribers. So a bit early to give you the first result, but the offer was really well received, and then we'll see in the coming months how the market really reacts. And your last question was regarding the historical perimeter of CANAL+ regarding Africa. So in this perimeter, we have our activity on Pay-TV in the French-speaking countries like Ivory Coast, Cameroon, et cetera. We also have our telecom activity. So formerly GVA and now CANAL+ Telecom Africa (CTA) and its much smaller activity in Asia. In the 3 activities, Pay-TV, Telecom in Asia, we benefit from strong growth. We still have growth on the Pay-TV market in French-speaking countries, very significant and strong content. Telco activity still has a double-digit growth, and we've been opening new cities. So we really see the improved revenues but also improve profitability of telco activity. And we also benefit from significant growth in Myanmar because we now have the EPL, which is a very strong content in Asia. So we saw strong growth, and we expect to continue this growth in Q4. But maybe just a second, Q4 last year, we had AFCON. So in terms of subscription, our portfolio was really high in Pay-TV in Africa. The lineup is going to be less strong, I would say, in '26 because we won't have this huge event in Africa, but still the trend is good.

This is Adrien from Bank of America. I've got a couple of questions, please. First trends in France. Would you expect that the French revenue -- the Mainland France revenue improve in Q4 relative to Q3 given the stronger lineup or an offset maybe from advertising revenue? And then secondly, do you think there will be any change around your ownership of Poland given the recent establishment of Skydance? Could that trigger perhaps a reconfiguration of shareholding structure? Would you be willing to perhaps buy out the minority shareholders there?

If we start with the first question regarding Mainland France, Q3 was really low in terms of advertising. We had 2 effects. First, the fact that the market is decreasing. And secondly, a big part of advertising was really on the FIFA World Cup in July and so less revenues on our channel. We expect to be back to a more normal situation, but in any case, the market is declining. So we expect to have, I would say, higher revenue in Q4 compared to Q3 in advertising, but still difficult market. Regarding Pay-TV, we are mainly in the postpaid market, even if the lineup is really high, considering the current situation, difficult to predict growth. So...

Yes. On your second point, we have had no signal that tenants may consider what you mentioned. Of course, we will discuss if they want to, but we are -- I would say we are currently happy with the situation.