Kabel Deutschland Releases Record Results For Its Fiscal Year Ended March 31, 2008
Highlights from Kabel Deutschland’s consolidated audited financials for its fiscal year ended March 31, 2008:
- Total Revenue Generating Units (‘RGU’)(1) increase to 10,572.8 thousand, up 2.2% from previous year (10,342.9 thousand). Internet and Phone RGUs grow by 423.6 thousand units in the fiscal year 2007/2008 reaching 754.5 thousand, a 128.0% increase over prior year. Digital pay TV RGUs increase by 86.8 thousand units in the reported year reaching 778.4 thousand on March 31, 2008, a 12.6% increase over last year. Premium services RGUs (digital access, pay TV, PVRs, Internet and Phone) now comprise 23.0% of total RGUs compared to 14.9% in the previous year.
- CATV subscribers now take an average 1.19 RGUs. The positive trend should drive ARPU and reduce churn.
- The shift towards premium services contributes to an increase in total blended ARPU per RGU(2) for the quarter ended March 31, 2008 by almost 10% to €8.50 from €7.76 in the same quarter of the previous year. The total blended ARPU per subscriber(3) for the quarter ended March 31, 2008 amounts to €10.03 (€8.63 in the previous year’s same quarter).
- Total revenues grow by 9.5% to €1,196.9 million compared to €1,093.2 million on a same store basis.
- Subscription based revenues grow by 10.0% compared to the previous fiscal year and go over €1 billion for the first time reaching €1.044.4 million (€949.4 million in the previous year). They now account for 87.3% of total revenues.
- Subscription based revenues from the Company’s premium services amount to €185.7 million and represent 17.8% of the Company’s overall subscription based revenues (€110.8 million representing 11.7% of the overall subscription based revenues in the fiscal year ended March 31, 2007). The increase in subscription based revenues equals to 67.6%.
- RGU growth and a shift in product mix to premium services fuel EBITDA growth on a same store basis. EBITDA as adjusted(4) increases by 19.7% and amounts to €457.8 million compared to €382.5 million on a same store basis last year. EBITDA margin(5) increases from 35.0% to 38.3% for the fiscal year 2007/2008.
- Free cash flow (EBITDA – Capex(6)) increases to €141.1 million or 24% above the prior year result of €113.7 million. Free cash flow margin amounts to 11.8% compared to 10.4% in the last year.
- The Company posts a net loss of €33.8 million in the fiscal year ended March 31, 2008 compared to €99.3 million in the previous year.
Kabel Deutschland (KDG), Germany’s largest triple play company, announced today its financial results for the fiscal year 2007/2008 ended March 31, 2008. These results underline the successful development of the Company’s premium services strategy (digital access, pay TV, PVRs, Internet and Phone).
“Our customers are increasingly subscribing to our Internet and phone products as they are the most attractive price / performance offering in the German market. Surfing the Internet and making phone calls via TV cable is becoming more and more a viable alternative to the usual DSL infrastructure. Our premium products are all positively contributing to our EBITDA. The substantial investments we have been making in the past are paying off” says Adrian v. Hammerstein, CEO of Kabel Deutschland.
Kabel Deutschland’s most competitive Internet products were positively recognized by two independent organisations awarding KDG with two important prizes. Winning the "eco Award 2008", Kabel Deutschland was nominated best Internet provider for private customers. After 2006 it is already the second time for KDG to win this important Internet prize awarded by the eco association (Verband der deutschen Internetwirtschaft e.V.) On top, the German Institute for Service Quality (DISQ) complimened Kabel Deutschland in June on "good service and outstanding tariffs" and elected KDG 'best Internet provider 2008'.
RGUs as of March 31, 2008 and ARPUs for the fiscal year ended March 31, 2008
KDG served 10,572.8 thousand total RGUs on March 31, 2008. The average services taken by a customer increased to 1.19 compared to 1.12 in the previous year. During the reported fiscal year total blended monthly ARPU per RGU for all KDG products increased by 8.9% to €8.32 from €7.64 in the previous year
Kabel Anschluss RGUs were 8,979.8 thousand (thereof 836.7 thousand digital cable access RGUs). Monthly ARPU(7) for the Kabel Anschluss product amounted to €7.79 in the fiscal year ended March 31, 2008 (€7.31 in the previous year).
Kabel Digital pay TV RGUs increased by 12.6% to 778.5 thousand at March 31, 2008. Monthly ARPU remained fairly flat at €7.73 for the fiscal year 2007/2008 (€7.71 in the previous fiscal year). On March 31, 2008 the number of digital RGUs (including 60.0 thousand PVR RGUs) amounted to 1,675.2 thousand (1,205.4 thousand on March 31, 2007 including 1.4 thousand PVR RGUs), a digital TV RGU penetration of 15.8%. Including the Premiere digital pay TV subscribers in KDG’s footprint and eliminating double counts, the total number of digital households in KDG’s footprint amounts to approximately 1.8 million households, a digital TV penetration of over 20%.
Kabel Internet and Phone RGUs increased by 423.6 thousand units in the fiscal year 2007/2008 reaching 754.5 thousand, a 128.0% increase over prior year. The Internet and Phone RGUs on March 31, 2008 comprised of 393.5 thousand Internet RGUs and 361.0 thousand Phone RGUs and were associated with 421.0 thousand subscribers. This results in a RGU / subscriber ratio of 1.79. Monthly ARPU per RGU for Kabel Internet in the fiscal year 2007/2008 amounted to €14.12 (€16.30 in the fiscal year ended March 31, 2007) and €24.79 for Kabel Phone (€28.02).
KDG’s financial results for the fiscal year 2007/2008 ended March 31, 2008
Cash flow, capital expenditures and liquidity
Cash flow from operations for the fiscal year ended March 31, 2008 amounted to €444.7 million compared to €360.0 million in the previous fiscal year.
Overall capital expenditures (Capex) amounted to €316.4 million recorded in the fiscal year 2007/2008. Of this amount, approximately 55% were used for the network upgrade related to KDG’s Internet and Phone services. The comparable Capex in the previous year amounted to €268.8 million of which approximately 47% were spent for the network upgrade. The increase in Capex used for these activities underlines the Company’s commitment to expand its triple play business with more than 70% of the Company’s level 3 network upgraded at the end of the fiscal year 2007/2008.
Cash on hand of €15.5 million coupled with revolver capacity of €265.0 million yielded €280.5 million of liquidity on March 31, 2008.
Balance sheet
Total interest bearing indebtedness was at €1,965.6 million with net debt at €1,950.1 million on March 31, 2008 resulting in a net debt / EBITDA (€457.8 million) ratio of approximately 4.3 times.
Outlook and financial calendar
Based on the dynamic growth of KDG’s Internet and Phone products combined with the stable free-to-air and pay TV business, the Company’s management expects revenues to grow by 15-20% in the current fiscal year. At the same time, EBITDA should grow to over €550 million for 2008/2009. The Company’s guidance for the total number of Internet and Phone subscribers as per fiscal year end 2008/2009 (March 31, 2009) is above 750 thousand. Capex is expected to amount to approximately €400 million which includes the transition and one time reconnection of Orion Cable networks of around €40 million.
The IFRS financials for KDG’s first quarter of its fiscal year 2008/2009 as per June 30, 2008 will be released at the end of August 2008.
Please refer to our website www.kabeldeutschland.com for further information. The complete financial statements as of March 31, 2008 will be available on our website as of tomorrow.