Kabel Deutschland Presents Record Results
- Revenue increase of 9.5% to € 1.197 billion
- Operating results (EBITDA(1)) with € 457.8 million and increase greater than expected of almost 20%
- Share of premium products (2) by all customer subscriptions (3) grows over-proportionately
- Total blended ARPU per subscriber rises in the last quarter of the fiscal year to € 10.03 (previous year’s same quarter € 8.63)
- Outlook 2008/2009: € 400 million Capex, 15 – 20% increase in revenues and minimum € 550 million EBITDA
In the fiscal year 2007/2008 (ended March 31, 2008) Kabel Deutschland (KDG) has attained record results in practically all areas and could thus further expand its leading market position. "The present numbers impressively document the successful transformation of the company from the former "one product supplier" to Germany's largest triple play company. Our strategy turns out to be successful, our investments are paying off. We will continue to pursue this path," says Dr. Adrian v. Hammerstein, Chief Executive Officer of the company.
EBITDA at record level
Compared to the prior year, revenues at Kabel Deutschland rose by 9.5 percent to € 1.197 billion (from € 1,093 billion). The expansion of the customer base for premium products with higher ARPUs led to record results for an EBITDA of € 457.8 million, a plus of 19.7% (€ 382.5 million). The net results for the fiscal year 2007/2008 improved from minus € 99.3 million in the previous year to minus € 33.8 million. In contrast to net results, diverse financing structures as well as write-off modalities remain not taken into account for the EBITDA comparison. With the EBITDA comparison, the operative performance of a company can thus be better evaluated and compared with other companies in Germany and abroad.
The so called premium products, consisting of digital TV offerings, Internet and telephony, are increasingly stronger contributors to the long term corporate success of Kabel Deutschland . Their share of the entire customer subscriptions of KDG now lies at 23% (prior year 15%).
Investments of € 316.4 million (4)
The considerable past investments, amounting to about € 316.4 million alone in the fiscal year 2007/2008, have paid off. The company has substantially invested in upgrading its cable network for Internet and telephony in the reporting year. On March 31, 2008 more than 70% of connectable households were equipped with return channel capability. The number of marketable homes for the same time period amounted to about 6.6 million, which presumably will increase to about 8 to 9 million marketable homes by the end of the fiscal year 2008/2009.
Internet and telephone products increasingly gain in significance
The success of the Internet and telephone offerings of Kabel Deutschland is continually confirmed by increasing subscriber and RGU numbers: for the end of the fiscal year 2007/2008 the number of subscribers for cable Internet and phone amounted to 421,000 (previous year 190,000). In the beginning of July 2008, Kabel Deutschland could already welcome the 500,000th Internet and telephone customer. The bulk of these customers subscribed to the attractive bundle offerings. About 80% of the new customers decided to book both the Internet as well as the telephone connection with Kabel Deutschland. By the end of the current fiscal year 2008/2009, the number of Internet and telephone customers is expected to increase to more than 750,000.
Associated with the rising number of customers for Internet and telephone products, the corresponding RGU numbers have developed in a very gratifying way. Compared to the preceding fiscal year, the Company could boost RGUs for cable Internet to 393,500 and for cable telephone to 361,000. In total this corresponds to a growth of 423,600 RGUs and a growth rate of 128 percent compared to the previous year's value.
Awards for best Internet provider and good customer service
Winning the "eco Award 2008", Kabel Deutschland was nominated best Internet provider for private customers in Germany. 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) compliments Kabel Deutschland in June on "good service and outstanding tariffs" and elects KDG 'best Internet provider 2008', too.
Digitization making progress
Kabel Deutschland has significantly advanced digitization in its cable households: on March 31, 2008 the number of digital TV subscriptions increased to 1.7 million (previous year 1.2 million) including the 778,500 KDG pay TV RGUs. A growth of 88,415 RGUs (12.8% increase compared to prior year) was attained. Considering the approximately 800,000 Premiere cable subscribers in the KDG regions (and adjusted for overlappings), more than 20% of the KDG cable households in the meantime receive their TV signal in digital quality. This represents about 1.8 million digital cable TV households.
In total, Kabel Deutschland reported about 10.6 million RGUs with cable based products for March 31, 2008; of these about 9.8 million RGUs were allotted to TV products; for cable Internet & phone in total 754,500. The comparison of total RGUs as per March 31, 2008 with the previous year’s number corresponds to an increase of 2.2%. Moreover the share of subscribers who have booked more than one product from Kabel Deutschland has increased. On an average, a Kabel Deutschland subscriber booked 1.19 products; in the previous year it was1.12.
"Our Internet and telephone products are well accepted by the customer. We offer an outstanding cost benefit relationship and thereby ensure for genuine infrastructure competition in the market," says v. Hammerstein on the results submitted for the fiscal year 2007/2008.
Financial outlook
In order to support continued growth in the current reporting year, total investments will presumably increase to about € 400 million. Due to the increased expenditures connected with the acquisition of Orion Cable Networks, especially amortization, the company does not expect positive net results in the course of the 2008/2009 fiscal year. The sales will increase by about 15 to 20% compared to the previous year; EBITDA should simultaneously increase by about 20 percent to a value of at least € 550 million.