Growth and high investments in new business areas
Kabel Deutschland is a company with continuous growth: 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%.
Strong growth at digital TV packages, internet and telephony
Along with the Kabel Internet and Kabel Phone business, the number of RGUs during the reporting period has more than doubled to 754,500 by March 31, 2008 (previous year: 331,000).
Kabel Deutschland has also achieved significant growth in marketing the digital pay TV packages Kabel Digital Home and Kabel Digital International. The number of RGUs in this sector rose to 778,500 by March 31, 2008 compared to 692,000 on March 31, 2007. That corresponds to a growth rate of 12.8 percent.
Average revenue per unit rises continuously
The obligation in new business areas, characterized by strong revenues, also led to a rise in average revenue per unit (ARPU) to € 8.32 in fiscal year 2007/2008, about ten per cent above last year’s value (€7.64).
Also the ongoing success in marketing of the new business areas induced rising subscription based revenues as well as total revenues of Kabel Deutschland. The company’s revenues were at € 1.197 billion in fiscal year 2007 / 2008, almost ten per cent more than in the previous year (€ 1.093 billion).
Progress in upgrading the cable network
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.
EBITDA at record level
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.
Premium products are increasingly stronger contributors to the corporate success
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%).
Increasing investments and higher EBITDA expected
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.