Ziggo, Strong growth of internet and triple play. Broadband internet: 46,000 net adds in Q3.

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Beleggingsadvies 18/10/2013 08:02
. Successful innovations and increased efforts in sales and customer retention result in strong growth of net adds for internet, telephony and triple play
· Roll-out of popular WifiSpots and increased internet speeds support strong growth of internet subscribers
· Over 1 million WifiSpots activated since launch with number of users and data offloaded growing every day
· Ziggo Mobile launched successfully on September 16 with efficient MVNO and offload model
· Churn in customer base shows a decline compared to previous quarters
· Continued organic revenue growth for B2B of 7.5% y-o-y

Operational highlights Q3 2013
· All-in-1 bundle subscribers up 37,000 in Q3, resulting in 2.5% q-o-q growth and 8.2% y-o-y growth; All-in-1 bundle penetration reaches 53.9% of our consumer customer base
· Strong growth in internet subscribers of 46,000 in Q3, representing 2.5% q-o-q growth and 6.3% y-o-y growth
· Telephony usage revenue stabilized at 0.3% y-o-y; up 1.8% excl. FTA rate reductions in 2012 and 2013
· Revenues for digital pay TV down 2.7% y-o-y with loss of pay-TV subscribers partially offset by high growth of VoD transactions, up 43% y-o-y
· B2B achieves continued growth with 4,000 net adds for its business bundles

Financial highlights Q3 2013
· Revenue up 2.9% y-o-y to €391.1 million; organic revenue excl. set-top box sales and 'revenue from other sources' up 0.9%
· Adjusted EBITDA €220.4 million, down 2.9% y-o-y from the record quarter Q3 2012.
Excluding Esprit Telecom, EBITDA down 3.6%
· Free cash flow €136.3 million, down 25.7% y-o-y due to higher capital expenditure and increased spending on sales and retention
· Net profit up 19.4% to €86.5 million, from €72.4 million in Q3 2012
· Earnings per share increased by 19.4% y-o-y to €0.43
· Leverage ratio back up to 3.55x following payment of dividend, in line with our stated leverage target of around 3.50x

CEO Bernard Dijkhuizen:
"We recorded a very strong quarter with the highest sequential growth in net adds since 2010. The growth in customers subscribing to internet and All-in-1 bundles doubled compared to the previous quarter. Our investments in sales, focus on customer retention and the successful roll-out of the highly popular WifiSpots all contributed to this achievement in the third quarter, which normally is a somewhat softer quarter due to seasonality.

Customer retention in particular has been the center of our focus. We successfully developed and launched new campaigns and adopted a more targeted marketing approach, on the one hand, while on the other we increased the attractiveness of our products. The internet speed increase for our triple play bundles and broadband internet products (today as high as 150Mbps) and, more importantly, the successful roll-out of WifiSpots, have contributed to a strong increase in the number of subscribers. Since its launch we have activated over 1 million WifiSpots, which quickly gained popularity as is demonstrated by an increasing number of users and data offloaded every day. We will continue to expand the coverage by adding more Wifispots in our footprint.

Another important step in Q3 was the launch of Ziggo Mobile, a cornerstone for our converged strategy aimed at making content and information available anywhere at any time. Using our MVNO agreement, we launched a simple and straightforward Sim Only proposition, which is attractively positioned in terms of price and value for money and is currently exclusively available for existing Ziggo customers. It comprises a rich bundle of call minutes/SMS and mobile data, supplemented by additional and unlimited access to 1 million WifiSpots. By leveraging our existing assets, and based on our strong position and solid reputation in the Dutch market, we believe Ziggo is very well positioned to build a sound mobile franchise as a basis for offering fully converged services.

Even though this quarter was very successful in terms of growth of RGUs, we believe that for the foreseeable future the market will remain as competitive as we have seen in the last 6 quarters. At the same time, the high single digit All-in-1 bundle and broadband internet RGU growth in Q3, strong momentum for B2B in the SoHo- and SME-market and the successful launch of Ziggo Mobile will position us strongly for 2014".

Outlook
We reiterate our previous revenue and EBITDA guidance for the full year 2013. Organic revenue growth (excl. 'revenues from other sources') is expected to be around 1%, whilst adjusted EBITDA (excl. acquisitions) is expected to be in line with last year, including increased investment in sales and retention and additional campaigns supporting our mobile launch.

Following the success of our campaigns in Q3, capital expenditure for 2013 will be around €340 million, the high-end of the €330-€340 million range previously given. This includes increased supply of interactive set-top boxes on the back of success driven sales- and retention campaigns as well as higher demand for Wifi-enabled modems and investments related to the launch of Ziggo Mobile.

In January 2014, Ziggo intends to propose the final dividend for the 2013 financial year. This final dividend is subject to shareholder approval and refinancing of the existing senior unsecured notes that are callable as of May 2014.

Important dates
Ziggo expects to publish its coming quarterly results on the following dates:
FY and Q4 2013 January 23, 2014
Q1 2014 April 16, 2014
Q2 2014 July 17, 2014
Q3 2014 October 16, 2014

The 2014 AGM is scheduled for April 17, 2014.






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