As the markets slowly begin to recover from the credit crunch, it is only natural that the private equity owners of many of Europe’s Pay TV operators will look to the public markets to either go public, partially or fully, or to reschedule onerous debt into more pleasant and long term debt.
While we bill Kabel Deutschland as probably the largest of these European cable operators, the merging at the beginning of 2008 of Casema, @home, Essent Kabelcom and Multikabel in the Netherlands, initially into an entity called Zesko, which subsequently changed its name to Ziggo, is perhaps one of the most dominant. And its figures show that it is still on track to enter public ownership.
Despite the Netherlands also hosting one of the most successful Liberty Global cable operations with around 2 million TV customers, Ziggo remains significantly ahead, with 3.1 million TV connected homes and 7.1 million RGUs. And while Kabel Deutschland was filling the German headlines with news of its recent IPO, Ziggo has been quietly lining up all manner of cheaper debt options, mostly window dressing for its own planned IPO later this year.
With that in mind it produced full year revenues up just 3.7% to €1.28 billion and RGUs (revenue generating units) up by 9% to 7.1 million, while it rolled out 120 Mbps EuroDocsis 3.0 modems and says these will reach its entire service area over the coming year. It has also begun adding Common Interface modules, which separate conditional access from set tops. Ziggo says it has begun aggressively marketing triple play bundles and also said that in the quarter there was a significant improvement in its customer satisfaction ratings. However total TV customer homes fell by about 100,000 during the period despite more RGUs being shipped.
The Private equity groups Warburg Pincus and Cinven own the bulk of the shares and have recently been looking for lender approval to replace junior loans with high-yield bonds pushed further out and has been telling Netherlands investors that it might opt for an IPO to retire debt later this year.
Ziggo CEO Bernard Dijkhuizen said, ‘2009 was a busy and productive year for Ziggo that positions us well for future growth. Many of our key initiatives have come to fruition and we were successful in bringing a number of innovations to market. Our customer satisfaction improved as a result of our intensive focus on the quality of our products and services, and we will continue to focus on enhancing our customers’ experience in 2010.’
However the company spent a flat €213 million, slightly up from last year, on Capex, hardly transformative. But somehow it managed to generate €434 million in cash flow, compared to €325 million last year.
Digital TV subscribers are now approaching about half of its TV base at 1.55 million and broadband customers have jumped from 1.37 million to 1.5 million since last year. This is probably behind many of its larger rivals across Western Europe, but not UPC in the Netherlands, which would have to install another 250,000 digital TV homes to catch up with Ziggo. Customers who buy bundles of products from Ziggo have gone up dramatically from 260,000 to 675,000.