Kabel Deutschland berichtet 8,3% Umsatzwachstum im zweiten Quartal

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Kabel Deutschland Holding AG (‘Kabel Deutschland’, ‘KDH’ or ‘the Company’), Germany’s largest cable network operator, today released its consolidated financials for the second quarter and six months of its fiscal year 2012/13 ending March 31, 2013.

Highlights for the second quarter ended September 30, 2012:

• Revenues increased by 8.3% to €453 million from €418 million in the second quarter of previous fiscal year
  • Broadband RGUs(1) grew by 74 thousand quarter on quarter, the strongest growth of net additions since the quarter ending March 2011. Year on year Internet RGUs increased by 280 thousand or 20.3%
  • The Company added 81 thousand Premium TV(2) RGUs versus the previous quarter; year on year Premium TV RGUs increased by 448 thousand or 31.7%
  • RGU per subscriber ratio is up from 1.50 to 1.63 over past 12 months
  • Total blended ARPU per subscriber(3) for the second quarter reached €15.72 – up by €1.47 or 10.3% from the prior year
• Adjusted EBITDA (EBITDA)(4) grew by 8.5% to €213 million compared to €196 million in the last fiscal year
• The Company spent Capex(5) of €115 million or 25.5% of revenues; operating free cash flow(6) (EBITDA - Capex) amounted to €98 million, up from €96 million last year
• The Company posted a net profit of €61 million or €0.69 per share (versus €36 million or €0.40 last year)
• As of September 30, 2012, net leverage(7) stands at 3.3 times, down from 3.7 times one year ago

Highlights for the six months ended September 30, 2012:

• Revenues increased by 8.0% to €897 million compared to €830 million in the first six months of the previous year
• EBITDA grew by 8.4% to €423 million versus €390 million in the same period last year. EBITDA margin(13) was 47.1% (previous year: 47.0%)
• Capex was €231 million versus €178 million in the previous year’s six months, representing 25.8% of revenues
• Operating free cash flow amounted to €191 million (previous year: €212 million)
• The Company posted a net profit of €127 million for the six months ended September 30, 2012 (versus €45 million net profit in the same period last fiscal year), representing an EPS of €1.43 (versus €0.50 last year)

Operational Performance
In the second quarter of fiscal year 2012/13, Kabel Deutschland continued along its growth path with increasing momentum in the Internet & Phone segment.

Internet RGUs grew by 74 thousand quarter on quarter to 1,657 thousand. Year on year, the Company added 280 thousand new broadband RGUs. Now more than 35% of the Company’s new Internet customers opt for the 100 Mbit/s product where available; one year earlier the share was around 20%.

The Company added 71 thousand new Internet & Phone subscribers in the quarter; compared to 61 thousand net adds in the second quarter of last fiscal year. As of September 30, 2012 the Company recorded 1,770 thousand Internet & Phone subscribers, up by 275 thousand or 18.4% year on year.

The total blended Internet & Phone ARPU for the quarter grew to €28.51, up €0.30 year on year. Quarter on quarter the total blended Internet & Phone ARPU increased by €0.07 from €28.44. The variable ARPU component for the quarter declined to €4.60 (prior quarter: €4.73), predominantly caused by the change in customers’ calling behaviour, but more than offset by an increase of the fixed ARPU component to €23.91 from €23.72 in the previous quarter.

As of September 30, 2012 Kabel Deutschland accounted for 1,863 thousand Premium TV RGUs, representing an annual growth of 31.7%. In the second quarter, Premium TV RGUs growth remained solid with 81 thousand units (versus 98 thousand units in the second quarter of the prior fiscal year). Thereof, DVRs accounted for 47 thousand and Pay TV for 34 thousand RGUs. After slower summer months with moderate marketing efforts, Premium TV sales have picked up strongly again since September. In addition, at the end of September, Kabel Deutschland reports 859 thousand smartcards activated for its HD Private(14) product.

As a result of growing Premium TV penetration, the total blended TV ARPU per subscriber increased to €10.32 in the second quarter, up by €0.52 or 5.3% from €9.80 in the previous year’s second quarter.

With 7,551 thousand subscribers, the direct subscriber base increased by 60 thousand year on year and 5 thousand quarter on quarter as of September 30, 2012. The number of total unique subscribers decreased by 39 thousand quarter on quarter to 8,498 thousand (June 30, 2012: 8,537 thousand), mainly caused by disconnects from Level 4 operators (minus 44 thousand indirect subscribers).

Total RGUs rose by 6.3% or 820 thousand from the previous year and reached 13.9 million RGUs on September 30, 2012, with New Services RGUs having grown by approximately 1 million. The constant increase of subscribers taking more than one of Kabel Deutschland’s products lifted the RGU per subscriber ratio to 1.63 from 1.50 one year ago.

The higher penetration of the customer base with New Services led to an increase of the total blended ARPU per subscriber to €15.72 in the second quarter of the current fiscal year – up by €1.47 or 10.3% year on year or up by €0.34 from the first quarter.

Financial Results
In the second quarter of the current fiscal year revenue growth accelerated to 8.3% versus 7.7% in the first quarter. In comparison, in the second quarter of last year, the annual growth rate was 5.5%. In the second quarter, TV revenues increased by 3.6% to €296 million year on year, while Internet & Phone revenues grew by 18.7% to €156 million. Total revenues added up to €453 million.

EBITDA for the second quarter stood at €213 million compared to €196 million in the previous year’s second quarter (up 8.5%). EBITDA margin was 47.1%, versus 47.0% in the prior year’s second quarter.

The Company spent €115 million on Capex in the second quarter, of which 66.2% or €76 million were success-based.

In the September quarter, the Company generated €98 million of operating free cash flow, which translates into an operating free cash flow margin of 21.6%.

The Company posted a net profit of €61 million, representing earnings per share of €0.69 (versus €36 million net profit and an EPS of €0.40 in the same period last fiscal year).

Following the issuance of €600 million of Senior Secured and Unsecured Notes during the first six months, cash on hand was €662 million. Taking into account unused revolver capacity of €324 million, the Company had liquidity of €986 million. Total net debt declined to €2,762 million as of September 30, 2012 (previous year: €2,853 million). The net debt to EBITDA leverage ratio (LTM) decreased from 3.7 times one year ago to 3.3 times, being within the Company’s leverage target range of 3.0 to 3.5 times.

Business outlook (stand-alone without considering the Tele Columbus acquisition)
The Management of Kabel Deutschland updates the guidance for the current fiscal year 2012/13 as follows:

• Annual revenue growth between 7.5 and 8.5% (unchanged),
• Adjusted EBITDA in the range of €855 to €870 million (unchanged),
• Taking current growth trajectory into account, Capex to sales ratio is now expected at approximately 26% (updated),
• Leverage within the target range of 3.0 to 3.5 times Net Debt to EBITDA by March 2013 (unchanged).

For fiscal year 2012/13 the Management intends to propose a dividend at the same level as for fiscal year 2011/12 (€1.50 per share). In light of the Tele Columbus acquisition, however, this is subject to having clear visibility on being in or close to the target leverage range after dividend payment in autumn 2013 (unchanged).

Recent developments

• On July 23, 2012, Kabel Deutschland successfully placed an additional nominal €200 million of its existing Senior Secured Notes due 2018 initially issued in June 2011 and carrying a coupon of 6.5%. The €200 million tap was placed at 106.75%. The proceeds of €213.5 million replaced the remaining €200 million bridge financing for the acquisition of Tele Columbus which was then terminated accordingly.
• In July 2012, the arbitration court issued a ruling on the 2008 Tele Columbus acquisition purchase price litigation, resulting in a purchase price adjustment in favor of KDVS to a large extent. It was agreed to prolong the time limit for the application to annul the decision and not to apply for declaration of enforceability with regard to the currently intended Tele Columbus acquisition.
• On August 2, 2012, Kabel Deutschland acquired the operations of one of its regional suppliers of technical maintenance and installation services in Bavaria for an aggregate investment of approximately €3 million. The transaction was closed immediately.
• Starting end of August 2012, Kabel Deutschland included five RTL HD channels in its HD Private offer.
• On August 31, 2012, Kabel Deutschland filed the Tele Columbus acquisition with the Federal Cartel Office. At the end of September 2012, the German Federal Cartel Office declared to initiate formal main examination proceedings (so-called second phase).
• At the beginning of October 2012, Kabel Deutschland announced a sales cooperation with mobilcom-debitel for all KD products in 350 shops.
• Following the AGM on October 11, 2012, Kabel Deutschland paid dividends of €1.50 per share for the fiscal year 2011/12.
• On October 19, 2012, Kabel Deutschland launched its public WiFi pilot project in Berlin in cooperation with the Media Authority Berlin-Brandenburg.
• With effect from November 1, 2012, Kabel Deutschland bundled its customer and technical service centers in Kabel Deutschland Kundenbetreuung GmbH (KDK), a wholly-owned subsidiary of KDVS GmbH.

Additional information
The Company will host a conference call this afternoon at 4.00 pm CET for capital market participants.

The full financial report for the second quarter and six months of fiscal year 2012/13 ended September 30, 2012 is available for download here.

The financials for Kabel Deutschland Holding AG’s third quarter and nine months of the fiscal year ending on March 31, 2013 will be released on February 20, 2013.

Please see the PDF below for the full IR Release.