Kabel Deutschland mit einer starken Dynamik im dritten Quartal des Geschäftsjahres 2011/2012

Beachten Sie: Die vollständige Fassung dieser Mitteilung ist nur in englischer Sprache verfügbar.

Kabel Deutschland Holding AG (‘Kabel Deutschland’, ‘KDH’ or ‘the Company’), Germany’s largest cable network operator, today released its consolidated financials for the third quarter and 9 months ended December 31, 2011 of its fiscal year ending March 31, 2012.

Highlights for the third quarter ended December 31, 2011:

• In the third quarter the Company added 67.9 thousand Internet and Phone subscribers, up 4.5% from September 30, 2011.
• Premium TV(1) RGUs(2) up by 9.5% or 133.8 thousand units quarter on quarter, of which 72.8 thousand units were DVR RGUs.
• Total blended monthly ARPU per subscriber(3) reached €14.49 – up by €0.99 or 7.3% from the prior year’s third quarter.
• Revenues increased by 5.4% to €427.3 million from €405.3 million in the third quarter of the prior fiscal year.
• Adjusted EBITDA (EBITDA)(4) grew by 8.0% to €200.0 million compared to €185.2 million in the previous year’s third quarter.
• The Company posted a quarterly net profit of €55.0 million, compared to a net loss of €36.5 million one year ago.
• Capital expenditures (Capex)(5) were €105.0 million (versus €85.9 million in the same period of the prior year).
• As of December 31, 2011 the Total Net Debt(6) to EBITDA ratio was 3.6 times (third quarter annualized EBITDA).
• KDH’s Management Board leaves the revenue, EBITDA, leverage and dividend guidance unchanged for the full fiscal year. The higher than expected demand for DVRs translates into higher success-based Capex. Therefore, Capex guidance for the full year was raised to €380.0 to €390.0 million, up from the higher end of the €355.0 to €370.0 million range previously.

Highlights for the 9 months ended December 31, 2011:

• Revenues increased by 5.6% to €1,257.4 million compared to €1,191.1 million in the 9 months of the previous fiscal year.
• EBITDA grew by 9.2% to €589.9 million compared to €540.4 million in the 9 months last fiscal year. EBITDA margin expanded to 46.9%, up from 45.4%.
• The Company posted a net profit of €99.9 million (€45.1 million net loss in the 9 months last fiscal year).
• Capex was €282.7 million compared to €226.0 million in the previous year’s 9 months, representing 22.5% of revenues.
• Operating free cash flow (EBITDA - Capex) amounted to €307.2 million (previous year: €314.4 million).

Operational Performance
Kabel Deutschland’s third quarter of fiscal year 2011/2012 was characterized by strong operational momentum paving the way for future topline growth.

In the third quarter, Internet and Phone subscriber growth regained traction and increased by 67.9 thousand subscribers, compared to 61.1 thousand net additions in the second and 51.5 thousand in the first quarter, respectively. Stronger net adds resulted in a higher number of subscribers on promotions and thus, fixed ARPU decreased by €0.06 quarter on quarter. At the same time, variable ARPU declined by €0.10 on a quarterly basis. These effects are reflected in a moderate decline of the total blended monthly Internet and Phone ARPU per subscriber(7) which decreased by €0.16 to €28.05, from €28.21 in the second quarter.

Since summer 2011, the Company has seen strongly rising demand for its Premium TV services. This trend continued in the third quarter with a quarterly increase of Premium TV RGUs by 9.5% or 133.8 thousand units. Thereof, the DVR product accounted for 72.8 thousand units representing the strongest absolute growth ever. In addition, demand for Kabel Deutschland’s HD Private offering, launched on October 5, 2011, was high with 270.6 thousand subscribers receiving HD Private on December 31, 2011, and driving digital usage in the Company’s customer base. The high demand for these TV services led to an increase of the total blended monthly TV ARPU per subscriber(8) to €9.86, up from €9.80 in the previous quarter.

Further to this, the Company’s direct subscriber base was up 9.6 thousand quarter on quarter at 7,500.9 thousand as of December 31, 2011 (7,491.3 thousand as of September 30, 2011). Total unique subscribers decreased by 38.9 thousand to 8,651.4 thousand quarter on quarter, predominantly resulting from disconnects by Level 4 operator Tele Columbus.

In total, the Company reported 13.3 million RGUs on December 31, 2011, up 5.7% or 721.0 thousand from previous year. The continuous upselling of New Services(9) into the existing subscriber base lifted the RGU per subscriber ratio to 1.54 from 1.50 on September 30, 2011, and 1.43 one year ago. The upselling trend is reflected by the steady increase of the total blended monthly ARPU per subscriber which reached €14.49 in the third quarter – up by €0.99 or 7.3% year on year.

Financial results
In the third quarter, revenues increased by 5.4% to €427.3 million compared to €405.3 million in the third quarter of the prior fiscal year. TV revenues increased by 1.7% to €289.9 million; Internet and Phone revenues grew by 14.2% year on year to €137.4 million.

Third quarter EBITDA grew year on year from €185.2 million to €200.0 million (up 8.0%) including an annual reimbursement of €11.0 million related to its Service Level Agreements with Deutsche Telekom (accounted for in the respective fourth quarter of previous fiscal years). EBITDA margin(10) climbed to 46.8%, up from 45.7% in the prior year’s third quarter. The strong pull from customers for HD Private resulted in higher call volume in customer service centers and thus, higher selling expenses.

Furthermore, Capex was €105.0 million in the quarter ended December 31, 2011. Success-based Capex accounted for €72.5 million representing an increase of 26.9% or €15.4 million year on year, driven by the stronger than expected demand for the Company’s DVR product.

In the third quarter of the current fiscal year, operating free cash flow (EBITDA - Capex) amounted to €95.0 million which translates into an operating free cash flow margin of 22.2%.

The Company posted a quarterly net profit of €55.0 million representing earnings per share of €0.62 (compared to €36.5 million net loss in the same period last fiscal year).

Cash on hand of €14.5 million coupled with unused revolver capacity of €255.0 million provided €269.5 million of liquidity as of December 31, 2011. Total net debt declined to €2,865.5 million as of December 31, 2011 (prior year’s third quarter: €2,903.1 million). The Net Debt to EBITDA leverage ratio decreased from 3.9 times one year ago to 3.6 times (third quarter annualized), approaching the Company’s leverage target of just below 3.5 times as of March 31, 2012.

Refinancing and Extension
In January 2012 Kabel Deutschland raised US$750 million of a new senior secured floating rate loan tranche with a maturity of February 1, 2019 (issued at 98.5). The new term loan F (TLF), which ranks pari passu with existing credit facilities and senior secured notes, priced at 325bps over Libor with a Libor floor of 100bps. The US$ term loan (with Libor floor) was FX hedged into Euro for five years which translates into a margin of Euribor plus 388bps.

On January 23, 2012, Kabel Deutschland requested its existing TLA1, TLA2 and TLC1 lenders to roll their maturities from March 2014 to March 2017. The extension was successfully completed on February 1, 2012. €782.0 million were extended by the lenders to the new term loan G (TLG).

On February 9, 2012, Kabel Deutschland prepaid €557 million of the existing 2012-2014 maturities utilising the proceeds of the recent US$750 million TLF. As a result of the extension and prepayment, Kabel Deutschland reduced its 2014 maturities to €71 million in the TLC1 facility. The Company’s maturity profile was extended by 2 years to almost 6 years with no significant maturities becoming due before December 2016.

Outlook
Kabel Deutschland’s Management Board today updated the guidance for the full fiscal year 2011/2012 as follows:

• Revenue growth at the low end of the range of 6.25 to 6.75% (unchanged),
• EBITDA in the range of €790.0 to €800.0 million (unchanged),
• Capex of €380.0 to €390.0 million, up from the higher end of €355.0 to €370.0 million, driven by success-based Capex for the higher than expected sales of DVRs,
• Leverage of just below 3.5 times by the end of the fiscal year (unchanged),
• Dividend for the fiscal year ending on March 31, 2012 of €1.50 per share or above (unchanged).

Recent developments

• On October 13, 2011, Kabel Deutschland announced that Annet Aris, Catherine Mühlemann, Paul Stodden and Torsten Winkler were designated as new members of KDH’s Supervisory Board as of November 1, 2011. They succeed the Supervisory Board members John Hahn, Biswajit Subramanian and Robert Sudo (representing Providence Equity Partners) as well as Ian West.
• On November 3, 2011, KDH increased the market reach of DOCSIS 3.0 services to 8.3 million households, representing approximately 66% of its upgraded footprint. Today it stands at approximately 72%.
• On November 14, 2011, Fitch raised the Long-term Issuer Default Rating of Kabel Deutschland Vertrieb und Service GmbH to ‘BB’ with outlook stable from ‘BB-‘ outlook positive. At the same time, Fitch affirmed the Company’s Senior Secured Debt Rating at ‘BB+’.
• On December 9, 2011, Kabel Deutschland completed the share buyback program commenced on September 19, 2011 with a volume of €60 million. In total, around 1.48 million shares were acquired in the open market for an average purchase price of €40.62. This relates to approximately 1.6% of the share capital. The acquired shares will be cancelled reducing the number of shares from 90.0 to approximately 88.5 million and the share capital, respectively.

Additional information
The Company will host a conference call this afternoon at 4.00 pm CET for capital market participants. Please refer to the website www.kabeldeutschland.com for further information.

The financials for Kabel Deutschland Holding AG’s fourth quarter and fiscal year ending on March 31, 2011 will be released on June 14, 2012.

Please see the PDF below for the full IR Release.