Oct 17, 2017 7:30 AM CET
Third quarter summary
Comment from Anders Nilsson, CEO, Com Hem Group:
Focus on customer satisfaction results in multiyear record volumes in the Com Hem Segment
In the Com Hem Segment we saw the strongest quarterly intake of unique customers, broadband RGUs and digital TV RGUs in several years. Our customer base grew by 11,000 in the segment and the number of RGUs increased by 14,000 with very strong growth in both broadband and digital TV, up 12,000 and 6,000 RGUs, respectively. Our TiVo base grew by 4,000 customers, (now 40% of our DTV base). The number of telephony RGUs continued to decline, down 3,000, somewhat lower than in previous periods. The blended consumer ARPU declined by SEK 3 (0.8%) sequentially. The decline in ARPU is attributed to high volume intake with many customers on introductory discounts as well as a dilution of digital TV ARPU driven by increased sales efforts of broadband services bundled with lower tier TV packages. We continue to see growth in broadband ARPU on the back of price adjustments and migration into higher speed tiers. Churn of 12.8% was 0.4 percentage points higher than Q2 2017. Within B2B we saw a decline in revenue, down 15.1% (SEK 12m) compared to Q3 2016, as we focus on the OnNet broadband business, which grew by 14.9% compared to the third quarter last year. We continue efforts to improve the mix between high margin OnNet business and low margin OffNet business and expect continued pressure on revenue throughout 2017 while underlying EBITDA and operating free cash flow continue to improve.
Addressable households reach 2.7m
We made further progress in our network expansion programme with 100,000 addressable households added in the quarter to a total of 700,000 since the start of the expansion, 250,000 of which are unique to Boxer. Since the start of the footprint expansion the Group has increased its footprint by 35% from 2.0m to 2.7m addressable households. We remain confident that we can reach our target of at least 3.0m households by 2020, which constitutes an increase of 50% from before the SDU expansion and the Boxer acquisition.
Deployment of our own fibre in selected trial areas continued successfully during the quarter. Given the potential change in regulation, we need more time to further evaluate whether it is more beneficial to increase focus on our capex light approach of connecting to third party infrastructure, rather than scaling up new build beyond the trial areas. We are cautiously optimistic that potential changes in the regulatory environment next year could improve both the scope and the economics of the expansion as closed networks may become accessible and open networks which are only accessible through a communications operator today could become open for local access (unbundling). Since this could potentially give Com Hem access to all SDU households it would be a major tailwind to the scope and economics of the expansion.
Further improvement in the Boxer Segment
The positive momentum that we saw last quarter in Boxer continued with an additional 5,000 broadband RGUs added. Churn decreased by 0.6 percentage points to 14.4% but as expected we still see a decline in unique customers and total RGUs, down by 9,000, and 6,000, respectively, in-line with the previous quarter. In the fourth quarter we expect a temporary increase in churn due to migration of the 700 Mhz band as well as seasonal effects of both competitor fibre rollout and expiration of binding periods across the customer base.
Boxer can now reach 1,000,000 addressable households including all of the Com Hem Segment’s current fibre footprint as well as 250,000 SDU households unique to Boxer. While we are able to grow Boxer’s profits even with declining revenue, we hope to be able to turn the company into RGU growth and stop the revenue decline in the coming years as the Boxer brand gets further traction as a broadband-led TV operator across the newly acquired SDU footprint. This would constitute a success beyond our initial expectations.
Significantly increased dividend in 2018
Due to increased confidence in our ability to continue generating strong cash flow, the Board intends to propose a change to the mix of the shareholder remuneration by increasing the cash dividend by 50 percent from SEK 4.00 per share to SEK 6.00 per share to be paid out semi-annually in March and September, 2018. Alongside the cash dividend we intend to continue to do buybacks of some SEK 40m-50m per month in 2018. The Com Hem Group remains committed to distribute all excess cash to its shareholders while maintaining leverage within the target interval of 3.5-4.0 net debt / underlying EBITDA LTM.
Focus for the rest of 2017 will be to continue progress on the projects we have initiated over the last year. In the Com Hem Segment we will continue initiatives to improve customer satisfaction such as preparing for the rollout of DOCSIS 3.1, which will allow higher speeds and the launch of our new TV hub. In Boxer we will put all our efforts into increasing the broadband penetration in the new fibre footprint while executing on the integration process. We will continue expanding our footprint toward the 3.0m target which will provide the Com Hem Group with room to grow at this pace for many years to come and in addition we continue the work to attain an MVNO (mobile virtual network operator) agreement to prepare the business for a converged market.
Notes to the editors:
You will find the complete report with tables in the attached PDF or at: http://www.comhemgroup.se/en/investors/financial-reports-presentations/
Conference call on October 17
Management will host a conference call for the financial community at 10:00 am CET today. The presentation will be held in English and the presentation material can be accessed on www.comhemgroup.com. An on-demand version is also available after the presentation.
Link to webcast: https://comhemgroup.videosync.fi/20171017_q3
Conference call dial-in numbers:
Sweden: +46 (0)8 5052 0110
UK: +44 (0)20 7162 0077
USA: +1 646 851 2407
To ensure that you are connected to the conference call, please dial in 10 minutes ahead of the conference call to register your attendance.
For queries, please contact:
Marcus Lindberg, Investor Relations Manager
Tel: +46(0)734 39 25 40
Petra von Rohr, Director IR & Corporate Communications
Tel: +46(0)734 39 06 54
Fredrik Hallstan, Head of PR
Tel: +46(0)761 15 38 30
This information is information that Com Hem Holding AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 07:30 CET on October 17, 2017.
About Com Hem Group
Com Hem Group offers broadband, TV, play and telephony services to Swedish households and companies. Our powerful and future-proofed network with speeds up to 1 Gbit/s, covers half of the country’s households, making the Com Hem Group an important driver of creating a digital Sweden. We bring our 1.45 million customers the largest range of digital-TV channels and play services via set top boxes as well as on-the-go for tablets and smartphones. The company was founded in 1983 and has approximately 1,100 employees. Com Hem Group is headquartered in Stockholm and operates through four subsidiaries; Com Hem AB, Boxer TV Access AB, Phonera Företag AB and iTUX Communication AB. In 2016, Group sales totalled SEK 5,665 million. Since 2014 the Com Hem share is listed on Nasdaq Stockholm. www.comhemgroup.com.