Archive notice: This article was originally published on July 27, 2007. Links and embedded videos are preserved as part of the historical record.
In the business with Kabel Internet, the fast Internet access via the TV cable, as well as Kabel Phone, the telephone connection from Kabel Deutschland, the number of RGUs more than tripled within the reporting period to 331,000 (previous year 101,000). At the same time, Kabel Deutschland is continuing to build up the marketable base. In the 2006/2007 fiscal year alone, the company upgraded 4.6 million connectable households, primarily in northern Germany and Bavaria, for the provision of Internet and telephony. As of March 31, 2007, Kabel Deutschland was thus able to reach a total of more than 8.6 million connectable households with its triple-play products – television, Internet and telephony from a single source. This corresponds to a share of 56 percent. The upgrading of the cable networks in Lower Saxony will add another two million households in September of this year. By the end of the 2008/2009 fiscal year (March 31, 2009), Kabel Internet and Kabel Phone are to be available to 90 percent of connectable households in the Kabel Deutschland area.
“The business with broadband Internet and telephone connections has top priority for Kabel Deutschland. With the package of a double flat rate and 6 Mbit/s download speed for 29.90 euros, we have clearly positioned ourselves as the price leader. Added to this is a new marketing offensive with a whole bundle of measures. In this way, we win 20 to 30 percent of new customers and switchers among the marketable households”, Dr. Adrian v. Hammerstein, Chairman of the Management Board of Kabel Deutschland, comments on the development in this business area. “Within three to four years, we consider a market share of up to 20 percent among our marketable households achievable.”
Kabel Deutschland was also able to achieve strong growth in the marketing of the digital subscription programme packages Kabel Digital Home and Kabel Digital International. The number of RGUs in this area rose to 692,000 on March 31, 2007, compared with 479,000 on March 31, 2006. This corresponds to a growth rate of 44 percent. The number of cable-connection RGUs fell slightly as expected in the 2006/2007 fiscal year to 9.320 million on March 31, 2007 (previous year 9.597 million). Nevertheless, revenue in the cable-connection business grew by just under one percent.
As a result of the good marketing successes with the new products, Kabel Deutschland’s total revenue rose by 8 percent from 1.012 billion euros in the previous year to 1.093 billion euros in the 2006/2007 fiscal year. Subscription revenues increased from 871.3 million euros to 949.5 million euros in the same period. Average monthly revenue per customer (ARPU) increased by 5 percent from 7.30 euros in 2005/2006 to 7.64 euros in 2006/2007.
In order to accelerate network expansion for Internet and telephony and customer acquisition, Kabel Deutschland invested massively in the past fiscal year. Investments rose from 152 million euros in the 2005/2006 fiscal year to 281 million euros in 2006/2007. Earnings before interest, taxes, depreciation and amortization (EBITDA as adjusted*) fell only slightly to 382.5 million euros despite the high investments and start-up losses from the Internet and telephony business (previous year: 401.3 million euros). This corresponds to an EBITDA margin of 35.0 percent (previous year: 39.7 percent). The net result was again negative at -99.2 million euros (previous year: -68.5 million euros).
“The good growth in customers and revenue clearly shows us that our strategy is working. Following the start-up losses in the past two years, this will also be reflected in the result figures in the current fiscal year. We therefore expect EBITDA of 430 to 440 million euros for this year. From the beginning of 2008, we expect positive quarterly net results”, Adrian v. Hammerstein says of further business development.
Kabel Deutschland also achieved good success in the expansion and digitization of the television offering in the past fiscal year. Kabel Deutschland increased the number of digital programmes available on cable alongside the 33 analogue channels to more than 200, including up to 100 free-TV programmes. The variety of digital programmes and the free provision of digital receivers for Kabel Deutschland’s direct customers have helped to win around 600,000 RGUs for the digital cable connection to date. Together with customers of Kabel Digital Home and Kabel Digital International as well as Premiere customers on cable, this results in a share of around 20 percent digitized cable households in the Kabel Deutschland area, with the trend continuing to rise.
