Wednesday, 28 June 2017

Ziggo posts Q1 2014 results

Ziggo
Wednesday 16 April 14

Operational highlights Q1 2014 · Total internet subscribers up 38,000 in Q1 to a total of 1.95 million, representing 2.0% sequential growth and 7.5% y-o-y growth · All-in-1 bundle subscribers up 20,000 (incl. 3,800 triple play business bundles)[1] in Q1 to a total of 1.56 million, resulting in 1.3% sequential growth and 7.0% y-o-y growth · All-in-1 penetration reaches 57.1% of our consumer customer base · Telephony usage revenue down 7.9% y-o-y and down 7.0% excluding FTA rate reduction · Digital pay TV revenue down 4.3% y-o-y due to a 16,000 decline in subscribers, partly offset by an ARPU increase and an uptake in VOD · Consumer ARPU for the quarter up 3.6% y-o-y to €43.07 · Price increase for consumer products and changes to the fixed telephony offering effective as of April 1 Financial highlights Q1 2014 · Revenue up 1…

Operational highlights Q1 2014

· Total internet subscribers up 38,000 in Q1 to a total of 1.95 million, representing 2.0% sequential growth and 7.5% y-o-y growth

· All-in-1 bundle subscribers up 20,000 (incl. 3,800 triple play business bundles)[1] in Q1 to a total of 1.56 million, resulting in 1.3% sequential growth and 7.0% y-o-y growth

· All-in-1 penetration reaches 57.1% of our consumer customer base

· Telephony usage revenue down 7.9% y-o-y and down 7.0% excluding FTA rate reduction

· Digital pay TV revenue down 4.3% y-o-y due to a 16,000 decline in subscribers, partly offset by an ARPU increase and an uptake in VOD

· Consumer ARPU for the quarter up 3.6% y-o-y to €43.07

· Price increase for consumer products and changes to the fixed telephony offering effective as of April 1

Financial highlights Q1 2014

· Revenue up 1.7% y-o-y to €394.2 million; up 0.8% y-o-y excl. Esprit and 'other revenue'

· Adjusted EBITDA €213.1 million, down 4.3% y-o-y; down 4.7% y-o-y excl. Esprit

· Opex increase of €15.8m y-o-y and €13.4m or 14.1% excl. Esprit due to higher investment in marketing & sales and higher cost for customer service

· Net result reduced to -€38.4 million from €92.7 million in Q1 last year due to one-off costs of approximately €93 million net of taxes related to the refinancing, intended acquisition and fair value losses on our hedges

· Net debt amounts to €3.1 billion, stable compared to year-end 2013

· Leverage ratio of 3.6x, slightly up compared to 3.5x at year-end 2013

CEO René Obermann:


"Clearly, the recommended offer on Ziggo from Liberty Global, which was announced on January 27, was the most important event for the company during the first quarter. We believe that the combination of the two Dutch cable companies offers a great opportunity for all stakeholders as it allows us to jointly invest and provide even better services to our customers.

When we focus on the operational developments in the quarter, we see a continuation of the operational trends from the second half of 2013: continued RGU growth for both consumer and B2B, particularly in broadband internet. Similar to the last two quarters, growth in internet RGUs has exceeded growth in triple play subscriptions following the success of our double play TV and internet offering which particularly addresses the 'mobile-only' telephony households. The success of our internet is strongly supported by WifiSpots as well as on-going speed increases of up to 180Mbit/s as recently announced. We expect our announced speed increase to make us even more competitive in broadband and support further growth in this area. For Ziggo mobile we recorded 30,000 net adds in the first quarter, in line with the previous quarter.

In the B2B segment, we see continuing positive trends. We are pleased to announce another quarter of double digit organic revenue growth on the back of our on-going success with the sales of business bundles.

Finally, as expected, telephony usage revenue has resumed its declining trend in Q1 2014. With the change of our fixed line telephony offering as from April 2014, we have taken a number of measures which we expect will mitigate this trend going forward.

The decline in EBITDA in the first quarter came primarily from external personnel hired which are needed to drive our ambitious innovation agenda forward, including migrating some of our legacy IT-systems, and the investment in customers services and sales and promotions.

Until if and when the merger closes, which is expected to happen in Q3/4, we will run the company completely independent. Our management team is committed to delivering the targeted financial results, whilst aiming to outperform our Dutch peers on revenue growth at the same time."

Outlook

Based on our strong network and appealing product offerings, we will continue to focus on our top-line in 2014. This will predominantly be facilitated by on-going growth in broadband internet, Ziggo Mobile and our B2B activities.

As we anticipate no easing of the current competitiveness in the market, we will continue investments in sales and promotions, customer retention and product development to strengthen our position and improve our services. We expect these additional investments, which will be skewed towards the first half of the year, to result in a flat EBITDA for 2014 compared to last year. Following increased network investments to stay ahead of ever-increasing customer demand for bandwidth, the investments in set top boxes to support customer experience and the continuation of investments to upgrade our IT systems to enable converged services, Capex will increase to around €370 million in 2014.

Recommended offer by Liberty Global

On January 27, Ziggo and Liberty Global jointly announced that a conditional agreement had been reached on a recommended offer (the "Offer") pursuant to which Liberty Global would acquire Ziggo in a stock and cash transaction. Under the terms of the Offer and taking into account the Liberty Global stock dividend, Ziggo shareholders will receive €11.00 in cash, 0.2282 Liberty Global Class A ordinary shares and 0.5630 Liberty Global Class C ordinary shares for each Ziggo share.

Discussion with the AFM on the valuation and presentation of the customer relationships

Following our discussions with the AFM as a result of questions raised by the AFM concerning how the company came to the conclusion that the useful life of the customer relationships is indefinite, we plan to separate the asset in a customer list with a definite life and the license to provide our cable-related services in our footprint for an infinite period. Based on our analysis, we came to the conclusion that the value of the customer list is fully amortized assuming an amortization period for the customer list of five years and that the remaining value represents the license to operate in our footprint for an infinite period. Based on this analysis and to be more in line with peers we intend to reclassify the remaining balance of approximately €1.5 billion from customer relationship to goodwill in the 2014 accounts. This reclassification will also lower the deferred tax liability and goodwill by an amount of the deferred tax liability relating to the value allocated to the license. This reclassification does not have any impact on net result nor shareholders' equity. Our discussion with the AFM is still on-going.

Statement on proposal for final dividend for financial year 2013

In view of the recommended offer for Ziggo, management proposes that the total dividend for the financial year 2013 will be equal to the interim dividend distributed in September 2013. Consequently, there will be no final dividend distribution following the shareholder meeting on April 17, 2014.

Important dates


This year, Ziggo expects to publish its quarterly results on the following dates.

Q2 2014 July 17, 2014

Q3 2014 October 16, 2014

The Annual General Meeting of Shareholders over the financial year 2013 will be held on April 17, 2014.


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