Ziggo: preview to 13Q1 results (April 17)

Ziggo's results are due April 17, before market opening.

Looking back to the 12Q4 results:

• Revenue growth fell back to 1.4%; slowdown caused by weak telephony results (free on-net calls, FTA reduction, lower AMPU), less steep annual price increases; increased competition; no real growth for paid digital TV services (peaks at around 900k).
• Net adds digital TV zero (remaining analog viewers probably late adopters of digital TV), hence analog-to-digital conversion zero; net adds RGUs first time negative.

Guidance 2013:

• EBITDA growth 2.5-3.5%.
• Revenue growth slightly ahead of this.
• Capex EUR 320-330m.
• Expenses for S&M and product development (TV Everywhere, mobility) are speeded up.

Market consensus:

• 13Q1: revenue EUR 390m, EBITDA EUR 220m, net income EUR 76m
• 2013: revenue EUR 1,585m, EBITDA EUR 906m, net income EUR 310m

Recent issues:

• Rene Obermann (DT CEO) to be CEO from 140101
• Acquires Esprit Telecom
• In January 2013, Ziggo stated that the Q4 trends continue, i.e. the loss of RGUs isn't over.
• Liberty Global acquires a 13% stake.

Conclusion:

• Negative: Ziggo has a growth problem. Lifting revenue growth doesn't seem likely as a result of competition. It looks like the mobile strategy (around WiFi) is more about reducing churn than about adding to growth.
• Positive:
• Acquisitions in the business market save the day (Esprit adds 2.4% to revenues) and more may follow.
• Ziggo appears to move to offering services off-net, as with Breezz and Esprit, and also with TV Everywhere. Next may be offering services on FTTH (Reggefiber/KPN, CIF).
• Another way to look at it, is to see Ziggo as a content aggregator. Taking its ontent off-net, could add new revenue streams.
• Also, Ziggo may buy cable companies or even CIF of T-Mobile NL.
• Foreign takeovers could consolidate assets like Com Hem (Sweden), ONO (Spain), Numericable (France).
• Finally, at some point Liberty Global may launch an offer.