Caiw reports losses due to higher investments, marketing costs

Thursday 28 August 2014 | 17:03 CET | Background

Cable and fibre service provider Caiw has reported a net loss of EUR 4.06 million for 2013, according to its annual report. The revenues grew by EUR 4.5 million during the year to EUR 74.3 million. Of the increase, EUR 2.5 million came from the acquisition of Cogas's TV customers in December 2013. Caiw's EBITDA amounted to EUR 2.7 million, much lower than EUR 7.5 million in 2012. The decrease is mostly caused by higher infrastructure and marketing costs (to promote fibre services) as well as a customer service restructuring. The number of employees increased from 148 at the end of 2012 to 169 at the end of 2013 with FTEs growing from 138 to 153.

Caiw’s owner CIF decided after the failed sale to KPN to keep Caiw and position it as service provider of in its fibre networks. Since then CIF acquired cable networks in Hendrik Ido Ambacht, Borculo and Hilvarenbeek as well as Cogas' cable activities. The customers using those coax networks were transferred to Caiw and CIF is now upgrading those networks to FTTH with Caiw as only provider of TV, broadband and fixed telephony services.

Caiw adapts business plan to get refinancing

Caiw’s annual report show that the company took on a new loan with the ING bank of EUR 40 million to refinance the existing Rabo bank loan as well as receive enough funds for future acquisitions and investments. During the financing process, Caiw found that that its business plan was no longer in line with reality. The plan had a too high estimate of cable growth and more investments were needed to get existing customers to change to FTTH. These circumstances will see a much higher increase in capex and marketing costs than written in the business plan.Caiw hired management consultants to write a revised business plan that was presented to CIF and ING in the beginning of 2014. The new plan foresees a lower EBITDA and higher need for financing during the coming years and that is not covered by the current ING loan. 
The company is now working with CIF and ING to change the loan conditions and increase the loan to enable the new business plan. To prepare for a structural solution, CIF extended the Caiw’s network rent payments by two months in the first quarter of 2014. At the same time, a proposal to adapt the current network rent conditions to enhance Caiw’s operational financial result as well as the leverage ratio. This proposal still has to be approved by CIF’s partners, advisory board and credit commission and will be implemented in the third quarter thus preventing a breach of covenant by Caiw during 2014.

Broadband and telephony customers grow to due triple play success

The acquisition of Cogas’ TV customers was the main reason for a more than 40 percent annual growth (62,000 customers) to 216,000 Caiw TV customers at the end of 2013. The 67,000 Cogas TV customers were enough to off-set the autonomous decrease of TV customers. Caiw also was successful in cross selling triple play services to existing customers. This led to 8.9 percent more internet customers and 28 percent more telephony customers ending 2013 respectively with 86,000 and 64,000. The number of pay TV customers dropped by 4.5 percent year-on-year to 105,000.

Telephony revenues drive consumer revenues growth

Caiw’s wholesale TV and radio activaties were goed for 1.9 percent of all revenues  with EUR 1.41 million and other revenues (signal delivery and wholesale services for CBizz) amounted to EUR 2.21 million or 3 percent of all revenues. The remaining 95.1 percent of the revenues comes from Caiw’s consumer activities, growing by 6.6 percent during 2013 to EUR 70.72 million. 
These revenues are divided among these activities:
  • Television: 50 percent (51% in 2012). Adding 5.5 percent in 2013 to EUR 35.67 million;
  • Broadband: 33 percent (33% in 2012). Adding 5.9 percent in 2013 to EUR 23.02 million;
  • Fixed telephony: 14 percent (13% in 2012). Adding 12.8 percent in 2013 to EUR 9.9 million;
  • Other consumer activities: 3 percent (3% in 2012). Adding 8 percent in 2013 to EUR 2 million.

Cogas acquisition valued at almost EUR 13 million

The acquisition of Cogas is valued at almost EUR 12.9 million including EUR 6.6 million in customer value/ Cogas further include EUR 1.5 million liquidity and EUR 4.5 million in liabilities. The latter include a deferred tax liability of EUR 1.6 million. The goodwill is valued at EUR 7 milllion based on the expected value creation by synergy effects of combining the operations. In the beginning of 2013, customers of two smaller operators, SCAI Borculo and CAS Hilvarenbeek, were also acquired by Caiw. Both transactions were valued at EUR 100,000.

Board structure changes, new board members

Per 1 March 2013, Caiw changed its two-tier board structure into a one-tier structure with executive members and non-executive members. Per 1 August 2013, CIF partners Randolf Nijse and Martijn Visser left the board to be replaced by Dutch entrepreneur J. Docter and managing director Germany at Fox International Channels, Marco de Ruiter. CFO Eric Sas left the company per 1 July 2013 and was replaced by CFO ad interim William de la Motte.

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