The Netherlands' largest cable operator Ziggo has released partial results for the first half of 2009. Revenues rose 2.6 percent to EUR 630 million, and EBITDA grew 1.0 percent to EUR 343 million. In terms of subscriber numbers, digital TV stands out: up 39 percent to 1.38 million customers. Analogue subscribers were down just 1.5 percent to 3.22 million.
The figures show that growth slows as we go from the top to bottom line. The number of subscribers, and in particular digital TV, showed the strongest growth. The number of revenue-generating units was up 7.5 percent to 6.9 million. Revenues grew a slower 2.6 percent, apparently due to strong growth in the number of customers for the basic digital TV product (same price as analogue) and telephony (a relatively cheap service). Looking further down, we see that EBITDA rose only 1.0 percent. Ziggo attributes that to a "temporary increase of costs" in order to improve customer service, which cancelled out any synergies from the merger forming the company. You can't really argue with that.
Other results, such as net profit, were not published by Ziggo. However Telecompaper estimates that Ziggo is showing an improvement in results in 2009 compared to 2008. The company is clearly still in the red, but showing much smaller losses than in 2008. Interest payments are still around EUR 500 million. We estimate that the loss will be around two-thirds of the result in 2008, which was a loss of EUR 353 million.
We can compare the results to UPC, which already released results through its parent company Liberty Global. For UPC Netherlands, only the subscriber numbers, revenues and EBITDA are released, and other figures are not broken down by country. Liberty Global is active in 13 countries.
There is a big difference, showing UPC performing poorly compared to Ziggo. Whereas Ziggo is growing especially strongly in digital TV and losing few analogue customers, UPC shows growth of 16 percent in digital and sharp decline of 13 percent in analogue customers. Also on the telephony market, Ziggo is doing better than UPC, with growth of 17 percent versus 13 percent. UPC is performing better in internet, with an increase of 5 percent in subscriber numbers, versus just 1 percent for Ziggo. Overall, Ziggo showed solid growth in the number of RGUs of 7.5 percent, while UPC's total declined in the period. The revenue growth at both is comparable at around 2.5 percent, but UPC is doing better with EBITDA, up around 8 percent.
The differences in performance are partly due to their network footprints. UPC Is active in Amsterdam and Rotterdam, cities with a metro area population of over 2 million. In the big cities, competition with Digitenne and CanalDigitaal is strongest, as a result of the multicultural programming offered by CanalDigitaal and the Digitenne network coverage. In addition, UPC is facing the FTTH projects run by Reggefiber and KPN. These are concentrated in the east of the country, the Eindhoven region and again, Amsterdam and Rotterdam. Another difference is the roll-out of EuroDocsis 3.0, where UPC has around a half year advance on Ziggo. This explains UPC's success on the broadband market. Ziggo is also struggling with the integration of its three merger constituents (Casema, Multikabel and Essent Kabelcom), which is taking its toll on customer service. For Ziggo this means extra costs and a declining EBITDA margin. UPC has overcome problems with customer service and has even pocketed a call centre award.
UPC's successes with EuroDocsis 3.0 and its call centres promise good things for Ziggo's results in the second half of the year.
