Ziggo announced the refinancing of a credit facility worth EUR 800 million, which could be extended further. At the same time, it reiterated its guidance for 2013: EBITDA growth of 2.5-3.5 percent, slightly faster sales growth and an acceleration in sales in the course of the year thanks to new marketing initiatives. Capex is estimated at EUR 320-330 million.
In February the company launched a campaign focused on triple play, dual play and interactive TV services. In Q2, another campaign is planned, aimed at improving customer loyalty and lowering churn. Ziggo also said it has not seen any changes in the market conditions or results since the end of 2012. The trend in RGUs is unchanged, and churn is increasing due to the popularity of triple-play offers and tougher competition (see our article 'Ziggo's period of high growth comes to an end').
RGU loss continues
The fourth quarter marked a turning point, with the number of RGUs (revenue-generating units) falling for the first time and zero growth in digital TV. Revenue growth also fell to a low point of 1.4 percent. With its latest update, it appears the company has yet to turn around the situation, even if it's confirming its 2013 outlook. This means Ziggo is continuing to lose customers (at least on the consumer market), at a somewhat faster rate than we have seen in recent years. It's still increasing the number of RGUs per customer though, leading to continued growth in operating profit.
Ambitious
Given its Q4 performance and the forecast for sales to grow faster than EBITDA this year (so, around 3-5 percent), one can only conclude that Ziggo is expecting a lot from its new marketing campaigns. Turning around the sales trend though appears a very ambitious goal. Especially as KPN is now doing better on the broadband market, Vodafone and Tele2 have entered the FTTH market, and Online.nl has started its own campaign. This may be why Ziggo is also trying to accelerate growth on the enterprise market. The just announced acquisition of Esprit Telecom (revenue 2012: EUR 37 million) will add already 2.4 percent to revenues this year. Note that Ziggo's forecast is not based on organic growth.
Mobile
The mobile market could be another growth driver, but it's questionable whether Ziggo's current strategy of Wi-Fi plus LTE in the 2.6GHz band and a roaming agreement with Vodafone will add anything significant to sales. It appears more a construction aimed at limiting churn. The question is whether that is enough for Ziggo. If not, then the new CEO Rene Obermann (from 01 January 2014) will need to lead the effort to develop a complete mobile offering and revenue source - for example, by acquiring T-Mobile Netherlands.
