Com Hem turned a net profit of SEK 7 million in the third quarter of 2014, up from a net loss of SEK 82 million in the same period of 2013. It continued to increase its subscriber base, even achieving a rise in the number of fixed telephony users, for the first quarter since 2011, and cutting churn.
Com Hem reported revenue of SEK 1.210 billion, up 9.6 percent from SEK 1.104 billion from a year earlier. Underlying EBITDA rose 1.1 percent from a year earlier to SEK 576 million. EBIT declined by 1.5 percent to SEK 200 million from SEK 203 million last time. Operating free cash flow was SEK 318 million, up 5.3 percent.
The unique consumer subscriber base grew by 15,000 to a total of 861,000. Broadband growth continued, increasing by 17,000 to 594,000 RGUs, an all-time high. Digital television grew for the second consecutive quarter, increasing by 8,000 to 607,000 RGUs and the number of TiVo customers grew by nearly 30,000 to 132,000 customers, giving a 22 percent penetration rate. Com Hem's fixed telephony subscriber base grew for the first quarter since 2011, by 3,000 RGUs.
The number of homes connected rose to 1.846 million in the third quarter from 1.832 million in the second. The rate of unique consumer subscribers to homes connected was 46.6 percent, up slightly from 46.2 percent in the second. The ratio of consumer RGUs per unique consumer subscriber was unchanged at 1.78. The total number of consumer RGUs improved to 1.531 million from 1.503 million in the second quarter.
Churn declined from 16.4 percent in the prior quarter to 14.8 percent in the third quarter. Come Hem is very much aware that a lot more remains to be done in this area, and it is leaving no stone unturned to improve the way it conducts its business. It said its bundling opportunity is the next step outlined in its growth ambition. It will cater to customers’ desire for fast broadband and add its digital TV services in easy-to-understand and “compelling” offers over the coming quarters.
Consumer ARPU edged up to SEK 361 from SEK 360 in the second quarter, and ARPU from services to property owners was stable at SEK 35.
Earnings per share for the third quarter were SEK 0.03 compared with a loss per share of SEK 0.82. Pro forma EPS was SEK 0.02, compared with a negative SEK 0.39: This was excluding one-off costs associated with the IPO and debt refinancing, adjusted for income tax and divided by the number of shares after the issuance of new ones and the exercise of the over-allotment option.
The IPO proceeds enabled Com Hem to lower both the level and the cost of debt as the average interest rate was reduced from 8.4 percent to 6.7 percent. Its Senior Secured Notes issuance in October with a coupon of 5.25 percent to redeem outstanding ones will further reduce its average interest rate to 5.0 percent and strengthen its ability to generate free cash flow in future.
