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Kabel Deutschland remains on course for growth and diligently reduces debt

Highlights for Q1 fiscal year 2010/2011 (April 1, through June 30, 2010):

  • Revenues up by 6.1 percent to €389.5 million
  • Adjusted EBITDA rises 11.2% to €176.2 million
  • 1.155 million Internet and Phone subscribers (increase of 29.1%)
  • 1.108 million Premium TV RGUs (plus 12.8%)
  • Net debt reduced by €196.7 million over previous year
  • €300 million cash on June 30, 2010

Kabel Deutschland Holding AG (KDH), Germany’s largest cable operator, remained on course for growth in the first quarter of its fiscal year 2010/2011 (April 1 through June 30, 2010). The Company reported significant increases in revenues, earnings, and key performance indicators. With the financial figures for the first quarter of fiscal year 2010/2011 presented today, the Management Board has also substantiated the outlook for the full fiscal year 2010/2011: Adjusted EBITDA is expected to reach the upper end of the €715 to €725 million range guidance announced on June 10, 2010.

Kabel-Deutschland-Corporate-Profile

Kabel Deutschland Corporate Profile

Kabel Deutschland is confident that its organic growth strategy is paying off: “The high demand for our new services – particularly Internet and Phone – underlines the attractiveness of the Company’s product portfolio. First quarter operating performance continues last fiscal year’s successful trend. At the same time, we were able to reduce our net debt by almost €200 million compared to the previous year. So we are right on track to reduce our leverage ratio to 3.5 to 4.0 times total net debt to adjusted EBITDA in the near term,” said Adrian v. Hammerstein, CEO of Kabel Deutschland Holding AG.

Significant increase in revenues, earnings and cash flow

The Company, which has been listed on the stock exchange since March 22, 2010, posted a significant increase in revenues and earnings. In the first quarter, revenues were up by 6.1% to €389.5 million (previous year €367.2 million), and adjusted EBITDA rose 11.2% to €176.2 million (previous year €158.5 million). Profit before taxes amounted to €7.9 million (previous year loss of €4.3 million) in the quarter ended June 30, 2010. The net result for the reported period amounted to a loss of €2.1 million, a significant improvement on the previous year’s loss of €10.5 million. The Company invested a total of €61 million in its kabel internet and customer acquisition in the first quarter of fiscal year 2010/2011 (previous year €71.6 million). Operating free cash flow (adjusted EBITDA minus capex) increased to €115.2 million, up 32.6% from the previous year’s first quarter (€86.9 million).

Internet and Phone offering remains the growth driver

The total number RGUs was up by 423,000 from the previous year to 12.2 million as of June 30, 2010 (previous year 11.8 million, a 3.6% increase). Premium TV, Internet, and Phone products accounted for 26.3% of these RGUs, compared with 21.8% in the previous year. The Company served approximately 8.9 million customers on June 30, 2010. The Internet and Phone offering was again the most important growth driver. The number of these RGUs rose 32.3% to 2.097 million (previous year 1.584 million). These subscriptions were taken by 1.155 million customers (previous year 894,000), an increase of 29.1%. The majority of Kabel Deutschland’s broadband customers subscribe to bundle packages comprising Internet and Phone services. The number of Premium TV RGUs increased by 12.8% to 1.108 million units (previous year 982,000).

ARPU and RGUs per customer increased again

These growth rates attest to the success of the Company’s new services, which customers are demanding in increasing numbers. Average revenue per user (ARPU) increased accordingly to €12.86 (previous year €11.71), plus 9.8%. The number of customers subscribing to more than one Kabel Deutschland product also increased. On June 30, 2010, one Kabel Deutschland customer subscribed to 1.37 products on average, up from 1.30 products in the previous year.

Net debt and leverage ratio reduced

In the twelve months ended June 30, 2010, the Company reduced its net debt significantly by €196.7 million to €2,864.6 million. In the first quarter of fiscal 2010/2011, this constitutes a leverage ratio of 4.1 times net debt to quarterly run rate of Q1 adjusted EBITDA. In the previous year, net debt was €3,061.3 million, resulting in a leverage ratio of 4.8 times adjusted EBITDA. At the time of the IPO, Kabel Deutschland had stated a target leverage ratio of 3.5 to 4 times adjusted EBITDA, to be reached by the end of the current fiscal year. The Company is thus right on schedule. Kabel Deutschland had €300 million in cash on June 30, 2010.

On July 27, 2010, the rating agency Standard & Poor’s raised the long-term credit rating for Kabel Deutschland Germany GmbH by a notch, from B+ to BB-. In the course of its efforts to reduce debt, Kabel Deutschland bought back €36.7 million of its PIK loan since June 30, 2010. Further to that, the Company will prepay €25.0 million of its bank facilities at the end of August 2010. Kabel Deutschland also intends to continue to selectively prepay debt in the future.


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