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Kabel Deutschland stays on course for success

Kabel Deutschland Holding AG (KDH), Germany’s leading cable operator, remained on course for success in the first half of its fiscal year 2010/2011 (April 1 through September 30, 2010). The Management Board sees its growth strategy substantiated with this performance: “Our financial figures indicate we are staying on course for growth and seamlessly following through on the positive trend. High demand for powerful, attractively priced products remains our most important growth driver, particularly in the area of Internet, Phone, and our Premium TV business offerings,” says Adrian v. Hammerstein, CEO of Kabel Deutschland Holding AG, commenting on the figures presented today.

Revenues, earnings, and cash flow increase again

The MDAX listed company again posted a sharp increase in revenues and earnings in the first half year of its fiscal year 2010/2011: Revenues were up 6.8% to €785.8 million (previous year €735.5 million), and adjusted EBITDA rose 10.4% to €355.2 million (previous year €321.9 million). The EBITDA margin was 45.2 percent (previous year 43.8 percent). The pre-tax result for the first half of the fiscal year 2010/2011 amounted to minus €0.2 million, a significant improvement on the previous year’s amount of minus €14.6 million. As expected, net loss was reduced to €7.8 million (previous year minus €26.9 million).

Kabel Deutschland Germany

Kabel Deutschland Germany

The cable operator invested €140.1 million in the first half of its fiscal year 2010/2011 (previous year €152.5 million). Operating free cash flow (adjusted EBITDA minus capex) increased by 27% to €215.1 million (previous year €169.4 million).

Ongoing high attractiveness of new services

The total number of Kabel Deutschland’s RGUs was up by 473,500 from the previous year to 12.314 million as of September 30, 2010 (a 4% increase from the previous year’s 11.841 million). This growth was driven by continued strong demand for the new services Premium TV, Internet and Phone. These RGUs accounted for 3.348 million, a 27.2% share of total RGUs (previous year 2.730 million RGUs, a share of 23.1 percent). The Company served 8.846 million customers on September 30, 2010.

The Internet and Phone offering contributed again considerably to the Company’s growth. The number of these RGUs increased by 28.5% to 2.213 million (previous year 1.722 million), and were taken by 1.210 million customers (previous year 967,000). These figures underscore the trend towards bundled product solutions. Most of Kabel Deutschland’s customers opt for combined Internet and Phone services.

The number of Premium TV RGUs increased by 12.6% to 1.135 million (previous year 1.008 million). “Thanks to attractive and innovative products such as the digital HD video recorder and our Video-on-Demand service slated for launch during the current fiscal year, Kabel Deutschland’s TV offering is ideally positioned,” notes v. Hammerstein.

Monthly ARPU exceeds €13 for the first time

The Company is making good progress in its objective of increasing the number of RGUs per subscriber and thereby boosting monthly revenues. On September 30, 2010, one Kabel Deutschland customer subscribed to 1.39 products on average. In the previous year this ratio amounted to 1.31. Kabel Deutschland increased its monthly average revenue per user (ARPU) to €13.08 in the second quarter of fiscal year 2010/2011 (previous year €11.88). During the first half of the fiscal year 2010/2011 the monthly ARPU amounted to €12.97 (previous year €11.80). The midterm goal is to achieve about €20 ARPU.

Net debt and leverage ratio reduced

In the twelve months ended September 30, 2010, the cable operator reduced its net debt by €206.3 million to €2,876.3 million. In the second quarter of the fiscal year 2010/2011, this constitutes a leverage ratio of 4.0 times net debt to quarterly run rate of Q2 adjusted EBITDA. In the previous year, net debt was €3,082.6 million, resulting in a leverage ratio of 4.7 times adjusted EBITDA. Consequently, the Company has already achieved its target leverage ratio of 4.0 times to 3.5 times of adjusted EBITDA, and is right on schedule with its efforts to swiftly reduce debt.

Cash amounted to €226.6 million on September 30, 2010. Together with an unused credit facility in the amount of €325 million, the Kabel Deutschland’s liquidity totaled €551.6 million. During the second quarter of its fiscal year 2010/201, Kabel Deutschland bought back €36.7 million of its PIK loan and prepaid €25 million of its bank facilities. In addition and after the reported period ended, the cable operator redeemed €24 million in its Euro corporate bonds on October 20, 2010.

On October 20, 2010, the rating agency Moody’s raised the rating for the Kabel Deutschland Group by one notch to “Ba2”, and the rating for its corporate bonds to “B1” in recognition of the Company’s strong operational performance and ongoing debt reduction. Standard & Poor’s had already raised the long-term credit rating for Kabel Deutschland GmbH to “BB-“ on July 27, 2010. Further, on November 11, 2010, the rating agency Fitch upgraded the outlook for Kabel Deutschland from “stable” to “positive”.

On November 1, 2010 Kabel Deutschland launched an “Amend & Extend” process in which the Company seeks consent from its lenders to certain amendments in its credit conditions and the extension of maturities for some of its credit facilities. Already one week before the end of the official deadline of November 19, 2010 the overwhelming majority of the Company’s creditors supported Kabel Deutschland in its request. So far 94% of the cable operator’s lenders agreed to the amendments.


The Management Board has confirmed its forecast for 6.5 to 7% revenue growth in the current fiscal year 2010/2011. Adjusted EBITDA is expected to reach the upper end of the targeted €715 to 725 million range. Capex is now anticipated to come to between €340 and €350 million (previous guidance €350 to €360 million). This guidance is based on an expected 250 thousand net adds for the Company’s Internet and Phone subscribers by the end of the fiscal year 2010/2011. The leverage ratio should drop below 4.0 times of EBITDA by the end of the fiscal year.

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