Kabel Deutschland (KDG), Europe’s largest cable company, is set to cut debt faster than markets expected and would like to absorb two smaller domestic rivals, according to Adrian von Hammerstein, chief executive.
Rapidly improving sales of superfast broadband on top of basic cable television have given KDG sufficient cash flow growth to consider shareholder returns, faster debt reduction and investment, von Hammerstein told the FT.
KDG’s target, he added, is “to get net debt down to between 4 and 3.5 times” EBITDA. At its level now of E2.86 billion net debt is “a perfectly comfortable” 4.1 times ebitda, having come down by E197 million in the year to March 31st.
“But we are considering adjusting that target range to 3.5 to 3 times and deleveraging more strongly,” he said. This was intended to achieve a re-rating by agencies and thereby cut interest costs.
Pre-tax losses fell by 65 per cent to E14 million over the year to the end of March. But in spite of the strong operational performance of the business that has 8.9 million cable TV customers in 13 of Germany’s 16 provinces, he ruled out payment of a dividend before 2012, the date the board set when KDG floated on MDax in March.