Swedish telco Com Hem has reported second quarter revenues of SEK 1,300 million (€137.5m), up 4.3 per cent, while operating profit increased by 5.5 per cent to SEK 192 million.
Com Hem also reported it added 6,000 subscribers in Q2, taking its installed base to a new high of 926,000.
Anders Nilsson, CEO, Com Hem, commented: “Customer satisfaction remains our main operational focus which in this quarter led to an increased consumer customer base growing by 6,000 and a continued strong broadband growth of 10,000 RGUs. DTV subscribers increased by 1,000 in the quarter, and our TiVo base grew by 4,000 customers reaching 37% of our total DTV base. The number of telephony subscribers dropped by 14,000 following price adjustments.
Consumer churn decreased by 0.8 p.p. compared to Q1 and was 13.1% in the quarter, now only 0.2 p.p. higher than the record low churn of 12.9% we recorded for both Q3 and Q4 2015. We expect the churn rate to continue trending downward somewhat over time as we improve customer satisfaction.
As expected, the implementation of this year’s price adjustments was well received and drove a SEK 6 uptick in consumer ARPU (average monthly revenue per user) to SEK 369 in the quarter. In total, over half of our customers were affected by the price adjustments which on average were somewhat larger than 2015. We continued to focus on the elimination of discounts, rather than raising front book prices, and left the prices of our most popular broadband and TiVo services unchanged.
Demand for our high speed broadband continued to be strong in the quarter, with more than 80% of new broadband subscribers choosing speeds of 100 Mbit/s and above. This brought average speeds in the base up to 129 Mbit/s, compared to 104 Mbit/s a year ago.
Com Hem’s fibreCoax infrastructure continues to deliver the fastest average download speed amongst our peers according to external tests by Bredbandskollen, Netflix Speed Index and Google Video Index.
During the quarter we have also past the milestone of 2 million connected households, by adding almost 60,000 new households during the quarter and compared to last year, we have increased our footprint with 6%, or 115,000 households.
Within B2B our focus remains on growing the high-margin OnNet business, while we see a structural decline in the OffNet legacy fixed telco business. During the quarter we added 1,000 new OnNet B2B customers, and compared to last year the OnNet B2B customer base have grown with over 40%.
Following successful trials, we did in June decide to expand into the single dwelling unit (“SDU”) market in Sweden and we expect to be able to reach additional 800,000 SDUs via fibre (homes passed) over the coming years. Our ambition is to make the SDU market the next major growth pillar for Com Hem turning the company into a true national operator in broadband- and TV-services.
To boost this expansion Com Hem has entered into an agreement to acquire the Swedish digital terrestrial pay television operator Boxer TV-Access AB. The acquisition of Boxer is a significant opportunity for Com Hem and is expected to generate approximately SEK 300m in additional Underlying EBITDA and an annual operating free cash flow of approximately SEK 200m to the Com Hem Group. Boxer’s approximately 500,000 DTV customer base is primarily situated in the SDU market, and will to a large extent be passed by fibre over the coming years.
We are working to obtain all necessary approvals for the Boxer transaction which is expected to close in the second half of 2016. We have already started planning the process of integration and we are confident that Boxer will be a great fit for the Com Hem portfolio.
We are very happy with our progress so far in 2016 including our new focus on the SDU market, the acquisition of Boxer, and the rebranding campaign. We firmly believe that these initiatives will lay the foundation for further success in the second half of 2016 and beyond.”