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Com Hem Q3 up 4.3%

October 18, 2016

Swedish telco Com Hem has reported Q3 revenues of SEK 1,309 million (€134.9m), up 4.3 per cent. The net result for the period more than doubled and amounted to SEK 106 million.

The acquistion of pay-TV network Boxer added 500,000 new DTT customers to Com Hem, primarily in SDUs.

In a statement Anders Nilsson, CEO at Com Hem, said: “The third quarter of 2016 was an eventful and exciting period for Com Hem. We closed the acquisition of Boxer, adding half a million customers into our new growth market. The seasonally strong third quarter produced record profitability in our existing businesses where we delivered records in revenue and Underlying EBITDA, and strong operating free cash flow. We are now seeing the positive effects of the rebranding campaign as we added 8,000 additional subscribers in the quarter while consumer ARPU reached a record high of SEK 371 and consumer churn fell to a record low of 12.7%. Com Hem is in a great position with an established leading brand in the MDU market and, with the Boxer acquisition under our belt, a great opportunity to expand into the SDU market to become a true national operator in broadband and TV-services.

Continued progress in customer satisfaction along with positive rebranding effects led to the consumer customer base growing by 8,000 and a continued strong broadband growth of 11,000 RGUs. Demand for our DTV products was strong in the quarter with RGUs increasing by 4,000. Our TiVo base grew by 7,000 customers, now at 37% of our total DTV base. The number of telephony RGUs dropped by 7,000.

Consumer ARPU reached a record high of SEK 371 compared to 369 SEK in Q2, as a larger portion of customers now subscribe to higher tier products. Consumer churn decreased by 0.4 p.p. compared to Q2 and was 12.7% in the quarter, now 0.2 p.p. lower than the previous record low level of 12.9% in Q3 and Q4 2015. 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. Within B2B our focus remains on growing the high-margin On- Net 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 has grown by almost 30% and OnNet revenues by 55%.

Revenue grew by 4.3% compared to the third quarter 2015, driven by a 6.0% growth in our consumer business and a 1.0% growth in B2B, partly offset by a decline of 0.9% in the network operator business. Underlying EBITDA grew by 8.7% to a record high of SEK 642m, with an Underlying EBITDA margin of 49.0%. Capex amounted to SEK 180m in the quarter compared to SEK 219m in the third quarter 2015.

We believe that we have optimized the core business to a point where we can run a lean operation and deliver steady growth at a sustainably lower capex level. We therefore lower our capex guidance for the full year 2016 to SEK 850-950m from SEK 1-1.1bn previously. Together, Underlying EBITDA growth and lower capex than last year led to continued strong operating free cash flow, which grew by 24% to SEK 461m. Our strong cash flow allowed us to continue executing on our share buyback program. In the quarter we repurchased shares for SEK 287m, representing 2% of total number of registered shares as of September 30, while remaining within our leverage target. The share repurchase programme continues with a mandate to repurchase up to SEK 200m between October 1 and November 30.”

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