Advanced Television

Com Hem Q2 revenue up 1.1%

July 11, 2018

Swedish multi-play operator Com Hem has reported Q2 revenue increased by 1.1 per cent to SEK 1,815 million (176.6m) for the Group, with Com Hem Segment increasing by 3.5 per cent to SEK 1,411 million.

Operating profit (EBIT) of SEK 214m decreased by 3.6 per cent compared to SEK 222 million in the previous year due to higher items affecting comparability. Excluding these items, EBIT increased by 9 per cent from SEK 243 million in Q2 2017 to SEK 265 million in Q2 2018. EBITDA declined by 2.1 per cent to SEK 693 million due to SEK 30 million higher items affecting comparability.

Other Q2 highlights include:

    • Unique consumer subscribers rose by 5,000 to record high 992,000.
    • Continued growth in broadband, up 8,000 to record high 765,000 RGUs.
    • Digital TV RGUs increased by 1,000 to 654,000.
    • Consumer ARPU increased to SEK 378 (SEK 371 in Q1 2018), due to price adjustments.
    • Consumer churn of 12.8 per cent down 2 percentage points compared to last quarter.

In a statement Anders Nilsson, CEO, Com Hem Group commented:

Increased ARPU and lower churn in the Com Hem Segment
The Com Hem Segment consumer ARPU rose by SEK 8 sequentially to SEK 378 on the back of price adjustments implemented in the first quarter while consumer churn declined by 2.0 percentage points sequentially to 12.8%. Churn was slightly higher compared to the second quarter of 2017 as some of the churn related to price adjustments was carried over from the first quarter due to a change in the cancellation procedures. The sequential decrease in consumer churn led to higher volumes compared to the first quarter, partly offset by an impact from increased activity by competitors. The customer base grew by 5,000 subscribers, broadband RGUs increased by 8,000, digital TV RGUs increased by 1,000, while the fixed telephony RGU decline accelerated to 8,000 due to adjustments of fixed telephony pricing in the quarter.

Boxer integration completed
We finalized the system integration of Boxer during the quarter and expect the remaining synergies to be realized in the second half of the year. With this final step in the integration of Boxer we now have a fully integrated business with all functions run centrally for both brands. This allows Boxer to fully capitalize on the operational advantages of being part of the Com Hem Group with more efficient systems, sales, marketing and a product portfolio now including the new TV Hub which is available for Boxer customers in both the fibre networks and via the DTT network. Boxer consumer ARPU rose by SEK 5 to SEK 309 due to price adjustments in the first quarter and increased dual penetration. Consumer churn remains elevated partly due to a lagging effect from price adjustments but decreased by 2.7 percentage points sequentially to 16.6% in the quarter. Boxer added an additional 4,000 broadband RGUs which is in-line with previous quarters, while unique subscribers and total RGUs declined by 7,000 and 6,000 respectively, an improvement from previous quarters.

Early signs of a converging Swedish market
We saw a higher level of activity from competitors in the quarter. Specifically, we see competitors increasingly focus on fixed-mobile bundles by adding additional value to customers rather than discounting. While this had a slightly dampening effect on volumes in the quarter, we see this as a positive development in the long run as it should benefit both consumers and operators by encouraging operators to improve services and increase customers satisfaction. We believe that this natural development in the market will reduce the overall market churn and make pricing more resilient. This makes the upcoming merger with Tele2 even more timely as we aim to drive this trend in the Swedish market. Together with Tele2 we will have the additional tools and scale needed to amplify the more-for-more strategy which has underpinned the growth in Com Hem over the last few years.

Looking ahead
Our focus for the second half of the year will as always be continued efforts to increase customer satisfaction to create sustainable growth. We are upgrading our network in preparation for the
1+ Gbit/s launch to further enhance our superior broadband service and meet increasing customer demand for higher speeds and capacity. The TV Hub, which we believe perfectly matches the TV-viewing habits of today’s consumer, is now being sold by both our main brands and should serve to further enhance customer satisfaction. Meanwhile we focus on developing our boxless TV-offering to turn it into our main product in the future. With the Boxer integration now completed, we can realize the rest of the cost synergies and run a more efficient dual brand strategy in the SDU market. These initiatives will create continued growth and secure delivery of our full year guidance. The merger with Tele2 is on track for a fourth quarter closing and in the meantime we will do everything we can to prepare the combined company to successfully drive fixed-mobile convergence from 2019 and beyond.

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