Swedish multi-play operator Com Hem has reported that Q3 revenue declined by 0.2 per cent to SEK 1,777 million (€172.1m), driven by a 7 per cent decline in Boxer revenue.
The Com Hem Segment grew 1.9 per cent with good growth in Com Hem Consumer of 3.7 per cent, slightly offset by a 7.5 per cent decline in Network Operator revenue caused by timing of low-margin fibre connection fee revenue.
In a statement, Anders Nilsson, CEO at Com Hem Group, said: “We saw improvements in operational KPIs as churn reached a record low in the Com Hem Segment and broadband sales picked up in Boxer. A milestone was passed in broadband with the commercial launch of 1.2 Gbit/s speeds, extending our speed leadership. The TV Hub is getting traction with high-end STB penetration now at 42% of the Com Hem Segment DTV base. The Boxer synergies are now fully realized following completion of the system integration in Q2.”
“In the quarter, we saw continued growth in Com Hem Segment Consumer revenue, up 3.7% on the back of an increase in unique customers and higher ARPU compared to Q3 2017. However, given the slowdown in the fibre buildout in Sweden, the revenue from fibre connection fees declined and resulted in a decline of 7.5% in the network operator business which took total Com Hem Segment revenue growth to 1.9% in the quarter. Since the fibre connection revenue comes at a very low margin, this did not affect underlying EBITDA which grew by 4.5% in the Com Hem Segment. The Group revenue decline of 0.2% was driven by a 7.0% decline in the Boxer Segment. However, given the margin expansion in both segments, underlying EBITDA grew by 4.2% for the Group which is in-line with guidance, and operating free cash flow grew by 17.3% due to lower capex in the quarter.”
“Consumer churn reached a record low level of 12.4% in the Com Hem Segment in the quarter. Declining churn and a growing customer base after five consecutive years of annual price adjustments confirms to us that the more-for-more strategy works. The customer base grew by 7,000 subscribers, broadband RGUs increased by 8,000, digital TV RGUs increased by 1,000, while the fixed telephony RGUs declined by 10,000 due to fixed telephony price adjustments during the quarter. The net intake of unique subscribers improved slightly in the quarter after a few quarters of lower net adds than previous years, which results in slightly lower consumer revenue growth despite higher year-on-year consumer ARPU, up SEK 3 year-on-year to SEK 375.”
“Since this is the last quarter for Com Hem as a standalone entity before we merge with Tele2, I would like to thank everyone who has followed Com Hem over the last few years. Since the IPO, our strategy has been to focus on several growth drivers to increase value for our shareholders. I would like to take this opportunity to look at what we have achieved. Since Q2 2014, the Com Hem Segment unique customer base has grown by 18% to almost 1 million customers and consumer churn has declined by 4 percentage points. Broadband RGUs have increased by 39% organically and the average speed in the customer base has increased by 130%. Com Hem Segment DTV RGUs have grown by 9% and penetration of high-end set top boxes has increased from 17% to 42%. The Group has increased its footprint by 50% by adding 1 million addressable households in the SDU market and Boxer has been fully integrated into Com Hem. Because of these operational achievements we have been able to almost triple the shareholder value and deliver a total shareholder return of 197% between the IPO and the 2018 EGM. During the same period, the OMX Stockholm 30 index had a return of 39% and the Stoxx 600 Europe Telecom index had a return of -3%. We believe that no other investment in any publicly traded European telecom company during this period would have offered a greater return.”
“During the quarter, we received approval from our shareholders and in beginning of October the European competition authorities gave clearance to proceed with the merger which is expected to be finalized on November 5. We are very excited to enter the next chapter in the Com Hem story as part of Tele2 and we hope that you will join us for the next leg of the journey. In addition to continuing efforts to increase customer satisfaction and create sustainable growth we will now start working on the integration of the two businesses to ensure that our combined talent, assets, products and brands reach their full potential. Our focus will now be to make sure that the combined company serves the best interest of our customers, employees, shareholders and society as a whole.”