Advanced Television

Bank: NENT rated BUY

December 9, 2020

According to a report from investment bank Berenberg, future ARPU growth at Nordic Entertainment Group (NENT) will largely be non-linear and from its Viaplay SVoD platform.

NENT’s ARPU has been hit hard by the cancellation of sporting events this year due to the pandemic, and its forecast revenues of cSEK114 per month (€11.12) for FY 2020, compared to SEK137 for FY 2019. “

We forecast that this number will increase to SEK170 by FY 2025,” says Berenberg.

The bank also suggests that NENT’s operating model delivers a sound precedent for a successful Baltic roll-out.

“TV3 Group, which, like NENT, used to be part of Modern Times Group, launched an SVoD service, Go3, in the Baltics this year and attracted 130,000 subscribers in six months, reassuring us about the prospect of a successful Viaplay rollout by NENT in Q1 2021. We nudge up our forecast for Viaplay subscriptions in the Baltics to 79,000 (from 58,000) in FY 2021. As Viaplay’s content offering will be similar to that of TV3’s Go3, we are confident that our estimates remain conservative, particularly as NENT announced last week that it has secured the exclusive rights to the Champions League and Europa League in the Baltics.”

Berenberg also remains bullish on NENT’s prospects in Poland (due for launch in August 2021 and tapping into its SVoD demand: “We trim our subscriber forecast numbers to reflect the fact that data on peers’ (eg Netflix’s) subscription numbers are based on estimates rather than disclosed numbers. We have thus used the lower end of estimate ranges to be conservative. Having secured the key sports right in the Bundesliga, and with local Polish content likely to be invested in, we believe Viaplay can enjoy great success in Poland, but we err on the side of caution until the rollout begins and we have solid data from NENT.”

“We have also made clear our opinion that NENT’s sports portfolio is a major unique selling point that will solidify its domestic market share as well as providing a hook for international markets – the prime example being the Bundesliga in Poland. The (non-exhaustive) rights overview reinforces our view that the portfolio built by NENT is well protected for the foreseeable future given NENT’s success in negotiating long term agreements with the leagues,” says Berenberg.

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