Bank: “NENT ready to thrive”
February 5, 2021
NENT Group, the Nordic streaming company which includes the Scandinavian Viasat pay-TV brand, is well placed to thrive domestically and internationally according to a report from investment bank Berenberg.
The bank recognises that along with many other pay-TV operations, NENT has benefited from the lockdown, saying: “2020 represented a significant year for the global streaming market, with stay-at-home restrictions, new market entrants and heavy content investments driving significant SVoD adoption. Although competition is high, we view this as further evidence that the structural shift from linear to digital will provide space for Nordic Entertainment’s (NENT) Viaplay to thrive domestically and internationally.”
“With the SVoD market growing healthily, we trim our near-term margins to reflect the likelihood that NENT management will prioritise content investments to establish and solidify its position across its new markets, evidenced by steady news-flow over recent months regarding sports rights acquisitions and content agreements. These adjustments are offset by improved medium- and long-term forecasts, both on top-line growth and margins. Given indications of a cSEK3.5 billion equity raise and a cSEK1.2 billion special dividend from Allente, NENT will have a significant war chest at its disposal and we are supportive of investment now to reap medium-term operating leverage,” continues Berenberg.
“Consistent with our thesis, NENT is progressing with the sale of its non-scripted production, branded entertainment and events businesses, with a view to streamlining its operations to focus on the SVoD opportunity with Viaplay. With the UK studios distribution business sale and the Allente joint venture complete, we believe the nonscripted and events sale will complete the streamlining process,” adds the bank.
The Berenberg report says that sentiment around NENT currently revolves around its ambitions to become the ‘European streaming champion’.
“We will start to see evidence of management’s strategy execution through 2021 – although we will probably have to wait until H2 for meaningful data on international uptake. Thus, we would not consider Q4 results to provide an indication of the potential success moving forward. We would, however, expect management to make good on its guidance of reaching 3 million Viaplay subscriptions. Our price target remains unchanged at SEK560,” concludes the report.