Com Hem sees scope for price rises following solid 2Q

Anders Nilsson

Swedish cable operator Com Hem’s management believe the company has greater scope than anticipated to grow revenue through the gradual introduction of price increases following a quarter that saw it reduce discounts without a significant impact on churn.

Com Hem saw moderate subscriber growth in the second quarter, with the number of TiVo advanced TV customers growing by 14,000 to account for a third of the digital TV base, with 204,000 TiVo homes out of a total of 627,000 digital TV revenue-generating units.

Com Hem’s overall digital TV base grew by 2,000 in the quarter, while its broadband base grew by 8,000 to 637,000. The cable operator’s overall subscriber base grew by 6,000 to 894,000.

The company believes there is room for higher growth rates in the future and it will focus on driving higher TiVo sales going forwards, said Anders Nilsson, CEO of Com Hem, on a conference call to mark the results. Nilsson said increasing prices could help grow revenues significantly in the future, as Com Hem has recognized that there is room to increase prices without having a significant impact on churn.

“We were surprised by the low churn impact of discount reductions,” he said. The company has not laid out pricing plans for next year, but will analyse this. Discount reductions will continue to be made on an annual basis. The impact will be felt gradually, he said.

Com Hem expects ARPU to grow through the next quarter as price rises take effect. The company saw greatest growth in broadband. The operator saw telephone customers fall due to price rises taking effect.

The company saw landlord revenues decrease due to contract non-renewal and other factors including lower index pricing due to lower inflation, with revenues from this segment down SEK21 million.

Capex grew slightly to SEK250 million in the quarter due to investment in broadband.

The company expects mid-single digit revenue growth for the year as a whole.

Com Hem posted revenues of SEK1.246 billion for the quarter, up 4% year-on-year, while underlying EBITDA was SEK583 million, up 3.1%.