Berenberg positive on NENT Group’s upping of sub targets and EBIT losses

Nordic streaming outfit Nordic Entertainment Group’s (NENT Group) ambitious international rollout plan for Viaplay is “likely to bear fruit in the medium term”, despite increased EBIT losses as it finances it expansion, according to an analysis by Berenberg.

At NENT Group’s capital markets day last week the streaming outfit raised its subscriber target for 2025 from 10.5 million to 12 million but admitted that that EBIT losses would be higher than previously indicated, amounting to SEK3.8 billion before breakeven was achieved in 2025 rather than SEK2.5 billion, as previously forecast.

Berenberg’s analysts said this increase in cumulative losses was not a concern but “rather a reflection of increased ambition within the international expansion” that would likely deliver results “as content investments convince more consumers in international markets to sign up for Viaplay”.

Berenberg said that NENT Group’s plans unveiled last week to expand to five more international markets between now and 2023 – the UK, Canada, Germany, Austria and Switzerland – with an offering that did not include sports would mean “there will likely be fewer subscribers in these markets compared to Poland and the Netherlands”.

However, they said, “there is also less cost and risk associated with the launches” and NENT Group has to the option to ramp its content investment down the line if its offerings succeed in capturing a significant slice of the market.

Berenberg’s analysts also reflected that “the tone from management” indicated that NENT Group’s launch of Viaplay in Poland was going well, even if it had not yet published subscriber figures.

The analysts speculated that the popularity of Bundesliga football and Viaplay originals in Poland could more or less be replicated in the Netherlands, where Viaplay is scheduled to launch next, with Formula 1 taking the place of Bundesliga rights as the core of the sports offering in this market.