Com Hem : reports second quarter results 2017

Second quarter summary

• Revenue saw a strong increase of 38.1% to SEK 1,794m while organic revenue, excluding Boxer, rose by 5.0% to SEK 1,364m.
• Operating profit (EBIT) rose by 16.0% to SEK 222m.
• Underlying EBITDA saw a strong increase of 20.3% to SEK 730m and organic underlying EBITDA, excluding Boxer, rose by 6.7% to SEK 648m.
• Cash flow from operating activities decreased by 13.6% to SEK 478m due to timing in interest payments and a negative change in working capital which is expected to be partially reversed in H2 2017.
• Operating free cash flow increased modestly by 2.3% to SEK 419m and organic operating free cash flow, excluding Boxer, fell by 6.7% to SEK 382m due to temporarily low capex level in Q2 2016.
• Net result rose by 33.9% to SEK 110m.
• Earnings per share: SEK 0.61 (0.43).
• Com Hem Segment:
  • Record high consumer ARPU of SEK 376 (SEK 368 in Q1 2017).
  • Record low consumer churn of 12.4% (13.6% in Q1 2017).
  • Unique consumer subscribers rose by 8,000 to record high 961,000.
  • Strong volume growth in broadband, up 11,000 to record high 724,000 RGUs.
  • Digital-TV RGU's totalled 645,000, with a continued growth of 4,000 TiVo customers (penetration rate of 40%).
• Boxer Segment:
• • Consumer churn rate dropped by 4.2 percentage points sequentially to 15.0%, the lowest level since Q3 2015.
  • Consumer ARPU rose by SEK 1 to SEK 298, a record high.
  • 5,000 broadband RGUs were added in the quarter.
  • Decline in unique consumers slowed down to -8,000 compared to -16,000 in the first quarter.
  • Decline in RGUs slowed down to -5,000 compared to -13,000 in the first quarter.
  • Boxer's fibre footprint is now at 900,000 addressable households including roughly 200,000 which do not overlap with the Com Hem Segment.

Comment from Anders Nilsson, CEO, Com Hem Group:
The Com Hem Group showed strong operational momentum with good performance across all KPIs. This translated into solid financial performance as revenue and underlying EBITDA for the Group grew in-line with guidance. In the Com Hem Segment, record consumer ARPU and churn in the quarter following our annual price adjustments give us confidence in our strategy to focus on customer satisfaction. For Boxer we see initial signs that the repositioning from a TV-centric to a broadband-led operator is getting traction, resulting in a slowdown of the RGU decline, as broadband sales grow while DTT churn is significantly reduced.

Record ARPU and churn following price adjustments in the Com Hem Segment
Price adjustments implemented in the previous quarter drove a sequential consumer ARPU increase of SEK 8 (2.3%) to a record high of SEK 376 while consumer churn declined from 13.6% in the first quarter to 12.4%, a record low. Our customer base grew by 8,000 in the segment and the number of RGUs increased by 8,000 with very strong growth in broadband, up 11,000 RGUs, modest growth in DTV, up 1,000 RGUs, and continued decline in telephony, down 5,000. Our TiVo base grew by 4,000 customers, now at 40% of our DTV base.

Addressable households reaching 2.6m
We made continued progress in our network expansion programme with 200,000 addressable households added in the quarter to a total of 600,000 since the start of the expansion, 200,000 of which are unique to Boxer. Since one year ago the Group has expanded its footprint by 30% from 2.0m to 2.6m addressable households. In the first quarter we upgraded the footprint expansion target from 2.8m to 3.0m households by 2020, which constitutes an increase of 50% from before the SDU expansion and the Boxer acquisition. In addition, we made progress on the new build project where fibre was deployed in selected trial areas during the quarter. Given high competition to deploy fibre in attractive areas, we need more time to further evaluate the feasibility of scaling up new build with attractive payback beyond the trials and expect to announce a decision later in 2017.

Looking ahead
We started this year setting out some ambitious but achievable goals. This quarter we saw clear signs that the initiatives set in motion in previous periods are already producing concrete benefits. While we execute on our current growth drivers we also look to the future for further opportunities as we prepare the company to operate in a converged market. This continues to be a year of operational focus as we execute on initiatives to improve customer satisfaction in the core cable business, set up the Boxer business to capitalise on the fibration of the SDU market and make headway toward our goal to connect 3.0m addressable households by 2020.

Notes to the editors:
You will find the complete report with tables in the attached PDF or at:http://www.comhemgroup.se/en/investors/financial-reports-presentations/

Conference call on July 11
Management will host a conference call for the financial community at 10:00 am CET today. The presentation will be held in English and the presentation material can be accessed on www.comhemgroup.com. An on-demand version is also available after the presentation.

Link to webcast: http://cloud.magneetto.com/comhem/2017_0711_q2/view

Conference call dial-in numbers:
Sweden: [phone]
UK: [phone]
USA: [phone]

To ensure that you are connected to the conference call, please dial in 10 minutes ahead of the conference call to register your attendance.

Other information
Com Hem Holding AB's subsidiary Com Hem Sweden AB (publ) is the reporting entity of the Group´soutstanding notes. Com Hem Sweden AB (publ) half year results 2017 is asof today available on http://www.comhemgroup.se/en/investors/financial-reports-presentations/

For queries, please contact:

Investors
Marcus Lindberg, Investor Relations Manager
Tel: [phone]
[e-mail]

Petra von Rohr, Director IR & Corporate Communications
Tel: [phone]
[e-mail]

Media
Fredrik Hallstan, Head of PR
Tel: [phone]
[e-mail]

This information is information that Com Hem Holding AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 07:30 CET on July 11, 2017.

About Com Hem Group
Com Hem Group offers broadband, TV, play and telephony services to Swedish households and companies. Our powerful and future-proofed network with speeds up to 1 Gbit/s, covers half of the country's households, making the Com Hem Group an important driver of creating a digital Sweden. We bring our 1.45 million customers the largest range of digital-TV channels and play services via set top boxes as well as on-the-go for tablets and smartphones. The company was founded in 1983 and has approximately 1,100 employees. Com Hem Group is headquartered in Stockholm and operates through four subsidiaries; Com Hem AB, Boxer TV Access AB, Phonera Företag AB and iTUX Communication AB. In 2016, Group sales totalled SEK 5,665 million. Since 2014 the Com Hem share is listed on Nasdaq Stockholm.www.comhemgroup.com.