Utrecht, July 18, 2013 Ziggo N.V. Q2 2013 Results Further investments to improve revenue momentum Investments focused on Ziggo WifiSpots, launch of mobile offerings and customer retention ·         Successful launch of our popular 'Ziggo WifiSpots' with 850,000 hotspots to be activated in August ·         Ziggo prepares to launch an MVNO-based mobile offering in 2nd half of 2013 ·         Newly introduced campaigns in Q2 targeted on customer retention ·         B2B...

 

Utrecht, July 18, 2013

Ziggo N.V. Q2 2013 Results

 

Further investments to improve revenue momentum

Investments focused on Ziggo WifiSpots, launch of mobile offerings and customer retention

 

·         Successful launch of our popular 'Ziggo WifiSpots' with 850,000 hotspots to be activated in August

·         Ziggo prepares to launch an MVNO-based mobile offering in 2nd half of 2013

·         Newly introduced campaigns in Q2 targeted on customer retention

·         B2B continues to record strong organic revenue growth; first contribution from acquisition of Esprit Telecom

·         Revised outlook for full year 2013 due to higher investments

 

Operational highlights Q2 2013

·      All-in-1 bundle subscribers up 20,000 in Q2, resulting in 1.4% q-o-q growth and 7.1% y-o-y growth; All-in-1 bundle penetration reaches 53.7% of our consumer customer base

·      Internet subscribers up 20,000 in Q2, representing 1.1% q-o-q growth and 4.6% y-o-y growth

·      Telephony usage revenue down 5.2% y-o-y (down 1.3% excluding FTA rate reduction)

·      Digital pay TV, including Video on Demand, up 1.0% y-o-y

·      B2B adds over 3,500 subscriptions for its business bundles

·      150,000 set-top boxes made interactive through SGUI, supporting another quarter of strong growth in Video-on-Demand transactions

 

Financial highlights Q2 2013

·      Revenues up 1.4% y-o-y to EUR391.9 million (down 0.2% excluding Esprit Telecom). Underlying revenues excluding set-top box sales and other revenues up 0.6% organically, despite a 5.2% decline in telephony usage revenues.

·      Adjusted EBITDA EUR221.0 million, up 0.8% y-o-y. Excluding Esprit Telecom, EBITDA up 0.3%

·      Free cash flow EUR95.0 million, down 40.1% y-o-y due to growth in capital expenditure and acquisition of Esprit Telecom

·      Net profit up to EUR88.9 million, from EUR64.4 million in Q2 2012

·      Earnings per share EUR0.44

·      Leverage ratio down to 3.41x compared to 3.42x at year-end 2012

 

CEO Bernard Dijkhuizen:

"During the second quarter we experienced similar market dynamics as in the last few quarters. Our sales campaigns for the All-in-1 bundle were successful and continued to deliver good results, taking into account Q2 seasonality. At the same time, churn levels continued to be relatively high historically, particularly for lower spending customers, having an impact on revenue growth in the consumer market. In order to reduce churn we have developed and launched several programs during the second quarter targeting to improve customer retention. Our focus on sales of All-in-1 bundles and retention had an adverse effect on marketing initiatives for premium TV, contributing to a limited growth in digital pay TV this quarter.

 

 

In addition to our loyalty campaigns, we prepared the increase of internet speeds and started to roll out the popular Ziggo WifiSpots. Ziggo WifiSpots creates through the public channel of the modems from all Ziggo internet customers a large number of Wifi-hotspot access points in our footprint for Ziggo customers. The roll out will result in over 850,000 hotspots by the end of the third quarter and close to 1 million before the end of the year. This new service strongly supports the appeal and attractiveness of our services to our customers and the response by customers and media has been overwhelming.

 

To further leverage the benefits of the Ziggo WiFiSpots we will also launch an MVNO-based mobile offering for existing customers in the second half of this year. This proposition will offer an attractive price for a bundle of call minutes/SMS and mobile data in combination with high quality internet access through the Ziggo WifiSpots. This proposition will grow over time to a fully converged mobile offering.

 

While in consumer markets RGUs and revenue growth came in below our expectations, we were pleased to see continued strong organic revenue growth in our B2B operations. On top of that we benefited from a first contribution from our acquisition Esprit Telecom. This acquisition will stimulate organic revenue growth in the SME market (small and medium-sized enterprises) going forward, in addition to growth in the small and home offices market through our office bundles."

Outlook

Following the decision to further step up our campaigns and investments in customer retention, our Ziggo WifiSpots and the launch of our mobile offering, and taking into consideration the higher than anticipated churn in the first half year, our outlook for the full year 2013 will change. We now anticipate 2013 organic revenue growth (excluding 'revenues from other sources') to be around  1%, whilst adjusted EBITDA is expected to be in line with last year. Our capital expenditure for 2013 is expected to increase to a range of EUR330-340 million primarily due to higher investment in customer premises and equipment to support customer retention and investments for the launch of Ziggo mobile.

 

In line with the dividend policy, Ziggo intends to pay an interim dividend of EUR190 million, equal to EUR0.95 per share, in September 2013.

 

Important dates

This year, Ziggo expects to publish its quarterly results on the following dates:

Q3 2013                      October 18, 2013

FY and Q4 2013           January 23, 2014

 

Interim dividend 2013:

September 3, 2013     Ex-dividend (at opening)

September 5, 2013     Record date (after close)

September 10, 2013   Payment date

 

Note

Please note that the results published in this press release are the consolidated results of Ziggo N.V. ("Ziggo"), and not those of Ziggo Bond Company B.V., the entity that we reported on prior to Q1 2012. As a consequence of the initial public offering of 25% of its ordinary shares on March 21, 2012, Ziggo is now reporting quarterly results at the level of the entity that issued the ordinary shares at NYSE Euronext Amsterdam, referred to as "Ziggo". A reconciliation of the results for Ziggo N.V. to Ziggo Bond Company B.V. is attached as a separate schedule to this earnings release, and an explanation of the most important reconciling items is provided at the end of this release. Ziggo was incorporated on April 1, 2011 and indirectly acquired all of the issued and outstanding shares of Ziggo Bond Company B.V. on March 20, 2012.

 

Definitions/Footnotes

(1)   Adjusted EBITDA refers to EBITDA, adjusted to eliminate the effects of operating expenses incurred in connection with the initial public offering of ordinary shares of the company on March 21, 2012, which were EUR0.0 million respectively EUR0.0 million for the quarter and half year ended June 30, 2013 and EUR0.0 million respectively EUR39.7 million for the quarter and half year ended June 30, 2012.

(2)   EBITDA represents operating income plus depreciation and amortization. Although EBITDA should not be considered a substitute for operating income and net cash flow from operating activities, we believe that it provides useful information regarding our ability to meet future debt service requirements.

(3)   Operating data relating to our footprint and RGUs are presented as at the end of the period indicated.

(4)   Digital television RGUs equals the total number of standard TV subscribers who have activated a smart card as at the end of the periods indicated. As a result, digital TV RGUs represents the number of subscribers who have access to our digital TV services. In any given period, not all of these digital TV RGUs will have subscribed to additional digital pay TV services. As at June 30, 2013, 862,000 of our total digital TV RGUs subscribed to one or more of our digital pay TV services.

(5)   Total RGUs are calculated as the sum of total standard TV subscribers, digital pay TV subscribers, internet subscribers and telephony subscribers which are serviced by our coaxial products for both the consumer and the business markets. Total consumer RGUs excludes the subscriptions for our products Office Basis (31,909), Office Plus (1,291) and Internet Plus (10,143) targeted at SOHO and small businesses and our collective TV contracts TOM and TOMi (representing 80,000 RGUs), as these coaxial products are serviced by our business division and revenues generated through these products are recognized as business service revenues. These products represent 124,000 TV RGUs, 14,000 digital pay TV RGUs, 43,000 internet RGUs and 33,000 telephony RGUs.

(6)   Besides 1,446,000 subscribers who subscribed to the All-in 1 bundle, 12,000 customers subscribed to standard TV, internet and telephony on an individual product basis instead of an All-in-1 bundle.

(7)   RGUs per customer is the total number of consumer RGUs (6,845,000 as at June 30, 2013) divided by the total number of consumer standard TV subscribers (2,694,000 as at June 30, 2013).

(8)   Average Revenue per User (ARPU) for the consumer market is calculated as the sum of total standard TV, digital pay television, internet, telephony (including call charges and interconnection revenue) and All-in-1 bundle subscription revenues generated in the consumer market for the period divided by the number of months used and divided by the period's average monthly total standard TV RGUs. It excludes revenue from other sources, including installation fees and set-top box sales.

(9)   We have changed the definition of net debt for the calculation of the leverage. Net debt is defined as the outstanding balance of the principal amount of our borrowings plus the accrued interest on these borrowings and the market-to-market value of the derivative financial instruments, reduced by the balance for cash and cash equivalents. Before the balance of accrued interest and the market-to-market value of the derivative financial instruments was not included in the calculation of net debt.

 

About Ziggo Ziggo is a Dutch provider of entertainment, information and communication through television, internet and telephony services. The company serves around 2.8 million households, with over 1.8 million internet subscribers, almost 2.3 million subscribers for digital television and 1.5 million telephony subscribers. Business-to-business subscribers use services such as data communication, telephony, television and internet. The company owns a next-generation network capable of providing the bandwidth required for all future services currently foreseen. More information on Ziggo can be found on: www.ziggo.com.
Not for publication   For more information please contact: Press Martijn Jonker Deputy Corporate Communications Director +31 (0)88 717 2419 | [email protected]	Analysts and Investors Wouter van de Putte Corporate Finance & Investor Relations Director +31 (0)88 717 1799 | [email protected]

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