NTL: Revenues Up, Shares Down

Business is picking up at restructured U.K. cable company NTL Group Ltd. (Nasdaq Europe: NTLI), which reported a 6 percent year-over-year revenue increase for the second quarter. However, its share price suffered as the results missed analysts' expectations (see NTL Reports Q2).

Revenues of £584.4 million (US$1,067 million) were up from £551.3 million ($1,006 million) in the second quarter of 2003, thanks to growth in its residential broadband and telephony services. The results reflect the improvements the company has made since it completed its restructuring last year, it says (see NTL Emerges From Chapter 11).

While its profit margins increased 3.3 percent to 34.6 percent, NTL’s shares fell 7.2 percent in afternoon trading to $49.13.

Analysts were expecting revenues of around £590 million ($1,077 million), but the results suffered from seasonally lower telecom services purchasing, according to Aryeh Bourkoff, analyst at UBS Investment Research. "While NTL reported lighter than expected metrics it expects to see improvement in 2H04 results... the sales pipeline in 3Q04, so far, exceeds 2Q04, in our view," Bourkoff writes in a note to clients today.

Net loss for the quarter increased from £160.3 million ($292.6 million) last year to £249.8 million ($456 million), of which £162.3 million ($296.3 million) was repaid debt. The company renegotiated its debt during the quarter, as the final part of its restructuring process (see NTL Proposes Refinancing).

Net loss per share was $5.16, compared with analysts’ expectations of $2.25, according to Reuters Research.

The carrier's Home Division, which offers triple-play services to about 660,000 customers, added 60,500 net customers during the quarter, beating its target of 50,000 for the fourth quarter in a row. The Business Division didn’t fare so well, due to delayed timing of project work.

The television part of its triple-play is under the most pressure, as the market in the U.K. is fiercely competitive. Shares in rival BSkyB Group plc, a satellite provider, also fell today in response to worse-than-expected results.

Broadband uptake remains its strongest area of business, and it "maintains its 2004 broadband guidance of 25-30% sub growth and expects ARPU to pick up," writes Bourkoff.

— Nicole Willing, Reporter, Light Reading

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