Europe's Cable Ops in Bullish Mood
A new survey of European cable operators reveals a confident group of service providers that believe they can increase their annual revenues by more than 5 percent on the back of broadband, mobile and B2B/wholesale growth.
Germany's Solon Management Consulting surveyed senior executives at 14 cable operators in 11 countries around Europe in late 2011 and early 2012. The results showed that while next-generation TV services (TV everywhere, multi-screen, next-gen set-top box) will be used to protect the existing customer bases, top-line sales growth is expected to come from other offerings, with demand for greater broadband speeds driven by the increasing customer use of online video services.
In recent years the operators have invested in a broader service portfolio, enabling them to offer quadruple-play packages (TV, broadband, telephony and mobile) as well as enterprise services. Now those investments are starting to pay off, according to Solon's findings.
One operator that fits in with Solon's findings is the U.K.'s Virgin Media Inc. (Nasdaq: VMED), which has built an impressive broadband service and customer base and diversified into mobile and business customer services and which is now starting to see the positive impacts of those developments in its earnings reports. (See Virgin Media Q1 Profit Hits £7M .)
The Solon team also notes that the cable operator respondents forecast their capital expenditures to grow in absolute terms but to decrease as a percentage of revenues, from an average of 23 percent in 2010 to 18 percent in 2014. That might be wishful thinking, however, as "the history of Solon Cable Surveys since 2004 shows that achieving this target is a challenge."
— Ray Le Maistre, International Managing Editor, Light Reading