Sweden's Com Hem Pays $160M for Boxer TV

Sweden's Com Hem has agreed to buy pay-TV player Boxer TV from state-owned Teracom in a deal worth about 1.3 billion Swedish kronor ($160 million) that will give it a bigger presence among the country's single-dwelling units (SDUs).

Having established itself as one of the main players in the multi-dwelling unit (MDU) market, Com Hem AB has recently turned its attention to SDUs as it looks for new growth opportunities.

Com Hem has previously flagged plans to extend its fiber network coverage to about 800,000 SDUs in the next few years, and the acquisition of Boxer will give it more than half a million SDU customers using DTT (digital terrestrial television) services.

Last year, the cable company provided telephony, broadband and TV services to a total of 911,000 Swedish households, and the figure has grown by more than 80,000 in the last two years, with revenues rising by nearly 10%, to SEK3.76 billion ($464 million), over the same period.

Sweden has about 4.2 million households in total, according to data from the country's statistics agency.

Boxer is believed to have come under pressure from the rollout of fiber networks in Sweden: Customer numbers have fallen by more than 30,000 in the last two years, to 541,000 in 2015, and revenues have fallen by 5%, to SEK1.88 billion ($232 million), over the same period. But Com Hem reckons its own fiber investment activities will stop the rot by giving customers a high-speed broadband option in addition to TV services.

Want to know more about pay-TV subscriber trends? Check out our dedicated video services content channel here on Light Reading.

While the enterprise value of the deal works out to be SEK1.33 billion ($164 million), Com Hem will pay a total consideration of SEK1.55 billion ($191 million) in cash for Boxer.

Taking into account net cash of SEK220 million ($27 million) on Boxer's books, the transaction will increase Com Hem's net debt by SEK1.33 billion ($164 million) and be funded through a new SEK800 million ($99 million) credit facility with Swedbank as well existing "unutilized" credit facilities.

Com Hem is already heavily leveraged and the deal will increase its net debt to about 3.9 times annual EBITDA, from a previous ratio of 3.8. That will bring the company close to the upper limit of a target range of between 3.5 and 4.

However, the company expects the takeover to add about SEK300 million ($37 million) of EBITDA to annual earnings, due partly to "synergies." Last year, the company reported EBITDA of SEK2.27 billion ($280 million), 13.2% more than in 2014.

Com Hem is still guiding for revenue growth in the "mid-single-digit" range over the medium term and plans to increase capital expenditure slightly from a current annual level of between SEK1 billion ($123 million) and SEK1.1 billion ($136 million).

The deal has yet to secure the approval of national regulatory authorities.

Shares in Com Hem rose by 6.5% in Stockholm this morning following news of the deal, but were trading up just 0.1% on Tuesday's closing price at the time of publication.

— Iain Morris, , News Editor, Light Reading