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Reuters Summit-UPDATE 1-Kabel Deutschland keen on consolidation
November 30, 2010 / 4:30 PM / 7 years ago

Reuters Summit-UPDATE 1-Kabel Deutschland keen on consolidation

(Repeats with new Reuters story code)

* May lower net debt/EBITDA target to 3-3.5 times

* Consolidation with operators in other regions still hard

* Sees company resilient to economic turmoil

(Add CEO comment, detail, background)

By Nicola Leske LONDON, Nov 30 (Reuters) - Germany's largest cable operator Kabel Deutschland KD8Gn.DE, which went public in March, is keen to acquire smaller regional competitors and should have ample capacity to do so thanks to a refinancing, it said.

"We are in the process of refinancing ... and all of that is going to have the effect of taking a healthy double-digit number off our interest expenses," Chief Executive Adrian von Hammerstein told the Reuters Global Media Summit in London on Tuesday.

To get better terms, von Hammerstein said, KDG was considering lowering the target range for its net debt to EBITDA ratio to between 3 and 3.5, from 3.5 to 4, having reached the lower end of that range.

Von Hammerstein, a supporter of sector consolidation in Germany, reiterated his interest in struggling cable providers Primacom PRIG.DE and Telecolumbus but said there were no new developments to report.

Telecolumbus and Primacom are owned by banks which are not natural owners, von Hammerstein said, adding he was optimistic opportunities would present themselves.

Asked whether it would be possible for KDG to buy smaller rival Kabel Baden Wuerttemberg (KabelBW), owned by Swedish private equity firm EQT [EQTPRK.UL], von Hammerstein said: "Difficult ... the regulator has concerns about the TV market."

EQT has mandated JP Morgan and Deutsche Bank to sell or float KabelBW, Germany's third-largest cable company, sources familiar with the matter have told Reuters. [ID:nLDE6AP1O6]

In 2004, KDG tried to merge KabelBW and Unity Media to create a heavyweight rival to Deutsche Telekom (DTEGn.DE), only to be thwarted by antitrust authorities.

Von Hammerstein added that any potential acquisition would very likely be done on a standalone basis, not with funding from shareholder Providence Equity Partners, owner of about 44 percent of Kabel Deutschland and which has agreed to a six-month lock-up on its stake, von Hammerstein said.


The German cable sector is lagging other European countries because it was privatised relatively late but von Hammerstein said this gave cable companies more growth opportunities in Germany.

"Average revenue per user in Germany is 13 euros ($17) per month. Other European operators are pretty much all above 30," von Hammerstein said, adding that demand for HDTV, flat screens and services such as video on demand would also drive growth.

Germany, with dozens of quality free-to-air TV channels, has so far proved a tough market for pay-TV operators like Sky Deutschland SKYDn.DE.

Cable operators have been hampered by anti-trust concerns that prevent a national player from being created. "Regional consolidation is still an issue," von Hammerstein said, but added: "I think it's a matter of time."

Asked whether there was room for Kabel Deutschland to raise its full-year guidance, von Hammerstein said: "Subscription business is like a tanker. It does not move quickly. We have good visibility on how the business evolves.

"You cannot expect big jumps and bounces," he said, but added this also meant the business should survive the current turmoil in the euro zone in relatively good shape.

"My sense is that, even if there is an impact, we should be quite resilient," he said. (Editing by David Holmes) ($1=.7676 Euro)

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