ABN Amro has said there is a risk of disappointment in European cable group UPC’s digital cable roll-out.
The broker says that one of the key elements in driving growth in UPC’s average revenue per user (ARPU) is the development of its digital cable service. However, ABN thinks that the roll-out will have a negative affect on the company’s ARPU growth and share price.
UPC’s revised target of 250,000 digital subscribers by the end of the year (down from 300,000), is ambitious given that a full roll-out will not begin until the third quarter. It will have to sign up in the region of 100,000 subscribers in the second half of the year. This is a tall order, says ABN, given that the Microsoft ‘Silver’ operating system is yet to be fully written.
UPC has to act fairly quickly with its digital plans if investors are to remain confident in the group and hold the share price up, especially given a mounting debt burden.
Overall, UPC’s financial results were pretty much in line with expectations. Revenues were €1.0 billion and EBITDA came in at a loss of €363 million. Net loss was €1.98 billion.
