European cable companies confident of profitable near future
| 03 December 2014
The latest Solon survey of European cable communications has revealed that executives from leading operators expect good times ahead for their industry in terms of revenues and profits.
SolonIndeed the survey — based on the feedback of executives at 14 leading European cable operators from 12 countries — predicts a revenue increase of 6% per year until 2016 and a further increase in profitability with EBITDA margin expected to reach 51% on average in 2016.
Broadband was found to be by far the largest revenue and EBITDA growth-driver for the industry, a development mainly driven by significant growth in download speeds. The primarily marketed bandwidth of European cable operators was on average 48Mbps in the first half of 2013. By 2016, cable players expect this value to increase to over 150Mbps betting on VDSL and vectoring players not being able to deliver comparable bandwidths.
Another key finding from the data is that the cable industry's leading management's attention is focused on defending their positions from DSL and fibre-based companies through additions of leading SVOD services. Principally this involves adding the likes of Netflix and Amazon to their respective EPGs, said Matthias Hamel, managing director at Solon Management Consulting.
"Cable operators have the choice to compete with companies such as Amazon Instant Video or Netflix by developing own video streaming products or to integrate them into their offerings," he commented. "The assessment of both strategic alternatives is largely driven by a company's competitive position. However, recent trends see a development towards the latter strategy, ie the integration of these video streaming platforms.
Looking at possible challenges, the Solon survey of European cable communications cautioned that medium-sized cable companies could see customers demand more complex products and customer care as well as different sales approaches.