BPN 1130 Dutch cable operator eyes IPO

The Dutch cable operator Ziggo is contemplating a stock quotation, so its financial director said. The recently formed cable company leaked the news just as it was buried under a flood of complaints. To make matters worse, the company experienced technical hiccups of its network over the weekend.

Ziggo is the largest cable operator in The Netherlands with 3,2 million connections, serving 7,8 million people. The company is a three-way merger of the cable operators Casema, @Home en Multikabel. The companies were bought by two British equity companies Warburg Pincus and Cinven. Usually these companies hold the shares of companies for three to seven years. An IPO in the short run is not expected due to the bad stock exchange climate.

An IPO opens the door for foreign companies to come. Before the merger into Ziggo the private equity houses hoped to sell the cable companies to UPC, which was the largest cable company at that time with 2,1 million connections. Together UPC and the merger would have delivered a countrywide network and would have established competition for the incumbent telecom company KPN. However UPC’s holding company Liberty Global declined the invitation.

The remarks about an IPO were made in a week that the Dutch consumer association started a complaints’ desk as Ziggo was unable to handle all the traffic. In less than a week the consumer association registered 10.000 complaints, ranging from administrative actions to helpdesk problems with telephone, internet and television. The management of Ziggo was completely taken by surprise. Customers grew angry because of the long waiting times and the tariff for the helpdesk. Ziggo will meet the consumer association this week to solve to exchange the results of the complaints’ desk.

By the end of the week the disasters were still not over. Affecting more than 300.000 subscribers in the Utrecht province, the telephone network showed a defect, affecting the telephone and internet services. By Sunday night the breakdowns had been solved.

Despite the swell of complaints and the technical breakdown the company went on to advertise its services on radio, enticing new subscribers. A company spokes person indicated that they had followed the PR rule book for mergers. However they should have known that two is a party and three is a crowd.

Blog Posting Number: 1130

Tags: cable, IPO

BPN 1039 Zesko largest Dutch digital TV operator

The total number of Dutch TV connections grew by 10,100 to 7.73 million on 31 December 2007, with the digital TV growth only just off-setting the drop in analogue TV connections. The number of digital TV connections grew by 5.4 percent or 169,200 net additions during the quarter to 3.32 million on 31 December 2007, according to the quarterly update about the Dutch television subscribers market, by Telecompaper, an independent Dutch telecom market research bureau..

Both terrestrial and IPTV saw their market share grow on the Dutch digital TV market to 14.5 percent and 5.1 percent respectively, while cable and satellite continued to lose market share. The penetration of digital TV on the Dutch cable networks continued to grow, ending 2007 at 26.3 percent compared with 14.6 percent at the end of 2006.

The Dutch digital TV market's quarterly growth is expected to reach 7 percent during the first two quarters of 2008. The growth will be driven by KPN's continued effort to win as many as Digitenne customers as possible, and a steady increase of analogue cable TV customers changing over to digital TV via their cable network operator. Telecompaper estimates that the Dutch digital TV market will reach the 4 million user-milestone in the beginning of the third quarter of 2008.

On the digital TV market, Zesko became the largest provider by winning 87,000 customers during the fourth quarter, to end 2007 with 834,000 digital TV customers. Satellite TV operator Canal Digitaal lost its position as largest digital TV operator but continued its quarterly growth of around 3 percent to end the year with almost 800,000 customers. UPC saw its the number of digital TV customers grow by 18,900 to 550,300 on 31 December 2007, while KPN reported the highest growth of 20 percent to reach 497,000 subscribers on 31 December 2007.

The battle for the Dutch digital TV market has now four main players: the cable operators Zesko and UPC and IPTV operators KPN and Tele2. Zesko is the holding in which the cable operators Casema and Multikabel have been united.

Blog Posting Number: 1039

Tags: digital television, IPTV

Cross-channel rights to Dutch soccer premier division

The Dutch soccer world is in a stage of excitement, as the tender to the broadcast rights of the premier division has been closed. For the Dutch soccer team the rights mean revenues, while for the viewer/user it means access to the summaries and games.

The soccer games have become a cross-channel rights circus. Besides the rights to the premier league games of men, the rights are also sold to the games of women. The cross-channel rights concern television and radio over cable, IPTV and mobile. A complicating factor is the formats: previews, live games, summaries and archived games.

The participants in this tender have not been announced, but there were six major candidates for the all over rights. The Dutch public broadcast NOS lost two years ago the summaries to the new broadcast station Talpa/Ten. Versatel, now Tele2 had the rights to the full games and shared the rights amongst others with the telecom incumbent KPN. But after two years the scene has changed dramatically. Talpa/Ten has terminated broadcasting and the rights went to RTL.nl. Versatel hoped to pick up 100.000 IPTV/ADSL clients with the premier league soccer, but this did not work out at all.

Now the potential bidders limited themselves to six candidates: NOS, Tele2, KPN, RTL and SBS. RTL and SBS have not tendered, but a novice surprised everyone: Zesko, a combination of cable operators (Casema, @Home and Multikabel). This conglomerate does not cover the entire country with its cable infrastructure, but to fill some gaps they went into a deal with Canal Digitaal, a satellite distributor of movies, sports and digital channels. It is taken for granted that no foreign media party has turned in a bid for the rights.

The rights have been eagerly fought over the years. When the public broadcast company lost the rights to Talpa, Talpa paid 35 million euro for it. Yet the broadcast station lost at least a half million viewers due to the change in format and the commercials during the broadcasts. This round of bids might top the 100 million euro, which novice Zesko is said to be prepared to pay. Just twenty years ago the rights were worth 1,4 million euro.

The Premier League combination, which is selling the rights, will take its time for a decision. They have had two bad experiences in the past years. The telecom company Versatel/Tele2 wanted to use soccer to draw in new clients and when this did not work it started to sell out its rights to the digital channel of KPN. And the Talpa/Ten transfer of the rights to RTL has not brought the premier league more exposure; in fact due to the change of stations people have lost track of the premier league. So the question for the premier league combination is now, whether they will accept the high bid of the cable operators’ consortium or whether they will cut the package up and offer it to separate companies, who in turn can make their own distribution combines.

From the content point of view this bidding is interesting. We are talking about highly appreciated sports content. There was a day that on Sunday night at 7 o’clock no less than 4 million sat ready on the couch for the summaries; now only 3 million find the proper broadcast station. So why should the price go up, when the number of viewers is going down. On the other hand live games will be able to be viewed with a set-top box or by IPTV subscription. So there is certainty about part of the revenues.

So far soccer content has been a cross-channel commodity for the Premier League combination and the bidders. No cross-media potential has been seen yet in soccer content. The stress of soccer content has been on distribution; only the larger clubs have been able to form a community and have their virtual club house.

Blog Posting Number: 981

Tags: sports, sports content, IPTV

Dutch digital TV market growing slowly

The number of digital TV connections in the Netherlands grew 5.9 percent to pass the 2 million mark during the first quarter, ending the period with 2.12 million subscribers.

In 2006 the number of Dutch households grew to 7.2 million. The number of total Dutch TV connections grew by 0.3 percent during the quarter to 7.026 million. Analogue TV is still dominant in the Netherlands with 4.91 million connections. Digital's share of the total TV market passed the 30 percent mark, according to Telecompaper's report on TV connections in the Netherlands, "Dutch Television Market Q1 2007".

The cable network operators continue to dominate the Dutch TV landscape, with a share of 87.7 percent of the entire TV market and a growing share of the digital TV market. Year-on-year, cable saw its digital TV market share grow by more than 20 points, to 69 percent at the end of the first quarter of 2007. UPC saw its share of the total TV market and digital TV market fall to 24.1 percent and 31.1 percent respectively, but it is still the largest TV provider with 2.198 million customers on 31 March 2007. The penetration of digital TV on the Dutch cable networks passed the 20 percent mark during the first quarter of 2007, ending the period with 20.3 percent.

The quarterly growth for the second quarter is expected to be around 10 percent, driven by cable network operators Delta and Casema, because they lag behind in digital penetration.

Besides the cable there is IPTV being sold in the Netherlands by Tele2. However competition is heating up from the autumn onwards when the incumbent telco KPN will launch the IPTV service Mine. This launch of this service has been announced several times, but was regularly postponed due to technical problems. The launch will give a new impulse and will lead to an estimated 2.6 million digital TV customers (cable and IPTV) at the end of 2007.

Blog Posting Number: 807

Tags: digital telvision, cable

The municipality of Brunssum in the South of The Netherlands (see coloured area in black oval) is one of the last of the cable Mohicans. It will offer its cable network for sale. Presently the network has 13.500 connections. Reason for the sale it the high costs of upgrading for the network.

Brunssum is one of the last municipalities in The Netherlands which still possesses and operates its own cable network. In the past fifteen years almost all municipal networks have been sold to regional operators like UPC, Casema and Kabelcom/aHome/Essent. These companies have been able to invest in triple play (television, telecom and internet). The present network of Brunssum badly needs an upgrade, if it wants to compete with these regional cable operators. The local network can not offer digital television. So the municipality will put it on the market.

This has been the trend for the last fifteen years and in this way regional operators are growing by threading municipalities in particular regions. This is the way UPC, Casema and Essent grew into cable operators with millions of users. The real high time was at the end of the nineties when regional cable operators paid 2250 guilders (roughly 1125 euro) or more for every subscriber. Brunssum expects revenues from the sale of the network for 10 million euro; this would be 740 euro per subscriber. The regional cable operator could earn that sum back easily – so was the reasoning – by offering digital TV, telecom facilities, internet and security services. But these days cable operators have to compete with new glass fibre consortia. So UPC is fighting the Citynet consortium in Amsterdam and in Nuenen UPC lost the majority of its subscribers to Ons Net, the private glass fibre consortium.

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More than 1 million households in The Netherlands have a television subscription combined with an internet subscription. Source: Vecai

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It is interesting to see that many of the fibre glass projects are also initiated by the municipalities. In the past they ran a cable network to avoid forests of antennas. Now they get involved in high speed networks for their own municipal services, education and hospitals; but their involvement is not that of an operator. They take shares in the private companies in order to have a say about the connections to their services and insure that the inhabitants get the best network possible. I guess that once glass fibre networks are common, up and running, that municipalities will sell their shares again to invest in other citizens’ services.

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Talking about internet by cable. I have a UPC subscription to Internet, Chello Classic, a package of 8 Mbps down and 1 Mbps up. That package is no longer sold; they never informed me by letter or e-mail. But what you get back or as compensation is not told on the webpage. On the webpage they guarantee the same optimal service, but lately they have been fiddling with the speed, as you can see from last month’s speed recordings through Speedtest.

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Blog Posting Number: 775

Tags: cable, glass fibre