Market Insight

Swedish Com Hem continues steady turnaround in digital TV growth

February 10, 2015

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Swedish cable operator Com Hem has seen improved digital subscriber growth following a period of slowdown. The fourth quarter of 2014 saw 1.7% growth on the previous quarter, with digital pay TV subscribers standing at 617,598. Year-on-year, this was a growth of 3.5%, reversing the decline of 2.5% experienced in 2013.

As well as digital TV growth, the cable group’s latest set of results showed a continuation of the upswings it has seen in its broadband subscriber base, which grew by 9.6% across the course of 2014 to 611,739. This had a knock-on effect for telephony, which rose by 9,956 to 337,115 subscriptions. Further positives were a fall in churn, which decreased to 14.2% of unique consumer subscribers – an improvement on the previous year’s figure of 16.3%, and an increase in unique subscribers from 830,187 at Q4 2013 to 876,270 at Q4 2014.

Com Hem’s growth in digital TV and internet had positive effects on revenue, with FY 2014 digital TV revenue up 3.2% to Skr 1,737 million (€191 million) and internet revenue growing 10.4% to Skr 1,461 million (€160 million). This was partially offset however by a decline in both telephony and landlord revenue. The net effect was a 2.2% increase on 2013 FY revenue across consumer and landlord businesses to Skr 4,313 million (€474 million) for 2014.  

Our analysis

Com Hem’s improvement in digital growth has been a long time coming following a period of decline which began at the start of 2012 and persisted until the beginning of 2014. The launch of its TiVo service has been instrumental in this, which has grown to 27% of Com Hem’s digital pay TV base since its launch in Q3 2013. As IHS has previously noted, this highlights the value of cable operators taking advantage of the opportunity that online TV offers, as well as acknowledging the threat it may present. Despite the encouraging return to growing its digital base though, the operator still has a way to go in converting its total TV base to digital. IHS currently estimates the percentage of Com Hem’s TV base taking digital as around 36%.

The next stage in Com Hem’s strategy is directed towards ARPU growth. Last quarter saw modest growth in consumer ARPU, which increased Skr 5.49 (€0.60) on Q4 2013’s figure to Skr 360.51 (€39.58). This strategy will come into play in Q2 2015, which will see the operator adopt strategic price increases and reduced discounting of packages. The challenge here will be sustaining the levels of customer and revenue growth the operator has achieved in 2014 while minimising the risk of churn from more stringent pricing. Com Hem’s results suggest that there already been some degree of success in upselling of products, which bodes well for an ARPU-led strategy. As well as the migration of customers to TiVo, this has been true for broadband, where the latter half of 2014 in particular saw a significant shift in consumer mix in broadband speeds. The end of 2014 saw 52% of broadband consumers take speeds of 20-50 Mbps and 46% taking speeds over 100 Mbps.

Nordic Region Sweden
Com Hem
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