Market Insight

Downward trend in Nordic satellite subscribers continues into 2013

April 25, 2013

Martyn Hannant Martyn Hannant Manager – Research and Analysis, Service Providers & Platforms
This product is included in:

Want to learn more?
Have an expert contact you.

Pan-Nordic satellite operators Canal Digital and Viasat both continued to see a fall in customers during the first quarter 2013, continuing a decline in total satellite subscribers in the Nordic region first observed in early 2008. In contrast with its comparatively good performance over the last three quarters of 2012, Telenor-owned Canal Digital lost 8,000 subscribers in the first quarter 2013. Modern Times Group's Nordic losses were higher still, with 13,000 DTH subscribers churning from its Viasat service. Canal Digital ended the quarter with 937,000 satellite customers, whilst Viasat ended the quarter with 625,000 subscribers across the Nordic region.

Year-on-year, the financial performance of Telenor Broadcast's Canal Digital DTH arm has been fairly steady. The satellite operator reported an increase of 5.02 per cent in operating profit compared to the same quarter a year earlier, and a slight increase in operating margin from 13 per cent to 14 per cent. Revenue increased both year-on-year and quarter-on-quarter to NKr1,120m (€143.5m). Canal Digital said the growth came from increased ARPU from its DTH customers and a rise in hardware sales. Year-on-year, Canal Digital's monthly ARPU for Q1 2013 increased by 4.4 per cent to Nkr360 (€46.1).

MTG saw a drop in operating margin to 11 per cent last quarter, down from 18 per cent a year earlier. Pay TV Nordic net sales for MTG increased 1.76 per cent year-on-year to Skr1,310.2m (€145m), however costs were up 9.8 per cent to Skr1,164.1m (€128.8m), leaving MTG with its lowest quarterly operating income since the second quarter 2006, at Skr146.1m (€16.2m). According to MTG, this is largely to due to the purchase of the remaining assets of the Danish TV2 Sport business in January 2013 and the subsequent inclusion of this in its Pay TV Nordic segment. MTG's Nordic monthly pay TV premium ARPU was up 1.8 per cent in the year to Skr412.9 (€45.7), but was down 0.7 per cent in the quarter, a shift blamed on currency effects.  

The first quarter of 2013 is continuing the story seen in 2012, with MTG continuing to invest heavily in premium content over the period. This included the re-branding of TV2 Sport to TV3 Sport, and the introduction of a new channel, TV3 Sport 2 in February 2013. In addition, MTG has continued to invest in movies and sport content, and its Viaplay OTT service. The ongoing investments have been reflected in the rise in MTG's pay TV Nordic costs and the significantly lower operating income. IHS continues to forecast a decline in traditional DTH subscribers over the next five years, which suggests that the increased focus on content and, in particular, Viaplay may well benefit MTG in the long run, if it can manage its costs. MTG's reported figures also include third party subscribers through cable and IPTV, however, growth here is unlikely fully offset the fall in DTH satellite subscribers going forwards. Subscriber figures for Viaplay have not been disclosed by MTG.

Despite the similar backdrop of a declining subscriber base, there has been less of an impact on operating profit for Canal Digital. This will in part be due to lower investment in premium content. Instead, Canal Digital's content investment has been focused more on commercial Nordic channels, with an exclusive agreement with SBS Nordic Broadcasting signed in February 2013, and most recently, a renewed agreement with TV2 in Norway following a lengthy carriage dispute.

Canal Digital's churn has also been more effectively managed in comparison to MTG. Canal Digital's DTH subscriber base decreased by 1.8 per cent year-on-year in the quarter compared to Viasat's  drop of 6.3 per cent. The focus on maximising revenue from its existing customers via increasing ARPU and hardware sales should help Canal Digital sustain profit levels throughout 2013. The introduction of a next-generation platform in the latter half of 2013 could assist Canal Digital further, if costs can be managed and the platform can be successfully up-sold to customers.

Share facebook Twitter Google Plus Linked In Add This Contact Us