Market Insight

Decline in Nordic satellite subscribers shows signs of easing in Q4 2013

February 13, 2014

Martyn Hannant Martyn Hannant Manager – Research and Analysis, Service Providers & Platforms
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Fourth quarter and full year results for Nordic satellite operators Canal Digital and Viasat show that the ongoing decline in DTH (direct-to-home) satellite subscribers in the Nordic region is continuing, albeit at a gradually reducing pace. DTH as a platform in the Nordics declined by 55,000 in 2013, showing a slight slowdown compared to the fall of 58,000 in 2012. Telenor’s Canal Digital has continued easing its churn levels, which it began focusing on during 2012. The satellite operator rounded off the year with 929,000 DTH customers, down 16,000 on the 2012’s figure. Modern Times Group’s (MTG) Viasat brand has not eased its annual subscriber loss overall, which decreased by 39,000 to 599,000, but showed some evidence of slowed churn in the latter half of 2013.

For 2013, Canal Digital operating profit remained stable in comparison to Viasat, however this was due to MTG’s ongoing investment in content. This included investment into premium rights such as the renewal of exclusive UEFA Champions League football rights in Scandinavia, and consolidation of the Danish TV3 Sports channel business.  For 2013, Canal Digital DTH operating profit rose 18% to NKr673 million (€90 million), whereas MTG’s pay TV Nordic operating income decreased 27% to SKr619 million (€71.1 million) over the year. DTH revenue for both operators was up over the year. Canal Digital DTH revenue for the year increased 2.4% to Nkr4,536 million (€604.4 million), while MTG’s pay TV Nordic net sales grew 4.9% to Skr5,335 million (€612.5 million). However, as the operating income figures attest, this was offset by increased operating costs for MTG in 2013. Canal Digital’s operating costs were at a similar level compared to 2012.

Quarterly ARPU for Viasat and Canal Digital increased compared to the fourth quarter of 2012, albeit to varying degrees. Canal Digital’s DTH monthly ARPU increased 5.4% to Nkr373 (€49.9), whereas total premium monthly ARPU for MTG increased 1.7% to Skr423 (€48.6).

Our Take

The quarterly results particularly show signs of eased churn of satellite subscribers in Nordic territories. This has especially been true in Sweden, where Canal Digital closed the final quarter of 2013 with 308,000 DTH subscribers, up 1,000 on its regional base at the end of 2012. Sweden has also been singled out by MTG as a market in which more stability has been seen. Overall, despite having larger quarterly churn than Canal Digital, MTG actually had its lowest quarterly loss in DTH subscribers since Q4 2011.

In addition, if third party networks such as cable and IPTV operators are included, MTG’s overall premium subscriber base increased to 977,000 in Q4 2013 – again for the first time since 2011. This was due to campaigns targeting third party networks, indicating further evidence of a subtle shift in MTG’s strategy away from DTH, together with its pushing of its online Viaplay service, for which it also reports subscriber growth. This suggests that MTG’s strategy of enriching the content of its offerings across all its platforms may be beginning to pay off, despite the increased costs that accompany it. However, Canal Digital’s current strategy, focusing more on customer service and retention as opposed to content investment, has seen comparatively more managed churn, with the added bonus of keeping operating costs fairly under control.

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