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Outlook positive for KDG, says Fitch

Analysts are bullish on German cabler Kabel Deutschland’s (KDG) prospects, citing strong operational momentum and an improved debt position.

Credit ratings agency Fitch said the outlook for KDG is positive. It noted the MSO’s own guidance for 6.5-7.5% revenue growth for the financial year ending March 2011. KDG has about €2.4 billion of debt with no significant payments scheduled before 2014 except for a €197 million loan due in March 2012.

The agency affirmed KDG’s long-term debt issuer default BB- rating, its senior secured bank facilities at BB+, and its senior notes at BB-. According to Fitch, the default rating reflected KDG’s business model combining “utility-like revenue streams from its large basic TV subscriber base, and increasing blended average revenue per user (ARPU) supported by solid customer take-up of higher ARPU premium services (broadband, telephony and premium TV)”. This, it said had translated into solid revenue growth, with 6.5 expected for the year to March 2011. The company’s unadjusted debt to long-term EBITDA ratio had declined from 5.3x in March 2009 to 4.2x in June this year, Fitch said.

Fitch said there was room for further improvements in the company’s leverage, and said that the upgrade of its network with DOCSIS 3.0 technology had strengthened its competitive position.

Separately, KDG will make Sky Deutschland’s pay TV services available to its subscribers via CI Plus modules from November 17 following an agreement between the two companies.

The move will enable KDG’s customers who take Sky subscription packages and have a compatible digital TV to receive the channels without the need for a set-top box.

KDG will make Sky Deutschland’s pay TV services available to its subscribers via CI Plus modules from November 17 following an agreement between the two companies.

The move will enable KDG’s customers who take Sky subscription packages and have a compatible digital TV to receive the channels without the need for a set-top box.