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Com Hem looks to OTT SVOD as ‘next step’ in convergence strategy

Swedish cable operator sees OTT TV as a “natural next step” to extend its reach following the launch of a box-less subscription video-on-demand offering in April.

Anders Nilsson

Com Hem, which saw its TV base fall in the first quarter, highlighted both its launch of its advanced TV box and a new OTT SVOD service as evidence that it was adapting to a changing market in its Q1 results statement.

Com Hem highlighted its launch in April of the Android-based TV Hub as its main TV offering alongside TiVo, and the operator has also launched a box-less subscription video-on-demand offering, ComBo, which was developed in-house alongside the TV Hub.

Anders Nilsson, CEO, Com Hem Group, said that OTT was “a natural next step” that would enable it to use its ability to bundle the best on-demand content and deliver it to users in its footprint that are not traditional TV customers.

“This opens up a completely new segment in the market for Com Hem and could potentially be a significant growth driver over time. We do not expect this to materially affect our near-term growth but it will allow us to tweak the functionality, content and sales channels to eventually develop ComBo into a standalone off-network TV service, catering to a much larger potential customer base,” he said.

“It constitutes another puzzle piece to make the upcoming merger with Tele2 even more attractive by combining a high quality mobile network and a large mobile customer base with an on-the-go video service.”

The operator’s digital TV RGUs declined by 1,000 to 653,000 in Q1, hit by price changes, while the TiVo advanced TV customers increased by 3,000. Advanced TV customers now account for 41% of the TV base.

Com Hem added 4,000 net subscribers overall to take its total to 987,000 in Q1. The company added 7,000 broadband subscribers, taking its broadband revenue-generating unit base to 757,000.

Com Hem’s Boxer digital-terrestrial TV unit was hit by high churn due to price increases. Boxer lost 9,000 customers in the quarter, an improvement on the 12,000 lost in Q4 2016. While 4,000 broadband RGUs were added, Boxer lost 7,000 RGUs overall in the quarter.

On the positive side, Com Hem increased its base of addressable homes to 2.9 million, including 200,000 unique to Boxer. The company has grown its footprint by 45% since the start of its build-out programme two years ago.

The operator saw its operating profit for the first quarter drop on flat year-on-year revenues, which the company said was due to a number of items having an impact on comparability.

Com Hem posted Q1 revenues of SEK1.784 billion (€170 million), up 1.6%, and operating profit of SEK222 million, down from SEK232 million.

The operator posted EBITDA of SEK702 million, down 0.7%, which it attributed to items related to the merger with Tele2 and the reorganization of its products, marketing and commercial departments to align with the requirements of a converged market.

However, Com Hem said that underlying EBITDA was up 3.6%, while its core cable EBITDA was up 5.2% to SEK661 million.