Kudelski reports 2011 annual results

CHESEAUX, Switzerland — The Kudelski Group (SIX:KUD.S), the world’s leading provider of media content protection and value-added service technology, announced today its 2011 annual results. Group revenues in constant currency declined by 3.8%. Total annual revenues and other operating income declined from CHF 1’069.3 million in 2010 to CHF 896.6 million in 2011, with the Digital TV segment driving most of the decline.

Structural developments in the Digital TV segment remained positive, with new customer wins, a positive traction for the Group’s latest generation of products, and selected regions, such as Latin America, continuing to deliver strong growth in constant currency. These developments could only partially compensate the economic slowdown in Southern Europe. Furthermore, 2010 was positively impacted by certain one-off contributions, which were not available at the same levels in 2011, including revenues from a card replacement program at Virgin Media and a one-off other operating income from government grants. In 2011, operating income for the Digital TV segment declined by CHF 100.5 million to CHF 28.9 million.

2011 also saw the turnaround of the Middleware and Advertising segment reach another important milestone, with the segment reverting to profitability on a full year basis.

Gaining Traction In Internet TV

Cable, satellite and telco service providers are increasingly turning to NAGRA for its expertise and innovation capabilities to enable an Internet-connected environment for their viewers as a natural extension to their existing services.
Latest developments at customers integrating NAGRA’s Internet TV capabilities include:

• Dish/Echostar is deploying NAGRA solutions to up-coming Internet TV (OTT) projects and Sling DVRs
• Canal+ in France is extending NAGRA PRM (Persistent Rights Management) to additional devices
• APS/HD+ in Germany introducing NAGRA PRM
• PRISA TV has launched new devices working on the deployed Internet TV platform
• Jazztel – the PRISA TV platform has been extended to support pure Internet TV set-top boxes with both live and VOD content

With the new deployments of the last few months, NAGRA PRM – a key element of the Group’s Internet TV solution suite – is now implemented at leading service providers around the world including: Telefónica, UPC, T-Com Croatia, Numericable, SFR, Digital+, Zon, Mediaset, Virgin Media, Telenet, VOO, NET, Embratel, Skylife, CNS and kbro (Taiwan), Elisa, Hansenet, Naxoo.

Furthermore, NAGRA and abertis telecom, the leader in Spain in infrastructure and telecommunications services, signed a strategic partnership to launch a cloud-based service aimed at pay-TV service providers and free-to-air broadcasters seeking to deploy affordable multiscreen services, integrating broadcast TV with on-demand Internet TV services, with fast time-to-market.

Continued Strong Momentum In Emerging Markets

In the established pay TV segment, the Kudelski Group has continued to win new contracts and expand its global footprint, benefitting in particular from new wins in emerging markets.

The Latin American market is showing a sustained momentum and remains an important growth vehicle for the digital TV segment. Besides significant growth with established customers like NET, Embratel and Telefonica, some important additions were made in 2011 like CNT of Ecuador who selected Nagra for DTH, Claro TV (América Móvil) selecting OpenTV middleware, Oi in Brasil getting additional middleware modules.

Further, major wins were achieved notably in India, Bangladesh and Taiwan where NAGRA advanced technologies are proving critical to support the ongoing local networks digitalization and soaring demand for pay-TV.

IMCL, a NAGRA customer since 2003 and India’s leading cable MSO with around 8 million homes under the brand name InCableNet, has selected NAGRA’s fully integrated end-to-end solution to be initially deployed in 500’000 set-top-boxes with a further potential 500’000 devices. NAGRA will act as the system integrator.

Bengal Communications Ltd (BCL), one of the largest cable MSO in Bangladesh, has selected NAGRA’s latest generation conditional access (CA) and middleware technologies for its upcoming digital cable services.

In Taiwan, NAGRA will drive the country’s cable digitalization deployment with the four major services providers, kbro, TBC, CNS and HYA, having selected NAGRA Media Access DLK (cardless) technology.
In parallel, NAGRA continues to build a strong revenue and R&D base in fast developing economies (R&D centers in India and China).

Middleware And Advertising Picks Up

Following the R&D investment ramp-up aimed at accelerating the development of the next generation Group middleware solutions in 2010, initial deployments of such solutions took place in 2011. Thus, additional resources were released resulting in a lower cost base that enabled the middleware and advertising segment to revert to a positive operating income for the year.

The targeted effort in next-generation middleware has yielded it first promising results in the market. OpenTV4 has been successfully launched to power an internet TV solution for the Spanish ISP Jazztel. The flexibility of the middleware has been proven by the fast roll-out of an innovative user experience. Building on this innovative approach, OpenTV5 is progressing according to plan with its lead deployment customer Telefonica, positioning it as its global middleware solution across TV services.