European cable operators to accelerate growth

Tuesday, December 2nd, 2014
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Solon Management Consulting publishes the 6th Survey of European Cable Communication

MUNICH / LONDON — The 6th Solon Survey of European Cable Communication, announced today, underlines the ongoing success of the cable industry. Executives from leading European cable operators expect an accelerated growth rate, forecasting a revenue increase of 6% per year until 2016. At the same time, they also foresee a further increase in profitability: EBITDA margin is expected to reach 51% on average in 2016.

The Solon Survey of European Cable Communication 2014 is based on the feedback of executives at 14 leading European cable operators from 12 countries. Solon Management Consulting – top-management advisor on media and telecommunications – conducts this survey in cooperation with CTAM Europe every two years. It is one of the most comprehensive strategy and benchmarking studies for the European cable industry.

Survey results show that the industry´s top management attention is focused on next generation TV, which is a defensive move due to increasing competition from DSL / Fibre-Players and – in Pay-TV – from companies such as Netflix and Amazon.

Matthias Hamel, Managing Director at Solon Management Consulting, says:
“Cable operators have the choice to compete with companies such as Amazon Instant Video or Netflix by developing own video-streaming products or to integrate them into their offerings. The assessment of both strategic alternatives is largely driven by a company’s competitive position. However, recent trends see a development towards the latter strategy, i.e. the integration of these video-streaming platforms.”

Broadband is by far the largest revenue and EBITDA growth driver for the industry, a development mainly driven by significant growth in download speeds. The primarily marketed bandwidth of European cable operators was on average 48Mbit/s in H1 2013. By 2016, cable players expect this value to increase to over 150Mbit/s.

“Cable players will continue to utilize their network advantages. Standard products with over 150Mbit/s download speed and top products with much higher throughput represent a challenge to all competing infrastructures“, Hamel points out. “VDSL and Vectoring for example are not able to deliver comparable bandwidths.”

In terms of new customer segments, the cable industry especially focuses on business clients. B2B is perceived to be the second largest growth driver until 2016 (after broadband).

Hamel sees great potential but also corresponding challenges: “There is no reason to assume that cable operators should not be able to replicate their B2C success with SME customers. The challenges relate to medium-sized companies, which demand more complex products and customer care as well as different sales approaches.”