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Jul 30

German Cable Co Reduces Leverage

Posted by mcole in leverageCashcapexcable


Another cable company is cutting back on leverage and strengthening its balance sheet to weather the recession.

Kabel Deutschland released solid earnings results for the year in line with expectations, with earnings before interest, taxes, depreciation and amortization up 24.7% to EUR570.7 million compared with last year.

Unlike other cable companies like Cablevision that are also cutting back on leverage and cleaning balance sheets, Kabel increased capital expenditure to EUR373 million, a 17.9% rise compared to last year.

CreditSights noted that since it acquired Orion, its leverage has come down to 4.2 times EBITDA in March 2009 from 5.1 times in June 2008.

"Nationwide cable consolidation remains on hold for regulatory reasons, but potential in-region buys remain on the agenda for KDG," The CreditSight note added regarding the German cable market.


Comments (2)Add Comment
Ronald Fink
written by Ronald Fink, July 30, 2009
What do you think it says about the companies' relative position that Kabel is boosting capex while Cablevision cuts back? Think it has more to do with the difference in regulatory regimes than with the companies' financial position or point in their local economic cycle? Just curious.
Marine Cole
written by Marine Cole, July 31, 2009
It could be the different regulatory regimes although I am not too familiar with the situation in Germany. The other thing I can think of relates to what Michael Weaver, the cable analyst at Fitch, said:
That a large chunk of capex is proportional to the number of subscribers. The number of Cablevision's subscribers is going down so cutting capex isn't too big of a deal. But Kabel is in growth mode, especially thanks to acquisitions so their subscriber list is growing, which mean they have to keep increasing capex.

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