2nd UPDATE: Kabel Deutschland Narrows Loss

10th Jun 2010 14:50

(Adds executive, analyst's comments) By Archibald Preuschat Of DOW JONES NEWSWIRES MUNICH (Dow Jones)--Kabel Deutschland Holding AG, Europe's biggest cable network company, Thursday posted a sharply narrowed full-year net loss in its first results since it went public, and said it expects to be profitable and pay a first dividend by 2012. The Unterfoehring, Germany-based company, which floated March 22, said its net loss for the 2010 fiscal year, which ended March 31, was EUR45.3 million compared with a net loss of EUR144.3 million a year earlier as its operating performance improved. The company is loss making due to high depreciation and amortization costs following significant capital expenditure after it spent around EUR1 billion over the past five years to upgrade its network. "Amortization charges will disappear by 2012," Chief Financial Officer Paul Thomason said, by which time he expects the company to post a net profit and to pay a dividend. Revenue in fiscal 2010 was up almost 10% to EUR1.5 billion, while earnings before interest, taxes, amortization and depreciation, adjusted for non-recurring items, was EUR659.1 million, up from EUR570.6 million in 2009. The cable network company said its growth was due to broadband and fixed line telephone services and it expects sales to grow in a 6.5% to 7% range this year. Kabel Deutschland has 8.9 million subscribers who spent an average EUR12.10 a month last year, up from EUR11.10 a year earlier. Thomason said he expects to post a net loss this year in a range between EUR25 million and EUR40 million. The company said it expects 2011 adjusted Ebitda between EUR715 million and EUR725 million, while capital expenditure is expected to be EUR350 to EUR360 million. Its net debt-to-Ebitda ratio is expected to fall to below 4 times, compared with 4.3 times at March 31 when net debt was EUR2.87 billion. Chief executive Adrian von Hammerstein said in an interview after the results that he wants Kabel Deutschland to outperform other companies listed in Germany's mid-cap MDAX index after it lists there June 21. He said to achieve that aim won't require an acquisition as the company "is in a good position for organic growth." Kabel Deutschland posted "good results and more importantly supportive guidance" for the current year, said Morgan Stanley analysts Patrick Wellington and Frederic Boulan. They kept their overweight rating on the stock and EUR31 target price. Kabel Deutschland and its cable rivals compete in Europe's largest economy against telecom companies like Deutsche Telekom AG (DT), Vodafone Group PLC (VOD) and Telefonica SA's (TEF) O2 in Europe's largest economy. At 1335 GMT, Kabel Deutschland shares were flat at EUR23.15. -By Archibald Preuschat, Dow Jones Newswires; +49 211 13872 18; [email protected] (END) Dow Jones Newswires June 10, 2010 09:50 ET (13:50 GMT)