Europe’s Cable Sector Grows 7% in 2015

Entertainment Dealmakers Impact report
Courtesy of Joel Silverman

Growth drivers include triple, quad play, and digital TV upgrades

Triple- and quad-play offers of broadband Internet, telephony and TV helped drive a 7.1% growth in Europe’s cable industry revenues in 2015, according to new figures released Tuesday.

Data from IHS Technology also confirm the dramatic evolution of Europe’s cable operators — think Liberty Global, owned by John Malone (pictured), France’s Numericable, Sweden’s Com Hem, Spain’s ONO — which in 2005 saw TV subscribers accounting for about 75% of clients. By 2015, that picture had changed: The number of cable TV subscribers in Europe was down slightly from 2005, at 56.3 million, but there were 34.2 million Internet clients and 26.7 million telephony customers.

Still, TV remains a growth driver for Europe’s cable industry. Total cable TV revenues grew €605 million ($671 million) in 2015, a 5.5% increase fueled by a 20% spike from VOD revenues.

“Bundling and telco services are important to cable operators, maximizing value per customer,” said Martyn Hannant, senior analyst, TV media team, at IHS Technology. Also important is “the conversion from analog to digital cable TV, allowing for upsell to higher revenue-per-customer  services.”

Of European cable operators’ €22.9 billion ($25.4 billion) turnover last year, TV accounted for €11.55 billion ($12.8 billion), just over half that amount.

Presented Tuesday at Warsaw’s Cable Congress 2016 by Cable Europe, an industry trade group, the figures do not include the key consideration of costs as cable operators invest in advanced-technology infrastructures to set them apart from pay-TV rivals.

However, the figures do help explain last year’s on-off negotiations between Liberty Global, Europe’s biggest regional cable operator, and Vodafone, Europe’s largest mobile operator, as they sought to swap their British and German operations, giving each the possibility of scaling up on quad-play offers and brand strength in one of the two territories.

Talks broke down over a failure to come to an agreement on valuation of assets such as Britain’s Virgin Media, owned by Liberty Global. Vodafone and Liberty Global did merge their businesses in the Netherlands in a 50-50 joint venture in a deal announced in February.

“Aggressive” telecommunications companies offering Internet Protocol TV remains the main challenge for Europe’s cable industry,  Hannant said.

Vodafone’s main growth driver last year was not in mobile but in broadband, an indication of how cable and telco companies are trying to be one-stop shops offering mobile, landline, broadband and TV to customers.

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