Kabel Deutschland Has $964 Million War Chest for Acquisitions, CEO Says

Kabel Deutschland Holding AG, Germany’s biggest cable-television operator, said it has an 800 million-euro ($964 million) war chest to buy up rivals as the industry consolidates in the country.

The company, which today said its full-year loss narrowed, is “in such a position that we are interested in a consolidation of the market, so long as there’s a willing buyer and a willing seller,” Chief Executive Officer Adrian von Hammerstein said in a telephone interview.

He declined to say if the group may acquire insolvent cable company PrimaCom AG, or Tele Columbus GmbH, which a restructuring specialist is seeking to sell to limit lenders’ losses on loans, two people familiar told Bloomberg in April.

Cable companies such as Kabel Deutschland and Unitymedia GmbH, owned by billionaire John C. Malone’s Liberty Global Inc., are challenging Bonn-based telephone company Deutsche Telekom AG in the market for so-called triple-play offerings that bundle TV with Web and phone links. They may both be potential buyers of the country’s third-largest cable operator Kabel Baden- Wuerttemberg GmbH & Co KG.

Kabel Deutschland’s net loss for the 12 months through March 31 was 45.3 million euros compared with 144.3 million euros a year ago, the Unterfoehring-based company said today in a statement. Sales rose 9.6 percent to 1.5 billion euros.

The German cable market is poised for growth, after lagging behind other European countries in terms of average revenue per user, or ARPU. Kabel Deutschland’s monthly ARPU rose by 9.7 percent to 12.13 euros in the year ended March.

‘Low Penetration’

That compares with first-quarter monthly ARPU of 14.68 euros that Unitymedia reported on May 7 and 37.30 euros posted by Mechelen, Belgium-based Telenet Group Holding NV.

“This is an opportunity,” von Hammerstein said. The low ARPU can be attributed to the late privatization of the cable business in Germany and because “we had a late start in digital television and in Internet and telephony.”

“We still have a low penetration, but you need only to look to our neighboring countries to see what penetration levels are possible,” he said. “We are confident that we will continue our growth trajectory” with “competitively positioned products,” von Hammerstein said in the statement.

Growth Forecasts

In the latest fiscal year, adjusted earnings before interest, taxes, depreciation and amortization increased 16 percent to 659.1 million euros.

Fiscal-2011 adjusted Ebitda will rise to 715 million euros to 725 million euros, Kabel Deutschland said, a growth rate of 8.5 percent to 10 percent. Revenue is forecast to increase by 6.5 percent to 7 percent.

Kabel Deutschland fell 0.1 percent in Frankfurt trading at 2.58 p.m. to 23.12 euros. The stock has gained 3.8 percent since the company’s March 22 initial public offering of a 38 percent stake at 22 euros a share.

To contact the reporter on this story: Ragnhild Kjetland in Frankfurt at rkjetland@bloomberg.net.

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