The UK cable operators are rapidly becoming local telephone companies with a television service on the side; witness TeleWest Communications Plc (CI No 2,728) and now General Cable Plc, which reported its first interim figures since floating on the London Stock Exchange and Nasdaq in April (CI No 2,650). General, still 58% owned by French […]
The UK cable operators are rapidly becoming local telephone companies with a television service on the side; witness TeleWest Communications Plc (CI No 2,728) and now General Cable Plc, which reported its first interim figures since floating on the London Stock Exchange and Nasdaq in April (CI No 2,650). General, still 58% owned by French water company Compagnie Generale des Eaux SA, had a shade over 91,000 telephony subscribers at the end of the half against around 76,000 television subscribers. At flotation, the company raised ú158m, a far cry from what it wanted because the striking price was 190 pence, instead of the 220 to 250 pence hoped for. Yesterday they were trading up sixpence on the opening day price. London-based General Cable, which is ranked number five by the UK Cable Communications Association in terms of the number of homes in its franchise (CI No 2,682) reported pre-tax losses of ú10.9m, up from ú9.5m losses last time, on turnover that rose 47% to ú14.2m. As with TeleWest yesterday, the bare financial figures are not nearly as interesting as the plethora of numbers and percentages that accompany any cable operator’s results. In terms of services, 40% of revenues came from residential telephony, 33% from cable television and 27% from business telephony. General holds stakes in three UK franchises: 83% in The Cable Corporation Ltd, 50% of Yorkshire Cable Group and 45% of Birmingham Cable Corporation Ltd.
Operating cash flow was positive at The Cable Corporation and improved in Birmngham. Yorkshire Cable Group proved something of a problem child, with operating cash flow down sharply. In residential telephony, the number of connected lines grew 38% to 77,743 since the end of last year. The level of penetration, that is the percentage of customers signed whose homes the company passes, was 27%. The Cable Corporation, which operates in West London and Windsor, Berkshire, is in the process of overlaying its television-only cables with telephone and television ones, with 23,000 homes remaining to be completed at the end of the half. Annualised revenues per residential line were ú291. Yorkshire experienced problems with the interface between switch and billing sys tems which cost the company some customers and increased the residential telephony churn rate overall. The problems have now been dealt with and the churn is starting the level out, the company said. Business telephony customers grew 28% to 13,607 from the end of December, with most of the growth coming from The Cable Corporation and Yorkshire, which operates in seven Yorkshire towns and cities. Revenues per line have actually fallen 19% from the corresponding period last year due to a number of factors. Principal among these is an increase in lower revenue lines and the Centrex service, whereby customers get switchboard facilities without having to purchase or maintain equipment, the company said. Chairman Sir Anthony Cleaver said in his statement that revenue per line’s usefulness as a measure of success was diminishing in importance as services such as Centrex provide less revenue per line, but the overall revenue derived from each customer increases. He also promised new ISDN and facsimile store and forward services for business customers in the second half. And so to cable television. Customer numbers from the end of last year increased 15% to 76,062 – a fraction less than residential telephony customers. Penetration of the potential customer base was 24%, down 1% since December, because price increases in Yorkshire and Birmingham led to a higher customer churn rate. Television churn rate overall was 30%. The average revenues per customer have been maintained through price increases, but Sir Tony warned margins are under pressure, particularly in Birmingham, where the company has been unable to reduce carriage costs as the channel line up increases, though more channels should, in theory make the product more attractive. Sir Tony declares that General Cable sees no reason to amend the general thrust of our busi