MTG issues profit warning

Shares in Modern Times Group have fallen steeply after the pay-TV operator warned of declining numbers in the Nordic region brought about by increased competition.

Netflix, HBO and TV4 are all launching new services in the region this autumn, using the over-the-top technology that has brought MTG’s Viasat previous success.

On the Stockholm exchange MTG shares were hovering above their 52-week low on Friday morning at 213.50 – a drop of 14.76%.

“The increasing competition levels in the Nordic region are currently expected to result in the Nordic premium pay-TV subscriber base (excluding Viaplay) continuing to decline with a stable total Nordic pay-TV sales development in Q4 and 2013,” said Jørgen Madsen Lindemann, President and Chief Executive Officer. “The combination of this with the investments that we are making are therefore also currently expected to result in lower margins for our Nordic pay-TV business in Q4 and 2013 but will position us to grow our subscriber base, revenues and profits for the longer term.”

Further investments in the emerging markets are also expected to result in losses over the same period.

Premium subscribers fell to 1,023,000 in the third quarter from 1,031,000 three months ago and 1,042,000 one year previous. Satellite has taken the greater hit with third party suppliers actually growing slightly.

There is also increased competition to the Danish satellite platform and spindown from premium packages in Norway.

As a whole MTG reported pre-tax profits of SEK 389 million, down from SEK 439 million.