The value of the European cable industry grew more than 5% in 2012 and future growth potential remains robust, according to a new report from IHS, produced in collaboration with Cable Europe.
European Broadband Cable 2013 shows that the investment thesis for cable remains strong, a fact highlighted by recent deal activity such as the agreement for Vodafone to buy Germany’s Kabel Deutschland (KD).
The European cable industry generated revenues of €22.4bn in 2012, serving 61.3m homes. Central to the growth story of cable is the increasing importance of telecoms services. Cable has traditionally been a television provider, but telecoms services now account for 46% of all cable revenue across Europe and in ten markets, telecoms services have now become more important that television in terms of revenue generation for cable.
Bundled TV and telecoms services are not just the key to revenue and ARPU growth, but also represent cable’s trump card in positioning for the future of television delivery.
Controlling the IP last-mile infrastructure into the home as well as in-home devices is important. When combined with investments in Wi-Fi networks, a key area of focus for today’s cable providers, cable infrastructure becomes well positioned for delivery of Over-the-Top (OTT) content to multiple devices.
Analysis of the investment case for Vodafone to purchase cable infrastructure has focused on savings access to fixed-line infrastructure will give it, but we believe Vodafone’s interest in cable is a vote of confidence in the cable business model. And more than that, it is a vote of confidence in the way that cable has positioned for the future of entertainment.
A future at which television remains centre stage, but in which broadband (and increasingly mobile) take near equal billing, both for data access and entertainment delivery. When this is considered, the combination of Vodafone with KD looks more like the beginning of a prolonged strategic trend than a one-off purchase.
Key findings of the report include: the European cable industry was worth €22.4bn in 2012. Cable operators in Europe provide television services to 61.3m homes with cable infrastructure passing 116m homes.
Cable operators account for 112.9m RGUs, each representing a separate service contract (for TV, or telephony or internet).
Cable serves 28.7m broadband Internet subscribers in Europe. Digitisation of cable in Europe continues to progress with the majority of European Union cable homes now digital.
Average cable ARPU hit €26.60 a month in the European Union. Telecoms services now account for 46% of cable revenue across the European Union.
Cable is increasingly addressing multi-screen opportunities and out-of-home access with recent merger activity in the industry heavily focused on the provision of next generation services and the future of television service provision.
The cable industry maintained positive revenue growth throughout the economic downturn and revenues overall across Europe grew by 5.2%.