The impact of a new law ending bundled cable TV billing for tenants in Germany is significantly affecting Tele Columbus. The German cable operator reported a substantial 40.4% year-on-year decrease in TV customers during Q3 2024, resulting in a total of 1.1 million subscribers. Despite this, the number of individual user contracts increased by 130,000, reaching 863,000. Tele Columbus anticipates further growth in individual user contracts in Q4, fueled by increased sales efforts.
In contrast to the decline in TV subscriptions, the internet segment showcased significant growth, experiencing a remarkable 113.1% year-on-year increase in new customers during Q3. Over 50% of these new internet customers selected tariffs with speeds of at least 500Mbps, highlighting a trend towards higher bandwidth demands. While revenue for the first nine months of 2024 decreased slightly by 2.3% year-on-year to €325.0 million, normalised EBITDA remained relatively stable at €141.6 million. Reported EBITDA, however, fell by 14.2% compared to the same period in 2023, reaching €105.4 million.
Tele Columbus adjusted its full-year 2024 forecast to reflect the lower-than-expected initial conversion rate when transitioning TV customers to individual billing, as well as stricter capital allocation within sales channels. The company's restructuring into separate network and service companies is nearly complete, resulting in higher one-off expenses. As a result, management anticipates a year-on-year decline in both revenue and reported EBITDA, but also expects a stronger liquidity position due to optimized working capital and capital allocation/investments. A new German law, effective July 1, 2024, eliminated the practice of including cable TV costs in tenants' ancillary charges, regardless of usage. This legislation allows tenants to choose their TV providers but requires individual contracts for service. This new law has also impacted Vodafone, Germany’s largest cable operator, leading to considerable TV customer losses.