Chris Dziadul Reports: Digi shows resilience

2020 has so far been a largely positive year for Digi Communications and its operations in Central and Eastern Europe.

The headline KPIs show that it ended the first half with a total of 3.9 million fixed internet and 4.5 million cable RGUs in Romania and Hungary. Both were record figures and 13% and 8% respectively higher than 12 months earlier.

However, on closer examination we can see, certainly in the case of pay-TV, that the biggest growth was in the Romanian cable market. This more than offset losses in other areas. As of the end of H1, Digi’s subsidiary RCS&RDS had 3,801,000 cable RGUs, or 354,000 (+10.3%) more than a year earlier. At the same time, the number of DTH RGUs fell by 18,000 (-3.5%) to 499,000. Meanwhile, ARPU fell for both its cable (-3.8% to €5.1) and DTH (-3.9% to €4.9) operations.

In Hungary, Digi’s subsidiary lost both cable and DTH subscribers in the year to June 30. In the former case, the number of RGUs fell by 14,000 (-2%) to 682,000, while in the latter the figure was 21,000 (-7.6%) lower at 255,000. ARPU was also down, by 10% to €7.2 in the case of cable and 6.6% to €8.5 for DTH.

It is interesting to note that in Romania Digi’s revenues in the Covid-19 affected second quarter were, at €187.8 million, actually 0.6% higher than in the same period last year. Cable and fixed internet were two of the main drivers of this growth, with the former benefiting to some degree from the migration of RCS&RDS’s DTH customers.

Nevertheless, in Hungary Digi’s Q2 revenues were, at €50.5 million, 8.8% lower than a year earlier. This was put down to a weakened local currency against the euro and natural churn of Invitel customers.

On the regulatory front, the Romanian Competition Authority gave its approval in July to a major transaction announced eight months earlier in which RCS&RDS agreed to buy AKTA, the country’s largest independent cable operator. In Hungary, this March the regulator GVH finally approved Digi’s acquisition of Invitel on condition that it sold on some Invitel networks to a third party. This impacted directly on Digi’s cable and DTH RGU totals at the end of June.

The main takeaway is that although Digi suffered a blow in Hungary earlier this year by not being awarded a 5G licence, its operations in CEE continue to perform well in what are highly uncertain times. The company also has a non-TV) presence in two West European markets (Spain and Italy) and can point to a successful second quarter in which its total revenues were, at €310 million, 5% higher than a year earlier.

For more information about Chris Dziadul, please visit https://www.chrisdziadul.com

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