Investments in high-speed broadband networks helped Europe’s cable operators such as Liberty Global and Altice accelerate revenue growth in 2014 to 4.6%, industry group Cable Europe said on Wednesday (11 March).
That comes in sharp contrast to the five-year decline in sales for Europe’s telecom operators, hurt by fierce competition from new entrants and strict regulation from Brussels.
Cable operators in the 28-nation European Union made 21.5 billion euros in revenues last year, with half from broadband and telephony.
Cable companies have been competing with traditional telecom operators such as Deutsche Telekom and Orange with their ability to provide faster Internet access over their cable network.
That, in turn, has made them takeover targets for companies such as Vodafone – which bought cable operators in Spain and Germany – trying to get into fixed-line services.
But cable’s growth has slowed over the past five years as telecom firms caught up by rolling out super-fast fibre broadband and consolidating across Europe to cut debt and focus on key markets.
Sales in the cable sector grew by 6.6% back in 2010, the data showed.
“Yes, they (incumbent telecoms firms) are coming back, but their coming back does not slow down our growth,” Lutz Schueler, CEO of Liberty Global’s German unit Unitymedia KabelBW , said in an interview with Reuters.
Netflix not an enemy
Cable and telecoms firms alike are under pressure from so-called “over-the-top” providers such as Google and Netflix whose content competes with their pay-TV services.
“Cable is growing because of broadband, the number of broadband cable customers is growing 200% every year,” said Manuel Cubero, CEO of Kabel Deutschland, at a cable summit in Brussels. “The traditional TV business … is under pressure precisely because of this over-the-top world.”
The number of net cable TV subscribers dropped in 2014, although TV revenues grew 2% thanks to the growth of digital TV services, the Cable Europe data showed.
“People would like to say ‘oh Netflix is an enemy’,” said Mike Fries, CEO of Europe’s largest cable group Liberty Global. “Not really. They drive broadband consumption.”
Cable companies such as Liberty Global and Unitymedia are increasingly moving into mobile services which they see as the next area of growth for them after fixed broadband.
Both firms offer so-called “quad play” packages where they bundle Internet, TV, fixed phone and mobile services together.
“The quad play… is here to stay,” Fries said.