Hot Cable Systems Media Ltd. (TASE: HOT) today published its financial report for the second quarter of 2009. The report implies that the deployment of digital terrestrial television (DTT) may cause the company material looses in the future.
HOT launched its DTT service in early August, offering the set-top boxes, which air Israel Broadcasting Authority channels 1 and 33, commercial channels 2 and 10, the Knesset Channel 99, to subscribers at NIS 400. There has been no rush for the service yet, but HOT warns against the repercussions for its future cable operations.
HOT states in its financial report, "The company believes that comprehensive broadcasting legislation is liable to change the consumer habits of multi-channel television subscribers. This is liable to cause a significant decline in the company's revenue and is liable to have a material negative effect on its business and on the future business results of the company in this context."
According to a report by the Second Television and Radio Broadcasting Authority, which "Globes" disclosed in late July, 250,000 households are expected to hook up to DTT service. 150,000 of these households currently have analog television service and they will have to switch to DTT when analog broadcasting is terminated. Some poor households that cannot afford cable or satellite television service are also expected to take the DTT service.
HOT achieved only single-digit year-on-year revenue and profit growth, while also reducing its expenses and seeing a drop in its gross profit. Revenue rose 6% to NIS 775 million for the second quarter from NIS 729 million for the corresponding quarter of 2008.
Gross profit fell to NIS 165 million for the second quarter from NIS 178 million for the corresponding quarter. Operating profit rose 4% to NIS 81 million for the second quarter from NIS 78 million for the corresponding quarter, while net profit rose 5% to NIS 21 million (NIS 0.28 per share) from NIS 20 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 9% to NIS 282 million for the second quarter from NIS 252 million for the corresponding quarter. HOT reduced its sales and marketing expenses by 16% to NIS 42 million for the second quarter from NIS 50 million for the corresponding quarter, and cut its administrative and general expenses by 10% to NIS 28 million from NIS 31 million.
HOT had a working capital deficit of NIS 1.78 billion. The company stated that it "intends to extend the payment dates on credit given to the company from banks in accordance with the credit agreements."
HOT had NIS 1.36 billion in shareholders' equity at the end of June, compared with NIS 1.31 billion at the end of 2008.
HOT lost a net 2,000 subscribers during the second quarter to 913,000. Cable television revenue rose 1.2% to NIS 547 million for the second quarter from NIS 540 million for the corresponding quarter. The company added a net 6,000 Internet subscribers during the quarter to 698,000, and also added a net 17,000 telephone subscribers. Inland telephony service revenue rose 21% to NIS 228 million from NIS 189 million, thanks in part to the implementation of number portability by former Minister of Communications Ariel Atias.
HOT's share fell 1.8% in morning trading to NIS 33.63.
Published by Globes [online], Israel business news - www.globes-online.com - on August 17, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009 Hot Cable Systems Media Ltd. (TASE: HOT) today published its financial report for the second quarter of 2009. The report implies that the deployment of digital terrestrial television (DTT) may cause the company material looses in the future.
HOT launched its DTT service in early August, offering the set-top boxes, which air Israel Broadcasting Authority channels 1 and 33, commercial channels 2 and 10, the Knesset Channel 99, to subscribers at NIS 400. There has been no rush for the service yet, and HOT warns against the repercussions to its future cable operations.
HOT states in its financial report, "The company believes that comprehensive broadcasting legislation is liable to change consumer habits of multi-channel television subscribers. This is liable to cause a significant decline in the company's revenue and is liable to have a material negative effect on its business and on the future business results of the company in this context."
According to a report by the Second Television and Radio Broadcasting Authority, which "Globes" disclosed in late July, 250,000 households are expected to hook up to DTT service. 150,000 of these households currently have analog television service and they will have to switch to DTT when analog broadcasting is terminated. Some poor households that cannot afford cable or satellite television service are also expected to take the DTT service.
HOT achieved only single-digit year-on-year revenue and profit growth, while also reducing its expenses and seeing a drop in its gross profit. Revenue rose 6% to NIS 775 million for the second quarter from NIS 729 million for the corresponding quarter of 2008.
Gross profit fell to NIS 165 million for the second quarter from NIS 178 million for the corresponding quarter. Operating profit rose 4% to NIS 81 million for the second quarter from NIS 78 million for the corresponding quarter, while net profit rose 5% to NIS 21 million (NIS 0.28 per share) from NIS 20 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 9% to NIS 282 million for the second quarter from NIS 252 million for the corresponding quarter. HOT reduced its sales and marketing expenses by 16% to NIS 42 million for the second quarter from NIS 50 million for the corresponding quarter, and cut its administrative and general expenses by 10% to NIS 28 million from NIS 31 million.
HOT had a working capital deficit of NIS 1.78 billion. The company stated that it "intends to extend the payment dates on credit given to the company from banks in accordance with the credit agreements."
HOT had NIS 1.36 billion in shareholders' equity at the end of June, compared with NIS 1.31 billion at the end of 2008.
HOT lost a net 2,000 subscribers during the second quarter to 913,000. Cable television revenue rose 1.2% to NIS 547 million for the second quarter from NIS 540 million for the corresponding quarter. The company added a net 6,000 Internet subscribers during the quarter to 698,000, and also added a net 17,000 telephone subscribers. Inland telephony service revenue rose 21% to NIS 228 million from NIS 189 million, thanks in part to the implementation of number portability by former Minister of Communications Ariel Atias.
HOT's share fell 1.8% in morning trading to NIS 33.63.
Published by Globes [online], Israel business news - www.globes-online.com - on August 17, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009