DGAP-News: Silvia Quandt&Cie. AG: Sky Germany AG / Rating: Buy Target price: EUR 2.40 / Analyst: Jacques Abramowicz

Silvia Quandt&Cie. AG, Merchant&Investment Banking / Research Update

12.05.2010 11:00

Veröffentlichung einer Corporate News,übermittelt
durch die DGAP – ein Unternehmen der EquityStory AG.
Für den Inhalt der Mitteilung ist der Emittent / Herausgeber verantwortlich.

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Silvia Quandt&Cie. AG: Sky Germany AG / Mixed Q1 2010 results – EBITDA
loss increases but ARPU up EUR4 y-o-y

Rating: Buy
Target price: EUR 2.40
Close 11/05/10: EUR 1.447
RIC: SKYGn.DE

* Sky Deutschland reported its Q1 2009 results this morning which came in
as a mixed bag

* Whilst Revenues only increased by EUR2m y-o-y to EUR 234.7m, the EBITDA
loss widened to EUR – 64.5m and net subscriber growth was only 1,000
(compared to -28k in Q1 “09), ARPU increased EUR4 y-o-y and EUR 1.1 q-o-y
and now stands at EUR 28.85

* Churn is still quite high at 21% (122k customers) which explains why
Sky“s Customer Service and selling expenses were up 43.2% and 46.9%
respectively. Programming costs were up 20.5% y-o-y whilst administrative
costs actually sank 2.9%. Net customers stood at 2.471m at the end of the
quarter.

* On the revenue side, subscriber revenues rose a respectable 20.2% y-o-y
to EUR213.8m but Hardware and Wholesale revenues were down 67.6% and 79.5%
respectively. We are positive for the wholesale revenues as deals Sky
announced with NetCologne should continue to come in this year with other
cable operators.

* Cash flow continues to improve with Q1 2010 to only EUR-3.2m (Q1 “09 EUR
-54.6m) mainly thanks to financing activities. The cash flow from operating
activities deteriorated from EUR -14.2m to EUR -62.3m. At the end of Q1
2010 Sky Deutschland had net cash and cash equivalents of EUR 4.9m and net
debt of EUR139.9m.

* With Sky Deutschland continuing to burn cash from its operating
activities, the new CEO Brian Sullivan needs to quickly improve net
customer additions and bring his customers to 3m fast. The cooperations
with smaller cable companies and city carriers could be the way and, his
willingness to discount packages could also help improve customer growth.

* We are willing to give the new CEO, who gave a good impression at ANGA
cable, the benefit of showing what he can do so that we are currently
maintaining our Buy rating and price target of EUR 2.40.

Jacques Abramowicz
+49 (0)69 95 92 90 93 0
www.silviaquandt.de

12.05.2010 11:00 Ad-hoc-Meldungen, Finanznachrichten und Pressemitteilungenübermittelt durch die DGAP. Medienarchiv unterwww.dgap-medientreff.deundwww.dgap.de—————————————————————————