Cyfrowy Polsat is scheduled to publish 2Q09 results on 20 August before market opening. We forecast the results to be poor, under influence of strong competition on Polish DTH market and weak PLN. We expect net profit at PLN 54.5m for 2Q09, down 31.7% y/y, which is 14% below consensus expectations of PLN 63.4m. We would expect negative market reaction especially that the stock trades close to its all time high.
Revenues are expected to come in at PLN 320.5m for 2Q09, up 15.6%, in line with consensus estimate of PLN 325m. Net customer acquisition in the seasonally poor second quarter is expected to be weak, at 42k, out of which some only 30% should account for ‘Family package’. ARPU is forecast to come in at PLN 40.0 for ‘Family package’ in 2Q09, down from PLN 40.2 in the previous quarter. The reason is impact of long winter promotion when many subscribers joined by the company on promotional terms. As a result subscription revenues are expected to be almost flat q/q. Due to tough competition on the market we would expect annual churn ratio in the ‘Family package’ to exceed 10% from 9.7% in 1Q09.
EBIT is expected to come in at PLN 67.5m for 2Q09, down 32.1% y/y. Our estimate is 13% below consensus forecast of PLN 77.4m. Most of the cost items should be growing at a rate much higher than revenues on annual basis as a consequence of much weaker PLN versus US$ and EUR (some 50% of operating costs are denominated in these currencies), costs of MVNO services, amortization of commissions for distributors and also costs of customer retention. The largest cost item, programming expenses, should skyrocket on annual basis but be lower some 10% q/q due to recent strengthening of Polish currency. Television signal transmission expenses should grow both compared to last year and previous quarter due to worse currency situation and also renting new transponder.