Telenet announced yesterday during trading that it will proceed with a number of price hikes on cable TV and broadband products.
Regarding broadband, Telenet will be increasing some internet access fees by an average of 3% as from 16 August. This price increase will apply to only 6 out of 10 Telenet broadband customers. Some tariff plans will remain unchanged, and the pricing for the new broadband products launched on 27 June (Basic Internet, Fibernet and Fibernet XL) will not be changed.
Regarding cable TV subscription prices, Telenet will raise its subscription fee by an average of 4.2% on 9 October. This plan was already announced earlier this year, and has now been approved by the regulator. In Flanders, Telenet will also charge a supplement of maximum € 0.25 per month as a result of a rise in copyright pricing. Any copyright duties received are paid in full by Telenet to the channels and copyright associations.
Our View:
Slightly positive for Telenet. We estimate the proposed price hikes will have around a 1% to 1.5% positive impact on sales on a FY basis. The impact on profits will be lower as part of the sales increase comes on the back of higher copyright charges that are passed on to copyright associations. We will fine-tune our estimates at the occasion of the 2Q publication at the end of this month.
Conclusion:
No changes to our investment case, we reiterate our Accumulate rating and € 34 target on Telenet.
Later this month, Telenet will also proceed with the € 4.50 per share capital reduction (26 July ex-date, 29 July payment date).