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Info Kudelski rental model now in profit
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Info Kudelski rental model now in profit - 31-August-2009, 10:20

Kudelski rental model now in profit

Chris Forrester

Conditional access provider Kudelski Group says its transition from selling smart cards for digital television encryption and copy protection, to a service mode financial model is now complete and profits are now flowing again. It has upgraded its financial guidance for the 2nd half of its trading year.

Kudelskis first-half year results were unveiled Aug 28. During this period the company started to reap the fruits of the migration of a significant share of its digital TV conditional access deployed base to the service model. In 2008, the Group delivered over 25m new-generation upgrade smartcards to key operators including Dish (Echostar), Bell and Sogecable. In the first months of this year, the migration was completed. Since June, the cards deployed at Echostar started to yield the full monthly service fee.

With the completion of the transition to the service model, the Digital TV division has materially improved its operating profitability in this first half and is expected to further recover in the second half. Together with a strong resilience of our Public Access division and with substantially stable economics in Middleware and Advertising, this results in a growing revenue base and a material improvement of the Group operating profit, said a Kudelski statement.

Total revenues and other operating income were 7% higher than in the first half of 2008, reaching CHF 454m. The Margin after cost of material is CHF 18.2m higher, due to new agreements with strategic partners. With an operating income of CHF 8.5m, the Group reversed the loss of last years period, improving its operating margin by CHF 27m. Compared to the same period of last year, personnel expenses grew by CHF 8.3m reaching CHF 185.2m, while net income for the first half year was marginally positive at CHF 0.5m.

Nagravision will be showcasing its new NAGRA Media widget publishing platform at IBC. A widget is a smart, intuitive, easy-to-use software application that lets consumers play with graphics and information online. It creates a targeted and familiar environment with recommendation of relevant data for users. Delivering personalised services to the users increases the usage rate which translates to direct revenue, ads revenue, cross selling opportunities for the operator. Embracing widgets as the starting point for internet-enabled TVs allows operators to attract new subscribers, retain existing ones, and utilize internet social networks and content for viral promotions.

The platform allows operators to jointly develop with content partners, advanced Widget services in relation to live or on-demand content for pay TV subscribers. Additionally, operators can incorporate internet ad-serving services to complement traditional broadcast media revenues.

With the completion of the migration of over 30m active devices to the service model early this year, the profitability of the our Digital TV division has started to recover during the first half of 2009. In the second half-year, the divisions operating performance will further improve, as it will fully benefit from the revenues generated by the installed base of cards / devices in the service model, said the company.

As announced on February 27, 2009, the management guidance for total revenues remains between CHF 1.07 billion and 1.1 billion, while the operating profit is reviewed upwards between CHF 60 million and 70 million.

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