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MTG looks forward to growth in 2013 after mixed results

Modern Times Group expects some growth from its Nordic pay TV business this year, with lower profitability as a result of its investments in central and eastern Europe, after fourth-quarter results that were stronger than expected in some segments. The group expects margins from its pay TV businesses to continue to grow in 2014.

MTG said it would reduce its investment in its Ukrainian pre-paid satellite service as a result of intense competition in the market. The introduction of new mini-packages is expected to result in a full-year breakeven for the service this year instead of the previously forecast loss of around SEK50 million (€5.9 million).

MTG’s free TV business in the Nordic produced mixed results in the fourth quarter, with sales down 7% year-on-year to SEK1.15 billion, attributed to a decline in the Danish ad market. Nordic pay TV operations outperformed on the other hand, reflecting positive currency movements and higher HD and Viaplay subscriber figures. However, while total subscribers were boosted by third-party sales, the group’s premium base was more or less flat at just 1.058 million thanks to a small decline in satellite subscribers.

Free TV in emerging markets saw strong year-on-year growth of 8% at constant exchange rates in the fourth quarter, with operating profits up 55%. Pay TV in emerging markets also saw revenue growth of 19%, compensating the group’s investment costs in Russia and Ukraine, with an overall satellite subscriber base of 584,000 and a mini-pay subscription base of 83.9 million. The segment is expected to achieve EBIT breakeven this year.

MTG overall reported net sales of SEK3.53 billion for the fourth quarter, stable year-on-year at constant exchange rates, and net income of SEK378 million, compared with a loss of SEK2.564 billion last year.

“The sales growth for our continuing operations in the fourth quarter primarily reflected the strong competitive positions of our emerging markets businesses, which took advertising market shares and grew their subscriber bases in almost all of our operating territories. This reflects the investments that we have made in our content offerings and the development of our channel brands,” said Jørgen Madsen Lindemann, president and CEO. “As previously announced, we are now investing across a number of our businesses, and will do so throughout 2013, to ensure that our growth accelerates in the future. We have continued to innovate across our territories with new content, technologies, channels and services, and we are today offering our viewers, listeners and customers more high quality entertainment than ever before in more ways than ever before.”

MTG said it would propose an increased dividend of SEK10 at its AGM in May.