Cable television company Tevel has reversed its forecast, and now expects average revenue per user to drop as satellite television rival YES establishes itself.
Three months ago Tevel CEO Joseph Douer told Ha'aretz that he expects monthly ARPU to rise by NIS 20 to NIS 25 per subscriber after the transition to digital broadcasts. At the time, Tevel's monthly ARPU was around NIS 115.
Douer forecast that by the end of 2001, Tevel would again see NIS 150 ARPU a month, rising to NIS 165 to NIS 175 by year-end 2002.
But Douer had failed to predict that competition with YES would induce the company to lower monthly subscription fees to below NIS 134.
That said, today Tevel reported a loss of NIS 341 million for the third quarter. Revenue came to NIS 160 million.
Discount Investments Executive VP and CFO Ziv Leitman said that even after excluding the write-down of NIS 218 million on Golden Channels, Tevel's results are not cheering. Discount Investments owns 48.5% of Tevel.
Leitman said that Tevel acquired a 35% interest in Golden Channels based on $2,100 value per subscriber. When compiling its financial statement Tevel had to decide whether the investment really was eroding in value. Based on economic and regulatory uncertainty, Leitman said, Tevel decided to adopt a conservative approach and wrote down its investment by NIS 218 million.
Leitman said that the competition with YES is hurting ARPU by forcing the cable companies to offer special deals. There's no telling when this trend will change, he added, saying that regulation of the market may become necessary.
He declined to comment on the creditor banks' demand regarding minimal ARPU, and that it consistently rise, as a condition for lending money.
Increasing ARPU by $10 a month is significant for the companies but not for the subscribers, Leitman said, hinting of future rate rises in the future.