Don't rattle my coax cage
Yet another groot-value reader just forwarded me a press release from UGCEurope, responding to the bombshell article in yesterday's Trouw. It's in Dutch, and there's no sign of it on either the UGCEurope website, or that of parent UnitedGlobalCom. The reader's translation is:
"UPC demands rectification of Trouw
UPC requires from Trouw a rectification of its statetement that UPC in the Netherlands in 2004 made a net profit of euro 200 million, or a profit of 87 euro per customer. The real tale is that UPC Netherlands made a loss of euro 50 million, or euro 20 per customer.
In the past years UPC in the Netherlands has invested some billions of euro and it will continue to invest hundreds of millions euro of in the Netherlands.
UPC asks Trouw to be more meticulous in the future with its financial and economic reporting.
UPC Netherlands are a consolidated subsidiary of UnitedGlobalCom Inc. (UGC)"
I understand that a couple of opposition parties in the Dutch parliament have asked awkward questions of the Economic Affairs Minister based on yesterday's article, and I also understand that Trouw today carries an article seeking to draw a contrast between UPC and a small regional MSO in Brabant, which publishes a breakdown of the cost of its services here. The total per home, including 19% VAT, is EUR10.50, and this MSO only has 2,600 customers, some of whom were not easy to reach. The implication seems to be that UPC, with a customer base nearly 1,000x greater, and much better clustering in its footprint, should be able to amortize costs more effectively given its scale, i.e., whatever the stated accounting profits might be, the cash costs should be well below those of Brabant.
I think what we are witnessing here is a journalist with a tiger by the tail, and an evermore politicized, maybe even nationalistic aspect to it, and I think we can expect the saga to run. It's worth remembering that the Dutch market has previously explored the course of mandatory unbundling of the cable plant, and I wonder if this mounting debate will revive calls for such action.