Kudelski puts brave face on disappointing Europe

Company CEO André Kudelski expects this year's results to be good Keystone

The Kudelski group, whose core business is providing pay television security, has announced that its net profit in 2001 rose by 8.2 per cent to SFr72.1 million ($42.35 million).

The figure fell somewhat short of market expectations and was due to a provision for legal costs.

Kudelski, which is based near Lausanne, warned that the first half of this year would not be so easy, as a number of European digital broadcasters faced a struggle for survival.

Kudelski supplies security installations to broadcasters, and makes smart cards that slide into cable and satellite decoders and unscramble programming for subscribers.

Optimistic forecast

However, chairman and CEO André Kudelski told swissinfo that the company was sticking by its optimistic forecast for the year as a whole.

“I would say the overall outlook is very promising. We are still in our guidance for 2002 but the first half may be a little bit more shaky, due basically to the reshuffling in the European digital TV environment,” he said.

The company has said it anticipates net profit of SFr120-130 million for 2002 on sales revenues of between SFr600-700 million.

Subscriber numbers disappointing

A number of broadcasters have run up big losses in the pay TV market in Europe, overpaying for content and finding subscriber numbers disappointing.

“Digital TV may only be successful if you have a real choice, and today in Europe … you don’t have the full choice,” commented Kudelski.

“The Kudelski group is paying a lot of attention to this situation and is working with operators to find solutions that are adapted to the new digital TV environment and to support the upswing of the sector, which is expected to take place during the second half of 2002,” he added.

More favourable

The company, which originally made a name for itself by producing high-quality magnetic tape recorders for radio journalists and the film industry, said the digital TV market situation in the United States and Asia was “more favourable” than in Europe.

In the US, Kudelski has high hopes that its largest customer, EchoStar, will be given approval later this year by the regulatory authorities to go ahead with a $25 billion deal to acquire DirecTV.

The deal promises to boost the customer base of Kudelski’s clients from 30 million to 40 million.

“For us, it’s a wonderful potential. For the medium term, it would mean an increase of by 40 to 60 per cent of our net income,” said Kudelski.

However, some analysts say approval of the deal is far from certain, mainly because it would reduce the number of digital TV providers in the US from three to two.

If the deal does not go through, Kudelski said it would not mean the end of the world.

“It would just be business as usual, but we think that EchoStar has a very strong position and we may have in the longer term a possibility to still get DirecTV as a client,” he said.

The company is also active in other areas relating to smart cards, including access to sporting events, ski lifts, car parks and major events.

by Robert Brookes with agencies