Liberty Global completes tender offer for Ziggo

Liberty Global has completed its tender offer for Dutch cable operator Ziggo and will now own 100 per cent of the firm’s outstanding shares.

CEO Mike Fries confirmed that Liberty will immediately begin the integration of Ziggo and UPC Netherlands.

“As we leverage the incremental scale provided by Ziggo, which will expand our total customer base to 27 million households taking more than 55 million subscription services,” said Fries. He added that upon closing of the Ziggo offer, Liberty will look to use its “substantial liquidity” to restart its share repurchase programme.

“Our buybacks will resume imminently, and we expect to repurchase approximately $2.6 billion of stock over the next fourteen months, which will bring our cumulative total to more than $13 billion since the company’s formation in 2005,” Fries further stated.

Meanwhile Fries commented on Liberty Global’s Q3 results:

We continue leveraging the scale of our core distribution platform and the substantial investments we’re making to bring innovative products to market. As a result, our third quarter results were driven in large part by record volume growth, underpinned by strong consumer demand for our next-generation video platforms, our market-leading broadband speeds, and our increasingly converged products that provide our customers with connectivity and entertainment outside of the home. These robust subscriber gains helped us deliver a 6% increase in rebased OCF to $6.4 billion YTD and a 45% rise in Adjusted Free Cash Flow to $1.4 billion on a combined basis.”
“We are pleased to report that we completed our Ziggo tender offer and we will own 100% of their outstanding shares. We expect to immediately begin the integration of Ziggo and UPC Netherlands, which we expect will drive substantial cost and revenue synergies over the coming years. In another strategic development, we recently announced a plan to establish a tracking stock for our Latin American and Caribbean operations, which we believe will benefit shareholders through the creation of a “pure-play” Latin American stock.”
“Upon closing of the Ziggo offer, we will look to use our substantial liquidity position to reignite our share repurchase program. Our buybacks will resume imminently, and we expect to repurchase approximately $2.6 billion of stock over the next fourteen months, which will bring our cumulative total to more than $13 billion since the company’s formation in 2005. We are excited about our current operational momentum and our strong organic growth prospects for next year as we leverage the incremental scale provided by Ziggo, which will expand our total customer base to 27 million households taking more than 55 million subscription services.”
Subscriber Statistics :
At the end of Q3, we provided our 24.5 million unique customers with 49.2 million subscription services (“RGUs”) across our footprint of 47.5 million homes passed. During the third quarter of 2014, we increased our subscriber base by a Q3 record of 344,000 organic RGU additions. By September 30, 2014, we crossed the 15.0 million broadband internet subscriptions mark, increased telephony subscribers to 12.6 million and finished with a video base of 21.6 million subscribers.
During Q3, we increased our customer base organically by 29,000 customer relationships. Driven by the continued traction of our bundles, which are powered by our market-leading broadband and entertainment products, over 58% of our customers subscribed to double- and triple-play products, yielding a bundling ratio of 2.0x. At the end of Q3, we had 10.4 million triple-play customers, which exceeded our single-play customer base (10.1 million) for the first time.
For the three and nine months ended September 30, 2014, we generated organic subscriber additions of 344,000 and 928,000, reflecting year-over-year increases of 10% and 6%, respectively. Both year-over-year improvements were led by stronger broadband RGU additions and reduced video attrition, partly offset by lower telephony additions.
From a geographic perspective, our Q3 RGU growth consisted of 262,000 additions in Western Europe, 57,000 in Central and Eastern Europe (“CEE”) and 25,000 in Latin America5. Our record Q3 performance in Western Europe was led by 70,000 RGU additions in the U.K., an improvement of 77,000 compared to a 7,000 RGU loss in Q3 2013, in large part driven by the attractiveness of our new “Big Bundles”. Our German operation delivered 121,000 RGU additions during Q3, in-line with the corresponding prior year period, despite executing select video price increases in September. In the Netherlands, a combination of increased promotional activities by our competitors, our previously announced notification of an October 1st price increase and lower demand for our telephony product resulted in an RGU loss of 4,000 for the third quarter of 2014.
Our CEE operations added 57,000 RGUs in Q3, an increase of 16% compared to Q3 2013, mainly driven by churn improvements in the Czech Republic and Poland. Rounding out our geographic footprint, our operation in Chile added 9,000 RGUs, which was below their Q3 2013 performance of 29,000, while our Puerto Rican operation reported 16,000 RGU additions, their best Q3 performance ever.
We continue to enhance our customers’ video experience with our next-generation TV platforms, which include recent innovations like MyPrime and Horizon Go. These next-generation platforms, which are helping to reduce video churn, contributed to the improved Q3 video loss of 46,000 RGUs, the lowest third quarter video attrition in seven years. Our Western European region delivered a particularly strong result led by our British operation, which added 5,000 video RGUs in Q3, a turnaround from a 13,000 loss in Q3 2013. Meanwhile, our Dutch and German operations both showed lower video attrition in Q3, as compared to the same period in 2013. During Q3, we added 261,000 next-generation video subscribers, increasing our TiVo subscriber base to 2.4 million in the U.K. and our Horizon TV base to 770,000 subscribers across the Netherlands, Switzerland, Germany and Ireland. We finished Q3 2014 with a total of 13.5 million digital subscribers, representing 65% digital penetration6, of which 3.2 million or 23% were TiVo or Horizon TV subscribers.

In terms of our broadband internet and telephony performances, we added 239,000 and 151,000 organic RGUs, respectively, during the third quarter. Our broadband additions represented a record third quarter performance, with Germany and the U.K. contributing 77,000 and 49,000 RGU additions, respectively. Meanwhile, our telephony additions were nearly identical to our performance in Q3 2013, as lower results in the Netherlands and Switzerland were offset by improved performance in the U.K.
With respect to our mobile business, we finished the quarter with 4.4 million mobile subscribers7, which represents a sequential increase of 98,000 subscribers and doubles our Q3 2013 additions. This growth was led by an increase of 48,000 subscribers in Belgium, Telenet’s best performance in the last five quarters, while Germany, the U.K. and Chile added 22,000, 18,000 and 11,000, respectively. In late October, we launched our full-MVNO mobile service in the Netherlands for select customers in the first phase of a controlled roll-out and we are currently planning to launch additional full-MVNOs in the months to come.

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