Liberty Global: “2014 a milestone year”

mikefriesLiberty Global has reported 3.5 million pay-TV subscribers at the end of 2014, with its year-end Horizon base lifted to 914,000 by a record take-up in Germany in the fourth quarter. Virgin Media in the UK now has 2.5 million TiVo customers, adding 583,000 in the course of the year.

The company had 15.9 million digital TV subscribers at the end of the year, along with 7.6 million analogue customers. Overall, it lost 223,000 video customers in the course of the year, which it said was its best result in eight years. In the fourth quarter, video losses slowed to 35,000.

Liberty Global’s overall revenue-generating unit base increased by 1.3 million in the course of the year, including 918,000 in western Europe, 223,000 in central and eastern Europe and 130,000 in Latin America. Broadband remains the key driver, with 905,000 additions including 242,000 in the fourth quarter. Germany and the UK led the way with 511,000 and 201,000 additions respectively, including 113,000 Virgin Media additions in the fourth quarter, boosted by strong take up of big bundles and low churn.

Liberty Global’s Belgian operations added 129,000 RGUs in the course of 2014, boosted by its Whop and Whoppa triple-play bundles.

The company said the Dutch market remained challenging, with 26,000 RGUs lost in 2014. Liberty said it had however increased its synergy target from its acquisition of Ziggo to €250 million by 2018.

Overall, the company posted revenue of $18.2 billion for the year, up 3 per cent, with operating income up 11 per cent to US$2.2 billion.

CEO Mike Fries commented: “2014 was a milestone year for us on many fronts. We increased the pace of innovation in broadband, video, and wireless, delivered steady organic subscriber growth, continued driving operational efficiencies and achieved all of our financial targets. The capstone of the year was the acquisition of Ziggo, which represents a unique opportunity for us to create national scale and become the leading challenger in the mobile and enterprise businesses in Holland, while opening up great opportunities for Dutch consumers and businesses. In terms of financial performance, we reported record revenue in excess of $18 billion and delivered on all of our 2014 guidance targets including an 18 per cent increase in our Adjusted Free Cash Flow excluding Ziggo.”

“Innovation remains a key focus, enabling us to offer our customers cutting edge products and services which, in turn, supports our pricing strategy. In 2015, we will continue to make strategic investments to differentiate our products and continue driving demand for our next-generation platform, Horizon TV, which crossed the one million subscriber milestone this week, along with increasing usage of our Horizon Go app and our MyPrime video-streaming service. We are also preparing for trials of DOCSIS 3.1 technology in the second half of this year, which we expect will meaningfully and cost effectively extend our speed leadership to 1GB when we begin commercial deployments and up to 10GB in the future. With our superior broadband network, the expansion of WiFi to 10 million locations by the end of 2015 and our new mobile launches across Europe, we are well positioned to offer consumers the best connectivity experience available in our markets.”

“Our balance sheet remains in great shape with approximately $5.2 billion of liquidity at year-end. In Q4, we refinanced over $3 billion of debt, reducing our fully-swapped cost of debt to 6.0 per cent, our lowest on record, while pushing out our average maturity to over seven years. In January, we took advantage of attractive capital markets again and realigned our debt structure in order to create regional credit pools and help drive further operating efficiencies. During 2014, we repurchased nearly $1.6 billion of stock despite being out of the market for over four months due to the Ziggo transaction. We remain committed to repurchasing a further $1.9 billion by year end 2015. In addition, we are extending our previously announced buyback program by committing to purchase an additional $2 billion of ordinary shares by the end of 2016. This extension of our buyback program brings our total authorized buyback activity over the next two years to approximately $4 billion. Later this month, our shareholders will be voting on the creation of the LiLAC tracking stock, which would give our investor base an opportunity to invest more directly in our fast-growing operations in Latin America and the Caribbean.”

“Looking ahead to 2015, we expect to deliver mid-single digit rebased OCF growth, along with $2.5 billion of Adjusted Free Cash Flow, which would represent combined mid-teens growth on an FX-adjusted basis.5 Our expectations are based on continued robust subscriber growth, improving pricing power, our rapidly growing mobile and B2B businesses and executing on the substantial synergy opportunities that we have already underway with our operational integrations taking place in the Netherlands and the U.K.”

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