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Liberty Global FY: Solid European results

International TV and broadband company Liberty Global has reported Q4 and Full Year results which reveal a European operating income of $683 million (€643m) and $558 million in Q4 2016 and Q4 2015, respectively, and $2.482 billion and $2.101 billion during full-year 2016 and 2015, respectively, representing increases of 22 per cent and 18 per cent.

“As expected, we finished 2016 on a high note, delivering rebased OCF growth in Europe of 7.5 per cent in the fourth quarter, excluding Ziggo,” commented CEO Mike Fries. “This performance was driven by solid results across our European operations, including Virgin Media, which delivered its best quarterly result in two years with 8 per cent rebased OCF growth. As promised, the key 2016 drivers of our Liberty Go plan are kicking in – new build accelerated, B2B performed well and we kept indirect operating expenses relatively flat. We expect the collective impact of these drivers to continue ramping in 2017 and beyond, underpinning accelerating growth over the medium term,” he advised.

“On the subscriber front, we increased our 2016 RGU additions in Europe by 24 per cent year-over-year and finished the year with 946,000 new subscribers. This improved performance can be credited to the wide range of innovative new products that we’ve launched, including our superior and ever-increasing broadband speeds, and our aggressive network expansion programme, which delivered over 1.4 million new gigabit-ready homes in 2016, including nearly half a million at Virgin Media alone,” he noted.

Looking ahead, Fries confirmed that Liberty Global would continue to enrich its bundled portfolios with compelling 4G mobile offers and the addition of new content and functionality, including the launch of Netflix across its footprint. “We will also expand the deployment of exciting new products like our 4K cloud-based set-top and our WiFi Connect Box. Also, in late 2017, we will start field trials of the unrivalled DOCSIS 3.1 technology, which will provide gigabit speeds,” he confirmed.

Fries described the joint venture with Vodafone in the Netherlands, which completed at year-end, as “a terrific transaction for shareholders” as total cash proceeds were nearly $3 billion over 2016 with Liberty Global now owning 50 per cent of “the most innovative converged player in the market”.

European Highlights

  • 2016 RGU additions of 946,000 were up 24 per cent or 186,000 year-over-year on an organic basis
    • Increase driven by materially lower video churn and higher broadband gains
    • YoY improvement fuelled by 304,000 UK adds and turnaround in the Netherlands
  • Q4 organic customer relationship additions of 46,000 drove full-year increase of 25,000
  • Gained 402,000 organic mobile postpaid subscribers in 2016, driven by the UK and Belgium
  • Q4 Operating income up 22 per cent YoY, rebased OCF growth excluding Ziggo of 7.5 per cent in Q4
    • 2016 Operating income increased 18 per cent, while rebased OCF (excl. Ziggo) grew 4.3 per cent
  • Achieved new build programme target of >1.3 million European homes during 2016
    • Added 1.4 million new homes in 2016, including 465,000 in UK/Ireland
  • Cable Product Additions: for the full-year 2016, a 31 per cent reduction in video attrition (123,000 RGUs less) and higher broadband gains (76,000 RGUs more) boosted organic RGU performance in Europe by 24 per cent year-over-year to 946,000 additions
    • Supported by investments in next-generation video products and new build programme, the improved video RGU performance in 2016 was driven by the Netherlands (88,000), Switzerland (43,000) and the UK (35,000)
  • Next-Generation TV platforms (includes Horizon TV, Horizon-Lite, TiVo and Yelo TV): organically added 313,000 and 1.2 million subscribers in Q4 and 2016, respectively. Following the deconsolidation of Ziggo on December 31, 2016, Liberty Global ended the year with 6.7 million next-generation subscribers, representing 38 per cent of its total video base, excluding DTH, in Europe
    • In Q4 2016, Liberty Global launched the new 4K enabled V6 set-top box in the UK and completed the roll-out of Horizon TV across its European operations with the launch of Horizon TV in Austria and Horizon-Lite in Romania
  • UK/Ireland: Posted a 39 per cent increase in organic RGU additions to 304,000 in the UK in 2016, delivering its best annual result since 2009, helped by its network extension programme. Subscriber additions in Q4 in the UK were impacted by increased churn related to its second price increase in 2016, while sales remained strong throughout the quarter. In Ireland, intensified competition increased RGU attrition by 36,000 in 2016
  • Netherlands: with 51,000 RGU additions in Q4, Ziggo delivered its fourth consecutive quarterly improvement. This turnaround was driven by its product investments (such as Ziggo Sport, Connect Box and Replay TV) and customer-focused initiatives, supported by effective sales campaigns and strong upsell results
  • Germany: Posted 320,000 RGU additions in 2016, including 98,000 in Q4, with better combined voice and broadband gains compared to prior-year periods, in part due to the success of its ‘Highspeed Weeks’ promotion in the second half of 2016, but offset by modestly higher video attrition following its 2016 video price increase, which took place in Q1 2016
  • Belgium: RGU additions of 28,000 in 2016 were lower YoY as a result of the intense competitive environment. The ‘WIGO’ all-in-one converged offering had 151,000 subscribers by the end of year, following the introduction of this cutting-edge bundle in June 2016
  • Switzerland/Austria: delivered its fourth consecutive quarter of improved RGU performance with 16,000 RGU additions in Switzerland in Q4. This represents the region’s best quarterly result since Q1 2014, boosted by the success of its new Swiss ‘Connect’ and ‘Connect & Play’ portfolios
  • CEE: delivered a 7 per cent improvement in RGU gains in 2016, mainly related to its new build programme, and includes 60,000 video additions across the region for 2016. Its Q4 result was lower YoY as a result of lower DTH gains (19,000), mainly related to Romania, and softer telephony additions

 

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