According to Mike Fries, CEO of International TV and broadband company Liberty Global, the improvement in subscriber additions, led by its operations in the UK and Germany, contributed to its best first quarter video performance in the last ten years, with a “robust” take-up of the new 4K-enabled Virgin TV V6 set-top box and customer satisfaction for the product significantly higher than its prior device. The new box is expected to be rolled out across additional markets later this year. Its European Operating Income of $431 million in Q1 was down 18 per cent YoY.
Reporting the company’s results for the three months ended March 31st, Fries said that first quarter results in Europe showed an acceleration in volume growth, as the mix of “market-leading” broadband speeds, next-generation TV functionality and new build activity underpinning that performance. “We added 244,000 RGUs during Q1, a 40 per cent increase compared to the prior-year period, while successfully implementing price increases across several European markets. This improvement in subscriber additions was led by our operations in the UK and Germany, both of which contributed to our best first quarter video performance in the last ten years,” he advised.
In terms of its European financials, Fries said the company had a soft start to the year on the revenue front with 2 per cent rebased growth in Q1, mainly as a result of “challenging” mobile results in Belgium and the UK. Its European Operating Income of $431 Million in Q1 was down 18 per cent YoY.
He said that while most markets reported results consistent with its forecasts, Virgin Media’s cable ARPU was softer than planned, partly down to discounting and mix effect, as well as a decline in mobile revenue. “Virgin’s 1 per cent rebased OCF growth in the first quarter also reflected significant investment in our UK marketing efforts, emphasising our competitive advantage on broadband speeds, TV superiority bolstered by Virgin’s new 4K set-top box and our attractive new 4G quad-play offerings. These investments should allow us to deliver better results in the second half of this year. However, we now anticipate our 2017 full-year rebased OCF growth to be around 5 per cent for Liberty Global Group,” he revealed.
“With respect to Project Lightning, we previously reported a reboot of the programme along with leadership changes. This transformation includes the appointment of a new Lightning management team reporting to Liberty’s central T&I group and a detailed review of the programme with a view towards ramping our construction activity over the next 12 to 24 months. Although we delivered 102,000 new premises at Virgin Media in Q1 and a total of around 700,000 homes to date, we expect that the management transition and related review is likely to result in a slower build pace than what we previously expected for 2017. We will provide an update after our second quarter. Our new build plans throughout the rest of continental Europe are progressing well,” he said.
European Highlights Q1 2017
In terms of Cable Product Performance, Liberty Global added 244,000 RGUs, up 40 per cent YoY when excluding the Netherlands from its Q1 2016 result. This acceleration was driven by materially lower video attrition, which was reduced by 83,000 RGUs, mainly related to its improved performances in the UK and Germany. Broadband growth was sightly up (added 9,000 more RGUs), while telephony RGU growth slowed (added 22,000 fewer RGUs) as compared to the RGU additions in Q1 2016