Liberty Global Inc reveals its financial and operating results for Q1 ended March 31st 2013 and reports total RGUs of 35.2 million, including organic RGU additions of 373,000 during the quarter.
Revenue was $2.8 billion, representing like for like growth of 6 per cent and operating income of $525 million, also up 6 per cent.
Liberty Global’s President and CEO Mike Fries commented: “Our track record of strong operating and financial performance from 2012 continued into the first quarter of 2013. We delivered mid-single-digit rebased revenue and OCF growth of 6 per cent and 4 per cent, respectively, with both results comparing favourably to the prior year period. Fueled by the addition of 1.5 million RGUs and over 500,000 mobile subscriptions over the last twelve months, we posted our fifth consecutive quarter with rebased revenue growth of better than 5 per cent, led by Belgium and Germany.”
“Innovation remains a core focus this year as we continue to invest in the development of new product offerings. We launched our Horizon TV platform in Switzerland in Q1, with Ireland and Germany to follow later this year. Through April, we had over 200,000 Horizon TV subscribers in the Netherlands and Switzerland. In addition, we have significantly increased our broadband speeds in markets like the Netherlands, where we have key bundles positioned with 100 Mbps and a top-tier bundle at 200 Mbps.”
“We remain on track to complete the acquisition of Virgin Media4 before the end of the second quarter. We recently received regulatory approval from the European Commission and both companies have scheduled their respective shareholder votes for early June to approve the transaction. With a combined customer base of 25 million and an aggregate reach of over 45 million homes passed, we are excited about our collective growth potential and we will remain focused on delivering superior value to customers and shareholders.”
“Year-to-date, we have been active in the capital markets, raising the necessary financing to fund the Virgin Media acquisition, as well as opportunistically refinancing roughly $5 billion of debt at the UPC Holding and Unitymedia KabelBW credit pools. Upon completion of the Virgin Media transaction, we expect to have more than sufficient liquidity to fulfill our $3.5 billion share buyback target over the ensuing two years.”
“At March 31, 2013, 19.7 we had million unique customers received 35.2 million total services, an increase of over 5 per cent (inclusive of acquisitions) in our RGU base since March 31st 2012. On a product level, our RGU base consisted of 18.2 million video, 9.5 million broadband Internet and 7.5 million telephony subscriptions at quarter-end. Bundling remains an important driver of our subscriber growth, particularly sales of our triple-play product offerings, as over 30 per cent of our customer base, or approximately 6.2 million customers, subscribed to triple-play packages at March 31st 2013. In total, we finished the first quarter with aggregate bundled customers of 9.3 million (or 47 per cent of our total customer base), which reflects an increase of over 920,000 (inclusive of acquisitions) over the last twelve months.
During Q1 2013, we added 373,000 RGUs as compared to 445,000 RGUs in Q1 2012. Geographically, our RGU additions in Central and Eastern Europe (“CEE”) grew year-over-year by 30 per cent to 70,000 and Latin America5 increased by 88 per cent to 63,000, while western Europe experienced a decline of 33 per cent to 240,000. The lower comparative western European result was directly attributable to our German and Dutch businesses, as each had their best quarterly subscriber performance of 2012 in the first quarter. With respect to Germany, we added 169,000 RGUs during Q1 2013 as compared to the record 219,000 we achieved in Q1 2012. A portion of this lower result is due to a housing association contract that we lost in Germany in December 2011, as approximately 16,000 of the impacted RGUs were transferred to the new provider during the quarter.
With respect to our Dutch operation, we lost 3,000 RGUs in Q1 2013, as compared to a gain of 42,000 in Q1 2012. However, this result is consistent with our Dutch subscriber performance in both the third and fourth quarters of 2012, as the Dutch market remains very competitive. To that point and subsequent to quarter-end, we further strengthened our customer proposition in the Netherlands, as we introduced basic digital unencryption and launched new triple-play bundles that include increased broadband speeds with our primary bundle offering 100 Mbps along with the introduction of a 200 Mbps internet product in certain areas.
In terms of broadband Internet, we added 233,000 RGUs during the quarter with key contributions from our German, Swiss, Belgian and Chilean operations. In particular, our 22,000 Swiss broadband internet additions in Q1 2013 resulted partly from the market-leading speeds included in our recently launched Horizon bundles. From a voice perspective, we added 231,000 telephony subscribers in Q1 2013, largely mirroring our broadband growth, as we upsell our single- and double-play customer base to triple-play services.
From a video standpoint, we lost 92,000 video subscribers during the quarter, broadly in line with the corresponding prior year period. Our Chilean, CEE and Belgian operations all improved their year-over-year video subscriber performance. A key development that has taken shape over the last six months is that we have introduced basic digital unencryption to promote the digitalisation process and enhance our competitive position in a number of markets, including Switzerland, the Netherlands (as noted earlier), Austria, Romania, Czech Republic and in Germany’s Unitymedia footprint. By unencrypting the digital signal, we are providing our customers with incremental value and an easy introduction to our basic digital video services.
We continue to promote Horizon TV in the Dutch market and we launched this platform in January 2013 in Switzerland. Currently we have over 200,000 Horizon TV subscribers with more than 145,000 in the Netherlands and over 55,000 in Switzerland. In addition, we launched our unique Horizon Online platform with 45 channels in Ireland in mid-April and have plans to launch the full Horizon TV platform this summer in the Irish market, followed by Germany later in the year.
For the three months ended March 31st 2013, our consolidated revenue increased 9 per cent or $231 million to $2.77 billion, as compared to $2.54 billion in the prior year period. Our organic growth, led by volume growth in broadband Internet and mobile, fueled the majority of our year-over-year top-line expansion. In addition, we also benefitted from the positive contribution of acquisitions, principally OneLink in Puerto Rico, and to a lesser extent, foreign exchange (“FX”) movements. Adjusting for both the impact of acquisitions and FX, we achieved year-over-year rebased revenue growth of 6 per cent in Q1 2013, our best first quarter result in six years.
Our western European operations, which accounted for over 70 per cent of our consolidated revenue in the quarter, achieved year-over-year rebased growth of 7 per cent. This strong performance resulted largely from our Belgian and German operations, which delivered rebased growth of 12 per cent and 10 per cent, respectively. Our German result was particularly impressive given the fact that in the first quarter of 2013 we did not recognise revenue associated with public broadcaster carriage fees, which had contributed approximately $8 million of revenue in Q1 2012.
Furthermore, within western Europe, our businesses in Ireland and Switzerland generated rebased revenue growth of 9 per cent and 5 per cent, respectively, as each benefited from more than 100,000 advanced service RGU additions during the last twelve months. Our Swiss operation continued to demonstrate strong quarterly top-line growth, supported not only by volume growth but also by a video price increase in the quarter. Turning to CEE, our cable business in this region, which represents approximately 10 per cent of our consolidated revenue, posted 1 per cent rebased revenue growth for the three months ended March 31, 2013.”