Ziggo hampers Liberty Q2

Liberty Global added in excess of 230,000 subscribers to its to next-generation TV services in Q2, with its combined Horizon and TiVo base now boasting 4 million customers.

John Malone’s Liberty added 150,000 subscribers to its Horizon TV platform, and 80,000 to its TiVo service, which it offers in the UK via Virgin Media.

However, in the Netherlands, Liberty continued to face “competitive and integration challenges” with Ziggo, the Dutch cable operator it bought last year, losing 87,000 subscription service customers in the quarter.

Liberty said that its Q2 results were underpinned by “strong top line performances in the UK, Germany and Belgium” and at the end of the quarter provided 25.7 million unique customers with 52.9 million subscription services across 48.6 million homes passed in Europe. Q2 organic additions consisted of 43,000 service subscribers in Western Europe and 52,000 in Central and Eastern Europe.

Commenting on the results, CEO Mike Fries said, “Subscriber additions and OCF growth each accelerated in Q2, with most of our markets delivering improved sequential performance as compared to Q1. Strong demand for our triple- and quad-play bundles continues to support our results despite difficulties in the Netherlands, which continued to face competitive and integration challenges. We have taken measures to improve our results in that market and our H2 OCF growth should benefit from the positive impact of Ziggo synergies. Despite the headwinds in the Netherlands, we are confirming all of our 2015 guidance targets.”

“Rebased revenue growth of 3 per cent for the Liberty Global Group in Q2 was underpinned by strong top line performances in the UK, Germany and Belgium. Operating leverage and strong cost controls drove 4 per cent rebased OCF growth in Europe, despite the challenges in Holland. We expect OCF growth in Europe to continue ramping in the second half of the year based on our expectation for significantly improved net add numbers, accelerating rebased revenue growth from our residential and B2B services and our continued focus on controlling costs.”

“In early July we launched our LiLAC tracking stock, which tracks our market-leading cable assets in Chile and Puerto Rico. Investors can now directly participate in the economic performance of VTR and Liberty Puerto Rico, which together reported 7 per cent rebased revenue growth, 13 per cent rebased OCF growth and 43,000 organic RGU additions in Q2. We see LiLAC as a great platform for future M&A opportunities given the fragmented nature of media assets in this region of the world and along these lines we recently closed the Choice acquisition in Puerto Rico. Over the medium term, we expect LiLAC to generate mid- to high-single-digit rebased OCF growth.”

“We recently finalized the blueprint for our Liberty 3.0 program, and we’re excited about the substantial growth opportunity that lies ahead of us. This transformational effort is expected to enhance our revenue and OCF growth over the next several years as we unlock efficiencies and reinvest the majority of those savings to drive even faster revenue and operating cash flow growth. The 3.0 initiative will involve a number of changes to our operating model and organization, and we are confident in our ability to deliver high-single-digit OCF growth over the medium term.”

“We have continued to make steady progress with our capital structure, refinancing nearly $4 billion of debt in Q2 after a very active first quarter. As a result, our average tenor at quarter end has been extended to nearly eight years, at a blended, fully-swapped interest cost of 5.4 per cent. In terms of our repurchase activity, we bought nearly $500 million of our equity during Q2, increasing our total to over $900 million of buybacks during the first six months of the year. As a result, we remain on track to return $3 billion of capital to shareholders through stock repurchases over the next 18 months.”

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