Advanced Television

Liberty: Income dips on mobile, V6 box rolls out

May 8, 2017

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

  • Organic customer relationship growth of 40,000 in Q1 2017
    • Fuelled by strong quarterly additions in the UK and MDU contributions in Germany
  • Organic RGU growth was up 40 per cent year-over-year with 244,000 net additions in Q1
    • Video attrition improved materially to a loss of just 15,000 RGUs
  • Mobile base now stands at 6.4 million subscribers, including 5.1 million or 80 per cent postpaid

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

    • The improved video trend was supported by its new build programmes across Europe, the UK in particular, and success in the MDU segment in Germany
  • Next-Generation TV platforms (including Horizon TV, Horizon-Lite, TiVo, Eos (v6) and Yelo TV): Added 253,000 subscribers, its next-generation subscriber base reached 6.9 million, representing 39 per cent of our total video base (excluding DTH) in Europe
    • Take-up of the new 4K enabled Virgin TV V6 set-top box was robust in Q1 and customer satisfaction for this product has been significantly higher than its prior device. This new box is expected to be rolled out across additional markets later this year
    • Added the popular Netflix app to its Horizon platform in Germany in March, offering convenience and more on-demand content, and it is now available in four countries
  • WiFi Connect Box: investing in best-in-class connectivity to enhance the customer experience by rolling out its WiFi Connect boxes. As of March 31, 2017, it has 3.7 million boxes installed across Europe, representing 26 per cent penetration of its broadband base
    • The average broadband speed of our internet subscribers was 108 Mbps and on average they consumed 121GB of data per month during Q1
  • UK/Ireland: delivered accelerated RGU growth with 158,000 additions in Q1, up 70 per cent YoY. Of particular note was its UK video performance with 46,000 RGU additions, a 53,000 improvement year-over-year. This result was supported by its network extension programme and its new 4K set-top box. RGU attrition in Ireland was reduced from 17,000 in Q1 2016 to 5,000 this quarter, boosted by improvements across all products
  • Germany: delivered 52,000 RGU gains in Q1, while implementing price increases for four million subscribers. Sales remained steady during Q1 on the back of its new spring campaign and enhanced product portfolio, highlighting its 400Mbps top speed, which has improved our tier mix. Germany’s video result improved by 34,000 RGUs YoY with support from a strong MDU video business
  • Belgium: Q1 attrition of 12,000 RGUs was primarily related to intensified competition and the announcement of certain price increases. This mainly impacted its stand-alone video subscribers resulting in a video loss of 21,000 RGUs. On the broadband and fixed telephony fronts, it delivered 6,000 and 3,000 RGU additions, respectively, and was able to drive its ‘WIGO’ all-in-one converged bundle penetration to 9 per cent of its fixed-line customer base at the end March 31, 2017
  • Switzerland/Austria: lost 2,000 RGUs in Q1, a 10,000 improvement as compared to Q1 2016, all related to an improved fixed telephony performance. Aggressive marketing efforts and new bundles from competitors impacted the sequential RGU growth. Its Swiss ‘Connect’ and ‘Connect & Play’ portfolios will be enriched with an exclusive sports channel called ‘MySports’ that it plans to launch in Q3 to further differentiate its product offer

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