Liberty delivers modest Q1; Virgin stands out

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Liberty Global has reported revenues of $2.86 billion (€2.55bn), down 0.6 per cent on a year-on-on year basis annual basis while operating income was down 10.3 per cent on the same period last year to $105.5 million.

Virgin Media showed a net customer gain of 59,200, an annual increase of 32 per cent. Liberty’s UK and Ireland business saw 46,000 telephony and 37,000 broadband subscriptions additions in Q1 2019 , offset video attrition arising from Virgin’s shift in focus to higher value TV customers. Basic video customers were down 1,600 in the quarter while enhanced video subscribers fell by 22,700 during the quarter.

In total, the company added 24,700 organic RGUs, including Switzerland and 67,600 excluding those operations. This compares to losses of 33,000 in the previous quarter. Video losses increased this year to 60,500 from losses of 45,200 year-on-year.

CEO Mike Fries commented: “A year ago we announced the sale of our operations in Germany, Hungary, Romania and the Czech Republic to Vodafone, which represents the largest divestiture in company history. Since deal announcement we have crossed a number of key milestones and the European Commission is currently in the final stages of its review. We are confident that we remain on track for a successful completion of this transaction during the summer. With respect to the sale of UPC Switzerland to Sunrise, the Swiss Competition Authority is now reviewing the case having received formal notification and we anticipate regulatory approval in the fourth quarter. And finally, we are pleased to announce that the sale of our Eastern European DTH business was completed in early May. We will provide updates in due course regarding our capital allocation decisions with the total proceeds from these transactions.”

“From an operating perspective, Virgin Media continued to deliver improved subscriber trends. During the first quarter, Virgin Media delivered nearly 60,000 RGU additions, a 32 per cent year-over-year improvement driven by 26,000 new customer relationships. On the innovation front, we are pushing the envelope in the UK In April, we rolled out compelling new fixed-mobile converged bundles, boosted our top broadband speed to 500 Mbps and launched Intelligent WiFi, a cloud-based adaptive system that’s designed to significantly improve our customers’ in-home WiFi experience,” Fries added.

Commenting on the results, industry analyst Paolo Pescatore of PP Insight said: “Overall, [it was] a modest quarter given the challenging environment. Virgin Media now remains the crown jewels in Liberty Global’s portfolio, but also a problem child. Moves to divest other assets shows a desire to leave Europe by maximising the value of each asset. However, acquiring Virgin Media would not cheap for any party. And would require significant long term investment to compete with BT other smaller aggressive fibre broadband providers.”

“Latest moves to strengthen Virgin Media’s portfolio suggests that Liberty Global is committed to the UK for the short to medium term. Given the renewed push towards convergence and importance of owning fixed and mobile assets (due to 5G and more), it is feasible that it might acquire or merge with a UK mobile operator,” he added.


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