Liberty Global Q2: “Return to growth in core markets”

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Liberty Global, the multinational telco, has announced its Q2 2021 financial results. The company posted a quarterly revenue of $3.1 billion (€2.6bn) – an increase of 14.1 per cent year-on-year on a reported basis, and 3.4 per cent on a rebased basis.

Despite the rises in revenues and profits, Liberty Global’s overall subscriber growth slowed in te quarter compared with the previous year, recording 2,400 overall in the quarter compared with 7,700 at the end of Q2 2020.

CEO Mike Fries commented: “With the closing of the Virgin Media O2 joint venture during the second quarter, the converged national champions in our four key markets are collectively positioned to deliver unparalleled scale, competitive strength and strategic optionality across the footprint. Virgin Media O2 is a powerful combination, bringing together two iconic brands, two world-class networks, and a combined customer base of 54 million subscribers, all of whom are just beginning to find out how committed we are to powering the UK’s recovery and creating unbeatable choice for data-hungry consumers.”

“Our advanced fibre and 5G networks connected 87 million subscribers across Europe at June 30th, currently generating consolidated annual revenue of more than $7 billion, while our joint-ventures in the UK and the Netherlands produce combined annual revenue of more than $17 billion. As a result, we provide our shareholders unmatched exposure to the leading FMC platforms across Europe, with further upside potential from our global Ventures effort. This portfolio encompasses more than 50 investments across technology, content and infrastructure, including strategic stakes in such companies as Plume, ITV, Lionsgate, Univision and the Formula E racing series. Meanwhile our core operating assets are driving significant Adjusted Free Cash Flow growth, as we look to create additional value through adjacencies and by consistently applying our levered equity strategy to supercharge growth in free cash flow per share.”

“We saw a return to rebased revenue growth in all core markets in Q2 driven in large part by Covid recovery in sports and advertising but also encouragingly through underlying organic growth as we continue executing our convergence strategy. As a result, we added 139,000 consolidated broadband and postpaid mobile subscribers during the quarter, including 42,000 at Virgin Media (UK) during April and May. Meanwhile in Switzerland, we have identified an additional CHF 50 million (€46.4m) of synergies at Sunrise UPC (along with an associated CHF 100 million increase in costs to capture), which are now targeted at run-rate CHF 325 million with an NPV of CHF 3.7 billion versus our original expectation for run-rate synergies of CHF 275 million with an NPV of CHF 3.1 billion.”

“Today the Virgin Media O2 joint venture announced its intention to upgrade its fixed network to full fibre- to-the-premise (FTTP) with completion in 2028, building on its leadership position as the UK’s largest gigabit broadband provider. The investment will bolster the operator’s long-term network strategy, fuel future connectivity innovation for consumers and businesses and create options to potentially pursue the broadband wholesale market in the UK We, along with our partner Telefónica, are fully supportive of this value accretive project. The upgrade will be one of the UK’s most efficient fibre rollouts, costing marginally more than our previously planned Docsis 4 migration, and only a modest annual increase to our current capital expenditure budget. We continue to evaluate our future network strategies in our other operating markets and are encouraged by the technology options (wholesale, Docsis 4, FTTP) which are likely to vary by market as we position ourselves for free cash flow growth and long-term value creation.”

“At the consolidated level, we are reaffirming all of our original, full-year guidance metrics, including $1.35 billion of Adjusted Free Cash Flow representing 26 per cent YoY growth. With the liquidity enhancing completion of the VMED O2 JV, our balance sheet remains in great shape with $4.1 billion of cash and $5.7 billion of total liquidity, and we continue to be aggressive buyers of our stock, having repurchased ~$765 million through July 26th. Given the strength of our current cash position and our confidence in our core FMC operations, we have decided to commit to repurchasing a minimum of 10 per cent of our equity market capitalisation annually for the next three years. To the extent that 10 per cent of our market cap exceeds our annual FCF, we will use our existing cash to fund the balance, providing certainty to our shareholders around a baseline capital return strategy over the medium term. In the meantime, we have increased our 2021 authorisation by $400 million to align with our new buyback programme, targeting a full-year repurchase commitment of $1.4 billion,” he concluded.


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