Like any larger company, Liberty Global has its highs and lows. For every Netherlands there is a Romania, and when a reduction in video losses is counted as good news it makes it all the clearer that there is work to be done. Even so, the success of the DOCSIS 3.0 rollout has brought about superior broadband internet speeds and an RGU performance to match.
In seven out of nine markets Liberty has seen an improved performance driven by the two planks of broadband internet and digital TV rollout. The latter is particularly significant, as the staged rollout of digital TV from UPC hasn’t always kept pace with the availability of digital terrestrial services and in some markets commercially available direct-to-home satellite services. Once digital video services are in place – not just the linear TV channels but the other benefits such as VOD and PVRs – the triple play proposition becomes a truly workable marketing tool.
In an investor call on the company’s second quarter financials, Mike Fries, CEO & president, Liberty Global said that by far the most improved market was The Netherlands, where UPC added 38,000 RGUs boosted by new triple play bundles. “This is not an anomaly, this is a significant trend for us and one that should continue for us as we reach 80% of our footprint with DOCSIS 3.0 by the year end,” Fries said there had also been a halo effect for its voice business as customers took up the triple play option.
Romania was not so lucky, amid major competition from the DTH sector accounted for 40% of sub losses for the quarter. Excluding Romania, the figure was 20%.
In some markets it just doesn’t work out, with hardly any DTT to speak of and little in the way of DTH, Switzerland’s Cablecom had just got it wrong. Over the past year though Cablecom has been put under new management, introduced HD, VOD, DOCSIS 3 and even dabbled in 3D. New resources have been put into customer care and UPC is so confident that a rate increase can be introduced in the second half of 2010. The newly found confidence also extends to Cablecom starting to take the UPC name.
“At this point we’ve seen good signs that Cablecom is about to turn the corner, specifically we’ve seen strong net RGU performance year on year, although weaker than budget and that was largely due to an aggressive assumption on the reduction of churn,” said Gene Musselman, president and chief operating officer, UPC Broadband.
The Netherlands, where KPN now has over one million subscribers to its pay DTT and IPTV services, posted its lowest video subs loss in three years. As the first European country to switch off its terrestrial analogue services, way back in November 2006, Holland is once more a mature market.
High definition is beginning to play its part, an additional 260,000 HD subscriptions were taken on the quarter, helping to deliver a combined total of 2.4 million HD and DVR subscribers across the continent. Typically HD is able to command a premium of between €5 and €10.
With hardware costs coming down, it is less painful on the capital expenditure to get new HD boxes into the homes of subscribers that are happy to pay for the privilege. It has also brought down the cost of the proposed Liberty Media network device that with six-tuners might have initially been seen as high-end in the extreme. “We are making great progress with Samsung, Intel and NDS on the development and integration on the hardware and software components here and we continue to feel very positive about the impact that this IP device for the home will have on our digital TV and broadband business,” said Fries, pointing our that the company had received a good reception from operators in both the US and Europe.
Fries described how subscribers would be able to use the gateway to communicate with multiple Wi-Fi devices while sitting in front of the TV, moving content to an iPad from another device elsewhere in the home, over the IP network. “This isn’t just a slightly better user interface, this is an entirely different approach to the user experience, but more than that this is about putting a device in the home that has all the bells and whistles that your PC has today in terms of a very fast processor, multiple Wi-Fi chips, six tuners, and importantly the ability to communicate with your Wi-Fi devices.”
Because Liberty still has close to ten million homes that use no set-top box at all – the cableco has not set a date for an analogue switch-off – Fries said this presented a unique opportunity.
There are also opportunities in acquisition, Fries said Poland remains a very appropriate and obvious consolidation market and pointed to obvious consolidation in the Czech and Slovak markets. In the Czech Republic there were also “interesting opportunities”.
Liberty Global Q2 Financials
- Organic RGU2 additions of 169,000 increased by 80% or 75,000 RGUs
- Revenue of $2.17 billion and Operating Cash Flow (“OCF”)3 of $985 million
- Reflects reported revenue and OCF growth of 20% and 21%, respectively
- Represents 5% rebased4 revenue and OCF growth
- Operating income expanded by 120% to $327 million
- Cash provided by operating activities from continuing operations
Source: Liberty Global
Leave a Reply