Liberty Global migrated 1.5 million legacy video subscribers in Europe to one of its next generation TV platforms in 2015.
At the same time, it lost 400,000 video subscribers, with Western European markets, and in particular the Netherlands (200,000), the hardest hit.
This was to some degree offset by a gain of 51,000 video RGUs in Central and Eastern Europe.
Liberty’s Horizon platform base grew by over 800,000 in 2015, while TiVo gained over 350,000 subscribers in the UK. At the same time, a Horizon-like user interface gained nearly 140,000 digital TV subscribers in Belgium and over 170,000 legacy boxes were upgraded in the Czech Republic.
As of the end of 2015, 29% of the company’s total video customer base subscribed to one of its next generation platforms, up from 22% a year earlier. It had 14.2 million enhanced video subscribers, representing enhanced video penetration of 65%, with 7.7 million basic video subscribers.
Liberty Global now plans to roll out Horizon TV in Austria in the first half of this year.
Significantly, the last quarter of 2015 was a particularly good one for Liberty’s DTH operations in CEE. All saw subscriber growth, with the star performer being Focus Sat in Romania, with an increase of 24,300.
Meanwhile, Poland saw the high increase in internet subscribers (+32,900) and Romania in telephony subscribers (+33,700) in the last three months of the year.
Liberty Global had revenues of $18.3 billion in 2015, up 3% (rebased) on the previous year. Meanwhile, rebased OCF growth in 2015 amounted to 4%, reaching $8.7 billion and the company’s operating income of $2.3 billion was 5% up on the previous year.
Commenting on the results, which to a some degree have been overshadowed by the important announcement that Liberty Global and Vodafone are to merge their operations in the Netherlands, CEO Mike Fries said:
“The core drivers of value creation and opportunity in our business have never been better than today. Financial and operating growth in the second half of 2015 was stronger than our first six months of the year across the board, and we are guiding towards even higher growth for 2016 and beyond. These trends are supported by our Liberty 3.0 blueprint, which will enhance revenue and operating cash flow by focusing on B2B, mobile, network expansion and cost controls over the next three years.
“Europe is a rapidly converging market for fixed and mobile services, and in addition to the completion of our BASE mobile acquisition in Belgium, we are excited to announce today a new 50-50 joint venture with Vodafone in the Netherlands. By combining our best-in-class broadband and video network in the Netherlands with Vodafone’s market-leading 4G wireless platform, we are creating a new national champion for Dutch consumers that has the opportunity to realise synergies valued at €3.5 billion. This is a terrific transaction for Liberty Global shareholders. We valued Ziggo at €14 billion or approximately 11 times 2015 OCF and will continue to benefit from 50% of the synergies and free cash flow of the combined businesses. Together with expected proceeds from additional leverage and the pre-closing cash generated by Ziggo, we also expect to generate between €2.5 and €3 billion of cash at closing.
“On the operating front in Europe, we reported 3% rebased revenue growth and 4% rebased OCF growth for 2015. Our revenue ramped in the second half of the year, in large part driven by Virgin Media in the UK and Unitymedia in Germany, with both markets delivering 6% rebased top-line growth in Q4. Underpinned by the continued success of our pricing strategy, footprint expansion and the strong demand for our increasingly converged products, we expect to deliver 5% to 7% rebased OCF growth in Europe in 2016, excluding our Dutch business Ziggo and the recently acquired BASE, and we also plan to deliver over $2 billion of FCF. Over the next three years, we are targeting rebased OCF growth of between 7% and 9%, as we execute our ambitious Liberty 3.0 plans.”
