Liberty Global posted a net loss of $137 million for its European operations in the third quarter despite strong growth in next-generation video subscriber numbers.
In the corresponding period last year it recorded a net profit of $111 million.
The company gained an additional 278,000 next generation video customers in Q3, of which Horizon TV, including Horizon-Lite, accounted for 155,000 of the total.
Significantly, just over half (79,000) of the latter were in the Netherlands. Meanwhile, Horizon-Lite continue to grow in Hungary, Slovakia and the Czech Republic, gaining 53,000 subscribers in the three months to September 30.
At the same time, the TiVo (Virgin Media in the UK) and Yelo TV (Telenet in Belgium) added 67,000 and 3,000 next generation customers in Q3. All told 38% of Liberty’s base, equivalent to over 7.4 million subscribers, opted for its next generation TV platforms, up from 31% (6.2 million) in Q3 2015.
Liberty also gained 178,000 broadband subscribers in Q3, with growth being driven by the UK (60,000) and Germany (56,000). Its mobile telephony offer continued to perform well, with the Netherlands (20,000) and Switzerland (15,000) contributing the most to an overall increase of 56,000.
In terms of RGUs, Liberty added 159,000 and 98,000 in Western and Central and Eastern Europe respectively in Q3. The 92,000 increase in the UK was the best in seven years, while in the Netherlands the 11,000 loss was the lowest in two years.
Liberty Global’s revenues for its European operations amounted to $4.3 billion, or 1% more than a year earlier. Its operating income was $764 million (+60% year-on-year).
Commenting on the results, CEO Mike Fries said: “As we signalled on our last investor call, our Q3 results reflect the acceleration in operating performance that we anticipated in Europe (excluding Ziggo), where we generated over 5% rebased OCF growth. This result was the by-product of strong performances at Unitymedia and Virgin Media, which posted 7% and 6% rebased OCF growth, respectively, as well as operating efficiencies from our Liberty Go program. With respect to top-line drivers, our YTD subscriber additions in Europe were up nearly 50%, while customer ARPU in Q3 increased 3% year-over-year. This growth was due in part to our success with quad-play offers and our advanced video and OTT services. Our B2B business in Europe delivered another quarter of solid results, bringing our YTD rebased revenue growth to 9%. In addition, our new build activities, which are underway in nearly all markets, continue to deliver promising results. At the end of Q3, we had built nearly 850,00new homes across Europe this year, and we are on pace to deliver over 1.3 million homes by year end. We are confirming our full-year 2016 financial targets for our European business, including better cash flow growth in Q4, but we expect to end up at the lower end of our 4-5% rebased OCF growth range due to the phasing of our new build program and the impact of certain commercial initiatives in the UK.”
“On the M&A front, we continue to expect that our joint venture with Vodafone in the Netherlands will close around the end of the year. During the quarter, we took steps to recapitalise the combined entity’s balance sheet and raised an additional $3.2 billion of debt, of which we expect to receive 50% of the proceeds at closing. We will also receive up to an additional €1 billion at closing, subject to adjustment, from Vodafone to equalize ownership in the JV. Also of note, we announced the proposed acquisition of the third largest cable operator in Poland, Multimedia Polska, in October. This will significantly expand the reach of our market-leading platform in that market, and will allow us to drive further efficiencies across our business.”
