Scale, organic growth, levered equity driving Liberty Global

Notes from Liberty Global Annual General Meeting of Shareholders –¬†Thursday, June 26, 2014

  • Value creation drivers (all thriving in Europe)
    • 1.) scale in core markets
      • benefiting from fragmented market
      • favorable regulatory environment
      • winning share from larger telco incumbents
      • scale aids technology procurement (set top boxes), content acquisition, leveraging services & human resources
      • Virgin Media and Ziggo acquisitions were based on building scale
        • substantial synergies to be realized
    • 2.) organic growth
      • targeting mid-single digit growth in revenue and operating income
      • Europe has low penetration of advanced services
      • Liberty’s bundles are attractively priced and over best-of-breed offerings in video, broadband
      • 1ooMbps broadband speeds anchor bundles and organic growth
      • declining video losses from advanced digital platform
      • growth will require continued innovation
        • Horizon TV
          • Horizon generates 30% more ARPU
          • 20% less churn (vs. avg. digital customer)
        • mobile and B2B businesses
          • expects increased demand for quad plays
          • Wi-Fi hot spots and Wi-Fi calling technology
          • SOHO segment growing over 20% annually
      • content
        • with large video and broadband base makes sense to evaluate how select investments in content can help maintain and grow customers
        • All3Media JV partnership with Discovery Communications
        • 50% stake in De Vijver Media, Belgian free-to-air station
        • More content deal/investments to come, particularly in the OTT space
        • SVOD services, such as MyPrime, designed to get ahead of rising OTT threat (Malone is on record as thinking U.S. cable industry was slow to respond to SVOD threat.)
    • 3.) Committed to growing FCF per share (levered equity capital structure)
      • managing capital intensity
      • optimizing balance sheet
      • using excess cash to repurchase shares
        • asset they know the best (circle of competence)
      • best way to drive equity returns for shareholder
Share

Leave a Reply

Your email address will not be published. Required fields are marked *