Liberty Global Lags on Q1 Earnings and Revs - Analyst Blog

Liberty Global plc. LBTYA declared disappointing financial results for the first quarter of 2014. Both the top and the bottom failed to meet the respective Zacks Consensus Estimate. In the reported quarter, Liberty Global added 345,000 organic revenue generating units (RGU), down 7.5% year over year. Meanwhile, quarterly total RGU generation stood at 370,000.

Quarterly GAAP net loss came in at $79 million or 10 cents per share compared with a net loss of $1 million or a break-even per share in the prior-year quarter. However, adjusted earnings per share of 8 cents fell short of the Zacks Consensus Estimate of 10 cents. Quarterly total revenue of $4,533.7 million was up a substantial 69.7% year over year, but fell below the Zacks Consensus Estimate of $4,630 million.

Cost of operations was $1,698.9 million, up 75.7% year over year. Operating income came in at $581.7 million, up 10.1% year over year. Operating margin was 12.8% compared with 19.8% in the year-ago quarter.

In the first quarter of 2014, Liberty Global generated $1,310.8 million of cash from operations compared with $557.7 million in the year-ago quarter. Free cash flow in the reported quarter stood at $575.8 million against $58.3 million in the prior-year quarter.

At the end of the first quarter of 2014, Liberty Global had $6,530.5 million of cash and marketable securities and $41,000.8 million of outstanding debt on its balance sheet compared with $6,193.1 million and $43,681 million, respectively, at the end of 2013.

Subscriber Statistics

As of Mar 31, 2014, Liberty Global had approximately 25 million subscribers, which constitute 49 million RGUs. Of the total, 22 million were video RGUs, 15 million were broadband Internet RGUs and the remaining 12 million were telephony RGUs. Moreover, the company had 4.1 million mobile subscribers with a quarterly addition of 65,000.  

The total Single-Play customer count stood at 10.5 million, remaining almost flat year over year. The total Double-Play customer count was 3.9 million, up 27.4% year over year. The total Triple-Play customer count stood at over 10 million, up a whopping 63.2% year over year.

During the reported quarter, Liberty Global added 345,000 organic RGUs including net gains of 239,000 and 177,000 subscribers for broadband Internet and telephony services, respectively, and a net loss of 71,000 video subscribers.

At the end of the reported quarter, the company had over 550,000 Horizon TV subscribers in the Netherlands, Switzerland, Ireland and Germany. Liberty Global had more than 2.1 million TiVo Inc. TIVO-platform based video subscribers with a quarterly net addition of 100,000 subscribers.

As of Mar 31, 2014, Liberty Global had 13.3 million digital video subscribers with a digital technology penetration of 64%. Next-generation (Horizon and TiVo-platform) video subscriber base was over 2.65 million, reflecting 20% penetration of digital footprint.     

Segment-wise Results

Total revenue from the European Operations division was $4,222.6 million, up 80.7% year over year. Within this segment, revenues from Western Europe were $3,899.5 million, up 93.3% year over year. Revenues from Central and Eastern Europe came in at $289.2 million, up 0.5% year over year. Revenues from Central and other operation were $33.9 million, up 6.6% year over year. VTR Chile revenues were $225.3 million, down 10% year over year. Corporate and other revenues totaled $93.1 million, up 0.1% year over year.

Recent Development

Liberty Global has joined RDK Management LLC., a joint venture between U.S. cable giants Comcast Corp. CMCSA and Time Warner Cable Inc. TWC. Management also stated that its proposed acquisition of Ziggo may receive regulatory approval in the second quarter of 2014. Liberty Global currently has a Zacks Rank #3 (Hold).