Liberty Global has never been “so well positioned to create value for shareholders” despite the challenges it faces, according to CEO Mike Fries.
Speaking after the company released modest Q1 results, Fries said that the cable giant was “on the verge of completing a series of transactions that will leave us with a more concentrated operating platform in Western Europe” that was generating US$4.8 billion of operating cash flow at the operating company level and another US$2 billion through its VodafoneZiggo 50-50 JV in Holland, with over US$15 billion of cash and liquidity realized through asset sales at prices that are nearly twice our current implied trading multiple.
Fries said he was “supportive in all sorts of ways” of Vodafone’s new deal with Telefónica Deutschland, which the telco hopes will help secure regulatory approval for its acquisition of Liberty Global’s German unit.
Fries said that he did not believe the deal would have “any impact on our transaction other than speeding up closing and providing far more certainty than we had yesterday of that deal closing”.
Fries was wary about drawing any lessons from Vodafone’s decision to open up its network for Liberty Global itself. He said that the agreement was “a voluntary commercial arrangement between two operators” and, while it was a cable wholesale access deal, it was “not available to all parties”.
Regarding pressure from regulators to open up cable in the Benelux markets, he said that this had not been a requirement for Liberty’s Dutch JV with Vodafone but that a move in this direction had been made later “on a political basis” that the company continued to contest.
Fries made no specific update on Liberty’s plan to return cash to shareholders after its deal with Vodafone is approved. He said that the company had no plans for further transactions “large or small”.
Regarding VodafoneZiggo, he said that Liberty was “happy with the relationship with Vodafone” although there would be `”a natural point in the coming months or years” to decide on the future of the venture. He said he was also happy for Liberty to continue as a 60% shareholder in Telenet in Belgium and that it was “premature to discuss anything different” in terms of the company’s future.
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