Virgin Media video losses push down Liberty Global RGUs

Video subscriber losses at Virgin Media contributed in no small way to pushing down Liberty Global revenue-generating unit count in the third quarter. The cable giant lost 76,300 RGUs overall in the quarter, taking the total losses for the year-to-date to 80,400.

Virgin Media’s RGU losses amounted to 53,000 for the quarter, which the company said was the result of focusing on higher-value TV bundles, with a 5,000 gain in broadband customers being offset by a 50,000 decline in video subs and a 9,000 decline in fixed voice subs.

Overall, Liberty Global lost 76,000 RGUs, as compared to a gain of 32,000 RGUs in the prior-year period, as improved performances in our CEE operations, Switzerland and Telenet were more than offset by weakness at Virgin Media.

Telenet in Belgium lost 36,000 RGUS, while UPC Switzerland lost 14,000, both of which represented solid improvements year-on-year.

The remaining UPC assets in central and eastern Europe added 26,500 RGUs, driven by a strong performance in Poland.

Liberty posted rebased revenues of US$2.84 billion, down 0.6%, driven by declines in revenue from Switzerland and Belgium. Operating income was up by 1.8% to US$208.8 million.

Operating free cash-flow grew by 34.8% as Liberty’s reduction in capital intensity continued to bear fruit. While operating cash-flow declined, it nevertheless beat consensus estimates. Analysts at Jefferies noted however that

“Over the past two years,we have undertaken a substantial reshaping of our distribution footprint, taking advantage of the fixed-mobile convergence wave across Europe with transactions that recognize the premium value of broadband networks. As a result of this rebalancing, we find ourselves in an enviable position from both operating and liquidity perspectives,” said CEO Mike Fries.

“We have substantial scale in our remaining businesses, with 31 million consolidated fixed and mobile subscribers, generating approximately $5 billion of OCF per annum, and an additional 15 million fixed and mobile subscribers and $2 billion in annual OCF from our VodafoneZiggo joint venture in the Netherlands. In all markets we are leading the way with gigabit broadband speeds, converged fixed-mobile bundles, and a focus on profitable subscriber growth.”

Investment analysts at Jefferies noted that the better-than-expected operating cash-flow result was due to Belgium and central corporate activities, with the poor UK performance accounting for “essentially all” of he miss in RGU numbers.

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