Cable operator Liberty Global reported a strong finish to 2015, with organic net additions of 344,000 revenue-generating units in the fourth quarter for a total 53.6 million at year-end. The operator provided an average 2.08 services to each of its 25.8 million customers, and 45 percent of customers were on triple-play subscriptions. Revenues were up 4 percent and operating cash flow 6 percent higher on an organic basis in Q4, led by growth at Virgin Media in the UK and Unitymedia in Germany. Reported revenues were flat at USD 4.3 billion and OCF rose 3 percent to USD 2.1 billion, held back by negative currency effects.
CEO Mike Fries said the company saw a stronger second half of 2015 than the first six months, and Liberty Global expects the growth to improve further in 2016. The growth will be driven by the 'Liberty 3.0' plan, to enhance revenue and operating cash flow by focusing on B2B, mobile, network expansion and cost controls over the next three years. The company already counted 4.7 million mobile customers at the end of 2015, after net additions of 237,000 last year.
In an interview with the Financial Times, Fries said the company plans to launch mobile services in its remaining markets "soon". In addition to the expansion in mobile, Liberty Global will also invest in the next three years in video services for smartphones and expanding its cable network footprint, he said.
The company announced a target of 5-7 percent organic OCF growth in Europe in 2016, excluding the Dutch business Ziggo, which is being merged with Vodafone Netherlands, and the recently acquired Belgian mobile operator Base. Over the next three years, operating cash flow is expected to grow at an organic rate of 7-9 percent. The Latin America business Lilac is also projected to show 5-7 percent OCF growth this year, excluding the pending takeover of Cable & Wireless Communications. That compares to OCF growth in 2015 of 2 percent in Europe and 3 percent at Lilac
Liberty Global invested USD 3.91 billion or 22.9 percent of revenue in 2015, up from USD 3.65 billion or 21.4 percent the previous year, with the increase due manly to the acquisition of Ziggo. For 2016, it forecast capital expenditure at 22-25 percent of revenue, driven by network expansion in key markets. As part of the Liberty 3.0 programme, the company plans to connect over 1.5 million homes in 2016, including the UK (over 500,000), Germany (over 200,000) and the CEE region (over 600,000).
Free cash flow was up 16 percent in 2015 to USD 2.4 billion, helped by lower interest rates. The cash flow helped support USD 2.3 billion in share buybacks last year, and Liberty Global increased its buyback authorisation to up to USD 4.0 billion by the end of 2017. Liberty Global said it also expects EUR 2.5-3.0 billion from the merger of Ziggo with Vodafone Netherlands, including EUR 1 billion cash from Vodafone, Ziggo's cash base before closing, and its share of expected debt financing proceeds.
