Liberty Global Lags Earnings and Rev

Zacks

Liberty Global plc. (LBTYA) declared weak financial results for the second quarter of 2013 as both the top and bottom line fell below the respective Zacks Consensus Estimate. In the reported quarter, the company added 191,000 organic revenue generating units (:RGU), down 47.5% year over year.

Quarterly GAAP net loss was $11.6 million or a loss of 4 cents per share compared with a net loss of $219.9 million or 81 cents per share in the prior-year quarter. However, adjusted earnings per share of 12 cents were way below the Zacks Consensus Estimate of 30 cents. Quarterly total revenue of $3,161.9 million was up 25.3% year over year, but fell below the Zacks Consensus Estimate of $3,413 million.

Cost of operations was $2,716.7 million, up 32.8% year over year. Operating income was $445.2 million, down 7.1% year over year. Operating margin was 14.1% compared with 19% in the year-ago quarter.

During the first half of 2013, Liberty Global generated $1,346.2 million of cash from operations compared with $1,454.9 million in the year-ago period. Free cash flow in the reported period was $351.6 million compared with $460.8 million in the prior-year quarter.

At the end of the second quarter of 2013, Liberty Global had $4,647.4 million of cash and marketable securities and $41,059.2 million of outstanding debt on its balance sheet compared with respectively $2,989 million and $27,524.5 million at the end of 2012.

Subscriber Statistics

As of Jun 30, 2013, Liberty Global had 24.474 million customers in 14 countries. Out of the total, customer count for European Operations, VTR and Other operations were 23.019 million, 1.1829 million and 0.2721 million, respectively. The total Single-Play customer count was10.9544 million, down 0.7% year over year. The total Double-Play customer count was 3.9816 million, up 34.9% year over year. The total Triple-Play customer count was 9.538 million, up 69.5% year over year.

During the reported quarter, Liberty Global added 191,000 organic RGUs including net gains of 149,000 and 142,000 subscribers, respectively, for broadband Internet and telephony services and a net loss of 100,000 subscribers for video services. At quarter end, the company had over 270,000 Horizon TV subscribers and more than 1.7 million TiVo Inc. (TIVO)-platform based video subscribers and 4,064,000 mobile subscribers. 

Segment-wise Results

Total revenue from the European Operations division was $2,719.8 million, up 25.8% year over year. Within this segment, revenues from Western Europe were $2,407 million, up 29.6% year over year. Revenues from Central and Eastern Europe were $281.5 million, up 2.4% year over year. Revenues from Central and other operation were $31.3 million, up 8.3% year over year. VTR Chile revenues were $252.7 million, up 11.4% year over year. Corporate and other revenues were $210.5 million, up 41.3% year over year.

Latest Development

Liberty Global currently has a Zacks Rank #3 (Hold). In June, the company completed the acquisition of the British cable MSO, Virgin Media. The acquisition makes Liberty Global the largest cable TV MSO in the world, surpassing Comcast Corp. (CMCSA). In the U.K., the merged entity has become a formidable challenger to British Sky Broadcasting Group plc., which is the largest pay-TV operator in that country and is partially controlled by News Corp. (NWSA).

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