Liberty Global PLC (LBTYA) Down 2.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Liberty Global PLC (LBTYA). Shares have lost about 2.3% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Liberty Global PLC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Liberty Global Q2 Earnings Decline, Revenues Rise Y/Y
Liberty Global's loss from continuing operations in second-quarter 2023 amounted to $511.3 million, down 122.4% year over year.
Revenues increased 5.3% year over year to $1.848 billion. On a rebased basis, revenues declined 0.6% year over year.
The Zacks Consensus Estimate for the bottom line was pegged at a loss of 24 cents per share while that for the top line was $1.81 billion.
Top-Line Details
Total average revenue per unit (ARPU) per fixed customer relationship increased 3.2% year over year to $64.80. On a rebased basis, the figure dropped 0.4%. The figure beat the Zacks consensus estimate of $58.
Mobile ARPU (including interconnect revenues), on a reported basis, increased 4.6% to $26.96. On a rebased basis, the figure dropped 0.8%. Mobile ARPU (excluding interconnect revenues), on a reported basis, increased 7.2% to $25.10.
As of Jun 30, 2023, total mobile subscriber count included approximately 2.8 million subscribers in Switzerland, 2.9 million subscribers in Belgium, 34.5 million subscribers from the VMO2 JV and 5.5 million subscribers from the VodafoneZiggo JV.
In total, Liberty Global lost 29,300 customer relationships in the second quarter compared with a loss of 19,900 in the year-ago quarter.
Belgium’s revenues, on a reported basis, increased 11.3% year over year to $767 million. On a rebased basis, revenues inched up 1%. The figure beat the Zacks consensus estimate of $734 million.
In Belgium, Liberty Global lost 12,800 customer relationships compared with a loss of 4,400 in the year-ago quarter.
Switzerland’s revenues, on a reported basis, improved 6.5% year over year to $816.2 million. On a rebased basis, revenues decreased 1%. The figure beat the Zacks consensus estimate of $796 million.
In Switzerland, LBTYA lost 8,100 customer relationships compared with a loss of 9,000 in the year-ago quarter.
Ireland’s revenues, on a reported basis, increased 2% to $123.9 million. On a rebased basis, revenues decreased 0.4%. The figure beat the Zacks consensus estimate of $123 million.
The company lost 6,800 customer relationships in Ireland compared with a loss of 4,500 in the year-ago quarter.
Central and other revenues, on a reported basis, decreased 14.3% to $206.5 million. On a rebased basis, the top line declined 4.6%. The figure missed the Zacks Consensus Estimate of $213 million.
In Slovakia, Liberty Global lost 1,300 customer relationships compared with a loss of 2,000 in the year-ago quarter.
The company lost 300 customer relationships in Luxembourg, related to business in Luxembourg as a result of Telenet's January 2023 acquisition of Eltrona.
Joint Venture Details
Sunrise revenues of $816.2 million in second-quarter 2023 increased 6.5% year over year on a reported basis while decreasing 1% on a rebased basis. The rebased decline was due to a decrease in fixed subscription revenues due to ARPU pressure on main brand offerings. Continued momentum in mobile delivered a strong postpaid net adds of 23,100 in the quarter.
Telenet revenues of $767 million in second-quarter 2023 increased 11.3% year over year on a reported basis and 1% on a rebased basis. The increase in rebased revenues was primarily driven by an improvement in business-to-business (B2B) revenues and higher subscription revenues. Telenet lost 5,400 mobile postpaid revenue generating units (RGUs) in the second quarter and its broadband base contracted by 5,000 net adds.
In May, the European Commission approved the TelenetFluvius agreement to build Belgium's network of the future. This new infrastructure company, Wyre, started building early July and will allow the joint venture to deploy fiber-to-the-home (FTTH) across Flanders over time.
Liberty Global’s non-consolidated joint venture, Virgin Media O2, reported revenues of $3,391.5 million in second-quarter 2023, which increased 5.9% year over year on a reported basis and 1% on a rebased basis. The increase was driven by an improvement in mobile revenues due to consumer price rises and a decrease in consumer fixed revenues.
The fixed customer base contracted by 24,700 net adds in the second quarter, with an increase in disconnections due to the implementation of price rises over April and May. Broadband performance was more resilient with a 15,300 net reduction in the second quarter, while the average download speed across the company's broadband base increased 34% year over year to 332 Mbps, which is approximately 5x higher than the national average.
During second-quarter 2023, VMO2 built 175,500 premises, the majority of which were FTTH built for the nexfibre JV. In mobile, VMO2's 5G connectivity expanded to more than 2,800 towns and cities and remained on track to deliver 5G services to more than 50% of the entire U.K. population this year.
Vodafone Ziggo revenues increased 2.1% on a reported basis while decreasing 0.2% on a rebased basis to $1,088.4 million in the second quarter. The relatively flat rebased result was primarily due to a decline in the B2C fixed customer base, partially offset by growth in mobile postpaid and B2B fixed.
VodafoneZiggo continues to improve its commercial momentum, as FMC households9 grew by 9,000 in the second quarter to more than 1.5 million households in total and FMC SIMs increased by 11,500 in the second quarter to more than 2.6 million. Mobile postpaid SIMs grew 37,500 to 5.2 million, while mobile postpaid ARPU declined 0.7% from the year-ago period, primarily driven by ARPU decline in B2B. Total internet RGUs declined by 31,000 in the quarter, as a decrease of 35,400 in Consumer RGUs was only partially offset by a 4,400 increase in B2B RGUs. Fixed ARPU remained stable on a year-over-year basis.
Operating Details
Adjusted EBITDA declined 7.4% year over year to $601.4 million in the second quarter. On a rebased basis, EBITDA decreased 7.6%.
Switzerland’s EBITDA, on a rebased basis, declined 0.1% from the year-ago quarter.
Belgium’s EBITDA, on a rebased basis, increased 5% year over year.
Ireland’s EBITDA, on a rebased basis, decreased 4.4% year over year.
The company reported operating loss of $49.2 million in the reported quarter compared with operating income of $24.8 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2023, Liberty Global had $5.5 billion of cash, investments under SMAs and unused borrowing capacity, including $2.7 billion in corporate cash and no material debt maturities until 2028. This compares favorably with $5.3 billion of cash, investments under SMAs and unused borrowing capacity in the previous quarter.
In the first quarter, the total principal amount of debt and finance leases was $15.3 billion for continuing operations compared with $15.2 billion in the previous quarter. The average debt tenor is 5.4 years, with approximately 51% not due until 2029 or later.
Cash provided by operating activities was $691.8 million, down 8.7% year over year.
Moreover, adjusted free cash flow was $328.7 million in the second quarter compared with a negative adjusted free cash flow of $178.4 million in the previous quarter and $757.4 million in the year-ago quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Liberty Global PLC has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Liberty Global PLC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Liberty Global PLC (LBTYA) : Free Stock Analysis Report
