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Why Is Liberty Global PLC (LBTYA) Up 3.6% Since Last Earnings Report?

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It has been about a month since the last earnings report for Liberty Global PLC (LBTYA). Shares have added about 3.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Liberty Global PLC due for a pullback? 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 Incurs Loss in Q4, Revenues Up Y/Y

Liberty Global's fourth-quarter 2020 net loss was $1 billion compared with the year-ago quarter’s loss of $1.35 billion.

Revenues increased 14.9% year over year to $3.43 billion. However, on a rebased basis, revenues dipped 0.5% from the year-ago quarter.

Liberty Global gained 55,900 customer relationships in the reported quarter against a loss of 25,500 in the year-ago quarter.

Fixed-mobile convergence penetration increased to 28% in the fourth quarter up from 23% in the year-ago quarter.

Top-Line Details

Average revenue per unit (“ARPU”) per cable customer relationship increased 2.5% to $61.74. On a rebased basis, the figure declined 2.5%.

Mobile ARPU (including interconnect revenues), on a reported basis, increased 25.8% to $20.31. On a rebased basis, the figure decreased 4.5%.

Further, mobile ARPU (excluding interconnect revenues), on a reported basis, grew 26.3% to $17.65. On a rebased basis, the figure was down 3.1%.

In the United Kingdom/Ireland, Virgin Media gained 41,700 customer relationships against a loss of 9,400 in the year-ago quarter. The company benefited from strong demand for broadband bundles.

The U.K./Ireland revenues, on a reported basis, climbed 3% year over year to $1.77 billion. On a rebased basis, the same was flat year over year.

In Belgium, Telenet lost 1,000 customer relationships compared with loss of 6,900 in the year-ago quarter.

Belgium revenues, on a reported basis, increased 6.4% year over year to $793.7 million. On a rebased basis, revenues fell 0.9%.

In Switzerland, Liberty Global lost 5,800 customer relationships compared with the loss of 22,700 in the year-ago quarter. Sunrise added 6,000 customers in the periodpost acquisition.

Switzerland revenues, on a reported basis, surged 103.4% year over year to $642.9 million. On a rebased basis, revenues decreased 2.6%.

Continuing CEE (Poland and Slovakia) gained 21,000 customer relationships compared with 13,500K in the year-ago quarter, driven by growth in new build areas.

Continuing CEE revenues, on a reported basis, increased 6.2% to $127.4 million. On a rebased basis, the top line increased 3%.

Revenues from the Dutch joint venture increased 4.7% year over year on a rebased basis.

Liberty Global built 154,000 new premises in the reported quarter including 115,000 in the U.K. & Ireland.

Operating Details

Adjusted EBITDA increased 5.8% year over year to $1.35 billion in the fourth quarter. On a rebased basis, EBITDA decreased 6.2%.

U.K./Ireland EBITDA, on a rebased basis, decreased 11.1% year over year. Switzerland EBITDA, on a rebased basis, was down 7.9% from the year-ago quarter.

Belgium EBITDA, on a rebased basis, decreased 1.1% year over year. However, CEE EBITDA, on a rebased basis, increased 1.2% year over year.

Operating income was $648.2 million in the reported quarter compared with $282.5 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Dec 31, 2020, Liberty Global had $6.2 billion of cash, investments under SMAs and unused borrowing capacity.

Total principal amount of debt and finance leases were $31.3 billion for continuing operations. Moreover, the average debt tenor is seven years, with approximately 84% not due until 2026 or thereafter.

As of Dec 31, 2020, Liberty Global’s adjusted gross and net leverage ratios were 5.8X and 5.1X, respectively.

Cash provided by operating activities was $1.49 billion, unchanged year over year.

Moreover, adjusted free cash flow was $528.1 million in the fourth quarter compared with $774.7 million in the year-ago quarter and free cash outflow of $455.7 million in the previous quarter.

The company bought back $1 billion of shares under its repurchase program during 2020.

Joint Venture & Acquisition Details

Liberty Global stated that the joint venture with Telefonica’s O2 is on track and is expected to close in mid-2021.

Moreover, Liberty Global completed the acquisition of Sunrise Communications in mid-November.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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