Liberty Global Reports Robust 2Q (LBTYA) (NWSA)

Zacks

Yesterday, after market close, Liberty Global Inc. (LBTYA) declared solid financial results for the second quarter of 2011. Quarterly GAAP net loss was $347 million or $1.37 per share compared with a net loss of $736.6 million or $2.66 per share in the prior-year quarter.

However, the second quarter of 2011 adjusted (excluding special items) EPS of 52 cents was miles ahead of the Zacks Consensus Estimate of 26 cents.

Quarterly total revenue of $2,618.6 million was an improvement of 20.7% year over year, surpassing the Zacks Consensus Estimate of $2,565 million. Year-over-year growth of the top line was primarily attributable to the consolidation of Unitymedia operations.

Quarterly cost of operation was $949.9 million, up 18.7% year over year. Selling, General and Administrative expense was $484.1 million, up 16.3% year over year. In the second quarter of 2011, operating income was $530.8 million, up 62.3% year over year.

During the first half of 2011, Liberty Global generated $1,369.5 million of cash from operations compared with $1,166.1 million in the prior-year period. Free cash flow (cash flow from operations less capital expenditures) in the reported period was $350.7 million compared with $326.7 million in the year-ago period.

At the end of the second quarter of 2011, Liberty Global had $4,476.1 million of cash & marketable securities and $23,734.8 million of outstanding debt on its balance sheet compared with $4,921.1 million of cash & marketable securities and $22,462.6 million of outstanding debt on its balance sheet at the end of fiscal 2010.

At the end of the second quarter of 2011, debt-to-capitalization ratio was 0.85 compared with 0.86 at the end of fiscal 2010.

Subscriber Statistics

At the end of the second quarter of 2011, Liberty Global had 17.5697 million customers in 14 countries, down 0.9% year over year. UPC Broadband customer was 13.3599 million, down 1% year over year.

Telnet customer was 2.2339 million, down 3% year over year. VTR customer was 1.0898 million, up 2.2% year over year. Other segment customer was 886,100, up 1.9% year over year.

During the reported quarter, Liberty Global added 235,000 net RGUs (Revenue Generating Units) including net gains of 154,000 and 156,000 subscribers, respectively, for broadband Internet and telephony services and a net loss of 75,000 subscribers for video services.

Total Single-Play customer was 10.857 million, down 7% year over year. Total Double-Play customer was 2.6584 million, up 3.4% year over year. Total Triple-Play customer was 4.0543 million, up 16.1% year over year.

Segment wise Results

Revenue from total UPC Broadband division was $1,563.2 million, up 22.2% year over year. Within this segment, revenue from Western Europe was $1,242.7 million, up 22.6% year over year.

Revenue from Central and Eastern Europe was $289 million, up 20.4% year over year. Revenue from Central and other operation was $31.5 million, up 25% year over year.

Telenet revenue was $487.8 million, up 18.9% year over year. VTR revenue was $228.6 million, up 19.5% year over year. Austar revenue was $189 million, up 20.8% year over year. Corporate and other revenue was $172.9 million, up 13.4% year over year.

Businesses Restructuring Update

On July 11, 2011, Liberty Global decided to divest its operations in Australia. Liberty Global holds 54% stake of Austar United Communications Ltd., a leading pay-TV service provider in Australia. Austar announced that Liberty Global and Foxtel, the largest pay-TV operator in Australia, have entered into a definitive agreement, whereby Foxtel will acquire 100% stake of Austar for approximately $2.1 billion. Liberty Global will get around $1.1 billion through this divestiture.

Foxtel is jointly held by Australian telecom giant Telstra, News Ltd., a division of News Corp. (NWSA), and Consolidated Media Holdings. All these three shareholders agreed to the deal. However, the proposed acquisition still needs to clear the Australian regulatory hurdles and the minority shareholder approval of Austar.

Additionally, Liberty Global is also confident that it will get regulatory clearance for acquiring Kabel Baden-Wuerttemberg GmbH & Co KG, the third largest cable operator in Germany by the end of 2011. Last March, Liberty Global won the auction to purchase Kabel Baden for approximately $4.5 billion.

Recommendation

We maintain our long-term Neutral recommendation on Liberty Global. Currently, it holds a short-term Zacks #3 Rank (Hold) on the stock.

LIBERTY GLBL-A (LBTYA): Free Stock Analysis Report

NEWS CORP INC-A (NWSA): Free Stock Analysis Report

Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.

Be the first to comment

Leave a Reply