Liberty lowers target on Virgin Media UK ‘bump’

Liberty Global lowered its growth target for Europe this year as billionaire John Malone’s cable carrier reported a weaker-than-expected start in the UK.

Liberty — which owns Virgin Media and TV3 here — now forecasts operating cash flow growth of 5% for 2017, down from February’s outlook of 6% to 7%.

The operator lost more customers than expected in the UK in the first quarter, following two price increases last year and challenges with the launch of a new video product. Mobile revenue also declined. 

Its shares fell in New York trade.

“The UK is our biggest market, so it has a big impact,” chief executive Mike Fries said. He cast the new target as conservative. The reduction is “more of a bump in the road.”

The European unit of Mr Malone’s cable and media empire is facing stiff competition in Britain from BT Group and Vodafone as the country’s carriers expand on each other’s turfs.

A Dutch joint venture that moved ahead with Vodafone in the quarter is doing well in the fixed-line consumer business, but facing challenges in mobile amid competition from Tele2 and Deutsche Telekom’s T- Mobile, Mr Fries said.

“The real magic will happen when we can start marketing a true quad-play product,” Mr Fries said of the joint venture, which reported a 2% revenue decline in the first quarter and 6% drop in operating cash flow. 

Investors have been fixated on the idea of a merger or asset swap between Liberty and Vodafone, after years of talks between the companies. 

Even after the agreement to partner in the Netherlands, Mr Fries and Vodafone chief Vittorio Colao have stoked speculation by publicly commenting on the potential to bring their fixed and mobile assets together and challenge Europe’s incumbent operators.

Liberty is also seen as a potential buyer of broadcaster ITV — of which it owns 9.9% — particularly after last week’s announcement ITV chief Adam Crozier will step down in June. Mr Crozier’s departure doesn’t change Liberty’s relationship with ITV, Mr Fries said. 

Liberty, which along with TV3 here, has purchased free-to-air broadcasters in Belgium, doesn’t see any more immediate deals in the area on the horizon, he said.

In the UK market, Liberty is working to improve execution of a £3bn (€3.53bn) expansion of its Virgin Media footprint, known as Project Lightning, after revealing in March it had overstated construction progress. 

In Ireland, it had over one million revenue generating units or subscribers across its cable, internet and telephony products at the end of March.

Bloomberg and Irish Examiner


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