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Liberty Global defends UK strategy amid pending Three-O2 merger

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Liberty Global defends UK strategy amid pending Three-O2 merger

CEO Mike Friesdefended the company's U.K. strategy,insisting the group is "well-positioned" to weather competition in Britain'sconsolidating market in the wake of the pending Three-O2 .

Speakingduring a May 10 earnings conference call, Fries told analysts in the call notto "assume any changes to our UK mobile situation" in the event of atie up between Three and O2. With the group's Virgin Mobile MVNO activelyworking towards a 4G launch, Fries confirmed the group has been "engagedin some conversations all along the way" but stressed that it has along-term contingency plan "for whatever occurs."

Earlierthis year, analysts warned that such a deal between O2 and Three, as well asthe pending BT- merger, would add pressure onboth Liberty Global's mobile and cable strategy in the U.K. market. Accordingto the analysts, both combinations would put Liberty Global's U.K. unit, VirginMedia, at risk of falling behind.

However,EU commissioners are widely expected to veto the O2-Threetransaction on antitrust grounds and will reportedly release a statementregarding the proposed deal within the week. Hutchison earlier said it isprepared to challenge an EU regulatory veto on the deal and has to offer more concessions and will instead challenge a regulatory veto.

LibertyGlobal on May 9 reported revenues of $4.59 billion, up 1.6% from $4.52 billionthe previous year. Its operating income grew 5% year-on-year to $587 millionwhile its net loss for the quarter narrowed to $369.1 million, compared to aloss of $537.5 million, a year earlier.

Havingadded a total of 156,000 customers in the first quarter, Liberty Globalprovided its 25.7 million customers across its European operations with 22.6million video, 16.9 million broadband internet and 14.1 million telephony RGUs.

Meanwhile, Virgin Media, which represents nearly 40% ofLiberty Global Group's revenue, delivered 4% rebased growth in the firstquarter. Virgin Media's 110,000 subscriber gains in the period marked the unit'sbest first-quarter performance since 2010.

Asidefrom its bumper quarter in Britain, Liberty Global said its first-quarterresults were also boosted by strong sales growth in ,Germanyand Belgium.

Keento ramp up its quad-play strategy across the European market — where it added135,000 customers organically in the first quarter — Liberty Global said Feb.15 that it formed a Dutch joint venture with Vodafone to rival Royal KPN andDeutsche Telekom.

Thecombination brings Vodafone Nederland's 4G mobile network with the fiberbroadband network business of Liberty Global's Ziggo unit, and will result inan integrated communications provider with more than 15 million subscribers.The transaction is expected to close around the end of 2016.

Inthe earnings call, Fries said the deal, once complete, would bring the group'smobile base in Europe to nearly 15 million.

"Weare not AT&T. Butwe're starting to build a sizable and profitable mobile business," Friessaid, adding that Liberty Global plans to bring 4G to an additional fourmarkets this year, on top of four existing 4G markets.

LibertyGlobal's deal with Vodafone follows a $5.3 billion acquisition bid forCaribbean cable operator Cable & Wireless Communications that wouldsignificantly expand its footprint in the Latin American and Caribbean region.On April 20, the group received shareholder approval of more than 99% of votescast for the pending deal.

Outsideof the mobile segment, Liberty Global is also betting on residential productslike Horizon TV and its Wi-Fi offering for additional growth this year, Friessaid.

Havingrolled out its Connect Box Wi-Fi router at the close of 2015, Liberty Globalnow plans to prop up video products such as mobile TV platform Horizon Go andits Replay TV service by offering additional HD content. Liberty Global willalso trial a new cloud-based set-top box later this year.

Friessaid that the company's residential products had made huge gains, pointing outthat Horizon TV has more than 2 million subscriptions and that usage of replayTV stands at over 60%.