More

        

          

    HomeFinancial/RegulationLiberty Global maintains outlook despite impact from price hikes 

    Liberty Global maintains outlook despite impact from price hikes 

    -

    Subscriber numbers fell across the board as price rises impact Liberty’s operations 

    CEO Mike Fries admitted Liberty Global’s financial momentum had been hit by price hikes in the second quarter as the company lost an aggregate of 54,000 net broadband subs. 

    Speaking at the results, Fries however maintained the company’s full year outlook and suggested it was still well positioned to achieve its 2023 guidance across all operating companies. And while the price rises will help grow EBITDA in the second half, the downward pressure on subscribers remains an issue.  

    Revenue was steady at US$1.85bn year-on-year, while adjusted EBITDA was down 6.8% to US$601.4m. 

    “We have taken price rises in all four core markets, ranging from a low of 4% in Switzerland to a high of 14% to 17% in the UK,” he said, adding they would help balance out inflationary pressures.  

    He said despite the subs drop the market reaction was consistent with what the company predicted and added that it hadn’t yet seen the benefits kick in.  

    “In the case of VMO2 for example, the vast majority of the fixed price rise will materialise in the second half of the year and price rises in Belgium, Switzerland, Holland just took effect in June and July,” he said. “We’re also exploring the potential monetisation of both UK and Dutch tower portfolios of what we expect could be premium market multiples. 

    UK ripe for consolidation 

    The UK results saw Virgin Media O2 slash its workforce after seeing a slow quarter for broadband and postpaid mobile ads in the wake of price rises.  

    Fries reiterated Liberty was monitoring the altnets with a “strong view” the market needs consolidation. “We’re open to evaluating opportunities as they arise,” he said. “And finally, we’re monitoring the Vodafone 3 deal and exploring win-win outcome should that deal be approved.” 

    While the UK mobile market as a whole was soft in the quarter, he said O2 continues to see the lowest churn in Giffgaff, which just launched its own contract plans. Financially, VMO2 reported a sequential improvement in both revenue and EBITDA growth. 

    Mobile revenue in B2B continues to shine, growing 4.5% and 2.5% in the quarter, and EBITDA grew 4.4% or around 3% if you adjust for the nextfibre contracts,” he said. “Strategically, we are executing our fiber extension and fiber upgrade plans really well with over 640,000 homes delivered against a year-end target of 1.5 m.”  

    Swiss market benign 

    Liberty’s Sunrise implemented its first price rise (4%) – Swiss inflation is running at around 2%. Fries said Swisscom have added a CPI clause to its contracts but won’t raise prices this year or next while Salt recently announced its own 3% rise.   

    “Our price rise together with promotional intensity in the market did impact broadband trends in the quarter. But postpaid growth was strong under the circumstances,” he said. “Q2 revenue growth was negative 1%…an improvement over the first quarter but still impacted by what we’re calling the right pricing of our fixed UPC customer base, which should alleviate during the balance of the year.” 

    He added: “From a network perspective, we’re executing on our hybrid strategy, benefiting from our existing HFC network and benefiting from additional fibre-to-the-home wholesale agreements with Swisscom and SFM [Ph].” 

    Belgium and Holland steady  

    In Belgium, Fries said all operators have taken price increases with Telenet – which Liberty gained control of in March – implementing a 6% rise from June. Broadband and postpaid mobile subs declined in Q2, in part from announced price rises, but also due to a slowdown in market campaigns in the wake of some IT migration issues. 

    “We’re particularly pleased with the rollout of Telenet’s new NetCo partnership called Wyre, and we see great potential for both high utilization and high margins that will support the fibre build-out as well as some strategic financing opportunities,” he said.  

     In contrast to the UK, he described the Dutch market as “rational” with all operators taking high single-digit price increases and focusing their fiber buildouts largely in discrete regional areas when possible. 

    “KPN remains aggressive on the fixed front book pricing, which, together with the timing of our price rise announcements negatively impacted broadband results in the quarter,” he added.  

    Postpaid mobile adds drove 3.3% mobile service revenue growth. “We and our partners continuously evaluate strategic options to ensure VodafoneZiggo strengthens its market position,” he said.