Yesterday, after market close,
Liberty Global Inc.
) declared financial results for the fourth quarter of 2011, which
failed to meet our expectations. Despite this, in the previous
quarter, the company added a net 380,000 revenue generating units
(RGU), up 20% year over year. This is the highest quarterly net RGU
addition since 2006.
Quarterly GAAP net loss from continuing operation was $438.2
million or a loss of $1.61 per share compared with a net income of
$52.6 million or 5 cents per share in the prior-year quarter.
However, fourth-quarter 2011 adjusted (excluding special items) EPS
of 10 cents was significantly below the Zacks Consensus Estimate of
Quarterly total revenue of $2,404.5 million was an improvement
of 6.9% year over year, which is well below the Zacks Consensus
Estimate of $2,615 million. Year-over-year growth of the top line
was primarily attributable to the consolidation of German
Quarterly cost of operation was $868.4 million, up 5.1% year
over year. Selling, General and Administrative expenses were $462.3
million, up 4.5% year over year. In the fourth quarter of 2011,
operating income was $408.2 million, up 5.5% year over year.
During 2011, Liberty Global generated $2,736.6 million of cash
from operations compared with $2,329.2 million in 2010. Free cash
flow (cash flow from operations less capital expenditures) in 2011
was $809.3 million compared with $638.7 million in 2010.
At the end of 2011, Liberty Global had $2,626.4 million of cash
& marketable securities and $24,757.9 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 2010. At the end of 2011,
debt-to-capitalization ratio was 0.87 compared with 0.86 at the end
of fiscal 2010.
At the end of 2011, Liberty Global had 19.5382 million customers
in 14 countries. UPC Broadband customer was 16.1163 million. Telnet
customer was 2.1985 million. VTR customer was 1.1018 million.
Puerto Rico customer was 121,600. Total Single-Play customer was
11.4558 million, up 9.2% year over year. Total Double-Play customer
was 2.9131 million, up 10.3% year over year. Total Triple-Play
customer was 5.1693 million, up 38.1% year over year.
During the reported quarter, Liberty Global added 380,000 net
RGUs including net gains of 229,000 and 230,000 subscribers,
respectively, for broadband Internet and telephony services and a
net loss of 79,000 subscribers for video services. In the fourth
quarter, the company added 282,000 digital video subscribers.
At the end of 2011, Liberty Global had 8.2 million digital cable
subscribers with a penetration rate of 46%. Importantly, 50% of
total digital cable subscribers are now using HD/DVR services.
Segment wise Results
Revenue from total UPC Broadband division was $1,558.3 million,
up 8.9% year over year. Within this segment, revenue from Western
Europe was $1,243.3 million, up 8.9% year over year. Revenue from
Central and Eastern Europe was $285.3 million, up 9.7% year over
year. Revenue from Central and other operation was $29.7 million,
up 3.5% year over year.
Telenet revenue was $487.6 million, up 7.8% year over year. VTR
revenue was $214.6 million, down 2.1% year over year. Corporate and
other revenue was $164.1 million, down 1% 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 $1.08 billion through this divestiture.
Foxtel is jointly held by Australian telecom giant Telstra, News
Ltd., a division of
), and Consolidated Media Holdings. All these three shareholders
agreed upon the deal. However, the proposed acquisition still needs
to clear the Australian regulatory hurdles. However, Liberty Global
is confident that this deal will be completed in 2012.
We maintain our long-term Neutral recommendation on Liberty
Global. Currently, it holds a short-term Zacks #3 Rank (Hold) on
LIBERTY GLBL-A (
): Free Stock Analysis Report
NEWS CORP INC-A (
): Free Stock Analysis Report
To read this article on Zacks.com click here.