LBTYA

Liberty Global plc (LBTYA)

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Liberty Global, Inc. (LBTYA)

Q4 2008 Earnings Call Transcript

February 24, 2009 9:00 am ET

Executives

Mike Fries – President and CEO

Gene Musselman – President and COO, UPC Broadband

Bernie Dvorak – SVP, Co-CFO, and Principal Accounting Officer

Rick Westerman – SVP, IR & Corporate Communications

Analysts

Alan Gould – Natixis

Vijay Jayant – Barclays Capital

Josh James [ph] – Stifel Nicolaus

Matthew Harrigan – Wunderlich Securities

Murray Aronson [ph] – Yankle Partners [ph]

David Kestenbaum – Morgan Joseph

Richard Dineen – HSBC

Presentation

Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's investor call. This call and the associated webcast are the property of Liberty Global and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited.

At this time, all participants are in a listen-only mode. Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at www.lgi.com. Again, that’s www.lgi.com. Following today's formal presentation, instructions will be given for a question-and-answer session. As a reminder, this conference call is being recorded on this date, February 24, 2009.

I would now like to turn the conference call over to Mr. Mike Fries, President and CEO of Liberty Global. Please go ahead, sir.

Mike Fries

Thank you. And welcome everybody. As usual, we have a number of folks on the call from our side, from all over the place. And those you may hear from are Bernie Dvorak, Co-CFO; Rick Westerman, Investor Relations; and free folks from our operations; Gene Musselman from Europe; Ram Halus [ph], Japan; and Mauricio Ramos, Chile. I think before I get started, the operator has one more note to read there. Operator?

Operator

Certainly. Page two of the slide details the company's Safe Harbor statement regarding forward-looking statements. Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including with respect to Liberty Global's outlook and future growth prospects, its expectations regarding competitive and economic conditions and liquidity, and other statements that are not historical facts.

These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed from time to time in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed forms 10-K and 10-Q. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based.

I would now like to turn the call back over to Mr. Mike Fries.

Mike Fries

Thanks. So, as the operator mentioned, we are going to be speaking from slides today. And the agenda will be pretty much as we’ve normally done and I’ll hit some highlights, Bernie will talk about financial results, and we’ll get to your questions. I’m on slide four here entitled 2008 highlights.

I’d like to begin maybe with a broad generalization, which I think would be helpful at times like this. We believe our business is in pretty good shape. We continue to deliver stable growth. Our balance sheet is solid. And our core strategic initiatives are intact. So let me start with organic growth figures, which is still in my opinion are the strongest part of our story.

First of all, we added over 1 million RGUs during 2008, excluding acquisitions, and we ended the year with 26.5 million video, voice and data subscriptions. And those RGUs additions together with our continued focus on task discipline and scale efficiencies helped to deliver operating cash flow growth of 14% for the year. Our OCF margins improved 300 basis points to 43%. And we grew our free cash flow, which is an increasingly important metric for us and, I believe, you, about over 80%. I think these results speak for themselves.

On the M&A front, we’ve often said that while doing deals as in our “D&A” will always remain smart and disciplined. And I think while this was an unusual year with the credit markets largely shut down, we still completed some very attractive and highly strategic transactions. In total, we added 1.4 million RGUs, completed over 20 deals; some big, but most of them pretty small. On the larger side, J:COM, for example, acquired over 540,000 RGUs in Japan, increasing our market share and footprint there in core cities. And Telenet acquired over 730,000 subs in Belgium, which expanded our reach to 100% of Flanders.

We also completed or in the process to completing some tactical disposals. These are generally assets that are non-core and can generate tax efficient cash to the parent company. Perhaps the best example would be the sale of Mediatti to J:COM, which closed in December, and generated over $120 million to us, but also enhanced J:COM’s strategic and financial position in the Tokyo region.

In terms of our M&A pipeline, I think it’s fair to say we continue to work on the number of new opportunities, both big and small. But the message I’d like to leave you with is that we are going to continue to be clever and patient in this area. There is also considerable focus these days on balance sheets and liquidity, and that makes sense to us. But I have to tell you from our perspective, it’s almost as if we have been anticipating just this sort of environment, proactively pushing out maturities and actively hedging currencies and floating rate exposure for some time now.

We’ll get into more detail later, but we feel very good about our debt and liquidity position. We believe our current leverage is appropriate given our cash flow profile. As I just said, our debt is generally hedged in long-term.

Liquidity front, we sit today with over $2 billion of cash and debt availability. And remember, we are generating free cash flow at all our major credit pools and on a consolidated basis. The last major component of our strategy is well known by all of you. And I’m referring, of course, to our buyback initiative, which today (inaudible) repurchased 6 billion of our equity, including 2.2 billion just last year, representing a total of over 40% of the company since we started. I simply say that we remain committed to this approach, and as you will see, we think we are capitalized to continue down that path.

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