Liberty Global plc (LBTYA)

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Liberty Global, Inc. (LBTYA)

Q3 2012 Earnings Call

November 5, 2012 9:30 AM ET


Michael Fries - President and Chief Executive Officer

Charles Bracken - Executive Vice President and Co-Chief Financial Officer (and Principal Financial Officer)

Bernie Dvorak - Executive Vice President and Co-Chief Financial Officer (and Principal Accounting Officer)

Diederik Karsten -Executive Vice President, European Broadband Operations

Balan Nair - Executive Vice President and Chief Technology Officer

Mauricio Ramos - President, Liberty Global Latin America

Rick Westerman - Senior Vice President of Investor Relations and Corporate Communications


James Ratcliffe - Barclays

Jeff Wlodarczak - Pivotal Research

Ben Swinburne - Morgan Stanley Smith Barney

Matthew Harrigan - Wunderlich Securities

Will Milner - Arete Research

Vijay Jayant - ISI Group

Tim Hamby - Janco Partners



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. (Operator Instructions) I would now like to turn the conference call over to Mr. Mike Fries, President and CEO of Liberty Global.

Michael Fries

Welcome everybody, and thanks for joining us today. I want to make a couple of quick introductions before we do the Safe Harbor and get into the call. I have with me, as usual, Charlie Bracken and Bernie Dvorak, our co-CFOs; Diederik Karsten, who runs our European Cable Operations; Balan Nair, Chief Technology Officer; Mauricio Ramos, who oversees VTR Chile; and of course Rick Westerman, you all know, in the IR Department. There are a few other folks on the call, and if necessary, we'll hear from them as well.

The agenda is as we've done in the past. I will do a quick overview. Charlie will run through the numbers today. And then, we'll get to your questions. So before I do that, let me turn it back to the operator, for the Safe Harbor.


Thank you. Page 2 of the slides 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 the company's expectations with respect to its outlook for 2012; and future growth prospects and any other information and 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 expectation 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.

Michael Fries

As usual, there are some slides on our website, hope you've had a chance to access those and we will be speaking from those today. I am going to start on Slide 4 with a snapshot of our third quarter operating results.

Beginning with our subscriber growth of 320,000 RGUs for the three months. As most of you know, the third quarter is typically slower for us, but this is actually our second best Q3 for net adds, and we're now over 1.1 billion organic RGUs for the year, bringing our total video, voice and broadband base to 34.1 million.

By far the most exciting development in the quarter was our long awaited launch of Horizon, in the Netherlands. And I am pleased to announce that the wait was worth it. Early adoption of Horizon, both the gateway and the online service has far exceeded our expectations in internal forecast. And I'll give you some more of that in a moment.

The third quarter was also our strongest this year from a financial point of view. Obviously, we continue to see the benefit of last 12 months, where we've averaged nearly 380,000 net RGU adds per quarter. In the last nine months in which we've added over 2.1 million advanced services, including digital TVs subscriptions, which is a record for us. As you expect this volume growth together with some selective price increases helped with the Q3 revenue of $2.5 billion or 6% rebased growth.

Property and cash flow was also strong for the quarter, with fee-based growth of 5% to $1.2 billion in total OCF for the period. You've probably done the math, but translates into an OCF margin for the three months of 48.6%. And if you exclude VTR's 4G wireless projects number, which I'll update you on just a minute, our rebased OCF growth would have actually been 7% for the quarter.

Charlie is going to dig into the numbers in much more detail, but I get the punch line, which is that we are confirming all of our 2012 guidance targets to date. I'll just make three quick points in the capital structure. First, we ended September with roughly $5.5 billion of total liquidity, including consolidated cash of $3.3 billion, $2.1 billion of which was upstairs at the LGI parent level.

Second, we continue to have great access to the capital markets, and completing $2.5 billion in long-term debt financings in the quarter at an average interest rates in the mid-to-low 6s, well below our average cost of debt capital today. And third, we continue to invest in our own equity, with $620 million of stock repurchased through September 30, and $1 billion targeted by yearend. That will bring our total stock repurchases to over $9 billion, since we launched our Liberty Equity growth strategy.

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