Market Insight

Virgin Media acquisition drives 2013 revenue and subscriber growth for Liberty Global

February 14, 2014

Martyn Hannant Martyn Hannant Manager – Research and Analysis, Service Providers & Platforms
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Liberty Global’s acquisition of Virgin Media early in 2013 was the primary driver of robust growth in its revenue and subscriber base last year. Total customer relationships increased 23.8% over the year to 24,497,000. This was mostly due to Western European operations, which at the end of the year made up 75% of Liberty’s total unique customer base. This proportion of Liberty’s customers was boosted by the acquisition of Virgin Media in June 2013 and the inclusion of Belgian cable operator Telenet in its figures. Liberty Global’s customer growth in Central and Eastern Europe (CEE) slightly decreased, however, to 4,689,000, down 0.5% on the previous year’s figure.

Liberty Global’s revenues for the year were equally driven by its Western European operations. Accounting for pre-acquisition revenues, Liberty Global’s revenue increased at a rebased rate of 3.9% on last year to $14,474.2 million (€11,289.9 million), with Western Europe accounting for 82% of this at $11,872.3 million (€9,260.2 million). Without taking the pre-acquisition revenues of Virgin Media into account however, Liberty Global’s total Western European revenue increased 56.9% year-on-year, illustrating the effect of the acquisition on the US cable giant’s full year figures. In addition to Virgin Media, Western European revenue was positively influenced by Belgian operator Telenet, which increased revenue by 10% to $2,185.9 million (€1,705 million), and German arm Unitymedia KabelBW, which grew its revenue 7% to $2559.2 million (€1,996.2 million) over 2013. Liberty Global’s CEE revenue was at a similar level to last year, up 0.1% on a rebased basis to $1,141.2 million (€890.1 million).  

Liberty’s ARPU per customer relationship also saw healthy growth, increasing 27% to $48.14 (€37.55) across Liberty Global’s consolidated operations for the final quarter of 2013.

Our Take

Despite the positive effect on Liberty Global’s results as a whole, UK based Virgin Media had a challenging year in 2013, with a loss of 45,900 TV subscribers and slower customer growth in comparison to 2012, adding 14,200 unique cable homes in comparison to 2012’s 88,700 additions. The company has blamed increased churn in 2013 on competition from both Sky and BT.

Belgium and Germany were particularly singled out by Liberty as successful Western European markets in 2013. Notably, Belgium’s Telenet reduced TV customer churn to its lowest annual level since the first evidence of customer decline in 2008. Telenet sustained momentum in bundled subscriber growth over the course of 2013, particularly driven by a surge in fixed telephony customers in the second half of the year.

With the sale of channel business Chellomedia taking place in 2013, 2014 will see Liberty Global fully turning its focus to its cable activities. Liberty is particularly likely to place emphasis on The Netherlands, due to the difficult year experienced by its UPC brand. The Dutch operator lost 97,900 unique customers in 2013 due to accelerated TV churn and slower internet and telephony growth. In addition, the segment revealed a 2.2% rebased revenue loss over 2013. This has no doubt informed Liberty’s recently proposed acquisition of Dutch cable rival Ziggo, a transaction for which it is confident on getting regulatory approval.

The remainder of this year will also see Liberty expanding its next-generation service Horizon and the inherited TiVo platform in the UK, in order to arrest its underlying TV subscriber losses, which totalled at 294,000 in 2013. Currently, the US cable company claims such multi-platform gateway services make up 19% of its total digital TV base. There is also room however for growth in Liberty Global’s digital penetration rate, which stood at 63% of total operations at the end of 2013. The company has also stated its plans to expand its mobile offerings and upgrade its broadband speeds across its cable markets. 

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