Cable juggernaut Liberty Global has posted a net loss of $137 million for its European operations in the third quarter of 2016.
It’s a disappointing result given that last year it recorded a net profit of $111 million in the same period last year. The news also comes despite strong growth in next-generation video subscriber numbers.
The company added a healthy 278,000 next-gen video customers in Q3. Horizon TV, including Horizon-Lite, accounted for 155,000 of that total, half of which (79,000) were in the Netherlands. Meanwhile, Hungary, Slovakia and the Czech Republic also saw growth for Horizon-Lite, gaining 53,000 subscribers through 30 Sept.
Virgin Media in the UK and Telenet in Belgium added 67,000 and 3,000 digital subs, respectively, in Q3. About 38% of Liberty’s base, about 7.4 million subscribers, upgraded in the period, up from 31% (6.2 million) in Q3 2015.
In terms of RGUs, Liberty added 159,000 and 98,000 in Western and Central and Eastern Europe respectively in Q3. The 92,000 increase in the UK was the best in seven years, while in the Netherlands the 11,000 loss was the lowest in two years.
Liberty Global’s revenues for its European operations amounted to $4.3 billion, or 1% more than a year earlier. Its operating income was $764 million (+60% year-on-year).
Year-to-date subscriber additions in Europe were up nearly 50%, while customer ARPU in Q3 increased 3% year-over-year. By the end of Q3, Liberty Global had built out service to nearly 850,000 new homes across Europe, and it is on pace to deliver over 1.3 million homes by year-end.
The loss is due to investment in infrastructure and M&A activity—both factors that won’t be subsiding any time soon.
“On the M&A front, we continue to expect that our joint venture with Vodafone in the Netherlands will close around the end of the year,” said CEO Mike Fries on the earnings call. “During the quarter, we took steps to recapitalise the combined entity’s balance sheet and raised an additional $3.2 billion of debt, of which we expect to receive 50% of the proceeds at closing. We will also receive up to an additional €1 billion at closing, subject to adjustment, from Vodafone to equalise ownership in the JV. Also of note, we announced the proposed acquisition of the third largest cable operator in Poland, Multimedia Polska, in October. This will significantly expand the reach of our market-leading platform in that market, and will allow us to drive further efficiencies across our business.”
ART: virgin media
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