Liberty Global (LBTYA) Q1 2016 Earnings

posted in: Earnings Call, Notes | 0

Liberty Global (LBTYA) CEO Mike Fries said the company exceeded even its own expectations

“I think first and most importantly, we had a strong quarter on subscriber growth. We doubled our net-adds versus last year. We exceeded our own internal expectations pretty considerably. We saw improvements across all three products: video, broadband, and telephony with really strong results in the UK. I’ll dig into this in a bit in just a moment.”

And they were able to successfully increase prices without any large impact on customer churn 

“We were particularly pleased with this kind of volume growth after taking price increases across two thirds of our customer base in the first quarter. By the way if you add Ziggo, those customer increases were closer to 80%, which just got their price increases announced. We took a lot of lessons that we learned from last year and ensure that this year we reduce the impact of churn and optimize the benefits to sales. And we think we hit the mark here. Going forward as we manage the price-value relationship in this timeframe Q4, Q1 we think this sort of RGU growth in the first quarter is the new normal for us.”

Expects costs to remain relatively flat while revenue grows in the next few years

“Let me spend a minute on the efficiency side, though. I think we’ve been clear that while direct costs like content and bandwidth will always grow along with revenue, the bulk of our indirect expenses, which total approximately $5.5 billion a year, are expected to stay broadly flat over the next three years. Let me spend a minute on the efficiency side, though. I think we’ve been clear that while direct costs like content and bandwidth will always grow along with revenue, the bulk of our indirect expenses, which total approximately $5.5 billion a year, are expected to stay broadly flat over the next three years.  We’re starting to digitize much of what we do self-help or online tools, we’re launching a company-wide service apps and implementing digital first philosophies of cross customer engagement centers. Obviously the goal is quicker response times, higher satisfaction levels but also to be more efficient.”

Liberty Global (LBTYA) CEO Mike Fries highlighted the companies move into the mobile space

“We now serve over 7 million mobile customers in Europe, representing over 10% of our revenue. And if you add in the pending Cable & Wireless acquisition and our JV in Holland, our mobile base moves closer to 15 million. And I get it, we’re not AT&T but we are starting to build a sizable and profitable mobile business that complement our fixed platforms, and the benefits are material in terms of churn reduction and the competitiveness of our bundles.”

Spoke about the rationale for doing price increases in different markets

“On the rate increases, if you go around Europe, those increases are ranging from 2.5% to 5%, in the UK is over 5%, in Ireland was over 5%, in Switzerland more like 3.5%, Austria more like 3.5%, in Germany in the mid 2s, Belgium, Chile, Holland in the mid 2s. So it’s really a range and it has a lot of issues — a lot of factors that determine that, what’s the competition doing, what did we do last year? What improvements to the product have we made, that’s the key driver. We’ve increasing speed so.”