Scale, Organic Growth, Levered Equity Driving Liberty Global

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Scale, Organic Growth, Levered Equity Driving Liberty Global
Liberty Global

Scale, Organic Growth, Levered Equity Driving Liberty Global by Greg Speicher.

Notes from Liberty Global Annual General Meeting of Shareholders – Thursday, June 26, 2014

  • Value creation drivers (all thriving in Europe)
    • 1.) scale in core markets
      • benefiting from fragmented market
      • favorable regulatory environment
      • winning share from larger telco incumbents
      • scale aids technology procurement (set top boxes), content acquisition, leveraging services & human resources
      • Virgin Media and Ziggo acquisitions were based on building scale
        • substantial synergies to be realized
    • 2.) organic growth
      • targeting mid-single digit growth in revenue and operating income
      • Europe has low penetration of advanced services
      • Liberty Global’s bundles are attractively priced and over best-of-breed offerings in video, broadband
      • 1ooMbps broadband speeds anchor bundles and organic growth
      • declining video losses from advanced digital platform
      • growth will require continued innovation
        • Horizon TV
          • Horizon generates 30% more ARPU
          • 20% less churn (vs. avg. digital customer)
        • mobile and B2B businesses
          • expects increased demand for quad plays
          • Wi-Fi hot spots and Wi-Fi calling technology
          • SOHO segment growing over 20% annually
      • content
        • with large video and broadband base makes sense to evaluate how select investments in content can help maintain and grow customers
        • All3Media JV partnership with Discovery Communications
        • 50% stake in De Vijver Media, Belgian free-to-air station
        • More content deal/investments to come, particularly in the OTT space
        • SVOD services, such as MyPrime, designed to get ahead of rising OTT threat (Malone is on record as thinking U.S. cable industry was slow to respond to SVOD threat.)
    • 3.) Committed to growing FCF per share (levered equity capital structure)
      • managing capital intensity
      • optimizing balance sheet
      • using excess cash to repurchase shares
        • asset they know the best (circle of competence)
      • best way to drive equity returns for shareholder

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GregSpeicher.com was founded in 2009 by Greg Speicher. Greg is a private investor who has been investing, studying and writing about the the markets since 2006. Greg built several successful offline businesses including an Inc. 500 Company which he co-founded. Buffett stated, “I am a better investor because I am a businessman.” It is in that spirit that Greg brings his years of business experience to investing. ?? Greg received his B.A. in philosophy Magna Cum Laude from the University of St. Thomas in Rome, Italy, and attended the MBA Program at the Wharton School of the University of Pennsylvania. He also studied with Bruce Greenwald at the Value Investing Executive Education Course at Columbia University.

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