Liberty Global At Morgan Stanley TMT Conference Notes $LBTYK, $LBTYA

  • 2017 outlook calls for accelerated OCF growth of 6-7%
  • Topline drivers: New builds such as Project Lightning in UK, B2B growth, expanding mobile business
  • They are working to accelerate growth to 7-8%
  • Goal is to keep costs as flat as possible over next two years
  • Project Lightning is on track with regards to penetration and ARPU

Liberty Global

  • Looking for 30% unlevered returns on new builds
  • Targeting 40% penetration after 3 years in new builds
  • Quad play: still early days but ahead of U.S.; fueled by an incumbent in every market. Liberty has mobile launched in every market; the economic benefit is churn reduction. Each market is treated differently.
  • Preference is a full MVNO that maximizes control over customer relationship. They want to own the SIM card.
  • They have invested in making the WiFi experience in the home very good. This is very important to the customer.
  • 5G will take a while to be market ready. Not a priority for Liberty.
  • Video: Invested to make a multi-screen, beautiful interface available. Churn rate on Horizon is lower. Provides replay TV back seven days on TV and mobile devices. Apps like YouTube and Netflix run on the device.
  • No home runs in content in Europe. They look for smaller incremental content investments.
  • Guiding to $1.5 billion of FCF in 2017; this is the trough. More vendor financing in 2017. They expect FCF will grow in 2018 and beyond.
  • They have a lot of flexibility to scale back new builds if returns do not materialize making it low risk.
  • Project Lightning has not seen much of a response from BT.
  • There is recent progress in turning around Ziggo.

Article by Greg Speicher



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Greg Speicher
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.