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Liberty Global (LBTYA) Incurs Loss in Q3, Revenues Up Y/Y

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Liberty Global’s (LBTYA - Free Report) third-quarter 2020 net loss was $1.02 billion against the year-ago quarter’s earnings of $12.85 billion.

Revenues increased 4% year over year to $2.95 billion. However, on a rebased basis, revenues dipped 1.3% from the year-ago quarter primarily due the negative impacts of the coronavirus.

Liberty Global gained 36,500 customer relationships in the reported quarter against a loss of 18,100 in the year-ago quarter.

Fixed-mobile convergence (“FMC”) continued to drive mobile growth with 127,000 post-paid additions. Markedly, blended FMC penetration increased to 25%, while penetration at VirginMedia and UPC Switzerland was 23%.

Top-Line Details

Average revenue per unit (“ARPU”) per cable customer relationship increased 4.2% to $60.37. On a rebased basis, the figure declined 0.9%.

Mobile ARPU, (including interconnect revenues) on a reported basis, increased 3.5% to $17.04. On a rebased basis, the figure decreased 6.5%.

Further, mobile ARPU (excluding interconnect revenues) on a reported basis, inched up 0.2% to $14.26. On a rebased basis, the figure was down 3.9%.

In the United Kingdom/Ireland, Virgin Media gained 37,300 customer relationships against a loss of 3,400 in the year-ago quarter.

The U.K./Ireland revenues, on a reported basis, climbed 5.7% year over year to $1.67 billion. On a rebased basis, the same was up 0.7% year over year driven by higher B2B wholesale revenues and favorable impact of $20.3 million related to deferred handset revenues, partially offset by decline in advertising revenues in the company’s broadcast business in Ireland.

In Belgium, Telenet lost 3,100 customer relationships compared with loss of 12,600 in the year-ago quarter.

Belgium revenues, on a reported basis, increased 3.4% year over year to $746.6 million. On a rebased basis, revenues fell 1.3% driven by lower interconnect revenues and a decline in advertising and production revenues at De Vijver Media.

In Switzerland, Liberty Global lost 6,300 customer relationships compared with the loss of 9,000 in the year-ago quarter.

Switzerland revenues, on a reported basis, increased 1.1% year over year to $315 million. On a rebased basis, revenues decreased 5.8% due to lower ARPU and customer volume losses.

Continuing CEE (Poland and Slovakia) gained 8,600 customer relationships compared with 7,100K in the year-ago quarter driven by growth in new build areas.

Continuing CEE revenues, on a reported basis, increased 6% to $124.2 million. On a rebased basis, the top line increased 3.2%.

Revenues from the Dutch joint venture decreased 18.7% year over year on a rebased basis.

Liberty Global built 158,000 new premises in the reported quarter including 125,000 in the U.K. & Ireland.

Operating Details

Adjusted EBITDA declined 0.2% year over year to $1.21 billion in the third quarter. On a rebased basis, EBITDA decreased 5%.

U.K./Ireland EBITDA, on a rebased basis, decreased 3.4% year over year. Switzerland EBITDA, on a rebased basis, was down 9.9% from the year-ago quarter.

Belgium EBITDA, on a rebased basis, decreased 2.2% year over year. Continuing CEE EBITDA also, on a rebased basis, decreased 4% year over year.

Loss from continuing operations was $973.6 million in the reported quarter against earnings of $587.2 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Sep 30, 2020, Liberty Global had $9.3billion of cash, investments under SMAs and unused borrowing capacity.

Total principal amount of debt and finance leases were $27.6 billion for continuing operations. Moreover, the average debt tenor is seven years, with approximately 78% not due until 2026 or thereafter.

As of Sep 30, 2020, Liberty Global’s adjusted gross and net leverage ratios were 5.4X and 4X, respectively.

Cash provided by operating activities was $1.10 billion, up 86% year over year.

Moreover, adjusted free cash flow was $455.7 million in the third quarter compared with $591.7 million in the year-ago quarter and free cash outflow of $455.7 million in the previous quarter.

The company bought back $1 billion of shares under its repurchase program in the reported quarter. Moreover, Liberty Global’s board authorized a new share-repurchase program.

Joint Venture & Acquisition Details

Liberty Global stated that the joint venture with Telefonica’s O2 is on track and is expected to close in mid-2021.

Moreover, Liberty Global entered into a transaction agreement with Sunrise Communications on Aug 12, 2020, for the acquisition of the latter. The company now expects acquisition of Sunrise to close in mid-November.

Zacks Rank & Stocks to Consider

Liberty Global currently carries a Zacks Rank #3 (Hold).

DISH Network (DISH - Free Report) , TEGNA (TGNA - Free Report) and Delta Apparel (DLA - Free Report) are some better-ranked stocks in the broader consumer & discretionary sector. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DISH, TEGNA and Delta Apparel are set to report quarterly results on Nov 6, 9 and 19, respectively.

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