Back to top

Image: Bigstock

Liberty Global Ltd (LBTYA) Up 5.6% Since Last Earnings Report: Can It Continue?

Read MoreHide Full Article

It has been about a month since the last earnings report for Liberty Global Ltd (LBTYA - Free Report) . Shares have added about 5.6% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Liberty Global Ltd due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Liberty Global Q3 Earnings Decline, Revenues Rise Y/Y

Liberty Global's loss from continuing operations in third-quarter 2023 amounted to $822.7 million, down 66.2% year over year.

Revenues increased 6.2% year over year to $1.854 billion. On a rebased basis, revenues declined 4.3% year over year.

The Zacks Consensus Estimate for the bottom line was pegged at a loss of 15 cents per share while that for the top line was $1.88 billion.

Top-Line Details

Total average revenue per unit (ARPU) per fixed customer relationship increased 9.6% year over year to $67.56. On a rebased basis, the figure increased 1.7%. The figure beat the Zacks Consensus Estimate of $59.

Mobile ARPU (including interconnect revenues), on a reported basis, increased 3% to $26.81. On a rebased basis, the figure dropped 5.5%. Mobile ARPU (excluding interconnect revenues), on a reported basis, increased 5.2% to $25.03.

As of Sep 30, 2023, the total mobile subscriber count included approximately 2.8 million subscribers in Switzerland, 2.9 million in Belgium, 35 million from the VMO2 JV and 5.6 million from the VodafoneZiggo JV.

In total, Liberty Global lost 39,100 customer relationships in the third quarter compared with a loss of 14,000 in the year-ago quarter.

Belgium’s revenues, on a reported basis, increased 16.6% year over year to $775.2 million. On a rebased basis, revenues inched down 0.3%. The figure beat the Zacks Consensus Estimate of $770 million.

In Belgium, Liberty Global lost 20,700 customer relationships compared with a loss of 7,700 in the year-ago quarter.

Switzerland’s revenues, on a reported basis, improved 8.8% year over year to $859.3 million. On a rebased basis, revenues decreased 0.8%. The figure beat the Zacks Consensus Estimate of $841 million.

In Switzerland, LBTYA lost 11,100 customer relationships compared with a loss of 3,200 in the year-ago quarter.

Ireland’s revenues, on a reported basis, increased 8.1% to $125.5 million. On a rebased basis, revenues remained the same. The figure missed the Zacks Consensus Estimate of $127 million.

The company lost 5,100 customer relationships in Ireland compared with a loss of 1,900 in the year-ago quarter.

Central and other revenues, on a reported basis, decreased 31.1% to $164.3 million. On a rebased basis, the top line declined 30.4%. The figure missed the Zacks Consensus Estimate of $187 million.

In Slovakia, Liberty Global lost 1,800 customer relationships compared with a loss of 1,200 in the year-ago quarter.

The company lost 400 customer relationships in Luxembourg, related to business in Luxembourg as a result of Telenet's January 2023 acquisition of Eltrona.

Joint Venture Details

Sunrise revenues of $859.3 million in third-quarter 2023 increased 8.8% year over year on a reported basis and decreased 0.8% on a rebased basis. The rebased decline was due to lower handset and roaming revenues, offset by the July price rise benefit and strong trading momentum in flanker brands. Continued momentum in mobile delivered a strong postpaid net adds of 29,200 in the quarter.

Telenet revenues of $775.2 million in third-quarter 2023 increased 16.6% year over year on a reported basis and decreased 0.3% on a rebased basis. The decrease in rebased revenues was due to a decline in production and advertising revenues because of the macroeconomic backdrop. Telenet lost 4,000 mobile postpaid revenue-generating units in the third quarter and its broadband base contracted by 13,500 net adds.

Liberty Global’s non-consolidated joint venture, Virgin Media O2, reported revenues of $3,503.8 million in third-quarter 2023, which increased 15.2% year over year on a reported basis and 1.2% on a rebased basis. The increase was primarily due to the net effect of an overall rise in mobile revenues driven by higher service revenues that were partially offset by lower handset revenues.

The fixed customer base grew by 32,500 net adds in the third quarter, while continued demand for fast and high-quality connectivity drove 40,800 broadband net adds. Postpaid mobile delivered 50,000 net adds in the third quarter. The average download speed across the company's broadband base increased 34% year over year to 349 Mbps, approximately 5x higher than the national average.

During third-quarter 2023, VMO2 built 250,800 premises, the majority of which were FTTH homes built for the nexfibre JV. In mobile, VMO2's 5G connectivity expanded to more than 3,200 towns and cities and remained on track to deliver 5G services to over 50% of the entire U.K. population this year.

Vodafone Ziggo revenues increased 8% on a reported basis and 0.1% on a rebased basis to $1,125.2 million in the third quarter. The stable rebased result was primarily driven by the July price increase in consumer fixed and customer growth in mobile postpaid and B2B fixed.

VodafoneZiggo continues to improve its commercial momentum, as FMC households9 remained stable at 1.5 million and FMC net adds increased by 13,000 in the third quarter to more than 2.6 million, delivering significant Net Promoter Scores along with customer loyalty benefits. Mobile postpaid net adds grew 28,600 to 5.3 million, while mobile postpaid ARPU decreased 3.1% year over year, primarily due to a decline of ARPU in B2B. The broadband base contracted by 33,900 net adds in the quarter, as a decline of 39,200 in Consumer was only partially offset by an increase of 5,300 in B2B. Consumer fixed ARPU increased 4.4% year over year as a result of the price increase in July.

Operating Details

Adjusted EBITDA declined 10% year over year to $597.7 million in the third quarter. On a rebased basis, EBITDA decreased 16.9%.

Switzerland’s EBITDA, on a rebased basis, increased 6.2% from the year-ago quarter.

Belgium’s EBITDA, on a rebased basis, increased 7.3% year over year.

Ireland’s EBITDA, on a rebased basis, decreased 0.9% year over year.

The company reported an operating loss of $27.4 million in the reported quarter compared with an operating income of $108.9 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Sep 30, 2023, Liberty Global had $5 billion of cash, investments under SMAs and unused borrowing capacity, including $3.5 billion in corporate cash and no material debt maturities until 2028. This compares unfavorably with $5.08 billion of cash, investments under SMAs and unused borrowing capacity in the previous quarter.

In the third quarter, the total principal amount of debt and finance leases was $15.3 billion for continuing operations compared with $15.3 billion in the previous quarter. The average debt tenor is five years, with approximately 48% not due until 2029 or later.

Cash provided by operating activities was $327.1 million, down 39.5% year over year.

Moreover, adjusted free cash flow was negative $102.3 million in the third quarter compared with a positive adjusted free cash flow of $328.7 million in the previous quarter and $147.5 million in the year-ago quarter.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Liberty Global Ltd has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Liberty Global Ltd has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Liberty Global Ltd (LBTYA) - free report >>

Published in