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A Mixed Bag for Liberty Global

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Liberty Global Inc. (LBTYA - Free Report) declared mixed financial results for the fourth quarter of 2012. Although revenue and operating cash flow reached a record high level, the company suffered losses due to huge financial charges. In the reported quarter, the company added 465,000 organic revenue generating units (RGU), reflecting an annualized growth of 22%. Liberty Global currently has a Zacks Rank #2 (Buy).

Quarterly GAAP net loss from continuing operations was $331.3 million or a loss of $1.27 per share compared with a net loss of $435 million or $1.58 per share in the prior-year quarter. Fourth-quarter 2012 losses per share of $1.27 were worse than the Zacks Consensus Estimate of an income of 15 cents per share. Quarterly total revenue at $2,730.2 million was up 13.6% year over year, easily surpassing Zacks Consensus Estimate of $2,630 million.

Quarterly cost of operation was $973.5 million, up 12.1% year over year. Selling, General and Administrative expenses were $524.2 million, up 13.4% year over year. In the fourth quarter of 2012, operating income was $500.7 million, up 22.7% year over year.

During the fourth quarter of 2012, Liberty Global generated $1,033.5 million of cash from operations compared with $837.6 million in the year-ago period. Free cash flow in the reported quarter was $565.5 million compared with $323.5 million in the prior-year quarter.

At the end of fiscal 2012, Liberty Global had $2,989 million of cash and marketable securities and $27,524.5 million of outstanding debt on its balance sheet compared with $2,626.4 million of cash and marketable securities and $24,757.9 million of outstanding debt at the end of 2011. At the end of fiscal 2012, debt-to-capitalization ratio was 0.93 compared with 0.87 at the end of 2011.

Subscriber Statistics

As on Dec 31, 2012, Liberty Global had 19.7882 million customers in 13 countries. Out of the total, customer count at UPC Broadband, Telnet and VTR was 16.2503 million, 2.1227 million and 1.1444 million, respectively. Puerto Rico and Chile had 270,800 customers. Total Single-Play customer was 10.7272 million, down 6.4% year over year. Total Double-Play customer was 3.0757 million, up 5.6% year over year. Total Triple-Play customer was 5.9853 million, up 15.8% year over year.

During the reported quarter, Liberty Global added 465,000 net RGUs including net gains of 249,000 and 244,000 subscribers, respectively, for broadband Internet and telephony services and a net loss of 28,000 subscribers for video services. In the fourth quarter, the company added 217,000 digital video subscribers. At the end of 2012, Liberty Global had 9.1 million digital cable subscribers with a penetration rate of over 52%.

Segment wise Results

Revenue from total UPC Broadband division was $1,791.9 million, up 15% year over year. Within this segment, revenue from Western Europe was $1,475.4 million, up 18.7% year over year. Revenue from Central and Eastern Europe was $285.9 million, up 0.2% year over year. Revenue from Central and other operation was $30.6 million, up 3% year over year. During the reported quarter, Telenet revenue was $513.3 million, up 5.3% year over year. VTR revenue was $248.3 million, up 15.7% year over year. Corporate and other revenue was $196.9 million, up 20% year over year.

Latest Development

On Feb 5, 2013, Liberty Global came out with a joint press statement with Virgin Media Inc. , that the two companies have entered into an agreement par which, Liberty Global will acquire a 100% stake in Virgin Media in a cash and equity deal. The deal is expected to be of $15.8 billion or an enterprise value of nearly $23.3 billion.  Both the companies are expecting the deal to be completed by the second quarter of 2013, subject to customary regulatory approval. If this deal gets approved, then Virgin Media will become a formidable challenger to BSkyB, the largest pay-TV operator of the U.K. and BT Group plc. (BT - Free Report) .BSkyB is partially controlled by News Corp. (NWSA - Free Report) .

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