VMED Virgin Media Inc. (MM)

Liberty Global Inc. (LBTYA) declared mixed financial results for the first quarter of 2013. While net earnings fell below the Zacks Consensus Estimate, revenues beat the same. In the reported quarter, the company added 373,000 organic revenue generating units (RGU), down 16.2% year over year. Liberty Global currently has a Zacks Rank #3 (Hold).

Quarterly GAAP net loss was $1 million or a break-even per share compared with a net loss of $25.7 million or 9 cents per share in the prior-year quarter. However, first-quarter 2013 adjusted earnings per share of 9 cents were way below the Zacks Consensus Estimate of 28 cents. Quarterly total revenue of $2,767.7 million was up 9.1% year over year, easily surpassing the Zacks Consensus Estimate of $2,714 million.

Quarterly cost of operations was $1,027 million, up 14.4% year over year. Selling, General and Administrative expenses were $497.9 million, up 5.6% year over year. In the first quarter of 2013, operating income was $525.4 million, up 6.3% year over year.

During the first quarter of 2013, Liberty Global generated $557.7 million of cash from operations compared with $805.8 million in the year-ago period. Free cash flow in the reported quarter was $23.1 million compared with $241.9 million in the prior-year quarter.

At the end of the first quarter of 2013, Liberty Global had $2,906.8 million of cash and marketable securities and $29,600.1 million of outstanding debt on its balance sheet compared with $2,989 million of cash and marketable securities and $27,524.5 million of outstanding debt at the end of 2012.

Subscriber Statistics

As on Mar 31, 2013, Liberty Global had 19.7457 million customers in 13 countries. Out of the total, customer count at UPC Broadband, Telnet and VTR was 16.1984 million, 2.1062 million and 1.1679 million, respectively. Puerto Rico and Chile had 273,200 customers. The total Single-Play customer count was10.4666 million, down 6.8% year over year. The total Double-Play customer count was 3.092 million, up 5.9% year over year. The total Triple-Play customer count was 6.1871 million, up 13.8% year over year.

During the reported quarter, Liberty Global added 373,000 net RGUs including net gains of 233,000 and 231,000 subscribers, respectively, for broadband Internet and telephony services and a net loss of 92,000 subscribers for video services. In the first quarter, the company added 217,000 digital video subscribers. At present, the company has more than 200,000 Horizon TV subscribers (145,000 in the Netherlands and 55,000 in Switzerland). Recently, Liberty Global started offering Horizon TV in Ireland and will also deploy it in Germany later this year. 

Segment wise Results

Total revenue from the total UPC Broadband division was $1,801.4 million, up 5.6% year over year. Within this segment, revenues from Western Europe were $1,481.6 million, up 6.1% year over year. Revenues from Central and Eastern Europe were $287.8 million, up 2.5% year over year. Revenues from Central and other operation were $32 million, up 13.5% year over year. In the reported quarter, Telenet revenues were $536.2 million, up 12.3% year over year. VTR revenues were $250.4 million, up 11.5% year over year. Corporate and other revenues were $199.3 million, up 31.6% year over year.

Latest Development

On Apr 15, Liberty Global received European Union’s regulatory approval for its proposed acquisition of Virgin Media Inc. (VMED). On Feb 2013, Liberty Global decided to acquire a 100% stake in Virgin Media, in a cash and equity deal. The deal is worth around $15.8 billion or an enterprise value of nearly $23.3 billion. The deal is now being weighed by the U.S. regulator and is expected to be closed by the second quarter of 2013. If this deal finally matures, then the merged entity will become a formidable challenger to British Sky Broadcasting Group plc. (BSkyB), the largest pay-TV operator of the U.K and BT Group plc. (BT). BSkyB is partially controlled by News Corp. (NWSA).  

 
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VIRGIN MEDIA (VMED): Free Stock Analysis Report
 
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