Liberty Global pares growth target

Bloomberg

Liberty Global Plc lowered its growth target for Europe this year as billionaire John Malone’s cable carrier reported a weaker-than-expected start in the UK.
Liberty now forecasts operating cash flow growth of 5 percent for 2017, down from February’s outlook of 6 percent to 7 percent, the London-based company said. The operator lost more customers than expected in the UK in the first quarter, following two price increases last year and challenges with the launch of a new video product. Mobile revenue also declined.
“The UK is our biggest market, so it has a big impact,” Chief Executive Officer Mike Fries said in an interview. He cast the new target as conservative. The reduction is “more of a bump in the road.”
The European unit of Malone’s cable and media empire is facing stiff competition in Britain from BT Group Plc and Vodafone Group Plc as the country’s carriers expand on each other’s turfs. A Dutch joint venture that moved ahead with Vodafone in the quarter is doing well in the fixed-line consumer business, but facing challenges in mobile amid competition from Tele2 AB and Deutsche Telekom AG’s T-Mobile, Fries said.
“The real magic will happen when we can start marketing a true quad-play product,” Fries said of the joint venture, which reported a 2 percent revenue decline in the first quarter and 6 percent drop in operating cash flow. Fries said he didn’t have anything fresh to say about whether the partnership could be a prelude to a larger deal between the two companies.

VODAFONE, ITV
Investors have been fixated on the idea of a merger or asset swap between Liberty and Vodafone, after years of talks between the companies. Even after the agreement to partner in the Netherlands, Fries and Vodafone CEO Vittorio Colao have stoked speculation by publicly commenting on the potential to bring their fixed and mobile assets together and challenge Europe’s incumbent operators.
Liberty is also seen as a potential buyer of UK broadcaster ITV Plc — of which it owns 9.9 percent — particularly after last week’s announcement that ITV CEO Adam Crozier will step down in June. Crozier’s departure, with no successor named, doesn’t change Liberty’s relationship with ITV, Fries said. Liberty, which has purchased free-to-air broadcasters in Belgium and Ireland, doesn’t see any more immediate deals in the area on the horizon, he said.
In its home UK market, Liberty is working to improve execution of a 3 billion pound ($3.9 billion) expansion of its Virgin Media footprint, known as Project Lightning, after revealing in March that it had overstated construction progress. Management changes will probably delay the project this year, with a ramp-up now expected over 12 to 24 months, the company said. The impact of the Project Lightning slowdown isn’t material to company targets, Fries said.
Liberty faces the threat of escalating price competition for broadband in the UK, where the communications regulator proposed in March to lower some wholesale rates charged by BT for other operators to access its network. Liberty’s expansion project in the country is the company’s biggest, aimed at boosting coverage by almost a third, to another 4 million homes.