What Will Liberty Global do with its Cash?

05/23/2018 5:00 am EST

Focus: GLOBAL

David Fried

Editor, The Buyback Letter

Liberty Global Plc (LBTYA) is the world’s largest international TV and broadband company, with operations in 11 European countries under the consumer brands Virgin Media, Unitymedia, Telenet and UPC, notes David Fried, buyback and share repurchase specialist an editor of The Buyback Letter.

It invests in infrastructure, digital platforms and next-generation networks that connect 22 million customers subscribing to 46 million TV, broadband internet and telephone services. Liberty also serves 7 million mobile subscribers and offers Wi-Fi service through 12 million access points across its footprint.

In addition, Liberty Global owns 50% of VodafoneZiggo, a joint venture in the Netherlands with 4 million customers subscribing to 10 million fixed-line and 5 million mobile services, as well as significant investments in ITV, All3Media, ITI Neovision, Casa Systems, LionsGate, the Formula E racing series and several regional sports networks.

The company has been wheeling and dealing. Liberty now expects its previously announced sale of UPC Austria for €1.9 billion to TMobile Austria to close in the second half of 2018. In March, the company also announced the termination of its planned purchase of Multimedia Polska.

And British wireless phone giant Vodafone (VOD) is buying Liberty’s European cable TV systems (Germany, Hungary, Romania and the Czech Republic) for some $22 billion.

Liberty Global is the largest multinational cable company in Europe, and following the sale of systems to Vodafone, Liberty Global will continue to be Europe's biggest multinational cable operator, with systems in United Kingdom, Ireland, Belgium, Switzerland, Poland and Slovakia.

That move is not without controversy, with other large players objecting, saying it would lead to excessive market concentration and monopoly.

Liberty also invested in Cheddar, the financial news streaming service aimed at Millennials (it is called “the CNBC for Millennials”), which is preparing to expand internationally and launch a channel on Snapchat Discover.

Q1 results were sales of $4.16 billion (up 18.4% over the prior year’s period), and operating cash flow of $1.90 billion (up 19.2% over the prior period).

After shedding assets, the U.K. and Ireland will account for over half of the company's revenue; the product offerings in these two countries are improving rapidly and Liberty Global hopes to effectively compete with next-generation TV service being expanded and strong broadband and voice products.

Management has not announced what it will do with cash from the asset sale. Perhaps a buying spree or a large buyback of shares? Shares outstanding have been reduced by 5.6% in the last 12 months.

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