Analyst Note| Michael Hodel, CFA |
Liberty Global continued to post improvement in customer metrics across the markets it serves during the fourth quarter, though growth remains elusive thanks to the impacts of the pandemic and pricing pressures. Reported revenue increased 15% versus a year ago to $3.4 billion thanks primarily to the acquisition of Sunrise in Switzerland. Adjusted for acquisitions and currency movements, revenue declined 0.5%. Profitability also suffered during the quarter, especially in the U.K., as Liberty invested to integrate Sunrise and prepare for the merger of its Virgin subsidiary with Telefonica's O2, which management still expects to close by midyear, and increased investments to drive future growth. Management also continues to express strong interest in pursuing strategic opportunities, both within its venture fund (which it estimates holds $2.4 billion of investments) and its operating subsidiaries. We don't plan to materially change our $33 fair value estimate and believe Liberty shares are modestly undervalued.