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Liberty Global PLC LBTYA

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Liberty Global Returns to Growth in Q1 as Customer Metrics Continue to Improve

Analyst Note

| Michael Hodel, CFA |

Liberty Global returned to growth during the first quarter, though barely. Total reported revenue increased 26% year over year thanks to the Sunrise acquisition in Switzerland. Adjusted for Sunrise and currency movements, revenue would have grown 0.2%, the first increase since 2018. Customer additions were improved or stable in each major market the firm serves except the Netherlands, where VodafoneZiggo struggled. The merger between Virgin Media and Telefonica’s O2 in the U.K. has received preliminary regulatory approval and management expects the transaction to close in the coming weeks. Putting these two businesses together should round out the major strategic moves Liberty Global is contemplating, leaving it to look for investment opportunities around its core operations, such as expanding its fixed-line network across the U.K. or acquiring adjacent assets.  We don’t expect to significantly alter our $33 fair value estimate. Though the shares have had a nice run in recent months, we believe the stock remains modestly undervalued.

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Company Profile

Business Description

Liberty Global is one of the largest cable owners in Europe, with operations in the United Kingdom (50%-owned), Switzerland, Belgium (60%-owned), the Netherlands (50%-owned), Ireland, Poland, and Slovakia. The firm sold its businesses in Germany, Romania, Hungary, and the Czech Republic to Vodafone in 2019, generating $11 billion proceeds, and merged its U.K. business with wireless carrier O2 in June 2021. The firm's operations serve about 5.5 million Internet access customers in the U.K., 1.7 million in Belgium, 1.1 million in Switzerland, and 3.4 million in the Netherlands. Liberty also provides wireless services in each of these four markets to a combined 41 million customers, including 27 million at O2.

Contact
161 Hammersmith Road, Griffin House
London, W6 8BS, United Kingdom
T +44 2084836449
Sector Communication Services
Industry Entertainment
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type
Employees 23,000

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