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.