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Liberty Global PLC Class A LBTYA

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Liberty Global Continues to Regain Momentum During Q4 as Strategic Moves Loom

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.

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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, 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. An attempt to sell its Swiss business to rival Sunrise fell apart in 2019. The firm serves about 9.4 million Internet access customers across its consolidated footprint and another 3.4 million in the Netherlands, which it does not consolidate in its financial statements. Liberty also serves 6.4 million wireless customers in consolidated markets and 5.1 million in the Netherlands. The firm agreed to merge its U.K. business with wireless carrier O2 in May 2020.

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