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Organic RGU additions increased 34% to 1.6 million in 2012, including 465,000 in Q4

Liberty Global Reports 2012 Results

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2/14/2013
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ENGLEWOOD, Colorado -- Liberty Global, Inc. (“Liberty Global,” “LGI,” or the “Company”) (NASDAQ: LBTYA, LBTYB and LBTYK), today announces financial and operating results for the year and three months (“Q4”) ended December 31, 2012. Highlights for the full year compared to the same period for 2011 (unless noted), include:

  • Organic RGU additions increased 34% to 1.6 million in 2012, including 465,000 in Q4
  • Revenue of $10.3 billion, reflecting rebased growth of 6%
  • Operating Cash Flow (“OCF”) of $4.9 billion, representing rebased growth of 4%
  • Operating income increased 9% to $2.0 billion
  • Adjusted Free Cash Flow (“Adjusted FCF”) of $1.0 billion, up 31%
  • 2012 stock repurchases totaled approximately $1.0 billion Liberty Global President and CEO Mike Fries stated, “2012 was a great year for our company and we finished on a high note, reporting our strongest subscriber growth ever in the fourth quarter. For the full year we added 1.6 million organic RGUs, including 465,000 in Q4 alone. These record results were driven by the success of our triple-play bundles, which leverage our superior broadband speeds and resulted in record annual broadband internet and telephony subscriber additions. At the same time, we made significant progress on our product roadmap with the introduction in the Dutch market of Horizon TV, our revolutionary media and entertainment platform. Within five short months we have sold over 100,000 subscriptions and have over 200,000 unique users enjoying our on-line and multiscreen services in the Netherlands. In January of 2013, we introduced Horizon TV in Switzerland and the response has been overwhelmingly positive.” “Our strength in subscriber additions helped fuel rebased revenue growth of 7% in the fourth quarter to $2.7 billion, which was our best quarterly result in five years. Also in Q4, rebased OCF increased 6% to $1.3 billion, consistent with our expectation for accelerated growth in the second half of 2012. From an Adjusted Free Cash Flow perspective, we delivered over $1.0 billion for the full year, a 31% increase compared to 2011. Having achieved or exceeded all of our 2012 guidance targets, we are bullish regarding our 2013 prospects and began the year with strong operating momentum.” “Our positive outlook also stems from our recent announcement of the pending acquisition of Virgin Media, a financially and strategically accretive combination that reinforces our position as Europe’s largest and most advanced broadband communications company. We expect to close the acquisition in the second quarter following regulatory and shareholder approvals.” “From a balance sheet perspective, we finished the fourth quarter with cash and equivalents in excess of $3 billion and total liquidity of more than $5 billion. In addition, we continued to opportunistically refinance our debt and take advantage of strong capital markets, further extending our maturity profile and lowering our fully-swapped borrowing cost, which is down 80 basis points to 7.2% compared to a year ago. We remain committed to our levered equity strategy for value creation, as we repurchased approximately $1 billion of stock in 2012, bringing our cumulative total to over $9 billion since we formed LGI back in 2005.” Subscriber Statistics At December 31, 2012, we provided our 19.8 million unique customers with 34.8 million services, consisting of 18.3 million video, 9.2 million broadband internet and 7.3 million telephony subscriptions. As compared to year-end 2011, we increased our RGU base by 6% or over 2.0 million RGUs. This growth was largely attributable to our 1.6 million organic RGU additions and the Puerto Rican OneLink acquisition in Q4. During 2012, we increased our combined double- and triple-play customers by nearly 1.0 million or 12% (inclusive of acquisitions) to over 9.0 million bundled customers or 46% of our customer base. As a result, our bundling ratio increased from 1.68x RGUs per customer at the end of 2011 to 1.76x RGUs per customer at the end of 2012. We added 465,000 RGUs in the fourth quarter and 1.6 million RGUs for full-year 2012. Both results represent record activity levels, reflecting year-over-year growth of 22% and 34%, respectively. Our RGU additions for the three months and the year ended December 31, 2012 include 28,000 and 89,000 RGUs, respectively, relating to small office home office (“SOHO”) RGUs. Geographically, our European operations accounted for 92% of our total RGU additions in 2012. Of particular note, our German operation (Unitymedia KabelBW) delivered a record 768,000 net additions in 2012, which comprised nearly half of our subscriber growth, as we successfully implemented our “Go-for-Growth” strategy. As compared to our 2011 results, our German business increased its RGU additions by 69% and by 4% if adjusted to include a full year of Kabel BW results in 2011, as opposed to the two weeks that were included in our actual 2011 results. Our other operations in western Europe added 373,000 RGUs collectively in 2012, reflecting year-over-year growth of 5%. This growth was derived from improved subscriber performances in Switzerland, Austria and Belgium, offset by a year-over-year decline in our Dutch business, which faced a more competitive environment during the second half of 2012. Rounding out our European footprint, our Central and Eastern European (“CEE”) region added 329,000 RGUs in 2012, our highest annual total since 2007 in that region. Additionally, our Chilean and Puerto Rican operations contributed 105,000 and 20,000, respectively. In terms of our TV business, we lost 287,000 video subscribers (including just 28,000 in Q4) in 2012, which reflected a 7% improvement compared to our video losses in 2011 and represents our lowest annual video attrition in five years in absolute terms despite a significantly larger footprint. We finished 2012 with a digital video base of 9.1 million RGUs, as we added 920,000 digital cable RGUs (including 217,000 in Q4) during the year. As a result, our digital penetration12 increased to 52% compared to 46% at year-end 2011. We expect that our opportunity to continue driving digital upgrades will be enhanced by our recently launched Horizon TV product and with nearly 8.5 million analog video subscribers, we remain confident in the video growth opportunity. The take-up of Horizon TV in the Dutch market remained robust during the fourth quarter, and the early results so far in Switzerland have been very positive. We look forward to launching Horizon TV in Germany and Ireland later this year. Overall subscriber growth was powered by our market-leading double- and triple-play bundles, with our superior broadband internet products serving as the key competitive differentiator. As a result of the strong demand from within our customer base, we added over 900,000 broadband internet subscribers (including 249,000 in Q4) and over 970,000 telephony subscribers (including 244,000 in Q4) reflecting year-over-year growth of 19% and 32%, respectively, both of which represent record annual additions. Revenue For the three months and year ended December 31, 2012, we reported consolidated revenue of $2.7 billion and $10.3 billion, reflecting year-over-year growth rates of 14% and 8%, respectively, compared to the prior year. The performance in both periods resulted primarily from the positive contribution of acquisitions, principally Kabel BW, as well as our record organic RGU growth. When adjusting for the impact of acquisitions and FX, we achieved year-over-year rebased revenue growth of 7% and 6% for the three-month and full-year 2012 periods, respectively. These results compare to 5% rebased growth that we reported last year for both the fourth quarter and full-year 2011 periods. Our fourth quarter rebased revenue growth reflects our strongest quarterly performance of 2012 and our fastest growth quarter in five years, driven by triple-play and mobile subscriber growth. Of particular note, our best performing operations were Germany and Belgium, which delivered rebased revenue growth of 13% and 9%, respectively. Turning to our annual results and similar to the fourth quarter, our rebased revenue growth of 6% was our best top-line performance in five years. Our western European operations generated 7% year-over-year rebased growth, led by Germany and Belgium with 11% and 8%, respectively. Liberty Global Inc.
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