Liberty Global Sees More M&A Coming

Despite some concerns from investors about its latest acquisition target, Liberty Global is still gung-ho about gobbling up more cable and mobile providers in Europe and Latin America.

Speaking at the Citi 2016 Global Internet, Media & Telecommunications Conference in Las Vegas earlier this week, Liberty Global Inc. (Nasdaq: LBTY) CEO Mike Fries said his company still has further M&A ambitions in those two regions of the world as it seeks to foster more growth. Liberty Global, the western world's largest MSO with nearly 55 million homes passed in Europe, South America and the Caribbean, is now trying to close its pending €3.5 billion (US$5.3 billion) purchase of Cable & Wireless Communications , which was announced two months ago. (See Liberty Global to Buy CWC in $5.3B Deal.)

While the stock market has not reacted favorably to that deal so far, pushing Liberty Global's share price on the Nasdaq Exchange down by about $6, or more than 10%, since mid-November, Fries remains bullish about both the acquisition and the company's future M&A prospects in Latin America. Calling it "a terrific deal," he said Liberty Global views the C & W purchase as "a seminal hump" for his company in the thriving region, which is now growing faster than either North America or Europe. "We're running the business for five to ten years," he said, not just the short term.

Liberty Global, which also operates cable systems in Puerto Rico and Chile, recently created a new tracking stock, LILAC, to cover its properties in the New World. The MSO plans to use that stock platform to expand its presence south of the US border and then probably turn LILAC into an independent entity eventually. It has not yet named any other Latin American acquisition targets. (See Liberty Global Digs Latin Beat.)

"Over time we're likely to spin that business," Fries said. "But it will be part of the mother ship right now."

Liberty Global also has its eye on more M&A deals in Europe, several months after calling off talks with rival Vodafone Group plc (NYSE: VOD) about possible asset swaps. While there are "no countries in the pipeline today," Fries said, the company is always open to greater consolidation in a region where it has invested heavily and expanded broadly. With large cable systems in a dozen nations and about 50 million homes passed, Liberty Global is already the continent's dominant cable player by far. (See Vodafone, Liberty Call Off Asset-Swap Talks.)

"We never say never," he said. "We think it's ours for the taking, if you will. We have scale and we have great reach. Clearly, we're not done."

That said, Fries also sees plenty of opportunity for greater "organic" growth in Europe, where it plans to roll out the new DOCSIS 3.1 spec aggressively over the next three years. He cited Liberty Global's plans to extend cable lines to another 10 million to 12 million homes in the UK and elsewhere over the next three to five years. He noted that this number of homes is about equal to the size of the company's Virgin Media cable operation in the UK today. (See Virgin Media Plots £3B Invasion of BT Turf.)

"Organic growth is the primary story that we want to live by and die by," he said. "If you can't grow organically, there's no point being in the business."

— Alan Breznick, Cable/Video Practice Leader, Light Reading

danielcawrey 1/8/2016 | 9:28:15 PM
Streaming Interesting read. While in the U.S. we're seeing streaming take a lot of cable-based business from operators, I had not considered the fact than in other places in the world cable might actually be a booming market. Maybe this is just talk and a reason for M&A sprees, but it's possible in many places in the world streaming services just aren't available (yet). 
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