Setting its sights beyond Europe, Liberty Global is aiming to expand its presence in the relatively small but rapidly growing Latin American and Caribbean markets for broadband and pay-TV services.
Liberty Global Inc. (Nasdaq: LBTY), the dominant cable operator in Europe and one of the largest MSOs in the world with more than 51.9 million homes passed and 27.3 million total subscribers, is already the largest cable provider in Chile and Puerto Rico. In those two markets, the company now has a combined total of about 3.7 million homes passed and 1.5 million cable customers.
But now Liberty Global executives think they can greatly enlarge those totals through a combination of more aggressive marketing and cable system acquisitions. In particular, they're eyeing the latter route for Latin American and Caribbean expansion, similar to the course they've pursued in Europe over the last few years.
"We think there's a significant opportunity to expand in this region," said Liberty Global CEO Mike Fries, speaking on the company's fourth-quarter earnings call with financial analysts last Friday. Noting the company's M&A expertise, he said officials see "some very interesting consolidation opportunities" in Latin America and the Caribbean.
To that end, Liberty Global is seeking to create a new tracking stock to cover its Latin American and Caribbean properties. That proposed stock platform, known as LILAC, will be put before company shareholders for approval next week. If it passes, company executives intend to launch the stock in early spring.
Liberty Global officials highlighted the growth potential of Latin America and the Caribbean, where a mere 25% of homes now subscribe to broadband and just 40% subscribe to some type of pay-TV service, during the earnings call. They also noted that their existing Chilean and Puerto Rican cable systems have been posting steady customer and operating cash flow growth.
The fresh expansion push south of the US border comes as Liberty Global also begins a broadband blitz in the UK. Directly taking on fixed-line incumbent BT Group plc (NYSE: BT; London: BTA), Liberty Global's Virgin Media Inc. (Nasdaq: VMED) unit plans to spend €3 billion ($4.6 billion) to wire up to 4 million homes and businesses and extend its hybrid fiber-coax (HFC) footprint to nearly 17 million premises, or two thirds of the nation, by 2020. (See Virgin Media Plots £3B Invasion of BT Turf.)
It also comes a couple of years after Liberty Global shed most of its other properties around the world to focus almost entirely on European expansion in its 14-nation footprint. Previously, the MSO owned large cable systems and other pay-TV assets in Australia and Japan.
In other notable results from its earnings report, Liberty Global said that its next-gen IP video platform, Horizon TV, has just scaled the 1 million subscriber mark. In addition, the company's Horizon Go TV app is now available in eight of its 14 European markets.
Liberty Global officials credited these moves, plus the growing popularity of their MyPrime video-streaming service in its four initial markets, with stemming their steady loss of video subscribers in recent months. The MSO shed 35,200 video customers in the fourth quarter and 223,000 video customers for the full year, which, while still substantial, actually represented its best pay-TV performance in eight years. (So go figure.)
The international MSO also continued to make strong strides in the European commercial services market. Liberty Global boosted its business services revenues to $1.7 billion in 2014, up 7% for the year, as it concentrated on signing up more SOHO firms and beefing up its UK B2B presence.
— Alan Breznick, Cable/Video Practice Leader, Light Reading