Liberty Global offloads Swiss business for $6.3 billion

Liberty Global has continued its great withdraw from the European markets with another sale, this time convincing Sunrise its 1 million Swiss customers are worth $6.3 billion.

Announcing the deal alongside its financial results, it does look to be a good deal for Liberty Global. This is a business which has been going through somewhat of a restructure, attempting to find profit in a challenging industry by refocusing resources, though it now appears the years of aggressive acquisitions and expansion have not paid off.

“The past fourteen months have been transformational for Liberty Global,” said CEO Mike Fries. “After two decades of buying, building and growing world-class cable operations in Europe, we have announced or completed transactions in six of our twelve markets at premium valuations.”

While $6.3 billion certainly pales in comparison to some of the mega-acquisitions we’ve seen in recent years, it might be worth putting a bit of context around this transaction.

UPC Switzerland has passed just over 2.3 million homes across the country, this is more than 50% of Swiss homes, currently commanding a subscriber base of 1.1 million. The video offering currently has a subscriber base of just over 1 million subscribers (645,000 of which are premium) and mobile subscriptions total 146,000.

Whether these figures justify the $6.3 billion which Sunrise is handing over we’ll let you decide, though just as a point of comparison BT bought EE, and its 30 million mobile subscribers, for £12.5 billion in 2014.

For Sunrise, such an acquisition will add buoyancy to already positive momentum. Over the last three months, Sunrise realised 42,300 postpaid net adds, UPC Switzerland was 8,500 by comparison, while Internet and TV subscribers rose by 8.3% and 14.1% year-on-year respectively.

Liberty LATAM bails out of convergence ambitions

Liberty Latin America has terminated its conversations regarding a potential acquisition of Millicom International.

Details are relatively thin on the ground, though the pair has been in discussions over a possible acquisition which would have made Liberty LATAM the largest convergence player in the Americas. What this means for the Liberty business, which has targeted growth in Latin America in recent years, remains to be seen.

“The Company remains focused on its growth strategy to deliver value for shareholders and provide market leading products and services to its customers,” Liberty said in a statement.

The acquisition talks only emerged in the last couple of weeks, though it would have been a complete takeover from Liberty Latin America. While the Liberty business is certainly in a stable position in the region, competitors have bought into the convergence buzz in recent years, with Telefonica and America Movil offering what would be considered in today’s terms as a more complete connectivity offering.

Operating in 21 countries across Latin America and the Caribbean, Liberty offers consumer and B2B cable and fixed internet services, as well as operating a subsea cable network. On the other side of the coin, Millicom commands mobile operations in eight markets, in most of which it is a market share leader. Theoretically, there was a very handy dovetail between the pair.

Latin America is certainly a market which can offer significant rewards, albeit there are notable risks as well, but it seems the convergence dream was a short-lived dalliance for Liberty LATAM. At least for the moment.

UK shines for Liberty Global in Q3

The UK market proved to a be a success over the last three months for Liberty Global, though the same could not be said for the Belgium and Swiss operations.

Total revenues for the quarter stood at $2.9 billion, a 1.3% increase, with the UK business posting 3.6% growth. While this might sound positive, this is compared to 10.8% for the nine months of 2018 proving there is appetite in the UK for a full-fibre diet. Unfortunately, the success could not be replicated elsewhere, with the Belgium business dropping year-on-year revenues by 1.5% and the bottom falling out of the Swiss bucket with a 8.1% decrease.

“The Swiss market remains challenging but we have a number of initiatives that we believe will improve performance,” said CEO Mike Fries. “Our turnaround plan is underpinned by revamped video products, a refreshed MySports programming line-up, the launch of 1 Gig broadband speeds and a new and improved MVNO offering.

“The continued operating and financial momentum at Virgin Media helped fuel our Q3 results. With respect to our U.K. subscriber growth, we generated over 100,000 net additions, which represents a record third quarter performance. This achievement was supported by strong volume growth in both our Project Lightning and legacy footprints.”

Looking specifically at the UK business, cable revenues declined by 0.7% year-on-year to $2 billion, while mobile revenue increased 2.4% to $416 million and enterprise revenues were up 6.1% year-over-year to $491 million. Operating income decreased 4.8% year-over-year to $592 million, though with promising growth on the top-line, and an additional 109,000 subscribers to account for, overall you could say a good three month’s work.

With Liberty Global still on course to dispose of its businesses in Germany and Central Europe to Vodafone, the team might be able to turn more attention to the troublesome Belgians and Swiss.

Liberty Global throws weight behind standard to bolster wifi game

Liberty Global is the latest telco to join the HomeGrid Forum, having already deployed a wifi extender solution to improve connectivity in the home.

The wifi extender, which has been deployed in some Liberty Global subsidiaries since 2015 including Telenet in Belgium and Virgin Media in the UK, delivers improved wifi speeds in rooms far away from the residential gateway, with the standard claiming the praise. In the HomeGrid Forum, Liberty Global is joining dozens of other organizations, including the likes of China Telecom, BT and AT&T.

“Industry collaboration is an important component within the Alliance and Liberty Global are true innovators in investing in and enabling seamless home-networking technology,” said Dr. Len Dauphinee, HomeGrid Forum President. “Liberty Global is a major provider of home networking and we are delighted to welcome them to HomeGrid Forum as we continue to move towards a smart connectivity future.”

“Liberty Global is delighted to be working with HomeGrid Forum and supporting the progress of technology,” said Peter Joyce, Director of Connectivity CPE Architecture at Liberty Global. “We look forward to working closely with HomeGrid Forum and improving the future of home networking for our customers.”

While wifi has been a consistent part of the connectivity world, it is often overlooked. Frustrations for consumers still persist when it comes to breadth of coverage throughout the home and also weak signal in rooms which are furthest away from the router. This is one of the issues the standard looks to address. is a specification for home networking with data rates up to 2 Gbit/s and operation over four types of legacy wires: telephone wiring, coaxial cables, power lines and plastic optical fiber. A single semiconductor device is able to network over any of the supported home wire types. Aside from the telcos, the HomeGrid Forum (the non-profit trade group promoting also counts the likes of Echostar and Panasonic as members.

Ericsson gets more Liberty Global managed service work

Ericsson’s PR efforts currently seem devoted to promoting its managed services division and a pan-European fixed line gig with Liberty Global presents some low-hanging fruit.

Before we get too carried away it should be stressed this is the renewal of an existing partnership between the two, but it at least indicates Ericsson hasn’t been screwing things up. The new contract includes the consolidation of network service delivery in the UK, Ireland, the Netherlands, Hungary, Poland and Germany, which seems to be more countries than the previous 2016 deal.

“Ericsson will maintain Liberty Global’s European network operations to the highest level, ensuring that their customers will enjoy the best possible user experiences,” said Peter Laurin, SVP of Managed Services at Ericsson. “Ericsson’s Managed Services creates sustainable differentiation as Liberty Global evolves from a focus on network-centric operations to user experience-centric operations, using market-leading technologies in automation and artificial intelligence.”

“Our partnership with Ericsson is part of Liberty Global’s strategy to continually improve the quality of our services while creating operational efficiencies throughout the region,” said Jeanie York, MD of Core Network Planning, Engineering, and Operations at Liberty Global. “Ericsson’s leadership in Managed Services was an ideal fit for us as we innovate to improve the customer experience.”

This gig is especially intriguing since Liberty Global is a fixed line player and that’s not exactly Ericsson’s core area. Our understanding was that, as part of its efforts to bring Managed Services back to profitability, Ericsson was only going to manage the services of companies it also flogged kit to. Clearly there’s some wriggle room in that strategy.

Elsewhere Ericsson also managed to do a 5G NR-compliant live data call over the 39 GHz band using the Intel AIR 5331 baseband in both the US and Sweden. This is more of a big deal for Intel as it strived to keep pace with Qualcomm on the 5G modem front, but is also a sign that Ericsson is keen to encourage a diverse 5G ecosystem.

“This live 5G demonstration on the 39 GHz band signifies how close 5G commercial services are to reality in North America,” said Asha Keddy, VP of Next Generation and Standards at Intel. “Using the Intel 5G Mobile Trial Platform configured with a 39 GHz RF chip/antenna, we successfully demonstrated a 3GPP-compliant data call performed connecting to an Ericsson commercial 5G g-NB base station, an important step in ensuring our commercial platforms are field ready for deployment in 2019.”

If you’re still sceptical here’s a photo of some random kit in a room to serve as proof that the test really did happen.

Ericsson Intel 5G kit

Liberty Global poaches Tivo CEO Enrique Rodriguez to be CTO

Enrique Rodriguez, who only joined DVR company Tivo as CEO last November, has been poached by Liberty Global to be its CTO.

“Enrique is a seasoned executive who will hit the ground running on day one,” said Mike Fries, CEO of Liberty Global. “In today’s technology environment the best CTOs have worked across sectors, platforms and geographies. Enrique has C-level experience as an engineer, software developer and operator.

“He has managed multi-billion dollar businesses for companies like AT&T, Microsoft, Cisco and Thomson, and has a long history in digital television as well as the European broadband sector. As head of Microsoft’s Connected TV business, he launched IPTV solutions for telecommunication companies around the world, including many of our competitors. More recently, at AT&T, he was responsible for the teams that developed and launched DIRECTV’s successful OTT service, DIRECTV Now.

“I’m particularly excited to tap into Enrique’s knowledge of video products and platforms as we ramp up innovation in our TV business. He’s the right leader at the right time for Liberty Global.”

“This is an exciting time to join Liberty Global,” said Rodriguez. “It is one of the few companies in our sector with international scale, a long-term commitment to technology leadership, and a track record of consistent growth and value creation. Mike and his team are first class operators and I look forward to accelerating product innovation and building the network capacity that European consumers want and demand.”

Analyst Paolo Pescatore reckons this is a good move for Liberty. “Beyond the wealth of experience he brings to Liberty Global he will be able to help the group launch new services,” he said. “He joins at a time when the company is struggling to be truly successful in convergence. With this in mind, Liberty is placing a lot of focus on efficiency and is seeking to make better use of data by investing in software and the cloud. Unsurprising expect a particular focus on TV and the integration of online video services within the new TV platform.”

Rodriguez certainly seems to have good tech credentials, having worked at DIRECTV, radio streaming company Sirius XM, Cisco’s service provider video technology group and the TV and Xbox bits of Microsoft. Consumer entertainment tech is clearly his thing and it heralds some promising innovation from Liberty Global in future.

Liberty Global recycles Lutz Schüler from Unitymedia to Virgin Media

With Liberty Global selling a bunch of its German stuff to Vodafone it has decided to recycle an exec it would otherwise lose.

Lutz Schüler has been CEO of German cableco (and part of the above deal) Unitymedia since 2011. He has apparently done a decent job because Liberty Global has decided to resurrect the role of COO at Virgin Media in the UK to accommodate him rather than see him fall into the clutches of Vodafone. The same sentiment doesn’t seem to apply to Winni Rapp, who will replace Schüler having been CFO at Unitymedia.

“Since our initial acquisitions in 2009 and 2010, Unitymedia has grown revenue 60% and operating cash flow 80%, and has led the market in broadband innovation,” said Mike Fries, CEO of Liberty Global. “With the pending sale of our German business to Vodafone, Virgin Media takes on greater importance within our platform in Europe and we want the strongest team possible driving this business. I couldn’t be happier to keep Lutz in the Liberty family.”

“I’m excited to have Lutz join the Virgin Media team,” said Tom Mockridge, CEO of VM and his new boss. “His track record in Germany as an operator speaks for itself and he will provide a new level of marketing energy and leadership that will benefit Virgin Media customers and employees.”

“I’m thrilled to join the Virgin Media team and work alongside Tom,” said Schüler. “As I embrace this new challenge, I know that Unitymedia will be in strong, capable hands under Winni’s leadership.”

“Taking the reins at Unitymedia at this critical time is a great honour.,” said Rapp. “If you want to see the future of the TV and broadband business you need to look no further than Unitymedia. I will continue our proud tradition of innovation and our customers will be well served when Unitymedia and Vodafone join forces.”

Everyone seems pretty pumped about this little reshuffle don’t they? The COO role was previously filled, with Dana Strong having been promoted into it in March 2017. But that just seemed to served to enhance her professional profile enough to catch the eye of Comcast, to whom she defected less than a year later. Liberty Global will be hoping history doesn’t repeat itself with Schüler.

Virgin Media tries to steal the limelight from Global Media

Liberty Global offloading non-core assets isn’t the only bit of news coming out of the offices today as Virgin Media’s Project Lightning continues to defy its name.

Financials for the quarter were pretty positive overall, revenues for the UK and Ireland grew 5.2% (rebased) to $1.77 billion, while the team boasted of a 25,200 net gain of mobile subscribers. On the more disappointing side of the quarter was Project Lightning.

Over the course of the three months, 111,000 marketable premises were added to the roster, taking the total to 1.2 million since the launch. While this might sound positive, this is the slowest progress for the last four quarters and let’s not forget the aim is to take this number to 4 million by the end of 2019; this isn’t the most rapid rollout we’ve ever seen.

Missing this target is not necessarily the end of the world, it was after all a self-imposed one, but it does perhaps indicate a bit of internal lethargy. Again, not exactly hit the panic button time if it was only measuring itself against the cumbersome BT, but the emergence of Vodafone as a challenger ‘altnet’ in the broadband game perhaps makes it a worrying situation. Progress has been sluggish (putting it politely) when compared to the Vodafone/CityFibre partnership which is tearing up roads left, right and centre to add cities to the growing list of gigacities, targeting 5 million connections over the next eight years.

Of course bringing Vodafone into the conversation is entirely appropriate considering the acquisition announcement which has recently been made. Aside from Liberty Global’s German and Eastern European assets, Virgin Media is also a name which has been whispered in the dark corners of the rumour mill, though this does not look like a bit of business which will be hitting the headlines any time soon.

“Virgin Media is not on the agenda,” said Vodafone CEO Vittorio Coloa during a briefing on the wider acquisition. The UK business is laser-focused on the development of its own convergence objectives, a worrying sign for Virgin Media.

Looking at the figures, Virgin Media currently has just over 5 million subscribers, bringing on an extra 32,000 over the quarter. This is a respectable number, but for this to continue upwards in the long-term, Project Lightening will have to start proving it is worth the paper it is written on.

On the mobile side of things, the message is slightly better. Although the number of prepaid subscribers declined by 44,000, 69,000 were acquired for the more lucrative postpaid subscriptions. The total number of mobile subscriptions now stands at just over 3 million.

Virgin Media isn’t doing badly, but it is hardly setting the world on fire. The broadband business might have been able to position itself as the alternative to Openreach in years gone, but with Vodafone about to turn the lights on in its own gigacities, the team will have to prove it is more than just an alternative for alternatives sake. At the moment it is doing its own ‘Gap Yah’ impression. Momentum is gathering for Vodafone and it looks to be a threat to the sluggish mainstays of the broadband world.

Vodafone writes €18.4bn cheque for Liberty Global assets

The acquisition has been bubbling away behind the scenes for months, but Vodafone’s €18.4 billion acquisition of Liberty Global assets in Germany and eastern Europe will test the resolve of regulators.

The transaction itself, which is expected to complete in mid-2019, will include Liberty Global operations in Germany, Czech Republic, Hungary and Romania, excluding the ‘Direct Home’ units in each of the countries. Vodafone claims the deal will make it the largest ‘next generation network owner’ in Europe, with 54 million cable/fibre customers and a potential footprint of 110 million homes and businesses.

While it will surprise few in the industry, it will also have attracted the interest of regulators. Aside from the opposition of competitors, the pair will have to prove to cumbersome bureaucrats it will not negatively impact the consumer.

“Vodafone now becomes a powerful rival to Deutsche Telekom in bundled services,” said Paolo Pescatore of CCS Insight. “However, we strongly believe that regulators will block or restrict the deal. Vodafone and Liberty Global have a relatively solid presence in the fixed-line and TV markets, so any move would cut the number of companies in both segments.”

Share Price

European telcos have been crying out for consolidation for years. It allows for scale and security when considering the heavy investments which will have to be made over the coming years to remain relevant in the digital economy, however Europe is fixated on having four operators in any market, and seemingly against the idea of pan-European operations. While it seems incredibly contradictory to European Commission’s desire to use the combined weight of the European economy to compete on the global stage, it has made its position well known.

Perhaps the country where this resistance will be most notable is Germany, where market incumbent Deutsche Telekom is likely to be very vocal. Vodafone has promised the deal will enable the business to accelerate its presence in the country, targeting gigabit connections to 25 million homes, roughly 62% of the population, by 2022. DT has been sluggish in creating a network relevant for the digital economy, therefore such promises might catch the attention of the digitally thirsty government.

That said, the pair do claim to have the advantage of minimal geographical overlap across the country. Serving different customers, in different regions, is an aspect which might come into consideration, as is the Vodafone plug about streaming services. This will be a point which will have to enter into the argument as the rise in popularity of streaming services is beginning to make the number of cable providers slightly redundant. It will be interesting to see whether regulators count these two segments as complementary services, which would certainly be a benefit to the Vodafone competition argument. We suspect this will not be the case, following the illogical and dated tendencies of regulators, placing the deal under microscopic scrutiny.

DT will of course be the biggest thorn in the side here, as CEO Timotheus Höttges has already passed comments several times over recent months, denouncing the deal as “unacceptable” and accusing the pair of attempting to create a national monopoly.

“He wants to keep his dominance as the only nationalised player,” said Vittorio Colao, CEO of Vodafone Group. “The argument is quite frankly self-serving. Höttges doesn’t like the idea because he doesn’t like competition.”

Another concern should be noted from the German broadcasters, who feel the combination of the two would minimise the number of distribution partners in the country, therefore creating a suspect landscape where the balance of power is unevenly distributed. To counter this point, Colao highlighted Vodafone has no ambition of getting involved with the content game. The objective here will be to act as a distribution partner, with no intentions of owning or commissioning content. This does not completely allay the concerns of the broadcasters, though it might ease the worry about competition getting a leg-up.

In the Eastern European markets, Vodafone is talking up the converged business model. Looking across the region, Vodafone currently has 15.8 million mobile customers, which could be combined with Liberty Global’s 1.8 million broadband and 2.1 million TV subscribers. It certainly creates a solid foundation for growth through the attractive bundling offers.

Convergence is of course the key word here, and also goes to explain the timing of the deal. A tie up between the two has been on the cards for a long-time, though Colao pointed towards experience as the driver.

“It is the evolution of the business which has matured and convergence is also maturing,” said Colao.

The theoretical benefits of convergence are well-known, though in reality it is a costly and brave move to make. In Spain, Vodafone has been working to demonstrate the benefits of the convergence business model, both that it can work operationally and customers are prepared to enter into bundled contracts, which has provided the team with the confidence to move forward with the Liberty Global deal. It has been a pipedream for some time, but it reality the business and industry had to evolve to make it possible.

For Liberty Global, this deal marks a new chapter for the company. In several markets it struggles to muster the resources to compete effectively, therefore a consolidation of efforts in key markets is certainly a sensible approach. Once debt has been cleared, Liberty Global’s ‘cable cowboy’ John Malone will have just over $10 billion to invest in markets such as the UK, or Liberty Latin America, a key growth region for the business.

While this will not change the Vodafone business overnight, it follow wider trends of convergence consolidation across the continent. Similar to the likes of EE/BT, Telefonica and Orange, Vodafone is positioning itself as a much rounder player for the digital era.