Liberty Global forecasts big benefits from Ziggo acquisition

Liberty Global CEO, Mike Fries.

Liberty Global could realise greater synergies than previously forecast from its acquisition of leading Dutch cable operator Ziggo, according to president and CEO Mike Fries. 

Speaking to analysts after Liberty announced its third quarter results, Fries said that synergies raised by the acquisition could be greater than forecast.

“We’re expecting about €550 million on an annualised basis [from Ziggo],” said Fries. “Don’t be surprised if we raise our synergy target for Ziggo.”

Liberty’s Dutch operations will be integrated under the Ziggo brand. The launch of a full MVNO last month, with plans for a full commercial launch next year, with a national 4G offering, means that the operator can deliver on the promise of the quad-play at a national level for the first time, said Fries.

“This is our first truly national quad-play opportunity, with our full MVNO launched in October and a broader commercial launch planned for next year,” he said.

Fries said that the combination of Liberty’s operations in Switzerland and Austria could also deliver additional benefits.

Fries said that Liberty’s Horizon advanced TV service had now passed 30% penetration in three of the markets in which the service has launched, while Virgin Media’s TiVo platform in the UK now reaches 60% of the operator’s digital pay TV homes, taking the operator’s international total of advanced pay TV users to 3.2 million.

He said Liberty Global had a great opportunity to use greater penetration of advanced services and multi-play to increase prices for services across its European footprint. “The bottom line is that we are under-priced in Europe,” he said.

During the results presentation, Fries also outlined the logic behind Liberty Global’s decision to spin off its Latin American assets, initially by creating a tracking stock. The decision, which is subject to shareholder approval, will affect VTR in Chile and Liberty Cablevision in Puerto Rico.

Describing the move as “the best way to create value for shareholders”, Fries said it reflected the potential for high broadband growth in the emerging Latin American and Caribbean market.

Bernard Dvorak, executive vice-president, co-chief financial officer and principal accounting officer, Liberty Global, said that the move highlighted the “frankly superior growth prospects” in the region versus the single-digit EBITDA growth expected from Europe. He also said that the Latin American and Caribbean market had a “different risk-to-return profile” to Europe and that the move enabled shareholders to take a decision “as to where they want to put their money and effort”.

Dvorak indicated that the move would give the assets a greater profile and said that “M&A opportunities could be interesting if we pick markets and not assets and we do that carefully and with the right kind of risk-to-return profile”.