Liberty Global’s Fries: telcos need to sell more and separate networks

Liberty Global – as part of the telecom industry more generally – needs to tap new revenue streams by providing more services to consumers, while looking to a split between infrastructure and services to release value, according to CEO Mike Fries.

Mike Fries (Source: Liberty Global)

Speaking to CNBC at the recent World Economic Forum in Davos, Fries said that technologies build around AI could help “cut costs” but that, as an industry, “fundamentally, we need new revenue”.

“Whether that’s selling new services such as tele-health in Holland, or gaming in Belgium, if we can find ways to get customers more stuff, with a supermarket approach, it can work,” he said.

In addition to building out the ‘super-aggregation’ model to services other than traditional video and broadband, Fries said that Liberty Global specifically could look to deliver greater value by fully realising the value of its networks.

“Second, the gold in our business is our networks. You see infrastructure being valued in Europe at 15x EBITDA. So we wouldn’t be surprised if we start looking at networks and servecos separately, and finding ways to break the business up, so that these networks, whether they are fibre or 5G, have value different from the servecos,” he said.

Fries said that Liberty had “spent the last five years changing the portfolio so that we now have fixed-mobile convergence champions in only five markets”, having sold off legacy cable operations.

The company is looking to a strategic update in February to show how it will “bridge the massive value gap in our stock” through a series of transactions, structures and strategies that will deliver value to shareholders, he said.

Fries said fibre and 5G were technologies that were driving innovation. He said that these networks would consume less energy and would be more powerful than their antecedents, but would also fuel economic growth.

He added that Liberty Global was “highly leveraged by design” but that “also really de-risked” with no refinancing coming in the near future.

Impact of AI

Regarding AI and its impact, Fries said that the technology will be “a game changer” for the telecom industry, which is “grinding every day” to increase revenue.

He said that AI would enable “everything that touches the consumer” to be “more joyful, better and more efficient” while the technology would help network management become more efficient, with outages tracked more immediately.

“Our people will be more productive,” he said, adding that Liberty Global already had use cases identified where AI could be applied.

Fries said that AI brought risks but added that “everyone is on it” from regulators to the firms themselves, in thinking ahead about what those risks may be.