Yesterday, after market close, Liberty Global Inc. (LBTYA) declared solid financial results for the first quarter of 2011. Quarterly GAAP net income was $342.4 million or $1.22 cents per share compared with a net income of $736.6 million or $2.75 per share in the prior-year quarter. The first quarter of 2011 adjusted (excluding special items) EPS of 86 cents was miles ahead of the Zacks Consensus Estimate of 20 cents.
Quarterly total revenue of $2,432.3 million was an improvement of 11.8% year over year, surpassing the Zacks Consensus Estimate of $2,389 million. Year-over-year growth of the top line was primarily attributable to the consolidation of Unitymedia operations.
Quarterly cost of operation was $902.2 million, up 9.2% year over year. Selling, General and Administrative expense was $444 million, up 8.8% year over year. In the first quarter of 2011, operating income was $577.6 million, up 90.3% year over year.
During the first quarter of 2011, Liberty Global generated $734.9 million of cash from operations compared with $805.7 million in the prior-year period. Free cash flow (cash flow from operations less capital expenditures) in the reported quarter was $248.5 million compared with $301.6 million in the year-ago quarter.
At the end of the first quarter of 2011, Liberty Global had $3,875.3 million of cash & marketable securities and $23,860.8 million of outstanding debt on its balance sheet compared with $4,921.1 million of cash & marketable securities and $22,462.6 million of outstanding debt on its balance sheet at the end of fiscal 2010. At the end of the first quarter of 2011, debt-to-capitalization ratio was 0.87 compared with 0.86 at the end of fiscal 2010.
Subscriber Statistics
At the end of the first quarter of 2011, Liberty Global had 17.5758 million customers in 14 countries, down 1.4% year over year. UPC Broadband customer was 13.3698 million, down 1.6% year over year. Telnet customer was 2.2537 million, down 2.8% year over year. VTR customer was 1.0747 million, up 2.3% year over year. Other segment customer was 877,600, up 1% year over year.
During the reported quarter, Liberty Global added 252,000 net RGUs (Revenue Generating Units) including net gain of 190,000 and 155,000 subscribers, respectively, for broadband Internet and telephony services and a net loss of 93,000 subscribers for the video services.
Total Single-Play customer was 11.0216 million, down 7.5% year over year. Total Double-Play customer was 2.6599 million, up 4.7% year over year. Total Triple-Play customer was 3.8943 million, up 15.4% year over year.
Segment wise Results
Revenue from total UPC Broadband division was $1,456.7 million, up 14.4% year over year. Within this segment, revenue from Western Europe was $1,161.5 million, up 17.7% year over year. Revenue from Central and Eastern Europe was $265.1 million, up 2.3% year over year. Revenue from Central and other operation was $30.1 million, up 11.1% year over year.
Telenet revenue was $454.3 million, up 3.5% year over year. VTR revenue was $214.1 million, up 17.6% year over year. Austar revenue was $174.4 million, up 11.5% year over year. Corporate and other revenue was $153.8 million, up 5.3% year over year.
Recommendation
Deployment of high-speed DOCSIS 3.0 network has helped Liberty Global to differentiate its offerings in the industry. With DOCSIS 3.0, the company can now offer faster downloadspeed compared with other large European cable operators, such as Virgin Media Inc. (VMED) and BT Group plc. (BT). We maintain our long-term Neutral recommendation on Liberty Global. Currently, it holds a short-term Zacks #3 Rank (Hold) on the stock.
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