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Liberty Global's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: LBTYA

I think what you will notice straightaway that the best part of our story continues to be our subscriber growth. Given the focus in our industry today, competitive platforms and disruptive technologies, and the European market situation, I think you will be pleased to learn that we continue to grow at record levels. We added 364,000 RGUs in the 3 months ended June 30, which is significantly higher than last year. And not surprisingly, Germany continues to be our primary growth driver, representing about 50% of our net ads, but we are also performing well across Europe, and I will show you those numbers in a minute.

Revenue for the 3 months was $2.5 billion, that’s a second straight quarter of more than 5% rebased growth and operating cash flow was $1.2 billion, that’s up 2.5% rebased year-over-year. I think it’s important to point out that our operating cash flow growth figure is in line and with expectations and actually a little better than budget. So obviously, we are anticipating an acceleration in OCF growth in the second half of the year and we are on track to do just that.

Adjusted free cash flow was up 24% for the quarter and 19% year-to-date, which is also on par with our guidance. In fact, not surprisingly, we are confirming all of our financial guidance targets today.

Switching gears, it was relatively a quiet quarter in the M&A area but I will provide you with four quick updates. I assume everyone knows at this point that we closed the sale of Austar at the end of May and banked $1.1 billion in proceeds. We also recently announced that together with Searchlight Capital we have begun the process of consolidating the market in Puerto Rico with the acquisition of the largest cable operator there, OneLink. Together, we are paying about 6.3 times synergies 2012 OCF for 263,000 RGUs which will merge into our operations. So, essentially with no additional capital investment on our part, we will own 60% of the business with a combined operating cash flow of approximately $120 million, 70% of the market, and pretty reasonable scale and growth prospects. With no obvious exit today, we think it’s a prudent way of rationalizing this asset.

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