Liberty Global's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Liberty Global, Inc. (LBTYA)

Q1 2012 Earnings Call

May 11, 2012 9:00 am ET

Executives

Michael T. Fries – President and Chief Executive Officer

Charles H.R. Bracken – Senior Vice President, Co-Chief Financial Officer

Diederik Karsten – Managing Director, European Broadband Operations

Balan Nair – Senior Vice President and Chief Technology Officer

Frederick G. Westerman III – Senior Vice President-Investor Relations and Corporate Communications

Mauricio Ramos – President and Chief Executive Officer, VTR GlobalCom S.A.

Analysts

Jeff Wlodarczak – Pivotal Research Group LLC

Hugh I. McCaffrey – Goldman Sachs International Ltd.

James Maxwell Ratcliffe – Barclays Capital, Inc.

Ryan Fiftal – Morgan Stanley & Co. LLC

Matthew J. Harrigan – Wunderlich Securities, Inc.

David C. Joyce – Miller Tabak + Co., LLC

Vivek Khanna – Deutsche Bank

Will N. Milner – Arete Research Services LLP

Vikash Harlalka – ISI Group, Inc.

Presentation

Operator

Please standby. Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global’s Investor Call. This call and the associated webcast are the property of Liberty Global, and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the express written consent of Liberty Global is strictly prohibited.

At this time, all participants are in a listen-only mode. Today’s formal presentation materials can be found under the investor relations section of Liberty Global’s website at www.lgi.com. Following today’s formal presentation, instructions will be given for a question-and-answer session. As a reminder, this conference call is being recorded on this date, May 11, 2012.

I would now like to turn the conference call over to Mr. Mike Fries, President and CEO of Liberty Global. Please go ahead, sir.

Michael T. Fries

Thank you, and good morning or good afternoon everybody. As usual we have a relatively large group on our call from various time zones. But I’m going to introduce Charlie Bracken and Bernie Dvorak of course our EVPs and co-CFOs. Diederik Karsten, is on, who is our EVP and Head of European Operations; Balan Nair, on a cell phone somewhere in the world, our EVP and Chief Technology Officer; Bryan Hall, EVP General Counsel, and of course we’ve got Rick Westerman, on as well from our IR and Communications Group. So we’re going to do the Safe Harbor and we’ll jump right into it.

Operator

Thank you. Page 2 of the slides detail the company’s Safe Harbor statements regarding forward-looking statements. Today’s presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company’s expectations with respect to its outlook for 2012; and future growth prospects and other information and statements that are not historical facts. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements.

These risks include those detailed from time-to-time in Liberty Global’s filings with the Securities and Exchange Commission, including its most recently filed Forms 10-K and 10-Q. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectation or in the conditions on which any such statement is based.

I would now like to turn the call back over to Mr. Mike Fries.

Michael T. Fries

Thanks. So as she said, we are going to be working of the slides today. And as I usually do, I’m going to kick it off for some highlights on slide 4. I want to say upfront, our remarks are probably a bit longer than they usually are, but pretty much everything we want to tell you or we want you to take away from this call was right here on this slide.

Beginning with perhaps the most important storyline, and that’s our subscriber growth which totaled 445,000 net RGU adds, our best quarter ever in the history of the company. I’ll provide a little more color on this number in a minute, but 11 of our 13 markets are up year-over-year. We continue to exceed even our own internal expectations on sales and churn in most markets. Our recent RGU growth acceleration underpinned rebased revenue growth of 5.5%, which was our best results in six quarters. I know I’ve said publicly that we believe revenue growth in 2012 should exceed 2011 and we’re off to a good start.

And on the cash flow front, we generated rebased operating cash flow growth of 3.1%, a pretty good number given the isolated impact of our 4G rol1out in Chile, and an increased sales volume in Europe. And then free cash flow growth of 15%, which is right in line with our full-year guidance.

As most of you would know, we have effectively closed sale of our Australian business Austar, and should be receiving net proceeds of $1.1 billion before the end of this month. And we are right on track with the integration of our German businesses Unitymedia and KBW, and should be receiving net proceeds, sorry and I’ll give you a snapshot of that market in just a minute, no net proceeds out of Germany.

Sitting back for a moment, it’s worth pointing out that in case you were not following it, that our publicly listed European peers KDG and [DIGO] continue to trade pretty well in the market, certainly at a premium to us which on one level validates our own business and on another level, it shines a light on the left side in our own stock.

And then lastly, our balance sheet remains as usual in very good shape. Pro forma for the Austar sale, our total liquidity will be nearly $5 billion including $2.8 billion of cash. Our debt remains fixed, hedged and long-term with 95% of our debt due in 2016 and beyond. And we’re on pace to complete $1 billion of buybacks this year.

So all of our core value drivers are working today, we’re growing the business organically in a rapid cliff, our M&A and rebalancing initiatives are on track and delivering results, and our capital structure management including liquidity, leveraging buybacks continue to set us apart from our peer group.

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