Strong Quarter Drives Liberty Global


Miller Tabak & Co. media analyst David Joyce reiterated his “buy” rating and $29 price target on Liberty Global Inc., after the international cable arm of Liberty Media Corp. reported stronger-than-expected first-quarter results.

LGI reported an 11% increase in revenue to $1.63 billion and a 13% bump in operating cash flow to $572 million for the quarter, matching Joyce’s estimates. Revenue generating units (RGUs) — a measure of combined basic, digital, high-speed Internet and telephone subscriptions — increased by 437,000 in the period, putting the company on track to reaching its goal of 1.6 million new units for the full year.

Free cash flow (cash flow after capital expenditures and interest payments are made) for the period was $107 million, nearly five times the $28 million generated last year and well above Joyce’s estimate of a $10 million free cash flow deficit. In a research report, Joyce wrote that the gain was largely due to one-time issues, mainly the timing of working capital changes and lower capital expenditures.

Joyce wrote that while bundling services is growing well, there is still much potential for growth. The percentage of triple-play customers is only 5.8% in Europe, 22.9% in Japan and 22.8% in Chile, he noted, for an average of 9% of customers in the three-product bundle across LGI’s entire footprint.