Liberty Global (LBTYA) Plc, the cable company controlled by billionaire John Malone, added customers in the third quarter as more signed up for packages combining phone, Web and television service.
Liberty Global added 314,000 subscribers last quarter. That beat the 223,000 additions estimated by Vijay Jayant, an analyst with ISI Group. Shares rose as much as 6.9 percent, the biggest gain in two years.
Customers in markets such as Germany, the Netherlands and Belgium are signing up for more triple-play packages and paying for Internet speeds twice as fast as a year ago, the company said. Subscribers in Switzerland are signing up for service that’s three times as fast, Liberty Global said. The company generated about 90 percent of its revenue from Europe last year.
“Broadband remains our core product and anchors our bundled plans in every market,” Chief Executive Officer Mike Fries said in a conference call today. “We should have a huge advantage in broadband for the foreseeable future, and this gives us a lot of comfort.”
Liberty Global repurchased $500 million worth of shares last quarter. The company is on track to complete its two-year target to repurchase $3.5 billion in shares by the middle of 2015, Fries said in a statement.
Liberty Global rose 6.6 percent, to $81.04 in Nasdaq Stock Market trading at 11:29 a.m. in New York. The shares gained 21 percent this year through yesterday.
Liberty’s net loss widened to $830.1 million, or $2.09 a share, from $22.4 million, or 8 cents, a year earlier, the London-based company said in a statement yesterday. Revenue rose 74 percent to $4.37 billion, missing analysts’ $4.42 billion average estimate, according to data compiled by Bloomberg.
Liberty Global blamed the loss on its investments in derivative instruments, as well as higher expenses from interest and income taxes. Malone said in July that he’s willing to take on debt to expand his European operations because he expects the cost of paying back loans to decline as economies improve and inflation rates rebound from crisis levels.
Interest expenses increased to $605.7 million from $351.8 million a year earlier while debt and lease obligations more than doubled to $854.1 million from $363.5 million, the company said. Losses from derivative investments, investments that can be used to hedge risk, rose to $675 million from $569.9 million. Earnings last year were helped by a sale of interest in Austar United Communications in the second quarter.
In the U.K., Virgin Media -- which Liberty Global bought this year -- lost 6,800 customers after BT Group Plc began offering free access to premium sports programs for its broadband customers. TV and phone customers fell by 12,600 and 24,400 respectively, while 30,200 signed up for Internet service, Virgin Media said in a statement on its website. An agreement to offer BT Sport channels to Virgin customers helped mitigate losses.
Liberty Global said in the statement it expects to recognize as much as $360 million in cost savings from the Virgin Media deal, double its initial forecast.
In September, Liberty Global was the first cable company to team up with subscription-video service Netflix Inc., allowing the streaming site to be included on the Virgin Media platform in the U.K. Netflix later signed similar deals with cable operators in Sweden and Denmark.
Liberty Global agreed on Oct. 28 to sell its Chellomedia international content unit to AMC Networks Inc., the owner of the U.S. cable-TV channel that broadcasts “Breaking Bad” and “Mad Men,” for 750 million euros ($1 billion), as Malone’s company focuses on acquiring rivals in Europe and building out network capacity.
The company was less successful in the Netherlands and Germany. Dutch pay-TV provider Ziggo NV (ZIGGO) said last month it rejected a takeover offer from Liberty Global, which had a 28.5 percent stake as of a July 25 filing. Malone’s company was also outbid for Germany’s Kabel Deutschland Holding AG by Vodafone Group Plc (VOD) in June.
Liberty Global’s attempts to build up its German business were further sidetracked in August when its antitrust clearance to buy cable operator Kabel Baden-Wuerttemberg GmbH was overturned by a court that ruled the competition authority didn’t demand tough enough concessions.
Fries said today he doesn’t expect any future concessions to be “material” to Liberty Global’s business in the country. Losing Kabel Deutschland to Vodafone this year may be beneficial since Liberty Global can now argue that the German market is more competitive, Fries said on the conference call.
“Some people have questioned our commitment to the German market, which is absurd,” Fries said. “Our long-term potential in Germany has never looked better.”
Liberty Global bought Kabel Baden-Wuerttemberg, Germany’s third-largest cable operator, from EQT Partners in March 2011 for about 3.16 billion euros, to benefit from demand for broadband Internet access via cable. Two years earlier, it bought Unitymedia, Germany’s second-largest cable operator.
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