Liberty Global Sales Miss Estimates on Video Client LossKristen Schweizer
Virgin Media Inc., the British pay-TV provider owned by John Malone’s Liberty Global Plc, will spend 3 billion pounds ($4.6 billion) connecting more British homes to its high-speed broadband network.
Calling it the largest U.K. Internet infrastructure investment in the past 10 years, Virgin Media said it will be able to offer superfast “fiber-rich” connections to 17 million homes and businesses -- a third more than now -- by 2020. The move will create 6,000 jobs, the company said.
The investment takes place amid a broader reshaping of the British telecommunications industry, sparked by BT Group Plc’s $19 billion acquisition of wireless carrier EE Ltd., a deal that brings together the country’s biggest broadband and mobile providers.
“In virtually all of the areas we have identified for expansion, BT is the only option available right now,” Virgin Media Chief Executive Officer Tom Mockridge said in a statement Friday. “Its aging copper telephony wires are not capable of the ultrafast connectivity that Virgin Media delivers.”
Britain has a relatively high penetration rate for superfast Internet when compared to Europe, although there is still plenty of room for growth. As of May 2014 some 28 percent of U.K. broadband connections were classified as superfast, according to regulator Ofcom, compared to the European average of 21 percent and fewer than 1 percent of Italians.
Liberty Global, controlled by billionaire Malone, paid $16 billion to buy Virgin Media in 2013 to expand in Europe’s biggest cable-TV market.
The shares rose 2.8 percent to $51.18 at 10:44 a.m. in New York. They are up 2.2 percent this year.
The company is facing an increasingly competitive environment as companies move to offering single packages of broadband, home phone, mobile and television services -- and hunt for the content to support their businesses. Rupert Murdoch’s Sky Plc, Virgin Media’s bigger U.K. rival, just agreed to pay a record 1.39 billion pounds a year to air Premier League soccer matches.
Liberty Global, which owns cable companies across Europe, said on Thursday its fourth-quarter sales rose 3.3 percent to $4.62 billion as a decline in video subscribers offset growth in high-speed Internet service.
Analysts had estimated revenue of $4.69 billion on average, according to data compiled by Bloomberg. The net loss for the quarter widened to $523.4 million from $121.2 million a year earlier, the company said in a statement.
After spending the past decade investing in cable, Liberty Global expanded into television production to fuel growth and last year bought a 6.4 percent stake in ITV Plc, the U.K.’s biggest commercial broadcaster with top-rated shows like “Downton Abbey,” and teamed up with Discovery Communications Inc. to buy TV production house All3Media.
Liberty Global said it added 351,000 subscription services in the quarter, ending the year with a total of 55.9 million, including 24.3 million for video, 17.3 million for Internet and 14.3 million for telephone service.