Some Investors Think Liberty Global Deals Are Starting to Pay Off
$100 Billion in Transactions in Five Years
After spending $100 billion on acquisitions and other transactions over the past five years, Liberty Global’s (LBTYA) Chief Executive Mike Fries has started to slowly gain more fans in the investing community. Fries has catapulted the telecom giant throughout the European market with his rapid transactions. Now, Liberty Global has 50 million subscribers across seven European countries. The company currently generates $11.8 billion in annual revenue.
Even through the coronavirus pandemic, which halted transactions in some sectors, Fries continued his acquisition push. Liberty Global’s shares have now outpaced growth on the S&P 500, with the company’s stock up 19% in the past year compared to 15.5% for the overall index. Fries says more growth and deals are still to come.
Behind the Deal-Making Spree
Fries is credited as the driving force behind the deals. The chief executive cut his dealmaking teeth under John Malone, Liberty Global’s founder, nicknamed the “cable cowboy.” Malone was known for his role in the consolidation of the cable television industry over the course of the 1990s.
At the start of this transaction spree in 2015, Fries noticed the cable television industry starting to shift. He saw the cost-cutting and profit-boosting advantages of what those in the industry call fixed-mobile convergence, or the practice of bottling mobile, broadband, and TV services into one.
The mergers Fries has overseen during the past half-decade aim to disrupt the European telecom space, which has trailed the larger market by 40% in the last five years.
Investors Watch for UK Expansion
Fries has his eye on expansion around the United Kingdom…and so do Liberty Global’s investors. While the Virgin-02 deal is still awaiting regulatory approval, analysts expect it to go through. When it does, Liberty plans to leverage combined synergies to save 6.2 billion pounds (or $8.45 billion) in the next five years.
Fries said reliable connectivity is of increased importance to UK customers due to the coronavirus pandemic, and that after the merger is complete, Liberty expects to reach 1 million homes within 12 months. Later on it will aim to connect 7 million more homes.
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