* To offer quad-play in all markets in coming years - CFO
* Says mobile strategy is defensive, not frontal assault on
* Few opportunities for more acquisitions in Europe - CFO
By Leila Abboud
BARCELONA, Nov 20 Liberty Global,
Europe's biggest cable group will sell mobile services as part
of all-inclusive bundles across its 12 markets in the coming
years but is not yet convinced that such so-called
quadruple-play offers are a big attraction.
Chief Financial Officer Charles Bracken told Reuters that
Liberty does not want to buy or build its own mobile networks
and will buy in capacity instead on a wholesale basis instead in
offering all-inclusive bundles of television, Internet, mobile
and fixed-line services.
"We need to be able to react if and when markets evolve to
all-inclusive bundles but we're still not totally convinced that
quadruple-play is a must-have," said Bracken on the sidelines of
a Morgan Stanley investment conference.
"Our strategy on mobile is 'capital-light' and defensive.
We're not trying to disrupt or attack," he said.
Liberty's key product offering is broadband with speeds of
up to 120 megabits per second, fixed phones and television, but
offering a mobile service too as a mobile virtual network
operator (MVNO) can help keep customers loyal.
In Germany, Liberty could launch quad-play offers as it
already does in Britain, where it acquired Virgin Media in a
$15.7 billion deal earlier this year, but it will not make the
first move unless market leaders Deutsche Telekom and
Vodafone go down that route, Bracken said.
However, Vodafone has just completed its $10 billion
acquisition of Germany's largest cable operator, Kabel
Deutschland so would be able to offer quad-play if it
wanted to. Telecom companies in France and Spain have
aggressively marketed such all-included offers, which give
customers a 10-25 percent discount on the whole, as a way to
blunt customer losses in mobile.
Liberty markets its cable offers under the UPC and Unity
Media brands in Germany, Belgium, the Netherlands, and Austria
among other countries on the continent and under the Virgin
Media brand in Britain. The group says it has annual sales of
around $17 billion with operations in 12 European countries as
well as Chile and Puerto Rico.
But it only has about 4 million mobile customers, with 3
million of those with Virgin Media in the UK.
In Belgium it has about 700,000 and Germany only 196,000.
However, Liberty has signed eight agreements with telecom
operators, including Telefonica's 02, Orange, Vodafone
and Mobistar, to rent mobile capacity from them.
Virgin Media in the UK has a long-standing MVNO agreement with
EE, the UK operator which is co-owned by Orange and Deutsche
Asked why Liberty would not be aggressive in the market for
mobile customers Bracken said the economics of re-selling mobile
capacity were not as attractive and it preferred to focus on the
group's core broadband and TV products.
"There is little strategic imperative for us to build a big
business in mobile," he said.
"But we are moving to an operational phase from a
developmental phase in mobile."
In fact Liberty has just appointed as the new head of its
European mobile operation Graeme Oxby, the former director of
Mobile and Home Phone at Virgin Media, with a view to being "a
full MVNO operator in most of its European operations".
DONE WITH BIG ACQUISITIONS
Bracken also said he does not see Liberty as undertaking
further large-scale acquisitions either to expand into new
countries or fill out its current operations because few
suitable targets remained.
"We are reaching the end of European consolidation," he
said. "It's less a consolidation game now, and more of a
monetisation period for us."
Shares in the Nasdaq-listed firm were up 0.5 percent at
79.62 by 1538 GMT on Wednesday, a rise of 27 percent so far this
year, just ahead of a 26.5 percent rise in the Nasdaq 100 index
Liberty built its leading position in European cable via
acquisitions in the past decade, and the group now has 47
million homes passed and 24 million customers. Although there
are some gaps in its European coverage, such as Scandinavia,
France, Spain and Portugal, Bracken does not think large deals
are very likely.
"We used to be in France and Scandinavia and cannot really
see us going back there, while in other places the cable assets
are not up for sale," he said, referring to Spain's Ono and
"We will always look at deal opportunities since we are the
consolidator in Europe but there is not a lot left in terms of
M&A that will really move the needle for us."
However, with regard to buying the 71.5 percent of Dutch
cable operator Ziggo that Liberty does not already
own, Bracken said it remained a long-term goal as it would reap
synergies from merging it with UPC in the Netherlands, but not
at any price.
Last month Ziggo, which has a current market value of 6.3
billion euros, said Liberty had made a takeover approach but it
had rejected it.
"Liberty has a track record of being disciplined on pricing
on acquisitions," Bracken said.
"We're happy to sit where we are, and if the stars align
we'd be happy to move as well, but for now they are not