Liberty Global benefited from strong growth in German cable and the on-going importance of bundled up-selling in the first quarter of 2013, posting strong growth in RGUs and more than seven per cent revenue growth. Despite a slight decline of 0.3 per cent in total customer relationships in Europe compared to the first quarter 2012, Liberty Global increased its RGUs (revenue generating units) in Europe by 4.7 per cent to 32,354,100. European revenue grew 7.1 per cent year-on-year, largely driven by its Western European operations. In particular, Liberty has singled out strong revenue performance in Belgium and Germany as the key drivers to this growth. Including Belgian operation Telenet, revenue for Liberty Global's Western European operations increased 7.7 per cent on the previous year's figure to $2017.8m (€1448.4m). Revenue for the Central and Eastern European region increased 2.5 per cent on Q1 2012's figure to $287.8m (€206.6m). ARPU was up 5.1 per cent to €24.96 per customer relationship for the UPC/Unity division, whilst Telenet's ARPU rose by 4.4 per cent to €47.40 per unique customer.
Despite the solid performance, RGU additions for Europe showed signs of slowing at 314,700 in the first quarter 2013 compared to 553,000 in the same quarter a year earlier. In particular, the key Netherlands market saw aggressive competition from incumbent Dutch IPTV operator KPN. In the first quarter of 2013, UPC Netherlands lost 2,900 RGUs, compared to net additions of 60,000 over the first quarter of 2012. In addition, a loss of a housing association contract in Germany has been blamed for the decline in RGU additions.
Liberty has extended a recent policy of droping encyption for its basic tier services to a number of markets in recent months, allowing digital customer to multiroom with a DVB-C TV set. Over the last six months, Liberty has dropped basic encryption in Switzerland, the Netherlands, Austria, Romania, Czech Republic and Germany's Unitymedia footprint, increasingly seeing this as a customer retention tool.
Liberty also saw strong uptake for its Horizon next-generation TV product, gaining 145,000 subscribers in the Netherlands since its launch in September 2012, and a further 55,000 in Switzerland, where it launched the service January 2013. An online-only Horizon service was launched in Ireland in mid-April, with a full release scheduled for mid-summer, and a German launch is planned later this year.
Liberty still has plenty of head-room for growth from the upsale of bundled products.The percentage of double play or above customers for the UPC/Unity Division as a whole increased to 42.2 per cent in Q1 2013. By comparison 72.1 per cent of Telenet's customers take a bundled product with the Belgian operator growing its revenue 12.3 per cent in the year, despite a loss of 74,500 unique cable homes since the first quarter of 2012.
The Netherlands remains a key strategic battleground for Liberty. The group recently secured a 15 per cent stake in larger Dutch cable operator Ziggo, pushing consolidation in order to compete head-on with KPN - a decision which Liberty has stressed is an opportunistic reaction to market conditions in Netherlands. In addition to this, UPC Netherlands is also introducing a faster 200Mbps Internet product in some Dutch areas and launching new triple-play bundles.
The early figures for Horizon are also encouraging, given the high-end product could have been a tough sell in the lower-value continental cable markets. Horizon TV is largely a self-install service, which may minimise any impact on costs relating to hardware in the future. Horizon will also become increasingly important in the battle with OTT providers.