By Stu Woo
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 14, 2017).
LONDON -- Decades after earning the nickname the "Cable Cowboy"
for building an American cable-TV empire, John Malone is at it
again. This time, he has set his sights on internet delivery
overseas.
Mr. Malone's investments have been making plenty of headlines in
the U.S. recently. He owns a nearly one-third voting stake in
Discovery Communications Inc., the television-programming company
that agreed on July 31 to buy rival Scripps Networks Interactive
Inc. for $11.9 billion. Another big Malone investment, Charter
Communications Inc., last month rejected a one-on-one tie-up with
Sprint Corp.
But he and his lieutenants have also been building, more
quietly, a cable colossus far from American shores that has the
potential to be the backbone for 5G, the next generation of
wireless communications that promises to turbocharge mobile
download and upload speeds. Liberty Global PLC, which is
incorporated in London but run out of Mr. Malone's hometown of
Denver, is currently the world's biggest international cable
company. Currently, it has 25 million subscribers across 30
countries in Europe and Latin America. The company said Monday it
planned to spin off the Latin American business later this
year.
The company's ambition when it started in 2005 was to be a
cable-TV and broadband-internet provider, but its focus has shifted
to include wireless networks, too.
Liberty Global and its investors believe it has positioned its
networks to take advantage of 5G technology if and when it gains
traction. The strategy echoes Mr. Malone's moves in the U.S. in the
1990s, when he transformed cable into high-speed pipes for the
internet.
Currently, Liberty Global's focus is selling customers its "quad
play," a bundle of cable, internet, fixed-line telephone and mobile
services, all for one price. Liberty mostly rents the use of
cellular towers and other wireless infrastructure from carriers for
its mobile offerings. But for the other three products, it owns the
infrastructure -- miles of coaxial copper and fiber-optic
cables.
It is those cables where more value potentially can be
unlocked.
The telecom industry's vision of 5G, which is expected to go
live in 2019 or 2020, is to connect the cables to small cellular
antennas to transmit the gobs of data required for top-quality
videos, self-driving cars, virtual reality and other technologies
of the near future. Those antennas would be close to the ground, or
atop buildings and streetlights, in contrast to the tall ones now
that sit along highways. These smaller antennas would send that
data on its final journey -- to customers in a radius as short as
300 feet. The process is similar to how a Wi-Fi router transmits
data from a landline connection.
"There are two things that are going great for us," said Balan
Nair, Liberty Global's chief technology and innovation officer. "We
have fiber to many neighborhoods" and power, he said. The company
has utility cabinets in neighborhoods already connected to power,
which would allow the company -- or a mobile-carrier partner -- to
quickly set up a 5G cellular site there.
Liberty Global's fiber-optic landlines could make the company an
acquisition target for a mobile carrier that wants to buy 5G
infrastructure, said Citi analyst Simon Weeden. "There's obviously
going to be demand for this stuff," he said.
But one potential downside: Many wireless carriers are already
building out their own fiber-optic networks for their own 5G
services. If that happens, customers might just use their existing
wireless carrier's 5G and skip Liberty Global's offerings
altogether. "5G may not be good news" for Liberty Global, Mr.
Weeden said.
Mr. Nair said it would be difficult for mobile carriers to
invest in laying the landlines for their own 5G network. "The
economics of building that infrastructure are high," he said,
referring to costs. He said Liberty Global would decide whether to
partner with a mobile carrier for 5G or whether to become a 5G
carrier on its own on a case-by-case basis in each market.
Liberty Global Chief Executive Mike Fries struck a note of
caution at a conference in February, saying that 5G wouldn't become
a reality soon, at least in Europe. European mobile carriers don't
have enough money to invest in 5G upgrades, and many are still in
the process of adopting 4G, the current generation of wireless
technology, Mr. Fries said.
The challenges extend to building out the infrastructure.
Liberty Global's effort to install fiber-optic lines in the U.K.,
called "Project Lightning," has been delayed. Mr. Fries in May said
the company had discovered irregularities in reporting the
completion status of some fiber-optic plans by a small group of
local managers. This week, he said management changes were helping
to remedy the problem.
Mr. Malone, 76 years old, is Liberty Global's chairman, but he
delegates responsibilities to the 54-year-old Mr. Fries, who is
also based in Denver and occasionally fronts a rock 'n' roll cover
band called "The Moderators." Liberty Global declined to make Mr.
Malone available for an interview.
Liberty Global's fast growth has been somewhat overshadowed,
especially lately, by Mr. Malone's other interests in the U.S.
In 1999, Mr. Malone sold cable-powerhouse Tele-Communications
Inc. to what was then known as AT&T Corp. for $46 billion. In
2005, he merged two of his overseas interests, cable-operator
UnitedGlobalCom and the international arm of media-investment
company Liberty Media Corp., to create Liberty Global. Mr. Malone
remains Liberty Media's chairman.
Mr. Malone is also chairman of Liberty Broadband Corp., the
largest investor in Charter. Mr. Malone had been trying for a year
to get Charter and rival Comcast Corp. to jointly invest in or
partner with a mobile carrier, The Wall Street Journal reported in
June. Charter on last month, however, rejected an informal offer
for a merger with Sprint.
Liberty Global now operates eight brands, the most notable being
Virgin Media in the U.K. and Ireland. Since 2005, it has snapped up
more than 250 companies, spending $93 billion, and sold about 30,
for $11 billion. It bought Virgin Media in 2013 for $24
billion.
Mr. Fries has kept the company's various businesses for the most
part independent, counting on local brand recognition and manager
expertise. But the parent company saves on research and development
costs by rolling out the same set-top box across all of its
markets. Liberty Global also has a stable of cable-industry
veterans it can dispatch to its companies to help with
technological and regulatory issues. "We are delivering people, we
are delivering expertise," Mr. Fries said in a recent
interview.
Write to Stu Woo at Stu.Woo@wsj.com
(END) Dow Jones Newswires
August 14, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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