Liberty Global Continues Network Transformation in Europe With Telenet/ Fluvius Partnership in Belgium
July 19 2022 - 2:11AM
Business Wire
Liberty Global Subsidiary Telenet and Fluvius Agree to Fiber
Partnership in Flanders
Partnership Complements Previously Announced FTTH Plans in UK
and Ireland, and Hybrid Approaches in The Netherlands and
Switzerland
Liberty Global plc (“Liberty Global” or the “Company”) (NASDAQ:
LBTYA, LBTYB and LBTYK) subsidiary Telenet Group Holding NV
(‘Telenet’ - Euronext Brussels: TNET) and Fluvius System Operator
(‘Fluvius’) have today entered into a highly attractive and binding
agreement to create the network of the future in Flanders.
The companies will incorporate a new independent self-funding
infrastructure company, “NetCo”, of which Telenet will own 66.8%
and Fluvius 33.2%. Combining both companies’ fixed network assets,
NetCo will invest in the gradual evolution of its current hybrid
fiber coaxial (“HFC”) network into a Fiber-to-the-Home (“FTTH”)
network, targeting 78% of their combined footprint in Flanders by
2038, either through building directly or with external partners,
or through wholesale arrangements. NetCo will also focus on
upgrading the existing hybrid fiber coaxial (HFC) network using
state-of-the-art DOCSIS technology where FTTH will not be
deployed.
Key elements of the agreement follow:
- A fully-funded, 5x levered NetCo will result in improved
ownership economics for Telenet as opposed to the current rental
arrangement whereby Telenet pays to access the Fluvius network
representing 1/3 of the Telenet operating footprint today.
- NetCo will operate an open access network with a market-leading
utilization rate that's positioned to attract additional strategic
and/or financial partners.
- More than 50% of homes passed in NetCo's footprint are very
economic to pass with FTTH at an estimated cost per premise of
around EUR650.
- The investment will be financed from NetCo's robust cash flow
as well as Telenet's EUR745 million of proceeds from its recent
tower divestment, with no dependency on obtaining incremental
external financing.
- At closing, Telenet’s pro forma net debt will decrease by
around EUR500 million as Fluvious’ long-term emphyteutic lease will
cease to exist. However, in order to maintain Telenet's
consolidated net total leverage of around 4x through the
CAPEX-intense build period, its dividend will be reset to a floor
of EUR1.00 effective immediately. After the build period, CAPEX
intensity is expected to materially decrease and return to
normalized historical levels, leading to substantial Adjusted Free
Cash Flow growth and providing scope for significantly higher
shareholder disbursements.
Telenet’s partnership with Fluvius is the latest development in
the ongoing evolution of Liberty Global’s 10 Gigabit network
strategies, utilizing a combination of the best upgrade
technologies available, which also include:
- Full FTTH upgrade of Virgin Media O2’s fixed network in the UK,
targeting completion of all 16 million UK homes by 2028.
Separately, Liberty Global and Telefonica are seeking financial
partners to create a new, independent joint venture that will
accelerate full fiber rollout to up to seven million premises in
the UK over the next five years.
- FTTH upgrade of Virgin Media Ireland’s entire footprint,
targeting 1m FTTH homes over the next 3 years.
- VodafoneZiggo currently progressing with longer term HFC plans
including DOCSIS 4.0 in the Netherlands, with initial indicative
costs at an attractive EUR150-200 per home.
- A hybrid approach in Switzerland, where Sunrise is deploying a
network strategy that incorporates DOCSIS 3.1 and 4.0 upgrade
technologies, wholesale and select fiber builds. To support this,
Sunrise has recently renewed wholesale terms with Swisscom and SFN,
giving long-term visibility on attractive access terms alongside
existing HFC network.
Mike Fries, CEO, Liberty Global, comments: “This partnership
with Fluvius places Telenet firmly in the driver’s seat in the
Belgian market, and cements NetCo as the undisputed kingmaker with
a combined retail and wholesale market share close to 60%.”
“The partnership also highlights the effectiveness of our
network strategies. By utilising a combination of the best network
upgrade technologies available, we are firmly on the road to
offering up to 10 gig broadband speeds in all our markets. Almost
100% of Liberty Global’s networks already offer gigabit speeds to
customers today, with VodafoneZiggo due to complete its work to
deliver gigabit speeds across its entire network by the end of this
year. Our ongoing network development strategies will enable us to
extend our leadership positions in each of our core European
markets.”
ABOUT LIBERTY GLOBAL
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is a world
leader in converged broadband, video and mobile communications
services. We deliver next-generation products through advanced
fiber and 5G networks, and currently provide over 85 million fixed
and mobile connections* across Europe and the United Kingdom. Our
businesses operate under some of the best-known consumer brands,
including Virgin Media-O2 in the U.K., VodafoneZiggo in The
Netherlands, Telenet in Belgium, Sunrise in Switzerland, Virgin
Media in Ireland and UPC in Slovakia. Through our substantial scale
and commitment to innovation, we are building Tomorrow’s
Connections Today, investing in the infrastructure and platforms
that empower our customers to make the most of the digital
revolution, while deploying the advanced technologies that nations
and economies need to thrive.
Our consolidated businesses generate annual revenue of more than
$7.5 billion, while the VodafoneZiggo JV and the VMO2 JV generate
combined annual revenue of more than $19 billion.**
Liberty Global Ventures, our global investment arm, has a
portfolio of more than 75 companies and funds across content,
technology and infrastructure, including strategic stakes in
companies like ITV, Televisa Univision, Plume, Lionsgate and the
Formula E racing series.
* Represents aggregate consolidated and 50% owned
non-consolidated fixed and mobile subscribers. Includes wholesale
mobile subscribers of the VMO2 JV and B2B fixed subscribers of the
VodafoneZiggo JV.
** Revenue figures above are provided based on full year 2021
Liberty Global consolidated results (excluding revenue from the
U.K. JV Entities) and the combined as reported full year 2021
results for the VodafoneZiggo JV and estimated U.S. GAAP full year
2021 results for the VMO2 JV. For more information, please visit
www.libertyglobal.com.
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