When a teenager wants his MTV in Budapest, he watches it on UPC Hungary, part of Liberty Global Inc.’s vast cable holdings in Eastern Europe.
If a mom in Tokyo signs up for high-speed Internet, chances are it’s coming from Liberty Global’s Japanese firm, J:Com.
In Santiago, Chile, turn on the football match and it’s delivered on VTR, another Liberty Global cable operation.
Liberty Global, based in Douglas County, calls itself the largest cable company outside the United States, with 15.2 million video, Internet and phone customers and about $5 billion in annual revenues.
Formed nine months ago in the merger between Liberty Media International and UnitedGlobalCom, Liberty Global has since paid out $4 billion to gobble up 12 cable companies in countries as far apart as Switzerland and Australia.
“Cable, in our opinion, is a superior technology to a telco or wireless, and we have to move quickly to exploit that,” said Mike Fries, Liberty Global chief executive.
But Liberty Global also faces challenges:
It has to be nimble to stay ahead of its competitors – mainly phone companies – in the countries where it operates.
Private-equity firms with lots of cash to spend are competing for assets with Liberty Global.
Its stock price has dropped 25 percent since September, closing at $19.63 on Monday.
One reason for the lagging stock price is that investors aren’t convinced cable will win the worldwide battle for dominance, said Ted Henderson, a cable-industry analyst who follows Liberty Global from Stifel, Nicolaus & Co.’s Denver office.
“The market is saying, ‘We don’t want to touch anything in that space – phone companies or cable companies,” he said.
Analyst Alan Gould at Natexis Bleichroeder Inc. in New York also sounded a cautious note.
While Gould forecasts yearly revenue growth of 12 to 14 percent in the next three years, he wrote in an analytical report, “With the aggressive rollout of triple-play services planned for Europe and Japan, execution risk remains our largest concern.”
Gould’s firm owns shares in Liberty Global.
Liberty Global plans a conference call today to discuss its fourth-quarter results.
Regulators outside the U.S. have been supportive of Liberty Global, Fries said, mainly because the cable industry is seen as a small David with just 25 to 40 percent market share, battling a Goliath, often in the form of national telephone companies.
“Cable is still the little guy in this battle for the consumer, and phone companies have nationwide networks with significantly more revenue,” Fries said.
Venture capitalists are competing with Liberty to buy cable assets internationally, Fries said, but he says they won’t succeed.
“They’re not naturally suited to upgrading these businesses, so their tactics could prove dangerous in an industry that is changing so fast,” Fries said.
Liberty Global plans to pay about $1.3 billion in 2006 to upgrade infrastructure, Fries said. And it has about $1 billion in cash on hand to buy up more properties.
When it was formed last June, Liberty Global was dubbed “TCI: Take Two” because its aggressive-growth strategy mirrored that of Tele-Communications Inc., a Colorado-based cable giant run for 25 years by John Malone.
TCI had 14 million customers at its zenith in 1997. It was swallowed up by AT&T Broadband, which was subsequently bought by Philadelphia-based Comcast Corp. Malone is chairman of Liberty Global and of Liberty Media Corp., a media holding company valued at $22.8 billion. Liberty Media and Liberty Global are based in the same building in Douglas County off E-470.
Staff writer Beth Potter can be reached at 303-820-1503 or bpotter@denverpost.com.
