Liberty Global on Friday said the Project Lightning network extension initiative undertaken by its Virgin Media unit in the U.K. is off to a strong start and indicated that it plans to launch a similar initiative on a larger scale in Germany.
"Project Lightning…is off to a great start," Liberty Global CEO Mike Fries said on the company’s first quarter results call.
Early trial deployments are showing penetration levels in line with the firm’s expectations and "ARPUs above what we had hoped to achieve," he said.
Under the project, Virgin Media passed an additional 36,000 homes in the first six weeks and aims to increase that to 150,000 by the end of the year, thanks to an acceleration in build-out in the second half of the year. Fries said he sees the project "really ramping up in 2016 and beyond."
Unveiled in February, Project Lightning will see Virgin Media spend £3 billion to connect 4 million homes and businesses to its broadband network over the next five years.
The CEO suggested that Liberty Global will look to scale up its networks in a similar way in markets outside the U.K. Germany is a key target, with "interesting and very affordable build opportunities," he said.
"[Germany] could be as big, or potentially much bigger than the sort of numbers we are looking at in the U.K.," Fries said.
He was keen to remind the listeners on the call that Project Lightning and any other similar projects will not have a major impact on the company’s financials, being largely self-funding.
Any other new build opportunity "would be of a similar nature," Fries said. "If we can pull it off in the U.K…we surely can do it in other instances," he said.
Liberty Global’s Q1 numbers were less-than stellar, with its net loss widening, revenues creeping down, and some pressure on its customer base, but Fries insists the firm started seeing an uptick as early as April.
T he firm posted a net loss of $537.5 million compared with $78.8 million in the year ago quarter, while operating income slipped by 4% to $557.5 million. Group revenues declined to $4.52 billion from $4.53 billion.
Liberty Global’s various operations recorded 68,000 organic net adds in revenue generating units (RGUs) during the quarter, compared with 345,000 additions in the year-ago quarter.
While the company added 154,000 broadband RGUs and 83,000 telephony RGUs, video RGUs slid by 169,000.
"This clearly was not our best quarter on the subscriber front," Fries admitted.
Churn in Germany and the Netherlands was largely to blame, driven in the former by price increases and in the latter by the process of integrating newly acquired Ziggo with UPC.
However, Fries said April showed a rebound and insisted he remains confident on the full year.
Indeed, Liberty Global reiterated its 2015 guidance, including mid-single digit rebased operating cash flow growth and $2.5 billion of free cash flow.
