Liberty Global plc (NASDAQ:LBTYK) has figured out how it's going to adapt to the realities in telecommunications today, and the strategy is playing out even better than management had hoped. A focus on high-speed broadband in Europe and next-generation TV platforms has more than offset any cord-cutting, and the transition to these new products is just taking hold.

What's amazing about this is that Liberty Global has turned the slow-growing European economy into a high-growth market. Here's a look at the quarter's results.

Illustration of communication bouncing around the world.

Image source: Getty Images.

Liberty Global plc results: The raw numbers


Q4 2016

Q4 2015

Year-Over-Year Change


$5.14 billion

$4.60 billion


Operating cash flow

$2.41 billion

$2.19 billion


Free cash flow

$1.13 billion

$826.6 million


Data source: Liberty Global plc Q4 2016 earnings release.

What happened with Liberty Global plc this quarter?

The results above include the entire Liberty Global business, but it's Europe that should be the focus for investors right now. Growth in the region has been incredible, and cash-flow generation is starting to kick in as well.

  • Organic revenue generating units (RGUs) growth was 323,700 in Europe, driven by 230,600 data and 117,500 voice RGUs added during the quarter. For the full year, 946,100 RGUs were added.
  • Next-generation TV platforms seem to be the biggest winner for 2016, adding 1.2 million subscribers. This will position the company well for the future as customers cut traditional cable ties.
  • While Europe's revenue was up 2.2% to $4.2 billion, operating cash flow jumped 5%, and adjusted free cash flow popped 29.5% as operating leverage kicked in.
  • The large net income in the fourth quarter included $1.1 billion in income tax benefits recognized in the Netherlands business and a $521 million pre-tax gain on closing the joint venture in the Netherlands with Vodafone Group.

What management had to say

Management said the company's growth plans are starting to kick in, with higher broadband speeds driving both greater adoption as well as more TV customers. The hope now is that customers can be convinced to add mobile to the bundle.

The Latin America business has been a bit of a drag on results following the CWC acquisition last year. The company will try to focus efforts on margin expansion and adding a value stack for Latin America similar to what's working in Europe right now, but it may take longer than in more mature markets.

Looking forward

The expectation of for 5% to 7% operating cash flow growth in Europe in 2017 with 7% to 8% growth over the medium term. Latin America doesn't have the same stability, so management didn't give the same kind of guidance, but LiLAC Group is expected to deliver $1.5 billion in operating cash flow for the year, keeping a similar pace to how it performed in the fourth quarter.

Overall, there's a lot to like in today's report. And when Europe is a growth market, you must be doing something right.

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