Liberty Global plc (LBTYK 0.48%) reported fourth-quarter earnings Monday and also announced a merger with Vodafone (VOD 2.08%). The two companies will combine forces in the Netherlands to deliver a more well-rounded suite of products to customers there.

But before we get to that deal, let's go through the company's raw numbers.  

Liberty Global plc results: The raw numbers


Q4 2015 Actuals

Q4 2014 Actuals

Growth (YOY)


$4.60 billion

$4.62 billion


Operating Income

$621.3 million

$273.3 million


Free Cash Flow

$826.6 million

$809.8 million


Data source: Company earnings release.

What happened with Liberty Global plc?

  • A total of 344,000 revenue generating units, or RGUs, were added in the fourth quarter. It was the best quarter in a year that saw 870,000 organic RGU additions.
  • If you adjust for currency, management said revenue was up 3% in 2015, operating cash flow grew 3.5%, and free cash flow was up 16%.  
  • Cash is being used at a rapid rate to buy back shares. In 2015, buybacks were $2.3 billion and management expects another $4.0 billion in buybacks by the end of 2017.
  • In the LiLAC Group, which includes operations in Chile and Puerto Rico, revenue grew 7% on a rebased basis to $1.22 billion and free cash flow jumped 25% to $87 million.
  • Interest on its debt reached a record low of 4.9%. This helps put strong leverage on the balance sheet and allows for acquisitions or share buybacks.
  • 45% of customers subscribed to a triple-play product, 17% subscribed to a double-play product, and 38% subscribed to a single-play product. The company noted the opportunity to "up-sell" subscribers.

What management had to say
Cable customers continue to slowly fade away, but broadband and mobile continue to improve for Liberty Global. Operations in Europe are also improving as the economy slowly picks up there and customers begin demanding faster broadband connections.

The 50/50 merger of Vodafone's mobile operations in the Netherlands with Ziggo's broadband network will also help drive the company's broader adoption in the country. This will make the "triple play" more compelling for consumers and repeats a strategy Liberty Global has been using across Europe and Latin America.  

The Dutch transaction likely won't close until the end of 2016, but look for it to be a potentially lucrative growth market for Liberty Global with 280 million euros of cost synergies already identified by the two companies.

Looking forward
In many ways, the fourth quarter was the strongest of the year for Liberty Global, despite currency headwinds from a strong dollar. The strategy of investing in faster broadband and more "triple play" options for customers is paying off and that should continue in 2016.

The continued momentum in share repurchases should also help shareholders over the next couple of years. Liberty Global isn't a company that chooses to pay dividends, so that's the best way the company can pay back shareholders and boost earnings per share in the future.