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7 February 2019

Liberty exacerbates European exodus with UPC sale to Sunrise

Liberty Global’s UPC, the great shrinking superpower of European cable, plans to sell off its Swiss operations to local telco Sunrise, in a market where Liberty has long been rumored to be a consolidation driver – except it was supposed to be the other way around.

As John Malone seeks new ventures, monitoring the Latin American and Caribbean markets closely for an acquisition target, following the recent sale of assets in Germany, Hungary and the Czech Republic to Vodafone, Liberty Global looks to be nearing a European exodus which would leave it with just one remaining wholly owned operation with Virgin Media in the UK and Ireland – its only consistently performing region. That is of course excluding the contentious VodafoneZiggo operation which Liberty owns a 50% share in and Telenet in Belgium.

It suggests Liberty Global’s Polish and Slovakian operations are also in for a sale and in turn implies it plans to inject all its remaining European energy into taking on the Comcast-led Sky business in broadband, hoping to maintain a tight ship in cable TV as the streaming prowess of Now TV gets a boost of US money. But with little in the way of OTT video, the Virgin Media TV business is in for a shock.

Rumors of a sale of UPC Switzerland to Sunrise were sparked by the Financial Times this week, citing unnamed sources. Financial market data firm Refinitv values the Sunrise business at €4.3 billion ($4.9 billion), and on last count the operator had roughly 200,000 TV subscribers, alongside its 2.2 million mobile and 400,000 internet subscribers.

UPC Switzerland, meanwhile, lost 21,000 video subscribers during Q3 2018 from a total decline of 41,500 RGUs. Typically, UPC’s territories have been experiencing a subscriber shift from DTH and basic cable TV over to the enhanced video offering, which has so far managed to partially offset the steady flow of cord cutters, although clearly this has not gone to plan in Switzerland. It ended the quarter with 656,700 enhanced video subs, down 8,600, while 14,400 left the basic tier, leaving it with 457,800. UPC also lost 13,000 on broadband, reducing its Swiss internet base to 712,400. Revenue in Switzerland was down 6.3% to €299.4 million ($340 million) for the quarter.

As rival operator Salt has moved up the ranks, rumors circulated in early 2018 linking Liberty with a move for either one of Salt or Sunrise, another independent Swiss operator, once owned by Denmark’s TDC. Shortly after these reports emerged, UPC Switzerland CEO Eric Tveter came out declaring desire for a merger, so question marks remain over Salt’s future, although we always felt Salt was unlikely to sell out to Liberty Global.

UPC only launched the new Horizon 4 video platform in Switzerland in October, with a 4K Ultra HD set top from Arris, voice activated remote control and upgraded version of the UPC TV app. And just prior to that, UPC Switzerland inked an OTT partnership with Sky, integrating the MySports Go service into the Sky Sports streaming app.

It is approaching a year since Faultline Online Reporter declared that Liberty Global was in desperate need of a TV rethink and so far packing its bags and leaving Europe due to increasing frustration with regulators is the only plan of action the operator can muster – and an unconvincing one at that. Although, given the series of recent events from the rumor mill, concerning Liberty reportedly bidding – then days later retracting – its bid for Latin American mobile operator Millicom, we would not be surprised if the Financial Times’ sources were unreliable at best.

Just to throw the cat among the pigeons, sister company Liberty Media has reportedly entered the bidding for Fox’s 22 RSNs, which Disney is selling off as part of the merger, according to CNBC. Sinclair Broadcast and Apollo have both dropped out of the running, while MLB has also submitted a bid, it claims.