Telenet Group Holding NV has reported its preliminary fourth quarter and full-year 2023 results, achieving its full-year outlook across all metrics despite a challenging macro-economic and competitive backdrop.
According to John Porter, CEO of Telenet, "I’m pleased that we have managed to deliver on all our financial targets as set in February last year, despite a challenging market backdrop. Our latest marketing campaigns centered around our fixed mobile convergence (“FMC”) propositions and targeted hardware promotions drove improved commercial momentum in Q4, which underpins the attractiveness of our offers and shows we’re back on the right trajectory."
Porter also expressed excitement about the company's roadmap for 2024, which includes upcoming launches, accelerated roll-out of fiber homes, commitment to regain commercial agility, continued B2B growth, and a recovery of the media business.
Telenet reported improved net subscriber performance in the fourth quarter across both fixed and mobile products compared to the third quarter, although still impacted by elevated churn.
Key financial highlights include revenue growth of 1.3% year-over-year, stable adjusted EBITDAAL, and achieved adjusted free cash flow guidance of around €250.0 million for the full year. The company reported a net loss of €139.1 million in the fourth quarter and a net profit of €295.8 million for the full year 2023.
The company's shares have slid -6.1% today, and are now trading at a price of $18.1.
The company's full 8-K submission is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $11,958 | $11,116 | $11,545 | $10,311 | $7,196 | $7,413 |
| Operating Margins | 7% | 6% | 18% | 13% | 2% | -1% |
| Net Margins | 6% | 104% | -14% | 130% | 20% | -71% |
| Net Income (M) | $725 | $11,521 | -$1,628 | $13,427 | $1,473 | -$5,262 |
| Net Interest Expense (M) | $1,479 | $1,384 | $1,187 | $882 | $589 | $828 |
| Depreciation & Amort. (M) | $3,858 | $3,546 | $2,227 | $2,354 | $2,171 | $2,265 |
| Diluted Shares (M) | 779 | 706 | 602 | 569 | 497 | 421 |
| Earnings Per Share | -$1.97 | $16.32 | -$2.7 | $23.59 | $2.96 | -$10.48 |
| EPS Growth | n/a | 928.43% | -116.54% | 973.7% | -87.45% | -454.05% |
| Avg. Price | $29.25 | $25.27 | $21.29 | $27.13 | $24.83 | $19.28 |
| P/E Ratio | -14.85 | 1.55 | -7.89 | 1.12 | 8.25 | -1.82 |
| Free Cash Flow (M) | $4,510 | $3,417 | $2,893 | $2,141 | $1,535 | $820 |
| CAPEX (M) | $1,453 | $1,168 | $1,293 | $1,408 | $1,303 | $1,390 |
| EV / EBITDA | 11.07 | 9.22 | 6.36 | 8.05 | 10.79 | 10.2 |
| Total Debt (M) | $29,805 | $28,182 | $14,947 | $14,825 | $13,763 | $15,192 |
| Net Debt / EBITDA | 6.03 | 4.76 | 3.2 | 3.79 | 5.19 | 6.17 |
| Current Ratio | 0.4 | 1.22 | 1.29 | 1.45 | 1.61 | 1.45 |
Based on the provided information, Liberty Global's stock at a price of $18.1 appears to be overvalued. The company's growth factors present several negatives, including a declining revenue at a rate of -8.5%, flat capital expenditure trends, low operating margins averaging 7.5% over the last 6 years (significantly lower than the industry average), and a concerning decline in earnings per share at an annualized growth rate of -32.1%.
Regarding value factors, while Liberty Global has total liabilities of $21.85 billion far exceeding its current assets, and its current ratio of 1.45 shows that it has just enough current assets to cover its current liabilities. However, the highly leveraged balance sheet with a current Net Debt / EBITDA ratio of 6.17 and an average of 4.86 over the last 5 years presents a significant concern. Furthermore, the firm’s free cash flows have a compounded average growth rate of -27.0% over the last 5 years, with a negative trailing twelve month P/E ratio.
The positives are limited,such as free cash flow of $2.55 billion over the last 6 years. However, this is overshadowed by the significant negatives in both growth and value factors.
