Credit Analysis of Liberty Global Inc

NASDAQ-listed Liberty Global Inc, an operator of cable television networks, is my second-largest equity investment and I have previously written about the equity investment case here.  For a recent job interview I prepared a credit analysis of UPC Holding BV – Liberty Global Inc’s largest operating subsidiary – which I have included below.   (Since you ask, the presentation was sufficient to get me through the 2nd round interview, but I failed to get past HR and senior management in the 3rd round).  The company’s credit position is highly supportive of the equity investment case, as it shows that around €850m per annum (~$1.2bn) is available for distribution to Liberty Global each year, even on very conservative growth assumptions.  Liberty Global’s market capitalisation is $11.1bn and this asset alone supports a continuation of >$1bn per annum share buybacks at the Liberty Global level.  In addition, Liberty Global also receives cash flows from other assets such as Unity Media, Telenet, Austar, and – soon – KBW.  Consequently, this provides comfort that Liberty Global can grow its already large share buyback programme over time.

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