David Jan Aris, Liberty Global: The next Euro star

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29 November 2013

Liberty Global has emerged as a major player in the European wholesale market in 2013. Alex Hawkes speaks exclusively to the company’s director of enterprise and wholesale, David Jan Aris, about how M&A activity is transforming the continent.



In a year of eye-catching telecoms deals across Europe, Liberty Global’s acquisition of Virgin Media certainly stood out. The move, along with several other strategic stake increases, has seen the company emerge as a major player on the continent’s wholesale scene.

"I find it fascinating," says Liberty Global’s director of enterprise and wholesale David Jan Aris, reflecting on the huge level of M&A activity in the European market in 2013. "On one hand you have Vodafone, which is a hunter on the lookout for acquisitions, but on the other hand, the company is still the prey, as it is being watched by AT&T."

Aris has witnessed first-hand how a fast and effective M&A strategy can significantly transform a company’s wholesale operations, helping to both strengthen service capabilities and extend market reach.

Liberty Global has acted fast in 2013. After securing Virgin Media for approximately $24 billion, the company also increased its stake in Dutch cable firm Ziggo from 15% to 28.5%, and increased its stake in Belgium’s Telenet from 50.2% to 58.4%.

Its name has also been linked to other companies, and it narrowly missed out to Vodafone in its attempt to acquire Kabel Deutschland. All of this activity has significantly raised Liberty Global’s profile in the region.

"We have entered a large eye-catching market via acquisitions, and people recognise that," says Aris. "We have made large investments compared to previous years and that has specifically helped us in the wholesale market."

According to Aris, the company now owns over 1 million km of fibre across Europe, with 122,000 business locations connected to its extensive network. "The other interesting metric is we have over 110 account managers across our footprint, which is the kind of size that makes us comparable with the big players in Europe," he says.

Focus on fibre
Liberty Global is one of the world’s largest cable companies, and was formed in 2005 as a result of a merger between the international arm of Liberty Media and UGC. In Europe, its wholesale services have traditionally operated under UPC Wholesale, which Aris has led since 2010.

Aligning all of its wholesale operations under the Liberty Global brand has seen the focus of the unit’s operations shift from eastern Europe to the west.

"The majority of our wholesale revenues are now from western Europe and it’s been quite fascinating to bring all these cultures and companies together," says Aris. "The western European market is very dynamic, particularly compared to some eastern markets, where in some cases the competition is only coming from the incumbent."

Aris also feels that operating under the Liberty Global brand has given the company greater visibility in Europe, where it is recognised as one of the largest cable operators.

"I think that in the past we were strongly concentrated around the UPC brand in a lot of the markets, but that doesn’t fit anymore with our acquisition of Virgin Media, our increased stake in Telenet and our various German entities. So in that sense, we clearly see that a new brand was needed," he says. "It also relates back to our strong financial background. People recognise we’ve performed strongly in the stock market."

Local hero
So now that Liberty Global has officially arrived in the European wholesale market, what can it offer the carrier community?

"We have a very compelling offer to other carriers through our investment in fibre. That is ultimately our USP," says Aris. "If you look at the international carriers, many of them have invested in cross-border connectivity. We have used our strength in local networks and local expertise, which is why we are a good fit with international carriers – because we can deliver on the last mile to their networks," he adds.

On the enterprise side, the acquisition of Virgin Media has given Liberty Global a solid business network to help carriers serve multinational customers.

"We can easily help be part of the solution on the global access side and the acquisition of Virgin has given us credibility. The UK is a big market, so it is nice to have that included in our total European footprint," says Aris.

"I think our story is all about European reach with local expertise. Instead of promoting our global scale, we have focussed on developing our local touch. We want to continue doing that and not lose sight on the big numbers – if you are not providing a good local service, then in my view you don’t have a service at all."

The evolution of cable operators in Europe
In the US, cable operators have played an important role in the wholesale market, tapping effectively into quad-play opportunities. The emergence of Liberty Global could signal that this trend is coming to Europe, and the market is about to witness a deeper involvement from cable companies.

In order for a cable company to truly compete in the wholesale segment, it must have scale, believes Aris.

"Cable companies can create a successful local business, but I think in order to press on the international side, they need scale and publicity," he says.

The role of cable companies could be an interesting development in Europe, where they are arguably in a stronger position to tap into new opportunities with over-the-top (OTT) players.

Aris is enthusiastic about future collaboration between carriers and OTT players, viewing it as a new wave of business for the industry.

"The OTT players are coming much more into our market and I think they will look for ways to optimise their networks. At the moment they are still heavily looking at ways to be a success on the consumer side, but over time I think they will look harder at their own business model and how they can optimise it," he says. "I think that will be a very interesting segment to be involved with, particularly in terms of providing cloud solutions."

Aris is equally enthused about the role of software-defined networking (SDN), describing it as a "beautiful" technology: "I think you can do a lot with SDN, but the economies of scale will only make sense with the access-based Ethernet technology," he says. "Ethernet is a strong growth area for us and we are presently looking at Metro Ethernet Forum (MEF) certification."

Supporting this, the company earlier this year rolled out its Ethernet services portfolio in Switzerland. Based on the Carrier Ethernet 2.0 standard, the company claims to be the first provider of next-generation Ethernet services in the country and plans to take the services portfolio to other countries across Europe in 2014.

"It fulfils the needs of our customers and we see a strong direction," says Aris.

Quad-play in 2014
2014 will see the wider Liberty Global organisation pushing deeper into quad-play services in order to meet the growing demand for TV, broadband, mobile and fixed-line services across Europe.

In November the company announced that Graeme Oxby had been appointed MD for its European mobile operations, a newly created position that highlighted its growing focus on developing additional mobile services.

The company operates an MVNO model in Europe, in markets including the UK, Belgium and Germany, and is expected to launch its new services in the latter. On the wholesale side, however, Aris believes 2014 will be about leveraging the company’s M&A strategy from 2013.

"There are 2 elements: cost savings and new revenue opportunities. I think that the next thing will be to develop new products and services, and that is what the market is really looking for," says Aris.

"I think we are coming out of five years of recession, during which the carrier market was driven into optimising. Now we are looking at ways to implement new services and products and discover ways to enhance our business."

Liberty Global’s 2013 M&A timeline
January:
Increases ownership in Telenet to 58%
February: Announces move to acquire Virgin Media
March: Acquires a 12.65% stake in Ziggo
May: Announces additional senior management changes,
with Tom Mockridge becoming CEO of Virgin Media, Robert
Dunn becoming CFO of Virgin Media and Baptiest Coopmans
becoming MD of UPC Netherlands
June: Completes acquisition of Virgin Media
September: Loses out on bid for Kabel Deutschland to
Vodafone
October: Agrees to sell Chellomedia for $1 billion
November: Linked with bid for Intel’s online pay-TV service

Topics: Liberty Global, David Jan Aris, M&A, Europe, acquisition, Virgin Media, Ziggo, Telenet, Big Interview


 

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