UPC Holding B.V. (“UPC Holding”) is today providing
selected, preliminary unaudited financial and operating
results for the three months (“Q4”) and year ended December 31,
2011. UPC Holding is an indirectly owned subsidiary of Liberty
Global, Inc. (“Liberty Global”) (NASDAQ: LBTYA, LBTYB and LBTYK). A
copy of this press release will be posted to the Liberty Global
website (www.lgi.com). In addition, UPC Holding’s consolidated
financial statements with the accompanying notes are expected to be
posted prior to the end of March 2012.
Financial and operating highlights for the year ended December
31, 2011, as compared to the results for the same period last year
(unless noted) include:
- Organic RGU1 additions increased 61% to
662,000 in 2011, including 240,000 in Q4
- Highest annual and quarterly result
since 2007
- Revenue increased 7% to €4.01 billion,
reflecting rebased2 growth of 3%
- Operating cash flow (“OCF”)3 improved
9% to €1.93 billion, representing rebased growth of 4%
- Operating income in 2011 increased by
22% year-over-year to €914 million
- Capital expenditures as a percentage of
revenue declined to 19.5% of revenue
- Approximately 90% of consolidated
third-party debt is due 2016 and beyond
Financial Results
For the three months and year ended December 31, 2011, our
consolidated revenue increased 5% and 7% to €1.02 billion and €4.01
billion, respectively, as compared to the three months and year
ended December 31, 2010. The revenue growth in both periods was
largely due to a combination of organic growth and acquisitions,
and for the year, revenue growth was also favorably impacted by
foreign currency (“FX”) movements. Adjusting for FX movements and
acquisitions, we realized 3% rebased revenue growth for both the
three months and year ended December 31, 2011, respectively. Our
2011 rebased growth was predominantly driven by strong subscriber
volumes in our advanced services of digital video, broadband
internet and telephony, and was consistent with our reported 2010
rebased growth rate.
Geographically, our European operations (“UPC Europe”)
recognized rebased growth of 3% in 2011, with our Western European
and Central and Eastern European (“CEE”) regions generating rebased
growth of 3% and 1%, respectively. Our strongest European
performers were our Irish, Polish and Dutch operations, which
produced rebased revenue growth of 11%, 8%, and 5%, respectively.
Outside of Europe, our Chilean operation (“VTR”) delivered
year-over-year rebased revenue growth of 6% in 2011.
In terms of OCF, we increased our OCF by 8% to €490 million and
9% to €1.93 billion for the three months and year ended December
31, 2011, respectively, as compared to the corresponding 2010
periods. On a rebased basis, we achieved year-over-year rebased
growth of 3% for Q4 and 4% for the full-year. For 2011, our rebased
performance included 8% growth in our Chilean operation and 5%
growth in our Western European operations, with our Irish and Dutch
operations delivering rebased growth of 18% and 7%, respectively.
In addition, our Swiss operation demonstrated substantial
improvement in 2011, posting rebased OCF growth of 4% as compared
to 1% in 2010. Rounding out our remaining operations, CEE’s OCF
rebased performance was basically flat in 2011, as solid results in
Poland and Slovakia were offset by Romania and the Czech
Republic.
For the three months ended December 31, 2011, we reported a
consolidated OCF margin4 of 47.9%, as compared to 46.6% for the
three months ended December 31, 2010. The year-over-year increase
of 130 basis points was largely driven by 330 and 150 basis point
improvements in our CEE and Chilean operations, respectively. Our
OCF margin in CEE in Q4 2010 was negatively impacted by a full-year
retroactive impact of the Hungarian Tax5 as opposed to one quarter
of said tax in Q4 2011. Excluding the Hungarian Tax from both
periods, our consolidated Q4 2011 OCF margin would have been 30
basis points higher than our Q4 2010 margin.
Similarly, on a full-year basis, our consolidated OCF margin
increased 60 basis points to 48.1% in 2011, as compared to 47.5% in
2010, as we continued to reap operational leverage in markets such
as the Netherlands, Switzerland and Chile. Geographically, our
Western European operations delivered an OCF margin of 54.9% in
2011, reflecting a 100 basis point improvement over 2010, while our
Chilean operation posted a 60 basis point year-over-year increase
to 42.4%. On the other hand, our CEE operations attained an OCF
margin of 48.8%, reflecting a modest decrease from our 2010 OCF
margin of 49.6%.
For 2011, our capital expenditures declined 2% to €782 million,
as compared to €796 million in 2010. As a percentage of revenue,
our capital expenditures decreased 180 basis points to 19.5% from
21.3%, with UPC Europe at 19.7% and VTR at 18.5%. This is a
positive result considering our strong RGU growth in 2011. As a
result of our increasing focus on working capital efficiency in
2011, our capital expenditures benefitted from vendor financing
arrangements totaling €73 million during the year. In terms of our
overall spend in 2011, approximately 60% was attributable to
customer premises equipment and scalable infrastructure, 22%
pertained to line extensions and upgrade/rebuild activity, and the
remaining 18% was related to support capital. With respect to 2012,
we expect that capital expenditures as a percentage of revenue will
range from 16% to 18% on a consolidated basis, as compared to 19.5%
in 2011. In 2012, we will look to further improve our working
capital, and as a result, we would expect to utilize a higher level
of vendor financing arrangements in 2012 as compared to 2011.
Subscriber Statistics
At December 31, 2011, we provided a total of 17.8 million
subscription services (RGUs), consisting of 9.4 million video, 5.0
million broadband internet and 3.4 million telephony RGUs, to our
10.3 million unique customers. In 2011, we grew our RGU base by 8%
or 1.4 million RGUs, including 701,000 RGUs from acquisitions and
662,000 from organic growth. Including acquisitions, our bundled
customer base increased 13% to 4.8 million over the last twelve
months, resulting in 46% of our customers subscribing to multiple
services. As a result of our marketing emphasis, 82% of the
increase in bundled customers was attributable to growth in our
triple-play subscriptions.
In 2011, we added 662,000 RGUs on an organic basis, including
240,000 in the fourth quarter. These figures reflect year-over-year
growth of 61% and 30%, respectively, and represent our highest
annual and quarterly additions since 2007. Geographically, our
full-year growth was driven in large part by a 270% increase at our
CEE operations, led by Romania and, to a lesser extent, Hungary and
Slovakia. Also, our Chilean operation more than doubled its 2010
subscriber gains, adding 113,000 RGUs in 2011. Finally, our cable
systems in Western Europe added 283,000 RGUs in 2011, which is in
line with 2010. Both our Irish and Swiss operations delivered
significant year-over-year growth.
In terms of our video business, we lost 171,000 customers in
2011, a 34% improvement compared to our video losses in the prior
year. During the year, we continued to focus on upselling our
analog video customers to digital, as we added 184,000 and 648,000
digital cable subscribers for the three months and year ended
December 31, 2011, respectively. We finished 2011 with a digital
cable base of 4.7 million and digital penetration6 of 54%, up from
46% at year-end 2010. Our continued emphasis on HD and DVR
services7 has been an important factor in driving both digital
penetration and video ARPU, and in 2011, we added an aggregate
586,000 HD and/or DVR subscribers (inclusive of acquisitions),
expanding the penetration of our digital cable base to
approximately 50%.
Broadband internet and telephony services remain the principal
drivers of organic subscriber growth. In 2011, we added 421,000
broadband internet subscribers (including 131,000 in Q4) and
413,000 telephony subscribers (including 141,000 in Q4). As
compared to our full-year 2010 results, our broadband internet and
telephony additions reflect growth of 12% and 40%, respectively.
Our quarterly performance was even more impressive, as we grew 15%
and 67% on broadband internet and telephony, respectively. Our
results were largely a function of our ‘3.0’ bundles, which offer a
superior consumer value proposition. We finished 2011 with
approximately 90% of our two-way homes passed capable of ‘3.0’
broadband speeds, and as we approach 2012, we will look to continue
capitalizing on our broadband speed advantage to gain market
share.
Summary of Third-Party Debt and Cash and Cash
Equivalents
The following table details our consolidated third-party
debt and cash and cash equivalents as of the dates indicated:8
December 31, September 30, 2011
2011 in millions UPC Broadband Holding Bank Facility
€
4,737.1
€
5,110.6
UPCB Finance Limited 7.625% Senior Secured Notes due 2020 496.3
496.2 UPCB Finance II Limited 6.375% Senior Secured Notes due 2020
750.0 750.0 UPCB Finance III Limited 6.625% Senior Secured Notes
due 2020 771.6 743.5 UPCB Finance V Limited 7.25% Senior Secured
Notes due 2021 578.7 — UPC Holding 8.00% Senior Notes due 2016
300.0 300.0 UPC Holding 9.75% Senior Notes due 2018 378.0 377.5 UPC
Holding 9.875% Senior Notes due 2018 289.9 278.9 UPC Holding 8.375%
Senior Notes due 2020 640.0 640.0 Other debt, including vendor
financing and capital lease obligations
103.8
71.7 Total third-party debt
€
9,045.4
€
8,768.4
Cash and cash equivalents
€
126.5
€
79.1
At December 31, 2011, we reported €9.0 billion of third-party
debt and €127 million of cash and cash equivalents. As compared to
September 30, 2011, our third-party debt increased by €277 million,
largely as a result of fourth quarter borrowings (see below). These
borrowings were partially offset by repayments on Facilities AA and
W during the quarter. In addition, and to a much lesser extent, the
impact of a strengthening U.S. dollar relative to the euro during
the fourth quarter and increased vendor financing, contributed to
our total third-party debt increase. In terms of maturity and
borrowing cost at December 31, 2011, approximately 90% of our
third-party debt was due in 2016 and beyond and our debt borrowing
cost9 was approximately 8.8% on a fully-swapped basis.
In the fourth quarter, we entered into a facility accession
agreement for a new facility (Facility AB) under the UPC Broadband
Holding Bank Facility with an aggregate principal amount of $500
million (€386 million). Facility AB is a term loan with a final
maturity date of December 31, 2017 and bears interest at a rate of
LIBOR plus 3.50%, with a LIBOR floor of 1.25%. On October 28, 2011,
we borrowed the total amount of Facility AB, receiving proceeds of
$485 million (€342 million at the transaction date) on a net basis
after payment of original issue discount of 3.0%. We used a portion
of the proceeds to repay €285 million of outstanding redrawable
term loans under Facility AA.
In addition to Facility AB, we issued $750 million (€579
million) of 7.25% Senior Secured Notes due 2021 at UPCB Finance V
Limited in November 2011. UPCB Finance V Limited is a special
purpose financing entity which is owned 100% by a charitable trust.
The proceeds of this offering were used to fund Facility AC under
the UPC Broadband Holding Bank Facility and a portion of the
proceeds from Facility AC were then used to repay €363 million of
Facility AA and €144 million of Facility W.
In February 2012, we issued $750 million (€579 million) of
6.875% Senior Secured Notes due 2022 at UPCB Finance VI Limited.
UPCB Finance VI Limited is a special purpose financing entity which
is owned 100% by a charitable trust. The proceeds of this offering
were used to fund Facility AD under the UPC Broadband Holding Bank
Facility. The gross proceeds from Facility AD were used to repay in
full amounts outstanding under Facilities M, N and O, respectively.
In addition, certain lenders under the UPC Broadband Holding Bank
Facility agreed to extend €536 million of commitments under
Facility S (2016) into a new facility maturing in 2019 and at the
same coupon. We expect to close this transaction shortly.
Borrowing Capacity & Covenant Calculations
UPC Broadband Holding B.V. (“UPC Broadband Holding”), our wholly
owned subsidiary, is a borrower and we are a guarantor of
outstanding indebtedness under the UPC Broadband Holding Bank
Facility. As of December 31, 2011, UPC Broadband Holding had
maximum undrawn commitments under Facilities Q, W and AA of the UPC
Broadband Holding Bank Facility of €1.1 billion. Upon completion of
our fourth quarter compliance reporting requirements, we anticipate
that our availability under the UPC Broadband Holding Bank Facility
will be limited to €339 million.
Similarly, based on the results for December 31, 2011 and
subject to the completion of fourth quarter bank reporting
requirements, (i) the ratio of Senior Debt to Annualized EBITDA
(last two quarters annualized), as defined and calculated in
accordance with the UPC Broadband Holding Bank Facility, was 3.83x,
and (ii) the ratio of Total Debt to Annualized EBITDA (last two
quarters annualized), as defined and calculated in accordance with
the UPC Broadband Holding Bank Facility was 4.63x.10
UPC Broadband Holding Bank Facility
The following table details the key terms of the UPC Broadband
Holding Bank Facility at December 31, 2011:
As of December 31, 2011
Facility Final maturity Interest
rate
Facility amount11
Unusedborrowingcapacity
Carryingvalue12
in millions Facility M Dec. 31, 2014 E + 2.00%
€
279.8
€
—
€
279.8
Facility N Dec. 31, 2014 L + 1.75%
$
327.2 — 252.5
Facility O
July 31, 2013 SR + 2.75% HUF 5,962.5 / PLN 115.1 — 44.7
Facility Q
July 31, 2014 E + 2.75%
€
30.0
30.0 —
Facility R
Dec. 31, 2015 E + 3.25%
€
290.7
— 290.7
Facility S
Dec. 31, 2016 E + 3.75%
€
1,740.0
— 1,740.0
Facility T
Dec. 31, 2016 L + 3.50%
$
260.2 — 199.5
Facility U
Dec. 31, 2017 E + 4.00%
€
750.8
— 750.8
Facility V
Jan. 15, 2020 7.625%
€
500.0
— 500.0
Facility W
Mar. 31, 2015 E + 3.00%
€
144.1
144.1 —
Facility X
Dec. 31, 2017 L + 3.50%
$
1,042.8 — 804.6
Facility Y
July 1, 2020 6.375%
€
750.0
— 750.0
Facility Z
July 1, 2020 6.625%
$
1,000.0 — 771.6
Facility AA
July 31, 2016 E + 3.25%
€
904.0
904.0 —
Facility AB
Dec. 31, 2017
L + 3.50%13
$
500.0 — 374.5
Facility AC
Nov. 15, 2021 7.250%
$
750.0 — 578.7 Elimination of Facilities V, Y, Z and AC in
consolidation
— (2,600.3 )
Total
€
1,078.1
€
4,737.1
About UPC Holding
UPC Holding connects its customers to the world of
entertainment, communications and information, by offering advanced
video, voice and broadband internet services. As of December
31, 2011, UPC Holding operated state-of-the-art networks in Europe
and Chile, serving 10 million customers in 10 countries.
Disclaimer
This press release contains forward-looking statements,
including our expectations with respect to our future growth
prospects, our continued ability to increase our organic RGU
additions and further grow the penetration of our advanced services
and our assessment of our liquidity and access to capital markets,
including our borrowing availability; our expectation regarding the
closing of our Facility S extension; our expectations with respect
to the impact of our expanded roll-out of advanced products and
services, including our next-generation broadband services and
advanced digital video features; our expectations with respect to
our 2012 capital expenditures as a percentage of revenue; our
insight and expectations regarding competitive and economic factors
in our markets; the impact of our M&A activity on our
operations and financial performance; and other information and
statements that are not historical fact. These forward-looking
statements involve certain risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
by these statements. These risks and uncertainties include the
continued use by subscribers and potential subscribers of our
services and their willingness to upgrade to our more advanced
offerings, our ability to meet challenges from competition and
economic factors, the continued growth in services for digital
television at a reasonable cost, the effects of changes in
technology and regulation, our ability to achieve expected
operational efficiencies and economies of scale, our ability to
generate expected revenue and operating cash flow, control capital
expenditures as measured by a percentage of revenue and achieve
assumed margins, the impact of our future financial performance, or
market conditions generally, on the availability, terms and
deployment of capital, as well as other factors detailed from time
to time in Liberty Global's filings with the Securities and
Exchange Commission including Liberty Global’s most recently filed
Form 10-K. These forward-looking statements speak only as of the
date of this release. We expressly disclaim any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in
our expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is
based.
We are required under the terms of the indentures for the UPC
Holding senior notes and the UPCB Finance Limited, UPCB Finance II
Limited, UPCB Finance III Limited, UPCB Finance V Limited and UPCB
Finance VI Limited senior secured notes to provide certain
financial information regarding UPC Holding to bondholders on a
quarterly basis. UPC Broadband Holding, our wholly-owned
subsidiary, is a borrower and we are a guarantor of outstanding
indebtedness under the UPC Broadband Holding Bank Facility, which
also requires the provision of certain financial and related
information to the lenders. This press release is being issued at
this time, in connection with those obligations, due to the
contemporaneous release by Liberty Global of its December 31, 2011
results. The financial information contained herein is preliminary
and subject to change. We presently expect to issue our audited
consolidated financial statements prior to the end of March 2012,
at which time they will be posted to the investor relations section
of the Liberty Global website (www.lgi.com) under the fixed income
heading. Copies will also be available from the Trustee for the
senior notes and the senior secured notes.
___________________________________
1 Please see footnotes to the operating data table for the
definition of revenue generating units (“RGUs”). Organic figures
exclude RGUs of acquired entities at the date of acquisition but
include the impact of changes in RGUs from the date of acquisition.
All subscriber/RGU additions or losses refer to net organic
changes, unless otherwise noted. 2 For purposes of
calculating rebased growth rates on a comparable basis for all
businesses that we owned during the respective period in 2011, we
have adjusted our historical revenue and OCF for the three months
and year ended December 31, 2010 to (i) include the pre-acquisition
revenue and OCF of certain entities acquired during 2011 in the
respective 2010 rebased amounts to the same extent that the revenue
and OCF of such entities are included in our 2011 results and (ii)
reflect the translation of our rebased amounts for the respective
2010 period at the applicable average exchange rates that were used
to translate our 2011 results. In addition, our fourth quarter
total rebased OCF growth rates, as well as the fourth quarter
rebased OCF growth rates for Central and Eastern Europe and Total
UPC Europe, reflect the impact of rebasing 2010 results for the
“Hungarian Tax” as defined in note 5. Please see page 7 for
supplemental information on rebased growth. 3 Please see
page 10 for our definition of operating cash flow and a
reconciliation to operating income. 4 OCF margin is
calculated by dividing OCF by total revenue for the applicable
period. 5 The Hungarian Tax represents a revenue-based tax
that was imposed in Hungary during the fourth quarter of 2010, with
retroactive effect to the beginning of 2010. The Hungarian Tax is
currently scheduled to expire at the end of 2012. The EU Commission
initiated an investigation in March 2011 and, on September 29,
2011, the EU Commission requested that Hungary abolish the
Hungarian Tax on the grounds that it is illegal under EU rules. The
Hungarian government has not taken any measures to comply and the
EU Commission may refer the matter to the EU Court of Justice.
Until such time as this matter is resolved, we will continue to
accrue and pay the Hungarian Tax. Through December 31, 2011, we
have incurred total inception-to-date operating expenses of HUF 6.9
billion (€22 million) as a result of the Hungarian Tax. 6
Digital penetration is calculated by dividing digital cable RGUs by
the total of digital and analog cable RGUs. 7 HD and DVR
refer to high definition and digital video recorder services,
respectively. 8 UPCB Finance Limited, UPCB Finance II
Limited, UPCB Finance III Limited and UPCB Finance V Limited are
special purpose financing companies created for the primary purpose
of issuing senior secured notes and are owned 100% by charitable
trusts. We used the proceeds from the senior secured notes to fund
Facilities V, Y, Z and AC under the UPC Broadband Holding Bank
Facility, with UPC Financing, our direct subsidiary, as the
borrower. These special purpose financing companies are dependent
on payments from UPC Financing under Facilities V, Y, Z and AC in
order to service their payment obligations under the senior secured
notes. As such, these companies are variable interest entities and
UPC Financing and its parent entities, including UPC Holding, are
required by accounting principles generally accepted in the U.S.
(“GAAP”) to consolidate these companies. Accordingly, the amounts
outstanding under Facilities V, Y, Z and AC eliminate within our
condensed consolidated financial statements. 9 Our fully
swapped debt borrowing cost represents the weighted average
interest rate on our aggregate variable and fixed rate
indebtedness, including the effects of derivative instruments,
discounts and commitment fees, but excluding the impact of
financing costs. 10 Our covenant calculations are based on
debt amounts which take into account currency swaps calculated at
weighted average FX rates across the period. Thus, the debt used in
the calculations may differ from the debt balances reported within
the financial statements. 11 Amounts represent total
third-party commitments at December 31, 2011 without giving effect
to the impact of discounts. Certain of the originally committed
amounts under Facilities M, N, Q and W have been novated to one of
our subsidiaries, and accordingly, such amounts are not included in
the table. 12 The Facility T and AB carrying values include
the impact of discounts. 13 Facility AB interest rate
includes a LIBOR floor of 1.25%.
Revenue and Operating Cash
Flow
In the following tables, we present preliminary revenue and
operating cash flow by reportable segment of our continuing
operations for the three months and year ended December 31, 2011,
as compared to the corresponding prior year periods. All of the
reportable segments derive their revenue primarily from broadband
communications services, including video, broadband internet and
telephony services. Most reportable segments also provide
business-to-business services. At December 31, 2011, our operating
segments in the UPC Europe division provided services in nine
European countries. Our Other Western Europe segment includes our
broadband communications operating segments in Austria and Ireland.
Our Central and Eastern Europe segment includes our broadband
communications operating segments in the Czech Republic, Hungary,
Poland, Romania and Slovakia. UPC Europe’s central and other
category includes (i) the UPC DTH operating segment, (ii) costs
associated with certain centralized functions, including billing
systems, network operations, technology, marketing, facilities,
finance and other administrative functions and (iii) intersegment
eliminations within UPC Europe. VTR provides broadband
communications services in Chile.
Beginning in the first quarter of 2011, UPC DTH, which is a
Luxembourg-based organization that provides DTH services to
customers in the Czech Republic, Hungary, Romania and Slovakia, is
reported within UPC Europe’s central and other category. Prior to
this change, the UPC DTH operating results were reported within UPC
Europe’s Central and Eastern Europe segment. In addition,
certain backbone costs incurred by UPC Europe were previously
included in the operating expenses of UPC Europe’s central and
other category. Beginning in the first quarter of 2011, these
backbone costs are included within the operating expenses of the
applicable UPC Europe operating segment based on usage. Segment
information for all periods presented has been restated to reflect
the changes described above.
For purposes of calculating rebased growth rates on a comparable
basis for all businesses that we owned during 2011, we have
adjusted our historical revenue and OCF for the three months and
year ended December 31, 2010 to (i) include the pre-acquisition
revenue and OCF of certain entities acquired during 2011 in our
rebased amounts for the three months and year ended December 31,
2010 to the same extent that the revenue and OCF of such entities
are included in our results for the three months and year ended
December 31, 2011 and (ii) reflect the translation of our rebased
amounts for the three months and year ended December 31, 2010 at
the applicable average foreign currency exchange rates that were
used to translate our results for the three months and year ended
December 31, 2011. In addition, we have increased our total OCF, as
well as the OCF of Central and Eastern Europe and Total UPC Europe,
for the three months ended December 31, 2010 to rebase for the
Hungarian Tax that was imposed during the fourth quarter of 2010.
The implementation of the Hungarian Tax required a year-to-date
retroactive adjustment, resulting in total expense recognized for
this tax in the fourth quarter of 2010 of HUF 3,545 million (€13.0
million). The fourth quarter of 2010 OCF adjustment was computed as
if the Hungarian Tax had been imposed at the beginning of 2010, and
accrued throughout the year. As a result, our rebased OCF for the
three months ended December 31, 2010 includes an increase related
to the Hungarian Tax of HUF 2,428 million (€9.0 million) to reverse
the portion of the expense that relates to the first three quarters
of 2010. After this adjustment, the reduction in OCF in the fourth
quarter of 2010 for the Hungarian Tax is HUF 1,117 million (€4.0
million). This compares to a reduction to OCF that is included in
our actual results for the three months and year ended December 31,
2011 of HUF 872 million (€2.9 million) and HUF 3,334 million (€11.9
million), respectively.
The acquired entities that have been included in whole or in
part in the determination of our rebased revenue and OCF for the
three months and year ended December 31, 2010 include Aster and two
small entities in Europe. We have reflected the revenue and OCF of
these acquired entities in our 2010 rebased amounts based on what
we believe to be the most reliable information that is currently
available to us (generally pre-acquisition financial statements),
as adjusted for the estimated effects of (i) any significant
differences between GAAP and local generally accepted accounting
principles, (ii) any significant effects of post-acquisition
purchase accounting adjustments, (iii) any significant differences
between our accounting policies and those of the acquired entities
and (iv) other items we deem appropriate. We do not adjust
pre-acquisition periods to eliminate non-recurring items or to give
retroactive effect to any changes in estimates that might be
implemented during post-acquisition periods. As we did not own or
operate the acquired businesses during the pre-acquisition periods,
no assurance can be given that we have identified all adjustments
necessary to present the revenue and OCF of these entities on a
basis that is comparable to the corresponding post-acquisition
amounts that are included in our historical results or that the
pre-acquisition financial statements we have relied upon do not
contain undetected errors. The adjustments reflected in our rebased
amounts have not been prepared with a view towards complying with
Article 11 of the Securities and Exchange Commission's Regulation
S-X. In addition, the rebased growth percentages are not
necessarily indicative of the revenue and OCF that would have
occurred if these transactions had occurred on the dates assumed
for purposes of calculating our rebased amounts or the revenue and
OCF that will occur in the future. The rebased growth percentages
have been presented as a basis for assessing growth rates on a
comparable basis, and are not presented as a measure of our pro
forma financial performance. Therefore, we believe our rebased data
is not a non-GAAP financial measure as contemplated by Regulation G
or Item 10 of Regulation S-K.
The selected financial data contained herein is preliminary and
unaudited and subject to possible adjustments in connection with
the publication of UPC Holding’s December 31, 2011 consolidated
financial statements. In each case, the following tables present
(i) the amounts reported by each of our reportable segments for the
comparative periods, (ii) the euro change and percentage change
from period to period and (iii) the percentage change from period
to period on a rebased basis.
Revenue
Three months endedDecember
31,
Increase
(decrease)
Increase
(decrease)
2011 2010
€
% Rebased % in millions, except %
amounts UPC Europe: The Netherlands
€
232.8
€
223.9
€
8.9
4.0 4.0 Switzerland 238.5 217.1 21.4 9.9 2.2 Other Western Europe
160.4 157.4
3.0 1.9 1.9
Total Western Europe 631.7 598.4 33.3 5.6 2.8 Central and Eastern
Europe 211.6 191.5 20.1 10.5 0.6 Central and other
21.2 20.9 0.3
1.4 — Total UPC Europe
864.5 810.8 53.7 6.6 2.2 VTR (Chile)
159.9
161.4 (1.5 )
(0.9 )
4.8 Total
€
1,024.4
€
972.2
€
52.2
5.4 2.6
Year endedDecember 31,
Increase
(decrease)
Increase
(decrease)
2011 2010
€
% Rebased % in millions, except %
amounts UPC Europe: The Netherlands
€
914.9
€
871.6
€
43.3
5.0 5.0 Switzerland 928.3 811.9 116.4 14.3 2.2 Other Western Europe
634.8 617.9
16.9 2.7 2.7 Total Western
Europe 2,478.0 2,301.4 176.6 7.7 3.3 Central and Eastern Europe
806.6 754.5 52.1 6.9 1.2 Central and other
89.3
81.4 7.9 9.7
— Total UPC Europe 3,373.9 3,137.3 236.6 7.5 2.9 VTR
(Chile)
639.4 602.6
36.8 6.1 5.8 Total
€
4,013.3
€
3,739.9
€
273.4
7.3 3.4
Operating Cash Flow
Three months endedDecember
31,
Increase
(decrease)
Increase
(decrease)
2011 2010
€
%
Rebased %1
in millions, except % amounts UPC Europe: The Netherlands
€
137.4
€
132.0
€
5.4
4.1 4.1 Switzerland 133.7 119.5 14.2 11.9 4.2 Other Western Europe
73.6 74.3
(0.7 )
(0.9 )
(0.9 )
Total Western Europe 344.7 325.8 18.9 5.8 3.0 Central and Eastern
Europe 99.9 84.0 15.9 18.9 (3.2 ) Central and other
(25.0 )
(26.3 )
1.3 4.9 —
Total UPC Europe 419.6 383.5 36.1 9.4 2.0 VTR (Chile)
70.8 69.1
1.7 2.5 8.3
Total
€
490.4
€
452.6
€
37.8
8.4 2.9
Year endedDecember 31,
Increase
(decrease)
Increase
(decrease)
2011 2010
€
% Rebased % in millions, except %
amounts UPC Europe: The Netherlands
€
542.5
€
507.8
€
34.7
6.8 6.8 Switzerland 522.7 447.8 74.9 16.7 4.3 Other Western Europe
296.4 284.2
12.2 4.3
4.3 Total Western Europe 1,361.6 1,239.8 121.8
9.8 5.3 Central and Eastern Europe 393.5 374.3 19.2 5.1 (0.3 )
Central and other
(95.3 )
(90.3 )
(5.0 )
(5.5 )
— Total UPC Europe 1,659.8 1,523.8 136.0 8.9
3.9 VTR (Chile)
271.0
251.7 19.3
7.7 7.5 Total
€
1,930.8
€
1,775.5
€
155.3
8.7 4.4
___________________________________
1 In addition to rebasing for currency exchange rates and
acquisitions, we have also rebased our Q4 2010 OCF for the
Hungarian Tax that was imposed in the fourth quarter of 2010. This
impacts the Central and Eastern Europe, Total UPC Europe and Total
line items. Please see page 7 for supplemental information.
Operating Cash Flow Definition and Reconciliation
Operating cash flow is not a GAAP measure. Operating cash flow
is the primary measure used by our chief operating decision maker
to evaluate segment operating performance. Operating cash flow is
also a key factor that is used by our internal decision makers to
(i) determine how to allocate resources to segments and (ii)
evaluate the effectiveness of our management for purposes of annual
and other incentive compensation plans. As we use the term,
operating cash flow is defined as revenue less operating and
selling, general and administrative expenses (excluding stock-based
compensation, related-party fees and allocations, depreciation and
amortization and impairment, restructuring and other operating
charges or credits). Other operating charges or credits
include (i) gains and losses on the disposition of long-lived
assets, (ii) direct acquisition costs, such as third-party due
diligence, legal and advisory costs, and (iii) other
acquisition-related items, such as gains and losses on the
settlement of contingent consideration. Our internal decision
makers believe operating cash flow is a meaningful measure and is
superior to available GAAP measures because it represents a
transparent view of our recurring operating performance that is
unaffected by our capital structure and allows management to (i)
readily view operating trends, (ii) perform analytical comparisons
and benchmarking between segments and (iii) identify strategies to
improve operating performance in the different countries in which
we operate. We believe our operating cash flow measure is
useful to investors because it is one of the bases for comparing
our performance with the performance of other companies in the same
or similar industries, although our measure may not be directly
comparable to similar measures used by other
companies. Operating cash flow should be viewed as a measure
of operating performance that is a supplement to, and not a
substitute for, operating income, net earnings (loss), cash flow
from operating activities and other GAAP measures of income or cash
flows. A reconciliation of total segment operating cash flow
to our operating income is presented below.
Three months ended
December 31,
Year ended
December 31,
2011 2010 2011 2010 in
millions Total segment operating cash flow
€
490.4
€
452.6
€
1,930.8
€
1,775.5
Stock-based compensation expense (3.6 ) (2.7 ) (13.5 ) (17.3 )
Related-party fees and allocations, net (6.8 ) (9.0 ) (5.9 ) (18.1
) Depreciation and amortization (247.3 ) (236.0 ) (970.2 ) (974.0 )
Impairment, restructuring and other operating charges, net
(12.5 )
(6.0 )
(26.8 )
(16.0 ) Operating income
€
220.2
€
198.9
€
914.4
€
750.1
Capital Expenditure Summary
The following table provides UPC Holding capital expenditures
(“CapEx”) for the indicated periods:
Three months ended
December 31,
Year ended
December 31,
2011 2010 2011 2010 in
millions UPC Europe: The Netherlands
€
32.4
€
37.0
€
138.5
€
125.8
Switzerland 39.1 36.8 151.9 154.0 Other Western Europe
43.9 37.6
144.5 143.5 Total
Western Europe 115.4 111.4 434.9 423.3 Central and Eastern Europe
35.9 30.9 130.3 143.3 Central and other
19.1
33.0 98.4
92.7 Total UPC Europe 170.4 175.3
663.6 659.3 VTR (Chile)
15.6
27.6 118.0
136.7 Total UPC Holding
€
186.0
€
202.9
€
781.6
€
796.0
CapEx as % of
Revenue
Total UPC Europe 19.7 % 21.6 % 19.7 % 21.0 % VTR
9.8 % 17.1
% 18.5 %
22.7 % Total UPC Holding
18.2 % 20.9
% 19.5 %
21.3 %
The table below highlights the categories of our property and
equipment additions for the indicated periods, with a
reconciliation to our capital expenditures that we present in our
consolidated statements of cash flows:
Three months ended December 31, Year
ended December 31, 2011 2010
2011 2010 in millions Customer premises
equipment
€
71.6
€
70.9
€
326.5
€
329.0
Scalable infrastructure 64.2 39.6 196.1 157.6 Line extensions 29.4
24.9 98.0 85.5 Upgrade/rebuild 31.6 30.5 93.7 92.9 Support capital
60.2 48.9
158.9 137.4
Property and equipment additions 257.0 214.8 873.2 802.4
Assets acquired under capital-related
vendor financing arrangements2
(31.8 ) — (73.2 ) — Assets acquired under capital leases2 (0.3 )
(0.2 ) (1.4 ) (5.9 ) Changes in current liabilities related to
capital expenditures
(38.9 )
(11.7 )
(17.0 )
(0.5 ) Total capital expenditures
€
186.0
€
202.9
€
781.6
€
796.0
___________________________________
2
The capital expenditures that we report in our consolidated
cash flow statements do not include amounts that are financed under
vendor financing or capital lease arrangements. Instead, these
expenditures are reflected as non-cash additions to our property
and equipment when the underlying assets are delivered and as
repayments of debt when the principal is repaid.
RGUs, Customers and Bundling
The following table provides information on the breakdown of our
RGUs and customer base and highlights our customer bundling metrics
at December 31, 2011, September 30, 2011, and December 31,
2010:
December 31,2011
September 30,2011
December 31,2010
Q4’11 / Q3’11(% Change)
Q4’11 / Q4’10(% Change)
Total RGUs Video 9,375,500 9,406,900 9,147,800 (0.3 %) 2.5 %
Broadband Internet 4,968,000 4,830,700 4,319,400 2.8 % 15.0 %
Telephony
3,464,100 3,319,300
2,967,500 4.4
% 16.7 % UPC Holding RGUs
17,807,600 17,556,900 16,434,700 1.4 % 8.4 %
Total
Customers Single-Play Customers 5,517,000 5,642,400 5,719,400
(2.2 %) (3.5 %) Double-Play Customers 2,015,700 2,014,500 1,913,300
0.1 % 5.4 % Triple-Play Customers
2,753,100
2,628,600 2,295,900
4.7 % 19.9 %
UPC Holding Customers 10,285,800 10,285,500 9,928,600 0.0 % 3.6 %
% Double-Play Customers UPC Europe 19.4 % 19.4 % 19.0
% 0.0 % 2.1 % VTR 21.2 % 21.5 % 21.9 % (1.4 %) (3.2 %) UPC Holding
19.6 % 19.6 % 19.3 % 0.0 % 1.6 %
% Triple-Play
Customers UPC Europe 24.6 % 23.2 % 20.7 % 6.0 % 18.8 % VTR 45.2
% 44.9 % 42.8 % 0.7 % 5.6 % UPC Holding 26.8 % 25.6 % 23.1 % 4.7 %
16.0 %
RGUs per Customer Relationship UPC Europe 1.69
1.66 1.60 1.8 % 5.6 % VTR 2.12 2.11 2.08 0.5 % 1.9 % UPC Holding
1.73 1.71 1.66 1.2 % 4.2 %
ARPU per Customer Relationship Table
The following table provides ARPU per customer relationship3 for
the indicated periods:
Three months ended December 31, FX
Neutral 2011 2010 % Change
% Change4
UPC Europe
€
27.43
€
26.71
2.7 % 2.3 % VTR
CLP
30,572
CLP
29,872
2.3 % 2.3 % UPC Holding
€
29.23
€
28.77
1.6 % 2.2 %
___________________________________
3 ARPU per customer relationship refers to the average
monthly subscription revenue per average customer relationship and
is calculated by dividing the average monthly subscription revenue
(excluding installation, late fees and mobile telephony revenue)
for the indicated period, by the average of the opening and closing
balances for customer relationships for the period. Customer
relationships of entities acquired during the period are
normalized. Unless otherwise indicated, ARPU per customer
relationship for UPC Europe and UPC Holding are not adjusted for
currency impacts . 4 The FX-neutral change represents the
percentage change on a year-over-year basis adjusted for FX impacts
and is calculated by adjusting the prior year figures to reflect
translation at the foreign currency rates used to translate the
current year amounts.
Operating Data – December
31, 2011 - UPC Holding Consolidated
HomesPassed(1)
Two-wayHomesPassed(2)
CustomerRelationships(3)
Video Internet
Telephony
TotalRGUs(4)
Analog
CableSubscribers(5)
Digital
CableSubscribers(6)
DTHSubscribers(7)
MMDSSubscribers(8)
TotalVideo
HomesServiceable(9)
Subscribers(10)
HomesServiceable(11)
Subscribers(12)
UPC Europe: The Netherlands(13) 2,797,900 2,784,200 1,819,600
3,605,500 808,000 1,010,200 — — 1,818,200 2,795,600 943,700
2,793,700 843,600 Switzerland(13) 2,084,500 1,776,800 1,526,800
2,403,800 917,400 570,000 — — 1,487,400 2,254,400 553,200 2,254,400
363,200 Austria 1,180,300 1,180,300 681,100 1,304,400 208,800
302,100 — — 510,900 1,180,300 444,700 1,180,300 348,800 Ireland
868,200 709,000 533,000
886,400 82,400 331,400
— 55,000 468,800
709,000 255,400 674,600
162,200 Total Western Europe
6,930,900
6,450,300 4,560,500
8,200,100 2,016,600
2,213,700 — 55,000
4,285,300 6,939,300
2,197,000 6,903,000
1,717,800 Hungary 1,417,000 1,402,400 965,600
1,566,500 323,100 290,300 219,300 — 832,700 1,402,400 427,800
1,404,900 306,000 Romania 2,072,400 1,650,400 1,142,600 1,608,100
508,200 351,700 282,800 — 1,142,700 1,650,400 281,300 1,588,600
184,100 Poland 2,620,100 2,476,900 1,497,000 2,494,400 727,300
626,100 — — 1,353,400 2,476,900 775,800 2,464,700 365,200 Czech
Republic 1,334,900 1,226,600 741,400 1,212,000 81,800 421,600
81,400 — 584,800 1,226,600 432,300 1,223,900 194,900 Slovakia
486,400 455,300 276,900
395,700 102,400 109,400
46,700 800 259,300
421,400 87,500 421,400
48,900 Total Central & Eastern Europe
7,930,800 7,211,600
4,623,500 7,276,700
1,742,800 1,799,100 630,200
800 4,172,900 7,177,700
2,004,700 7,103,500
1,099,100 Total UPC Europe
14,861,700
13,661,900 9,184,000
15,476,800 3,759,400
4,012,800 630,200 55,800
8,458,200 14,117,000
4,201,700 14,006,500
2,816,900 VTR (Chile)
2,758,300
2,129,800 1,101,800
2,330,800 214,600 702,700
— — 917,300
2,129,800 766,300 2,119,900
647,200 Total UPC Holding
17,620,000 15,791,700
10,285,800 17,807,600
3,974,000 4,715,500
630,200 55,800
9,375,500 16,246,800
4,968,000 16,126,400
3,464,100 Subscriber Variance
Table – December 31, 2011 vs. September 30, 2011 - UPC Holding
Consolidated
HomesPassed(1)
Two-wayHomesPassed(2)
CustomerRelationships(3)
Video Internet
Telephony
TotalRGUs(4)
Analog
CableSubscribers(5)
Digital
CableSubscribers(6)
DTHSubscribers(7)
MMDSSubscribers(8)
TotalVideo
HomesServiceable(9)
Subscribers(10)
HomesServiceable(11)
Subscribers(12) UPC Europe: The Netherlands
5,900 43,800 (19,600) 53,600 (55,500) 36,600 — — (18,900) 44,400
34,900 43,900 37,600 Switzerland 7,000 15,500 (23,300) 2,300
(64,700) 35,500 — — (29,200) 41,600 17,800 41,800 13,700 Austria
3,300 3,300 (200) 11,800 (14,900) 13,800 — — (1,100) 3,300 5,800
3,300 7,100 Ireland
(900)
8,400
2,000 27,900 (5,600)
3,300 — (2,200)
(4,500)
8,400 14,000
11,400 18,400 Total Western Europe
15,300 71,000 (41,100)
95,600 (140,700)
89,200
— (2,200)
(53,700)
97,700 72,500 100,400
76,800 Hungary 4,000 4,000 8,200 15,200 (8,600) 2,800
12,100 — 6,300 4,000 3,900 4,000 5,000 Romania 1,000 3,300 20,400
52,300 (29,900) 23,100 27,300 — 20,500 3,300 14,900 3,300 16,900
Poland 11,800 21,600 3,100 48,700 (47,500) 41,500 — — (6,000)
21,600 25,600 21,800 29,100 Czech Republic 2,900 2,900 4,900 18,300
(5,300) 6,900 1,800 — 3,400 2,900 9,000 3,000 5,900 Slovakia
1,500 1,400 2,600
11,900 (8,900)
6,900
2,800 (100)
700
2,300 5,400 5,200
5,800 Total Central & Eastern Europe
21,200 33,200 39,200
146,400 (100,200)
81,200
44,000 (100)
24,900
34,100 58,800 37,300
62,700 Total UPC Europe
36,500
104,200 (1,900)
242,000
(240,900)
170,400 44,000
(2,300)
(28,800)
131,800
131,300 137,700 139,500
VTR (Chile)
16,400 22,200
2,200 8,700 (15,800)
13,200 — —
(2,600)
22,200 6,000
22,400 5,300 Grand Total
52,900 126,400
300 250,700
(256,700) 183,600
44,000 (2,300)
(31,400) 154,000
137,300 160,100
144,800
ORGANIC CHANGE
SUMMARY:
UPC Europe 40,500 101,600 (8,700) 231,400 (240,900) 170,400 44,000
(2,300) (28,800) 129,200 124,800 137,300 135,400 VTR
16,400 22,200 2,200
8,700 (15,800)
13,200
— — (2,600)
22,200 6,000 22,400
5,300 Total Organic Change
56,900 123,800
(6,500) 240,100
(256,700) 183,600
44,000 (2,300)
(31,400) 151,400
130,800 159,700
140,700
ADJUSTMENTS:
Q4 2011 Ireland adjustment (2,200) 2,200 — — — — — — — 2,200 — — —
Q4 2011 Switzerland adjustment — — 6,800 10,600 — — — — — — 6,500 —
4,100 Q4 2011 Poland adjustment
(1,800)
400 — — —
— — — —
400 — 400 —
Net adjustments (4,000)
2,600 6,800
10,600 —
— — —
— 2,600
6,500 400
4,100 Total Net Adds (Reductions)
52,900 126,400
300 250,700
(256,700) 183,600
44,000 (2,300)
(31,400) 154,000
137,300 160,100
144,800
Footnotes for Operating Data and
Subscriber Variance Tables
(1) Homes Passed are homes or residential
multiple dwelling units that can be connected to our networks
without materially extending the distribution plant, except for
direct-to-home (“DTH”) and Multi-channel Multipoint (microwave)
Distribution System (“MMDS”) homes. Our Homes Passed counts are
based on census data that can change based on either revisions to
the data or from new census results. We do not count homes passed
for DTH. With respect to MMDS, one MMDS customer is equal to one
Home Passed. Due to the fact that we do not own the partner
networks (defined below) used in Switzerland and the Netherlands
(see note 13) or the unbundled loop and shared access network used
by one of our Austrian subsidiaries, UPC Austria GmbH (“Austria
GmbH”), we do not report homes passed for Switzerland’s and the
Netherlands’ partner networks or the unbundled loop and shared
access network used by Austria GmbH. (2) Two-way Homes Passed are
Homes Passed by those sections of our networks that are
technologically capable of providing two-way services, including
video and internet services and, in most cases, telephony services.
Due to the fact that we do not own the partner networks used in
Switzerland and the Netherlands or the unbundled loop and shared
access network used by Austria GmbH, we do not report two-way homes
passed for Switzerland’s or the Netherlands’ partner networks or
the unbundled loop and shared access network used by Austria GmbH.
(3) Customer Relationships are the number of customers who receive
at least one of our video, internet or voice services that we count
as Revenue Generating Units (“RGUs”), without regard to which, or
to how many services they subscribe. To the extent that RGU counts
include equivalent billing unit (“EBU”) adjustments, we reflect
corresponding adjustments to our Customer Relationship counts. For
further information regarding our EBU calculation, see Additional
General Notes to Tables below. Customer Relationships generally are
counted on a unique premises basis. Accordingly, if an individual
receives our services in two premises (e.g., a primary home and a
vacation home), that individual generally will count as two
Customer Relationships. We exclude mobile customers from Customer
Relationships. (4) Revenue Generating Unit is separately an Analog
Cable Subscriber, Digital Cable Subscriber, DTH Subscriber, MMDS
Subscriber, Internet Subscriber or Telephony Subscriber. A home,
residential multiple dwelling unit, or commercial unit may contain
one or more RGUs. For example, if a residential customer in our
Austrian system subscribed to our digital cable service, telephony
service and broadband internet service, the customer would
constitute three RGUs. Total RGUs is the sum of Analog Cable,
Digital Cable, DTH, MMDS, Internet and Telephony Subscribers. RGUs
generally are counted on a unique premises basis such that a given
premises does not count as more than one RGU for any given service.
On the other hand, if an individual receives one of our services in
two premises (e.g. a primary home and a vacation home), that
individual will count as two RGUs for that service. Each bundled
cable, internet or telephony service is counted as a separate RGU
regardless of the nature of any bundling discount or promotion.
Non-paying subscribers are counted as subscribers during their free
promotional service period. Some of these subscribers may choose to
disconnect after their free service period. Services offered
without charge on a long-term basis (e.g., VIP subscribers, free
service to employees) generally are not counted as RGUs . (5)
Analog Cable Subscriber is a home, residential multiple dwelling
unit or commercial unit that receives our analog cable service over
our broadband network. In Europe, we have approximately 445,900
“lifeline” customers that are counted on a per connection basis,
representing the least expensive regulated tier of video cable
service, with only a few channels. (6) Digital Cable Subscriber is
a home, residential multiple dwelling unit or commercial unit that
receives our digital cable service over our broadband network or
through a partner network. We count a subscriber with one or more
digital converter boxes that receives our digital cable service in
one premises as just one subscriber. A Digital Cable Subscriber is
not counted as an Analog Cable Subscriber. As we migrate customers
from analog to digital cable services, we report a decrease in our
Analog Cable Subscribers equal to the increase in our Digital Cable
Subscribers. Subscribers in Switzerland who use purchased set-top
boxes or other means to receive our basic digital cable service,
but do not pay a recurring monthly service fee in addition to the
basic analog service fee, are counted as Digital Cable Subscribers
to the extent that such individuals are subscribing to our analog
cable service. At December 31, 2011, we included 63,600 of these
subscribers in the Digital Cable Subscribers reported for
Switzerland. In the case of Switzerland, we estimate the number of
such subscribers. Subscribers to digital cable services provided by
our Switzerland operations over partner networks receive analog
cable services from the partner networks as opposed to our
Switzerland operations. (7) DTH Subscriber is a home, residential
multiple dwelling unit or commercial unit that receives our video
programming broadcast directly via a geosynchronous satellite. (8)
MMDS Subscriber is a home, residential multiple dwelling unit or
commercial unit that receives our video programming via MMDS. (9)
Internet Homes Serviceable are Two-way Homes Passed that can be
connected to our network, or a partner network with which we have a
service agreement, for the provision of broadband internet services
if requested by the customer, building owner or housing
association, as applicable. With respect to Austria GmbH, we do not
report as Internet Homes Serviceable those homes served either over
an unbundled loop or over a shared access network. (10) Internet
Subscriber is a home, residential multiple dwelling unit or
commercial unit that receives internet services over our networks,
or that we service through a partner network. Our Internet
Subscribers in Austria include 70,200 residential digital
subscriber line (“DSL”) subscribers of Austria GmbH that are not
serviced over our networks. Our Internet Subscribers do not include
customers that receive services from dial-up connections. (11)
Telephony Homes Serviceable are Two-way Homes Passed that can be
connected to our network, or a partner network with which we have a
service agreement, for the provision of telephony services if
requested by the customer, building owner or housing association,
as applicable. With respect to Austria GmbH, we do not report as
Telephony Homes Serviceable those homes served over an unbundled
loop rather than our network. (12) Telephony Subscriber is a home,
residential multiple dwelling unit or commercial unit that receives
voice services over our networks, or that we service through a
partner network. Telephony Subscribers exclude mobile telephony
subscribers. Our Telephony Subscribers in Austria include 52,700
residential subscribers of Austria GmbH that are not serviced over
our networks. (13) Pursuant to service agreements, Switzerland and,
to a much lesser extent, the Netherlands offer digital cable,
broadband internet and telephony services over networks owned by
third-party cable operators (partner networks). A partner network
RGU is only recognized if there is a direct billing relationship
with the customer. Homes Serviceable for partner networks represent
the estimated number of homes that are technologically capable of
receiving the applicable service within the geographic regions
covered by the applicable service agreements. Internet and
Telephony Homes Serviceable with respect to partner networks have
been estimated by our Switzerland operations. These estimates may
change in future periods as more accurate information becomes
available. At December 31, 2011, Switzerland’s partner networks
account for 118,500 Customer Relationships, 203,500 RGUs, 80,200
Digital Cable Subscribers, 477,600 Internet and Telephony Homes
Serviceable, 72,700 Internet Subscribers, and 50,600 Telephony
Subscribers. In addition, partner networks account for 491,800 of
Switzerland’s digital cable homes serviceable, that are not
included in Homes Passed or Two-way Homes Passed in our December
31, 2011 subscriber table.
Additional General Notes to
Tables:
Certain of our residential and commercial
RGUs are counted on an EBU basis, including residential multiple
dwelling units and commercial establishments, such as bars, hotels
and hospitals, in Chile and certain commercial establishments in
Europe. Our EBUs are generally calculated by dividing the bulk
price charged to accounts in an area by the most prevalent price
charged to non-bulk residential customers in that market for the
comparable tier of service. As such, we may experience variances in
our EBU counts solely as a result of changes in rates. On a
business-to-business (“B2B”) basis, certain of our subsidiaries
provide voice, broadband internet, data and other services to
businesses, primarily in Switzerland, the Netherlands, Austria,
Hungary, Ireland, Romania, the Czech Republic and Poland. We
generally do not count customers of B2B services as customers or
RGUs for external reporting purposes. In this regard, the RGUs
presented in our December 31, 2011 subscriber table exclude 132,100
small office and home office (“SOHO”) subscribers to B2B internet
(66,700), telephony (44,400) and digital cable (21,000) services
provided by our UPC Europe Division.
While we take appropriate steps to ensure
that subscriber statistics are presented on a consistent and
accurate basis at any given balance sheet date, the variability
from country to country in (i) the nature and pricing of products
and services, (ii) the distribution platform, (iii) billing
systems, (iv) bad debt collection experience and (v) other factors
add complexity to the subscriber counting process. We periodically
review our subscriber counting policies and underlying systems to
improve the accuracy and consistency of the data reported on a
prospective basis. Accordingly, we may from time to time make
appropriate adjustments to our subscriber statistics based on those
reviews.
Subscriber information for acquired entities is preliminary and
subject to adjustment until we have completed our review of such
information and determined that it is presented in accordance with
our policies.
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