277,000 Subscriber Adds, Double Prior Year & Up 78%
Sequentially
H1 Rebased Revenue Growth of 3% Reaching ~$10 billion
Aggressive Equity Repurchases Totaling ~$700 million in
Q2
Closing of Strategic Cable & Wireless Deal Transforms
LiLAC
Received Conditional Regulatory Clearance for Dutch Joint
Venture
Updating 2016 Guidance to Include BASE and CWC
Liberty Global plc ("Liberty Global") (NASDAQ: LBTYA, LBTYB,
LBTYK, LILA and LILAK), today announces financial and operating
results for the three months ("Q2") and six months ("YTD" or "H1")
ended June 30, 2016 for the Liberty Global Group1 and the LiLAC
Group1.
Key highlights for the consolidated operations of Liberty
Global plc
- Q2 Organic RGU2 additions of 277,000, a
two-fold increase versus 138,000 in Q2 2015
- Driven by well-balanced improvements
across all three products, aided by new build
- Substantial year-over-year improvement
driven by the U.K., the Netherlands & Germany
- YTD RGU additions total 433,000,
powered by 369,000 broadband internet additions
- Over 500,000 homes built or upgraded
YTD, program on track for 1.5 million homes in 2016
- Rebased3 revenue growth of 3% YTD,
reaching $9.7 billion
- Q2 rebased revenue growth of 2.5%
adversely impacted by the Netherlands
- Germany at 7%, Chile at 4.5%, and
Belgium at 3.5% key Q2 contributors
- Operating income of $1.1 billion YTD
down 9% YoY, including $488 million in Q2 down 22%
- YTD OCF4 of $4.4 billion, reflecting
rebased growth of 2%
- Q2 rebased OCF growth of 1%, expect
significant H2 acceleration
- Liberty Global Group 2016 rebased OCF
guidance, now including BASE5: 4-5%
- LiLAC Group 2016 rebased OCF guidance,
now including CWC6: remains 5-7%
- YTD net cash provided by operating
activities, net cash used by investing activities and netcash
provided by financing activities of $2.7 billion, $2.6 billion and
$168 million, respectively
- Q2 Free Cash Flow ("FCF")7 of $481
million, including $516 million attributed to Europe
- Liberty Global Group 2016 FCF guidance,
now including BASE: $1.8 billion8
- LiLAC Group FCF still expected to be
limited in 2016, now including CWC8
- Repurchased nearly $700 million of
equity in Q2, including ~$300 million in late June
Operating and financial highlights for Liberty Global Group,
our European business
- Organic Q2 RGU additions of 231,000,
~140% improvement versus Q2 2015
- YoY Q2 increase driven by improvements
in all three cable products
- Added 109,000 organic postpaid mobile
subscribers in Q2 2016
- Solid Q2 mobile postpaid adds in the
U.K. of 40,000 and 28,000 in Belgium
- Next-generation9 video base surpassed
seven million subscribers in Q2
- Added 184,000 Horizon TV and 66,000
TiVo subscribers
- Rebased revenue growth of 3% in Q2,
supported by B2B (including SOHO) growth of 11%
- Operating income contraction of 9% to
$509 million in Q2
- Q2 rebased OCF growth of 1%, increasing
to 2% when excluding Ziggo as per guidance
- Q2 growth adversely impacted by certain
nonrecurring and nonoperational items
- Active capital management creates
balance sheet strength, seven year average debt tenor
- Net leverage10 of 4.9x in Q2, down from
5.3x at March 31, 2016
- Blended cost of debt11 at 4.7% and
total liquidity12 of $4.6 billion
Operating and financial highlights for LiLAC Group, our Latin
American & Caribbean business
- Gained 46,000 RGU additions and 18,000
organic customer13 additions in Q2 2016
- Continued traction in Chile with 37,000
new RGUs, best quarterly result in three years
- Cable & Wireless ("CWC") added
7,000 RGUs post the mid-May acquisition
- Ended Q2 2016 with 3.8 million mobile
subscribers following the CWC acquisition
- CWC integration well underway, expect
to provide synergy update later this year
- Rebased revenue growth of 3% YTD, led
by VTR's 6% growth in Chile
- Q2 rebased revenue growth of 1%,
impacted by CWC revenue contraction of 1%
- Operating loss of $21 million in Q2
2016 as compared to $66 million operating gain in Q2 2015
- Rebased OCF grew 6% YTD, supported by
all three operations
- 3% rebased OCF growth in Q2 with 5%
growth in Puerto Rico and 4% at CWC
- Finished Q2 with net leverage of 4.1x,
including over $500 million in cash
CEO Mike Fries stated, "As we continue to put the building
blocks of Liberty Go in place, we are starting to see the first
evidence of success with the acceleration of our subscriber
additions in the first half of 2016. We substantially outperformed
our prior-year Q2 and our sequential Q1 results with the addition
of 277,000 RGUs in Q2 this year. Unitymedia in Germany added
109,000 RGUs, representing our best quarterly result in eighteen
months, while Virgin Media in the U.K. posted 66,000 RGU additions,
our best Q2 performance in the U.K. in eight years. Over the first
six months of 2016, we doubled our subscriber additions compared to
last year with improvements across all three cable products, while
at the same time adding over 200,000 new postpaid mobile
subscribers. Looking ahead, we expect our new build activity to
continue providing a tailwind to our subscriber volumes, further
supported by our investments to innovate around superior broadband
speeds and next-generation video platforms, along with the
development of the most advanced fixed-mobile converged products in
our markets.”
"In Europe we reported 4.0% rebased revenue and 2.4% rebased OCF
growth for Q2 (excluding Ziggo and BASE), with solid performances
in Germany, Belgium and, to a lesser extent, our U.K. business. In
that market, our OCF growth in Q2 was adversely impacted by certain
nonrecurring and nonoperational items. In the second half of 2016,
we expect that our rebased OCF growth in the U.K. and overall will
significantly improve, driven by the impacts of new build and the
related acceleration in subscriber additions, as well as the first
efficiencies from our Liberty Go initiative. And we remain
committed to delivering 7-9%14 rebased OCF growth through the end
of 2018."
"On the M&A front, we received conditional Phase 1 clearance
from the European Commission for our proposed joint venture with
Vodafone in the Netherlands. The approval is great news for all
Dutch consumers and businesses, as well as for our shareholders, as
the combination will create a truly converged company with
compelling organic growth prospects and substantial synergies. In
May, we closed the Cable & Wireless transaction, transforming
our LiLAC business into a regional powerhouse with over five
million fixed and nearly four million mobile subscribers across
Latin America and the Caribbean. In addition, the recent
distribution of LiLAC shares has significantly enhanced the trading
liquidity of that security."
"In late June, British voters decided to leave the EU.
Fortunately, the debt on our balance sheet remains hedged against
currency and interest rate exposures, while our average tenor
currently stands at seven years. As a side note, we have not seen a
slowdown of demand in the U.K., sales are actually up
year-over-year. Finally, while we were restricted on share buybacks
in the early part of Q2 due to the pending Cable & Wireless
transaction, we have been aggressive buyers since closing. In
total, we repurchased $700 million of stock in Q2, including $300
million in the days post-Brexit. We remain fully committed to
repurchasing at least $3.0 billion of additional equity by the end
of next year."
Subscriber Statistics - Liberty Global Group (Europe)
At June 30, 2016, Liberty Global Group provided a total of 53.9
million subscription services ("RGUs") across its footprint of 49.8
million homes passed15 in Europe. These services consisted of 22.5
million video, 17.1 million broadband internet and 14.3 million
telephony RGUs. As compared to March 31, 2016, we increased our
total RGUs by 231,000 on an organic basis. This was more than
double the 97,000 organic RGU additions that we delivered in Q2
2015, driven by well-balanced improvements across all three
fixed-line products and aided by the ongoing network expansion
across our footprint. On a sequential basis, net additions
increased by 70% or 97,000 RGUs, mainly driven by an improved video
performance. Supported by record Q2 growth in the U.K. with 31,000
customers and strong customer additions in Germany of 11,000, our
base in Europe expanded by 4,000 on an organic basis in Q2 to 25.7
million unique customers. We ended the quarter with a bundling
ratio of 2.1 RGUs per customer, as 46% of our customers subscribed
to a triple-play (11.8 million), 17% subscribed to a double-play
(4.5 million) and 37% subscribed to a single-play product (9.4
million).
From a geographical perspective, our Q2 2016 organic RGU
additions were led by our Western European performance, where we
delivered 140,000 net additions. This result was a substantial
improvement from the 45,000 RGUs that we added in the second
quarter of 2015. Meanwhile, our Central and Eastern Europe ("CEE")
region also showed a strong year-over-year improvement, adding
92,000 organic additions in Q2 2016, nearly double our result from
the prior-year quarter. From an individual country performance, our
Western European result was fueled by Virgin Media in the U.K.,
which reported 66,000 subscriber additions. This result, which was
Virgin Media's best Q2 performance in the U.K. in eight years, was
supported by strong marketing campaigns, new Project Lightning
homes and record low churn. Another notable performer in Q2 was
Germany, where Unitymedia delivered RGU additions of 109,000, its
best quarterly performance in the last 18 months. This success was
partly credited to our "Highspeed Weeks" campaign, which resulted
in increased uptake of our high speed broadband bundles, as 80% of
new subscribers were signing up for packages with broadband speeds
of 120 Mbps or higher. In Belgium, Telenet added 18,000 subscribers
in Q2, nearly a 25% year-over-year improvement that was bolstered
by the attractiveness of its superior entertainment bundles and new
WIGO campaign, which features Telenet's first all-in-one converged
offering.
Elsewhere in Europe, UPC in Switzerland experienced RGU
attrition of 20,000 in Q2, due in part to our higher-priced product
portfolio in an intensified competitive environment. The Swiss Q2
performance, which was similar to our Q1 RGU loss in Switzerland,
was driven by lower sales that more than offset improved sequential
churn levels across all products. Rounding out our key Western
European operations, Ziggo in the Netherlands posted RGU attrition
of 28,000 in Q2 2016, which reflects an improvement of 12,000 RGUs
sequentially and 59,000 RGUs year-over-year. Our Dutch performance
was attributable to lower churn and higher sales, as the
investments in our customer service and entertainment platform are
beginning to yield results.
Turning to our product performance, our organic subscriber
growth was powered again by our broadband internet results, as we
added 160,000 RGUs in Q2 2016, a 46% acceleration as compared to
the 110,000 RGUs gained in Q2 2015. This was mainly driven by
year-over-year improvements in the U.K. (36,000) and the
Netherlands (20,000). Similarly, our Q2 fixed-line telephony RGU
additions of 143,000 improved 45% year-over-year, led by the U.K.
and Germany with 23,000 and 18,000 improvements, respectively.
Looking at our video performance, we lost 72,000 subscribers in
Q2 2016, a significant improvement versus the 111,000 video
attrition that we posted in Q2 2015. In total, nine out of our 12
European countries reported better year-over-year video results, of
which Ziggo delivered the most material improvement, as video
attrition in the Netherlands decreased by 24,000 RGUs. At the end
of Q2, we had 14.2 million enhanced video subscribers16,
representing enhanced video penetration17 of 66%, and 7.5 million
basic video subscribers18. With regard to our next-generation video
subscriber base, which includes TiVo, Horizon TV (including
Horizon-Lite) and Yelo TV, we added 304,000 subscribers in Q2 2016,
while surpassing two milestones. In the U.K., Virgin Media
delivered 66,000 new TiVo subscribers and crossed the three million
subscriber threshold, representing 82% of our U.K. video base.
Also, our next-generation TV subscriber count at the end of Q2 2016
surpassed seven million subscribers for the first time. With
respect to our Horizon product suite, we added 184,000 subscribers
to Horizon TV and 45,000 to Horizon-Lite in Q2 2016. The markets
with the biggest Horizon TV gains in the quarter were at Ziggo with
91,000, Unitymedia with 42,000 and Poland with 35,000. Furthermore,
we rolled out our Horizon-Lite product, which provides a
Horizon-like user interface on legacy boxes and thereby improves
the customer experience, in Slovakia (38,000) and Hungary (7,000)
during Q2. Finally, we expanded our popular Replay TV functionality
to Horizon-Lite (Czech, Slovakia and Hungary) and Horizon Go in
three additional countries (Switzerland, Czech and Slovakia) during
Q2. Currently, 36% of our total video base (in countries that offer
next-generation TV services) subscribed to one of our innovative
next-generation TV platforms at June 30, 2016, as compared to 29%
one year ago.
With respect to our wireless business in Europe, we finished Q2
2016 with 6.7 million mobile subscribers19. During the second
quarter of 2016, we added 105,000 postpaid subscribers, partially
offset by a loss of 53,000 lower-ARPU20 prepaid subscribers. This
net growth of 52,000 mobile subscribers was primarily driven by our
Western European operations, which added 47,000 subscribers, while
our CEE countries contributed 6,000 additions. From a country
perspective, the U.K. and Switzerland gained 24,000 and 15,000
mobile subscribers, respectively. The results in the U.K. were led
by our continued focus on gaining postpaid subscribers, adding
40,000 in Q2 2016 and 181,000 subscribers over the last twelve
months, on the back of the continued success of our
split-contracts21 Freestyle proposition. The growth of 15,000
mobile subscribers in Switzerland in Q2 marks a material step-up,
both sequentially and year-over-year, helped by the success in our
larger retail shop presence, as well as our "Mega Deal" campaign,
which promotes our mid-tier mobile offering to our fixed-line
customers. Meanwhile in Belgium, Telenet added 28,000 postpaid
mobile subscribers organically in Q2, but this was more than offset
by the loss of 36,000 prepaid subscribers from the former BASE
business. The growth in postpaid was partly driven by attractive
"Family Deal" offers, early success of Telenet's new WIGO offering
and the continued success of split-contracts,21 which were
introduced in Q3 2015. We also had modest additions in Austria,
Ireland, Germany and CEE. On the product innovation front, we
successfully launched our 4G mobile services in Austria and Ireland
in July, and we also extended our split-contract Freestyle
proposition to Ireland.
Revenue - Liberty Global Group (Europe)
For the three and six months ended June 30, 2016, revenue
attributed to the Liberty Global Group increased 5% to $4.5 billion
and 3% to $8.8 billion, respectively, as compared to the
corresponding 2015 periods. For both periods, our reported revenue
growth was driven primarily by the inclusion of BASE in Belgium and
our organic revenue growth, partially offset by negative foreign
currency ("FX") movements, mainly related to the strengthening of
the U.S. dollar against the British pound. When adjusting to
neutralize the impact of acquisitions, dispositions and FX, our
operations attributed to the Liberty Global Group achieved
year-over-year rebased revenue growth of 3% during both the three
and six months ended June 30, 2016.
Our rebased revenue performance during the YTD period included
the net effect of certain nonrecurring and non-operational items,
the most significant of which was the $21 million net positive
impact of the upfront recognition of mobile handset revenue,
largely in connection with our split-contract21 programs in the
U.K., Belgium and Switzerland. In addition, the favorable $9
million impact of the YTD higher amortization of deferred upfront
fees on B2B contracts22 in the U.K. was more than offset by a $10
million reduction in cable subscription revenue resulting from a
change in the regulations governing certain fees Virgin Media
charges to its customers in the U.K. The net effect of nonrecurring
and non-operational items in Q2 was not material.
From a geographic perspective, we delivered 3% rebased revenue
growth in Western Europe in Q2, consistent with the results that we
posted in the prior-year period and in Q1 2016. Our Central and
Eastern European operations also delivered 3% rebased revenue
growth, an improvement from 1% growth in Q2 2015 and in-line with
Q1 2016. The year-over-year improved performance in CEE was
primarily the result of improvement in our DTH operation, as well
as in our businesses in the Czech Republic and Poland.
Turning back to Western Europe, which represents nearly 95% of
Liberty Global Group's revenue, our second quarter 2016 top-line
performance was highlighted by our results in Germany, where we
posted 7% rebased revenue growth, an improved result as compared to
the 6% rebased growth that we reported in Q2 2015. Our German
performance was primarily attributable to higher cable subscription
revenue, driven by an increase in both ARPU per RGU and
subscribers. In Belgium, Telenet posted 3.5% rebased revenue growth
in Q2, as higher top-line growth in Telenet's legacy business was
partly offset by revenue headwinds in the recently acquired BASE
mobile business. Meanwhile, at Virgin Media, we reported 3% rebased
revenue growth in Q2, mainly driven by accelerated RGU growth. In
addition, Virgin Media's top-line continued to be supported by
higher business revenue, partly driven by increases in underlying
data volumes, and our mobile business. Looking ahead, we anticipate
Virgin Media's revenue growth in the second half of 2016 to be
higher than the first half of the year as we expect to benefit from
continued volume growth, increasingly driven by Project Lightning,
and ARPU improvements. In Switzerland/Austria, our rebased revenue
growth was 2% in Q2 2016, where improvements in mobile revenue and
higher ARPU per RGU more than offset the effects of the
aforementioned subscriber attrition.
Finally, in the Netherlands, Ziggo reported a rebased revenue
decline of 3% in Q2, consistent with the past three quarters, as
RGU losses over the last twelve months and lower ARPU per RGU more
than offset revenue gains in mobile. Looking ahead, we expect to
benefit from the July 1, 2016 price increase, but due to subscriber
losses over the last twelve months and the current competitive
environment, we foresee continued top-line pressure throughout
2016.
Our B2B (including SOHO)22 and mobile operations (including
interconnect and handset sales) posted Q2 rebased revenue growth
rates of 11% and 2%23, respectively, as compared to Q2 2015. Of
note, the mobile rebased revenue growth was negatively impacted by
the aforementioned BASE revenue headwinds.
Operating Income - Liberty Global Group (Europe)
For the three and six months ended June 30, 2016, Liberty Global
Group's operating income was $509 million and $1.0 billion,
respectively, representing declines of 9% and 3%, respectively,
when compared to the prior-year periods. These declines were
primarily due to the net effect of (i) increases in impairment,
restructuring and other operating items, net, (ii) increases in
OCF, as described below, and (iii) for the three-month comparison,
an increase in share-based compensation expense.
Operating Cash Flow - Liberty Global Group (Europe)
For the three and six months ended June 30, 2016, OCF for the
operations attributed to the Liberty Global Group was $2.1 billion
and $4.1 billion, respectively, representing 1% growth
year-over-year in each period. The result for the three-month
period was driven primarily by the aforementioned inclusion of BASE
and our organic OCF growth, while the six-month period result was
primarily driven by organic OCF growth, and, to a lesser extent,
the inclusion of BASE. Both periods were negatively affected by FX
movements, mainly related to the appreciation of the U.S. dollar
relative to the British pound. On a rebased basis, the operations
attributed to the Liberty Global Group reported OCF growth for the
three and six months ended June 30, 2016 of 1% and 2%,
respectively.
The Liberty Global Group rebased OCF performance for Q2 2016 was
partially impacted by the nonrecurring and non-operational revenue
items mentioned above and the fact that our Q2 2015 costs benefited
from the favorable net impact of nonrecurring or non-operational
items to a greater extent than did our Q2 2016 costs. The most
significant of these items was the $11 million negative impact of
reduced network infrastructure charges in the U.K. in Q2 2015, the
$8 million positive impact of lower year-over-year Ziggo
integration expenses in the Netherlands, the negative impact of an
$8 million nonrecurring favorable settlement of an operational
contingency at Telenet in Q2 2015 and the positive impact of a
similar nonrecurring favorable settlement of $7 million at Telenet
in Q2 2016. For the YTD 2016 period, a benefit related to the H1
2015 Ziggo integration costs of $23 million was partly offset by
various nonrecurring and non-operational items in the first half of
2015, mainly in the U.K. As a result, the impact of nonrecurring
and non-operational items on our costs in the YTD period was
limited.
From a regional standpoint, our Western European operations
delivered 2% rebased OCF growth in the second quarter of 2016,
while our CEE operations reported a 2% rebased OCF contraction. The
CEE performance was partially related to revenue growth that was
more than offset by higher costs largely related to increased
programming costs and staff-related and sales and marketing costs
related to new build activities.
Looking at Liberty Global Group's markets in Western Europe, our
second quarter performance was led by Unitymedia in Germany, which
posted 7% rebased OCF growth in Q2 2016, mainly due to the
previously mentioned revenue drivers. With respect to our
operations in Switzerland/Austria, we delivered 4% rebased OCF
growth in Q2 2016, mainly due to the previously mentioned revenue
drivers and lower staff and network related expenses that were
partly attributable to the integration of our Swiss and Austrian
organizations.
Moving to our largest operation, Virgin Media posted 1% rebased
OCF growth in Q2, as the aforementioned revenue growth drivers were
partially offset by higher programming costs and the negative
impact of favorable nonrecurring items in the prior year. Telenet
in Belgium reported 1% rebased OCF growth, supported by the
previously-mentioned revenue drivers of our legacy fixed business,
partly offset by BASE's OCF contraction. Rounding out our Western
European operations, Ziggo posted a 4% rebased OCF contraction, as
lower revenue and higher programming costs were only partially
offset by lower indirect expenses.
The Liberty Global Group reported OCF margins24 of 46.4% and
46.5% for the three and six months ended June 30, 2016,
respectively, as compared to the 48.4% and 47.7% margins that were
reported for the corresponding prior-year periods. The
year-over-year declines were affected by the inclusion of the lower
OCF margins of BASE and the revenue and OCF trends noted above.
Property and Equipment Additions - Liberty Global Group
(Europe)
For the three months ended June 30, 2016, the Liberty Global
Group reported property and equipment ("P&E") additions25 of
$1.1 billion or 24.6% of revenue, as compared to $971 million or
22.8% of revenue in Q2 2015. In terms of our YTD performance, we
incurred P&E additions of $2.0 billion or 23.1% of revenue in
the 2016 period versus $1.8 billion or 21.7% of revenue in the
prior-year period.
The increase in absolute P&E additions for the Q2 and YTD
2016 periods is principally due to increased line extension and
scalable infrastructure spend related to new build and upgrade
activities across our footprint. In addition, the absolute increase
in the YTD period includes higher customer premises equipment
("CPE") spend as a result of higher subscriber volumes. The higher
absolute local currency P&E spend for both periods was
partially offset by the strengthening of the U.S. dollar against
the British pound.
In terms of the breakdown of our Q2 2016 P&E additions by
category, 48% pertained to line extensions, upgrade/rebuild and
scalable infrastructure, 27% was related to CPE and 25% was related
to support capital.
Condensed Consolidated Statements of Cash Flows - Liberty
Global Group (Europe)
For the six months ended June 30, 2016, the Liberty Global
Group's net cash provided by operating activities was $2,561
million, as compared to $2,552 million during the prior-year
period. This increase in cash provided is primarily attributable to
the net effect of (i) lower cash payments related to derivative
instruments, (ii) higher payments for interest, (iii) an increase
in cash provided by OCF and related working capital items and (iv)
higher payments for taxes.
For the six months ended June 30, 2016, the Liberty Global
Group's net cash used by investing activities was $2,403 million,
as compared to $1,419 million during the prior-year period. This
increase in cash used is primarily attributable to the net effect
of (i) an increase in cash used of $1,336 million associated with
higher cash paid in connection with acquisitions, (ii) a decrease
in cash used of $117 million associated with lower cash paid
related to investments in and loans to affiliates and others, (iii)
an increase in cash of $111 million related to net inter-group cash
payments and receipts and (iv) a decrease in cash used of $70
million as a result of cash proceeds received in connection with
the settlement of certain litigation.
For the six months ended June 30, 2016, the Liberty Global
Group's net cash used by financing activities was $109 million, as
compared to $1,602 million during the prior-year period. This
decrease in cash used is primarily attributable to (i) $432 million
related to higher net borrowings of debt, (ii) $292 million due to
lower payments for financing costs and debt premiums, (iii) $260
million due to lower payments related to derivative instruments,
(iv) $191 million due to lower repurchases of Liberty Global
ordinary shares, (v) $142 million related to purchases of
additional shares of our subsidiaries during the 2015 period and
(vi) $130 million associated with an increase in cash received from
call option contracts on Liberty Global ordinary shares.
Free Cash Flow - Liberty Global Group (Europe)
For the three and six months ended June 30, 2016, our operations
attributed to the Liberty Global Group generated free cash flow of
$516 million and $412 million, respectively, as compared to $539
million and $894 million, respectively, in the prior-year
periods.
The decline in our FCF in Q2 2016, as compared to Q2 2015, was
attributable to the net effect of (i) lower benefits from vendor
financing activities, (ii) improvements in cash provided from OCF
and related working capital items and (iii) lower interest payments
(including related derivative instruments). The year-over-year
decrease in the YTD period was primarily due to lower benefits from
vendor financing activities and a decrease in cash provided from
OCF and related working capital items.
Looking ahead, we are updating our Liberty Global Group guidance
for FCF8 in 2016. Including the Netherlands for the full-year and
BASE from February 12, 2016, we expect to deliver $1.8 billion of
FCF in 2016 based on the FX rates as of August 2, 2016.
Leverage, Liquidity & Shares Outstanding - Liberty Global
Group (Europe)
At June 30, 2016, we had attributed total third-party debt26 of
$46.0 billion and cash and cash equivalents of $786 million for the
Liberty Global Group. As compared to Q1 2016, our third-party debt
decreased by $1.1 billion on a sequential basis, primarily due to
the weakening of most of our borrowing currencies against the U.S.
dollar.
After excluding $2.3 billion of debt backed by shares we hold in
ITV plc, Sumitomo Corporation and Lions Gate Entertainment Corp.,
Liberty Global Group's consolidated adjusted gross and net leverage
ratios were 5.0x and 4.9x, respectively, at June 30, 2016. Both of
these ratios decreased as compared to March 31, 2016. The declines
of 0.4x for both adjusted gross and net leverage ratios were mainly
the result of a sequential increase in the reported quarterly OCF
and the aforementioned lower debt balance due to the weakening of
all of our borrowing currencies against the U.S. dollar.
At the end of the of Q2 2016, Liberty Global Group's average
tenor of third-party debt was seven years, 91% of which comes due
in 2021 and after. Our blended fully-swapped borrowing cost of such
debt was 4.7% as of June 30, 2016. Our consolidated liquidity
position on June 30, 2016 was approximately $4.6 billion, including
$786 million of cash, and the aggregate unused borrowing capacity
under our credit facilities27 totaled $3.8 billion.
At July 29, 2016, we had 920 million Liberty Global Group shares
outstanding, including 264 million Class A ordinary shares, 11
million Class B ordinary shares and 645 million Class C ordinary
shares.
Subscriber Statistics - LiLAC Group
At June 30, 2016, the LiLAC Group provided a total of 5.4
million subscription services to our 3.0 million unique fixed-line
customers across our footprint of 6.0 million homes passed
predominantly located within Latin America and the Caribbean. These
services consisted of 1.7 million video, 2.0 million broadband
internet and 1.7 million telephony subscriptions. As a result of
the closing of the CWC acquisition on May 16, 2016, our total
customers and RGUs increased by 1.3 million and 1.9 million,
respectively. In terms of our Q2 2016 quarterly organic additions,
including CWC's results for the stub period, we delivered 18,000
customer and 46,000 RGU additions. We ended Q2 2016 with a bundling
ratio of 1.8 RGUs per customer, providing ample headroom for
growth, as 29% of our customers subscribed to triple-play (0.8
million), 27% to double-play (0.8 million) and 44% to single-play
products (1.3 million).
Looking at product performance, our organic subscriber growth
was fueled by 31,000 broadband additions in Q2 2016, driven by
superior speeds in markets like Chile and Puerto Rico. We also
added 10,000 video subscribers and 5,000 telephony subscribers
during Q2 2016.
Geographically, in Chile, we added 37,000 RGUs in Q2 2016,
in-line with our performance in the prior-year period. Of note, VTR
delivered record quarterly customer additions of 24,000 during the
quarter. Subscriber growth was led by 30,000 broadband additions,
up over 30% year-over-year, driven by the continued success of our
“Vive Más” bundles. Further, we added 10,000 video subscribers,
supported by our offers that feature the most HD channels in the
market, while losing 3,000 fixed-line telephony subscribers.
Turning to our newly acquired CWC business, which spans a number
of markets, we gained 7,000 RGUs during the last six weeks of Q2,
consisting of 5,000 fixed-line telephony additions, 1,000 broadband
internet gains and 1,000 video additions. More specifically, in
Panama we added 4,000 RGUs during the period, consisting primarily
of 3,000 video and 1,000 broadband RGU subscribers. This growth
resulted in part from strong take-up of our DTH product and
capitalization of our improved and expanding fixed network.
Continued network investments also supported our gain of 8,000 RGU
additions in Jamaica, with growth across each of our three
fixed-line services. In the Bahamas, we experienced relatively flat
broadband and fixed-line voice performance during the stub period,
but plan to launch a video product in Q3 that we expect will
strengthen our competitive position. Meanwhile, we lost 6,000
subscribers across our other markets, including 2,000 and 1,000
RGUs in Trinidad & Tobago and Barbados, respectively, which
were characterized by challenging competitive and macroeconomic
environments.
Finally, in Puerto Rico we gained 2,000 RGUs during the quarter,
consisting of 4,000 fixed-line voice additions, flat broadband
results and 2,000 video losses. Early in Q2, the former Choice
footprint was re-branded under the Liberty Puerto Rico moniker, and
our Q2 result included bundling success in the legacy Choice
footprint. We continue to operate in a very difficult macroeconomic
environment, but continue to benefit from our market-leading
broadband speeds.
On the mobile front, we ended the quarter with 3.8 million
subscribers, the vast majority of which were attributed to CWC (3.7
million). The highlight of the quarter in mobile was our
performance in Chile, in which we added 7,000 mobile subscribers,
composed of 8,000 postpaid additions and 1,000 low-ARPU prepaid
losses. Additionally in Chile, we implemented several operational
improvements associated with our mobile strategy that contributed
to the positive results for the quarter. Moving to CWC, our mobile
subscribers decreased by 1,000 organically during the stub period,
driven primarily by a loss of 4,000 prepaid subscribers. More
specifically, we continued to gain market share in Jamaica, which
is one of the largest telecommunications markets in the region, as
we added 3,000 mobile subscribers for the Q2 stub period. We also
added a modest 1,000 subscribers in Panama, where competition
remains intense in a prepaid market characterized by aggressive
promotional activity. Offsetting our performance in Jamaica and
Panama, we experienced a decline of 5,000 subscribers across the
remainder of the CWC footprint, including 2,000 in Barbados.
Acquisition of Cable & Wireless - LiLAC Group
On May 16, 2016, a subsidiary of Liberty Global acquired CWC.
Accordingly, CWC is included in Liberty Global's and LiLAC's
financial information under Liberty Global's U.S. GAAP accounting
policies effective May 16, 2016.
Revenue - LiLAC Group
For the operations attributed to the LiLAC Group, our reported
revenue increased 94% to $603 million and 51% to $907 million for
the three and six months ended June 30, 2016, as compared to the
corresponding 2015 periods. For both periods, our reported growth
was primarily driven by the acquisitions of CWC and Choice and, to
a lesser extent, our organic revenue growth, partially offset by
adverse FX movements. During the 45-day stub period from May 16 to
June 30, 2016, CWC contributed $286 million of revenue. When
adjusting to neutralize the impact of acquisitions and FX, our
operations attributed to the LiLAC Group achieved year-over-year
rebased revenue growth of 1% and 3% for the three and six months
ended June 30, 2016, respectively.
From a geographic perspective, our Chilean operation reported
year-over-year rebased revenue growth of 4.5% in Q2 2016, primarily
attributable to higher cable subscription revenue, driven by an
increase in both subscribers and ARPU per RGU, and growth in our
mobile subscription revenue. This growth was partially offset by a
decrease associated with the application of tariff decree
reductions on ancillary services to former customers. In Puerto
Rico, we posted 1% year-over-year rebased growth during the second
quarter, as growth in B2B was partially offset by volume and ARPU
per RGU declines in cable subscription revenue.
CWC experienced a 1% rebased revenue contraction for the period
from May 16, 2016 through June 30, 2016, as compared to the
corresponding prior-year period, as our revenue growth in Jamaica
and Panama was more than offset by declines in Barbados, the
Bahamas and Trinidad & Tobago.
Operating Income - LiLAC Group
For the three and six months ended June 30, 2016, operations
attributed to the LiLAC Group reported operating income (loss) of
($21 million) and $39 million, respectively, representing declines
of 132% and 67% when compared to the prior-year periods. These
declines were primarily due to the net effect of (i) increases in
OCF, as described below, (ii) increases in impairment,
restructuring and other operating items, net and (iii) increases in
depreciation and amortization. The changes in these factors were
primarily due to the inclusion of CWC for the stub period.
Operating Cash Flow - LiLAC Group
Reported OCF for the LiLAC Group increased 81% to $231 million
and 50% to $353 million for the three and six months ended June 30,
2016, respectively, as compared to the corresponding prior-year
periods. The underlying reasons for our reported OCF growth were
consistent with the aforementioned revenue drivers, including the
contribution from CWC and Choice and negative FX movements. During
the 45-day stub period from May 16 to June 30, 2016, CWC
contributed $101 million of OCF. From a rebased perspective, LiLAC
delivered 3% and 6% growth for the three and six months ended June
30, 2016, respectively.
On a regional basis, our CWC operation reported 4%
year-over-year rebased OCF growth for the stub period in Q2. This
growth includes the realization of staff and network-related
synergies from CWC's integration with Columbus. During the third
quarter of 2016, CWC will begin to broadcast live Premier League
games in a number of its markets pursuant to a new multi-year
agreement. The cost of the rights to broadcast these games is
expected to result in a significant increase to CWC’s programming
costs beginning in August 2016.
In Puerto Rico, we posted 5% rebased OCF growth during the
second quarter, due to the aforementioned revenue drivers along
with tight cost controls. Rounding out our operations, in Chile we
reported 2% rebased OCF growth in Q2, as the previously mentioned
revenue drivers, were partially offset by increases in programming
and copyright costs, including the impact of non-functional
currency spend due to the significant year-over-year decline in the
Chilean peso relative to the U.S. dollar, and other costs.
From an OCF margin perspective, the LiLAC Group reported OCF
margins of 38.3% and 38.9%, respectively, for the three and six
months ended June 30, 2016. This compared to 41.0% and 39.4%
margins that we reported for the corresponding prior-year periods.
The year-over-year decline was primarily related to the inclusion
of CWC's lower OCF margin for the stub period.
Property and Equipment Additions - LiLAC Group
For the three months ended June 30, 2016, operations attributed
to the LiLAC Group reported P&E additions of $133 million or
22.1% of revenue, as compared to $70 million or 22.4% of revenue in
Q2 2015. For the YTD period, the LiLAC Group incurred $205 million
or 22.6% of revenue as compared to $126 million or 21.0% of revenue
in the prior-year period.
The increase in absolute P&E additions for both periods was
mainly related to the acquisitions of CWC and, to a lesser extent,
Choice, along with higher spend for line extensions driven by our
new build and upgrade program in Chile and Puerto Rico. These
increases were partially offset by the depreciation of the Chilean
peso against the U.S. dollar. Excluding CWC, our capital was
allocated as follows during Q2 2016: 49% to CPE, 33% to scalable
infrastructure, line extensions and upgrade/rebuild activity and
18% to support capital.
Condensed Consolidated Statements of Cash Flows - LiLAC
Group
For the six months ended June 30, 2016, the LiLAC Group's net
cash provided by operating activities was $106 million, as compared
to $134 million during the prior-year period. This decrease in cash
provided is primarily attributable to the net effect of (i) higher
payments for taxes, (ii) higher payments for interest, (iii) an
increase in cash provided by OCF and related working capital items
and (iv) higher cash receipts related to derivative
instruments.
For the six months ended June 30, 2016, the LiLAC Group's net
cash used by investing activities was $171 million, as compared to
$381 million during the prior-year period. This decrease in cash
used is primarily attributable to the net effect of (i) an increase
in cash received of $290 million in connection with acquisitions
and (ii) an increase in cash used of $70 million related to higher
payments for capital expenditures.
For the six months ended June 30, 2016, the LiLAC Group's net
cash provided by financing activities was $283 million, as compared
to $376 million during the prior-year period. This decrease in cash
provided is primarily attributable to the net effect of (i) a
decrease in cash of $111 million related to net inter-group
payments and receipts, (ii) an increase in cash provided of $80
million due to higher net borrowings of debt and (iii) a decrease
in cash provided of $25 million due to higher payments for
financing costs and debt premiums.
Free Cash Flow - LiLAC Group
For the three and six months ended June 30, 2016, our operations
attributed to the LiLAC Group posted negative FCF of $35 million
and $15 million, respectively, as compared to positive FCF of $54
million and $28 million, respectively, in the prior-year
periods.
The year-over-year declines for both Q2 and H1, as compared to
the prior-year periods, were primarily the result of the negative
impacts of increases in income tax payments in Chile and the
inclusion of negative free cash flow from CWC's business that were
only partially offset by increased benefits from vendor financing
activities. In addition, the H1 decline reflects the positive
impacts of organic OCF growth and the related working capital
movements. For the period between May 16, 2016 and June 30, 2016,
Cable and Wireless had a $22 million FCF deficit.
Including the impact of CWC, we continue to expect limited FCF8
for full-year 2016.
Leverage, Liquidity & Shares Outstanding - LiLAC
Group
At June 30, 2016, we had attributed total third-party debt of
$5.9 billion and cash and cash equivalents of $501 million for the
LiLAC Group. As compared to March 31, 2016, the carrying value of
our debt and cash balance attributed to the LiLAC Group increased
by $3.6 billion and $205 million, respectively, primarily due to
our acquisition of CWC.
Giving pro forma effect to include CWC's OCF for all of Q2, the
LiLAC Group ended Q2 2016 with adjusted gross and net leverage
ratios associated with the debt attributed to the LiLAC Group of
4.5x and 4.1x, respectively.
At the end of Q2 2016, the LiLAC Group's average tenor of
third-party debt was just under six years, with less than 10% of
our debt due prior to 2022, and the blended fully-swapped borrowing
cost for our debt was 6.5%. With respect to our consolidated
liquidity position, we finished Q2 2016 with approximately $1.0
billion, including $501 million of cash and $543 million of
aggregate borrowing capacity under our credit facilities27.
At July 29, 2016, we had 174 million LiLAC shares outstanding,
including 51 million Class A ordinary shares, 2 million Class B
ordinary shares and 121 million Class C ordinary shares.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements with respect to our strategies, future
growth prospects and opportunities; expected RGU additions;
expected future revenue and OCF growth, as well as FCF;
expectations with respect to the development, enhancement and
expansion of our superior networks and innovative and advanced
products and services, including higher broadband speeds, launches
of next-generation video services, new programming and fixed-mobile
converged products; plans and expectations relating to new build
and network extension opportunities, including estimated number of
homes to be built out; expectations with respect to Liberty Go; the
strength of our balance sheet and tenor of our third-party debt;
continued pressures and offsetting factors relating to our
operations in the Netherlands; the recent acquisition of CWC and
the pending joint venture in the Netherlands and the anticipated
benefits, costs and synergies in connection therewith; expectations
regarding our share buyback program; 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, to
manage rapid technological change or to maintain or increase rates
to our subscribers or to pass through increased costs to our
subscribers; the effects of changes in laws or regulation; our
ability to maintain certain accreditations; general economic
factors; our ability to obtain regulatory approval and satisfy
regulatory conditions associated with acquisitions and
dispositions; our ability to successfully acquire and integrate new
businesses and realize anticipated efficiencies from businesses we
acquire; the availability of attractive programming for our video
services and the costs associated with such programming; our
ability to achieve forecasted financial and operating targets; the
outcome of any pending or threatened litigation; the ability of our
operating companies to access cash of their respective
subsidiaries; the impact of our operating companies' future
financial performance, or market conditions generally, on the
availability, terms and deployment of capital; fluctuations in
currency exchange and interest rates; the ability of suppliers and
vendors (including our third-party wireless network providers under
our MVNO arrangements) to timely deliver quality products,
equipment, software, services and access; our ability to adequately
forecast and plan future network requirements including the costs
and benefits associated with network expansions; and other factors
detailed from time to time in our filings with the Securities and
Exchange Commission, including Liberty Global's most recently filed
Form 10-K and Form 10-Q. 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.
About Liberty Global
Liberty Global is the world’s largest international TV and
broadband company, with operations in more than 30 countries across
Europe, Latin America and the Caribbean. We invest in the
infrastructure that empowers our customers to make the most of the
digital revolution. Our scale and commitment to innovation enables
us to develop market-leading products delivered through
next-generation networks that connect our 29 million customers who
subscribe to over 59 million television, broadband internet and
telephony services. We also serve 11 million mobile subscribers and
offer WiFi service across seven million access points.
Liberty Global’s businesses are comprised of two stocks: the
Liberty Global Group (NASDAQ: LBTYA, LBTYB and LBTYK) for our
European operations, and the LiLAC Group (NASDAQ: LILA and LILAK,
OTC Link: LILAB), which consists of our operations in Latin America
and the Caribbean.
The Liberty Global Group operates in 12 European countries under
the consumer brands Virgin Media, Ziggo, Unitymedia, Telenet and
UPC. The LiLAC Group operates in over 20 countries in Latin America
and the Caribbean under the consumer brands VTR, Flow, Liberty, Mas
Movil and BTC. In addition, the LiLAC Group operates a sub-sea
fiber network throughout the region in over 30 markets.
For more information, please visit www.libertyglobal.com.
Footnotes
1 On July 1, 2015, Liberty Global completed the "LiLAC
Transaction" pursuant to which each holder of Liberty Global’s
then-outstanding ordinary shares remained a holder of the same
amount and class of new Liberty Global ordinary shares and received
one share of the corresponding class of LiLAC ordinary shares for
each 20 then-outstanding Liberty Global ordinary shares held as of
the record date for such distribution, with cash issued in lieu of
fractional LiLAC ordinary shares. The Liberty Global ordinary
shares following the LiLAC Transaction and the LiLAC ordinary
shares are tracking shares. Tracking shares are intended by the
issuing company to reflect or “track” the economic performance of a
particular business or “group,” rather than the economic
performance of the company as a whole. The Liberty Global ordinary
shares and the LiLAC ordinary shares are intended to reflect or
“track” the economic performance of the Liberty Global Group and
the LiLAC Group (each as defined and described below),
respectively. For more information regarding the tracking shares,
see note 1 to our condensed consolidated financial statements
included in our quarterly report on Form 10-Q filed on August 4,
2016 (the "10-Q"). “Liberty Global Group” does not represent a
separate legal entity, rather it represents those businesses,
assets and liabilities that have been attributed to that group. The
Liberty Global Group comprises our businesses, assets and
liabilities not attributed to the LiLAC Group, including Virgin
Media, Unitymedia, UPC Holding BV, Telenet and Ziggo Group Holding.
“LiLAC Group” does not represent a separate legal entity, rather it
represents those businesses, assets and liabilities that have been
attributed to that group. The LiLAC Group comprises our operations
in Latin America and the Caribbean and has attributed to it CWC,
VTR and Liberty Puerto Rico. 2
Please see Footnotes for Operating Data
and Subscriber Variance Tables for the definition of 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.
3
Please see Revenue and Operating Cash Flow
for information on rebased growth.
4
Please see Operating Cash Flow Definition
and Reconciliation for our Operating Cash Flow ("OCF") definition
and the required reconciliations.
5 On February 11, 2016, pursuant to a definitive agreement and
following regulatory approval, Telenet acquired Telenet Group BVBA,
formerly known as BASE Company NV ("BASE"). 6 On May 16, 2016,
pursuant to a scheme of arrangement and following shareholder
approvals, we acquired Cable & Wireless Communications Limited
(formerly Cable & Wireless Communications Plc) ("CWC"). 7
Please see Free Cash Flow Definition and
Reconciliation for information on Free Cash Flow (“FCF”) and the
required reconciliations. For more detailed information concerning
our operating, investing and financing cash flows, see the
condensed consolidated statements of cash flows including in our
Form 10-Q.
8 Our Liberty Global Group FCF guidance of over $2.0 billion for
2016 has been revised to include BASE and updated FX rates. Our new
guidance for Liberty Global Group of $1.8 billion continues to
include the Netherlands for all of 2016 and is based on FX rates as
of August 2, 2016. Our LiLAC Group FCF guidance for 2016 continues
to be "limited FCF" after revising to include CWC and update FX
rates to August 2, 2016. Reconciliations of our FCF guidance for
2016 to a GAAP measure are not provided as not all elements of the
reconciliation are projected as part of our forecasting process. 9
Our next-generation video base consists of Horizon TV, TiVo (in the
U.K.), Digital TV with a Horizon-like user interface (Yelo in
Belgium) as well as Horizon-Lite set-top boxes. 10 Our gross and
net debt ratios are defined as total debt and net debt to
annualized OCF of the latest quarter. Net debt is defined as total
debt less cash and cash equivalents. For purposes of these
calculations, debt is measured using swapped foreign currency
rates, consistent with the covenant calculation requirements of our
subsidiary debt agreements, and, in the case of the Liberty Global
Group, excludes the loans backed or secured by the shares we hold
in ITV plc, Sumitomo Corporation and Lions Gate Entertainment Corp.
For Liberty Global plc and LiLAC Group, our ratios are adjusted to
reflect the Q2 2016 pre-acquisition OCF of CWC. 11 Our blended
fully-swapped debt borrowing cost represents the weighted average
interest rate on our aggregate variable- and fixed-rate
indebtedness (excluding capital lease obligations), including the
effects of derivative instruments, original issue premiums or
discounts and commitment fees, but excluding the impact of
financing costs. 12 Liquidity refers to cash and cash equivalents
plus the maximum undrawn commitments under subsidiary borrowing
facilities, without regard to covenant compliance calculations. 13
Please see Footnotes for Operating Data
and Subscriber Variance Tables for the definition of Customer
Relationships.
14
Our three-year OCF guidance of 7% to 9%
growth excludes Ziggo, and is intended to be calculated as a
compound annual growth rate in 2018 with 2015 as the base year,
after adjusting for acquisitions, dispositions, FX and other
factors that may affect the comparability of 2018 and 2015
results.
15
Please see Footnotes for Operating Data
and Subscriber Variance Tables for the definition of Homes
Passed.
16
Enhanced Video Subscriber - please see
Footnotes for Operating Data and Subscriber Variance Tables for our
Enhanced Video Subscriber definition.
17 Enhanced video penetration is calculated by dividing the number
of enhanced video RGUs by the total number of basic and enhanced
video RGUs. 18
Please see Footnotes for Operating Data
and Subscriber Variance Tables for the definition of Basic Video
Subscriber.
19 Our mobile subscriber count represents the number of active
subscriber identification module (“SIM”) cards in service rather
than services provided. For example, if a mobile subscriber has
both a data and voice plan on a smartphone this would equate to one
mobile subscriber. Alternatively, a subscriber who has a voice and
data plan for a mobile handset and a data plan for a laptop (via a
dongle) would be counted as two mobile subscribers. Customers who
do not pay a recurring monthly fee are excluded from our mobile
telephony subscriber counts after periods of inactivity ranging
from 30 to 90 days, based on industry standards within the
respective country. 20 Average Revenue Per Unit (“ARPU”) refers to
the average monthly subscription revenue per average customer
relationship or mobile subscriber, as applicable, and is calculated
by dividing the average monthly cable subscription revenue
(excluding mobile services, B2B services, interconnect, channel
carriage fees, mobile handset sales and installation fees) or
mobile subscription revenue, as applicable, for the indicated
period, by the average of the opening and closing balances for
customer relationships or mobile subscribers, as applicable, for
the period. Customer relationships of entities acquired during the
period are normalized. Unless otherwise indicated, ARPU per
customer relationship or mobile subscriber, as applicable, for the
Liberty Global Group and LiLAC Group are not adjusted for currency
impacts. ARPU per RGU refers to average monthly subscription
revenue per average RGU, which is calculated by dividing the
average monthly cable subscription revenue for the indicated
period, by the average of the opening and closing balances of RGUs
for the period. Unless otherwise noted, ARPU in this release is
considered to be ARPU per average customer relationship or mobile
subscriber, as applicable. 21 In the U.K., Belgium and Switzerland
we now offer our customers the option to purchase a mobile handset
pursuant to a contract that is independent of a mobile airtime
services contract ("split-contract programs"). Revenue associated
with handsets sold under our split-contract programs is recognized
upfront and included in other non-subscription revenue. We
generally recognize the full sales price for the mobile handset
upon delivery, regardless of whether the sales price is received
upfront or in installments. Revenue associated with the airtime
services is recognized as mobile subscription revenue over the
contractual term of the airtime services contract. Prior to our
split-contract programs, all revenue from handset sales that was
contingent upon delivering future airtime services was recognized
over the life of the customer contract as part of the monthly fee
and included in mobile subscription revenue. 22 Total B2B includes
subscription (SOHO) and non-subscription revenue. Non-subscription
revenue includes the amortization of deferred upfront installation
fees and deferred nonrecurring fees received on B2B contracts where
we maintain ownership of the installed equipment. Most of this
deferred revenue relates to Virgin Media's B2B contracts, and in
connection with the application of the Virgin Media acquisition
accounting, we eliminated all of Virgin Media's B2B deferred
revenue as of the June 7, 2013 acquisition date. Due primarily to
this acquisition accounting, the amortization of Virgin Media's B2B
deferred revenue is accounting for $4.4 million and $8.8 million of
the increase in Liberty Global Group's total B2B revenue for the
three and six months ended June 30, 2016, respectively. 23 Liberty
Global Group's 1.7% and 3.4% rebased mobile revenue growth
(including interconnect and mobile handset sales revenue) for Q2
2016 and YTD 2016, respectively, includes the positive impact of
our split-contract and non-subsidized handset sale programs in the
U.K., Belgium, Switzerland, Ireland and Hungary, as further
described above. Our split-contract and non-subsidized handset sale
programs in the U.K., Belgium and Switzerland had a net positive
effect on our mobile subscription and handset revenue of $7.8
million in Q2 2016 and $20.5 million in YTD 2016. The net positive
effects of the split-contract and non-subsidized handset sale
programs are comprised of (i) increases in handset revenue of $36.1
million and $72.7 million and (ii) decreases in mobile subscription
revenue of $28.3 million and $52.2 million during Q2 2016 and YTD
2016, respectively. 24 OCF margin is calculated by dividing OCF by
total revenue for the applicable period. 25 Our property and
equipment additions include our capital expenditures on an accrual
basis and amounts financed under vendor financing or capital lease
arrangements. 26 Represents principal amount of third-party debt
and includes capital leases. 27 Our aggregate unused borrowing
capacity of $4.4 billion represents the maximum undrawn commitments
under our subsidiaries' applicable facilities without regard to
covenant compliance calculations. This consists of $3.9 billion
attributed to the Liberty Global Group and $543 million attributed
to LiLAC Group. Upon completion of the relevant June 30, 2016
compliance reporting requirements for our credit facilities, and
assuming no further changes from quarter-end borrowing levels, we
anticipate that our subsidiaries' borrowing capacity would be $2.9
billion. This consists of $2.5 billion attributed to the Liberty
Global Group and $411 million attributed to the LiLAC Group.
Balance Sheets, Statements of Operations and Statements of
Cash Flows
The condensed consolidated balance sheets, statements of
operations and statements of cash flows of Liberty Global are
included in our 10-Q. For attributed financial information of the
Liberty Global Group and the LiLAC Group, see Exhibit 99.1 to our
10-Q.
Revenue and Operating Cash Flow
In the following tables, we present revenue and operating cash
flow by reportable segment for the three and six months ended June
30, 2016, as compared to the corresponding prior-year periods. All
of our reportable segments derive their revenue primarily from
consumer and B2B services, including video, broadband internet and
fixed-line telephony services and, with the exception of Puerto
Rico, mobile services. For detailed information regarding the
composition of our reportable segments, see note 14 to our
condensed consolidated financial statements included in our
10-Q.
For purposes of calculating rebased growth rates on a comparable
basis for all businesses that we owned during 2016, we have
adjusted our historical revenue and OCF for the three and six
months ended June 30, 2015 to (i) include the pre-acquisition
revenue and OCF of certain entities acquired during 2015 and 2016
in our rebased amounts for the three and six months ended June 30,
2015 to the same extent that the revenue and OCF of such entities
are included in our results for the three and six months ended June
30, 2016, (ii) exclude the pre-disposition revenue and OCF of
"offnet" subscribers in the U.K. that were disposed in the fourth
quarter of 2014 and the first half of 2015 from our rebased amounts
for the three and six months ended June 30, 2015 to the same extent
that the revenue and OCF of these disposed subscribers is excluded
from our results for the three and six months ended June 30, 2016,
(iii) exclude the revenue and OCF related to a partner network
agreement that was terminated shortly after the Ziggo acquisition
from our rebased amounts for the six months ended June 30, 2015 to
the same extent that the revenue and OCF from this partner network
is excluded from our results for the six months ended June 30,
2016, (iv) exclude the pre-disposition revenue, OCF and associated
intercompany eliminations of Film1, which was disposed in the third
quarter of 2015, from our rebased amounts for the three and six
months ended June 30, 2015 to the same extent that the revenue, OCF
and associated intercompany eliminations are excluded from our
results for the three and six months ended June 30, 2016, (v)
exclude the revenue and OCF of multi-channel multi-point
(microwave) distribution system subscribers in Ireland that have
disconnected since we announced the switch-off of this service
effective April 2016 for the three and six months ended June 30,
2015 to the same extent that the revenue and OCF of these
subscribers is excluded from our results for the three and six
months ended June 30, 2016 and (vi) reflect the translation of our
rebased amounts for the three and six months ended June 30, 2015 at
the applicable average foreign currency exchange rates that were
used to translate our results for the three and six months ended
June 30, 2016. We have included CWC, BASE, Choice and two small
entities in whole or in part in the determination of our rebased
revenue and OCF for the three and six months ended June 30, 2015.
We have reflected the revenue and OCF of the acquired entities in
our 2015 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 (a) any significant differences between
Generally Accepted Accounting Principles in the United States
(“GAAP”) and local generally accepted accounting principles, (b)
any significant effects of acquisition accounting adjustments, (c)
any significant differences between our accounting policies and
those of the acquired entities and (d) 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 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 growth
rates are not a non-GAAP financial measure as contemplated by
Regulation G or Item 10 of Regulation S-K.
In each case, the following tables present (i) the amounts
reported by each of our reportable segments for the comparative
periods, (ii) the U.S. dollar change and percentage change from
period to period and (iii) the percentage change from period to
period on a rebased basis:
Three months ended Increase
Increase June 30, (decrease) (decrease)
Revenue 2016 2015 $
% Rebased % in millions, except % amounts
Liberty Global Group: European Operations Division:
U.K./Ireland $ 1,717.7 $ 1,759.6 $ (41.9 ) (2.4) 3.2 The
Netherlands 678.8 683.9 (5.1 ) (0.7) (2.8 ) Germany 643.5 591.0
52.5 8.9 6.7 Belgium 707.3 500.3 207.0 41.4 3.5 Switzerland/Austria
447.0 448.8 (1.8 ) (0.4) 1.6 Total Western
Europe 4,194.3 3,983.6 210.7 5.3 2.6 Central and Eastern Europe
274.0 267.2 6.8 2.5 3.4 Central and other (0.9 ) (1.0 ) 0.1
N.M. * Total European Operations Division 4,467.4 4,249.8
217.6 5.1 2.6 Corporate and other 15.2 12.8 2.4 18.8 * Intersegment
eliminations (11.4 ) (7.5 ) (3.9 ) N.M. * Total Liberty
Global Group 4,471.2 4,255.1 216.1 5.1 2.6
LiLAC Group: LiLAC Division: CWC 285.6 — 285.6
*
(0.7 ) Chile 210.6 220.8 (10.2 ) (4.6) 4.5 Puerto Rico 106.9
90.6 16.3 18.0 1.2 Total LiLAC Division 603.1
311.4 291.7 93.7 1.4 Intersegment eliminations (0.2 ) — (0.2
) N.M. * Total LiLAC Group 602.9 311.4 291.5
93.6 1.4 Total $ 5,074.1 $ 4,566.5 $
507.6 11.1 2.5 Total Liberty Global Group
excluding the Netherlands and BASE 4.0 Total Liberty Global Group
excluding the Netherlands 3.7 LiLAC Group excluding CWC 3.4
* - Omitted; N.M. - Not Meaningful
Six months ended Increase
Increase June 30, (decrease) (decrease)
Revenue 2016 2015 $
% Rebased % in millions, except % amounts
Liberty Global Group: European Operations Division:
U.K./Ireland $ 3,404.2 $ 3,471.0 $ (66.8 ) (1.9 ) 3.4 The
Netherlands 1,348.6 1,391.3 (42.7 ) (3.1 ) (2.9 ) Germany 1,260.6
1,188.9 71.7 6.0 6.1 Belgium 1,317.5 1,003.0 314.5 31.4 4.2
Switzerland/Austria 880.4 888.1 (7.7 ) (0.9 ) 2.0
Total Western Europe 8,211.3 7,942.3 269.0 3.4 2.7 Central
and Eastern Europe 540.1 535.4 4.7 0.9 3.0 Central and other (3.3 )
(3.8 ) 0.5 N.M. * Total European Operations
Division 8,748.1 8,473.9 274.2 3.2 2.7 Corporate and other 29.8
25.6 4.2 16.4 * Intersegment eliminations (22.6 ) (15.3 ) (7.3 )
N.M. * Total Liberty Global Group 8,755.3
8,484.2 271.1 3.2 2.7 LiLAC Group:
LiLAC Division: CWC 285.6 — 285.6 * (0.7 ) Chile
410.6 429.6 (19.0 ) (4.4 ) 6.0 Puerto Rico 210.8 169.6
41.2 24.3 2.0 Total LiLAC Division
907.0 599.2 307.8 51.4 2.9 Intersegment eliminations (0.2 ) — (0.2
) N.M. * Total LiLAC Group 906.8 599.2 307.6
51.3 2.9 Total $ 9,662.1 $ 9,083.4 $
578.7 6.4 2.7 Total Liberty Global
Group excluding the Netherlands and BASE 4.0 Total Liberty Global
Group excluding the Netherlands 3.8 LiLAC Group excl. CWC 4.6
* - Omitted; N.M. - Not Meaningful
Three months ended Increase
Increase June 30, (decrease)
(decrease) OCF 2016 2015
$ % Rebased % in millions, except %
amounts Liberty Global Group: European Operations
Division: U.K./Ireland $ 765.5 $ 805.6 $ (40.1 ) (5.0 ) 1.3 The
Netherlands 364.1 371.0 (6.9 ) (1.9 ) (4.0 ) Germany 400.3 366.9
33.4 9.1 7.0 Belgium 311.3 260.8 50.5 19.4 1.2 Switzerland/Austria
263.6 259.7 3.9 1.5 3.8 Total
Western Europe 2,104.8 2,064.0 40.8 2.0 1.7 Central and Eastern
Europe 114.6 118.4 (3.8 ) (3.2 ) (2.0 ) Central and other (82.1 )
(72.7 ) (9.4 ) N.M. * Total European Operations
Division 2,137.3 2,109.7 27.6 1.3 1.2 Corporate and other (62.7 )
(52.3 ) (10.4 ) (19.9 ) * Total Liberty Global Group 2,074.6
2,057.4 17.2 0.8 0.6 LiLAC
Group: LiLAC Division: CWC 101.0 — 101.0 * 3.6 Chile 81.8 87.6 (5.8
) (6.6 ) 2.4 Puerto Rico 50.0 40.8 9.2
22.5 5.0 Total LiLAC Division 232.8 128.4 104.4 81.3
3.5 Corporate and other (1.7 ) (0.8 ) (0.9 ) N.M. *
Total LiLAC Group 231.1 127.6 103.5 81.1
3.1 Total $ 2,305.7 $ 2,185.0 $ 120.7
5.5 0.9 Total Liberty Global Group
excluding the Netherlands and BASE 2.4 Total Liberty Global Group
excluding the Netherlands 1.7 LiLAC Group excl. CWC 2.7
Operating Income (Loss)
Liberty Global Group $ 508.7 $ 559.0 $ (50.3 ) (9.0 ) LiLAC Group
(20.9 ) 65.9 (86.8 ) (131.7 ) Total $ 487.8 $ 624.9
$ (137.1 ) (21.9 )
* - Omitted; N.M. - Not Meaningful
Six months ended Increase
Increase June 30, (decrease) (decrease)
OCF 2016 2015 $ %
Rebased % in millions, except % amounts
Liberty Global Group: European Operations Division: U.K./Ireland $
1,510.1 $ 1,568.9 $ (58.8 ) (3.7 ) 2.4 The Netherlands 732.0 738.9
(6.9 ) (0.9 ) (0.8 ) Germany 779.7 730.9 48.8 6.7 6.7 Belgium 581.1
507.8 73.3 14.4 1.7 Switzerland/Austria 521.7 508.5
13.2 2.6 5.8 Total Western Europe 4,124.6
4,055.0 69.6 1.7 2.9 Central and Eastern Europe 225.5 236.5 (11.0 )
(4.7 ) (2.5 ) Central and other (166.4 ) (140.6 ) (25.8 ) N.M.
* Total European Operations Division 4,183.7 4,150.9
32.8 0.8 2.1 Corporate and other (115.5 ) (104.4 ) (11.1 ) (10.6 )
* Total Liberty Global Group 4,068.2 4,046.5
21.7 0.5 1.8 LiLAC Group: LiLAC Division: CWC
101.0 — 101.0 * 3.6 Chile 158.1 163.6 (5.5 ) (3.4 ) 7.3 Puerto Rico
96.8 74.3 22.5 30.3 6.1 Total
LiLAC Division 355.9 237.9 118.0 49.6 5.9 Corporate and other (2.9
) (2.1 ) (0.8 ) N.M. * Total LiLAC Group 353.0
235.8 117.2 49.7 5.7 Total $ 4,421.2
$ 4,282.3 $ 138.9 3.2 2.1
Total Liberty Global Group excluding the Netherlands and BASE 2.7
Total Liberty Global Group excluding the Netherlands 2.4 LiLAC
Group excl. CWC 6.5
Operating Income Liberty Global
Group $ 1,035.3 $ 1,064.5 $ (29.2 ) (2.7 ) LiLAC Group 39.1
117.9 (78.8 ) (66.8 ) Total $ 1,074.4 $ 1,182.4
$ (108.0 ) (9.1 )
* - Omitted; N.M. - Not Meaningful
OCF Definition and Reconciliation
As used herein, OCF has the same meaning as the term "Adjusted
OIBDA" that is referenced in our 10-Q. OCF is the primary measure
used by our chief operating decision maker to evaluate segment
operating performance. OCF 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, OCF is defined as operating income before
depreciation and amortization, share-based compensation, provisions
and provision releases related to significant litigation and
impairment, restructuring and other operating items. Other
operating items include (a) gains and losses on the disposition of
long-lived assets, (b) third-party costs directly associated with
successful and unsuccessful acquisitions and dispositions,
including legal, advisory and due diligence fees, as applicable,
and (c) other acquisition-related items, such as gains and losses
on the settlement of contingent consideration. Our internal
decision makers believe OCF is a meaningful measure because it
represents a transparent view of our recurring operating
performance that is unaffected by our capital structure and allows
management to (1) readily view operating trends, (2) perform
analytical comparisons and benchmarking between segments and (3)
identify strategies to improve operating performance in the
different countries in which we operate. We believe our OCF
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 public
companies. OCF should be viewed as a measure of operating
performance that is a supplement to, and not a substitute for,
operating income, net earnings or loss, cash flow from operating
activities and other GAAP measures of income or cash flows. A
reconciliation of total segment OCF to our operating income is
presented below.
Three months ended Six months ended
June 30, June 30, 2016 2015
2016 2015 Consolidated Liberty Global
in millions in millions Total segment OCF $ 2,305.7 $
2,185.0 $ 4,421.2 $ 4,282.3 Share-based compensation expense (74.6
) (56.6 ) (143.6 ) (128.0 ) Depreciation and amortization (1,553.0
) (1,477.8 ) (2,988.5 ) (2,929.2 ) Impairment, restructuring and
other operating items, net (190.3 ) (25.7 ) (214.7 ) (42.7 )
Operating income $ 487.8 $ 624.9 $ 1,074.4 $
1,182.4
Liberty Global Group Total segment OCF
$ 2,074.6 $ 2,057.4 $ 4,068.2 $ 4,046.5 Share-based compensation
expense (71.4 ) (55.0 ) (138.6 ) (127.5 ) Inter-group fees and
allocations 2.1 — 4.2 — Depreciation and amortization (1,426.9 )
(1,423.5 ) (2,810.1 ) (2,822.7 ) Impairment, restructuring and
other operating items, net (69.7 ) (19.9 ) (88.4 ) (31.8 )
Operating income $ 508.7 $ 559.0 $ 1,035.3 $
1,064.5
LiLAC Group Total segment OCF $ 231.1
$ 127.6 $ 353.0 $ 235.8 Share-based compensation expense (3.2 )
(1.6 ) (5.0 ) (0.5 ) Inter-group fees and allocations (2.1 ) — (4.2
) — Depreciation and amortization (126.1 ) (54.3 ) (178.4 ) (106.5
) Impairment, restructuring and other operating items, net (120.6 )
(5.8 ) (126.3 ) (10.9 ) Operating income $ (20.9 ) $ 65.9 $
39.1 $ 117.9
Summary of Debt, Capital Lease Obligations and Cash and Cash
Equivalents
The following table1 details the U.S. dollar equivalent balances
of our third-party consolidated debt, capital lease obligations and
cash and cash equivalents at June 30, 2016:
Capital Debt &
Capital Cash Lease Lease and Cash
Debt2 Obligations Obligations
Equivalents in millions Liberty Global and Liberty
Global Group unrestricted subsidiaries $ 2,480.2 $ 62.8 $ 2,543.0 $
664.4 Virgin Media3 14,596.3 116.7 14,713.0 37.1 UPC Holding
6,644.7 25.7 6,670.4 60.7 Unitymedia 7,989.4 703.3 8,692.7 0.3
Ziggo Group Holding 8,089.7 0.3 8,090.0 5.2 Telenet 4,880.5
388.9 5,269.4 18.0 Total Liberty Global Group
44,680.8 1,297.7 45,978.5 785.7 LiLAC Group
unrestricted subsidiaries — — — 64.4 CWC 3,559.1 13.1 3,572.2 248.2
VTR Finance 1,417.5 0.4 1,417.9 117.6 Liberty Puerto Rico 942.5
0.3 942.8 70.4 Total LiLAC Group 5,919.1
13.8 5,932.9 500.6 Total $ 50,599.9 $
1,311.5 $ 51,911.4 $ 1,286.3
Property and Equipment Additions and Capital
Expenditures
The tables below highlight the categories of the property and
equipment additions attributed to the Liberty Global Group and the
LiLAC Group for the indicated periods and reconciles those
additions to the capital expenditures that are presented in the
attributed statement of cash flows information included in Exhibit
99.1 to our 10-Q:
Liberty Global Group
Three months ended Six months ended
June 30, June 30, 2016 2015
2016 2015 in millions, except % amounts
Customer premises equipment $ 294.8 $ 283.3 $ 596.4 $ 551.6
Scalable infrastructure 242.2 202.8 411.6 371.3 Line extensions
182.5 106.4 306.1 200.4 Upgrade/rebuild 106.6 129.3 219.6 248.6
Support capital & other 272.4 249.0 490.3
467.7 Property and equipment additions 1,098.5 970.8 2,024.0
1,839.6 Assets acquired under capital-related vendor financing
arrangements4 (490.5 ) (380.9 ) (929.4 ) (675.9 ) Assets acquired
under capital leases (13.7 ) (12.5 ) (41.6 ) (74.5 ) Changes in
current liabilities related to capital expenditures (86.9 ) (37.8 )
41.5 61.8 Capital expenditures5 $ 507.4 $
539.6 $ 1,094.5 $ 1,151.0 Property and
equipment additions as % of revenue 24.6 % 22.8 % 23.1 % 21.7 %
LiLAC Group
Three months ended Six months ended
June 30, June 30, 2016
2015 2016 2015
in millions, except % amounts Customer premises equipment $
39.4 $ 36.1 $ 74.2 $ 69.1 Scalable infrastructure 13.6 14.5 25.6
25.3 Line extensions 11.1 5.1 21.1 7.2 Upgrade/rebuild 1.8 1.4 3.5
2.6 Support capital & other 13.9 12.7 26.9 21.7 CWC P&E
Additions 53.6 — 53.6 — Property and
equipment additions 133.4 69.8 204.9 125.9 Assets acquired under
capital-related vendor financing arrangements (17.0 ) — (17.0 ) —
Assets acquired under capital leases (0.2 ) — (0.2 ) — Changes in
current liabilities and cash derivatives related to capital
expenditures 15.4 (8.2 ) (6.1 ) (14.5 ) Capital expenditures
$ 131.6 $ 61.6 $ 181.6 $ 111.4
Property and equipment additions as % of revenue 22.1 % 22.4 % 22.6
% 21.0 %
______________________________
1 Except as otherwise indicated, the amounts reported in the
table include the named entity and its subsidiaries. 2 Debt amounts
for UPC Holding, Ziggo Group Holding and Telenet include notes
issued by special purpose entities that are consolidated by each. 3
The Virgin Media borrowing group includes certain subsidiaries of
Virgin Media, but excludes Virgin Media. The cash and cash
equivalents amount includes cash and cash equivalents held by the
Virgin Media borrowing group, but excludes $0.6 million of cash and
cash equivalents held by Virgin Media. This amount is included in
the amount shown for Liberty Global and Liberty Global Group
unrestricted subsidiaries. In addition, the $55 million principal
amount of the 6.5% convertible notes of Virgin Media is excluded
from the debt of the Virgin Media borrowing group and included in
the debt of Liberty Global and Liberty Global Group unrestricted
subsidiaries. 4 Amounts exclude related VAT of $68 million and $54
million during the three months ended June 30, 2016 and 2015,
respectively, and $129 million and $89 million during the six
months ended June 30, 2016 and 2015, respectively, that were also
financed by our vendors under these arrangements. 5 The capital
expenditures that we report in our condensed consolidated
statements of cash flows 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 related principal is repaid.
Free Cash Flow Definition and Reconciliation
We define free cash flow as net cash provided by our operating
activities, plus (i) excess tax benefits related to the exercise of
share-based incentive awards, (ii) cash payments for third-party
costs directly associated with successful and unsuccessful
acquisitions and dispositions and (iii) expenses financed by an
intermediary, less (a) capital expenditures, as reported in our
condensed consolidated statements of cash flows, (b) principal
payments on amounts financed by vendors and intermediaries and (c)
principal payments on capital leases (exclusive of the portions of
the network lease in Belgium and the duct leases in Germany that we
assumed in connection with certain acquisitions), with each item
excluding any cash provided or used by our discontinued operations.
We believe that our presentation of free cash flow provides useful
information to our investors because this measure can be used to
gauge our ability to service debt and fund new investment
opportunities. Free cash flow should not be understood to represent
our ability to fund discretionary amounts, as we have various
mandatory and contractual obligations, including debt repayments,
which are not deducted to arrive at this amount. Investors should
view free cash flow as a supplement to, and not a substitute for,
GAAP measures of liquidity included in our condensed consolidated
statements of cash flows. The following table provides the
reconciliation of our net cash provided by operating activities to
FCF for the indicated periods:
Three months ended Six months ended
June 30, June 30, 2016 2015
2016 2015 in millions Consolidated
Liberty Global Net cash provided by operating activities $
1,577.7 $ 1,311.9 $ 2,666.6 $ 2,685.8 Excess tax benefits from
share-based compensation6 1.4 (2.1 ) 3.2 17.9 Cash payments for
direct acquisition and disposition costs 77.8 231.2 86.0 238.8
Expenses financed by an intermediary7 239.7 42.6 393.2 51.7 Capital
expenditures (639.0 ) (601.2 ) (1,276.1 ) (1,262.4 ) Principal
payments on amounts financed by vendors and intermediaries (748.0 )
(350.4 ) (1,420.9 ) (732.1 ) Principal payments on certain capital
leases (28.5 ) (39.7 ) (55.9 ) (77.4 ) FCF $ 481.1 $ 592.3
$ 396.1 $ 922.3
Liberty Global
Group Net cash provided by operating activities $ 1,541.8 $
1,198.2 $ 2,560.8 $ 2,552.1 Excess tax benefits from share-based
compensation 1.4 (0.8 ) 3.2 16.0 Cash payments for direct
acquisition and disposition costs 16.8 228.2 24.9 234.8 Expenses
financed by an intermediary 239.7 42.6 393.2 51.7 Capital
expenditures (507.4 ) (539.6 ) (1,094.5 ) (1,151.0 ) Principal
payments on amounts financed by vendors and intermediaries (748.0 )
(350.4 ) (1,420.9 ) (732.1 ) Principal payments on certain capital
leases (27.9 ) (39.6 ) (55.2 ) (77.2 ) FCF $ 516.4 $ 538.6
$ 411.5 $ 894.3
LiLAC Group Net
cash provided by operating activities $ 35.9 $ 113.7 $ 105.8 $
133.7 Excess tax benefits from share-based compensation — (1.3 ) —
1.9 Cash payments for direct acquisition and disposition costs 61.0
3.0 61.1 4.0 Capital expenditures (131.6 ) (61.6 ) (181.6 ) (111.4
) Principal payments on certain capital leases (0.6 ) (0.1 ) (0.7 )
(0.2 ) FCF $ (35.3 ) $ 53.7 $ (15.4 ) $ 28.0
___________________________________________
6
Excess tax benefits from share-based compensation represent
the excess of tax deductions over the related financial reporting
share-based compensation expense. The hypothetical cash flows
associated with these excess tax benefits are reported as an
increase to cash flows from financing activities and a
corresponding decrease to cash flows from operating activities in
our condensed consolidated statements of cash flows.
7
For purposes of our condensed consolidated statements of cash
flows, expenses financed by an intermediary are treated as
hypothetical operating cash outflows and hypothetical financing
cash inflows when the expenses are incurred. When we pay the
financing intermediary, we record financing cash outflows in our
condensed consolidated statements of cash flows. For purposes of
our free cash flow definition, we add back the hypothetical
operating cash outflow when these financed expenses are incurred
and deduct the financing cash outflows when we pay the financing
intermediary.
ARPU per Customer Relationship8
The following table provides ARPU per customer relationship for
the indicated periods:
Three months ended June 30, %
FX-Neutral9 2016
2015 Change % Change Liberty Global
Consolidated $ 44.65 $ 44.83
(0.4)
%
1.5 % Liberty Global Group € 39.13 € 39.70
(1.4)
%
2.1 % U.K. & Ireland (Virgin Media) £ 49.61 £ 49.23 0.8 % 0.1 %
Germany (Unitymedia) € 24.24 € 22.80 6.3 % 6.3 % Belgium (Telenet)
€ 53.43 € 50.43 5.9 % 5.9 % The Netherlands (Ziggo) € 44.96 € 44.52
1.0 % 1.0 % Other Europe (UPC Holding) € 26.76 € 27.68
(3.3)
%
0.3 % LiLAC Group10 $ 49.69 $ 59.52
(16.5)
%
(11.0)
%
Chile (VTR) CLP 33,078 CLP 32,682 1.2 % 1.2 % CWC $ 32.64 $ N/A N/A
N/A Puerto Rico $ 79.54 $ 85.10 (6.5 )%
(6.5)
%
_________________________________________
8 The amounts presented for the 2016 period reflect the
post-acquisition revenue for CWC, which was acquired on May 16,
2016. The impact of CWC is not included in the three months ended
June 30, 2015. 9 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. 10 The decrease in the LiLAC Group ARPU is
primarily due to the inclusion of CWC. Excluding CWC, the LiLAC
Group ARPU is $56.08 for the three months ended June 30, 2016.
Mobile Statistics
The following tables provide ARPU per mobile subscriber11 and
mobile subscribers12 for the indicated periods:
ARPU per Mobile Subscriber Three months ended June
30, % FX-Neutral
2016 2015 Change % Change
Liberty Global Group: Including interconnect revenue $ 19.84 $
22.54 (12.0 )% (8.6 )% Excluding interconnect revenue $ 16.13 $
18.67 (13.6 )% (10.0 )% LiLAC Group: Including interconnect
revenue $ 19.10 $ 27.70 (31.1 )% (24.4 )% Excluding interconnect
revenue $ 17.01 $ 24.96 (31.8 )% (25.3 )%
Mobile
Subscribers June 30, 2016 March 31, 2016
Change Liberty Global Group: U.K. 3,021,400 2,997,400
24,000 Belgium 3,007,900 3,016,600 (8,700 ) Germany 358,700 357,300
1,400 The Netherlands 207,200 197,000 10,200 Switzerland 55,600
40,700 14,900 Austria 21,100 17,400 3,700 Ireland 11,800
10,500 1,300 Total Western Europe 6,683,700
6,636,900 46,800 Hungary 47,400 41,300 6,100 Poland
6,200 6,700 (500 ) Total CEE 53,600 48,000
5,600 Liberty Global Group 6,737,300 6,684,900 52,400
LiLAC Group: Panama 2,002,300 — 2,002,300 Jamaica 886,200 —
886,200 Bahamas 305,300 — 305,300 Barbados 129,800 — 129,800 Other
376,700 — 376,700 CWC Total
3,700,300 — 3,700,300 Chile 139,000 132,000 7,000
LiLAC Group 3,839,300 132,000 3,707,300
Grand Total 10,576,600 6,816,900 3,759,700
__________________________________________
11 Our ARPU per mobile subscriber calculation that excludes
interconnect revenue refers to the average monthly mobile
subscription revenue per average mobile subscribers in service and
is calculated by dividing the average monthly mobile subscription
revenue (excluding activation fees, handset sales and late fees)
for the indicated period, by the average of the opening and closing
balances of mobile subscribers in service for the period. Our ARPU
per mobile subscriber calculation that includes interconnect
revenue increases the numerator in the above-described calculation
by the amount of mobile interconnect revenue during the period. The
amounts for the three months ended June 30, 2015 do not include the
impact of CWC and BASE in Belgium. The decrease in ARPU per mobile
subscriber for the Liberty Global Group is largely due to our
split-contract programs. The decrease in ARPU per mobile subscriber
for the LiLAC Group is primarily due to the inclusion of CWC.
Excluding CWC, the LiLAC Group ARPU per mobile subscriber for the
three months ended June 30, 2016 was $26.54 (including
interconnect) and $23.97 (excluding interconnect). 12 In a number
of countries, our mobile subscribers received mobile services
pursuant to prepaid contracts. As of June 30, 2016, the prepaid
mobile subscriber count included the following: Panama (1,830,400),
Belgium (982,100), Jamaica (864,000), U.K. (677,000), Bahamas
(269,100), Barbados (98,800), Chile (8,900) and twelve remaining
CWC geographies (320,100). At March 31, 2016, the prepaid mobile
subscriber count included the following: Belgium (1,018,500), U.K.
(693,100) and Chile (9,900).
RGUs, Customers and Bundling13
The following table provides information on the breakdown of our
RGUs and customer base and highlights our customer bundling metrics
at June 30, 2016, March 31, 2016, and June 30, 2015:
June 30,2016
March 31,2016
June 30,2015
Q2’16 / Q1’16(% Change)
Q2’16 / Q2’15(% Change)
Liberty Global Group Total RGUs Video
RGUs 22,508,100 22,580,300 22,823,300 (0.3 %) (1.4 %) Broadband
Internet RGUs 17,105,800 16,945,500 16,372,000 0.9 % 4.5 %
Telephony RGUs 14,261,600 14,118,400 13,650,300
1.0 % 4.5 % Total Liberty Global Group 53,875,500 53,644,200
52,845,600 0.4 % 1.9 %
Customers Single-Play
Customers 9,409,000 9,551,100 10,058,800 (1.5 %) (6.5 %) Dual-Play
Customers 4,478,800 4,415,200 4,194,600 1.4 % 6.8 % Triple-Play
Customers 11,836,300 11,754,200 11,465,900 0.7
% 3.2 % Total Liberty Global Group 25,724,100 25,720,500 25,719,300
— % — % % of Single-Play Customers 36.6 % 37.1 % 39.1 % (1.3
%) (6.4 %) % of Dual-Play Customers 17.4 % 17.2 % 16.3 % 1.2 % 6.7
% % of Triple-Play Customers 46.0 % 45.7 % 44.6 % 0.7 % 3.1 %
RGUs per customer relationship 2.09 2.09 2.05 — % 2.0 %
LiLAC
Group
Total RGUs Video RGUs 1,739,500 1,293,400 1,290,700 34.5 %
34.8 % Broadband Internet RGUs 2,013,600 1,347,600 1,285,900 49.4 %
56.6 % Telephony RGUs 1,685,600 876,200 888,000
92.4 % 89.8 % Total LiLAC Group 5,438,700 3,517,200
3,464,600 54.6 % 57.0 %
Customers Single-Play
Customers 1,307,100 570,000 559,400 129.3 % 133.7 % Dual-Play
Customers 807,000 382,200 365,100 111.1 % 121.0 % Triple-Play
Customers 839,200 727,600 725,000 15.3 % 15.8
% Total LiLAC Group 2,953,300 1,679,800 1,649,500 75.8 % 79.0 %
% of Single-Play Customers 44.3 % 33.9 % 33.9 % 30.7 % 30.7
% % of Dual-Play Customers 27.3 % 22.8 % 22.1 % 19.7 % 23.5 % % of
Triple-play Customers 28.4 % 43.3 % 44.0 % (34.4 %) (35.5 %)
RGUs per customer relationship 1.84 2.09 2.10 (12.0 %) (12.4 %)
__________________________________________
13 The June 30, 2015 and March 31, 2016 figures do not
include the impact of the CWC acquisition.
Consolidated Operating Data — June 30,
2016
Video
HomesPassed(1)
Two-wayHomesPassed(2)
CustomerRelationships(3)
TotalRGUs(4)
Basic
VideoSubscribers(5)
EnhancedVideoSubscribers(6)
DTHSubscribers(7)
TotalVideo
InternetSubscribers(8)
TelephonySubscribers(9)
U.K. 13,072,300 13,057,000 5,200,900 12,908,400 — 3,712,600
— 3,712,600 4,808,000 4,387,800 Germany 12,808,700 12,614,500
7,147,600 12,651,600 4,901,800 1,543,600 — 6,445,400 3,207,500
2,998,700 The Netherlands(10) 7,053,000 7,039,600 4,033,300
9,660,600 720,200 3,291,500 — 4,011,700 3,118,400 2,530,500 Belgium
2,963,500 2,963,500 2,161,300 4,870,200 308,900 1,728,100 —
2,037,000 1,586,700 1,246,500 Switzerland(10) 2,216,700 2,216,700
1,299,700 2,496,500 591,000 663,800 — 1,254,800 743,700 498,000
Austria 1,380,100 1,380,100 652,200 1,393,100 126,000 366,200 —
492,200 493,600 407,300 Ireland 837,600 784,400
461,500 1,039,600 29,800 293,500 —
323,300 364,200 352,100 Total Western Europe
40,331,900 40,055,800 20,956,500 45,020,000
6,677,700 11,599,300 — 18,277,000
14,322,100 12,420,900 Poland 3,059,300 2,994,500
1,434,200 2,900,700 224,300 979,800 — 1,204,100 1,078,100 618,500
Hungary 1,660,300 1,642,800 1,107,500 2,119,300 151,300 504,700
295,400 951,400 608,200 559,700 Romania 2,737,400 2,672,900
1,245,200 2,182,000 274,600 617,300 344,900 1,236,800 512,300
432,900 Czech Republic 1,430,000 1,396,700 709,000 1,209,200
126,600 353,200 115,300 595,100 460,500 153,600 Slovakia 544,300
523,100 271,700 444,300 31,600
143,000 69,100 243,700 124,600 76,000
Total CEE 9,431,300 9,230,000 4,767,600
8,855,500 808,400 2,598,000 824,700
4,231,100 2,783,700 1,840,700
Total Liberty
Global Group
49,763,200 49,285,800 25,724,100
53,875,500 7,486,100
14,197,300 824,700 22,508,100
17,105,800 14,261,600 Chile
3,150,600 2,638,600 1,303,800 2,772,000 87,400 953,300 — 1,040,700
1,056,200 675,100 CWC Panama 415,700 240,200 391,800 518,200 —
51,800 39,200 91,000 124,800 302,400 Jamaica 469,800 459,800
300,000 484,400 — 104,800 — 104,800 168,100 211,500 Trinidad &
Tobago 310,500 310,500 184,800 292,100 — 135,500 — 135,500 132,000
24,600 Barbados 121,800 121,800 96,300 173,800 — 20,400 — 20,400
67,400 86,000 Bahamas 140,600 140,600 61,500 86,900 — 600 — 600
24,800 61,500 Other 354,300 334,500 218,300
326,900 12,800 72,300 — 85,100
119,100 122,700 Total CWC 1,812,700 1,607,400
1,252,700 1,882,300 12,800 385,400
39,200 437,400 636,200 808,700 Puerto Rico
1,078,600 1,078,600 396,800 784,400 —
261,400 — 261,400 321,200
201,800
Total LiLAC Group 6,041,900
5,324,600 2,953,300 5,438,700
100,200 1,600,100 39,200
1,739,500 2,013,600
1,685,600 Grand Total 55,805,100
54,610,400 28,677,400 59,314,200
7,586,300 15,797,400
863,900 24,247,600 19,119,400
15,947,200
Subscriber Variance Table - June 30,
2016 vs March 31, 2016
Video
HomesPassed(1)
Two-wayHomesPassed(2)
Customer
Relationships(3)
Total
RGUs(4)
Basic Video
Subscribers(5)
EnhancedVideoSubscribers(6)
DTHSubscribers(7)
TotalVideo
InternetSubscribers(8)
TelephonySubscribers(9)
U.K. 94,300 96,200 30,800 66,000 — (7,200 ) — (7,200 )
42,700 30,500 Germany 25,700 13,700 10,500 109,300 (47,900 ) 34,600
— (13,300 ) 61,300 61,300 The Netherlands(10) 16,300 16,800 (13,200
) (27,700 ) (16,300 ) (16,400 ) — (32,700 ) 9,500 (4,500 ) Belgium
10,000 10,000 (2,500 ) 17,600 (13,400 ) 9,300 — (4,100 ) 9,400
12,300 Switzerland(10) 19,300 19,800 (14,700 ) (20,400 ) (10,000 )
(4,200 ) — (14,200 ) (3,400 ) (2,800 ) Austria 5,000 5,000 1,000
10,700 (7,100 ) 3,900 — (3,200 ) 5,200 8,700 Ireland 1,400
8,900 (6,700 ) (15,900 ) (1,100 ) (8,200 ) — (9,300 )
(3,500 ) (3,100 ) Total Western Europe 172,000 170,400
5,200 139,600 (95,800 ) 11,800 —
(84,000 ) 121,200 102,400 Poland 60,400 61,200 (3,000
) 28,800 (7,800 ) 9,800 — 2,000 13,300 13,500 Hungary 15,400 15,400
5,000 23,800 (7,600 ) 11,000 2,200 5,600 9,400 8,800 Romania 53,400
50,300 100 31,300 (7,600 ) 10,600 (700 ) 2,300 11,700 17,300 Czech
Republic 4,900 4,900 (1,700 ) 5,600 8,000 (1,300 ) (2,300 ) 4,400
4,000 (2,800 ) Slovakia 3,200 3,700 (2,000 ) 2,200
(2,300 ) — (200 ) (2,500 ) 700 4,000
Total CEE 137,300 135,500 (1,600 ) 91,700
(17,300 ) 30,100 (1,000 ) 11,800 39,100 40,800
Total Liberty Global Group
309,300 305,900 3,600 231,300 (113,100
) 41,900 (1,000 ) (72,200 ) 160,300 143,200
Chile 69,600 70,300 24,100 36,800 (2,800 ) 13,100 — 10,300
29,800 (3,300 ) CWC Panama 415,700 240,200 391,800 518,200 — 51,800
39,200 91,000 124,800 302,400 Jamaica 469,800 459,800 300,000
484,400 — 104,800 — 104,800 168,100 211,500 Trinidad & Tobago
310,500 310,500 184,800 292,100 — 135,500 — 135,500 132,000 24,600
Barbados 121,800 121,800 96,300 173,800 — 20,400 — 20,400 67,400
86,000 Bahamas 140,600 140,600 61,500 86,900 — 600 — 600 24,800
61,500 Other 354,300 334,500 218,300 326,900
12,800 72,300 — 85,100 119,100
122,700 Total CWC 1,812,700 1,607,400
1,252,700 1,882,300 12,800 385,400
39,200 437,400 636,200 808,700 Puerto
Rico 6,100 6,100 (3,300 ) 2,400 —
(1,600 ) — (1,600 ) — 4,000 Total LiLAC Group
1,888,400 1,683,800 1,273,500 1,921,500
10,000 396,900 39,200 446,100 666,000
809,400
Grand Total 2,197,700
1,989,700 1,277,100
2,152,800 (103,100 ) 438,800
38,200 373,900 826,300
952,600
Organic Change
Summary:
U.K. 94,300 96,200 30,800 66,000 — (7,200 ) — (7,200 ) 42,700
30,500 Germany 25,700 34,000 10,500 109,300 (47,900 ) 34,600 —
(13,300 ) 61,300 61,300 The Netherlands 16,300 16,800 (13,200 )
(27,700 ) (16,300 ) (16,400 ) — (32,700 ) 9,500 (4,500 ) Belgium
10,000 10,000 (2,500 ) 17,600 (13,400 ) 9,300 — (4,100 ) 9,400
12,300 Other Europe 163,000 169,200 (22,000 ) 66,100
(35,500 ) 21,600 (1,000 ) (14,900 ) 37,400
43,600
Total Liberty Global Group 309,300
326,200 3,600 231,300
(113,100 ) 41,900 (1,000
) (72,200 ) 160,300
143,200 Chile 69,600 70,300 24,100 36,800 (2,800 )
13,100 — 10,300 29,800 (3,300 ) CWC Panama — — 3,100 4,300 — 500
2,400 2,900 1,000 400 Jamaica — — (1,100 ) 7,900 — 2,200 — 2,200
900 4,800 Trinidad & Tobago — — (1,800 ) (1,900 ) — (2,500 ) —
(2,500 ) (800 ) 1,400 Barbados — — (1,000 )
(1,200 ) — (100 ) — (100 ) (500 ) (600 ) Bahamas — — — 300 — 300 —
300 100 (100 ) Other — — (2,300 ) (2,900 ) (700 )
(1,100 ) — (1,800 ) 200 (1,300 ) Total CWC — —
(3,100 ) 6,500 (700 ) (700 ) 2,400 1,000
900 4,600 Puerto Rico 6,100 6,100
(3,300 ) 2,400 — (1,600 ) — (1,600 ) —
4,000
Total LiLAC Group 75,700
76,400 17,700 45,700
(3,500 ) 10,800 2,400
9,700 30,700 5,300 Total
Organic Change 385,000 402,600 21,300 277,000
(116,600 ) 52,700 1,400 (62,500 ) 191,000
148,500
Q2 2016
Adjustments:
Q2 2016 Acquisition - Panama 415,700 240,200 388,700 513,900 —
51,300 36,800 88,100 123,800 302,000 Q2 2016 Acquisition - Jamaica
469,800 459,800 301,100 476,500 — 102,600 — 102,600 167,200 206,700
Q2 2016 Acquisition - Trinidad & Tobago 310,500 310,500 186,600
294,000 — 138,000 — 138,000 132,800 23,200 Q2 2016 Acquisition -
Barbados 121,800 121,800 97,300 175,000 — 20,500 — 20,500 67,900
86,600 Q2 2016 Acquisition - Bahamas 140,600 140,600 61,500 86,600
— 300 — 300 24,700 61,600 Q2 2016 Acquisition - Other CWC 354,300
334,500 220,600 329,800 13,500 73,400 — 86,900 118,900 124,000 Q2
2016 Germany Adjustments — (20,300 ) — — —
— — — — —
Net
Adjustments 1,812,700 1,587,100 1,255,800
1,875,800 13,500 386,100 36,800 436,400
635,300 804,100
Net Adds (Reductions)
2,197,700 1,989,700 1,277,100 2,152,800
(103,100 ) 438,800 38,200 373,900 826,300
952,600
Footnotes for Operating Data and
Subscriber Variance Tables
(1) Homes Passed are homes, residential multiple dwelling
units or commercial units that can be connected to our networks
without materially extending the distribution plant, except for DTH
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. Due to the fact that
we do not own the partner networks (defined below) used in
Switzerland and the Netherlands we do not report homes passed for
Switzerland’s and the Netherlands’ partner networks. (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, internet and telephony services. (3) Customer
Relationships are the number of customers who receive at least one
of our video, internet or telephony 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. 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-only customers from
Customer Relationships. (4) Revenue Generating Unit or "RGU" is
separately a Basic Video Subscriber, Enhanced Video Subscriber, DTH
Subscriber, Internet Subscriber or Telephony Subscriber (each as
defined and described below). A home, residential multiple dwelling
unit, or commercial unit may contain one or more RGUs. For example,
if a residential customer in our Austrian market subscribed to our
enhanced video service, fixed-line telephony service and broadband
internet service, the customer would constitute three RGUs. Total
RGUs is the sum of Basic Video, Enhanced Video, DTH, 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. We do not
include subscriptions to mobile services in our externally reported
RGU counts. In this regard, our June 30, 2016 RGU counts exclude
our separately reported postpaid and prepaid mobile subscribers.
(5) Basic Video Subscriber is a home, residential multiple dwelling
unit or commercial unit that receives our video service over our
broadband network either via an analog video signal or via a
digital video signal without subscribing to any recurring monthly
service that requires the use of encryption-enabling technology.
Encryption-enabling technology includes smart cards, or other
integrated or virtual technologies that we use to provide our
enhanced service offerings. With the exception of RGUs that we
count on an EBU basis, we count RGUs on a unique premises basis. In
other words, a subscriber with multiple outlets in one premises is
counted as one RGU and a subscriber with two homes and a
subscription to our video service at each home is counted as two
RGUs. In Europe, we have approximately 150,200 “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) Enhanced Video Subscriber is a home, residential
multiple dwelling unit or commercial unit that receives our video
service over our broadband network or through a partner network via
a digital video signal while subscribing to any recurring monthly
service that requires the use of encryption-enabling technology.
Enhanced Video Subscribers that are not counted on an EBU basis are
counted on a unique premises basis. For example, a subscriber with
one or more set-top boxes that receives our video service in one
premises is generally counted as just one subscriber. An Enhanced
Video Subscriber is not counted as a Basic Video Subscriber. As we
migrate customers from basic to enhanced video services, we report
a decrease in our Basic Video Subscribers equal to the increase in
our Enhanced Video Subscribers. Subscribers to enhanced video
services provided by our operations in Switzerland and the
Netherlands over partner networks receive basic video services from
the partner networks as opposed to our 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) 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 exclude 49,300
digital subscriber line (“DSL”) subscribers within Austria that are
not serviced over our networks. Our Internet Subscribers do not
include customers that receive services from dial-up connections.
In Switzerland, we offer a 2 Mbps internet service to our Basic and
Enhanced Video Subscribers without an incremental recurring fee.
Our Internet Subscribers in Switzerland include 100,800 subscribers
who have requested and received this service. (9) 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
exclude 38,100 subscribers within Austria that are not serviced
over our networks. In Switzerland, we offer a basic phone service
to our Basic and Enhanced Video Subscribers without an incremental
recurring fee. Our Telephony Subscribers in Switzerland include
64,200 subscribers who have requested and received this service.
(10) Pursuant to service agreements, Switzerland and, to a much
lesser extent, the Netherlands offer enhanced video, 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. At June 30, 2016, Switzerland’s partner networks account
for 141,700 Customer Relationships, 288,400 RGUs, 106,200 Enhanced
Video Subscribers, 108,000 Internet Subscribers, and 74,200
Telephony Subscribers.
Additional General Notes to
Tables:
As a result of our decision to discontinue our Multi-channel
Multipoint Distribution System (“MMDS”) service in Ireland, we have
excluded subscribers to our MMDS service from our externally
reported operating statistics effective January 1, 2016, which
resulted in a reduction to Homes Passed, RGUs, and Customer
Relationships in Ireland and Slovakia of 22,200 and 500,
respectively.
Most of our broadband communications subsidiaries provide
telephony, broadband internet, data, video or other B2B services.
Certain of our B2B revenue is derived from small or home office
(“SOHO”) subscribers that pay a premium price to receive enhanced
service levels along with video, internet or telephony services
that are the same or similar to the mass marketed products offered
to our residential subscribers. All mass marketed products provided
to SOHOs, whether or not accompanied by enhanced service levels
and/or premium prices, are included in the respective RGU and
customer counts of our broadband communications operations, with
only those services provided at premium prices considered to be
“SOHO RGUs” or “SOHO customers.” SOHO customers of CWC are not
included in our respective RGU and customer counts as of June 30,
2016. With the exception of our B2B SOHO subscribers, we generally
do not count customers of B2B services as customers or RGUs for
external reporting purposes.
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 Puerto Rico and certain commercial and residential
multiple dwelling units in Europe (with the exception of Germany
and Belgium, where we do not count any RGUs on an EBU
basis). 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. In Germany,
homes passed reflect the footprint and two-way homes passed reflect
the technological capability of our network up to the street
cabinet, with drops from the street cabinet to the building
generally added, and in-home wiring generally upgraded, on an as
needed or success-based basis. In Belgium, Telenet leases a portion
of its network under a long-term capital lease arrangement. These
tables include operating statistics for Telenet's owned and leased
networks.
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, including CWC, 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160804006517/en/
Liberty GlobalInvestor
Relations:Oskar Nooij, +1 303 220 4218Christian
Fangmann, +49 221 84 62 5151John Rea, +1 303 220 4238orCorporate Communications:Matt Beake, +44 20
8483 6428Rebecca Pike, +44 20 8483 6216
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