All Full-Year OCF and Adj. FCF Targets Confirmed for LBTY &
LiLAC
European Operating Income Down 5% in Q2, LiLAC to $159
Million
Q2 Rebased OCF Growth of 6% in Europe and 10.5% at LiLAC
Q2 LBTY Share Repurchases of $1.2 Billion and $2.2 Billion
YTD
LiLAC Group Spin-Off Remains On Track for Year-End 2017
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, 2017 for the Liberty Global Group1 and the LiLAC
Group1.
CEO Mike Fries stated, "During the first six months of the year,
we added 406,000 RGUs2 across our European markets, including a
16%3 year-over-year improvement in Western Europe, underpinned by
our strongest H1 video performance since 2006 and continued network
expansion. Our next-generation4 video platforms, which include
elegant user-interfaces, in-and-out of the home viewing
capabilities and robust content line-ups, continue resonating with
consumers, as we've added 1 million subscribers across Europe
during the last twelve months. In the U.K., we have been
proactively rolling out our new 4k-enabled, Virgin TV V6 set-top
box, where we are seeing strong demand from both new and existing
customers. In our other markets, we continue expanding the reach of
Horizon TV and over 40% of our video base in Europe now subscribes
to one of our next-generation TV platforms. On the connectivity
front, nearly one-third of our 15 million broadband subscribers
enjoy our high-speed Connect Box, which provides an impeccable WiFi
user experience throughout the home, and our subscribers can now
seamlessly access 10 million WiFi spots across Europe."
"From a financial perspective, our Q2 rebased5 OCF6 result in
Europe showed both sequential and year-over-year improvement, as we
delivered 6% rebased OCF growth. This result was fueled by strong
performances in Germany, Belgium and CEE, which delivered Q2
rebased OCF growth of 6%, 5% and 7%, respectively, and was further
supported by our company-wide indirect cost efficiencies. On
top-line growth, we reported a 2% rebased improvement as our B2B7
business delivered 14% rebased revenue growth in the quarter,
partly offset by continued challenges in our mobile business which
contracted 6%. As expected, cable ARPU8 and revenue growth at
Virgin Media remained soft, as the discounting and mix effects that
impacted growth in Q1 continued in the second quarter. At the same
time, we are seeing some early signs of progress and expect the
ARPU headwind in the U.K. to lessen in Q4 of this year. We continue
to anticipate approximately 5% rebased OCF growth for Liberty
Global Group in 2017."
"With respect to Project Lightning, we've made significant
strides in solidifying the foundation of the program through the
appointment of a dedicated new leadership team9, as well as an
overhaul of key processes and procedures. During Q2, we built
127,000 new premises at Virgin Media, including a record monthly
build performance in June, and our cumulative total now stands at
nearly 800,000 premises since the project's inception. Meanwhile,
on the European continent, the number of new build and upgraded
homes in markets like Germany and CEE continue to broadly track our
expectations. In these regions, we have added a cumulative total of
1.4 million newly marketable premises over the last 2 years."
"At LiLAC, we delivered 10.5% rebased OCF growth in Q2 due to
double-digit improvements at both VTR and CWC10. In the case of
CWC, we've taken actions that should help drive organic revenue
growth and cost efficiencies in the future. With regard to our
planned spin-off of the LiLAC Group, we are pleased to report that
we submitted a draft registration statement with the SEC on a
confidential basis in July, and we still expect to complete the
transaction around the end of the year. We believe the spin-off
will benefit LiLAC shareholders by creating a stand-alone,
asset-backed equity, while enhancing its potential attractiveness
as an acquisition currency for consolidation opportunities in the
highly-fragmented Latin American and Caribbean telecommunications
markets. In terms of guidance, we continue to anticipate
approximately $1.5 billion11 of OCF for full-year 2017 at
LiLAC."
"We remained active in the credit markets during the first half
of the year, refinancing over $11 billion of long-term debt in
Europe and Latin America combined. At the end of June, our
fully-swapped borrowing cost12 for Liberty Global plc was 4.8%, our
average tenor13 exceeded seven years and we had substantial
liquidity14 of over $6 billion. With respect to our share buyback
programs, we took advantage of recent trading levels and
repurchased a record $2.2 billion of LBTY equity, as well as $41
million of LiLAC Group stock during the first half of 2017. Going
forward, we will continue to manage our business through the lens
of our long-standing levered-equity strategy, and will continue to
be opportunistic when our stock prices look especially
attractive."
European Highlights Q2
2017
- 162,000 RGU adds as softer broadband
& voice growth was partially offset by better video trends
- 99,000 organic Q2 postpaid mobile
additions15, driven by a strong performance at Telenet
- 35% of our Virgin Media postpaid mobile
base has migrated to 4G
- Closed the acquisition of SFR in
Belgium in mid-June, adding 91,000 customers
- German analog switch-off successfully
finalized in early July with limited video churn
- Rebased revenue increased 2%, impacted
by lower growth at Virgin Media and Switzerland
- Residential fixed16 of $2.7 billion, up
1% year-over-year
- B2B up 14% year-over-year to $0.5
billion
- Residential mobile (incl. handset &
interconnect) declined 6% YoY to $0.4 billion
- Operating income decreased 5%
year-over-year
- Rebased OCF growth of 6% with improved
sequential growth from nearly all segments
- Includes a $32 million nonrecurring
benefit associated with a telecom operator's agreement to
compensate Virgin Media for prior-period contractual breaches
- Connected/built new premises totaling
around 500,000 YTD and 295,000 in Q2, of which 127,000 were at
Virgin Media in Q2
Liberty Global Group (Europe) Q2 2017
YOYGrowth/(Decline)*
YTD 2017
YOYGrowth/(Decline)*
Subscribers
Organic RGU Net Additions 161,900 (37.5 %) 406,200 (6.3 %)
Financial (in USD
millions, unless noted)
Revenue $ 3,664 1.6 % $ 7,183 1.9 % OCF $ 1,733 6.0 % $ 3,338 5.0 %
Operating income $ 483 (5.0 %) $ 914 (11.7 %) Adjusted
FCF(17) $ 325 N.M. $ (8 ) N.M. Cash provided by operating
activities $ 1,509 $ 2,412 Cash provided (used) by investing
activities $ (926 ) $ 965 Cash used by financing activities $
(1,662 ) $ (3,445 )
* For the RGU growth rate, the Netherlands is excluded from the
2016 figures; Revenue and OCF YoY growth rates are on a rebased
basis.N.M. - Not Meaningful
LiLAC Highlights Q2 2017
- Added 8,000 organic customers18,
bringing the H1 total to 41,000
- Subscriber additions of 16,000 in Q2
2017 & 58,000 in H1 2017
- VTR's 34,000 net adds partially offset
by losses totaling 18,000 at CWC & LCPR
- Rebased revenue growth of 2%, including
8% in Chile and 1% at CWC and LCPR
- Operating income of $159 million versus
a $21 million operating loss in Q2 2016
- Rebased OCF growth of 10.5%
- CWC & VTR each delivered 11%
rebased growth
- LCPR delivered 7% rebased OCF growth
despite macroeconomic headwinds
- Lowering P&E additions as a % of
revenue forecast to 19%-21% for 2017
Liberty Latin America & Caribbean Q2
2017
YOYGrowth/(Decline)*
YTD 2017
YOYGrowth/(Decline)*
Subscribers
Organic RGU Net Additions 15,700 (65.6 %) 57,600 (14.0 %)
Financial (in USD
millions, unless noted)
Revenue $ 921 2.4 % $ 1,832 0.8 % OCF $ 368 10.5 % $ 722 (0.4 %)
Operating income $ 159 N.M. $ 297 N.M. Adjusted FCF $ 114
N.M. $ 56 N.M. Cash provided by operating activities $ 224 $ 299
Cash used by investing activities $ (123 ) $ (253 ) Cash provided
(used) by financing activities $ (27 ) $ 2
* Revenue and OCF YoY growth rates are on a rebased basis.N.M. -
Not Meaningful
Subscriber Growth - Liberty Global Group (Europe)
Three months ended Six months
ended June 30, June 30, 2017
2016 2017 2016 Organic
RGU net additions (losses) by product (excluding NL)(3)
(excluding NL)(3) Video (16,100 ) (39,500 ) (31,200 ) (137,200 )
Data 100,100 150,800 254,500 296,000 Voice 77,900 147,700
182,900 274,700 Total Liberty Global Group
161,900 259,000 406,200 433,500
Organic RGU net additions (losses) by market U.K./Ireland
78,100 50,100 236,100 143,000 Germany 53,800 109,300 106,200
132,900 Belgium (15,300 ) 17,600 (27,300 ) 23,900
Switzerland/Austria 10,600 (9,700 ) 8,200 (21,700 ) Central and
Eastern Europe 34,700 91,700 83,000 155,400
Total Liberty Global Group 161,900 259,000
406,200 433,500
Organic Mobile SIM
additions (losses) by product Postpaid 98,700 94,700 189,900
183,300 Prepaid (92,900 ) (52,500 ) (165,900 ) (119,000 ) Total
Liberty Global Group 5,800 42,200 24,000
64,300
Organic Mobile SIM additions (losses) by
market U.K./Ireland (7,500 ) 25,300 (4,100 ) 9,200 Belgium
(6,300 ) (8,700 ) 400 9,100 Other 19,600 25,600
27,700 46,000 Total Liberty Global Group 5,800
42,200 24,000 64,300
- Cable Product
Performance: we added 406,000 RGUs in H1, down 6%
year-over-year. During Q2 we gained 162,000 RGUs, a decline of 37%
over the prior-year period due to lower additions in CEE, Germany
and Belgium. From a Q2 product perspective, our video RGU
performance improved, while our broadband and telephony growth
slowed year-over-year
- The better video result was primarily
driven by Virgin Media, which improved its Q2 performance by 50,000
RGUs supported by the relaunch of Virgin TV and the successful
rollout of our Virgin TV V6 set-top box. The overall video
performance was particularly strong given our focus on the
completion of the analog switch-off in Germany, which caused only
minimal disruption to our German operations
- Next-Generation
TV platforms (including Horizon TV, Horizon-Lite, TiVo,
Virgin TV V6 and Yelo TV): we added 302,000 subscribers in Q2, as
our next-generation subscriber base reached 7.2 million,
representing 41% of our total cable video base (excluding DTH).
Notable Q2 performances included the U.K. (78,000 additions),
Belgium (69,000 additions) and Poland (53,000 additions)
- Our new 4K enabled Virgin TV V6 set-top
box is resonating with consumers in the U.K. and by June 30, 2017
nearly 10% of video subscribers in the U.K. had a new box.
Subscribers to the Virgin TV V6 box have significantly higher NPS
scores than those on legacy boxes
- WiFi Connect
Box: we increased the number of WiFi Connect boxes by more
than 800,000 during Q2, ending the quarter with 4.5 million boxes
installed across Europe. This represents a 31% penetration of our
broadband base of 14.7 million
- U.K./Ireland: posted RGU growth of 78,000
additions in Q2, up 56% YoY in a seasonally slower quarter, and
improved in both Lightning new build areas and our existing
footprint. Similar to Q1, our U.K. video performance materially
improved on a year-over-year basis with 35,000 RGU additions, a
42,000 subscriber improvement. Our Q2 U.K. internet RGU growth of
31,000 slowed due to higher year-over-year churn levels but still
took an estimated 46% share of national broadband net adds and an
even higher share of broadband net adds on our cable footprint in
the U.K. during Q2. Our Irish RGU performance returned to positive
territory with improvements across all products due to our latest
spring campaign
- Germany:
reported 54,000 RGU additions in Q2, around half of our Q2 2016
result. The main operational focus in Q2 was the switch-off of the
analog TV signal across our video base of 6 million subscribers.
The migration to a digital-only video experience was successful,
including better year-over-year video performance. We experienced
weaker internet and fixed voice RGU growth, partially as a result
of (1) a more competitive environment and (2) certain delays in
installations for new customers as truck rolls were prioritized for
existing customers to assist with the analog switch-off in June. In
addition, we have reduced discounts since February 2017, while in
the prior-year period we ran our "Highspeed Weeks" promotion
- Belgium:
Q2 attrition of 15,000 RGUs was broadly in-line with Q1 results,
but down year-over-year primarily due to intensified competition.
While video losses improved sequentially, internet and telephony
performance softened. Our all-in-one converged package "WIGO"
reached 224,000 subscribers at June 30, 2017, including a robust Q2
inflow of 36,000 net new "WIGO" subscribers. In addition, Telenet
closed its acquisition of SFR Belux in June, resulting in 190,000
nonorganic fixed subscriber additions in Q2 2017
- Switzerland/Austria: 11,000 RGU additions in Q2,
supported by a sequential and year-over-year improvement across all
fixed-line products. This result was driven by our refreshed Swiss
Connect & Play portfolio, which launched in mid-May. With
respect to this new portfolio, we lowered price points of our
high-tier bundles, while lifting price points on the low-end to
drive a better tier-mix. We expect to launch our MySports channels
in early September featuring exclusive content, such as Swiss,
Russian and Swedish ice hockey, and German and Portuguese
soccer
- CEE:
delivered 35,000 RGU additions in Q2, a decline versus the 92,000
gained in Q2 2016. This weaker performance was primarily due to
softer RGU performances in Poland, Slovakia and our DTH business.
Hungary's strong RGU additions partially offset these weaker
results
- Mobile15:
added 6,000 mobile subscribers in total in Q2, as our 99,000
postpaid subscriber additions, were largely offset by attrition in
the prepaid subscriber base
- Virgin Media's Q2 subscriber base in
the U.K. declined by 20,000 as low-ARPU prepaid subscriber losses
of 30,000 more than offset the 10,000 postpaid additions. Of note,
4G subscriptions in the U.K. increased by 347,000 in Q2 and now
represent 34% of the U.K.'s total postpaid mobile base. Ireland
delivered a record 13,000 additions during Q2, supported by our
attractive SIM-only postpaid mobile promotion
- Telenet in Belgium gained 60,000
postpaid additions in Q2, supported by the continued success of
"WIGO" and a refreshed BASE19 postpaid offering with doubled data
allowance. This sequential and year-over-year improvement was
offset by a decline in our prepaid base of 63,000 during Q2, mainly
due to the deactivation of 53,000 prepaid SIM cards following a
legislative change to register all legacy prepaid SIMs by June 15,
2017
- Switzerland/Austria posted 15,000
postpaid SIM additions on the back of the continued "10 for 10"
promotion in Austria and a refreshed mobile portfolio in
Switzerland, now including free EU roaming
Revenue Highlights - Liberty Global Group (Europe)
The following table presents (i) revenue of each of our
consolidated reportable segments for the comparative periods, and
(ii) the percentage change from period to period on a reported and
a rebased basis:
Three months ended
Increase/(decrease) Six months ended
Increase/(decrease) June 30, June 30,
Revenue 2017 2016 %
Rebased % 2017 2016 %
Rebased
% in millions, except % amounts European
Division: U.K./Ireland $ 1,566.1 $ 1,717.7 (8.8 ) 0.9 $ 3,070.5 $
3,404.2 (9.8 ) 1.3 Belgium 686.0 707.3 (3.0 ) 0.7 1,347.4 1,317.5
2.3 0.9 Germany 655.8 643.5 1.9 4.6 1,284.9 1,260.6 1.9 5.1
Switzerland/Austria 435.1 447.0 (2.7 ) (1.5 ) 858.8 880.4 (2.5 )
(1.4 ) The Netherlands — 678.8 N.M. N.M. —
1,348.6 N.M. N.M. Total Western Europe 3,343.0 4,194.3 (20.3
) 1.2 6,561.6 8,211.3 (20.1 ) 1.6 Central and Eastern Europe 288.6
274.0 5.3 6.4 559.9 540.1 3.7 5.8 Central and other 31.6
(0.9 ) N.M. N.M. 60.3 (3.3 ) N.M. N.M. Total European
Division 3,663.2 4,467.4 (18.0 ) 1.6 7,181.8 8,748.1 (17.9 ) 1.9
Corporate and other 0.5 15.2 (96.7 ) N.M. 0.9 29.8 (97.0 ) N.M.
Intersegment eliminations — (11.4 ) N.M. N.M. — (22.6
) N.M. N.M. Total Liberty Global Group $ 3,663.7 $ 4,471.2
(18.1 ) 1.6 $ 7,182.7 $ 8,755.3 (18.0 )
1.9
N.M. - Not Meaningful
- Reported revenue for the three and six
months ended June 30, 2017, declined 18% year-over-year in each
period
- These results were primarily driven by
the net impact of (i) the deconsolidation of our operations in the
Netherlands in connection with the completion of our joint venture
with Vodafone Group plc (the "VodafoneZiggo JV"), (ii) negative
foreign exchange ("FX") movements, mainly related to the
strengthening of the U.S. dollar against the British pound, and
(iii) our organic revenue growth
- Rebased revenue grew 2% during each of
the Q2 and H1 2017 periods and included the net negative impact of
certain items, the most significant of which included:
- A reduction in cable subscription
revenue of $3 million and $12 million, respectively, resulting from
a change in U.K. regulations governing payment handling fees that
Virgin Media charges its customers
- The favorable $6 million impact in the
YTD period of the expected recovery of VAT paid in prior periods
with respect to copyright fees in Belgium, which benefited revenue
in Q1 2017
- In Q2 and H1 2017, we recognized $32
million and $63 million of revenue from the VodafoneZiggo JV
pursuant to the framework services agreement. Our rebased growth
calculations include an estimate of the revenue from the framework
agreement for the Q2 and H1 2016 periods, as if the framework
agreement had been in place at the beginning of 2016
- Effective April 1, 2017, we changed the
categories that we present in our product revenue table in order to
align with our internal reporting. These changes were retroactively
reflected in the prior-year periods. The new table presents
Residential Cable, Residential Mobile and B2B (Fixed and Mobile)
sections, with each section including subscription and
non-subscription elements. Our definitions of subscription revenue
and ARPU have not changed. For additional details and definitions
of our product revenue, see note 15 to the condensed consolidated
financial statements included in our quarterly report on Form 10-Q
filed on August 7, 2017 (the "Form 10-Q")
- Our B2B7 business (including SOHO and
non-subscription revenue) reported rebased revenue growth of 14%
and 12% in Q2 2017 and H1 2017, respectively
- Our residential mobile (including
interconnect and handset sales) business posted 6% and 7% rebased
revenue contractions during Q2 2017 and H1 2017, respectively
- Contraction of mobile revenue was due
to rebased revenue declines in Belgium and the U.K., which together
represent over 90% of our mobile business
- The U.K. declines were mainly related
to reductions in revenue from Virgin Media's subsidized handset
base of $31 million and $67 million, respectively, which more than
offset increases related to growth in Virgin Media's split-contract
program of $14 million and $29 million, respectively
- Additionally, declines in mobile
interconnect revenue negatively impacted mobile revenue in both the
U.K. and Belgium
Q2 2017 Rebased Revenue Growth - Segment
Highlights
- U.K./Ireland: the rebased revenue growth of 1% in
Q2 2017 was driven by:
- Rebased residential cable revenue (~70%
of total revenue) growth of 2%, driven by the net effect of (i)
growth in subscription revenue resulting from RGU additions and
(ii) a relatively flat year-over-year Q2 ARPU performance on an
FX-neutral basis
- Rebased residential mobile revenue
(including interconnect and mobile handset revenue) decline of 8%,
primarily due to the net reduction in revenue in the U.K., as
mentioned above
- Rebased business revenue growth of 4%,
mainly driven by SOHO and SME
- Belgium:
rebased revenue growth rate of 1% in Q2 was mainly driven by the
net effect of (i) strong growth in B2B, (ii) mobile headwinds,
partly related to lower mobile subscribers and handset sales and
(iii) lower cable revenue, primarily due to RGU attrition
- Germany:
Q2 rebased revenue growth of 5% was mainly driven by (i) higher
cable subscription revenue (~90% of total revenue), as a result of
a larger subscriber base and an increase in ARPU per RGU, (ii)
higher low-margin mobile handset revenue and (iii) B2B growth in
the SOHO segment. Looking ahead, we expect H2 2017 to be adversely
impacted by the analog switch-off, as the related loss of analog
carriage fees is expected to result in a reduction of revenue and
OCF of approximately €7.5 ($8.6) million per quarter
- Switzerland/Austria: rebased revenue declined by
1.5% in Q2, mainly driven by the net effect of (i) lower ARPU per
RGU, primarily related to a weaker tier-mix and competitive
pressures and (ii) a higher contribution from B2B. At the same
time, mobile revenue growth was limited as the contribution from
the mobile subscriber growth was offset by lower handset sales
- CEE:
rebased revenue growth of 6% in Q2 driven mainly by (i) strong
growth in our B2B business and (ii) higher cable revenue supported
by solid RGU additions totaling 302,000 over the LTM period, partly
offset by a 1% decline in the ARPU per RGU on an FX-neutral
basis
Operating Income - Liberty Global Group (Europe)
- Operating income of $483 million and
$509 million in Q2 2017 and Q2 2016, respectively, representing a
decrease of 5%. For the six months ended June 30, 2017, the
operating income of $914 million reflects a decline of 12% as
compared to $1.0 billion in H1 2016
- The decreases in operating income
during both periods primarily resulted from lower OCF, as further
described below, and declines in depreciation and amortization. The
declines in OCF and depreciation and amortization are primarily
attributable to the fact that our Netherlands segment is not
included in our 2017 consolidated results
Operating Cash Flow Highlights - Liberty Global Group
(Europe)
The following table presents (i) OCF of each of our consolidated
reportable segments for the comparative periods, and (ii) the
percentage change from period to period on a reported and a rebased
basis:
Three months ended
Increase/(decrease) Six months ended
Increase/(decrease) June 30, June 30,
OCF 2017 2016 %
Rebased % 2017 2016 %
Rebased % in millions, except % amounts
European Division: U.K./Ireland $ 709.8 $ 765.5 (7.3 ) 3.9 $
1,358.3 $ 1,510.1 (10.1 ) 2.4 Belgium 317.8 311.3 2.1 5.4 615.7
581.1 6.0 6.8 Germany 412.8 400.3 3.1 5.8 795.6 779.7 2.0 5.2
Switzerland/Austria 266.9 263.6 1.3 2.3 522.0 521.7 0.1 1.0 The
Netherlands — 364.1 N.M. N.M. — 732.0
N.M. N.M. Total Western Europe 1,707.3 2,104.8 (18.9 ) 4.4 3,291.6
4,124.6 (20.2 ) 3.7 Central and Eastern Europe 122.9 114.6 7.2 7.2
233.9 225.5 3.7 5.5 Central and other (51.2 ) (82.1 ) 37.6
4.8 (93.2 ) (166.4 ) 44.0 14.3 Total European
Division 1,779.0 2,137.3 (16.8 ) 4.9 3,432.3 4,183.7 (18.0 ) 4.4
Corporate and other (45.7 ) (62.7 ) 27.1 25.0 (94.3 )
(115.5 ) 18.4 14.6 Total Liberty Global Group $ 1,733.3
$ 2,074.6 (16.5 ) 6.0 $ 3,338.0 $
4,068.2 (17.9 ) 5.0 OCF Margin 47.3 % 46.4 % 46.5 %
46.5 %
N.M. - Not Meaningful
- Reported OCF for the three and six
months ended June 30, 2017, declined 16.5% and 18% year-over-year,
respectively
- These results were primarily driven by
the net impact of (i) the deconsolidation of our operations in the
Netherlands, (ii) the aforementioned adverse impact of FX movements
and (iii) our organic OCF growth
- Rebased OCF growth of 6% and 5% in Q2
and H1 2017, respectively, included the net positive impact of
certain items, the most significant of which included:
- The net unfavorable revenue items
discussed in the "Revenue Highlights" section above
- A favorable $32 million benefit
recognized in Q2 associated with a telecom operator's agreement to
compensate Virgin Media for prior-period contractual breaches
related to network charges
- A $13 million network tax increase
following an April 1, 2017 increase in the rateable value of our
existing U.K. and Irish networks
- The negative impact of an $8 million
favorable MVNO settlement in Belgium in Q2 2016
- As compared to the prior-year periods,
our Q2 and H1 2017 OCF margins20 were up 90 basis points to 47.3%
and flat at 46.5% year-over-year, respectively. Of note, the OCF
margins during the 2017 periods were negatively impacted by the
deconsolidation of the Netherlands
Q2 2017 Rebased Operating Cash Flow Growth
- Segment Highlights
- U.K./Ireland: OCF increased 4% in Q2 on a rebased
basis, including the favorable impact of the $32 million benefit
mentioned above. Excluding this benefit, OCF declined marginally on
a rebased basis as revenue growth was offset by the aforementioned
network tax increase, as well as higher marketing and programming
costs
- Belgium:
rebased OCF growth of 5% in Q2 was largely driven by less mobile
handset subsidies, lower sales and marketing, lower integration
costs and indirect cost containment following the BASE
acquisition
- Germany:
increased OCF by 6% in Q2 on a rebased basis, primarily due to the
net effect of (i) an increase in revenue, (ii) higher direct costs,
primarily due to higher mobile handset sales, partially offset by
lower fixed-line telephony call volumes and interconnect rates and
(iii) cost containment of indirect costs
- Switzerland/Austria: rebased OCF growth of 2% in
Q2 as the rebased revenue contraction of 1.5% was more than offset
by lower direct and indirect costs across the various
functions
- CEE:
rebased OCF growth of 7% in Q2 was largely driven by the
aforementioned revenue growth
- Central and
other: the Q2 year-over-year improvement on a rebased basis
was driven by general cost containment, including lower consultancy
and contingent labor costs, and savings arising from the
establishment of our group-wide Technology & Innovation
organization. Of note, in the prior-year period, we incurred higher
nonrecurring costs associated with the implementation of our
Liberty Go initiative
Net Loss - Liberty Global Group (Europe)
- Net loss was $637 million for the three
months ended June 30, 2017, as compared to net earnings of $204
million for the prior-year period. On a YTD basis, the net loss was
$930 million and $126 million, in H1 2017 and H1 2016,
respectively
Property and Equipment Additions - Liberty Global Group
(Europe)
The details of our property and equipment additions21 are as
follows:
Three months ended Six months
ended June 30, June 30, 2017
2016 2017 2016 in millions,
except % amounts Customer premises equipment $ 304.2 $ 229.9 $
600.2 $ 466.1 New Build & Upgrade 305.5 203.6 495.3 354.6
Capacity 163.0 159.8 279.6 266.1 Baseline 200.9 219.2 357.2 393.7
Product & Enablers 230.2 142.9 355.9 260.3
Property and equipment additions (excluding the
Netherlands(3)) 1,203.8 955.4 2,088.2 1,740.8 The Netherlands —
143.1 — 283.2 Total property and
equipment additions $ 1,203.8 $ 1,098.5 2,088.2
2,024.0 Property and equipment additions as % of
revenue (excluding NL(3)) 32.9 % 25.2 % 29.1 % 23.5 %
- Increases in property and equipment
additions in absolute terms and as a percentage of revenue in both
the Q2 and YTD periods were primarily driven by (i) increased new
build activities across our footprint, particularly in the U.K.,
(ii) higher CPE spend year-over-year and (iii) higher product &
enablers spend, due in part to a new DTH transponder lease
agreement in CEE, partly offset by (iv) lower baseline spend
Consolidated Statements of Cash Flows - Liberty Global Group
(Europe)
Six months ended
June 30, 2017 2016
Variance in millions Net cash provided (used)
by: Operating Activities $ 2,411.5 $ 2,564.0 $ (152.5 )
Investing Activities $ 964.7 $ (2,402.9 ) $ 3,367.6 Financing
Activities $ (3,444.8 ) $ (112.4 ) $ (3,332.4 )
- Operating
Activities: the decrease in cash provided was primarily
attributable to the net effect of (i) a decrease in cash provided
by OCF and related working capital items due to the completion of
the VodafoneZiggo JV transaction, (ii) an increase in cash provided
due to (a) lower payments of interest, (b) higher cash receipts
related to derivative instruments and (c) higher cash dividends
primarily received from the VodafoneZiggo JV and (iii) a decrease
due to unfavorable movements in FX
- Investing
Activities: the change in net cash provided (used) by
investing activities was primarily attributable to an increase in
cash related to (i) higher distributions received from affiliates,
(ii) lower payments for acquisitions and (iii) the equalization
payment received in Q1 2017 in connection with the completion of
the VodafoneZiggo JV transaction
- Financing
Activities: the increase in net cash used by financing
activities was primarily attributable to increases associated with
(i) the repurchase of shares, (ii) higher net repayments of debt
and (iii) an increase in cash collateral associated with a June
2017 debt transaction
Adjusted Free Cash Flow - Liberty Global Group
(Europe)
Three months ended
Six months ended June 30, June 30, 2017
2016 2017 2016
in millions in millions Adjusted Free Cash Flow $
325.1 $ 516.4 $ (7.5 ) $ 411.5
- The adjusted free cash flow17 decrease
of $191 million in Q2 and $419 million in H1 2017, as compared to
the prior-year periods, was attributable to the net effect of:
- Lower cash provided from OCF and
related working capital items
- Lower interest payments (including
related derivative instruments)
- Favorable movements in FX
- Higher dividends received
- Lower capital expenditures
- Lower cash taxes in the Q2 period and
higher cash taxes in the H1 period
- The impact of the VodafoneZiggo JV
transaction accounted for a significant portion of these items
- On a net basis, our vendor financing
programs resulted in approximately $59 million and $84 million
higher adjusted free cash flow in Q2 and H1 2017, respectively, as
compared to the prior-year periods
Leverage and Liquidity - Liberty Global Group (Europe - at
June 30, 2017)
- Total capital
leases and principal amount of third-party debt: $40.7
billion
- Leverage
ratios: our adjusted gross and net leverage ratios22 at June
30, 2017 were 5.2x and 5.1x, respectively
- Average debt
tenor13 : 7.5 years, with ~90% not due until 2021 or
beyond
- Borrowing
costs12 : blended fully-swapped borrowing cost of our
third-party debt was 4.5%
- Liquidity:
$4.7 billion, including (i) $1.1 billion of cash at June 30, 2017
and (ii) aggregate unused borrowing capacity23 under our credit
facilities of $3.6 billion
VodafoneZiggo Joint Venture (not consolidated) - Liberty
Global Group
Our noncontrolling 50% interest in the VodafoneZiggo JV is
attributed to Liberty Global Group. VodafoneZiggo is a leading
Dutch company that provides fixed, mobile and integrated
communication and entertainment services to consumers and
businesses. The unaudited financial and operating information set
forth below is preliminary and subject to change. All financial and
operating information presented in this section is presented in
accordance with VodafoneZiggo's policies.
VodafoneZiggo highlights for Q2
2017(a):
- Lower fixed RGU attrition with a loss
of 10,000 RGUs in Q2 as compared to a loss of 28,000 in Q2 2016;
mobile contract net additions improved to 19,000, compared to a pro
forma loss of 2,000 in Q2 2016
- Total revenue declined by 3% on a pro
forma basis in Q2 to €997 million, reflecting continuing mobile
competition, notably in the B2B segment; fixed-line performance was
stable
- Consumer cable revenue declined by 1%
on a pro forma basis as ARPU growth was offset by a lower customer
base
- Consumer mobile service revenue
declined by 7% on a pro forma basis in Q2 driven by increased
competition and lower roaming revenue
- B2B revenue declined by 7% on a pro
forma basis in Q2 as mobile pressures were only partially offset by
cable growth (led by SOHO subscribers)
- Operating income of €46 million in Q2;
remained flat on a pro forma basis compared with Q2 2016
- Q2 OCF(b) declined by 1% on a pro forma
basis to €428 million as lower revenue was partially offset by
lower marketing expenses, reduced handset costs driven by a higher
proportion of SIM-only sales and lower interconnect costs driven by
lower voice and SMS usage
- Successful launch in April of converged
offer to 633,000 households with 872,000 mobile SIMs. Offer
includes double mobile data allowance, an extra premium TV package
and an internet security package at no incremental cost
(a) VodafoneZiggo (formerly known as Ziggo Group Holding
B.V.) is a wholly-owned subsidiary of VodafoneZiggo Group Holding
B.V. ("VodafoneZiggo JV"), a 50:50 joint venture between Vodafone
Group plc ("Vodafone") and Liberty Global. Prior to December 31,
2016, the predecessor of VodafoneZiggo was a wholly-owned
subsidiary of Liberty Global. On December 31, 2016, Liberty Global
and Vodafone completed a transaction (the "JV Transaction") whereby
(i) VodafoneZiggo became a wholly-owned subsidiary of the
VodafoneZiggo JV and (ii) Vodafone Libertel B.V. ("Vodafone NL"),
the entity that owns Vodafone’s mobile operations in the
Netherlands, became a wholly-owned subsidiary of VodafoneZiggo. In
connection with the closing of the JV Transaction, the
VodafoneZiggo JV recorded all of its assets and liabilities at fair
value. As the entity contributed to the VodafoneZiggo JV by Liberty
Global is considered to be the predecessor of VodafoneZiggo for
financial reporting purposes, the historical consolidated financial
statements for VodafoneZiggo do not include Vodafone NL for periods
prior to December 31, 2016. In order to provide meaningful
comparisons, the preliminary financial and operating information
presented herein for the 2016 periods are presented on a pro forma
basis that gives effect to, among other items, (i) the inclusion of
the financial and operating information of Vodafone NL (excluding
Vodafone Thuis) as of and for the three and six months ended June
30, 2016, (ii) the impacts of the fair value accounting applied to
the opening balance sheet of VodafoneZiggo in connection with the
closing of the JV Transaction, (iii) the services provided to
VodafoneZiggo by Vodafone and Liberty Global pursuant to a
“Framework Agreement” that was entered into in connection with the
JV Transaction; (iv) the elimination of historical related-party
charges from Vodafone and Liberty that will not continue in the
periods following the JV Transaction, with each adjustment recorded
as if the JV Transaction had occurred on January 1, 2016. The pro
forma depreciation and amortization amounts for the 2016 periods
are based on the fair values and estimated useful lives assigned to
VodafoneZiggo's long-lived assets in the preliminary acquisition
accounting and do not provide for the impacts of property and
equipment additions or retirements during the applicable 2016
periods. VodafoneZiggo financial information is denominated in
euro, its functional currency, and reported in accordance with U.S.
GAAP. The pro forma financial information has not been prepared
with a view towards complying with Article 11 of Regulation S-X.
(b) OCF for VodafoneZiggo is defined on a basis consistent
with Liberty Global. For the definition of OCF see note 6. A
reconciliation of operating income to OCF is presented below (in
millions).
Three months ended June
30, Six months ended June 30, 2017
2016 2017 2016
Pro forma Pro forma Operating income € 46.1 €
45.9 € 99.3 € 121.9 Share-based compensation expense 1.5 2.8 4.2
5.6 Depreciation and amortization 378.0 378.2 753.3 755.0
Impairment, restructuring and other operating items, net 2.5
5.6 2.7 8.3 OCF € 428.1 € 432.5 € 859.5
€ 890.8
The following table sets forth selected operating statistics of
VodafoneZiggo:
June 30, 2017
2016
Fixed-line
Subscribers (RGUs)
Basic Video 592,500 720,200 Enhanced Video 3,341,100
3,291,500 Total Video 3,933,600 4,011,700 Internet 3,197,200
3,118,400 Telephony 2,544,800 2,530,500 Total RGUs 9,675,600
9,660,600 Fixed Customer Relationships 3,936,300
4,033,300
Mobile
Subscribers (pro forma for June 30, 2016)
Postpaid 4,085,800 4,059,800 Prepaid (c) 964,200 1,184,600
Total Mobile subscribers 5,050,000 5,244,400
____________________________
(c) Under the VodafoneZiggo definition of prepaid
subscribers, customers who do not pay a recurring monthly fee are
excluded from VodafoneZiggo's prepaid mobile telephony subscriber
counts after a period of inactivity of 15 months.
Subscriber Growth - LiLAC Group
Three months ended Six months
ended June 30, June 30, 2017
2016 2017 2016 Organic
RGU net additions (losses) by product Video 6,300 9,700 11,500
13,200 Data 23,200 30,700 61,800 56,200 Voice (13,800 ) 5,300
(15,700 ) (2,400 ) Total LiLAC Group 15,700 45,700
57,600 67,000
Organic RGU net
additions (losses) by market CWC (15,600 ) 6,500 (5,700 ) 6,500
Chile 33,800 36,800 59,200 53,000 Puerto Rico (2,500 ) 2,400
4,100 7,500 Total LiLAC Group 15,700 45,700
57,600 67,000
Organic Mobile SIM
additions (losses) by product Postpaid 10,400 10,600 22,500
11,600 Prepaid (44,300 ) (4,800 ) (17,300 ) (5,800 ) Total LiLAC
Group (33,900 ) 5,800 5,200 5,800
Organic Mobile SIM additions (losses) by market CWC (48,200
) (1,200 ) (21,600 ) (1,200 ) Chile 14,300 7,000 26,800 7,000
Puerto Rico — — — — Total LiLAC Group
(33,900 ) 5,800 5,200 5,800
- Product
Additions: organic RGU additions of 16,000 in Q2 2017
- Net additions in Chile, were offset by
losses at CWC and in Puerto Rico. Across all three businesses we
saw declines in voice subscribers
- Chile: VTR
added 34,000 RGUs driven by 26,000 broadband subscriber adds, with
over 60% of new sales taking packages containing speeds of 120 Mbps
or higher. We also delivered 12,000 additional video RGUs during
Q2, our strongest quarterly video performance in two years, as our
best-in-class HD channel offering and cutting-edge video-on-demand
user interface attracted customers
- Puerto
Rico: LCPR reported subscriber losses of 3,000 as our
telephony performance weakened and we saw slightly greater video
subscriber decline relative to the prior-year period. Broadband RGU
performance was marginally better year-over-year as our
market-leading speeds, including 400 Mbps for our top-tier
offering, continue to resonate with our customer base
- Panama: we
added 10,000 organic RGUs during the quarter, including 4,000
internet and 3,000 cable video RGUs, as we continued to generate
momentum behind our refreshed bundled offers and network
improvement activities which enabled faster speeds of up to 300
Mbps. We also continued to grow our DTH base, adding 3,000 organic
RGUs in Q2
- Jamaica:
RGUs decreased by 12,000 as subscribers declined across all
fixed-line categories
- Bahamas:
we reported a small RGU decline of 1,000 in Q2 as continued
penetration of our growing Fiber-to-the-Home (FttH) network, which
generated 2,000 video adds, was offset by a decline of 3,000 voice
subscribers
- Barbados:
RGUs declined by 4,000, primarily due to lower fixed-line telephony
subscribers and, to a lesser extent, declines in broadband and
video caused by competition
- Mobile:
mobile subscribers declined by 34,000 in the second quarter as
continued postpaid success in Chile (15,000) and prepaid gains in
Jamaica (3,000) were more than offset by losses across other CWC
businesses, including Panama (18,000) and the Bahamas (24,000)
- Panama: an
18,000 decline in subscribers was mainly driven by reduced low-ARPU
prepaid subscribers
- Jamaica:
subscribers grew by 3,000 as we continued to target increased
market share
- Bahamas:
our subscriber base fell by 24,000 following the entry of a new
competitor into the market in late 2016
- Chile:
added 14,000 subscribers in total, a record quarter, as we
continued to successfully focus on penetrating our fixed subscriber
base with our postpaid product
Revenue Highlights - LiLAC Group
On May 16, 2016, a subsidiary of Liberty Global acquired CWC.
Accordingly, CWC has been included in our financial results under
our U.S. GAAP accounting policies since the acquisition date. The
following table presents (i) revenue of each of our consolidated
reportable segments for the comparative periods and (ii) the
percentage change from period to period on a reported and a rebased
basis:
Three months ended Increase
Six months ended Increase/(decrease)
June 30, June 30, Revenue 2017
2016 % Rebased % 2017
2016 % Rebased % in millions, except
% amounts LiLAC Division: CWC $ 582.7 $ 285.6 104.0 0.7
$ 1,158.3 $ 285.6 305.6 (1.8 ) Chile 231.1 210.6 9.7 7.6 460.4
410.6 12.1 7.4 Puerto Rico 108.3 106.9 1.3 1.3
215.0 210.8 2.0 2.0 Total LiLAC
Division 922.1 603.1 52.9 2.4 1,833.7 907.0 102.2 0.8 Intersegment
eliminations (1.2 ) (0.2 ) N.M. N.M. (1.9 ) (0.2 ) N.M. N.M. Total
LiLAC Group $ 920.9 $ 602.9 52.7 2.4 $
1,831.8 $ 906.8 102.0 0.8
N.M. - Not Meaningful
- Reported revenue for the three and six
months ended June 30, 2017 increased by 53% and 102%, respectively
- The Q2 and YTD results were primarily
driven by the acquisition of CWC and organic growth
- From a rebased perspective, revenue
increased 2% and 1% for the three and six months ended June 30,
2017, respectively, and included a favorable $6 million and $8
million impact in each of the Q2 and YTD periods, respectively, for
wholesale revenue recognized on a cash basis related to services
provided to a significant customer in prior quarters
Q2 2017 Rebased Revenue Growth - Segment
Highlights
- CWC:
rebased revenue grew 1% overall. Our Caribbean region reported
rebased revenue growth of 3% in Q2, including growth of 15% in
Jamaica, with strength across all products, in particular mobile
and managed services, more than offsetting weakness in other
markets. Revenue from wholesale connectivity across our sub-sea and
terrestrial networks and B2B in Latin American markets also grew
strongly, rising by 13% on a rebased basis. Revenue declined by 2%
on a rebased basis in Panama, as growing fixed-line services were
offset by lower managed services, and by 12% on a rebased basis in
the Bahamas, primarily due to weak mobile performance caused by the
increased competition mentioned above
- Chile:
robust rebased revenue growth of 8% for Q2 2017 primarily related
to higher ARPU per RGU and an increase in the average number of
subscribers as well as increased mobile subscription revenue,
driven by subscriber growth
- Puerto
Rico: rebased revenue growth of 1% was driven by subscriber
growth over the last twelve months and Puerto Rico's B2B
business
Operating Income - LiLAC Group
- Operating income (loss) of $159 million
and ($21 million) in Q2 2017 and Q2 2016, respectively, and $297
million and $39 million for the six months ended June 30, 2017 and
2016, respectively
- These increases were primarily driven
by the net effect of (i) increases in OCF, as further described
below, (ii) increases in depreciation and amortization, largely due
to the inclusion of CWC, and (iii) declines in impairment,
restructuring and other operating items, net
Operating Cash Flow Highlights - LiLAC Group
The following table presents (i) OCF of each of our consolidated
reportable segments for the comparative periods and (ii) the
percentage change from period to period on a reported and a rebased
basis:
Three months ended
Increase/(decrease) Six months ended
Increase/(decrease) June 30, June 30,
OCF 2017 2016 %
Rebased % 2017 2016 %
Rebased % in millions, except % amounts LiLAC
Division: CWC $ 224.1 $ 101.0 121.9 11.4 $ 437.2 $ 101.0 332.9 (6.1
) Chile 92.3 81.8 12.8 10.6 183.9 158.1 16.3 11.3 Puerto Rico 53.8
50.0 7.6 7.4 105.1 96.8
8.6 8.6
Total LiLAC Division
370.2 232.8 59.0 10.6 726.2 355.9 104.0 (0.2 ) Corporate and other
(2.2 ) (1.7 ) (29.4 ) (37.5 ) (4.3 ) (2.9 ) (48.3 ) (53.6 ) Total
segment OCF $ 368.0 $ 231.1 59.2 10.5 $
721.9 $ 353.0 104.5 (0.4 ) OCF Margin
40.0 % 38.3 % 39.4 % 38.9 %
- Reported OCF for the three and six
months ended June 30, 2017 increased 59% and 105%, respectively,
primarily as a result of the acquisition of CWC
- From a rebased perspective, OCF
increased 10.5% and remained flat for the three and six months
ended June 30, 2017, respectively
Q2 2017 Rebased OCF Growth - Segment
Highlights
- CWC:
rebased OCF growth of 11% was driven by (i) the aggregate favorable
impact of higher integration costs and higher bad debts in Q2 2016
and the reassessment of certain accruals in Q2 2017, (ii) an
increased gross margin contribution from our managed services
business, boosted by an improved mix of services in Q2 2017, and
(iii) reduced pension, consultancy, travel and office
expenses. These factors were partially offset by higher
content costs, primarily related to the Premier League rights
- Chile:
rebased OCF increase of 11% was driven by the aforementioned
revenue growth and ongoing cost efficiencies
- Puerto
Rico: rebased OCF growth of 7% was primarily supported by
lower direct costs and an increase in revenue
Net Loss - LiLAC Group
- Net losses were $22 million and $115
million for the three months ended June 30, 2017 and 2016,
respectively, and $33 million and $154 million for the six months
ended June 30, 2017 and 2016, respectively
Property and Equipment Additions - LiLAC Group
Three months ended Six months
ended June 30, June 30, 2017
2016 2017 2016 in millions,
except % amounts Customer premises equipment $ 36.2 $ 33.1 $
81.6 $ 71.7 New Build & Upgrade 12.0 10.7 26.6 24.5 Capacity
8.3 14.7 17.7 22.3 Baseline 8.7 17.3 16.3 22.3 Product &
Enablers 5.3 4.0 7.0 10.5 CWC 100.4 53.6 160.9
53.6 Property and equipment additions $ 170.9 $ 133.4
$ 310.1 $ 204.9 Property and equipment
additions as % of revenue 18.6 % 22.1 % 16.9 % 22.6 %
- The increase in property and equipment
additions in absolute terms was driven primarily by (i) an increase
due to the impact of the CWC acquisition and (ii) an increase in
expenditures for the purchase and installation of customer premises
equipment
- We now expect the percentage of revenue
represented by our property and equipment additions to range from
19% to 21% for the LiLAC Group in 2017. This represents a decrease
from our previous guidance of 21% to 23%
Consolidated Statements of Cash Flows - LiLAC Group
Six months ended
June 30, 2017 2016
Variance in millions Net cash provided (used)
by: Operating Activities $ 299.4 $ 105.8 $ 193.6 Investing
Activities $ (252.6 ) $ (170.8 ) $ (81.8 ) Financing Activities $
2.2 $ 282.9 $ (280.7 )
- Operating
Activities: the increase in cash provided was primarily
attributable to the net effect of (i) an increase in cash provided
by OCF and related working capital items and (ii) higher interest
payments
- Investing
Activities: the increase in cash used was primarily due to
higher payments for capital expenditures
- Financing
Activities: the decrease in net cash provided was primarily
attributable to lower net borrowings of debt, partially offset by
higher cash payments associated with the repurchase of shares
The inclusion of CWC in the 2017 period accounted for the
majority of these changes.
Adjusted Free Cash Flow - LiLAC Group
Three months ended Six months
ended June 30, June 30, 2017
2016 2017 2016 in
millions Adjusted Free Cash Flow $ 114.0 $ (35.3 ) $ 56.0 $
(15.4 )
- The Q2 increase, as compared to the
prior-year period, was attributable to:
- Higher cash provided from OCF and
related working capital items
- Lower cash taxes, partially driven by a
$27 million tax refund received from the Chilean government
- Lower interest payments (including
related derivative instruments)
- Lower capital expenditures
- The YTD increase, as compared to the
prior-year period, was attributable to the net effect of:
- Higher cash provided from OCF and
related working capital items
- Higher interest payments (including
related derivative instruments)
- Higher capital expenditures
- Lower cash taxes
- The inclusion of CWC in the full-2017
periods impacted the variances mentioned above
- On a net basis, our vendor financing
programs resulted in approximately $21 million and $26 million of
higher adjusted free cash flow in Q2 and YTD 2017, respectively, as
compared to the prior-year periods
- All three LiLAC Group credit pools
generated positive Adjusted FCF in H1 2017
Leverage and Liquidity - LiLAC Group (at June 30,
2017)
- Total capital
leases and principal amount of third-party debt: $6.2
billion
- Leverage
ratios: consolidated gross and net leverage ratios22 of 4.2x
and 3.8x, respectively
- Average debt
tenor13: over 5.0 years, with over 90% not due until 2021 or
beyond
- Borrowing
costs12: blended fully-swapped borrowing cost of our
third-party debt was 6.4%
- Liquidity:
approximately $1.6 billion, including $599 million of cash and $1.0
billion of aggregate unused borrowing capacity23 under our credit
facilities
Forward-Looking Statements and Disclaimer
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; our expectations with respect
to subscribers, revenue, ARPU per RGU, OCF and Adjusted FCF;
expectations with respect to the development, enhancement and
expansion of our superior networks and innovative and advanced
products and services; statements regarding our planned spin-off of
the businesses attributed to the LiLAC Group and the anticipated
impacts and benefits of such transaction; future P&E additions
as a percentage of revenue; expectations regarding our share
buyback programs; the strength of our balance sheet and tenor of
our third-party debt; statements regarding our JV in the
Netherlands 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 and our affiliates’
services and their willingness to upgrade to our more advanced
offerings; our and our affiliates’ ability to meet challenges from
competition, to manage rapid technological change or to maintain or
increase rates to subscribers or to pass through increased costs to
subscribers; the effects of changes in laws or regulation; general
economic factors; our and our affiliates’ ability to obtain
regulatory approval and satisfy regulatory conditions associated
with acquisitions and dispositions; our and affiliates’ ability to
successfully acquire and integrate new businesses and realize
anticipated efficiencies from acquired businesses; the availability
of attractive programming for our and our affiliates’ video
services and the costs associated with such programming; our and
our affiliates’ ability to achieve forecasted financial and
operating targets; the outcome of any pending or threatened
litigation; the ability of our operating companies and affiliates
to access cash of their respective subsidiaries; the impact of our
operating companies' and affiliates’ 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 and our affiliates’ 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 our most recently filed Form 10-K,
as amended, 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.
Nothing in this press release constitutes an offer of any
securities for sale.
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 enable
us to develop market-leading products delivered through
next-generation networks that connect our 25 million customers who
subscribe to 51 million television, broadband internet and
telephony services. We also serve over 10 million mobile
subscribers and offer WiFi service across 10 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, Unitymedia, Telenet and UPC. The
Liberty Global Group also owns 50% of VodafoneZiggo, a Dutch joint
venture, which has 4 million customers, 10 million fixed-line
subscribers and 5 million mobile subscribers. The LiLAC Group
operates in over 20 countries in Latin America and the Caribbean
under the consumer brands VTR, Flow, Liberty, Más Móvil and BTC. In
addition, the LiLAC Group operates a sub-sea fiber network
throughout the region connecting over 40 markets.
For more information, please visit www.libertyglobal.com or
contact:
Investor Relations:
Corporate Communications: Oskar Nooij +1 303
220 4218 Matt Beake +44 20 8483 6428 Christian
Fangmann +49 221 84 62 5151 Rebecca Pike +44 20 8483 6216 John Rea
+1 303 220 4238
Footnotes
1 The Liberty Global ordinary shares 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 “track” the
economic performance of the Liberty Global Group and the LiLAC
Group, respectively (each as defined and described below). For more
information regarding the tracking shares, see note 1 to our
condensed consolidated financial statements included in our Form
10-Q. While the LiLAC Group and the Liberty Global Group have
separate collections of businesses, assets and liabilities
attributed to them, neither group is a separate legal entity. The
LiLAC Group comprises our operations in Latin America and the
Caribbean and has attributed to it CWC, VTR and Liberty Puerto
Rico. The Liberty Global Group comprises our businesses, assets and
liabilities not attributed to the LiLAC Group, including Virgin
Media, Unitymedia, UPC Holding, Telenet and, through December 31,
2016, Ziggo Group Holding. The condensed consolidated financial
statements of Liberty Global are included in our Form 10-Q. For
attributed financial information of the Liberty Global Group and
the LiLAC Group, see Exhibit 99.1 to our Form 10-Q. 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 and other nonorganic adjustments, 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 As we no longer consolidate the Netherlands effective December
31, 2016, we have removed the Netherlands from certain information
presented for periods prior to December 31, 2016 to enhance
comparability. 4 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.
5
Please see Revenue and Operating Cash Flow
for information on rebased growth.
6
Please see OCF Definition and
Reconciliation for our Operating Cash Flow ("OCF") definition and
the required reconciliations.
7 Total B2B includes subscription (SOHO) and non-subscription
revenue. 8 Average Revenue Per Unit (“ARPU”) refers to the average
monthly subscription revenue (subscription revenue excludes
interconnect, channel carriage fees, mobile handset sales, late
fees and installation fees) per average customer relationship or
mobile subscriber, as applicable. ARPU per average customer
relationship is calculated by dividing the average monthly
subscription revenue from residential cable and SOHO services by
the average of the opening and closing balances for customer
relationships for the period. ARPU per average mobile subscriber is
calculated by dividing residential mobile and SOHO revenue for the
indicated period by the average of the opening and closing balances
for mobile subscribers for the period. Unless otherwise indicated,
ARPU per customer relationship or mobile subscriber is not adjusted
for currency impacts. ARPU per RGU refers to average monthly
revenue per average RGU, which is calculated by dividing the
average monthly subscription revenue from residential and SOHO
services for the indicated period, by the average of the opening
and closing balances of the applicable 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.
Customer relationships, mobile subscribers and RGUs of entities
acquired during the period are normalized. 9 Please see Liberty
Global's 8-K/A filed on March 28, 2017. 10 On May 16, 2016, we
acquired Cable & Wireless Communications Limited ("CWC"). 11 A
reconciliation of our LiLAC OCF guidance for 2017 to a U.S. GAAP
measure is not provided due to the fact that not all elements of
the reconciliation is projected as part of our forecasting process,
as certain items may vary significantly from one period to another.
For example, impairments or other operating charges such as direct
acquisition costs are contingent upon the underlying activity,
which cannot be reasonably forecasted. FX rates as of February 12,
2017. 12 Our blended fully-swapped debt borrowing cost represents
the weighted average interest rate on our aggregate variable- and
fixed-rate indebtedness (excluding capital leases and including
vendor financing obligations), including the effects of derivative
instruments, original issue premiums or discounts and commitment
fees, but excluding the impact of financing costs. 13 For purposes
of calculating our average tenor, total third-party debt excludes
vendor financing. 14 Liquidity refers to cash and cash equivalents
plus the maximum undrawn commitments under subsidiary borrowing
facilities, without regard to covenant compliance calculations. 15
Please see Footnotes for Operating Data
and Subscriber Variance Tables for the definition of mobile
subscribers.
16 Our residential fixed business consists of our fixed-line
triple-play and DTH businesses, but excludes SOHO services.
Residential fixed also excludes the framework services revenue from
the VodafoneZiggo JV and our small Irish broadcasting businesses.
17
Please see Adjusted Free Cash Flow
Definition and Reconciliation for information on Adjusted 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
included in our Form 10-Q. A reconciliation of our 2017 FCF
guidance to a U.S. GAAP measure is not provided due to the fact
that not all elements of the reconciliation are projected as part
of our forecasting process, as certain items may vary significantly
from one period to another. Adjusted FCF guidance is based on FX
rates as of February 12, 2017.
18
Please see Footnotes for Operating Data
and Subscriber Variance Tables for the definition of Customer
Relationships.
19 On February 11, 2016, Telenet acquired Telenet Group BVBA
("BASE"). 20 OCF margin is calculated by dividing OCF by total
revenue for the applicable period. 21 Our property and equipment
additions include our capital expenditures on an accrual basis and
amounts financed under vendor financing or capital lease
arrangements. 22 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 Group, our gross and net
leverage ratios are adjusted to reflect the €600 million ($685
million) redemption of certain UPC Holding senior notes that took
place on July 7, 2017. The net proceeds from the June financing
transaction used to redeem these notes were held in escrow at June
30, 2017. 23 Our aggregate unused borrowing capacity of $4.6
billion represents the maximum undrawn commitments under our
subsidiaries' applicable facilities without regard to covenant
compliance calculations. This consists of $3.6 billion attributed
to the Liberty Global Group and $1.0 billion attributed to the
LiLAC Group. Upon completion of the relevant June 30, 2017
compliance reporting requirements for our credit facilities, and
assuming no further changes from quarter-end borrowing levels, with
the exception of (i) the €600 million ($685 million) redemption of
certain UPC Holding senior notes that took place on July 7, 2017
and (ii) the July 3, 2017 drawdown of $50.0 million under the CWC
Revolving Credit Facility and the removal of the limitation related
to letters of credit issued in connection with certain CWC pension
obligations, we anticipate that our subsidiaries' borrowing
capacity would be $4.5 billion. This consists of $3.5 billion
attributed to the Liberty Global Group and $958 million attributed
to the LiLAC Group. LiLAC cash of $599 million includes $325
million of cash held by CWC, substantially all of which is held by
CWC subsidiaries. For information regarding limitations on CWC's
ability to access this cash, see the discussion under "Material
Changes in Financial Condition" in our Form 10-Q.
Balance Sheets, Statements of Operations and Statements of
Cash Flows
The 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.
Rebase Information
For purposes of calculating rebased growth rates on a comparable
basis for all businesses that we owned during 2017, we have
adjusted our historical revenue and OCF for the three and six
months ended June 30, 2016 to (i) include the pre-acquisition
revenue and OCF of certain entities acquired during 2016 and 2017
in our rebased amounts for the three and six months ended June 30,
2016 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, 2017, (ii) exclude the revenue and OCF of Ziggo Group Holding
and a sports channel that were contributed to the VodafoneZiggo JV
at the end of December 31, 2016, (iii) include revenue for the
framework services agreement with the VodafoneZiggo JV and certain
associated operating and SG&A expenses that had been allocated
to our Netherlands segment during the 2016 periods in our rebased
amounts for the three and six months ended June 30, 2016 as if the
framework services agreement had been in place at the beginning of
2016, (iv) 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 six months ended June 30, 2016 to the
same extent that the revenue and OCF of these subscribers is
excluded from our results for the six months ended June 30, 2017
(v) exclude the revenue and OCF of two small disposals made in
Belgium during Q1 2017 to the same extent that the revenue and OCF
of these disposed businesses is excluded from our results for the
three and six months ended June 30, 2017 and (vi) reflect the
translation of our rebased amounts for the three and six months
ended June 30, 2016 at the applicable average foreign currency
exchange rates that were used to translate our results for the
three and six months ended June 30, 2017. We have included CWC, SFR
and five small entities in whole or in part in the determination of
our rebased revenue and OCF for the three months ended June 30,
2016. We have included CWC, SFR, BASE and five small entities in
whole or in part in the determination of our rebased revenue and
OCF for the six months ended June 30, 2016. We have reflected the
revenue and OCF of the acquired entities in our 2016 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
(“U.S. 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
nonrecurring 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.
The following table provides adjustments made to the 2016
amounts to derive our rebased growth rates for the Liberty Global
Group and the LiLAC Group:
Revenue OCF
Three monthsended June
30,
Six monthsended June 30,
Three monthsended June
30,
Six monthsended June 30,
2016 2016 2016 2016 Liberty Global
Group in millions Acquisitions $ 18.1 $ 104.2 $ 0.2 $
13.9 Contribution of Ziggo Group Holding to the VodafoneZiggo JV
and other dispositions (a) (659.7 ) (1,308.9 ) (341.5 ) (686.4 )
Foreign Currency (224.9 ) (501.3 ) (97.7 ) (218.1 ) Total decrease
$ (866.5 ) $ (1,706.0 ) $ (439.0 ) $ (890.6 )
LiLAC
Group Acquisitions $ 296.9 $ 902.5 $ 101.6 $ 368.8 Foreign
Currency (0.7 ) 7.6 0.2 2.8 Total increase $
296.2 $ 910.1 $ 101.8 $ 371.6 (a)
In connection with the December 31, 2016 closing of the
VodafoneZiggo JV transaction, we entered into a Framework Agreement
that provides for the terms under which we provide services to the
VodafoneZiggo JV. These adjustments to revenue and OCF are net of
$32 million and $63 million of revenue for Q2 and YTD 2016,
respectively, that we assumed would have been earned if the
Framework Agreement had been in place on January 1, 2016.
OCF Definition and Reconciliation
As used herein, OCF has the same meaning as the term "Adjusted
OIBDA" that is referenced in our Form 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 U.S. GAAP measures of income or cash
flows. A reconciliation of our operating income to total
segment OCF is presented in the following table:
Three months ended Six months
ended June 30, June 30, 2017
2016 2017 2016 in
millions Consolidated Liberty Global Operating income $
641.9 $ 487.8 $ 1,211.1 $ 1,074.4 Share-based compensation expense
56.4 74.6 95.4 143.6 Depreciation and amortization 1,371.4 1,553.0
2,693.6 2,988.5 Impairment, restructuring and other operating
items, net 31.6 190.3 59.8 214.7 Total
segment OCF $ 2,101.3 $ 2,305.7 $ 4,059.9 $
4,421.2
Liberty Global Group Operating income
$ 483.2 $ 508.7 $ 914.4 $ 1,035.3 Share-based compensation expense
53.4 71.4 86.8 138.6 Inter-group fees and allocations (3.0 ) (2.1 )
(6.0 ) (4.2 ) Depreciation and amortization 1,178.5 1,426.9 2,306.8
2,810.1 Impairment, restructuring and other operating items, net
21.2 69.7 36.0 88.4 Total segment OCF $
1,733.3 $ 2,074.6 $ 3,338.0 $ 4,068.2
LiLAC Group Operating income (loss) $ 158.7 $ (20.9 )
$ 296.7 $ 39.1 Share-based compensation expense 3.0 3.2 8.6 5.0
Inter-group fees and allocations 3.0 2.1 6.0 4.2 Depreciation and
amortization 192.9 126.1 386.8 178.4 Impairment, restructuring and
other operating items, net 10.4 120.6 23.8
126.3 Total segment OCF $ 368.0 $ 231.1 $
721.9 $ 353.0
Summary of Debt, Capital Lease Obligations and Cash and Cash
Equivalents
The following table1 details the U.S. dollar equivalent balances
of the outstanding principal amount of our debt, capital lease
obligations and cash and cash equivalents at June 30, 2017:
Capital Debt
& Capital Cash Lease
Lease and Cash Debt2 Obligations
Obligations Equivalents in millions Liberty
Global and Liberty Global Group unrestricted subsidiaries $ 2,254.0
$ 71.9 $ 2,325.9 $ 991.6 Virgin Media3 15,461.2 77.2 15,538.4 46.6
UPC Holding 7,892.2 91.1 7,983.3 22.0 Unitymedia 8,531.3 698.4
9,229.7 3.2 Telenet 5,229.8 415.7 5,645.5 27.3
Total Liberty Global Group 39,368.5 1,354.3 40,722.8
1,090.7 LiLAC Group unrestricted subsidiaries — — — 58.6 CWC
3,729.1 19.9 3,749.0 325.1 VTR Finance 1,473.1 0.9 1,474.0 165.2
Liberty Puerto Rico 942.5 — 942.5 50.0 Total
LiLAC Group 6,144.7 20.8 6,165.5 598.9
Total
$ 45,513.2 $ 1,375.1 $ 46,888.3 $ 1,689.6
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 reconcile 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, 2017
2016 2017 2016 in millions,
except % amounts Customer premises equipment $ 304.2 $ 229.9 $
600.2 $ 466.1 New Build & Upgrade 305.5 203.6 495.3 354.6
Capacity 163.0 159.8 279.6 266.1 Baseline 200.9 219.2 357.2 393.7
Product & Enablers 230.2 142.9 355.9 260.3
Property and equipment additions (excluding the
Netherlands(3)) 1,203.8 955.4 2,088.2 1,740.8 The Netherlands —
143.1 — 283.2 Total property and
equipment additions 1,203.8 1,098.5 2,088.2 2,024.0 Reconciliation
of property and equipment additions to capital expenditures:
Excluding the Netherlands: Assets acquired under capital-related
vendor financing arrangements4 (664.1 ) (424.1 ) (1,278.5 ) (822.6
) Assets acquired under capital leases (72.5 ) (13.7 ) (103.9 )
(41.6 ) Changes in current liabilities related to capital
expenditures (23.0 ) (81.9 ) 238.8 28.5 The Netherlands —
(71.4 ) — (93.8 ) Total capital expenditures5 $ 444.2
$ 507.4 $ 944.6 $ 1,094.5 Property and
equipment additions as % of revenue (excluding the Netherlands(3))
32.9 % 25.2 % 29.1 % 23.5 %
LiLAC Group
Three months ended Six months
ended June 30, June 30, 2017
2016 2017 2016 in millions,
except % amounts Customer premises equipment $ 36.2 $ 33.1 $
81.6 $ 71.7 New Build & Upgrade 12.0 10.7 26.6 24.5 Capacity
8.3 14.7 17.7 22.3 Baseline 8.7 17.3 16.3 22.3 Product &
Enablers 5.3 4.0 7.0 10.5 CWC P&E Additions 100.4 53.6
160.9 53.6 Property and equipment additions
170.9 133.4 310.1 204.9 Assets acquired under capital-related
vendor financing arrangements (20.1 ) (17.0 ) (34.2 ) (17.0 )
Assets acquired under capital leases (1.6 ) (0.2 ) (2.5 ) (0.2 )
Changes in current liabilities and cash derivatives related to
capital expenditures (25.3 ) 15.4 (25.1 ) (6.1 ) Capital
expenditures $ 123.9 $ 131.6 $ 248.3 $ 181.6
Property and equipment additions as % of revenue 18.6
% 22.1 % 16.9 % 22.6 %
______________________________
1 Except as otherwise indicated, the amounts reported in the
table include the named entity and its subsidiaries. 2 Debt amounts
for UPC Holding and Telenet include notes issued by special purpose
entities that are consolidated by the respective subsidiary. 3 The
Virgin Media borrowing group includes certain subsidiaries of
Virgin Media, but excludes Virgin Media Inc. The cash and cash
equivalents amount includes cash and cash equivalents held by the
Virgin Media borrowing group, but excludes cash and cash
equivalents held by Virgin Media Inc. This amount is included in
the amount shown for Liberty Global and Liberty Global Group
unrestricted subsidiaries. 4 Amounts exclude related VAT of $103
million and $73 million during the three months ended June 30, 2017
and 2016, respectively, and $201 million and $129 million during
the six months ended June 30, 2017 and 2016, 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.
Adjusted Free Cash Flow Definition and Reconciliation
We define Adjusted Free Cash Flow as net cash provided by our
operating activities, plus (i) cash payments for third-party costs
directly associated with successful and unsuccessful acquisitions
and dispositions and (ii) expenses financed by an intermediary,
less (a) capital expenditures, as reported in our 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 Adjusted 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. Adjusted 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 Adjusted Free Cash Flow as a supplement to,
and not a substitute for, U.S. GAAP measures of liquidity included
in our consolidated statements of cash flows. We changed our
definition of adjusted free cash flow effective January 1, 2017 to
remove the add-back of excess tax benefits from share-based
compensation. This change, which was given effect for all periods
presented, was made to accommodate our January 1, 2017 adoption of
ASU 2016-09, Compensation - Stock Compensation, Improvements to
Employee Share-Based Payment Accounting, pursuant to which we
retrospectively revised the presentation of our condensed
consolidated statements of cash flows to remove the operating cash
outflows and financing cash inflows associated with excess tax
benefits from share-based compensation. The following table
provides the reconciliation of our net cash provided by operating
activities to Adjusted Free Cash Flow for the indicated
periods:
Three months ended Six months
ended June 30, June 30, 2017
2016 2017 2016 in
millions Consolidated Liberty Global Net cash provided
by operating activities $ 1,732.2 $ 1,579.1 $ 2,710.9 $ 2,669.8
Cash payments for direct acquisition and disposition costs 4.8 77.8
7.5 86.0 Expenses financed by an intermediary6 383.9 239.7 692.0
393.2 Capital expenditures (568.1 ) (639.0 ) (1,192.9 ) (1,276.1 )
Principal payments on amounts financed by vendors and
intermediaries (1,088.3 ) (748.0 ) (2,121.3 ) (1,420.9 ) Principal
payments on certain capital leases (25.4 ) (28.5 ) (47.7 ) (55.9 )
Adjusted FCF $ 439.1 $ 481.1 $ 48.5 $ 396.1
Liberty Global Group Net cash provided by
operating activities $ 1,508.7 $ 1,543.2 $ 2,411.5 $ 2,564.0 Cash
payments for direct acquisition and disposition costs 4.2 16.8 6.0
24.9 Expenses financed by an intermediary 346.8 239.7 644.6 393.2
Capital expenditures (444.2 ) (507.4 ) (944.6 ) (1,094.5 )
Principal payments on amounts financed by vendors and
intermediaries (1,067.1 ) (748.0 ) (2,081.3 ) (1,420.9 ) Principal
payments on certain capital leases (23.3 ) (27.9 ) (43.7 ) (55.2 )
Adjusted FCF $ 325.1 $ 516.4 $ (7.5 ) $ 411.5
LiLAC Group Net cash provided by operating activities
$ 223.5 $ 35.9 $ 299.4 $ 105.8 Cash payments for direct acquisition
and disposition costs 0.6 61.0 1.5 61.1 Expenses financed by an
intermediary 37.1 — 47.4 — Capital expenditures (123.9 ) (131.6 )
(248.3 ) (181.6 ) Principal payments on amounts financed by vendors
and intermediaries (21.2 ) — (40.0 ) — Principal payments on
certain capital leases (2.1 ) (0.6 ) (4.0 ) (0.7 ) Adjusted FCF $
114.0 $ (35.3 ) $ 56.0 $ (15.4 )
______________________________
6 For purposes of our 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 consolidated
statements of cash flows. For purposes of our Adjusted 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 Relationship
The following table provides ARPU per customer relationship for
the indicated periods:
Three months ended June 30,
% FX-Neutral7 2017
2016 Change % Change Liberty
Global Consolidated (excluding the Netherlands(3))* $ 41.75 $ 43.83
(4.7 %) 1.5 % Liberty Global Group (excluding the Netherlands(3)) €
37.39 € 38.04 (1.7 %) 1.2 % U.K. & Ireland (Virgin Media) £
49.70 £ 49.61 0.2 % (0.4 %) Germany (Unitymedia) € 25.11 € 24.24
3.6 % 3.6 % Belgium (Telenet) € 54.93 € 53.43 2.8 % 2.8 % Other
Europe (UPC Holding) € 27.09 € 26.76 1.2 % (0.1 %) LiLAC Group* $
52.28 $ 52.23 0.1 % (1.0 %) Chile (VTR) CLP 33,831 CLP 33,078 2.3 %
2.3 % CWC* $ 42.53 $ 39.75 7.0 % 8.5 % Puerto Rico $ 79.84 $ 79.54
0.4 % 0.4 %
N.M. - Not Meaningful
______________________________
7
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.
Mobile ARPU
The following tables provide ARPU per mobile subscriber8 for the
indicated periods:
ARPU per Mobile Subscriber Three months
ended June 30, %
FX-Neutral 2017 2016
Change % Change Liberty Global Group: Including
interconnect revenue $ 17.94 $ 20.10 (10.7 %) (3.5 %) Excluding
interconnect revenue $ 14.83 $ 16.54 (10.3 %) (2.8 %) LiLAC
Group*: Including interconnect revenue $ 16.70 $ 17.68 (5.5 %) (5.8
%) Excluding interconnect revenue $ 15.46 $ 16.47 (6.1 %) (6.4 %)
______________________________
8
Our ARPU per mobile subscriber calculation
that excludes interconnect revenue refers to the average monthly
mobile subscription revenue per average mobile subscriber 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.
*
As a part of our ongoing effort to conform
CWC's subscriber counting policies to our policies, we have
reflected nonorganic reductions totaling 224,000 to CWC's customer
count during the twelve months ended June 30, 2017. In order to
provide a more meaningful comparison of ARPU, we have reflected all
of these nonorganic reductions in the customer figures used to
calculate ARPU for the three months ended June 30, 2017 and
2016.
RGUs, Customers and Bundling9
The following table provides information on the breakdown of our
RGUs and customer base and highlights our customer bundling metrics
at June 30, 2017 and March 31, 2017:
June 30,2017
March 31,2017
Q2’17 / Q1’17(% Change)
Liberty Global
Group
Total RGUs Video RGUs 18,546,700 18,472,500 0.4 % Broadband
Internet RGUs 14,652,600 14,486,300 1.1 % Telephony RGUs 12,194,300
12,065,900 1.1 % Total Liberty Global Group
45,393,600 45,024,700 0.8 %
Customers Single-Play
Customers 8,262,300 8,330,700 (0.8 %) Dual-Play Customers 3,956,500
3,925,700 0.8 % Triple-Play Customers 9,739,500 9,614,200
1.3 % Total Liberty Global Group 21,958,300 21,870,600 0.4 %
Bundling % of Single-Play Customers 37.6 % 38.1 %
(1.3 %) % of Dual-Play Customers 18.0 % 17.9 % 0.6 % % of
Triple-Play Customers 44.4 % 44.0 % 0.9 % RGUs per customer
relationship 2.07 2.06 0.5 %
LiLAC
Group
Total RGUs Video RGUs 1,714,200 1,717,100 (0.2 %) Broadband
Internet RGUs 2,061,600 2,061,500 — % Telephony RGUs 1,452,700
1,639,300 (11.4 %) Total LiLAC Group 5,228,500
5,417,900 (3.5 %)
Customers Single-Play Customers
1,116,300 1,271,800 (12.2 %) Dual-Play Customers 781,100 801,200
(2.5 %) Triple-Play Customers 850,000 847,900 0.2 %
Total LiLAC Group 2,747,400 2,920,900 (5.9 %)
Bundling % of Single-Play Customers 40.7 % 43.6 % (6.7 %) %
of Dual-Play Customers 28.4 % 27.4 % 3.6 % % of Triple-play
Customers 30.9 % 29.0 % 6.6 % RGUs per customer relationship
1.90 1.85 2.7 %
______________________________
9
The June 30, 2017 and March 31, 2017
figures for the Liberty Global Group do not include Ziggo Group
Holding, which was contributed to the VodafoneZiggo JV on December
31, 2016.
Consolidated Operating Data — June 30,
2017
Video
HomesPassed(1)
Two-wayHomesPassed(2)
Fixed-lineCustomerRelationships(3)
Basic
VideoSubscribers(5)
EnhancedVideoSubscribers(6)
DTHSubscribers(7)
TotalVideo
InternetSubscribers(8)
TelephonySubscribers(9)
TotalRGUs(4)
Total
MobileSubscribers(11)
U.K. 13,675,600 13,663,500 5,373,000 — 3,809,800 —
3,809,800 5,028,300 4,437,100 13,275,200 2,995,600 Germany
12,935,600 12,831,100 7,175,000 4,756,700 1,632,800 — 6,389,500
3,389,500 3,166,200 12,945,200 340,400 Belgium/Luxembourg 3,328,000
3,328,000 2,212,400 265,500 1,796,500 — 2,062,000 1,668,400
1,304,000 5,034,400 2,838,700 Switzerland(10) 2,255,900 2,255,900
1,271,400 560,900 671,900 — 1,232,800 752,600 524,300 2,509,700
92,500 Austria 1,399,000 1,399,000 652,400 99,600 372,500 — 472,100
508,500 441,700 1,422,300 47,200 Ireland 865,900
822,700 452,100 27,500
269,000 — 296,500 366,100
354,900 1,017,500 40,500
Total Western Europe 34,460,000 34,300,200
17,136,300 5,710,200 8,552,500
— 14,262,700 11,713,400
10,228,200 36,204,300
6,354,900 Poland 3,224,100 3,164,000 1,429,200 198,200 1,013,900 —
1,212,100 1,117,500 627,900 2,957,500 4,600 Romania 2,984,800
2,940,800 1,297,100 254,100 654,900 352,100 1,261,100 553,700
503,200 2,318,000 — Hungary 1,748,500 1,731,000 1,111,200 109,400
563,700 277,900 951,000 654,600 605,100 2,210,700 74,700 Czech
Republic 1,498,700 1,465,400 715,600 159,500 355,300 105,100
619,900 486,400 152,700 1,259,000 — Slovakia 596,100
576,500 268,900 25,300
138,400 76,200 239,900
127,000 77,200 444,100 —
Total CEE 10,052,200 9,877,700
4,822,000 746,500 2,726,200
811,300 4,284,000 2,939,200
1,966,100 9,189,300
79,300
Total Liberty Global Group
44,512,200 44,177,900
21,958,300 6,456,700
11,278,700 811,300
18,546,700 14,652,600
12,194,300 45,393,600
6,434,200 Chile 3,319,300 2,817,200 1,375,500 73,000
992,100 — 1,065,100 1,143,400 646,200 2,854,700 193,000 Puerto Rico
1,103,600 1,103,600 405,900 — 258,700 — 258,700 334,200 210,300
803,200 — Panama 528,400 472,100 187,600 — 45,200 36,200 81,400
101,300 124,500 307,200 1,765,300 Jamaica 426,500 416,500 261,200 —
95,200 — 95,200 148,200 196,200 439,600 933,900 Trinidad 312,900
312,900 161,100 — 111,600 — 111,600 123,400 38,000 273,000 —
Barbados 123,100 123,100 97,400 — 17,400 — 17,400 61,900 77,600
156,900 125,600 Bahamas 128,900 128,900 52,000 — 5,500 — 5,500
27,200 52,000 84,700 285,200 Other CWC 356,300
336,500 206,700 11,300
68,000 — 79,300 122,000
107,900 309,200 391,300
Total LiLAC Group 6,299,000
5,710,800 2,747,400
84,300 1,593,700
36,200 1,714,200
2,061,600 1,452,700
5,228,500 3,694,300 Grand
Total 50,811,200 49,888,700
24,705,700 6,541,000
12,872,400 847,500
20,260,900 16,714,200
13,647,000 50,622,100
10,128,500
Subscriber Variance Table - June 30,
2017 vs March 31, 2017
Video
HomesPassed(1)
Two-wayHomesPassed(2)
Fixed-lineCustomerRelationships(3)
Basic
VideoSubscribers(5)
Enhanced
VideoSubscribers(6)
DTHSubscribers(7)
TotalVideo
InternetSubscribers(8)
TelephonySubscribers(9)
TotalRGUs(4)
Total
MobileSubscribers(11)
U.K. 121,200 121,300 21,500 — 34,500 — 34,500 30,900
11,400 76,800 (20,100 ) Germany 19,400 23,700 1,500 (41,100 )
33,300 — (7,800 ) 32,400 29,200 53,800 (6,300 ) Belgium/Luxembourg
331,300 331,300 78,200 (3,200 ) 68,900 — 65,700 60,300 45,800
171,800 1,200 Switzerland(10) 4,800 4,800 (10,000 ) (8,100 ) (300 )
— (8,400 ) 8,100 6,400 6,100 7,200 Austria 4,500 4,500 (800 )
(10,000 ) 4,900 — (5,100 ) 2,600 7,000 4,500 8,200 Ireland 9,600
10,600 (400 ) (900 ) (500
) — (1,400 ) 1,700 1,000
1,300 12,600 Total Western
Europe 490,800 496,200 90,000
(63,300 ) 140,800 —
77,500 136,000 100,800
314,300 2,800 Poland 40,000 40,400 (1,300 )
(5,200 ) 3,400 — (1,800 ) 6,000 (2,300 ) 1,900 (300 ) Romania
62,300 63,800 6,200 (900 ) 7,500 (4,300 ) 2,300 9,700 14,900 26,900
— Hungary 10,400 10,400 4,200 (9,000 ) 18,100 (6,900 ) 2,200 13,000
15,300 30,500 7,600 Czech Republic 14,700 14,700 (1,400 ) 6,600 100
(4,000 ) 2,700 4,900 5,800 13,400 — Slovakia 7,400
9,700 (10,000 ) (1,800 ) (6,500 )
(400 ) (8,700 ) (3,300 ) (6,100 )
(18,100 ) — Total CEE 134,800
139,000 (2,300 ) (10,300 ) 22,600
(15,600 ) (3,300 ) 30,300
27,600 54,600 7,300
Total Liberty Global Group
625,600 635,200 87,700
(73,600 ) 163,400 (15,600 ) 74,200
166,300 128,400 368,900
10,100 Chile 47,800 58,600 22,700
(2,700 ) 14,900 — 12,200 25,600 (4,000 ) 33,800 14,300 Puerto Rico
8,600 8,600 (800 ) — (2,200 ) — (2,200 ) 300 (600 ) (2,500 ) —
Panama 600 18,900 (155,700 ) — 2,700 (6,300 ) (3,600 ) 3,600
(151,400 ) (151,400 ) (17,900 ) Jamaica 2,200 2,200 (33,700 ) —
(2,800 ) — (2,800 ) (26,200 ) (27,600 ) (56,600 ) (1,000 ) Trinidad
1,200 1,200 (2,300 ) — (2,500 ) — (2,500 ) (100 ) 4,600 2,000 —
Barbados 600 600 7,900 — (700 ) — (700 ) (1,100 ) (1,900 ) (3,700 )
(3,000 ) Bahamas — — (2,700 ) — 1,800 — 1,800 400 (2,700 ) (500 )
(24,200 ) Other — — (8,900 )
(700 ) (4,400 ) — (5,100 )
(2,400 ) (3,000 ) (10,500 ) (6,000 ) Total
LiLAC Group 61,000 90,100 (173,500 )
(3,400 ) 6,800 (6,300 ) (2,900 )
100 (186,600 ) (189,400 )
(37,800 )
Grand Total 686,600
725,300 (85,800 )
(77,000 ) 170,200
(21,900 ) 71,300
166,400 (58,200 )
179,500 (27,700 )
Continued below
Subscriber Variance Table - June 30,
2017 vs March 31, 2017
Video
Homes Passed(1)
Two-wayHomes
Passed(2)
Fixed-lineCustomer
Relationships(3)
Basic Video Subscribers(5)
EnhancedVideo
Subscribers(6)
DTH Subscribers(7)
TotalVideo Internet
Subscribers(8) Telephony
Subscribers(9) Total RGUs(4)
Total Mobile Subscribers(11)
Organic Change
Summary:
U.K. 121,200 121,300 21,500 — 34,500 — 34,500 30,900 11,400 76,800
(20,100 ) Germany 19,400 23,700 1,500 (41,100 ) 33,300 — (7,800 )
32,400 29,200 53,800 (6,300 ) Belgium/Luxembourg 12,200 12,200
(12,600 ) (10,500 ) (4,700 ) — (15,200 ) 1,400 (1,500 ) (15,300 )
(3,100 ) Other Europe 146,700 151,900
(24,600 ) (33,200 ) 21,200 (15,600 )
(27,600 ) 35,400 38,800
46,600 35,300
Total Liberty Global
Group 299,500 309,100
(14,200 ) (84,800 )
84,300 (15,600 )
(16,100 ) 100,100
77,900 161,900
5,800 Chile 47,800 58,600 22,700 (2,700 ) 14,900 —
12,200 25,600 (4,000 ) 33,800 14,300 Puerto Rico 8,600 8,600 (800 )
— (2,200 ) — (2,200 ) 300 (600 ) (2,500 ) — Panama 600 18,900 5,200
— 2,700 2,900 5,600 3,600 300 9,500 (17,900 ) Jamaica 2,200 2,200
(13,100 ) — (2,800 ) — (2,800 ) (3,100 ) (6,500 ) (12,400 ) 2,900
Trinidad 1,200 1,200 (2,300 ) — (2,500 ) — (2,500 ) (100 ) 4,600
2,000 — Barbados 600 600 7,900 — (700 ) — (700 ) (1,100 ) (1,900 )
(3,700 ) (3,000 ) Bahamas — — (2,700 ) — 1,800 — 1,800 400 (2,700 )
(500 ) (24,200 ) Other — — (8,900 )
(700 ) (4,400 ) — (5,100 )
(2,400 ) (3,000 ) (10,500 ) (6,000 )
Total LiLAC Group 61,000 90,100
8,000 (3,400 )
6,800 2,900
6,300 23,200
(13,800 ) 15,700
(33,900 ) Total Organic Change 360,500
399,200 (6,200 ) (88,200 ) 91,100
(12,700 ) (9,800 ) 123,300
64,100 177,600 (28,100 )
Q2 2017
Adjustments:
Q2 2017 Acquisition - Hungary — — 7,100 400 5,500 — 5,900 5,300
3,200 14,400 — Q2 2017 Acquisition - Romania 7,000 7,000 4,000
3,500 — — 3,500 2,000 — 5,500 — Q2 2017 Acquisition - Belgium
319,100 319,100 90,800 7,500 74,700 — 82,200 60,100 48,100 190,400
4,300 Q2 2017 Belgium adjustments — — — (200 ) (1,100 ) — (1,300 )
(1,200 ) (800 ) (3,300 ) — Q2 2017 Panama adjustments(12) — —
(160,900 ) — — (9,200 ) (9,200 ) — (151,700 ) (160,900 ) — Q2 2017
Jamaica adjustments(13) — — (20,600 )
— — — —
(23,100 ) (21,100 ) (44,200 ) (3,900 )
Net Adjustments 326,100 326,100
(79,600 ) 11,200 79,100 (9,200 )
81,100 43,100 (122,300 )
1,900 400
Net Adds (Reductions) 686,600
725,300 (85,800 ) (77,000 )
170,200 (21,900 ) 71,300
166,400 (58,200 ) 179,500
(27,700 )
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. Certain of 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 (see note 10) we do not report homes passed for
Switzerland’s 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 Fixed-line 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 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 or 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, 2017 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 179,600 “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 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 42,100 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 88,200 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 32,200 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 112,400
subscribers who have requested and received this service. 10
Pursuant to service agreements, Switzerland offers 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, 2017, Switzerland’s partner networks
account for 132,400 Customer Relationships, 290,200 RGUs, 104,500
Enhanced Video Subscribers, 107,700 Internet Subscribers, and
78,000 Telephony Subscribers. 11 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. In
a number of countries, our mobile subscribers receive mobile
services pursuant to prepaid contracts. As of June 30, 2017, the
prepaid mobile subscriber count included the following: Panama
(1,599,200), Jamaica (914,900), Belgium (620,100), U.K. (575,500),
Bahamas (255,600), Barbados (96,800), Chile (7,100) and twelve
remaining CWC geographies (333,100). 12 During the quarter ended
June 30, 2017, we discontinued counting customers of Panama's
prepaid fixed-line voice service and certain inactive customers of
Panama's DTH video service. 13 During the quarter ended June 30,
2017, we discontinued counting certain inactive customers of
Jamaica's fixed line and mobile services.
Additional General Notes to
Tables:
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.” To the extent our existing
customers upgrade from a residential product offering to a SOHO
product offering, the number of SOHO RGUs or SOHO customers will
increase, but there is no impact to our total RGU or customer
counts. Due to system limitations, SOHO customers of CWC are not
included in our respective RGU and customer counts as of June 30,
2017. 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/20170807006043/en/
Liberty Global plcInvestor
Relations:Oskar Nooij, +1 303 220 4218orChristian
Fangmann, +49 221 84 62 5151orJohn Rea, +1 303 220
4238orCorporate Communications:Matt Beake, +44
20 8483 6428orRebecca Pike, +44 20 8483 6216
Liberty Global (NASDAQ:LBTYB)
Historical Stock Chart
From Aug 2024 to Sep 2024
Liberty Global (NASDAQ:LBTYB)
Historical Stock Chart
From Sep 2023 to Sep 2024