Strongest quarterly revenue growth in nearly five
years
Operating income up 17.5% year-over-year to $493.1
million
Rebased OCF growth of 4.7%, including 5.5% at Virgin
Media
Repurchased nearly $500 million of stock in Q1
________________________________________________________________
Q1 REVENUE & YOY GROWTH2$4.2bn |
+4.2%
Q1 OCF3 & YOY GROWTH2$1.9bn |
+4.7%
--------------------------------
Q1 P&E ADDS & AS A % OF REVENUE$1.3bn |
30.1%
Q1 GROSS & NET DEBT RATIOS45.3x |
5.2x
NASDAQ: LBTYA | LBTYB | LBTYK
Liberty Global plc today announced its Q1 2018 financial
results. For information regarding the presentation of the 2017
financial information contained in this release, including with
respect to our adoption of ASU 2014-09 - Revenue from Contracts
with Customers, see notes 1 and 12.
CEO Mike Fries stated, "We generated 4.2% rebased2
revenue growth in Q1, which was our third consecutive quarter of
top-line improvement, underpinned by 5.2% rebased growth at Virgin
Media, on the back of accelerating ARPU and strong mobile and B2B
results."
"Our rebased OCF growth of 4.7% in Q1, which represents our
strongest first quarter result since 2014, was driven by 11.8%
growth in Germany, 6.3% in Central and Eastern Europe, 5.5% at
Virgin Media and a flat indirect cost base. We continue to expect
around 5% rebased OCF growth for the full year.
On the innovation front, we remain at the forefront of
delivering cutting-edge products and services. Earlier this month
in Bochum, Germany, we launched our first gigabit broadband service
powered by Docsis 3.1 technology. In addition, nearly half of our
video and broadband bases now enjoy a next-generation set top
and/or a WiFi connect box. Of course, we will continue to deploy
market-leading products while readying our fiber-rich networks for
Docsis 3.1 roll-outs across Europe."
"We expect our previously announced sale of UPC Austria for €1.9
billion to T-Mobile Austria to close in the second half of 2018. In
March, we announced the termination of our planned purchase of
Multimedia Polska, which highlights our acquisition discipline as
we stepped away from this opportunity when the remedies became too
burdensome.
At March 31, 2018, our balance sheet had an average long-term
debt tenor9 of more than seven years, a fully-swapped borrowing
cost of 4.2% and a liquidity10 position in excess of $4 billion.
With regards to our share buyback program, we bought nearly $500
million of stock in Q1 and remain on track to repurchase a total of
$2 billion this year."
Q1 2018 Highlights
2018 Guidance Targets NEW PREMISES BUILT 204,000
REBASED OCF GROWTH ~5% B2B5 REVENUE
GROWTH2 +12.4% ADJUSTED FREE CASH
FLOW7 $1.6BN8 ORGANIC RGU6
ADDITIONS 66,000 P&E ADDITIONS OF $5.1 BN8
About Liberty Global
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is the world’s
largest international TV and broadband company, with operations in
11 European countries under the consumer brands Virgin Media,
Unitymedia, Telenet and UPC. We invest in the infrastructure and
digital platforms that empower our customers to make the most of
the video, internet and communications revolution. Our substantial
scale and commitment to innovation enable us to develop
market-leading products delivered through next-generation networks
that connect 22 million customers subscribing to 46 million TV,
broadband internet and telephony services. We also serve 7 million
mobile subscribers and offer WiFi service through 12 million
access points across our footprint.
In addition, Liberty Global owns 50% of VodafoneZiggo, a joint
venture in the Netherlands with 4 million customers subscribing to
10 million fixed-line and 5 million mobile services, as well as
significant investments in ITV, All3Media, ITI Neovision, Casa
Systems, LionsGate, the Formula E racing series and several
regional sports networks.
Q1 Highlights
- Q1 rebased revenue up 4.2%, led by 8.7%
growth in Germany & 5.2% at Virgin Media
- Q1 residential cable revenue11 of $3.1
billion increased 2.8% year-over-year
- Q1 residential mobile revenue11
increased 4.5% year-over-year to $0.4 billion
- Q1 B2B revenue11 increased 12.4%
year-over-year to $0.6 billion
- Q1 operating income increased 17.5%
year-over-year
- Q1 rebased OCF growth was 4.7% to $1.9
billion
- Supported by strong results at
Unitymedia, CEE and Virgin Media
- Q1 revenue and OCF results benefit from
carriage fee settlement in Germany
- 66,000 organic RGU additions in Q1
- Net additions were comparable to the
prior year in CEE, offset by weaker trends in Western Europe
- Built over 200,000 new premises across
Europe in Q1
- Virgin Media delivered 111,000 new
premises in the U.K. & Ireland
- Solid balance sheet with ~$4 billion of
liquidity
- Net leverage4 of 5.2x at March 31,
2018
- Fully-swapped borrowing cost of 4.2%,
down from 4.6% in Q1 '17
Liberty Global
Q1 2018
YoY
Growth/(Decline)*
Subscribers
Organic RGU Net Additions 66,000 (72.9 %)
Financial (in USD
millions)
Revenue $ 4,156.1 4.2 % OCF $ 1,898.9 4.7 % Operating income $
493.1 17.5 % Adjusted FCF $ (625.1 ) Cash provided by
operating activities $ 1,279.3 Cash used by investing activities $
(671.1 ) Cash used by financing activities $ (1,732.4 )
* Revenue and OCF YoY growth rates are on
a rebased basis.
Subscriber Growth
Three months ended March 31, 2018
2017 Organic RGU net additions (losses) by
product Video (84,000 ) (15,100 ) Data 78,300 154,400
Voice
71,800 105,000 Total 66,100 244,300
Organic RGU net additions (losses) by market
U.K./Ireland 44,900 158,000 Belgium (21,500 ) (12,000 ) Germany
28,700 52,400 Switzerland/Austria (34,700 ) (2,400 ) Central and
Eastern Europe 48,700 48,300 Total 66,100
244,300
Organic Mobile SIM additions (losses) by
product Postpaid 101,300 91,200 Prepaid (49,400 ) (73,000 )
Total 51,900 18,200
Organic Mobile SIM
additions (losses) by market U.K./Ireland 25,200 3,400 Belgium
22,300 3,500 Other 4,400 11,300 Total 51,900
18,200
- Cable Product
Performance: During Q1 we added 66,000 RGUs, a 73% decline
over the prior-year period due to lower net additions across most
European operations. On the fixed product side, all three products
showed year-over-year declines
- U.K./Ireland: Q1 RGU additions of 45,000 were
lower than the prior year, as the impacts of lower gross additions
more than offset improved performance in new build areas. This
performance reflects our focus on improving the value and tenure of
our customer base through structured promotions, select price rises
and the launch of initiatives such as our V6 set-top box upgrade
program
- Belgium:
RGU attrition of 22,000 in Q1 was primarily due to intensified
competition. However, our converged quad-play package additions
continued to grow, as we gained 30,000 new "WIGO" subscribers
during Q1
- Germany:
Reported 29,000 RGU additions in Q1, which was below our Q1 2017
result, mainly due to higher video attrition as last year's
performance was driven by strong results in our MDU segment. Q1
broadband and fixed-line telephony net additions were impacted by
churn from price increases implemented in the quarter
- Switzerland/Austria: Lost 35,000 RGUs in Q1,
compared to a loss of 2,000 in Q1 2017, primarily due to heightened
competition in Switzerland
- CEE:
Delivered 49,000 RGUs in Q1, largely in line with the prior-year
period
- Next-Generation
Video Penetration (including Horizon TV, Horizon-Lite, TiVo, Virgin
TV V6 and Yelo TV): Added 201,000 subscribers to our
advanced platforms in Q1 and reached 7.9 million or 45% of our
total cable video base (excluding DTH) by the end of the
quarter
- WiFi Connect
Box: Deployments of our latest WiFi Connect box increased by
over 800,000 in Q1, ending the quarter with an installed base of
nearly 7.3 million or 48% of broadband subscribers across
Europe
- Mobile:
Added 52,000 mobile subscribers in Q1, as 101,000 postpaid
additions were partially offset by continued attrition in our
low-ARPU prepaid base
- Belgium added 22,000 new mobile
subscribers during Q1, a strong year-over-year improvement. This
was driven by the continued success of our converged "WIGO"
offers
- U.K./Ireland added 69,000 postpaid
mobile subscribers in Q1, 87% higher than the prior-year result.
Total mobile net additions increased by 25,000 in the quarter as
postpaid growth was partially offset by low-ARPU prepaid losses.
The penetration of 4G at Virgin Media increased to 62% of our
postpaid base at the end of Q1 and almost 20% of our U.K. mobile
base has been migrated to our full MVNO platform, which went live
in Q4 2017
- Switzerland/Austria mobile subscriber
additions were up year-over-year with 16,000 mobile subscriber
additions in Q1, driven by improved Swiss offerings, which include
free EU roaming
Revenue Highlights
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 both a reported
and rebased basis:
Three months ended
March 31,
Increase/(decrease)
Revenue 2018
201712
%
Rebased % in millions, except % amounts
U.K./Ireland $ 1,778.2 $ 1,502.5 18.3 5.2 Belgium 759.6 660.0 15.1
(1.3 ) Germany 782.8 624.1 25.4 8.7 Switzerland/Austria 454.6 422.8
7.5 (0.4 ) Central and Eastern Europe 330.8 270.7 22.2 4.3 Central
and Corporate 51.7 32.8 57.6 41.1 Intersegment eliminations (1.6 )
(3.7 ) N.M. N.M. Total $ 4,156.1 $ 3,509.2
18.4 4.2
N.M. - Not Meaningful
- Reported revenue for the three months
ended March 31, 2018, increased 18.4% year-over-year
- These results were primarily driven by
the net impact of (i) positive foreign exchange ("FX") movements,
mainly related to the strengthening of the Euro and British Pound
against the U.S. dollar, and (ii) organic revenue growth
- Rebased revenue grew 4.2% in Q1. These
results included:
- A favorable $33.2 million impact of the
settlement of prior-year fees in connection with the execution of a
new carriage fee contract in Germany during the first quarter of
2018
- A reduction in channel carriage fee
revenue primarily related to the June 2017 discontinuation of our
analog video services in Germany, which resulted in decreased
revenue of $7.3 million in Q1 2018
- A $5.3 million headwind from the
expected recovery of VAT paid in prior periods with respect to
copyright fees in Belgium, which benefited revenue in Q1 2017
- The unfavorable $3.9 million impact due
to the reversal during the first quarter of 2018 of revenue in
Switzerland that was recognized during prior-year periods
- A $3.7 million headwind from the
release of unclaimed customer credits in Switzerland in Q1
2017
- Our residential cable business reported
rebased revenue growth of 2.8% in Q1
- Our B2B business (including SOHO and
non-subscription revenue) reported rebased revenue growth of 12.4%
in Q1
- Our residential mobile business
(including interconnect and handset sales) posted 4.5% rebased
revenue growth in Q1
Q1 2018 Rebased Revenue Growth - Segment
Highlights
- U.K./Ireland: Rebased revenue growth of 5.2%
reflects (i) 3.0% growth in our residential cable business
supported by accelerating cable ARPU and subscriber growth, (ii)
17.8% rebased growth in residential mobile revenue (including
interconnect and mobile handset revenue), reflecting higher revenue
from mobile handset sales that was partially offset by lower mobile
subscription revenue, and (iii) 4.5% rebased revenue growth in our
B2B business, largely driven by continued growth in the SOHO
segment
- Belgium:
Rebased revenue contraction of 1.3% was mainly driven by the net
effect of (i) lower cable revenue, (ii) lower mobile revenue and
(iii) growth in B2B segment
- Germany:
Rebased revenue growth of 8.7% reflects the net effect of (i)
higher residential cable non-subscription revenue, mainly driven by
higher carriage fee revenue, including the net impact of the
aforementioned $33.2 million settlement and the $7.3 million loss
of carriage fee revenue, (ii) B2B revenue growth, largely driven by
an increase in B2B non-subscription revenue, (iii) higher
residential cable subscription revenue as a result of increases in
subscribers and higher ARPU per RGU
- Switzerland/Austria: Rebased revenue declined
slightly, primarily related to the net effect of (i) lower ARPU per
RGU, which was impacted by competitive pressures, (ii) higher
revenue from the distribution of MySports channels, (iii) higher
mobile revenue and (iv) an increase in B2B revenue
- CEE:
Rebased revenue growth of 4.3%, driven by the net effect of (i)
growth in our B2B business, (ii) higher cable revenue supported by
solid RGU additions over the last 12 months and (iii) a small
decline in ARPU per RGU
Operating Income
- Operating income of $493.1 million and
$419.5 million in Q1 2018 and Q1 2017, respectively, representing
an increase of 17.5% year over year
- The increase in operating income
primarily resulted from the net effect of higher OCF, as further
described below, and an increase in depreciation and
amortization
Operating Cash Flow Highlights
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 both a reported and
rebased basis:
Three months ended Increase/(decrease)
March 31, OCF 2018
201712
%
Rebased % in millions, except % amounts
U.K./Ireland $ 762.6 $ 642.9 18.6 5.5 Belgium 357.6 296.5 20.6 2.5
Germany 492.1 381.3 29.1 11.8 Switzerland/Austria 243.5 252.0 (3.4
) (10.4 ) Central and Eastern Europe 139.1 110.9 25.4 6.3 Central
and Corporate (96.0 ) (90.6 ) 6.0 4.7 Total $ 1,898.9
$ 1,593.0 19.2 4.7 OCF Margin
45.7 % 45.4 %
N.M. - Not Meaningful
- Reported OCF for the three months ended
March 31, 2018, increased 19.2% year-over-year, respectively
- This result was primarily driven by the
net impact of (i) the aforementioned impact of FX movements and
(ii) organic OCF growth
- Rebased OCF growth of 4.7% in Q1
included:
- The net favorable impact on our revenue
of certain items, as discussed in the "Revenue Highlights" section
above
- An unfavorable $8.4 million network tax
increase following an increase in the rateable value of our
existing U.K. networks
- An unfavorable $8.8 million associated
with the settlement of prior-year amounts in connection with the
execution of a new programming agreement in Germany
- A favorable $6.7 million benefit in Q1
2018 due to the expected settlement of a portion of our 2018 annual
incentive compensation with Liberty Global ordinary shares through
a shareholding incentive program that was implemented in 2018
- As compared to the prior-year period,
our Q1 2018 OCF margins were up 30 basis points to 45.7%
Q1 2018 Rebased Operating Cash Flow Growth
- Segment Highlights
- U.K./Ireland: Rebased OCF growth of 5.5% reflects
the net effect of (i) increased revenue, (ii) higher handset and
programming spend, (iii) lower marketing costs and (iv) a $8.4
million year-over-year increase in network taxes following an April
1, 2017 increase in the rateable value of our U.K. networks
- Belgium:
Rebased OCF growth of 2.5%, largely driven by the net effect of (i)
lower direct costs as a result of the migration of subscribers to
our own mobile network and (ii) the aforementioned revenue
decrease
- Germany:
Rebased OCF growth of 11.8%, primarily due to the net effect of (i)
an increase in revenue, (ii) higher direct costs, primarily due to
an increase in interconnect, programming and copyright costs,
partially offset by lower handset costs, (iii) lower SG&A
costs, primarily due to a decrease in sales and marketing costs,
and (iv) lower indirect expenses, primarily driven by in-sourced
labor
- Switzerland/Austria: Rebased OCF declined 10.4%
due to the aforementioned revenue impacts and an increase in the
expense associated with the MySports Platform, which is more
heavily weighted to the hockey season in the first and fourth
quarters of the year
- CEE:
Rebased OCF growth of 6.3%, driven by the net effect of (i) the
aforementioned revenue growth, (ii) higher interconnect costs
related to higher volumes in our voice transit business and (iii)
lower indirect costs
Net Loss Attributable to Liberty Global Shareholders
- Net loss attributable to Liberty Global
shareholders (including discontinued operations) was $1,186.5
million and $325.6 million for the three months ended March 31,
2018 and 2017, respectively
Leverage and Liquidity
- Total capital
leases and principal amount of third-party debt: $42.8
billion
- Leverage
ratios: Our adjusted gross and net leverage ratios at March
31, 2018 were 5.3x and 5.2x, respectively
- Average debt
tenor : Over 7 years, with ~75% not due until 2024 or
thereafter
- Borrowing
costs: Blended fully-swapped borrowing cost of our
third-party debt was 4.2%
- Liquidity:
$4.2 billion, including (i) $0.6 billion of cash at March 31, 2018
and (ii) aggregate unused borrowing capacity13 under our credit
facilities of $3.6 billion
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; expectations with respect to
our OCF growth, our Adjusted FCF and our P&E additions;
expectations with respect to the development, enhancement and
deployment of our innovative and advanced products and services,
including WiFi Connect and next generation set-top boxes as well as
Docsis 3.1 roll outs; expectations with respect to the sale of UPC
Austria; expectations regarding our share buyback program; the
strength of our balance sheet and tenor of our third-party debt;
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 events that are outside of our control,
such as 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 and Form 10-Q ("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.
Balance Sheets, Statements of Operations and Statements of
Cash Flows
The condensed consolidated balance sheets, statements of
operations and statements of cash flows of Liberty Global are in
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 months ended
March 31, 2017 to (i) include the pre-acquisition revenue and OCF
of an entity acquired during 2017 in our rebased amounts for the
three months ended March 31, 2017 to the same extent that the
revenue and OCF of this entity is included in our results for the
three months ended March 31, 2018, (ii) include revenue and certain
operating and SG&A expenses associated with the framework
services agreement with the VodafoneZiggo JV to reflect an amount
equal to the framework services agreement amounts included in our
results for the three months ended March 31, 2018, (iii) exclude
the revenue and OCF of four small disposals made in Belgium during
2017 to the same extent that the revenue and OCF of these disposed
businesses is excluded from our results for the three months ended
March 31, 2018, (iv) include revenue for the temporary elements of
the Split-off Agreements with Liberty Latin America as if the
Split-off Agreements had been in place at the beginning of 2017,
(v) to reflect the January 1, 2018 adoption of the new revenue
recognition standard (ASU 2014-09, Revenue from Contracts with
Customers) as if such adoption had occurred on January 1, 2017 and
(vi) reflect the translation of our rebased amounts for the three
months ended March 31, 2017 at the applicable average foreign
currency exchange rates that were used to translate our results for
the three months ended March 31, 2018. We have included SFR BeLux
in whole or in part in the determination of our rebased revenue and
OCF for the three months ended March 31, 2017. We have reflected
the revenue and OCF of this acquired entity in our 2017 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 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 entity 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 business during the
pre-acquisition periods, no assurance can be given that we have
identified all adjustments necessary to present the revenue and OCF
of this entity 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 2017
amounts to derive our rebased growth rates:
Revenue OCF
Three monthsendedMarch
31,
Three monthsendedMarch
31,
2017 2017 in millions Acquisitions $ 17.3 $
9.6 Revenue Recognition (ASU 2014-09) (9.8 ) (7.6 ) Dispositions*
(8.6 ) (4.4 ) Foreign Currency 472.4 215.2 Total
increase $ 471.3 $ 212.8
*Includes rebase adjustments related to agreements to provide
transitional and other services to the VodafoneZiggo JV and Liberty
Latin America. These adjustments result in an equal amount of fees
in both the 2018 and 2017 periods for those services that are
deemed to be temporary in nature. The net amount of these
adjustments resulted in decreases in revenue and OCF for the three
months ended March 31, 2017 of $0.9 million and $0.7 million,
respectively.
Summary of Debt, Capital Lease Obligations & Cash and
Cash Equivalents
The following table(i) details the U.S. dollar equivalent
balances of the outstanding principal amount of our debt, capital
lease obligations and cash and cash equivalents at March 31,
2018:
Capital Debt &
Capital Cash Lease Lease and Cash
Debt(ii) Obligations Obligations
Equivalents in millions Liberty Global and
unrestricted subsidiaries $ 2,451.5 $ 63.8 $ 2,515.3 $ 437.5 Virgin
Media(iii) 17,296.6 81.3 17,377.9 38.2 Unitymedia 8,945.6 733.6
9,679.2 7.4 UPC Holding 7,221.8 95.4 7,317.2 27.7 Telenet 5,417.6
476.2 5,893.8 44.1 Total $ 41,333.1 $
1,450.3 $ 42,783.4 $ 554.9
______________________________
(i) Except as otherwise indicated, the amounts reported in
the table include the named entity and its subsidiaries. (ii) Debt
amounts for UPC Holding and Telenet include notes issued by special
purpose entities that are consolidated by the respective
subsidiary. (iii) The Virgin Media borrowing group includes certain
subsidiaries of Virgin Media, but excludes the parent entity,
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
unrestricted subsidiaries.
Property and Equipment Additions and Capital
Expenditures
The tables below highlight the categories of the property and
equipment additions for the indicated periods and reconcile those
additions to the capital expenditures that are presented in the
condensed consolidated statements of cash flows in our 10-Q.
Three months ended March 31, 2018
2017 in millions, except % amounts Customer
premises equipment $ 376.4 $ 296.0 New Build & Upgrade 262.9
189.8 Capacity 152.8 116.6 Product & Enablers 236.4 125.7
Baseline 222.9 156.3 Total property and equipment
additions 1,251.4 884.4 Reconciliation of property and equipment
additions to capital expenditures: Assets acquired under
capital-related vendor financing arrangements(i) (743.4 ) (614.4 )
Assets acquired under capital leases (29.5 ) (31.4 ) Changes in
current liabilities related to capital expenditures 167.5
261.8 Total capital expenditures(ii) $ 646.0 $ 500.4
Property and equipment additions as % of revenue12
30.1 % 25.2 %
______________________________
(i) Amounts exclude related VAT of $107 million and $98
million during the three months ended March 31, 2018 and 2017,
respectively, that were also financed by our vendors under these
arrangements. (ii) The capital expenditures that we report in our
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.
ARPU per Cable Customer Relationship
The following table provides ARPU per cable customer
relationship for the indicated periods:
Three months ended
March 31, % Rebased 2018
201712
Change % Change Liberty Global $ 46.04 $ 39.98
15.2 % 1.3 % U.K. & Ireland (Virgin Media) £ 51.58 £ 50.64 1.9
% 1.6 % Germany (Unitymedia) € 25.89 € 25.14 3.0 % 3.0 % Belgium
(Telenet) € 54.90 € 54.43 0.9 % 1.3 % Other Europe (UPC Holding) €
25.80 € 27.21 (5.2 %) (2.1 %)
Mobile ARPU
The following tables provide ARPU per mobile subscriber for the
indicated periods:
ARPU per Mobile Subscriber Three months
ended March 31, %
Rebased 2018
201712
Change % Change Liberty Global: Including
interconnect revenue $ 18.33 $ 17.10 7.2 % (2.6 %) Excluding
interconnect revenue $ 14.69 $ 13.78 6.6 % (3.5 %)
Consolidated Operating Data — March 31, 2018
Video
HomesPassed
Two-wayHomesPassed
CableCustomerRelationships
Basic
VideoSubscribers(i)
EnhancedVideoSubscribers
DTHSubscribers
TotalVideo
InternetSubscribers(ii)
TelephonySubscribers(iii)
TotalRGUs
Total
MobileSubscribers(iv)
U.K. 14,087,300 14,075,500 5,452,600 — 3,840,000 — 3,840,000
5,135,500 4,446,000 13,421,500 3,018,000 Germany 13,004,500
12,925,500 7,158,200 4,676,900 1,643,100 — 6,320,000 3,502,800
3,274,300 13,097,100 303,900 Belgium 3,326,300 3,326,300 2,174,800
233,100 1,779,000 — 2,012,100 1,676,200 1,298,200 4,986,500
2,826,100 Switzerland(v) 2,290,400 2,290,400 1,205,500 496,000
674,100 — 1,170,100 738,200 535,500 2,443,800 121,700 Austria
1,414,900 1,414,900 656,100 92,200 363,300 — 455,500 521,300
466,100 1,442,900 72,800 Ireland 896,400 862,000 438,200 13,700
260,100 — 273,800 372,600 355,300 1,001,700 59,900 Poland 3,375,200
3,318,500 1,432,600 183,500 1,026,700 — 1,210,200 1,145,200 634,000
2,989,400 3,800 Romania 3,120,100 3,077,200 1,338,000 254,900
680,200 356,500 1,291,600 587,300 547,800 2,426,700 — Hungary
1,796,900 1,779,400 1,107,800 83,600 601,700 258,400 943,700
684,300 651,600 2,279,600 93,900 Czech Republic 1,532,300 1,512,400
716,500 174,900 357,900 99,100 631,900 500,800 173,100 1,305,800 —
Slovakia 606,400 591,700 270,400
26,300 141,500 75,500
243,300 133,600 81,000
457,900 —
Total 45,450,700
45,173,800 21,950,700
6,235,100 11,367,600
789,500 18,392,200
14,997,800 12,462,900
45,852,900 6,500,100
Subscriber Variance Table - March 31, 2018 vs December 31,
2017 Video
HomesPassed
Two-wayHomesPassed
CableCustomerRelationships
Basic
VideoSubscribers(i)
EnhancedVideoSubscribers
DTHSubscribers
TotalVideo
InternetSubscribers(ii)
TelephonySubscribers(iii)
TotalRGUs
Total
MobileSubscribers(iv)
U.K. 108,300 108,300 20,000 — 12,800 — 12,800 31,200 5,900
49,900 15,200 Germany 23,200 25,100 (2,000 ) (10,300 ) (10,500 ) —
(20,800 ) 26,200 23,300 28,700 (16,500 ) Belgium 9,200 9,200
(15,600 ) (11,600 ) (7,600 ) — (19,200 ) 2,100 (4,400 ) (21,500 )
22,300 Switzerland(v) 8,800 8,800 (31,300 ) (24,600 ) (5,800 ) —
(30,400 ) (11,100 ) (2,200 ) (43,700 ) 6,900 Austria 4,100 4,100
2,000 (1,000 ) (4,200 ) — (5,200 ) 5,700 8,500 9,000 8,700 Ireland
2,500 6,700 (16,100 ) (10,900 ) (8,000 ) — (18,900 ) 400 (1,000 )
(19,500 ) 10,000 Poland 21,100 21,600 (2,300 ) (5,300 ) 2,900 —
(2,400 ) 5,500 4,100 7,200 (200 ) Romania 43,000 43,000 (7,600 )
(5,800 ) 7,000 (9,400 ) (8,200 ) 5,600 12,400 9,800 — Hungary 7,500
7,400 (3,100 ) (8,600 ) 10,800 (7,500 ) (5,300 ) 9,000 12,900
16,600 5,500 Czech Republic (1,600 ) 3,000 (500 ) 3,300 1,900
(1,500 ) 3,700 3,300 10,000 17,000 — Slovakia 2,300
2,300 (100 ) 900 900 (900
) 900 2,500 2,300
5,700 —
Total 228,400
239,500 (56,600 ) (73,900
) 200 (19,300 )
(93,000 ) 80,400
71,800 59,200 51,900
Subscriber Variance Table - March
31, 2018 vs December 31, 2017 Video
HomesPassed Two-way
HomesPassed Cable CustomerRelationships
Basic
VideoSubscribers(i)
EnhancedVideoSubscribers
DTHSubscribers
TotalVideo
InternetSubscribers(ii)
TelephonySubscribers(iii)
TotalRGUs
Total
MobileSubscribers(iv)
Organic Change
Summary:
U.K. 108,300 108,300 20,000 — 12,800 — 12,800 31,200 5,900 49,900
15,200 Germany 23,200 25,100 (2,000 ) (10,300 ) (10,500 ) — (20,800
) 26,200 23,300 28,700 (16,500 ) Belgium 9,200 9,200 (15,600 )
(11,600 ) (7,600 ) — (19,200 ) 2,100 (4,400 ) (21,500 ) 22,300
Other Europe 70,800 75,300 (50,400 )
(47,800 ) 10,300 (19,300 )
(56,800 ) 18,800 47,000 9,000
30,900 Total Organic Change 211,500
217,900 (48,000 ) (69,700 ) 5,000
(19,300 ) (84,000 ) 78,300
71,800 66,100 51,900
Q1 2018
Adjustments:
Q1 2018 Acquisitions - Romania 21,600 21,600 6,000 5,500 — — 5,500
2,100 — 7,600 — Q1 2018 Czech Republic Adjustments (4,700 ) — — — —
— — — — — — Q1 2018 Acquisition - Ireland — —
(14,600 ) (9,700 ) (4,800 ) —
(14,500 ) — — (14,500 ) —
Net Adjustments 16,900 21,600
(8,600 ) (4,200 ) (4,800 ) —
(9,000 ) 2,100 — (6,900 )
—
Net Adds (Reductions) 228,400 239,500
(56,600 ) (73,900 ) 200
(19,300 ) (93,000 ) 80,400 71,800
59,200 51,900
Footnotes for Consolidated Operating
Data and Subscriber Variance Tables
(i) We have approximately 197,400 “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. (ii) Our Internet Subscribers exclude 37,600
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 81,500 subscribers
who have requested and received this service. (iii) Our Telephony
Subscribers exclude 29,200 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 137,100 subscribers who have requested and received this
service. (iv) In a number of countries, our mobile subscribers
receive mobile services pursuant to prepaid contracts. As of March
31, 2018, our mobile subscriber count included 509,500 and 470,600
prepaid mobile subscribers in Belgium and the U.K., respectively.
(v) 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 March 31, 2018, Switzerland’s
partner networks account for 136,100 Cable Customer Relationships,
314,900 RGUs, 113,400 Enhanced Video Subscribers, 115,300 Internet
Subscribers, and 86,200 Telephony Subscribers. Subscribers to
enhanced video services provided by partner networks receive basic
video services from the partner networks as opposed to our
operations. Due to the fact that we do not own these partner
networks, we do not report homes passed for Switzerland’s partner
networks.
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 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. 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.
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 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.
Footnotes
1 The former LiLAC Group has been treated as a discontinued
operation and accordingly, the information in this release relates
only to our continuing operations. For additional information, see
note 4 to the condensed consolidated financial statements included
in our 10-Q. 2 The indicated growth rates are rebased for
acquisitions, dispositions, FX and the new revenue recognition
standard (ASU 2014-09, Revenue from Contracts with Customers).
Please see Rebase Information for information on rebased growth. 3
Please see Glossary for our Operating Cash Flow ("OCF") definition
and the required reconciliations. 4 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 excludes the loans backed or secured by the shares
we hold in ITV plc, Sumitomo Corporation and Lions Gate
Entertainment Corp. 5 Total B2B includes subscription (SOHO) and
non-subscription revenue. B2B and SOHO growth rates include upsell
from our residential businesses. 6 Please see Glossary 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. 7 Please see
Glossary 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
10-Q. 8 Based on FX rates as of February 13, 2018. New build and
upgrade spend excludes related CPE. 9 For purposes of calculating
our average tenor, total third-party debt excludes vendor
financing. 10 Liquidity refers to cash and cash equivalents plus
the maximum undrawn commitments under subsidiary borrowing
facilities, without regard to covenant compliance calculations. 11
Includes subscription and non-subscription revenue. For additional
information regarding how we define our revenue categories, see
note 16 to the condensed consolidated financial statements included
in our 10-Q. 12 Effective January 1, 2018, we adopted Accounting
Standards Update (ASU") No. 2014-09, Revenue from Contracts with
Customers (“ASU 2014-09”), on a prospective basis. All applicable
2017 amounts in this release are presented on a pro forma basis
that gives effect to the adoption of ASU 2014-09 as if such
adoption had occurred on January 1, 2017. In addition, on January
1, 2018, we adopted ASU No. 2017-07, Improving the Presentation of
Net Periodic Pension Cost and Net Periodic Postretirement Benefit
Cost (“ASU 2017-07”) on a retrospective basis. Accordingly, the
operating income and OCF amounts for the 2017 periods in this
release have been retrospectively revised to reflect the impact of
ASU 2017-07. For additional information, see note 2 to the
condensed consolidated financial statements included in our 10-Q.
The following table provides a summary of selected quarterly
information for 2017 that gives pro forma effect to the adoption of
ASU 2014-09 and reflects the retrospective changes of ASU
2017-07.
Three months ended
Year endedDecember
31,2017
March 31,2017
June 30,2017
September 30,2017
December 31,2017
in millions, except ARPU amounts Revenue: U.K./Ireland $
1,502.5 $ 1,563.8 $ 1,609.9 $ 1,709.6 $ 6,385.8 Belgium 660.0 684.8
758.7 758.1 2,861.6 Germany 624.1 650.9 698.4 714.3 2,687.7
Switzerland/Austria 422.8 434.8 454.8 449.8 1,762.2 Central and
Eastern Europe 270.7 288.4 306.5 317.0 1,182.6 Central and
Corporate and intersegment eliminations 29.1 32.1
36.0 32.7 129.9 Total revenue $ 3,509.2
$ 3,654.8 $ 3,864.3 $ 3,981.5 $ 15,009.8
Segment OCF: U.K./Ireland $ 642.9 $ 701.0 $ 708.2 $
805.8 $ 2,857.9 Belgium 296.5 316.5 356.2 326.5 1,295.7 Germany
381.3 409.9 440.6 458.1 1,689.9 Switzerland/Austria 252.0 264.3
270.0 257.0 1,043.3 Central and Eastern Europe 110.9 123.0 138.0
145.2 517.1 Central and Corporate (90.6 ) (96.9 ) (96.7 ) (95.2 )
(379.4 ) Total Segment OCF $ 1,593.0 $ 1,717.8 $
1,816.3 $ 1,897.4 $ 7,024.5 Operating
income $ 419.5 $ 467.7 $ 517.9 $ 481.3 $ 1,886.4 Share-based
compensation expense 33.4 53.4 23.2 63.9 173.9 Depreciation and
amortization 1,128.3 1,178.5 1,216.5 1,333.7 4,857.0 Impairment,
restructuring and other operating items, net 11.8 18.2
58.7 18.5 107.2 Segment OCF $ 1,593.0
$ 1,717.8 $ 1,816.3 $ 1,897.4 $ 7,024.5
ARPU per cable customer relationship: Liberty Global
$ 39.98 $ 41.36 $ 43.69 $ 43.78 U.K.
& Ireland (Virgin Media) £ 50.64 £ 50.29 £ 50.10
£ 50.73 Germany (Unitymedia) € 25.14 € 25.45
€ 25.62 € 25.77 Belgium (Telenet) € 54.43
€ 55.04 € 55.07 € 55.18 Other Europe
(UPC Holding) € 27.21 € 27.30 € 26.58 € 26.12
ARPU per mobile subscriber: Excluding interconnect
revenue $ 13.78 $ 14.71 $ 14.97 $ 15.02
Including interconnect revenue $ 17.10 $ 18.18 $
18.85 $ 18.73 13 Our aggregate unused
borrowing capacity of $3.6 billion represents the maximum undrawn
commitments under our subsidiaries' applicable facilities without
regard to covenant compliance calculations. Upon completion of the
relevant March 31, 2018 compliance reporting requirements for our
credit facilities, and assuming no further changes from quarter-end
borrowing levels, we anticipate that our subsidiaries' borrowing
capacity will remain at $3.6 billion.
Glossary
Adjusted Free Cash Flow: 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 condensed consolidated statements of cash flows,
(b) principal payments on amounts financed by vendors and
intermediaries and (c) principal payments on capital leases
(exclusive of the portions of the network lease in Belgium and the
duct leases in Germany that we assumed in connection with certain
acquisitions), with each item excluding any cash provided or used
by our discontinued operations. We believe that our presentation of
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 condensed consolidated
statements of cash flows.
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 March 31,
2018
2017(i)
in millions Net cash provided by operating activities
of our continuing operations $ 1,279.3 $ 904.4 Cash payments for
direct acquisition and disposition costs 1.6 1.8 Expenses financed
by an intermediary(ii) 557.8 297.8 Capital expenditures (646.0 )
(500.4 ) Principal payments on amounts financed by vendors and
intermediaries (1,796.8 ) (1,014.2 ) Principal payments on certain
capital leases (21.0 ) (20.4 ) Adjusted FCF $ (625.1 ) $
(331.0 )
_______________
(i) Adjusted free cash flow for the three months ended March
31, 2017 has been restated to reflect our January 1, 2018 adoption
of ASU 2016-18, Restricted Cash. (ii) For purposes of our
condensed consolidated statements of cash flows, expenses financed
by an intermediary are treated as hypothetical operating cash
outflows and hypothetical financing cash inflows when the expenses
are incurred. When we pay the financing intermediary, we record
financing cash outflows in our condensed consolidated statements of
cash flows. For purposes of our 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: Average Revenue Per Unit is
the average monthly subscription revenue per average cable customer
relationship or mobile subscriber, as applicable. Following the
adoption of ASU 2014-09, subscription revenue excludes interconnect
fees, channel carriage fees, mobile handset sales and late fees,
but includes the amortization of installation fees. Prior to the
adoption of ASU 2014-09, installation fees were excluded from
subscription revenue. ARPU per average cable customer relationship
is calculated by dividing the average monthly subscription revenue
from residential cable and SOHO services by the average number of
cable 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 number of
mobile subscribers for the period. Unless otherwise indicated, ARPU
per cable 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 number of the
applicable RGUs for the period. Unless otherwise noted, ARPU in
this release is considered to be ARPU per average cable customer
relationship or mobile subscriber, as applicable. Cable customer
relationships, mobile subscribers and RGUs of entities acquired
during the period are normalized. In addition, for purposes of
calculating the percentage change in ARPU on a rebased basis, we
adjust the prior-year subscription revenue, cable customer
relationships, mobile subscribers and RGUs, as applicable, to
reflect acquisitions, dispositions, FX and the January 1, 2018
adoption of the new revenue recognition standard (ASU 2014-09,
Revenue from Contracts with Customers) on a comparable basis with
the current year, consistent with how we calculate our rebased
growth for revenue and OCF, as further described in the body of
this release.
ARPU per Mobile Subscriber: Our
ARPU per mobile subscriber calculation that excludes interconnect
revenue refers to the average monthly mobile subscription revenue
per average mobile subscriber and is calculated by dividing the
average monthly mobile subscription revenue (excluding 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.
Basic Video Subscriber: 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. 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.
Blended fully-swapped debt borrowing
cost: 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.
B2B: Business-to-Business.
Cable Customer Relationships: the
number of customers who receive at least one of our video, internet
or telephony services that we count as RGUs, without regard to
which or to how many services they subscribe. Cable 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 Cable Customer Relationships. We
exclude mobile-only customers from Cable Customer
Relationships.
Customer Churn: the rate at which
customers relinquish their subscriptions. The annual rolling
average basis is calculated by dividing the number of disconnects
during the preceding 12 months by the average number of customer
relationships. For the purpose of computing churn, a disconnect is
deemed to have occurred if the customer no longer receives any
level of service from us and is required to return our equipment. A
partial product downgrade, typically used to encourage customers to
pay an outstanding bill and avoid complete service disconnection,
is not considered to be disconnected for purposes of our churn
calculations. Customers who move within our cable footprint and
upgrades and downgrades between services are also excluded from the
disconnect figures used in the churn calculation.
DTH Subscriber: a home, residential
multiple dwelling unit or commercial unit that receives our video
programming broadcast directly via a geosynchronous satellite.
Enhanced Video Subscriber: 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 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.
Homes Passed: 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.
Internet Subscriber: 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 do not include customers
that receive services from dial-up connections.
MDU: Multiple Dwelling Unit.
Mobile Subscriber Count: the number
of active 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 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.
MVNO: Mobile Virtual Network
Operator.
NPS: Net Promoter Score.
OCF: 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 OCF is
presented in the following table:
Three months ended March 31, 2018
201713
in millions Operating income $ 493.1 $ 419.5
Share-based compensation expense 45.8 33.4 Depreciation and
amortization 1,296.4 1,128.3 Impairment, restructuring and other
operating items, net 63.6 11.8 Total OCF $ 1,898.9 $
1,593.0
OCF margin: calculated by dividing
OCF by total revenue for the applicable period.
Property and equipment additions:
includes capital expenditures on an accrual basis, amounts financed
under vendor financing or capital lease arrangements and other
non-cash additions.
RGU: A Revenue Generating Unit is
separately a Basic Video Subscriber, Enhanced Video Subscriber, DTH
Subscriber, Internet Subscriber or Telephony Subscriber. A home,
residential multiple dwelling unit, or commercial unit may contain
one or more RGUs. For example, if a residential customer in our
U.K. 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 March 31, 2018 RGU counts exclude
our separately reported postpaid and prepaid mobile
subscribers.
SIM: Subscriber Identification
Module.
SOHO: Small or Home Office
Subscribers.
Telephony Subscriber: 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.
Two-way Homes Passed: homes passed
by those sections of our networks that are technologically capable
of providing two-way services, including video, internet and
telephony services.
U.S. GAAP: United States Generally
Accepted Accounting Principles.
YoY: Year-over-year.
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version on businesswire.com: https://www.businesswire.com/news/home/20180508006703/en/
Liberty GlobalInvestor RelationsMatt Coates, +44
20 8483 6333John Rea, +1 303 220 4238Stefan Halters, +1 303 784
4528orCorporate CommunicationsBill Myers, +1 303 220
6686Matt Beake, +44 20 8483 6428Corporate
Websitewww.libertyglobal.com
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