Accelerated our Gigabit broadband rollout to millions of
European homes and businesses
Completed $2.7 billion tender offer for Class A & C
shares in September
Q3 2019 operating income up 1.8% YoY to $208.8 million for
continuing operations
Capital intensity continues to decrease substantially fueling
YTD1 OFCF growth2 of 80%
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK):
Continuing Operations (Including
Switzerland)
Q3 2019
YTD 2019
Organic RGU Additions
(76,300
)
(80,400
)
Revenue Growth2
(0.6
)%
(0.7
)%
OCF Growth2
(4.1
)%
(3.0
)%
OFCF Growth2
34.8
%
42.1
%
Continuing Operations (Excluding
Switzerland)3
Q3 2019
YTD 2019
Organic RGU Additions
(62,200
)
4,600
Revenue Growth2
(0.2
)%
(0.3
)%
OCF Growth2
(2.9
)%
(1.8
)%
OFCF Growth2
63.1
%
79.7
%
2019 Guidance
Targets5
Excluding CH
Including CH
OCF Growth3
Flat to Down
Modest Decline
Adjusted FCF4
$550-$600 mm
$700-$750 mm
P&E Additions
~$2.7 bn
~$2.8-$2.9 bn
Liberty Global plc today announced its Q3 2019 financial
results. Our former operations in Austria, Germany, Hungary,
Romania and the Czech Republic, along with our DTH business
(collectively, the "Discontinued Operations") have been accounted
for as discontinued operations. Unless otherwise indicated, the
information in this release relates only to our continuing
operations.
CEO Mike Fries stated, "Over the past two years, we have
undertaken a substantial reshaping of our distribution footprint,
taking advantage of the fixed-mobile convergence wave across Europe
with transactions that recognize the premium value of broadband
networks. As a result of this rebalancing, we find ourselves in an
enviable position from both operating and liquidity
perspectives.
We have substantial scale in our remaining businesses, with 31
million consolidated fixed and mobile subscribers, generating
approximately $5 billion of OCF per annum, and an additional 15
million fixed and mobile subscribers and $2 billion in annual OCF
from our VodafoneZiggo joint venture in the Netherlands. In all
markets we are leading the way with gigabit broadband speeds,
converged fixed-mobile bundles, and a focus on profitable
subscriber growth."
"Just as importantly, we are entering a new phase of operating
and free cash flow expansion with capital intensity down 29%1
through nine months and operating free cash flow up 80%1. Not
surprisingly we are confirming our OCF and FCF guidance for the
full year.
One of the highlights of the quarter was the successful
completion of our modified Dutch auction tender offers. We were
able to purchase nearly 100 million shares in total at a blended
average price of just over $27 per share, which represented around
14% of our shares outstanding, for a combined aggregate cost of
$2.7 billion. Today we have $10 billion of liquidity 6 on the
balance sheet and remain focused on long-term value creation.
While we are disappointed that Sunrise was unable to obtain
approval for the financing of their acquisition of our Swiss
operation3, we are excited with the progress we continue to make in
that market. All of our key operating metrics - fixed subscriber
movement, ARPU growth, NPS, mobile net adds - are moving in the
right direction. Like the rest of Europe, Switzerland is rapidly
converging around fixed-mobile services, and our gigabit broadband
networks and superior TV platform are the fulcrum assets in that
market.
Our third quarter 2019 earnings call is tomorrow morning at 9:00
a.m. E.T. and we hope you can join us."
About Liberty Global
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is one of the
world’s leading converged video, broadband and communications
companies, with operations in six European countries under the
consumer brands Virgin Media, Telenet and UPC. We invest in the
infrastructure and digital platforms that empower our customers to
make the most of the digital revolution. Our substantial scale and
commitment to innovation enable us to develop market-leading
products delivered through next-generation networks that connect 11
million customers subscribing to 25 million TV, broadband internet
and telephony services. We also serve 6 million mobile subscribers
and offer WiFi service through millions of 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,
LionsGate, the Formula E racing series and several regional sports
networks.
Q3 Highlights (on a continuing
operations basis unless otherwise noted)
- Q3 rebased revenue decreased 0.6% to $2,840.9 million
- Q3 residential cable revenue7 decreased 1.3% YoY to $1,821.8
million
- Results driven by revenue contractions in Switzerland and
Belgium
- Q3 residential mobile revenue7 increased 0.8% YoY to $401.0
million
- Performance driven by strong Swiss result
- Q3 B2B8 revenue7 decreased 0.7% YoY to $463.3 million
- Strong growth in Switzerland and CEE offset by declines at our
other operations
- Q3 operating income increased 1.8% YoY to $208.8 million
- Q3 rebased OCF declined by 4.1% to $1,211.7 million
- Q3 property & equipment additions spend at 23.2% of revenue
as compared to 30.3% in Q3 2018
- Built 162,000 new premises during Q3, including 119,000 new
premises in the U.K. & Ireland
- Completed $2.7 billion tender offer in September
- Solid balance sheet with $9.9 billion of liquidity6 at Q3
- Net leverage9 of 3.6x at Q3
- Fully-swapped borrowing cost of 4.1% on debt balance of $27.0
billion
Liberty Global (continuing operations)
Q3 2019
YoY Growth(i)
YTD 2019
YoY Growth(i)
Subscribers
Organic Net RGU Losses
(76,300
)
(80,400
)
Organic Net RGU Additions (Losses) excl.
Switzerland
(62,200
)
4,600
Financial (in
millions, except percentages)
Revenue
Continuing operations
$
2,840.9
(0.6
%)
$
8,559.3
(0.7
%)
Continuing operations excluding
Switzerland
(0.2
%)
(0.3
%)
Operating income
$
208.8
1.8
%
$
463.0
(21.1
%)
OCF:
Continuing operations
$
1,211.7
(4.1
%)
$
3,585.7
(3.0
%)
Continuing operations excluding
Switzerland
(2.9
%)
(1.8
%)
OFCF:
Continuing operations
$
552.9
34.8
%
$
1,545.6
42.1
%
Continuing operations excluding
Switzerland
63.1
%
79.7
%
Cash provided by operating activities
$
591.7
$
2,220.2
Cash provided by investing activities
$
10,492.0
$
9,809.3
Cash used by financing activities
$
(4,839.4
)
$
(6,434.8
)
Adjusted FCF4:
Continuing operations
$
(70.9
)
$
(143.4
)
Pro forma continuing operations(ii)
$
(16.2
)
$
(96.1
)
(i)
Revenue and OCF YoY growth rates are on a
rebased basis
(ii)
Pro forma Adjusted FCF gives pro forma
effect to certain adjustments to our recurring cash flows that we
have or expect to realize following the disposition of the
Discontinued Operations and the Switzerland Disposal Group. For
additional details, see the information and reconciliation included
within the Glossary
Subscriber Growth
Three months ended
Nine months ended
September 30,
September 30
2019
2018
2019
2018
Organic RGU net additions (losses) by
product
Video
(65,700
)
(32,600
)
(181,100
)
(85,500
)
Data
10,800
23,900
62,800
73,300
Voice
(21,400
)
40,700
37,900
74,700
Total
(76,300
)
32,000
(80,400
)
62,500
Organic RGU net additions (losses) by
market
U.K./Ireland
(52,700
)
105,300
1,600
262,400
Belgium
(36,000
)
(52,900
)
(91,700
)
(99,800
)
Switzerland
(14,100
)
(41,500
)
(85,000
)
(139,000
)
Continuing CEE (Poland and Slovakia)
26,500
21,100
94,700
38,900
Total
(76,300
)
32,000
(80,400
)
62,500
Organic Mobile SIM additions (losses)
by product
Postpaid
167,400
60,800
365,500
254,900
Prepaid
(35,000
)
(37,100
)
(114,500
)
(122,900
)
Total
132,400
23,700
251,000
132,000
Organic Mobile SIM additions by
market
U.K./Ireland
84,500
5,000
111,600
50,900
Belgium
30,600
10,500
95,000
58,800
Other
17,300
8,200
44,400
22,300
Total
132,400
23,700
251,000
132,000
- Cable Product Performance: During
Q3 we lost 76,000 RGUs, as compared to a gain of 32,000 RGUs in the
prior-year period, as improved performances in our CEE operations,
Switzerland and Telenet were more than offset by weakness at Virgin
Media
- U.K./Ireland: Q3 RGU losses were
53,000 were the result of our disciplined approach to customer
acquisition and retention combined with our shift in focus to
higher-value TV bundles. A 5,000 gain in broadband RGUs was offset
by a 50,000 decline in video RGUs and a 9,000 decline in telephony
RGUs
- Belgium: RGU attrition of 36,000
in Q3 represents a year-over-year improvement as losses in the SFR
footprint moderated
- Switzerland: Switzerland lost
14,000 RGUs in Q3, which represents a strong year-over-year
improvement as compared to a loss of 41,500 in Q3 2018, largely
driven by an enhanced value proposition
- Continuing CEE (Poland and
Slovakia): Added 26,500 RGUs in Q3, as compared to 21,000 in
Q3 2018, driven by improved performance in all products in
Poland
- Mobile: Added 132,000 mobile
subscribers in Q3, as 167,000 postpaid additions were only
partially offset by continued attrition in our low-ARPU prepaid
base
- Record Q3 U.K./Ireland postpaid mobile net adds of 107,000 were
supported by the launch of our FMC bundles. Virgin Media's
fixed-mobile converged base increased by 80 bps sequentially to
20.7% in Q3. Over time, take-up of converged bundles is expected to
drive higher ARPU and lower churn
- Belgium added 31,000 mobile subscribers during Q3 including
43,000 net postpaid additions. This growth was supported by our
converged WIGO offering
- Switzerland added 16,000 mobile subscribers in Q3 driven by
bundling success and a revamped mobile offer following our MVNO
switch in January 2019
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
Increase/(decrease)
Nine months ended
Increase/(decrease)
September 30,
September 30,
Revenue
2019
2018
%
Rebased %
2019
2018
%
Rebased %
in millions, except %
amounts
Continuing operations:
U.K./Ireland
$
1,579.9
$
1,667.7
(5.3
)
0.1
$
4,885.2
$
5,180.8
(5.7
)
0.1
Belgium
721.9
746.8
(3.3
)
(2.0
)
2,147.0
2,260.3
(5.0
)
(1.4
)
Switzerland
311.7
323.3
(3.6
)
(3.3
)
942.7
1,000.4
(5.8
)
(3.5
)
Continuing CEE
117.2
120.3
(2.6
)
2.4
355.4
373.1
(4.7
)
2.5
Central and Corporate
110.5
71.9
53.7
6.2
231.4
197.4
17.2
(3.8
)
Intersegment eliminations
(0.3
)
(0.3
)
N.M.
N.M.
(2.4
)
(3.2
)
N.M.
N.M.
Total continuing operations
$
2,840.9
$
2,929.7
(3.0
)
(0.6
)
$
8,559.3
$
9,008.8
(5.0
)
(0.7
)
Total continuing operations excluding
Switzerland
(0.2
)
(0.3
)
______________________________
N.M. - Not Meaningful
- Reported revenue for the three and nine months ended September
30, 2019 decreased 3.0% and 5.0% year over year, respectively
- The Q3 result was primarily driven by the impact of (i)
negative foreign exchange ("FX") movements, mainly related to the
weakening of the British Pound and Euro against the U.S. dollar,
and (ii) organic revenue contraction
- Rebased revenue declined 0.6% and 0.7% in the Q3 and YTD
periods, respectively. This result included:
- For the YTD period, the favorable impact of $5.6 million
related to revenue recognized by Virgin Media during the second
quarter of 2019 in connection with the sale of rights to future
commission payments on customer handset insurance arrangements
- For the YTD period, the favorable impact of a $4.1 million
revenue reversal recorded in Switzerland during the first quarter
of 2018
- The unfavorable impact of $3.8 million of mobile subscription
revenue recognized in the U.K. during the third quarter of 2018
related to the expected recovery of certain prior-period VAT
payments
Q3 2019 Rebased Revenue Growth - Segment
Highlights
- U.K./Ireland: Rebased revenue was
broadly flat in Q3 driven by the net effect of (i) an increase in
residential cable revenue due to modest increases in our cable RGU
base and cable ARPU, offset by a decrease in cable non-subscription
revenue, (ii) a decline in residential mobile revenue driven by
lower subscription revenue which was impacted by the aforementioned
recovery of prior-period VAT payments and (iii) a decline in B2B
revenue due to lower data and installation revenue in our
non-subscription business, which offset the benefit of dark fibre
contract wins in the quarter and an increase in subscription
revenue due to growth in SOHO RGUs
- Belgium: Rebased revenue declined
2.0% in Q3 driven by the net effect of (i) lower B2B
non-subscription revenue driven by a decrease in revenue from
wholesale services and interconnect revenue, (ii) an increase in
B2B subscription revenue due to growth in SOHO RGUs, (iii) a
decline in residential cable revenue driven by a decrease in
subscribers, partially offset by an increase in ARPU and (iv) an
increase in mobile revenue due to higher revenue from the sale of
mobile handsets and other devices, partially offset by lower mobile
ARPU
- Switzerland: Rebased revenue
declined 3.3% in Q3, primarily due to the net effect of (i) a
decrease in residential cable subscription revenue driven by
subscriber volume losses and (ii) higher mobile revenue driven by
both an increase in subscribers and handset sales
- Continuing CEE (Poland and
Slovakia): Rebased revenue increased 2.4% in Q3 driven by an
increase in residential cable subscription revenue driven by new
build areas
- Central and Corporate: Rebased
revenue increased 6.2% in Q3 primarily due to an increase in CPE
sales to the VodafoneZiggo JV. Commencing in Q3, TSA revenue
received from Vodafone has been rebased
Operating Income
- Operating income was $208.8 million and $205.2 million in Q3
2019 and Q3 2018, respectively, representing an increase of 1.8%
YoY. For the nine months ended September 30, 2019, our operating
income of $463.0 million reflects a decrease of 21.1% as compared
to $586.9 million for the 2018 period
- The changes in operating income in the QTD and YTD periods
primarily resulted from the net effect of (i) lower OCF, as further
described below, (ii) decreases in depreciation and amortization
expense, (iii) increases in share-based compensation expense and
(iv) lower impairment, restructuring and other operating items,
net
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)
Nine months ended
Increase/(decrease)
September 30,
September 30,
OCF
2019
2018
%
Rebased %
2019
2018
%
Rebased %
in millions, except %
amounts
Continuing operations:
U.K./Ireland
$
674.0
$
742.1
(9.2
)
(4.1
)
$
2,085.5
$
2,268.3
(8.1
)
(2.4
)
Belgium
358.6
383.4
(6.5
)
(2.3
)
1,047.0
1,124.7
(6.9
)
(1.4
)
Switzerland
168.0
191.0
(12.0
)
(11.9
)
500.8
566.5
(11.6
)
(9.4
)
Continuing CEE
58.2
60.9
(4.4
)
0.5
173.3
185.2
(6.4
)
0.6
Central and Corporate
(46.8
)
(88.7
)
47.2
15.6
(222.0
)
(283.3
)
21.6
1.5
Intersegment eliminations
(0.3
)
(4.0
)
N.M.
N.M.
1.1
(11.5
)
N.M.
N.M.
Total continuing operations
$
1,211.7
$
1,284.7
(5.7
)
(4.1
)
$
3,585.7
$
3,849.9
(6.9
)
(3.0
)
Total continuing operations excluding
Switzerland
(2.9
)
(1.8
)
______________________________
N.M. - Not Meaningful
- Reported OCF for the three and nine months ended September 30,
2019 decreased 5.7% and 6.9% year over year, respectively
- The Q3 result was primarily driven by (i) the aforementioned
negative impact of FX movements and (ii) organic OCF decline
- Our rebased OCF decline of 4.1% and 3.0% in the Q3 and YTD
periods, respectively, included:
- The aforementioned favorable impacts of certain items on our
revenue, as discussed in the "Revenue Highlights" section
above
- The following current year impacts:
- Unfavorable network tax increases of $11.4 million and $29.6
million for Q3 and YTD, respectively, following an increase in the
rateable value of our U.K. networks, which is being phased in over
a six-year period ending in 2022
- For the YTD period, higher severance costs in U.K./Ireland of
$6.7 million associated with revisions to our operating model and
decreases in senior management personnel recorded during the second
quarter of 2019
- For the YTD period, an unfavorable increase in personnel costs
in Central and Corporate recorded during the second quarter of 2019
related to a $5.0 million cash bonus associated with the renewal of
an existing executive employment contract on similar terms
- The following prior year impacts:
- For the YTD period, lower costs of $6.8 million due to the
reassessment of an accrual in U.K./Ireland in the second quarter of
2018
- For the YTD period, higher costs of $5.3 million resulting from
the impact of a credit recorded during the second quarter of 2018
in connection with a telecommunications operator's agreement to
compensate Virgin Media and other communications providers for
certain prior-period contractual breaches related to network
charges
- Higher costs of $5.2 million and $4.5 million for Q3 and YTD,
respectively, due to the reassessment of certain accruals in
U.K./Ireland in the third quarter of 2018
Q3 2019 Rebased Operating Cash Flow Growth
- Segment Highlights
- U.K./Ireland: Rebased OCF decline
of 4.1% reflects the aforementioned revenue performance and
increases in our cost base due to (i) higher programming costs,
(ii) an $11.4 million net increase in network taxes, (iii) higher
mobile data costs and (iv) the impact of a net $5.2 million benefit
in the prior-year period relating to the reassessment of certain
accruals
- Belgium: Rebased OCF decline of
2.3% was largely driven by the Medialaan MVNO contract loss and
certain regulatory headwinds
- Switzerland: Rebased OCF decline
of 11.9% in Q3 was largely due to (i) project and marketing spend
related to growth initiatives and (ii) the aforementioned loss of
residential cable subscription revenue
- Continuing CEE (Poland and
Slovakia): Rebased OCF increase of 0.5% as the
aforementioned revenue growth was partially offset by increased
marketing spend
OFCF Highlights
The following table presents (i) OFCF of each of our
consolidated reportable segments for the comparative periods and
(ii) the percentage change from period to period on a rebased
basis:
Three months ended
Nine months ended
September 30,
September 30,
OFCF
2019
2018
Rebased %
2019
2018
Rebased %
in millions, except %
amounts
Continuing operations:
U.K./Ireland
$
312.2
$
286.4
14.9
$
957.0
$
772.5
31.0
Belgium
240.1
174.0
44.0
649.2
560.1
23.0
Switzerland
96.7
131.3
(26.2
)
293.6
401.6
(24.9
)
Continuing CEE
33.4
29.7
17.7
107.1
86.1
32.8
Central and Corporate
(129.2
)
(220.6
)
29.0
(462.4
)
(693.2
)
26.2
Intersegment eliminations
(0.3
)
(4.0
)
N.M.
1.1
(11.5
)
N.M.
Total continuing operations
$
552.9
$
396.8
34.8
$
1,545.6
$
1,115.6
42.1
Total continuing operations excluding
Switzerland
63.1
79.7
Net Earnings Attributable to Liberty Global
Shareholders
- Net earnings attributable to Liberty Global shareholders was
$12,847.9 million and $974.1 million for the three months ended
September 30, 2019 and 2018, respectively, and $12,907.9 million
and $700.2 million for the nine months ended September 30, 2019 and
2018, respectively. These increases are primarily attributable to a
$12.2 billion gain on the sale of our operations in Germany,
Hungary, Romania and the Czech Republic recognized during the third
quarter of 2019
Leverage and Liquidity
- Total principal amount of debt and
finance leases: $27.6 billion for continuing operations
- Leverage ratios9: At September 30,
2019, our adjusted gross and net leverage ratios were 5.1x and
3.6x, respectively
- Average debt tenor10:
Approximately 7 years, with ~75% not due until 2025 or thereafter
for continuing operations
- Borrowing costs: Blended
fully-swapped borrowing cost of our debt was 4.1% for continuing
operations
- Liquidity6: $9.9 billion for our
continuing operations, including (i) $7.4 billion of cash at
September 30, 2019 and (ii) aggregate unused borrowing capacity11
under our credit facilities of $2.5 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 rebased OCF growth, our Adjusted FCF and our P&E additions;
expectations with respect to Switzerland; decisions regarding the
deployment of our capital; expectations with respect to the
development, launch and benefits of our innovative and advanced
products and services; 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, vendors and contractors
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/A
and Forms 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 2019, we have
adjusted our historical revenue, OCF and OFCF for the three and
nine months ended September 30, 2018 to (i) include the
pre-acquisition revenue, OCF and P&E additions of entities
acquired during 2019 in our rebased amounts for the three and nine
months ended September 30, 2018 to the same extent that the
revenue, OCF and P&E additions of these entities are included
in our results for the three and nine months ended September 30,
2019, (ii) include revenue and costs for the temporary elements of
transitional and other services provided to the VodafoneZiggo JV,
Vodafone, Deutsche Telekom (the buyer of UPC Austria), Liberty
Latin America and M7 Group (the buyer of UPC DTH), to reflect
amounts related to these services equal to those included in our
results for the three and nine months ended September 30, 2019 and
(iii) reflect the translation of our rebased amounts for the three
and nine months ended September 30, 2018 at the applicable average
foreign currency exchange rates that were used to translate our
results for the three and nine months ended September 30, 2019. We
have reflected the revenue, OCF and P&E additions of these
acquired entities in our 2018 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 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, OCF and OFCF 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, OCF and OFCF that would have
occurred if these transactions had occurred on the dates assumed
for purposes of calculating our rebased amounts or the revenue, OCF
and OFCF 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 2018
amounts to derive our rebased growth rates for our continuing
operations:
Revenue
OCF
OFCF
Three months ended September
30,
2018
Nine months ended September
30,
2018
Three months ended September
30,
2018
Nine months ended September
30,
2018
Three months ended September
30, 2018
Nine months ended September
30,
2018
in millions
Acquisitions
$
24.7
$
56.2
$
1.8
$
5.5
$
28.9
$
28.3
Dispositions(i)
36.0
54.3
29.6
43.6
—
—
Foreign Currency
(133.7
)
(502.7
)
(53.2
)
(204.0
)
(17.1
)
(56.6
)
Total decrease
$
(73.0
)
$
(392.2
)
$
(21.8
)
$
(154.9
)
$
11.8
$
(28.3
)
(i)
Includes rebase adjustments related to
agreements to provide transitional and other services to the
VodafoneZiggo JV, Vodafone, Liberty Latin America, Deutsche Telekom
and M7 Group. These adjustments result in an equal amount of fees
in both the 2019 and 2018 periods for those services that are
deemed to be temporary in nature. The net amount of these
adjustments resulted in increases in revenue of $36.5 million and
$54.8 million and OCF of $30.5 million and $45.9 million for the
three and nine months ended September 30, 2018, respectively.
Summary of Debt, Finance Lease Obligations & Cash and
Cash Equivalents
The following table(i) details the U.S. dollar equivalent
balances of the outstanding principal amount of our continuing
operations debt, finance lease obligations and cash and cash
equivalents at September 30, 2019:
Finance
Debt & Finance
Cash
Lease
Lease
and Cash
Debt(ii), (iii)
Obligations
Obligations
Equivalents
in millions
Liberty Global and unrestricted
subsidiaries
$
1,511.3
$
54.6
$
1,565.9
$
7,144.3
Virgin Media(iv)
15,555.5
66.8
15,622.3
42.5
UPC Holding
4,156.8
21.8
4,178.6
105.4
Telenet
5,753.7
443.4
6,197.1
89.8
Total
$
26,977.3
$
586.6
$
27,563.9
$
7,382.0
______________________________
(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)
Debt amounts for UPC Holding include those
amounts that were not direct obligations of the entities that were
disposed of within the UPC Holding borrowing group.
(iv)
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 table below highlights the categories of the property and
equipment additions of our continuing operations for the indicated
periods and reconciles those additions to the capital expenditures
of our continuing operations that are presented in the condensed
consolidated statements of cash flows in our 10-Q.
Three months ended September
30,
Nine months ended September
30,
2019
2018
2019
2018
in millions, except %
amounts
Customer premises equipment
$
132.3
$
192.2
$
518.6
$
728.3
New Build & Upgrade
148.9
153.3
453.5
531.7
Capacity
77.8
94.4
227.6
305.8
Baseline
155.9
275.1
439.1
631.2
Product & Enablers
143.9
172.9
401.3
537.3
Total P&E Additions
658.8
887.9
2,040.1
2,734.3
Reconciliation of P&E Additions to
capital expenditures:
Assets acquired under capital-related
vendor financing arrangements(i)
(376.9
)
(469.6
)
(1,303.2
)
(1,656.3
)
Assets acquired under capital leases
(14.6
)
(21.6
)
(47.2
)
(68.1
)
Changes in current liabilities related to
capital expenditures
(0.1
)
(53.0
)
210.4
128.6
Total capital expenditures, net(ii)
$
267.2
$
343.7
$
900.1
$
1,138.5
Capital expenditures, net:
Third-party payments
$
284.8
$
359.6
$
976.0
$
1,211.7
Proceeds received for transfers to related
parties(iii)
(17.6
)
(15.9
)
(75.9
)
(73.2
)
Total capital expenditures, net
$
267.2
$
343.7
$
900.1
$
1,138.5
P&E Additions as % of revenue7
23.2
%
30.3
%
23.8
%
30.4
%
______________________________
(i)
Amounts exclude related VAT of $60.2
million and $84.3 million for the three months ended September 30,
2019 and 2018, respectively, and $208.9 million and $267.8 million
for the nine months ended September 30, 2019 and 2018,
respectively, that were also financed by our vendors under these
arrangements.
(ii)
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 finance 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.
(iii)
Primarily relates to transfers of
centrally-procured property and equipment to our Discontinued
Operations and the VodafoneZiggo JV.
ARPU per Cable Customer Relationship
The following table provides ARPU per cable customer
relationship for the indicated periods:
Three months ended September
30,
%
Rebased
2019
2018
Change
% Change
Liberty Global
$
57.94
$
60.48
(4.2
%)
0.3
%
U.K. & Ireland (Virgin Media)
ÂŁ
51.41
ÂŁ
51.09
0.6
%
0.5
%
Belgium (Telenet)
€
57.84
€
56.49
2.4
%
2.4
%
UPC
€
37.06
€
37.39
(0.9
%)
(3.5
%)
Mobile ARPU
The following tables provide ARPU per mobile subscriber for the
indicated periods:
ARPU per Mobile
Subscriber
Three months ended September
30,
%
Rebased
2019
2018
Change
% Change
Liberty Global:
Including interconnect revenue
$
16.47
$
19.39
(15.1
%)
(4.7
%)
Excluding interconnect revenue
$
14.23
$
15.56
(8.5
%)
(4.8
%)
Consolidated Operating Data —
September 30, 2019
Video
Homes
Passed
Cable Customer
Relationships
Basic Video
Subscribers(i)
Enhanced Video
Subscribers
Total
Video
Internet
Subscribers(ii)
Telephony
Subscribers(iii)
Total
RGUs
Total Mobile
Subscribers(iv)
Continuing operations:
U.K.
14,748,500
5,526,200
—
3,765,000
3,765,000
5,269,100
4,633,600
13,667,700
3,137,000
Belgium
3,375,300
2,079,000
176,400
1,705,300
1,881,700
1,659,200
1,221,200
4,762,100
2,778,900
Switzerland(v)
2,363,500
1,061,500
435,700
598,000
1,033,700
671,200
509,200
2,214,100
188,900
Ireland
946,400
436,700
—
276,900
276,900
379,200
344,700
1,000,800
98,000
Poland
3,524,700
1,470,600
184,000
1,060,800
1,244,800
1,211,400
679,000
3,135,200
4,900
Slovakia
617,900
192,700
28,500
141,900
170,400
139,400
86,100
395,900
—
Total continuing operations
25,576,300
10,766,700
824,600
7,547,900
8,372,500
9,329,500
7,473,800
25,175,800
6,207,700
Subscriber Variance Table -
September 30, 2019 vs. June 30, 2019
Video
Homes
Passed
Cable Customer
Relationships
Basic Video
Subscribers(i)
Enhanced Video
Subscribers
Total
Video
Internet
Subscribers(ii)
Telephony
Subscribers(iii)
Total
RGUs
Total Mobile
Subscribers(iv)
Continuing operations:
U.K.
111,800
(5,600
)
—
(57,100
)
(57,100
)
2,400
(7,400
)
(62,100
)
78,000
Belgium
9,200
(12,600
)
(7,300
)
(13,200
)
(20,500
)
(1,900
)
(13,600
)
(36,000
)
30,600
Switzerland(v)
10,200
(9,200
)
(5,600
)
(1,400
)
(7,000
)
(5,500
)
(1,600
)
(14,100
)
15,500
Ireland
5,000
2,200
(1,100
)
8,600
7,500
3,000
(1,100
)
9,400
6,500
Poland
24,500
7,100
7,000
4,200
11,200
11,700
1,800
24,700
1,800
Slovakia
1,500
—
700
(500
)
200
1,100
500
1,800
—
Total continuing operations
162,200
(18,100
)
(6,300
)
(59,400
)
(65,700
)
10,800
(21,400
)
(76,300
)
132,400
Organic Change
Summary:
U.K.
111,800
(5,600
)
—
(57,100
)
(57,100
)
2,400
(7,400
)
(62,100
)
78,000
Belgium
9,200
(12,600
)
(7,300
)
(13,200
)
(20,500
)
(1,900
)
(13,600
)
(36,000
)
30,600
Other Europe
41,200
100
1,000
10,900
11,900
10,300
(400
)
21,800
23,800
Total Organic Change
162,200
(18,100
)
(6,300
)
(59,400
)
(65,700
)
10,800
(21,400
)
(76,300
)
132,400
Q3 2019
Adjustments:
Q3 2019 Adjustment - Poland
—
(4,600
)
—
(1,900
)
(1,900
)
(3,700
)
(1,800
)
(7,400
)
100
Total adjustments
—
(4,600
)
—
(1,900
)
(1,900
)
(3,700
)
(1,800
)
(7,400
)
100
Footnotes for Consolidated Operating
Data and Subscriber Variance Tables
(i)
We have approximately 27,600 “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.
(ii)
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 72,200 subscribers who have requested and received this
service.
(iii)
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 176,100 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 September 30, 2019, our mobile subscriber count included
454,100 and 297,400 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
September 30, 2019, Switzerland’s partner networks account for
121,400 Cable Customer Relationships, 300,600 RGUs, which include
106,600 Enhanced Video Subscribers, 109,200 Internet Subscribers,
and 84,800 Telephony Subscribers. Subscribers to our enhanced video
services provided over 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 Belgium, Telenet leases a portion of its network under a
long-term finance 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
Excluding Switzerland
2
The indicated growth rates are rebased for
acquisitions, dispositions, FX and other items that impact the
comparability of our year-over-year results. Please see Rebase
Information for information on rebased growth.
3
On February 27, 2019, we entered into a
share purchase agreement (the SPA) to sell our operations in
Switzerland (UPC Switzerland) to Sunrise Communications Group AG
(Sunrise), which was amended on October 22, 2019. The amended SPA
provides our company the right to terminate the SPA at any time,
except if we have requested Sunrise to convene a new Extraordinary
General Meeting (EGM) to approve an associated capital increase and
entitles Sunrise to terminate the SPA at any time after November
11, 2019, except if we have requested Sunrise to convene a new EGM.
In light of the fact that the SPA remains in effect as of the date
of this release and the fact that we originally provided our 2019
guidance for OCF, Adjusted FCF and property and equipment additions
excluding our operations in Switzerland, we are continuing to
provide certain metrics on an "excluding Switzerland" basis. The
term "excluding Switzerland" represents our continuing operations
excluding UPC Switzerland and certain holding companies within the
UPC Holding borrowing group (together, the "Switzerland Disposal
Group"), including the UPC Holding borrowing group’s existing
senior and senior secured notes (the "UPC Notes"), associated
derivatives and certain other debt items.
4
Our Adjusted FCF (excluding Switzerland)
and our 2019 guidance targets for Adjusted FCF (excluding
Switzerland) are presented on a pro forma basis that gives effect
to (i) the removal of the Adjusted FCF of the Switzerland Disposal
Group, including 100% of the interest and related derivative
payments made during the applicable periods associated with the UPC
Notes, (ii) the addition of our estimate of interest and related
derivative payments that were made by UPC Holding associated with
our continuing operations in Poland and Slovakia during the
respective period and (iii) the net cash flows that we would have
received from transitional services agreements if the sale of the
Discontinued Operations and the Switzerland Disposal Group had
occurred on January 1, 2019. Our 2019 guidance targets for Adjusted
FCF (including Switzerland) is presented on a pro forma basis that
gives effect to (a) the removal of our estimate of interest and
related derivative payments that were made by the UPC Holding
borrowing group associated with its discontinued operations during
the applicable periods and (b) the net cash flows that we would
have received from transitional services agreements if the sale of
the Discontinued Operations had occurred on January 1, 2019.
A reconciliation of our 2019 guidance targets for Adjusted FCF 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.
5
Original P&E and FCF guidance, which
excludes Switzerland, based on EUR/USD 1.13; GBP/USD 1.30. Updated
guidance, which includes Switzerland, based on EUR/USD 1.12;
GBP/USD 1.26.
6
Liquidity refers to cash and cash
equivalents plus the maximum undrawn commitments under subsidiary
borrowing facilities, without regard to covenant compliance
calculations.
7
Includes subscription and non-subscription
revenue. For additional information regarding how we define our
revenue categories, see note 17 to the condensed consolidated
financial statements included in our 10-Q.
8
Total B2B includes subscription (SOHO) and
non-subscription revenue. B2B and SOHO growth rates include upsell
from our residential businesses.
9
Our gross and net debt ratios are defined
as total debt and net debt, respectively, divided by 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 and Lions Gate Entertainment Corp. For
additional information, see note 5 to the condensed consolidated
financial statements included in our 10-Q. The following table
details the calculation of our consolidated debt and net debt to
annualized consolidated OCF ratios as of and for the quarter ended
September 30, 2019:
As of and for the
quarter ended
September 30, 2019
in millions, except
ratios
Consolidated Debt to Annualized
Consolidated OCF:
Debt and finance lease obligations before
deferred financing costs, discounts and premiums
$
27,562.5
Principal related projected derivative
cash payments
(1,576.5
)
ITV Collar Loan
(1,330.2
)
Lionsgate Collar Loan
(55.3
)
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
24,600.5
Annualized quarterly OCF
$
4,846.8
Consolidated debt to annualized
consolidated OCF ratio
5.1
Consolidated Net Debt to Annualized
Consolidated OCF:
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
24,600.5
Cash and cash equivalents
(7,382.0
)
Adjusted net debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
17,218.5
Annualized quarterly OCF
$
4,846.8
Consolidated net debt to annualized
consolidated OCF ratio
3.6
10
For purposes of calculating our average
tenor, total third-party debt excludes vendor financing.
11
Our aggregate unused borrowing capacity of
$2.5 billion represents the maximum undrawn commitments under the
applicable facilities of our continuing operations without regard
to covenant compliance calculations. Upon completion of the
relevant September 30, 2019 compliance reporting requirements for
our credit facilities, and assuming no further changes from
quarter-end borrowing levels, we anticipate that the full unused
borrowing capacity of our continuing operations will continue to be
available, with the exception of the VM Credit Facilities, which
will have borrowing capacity limited to ÂŁ592.1 million ($727.7
million), with no additional restriction to loan or distribute. Our
above expectations do not consider any actual or potential changes
to our borrowing levels or any amounts loaned or distributed
subsequent to September 30, 2019.
Glossary
10-Q or 10-K: As used herein, the
terms 10-Q and 10-K refer to our most recent quarterly or annual
report as filed with the Securities and Exchange Commission on Form
10-Q or Form 10-K, as applicable.
Adjusted Free Cash Flow (FCF): 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 finance 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 a reconciliation of our net cash
provided by operating activities from continuing operations to
Adjusted Free Cash Flow for the indicated periods. In addition, in
order to provide information regarding our Adjusted Free Cash Flow
that excludes the Discontinued Operations and the Switzerland
Disposal Group, we also present Adjusted Free Cash Flow on a pro
forma basis for the three and nine months ended September 30, 2019
as if the sale of the Discontinued Operations and the Switzerland
Disposal Group had been completed on January 1, 2019.
Three months ended September
30,
Nine months ended September
30,
2019
2018
2019
2018
in millions
Continuing operations:
Net cash provided by operating
activities
$
591.7
$
579.4
$
2,220.2
$
2,707.5
Cash payments for direct acquisition and
disposition costs
5.5
9.2
23.5
14.0
Expenses financed by an
intermediary(i)
553.1
507.4
1,639.2
1,423.8
Capital expenditures, net
(267.2
)
(343.7
)
(900.1
)
(1,138.5
)
Principal payments on amounts financed by
vendors and intermediaries
(928.8
)
(569.0
)
(3,069.2
)
(3,918.0
)
Principal payments on certain finance
leases
(25.2
)
(21.4
)
(57.0
)
(59.0
)
Adjusted FCF
(70.9
)
$
161.9
(143.4
)
$
(970.2
)
Pro forma adjustments related to the sale
of the Discontinued Operations and the Switzerland Disposal
Group:
Switzerland Disposal Group(ii)
45.4
(60.5
)
Interest and derivative payments(iii)
(24.6
)
(47.1
)
Transitional services agreements(iv)
33.9
154.9
Pro forma Adjusted FCF(v)
$
(16.2
)
$
(96.1
)
_______________
(i)
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.
(ii)
The Switzerland Disposal Group is included
within our Continuing Operations Adjusted FCF. These pro forma
adjustments represent the removal of the Adjusted FCF of the
Switzerland Disposal Group, including 100% of the interest and
related derivative payments made during the applicable period
associated with the UPC Notes.
(iii)
Represents the addition of the estimated
interest and related derivative payments made by UPC Holding
associated with our continuing UPC operations in Poland and
Slovakia during the applicable period. These estimated payments are
calculated based on Poland and Slovakia’s pro rata share of UPC
Holding's OCF and UPC Holding's aggregate interest and derivative
payments during the applicable period. Although we believe that
these estimated payments represent a reasonable estimate of the
annual interest and related derivative payments that will occur in
relation to the continuing operations in Poland and Slovakia, no
assurance can be given that the actual interest and derivative
payments will be equivalent to the amounts presented. No pro forma
adjustments were required with respect to Unitymedia's interest and
derivative payments as substantially all of Unitymedia’s debt and
related derivative instruments were direct obligations of entities
within the Vodafone Disposal Group. As a result, the interest and
related derivative payments associated with such debt and
derivative instruments of Unitymedia are included in discontinued
operations.
(iv)
Represents our preliminary estimate of the
net cash flows that we would have received from transitional
services agreements if the sale of the Discontinued Operations and
the Switzerland Disposal Group had occurred on January 1, 2019. The
estimated net cash flows are based on the estimated revenue that we
expect to recognize from our transitional services agreements
during the first 12 months following the completion of the sale of
the Discontinued Operations and the Switzerland Disposal Group,
less the estimated incremental costs that we expect to incur to
provide such transitional services. As a result, the pro forma
adjustments during the three and nine months ended September 30,
2019 include $12.2 million and $88.2 million related to our
discontinued operations in Germany, Hungary, Romania and the Czech
Republic, respectively, $21.7 million and $65.7 million related to
the Switzerland Disposal Group, respectively, and nil and $1.0
million related to our discontinued DTH business, respectively.
(v)
Represents the Adjusted FCF that we
estimate would have resulted if the sale of the Discontinued
Operations and the Switzerland Disposal Group had been completed on
January 1, 2019. Actual amounts may differ from the amounts assumed
for purposes of this pro forma calculation. For example, our Pro
forma Adjusted FCF does not include any future benefits related to
reductions in our corporate costs as a result of our operating
model rationalization or any other potential future operating or
capital cost reductions attributable to our continuing or
discontinued operations.
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 finance 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
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 for our
continuing operations is presented in the following table:
Three months ended
Nine months ended
September 30,
September 30,
2019
2018
2019
2018
in millions
Operating income
$
208.8
$
205.2
$
463.0
$
586.9
Share-based compensation expense
74.0
42.8
228.3
131.0
Depreciation and amortization
892.9
929.4
2,754.3
2,934.1
Impairment, restructuring and other
operating items, net
36.0
107.3
140.1
197.9
Total OCF
$
1,211.7
$
1,284.7
$
3,585.7
$
3,849.9
OCF margin: calculated by dividing
OCF by total revenue for the applicable period.
OFCF: As used herein, Operating
Free Cash Flow or "OFCF" represents OCF less property and equipment
additions. OFCF is an additional metric that we use to measure the
performance of our operations after considering the level of
property and equipment additions incurred during the period. For
limitations of OFCF, see the definition of OCF.
A reconciliation of our total OCF to total OFCF for our
continuing operations is presented in the following table:
Three months ended
Nine months ended
September 30,
September 30,
2019
2018
2019
2018
in millions
Total OCF
$
1,211.7
$
1,284.7
$
3,585.7
$
3,849.9
Property and equipment additions
(658.8
)
(887.9
)
(2,040.1
)
(2,734.3
)
Total OFCF
$
552.9
$
396.8
$
1,545.6
$
1,115.6
OFCF margin: OFCF margin is
calculated by dividing OFCF by total revenue for the applicable
period.
Property and equipment additions (P&E
Additions): includes capital expenditures on an accrual
basis, amounts financed under vendor financing or finance 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 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.
U.S. GAAP: Accounting principles
generally accepted in the United States.
YoY: Year-over-year.
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version on businesswire.com: https://www.businesswire.com/news/home/20191106006093/en/
Investor Relations Matt Coates +44 20 8483 6333 John Rea
+1 303 220 4238 Stefan Halters +44 20 8483 6211
Corporate Communications Molly Bruce +1 303 220 4202 Matt
Beake +44 20 8483 6428
Corporate Website www.libertyglobal.com
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