Giga-ready networks proving resilient amidst COVID-19 usage
surge
Repurchased nearly $500 million of shares through the end of
April
Q1 operating income up 166% year-over-year to $280.6
million
Liberty Global plc today announced its Q1 2020 financial
results. Our former operations in Austria, Germany, Hungary,
Romania and the Czech Republic, along with our DTH business
(collectively, the "Discontinued Operations") are presented as
discontinued operations for the three months ended March 31, 2019.
Unless otherwise indicated, the information in this release relates
only to our continuing operations.
CEO Mike Fries stated, "Along with the rest of the world, we’ve
been focused in recent weeks on tackling the challenges associated
with the COVID-19 pandemic. We have been primarily concerned with
ensuring the health and safety of our employees and providing
robust and reliable connectivity for our customers. I am happy to
report that our broadband networks have readily absorbed increases
exceeding 20% in downstream and 50% in upstream bandwidth across
our footprint. Our recent investments in infrastructure, gigabit
speeds and connectivity products have proven invaluable to our
customers.
In addition to delivering critical telecommunications services,
we have launched a number of initiatives aimed at enhancing our
customers’ experience during these difficult times. At Virgin
Media, for example, we have provided free kids programming, greater
connectivity to critical public services such as NHS hospitals and
bigger data packages for our mobile customers. On the continent,
Telenet and UPC have launched similar plans ranging from free
broadband speed increases to improved connectivity for nursing care
facilities so that families can stay in touch with their loved ones
virtually. Connectivity is at the heart of our company and we
remain unwavering in our commitment to providing our customers and
communities with the very best broadband experience possible,
especially now.
As a critical service provider with limited exposure to those
sectors of the economy most impacted by the pandemic, our Q1
results were broadly in-line with our expectations. At Virgin
Media, we held our fixed-line customer base largely flat while
increasing customer ARPU 1.2%. Virgin also delivered a record
72,000 postpaid mobile additions in Q1, bringing our FMC
penetration to 22%, up 250 basis point from Q1’19. This result was
powered by our Oomph! FMC bundles which feature super-fast
broadband speeds combined with attractive mobile offers. We saw
continued progress at UPC Switzerland as our fixed-line customer
losses nearly halved year over year and our FMC penetration
increased to 21%, up from 15% twelve months ago. Our Swiss
operation continues to track to plan despite increased competition
in the market and we remain particularly encouraged by the free
cash flow profile of the business. And in Belgium, we experienced a
similar trend with a small decline in fixed customers offset by an
increase in customer ARPU. On the mobile front, Telenet added 6,000
mobile subscribers in the quarter, pushing FMC penetration to 45%,
up from 42% in Q1 2019.
We are still assessing the medium-term impact from the COVID-19
crisis on our financial guidance and expect to update investors on
our second quarter earnings call. For now, however, we remain
encouraged by our operating prospects and do not currently see the
need to change or suspend our full-year guidance. Meanwhile, our
balance sheet remains in great shape and we have over $10 billion
of liquidity. We did remain active on share buybacks, spending
nearly $500 million from mid-February until the end of April,
during which time we acquired nearly 29 million shares at an
average price of approximately $16.75."
Q1 Highlights
- Q1 reported revenue growth of 0.3%; rebased1 revenue decrease
of 0.3%
- Q1 operating income increased 166% YoY to $280.6 million
- Q1 rebased1 OCF2 declined 3.6% to $1,150.3 million
- Q1 property & equipment additions spend at 22.8% of revenue
as compared to 24.4% in Q1 2019
- Built 123,000 new premises during Q1, including 93,000 new
premises in the U.K. & Ireland
- Solid balance sheet with $10.3 billion of liquidity3
- Comprising $5.4 billion of cash, $2.0 billion of investments
held under Separately Managed Accounts (SMAs) and $2.9 billion of
unused borrowing capacity
- Net leverage4 of 3.7x
- Fully-swapped borrowing cost of 4.1% on debt balance of $26.9
billion
- Repurchased nearly $500 million of stock through April 30,
2020
Liberty Global (continuing
operations)
Q1 2020
Q1 2019
YoY Growth
(reported)
YoY Growth
(rebased)
Customers
Organic Customer Losses
(18,900
)
(1,700
)
(1,011.8
%)
Financial (in
millions, except percentages)
Revenue
$
2,875.8
$
2,868.0
0.3
%
(0.3
%)
Operating income
$
280.6
$
105.5
166.0
%
OCF
$
1,150.3
$
1,183.3
(2.8
%)
(3.6
%)
P&E additions
$
654.4
$
698.6
(6.3
%)
OFCF
$
495.9
$
484.7
2.3
%
(2.4
%)
Cash provided by operating activities
$
449.8
$
306.3
46.8
%
Cash used by investing activities
$
(2,349.2
)
$
(367.7
)
(538.9
)%
Cash used by financing activities
$
(783.2
)
$
(737.5
)
(6.2
)%
Adjusted FCF(i)
$
(317.0
)
$
(558.7
)
43.3
%
(i)
Adjusted FCF for the three months ended
March 31, 2019 is presented on a pro forma basis, which 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. For additional details, see the
information and reconciliation included within the Glossary.
Customer Growth
Three months ended
March 31,
2020
2019
Organic customer net additions (losses)
by market
U.K./Ireland
(1,100
)
25,500
Belgium
(7,500
)
(15,200
)
Switzerland
(16,400
)
(23,600
)
CEE (Poland and Slovakia)
6,100
11,600
Total
(18,900
)
(1,700
)
- Customer Relationships: During Q1
we lost 19,000 customer relationships, as compared to the 2,000
customer relationships we lost in the prior-year period
- U.K./Ireland: U.K./Ireland lost
1,000 customer relationships in Q1, as growth from new build areas
was offset by attrition in the non-Lightning footprint
- Belgium: Q1 losses of 8,000
customer relationships was a significant YoY improvement as
compared to a loss of 15,000 in Q1 2019, primarily driven by
successful quad-play bundles
- Switzerland: Customer attrition of
16,000 in Q1 which was a YoY improvement as compared to a loss of
24,000 in Q1 2019, as commercial momentum improved but still
adversely impacted by competitive market conditions
- CEE (Poland and Slovakia): CEE
added 6,000 customer relationships in Q1, as compared to 12,000 in
Q1 2019 as an increased focus on front-book ARPU led to lower gross
additions
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)
March 31,
Revenue
2020
2019
Reported %
Rebased %
in millions, except %
amounts
U.K./Ireland
$
1,620.6
$
1,661.3
(2.4
)
(0.6
)
Belgium
718.1
711.9
0.9
(0.4
)
Switzerland
316.8
316.0
0.3
(2.7
)
CEE
119.1
119.1
—
3.5
Central and Corporate
101.2
60.7
66.7
8.4
Intersegment eliminations
—
(1.0
)
N.M.
N.M.
Total
$
2,875.8
$
2,868.0
0.3
(0.3
)
N.M. - Not Meaningful
- Reported revenue for the three months ended March 31, 2020
increased 0.3% YoY
- The increase 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 decline of 0.3% YoY in Q1 included:
- Favorable increase of $1.7 million in Switzerland due to the
acceleration of revenue from our distribution partner for the
broadcast of ice hockey. Switzerland's ice hockey league has been
cancelled as a result of the COVID-19 pandemic, which resulted in
the prepaid amounts for the associated sports rights that were
previously scheduled to be expensed during the second quarter of
2020 to be recognized during the first quarter of 2020.
Accordingly, $1.7 million of associated revenue that would have
been recorded in April 2020 has been recognized during the first
quarter of 2020
Q1 2020 Rebased Revenue Growth - Segment
Highlights
- U.K./Ireland: Rebased revenue
decreased 0.6% YoY in Q1, with an increase in subscription revenue
across the business offset by declines in both mobile and B2B
non-subscription revenue
- Belgium: Rebased revenue declined
0.4% YoY in Q1 driven by an increase in our cable and mobile
subscription revenue due to continued momentum related to our FMC
bundles in both the residential and the business segments and the
benefit of the August 2019 rate adjustments, offset by both lower
other revenue and business services revenue, mainly impacted by
COVID-19
- Switzerland: Rebased revenue
declined 2.7% YoY in Q1 primarily due to the net effect of lower
consumer subscription revenue as a result of 3P volume losses,
partially offset by (i) continued volume related mobile service
revenue growth and (ii) higher handset sales
- CEE (Poland and Slovakia): Rebased
revenue grew 3.5% YoY in Q1 due to an increase in residential cable
subscription revenue driven by new build areas and growth in
B2B
- Central and Corporate: Rebased
revenue increased 8.4% YoY in Q1 primarily due to an increase in
CPE sales to the VodafoneZiggo JV
Operating Income
- Operating income was $280.6 million and $105.5 million in Q1
2020 and Q1 2019, respectively, representing an increase of 166%
YoY
- The increase in operating income primarily resulted from the
net effect of (i) a decrease in depreciation and amortization
expense, (ii) lower impairment, restructuring and other operating
items, net, (iii) lower OCF, as further described below, and (iv) a
decrease in share-based compensation expense
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
2020
2019
Reported %
Rebased %
in millions, except %
amounts
U.K./Ireland
$
655.4
$
692.2
(5.3
)
(3.5
)
Belgium
331.6
339.0
(2.2
)
0.6
Switzerland
134.1
156.3
(14.2
)
(16.0
)
CEE
54.3
53.7
1.1
4.8
Central and Corporate
(25.1
)
(59.3
)
57.7
5.4
Intersegment eliminations
—
1.4
N.M.
N.M.
Total
$
1,150.3
$
1,183.3
(2.8
)
(3.6
)
N.M. - Not Meaningful
- Reported OCF for the three months ended March 31, 2020
decreased 2.8% YoY
- This decrease was primarily driven by (i) an organic OCF
decline and (ii) the aforementioned negative impact of FX
movements
- Our rebased OCF decline of 3.6% YoY in Q1 included:
- The aforementioned favorable impact of a certain revenue item,
as discussed in the "Revenue Highlights" section above
- The following current year impacts:
- A $13.2 million net unfavorable impact of the acceleration of
certain costs for sports rights as a result of the COVID-19
pandemic. In this respect, certain sports leagues in Belgium and
Switzerland have been or are expected to be cancelled. Accordingly,
$14.9 million of aggregate prepaid amounts for the associated
sports rights that were previously scheduled to be expensed during
the second and third quarters of 2020 have been recognized during
the first quarter of 2020. This increase in costs was only
partially offset by the aforementioned associated $1.7 million
increase in revenue in Switzerland. The acceleration in sports
rights costs during Q1 will have no impact on our full-year 2020
OCF
- Unfavorable network tax increase of $10.0 million 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
Q1 2020 Rebased Operating Cash Flow Growth
- Segment Highlights
- U.K./Ireland: Rebased OCF decline
of 3.5% YoY in Q1 reflects the aforementioned revenue performance
and an increase in our cost base due to (i) a $10.0 million net
increase in network taxes and (ii) higher mobile data and
programming costs
- Belgium: Rebased OCF growth of
0.6% YoY in Q1, largely driven by the Medialaan MVNO contract loss,
certain regulatory headwinds and a decrease in our cost base due to
the net effect of (i) an increase in programming and copyright
costs, (ii) lower sales and marketing expenses and (iii) continued
tight cost control
- Switzerland: Rebased OCF decline
of 16.0% YoY in Q1, mainly due to (i) higher interconnect and
mobile handset costs and (ii) the aforementioned loss of
residential cable subscription revenue
- CEE (Poland and Slovakia): Rebased
Segment OCF growth of 4.8% YoY in Q1, largely driven by the
aforementioned increase in residential cable subscription
revenue
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 both a reported
and rebased basis:
Three months ended
Increase/(decrease)
March 31,
OFCF
2020
2019
Reported %
Rebased %
in millions, except %
amounts
U.K./Ireland
$
308.8
$
296.9
4.0
5.8
Belgium
190.0
197.3
(3.7
)
(1.2
)
Switzerland
64.9
97.7
(33.6
)
(34.5
)
CEE
35.4
32.0
10.6
15.3
Central and Corporate
(103.2
)
(140.6
)
26.6
2.0
Intersegment eliminations
—
1.4
N.M.
N.M.
Total
$
495.9
$
484.7
2.3
(2.4
)
N.M. - Not Meaningful
Net Earnings Attributable to Liberty Global
Shareholders
- Net earnings attributable to Liberty Global shareholders was
$949.8 million and $7.0 million for the three months ended March
31, 2020 and 2019, respectively
Leverage and Liquidity
- Total principal amount of debt and
finance leases: $27.5 billion
- Leverage ratios4: At March 31,
2020, our adjusted gross and net leverage ratios were 5.2x and
3.7x, respectively
- Average debt tenor5: Over 7 years,
with ~71% not due until 2026 or thereafter
- Borrowing costs: Blended
fully-swapped borrowing cost of our debt was 4.1%
- Liquidity3: $10.3 billion,
including (i) $5.4 billion of cash at March 31, 2020, (ii) $2.0
billion of investments held under SMAs and (iii) $2.9 billion of
aggregate unused borrowing capacity6 under our credit
facilities
Forward-Looking Statements and Disclaimer
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements with respect to our strategies, future
growth prospects and opportunities; expectations with respect to
continued network resiliency amidst the COVID-19 usage surge;
expectations with respect to our share repurchase plan; expected
launch of broadband speed increases and connectivity and
entertainment enhancements; 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 potential impact of the recent outbreak of COVID-19 on our
company; the effects of changes in laws or regulation; the effects
of the U.K.'s exit from the E.U.; 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.
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. For more information, please visit
www.libertyglobal.com.
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 2020, we have
adjusted our historical revenue, OCF and OFCF for the three months
ended March 31, 2019 to (i) include the pre-acquisition revenue,
OCF and P&E additions of entities acquired during 2019 in our
rebased amounts for the three months ended March 31, 2019 to the
same extent that the revenue, OCF and P&E additions of these
entities are included in our results for the three months ended
March 31, 2020, (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 months ended March 31, 2020
and (iii) reflect the translation of our rebased amounts for the
three months ended March 31, 2019 at the applicable average foreign
currency exchange rates that were used to translate our results for
the three months ended March 31, 2020. We have reflected the
revenue, OCF and P&E additions of these acquired entities in
our 2019 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 2019
amounts to derive our rebased growth rates:
Three months ended March 31,
2019
Revenue
OCF
OFCF
in millions
Acquisitions
$
31.3
$
0.9
$
0.9
Dispositions(i)
35.5
33.1
33.1
Foreign Currency
(50.9
)
(23.4
)
(10.3
)
Total increase
$
15.9
$
10.6
$
23.7
(i)
Relates to rebase adjustments for
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 2020 and 2019 periods for those services that are
deemed to be temporary in nature.
Liquidity(3)
The following table details the U.S. dollar equivalent balances
of our liquidity position(i) at March 31, 2020, which includes our
(i) cash and cash equivalents, (ii) investments held under SMAs and
(iii) unused borrowing capacity at March 31, 2020:
Cash
Unused
and Cash
Borrowing
Total
Equivalents
SMAs(ii)
Capacity(iii)
Liquidity
in millions
Liberty Global and unrestricted
subsidiaries
$
5,240.0
$
1,974.0
$
—
$
7,214.0
Virgin Media(iv)
26.2
—
1,239.8
1,266.0
UPC Holding
23.5
—
1,086.2
1,109.7
Telenet
150.8
—
554.0
704.8
Total
$
5,440.5
$
1,974.0
$
2,880.0
$
10,294.5
(i)
Except as otherwise indicated, the amounts
reported in the table include the named entity and its
subsidiaries.
(ii)
Represents investments held under SMAs
which are maintained by investment managers acting as agents on our
behalf.
(iii)
Our aggregate unused borrowing capacity of
$2.9 billion represents the maximum undrawn commitments under the
applicable facilities without regard to covenant compliance
calculations or other conditions precedent to borrowing.
(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.
Summary of Debt & Finance Lease Obligations
The following table(i) details the U.S. dollar equivalent
balances of the outstanding principal amount of our debt and
finance lease obligations at March 31, 2020:
Finance
Debt & Finance
Lease
Lease
Debt(ii)
Obligations
Obligations
in millions
Liberty Global and unrestricted
subsidiaries
$
1,680.2
$
49.1
$
1,729.3
Virgin Media
15,322.4
63.7
15,386.1
UPC Holding
4,199.0
21.1
4,220.1
Telenet
5,684.7
446.8
6,131.5
Total
$
26,886.3
$
580.7
$
27,467.0
(i)
Except as otherwise indicated, the amounts
reported in the table include the named entity and its
subsidiaries.
(ii)
Debt amounts for UPC Holding include notes
issued by special purpose entities that are consolidated by UPC
Holding.
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
March 31,
2020
2019
in millions, except %
amounts
Customer premises equipment
$
147.5
$
228.6
New build & upgrade
159.5
142.4
Capacity
69.7
72.6
Baseline
137.6
128.4
Product & enablers
140.1
126.6
Total P&E additions
654.4
698.6
Reconciliation of P&E additions to
capital expenditures:
Assets acquired under capital-related
vendor financing arrangements(i)
(370.9
)
(508.9
)
Assets acquired under capital leases
(11.1
)
(12.2
)
Changes in current liabilities related to
capital expenditures
75.4
153.8
Total capital expenditures, net(ii)
$
347.8
$
331.3
Capital expenditures, net:
Third-party payments
$
348.3
$
371.6
Proceeds received for transfers to related
parties(iii)
(0.5
)
(40.3
)
Total capital expenditures, net
$
347.8
$
331.3
P&E additions as % of revenue
22.8
%
24.4
%
(i)
Amounts exclude related VAT of $63.6
million and $84.8 million during the three months ended March 31,
2020 and 2019, respectively, that were also financed 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, as applicable.
ARPU per Cable Customer Relationship
The following table provides ARPU per cable customer
relationship and percentage change from period to period on both a
reported and rebased basis for the indicated periods:
Three months ended March
31,
Increase/(decrease)
2020
2019
Reported %
Rebased %
Liberty Global
$
59.59
$
60.20
(1.0
%)
0.6
%
U.K. & Ireland (Virgin Media)
£
51.97
£
51.36
1.2
%
1.2
%
Belgium (Telenet)
€
58.34
€
57.27
1.9
%
1.9
%
UPC
€
37.01
€
37.01
—
%
(3.8
%)
Mobile ARPU
The following tables provide ARPU per mobile subscriber and
percentage change from period to period on both a reported and
rebased basis for the indicated periods:
ARPU per Mobile
Subscriber
Three months ended March
31,
Increase/(decrease)
2020
2019
Reported %
Rebased %
Liberty Global:
Including interconnect revenue
$
16.74
$
16.27
2.9
%
0.5
%
Excluding interconnect revenue
$
13.74
$
13.97
(1.6
%)
(1.3
%)
Consolidated Operating Data —
March 31, 2020
Video
Homes
Passed
Fixed-Line
Customer
Relationships
Internet
Subscribers(i)
Basic Video
Subscribers(ii)
Enhanced Video
Subscribers
Total
Video
Telephony
Subscribers(iii)
Total
RGUs
Total Mobile
Subscribers(iv)
U.K.
14,981,500
5,516,500
5,279,200
—
3,621,800
3,621,800
4,579,100
13,480,100
3,220,400
Belgium
3,394,200
2,064,600
1,672,500
147,400
1,704,600
1,852,000
1,206,300
4,730,800
2,814,800
Switzerland(v)
2,382,200
1,011,900
651,900
399,300
586,700
986,000
502,300
2,140,200
213,200
Ireland
938,600
435,900
380,500
—
289,300
289,300
325,500
995,300
98,000
Poland
3,562,500
1,490,000
1,241,300
207,300
1,068,800
1,276,100
667,200
3,184,600
16,200
Slovakia
620,100
192,900
141,800
29,500
142,100
171,600
87,900
401,300
—
Total
25,879,100
10,711,800
9,367,200
783,500
7,413,300
8,196,800
7,368,300
24,932,300
6,362,600
Subscriber Variance Table —
March 31, 2020 vs. December 31, 2019
Video
Homes
Passed
Fixed-Line
Customer
Relationships
Internet
Subscribers(ii)
Basic Video
Subscribers(i)
Enhanced Video
Subscribers
Total
Video
Telephony
Subscribers(iii)
Total
RGUs
Total Mobile
Subscribers(iv)
Organic Change Summary:
U.K.
87,100
(1,600
)
8,200
—
(65,600
)
(65,600
)
(26,400
)
(83,800
)
40,900
Belgium
9,000
(7,500
)
8,100
(17,300
)
2,700
(14,600
)
(6,200
)
(12,700
)
6,400
Switzerland(v)
9,400
(16,400
)
(9,500
)
(8,900
)
(6,500
)
(15,400
)
(4,200
)
(29,100
)
12,500
Ireland
3,600
500
2,300
—
8,900
8,900
(9,600
)
1,600
400
Poland
14,700
6,200
11,700
10,700
1,800
12,500
(7,200
)
17,000
7,200
Slovakia
1,100
(100
)
1,200
700
(400
)
300
800
2,300
—
Total organic change
124,900
(18,900
)
22,000
(14,800
)
(59,100
)
(73,900
)
(52,800
)
(104,700
)
67,400
Q1 2020 Adjustments:
Switzerland
—
(10,500
)
—
(10,500
)
—
(10,500
)
—
(10,500
)
—
Ireland
(4,900
)
—
—
—
—
—
—
—
—
Total adjustments
(4,900
)
(10,500
)
—
(10,500
)
—
(10,500
)
—
(10,500
)
—
Footnotes for Consolidated Operating Data and Subscriber
Variance Tables
(i)
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 68,900 subscribers who have requested and received this
service
(ii)
We have approximately 28,600 “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.
(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 189,300 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, 2020, our mobile subscriber count included 427,200
and 233,400 prepaid mobile subscribers in Belgium and the U.K.,
respectively.
(v)
Pursuant to service agreements,
Switzerland offers broadband internet, enhanced video 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, 2020, Switzerland’s partner networks account for 116,000
Fixed-Line Customer Relationships, 295,300 RGUs, which include
107,800 Internet Subscribers, 102,800 Enhanced Video Subscribers
and 84,700 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
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.
2
During the fourth quarter of 2019, we
changed the presentation of our consolidated reportable segments
with respect to certain operating costs related to our
centrally-managed technology and innovation function. For
additional information and detail of the impact to our consolidated
reportable segments, see the Appendix.
3
Liquidity refers to cash and cash
equivalents and investments held under separately managed accounts
plus the maximum undrawn commitments under subsidiary borrowing
facilities, without regard to covenant compliance calculations or
other conditions precedent to borrowing.
4
Our debt and net debt ratios are defined
as total debt and net debt, respectively, divided by OCF for the
last twelve months (LTM OCF). Prior to December 31, 2019, we
presented our debt and net debt ratios under an annualized OCF
approach using the OCF from the most recent quarter (LQA OCF). For
comparative purposes we have included both the debt and net debt
ratios under the LQA method below. Net debt is defined as total
debt less cash and cash equivalents and investments under
separately managed accounts. 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 on our investments, see note 7 to the
condensed consolidated financial statements included in our 10-Q.
The following table details the calculation of our debt and net
debt to LTM OCF and LQA OCF ratios as of March 31, 2020 (in
millions, except ratios):
As of and for the twelve months ended
March 31, 2020
Debt to LTM OCF:
Debt and finance lease obligations before
deferred financing costs, discounts and premiums
$
27,467.0
Principal related projected derivative
cash payments
(962.7
)
ITV Collar Loan
(1,341.9
)
Lionsgate Collar Loan
(55.3
)
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
25,107.1
LTM OCF
$
4,826.6
Debt to LTM OCF ratio
5.2
Net Debt to LTM OCF:
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
25,107.1
Cash and cash equivalents and investments
held under separately managed accounts
(7,414.5
)
Adjusted net debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
17,692.6
LTM OCF
$
4,826.6
Net debt to LTM OCF ratio
3.7
As of and for the quarter ended March 31,
2020
Debt & Net Debt to LQA OCF:
LQA OCF
$
4,601.2
Debt to LQA OCF
5.5
Net debt to LQA OCF
3.8
5
For purposes of calculating our average
tenor, total third-party debt excludes vendor financing.
6
Our aggregate unused borrowing capacity of
$2.9 billion represents the maximum undrawn commitments under the
applicable facilities without regard to covenant compliance
calculations or other conditions precedent to borrowing. Upon
completion of the relevant March 31, 2020 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 will continue to be available, with
the exception of the VM Credit Facilities, which will have
borrowing capacity limited to £761.7 million ($944.3 million), and
the UPC Holding Bank Facility, which will have borrowing capacity
limited to €652.0 million ($715.3 million), each 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 March 31, 2020.
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 that we
assumed in connection with certain acquisitions), with each item
excluding any cash provided or used by our Discontinued Operations,
as applicable. 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, we also present Adjusted
Free Cash Flow on a pro forma basis for the three months ended
March 31, 2019 as if the sale of the Discontinued Operations had
been completed on January 1, 2019.
Three months ended
March 31,
2020
2019
in millions
Continuing operations:
Net cash provided by operating
activities
$
449.8
$
306.3
Cash payments for direct acquisition and
disposition costs
0.5
12.4
Expenses financed by an
intermediary(i)
722.8
564.0
Capital expenditures, net
(347.8
)
(331.3
)
Principal payments on amounts financed by
vendors and intermediaries
(1,121.0
)
(1,162.8
)
Principal payments on certain finance
leases
(21.3
)
(13.1
)
Adjusted FCF
$
(317.0
)
(624.5
)
Pro forma adjustments related to the sale
of the Discontinued Operations:
Interest and derivative payments(ii)
26.9
Transitional services agreements(iii)
38.9
Pro forma Adjusted FCF(iv)
$
(558.7
)
(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)
Represents the estimated interest and
related derivative payments made by UPC Holding associated with our
discontinued UPC Holding operations in Hungary, Romania and the
Czech Republic during the applicable period. These estimated
payments are calculated based on Hungary, Romania and the Czech
Republic’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 this adjustment to interest and related
derivative payments results in a reasonable estimate of the annual
ongoing interest and related derivative payments that will occur in
relation to the continuing UPC Holding operations, 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 the entities
being disposed. As a result, the interest and related derivative
payments associated with such debt and derivative instruments of
Unitymedia are included in discontinued operations.
(iii)
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 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, less the estimated incremental costs that we expect to
incur to provide such transitional services. As a result, the pro
forma adjustments during the year ended March 31, 2019 include
$38.2 million related to our discontinued operations in Germany,
Hungary, Romania and the Czech Republic and $0.7 million related to
our discontinued DTH business.
(iv)
Represents the Adjusted FCF that we
estimate would have resulted if the sale of the Discontinued
Operations 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. ARPU per average
fixed-line customer relationship is calculated by dividing the
average monthly subscription revenue from residential cable and
SOHO services by the average number of fixed-line 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. Fixed-line 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, fixed-line customer
relationships, mobile subscribers and RGUs, as applicable, to
reflect acquisitions, dispositions and FX 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.
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.
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.
Fixed-Line Customer Relationships:
the number of customers who receive at least one of our internet,
video or telephony services that we count as RGUs, without regard
to which or to how many services they subscribe. Fixed-Line
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 Fixed-Line Customer
Relationships. We exclude mobile-only customers from Fixed-Line
Customer Relationships.
Fixed-Mobile Convergence (FMC):
Fixed-mobile convergence penetration represents the number of
customers who subscribe to both a fixed broadband internet service
and postpaid mobile telephony service, divided by the total number
of customers who subscribe to our fixed broadband internet
service.
Homes Passed: homes, residential
multiple dwelling units or commercial units that can be connected
to our networks without materially extending the distribution
plant. 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.
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.
Lightning premises: includes homes,
residential multiple dwelling units and commercial premises that
potentially could subscribe to our residential or SOHO services,
which have been connected to our networks as a part of our Project
Lightning network extension program in the U.K. and Ireland.
Project Lightning infill build relates to construction in areas
adjacent to our existing network.
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
March 31,
2020
2019
in millions
Operating income
$
280.6
$
105.5
Share-based compensation expense
55.2
67.3
Depreciation and amortization
783.5
939.6
Impairment, restructuring and other
operating items, net
31.0
70.9
Total OCF
$
1,150.3
$
1,183.3
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
March 31,
2020
2019
in millions
Total OCF
$
1,150.3
$
1,183.3
Property and equipment additions
(654.4
)
(698.6
)
Total OFCF
$
495.9
$
484.7
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,
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, 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.
Appendix - Supplemental OCF, P&E and OFCF
information
The following table presents (i) OCF, (ii) property and
equipment additions, (iii) OFCF and (iv) percentage change from
period to period for OCF and OFCF on both a reported and rebased
basis for each of our consolidated reportable segments:
Three months ended March
31,
Increase/(decrease)
2020
2019
Reported %
Rebased %
in millions, except %
amounts
OCF(i):
U.K./Ireland
$
655.4
$
692.2
(5.3
)
(3.5
)
Belgium
331.6
339.0
(2.2
)
0.6
Switzerland
134.1
156.3
(14.2
)
(16.0
)
CEE
54.3
53.7
1.1
4.8
Central and Corporate
(25.1
)
(59.3
)
57.7
5.4
Intersegment eliminations
—
1.4
N.M.
N.M.
Total OCF
$
1,150.3
$
1,183.3
(2.8
)
(3.6
)
Property and equipment additions(ii):
U.K./Ireland
$
346.6
$
395.3
Belgium
141.6
141.7
Switzerland
69.2
58.6
CEE
18.9
21.7
Central and Corporate
78.1
81.3
Total property and equipment additions
$
654.4
$
698.6
OFCF(i) (ii):
U.K./Ireland
$
308.8
$
296.9
4.0
5.8
Belgium
190.0
197.3
(3.7
)
(1.2
)
Switzerland
64.9
97.7
(33.6
)
(34.5
)
CEE
35.4
32.0
10.6
15.3
Central and Corporate
(103.2
)
(140.6
)
26.6
2.0
Intersegment eliminations
—
1.4
N.M.
N.M.
Total OFCF
$
495.9
$
484.7
2.3
(2.4
)
(i)
Includes the Centrally-held Operating Cost
Allocations, as defined and described below.
(ii)
Excludes the Centrally-held P&E
Attributions, as defined and described below.
Centrally-held Operating Cost
Allocations
During the fourth quarter of 2019, we changed the presentation
of certain operating costs related to our centrally-managed
technology and innovation function. These costs, which were
previously included in Central and Corporate, are now allocated to
our consolidated reportable segments. This change, which we refer
to as the “Centrally-held Operating Cost Allocations”, was made as
a result of internal changes with respect to the way in which our
chief operating decision maker evaluates the OCF of our operating
segments. Segment information for the three months ended March 31,
2019 has been revised in our reported U.S. GAAP disclosures to
reflect this change. The following table provides a summary of the
impact on the OCF of our consolidated reportable segments and
Central and Corporate that resulted from the Centrally-held
Operating Cost Allocations.
Three months ended March
31,
2020
2019
in millions
Increase (decrease) to OCF:
U.K./Ireland
$
(12.1
)
$
(16.1
)
Switzerland
(4.8
)
(6.8
)
CEE
(2.5
)
(3.5
)
Central and Corporate
19.4
26.4
Total Liberty Global
$
—
$
—
Centrally-held Property & Equipment
Attributions
Property and equipment additions presented for Central and
Corporate include certain capital costs incurred for the benefit of
our operating segments. Generally, for purposes of the consolidated
financial statements of our borrowing groups, the expense
associated with these capital costs is allocated and/or charged to
our operating segments as related-party fees and allocations in
their respective statements of operations over the period in which
the operating segment benefits from the use of the Central and
Corporate asset. Related-party fees and allocations are excluded
from the reported OCF metric of these borrowing groups. These
amounts are based on (i) our estimate of its share of underlying
costs, (ii) our estimate of its share of the underlying costs plus
a mark-up or (iii) commercially-negotiated rates. These charges and
allocations differ from the attributed OFCF approach, as further
described below.
For internal management reporting and capital allocation
purposes, we evaluate the OFCF of our operating segments on an
"attributed" basis, whereby we estimate and attribute certain
capital costs incurred by Central and Corporate to our operating
segments as if that operating segment directly incurred its
estimated share of the capital costs in the same period the costs
were incurred by Central and Corporate. These capital costs
represent assets that are jointly used by our operating segments.
In the context of evaluating our operating segments, we believe
this non-GAAP approach, which we refer to as the "Centrally-held
Property and Equipment Attributions", is a meaningful measure as it
represents a transparent view of what the estimated capital spend
for our operating segments might be if they were to operate as a
stand-alone business (excluding, among other considerations, any
impact from lost economies of scale) and allows us to more
accurately (i) review capital trends by operating segment, (ii)
perform benchmarking between operating segments and (iii) drive
alignment and accountability between Central and Corporate and our
operating segments with respect to our consolidated capital spend.
The amounts attributed to each operating segment are estimated
based on (a) actual costs incurred by Central and Corporate,
without any mark-up, and (b) each respective operating segment's
estimated use of the associated assets.
The below table summarizes the Centrally-held Property and
Equipment Attributions, consistent with our internal management
reporting approach. This presentation is for illustrative purposes
only and is intended as a supplement to, and not a substitute for,
our U.S. GAAP presentation of the property and equipment additions
of our reportable segments.
Three months ended March
31,
2020
2019
in millions
Increase (decrease) to property and
equipment additions:
U.K./Ireland
$
34.9
$
26.5
Belgium
3.1
—
Switzerland
10.1
8.8
CEE
6.9
5.3
Central and Corporate
(55.0
)
(40.6
)
Total Liberty Global
$
—
$
—
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200506005984/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
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